Registration No. 2-40357/811-2193
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM N-1A
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933 /X/
Pre-Effective Amendment No. / /
Post-Effective Amendment No. 33 /X/
and/or
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. 33 /X/
(Check appropriate box or boxes)
--------------------
EVERGREEN TRUST
(Exact name of registrant as specified in charter)
2500 Westchester Avenue
Purchase, N.Y. 10577
(Address of Principal Executive Offices)
(Registrant's Telephone Number, Including Area Code (914) 694-2020)
James P. Wallin, Esq.
Evergreen Asset Management Corp.
2500 Westchester Avenue, Purchase, New York 10577
(Name and address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box)
/ /Immediately upon filing pursuant to paragraph (b) or
/ /on (date) pursuant to paragraph (b) or
/ /60 days after filing pursuant to paragraph (a)(i) or
/ /on (date) pursuant to paragraph (a)(i) or
/X/75 days after filing pursuant to paragraph (a)(ii) or
/ /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)
Registrant has registered an indefinite number of shares under the Securities
Act of 1933 pursuant to Rule 24f-2 under the Investment Company Act of 1940.
Registrant's Rule 24f-2 notice for its fiscal year ended September 30, 1996 was
filed on or about November 27, 1996.
<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 Fund(s);
General Information
Item 5. Management of the Fund Management of the Fund(s);
General Information
Item 6. Capital Stock and Other Securities Dividends, Distributions
and Taxes; General
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
Item 14. Management of the Fund Management
Item 15. Control Persons and Principal Management
Holders of Securities
Item 16. Investment Advisory and Other Services Investment Adviser;
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
Part C
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C to this Registration Statement.
<PAGE>
*******************************************************************************
PROSPECTUS
*******************************************************************************
THE EVERGREEN(SM) DOMESTIC GROWTH FUNDS
*******************************************************************************
PROSPECTUS DATED JUNE 2, 1997
EVERGREEN FUND
EVERGREEN AGGRESSIVE GROWTH FUND
EVERGREEN SMALL CAP VALUE FUND
PROSPECTUS DATED NOVEMBER 29, 1996 AS SUPPLEMENTED JUNE 2, 1997
EVERGREEN U.S. REAL ESTATE EQUITY FUND
EVERGREEN LIMITED MARKET FUND, INC.
CLASS A SHARES
CLASS B SHARES
CLASS C SHARES
The Evergreen Domestic Growth Funds (the "Funds") are designed to provide
investors with a selection of investment alternatives that seek to provide
capital growth and diversification. This Prospectus provides information
regarding the Class A, Class B and Class C shares offered by the Funds. Each
Fund is, or is a series of, an open-end, diversified, management investment
company. This Prospectus sets forth concise information about the Funds that a
prospective investor should know before investing. The address of the Funds is
2500 Westchester Avenue, Purchase, New York 10577.
A Statement of Additional Information ("SAI") dated June 2, 1997 for the
Evergreen Fund, the Evergreen Aggressive Growth Fund and the Evergreen Small Cap
Value Fund and dated November 29, 1996 as supplemented June 2, 1997 for the
Evergreen U.S. Real Estate Equity Fund and the Evergreen Limited Market Fund,
Inc. has been filed with the Securities and Exchange Commission and is
incorporated by reference herein. The SAI provides information regarding certain
matters discussed in this Prospectus and other matters that may be of interest
to investors. Shareholders may obtain a copy of the SAI without charge by
calling the Funds at (800) 343-2898. There can be no assurance that the
investment objective of any Fund will be achieved. Investors are advised to read
this Prospectus carefully.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF ANY
BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT INSURED OR
OTHERWISE PROTECTED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY AND
INVOLVE RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
KEEP THIS PROSPECTUS FOR FUTURE REFERENCE
EVERGREEN(SM) is a Service Mark of Evergreen Asset Management Corp.
Copyright 1995, Evergreen Asset Management Corp.
<PAGE>
TABLE OF CONTENTS
OVERVIEW OF THE FUNDS......................................................3
EXPENSE INFORMATION........................................................4
FINANCIAL HIGHLIGHTS.......................................................9
DESCRIPTION OF THE FUNDS..................................................20
INVESTMENT OBJECTIVES AND POLICIES..................................20
INVESTMENT PRACTICES AND RESTRICTIONS...............................23
OPTIONS, FUTURES AND DERIVATIVES....................................25
SPECIAL RISK CONSIDERATIONS.........................................28
MANAGEMENT OF THE FUNDS...................................................30
BOARD OF TRUSTEES/DIRECTORS.........................................30
INVESTMENT ADVISERS.................................................30
SUB-ADVISER.........................................................31
PORTFOLIO MANAGERS..................................................31
ADMINISTRATOR.......................................................32
SUBADMINISTRATOR....................................................32
DISTRIBUTION PLANS AND AGREEMENTS...................................33
PURCHASE AND REDEMPTION OF SHARES.........................................34
HOW TO BUY SHARES...................................................34
HOW TO REDEEM SHARES................................................39
EXCHANGE PRIVILEGE..................................................41
SHAREHOLDER SERVICES................................................42
EFFECT OF BANKING LAWS..............................................43
OTHER INFORMATION.........................................................44
DIVIDENDS, DISTRIBUTIONS AND TAXES..................................44
GENERAL INFORMATION.................................................45
<PAGE>
OVERVIEW OF THE FUNDS
The following summary is qualified in its entirety by the more detailed
information contained elsewhere in this Prospectus. See "Description of the
Funds" and "Management of the Funds."
The investment adviser to the EVERGREEN FUND, EVERGREEN U.S. REAL ESTATE
EQUITY FUND and EVERGREEN LIMITED MARKET FUND, INC. is Evergreen Asset
Management Corp. ("EAMC"). EAMC and its predecessors have served as investment
adviser to the Evergreen mutual funds since 1971. EAMC is a wholly-owned
subsidiary of First Union National Bank of North Carolina ("FUNB"), which in
turn is a subsidiary of First Union Corporation, the sixth largest bank holding
company in the United States. The Capital Management Group of First Union
National Bank of North Carolina serves as investment adviser to EVERGREEN
AGGRESSIVE GROWTH FUND.
Keystone Investment Management Company ("Keystone") serves as investment
adviser to the EVERGREEN SMALL CAP VALUE FUND. Keystone is an indirectly-owned
subsidiary of FUNB. Keystone, or its affiliates, have provided investment
advisory and management services to investment companies and private accounts
since 1932.
EVERGREEN FUND seeks to achieve capital appreciation by investing in the
securities of little-known or relatively small companies, or companies
undergoing changes which the Fund's investment adviser believes will have
favorable consequences. Income will not be a factor in the selection of
portfolio investments.
EVERGREEN U.S. REAL ESTATE EQUITY FUND seeks long-term capital growth.
Current income is a secondary objective. It invests primarily in equity
securities of U.S. companies which are principally engaged in the real estate
industry or which own significant real estate assets. It will not purchase
direct interests in real estate.
EVERGREEN LIMITED MARKET FUND, INC. seeks to achieve capital appreciation
in the value of its shares. Income is not a factor in the selection of portfolio
securities. In attempting to achieve its objective, the policy of EVERGREEN
LIMITED MARKET FUND, INC. is to invest principally in securities of companies
for which there is a relatively limited trading market. Generally these are
little-known, small or special situation companies.
EVERGREEN AGGRESSIVE GROWTH FUND seeks long-term capital appreciation by
investing primarily in common stocks of emerging growth companies and in larger,
more well established companies, all of which are viewed by the Fund's
investment adviser as having above average appreciation potential.
EVERGREEN SMALL CAP VALUE FUND seeks capital appreciation by investing in a
diversified portfolio of common stocks of U.S. issuers which the investment
adviser believes have underlying values, or potential values, exceeding their
current values.
THERE IS NO ASSURANCE THAT THE INVESTMENT OBJECTIVE OF ANY FUND WILL BE
ACHIEVED.
<PAGE>
EXPENSE INFORMATION
All Funds
The table set forth below summarizes the shareholder transaction costs
associated with an investment in Class A, Class B and Class C Shares of a Fund.
For further information see "Purchase and Redemption of Shares" and "General
Information -- Other Classes of Shares."
SHAREHOLDER TRANSACTION EXPENSES
Class A Shares Class B Shares Class C Shares
Maximum Sales Charge
Imposed on Purchases 4.75% None None
(as a % of offering price)
Maximum Deferred Sales
Charge (as a % of None 5.00%* 1.00%*
original purchase price
or redemption proceeds,
whichever is lower)
- -----------------------
*The deferred sales charge declines over a six-year period from 5.00% during
the month of purchase and the first twelve-month period following the month of
purchase to 1.00% during the sixth twelve-month period following the month of
purchase. No deferred sales charge is imposed on amounts redeemed thereafter.
ANNUAL FUND OPERATING EXPENSES AND EXAMPLES
The following tables show for each Fund the estimated 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 Class 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 4.75% 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 deferred sales charge applicable for
that time period, and (iii) the expenses for Class B Shares reflect the
conversion to Class A Shares seven years after the month of purchase (years
seven through ten, therefore, reflect Class A expenses).
EVERGREEN FUND
<TABLE>
<CAPTION>
EXAMPLES
Assuming Redemption
ANNUAL OPERATING EXPENSES at End of Period Assuming No Redemption
Class A Class B Class C Class A Class B Class C Class B Class C
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management Fees .98% .98% .98% After 1 Year $ 61 $ 72 $ 32 $ 22 $ 22
12b-1 Fees* .25% 1.00% 1.00% After 3 Years $ 90 $ 97 $ 67 $ 67 $ 67
Other Expenses .17% .17% .17% After 5 Years $ 120 $ 135 $ 115 $ 115 $ 115
Total+ 1.40% 2.15% 2.15% After 10 Years $ 207 $ 220 $ 248 $ 220 $ 248
</TABLE>
EVERGREEN U.S. REAL ESTATE EQUITY FUND
<TABLE>
<CAPTION>
EXAMPLES
Assuming Redemption at End of
ANNUAL OPERATING EXPENSES Period Assuming No Redemption
Class A Class B Class C Class A Class B Class C Class B Class C
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management Fees 1.00% 1.00% 1.00% After 1 Year $ 64 $ 75 $ 35 $ 25 $ 25
12b-1 Fees* .25% 1.00% 1.00% After 3 Years $ 100 $ 108 $ 78 $ 78 $ 78
Other Expenses After 5 Years $ 138 $ 153 $ 133 $ 133 $ 133
(after reimbursement)** .50% .50% .50% After 10 Years $ 244 $ 257 $ 284 $ 257 $ 284
Total+ 1.75% 2.50% 2.50%
</TABLE>
<PAGE>
EVERGREEN LIMITED MARKET FUND, INC.
<TABLE>
<CAPTION>
EXAMPLES
Assuming Redemption at End of
ANNUAL OPERATING EXPENSES Period Assuming No Redemption
Class A Class B Class C Class A Class B Class C Class B Class C
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management Fees 1.00% 1.00% 1.00% After 1 Year $ 65 $ 76 $ 36 $ 26 $ 26
12b-1 Fees* .25% 1.00% 1.00% After 3 Years $ 103 $ 111 $ 81 $ 81 $ 81
Other Expenses*** .60% .60% .60% After 5 Years $ 143 $ 158 $ 138 $ 138 $ 138
Total+ 1.85% 2.60% 2.60% After 10 Years $ 254 $ 267 $ 293 $ 267 $ 293
</TABLE>
EVERGREEN AGGRESSIVE GROWTH FUND
<TABLE>
<CAPTION>
EXAMPLES
Assuming Redemption at End
ANNUAL OPERATING EXPENSES of Period Assuming No Redemption
Class A Class B Class C Class A Class B Class C Class B Class C
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management Fees .60% .60% .60% After 1 Year $ 59 $ 70 $ 30 $ 20 $ 20
12b-1 Fees* .25% 1.00% 1.00% After 3 Years $ 84 $ 92 $ 62 $ 62 $ 62
Other Expenses .37% .37% .37% After 5 Years $ 111 $ 126 $ 106 $ 106 $ 106
Total+ 1.22% 1.97% 1.97% After 10 Years $ 188 $ 201 $ 230 $ 201 $ 230
</TABLE>
EVERGREEN SMALL CAP VALUE FUND
<TABLE>
<CAPTION>
EXAMPLES
Assuming Redemption at End
ANNUAL OPERATING EXPENSES of Period Assuming No Redemption
Class A Class B Class C Class A Class B Class C Class B Class C
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management Fees .95% .95% .95% After 1 Year $ 64 $ 75 $ 35 $ 25 $ 25
12b-1 Fees* .25% 1.00% 1.00% After 3 Years $ 100 $ 108 $ 78 $ 78 $ 78
Other .55% .55% .55%
Expenses****
Total+ 1.75% 2.50% 2.50%
</TABLE>
*Class A Shares can pay up to an annual rate of 0.75% of average net assets as a
12b-1 Fee. For the foreseeable future, the Class A Shares 12b-1 Fees will be
limited to 0.25% of average net assets.
**Reflects agreements by EAMC to limit aggregate operating expenses (including
the Advisory Fees, but excluding interest, taxes, brokerage commissions, Rule
12b-1 distribution fees and shareholder servicing fees and extraordinary
expenses) of EVERGREEN U.S. REAL ESTATE EQUITY FUND to an annual rate of 1.50%
of average net assets until the Fund reaches net assets of $15 million. Absent
such agreements, the estimated annual operating expenses for the Fund would be
2.50% of average net assets for Class A shares and 3.25% of average net assets
for Class B and Class C Shares.
***The annual operating expenses and examples do not reflect fee waivers and
expense reimbursements for the most recent fiscal period. Actual expenses net of
fee waivers and expense reimbursements for the fiscal year ended September 30,
1996 for Class A, Class B and Class C Shares were 1.73%, 2.47% and 2.44%,
respectively. 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.
****Reflects agreements by Keystone to limit aggregate operating expenses
(including the Advisory Fees, but excluding interest, taxes, brokerage
commissions, Rule 12b-1 distribution fees and shareholder servicing fees and
extraordinary expenses) of EVERGREEN SMALL CAP VALUE FUND to an annual rate of
1.50% of average net assets until the Fund reaches net assets of $15 million.
Absent such agreements, the estimated annual operating expenses for the Fund
would be 2.00%, 2.75% and 2.75% of average net assets for Class A, Class B and
Class C Shares, respectively.
+ Total annual operating expenses represent estimated expenses for the fiscal
year ending September 30, 1997.
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 fiscal period. These 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.
FINANCIAL HIGHLIGHTS
The tables on the following pages represent, for each Fund, financial
highlights for a share outstanding throughout each period. Price Waterhouse LLP
has audited the financial highlights for (i) the five most recent fiscal years
or the life of the Fund, if shorter, for EVERGREEN FUND and EVERGREEN U.S. REAL
ESTATE EQUITY FUND, (ii) the fiscal year ended September 30, 1996 for EVERGREEN
LIMITED MARKET FUND, INC., and (iii) for the fiscal periods ended September 30,
1995 and 1996 for EVERGREEN AGGRESSIVE GROWTH FUND. Ernst & Young LLP was
EVERGREEN LIMITED MARKET FUND, INC.'s prior independent auditors and audited
that Fund's financial highlights for each of the fiscal years in the four-year
period ended September 30, 1995. A report of Price Waterhouse LLP and Ernst &
Young LLP, as the case may be, on the audited information with respect to each
Fund is contained in the annual report to shareholders of each Fund which in
relevant part is incorporated by reference in the SAI. Shareholders should read
the following information for each Fund in conjunction with the financial
statements and related notes contained in such annual report which are
incorporated by reference in the SAI.
Further information about a Fund's performance is contained in the Fund's
annual report to shareholders, which may be obtained without charge.
<PAGE>
EVERGREEN FUND -- CLASS A, B AND C SHARES
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
JANUARY 3, JANUARY 3, JANUARY 3,
1995* 1995* 1995*
YEAR ENDED THROUGH YEAR ENDED THROUGH YEAR ENDED THROUGH
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1996 1995 1996 1995 1996 1995
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning of
period............................. $15.55 $ 11.97 $15.48 $11.97 $15.48 $11.97
Income from investment operations:
Net investment income (loss)....... .12 .01 (.03) (.02) -- (.01)
Net realized and unrealized gain
on investments................... 2.61 3.57 2.64 3.53 2.61 3.52
Total from investment
operations..................... 2.73 3.58 2.61 3.51 2.61 3.51
Less distributions to shareholders
from:
Net investment income.............. (.06) -- (.02) -- (.04) --
Net realized gains................. (.58) -- (.58) -- (.58) --
Total distributions.............. (.64) -- (.60) -- (.62) --
Net asset value, end of period....... $17.64 $ 15.55 $ 17.49 $15.48 $ 17.47 $15.48
TOTAL RETURN+........................ 18.1% 29.9% 17.3% 29.3% 17.3% 29.3%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (in
millions).......................... $87 $29 $254 $74 $6 $2
Ratios to average net assets:
Expenses........................... 1.45% 1.70%#++ 2.18% 2.32%#++ 2.14%# 2.12%#++
Interest expense................... -- .01%++ -- .01%++ -- .01%++
Net investment income (loss)....... .63% .13%#++ (.10%) (.48%)#++ (.07%)# (.31%)#++
Portfolio turnover rate.............. 15% 19% 15% 19% 15% 19%
Average commission rate paid
per share.......................... $ .0603 N/A $ .0603 N/A $ .0603 N/A
</TABLE>
* Commencement of class operations.
+ Total return is calculated on net asset value per share for the periods
indicated and is not annualized. Initial sales charge or contingent deferred
sales charges are not reflected.
++ Annualized.
# Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were assumed or waived by the investment adviser, the
annualized ratios of expenses and net investment income (loss) to average
net assets, exclusive of any applicable state expense limitations would have
been the following:
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
JANUARY 3, JANUARY 3, JANUARY 3,
1995* 1995* 1995*
THROUGH THROUGH YEAR ENDED THROUGH
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1995 1995 1996 1995
<S> <C> <C> <C> <C>
Expenses..................................... 1.75% 2.34% 2.38% 5.31%
Net investment income (loss)................. .08% (.50%) (.31%) (3.50%)
</TABLE>
<PAGE>
EVERGREEN U.S. REAL ESTATE EQUITY FUND -- CLASS A, B AND C SHARES
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
MARCH 10, MARCH 7, JULY 12,
YEAR ENDED 1995* THROUGH YEAR ENDED 1995* THROUGH YEAR ENDED 1995* THROUGH
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1996| 1995 1996| 1995 1996| 1995
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning
of period..................... $11.42 $9.21 $ 11.37 $9.19 $ 11.41 $ 10.87
Income from investment
operations:
Net investment income......... .20 .18 .13 .05 .13 .08
Net realized and unrealized
gain on investments......... 1.28 2.03 1.27 2.13 1.28 .46
Total from investment
operations................ 1.48 2.21 1.40 2.18 1.41 .54
Less distributions to
shareholders from:
Net investment income......... (.20) -- (.15) -- (.17) --
Net realized gains............ (.21) -- (.21) -- (.21) --
Total distributions......... (.41) -- (.36) -- (.38) --
Net asset value, end of
period........................ $12.49 $ 11.42 $ 12.41 $ 11.37 $ 12.44 $ 11.41
TOTAL RETURN+................... 13.1% 24.0% 12.5% 23.7% 12.5% 5.0%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted)............... $263 $5 $431 $160 $125 $3
Ratios to average net assets:
Expenses...................... 1.72%# 1.78%++# 2.46%# 2.51%++# 2.47%# 2.49%++#
Interest expense.............. .04% -- .04% -- .04% --
Net investment income......... 1.60%# 3.13%++# 1.05%# 2.00%++# 1.08%# 2.55%++#
Portfolio turnover rate......... 169% 115% 169% 115% 169% 115%
Average commission rate paid
per share..................... $.0619 N/A $.0619 N/A $.0619 N/A
</TABLE>
| Per share data is calculated based on average shares outstanding during the
period.
* Commencement of class operations.
+ Total return is calculated on net asset value per share for the periods
indicated and is not annualized. Initial sales charge or contingent deferred
sales charges are not reflected.
++ Annualized.
# Net of expense waivers and reimbursements. If the Fund had borne all expenses
that were assumed or waived by the investment adviser, the annualized ratios
of expenses and net investment loss to average net assets, exclusive of any
applicable state expense limitations, would have been the following:
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
MARCH 10, MARCH 7, JULY 12,
YEAR ENDED 1995* THROUGH YEAR ENDED 1995* THROUGH YEAR ENDED 1995* THROUGH
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1996 1995 1996 1995 1996 1995
<S> <C> <C> <C> <C> <C> <C>
Expenses................ 9.65% 364.74% 6.19% 28.70% 18.82% 421.54%
Net investment loss..... (6.33%) (359.83%) (2.68%) (24.19%) (15.27%) (416.50%)
</TABLE>
<PAGE>
EVERGREEN LIMITED MARKET FUND, INC. -- CLASS A, B AND C SHARES
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
JANUARY 3, JANUARY 3, JANUARY 3,
YEAR 1995* YEAR 1995* YEAR 1995*
ENDED THROUGH ENDED THROUGH ENDED THROUGH
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1996| 1995 1996| 1995 1996| 1995
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning of
period............................. $ 18.41 $15.76 $18.30 $15.76 $18.31 $15.76
Income (loss) from investment
operations:
Net investment loss................ (.10) (.10) (.25) (.20) (.36) (.20)
Net realized and unrealized gain
(loss) on investments............ (.44) 2.75 (.42) 2.74 (.30) 2.75
Total from investment
operations..................... (.54) 2.65 (.67) 2.54 (.66) 2.55
Less distributions to shareholders
from net realized gains............ (.56) -- (.56) -- (.56) --
Net asset value, end of period....... $ 17.31 $18.41 $17.07 $18.30 $17.09 $18.31
TOTAL RETURN+........................ (2.9%) 16.8% (3.6%) 16.1% (3.6%) 16.2%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted).................... $903 $1,089 $1,461 $2,020 $27 $62
Ratios to average net assets:
Expenses#.......................... 1.73% 1.51%++ 2.47% 2.26%++ 2.44% 2.25%++
Interest expense................... .02% -- .02% -- .02% --
Net investment loss#............... (.52%) (1.03%)++ (1.28%) (1.77%)++ (1.35%) (1.76%)++
Portfolio turnover rate.............. 160% 84% 160% 84% 160% 84%
Average commission rate paid
per share.......................... $.0497 N/A $.0497 N/A $ .0497 N/A
</TABLE>
| Per share data based on average shares outstanding.
* Commencement of class operations.
+ Total return is calculated for the periods indicated and is not annualized.
Initial sales charge or contingent deferred sales charges are not reflected.
++ Annualized.
# Net of expense waivers and reimbursements. If the Fund had borne all expenses
that were assumed or waived by the investment adviser, the annualized ratios
of expenses and net investment loss to average net assets, exclusive of any
applicable state expense limitations, would have been the following:
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
JANUARY 3, JANUARY 3, JANUARY 3,
YEAR 1995* YEAR 1995* YEAR 1995*
ENDED THROUGH ENDED THROUGH ENDED THROUGH
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1996 1995 1996 1995 1996 1995
<S> <C> <C> <C> <C> <C> <C>
Expenses......................... 3.08% 4.33% 3.26% 3.66% 32.28% 41.34%
Net investment loss.............. (1.87%) (3.85%) (2.07%) (3.18%) (31.19%) (40.85%)
</TABLE>
<PAGE>
EVERGREEN AGGRESSIVE GROWTH FUND -- CLASS A SHARES
<TABLE>
<CAPTION>
TEN MONTHS
YEAR ELEVEN MONTHS ENDED
ENDED ENDED OCTOBER
SEPTEMBER 30, SEPTEMBER 30, YEAR ENDED OCTOBER 31, 31,
1996 1995* 1994|# 1993|# 1992|# 1991|# 1990|# 1989|# 1988**|#
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value,
beginning of
period............... $17.37 $13.85 $14.44 $11.76 $12.22 $7.37 $11.06 $7.62 $7.07
Income (loss) from
investment
operations:
Net investment
loss............... (.15) (.16) (.13) (.12) (.10) (.08) (.04) (.11) (.21)
Net realized and
unrealized gain
(loss)............. 4.46 3.68 (.22) 3.06 1.84 5.59 (2.02) 3.55 .76
Total from
investment
operations..... 4.31 3.52 (.35) 2.94 1.74 5.51 (2.06) 3.44 .55
Less distributions to
shareholders from:
Net realized gains... (.64) -- (.24) (.26) (2.20) (.66) (1.63) -- --
Net asset value, end of
period............... $21.04 $17.37 $13.85 $14.44 $11.76 $12.22 $7.37 $11.06 $7.62
TOTAL RETURN+.......... 25.6% 25.4% (2.4%) 25.3% 17.4% 79.8% (20.5%) 45.1% 9.3%
RATIOS & SUPPLEMENTAL
DATA
Net assets, end of
period
(000's omitted)...... $96,608 $70,858 $64,635 $58,053 $29,302 $23,509 $14,325 $21,241 $19,900
Ratios to average net
assets of:
Expenses............. 1.22% 1.47%++ 1.25% 1.31% 1.44% 1.59% 1.86% 1.78% 2.02%++
Net investment
loss............... (.86%) (1.12%)++ (.92%) (.92%) (.93%) (.71%) (.49%) (1.19%) (1.36%)++
Portfolio turnover
rate................. 33% 31% 59% 48% 46% 108% 100% 120% 45%
Average commission rate
paid per share....... $.0582 N/A N/A N/A N/A N/A N/A N/A N/A
<CAPTION>
YEAR
ENDED
DECEMBER 31,
1987|#
<S> <C>
PER SHARE DATA
Net asset value,
beginning of
period............... $8.77
Income (loss) from
investment
operations:
Net investment
loss............... (.11)
Net realized and
unrealized gain
(loss)............. (1.34)
Total from
investment
operations..... (1.45)
Less distributions to
shareholders from:
Net realized gains... (.25)
Net asset value, end of
period............... $7.07
TOTAL RETURN+.......... (16.5%)
RATIOS & SUPPLEMENTAL
DATA
Net assets, end of
period
(000's omitted)...... $25,700
Ratios to average net
assets of:
Expenses............. 1.57%
Net investment
loss............... (1.05%)
Portfolio turnover
rate................. 65%
Average commission rate
paid per share....... N/A
</TABLE>
# Effective June 30, 1995, Evergreen Aggressive Growth Fund, a new series of
Evergreen Trust, acquired substantially all of the net assets of ABT Emerging
Growth Fund. ABT Emerging Growth Fund, which had a fiscal year that ended on
October 31 was the accounting survivor in the combination. Accordingly, the
information above includes the results of operations of ABT Emerging Growth
Fund prior to June 30, 1995.
* The Fund changed its fiscal year end from October 31, to September 30.
** The Fund changed its fiscal year end from December 31 to October 31.
+ Total return is calculated on net asset value for the period indicated and is
not annualized. Initial sales charge is not reflected.
++ Annualized.
| Per share data based on average shares outstanding.
<PAGE>
EVERGREEN AGGRESSIVE GROWTH FUND -- CLASS B AND C SHARES
<TABLE>
<CAPTION>
CLASS B SHARES CLASS C SHARES
JULY 7, AUGUST 3,
YEAR 1995* YEAR 1995*
ENDED THROUGH ENDED THROUGH
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning
of period..................... $17.35 $15.82 $17.31 $16.42
Income (loss) from investment
operations:
Net investment loss........... (.16) (.03) (.15) (.01)
Net realized and unrealized
gain on investments......... 4.34 1.56 4.36 .90
Total from investment
operations................ 4.18 1.53 4.21 .89
Less distributions to
shareholders from net realized
gains......................... (.64) -- (.64) --
Net asset value, end of
period........................ $20.89 $17.35 $20.88 $17.31
TOTAL RETURN+................... 24.9% 9.7% 25.1% 5.4%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted)............... $21,644 $2,858 $991 $416
Ratios to average net assets:
Expenses...................... 1.98% 2.09%++ 1.96% 2.09%++
Net investment loss........... (1.60%) (1.71%)++ (1.57%) (1.51%)++
Portfolio turnover rate......... 33% 31% 33% 31%
Average commission rate paid
per share..................... $.0582 N/A $.0582 N/A
</TABLE>
* Commencement of class operations.
+ Total return is calculated on net asset value per share for the periods
indicated and is not annualized. Contingent deferred sales charges are not
reflected.
++ Annualized.
DESCRIPTION OF THE FUNDS
INVESTMENT OBJECTIVES AND POLICIES
Each Fund's investment objective is fundamental and may not be changed
without shareholder approval.
In addition to the investment policies detailed below, each Fund may employ
certain additional investment strategies which are discussed in "Investment
Practices and Restrictions."
Evergreen Fund
The EVERGREEN FUND seeks to achieve its investment objective of capital
appreciation principally through investments in common stocks and securities
convertible into or exchangeable for common stocks of companies which are
little-known, relatively small or represent special situations which, in the
opinion of the Fund's investment adviser, offer potential for capital
appreciation. A "little-known" company means one whose business is limited to a
regional market or whose securities are closely held with only a small
proportion traded publicly. A "relatively small" company means one which has a
small share of the market for its products or services in comparison with other
companies in its field, or which provides goods or services for a limited
market. A "special situation" company is one which offers potential for capital
appreciation because of a recent or anticipated change in structure, management,
products or services. In addition to the securities described above, the Fund
may invest in securities of relatively well-known and large companies with
potential for capital appreciation. Investments may also be made to a limited
degree in non-convertible debt securities and preferred stocks which offer an
opportunity for capital appreciation. Short-term investments may also be made if
the Fund's investment adviser believes that such action will benefit the Fund.
See "Special Risk Considerations."
EVERGREEN U.S. REAL ESTATE EQUITY FUND
The EVERGREEN U.S. REAL ESTATE EQUITY FUND's investment objective is
long-term capital growth, which it seeks to achieve through investment primarily
in equity securities of domestic companies which are principally engaged in the
real estate industry or which own significant real estate assets; the Fund will
not purchase direct interests in real estate. Current income is a secondary
objective. Equity securities include common stock, preferred stock and
securities convertible into common stock.
Under normal conditions, the Fund will invest not less than 65% of its
total assets in equity securities of United States exchange or NASDAQ listed
companies principally engaged in the real estate industry. A company is deemed
to be "principally engaged" in the real estate industry if at least 50% of its
assets (marked to market), gross income or net profits are attributable to
ownership, construction, management or sale of residential, commercial or
industrial real estate. Real estate industry companies may include among others:
equity real estate investment trusts, which pool investors' funds for investment
primarily in commercial real estate properties; mortgage real estate investment
trusts, which invest pooled funds in real estate related loans; brokers or real
estate developers; and companies with substantial real estate holdings, such as
paper and lumber producers and hotel and entertainment companies. The Fund will
only invest in real estate equity trusts and limited partnerships which are
traded on major exchanges. See "Special Risk Considerations" with respect to the
special risks involved with an investment in these types of securities. The
remainder of the Fund's investments may be made in equity securities of issuers
whose products and services are related to the real estate industry, such as
manufacturers and distributors of building supplies and financial institutions
which issue or service mortgages. The Fund may invest more than 25% of its total
assets in any one sector of the real estate or real estate related industries.
In addition, the Fund may, from time to time, invest in the securities of
companies unrelated to the real estate industry whose real estate assets are
substantial relative to the price of the companies' securities.
Investments may also be made in securities of issuers unrelated to the real
estate industry believed by the Fund's investment adviser to be undervalued and
to have capital appreciation potential. Also, consistent with the secondary
objective of current income, investments may also be made in non-convertible
debt securities of such companies. The debt securities purchased (except for
those described below) will be of investment grade or better quality (e.g.,
rated no lower than A by Standard & Poor's Ratings Group ("S&P") or Moody's
Investors Service ("Moody's") or any other nationally recognized statistical
rating organization ("SRO"), or, if not so rated, believed by the Fund's
investment adviser to be of comparable quality). However, up to 10% of total
assets may be invested in unrated debt securities of issuers secured by real
estate assets where the Fund's investment adviser believes that the securities
are trading at a discount and the underlying collateral will ensure repayment of
principal. In such situations, it is conceivable that the Fund could, in the
event of default, end up holding the underlying real estate directly.
EVERGREEN LIMITED MARKET FUND, INC.
The investment objective of EVERGREEN LIMITED MARKET FUND, INC. is to
achieve capital appreciation; income is not a factor in the selection of
portfolio securities. The Fund seeks to achieve its objective principally
through investments in common stocks of companies for which there is a
relatively limited trading market. A relatively limited trading market is one in
which only small amounts of stock are available at any given time generally
through five or fewer market makers. The securities of such companies are often
traded only over-the-counter or on a regional securities exchange, rarely on a
national securities exchange, and may not trade every day or in the volume
typical of trading on a national securities exchange.
Investments by the Fund are made with a view toward taking advantage of
market inefficiencies affecting the price of a company's securities or by
exploiting the investment opportunities which may be inherent in companies
offering new or unique products or services. Market inefficiency can result from
a company being too small to be covered by most industry analysts, thereby
resulting in a limited dissemination of information about the company or its
industry. The companies in which the Fund may invest are small, but have at
least $1,000,000 and generally no more than $150,000,000 of market
capitalization (see "Special Risk Considerations"). The Fund may also invest in
little-known or unpopular companies which may not be widely recommended for
purchase by industry analysts due to some situation unique to the company or its
industry. There are no restrictions as to types of businesses or industries in
which the Fund may invest. The Fund's investment adviser believes that its
investment research programs will uncover a variety of relatively unexploited
investment opportunities.
The Fund's investment adviser will attempt to screen the universe of
companies falling within the capitalization range described above and invest
primarily in what it believes to be the 100 best based on certain qualitative
and quantitative criteria. Such companies may include those with the highest
return on equity and consistent earnings growth. The criteria will be reviewed
and evaluated on an ongoing basis by the Fund's investment adviser. In addition,
the Fund will invest in other companies which do not meet the screening
criteria. These will include companies which offer unique products or services
or operate in industries or sectors that have, in the opinion of the Fund's
investment adviser, significant growth prospects. In selecting investment
opportunities for the Fund, the Fund's investment adviser will use certain
proprietary computer screening techniques and the extensive library facilities
of Lieber & Company, the Fund's sub-adviser.
While the focus of EVERGREEN LIMITED MARKET FUND, INC. is on long-term
capital appreciation, investments may on occasion be made with the expectation
of short-term capital appreciation. Securities held for a short time period may
be sold if the investment objective for such securities has been achieved or if
other circumstances warrant.
EVERGREEN AGGRESSIVE GROWTH FUND
The EVERGREEN AGGRESSIVE GROWTH FUND's investment objective is to achieve
long-term capital appreciation by investing primarily in common stocks of
emerging growth companies and larger, more well established companies, all of
which are viewed by the Fund's investment adviser as having above-average
appreciation potential. Under normal circumstances, the Fund intends to invest
at least 65% of its net assets in common stocks or securities convertible into
common stocks. The Fund's investment adviser considers an emerging growth
company to be one which is still in the developmental stage, yet has
demonstrated, or is expected to achieve, growth of earnings over various major
business cycles. Important qualities of any emerging growth company include
sound management and a good product with growing market opportunities. To the
extent that its assets are not invested in common stocks or securities
convertible into common stocks, the Fund also may invest its assets in, or enter
into repurchase agreements with banks or broker-dealers with respect to,
investment grade corporate bonds, U.S. government securities, commercial paper
and certificates of deposit of domestic banks.
Consistent with its investment objective, the Fund also may invest in
equity securities of seasoned, established companies which its investment
adviser believes have above-average appreciation potential similar to that of
companies in the developmental stage. This may be due, for example, to
management change, new technology, new product or service developments, changes
in demand, or other factors. Investments in stocks of emerging growth companies
may involve special risks. Securities of lesser-known, relatively small and
special situation companies tend to be speculative and volatile. Therefore, the
current net asset value of the Fund's shares may vary significantly.
Accordingly, the Fund should not be considered suitable for investors who are
unable or unwilling to assume the risks of loss inherent in such a program, nor
should investment in the Fund be considered a balanced or complete investment
program.
EVERGREEN SMALL CAP VALUE FUND
The EVERGREEN SMALL CAP VALUE FUND's investment objective is capital
appreciation. The Fund seeks to achieve its investment objective by investing in
a diversified portfolio of securities consisting primarily of common stocks of
U.S. issuers that the Fund's investment adviser believes have an underlying
value, or potential value, exceeding their current prices. Income is not a
primary factor in the selection of securities. Under normal market conditions,
the Fund will invest at least 65% of its total assets in common stocks of
companies with a market capitalization of less than $1 billion determined at the
time of purchase. In addition to common stocks, the Fund may invest in
securities having common stock characteristics, such as convertible bonds and
preferred stocks. The Fund may invest up to 25% of its assets in securities
issued by companies located in foreign countries.
In selecting securities for the portfolio, the Fund's investment adviser
will assess the prospects for earnings growth of a company over the next 1-1/2
to 3 years and quantify the economic worth, or basic value, of a company. Using
this value approach, the Fund's investment adviser relies primarily on the
knowledge, experience and judgment of its in-house research staff. The Fund's
investment adviser may also use information from a variety of outside sources,
including brokerage firms, electronic data bases, specialized research firms and
technical journals. See "Special Risks Considerations."
The Fund may invest in convertible debt securities that are rated Baa or
higher by Moody's or BBB or higher by S&P or, if unrated, deemed by the Fund's
investment adviser to be of comparable quality. Securities rated Baa or BBB may
have speculative characteristics. Changes in economic conditions or other
circumstances are more likely to weaken the ability of the issuers of such debt
securities to make principal and interest payments than is the case with higher
rated securities. However, like the higher rated debt securities, these
securities are considered investment grade. For a description of such ratings,
see the SAI.
INVESTMENT PRACTICES AND RESTRICTIONS
DEFENSIVE INVESTMENTS. Each Fund may invest, without limitation, in high quality
money market instruments, such as notes, certificates of deposit or bankers'
acceptances, U.S. government securities, non-convertible investment grade debt
securities or preferred stocks or hold its assets in cash if, in the opinion of
the Funds' investment advisers, market conditions warrant a temporary defensive
investment strategy.
PORTFOLIO TURNOVER AND BROKERAGE. The annual portfolio turnover rates for each
Fund, except the EVERGREEN SMALL CAP VALUE FUND, are set forth in the tables
contained in the "Financial Highlights" section above. The portfolio turnover
rate for the EVERGREEN SMALL CAP VALUE FUND is not expected to exceed 200% for
the coming year. A high rate of portfolio turnover (100% or more) may involve
correspondingly greater brokerage commissions and other transaction costs, which
the Fund and its shareholders must bear. For further information about brokerage
and distributions see "Dividends, Distributions and Taxes" or the SAI.
It is contemplated that Lieber & Company ("Lieber"), an affiliate of EAMC
and a member of the New York and American Stock Exchanges, will to the extent
practicable effect substantially all of the portfolio transactions for EVERGREEN
FUND, EVERGREEN U.S. REAL ESTATE EQUITY FUND and EVERGREEN LIMITED MARKET FUND,
INC. effected on those exchanges. See the SAI for further information regarding
the brokerage allocation practices of the Funds.
BORROWING. As a matter of fundamental policy, the Funds may not borrow money
except as a temporary measure for extraordinary or emergency purposes. The
proceeds from borrowings may be used to facilitate redemption requests which
might otherwise require the untimely disposition of portfolio securities. The
specific limits and other terms applicable to borrowing by each Fund are set
forth in the SAI.
LENDING OF PORTFOLIO SECURITIES. In order to generate income and to offset
expenses, the Funds may lend portfolio securities to brokers, dealers and other
financial institutions. Each Fund's investment adviser will monitor the
creditworthiness of such borrowers. Loans of securities by the Funds, if and
when made, may not exceed 30% of the value of a Fund's net assets and must be
collateralized by cash or U.S. government securities that are maintained at all
times in an amount equal to at least 100% of the current market value of the
securities loaned, including accrued interest. While such securities are on
loan, the borrower will pay a Fund any income accruing thereon, and the Fund may
invest the cash collateral in portfolio securities, thereby increasing its
return. Any gain or loss in the market price of the loaned securities which
occurs during the term of the loan would affect a Fund and its investors. A Fund
has the right to call a loan and obtain the securities loaned at any time on
notice of not more than five business days. A Fund may pay reasonable fees in
connection with such loans.
There is the risk that when lending portfolio securities, the securities
may not be available to a Fund on a timely basis, and the Fund may, therefore,
lose the opportunity to sell the securities at a desirable price. In addition,
in the event that a borrower of securities would file for bankruptcy or become
insolvent, disposition of the securities may be delayed pending court action.
ILLIQUID SECURITIES. The Funds may invest up to 15% of their net assets in
illiquid securities and other securities which are not readily marketable,
including non-negotiable time deposits, certain restricted securities not deemed
by the Trustees or Directors to be liquid and repurchase agreements with
maturities longer than seven days, except that EVERGREEN U.S. REAL ESTATE EQUITY
FUND may only invest up to 10% of its assets in repurchase agreements with
maturities longer than seven days. Securities eligible for resale pursuant to
Rule 144A under the Securities Act of 1933 (the "Securities Act"), which have
been determined to be liquid, will not be considered by the Funds' investment
advisers to be illiquid or not readily marketable and, therefore, are not
subject to the aforementioned 15% limit. The inability of a Fund to dispose of
illiquid or not readily marketable investments readily or at reasonable prices
could impair a Fund's ability to raise cash for redemptions or other purposes.
The liquidity of securities purchased by a Fund which are eligible for resale
pursuant to Rule 144A will be monitored by each Fund's investment adviser on an
ongoing basis, subject to the oversight of the Trustees or Directors. In the
event that such a security is deemed to be no longer liquid, a Fund's holdings
will be reviewed to determine what action, if any, is required to ensure that
the retention of such security does not result in a Fund having more than 15% of
its assets invested in illiquid or not readily marketable securities.
REPURCHASE AGREEMENTS AND REVERSE REPURCHASE AGREEMENTS. Each Fund may enter
into repurchase agreements with member banks of the Federal Reserve System,
including the Fund's Custodian, or primary dealers in U.S. government
securities. A repurchase agreement is an arrangement whereby a Fund purchases a
security and simultaneously agrees to resell it to the vendor at the same price
plus interest. The arrangement results in a fixed rate of return that is not
subject to market fluctuations during the holding period. A Fund will maintain
collateral with its Custodian in an amount at least equal to the repurchase
price (including accrued interest). In the event a vendor defaults on its
repurchase obligation, a Fund might suffer a loss to the extent that the
proceeds from the sale of the collateral were less than the repurchase price. If
the vendor becomes the subject of bankruptcy proceedings, a Fund might be
delayed in selling the collateral. The Funds' investment advisers will review
and continually monitor the creditworthiness of each institution with which a
Fund enters into a repurchase agreement to evaluate these risks.
EVERGREEN U.S. REAL ESTATE EQUITY FUND, EVERGREEN AGGRESSIVE GROWTH FUND
and EVERGREEN SMALL CAP VALUE FUND may enter into "reverse repurchase
agreements." A reverse repurchase agreement is an arrangement whereby the Fund
agrees to sell portfolio securities to financial institutions such as banks and
broker-dealers, and to repurchase them at a mutually agreed upon date for the
price plus interest. At the time a Fund enters into a reverse repurchase
agreement, it will be placed in a segregated custodial cash account, U.S.
government securities or liquid high grade debt obligations having a value at
least equal to the repurchase price (including accrued interest) and will
subsequently monitor the account to ensure that such equivalent value is
maintained. Reverse repurchase agreements involve the risk that the market value
of the securities sold by the Fund may decline below the repurchase price of
those securities. A Fund will not enter into reverse repurchase agreements
exceeding 5% of the value of its total assets.
FIXED INCOME SECURITIES -- DOWNGRADES. If any security invested in by any of the
Funds loses its rating or has its rating reduced after the Fund has purchased
it, the Fund is not required to sell or otherwise dispose of the security, but
may consider doing so.
OPTIONS, FUTURES AND DERIVATIVES
In addition to making investments directly in securities, EVERGREEN U.S.
REAL ESTATE EQUITY FUND and EVERGREEN SMALL CAP VALUE FUND may write covered put
and call options and hedge their investments by purchasing options and engaging
in transactions in futures contracts and related options. The Funds may engage
in foreign currency exchange transactions to protect against changes in future
exchange rates.
WRITING OPTIONS. EVERGREEN U.S. REAL ESTATE EQUITY FUND and EVERGREEN SMALL
CAP VALUE FUND may write covered call and put options on certain portfolio
securities in an attempt to earn income and realize a higher return on its
portfolio. A call option gives the purchaser of the option the right to buy a
security from the writer at the exercise price at any time during the option
period. An option may not be written if, afterwards, securities comprising more
than 5% of the market value of a Fund's equity securities would be subject to
call options. A Fund realizes income from the premium paid to it in exchange for
writing the call option. Once it has written a call option on a portfolio
security and until the expiration of such option, a Fund forgoes the opportunity
to profit from increases in the market price of such security in excess of the
exercise price of the call option. Should the price of the security on which a
call has been written decline, a Fund bears the risk of loss, which would be
offset to the extent the Fund has received premium income. A Fund will only
write "covered" options traded on recognized securities exchanges. An option
will be deemed covered when a Fund either (i) owns the security (or securities
convertible into such security) on which the call option has been written in an
amount sufficient to satisfy the obligations arising under a call option, or
(ii) in the case of both call and put options, the Fund's Custodian maintains
cash or high-grade liquid debt securities belonging to the Fund in an amount not
less that the amount needed to satisfy the Fund's obligations with respect to
such options. A "closing purchase transaction" may be entered into with respect
to a call option written by a Fund for the purpose of closing its position. The
Fund will realize a profit (or loss) from such transaction if the cost of such
transaction is less (or more) than the premium received from the writing of the
option. Because increases in the market price of a call option will generally
reflect increases in the market price of the underlying security, any loss
resulting from the repurchase of a call option may be offset in whole or in part
by unrealized appreciation of the underlying security owned by the Fund.
PURCHASING PUT AND CALL OPTIONS ON SECURITIES. The Funds may purchase put
options to protect its portfolio holdings in an underlying security against a
decline in market value. This protection is provided during the life of the put
option since the Fund, as holder of the put, is able to sell the underlying
security at the exercise price regardless of any decline in the underlying
security's market price. For the purchase of a put option to be profitable, the
market price of the underlying security must decline below the exercise price
more than enough to cover the premium and transaction costs. By using put
options in this manner, any profit which the Fund might otherwise have realized
on the underlying security will be reduced by the premium paid for the put
option and by transaction costs.
Each Fund may also purchase a call option to hedge against an increase in
price of a security that it intends to purchase. This protection is provided
during the life of the call option since the Fund, as holder of the call, is
able to buy the underlying security at the exercise price regardless of any
increase in the underlying security's market price. For the purchase of a call
option to be profitable, the market price of the underlying security must rise
above the exercise price more than enough to cover the premium and transaction
costs. By using call options in this manner, any profit which the Fund might
have realized had it bought the underlying security at the time it purchased the
call option will be reduced by the premium paid for the call option and by
transaction costs.
FUTURES, OPTIONS AND OTHER DERIVATIVE INSTRUMENTS. In addition to writing
covered call and put options, each Fund may purchase and sell various financial
instruments ("Derivative Instruments) such as financial futures contracts
(including interest rate, index and foreign currency futures contracts), options
(such as options on securities, indices, foreign currencies and futures
contracts), forward currency contracts and interest rate, equity index and
currency swaps, caps, collars and floors. The index Derivative Instruments a
Fund may use may be based on indices of U.S. or foreign equity or debt
securities. These Derivative Instruments may be used, for example, to preserve a
return or spread, to lock in unrealized market value gains or losses, to
facilitate or substitute for the sale or purchase of securities, to manage the
duration of securities, to alter the exposure of a particular investment or
portion of a Fund's portfolio to fluctuations in interest rates or currency
rates, to uncap a capped security or to convert a fixed rate security into a
variable rate security or a variable rate security into a fixed rate security.
A Fund's ability to use these instruments may be limited by market
conditions, regulatory limits and tax considerations. A Fund might not use any
of these strategies, and there can be no assurance that any strategy that is
used will succeed. See the SAI for more information regarding these instruments
and the risks relating thereto.
CURRENCY AND OTHER FINANCIAL FUTURES CONTRACTS. The Funds may also enter
into currency and other financial futures contracts and write options on such
contracts. The Funds intend to enter into such contracts and related options for
hedging purposes. The Funds will enter into futures on securities, currencies or
index-based futures contracts, in order to hedge against changes in interest or
exchange rates or securities prices. A futures contract on securities or
currencies is an agreement to buy or sell securities or currencies during a
designated month at whatever price exists at that time. A futures contract on a
securities index does not involve the actual delivery of securities, but merely
requires the payment of a cash settlement based on changes in the securities
index. The Funds do not make payment or deliver securities upon entering into a
futures contract. Instead, they put down a margin deposit, which is adjusted to
reflect changes in the value of the contract and which remains in effect until
the contract is terminated.
The Funds may sell or purchase currency and other financial futures
contracts. When a futures contract is sold by a Fund, the profit on the contract
will tend to rise when the value of the underlying securities or currencies
declines and to fall when the value of such securities or currencies increases.
Thus, the Funds sell futures contracts in order to offset a possible decline in
the profit on their securities or currencies. If a futures contract is purchased
by a Fund, the value of the contract will tend to rise when the value of the
underlying securities or currencies increases and to fall when the value of such
securities or currencies declines.
The Funds may enter into closing purchase and sale transactions in order
to terminate a futures contract and may buy or sell put and call options for the
purpose of closing out their options positions. The Funds' ability to enter into
closing transactions depends on the development and maintenance of a liquid
secondary market. There is no assurance that a liquid secondary market will
exist for any particular contract or at any particular time. As a result, there
can be no assurance that the Funds will be able to enter into an offsetting
transaction with respect to a particular contract at a particular time. If the
Funds are not able to enter into an offsetting transaction, the Funds will
continue to be required to maintain the margin deposits on the contract and to
complete the contract according to its terms, in which case the Funds would
continue to bear market risk on the transaction.
RISKS OF DERIVATIVE INSTRUMENTS. The use of Derivative instruments,
including written put and call options, involves special risks, including: (1)
the lack of, or imperfect, correlation between price movements of a Fund's
current or proposed portfolio investments that are the subject of the
transactions as well as price movements of the Derivative Instruments involved
in the transaction; (2) possible lack of a liquid secondary market for any
particular Derivative Instrument at a particular time; (3) the need for
additional portfolio management skills and techniques; (4) losses due to
unanticipated market price movements; (5) the fact that, while such strategies
can reduce the risk of loss, they can also reduce the opportunity for gain, or
even result in losses, by offsetting favorable price movements in portfolio
investments; (6) incorrect forecasts by a Fund's investment adviser concerning
interest or currency exchange rates or direction of price fluctuations of the
investment that is the subject of the transaction, which may result in the
strategy being ineffective; (7) loss of premiums paid by the Fund on options it
purchases; and (8) the possible inability of the Fund to purchase or sell a
portfolio security at a time when it would otherwise be favorable for it to do
so, or the need to sell a portfolio security at a disadvantageous time, due to
the need for the Fund to maintain "cover" or to segregate securities in
connection with such transactions and the possible inability of the Fund to
close out or liquidate its positions.
Each Fund's investment adviser may use Derivative Instruments, including
written put and call options, for hedging purposes (i.e., by paying a premium or
foregoing the opportunity for profit in return for protection against downturns
in markets generally or the prices of individual securities or currencies) and
also may use Derivative Instruments to try to enhance the return characteristics
of a Fund's portfolio of investments (i.e., by receiving premiums in connection
with the writing of options and thereby accepting the risk of downturns in
markets generally or the prices of individual securities or currencies or by
paying premiums with the hope that the securities or currencies underlying
Derivative Instruments will appreciate). The use of Derivative Instruments for
hedging purposes or to enhance a Fund's return characteristics can increase
investment risk. If a Fund's investment adviser judges market conditions
incorrectly or employs a strategy that does not correlate well with the Fund's
investments, these techniques could result in a loss, regardless of whether the
intent was to reduce risk or increase return. These techniques may increase the
volatility of a Fund and may involve a small investment of cash relative to the
magnitude of the risk assumed, resulting in leverage. In addition, these
techniques could result in a loss if the counterparty to the transaction does
not perform as promised or if there is not a liquid secondary market to close
out a position that the Fund has entered into. Options and futures transactions
may increase portfolio turnover rates, which would result in greater commission
expenses and transaction costs.
SPECIAL RISK CONSIDERATIONS
INVESTMENT IN SMALL COMPANIES. Investments in securities of little-known,
relatively small or special situation companies ("Small Companies") may be
speculative and volatile. Investing in Small Companies generally involves some
or all of the following risks:
1. The company may lack management depth, potentially increasing the risks
associated with the loss of key personnel.
2. The company may lack material and financial resources, possibly limiting the
availability of financing.
3. The company may be developing or marketing new products or services for
which there are no established markets and the market for the product or
service could fail to develop as projected.
4. The securities of Small Companies are often closely held and only traded on
the over-the-counter market or on a regional stock exchange. As a result,
the securities of Small Companies are sometimes illiquid or subject to wide
price fluctuations.
As a result of the risk factors described above, the net asset value of
each Fund's shares can be expected to vary significantly. Accordingly, each Fund
should not be considered suitable for investors who are unable or unwilling to
assume the associated risks, nor should investment in the Funds be considered a
balanced or complete investment program.
INVESTMENTS RELATED TO REAL ESTATE. EVERGREEN U.S. REAL ESTATE EQUITY FUND
invests primarily in issuers whose activities are real estate related. Risks
associated with investment in securities of companies in the real estate
industry include: declines in the value of real estate; risks related to general
and local economic conditions; overbuilding and increased competition; increases
in property taxes and operating expenses; changes in zoning laws; casualty or
condemnation losses; variations in rental income; changes in neighborhood
values; the appeal of properties to tenants; and increase in interest rates. In
the event of a default on such securities, the holder thereof could end up
holding real estate directly and therefore be more directly subject to such
risks. In addition, equity real estate investment trusts may be affected by
changes in the value of the underlying property owned by the trusts, while
mortgage real estate investment trusts may be affected by the quality of credit
extended. Equity and mortgage real estate investment trusts are dependent upon
management skills, may not be diversified and are subject to the risks of
financing projects. Such trusts are also subject to heavy cash flow dependency,
defaults by borrowers, self liquidation and the possibility of failing to
qualify for tax-free pass-through of income under the Internal Revenue Code of
1986, as amended (the "Code") and to maintain exemption from the Investment
Company Act of 1940, as amended (the "1940 Act"). In the event an issuer of debt
securities collateralized by real estate defaulted, it is conceivable that a
Fund could end up holding the underlying real estate.
FOREIGN SECURITIES RISKS. Investing in foreign securities of foreign issuers
generally involves more risk than investing in a portfolio consisting solely of
securities of domestic issuers for the following reasons: publicly available
information on issuers and securities may be scarce; many foreign countries do
not follow the same accounting, auditing and financial reporting standards as
are used in the U.S.; market trading volumes may be smaller, resulting in less
liquidity and more price volatility compared to U.S. securities of comparable
quality; there may be less regulation of securities trading and its
participants; the possibility may exist for expropriation, confiscatory
taxation, nationalization, establishment of exchange controls, political or
social instability of negative diplomatic developments; and dividend or interest
withholding may be imposed at the source.
Fluctuations in foreign exchange impose an additional level of risk,
possibly affecting the value of the Fund's foreign investments and earnings,
gains and losses realized through trades, and the unrealized appreciation or
depreciation of investments. The Fund may also incur costs when it shifts assets
from one country to another.
OTHER INVESTMENT RESTRICTIONS. Each Fund has adopted additional investment
restrictions that are set forth in the SAI. Unless otherwise noted, the
restrictions and policies set forth above are not fundamental and may be changed
without shareholder approval.
MANAGEMENT OF THE FUNDS
BOARD OF TRUSTEES/DIRECTORS
Each Fund is governed by the Board of Trustees or Directors of the trust or
corporation under which it was organized. Each Fund's Board of Trustees or
Directors, as applicable, has absolute and exclusive control over the management
and disposition of all assets of a Fund.
INVESTMENT ADVISERS
Each Fund has retained an investment adviser that, subject to the authority
of a Fund's Trustees or Directors, (1) provides the Fund with investment advice,
management and administrative services and (2) supervises the Fund's daily
business affairs.
The investment adviser to each Fund is a subsidiary of FUNB. FUNB is a
subsidiary of First Union Corporation ("First Union"), the sixth largest bank
holding company in the United States. First Union, headquartered in Charlotte,
North Carolina, had $132 billion in consolidated assets as of February 28, 1997.
First Union and its subsidiaries provide a broad range of financial services to
individuals and businesses throughout the United States. EAMC, Keystone and the
Capital Management Group of FUNB ("CMG") manage or otherwise oversee the
investment of over $42.5 billion in assets belonging to a wide range of clients,
including certain Evergreen and Keystone mutual funds.
EVERGREEN FUND, EVERGREEN U.S. REAL ESTATE EQUITY FUND, and EVERGREEN
LIMITED MARKET FUND, INC. EAMC is the investment adviser to the EVERGREEN FUND,
EVERGREEN U.S. REAL ESTATE EQUITY FUND, and EVERGREEN LIMITED MARKET FUND, INC.
EAMC, together with its predecessors, has provided investment advice to the
Evergreen mutual funds since 1971. EAMC, located at 2500 Westchester Avenue,
Purchase, New York 10577, is a wholly-owned subsidiary of First Union Bank of
North Carolina ("FUNB").
For the services it renders to each Fund, EAMC receives an annual fee equal
to 1.00% of the first $750,000,000 of the Fund's average daily net assets, plus
0.90% of the next $250,000,000 of such average daily net assets, plus 0.80% of
such average daily net assets in excess of $1,000,000,000. For the fiscal year
ended September 30, 1996, each of the Funds paid the following in investment
advisory fees to EAMC as a percentage of its average net assets: EVERGREEN FUND,
0.98%; EVERGREEN U.S. REAL ESTATE EQUITY FUND, 0.00%; and EVERGREEN LIMITED
MARKET FUND, INC. 1.00%.
EVERGREEN SMALL CAP VALUE FUND. Keystone is the investment adviser to the
EVERGREEN SMALL CAP VALUE FUND. Keystone, or its affiliates, has provided
investment advisory and management services to investment companies and private
accounts since 1932. Keystone is located at 200 Berkeley Street, Boston,
Massachusetts 02116.
For the services it renders to the EVERGREEN SMALL CAP VALUE FUND, Keystone
receives an annual fee equal to 0.95% of the Fund's aggregate net asset value.
EVERGREEN AGGRESSIVE GROWTH FUND. CMG provides investment advisory services
to the EVERGREEN AGGRESSIVE GROWTH FUND. For the services it renders to the
EVERGREEN AGGRESSIVE GROWTH FUND, CMG receives an annual fee equal to 0.60% of
the Fund's average daily net assets. For the fiscal year ended September 30,
1996, EVERGREEN AGGRESSIVE GROWTH FUND paid 0.60% of its average net assets to
CMG in investment advisory fees.
Information regarding each Fund's total operating expenses and, to the
extent applicable, any expense limitations or waivers, are set forth in the
section "Financial Highlights." From time to time, each investment adviser may
reduce or waive its fee or reimburse a Fund for which it serves as investment
adviser for certain of the Fund's expenses in order to reduce the Fund's expense
ratio. As a result, a Fund's total return would be higher than if the fees and
any expenses had been paid by the Fund.
SUB-ADVISER
EAMC has entered into sub-advisory agreements with Lieber regarding
EVERGREEN FUND, EVERGREEN U.S. REAL ESTATE EQUITY FUND and EVERGREEN LIMITED
MARKET FUND, INC. (the "Sub-Advisory Agreements"). The Sub-Advisory Agreements
provide for Lieber's research department and staff to furnish EAMC with
information, investment recommendations, advice and research and general
consulting services regarding each Fund. For its services rendered, EAMC
reimburses Lieber for the direct and indirect costs of performing such services.
There is no additional charge to the Funds for the services provided by Lieber.
Lieber is a subsidiary of First Union and is located at 2500 Westchester Avenue,
Purchase, New York 10577.
PORTFOLIO MANAGERS
EVERGREEN FUND. Stephen A. Lieber has been the portfolio manager for
EVERGREEN FUND since 1971. Mr. Lieber is the Chairman and Co-Chief Executive
Officer of EAMC. Mr. Lieber has been associated with EAMC since he founded it,
or its predecessors, in 1971.
EVERGREEN AGGRESSIVE GROWTH FUND. The portfolio manager for EVERGREEN
AGGRESSIVE GROWTH FUND is Harold J. Ireland, Jr., a Vice President of CMG who
has been associated with CMG since 1995. Prior to that, Mr. Ireland was a Vice
President of Palm Beach Capital Management, Inc. and served as portfolio manager
of the Fund's predecessor, ABT Emerging Growth Fund, since 1985.
EVERGREEN U.S. REAL ESTATE EQUITY FUND. Samuel A. Lieber has been the
portfolio manager for EVERGREEN U.S. REAL ESTATE EQUITY FUND since the Fund's
inception in March, 1995. Mr. Samuel Lieber has been associated with EAMC since
1985.
EVERGREEN LIMITED MARKET FUND, INC. A committee, which includes Stephen A.
Lieber and Nola Maddox Falcone, President and Co-Chief Executive Officer of
EAMC, manages the portfolio of EVERGREEN LIMITED MARKET FUND, INC. The committee
also draws upon the resources of certain other portfolio management and
analytical personnel employed by EAMC or its affiliates.
EVERGREEN SMALL CAP VALUE FUND. Warren J. Isabelle is the portfolio manager
for EVERGREEN SMALL CAP VALUE FUND. He is also Chief Investment Officer for
Equities of Keystone. Prior to joining Keystone in February, 1997, Mr. Isabelle
managed the Pioneer Capital Growth Fund and the Pioneer Small Company Fund. He
also served as Head of the Pioneer Special Equities Group. He has 14 years of
investment experience.
ADMINISTRATOR
EKIS serves as administrator to the Funds and is entitled to receive a fee
based on the aggregate average daily net assets of the Funds at a rate based on
the total assets of the mutual funds administered by EKIS for which CMG, EAMC or
Keystone also serve as investment adviser. As administrator, and subject to the
supervision and control of the Trustees/Directors of the Funds, EKIS provides
facilities, equipment and personnel to the Funds. EKIS's administration fee is
calculated in accordance with the following schedule:
AGGREGATE AVERAGE DAILY NET ASSETS OF FUNDS
ADMINISTERED BY EKIS FOR WHICH ANY AFFILIATE OF
ADMINISTRATIVE FEE FUNB SERVES AS INVESTMENT ADVISER
0.050% on the first $7 billion
0.035% on the next $3 billion
0.030% on the next $5 billion
0.020% on the next $10 billion
0.015% on the next $5 billion
0.010% on assets in excess of $30 billion
SUBADMINISTRATOR
BISYS Fund Services ("BISYS"), an affiliate of Evergreen Keystone
Distributor, Inc. ("EKD"), distributor for the Evergreen Keystone group of
mutual funds, serves as sub-administrator to the Funds and is entitled to
receive a fee from the Funds calculated on the aggregate average daily net
assets of the Funds at a rate based on the total assets of the mutual funds
administered by EKIS for which FUNB affiliates also serve as investment adviser,
calculated in accordance with the following schedule:
AGGREGATE AVERAGE DAILY NET ASSETS OF FUNDS
ADMINISTERED BY BISYS FOR WHICH ANY AFFILIATE OF
SUB-ADMINISTRATIVE FEE FUNB SERVES AS INVESTMENT ADVISER
0.0100% on the first $7 billion
0.0075% on the next $3 billion
0.0050% on the next $15 billion
0.0040% on assets in excess of $25 billion
The total assets of the mutual funds administered by EKIS for which FUNB
affiliates also serve as investment advisers were approximately $29.2 billion as
of February 28, 1997.
DISTRIBUTION PLANS AND AGREEMENTS
DISTRIBUTION PLANS. Each Fund's Class A, Class B and Class C Shares pays
for the expenses associated with the distribution of its shares according to a
distribution plan that it has adopted pursuant to Rule 12b-1 under the 1940 Act
(each, a "Plan" or collectively the "Plans"). Under the Plans, each Fund may
incur distribution-related and shareholder servicing-related expenses at the
following rates:
Maximum Annual Rate as a % of
Class of Fund's Average Daily Net Assets
Shares Attributable to the Class
- --------------- -------------------------------
Class A 0.75%, currently limited to 0.25%
Class B 1.00%
Class C 1.00%
Of the amount that each Class may pay under its respective distribution
plan, up to 0.25% may constitute a service fee to be used to compensate
organizations, which may include each Fund's investment adviser or their
affiliates, for personal services rendered to shareholders and/or the
maintenance of shareholder accounts. The Funds may not pay any distribution or
services fees during any fiscal period in excess of the amounts set forth above.
DISTRIBUTION AGREEMENTS. Each Fund has also entered into a distribution
agreement (each a "Distribution Agreement" or collectively the "Distribution
Agreements") with EKD. Pursuant to the Distribution Agreements, each Fund will
compensate EKD for its services as distributor at the following rates:
Maximum Annual Rate as a % of
Class of Fund's Average Daily Net Assets
Shares Attributable to the Class
- --------------- -------------------------------
Class A 0.25%
Class B 1.00%
Class C 1.00%
The Distribution Agreements provide that EKD will use the distribution fee
received from a Fund for payments (i) to compensate broker-dealers or other
persons for distributing shares of the Fund, including interest and principal
payments made in respect of amounts paid to broker-dealers or other persons that
have been financed (EKD may assign its rights to receive compensation under the
Plans to secure such financings), (ii) to otherwise promote the sale of shares
of the Fund, and (iii) to compensate broker-dealers, depository institutions and
other financial intermediaries for providing administrative, accounting and
other services with respect to the Fund's shareholders. FUNB or its affiliates
may finance the payments made by EKD to compensate broker-dealers or other
persons for distributing shares of the Fund.
Since EKD's compensation under the Distribution Agreements is not directly
tied to the expenses incurred by EKD, the amount of compensation received by it
under the Distribution Agreements during any year may be more or less than its
actual expenses and may result in a profit to EKD. Distribution expenses
incurred by EKD in one fiscal year that exceed the level of compensation paid to
EKD for that year may be paid from distribution fees received from a Fund in
subsequent fiscal years.
The Plans are in compliance with the Conduct Rules of the National
Association of Securities Dealers, Inc. which effectively limit the annual
asset-based sales charges and service fees that a mutual fund may pay on a class
of shares to an annual rate of 0.75% and 0.25%, respectively, of the average
aggregate annual net assets attributable to that class. The rules also limit the
aggregate of all front-end, deferred and asset-based sales charges imposed with
respect to a class of shares by a mutual fund that also charges a service fee to
6.25% of cumulative gross sales of shares of that class, plus interest on the
unpaid amount at the prime rate plus 1% per annum.
PURCHASE AND REDEMPTION OF SHARES
HOW TO BUY SHARES
You may purchase shares of any of the Funds through broker-dealers, banks
or other financial intermediaries, or directly through EKD. In addition, you may
purchase shares of any of the Funds by mailing to that Fund, c/o Evergreen
Keystone Service Company ("EKSC"), P.O. Box 2121, Boston, Massachusetts
02106-2121, a completed account application and a check payable to the Fund. You
may also telephone 1-800-343-2898 to obtain the number of an account to which
you can wire or electronically transfer funds and then send in a completed
account application. The minimum initial investment is $1,000, which may be
waived in certain situations. Subsequent investments in any amount may be made
by check, by wiring Federal funds, by direct deposit or by an electronic funds
transfer.
There is no minimum amount for subsequent investments. Investments of $25
or more are allowed under the Systematic Investment Plan. Share certificates are
not issued. See the Share Purchase Application and SAI for more information.
Only Class A, Class B and Class C shares are offered through this Prospectus
(see "General Information" -- "Other Classes of Shares").
CLASS A SHARES-FRONT-END SALES CHARGE ALTERNATIVE. You may purchase Class A
shares of each Fund at net asset value plus an initial sales charge on purchases
under $1,000,000. You may purchase $1,000,000 of Class A shares without a
front-end sales charge; however, a contingent deferred sales charge ("CDSC")
equal to the lesser of 1% of the purchase price or the redemption value will be
imposed on shares redeemed during the month of purchase and the 12- month period
following the month of purchase. The schedule of charges for Class A shares is
as follows:
Initial Sales Charge
<TABLE>
<CAPTION>
As a % of the Net As a % of the Commission to Dealer/Agent as a
Amount of Purchase Amount Invested Offering Price % of Offering Price
<S> <C> <C> <C>
Less than $ 50,000 4.99% 4.75% 4.25%
$ 50,000 - $ 99,999 4.71% 4.50% 4.25%
$100,000 - $ 249,999 3.90% 3.75% 3.25%
$250,000 - $ 499,999 2.56% 2.50% 2.00%
$500,000 - $ 999,999 2.04% 2.00% 1.75%
Amounts between
$1,000,000 - $2,999,999 None None 1.00%, plus
For amounts between
$3,000,000 - $4,999,999 None None .50%, plus
For amounts of
$5,000,000 and over None None .25%
</TABLE>
No front-end sales charges are imposed on Class A shares purchased by (a)
institutional investors, which may include bank trust departments and registered
investment advisers; (b) investment advisers, consultants or financial planners
who place trades for their own accounts or the accounts of their clients and who
charge such clients a management, consulting, advisory or other fee; (c) clients
of investment advisers or financial planners who place trades for their own
accounts if the accounts are linked to the master account of such investment
advisers or financial planners on the books of the broker-dealer through whom
shares are purchased; institutional clients of broker-dealers, including
retirement and deferred compensation plans and the trusts used to fund these
plans, which place trades through an omnibus account maintained with a Fund by
the broker-dealer; shareholders of record on October 12, 1990 in any series of
Evergreen Investment Trust in existence on that date, and the members of their
immediate families; current and retired employees of FUNB and its affiliates,
EKD and any broker-dealer with whom EKD has entered into an agreement to sell
shares of the Funds, and members of the immediate families of such employees;
and upon the initial purchase of an Evergreen mutual fund by investors
reinvesting the proceeds from a redemption within the preceding thirty days of
shares of other mutual funds, provided such shares were initially purchased with
a front-end sales charge or subject to a CDSC. Certain broker-dealers or other
financial institutions may impose a fee on transactions in shares of the Funds.
Class A shares may also be purchased at net asset value by qualified and
non-qualified employee benefit and savings plans which make shares of the Funds
and the other Evergreen Keystone mutual funds available to their participants,
and which: (a) are employee benefit plans having at least $1,000,000 in
investable assets, or 250 or more eligible participants; or (b) are
non-qualified benefit or profit sharing plans which are sponsored by an
organization which also make the Evergreen Keystone mutual funds available
through a qualified plan meeting the criteria specified under (a). In connection
with sales made to plans of the type described in the preceding sentence that
are clients of broker-dealers, and which do not qualify for sales at net asset
value under the conditions set forth in the paragraph above, payments may be
made in an amount equal to 0.50% of the net asset value of shares purchased.
These payments are subject to reclaim in the event shares are redeemed within
twelve months after purchase.
When Class A shares are sold, EKD will normally retain a portion of the
applicable sales charge and pay the balance to the broker-dealer or other
financial intermediary through whom the sale was made. EKD may also pay fees to
banks from sales charges for services performed on behalf of the customers of
such banks in connection with the purchase of shares of the Funds. In addition
to compensation paid at the time of sale, entities whose clients have purchased
Class A shares may receive a trailing commission equal to 0.25% of the average
daily value on an annual basis of Class A shares held by their clients. Certain
purchases of Class A shares may qualify for reduced sales charges in accordance
with a Fund's Concurrent Purchases, Rights of Accumulation, Letter of Intent,
Privilege for Certain Retirement Plans and Reinstatement Privilege. Consult the
Share Purchase Application and SAI for additional information concerning these
reduced sales charges.
CLASS B SHARES -- DEFERRED SALES CHARGE ALTERNATIVE. You may purchase Class
B shares at net asset value without an initial sales charge. However, you may
pay a CDSC if you redeem shares within six years after the month of purchase.
The amount of the CDSC (expressed as a percentage of the lesser of the current
net asset value or original cost) will vary according to the number of years
from the month of purchase of Class B shares as set forth below.
CDSC
REDEMPTION TIMING IMPOSED
Month of purchase and the first twelve-month
period following the month of purchase....................... 5.00%
Second twelve-month period following
the month of purchase........................................ 4.00%
Third twelve-month period following
the month of purchase......................................... 3.00%
Fourth twelve-month period following
the month of purchase......................................... 3.00%
Fifth twelve-month period following
the month of purchase......................................... 2.00%
Sixth twelve-month period following
the month of purchase......................................... 1.00%
No CDSC is imposed on amounts redeemed thereafter.
The CDSC is deducted from the amount of the redemption and is paid to EKD
or its predecessor. Class B shares are subject to higher distribution and/or
shareholder service fees than Class A shares for a period of seven years after
the month of purchase (after which it is expected that they will convert to
Class A shares without imposition of a front-end sales charge or exchange fee).
The higher fees mean a higher expense ratio, so Class B shares pay
correspondingly lower dividends and may have a lower net asset value than Class
A shares. The maximum amount of Class B Shares that may be purchased is
$250,000. See the SAI for further details.
CLASS C SHARES -- LEVEL-LOAD ALTERNATIVE. Class C shares are only offered
through broker-dealers who have special distribution agreements with EKD. You
may purchase Class C shares at net asset value without any initial sales charge
and, therefore, the full amount of your investment will be used to purchase Fund
shares. However, you will pay a 1.00% CDSC, if you redeem shares during the
month of purchase and the 12-month period following the month of purchase. No
CDSC is imposed on amounts redeemed thereafter. Class C shares incur higher
distribution and/or shareholder service fees than Class A shares but, unlike
Class B shares, do not convert to any other class of shares of a Fund. The
higher fees mean a higher expense ratio, so Class C shares pay correspondingly
lower dividends and may have a lower net asset value than Class A shares. The
maximum amount of Class C shares that may be purchased is $500,000. No CDSC will
be imposed on Class C shares purchased by institutional investors, and through
employee benefit and savings plans eligible for the exemption from front-end
sales charges described under "Class A Shares-Front End Sales Charge
Alternative", above. Broker-dealers and other financial intermediaries whose
clients have purchased Class C shares may receive a trailing commission equal to
0.75% of the average daily value of such shares on an annual basis held by their
clients more than one year from the date of purchase. The payment of trailing
commissions will commence immediately with respect to shares eligible for
exemption from the CDSC normally applicable to Class C shares.
CONTINGENT DEFERRED SALES CHARGE
Shares obtained from dividend or distribution reinvestment are not subject
to a CDSC. Any CDSC imposed upon the redemption of Class A, Class B or Class C
shares is a percentage of the lesser of (1) the net asset value of the shares
redeemed or (2) the net asset value at the time of purchase of such shares.
No CDSC is imposed on a redemption of shares of the Fund in the event of
(1) death or disability of the shareholder; (2) a lump-sum distribution from a
401(k) plan or other benefit plan qualified under the Employee Retirement Income
Security Act of 1974 ("ERISA"); (3) automatic withdrawals from ERISA plans if
the shareholder is at least 59 1/2 years old; (4) involuntary redemptions of
accounts having an aggregate net asset value of less than $1.00; (5) automatic
withdrawals under the Systematic Withdrawal Plan of up to 1.00% per month of the
shareholder's initial account balance; (6) withdrawals consisting of loan
proceeds to a retirement plan participant; (7) financial hardship withdrawals
made by a retirement plan participant; or (8) withdrawals consisting of returns
of excess contributions or excess deferral amounts made to a retirement plan
participant.
The Funds may also sell Class A, Class B or Class C shares at net asset
value without any initial sales charge or a CDSC to certain Directors, Trustees,
officers and employees of the Funds, Keystone, FUNB, EAMC, EKD and certain of
their affiliates, and to members of the immediate families of such persons, to
registered representatives of firms with dealer agreements with EKD, and to a
bank or trust company acting as a trustee for a single account. See the SAI for
more information.
HOW THE FUNDS VALUE THEIR SHARES. The net asset value of each Class of shares of
a Fund is calculated by dividing the value of the amount of the Fund's net
assets attributable to that Class by the number of outstanding shares of that
Class. Shares are valued each day the New York Stock Exchange (the "Exchange")
is open as of the close of regular trading (currently 4:00 p.m. Eastern time).
The securities in a Fund are valued at their current market value determined on
the basis of market quotations or, if such quotations are not readily available,
such other methods as the Trustees or Directors believe would accurately reflect
fair value. Non-dollar denominated securities will be valued as of the close of
the Exchange at the closing price of such securities in their principal trading
markets.
GENERAL. The decision as to which Class of shares is more beneficial to you
depends on the amount of your investment and the length of time you will hold
it. If you are making a large investment, thus qualifying for a reduced sales
charge, you might consider Class A shares. If you are making a smaller
investment, you might consider Class B shares since 100% of your purchase is
invested immediately and since such shares will convert to Class A shares, which
incur lower ongoing distribution and/or shareholder service fees, after seven
years. If you are unsure of the time period of your investment, you might
consider Class C shares since there are no initial sales charges and, although
there is no conversion feature, the CDSC only applies to redemptions made during
the first year. Consult your financial intermediary for further information. The
compensation received by dealers and agents may differ depending on whether they
sell Class A, Class B or Class C shares. There is no size limit on purchases of
Class A shares.
In addition to the discount or commission paid to broker-dealers, EKD may
from time to time pay to broker-dealers additional cash or other incentives that
are conditioned upon the sale of a specified minimum dollar amount of shares of
a Fund and/or other Evergreen Keystone mutual funds. Such incentives will take
the form of payment for attendance at seminars, lunches, dinners, sporting
events or theater performances, or payment for travel, lodging and entertainment
incurred in connection with travel by persons associated with a broker-dealer
and their immediate family members to urban or resort locations within or
outside the United States. Such a dealer may elect to receive cash incentives of
equivalent amount in lieu of such payments. EKD may also limit the availability
of such incentives to certain specified dealers. EKD from time to time sponsors
promotions involving First Union Brokerage Services, Inc. ("FUBS"), an affiliate
of each Fund's investment adviser, and select broker-dealers, pursuant to which
incentives are paid, including gift certificates and payments in amounts up to
1% of the dollar amount of shares of a Fund sold. Awards may also be made based
on the opening of a minimum number of accounts. Such promotions are not being
made available to all broker-dealers. Certain broker-dealers may also receive
payments from EKD or a Fund's investment adviser over and above the usual trail
commissions or shareholder servicing payments applicable to a given Class of
shares.
ADDITIONAL PURCHASE INFORMATION. As a condition of this offering, if a purchase
is canceled due to nonpayment or because an investor's check does not clear, the
investor will be responsible for any loss a Fund or the Fund's investment
adviser incurs. If such investor is an existing shareholder, a Fund may redeem
shares from an investor's account to reimburse the Fund or its investment
adviser for any loss. In addition, such investors may be prohibited or
restricted from making further purchases in any of the Evergreen Keystone mutual
funds. The Funds will not accept third party checks other than those payable
directly to a shareholder whose account has been in existence at least thirty
days.
HOW TO REDEEM SHARES
You may "redeem" ( i.e., sell) your shares in a Fund to the Fund for cash,
(at their net redemption value) on any day the Exchange is open, either directly
by writing to the Fund, c/o EKSC, or through your financial intermediary. The
amount you will receive is based on the net asset value adjusted for fractions
of a cent (less any applicable CDSC for Class B or Class C shares) next
calculated after the Fund receives your request in proper form. Proceeds
generally will be sent to you within seven days. However, for shares recently
purchased by check, a Fund will not send proceeds until it is reasonably
satisfied that the check has been collected (which may take up to 15 days). Once
a redemption request has been telephoned or mailed, it is irrevocable and may
not be modified or canceled.
REDEEMING SHARES THROUGH YOUR FINANCIAL INTERMEDIARY. A Fund must receive
instructions from your financial intermediary before 4:00 p.m. (Eastern time)
for you to receive that day's net asset value (less any applicable CDSC for
Class B or Class C shares). Your financial intermediary is responsible for
furnishing all necessary documentation to a Fund and may charge you for this
service. Certain financial intermediaries may require that you give instructions
earlier than 4:00 p.m. (Eastern time).
REDEEMING SHARES DIRECTLY BY MAIL OR TELEPHONE. Send a signed letter of
instruction or stock power form to the Fund, c/o EKSC; the registrar, transfer
agent and dividend-disbursing agent for each Fund. Stock power forms are
available from your financial intermediary, EKSC, and many commercial banks.
Additional documentation is required for the sale of shares by corporations,
financial intermediaries, fiduciaries and surviving joint owners. Signature
guarantees are required for all redemption requests for shares with a value of
more than $50,000. Currently, the requirement for a signature guarantee has been
waived on redemptions of $50,000 or less when the account address of record has
been the same for a minimum period of 30 days. The Fund and EKSC reserve the
right to withdraw this waiver at any time. A signature guarantee must be
provided by a bank or trust company (not a Notary Public), a member firm of a
domestic stock exchange or by other financial institutions whose guarantees are
acceptable under the Securities Exchange Act of 1934 and EKSC's policies.
Shareholders may withdraw amounts of $1,000 or more (up to $50,000) from
their accounts by calling the telephone number on the front page of this
Prospectus between the hours of 8:00 a.m. and 5:30 p.m. (Eastern time) each
business day (i.e., any weekday exclusive of days on which the Exchange or
EKSC's offices are closed). The Exchange is closed on New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. Redemption requests received after 4:00 p.m.
(Eastern time) will be processed using the net asset value determined on the
next business day. Such redemption requests must include the shareholder's
account name, as registered with a Fund, and the account number. During periods
of drastic economic or market changes, shareholders may experience difficulty in
effecting telephone redemptions. If you cannot reach the Fund by telephone, you
should follow the procedures for redeeming by mail or through a broker-dealer as
set forth herein. The telephone redemption service is not made available to
shareholders automatically. Shareholders wishing to use the telephone redemption
service must complete the appropriate sections on the Share Purchase
Application and choose how the redemption proceeds are to be paid. Redemption
proceeds will either (i) be mailed by check to the shareholder at the address in
which the account is registered or (ii) be wired to an account with the same
registration as the shareholder's account in a Fund at a designated commercial
bank.
In order to insure that instructions received by EKSC are genuine when you
initiate a telephone transaction, you will be asked to verify certain criteria
specific to your account. At the conclusion of the transaction, you will be
given a transaction number confirming your request, and written confirmation of
your transaction will be mailed the next business day. Your telephone
instructions will be recorded. Redemptions by telephone are allowed only if the
address and bank account of record have been the same for a minimum period of 30
days. The Fund reserves the right at any time to terminate, suspend, or change
the terms of any redemption method described in this Prospectus, except
redemption by mail, and to impose fees.
Except as otherwise noted, neither the Funds, EKSC, nor EKD assumes
responsibility for the authenticity of any instructions received by any of them
from a shareholder in writing, over the Evergreen Keystone Express Line, or by
telephone. EKSC will employ reasonable procedures to confirm that instructions
received over Evergreen Keystone Express Line or by telephone are genuine.
Neither the Funds, EKSC, nor the EKD will be liable when following instructions
received over Evergreen Keystone Express Line or by telephone that EKSC
reasonably believes are genuine.
EVERGREEN KEYSTONE EXPRESS LINE. Evergreen Keystone Express Line offers you
specific fund account information and price and yield quotations as well as the
ability to do account transactions, including investments, exchanges and
redemptions. You may access Evergreen Keystone Express Line by dialing toll free
1-800-346-3858 on any touch-tone telephone, 24 hours a day, seven days a week.
GENERAL. The sale of shares is a taxable transaction for Federal income tax
purposes. The Funds may temporarily suspend the right to redeem their shares
when (1) the Exchange is closed, other than customary weekend and holiday
closings; (2) trading on the Exchange is restricted; (3) an emergency exists and
the Funds cannot dispose of their investments or fairly determine their value;
or (4) the Securities and Exchange Commission so orders. The Funds reserve the
right to close an account that through redemption has fallen below $1,000 and
has remained so for thirty days. Shareholders will receive sixty days' written
notice to increase the account value to at least $1,000 before the account is
closed. The Funds have elected to be governed by Rule 18f-1 under the 1940 Act
pursuant to which each Fund is obligated to redeem shares solely in cash, up to
the lesser of $250,000 or 1% of a Fund's total net assets during any ninety day
period for any one shareholder. See the SAI for further details.
EXCHANGE PRIVILEGE
HOW TO EXCHANGE SHARES. You may exchange some or all of your shares for shares
of the same Class in the other Evergreen Keystone mutual funds through your
financial intermediary, by calling or writing to EKSC or by using Evergreen
Keystone Express Line as described below. Once an exchange request has been
telephoned or mailed, it is irrevocable and may not be modified or canceled.
Exchanges will be made on the basis of the relative net asset values of the
shares exchanged next determined after an exchange request is received. An
exchange that represents an initial investment in another Evergreen Keystone
mutual fund is subject to the minimum investment and suitability requirements of
each Fund.
Each of the Evergreen Keystone mutual funds has different investment
objectives and policies. For complete information, a prospectus of the fund into
which an exchange will be made should be read prior to the exchange. An exchange
order must comply with the requirement for a redemption or repurchase order and
must specify the dollar value or number of shares to be exchanged. An exchange
is treated for Federal income tax purposes as a redemption and purchase of
shares and may result in the realization of a capital gain or loss. Shareholders
are limited to five exchanges per calendar year, with a maximum of three per
calendar quarter. This exchange privilege may be modified or discontinued at any
time by the Fund upon sixty days' notice to shareholders and is only available
in states in which shares of the fund being acquired may lawfully be sold.
No CDSC will be imposed in the event Class B or Class C shares are
exchanged for Class B or Class C shares, respectively, of other Evergreen
Keystone mutual funds. If you redeem shares, the CDSC applicable to the Class B
or Class C shares of the Evergreen or Keystone mutual fund originally purchased
for cash is applied. Also, Class B shares will continue to age following an
exchange for purposes of conversion to Class A shares and determining the amount
of the applicable CDSC.
EXCHANGES THROUGH YOUR FINANCIAL INTERMEDIARY. A Fund must receive exchange
instructions from your financial intermediary before 4:00 p.m. (Eastern time)
for you to receive that day's net asset value. Your financial intermediary is
responsible for furnishing all necessary documentation to a Fund and may charge
you for this service.
EXCHANGES BY TELEPHONE AND MAIL. Exchange requests received by the Fund after
4:00 p.m. (Eastern time) will be processed using the net asset value determined
at the close of the next business day. During periods of drastic economic or
market changes, shareholders may experience difficulty in effecting telephone
exchanges. You should follow the procedures outlined below for exchanges by mail
if you are unable to reach EKSC by telephone. If you wish to use the telephone
exchange service you should indicate this on the Share Purchase Application.
As noted above, each Fund will employ reasonable procedures to confirm that
instructions for the redemption or exchange of shares communicated by telephone
are genuine. A telephone exchange may be refused by a Fund or EKSC if it is
believed advisable to do so. Procedures for exchanging Fund shares by telephone
may be modified or terminated at any time. Written requests for exchanges should
follow the same procedures outlined for written redemption requests in the
section entitled "How to Redeem Shares"; however, no signature guarantee is
required.
SHAREHOLDER SERVICES
The Funds offer the following shareholder services. For more information
about these services or your account, contact your financial intermediary, EKSC
or the toll-free number on the front page of this Prospectus. Some services are
described in more detail in the Share Purchase Application.
SYSTEMATIC INVESTMENT PLAN. You may make monthly or quarterly investments into
an existing account automatically in amounts of not less than $25 per month or
$75 per quarter. You may open a Systematic Investment Plan in the EVERGREEN FUND
and EVERGREEN AGGRESSIVE GROWTH FUND for a minimum of only $50 per month with no
initial investment required.
TELEPHONE INVESTMENT PLAN. You may make investments into an existing account
electronically in amounts of not less than $100 or more than $10,000 per
investment. Telephone investment requests received by 4:00 p.m. (Eastern time)
will be credited to a shareholder's account the day the request is received.
Shares purchased under the Systematic Investment Plan or Telephone Investment
Plan may not be redeemed for ten days from the date of investment.
SYSTEMATIC WITHDRAWAL PLAN. When an account of $10,000 or more is opened or when
an existing account reaches that size, you may participate in the Systematic
Withdrawal Plan by filling out the appropriate part of the Share Purchase
Application. Under this plan, you may receive (or designate a third party to
receive) a monthly or quarterly fixed-withdrawal payment in a stated amount of
at least $75 and may be as much as 1.0% per month or 3.0% per quarter of the
total net asset value of the Fund shares in your account when the Plan was
opened. Fund shares will be redeemed as necessary to meet withdrawal payments.
All participants must elect to have their dividends and capital gain
distributions reinvested automatically. Any applicable Class B CDSC will be
waived with respect to redemptions occurring under a Systematic Withdrawal Plan
during a calendar year to the extent that such redemptions do not exceed 10% of
(i) the initial value of the account plus (ii) the value, at the time of
purchase, of any subsequent investments. Excessive withdrawals may decrease or
deplete the value of your account. Moreover, because of the effect of the
applicable sales charge, a Class A investor should not make continuous purchases
of a Fund's shares while participating in a Systematic Withdrawal Plan.
INVESTMENTS THROUGH EMPLOYEE BENEFIT AND SAVINGS PLANS. Certain qualified and
non-qualified benefit and savings plans may make shares of the Funds and the
other Evergreen Keystone mutual funds available to their participants.
Investments made by such employee benefit plans may be exempt from front-end
sales charges if they meet the criteria set forth under "Class A Shares-Front
End Sales Charge Alternative." EAMC, Keystone or CMG may provide compensation to
organizations providing administrative and recordkeeping services to plans which
make shares of the Evergreen Keystone mutual funds available to their
participants.
AUTOMATIC REINVESTMENT PLAN. For the convenience of investors, all dividends and
distributions are automatically reinvested in full and fractional shares of a
Fund at the net asset value per share at the close of business on the record
date, unless otherwise requested by a shareholder in writing. If the transfer
agent does not receive a written request for subsequent dividends and/or
distributions to be paid in cash at least three full business days prior to a
given record date, the dividends and/or distributions to be paid to a
shareholder will be reinvested.
DOLLAR COST AVERAGING. Through dollar cost averaging you can invest a fixed
dollar amount each month or each quarter in any Evergreen Keystone mutual fund.
This results in more shares being purchased when the selected Fund's net asset
value is relatively low and fewer shares being purchased when the Fund's net
asset value is relatively high and may result in a lower average cost per share
than a less systematic investment approach.
Prior to participating in dollar cost averaging, you must establish an
account in an Evergreen Keystone mutual fund. You should designate on the
application (1) the dollar amount of each monthly or quarterly investment you
wish to make and (2) the Fund in which the investment is to be made. Thereafter,
on the first day of the designated month, an amount equal to the specified
monthly or quarterly investment will automatically be redeemed from your initial
account and invested in shares of the designated fund.
If you are a Class A investor and paid a sales charge on your initial
purchase, the shares purchased will be eligible for Rights of Accumulation and
the sales charge applicable to the purchase will be determined accordingly. In
addition, the value of shares purchased will be included in the total amount
required to fulfill a Letter of Intent. If a sales charge was not paid on the
initial purchase, a sales charge will be imposed at the time of subsequent
purchases, and the value of shares purchased will become eligible for Rights of
Accumulation and Letters of Intent. See the SAI.
TWO DIMENSIONAL INVESTING. You may elect to have income and capital gains
distributions from any class of Evergreen Keystone mutual fund shares you own
automatically invested to purchase the same class of shares of any other
Evergreen Keystone mutual fund. You may select this service on your application
and indicate the Evergreen Keystone mutual fund(s) into which distributions are
to be invested. The value of shares purchased will be ineligible for Rights of
Accumulation and Letters of Intent. See the SAI.
TAX SHELTERED RETIREMENT PLANS. The Fund has various retirement plans available
to you, including Individual Retirement Accounts (IRAs); Rollover IRAs;
Simplified Employee Pension Plans (SEPs); Salary Reduction Plans (SARSEPs); Tax
Sheltered Annuity Plans; 403(b)(7) Plans; 401(k) Plans; Keogh Plans; Corporate
Profit-Sharing Plans; and Money Purchase Plans. For details, including fees and
application forms, call toll free 1-800-247-4075 or write to EKSC.
EFFECT OF BANKING LAWS
The Glass-Steagall Act and other banking laws and regulations ("Banking
Laws") presently prohibit member banks of the Federal Reserve System or their
non-bank affiliates ("Member Banks") from sponsoring, organizing, controlling,
or distributing the shares of registered open-end investment companies such as
the Funds. However, under the Banking Laws, a Member Bank may act as investment
adviser, transfer agent or custodian to a registered open-end investment company
and may also act as agent in connection with the purchase of shares of such an
investment company upon the order of its customer. EAMC and Keystone, since they
both are subsidiaries of FUNB, and CMG are subject to and in compliance with the
aforementioned laws and regulations.
Changes to applicable laws and regulations or future judicial or
administrative decisions could result in CMG, Keystone or EAMC being prevented
from continuing to perform the services required under the investment advisory
contract or from acting as agent in connection with the purchase of shares of a
Fund by its customers. If CMG, Keystone or EAMC were prevented from continuing
to provide the services called for under the investment advisory agreements, it
is expected that the Trustees or Directors would identify, and call upon each
Fund's shareholders to approve, a new investment adviser. If this were to occur,
the Trustees or Directors would seek to take action so that the shareholders of
any Fund would not suffer any adverse financial consequences.
OTHER INFORMATION
DIVIDENDS, DISTRIBUTIONS AND TAXES
It is the policy of each Fund to distribute its investment company taxable
income and any net realized capital gains to shareholders annually or more
frequently as required as a condition of continued qualification as a regulated
investment company by the Code. Dividends and distributions generally are
taxable in the year in which they are paid, except any dividends paid in January
that were declared in the previous calendar quarter may be treated as paid in
December in the previous year. Income dividends and capital gain distributions
are automatically reinvested in additional shares of the Fund making the
distribution at the net asset value per share at the close of business on the
record date, unless the shareholder writes to the Fund's transfer agent and
requests payment in cash.
Each Fund has qualified and intends to continue to qualify as a regulated
investment company under the Code. While so qualified, it is expected that each
Fund will not be required to pay any federal income tax on that portion of its
investment company taxable income and any net realized capital gains it
distributes to shareholders. The Code imposes a 4% nondeductible excise tax on
regulated investment companies, such as the Funds, to the extent they do not
meet certain distribution requirements by the end of each calendar year. Each
Fund anticipates meeting such distribution requirements. Most shareholders of
the Funds normally will have to pay federal income tax and any state or local
taxes on the dividends and distributions they receive from a Fund.
Following the end of each calendar year, every shareholder of the Funds
will be sent applicable tax information and information regarding the dividends
and capital gain distributions made during the calendar year. Under current law,
the highest federal income tax rate applicable to net long-term capital gains
realized by individuals is 28%. The rate applicable to corporations is 35%.
Certain income from a Fund may qualify for a corporate dividends-received
deduction of 70%. EVERGREEN U.S. REAL ESTATE EQUITY FUND invests in real estate
investment trusts which report the tax characteristics of their distributions to
the Fund annually on a calendar year basis. The timing of such reporting to the
Fund may affect the tax characteristics of distributions by the Fund to
shareholders. Each Fund is required by Federal law to withhold 31% of reportable
payments (which may include dividends, capital gain distributions and
redemptions) paid to certain shareholders. In order to avoid this backup
withholding requirement, you must certify on the Share Purchase Application, or
on a separate form supplied by EKSC, that the investor's social security or
taxpayer identification number is correct and that the investor is not currently
subject to backup withholding or is exempt from backup withholding. A
shareholder who acquires Class A shares of a Fund and sells or otherwise
disposes of such shares within ninety days of acquisition may not be allowed to
include certain sales charges incurred in acquiring such shares for purposes of
calculating gain and loss realized upon a sale or exchange of shares of the
Fund.
The foregoing discussion of Federal income tax consequences is based on tax
laws and regulations in effect on the date of this Prospectus, and is subject to
change by legislative or administrative action. As the foregoing discussion is
for general information only, you should also review the discussion of
"Additional Tax Information" contained in the SAI. In addition, you should
consult your own tax adviser as to the tax consequences of investments in the
Funds, including the application of state and local taxes which may be different
from Federal income tax consequences described above.
GENERAL INFORMATION
CODE OF ETHICS. The Funds have adopted a Code of Ethics incorporating policies
on personal securities trading as recommended by the Investment Company
Institute.
PORTFOLIO TRANSACTIONS. Consistent with the Rules of Fair Practice of the
National Association of Securities Dealers, Inc., and subject to seeking best
price and execution, a Fund may consider sales of its shares as a factor in the
selection of dealers to enter into portfolio transactions with the Fund.
ORGANIZATION. The EVERGREEN FUND, EVERGREEN AGGRESSIVE GROWTH FUND and EVERGREEN
SMALL CAP VALUE FUND are each separate investment series of the Evergreen Trust,
a Massachusetts business trust reorganized in 1986 from a Maryland predecessor
corporation. The EVERGREEN U.S. REAL ESTATE EQUITY FUND is a separate series of
Evergreen Equity Trust, a Massachusetts business trust organized in 1988.
EVERGREEN LIMITED MARKET FUND, INC. is a Maryland corporation organized in 1983.
The Funds do not intend to hold annual shareholder meetings; shareholder
meetings will be held only when required by applicable law. Shareholders have
available certain procedures for the removal of Directors or Trustees.
A shareholder in each Class of a Fund will be entitled to his or her share
of all dividends and distributions from a Fund's assets, based upon the relative
value of such shares to those of other Classes of the Fund, and, upon redeeming
shares, will receive the then current net asset value of the Class of shares of
the Fund represented by the redeemed shares less any applicable CDSC. Each Trust
(or corporation in the case of the EVERGREEN LIMITED MARKET FUND, INC.) named
above is empowered to establish, without shareholder approval, additional
investment series, which may have different investment objectives, and
additional classes of shares for any existing or future series. If an additional
series was established in a Trust (or in EVERGREEN LIMITED MARKET FUND, INC.),
each share of the series or any Class established thereunder would normally be
entitled to one vote for all purposes. Generally, shares of each series and
Class would vote together as a single Class on matters, such as the election of
Trustees of Directors, that affect each series and Class in substantially the
same manner. Class A, Class B, Class C and Class Y shares have identical voting,
dividend, liquidation and other rights, except that each Class bears, to the
extent applicable, its own distribution and transfer agency expenses as well as
any other expenses applicable only to a specific Class. Each Class of shares
votes separately with respect to Rule 12b-1 distribution plans and other matters
for which separate Class voting is appropriate under applicable law. Shares are
entitled to dividends as determined by the Trustees or Directors and, in
liquidation of a Fund, are entitled to receive the net assets of the Fund.
CUSTODIAN. State Street Bank and Trust Company, P.O. Box 9021, Boston,
Massachusetts 02205-9827 acts as each Fund's custodian.
REGISTRAR, TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT. Evergreen Keystone
Service Company, P.O. Box 2121, Boston, Massachusetts 02106-2121 acts as
registrar, transfer agent and dividend-disbursing agent for each of the Funds.
The transfer agent fee with respect to the Class B shares will be higher than
the transfer agency fee with respect to the Class A shares or Class C shares.
PRINCIPAL UNDERWRITER. EKD, an affiliate of BISYS, located at 125 West 55th
Street, New York, New York 10019, is the principal underwriter of the Funds.
BISYS also acts as sub-administrator to the Funds and provides certain
sub-administrative services to Keystone in connection with its role as
investment adviser to EVERGREEN SMALL CAP VALUE FUND and to EAMC in connection
with its role as investment adviser to EVERGREEN FUND, EVERGREEN U.S. REAL
ESTATE EQUITY FUND and EVERGREEN LIMITED MARKET FUND, INC., including providing
personnel to serve as officers of the Funds.
OTHER CLASSES OF SHARES. Each Fund currently offers four classes of shares,
Class A, Class B, Class C and Class Y, and may in the future offer additional
classes. Class Y shares are not offered by this Prospectus and are only
available to (i) persons who at or prior to December 31, 1994, owned shares in a
mutual fund advised by EAMC, (ii) certain institutional investors and (iii)
investment advisory clients of EAMC, Keystone, CMG and their affiliates. The
dividends payable with respect to Class A, Class B and Class C shares will be
less than those payable with respect to Class Y shares due to the distribution
and shareholder servicing related expenses borne by Class A, Class B and Class C
shares and the fact that such expenses are not borne by Class Y shares.
PERFORMANCE INFORMATION. From time to time, the Funds may quote their "total
return" or "yield" for a specified period in advertisements, reports or other
communications to shareholders, Total return and yield are computed separately
for Class A, Class B and Class C shares. A Fund's total return for each such
period is computed by finding, through the use of a formula prescribed by the
Securities and Exchange Commission ("SEC"), the average annual compounded rate
of return over the period that would equate an assumed initial amount invested
to the value of the investment at the end of the period. For purposes of
computing total return, dividends and capital gains distributions paid on shares
of a Fund are assumed to have been reinvested when paid and the maximum sales
charges applicable to purchases of a Fund's shares are assumed to have been
paid. Yield is a way of showing the rate of income the Fund earns on its
investments as a percentage of the Fund's share price. The Fund's yield is
calculated according to accounting methods that are standardized by the SEC for
all stock and bond funds. Because yield accounting methods differ from the
method used for other accounting purposes, the Fund's yield may not equal its
distribution rate, the income paid to your account or the net investment income
reported in the Fund's financial statements. To calculate yield, the Fund takes
the interest [and dividend] income it earned from its portfolio of investments
(as defined by the SEC formula) for a 30-day period (net of expenses), divides
it by the average number of shares entitled to receive dividends, and expresses
the result as an annualized percentage rate based on the Fund's share price at
the end of the 30-day period. This yield does not reflect gains or losses from
selling securities.
Performance data for each class of shares will be included in any
advertisement or sales literature using performance data of a Fund. These
advertisements may quote performance rankings or ratings of a Fund by financial
publications or independent organizations such as Lipper Analytical Services,
Inc. and Morningstar, Inc. or compare a Fund's performance to various indices.
The Fund may also advertise in items of sales literature an "actual distribution
rate" which is computed by dividing the total ordinary income distributed (which
may include the excess of short-term capital gains over losses) to shareholders
for the latest twelve month period by the maximum public offering price per
share on the last day of the period. Investors should be aware that past
performance may not be reflective of future results.
In marketing a Fund's shares, information may be provided that is designed
to help individuals understand their investment goals and explore various
financial strategies. Such information may include publications describing
general principles of investing, such as asset allocation, diversification, risk
tolerance, and goal setting; a questionnaire designed to help create a personal
financial profile; and an action plan offering investment alternatives. The
information provided to investors may also include discussions of other
Evergreen Keystone mutual funds, products, and services, which may include:
retirement investing; brokerage products and services; the effects of periodic
investment plans and dollar cost averaging; saving for college; and charitable
giving. In addition, the information provided to investors may quote financial
or business publications and periodicals, including model portfolios or
allocations, as they relate to fund management, investment philosophy, and
investment techniques. EKD may also reprint, and use as advertising and sales
literature, articles from Evergreen Events, a quarterly magazine provided to
Evergreen Keystone mutual fund shareholders.
LIABILITY UNDER MASSACHUSETTS LAW. Under Massachusetts law, trustees and
shareholders of a business trust may, in certain circumstances, be held
personally liable for its obligations. The Declarations of Trust under which the
EVERGREEN FUND, EVERGREEN U.S. REAL ESTATE EQUITY FUND, EVERGREEN AGGRESSIVE
GROWTH FUND and EVERGREEN SMALL CAP VALUE FUND operate provide that no Trustee
or shareholder will be personally liable for the obligations of the Trust and
that every written contract made by the Trust shall contain a provision to that
effect. If any Trustee or shareholder were required to pay any liability of the
Trust, that person would be entitled to reimbursement from the general assets of
the Trust.
ADDITIONAL INFORMATION. This Prospectus and the SAI, which has been incorporated
by reference herein, do not contain all the information set forth in the
Registration Statements filed by the Trusts or EVERGREEN LIMITED MARKET FUND,
INC. with the SEC under the Securities Act. 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.
<PAGE>
********************************************************************************
PROSPECTUS
********************************************************************************
THE EVERGREEN(SM) DOMESTIC GROWTH FUNDS
********************************************************************************
PROSPECTUS DATED JUNE 2, 1997
EVERGREEN FUND
EVERGREEN AGGRESSIVE GROWTH FUND
EVERGREEN SMALL CAP VALUE FUND
PROSPECTUS DATED NOVEMBER 29, 1996 AS SUPPLEMENTED JUNE 2, 1997
EVERGREEN U.S. REAL ESTATE EQUITY FUND
EVERGREEN LIMITED MARKET FUND, INC.
CLASS Y SHARES
The Evergreen Domestic Growth Funds (the "Funds") are designed to provide
investors with a selection of investment alternatives that seek to provide
capital growth and diversification. This Prospectus provides information
regarding the Class Y shares offered by the Funds. Each Fund is, or is a series
of, an open-end, diversified, management investment company. This Prospectus
sets forth concise information about the Funds that a prospective investor
should know before investing. The address of the Funds is 2500 Westchester
Avenue, Purchase, New York 10577.
A Statement of Additional Information ("SAI") dated June 2, 1997 for the
Evergreen Fund, the Evergreen Aggressive Growth Fund and the Evergreen Small Cap
Value Fund and dated November 29, 1996 as supplemented June 2, 1997 for the
Evergreen U.S. Real Estate Equity Fund and the Evergreen Limited Market Fund,
Inc. has been filed with the Securities and Exchange Commission and is
incorporated by reference herein. The SAI provides information regarding certain
matters discussed in this Prospectus and other matters that may be of interest
to investors. Shareholders may obtain a copy of the SAI without charge by
calling the Funds at (800) 343-2898. There can be no assurance that the
investment objective of any Fund will be achieved. Investors are advised to read
this Prospectus carefully.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF ANY
BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT INSURED OR
OTHERWISE PROTECTED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY AND
INVOLVE RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
KEEP THIS PROSPECTUS FOR FUTURE REFERENCE
EVERGREEN(SM) is a Service Mark of Evergreen Asset Management Corp.
Copyright 1995, Evergreen Asset Management Corp.
<PAGE>
TABLE OF CONTENTS
Page
OVERVIEW OF THE FUNDS.......................................................4
EXPENSE INFORMATION.........................................................4
FINANCIAL HIGHLIGHTS........................................................6
DESCRIPTION OF THE FUNDS....................................................7
INVESTMENT OBJECTIVES AND POLICIES....................................7
INVESTMENT PRACTICES AND RESTRICTIONS.................................9
SPECIAL RISK CONSIDERATIONS..........................................13
OTHER INVESTMENT RESTRICTIONS........................................14
MANAGEMENT OF THE FUNDS....................................................14
BOARD OF TRUSTEES/DIRECTORS..........................................14
INVESTMENT ADVISERS..................................................14
SUB-ADVISER..........................................................15
PORTFOLIO MANAGERS...................................................15
ADMINISTRATOR........................................................16
SUBADMINISTRATOR.....................................................16
PURCHASE AND REDEMPTION OF SHARES..........................................17
HOW TO BUY SHARES....................................................17
HOW TO REDEEM SHARES.................................................18
EXCHANGE PRIVILEGE...................................................19
SHAREHOLDER SERVICES
<PAGE>
OVERVIEW OF THE FUNDS
The following summary is qualified in its entirety by the more detailed
information contained elsewhere in this Prospectus. See "Description of the
Funds" and "Management of the Funds."
The investment adviser to the EVERGREEN FUND, EVERGREEN U.S. REAL ESTATE
EQUITY FUND and EVERGREEN LIMITED MARKET FUND, INC. is Evergreen Asset
Management Corp. ("EAMC"). EAMC and its predecessors have served as investment
adviser to the Evergreen mutual funds since 1971. EAMC is a wholly-owned
subsidiary of First Union National Bank of North Carolina ("FUNB"), which in
turn is a subsidiary of First Union Corporation, the sixth largest bank holding
company in the United States. The Capital Management Group of First Union
National Bank of North Carolina serves as investment adviser to EVERGREEN
AGGRESSIVE GROWTH FUND.
Keystone Investment Management Company ("Keystone") serves as investment
adviser to the EVERGREEN SMALL CAP VALUE FUND. Keystone is an indirectly-owned
subsidiary of FUNB. Keystone, or its affiliates, have provided investment
advisory and management services to investment companies and private accounts
since 1932.
EVERGREEN FUND seeks to achieve capital appreciation by investing in the
securities of little-known or relatively small companies, or companies
undergoing changes which the Fund's investment adviser believes will have
favorable consequences. Income will not be a factor in the selection of
portfolio investments.
EVERGREEN U.S. REAL ESTATE EQUITY FUND seeks long-term capital growth.
Current income is a secondary objective. It invests primarily in equity
securities of U.S. companies which are principally engaged in the real estate
industry or which own significant real estate assets. It will not purchase
direct interests in real estate.
EVERGREEN LIMITED MARKET FUND, INC. seeks to achieve capital appreciation
in the value of its shares. Income is not a factor in the selection of portfolio
securities. In attempting to achieve its objective, the policy of EVERGREEN
LIMITED MARKET FUND, INC. is to invest principally in securities of companies
for which there is a relatively limited trading market. Generally these are
little-known, small or special situation companies.
EVERGREEN AGGRESSIVE GROWTH FUND seeks long-term capital appreciation by
investing primarily in common stocks of emerging growth companies and in larger,
more well established companies, all of which are viewed by the Fund's
investment adviser as having above average appreciation potential.
EVERGREEN SMALL CAP VALUE FUND seeks capital appreciation by investing in
a diversified portfolio of common stocks of U.S. issuers which the investment
adviser believes have underlying values, or potential values, exceeding their
current values.
THERE IS NO ASSURANCE THAT THE INVESTMENT OBJECTIVE OF ANY FUND WILL BE
ACHIEVED.
EXPENSE INFORMATION
The table set forth below summarizes the shareholder transaction costs
associated with an investment in Class Y Shares of a Fund. For further
information see "Purchase and Redemption of Shares" and "General Information --
Other Classes of Shares."
CLASS Y SHARES
SHAREHOLDER TRANSACTION EXPENSES NO LOAD OPTION
Maximum Sales Charge Imposed on Purchases None
Maximum Sales Load Imposed on Dividend Reinvestments None
Maximum Deferred Sales Charge None
Exchange Fee None
ANNUAL FUND OPERATING EXPENSES AND EXAMPLES
The following tables show for each 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 FUND
Annual Operating
Expenses Examples
------------------ ---------------
Management Fees 0.98% After 1 Year $ 12
Other Expenses 0.17% After 3 Years $ 37
-----
Total 1.15% After 5 Years $ 63
After 10 Years $140
EVERGREEN U.S. REAL ESTATE EQUITY FUND
Annual Operating
Expenses Examples
------------------ ---------------
Management Fees 1.00% After 1 Year $ 15
Other Expenses* 0.50% After 3 Years $ 47
-----
Total 1.50% After 5 Years $ 82
After 10 Years $179
EVERGREEN LIMITED MARKET FUND, INC.
Annual Operating
Expenses Examples
------------------ ----------------
Management Fees 1.00% After 1 Year $ 16
Other Expenses** 0.60% After 3 Years $ 50
Total 1.60% After 5 Years $ 87
After 10 Years $190
EVERGREEN AGGRESSIVE GROWTH FUND
Annual Operating
Expenses Examples
------------------ ----------------
Management Fees 0.60% After 1 Year $10
Other Expenses 0.37% After 3 Years $31
-----
Total 0.97% After 5 Years $54
After 10 Years $119
EVERGREEN SMALL CAP VALUE FUND
Annual Operating
Expenses Examples
------------------ ----------------
Management Fees 0.95% After 1 Year $15
Other Expenses*** 0.55% After 3 Years $47
-------
Total 1.50%
*Reflects an agreement by EAMC to limit aggregate operating expenses (including
the Advisory Fees, but excluding interest, taxes, brokerage commissions and
extraordinary expenses) of EVERGREEN U.S. REAL ESTATE EQUITY FUND to an annual
rate of 1.50% of average net assets until the fund reaches net assets of $15
million. Absent such agreements, the estimated annual operating expenses for
Class Y Shares would have been 2.25% of average net assets.
**The annual operating expenses and examples of EVERGREEN LIMITED MARKET FUND,
INC. do not reflect fee waivers and expense reimbursements for the most recent
fiscal period. Actual expenses net of fee waivers and expense reimbursements for
the fiscal year ended September 30, 1996 for Class Y Shares were 1.55%.
***Reflects agreements by Keystone to limit aggregate operating expenses
(including the Advisory Fees, but excluding interest, taxes, brokerage
commissions and extraordinary expenses) of EVERGREEN SMALL CAP VALUE FUND to an
annual rate of 1.50% of average net assets until the Fund reaches net assets of
$15 million. Absent such agreements, the estimated annual operating expenses for
the Fund would be 1.75% of average net assets.
The Fund offers Class A, B and C Shares which have different expenses and
sales charges.
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.
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 for the most recent fiscal period. These 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."
FINANCIAL HIGHLIGHTS
The tables on the following pages represent, for each Fund, financial
highlights for a share outstanding throughout each period. Price Waterhouse LLP
has audited the financial highlights for (i) the five most recent fiscal years
or the life of the Fund, if shorter, for EVERGREEN FUND and EVERGREEN U.S. REAL
ESTATE EQUITY FUND, (ii) the fiscal year ended September 30, 1996 for EVERGREEN
LIMITED MARKET FUND, INC., and (iii) for the fiscal periods ended September 30,
1995 and 1996 for EVERGREEN AGGRESSIVE GROWTH FUND. Ernst & Young LLP was
EVERGREEN LIMITED MARKET FUND, INC.'s prior independent auditors and audited
that Fund's financial highlights for each of the fiscal years in the four-year
period ended September 30, 1995. A report of Price Waterhouse LLP and Ernst &
Young LLP, as the case may be, on the audited information with respect to each
Fund is contained in the annual report to shareholders of each Fund which in
relevant part is incorporated by reference in the SAI. Shareholders should read
the following information for each Fund in conjunction with the financial
statements and related notes contained in such annual report which are
incorporated by reference in the SAI.
Further information about a Fund's performance is contained in the Fund's
annual report to shareholders, which may be obtained without charge.
Further information about a Fund's performance is contained in the Fund's
annual report to shareholders, which may be obtained without charge.
<PAGE>
EVERGREEN FUND -- CLASS Y SHARES
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
1996 1995 1994 1993 1992 1991 1990 1989 1988*
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning
of period.................................. $15.59 $14.62 $14.46 $13.10 $13.32 $ 9.66 $14.01 $12.47 $15.12
Income (loss) from investment operations:
Net investment income...................... .24 .10 .07 .09 .09 .17 .24 .32 .21
Net realized and unrealized gain (loss) on
investments.............................. 2.55 3.10 .79 1.96 .55 3.93 (3.62) 1.99 (1.05)
Total from investment
operations............................. 2.79 3.20 .86 2.05 .64 4.10 (3.38) 2.31 (.84)
Less distributions to shareholders from:
Net investment income...................... (.09) (.07) (.09) (.07) (.17) (.18) (.36) (.21) (.25)
Net realized gains......................... (.58) (2.16) (.61) (.62) (.69) (.26) (.61) (.56) (1.56)
Total distributions...................... (.67) (2.23) (.70) (.69) (.86) (.44) (.97) (.77) (1.81)
Net asset value, end of period............. $17.71 $15.59 $14.62 $14.46 $13.10 $13.32 $9.66 $14.01 $12.47
TOTAL RETURN+................................ 18.4% 26.8% 6.2% 15.8% 5.2% 43.7% (25.4%) 20.0% 1.9%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (in millions)...... $841 $612 $526 $657 $722 $755 $525 $867 $751
Ratios to average net assets:
Operating expenses......................... 1.15% 1.16% 1.13% 1.11% 1.13% 1.15% 1.15% 1.11% 1.03%
Interest expense........................... -- .06% .09% .01% -- -- -- -- --
Net investment income...................... .93% .53% .40% .60% .56% 1.45% 1.83% 2.46% 1.70%
Portfolio turnover rate...................... 15% 19% 19% 21% 32% 35% 39% 40% 42%
Average commission rate paid per share....... $.0603 N/A N/A N/A N/A N/A N/A N/A N/A
<CAPTION>
1987*
<S> <C>
PER SHARE DATA
Net asset value, beginning
of period.................................. $13.55
Income (loss) from investment operations:
Net investment income...................... .17
Net realized and unrealized gain (loss) on
investments.............................. 2.65
Total from investment
operations............................. 2.82
Less distributions to shareholders from:
Net investment income...................... (.13)
Net realized gains......................... (1.12)
Total distributions...................... (1.25)
Net asset value, end of period............. $15.12
TOTAL RETURN+................................ 22.5%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (in millions)...... $808
Ratios to average net assets:
Operating expenses......................... 1.03%
Interest expense........................... --
Net investment income...................... 1.32%
Portfolio turnover rate...................... 46%
Average commission rate paid per share....... N/A
</TABLE>
* Net of expense limitation in fiscal years 1988 and 1987.
+ Total return is calculated on net asset value for the period indicated and is
not annualized.
<PAGE>
EVERGREEN U.S. REAL ESTATE EQUITY FUND -- CLASS Y SHARES
<TABLE>
<CAPTION>
NINE MONTHS SEPTEMBER 1, 1993*
YEAR ENDED YEAR ENDED ENDED THROUGH
SEPTEMBER 30, 1996| SEPTEMBER 30, 1995 SEPTEMBER 30, 1994# DECEMBER 31, 1993
<S> <C> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning of
period........................... $11.44 $10.07 $ 10.71 $ 10.00
Income (loss) from investment
operations:
Net investment income............ .24 .23 .11 .04
Net realized and unrealized gain
(loss) on investments.......... 1.29 1.46 (.75) .72
Total from investment
operations................... 1.53 1.69 (.64) .76
Less distributions to shareholders
from:
Net investment income............ (.20) (.20) -- (.04)
In excess of net investment
income......................... -- -- -- (.01)
Net realized gains............... (.21) (.12) -- --
Total distributions............ (.41) (.32) -- (.05)
Net asset value, end of period..... $12.56 $11.44 $ 10.07 $ 10.71
TOTAL RETURN+...................... 13.6% 17.6% (6.0%) 7.6%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's
omitted)......................... $10,601 $9,456 $8,630 $4,610
Ratios to average net assets:
Expenses**....................... 1.46% 1.50% 1.49%++ .44%++
Interest expense................. .04% -- -- --
Net investment income**.......... 2.02% 2.45% 1.60%++ 1.93%++
Portfolio turnover rate............ 169% 115% 102% 17%
Average commission rate paid per
share............................ $.0619 N/A N/A N/A
</TABLE>
| Per share data is calculated based on average shares outstanding during the
period.
# The Fund changed its fiscal year end from December 31 to September 30.
* Commencement of operations.
+ Total return is calculated on net asset value for the periods indicated and
is not annualized.
++ Annualized.
** Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were assumed or waived by the investment adviser, the
annualized ratios of expenses and net investment income (loss) to average
net assets, exclusive of any applicable state expense limitations, would
have been the following:
<TABLE>
<CAPTION>
NINE MONTHS SEPTEMBER 1, 1993*
YEAR ENDED YEAR ENDED ENDED THROUGH
SEPTEMBER 30,1996 SEPTEMBER 30, 1995 SEPTEMBER 30, 1994 DECEMBER 31, 1993
<S> <C> <C> <C> <C>
Expenses............................ 2.25% 2.70% 2.65% 3.59%
Net investment income (loss)........ 1.23% 1.25% .44% (1.21%)
</TABLE>
<PAGE>
EVERGREEN LIMITED MARKET FUND, INC. -- CLASS Y SHARES
<TABLE>
<CAPTION>
YEAR YEAR FOUR MONTHS
ENDED ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, YEAR ENDED MAY 31,
1996 1995 1994* 1994 1993 1992 1991 1990 1989|
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value,
beginning of
period.............. $18.42 $21.74 $21.20 $20.87 $21.02 $18.81 $17.69 $21.02 $16.82
Income (loss) from
investment
operations:
Net investment
income (loss)..... (.08) (.23) (.05) (.07) (.03) .02 .56 .45 .16
Net realized and
unrealized gain
(loss) on
investments....... (.43) .59 .59 1.67 1.57 3.33 1.67 .25 4.37
Total from
investment
operations...... (.51) .36 .54 1.60 1.54 3.35 2.23 .70 4.53
Less distributions to
shareholders from:
Net investment
income............ -- -- -- -- -- (.14) (.53) (.36) (.05)
Net realized
gains............. (.56) (3.68) -- (1.27) (1.69) (1.00) (.58) (3.67) (.28)
Total
distributions... (.56) (3.68) -- (1.27) (1.69) (1.14) (1.11) (4.03) (.33)
Net asset value, end
of period........... $17.35 $18.42 $21.74 $21.20 $20.87 $21.02 $18.81 $17.69 $21.02
TOTAL RETURN+......... (2.7%) 4.8% 2.6% 7.6% 7.5% 18.3% 14.4% 4.2% 27.4%
RATIOS & SUPPLEMENTAL
DATA
Net assets, end of
period
(000's omitted)..... $39,622 $64,721 $99,340 $96,357 $80,605 $62,172 $45,687 $37,838 $37,292
Ratios to average net
assets:
Expenses............ 1.55%# 1.36% 1.37%++ 1.26% 1.24% 1.25% 1.32% 1.33% 1.30%
Interest expense.... .02% -- -- -- -- -- -- -- --
Net investment
income (loss)..... (.38%)# (.87%) (.70%)++ (.33%) (.07%) .22% 3.32% 2.25% .86%
Portfolio turnover
rate................ 160% 84% 36% 89% 29% 55% 59% 46% 45%
Average commission
rate paid per
share............... $.0497 N/A N/A N/A N/A N/A N/A N/A N/A
<CAPTION>
1988
<S> <C>
PER SHARE DATA
Net asset value,
beginning of
period.............. $18.55
Income (loss) from
investment
operations:
Net investment
income (loss)..... --
Net realized and
unrealized gain
(loss) on
investments....... (.78)
Total from
investment
operations...... (.78)
Less distributions to
shareholders from:
Net investment
income............ --
Net realized
gains............. (.95)
Total
distributions... (.95)
Net asset value, end
of period........... $16.82
TOTAL RETURN+......... (4.0%)
RATIOS & SUPPLEMENTAL
DATA
Net assets, end of
period
(000's omitted)..... $23,007
Ratios to average net
assets:
Expenses............ 1.47%
Interest expense.... --
Net investment
income (loss)..... .01%
Portfolio turnover
rate................ 47%
Average commission
rate paid per
share............... N/A
</TABLE>
* The Fund changed its fiscal year end from May 31 to September 30.
| Investment income, expenses and net investment income are based on average
monthly shares outstanding for the period indicated.
+ Total return is calculated on net asset value for the periods indicated and
is not annualized.
++ Annualized.
# Net of expense waivers and reimbursements. If the Fund had borne all expenses
that were assumed or waived by the investment adviser, the annualized ratios
of expenses and net investment loss to average net assets would have been the
following:
<TABLE>
<CAPTION>
YEAR ENDED
SEPTEMBER 30,
1996
<S> <C>
Expenses.................................... 1.60%
Net investment loss......................... (.43%)
</TABLE>
<PAGE>
EVERGREEN AGGRESSIVE GROWTH FUND -- CLASS Y SHARES
<TABLE>
<CAPTION>
CLASS Y SHARES
JULY 7,
YEAR 1995*
ENDED THROUGH
SEPTEMBER 30, SEPTEMBER 30,
1996 1995
<S> <C> <C>
PER SHARE DATA:
Net asset value, beginning of
period........................ $17.38 $15.79
Income (loss) from investment
operations:
Net investment loss........... (.06) (.01)
Net realized and unrealized
gain on investments......... 4.41 1.60
Total from investment
operations................ 4.35 1.59
Less distributions to
shareholders from net realized
gains......................... (.64) --
Net asset value, end of
period........................ $21.09 $17.38
TOTAL RETURN+................... 25.8% 10.1%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (000's
omitted)...................... $25,918 $1,889
Ratios to average net assets:
Expenses...................... .97% 1.08%++
Net investment loss........... (.60%) (.71%)++
Portfolio turnover rate......... 33% 31%
Average commission rate paid per
share......................... $.0582 N/A
</TABLE>
* Commencement of class operations.
+ Total return is calculated on net asset value per share for the periods
indicated and is not annualized. Contingent deferred sales charges are not
reflected.
++ Annualized.
<PAGE>
DESCRIPTION OF THE FUNDS
INVESTMENT OBJECTIVES AND POLICIES
Each Fund's investment objective is fundamental and may not be changed
without shareholder approval.
In addition to the investment policies detailed below, each Fund may
employ certain additional investment strategies which are discussed in
"Investment Practices and Restrictions."
EVERGREEN FUND
The EVERGREEN FUND seeks to achieve its investment objective of capital
appreciation principally through investments in common stocks and securities
convertible into or exchangeable for common stocks of companies which are
little-known, relatively small or represent special situations which, in the
opinion of the Fund's investment adviser, offer potential for capital
appreciation. A "little-known" company means one whose business is limited to a
regional market or whose securities are closely held with only a small
proportion traded publicly. A "relatively small" company means one which has a
small share of the market for its products or services in comparison with other
companies in its field, or which provides goods or services for a limited
market. A "special situation" company is one which offers potential for capital
appreciation because of a recent or anticipated change in structure, management,
products or services. In addition to the securities described above, the Fund
may invest in securities of relatively well-known and large companies with
potential for capital appreciation. Investments may also be made to a limited
degree in non-convertible debt securities and preferred stocks which offer an
opportunity for capital appreciation. Short-term investments may also be made if
the Fund's investment adviser believes that such action will benefit the Fund.
See "Special Risk Considerations."
EVERGREEN U.S. REAL ESTATE EQUITY FUND
The EVERGREEN U.S. REAL ESTATE EQUITY FUND'S investment objective is
long-term capital growth, which it seeks to achieve through investment primarily
in equity securities of domestic companies which are principally engaged in the
real estate industry or which own significant real estate assets; the Fund will
not purchase direct interests in real estate. Current income is a secondary
objective. Equity securities include common stock, preferred stock and
securities convertible into common stock.
Under normal conditions, the Fund will invest not less than 65% of its
total assets in equity securities of United States exchange or NASDAQ listed
companies principally engaged in the real estate industry. A company is deemed
to be "principally engaged" in the real estate industry if at least 50% of its
assets (marked to market), gross income or net profits are attributable to
ownership, construction, management or sale of residential, commercial or
industrial real estate. Real estate industry companies may include among others:
equity real estate investment trusts, which pool investors' funds for investment
primarily in commercial real estate properties; mortgage real estate investment
trusts, which invest pooled funds in real estate related loans; brokers or real
estate developers; and companies with substantial real estate holdings, such as
paper and lumber producers and hotel and entertainment companies. The Fund will
only invest in real estate equity trusts and limited partnerships which are
traded on major exchanges. See "Special Risk Considerations" with respect to the
special risks involved with an investment in these types of securities. The
remainder of the Fund's investments may be made in equity securities of issuers
whose products and services are related to the real estate industry, such as
manufacturers and distributors of building supplies and financial institutions
which issue or service mortgages. The Fund may invest more than 25% of its total
assets in any one sector of the real estate or real estate related industries.
In addition, the Fund may, from time to time, invest in the securities of
companies unrelated to the real estate industry whose real estate assets are
substantial relative to the price of the companies' securities.
Investments may also be made in securities of issuers unrelated to the
real estate industry believed by the Fund's investment adviser to be undervalued
and to have capital appreciation potential. Also, consistent with the secondary
objective of current income, investments may also be made in non-convertible
debt securities of such companies. The debt securities purchased (except for
those described below) will be of investment grade or better quality (e.g.,
rated no lower than A by Standard & Poor's Ratings Group ("S&P") or Moody's
Investors Service ("Moody's") or any other nationally recognized statistical
rating organization ("SRO"), or, if not so rated, believed by the Fund's
investment adviser to be of comparable quality). However, up to 10% of total
assets may be invested in unrated debt securities of issuers secured by real
estate assets where the Fund's investment adviser believes that the securities
are trading at a discount and the underlying collateral will ensure repayment of
principal. In such situations, it is conceivable that the Fund could, in the
event of default, end up holding the underlying real estate directly.
EVERGREEN LIMITED MARKET FUND, INC.
The investment objective of EVERGREEN LIMITED MARKET FUND, INC. is to
achieve capital appreciation; income is not a factor in the selection of
portfolio securities. The Fund seeks to achieve its objective principally
through investments in common stocks of companies for which there is a
relatively limited trading market. A relatively limited trading market is one in
which only small amounts of stock are available at any given time generally
through five or fewer market makers. The securities of such companies are often
traded only over-the-counter or on a regional securities exchange, rarely on a
national securities exchange, and may not trade every day or in the volume
typical of trading on a national securities exchange.
Investments by the Fund are made with a view toward taking advantage of
market inefficiencies affecting the price of a company's securities or by
exploiting the investment opportunities which may be inherent in companies
offering new or unique products or services. Market inefficiency can result from
a company being too small to be covered by most industry analysts, thereby
resulting in a limited dissemination of information about the company or its
industry. The companies in which the Fund may invest are small, but have at
least $1,000,000 and generally no more than $150,000,000 of market
capitalization (see "Special Risk Considerations"). The Fund may also invest in
little-known or unpopular companies which may not be widely recommended for
purchase by industry analysts due to some situation unique to the company or its
industry. There are no restrictions as to types of businesses or industries in
which the Fund may invest. The Fund's investment adviser believes that its
investment research programs will uncover a variety of relatively unexploited
investment opportunities.
The Fund's investment adviser will attempt to screen the universe of
companies falling within the capitalization range described above and invest
primarily in what it believes to be the 100 best based on certain qualitative
and quantitative criteria. Such companies may include those with the highest
return on equity and consistent earnings growth. The criteria will be reviewed
and evaluated on an ongoing basis by the Fund's investment adviser. In addition,
the Fund will invest in other companies which do not meet the screening
criteria. These will include companies which offer unique products or services
or operate in industries or sectors that have, in the opinion of the Fund's
investment adviser, significant growth prospects. In selecting investment
opportunities for the Fund, the Fund's investment adviser will use certain
proprietary computer screening techniques and the extensive library facilities
of Lieber & Company, the Fund's sub-adviser.
While the focus of EVERGREEN LIMITED MARKET FUND, INC. is on long-term
capital appreciation, investments may on occasion be made with the expectation
of short-term capital appreciation. Securities held for a short time period may
be sold if the investment objective for such securities has been achieved or if
other circumstances warrant.
EVERGREEN AGGRESSIVE GROWTH FUND
The EVERGREEN AGGRESSIVE GROWTH FUND'S investment objective is to achieve
long-term capital appreciation by investing primarily in common stocks of
emerging growth companies and larger, more well established companies, all of
which are viewed by the Fund's investment adviser as having above-average
appreciation potential. Under normal circumstances, the Fund intends to invest
at least 65% of its net assets in common stocks or securities convertible into
common stocks. The Fund's investment adviser considers an emerging growth
company to be one which is still in the developmental stage, yet has
demonstrated, or is expected to achieve, growth of earnings over various major
business cycles. Important qualities of any emerging growth company include
sound management and a good product with growing market opportunities. To the
extent that its assets are not invested in common stocks or securities
convertible into common stocks, the Fund also may invest its assets in, or enter
into repurchase agreements with banks or broker-dealers with respect to,
investment grade corporate bonds, U.S. government securities, commercial paper
and certificates of deposit of domestic banks.
Consistent with its investment objective, the Fund also may invest in
equity securities of seasoned, established companies which its investment
adviser believes have above-average appreciation potential similar to that of
companies in the developmental stage. This may be due, for example, to
management change, new technology, new product or service developments, changes
in demand, or other factors. Investments in stocks of emerging growth companies
may involve special risks. Securities of lesser-known, relatively small and
special situation companies tend to be speculative and volatile.
Therefore, the current net asset value of the Fund's shares may vary
significantly. Accordingly, the Fund should not be considered suitable for
investors who are unable or unwilling to assume the risks of loss inherent in
such a program, nor should investment in the Fund be considered a balanced or
complete investment program.
EVERGREEN SMALL CAP VALUE FUND
The EVERGREEN SMALL CAP VALUE FUND'S investment objective is capital
appreciation. The Fund seeks to achieve its investment objective by investing in
a diversified portfolio of securities consisting primarily of common stocks of
U.S. issuers that the Fund's investment adviser believes have an underlying
value, or potential value, exceeding their current prices. Income is not a
primary factor in the selection of securities. Under normal market conditions,
the Fund will invest at least 65% of its total assets in common stocks of
companies with a market capitalization of less than $1 billion determined at the
time of purchase. In addition to common stocks, the Fund may invest in
securities having common stock characteristics, such as convertible bonds and
preferred stocks. The Fund may invest up to 25% of its assets in securities
issued by companies located in foreign countries.
In selecting securities for the portfolio, the Fund's investment adviser
will assess the prospects for earnings growth of a company over the next 1-1/2
to 3 years and quantify the economic worth, or basic value, of a company. Using
this value approach, the Fund's investment adviser relies primarily on the
knowledge, experience and judgment of its in-house research staff. The Fund's
investment adviser may also use information from a variety of outside sources,
including brokerage firms, electronic data bases, specialized research firms and
technical journals. See "Special Risks Considerations."
The Fund may invest in convertible debt securities that are rated Baa or
higher by Moody's or BBB or higher by S&P or, if unrated, deemed by the Fund's
investment adviser to be of comparable quality. Securities rated Baa or BBB may
have speculative characteristics. Changes in economic conditions or other
circumstances are more likely to weaken the ability of the issuers of such debt
securities to make principal and interest payments than is the case with higher
rated securities. However, like the higher rated debt securities, these
securities are considered investment grade. For a description of such ratings,
see the SAI.
INVESTMENT PRACTICES AND RESTRICTIONS
DEFENSIVE INVESTMENTS
Each Fund may invest, without limitation, in high quality money market
instruments, such as notes, certificates of deposit or bankers' acceptances,
U.S. government securities, non-convertible investment grade debt securities or
preferred stocks or hold its assets in cash if, in the opinion of the Funds'
investment advisers, market conditions warrant a temporary defensive investment
strategy.
PORTFOLIO TURNOVER AND BROKERAGE
The annual portfolio turnover rates for each Fund, except the EVERGREEN
SMALL CAP VALUE FUND, are set forth in the tables contained in the "Financial
Highlights" section above. The portfolio turnover rate for the EVERGREEN SMALL
CAP VALUE FUND is not expected to exceed 200% for the coming year. A high rate
of portfolio turnover (100% or more) may involve correspondingly greater
brokerage commissions and other transaction costs, which the Fund and its
shareholders must bear. For further information about brokerage and
distributions see "Dividends, Distributions and Taxes" or the SAI.
It is contemplated that Lieber & Company ("Lieber"), an affiliate of EAMC and a
member of the New York and American Stock Exchanges, will to the extent
practicable effect substantially all of the portfolio transactions for EVERGREEN
FUND, EVERGREEN U.S. REAL ESTATE EQUITY FUND and EVERGREEN LIMITED MARKET FUND,
INC. effected on those exchanges. See the SAI for further information regarding
the brokerage allocation practices of the Funds.
BORROWING
As a matter of fundamental policy, the Funds may not borrow money except
as a temporary measure for extraordinary or emergency purposes. The proceeds
from borrowings may be used to facilitate redemption requests which might
otherwise require the untimely disposition of portfolio securities. The specific
limits and other terms applicable to borrowing by each Fund are set forth in the
SAI.
LENDING OF PORTFOLIO SECURITIES
In order to generate income and to offset expenses, the Funds may lend
portfolio securities to brokers, dealers and other financial institutions. Each
Fund's investment adviser will monitor the creditworthiness of such borrowers.
Loans of securities by the Funds, if and when made, may not exceed 30% of the
value of a Fund's net assets and must be collateralized by cash or U.S.
government securities that are maintained at all times in an amount equal to at
least 100% of the current market value of the securities loaned, including
accrued interest. While such securities are on loan, the borrower will pay a
Fund any income accruing thereon, and the Fund may invest the cash collateral in
portfolio securities, thereby increasing its return. Any gain or loss in the
market price of the loaned securities which occurs during the term of the loan
would affect a Fund and its investors. A Fund has the right to call a loan and
obtain the securities loaned at any time on notice of not more than five
business days. A Fund may pay reasonable fees in connection with such loans.
There is the risk that when lending portfolio securities, the securities
may not be available to a Fund on a timely basis, and the Fund may, therefore,
lose the opportunity to sell the securities at a desirable price. In addition,
in the event that a borrower of securities would file for bankruptcy or become
insolvent, disposition of the securities may be delayed pending court action.
ILLIQUID SECURITIES
The Funds may invest up to 15% of their net assets in illiquid securities
and other securities which are not readily marketable, including non-negotiable
time deposits, certain restricted securities not deemed by the Trustees or
Directors to be liquid and repurchase agreements with maturities longer than
seven days, except that EVERGREEN U.S. REAL ESTATE EQUITY FUND may only invest
up to 10% of its assets in repurchase agreements with maturities longer than
seven days. Securities eligible for resale pursuant to Rule 144A under the
Securities Act of 1933 (the "Securities Act"), which have been determined to be
liquid, will not be considered by the Funds' investment advisers to be illiquid
or not readily marketable and, therefore, are not subject to the aforementioned
15% limit. The inability of a Fund to dispose of illiquid or not readily
marketable investments readily or at reasonable prices could impair a Fund's
ability to raise cash for redemptions or other purposes. The liquidity of
securities purchased by a Fund which are eligible for resale pursuant to Rule
144A will be monitored by each Fund's investment adviser on an ongoing basis,
subject to the oversight of the Trustees or Directors. In the event that such a
security is deemed to be no longer liquid, a Fund's holdings will be reviewed to
determine what action, if any, is required to ensure that the retention of such
security does not result in a Fund having more than 15% of its assets invested
in illiquid or not readily marketable securities.
REPURCHASE AGREEMENTS AND REVERSE REPURCHASE AGREEMENTS
Each Fund may enter into repurchase agreements with member banks of the
Federal Reserve System, including the Fund's Custodian, or primary dealers in
U.S. government securities. A repurchase agreement is an arrangement whereby a
Fund purchases a security and simultaneously agrees to resell it to the vendor
at the same price plus interest. The arrangement results in a fixed rate of
return that is not subject to market fluctuations during the holding period. A
Fund will maintain collateral with its Custodian in an amount at least equal to
the repurchase price (including accrued interest). In the event a vendor
defaults on its repurchase obligation, a Fund might suffer a loss to the extent
that the proceeds from the sale of the collateral were less than the repurchase
price. If the vendor becomes the subject of bankruptcy proceedings, a Fund might
be delayed in selling the collateral. The Funds' investment advisers will review
and continually monitor the creditworthiness of each institution with which a
Fund enters into a repurchase agreement to evaluate these risks.
EVERGREEN U.S. REAL ESTATE EQUITY FUND, EVERGREEN AGGRESSIVE GROWTH FUND
AND EVERGREEN SMALL CAP VALUE FUND may enter into "reverse repurchase
agreements." A reverse repurchase agreement is an arrangement whereby the Fund
agrees to sell portfolio securities to financial institutions such as banks and
broker-dealers, and to repurchase them at a mutually agreed upon date for the
price plus interest. At the time a Fund enters into a reverse repurchase
agreement, it will be placed in a segregated custodial cash account, U.S.
government securities or liquid high grade debt obligations having a value at
least equal to the repurchase price (including accrued interest) and will
subsequently monitor the account to ensure that such equivalent value is
maintained. Reverse repurchase agreements involve the risk that the market value
of the securities sold by the Fund may decline below the repurchase price of
those securities. A Fund will not enter into reverse repurchase agreements
exceeding 5% of the value of its total assets.
FIXED INCOME SECURITIES -- DOWNGRADES
If any security invested in by any of the Funds loses its rating or has
its rating reduced after the Fund has purchased it, the Fund is not required to
sell or otherwise dispose of the security, but may consider doing so.
OPTIONS, FUTURES AND DERIVATIVES
In addition to making investments directly in securities, EVERGREEN U.S.
REAL ESTATE EQUITY FUND and EVERGREEN SMALL CAP VALUE FUND may write covered put
and call options and hedge their investments by purchasing options and engaging
in transactions in futures contracts and related options. The Funds may engage
in foreign currency exchange transactions to protect against changes in future
exchange rates.
WRITING OPTIONS. EVERGREEN U.S. REAL ESTATE EQUITY FUND and EVERGREEN SMALL CAP
VALUE FUND may write covered call and put options on certain portfolio
securities in an attempt to earn income and realize a higher return on its
portfolio. A call option gives the purchaser of the option the right to buy a
security from the writer at the exercise price at any time during the option
period. An option may not be written if, afterwards, securities comprising more
than 5% of the market value of a Fund's equity securities would be subject to
call options. A Fund realizes income from the premium paid to it in exchange for
writing the call option. Once it has written a call option on a portfolio
security and until the expiration of such option, a Fund forgoes the opportunity
to profit from increases in the market price of such security in excess of the
exercise price of the call option. Should the price of the security on which a
call has been written decline, a Fund bears the risk of loss, which would be
offset to the extent the Fund has received premium income. A Fund will only
write "covered" options traded on recognized securities exchanges. An option
will be deemed covered when a Fund either (I) owns the security (or securities
convertible into such security) on which the call option has been written in an
amount sufficient to satisfy the obligations arising under a call option, or
(ii) in the case of both call and put options, the Fund's Custodian maintains
cash or high-grade liquid debt securities belonging to the Fund in an amount not
less that the amount needed to satisfy the Fund's obligations with respect to
such options. A "closing purchase transaction" may be entered into with respect
to a call option written by a Fund for the purpose of closing its position. The
Fund will realize a profit (or loss) from such transaction if the cost of such
transaction is less (or more) than the premium received from the writing of the
option. Because increases in the market price of a call option will generally
reflect increases in the market price of the underlying security, any loss
resulting from the repurchase of a call option may be offset in whole or in part
by unrealized appreciation of the underlying security owned by the Fund.
PURCHASING PUT AND CALL OPTIONS ON SECURITIES. The Funds may purchase put
options to protect its portfolio holdings in an underlying security against a
decline in market value. This protection is provided during the life of the put
option since the Fund, as holder of the put, is able to sell the underlying
security at the exercise price regardless of any decline in the underlying
security's market price. For the purchase of a put option to be profitable, the
market price of the underlying security must decline below the exercise price
more than enough to cover the premium and transaction costs. By using put
options in this manner, any profit which the Fund might otherwise have realized
on the underlying security will be reduced by the premium paid for the put
option and by transaction costs.
Each Fund may also purchase a call option to hedge against an increase in
price of a security that it intends to purchase. This protection is provided
during the life of the call option since the Fund, as holder of the call, is
able to buy the underlying security at the exercise price regardless of any
increase in the underlying security's market price. For the purchase of a call
option to be profitable, the market price of the underlying security must rise
above the exercise price more than enough to cover the premium and transaction
costs. By using call options in this manner, any profit which the Fund might
have realized had it bought the underlying security at the time it purchased the
call option will be reduced by the premium paid for the call option and by
transaction costs.
FUTURES, OPTIONS AND OTHER DERIVATIVE INSTRUMENTS. In addition to writing
covered call and put options, each Fund may purchase and sell various financial
instruments ("Derivative Instruments) such as financial futures contracts
(including interest rate, index and foreign currency futures contracts), options
(such as options on securities, indices, foreign currencies and futures
contracts), forward currency contracts and interest rate, equity index and
currency swaps, caps, collars and floors. The index Derivative Instruments a
Fund may use may be based on indices of U.S. or foreign equity or debt
securities. These Derivative Instruments may be used, for example, to preserve a
return or spread, to lock in unrealized market value gains or losses, to
facilitate or substitute for the sale or purchase of securities, to manage the
duration of securities, to alter the exposure of a particular investment or
portion of a Fund's portfolio to fluctuations in interest rates or currency
rates, to uncap a capped security or to convert a fixed rate security into a
variable rate security or a variable rate security into a fixed rate security.
A Fund's ability to use these instruments may be limited by market
conditions, regulatory limits and tax considerations. A Fund might not use any
of these strategies, and there can be no assurance that any strategy that is
used will succeed. See the SAI for more information regarding these instruments
and the risks relating thereto.
CURRENCY AND OTHER FINANCIAL FUTURE CONTRACTS. The Funds may also enter
into currency and other financial futures contracts and write options on such
contracts. The Funds intend to enter into such contracts and related options for
hedging purposes. The Funds will enter into futures on securities, currencies or
index-based futures contracts in order to hedge against changes in interest or
exchange rates or securities prices. A futures contract on securities or
currencies is an agreement to buy or sell securities or currencies during a
designated month at whatever price exists at that time. A futures contract on a
securities index does not involve the actual delivery of securities, but merely
requires. The Funds do not make payment or deliver securities upon entering into
a futures contract. Instead, they put down a margin deposit, which is adjusted
to reflect changes in the value of the contract and which remains in effect
until the contract is terminated.
The Funds may sell or purchase currency and other financial futures
contracts. When a futures contract is sold by a Fund, the profit on the contract
will tend to rise when the value of the underlying securities or currencies
declines and to fall when the value of such securities or currencies increases.
Thus, the Funds sell futures contracts in order to offset a possible decline in
the profit on their securities or currencies. If a futures contract is purchased
by a Fund, the value of the contract will tend to rise when the value of the
underlying securities or currencies increases and to fall when the value of such
securities or currencies declines.
The Funds may enter into closing purchase and sale transacations in order
to terminate a futures contract and may buy or sell put and call options for the
purpose of closing out their options positions. The Funds' ability to enter into
closing transactions depends on the development and maintenance of a liquid
secondary market. There is no assurance that a liquid secondary market will
exist for any particular contract or at any particular time. As a result, there
can be no assurance that the Funds will be able to enter into an offsetting
transaction with respect to a particular contract at a particular time. If the
Funds are not able to enter into an offsetting transaction, the Funds will
continue to be required to maintain the margin depostis on the contract and to
complete the contract according to its terms, in which case the Funds would
continue to bear market risk on the transaction.
RISKS OF DERIVATIVE INSTRUMENTS. The use of Derivative instruments,
including written put and call options, involves special risks, including: (1)
the lack of, or imperfect, correlation between price movements of a Fund's
current or proposed portfolio investments that are the subject of the
transactions as well as price movements of the Derivative Instruments involved
in the transaction; (2) possible lack of a liquid secondary market for any
particular Derivative Instrument at a particular time; (3) the need for
additional portfolio management skills and techniques; (4) losses due to
unanticipated market price movements; (5) the fact that, while such strategies
can reduce the risk of loss, they can also reduce the opportunity for gain, or
even result in losses, by offsetting favorable price movements in portfolio
investments; (6) incorrect forecasts by a Fund's investment adviser concerning
interest or currency exchange rates or direction of price fluctuations of the
investment that is the subject of the transaction, which may result in the
strategy being ineffective; (7) loss of premiums paid by the Fund on options it
purchases; and (8) the possible inability of the Fund to purchase or sell a
portfolio security at a time when it would otherwise be favorable for it to do
so, or the need to sell a portfolio security at a disadvantageous time, due to
the need for the Fund to maintain "cover" or to segregate securities in
connection with such transactions and the possible inability of the Fund to
close out or liquidate its positions.
Each Fund's investment adviser may use Derivative Instruments, including
written put and call options, for hedging purposes (i.e., by paying a premium or
foregoing the opportunity for profit in return for protection against downturns
in markets generally or the prices of individual securities or currencies) and
also may use Derivative Instruments to try to enhance the return characteristics
of a Fund's portfolio of investments (i.e., by receiving premiums in connection
with the writing of options and thereby accepting the risk of downturns in
markets generally or the prices of individual securities or currencies or by
paying premiums with the hope that the securities or currencies underlying
Derivative Instruments will appreciate). The use of Derivative Instruments for
hedging purposes or to enhance a Fund's return characteristics can increase
investment risk. If a Fund's investment adviser judges market conditions
incorrectly or employs a strategy that does not correlate well with the Fund's
investments, these techniques could result in a loss, regardless of whether the
intent was to reduce risk or increase return. These techniques may increase the
volatility of a Fund and may involve a small investment of cash relative to the
magnitude of the risk assumed, resulting in leverage. In addition, these
techniques could result in a loss if the counterparty to the transaction does
not perform as promised or if there is not a liquid secondary market to close
out a position that the Fund has entered into. Options and futures transactions
may increase portfolio turnover rates, which would result in greater commission
expenses and transaction costs.
SPECIAL RISK CONSIDERATIONS
INVESTMENT IN SMALL COMPANIES
Investments in securities of little-known, relatively small or special
situation companies ("Small Companies") may be speculative and volatile.
Investing in Small Companies generally involves some or all of the following
risks:
1. The company may lack management depth, potentially increasing the risks
associated with the loss of key personnel. 2. The company may lack material and
financial resources, possibly limiting the availability of financing. 3. The
company may be developing or marketing new products or services for which there
are no established markets and the market for the product or service could fail
to develop as projected. 4. The securities of Small Companies are often closely
held and only traded on the over-the -counter market or on a regional stock
exchange. As a result, the securities of Small Companies are sometimes illiquid
or subject to wide price fluctuations.
As a result of the risk factors described above, the net asset value of each
Fund's shares can be expected to vary significantly. Accordingly, each Fund
should not be considered suitable for investors who are unable or unwilling to
assume the associated risks, nor should investment in the Funds be considered a
balanced or complete investment program.
INVESTMENTS RELATED TO REAL ESTATE
EVERGREEN U.S. REAL ESTATE EQUITY FUND invests primarily in issuers whose
activities are real estate related. Risks associated with investment in
securities of companies in the real estate industry include: declines in the
value of real estate; risks related to general and local economic conditions;
overbuilding and increased competition; increases in property taxes and
operating expenses; changes in zoning laws; casualty or condemnation losses;
variations in rental income; changes in neighborhood values; the appeal of
properties to tenants; and increase in interest rates. In the event of a default
on such securities, the holder thereof could end up holding real estate directly
and therefore be more directly subject to such risks. In addition, equity real
estate investment trusts may be affected by changes in the value of the
underlying property owned by the trusts, while mortgage real estate investment
trusts may be affected by the quality of credit extended. Equity and mortgage
real estate investment trusts are dependent upon management skills, may not be
diversified and are subject to the risks of financing projects. Such trusts are
also subject to heavy cash flow dependency, defaults by borrowers, self
liquidation and the possibility of failing to qualify for tax-free pass-through
of income under the Internal Revenue Code of 1986, as amended (the "Code") and
to maintain exemption from the Investment Company Act of 1940, as amended (the
"1940 Act"). In the event an issuer of debt securities collateralized by real
estate defaulted, it is conceivable that a Fund could end up holding the
underlying real estate.
FOREIGN SECURITIES RISKS
Investing in foreign securities of foreign issuers generally involves more
risk than investing in a portfolio consisting solely of securities of domestic
issuers for the following reasons: publicly available information on issuers and
securities may be scarce; many foreign countries do not follow the same
accounting, auditing and financial reporting standards as are used in the U.S.;
market trading volumes may be smaller, resulting in less liquidity and more
price volatility compared to U.S. securities of comparable quality; there may be
less regulation of securities trading and its participants; the possibility may
exist for expropriation, confiscatory taxation, nationalization, establishment
of exchange controls, political or social instability of negative diplomatic
developments; and dividend or interest withholding may be imposed at the source.
Fluctuations in foreign exchange impose an additional level of risk,
possibly affecting the value of the Fund's foreign investments and earnings,
gains and losses realized through trades, and the unrealized appreciation or
depreciation of investments. The Fund may also incur costs when it shifts assets
from one country to another.
OTHER INVESTMENT RESTRICTIONS
Each Fund has adopted additional investment restrictions that are set
forth in the SAI. Unless otherwise noted, the restrictions and policies set
forth above are not fundamental and may be changed without shareholder approval.
MANAGEMENT OF THE FUNDS
BOARD OF TRUSTEES/DIRECTORS
Each Fund is governed by the Board of Trustees or Directors of the trust
or corporation under which it was organized. Each Fund's Board of Trustees or
Directors, as applicable, has absolute and exclusive control over the management
and disposition of all assets of a Fund.
INVESTMENT ADVISERS
Each Fund has retained an investment adviser that, subject to the
authority of a Fund's Trustees or Directors, (1) provides the Fund with
investment advice, management and administrative services and (2) supervises the
Fund's daily business affairs.
The investment adviser to each Fund is a subsidiary of FUNB. FUNB is a
subsidiary of First Union Corporation ("First Union"), the sixth largest bank
holding company in the United States. First Union, headquartered in Charlotte,
North Carolina, had $132 billion in consolidated assets as of February 28, 1997.
First Union and its subsidiaries provide a broad range of financial services to
individuals and businesses throughout the United States. Capital Management
Group of FUNB ("CMG") manages or otherwise oversees the investment of over $45
billion in assets belonging to a wide range of clients, including all of the
series of Evergreen investment Trust and certain other Evergreen mutual funds.
EVERGREEN FUND, EVERGREEN U.S. REAL ESTATE EQUITY FUND, AND EVERGREEN LIMITED
MARKET FUND, INC.
EAMC is the investment adviser to the EVERGREEN FUND, EVERGREEN U.S. REAL
ESTATE EQUITY FUND, and EVERGREEN LIMITED MARKET FUND, INC. EAMC, together with
its predecessors, has provided investment advice to the Evergreen mutual funds
since 1971. EAMC, located at 2500 Westchester Avenue, Purchase, New York 10577,
is a wholly-owned subsidiary of First Union Bank of North Carolina ("FUNB").
For the services it renders to each Fund, EAMC receives an annual fee
equal to 1.00% of the first $750,000,000 of the Fund's average daily net assets,
plus 0.90% of the next $250,000,000 of such average daily net assets, plus 0.80%
of such average daily net assets in excess of $1,000,000,000. For the fiscal
year ended September 30, 1996, each of the Funds paid the following in
investment advisory fees to EAMC as a percentage of its average net assets:
EVERGREEN FUND, 0.98%; EVERGREEN U.S. REAL ESTATE EQUITY FUND, 0.00%; and
EVERGREEN LIMITED MARKET FUND, INC. 1.00%.
EVERGREEN SMALL CAP VALUE FUND
Keystone is the investment adviser to the EVERGREEN SMALL CAP VALUE FUND.
Keystone, or its affiliates, has provided investment advisory and management
services to investment companies and private accounts since 1932. Keystone is
located at 200 Berkeley Street, Boston, Massachusetts 02116.
For the services it renders to the EVERGREEN SMALL CAP VALUE FUND,
Keystone receives an annual fee equal to 0.95% of the Fund's aggregate net asset
value.
EVERGREEN AGGRESSIVE GROWTH FUND
CMG provides investment advisory services to the EVERGREEN AGGRESSIVE
GROWTH FUND. For the services it renders to the EVERGREEN AGGRESSIVE GROWTH
FUND, CMG receives an annual fee equal to 0.60% of the Fund's average daily net
assets.
For the fiscal year ended September 30, 1996, EVERGREEN AGGRESSIVE GROWTH FUND
paid 0.60% of its average net assets to CMG in investment advisory fees.
Information regarding each Fund's total operating expenses and, to the
extent applicable, any expense limitations or waivers, are set forth in the
section "Financial Highlights." From time to time, each investment adviser may
reduce or waive its fee or reimburse a Fund for which it serves as investment
adviser for certain of the Fund's expenses in order to reduce the Fund's expense
ratio. As a result, a Fund's total return would be higher than if the fees and
any expenses had been paid by the Fund.
SUB-ADVISER
EAMC has entered into sub-advisory agreements with Lieber regarding
EVERGREEN FUND, EVERGREEN U.S. REAL ESTATE EQUITY FUND and EVERGREEN LIMITED
MARKET FUND, INC. (the "Sub-Advisory Agreements"). The Sub-Advisory Agreements
provide for Lieber's research department and staff to furnish EAMC with
information, investment recommendations, advice and research and general
consulting services regarding each Fund. For its services rendered, EAMC
reimburses Lieber for the direct and indirect costs of performing such services.
There is no additional charge to the Funds for the services provided by Lieber.
Lieber is a subsidiary of First Union and is located at 2500 Westchester Avenue,
Purchase, New York 10577.
PORTFOLIO MANAGERS
EVERGREEN FUND
Stephen A. Lieber has been the portfolio manager for EVERGREEN FUND since
1971. Mr. Lieber is the Chairman and Co-Chief Executive Officer of EAMC.
Mr. Lieber has been associated with EAMC since he founded it, or its
predecessors, in 1971.
EVERGREEN AGGRESSIVE GROWTH FUND
The portfolio manager for EVERGREEN AGGRESSIVE GROWTH FUND is Harold J.
Ireland, Jr., a Vice President of CMG who has been associated with CMG since
1995. Prior to that, Mr. Ireland was a Vice President of Palm Beach Capital
Management, Inc. and served as portfolio manager of the Fund's predecessor, ABT
Emerging Growth Fund, since 1985.
EVERGREEN U.S. REAL ESTATE EQUITY FUND
Samuel A. Lieber has been the portfolio manager for EVERGREEN U.S. REAL
ESTATE EQUITY FUND since the Fund's inception in March, 1995. Mr. Samuel Lieber
has been associated with EAMC since 1985.
EVERGREEN LIMITED MARKET FUND, INC.
A committee, which includes Stephen A. Lieber and Nola Maddox Falcone,
President and Co-Chief Executive Officer of EAMC, manages the portfolio of
Evergreen Limited Market Fund, Inc. The committee also draws upon the resources
of certain other portfolio management and analytical personnel employed by EAMC
or its affiliates.
EVERGREEN SMALL CAP VALUE FUND
Warren J. Isabelle is the portfolio manager for Evergreen Small Cap Value
Fund. He is also Chief Investment Officer for Equities of Keystone. Prior to
joining Keystone in February, 1997, Mr. Isabelle managed the Pioneer Capital
Growth Fund and the Pioneer Small Company Fund. He also served as Head of the
Pioneer Special Equities Group. He has 14 years of investment experience.
ADMINISTRATOR
EKIS serves as administrator to the Funds and is entitled to receive a fee
based on the aggregate average daily net assets of the Funds at a rate based on
the total assets of the mutual funds administered by EKIS for which CMG, EAMC or
Keystone also serve as investment adviser. As administrator, and subject to the
supervision and control of the Trustees/Directors of the Funds, EKIS provides
facilities, equipment and personnel to the Funds. EKIS's administration fee is
calculated in accordance with the following schedule:
Aggregate Average Daily Net Assets of Funds
Administered by EKIS For Which any Affiliate of FUNB
Administrative Fee Serves as Investment Adviser
- ------------------------- -----------------------------------------------------
0.050% on the first $7 billion
0.035% on the next $3 billion
0.030% on the next $5 billion
0.020% on the next $10 billion
0.015% on the next $5 billion
0.010% on assets in excess of $30 billion
SUBADMINISTRATOR
BISYS Fund Services ("BISYS"), an affiliate of Evergreen Keystone Distributor,
Inc. ("EKD"), distributor for the Evergreen Keystone group of mutual funds,
serves as sub-administrator to the Funds and is entitled to receive a fee from
the Funds calculated on the average daily net assets of the Funds at a rate
based on the total assets of the mutual funds administered by EKIS for which
FUNB affiliates also serve as investment adviser, calculated in accordance with
the following schedule:
Aggregate Average Daily Net Assets of Funds
Administered by BISYS For Which any Affiliate of
Sub-Administrative Fee FUNB Serves as Investment Adviser
- ------------------------ ----------------------------------------------------
0.0100% on the first $7 billion
0.0075% on the next $3 billion
0.0050% on the next $15 billion
0.0040% on assets in excess of $25 billion
The total assets of the mutual funds administered by EKIS for which FUNB
affiliates also serve as investment advisers were approximately $29.2 billion as
of February 28, 1997.
PURCHASE AND REDEMPTION OF SHARES
HOW TO BUY SHARES
Class Y shares are offered at net asset value without a front-end sales
charge or a contingent deferred sales load. Class Y shares are only offered to
(1) persons who at or prior to December 31, 1994, owned shares in a mutual fund
advised by EAMC, (2) certain institutional investors and (3) investment advisory
clients of CMG, EAMC or their affiliates.
Eligible investors may purchase Class Y shares of any of the Funds through
broker-dealers, banks or other financial intermediaries, or directly through
EKD. In addition, you may purchase Class Y shares of any of the Funds by mailing
to that Fund, c/o Evergreen Keystone Service Company ("EKSC"), P.O. Box 2121,
Boston, Massachusetts 02106- 2121, a completed account application and a check
payable to the Fund. You may also telephone 1-800-343-2898 to obtain the number
of an account to which you can wire or electronically transfer funds and then
send in a completed account application. The minimum initial investment is
$1,000, which may be waived in certain situations. Subsequent investments in any
amount may be made by check, by wiring Federal funds, by direct deposit or by an
electronic funds transfer.
There is no minimum amount for subsequent investments. Investments of $25
or more are allowed under the Systematic Investment Plan. Share certificates are
not issued. See the Share Purchase Application and SAI for more information.
Only Class Y shares are offered through this Prospectus (see "General
Information" -- "Other Classes of Shares").
HOW THE FUNDS VALUE THEIR SHARES
The net asset value of each Class of shares of a Fund is calculated by
dividing the value of the amount of the Fund's net assets attributable to that
Class by the number of outstanding shares of that Class. Shares are valued each
day the New York Stock Exchange (the "Exchange") is open as of the close of
regular trading (currently 4:00 p.m. Eastern time). The securities in a Fund are
valued at their current market value determined on the basis of market
quotations or, if such quotations are not readily available, such other methods
as the Trustees or Directors believe would accurately reflect fair value.
Non-dollar denominated securities will be valued as of the close of the Exchange
at the closing price of such securities in their principal trading markets.
ADDITIONAL PURCHASE INFORMATION
As a condition of this offering, if a purchase is canceled due to
nonpayment or because an investor's check does not clear, the investor will be
responsible for any loss a Fund or the Fund's investment adviser incurs. If such
investor is an existing shareholder, a Fund may redeem shares from an investor's
account to reimburse the Fund or its investment adviser for any loss. In
addition, such investors may be prohibited or restricted from making further
purchases in any of the Evergreen Keystone mutual funds. The Funds will not
accept third party checks other than those payable directly to a shareholder
whose account has been in existence at least thirty days.
HOW TO REDEEM SHARES
You may "redeem" ( i.e., sell) your Class Y shares in a Fund to the Fund
for cash, (at their net redemption value) on any day the Exchange is open,
either directly by writing to the Fund, c/o EKSC, or through your financial
intermediary. The amount you will receive is the net asset value adjusted for
fractions of a cent next calculated after the Fund receives your request in
proper form. Proceeds generally will be sent to you within seven days. However,
for shares recently purchased by check, a Fund will not send proceeds until it
is reasonably satisfied that the check has been collected (which may take up to
15 days). Once a redemption request has been telephoned or mailed, it is
irrevocable and may not be modified or canceled.
REDEEMING SHARES THROUGH YOUR FINANCIAL INTERMEDIARY
A Fund must receive instructions from your financial intermediary before
4:00 p.m. (Eastern time) for you to receive that day's net asset value. Your
financial intermediary is responsible for furnishing all necessary documentation
to a Fund and may charge you for this service. Certain financial intermediaries
may require that you give instructions earlier than 4:00 p.m.
(Eastern time).
REDEEMING SHARES DIRECTLY BY MAIL OR TELEPHONE
Send a signed letter of instruction or stock power form to the Fund, c/o
EKSC; the registrar, transfer agent and dividend-disbursing agent for each Fund.
Stock power forms are available from your financial intermediary, EKSC, and many
commercial banks. Additional documentation is required for the sale of shares by
corporations, financial intermediaries, fiduciaries and surviving joint owners.
Signature guarantees are required for all redemption requests for shares with a
value of more than $50,000. Currently, the requirement for a signature guarantee
has been waived on redemptions of $50,000 or less when the account address of
record has been the same for a minimum period of 30 days. The Fund and EKSC
reserve the right to withdraw this waiver at any time. A signature guarantee
must be provided by a bank or trust company (not a Notary Public), a member firm
of a domestic stock exchange or by other financial institutions whose guarantees
are acceptable under the Securities Exchange Act of 1934 and EKSC's policies.
Shareholders may withdraw amounts of $1,000 or more (up to $50,000) from
their accounts by calling the telephone number on the front page of this
Prospectus between the hours of 8:00 a.m. and 5:30 p.m.(Eastern time) each
business day (i.e., any weekday exclusive of days on which the Exchange or
EKSC's offices are closed). The Exchange is closed on New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. Redemption requests received after 4:00 p.m.
(Eastern time) will be processed using the net asset value determined on the
next business day. Such redemption requests must include the shareholder's
account name, as registered with a Fund, and the account number. During periods
of drastic economic or market changes, shareholders may experience difficulty in
effecting telephone redemptions. If you cannot reach the Fund by telephone, you
should follow the procedures for redeeming by mail or through a broker-dealer as
set forth herein. The telephone redemption service is not made available to
shareholders automatically. Shareholders wishing to use the telephone redemption
service must complete the appropriate sections on the Share Purchase Application
and choose how the redemption proceeds are to be paid. Redemption proceeds will
either (i) be mailed by check to the shareholder at the address in which the
account is registered or (ii) be wired to an account with the same registration
as the shareholder's account in a Fund at a designated commercial bank.
In order to insure that instructions received by EKSC are genuine when you
initiate a telephone transaction, you will be asked to verify certain criteria
specific to your account. At the conclusion of the transaction, you will be
given a transaction number confirming your request, and written confirmation of
your transaction will be mailed the next business day. Your telephone
instructions will be recorded. Redemptions by telephone are allowed only if the
address and bank account of record have been the same for a minimum period of 30
days. The Fund reserves the right at any time to terminate, suspend, or change
the terms of any redemption method described in this Prospectus, except
redemption by mail, and to impose fees.
Except as otherwise noted, neither the Funds, EKSC, nor EKD assumes
responsibility for the authenticity of any instructions received by any of them
from a shareholder in writing, over the Evergreen Keystone Express Line, or by
telephone. EKSC will employ reasonable procedures to confirm that instructions
received over Evergreen Keystone Express Line or by telephone are genuine.
Neither the Funds, EKSC, nor the EKD will be liable when following instructions
received over Evergreen Keystone Express Line or by telephone that EKSC
reasonably believes are genuine.
EVERGREEN KEYSTONE EXPRESS LINE. Evergreen Keystone Express Line offers you
specific fund account information and price and yield quotations as well as the
ability to do account transactions, including investments, exchanges and
redemptions. You may access Evergreen Keystone Express Line by dialing toll free
1-800-346-3858 on any touch-tone telephone, 24 hours a day, seven days a week.
GENERAL. The sale of shares is a taxable transaction for Federal income tax
purposes. The Funds may temporarily suspend the right to redeem their shares
when (1) the Exchange is closed, other than customary weekend and holiday
closings; (2) trading on the Exchange is restricted; (3) an emergency exists and
the Funds cannot dispose of their investments or fairly determine their value;
or (4) the Securities and Exchange Commission so orders. The Funds reserve the
right to close an account that through redemption has fallen below $1,000 and
has remained so for thirty days. Shareholders will receive sixty days' written
notice to increase the account value to at least $1,000 before the account is
closed. The Funds have elected to be governed by Rule 18f-1 under the 1940 Act
pursuant to which each Fund is obligated to redeem shares solely in cash, up to
the lesser of $250,000 or 1% of a Fund's total net assets during any ninety day
period for any one shareholder.
See the SAI for further details.
EXCHANGE PRIVILEGE
HOW TO EXCHANGE SHARES
You may exchange some or all of your Class Y shares for shares of the same
Class in the other Evergreen Keystone mutual funds through your financial
intermediary, by calling or writing to EKSC or by using Evergreen Keystone
Express Line as described below. Once an exchange request has been telephoned or
mailed, it is irrevocable and may not be modified or canceled. Exchanges will be
made on the basis of the relative net asset values of the shares exchanged next
determined after an exchange request is received. An exchange that represents an
initial investment in another Evergreen Keystone mutual fund is subject to the
minimum investment and suitability requirements of each Fund.
Each of the Evergreen Keystone mutual funds has different investment
objectives and policies. For complete information, a prospectus of the fund into
which an exchange will be made should be read prior to the exchange. An exchange
order must comply with the requirement for a redemption or repurchase order and
must specify the dollar value or number of shares to be exchanged. An exchange
is treated for Federal income tax purposes as a redemption and purchase of
shares and may result in the realization of a capital gain or loss. Shareholders
are limited to five exchanges per calendar year, with a maximum of three per
calendar quarter. This exchange privilege may be modified or discontinued at any
time by the Fund upon sixty days' notice to shareholders and is only available
in states in which shares of the fund being acquired may lawfully be sold.
EXCHANGES THROUGH YOUR FINANCIAL INTERMEDIARY
A Fund must receive exchange instructions from your financial intermediary
before 4:00 p.m. (Eastern time) for you to receive that day's net asset value.
Your financial intermediary is responsible for furnishing all necessary
documentation to a Fund and may charge you for this service.
EXCHANGES BY TELEPHONE AND MAIL
Exchange requests received by the Fund after 4:00 p.m. (Eastern time) will
be processed using the net asset value determined at the close of the next
business day. During periods of drastic economic or market changes, shareholders
may experience difficulty in effecting telephone exchanges. You should follow
the procedures outlined below for exchanges by mail if you are unable to reach
EKSC by telephone. If you wish to use the telephone exchange service you should
indicate this on the Share Purchase Application. As noted above, each Fund will
employ reasonable procedures to confirm that instructions for the redemption or
exchange of shares communicated by telephone are genuine. A telephone exchange
may be refused by a Fund or EKSC if it is believed advisable to do so.
Procedures for exchanging Fund shares by telephone may be modified or terminated
at any time. Written requests for exchanges should follow the same procedures
outlined for written redemption requests in the section entitled "How to Redeem
Shares"; however, no signature guarantee is required.
SHAREHOLDER SERVICES
The Funds offer the following shareholder services. For more information
about these services or your account, contact your financial intermediary, EKSC
or the toll-free number on the front page of this Prospectus. Some services are
described in more detail in the Share Purchase Application.
SYSTEMATIC INVESTMENT PLAN
You may make monthly or quarterly investments into an existing account
automatically in amounts of not less than $25 per month or $75 per quarter. You
may open a Systematic Investment Plan in the EVERGREEN FUND and EVERGREEN
AGGRESSIVE GROWTH FUND for a minimum of only $50 per month with no initial
investment required.
TELEPHONE INVESTMENT PLAN
You may make investments into an existing account electronically in
amounts of not less than $100 or more than $10,000 per investment. Telephone
investment requests received by 4:00 p.m. (Eastern time) will be credited to a
shareholder's account the day the request is received. Shares purchased under
the Systematic Investment Plan or Telephone Investment Plan may not be redeemed
for ten days from the date of investment.
SYSTEMATIC WITHDRAWAL PLAN
When an account of $10,000 or more is opened or when an existing account
reaches that size, you may participate in the Systematic Withdrawal Plan by
filling out the appropriate part of the Share Purchase Application. Under this
plan, you may receive (or designate a third party to receive) a monthly or
quarterly fixed-withdrawal payment in a stated amount of at least $75 and may be
as much as 1.0% per month or 3.0% per quarter of the total net asset value of
the Fund shares in your account when the Plan was opened. Fund shares will be
redeemed as necessary to meet withdrawal payments. All participants must elect
to have their dividends and capital gain distributions reinvested automatically.
AUTOMATIC REINVESTMENT PLAN
For the convenience of investors, all dividends and distributions are
automatically reinvested in full and fractional shares of a Fund at the net
asset value per share at the close of business on the record date, unless
otherwise requested by a shareholder in writing. If the transfer agent does not
receive a written request for subsequent dividends and/or distributions to be
paid in cash at least three full business days prior to a given record date, the
dividends and/or distributions to be paid to a shareholder will be reinvested.
DOLLAR COST AVERAGING
Through dollar cost averaging you can invest a fixed dollar amount each
month or each quarter in any Evergreen Keystone mutual fund. This results in
more shares being purchased when the selected Fund's net asset value is
relatively low and fewer shares being purchased when the Fund's net asset value
is relatively high and may result in a lower average cost per share than a less
systematic investment approach.
Prior to participating in dollar cost averaging, you must establish an
account in an Evergreen Keystone mutual fund. You should designate on the
application (1) the dollar amount of each monthly or quarterly investment you
wish to make and (2) the Fund in which the investment is to be made. Thereafter,
on the first day of the designated month, an amount equal to the specified
monthly or quarterly investment will automatically be redeemed from your initial
account and invested in shares of the designated fund.
TWO DIMENSIONAL INVESTING
You may elect to have income and capital gains distributions from any
Class Y Evergreen Keystone mutual fund shares you own automatically invested to
purchase the same class of shares of any other Evergreen Keystone mutual fund.
You may select this service on your application and indicate the Evergreen
Keystone mutual fund(s) into which distributions are to be invested.
TAX SHELTERED RETIREMENT PLANS
The Fund has various retirement plans available to you, including
Individual Retirement Accounts (IRAs); Rollover IRAs; Simplified Employee
Pension Plans (SEPs); Salary Reduction Plans (SARSEPs); Tax Sheltered Annuity
Plans; 403(b)(7) Plans; 401(k) Plans; Keogh Plans; Corporate Profit-Sharing
Plans; and Money Purchase Plans. For details, including fees and application
forms, call toll free 1-800-247-4075 or write to EKSC.
EFFECT OF BANKING LAWS
The Glass-Steagall Act and other banking laws and regulations ("Banking Laws")
presently prohibit member banks of the Federal Reserve System or their non-bank
affiliates ("Member Banks") from sponsoring, organizing, controlling, or
distributing the shares of registered open-end investment companies such as the
Funds. However, under the Banking Laws, a Member Bank may act as investment
adviser, transfer agent or custodian to a registered open-end investment company
and may also act as agent in connection with the purchase of shares of such an
investment company upon the order of its customer. EAMC and Keystone, since they
both are subsidiaries of FUNB, and CMG are subject to and in compliance with the
aforementioned laws and regulations.
Changes to applicable laws and regulations or future judicial or
administrative decisions could result in CMG, Keystone or EAMC being prevented
from continuing to perform the services required under the investment advisory
contract or from acting as agent in connection with the purchase of shares of a
Fund by its customers. If CMG, Keystone or EAMC were prevented from continuing
to provide the services called for under the investment advisory agreements, it
is expected that the Trustees or Directors would identify, and call upon each
Fund's shareholders to approve, a new investment adviser. If this were to occur,
the Trustees or Directors would seek to take action so that the shareholders of
any Fund would not suffer any adverse financial consequences.
OTHER INFORMATION
DIVIDENDS, DISTRIBUTIONS AND TAXES
It is the policy of each Fund to distribute its investment company
taxable income and any net realized capital gains to shareholders annually or
more frequently as required as a condition of continued qualification as a
regulated investment company by the Code. Dividends and distributions generally
are taxable in the year in which they are paid, except any dividends paid in
January that were declared in the previous calendar quarter may be treated as
paid in December in the previous year. Income dividends and capital gain
distributions are automatically reinvested in additional shares of the Fund
making the distribution at the net asset value per share at the close of
business on the record date, unless the shareholder writes to the Fund's
transfer agent and requests payment in cash.
Each Fund has qualified and intends to continue to qualify as a regulated
investment company under the Code. While so qualified, it is expected that each
Fund will not be required to pay any federal income tax on that portion of its
investment company taxable income and any net realized capital gains it
distributes to shareholders. The Code imposes a 4% nondeductible excise tax on
regulated investment companies, such as the Funds, to the extent they do not
meet certain distribution requirements by the end of each calendar year. Each
Fund anticipates meeting such distribution requirements. Most shareholders of
the Funds normally will have to pay federal income tax and any state or local
taxes on the dividends and distributions they receive from a Fund.
Following the end of each calendar year, every shareholder of the Funds
will be sent applicable tax information and information regarding the dividends
and capital gain distributions made during the calendar year. Under current law,
the highest federal income tax rate applicable to net long-term capital gains
realized by individuals is 28%. The rate applicable to corporations is 35%.
Certain income from a Fund may qualify for a corporate dividends-received
deduction of 70%. EVERGREEN U.S. REAL ESTATE EQUITY FUND invests in real estate
investment trusts which report the tax characteristics of their distributions to
the Fund annually on a calendar year basis. The timing of such reporting to the
Fund may affect the tax characteristics of distributions by the Fund to
shareholders. Each Fund is required by Federal law to withhold 31% of reportable
payments (which may include dividends, capital gain distributions and
redemptions) paid to certain shareholders. In order to avoid this backup
withholding requirement, you must certify on the Share Purchase Application, or
on a separate form supplied by EKSC, that the investor's social security or
taxpayer identification number is correct and that the investor is not currently
subject to backup withholding or is exempt from backup withholding.
The foregoing discussion of Federal income tax consequences is based on
tax laws and regulations in effect on the date of this Prospectus, and is
subject to change by legislative or administrative action. As the foregoing
discussion is for general information only, you should also review the
discussion of "Additional Tax Information" contained in the SAI. In addition,
you should consult your own tax adviser as to the tax consequences of
investments in the Funds, including the application of state and local taxes
which may be different from Federal income tax consequences described above.
GENERAL INFORMATION
CODE OF ETHICS
The Funds have adopted a Code of Ethics incorporating policies on personal
securities trading as recommended by the Investment Company Institute.
PORTFOLIO TRANSACTIONS
Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc., and subject to seeking best price and execution, a
Fund may consider sales of its shares as a factor in the selection of dealers to
enter into portfolio transactions with the Fund.
ORGANIZATION
The EVERGREEN FUND, EVERGREEN AGGRESSIVE GROWTH FUND AND EVERGREEN SMALL CAP
VALUE FUND are each separate investment series of the Evergreen Trust, a
Massachusetts business trust reorganized in 1986 from a Maryland predecessor
corporation. The EVERGREEN U.S. REAL ESTATE EQUITY FUND is a separate series of
Evergreen Equity Trust, a Massachusetts business trust organized in 1988.
EVERGREEN LIMITED MARKET FUND, INC. is a Maryland corporation organized in 1983.
The Funds do not intend to hold annual shareholder meetings; shareholder
meetings will be held only when required by applicable law. Shareholders have
available certain procedures for the removal of Directors or Trustees.
A shareholder in each Class of a Fund will be entitled to his or her share
of all dividends and distributions from a Fund's assets, based upon the relative
value of such shares to those of other Classes of the Fund, and, upon redeeming
shares, will receive the then current net asset value of the Class of shares of
the Fund represented by the redeemed shares. Each Trust or Corporation named
above is empowered to establish, without shareholder approval, additional
investment series, which may have different investment objectives, and
additional classes of shares for any existing or future series. If an additional
series was established in a Trust or corporation each share of the series or any
Class established thereunder would normally be entitled to one vote for all
purposes. Generally, shares of each series and Class would vote together as a
single Class on matters, such as the election of Trustees of Directors, that
affect each series and Class in substantially the same manner. Class A, Class B,
Class C and Class Y shares have identical voting, dividend, liquidation and
other rights, except that each Class bears, to the extent applicable, its own
distribution and transfer agency expenses as well as any other expenses
applicable only to a specific Class. Each Class of shares votes separately with
respect to Rule 12b-1 distribution plans and other matters for which separate
Class voting is appropriate under applicable law. Shares are entitled to
dividends as determined by the Trustees or Directors and, in liquidation of a
Fund, are entitled to receive the net assets of the Fund.
CUSTODIAN
State Street Bank and Trust Company, P.O. Box 9021, Boston, Massachusetts
02205-9827 acts as each Fund's custodian.
REGISTRAR, TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT
Evergreen Keystone Service Company, P.O. Box 2121, Boston, Massachusetts
02106-2121 acts as registrar, transfer agent and dividend-disbursing agent for
each of the Funds.
PRINCIPAL UNDERWRITER
EKD, an affiliate of BISYS, located at 125 West 55th Street, New York, New
York 10019, is the principal underwriter of the Funds. BISYS also acts as
sub-administrator to the Funds and provides certain sub-administrative services
to Keystone in connection with its role as investment adviser to EVERGREEN SMALL
CAP VALUE FUND and to EAMC in connection with its role as investment adviser to
EVERGREEN FUND, EVERGREEN U.S. REAL ESTATE EQUITY FUND and EVERGREEN LIMITED
MARKET FUND, INC., including providing personnel to serve as officers of the
Funds.
OTHER CLASSES OF SHARES
Each Fund currently offers four classes of shares, Class A, Class B, Class
C and Class Y, and may in the future offer additional classes. Class Y shares
are the only class of shares offered by this Prospectus and are only available
to (i) persons who at or prior to December 31, 1994, owned shares in a mutual
fund advised by EAMC, (ii) certain institutional investors and (iii) investment
advisory clients of EAMC, Keystone, CMG and their affiliates. The dividends
payable with respect to Class A, Class B and Class C shares will be less than
those payable with respect to Class Y shares due to the distribution and
shareholder servicing related expenses borne by Class A, Class B and Class C
shares and the fact that such expenses are not borne by Class Y shares.
Shareholders may obtain information concerning each Fund's Class A, B and C
shares from EKSC.
PERFORMANCE INFORMATION
From time to time, the Funds may quote their "total return" or "yield" for
a specified period in advertisements, reports or other communications to
shareholders. Fund's total return for each such period is computed by finding,
through the use of a formula prescribed by the Securities and Exchange
Commission ("SEC"), the average annual compounded rate of return over the period
that would equate an assumed initial amount invested to the value of the
investment at the end of the period. For purposes of computing total return,
dividends and capital gains distributions paid on shares of a Fund are assumed
to have been reinvested when paid. Yield is a way of showing the rate of income
the Fund earns on its investments as a percentage of the Fund's share price. The
Fund's yield is calculated according to accounting methods that are standardized
by the SEC for all stock and bond funds. Because yield accounting methods differ
from the method used for other accounting purposes, the Fund's yield may not
equal its distribution rate, the income paid to your account or the net
investment income reported in the Fund's financial statements. To calculate
yield, the Fund takes the interest [and dividend] income it earned from its
portfolio of investments (as defined by the SEC formula) for a 30-day period
(net of expenses), divides it by the average number of shares entitled to
receive dividends, and expresses the result as an annualized percentage rate
based on the Fund's share price at the end of the 30-day period. This yield does
not reflect gains or losses from selling securities.
Performance data for each class of shares will be included in any
advertisement or sales literature using performance data of a Fund. These
advertisements may quote performance rankings or ratings of a Fund by financial
publications or independent organizations such as Lipper Analytical Services,
Inc. and Morningstar, Inc. or compare a Fund's performance to various indices.
The Fund may also advertise in items of sales literature an "actual distribution
rate" which is computed by dividing the total ordinary income distributed (which
may include the excess of short-term capital gains over losses) to shareholders
for the latest twelve month period by the maximum public offering price per
share on the last day of the period. Investors should be aware that past
performance may not be reflective of future results.
In marketing a Fund's shares, information may be provided that is
designed to help individuals understand their investment goals and explore
various financial strategies. Such information may include publications
describing general principles of investing, such as asset allocation,
diversification, risk tolerance, and goal setting; a questionnaire designed to
help create a personal financial profile; and an action plan offering investment
alternatives. The information provided to investors may also include discussions
of other Evergreen Keystone mutual funds, products, and services, which may
include: retirement investing; brokerage products and services; the effects of
periodic investment plans and dollar cost averaging; saving for college; and
charitable giving. In addition, the information provided to investors may quote
financial or business publications and periodicals, including model portfolios
or allocations, as they relate to fund management, investment philosophy, and
investment techniques. EKD may also reprint, and use as advertising and sales
literature, articles from Evergreen Events, a quarterly magazine provided to
Evergreen Keystone mutual fund shareholders.
LIABILITY UNDER MASSACHUSETTS LAW
Under Massachusetts law, trustees and shareholders of a business trust
may, in certain circumstances, be held personally liable for its obligations.
The Declarations of Trust under which the EVERGREEN FUND, EVERGREEN U.S. REAL
ESTATE EQUITY FUND, EVERGREEN AGGRESSIVE GROWTH FUND and EVERGREEN SMALL CAP
VALUE FUND operate provide that no Trustee or shareholder will be personally
liable for the obligations of the Trust and that every written contract made by
the Trust shall contain a provision to that effect. If any Trustee or
shareholder were required to pay any liability of the Trust, that person would
be entitled to reimbursement from the general assets of the Trust.
ADDITIONAL INFORMATION
This Prospectus and the SAI, which has been incorporated by reference
herein, do not contain all the information set forth in the Registration
Statements filed by the Trusts or EVERGREEN LIMITED MARKET FUND, INC. with the
SEC under the Securities Act. 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.
STATEMENT OF ADDITIONAL INFORMATION
THE EVERGREEN DOMESTIC GROWTH FUNDS
2500 WESTCHESTER AVENUE, PURCHASE, NEW YORK 10577
800-343-2898
JUNE 2, 1997
EVERGREEN FUND ("EVERGREEN")
EVERGREEN AGGRESSIVE GROWTH FUND ("AGGRESSIVE")
EVERGREEN SMALL CAP VALUE FUND ("SMALL CAP")
NOVEMBER 29, 1996, AS SUPPLEMENTED JUNE 2, 1997
EVERGREEN U.S. REAL ESTATE EQUITY FUND ("U.S. REAL ESTATE")
EVERGREEN LIMITED MARKET FUND, INC. ("LIMITED MARKET")
This Statement of Additional Information ("SAI") dated June 2, 1997 pertains to
all classes of shares of Evergreen, Aggressive and Small Cap and November 29,
1996, as supplemented June 2, 1997, pertains to all classes of shares of U.S.
Real Estate and Limited Market. It is not a prospectus and should be read in
conjunction with the Prospectus dated June 2, 1997 for Evergreen, Aggressive and
Small Cap and November 29, 1996, as supplemented June 2,1997, for U.S. Real
Estate and Limited Market in which you are making or contemplating an
investment. The Evergreen Domestic Growth 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 of each Fund. Copies of each Prospectus may
be obtained without charge by calling the number listed above.
<PAGE>
TABLE OF CONTENTS
INVESTMENT OBJECTIVES AND POLICIES.....................................1
INVESTMENT RESTRICTIONS................................................1
CERTAIN RISK CONSIDERATIONS............................................1
MANAGEMENT.............................................................1
INVESTMENT ADVISERS....................................................1
Evergreen, U.S. Real Estate and Limited Market...................8
Aggressive.......................................................8
Small Cap........................................................8
Advisory Fees....................................................8
Continuation of the Advisory Agreement...........................9
General.........................................................10
Expense Limitations.............................................11
DISTRIBUTION PLANS.....................................................1
Fees Paid Pursuant to Distribution Plans........................12
ALLOCATION OF BROKERAGE................................................1
ADDITIONAL TAX INFORMATION.............................................1
NET ASSET VALUE.......................................................15
PURCHASE OF SHARES.....................................................1
General.........................................................16
Alternative Purchase Arrangements...............................17
Deferred Sales Charge Alternative--Class B Shares...............21
Level-Load Alternative--Class C Shares..........................22
Class Y Shares..................................................22
GENERAL INFORMATION ABOUT THE FUNDS...................................23
Capitalization and Organization.................................23
Distributor.....................................................24
Counsel.........................................................24
Independent Auditors............................................24
PERFORMANCE INFORMATION...............................................24
Total Return....................................................24
YIELD CALCULATIONS....................................................26
Non-Standardized Performance....................................26
GENERAL...............................................................26
Additional Information..........................................27
FINANCIAL STATEMENTS..................................................27
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
(See also "Description of the Funds - Investment Objectives and Policies" in
each Fund's Prospectus)
The investment objective 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 following
expands upon the discussion in the Prospectus regarding certain investments of
each Fund.
OPTIONS
EVERGREEN may write covered call options to a limited extent on its
portfolio securities ("covered options") in an attempt to earn additional
income. A call option gives the purchaser of the option the right to buy a
security from the writer at the exercise price at any time during the option
period. The premium paid to the writer is the consideration for undertaking the
obligations under the option contract. The writer foregoes the opportunity to
profit from an increase in the market price of the underlying security above the
exercise price except insofar as the premium represents such a profit. The Fund
retains the risk of loss should the price of the underlying security decline.
The Fund will write only covered call option contracts and will receive premium
income from the writing of such contracts. EVERGREEN 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. The 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.
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/Directors. 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
EVERGREEN and LIMITED MARKET may not 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.
Neither AGGRESSIVE, SMALL CAP nor U.S. REAL ESTATE 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 AGGRESSIVE*, EVERGREEN, LIMITED MARKET, SMALL CAP or U.S. REAL
ESTATE* 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.
3. INVESTMENT FOR PURPOSES OF CONTROL OR MANAGEMENT
None of EVERGREEN, U.S. REAL ESTATE*, LIMITED MARKET*, SMALL CAP* or
AGGRESSIVE* may invest in companies for the purpose of exercising control or
management.
4. PURCHASE OF SECURITIES ON MARGIN
None of EVERGREEN, AGGRESSIVE*, LIMITED MARKET, U.S. REAL ESTATE* OR SMALL
CAP 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
EVERGREEN may not invest more than 5% of its net assets in securities of
unseasoned issuers that have been in continuous operation for less than three
years, including operating periods of their predecessors.
Neither AGGRESSIVE* nor U.S. REAL ESTATE* may invest more than 15% 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, except obligations issued or guaranteed by the U.S. government
and its agencies or instrumentalities (this limitation does not apply to real
estate investment trusts).
6. UNDERWRITING
None of AGGRESSIVE, EVERGREEN, LIMITED MARKET, SMALL CAP or U.S. REAL ESTATE
may engage in the business of underwriting the securities of other issuers.
7. INTERESTS IN OIL, GAS OR OTHER MINERAL EXPLORATION OR DEVELOPMENT PROGRAMS
None of AGGRESSIVE, EVERGREEN, LIMITED MARKET OR U.S. REAL ESTATE may
purchase, sell or invest in interests in oil, gas or other mineral
exploration or development programs.
8. CONCENTRATION IN ANY ONE INDUSTRY
U.S. REAL ESTATE may not concentrate its investments in any one industry,
except that the Fund will invest at least 65% of its total assets in
securities of companies engaged principally in the real estate industry.
None of EVERGREEN, LIMITED MARKET, SMALL CAP or AGGRESSIVE 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; provided, that this
limitation shall not apply with respect to each Fund, to obligations issued
or guaranteed by the U.S. government or its agencies or instrumentalities.
For purposes of this restriction, utility companies, gas, electric, water and
telephone companies will be considered separate industries.
9. WARRANTS
None of AGGRESSIVE*, EVERGREEN, LIMITED MARKET or U.S. REAL ESTATE* may
invest more than 5% of its net assets in warrants, and, of this amount, no
more than 2% of each Fund's total net assets may be invested in warrants that
are listed on neither the New York nor the American Stock Exchange.
10.OWNERSHIP BY TRUSTEES(DIRECTORS)/OFFICERS
None of AGGRESSIVE*, EVERGREEN, LIMITED MARKET or U.S. REAL ESTATE* may
purchase or retain the securities of any issuer if (i) one or more officers
or Trustees/Directors 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.
11.SHORT SALES
AGGRESSIVE*, EVERGREEN, LIMITED MARKET or U.S. REAL ESTATE* 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).
12.LENDING OF FUNDS AND SECURITIES
The Funds may not lend their 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 AGGRESSIVE, U.S. REAL ESTATE, EVERGREEN, SMALL CAP or LIMITED MARKET
may lend its portfolio securities, unless the borrower is a broker, dealer or
financial institution that pledges and maintains collateral with the Fund
consisting of cash or securities issued or guaranteed by the U.S. government
having a value at all times not less than 100% of the current market value of
the loaned securities, including accrued interest, provided that the
aggregate amount of such loans shall not exceed 30% of the Fund's net assets.
13.COMMODITIES
Neither AGGRESSIVE, SMALL CAP nor U.S. REAL ESTATE may purchase, sell or
invest in physical commodities unless acquired as a result of ownership of
securities or other instruments (but this shall not prevent a Fund from
purchasing or selling options and futures contracts or from investing in
securities or other instruments backed by physical commodities).
Neither EVERGREEN nor LIMITED MARKET may purchase, sell or invest in
commodities or commodity contracts.
14.REAL ESTATE
None of AGGRESSIVE, EVERGREEN, LIMITED MARKET, SMALL CAP or U.S. REAL ESTATE
may purchase, sell or invest in real estate or interests in real estate,
except that (i) 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; and (ii) U.S. REAL ESTATE may
purchase securities secured by real estate or interests therein, or issued by
companies or investment trusts which invest in real estate or interests
therein.
15.BORROWING, SENIOR SECURITIES, REVERSE REPURCHASE AGREEMENTS
LIMITED MARKET 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. LIMITED MARKET may not issue senior
securities, as defined in the Investment Company Act of 1940, as amended,
except insofar as the Fund may be deemed to have issued a senior security by
reason of borrowing money in accordance with the restrictions described
above.
EVERGREEN may not borrow money except from banks as a temporary measure for
extraordinary or emergency purposes (i) on an unsecured basis, subject to the
requirements that the value of the Fund's assets, including the proceeds of
borrowings, does not at any time become less than 300% of the Fund's
indebtedness; provided, however, that if the value of the Fund's assets
becomes less than such amount, the Fund will reduce its borrowings within
three business days so that the value of the Fund's assets will be at least
300% of its indebtedness, or (ii) may make such borrowings on a secured
basis, provided that the aggregate amount of such borrowings shall not exceed
5% of the value of its total net assets at the time of any such borrowing, or
mortgage, pledge or hypothecate its assets, except in an amount not exceeding
15% of its total net assets taken at cost to secure such borrowing.
AGGRESSIVE may not borrow money except on an unsecured basis up to 25% of its
net assets, subject to the requirements that the value of the Fund's assets,
including the proceeds of borrowings, does not at any time become less than
300% of the Fund's indebtedness; provided, however, that if the value of the
Fund's assets becomes less than such amount, the Fund will reduce its
borrowings within three business days so that the value of the Fund's assets
will be at least 300% of its indebtedness.
U.S. REAL ESTATE 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 each Fund's total assets at the time of such borrowing. The Fund
will not enter into reverse repurchase agreements exceeding 5% of the value
of its total assets.
SMALL CAP may not borrow money, except (1) from a bank, provided that
immediately after any such borrowing there is asset coverage of at least 300%
for all of the Fund's borrowings, and, in the event that such asset coverage
at any time falls below 300% the Fund will reduce its borrowings so that its
asset coverage is at least 300%; and (2) for temporary purposes in an amount
not to exceed 5% of the value of the Fund's total assets.
16.JOINT TRADING
None of AGGRESSIVE*, EVERGREEN, LIMITED MARKET or U.S. REAL ESTATE* may
participate on a joint or joint and several basis in any trading account in
any securities. (A Fund's "bunching" of orders for the purchase or sale of
portfolio securities with its investment adviser or accounts under its
management to reduce brokerage commissions, to average prices among them or
to facilitate such transactions is not considered a trading account in
securities for purposes of this restriction).
17.OPTIONS
Neither LIMITED MARKET nor U.S. REAL ESTATE* may write, purchase or sell put
or call options, or combinations thereof, except that U.S. REAL ESTATE may do
so as permitted under "Description of the Funds - Investment Objectives and
Policies" in its Prospectus.
EVERGREEN may not write, purchase or sell put or call options, or
combinations thereof, except that the Fund is authorized to write covered
call options on portfolio securities and to purchase call options in closing
purchase transactions, provided that (i) such options are listed on a
national securities exchange, (ii) the aggregate market value of the
underlying securities does not exceed 25% of the Fund's total net assets,
taken at current market value on the date of any such writing, and (iii) the
Fund retains the underlying securities for so long as call options written
against them make the shares subject to transfer upon the exercise of any
options.
NON-FUNDAMENTAL OPERATING POLICIES
Certain Funds have adopted additional non-fundamental operating policies.
Operating policies may be changed by the Board of Trustees/Directors without a
shareholder vote.
1. FUTURES AND OPTIONS TRANSACTIONS
With respect to U.S. REAL ESTATE, which may invest in futures and options,
the Fund 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 EVERGREEN, LIMITED MARKET, SMALL CAP or U.S. REAL ESTATE 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/ Directors have determined to be liquid.
CERTAIN RISK CONSIDERATIONS
There can be no assurance that a Fund will achieve its investment objective,
and an investment in the Fund involves certain risks which are described under
"Description of the Funds - Investment Practices and Restrictions; Special Risk
Considerations" in the Prospectus.
While U.S. REAL ESTATE is technically diversified within the meaning of the
Investment Company Act of 1940, as amended (the "1940 Act"), because the
investment alternatives of the Fund are restricted by a policy of concentrating
at least 65% of its total assets in companies in the real estate industry,
investors should understand that investment in this Fund may be subject to
greater risk and market fluctuation than an investment in a portfolio of
securities representing a broader range of industry investment alternatives.
MANAGEMENT
The Trustees and executive officers of Evergreen Trust and Evergreen Equity
Trust (the "Trusts") and the Directors and executive officers of Limited Market,
their ages, addresses and principal occupations during the past five years are
set forth below:
<TABLE>
<CAPTION>
Name, Age and Address of Position With
Trustees/Directors & Certain Trusts/ Limited Principal Occupation(s) During Past
Officers Market Five Years
- ------------------------------ --------------- -----------------------------------
<S> <C> <C>
LAURENCE B. ASHKIN (68), 180 Trustee/Director. Real estate developer and construction
East Pearson Street, Chicago, consultant since 1980; President of Centrum
IL. Equities since 1987 and Centrum Properties,
Inc. since 1980.
FOSTER BAM (69), Greenwich Trustee/Director. Partner in the law firm of Cummings and
Plaza, Greenwich, CT. Lockwood since 1968.
JAMES S. HOWELL (72), 4124 Chairman and Retired Vice President of Lance Inc. (food
Crossgate Road, Charlotte, NC. Trustee/ Director. manufacturing); Chairman of the Distribution
Comm. Foundation for the Carolinas from
1989 to 1993.
ROBERT J. JEFFRIES (73), 2118 Trustee/Director Corporate consultant since 1967.
Ne Bedford Drive, Sun City Emeritus*.
Center,
GERALD M. MCDONNELL (57), 209 Trustee/Director. Sales Representative with Nucor-Yamoto Inc.
Ease Nucor Rd. Norfolk, NE. (steel producer) since 1988.
THOMAS L. MCVERRY (58), 4419 Trustee/Director. Director of Carolina Cooperative Federal
Parkview Drive, Charlotte, NC. 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 Partner in the law firm Holcomb and Pettit,
and Pettit, P.A., 227 West Trade P.A. since 1990; Attorney, Clontz and Clontz
St., Charlotte, NC. from 1980 to 1990.
RUSSELL A. SALTON, III, M.D. Trustee/Director. Medical Director, U.S. Healthcare of
(49) Regency Executive Park, Charlotte, North Carolina since 1995,
Charlotte, NC. President, Primary Physician Care from 1990
to 1996.
MICHAEL S. SCOFIELD (53), 212 Trustee/Director. Attorney, Law Offices of Michael S. Scofield
S. Tryon Street, Suite 1280, since 1969.
Charlotte, NC.
JOHN J. PILEGGI (37), 230 Park President and Consultant to BISYS Fund Services since
Avenue, Suite 910, New York, NY. Treasurer. 1996. Senior Managing Director, Furman
Selz LLC since 1992; Managing Director
from 1984 to 1992.
GEORGE O. MARTINEZ (37), 3435 Secretary. Senior Vice President/Director of
Stelzer Road, Columbus, OH. Administration and Regulatory Services,
BISYS Fund Services since April 1995; Vice
President/Assistant General Counsel,
Alliance Capital Management from 1988 to
1995.
*Robert J. Jeffries has been serving as a Trustee/Director Emeritus since January 1, 1997.
** Mr. Pettit may be deemed to be an "interested person" within the meaning of the 1940 Act.
The officers listed above hold the same positions with forty-two investment
companies offering a total of__ investment funds within the Evergreen Keystone
mutual fund complex. Messrs. Howell, Salton and Scofield are Trustees/Directors
of all forty-two investment companies. Messrs. McDonnell, McVerry and Pettit are
Trustees/Directors of forty-one of the investment companies (excluded is
Evergreen Variable Trust). Messrs. Ashkin and Bam are Trustees/Directors and Mr.
Jeffries is a Trustee/Director Emeritus of forty of the investment companies
(excluded are Evergreen Variable Trust and Evergreen Investment Trust).
The officers of the Trusts are all officers and/or employees of The BISYS
Group, Inc. ("BISYS"), except for Mr. John J. Pileggi who is a consultant to
BISYS. BISYS is an affiliate of Evergreen Keystone 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 of North Carolina,
Evergreen Asset Management Corp., Keystone Investment Management Company
("Keystone") or their affiliates. See "Investment Advisers." Currently, none of
the Trustees is an "affiliated person" as defined in the 1940 Act.
AS OF THE DATE OF THIS SAI, THE OFFICERS AND TRUSTEES/DIRECTORS OF THE TRUSTS
AND LIMITED MARKET AS A GROUP OWNED LESS THAN 1% OF THE OUTSTANDING SHARES OF
CLASS A, B, C AND Y OF ANY OF THE FUNDS.
Set forth below is information with respect to each person, who, to U.S. Real
Estate and Limited Market Fund's knowledge, owned beneficially or of record more
than 5% of a class of each Fund's total outstanding shares as of November 1,
1996.
</TABLE>
<TABLE>
<CAPTION>
Name and Address Name of Fund/Class No. of Shares % of Class
- ------------------------- ---------------------- --------------- ---------------
<S> <C> <C> <C>
Fubs & Co. Febo U.S. Real Estate/A 2,608 12.24%
Astrid & Bernard Celestin
401 S. Tryon St.
Charlotte, NC 28202-1911
Charles Schwab & Co. Inc. U.S. Real Estate/A 4,780 22.43%
Special Custody Account for the
Exclusive Benefit of Customers
Attn: Mutual Fund Dept.
101 Montgomery St.
San Fransisco, CA 84104-4177
Dorothy M. Reif Revocable Trus U.S. Real Estate/A 1,529 7.17%
U/A DTD 08/19/92
401 S. Tryon St.
Charolotte, NC 28202-1911
Joseph T. Reif TR U.S. Real Estate/A 1,529 7.17%
Joseph T. Reif Revocable Trust
U/A DTD 8/19/92
401 S. Tryon St.
Charlotte, NC 28202-1911
First Union Nat'l Bank NC C/F U.S. Real Estate/A 1,194 5.60%
Daniel E. Polk IRA
401 S.Tryon St.
Charlotte, NC 28202-1911
Donaldson Lufkin Jenrette U.S. Real Estate/A 1,986 9.32%
Securities Corporation Inc
P.O. Box 2052
Jersey City, NJ 07303-2052
Fubs & Co. Febo U.S. Real Estate/A 1,865 8.75%
Isaac Lalo and
Michele Lalo
401 S. Tryon St.
Charlotte, NC 28202-1911
First Union National Bank U.S. Real Estate/B 2,284 5.21%
NC C/F
Lawrence L. Horner IRA
401 S. Tryon Street
Charlotte, NC 28288-1911
FUBS & CO. Febo U.S. Real Estate/B 3,626 8.27%
June P. Mooring
401 S. Tryon Street
Charlotte, NC 28304-1911
Fubs & Co. Febo U.S. Real Estate/B 5,607 12.79%
TTEE FBO Alan R. Finnieston
Karen L. Finnieston
C/O First Union National Bank
401 S. Tryon Street CMG-2-1151
Charlotte, NC 28288-1911
First Fidelity Bank-CT C/F U.S. Real Estate/B 2,530 5.77%
Betty J. Carney IRA
Fubs & Co. Febo
401 S. Tryon Street
Charlotte, NC 28288-1911
Charles A. Rossi U.S. Real Estate/B 7,974 18.19%
Edna Rossi
Fubs & Co. Febo
401 S. Tryon Street
Charlotte, NC 28288-1911
Southwest Securities Inc. FBO U.S. Real Estate/B 2,463 5.62%
Jerry W. Bayless TTEE
P.O. Box 509002
Dallas, TX 75250-9002
Brian Mccou U.S. Real Estate/C 7,968 27.73%
Fubs & Co. Febo
401 S. Tryon Street
Charlotte, NC 28288-1911
Merrill Lynch U.S. Real Estate/C 17,447 60.72%
Trade House Account - AID
Private Client Group
Attn: Book Entry
4800 Dear Lake Dr. East 3rd Fl.
Jacksonville, FL 32246-6484
Donaldson Lufkin Jenrette U.S. Real Estate/C 1,608 5.60%
Securities Corporation Inc
P.O. Box 2052
Jersey City, NJ 07303-2052
Constance E. Lieber* U.S. Real Estate/Y 77,526 9.39%
C/O Lieber & Co.
2500 Westchester Avenue
Purchase, NY 10577
Stephen A. Lieber* U.S. Real Estate/Y 225,899 27.37%
C/O Lieber & Co.
2500 Westchester Avenue
Purchase, NY 10577
The Essel Foundation* U.S. Real Estate/Y 50,123 6.07%
C/O Lieber & Co.
2500 Westchester Avenue
Purchase, NY 10577
Charles Schwab & Co. Inc. U.S. Real Estate/Y 59,203 7.17%
Reinvest Account
Attn: Mutual Funds Dept.
101 Montgomery Street
San Francisco, CA 94104-4122
Fubs & Co. Cust Limited Market/A 6,000 11.73%
FBO Edward M. Armfield, Sr.
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
Fubs & Co. Febo Limited Market/A 3,566 6.97%
Gerald Herson
C/O First Union National Bank
401 S. Tryon Street
Charlotte, NC 28288-1911
Fubs & Co. Febo Limited Market/A 2,833 5.54%
Anthony J. Defranzo Jr.
C/O First Union National Bank
401 S Tryon Street
Charlotte, NC 28288-1911
Charles Schwab & Co. Inc. Limited Market/A 2,978 5.82%
Special Custody Account for the
Exclusive Benefit of Customers
Reinvest Account Mut FDS Dept
101 Montgomery St.
San Francisco, CA 94104-4122
First Union National Bank FL C Limited Market/C 213 13.61%
Kathleen L. Hannan MD Sep.
C/O FUNB
401 S. Tryon Street
Charlotte, NC 28288-1911
First Union National Bank GA C Limited Market/C 1,064 67.87%
Janet E. Dauugherty IRA
C/O FUNB
401 S. Tryon Street
Charlotte, NC 28288-1911
First Union Natl. Bank GA C/F Limited Market/C 80 5.13%
Stephen W. Sachs IRA
401 S. Tryon Street
Charlotte, NC 28288-1911
Charles Schwab & Co. Inc. Limited Market/Y 189,005 8.63%
Reinvest Account
Mutual Fund Dept.
101 Montgomery Street
San Francisco, CA 94104-4122
Contance E. Lieber Limited Market/Y 170,046 7.77%
C/O Lieber & Co.
2500 Westchester Avenue
Purchase, NY 10577
Stephen A. Lieber Limited Market/Y 237,691 10.86%
C/O Lieber & Co.
2500 Westchester Avenue
Purchase, NY 10577
Harris Trust & Svgs Bank A/C Limited Market/Y 143,281 6.54%
Delta Air Lines Master TR
TR 03 70314 - Att Dina Peterson
C/O Lieber & Co.
2500 Westchester Ave.
</TABLE>
- --------------------------------
*As a result of his direct and beneficial ownership of 38.46% of the shares
of U.S. Real Estate on November 1, 1996, Stephen A.Lieber may be deemed to
"control" the Fund, as that term is defined in the 1940 Act.
Set forth below is information with respect to each person, who, to
Evergreen, Aggressive and Small Cap knowledge, owned beneficially or of record
more than 5% of a class of each Fund's total outstanding shares as of February
28, 1997.
<TABLE>
<CAPTION>
Name and Address Name of Fund/Class No. of Shares % of Class
- ------------------------- ---------------------- --------------- ---------------
<S> <C> <C> <C>
First Union National Bank/EB/I Evergreen Fund/Y 3,898,502 8.43%
Cash Account
Attn Trust Operations Fund Group
401 S. Tryon St. 3rd Floor CMG 1151
Charlotte, NC 28202-1911
First Union National Bank/EB/I Evergreen Fund/Y 10,029,266 21.69%
Reinvest Account
Attn Trust Operations Fund Group
401 S. Tryon St. 3rd Floor CMG 1151
Charlotte, NC 28202-1911
Merrill Lynch Evergreen Aggressive 296,678 6.59%
Trade House Account - AID Growth Fund/A
Private Client Group
Attn Book Entry
4800 Deer Lake Dr. East 3rd Floor
Jacksonville, FL 32246-6484
Merrill Lynch Evergreen Aggressive 27,894 31.37%
Trade House Account - AID Growth Fund/C
Private Client Group
Attn Book Entry
4800 Deer Lake Drive East 3rd Floor
Jacksonville, FL 32246-6484
Fubs & Co. Febo Evergreen Aggressive 5,485 6.17%
Octavio Riano-Avila and Growth Fund/C
Rosalba Chauez de Riano
4995 NW 72nd Avenue
Miami, FL 33166-5643
First Union National Bank Evergreen Aggressive 1,100,255 55.39%
Trust Accounts Growth Fund/Y
Attn Ginny Batten
11th Floor CMG-1151
301 S. Tryon Street
Charlotte, NC 28288-0002
First Union National Bank Evergreen Aggressive 571,535 28.77%
Trust Accounts Growth Fund/Y
Attn Ginny Batten
11th Floor CMG-1151
301 S. Tryon Street
Charlotte, NC 28288-0002
INVESTMENT ADVISERS
(See also "Management of the Funds" in each Fund's Prospectus)
EVERGREEN, U.S. REAL ESTATE AND LIMITED MARKET
The investment adviser to Evergreen, U.S. Real Estate and Limited Market is
Evergreen Asset Management Corp., a New York corporation, with offices at 2500
Westchester Avenue, Purchase, New York ("EAMC" or the "Adviser"). EAMC is owned
by First Union National Bank of North Carolina ("FUNB" or the "Adviser") which,
in turn, is a subsidiary of First Union Corporation ("First Union"), a bank
holding company headquartered in Charlotte, North Carolina.
AGGRESSIVE
The investment adviser of Aggressive is FUNB which provides investment advisory
services through its Capital Management Group.
SMALL CAP
The investment adviser to Small Cap is Keystone Investment Management Company
("Keystone" or the "Adviser"). Keystone is an indirectly-owned subsidiary of
FUNB.
ADVISORY FEES
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, except
Small Cap, for the three most recent fiscal periods reflected in its
registration statement are set forth below:
Year Ended Year Ended Year Ended
9/30/96 9/30/95 9/30/94
----------- -------------- ------------
EVERGREEN
Advisory Fee $9,145,287 $5,472,439 $5,738,633
Expense Reimbursement $ 9,740 $ 24,130
U.S. REAL ESTATE
Advisory Fee $104,850 $ 85,509 $ 57,506
Waiver (104,850) ( 85,509) ($57,506)
Net Advisory Fee $ 0 $ 0 $ 0
Expense Reimbursement $107,348 $ 43,013 $9,102
LIMITED MARKET
Advisory Fee $510,421 $800,642 $314,648
Waiver (27,044) -- --
Net Advisory Fee $483,377 $800,642 $314,648
Expense Reimbursement $ 37,344 $ 48,100 $ 0
Year Ended Period Ended
AGGRESSIVE* 9/30/96 7/1/95 - 9/30/95
----------- --------------
$612,492 $106,041
*Aggressive commenced operations as successor Fund to ABT Emerging Growth
Fund on June 30, 1995. Therefore, the first year's figures set forth in the
table above reflect the advisory fees paid to the Fund's Adviser for the period
from the commencement of operations through September 30, 1995. The advisory
fees paid to Palm Beach Capital Management, Ltd., investment adviser to ABT
Emerging Growth Fund for the period November 1, 1994 through June 30, 1995,
totalled $248,815.
SUB-ADVISER
EAMC has entered into sub-advisory agreements with Lieber & Company ("Lieber")
regarding Evergreen, U.S. Real Estate and Limited Market (the "Sub-Advisory
Agreements"). The Sub-Advisory Agreements provide for Lieber's research
department and staff to furnish EAMC with information, investment
recommendations, advice and research and general consulting services regarding
each Fund. For its services rendered, EAMC reimubrses Lieber for the direct and
indirect costs of performing such services. There is no additional charge to the
Funds for the services performed by Lieber. Lieber is a subsidiary of First
Union and is located at 2500 Westchester Avenue, Purchase, New York 10577.
CONTINUATION OF THE ADVISORY AGREEMENTS
ALL FUNDS, EXCEPT SMALL CAP. The Investment Advisory Agreements will continue
in effect from year to year provided that their continuance is approved annually
by a vote of a majority of the Trustees of each Trust and Directors of Limited
Market including a majority of (i) those Trustees/Directors who are not parties
thereto or "interested persons" (as defined in the 1940 Act) of any such party
(the "Independent Trustees, in the case of each Trust, and the "Independent
Directors," in the case of Limited Market), cast in person at a meeting duly
called for the purpose of voting on such approval or (ii) the outstanding voting
shares of each Fund.
SMALL CAP. With respect to Small Cap, the Investment Advisory Agreement dated
March 11, 1997 will continue in effect until March 11, 1998. Thereafter, the
Investment Advisory Agreement will continue in effect from year to year provided
that such continuance is approved annually by a vote of a majority of (i) the
Trustees of Evergreen Trust, including a majority of the Independent Trustees,
cast in person at a meeting duly called for the purpose of voting on such
approval or (ii) the outstanding voting securities of the Fund.
GENERAL
Under its 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 its
registration 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.
Each Investment Advisory Agreement is 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
and Limited Market's Trustees/Directors or by the respective Adviser. Each
Investment Advisory Agreement will automatically terminate in the event of its
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.
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, the 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 either EAMC, FUNB or Keystone acts as
investment adviser or between the Fund and any advisory clients of EAMC, 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.
EKIS provides administrative services to Aggressive and each of the
portfolios of Evergreen Investment Trust for a fee based on the average daily
net assets of each fund administered by EKIS for which EAMC, FUNB or Keystone
also serves 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. BISYS, an
affiliate of Evergreen Keystone Distributor, Inc. (the "Distributor"), serves as
sub-administrator to Aggressive [AND SMALL CAP] and is entitled to receive a fee
from the Fund based on the average daily net assets of Aggressive [AND SMALL
CAP] at a rate calculated on the total assets of the mutual funds administered
by EKIS for which FUNB, EAMC or Keystone also serve as investment adviser,
calculated in accordance with the following schedule: .0100% of the first $7
billion; .0075% on the next $3 billion; .0050% on the next $15 billion; and
.0040% on assets in excess of $25 billion. The total assets of mutual funds
administered by EKIS for which EAMC, FUNB or Keystone serves as investment
adviser were approximately $30 billion as of February 28, 1997.
For the period July 1, 1995 through September 30, 1995 and the fiscal year
ended September 30, 1996, Aggressive paid EAMC $9,1462 and $51,109,
respectively, in administration service fees.
EXPENSE LIMITATIONS
Each Adviser has in some instances voluntarily limited (and may in the
future limit) expenses of certain of the Funds. Until U.S. Real Estate reaches
$15 million in net assets, EAMC has voluntarily agreed to reimburse the Fund to
the extent that the Fund's aggregate operating expenses (including the Adviser's
fee, but excluding interest, taxes, brokerage commissions, Rule 12b-1
distribution fees and extraordinary expenses) exceed 1.50% of its average net
assets for any fiscal year.
DISTRIBUTION PLANS
(See also "Management of the Funds - Distribution Plans and Agreements"
in each Fund's Prospectus)
Distribution fees are accrued daily and paid monthly on the Class A, Class B
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 ("CDSC")
after the first year following 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 CDSC 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 Plan and the purposes for which such expenditures were made
to the Trustees of each Trust and the Directors of Limited Market for their
review on a quarterly basis. Also, each Plan provides that the selection and
nomination of Independent Trustees/Directors are committed to the discretion of
such Independent Trustees/Directors 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 Securities and Exchange Commission
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/Directors of each Trust and Limited
Market or by vote of the holders of a majority of the outstanding voting
securities (as defined in the 1940 Act) of that Class, and, in either case, by a
majority of the Independent Trustees/ Directors and 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 the Funds and holders of Class A, Class B and Class C shares
and (ii) stimulate administrators to render administrative support services to
the Funds 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.
Any Plan or Distribution Agreement may be terminated (i) by a Fund without
penalty at any time by a majority vote of the holders of the outstanding voting
securities of the Fund, voting separately by Class, or by a majority vote of the
Independent Trustees/Directors, 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. 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/Directors of a Trust and Limited Market or
the holders of the Fund's outstanding voting securities, voting separately by
Class, and in either case, by a majority of the Independent Trustees/Directors,
cast in person at a meeting called for the purpose of voting on such approval.
However, a 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.
FEES PAID PURSUANT TO DISTRIBUTION PLANS
For the fiscal year ended September 30, 1996, the Funds incurred the following
distribution services fees:
CLASS EVERGREEN U.S. REAL ESTATE LIMITED MARKET AGGRESSIVE GROWTH
- -------- ----------- ---------------- -------------- -----------------
Class A $149,922 $307 $2,471 $197,507
Class B $160,792 $2,250 $12,608 $26,469
Class C $10,292 $328 $310 $3,308
ALLOCATION OF BROKERAGE
Decisions regarding each Fund's portfolio are made by its Adviser, subject to
the supervision and control of the Trustees/Directors. Orders for the purchase
and sale of securities and other investments are placed by employees of the
Adviser, all of whom, in the case of EAMC, are associated with Lieber. In
general, the same individuals perform the same functions for the other funds
managed by the 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 Adviser shall be prompt execution at the most favorable
price. An 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 Adviser. 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 Securities and Exchange Commission, 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 EAMC 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
the Fund 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 EAMC contemplates any ongoing arrangements with other brokerage
firms, brokerage business may be given from time to time to other firms. In
addition, the Trustees/Directors 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.
Any profits from brokerage commissions accruing to Lieber as a result of
portfolio transactions for the Fund 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 a Fund.
The following chart shows: (i) the brokerage commissions paid by each Fund
advised by EAMC 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:
YEAR YEAR YEAR
ENDED ENDED ENDED
9/30/96 9/30/95 9/30/94
--------- --------- ---------
EVERGREEN
Total Brokerage Commissions $590,105 $342,559 $535,816
Dollar Amount paid to Lieber $515,522 $252,069 $478,391
% paid to Lieber 87% 74% 89%
% of Transactions Effected by
Lieber 82% 73% 90%
U.S. REAL ESTATE
Total Brokerage Commissions $114,230 $71,440 $49,723
Dollar Amount paid to Lieber $109,622 $68,714 $48,400
% paid to Lieber 96% 96% 97%
% of Transactions Effected by
Lieber 94% 95% 98%
LIMITED MARKET
Total Brokerage Commissions $317,058 $414,048 $94,996
Dollar Amount paid to Lieber $153,596 $125,347 $51,736
% paid to Lieber 48% 30% 54%
% of Transactions Effected by
Lieber 41% 24% 50%
ADDITIONAL TAX INFORMATION
(See also "Dividends, Distributions and Taxes" in the Prospectus)
Each Fund, other than Small Cap, has qualified and intends to continue to
qualify, and Small Cap intends to qualify, for and elect the tax treatment
applicable to a regulated investment company (a "RIC") under Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"). (Such qualification does
not involve supervision of management or investment practices or policies by the
Internal Revenue Service.) In order to qualify as a RIC, a Fund must, among
other things, (a) 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; (b) 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; and (c) 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. 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 of investment company taxable income and any net short-term
capital gains will be taxable as ordinary income 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 losses 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. Any loss realized by a shareholder on the sale
of shares of the Fund held by the shareholder for six months or less will be
disallowed to the extent of any exempt interest dividends received by the
shareholder with respect to such shares, and will be treated for tax purposes as
a long-term capital loss to the extent of any distributions of net capital gains
received by the shareholder with respect to such shares.
All distributions, whether received in shares or cash, must be reported by
each shareholder on his or her Federal income tax return. Each shareholder
should consult 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.
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 31% (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 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 a share of a Fund is its net asset value, plus,
in the case of Class A shares, a sales charge which will vary depending on 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/Articles of Incorporation 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 price. 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/Directors.
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, to the extent applicable, transfer agency fees and the fact that Class Y
shares bear no additional distribution 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/Directors 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/Directors 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 promptly after receipt
of the information which may be after the ex-dividend date.
PURCHASE OF SHARES
The following information supplements that set forth in each 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 CDSC (the deferred sales charge
alternative"), or without any front-end sales charge, but with a CDSC imposed
only during the first year after 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 investments is $1,000; there is no minimum
for subsequent investments. The subscriber may use the [Share Purchase
Application] available from the Distributor or the Funds 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] [calling 1-800-343-2898] if
the shareholder has completed the appropriate portion of the [Share Purchase
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 4:00
p.m. New York 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 are not issued for any class of shares of any Fund. All such
shares shall remain in the shareholder's account on the records of the Fund.
This facilitates later redemption and relieves the shareholder of the
responsibility for and inconvenience of lost or stolen certificates.
ALTERNATIVE PURCHASE ARRANGEMENTS
As described below, each Fund issues four classes of shares: Class A, B, C
and Y shares. 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) Class A, Class B and Class C shares are subject to
a Rule 12b-1 distribution fee; (II) 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; (III) Class B shares and Class C shares each bear the
expense of a higher Rule 12b-1 distribution services fee than Class A shares;
(IV) with the exception of Class Y shares, each Class of each Fund has exclusive
voting rights with respect to (a) the provisions of its Plan and (b) other
matters for which separate Class voting is appropriate under applicable law; and
(V) 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 fee and
CDSCs on Class B shares prior to conversion, or the accumulated distribution
services 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.
Class A shares are subject to a lower distribution services 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
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 fees and, in the case of Class B shares, being subject to a CDSC 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 by the Funds would have to
hold his or her investment approximately seven years from the month of purchase
for the Class B and Class C distribution services 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 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 CDSC may find it more advantageous to purchase Class C
shares.
With respect to each Fund, the Trustees/Directors 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/Directors,
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 year.
Per Share Sales Offering Price
Net Asset Value Charge Date Per Share
--------------- ---------------- ---------- --------------
Evergreen $17.64 $ .88 9/30/96 $18.52
Aggressive $21.04 $1.05 9/30/96 $22.09
U.S. Real Estate $12.49 $ .62 9/30/96 $13.11
Limited Market $17.31 $ .86 9/30/96 $18.17
Prior to January 3, 1995, shares of the Funds then offering shares were
offered exclusively on a no-load basis and, accordingly, no underwriting
commissions were paid in respect of sales of shares of the Funds or retained by
the Distributor. In addition, since Class B and Class C shares were not offered
prior to January 3, 1995, CDSCs have been paid to the Distributor with respect
to Class B or Class C shares only since January 3, 1995.
The following commissions were paid and amounts retained on behalf of each
Fund for the fiscal year ended September 30, 1996 and on behalf of Evergreen,
U.S. Real Estate and Limited Market for the period from January 3, 1995 through
September 30, 1995, and on behalf of Aggressive for the period from July 1, 1995
through September 30, 1995:
Fiscal Year Ended Period From
EVERGREEN 9/30/96 1/3/95 - 9/30/95
- ---------------------------- ------------------ --------------
Commissions Received $1,462,012 $586,701
Commissions Retained $ 157,233 $ 72,923
Fiscal Year Ended Period From
AGGRESSIVE 9/30/96 7/1/95 - 9/30/95
- ---------------------------- ----------------- ----------------
Commissions Received $185,835 $70,327
Commissions Retained $ 22,742 $ 8,909
Fiscal Year Ended Period From
U.S. REAL ESTATE 9/30/96 1/3/95 - 9/30/95
- ---------------------------- ------------------ --------------
Commissions Received $4,724 $118
Commissions Retained $ 543 $ 13
Fiscal Year Ended Period From
LIMITED MARKET 9/30/96 1/3/95 - 9/30/95
- ---------------------------- ------------------ --------------
Commissions Received $2,963 $3,418
Commissions Retained $ 188 $ 495
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.
CONCURRENT PURCHASES. Certain persons may qualify for the sales charge
reductions by combining purchases of shares of one or more of the Evergreen
Keystone mutual funds other than 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 for the employee benefit plans of a single employer. 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 Keystone mutual fund.
Prospectuses for the Evergreen Keystone mutual funds may be obtained without
charge by contacting the Distributor or the Advisers at the address or telephone
number shown on the front cover of this SAI.
RIGHTS OF ACCUMULATION. An investor's purchase of additional Class A shares
of a Fund may qualify for a Right of Accumulation. The applicable sales charge
will be based on the total of:
(the investor's current purchase;
(the net asset value (at the close of business on the previous day) of (a)
all Class A, Class B and Class C shares of the Fund held by the investor
and (b) all such shares of any other Evergreen Keystone mutual fund held
by the investor; and
(iii) the net asset value of all shares described in paragraph (ii) 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, Class B or Class C shares of an
Evergreen Keystone mutual 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 Concurrent Purchases or to obtain the Rights of
Accumulation 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 (or Class A, Class B and/or Class C shares) of the Fund
or any other Evergreen Keystone mutual 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, Class B or Class C shares of the Fund or any
other Evergreen Keystone mutual 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 Concurrent Privileges described above may
purchase shares of the Evergreen Keystone mutual 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 shares of the Fund or any other Evergreen Keystone mutual
fund, to qualify for the 3.75% sales charge applicable to purchases in the Funds
and 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 the Fund should complete the appropriate
portion of the [Share Purchase Application] while current Class A shareholders
desiring to do so can obtain a form of Letter of Intent by contacting a Fund at
the address or telephone number shown on the cover of this Statement of
Additional Information.
INVESTMENTS THROUGH EMPLOYEE BENEFIT AND SAVINGS PLANS. Certain qualified and
non-qualified benefit and savings plans may make shares of the Evergreen
Keystone mutual 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 record keeping
services to plans which make shares of the Evergreen Keystone mutual funds
available to their participants.
REINSTATEMENT PRIVILEGE. A Class A shareholder who has caused any or all of
his or her shares of the 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 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
the Fund at the address shown on the cover of this SAI.
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/Directors of the Trusts or Limited Market; 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
Adviser, 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 ALTERNATIVE--CLASS B 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 CDSC 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 CDSC and the
distribution services 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 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.
CDSC. Class B shares which are redeemed within six years after the month of
purchase will be subject to a CDSC 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 CDSC will be assessed on shares derived from
reinvestment of dividends or capital gains distributions. The amount of the
CDSC, 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 CDSC 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 seven years
or Class B shares acquired pursuant to reinvestment of dividends or
distributions and third of Class B shares held longest during the seven-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 the month of
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 the
month of purchase for a CDSC of $16).
The CDSC 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 imposed on Class B shares. Such
conversion will be on the basis of the relative net asset values of the two
classes, without the imposition of any sales load, fee or other charge. The
purpose of the conversion feature is to reduce the distribution services fee
paid by holders of Class B shares that have been outstanding long enough for the
Distributor to have been compensated for the expenses associated with the sale
of such shares.
The 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 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 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% CDSC if you redeem shares during the
month of purchase and the 12-month period following the month of purchase. No
charge is imposed in connection with redemptions made more than one year from
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 CDSC 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 enables the Fund to sell Class C
shares without either a front-end load or CDSC. 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 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 EAMC, (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
sales charge or CDSC.
GENERAL INFORMATION ABOUT THE FUNDS
(See also "Other Information - General Information" in each Fund's Prospectus)
CAPITALIZATION AND ORGANIZATION
Limited Market is a Maryland corporation. Evergreen, Aggressive and Small Cap
are separate series of Evergreen Trust, a Massachusetts business trust.
Evergreen U.S. Real Estate Equity Fund is a series of Evergreen Equity Trust, a
Massachusetts business Trust. Evergreen Aggressive Growth Fund, which is a
series of Evergreen Trust, acquired substantially all of the assets of ABT
Emerging Growth Fund (the "ABT Fund") on June 30, 1995. 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.
Evergreen, Aggressive and Small Cap may issue an unlimited number of shares
of beneficial interest with a $0.001 PAR VALUE. U.S. Real Estate may issue an
unlimited number of shares of beneficial interest with a $0.001 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.
The authorized capital stock of Limited Market consists of 25,000,000 shares
of common stock having a par value of $0.10 per share. Each share of Limited
Market is entitled to one vote and to participate equally in dividends and
distributions declared by Limited Market and, on liquidation, to its
proportionate share of the net assets remaining after satisfaction of
outstanding liabilities (including fractional shares on a proportional basis).
All shares of Limited Market when issued will be fully paid and non-assessable
and have no preemptive, conversion or exchange rights. Fractional shares have
proportionally the same rights, including voting rights, as are provided for a
full share. The rights of the holders of shares of common stock may not be
modified except by vote of the holders of a majority of the outstanding shares.
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.
Under the Bylaws of Limited Market, each Director will continue in office
until such time as less than a majority of the Directors then holding office
have been elected by the shareholders or upon the occurrence of any of the
conditions described under Section 16 of the 1940 Act. As a result, normally no
annual or regular meetings of shareholders will be held, unless otherwise
required by the Bylaws 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/Directors can elect
100% of the Trustees/Directors 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/Directors.
The Trustees/Directors of each Trust and Limited Market 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 or Limited
Market with different investment objectives, policies or restrictions,
additional series of shares may be created by one or more of the Trusts or
Limited Market. Any issuance of shares of another series or class would be
governed by the 1940 Act and the law of either the Commonwealth of Massachusetts
or the State of Maryland. If shares of another series of a Trust or Limited
Market 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/Directors, 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 an 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 shareholder meeting for the removal of the
Trustees/Directors of each Trust or Limited Market, 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 Trust or Limited Market
Fund may not be modified except by the vote of a majority of the outstanding
shares of such series.
An order has been received from the Securities and Exchange Commission
permitting the issuance and sale of multiple classes of shares representing
interests in each Fund. In the event a Fund were to issue additional Classes of
shares other than those described herein, no further relief from the Securities
and Exchange Commission would be required.
DISTRIBUTOR
Evergreen Keystone Distributor, Inc., 125 West 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 Agreement between each Fund and
the Distributor, each 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
the Funds (except Small Cap). KPMG Peat Marwick LLP has been selected to be the
independent auditors of Small Cap.
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 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 Securities
and Exchange Commission, 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 Evergreen, U.S. Real Estate and Limited Market, the shares of
each Fund outstanding prior to January 3, 1995 have been reclassified as Class Y
shares. With respect to Aggressive, the Fund is the successor of the the ABT
Emerging Growth Fund and the information presented is based on the ABT Emerging
Growth Fund's Class A shares, the only outstanding class until June 30, 1995.
The average annual compounded total return for each Class of shares offered by
the Funds for the most recently completed one, five and ten year fiscal periods
or period since inception is set forth in the table below.
1 Year 5 Years 10 Years
Ended Ended Ended
9/30/96 9/30/96 9/30/96
--------- -------- ----------
EVERGREEN
Class A 12.46% 12.96% 11.03%
Class B 12.29% 13.57% 11.45%
Class C 16.29% 13.81% 11.45%
Class Y 18.43% 14.20% 11.63%
LIMITED MARKET
Class A (7.51%) 5.45% 8.64%
Class B (8.31%) 5.91% 9.02%
Class C (4.52%) 6.21% 9.03%
Class Y (2.73%) 6.53% 9.19%
AGGRESSIVE
Class A 19.65% 17.51% 14.77%
Class B 19.94% 18.30% 15.26%
Class C 24.11% 18.48% 15.25%
Class Y 25.84% 18.72% 15.36%
1 Year Period From 9/1/93
Ended (inception) to
9/30/96 12/31/96
--------- ------------------
U.S. REAL ESTATE
Class A 7.75% 8.33%
Class B 7.49% 8.89%
Class C 11.49% 9.82%
Class Y 13.57% 10.26%
Except for the one year ended September 30, 1996, the performance numbers for
Evergreen, U.S. Real Estate and Limited Market 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 CDSC. Except for
the one year ended September 30, 1996, the performance numbers for the Class B,
Class C and Class Y shares of Aggressive are hypothetical numbers based upon the
performance for the Class A shares of ABT Emerging Growth Fund, which is the
predecessor to Aggressive for accounting purposes as adjusted for any applicable
CDSC.
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 invested 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 Securities & Exchange
Commission 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 rate 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 the following Funds for the thirty-day period ended October 31,
1996 for each Class of shares offered by the Funds is set forth in the table
below:
EVERGREEN AGGRESSIVE U.S. REAL ESTATE LIMITED MARKET
------------ ---------- ---------------- --------------
Class A 0.21% -0.78% 1.68% -0.48%
Class B -0.47% -1.51% 1.04% -1.21%
Class C -0.47% -1.51% 1.02% -1.21%
Class Y 0.45% -0.59% 1.99% -0.25%
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 inquiry 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
SAI. This SAI does not contain all the information set forth in the Registration
Statement filed by the Trusts and Limited Market with the Securities and
Exchange Commission under the Securities Act of 1933. Copies of the Registration
Statement may be obtained at a reasonable charge from the Securities and
Exchange Commission or may be examined, without charge, at the offices of the
Securities and Exchange Commission in Washington, D.C.
FINANCIAL STATEMENTS
Each Fund's financial statements (except Small Cap Fund) appearing in their
most current fiscal year Annual Report to shareholders and the report thereon of
the independent auditors appearing thereon of, Price Waterhouse LLP; Tait,
Weller & Baker LLP, and Ernst & Young LLP are incorporated by reference in the
SAI . The Annual Reports to Shareholders for each Fund, which contain the
referenced statements, are available upon request and without charge.
Attached are the audited statement of assets and liabilities and the reports
thereon of KPMG Peat Marwick LLP for Small Cap as of March 18, 1997.
<PAGE>
APPENDIX "A"
DESCRIPTION OF BOND RATINGS
Standard & Poor's Ratings Group. A Standard & Poor's corporate 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 obligers 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 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 Inc. A brief description of the applicable Moody's
Investors Service Inc.'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 LLP: 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 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, Inc.: 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 Group: "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 classifica-tion. 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 LLP: 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 SMALL CAP VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES
MARCH 18, 1997
Assets:
Cash $40
Deferred organizational expenses 16,000
------
Total assets 16,040
======
Liabilities:
Organizational expenses payable 16,000
------
Net assets $40
======
Net assets comprised of:
Paid-in capital $40
------
Total net assets $40
======
Net asset value per share:
Class A Shares
Net assets of $10 divided by 1 share outstanding $10.00
Offering price per share ($10.00 / 0.09525)
based on sales charge of 4.75% of offering
price at March 18, 1997) $10.50
Class B Shares
Net assets of $10 divided by 1 share outstanding $10.00
Class C Shares
Net assets of $10 divided by 1 share outstanding $10.00
Class Y Shares
Net assets of $10 divided by 1 share outstanding $10.00
See accompanying notes to the financial statements.
<PAGE>
EVERGREEN SMALL CAP VALUE FUND
NOTES TO FINANCIAL STATEMENTS
March 18, 1997
Note 1 - Organization
Evergreen Small Cap Value Fund ("the Fund") is a newly organized separate
diversified investment series of Evergreen Trust (the "Trust"), a Massachusetts
business trust. The Trust is registered under the Investment Company Act of
1940, as amended (the "Act"), as an open-end management company. The Fund has
had no operations other than the sale of four shares of beneficial interest.
The Fund currently offers four classes of shares. Class A shares are offered at
a public offering price which includes a maximum sales charge of 4.75% payable
at the time of purchase. Class B shares are sold subject to a contingent
deferred sales charge that is payable upon redemption and decreases depending on
how long shares have been held. Class B shares that have been outstanding for
seven years after the month of purchase will automatically convert to Class A
shares. Class C shares are sold subject to a contingent deferred sales charge
payable on shares redeemed during the month of purchase and the twelve-month
period following the month of purchase. Class Y shares are offered at net asset
value without a front-end or back-end sales charge.
Note 2 - Investment Advisory and Administration Agreements
The Management of the Fund is supervised by the Trustees of the Trust. The Fund
has entered into an investment advisory and management agreement with Keystone
Investment Management Company ("Keystone"), who will serve as its investment
adviser. Keystone is a wholly-owned subsidiary of First Union National Bank of
North Carolina ("FUNB").
In consideration of Keystone performing its obligations, the Fund will pay to
Keystone an investment advisory fee, accrued daily and payable monthly, at an
annual rate of 0.95% of its average daily net assets.
The Fund has entered into an administrative services agreement with Evergreen
Keystone Investment Services ("EKIS") to provide administrative services and to
supervise the Fund's daily business affairs. The Fund will pay EKIS an
administrative fee, accrued daily and payable monthly, at a rate based on the
aggregate average daily net assets of all of the mutual funds administered by
EKIS for which FUNB affiliates serve as investment advisers. The fee will start
at 0.05% per annum and decline as net assets increase to 0.01% per annum.
BISYS Fund Services, an affiliate of Evergreen Keystone Distributor, Inc.,
distributor for the Evergreen Keystone group of mutual funds, serves as
sub-administrator to the Funds and is entitled to receive a fee from each fund
calculated on the average daily net assets of the Fund at a rate based on the
aggregate average daily net assets of the mutual funds administered by EKIS for
which FUNB affiliates also serve as investment advisers. The fee will be
calculated daily and payable monthly and will start at 0.01% per annum and
decline, as aggregate average daily net assets of such funds increase, to 0.004%
per annum.
Note 3- Distribution Plans
The Fund bears some of its costs of selling its shares under Distribution Plans
adopted by its Class A, B and C shares pursuant to Rule 12b-1 under the Act.
The Class A Distribution Plan provides for payments, which are currently limited
to 0.25% annually of the average daily net asset value of Class A shares, to pay
expenses of the distribution of Class A shares.
The Class B and Class C Distribution Plans provide for payments at an annual
rate of up to 1.00% of the average daily net asset value of Class B and Class C
shares, of which 0.75% may be used to pay distribution expenses and 0.25% may be
used to pay shareholder service fees.
Note 4- Organizational Costs
FUNB has agreed to advance all of the costs incurred and to be incurred in
connection with the organization and initial registration of the Fund. The Fund
has agreed to reimburse FUNB for such costs. These costs have been deferred and
will be amortized by the Fund over a period not to exceed 60 months from the
date the Fund commences operations.
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholder
Evergreen Small Cap Value Fund
We have audited the statement of assets and liabilities of Evergreen Small Cap
Value Fund (a fund within the Evergreen Trust) as of March 18, 1997. This
financial statement is the responsibility of management of Evergreen Small Cap
Value Fund. Our responsibility is to express an opinion on this financial
statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of assets and liabilities is free of
material misstatement. An audit of a statement of assets and liabilities
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the statement of assets and liabilities. An audit of a statement
of assets and liabilities also includes assessing the accounting principle used
and significant estimates made by management, as well as evaluating the overall
statement of assets and liabilities presentation. We believe that our audit of
the statement of assets and liabilities provides a reasonable basis for our
opinion.
In our opinion, the statement of assets and liabilities referred to above
presents fairly, in all material respects, the financial position of Evergreen
Small Cap Value Fund at March 18, 1997, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Boston, Massachusetts
March 18, 1997
<PAGE>
THE EVERGREEN TRUST
PART C. OTHER INFORMATION
Item 24(a). Financial Statements
The following financial statements are included in Part A of the
Registration Statement:
Financial Highlights
Evergreen Fund
Class A Shares Period January 3, 1995, through September
30, 1995, and the year ended September 30,
1996.
Class B Shares Period January 3, 1995, through September
30, 1995, and the year ended September 30,
1996.
Class C Shares Period January 3, 1995, through September
30, 1995, and the year ended September 30,
1996.
Class Y Shares For each of the years in the ten-year
period ended September 30, 1996
Evergreen Aggressive Growth Fund
Class A Shares Year ended December 31, 1987; ten months
ended October 31, 1988; six years ended
October 31, 1994; eleven months ended
September 30, 1995; and year ended
September 30, 1996
Class B Shares For the period July 7, 1995, through
September 30, 1995 and the year ended
September 30, 1996
Class C Shares Period August 3, 1995, through September
30, 1995 and the year ended September 30,
1996
Class Y Shares For the period July 7, 1995, through
September 30, 1995 and the year ended
September 30, 1996
The audited Financial Statements listed below are incorporated by reference
to Registrant's Annual Report as filed with the Securities and Exchange
Commission:
Evergreen Fund
Schedule of Investments September 30, 1996
Statement of Assets and Liabilities September 30, 1996
Statement of Operations Year ended September 30, 1996
Statements of Changes in Net Assets For each of the years in
the two-year period ended
September 30, 1996
Evergreen Aggressive Growth Fund
Schedule of Investments September 30, 1996
Statement of Assets and Liabilities September 30, 1996
Statement of Operations Year ended September 30, 1996
Statements of Changes in Net Assets For eleven months ended
September 30, 1995 and the
year ended period ended
September 30, 1996
Evergreen Fund and Evergreen Aggressive
Growth Fund
Notes to Financial Statements
Independent Auditors' Report
Evergreen Small Cap Value Fund
Statement of Assets and Liabilities March 18, 1997
Notes to Financial Statements
Independent Auditors' Report
Item 24(b). Exhibits
No. Description
1(A) Amended and Restated Declaration of Trust**
1(B) Form of Instrument providing for the Establishment and
Designation of Classes**
2 By-Laws**
3 Not Applicable
4 Instruments Defining Rights of Shareholders**
5(A) Evergreen Fund Investment Advisory Agreement**
5(B) Evergreen Fund Investment Subadvisory Agreement**
5(C) Evergreen Aggressive Growth Fund
Investment Advisory Agreement**
5 (D) Evergreen Aggressive Growth Fund
Investment Subadvisory
Agreement**
5 (E) Form of Evergreen Small Cap Value Fund
Investment Management and Advisory Agreement+
6 (A) Distribution Agreements for Class A, B and C Shares of Evergreen
Fund and Evergreen Aggressive Growth Fund**
6 (B) Distribution Agreement for Class A, B and C Shares of Evergreen
Small Cap Value Fund+
6 (C) Form of Dealer Agreement+
7 Deferred Compensation Plan+
8 Custodian Agreement**
9 To be Filed by Amendment.
10 Opinion and Consent of Counsel+
11(A) Consent of Price Waterhouse, independent auditors+
11(B) Consent of KPMG Peat Marwick LLP, independent auditors+
12 Not Applicable
13 Not Applicable
14 To be Filed by Amendment
15(A) Form of Rule 12b-1 Distribution Plan**
15(B) Rule 12b-1 Distribution Plan for the Evergreen Small Cap Value
Fund+
16 To be Filed by Amendment
17 Financial Data Schedules**
18 Multiple Class Plan for the Evergreen Keystone Fund Group+
19 Powers of Attorney+
* Incorporated by reference to the Annual Report to Shareholders for
the fiscal year ended September 30, 1996 which has been previously
filed with the Commission and by reference to the Annual
Report of Registrant on form NSAR for the aforementioned period.
** Incorporated by reference to Registrant's previous filings on
Form N-1A.
*** Incorporated by reference to Registrant's Post-Effective Amendment
No. 32 previously filed on November __, 1996.
+ Filed herewith.
Item 25. Persons Controlled by or Under Common Control with Registrant
None
- --------------------------
Item 26. Number of Holders of Securities (as of February 28, 1997)
(1) (2)
Number of Record
Title of Class Shareholders
Evergreen Fund:
Class Y Shares of Beneficial Interest ($0.001 par value) 26,451
Class A Shares of Beneficial Interest ($0.001 par value) 20,412
Class B Shares of Beneficial Interest ($0.001 par value) 47,745
Class C Shares of Beneficial Interest ($0.001 par value) 727
Evergreen Aggressive Growth Fund:
Class Y Shares of Beneficial Interest ($0.001 par value) 823
Class A Shares of Beneficial Interest ($0.001 par value) 8,840
Class B Shares of Beneficial Interest ($0.001 par value) 4,129
Class C Shares of Beneficial Interest ($0.001 par value) 173
Item 27. Indemnification
Article XI of the Registrant's By-laws contains the following
provisions regarding indemnification of Trustees and officers:
SECTION 11.1 Actions Against Trustee or Officer. The Trust shall
indemnify any individual who is a present or former Trustee or officer of the
Trust and who, by reason of his position as such, was, is, or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
any action or suit by or in the right of the Trust) against expenses, including
attorneys' fees, judgments, fines, and amounts paid in settlement, actually and
reasonably incurred by him in connection with the claim, action, suit, or
proceeding, if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Trust, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon the plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be in or
not opposed to the best interests of the Trust, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his conduct
was unlawful.
SECTION 11.2 Derivative Actions Against Trustees or Officers. The Trust
shall indemnify any individual who is a present or former Trustee or officer of
the Trust and who, by reason of his position as such, was, is, or is threatened
to be made a party to any threatened, pending or completed action or suit by or
on behalf of the Trust to obtain a judgment or decree in its favor, against
expenses, including attorneys' fees, actually and reasonably incurred by him in
connection with the defense or settlement of the action or suit, if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Trust, except that no indemnification shall be made in
respect of any claim, issue or matter as to which the individual has been
adjudged to be liable for negligence or misconduct in the performance of his
duty to the Trust, except to the extent that the court in which the action or
suit was brought determines upon application that, despite the adjudication of
liability but in view of all circumstances of the case, the person is fairly and
reasonably entitled to indemnity for those expenses which the court shall deem
proper, provided such Trustee or officer is not adjudged to be liable by reason
of his wilful misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of his office.
SECTION 11.3 Expenses of Successful Defense. To the extent that a
Trustee or officer of the Trust has been successful on the merits or otherwise
in defense of any action, suit or proceeding referred to in Section 11.1 or 11.2
or in defense of any claim, issue, or matter therein, he shall be indemnified
against expenses, including attorneys' fees, actually and reasonably incurred by
him in connection therewith.
SECTION 11.4 Required Standard of Conduct.
(a) Unless a court orders otherwise, any indemnification under Section
11.1 or 11.2 may be made by the Trust only as authorized in the specific case
after a determination that indemnification of the Trustee or officer is proper
in the circumstances because he has met the applicable standard of conduct set
forth in Section 11.1 or 11.2. The determination shall be made by: (i) the
Trustees, by a majority vote of a quorum consisting of Trustees who were not
parties to the action, suit or proceeding; or if the required quorum is not
obtainable, or if a quorum of disinterested Trustees so directs, (ii) an
independent legal counsel in a written opinion.
(b) Nothing contained in this Article XI shall be construed to protect
any Trustee or officer of the Trust against any liability to the Trust or its
Shareholders to which he would otherwise be subject by reason of wilful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his office (any such conduct being hereinafter called
"Disabling Conduct"). No indemnification shall be made pursuant to this Article
XI unless:
(i) There is a final determination on the merits by a court or
other body before whom the action, suit or proceeding was brought that the
individual to be indemnified was not liable by reason of Disabling Conduct; or
(ii) In the absence of such a judicial determination, there is a
reasonable determination, based upon a review of the facts, that such individual
was not liable by reason of Disabling Conduct, which determination shall be made
by:
(A) A majority of a quorum of Trustees who are neither
"interested persons" of the Trust, as defined in section 2(a) (19) of the 1940
Act, nor parties to the action, suit or proceeding; or
(B) An independent legal counsel in a written opinion.
SECTION 11.5 Advance Payments. Notwithstanding any provision of this
Article XI, any advance payment of expenses by the Trust to any Trustee or
officer of the Trust shall be made only upon the undertaking by or on behalf of
such Trustee or officer to repay the advance unless it is ultimately determined
that he is entitled to indemnification as above provided, and only if one of the
following conditions is met:
(a) the Trustee or officer to be indemnified provides a security for his
undertaking; or
(b) The Trust is insured against losses arising by reason of any lawful
advances; or
(c) There is a determination, based on a review of readily available facts,
that there is reason to believe that the Trustee or officer to be indemnified
ultimately will be entitled to indemnification, which determination shall be
made by:
(i) A majority of a quorum of Trustees who are neither "interested persons"
of the Trust, as defined in Section 2(a) (19) of the 1940 Act, nor parties to
the action, suit or proceeding; or
(ii) An independent legal counsel in a written opinion.
SECTION 11.6 Former Trustees and Officers. The indemnification provided
by this Article XI shall continue as to an individual who has ceased to be a
Trustee or officer of the Trust and inure to the benefit of the legal
representatives of such individual and shall not be deemed exclusive of any
other rights to which any Trustee, officer, employee or agent of the Trust may
be entitled under any agreement, vote of Trustees or otherwise, both as to
action in his official capacity and as to action in another capacity while
holding office as such; provided, that no Person may satisfy any right of
indemnity granted herein or to which he may be otherwise entitled, except out of
the Trust Property, and no Shareholder shall be personally liable with respect
to any claim for indemnity.
SECTION 11.7 Insurance. The Trust may purchase and maintain insurance
on behalf of any person who is or was a Trustee, officer, employee, or agent of
the Trust, against any liability asserted against him and incurred by him in any
such capacity, or arising out of his status as such. However, the Trust shall
not purchase insurance to indemnify any Trustee or officer against liability for
any conduct in respect of which the 1940 Act prohibits the Trust itself from
indemnifying him.
SECTION 11.8 Other Rights to Indemnification. The indemnification
provided for herein shall not be deemed exclusive of any other rights to which
those seeking indemnification may be entitled under any By-Law, agreement, vote
of Shareholders or disinterested Trustees or otherwise.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to Trustees, officers and controlling persons of
the Registrant pursuant to the foregoing provisions or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a Trustee, officer, or controlling person of the Registrant in
connection with the successful defense of any action, suit or proceeding) is
asserted by such Trustee, officer or controlling person in connection with the
shares being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
Item 28. Business or Other Connections of Investment Adviser
A. Evergreen Asset Management Corp. ("Evergreen Asset"), the investment adviser
to Registrant's Evergreen Fund series, and Lieber and Company, the sub-adviser
to Registrant's Evergreen Fund series also acts as such to one or more of the
separate investment series offered by The Evergreen Total Return Fund, The
Evergreen Limited Market Fund, Inc., Evergreen Growth and Income Fund, The
Evergreen Money Market Trust, The Evergreen American Retirement Trust, The
Evergreen Municipal Trust, Evergreen Equity Trust and Evergreen Foundation Trust
and Evergreen Variable Trust, all registered investment companies. Stephen A.
Lieber, Chairman and Co-CEO, Theodore J. Israel, Jr., Director and Executive
Vice President and Nola Maddox Falcone, Director, President and Co-CEO, are the
principal executive officers and directors of Evergreen Asset and Lieber and
Company, and were, prior to June 30, 1994, officers and/or directors or trustees
of the Registrant and the other funds for which the Adviser acts as investment
adviser.
B. The Capital Management Group of First Union National Bank of North
Carlolina acts as investment adviser to the Evergreen Aggressive Growth Fund.
The Directors and principal executive officers of FUNB, are set forth in
the following table:
FIRST UNION NATIONAL BANK OF NORTH CAROLINA
BOARD OF DIRECTORS
George E. Battle, Jr. John R. Belk
President of the Board of Senior Vice President
Bishops of AME Zion Church Belk Stores Services, Inc.
South Atlantic Region 2801 W. Tyvola Road
Two First Union Center-Ste 2040 Charlotte, NC 29217-4500
Charlotte, NC 28202
Daniel T. Blue, Jr. Ben Mayo Boddie
Partner Chairman & CEO
Thigpen, Blue, Stephens & Fellers Boddie-Noell Enterprises, Inc.
205 Fayetteville Street Mall P.O. Box 1908
Raleigh, NC 27602 Rocky Mount, NC 27802
Raymond A. Bryan, Jr. John F.A.V. Cecil
Chairman & CEO President
T.A. Loving Company Biltmore Dairy Farms, Inc.
P.O. Drawer 919 P.O. Box 5355
Goldsboro, NC 27530 Asheville, NC 28813
John W. Copeland John Crosland, Jr.
President Chairman of the Board
Ruddick Corporation The Crosland Group, Inc.
2000 Two First Union Center 135 Scaleybark Road
Charlotte, NC 28282 Charlotte, NC 28209
J. William Disher Malcolm E. Everett, III
Chairman & President President & CEO
Lance Incorporated First Union National Bank
P.O. Box 32368 of North Carolina
Charlotte, NC 28232 310 S. Tryon Street
Charlotte, NC 28288-0006
James F. Goodmon Shelton Gorelick
President & Chief President
Executive Officer SGIC, Inc.
Capitol Broadcasting P.O. Box 35229
Company, Inc. Charlotte, NC 28235-5129
P.O. Box 12000
Raleigh, NC 27605
Charles L. Grace James E. S. Hynes
President Chairman
Cummins Atlantic, Inc. Hynes Sales Company, Inc.
P.O. Box 240729 P.O. Box 220948
Charlotte, NC 28224-0729 Charlotte, NC 28222
Mackey J. McDonald Earl N. Phillips, Jr.
President & CEO President
V F Corporation First Factors Corporation
P.O. Box 1022 P.O. Box 2730
Wyomissing, PA 19610 High Point, NC 27261
J. Gregory Poole, Jr. John P. Rostan, III
Chairman & President General Partner
Gregory Poole Equipment Company Heritage Investments, LLP
P.O. Box 469 P.O. Box 970
Raleigh, NC 27602 Valdese, NC 28690
Nelson Schwab, III George Shinn
Managing Director Owner and Chairman
Carousel Capatal Company Shinn Enterprises, Inc.
4201 Congress St., Suite 440 100 Hive Drive
Charlotte, NC 28209 Charlotte, NC 28217
Harley F. Shuford, Jr. Stanley E. Wright
President and CEO Retired President and Chief
Shuford Industries Executive Officer
P.O. Box 608 219 Fayetteville Street Mall
Hickory, NC 28603 Raleigh Federal Savings Bank
Raleigh, NC 27601
FIRST UNION NATIONAL BANK OF NORTH CAROLINA
EXECUTIVE OFFICERS
Edward E. Crutchfield, Chairman & CEO, First Union Corporation
John R. Georgius, Vice Chairman, First Union Corporation
B.J. Walker, Vice Chariman, First Union Corporation
Malcolm E. Everett, President, FUNB of NC
Austin A. Adams, EVP, First Union Corporation
Marion A. Cowell Jr., EVP, First Union Corporation
Robert T. Atwood, EVP & CFO, First Union Corporation
Leigh Bullen, Controller, FUNB of NC
H. Burt Melton, EVP, First Union Corporation
Don R. Johnson, EVP, First Union Corporation
Malcolm T. Murray, EVP, First Union Corporation
Alvin T. Sale, EVP, First Union Corporation
Richard K. Wagoner, EVP, FUNB of NC
James H. Hatch, SVP & Corporate Controller, First Union Corporation
Richard C. Highfield, SVP, First Union Corporation
Ben C. Maffitt, SVP, FUNB of NC
Donald A. McMullen, EVP, FUNB of NC
Kenneth R. Stancliff, SVP, First Union Corporation
Fred Winkler, EVP, FUNB of NC
Peter J. Schild, SVP, First Union Corporation
Betty Trautwein, SVP, FUNB of NC
Alice Lehman, SVP, First Union Corporation
Nina Archer, SVP, FUNB of NC
All of the Executive Officers are located at the following
address: First Union National Bank of North Carolina, One First
Union Center, Charlotte, NC 28288.
For a description of the other business of First Union National Bank of
North Carolina ("FUNB-NC"), which serves as investment adviser to Registrant's
Evergreen Aggressive Growth Fund series, see the section entitled "Investment
Advisers" in Part A.
C. Keystone Investment Management Company acts as investment adviser to
Evergreen Small Cap Value Fund.
The following table lists the names of the various officers and directors of
Evergreen Small Cap Value Fund's investment adfviser, Keystone Investment
Management Company, and their positions. For each named individual, the table
lists, for at least two years, (i) any other organizations (for Keystone
Investment Management Company, excluding investment advisory clients) with which
the officer and/or director has had or has substantial involvement; and (ii)
positions held with such organizations.
LIST OF OFFICERS AND DIRECTORS OF
KEYSTONE INVESTMENT MANAGEMENT COMPANY
</TABLE>
<TABLE>
<CAPTION>
Position with
Keystone
Investment
Name Management Company Other Business Affiliations
- ---- ------------------ ---------------------------
<S> <C> <C>
Albert H. Chairman of Senior Vice President
Elfner, III the Board, First Union Keystone, Inc.
Chief Executive Keystone Asset Corporation
Officer President and Director:
Keystone Trust Company
Director or Trustee:
Evergreen Keystone Investment Services, Inc
Evergreen Keystone Service Company
Boston Children's Services Associates
Middlesex School
Middlebury College
Formerly:
Chairman of the Board,
Chief Executive Officer,
President and Director:
Keystone Management, Inc.
Keystone Software, Inc.
Keystone Capital Corporation
Trustee or Director:
Neworld Bank
Robert Van Partners, Inc.
Fiduciary Investment Company, Inc.
Formerly Chairman of the Board and Director:
Keystone Fixed Income Advisers, Inc.
Keystone Institutional Company, Inc.
Philip M. Byrne Senior Vice Formerly:
President President and Director:
Keystone Institutional Company, Inc.
Formerly Senior Vice President:
Keystone Investments, Inc.
Herbert L. Senior Vice None
Bishop, Jr. President
Donald C. Dates Senior Vice None
President
Gilman Gunn Senior Vice None
President
Edward F. Senior Vice Formerly Senior Vice President,
Godfrey President, Chief Financial Officer and Treasurer:
Chief Financial First Union Keystone, Inc.
Officer and Treasurer Evergreen Keystone Investment Services, Inc.
Formerly:
Treasurer:
Keystone Institutional Company, Inc.
Keystone Management, Inc.
Keystone Software, Inc.
Fiduciary Investment Company, Inc.
Treasurer and Director:
Hartwell Keystone Advisers, Inc.
Rosemary D. Senior Vice
Van Antwerp President,
General Counsel Senior Vice President:
and Secretary Evergreen Keystone Service Company
Senior Vice President and Secretary:
Evergreen Keystone Investment Services, Inc.
Formerly:
Senior Vice President, General Counsel and Secretary:
Keystone Investments, Inc.
Senior Vice President and General Counsel:
Keystone Institutional Company, Inc.
Senior Vice President, General Counsel and Director:
Fiduciary Investment Company, Inc.
Senior Vice President, General Counsel, Director and Secretary:
Keystone Management, Inc.
Keystone Software, Inc.
Senior Vice President and Secretary:
Hartwell Keystone Advisers, Inc.
Vice President and Secretary:
Keystone Fixed Income Advisers, Inc.
J. Kevin Kenely Vice President Vice President:
Evergreen Keystone Investment Services, Inc.
Formerly:
Controller
Keystone Investments, Inc.
Keystone Investment Management Company
Keystone Investment Distributors Company
Keystone Institutional Company, Inc.
Keystone Management, Inc.
Keystone Software, Inc.
Fiduciary Investment Company, Inc.
Vice President:
Keystone Institutional Company, Inc.
Keystone Management, Inc.
Keystone Software, Inc.
Fiduciary Investment Company, Inc.
Keystone Investments, Inc.
John D. Rogol Vice President Vice President and
Controller:
Evergreen Keystone Investment Services, Inc.
Treasurer and Vice President:
Evergreen Keystone Service Company
Controller:
Keystone Asset Corporation
Formerly:
Controller:
Keystone Institutional Company, Inc.
Keystone Management, Inc.
Keystone Software, Inc.
Fiduciary Investment Company, Inc.
Formerly Vice President and Controller:
Keystone Investments, Inc.
John Addeo Vice President None
Andrew Baldassarre Vice President None
David Benhaim Vice President None
Donald Bisson Vice President None
Francis X. Claro Vice President None
Kristine R. Vice President None
Cloyes
Christopher P. Senior Vice None
Conkey President
J. Gary Craven Senior Vice None
President
Richard Cryan Senior Vice None
President
Maureen E. Senior Vice None
Cullinane President
Betsy Hutchings Sr. Vice President None
Walter T. Senior Vice None
McCormick President
George F. Wilkins Senior Vice None
President
George E. Dlugos Vice President None
Antonio T. Docal Vice President None
Dana E. Erikson Vice President None
George J. Kimball Vice President None
JoAnn L. Lyndon Vice President None
John C. Vice President None
Madden, Jr.
Eleanor H. Marsh Vice President None
James D. Medvedeff Vice President None
Stanley M. Niksa Vice President None
Jonathan A. Noonan Vice President None
Robert E. O'Brien Vice President None
Margery C. Parker Vice President None
Joyce W. Petkovich Vice President None
Daniel A. Rabasco Vice President None
Harlen R. Sanderling Vice President None
Kathy K. Wang Vice President None
Judith A. Warners Vice President None
Peter Willis Vice President None
Richard A. Wisentaner Vice President None
Cheryle E. Womble Vice President None
Walter Zagrobski Vice President None
</TABLE>
All of the officers are located at Keystone Investment Management Company,
200 Berkeley Street, Boston, Massachusetts 02116.
Item 29. Principal Underwriters
Evergreen Keystone Distributor, Inc.
The Director and principal executive officers are:
Director Michael C. Petrycki
Officers Robert A. Hering President
Michael C. Petrycki Vice President
Lawrence Wagner VP, Chief Financial Officer
Steven D. Blecher VP, Treasurer, Secretary
Elizabeth Q. Solazzo Assistant Secretary
Evergreen Keystone Distributor, Inc. 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 Limited Market Fund, Inc.
Evergreen Growth and Income Fund
The Evergreen Total Return 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 Short-Intermediate Municipal Fund-CA
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(formerly Evergreen Fixed Income)
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
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
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 Mid-Cap Growth Fund (S-3)
Keystone Small Company Growth Fund (S-4)
Keystone Balanced Fund II
Keystone Capital Preservation and Income Fund
Keystone Fund for Total Return
Keystone Fund of the Americas
Keystone Global Opportunities Fund
Keystone Global Resources and Development Fund
Keystone Government Securities Fund
Keystone America Hartwell Emerging Growth Fund, Inc.
Keystone Institutional Adjustable Rate Fund
Keystone Institutional Trust
Keystone Institutional Small Capitalization Growth Fund
Keystone Intermediate Term Bond Fund
Keystone International Fund Inc.
Keystone Liquid Trust
Keystone Omega Fund
Keystone Precious Metals Holdings, Inc.
Keystone Small Company Growth Fund II
Keystone State Tax Free Fund
Keystone New York Tax Free Fund
Keystone Pennsylvania Tax Free Fund
Keystone Massachusetts Tax Free Fund
Keystone Florida Tax Free Fund
Keystone State Tax Free Fund - Series II
Keystone Missouri Tax Free Fund
Keystone California Tax Free Fund
Keystone Strategic Income Fund
Keystone Tax Free Fund
Keystone Tax Free Income 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 the Registrant's Custodian, State
Street Bank and Trust Company, 2 Heritage Drive, North Quincy, Massachusetts
02171, the offices of Evergreen Asset Management Corp., 2500 Westchester
Avenue, Purchase, New York 10577 or the offices of First Union Keystone, Inc.
200 Berkeley Street, Boston, Massachusetts 02116.
Item 31. Management Services
Not Applicable.
Item 32. Undertakings
Not Applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and
the Investment Company Act of 1940, as amended, the Registrant certifies that it
has duly caused this Post-Effective Amendment No. 33 to the Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in The City of New York, State of New York, on the 19th day of
March, 1997.
EVERGREEN TRUST
/s/ John J. Pileggi
by-----------------------------
John J. Pileggi, President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Post-Effective Amendment No. 33 to the Registration Statement has been
signed below by the following persons in the capacities and on the dates
indicated.
Signatures Title Date
- ----------- ----- ----
/s/John J. Pileggi
- ----------------------- President and March 19, 1997
John J. Pileggi Treasurer
/s/ Laurence B. Ashkin
- ----------------------- Trustee March 19, 1997
Laurence B. Ashkin
by James P. Wallin
Attorney - In - Fact
/s/Foster Bam
- ----------------------- Trustee March 19, 1997
Foster Bam
by James P. Wallin
Attorney - In - Fact
/s/James S. Howell
- ----------------------- Trustee March 19, 1997
James S. Howell
by James P. Wallin
Attorney - In - Fact
/s/Gerald M. McDonnell
- ----------------------- Trustee March 19, 1997
Gerald M. McDonnell
by James P. Wallin
Attorney - In - Fact
/s/Thomas L. McVerry
- ----------------------- Trustee March 19, 1997
Thomas L. McVerry
by James P. Wallin
Attorney - In - Fact
/s/William Walt Pettit
- ----------------------- Trustee March 19, 1997
William Walt Pettit
by James P. Wallin
Attorney - In - Fact
/s/Russell A. Salton, III, M.D
- ------------------------------ Trustee March 19, 1997
Russell A. Salton, III, M.D
by James P. Wallin
Attorney - In - Fact
/s/Michael S. Scofield
- ----------------------- Trustee March 19, 1997
Michael S. Scofield
by James P. Wallin
Attorney - In - Fact
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description Page
5(E) Form of Investment Management and Advisory Agreement
for Evergreen Small Cap Value Fund
6(B) Distribution Agreement for Class A, B and C Shares of
Evergreen Small Cap Value Fund
6(C) Form of Dealer Agreement
7 Deferred Compensation Plan
10 Consent and Opinion of Counsel
11 Consents of Independent
Auditors
15(B) Rule 12b-1 Distribution Plans for the Evergreen Small
Cap Value Fund
18 Multiple Class Plan for the Evergreen Keystone Fund
Group
19 Powers of Attorney
Other Exhibits
<PAGE>
FORM OF
INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT
AGREEMENT made the ___ day of ___________, 1997, by and between EVERGREEN
SMALL CAP VALUE FUND, a Massachusetts business trust (the "Fund"), and KEYSTONE
INVESTMENT MANAGEMENT COMPANY, a Delaware corporation (the "Adviser").
WHEREAS, the Fund and the Adviser wish to enter into an Agreement setting
forth the terms on which the Adviser will perform certain services for the
Fund.
THEREFORE, in consideration of the promises and the mutual agreements
hereinafter contained, the Fund and the Adviser agree as follows:
1. The Fund hereby employs the Adviser to manage and administer the
operation of the Fund, to supervise the provision of services to the Fund by
others, and to manage the investment and reinvestment of the assets of the
Fund in conformity with the Fund's investment objectives and restrictions as
may be set forth from time to time in the Fund's then current prospectus and
statement of additional information, if any, and other governing documents,
all subject to the supervision of the Board of Trustees of the Fund, for the
period and on the terms set forth in this Agreement. The Adviser hereby
accepts such employment and agrees during such period, at its own expense, to
render the services and to assume the obligations set forth herein, for the
compensation provided herein. The Adviser shall for all purposes herein be
deemed to be an independent contractor and shall, unless otherwise expressly
provided or authorized, have no authority to act for or represent the Fund in
any way or otherwise be deemed an agent of the Fund.
2. The Adviser shall place all orders for the purchase and sale of
portfolio securities for the account of the Fund with broker-dealers selected
by the Adviser. In executing portfolio transactions and selecting broker-
dealers, the Adviser will use its best efforts to seek best execution on
behalf of the Fund. In assessing the best execution available for any
transaction, the Adviser shall consider all factors it deems relevant,
including the breadth of the market in the security, the price of the
security, the financial condition and execution capability of the broker-
dealer, and the reasonableness of the commission, if any (all for the specific
transaction and on a continuing basis). In evaluating the best execution
available, and in selecting the broker-dealer to execute a particular
transaction, the Adviser may also consider the brokerage and research services
(as those terms are used in Section 28(e) of the Securities Exchange Act of
1934 (the "1934 Act") provided to the Fund and/or other accounts over which
the Adviser or an affiliate of the Adviser exercises investment discretion.
The Adviser is authorized to pay a broker-dealer who provides such brokerage
and research services a commission for executing a portfolio transaction for
the Fund which is in excess of the amount of commission another broker-dealer
would have charged for effecting that transaction if, but only if, the Adviser
determines in good faith that such commission was reasonable in relation to
the value of the brokerage and research services provided by such broker-
dealer viewed in terms of that particular transaction or in terms of all of
the accounts over which investment discretion is so exercised.
3. The Adviser, at its own expense, shall furnish to the Fund office space
in the offices of the Adviser or in such other place as may be agreed upon by
the parties from time to time, all necessary office facilities, equipment and
personnel in connection with its services hereunder, and shall arrange, if
desired by the Fund, for members of the Adviser's organization to serve
without salaries from the Fund as officers or, as may be agreed from time to
time, as agents of the Fund. The Adviser assumes and shall pay or reimburse
the Fund for: (1) the compensation (if any) of the Trustees of the Fund who
are affiliated with the Adviser or with its affiliates, or with any adviser
retained by the Adviser, and of all officers of the Fund as such, and (2) all
expenses of the Adviser incurred in connection with its services hereunder.
The Fund assumes and shall pay all other expenses of the Fund, including,
without limitation: (1) all charges and expenses of any custodian or
depository appointed by the Fund for the safekeeping of its cash, securities
and other property; (2) all charges and expenses for bookkeeping and auditors;
(3) all charges and expenses of any transfer agents and registrars appointed
by the Fund; (4) all fees of all Trustees of the Fund who are not affiliated
with the Adviser or any of its affiliates, or with any adviser retained by the
Adviser; (5) all brokers' fees, expenses and commissions and issue and
transfer taxes chargeable to the Fund in connection with transactions
involving securities and other property to which the Fund is a party; (6) all
costs and expenses of distribution of its shares incurred pursuant to a Plan
of Distribution adopted under Rule 12b-1 under the Investment Company Act of
1940 ("1940 Act"); (7) all taxes and trust fees payable by the Fund to
Federal, state or other governmental agencies; (8) all costs of certificates
representing shares of the Fund; (9) all fees and expenses involved in
registering and maintaining registrations of the Fund and of its shares with
the Securities and Exchange Commission (the "Commission") and registering or
qualifying its shares under state or other securities laws, including, without
limitation, the preparation and printing of registration statements,
prospectuses and statements of additional information for filing with the
Commission and other authorities; (10) expenses of preparing, printing and
mailing prospectuses and statements of additional information to shareholders
of the Fund; (11) all expenses of shareholders' and Trustees' meetings and of
preparing, printing and mailing notices, reports and proxy materials to
shareholders of the Fund; (12) all charges and expenses of legal counsel for
the Fund and for Trustees of the Fund in connection with legal matters
relating to the Fund, including, without limitation, legal services rendered
in connection with the Fund's existence, trust and financial structure and
relations with its shareholders, registrations and qualifications of
securities under Federal, state and other laws, issues of securities, expenses
which the Fund has herein assumed, whether customary or not, and extraordinary
matters, including, without limitation, any litigation involving the Fund, its
Trustees, officers, employees or agents; (13) all charges and expenses of
filing annual and other reports with the Commission and other authorities; and
(14) all extraordinary expenses and charges of the Fund. In the event that the
Adviser provides any of these services or pays any of these expenses, the Fund
will promptly reimburse the Adviser therefor.
The services of the Adviser to the Fund hereunder are not to be deemed
exclusive, and the Adviser shall be free to render similar services to others.
4. As compensation for the Adviser's services to the Fund during the
period of this Agreement, the Fund will pay to the Adviser a fee at the annual
rate of 0.95% of the aggregate net asset value of the shares of the fund,
computed as of the close of business on each business day.
A pro rata portion of the Fund's fee shall be payable in arrears at the
end of each day or calendar month as the Adviser may from time to time specify
to the Fund. If and when this Agreement terminates, any compensation payable
hereunder for the period ending with the date of such termination shall be
payable upon such termination. Amounts payable hereunder shall be promptly
paid when due.
5. The Adviser may enter into an agreement to retain, at its own expense,
a firm or firms ("SubAdviser") to provide the Fund all of the services to be
provided by the Adviser hereunder, if such agreement is approved as required
by law. Such agreement may delegate to such SubAdviser all of Adviser's
rights, obligations and duties hereunder.
6. The Adviser shall not be liable for any error of judgment or mistake of
law or for any loss suffered by the Fund in connection with the performance of
this Agreement, except a loss resulting from the Adviser's willful
misfeasance, bad faith, gross negligence or from reckless disregard by it of
its obligations and duties under this Agreement. Any person, even though also
an officer, Director, partner, employee, or agent of the Adviser, who may be
or become an officer, Trustee, employee or agent of the Fund, shall be deemed,
when rendering services to the Fund or acting on any business of the Fund
(other than services or business in connection with the Adviser's duties
hereunder), to be rendering such services to or acting solely for the Fund and
not as an officer, Director, partner, employee, or agent or one under the
control or direction of the Adviser even though paid by it. The Fund agrees to
indemnify and hold the Adviser harmless from all taxes, charges, expenses,
assessments, claims and liabilities (including, without limitation,
liabilities arising under the Securities Act of 1933, the 1934 Act, the 1940
Act, and any state and foreign securities and blue sky laws, as amended from
time to time) and expenses, including (without limitation) attorneys' fees and
disbursements, arising directly or indirectly from any action or thing which
the Adviser takes or does or omits to take or do hereunder provided that the
Adviser shall not be indemnified against any liability to the Fund or to its
shareholders (or any expenses incident to such liability) arising out of a
breach of fiduciary duty with respect to the receipt of compensation for
services, willful misfeasance, bad faith, or gross negligence on the part of
the Adviser in the performance of its duties, or from reckless disregard by it
of its obligations and duties under this Agreement.
7. The Fund shall cause its books and accounts to be audited at least once
each year by a reputable independent public accountant or organization of
public accountants who shall render a report to the Fund.
8. Subject to and in accordance with the Declaration of Trust of the Fund,
the Articles of Incorporation of the Adviser and the governing documents of
any SubAdviser, it is understood that Trustees, Directors, officers, agents
and shareholders of the Fund or any Adviser are or may be interested in the
Adviser (or any successor thereof) as Directors and officers of the Adviser or
its affiliates, as stockholders of Keystone Investments, Inc. or otherwise;
that Directors, officers and agents of the Adviser and its affiliates or
stockholders of Keystone Investments, Inc. are or may be interested in the
Fund or any Adviser as Trustees, Directors, officers, shareholders or
otherwise; that the Adviser (or any such successor) is or may be interested in
the Fund or any SubAdviser as shareholder, or otherwise; and that the effect
of any such adverse interests shall be governed by said Declaration of Trust
of the Fund, Articles of Incorporation of the Adviser and governing documents
of any SubAdviser.
9. This Agreement shall continue in effect after December 10, 1998, only
so long as (1) such continuance is specifically approved at least annually by
the Board of Trustees of the Fund or by a vote of a majority of the
outstanding voting securities of the Fund, and (2) such renewal has been
approved by the vote of a majority of Trustees of the Fund who are not
interested persons, as that term is defined in the 1940 Act, of the Adviser or
of the Fund, cast in person at a meeting called for the purpose of voting on
such approval.
10. On sixty days' written notice to the Adviser, this Agreement may be
terminated at any time without the payment of any penalty by the Board of
Trustees of the Fund or by vote of the holders of a majority of the
outstanding voting securities of the Fund; and on sixty days' written notice
to the Fund, this Agreement may be terminated at any time without the payment
of any penalty by the Adviser. This Agreement shall automatically terminate
upon its assignment (as that term is defined in the 1940 Act). Any notice
under this Agreement shall be given in writing, addressed and delivered, or
mailed postage prepaid, to the other party at the main office of such party.
11. This Agreement may be amended at any time by an instrument in writing
executed by both parties hereto or their respective successors, provided that
with regard to amendments of substance such execution by the Fund shall have
been first approved by the vote of the holders of a majority of the
outstanding voting securities of the Fund and by the vote of a majority of
Trustees of the Fund who are not interested persons (as that term is defined
in the 1940 Act) of the Adviser, any predecessor of the Adviser, or of the
Fund, cast in person at a meeting called for the purpose of voting on such
approval. A "majority of the outstanding voting securities of the Fund" shall
have, for all purposes of this Agreement, the meaning provided therefor in the
1940 Act.
12. Any compensation payable to the Adviser hereunder for any period other
than a full year shall be proportionately adjusted.
13. The provisions of this Agreement shall be governed, construed and
enforced in accordance with the laws of The Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
on the day and year first above written.
EVERGREEN SMALL CAP VALUE FUND
By:
--------------------------------------
Name:
Title:
KEYSTONE INVESTMENT MANAGEMENT COMPANY
By:
--------------------------------------
Name:
Title:
DISTRIBUTION AGREEMENT
WHEREAS, The Evergreen Trust (the "Trust"), has adopted one or more Plans
of Distribution with respect to certain Classes of shares of its separate
investment series (each a "Plan", or collectively the "Plans") pursuant to Rule
12b-1 under the Investment Company Act of 1940, as amended (the "1940 Act")
which Plans authorize the Trust on behalf of the Funds to enter into agreements
regarding the distribution of such Classes of shares (the "Shares") of the
separate investment series of the Trust (the "Funds") set forth on Exhibit A;
and
WHEREAS, the Trust has agreed that Evergreen Keystone Distributor, Inc.
(the "Distributor"), a Delaware corporation, shall act as the distributor of the
Shares; and
WHEREAS, the Distributor agrees to act as distributor of the Shares for the
period of this Distribution Agreement (the "Agreement");
NOW, THEREFORE, in consideration of the agreements hereinafter contained,
it is agreed as follows:
1. Services as Distributor
1.1. The Distributor agrees to use appropriate efforts to promote each
Fund and to solicit orders for the purchase of Shares and will undertake such
advertising and promotion as it believes reasonable in connection with such
solicitation The services to be performed hereunder by the Distributor are
described in more detail in Section 7 hereof. . In the event that the Trust
establishes additional investment series with respect to which it desires to
retain Evergreen Funds Distributor, Inc. to act as distributor for one or more
Classes hereunder, it shall promptly notify the Distributor in writing. If the
Distributor is willing to render such services it shall notify the Trust in
writing whereupon such portfolio shall become a Fund and its designated Classes
of shares of beneficial interest shall become Shares hereunder.
1.2. All activities by the Distributor and its agents and employees as
the distributor of Shares shall comply with all applicable laws, rules and
regulations, including, without limitation, all rules and regulations made or
adopted pursuant to the 1940 Act by the Securities and Exchange Commission (the
"Commission") or any securities association registered under the Securities
Exchange Act of 1934, as amended.
1.3 In selling the Shares, the Distributor shall use its best efforts
in all respects duly to conform with the requirements of all Federal and state
laws relating to the sale of such securities. Neither the Distributor, any
selected dealer or any other person is authorized by the Trust to give any
information or to make any representations, other than those contained in the
Trust's registration statement (the "Registration Statement") or related Fund
prospectus and statement of additional information ("Prospectus and Statement of
Additional Information") and any sales literature specifically approved by the
Trust.
1.4 The Distributor shall adopt and follow procedures, as approved by
the officers of the Trust, for the confirmation of sales to investors and
selected dealers, the collection of amounts payable by investors and selected
dealers on such sales, and the cancellation of unsettled transactions, as may be
necessary to comply with the requirements of the National Association of
Securities Dealers, Inc. (the "NASD"), as such requirements may from time to
time exist.
1.5. The Distributor will transmit any orders received by it for
purchase or redemption of Shares to the transfer agent and custodian for the
applicable Fund.
1.6. Whenever in their judgment such action is warranted by unusual
market, economic or political conditions, or by abnormal circumstances of any
kind, the Trust's officers may decline to accept any orders for, or make any
sales of Shares until such time as those officers deem it advisable to accept
such orders and to make such sales.
1.7. The Distributor will act only on its own behalf as principal if it
chooses to enter into selling agreements with selected dealers or others. The
Distributor shall offer and sell Shares only to such selected dealers as are
members, in good standing, of the NASD.
1.8 The Distributor agrees to adopt compliance standards, in a form
satisfactory to the Trust, governing the operation of the multiple class
distribution system under which Shares are offered.
2. Duties of the Trust.
2.1. The Trust agrees at its own expense to execute any and all
documents and to furnish, at its own expense, any and all information and
otherwise to take all actions that may be reasonably necessary in connection
with the qualification of Shares for sale in such states as the Trust and the
Distributor may designate.
2.2. The Trust shall furnish from time to time, for use in connection
with the sale of Shares such information with respect to the Funds and the
Shares as the Distributor may reasonably request; and the Trust warrants that
any such information shall be true and correct. Upon request, the Trust shall
also provide or cause to be provided to the Distributor: (a) unaudited
semi-annual statements of each Fund's books and accounts, (b) quarterly earnings
statements of each Fund, (c) a monthly itemized list of the securities in each
Fund, (d) monthly balance sheets as soon as practicable after the end of each
month, and (e) from time to time such additional. information regarding each
Fund's financial condition as the Distributor may reasonably request.
3. Representations of the Trust.
3.1. The Trust represents to the Distributor that it is registered
under the 1940 Act and that the Shares of each of the Funds have been registered
under the Securities Act of 1933, as amended (the "Securities Act"). The Trust
will file such amendments to its Registration Statement as may be required and
will use its best efforts to ensure that such Registration Statement remains
accurate.
4. Indemnification.
4.1. The Trust shall indemnify and hold harmless the Distributor and
each person, if any, who controls the Distributor within the meaning of Section
15 of the Securities Act against any loss, liability, claim, damage or expense
(including the reasonable cost of investigating or defending any alleged loss,
liability, claim, damage or expense and reasonable counsel fees incurred in
connection therewith), which the Distributor or such controlling person may
incur under the Securities Act or under common law or otherwise, arising out of
or based upon any untrue statement, or alleged untrue statement, of a material
fact contained in the Registration Statement, as from time to time amended or
supplemented, any prospectus or annual or interim report to shareholders of the
Trust, or arising out of or based upon any omission, or alleged omission, to
state a material fact requires to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, unless such statement or omission was made in
reliance upon, and in conformity with, information furnished to the Trust in
connection therewith by or on behalf of the Distributor; provided, however, that
in no case (i) is the indemnity of the Trust in favor of the Distributor and any
such controlling persons to be deemed to protect such Distributor or any such
controlling persons thereof against any liability to the Trust or its security
holders to which the Distributor or any such controlling persons would otherwise
be subject by reason of willful misfeasance, bad faith or gross negligence in
the performance of their duties or by reason of the reckless disregard of their
obligations and duties under this Agreement; or (ii) is the Trust to be liable
under its indemnity agreement contained in this paragraph with respect to any
claim made against the Distributor or any such controlling persons, unless the
Distributor or such controlling persons, as the case maybe, shall have notified
the Trust in writing within a reasonable time after the summons or other first
legal process giving information of the nature of the claim shall have been
served upon the Distributor or such controlling persons (or after the
Distributor or such controlling persons shall have received notice of such
service on any designated agent), but failure to notify the Trust of any such
claim shall not relieve it from any liability which it may have to the person
against whom such action is brought otherwise than on account of its indemnity
agreement contained in this paragraph. The Trust will be entitled to participate
at its own expense in the defense, or, if it so elects, to assume the defense of
any suit brought to enforce any such liability, but if the Trust elects to
assume the defense, such defense shall be conducted by counsel chosen by it and
satisfactory to the Distributor or such controlling person or persons, defendant
or defendants in the suit. In the event the Trust elects to assume the defense
of any such suit and retain such counsel, the Distributor or such controlling
person or persons, defendant or defendants in the suit, shall bear the fees and
expenses of any additional counsel retained by them, but, in case the Trust does
not elect to assume the defense of any such suit, it will reimburse the
Distributor or such controlling person or persons, defendant or- defendants in
the suit, for the reasonable fees and expenses of any counsel retained by them.
The Trust shall promptly notify the Distributor of the commencement of any
litigation or proceed against it or any of its officers or directors in
connection with the issuance or sale of any of the shares.
4.2. The Distributor shall indemnify and hold harmless the Trust and
each of its directors and officers and each person, if any, who controls the
Trust against any loss, liability, claim, damage or expense described in the
foregoing indemnity contained in paragraph 4.1, but only with respect to
statements or omissions made in reliance upon, and in conformity with,
information furnished to the Trust in writing by or on behalf of the Distributor
for use in connection with the Registration Statement, as from time to time
amended, or the annual or interim reports to shareholders. In case any action
shall be brought against the Trust or any persons so indemnified, in respect of
which indemnity may be sought against the Distributor, the Distributor shall
have the rights and duties given to the Trust, and the Trust and each person so
indemnified shall have the rights and duties given to the Distributor by the
provisions of paragraph 4.1.
5. Offering of Shares.
5.1. None of the Shares shall be offered by either the Distributor or
the Trust under any of the provisions of this Agreement, and no orders for the
purchase or sale of Shares hereunder shall be accepted by the Trust, if and so
long as the effectiveness of the registration statement then in effect or any
necessary amendments thereto shall be suspended under any of the provisions of
the Securities Act or if and so long as a current prospectus and statement of
additional information as required by Section 10(b) (2) of the Securities Act,
as amended, is not on file with the Commission; provided, however, that nothing
contained in this paragraph 5.1 shall in any way restrict or have any
application to or bearing upon the Trust's obligation to repurchase Shares from
any shareholder in accordance with the provisions of the prospectus of each Fund
or the Trust's prospectus or Declaration of Trust.
6. Amendments to Registration Statement and Other Material Events.
6.1. The Trust agrees to advise the Distributor as soon as reasonably
practical by a notice in writing delivered to the Distributor: (a) of any
request or action taken by the Commission which is material to the Distributor's
obligations hereunder or (b) any material fact of which the Trust becomes aware
which affects the Distributor's obligations hereunder.
For purposes of this section, informal requests by or acts of
the Staff of the Commission shall not be deemed actions of or requests by the
Commission.
7. Compensation of Distributor.
7.1. (a) As promptly as possible after the first Business Day (as
defined in the Prospectus) of each month this Agreement is in effect, the Trust
shall compensate the Distributor for its distribution services rendered during
the previous month (but not prior to the Commencement Date); by making payment
to the Distributor in the amounts set forth on Exhibit A annexed hereto with
respect to each Class of Shares of each Fund to which this Agreement is
applicable. The compensation by the Trust of the Distributor is authorized
pursuant to the Plan or Plans adopted by the Trust pursuant to Rule 12b-l under
the 1940 Act.
(b) Under this Agreement, the Distributor shall: (i) make
payments to securities dealers and others engaged in the sale of Shares; (ii)
make payments of principal and interest in connection with the financing of
commission payments made by the Distributor in connection with the sale of
Shares (iii) incur the expense of obtaining such support services, telephone
facilities and shareholder services as may reasonably be required in connection
with its duties hereunder; (iv) formulate and implement marketing and
promotional activities, including, but not limited to, direct mail promotions
and television, radio, newspaper, magazine and other mass media advertising; (v)
prepare, print and distribute sales literature; (vi) prepare, print and
distribute Prospectuses of the Funds and reports for recipients other than
existing shareholders of the Funds; and (vii) provide to the Trust such
information, analyses and opinions with respect to marketing and promotional
activities as the Trust may, from time to time, reasonably request.
(c) The Distributor shall prepare and deliver reports to the
Treasurer of the Trust on a regular, at least monthly, basis, showing the
distribution expenditures incurred by the Distributor in connection with its
services rendered pursuant to this Agreement and the Plan and the purposes
therefor, as well as any supplemental reports as the Trustees, from time to
time, may reasonably request.
(d) The Distributor may retain as a sales charge the difference
between the current offering price of Shares, as set forth in the current
prospectus for each Fund, and net asset value, less any reallowance that is
payable in accordance with the sales charge schedule in effect at any given time
with respect to the Shares.
(e) The Distributor may retain any contingent deferred sales
charge ("CDSCs") payable with respect to the redemption of any Shares, provided
however, that any CDSCs received by the Distributor shall first be applied by
the Distributor or its assignee to any outstanding amounts payable or which may
in the future be payable by the Distributor or its assignee under financing
arrangements entered into in connection with the payment of commissions on the
sale of Shares.
(f) The Distributor may sell, assign, pledge or hypothecate its
rights to receive compensation hereunder. The Trust acknowledges that, in
connection with the financing of commission payments made by the Distributor in
connection with the sale of Shares, the Distributor may sell and assign, and/or
has sold and assigned, to Mutual Fund Funding 1994-1 the Distributor's interest
in certain items of compensation payable to the Distributor hereunder, and that
Mutual Fund Funding 1994-1 in turn may pledge or assign, and/or has assigned,
such interest to First Union Corporation as lender to secure such financing. It
is understood that an assignee may not further sell, assign, pledge, or
hypothecate its right to receive such reimbursement unless such sale,
assignment, pledge or hypothecation has been approved by the vote of the Board
of the Trust, including a majority of the Disinterested Trustees, cast in person
at a meeting called for the purpose of voting on such approval.
(g) In addition to the foregoing, and in respect of its services
hereunder and for similar services rendered to other investment companies for
which Evergreen Asset Management Corp. (the "Investment Adviser") serves as
investment adviser, the Investment Adviser may pay to the Distributor an
additional fee to be paid in such amount and manner as the Investment Adviser
and Distributor may agree from time to time.
8. Confidentiality, Non-Exclusive Agency.
8.1. The Distributor agrees on behalf of itself and its employees to
treat confidentially and as proprietary information of the Trust all records and
other information relative to the Funds and its prior, present or potential
shareholders, and not to use such records and information for any purpose other
than performance of its responsibilities and to obtain approval in writing by
the Trust, which approval shall not be unreasonably withheld and may not be
withheld where the Distributor may be exposed to civil or criminal contempt
proceedings for failure to comply, when requested to divulge such information by
duly constituted authorities, or when so requested by the Trust.
8.2. Nothing contained in this Agreement shall prevent the Distributor,
or any affiliated person of the Distributor, from performing services similar to
those to be performed hereunder for any other person, firm, or corporation or
for its or their own accounts or for the accounts of others.
9. Term.
9.1. This Agreement shall continue until June 30, 1995 and thereafter
for successive annual periods, provided such continuance is specifically
approved at least annually by (i) a vote of the majority of the Trustees of the
Trust and (ii) a vote of the majority of those Trustees of the Trust who are not
interested persons of the Trust and who have no direct or indirect financial
interest in the operation of the Plan, in this Agreement or any agreement
related to the Plan (the "Independent Trustees") by vote cast in person at a
meeting called for the purpose of voting on such approval. This Agreement is
terminable at any time, with respect to the Trust, without penalty, (a) on not
less than 60 days' written notice by vote of a majority of the Independent
Trustees, or by vote of the holders of a majority of the outstanding voting
securities of the Trust, or (b) upon not less than 60 days' written notice by
the Distributor. This Agreement may remain in effect with respect to a Fund even
if it has been terminated in accordance with this paragraph with respect to one
or more other Funds of the Trust. This Agreement will also terminate
automatically in the event of its assignment. (As used in this Agreement, the
terms "majority of the outstanding voting securities", "interested persons", and
"assignment" shall have the same meaning as such terms have in the 1940 Act.)
10. Miscellaneous.
10.1. This Agreement shall be governed by the laws of the State
of New York.
10.2. The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their constructions or effect.
10.3 The obligations of the Trust hereunder are not personally binding
upon, nor shall resort be had to the private property of, any of the Trustees,
shareholders, officers, employees or agents of the Trust and only the Trust's
property shall be bound.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the 1st day of January, 1997.
EVERGREEN KEYSTONE DISTRIBUTOR, INC. EVERGREEN TRUST
By: /s/ David Huber By: /s/ John J. Pileggi
Title: David Huber, Vice President Title: John J. Pileggi, President
<PAGE>
EXHIBIT A
To Distribution Agreement between Evergreen Funds Distributor, Inc.
and EVERGREEN TRUST
FUNDS AND CLASSES COVERED BY THIS AGREEMENT:
Evergreen Fund
CLASS A SHARES
CLASS B SHARES
CLASS C SHARES
CLASS Y SHARES
Evergreen Aggressive Growth Fund
CLASS A SHARES
CLASS B SHARES
CLASS C SHARES
CLASS Y SHARES
Evergreen Small Cap Value Fund
CLASS A SHARES
CLASS B SHARES
CLASS C SHARES
CLASS Y SHARES
Distribution Fees
1. During the term of this Agreement, the Trust will pay to the Distributor
a quarterly fee with respect to each of the Funds and Classes of Shares thereof
listed above. This fee will be computed at the annual rate of .25 of 1% of the
average net asset value on an annual basis of Class A Shares of each Fund; and
.75 of 1% of the average net asset value on an annual basis of Class B and Class
C Shares of each Fund.
2. For the quarterly period in which the Agreement becomes effective or
terminates, there shall be an appropriate proration of any fee payable on the
basis of the number of days that the Agreement is in effect during the quarter.
IN WITNESS WHEREOF, the parties hereto have caused this Exhibit A to the
Distribution Agreement between the parties dated January 1, 1997, to be executed
by their officers designated below as of the 1st day of January, 1997.
EVERGREEN KEYSTONE DISTRIBUTOR, INC. EVERGREEN TRUST
By: /s/ David Huber By: /s/ John J. Pileggi
Title: David Huber, Vice President Title: John J. Pileggi, President
- ---------------------
EVERGREEN KEYSTONE
- ---------------------
[logo] FUNDS [logo]
- ---------------------
EVERGREEN KEYSTONE DISTRIBUTOR, INC.
230 PARK AVENUE
NEW YORK, NEW YORK 10169
December 12, 1996
Effective January 1, 1997
To Whom It May Concern:
You currently have a dealer agreement ("Agreement") with Evergreen
Keystone Distributor, Inc. ("Company"). Effective January 1, 1997 the
Agreement is amended and restated in its entirety as set forth below.
The Company, principal underwriter, invites you to participate in the
distribution of shares, including separate classes of shares, ("Shares") of
the Keystone Fund Family, the Keystone America Fund Family, the Evergreen Fund
Family and to the extent applicable their separate investment series
(collectively "Funds" and each individually a "Fund") designated by us which
are currently or hereafter underwritten by the Company, subject to the
following terms:
1. You will offer and sell Shares of the Funds at the public offering price
with respect to the applicable class described in the then current prospectus
and/or statement of additional information ("Prospectus") of the Fund whose
Shares you offer. You will offer Shares only on a forward pricing basis, i.e.
orders for the purchase, repurchase or exchange of Shares accepted by you
prior to the close of the New York Stock Exchange and placed with us the same
day prior to the close of our business day, 5:00 p.m. Eastern Time, shall be
confirmed at the closing price for that business day. You agree to place
orders for Shares only with us and at such closing price. In the event of a
difference between verbal and written price confirmation, the written
confirmations shall be considered final. Prices of a Fund's Shares are
computed by and are subject to withdrawal by each Fund in accordance with its
Prospectus. You agree to place orders with us only through your central order
department unless we accept your written Power of Attorney authorizing others
to place orders on your behalf. This Agreement on your part runs to us and the
respective Fund and is for the benefit and enforceable by each.
2. In the distribution and sale of Shares, you shall not have authority to act
as agent for the Fund, the Company or any other dealer in any respect in such
transactions. All orders are subject to acceptance by us and become effective
only upon confirmation by us. The Company reserves the unqualified right not
to accept any specific order for the purchase or exchange of Shares.
3. In addition to the distribution services provided by you with respect to a
Fund you may be asked to render administrative, account maintenance and other
services as necessary or desirable for shareholders of such Fund ("Shareholder
Services").
4. Notwithstanding anything else contained in this Agreement or in any other
agreement between us, the Company hereby acknowledges and agrees that any
information received from you concerning your customer in the course of this
arrangement is confidential. Except as requested by the customer or as
required by law and except for the respective Fund, its officers, directors,
employees, agents or service providers, the Company will not provide nor
permit access to such information by any person or entity, including any First
Union Corporation bank or First Union Brokerage Services, Inc.
5. So long as this Agreement remains in effect, we will pay you commissions on
sales of Shares of the Funds and service fees for Shareholder Services, in
accordance with the Schedule of Commissions and Service Fees ("Schedule")
attached hereto and made a part hereof, which Schedule may be modified from
time to time or rescinded by us, in either case without prior notice. You have
no vested right to receive any continuing service fees, other fees, or other
commissions which we may elect to pay to you from time to time on Shares
previously sold by you or by any person who is not a broker or dealer actually
engaged in the investment banking or securities business. You will receive
commissions in accordance with the attached Schedule on all purchase
transactions in shareholder accounts (excluding reinvestment of income
dividends and capital gains distributions) for which you are designated as
Dealer of Record except where we determine that any such purchase was made
with the proceeds of a redemption or repurchase of Shares of the same Fund or
another Fund, whether or not the transaction constitutes the exercise of the
exchange privilege. Commissions will be paid to you twice a month. You will
receive service fees for shareholder accounts for which you are designated
Dealer of Record as provided in the Schedule. You hereby represent that
receipt of such service fees by you will be disclosed to your customers.
You hereby authorize us to act as your agent in connection with all
transactions in shareholder accounts in which you are designated as Dealer of
Record. All designations of Dealer of Record and all authorizations of the
Company to act as your agent shall cease upon the termination of this
Agreement or upon the shareholder's instruction to transfer his or her account
to another Dealer of Record.
6. Payment for all Shares purchased from us shall be made to the Company and
shall be received by the Company within three business days after the
acceptance of your order or such shorter time as may be required by law. If
such payment is not received by us, we reserve the right, without prior
notice, forthwith to cancel the sale, or, at our option, to sell such Shares
back to the respective Fund in which case we may hold you responsible for any
loss, including loss of profit, suffered by us or by such Fund resulting from
your failure to make payment as aforesaid.
7. You agree to purchase Shares of the Funds only from us or from your
customers. If you purchase Shares from us, you agree that all such purchases
shall be made only to cover orders already received by you from your
customers, or for your own bonafide investment without a view to resale. If
you purchase Shares from your customers, you agree to pay such customers the
applicable net asset value per Share less any contingent deferred sales charge
("CDSC") that would be applicable under the Prospectus ("repurchase price").
8. You will sell Shares only (a) to your customers at the prices described in
paragraph 2 above; or (b) to us as agent for a Fund at the repurchase
price. In such a sale to us, you may act either as principal for your own
account or as agent for your customer. If you act as principal for your own
account in purchasing Shares for resale to us, you agree to pay your
customer not less nor more than the repurchase price which you receive from
us. If you act as agent for your customer in selling Shares to us, you
agree not to charge your customer more than a fair commission for handling
the transaction. You shall not withhold placing with us orders received
from your customers so as to profit yourself as a result of such
withholding.
10. We will not accept from you any conditional orders for Shares.
11. If any Shares sold to you under the terms of this Agreement are
repurchased by a Fund, or are tendered for redemption, within seven business
days after the date of our confirmation of the original purchase by you, it is
agreed that you shall forfeit your right to any commissions on such sales even
though the shareholder may be charged a CDSC by the Fund.
We will notify you of any such repurchase or redemption within the next
ten business days after the date on which the certificate or written request
for redemption is delivered to us or to the Fund, and you shall forthwith
refund to us the full amount of any commission you received on such sale. We
agree, in the event of any such repurchase or redemption, to refund to the
Fund any commission we retained on such sale and, upon receipt from you of the
commissions paid to you, to pay such commissions forthwith to the Fund.
12. Shares sold to you hereunder shall not be issued until payment has been
received by the Fund concerned. If transfer instructions are not received from
you within 15 days after our acceptance of your order, the Company reserves
the right to instruct the transfer agent for the Fund concerned to register
Shares sold to you in your name and notify you of such. You agree to hold
harmless and indemnify the Company, the Fund and its transfer agent for any
loss or expense resulting from such registration.
13. You agree to comply with any compliance standards that may be furnished to
you by us regarding when each class of Shares of a Fund may appropriately be
sold to particular customers.
14. No person is authorized to make any representations concerning Shares of a
Fund except those contained in the Prospectus and in sales literature issued
by us supplemental to such Prospectus. In purchasing Shares from us you shall
rely solely on the representations contained in the appropriate Prospectus and
in such sales literature. We will furnish additional copies of such
Prospectuses and sales literature and other releases and information issued by
us in reasonable quantities upon request. You agree that you will in all
respects duly conform with all laws and regulations applicable to the sales of
Shares of the Funds and will indemnify and hold harmless the Funds, their
directors and trustees and the Company from any damage or expenses on account
of any wrongful act by you, your representatives, agents or sub-agents in
connection with any orders or solicitation or orders of Shares of the Funds by
you, your representatives, agents or sub-agents.
15. Each party hereto represents that it is (1) a member of the National
Association of Securities Dealers, Inc., and agrees to notify the other should
it cease to be a member of such Association and agrees to the automatic
termination of this Agreement at that time or (2) excluded from the definition
of broker-dealer under the Securities Exchange Act of 1934. It is further
agreed that all rules or regulations of the Association now in effect or
hereafter adopted, including its Business Conduct Rule 2830(d), which are
binding upon underwriters and dealers in the distribution of the securities of
open-end investment companies, shall be deemed to be a part of this Agreement
to the same extent as if set forth in full herein.
16. You will not offer the Funds for sale in any State where they are not
qualified for sale under the blue sky laws and regulations of such State or
where you are not qualified to act as a dealer except for States in which they
are exempt from qualification.
17. This Agreement supersedes and cancels any prior agreement with respect to
the sales of Shares of any of the Funds underwritten by the Company. The
Agreement may be amended by us at any time upon written notice to you.
18. This amendment to the Agreement shall be effective on January 1, 1997 and
all sales hereunder are to be made, and title to Shares of the Funds shall
pass in The Commonwealth of Massachusetts. This Agreement shall be interpreted
in accordance with the laws of The Commonwealth of Massachusetts.
19. All communications to the Company should be sent to the above address. Any
notice to you shall be duly given if mailed or telegraphed to you at the
addressed specified by you.
20. Either part may terminate this Agreement at any time by written notice to
the other party.
- --------------------------- EVERGREEN KEYSTONE DISTRIBUTOR, INC.
Dealer or Broker Name
- --------------------------- /s/ Robert A. Hering
Address
ROBERT A. HERING, President
<PAGE>
- ---------------------
EVERGREEN KEYSTONE
- ---------------------
[logo] FUNDS [logo]
- ---------------------
EVERGREEN KEYSTONE DISTRIBUTOR, INC. ROBERT A. HERING
230 PARK AVENUE President
NEW YORK, NEW YORK 10169
December 12, 1996
Effective January 1, 1997
Dear Financial Professional:
This Schedule of Commissions and Service Fees ("Schedule") supersedes any
previous Schedules, is hereby made part of our dealer agreement ("Agreement")
with you effective January 1, 1997 and will remain in effect until modified or
rescinded by us. Capitalized terms used in this Schedule and not defined
herein have the same meaning as such terms have in the Agreement. All
commission rates and service fee rates set forth in this Schedule may be
modified by us from time to time without prior notice.
I. KEYSTONE FUNDS
KEYSTONE QUALITY BOND FUND (B-1) KEYSTONE MID-CAP GROWTH FUND (S-3)
KEYSTONE DIVERSIFIED BOND FUND (B-2) KEYSTONE SMALL COMPANY GROWTH FUND (S-4)
KEYSTONE HIGH INCOME BOND FUND (B-4) KEYSTONE INTERNATIONAL FUND INC.
KEYSTONE BALANCED FUND (K-1) KEYSTONE PRECIOUS METALS HOLDINGS, INC.
KEYSTONE STRATEGIC GROWTH FUND (K-2) KEYSTONE TAX FREE FUND
KEYSTONE GROWTH AND INCOME FUND (S-1) (COLLECTIVELY "KEYSTONE FUNDS")
1. COMMISSIONS FOR THE KEYSTONE FUNDS (OTHER THAN KEYSTONE PRECIOUS METALS
HOLDINGS, INC.)
Except as otherwise provided in our Agreement, we will pay you commissions
on your sales of Shares of such Keystone Funds rtds d such er tv amrr
rdKeystone Fundat the rate of 4.0% of the aggregate public offering price of
such Shares as described in the Fund's Prospectus ("Offering Price") when sold
in an eligible sale.
2. COMMISSIONS FOR KEYSTONE PRECIOUS METALS HOLDINGS, INC.
Except as otherwise provided for in our Agreement, we will pay you
commissions on your sale of Shares of Keystone Precious Metals Holdings, Inc.
as the rate of the Offering Price when sold in an eligible sale as follows:
AMOUNT OF PURCHASE COMMISSION AMOUNT OF PURCHASE COMMISSION
Less than $100,000 4% $250,000-$499,999 1%
$100,000-$249,999 2% $500,000 and above 0.5%
3. SERVICE FEES
We will pay you service fees based on the aggregate net asset value of
Shares of the Keystone Funds (other than Keystone Precious Metals Holdings,
Inc.) you have sold on or after June 1, 1983 and of Keystone Precious Metals
Holdings, Inc. you have sold on or after November 19, 1984, which remain
issued and outstanding on the books of such Funds on the fifteenth day of the
third month of each calendar quarter (March 15, June 15, September 15 and
December 15, each hereinafter a "Service Fee Record Date") and which are
registered in the names of customers for whom you are dealer of record
("Eligible Shares"). Such service fees will be calculated quarterly at the
rate of 0.0625% per quarter of the aggregate net asset value of all such
Eligible Shares (approximately 0.25% annually) on the Service Fee Record Date;
provided, however, that in any calendar quarter in which service fees earned
by you on Eligible Shares of all Funds (except Keystone Liquid Trust Class A
Shares) are less than $50.00 in the aggregate, no service fees will be paid to
you nor will such amounts be carried over for payment in a future quarter.
Service fees will be payable within five business days after the Service Fee
Record Date. Service fees will only be paid by us to the extent that such
amounts have been paid to us by the Funds.
4. PROMOTIONAL INCENTIVES
We may, from time to time, provide promotional incentives, including
reallowance and/or payment of additional commissions to certain dealers. Such
incentives may, at our discretion, be limited to dealers who allow their
individual selling representatives to participate in such additional
commissions.
<TABLE>
<CAPTION>
II. KEYSTONE AMERICA FUNDS AND EVERGREEN FUNDS
KEYSTONE AMERICA FUNDS
<S> <C>
KEYSTONE GOVERNMENT SECURITIES FUND KEYSTONE OMEGA FUND
KEYSTONE STATE TAX FREE FUND KEYSTONE SMALL COMPANY GROWTH FUND - II
KEYSTONE STATE TAX FREE FUND - SERIES II KEYSTONE FUND FOR TOTAL RETURN
KEYSTONE STRATEGIC INCOME FUND KEYSTONE BALANCED FUND - II
KEYSTONE TAX FREE INCOME FUND (COLLECTIVELY "KEYSTONE EQUITY AND LONG TERM INCOME FUNDS")
KEYSTONE WORLD BOND FUND KEYSTONE CAPITAL PRESERVATION AND INCOME FUND
KEYSTONE FUND OF THE AMERICAS KEYSTONE INTERMEDIATE TERM BOND FUND
KEYSTONE GLOBAL OPPORTUNITIES FUND (COLLECTIVELY "KEYSTONE INTERMEDIATE INCOME FUNDS")
KEYSTONE AMERICA HARTWELL EMERGING GROWTH FUND, INC. KEYSTONE LIQUID TRUST
KEYSTONE GLOBAL RESOURCES AND DEVELOPMENT FUND
EVERGREEN FUNDS
EVERGREEN U.S. GOVERNMENT FUND EVERGREEN AMERICAN RETIREMENT FUND
EVERGREEN HIGH GRADE TAX FREE FUND EVERGREEN FOUNDATION FUND
EVERGREEN FLORIDA MUNICIPAL BOND FUND EVERGREEN TAX STRATEGIC FOUNDATION FUND
EVERGREEN GEORGIA MUNICIPAL BOND FUND EVERGREEN UTILITY FUND
EVERGREEN NEW JERSEY MUNICIPAL BOND FUND EVERGREEN TOTAL RETURN FUND
EVERGREEN NORTH CAROLINA MUNICIPAL BOND FUND EVERGREEN SMALL CAP EQUITY INCOME FUND
EVERGREEN SOUTH CAROLINA MUNICIPAL BOND FUND (COLLECTIVELY "EVERGREEN EQUITY AND LONG TERM INCOME FUNDS")
EVERGREEN VIRGINIA MUNICIPAL BOND FUND
EVERGREEN FLORIDA HIGH INCOME MUNICIPAL BOND FUND EVERGREEN MONEY MARKET FUND
EVERGREEN FUND EVERGREEN TAX EXEMPT MONEY MARKET FUND
EVERGREEN U.S. REAL ESTATE EQUITY FUND EVERGREEN TREASURY MONEY MARKET FUND
EVERGREEN LIMITED MARKET FUND EVERGREEN PENNSYLVANIA TAX FREE MONEY MARKET FUND
EVERGREEN AGGRESSIVE GROWTH FUND (COLLECTIVELY "EVERGREEN MONEY MARKET FUNDS")
EVERGREEN INTERNATIONAL EQUITY FUND EVERGREEN SHORT-INTERMEDIATE BOND FUND
EVERGREEN GLOBAL LEADERS FUND EVERGREEN INTERMEDIATE-TERM BOND FUND
EVERGREEN EMERGING MARKETS FUND EVERGREEN INTERMEDIATE-TERM GOVERNMENT SECURITIES FUND
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND
EVERGREEN BALANCED FUND EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND -- CALIFORNIA
EVERGREEN GROWTH & INCOME FUND (COLLECTIVELY "EVERGREEN INTERMEDIATE INCOME AND
EVERGREEN VALUE FUND MONEY MARKET FUNDS")
</TABLE>
A. CLASS A SHARES
1. COMMISSIONS
Except as otherwise provided in our Agreement, in paragraph 2 below or in
connection with certain types of purchases at net asset value which are
described in the Prospectuses for the Keystone America Funds and the Evergreen
Funds, we will pay you commissions on your sales of Shares of such Funds in
accordance with the following sales charge schedules* on sales where we
receive a commission from the shareholder:
KEYSTONE AMERICA AND EVERGREEN EQUITY AND LONG TERM INCOME FUNDS
SALES CHARGE AS COMMISSION AS
AMOUNT OF A PERCENTAGE OF A PERCENTAGE OF
PURCHASE OFFERING PRICE OFFERING PRICE
Less than $50,000 4.75% 4.25%
$50,000-$99,999 4.50% 4.25%
$100,000-$249,999 3.75% 3.25%
$250,000-$499,999 2.50% 2.00%
$500,000-$999,999 2.00% 1.75%
Over $1,000,000 None See paragraph 2
KEYSTONE AMERICA AND EVERGREEN INTERMEDIATE INCOME FUNDS
SALES CHARGE AS COMMISSION AS
AMOUNT OF A PERCENTAGE OF A PERCENTAGE OF
PURCHASE OFFERING PRICE OFFERING PRICE
Less than $50,000 3.25% 2.75%
$50,000-$99,999 3.00% 2.75%
$100,000-$249,999 2.50% 2.25%
$250,000-$499,999 2.00% 1.75%
$500,000-$999,999 1.50% 1.25%
Over $1,000,000 None See paragraph 2
KEYSTONE LIQUID TRUST AND EVERGREEN MONEY MARKET FUNDS
No sales charge for any amount of purchase.
2. COMMISSIONS FOR CERTAIN TYPES OF PURCHASES
With respect to (a) purchases of Class A Shares in the amount of $1 million
or more and/or (b) purchases of Class A Shares made by a corporate or certain
other qualified retirement plan or a non-qualified deferred compensation plan
or a Title I tax sheltered annuity or TSA Plan sponsored by an organization
having 100 or more eligible employees (a "Qualifying Plan"), (each such
purchase a "NAV Purchase"), we will pay you commissions as follows:
<TABLE>
<CAPTION>
a. Purchases described in 2(a) above
AMOUNT OF COMMISSION AS A PERCENTAGE
PURCHASE OF OFFERING PRICE
<S> <C>
$1,000,000-$2,999,999 1.00% of the first $2,999,999, plus
$3,000,000-$4,999,999 0.50% of the next $2,000,000, plus
$5,000,000 0.25% of amounts equal to or over $5,000,000
b. Purchases described in 2(b) above .50% of amount of purchase (subject to recapture
upon early redemption)
</TABLE>
* These sales charge schedules apply to purchases made at one time or pursuant
to Rights of Accumulation or Letters of Intent. Any purchase which is made
pursuant to Rights of Accumulation or Letter of Intent is subject to the
terms described in the Prospectus(es) for the Fund(s) whose Shares are being
purchased.
3. PROMOTIONAL INCENTIVES
We may, from time to time, provide promotional incentives, including
reallowance and/or payment of up to the entire sales charge to certain
dealers. Such incentives may, at our discretion, be limited to dealers who
allow their individual selling representatives to participate in such
additional commissions.
4. SERVICE FEES FOR EVERGREEN FUNDS (OTHER THAN EVERGREEN MONEY MARKET FUNDS)
AND KEYSTONE AMERICA FUNDS (OTHER THAN KEYSTONE STATE TAX FREE FUND,
KEYSTONE STATE TAX FREE FUND - SERIES II, KEYSTONE CAPITAL PRESERVATION AND
INCOME FUND AND KEYSTONE LIQUID TRUST)
a. Keystone America Funds Only. Until March 31, 1997, we will pay you
service fees based on the aggregate net asset value of Shares of such Funds
you have sold which remain issued and outstanding on the books of such Funds
on the fifteenth day of the third month of each calendar quarter (March 15,
June 15, September 15 and December 15, each hereinafter a "Service Fee Record
Date") and which are registered in the names of customers for whom you are
dealer of record ("Eligible Shares"). Such service fees will be calculated
quarterly at the rate of 0.0625% per quarter of the aggregate net asset value
of all such Eligible Shares (approximately 0.25% annually) on the Service Fee
Record Date; provided, however, that in any calendar quarter in which total
service fees earned by you on Eligible Shares of all Keystone Funds (except
Keystone Liquid Trust Class A Shares) are less than $50.00 in the aggregate,
no service fees will be paid to you nor will such amounts be carried over for
payment in a future quarter. Service fees will be paid within five days after
the Service Fee Record Date. Service fees will only be paid by us to the
extent that such amounts have been paid to us by the Funds.
b. Evergreen Funds and Keystone America Funds (after March 31, 1997). We
will pay you service fees based on the average daily net asset value of Shares
of such Funds you have sold which are issued and outstanding on the books of
such Funds during each calendar quarter and which are registered in the names
of customers for whom you are dealer of record ("Eligible Shares"). Such
service fees will be calculated quarterly at the rate of 0.0625% per quarter
of the daily average net asset value of all such Eligible Shares
(approximately 0.25% annually) during such quarter; provided, however, that in
any calendar quarter in which total service fees earned by you on Eligible
Shares of all Funds (except Keystone Liquid Trust Class A Shares) are less
than $50.00 in the aggregate, no service fees will be paid to you nor will
such amounts be carried over for payment in a future quarter. Service fees
will be paid by the twentieth day of the month before the end of the
respective quarter. Service fees will only be paid by us to the extent that
such amounts have been paid to us by the Funds.
5. SERVICE FEES FOR KEYSTONE STATE TAX FREE FUND AND KEYSTONE STATE TAX FREE
FUND - SERIES II
a. Until March 31, 1997, we will pay you service fees based on the aggregate
net asset value of Shares of such Funds you have sold which remain issued and
outstanding on the books of the Funds on the fifteenth day of the third month
of each calendar quarter (March 15, June 15, September 15 and December 15,
each hereinafter a "Service Fee Record Date") and which are registered in the
names of customers for whom you are dealer of record ("Eligible Shares"). Such
service fees will be calculated quarterly at the rate of 0.0375% per quarter
of the aggregate net asset value of all such Eligible Shares (approximately
0.15% annually) on the Service Fee Record Date; provided, however, that in any
calendar quarter in which total service fees earned by you on Eligible Shares
of all Funds (except Keystone Liquid Trust Class A Shares) are less than
$50.00 in the aggregate, no service fees will be paid to you nor will such
amounts be carried over for payment in a future quarter. Service fees will be
paid within five days after the Service Fee Record Date. Service fees will
only be paid by us to the extent that such amounts have been paid to us by the
Funds.
b. After March 31, 1997 we will pay you service fees calculated as provided
in section II (A)(4)(b) except that the quarterly rate will be 0.0375%
(approximately 0.15% annually).
c. After June 30, 1997, we will pay you service fees calculated as provided
in section II (A)(4)(b) above on Shares sold on or after July 1, 1997.
6. SERVICE FEES FOR KEYSTONE CAPITAL PRESERVATION AND INCOME FUND
a. Until March 31, 1997, we will pay you service fees calculated as provided
in section II (A)(4)(a) except that for Eligible Shares sold after January 1,
1997 the quarterly rate will be 0.025% (approximately 0.10% annually).
b. After March 31, 1997 we will pay you service fees calculated as provided
in section II (A)(4)(b) except that for Eligible Shares sold after January 1,
1997 the quarterly rate will be 0.025% (approximately 0.10% annually).
7. SERVICE FEES FOR KEYSTONE LIQUID TRUST
We will pay you service fees based on the aggregate net asset value of all
Shares of such Fund you have sold which remain issued and outstanding on the
books on the Fund on the fifteenth day of the third month of each calendar
quarter (March 15, June 15, September 15 and December 15, each hereinafter a
"Service Fee Record Date") and which are registered in the names of customers
for whom you are dealer of record ("Eligible Shares"). Such service fees will
be calculated at the rates set forth below and based on the aggregate net
asset value of all such Eligible Shares on the Service Fee Record Date;
provided, however, that no such service fees will be paid to you for any
quarter if the aggregate net asset value of such Eligible Shares on the last
business day of the quarter is less than $2 million; and provided further,
however, that service fees will only be paid to us to the extent that such
amounts have been paid to us by the Fund. Service fees will be paid within 5
days after the Service Fee Record Date. The quarterly rates at which such
service fees are payable and the net asset value to which such rates will be
applied are set forth below:
ANNUAL QUARTERLY AGGREGATE NET ASSET
RATE PAYMENT RATE VALUE OF SHARES
0.00000% 0.00000% of the first $1,999,999, plus
0.15000% 0.03750% of the next $8,000,000, plus
0.20000% 0.05000% of the next $15,000,000, plus
0.25000% 0.06250% of the next $25,000,000, plus
0.30000% 0.07500% of amounts over $50,000,000
8. SERVICE FEES FOR EVERGREEN MONEY MARKET FUNDS
We will pay you service fees calculated as provided in section II (A)(4)(b)
except that the quarterly rate will be 0.075% (approximately 0.30% annually.)
<PAGE>
B. CLASS B SHARES
ALL KEYSTONE AMERICA AND EVERGREEN FUNDS
1. COMMISSIONS
Except as otherwise provided in our Agreement, we will pay you commissions
on your sales of Class B Shares of the Keystone America Funds and the
Evergreen Funds at the rate of 4.00% of the aggregate Offering Price of such
Shares, when sold in an eligible sale.
2. PROMOTIONAL INCENTIVES
We may, from time to time, provide promotional incentives, including
reallowance and/or payment of additional commissions, to certain dealers. Such
incentives may, at our discretion, be limited to dealers who allow their
individual selling representatives to participate in such additional
commissions.
3. SERVICE FEES FOR EVERGREEN FUNDS AND KEYSTONE AMERICA FUNDS (OTHER THAN
KEYSTONE STATE TAX FREE FUND AND KEYSTONE STATE TAX FREE FUND - SERIES II)
a. Keystone America Funds - Until March 31, 1997, we will pay you service
fees calculated as provided in section II (A)(4)(a) above.
b. Evergreen Funds and Keystone America Funds (after March 31. 1997). We
will pay you service fees calculated as provided in section II (A)(4)(b)
above.
4. SERVICE FEES FOR KEYSTONE STATE TAX FREE FUND AND KEYSTONE STATE TAX FREE
FUND - SERIES II
a. Until March 31, 1997, we will pay you service fees calculated as provided
in section II (A)(5)(a) above.
b. After March 31, 1997, we will pay you service fees calculated as provided
in section II (A)(5)(b) above.
c. After June 30, 1997, we will pay you service fees calculated as provided
in section II (A)(5)(c) above.
C. CLASS C SHARES
ALL KEYSTONE AMERICA AND EVERGREEN FUNDS
1. COMMISSIONS
Except as provided in our Agreement, we will pay you initial commissions on
your sales of Class C Shares of the Keystone America and the Evergreen Funds
at the rate of 0.75% of the aggregate Offering Price of such Shares sold in
each eligible sale.
We will also pay you commissions based on the average daily net asset value
of Shares of such Funds you have sold which have been on the books of the
Funds for a minimum of 14 months from the date of purchase (plus any
reinvested distributions attributable to such Shares), which have been issued
and outstanding on the books of such Funds during the calendar quarter and
which are registered in the names of customers for whom you are dealer of
record ("Eligible Shares"). Such commissions will be calculated quarterly at
the rate of 0.1875% per quarter of the average daily net asset value of all
such Eligible Shares (approximately 0.75% annually) during such quarter. Such
commissions will be paid by the twentieth day of the month before the end of
the respective quarter. Such commissions will continue to be paid to you
quarterly so long as aggregate payments do not exceed applicable NASD
limitations and other governing regulations.
2. SERVICE FEES
We will pay you a full year's service fee in advance on your sales of Class
C Shares of such Funds at the rate of 0.25% of the aggregate net asset value
of such Shares.
We will pay you service fees based on the average daily net asset value of
Shares of such Funds you have sold which have been on the books of the Funds
for a minimum of 14 months from the date of purchase (plus any reinvested
distributions attributable to such Shares), which have been issued and
outstanding during the respective quarter and which are registered in the
names of customers for whom you are the dealer of record ("Eligible Shares").
Such service fees will be calculated quarterly at the rate of 0.0625% per
quarter of the average daily net asset value of all such Eligible Shares
(approximately 0.25% annually); provided, however, that in any calendar
quarter in which total service fees earned by you on Eligible Shares of Funds
(except Keystone Liquid Trust Class A Shares) are less than $50.00 in the
aggregate, no service fees will be paid to you nor will such amounts be
carried over for payment in a future quarter. Service fees will be paid by the
twentieth day of the month before the end of the respective quarter. Service
fees other than those paid in advance will only be paid by us to the extent
that such amounts have been paid to us by the Funds.
THE EVERGREEN FUNDS
DEFERRED COMPENSATION PLAN
AGREEMENT, made on this ___ day of ___________, 1995, by and
between the registered open-end investment companies listed in
Attachment A hereto (each a "Fund" and together, the "Funds"), and
___________ (the "Trustee").
WHEREAS, the Trustee is serving as a director/trustee of the
Funds for which he is entitled to receive trustees' fees; and
WHEREAS, the Funds and the Trustee desire to permit the
Trustee to defer receipt of trustees' fees payable by the Funds;
NOW, THEREFORE, in consideration of the mutual covenants and
obligations set forth in this Agreement, the Funds and the Trustee
hereby agree as follows:
1. DEFINITION OF TERMS AND CONDITIONS
1.1 Definitions. Unless a different meaning is plainly implied
by the context, the following terms as used in this Agreement shall
have the meanings specified below:
(a) "Beneficiary" shall mean such person or persons
designated pursuant to Section 4.3 hereof to receive benefits after
the death of the Trustee.
(b) "Board of Trustees" shall mean the Board of
Trustees or the Board of Directors of a Fund.
(c) "Code" shall mean the Internal Revenue Code of
1986, as amended from time to time, or any successor statute.
(d) "Compensation" shall mean the amount of trustees'
fees paid by a Fund to the Trustee during a Deferral Year prior to
reduction for Compensation Deferrals made under this Agreement.
(e) "Compensation Deferral" shall mean the amount or
amounts of the Trustee's Compensation deferred under the provisions
of Section 3 of this Agreement.
(f) "Deferral Account" shall mean the account
maintained to reflect the Trustee's Compensation Deferrals made
pursuant to Section 3 hereof and any other credits or debits thereto.
(g) "Deferral-Year" shall mean each calendar year
during which the Trustee makes, or is entitled to make, Compensation
Deferrals under Section 3 hereof.
(h) "Valuation Date" shall mean the last business day
of each calendar year and any other day upon which a Fund makes a
valuation of the Deferred Account.
1.2 Plurals and Gender. Where appearing in this Agreement the
singular shall include the plural and the masculine shall include the
feminine, and vice versa, unless the context clearly indicates a
different meaning.
1.3 Trustees and Directors. Where appearing in this Agreement,
"Trustee" shall also refer to "Director" and trustee emeritus and
director emeritus and "Board of Trustees" shall also refer to "Board of
Directors."
1.4 Headings. The headings and subheadings in this Agreement are
inserted for the convenience of reference only and are to be ignored in
any construction of the provisions hereof.
1.5 Separate Agreement for Each Fund. This Agreement is
drafted, and shall be construed, as a separate agreement between the
Trustee and each of the Funds.
2. PERIOD DURING WHICH COMPENSATION DEFERRALS ARE PERMITTED
2.1 Commencement of Compensation Deferrals. The Trustee may elect,
on a form provided by, and submitted to, the Secretary of a Fund, to
commence Compensation Deferrals under Section 3 hereof for the period
beginning on the later of (i) the date this Agreement is executed or
(ii) the date such form is submitted to the Secretary of the Fund.
2.2 Termination of Deferrals. The Trustee shall not be eligible to
make Compensation Deferrals after the earlier of the following dates:
(a) The date on which he ceases to serve as a Trustee of
the Fund; or
(b) The effective date of the termination of this
Agreement.
3. COMPENSATION DEFERRALS
3. Compensation Deferral Elections.
(a) Except as provided below, a deferral election on the form
described in Section 2.1 hereof, must be filed with the Secretary of a
Fund prior to the first day of the Deferral Year to which it applies.
The form shall set forth the amount of such Compensation Deferral (in
whole percentage amounts) . Such election shall continue in effect for
all subsequent Deferral Years unless it is canceled or modified as
provided below. Notwithstanding the foregoing, (i) any person who is
elected to the Board during a fiscal year of a Fund may elect before
becoming a Trustee or within 30 days after becoming a Trustee to defer
any unpaid portion of the retainer of such fiscal year and the fees for
any future meetings during such fiscal year by filing an election form
with the Secretary of the Fund, and (ii) Trustees may elect to defer any
unpaid portion of the retainer for the fiscal year in which Deferred
Compensation Agreements are first authorized by the Board and any unpaid
fees for any future meetings during such fiscal year by submitting an
election form to the Secretary of a Fund within 30 days of such
authorization.
(b) Compensation Deferrals shall be withheld from each
payment of Compensation by a Fund to the Trustee based upon the
percentage amount elected by the Trustee under Section 3.1 (a) hereof.
(c) The Trustee may cancel or modify the amount of his
Compensation Deferrals on a prospective basis by submitting to the
Secretary of a Fund a revised compensation Deferral election form.
Subject to the provisions of Section 4.2 hereof, such change will be
effective as of the first day of the Deferral Year following the date
such revision is submitted to the Secretary of the Fund.
3.2 Valuation of Deferral Account.
(a) A Fund shall establish a bookkeeping Deferral Account to
which will be credited an amount equal to the Trustee's Compensation
Deferrals under this Agreement. Compensation Deferrals shall be
allocated to the Deferral Account on the day such Compensation
Deferrals are withheld from the Trustee's Compensation and shall be
deemed invested pursuant to Section 3.3, below, as of the same day. The
Deferral Account shall be debited to reflect any distributions from
such Account. Such debits shall be allocated to the Deferral Account as
of the date such distributions are made.
(b) As of each Valuation Date, income, gain and loss
equivalents (determined as if the Deferral Account is invested in the
manner set forth under Section 3.3, below) attributable to the period
following the next preceding Valuation Date shall be credited to and/or
deducted from the Trustees Deferral Account.
3.3 Investment of Deferral Account Balance
(a) (1) The Trustee may select from various options made
available by the Funds the investment media in which all or part of his
Deferral Account shall be deemed to be invested. The investment media
available to the Trustee as of the date of this Agreement are listed in
Attachment B hereto.
(2) The Trustee shall make an investment designation on
a form provided by the Secretary of the Funds (Attachment C) which
shall remain effective until another valid designation has been made by
the Trustee as herein provided. The Trustee may amend his investment
designation daily by giving instructions to the Secretary of the Funds.
(3) Any changes to the investment media to be made
available to the Trustee, and any limitation on the maximum or minimum
percentages of the Trustee's Deferral Account that may be invested in
any particular medium, shall be communicated from time-to-time to the
Trustee by the Secretary of the Funds.
(b) Except as provided below, the Trustee's Deferral
Account shall be deemed to be invested in accordance with his
investment designations, provided such designations conform to the
provisions of this Section. If:
(1) the Trustee does not furnish the secretary of the
Funds with complete, written investment instructions, or
(2) the written investment instructions from the
Trustee are unclear,
then the Trustee's election to make Compensation Deferrals hereunder
shall be held in abeyance and have no force and effect, and he shall be
deemed to have selected the Evergreen Money Market Fund until such time
as the Trustee shall provide the Secretary of the Funds with complete
investment instructions. In the event that any fund under which any
portion of the Trustee's Deferral Account is deemed to be invested
ceases to exist, such portion of the Deferral Account thereafter shall
be held in the successor to such Fund, subject to subsequent deemed
investment elections.
The use of the returns on the investment media to determine
the amount of the earnings credited to a Trustee's Deferral Account is
subject to regulatory approval. Until such approval is received, the
Compensation Deferrals of a Trustee Under this Agreement shall be
continuously credited with earnings in an amount determined by
multiplying the balance credited to the Deferral Account by an interest
rate equal to the yield on 90-day U.S. Treasury Bills.
The Secretary of the Funds shall provide an annual statement
to the Trustee showing such information as is appropriate, including the
aggregate amount in the Deferral Account, as of a reasonably current
date.
4. DISTRIBUTION FROM DEFERRAL ACCOUNT
4.1 In General. Distributions from the Trustee's Deferral Account
may be paid in a lump sum or in installments as elected by the Trustee
commencing on or as soon as practicable after a date specified by the
Trustee, which may not be sooner than the earlier of the first business
day of January following (a) a date five years following the deferral
election, or (b) the year in which the Trustee ceases to be a member of
the Board of Trustees of the Funds. Notwithstanding the foregoing, in
the event of the liquidation, dissolution or winding up of a Fund or the
distribution of all or substantially all of a Fund's assets and property
relating to one or more series of its shares to the shareholders of such
series (for this purpose a sale, conveyance or transfer of a Fund's
assets to a trust, partnership, association or corporation in exchange
for cash shares or other securities with the transfer being made subject
to, or with the assumption by the transferee of, the liabilities of the
Fund shall not be deemed a termination of the Fund or such a
distribution), all unpaid amounts in the Deferral Account as of the
effective date thereof shall be paid in a lump sum on such effective
date. In addition, upon application by a Trustee and determination by
the Chairman of the Board of Trustees of the Funds that the Trustee has
suffered a severe and unanticipated financial hardship, the Secretary
shall distribute to the Trustee, in a single lump sum, an amount equal
to the lesser of the amount needed by the Trustee to meet the hardship
plus applicable income taxes payable upon such distribution, or the
balance of the Trustee's Deferral Account.
4.2 Death Prior to Complete Distribution of Deferral Account. Upon
the death of the Trustee (whether prior to or after the commencement of
the distribution of the amounts credited to his Deferral Account), the
balance of such Account shall be distributed to his Beneficiary in a
lump sum as soon as practicable after the Trustee's death.
4.3 Designation of Beneficiary. For purposes of Section 4.3 hereof,
the Trustee's Beneficiary shall be the person or persons so designated
by the Trustee in a written instrument submitted to the Secretary of the
Funds. In the event the Trustee fails to properly designate a
Beneficiary, his Beneficiary shall be the person or persons in the first
of the following classes of successive preference Beneficiaries
Surviving at the death of the Trustee: the Trustees (1) surviving
spouse, or (2) estate.
5. AMENDMENT AND TERMINATION
5.1 The Board of Trustees may at any time in its sole discretion
amend or terminate this Plan; provided however, that no Such amendment
or termination shall adversely affect the right of Trustees to receive
amounts previously credited to their Deferral Accounts.
6. MISCELLANEOUS
6.1 Rights of Creditors.
(a) This Agreement is an unfunded and non-qualified deferred
compensation arrangement. Neither the Trustee nor other persons shall
have any interest in any specific asset or assets of a Fund by reason of
any Deferral Account hereunder, nor any rights to receive distribution
of his Deferral Account except as and to the extent expressly provided
hereunder. A Fund shall not be required to purchase, hold or dispose of
any investments pursuant to this Agreement; however, if in order to
cover its obligations hereunder the Fund elects to purchase any
investments the same shall continue for all purposes to be a part of the
general assets and property of the Fund, subject to the claims of its
general creditors and no person other than the Fund shall by virtue of
the provisions of this Agreement have any interest in such assets other
than an interest as a general creditor.
(b) The rights of the Trustee and the Beneficiaries to the amounts
held in the Deferral Account are unsecured and shall be subject to the
creditors of the Funds. With respect to the payment of amounts held
under the Deferral Account, the Trustee and his Beneficiaries have the
status of unsecured creditors of the Funds. This Agreement is executed
on behalf of the Fund by an officer of a Fund as such and not
individually. Any obligation of a Fund hereunder shall be an unsecured
obligation of the Fund and not of any other person.
6.2 Agents. The Funds may employ agents and provide for such
clerical, legal, actuarial, accounting, advisory or other services as
they deem necessary to perform their duties under this Agreement. The
Funds shall bear the cost of such services and all other expenses they
incur in connection with the administration of this Agreement.
6.3 Incapacity. If a Fund shall receive evidence satisfactory to
it that the Trustee or any Beneficiary entitled to receive any benefit
under this Agreement is, at the time when such benefit becomes payable,
a Minor, or is physically or mentally incompetent to give a valid
release therefor, and that another person or an institution is then
maintaining or has custody of the Trustee or Beneficiary and that no
guardian, committee or other representative of the estate of the Trustee
or Beneficiary shall have been duly appointed, the Fund may make payment
of such benefit otherwise payable to the Trustee or Beneficiary to such
other person or institution, including a custodian under a Uniform Gifts
to Minors Act, or corresponding legislation (who shall be a guardian of
the minor or a trust company), and the release of such other person or
institution shall be a valid and complete discharge for the payment of
such benefit.
6.4 Cooperation of Parties. All parties to this Agreement and any
person claiming any interest hereunder agree to perform any and all acts
and execute any and all documents and papers which are necessary or
desirable for carrying out this Agreement or any of its provisions.
6.5 Governing Law. This Agreement is made and entered into in the
State of North Carolina and all matters concerning its validity,
construction and administration shall be governed by the laws of the
State of North Carolina.
6.6 No Guarantee of Trusteeship. Nothing contained in this
Agreement shall be construed as a guaranty or right of any Trustee to be
continued as a Trustee of one or more of the Evergreen Funds (or of a
right of a Trustee to any specific level of Compensation) or as a
limitation of the right of any of the Evergreen Funds, by shareholder
action or otherwise, to remove any of its trustees.
6.7 Counsel. The Funds may consult with legal counsel with respect
to the meaning or construction of this Agreement, their obligations or
duties hereunder or with respect to any action or proceeding or any
question of law, and they shall be fully protected with respect to any
action taken or omitted by them in good faith pursuant to the advice of
legal counsel.
6.8 Spendthrift Provision. The Trustees' and Beneficiaries'
interests in the Deferral Account shall not be subject to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, or charges
and any attempt so to anticipate, alienate, sell, transfer, assign,
pledge, encumber or charge the same shall be void; nor shall any portion
of any such right hereunder be in any manner payable to any assignee,
receiver or trustee, or be liable for such person's debts, contracts,
liabilities, engagements or torts, Or be subject to any legal process to
levy upon or attach.
6.9 Notices. For purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered personally or
mailed by United States registered or certified mail, return receipt
requested, postage prepaid, or by nationally recognized overnight
delivery service, addressed to the Trustee at the home address set forth
in the Funds' records and to a Fund at its principal place of business,
provided that all notices to a Fund shall be directed to the attention
of the Secretary of the Fund or to such other address as either party
may have furnished to the other in writing in accordance herewith,
except that notice of change of address shall be effective only upon
receipt.
6.10 Entire Agreement. This Agreement contains the entire
understanding between the Funds and the Trustee with respect to the
payment of non-qualified elective deferred compensation by the Funds to
the Trustee.
6.11 Interpretation of Agreement. Interpretation of, and
determinations related to, this Agreement made by the Funds in good
faith, including any determinations of the amounts of the Deferral
Account, shall be conclusive and binding upon all parties; and a Fund
shall not incur any liability to the Trustee for any such interpretation
or determination so made or for any other action taken by it in
connection with this Agreement in good faith.
6.12 Successors and Assigns. This Agreement shall be binding upon,
and shall inure to the benefit of, the Funds and their successors and
assigns and to the Trustees and his heirs, executors, administrators and
personal representatives.
6.13 Severability. In the event any one or more provisions of this
Agreement are held to be invalid or unenforceable, such illegality or
unenforceability shall not affect the validity or enforceability of the
other provisions hereof and such other provisions shall remain in full
force and effect unaffected by such invalidity or unenforceability.
6.14 Execution of Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed as of the day and year first above written.
EVERGREEN TRUST
EVERGREEN EQUITY TRUST
EVERGREEN INVESTMENT TRUST
EVERGREEN TOTAL RETURN FUND
EVERGREEN GROWTH AND INCOME FUND
THE EVERGREEN AMERICAN RETIREMENT
TRUST
EVERGREEN FOUNDATION TRUST
EVERGREEN MUNICIPAL TRUST
EVERGREEN MONEY MARKET FUND
EVERGREEN LIMITED MARKET FUND, INC.
By:
________________ ____________________
Witness John J. Pileggi
President
________________ ____________________
Witness Trustee
<PAGE>
ATTACHMENT A
EVERGREEN TRUSTS & FUNDS
1. EVERGREEN TRUST
a. Evergreen Fund
b. Evergreen Aggressive Growth Fund
2. EVERGREEN EQUITY TRUST
a. Evergreen Global Real Estate Equity Fund
b. Evergreen U.S. Real Estate Equity Fund
C. Evergreen Global Leaders Fund
3. EVERGREEN INVESTMENT TRUST
a. Evergreen International Equity Fund
b. Evergreen Emerging Markets Growth Fund
C. Evergreen Balanced Fund
d. Evergreen Value Fund
e. Evergreen Utility Fund
f. Evergreen U.S. Government Fund
g. Evergreen Fixed Income Fund
h. Evergreen Managed Bond Fund (Y Shares only)
i. Evergreen High Grade Tax Free Fund
J. Evergreen Florida Municipal Bond Fund
k. Evergreen Georgia Municipal Bond Fund
1. Evergreen North Carolina Municipal Bond Fund
M. Evergreen South Carolina Municipal Bond Fund
n. Evergreen Virginia Municipal Bond Fund
0. Evergreen Treasury Money Market
4. EVERGREEN TOTAL RETURN FUND
5. EVERGREEN GROWTH AND INCOME FUND
6. THE EVERGREEN AMERICAN RETIREMENT TRUST
a. Evergreen American Retirement Fund
b. Evergreen Small Cap Equity Income Fund
7. EVERGREEN FOUNDATION TRUST
a. Evergreen Foundation Fund
b. Evergreen Tax Strategic Foundation Fund
8. EVERGREEN MUNICIPAL TRUST
a. Evergreen Short-intermediate municipal Fund
b. Evergreen Short-intermediate Municipal Fund-California
C. Evergreen Florida High Income Municipal Fund
d. Evergreen Tax Exempt Money Market Fund
9. EVERGREEN MONEY MARKET FUND
10. EVERGREEN LIMITED MARKET FUND, INC.
ATTACHMENT B
EVERGREEN TRUSTS & FUNDS
Available Fund Options
Evergreen International Equity Fund
Evergreen Aggressive Growth Fund
Evergreen Fund
Evergreen Foundation Fund
Evergreen Growth & Income
Evergreen Value
Evergreen Fixed Income
Evergreen Money Market Fund
<PAGE>
ATTACHMENT C
DEFERRED COMPENSATION AGREEMENT
DEFERRAL ELECTION FORM
TO: The Secretary of The Evergreen Funds
FROM:
DATE:
With respect to the Deferred Compensation Agreement (the
"Agreement") dated as of November __, 1995 by and between the
undersigned and The Evergreen Funds, I hereby make the following
elections:
Deferral of Compensation
Starting with Compensation to be paid to me with respect to
services provided by me to The Evergreen Funds after the date this
election form is provided to The Evergreen Funds, and for all periods
thereafter (unless subsequently amended by way of a new election form),
I hereby elect that ___ percent (__%) of my Compensation (as defined
under the Agreement) be deferred and that the Funds establish a
bookkeeping account credited with amounts equal to the amount so
deferred (the "Deferral Account"), The Deferral Account shall be
further credited with income equivalents as provided under the
Agreement. Each Compensation Deferral (as defined in the Agreement)
shall be deemed invested pursuant to Section 3.3 of the Agreement as of
the same day it would have been paid to me.
I wish the Compensation Deferral to be invested in the Funds
and percentages noted in Annex A to this Form.
I understand that the amounts held in the Deferral Account
shall remain the general assets of The Evergreen Funds and that, with
respect to the payment of such amounts, I am merely a general creditor
of The Evergreen Funds. I may not sell, encumber, pledge, assign or
otherwise alienate the amounts held under the Deferral Account.
<PAGE>
Distribution from Deferral Account
I hereby elect that distributions from my Deferral Account be
paid:
______ in a lump sum or
______ in quarterly installments for ___ years (specify a
number of years not to exceed ten); commencing on the first business
day of January following:
______ the year in which I cease to be a member of the
Board of Trustees of the Funds, or
______ a calendar year but not a year earlier than 2000.
I hereby agree that the terms of the Agreement are incorporated
herein and are made a part hereof. Dated as of the day and year first
above written.
WITNESS: TRUSTEE:
__________________ __________________
RECEIVED:
THE EVERGREEN FUNDS
By:____________________
Name:__________________
Title:_________________
Date:__________________
<PAGE>
ANNEX A
I desire that my deferred Compensation be invested as follows:
Evergreen International Equity Fund %_____
Evergreen Aggressive Growth Fund %_____
Evergreen Fund %_____
Evergreen Foundation Fund %_____
Evergreen Growth & Income Fund %_____
Evergreen Value %_____
Evergreen Fixed Income %_____
Evergreen Money Market Fund %_____
______________________
100% of Deferred
Compensation Amount
<PAGE>
ATTACHMENT D
THE EVERGREEN FUNDS
DEFERRED COMPENSATION PLAN
DESIGNATION OF BENEFICIARY
You may designate one or more beneficiaries to receive any
amount remaining in your Deferral Account at your death. If your
Designated Beneficiary survives you, but dies before receiving the full
amount of the Deferral Account to which he or she is entitled, the
remainder will be paid to the Designated Beneficiary's estate, unless
you specifically elect otherwise in your Designation of Beneficiary
form.
You may indicate the names not only of one or more primary
Designated Beneficiaries but also the names of secondary beneficiaries
who would receive amounts in your Deferral Account in the event the
primary beneficiary or beneficiaries are not alive at your death. In
the case of each Designated Beneficiary, give his or her name, address,
relationship to you, and the percentage of your Deferral Account he or
she is to receive. You may change your Designated Beneficiaries at any
time, without their consent, by filing a new Designation of Beneficiary
form with the Secretary of the Funds.
******************************************
As a participant in the Evergreen Funds' Deferred Compensation
Plan (the "Plan"), I hereby designate the person or persons listed
below to receive any amount remaining in my Deferral Account in the
event of my death. This designation of beneficiary shall become
effective upon its delivery to the Secretary of the Funds prior to my
death, and revokes any designation(s) of beneficiary previously made by
me. I reserve the right to revoke this designation of beneficiary at
any time without notice to any beneficiary.
I hereby name the following as primary Designated Beneficiaries
under the Plan:
_____________________________________________________________________
Name Relationship Percentage Address
_____________________________________________________________________
Name Relationship Percentage Address
_____________________________________________________________________
Name Relationship Percentage Address
_____________________________________________________________________
Name Relationship Percentage Address
In the event that one or more of my primary Designated
Beneficiaries predeceases mer his or her share shall be allocated among
the Surviving primary Designated Beneficiaries. I name the following as
secondary Designated Beneficiaries under the Plan, in the event that no
primary Designated Beneficiary survives me:
______________________________________________________________________
Name Relationship Percentage Address
______________________________________________________________________
Name Relationship Percentage Address
______________________________________________________________________
Name Relationship Percentage Address
______________________________________________________________________
Name Relationship Percentage Address
In the event that no primary Designated Beneficiary
survives me and one or more of the secondary Designated Beneficiaries
predeceases me, his or her share shall be allocated among the
surviving secondary Designated Beneficiaries.
___________________ _____________________
(witness) (Signature of Trustee)
Date: Date:
James P. Wallin
2500 Westchester Avenue
Purchase, New York 10577
March 18, 1997
Evergreen Trust
2500 Westchester Avenue
Purchase, New York 10577
Dear Sirs:
Evergreen Trust, a Massachusetts business trust (the "Trust"), is filing
with the Securities and Exchange Commission a Post-Effective Amendment to its
Registration Statment on Form N-1A (the "Amendment") for the purpose of
registering an additional series of shares to be known as "Evergreen Small
Cap Value Fund" (the "Fund").
I have, as counsel, participated in various proceedings relating to the
Trust and to the Amendment. I have examined copies, either certified or
otherwise proved to our satisfaction to be genuine, of the Trust's Declaration
of Trust, as now in effect, the minutes of meetings of the Trustees of the Trust
and other documents relating to the organization and operation of the Trust. I
have also reviewed the form of the Amendment being filed by the Trust. I am
generally familiar with the business affairs of the Trust.
The Trust has advised me that the shares of the Fund will only be sold in
the manner contemplated by the prospectus of the Fund current at the time of
sale, and that the shares of the Fund will only be sold for a consideration not
less than the net asset value thereof as required by the Investment Company Act
of 1940 and not less than the par value thereof.
Based upon the foregoing, it is my opinion that the Shares will be, when
issued, fully paid and non-assessable. However, I note that as set forth in the
Registration Statement, the Fund's shareholders might, under certain
circumstances, be liable for transactions effected by the Trust.
I hereby consent to the filing of this Opinion with the Securities and
Exchange Commission together with the Amendment, and to the filing of this
Opinion under the securities laws of any state.
I am a member of the Bar of the State of New York and do not hold myself
out as being conversant with the laws of any jurisdiction other than those of
the United States of America and the State of New York. I note that I am not
licensed to practice law in The Commonwealth of Massachusetts, and to the extent
that any opinion expressed herein involves the law of Massachusetts, such
opinion should be understood to be based solely upon my review of the documents
referred to above, the published statutes of that Commonwealth and, where
applicable, published cases, rules or regulations of regulatory bodies of that
Commonwealth.
Very truly yours,
/s/James P. Wallin
---------------------
James P. Wallin
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of this Post-Effective
Amendment No. 33 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated November 18, 1996, relating to the financial
statements and financial highlights appearing in the September 30, 1996 Annual
Report to Shareholders of Evergreen Fund and Evergreen Aggressive Growth Fund,
which are also incorporated by reference into the Registration Statement. We
also consent to the references to us under the heading "Financial Highlights" in
the Prospectus and under the headings "Independent Auditors" and "Financial
Statements" in the Statement of Additional Information.
Price Waterhouse LLP
1177 Avenue of the Americas
New York, NY 10036
March 18, 1997
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
The Board of Trustees and Shareholder
Evergreen Small Cap Value Fund
We consent to the use of our report dated March 18, 1997 incorporated by
reference herein.
KPMG Peat Marwick LLP
Boston, Massachusetts
March 19, 1997
DISTRIBUTION PLAN OF CLASS A SHARES
THE EVERGREEN TRUST
EVERGREEN SMALL CAP VALUE FUND
Section 1. The Evergreen Trust (the "Trust") may act as the distributor of
securities which are issued in respect of one or more of its separate investment
series, pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the
"1940 Act") according to the terms of this Distribution Plan ("Plan").
Section 2. The Trust may expend daily amounts at an annual rate of .75 of
1% of the average daily net asset value of the Class A Shares ("Shares") of its
Evergreen Small Company Value Fund Series ("Fund") to finance any activity which
is principally intended to result in the sale of Shares including, without
limitation, expenditures consisting of payments to a principal underwriter of
the Fund (Principal Underwriter) or others in order: (i) to enable payments to
be made by the Principal Underwriter or others for any activity primarily
intended to result in the sale of Shares, including, without limitation, (a)
compensation to public relations consultants or other persons assisting in, or
providing services in connection with, the distribution of Shares, (b)
advertising, (c) printing and mailing of prospectuses and reports for
distribution to persons other than existing shareholders, (d) preparation and
distribution of advertising material and sales literature, (e) commission
payments, and principal and interest expenses associated with the financing of
commission payments, made by the Principal Underwriter in connection with the
sale of Shares and (f) conducting public relations efforts such as seminars;
(ii) to enable the Principal Underwriter or others to receive, pay or to have
paid to others who have sold Shares, or who provide services to holders of
Shares, a maintenance or other fee in respect of services provided to holders of
Shares, at such intervals as the Principal Underwriter may determine, in respect
of Shares previously sold and remaining outstanding during the period in respect
of which such fee is or has been paid; and/or (iii) to compensate the Principal
Underwriter for its efforts in respect of sales of Shares since inception of the
Plan. Appropriate adjustments shall be made to the payments made pursuant to
this Section 2 to the extent necessary to ensure that no payment is made by the
Fund with respect to any Class in excess of the applicable limit imposed on
asset based, front end and deferred sales charges under subsection (d) of
Section 26 of Article III of the Rules of Fair Practice of the National
Association of Securities Dealers, Inc. (the "NASD"). In addition, to the extent
any amounts paid hereunder fall within the definition of an "asset based sales
charge" under said NASD Rule such payments shall be limited to .75 of 1% of the
aggregate net asset value of the Shares on an annual basis and, to the extent
that any such payments are made in respect of "shareholder services" as that
term is defined in the NASD Rule, such payments shall be limited to .25 of 1% of
the aggregate net asset value of the Shares on an annual basis and shall only be
made in respect of shareholder services rendered during the period in which such
amounts are accrued.
Section 3. This Plan shall not take effect with respect to any Fund until it
has been approved by votes of a majority of (a) the outstanding Shares of such
Series, (b) the Trustees of the Trust, and (c) those Trustees of the Trust who
are not "interested persons" of the Fund (as defined in the 1940 Act) and who
have no direct or indirect financial interest in the operation of this Plan or
any agreements of the Trust related hereto or any other person related to this
Plan ("Disinterested Trustees"), cast in person at a meeting called for the
purpose of voting on this Plan. In addition, any agreement related to this Plan
and entered into by the Fund in connection therewith shall not take effect until
it has been approved by votes of a majority of (a) the Board of Trustees of the
Trust, and (c) the Disinterested Trustees of the Trust.
Section 4. Unless sooner terminated pursuant to Section 6, this Plan shall
continue in effect for a period of one year from the date it takes effect and
thereafter shall continue in effect for additional periods that shall not exceed
one year so long as such continuance is specifically approved by votes of a
majority of both (a) the Board of Trustees of the Trust and (b) the
Disinterested Trustees of the Trust, cast in person at a meeting called for the
purpose of voting on this Plan.
Section 5. Any person authorized to direct the disposition of monies paid or
payable pursuant to this Plan or any related agreement shall provide to the
Trust's Board and the Board shall review at least quarterly a written report of
the amounts so expended and the purposes for which such expenditures were made.
Section 6. This Plan may be terminated at any time with respect to any Fund
by vote of a majority of the Disinterested Trustees, or by vote of a majority of
the Shares of the Fund.
Section 7. Any agreement of the Trust, with respect to any Fund, related to
this Plan shall be in writing and shall provide:
A. That such agreement may be terminated with respect to a Fund at any time
without payment of any penalty, by vote of a majority of the Disinterested
Trustees or by a vote of a majority of the outstanding Shares of such Fund on
not more than sixty days written notice to any other party to the agreement; and
B. That such agreement shall terminate automatically in the event of its
assignment.
Section 8. This Plan may not be amended to increase materially the amount
of distribution expenses provided for in Section 2 with respect to a Fund unless
such amendment is approved by a vote of at least a majority (as defined in the
1940 Act) of the outstanding Shares of such Fund, and no material amendment to
this Plan shall be made unless approved by votes of a majority of (a) the Board
of Trustees of the Trust, and (c) the Disinterested Trustees of the Trust, cast
in person at a meeting called for the purpose of voting on such amendment.
DATED:
March 3, 1997
<PAGE>
DISTRIBUTION PLAN OF CLASS B SHARES
THE EVERGREEN TRUST
EVERGREEN SMALL CAP VALUE FUND
Section 1. The Evergreen Trust (the "Trust") may act as the distributor of
securities which are issued in respect of one or more of its separate investment
series, pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the
"1940 Act") according to the terms of this Distribution Plan ("Plan").
Section 2. The Trust may expend daily amounts at an annual rate of 1% of
the average daily net asset value of the Class B Shares ("Shares") of its
Evergreen Small Company Value Fund Series ("Fund") to finance any activity which
is principally intended to result in the sale of Shares including, without
limitation, expenditures consisting of payments to a principal underwriter of
the Fund (Principal Underwriter) or others in order: (i) to enable payments to
be made by the Principal Underwriter or others for any activity primarily
intended to result in the sale of Shares, including, without limitation, (a)
compensation to public relations consultants or other persons assisting in, or
providing services in connection with, the distribution of Shares, (b)
advertising, (c) printing and mailing of prospectuses and reports for
distribution to persons other than existing shareholders, (d) preparation and
distribution of advertising material and sales literature, (e) commission
payments, and principal and interest expenses associated with the financing of
commission payments, made by the Principal Underwriter in connection with the
sale of Shares and (f) conducting public relations efforts such as seminars;
(ii) to enable the Principal Underwriter or others to receive, pay or to have
paid to others who have sold Shares, or who provide services to holders of
Shares, a maintenance or other fee in respect of services provided to holders of
Shares, at such intervals as the Principal Underwriter may determine, in respect
of Shares previously sold and remaining outstanding during the period in respect
of which such fee is or has been paid; and/or (iii) to compensate the Principal
Underwriter for its efforts in respect of sales of Shares since inception of the
Plan. Appropriate adjustments shall be made to the payments made pursuant to
this Section 2 to the extent necessary to ensure that no payment is made by the
Fund with respect to any Class in excess of the applicable limit imposed on
asset based, front end and deferred sales charges under subsection (d) of
Section 26 of Article III of the Rules of Fair Practice of the National
Association of Securities Dealers, Inc. (the "NASD"). In addition, to the extent
any amounts paid hereunder fall within the definition of an "asset based sales
charge" under said NASD Rule such payments shall be limited to .75 of 1% of the
aggregate net asset value of the Shares on an annual basis and, to the extent
that any such payments are made in respect of "shareholder services" as that
term is defined in the NASD Rule, such payments shall be limited to .25 of 1% of
the aggregate net asset value of the Shares on an annual basis and shall only be
made in respect of shareholder services rendered during the period in which such
amounts are accrued.
Section 3. This Plan shall not take effect with respect to any Fund until
it has been approved by votes of a majority of (a) the outstanding Shares of
such Series, (b) the Trustees of the Trust, and (c) those Trustees of the Trust
who are not "interested persons" of the Fund (as defined in the 1940 Act) and
who have no direct or indirect financial interest in the operation of this Plan
or any agreements of the Trust related hereto or any other person related to
this Plan ("Disinterested Trustees"), cast in person at a meeting called for the
purpose of voting on this Plan. In addition, any agreement related to this Plan
and entered into by the Fund in connection therewith shall not take effect until
it has been approved by votes of a majority of (a) the Board of Trustees of the
Trust, and (c) the Disinterested Trustees of the Trust.
Section 4. Unless sooner terminated pursuant to Section 6, this Plan shall
continue in effect for a period of one year from the date it takes effect and
thereafter shall continue in effect for additional periods that shall not exceed
one year so long as such continuance is specifically approved by votes of a
majority of both (a) the Board of Trustees of the Trust and (b) the
Disinterested Trustees of the Trust, cast in person at a meeting called for the
purpose of voting on this Plan.
Section 5. Any person authorized to direct the disposition of monies paid
or payable pursuant to this Plan or any related agreement shall provide to the
Trust's Board and the Board shall review at least quarterly a written report of
the amounts so expended and the purposes for which such expenditures were made.
Section 6. This Plan may be terminated at any time with respect to any Fund
by vote of a majority of the Disinterested Trustees, or by vote of a majority of
the Shares of the Fund.
Section 7. Any agreement of the Trust, with respect to any Fund, related to
this Plan shall be in writing and shall provide:
A. That such agreement may be terminated with respect to a Fund at any time
without payment of any penalty, by vote of a majority of the Disinterested
Trustees or by a vote of a majority of the outstanding Shares of such Fund on
not more than sixty days written notice to any other party to the agreement; and
B. That such agreement shall terminate automatically in the event of its
assignment.
Section 8. This Plan may not be amended to increase materially the amount
of distribution expenses provided for in Section 2 with respect to a Fund unless
such amendment is approved by a vote of at least a majority (as defined in the
1940 Act) of the outstanding Shares of such Fund, and no material amendment to
this Plan shall be made unless approved by votes of a majority of (a) the Board
of Trustees of the Trust, and (c) the Disinterested Trustees of the Trust, cast
in person at a meeting called for the purpose of voting on such amendment.
DATED:
March 3, 1997
<PAGE>
DISTRIBUTION PLAN OF CLASS C SHARES
THE EVERGREEN TRUST
EVERGREEN SMALL CAP VALUE FUND
Section 1. The Evergreen Trust (the "Trust") may act as the distributor of
securities which are issued in respect of one or more of its separate investment
series, pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the
"1940 Act") according to the terms of this Distribution Plan ("Plan").
Section 2. The Trust may expend daily amounts at an annual rate of 1% of
the average daily net asset value of the Class C Shares ("Shares") of its
Evergreen Small Company Value Fund Series ("Fund") to finance any activity which
is principally intended to result in the sale of Shares including, without
limitation, expenditures consisting of payments to a principal underwriter of
the Fund (Principal Underwriter) or others in order: (i) to enable payments to
be made by the Principal Underwriter or others for any activity primarily
intended to result in the sale of Shares, including, without limitation, (a)
compensation to public relations consultants or other persons assisting in, or
providing services in connection with, the distribution of Shares, (b)
advertising, (c) printing and mailing of prospectuses and reports for
distribution to persons other than existing shareholders, (d) preparation and
distribution of advertising material and sales literature, (e) commission
payments, and principal and interest expenses associated with the financing of
commission payments, made by the Principal Underwriter in connection with the
sale of Shares and (f) conducting public relations efforts such as seminars;
(ii) to enable the Principal Underwriter or others to receive, pay or to have
paid to others who have sold Shares, or who provide services to holders of
Shares, a maintenance or other fee in respect of services provided to holders of
Shares, at such intervals as the Principal Underwriter may determine, in respect
of Shares previously sold and remaining outstanding during the period in respect
of which such fee is or has been paid; and/or (iii) to compensate the Principal
Underwriter for its efforts in respect of sales of Shares since inception of the
Plan. Appropriate adjustments shall be made to the payments made pursuant to
this Section 2 to the extent necessary to ensure that no payment is made by the
Fund with respect to any Class in excess of the applicable limit imposed on
asset based, front end and deferred sales charges under subsection (d) of
Section 26 of Article III of the Rules of Fair Practice of the National
Association of Securities Dealers, Inc. (the "NASD"). In addition, to the extent
any amounts paid hereunder fall within the definition of an "asset based sales
charge" under said NASD Rule such payments shall be limited to .75 of 1% of the
aggregate net asset value of the Shares on an annual basis and, to the extent
that any such payments are made in respect of "shareholder services" as that
term is defined in the NASD Rule, such payments shall be limited to .25 of 1% of
the aggregate net asset value of the Shares on an annual basis and shall only be
made in respect of shareholder services rendered during the period in which such
amounts are accrued.
Section 3. This Plan shall not take effect with respect to any Fund until
it has been approved by votes of a majority of (a) the outstanding Shares of
such Series, (b) the Trustees of the Trust, and (c) those Trustees of the Trust
who are not "interested persons" of the Fund (as defined in the 1940 Act) and
who have no direct or indirect financial interest in the operation of this Plan
or any agreements of the Trust related hereto or any other person related to
this Plan ("Disinterested Trustees"), cast in person at a meeting called for the
purpose of voting on this Plan. In addition, any agreement related to this Plan
and entered into by the Fund in connection therewith shall not take effect until
it has been approved by votes of a majority of (a) the Board of Trustees of the
Trust, and (c) the Disinterested Trustees of the Trust. Section 4. Unless sooner
terminated pursuant to Section 6, this Plan shall continue in effect for a
period of one year from the date it takes effect and thereafter shall continue
in effect for additional periods that shall not exceed one year so long as such
continuance is specifically approved by votes of a majority of both (a) the
Board of Trustees of the Trust and (b) the Disinterested Trustees of the Trust,
cast in person at a meeting called for the purpose of voting on this Plan.
Section 5. Any person authorized to direct the disposition of monies paid
or payable pursuant to this Plan or any related agreement shall provide to the
Trust's Board and the Board shall review at least quarterly a written report of
the amounts so expended and the purposes for which such expenditures were made.
Section 6. This Plan may be terminated at any time with respect to any Fund by
vote of a majority of the Disinterested Trustees, or by vote of a majority of
the Shares of the Fund. Section 7. Any agreement of the Trust, with respect to
any Fund, related to this Plan shall be in writing and shall provide:
A. That such agreement may be terminated with respect to a Fund at any time
without payment of any penalty, by vote of a majority of the Disinterested
Trustees or by a vote of a majority of the outstanding Shares of such Fund on
not more than sixty days written notice to any other party to the agreement; and
B. That such agreement shall terminate automatically in the event of its
assignment. Section 8. This Plan may not be amended to increase materially the
amount of distribution expenses provided for in Section 2 with respect to a Fund
unless such amendment is approved by a vote of at least a majority (as defined
in the 1940 Act) of the outstanding Shares of such Fund, and no material
amendment to this Plan shall be made unless approved by votes of a majority of
(a) the Board of Trustees of the Trust, and (c) the Disinterested Trustees of
the Trust, cast in person at a meeting called for the purpose of voting on such
amendment.
DATED:
March 3, 1997
MULTIPLE CLASS PLAN FOR THE EVERGREEN/KEYSTONE FUND GROUP
Each Fund in the Evergreen/Keystone group of mutual funds currently
offers up to four classes of shares with the following class provisions and
current offering and exchange characteristics. Additional classes of shares
(such classes being shares having characteristics referred to in Rule 18f-3
under the Investment Company Act of 1940, as amended (the "1940 Act")), when
created, may have characteristics that differ from those described.
I. CLASSES
A. Class A Shares
1. Class A Shares have a distribution plan adopted pursuant to Rule
12b-1 under the 1940 Act (a "12b-1 Distribution Plan") and/or a
shareholder services plan. The plans provide for annual payments of
distribution and/or shareholder services fees that are based on a
percentage of average daily net assets of Class A shares, as described
in the Fund's current prospectus.
2. Class A Shares are offered with a front-end sales load, except that
purchases of Class A Shares made under certain circumstances are not
subject to the front-end load or may be subject to a contingent
deferred sales charge ("CDSC"), as described in the Fund's current
prospectus.
3. Shareholders may exchange Class A Shares of the Fund for Class A
Shares of any other fund named in the Fund's prospectus.
B. Class B Shares
1. Class B Shares have adopted a 12b-1 Distribution Plan and/or a
shareholder services plan. The plans provide for annual payments of
distribution and/or shareholder services fees that are based on a
percentage of average daily net assets of Class B shares, as described
in the Fund's current prospectus.
2. Class B Shares are offered at net asset value without a front-end
sales load, but may be subject to a CDSC as described in the Fund's
current prospectus.
3. Class B Shares automatically convert to Class A Shares without a
sales load or exchange fee after designated periods.
4. Shareholders may exchange Class B Shares of the Fund for Class B
Shares of any other fund described in the Fund's prospectus.
C. Class C Shares
1. Class C Shares have adopted a 12b-1 Distribution Plan and/or a
shareholder services plan. The plans provide for annual payments of
distribution and/or shareholder services fees that are based on a
percentage of average daily net assets of Class C shares, as described
in the Fund's current prospectus.
2. Class C Shares are offered at net asset value without a front-end
sales load, but may be subject to a CDSC as described in the Fund's
current prospectus.
3. Shareholders may exchange Class C Shares of the Fund for Class C
Shares of any other fund named in the Fund's prospectus.
D. Class Y Shares
1. Class Y Shares have no distribution or shareholder services plans.
2. Class Y Shares are offered at net asset value without a front-end
sales load or CDSC.
3. Shareholders may exchange Class Y Shares of the Fund for Class Y
Shares of any other fund described in the Fund's prospectus.
II. CLASS EXPENSES
Each class bears the expenses of its 12b-1 Distribution Plan and/or
shareholder services plan. There currently are no other class specific expenses.
III. EXPENSE ALLOCATION METHOD
All income, realized and unrealized capital gains and losses and
expenses not assigned to a class will be allocated to each class based on the
relative net asset value of each class.
IV. VOTING RIGHTS
A. Each class will have exclusive voting rights on any matter submitted to
its shareholders that relates solely to its class arrangement.
B. Each class will have separate voting rights on any matter submitted to
shareholders where the interests of one class differ from the interests of any
other class.
C. In all other respects, each class has the same rights and obligations as
each other class.
V. EXPENSE WAIVERS OR REIMBURSEMENTS
Any expense waivers or reimbursements will be in compliance with Rule 18f-3
issued under the 1940 Act.
POWER OF ATTORNEY
I, the undersigned, hereby constitute Joseph J. McBrien, James P.
Wallin, John J. Pileggi and Joan V. Fiore, 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 Evergreen Asset Management Corp. and First Union National
Bank of North Carolina serve as investment adviser 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 in 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 this 8th day of February, 1996.
Signature
/s/John J. Pileggi
- ------------------
John J. Pileggi
Title, President and Treasurer
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Joseph J. McBrien, James P.
Wallin, John J. Pileggi and Joan V. Fiore, 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 Evergreen Asset Management Corp. and First Union National
Bank of North Carolina serve as investment adviser 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 in 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 this 8th day of February, 1996.
Signature
/s/Michael S. Scofield
- -----------------------
Michael S. Scofield
Title, Trustee
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Joseph J. McBrien, James P.
Wallin, John J. Pileggi and Joan V. Fiore, 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 Evergreen Asset Management Corp. and First Union National
Bank of North Carolina serve as investment adviser 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 in 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 this 8th day of February, 1996.
Signature
/s/Laurence B. Ashkin
- ---------------------
Laurence B. Ashkin
Title, Trustee
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Joseph J. McBrien, James P.
Wallin, John J. Pileggi and Joan V. Fiore, 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 Evergreen Asset Management Corp. and First Union National
Bank of North Carolina serve as investment adviser 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 in 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 this 8th day of February, 1996.
Signature
/s/ Foster Bam
- ------------------
Foster Bam
Title, Trustee
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Joseph J. McBrien, James P.
Wallin, John J. Pileggi and Joan V. Fiore, 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 Evergreen Asset Management Corp. and First Union National
Bank of North Carolina serve as investment adviser 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 in 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 this 8th day of February, 1996.
Signature
/s/ James Howell
- ------------------
James Howell
Title, Trustee
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Joseph J. McBrien, James P.
Wallin, John J. Pileggi and Joan V. Fiore, 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 Evergreen Asset Management Corp. and First Union National
Bank of North Carolina serve as investment adviser 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 in 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 this 8th day of February, 1996.
Signature
/s/ Gerald McDonnell
- --------------------
Gerald McDonnell
Title, Trustee
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Joseph J. McBrien, James P.
Wallin, John J. Pileggi and Joan V. Fiore, 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 Evergreen Asset Management Corp. and First Union National
Bank of North Carolina serve as investment adviser 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 in 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 this 8th day of February, 1996.
Signature
/s/ Thomas L. McVerry
- ---------------------
Thomas L. McVerry
Title, Trustee
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Joseph J. McBrien, James P.
Wallin, John J. Pileggi and Joan V. Fiore, 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 Evergreen Asset Management Corp. and First Union National
Bank of North Carolina serve as investment adviser 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 in 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 this 8th day of February, 1996.
Signature
/s/ William W. Pettit
- ---------------------
William W. Pettit
Title, Trustee
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Joseph J. McBrien, James P.
Wallin, John J. Pileggi and Joan V. Fiore, 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 Evergreen Asset Management Corp. and First Union National
Bank of North Carolina serve as investment adviser 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 in 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 this 8th day of February, 1996.
Signature
/s/ Russell A. Salton, III
- --------------------------
Russell A. Salton, III
Title, Trustee
