Registration No.2-81494
- --------------------------------------------------------------------------------
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. 16 /x/
and/or
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 /x/
Amendment No. 16 /x/
(Check appropriate box or boxes)
--------------------
THE EVERGREEN LIMITED MARKET FUND
(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, N.Y. 10577
(Name and address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box)
/x/ Immediately upon filing pursuant to paragraph (b) 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
/ / 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>
THE EVERGREEN LIMITED MARKET FUND, INC.
CALCULATION OF REGISTRATION FEE UNDER THE SECURITRIES ACT OF 1933
Proposed
Title of Maximum Proposed
Securities Amount Offering Maximum Amount of
Being Being Price Per Aggregate Registration
Registered Registered Share Offering Price* Fee
Shares of
Common Stock
THE EVERGREEN
LIMITED MARKET
FUND, INC. 1,593,642 $17.89 $330,000 $100.00
___________________________________________________________
* The calculation of the maximum aggregate offering price was made pursuant to
Rule 24e-2 under the Investment Company Act of 1940, and was based upon an
offering price of $17.89 per share for THE EVERGREEN LIMITED MARKET FUND, INC.
The offering price per share has been calculated pursuant to Rule 457(c) under
the Securities Act of 1933 and is equal to the average net asset value per share
of all classes of each series on November 22, 1996. The total amount of
securities redeemed by the Registrant with respect to THE EVERGREEN LIMITED
MARKET FUND, INC. during the fiscal year ended September 30, 1996 was
$30,085,341. Of this number, no shares have been used for reduction pursuant to
paragraph (a) of Rule 24e-2 in previous filings of post-effective amendments
during the current year, and shares with a value of $8,458,110 on behalf of THE
EVERGREEN LIMITED MARKET FUND, INC. have been used for reduction pursuant to
paragraph (c) of Rule 24f-2 in all previous filings during the current year.
Shares redeemed by Registrant having a total value of $21,627,231 are being
used for reduction pursuant to paragraph (a) of Rule 24e-2 in the post-effective
amendment being filed herein. No shares are being registered on behalf of THE
EVERGREEN LIMITED MARKET FUND, INC. since it had net sales during the previous
fiscal year. While no fee is required for the 1,263,642 shares being registered
by THE EVERGREEN LIMITED MARKET FUND, INC. in reliance on reduction pursuant to
paragraph (a) of Rule 24e-2, the Registrant has elected to register for $100 an
additional $330,000 of shares (approximately 330,000 shares of THE EVERGREEN
LIMITED MARKET FUND, INC. at $1.00 per share).
CROSS REFERENCE SHEET
(as required by Rule 481(a))
N-1A Item No. Location in Prospectus(es)
Part A
Item 1. Cover Page Cover Page
Item 2. Synopsis and Fee Table Overview of the Fund(s);
Expense Information
Item 3. Condensed Financial Information Financial Highlights
Item 4. General Description of Registrant Cover Page; Description of
the Funds; 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; Purchase
Securities Being Offered 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>
*******************************************************************************
<PAGE>
PROSPECTUS November 29, 1996
EVERGREEN(SM) DOMESTIC GROWTH FUNDS
EVERGREEN FUND
EVERGREEN U.S. REAL ESTATE EQUITY FUND
EVERGREEN LIMITED MARKET FUND
EVERGREEN AGGRESSIVE GROWTH FUND
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 which seek to
provide capital growth and diversification. This Prospectus provides
information regarding the Class A, Class B and Class C shares offered by
the Funds. Each Fund is, 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" for the Funds dated
November 29, 1996 has been filed with the Securities and Exchange
Commission and is incorporated by reference herein. The Statement of
Additional Information provides information regarding certain matters
discussed in this Prospectus and other matters which may be of interest to
investors, and may be obtained without charge by calling the Funds at (800)
807-2940. 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
<TABLE>
<S> <C>
OVERVIEW OF THE FUNDS 2
EXPENSE INFORMATION 3
FINANCIAL HIGHLIGHTS 5
DESCRIPTION OF THE FUNDS
Investment Objectives and Policies 13
Investment Practices and Restrictions 15
MANAGEMENT OF THE FUNDS
Investment Advisers 17
Sub-Adviser 19
Distribution Plans and Agreements 19
PURCHASE AND REDEMPTION OF SHARES
How to Buy Shares 20
How to Redeem Shares 22
Exchange Privilege 23
Shareholder Services 24
Effect of Banking Laws 25
OTHER INFORMATION
Dividends, Distributions and Taxes 25
General Information 26
</TABLE>
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. which, with its predecessors, has served as an investment
adviser to the Evergreen mutual funds since 1971. Evergreen Asset Management
Corp. is a wholly-owned subsidiary of First Union National Bank of North
Carolina, 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.
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 United States 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 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 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.
THERE IS NO ASSURANCE THAT THE INVESTMENT OBJECTIVE OF ANY FUND WILL BE
ACHIEVED.
2
<PAGE>
EXPENSE INFORMATION
The table set forth below summarizes the shareholder transaction costs
associated with an investment in each Class A, Class B and Class C Shares of a
Fund. For further information see "Purchase and Redemption of Shares" and
"General Information -- Other Classes of Shares".
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES Class A Shares Class B Shares Class C Shares
<S> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases 4.75% None None
(as a % of offering price)
Sales Charge on Dividend Reinvestments None None None
Contingent Deferred Sales Charge (as a % of None 5% during the first year, 4% during the 1% during the
original purchase price or redemption second year, 3% during the third and fourth first year and
proceeds, whichever is lower) years, 2% during the fifth year, 1% during 0% thereafter
the sixth year and 0% after the sixth year
Redemption Fee None None None
Exchange Fee None None None
</TABLE>
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 C, 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 contingent deferred sales charge
applicable for that time period, and (iii) the expenses for Class B Shares
reflect the conversion to Class A Shares eight years after purchase (years eight
through ten, therefore, reflect Class A expenses).
EVERGREEN FUND
<TABLE>
<CAPTION>
EXAMPLES
Assuming
Assuming Redemption No
ANNUAL OPERATING EXPENSES at End of Period Redemption
Class A Class B Class C Class A Class B Class C Class B Class C
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management Fees .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
Assuming Redemption at End of No
ANNUAL OPERATING EXPENSES Period Redemption
Class A Class B Class C Class A Class B Class C Class B 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>
EVERGREEN LIMITED MARKET FUND
<TABLE>
<CAPTION>
EXAMPLES
Assuming
Assuming Redemption at End of No
ANNUAL OPERATING EXPENSES Period Redemption
Class A Class B Class C Class A Class B Class C Class B 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>
3
<PAGE>
EVERGREEN AGGRESSIVE GROWTH FUND
<TABLE>
<CAPTION>
EXAMPLES
Assuming
Assuming Redemption at End of No
ANNUAL OPERATING EXPENSES Period Redemption
Class A Class B Class C Class A Class B Class C Class B 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
After 10 Years $ 188 $ 201 $ 230 $ 201 $ 230
Total 1.22% 1.97% 1.97%
</TABLE>
*Class A Shares can pay up to . 75 of 1% of average net assets as a 12b-1 Fee.
For the foreseeable future, the Class A Shares 12b-1 Fees will be limited to .25
of 1% of average net assets. For Class B and Class C Shares a portion of the
12b-1 Fees equivalent to .25 of 1% of average net assets will be shareholder
servicing-related. Distribution-related 12b-1 Fees will be limited to .75 of 1%
of average net assets as permitted under the rules of the National Association
of Securities Dealers, Inc.
**Reflects agreements by Evergreen Asset 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 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 and 3.25% of average net assets for Class B
and 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 year ended September 30, 1996 for
Class A, B and 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.
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.
4
<PAGE>
FINANCIAL HIGHLIGHTS
The tables on the following pages present, for each Fund, financial
highlights for a share outstanding throughout each period indicated. The
information in the tables for the five most recent fiscal years or the life of
the Fund, if shorter, for EVERGREEN FUND and EVERGREEN U.S. REAL ESTATE EQUITY
FUND has been audited by Price Waterhouse LLP, each Fund's independent auditors.
The information in the tables for EVERGREEN LIMITED MARKET FUND for the fiscal
year ended September 30, 1996 has been audited by Price Waterhouse, the Fund's
current independent auditors. The information in the tables for each of the
Fund's fiscal years in the four-year period ended September 30, 1995 was audited
by Ernst & Young, the Fund's prior independent auditors. The information in the
tables for EVERGREEN AGGRESSIVE GROWTH FUND for the fiscal periods ended
September 30, 1996 and 1995 has been audited by Price Waterhouse LLP, the Fund's
current independent auditors. The information in the tables for each of the
years in the three-year period ended October 31, 1994 was audited by Tait,
Weller & Baker, the Fund's prior independent auditors. A report of Price
Waterhouse LLP, Ernst & Young LLP or Tait Weller & Baker, as the case may be, on
the audited information with respect to each Fund is incorporated by reference
in the Statement of Additional Information. The following information for each
Fund should be read in conjunction with the financial statements and related
notes which are incorporated by reference in the Statement of Additional
Information.
Further information about a Fund's performance is contained in the Fund's
annual report to shareholders, which may be obtained without charge.
EVERGREEN 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.
5
<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>
6
<PAGE>
EVERGREEN U.S. REAL ESTATE EQUITY FUND -- CLASS Y SHARES
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED YEAR ENDED ENDED
SEPTEMBER 30, 1996| SEPTEMBER 30, 1995 SEPTEMBER 30, 1994#
<S> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning of
period.............................. $11.44 $10.07 $ 10.71
Income (loss) from investment
operations:
Net investment income............... .24 .23 .11
Net realized and unrealized gain
(loss) on investments............. 1.29 1.46 (.75)
Total from investment
operations.................... 1.53 1.69 (.64)
Less distributions to shareholders
from:
Net investment income............... (.20) (.20) --
In excess of net investment
income............................ -- -- --
Net realized gains.................. (.21) (.12) --
Total distributions............. .41 (.32) --
Net asset value, end of period........ $12.56 $11.44 $ 10.07
TOTAL RETURN+......................... 13.6% 17.6% (6.0%)
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's
omitted)............................ $10,601 $9,456 $8,630
Ratios to average net assets:
Expenses**.......................... 1.46% 1.50% 1.49%++
Interest expense.................... .04% -- --
Net investment income**............. 2.02% 2.45% 1.60%++
Portfolio turnover rate............... 169% 115% 102%
Average commission rate paid per
share............................... $.0619 N/A N/A
<CAPTION>
SEPTEMBER 1, 1993*
THROUGH
DECEMBER 31, 1993
<S> <C>
PER SHARE DATA
Net asset value, beginning of
period.............................. $ 10.00
Income (loss) from investment
operations:
Net investment income............... .04
Net realized and unrealized gain
(loss) on investments............. .72
Total from investment
operations.................... .76
Less distributions to shareholders
from:
Net investment income............... (.04)
In excess of net investment
income............................ (.01)
Net realized gains.................. --
Total distributions............. (.05)
Net asset value, end of period........ $ 10.71
TOTAL RETURN+......................... 7.6%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's
omitted)............................ $4,610
Ratios to average net assets:
Expenses**.......................... .44%++
Interest expense.................... --
Net investment income**............. 1.93%++
Portfolio turnover rate............... 17%
Average commission rate paid per
share............................... 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>
7
<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>
8
<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>
9
<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>
* 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>
10
<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.
11
<PAGE>
EVERGREEN AGGRESSIVE GROWTH FUND -- CLASS B, C AND Y SHARES
<TABLE>
<CAPTION>
CLASS B SHARES CLASS C SHARES CLASS Y SHARES
JULY 7, AUGUST 3, JULY 11,
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..................... $17.35 $15.82 $17.31 $16.42 $17.38 $15.79
Income (loss) from investment
operations:
Net investment loss........... (.16) (.03) (.15) (.01) (.06) (.01)
Net realized and unrealized
gain on investments......... 4.34 1.56 4.36 .90 4.41 1.60
Total from investment
operations................ 4.18 1.53 4.21 .89 4.35 1.59
Less distributions to
shareholders from net realized
gains......................... (.64) -- (.64) -- (.64) --
Net asset value, end of
period........................ $20.89 $17.35 $20.88 $17.31 $21.09 $17.38
TOTAL RETURN+................... 24.9% 9.7% 25.1% 5.4% 25.8% 10.1%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted)............... $21,644 $2,858 $991 $416 $25,918 $1,889
Ratios to average net assets:
Expenses...................... 1.98% 2.09%++ 1.96% 2.09%++ .97% 1.08%++
Net investment loss........... (1.60%) (1.71%)++ (1.57%) (1.51%)++ (.60%) (.71%)++
Portfolio turnover rate......... 33% 31% 33% 31% 33% 31%
Average commission rate paid
per share..................... $.0582 N/A $.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.
12
<PAGE>
DESCRIPTION OF THE FUNDS
INVESTMENT OBJECTIVES AND POLICIES
Each Fund's investment objective is fundamental policy, which 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 stock and securities
convertible into or exchangeable for common stock of companies which are
little-known, relatively small or represent special situations which, in the
opinion of the Fund's investment adviser, offer potential for capital
appreciation. A "little-known" company means one whose business is limited to a
regional market or whose securities are closely held with only a small
proportion traded publicly. A "relatively small" company means one which has a
small share of the market for its products or services in comparison with other
companies in its field, or which provides goods or services for a limited
market. A "special situation" company is one which offers potential for capital
appreciation because of a recent or anticipated change in structure, management,
products or services. In addition to the securities described above, the
EVERGREEN FUND may invest in securities of relatively well-known and large
companies with potential for capital appreciation. Investments may also be made
to a limited degree in non-convertible debt securities and preferred stocks
which offer an opportunity for capital appreciation. Short-term investments may
also be made if the Fund's investment adviser believes that such action will
benefit the Fund. See "Special Risk Considerations".
EVERGREEN U.S. REAL ESTATE EQUITY FUND
The 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 will be a secondary objective. Equity securities
will 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 nonconvertible 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, Inc.
13
<PAGE>
("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
The investment objective of EVERGREEN LIMITED MARKET FUND is to achieve
capital appreciation; income is not a factor in the selection of portfolio
securities. The Fund seeks to achieve its objective principally through
investments in common stock of companies for which there is a relatively limited
trading market. A relatively limited trading market is one in which only small
amounts of stock are available at any given time generally through five or fewer
market makers. The securities of such companies are often traded only
over-the-counter or on a regional securities exchange, rarely on a national
securities exchange, and may not trade every day or in the volume typical of
trading on a national securities exchange.
Investments by the Fund are made with a view toward taking advantage of
market inefficiencies affecting the price of a company's securities or by
exploiting the investment opportunities which may be inherent in companies
offering new or unique products or services. Market inefficiency can result from
a company being too small to be covered by most industry analysts, thereby
resulting in a limited dissemination of information about the company or its
industry. The companies in which the Fund may invest are small, but have at
least $1,000,000 and generally no more than $150,000,000 of market
capitalization (see "Investment Practices and Restrictions -- 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 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
14
<PAGE>
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.
INVESTMENT PRACTICES AND RESTRICTIONS
Defensive Investments. The Funds 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. It is anticipated that the annual portfolio
turnover rate for the EVERGREEN FUND will not exceed 100%. It is anticipated
that the annual portfolio turnover rate for EVERGREEN U.S. REAL ESTATE EQUITY
FUND, EVERGREEN LIMITED MARKET FUND and EVERGREEN AGGRESSIVE GROWTH FUND may
exceed 100%. A portfolio turnover rate of 100% would occur if all of a Fund's
portfolio securities were replaced in one year. The portfolio turnover rate
experienced by a Fund directly affects brokerage commissions and other
transaction costs which the Fund bears directly. A high rate of portfolio
turnover will increase such costs. It is contemplated that Lieber & Company, an
affiliate of Evergreen Asset Management Corp. ("Evergreen Asset") and a member
of the New York and American Stock Exchanges, will to the extent practicable
effect substantially all of the portfolio transactions for EVERGREEN FUND,
EVERGREEN U.S. REAL ESTATE EQUITY FUND and EVERGREEN LIMITED MARKET FUND
effected on those exchanges. See the Statement of Additional Information for
further information regarding the brokerage allocation practices of the Funds.
The portfolio turnover rate for each Fund is set forth in the tables contained
in the section entitled "Financial Highlights".
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 Statement of Additional Information.
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 a reasonable price
could impair the 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,
15
<PAGE>
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 Funds custodian or primary dealers in U.S. government securities.
A repurchase agreement is an arrangement pursuant to which a buyer purchases a
security and simultaneously agrees to resell it to the vendor at a price that
results in an agreed-upon market rate of return which is effective for the
period of time (which is normally one to seven days, but may be longer) the
buyer's money is invested in the security. The arrangement results in a fixed
rate of return that is not subject to market fluctuations during the holding
period. A Fund requires continued maintenance of 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 and EVERGREEN AGGRESSIVE GROWTH
FUND may borrow money by entering into a "reverse repurchase agreement" by which
they agree to sell portfolio securities to financial institutions such as banks
and broker-dealers, and to repurchase them at a mutually agreed upon date and
price, for temporary or emergency purposes. At the time a Fund enters into a
reverse repurchase agreement, it will place in a segregated custodial account
cash, 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.
Futures and Related Options. The EVERGREEN U.S. REAL ESTATE EQUITY FUND may, to
a limited extent, enter into financial futures contracts, including futures
contracts based on securities indices, and purchase and sell options on such
futures contracts. The sale of a futures contract obligates the Fund to deliver
the amount of securities, currency, or in the case of an index futures contract,
cash, called for in the futures contract on a specific future date and price.
Conversely, the purchase of a futures contract obligates the Fund to receive
(purchase) the amount of securities, currency, or in the case of an index
futures contract, cash, called for in the futures contract on a specific future
date and at a specific price. While the terms of futures contracts call for
actual delivery or receipt of the underlying property, the majority of such
contracts are "closed out" prior to settlement date by entering into an
offsetting purchase or sale transaction. Upon entering into a futures contract,
the Fund must make an initial margin deposit representing a portion of the funds
that would be required to settle the contract. Thereafter, on each day that
futures contracts to which the Fund is a party trade, the Fund may be required
to post additional "variation" margin as a result of changes in the value of the
futures contract. The Fund does not segregate assets in an amount equal to its
total exposure under futures contracts.
While the Fund will enter into futures contracts only if there appears to
be a liquid secondary market for such contracts, there can be no assurance that
the Fund will be able to close out its position in a specific contract at any
specific time. The Fund will not enter into a particular index-based futures
contract unless the Fund's investment adviser determines that a correlation
exists between price movements in the index-based futures contract and in
securities in the Fund's portfolio. Such correlation is not likely to be
perfect, since the Fund's portfolio is not likely to contain the same securities
used in the index.
An option on a futures contract entitles its holder to enter into a
futures contract on specific terms which remain fixed until the expiration of
the option, regardless of the movement of futures prices in general. If the
movement of currency futures prices during the term of the option are such that
it does not become advantageous for the Fund to exercise the option or enter
into an offsetting options transaction, the option will expire and have no
further value. The exposure of the Fund in connection with purchase of an option
on a futures contract is limited to the premium paid for the option. The Fund
will only use futures instruments for hedging, not speculative, purposes. The
Fund may not enter into futures contracts or related options if, immediately
thereafter, more than 30% of the Fund's total assets would be hedged thereby or
the amounts committed to margin and premiums paid for unexpired options would
exceed 5% of the Fund's total assets.
16
<PAGE>
SPECIAL RISK CONSIDERATIONS
Investment in Small Companies. Investments in securities of little-known,
relatively small and special situation companies may tend to be speculative and
volatile. A lack of management depth in such companies could increase the risks
associated with the loss of key personnel. Also, the material and financial
resources of such companies may be limited, with the consequence that funds or
external financing necessary for growth may be unavailable. Such companies may
also be involved in the development or marketing of new products or services for
which there are no established markets. If projected markets do not materialize
or only regional markets develop, such companies may be adversely affected or be
subject to the consequences of local events. Moreover, such companies may be
insignificant factors in their industries and may become subject to intense
competition from larger companies. Securities of companies in which the Funds
may invest will frequently be traded only in the over-the-counter market or on
regional stock exchanges and will often be closely held. Securities of this type
may have limited liquidity and be subject to wide price fluctuations. As a
result of the risk factors described above, the net asset value of each Fund's
shares can be expected to vary significantly. Accordingly, each Fund should not
be considered suitable for investors who are unable or unwilling to assume the
associated risks, nor should investment in the Funds be considered a balanced or
complete investment program.
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.
OTHER INVESTMENT RESTRICTIONS. Each Fund has adopted additional investment
restrictions that are set forth in the Statement of Additional Information.
Unless otherwise noted, the restrictions and policies set forth above are not
fundamental and may be changed without shareholder approval.
MANAGEMENT OF THE FUNDS
INVESTMENT ADVISERS
The management of the EVERGREEN FUND, EVERGREEN U.S. REAL ESTATE EQUITY
FUND and EVERGREEN AGGRESSIVE GROWTH FUND is supervised by the Trustees of the
Trust under which each Fund has been established ("Trustees"). The management of
EVERGREEN LIMITED MARKET FUND is supervised by the Directors of the Fund
("Directors"). Evergreen Asset has been retained by EVERGREEN FUND, EVERGREEN
U.S. REAL ESTATE EQUITY FUND and EVERGREEN LIMITED MARKET FUND as investment
adviser. Evergreen Asset succeeded on June 30, 1994 to the advisory business of
a corporation with the same name, but under different ownership, which was
organized in 1971. Evergreen Asset, with its predecessors, has served as
investment adviser to the Evergreen mutual funds since 1971. Evergreen Asset is
a wholly-owned subsidiary of First Union National Bank of North Carolina
("FUNB"). The address of Evergreen Asset is 2500 Westchester Avenue, Purchase,
New York 10577. FUNB is a subsidiary of First Union Corporation ("First Union"),
the sixth largest bank holding company in the United States. Stephen A. Lieber
and Nola Maddox Falcone serve as the chief investment officers of Evergreen
Asset and, along with Theodore J. Israel, Jr., were the owners of Evergreen
Asset's predecessor and the former general partners of Lieber & Company which,
as described below, provides certain subadvisory services to Evergreen Asset in
connection with its duties as investment adviser to the Funds. The Capital
Management Group of FUNB ("CMG") serves as investment adviser to EVERGREEN
AGGRESSIVE GROWTH FUND.
17
<PAGE>
First Union is headquartered in Charlotte, North Carolina, and had $134
billion in consolidated assets as of September 30, 1996. First Union and its
subsidiaries provide a broad range of financial services to individuals and
businesses throughout the United States. CMG manages or otherwise oversees the
investment of over $42.5 billion in assets belonging to a wide range of clients,
including all the series of Evergreen Investment Trust, the two series of The
Evergreen Lexicon Fund and the two series of Evergreen Tax-Free Trust. First
Union Brokerage Services, Inc., a wholly-owned subsidiary of FUNB, is a
registered broker-dealer that is principally engaged in providing retail
brokerage services consistent with its federal banking authorizations. First
Union Capital Markets Corp., a wholly-owned subsidiary of First Union, is a
registered broker-dealer principally engaged in providing, consistent with its
federal banking authorizations, private placement, securities dealing, and
underwriting services.
As investment adviser to EVERGREEN FUND, EVERGREEN U.S. REAL ESTATE
EQUITY FUND and EVERGREEN LIMITED MARKET FUND, Evergreen Asset manages each
Fund's investments, provides various administrative services and supervises each
Fund's daily business affairs, subject to the authority of the
Trustees/Directors. Evergreen Asset is entitled to receive from each Fund an
annual fee equal to 1% of average daily net assets of each Fund on the first
$750 million in assets, .9 of 1% of average daily net assets on the next $250
million in assets, and .8 of 1% of average daily net assets on assets in excess
of $1 billion. The fee paid by EVERGREEN FUND, EVERGREEN U.S. REAL ESTATE EQUITY
FUND and EVERGREEN LIMITED MARKET FUND is higher than the rate paid by most
other investment companies. The total annualized operating expenses of EVERGREEN
FUND, EVERGREEN U.S. REAL ESTATE EQUITY FUND and EVERGREEN LIMITED MARKET FUND
for the fiscal year ended September 30, 1996, are set forth in the section
entitled "Financial Highlights". Until EVERGREEN U.S. REAL ESTATE EQUITY FUND
reaches net assets of $15 million, Evergreen Asset will reimburse the Fund to
the extent the Fund's aggregate operating expenses (including Evergreen Asset's
fee, but excluding interest, taxes, brokerage commissions, Rule 12b-1
distribution fees and shareholder servicing fees and extraordinary expenses)
exceed 1.50% of average net assets for any fiscal year. From time to time,
Evergreen Asset may further reduce or waive its fee or reimburse each Fund for
certain of its expenses in order to reduce the Fund's expense ratio. As a result
the Fund's total return would be higher than if the fees and any expenses had
been paid by the Fund.
CMG manages investments and supervises the daily business affairs of
EVERGREEN AGGRESSIVE GROWTH FUND and, as compensation therefor, is entitled to
receive an annual fee equal to .60 of 1% of average daily net assets of the
Fund. The total annualized operating expenses of EVERGREEN AGGRESSIVE GROWTH
FUND for its fiscal year ended September 30, 1996, are set forth in the section
entitled "Financial Highlights".
Evergreen Asset serves as administrator to EVERGREEN AGGRESSIVE GROWTH
FUND and is entitled to receive a fee based on the average daily net assets of
the Fund at a rate based on the total assets of the mutual funds administered by
Evergreen Asset for which CMG or Evergreen Asset also serve as investment
adviser, calculated in accordance with the following schedule: .050% of 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. Furman Selz LLC, an affiliate of Evergreen Funds
Distributor, Inc., distributor for the Evergreen group of mutual funds, serves
as sub-administrator to EVERGREEN AGGRESSIVE GROWTH FUND and is entitled to
receive a fee from the Fund calculated on the average daily net assets of the
Fund at a rate based on the total assets of the mutual funds administered by
Evergreen Asset for which CMG or Evergreen Asset 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 the mutual
funds administered by Evergreen Asset for which CMG or Evergreen Asset serve as
investment adviser were approximately $16.3 billion as of October 31, 1996.
The portfolio manager for EVERGREEN FUND is Stephen A. Lieber, who is
Chairman and Co-Chief Executive Officer of Evergreen Asset. Mr. Lieber is the
founder of Evergreen Asset and has been associated with Evergreen Asset and its
predecessor since 1971. 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. The portfolio manager for
EVERGREEN U.S. REAL ESTATE EQUITY FUND is Samuel A. Lieber. Mr. Samuel Lieber
has been the Fund's principal manager since inception and has been associated
with Evergreen Asset since 1985. The portfolio of EVERGREEN LIMITED MARKET FUND
is managed by a committee, which includes Stephen A. Lieber and Nola Maddox
Falcone, President and Co-Chief Executive Officer of Evergreen Asset, together
with portfolio management and analytical personnel employed by Evergreen Asset
or its affiliates.
18
<PAGE>
SUB-ADVISER
Evergreen Asset has entered into sub-advisory agreements with Lieber &
Company which provide that Lieber & Company's research department and staff will
furnish Evergreen Asset with information, investment recommendations, advice and
assistance, and will be generally available for consultation on the portfolios
of EVERGREEN FUND, EVERGREEN U.S. REAL ESTATE EQUITY FUND and EVERGREEN LIMITED
MARKET FUND. Lieber & Company will be reimbursed by Evergreen Asset in
connection with the rendering of services on the basis of the direct and
indirect costs of performing such services. There is no additional charge to
EVERGREEN FUND, EVERGREEN U.S. REAL ESTATE EQUITY FUND and EVERGREEN LIMITED
MARKET FUND for the services provided by Lieber & Company. The address of Lieber
& Company is 2500 Westchester Avenue, Purchase, New York 10577. Lieber & Company
is an indirect, wholly-owned, subsidiary of First Union.
DISTRIBUTION PLANS AND AGREEMENTS
Rule 12b-1 under the 1940 Act permits an investment company to pay
expenses associated with the distribution of its shares in accordance with a
duly adopted plan. Each Fund has adopted for each of its Class A, Class B and
Class C shares a Rule 12b-1 plan (each, a "Plan" or collectively the "Plans").
Under the Plans, each Fund may incur distribution-related and shareholder
servicing-related expenses which may not exceed an annual rate of .75 of 1% of
the Fund's aggregate average daily net assets attributable to Class A shares and
1.00% of the Fund's aggregate average daily net assets attributable to the Class
B and Class C shares. Payments with respect to Class A shares under the Plan are
currently voluntarily limited to .25 of 1% of each Fund's aggregate average
daily net assets attributable to Class A shares. The Plans provide that a
portion of the fee payable thereunder in an amount not to exceed .25 of 1% of
the aggregate average daily net assets of each Fund attributable to each Class
of shares may constitute a service fee to be used for providing ongoing personal
service and/or the maintenance of shareholder accounts.
Each Fund has also entered into a distribution agreement (each a
"Distribution Agreement" or collectively the "Distribution Agreements") with
Evergreen Funds Distributor, Inc. ("EFD"). Pursuant to the Distribution
Agreements, each Fund will compensate EFD for its services as distributor at a
rate which may not exceed an annual rate of .25 of 1% of a Fund's aggregate
average daily net assets attributable to Class A shares and .75 of 1% of a
Fund's aggregate average daily net assets attributable to the Class B and Class
C shares. The Distribution Agreements provide that EFD will use the distribution
fee received from a Fund for payments (i) to compensate broker-dealers or other
persons for distributing shares of the Funds, including interest and principal
payments made in respect of amounts paid to broker-dealers or other persons that
have been financed (EFD 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. The financing of
payments made by EFD to compensate broker-dealers or other persons for
distributing shares of the Funds may be provided by FUNB or its affiliates. The
Funds may also make payments under the Plans, in amounts up to .25 of 1% of a
Fund's aggregate average daily net assets on an annual basis attributable to
Class B and Class C shares, to compensate organizations, which may include EFD,
CMG and Evergreen Asset 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. Since EFD's compensation under
the Distribution Agreements is not directly tied to the expenses incurred by
EFD, 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 EFD. Distribution expenses incurred by EFD in one fiscal year that
exceed the level of compensation paid to EFD for that year may be paid from
distribution fees received from a Fund in subsequent fiscal years.
The Plans are in compliance with 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 .75
of 1% and .25 of 1%, respectively, of the average 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 at the prime rate plus 1% per annum.
19
<PAGE>
PURCHASE AND REDEMPTION OF SHARES
HOW TO BUY SHARES
You can purchase shares of any of the Funds through broker-dealers, banks
or other financial intermediaries, or directly through EFD. The minimum initial
investment is $1,000, which may be waived in certain situations. There is no
minimum for subsequent investments. Investments of $25 or more are allowed under
the systematic investment plan. Share certificates are not issued. In states
where EFD is not registered as a broker-dealer shares of a Fund will only be
sold through Furman Selz LLC, other broker-dealers or other financial
institutions that are registered. See the Share Purchase Application and
Statement of Additional Information 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 can purchase Class A
shares at net asset value plus an initial sales charge on purchases under
$1,000,000. On purchases of $1,000,000 or more 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 first year after
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
Amount of Purchase Amount Invested Offering Price as a % of Offering Price
<S> <C> <C> <C>
Less than $ 50,000 4.99% 4.75% 4.25%
$ 50,000 - $ 99,000 4.71% 4.50% 4.25%
$ 100,000 - $ 249,999 3.90% 3.75% 3.25%
$ 250,000 - $ 499,999 2.56% 2.50% 2.00%
$ 500,000 - $ 999,999 2.04% 2.00% 1.75%
$1,000,000 - $2,999,999 None None 1.00%
$3,000,000 - $4,999,999 None None .50%
Over $5,000,000 None None .25%
</TABLE>
No front-end sales charges are imposed on Class A shares purchased by:
institutional investors, which may include bank trust departments and registered
investment advisers; 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; 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,
EFD and any broker-dealer with whom EFD 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 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 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 .50 of 1% 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.
20
<PAGE>
When Class A shares are sold, EFD 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. EFD 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 .25 of 1% 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 Combined Purchase Privilege, Cumulative Quantity
Discount, Statement of Intention, Privilege for Certain Retirement Plans and
Reinstatement Privilege. Consult the Share Purchase Application and Statement of
Additional Information for additional information concerning these reduced sales
charges.
Class B Shares -- Deferred Sales Charge Alternative. You can 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 purchase. Shares obtained
from dividend or distribution reinvestment are not subject to the CDSC. 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 purchase of Class B shares as set forth below.
<TABLE>
<CAPTION>
Year Since
Purchase Contingent Deferred Sales Charge
<S> <C>
FIRST 5%
SECOND 4%
THIRD and FOURTH 3%
FIFTH 2%
SIXTH 1%
</TABLE>
The CDSC is deducted from the amount of the redemption and is paid to
EFD. The CDSC will be waived on redemptions of shares following the death or
disability of a shareholder, to meet distribution requirements for certain
qualified retirement plans or in the case of certain redemptions made under a
Fund's Systematic Cash Withdrawal Plan. Class B shares are subject to higher
distribution and/or shareholder service fees than Class A shares for a period of
seven years (after which it is expected that they will convert to Class A
shares). 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. See the Statement of Additional Information for further details. Class
C Shares -- Level-Load Alternative. You can purchase Class C shares 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 1.0% CDSC if you redeem
shares during the first year after purchase. 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. Shares
obtained from dividend or distribution reinvestment are not subject to the CDSC.
The maximum amount of Class C shares that may be purchased is $500,000.
No contingent deferred sales charge 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 .75 of 1% 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 contingent deferred sales
charge normally applicable to Class C shares.
With respect to Class B shares and Class C shares, no CDSC will be
imposed on: (1) the portion of redemption proceeds attributable to increases in
the value of the account due to increases in the net asset value per share, (2)
shares acquired through reinvestment of dividends and capital gains, (3) shares
held for more than six years (in the case of Class B shares) or one year (in the
case of Class C shares) after the end of the calendar month of acquisition, (4)
accounts following the death or disability of a shareholder, or (5) minimum
required distributions to a shareholder over the age of 70 1/2 from an IRA or
other retirement plan.
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
21
<PAGE>
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 market.
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 dealers, EFD will from
time to time pay to 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 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 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. EFD may also limit the availability of such incentives to
certain specified dealers. EFD 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 dealers. Certain broker-dealers may also receive payments from EFD 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 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 on any day
the Exchange is open, either directly or through your financial intermediary.
The price you will receive is the net asset value (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 ten 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 State Street Bank and Trust Company ("State
Street") which is the registrar, transfer agent and dividend-disbursing agent
for each Fund. Stock power forms are available from your financial intermediary,
State Street, 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 $10,000 or where the redemption
proceeds are to be mailed to an
22
<PAGE>
address other than that shown in the account registration. 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 to State Street.
Shareholders may withdraw amounts of $1,000 or more 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 State Street'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 made 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.
Shareholders who are unable to reach a Fund or State Street by telephone should
follow the procedures outlined above for redemption by mail.
The telephone redemption service is not made available to shareholders
automatically. Shareholders wishing to use the telephone redemption service must
indicate this 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. State Street currently deducts a $5 wire
charge from all redemption proceeds wired. This charge is subject to change
without notice. A shareholder who decides later to use this service, or to
change instructions already given, should fill out a Shareholder Services Form
and send it to State Street Bank and Trust Company, P.O. Box 9021, Boston,
Massachusetts 02205-9827, with such shareholder's signature guaranteed 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 to
State Street. Shareholders should allow approximately ten days for such form to
be processed. The Funds will employ reasonable procedures to verify that
telephone requests are genuine. These procedures include requiring some form of
personal identification prior to acting upon instructions and tape recording of
conversations. If a Fund fails to follow such procedures, it may be liable for
any losses due to unauthorized or fraudulent instructions. The Fund shall not be
liable for following telephone instructions reasonably believed to be genuine.
Also, each Fund reserves the right to refuse a telephone redemption request, if
it is believed advisable to do so. Financial intermediaries may charge a fee for
handling telephonic requests. The telephone redemption option may be suspended
or terminated at any time without notice.
General. The sale of shares is a taxable transaction for Federal income tax
purposes. Under unusual circumstances, a Fund may suspend redemptions or
postpone payment for up to seven days or longer, as permitted by Federal
securities law. The Funds reserve the right to close an account that through
redemption has remained below $1,000 for thirty days. Shareholders will receive
sixty days' written notice to increase the account value 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 Statement of Additional Information 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 mutual funds through your financial
intermediary, or by telephone or mail 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 value
of the shares exchanged next determined after an exchange request is received.
An exchange which represents an initial investment in another Evergreen mutual
fund is subject to the minimum investment and suitability requirements of each
Fund.
Each of the Evergreen 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 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.
23
<PAGE>
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 mutual
funds. If you redeem shares, the CDSC applicable to the Class B or Class C
shares of the Evergreen 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. You may exchange shares with a value of $1,000
or more by telephone by calling the telephone number on the front page of this
Prospectus. Exchange requests made after 4:00 p.m. (Eastern time) will be
processed using the net asset value determined on 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 State Street 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 State Street 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, EFD 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. Each Fund reserves the right to close an account that through
liquidation or termination of the Systematic Investment Plan has not reached a
minimum balance of $1,000 ($250 for retirement accounts) within 24 months of the
initial investment. You can 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 3:00 p.m. (Eastern time)
will be credited to a shareholder's account the day the request is received.
Shares purchased under the Funds Systematic Investment Plan or Telephone
Investment Plan may not be redeemed for ten days from the date of investment.
Systematic Cash 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 Funds
Systematic Cash 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 check in a stated amount of not less
than $75. 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 Cash 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.
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 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". Evergreen Asset or CMG may provide compensation to organizations
providing administrative and recordkeeping services to plans which make shares
of the Evergreen mutual funds available to their participants.
24
<PAGE>
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.
Tax Sheltered Retirement Plans. Eligible investors may open a pension and profit
sharing account in any Evergreen mutual fund (except those funds having an
objective of providing tax free income) under the following prototype retirement
plans: (i) Individual Retirement Accounts ("IRAs") and Rollover IRAs; (ii)
Simplified Employee Pension (SEP) for sole proprietors, partnerships and
corporations; and (iii) Profit-Sharing and Money Purchase Pension Plans for
corporations and their employees.
EFFECT OF BANKING LAWS
The Glass-Steagall Act and other banking laws and regulations presently
prohibit member banks of the Federal Reserve System ("Member Banks") or their
non-bank affiliates from sponsoring, organizing, controlling, or distributing
the shares of registered open-end investment companies such as the Funds. Such
laws and regulations also prohibit banks from issuing, underwriting or
distributing securities in general. However, under the Glass-Steagall Act and
such other laws and regulations, a Member Bank or an affiliate thereof may act
as investment adviser, transfer agent or custodian to a registered open-end
investment company and may also act as agent in connection with the purchase of
shares of such an investment company upon the order of its customer. Evergreen
Asset, since it is a subsidiary 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 or Evergreen Asset 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 or Evergreen Asset were prevented from continuing
to provide the services called for under the investment advisory agreement, 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,
it is not anticipated that the shareholders of any Fund would 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 to be treated
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
25
<PAGE>
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 State Street, 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 Statement of
Additional Information. 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
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 and EVERGREEN AGGRESSIVE GROWTH 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)
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), 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, Registrar, Transfer Agent and Dividend-Disbursing Agent . 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. State Street is compensated for its services as transfer agent by a fee
based upon the number of shareholder accounts maintained for the Funds. The
transfer agency 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. FUNB
may act as sub-transfer agent in connection with certain telephonic services
provided to the Funds' shareholders, and
26
<PAGE>
with respect to shareholders participating in certain employee benefit plans for
which FUNB provides recordkeeping services.
Principal Underwriter. EFD, an affiliate of Furman Selz LLC, located 230 Park
Avenue, New York, New York 10169, is the principal underwriter of the Funds.
Furman Selz LLC also acts as sub-administrator to EVERGREEN AGGRESSIVE GROWTH
FUND and provides certain sub-administrative services to Evergreen Asset in
connection with its role as investment adviser to EVERGREEN FUND, EVERGREEN U.S.
REAL ESTATE EQUITY FUND and EVERGREEN LIMITED MARKET FUND 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 Evergreen Asset, (ii) certain institutional investors and
(iii) investment advisory clients of Evergreen Asset, 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 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 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. The Principal Underwriter may also reprint, and use as
advertising and sales literature, articles from EVERGREEN EVENTS, a quarterly
magazine provided to Evergreen 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 and EVERGREEN AGGRESSIVE
GROWTH FUND operate provide that no Trustee or shareholder will be personally
liable for the obligations of the Trust and that every written contract
27
<PAGE>
made by the Trust 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 Statement of Additional
Information, 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.
28
<PAGE>
INVESTMENT ADVISER
Evergreen Asset Management Corp., 2500 Westchester Avenue, Purchase, New York
10577
EVERGREEN FUND, EVERGREEN U.S. REAL ESTATE EQUITY FUND, EVERGREEN LIMITED
MARKET FUND
Capital Management Group of First Union National Bank of North Carolina, 201
South College Street, Charlotte, North Carolina 28288
EVERGREEN AGGRESSIVE GROWTH FUND
CUSTODIAN & TRANSFER AGENT
State Street Bank and Trust Company, Box 9021, Boston, Massachusetts
02205-9827
LEGAL COUNSEL
Sullivan & Worcester LLP, 1025 Connecticut Avenue, N.W., Washington, D.C.
20036
INDEPENDENT AUDITORS
Price Waterhouse LLP, 1177 Avenue of the Americas, New York, New York 10036
DISTRIBUTOR
Evergreen Funds Distributor, Inc., 230 Park Avenue, New York, New York 10169
536114rev02
*******************************************************************************
<PAGE>
PROSPECTUS November 29, 1996
EVERGREEN(SM) DOMESTIC GROWTH FUNDS (Evergreen Logo)
EVERGREEN FUND
EVERGREEN U.S. REAL ESTATE EQUITY FUND
EVERGREEN LIMITED MARKET FUND
EVERGREEN AGGRESSIVE GROWTH FUND
CLASS Y SHARES
The Evergreen Domestic Growth Funds (the "Funds") are designed to
provide investors with a selection of investment alternatives which seek to
provide capital growth and diversification. This Prospectus provides
information regarding the Class Y shares offered by the Funds. Each Fund
is, 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" for the Funds dated
November 29, 1996 has been filed with the Securities and Exchange
Commission and is incorporated by reference herein. The Statement of
Additional Information provides information regarding certain matters
discussed in this Prospectus and other matters which may be of interest to
investors, and may be obtained without charge by calling the Funds at (800)
235-0064. 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, 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
<TABLE>
<CAPTION>
<S> <C>
OVERVIEW OF THE FUNDS 2
EXPENSE INFORMATION 3
FINANCIAL HIGHLIGHTS 5
DESCRIPTION OF THE FUNDS
Investment Objectives and Policies 13
Investment Practices and Restrictions 15
MANAGEMENT OF THE FUNDS
Investment Advisers 17
Sub-Adviser 19
PURCHASE AND REDEMPTION OF SHARES
How to Buy Shares 19
How to Redeem Shares 20
Exchange Privilege 21
Shareholder Services 21
Effect of Banking Laws 22
OTHER INFORMATION
Dividends, Distributions and Taxes 22
General Information 23
</TABLE>
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. which, with its predecessors, has served as an investment
adviser to the Evergreen mutual funds since 1971. Evergreen Asset Management
Corp. ("Evergreen Asset") is a wholly-owned subsidiary of First Union National
Bank of North Carolina, 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.
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 United States 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 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 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.
THERE IS NO ASSURANCE THAT THE INVESTMENT OBJECTIVE OF ANY FUND WILL BE
ACHIEVED.
2
<PAGE>
EXPENSE INFORMATION
The table set forth below summarizes the shareholder transaction costs
associated with an investment in the Class Y Shares of the Fund. For further
information see "Purchase and Redemption of Shares".
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES
<S> <C>
Maximum Sales Charge Imposed on Purchases None
Sales Charge on Dividend Reinvestments None
Contingent Deferred Sales Charge None
Redemption Fee None
Exchange Fee (only applies after 4 exchanges per
year) $ 5.00
</TABLE>
The following table shows for the Fund the estimated annual operating
expenses (as a percentage of average net assets) attributable to Class Y Shares,
together with examples of the cumulative effect of such expenses on a
hypothetical $1,000 investment for the periods specified assuming (i) a 5%
annual return and (ii) redemption at the end of each period.
EVERGREEN FUND
<TABLE>
<CAPTION>
ANNUAL OPERATING
EXPENSES EXAMPLE
<S> <C> <C> <C>
Management Fees .98%
After 1 Year $ 12
Other Expenses .17%
After 3 Years $ 37
After 5 Years $ 63
Total 1.15%
After 10 Years $ 140
</TABLE>
EVERGREEN U.S. REAL ESTATE EQUITY FUND
<TABLE>
<CAPTION>
ANNUAL OPERATING
EXPENSES EXAMPLE
<S> <C> <C> <C>
Management Fees 1.00%
After 1 Year $ 15
Other Expenses* .50%
After 3 Years $ 47
After 5 Years $ 82
Total 1.50%
After 10 Years $ 179
</TABLE>
EVERGREEN LIMITED MARKET FUND
<TABLE>
<CAPTION>
ANNUAL OPERATING
EXPENSES EXAMPLE
<S> <C> <C> <C>
Management Fees 1.00%
After 1 Year $ 16
Other Expenses** .60%
After 3 Years $ 50
After 5 Years $ 87
Total 1.60%
After 10 Years $ 190
</TABLE>
EVERGREEN AGGRESSIVE GROWTH FUND
<TABLE>
<CAPTION>
ANNUAL OPERATING
EXPENSES EXAMPLE
<S> <C> <C> <C>
Management Fees .60%
After 1 Year $ 10
Other Expenses .37%
After 3 Years $ 31
After 5 Years $ 54
Total .97%
After 10 Years $ 119
</TABLE>
*Reflects agreement by Evergreen Asset to limit aggregate operating
expenses (including the Adviser's fee, but excluding interest, taxes, brokerage
commissions, Rule 12b-1 distribution fees, shareholder servicing fees and
extraordinary expenses) of EVERGREEN U.S. REAL ESTATE EQUITY FUND to 1.50% of
average net assets until the Fund reaches net assets of $15 million. Absent such
agreement, the annual operating expenses for Class Y Shares would be 2.25% of
average net assets.
**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 year ended September 30,
1996 for Class Y Shares was 1.55%.
3
<PAGE>
From time to time, each Fund's investment adviser may, at its discretion,
reduce or waive its fees or reimburse the Fund for certain of its expenses in
order to reduce the Fund's expense ratio. 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 the Class Y
Shares of the Funds will bear directly or indirectly. The amounts set forth
under "Other Expenses", as well as the amounts set forth in the example, are
estimated amounts for the current fiscal year based on historical experience for
the most recent fiscal period. THE EXAMPLES SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES OR INVESTMENT RETURN, ACTUAL EXPENSES
OR 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".
4
<PAGE>
FINANCIAL HIGHLIGHTS
The tables on the following pages present, for each Fund, financial
highlights for a share outstanding throughout each period indicated. The
information in the tables for the five most recent fiscal years or the life of
the Fund, if shorter, for EVERGREEN FUND and EVERGREEN U.S. REAL ESTATE EQUITY
FUND has been audited by Price Waterhouse LLP, each Fund's independent auditors.
The information in the tables for EVERGREEN LIMITED MARKET FUND for the fiscal
year ended September 30, 1996 has been audited by Price Waterhouse LLP, the
Fund's current independent auditors. The information in the tables for each of
the Fund's fiscal years in the four-year period ended September 30, 1995 was
audited by Ernst & Young LLP, the Fund's prior independent auditors. The
information in the tables for EVERGREEN AGGRESSIVE GROWTH FUND for the fiscal
periods ended September 30, 1996 and 1995 has been audited by Price Waterhouse
LLP, the Fund's current independent auditors. The information in the tables for
each of the years in the three-year period ended October 31, 1994 was audited by
Tait, Weller & Baker, the Fund's prior independent auditors. A report of Price
Waterhouse LLP, Ernst & Young LLP or Tait Weller & Baker, as the case may be, on
the audited information with respect to each Fund is incorporated by reference
in the Statement of Additional Information. The following information for each
Fund should be read in conjunction with the financial statements and related
notes which are incorporated by reference in the Statement of Additional
Information.
Further information about a Fund's performance is contained in the Fund's
annual report to shareholders, which may be obtained without charge.
EVERGREEN 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.
5
<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>
6
<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>
7
<PAGE>
EVERGREEN U.S. REAL ESTATE 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>
8
<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>
9
<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>
* 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>
10
<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.
11
<PAGE>
EVERGREEN AGGRESSIVE GROWTH FUND -- CLASS B, C AND Y SHARES
<TABLE>
<CAPTION>
CLASS B SHARES CLASS C SHARES CLASS Y SHARES
JULY 7, AUGUST 3, JULY 11,
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........................ $17.35 $15.82 $17.31 $16.42 $17.38 $15.79
Income (loss) from investment
operations:
Net investment loss........... (.16) (.03) (.15) (.01) (.06) (.01)
Net realized and unrealized
gain on investments......... 4.34 1.56 4.36 .90 4.41 1.60
Total from investment
operations................ 4.18 1.53 4.21 .89 4.35 1.59
Less distributions to
shareholders from net realized
gains......................... (.64) -- (.64) -- (.64) --
Net asset value, end of
period........................ $20.89 $17.35 $20.88 $17.31 $21.09 $17.38
TOTAL RETURN+................... 24.9% 9.7% 25.1% 5.4% 25.8% 10.1%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (000's
omitted)...................... $21,644 $2,858 $991 $416 $25,918 $1,889
Ratios to average net assets:
Expenses...................... 1.98% 2.09%++ 1.96% 2.09%++ .97% 1.08%++
Net investment loss........... (1.60%) (1.71%)++ (3.15%) (1.51%)++ (.60%) (.71%)++
Portfolio turnover rate......... 33% 31% 33% 31% 33% 31%
Average commission rate paid per
share......................... $.0582 N/A $.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.
12
<PAGE>
DESCRIPTION OF THE FUNDS
INVESTMENT OBJECTIVES AND POLICIES
Each Fund's investment objective is fundamental policy, which 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 stock and securities
convertible into or exchangeable for common stock of companies which are
little-known, relatively small or represent special situations which, in the
opinion of the Fund's investment adviser, offer potential for capital
appreciation. A "little-known" company means one whose business is limited to a
regional market or whose securities are closely held with only a small
proportion traded publicly. A "relatively small" company means one which has a
small share of the market for its products or services in comparison with other
companies in its field, or which provides goods or services for a limited
market. A "special situation" company is one which offers potential for capital
appreciation because of a recent or anticipated change in structure, management,
products or services. In addition to the securities described above, the
EVERGREEN FUND may invest in securities of relatively well-known and large
companies with potential for capital appreciation. Investments may also be made
to a limited degree in non-convertible debt securities and preferred stocks
which offer an opportunity for capital appreciation. Short-term investments may
also be made if the Fund's investment adviser believes that such action will
benefit the Fund. See "Special Risk Considerations".
EVERGREEN U.S. REAL ESTATE EQUITY FUND
The 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 will be a secondary objective. Equity securities
will 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
specific 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 nonconvertible 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, Inc.
13
<PAGE>
("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
The investment objective of EVERGREEN LIMITED MARKET FUND is to achieve
capital appreciation; income is not a factor in the selection of portfolio
securities. The Fund seeks to achieve its objective principally through
investments in common stock of companies for which there is a relatively limited
trading market. A relatively limited trading market is one in which only small
amounts of stock are available at any given time generally through five or fewer
market makers. The securities of such companies are often traded only
over-the-counter or on a regional securities exchange, rarely on a national
securities exchange, and may not trade every day or in the volume typical of
trading on a national securities exchange.
Investments by the Fund are made with a view toward taking advantage of
market inefficiencies affecting the price of a company's securities or by
exploiting the investment opportunities which may be inherent in companies
offering new or unique products or services. Market inefficiency can result from
a company being too small to be covered by most industry analysts, thereby
resulting in a limited dissemination of information about the company or its
industry. The companies in which the Fund may invest are small, but have at
least $1,000,000 and generally no more than $150,000,000 of market
capitalization (see "Investment Practices and Restrictions -- 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 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
14
<PAGE>
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.
INVESTMENT PRACTICES AND RESTRICTIONS
Defensive Investments. The Funds 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. It is anticipated that the annual portfolio
turnover rate for the EVERGREEN FUND will not exceed 100%. It is anticipated
that the annual portfolio turnover rate for EVERGREEN U.S. REAL ESTATE EQUITY
FUND, EVERGREEN LIMITED MARKET FUND and EVERGREEN AGGRESSIVE GROWTH FUND may
exceed 100%. A portfolio turnover rate of 100% would occur if all of a Fund's
portfolio securities were replaced in one year. The portfolio turnover rate
experienced by a Fund directly affects brokerage commissions and other
transaction costs which the Fund bears directly. A high rate of portfolio
turnover will increase such costs. It is contemplated that Lieber & Company, an
affiliate of Evergreen Asset Management Corp. ("Evergreen Asset") and a member
of the New York and American Stock Exchanges, will to the extent practicable
effect substantially all of the portfolio transactions for EVERGREEN FUND,
EVERGREEN U.S. REAL ESTATE EQUITY FUND and EVERGREEN LIMITED MARKET FUND
effected on those exchanges. See the Statement of Additional Information for
further information regarding the brokerage allocation practices of the Funds.
The portfolio turnover rate for each Fund is set forth in the tables contained
in the section entitled "Financial Highlights".
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 Statement of Additional Information.
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 a reasonable price
could impair the 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,
15
<PAGE>
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 Funds custodian or primary dealers in U.S. Government securities.
A repurchase agreement is an arrangement pursuant to which a buyer purchases a
security and simultaneously agrees to resell it to the vendor at a price that
results in an agreed-upon market rate of return which is effective for the
period of time (which is normally one to seven days, but may be longer) the
buyer's money is invested in the security. The arrangement results in a fixed
rate of return that is not subject to market fluctuations during the holding
period. A Fund requires continued maintenance of 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 and EVERGREEN AGGRESSIVE GROWTH
FUND may borrow money by entering into a "reverse repurchase agreement" by which
they agree to sell portfolio securities to financial institutions such as banks
and broker-dealers, and to repurchase them at a mutually agreed upon date and
price, for temporary or emergency purposes. At the time a Fund enters into a
reverse repurchase agreement, it will place in a segregated custodial account
cash, 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.
Futures and Related Options. The EVERGREEN U.S. REAL ESTATE EQUITY FUND may, to
a limited extent, enter into financial futures contracts, including futures
contracts based on securities indices, and purchase and sell options on such
futures contracts. The sale of a futures contract obligates the Fund to deliver
the amount of securities, currency, or in the case of an index futures contract,
cash, called for in the futures contract on a specific future date and price.
Conversely, the purchase of a futures contract obligates the Fund to receive
(purchase) the amount of securities, currency, or in the case of an index
futures contract, cash, called for in the futures contract on a specific future
date and at a specific price. While the terms of futures contracts call for
actual delivery or receipt of the underlying property, the majority of such
contracts are "closed out" prior to settlement date by entering into an
offsetting purchase or sale transaction. Upon entering into a futures contract,
the Fund must make an initial margin deposit representing a portion of the funds
that would be required to settle the contract. Thereafter, on each day that
futures contracts to which the Fund is a party trade, the Fund may be required
to post additional "variation" margin as a result of changes in the value of the
futures contract. The Fund does not segregate assets in an amount equal to its
total exposure under futures contracts.
While the Fund will enter into futures contracts only if there appears to
be a liquid secondary market for such contracts, there can be no assurance that
the Fund will be able to close out its position in a specific contract at any
specific time. The Fund will not enter into a particular index-based futures
contract unless the Fund's investment adviser determines that a correlation
exists between price movements in the index-based futures contract and in
securities in the Fund's portfolio. Such correlation is not likely to be
perfect, since the Fund's portfolio is not likely to contain the same securities
used in the index.
An option on a futures contract entitles its holder to enter into a
futures contract on specific terms which remain fixed until the expiration of
the option, regardless of the movement of futures prices in general. If the
movement of currency futures prices during the term of the option are such that
it does not become advantageous for the Fund to exercise the option or enter
into an offsetting options transaction, the option will expire and have no
further value. The exposure of the Fund in connection with purchase of an option
on a futures contract is limited to the premium paid for the option. The Fund
will only use futures instruments for hedging, not speculative, purposes. The
Fund may not enter into futures contracts or related options if, immediately
thereafter, more than 30% of the Fund's total assets would be hedged thereby or
the amounts committed to margin and premiums paid for unexpired options would
exceed 5% of the Fund's total assets.
16
<PAGE>
SPECIAL RISK CONSIDERATIONS
Investment in Small Companies. Investments in securities of little-known,
relatively small and special situation companies may tend to be speculative and
volatile. A lack of management depth in such companies could increase the risks
associated with the loss of key personnel. Also, the material and financial
resources of such companies may be limited, with the consequence that funds or
external financing necessary for growth may be unavailable. Such companies may
also be involved in the development or marketing of new products or services for
which there are no established markets. If projected markets do not materialize
or only regional markets develop, such companies may be adversely affected or be
subject to the consequences of local events. Moreover, such companies may be
insignificant factors in their industries and may become subject to intense
competition from larger companies. Securities of companies in which the Funds
may invest will frequently be traded only in the over-the-counter market or on
regional stock exchanges and will often be closely held. Securities of this type
may have limited liquidity and be subject to wide price fluctuations. As a
result of the risk factors described above, the net asset value of each Fund's
shares can be expected to vary significantly. Accordingly, each Fund should not
be considered suitable for investors who are unable or unwilling to assume the
associated risks, nor should investment in the Funds be considered a balanced or
complete investment program.
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.
OTHER INVESTMENT RESTRICTIONS. Each Fund has adopted additional investment
restrictions that are set forth in the Statement of Additional Information.
Unless otherwise noted, the restrictions and policies set forth above are not
fundamental and may be changed without shareholder approval.
MANAGEMENT OF THE FUNDS
INVESTMENT ADVISERS
The management of the EVERGREEN FUND, EVERGREEN U.S. REAL ESTATE EQUITY
FUND and EVERGREEN AGGRESSIVE GROWTH FUND is supervised by the Trustees of the
Trust under which each Fund has been established ("Trustees"). The management of
EVERGREEN LIMITED MARKET FUND is supervised by the Directors of the Fund
("Directors"). Evergreen Asset has been retained by EVERGREEN FUND, EVERGREEN
U.S. REAL ESTATE EQUITY FUND and EVERGREEN LIMITED MARKET FUND as investment
adviser. Evergreen Asset succeeded on June 30, 1994 to the advisory business of
a corporation with the same name, but under different ownership, which was
organized in 1971. Evergreen Asset, with its predecessors, has served as
investment adviser to the Evergreen mutual funds since 1971. Evergreen Asset is
a wholly-owned subsidiary of First Union National Bank of North Carolina
("FUNB"). The address of Evergreen Asset is 2500 Westchester Avenue, Purchase,
New York 10577. FUNB is a subsidiary of First Union Corporation ("First Union")
the sixth largest bank holding company in the United States. Stephen A. Lieber
and Nola Maddox Falcone serve as the chief investment officers of Evergreen
Asset and, along with Theodore J. Israel, Jr., were the owners of Evergreen
Asset's predecessor and the former general partners of Lieber & Company which,
as described below, provides certain subadvisory services to Evergreen Asset in
connection with its duties as investment adviser to the Funds. The Capital
Management Group of FUNB ("CMG") serves as investment adviser to EVERGREEN
AGGRESSIVE GROWTH FUND.
17
<PAGE>
First Union is headquartered in Charlotte, North Carolina, and had $134
billion in consolidated assets as of September 30, 1996. First Union and its
subsidiaries provide a broad range of financial services to individuals and
businesses throughout the United States. CMG manages or otherwise oversees the
investment of over $42.5 billion in assets belonging to a wide range of clients,
including all the series of Evergreen Investment Trust, the two series of The
Evergreen Lexicon Fund and the two series of Evergreen Tax-Free Trust. First
Union Brokerage Services, Inc., a wholly-owned subsidiary of FUNB, is a
registered broker-dealer that is principally engaged in providing retail
brokerage services consistent with its federal banking authorizations. First
Union Capital Markets Corp., a wholly-owned subsidiary of First Union, is a
registered broker-dealer principally engaged in providing, consistent with its
federal banking authorizations, private placement, securities dealing, and
underwriting services.
As investment adviser to EVERGREEN FUND, EVERGREEN U.S. REAL ESTATE
EQUITY FUND and EVERGREEN LIMITED MARKET FUND, Evergreen Asset manages each
Fund's investments, provides various administrative services and supervises each
Fund's daily business affairs, subject to the authority of the
Trustees/Directors. Evergreen Asset is entitled to receive from each Fund an
annual fee equal to 1% of average daily net assets of each Fund on the first
$750 million in assets, .9 of 1% of average daily net assets on an annual basis
on the next $250 million in assets, and .8 of 1% of average daily net assets on
assets in excess of $1 billion. The fee paid by EVERGREEN FUND, EVERGREEN U.S.
REAL ESTATE EQUITY FUND and EVERGREEN LIMITED MARKET FUND is higher than the
rate paid by most other investment companies. The total annualized operating
expenses of EVERGREEN FUND, EVERGREEN U.S. REAL ESTATE EQUITY FUND and EVERGREEN
LIMITED MARKET FUND for the fiscal year ended September 30, 1996, are set forth
in the section entitled "Financial Highlights". Until EVERGREEN U.S. REAL ESTATE
EQUITY FUND reaches net assets of $15 million, Evergreen Asset will reimburse
the Fund to the extent the Fund's aggregate operating expenses (including
Evergreen Asset's fee, but excluding interest, taxes, brokerage commissions,
Rule 12b-1 distribution fees and shareholder servicing fees and extraordinary
expenses) exceed 1.50% of average net assets for any fiscal year. From time to
time, Evergreen Asset may further reduce or waive its fee or reimburse each Fund
for certain of its expenses in order to reduce the Fund's expense ratio. As a
result the Fund's total return would be higher than if the fees and any expenses
had been paid by the Fund.
CMG manages investments and supervises the daily business affairs of
EVERGREEN AGGRESSIVE GROWTH FUND and, as compensation therefor, is entitled to
receive an annual fee equal to .60 of 1% of average daily net assets of the
Fund. The total annualized operating expenses of EVERGREEN AGGRESSIVE GROWTH
FUND for its fiscal year ended September 30, 1996, are set forth in the section
entitled "Financial Highlights".
Evergreen Asset serves as administrator to EVERGREEN AGGRESSIVE GROWTH
FUND and is entitled to receive a fee based on the average daily net assets of
this Fund at a rate based on the total assets of the mutual funds administered
by Evergreen Asset for which CMG or Evergreen Asset also serve as investment
adviser, calculated in accordance with the following schedule: .050% of 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. Furman Selz LLC, an affiliate of Evergreen Funds
Distributor, Inc., distributor for the Evergreen group of mutual funds, serves
as sub-administrator to EVERGREEN AGGRESSIVE GROWTH FUND and is entitled to
receive a fee from the Fund calculated on the average daily net assets of the
Fund at a rate based on the total assets of the mutual funds administered by
Evergreen Asset for which CMG or Evergreen Asset 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 the mutual
funds administered by Evergreen Asset for which CMG or Evergreen Asset serve as
investment adviser were approximately $16.3 billion as of October 31, 1996.
The portfolio manager for EVERGREEN FUND is Stephen A. Lieber, who is
Chairman and Co-Chief Executive Officer of Evergreen Asset. Mr. Lieber is the
founder of Evergreen Asset and has been associated with Evergreen Asset and its
predecessor since 1971. 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. The portfolio manager for
EVERGREEN U.S. REAL ESTATE EQUITY FUND is Samuel A. Lieber. Mr. Samuel Lieber
has been the Fund's principal manager since inception and has been associated
with Evergreen Asset since 1985. The portfolio of EVERGREEN LIMITED MARKET FUND
is managed by a committee, which includes Stephen A. Lieber and Nola Maddox
Falcone, President and Co-Chief Executive Officer of Evergreen Asset, together
with portfolio management and analytical personnel employed by Evergreen Asset
or its affiliates.
18
<PAGE>
SUB-ADVISER
Evergreen Asset has entered into sub-advisory agreements with Lieber &
Company which provide that Lieber & Company's research department and staff will
furnish Evergreen Asset with information, investment recommendations, advice and
assistance, and will be generally available for consultation on the portfolios
of EVERGREEN FUND, EVERGREEN U.S. REAL ESTATE EQUITY FUND and EVERGREEN LIMITED
MARKET FUND. Lieber & Company will be reimbursed by Evergreen Asset in
connection with the rendering of services on the basis of the direct and
indirect costs of performing such services. There is no additional charge to
EVERGREEN FUND, EVERGREEN U.S. REAL ESTATE EQUITY FUND and EVERGREEN LIMITED
MARKET FUND for the services provided by Lieber & Company. The address of Lieber
& Company is 2500 Westchester Avenue, Purchase, New York 10577. Lieber & Company
is an indirect, wholly-owned, subsidiary of First Union.
PURCHASE AND REDEMPTION OF SHARES
HOW TO BUY SHARES
Eligible investors may purchase Fund shares at net asset value by mail or
wire as described below. The Funds impose no sales charges on Class Y shares.
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 Evergreen Asset, (ii) certain institutional
investors and (iii) investment advisory clients of CMG, Evergreen Asset or their
affiliates. The minimum initial investment is $1,000, which may be waived in
certain situations. There is no minimum for subsequent investments. Investors
may make subsequent investments by establishing a Systematic Investment Plan or
a Telephone Investment Plan.
Purchases by Mail or Wire. Each investor must complete the Share Purchase
Application and mail it together with a check made payable to the Fund whose
shares are being purchased, to State Street Bank and Trust Company ("State
Street") at P.O. Box 9021, Boston, Massachusetts 02205-9827. Checks not drawn on
U.S. banks will be subject to foreign collection which will delay an investor's
investment date and will be subject to processing fees.
When making subsequent investments, an investor should either enclose the
return remittance portion of the statement, or indicate on the face of the
check, the name of the Fund in which an investment is to be made, the exact
title of the account, the address, and the Fund account number. Purchase
requests should not be sent to a Fund in New York. If they are, the Fund must
forward them to State Street, and the request will not be effective until State
Street receives them.
Initial investments may also be made by wire by (i) calling State Street
at 800-423-2615 for an account number and (ii) instructing your bank, which may
charge a fee, to wire federal funds to State Street, as follows: State Street
Bank and Trust Company, ABA No.0110-0002-8, Attn: Custodian and Shareholder
Services. The wire must include references to the Fund in which an investment is
being made, account registration, and the account number. A completed Share
Purchase Application must also be sent to State Street indicating that the
shares have been purchased by wire, giving the date the wire was sent and
referencing the account number. Subsequent wire investments may be made by
existing shareholders by following the instructions outlined above. It is not
necessary, however, for existing shareholders to call for another account
number.
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 a Fund's 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 market.
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 the Fund's investment
adviser for any loss. In addition, such investors may be prohibited or
restricted from making further purchases in any of the Evergreen mutual funds.
The Funds
19
<PAGE>
will not accept third party checks other than those payable directly to a
shareholder whose account has been in existence at least thirty days.
The Share Purchase Application may not be used to invest in any of the
prototype retirement plans for which the Funds are an available investment. For
information about the requirements to make such investments, including copies of
the necessary application forms, please call the telephone number set forth on
the cover page of this Prospectus. A Fund cannot accept investments specifying a
certain price or date and reserves the right to reject any specific purchase
order, including orders in connection with exchanges from the other Evergreen
mutual funds. Although not currently anticipated, each Fund reserves the right
to suspend the offer of shares for a period of time.
Shares of each Fund are sold at the net asset value per share next
determined after a shareholder's order is received. Investments by federal funds
wire or by check will be effective upon receipt by State Street. Qualified
institutions may telephone orders for the purchase of any Fund's shares.
Institutions should telephone the Fund (800-235-0064) for additional information
on purchases by telephone. Investors may also purchase shares through a
broker/dealer, which may charge a fee for the service.
HOW TO REDEEM SHARES
You may "redeem", i.e., sell your shares in a Fund to the Fund on any day
the Exchange is open, either directly or through your financial intermediary.
The price you will receive is the net asset value 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 ten days). Once a redemption request has been
telephoned or mailed, it is irrevocable and may not be modified or canceled.
Redeeming Shares Directly by Mail or Telephone. Send a signed letter of
instruction or stock power form to State Street which is the registrar, transfer
agent and dividend-disbursing agent for each Fund. Stock power forms are
available from your financial intermediary, State Street, 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 $10,000 or where the redemption proceeds are to be mailed to
an address other than that shown in the account registration. 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 to State Street.
Shareholders may withdraw amounts of $1,000 or more from their accounts
by calling State Street (800-423-2615) 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 State Street'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 made 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. Shareholders who are
unable to reach a Fund or State Street by telephone should follow the procedures
outlined above for redemption by mail.
The telephone redemption service is not made available to shareholders
automatically. Shareholders wishing to use the telephone redemption service must
indicate this 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. State Street currently deducts a $5 wire
charge from all redemption proceeds wired. This charge is subject to change
without notice. A shareholder who decides later to use this service, or to
change instructions already given, should fill out a Shareholder Services Form
and send it to State Street Bank and Trust Company, P.O. Box 9021, Boston,
Massachusetts 02205-9827, with such shareholder's signature guaranteed 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 to
State Street. Shareholders should allow approximately ten days for such form to
be processed. The Funds will employ reasonable procedures to verify that
telephone requests are genuine. These procedures include requiring some form of
personal identification prior to acting upon instructions and tape recording of
conversations. If a Fund fails to follow such procedures, it may be liable for
any losses due to unauthorized or fraudulent instructions. The Fund shall not be
liable for following telephone instructions reasonably believed to be
20
<PAGE>
genuine. Also, each Fund reserves the right to refuse a telephone redemption
request, if it is believed advisable to do so. Financial intermediaries may
charge a fee for handling telephonic requests. The telephone redemption option
may be suspended or terminated at any time without notice.
General. The sale of shares is a taxable transaction for Federal income tax
purposes. Under unusual circumstances, a Fund may suspend redemptions or
postpone payment for up to seven days or longer, as permitted by Federal
securities law. The Funds reserve the right to close an account that through
redemption has remained below $1,000 for thirty days. Shareholders will receive
sixty days' written notice to increase the account value 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 Statement of Additional Information 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 mutual funds by telephone or mail 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 value of the shares exchanged next determined
after an exchange request is received. An exchange, which represents an initial
investment in another Evergreen mutual fund, is subject to the minimum
investment and suitability requirements of each Fund.
Each of the Evergreen 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 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. Each Fund imposes a
fee of $5 per exchange on shareholders who exchange in excess of four times per
calendar year. 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 by Telephone and Mail. You may exchange shares with a value of $1,000
or more by telephone by calling State Street (800-423-2615). Exchange requests
made after 4:00 p.m. (Eastern time) will be processed using the net asset value
determined on 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 State Street 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 State
Street 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,
Evergreen Funds Distributor, Inc. ("EFD"), the distributor of the Funds' shares,
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. Each Fund reserves the right to close an account that through
liquidation or termination of the Systematic Investment Plan has not reached a
minimum balance of $1,000 ($250 for retirement accounts) within twenty-four
months of the initial investment. You can 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 3:00 p.m. (Eastern time)
will be credited to a shareholder's account the day the request is received.
21
<PAGE>
Shares purchased under the Funds Systematic Investment Plan or Telephone
Investment Plan may not be redeemed for ten days from the date of investment.
Systematic Cash 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 Funds
Systematic Cash 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 check in a stated amount of not less
than $75. 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.
Tax Sheltered Retirement Plans. Eligible investors may open a pension and profit
sharing account in any Evergreen mutual fund (except those funds having an
objective of providing tax free income) under the following prototype retirement
plans: (i) Individual Retirement Accounts ("IRAs") and Rollover IRAs; (ii)
Simplified Employee Pension (SEP) for sole proprietors, partnerships and
corporations; and (iii) Profit-Sharing and Money Purchase Pension Plans for
corporations and their employees.
EFFECT OF BANKING LAWS
The Glass-Steagall Act and other banking laws and regulations presently
prohibit member banks of the Federal Reserve System ("Member Banks") or their
non-bank affiliates from sponsoring, organizing, controlling, or distributing
the shares of registered open-end investment companies such as the Funds. Such
laws and regulations also prohibit banks from issuing, underwriting or
distributing securities in general. However, under the Glass-Steagall Act and
such other laws and regulations, a Member Bank or an affiliate thereof may act
as investment adviser, transfer agent or custodian to a registered open-end
investment company and may also act as agent in connection with the purchase of
shares of such an investment company upon the order of its customer. Evergreen
Asset, since it is a subsidiary 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 or Evergreen Asset 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 or Evergreen Asset were prevented from continuing
to provide the services called for under the investment advisory agreement, 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,
it is not anticipated that the shareholders of any Fund would 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 to be treated
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,
22
<PAGE>
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 Fund
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 State Street, 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 Statement of
Additional Information. 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
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 and EVERGREEN AGGRESSIVE GROWTH 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)
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 or Class were established in a Trust (or in EVERGREEN LIMITED MARKET
FUND), each share or any Class 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 or 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.
23
<PAGE>
Custodian, Registrar, Transfer Agent and Dividend-Disbursing Agent. 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.
State Street is compensated for its services as transfer agent by a fee based
upon the number of shareholder accounts maintained for the Funds. The transfer
agency 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. FUNB may act as
sub-transfer agent in connection with certain telephonic services provided to
the Funds' shareholders, and with respect to shareholders participating in
certain employee benefit plans for which FUNB provides recordkeeping services.
Principal Underwriter. EFD, an affiliate of Furman Selz LLC, located 230 Park
Avenue, New York, New York 10169, is the principal underwriter of the Funds.
Furman Selz LLC also acts as sub-administrator to EVERGREEN AGGRESSIVE GROWTH
FUND and provides certain sub-administrative services to Evergreen Asset in
connection with its role as investment adviser to EVERGREEN FUND, EVERGREEN U.S.
REAL ESTATE EQUITY FUND and EVERGREEN LIMITED MARKET FUND, 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 Evergreen Asset, (ii) certain
institutional investors and (iii) investment advisory clients of Evergreen
Asset, 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 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 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
24
<PAGE>
portfolios or allocations, as they relate to fund management, investment
philosophy, and investment techniques. The Principal Underwriter may also
reprint, and use as advertising and sales literature, articles from EVERGREEN
EVENTS, a quarterly magazine provided to Evergreen 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 and EVERGREEN AGGRESSIVE
GROWTH 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 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 Statement of Additional
Information, 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.
25
<PAGE>
INVESTMENT ADVISER
Evergreen Asset Management Corp., 2500 Westchester Avenue, Purchase, New York
10577
EVERGREEN FUND, EVERGREEN U.S. REAL ESTATE EQUITY FUND, EVERGREEN LIMITED
MARKET FUND
Capital Management Group of First Union National Bank of North Carolina, 201
South College Street, Charlotte, North Carolina 28288
EVERGREEN AGGRESSIVE GROWTH FUND
CUSTODIAN & TRANSFER AGENT
State Street Bank and Trust Company, Box 9021, Boston, Massachusetts
02205-9827
LEGAL COUNSEL
Sullivan & Worcester LLP, 1025 Connecticut Avenue, N.W., Washington, D.C.
20036
INDEPENDENT AUDITORS
Price Waterhouse LLP, 1177 Avenue of the Americas, New York, New York 10036
DISTRIBUTOR
Evergreen Funds Distributor, Inc., 230 Park Avenue, New York, New York 10169
536122rev02
<PAGE>
*******************************************************************************
STATEMENT OF ADDITIONAL INFORMATION
November 29, 1996
THE EVERGREEN DOMESTIC GROWTH FUNDS
2500 Westchester Avenue, Purchase, New York 10577
800-807-2940
Evergreen Fund ("Evergreen")
Evergreen Aggressive Growth Fund ("Aggressive")
Evergreen U.S. Real Estate Fund ("U.S. Real Estate")
Evergreen Limited Market Fund, Inc. ("Limited Market")
This Statement of Additional Information pertains to all classes of shares of
the Funds listed above. It is not a prospectus and should be read in conjunction
with the Prospectus dated November 29, 1996 for the Fund 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.
TABLE OF CONTENTS
Investment Objectives and Policies................................2
Investment Restrictions...........................................2
Non-Fundamental Operating Policies................................6
Certain Risk Considerations.......................................7
Management........................................................7
Investment Advisers...............................................15
Distribution Plans................................................19
Allocation of Brokerage...........................................21
Additional Tax Information........................................23
Net Asset Value...................................................26
Purchase of Shares................................................27
General Information About the Funds...............................38
Performance Information...........................................40
Financial Statements..............................................43
Appendix A - Description of Bond, Municipal Note And Commercial Paper Ratings.44
1
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES (See also "Description
of 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 forgoes 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.
2
<PAGE>
.........Neither Aggressive 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 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* 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, or U.S. Real Estate*
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 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
......... No Fund 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.
3
<PAGE>
.........None of Evergreen, Limited Market 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 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 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).
4
<PAGE>
.........Neither Evergreen nor Limited Market may purchase, sell or invest in
commodities or commodity contracts.
14.......Real Estate
..........None of Aggressive, Evergreen, Limited Market 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
5
<PAGE>
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* or U.S. Real Estate* may invest
more than 15% of its net assets in illiquid securities and other securities
6
<PAGE>
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 Objectives and Policies"
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.
Borrowing.
The table set forth below describes the extent to which Evergreen
entered into borrowing transactions during the fiscal years ended September 30,
1994, 1995 and 1996.
EVERGREEN
Average
Amount
Amount of Debt Average Amount of Average Number of of Debt
Outstanding Debt Outstanding Shares Outstanding Per-Share
Year Ended End of Year During the Year During the Year During Year
- ---------- ----------- ----------------- ------------------ -----------
9/30/94 $0 $11,164,110 39,709,107 $0.28
9/30/95 $0 $12,243,662 39,231,834 $0.31
9/30/96 $0 -0- -0- -0-
Limited Market
9/30/96 $280,000 $171,371 3,099,357 $0.06
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:
Laurence B. Ashkin (68), 180 East Pearson Street, Chicago, IL-Trustee/Director.
Real estate developer and construction consultant since 1980; President of
Centrum Equities since 1987 and Centrum Properties, Inc. since 1980.
7
<PAGE>
Foster Bam (69), Greenwich Plaza, Greenwich, CT-Trustee/Director. Partner in the
law firm of Cummings and Lockwood since 1968.
James S. Howell (72), 4124 Crossgate Road, Charlotte, NC-Chairman and Trustee/
Director. Retired Vice President of Lance Inc. (food manufacturing); Chairman of
the Distribution Comm. Foundation for the Carolinas from 1989 to 1993.
Gerald M. McDonnell (57), 209 East Nucor Rd. Norfolk, NE, NC-Trustee/Director.
Sales Representative with Nucor-Yamoto Inc. (steel producer) since 1988.
Thomas L. McVerry (58), 4419 Parkview Drive, Charlotte, NC-Trustee/Director.
Director of Carolina Cooperative Federal Credit Union since 1990 and Rexham
Corporation from 1988 to 1990; Vice President of Rexham Industries, Inc.
(diversified manufacturer) from 1989 to 1990; Vice President-Finance and
Resources, Rexham Corporation from 1979 to 1990.
William Walt Pettit*(41), Holcomb and Pettit, P.A., 227 West Trade St.,
Charlotte, NC-Trustee/Director. Partner in the law firm Holcomb and Pettit, P.A.
since 1990; Attorney, Clontz and Clontz from 1980 to 1990.
Russell A. Salton, III, M.D. (49) 205 Regency Executive Park, Charlott,
NC-Trustee/ Director. Medical Director, U.S. Healthcare of Charlotte, North
Carolina since 1995, President, Primary Physician Care from 1990 to 1996.
Michael S. Scofield (53), 212 S. Tryon Street Suite 1280, Charlotte,
NC-Trustee/Director. Attorney, Law Offices of Michael S. Scofield since 1969.
Robert J. Jeffries (73), 2118 New Bedford Drive, Sun City Center,
FL-Trustee/Director Emeritus. Corporate consultant since 1967.
John J. Pileggi (37), 237 Park Avenue, Suite 910, New York, NY-President and
Treasurer. Senior Managing Director, Furman Selz LLC since 1992, Managing
Director from 1984 to 1992.
Joan V. Fiore (40), 237 Park Avenue, Suite 910, New York, NY-Secretary. Managing
Director and Counsel, Furman Selz LLC since 1991; Staff Attorney, Securities and
Exchange Commission from 1986 to 1991.
The officers listed above hold the same positions with thirteen investment
companies offering a total of forty-three investment funds within the Evergreen
mutual fund complex. Messrs. Howell, Salton and Scofield are Trustees/Directors
of all thirteen investment companies. Messrs. McDonnell, McVerry and Pettit are
Trustees/Directors of twelve 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 eleven of the investment companies(excluded
are Evergreen Variable Trust and Evergreen Investment Trust).
- - --------
* Mr. Pettit may be deemed to be an "interested person" within the meaning
of the Investment Company Act of 1940, as amended (the "1940 Act").
The officers of the Trusts are all officers and/or employees of Furman
Selz LLC. Furman Selz LLC is an affiliate of Evergreen Funds Distributor, Inc.,
the distributor of each Class of shares of each Fund.
8
<PAGE>
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 or Evergreen Asset Management Corp. or their affiliates. See
"Investment Advisers." Currently, none of the Trustees is an "affiliated person"
as defined in the 1940 Act. The Evergreen Municipal Trust and Evergreen
Investment Trust pay each Trustee who is not an "affiliated person" an annual
retainer and fee per meeting attended, plus expenses. The Evergreen Tax Free
Trust pays each Trustee who is not an "affiliated person a fee per meeting
attended, plus expenses, as follows:
Name of Trust/Fund Annual Retainer Meeting Fee
Evergreen Trust $4,500
Evergreen $300
Aggressive $100
Evergreen Equity Trust $1,000*
U.S. Real Estate $100
Limited Market $500 $100
- --------------------
* The annual retainer paid by Evergreen Equity Trust to each Trustee/Director is
allocated among its three series.
In addition:
(1) The Chairman of the Board of the Evergreen group mutual funds is paid an
annual retainer of $5,000, and the Chairman of the Audit Committee is paid an
annual retainer of $2,000. These retainers are allocated among all the funds in
the Evergreen group of mutual funds, based upon assets.
(2) Each member of the Audit Committee is paid an annual retainer of $500.
(3) Each non-affiliated Trustee/Director is paid a fee of $500 for each special
telephonic meeting in which he participates, regardless of the number of Funds
for which the meeting is called.
(4) Each non-affiliated Trustee is paid a fee of $250 for each special Committee
of the Board telephone conference call meeting of one or more Funds in which he
participates.
(5) Any individual who has been appointed as a Trustee/Director Emeritus of one
or more funds in the Evergreen Group of mutual funds is paid one-half of the
fees that are payable to regular Trustees/Directors.
Set forth below for each of the Trustees/Directors is the aggregate
compensation paid to such Trustees/Directors by each Trust and Limited Market
for the fiscal year ended September 30, 1996.
9
<PAGE>
Total
Compensation
Aggregate Compensation From Trust From Trusts
Evergreen Evergreen & Fund
Name of Evergreen Equity Limited Complex Paid
Person Trust Trust Market to Trustees
Laurence Ashkin $6,150 $2,111 $908 $26,475
Foster Bam $6,150 $2,111 $908 $26,475
James S. Howell $6,444 $2,127 $918 $53,000
Robert J.
Jeffries $3,849 $1,278 $565 $15,238
Gerald M.
McDonnell $6,171 $2,106 $904 $45,975
Thomas L.
McVerry $6,259 $2,113 $909 $47,100
William Walt
Pettit $6,141 $2,104 $903 $45,600
Russell A.
Salton, III, M.D. $6,141 $2,104 $903 $48,750
Michael S.
Scofield $6,141 $2,104 $903 $48,750
* Robert J. Jeffries has been serving as a Trustee/Director Emeritus since
January 1, 1996.
As of the date of this Statement of Additional Information, the officers and
Trustees/Directors of the Trusts and Limited Market as a group owned less than
1% of the outstanding shares of any of the Funds.
No officer or Trustee/Director of the Trusts and Limited Market owned Class
A, B or C shares of any Fund as of the date hereof. The number and percent of
outstanding Class Y shares of each Fund owned by officers and Trustees
/Directors as a group on November 1, 1996, is as follows:
No. of Shares Owned
By Officers and Ownership by Officers and
Trustees/Directors Trustees/Directors as a %
Name of Fund as a Group of Class Y Shares Outstanding
Evergreen 105,106 .16%
U.S. Real Estate -0- -0-
Limited Market -0- -0-
Aggressive -0- -0-
10
<PAGE>
Set forth below is information with respect to each person, who, to
each Fund's knowledge, owned beneficially or of record more than 5% of a class
of each Fund's total outstanding shares and their aggregate ownership of the
Fund's total outstanding shares as of November 1, 1996.
Name of % of
Name and Address Fund/Class No. of Shares Class/Fund
- ---------------- ---------- ------------- ----------
Fubs & Co. Febo Evergreen/C 19,728 5.88%/.03%
Mary Anne Riordan Rev. Trust
Mary Ann Riordan TTEE
U/A/D 05/04/95
C/O First Union National Bank
401 S. Tryon Street
Charlotte, NC 28288-1911
Fubs & Co. Febo Evergreen/C 29,023 8.35%/.04%
Umberto Lusardi
401 S. Tryon St.
Charlotte, NC 28202-1911
First Union National Bank/EB/INT Evergreen/Y 3,362,405 7.39%/5.08%
Cash Account
Attn: Trust Operations Fund Group
401 S. Tryon St. 3rd Fl CMG 1151
Charlotte, NC 28202-1911
First Union National Bank/EB/INT Evergreen/Y 9,225,357 20.27%/13.94%
Reinvest Account
Attn: Trust Operations Fund Group
401 S. Tryon St. 3rd Fl. CMG 1151
Charlotte, NC 28202-1911
Fubs & Co. Febo U.S. Real Estate/A 2,608 12.24%/.28%
Astrid & Bernard Celestin
401 S. Tryon St.
Charlotte, NC 28202-1911
Charles Schwab & Co. Inc. U.S. Real Estate/A 4,780 22.43%/.52%
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 Trust U.S. Real Estate/A 1,529 7.17%/.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%/.17%
Joseph T. Reif Revocable Trust
11
<PAGE>
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%/.13%
Daniel E. Polk IRA
401 S.Tryon St.
Charlotte, NC 28202-1911
Donaldson Lufkin Jenrette U.S. Real Estate/A 1,986 9.32%/.22%
Securities Corporation Inc
P.O. Box 2052
Jersey City, NJ 07303-2052
Fubs & Co. Febo U.S. Real Estate/A 1,865 8.75%/.20%
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%/ .25%
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%/ .39%
June P. Mooring
401 S. Tryon Street
Charlotte, NC 28304-1911
Fubs & Co. Febo U.S. Real Estate/B 5,607 12.79%/ .61%
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%/.28%
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%/.87%
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%/.27%
Jerry W. Bayless TTEE
P.O. Box 509002
Dallass TX 75250-9002
12
<PAGE>
Brian Mccou U.S. Real Estate/C 7,968 27.73%/ .87%
Fubs & Co. Febo
401 S. Tryon Street
Charlotte, NC 28288-1911
Merrill Lynch U.S. Real Estate/C 17,447 60.72%/ .90%
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%/.17%
Securities Corporation Inc
P.O. Box 2052
Jersey City, NJ 07303-2052
Constance E. Lieber* U.S. Real Estate/Y 77,526 9.39%/8.44%
C/O Lieber & Co.
2500 Westchester Avenue
Purchase, NY 10577
Stephen A. Lieber* U.S. Real Estate/Y 225,899 27.37%/24.57%
C/O Lieber & Co.
2500 Westchester Avenue
Purchase, NY 10577
The Essel Foundation* U.S. Real Estate/Y 50,123 6.07%/ 5.45%
C/O Lieber & Co.
2500 Westchester Avenue
Purchase, NY 10577
Charles Schwab & Co. Inc. U.S. Real Estate/Y 59,203 7.17%/ 6.44%
Reinvest Account
Attn: Mutual Funds Dept.
101 Montgomery Street
San Francisco, CA 94104-4122
Merrill Lynch Aggressive Growth/A 282,076 6.22%/ 4.00%
Trade House Account-Aid
Private Client Group
Attn: Book Entry
4800 Deer Lake Dr.,East 3rd Fl.
Jacksonville, FL 32246-6484
Merrill Lynch Aggressive Growth/C 14,891 30.24%/ .21%
Trade House Account-Aid
Private Client Group
Attn: Book Entry
4800 Deer Lake Dr.,East 3rd Fl.
Jacksonville, FL 32246-6484
Fubs & Co. Febo Aggressive Growth/C 5,485 11.14%/ .08%
13
<PAGE>
Octavio Riano-Avila and
Rosalba Chauez De Riano
FUNB
401 S. Tryon Street
Charlotte, NC 28288-1961
First Union National Bank Aggressive Growth/Y 526,341 39.11%/ 7.46%
Trust Accounts
Attn: Ginny Batten
11th Floor CMG-1151
301 S. Tryon Street
Charlotte, NC 28288-0001
First Union National Bank Aggressive Growth/Y 542,699 40.32%/ 7.6%
Trust Accounts
Attn: Ginny Batten
11th Floor CMG-1151
301 S. Tryon Street
Charlotte, NC 28288-0001
Fubs & Co. Cust Limited Market/A 6,000 11.73%/ .26%
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%/ .15%
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%/ .12%
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%/.13%
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/F Limited Market/C 213 13.61%/ .01%
Kathleen L. Hannan MD Sep.
C/O FUNB
401 S. Tryon Street
Charlotte, NC 28288-1911
First Union National Bank GA C/F Limited Market/C 1,064 67.87%/ .05%
14
<PAGE>
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%/ .0%
Stephen W. Sachs IRA
401 S. Tryon Street
Charlotte, NC 28288-1911
Charles Schwab & Co. Inc. Limited Market/Y 189,005 8.63%/ 8.12%
Reinvest Account
Mutual Fund Dept.
101 Montgomery Street
San Francisco, CA 94104-4122
Contance E. Lieber Limited Market/Y 170,046 7.77%/ 7.31%
C/O Lieber & Co.
2500 Westchester Avenue
Purchase, NY 10577
Stephen A. Lieber Limited Market/Y 237,691 10.86%/10.22%
C/O Lieber & Co.
2500 Westchester Avenue
Purchase, NY 10577
Harris Trust & Svgs Bank A/C Limited Market/Y 143,281 6.54%/6.16%
Delta Air Lines Master TR
TR 03 70314 - Att Dina Peterson
C/O Lieber & Co.
2500 Westchester Ave.
- ---------------------------------
*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.
INVESTMENT ADVISERS
(See also "Management of the Funds" in each Fund's Prospectus)
The investment adviser of 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 ("Evergreen Asset" or the
"Adviser"). Evergreen Asset 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. The investment adviser of Aggressive is FUNB which
provides investment advisory services through its Capital Management Group. The
Directors of Evergreen Asset are Richard K. Wagoner and Barbara I. Colvin. The
executive officers of Evergreen Asset are Stephen A. Lieber, Chairman and
Co-Chief Executive Officer, Nola Maddox Falcone, President and Co-Chief
Executive Officer and Theodore J. Israel, Jr., Executive Vice President.
15
<PAGE>
On June 30, 1994, Evergreen Asset and Lieber and Company ("Lieber")
were acquired by First Union through certain of its subsidiaries. Evergreen
Asset was acquired by FUNB, a wholly-owned subsidiary (except for directors'
qualifying shares) of First Union, by merger into EAMC Corporation ("EAMC") a
wholly-owned subsidiary of FUNB. EAMC then assumed the name "Evergreen Asset
Management Corp." and succeeded to the business of Evergreen Asset.
Contemporaneously with the succession of EAMC to the business of Evergreen Asset
and its assumption of the name "Evergreen Asset Management Corp.", Evergreen,
U.S. Real Estate and Limited Market entered into a new investment advisory
agreement with EAMC and into a distribution agreement with Evergreen Funds
Distributor, Inc. (the "Distributor"), an affiliate of Furman Selz LLC. At that
time, EAMC also entered into a new sub-advisory agreement with Lieber pursuant
to which Lieber provides certain services to Evergreen Asset in connection with
its duties as investment adviser.
The partnership interests in Lieber, a New York general partnership,
were acquired by Lieber I Corp. and Lieber II Corp., which are both wholly-owned
subsidiaries of FUNB. The business of Lieber is being continued. The new
advisory and sub-advisory agreements were approved by the shareholders of
Evergreen, U.S. Real Estate and Limited Market at their meeting held on June 23,
1994, and became effective on June 30, 1994. Aggressive, which commenced
operations on June 30, 1995, entered into an advisory agreement with FUNB on
June 30, 1995.
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 their 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.
The method of computing the investment advisory fee for each Fund is
described in such Fund's Prospectus. The advisory fees paid by each Fund for the
three most recent fiscal periods reflected in its registration statement are set
forth below:
EVERGREEN Year Ended Year Ended Year Ended
9/30/96 9/30/95 9/30/94
Advisory Fee $9,145,287 $5,472,439 $5,738,633
========== ========== ==========
Expense
Reimbursement $ 9,740 $ 24,130
========== ==========
AGGRESSIVE* Year Ended Period Ended
9/30/96 7/1/95 - 9/30/95
Advisory Fee $612,492 $106,041
========== ==========
16
<PAGE>
U.S. REAL ESTATE Year Ended Year Ended Year Ended
9/30/96 9/30/95 9/30/94
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 Year Ended Year Ended Year Ended
9/30/96 9/30/95 9/30/94
Advisory Fee $510,421 $800,642 $314,648
Waiver (27,044) - -
-------- ------- --------
Net Advisory Fee $483,377 $800,642 $314,648
======== ======== ========
Expense
Reinbursement $ 37,344 $ 48,100 $ 0
======== ======== ========
*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 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.
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, Evergreen Asset 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.
The Investment Advisory Agreements are terminable, without the payment
of any penalty, on sixty days' written notice, by a vote of the holders of a
majority of each Fund's outstanding shares, or by a vote of a majority of each
Trust's and Limited Market's Trustees/Directors or by the respective Adviser.
The Investment Advisory Agreements will automatically terminate in the event of
their assignment. Each Investment Advisory Agreement provides in substance that
the Adviser shall not be liable for any action or failure to act in accordance
with its duties thereunder in the absence of willful misfeasance, bad faith or
gross negligence on the part of the Adviser or of reckless disregard of its
17
<PAGE>
obligations thereunder. The Investment Advisory Agreements with respect to
Evergreen, U.S. Real Estate and Limited Market were approved by each Fund's
shareholders on June 23, 1994, became effective on June 30, 1994, were last
approved by the Trustees of each Trust and the Directors of Limited Market on
February 8, 1996, and 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 those
Trustees/Directors who are not parties thereto or "interested persons" (as
defined in the 1940 Act) of any such party, cast in person at a meeting duly
called for the purpose of voting on such approval or a majority of the
outstanding voting shares of each Fund. With respect to Aggressive, the
Investment Advisory Agreement dated June 30, 1995 was last approved by the
Trustees of Evergreen Trust at their meeting held February 8, 1996, for the one
year period beginning May 1, 1996, and it will continue from year to year with
respect to the Fund provided that such continuance is approved annually by a
vote of a majority of the Trustees of Evergreen Trust including a majority of
those Trustees who are not parties thereto or "interested persons" of any such
party cast in person at a meeting duly called for the purpose of voting on such
approval or by a vote of a majority of the outstanding voting securities of each
Fund.
Certain other clients of each Adviser may have investment objectives
and policies similar to those of the Funds. Each Adviser (including the
sub-adviser) may, from time to time, make recommendations which result in the
purchase or sale of a particular security by its other clients simultaneously
with a Fund. If transactions on behalf of more than one client during the same
period increase the demand for securities being purchased or the supply of
securities being sold, there may be an adverse effect on price or quantity. It
is the policy of each Adviser to allocate advisory recommendations and the
placing of orders in a manner which is deemed equitable by the Adviser to the
accounts involved, including the Funds. When two or more of the clients of the
Adviser (including one or more of the Funds) are purchasing or selling the same
security on a given day from the same broker-dealer, such transactions may be
averaged as to price.
Although the investment objectives of the Funds are not the same, and
their investment decisions are made independently of each other, they rely upon
the same resources for investment advice and recommendations. Therefore, on
occasion, when a particular security meets the different investment objectives
of the various Funds, they may simultaneously purchase or sell the same
security. This could have a detrimental effect on the price and quantity of the
security available to each Fund. If simultaneous transactions occur, 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 Evergreen Asset or FUNB
act as investment adviser or between the Fund and any advisory clients of
Evergreen Asset, FUNB 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.
18
<PAGE>
On July 1, 1995, Evergreen Asset commenced providing 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
Evergreen Asset for which Evergreen Asset or FUNB 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. Furman Selz LLC, an affiliate of the
Distributor, serves as sub-administrator to Aggressive and is entitled to
receive a fee from the Fund based on the average daily net assets of Aggressive
at a rate calculated on the total assets of the mutual funds administered by
Evergreen Asset for which FUNB or Evergreen Asset 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 Evergreen Asset for which Evergreen Asset or FUNB serves as
investment adviser were approximately $16.3 billion as of October 31, 1996.
For the period July 1, 1995 through September 30, 1995 and the fiscal
year ended September 30, 1996, Aggressive paid Evergreen Asset $9,1462 and
$51,109, respectively, in administration service fees.
DISTRIBUTION PLANS
Reference is made to "Management of the Funds - Distribution Plans and
Agreements" in the Prospectus of each Fund for additional disclosure regarding
the Funds' distribution arrangements. Distribution fees are accrued daily and
paid monthly on the Class A, Class B and Class C shares and are charged as class
expenses, as accrued. The distribution fees attributable to the Class B shares
and Class C shares are designed to permit an investor to purchase such shares
through broker-dealers without the assessment of a front-end sales charge, and,
in the case of Class C shares, without the assessment of a contingent deferred
sales charge after the first year following purchase, while at the same time
permitting the Distributor to compensate broker-dealers in connection with the
sale of such shares. In this regard the purpose and function of the combined
contingent deferred sales charge and distribution services fee on the Class B
shares and the Class C shares are the same as those of the front-end sales
charge and distribution fee with respect to the Class A shares in that in each
case the sales charge and/or distribution fee provide for the financing of the
distribution of the Fund's shares.
Under the Rule 12b-1 Distribution Plans that have been adopted by each
Fund with respect to each of its Class A, Class B and Class C shares (each a
"Plan" and collectively, the "Plans"), the Treasurer of each Fund reports the
amounts expended under the 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 Trustees/Directors who are not "interested persons" of each
Trust and Limited Market (as defined in the 1940 Act) are committed to the
discretion of such disinterested 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
19
<PAGE>
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.
Evergreen, U.S. Real Estate, and Limited Market commenced offering
Class A, Class B and Class C shares on January 3, 1995 and Aggressive commenced
offering Class A, Class B and Class C shares on June 30, 1995. Each Plan with
respect to such Funds became effective on December 30, 1994 (April 20, 1995 with
respect to Aggressive) and was initially approved by the sole shareholder of
each Class of shares of each Fund with respect to which a Plan was adopted on
that date and by the unanimous vote of the Trustees/Directors of each Trust and
Limited Market, including the disinterested Trustees/Directors voting
separately, at a meeting called for that purpose and held on December 13, 1994
(April 20, 1995 with respect to Aggressive). The Distribution Agreements between
each Fund and the Distributor, pursuant to which distribution fees are paid
under the Plans by each Fund with respect to its Class A, Class B and Class C
shares were also approved at the December 13, 1994 (April 20, 1995 with respect
to Aggressive) meeting by the unanimous vote of the Trustees/Directors,
including the disinterested Trustees/Directors voting separately. 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 Trustees/ Directors who are not parties to the Agreement or interested
persons, as defined in the 1940 Act, of any such party (other than as
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.
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
20
<PAGE>
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 disinterested
Trustees/Directors, cast in person at a meeting called for the purpose of voting
on such approval; and any Plan or Distribution Agreement may not be amended in
order to increase materially the costs that a particular Class of shares of a
Fund may bear pursuant to the Plan or Distribution Agreement without the
approval of a majority of the holders of the outstanding voting shares of the
Class affected. Any Plan or Distribution Agreement may be terminated (a) 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 Trustees/Directors who are not "interested persons" as
defined in the 1940 Act, or (b) 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.
Fees Paid Pursuant to Distribution Plans. The Funds incurred the following
distribution services fees:
Evergreen. For the fiscal period from January 3, 1995 through September 30,
1995, and the fiscal year ended September 30, 1996, $21,713 and $149,922,
respectively, on behalf of Class A shares; $160,792 and $1,185,957,
respectively, on behalf of Class B shares, and $3,738 and $10,292, respectively,
on behalf of Class C shares.
U.S. Real Estate. For the fiscal period from January 3, 1995 through September
30, 1995, and the fiscal year ended September 30, 1996, $6 and $307,
respectively, on behalf of Class A shares; $269 and $2,250, respectively, on
behalf of Class B shares, and $5 and $328, respectively, on behalf of Class C
shares.
Limited Market. For the fiscal period from January 3, 1995 through September 30,
1995, and the fiscal year ended September 30, 1996, $1429 and $2,471,
respectively, on behalf of Class A shares; $8,649 and $12,608, respectively, on
behalf of Class B shares, and $303 and $310, respectively, on behalf of Class C
shares.
Aggressive Growth. For the fiscal period from July 1, 1995 through September 30,
1995, and the fiscal year ended September 30, 1996, $41,237 and $197,507,
respectively, on behalf of Class A shares; $1,989 and $26,469, respectively, on
behalf of Class B shares, and $29 and $3,308, respectively, on behalf of Class C
shares.
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 Evergreen Asset, 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
21
<PAGE>
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 Evergreen Asset has entered into an agreement with
Lieber authorizing Lieber to retain compensation for brokerage services. In
accordance with such agreement, it is contemplated that Lieber, a member of the
New York and American Stock Exchanges, will, to the extent practicable, provide
brokerage services to 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 Evergreen Asset contemplates any
ongoing arrangements with other brokerage firms, brokerage business may be given
from time to time to other firms. In addition, the Trustees/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.
22
<PAGE>
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 the Fund.
The following chart shows: (1) the brokerage commissions paid by each
Fund advised by Evergreen Asset during their last three fiscal years; (2) the
amount and percentage thereof paid to Lieber; and (3) the percentage of the
total dollar amount of all portfolio transactions with respect to which
commissions have been paid which were effected by Lieber:
EVERGREEN Year Ended Year ended Year Ended
9/30/96 9/30/95 9/30/94
Total Brokerage $590,105 $342,559 $535,816
Commissions
Dollar Amount and % $515,522 $252,069 $478,391
paid to Lieber 87% 74% 89%
% of Transactions
Effected by Lieber 82% 73% 90%
U.S. REAL ESTATE Year Ended Year Ended Period Ended
9/30/96 9/30/95 9/30/94
Total Brokerage $114,230 $71,440 $49,723
Commissions
Dollar Amount and % $109,622 $68,714 $48,400
paid to Lieber 96% 96% 97%
% of Transactions
Effected by Lieber 94% 95% 98%
LIMITED MARKET Year Ended Year Ended Period Ended
9/30/96 9/30/95 9/30/94
Total Brokerage $317,058 $414,048 $94,996
Commissions
Dollar Amount and % $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 "Taxes" in the Prospectus)
Each Fund has qualified and intends to continue to qualify for and
elect the tax treatment applicable to regulated investment companies ("RIC")
under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"). (Such qualification does not involve supervision of management or
investment practices or policies by the Internal Revenue Service.) In order to
qualify as a regulated investment company, a Fund must, among other things,
23
<PAGE>
(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
24
<PAGE>
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
25
<PAGE>
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 shares 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 and portfolio bonds are presently valued by a recognized pricing
service when such prices are believed to reflect the fair value of the security.
Over-the-counter securities not included in the NASDAQ National List for which
market quotations are readily available are valued at a price quoted by one or
more brokers. If accurate quotations are not available, securities will be
valued at fair value determined in good faith by the Board of
Trustees/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
26
<PAGE>
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 contingent deferred
sales charge (the deferred sales charge alternative"), or without any front-end
sales charge, but with a contingent deferred sales charge imposed only during
the first year after 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 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
27
<PAGE>
on the Exchange on each day the Exchange is open for trading are priced at the
net asset value computed as of the close of regular trading on the Exchange on
that day (plus for Class A shares the sales charges). In the case of orders for
purchase of shares placed through selected dealers or agents, the applicable
public offering price will be the net asset value as so determined, but only if
the selected dealer or agent receives the order prior to the close of regular
trading on the Exchange and transmits it to the Distributor prior to its close
of business that same day (normally 5:00 p.m. Eastern time). The selected dealer
or agent is responsible for transmitting such orders by 5:00 p.m. If the
selected dealer or agent fails to do so, the investor's right to that day's
closing price must be settled between the investor and the selected dealer or
agent. If the selected dealer or agent receives the order after the close of
regular trading on the Exchange, the price will be based on the net asset value
determined as of the close of regular trading on the Exchange on the next day it
is open for trading.
Following the initial purchase of shares of a Fund, a shareholder may
place orders to purchase additional shares by telephone if the shareholder has
completed the appropriate portion of the 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 3:00 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
Each Fund issues four classes of shares: (i) Class A shares, which are
sold to investors choosing the front-end sales charge alternative; (ii) Class B
shares, which are sold to investors choosing the deferred sales charge
alternative; (iii) Class C shares, which are sold to investors choosing the
level-load sales charge alternative; and (iv) Class Y shares, which are offered
only to (a) persons who at or prior to December 30, 1994 owned shares in a
mutual fund advised by Evergreen Asset, (b) certain investment advisory clients
of the Advisers and their affiliates, and (c) institutional investors. The four
classes of shares each represent an interest in the same portfolio of
investments of the Fund, have the same rights and are identical in all respects,
except that (I) only Class A, Class B and Class C shares are subject to a Rule
12b-1 distribution fee, (II) Class 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 and, in the case
of Class B shares, higher transfer agency costs, (IV) with the exception of
Class Y shares, each Class of each Fund has exclusive voting rights with respect
to provisions of the Rule 12b-1 Plan pursuant to which its distribution services
28
<PAGE>
fee is paid which relates to a specific Class and other matters for which
separate Class voting is appropriate under applicable law, provided that, if the
Fund submits to a simultaneous vote of Class A, Class B and Class C shareholders
an amendment to the Rule 12b-1 Plan that would materially increase the amount to
be paid thereunder with respect to the Class A shares, the Class A shareholders
and the Class B and Class C shareholders will vote separately by Class, and (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
contingent deferred sales charges 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 $2,500,000 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 contingent deferred sales charge for a six-year period. For example, based on
current fees and expenses, an investor subject to the 4.75% front-end sales
charge imposed by Evergreen Equity and Long-Term Bond Fund (i.e. Evergreen,
Aggressive, U.S. Real Estate and Limited Market) would have to hold his or her
investment approximately seven years 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.
29
<PAGE>
Those investors who prefer to have all of their funds invested
initially but may not wish to retain Fund shares for the six year period during
which Class B shares are subject to a contingent deferred sales charge may find
it more advantageous to purchase Class C shares.
With respect to each Fund, the Trustees/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.
Net Per Share Offering
Asset Sales Price
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
30
<PAGE>
the Distributor. In addition, since Class B and Class C shares were not offered
prior to January 3, 1995, contingent deferred sales charges have been paid to
the Distributor with respect to Class B or Class C shares only since January 3,
1995.
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 Period from
Ended 9/30/96 1/3/95 - 9/30/95
Evergreen
Commissions Received $1,462,012 $586,701
Commissions Retained $ 157,233 $ 72,923
Period from
7/1/95 - 9/30/95
Aggressive
Commissions Received $185,835 $70,327
Commissions Retained $ 22,742 $ 8,909
Period from
U.S. Real Estate 1/3/95 - 9/30/95
Commissions Received $4,724 $118
Commissions Retained $ 543 $ 13
Period from
Limited Market 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.
Combined Purchase Privilege. Certain persons may qualify for the sales
charge reductions by combining purchases of shares of one or more of the
Evergreen 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
31
<PAGE>
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 mutual fund. Currently, the
Evergreen mutual funds include:
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:
Evergreen American Retirement Fund
Evergreen Small Cap Equity Income Fund
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
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
32
<PAGE>
Evergreen Variable Trust:
Evergreen VA Fund
Evergreen VA Growth and Income Fund
Evergreen VA Foundation Fund
Prospectuses for the Evergreen 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 Statement of Additional Information.
Cumulative Quantity Discount (Right of Accumulation). An investor's
purchase of additional Class A shares of a Fund may qualify for a Cumulative
Quantity Discount. The applicable sales charge will be based on the total of:
(i) the investor's current purchase;
(ii) the net asset value (at the close of business on the
previous day) of (a) all Class A, Class B and Class C shares
of the Fund held by the investor and (b) all such shares of
any other Evergreen 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 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 any
Evergreen Equity or Long-Term Bond Fund (i.e., Evergreen, Aggressive, U.S. Real
Estate and Limited Market) would be at the 2.50% rate applicable to a single
$300,000 purchase of shares of the Fund, rather than the 3.75% rate.
To qualify for the Combined Purchase Privilege or to obtain the
Cumulative Quantity Discount on a purchase through a selected dealer or agent,
the investor or selected dealer or agent must provide the Distributor with
sufficient information to verify that each purchase qualifies for the privilege
or discount.
Statement of Intention. Class A investors may also obtain the reduced
sales charges shown in the Prospectus by means of a written Statement of
Intention, 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 mutual fund. Each
purchase of shares under a Statement of Intention 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 Statement of Intention. At the
investor's option, a Statement of Intention may include purchases of Class A,
Class B or Class C shares of the Fund or any other Evergreen mutual fund made
not more than 90 days prior to the date that the investor signs a Statement of
Intention; however, the 13-month period during which the Statement of Intention
is in effect will begin on the date of the earliest purchase to be included.
33
<PAGE>
Investors qualifying for the Combined Purchase Privilege described
above may purchase shares of the Evergreen mutual funds under a single Statement
of Intention. For example, if at the time an investor signs a Statement of
Intention 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 mutual fund, to qualify for the 3.75% sales charge applicable to
purchases in an Evergreen Equity or Long-Term Bond Fund (i.e, Evergreen,
Aggressive, U.S. Real Estate and Limited Market)and on the total amount being
invested (the sales charge applicable to an investment of $100,000).
The Statement of Intention is not a binding obligation upon the
investor to purchase the full amount indicated. The minimum initial investment
under a Statement of Intention 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 Statement of Intention 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 Statement of Intention 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 Statement of Intention 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 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 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
34
<PAGE>
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 Statement of Additional
Information.
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 Trust 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 contingent deferred sales charge are paid to the
Distributor and are used by the Distributor to defray the expenses of the
Distributor related to providing distribution-related services to the Fund in
connection with the sale of the Class B shares, such as the payment of
compensation to selected dealers and agents for selling Class B shares. The
combination of the contingent deferred sales charge and the distribution
35
<PAGE>
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.
Contingent Deferred Sales Charge. Class B shares which are redeemed
within six years of purchase will be subject to a contingent deferred sales
charge at the rates set forth in the Prospectus charged as a percentage of the
dollar amount subject thereto. The charge will be assessed on an amount equal to
the lesser of the cost of the shares being redeemed or their net asset value at
the time of redemption. Accordingly, no sales charge will be imposed on
increases in net asset value above the initial purchase price. In addition, no
contingent deferred sales charge will be assessed on shares derived from
reinvestment of dividends or capital gains distributions. The amount of the
contingent deferred sales charge, if any, will vary depending on the number of
years from the time of payment for the purchase of Class B shares until the time
of redemption of such shares.
In determining the contingent deferred sales charge applicable to a
redemption, it will be assumed that the redemption is first of any Class A
shares or Class C shares in the shareholder's Fund account, second of Class B
shares held for over 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 purchase, the
net asset value per share is $12 and, during such time, the investor has
acquired 10 additional Class B shares upon dividend reinvestment. If at such
time the investor makes his or her first redemption of 50 Class B shares, 10
Class B shares will not be subject to charge because of dividend reinvestment.
With respect to the remaining 40 Class B shares, the charge is applied only to
the original cost of $10 per share and not to the increase in net asset value of
$2 per share. Therefore, of the $600 of the shares redeemed $400 of the
redemption proceeds (40 shares x $10 original purchase price) will be charged at
a rate of 4.0% (the applicable rate in the second year after purchase for a
contingent deferred sales charge of $16).
The contingent deferred sales charge is waived on redemptions of shares
(i) following the death or disability, as defined in the Code, of a shareholder,
or (ii) to the extent that the redemption represents a minimum required
distribution from an individual retirement account or other retirement plan to a
shareholder who has attained the age of 70-1/2.
Conversion Feature. At the end of the period ending seven years after
the end of the calendar month in which the shareholder's purchase order was
accepted, Class B shares will automatically convert to Class A shares and will
no longer be subject to a higher distribution services fee 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.
36
<PAGE>
For purposes of conversion to Class A, Class B shares purchased through
the reinvestment of dividends and distributions paid in respect of Class B
shares in a shareholder's account will be considered to be held in a separate
sub-account. Each time any Class B shares in the shareholder's account (other
than those in the sub-account) convert to Class A, an equal pro-rata portion of
the Class B shares in the sub-account will also convert to Class A.
The conversion of Class B shares to Class A shares is subject to the
continuing availability of an opinion of counsel to the effect that (i) the
assessment of the higher distribution services fee and 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% contingent deferred sales
charge if you redeem shares during the first year after purchase. No charge is
imposed in connection with redemptions made more than one year from the date of
purchase. Class C shares are sold without a front-end sales charge so that the
Fund will receive the full amount of the investor's purchase payment and after
the first year without a contingent deferred sales charge so that the investor
will receive as proceeds upon redemption the entire net asset value of his or
her Class C shares. The Class C distribution services fee enables the Fund to
sell Class C shares without either a front-end or contingent deferred sales
charge. However, unlike Class B shares, Class C shares do not convert to any
other class shares of the Fund. Class C shares incur higher distribution
services fees than Class A shares, and will thus have a higher expense ratio and
pay correspondingly lower dividends than Class A shares.
Class Y Shares
Class Y shares are not offered to the general public and are available
only to (i) persons who at or prior to December 30, 1994 owned shares in a
mutual fund advised by Evergreen Asset, (ii) certain investment advisory clients
of the Advisers and their affiliates, and (iii) institutional investors. Class Y
shares do not bear any Rule 12b-1 distribution expenses and are not subject to
any front-end or contingent deferred sales charges.
GENERAL INFORMATION ABOUT THE FUNDS
(See also "Other Information - General Information" in each Fund's Prospectus)
37
<PAGE>
Capitalization and Organization
Evergreen Limited Market Fund, Inc. is a Maryland corporation. Evergreen
Fund and Evergreen Aggressive Growth Fund 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 and Aggressive 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 $0.0001 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
38
<PAGE>
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 Funds Distributor, Inc. (the "Distributor"), 230 Park Avenue,
New York, New York 10169, 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
39
<PAGE>
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.
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.
Evergreen 1 Year 5 Years 10 Years
Ended Ended Ended
9/30/96 9/30/96 9/30/96
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 1 Year 5 Years 10 Years
Market Ended Ended Ended
40
<PAGE>
9/30/96 9/30/96 9/30/96
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%
U.S. Real From
Estate 1 Year 9/1/93
Ended (inception)
9/30/96 to 12/31/96
Class A 7.75% 8.33%
Class B 7.49% 8.89%
Class C 11.49% 9.82%
Class Y 13.57% 10.26%
Aggressive 1 Year 5 Years 10 Years
Ended Ended Ended
9/30/96 9/30/96 9/30/96
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%
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
contingent deferred sales charge. 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 contingent deferred sales
charge.
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
41
<PAGE>
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+1)6-1]
cd
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
Class A .21% Class A - .78%
Class B -.47% Class B -1.51%
Class C -.45% Class C -1.51%
Class Y .45% Class Y - .59%
42
<PAGE>
U.S. Real Estate Limited Market
Class A 1.68% Class A - .48%
Class B 1.04% Class B -1.21%
Class C 1.02% Class C -1.21%
Class Y 1.99% Class Y - .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
Statement of Additional Information. This Statement of Additional Information
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 appearing in their most current fiscal
year Annual Report to shareholders and the report thereon of the independent
43
<PAGE>
auditors appearing thereon of, Price Waterhouse LLP; Tait, Weller & Baker LLP,
and Ernst & Young LLP are incorporated by reference in the Statement of
Additional Information. The Annual Reports to Shareholders for each Fund, which
contain the referenced statements, are available upon request and without
charge.
APPENDIX "A"
DESCRIPTION OF BOND RATINGS
Standard & Poor's Ratings 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
44
<PAGE>
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
45
<PAGE>
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
46
<PAGE>
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
47
<PAGE>
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.
48
<PAGE>
*******************************************************************************
<PAGE>
THE EVERGREEN LIMITED MARKET FUND, INC.
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
a. Financial Statements
Included in Part A of this Registration Statement:
Financial Highlights for the fiscal years ended May 31, 1988 through May
31, 1994 the four months ended September 30, 1994 and the fiscal years
ended September 30, 1995 and 1996.
Included in Part B of this Registration Statement:*
Statement of Investments as of September 30, 1996; Statement of Assets and
Liabilities as of September 30, 1996; Statement of Operations for the year
ended September 30, 1996; Statement of Changes in Net Assets for the fiscal
years ended September 30, 1995 and 1996. Financial Highlights; Combined
Notes to Financial Statements; Report of Independent Auditors
Statements, schedules and historical information other than those listed
above have been omitted since they are either not applicable or are not
required or the required information is shown in the financial statements
or notes thereto.
b. Exhibits
Number Description
1(A) Articles of Amendment and Restatement**
1(B) Articles of Amendment**
1(C) Articles Supplementary Creating Three Additional Classes of
Common Stock**
2 By-Laws**
3 None
4 Form Specimen Share Certificate**
5(A) Investment Advisory Agreement**
5(B) Subadvisory Agreement**
6 Distribution Agreement**
7 None
8 Custodian Agreement**
9 None
10 None
11 Consent of Ernst & Young, and Price Waterhouse, independent
auditors +
12 None
13 None
14 None
15 Rule 12b-1 Distribution Plans**
16 None
17 Financial Data Schedule +
- --------------------------
* 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 andby reference to the Annual and Semi-Annual Reports of Registrant
on form NSAR for the aforementioned period.
** Incorporated by reference to Registrant's previous filings on Form N-1A.
++ All Exhibits have been filed electronically.
<PAGE>
Item 25. Persons Controlled by or Under Common Control with Registrant
None
Item 26. Number of Holders of Securities (as of October 31, 1996)
(1) (2)
Number of Record
Title of Class Shareholders
Class Y Shares of Common Stock ($0.10 par value) 1,230
Class A Shares of Common Stock ($0.10 par value) 130
Class B Shares of Common Stock ($0.10 par value) 186
Class C Shares of Common Stock ($0.10 par value) 14
Item 27. Indemnification
Article IX of the Registrant's By-Laws provides as follows:
Availability of Indemnification. To the maximum extent permitted by the
Maryland General Corporation Law as from time to time amended, the Corporation
shall indemnify its currently acting and its former directors, officers, and
employees and those persons who, at the request of the Corporation, serve or
have served another corporation, partnership, joint venture, trust or other
enterprise in one or more of such capacities. 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 directors or otherwise.
Nonavailability of Indemnification. Anything herein contained to the
contrary notwithstanding, no officer or director of the Corporation shall be
indemnified for any liability to the Corporation or its security holders 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.
Item 28. Business or Other Connections of Investment Adviser
(a) For a description of the other business of the investment adviser, see
the section entitled "Management of the Funds-Investment Adviser" in Part A.
Evergreen Asset Management Corp., the Registrant's investment adviser, and
Lieber and Company, the Registrant's sub-adviser also act as such to the
Evergreen Trust, The Evergreen Total Return Fund, Evergreen Growth and Income
Fund, The Evergreen Money Market Trust, The Evergreen American Retirement Trust,
The Evergreen Municipal Trust, Evergreen Equity Trust, Evergreen Foundation
Trust and Evergreen Variable Trust all registered investment companies. Stephen
A. Lieber, Theodore J. Israel, Jr. and Nola Maddox Falcone, officers of the
Adviser and Lieber and Company, 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. Evergreen Asset Management Corp. and Lieber
and Company are wholly-owned subsidiaries of First Union National Bank Of North
Carolina.
The Trustees and principal executive officers of First Union National Bank
of North Carolina, parent of the Registrants's investment adviser and
sub-adviser, and the Directors of First Union National Bank of North Carolina,
are set forth in the following tables:
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.
Item 29. Principal Underwriters
Evergreen Funds Distributor, Inc. The Director and principal
executive officers are:
Director Michael C. Petrycki
Officers Robert A. Hering President
Michael C. Petrycki Vice President
Gordon Forrester Vice President
Lawrence Wagner VP, Chief Financial Officer
Steven D. Blecher VP, Treasurer, Secretary
Elizabeth Q. Solazzo Assistant Secretary
Thalia M. Cody Assistant Secretary
Evergreen Funds 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
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 or the offices of Evergreen Asset Management Corp., 2500 Westchester
Avenue, Purchase, New York 10577.
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. 16 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 27th day of
November, 1996.
EVERGREEN LIMITED MARKET FUND INC.
/s/ John J. Pileggi
by-----------------------------
John J. Pileggi, President
by James P. Wallin
Attorney - In - Fact
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Post-Effective Amendment No. 16 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 November 27, 1996
John J. Pileggi Treasurer
by James P. Wallin
Attorney - In - Fact
/s/ Laurence B. Ashkin
- ----------------------- Trustee November 27, 1996
Laurence B. Ashkin
by James P. Wallin
Attorney - In - Fact
/s/Foster Bam
- ----------------------- Trustee November 27, 1996
Foster Bam
by James P. Wallin
Attorney - In - Fact
/s/James S. Howell
- ----------------------- Trustee November 27, 1996
James S. Howell
by James P. Wallin
Attorney - In - Fact
/s/Gerald M. McDonnell
- ----------------------- Trustee November 27, 1996
Gerald M. McDonnell
by James P. Wallin
Attorney - In - Fact
/s/Thomas L. McVerry
- ----------------------- Trustee November 27, 1996
Thomas L. McVerry
by James P. Wallin
Attorney - In - Fact
/s/William Walt Pettit
- ----------------------- Trustee November 27, 1996
William Walt Pettit
by James P. Wallin
Attorney - In - Fact
/s/Russell A. Salton, III, M.D
- ------------------------------ Trustee November 27, 1996
Russell A. Salton, III, M.D
by James P. Wallin
Attorney - In - Fact
/s/Michael S. Scofield
- ----------------------- Trustee November 27, 1996
Michael S. Scofield
by James P. Wallin
Attorney - In - Fact
<PAGE>
JAMES P. WALLIN, ESQ.
2500 WESTCHESTER AVENUE
Purchase, New York 10577
November 27, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re Post-Effective Amendment of
EVERGREEN LIMITED MARKET FUND
Registration No. 2-81494; Investment Company File No. 811-3653
Commissioners:
I have acted as counsel to the above-referenced registrant which proposes
to file, pursuant to paragraph (b) of Rule 485 (the "Rule"), Post-Effective
Amendment No. 16 the "Amendment") to its registration statement under the
Securities Act of 1933, as amended.
Pursuant to paragraph (b)(4) of the Rule, I represent that the Amendment
does not contain disclosures which would render it ineligible to become
effective pursuant to paragraph (b) of the Rule.
Very truly yours,
/s/James P. Wallin
---------------------
James P. Wallin
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description Page
11 Consent of Independent
Accountants
17 Financial Data Schedules
<PAGE>
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. 16 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 Limited Market Fund, Inc., 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
November 26, 1996
<PAGE>
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the references to our firm under the caption "Financial
Highlights" in the Class Y Prospectus and the Class A, Class B and Class C
Prospectus and to the incorporation by reference of our report, dated November
17, 1995, on the financial statements and financial highlights of Evergreen
Limited Market Fund, Inc. included in the 1995 Annual Report to Shareholders,
in the Post-Effective Amendment No. 16 to the Registration Statement (Form N-1A
No. 2-81494) dated November 29, 1996 of The Evergreen Domestic Growth Funds.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Boston, Massachusetts
November 26, 1996
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<NAME> Evergreen Limited Market Fund Class A
<SERIES>
<NUMBER> 11
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Sep-30-1996
<PERIOD-START> Oct-01-1995
<PERIOD-END> Sep-30-1996
<INVESTMENTS-AT-COST> 41,073,660
<INVESTMENTS-AT-VALUE> 42,101,861
<RECEIVABLES> 1,254,673
<ASSETS-OTHER> 45,380
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 43,401,914
<PAYABLE-FOR-SECURITIES> 424,156
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 964,323
<TOTAL-LIABILITIES> 1,388,479
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 41,596,543
<SHARES-COMMON-STOCK> 52,190
<SHARES-COMMON-PRIOR> 59,169
<ACCUMULATED-NII-CURRENT> (3,915)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (607,394)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,028,201
<NET-ASSETS> 903,189
<DIVIDEND-INCOME> 485,782
<INTEREST-INCOME> 124,447
<OTHER-INCOME> 0
<EXPENSES-NET> 819,508
<NET-INVESTMENT-INCOME> (209,279)
<REALIZED-GAINS-CURRENT> (378,317)
<APPREC-INCREASE-CURRENT> (1,769,027)
<NET-CHANGE-FROM-OPS> (2,356,623)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 32,318
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 44,104
<NUMBER-OF-SHARES-REDEEMED> 52,912
<SHARES-REINVESTED> 1,829
<NET-CHANGE-IN-ASSETS> (25,878,536)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1,662,642
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 510,421
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 883,896
<AVERAGE-NET-ASSETS> 988,481
<PER-SHARE-NAV-BEGIN> 18.41
<PER-SHARE-NII> (0.10)
<PER-SHARE-GAIN-APPREC> (0.44)
<PER-SHARE-DIVIDEND> (0.56)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 17.31
<EXPENSE-RATIO> 1.73
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<NAME> Evergreen Limited Market Fund Class B
<SERIES>
<NUMBER> 12
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Sep-30-1996
<PERIOD-START> Oct-01-1995
<PERIOD-END> Sep-30-1996
<INVESTMENTS-AT-COST> 41,073,660
<INVESTMENTS-AT-VALUE> 42,101,861
<RECEIVABLES> 1,254,673
<ASSETS-OTHER> 45,380
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 43,401,914
<PAYABLE-FOR-SECURITIES> 424,156
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 964,323
<TOTAL-LIABILITIES> 1,388,479
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 41,596,543
<SHARES-COMMON-STOCK> 85,594
<SHARES-COMMON-PRIOR> 100,394
<ACCUMULATED-NII-CURRENT> (3,915)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (607,394)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,028,201
<NET-ASSETS> 1,461,375
<DIVIDEND-INCOME> 485,782
<INTEREST-INCOME> 124,447
<OTHER-INCOME> 0
<EXPENSES-NET> 819,508
<NET-INVESTMENT-INCOME> (209,279)
<REALIZED-GAINS-CURRENT> (378,317)
<APPREC-INCREASE-CURRENT> (1,769,027)
<NET-CHANGE-FROM-OPS> (2,356,623)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 61,166
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 15,528
<NUMBER-OF-SHARES-REDEEMED> 43,481
<SHARES-REINVESTED> 3,253
<NET-CHANGE-IN-ASSETS> (25,878,536)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1,662,642
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 510,421
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 883,896
<AVERAGE-NET-ASSETS> 1,681,127
<PER-SHARE-NAV-BEGIN> 18.30
<PER-SHARE-NII> (0.25)
<PER-SHARE-GAIN-APPREC> (0.42)
<PER-SHARE-DIVIDEND> (0.56)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 17.07
<EXPENSE-RATIO> 2.47
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<NAME> Evergreen Limited Market Fund Class C
<SERIES>
<NUMBER> 13
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Sep-30-1996
<PERIOD-START> Oct-01-1995
<PERIOD-END> Sep-30-1996
<INVESTMENTS-AT-COST> 41,073,660
<INVESTMENTS-AT-VALUE> 42,101,861
<RECEIVABLES> 1,254,673
<ASSETS-OTHER> 45,380
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 43,401,914
<PAYABLE-FOR-SECURITIES> 424,156
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 964,323
<TOTAL-LIABILITIES> 1,388,479
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 41,596,543
<SHARES-COMMON-STOCK> 1,569
<SHARES-COMMON-PRIOR> 3,363
<ACCUMULATED-NII-CURRENT> 3,915
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (607,394)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,028,201
<NET-ASSETS> 26,811
<DIVIDEND-INCOME> 485,782
<INTEREST-INCOME> 124,447
<OTHER-INCOME> 0
<EXPENSES-NET> 819,508
<NET-INVESTMENT-INCOME> (209,279)
<REALIZED-GAINS-CURRENT> (378,317)
<APPREC-INCREASE-CURRENT> (1,769,027)
<NET-CHANGE-FROM-OPS> (2,356,623)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 1,952
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 134
<NUMBER-OF-SHARES-REDEEMED> 2,040
<SHARES-REINVESTED> 112
<NET-CHANGE-IN-ASSETS> (25,878,536)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1,662,642
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 510,421
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 883,896
<AVERAGE-NET-ASSETS> 41,265
<PER-SHARE-NAV-BEGIN> 18.31
<PER-SHARE-NII> (0.36)
<PER-SHARE-GAIN-APPREC> (0.30)
<PER-SHARE-DIVIDEND> (0.56)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 17.09
<EXPENSE-RATIO> 2.44
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<NAME> Evergreen Limited Market Fund Class Y
<SERIES>
<NUMBER> 14
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Sep-30-1996
<PERIOD-START> Oct-01-1995
<PERIOD-END> Sep-30-1996
<INVESTMENTS-AT-COST> 41,073,660
<INVESTMENTS-AT-VALUE> 42,101,861
<RECEIVABLES> 1,254,673
<ASSETS-OTHER> 45,380
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 43,401,914
<PAYABLE-FOR-SECURITIES> 424,156
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 964,323
<TOTAL-LIABILITIES> 1,388,479
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 41,596,543
<SHARES-COMMON-STOCK> 2,283,629
<SHARES-COMMON-PRIOR> 3,513,698
<ACCUMULATED-NII-CURRENT> (3,915)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (607,394)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,028,201
<NET-ASSETS> 39,622,060
<DIVIDEND-INCOME> 485,782
<INTEREST-INCOME> 124,447
<OTHER-INCOME> 0
<EXPENSES-NET> 819,508
<NET-INVESTMENT-INCOME> (209,279)
<REALIZED-GAINS-CURRENT> (378,317)
<APPREC-INCREASE-CURRENT> (1,769,027)
<NET-CHANGE-FROM-OPS> (2,356,623)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 1,796,283
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 335,022
<NUMBER-OF-SHARES-REDEEMED> 1,659,708
<SHARES-REINVESTED> 94,621
<NET-CHANGE-IN-ASSETS> (25,878,536)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1,662,642
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 510,421
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 883,896
<AVERAGE-NET-ASSETS> 48,331,228
<PER-SHARE-NAV-BEGIN> 18.42
<PER-SHARE-NII> (0.08)
<PER-SHARE-GAIN-APPREC> (0.43)
<PER-SHARE-DIVIDEND> (0.56)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 17.35
<EXPENSE-RATIO> 1.55
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
