1933 Act File No. 33-6700
1940 Act File No. 811-4715
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
Post-Effective Amendment No. 15 X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 15 X
THE EVERGREEN GROWTH AND INCOME FUND
(Exact Name of Registrant as Specified in Charter)
200 Berkeley Street
Boston, MA 02116
(Address of Principal Executive Offices)
(617) 210-3200
(Registrant's Telephone Number)
Dorothy E. Bourrassa, Esq.
First Union Corporation
200 Berkeley Street, Boston, Massachusetts 02116
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box)
/x/ Immediately upon filing pursuant to paragraph (b)
/ / on (date) pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(i)
/ / on (date) pursuant to paragraph (a)(i)
/ / 75 days after filing pursuant to paragraph (a)(ii)
/ / on (date) pursuant to paragraph (a)(ii) of Rule 485
If appropriate, check the following box:
/ / This post-effective amendment designates a new effective date for a
previously filed post-effective amendment
/ / 60 days after filing pursuant to paragraph (a)(i)
/ / on (date) pursuant to paragraph (a)(i)
The Registrant has filed a Declaration pursuant to Rule 24f-2 under the
Investment Company Act of 1940. Registrant's Rule 24f-2 Notice for the fiscal
period ended July 31, 1997 was filed on September 30, 1997.
<PAGE>
EVERGREEN GROWTH AND INCOME FUND
CONTENTS OF
POST-EFFECTIVE AMENDMENT NO. 15
to
REGISTRATION STATEMENT
This Post-Effective Amendment No. 15 to Registration
Statement No. 33-11047/811-4950 consists of
the following pages, items of information, and documents:
The Facing Sheet
The Contents Page
The Cross-Reference Sheet
PART A
Prospectus
PART B
Statement of Additional Information
PART C
Financial Statements
Exhibits
Number of Holders of Securities
Indemnification
Business and Other Connections of Investment Adviser
Principal Underwriter
Location of Accounts and Records
Signatures
<PAGE>
CROSS REFERENCE SHEET
(as required by Rule 481(a))
N-1A Item No. Location in Prospectus(es)
Part A
Item 1. Cover Page Cover Page
Item 2. Synopsis and Fee Table Overview of the Fund(s);
Expense Information
Item 3. Condensed Financial Information Financial Highlights
Item 4. General Description of Registrant Cover Page; Description of
the Funds; Other
Information
Item 5. Management of the Fund Management of the Fund(s);
Other Information
Item 6. Capital Stock and Other Securities Dividends, Distributions and
Taxes; Other Information
Item 7. Purchase of Securities Being Offered Purchase and Redemption of
Shares
Item 8. Redemption or Repurchase Purchase and Redemption of
Shares
Item 9. Pending Legal Proceedings Not Applicable
Location in Statement of
Part B Additional Information
Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. General Information and History Not Applicable
Item 13. Investment Objectives and Policies Investment Objectives and
Policies;Investment
Restrictions; Non-
Fundamental Operating
Policies; Certain Risk
Considerations
Item 14. Management of the Fund Trustees and
Holders of Securities
Item 15. Control Persons and Principal Trustees and
Holders of Securities Holders of Securities
Item 16. Investment Advisory and Other Services Investment Advisers;
Purchase of Shares
Item 17. Brokerage Allocation Allocation of Brokerage
Item 18. Capital Stock and Other Securities Purchase of Shares
Item 19. Purchase, Redemption and Pricing of Distribution Plans;
Securities Being Offered Purchase of Shares;
Net Asset Value
Item 20. Tax Status Additional Tax Information
Item 21. Underwriters Distribution Plans;
Purchase of Shares
Item 22. Calculation of Performance Data Performance Information
Item 23. Financial Statements Financial Statements
<PAGE>
AMENDMENT TO THE CLASS A, B AND C PROSPECTUS
OF
EVERGREEN GROWTH AND INCOME FUNDS
The Class A, B and C Prospectus of the Funds is hereby amended to read as
follows:
The respective Board of Trustees of each of the Funds has approved a
proposal to reorganize (the "Reorganization") each Fund into a corresponding
series (each a "Successor Fund") of Evergreen Equity Trust, a Delaware business
trust. If shareholders of a Fund approve the Reorganization and the conditions
of the Reorganization are satisfied, all of the assets and liabilities of the
Fund will be transferred to the corresponding Successor Fund and each
shareholder of the Fund will receive shares of the corresponding Successor Fund.
In connection with the Reorganizations, each Board has approved, subject to
shareholder approval, the reclassification of most Funds' investment objectives
from "fundamental" (i.e., changeable by shareholder vote only) to
"nonfundamental" (i.e., changeable by vote of the Board), the adoption by each
Fund of certain standardized investment restrictions, and the elimination or
reclassification from fundamental to nonfundamental of each Fund's other
currently fundamental investment restrictions.
The Reorganizations and related proposals are scheduled to be voted on at a
joint special meeting of shareholders to be held on December 15, 1997.
Information detailing each proposal was mailed to shareholders on October 27,
1997.
Each occurrence of the term "Evergreen Keystone" is hereby replaced with
"Evergreen."
The address of the Funds is 200 Berkeley Street, Boston, Massachusetts
02116.
You may exchange shares of the Funds for shares of another Evergreen Fund
by calling or writing to Evergreen Service Company or by using the Evergreen
Express Line. If the shares being tendered for exchange are still subject to a
contingent deferred sales charge or are eligible for conversion in a specified
time, such remaining charge or remaining time will carry over to the shares
being acquired in the exchange transaction.
KEYSTONE FUND FOR TOTAL RETURN ONLY
Keystone Fund for Total Return is now called "Evergreen Fund for Total
Return."
<PAGE>
- --------------------------------------------------------------------------------
EXPENSE INFORMATION
- --------------------------------------------------------------------------------
The table set forth below summarizes the shareholder transaction costs
associated with an investment in each Class A, Class B and Class C shares of the
Funds. For further information see "Purchase and Redemption of Fund Shares" and
"General Information -- Other Classes of Shares".
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES Class A Shares Class B Shares Class C Shares
-------------- --------------------------------------------- ---------------
<S> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases 4.75% None None
(as a % of offering price)
Contingent Deferred Sales Charge (as a % of None 5% during the first year, 4% during the 1% during the
original purchase price or redemption second year, 3% during the third and fourth first year and
proceeds, whichever is lower) years, 2% during the fifth year, 1% during 0% thereafter
the sixth year and 0% after the sixth year
</TABLE>
The following tables show for each Fund the actual annual operating
expenses (as a percentage of average net assets) attributable to each Class of
shares, together with examples of the cumulative effect of such expenses on a
hypothetical $1,000 investment in each Class for the periods specified assuming
(i) a 5% annual return, and (ii) redemption at the end of each period and,
additionally for Class B and C shares, no redemption at the end of each period.
In the following examples (i) the expenses for Class A shares assume
deduction of the maximum sales charge at the time of purchase, (ii) the expenses
for Class B shares and Class C shares assume deduction at the time of redemption
(if applicable) of the maximum contingent deferred sales charge applicable for
that time period, and (iii) the expenses for Class B shares reflects the
conversion to Class A shares seven years after purchase (years eight through
ten, therefore, reflect Class A expenses).
EVERGREEN UTILITY FUND
<TABLE>
<CAPTION>
EXAMPLES
----------------------------------------
Assuming
Assuming Redemption at End of no
ANNUAL OPERATING EXPENSES** Period Redemption
- ------------------------------------------------------ ----------------------------- -----------
Class A Class B Class C Class A Class B Class C Class B
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Management Fees .31% .31% .31%
After 1 Year $ 57 $ 68 $ 28 $ 18
12b-1 Fees* .25% .75% .75%
After 3 Years $ 78 $ 85 $ 55 $ 55
Shareholder Service Fees -- .25% .25%
After 5 Years $ 100 $ 115 $ 95 $ 95
Other Expenses .44% .44% .44%
After 10 Years $ 164 $ 177 $ 206 $ 177
------- ------- -------
Total 1.00% 1.75% 1.75%
======= ======= =======
<CAPTION>
Assuming no Redemption
-------------------------
Class C
-------
<S> <C>
After 1 Year $ 18
After 3 Years $ 55
After 5 Years $ 95
After 10 Years $ 206
<CAPTION>
Management Fees
</TABLE>
EVERGREEN GROWTH AND INCOME FUND
<TABLE>
<CAPTION>
EXAMPLES
---------------------------------------------------
Assuming Redemption at End of Assuming no
ANNUAL OPERATING EXPENSES Period Redemption
- --------------------------------------------------- ----------------------------- ------------------
Class A Class B Class C Class A Class B Class C Class B Class C
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management Fees .97% .97% .97%
After 1 Year $ 62 $ 73 $ 33 $ 23 $ 23
12b-1 Fees* .25% .75% .75%
After 3 Years $ 92 $ 100 $ 70 $ 70 $ 70
Shareholder Service
Fees -- .25% .25% After 5 Years $ 124 $ 140 $ 120 $ 120 $ 120
After 10 Years $ 215 $ 229 $ 258 $ 229 $ 258
Other Expenses .25% .28% .28%
------- ------- -------
Total 1.47% 2.25% 2.25%
======= ======= =======
</TABLE>
2
<PAGE>
EVERGREEN VALUE FUND
<TABLE>
<CAPTION>
EXAMPLES
---------------------------------------------------
Assuming Redemption at End of Assuming no
ANNUAL OPERATING EXPENSES Period Redemption
- --------------------------------------------------- ----------------------------- ------------------
Class A Class B Class C Class A Class B Class C Class B Class C
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management Fees .50% .50% .50%
After 1 Year $ 56 $ 67 $ 27 $ 17 $ 17
12b-1 Fees* .25% .75% .75%
After 3 Years $ 75 $ 83 $ 52 $ 53 $ 52
Shareholder Service
Fees -- .25% .25% After 5 Years $ 96 $ 111 $ 90 $ 91 $ 90
After 10 Years $ 155 $ 168 $ 197 $ 168 $ 197
Other Expenses .17% .17% .16%
------- ------- -------
Total .92% 1.67% 1.66%
======= ======= =======
</TABLE>
EVERGREEN SMALL CAP EQUITY INCOME FUND
<TABLE>
<CAPTION>
EXAMPLES
---------------------------------------------------
Assuming Redemption at End of Assuming no
ANNUAL OPERATING EXPENSES** Period Redemption
- ---------------------------------------------------
Class A Class B Class C Class A Class B Class C Class B Class C
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management Fees 1.00% 1.00% 1.00%
After 1 Year $ 64 $ 75 $ 35 $ 25 $ 25
12b-1 Fees* .25% .75% .75%
After 3 Years $ 99 $ 107 $ 76 $ 77 $ 76
Shareholder Service
Fees -- .25% .25% After 5 Years $ 136 $ 151 $ 131 $ 131 $ 131
After 10 Years $ 240 $ 252 $ 279 $ 252 $ 279
Other Expenses .46% .46% .45%
------- ------- -------
Total 1.71% 2.46% 2.45%
======= ======= =======
</TABLE>
EVERGREEN INCOME AND GROWTH FUND
<TABLE>
<CAPTION>
EXAMPLES
---------------------------------------------------
Assuming Redemption at End of Assuming No
ANNUAL OPERATING EXPENSES Period Redemption
- --------------------------------------------------- ----------------------------- ------------------
Class A Class B Class C Class A Class B Class C Class B Class C
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management Fees .98% .98% .98%
After 1 Year $ 62 $ 72 $ 32 $ 22 $ 22
12b-1 Fees* .25% .75% .75%
After 3 Years $ 91 $ 99 $ 69 $ 69 $ 69
Shareholder Service
Fees -- .25% .25% After 5 Years $ 123 $ 138 $ 118 $ 118 $ 118
After 10 Years $ 213 $ 225 $ 254 $ 225 $ 254
Other Expenses .22% .22% .22%
------- ------- -------
Total 1.45% 2.20% 2.20%
======= ======= =======
</TABLE>
EVERGREEN FUND FOR TOTAL RETURN
<TABLE>
<CAPTION>
EXAMPLES
---------------------------------------------------
Assuming Redemption at Assuming no
ANNUAL OPERATING EXPENSES End of Period Redemption
- --------------------------------------------------- ----------------------------- -------------------
Class A Class B Class C Class A Class B Class C Class B Class C
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management Fees .63% .63% .63%
After 1 Year $ 60 $ 71 $ 30 $ 21 $ 20
12b-1 Fees* .25% 1.00% 1.00%
After 3 Years $ 85 $ 93 $ 63 $ 63 $ 63
Other Expenses .36% .39% .38%
After 5 Years $ 112 $ 129 $ 108 $ 109 $ 108
------- ------- -------
After 10 Years $ 190 $ 205 $ 234 $ 205 $ 234
Total 1.24% 2.02% 2.01%
------- ------- -------
------- ------- -------
</TABLE>
*Class A shares can pay up to 0.75% of average net assets as a 12b-1 Fee.
For the forseeable future, the Class A shares 12b-1 Fees will be limited to
0.25% of average net assets. For Class B and Class C shares, a portion of the
12b-1 Fees equivalent to 0.25% of average net assets will be shareholder
servicing-related. Distribution-related 12b-1 Fees will be limited to 0.75% of
average net assets as permitted under the rules of the National Association of
Securities Dealers, Inc.
**The annualized operating expenses and examples reflect fee waivers
and/or expense reimbursements for the fiscal period ended July 31, 1997. Actual
expenses for the period, excluding fee waivers and expense reimbursements, were
as follows:
<TABLE>
<CAPTION>
Class A Class B Class C
------- ------- -------
<S> <C> <C> <C>
Evergreen Utility Fund 1.19% 1.94% 1.94%
Evergreen Small Cap Equity Income Fund 1.84% 2.59% 2.58%
</TABLE>
3
<PAGE>
The Funds' investment advisers may, at their own discretion, discontinue
these fee waivers and expense reimbursements at any time.
The purpose of the foregoing table is to assist an investor in
understanding the various costs and expenses that an investor in each Class of
shares of the Funds will bear directly or indirectly. The amounts set forth both
in the tables and in the examples are estimated amounts based on the experience
of each Fund for the most recent period. Such amounts have been restated to
reflect current fee arrangements. THE EXAMPLES SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES OR ANNUAL RETURN. ACTUAL EXPENSES AND
ANNUAL RETURN MAY BE GREATER OR LESS THAN THOSE SHOWN. For a more complete
description of the various costs and expenses borne by the Funds see "Management
of the Funds". As a result of asset-based sales charges, long-term shareholders
may pay more than the economic equivalent of the maximum front-end sales charges
permitted under the rules of the National Association of Securities Dealers,
Inc.
From time to time, each Fund's investment adviser may, at its discretion,
reduce or waive its fees or reimburse the Funds for certain of their expenses in
order to reduce their expense ratios. Each Fund's investment adviser may cease
these waivers and reimbursements at any time.
4
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The tables on the following pages present, for each Fund, financial
highlights for a share outstanding throughout each period indicated. The
information in the tables for the five most recent fiscal years or the life of
the Fund if shorter has been audited by the respective Fund's independent
auditors as follows: for EVERGREEN UTILITY FUND by KPMG Peat Marwick LLP; for
EVERGREEN GROWTH AND INCOME FUND for the period ended July 31, 1997 and the year
ended December 31, 1996 by KPMG Peat Marwick LLP, and for the period January 3,
1995 through December 31, 1995 by other auditors; for EVERGREEN VALUE FUND by
KPMG Peat Marwick LLP; for EVERGREEN SMALL CAP EQUITY INCOME FUND for the period
ended July 31, 1997 and the year ended December 31, 1996 by KPMG Peat Marwick
LLP and for the period January 3, 1995 through December 31, 1995 by other
auditors, for EVERGREEN FUND FOR TOTAL RETURN by KPMG Peat Marwick LLP; and for
EVERGREEN INCOME AND GROWTH FUND for the period ended July 31, 1997 and for the
year ended January 31, 1997 by Price Waterhouse LLP, and for the year ended
January 31, 1996 and the period January 3, 1995 through January 31, 1995 by
other auditors. A report of KPMG Peat Marwick LLP or Price Waterhouse LLP, as
the case may be, on the audited information with respect to each Fund is
incorporated by reference in the Funds' Statement of Additional Information. The
following information for each Fund should be read in conjunction with the
financial statements and related notes which are incorporated by reference in
the Funds' Statement of Additional Information.
Further information about a Fund's performance is contained in the Fund's
annual report to shareholders, which may be obtained without charge.
EVERGREEN UTILITY FUND -- CLASS A SHARES
<TABLE>
<CAPTION>
CLASS A SHARES
-----------------------------------------------
SEVEN MONTHS YEAR ENDED DECEMBER 31,
ENDED -----------------------------
JULY 31, 1997# 1996 1995 1994*
-------------- ------- -------- ------
<S> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value beginning of period......................................... $10.57 $10.80 $9.00 $10.00
-------------- ------- -------- ------
Income from investment operations
Net investment income..................................................... 0.25 0.41 0.44 0.45
Net realized and unrealized gain (loss) on investments.................... 0.87 0.05 2.25 (1.01)
-------------- ------- -------- ------
Total from investment operations........................................ 1.12 0.46 2.69 (0.56)
-------------- ------- -------- ------
Less distributions from
Net investment income..................................................... (0.24) (0.41) (0.44) (0.44)
Net realized gain on investments.......................................... 0 (0.28) (0.45) 0
-------------- ------- -------- ------
Total distributions................................................... (0.24) (0.69) (0.89) (0.44)
-------------- ------- -------- ------
Net asset value end of period............................................... $11.45 $10.57 $10.80 $9.00
-------------- ------- -------- ------
-------------- ------- -------- ------
TOTAL RETURN+............................................................... 10.72% 4.40% 30.70% (5.60%)
RATIOS/SUPPLEMENTAL DATA:
Ratios to average net assets:
Total expenses............................................................ 1.00%++ 0.87% 0.79% 0.53%++
Total expenses, excluding indirectly paid expenses........................ 0.99%++ N/A N/A N/A
Total expenses, excluding fee waivers & expense reimbursements............ 1.19%++ 1.15% 1.18% 1.43%++
Net investment income..................................................... 3.85%++ 3.87% 4.51% 5.07%++
Portfolio turnover rate..................................................... 50% 59% 88% 23%
Average commission rate paid per share...................................... $0.0593 $0.0605 N/A N/A
Net assets end of period (thousands)........................................ $91,638 $96,243 $107,872 $4,190
--========= ======= ======== ======
</TABLE>
- -------------
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from January 4, 1994 (commencement of class operations) to
December 31, 1994.
# The Fund changed its fiscal year ended from December 31 to July 31, effective
July 31, 1997.
5
<PAGE>
EVERGREEN UTILITY FUND -- CLASS B AND C SHARES
<TABLE>
<CAPTION>
CLASS B SHARES
------------------------------------------------
SEVEN MONTHS YEAR ENDED DECEMBER 31,
ENDED ------------------------------
JULY 31, 1997# 1996 1995 1994*
-------------- ------- -------- -------
<S> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value beginning of period........................................... $10.58 $10.81 $9.00 $10.00
-------------- ------- -------- -------
Income from investment operations
Net investment income....................................................... 0.20 0.33 0.37 0.39
Net realized and unrealized gain (loss) on investments...................... 0.87 0.05 2.26 (1.01)
-------------- ------- -------- -------
Total from investment operations........................................ 1.07 0.38 2.63 (0.62)
-------------- ------- -------- -------
Less distributions from
Net investment income....................................................... (0.19) (0.33) (0.37) (0.38)
Net realized gain on investments............................................ 0 (0.28) (0.45) 0
-------------- ------- -------- -------
Total distributions..................................................... (0.19) (0.61) (0.82) (0.38)
-------------- ------- -------- -------
Net asset value end of period................................................. $11.46 $10.58 $10.81 $9.00
-------------- ------- -------- -------
-------------- ------- -------- -------
TOTAL RETURN+................................................................. 10.21% 3.60% 29.90% (6.20%)
RATIOS/SUPPLEMENTAL DATA:
Ratios to average net assets:
Total expenses.............................................................. 1.75%++ 1.62% 1.53% 1.27%++
Total expenses, excluding indirectly paid expenses.......................... 1.74%++ N/A N/A N/A
Total expenses, excluding fee waivers & expense reimbursements.............. 1.94%++ 1.89% 1.93% 2.11%++
Net investment income....................................................... 3.10%++ 3.12% 3.78% 4.19%++
Portfolio turnover rate....................................................... 50% 59% 88% 23%
Average commission rate paid per share........................................ $0.0593 $0.0605 N/A N/A
Net assets end of period (thousands).......................................... $36,738 $38,511 $35,662 $28,792
============== ======= ======== =======
</TABLE>
- -------------
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from January 4, 1994 (commencement of class operations) to
December 31, 1994.
# The Fund changed its fiscal year ended from December 31 to July 31, effective
July 31, 1997.
<TABLE>
<CAPTION>
CLASS C SHARES
------------------------------------------------
SEVEN MONTHS YEAR ENDED DECEMBER 31,
ENDED ------------------------------
JULY 31, 1997# 1996 1995 1994*
-------------- ------- --------- ------
<S> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value beginning of period........................................... $10.58 $10.82 $9.01 $9.33
-------------- ------- --------- ------
Income from investment operations
Net investment income....................................................... 0.20 0.33 0.37 0.12
Net realized and unrealized gain (loss) on investments...................... 0.87 0.04 2.26 (0.33)
-------------- ------- --------- ------
Total from investment operations........................................ 1.07 0.37 2.63 (0.21)
-------------- ------- --------- ------
Less distributions from
Net investment income....................................................... (0.19) (0.33) (0.37) (0.11)
Net realized gain on investments............................................ 0 (0.28) (0.45) 0
-------------- ------- --------- ------
Total distributions..................................................... (0.19) (0.61) (0.82) (0.11)
-------------- ------- --------- ------
Net asset value end of period................................................. $11.46 $10.58 $10.82 $9.01
-------------- ------- --------- ------
-------------- ------- --------- ------
TOTAL RETURN+................................................................. 10.21% 3.50% 29.80% (2.20%)
RATIOS/SUPPLEMENTAL DATA:
Ratios to average net assets:
Total expenses.............................................................. 1.75%++ 1.63% 1.54% 1.94%++
Total expenses, excluding indirectly paid expenses.......................... 1.74%++ N/A N/A N/A
Total expenses, excluding fee waivers & expense reimbursements.............. 1.94%++ 1.90% 1.93% 2.78%++
Net investment income....................................................... 3.10%++ 3.13% 3.76% 3.96%++
Portfolio turnover rate....................................................... 50% 59% 88% 23%
Average commission rate paid per share........................................ $0.0593 $0.0605 N/A N/A
Net assets end of period (thousands).......................................... $379 $396 $246 $128
============= ======== ========= ======
</TABLE>
- -------------
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from September 2, 1994 (commencement of class operations) to
December 31, 1994.
# The Fund changed its fiscal year ended from December 31 to July 31, effective
July 31, 1997.
6
<PAGE>
EVERGREEN GROWTH AND INCOME FUND -- CLASS A AND B SHARES
<TABLE>
<CAPTION>
CLASS A SHARES
-----------------------------------
YEAR ENDED
SEVEN MONTHS DECEMBER 31,
ENDED -----------------
JULY 31, 1997# 1996 1995*
-------------- ------- ------
<S> <C> <C> <C>
PER SHARE DATA:
Net asset value beginning of period..................................................... $22.53 $18.63 $14.48
-------------- ------- ------
Income from investment operations
Net investment income................................................................. 0.08 0.12 0.13
Net realized and unrealized gain on investments....................................... 4.72 4.26 4.64
-------------- ------- ------
Total from investment operations.................................................. 4.80 4.38 4.77
-------------- ------- ------
Less distributions from
Net investment income................................................................. (0.07) (0.13) (0.14)
In excess of net investment income.................................................... 0** 0 0
Net realized gain on investments...................................................... 0 (0.35) (0.48)
-------------- ------- ------
Total distributions............................................................... (0.07) (0.48) (0.62)
-------------- ------- ------
Net asset value end of period........................................................... $27.26 $22.53 $18.63
-------------- ------- ------
-------------- ------- ------
TOTAL RETURN+........................................................................... 21.33% 23.50% 33.00%
RATIOS/SUPPLEMENTAL DATA:
Ratios to average net assets:
Total expenses........................................................................ 1.47%++ 1.41% 1.55%++
Total expenses, excluding indirectly paid expenses.................................... 1.47%++ N/A N/A
Total expenses, excluding fee waivers & expense reimbursements........................ N/A N/A 1.64%++
Net investment income................................................................. 0.57%++ 0.70% 0.99%++
Portfolio turnover rate................................................................. 6% 14% 17%
Average commission rate paid per share.................................................. $0.0603 $0.0566 N/A
Net assets end of period (millions)..................................................... $166 $85 $19
============= ======== ========
</TABLE>
- -------------
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from January 3, 1995 (commencement of class operations) to
December 31, 1995.
** Less than one cent per share.
# The Fund changed its fiscal year end from December 31 to July 31, effective
July 31, 1997.
<TABLE>
<CAPTION>
CLASS B SHARES
------------------------------------
YEAR ENDED
SEVEN MONTHS DECEMBER 31,
ENDED ------------------
JULY 31, 1997# 1996 1995*
-------------- ------- -------
<S> <C> <C> <C>
PER SHARE DATA:
Net asset value beginning of period.................................................... $22.43 $18.59 $14.48
-------------- ------- -------
Income from investment operations
Net investment income (loss)......................................................... (0.02) 0** 0.05
Net realized and unrealized gain on investments...................................... 4.69 4.20 4.61
-------------- ------- -------
Total from investment operations................................................. 4.67 4.20 4.66
-------------- ------- -------
Less distributions from
Net investment income................................................................ 0 (0.01) (0.07)
Net realized gain on investments..................................................... 0 (0.35) (0.48)
-------------- ------- -------
Total distributions.............................................................. 0 (0.36) (0.55)
-------------- ------- -------
Net asset value end of period.......................................................... $27.10 $22.43 $18.59
-------------- ------- -------
-------------- ------- -------
TOTAL RETURN+.......................................................................... 20.82% 22.60% 32.20%
RATIOS/SUPPLEMENTAL DATA:
Ratios to average net assets:
Total expenses....................................................................... 2.25%++ 2.17% 2.24%++
Total expenses, excluding indirectly paid expenses................................... 2.25%++ N/A N/A
Total expenses, excluding fee waivers & expense reimbursements....................... N/A N/A 2.26%++
Net investment income................................................................ (0.19%)++ (0.06%) 0.30%++
Portfolio turnover rate................................................................ 6% 14% 17%
Average commission rate paid per share................................................. $0.0603 $0.0566 N/A
Net assets end of period (millions).................................................... $542 $245 $46
============== ======= =======
</TABLE>
- -------------
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from January 3, 1995 (commencement of class operations) to
December 31, 1995.
** Less than one cent per share.
# The Fund changed its fiscal year end from December 31 to July 31, effective
July 31, 1997.
7
<PAGE>
EVERGREEN GROWTH AND INCOME FUND -- CLASS C SHARES
<TABLE>
<CAPTION>
CLASS C SHARES
-----------------------------------
YEAR ENDED
SEVEN MONTHS DECEMBER 31,
ENDED -----------------
JULY 31, 1997# 1996 1995*
-------------- ------- ------
<S> <C> <C> <C>
PER SHARE DATA:
Net asset value beginning of period..................................................... $22.43 $18.58 $14.48
-------------- ------- ------
Income from investment operations
Net investment income (loss).......................................................... (0.02) 0** 0.06
Net realized and unrealized gain on investments....................................... 4.69 4.21 4.60
-------------- ------- ------
Total from investment operations.................................................. 4.67 4.21 4.66
-------------- ------- ------
Less distributions from
Net investment income................................................................. 0 (0.01) (0.08)
Net realized gain on investments...................................................... 0 (0.35) (0.48)
-------------- ------- ------
Total distributions............................................................... 0 (0.36) (0.56)
-------------- ------- ------
Net asset value end of period........................................................... $27.10 $22.43 $18.58
-------------- ------- ------
-------------- ------- ------
TOTAL RETURN+........................................................................... 20.82% 22.60% 32.20%
RATIOS/SUPPLEMENTAL DATA:
Ratios to average net assets:
Total expenses........................................................................ 2.25%++ 2.17% 2.15%++
Total expenses, excluding indirectly paid expenses.................................... 2.25%++ N/A N/A
Total expenses, excluding fee waivers & expense reimbursements........................ N/A N/A 4.94%++
Net investment income................................................................. (0.19%)++ (0.06%) 0.35%++
Portfolio turnover rate................................................................. 6% 14% 17%
Average commission rate paid per share.................................................. $0.0603 $0.0566 N/A
Net assets end of period (millions)..................................................... $24 $10 $20
============== ======= ======
</TABLE>
- -------------
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from January 3, 1995 (commencement of class operations) to
December 31, 1995.
** Less than one cent per share.
# The Fund changed its fiscal year ended from December 31 to July 31, effective
July 31, 1997.
8
<PAGE>
EVERGREEN VALUE FUND -- CLASS A SHARES
<TABLE>
<CAPTION>
CLASS A SHARES
-------------------------------------------------------------------------------------------------
YEAR ENDED
SEVEN MONTHS YEAR ENDED DECEMBER 31, MARCH 31,
ENDED -------------------------------------------------------------- ---------------
JULY 31, 1997# 1996 1995 1994 1993 1992 1991 1990* 1990 1989
-------------- ------- ------- ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value beginning of
period.................... $20.57 $20.45 $16.62 $17.63 $17.11 $17.08 $14.61 $15.12 $14.45 $12.83
-------------- ------- ------- ------ ------ ------ ------ ------ ------ ------
Income from investment
operations
Net investment income..... 0.21 0.38 0.55 0.52 0.47 0.44 0.46 0.36 0.54 0.36
Net realized and
unrealized gain (loss)
on investments.......... 4.05 3.49 4.69 (0.20) 1.10 0.89 3.17 (0.44) 1.70 2.11
-------------- ------- ------- ------ ------ ------ ------ ------ ------ ------
Total from investment
operations............ 4.26 3.87 5.24 0.32 1.57 1.33 3.63 (0.08) 2.24 2.47
-------------- ------- ------- ------ ------ ------ ------ ------ ------ ------
Less distributions from
Net investment income..... (0.19) (0.41) (0.51) (0.51) (0.47) (0.43) (0.43) (0.36) (0.57) (0.38)
Net realized gain on
investments............. 0 (3.32) (0.90) (0.82) (0.58) (0.87) (0.73) (0.02) (1.00) (0.47)
In excess of net
investment income....... 0 (0.02) 0 0 0 0 0 (0.05) 0 0
-------------- ------- ------- ------ ------ ------ ------ ------ ------ ------
Total distributions..... (0.19) (3.75) (1.41) (1.33) (1.05) (1.30) (1.16) (0.43) (1.57) (0.85)
-------------- ------- ------- ------ ------ ------ ------ ------ ------ ------
Net asset value end of
period.................... $24.64 $20.57 $20.45 $16.62 $17.63 $17.11 $17.08 $14.61 $15.12 $14.45
============== ======= ======= ====== ====== ======= ====== ====== ====== ======
TOTAL RETURN+............... 20.78% 18.90% 31.80% 1.90% 9.30% 8.00% 25.10% (0.50%) 15.50% 19.70%
RATIOS/SUPPLEMENTAL DATA:
Ratios to average net
assets:
Total expenses............ 0.92%++ 0.91% 0.90% 0.93% 0.99% 1.01% 0.96% 1.39%++ 1.55% 1.71%
Total expenses, excluding
indirectly paid
expenses................ 0.92%++ N/A N/A N/A N/A N/A N/A N/A N/A N/A
Total expenses, excluding
fee waiver & expense
reimbursement........... N/A N/A N/A N/A N/A 1.02% 1.05% N/A N/A N/A
Net investment income..... 1.66%++ 1.77% 2.78% 2.96% 2.63% 2.37% 2.78% 3.28%++ 3.42% 2.72%
Portfolio turnover rate..... 6% 91% 53% 70% 46% 56% 69% 13% 11% 24%
Average commission rate paid
per share................. $0.0600 $0.0588 N/A N/A N/A N/A N/A N/A N/A N/A
Net assets end of period
(millions)................ $392 $328 $292 $189 $190 $169 $136 $105 $96 $83
============== ======= ======= ====== ====== ======= ====== ====== ====== ======
<CAPTION>
1988
------
<S> <C>
PER SHARE DATA:
Net asset value beginning of
period.................... $14.66
------
Income from investment
operations
Net investment income..... 0.26
Net realized and
unrealized gain (loss)
on investments.......... (1.30)
------
Total from investment
operations............ (1.04)
------
Less distributions from
Net investment income..... (0.26)
Net realized gain on
investments............. (0.53)
In excess of net
investment income....... 0
------
Total distributions..... (0.79)
------
Net asset value end of
period.................... $12.83
------
------
TOTAL RETURN+............... (7.10%)
RATIOS/SUPPLEMENTAL DATA:
Ratios to average net
assets:
Total expenses............ 1.74%
Total expenses, excluding
indirectly paid
expenses................ N/A
Total expenses, excluding
fee waiver & expense
reimbursement........... N/A
Net investment income..... 1.92%
Portfolio turnover rate..... 24%
Average commission rate paid
per share................. N/A
Net assets end of period
(millions)................ $22
------
------
</TABLE>
- -------------
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
# The Fund changed its fiscal year ended from December 31 to July 31, effective
July 31, 1997.
* For the nine months ended December 31, 1990. The Fund changed fiscal year end
from March 31 to December 31, effective December 31, 1990.
9
<PAGE>
EVERGREEN VALUE FUND -- CLASS B AND C SHARES
<TABLE>
<CAPTION>
CLASS B SHARES
-------------------------------------------------------------
SEVEN MONTHS YEAR ENDED DECEMBER 31,
ENDED -------------------------------------------
JULY 31, 1997# 1996 1995 1994 1993*
-------------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value beginning of period.......................... $20.58 $20.45 $16.62 $17.63 $17.24
-------------- -------- -------- -------- -------
Income from investment operations
Net investment income...................................... 0.12 0.22 0.39 0.42 0.35
Net realized and unrealized gain (loss) on investments..... 4.03 3.50 4.70 (0.20) 1.01
-------------- -------- -------- -------- -------
Total from investment operations....................... 4.15 3.72 5.09 0.22 1.36
-------------- -------- -------- -------- -------
Less distributions from
Net investment income...................................... (0.10) (0.25) (0.36) (0.41) (0.35)
Net realized gain on investments........................... 0 (3.32) (0.90) (0.82) (0.58)
In excess of net investment income......................... 0 0 0 0 (0.04)
In excess of net realized gain on investments.............. 0 (0.02) 0 0 0
-------------- -------- -------- -------- -------
Total distributions.................................... (0.10) (3.59) (1.26) (1.23) (0.97)
-------------- -------- -------- -------- -------
Net asset value end of period................................ $24.63 $20.58 $20.45 $16.62 $17.63
============== ======== ======== ======== ========
TOTAL RETURN+................................................ 20.23% 18.10% 30.90% 1.30% 8.00%
RATIOS/SUPPLEMENTAL DATA:
Ratios to average net assets:
Total expenses............................................. 1.67%++ 1.66% 1.65% 1.53% 1.48%++
Total expenses, excluding indirectly paid expenses......... 1.67%++ N/A N/A N/A N/A
Net investment income...................................... 0.92%++ 1.01% 2.04% 2.36% 2.09%++
Portfolio turnover rate...................................... 6% 91% 53% 70% 46%
Average commission rate paid per share....................... $0.0600 $0.0588 N/A N/A N/A
Net assets end of period (thousands)......................... $276,256 $197,411 $141,072 $104,297 $59,953
============== ======== ======== ======== ========
</TABLE>
- -------------
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
# The Fund changed its fiscal year ended from December 31 to July 31, effective
July 31, 1997.
* For the period from February 2, 1993 (commencement of operations) to December
31, 1993.
<TABLE>
<CAPTION>
CLASS C SHARES
-----------------------------------------------
SEVEN MONTHS YEAR ENDED DECEMBER 31,
ENDED -----------------------------
JULY 31, 1997# 1996 1995 1994*
-------------- ------- ------- -------
<S> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value beginning of period......................................... $20.56 $20.44 $16.61 $18.28
-------------- ------- ------- -------
Income from investment operations
Net investment income..................................................... 0.12 0.22 0.39 0.19
Net realized and unrealized gain (loss) on investments.................... 4.03 3.50 4.70 (0.81)
-------------- ------- ------- -------
Total from investment operations...................................... 4.15 3.72 5.09 (0.62)
-------------- ------- ------- -------
Less distributions from
Net investment income..................................................... (0.10) (0.26) (0.36) (0.19)
Net realized gain on investments.......................................... 0 (3.32) (0.90) (0.82)
In excess of net investment income........................................ 0 0 0 (0.04)
In excess of net realized gain on investments............................. 0 (0.02) 0 0
-------------- ------- ------- -------
Total distributions................................................... (0.10) (3.60) (1.26) (1.05)
-------------- ------- ------- -------
Net asset value end of period............................................... $24.61 $20.56 $20.44 $16.61
============== ======= ======= =======
TOTAL RETURN+............................................................... 20.25% 18.10% 30.90% (3.40%)
RATIOS/SUPPLEMENTAL DATA:
Ratios to average net assets:
Total expenses............................................................ 1.66%++ 1.67% 1.65% 1.68%++
Total expenses, excluding indirectly paid expenses........................ 1.66%++ N/A N/A N/A
Net investment income..................................................... 0.94%++ 1.00% 2.03% 2.16%++
Portfolio turnover rate..................................................... 6% 91% 53% 70%
Average commission rate paid per share...................................... $0.0600 $0.0588 N/A N/A
Net assets end of period (thousands)........................................ $2,507 $1,458 $811 $485
============== ======= ======= =======
</TABLE>
- -------------
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from September 2, 1994 (commencement of class operations) to
December 31, 1994.
# The Fund changed its fiscal year end from December 31 to July 31, effective
July 31, 1997.
10
<PAGE>
EVERGREEN SMALL CAP EQUITY INCOME FUND -- CLASS A AND B SHARES
<TABLE>
<CAPTION>
CLASS A SHARES
-----------------------------------------
YEAR ENDED
SEVEN MONTHS DECEMBER 31,
ENDED --------------------
JULY 31, 1997# 1996 1995*
-------------- ------- ------
<S> <C> <C> <C>
PER SHARE DATA:
Net asset value beginning of period.............................................. $13.10 $11.57 $9.64
-------------- ------- ------
Income from investment operations
Net investment income.......................................................... 0.14** 0.34 0.34
Net realized and unrealized gain on investments................................ 2.59 2.13 2.45
-------------- ------- ------
Total from investment operations............................................. 2.73 2.47 2.79
-------------- ------- ------
Less distributions from
Net investment income.......................................................... (0.13) (0.34) (0.37)
Net realized gain on investments............................................... (0.01) (0.60) (0.49)
-------------- ------- ------
Total distributions.......................................................... (0.14) (0.94) (0.86)
-------------- ------- ------
Net asset value end of period.................................................... $15.69 $13.10 $11.57
============== ======= ======
TOTAL RETURN+.................................................................... 20.99% 22.00% 29.50%
RATIOS/SUPPLEMENTAL DATA:
Ratios to average net assets:
Total expenses................................................................. 1.71%++ 1.75% 1.75%++
Total expenses, excluding indirectly paid expenses............................. 1.70%++ N/A N/A
Total expenses, excluding fee waivers & expense reimbursements 1.84%++ 5.03% 24.45%++
Net investment income.......................................................... 1.88%++ 3.08% 3.39%++
Portfolio turnover rate.......................................................... 13% 50% 48%
Average commission rate paid per share........................................... $0.0665 $0.0635 N/A
Net assets end of period (thousands)............................................. $4,239 $336 $216
============== ======= ======
</TABLE>
- -------------
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from January 3, 1995 (commencement of operations) to January
31, 1995.
** Calculation based on average shares outstanding during the period.
# The Fund changed its fiscal year end from January 31 to July 31, effective
July 31, 1997.
<TABLE>
<CAPTION>
CLASS B SHARES
-----------------------------------------
YEAR ENDED
SEVEN MONTHS DECEMBER 31,
ENDED --------------------
JULY 31, 1997# 1996 1995*
-------------- ------- ------
<S> <C> <C> <C>
PER SHARE DATA:
Net asset value beginning of period.............................................. $13.09 $11.57 $9.64
-------------- ------- ------
Income from investment operations
Net investment income.......................................................... 0.08** 0.27 0.28
Net realized and unrealized gain on investments................................ 2.57 2.11 2.43
-------------- ------- ------
Total from investment operations............................................. 2.65 2.38 2.71
-------------- ------- ------
Less distributions from
Net investment income.......................................................... (0.09) (0.26) (0.29)
Net realized gain on investments............................................... (0.01) (0.60) (0.49)
-------------- ------- ------
Total distributions.......................................................... (0.10) (0.86) (0.78)
-------------- ------- ------
Net asset value end of period.................................................... $15.64 $13.09 $11.57
-============= ======= ======
TOTAL RETURN+.................................................................... 20.37% 21.10% 28.70%
RATIOS/SUPPLEMENTAL DATA:
Ratios to average net assets:
Total expenses................................................................. 2.46%++ 2.50% 2.50%++
Total expenses, excluding indirectly paid expenses............................. 2.45%++ N/A N/A
Total expenses, excluding fee waivers & expense reimbursements................. 2.59%++ 5.72% 20.90%++
Net investment income.......................................................... 1.12%++ 2.39% 2.67%++
Portfolio turnover rate.......................................................... 13% 50% 48%
Average commission rate paid per share........................................... $0.0665 $0.0635 N/A
Net assets end of period (thousands)............................................. $9,462 $692 $266
-============= ======= ======
</TABLE>
- -------------
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from January 3, 1995 (commencement of operations) to January
31, 1995.
** Calculation based on average shares outstanding during the period.
# The Fund changed its fiscal year end from January 31 to July 31, effective
July 31, 1997.
11
<PAGE>
EVERGREEN SMALL CAP EQUITY INCOME FUND -- CLASS C SHARES
<TABLE>
<CAPTION>
CLASS C SHARES
------------------------------------------
YEAR ENDED
SEVEN MONTHS DECEMBER 31,
ENDED ---------------------
JULY 31, 1997# 1996 1995*
-------------- ------- -------
<S> <C> <C> <C>
PER SHARE DATA:
Net asset value beginning of period............................................. $13.09 $11.56 $9.74
-------------- ------- -------
Income from investment operations
Net investment income......................................................... 0.10** 0.28 0.28
Net realized and unrealized gain on investments............................... 2.54 2.10 2.33
-------------- ------- -------
Total from investment operations............................................ 2.64 2.38 2.61
-------------- ------- -------
Less distributions from
Net investment income......................................................... (0.09) (0.25) (0.30)
Net realized gain on investments.............................................. (0.01) (0.60) (0.49)
-------------- ------- -------
Total distributions......................................................... (0.10) (0.85) (0.79)
-------------- ------- -------
Net asset value end of period................................................... $15.63 $13.09 $11.56
============== ======= =======
TOTAL RETURN+................................................................... 20.30% 21.10% 27.30%
RATIOS/SUPPLEMENTAL DATA:
Ratios to average net assets:
Total expenses................................................................ 2.45%++ 2.50% 2.50%++
Total expenses, excluding indirectly paid expenses............................ 2.44%++ N/A N/A
Total expenses, excluding fee waivers & expense reimbursements................ 2.58%++ 5.77% 187.29%++
Net investment income......................................................... 1.20%++ 2.33% 2.63%++
Portfolio turnover rate......................................................... 13% 50% 48%
Average commission rate paid per share.......................................... $0.0665 $0.0635 N/A
Net assets end of period (thousands)............................................ $2,770 $56 $24
============== ======= =======
</TABLE>
- -------------
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from January 24, 1995 (commencement of class operations) to
December 31, 1995.
** Calculation based on average shares outstanding during the period.
# The Fund changed its fiscal year end from December 31 to July 31, effective
July 31, 1997.
12
<PAGE>
EVERGREEN FUND FOR TOTAL RETURN -- CLASS A SHARES
(formerly Keystone Fund For Total Return)
<TABLE>
<CAPTION>
CLASS A SHARES
----------------------------------------------------------
EIGHT MONTHS YEAR ENDED NOVEMBER 30,
ENDED ----------------------------------------
JULY 31, 1997# 1996 1995 1994 1993
-------------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period............................. $17.33 $13.83 $11.75 $12.31 $12.06
-------------- ------- ------- ------- -------
Income from investment operations
Net investment income.......................................... 0.18 0.26 0.25 0.24 0.21
Net realized and unrealized gain (loss) on investments......... 3.34 3.83 2.80 (0.56) 1.31
-------------- ------- ------- ------- -------
Total from investment operations............................. 3.52 4.09 3.05 (0.32) 1.52
-------------- ------- ------- ------- -------
Less distributions from
Net investment income.......................................... (0.16) (0.26) (0.25) (0.24) (0.21)
In excess of net investment income............................. 0 0 (0.07) 0 (0.03)
Net realized gains on investments.............................. 0 (0.33) (0.65) 0 (1.03)
-------------- ------- ------- ------- -------
Total distributions.......................................... (0.16) (0.59) (0.97) (0.24) (1.27)
-------------- ------- ------- ------- -------
Net asset value, end of period................................... $20.69 $17.33 $13.83 $11.75 $12.31
=========== ======== ======== ======== ========
TOTAL RETURN+.................................................... 20.40% 29.83% 26.57% (2.65%) 12.67%
RATIOS/SUPPLEMENTAL DATA:
Ratios to average net assets:
Total expenses................................................. 1.24%++ 1.41% 1.69% 1.59% 1.85%
Total expenses, excluding indirectly paid expenses............. 1.22%++ 1.39% 1.67% N/A N/A
Total expenses, excluding fee waivers & expense
reimbursements............................................... N/A N/A N/A N/A N/A
Net investment income.......................................... 1.46%++ 1.66% 1.94% 1.93% 1.63%
Portfolio turnover rate.......................................... 41% 41% 77% 57% 92%
Average commission rate paid per share........................... $0.0501 $0.0037 N/A N/A N/A
Net assets, end of period (thousands)............................ $47,812 $40,487 $27,037 $23,162 $26,367
=========== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
--------------------------------------------------------------
1992 1991 1990 1989 1988 1987*
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period........................ $11.45 $10.29 $10.89 $9.41 $8.59 $10.00
------- ------- ------- ------- ------- -------
Income from investment operations
Net investment income..................................... 0.23 0.34 0.41 0.42 0.46 0.30
Net realized and unrealized gain (loss) on investments.... 1.19 1.38 (0.61) 2.01 0.89 (1.47)
------- ------- ------- ------- ------- -------
Total from investment operations........................ 1.42 1.72 (0.20) 2.43 1.35 (1.17)
------- ------- ------- ------- ------- -------
Less distributions from
Net investment income..................................... (0.23) (0.35) (0.40) (0.42) (0.53) (0.24)
In excess of net investment income........................ (0.05) (0.05) 0 0 0 0
Net ralized gains on investments.......................... (0.53) (0.16) 0 (0.53) 0 0
------- ------- ------- ------- ------- -------
Total distributions..................................... (0.81) (0.56) (0.40) (0.95) (0.53) (0.24)
------- ------- ------- ------- ------- -------
Net asset value, end of period.............................. $12.06 $11.45 $10.29 $10.89 $9.41 $8.59
======= ======= ======= ======= ======= =======
TOTAL RETURN+............................................... 12.56% 16.70% (1.85%) 26.17% 15.98% 11.94%
RATIOS/SUPPLEMENTAL DATA:
Ratios to average net assets:
Total expenses............................................ 1.85% 1.88% 2.00% 2.00% 1.47% 1.00%+++
Total expenses, excluding indirectly paid expenses........ N/A N/A N/A N/A N/A N/A
Total expenses, excluding fee waivers & expense
reimbursements.......................................... N/A N/A 2.41% 2.48% 2.92% 4.77%+++
Net investment income..................................... 1.87% 2.98% 3.85% 3.94% 4.87% 4.94%+++
Portfolio turnover rate..................................... 66% 43% 51% 50% 64% 16%
Average commission rate paid per share...................... N/A N/A N/A N/A N/A N/A
Net assets, end of period (thousands)....................... $23,607 $22,974 $22,080 $22,764 $20,735 $7,672
======== ======== ======== ======== ======== =======
</TABLE>
- -------------
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
+++ Annualized for the period from April 14, 1987 (commencement of investment
operations) to November 30, 1987.
# The Fund changed its fiscal year end from November 30 to July 31, effective
July 31, 1997.
* For the period from February 13, 1987 (commencement of operations) to
November 30, 1987.
13
<PAGE>
EVERGREEN FUND FOR TOTAL RETURN -- CLASS B SHARES
(formerly Keystone Fund For Total Return)
<TABLE>
<CAPTION>
CLASS B SHARES
----------------------------------------------------------
EIGHT MONTHS YEAR ENDED NOVEMBER 30,
ENDED ----------------------------------------
JULY 31, 1997# 1996 1995 1994 1993*
-------------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period............................. $17.31 $13.84 $11.77 $12.32 $12.65
-------------- ------- ------- ------- -------
Income from investment operations
Net investment income.......................................... 0.09 0.15 0.15 0.15 0.10
Net realized and unrealized gain (loss) on investments......... 3.31 3.80 2.82 (0.56) 0.74
-------------- ------- ------- ------- -------
Total from investment operations............................. 3.40 3.95 2.97 (0.41) 0.84
-------------- ------- ------- ------- -------
Less distributions from
Net investment income.......................................... (0.08) (0.15) (0.15) (0.14) (0.10)
In excess of net investment income............................. 0 0 (0.10) 0 (0.04)
Net realized gains on investments.............................. 0 (0.33) (0.65) 0 (1.03)
-------------- ------- ------- ------- -------
Total distributions.......................................... (0.08) (0.48) (0.90) (0.14) (1.17)
-------------- ------- ------- ------- -------
Net asset value, end of period................................... $20.63 $17.31 $13.84 $11.77 $12.32
============== ======= ======= ======= ========
TOTAL RETURN+.................................................... 19.68% 28.73% 25.59% (3.36%) 6.68%
RATIOS/SUPPLEMENTAL DATA:
Ratios to average net assets:
Total expenses................................................. 2.02%++ 2.18% 2.47% 2.31% 2.64%++
Total expenses, excluding indirectly paid expenses............. 2.00%++ 2.16% 2.46% N/A N/A
Net investment income.......................................... 0.58%++ 0.88% 1.06% 1.27% 0.84%++
Portfolio turnover rate.......................................... 41% 41% 77% 57% 92%
Average commission rate paid per share........................... $0.0501 $0.0037 N/A N/A N/A
Net assets, end of period (thousands)............................ $94,309 $43,526 $20,605 $7,314 $4,283
============== ======= ======= ======= ========
</TABLE>
- -------------
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from February 1, 1993 (commencement of class operations) to
November 30, 1993.
# The Fund changed its fiscal year end from November 30 to July 31, effective
July 31, 1997.
14
<PAGE>
EVERGREEN FUND FOR TOTAL RETURN -- CLASS C SHARES
(formerly Keystone Fund For Total Return)
<TABLE>
<CAPTION>
CLASS C SHARES
----------------------------------------------------------
EIGHT MONTHS YEAR ENDED NOVEMBER 30,
ENDED ----------------------------------------
JULY 31, 1997# 1996 1995 1994 1993*
-------------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period............................. $17.32 $13.85 $11.78 $12.33 $12.65
-------------- ------- ------- ------- -------
Income from investment operations
Net investment income.......................................... 0.09 0.14 0.16 0.15 0.10
Net realized and unrealized gain (loss) on investments......... 3.32 3.81 2.81 (0.56) 0.75
-------------- ------- ------- ------- -------
Total from investment operations............................. 3.41 3.95 2.97 (0.41) 0.85
-------------- ------- ------- ------- -------
Less distributions from
Net investment income.......................................... (0.08) (0.15) (0.16) (0.14) (0.10)
In excess of net investment income............................. 0 0 (0.09) 0 (0.04)
Net realized gain on investments............................... 0 (0.33) (0.65) 0 (1.03)
-------------- ------- ------- ------- -------
Total distributions.......................................... (0.08) (0.48) (0.90) (0.14) (1.17)
-------------- ------- ------- ------- -------
Net asset value, end of period................................... $20.65 $17.32 $13.85 $11.78 $12.33
============== ======= ======= ======= =======
TOTAL RETURN+.................................................... 19.73% 28.71% 25.57% (3.36%) 6.76%
RATIOS/SUPPLEMENTAL DATA:
Ratios to average net assets:
Total expenses................................................. 2.01%++ 2.17% 2.47% 2.34% 2.64%++
Total expenses, excluding indirectly paid expenses............. 1.99%++ 2.15% 2.44% N/A N/A
Net investment income.......................................... 0.66%++ 0.89% 1.16% 1.21% 0.83%++
Portfolio turnover rate.......................................... 41% 41% 77% 57% 92%
Average commission rate paid per share........................... $0.0501 $0.0037 N/A N/A N/A
Net assets, end of period (thousands)............................ $21,125 $14,562 $9,503 $5,968 $5,030
============== ======= ======= ======= =======
- -------------
</TABLE>
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from February 1, 1993 (commencement of class operations) to
November 30, 1993.
# The Fund changed its fiscal year end from November 30 to July 31, effective
July 31, 1997.
15
<PAGE>
EVERGREEN INCOME AND GROWTH FUND
(FORMERLY EVERGREEN TOTAL RETURN FUND)
CLASS A AND B SHARES
<TABLE>
<CAPTION>
CLASS A SHARES
--------------------------------------------------------
SIX MONTHS YEAR ENDED JANUARY 31,
ENDED -----------------------------------
JULY 31, 1997# 1997 1996 1995*
-------------- ------- ------- -------
<S> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period............................... $21.79 $20.15 $17.28 $17.09
-------------- ------- ------- -------
Income from investment operations
Net investment income............................................ 0.52 1.02 1.01 0.02
Net realized and unrealized gain on investments.................. 2.15 1.67 2.94 0.17
-------------- ------- ------- -------
Total from investment operations............................... 2.67 2.69 3.95 0.19
-------------- ------- ------- -------
Less distributions from
Net investment income............................................ (0.52) (1.05) (1.08) 0
-------------- ------- ------- -------
Total distributions............................................ (0.52) (1.05) (1.08) 0
-------------- ------- ------- -------
Net asset value, end of period..................................... $23.94 $21.79 $20.15 $17.28
============== ======= ======= =======
TOTAL RETURN+...................................................... 12.45% 13.80% 23.40% 1.10%
RATIOS/SUPPLEMENTAL DATA:
Ratios to average net assets:
Total expenses................................................... 1.45%++ 1.44% 1.36% 1.45%++
Total expenses, excluding indirectly paid expenses............... 1.45%++ N/A N/A N/A
Total expenses, excluding fee waivers & expense reimbursements... N/A N/A 2.50% N/A
Interest expense................................................. N/A 0.03% N/A N/A
Net investment income............................................ 4.69%++ 4.93% 5.39% 4.09%++
Portfolio turnover rate............................................ 72% 168% 138% 151%
Average commission rate paid per share............................. $0.0487 $0.0491 N/A N/A
Net assets, end of period (thousands).............................. $11,955 $9,678 $4,412 $119
============== ======= ======= =======
</TABLE>
- -------------
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from January 3, 1995 (commencement of Class operations) to
January 31, 1995.
# The Fund changed its fiscal year end from January 31 to July 31, effective
July 31, 1997.
<TABLE>
<CAPTION>
CLASS B SHARES
-------------------------------------------------------
SIX MONTHS YEAR ENDED JANUARY 31,
ENDED ----------------------------------
JULY 31, 1997# 1997 1996 1995*
-------------- ------- ------- ------
<S> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period................................. $21.69 $20.08 $17.28 $17.09
-------------- ------- ------- ------
Income from investment operations
Net investment income.............................................. 0.43** 0.89 0.91 0.02
Net realized and unrealized gain on investments.................... 2.15 1.64 2.87 0.17
-------------- ------- ------- ------
Total from investment operations................................. 2.58 2.53 3.78 0.19
-------------- ------- ------- ------
Less distributions from
Net investment income.............................................. (0.46) (0.92) (0.98) 0
-------------- ------- ------- ------
Total distributions.............................................. (0.46) (0.92) (0.98) 0
-------------- ------- ------- ------
Net asset value, end of period....................................... $23.81 $21.69 $20.08 $17.28
============== ======= ======= ======
TOTAL RETURN+........................................................ 12.06% 13.00% 22.40% 1.10%
RATIOS/SUPPLEMENTAL DATA:
Ratios to average net assets:
Total expenses..................................................... 2.20%++ 2.19% 2.11% 2.23%++
Total expenses, excluding indirectly paid expenses................. 2.20%++ N/A N/A N/A
Total expenses, excluding fee waivers & expense reimbursements..... N/A N/A 2.25% N/A
Interest expense................................................... N/A 0.03% N/A N/A
Net investment income.............................................. 3.94%++ 4.17% 4.69% 3.23%++
Portfolio turnover rate.............................................. 72% 168% 138% 151%
Average commission rate paid per share............................... $0.0487 $0.0491 N/A N/A
Net assets, end of period (thousands)................................ $43,977 $35,323 $14,750 $599
============== ======= ======= ======
</TABLE>
- -------------
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from January 3, 1995 (commencement of operations) to January
31, 1995.
** Calculated based on average shares outstanding.
# The Fund changed its fiscal year end from January 31 to July 31, effective
July 31, 1997.
16
<PAGE>
EVERGREEN INCOME AND GROWTH FUND
(FORMERLY EVERGREEN TOTAL RETURN FUND)
CLASS C SHARES
<TABLE>
<CAPTION>
CLASS C SHARES
------------------------------------------------------
SIX MONTHS YEAR ENDED JANUARY 31,
ENDED ---------------------------------
JULY 31, 1997# 1997 1996 1995*
-------------- ------- ------ ------
<S> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period................................ $21.69 $20.08 $17.27 $17.09
-------------- ------- ------ ------
Income from investment operations
Net investment income............................................. 0.44** 0.87 0.90 0.01
Net realized and unrealized gain on investments................... 2.14 1.66 2.89 0.17
-------------- ------- ------ ------
Total from investment operations................................ 2.58 2.53 3.79 0.18
-------------- ------- ------ ------
Less distributions from
Net investment income............................................. (0.46) (0.92) (0.98) 0
-------------- ------- ------ ------
Total distributions............................................. (0.46) (0.92) (0.98) 0
-------------- ------- ------ ------
Net asset value, end of period...................................... $23.81 $21.69 $20.08 $17.27
============== ======= ====== ======
TOTAL RETURN+....................................................... 12.06% 12.90% 22.40% 1.10%
RATIOS/SUPPLEMENTAL DATA:
Ratios to average net assets:
Total expenses.................................................... 2.20%++ 2.19% 2.11% 2.22%++
Total expenses, excluding indirectly paid expenses................ 2.20%++ N/A N/A N/A
Total expenses, excluding fee waivers & expense reimbursements.... N/A N/A 13.03% N/A
Interest expense.................................................. N/A 0.03% N/A N/A
Net investment income............................................. 4.06%++ 4.15% 4.67% 2.68%++
Portfolio turnover rate............................................. 72% 168% 138% 151%
Average commission rate paid per share.............................. $0.0487 $0.0491 N/A N/A
Net assets, end of period (thousands)............................... $950 $982 $523 $24
============== ======= ====== ======
</TABLE>
- -------------
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from January 3, 1995 (commencement of operations) to January
31, 1995.
** Calculated based on average shares outstanding.
# The Fund changed its fiscal year end from January 31 to July 31, effective
July 31, 1997.
17
<PAGE>
EVERGREEN SMALL CAP EQUITY INCOME FUND ONLY
Under normal circumstances, the Fund will invest at least 65% of its
assets in equity securities (including convertible debt securities) of companies
that, at the time of purchase, have "total market capitalization" -- present
market value per share multiplied by the total number of shares
outstanding -- of less than $1 billion. The Fund may invest up to 35% of its
total assets in equity securities of companies that at the time of purchase have
a total market capitalization of $1 billion or more, and in excess of that
percentage during temporary defensive periods.
EVERGREEN GROWTH AND INCOME FUND ONLY
The portfolio managers for Evergreen Growth and Income Fund are Stephen
A. Lieber and Gary R. Buesser. Mr. Lieber is Chairman and Co-Chief Executive
Officer of Lieber & Company and Evergreen Asset Management Corp. He was the
founding Partner of Lieber & Company in 1969 and served as Senior Partner until
June, 1994. He was a founding General Partner of Vanden Broeck, Lieber & Company
from 1956 to 1969. Mr. Buesser joined Lieber & Company as an analyst in 1996.
Previously, he was a Portfolio Manager/Analyst with Cowen Asset Management and
Shearson Lehman Brothers. Prior to managing Evergreen Growth and Income Fund,
Mr. Buesser worked as an associate portfolio manager on the Evergreen Foundation
Fund and as primary manager for pension and non-profit portfolios. He is a
member of the New York Society of Security Analysts and The Association for
Investment Management and Research.
EVERGREEN INCOME AND GROWTH FUND ONLY
FOREIGN ISSUERS. The Fund may invest up to 50% of its assets in the
securities of foreign issuers either directly or in the form of American
Depositary Receipts, European Depositary Receipts, Global Depositary Receipts or
other securities convertible into securities of foreign issuers.
PORTFOLIO COMPOSITION. The third sentence of the third paragraph under
the caption "Investment Objectives and Policies -- Evergreen Income and Growth
Fund" is hereby amended to read as follows: Ordinarily, the Fund anticipates
that approximately 75% of its portfolio will consist of equity securities
(including convertible preferred stock) and the other 25% of debt securities
(including convertible debt securities).
FOREIGN CURRENCY TRANSACTIONS. The Fund may enter into forward contracts
for hedging purposes and to provide the proper currency to settle a securities
transaction at the time the transaction occurs. For information on the risks
associated with investing in foreign currency transactions see "Foreign Currency
Transactions" under the propectus caption "Options, Furutres and Derivatives."
INVESTMENT IN SMALL COMPANIES. The Fund may from time to time invest in
securities of little known or relatively small special situation companies. For
information on the risks associated with investing in such companies see
"Investment in Small Companies" under the prospectus caption "Special Risk
Considerations."
EVERGREEN GROWTH AND INCOME FUND AND EVERGREEN INCOME AND GROWTH FUND ONLY
Each Fund may purchase futures contracts, including futures contracts
based on securities indices, and write options on such contracts. The Fund
intends to enter into such contracts and related options for hedging purposes.
The Fund may enter into other types of futures contracts that may become
available and relate to the securities held by the Fund.
December 1, 1997
18
<PAGE>
AMENDMENT TO THE CLASS Y PROSPECTUS
OF
EVERGREEN GROWTH AND INCOME FUNDS
The Class Y Prospectus of the Funds is hereby amended to read as follows:
The respective Board of Trustees of each of the Funds has approved a
proposal to reorganize (the "Reorganization") each Fund into a corresponding
series (each a "Successor Fund") of Evergreen Equity Trust, a Delaware business
trust. If shareholders of a Fund approve the Reorganization and the conditions
of the Reorganization are satisfied, all of the assets and liabilities of the
Fund will be transferred to the corresponding Successor Fund and each
shareholder of the Fund will receive shares of the corresponding Successor Fund.
In connection with the Reorganizations, each Board has approved, subject to
shareholder approval, the reclassification of most Funds' investment objectives
from "fundamental" (i.e., changeable by shareholder vote only) to
"nonfundamental" (i.e., changeable by vote of the Board), the adoption by each
Fund of certain standardized investment restrictions, and the elimination or
reclassification from fundamental to nonfundamental of each Fund's other
currently fundamental investment restrictions.
The Reorganizations and related proposals are scheduled to be voted on at
a joint special meeting of shareholders to be held on December 15, 1997.
Information detailing each proposal was mailed to shareholders on October 27,
1997.
Each occurrence of the term "Evergreen Keystone" is hereby replaced with
"Evergreen."
The address of the Funds is 200 Berkeley Street, Boston, Massachusetts
02116.
You may exchange shares of the Funds for shares of another Evergreen Fund
by calling or writing to Evergreen Service Company or by using the Evergreen
Express Line. If the shares being tendered for exchange are still subject to a
contingent deferred sales charge or are eligible for conversion in a specified
time, such remaining charge or remaining time will carry over to the shares
being acquired in the exchange transaction.
KEYSTONE FUND FOR TOTAL RETURN ONLY
Keystone Fund for Total Return is now called "Evergreen Fund for Total
Return."
<PAGE>
- --------------------------------------------------------------------------------
EXPENSE INFORMATION
- --------------------------------------------------------------------------------
The table set forth below summarizes the shareholder transaction costs
associated with an investment in the Class Y shares of the Funds. For further
information see "Purchase and Redemption of Shares".
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES
<S> <C>
Maximum Sales Charge Imposed on Purchases None
Sales Charge on Dividend Reinvestments None
Contingent Deferred Sales Charge None
Redemption Fee None
Exchange Fee None
</TABLE>
The following table shows for the Fund the estimated annual operating
expenses (as a percentage of average net assets) attributable to Class Y shares,
together with examples of the cumulative effect of such expenses on a
hypothetical $1,000 investment for the periods specified assuming (i) a 5%
annual return and (ii) redemption at the end of each period.
EVERGREEN GROWTH AND INCOME FUND
<TABLE>
<CAPTION>
ANNUAL OPERATING
EXPENSES EXAMPLE
---------------- -------
<S> <C> <C> <C>
Management Fees 0.97%
After 1 Year $ 12
12b-1 Fees --
After 3 Years $ 38
Other Expenses 0.24%
After 5 Years $ 66
------
After 10 Years $ 147
Total 1.21%
------
------
</TABLE>
EVERGREEN VALUE FUND
<TABLE>
<CAPTION>
ANNUAL OPERATING
EXPENSES EXAMPLE
---------------- -------
<S> <C> <C> <C>
Management Fees 0.50%
After 1 Year $ 7
12b-1 Fees --
After 3 Years $21
Other Expenses 0.17%
After 5 Years $37
------
After 10 Years $83
Total .67%
------
------
</TABLE>
EVERGREEN INCOME AND GROWTH FUND
<TABLE>
<CAPTION>
ANNUAL OPERATING
EXPENSES EXAMPLE
---------------- -------
<S> <C> <C> <C>
Management Fees 0.98%
After 1 Year $ 12
12b-1 Fees --
After 3 Years $ 38
Other Expenses 0.22%
After 5 Years $ 66
------
After 10 Years $ 146
Total 1.20%
------
------
</TABLE>
EVERGREEN UTILITY FUND
<TABLE>
<CAPTION>
ANNUAL OPERATING
EXPENSES * EXAMPLE
---------------- -------
<S> <C> <C> <C>
Management Fees 0.31%
After 1 Year $ 7
12b-1 Fees --
After 3 Years $23
Other Expenses 0.42%
After 5 Years $41
------
After 10 Years $91
Total 0.73%
------
------
</TABLE>
2
<PAGE>
EVERGREEN SMALL CAP EQUITY INCOME FUND
<TABLE>
<CAPTION>
ANNUAL OPERATING
EXPENSES * EXAMPLE
---------------- -------
<S> <C> <C> <C>
Management Fees 1.00%
After 1 Year $ 14
12b-1 Fees --
After 3 Years $ 44
Other Expenses 0.39%
After 5 Years $ 76
------
After 10 Years $ 167
Total 1.39%
------
------
</TABLE>
EVERGREEN FUND FOR TOTAL RETURN
<TABLE>
<CAPTION>
ANNUAL OPERATING
EXPENSES ** EXAMPLE
---------------- -------
<S> <C> <C> <C>
Management Fees 0.63%
After 1 Year $10
12b-1 Fees --
After 3 Years $32
Other Expenses 0.38%
------
Total 1.01%
------
------
</TABLE>
*The annualized operating expenses and examples reflect fee waivers
and/or expense reimbursements for the fiscal period ended July 31, 1997. Actual
expenses for the period, excluding fee waivers and expense reimbursements, were
as follows:
<TABLE>
<S> <C>
Evergreen Utility Fund 0.94%
Evergreen Small Cap Equity Income Fund 1.59%
</TABLE>
The Funds' investment advisers may, at their own discretion, discontinue
these fee waivers and expense reimbursements at any time.
**The Fund's estimated annual operating expenses and example are for the
fiscal year ending July 31, 1998.
The purpose of the foregoing table is to assist an investor in
understanding the various costs and expenses that an investor in Class Y shares
of the Funds will bear directly or indirectly. The amounts set forth both in the
tables and in the examples are estimated amounts based on the experience of each
Fund's Y Class for the most recent fiscal period. Such amounts have been
restated to reflect current fee arrangements. THE EXAMPLES SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR ANNUAL RETURN. ACTUAL
EXPENSES AND ANNUAL RETURN MAY BE GREATER OR LESS THAN THOSE SHOWN. For a more
complete description of the various costs and expenses borne by the Funds see
"Management of the Funds".
3
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The tables on the following pages present, for each Fund, financial
highlights for a Class Y share outstanding throughout each period indicated. The
information in the tables for the five most recent fiscal years or the life of
the Fund if shorter has been audited by the respective Fund's independent
auditors as follows: for EVERGREEN UTILITY FUND by KPMG Peat Marwick LLP; for
EVERGREEN GROWTH AND INCOME FUND for the period ended July 31, 1997 and for the
year ended December 31, 1996 by KPMG Peat Marwick LLP, and for the period
January 3, 1995 through December 31, 1995 by other auditors; for EVERGREEN VALUE
FUND by KPMG Peat Marwick LLP; for EVERGREEN SMALL CAP EQUITY INCOME FUND for
the period ended July 31, 1997 and for the year ended December 31, 1996 by KPMG
Peat Marwick LLP and for the period January 3, 1995 through December 31, 1995 by
other auditors, for EVERGREEN FUND FOR TOTAL RETURN by KPMG Peat Marwick LLP;
and for EVERGREEN INCOME AND GROWTH FUND for the period ended July 31, 1997 and
for the year ended January 31, 1997 by Price Waterhouse LLP, and for each of the
years or periods ended from March 31, 1988 through January 31, 1996 by other
auditors. A report of KPMG Peat Marwick LLP or Price Waterhouse LLP, as the case
may be, on the audited information with respect to each Fund is incorporated by
reference in the Funds' Statement of Additional Information. The following
information for each Fund should be read in conjunction with the financial
statements and related notes which are incorporated by reference in the Funds'
Statement of Additional Information.
Further information about a Fund's performance is contained in the Fund's
annual report to shareholders, which may be obtained without charge.
EVERGREEN UTILITY FUND -- CLASS Y SHARES
<TABLE>
<CAPTION>
SEVEN MONTHS YEAR ENDED DECEMBER 31,
ENDED -------------------------------
JULY 31, 1997# 1996 1995 1994*
-------------- ------- ------ ------
<S> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value beginning of period............................... $10.58 $10.82 $9.00 $9.51
-------------- ------- ------ ------
Income from investment operations
Net investment income........................................... 0.25 0.44 0.47 0.37
Net realized and unrealized gain (loss) on investments.......... 0.88 0.03 2.27 (0.50)
-------------- ------- ------ ------
Total from investment operations............................. 1.13 0.47 2.74 (0.13)
-------------- ------- ------ ------
Less distributions from
Net investment income........................................... (0.25) (0.43) (0.47) (0.37)
In excess of net investment income.............................. 0 0 0 (0.01)
Net realized gain on investments................................ 0 (0.28) (0.45) 0
-------------- ------- ------ ------
Total distributions.......................................... (0.25) (0.71) (0.92) (0.38)
-------------- ------- ------ ------
Net asset value end of period..................................... $11.46 $10.58 $10.82 $9.00
-------------- ------- ------ ------
-------------- ------- ------ ------
TOTAL RETURN...................................................... 10.85% 4.50% 31.30% (1.60%)
RATIOS/SUPPLEMENTAL DATA:
Ratios to average net assets:
Total expenses.................................................. 0.73%++ 0.61% 0.54% 0.40%++
Total expenses, excluding indirectly paid expenses.............. 0.73%++ N/A N/A N/A
Total expenses, excluding fee waivers & expense
reimbursements............................................... 0.94%++ 0.89% 0.93% 1.24%++
Net investment income........................................... 4.06%++ 4.01% 4.76% 4.93%++
Portfolio turnover rate........................................... 50% 59% 88% 23%
Average commission rate paid per share............................ $0.0593 $0.0605 N/A N/A
Net assets end of period (thousands).............................. $1,627 $2,000 $7,791 $5,201
</TABLE>
- -------------
++ Annualized.
* For the period from February 28, 1994 (commencement of class operations) to
December 31, 1994.
# The Fund changed its fiscal year ended from December 31 to July 31, effective
July 31, 1997.
4
<PAGE>
EVERGREEN GROWTH AND INCOME FUND -- CLASS Y SHARES
<TABLE>
<CAPTION>
SEVEN MONTHS YEAR ENDED DECEMBER 31,
ENDED ----------------------------------------
JULY 31, 1997# 1996 1995 1994 1993
-------------- ------- ------ ------ ------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value beginning of period................................ $22.55 $18.64 $14.52 $15.41 $14.18
-------------- ------- ------ ------ ------
Income from investment operations
Net investment income............................................ 0.11 0.18 0.18 0.14 0.14
Net realized and unrealized gain (loss) on investments........... 4.73 4.25 4.59 0.12 1.91
-------------- ------- ------ ------ ------
Total from investment operations............................... 4.84 4.43 4.77 0.26 2.05
-------------- ------- ------ ------ ------
Less distributions from
Net investment income............................................ (0.10) (0.17) (0.17) (0.14) (0.14)
In excess of net investment income............................... 0** 0 0 0 0
Net realized gain on investments................................. 0 (0.35) (0.48) (1.01) (0.68)
-------------- ------- ------ ------ ------
Total distributions............................................ (0.10) (0.52) (0.65) (1.15) (0.82)
-------------- ------- ------ ------ ------
Net asset value end of period...................................... $27.29 $22.55 $18.64 $14.52 $15.41
-------------- ------- ------ ------ ------
-------------- ------- ------ ------ ------
TOTAL RETURN....................................................... 21.52% 23.80% 32.90% 1.70% 14.40%
RATIOS/SUPPLEMENTAL DATA:
Ratios to average net assets:
Total expenses................................................... 1.21%++ 1.16% 1.27% 1.33% 1.26%
Total expenses, excluding indirectly paid expenses............... 1.21%++ 1.16% N/A N/A N/A
Net investment income............................................ 0.82%++ 0.93% 1.11% 0.96% 0.99%
Portfolio turnover rate............................................ 6% 14% 17% 29% 28%
Average commission rate paid per share............................. $0.0603 $0.0566 N/A N/A N/A
Net assets end of period (millions)................................ $616 $442 $141 $73 $77
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------
1992 1991 1990 1989 1988* 1987*
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value beginning of period............................. $12.99 $10.72 $12.03 $10.62 $9.38 $10.05
------ ------ ------ ------ ------ ------
Income from investment operations
Net investment income......................................... 0.15 0.19 0.30 0.52 0.19 0.20
Net realized and unrealized gain (loss) on investments........ 1.65 2.58 (0.84) 2.17 2.10 (0.63)
------ ------ ------ ------ ------ ------
Total from investment operations............................ 1.80 2.77 (0.54) 2.69 2.29 (0.43)
------ ------ ------ ------ ------ ------
Less distributions from
Net investment income......................................... (0.15) (0.19) (0.30) (0.52) (0.19) (0.24)
In excess of net investment income............................ 0 0 0 0 0 0
Net realized gain on investments.............................. (0.46) (0.31) (0.47) (0.76) (0.86) 0
------ ------ ------ ------ ------ ------
Total distributions......................................... (0.61) (0.50) (0.77) (1.28) (1.05) (0.24)
------ ------ ------ ------ ------ ------
Net asset value end of period................................... $14.18 $12.99 $10.72 $12.03 $10.62 $9.38
------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------
TOTAL RETURN.................................................... 13.80% 25.80% (4.50%) 25.40% 24.60% (4.30%)
RATIOS/SUPPLEMENTAL DATA:
Ratios to average net assets:
Total expenses................................................ 1.33% 1.41% 1.50% 1.54% 1.56% 1.76%
Total expenses, excluding indirectly paid expenses............ N/A N/A N/A N/A N/A N/A
Net investment income......................................... 1.18% 1.55% 2.62% 4.13% 1.70% 1.90%
Portfolio turnover rate......................................... 30% 23% 41% 53% 41% 48%
Average commission rate paid per share.......................... N/A N/A N/A N/A N/A N/A
Net assets end of period (millions)............................. $64 $48 $36 $32 $24 $21
</TABLE>
- -------------
++ Annualized.
* Net investment income based on the average monthly shares outstanding for the
period indicated.
** Less than one cent per share.
# The Fund changed its fiscal year end from December 31 to July 31, effective
July 31, 1997.
5
<PAGE>
EVERGREEN VALUE FUND -- CLASS Y SHARES
<TABLE>
<CAPTION>
SEVEN MONTHS YEAR ENDED DECEMBER 31,
ENDED -------------------------------------------------------------------
JULY 31, 1997# 1996 1995 1994 1993 1992 1991*
-------------- ------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value beginning of period....... $20.57 $20.45 $16.61 $17.63 $17.11 $17.08 $14.28
-------------- ------- ------ ------ ------ ------ ------
Income from investment operations
Net investment income................... 0.25 0.44 0.57 0.56 0.52 0.49 0.47
Net realized and unrealized gain (loss)
on investments........................ 4.03 3.49 4.72 (0.20) 1.12 0.90 3.53
-------------- ------- ------ ------ ------ ------ ------
Total from investment operations...... 4.28 3.93 5.29 0.36 1.64 1.39 4.00
-------------- ------- ------ ------ ------ ------ ------
Less distributions from
Net investment income................... (0.21) (0.47) (0.55) (0.56) (0.52) (0.49) (0.47)
Net realized gain on investments........ 0 (3.32) (0.90) (0.82) (0.58) (0.87) (0.73)
In excess of net investment income...... 0 0 0 0 (0.02) 0 0
In excess of net realized gain on
investments........................... 0 (0.02) 0 0 0 0 0
-------------- ------- ------ ------ ------ ------ ------
Total distributions................... (0.21) (3.81) (1.45) (1.38) (1.12) (1.36) (1.20)
-------------- ------- ------ ------ ------ ------ ------
Net asset value end of period............. $24.64 $20.57 $20.45 $16.61 $17.63 $17.11 $17.08
-------------- ------- ------ ------ ------ ------ ------
-------------- ------- ------ ------ ------ ------ ------
TOTAL RETURN.............................. 20.93% 19.20% 32.20% 2.10% 9.70% 8.30% 25.40%
RATIOS/SUPPLEMENTAL DATA:
Ratios to average net assets:
Total expenses.......................... 0.67%++ 0.66% 0.65% 0.68% 0.65% 0.68% 0.69%++
Total expenses, excluding indirectly
paid expenses......................... 0.67%++ N/A N/A N/A N/A N/A N/A
Total expenses, excluding fee waivers &
expense reimbursements................ N/A N/A N/A N/A N/A 0.69% 0.77%++
Net investment income................... 1.91%++ 2.02% 3.02% 3.21% 2.98% 2.90% 3.04%++
Portfolio turnover rate................... 6% 91% 53% 70% 46% 56% 69%
Average commission rate paid per share.... $0.0600 $0.0588 N/A N/A N/A N/A N/A
Net assets end of period (millions)....... $1,149 $996 $761 $507 $463 $326 $271
</TABLE>
- -------------
++ Annualized.
* For the period from January 3, 1991 (commencement of class operations) to
December 31, 1991.
# The Fund changed its fiscal year end from December 31 to July 31, effective
July 31, 1997.
6
<PAGE>
EVERGREEN SMALL CAP EQUITY INCOME FUND -- CLASS Y SHARES
<TABLE>
<CAPTION>
SEVEN MONTHS YEAR ENDED DECEMBER 31,
ENDED -------------------------------------------------
JULY 31, 1997# 1996 1995 1994 1993*
-------------- ------- ------ ------ ------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value beginning of period................ $13.12 $11.58 $9.70 $10.15 $10.00
-------------- ------- ------ ------ ------
Income from investment operations
Net investment income............................ 0.19** 0.38 0.38 0.34 0.10
Net realized and unrealized gain (loss) on
investments................................... 2.56 2.13 2.38 (0.41) 0.15
-------------- ------- ------ ------ ------
Total from investment operations.............. 2.75 2.51 2.76 (0.07) 0.25
-------------- ------- ------ ------ ------
Less distributions from
Net investment income............................ (0.15) (0.37) (0.38) (0.33) (0.10)
Net realized gain on investments................. (0.01) (0.60) (0.50) (0.05) 0
-------------- ------- ------ ------ ------
Total distributions........................... (0.16) (0.97) (0.88) (0.38) (0.10)
-------------- ------- ------ ------ ------
Net asset value end of period...................... $15.71 $13.12 $11.58 $9.70 $10.15
-------------- ------- ------ ------ ------
-------------- ------- ------ ------ ------
TOTAL RETURN....................................... 21.09% 22.40% 29.10% (0.70%) 2.50%
RATIOS/SUPPLEMENTAL DATA:
Ratios to average net assets:
Total expenses................................... 1.39%++ 1.50% 1.50% 1.48% 0.00%++
Total expenses, excluding indirectly paid
expenses...................................... 1.38%++ N/A N/A N/A N/A
Total expenses, excluding fee waivers & expense
reimbursements 1.59%++ 4.75% 4.34% 4.68% 4.39%++
Net investment income............................ 2.39%++ 3.36% 3.56% 3.72% 4.07%++
Portfolio turnover rate............................ 13% 50% 48% 9% 15%
Average commission rate paid per share............. $0.0665 $0.0635 N/A N/A N/A
Net assets end of period (thousands)............... $42,374 8,592 4,806 3,613 2,236
</TABLE>
- -------------
++ Annualized.
* For the period from October 1, 1993 (commencement of operations) to December
31, 1993.
** Calculation based on average shares outstanding during the period.
# The Fund changed its fiscal year end from December 31 to July 31, effective
July 31, 1997.
7
<PAGE>
EVERGREEN INCOME AND GROWTH FUND -- CLASS Y SHARES
(FORMERLY EVERGREEN TOTAL RETURN FUND)
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED JANUARY 31,
ENDED ---------------------------
JULY 31, 1997# 1997 1996 1995##
-------------- ------- ------ ------
<S> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period............................................ $21.81 $20.16 $17.28 $18.29
-------------- ------- ------ ------
Income from investment operations
Net investment income......................................................... 0.55 1.08 1.10 0.87
Net realized and unrealized gain (loss) on investments........................ 2.16 1.66 2.87 (0.55)
-------------- ------- ------ ------
Total from investment operations............................................ 2.71 2.74 3.97 0.32
-------------- ------- ------ ------
Less distributions from
Net investment income......................................................... (0.54) (1.09) (1.09) (1.08)
Net realized gain on investments.............................................. 0 0 0 (0.25)
-------------- ------- ------ ------
Total distributions......................................................... (0.54) (1.09) (1.09) (1.33)
-------------- ------- ------ ------
Net asset value, end of period.................................................. $23.98 $21.81 $20.16 $17.28
-------------- ------- ------ ------
-------------- ------- ------ ------
TOTAL RETURN.................................................................... 12.65% 14.10% 23.50% 1.90%
RATIOS/SUPPLEMENTAL DATA:
Ratios to average net assets
Total expenses................................................................ 1.20%++ 1.18% 1.19% 1.24%++
Total expenses, excluding indirectly paid expenses............................ 1.20%++ N/A N/A N/A
Interest expense.............................................................. N/A 0.03% N/A N/A
Net investment income......................................................... 4.97%++ 5.14% 5.70% 5.70%++
Portfolio turnover rate......................................................... 72% 168% 138% 151%
Average commission rate paid per share.......................................... $0.0487 $0.0491 N/A N/A
Net assets, end of period (millions)............................................ $900 $858 $914 $942
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988
------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period...................... $20.90 $18.82 $18.12 $18.26 $17.92 $17.11 $20.37
------ ------ ------ ------ ------ ------ ------
Income from investment operations
Net investment income................................... 1.08 1.11 1.08 1.02 1.07 1.12 1.06
Net realized and unrealized gain (loss) on
investments........................................... (1.41) 2.51 0.70 (0.08) 0.36 0.79 (2.64)
------ ------ ------ ------ ------ ------ ------
Total from investment operations...................... (0.33) 3.62 1.78 0.94 1.43 1.91 (1.58)
------ ------ ------ ------ ------ ------ ------
Less distributions from
Net investment income................................... (1.08) (1.08) (1.08) (1.08) (1.09) (1.08) (0.80)
Net realized gain on investments........................ (1.20) (0.46) 0 0 0 (0.02) (0.88)
------ ------ ------ ------ ------ ------ ------
Total distributions................................... (2.28) (1.54) (1.08) (1.08) (1.09) (1.10) (1.68)
------ ------ ------ ------ ------ ------ ------
Net asset value, end of period............................ $18.29 $20.90 $18.82 $18.12 $18.26 $17.92 $17.11
------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------
TOTAL RETURN.............................................. (2.10%) 20.20% 10.20% 5.80% 7.90% 1.30% (7.80%)
RATIOS/SUPPLEMENTAL DATA:
Ratios to average net assets
Total expenses.......................................... 1.18% 1.18% 1.21% 1.23% 1.18% 1.02% 1.01%
Total expenses, excluding indirectly paid expenses...... N/A N/A N/A N/A N/A N/A N/A
Interest expense........................................ N/A N/A N/A N/A N/A N/A N/A
Net investment income................................... 5.29% 5.65% 5.73% 5.90% 5.64% 6.36% 5.80%
Portfolio turnover rate................................... 106% 164% 137% 137% 89% 86% 81%
Average commission rate paid per share.................... N/A N/A N/A N/A N/A N/A N/A
Net assets, end of period (millions)...................... $1,065 $1,142 $1,032 $1,151 $1,292 $1,312 $1,346
</TABLE>
- -------------
++ Annualized.
# The Fund changed its fiscal year end from January 31 to July 31, effective
July 31, 1997.
## For the ten month period ended January 31, 1995. The Fund changed its fiscal
year end from March 31 to January 31, effective January 31, 1995.
8
<PAGE>
EVERGREEN FUND FOR TOTAL RETURN -- CLASS Y SHARES
(formerly Keystone Fund For Total Return)
<TABLE>
<CAPTION>
FOR THE PERIOD FROM
JANUARY 13, 1997
(DATE OF INITIAL
PUBLIC OFFERING)
TO JULY 31, 1997#
-------------------
<S> <C>
PER SHARE DATA:
Net asset value, beginning of period..................................................................... $17.74
-------------------
Income from investment operations
Net investment income.................................................................................. 0.18
Net realized and unrealized gain on investments........................................................ 2.86
-------------------
Total from investment operations..................................................................... 3.04
-------------------
Less distributions from
Net investment income.................................................................................. (0.16)
-------------------
Total distributions.................................................................................. (0.16)
-------------------
Net asset value, end of period........................................................................... $20.62
-------------------
-------------------
TOTAL RETURN............................................................................................. 17.22%
RATIOS/SUPPLEMENTAL DATA:
Ratios to average net assets
Total expenses......................................................................................... 1.34%++
Total expenses, excluding indirectly paid expenses..................................................... 1.34%++
Net investment income.................................................................................. 0.79%++
Portfolio turnover rate.................................................................................. 41%
Average commission rate paid per share................................................................... $0.0501
Net assets, end of period (thousands).................................................................... $93
</TABLE>
- -------------
++ Annualized.
# The Fund changed its fiscal year end from November 30 to July 31, effective
July 31, 1997.
9
<PAGE>
EVERGREEN SMALL CAP EQUITY INCOME FUND ONLY
Under normal circumstances, the Fund will invest at least 65% of its
assets in equity securities (including convertible debt securities) of companies
that, at the time of purchase, have "total market capitalization" -- present
market value per share multiplied by the total number of shares
outstanding -- of less than $1 billion. The Fund may invest up to 35% of its
total assets in equity securities of companies that at the time of purchase have
a total market capitalization of $1 billion or more, and in excess of that
percentage during temporary defensive periods.
EVERGREEN GROWTH AND INCOME FUND ONLY
The portfolio managers for Evergreen Growth and Income Fund are Stephen
A. Lieber and Gary R. Buesser. Mr. Lieber is Chairman and Co-Chief Executive
Officer of Lieber & Company and Evergreen Asset Management Corp. He was the
founding Partner of Lieber & Company in 1969 and served as Senior Partner until
June, 1994. He was a founding General Partner of Vanden Broeck, Lieber & Company
from 1956 to 1969. Mr. Buesser joined Lieber & Company as an analyst in 1996.
Previously, he was a Portfolio Manager/Analyst with Cowen Asset Management and
Shearson Lehman Brothers. Prior to managing Evergreen Growth and Income Fund,
Mr. Buesser worked as an associate portfolio manager on the Evergreen Foundation
Fund and as primary manager for pension and non-profit portfolios. He is a
member of the New York Society of Security Analysts and The Association for
Investment Management and Research.
EVERGREEN INCOME AND GROWTH FUND ONLY
FOREIGN ISSUERS. The Fund may invest up to 50% of its assets in the
securities of foreign issuers either directly or in the form of American
Depositary Receipts, European Depositary Receipts, Global Depositary Receipts or
other securities convertible into securities of foreign issuers.
PORTFOLIO COMPOSITION. The third sentence of the third paragraph under
the caption "Investment Objectives and Policies -- Evergreen Income and Growth
Fund" is hereby amended to read as follows: Ordinarily, the Fund anticipates
that approximately 75% of its portfolio will consist of equity securities
(including convertible preferred stock) and the other 25% of debt securities
(including convertible debt securities).
FOREIGN CURRENCY TRANSACTIONS. The Fund may enter into forward contracts
for hedging purposes and to provide the proper currency to settle a securities
transaction at the time the transaction occurs. For information on the risks
associated with investing in foreign currency transactions see "Foreign Currency
Transacations "under the prospectus caption "Options, Futures and Derivatives."
INVESTMENT IN SMALL COMPANIES. The Fund may from time to time invest in
securities of little known or relatively small special situation companies. For
information on the risks associated with investing in such companies see
"Investment in Small Companies" under the prospectus caption "Special Risk
Considerations."
EVERGREEN GROWTH AND INCOME FUND AND EVERGREEN INCOME AND GROWTH FUND ONLY
Each Fund may purchase futures contracts, including futures contracts
based on securities indices, and write options on such contracts. The Fund
intends to enter into such contracts and related options for hedging purposes.
The Fund may enter into other types of futures contracts that may become
available and relate to the securities held by the Fund.
December 1, 1997
<PAGE>
EVERGREEN GROWTH AND INCOME FUNDS
AMENDMENT TO THE
STATEMENT OF ADDITIONAL INFORMATION
Dated December 1, 1997
Growth and Income Funds
Evergreen Growth and Income Fund ("Growth and Income")
Evergreen Income and Growth Fund (formerly Evergreen Total Return Fund)
("Income and Growth")
Evergreen Small Cap Equity Income Fund ("Small Cap")
Evergreen Utility Fund ("Utility")
Evergreen Value Fund ("Value")
Evergreen Fund for Total Return ("Total Return")
This Statement of Additional Information pertains to all classes of shares
of the Funds listed above. It is not a prospectus and should be read in
conjunction with the Prospectus dated April 1, 1997, as supplemented from time
to time, for the Growth and Income Funds for the specific Fund in which you are
making or contemplating an investment. The Evergreen Growth and Income Funds are
offered through two separate prospectuses: one offering Class A, Class B and
Class C shares and a separate prospectus offering Class Y shares.
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
Investment Objectives and Policies.............................................2
Investment Restrictions........................................................6
Non-Fundamental Operating Policies............................................12
Trustees .....................................................................13
Investment Advisers...........................................................21
Distribution Plans and Agreements.............................................25
Allocation of Brokerage.......................................................28
Additional Tax Information....................................................30
Net Asset Value...............................................................32
Purchase of Shares............................................................33
General Information about the Funds...........................................43
Performance Information.......................................................44
General .....................................................................49
Finincial Statements..........................................................49
Appendix "A"..................................................................50
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES AND POLICIES
(See also "Description of the Funds - Investment Objectives
and Policies" in each Fund's Prospectus)
- --------------------------------------------------------------------------------
The investment objective(s) of each Fund and a description of the
securities in which each Fund may invest is set forth under "Description of the
Funds-Investment Objectives and Policies" in the relevant Prospectus. The
investment objectives are fundamental and cannot be changed without the approval
of shareholders. The following expands upon the discussion in the Prospectus
regarding certain investments of each Fund.
U.S. Government Securities (All Funds)
The types of U.S. government securities in which the Funds may invest
generally include direct obligations of the U.S. Treasury such as U. S. Treasury
bills, notes and bonds and obligations issued or guaranteed by U.S. government
agencies or instrumentalities. These securities are backed by:
(i) the full faith and credit of the U.S. Treasury;
(ii) the issuer's right to borrow from the U.S. Treasury;
(iii) the discretionary authority of the U.S. government to purchase
certain obligations of agencies or instrumentalities; or
(iv) the credit of the agency or instrumentality issuing the obligations.
Examples of agencies and instrumentalities that may not always receive
financial support from the U.S. government are:
(i) Farm Credit System, including the National Bank for Cooperatives, Farm
Credit Banks and Banks for Cooperatives;
(ii) Farmers Home Administration;
(iii) Federal Home Loan Banks;
(iv) Federal Home Loan Mortgage Corporation;
(v) Federal National Mortgage Association; and
(vi) Student Loan Marketing Association.
Restricted and Illiquid Securities (All Funds)
Each Fund may invest in restricted and illiquid securities. The ability of
the Board of Trustees ("Trustees") to determine the liquidity of certain
restricted securities is permitted under a Securities and Exchange Commission
("SEC") Staff position set forth in the adopting release for Rule 144A under the
Securities Act of 1933 (the "Rule"). The Rule is a non-exclusive, safe-harbor
for certain secondary market transactions involving securities subject to
restrictions on resale under federal securities laws. The Rule provides an
exemption from registration for resales of otherwise restricted securities to
qualified institutional buyers. The Rule was expected to further enhance the
liquidity of the secondary market for securities eligible for sale under the
Rule. The Funds which invest in Rule 144A securities believe 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 Trustees consider the following criteria in determining the
liquidity of certain restricted securities:
(i) the frequency of trades and quotes for the security;
(ii) the number of dealers willing to purchase or sell the security and the
number of other potential buyers;
(iii) dealer undertakings to make a market in the security; and
(iv) the nature of the security and the nature of the marketplace trades.
Restricted securities would generally be acquired either from institutional
investors who originally acquired the securities in private placements or
directly from the issuers of the securities in private placements. Restricted
securities and securities that are not readily marketable may sell at a discount
from the price they would bring if freely marketable.
When-Issued and Delayed Delivery Securities (Utility, Value and Total Return)
Securities purchased on a when-issued or delayed delivery basis are made to
secure what is considered to be an advantageous price or yield for a Fund. No
fees or other expenses, other than normal transaction costs, are incurred.
However, liquid assets of a Fund sufficient to make payment for the securities
to be purchased are segregated on the Fund's records at the trade date. These
assets are marked to market daily and are maintained until the transaction has
been settled. Utility and Value do not intend to engage in when- issued and
delayed delivery transactions to an extent that would cause the segregation of
more than 20% of the total value of their assets. Total Return does not intend
to invest more than 5% of its net assets in when-issued or delayed delivery
transactions.
Lending of Portfolio Securities (All Funds)
Each Fund may lend its portfolio securities to generate income and to
offset expenses. 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.
Reverse Repurchase Agreements (Small Cap, Utility, Value and Total Return)
Reverse repurchase agreements are similar to borrowing cash. In a reverse
repurchase agreement, a Fund transfers possession of a portfolio instrument to
another person, such as a financial institution, broker, or dealer, in return
for a percentage of the instrument's market value in cash, and agrees that on a
stipulated date in the future the Fund will repurchase the portfolio instrument
by remitting the original consideration plus interest at an agreed upon rate.
The use of reverse repurchase agreements may enable a Fund to avoid selling
portfolio instruments at a time when a sale may be deemed to be disadvantageous,
but the ability to enter into reverse repurchase agreements does not ensure that
the Fund will be able to avoid selling portfolio instruments at a
disadvantageous time.
When effecting reverse repurchase agreements, liquid assets of a Fund, in a
dollar amount sufficient to make payment for the obligations to be purchased,
are segregated at the trade date. These securities are marked to market daily
and maintained until the transaction is settled.
Options and Futures Transactions (All Funds)
Options which Utility and Value trade must be listed on national securities
exchanges.
Purchasing Put and Call Options on Financial Futures Contracts
Utility, Value and Total Return may purchase put and call options on
financial futures contracts (in the case of Utility and Value limited to options
on financial futures contracts for U.S. government securities). Unlike entering
directly into a futures contract, which requires the purchaser to buy a
financial instrument on a set date at an undetermined price, the purchase of a
put option on a futures contract entitles (but does not obligate) its purchaser
to decide on or before a future date whether to assume a short position at the
specified price.
A Fund may purchase put and call options on futures to protect portfolio
securities against decreases in value resulting from an anticipated increase in
market interest rates. Generally, if the hedged portfolio securities decrease in
value during the term of an option, the related futures contracts will also
decrease in value and the put option will increase in value. In such an event, a
Fund will normally close out its option by selling an identical put option. If
the hedge is successful, the proceeds received by the Fund upon the sale of the
put option plus the realized gain offsets the decrease in value of the hedged
securities.
Alternately, a Fund may exercise its put option to close out the position.
To do so, it would enter into a futures contract of the type underlying the
option. If the Fund neither closes out nor exercises an option, the option will
expire on the date provided in the option contract, and only the premium paid
for the contract will be lost.
Purchasing Options
Utility, Value and Total Return may purchase both put and call options on
their portfolio securities. These options will be used as a hedge to attempt to
protect securities which a Fund holds or will be purchasing against decreases or
increases in value. A Fund may purchase put and call options for the purpose of
offsetting previously written put and call options of the same series. If the
Fund is unable to effect a closing purchase transaction with respect to covered
options it has written, the Fund will not be able to sell the underlying
securities or dispose of assets held in a segregated account until the options
expire or are exercised.
Utility, Value and Total Return intend to purchase put and call options on
currency and other financial futures contracts for hedging purposes. A put
option purchased by a Fund would give it the right to assume a position as the
seller of a futures contract. A call option purchased by the Fund would give it
the right to assume a position as the purchaser of a futures contract. The
purchase of an option on a futures contract requires the Fund to pay a premium.
In exchange for the premium, the Fund becomes entitled to exercise the benefits,
if any, provided by the futures contract, but is not required to take any action
under the contract. If the option cannot be exercised profitably before it
expires, the Fund's loss will be limited to the amount of the premium and any
transaction costs.
Utility and Value currently do not intend to invest more than 5% of their
net assets in options transactions. Total Return will not purchase a put option
if, as a result of such purchase, more than 10% of its total assets would be
invested in premiums for such option.
"Margin" in Futures Transactions
Unlike the purchase or sale of a security, a Fund does not pay or receive
money upon the purchase or sale of a futures contract. Rather, a Fund is
required to deposit an amount of "initial margin" in cash or U.S. Treasury bills
with its custodian (or the broker, if legally permitted). The nature of initial
margin in futures transactions is different from that of margin in securities
transactions in that futures contract initial margin does not involve the
borrowing of funds by a Fund to finance the transactions. Initial margin is in
the nature of a performance bond or good faith deposit on the contract which is
returned to the Fund upon termination of the futures contract, assuming all
contractual obligations have been satisfied.
A futures contract held by a Fund is valued daily at the official
settlement price of the exchange on which it is traded. Each day the Fund pays
or receives cash, called "variation margin," equal to the daily change in value
of the futures contract. This process is known as "marking to market." Variation
margin does not represent a borrowing or loan by the Fund but is instead
settlement between the Fund and the broker of the amount one would owe the other
if the futures contract expired. In computing its daily net asset value, a Fund
will mark-to-market its open futures positions. The Fund is also required to
deposit and maintain margin when it writes call options on futures contracts.
Income and Growth and Growth and Income may write covered call options to a
limited extent on their portfolio securities ("covered options") in an attempt
to earn additional income. A Fund will write only covered call option contracts
and will receive premium income from the writing of such contracts. Income and
Growth and Growth and Income may purchase call options to close out a previously
written call option. In order to do so, the Fund will make a "closing purchase
transaction" -- the purchase of a call option on the same security with the same
exercise price and expiration date as the call option which it has previously
written. A Fund will realize a profit or loss from a closing purchase
transaction if the cost of the transaction is less or more than the premium
received from the writing of the option. If an option is exercised, a Fund
realizes a long-term or short-term gain or loss from the sale of the underlying
security and the proceeds of the sale are increased by the premium originally
received.
Junk Bonds (Growth and Income and Total Return)
Consistent with its strategy of investing in "undervalued" securities,
Growth and Income and Total Return may invest in lower medium and low-quality
bonds also known as "junk bonds" and may also purchase bonds in default if, in
the opinion of the Fund's investment adviser, there is significant potential for
capital appreciation. Total Return may invest without limit in debt securities
which are rated below investment grade. Growth and Income, however, will not
invest more than 5% of its total assets in debt securities which are rated below
investment grade. These bonds are regarded as speculative with respect to the
issuer's continuing ability to meet principal and interest payments. High yield
bonds may be more susceptible to real or perceived adverse economic and
competitive industry conditions than investment grade bonds. A projection of an
economic downturn, or higher interest rates, for example, could cause a decline
in high yield bond prices because such events could lessen the ability of highly
leveraged companies to make principal and interest payments on their debt
securities. In addition, the secondary trading market for high yield bonds may
be less liquid than the market for higher grade bonds, which can adversely
affect the ability to dispose of such securities.
- --------------------------------------------------------------------------------
INVESTMENT RESTRICTIONS
- --------------------------------------------------------------------------------
FUNDAMENTAL INVESTMENT RESTRICTIONS
Except as noted, the investment restrictions set forth below are
fundamental and may not be changed with respect to each Fund without the
affirmative vote of a majority of the outstanding voting securities of the Fund.
Where an asterisk (*) appears after a Fund's name, the relevant policy is
non-fundamental with respect to that Fund and may be changed by the Fund's
investment adviser without shareholder approval, subject to review and approval
by the Trustees. As used in this Statement of Additional Information and in the
Prospectus, "a majority of the outstanding voting securities of the Fund" means
the lesser of (1) the holders of more than 50% of the outstanding shares of
beneficial interest of the Fund or (2) 67% of the shares present if more than
50% of the shares are present at a meeting in person or by proxy.
1. Concentration of Assets in Any One Issuer
Neither Growth and Income nor Income and Growth may invest more than 5% of
their net 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.
None of Small Cap, Utility, Value or Total Return may invest more than 5%
of its 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. Ten Percent Limitation on Securities of Any One Issuer
None of Small Cap, Growth and Income or Income and Growth may purchase more
than 10% of any class of securities of any one issuer other than the U.S.
government and its agencies or instrumentalities.
Neither Value nor Utility may purchase more than 10% of the outstanding
voting securities of any one issuer.
Total Return 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.
3. Investment for Purposes of Control or Management
None of Growth and Income, Small Cap*, Income and Growth, Utility*, Value
or Total Return may invest in companies for the purpose of exercising control or
management.
4. Purchase of Securities on Margin
None of Growth and Income, Small Cap*, Income and Growth, Utility, Value or
Total Return may purchase securities on margin, 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.
5. Unseasoned Issuers
None of Income and Growth, Value*, Utility* or Total Return may invest more
than 5% of its total assets in securities of unseasoned issuers that have been
in continuous operation for less than three years, including operating periods
of their predecessors.
None of Growth and Income or Small Cap* may invest more than 15% of its
total assets (10% of total net assets in the case of Growth and Income) in
securities of unseasoned issuers that have been in continuous operation for less
than three years, including operating periods of their predecessors.
6. Underwriting
Growth and Income, Small Cap, Income and Growth, Utility, Value and Total
Return will not underwrite any issue of securities except as they may be deemed
an underwriter under the Securities Act of 1933 in connection with the sale of
securities in accordance with their investment objectives, policies and
limitations.
7. Interests in Oil, Gas or Other Mineral Exploration or Development
Programs.
None of Growth and Income, Small Cap or Income and Growth may purchase,
sell or invest in interests in oil, gas or other mineral exploration or
development programs.
Utility* will not purchase interests in oil, gas or other mineral
exploration or development programs or leases, although the Fund may purchase
the securities of other issuers which invest in or sponsor such programs.
Value will not purchase interests in oil, gas or other mineral exploration
or development programs or leases, although it may purchase the publicly traded
securities of companies engaged in such activities.
8. Concentration in Any One Industry
Neither Growth and Income nor Income and Growth may concentrate its
investments in any one industry, except that each Fund may invest up to 25% of
its total net assets in any one industry.
Small Cap may not invest 25% or more of its total 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. For
purposes of this restriction, utility companies, gas, electric, water and
telephone companies will be considered separate industries.
Value will not invest 25% or more of the value of its total assets in any
one industry except Value may invest 25% or more of its total assets in
securities issued or guaranteed by the U.S. government, its agencies or
instrumentalities.
Utility will not invest more than 25% of its 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.
Total Return will not purchase any security (other than 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 (i) there is no restriction with
respect to obligations issued or guaranteed by the U.S. government, its agencies
or instrumentalities; (ii) 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; (iii) 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 (iv) 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).
9. Warrants
None of Growth and Income, Income and Growth or Small Cap*, may invest more
than 5% of its net 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.
Utility* and Value* will not invest more than 5% of their net assets in
warrants, including those acquired in units or attached to other securities. For
purposes of this restriction, warrants acquired by the Funds in units or
attached to securities may be deemed to be without value.
10. Ownership by Trustees/Officers
None of Growth and Income, Small Cap*, Income and Growth, Utility* or
Value* may purchase or retain the securities of any issuer if (i) one or more
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 any 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.
11. Short Sales
None of Growth and Income or Income and Growth may make short sales of
securities unless, at the time of each such sale and thereafter while a short
position exists, each 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.
Small Cap,* may not make short sales of securities unless, at the time of
each such sale and thereafter while a short position exists, each 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).
Total Return will not make short sales of securities or maintain a short
position, unless at all times when a short position is open it owns an equal
amount of such securities or of securities which, without payment of any further
consideration are convertible into or exchangeable for securities of the same
issue as, and equal in amount to, the securities sold short.
Utility and Value will not sell any securities short.
12. Lending of Funds and Securities
Small Cap may not lend its funds to other persons, except through the
purchase of a portion of an issue of debt securities publicly distributed or the
entering into of repurchase agreements.
None of Growth and Income or Income and Growth may lend its funds to other
persons, except through the purchase of a portion of an issue of debt securities
publicly distributed.
Small Cap 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.
Growth and Income 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
value of the loaned securities provided that the aggregate amount of such loans
shall not exceed 30% of the Fund's net assets.
Income and Growth 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 (100% of the
value of the loaned securities for Income and Growth), including accrued
interest, provided that the aggregate amount of such loans shall not exceed 30%
of the Fund's net assets.
Utility will not lend any of its assets, except 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,
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.
Value will not lend any of its assets except that it may purchase or hold
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 by which the Fund is governed or lend
portfolio securities valued at not more than 5% of its total assets to
broker-dealers.
Total Return will not make loans, except that the Fund may 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.
13. Commodities
Small Cap may not purchase, sell or invest in 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).
None of Growth and Income or Income and Growth may purchase, sell or invest
in commodities or commodity contracts.
None of Utility, Value or Total Return will purchase or sell commodities or
commodity contracts; however, each Fund may enter into futures contracts on
financial instruments or currency and sell or buy options on such contracts.
14. Real Estate
Small Cap may not purchase or invest in real 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).
None of Growth and Income or Income and Growth may purchase, sell or invest
in real estate or interests in real estate, except that each Fund may purchase,
sell or invest in marketable securities of companies holding real estate or
interests in real estate, including real estate investment trusts.
None of Utility or Value will buy or sell real estate although 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. Neither Utility nor Value will invest in limited
partnership interests in real estate.
Total Return will not purchase or sell real estate, except that it may
purchase and sell securities secured by real estate and securities of companies
which invest in real estate.
15. Borrowing, Senior Securities, Repurchase Agreements and Reverse
Repurchase Agreements
Income and Growth 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.
Small Cap 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; 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.
Growth and Income may not borrow money except from banks as a temporary
measure 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 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. Growth and Income may not issue senior securities, 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.
Utility will not issue senior securities except that the Fund may borrow
money and engage in 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 the 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 portfolio by enabling it to, for example, meet redemption requests when the
liquidation of portfolio securities is deemed to be inconvenient or
disadvantageous. Utility will not purchase any securities while borrowings in
excess of 5% of its total assets are outstanding. 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 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.
Value will not issue senior securities except that the Fund may borrow
money 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. 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.
Total Return will not borrow money or enter into reverse repurchase
agreements, except that the Fund may enter into reverse repurchase agreements or
borrow money from banks for temporary or emergency purposes in aggregate amounts
up to one-third 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. The Fund will 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. The Fund will not issue
senior securities; 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 the issuance of a senior security.
16. Joint Trading
None of Growth and Income, Small Cap* or Income and Growth may participate
on a joint or joint 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).
17. Options
Neither Growth and Income nor Income and Growth may write, purchase or sell
put or call options, or combinations thereof, except that each 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.
Utility* will not purchase put options on securities unless the securities
are held in the Fund's portfolio and not more than 5% of the Fund's total assets
would be invested in premiums on open put options. Utility* will not write call
options on securities unless securities are held in the Fund's portfolio or
unless the Fund is entitled to them in deliverable form without further payment
or after segregating cash in the amount of any further payment.
18. Investing in Securities of Other Investment Companies
Utility and Value will purchase 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.
Total Return may not purchase securities of other investment companies,
except as part of a merger, consolidation, purchase or assets or similar
transaction.
Each other Fund may purchase the securities of other investment companies,
except to the extent such purchases are not permitted by applicable law.
19. Restricted Securities
Value will not invest more than 10% of its net assets in securities subject
to restrictions on resale under the Securities Act of 1933.
Utility* will not invest more than 10% of the value of its net assets in
securities subject to restrictions on resale under the Securities Act of 1933,
except for commercial paper issued under Section 4(2) of the Securities Act of
1933 and certain other restricted securities which meet the criteria for
liquidity as established by the Trustees.
- --------------------------------------------------------------------------------
NON-FUNDAMENTAL OPERATING POLICIES
- --------------------------------------------------------------------------------
Certain Funds have adopted additional non-fundamental operating policies.
Operating policies may be changed by the Board of Trustees without a shareholder
vote.
1. Futures and Options Transactions
Small Cap will not: (i) sell futures contracts, purchase put options or
write call options if, as a result, more than 30% of the Fund's total assets
would be hedged with futures and options under normal conditions; (ii) purchase
futures contracts or write put options if, as a result, the Fund's total
obligations upon settlement or exercise of purchased futures contracts and
written put options would exceed 30% of its total assets; or (iii) purchase call
options if, as a result, the current value of option premiums for options
purchased by the Fund would exceed 5% of the Fund's total assets. These
limitations do not apply to options attached to, or acquired or traded together
with their underlying securities, and do not apply to securities that
incorporate features similar to options.
2. Illiquid Securities
None of Growth and Income, Small Cap or Income and Growth may invest more
than 15% of its net assets in illiquid securities and other securities which are
not readily marketable, including repurchase agreements which have a maturity of
longer than seven days, but excluding securities eligible for resale under Rule
144A of the Securities Act of 1933, as amended, which the Trustees have
determined to be liquid.
Utility will not invest more than 15% of its 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 and, in non-negotiable time deposits.
Except with respect to borrowing money (and with respect to Total Return,
including borrowing money), if a percentage limitation is adhered to at the time
of investment, a later increase or decrease in percentage resulting from any
change in value or net assets will not result in a violation of such
restriction.
- --------------------------------------------------------------------------------
TRUSTEES
- --------------------------------------------------------------------------------
The Trustees and executive officers of each trust, their ages, addresses
and principal occupations during the past five years are set forth below:
JAMES S. HOWELL (72), 4124 Crossgate Road, Charlotte, NC-Chairman of the
Evergreen group of mutual funds and Trustee. Retired Vice President of Lance
Inc. (food manufacturing); Chairman of the Distribution Comm. Foundation for the
Carolinas from 1989 to 1993.
RUSSELL A. SALTON, III, M.D. (49), 205 Regency Executive Park, Charlotte,
NC -Trustee. Medical Director, U.S. Healthcare of Charlotte, North Carolina
since 1996; President, Primary Physician Care from 1990 to 1996.
MICHAEL S. SCOFIELD (53), 212 S. Tryon Street Suite 980, Charlotte,
NC-Trustee. Attorney, Law Offices of Michael S. Scofield since 1969. Messrs.
Howell, Salton and Scofield are Trustees of all Evergreen Mutual Funds.
GERALD M. MCDONNELL (57), 821 Regency Drive, Charlotte, NC -Trustee. Sales
Representative with Nucor-Yamoto Inc. (steel producer) since 1988.
THOMAS L. McVERRY (58), 4419 Parkview Drive, Charlotte, NC-Trustee.
Director of Carolina Cooperative Federal Credit Union since 1990 and Rexham
Corporation from 1988 to 1990; Vice President of Rexham Industries, Inc.
(diversified manufacturer) from 1989 to 1990; Vice President-Finance and
Resources, Rexham Corporation from 1979 to 1990.
WILLIAM WALT PETTIT* (41), Holcomb and Pettit, P.A., 227 West Trade St.,
Charlotte, NC- Trustee. Partner in the law firm Holcomb and Pettit, P.A. since
1990. Messrs. McDonnell, McVerry and Pettit are Trustees of all Evergreen Mutual
Funds, except those established within the Evergreen Variable Trust.
LAURENCE B. ASHKIN (68), 180 East Pearson Street, Chicago, IL- Trustee.
Real estate developer and construction consultant since 1980; President of
Centrum Equities since 1987 and Centrum Properties, Inc. since 1980.
FOSTER BAM (70), Greenwich Plaza, Greenwich, CT- Trustee. Partner in the
law firm of Cummings and Lockwood since 1968. Messrs. Ashkin and Bam are
Trustees of all Evergreen Mutual Funds (excluded are those established within
the Evergreen Variable Trust and Evergreen Investment Trust).
FREDERICK AMLING (69) Trustee. Professor, Finance Department, George
Washington University; President, Amling & Company (investment advice); Member,
Board of Advisers, Credito Emilano (banking); and former Economics and Financial
Consultant, Riggs National Bank.
CHARLES A. AUSTIN III (61) Trustee. Investment Counselor to Appleton
Partners, Inc.; former Managing Director, Seaward Management Corporation
(investment advice); and former Director, Executive Vice President and
Treasurer, State Street Research & Management Company (investment advice).
GEORGE S. BISSELL* (67) Chairman of certain funds in the Evergreen group of
mutual funds, and Trustee. Chairman of the Board and Trustee of Anatolia
College; Trustee of University Hospital (and Chairman of its Investment
Committee); former Director and Chairman of the Board of Hartwell Keystone
Advisers, Inc. and former Chairman of the Board and Chief Executive Officer of
Keystone Investments, Inc.
EDWIN D. CAMPBELL (69) Trustee. Director and former Executive Vice
President, National Alliance of Business; former Vice President, Educational
Testing Services; former Dean, School of Business, Adelphi University; and
former Executive Director, Coalition of Essential Schools, Brown University.
CHARLES F. CHAPIN (67) Trustee. Former Group Vice President, Textron Corp.;
and former Director, Peoples Bank (Charlotte, NC).
K. DUN GIFFORD (57) Trustee. Chairman of the Board, Director, and Executive
Vice President, The London Harness Company; Managing Partner, Roscommon Capital
Corp.; Trustee, Cambridge College; Chairman Emeritus and Director, American
Institute of Food and Wine; Chief Executive Officer, Gifford Gifts of Fine
Foods; Chairman, Gifford, Drescher & Associates (environmental consulting);
President, Oldways Preservation and Exchange Trust (education); and former
Director, Keystone Investments, Inc. and Keystone Investment Management Company.
LEROY KEITH, JR. (57) Trustee. Director of Phoenix Total Return Fund and
Equifax, Inc.; Trustee of Phoenix Series Fund, Phoenix Multi-Portfolio Fund, and
The Phoenix Big Edge Series Fund; and former President, Morehouse College.
F. RAY KEYSER, JR. (69) Trustee and Advisor to the Boards of Trustees of
the Evergreen group of mutual funds. Counsel, Keyser, Crowley & Meub, P.C.;
Member, Governor's (VT) Council of Economic Advisers; Chairman of the Board and
Director, Central Vermont Public Service Corporation and Hitchcock Clinic;
Director, Vermont Yankee Nuclear Power Corporation, Vermont Electric Power
Company, Inc., Grand Trunk Corporation, Central Vermont Railway, Inc., S.K.I.
Ltd., Sherburne Corporation, Union Mutual Fire Insurance Company, New England
Guaranty Insurance Company, Inc., and the Investment Company Institute; former
Governor of Vermont.
DAVID M. RICHARDSON (55) Trustee. Executive Vice President, DHR
International, Inc. (executive recruitment); former Senior Vice President,
Boyden International Inc. (executive recruitment); and Director, Commerce and
Industry Association of New Jersey, 411 International, Inc., and J&M Cumming
Paper Co.
RICHARD J. SHIMA (57) Trustee and Advisor to the Boards of Trustees of the
Evergreen group of mutual funds. Chairman, Environmental Warranty, Inc., and
Consultant, Drake Beam Morin, Inc. (executive outplacement); Director of
Connecticut Natural Gas Corporation, Trust Company of Connecticut, Hartford
Hospital, Old State House Association, and Enhance Financial Services, Inc.;
Chairman, Board of Trustees, Hartford Graduate Center; Trustee, Kingswood-
Oxford School and Greater Hartford YMCA; former Director, Executive Vice
President, and Vice Chairman of The Travelers Corporation.
ANDREW J. SIMONS (57) Trustee. Partner, Farrell, Fritz, Caemmerer, Cleary,
Barnosky & Armentano, P.C.; former President, Nassau County Bar Association;
former Associate Dean and Professor of Law, St. John's University School of Law.
Messrs. Amling, Austin, Bissell, Campbell, Chapin, Gifford, Keith, Keyser,
Richardson, Shima and Simons are Trustees or Directors of the thirty-one funds
in the former Keystone group of mutual funds. Their addresses are 200 Berkeley
Street, Boston, Massachusetts 02116-5034.
ROBERT J. JEFFRIES (74), 2118 New Bedford Drive, Sun City Center, Fl
Trustee Emeritus. Corporate consultant since 1967. Mr. Jeffries has been serving
as a Trustee Emeritus of eleven Evergreen Mutual Funds since January 1, 1996
(excluded are Evergreen Variable Trust, Evergreen Investment Trust, as well as
the former Keystone group of mutual funds).
EXECUTIVE OFFICERS
JOHN J. PILEGGI (37), 230 Park Avenue, Suite 910, New York, NY- President
and Treasurer. Consultant to BISYS Fund Services since 1996. Senior Managing
Director, Furman Selz LLC since 1992, Managing Director from 1984 to 1992.
GEORGE O. MARTINEZ (37), 3435 Stelzer Road, Columbus, OH-Secretary. Senior
Vice President/Director of Administration and Regulatory Services, BISYS Fund
Services since April 1995. Vice President/Assistant General Counsel, Alliance
Capital Management from 1988 to 1995. -------- * Messrs. Pettit and Bissell may
each be deemed to be an "interested person" within the meaning of the Investment
Company Act of 1940, as amended (the "1940 Act").
The officers of the Trusts are all officers and/or employees of The BISYS
Group, Inc. ("BISYS"), except for Mr. Pileggi, who is a consultant to BISYS.
BISYS is an affiliate of Evergreen Distributor, Inc., the distributor of each
Class of shares of each Fund.
The Funds do not pay any direct remuneration to any officer or Trustee who
is an "affiliated person" of either First Union National Bank, Evergreen Asset
Management Corp., Keystone Investment Management Company or their affiliates.
See "Investment Advisers". Currently, none of the Trustees is an "affiliated
person" as defined in the 1940 Act.
Set forth below for each of the Trustees is the aggregate compensation (and
expenses) paid to such Trustees by each Trust for the year ended July 31, 1997.
Aggregate Compensation From Each Trust
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Name of Evergreen Evergreen Evergreen Evergreen Evergreen
Trustee Income Growth American Invest- Fund for
and and Retirement ment Total
Growth Income Trust Trust Return
Fund Fund
L.B.Ashkin $7,134 $1,119 $2,019 $ 0 $ 0
F. Bam 6,525 910 1,617 0 0
R.J. Jeffries 3,200 400 800 0 0
J.S. Howell 7,270 1,214 2,033 27,124 0
G.M. McDonnell 7,078 1,071 2,011 25,613 0
T.L. McVerry 7,161 1,133 2,021 26,252 0
W.W. Pettit 7,028 1,035 2,006 25,214 0
R.A. Salton 7,000 1,000 2,000 25,000 0
M.S. Scofield 7,000 1,000 2,000 25,000 0
F. Amling 0 0 0 0 0
C.A. Austin 0 0 0 0 0
G.S. Bissell 0 0 0 0 0
E.D. Campbell 0 0 0 0 0
C.F. Chapin 0 0 0 0 0
K.D. Gifford 0 0 0 0 0
L. Keith 0 0 0 0 0
F.R. Keyser 698 676 109 5,198 0
D.M. Richardson 0 0 0 0 0
R.J. Shima 698 676 109 5,198 0
A.J. Simons 0 0 0 0 0
-------------------------------------
</TABLE>
Set forth below for each Trustee receiving in excess of $60,000 for the
fiscal period ended July 31, 1997 is the aggregate compensation paid to such
Trustee by the Evergreen Family of Funds.
Total Compensation From Trusts
and Fund Complex Paid To Trustees
L.B. Ashkin $65,100
J.S. Howell 102,500
G.M. McDonnell 89,200
T.L. McVerry 93,700
W.W. Pettit 91,825
R.A. Salton 94,500
M.S. Scofield 95,700
As of the date of this Statement of Additional Information, the officers
and Trustees of the Trusts owned as a group less than 1% of the outstanding
Class A, Class B, Class C or Class Y shares of any of the Funds.
Set forth below is information with respect to each person, who, to each
Fund's knowledge, owned beneficially or of record more than 5% of a class of
each Fund's total outstanding shares and their aggregate ownership of the Fund's
total outstanding shares as of October 31, 1997.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
First Union Natl. Bank-FL C/F, Inc. Income and 2,619 6.56%
Fred W. Cookson IRA Growth/C
6704 Willow Lane Braden Woods
Bradenton, FL 34202-9632
FUBS & Co. Febo Income and 2,361 5.92%
Last Stop Inc. Growth/C
8661 Colesville Rd #D149
Silver Spring, MD 20910-3933
MLPF&S for the sole benefit Growth and 227,818 21.83%
of its customers Income/C
Attn: Fund Admin
4800 Deer Lake Dr. E, 3rd Floor
Jacksonville, FL 32246-6484
First Union National Bank/EB/INT Growth and 12,928,184 55.28%
Reinvest Account Income/Y
Attn. Trust Operations Fund Group
401 S. Tryon Street, 3rd Floor
CMG 1151
Charlotte, NC 29202-1911
First Union National Bank/EB/INT Growth and 4,685,583 20.03%
Cash Account Income/Y
Attn. Trust Operations Fund Group
401 S. Tryon Street, 3rd Floor
CMG 1151
Charlotte, NC 29202-1911
MLPF&S for the sole benefit Small Cap/A 50,874 5.88%
of its customers
Attn: Fund Admin
4800 Deer Lake Dr. E, 3rd Floor
Jacksonville, FL 32246-6484
MLPF&S for the sole benefit Small Cap/B 278,020 13.20%
of its customers
Attn: Fund Admin
4800 Deer Lake Dr. E, 3rd Floor
Jacksonville, FL 32246-6484
MLPF&S for the sole benefit Small Cap/C 111,164 25.40%
of its customers
Attn: Fund Administration
4800 Deer Lake Dr. East 3rd Fl.
Jacksonville FL 32246-6484
First Union National Bank/EB/INT Small Cap/Y 1,832,926 48.09%
Cash Account
Attn. Trust Operations Fund Group
401 S. Tryon Street, 3rd Floor
CMG 1151
Charlotte, NC 29202-1911
First Union National Bank/EB/INT Small Cap/Y 884,948 23.33%
Reinvest Account
Attn: Trust Operations Fund Group
401 S. Tryon Street
3rd Floor CMG 1151
Charlotte, NC 28202-1911
Citibank NA Small Cap/Y 379,0999 95%
Delta Airlines Master Trust
308235
Joe Villella Citicorp Services
1410 N. Westshore Blvd. F15
Tampa, FL 33607-4519
FUBS & Co. Febo Utility/C 6,400 21.04%
Elsie B. Strom
Lewis F. Strom
906 Wells Street
Bennettsville, SC 29512-3240
FUBS & Co. Febo Utility/C 2,185 7.18%
Thomas McKinney and
Lottie McKinney
170 Scott Blvd.
Tyrone, GA 30290-9767
Fubs & Co. Febo Utility/C 2,083 6.85%
Max Ray and
Jeralyne Ray
Route 2 Box 111
Greenmountain, NC 28740-9618
FUBS & Co. Febo Utility/C 1,796 5.90%
Evelyn L. Smith
Creg Smith
3294 Myrtle Street
Hapeville, GA 30354-1418
FUBS & Co. Febo Utility/C 1,546 5.08%
Ruth D. Hayes and
D. W. Hayes
5460 Ash Street
Forest Park, GA 30050-4068
First Union National Bank Utility/Y 86,855 58.58%
Trust Account
Attn: Ginny Batten
11th Floor CMG-1151
301 S. Tryon Street
Charlotte, NC 28288-0002
First Union National Bank Utility/Y 46,441 31.32%
Trust Account
Attn: Ginny Batten
11th Floor CMG-1151
301 S. Tryon Street
Charlotte, NC 28288-0002
First Union National Bank-FL C/F Value/C 16,4830 12.82%
Irving Decter IRA
418 Mariner Dr.
Jupiter, FL 33447
First Union National Bank Value/Y 27,876,502 62.84%
Trust Account
Attn: Ginny Batten
11th Floor CMG-1151
301 S. Tryon Street
Charlotte, NC 28288-0002
First Union National Bank Value/Y 15,892,513 35.82%
Trust Account
Attn: Ginny Batten
11th Floor CMG-1151
301 S. Tryon Street
Charlotte, NC 28288-0002
MLPF&S for the sole benefit Tot Return/A 139,971 5.98%
of its customers
Attn: Fund Admin
4800 Deer Lake Dr. E, 3rd Floor
Jacksonville, FL 32246-6484
MLPF&S for the sole benefit Tot Return/B 464,170 9.98%
of its customers
Attn: Fund Admin
4800 Deer Lake Dr. E, 3rd Floor
Jacksonville, FL 32246-6484
SSN/TIN: 866168037 Tot Return/C 137,812 13.47%
Lavedna Ellingson
Douglas Ellingson TTEES
Lavedna Ellingson Marital Trust
U/A DTD 5-1-86
8510 McClintock
Tempe, AZ 85284-2527
MLPF&S for the sole benefit Tot Return/C 116,702 11.41%
of its customers
Attn: Fund Admin
4800 Deer Lake Dr. E, 3rd Floor
Jacksonville, FL 32246-6484
SSB Cust IRA Rollover Tot Return/Y 2,159 93.73%
Gail L. Gulbenkian
3768 McCoy Road
Blacksburg, VA 24060-0652
James R. Vanko Cust Tot Return/Y 143 6.23%
Kathryn A. Vanko
UnifTrans Min Act-CA
P.O. Box 7585
Mannoth Lakes, CA 93546-7585
</TABLE>
- --------------------------------------------------------------------------------
INVESTMENT ADVISERS
(See also "Management of the Fund" in each Fund's Prospectus)
- --------------------------------------------------------------------------------
The investment adviser of Income and Growth, Growth and Income and Small
Cap is Evergreen Asset Management Corp., a New York corporation, with offices at
2500 Westchester Avenue, Purchase, New York ("Evergreen Asset" or the
"Adviser"). Evergreen Asset is owned by FUNB (the"Adviser") which, in turn, is a
subsidiary of First Union Corporation ("First Union"), a bank holding company
headquartered in Charlotte, North Carolina.
The investment adviser of Utility and Value is FUNB which provides
investment advisory services through its Capital Management Group.
The investment adviser of Total Return is Keystone Investment Management
Company ("Keystone" or the "Adviser"), a Delaware corporation, with offices at
200 Berkeley Street, Boston, Massachusetts. Keystone is an indirectly owned
subsidiary of FUNB.
The Directors of Evergreen Asset are Richard K. Wagoner and Barbara I.
Colvin. The executive officers of Evergreen Asset are Stephen A. Lieber,
Chairman and Co-Chief Executive Officer, Nola Maddox Falcone, President and
Co-Chief Executive Officer, and Theodore J. Israel, Jr., Executive Vice
President. The Directors of Keystone are Albert H. Elfner, III, Edward F.
Godfrey, W. Douglas Munn, Donald McMullen, William M. Ennis, II and Barbara I.
Colvin. The executive officers of Keystone are Albert H. Elfner, III, Chairman,
Chief Executive Officer and President, Edward F. Godfrey, Senior Vice President
and Chief Operating Officer, W. Douglas Munn, Senior Vice President, Chief
Financial Officer and Treasurer and Rosemary D. Van Antwerp, Senior Vice
President and Secretary.
On September 6, 1996, First Union and FUNB entered into an Agreement and
Plan of Acquisition and Merger (the "Merger") with Keystone Investments, Inc.
("Keystone Investments"), the corporate parent of Keystone, which provided,
among other things, for the merger of Keystone Investments with and into a
wholly-owned subsidiary of FUNB. The Merger was consummated on December 11,
1996. Keystone continues to provide investment advisory services to certain
funds in the Evergreen Keystone Family of Funds. Contemporaneously with the
Merger, Total Return entered into a new investment advisory agreement with
Keystone and into a principal underwriting agreement with the Distributor.
Under the Investment Advisory Agreement with each Fund, each Adviser has
agreed to furnish reports, statistical and research services and recommendations
with respect to each Fund's portfolio of investments. In addition, each Adviser
provides office facilities to the Funds and performs a variety of administrative
services. Each Fund pays the cost of all of its other expenses and liabilities,
including expenses and liabilities incurred in connection with maintaining their
registrations under the Securities Act of 1933, as amended, and the 1940 Act,
printing prospectuses (for existing shareholders) as they are updated, state
qualifications, mailings, brokerage, custodian and stock transfer charges,
printing, legal and auditing expenses, expenses of shareholder meetings and
reports to shareholders. Notwithstanding the foregoing, each Adviser will pay
the costs of printing and distributing prospectuses used for prospective
shareholders.
The method of computing the investment advisory fee for each Fund is
described in such Fund's Prospectus. The advisory fees paid by each Fund for the
three most recent fiscal periods reflected in its registration statement are set
forth below:
INCOME Six Months Year Ended Year Ended
AND GROWTH Ended 7/31/97 1/31/97 1/31/96
Advisory Fee $4,371,784 $8,823,541 $9,343,195
=========== =========== ==========
Expense $0 $0 $53,576
Reimbursement
SMALL CAP Seven Months Year Ended Year Ended
Ended 7/31/97 12/31/96 12/31/95
Advisory Fee $180,153 $ 63,333 $ 45,397
Waiver ($ 35,183) ($ 63,333) ($ 45,397)
------------ ------------ ------------
Net Advisory Fee $ 144,970 $0 $0
========= ========= ========
SMALL CAP Seven Months Year Ended Year Ended
Ended 7/31/97 12/31/96 12/31/95
Expense
Reimbursement $0 $133,406 $164,584
-------------- -------------- ----------
UTILITY Seven Months Year Ended Year Ended
Ended 7/31/97 12/31/96 12/31/95
Advisory Fee $382,537 $725,733 $456,021
Waiver ($146,640) ($396,483) ($299,028)
-------------- -------------- ------------
Net Advisory Fee $235,897 $329,300 $156,993
======== ======== ========
Expense
Reimbursement $0 $0 $ 51,894
---------------- ---------------- ------------
GROWTH Seven Months Year Ended Year Ended
AND INCOME Ended 7/31/97 12/31/96 12/31/95
Advisory Fee $5,736,248 $5,287,338 $1,332,685
======== ======== ========
Expense
Reimbursement $0 $5,000 $0
-------------- -------------- ----------
VALUE Seven Months Year Ended Year Ended
Ended 7/31/97 12/31/96 12/31/95
Advisory Fee $4,753,235 $6,950,730 $5,120,579
TOTAL RETURN Eight Months Year Ended Year Ended
Ended 7/31/97 11/30/96 11/30/95
Advisory Fee $546,092 $448,266 $300,290
======== ======== ========
Expense Limitations
Keystone has voluntarily agreed to limit Total Return's Class A expenses to
1.50% of the average daily net assets of Class A shares, such expense limitation
to be reevaluated on a calendar month basis and to be modified or eliminated in
the future at the discretion of Keystone.
The Investment Advisory Agreements are terminable, without the payment of
any penalty, on sixty days' written notice, by a vote of the holders of a
majority of each Fund's outstanding shares, or by a vote of a majority of each
Trust's Trustees or by the respective Adviser. The Investment Advisory
Agreements will automatically terminate in the event of their assignment. Each
Investment Advisory Agreement provides in substance that the Adviser shall not
be liable for any action or failure to act in accordance with its duties
thereunder in the absence of willful misfeasance, bad faith or gross negligence
on the part of the Adviser or of reckless disregard of its obligations
thereunder.
The Investment Advisory Agreements with respect to Income and Growth,
Growth and Income and Small Cap were approved by each Fund's shareholders on
June 23, 1994, became effective on June 30, 1994, and were last approved by the
Trustees of each Trust on June 17, 1997.
The Investment Advisory Agreement with respect to Utility and Value dated
February 28, 1985, and amended from time to time thereafter, was last approved
by the Trustees of Evergreen Investment Trust on June 17, 1997.
The Investment Advisory Agreement with respect to Total Return was approved
by the Fund's shareholders on December 9, 1996, and became effective on December
11, 1996.
Each Investment Advisory Agreement will continue in effect from year to
year provided that its continuance is approved annually by a vote of a majority
of the Trustees of each Trust including a majority of those Trustees who are not
parties thereto or "interested persons" (as defined in the 1940 Act) of any such
party (the "Independent Trustees"), cast in person at a meeting duly called for
the purpose of voting on such approval or a majority of the outstanding voting
shares of each Fund.
Certain other clients of each Adviser may have investment objectives and
policies similar to those of the Funds. Each Adviser (including the sub-adviser)
may, from time to time, make recommendations which result in the purchase or
sale of a particular security by its other clients simultaneously with a Fund.
If transactions on behalf of more than one client during the same period
increase the demand for securities being purchased or the supply of securities
being sold, there may be an adverse effect on price or quantity. It is the
policy of each Adviser to allocate advisory recommendations and the placing of
orders in a manner which is deemed equitable by the Adviser to the accounts
involved, including the Funds. When two or more of the clients of the Adviser
(including one or more of the Funds) are purchasing or selling the same security
on a given day from the same broker-dealer, such transactions may be averaged as
to price.
Although the investment objectives of the Funds are not the same, and their
investment decisions are made independently of each other, they rely upon the
same resources for investment advice and recommendations. Therefore, on
occasion, when a particular security meets the different investment objectives
of the various Funds, they may simultaneously purchase or sell the same
security. This could have a detrimental effect on the price and quantity of the
security available to each Fund. If simultaneous transactions occur, each
Adviser attempts to allocate the securities, both as to price and quantity, in
accordance with a method deemed equitable to each Fund and consistent with their
different investment objectives. In some cases, simultaneous purchases or sales
could have a beneficial effect, in that the ability of one Fund to participate
in volume transactions may produce better executions for that Fund.
Each Fund has adopted procedures under Rule 17a-7 of the 1940 Act to permit
purchase and sales transactions to be effected between each Fund and the other
registered investment companies for which Evergreen Asset, FUNB or Keystone act
as investment adviser or between the Fund and any advisory clients of Evergreen
Asset, FUNB, Keystone or Lieber. Each Fund may from time to time engage in such
transactions but only in accordance with these procedures and if they are
equitable to each participant and consistent with each participant's investment
objectives.
From July 8, 1995 to March 11, 1997, Evergreen Asset provided
administrative services to each of the portfolios of Evergreen Investment Trust
for a fee based on the average daily net assets of each fund administered by
Evergreen Asset for which Evergreen Asset or FUNB also served as investment
adviser, calculated daily and payable monthly at the following annual rates:
.050% on the first $7 billion; .035% on the next $3 billion; .030% on the next
$5 billion; .020% on the next $10 billion; .015% on the next $5 billion; and
.010% on assets in excess of $30 billion. For the period from July 8, 1995
through December 31, 1995 and the fiscal year ended December 31, 1996, Utility
and Value incurred the following administration costs: Utility $39,330 and
$70,215, respectively; and Value $323,050 and $670,060, respectively.
Evergreen Investment Services, Inc. ("EIS") began providing administrative
services on March 12, 1997 to each of the portfolios of Evergreen Investment
Trust at the same rates as described above. For the period from January 1, 1997
through July 31, 1997, Utility and Value incurred the following administration
costs: Utility $28,507; and Value $352,965, respectively.
- --------------------------------------------------------------------------------
DISTRIBUTION PLANS AND AGREEMENTS
- --------------------------------------------------------------------------------
Reference is made to "Management of the Funds - Distribution Plans and
Agreements" in the Prospectus of each Fund for additional disclosure regarding
the Funds' distribution arrangements. Distribution fees are accrued daily and
paid monthly on the Class A, Class B Class and Class C shares and are charged as
class expenses, as accrued. The distribution fees attributable to the Class B
shares and Class C shares are designed to permit an investor to purchase such
shares through broker-dealers without the assessment of a front-end sales
charge, and, in the case of Class C shares, without the assessment of a
contingent deferred sales charge after the first year following the month of
purchase, while at the same time permitting the Distributor to compensate
broker-dealers in connection with the sale of such shares. In this regard, the
purpose and function of the combined contingent deferred sales charge and
distribution services fee on the Class B shares and the Class C shares are the
same as those of the front-end sales charge and distribution fee with respect to
the Class A shares in that in each case the sales charge and/or distribution fee
provide for the financing of the distribution of the Fund's shares.
Under the Rule 12b-1 Distribution Plans that have been adopted by each Fund
with respect to each of its Class A, Class B and Class C shares (each a "Plan"
and collectively, the "Plans"), the Treasurer of each Fund reports the amounts
expended under the Plans and the purposes for which such expenditures were made
to the Trustees of each Trust for their review on a quarterly basis. Also, each
Plan provides that the selection and nomination of the disinterested Trustees
are committed to the discretion of such disinterested Trustees then in office.
Each Adviser may from time to time and from its own funds or such other
resources as may be permitted by rules of the SEC make payments for distribution
services to the Distributor; the latter may in turn pay part or all of such
compensation to brokers or other persons for their distribution assistance.
Each Plan and Distribution Agreement will continue in effect for successive
twelve-month periods provided, however, that such continuance is specifically
approved at least annually by the Trustees of each Trust or by vote of the
holders of a majority of the outstanding voting securities of that Class and, in
either case, by a majority of the Independent Trustees of the Trust who have no
direct or indirect financial interest in the operation of the Plan or any
agreement related thereto.
The Plans permit the payment of fees to brokers and others for distribution
and shareholder-related administrative services and to broker-dealers,
depository institutions, financial intermediaries and administrators for
administrative services as to Class A, Class B and Class C shares. The Plans are
designed to (i) stimulate brokers to provide distribution and administrative
support services to each Fund and holders of Class A, Class B and Class C shares
and (ii) stimulate administrators to render administrative support services to
the Fund and holders of Class A, Class B and Class C shares. The administrative
services are provided by a representative who has knowledge of the shareholder's
particular circumstances and goals, and include, but are not limited to
providing office space, equipment, telephone facilities, and various personnel
including clerical, supervisory, and computer, as necessary or beneficial to
establish and maintain shareholder accounts and records; processing purchase and
redemption transactions and automatic investments of client account cash
balances; answering routine client inquiries regarding Class A, Class B and
Class C shares; assisting clients in changing dividend options, account
designations, and addresses; and providing such other services as the Fund
reasonably requests for its Class A, Class B and Class C shares.
In addition to the Plans, Utility and Value have each adopted a Shareholder
Services Plan whereby shareholder servicing agents may receive fees from the
Fund for providing services which include, but are not limited to, distributing
prospectuses and other information, providing shareholder assistance, and
communicating or facilitating purchases and redemptions of Class B and Class C
shares of the Fund.
In the event that a Plan or Distribution Agreement is terminated or not
continued with respect to one or more Classes of a Fund, (i) no distribution
fees (other than current amounts accrued but not yet paid) would be owed by the
Fund to the Distributor with respect to that Class or Classes, and (ii) the Fund
would not be obligated to pay the Distributor for any amounts expended under the
Distribution Agreement not previously recovered by the Distributor from
distribution services fees in respect of shares of such Class or Classes through
deferred sales charges.
All material amendments to any Plan or Distribution Agreement must be
approved by a vote of the Trustees of a Trust or the holders of the Fund's
outstanding voting securities, voting separately by Class, and in either case,
by a majority of the disinterested Trustees, cast in person at a meeting called
for the purpose of voting on such approval; and any Plan or Distribution
Agreement may not be amended in order to increase materially the costs that a
particular Class of shares of a Fund may bear pursuant to the Plan or
Distribution Agreement without the approval of a majority of the holders of the
outstanding voting shares of the Class affected. With respect to Utility and
Value, amendments to the Shareholder Services Plan require a majority vote of
the disinterested Trustees but do not require a shareholders vote. Any Plan,
Shareholder Services Plan or Distribution Agreement may be terminated (i) by a
Fund without penalty at any time by a majority vote of the holders of the
outstanding voting securities of the Fund, voting separately by Class or by a
majority vote of the disinterested Trustees, or (ii) by the Distributor. To
terminate any Distribution Agreement, any party must give the other parties 60
days' written notice; to terminate a Plan only, the Fund need give no notice to
the Distributor. Any Distribution Agreement will terminate automatically in the
event of its assignment.
Income and Growth, Growth and Income, Small Cap and Total Return incurred
the following Distribution Plans and Shareholder Services Plan fees:
Distribution Fees:
INCOME AND GROWTH. For the fiscal period ended July 31, 1997, $13,129 on behalf
of its Class A shares, $141,953 on behalf of its Class B shares and $3,417 on
behalf of its Class shares.
GROWTH AND INCOME. For the fiscal period ended July 31, 1997, $175,321 on behalf
of its Class A shares, $1,627,668 on behalf of its Class B shares and $68,757 on
behalf of its class C shares.
SMALL CAP. For the fiscal period ended July 31, 1997, $1,710 on behalf of its
Class A shares, $11,297 on behalf of its Class B shares and $4,164 on behalf of
its class C shares.
TOTAL RETURN. For the fiscal period ended July 31, 1997, $66,585 on behalf of
its Class A shares and $344,125 on behalf of its Class B shares and $89,922 on
behalf of its class C shares.
Shareholder Services Fees:
INCOME AND GROWTH. For the fiscal period ended July 31, 1997, shareholder
service fees of $47,318 on behalf of its Class B shares and $1,139 on behalf of
its class C shares.
GROWTH AND INCOME. For the fiscal period ended July 31, 1997, shareholder
service fees of $542,555 on behalf of its Class B shares and $22,919 on behalf
of its class C shares.
SMALL CAP. For the fiscal period ended July 31, 1997, shareholder service fees
of $3,766 on behalf of its Class B shares and $1,388 on behalf of its class C
shares.
TOTAL RETURN. For the fiscal period ended July 31, 1997, shareholder service
fees of $116,292 on behalf of its Class B shares and $29,986 on behalf of its
class C shares.
Value and Utility incurred the following Distribution Services Plans and
Shareholder Services Plans fees:
Distribution Fees:
VALUE. For the fiscal period ended July 31, 1997, $509,860 on behalf of its
Class A shares, $1,003,000 on behalf of its Class B shares and $8,193 on behalf
of its Class C shares.
UTILITY. For the fiscal period ended July 31, 1997, $134,715 on behalf of its
Class A shares, $160,642 on behalf of its Class B shares and $1,585 on behalf of
its Class C shares.
Shareholder Services Plans fees:
VALUE. For the fiscal period ended July 31, 1997, $334,333 on behalf of its
Class B shares and $2,731 on behalf of its Class C shares.
UTILITY. For the fiscal period ended July 31, 1997, $53,548 on behalf of its
Class B shares and $529 on behalf of its Class shares.
- --------------------------------------------------------------------------------
ALLOCATION OF BROKERAGE
- --------------------------------------------------------------------------------
Decisions regarding each Fund's portfolio are made by its Adviser, subject
to the supervision and control of the Trustees. Orders for the purchase and sale
of securities and other investments are placed by employees of each Fund's
Adviser. In general, the same individuals perform the same functions for the
other funds managed by each Adviser. A Fund will not effect any brokerage
transactions with any broker or dealer affiliated directly or indirectly with
the Adviser unless such transactions are fair and reasonable, under the
circumstances, to the Fund's shareholders. Circumstances that may indicate that
such transactions are fair or reasonable include the frequency of such
transactions, the selection process and the commissions payable in connection
with such transactions.
A substantial portion of the transactions in equity securities for each
Fund will occur on domestic stock exchanges. Transactions on stock exchanges
involve the payment of brokerage commissions. In transactions on stock exchanges
in the United States, these commissions are negotiated, whereas on many foreign
stock exchanges these commissions are fixed. In the case of securities traded in
the foreign and domestic over-the-counter markets, there is generally no stated
commission, but the price usually includes an undisclosed commission or markup.
Over-the-counter transactions will generally be placed directly with a principal
market maker, although the Fund may place an over-the-counter order with a
broker-dealer if a better price (including commission) and execution are
available.
It is anticipated that most purchase and sale transactions involving fixed
income securities will be with the issuer or an underwriter or with major
dealers in such securities acting as principals. Such transactions are normally
on a net basis and generally do not involve payment of brokerage commissions.
However, the cost of securities purchased from an underwriter usually includes a
commission paid by the issuer to the underwriter. Purchases or sales from
dealers will normally reflect the spread between bid and ask prices.
In selecting firms to effect securities transactions, the primary
consideration of each Fund shall be prompt execution at the most favorable
price. Each Adviser will also consider such factors as the price of the
securities and the size and difficulty of execution of the order. If these
objectives may be met with more than one firm, the Adviser will also consider
the availability of statistical and investment data and economic facts and
opinions helpful to the Fund. To the extent that receipt of these services for
which the Adviser or its affiliates might otherwise have paid, it would tend to
reduce their expenses.
Under Section 11(a) of the Securities Exchange Act of 1934, as amended,
and the rules adopted thereunder by the SEC, Lieber may be compensated for
effecting transactions in portfolio securities for a Fund on a national
securities exchange provided the conditions of the rules are met. Each Fund
advised by Evergreen Asset has entered into an agreement with Lieber authorizing
Lieber to retain compensation for brokerage services. In accordance with such
agreement, it is contemplated that Lieber, a member of the New York and American
Stock Exchanges, will, to the extent practicable, provide brokerage services to
Growth and Income, Income and Growth and Small Cap with respect to substantially
all securities transactions effected on the New York and American Stock
Exchanges. In such transactions, the Adviser will seek the best execution at the
most favorable price while paying a commission rate no higher than that offered
to other clients of Lieber or that which can be reasonably expected to be
offered by an unaffiliated broker-dealer having comparable execution capability
in a similar transaction. However, no Fund will engage in transactions in which
Lieber would be a principal. While no Fund advised by Evergreen Asset
contemplates any ongoing arrangements with other brokerage firms, brokerage
business may be given from time to time to other firms. In addition, the
Trustees have adopted procedures pursuant to Rule 17e-1 under the 1940 Act to
ensure that all brokerage transactions with Lieber, as an affiliated
broker-dealer, are fair and reasonable.
Each Trust's Board of Trustees has determined that a Fund may consider
sales of Fund shares as a factor in the selection of brokers to execute
portfolio transactions, subject to the requirements of best execution described
above. The Fund expects that purchases and sales of securities will usually be
effected through brokerage transactions for which commissions are payable.
Purchases from underwriters will include the underwriting commission or
concession, and purchases from dealers serving as market makers will include a
dealer's mark-up or reflect a dealer's mark-down. Where transactions are made in
the over-the-counter market, the Fund will deal with primary market makers
unless more favorable prices are otherwise obtainable. Under its Investment
Advisory Agreement, Keystone is permitted to pay higher brokerage commissions
for brokerage and research services in accordance with Section 28(e) of the
Securities Exchange Act of 1934. In the event Keystone follows such a practice,
it will do so on a basis that is fair and equitable to Total Return.
Any profits from brokerage commissions accruing to Lieber as a result of
portfolio transactions for Growth and Income, Income and Growth and Small Cap
will accrue to FUNB and to its ultimate parent, First Union. The Investment
Advisory Agreements do not provide for a reduction of the Adviser's fee with
respect to any Fund by the amount of any profits earned by Lieber from brokerage
commissions generated by portfolio transactions of the Fund.
The following chart shows: (i) the brokerage commissions paid by each Fund
advised by Evergreen Asset during their last three fiscal years; (ii) the amount
and percentage thereof paid to Lieber; and (iii) the percentage of the total
dollar amount of all portfolio transactions with respect to which commissions
have been paid which were effected by Lieber:
INCOME AND GROWTH Period Ended Year Ended Year Ended
7/31/97 1/31/97 1/31/96
Total Brokerage $1,575,483 $3,529,313 $3,255,068
Commissions
Dollar Amount and % $1,066,378 $2,835,293 $2,982,640
paid to Lieber 68% 80% 92%
% of Transactions
Effected by Lieber 69% 47% 90%
SMALL CAP Period Ended Year Ended Year Ended
7/31/97 12/31/96 12/31/95
Total Brokerage $74,018 $14,647 $5,968
Commissions
Dollar Amount and % $61,390 $13,246 $4,863
paid to Lieber 83% 90% 81%
% of Transactions
Effected by Lieber 75% 87% 77%
GROWTH AND INCOME Period Ended Year Ended Year Ended
7/31/97 12/31/96 12/31/95
Total Brokerage $412,968 $519,064 $210,923
Commissions
Dollar Amount and % $348,590 $429,888 $160,659
paid to Lieber 85% 83% 76%
% of Transactions
Effected by Lieber 78% 78% 74%
Each of the Funds changed its fiscal year end to July 31 during the first
period covered by the foregoing table.
Value, Utility and Total Return did not pay any commissions to Lieber. For
the fiscal period ended July 31, 1997 and the fiscal years ended December 31,
1996 and 1995, Utility paid $220,091, $323,978 and $272,806, respectively, in
commissions on brokerage transactions. For the fiscal period ended July 31, 1997
and the fiscal years ended December 31, 1996 and 1995, Value paid $273,045,
$3,164,292 and $1,644,077, respectively, in commissions on brokerage
transactions. For the fiscal period ended July 31, 1997 and the fiscal years
ended November 30, 1996 and 1995, Total Return paid $153,935, $227,013 and
$92,665, respectively, in commissions on brokerage transactions.
- --------------------------------------------------------------------------------
ADDITIONAL TAX INFORMATION
(See also "Other Information - Dividends,
Distributions and Taxes" in each Fund's Prospectus)
- --------------------------------------------------------------------------------
Each Fund has qualified and intends to continue to qualify for and elect
the tax treatment applicable to a regulated investment company ("RIC") under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code").
(Such qualification does not involve supervision of management or investment
practices or policies by the Internal Revenue Service.) In order to qualify as a
RIC, a Fund must, among other things, (i) derive at least 90% of its gross
income from dividends, interest, payments with respect to proceeds from
securities loans, gains from the sale or other disposition of securities or
foreign currencies and other income (including gains from options, futures or
forward contracts) derived with respect to its business of investing in such
securities; (ii) derive less than 30% of its gross income from the sale or other
disposition of securities, options, futures or forward contracts (other than
those on foreign currencies), or foreign currencies (or options, futures or
forward contracts thereon) that are not directly related to the RIC's principal
business of investing in securities (or options and futures with respect
thereto) held for less than three months (this requirement is repealed for Fund
fiscal years beginning after August 5, 1997); and (iii) diversify its holdings
so that, at the end of each quarter of its taxable year, (i) at least 50% of the
market value of the Fund's total assets is represented by cash, U.S. government
securities and other securities limited in respect of any one issuer, to an
amount not greater than 5% of the Fund's total assets and 10% of the outstanding
voting securities of such issuer, and (ii) not more than 25% of the value of its
total assets is invested in the securities of any one issuer (other than U.S.
government securities and securities of other regulated investment companies).
By so qualifying, a Fund is not subject to federal income tax if it timely
distributes its investment company taxable income and any net realized capital
gains. A 4% nondeductible excise tax will be imposed on a Fund to the extent it
does not meet certain distribution requirements by the end of each calendar
year. Each Fund anticipates meeting such distribution requirements.
Dividends paid by a Fund from investment company taxable income generally
will be taxed to the shareholders as ordinary income. Investment company taxable
income includes net investment income and net realized short-term gains (if
any). Any dividends received by a Fund from domestic corporations will
constitute a portion of the Fund's gross investment income. It is anticipated
that this portion of the dividends paid by a Fund (other than distributions of
securities profits) will qualify for the 70% dividends-received deduction for
corporations. Shareholders will be informed of the amounts of dividends which so
qualify.
Distributions of the excess of net long-term capital gain over net
short-term capital loss are taxable to shareholders (who are not exempt from
tax) as long-term capital gain, regardless of the length of time the shares of a
Fund have been held by such shareholders. Capital gain on assets held for more
than 18 months is generally subject to a maximum federal income tax rate of 20%
for an individual. The maximum capital gains tax rate for capital assets held by
an individual for more than 12 months but not more than 18 months is generally
28%. Short-term capital gains distributions are taxable to shareholders who are
not exempt from tax as ordinary income. Such distributions are not eligible for
the dividends-received deduction. Any loss recognized upon the sale of shares of
a Fund held by a shareholder for six months or less will be treated as a
long-term capital loss to the extent that the shareholder received a long-term
capital gain distribution with respect to such shares.
Distributions will be taxable as described above to shareholders (who are
not exempt from tax), whether made in shares or in cash. Shareholders electing
to receive distributions in the form of additional shares will have a cost basis
for federal income tax purposes in each share so received equal to the net asset
value of a share of a Fund on the reinvestment date.
Distributions by each Fund result in a reduction in the net asset value of
the Fund's shares. Should a distribution reduce the net asset value below a
shareholder's cost basis, such distribution nevertheless would be taxable as
ordinary income or capital gain as described above to shareholders (who are not
exempt from tax), even though, from an investment standpoint, it may constitute
a return of capital. In particular, investors should be careful to consider the
tax implications of buying shares just prior to a distribution. The price of
shares purchased at that time includes the amount of the forthcoming
distribution. Those purchasing just prior to a distribution will then receive
what is in effect a return of capital upon the distribution which will
nevertheless be taxable to shareholders subject to taxes.
Upon a sale or exchange of its shares, a shareholder will realize a taxable
gain or loss depending on its basis in the shares. Such gains or loss will be
treated as a capital gain or loss if the shares are capital assets in the
investor's hands and will be a long-term capital gain or loss if the shares have
been held for more than one year. Generally, any loss realized on a sale or
exchange will be disallowed to the extent shares disposed of are replaced within
a period of sixty-one days beginning thirty days before and ending thirty days
after the shares are disposed of.
Each shareholder should consult his or her own tax adviser to determine the
state and local tax implications of Fund distributions.
Shareholders who fail to furnish their taxpayer identification numbers to a
Fund and to certify as to its correctness and certain other shareholders may be
subject to a 31% federal income tax backup withholding requirement on dividends,
distributions of capital gains and redemption proceeds paid to them by the Fund.
If the withholding provisions are applicable, any such dividends or capital gain
distributions to these shareholders, whether taken in cash or reinvested in
additional shares, and any redemption proceeds will be reduced by the amounts
required to be withheld. Investors may wish to consult their own tax advisers
about the applicability of the backup withholding provisions.
If more than 50% of the value of a Fund's total assets at the end of a
fiscal year is represented by securities of foreign corporations and a Fund
elects to make foreign tax credits available to its shareholders, a shareholder
will be required to include in his gross income both cash dividends and the
amount a Fund advises him is his pro rata portion of income taxes withheld by
foreign governments from interest and dividends paid on a Fund's investments.
The shareholder will be entitled, however, to take the amount of such foreign
taxes withheld as a credit against his U.S. income tax, or to treat the foreign
tax withheld as an itemized deduction from his gross income, if that should be
to his advantage. In substance, this policy enables the shareholder to benefit
from the same foreign tax credit or deduction that he would have received if he
had been the individual owner of foreign securities and had paid foreign income
tax on the income therefrom. As in the case of individuals receiving income
directly from foreign sources, the above-described tax credit and deductions are
subject to certain limitations.
The foregoing discussion relates solely to U.S. federal income tax law as
applicable to U.S. persons (i.e., U.S. citizens and residents and U.S. domestic
corporations, partnerships, trusts and estates). It does not reflect the special
tax consequences to certain taxpayers (e.g., banks, insurance companies, tax
exempt organizations and foreign persons). Shareholders are encouraged to
consult their own tax advisers regarding specific questions relating to federal,
state and local tax consequences of investing in shares of a Fund. Each
shareholder who is not a U.S. person should consult his or her tax adviser
regarding the U.S. and foreign tax consequences of ownership of shares of a
Fund, including the possibility that such a shareholder may be subject to a U.S.
withholding tax at a rate of 30% (or at a lower rate under a tax treaty) on
amounts treated as income from U.S. sources under the Code.
- --------------------------------------------------------------------------------
NET ASSET VALUE
- --------------------------------------------------------------------------------
The following information supplements that set forth in each Fund's
Prospectus under the subheading "How to Buy Shares - How the Funds Value Their
Shares" in the Section entitled "Purchase and Redemption of Shares."
The public offering price of shares of a Fund is its net asset value plus,
in the case of Class A shares, a sales charge which will vary depending upon the
purchase alternative chosen by the investor, as more fully described in the
Prospectus. See "Purchase of Shares - Class A Shares - Front-End Sales Charge
Alternative." On each Fund business day on which a purchase or redemption order
is received by a Fund and trading in the types of securities in which a Fund
invests might materially affect the value of Fund shares, the per share net
asset value of each such Fund is computed in accordance with the Declaration of
Trust and By-Laws governing each Fund as of the next close of regular trading on
the New York Stock Exchange (the "Exchange") (currently 4:00 p.m. Eastern time)
by dividing the value of the Fund's total assets, less its liabilities, by the
total number of its shares then outstanding. A Fund business day is any weekday,
exclusive of national holidays on which the Exchange is closed and Good Friday.
For each Fund, securities for which the primary market is on a domestic or
foreign exchange and over-the-counter securities admitted to trading on the
NASDAQ National List are valued at the last quoted sale or, if no sale, at the
mean of closing bid and asked prices and portfolio bonds are presently valued by
a recognized pricing service when such prices are believed to reflect the fair
value of the security. Over-the-counter securities not included in the NASDAQ
National List for which market quotations are readily available are valued at a
price quoted by one or more brokers. If accurate quotations are not available,
securities will be valued at fair value determined in good faith by the Board of
Trustees.
The respective per share net asset values of the Class A, Class B,
Class C and Class Y shares are expected to be substantially the same. Under
certain circumstances, however, the per share net asset values of the Class B
and Class C shares may be lower than the per share net asset value of the Class
A shares (and, in turn, that of Class A shares may be lower than Class Y shares)
as a result of the greater daily expense accruals, relative to Class A and Class
Y shares, of Class B and Class C shares relating to distribution services fees
(and, with respect to Utility and Value, Shareholder Service Plan fees) and, to
the extent applicable, transfer agency fees and the fact that Class Y shares
bear no additional distribution, shareholder service or transfer agency related
fees.
While it is expected that, in the event each Class of shares of a Fund
realizes net investment income or does not realize a net operating loss for a
period, the per share net asset values of the four Classes will tend to converge
immediately after the payment of dividends, which dividends will differ by
approximately the amount of the expense accrual differential among the Classes,
there is no assurance that this will be the case. In the event one or more
Classes of a Fund experiences a net operating loss for any fiscal period, the
net asset value per share of such Class or Classes will remain lower than that
of Classes that incurred lower expenses for the period.
To the extent that any Fund invests in non-U.S. dollar denominated
securities, the value of all assets and liabilities will be translated into
United States dollars at the mean between the buying and selling rates of the
currency in which such a security is denominated against United States dollars
last quoted by any major bank. If such quotations are not available, the rate of
exchange will be determined in accordance with policies established by the Fund.
The Trustees will monitor, on an ongoing basis, a Fund's method of valuation.
Trading in securities on European and Far Eastern securities exchanges and
over-the-counter markets is normally completed well before the close of business
on each business day in New York. In addition, European or Far Eastern
securities trading generally or in a particular country or countries may not
take place on all business days in New York.
Furthermore, trading takes place in various foreign markets on days which
are not business days in New York and on which the Fund's net asset value is not
calculated. Such calculation does not take place contemporaneously with the
determination of the prices of the majority of the portfolio securities used in
such calculation. Events affecting the values of portfolio securities that occur
between the time their prices are determined and the close of the Exchange will
not be reflected in a Fund's calculation of net asset value unless the Trustees
deem that the particular event would materially affect net asset value, in which
case an adjustment will be made. Securities transactions are accounted for on
the trade date, the date the order to buy or sell is executed. Dividend income
and other distributions are recorded on the ex-dividend date, except certain
dividends and distributions from foreign securities which are recorded as soon
as the Fund is informed after the ex-dividend date.
- --------------------------------------------------------------------------------
PURCHASE OF SHARES
- --------------------------------------------------------------------------------
The following information supplements that set forth in each Fund's
Prospectus under the heading "Purchase and Redemption of Shares - How To Buy
Shares."
General
Shares of each Fund will be offered on a continuous basis at a price equal
to their net asset value plus an initial sales charge at the time of purchase
(the "front-end sales charge alternative"), with a contingent deferred sales
charge (the deferred sales charge alternative"), or without any front-end sales
charge, but with a contingent deferred sales charge imposed only during the
first year after the month of purchase (the "level-load alternative"), as
described below. Class Y shares which, as described below, are not offered to
the general public, are offered without any front-end or contingent sales
charges. Shares of each Fund are offered on a continuous basis through (i)
investment dealers that are members of the National Association of Securities
Dealers, Inc. and have entered into selected dealer agreements with the
Distributor ("selected dealers"), (ii) depository institutions and other
financial intermediaries or their affiliates, that have entered into selected
agent agreements with the Distributor ("selected agents"), or (iii) the
Distributor. The minimum for initial investment is $1,000; there is no minimum
for subsequent investments. The subscriber may use the Application available
from the Distributor for his or her initial investment. Sales personnel of
selected dealers and agents distributing a Fund's shares may receive differing
compensation for selling Class A, Class B or Class C shares.
Investors may purchase shares of a Fund in the United States either through
selected dealers or agents or directly through the Distributor. A Fund reserves
the right to suspend the sale of its shares to the public in response to
conditions in the securities markets or for other reasons.
Each Fund will accept unconditional orders for its shares to be executed at
the public offering price equal to the net asset value next determined (plus for
Class A shares, the applicable sales charges), as described below. Orders
received by the Distributor prior to the close of regular trading on the
Exchange on each day the Exchange is open for trading are priced at the net
asset value computed as of the close of regular trading on the Exchange on that
day (plus for Class A shares the sales charges). In the case of orders for
purchase of shares placed through selected dealers or agents, the applicable
public offering price will be the net asset value as so determined, but only if
the selected dealer or agent receives the order prior to the close of regular
trading on the Exchange and transmits it to the Distributor prior to its close
of business that same day (normally 5:00 p.m. Eastern time). The selected dealer
or agent is responsible for transmitting such orders by 5:00 p.m. If the
selected dealer or agent fails to do so, the investor's right to that day's
closing price must be settled between the investor and the selected dealer or
agent. If the selected dealer or agent receives the order after the close of
regular trading on the Exchange, the price will be based on the net asset value
determined as of the close of regular trading on the Exchange on the next day it
is open for trading.
Following the initial purchase of shares of a Fund, a shareholder may place
orders to purchase additional shares by telephone if the shareholder has
completed the appropriate portion of the Application. Payment for shares
purchased by telephone can be made only by Electronic Funds Transfer from a bank
account maintained by the shareholder at a bank that is a member of the National
Automated Clearing House Association ("ACH"). If a shareholder's telephone
purchase request is received before 3:00 p.m. Eastern time on a Fund business
day, the order to purchase shares is automatically placed the same Fund business
day for non-money market funds, and two days following the day the order is
received for money market funds, and the applicable public offering price will
be the public offering price determined as of the close of business on such
business day. Full and fractional shares are credited to a subscriber's account
in the amount of his or her subscription. As a convenience to the subscriber,
and to avoid unnecessary expense to a Fund, stock certificates representing
shares of a Fund are not issued. This facilitates later redemption and relieves
the shareholder of the responsibility for and inconvenience of lost or stolen
certificates.
Alternative Purchase Arrangements
Each Fund issues four classes of shares: (i) Class A shares, which are sold
to investors choosing the front-end sales charge alternative; (ii) Class B
shares, which are sold to investors choosing the deferred sales charge
alternative; (iii) Class C shares, which are sold to investors choosing the
level-load sales charge alternative; and (iv) Class Y shares, which are offered
only to (a) persons who at or prior to December 30, 1994 owned shares in a
mutual fund advised by Evergreen Asset, (b) certain investment advisory clients
of the Advisers and their affiliates, and (c) institutional investors. The four
Classes of shares each represent an interest in the same portfolio of
investments of the Fund, have the same rights and are identical in all respects,
except that (i) only Class A, Class B and Class C shares are subject to a Rule
12b-1 distribution fee, (ii) Class B and Class C shares of Balanced, Utility and
Value are subject to a Shareholder Service Plan fee, (iii) Class A shares bear
the expense of the front-end sales charge and Class B and Class C shares bear
the expense of the deferred sales charge, (iv) Class B shares and Class C shares
each bear the expense of a higher Rule 12b-1 distribution services fee and
shareholder service fee than Class A shares and, in the case of Class B shares,
higher transfer agency costs, (v) with the exception of Class Y shares, each
Class of each Fund has exclusive voting rights with respect to provisions of the
Rule 12b-1 Plan pursuant to which its distribution services (and, to the extent
applicable, Shareholder Service Plan fee) is paid which relates to a specific
Class and other matters for which separate Class voting is appropriate under
applicable law, provided that, if the Fund submits to a simultaneous vote of
Class A, Class B and Class C shareholders an amendment to the Rule 12b-1 Plan
that would materially increase the amount to be paid thereunder with respect to
the Class A shares, the Class A shareholders and the Class B and Class C
shareholders will vote separately by Class, and (vi) only the Class B shares are
subject to a conversion feature. Each Class has different exchange privileges
and certain different shareholder service options available.
The alternative purchase arrangements permit an investor to choose the
method of purchasing shares that is most beneficial given the amount of the
purchase, the length of time the investor expects to hold the shares, and other
circumstances. Investors should consider whether, during the anticipated life of
their investment in the Fund, the accumulated distribution services (and, to the
extent applicable, Shareholder Service Plan) fee and contingent deferred sales
charges on Class B shares prior to conversion, or the accumulated distribution
services (and, to the extent applicable, shareholder service) fee on Class C
shares, would be less than the front-end sales charge and accumulated
distribution services fee on Class A shares purchased at the same time, and to
what extent such differential would be offset by the higher return of Class A
shares. Class B and Class C shares will normally not be suitable for the
investor who qualifies to purchase Class A shares at the lowest applicable sales
charge. For this reason, the Distributor will reject any order (except orders
for Class B shares from certain retirement plans) for more than $250,000 for
Class B shares or $500,000 for Class C shares.
Class A shares are subject to a lower distribution services fee and no
Shareholder Service Plan fee and, accordingly, pay correspondingly higher
dividends per share than Class B shares or Class C shares. However, because
front-end sales charges are deducted at the time of purchase, investors
purchasing Class A shares would not have all their funds invested initially and,
therefore, would initially own fewer shares. Investors not qualifying for
reduced front-end sales charges who expect to maintain their investment for an
extended period of time might consider purchasing Class A shares because the
accumulated continuing distribution (and, to the extent applicable, Shareholder
Service Plan) charges on Class B shares or Class C shares may exceed the
front-end sales charge on Class A shares during the life of the investment.
Again, however, such investors must weigh this consideration against the fact
that, because of such front-end sales charges, not all their funds will be
invested initially.
Other investors might determine, however, that it would be more
advantageous to purchase Class B shares or Class C shares in order to have all
their funds invested initially, although remaining subject to higher continuing
distribution services (and, to the extent applicable, Shareholder Service Plan)
fees and, in the case of Class B shares, being subject to a contingent deferred
sales charge for a six-year period. For example, based on current fees and
expenses, an investor subject to the 4.75% front-end sales charge imposed on
Class A shares of the Funds would have to hold his or her investment
approximately seven years for the Class B and Class C distribution services
(and, to the extent applicable, Shareholders Service Plan) fees, to exceed the
front-end sales charge plus the accumulated distribution services fee of Class A
shares. In this example, an investor intending to maintain his or her investment
for a longer period might consider purchasing Class A shares. This example does
not take into account the time value of money, which further reduces the impact
of the Class B and Class C distribution services (and, to the extent applicable,
shareholder service) fees on the investment, fluctuations in net asset value or
the effect of different performance assumptions.
Those investors who prefer to have all of their funds invested initially
but may not wish to retain Fund shares for the six year period during which
Class B shares are subject to a contingent deferred sales charge may find it
more advantageous to purchase Class C shares.
With respect to each Fund, the Trustees have determined that currently no
conflict of interest exists between or among the Class A, Class B, Class C and
Class Y shares. On an ongoing basis, the Trustees, pursuant to their fiduciary
duties under the 1940 Act and state laws, will seek to ensure that no such
conflict arises.
Front-End Sales Charge Alternative--Class A Shares
The public offering price of Class A shares for purchasers choosing the
front-end sales charge alternative is the net asset value plus a sales charge as
set forth in the Prospectus for each Fund.
Shares issued pursuant to the automatic reinvestment of income dividends or
capital gains distributions are not subject to any sales charges. The Fund
receives the entire net asset value of its Class A shares sold to investors. The
Distributor's commission is the sales charge set forth in the Prospectus for
each Fund, less any applicable discount or commission "reallowed" to selected
dealers and agents. The Distributor will reallow discounts to selected dealers
and agents in the amounts indicated in the table in the Prospectus. In this
regard, the Distributor may elect to reallow the entire sales charge to selected
dealers and agents for all sales with respect to which orders are placed with
the Distributor.
Set forth below is an example of the method of computing the offering price
of the Class A shares of each Fund. The example assumes a purchase of Class A
shares of a Fund aggregating less than $100,000 subject to the schedule of sales
charges set forth in the Prospectus at a price based upon the net asset value of
Class A shares of each Fund at the end of each Fund's latest fiscal period.
<TABLE>
<CAPTION>
Date Net Asset Per Share Offering Price
Value Sales Charge Per Share
<S> <C> <C> <C> <C>
Growth and Income 7/31/97 $27.26 $1.36 $28.62
Income and Growth 7/31/97 $23.94 $1.19 $25.13
Small Cap 7/31/97 $15.69 $0.78 $16.47
Utility 7/31/97 $11.45 $0.57 $12.02
Value 7/31/97 $24.64 $1.23 $25.87
Total Return 7/31/97 $20.69 $1.03 $21.72
</TABLE>
Prior to January 3, 1995, shares of Growth and Income, Income and Growth
and Small Cap were offered exclusively on a no-load basis and, accordingly, no
underwriting commissions were paid in respect of sales of shares of these Funds
or retained by the Distributor. In addition, since Class B and Class C shares
were not offered by Growth and Income, Income and Growth or Small Cap prior to
January 3, 1995, contingent deferred sales charges have been paid to the
Distributor with respect to Class B or Class C shares only since January 3,
1995.
With respect to Utility and Value, the following commissions were paid to
and amounts wereretained by Federated Securities Corp. through July 7, 1995,
which until such date was the principal underwriter of portfolios of Evergreen
Investment Trust. For the subsequent periods, commissions were paid to and
amounts were retained by the current Distributor as noted below:
<TABLE>
<CAPTION>
Period Ended Year Ended Period From Period From
7/31/97 12/31/96 7/8/95 1/1/95
to 12/31/95 to 7/7/95
<S> <C> <C> <C> <C>
VALUE
Comissions $479,927 $522,573 $58,797 $56,058
Received
Commissions $51,343 $ 56,609 $ 6,615 $6,001
Retained
UTILITY
Commissions $15,633 $ 74,988 $15,692 $20,958
Received
Commissions $1,789 $ 7,857 $1,727 $ 2,228
Retained
</TABLE>
With respect to Income and Growth, Growth and Income and Small, the
following commissions were paid to and amounts were retained by the Distributor
for the periods indicated:
<TABLE>
<CAPTION>
Period Ended Year Ended Year Ended Period from 1/3/95
7/31/97 1/31/97 1/31/96 to 1/31/95
<S> <C> <C> <C> <C>
INCOME AND GROWTH
Commissions Received $41,996 $ 187,403 $ 98,890 $ 4,585
Commissions Retained $4,196 $ 20,208 $ 10,733 ---
Year Ended Year Ended
12/31/96 12/31/95
GROWTH AND INCOME
Commissions Received $1,769,199 $ 1,473,258 $ 326,249
Commissions Retained $169,177 $ 158,858 $ 37,300
SMALL CAP
Commissions Received $72,045 $ 3,568 $ 778
Commissions Retained $8,281 $ 340 $ 284
</TABLE>
With respect to Total Return, the following commissions were paid to and
amounts were retained by Keystone Investment Distributors Company, which prior
to December 1, 1996, was the distributor for Total Return.
Period Ended Year Ended Year Ended
7/31/97 11/30/96 11/30/95
TOTAL RETURN
Commissions Received $128,762 $355,043 $190,327
Commissions Retained $7,709 ($75,270) ($243,621)
Investors choosing the front-end sales charge alternative may under certain
circumstances be entitled to pay reduced sales charges. The circumstances under
which such investors may pay reduced sales charges are described below.
Combined Purchase Privilege. Certain persons may qualify for the sales
charge reductions by combining purchases of shares of one or more Evergreen
Funds (other than the money market funds) into a single "purchase," if the
resulting "purchase" totals at least $100,000. The term "purchase" refers to:
(i) a single purchase by an individual, or to concurrent purchases, which in the
aggregate are at least equal to the prescribed amounts, by an individual, his or
her spouse and their children under the age of 21 years purchasing shares for
his, her or their own account(s); (ii) a single purchase by a trustee or other
fiduciary purchasing shares for a single trust, estate or single fiduciary
account although more than one beneficiary is involved; or (iii) a single
purchase by an organization exempt from federal income tax under Section 501
(c)(3) or (13) of the Code; a pension, profit-sharing or other employee benefit
plan whether or not qualified under Section 401 of the Code. The term "purchase"
also includes purchases by any "company," as the term is defined in the 1940
Act, but does not include purchases by any such company which has not been in
existence for at least six months or which has no purpose other than the
purchase of shares of a Fund or shares of other registered investment companies
at a discount. The term "purchase" does not include purchases by any group of
individuals whose sole organizational nexus is that the participants therein are
credit card holders of a company, policy holders of an insurance company,
customers of either a bank or broker-dealer or clients of an investment adviser.
A "purchase" may also include shares, purchased at the same time through a
single selected dealer or agent, of any Evergreen Fund.
Cumulative Quantity Discount (Right of Accumulation). An investor's
purchase of additional Class A shares of a Fund may qualify for a Cumulative
Quantity Discount. The applicable sales charge will be based on the total of:
(i) the investor's current purchase;
(ii) the net asset value (at the close of business on the previous day) of
(a) all Class A shares of the Fund held by the investor and (b) all such shares
of any other Evergreen Fund held by the investor; and
(iii) the net asset value of all shares described in paragraph; and
(iv) owned by another shareholder eligible to combine his or her purchase
with that of the investor into a single "purchase" (see above).
For example, if an investor owned Class A, B or C shares of an Evergreen
Fund worth $200,000 at their then current net asset value and, subsequently,
purchased Class A shares of a Fund worth an additional $100,000, the sales
charge for the $100,000 purchase, in the case of the Funds, would be at the
2.50% rate applicable to a single $300,000 purchase of shares of the Fund,
rather than the 3.75% rate.
To qualify for the Combined Purchase Privilege or to obtain the Cumulative
Quantity Discount on a purchase through a selected dealer or agent, the investor
or selected dealer or agent must provide the Distributor with sufficient
information to verify that each purchase qualifies for the privilege or
discount.
Letter of Intent. Class A investors may also obtain the reduced sales
charges shown in the Prospectus by means of a written Letter of Intent, which
expresses the investor's intention to invest not less than $100,000 within a
period of 13 months in Class A shares of the Fund or any other Evergreen Fund.
Each purchase of shares under a Letter of Intent will be made at the public
offering price or prices applicable at the time of such purchase to a single
transaction of the dollar amount indicated in the Letter of Intent. At the
investor's option, a Letter of Intent may include purchases of Class A shares of
the Fund or any other Evergreen Fund made not more than 90 days prior to the
date that the investor signs a Letter of Intent; however, the 13-month period
during which the Letter of Intent is in effect will begin on the date of the
earliest purchase to be included.
Investors qualifying for the Combined Purchase Privilege described above
may purchase shares of the Evergreen Funds under a single Letter of Intent. For
example, if at the time an investor signs a Letter of Intent to invest at least
$100,000 in Class A shares of the Fund, the investor and the investor's spouse
each purchase shares of the Fund worth $20,000 (for a total of $40,000), it will
only be necessary to invest a total of $60,000 during the following 13 months in
Class A shares of the Fund or any other Evergreen Fund, to qualify for the 3.75%
sales charge applicable to purchases in any Evergreen Fund on the total amount
being invested (the sales charge applicable to an investment of $100,000).
The Letter of Intent is not a binding obligation upon the investor to
purchase the full amount indicated. The minimum initial investment under a
Letter of Intent is 5% of such amount. Shares purchased with the first 5% of
such amount will be held in escrow (while remaining registered in the name of
the investor) to secure payment of the higher sales charge applicable to the
shares actually purchased if the full amount indicated is not purchased, and
such escrowed shares will be involuntarily redeemed to pay the additional sales
charge, if necessary. Dividends on escrowed shares, whether paid in cash or
reinvested in additional Fund shares, are not subject to escrow. When the full
amount indicated has been purchased, the escrow will be released. To the extent
that an investor purchases more than the dollar amount indicated on the Letter
of Intent and qualifies for a further reduced sales charge, the sales charge
will be adjusted for the entire amount purchased at the end of the 13-month
period. The difference in sales charge will be used to purchase additional
shares of the Fund subject to the rate of sales charge applicable to the actual
amount of the aggregate purchases.
Investors wishing to enter into a Letter of Intent in conjunction with
their initial investment in Class A shares of a Fund should complete the
appropriate portion of the Application while current Class A shareholders
desiring to do so can obtain a form of Letter of Intent by writing to a Fund at
200 Berkeley Street, Boston, Massachusetts 02116-5034 or by calling
1-800-343-2898.
Investments Through Employee Benefit and Savings Plans. Certain qualified
and non-qualified benefit and savings plans may make shares of the Evergreen
Funds available to their participants. Investments made by such employee benefit
plans may be exempt from any applicable front-end sales charges if they meet the
criteria set forth in the Prospectus under "Class A Shares-Front- End Sales
Charge Alternative." The Advisers may provide compensation to organizations
providing administrative and recordkeeping services to plans which make shares
of the Evergreen Funds available to their participants.
Reinstatement Privilege. A Class A shareholder who has caused any or all of
his or her shares of a Fund to be redeemed or repurchased may reinvest all or
any portion of the redemption or repurchase proceeds in Class A shares of the
Fund at net asset value without any sales charge, provided that such
reinvestment is made within 30 calendar days after the redemption or repurchase
date. Shares are sold to a reinvesting shareholder at the net asset value next
determined as described above. A reinstatement pursuant to this privilege will
not cancel the redemption or repurchase transaction; therefore, any gain or loss
so realized will be recognized for federal income tax purposes except that no
loss will be recognized to the extent that the proceeds are reinvested in shares
of the Fund. The reinstatement privilege may be used by the shareholder only
once, irrespective of the number of shares redeemed or repurchased, except that
the privilege may be used without limit in connection with transactions whose
sole purpose is to transfer a shareholder's interest in the Fund to his or her
individual retirement account or other qualified retirement plan account.
Investors may exercise the reinstatement privilege by written request sent to a
Fund at 200 Berkeley Street, Boston, Massachusetts 02116-5034.
Sales at Net Asset Value. In addition to the categories of investors set
forth in the Prospectus, each Fund may sell its Class A shares at net asset
value, i.e., without any sales charge, to: (i) certain investment advisory
clients of the Advisers or their affiliates; (ii) officers and present or former
Trustees of the Trusts; present or former trustees of other investment companies
managed by the Advisers; officers, directors and present or retired full-time
employees of the Advisers, the Distributor, and their affiliates; officers,
directors and present and full-time employees of selected dealers or agents; or
the spouse, sibling, direct ancestor or direct descendant (collectively
"relatives") of any such person; or any trust, individual retirement account or
retirement plan account for the benefit of any such person or relative; or the
estate of any such person or relative, if such shares are purchased for
investment purposes (such shares may not be resold except to the Fund); (iii)
certain employee benefit plans for employees of the Advisers, the Distributor
and their affiliates; (iv) persons participating in a fee-based program,
sponsored and maintained by a registered broker-dealer and approved by the
Distributor, pursuant to which such persons pay an asset-based fee to such
broker-dealer, or its affiliate or agent, for service in the nature of
investment advisory or administrative services. These provisions are intended to
provide additional job-related incentives to persons who serve the Funds or work
for companies associated with the Funds and selected dealers and agents of the
Funds. Since these persons are in a position to have a basic understanding of
the nature of an investment company as well as a general familiarity with the
Fund, sales to these persons, as compared to sales in the normal channels of
distribution, require substantially less sales effort. Similarly, these
provisions extend the privilege of purchasing shares at net asset value to
certain classes of institutional investors who, because of their investment
sophistication, can be expected to require significantly less than normal sales
effort on the part of the Funds and the Distributor.
Deferred Sales Charge Alternatives--Class B and Class C Shares
Investors choosing the deferred sales charge alternative purchase Class B
shares at the public offering price equal to the net asset value per share of
the Class B shares on the date of purchase without the imposition of a sales
charge at the time of purchase. The Class B shares are sold without a front-end
sales charge so that the full amount of the investor's purchase payment is
invested in the Fund initially.
Proceeds from the contingent deferred sales charge are paid to the
Distributor and are used by the Distributor to defray the expenses of the
Distributor related to providing distribution-related services to the Fund in
connection with the sale of the Class B shares, such as the payment of
compensation to selected dealers and agents for selling Class B shares. The
combination of the contingent deferred sales charge and the distribution
services fee (and, with respect to Utility and Value, the Shareholder Service
Plan fee) enables the Fund to sell the Class B shares without a sales charge
being deducted at the time of purchase. The higher distribution services fee
(and, with respect to Utility and Value, the Shareholder Service Plan fee)
incurred by Class B shares will cause such shares to have a higher expense ratio
and to pay lower dividends than those related to Class A shares.
Contingent Deferred Sales Charge. Class B shares which are redeemed within
six years of purchase will be subject to a contingent deferred sales charge at
the rates set forth in the Prospectus charged as a percentage of the dollar
amount subject thereto. The charge will be assessed on an amount equal to the
lesser of the cost of the shares being redeemed or their net asset value at the
time of redemption. Accordingly, no sales charge will be imposed on increases in
net asset value above the initial purchase price. In addition, no contingent
deferred sales charge will be assessed on shares derived from reinvestment of
dividends or capital gains distributions. The amount of the contingent deferred
sales charge, if any, will vary depending on the number of years from the time
of payment for the purchase of Class B shares until the time of redemption of
such shares.
In determining the contingent deferred sales charge applicable to a
redemption, it will be assumed that the redemption is first of any Class A
shares or Class C shares in the shareholder's Fund account, second of Class B
shares held for over six years or Class B shares acquired pursuant to
reinvestment of dividends or distributions and third of Class B shares held
longest during the six-year period.
To illustrate, assume that an investor purchased 100 Class B shares at $10
per share (at a cost of $1,000) and in the second year after purchase, the net
asset value per share is $12 and, during such time, the investor has acquired 10
additional Class B shares upon dividend reinvestment. If at such time the
investor makes his or her first redemption of 50 Class B shares, 10 Class B
shares will not be subject to charge because of dividend reinvestment. With
respect to the remaining 40 Class B shares, the charge is applied only to the
original cost of $10 per share and not to the increase in net asset value of $2
per share. Therefore, of the $600 of the shares redeemed $400 of the redemption
proceeds (40 shares x $10 original purchase price) will be charged at a rate of
4.0% (the applicable rate in the second year after purchase for a contingent
deferred sales charge of $16).
The contingent deferred sales charge is waived on redemptions of shares (i)
following the death or disability, as defined in the Code, of a shareholder, or
(ii) to the extent that the redemption represents a minimum required
distribution from an individual retirement account or other retirement plan to a
shareholder who has attained the age of 70-1/2.
Conversion Feature. At the end of the period ending seven years after the
end of the calendar month in which the shareholder's purchase order was
accepted, Class B shares will automatically convert to Class A shares and will
no longer be subject to a higher distribution services fee (and, with respect to
Utility and Value, the Shareholder Service Plan fee) imposed on Class B shares.
Such conversion will be on the basis of the relative net asset values of the two
classes, without the imposition of any sales load, fee or other charge. The
purpose of the conversion feature is to reduce the distribution services fee
paid by holders of Class B shares that have been outstanding long enough for the
Distributor to have been compensated for the expenses associated with the sale
For purposes of conversion to Class A, Class B shares purchased through the
reinvestment of dividends and distributions paid in respect of Class B shares in
a shareholder's account will be considered to be held in a separate sub-account.
Each time any Class B shares in the shareholder's account (other than those in
the sub-account) convert to Class A, an equal pro-rata portion of the Class B
shares in the sub-account will also convert to Class A.
The conversion of Class B shares to Class A shares is subject to the
continuing availability of an opinion of counsel to the effect that (i) the
assessment of the higher distribution services fee (and, with respect to Utility
and Value, Shareholder Service Plan fee) and transfer agency costs with respect
to Class B shares does not result in the dividends or distributions payable with
respect to other Classes of a Fund's shares being deemed "preferential
dividends" under the Code, and (ii) the conversion of Class B shares to Class A
shares does not constitute a taxable event under Federal income tax law. The
conversion of Class B shares to Class A shares may be suspended if such an
opinion is no longer available at the time such conversion is to occur. In that
event, no further conversions of Class B shares would occur, and shares might
continue to be subject to the higher distribution services fee (and, with
respect to Utility and Value, the Shareholder Service Plan fee) for an
indefinite period which may extend beyond the period ending seven years after
the end of the calendar month in which the shareholder's purchase order was
accepted.
Level-Load Alternative--Class C Shares
Investors choosing the level-load sales charge alternative purchase Class C
shares at the public offering price equal to the net asset value per share of
the Class C shares on the date of purchase without the imposition of a front-end
sales charge. However, you will pay a 1.0% contingent deferred sales charge if
you redeem shares during the first year after the month of purchase. No charge
is imposed in connection with redemptions made more than one year after the
month of purchase. Class C shares are sold without a front-end sales charge so
that the Fund will receive the full amount of the investor's purchase payment
and after the first year without a contingent deferred sales charge so that the
investor will receive as proceeds upon redemption the entire net asset value of
his or her Class C shares. The Class C distribution services fee (and, with
respect to Utility and Value, Shareholder Service Plan fee) enables the Fund to
sell Class C of shares without either a front-end or contingent deferred sales
charge. However, unlike Class B shares, Class C shares do not convert to any
other Class shares of the Fund. Class C shares incur higher distribution
services fees (and, with respect to Utility and Value, Shareholder Service Plan
fee) than Class A shares, and will thus have a higher expense ratio and pay
correspondingly lower dividends than Class A shares.
Class Y Shares
Class Y shares are not offered to the general public and are available only
to (i) persons who at or prior to December 30, 1994 owned shares in a mutual
fund advised by Evergreen Asset, (ii) certain investment advisory clients of the
Advisers and their affiliates, and (iii) institutional investors. Class Y shares
do not bear any Rule 12b-1 distribution expenses and are not subject to any
front-end or contingent deferred sales charges.
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GENERAL INFORMATION ABOUT THE FUNDS
(See also "Other Information - General Information"
in each Fund's Prospectus)
- --------------------------------------------------------------------------------
Capitalization and Organization
Each of the Evergreen Growth and Income Fund and Evergreen Income and
Growth Fund is a Massachusetts business trust. Evergreen Small Cap Equity Income
Fund is a separate series of The Evergreen American Retirement Trust, a
Massachusetts business trust. Evergreen Utility Fund and Evergreen Value Fund,
which prior to July 7, 1995 were known as the First Union Utility Portfolio and
First Union Value Portfolio, respectively, are each separate series of Evergreen
Investment Trust, a Massachusetts business trust. Keystone Fund for Total Return
(formerly Keystone America Fund for Total Return) is a Massachusetts business
trust. On July 7, 1995, First Union Funds changed its name to Evergreen
Investment Trust. The above-named Trusts are individually referred to in this
Statement of Additional Information as the "Trust" and collectively as the
"Trusts." Each Trust is governed by a Board of Trustees. Unless otherwise
stated, references to the "Board of Trustees" or "Trustees" in this Statement of
Additional Information refer to the Trustees of all the Trusts.
Income and Growth and Growth and Income may issue an unlimited number of
shares of beneficial interest with a $0.001 par value. Small Cap, Value and
Utility may issue an unlimited number of shares of beneficial interest with a
$0.0001 par value. Total Return may issue an unlimited number of shares of
beneficial interest without par value. All shares of these Funds have equal
rights and privileges. Each share is entitled to one vote, to participate
equally in dividends and distributions declared by the Funds and on liquidation
to their proportionate share of the assets remaining after satisfaction of
outstanding liabilities. Shares of these Funds are fully paid, nonassessable and
fully transferable when issued and have no pre-emptive, conversion or exchange
rights. Fractional shares have proportionally the same rights, including voting
rights, as are provided for a full share.
Under each Trust's Declaration of Trust, each Trustee will continue in
office until the termination of the Trust or his or her earlier death,
incapacity, resignation or removal. Shareholders can remove a Trustee upon a
vote of two-thirds of the outstanding shares of beneficial interest of the
Trust. Vacancies will be filled by a majority of the remaining Trustees, subject
to the 1940 Act. As a result, normally no annual or regular meetings of
shareholders will be held, unless otherwise required by the Declaration of Trust
of each Trust or the 1940 Act.
Shares have noncumulative voting rights, which means that the holders of
more than 50% of the shares voting for the election of Trustees can elect 100%
of the Trustees if they choose to do so and in such event the holders of the
remaining shares so voting will not be able to elect any Trustees.
The Trustees of each Trust are authorized to reclassify and issue any
unissued shares to any number of additional series without shareholder approval.
Accordingly, in the future, for reasons such as the desire to establish one or
more additional portfolios of a Trust with different investment objectives,
policies or restrictions, additional series of shares may be created by one or
more of the Trusts. Any issuance of shares of another series or class would be
governed by the 1940 Act and the law of the Commonwealth of Massachusetts. If
shares of another series of a Trust were issued in connection with the creation
of additional investment portfolios, each share of the newly created portfolio
would normally be entitled to one vote for all purposes. Generally, shares of
all portfolios would vote as a single series on matters, such as the election of
Trustees, that affected all portfolios in substantially the same manner. As to
matters affecting each portfolio differently, such as approval of the Investment
Advisory Agreement and changes in investment policy, shares of each portfolio
would vote separately.
In addition any Fund may, in the future, create additional classes of
shares which represent an interest in the same investment portfolio. Except for
the different distribution related and other specific costs borne by such
additional classes, they will have the same voting and other rights described
for the existing classes of each Fund.
Procedures for calling a shareholders' meeting for the removal of the
Trustees of each Trust, similar to those set forth in Section 16(c) of the 1940
Act, will be available to shareholders of each Fund. The rights of the holders
of shares of a series of a Fund may not be modified except by the vote of a
majority of the outstanding shares of such series.
Distributor
Evergreen Distributor, Inc. (the "Distributor"), 125 W. 55th Street, New
York, New York 10019, serves as each Fund's principal underwriter, and as such
may solicit orders from the public to purchase shares of any Fund. The
Distributor is not obligated to sell any specific amount of shares and will
purchase shares for resale only against orders for shares. Under the
Distribution Agreement between each Fund and the Distributor, the Fund has
agreed to indemnify the Distributor, in the absence of its willful misfeasance,
bad faith, gross negligence or reckless disregard of its obligations thereunder,
against certain civil liabilities, including liabilities under the Securities
Act of 1933, as amended.
Counsel
Sullivan & Worcester LLP, Washington, D.C. serves as counsel to the Funds.
Independent Auditors
Price Waterhouse LLP has been selected to be the independent auditors of
Income and Growth.
KPMG Peat Marwick LLP has been selected to be the independent auditors of
Growth and Income, Small Cap, Utility, Value and Total Return.
- --------------------------------------------------------------------------------
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
Total Return
From time to time a Fund may advertise its "total return." Computed
separately for each class, the Fund's "total return" is its average annual
compounded total return for the most recent one, five, and ten-year periods (or
the period since the Fund's inception). The Fund's total return for such a
period is computed by finding, through the use of a formula prescribed by the
SEC, the average annual compounded rate of return over the period that would
equate an assumed initial amount invested to the value of such investment at the
end of the period. For purposes of computing total return, income dividends and
capital gains distributions paid on shares of the Fund are assumed to have been
reinvested when paid, and the maximum sales charge applicable to purchases of
Fund shares is assumed to have been paid. The Fund will include performance data
for Class A, Class B, Class C and Class Y shares in any advertisement or
information including performance data of the Fund.
With respect to Income and Growth, Growth and Income and Small Cap, the
shares of each Fund outstanding prior to January 3, 1995 have been reclassified
as Class Y shares. The average annual compounded total return for each Class of
shares offered by the Funds for the most recently completed one and five year
fiscal periods and for the fiscal period ended July 31, 1997 is set forth in the
table below.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
INCOME AND 6 Months Ended 1 Year Ended 5 Years From Inception* to
GROWTH 7/31/97 7/31/97 Ended 7/31/97 7/31/97
Class A 7.11% 22.24% N/A 17.65%
Class B 7.06% 22.40% N/A 18.13%
Class C 11.06% 26.37% N/A 19.00%
Class Y 12.65% 28.70% 11.99% 9.54%**
GROWTH AND 7 Months Ended 1 Year Ended 5 Years Ended From Inception*** to
INCOME 7/31/97 7/31/97 7/31/97 7/31/97
Class A 15.57% 33.71% N/A 28.25%
Class B 15.82% 34.32% N/A 29.00%
Class C 19.82% 38.25% N/A 29.80%
Class Y 21.52% 40.66% 20.43% 15.06%**
SMALL CAP 7 Months Ended 1 Year Ended From
7/31/97 7/31/97 Inception****
to 7/31/97
Class A 15.24% 36.08% 26.18%
Class B 15.37% 36.69% 26.83%
Class C 19.30% 41.71% 27.76%
Class Y 21.09% 43.24% 18.98%
UTILITY 7 Months Ended 1 Year Ended From
7/31/97 7/31/97 Inception*****
to 7/31/97
Class A 5.46% 15.56% 8.95%
Class B 5.21% 15.42% 9.00%
UTILITY 7 Months Ended 1 Year Ended From
7/31/97 7/31/97 Inception*****
to 7/31/97
Class C 9.21% 19.42% 13.55%
Class Y 10.85% 21.45% 12.58%
VALUE 7 Months Ended 1 Year Ended 5 Years Ended From Inception
7/31/97 7/31/97 7/31/97 ****** to 7/31/97
Class A 15.04% 35.47% 15.86% 12.37%**
Class B 15.23% 36.20% N/A 16.82%
Class C 19.25% 40.24% N/A 22.25%
Class Y 20.93% 42.58% 17.32% 17.96%
TOTAL RETURN 8 Months Ended 1 Year Ended 5 Years Ended From Inception
7/31/97 7/31/97 7/31/97 *******
to 7/31/97
Class A 14.48% 36.84% 16.32% 12.40%**
Class B 14.68% 37.44% N/A 16.33%
Class C 18.73% 41.58% N/A 16.61%
Class Y N/A N/A N/A 17.22%
</TABLE>
* Inception date: Class A, Class B and Class C - January 3, 1995; Class Y -
August 31, 1978
** Ten years ended July 31, 1997
*** Inception date: Class A, Class B and Class C - January 3, 1995; Class Y
- - October 15, 1986
**** Inception date: Class A and Class B - January 3, 1995; Class C -
January 24, 1995; Class Y - October 1, 1993
***** Inception date: Class A and Class B - January 4, 1994; Class C -
September 2, 1994; Class Y - February 28, 1994
****** Inception date: Class A - April 12, 1985; Class B - February 2,
1993; Class C - September 2, 1994; Class Y - January 1, 1991.
******* Inception date: Class A - February 13, 1987; Class B and Class C-
February 1, 1993; Class Y - January 13, 1997
The performance numbers for Income and Growth, Growth and Income and Small
Cap for the Class A, Class B and Class C shares are hypothetical numbers based
on the performance for Class Y shares as adjusted for any applicable front-end
sales charge or contingent deferred sales charge through January 3, 1995
(commencement of class operations) and the actual performance of each class
subsequent to January 3, 1995. The performance data calculated prior to January
3, 1995, does not reflect any Rule 12b-1 fees. If such fees were reflected the
returns would be lower.
A Fund's total return is not fixed and will fluctuate in response to
prevailing market conditions or as a function of the type and quality of the
securities in a Fund's portfolio and its expenses. Total return information is
useful in reviewing a Fund's performance but such information may not provide a
basis for comparison with bank deposits or other investments which pay a fixed
yield for a stated period of time. An investor's principal investment in a Fund
is not fixed and will fluctuate in response to prevailing market conditions.
YIELD CALCULATIONS
From time to time, a Fund may quote its yield in advertisements or in
reports or other communications to shareholders. Yield quotations are expressed
in annualized terms and may be quoted on a compounded basis. Yields are computed
by dividing the Fund's interest income (as defined in the SEC yield formula) for
a given 30-day or one month period, net of expenses, by the average number of
shares entitled to receive distributions during the period, dividing this figure
by the Fund's net asset value per share at the end of the period and annualizing
the result (assuming compounding of income) in order to arrive at an annual
percentage rate. The formula for calculating yield is as follows:
YIELD = [2[(a-b/cd)+ 1]6-1]
Where a = Interest earned during the period
b = Expenses accrued for the period (net of reimbursements)
c = The average daily number of shares outstanding during the
period that were entitled to receive dividends
d = The maximum offering price per share on the last day of the
period
Income is calculated for purposes of yield quotations in accordance with
standardized methods applicable to all stock and bond funds. Gains and losses
generally are excluded from the calculation. Income calculated for purposes of
determining a Fund's yield differs from income as determined for other
accounting purposes. Because of the different accounting methods used, and
because of the compounding assumed in yield calculations, the yields quoted for
a Fund may differ from the rates of distributions a Fund paid over the same
period, or the net investment income reported in a Fund's financial statements.
Yield information is useful in reviewing a Fund's performance, but because
yields fluctuate, such information cannot necessarily be used to compare an
investment in a Fund's shares with bank deposits, savings accounts and similar
investment alternatives which often provide an agreed or guaranteed fixed yield
for a stated period of time. Shareholders should remember that yield is a
function of the kind and quality of the instruments in the Funds' investment
portfolios, portfolio maturity, operating expenses and market conditions.
It should be recognized that in periods of declining interest rates the
yields will tend to be somewhat higher than prevailing market rates, and in
periods of rising interest rates the yields will tend to be somewhat lower.
Also, when interest rates are falling, the inflow of net new money to a Fund
from the continuous sale of its shares will likely be invested in instruments
producing lower yields than the balance of the Fund's investments, thereby
reducing the current yield of the Fund. In periods of rising interest rates, the
opposite can be expected to occur.
The yield of Income and Growth, Growth and Income, Small Cap, Utility and
Value, except Total Return, for the thirty-day period ended July 31 for each
Class of shares offered by the Funds is set forth in the table below:
Income and Growth
Class A 3.00%
Class B 2.42%
Class C 2.42%
Class Y 3.39%
Growth and Income
Class A 0.57%
Class B -0.12%
Class C -0.12%
Class Y 0.84%
Utility
Class A 3.17%
Class B 2.59%
Class C 2.59%
Class Y 3.58%
Small Cap Value
Class A 1.97% 1.48%
Class B 1.36% 0.83%
Class C 1.36% 0.84%
Class Y 2.33% 1.79%
Non-Standardized Performance
In addition to the performance information described above, a Fund may
provide total return information for designated periods, such as for the most
recent six months or most recent twelve months. This total return information is
computed as described under "Total Return" above except that no annualization is
made.
- --------------------------------------------------------------------------------
GENERAL
- --------------------------------------------------------------------------------
From time to time, a Fund may quote its performance in advertising and
other types of literature as compared to the performance of the Standard &
Poor's 500 Composite Stock Price Index, the Dow Jones Industrial Average,
Russell 2000 Index, or any other commonly quoted index of common stock prices.
The Standard & Poor's 500 Composite Stock Price Index, the Dow Jones Industrial
Average and the Russell 2000 Index are unmanaged indices of selected common
stock prices. A Fund's performance may also be compared to those of other mutual
funds having similar objectives. This comparative performance would be expressed
as a ranking prepared by Lipper Analytical Services, Inc. or similar independent
services monitoring mutual fund performance. A Fund's performance will be
calculated by assuming, to the extent applicable, reinvestment of all capital
gains distributions and income dividends paid. Any such comparisons may be
useful to investors who wish to compare a Fund's past performance with that of
its competitors. Of course, past performance cannot be a guarantee of future
results.
Additional Information
Any shareholder inquiries may be directed to the shareholder's broker or to
each Adviser at the address or telephone number shown on the front cover of this
Statement of Additional Information. This Statement of Additional Information
does not contain all the information set forth in the Registration Statements
filed by the Trusts with the SEC under the Securities Act of 1933. Copies of the
Registration Statements may be obtained at a reasonable charge from the SEC or
may be examined, without charge, at the offices of the SEC in Washington, D.C.
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Each Fund's financial statements appearing in their most current fiscal
year Annual Report to shareholders and the report thereon of the independent
auditors appearing therein, namely Price Waterhouse LLP (in the case of Income
and Growth) or KPMG Peat Marwick LLP (in the case of Growth and Income, Small
Cap, Utility, Value, and Total Return) are incorporated by reference into this
Statement of Additional Information. The Annual Reports to Shareholders for each
Fund, which contain the referenced statements, are available upon request and
without charge.
APPENDIX "A"
DESCRIPTION OF BOND RATINGS
Standard & Poor's Ratings Service. A Standard & Poor's corporate or
municipal bond rating is a current assessment of the credit worthiness of an
obligor with respect to a specific obligation. This assessment of credit
worthiness may take into consideration obligors such as guarantors, insurers or
lessees. The debt rating is not a recommendation to purchase, sell or hold a
security, inasmuch as it does not comment as to market price or suitability for
a particular investor.
The ratings are based on current information furnished to Standard & Poor's
by the issuer or obtained by Standard & Poor's from other sources it considers
reliable. Standard & Poor's does not perform any audit in connection with the
ratings and may, on occasion, rely on unaudited financial information. The
ratings may be changed, suspended or withdrawn as a result of changes in,
unavailability of such information, or for other circumstances.
The ratings are based, in varying degrees, on the following considerations:
1. Likelihood of default-capacity and willingness of the obligor as to the
timely payment of interest and repayment of principal in accordance with the
terms of the obligation.
2. Nature of and provisions of the obligation.
3. Protection afforded by, and relative position of, the obligation in the
event of bankruptcy, reorganization or their arrangement under the laws of
bankruptcy and other laws affecting creditors' rights.
AAA - This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay interest and repay
any principal.
AA - Debt rated AA also qualifies as high quality debt obligations.
Capacity to pay interest and repay principal is very strong and in the majority
of instances they differ from AAA issues only in small degree.
A - Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB - Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB, B, CCC, CC, C - Debt rated BB, B, CCC, CC and C is regarded, on a
balance, as predominantly speculative with respect to capacity to pay interest
and repay principal in accordance with the terms of the obligation.
BB indicates the lowest degree of speculation and C the highest degree of
speculation. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
BB - Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB - rating.
B - Debt rated B has greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The B rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied BB or BB-
rating.
CCC - Debt rated CCC has a currently indefinable vulnerability to default,
and is dependent upon favorable business, financial and economic conditions to
meet timely payment of interest and repayment of principal. In the event of
adverse business, financial or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The CCC rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
B or B- rating.
CC - The rating CC is typically applied to debt subordinated to senior debt
that is assigned an actual or implied CCC rating.
C - The rating C is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC- debt rating. The C rating may be
used to cover a situation where a bankruptcy petition has been filed, but debt
service payments are continued.
C1 - The rating C1 is reserved for income bonds on which no interest is
being paid.
D - Debt rated D is in payment default. It is used when interest payments
or principal payments are not made on a due date even if the applicable grace
period has not expired, unless Standard & Poor's believes that such payments
will be made during such grace periods; it will also be used upon a filing of a
bankruptcy petition if debt service payments are jeopardized.
Plus (+) or Minus (-) - To provide more detailed indications of credit
quality, the ratings from AA to CCC may be modified by the addition of a plus or
minus sign to show relative standing within the major rating categories.
NR - indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that Standard & Poor's
does not rate a particular type of obligation as a matter of policy. Debt
obligations of issuers outside the United States and its territories are rated
on the same basis as domestic corporate and municipal issues. The ratings
measure the credit worthiness of the obligor but do not take into account
currency exchange and related uncertainties.
Bond Investment Quality Standards: Under present commercial bank
regulations issued by the Comptroller of the Currency, bonds rated in the top
four categories (AAA, AA, A, BBB, commonly known as "Investment Grade" ratings)
are generally regarded as eligible for bank investment. In addition, the Legal
Investment Laws of various states may impose certain rating or other standards
for obligations eligible for investment by savings banks, trust companies,
insurance companies and fiduciaries generally.
Moody's Investors Service. A brief description of the applicable Moody's
rating symbols and their meanings follows:
Aaa - Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge". Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa - Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuations of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.
A - Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment sometime in the future.
Baa - Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Some bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well. NOTE: Bonds within the above
categories which possess the strongest investment attributes are designated by
the symbol "1" following the rating.
Ba - Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B - Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa - Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca - Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.
C - Bonds which are rated C are the lowest rated class of bonds and issue
so rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.
Duff & Phelps, Inc.: AAA-- highest credit quality, with negligible risk
factors; AA -- high credit quality, with strong protection factors and modest
risk, which may vary very slightly from time to time because of economic
conditions; A--average credit quality with adequate protection factors, but with
greater and more variable risk factors in periods of economic stress. The
indicators "+" and "-" to the AA and A categories indicate the relative position
of a credit within those rating categories.
Fitch Investors Service L.P.: AAA -- highest credit quality, with an
exceptionally strong ability to pay interest and repay principal; AA -- very
high credit quality, with very strong ability to pay interest and repay
principal; A -- high credit quality, considered strong as regards principal and
interest protection, but may be more vulnerable to adverse changes in economic
conditions and circumstances. The indicators "+" and "-" to the AA, A and BBB
categories indicate the relative position of credit within those rating
categories.
DESCRIPTION OF MUNICIPAL NOTE RATINGS
A Standard & Poor's note rating reflects the liquidity concerns and market
access risks unique to notes. Notes due in three years or less will likely
receive a note rating. Notes maturing beyond three years will most likely
receive a long-term debt rating. The following criteria will be used in making
that assessment.
o Amortization schedule (the larger the final maturity relative to other
maturities the more likely it will be treated as a note).
o Source of Payment (the more dependent the issue is on the market for its
refinancing, the more likely it will be treated as a note.) Note rating symbols
are as follows:
o SP-1 Very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics will be given a
plus (+) designation.
o SP-2 Satisfactory capacity to pay principal and interest.
o SP-3 Speculative capacity to pay principal and interest.
Moody's Short-Term Loan Ratings - Moody's ratings for state and municipal
short-term obligations will be designated Moody's Investment Grade (MIG). This
distinction is in recognition of the differences between short-term credit risk
and long-term risk. Factors affecting the liquidity of the borrower are
uppermost in importance in short-term borrowing, while various factors of major
importance in bond risk are of lesser importance over the short run.
Rating symbols and their meanings follow:
o MIG 1 - This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or demonstrated
broad-based access to the market for refinancing.
o MIG 2 - This designation denotes high quality. Margins of protection are
ample although not so large as in the preceding group.
o MIG 3 - This designation denotes favorable quality. All security
elements are accounted for but this is lacking the undeniable strength of the
preceding grades. Liquidity and cash flow protection may be narrow and market
access for refinancing is likely to be less well established.
o MIG 4 - This designation denotes adequate quality. Protection commonly
regarded as required of an investment security is present and although not
distinctly or predominantly speculative, there is specific risk.
COMMERCIAL PAPER RATINGS
Moody's Investors Service: Commercial paper rated "Prime" carries the
smallest degree of investment risk. The modifiers 1, 2, and 3 are used to denote
relative strength within this highest classification.
Standard & Poor's Ratings Service: "A" is the highest commercial paper
rating category utilized by Standard & Poor's Ratings Group which uses the
numbers 1+, 1, 2 and 3 to denote relative strength within its "A"
classification.
Duff & Phelps, Inc.: Duff 1 is the highest commercial paper rating category
utilized by Duff & Phelps which uses + or - to denote relative strength within
this classification. Duff 2 represents good certainty of timely payment, with
minimal risk factors. Duff 3 represents satisfactory protection factors, with
risk factors larger and subject to more variation.
Fitch Investors Service L.P.: F-1+ -- denotes exceptionally strong credit
quality given to issues regarded as having strongest degree of assurance for
timely payment; F-1 -- very strong, with only slightly less degree of assurance
for timely payment than F-1+; F-2 -- good credit quality, carrying a
satisfactory degree of assurance for timely payment.
<PAGE>
EVERGREEN GROWTH AND INCOME FUND
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
Item 24(a). Financial Statements
The following financial statements are incorporated by reference to the
Annual Report of the Evergreen Growth and Income Fund dated July 31, 1997.
Schedule of Investments July 31, 1997.
Financial Highlights
Class A shares For the period from January 3, 1995
(Commencement of class operations)
through December 31, 1995, for the one-
year period ended December 31, 1996, and
for the seven-month period ended
July 31, 1997.
Class B shares For the period from January 3, 1995
(Commencement of class operations)
through December 31, 1995, for the one-
year period ended December 31, 1996, and
for the seven-month period ended
July 31, 1997.
Class C shares For the period from January 3, 1995
(Commencement of class operations)
through December 31, 1995, for the one-
year period ended December 31, 1996, and
for the seven-month period ended
July 31, 1997.
Class Y shares For each of the years in the ten-year
period ended December 31, 1996, and for
the seven-month period ended
July 31, 1997.
Statement of Assets and Liabilities July 31, 1997.
Statements of Operations For the seven months ended July 31, 1997
and the year ended December 31, 1996
Statements of Changes in Net Assets For the seven months ended July 31, 1997
and each of the years in the two-year
period ended December 31, 1996
Notes to Financial Statements
Independent Auditors' Report Dated August 22, 1997.
<PAGE>
Item 24(b). Exhibits:
(1)(a) Declaration of Trust(1)
(b) Certificate of Amendment to Declaration of Trust(2)
(c) Form of Instrument providing for the Establishment
and Designation of Classes(2)
(2)(a) By-Laws(1)
(3) Not applicable
(4) Instruments Defining Rights of Shareholders(3)
(5) Investment Advisory Agreement(2)
(6) Distribution Agreement(2)
(7) Form of Deferred Compensation Plan(4)
(8) Custodian Agreement(5)
(9) None
(10) None
(11) Consent of KPMG Peat Marwick LLP, Independent
Auditors(6)
(12) None
(13) None
(14) None
(15) Rule 12b-1 Distribution Plans(2)
(16) Performance Calculations(7)
(17) Financial Data Schedules(6)
(18) Not applicable
(19) Powers of Attorney(6)
- -------------------
(1) Incorporated by reference to Registrant's registration statement on
Form N-1A, File No. 33-6700 filed June 24, 1986.
(2) Incorporated by reference to Post-Effective Amendment No. 10 to
Registrant's registration statement on Form N-1A, File No. 33-6700 filed
January 5, 1995.
(3) Incorporated by reference to Post-Effective Amendment No. 8 to Registrant's
registration statement on Form N-1A, File No. 33-6700 filed March 11, 1994.
(4) To be filed by Amendment.
(5) Incorporated by reference to Pre-Effective Amendment No. 1 to Registrant's
registration statement on Form N-1A, File No. 33-6700 filed
September 24, 1986.
(6) Filed herewith.
(7) Incorporated by reference to Post-Effective Amendment No. 14 to
Registrant's registration statement on Form N-1A, File No. 33-6700
<PAGE>
Item 25. Persons Controlled by or Under Common Control with Registrant:
Not applicable.
Item 26. Number of Holders of Securities:
Number of Record Holders
Title of Class as of October 31, 1997
-------------- ------------------------
Shares of beneficial interest
(.0001 par value)
Class A Shares 17,250
Class B Shares 57,249
Class C Shares 1,289
Class Y Shares 4,621
Item 27. Indemnification
Provisions for the indemnification of the Registrant's Trustees and
officers are contained in Article XI of Registrant's By-laws, a copy of which
was filed with Registrant's registration statement on Form N-1A, File No.
33-6700 filed June 24, 1986.
Item 28. Business and Other Connections of Investment Adviser:
For a description of the other business of the investment adviser, see the
section entitled "Management of the Funds-Investment Adviser" in Part A.
The Trustees and principal executive officers of the Fund's Investment
Adviser, and the Directors of the Fund's Manager, are set forth in the following
tables:
FIRST UNION NATIONAL BANK
BOARD OF DIRECTORS
Edward E. Crutchfield
Anthony P. Terracciano
John R. Georgius
Marion A. Cowell, Jr.
Robert T. Atwood
All of the Directors are located at the following address: First Union
National Bank, 301 South College Street, Charlotte, NC 28288
FIRST UNION NATIONAL BANK
EXECUTIVE OFFICERS
Edward E. Crutchfield, Chairman & CEO, First Union Corporation
John R. Georgius, Vice Chairman, First Union Corporation
Marion A. Cowell, Jr., Secretary and EVP, First Union Corporation
Robert T. Atwood, EVP & CFO, First Union Corporation
Anthony P. Terracciano, President, First Union Corporation
All of the Executive Officers are located at the following address: First
Union National Bank, 301 South College Street, Charlotte, NC 28288
Item 29. Principal Underwriters
The Directors and principal executive officers of Evergreen Distributor,
Inc. (formerly Evergreen Keystone Distributor, Inc.) are:
Directors Lynn C. Mangum
Robert J. McMullan
Officers Lynn C. Mangum Chairman, CEO
Robert C. McMullan Executive Vice President,
Treasurer
J. David Huber President
Kevin J. Dell Vice President, General
Counsel, Secretary
Mark J. Rybarczyk Senior Vice President
Dennis Sheehan Senior Vice President
Mark Dillon Senior Vice President
George Martinez Senior Vice President
D'Ray Moore Vice President
Dale Smith Vice President
Michael Burns Vice President
Bruce Treff Assistant Secretary
Annmaria Porcaro Assistant Secretary
In addition to the Registrant, Evergreen Distributor, Inc. also acts as
Distributor for the following registered investment companies or separate series
thereof:
Evergreen Trust
Evergreen Fund
Evergreen Aggressive Growth Fund
Evergreen Equity Trust:
Evergreen Global Real Estate Equity Fund
Evergreen U.S. Real Estate Equity Fund
Evergreen Global Leaders Fund
The Evergreen MicroCap Fund, Inc.
The Evergreen Income and Growth Fund
The Evergreen American Retirement Trust:
The Evergreen American Retirement Fund
Evergreen Small Cap Equity Income Fund
The Evergreen Foundation Trust:
Evergreen Foundation Fund
Evergreen Tax Strategic Foundation Fund
The Evergreen Municipal Trust:
Evergreen Short-Intermediate Municipal Fund
Evergreen Florida High Income Municipal Bond Fund
Evergreen Tax Exempt Money Market Fund
Evergreen Institutional Tax Exempt Money Market Fund
Evergreen Money Market Trust
Evergreen Money Market Fund
Evergreen Institutional Money Market Fund
Evergreen Institutional Treasury Money Market Fund
Evergreen Investment Trust
Evergreen Emerging Markets Growth Fund
Evergreen International Equity Fund
Evergreen Balanced Fund
Evergreen Value Fund
Evergreen Utility Fund
Evergreen Short-Intermediate Bond Fund
Evergreen U.S. Government Fund
Evergreen Florida Municipal Bond 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
The Evergreen Lexicon Fund:
Evergreen Intermediate-Term Government Securities Fund
Evergreen Intermediate-Term Bond Fund II
Evergreen Tax Free Trust:
Evergreen Pennsylvania Tax Free Money Market Fund
Evergreen New Jersey Tax Free Income Fund
Evergreen Variable Trust:
Evergreen VA Fund
Evergreen VA Growth and Income Fund
Evergreen VA Foundation Fund
Evergreen VA Global Leaders Fund
Evergreen VA Strategic Income Fund
Evergreen VA Aggressive Growth Fund
Evergreen Capital Preservation and Income Fund
Evergreen Fund for Total Return
Evergreen Global Opportunities Fund
Evergreen Global Resources and Development Fund
Evergreen Institutional Adjustable Rate Fund
Evergreen Institutional Trust
Evergreen Institutional Small Cap Growth Fund
Evergreen Intermediate Term Bond Fund
Evergreen Latin America Fund
Evergreen Omega Fund
Evergreen Small Company Growth Fund II
Evergreen State Tax Free Fund
Evergreen New York Tax Free Fund
Evergreen Pennsylvania Tax Free Fund
Evergreen Massachusetts Tax Free Fund
Evergreen Florida Tax Free Fund
Evergreen State Tax Free Fund - Series II
Evergreen Missouri Tax Free Fund
Evergreen California Tax Free Fund
Evergreen Strategic Income Fund
Evergreen Tax Free Income Fund
Keystone Quality Bond Fund (B-1)
Keystone Diversified Bond Fund (B-2)
Keystone High Income Bond Fund (B-4)
Keystone Balanced Fund (K-1)
Keystone Strategic Growth Fund (K-2)
Keystone Growth and Income Fund (S-1)
Keystone Small Company Growth Fund (S-4)
Keystone International Fund Inc.
Keystone Precious Metals Holdings, Inc.
Keystone Tax Free Fund
Item 30. Location of Accounts and Records
Accounts, books and other documents required to be maintained by Section
31(a) of the Investment Company Act of 1940 and the Rules promulgated thereunder
are maintained at the offices of:
First Union National Bank
1 First Union Center
301 S. College Street
Charlotte, North Carolina 28288
Evergreen Asset Management Corp.
2500 Westchester Avenue
Purchase, New York 10577
Evergreen Investment Services, Inc.
200 Berkeley Street
Boston, Massachusetts 02116
Evergreen Service Company
200 Berkeley Street
Boston, Massachusetts 02116
State Street Bank and Trust Company
1776 Heritage Drive
Quincy, Massachusetts 02171
Iron Mountain
3431 Sharp Slot Road
Swansea, Massachusetts 02720
Item 31. Management Services
Not Applicable.
Item 32. Undertakings
Upon request and without charge, Registrant hereby undertakes to furnish to
each person to whom a copy of the Registrant's prospectus is delivered with a
copy of its latest annual report to shareholders.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Amendment to its Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Amendment to its Registration Statement to be signed on its behalf
by the undersigned, thereto duly authorized in the City of Boston, and the
Commonwealth of Massachusetts, on the 28th day of November, 1997.
EVERGREEN FUND FOR TOTAL RETURN
/s/ John J. Pileggi
---------------------------
John J. Pileggi
President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to Registrant's Registration Statement has been signed below by the following
persons in the capacities indicated on the 28th day of November, 1997.
SIGNATURES TITLE
- ---------- -----
<TABLE>
<S> <C> <C>
/s/ George S. Bissell /s/ Charles F. Chapin /s/ William Walt Pettit
- ------------------------ ------------------------- -------------------------
George S. Bissell Charles F. Chapin* William Walt Pettit
Chairman of the Board of Trustees Trustee Trustee
and Chief Executive Officer
/s/ John J. Pileggi /s/ K. Dun Gifford /s/ David M. Richardson
- ------------------------- ------------------------- -------------------------
John J. Pileggi K. Dun Gifford* David M. Richardson*
President amd Treasurer (Principal Trustee Trustee
Financial and Accounting Officer)
/s/ Frederick Amling /s/ James S. Howell /s/ Russell A. Salton, III
- ------------------------- ------------------------- --------------------------
Frederick Amling* James S. Howell Russell A. Salton, III MD
Trustee Trustee Trustee
/s/ Laurence B. Ashkin /s/ Leroy Keith, Jr. /s/ Michael S. Scofield
- ------------------------- ------------------------- -------------------------
Laurence B. Ashkin Leroy Keith, Jr.* Michael S. Scofield
Trustee Trustee Trustee
/s/ Charles A. Austin, III /s/ F. Ray Keyser, Jr. /s/ Richard J. Shima
- ------------------------- ------------------------- -------------------------
Charles A. Austin, III* F. Ray Keyser, Jr.* Richard J. Shima*
Trustee Trustee Trustee
/s/ Foster Bam /s/ Gerald M. McDonnell /s/ Andrew J. Simons
- ------------------------- ------------------------- -------------------------
Foster Bam Gerald M. McDonnell Andrew J. Simons*
Trustee Trustee Trustee
/s/ Edwin D. Campbell /s/ Thomas L. McVerry
- ------------------------- -------------------------
Edwin D. Campbell* Thomas L. McVerry
Trustee Trustee
</TABLE>
*By:/s/ Martin J. Wolin
- -----------------------------
Martin J. Wolin**
Attorney-in-Fact
** Martin J. Wolin, by signing his name hereto, does hereby sign this
document on behalf of each of the above-named individuals pursuant to powers of
attorney duly executed by such persons filed as part of the Registration
Statement to Registrant's previous filings on Form N-1A.
<PAGE>
INDEX TO EXHIBITS
Exhibit Number Exhibit
- -------------- -------
11 Consent of KPMG Peat Marwick LLP, Independent Auditors
17 Financial Data Schedules
19 Powers of Attorney
CONSENT OF INDEPENDENT AUDITORS
The Trustees and Shareholders
Evergreen Growth and Income Fund
Evergreen Utility Fund
Evergreen Value Fund
Evergreen Small Cap Equity Income Fund
Evergreen Fund for Total Return
We consent to the use of our reports dated August 22, 1997 incorporated by
reference herein and to the reference to our firm under the captions "FINANCIAL
HIGHLIGHTS" in the Prospectuses.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Boston, Massachusetts
November 28, 1997
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 101
<NAME> EVERGREEN GROWTH & INCOME FUND CLASS A
<PERIOD-TYPE> 7-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUL-31-1997
<INVESTMENTS-AT-COST> 975,611,770
<INVESTMENTS-AT-VALUE> 1,341,337,101
<RECEIVABLES> 13,405,955
<ASSETS-OTHER> 111,749
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,354,854,805
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 6,162,426
<TOTAL-LIABILITIES> 6,162,426
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 959,749,798
<SHARES-COMMON-STOCK> 6,101,395
<SHARES-COMMON-PRIOR> 3,764,617
<ACCUMULATED-NII-CURRENT> (10,791)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 23,228,041
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 365,725,331
<NET-ASSETS> 1,348,692,379
<DIVIDEND-INCOME> 6,788,322
<INTEREST-INCOME> 5,272,237
<OTHER-INCOME> 0
<EXPENSES-NET> (9,655,368)
<NET-INVESTMENT-INCOME> 2,407,908
<REALIZED-GAINS-CURRENT> 23,375,321
<APPREC-INCREASE-CURRENT> 188,382,086
<NET-CHANGE-FROM-OPS> 214,165,315
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,967,692
<NUMBER-OF-SHARES-REDEEMED> (645,446)
<SHARES-REINVESTED> 14,532
<NET-CHANGE-IN-ASSETS> 56,236,526
<ACCUMULATED-NII-PRIOR> (6,087)
<ACCUMULATED-GAINS-PRIOR> (44,345)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (5,736,248)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (9,655,368)
<AVERAGE-NET-ASSETS> 120,759,872
<PER-SHARE-NAV-BEGIN> 22.53
<PER-SHARE-NII> 0.08
<PER-SHARE-GAIN-APPREC> 4.72
<PER-SHARE-DIVIDEND> (0.07)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 27.26
<EXPENSE-RATIO> 1.47
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
[ARTICLE] 6
[LEGEND]
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
[/LEGEND]
[SERIES]
[NUMBER] 101
[NAME] EVERGREEN GROWTH & INCOME FUND CLASS B
[PERIOD-TYPE] 7-MOS
[FISCAL-YEAR-END] JUL-31-1997
[PERIOD-START] JAN-01-1997
[PERIOD-END] JUL-31-1997
[INVESTMENTS-AT-COST] 975,611,770
[INVESTMENTS-AT-VALUE] 1,341,337,101
[RECEIVABLES] 13,405,955
[ASSETS-OTHER] 111,749
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 1,354,854,805
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 6,162,426
[TOTAL-LIABILITIES] 6,162,426
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 959,749,798
[SHARES-COMMON-STOCK] 20,017,483
[SHARES-COMMON-PRIOR] 10,915,374
[ACCUMULATED-NII-CURRENT] (10,791)
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 23,228,041
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 365,725,331
[NET-ASSETS] 1,348,692,379
[DIVIDEND-INCOME] 6,788,322
[INTEREST-INCOME] 5,272,237
[OTHER-INCOME] 0
[EXPENSES-NET] (9,655,368)
[NET-INVESTMENT-INCOME] 2,407,908
[REALIZED-GAINS-CURRENT] 23,375,321
[APPREC-INCREASE-CURRENT] 188,382,086
[NET-CHANGE-FROM-OPS] 214,165,315
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 9,881,863
[NUMBER-OF-SHARES-REDEEMED] (779,920)
[SHARES-REINVESTED] 166
[NET-CHANGE-IN-ASSETS] 217,580,012
[ACCUMULATED-NII-PRIOR] (6,087)
[ACCUMULATED-GAINS-PRIOR] (44,345)
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] (5,736,248)
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] (9,655,368)
[AVERAGE-NET-ASSETS] 369,093,831
[PER-SHARE-NAV-BEGIN] 22.43
[PER-SHARE-NII] (0.02)
[PER-SHARE-GAIN-APPREC] 4.69
[PER-SHARE-DIVIDEND] 0
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 27.1
[EXPENSE-RATIO] 2.25
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
[ARTICLE] 6
[LEGEND]
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
[/LEGEND]
[SERIES]
[NUMBER] 101
[NAME] EVERGREEN GROWTH & INCOME FUND CLASS C
[PERIOD-TYPE] 7-MOS
[FISCAL-YEAR-END] JUL-31-1997
[PERIOD-START] JAN-01-1997
[PERIOD-END] JUL-31-1997
[INVESTMENTS-AT-COST] 975,611,770
[INVESTMENTS-AT-VALUE] 1,341,337,101
[RECEIVABLES] 13,405,955
[ASSETS-OTHER] 111,749
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 1,354,854,805
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 6,162,426
[TOTAL-LIABILITIES] 6,162,426
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 959,749,798
[SHARES-COMMON-STOCK] 884,622
[SHARES-COMMON-PRIOR] 428,489
[ACCUMULATED-NII-CURRENT] (10,791)
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 23,228,041
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 365,725,331
[NET-ASSETS] 1,348,692,379
[DIVIDEND-INCOME] 6,788,322
[INTEREST-INCOME] 5,272,237
[OTHER-INCOME] 0
[EXPENSES-NET] (9,655,368)
[NET-INVESTMENT-INCOME] 2,407,908
[REALIZED-GAINS-CURRENT] 23,375,321
[APPREC-INCREASE-CURRENT] 188,382,086
[NET-CHANGE-FROM-OPS] 214,165,315
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 511,624
[NUMBER-OF-SHARES-REDEEMED] (55,491)
[SHARES-REINVESTED] 0
[NET-CHANGE-IN-ASSETS] 10,949,221
[ACCUMULATED-NII-PRIOR] (6,087)
[ACCUMULATED-GAINS-PRIOR] (44,345)
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] (5,736,248)
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] (9,655,368)
[AVERAGE-NET-ASSETS] 15,598,691
[PER-SHARE-NAV-BEGIN] 22.43
[PER-SHARE-NII] (0.02)
[PER-SHARE-GAIN-APPREC] 4.69
[PER-SHARE-DIVIDEND] 0
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 27.1
[EXPENSE-RATIO] 2.25
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
[ARTICLE] 6
[LEGEND]
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
[/LEGEND]
[SERIES]
[NUMBER] 101
[NAME] EVERGREEN GROWTH & INCOME FUND CLASS Y
[PERIOD-TYPE] 7-MOS
[FISCAL-YEAR-END] JUL-31-1997
[PERIOD-START] JAN-01-1997
[PERIOD-END] JUL-31-1997
[INVESTMENTS-AT-COST] 975,611,770
[INVESTMENTS-AT-VALUE] 1,341,337,101
[RECEIVABLES] 13,405,955
[ASSETS-OTHER] 111,749
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 1,354,854,805
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 6,162,426
[TOTAL-LIABILITIES] 6,162,426
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 959,749,798
[SHARES-COMMON-STOCK] 22,572,148
[SHARES-COMMON-PRIOR] 19,608,041
[ACCUMULATED-NII-CURRENT] (10,791)
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 23,228,041
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 365,725,331
[NET-ASSETS] 1,348,692,379
[DIVIDEND-INCOME] 6,788,322
[INTEREST-INCOME] 5,272,237
[OTHER-INCOME] 0
[EXPENSES-NET] (9,655,368)
[NET-INVESTMENT-INCOME] 2,407,908
[REALIZED-GAINS-CURRENT] 23,375,321
[APPREC-INCREASE-CURRENT] 188,382,086
[NET-CHANGE-FROM-OPS] 214,165,315
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 6,060,064
[NUMBER-OF-SHARES-REDEEMED] (3,163,527)
[SHARES-REINVESTED] 67,571
[NET-CHANGE-IN-ASSETS] 70,825,245
[ACCUMULATED-NII-PRIOR] (6,087)
[ACCUMULATED-GAINS-PRIOR] (44,345)
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] (5,736,248)
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] (9,655,368)
[AVERAGE-NET-ASSETS] 510,644,943
[PER-SHARE-NAV-BEGIN] 22.55
[PER-SHARE-NII] 0.11
[PER-SHARE-GAIN-APPREC] 4.73
[PER-SHARE-DIVIDEND] (0.10)
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 27.29
[EXPENSE-RATIO] 1.21
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Dorothy E. Bourassa, Terrence J.
Cullen, Rosemary D. Van Antwerp, James P. Wallin, Martin J. Wolin and John J.
Pileggi, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-14 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director or Trustee and for which Keystone Investment
Management Company, Evergreen Asset Management Corp. or First Union National
Bank of North Carolina serves as Adviser or Manager and registering from time to
time the shares of such companies, and generally to do all such things in my
name and on my behalf to enable such investment companies to comply with the
provisions of the Securities Act of 1933, as amended, the Investment Company Act
of 1940, as amended, and all requirements and regulations of the Securities and
Exchange Commission thereunder, hereby ratifying and confirming my signature as
it may be signed by my said attorneys to any and all registration statements and
amendments thereto.
In Witness Whereof, I have executed this Power of Attorney as of June
18, 1997.
SIGNATURE TITLE
/s/ Laurence B. Ashkin
____________________________ Director/Trustee
Laurence B. Ashkin
20388
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Dorothy E. Bourassa, Terrence J.
Cullen, Rosemary D. Van Antwerp, James P. Wallin, Martin J. Wolin and John J.
Pileggi, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-14 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director or Trustee and for which Keystone Investment
Management Company, Evergreen Asset Management Corp. or First Union National
Bank of North Carolina serves as Adviser or Manager and registering from time to
time the shares of such companies, and generally to do all such things in my
name and on my behalf to enable such investment companies to comply with the
provisions of the Securities Act of 1933, as amended, the Investment Company Act
of 1940, as amended, and all requirements and regulations of the Securities and
Exchange Commission thereunder, hereby ratifying and confirming my signature as
it may be signed by my said attorneys to any and all registration statements and
amendments thereto.
In Witness Whereof, I have executed this Power of Attorney as of June
18, 1997.
SIGNATURE TITLE
/s/ Charles A. Austin III
_____________________________ Director/Trustee
Charles A. Austin III
20388
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Dorothy E. Bourassa, Terrence J.
Cullen, Rosemary D. Van Antwerp, James P. Wallin, Martin J. Wolin and John J.
Pileggi, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-14 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director or Trustee and for which Keystone Investment
Management Company, Evergreen Asset Management Corp. or First Union National
Bank of North Carolina serves as Adviser or Manager and registering from time to
time the shares of such companies, and generally to do all such things in my
name and on my behalf to enable such investment companies to comply with the
provisions of the Securities Act of 1933, as amended, the Investment Company Act
of 1940, as amended, and all requirements and regulations of the Securities and
Exchange Commission thereunder, hereby ratifying and confirming my signature as
it may be signed by my said attorneys to any and all registration statements and
amendments thereto.
In Witness Whereof, I have executed this Power of Attorney as of June
18, 1997.
SIGNATURE TITLE
/s/ K. Dun Gifford
_____________________________ Director/Trustee
K. Dun Gifford
20388
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Dorothy E. Bourassa, Terrence J.
Cullen, Rosemary D. Van Antwerp, James P. Wallin, Martin J. Wolin and John J.
Pileggi, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-14 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director or Trustee and for which Keystone Investment
Management Company, Evergreen Asset Management Corp. or First Union National
Bank of North Carolina serves as Adviser or Manager and registering from time to
time the shares of such companies, and generally to do all such things in my
name and on my behalf to enable such investment companies to comply with the
provisions of the Securities Act of 1933, as amended, the Investment Company Act
of 1940, as amended, and all requirements and regulations of the Securities and
Exchange Commission thereunder, hereby ratifying and confirming my signature as
it may be signed by my said attorneys to any and all registration statements and
amendments thereto.
In Witness Whereof, I have executed this Power of Attorney as of June
18, 1997.
SIGNATURE TITLE
/s/ James S. Howell
_____________________________ Director/Trustee
James S. Howell
20388
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Dorothy E. Bourassa, Terrence J.
Cullen, Rosemary D. Van Antwerp, James P. Wallin, Martin J. Wolin and John J.
Pileggi, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-14 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director or Trustee and for which Keystone Investment
Management Company, Evergreen Asset Management Corp. or First Union National
Bank of North Carolina serves as Adviser or Manager and registering from time to
time the shares of such companies, and generally to do all such things in my
name and on my behalf to enable such investment companies to comply with the
provisions of the Securities Act of 1933, as amended, the Investment Company Act
of 1940, as amended, and all requirements and regulations of the Securities and
Exchange Commission thereunder, hereby ratifying and confirming my signature as
it may be signed by my said attorneys to any and all registration statements and
amendments thereto.
In Witness Whereof, I have executed this Power of Attorney as of June
18, 1997.
SIGNATURE TITLE
/s/ Leroy Keith, Jr.
_____________________________ Director/Trustee
Leroy Keith, Jr.
20388
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Dorothy E. Bourassa, Terrence J.
Cullen, Rosemary D. Van Antwerp, James P. Wallin, Martin J. Wolin and John J.
Pileggi, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-14 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director or Trustee and for which Keystone Investment
Management Company, Evergreen Asset Management Corp. or First Union National
Bank of North Carolina serves as Adviser or Manager and registering from time to
time the shares of such companies, and generally to do all such things in my
name and on my behalf to enable such investment companies to comply with the
provisions of the Securities Act of 1933, as amended, the Investment Company Act
of 1940, as amended, and all requirements and regulations of the Securities and
Exchange Commission thereunder, hereby ratifying and confirming my signature as
it may be signed by my said attorneys to any and all registration statements and
amendments thereto.
In Witness Whereof, I have executed this Power of Attorney as of June
18, 1997.
SIGNATURE TITLE
/s/ Gerald M. McDonnell
_____________________________ Director/Trustee
Gerald M. McDonnell
20388
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Dorothy E. Bourassa, Terrence J.
Cullen, Rosemary D. Van Antwerp, James P. Wallin, Martin J. Wolin and John J.
Pileggi, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-14 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director or Trustee and for which Keystone Investment
Management Company, Evergreen Asset Management Corp. or First Union National
Bank of North Carolina serves as Adviser or Manager and registering from time to
time the shares of such companies, and generally to do all such things in my
name and on my behalf to enable such investment companies to comply with the
provisions of the Securities Act of 1933, as amended, the Investment Company Act
of 1940, as amended, and all requirements and regulations of the Securities and
Exchange Commission thereunder, hereby ratifying and confirming my signature as
it may be signed by my said attorneys to any and all registration statements and
amendments thereto.
In Witness Whereof, I have executed this Power of Attorney as of June
18, 1997.
SIGNATURE TITLE
/s/ Thomas L. McVerry
_____________________________ Director/Trustee
Thomas L. McVerry
20388
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Dorothy E. Bourassa, Terrence J.
Cullen, Rosemary D. Van Antwerp, James P. Wallin, Martin J. Wolin and John J.
Pileggi, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-14 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director or Trustee and for which Keystone Investment
Management Company, Evergreen Asset Management Corp. or First Union National
Bank of North Carolina serves as Adviser or Manager and registering from time to
time the shares of such companies, and generally to do all such things in my
name and on my behalf to enable such investment companies to comply with the
provisions of the Securities Act of 1933, as amended, the Investment Company Act
of 1940, as amended, and all requirements and regulations of the Securities and
Exchange Commission thereunder, hereby ratifying and confirming my signature as
it may be signed by my said attorneys to any and all registration statements and
amendments thereto.
In Witness Whereof, I have executed this Power of Attorney as of June
18, 1997.
SIGNATURE TITLE
/s/ William Walt Pettit
_____________________________ Director/Trustee
William Walt Pettit
20388
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Dorothy E. Bourassa, Terrence J.
Cullen, Rosemary D. Van Antwerp, James P. Wallin, Martin J. Wolin and John J.
Pileggi, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-14 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director or Trustee and for which Keystone Investment
Management Company, Evergreen Asset Management Corp. or First Union National
Bank of North Carolina serves as Adviser or Manager and registering from time to
time the shares of such companies, and generally to do all such things in my
name and on my behalf to enable such investment companies to comply with the
provisions of the Securities Act of 1933, as amended, the Investment Company Act
of 1940, as amended, and all requirements and regulations of the Securities and
Exchange Commission thereunder, hereby ratifying and confirming my signature as
it may be signed by my said attorneys to any and all registration statements and
amendments thereto.
In Witness Whereof, I have executed this Power of Attorney as of June
18, 1997.
SIGNATURE TITLE
/s/ David M. Richardson
_____________________________ Director/Trustee
David M. Richardson
20388
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Dorothy E. Bourassa, Terrence J.
Cullen, Rosemary D. Van Antwerp, James P. Wallin, Martin J. Wolin and John J.
Pileggi, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-14 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director or Trustee and for which Keystone Investment
Management Company, Evergreen Asset Management Corp. or First Union National
Bank of North Carolina serves as Adviser or Manager and registering from time to
time the shares of such companies, and generally to do all such things in my
name and on my behalf to enable such investment companies to comply with the
provisions of the Securities Act of 1933, as amended, the Investment Company Act
of 1940, as amended, and all requirements and regulations of the Securities and
Exchange Commission thereunder, hereby ratifying and confirming my signature as
it may be signed by my said attorneys to any and all registration statements and
amendments thereto.
In Witness Whereof, I have executed this Power of Attorney as of June
18, 1997.
SIGNATURE TITLE
/s/ Russell A. Salton, III MD
_____________________________ Director/Trustee
Russell A. Salton, III MD
20388
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Dorothy E. Bourassa, Terrence J.
Cullen, Rosemary D. Van Antwerp, James P. Wallin, Martin J. Wolin and John J.
Pileggi, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-14 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director or Trustee and for which Keystone Investment
Management Company, Evergreen Asset Management Corp. or First Union National
Bank of North Carolina serves as Adviser or Manager and registering from time to
time the shares of such companies, and generally to do all such things in my
name and on my behalf to enable such investment companies to comply with the
provisions of the Securities Act of 1933, as amended, the Investment Company Act
of 1940, as amended, and all requirements and regulations of the Securities and
Exchange Commission thereunder, hereby ratifying and confirming my signature as
it may be signed by my said attorneys to any and all registration statements and
amendments thereto.
In Witness Whereof, I have executed this Power of Attorney as of June
18, 1997.
SIGNATURE TITLE
/s/ Michael S. Scofield
_____________________________ Director/Trustee
Michael S. Scofield
20388
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Dorothy E. Bourassa, Terrence J.
Cullen, Rosemary D. Van Antwerp, James P. Wallin, Martin J. Wolin and John J.
Pileggi, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-14 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director or Trustee and for which Keystone Investment
Management Company, Evergreen Asset Management Corp. or First Union National
Bank of North Carolina serves as Adviser or Manager and registering from time to
time the shares of such companies, and generally to do all such things in my
name and on my behalf to enable such investment companies to comply with the
provisions of the Securities Act of 1933, as amended, the Investment Company Act
of 1940, as amended, and all requirements and regulations of the Securities and
Exchange Commission thereunder, hereby ratifying and confirming my signature as
it may be signed by my said attorneys to any and all registration statements and
amendments thereto.
In Witness Whereof, I have executed this Power of Attorney as of June
18, 1997.
SIGNATURE TITLE
/s/ Richard J. Shima
_____________________________ Director/Trustee
Richard J. Shima
