1933 Act File No. 2-94560
1940 Act File No. 811-4154
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. 43 X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 43 X
EVERGREEN INVESTMENT TRUST
(formerly First Union Funds)
(Exact Name of Registrant as Specified in Charter)
2500 Westchester Avenue, Purchase, New York 10577
(Address of Principal Executive Offices)
(914) 694-2020
(Registrant's Telephone Number)
Joseph J. McBrien, Esquire,
2500 Westchester Avenue
Purchase, New York 10577
(Name and Address of Agent for Service)
Copies to:
John A. Dudley, Esquire
Sullivan & Worcester
1025 Connecticut Ave., N.W.
Washington, D.C. 20036
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 filed with the Securities and Exchange Commission a declaration
pursuant to Rule 24f-2 under the Investment Company Act of 1940, and:
/X/ filed the Notice required by that Rule for the series
herein on December 29, 1995; or
/ / intends to file the Notice required by that Rule on or about (date); or
/ / during the most recent fiscal year did not sell any securities pursuant to
Rule 24f-2 under the Investment Company Act of 1940, and, pursuant to Rule
24f-2(b)(2), need not file the Notice.
CROSS REFERENCE SHEET
This Amendment to the Registration Statement of EVERGREEN INVESTMENT TRUST,
formerly known as FIRST UNION FUNDS, is comprised of two of the Trust's
portfolios: (1) Evergreen Emerging Markets Fund (formerly, First Union Emerging
Markets Portfolio) and (2) Evergreen International Equity Fund (formerly, First
Union International Portfolio) Both of the portfolios consist of four separate
classes of shares: (a) Class Y Shares, (b) Class A Shares, (c) Class B Shares,
and (d) Class C Shares.
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 5A. Management's Discussion Management's Discussion of
Fund Performance
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; Other
Restrictions and
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>
PROSPECTUS December 29, 1995
EVERGREEN(Service Mark) INTERNATIONAL/GLOBAL GROWTH FUNDS
EVERGREEN EMERGING MARKETS GROWTH FUND (Evergreen logo appears here)
EVERGREEN INTERNATIONAL EQUITY FUND
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND
CLASS A SHARES
CLASS B SHARES
CLASS C SHARES
The Evergreen International/Global 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
December 29, 1995 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(Service Mark) 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 9
Investment Practices and Restrictions 10
MANAGEMENT OF THE FUNDS
Investment Advisers 15
Sub-Advisers 17
Distribution Plans and Agreements 17
PURCHASE AND REDEMPTION OF SHARES
How to Buy Shares 18
How to Redeem Shares 21
Exchange Privilege 22
Shareholder Services 22
Effect of Banking Laws 23
OTHER INFORMATION
Dividends, Distributions and Taxes 24
General Information 25
</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 EVERGREEN GLOBAL REAL ESTATE EQUITY FUND is
Evergreen Asset Management Corp. which, with its predecessors, has served as an
investment adviser to the Evergreen mutual funds since 1971. 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, one of the ten largest bank
holding companies in the United States. The Capital Management Group of First
Union National Bank of North Carolina serves as investment adviser to EVERGREEN
EMERGING MARKETS GROWTH FUND and EVERGREEN INTERNATIONAL EQUITY FUND.
EVERGREEN EMERGING MARKETS GROWTH FUND (formerly First Union Emerging
Markets Growth Portfolio) seeks to provide long-term capital appreciation. The
EVERGREEN EMERGING MARKETS GROWTH FUND invests in equity securities of issuers
located in countries with emerging markets.
EVERGREEN INTERNATIONAL EQUITY FUND (formerly First Union International
Equity Portfolio) seeks to provide long-term capital appreciation. The EVERGREEN
INTERNATIONAL EQUITY FUND invests in equity securities of non-U.S. issuers.
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND seeks long-term capital growth.
Current income is a secondary objective. It invests primarily in equity
securities of United States and non-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.
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 and seventh years and 0% after the
seventh 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 EMERGING MARKETS 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
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Management Fees 1.50% 1.50% 1.50% After 1 Year $ 67 $ 78 $ 38 $ 28
12b-1 Fees* .25% .75% .75% After 3 Years $ 107 $ 115 $ 85 $ 85
Shareholder Service Fees -- .25% .25% After 5 Years $ 150 $ 165 $ 145 $ 145
Other Expenses (a) .25% .25% .25% After 10 Years $ 269 $ 282 $ 308 $ 282
Total 2.00% 2.75% 2.75%
<CAPTION>
Class C
<S> <C>
Management Fees $ 28
12b-1 Fees* $ 85
Shareholder Service Fees $ 145
Other Expenses (a) $ 308
Total
</TABLE>
EVERGREEN INTERNATIONAL 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
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Management Fees .80% .80% .80% After 1 Year $ 65 $ 76 $ 36 $ 26
12b-1 Fees* .25% .75% .75% After 3 Years $ 102 $ 110 $ 80 $ 80
Shareholder Service Fees -- .25% .25% After 5 Years $ 142 $ 157 $ 137 $ 137
Other Expenses .78% .78% .78% After 10 Years $ 252 $ 265 $ 291 $ 265
Total 1.83% 2.58% 2.58%
<CAPTION>
Class C
<S> <C>
Management Fees $ 26
12b-1 Fees* $ 80
Shareholder Service Fees $ 137
Other Expenses $ 291
Total
</TABLE>
EVERGREEN GLOBAL 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
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Management Fees 1.00% 1.00% 1.00% After 1 Year $ 65 $ 76 $ 36 $ 26
12b-1 Fees* .25% 1.00% 1.00% After 3 Years $ 101 $ 109 $ 79 $ 79
Other Expenses (b) .54% .54% .54% After 5 Years $ 140 $ 155 $ 135 $ 135
Total 1.79% 2.54% 2.54% After 10 Years $ 248 $ 261 $ 288 $ 261
<CAPTION>
Class C
<S> <C>
Management Fees $ 26
12b-1 Fees* $ 79
Other Expenses (b) $ 135
Total $ 288
</TABLE>
3
<PAGE>
*Class A Shares can pay up to .75 of 1% of average net assets as a 12b-1 Fee.
For the forseeable future, the Class A 12b-1 Fees will be limited to .25 of 1%
of average net assets. For Class B and Class C Shares of EVERGREEN GLOBAL REAL
ESTATE EQUITY FUND, 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.
**The annual operating expenses and examples do not reflect fee waivers and
expense reimbursements for the most recent fiscal period. Actual expenses net of
fee waivers and expense reimbursements for the fiscal period ended October 31,
1995 or September 30, 1995, as applicable, for Class A, B and C Shares were as
follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
<S> <C> <C> <C>
Evergreen Emerging Markets Growth Fund 1.73% 2.48% 2.50%
Evergreen International Equity Fund 1.19% 1.94% 1.94%
Evergreen Global Real Estate Equity Fund 1.61% 2.42% 1.54%
</TABLE>
(a) Reflects agreements by CMG to limit aggregate operating
expenses (including the investment advisory fees, but
excluding interest, taxes, brokerage commissions, Rule 12b-1
Fees, shareholder servicing fees and extraordinary expenses)
of Evergreen Emerging Markets Growth Fund to 1.75% of
average net assets for the foreseeable future. Absent such
agreements, the actual annual operating expenses for the
Fund for the period ended October 31, 1995, were as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
<S> <C> <C> <C>
3.97% 4.72% 4.71%
</TABLE>
(b) Reflects agreements by Evergreen Asset Management Corp to
voluntarily reimburse the Evergreen Global Real Estate
Equity Fund for certain class specific expenses. Absent such
agreements, the actual operating expenses for the period
ended September 30, 1995, were as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
<S> <C> <C> <C>
21.59% 82.74% 269.60%
</TABLE>
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. Such expenses have been restated
to reflect current fee arrangements and in the case of Funds that did not offer
all of the above-referenced Classes of shares during such periods, the amounts
set forth in the tables are based on the expenses incurred by the Classes which
were offered. 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 EMERGING MARKETS GROWTH FUND and EVERGREEN
INTERNATIONAL EQUITY FUND has been audited by KPMG Peat Marwick LLP, each Fund's
independent auditors, for EVERGREEN GLOBAL REAL ESTATE EQUITY FUND has been
audited by Price Waterhouse LLP, the Fund's independent auditors. A report of
KPMG Peat Marwick LLP or Price Waterhouse LLP, as the case may be, on the
audited information with respect to each Fund is incorporated by reference in
the Fund's 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 Fund's 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 EMERGING MARKETS GROWTH FUND
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES CLASS Y
SEPTEMBER 6, SEPTEMBER 6, SEPTEMBER 6, SHARES
TEN MONTHS 1994* TEN MONTHS 1994* TEN MONTHS 1994* TEN MONTHS
ENDED THROUGH ENDED THROUGH ENDED THROUGH ENDED
OCTOBER DECEMBER 31, OCTOBER DECEMBER 31, OCTOBER DECEMBER 31, OCTOBER
31, 1995# 1994 31, 1995# 1994 31, 1995# 1994 31, 1995#
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of
period.............................. $8.17 $10.00 $8.16 $10.00 $8.16 $10.00 $8.17
Income (loss) from investment
operations:
Net investment income (loss)......... .05 -- .01 (.02) .02 (.02) .05
Net realized and unrealized loss on
investments and foreign currency
transactions........................ (.32) (1.83) (.32) (1.82) (.34) (1.82) (.30)
Total from investment
operations...................... (.27) (1.83) (.31) (1.84) (.32) (1.84) (.25)
Net asset value, end of period....... $7.90 $8.17 $7.85 $8.16 $7.84 $8.16 $7.92
TOTAL RETURN+........................ (3.3%) (18.3%) (3.8%) (18.4%) (3.9%) (18.4%) (3.1%)
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (000's
omitted)............................ $1,117 $867 $1,940 $1,589 $56 $89 $9,355
Ratios to average net assets:
Expenses++**........................ 1.73% 1.78% 2.48% 2.53% 2.50% 2.53% 1.48%
Net investment income (loss)++**.... .76% (.12%) .03% (.84%) .72% (.82%) .94%
Portfolio turnover rate.............. 65% 17% 65% 17% 65% 17% 65%
<CAPTION>
SEPTEMBER 6,
1994*
THROUGH
DECEMBER 31,
1994
<S> <C>
PER SHARE DATA:
Net asset value, beginning of
period.............................. $10.00
Income (loss) from investment
operations:
Net investment income (loss)......... .01
Net realized and unrealized loss on
investments and foreign currency
transactions........................ (1.84)
Total from investment
operations...................... (1.83)
Net asset value, end of period....... $8.17
TOTAL RETURN+........................ (18.3%)
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (000's
omitted)............................ $5,878
Ratios to average net assets:
Expenses++**........................ 1.53%
Net investment income (loss)++**.... .43%
Portfolio turnover rate.............. 17%
</TABLE>
* Commencement of operations.
# The Fund changed its year end from December 31 to October 31.
+ Total return is calculated on net asset value per share for the periods
indicated and is not annualized. Initial sales charges 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 CLASS Y
SEPTEMBER 6, SEPTEMBER 6, SEPTEMBER 6, SHARES
TEN MONTHS 1994* TEN MONTHS 1994* TEN MONTHS 1994* TEN MONTHS
ENDED THROUGH ENDED THROUGH ENDED THROUGH ENDED
OCTOBER DECEMBER 31, OCTOBER DECEMBER 31, OCTOBER DECEMBER 31, OCTOBER
31, 1995# 1994 31, 1995# 1994 31, 1995# 1994 31, 1995#
<S> <C> <C> <C> <C> <C> <C> <C>
Expenses........................... 3.97% 3.96% 4.72% 4.71% 4.74% 4.71% 3.72%
Net investment loss................ (1.48%) (2.30%) (2.21%) (3.02%) (1.52%) (3.00%) (1.30%)
<CAPTION>
SEPTEMBER 6,
1994*
THROUGH
DECEMBER 31,
1994
<S> <C>
Expenses........................... 3.71%
Net investment loss................ (1.75%)
</TABLE>
5
<PAGE>
EVERGREEN INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES CLASS Y
SEPTEMBER 2, SEPTEMBER 2, SEPTEMBER 2, SHARES
TEN MONTHS 1994* TEN MONTHS 1994* TEN MONTHS 1994* TEN MONTHS
ENDED THROUGH ENDED THROUGH ENDED THROUGH ENDED
OCTOBER 31, DECEMBER 31, OCTOBER 31, DECEMBER 31, OCTOBER 31, DECEMBER 31, OCTOBER 31,
1995# 1994 1995# 1994 1995# 1994 1995#
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of
period........................... $9.50 $10.00 $9.50 $10.00 $9.49 $10.00 $9.50
Income (loss) from investment
operations:
Net investment income............. .09 .02 .06 -- .08 .03 .08
Net realized and unrealized gain
(loss)
on investments and foreign
currency transactions............ -- (.52) (.03) (.50) (.04) (.54) .03
Total from investment
operations................... .09 (.50) .03 (.50) .04 (.51) .11
Less distributions to shareholders
from net investment income....... (.01) -- -- -- -- -- (.01)
Net asset value, end of period.... $9.58 $9.50 $9.53 $9.50 $9.53 $9.49 $9.60
TOTAL RETURN+..................... 1.1% (5.1%) .5% (5.2%) .5% (5.2%) 1.3%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (000's
omitted)......................... $3,594 $2,545 $7,278 $5,602 $196 $163 $49,575
Ratios to average net assets:
Expenses++**..................... 1.19% 1.26% 1.94% 2.02% 1.94% 2.01% .94%
Net investment income
(loss)++**..................... 1.38% .91% .66% .10% .79% .85% 1.58%
Portfolio turnover rate........... 4% 1% 4% 1% 4% 1% 4%
<CAPTION>
SEPTEMBER 2,
1994*
THROUGH
DECEMBER 31,
1994
<S> <C>
PER SHARE DATA:
Net asset value, beginning of
period........................... $10.00
Income (loss) from investment
operations:
Net investment income............. .02
Net realized and unrealized gain
(loss)
on investments and foreign
currency transactions............ (.51)
Total from investment
operations................... (.49)
Less distributions to shareholders
from net investment income....... (.01)
Net asset value, end of period.... $9.50
TOTAL RETURN+..................... (5.0%)
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (000's
omitted)......................... $23,830
Ratios to average net assets:
Expenses++**..................... 1.06%
Net investment income
(loss)++**..................... 1.03%
Portfolio turnover rate........... 1%
</TABLE>
* Commencement of operations.
# The Fund changed its year end from December 31 to October 31.
+ 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 CLASS Y
SEPTEMBER 2, SEPTEMBER 2, SEPTEMBER 2, SHARES
TEN MONTHS 1994* TEN MONTHS 1994* TEN MONTHS 1994* TEN MONTHS
ENDED THROUGH ENDED THROUGH ENDED THROUGH ENDED
OCTOBER 31, DECEMBER 31, OCTOBER 31, DECEMBER 31, OCTOBER 31, DECEMBER 31, OCTOBER 31,
1995# 1994 1995# 1994 1995# 1994 1995#
<S> <C> <C> <C> <C> <C> <C> <C>
Expenses........................ 1.84% 2.09% 2.59% 2.85% 2.59% 2.84% 1.59%
Net investment income (loss).... .73% .08% .01% (.73%) .14% .02% .93%
<CAPTION>
SEPTEMBER 2,
1994*
THROUGH
DECEMBER 31,
1994
<S> <C>
Expenses........................ 1.89%
Net investment income (loss).... .20%
</TABLE>
6
<PAGE>
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND -- CLASS Y SHARES
<TABLE>
<CAPTION>
ONE MONTH NINE MONTHS FEBRUARY 1, 1989*
ENDED YEAR ENDED ENDED THROUGH
OCTOBER 31, SEPTEMBER 30, SEPTEMBER 30, YEAR ENDED DECEMBER 31, DECEMBER 31,
1995## 1995 1994# 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value,
beginning of period... $12.13 $13.81 $14.75 $9.86 $9.16 $8.10 $10.03 $10.00
Income (loss) from
investment operations:
Net investment income
(loss)................ (.01) .11 .07 -- (.01) (.02) (.03) .17
Net realized and
unrealized gain (loss)
on
investments........... (.53) (1.17) (1.01) 5.07 .94 1.08 (1.90) .03
Total from
investment
operations........ (.54) (1.06) (.94) 5.07 .93 1.06 (1.93) .20
Less distributions to
shareholders from:
Net investment income... -- (.10) -- -- -- -- -- (.17)
Net realized gains...... -- (.52) -- (.18) (.23) -- -- --
Total
distributions..... -- (.62) -- (.18) (.23) -- -- (.17)
Net asset value, end of
period................ $11.59 $12.13 $13.81 $14.75 $9.86 $9.16 $8.10 $10.03
TOTAL RETURN+........... (4.5%) (7.7%) (6.4%) 51.4% 10.2% 13.1% (19.2%) 2.0%
RATIOS & SUPPLEMENTAL
DATA:
Net assets, end of
period (000's
omitted).............. $61,418 $67,645 $132,294 $146,173 $8,618 $7,557 $6,004 $7,336
Ratios to average net
assets:
Operating expenses.... 1.62%++ 1.54% 1.46%++ 1.56%** 2.00%** 2.00%** 2.00%** 2.00%**++
Interest expense...... .03%++ .05% .08%++ -- -- -- -- --
Net investment income
(loss).............. (1.14%)++ .92% .56%++ .03%** (.10%)** (.27%)** (.39%)** 2.23%**++
Portfolio turnover
rate.................. 1% 28% 63% 88% 245% 207% 325% 151%
</TABLE>
# The Fund changed its fiscal year end from December 31 to September 30.
## The Fund changed its fiscal year end from September 30 to October 31.
* Commencement of operations.
+ Total return is calculated on net asset value per share 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>
FEBRUARY 1, 1989
THROUGH
YEAR ENDED DECEMBER 31, DECEMBER 31,
1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
Operating expenses............................. 1.64% 3.72% 3.76% 3.99% 3.17%
Net investment income (loss)................... (.05%) (1.82%) (2.02%) (2.38%) 1.06%
</TABLE>
7
<PAGE>
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND -- CLASS A, B AND C SHARES
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
FEBRUARY 10, FEBRUARY 8, FEBRUARY 9,
ONE MONTH 1995* ONE MONTH 1995* ONE MONTH 1995*
ENDED THROUGH ENDED THROUGH ENDED THROUGH
OCTOBER 31, SEPTEMBER 30, OCTOBER 31, SEPTEMBER 30, OCTOBER 31, SEPTEMBER 30,
1995## 1995 1995## 1995 1995## 1995
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:+
Net asset value, beginning of period............ $ 12.12 $ 11.46 $ 12.08 $ 11.44 $ 12.08 $ 11.43
Income (loss) from investment operations:
Net investment income (loss).................. (.01) .07 (.02) .08 (.02) .06
Net realized and unrealized gain (loss) on
investments................................. (.53) .59 (.53) .56 (.53) .59
Total income (loss) from investment
operations................................ (.54) .66 (.55) .64 (.55) .65
Net asset value, end of period.................. $ 11.58 $ 12.12 $ 11.53 $ 12.08 $ 11.53 $ 12.08
TOTAL RETURN++.................................. (4.5%) 5.8% (4.6%) 5.6% (4.6%) 5.7%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period....................... $74,376 $66,261 $99,964 $ 128,117 $3,643 $ 6,811
Ratios to average net assets:||**
Operating expenses............................ 1.73% 1.61% 2.44% 2.42% 2.37% 1.54%
Interest expense.............................. .03% .01% .03% .03% .02% .01%
Net investment income (loss).................. (1.26%) .98% (1.98%) 1.38% (1.94%) .86%
Portfolio turnover rate#........................ 1% 28% 1% 28% 1% 28%
</TABLE>
* Commencement of class operations.
** Annualized. Due to the recent commencement of their offering, the ratios for
Class A, Class B and Class C shares are not necessarily comparable to that
of the Class Y shares, and are not necessarily indicative of future ratios.
+ Calculated based on average shares outstanding during the period.
++ Total return is calculated for the periods indicated and is not annualized.
Initial sales charge or contingent deferred sales charges are not reflected.
# Portfolio turnover rate is calculated for the one month ended October 31,
1995 and the twelve months ended September 30, 1995.
## The Fund changed its fiscal year-end from September 30 to October 31.
|| 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
FEBRUARY 10, FEBRUARY 8, FEBRUARY 9,
ONE MONTH 1995* ONE MONTH 1995* ONE MONTH 1995*
ENDED THROUGH ENDED THROUGH ENDED THROUGH
OCTOBER 31, SEPTEMBER 30, OCTOBER 31, SEPTEMBER 30, OCTOBER 31, SEPTEMBER 30,
1995 1995 1995 1995 1995 1995
<S> <C> <C> <C> <C> <C> <C>
Expenses.................................. 46.90% 21.59% 31.39% 82.74% 570.26% 269.60%
Net investment loss....................... (46.44%) (19.00%) (30.94%) (79.94%) (569.83%) (266.32%)
</TABLE>
8
<PAGE>
DESCRIPTION OF THE FUNDS
INVESTMENT OBJECTIVES AND POLICIES
Each Fund's investment objective is fundamental and may not be changed
without shareholder approval.
In addition to the investment policies detailed below, each Fund may
employ certain additional investment strategies which are discussed in
"Investment Practices and Restrictions".
EVERGREEN EMERGING MARKETS GROWTH FUND
The objective of EVERGREEN EMERGING MARKETS GROWTH FUND is long-term
capital appreciation. In seeking this objective, the Fund invests in equity
securities of issuers located in emerging markets. The Fund is suitable for
aggressive investors interested in the investment opportunities offered by
securities of issuers located in emerging or developing markets and the
resulting potential for growth opportunities attributable to political change,
economic deregulation and liberalized trade policies.
The Fund invests primarily in a diversified portfolio of equity
securities of issuers located in countries with emerging markets. As a matter of
policy, the Fund will invest at least 65% of the value of its total assets in
securities of emerging market issuers.
A country will be considered to have an "emerging market" if it has
relatively low gross national product per capita compared to the world's major
economies and the potential for rapid economic growth. Countries with emerging
markets include those that have an emerging stock market (as defined by the
International Finance Corporation), those with low-to middle income economies
(according to the World Bank), and those listed in World Bank publications as
"developing". The Fund will normally invest in at least six different countries,
although it may invest all of its assets in a single country. At the present
time, the Fund has no intention of investing all of its assets in a single
country. The Fund focuses on equity securities, but may also invest in other
types of instruments, including debt securities. Marvin & Palmer Associates, the
sub-adviser to the Fund, will make investment decisions regarding equity
securities based on its analysis of returns, price momentum, business and
industry considerations, and management quality.
EVERGREEN INTERNATIONAL EQUITY FUND
The objective of EVERGREEN INTERNATIONAL EQUITY FUND is long-term capital
appreciation. The Fund invests primarily in equity securities of non-U.S.
issuers and is suitable for investors who want to pursue their investment goals
in markets outside the United States. The Fund provides investors with a vehicle
to pursue investment opportunities in countries outside the U.S. whose
securities markets may benefit from differing economic and political cycles.
The Fund invests primarily in foreign equity securities that Boston
International Advisers, Inc., the sub-adviser to the Fund, determines, through
both fundamental and technical analysis, to be undervalued compared to other
securities in their industries and countries. In most market conditions, the
stocks comprising the Fund's assets will exhibit traditional value
characteristics, such as higher than average dividend yields, lower than average
price to book value, and will include stocks of companies with unrecognized or
undervalued assets. As a matter of policy, the Fund will invest at least 65% of
the value of its total assets in equity securities of issuers located in at
least three countries outside of the United States.
The Fund will emphasize value stocks, primarily of companies which are
listed on one or more of thirty-two stock markets: twenty developed markets and
twelve emerging markets. While the current intention of the Fund is to invest in
thirty-two stock markets, the Fund may invest in more or less, depending upon
market conditions as determined by the sub-adviser. The Fund will invest
substantially all of its assets in industrialized companies throughout the world
that comprise the Morgan Stanley Capital International EAFE (Europe, Australia
and the Far East) Index. In addition, the Fund intends to invest up to 10% of
its assets in emerging country equity securities, as described above under
"Evergreen Emerging Markets Growth Fund".
9
<PAGE>
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND
The EVERGREEN GLOBAL REAL ESTATE EQUITY FUND seeks to achieve its
investment objective of long-term capital growth through investment primarily in
equity securities of domestic and foreign 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.
The Fund will, under normal conditions, invest at least 65% of its total
assets in equity securities of domestic and foreign exchanges or NASDAQ listed
companies which are 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. As a matter of fundamental
policy, the Fund will also invest at least 65% of its total assets in the equity
securities of companies of at least three countries, including the United
States, except when abnormal market or financial conditions warrant the
assumption of a temporary defensive position. See "Investment Practices and
Restrictions" and "Special Risk Considerations".
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 but whose real
estate assets are substantial relative to the price of the companies'
securities.
The Fund pursues a flexible strategy of investing in a diversified
portfolio of securities of companies throughout the world. The Fund's investment
adviser anticipates that the Fund will give particular consideration to
investments in the United Kingdom, Western Europe, Australia, Canada, the Far
East (Japan, Hong Kong, Singapore, Malaysia and Thailand) and the United States.
The percentage of the Fund's assets invested in particular geographic regions
will shift from time to time in accordance with the judgment of the Fund's
investment adviser. Generally, a substantial portion of the assets of the Fund
will be denominated or traded in foreign currencies.
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 Moody's Investors Service ("Moody's") or Standard & Poor's
Ratings Group ("S&P") 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.
INVESTMENT PRACTICES AND RESTRICTIONS
General. The Funds primarily invest in:
common and preferred stocks, convertible securities and warrants of
foreign corporations. Common stocks represent an equity interest in a
corporation. This ownership interest often gives the Funds the right to
vote on measures affecting the company's organization and operations.
Although common stocks have a history of long-term growth in value, their
prices tend to fluctuate in the short-term, particularly those of smaller
capitalization companies. Smaller capitalization companies may have
limited product lines, markets, or financial resources. These conditions
may make them more susceptible to setbacks and reversals. Therefore,
their securities may have limited marketability and may be subject to
more abrupt or erratic market movements than securities of larger
companies;
10
<PAGE>
obligations of foreign governments and supranational organizations;
corporate and foreign government fixed income securities denominated in
currencies other than U.S. dollars rated, at the time of purchase, Baa or
higher by Moody's or BBB or higher by S&P, or which, if unrated, are
considered to be of comparable quality by the Funds' investment advisers
or sub-advisers. Bonds rated Baa by Moody's or BBB by S&P have
speculative characteristics. Changes in economic conditions or other
circumstances are more likely to lead to weakened capacity to make
principal and interest payments than higher rated bonds. Although the
Funds do not intend to invest significantly in debt securities, it should
be noted that the prices of fixed income securities fluctuate inversely
to the direction of interest rates;
strategic investments, such as options and futures contracts on currency
transactions, securities index futures contracts, and forward foreign
currency exchange contracts. The Funds can use these techniques to
increase or decrease their exposure to changing security prices, interest
rates, currency exchange rates, or other factors that affect security
values. (Although, of course, there can be no assurance that these
strategic investments will be successful in protecting the value of the
Funds' securities.); and
securities of closed-end investment companies.
Defensive Investments. The Funds may invest without limitation in high quality
money market instruments, such as notes, certificates of deposit or bankers'
acceptances, or U.S. government securities if, in the opinion of a Fund's
investment adviser or sub-adviser, market conditions warrant a temporary
defensive investment strategy.
Portfolio Turnover and Brokerage. It is anticipated that the annual portfolio
turnover rate for EVERGREEN GLOBAL REAL ESTATE EQUITY 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. 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 GLOBAL REAL ESTATE EQUITY 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".
Repurchase Agreements. The Funds may invest in repurchase agreements. Repurchase
agreements are agreements by which a Fund purchases a security for cash and
obtains a simultaneous commitment from the seller (usually a bank or
broker/dealer) to repurchase the security at an agreed-upon price and specified
future date. The repurchase price reflects an agreed-upon interest rate for the
time period of the agreement. The Funds risk is the inability of the seller to
pay the agreed-upon price on the delivery date. However, this risk is tempered
by the ability of the Funds to sell the security in the open market in the case
of a default. In such a case, the Funds may incur costs in disposing of the
security which would increase Fund expenses. Each Fund's investment adviser will
monitor the creditworthiness of the firms with which the Funds enter into
repurchase agreements.
When-Issued And Delayed Delivery Transactions. EVERGREEN INTERNATIONAL EQUITY
FUND and EVERGREEN EMERGING MARKETS GROWTH FUND may purchase securities on a
when-issued or delayed delivery basis. These transactions are arrangements in
which the Funds purchase securities with payment and delivery scheduled for a
future time. The seller's failure to complete these transactions may cause the
Funds to miss a price or yield considered to be advantageous. Settlement dates
may be a month or more after entering into these transactions, and the market
values of the securities purchased may vary from the purchase prices.
Accordingly, the Funds may pay more or less than the market value of the
securities on the settlement date. A Fund may dispose of a commitment prior to
settlement if the Fund's investment adviser deems it appropriate to do so. In
addition, EVERGREEN INTERNATIONAL EQUITY FUND and EVERGREEN EMERGING MARKETS
GROWTH FUND may enter into transactions to sell their purchase commitments to
third parties at current market values and simultaneously acquire other
commitments to purchase similar securities at later dates. The Funds may realize
short-term profits or losses upon the sale of such commitments.
Temporary Investments. The Funds may invest in U.S. and foreign short-term money
market instruments (denominated in U.S. and/or foreign currencies), including
interest-bearing call deposits with banks, government obligations, certificates
of deposit, bankers' acceptances, commercial paper, short-term corporate debt
securities, and repurchase agreements. These investments may be used to
temporarily invest cash received from the sale of
11
<PAGE>
Fund shares, to establish and maintain reserves for temporary defensive
purposes, or to take advantage of market opportunities.
Illiquid or Restricted Securities. Each Fund may invest up to 15% of its net
assets in illiquid securities and other securities which are not readily
marketable. Illiquid securities include certain restricted securities not
determined by the Trustees to be liquid, non-negotiable time deposits and
repurchase agreements providing for settlement in more than seven days after
notice. Securities eligible for resale pursuant to Rule 144A under the
Securities Act of 1933, 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. In the event that such a security is deemed to be no longer
liquid, a Fund's holdings will be reviewed to determine what action, if any, is
required to ensure that the retention of such security does not result in a Fund
having more than 15% of its assets invested in illiquid or not readily
marketable securities.
Borrowing. As a matter of fundamental policy, the Funds may not borrow money
except as a temporary measure to facilitate redemption requests or 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 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. The Funds' investment advisers or sub-advisers 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 the total assets of
the EVERGREEN GLOBAL REAL ESTATE EQUITY FUND, and one-third of the value of the
total assets of EVERGREEN INTERNATIONAL EQUITY FUND and EVERGREEN EMERGING
MARKETS GROWTH FUND, 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.
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.
Foreign Currency Transactions. The Funds will enter into foreign currency
transactions to obtain the necessary currencies to settle securities
transactions. Currency transactions may be conducted either on a spot or cash
basis at prevailing rates or through forward foreign currency exchange
contracts. The Funds may also enter into foreign currency transactions to
protect Fund assets against adverse changes in foreign currency exchange rates
or exchange control regulations. Such changes could unfavorably affect the value
of Fund assets which are denominated in foreign currencies, such as foreign
securities or funds deposited in foreign banks, as measured in U.S. dollars.
Although foreign currency exchanges may be used by a Fund to protect against a
decline in the value of one or more currencies, such efforts may also limit any
potential gain that might result from a relative increase in the value of such
currencies and might, in certain cases, result in losses to the Fund.
Forward Foreign Currency Exchange Contracts. A forward foreign currency exchange
contract ("forward contract") is an obligation to purchase or sell an amount of
a particular currency at a specific price and on a future date agreed upon by
the parties. Generally, no commission charges or deposits are involved. At the
time a Fund enters into a forward contract, Fund assets with a value equal to
the Fund's obligation under the forward contract are segregated and are
maintained until the contract has been settled. The Funds will not enter into a
forward contract with a term of more than one year. The Funds will generally
enter into a forward contract to provide the proper currency to settle a
securities transaction at the time the transaction occurs ("trade date"). The
period between trade date and settlement date will vary between 24 hours and 60
days, depending upon local custom.
The Funds may also protect against the decline of a particular foreign
currency by entering into a forward contract to sell an amount of that currency
approximating the value of all or a portion of the Funds' assets
12
<PAGE>
denominated in that currency ("hedging"). The success of this type of short-term
hedging strategy is highly uncertain due to the difficulties of predicting
short-term currency market movements and of precisely matching forward contract
amounts and the constantly changing value of the securities involved. Although
each Fund's investment adviser or sub-adviser will consider the likelihood of
changes in currency values when making investment decisions, each Fund's
investment adviser or sub-adviser believes that it is important to be able to
enter into forward contracts when it believes the interests of a Fund will be
served. The Funds will not enter into forward contracts for hedging purposes in
a particular currency in an amount in excess of the Funds' assets denominated in
that currency.
Options And Futures. The Funds may deal in options on foreign currencies,
portfolio securities and, in the case of EVERGREEN INTERNATIONAL EQUITY FUND and
EVERGREEN EMERGING MARKETS GROWTH FUND, securities indices. Such options may be
traded on an international securities exchange. The Funds will use these options
to manage interest rate and currency risks. The Funds also may write covered
call options and secured put options to generate income or to lock in gains.
EVERGREEN INTERNATIONAL EQUITY FUND and EVERGREEN EMERGING MARKETS GROWTH FUND
may write covered call options and securities put options on up to 25% of their
net assets. EVERGREEN GLOBAL REAL ESTATE EQUITY FUND may write covered call
options and secured put options on up to 15% of its net assets. EVERGREEN
INTERNATIONAL EQUITY FUND and EVERGREEN EMERGING MARKETS GROWTH FUND may
purchase put and call options provided that no more than 5% of the fair market
value of their net assets is invested in premiums on such options.
A call option gives the purchaser the right to buy, and the writer the
obligation to sell, the underlying asset at the exercise price during the option
period. A put option gives the purchaser the right to sell, and the writer the
obligation to buy, the underlying asset at the exercise price during the option
period. The writer of a covered call owns assets that are acceptable for escrow
and the writer of a secured put invests an amount not less than the exercise
price in eligible assets to the extent that it is obligated as a writer. If a
call written by a Fund is exercised, the Fund forgoes any possible profit from
an increase in the market price of the underlying asset over the exercise price
plus the premium received. In writing puts, there is a risk that a Fund may be
required to take delivery of the underlying asset at a disadvantageous price.
The Funds may enter into futures contracts involving foreign currency
and, in the case of EVERGREEN INTERNATIONAL EQUITY FUND and EVERGREEN EMERGING
MARKETS GROWTH FUND, securities indices or options on currency, for bona fide
hedging purposes. The Funds may not enter into futures contracts or related
options if, immediately thereafter, the amounts committed to margin and premiums
paid for unexpired options would exceed 5% of a Fund's net assets and, in the
case of EVERGREEN GLOBAL REAL ESTATE EQUITY FUND, more than 30% of the Fund's
net assets would be hedged thereby. EVERGREEN INTERNATIONAL EQUITY FUND and
EVERGREEN EMERGING MARKETS GROWTH FUND, may also enter into such futures
contracts or related options for purposes other than bona fide hedging if the
aggregate amount of initial margin deposits on a Fund's futures and related
options positions would not exceed 5% of the net liquidation value of the Fund's
assets, provided further that in the case of an option that is in-the-money at
the time of the purchase, the in-the-money amount may be excluded in calculating
the 5% limitation. In addition, a Fund may not sell futures contracts if the
value of such futures contracts exceeds the total market value of the Fund's
portfolio securities. Futures contracts sold by a Fund are generally subject to
segregation and coverage requirements established by either the Commodity
Futures Trading Commission ("CFTC") or the Securities and Exchange Commission
("SEC"), with the result that, if a Fund does not hold the instrument underlying
the futures contract or option, the Fund will be required to segregate, on an
ongoing basis with its custodian, cash, U.S. government securities, or other
liquid high grade debt obligations in an amount at least equal to the Fund's
obligations with respect to such instruments.
EVERGREEN INTERNATIONAL EQUITY FUND and EVERGREEN EMERGING MARKETS GROWTH
FUND may enter into securities index futures contracts and purchase and write
put and call options on securities index futures contracts that are traded on
regulated exchanges, including non-U.S. exchanges, to the extent permitted by
the CFTC. Securities index futures contracts are based on indices that reflect
the market value of securities of the firms included in the indices. An index
futures contract is an agreement pursuant to which two parties agree to take or
make delivery of an amount of cash equal to the differences between the value of
the index at the close of the last trading day of the contract and the price at
which the index contract was originally written.
EVERGREEN INTERNATIONAL EQUITY FUND and EVERGREEN EMERGING MARKETS GROWTH
FUND may enter into securities index futures contracts to sell a securities
index in anticipation of or during a market decline to attempt to offset the
decrease in market value of securities in its portfolio that might otherwise
result. When a Fund is not fully invested and anticipates a significant market
advance, it may enter into futures contracts to purchase the index in
13
<PAGE>
order to gain rapid market exposure that may in part or entirely offset
increases in the cost of securities that it intends to purchase. In many of
these transactions, a Fund will purchase such securities upon termination of the
futures position but, depending on market conditions, a futures position may be
terminated without the corresponding purchases of common stock. A Fund may also
invest in securities index futures contracts when its investment adviser or
sub-adviser believes such investment is more efficient, liquid or cost-effective
than investing directly in the securities underlying the index.
The use of futures and related options involves special considerations
and risks, including: (1) the ability of a Fund to utilize futures successfully
will depend on the ability of its investment adviser or sub-adviser to predict
pertinent market movements; and (2) the fact that there might be an imperfect
correlation (or conceivably no correlation) between the change in the market
value of the securities held by a Fund and the prices of the futures relating to
the securities purchased or sold by the Fund. The use of futures and related
options may reduce risk of loss by wholly or partially offsetting the negative
effect of unfavorable price movements, but these instruments can also reduce the
opportunity for gain by offsetting the positive effect of favorable price
movements in positions. No assurance can be given that the investment adviser's
or sub-adviser's judgment in this respect will be correct.
It is not certain that a secondary market for positions in futures
contracts or for options will exist at all times. Although each investment
adviser or sub-adviser will consider liquidity before entering into these
transactions, there is no assurance that a liquid secondary market on an
exchange or otherwise will exist for any particular futures contract or option
at any particular time. A Fund's ability to establish and close out futures and
options positions depends on this secondary market.
Risk Characteristics Of Foreign Securities. Investing in non-U.S. securities
involves additional risks not normally associated with domestic investments. In
an attempt to reduce some of these risks, the Funds diversify their investments
broadly among foreign countries which may include both developed and developing
countries. With respect to EVERGREEN INTERNATIONAL EQUITY FUND, at least three
different countries will always be represented. The Funds may take advantage of
the unusual opportunities for higher returns available from investing in
developing countries. As discussed in detail below under "Emerging Markets",
however, these investments carry considerably more volatility and risk because
they generally are associated with less mature economies and less stable
political systems.
Foreign securities are denominated in foreign currencies. Therefore, the
value in U.S. dollars of a Fund's assets and income may be affected by changes
in exchange rates and regulations. Although the Funds value their assets daily
in U.S. dollars, they will not convert their holdings of foreign currencies to
U.S. dollars daily. When a Fund converts its holdings to another currency, it
may incur conversion costs. Foreign exchange dealers realize a profit on the
difference between the prices at which such dealers buy and sell currencies.
To the extent that securities purchased by the Funds are denominated in
currencies other than the U.S. dollar, changes in foreign currency exchange
rates will affect the Funds' net asset values; the value of interest earned;
gains and losses realized on the sale of securities; and net investment income
and capital gains, if any, to be distributed to shareholders by a Fund. If the
value of a foreign currency rises against the U.S. dollar, the value of a Fund's
assets denominated in that currency will increase; correspondingly, if the value
of a foreign currency declines against the U.S. dollar, the value of a Fund's
assets denominated in that currency will decrease.
Other differences between investing in foreign and U.S. companies
include: less publicly available information about foreign companies; the lack
of uniform financial accounting standards applicable to foreign companies; less
readily available market quotations on foreign companies; differences in
government regulation and supervision of foreign stock exchanges, brokers,
listed companies, and banks; differences in legal systems which may affect the
ability to enforce contractual obligations or obtain court judgments; generally
lower foreign stock market volume; the likelihood that foreign securities may be
less liquid or more volatile; foreign brokerage commissions may be higher;
unreliable mail service between countries; and political or financial changes
which adversely affect investments in some countries. In the past, U.S.
government policies have discouraged or restricted certain investments abroad by
investors such as the Funds. Although the Funds are unaware of any current
restrictions, investors are advised that these policies could be reinstituted.
Emerging Markets. The economies of individual emerging countries may differ
favorably or unfavorably from the U.S. economy in such respects as growth of
gross domestic product, rate of inflation, currency depreciation, capital
reinvestment, resource self-sufficiency and balance of payments position.
Further, the economies of developing countries generally are heavily dependent
on international trade and, accordingly, have been, and may continue to be,
adversely affected by trade barriers, exchange controls, managed adjustments in
relative currency
14
<PAGE>
values and other protectionist measures imposed or negotiated by the countries
with which they trade. These economies also have been, and may continue to be,
adversely affected by economic conditions in the countries with which they
trade.
Prior governmental approval for foreign investments may be required under
certain circumstances in some emerging countries, and the extent of foreign
investment in certain debt securities and domestic companies may be subject to
limitation in other emerging countries. Foreign ownership limitations also may
be imposed by the charters of individual companies in emerging countries to
prevent, among other concerns, violation of foreign investment limitations.
Repatriation of investment income, capital and the proceeds of sales by
foreign investors may require governmental registration and/or approval in some
emerging countries. A Fund could be adversely affected by delays in, or a
refusal to grant, any required governmental registration or approval for such
repatriation. Any investment subject to such repatriation controls will be
considered illiquid if it appears reasonably likely that this process will take
more than seven days.
With respect to any emerging country, there is the possibility of
nationalization, expropriation or confiscatory taxation, political changes,
governmental regulation, social instability or diplomatic developments
(including war) which could affect adversely the economics of such countries or
the value of the Funds' investments in those countries. In addition, it may be
difficult to obtain and enforce a judgment in a court outside of the U.S.
Investments Related to Real Estate. 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 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.
MANAGEMENT OF THE FUNDS
INVESTMENT ADVISERS
The management of each Fund is supervised by the Trustees of the Trust
under which the Fund has been established ("Trustees"). Evergreen Asset
Management Corp. ("Evergreen Asset") has been retained by EVERGREEN GLOBAL REAL
ESTATE EQUITY 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"), one of the ten largest bank holding companies
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 Fund. The Capital Management Group of FUNB ("CMG")
serves as investment adviser to EVERGREEN INTERNATIONAL EQUITY FUND and
EVERGREEN EMERGING MARKETS GROWTH FUND. Boston International Advisers, Inc.
("BIA") is sub-adviser to EVERGREEN INTERNATIONAL EQUITY FUND and Marvin &
Palmer Associates, Inc. ("Marvin & Palmer") is sub-adviser to EVERGREEN EMERGING
MARKETS GROWTH FUND.
15
<PAGE>
First Union is a bank holding company headquartered in Charlotte, North
Carolina, which had $86.8 billion in consolidated assets as of September 30,
1995. First Union and its subsidiaries provide a broad range of financial
services to individuals and businesses through offices in 37 states. CMG manages
or otherwise oversees the investment of over $31 billion in assets belonging to
a wide range of clients, including all the series of Evergreen Investment Trust
(formerly known as First Union Funds). 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 GLOBAL REAL ESTATE EQUITY FUND,
Evergreen Asset manages the Fund's investments, provides various administrative
services and supervises the Fund's daily business affairs, subject to the
authority of the Trustees. Evergreen Asset is entitled to receive a fee equal to
1% of average daily net assets on an annual basis from EVERGREEN GLOBAL REAL
ESTATE EQUITY FUND.
CMG, along with BIA and Marvin & Palmer, respectively, manages
investments and supervises the daily business affairs of EVERGREEN INTERNATIONAL
EQUITY FUND and EVERGREEN EMERGING MARKETS GROWTH FUND. As compensation
therefor, CMG is entitled to receive an annual fee from EVERGREEN INTERNATIONAL
EQUITY FUND equal to: .82 of 1% of the first $20 million of average daily net
assets; .79 of 1% of the next $30 million of average daily net assets; .76 of 1%
of the next $50 million of average daily net assets; and .73 of 1% of average
daily net assets in excess of $100 million. From EVERGREEN EMERGING MARKETS
GROWTH FUND, CMG is entitled to receive an annual fee equal to: 1.50% of the
first $100 million of average daily net assets; 1.45% of the next $100 million
of average daily net assets; 1.40% of the next $100 million of average daily net
assets; and 1.35% of average daily net assets in excess of $300 million.
The fees paid by the Funds are higher than the rate paid by most other
investment companies, but are not higher than the fee paid by many funds with
similar investment objectives. The total expenses as a percentage of average
daily net assets on an annual basis of the Funds for the fiscal period ended
October 31, 1995 are set forth in the section entitled "Financial Highlights".
CMG has agreed to pay BIA, the sub adviser to EVERGREEN INTERNATIONAL EQUITY
FUND, a fee equal to: .32 of 1% of the first $20 million of average daily net
assets; .29 of 1% of the next $30 million of average daily net assets; .26 of 1%
of the next $50 million of average daily net assets; and .23 of 1% of average
daily net assets in excess of $100 million. For its services as sub-adviser to
EVERGREEN EMERGING MARKETS GROWTH FUND, Marvin & Palmer receives from CMG a fee
equal to: 1% of the first $100 million of average daily net assets; .95 of 1% of
the next $100 million of average daily net assets; .90 of 1% of the next $100
million of average daily net assets; and .85 of 1% of average daily net assets
in excess of $300 million.
Evergreen Asset serves as administrator to EVERGREEN INTERNATIONAL EQUITY
FUND and EVERGREEN EMERGING MARKETS GROWTH FUND and is entitled to receive a fee
based on the average daily net assets of these Funds 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
Incorporated, an affiliate of Evergreen Funds Distributor, Inc., distributor for
the Evergreen group of mutual funds, serves as sub-administrator to EVERGREEN
INTERNATIONAL EQUITY FUND and EVERGREEN EMERGING MARKETS GROWTH FUND and is
entitled to receive a fee from each Fund calculated on the average daily net
assets of each 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 $10.5 billion as of November 30,
1995.
The portfolio manager for EVERGREEN GLOBAL 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 managers for EVERGREEN INTERNATIONAL EQUITY FUND are
Richard Wagoner, Executive Vice President, Head of CMG since 1973, and a
Director of Evergreen Asset since 1994, together with Maureen Ghublikian and
David A. Umstead, who are Managing Directors of BIA and have been associated
therewith since prior to 1989.
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<PAGE>
The portfolio managers for EVERGREEN EMERGING MARKETS GROWTH FUND, all of
whom have served since the Fund's inception in September 1994, are David F.
Marvin, who is Chairman of Marvin & Palmer and is primarily responsible for
Latin America and currency management, Stanley Palmer, who is President of
Marvin & Palmer and primarily responsible for Southeast Asia and the India
subcontinent, Terry B. Mason, who is a Vice President of Marvin & Palmer and is
primarily responsible for Eastern Europe and Africa, Jay F. Middleton, who is a
portfolio manager for Marvin & Palmer and primarily responsible for Latin
America and the Middle East, and Todd D. Marvin, who is a portfolio manager for
Marvin & Palmer and, along with Mr. Palmer, primarily responsible for Southeast
Asia and the India subcontinent. David F. Marvin and Stanley Palmer, President,
founded Marvin & Palmer in 1986. Mr. Mason and Mr. Middleton both joined Marvin
& Palmer in 1990. Mr. Todd Marvin joined Marvin & Palmer in 1991 and, prior
thereto, was employed by Oppenheimer & Company as an analyst in its investment
banking department from 1989 until 1991.
SUB-ADVISERS
Evergreen Asset has entered into a sub-advisory agreement with Lieber &
Company with respect to EVERGREEN GLOBAL REAL ESTATE EQUITY FUND which provides
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 Fund's portfolio. 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 GLOBAL REAL ESTATE EQUITY
FUND for the services provided by Lieber & Company. It is contemplated that
Lieber & Company will, to the extent practicable, effect substantially all of
the portfolio transactions for this Fund on the New York and American Stock
Exchanges. The address of Lieber & Company is 2500 Westchester Avenue, Purchase,
New York 10577. Lieber & Company is an indirect, wholly-owned, subsidiary of
First Union.
BIA, the sub-adviser to the EVERGREEN INTERNATIONAL EQUITY FUND, has been
in operation since 1986 and specializes in the management of international
equity portfolios. BIA currently manages twenty international portfolios,
including five group trust funds, for pension fund sponsors and endowment plans
worldwide. Messrs. Lyle H. Davis, Norman H. Meltz and David A. Umstead are the
principal executive officers of BIA and each own more than 25% of the
outstanding voting securities thereof. As of September 30, 1995 BIA managed a
total of $2.5 billion in assets and served as sub-adviser to one other
investment company with total assets of $148 million.
Marvin & Palmer, sub-adviser to the EVERGREEN EMERGING MARKETS GROWTH
FUND, was founded in 1986 and is engaged in the management of global, non-United
States and emerging markets equity portfolios for institutional accounts. At
September 30, 1995, Marvin & Palmer managed a total of $3.1 billion in
investments for thirty-four institutional investors and five commingled funds
and served as sub-adviser to another investment company with total assets of $33
million.
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 aggregate average daily net assets attributable to each Fund's Class A
shares, 1% of the aggregate average daily net assets attributable to the Class B
and Class C shares of EVERGREEN GLOBAL REAL ESTATE EQUITY FUND, and .75 of 1% of
the aggregate average daily net assets attributable to the Class B and Class C
shares of EVERGREEN INTERNATIONAL EQUITY FUND and EVERGREEN EMERGING MARKETS
GROWTH FUND. Payments under the Plans adopted with respect to Class A shares 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 may constitute a service fee to be used
for providing ongoing personal services and/or the maintenance of shareholder
accounts. EVERGREEN INTERNATIONAL EQUITY FUND and EVERGREEN EMERGING MARKETS
GROWTH FUND have each, in addition to the Plans adopted with respect to their
Class B and Class C shares, adopted shareholder service plans ("Service Plans")
relating to the Class B and Class C shares which permit each Fund to incur a fee
of up to .25 of 1% of the aggregate average daily net assets attributable to the
Class B and Class C shares for ongoing personal services and/or the maintenance
of shareholder accounts. Such service fee payments to financial intermediaries
for such purposes, whether pursuant to a Plan or Service Plan, will not exceed
.25 of 1% of the aggregate average daily net assets attributable to each Class
of shares of each Fund.
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<PAGE>
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, .75 of 1% of a Fund's
aggregate average daily net assets attributable to the Class B shares and .75 of
1% of a Fund's aggregate average daily net assets attributable to the 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 (and in the case of EVERGREEN
INTERNATIONAL EQUITY FUND and EVERGREEN EMERGING MARKETS GROWTH FUND, the
Service 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 and each Fund's investment
adviser or their affiliates, for personal services rendered to shareholders
and/or the maintenance of shareholder accounts.
The Funds may not pay any distribution or services fees during any fiscal
period in excess of the amounts set forth above. 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.
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 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").
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<PAGE>
Class A Shares-Front-End Sales Charge Alternative. You can purchase Class A
shares at net asset value plus an initial sales charge, 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 $100,000 4.99% 4.75% 4.25%
$100,000 - $249,999 3.90% 3.75% 3.25%
$250,000 - $499,999 3.09% 3.00% 2.50%
$500,000 - $999,999 2.04% 2.00% 1.75%
$1,000,000 - $2,499,999 1.01% 1.00% 1.00%
Over $2,500,000 .25% .25% .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; 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 contingent deferred sales charge ("CDSC"). Certain
broker-dealers or other financial institutions may impose a fee in connection
with 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.
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 bank's
customers 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 seven years after purchase. Shares obtained
from dividend or distribution reinvestment are not subject to the CDSC. The
amount of the CDSC
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<PAGE>
(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> <C>
FIRST 5%
SECOND 4%
THIRD and FOURTH 3%
FIFTH 2%
SIXTH and SEVENTH 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% 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 the 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.
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 seven 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 determined on
the basis of market quotations or, if such quotations are not readily available,
such other methods as the Trustees of each Trust under which each Fund operates
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
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<PAGE>
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.
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.
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.
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 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 phone 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 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
21
<PAGE>
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 redemption 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. An exchange which
represents an initial investment in another Evergreen mutual fund must amount to
at least $1,000. 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. Exchanges are subject to minimum
investment and suitability requirements.
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.
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 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.
22
<PAGE>
Systematic Investment Plan. You may make monthly or quarterly investments into
an existing account automatically in amounts of not less than $25.
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.
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 $100. 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". Each Fund's investment adviser may provide compensation to
organizations providing administrative and recordkeeping services to plans which
make shares of the Evergreen mutual funds available to their participants.
Automatic Reinvestment Plan. For the convenience of investors, all dividends and
distributions are automatically reinvested in full and fractional shares of the
Funds 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. If you elect to receive dividends and
distributions in cash and the U.S. Postal Service cannot deliver the checks, or
if the checks remain uncashed for six months, the checks will be reinvested into
your account at the then current net asset value.
Tax Sheltered Retirement Plans. You 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 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.
23
<PAGE>
OTHER INFORMATION
DIVIDENDS, DISTRIBUTIONS AND TAXES
It is the policy of each Fund to distribute to shareholders its
investment company income, if any, annually and any net realized capital gains
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 of 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 has
made a written request for 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 whether such dividends and distributions are made in cash or
in additional shares. Questions on how any distributions will be taxed to the
investor should be directed to the investor's own tax adviser.
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%. 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.
A Fund may be subject to foreign withholding taxes which would reduce the
yield on its investments. Tax treaties between certain countries and the United
States may reduce or eliminate such taxes. Shareholders of a Fund who are
subject to United States Federal income tax may be entitled, subject to certain
rules and limitations, to claim a Federal income tax credit or deduction for
foreign income taxes paid by a Fund. See the Statement of Additional Information
for additional details. A Fund's transactions in options, futures and forward
contracts may be subject to special tax rules. These rules can affect the
amount, timing and characteristics of distributions to shareholders.
If more than 50% of the value of a Fund's assets at the end of the tax
year is represented by stock or securities of foreign corporations, the Fund
intends to qualify for certain Code stipulations that would allow shareholders
to claim a foreign tax credit or deduction on their U.S. income tax returns. The
Code may limit a shareholder's ability to claim a foreign tax credit.
Furthermore, shareholders who elect to deduct their portion of a Fund's foreign
taxes rather than take the foreign tax credit must itemize deductions on their
income tax returns.
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 your social security or
taxpayer identification number is correct and that you are not currently subject
to backup withholding or are 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.
24
<PAGE>
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 GLOBAL REAL ESTATE EQUITY FUND is a separate series
of the Evergreen Equity Trust (formerly Evergreen Real Estate Equity Trust), a
Massachusetts business trust organized in 1988. EVERGREEN INTERNATIONAL EQUITY
FUND and EVERGREEN EMERGING MARKETS GROWTH FUND are separate investment series
of Evergreen Investment Trust (formerly First Union Funds), which is a
Massachusetts business trust organized in 1984. 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 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 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 Fund, each share of the series
or Class 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, that affect each series and class in
substantially the same manner. Class A, B, C and Y shares have identical voting,
dividend, liquidation and other rights, except that each Class bears, to the
extent applicable, its own distribution, shareholder service 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
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.
Principal Underwriter. EFD, an affiliate of Furman Selz Incorporated, located
230 Park Avenue, New York, New York 10169, is the principal underwriter of the
Funds. Furman Selz Incorporated also acts as sub-administrator to EVERGREEN
INTERNATIONAL EQUITY FUND and EVERGREEN EMERGING MARKETS GROWTH FUND and
provides certain sub-administrative services to Evergreen Asset in connection
with its role as investment adviser to EVERGREEN GLOBAL REAL ESTATE EQUITY 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 CMG, Evergreen Asset or 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
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
25
<PAGE>
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.
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
Funds 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
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.
26
<PAGE>
INVESTMENT ADVISERS
Capital Management Group of First Union National Bank of North Carolina, 201
South College Street, Charlotte, North Carolina 28288
EVERGREEN EMERGING MARKETS GROWTH FUND, EVERGREEN INTERNATIONAL EQUITY
FUND
Evergreen Asset Management Corp., 2500 Westchester Avenue, Purchase, New York
10577
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND
CUSTODIAN & TRANSFER AGENT
State Street Bank & Trust Company, Box 9021, Boston, Massachusetts 02205-9827
LEGAL COUNSEL
Sullivan & Worcester LLP, 1025 Connecticut Avenue, N.W., Washington, D.C.
20036
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP, One Mellon Bank Center, Pittsburgh, Pennsylvania 15219
EVERGREEN EMERGING MARKETS GROWTH FUND, EVERGREEN INTERNATIONAL EQUITY
FUND
Price Waterhouse LLP, 1177 Avenue of the Americas, New York, New York 10036
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND
DISTRIBUTOR
Evergreen Funds Distributor, Inc., 230 Park Avenue, New York, New York 10169
536113REV01
*******************************************************************************
<PAGE>
PROSPECTUS December 29, 1995
(graphic of Evergreen tree logo appears on right of page)
EVERGREEN(SM symbol) INTERNATIONAL/GLOBAL GROWTH FUNDS
EVERGREEN EMERGING MARKETS GROWTH FUND
EVERGREEN INTERNATIONAL EQUITY FUND
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND
CLASS Y SHARES
The Evergreen International/Global 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
December 29, 1995 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, 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 symbol) 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 9
Investment Practices and Restrictions 10
MANAGEMENT OF THE FUNDS
Investment Advisers 15
Sub-Advisers 17
PURCHASE AND REDEMPTION OF SHARES
How to Buy Shares 17
How to Redeem Shares 18
Exchange Privilege 19
Shareholder Services 20
Effect of Banking Laws 20
OTHER INFORMATION
Dividends, Distributions and Taxes 21
General Information 22
</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 EVERGREEN GLOBAL REAL ESTATE EQUITY FUND is
Evergreen Asset Management Corp. which, with its predecessors, has served as an
investment adviser to the Evergreen mutual funds since 1971. 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, one of the ten largest bank
holding companies in the United States. The Capital Management Group of First
Union National Bank of North Carolina serves as investment adviser to EVERGREEN
EMERGING MARKETS GROWTH FUND and EVERGREEN INTERNATIONAL EQUITY FUND.
EVERGREEN EMERGING MARKETS GROWTH FUND (formerly First Union Emerging
Markets Growth Portfolio) seeks to provide long-term capital appreciation. The
EMERGING MARKETS GROWTH FUND invests in equity securities of issuers located in
countries with emerging markets.
EVERGREEN INTERNATIONAL EQUITY FUND (formerly First Union International
Equity Portfolio) seeks to provide long-term capital appreciation. The EVERGREEN
INTERNATIONAL EQUITY FUND invests in equity securities of non-U.S. issuers.
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND seeks long-term capital growth.
Current income is a secondary objective. It invests primarily in equity
securities of United States and non-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.
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 EMERGING MARKETS GROWTH FUND
<TABLE>
<CAPTION>
ANNUAL OPERATING
EXPENSES* EXAMPLE
<S> <C> <C> <C>
Management Fees 1.50%
After 1 Year $ 18
12b-1 Fees --
After 3 Years $ 55
Other Expenses** .25%
After 5 Years $ 95
After 10 Years $ 206
Total 1.75%
</TABLE>
EVERGREEN INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
ANNUAL OPERATING
EXPENSES* EXAMPLE
<S> <C> <C> <C>
Management Fees .80%
After 1 Year $ 16
12b-1 Fees --
After 3 Years $ 50
Other Expenses .78%
After 5 Years $ 86
After 10 Years $ 188
Total 1.58%
</TABLE>
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND
<TABLE>
<CAPTION>
ANNUAL OPERATING
EXPENSES EXAMPLE
<S> <C> <C> <C>
Management Fees 1.00%
After 1 Year $ 16
12b-1 Fees --
After 3 Years $ 49
Other Expenses .54%
After 5 Years $ 84
After 10 Years $ 183
Total 1.54%
</TABLE>
*The estimated annual operating expenses and examples do not reflect fee waivers
and expense reimbursements for the most recent fiscal period. Actual expenses
for Class Y Shares net of fee waivers and expense reimbursements for the fiscal
periods ended October 31, 1995 or September 30, 1995, as applicable, were as
follows:
<TABLE>
<CAPTION>
Evergreen Emerging Markets Growth Fund 1.48%
<S> <C>
Evergreen International Equity Fund .94%
</TABLE>
*Reflects agreements by CMG to limit aggregate operating expenses (including the
investment advisory fees, but excluding interest, taxes, brokerage commissions,
Rule 12b-1 fees, shareholder servicing fees and extraordinary expenses) of
Evergreen Emerging Markets Growth Fund to 1.75% of average net assets for the
foreseeable future. Absent such agreements, the estimated annual operating
expenses for the Fund would be 3.72%.
3
<PAGE>
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. Such expenses 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".
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 EMERGING MARKETS GROWTH FUND and EVERGREEN
INTERNATIONAL EQUITY FUND has been audited by KPMG Peat Marwick LLP, each Fund's
independent auditors, for EVERGREEN GLOBAL REAL ESTATE EQUITY FUND has been
audited by Price Waterhouse LLP, the Fund's independent auditors. A report of
KPMG Peat Marwick LLP or Price Waterhouse LLP, as the case may be, on the
audited information with respect to each Fund is incorporated by reference in
the Fund's Statement of Additional Information. The following information for
each Fund should be read in conjuction with the financial statements and related
notes which are incorporated by reference in the Fund's 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 EMERGING MARKETS GROWTH FUND
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES CLASS Y
SEPTEMBER 6, SEPTEMBER 6, SEPTEMBER 6, SHARES
TEN MONTHS 1994* TEN MONTHS 1994* TEN MONTHS 1994* TEN MONTHS
ENDED THROUGH ENDED THROUGH ENDED THROUGH ENDED
OCTOBER DECEMBER 31, OCTOBER DECEMBER 31, OCTOBER DECEMBER 31, OCTOBER
31, 1995# 1994 31, 1995# 1994 31, 1995# 1994 31, 1995#
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of
period.............................. $8.17 $10.00 $8.16 $10.00 $8.16 $10.00 $8.17
Income (loss) from investment
operations:
Net investment income (loss)......... .05 -- .01 (.02) .02 (.02) .05
Net realized and unrealized loss on
investments and foreign currency
transactions........................ (.32) (1.83) (.32) (1.82) (.34) (1.82) (.30)
Total from investment
operations...................... (.27) (1.83) (.31) (1.84) (.32) (1.84) (.25)
Net asset value, end of period....... $7.90 $8.17 $7.85 $8.16 $7.84 $8.16 $7.92
TOTAL RETURN+........................ (3.3%) (18.3%) (3.8%) (18.4%) (3.9%) (18.4%) (3.1%)
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (000's
omitted)............................ $1,117 $867 $1,940 $1,589 $56 $89 $9,355
Ratios to average net assets:
Expenses++**........................ 1.73% 1.78% 2.48% 2.53% 2.50% 2.53% 1.48%
Net investment income (loss)++**.... .76% (.12%) .03% (.84%) .72% (.82%) .94%
Portfolio turnover rate.............. 65% 17% 65% 17% 65% 17% 65%
<CAPTION>
SEPTEMBER 6,
1994*
THROUGH
DECEMBER 31,
1994
<S> <C>
PER SHARE DATA:
Net asset value, beginning of
period.............................. $10.00
Income (loss) from investment
operations:
Net investment income (loss)......... .01
Net realized and unrealized loss on
investments and foreign currency
transactions........................ (1.84)
Total from investment
operations...................... (1.83)
Net asset value, end of period....... $8.17
TOTAL RETURN+........................ (18.3%)
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (000's
omitted)............................ $5,878
Ratios to average net assets:
Expenses++**........................ 1.53%
Net investment income (loss)++**.... .43%
Portfolio turnover rate.............. 17%
</TABLE>
* Commencement of operations.
# The Fund changed its year end from December 31 to October 31.
+ Total return is calculated on net asset value per share for the periods
indicated and is not annualized. Initial sales charges 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 CLASS Y
SEPTEMBER 6, SEPTEMBER 6, SEPTEMBER 6, SHARES
TEN MONTHS 1994* TEN MONTHS 1994* TEN MONTHS 1994* TEN MONTHS
ENDED THROUGH ENDED THROUGH ENDED THROUGH ENDED
OCTOBER DECEMBER 31, OCTOBER DECEMBER 31, OCTOBER DECEMBER 31, OCTOBER
31, 1995# 1994 31, 1995# 1994 31, 1995# 1994 31, 1995#
<S> <C> <C> <C> <C> <C> <C> <C>
Expenses........................... 3.97% 3.96% 4.72% 4.71% 4.74% 4.71% 3.72%
Net investment loss................ (1.48%) (2.30%) (2.21%) (3.02%) (1.52%) (3.00%) (1.30%)
<CAPTION>
SEPTEMBER 6,
1994*
THROUGH
DECEMBER 31,
1994
<S> <C>
Expenses........................... 3.71%
Net investment loss................ (1.75%)
</TABLE>
5
<PAGE>
EVERGREEN INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES CLASS Y
SEPTEMBER 2, SEPTEMBER 2, SEPTEMBER 2, SHARES
TEN MONTHS 1994* TEN MONTHS 1994* TEN MONTHS 1994* TEN MONTHS
ENDED THROUGH ENDED THROUGH ENDED THROUGH ENDED
OCTOBER DECEMBER 31, OCTOBER DECEMBER 31, OCTOBER DECEMBER 31, OCTOBER
31, 1995# 1994 31, 1995# 1994 31, 1995# 1994 31, 1995#
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of
period.............................. $9.50 $10.00 $9.50 $10.00 $9.49 $10.00 $9.50
Income (loss) from investment
operations:
Net investment income................ .09 .02 .06 -- .08 .03 .08
Net realized and unrealized gain
(loss)
on investments and foreign currency
transactions........................ -- (.52) (.03) (.50) (.04) (.54) .03
Total from investment
operations...................... .09 (.50) .03 (.50) .04 (.51) .11
Less distributions to shareholders
from net investment income.......... (.01) -- -- -- -- -- (.01)
Net asset value, end of period....... $9.58 $9.50 $9.53 $9.50 $9.53 $9.49 $9.60
TOTAL RETURN+........................ 1.1% (5.1%) .5% (5.2%) .5% (5.2%) 1.3%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (000's
omitted)............................ $3,594 $2,545 $7,278 $5,602 $196 $163 $49,575
Ratios to average net assets:
Expenses++**........................ 1.19% 1.26% 1.94% 2.02% 1.94% 2.01% .94%
Net investment income (loss)++**.... 1.38% .91% .66% .10% .79% .85% 1.58%
Portfolio turnover rate.............. 4% 1% 4% 1% 4% 1% 4%
<CAPTION>
SEPTEMBER 2,
1994*
THROUGH
DECEMBER 31,
1994
<S> <C>
PER SHARE DATA:
Net asset value, beginning of
period.............................. $10.00
Income (loss) from investment
operations:
Net investment income................ .02
Net realized and unrealized gain
(loss)
on investments and foreign currency
transactions........................ (.51)
Total from investment
operations...................... (.49)
Less distributions to shareholders
from net investment income.......... (.01)
Net asset value, end of period....... $9.50
TOTAL RETURN+........................ (5.0%)
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (000's
omitted)............................ $23,830
Ratios to average net assets:
Expenses++**........................ 1.06%
Net investment income (loss)++**.... 1.03%
Portfolio turnover rate.............. 1%
</TABLE>
* Commencement of operations.
# The Fund changed its year end from December 31 to October 31.
+ 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 CLASS Y
SEPTEMBER 2, SEPTEMBER 2, SEPTEMBER 2, SHARES
TEN MONTHS 1994* TEN MONTHS 1994* TEN MONTHS 1994* TEN MONTHS
ENDED THROUGH ENDED THROUGH ENDED THROUGH ENDED
OCTOBER 31, DECEMBER 31, OCTOBER 31, DECEMBER 31, OCTOBER 31, DECEMBER 31, OCTOBER 31,
1995# 1994 1995# 1994 1995# 1994 1995#
<S> <C> <C> <C> <C> <C> <C> <C>
Expenses...................... 1.84% 2.09% 2.59% 2.85% 2.59% 2.84% 1.59%
Net investment income
(loss)....................... .73% .08% .01% (.73%) .14% .02% .93%
<CAPTION>
SEPTEMBER 2,
1994*
THROUGH
DECEMBER 31,
1994
<S> <C>
Expenses...................... 1.89%
Net investment income
(loss)....................... .20%
</TABLE>
6
<PAGE>
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND -- CLASS Y SHARES
<TABLE>
<CAPTION>
ONE MONTH NINE MONTHS
ENDED YEAR ENDED ENDED
OCTOBER 31, SEPTEMBER 30, SEPTEMBER 30, YEAR ENDED DECEMBER 31,
1995## 1995 1994# 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning
of period................ $12.13 $13.81 $14.75 $9.86 $9.16 $8.10 $10.03
Income (loss) from
investment operations:
Net investment income
(loss)................... (.01) .11 .07 -- (.01) (.02) (.03)
Net realized and unrealized
gain (loss) on
investments.............. (.53) (1.17) (1.01) 5.07 .94 1.08 (1.90)
Total from investment
operations........... (.54) (1.06) (.94) 5.07 .93 1.06 (1.93)
Less distributions to
shareholders from:
Net investment income...... -- (.10) -- -- -- -- --
Net realized gains......... -- (.52) -- (.18) (.23) -- --
Total distributions.... -- (.62) -- (.18) (.23) -- --
Net asset value, end of
period................... $11.59 $12.13 $13.81 $14.75 $9.86 $9.16 $8.10
TOTAL RETURN+.............. (4.5%) (7.7%) (6.4%) 51.4% 10.2% 13.1% (19.2%)
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period
(000's omitted).......... $61,418 $67,645 $132,294 $146,173 $8,618 $7,557 $6,004
Ratios to average net
assets:
Operating expenses....... 1.62%++ 1.54% 1.46%++ 1.56%** 2.00%** 2.00%** 2.00%**
Interest expense......... .03%++ .05% .08%++ -- -- -- --
Net investment income
(loss)................. (1.14%)++ .92% .56%++ .03%** (.10%)** (.27%)** (.39%)**
Portfolio turnover rate.... 1% 28% 63% 88% 245% 207% 325%
<CAPTION>
FEBRUARY 1, 1989*
THROUGH
DECEMBER 31,
1989
<S> <C>
PER SHARE DATA:
Net asset value, beginning
of period................ $10.00
Income (loss) from
investment operations:
Net investment income
(loss)................... .17
Net realized and unrealized
gain (loss) on
investments.............. .03
Total from investment
operations........... .20
Less distributions to
shareholders from:
Net investment income...... (.17)
Net realized gains......... --
Total distributions.... (.17)
Net asset value, end of
period................... $10.03
TOTAL RETURN+.............. 2.0%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period
(000's omitted).......... $7,336
Ratios to average net
assets:
Operating expenses....... 2.00%**++
Interest expense......... --
Net investment income
(loss)................. 2.23%**++
Portfolio turnover rate.... 151%
</TABLE>
# The Fund changed its fiscal year end from December 31 to September 30.
## The Fund changed its fiscal year end from September 30 to October 31.
* Commencement of operations.
+ Total return is calculated on net asset value per share 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>
FEBRUARY 1, 1989
THROUGH
YEAR ENDED DECEMBER 31, DECEMBER 31,
1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
Operating expenses............................. 1.64% 3.72% 3.76% 3.99% 3.17%
Net investment income (loss)................... (.05%) (1.82%) (2.02%) (2.38%) 1.06%
</TABLE>
7
<PAGE>
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND -- CLASS A, B AND C SHARES
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C
FEBRUARY 10, FEBRUARY 8, SHARES
ONE MONTH 1995* ONE MONTH 1995* ONE MONTH
ENDED THROUGH ENDED THROUGH ENDED
OCTOBER 31, SEPTEMBER 30, OCTOBER 31, SEPTEMBER 30, OCTOBER 31,
1995## 1995 1995## 1995 1995##
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:+
Net asset value, beginning of period...................... $ 12.12 $ 11.46 $ 12.08 $ 11.44 $ 12.08
Income (loss) from investment operations:
Net investment income (loss)............................. (.01) .07 (.02) .08 (.02)
Net realized and unrealized gain (loss) on investments... (.53) .59 (.53) .56 (.53)
Total income (loss) from investment
operations........................................... (.54) .66 (.55) .64 (.55)
Net asset value, end of period............................ $ 11.58 $ 12.12 $ 11.53 $ 12.08 $ 11.53
TOTAL RETURN++............................................ (4.5)% 5.8% (4.6)% 5.6% (4.6)%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period................................. $74,376 $66,261 $99,964 $ 128,117 $3,643
Ratios to average net assets:||**
Operating expenses....................................... 1.73% 1.61% 2.44% 2.42% 2.37%
Interest expense......................................... .03% .01% .03% .03% .02%
Net investment income (loss)............................. (1.26)% .98% (1.98)% 1.38% (1.94)%
Portfolio turnover rate#.................................. 1% 28% 1% 28% 1%
<CAPTION>
FEBRUARY 9,
1995*
THROUGH
SEPTEMBER 30,
1995
<S> <C>
PER SHARE DATA:+
Net asset value, beginning of period...................... $ 11.43
Income (loss) from investment operations:
Net investment income (loss)............................. .06
Net realized and unrealized gain (loss) on investments... .59
Total income (loss) from investment
operations........................................... .65
Net asset value, end of period............................ $ 12.08
TOTAL RETURN++............................................ 5.7%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period................................. $ 6,811
Ratios to average net assets:||**
Operating expenses....................................... 1.54%
Interest expense......................................... .01%
Net investment income (loss)............................. .86%
Portfolio turnover rate#.................................. 28%
</TABLE>
* Commencement of class operations.
** Annualized. Due to the recent commencement of their offering, the ratios for
Class A, Class B and Class C shares are not necessarily comparable to that
of the Class Y shares, and are not necessarily indicative of future ratios.
+ Calculated based on average shares outstanding during the period.
++ Total return is calculated for the periods indicated and is not annualized.
Initial sales charge or contingent deferred sales charges are not reflected.
# Portfolio turnover rate is calculated for the one month ended October 31,
1995 and the twelve months ended September 30, 1995.
## The Fund changed its fiscal year-end from September 30 to October 31.
|| 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
FEBRUARY 10, FEBRUARY 8, SHARES
ONE MONTH 1995* ONE MONTH 1995* ONE MONTH
ENDED THROUGH ENDED THROUGH ENDED
OCTOBER 31, SEPTEMBER 30, OCTOBER 31, SEPTEMBER 30, OCTOBER 31,
1995 1995 1995 1995 1995
<S> <C> <C> <C> <C> <C>
Expenses............................................ 46.90% 21.59% 31.39% 82.74% 570.26%
Net investment loss................................. (46.44%) (19.00%) (30.94%) (79.94%) (569.83%)
<CAPTION>
FEBRUARY 9,
1995*
THROUGH
SEPTEMBER 30,
1995
<S> <C>
Expenses............................................ 269.60%
Net investment loss................................. (266.32%)
</TABLE>
8
<PAGE>
DESCRIPTION OF THE FUNDS
INVESTMENT OBJECTIVES AND POLICIES
Each Fund's investment objective is fundamental and may not be changed
without shareholder approval.
In addition to the investment policies detailed below, each Fund may
employ certain additional investment strategies which are discussed in
"Investment Practices and Restrictions", below.
EVERGREEN EMERGING MARKETS GROWTH FUND
The objective of EVERGREEN EMERGING MARKETS GROWTH FUND is long-term
capital appreciation. In seeking this objective, the Fund invests in equity
securities of issuers located in emerging markets. The Fund is suitable for
aggressive investors interested in the investment opportunities offered by
securities of issuers located in emerging or developing markets and the
resulting potential for growth opportunities attributable to political change,
economic deregulation and liberalized trade policies.
The Fund invests primarily in a diversified portfolio of equity
securities of issuers located in countries with emerging markets. As a matter of
policy, the Fund will invest at least 65% of the value of its total assets in
securities of emerging market issuers.
A country will be considered to have an "emerging market" if it has
relatively low gross national product per capita compared to the world's major
economies and the potential for rapid economic growth. Countries with emerging
markets include those that have an emerging stock market (as defined by the
International Finance Corporation), those with low-to middle income economies
(according to the World Bank), and those listed in World Bank publications as
"developing". The Fund will normally invest in at least six different countries,
although it may invest all of its assets in a single country. At the present
time, the Fund has no intention of investing all of its assets in a single
country. The Fund focuses on equity securities, but may also invest in other
types of instruments, including debt securities. Marvin & Palmer Associates, the
sub-adviser to the Fund, will make investment decisions regarding equity
securities based on its analysis of returns, price momentum, business and
industry considerations, and management quality.
EVERGREEN INTERNATIONAL EQUITY FUND
The objective of EVERGREEN INTERNATIONAL EQUITY FUND is long-term capital
appreciation. The Fund invests primarily in equity securities of non-U.S.
issuers and is suitable for investors who want to pursue their investment goals
in markets outside the United States. The Fund provides investors with a vehicle
to pursue investment opportunities in countries outside the U.S. whose
securities markets may benefit from differing economic and political cycles.
The Fund invests primarily in foreign equity securities that Boston
International Advisers, Inc., the sub-adviser to the Fund, determines, through
both fundamental and technical analysis, to be undervalued compared to other
securities in their industries and countries. In most market conditions, the
stocks comprising the Fund's assets will exhibit traditional value
characteristics, such as higher than average dividend yields, lower than average
price to book value, and will include stocks of companies with unrecognized or
undervalued assets. As a matter of policy, the Fund will invest at least 65% of
the value of its total assets in equity securities of issuers located in at
least three countries outside of the United States.
The Fund will emphasize value stocks, primarily of companies which are
listed on one or more of thirty-two stock markets: twenty developed markets and
twelve emerging markets. While the current intention of the Fund is to invest in
thirty-two stock markets, the Fund may invest in more or less, depending upon
market conditions as determined by the Sub-Adviser. The Fund will invest
substantially all of its assets in industrialized companies throughout the world
that comprise the Morgan Stanley Capital International EAFE (Europe, Australia
and the Far East) Index. In addition, the Fund intends to invest up to 10% of
its assets in emerging country equity securities, as described above under
"Evergreen Emerging Markets Growth Fund".
9
<PAGE>
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND
The EVERGREEN GLOBAL REAL ESTATE EQUITY FUND seeks to achieve its
investment objective of long-term capital growth through investment primarily in
equity securities of domestic and foreign 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.
The Fund will, under normal conditions, invest at least 65% of its total
assets in equity securities of domestic and foreign exchanges or NASDAQ listed
companies which are 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. As a matter of fundamental
policy, the Fund will also invest at least 65% of its total assets in the equity
securities of companies of at least three countries, including the United
States, except when abnormal market or financial conditions warrant the
assumption of a temporary defensive position. See "Investment Practices and
Restrictions" and "Special Risk Considerations".
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 but whose real
estate assets are substantial relative to the price of the companies'
securities.
The Fund pursues a flexible strategy of investing in a diversified
portfolio of securities of companies throughout the world. The Fund's investment
adviser anticipates that the Fund will give particular consideration to
investments in the United Kingdom, Western Europe, Australia, Canada, the Far
East (Japan, Hong Kong, Singapore, Malaysia and Thailand) and the United States.
The percentage of the Fund's assets invested in particular geographic regions
will shift from time to time in accordance with the judgment of the Fund's
investment adviser. Generally, a substantial portion of the assets of the Fund
will be denominated or traded in foreign currencies.
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 Moody's Investors Service ("Moody's") or Standard & Poor's
Ratings Group ("S&P") 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.
INVESTMENT PRACTICES AND RESTRICTIONS
General. The Funds primarily invest in:
common and preferred stocks, convertible securities and warrants of
foreign corporations. Common stocks represent an equity interest in a
corporation. This ownership interest often gives the Funds the right to
vote on measures affecting the company's organization and operations.
Although common stocks have a history of long-term growth in value, their
prices tend to fluctuate in the short-term, particularly those of smaller
capitalization companies. Smaller capitalization companies may have
limited product lines, markets, or financial resources. These conditions
may make them more susceptible to setbacks and reversals. Therefore, their
securities may have limited marketability and may be subject to more
abrupt or erratic market movements than securities of larger companies;
10
<PAGE>
obligations of foreign governments and supranational organizations;
corporate and foreign government fixed income securities denominated in
currencies other than U.S. dollars rated, at the time of purchase, Baa or
higher by Moody's or BBB or higher by S&P, or which, if unrated, are
considered to be of comparable quality by the Funds' investment advisers
or sub-advisers. Bonds rated Baa by Moody's or BBB by S&P have speculative
characteristics. Changes in economic conditions or other circumstances are
more likely to lead to weakened capacity to make principal and interest
payments than higher rated bonds. Although the Funds do not intend to
invest significantly in debt securities, it should be noted that the
prices of fixed income securities fluctuate inversely to the direction of
interest rates;
strategic investments, such as options and futures contracts on currency
transactions, securities index futures contracts, and forward foreign
currency exchange contracts. The Funds can use these techniques to
increase or decrease their exposure to changing security prices, interest
rates, currency exchange rates, or other factors that affect security
values. (Although, of course, there can be no assurance that these
strategic investments will be successful in protecting the value of the
Funds' securities.); and
securities of closed-end investment companies.
Defensive Investments. The Funds may invest without limitation in high quality
money market instruments, such as notes, certificates of deposit or bankers'
acceptances, or U.S. government securities if, in the opinion of a Fund's
investment adviser or sub-adviser, market conditions warrant a temporary
defensive investment strategy.
Portfolio Turnover and Brokerage. It is anticipated that the annual portfolio
turnover rate for EVERGREEN GLOBAL REAL ESTATE EQUITY 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. 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 GLOBAL REAL ESTATE EQUITY 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".
Repurchase Agreements. The Funds may invest in repurchase agreements. Repurchase
agreements are agreements by which a Fund purchases a security for cash and
obtains a simultaneous commitment from the seller (usually a bank or
broker/dealer) to repurchase the security at an agreed-upon price and specified
future date. The repurchase price reflects an agreed-upon interest rate for the
time period of the agreement. The Funds risk is the inability of the seller to
pay the agreed-upon price on the delivery date. However, this risk is tempered
by the ability of the Funds to sell the security in the open market in the case
of a default. In such a case, the Funds may incur costs in disposing of the
security which would increase Fund expenses. Each Fund's investment adviser will
monitor the creditworthiness of the firms with which the Funds enter into
repurchase agreements.
When-Issued And Delayed Delivery Transactions. EVERGREEN INTERNATIONAL EQUITY
FUND and EVERGREEN EMERGING MARKETS GROWTH FUND may purchase securities on a
when-issued or delayed delivery basis. These transactions are arrangements in
which the Funds purchase securities with payment and delivery scheduled for a
future time. The seller's failure to complete these transactions may cause the
Funds to miss a price or yield considered to be advantageous. Settlement dates
may be a month or more after entering into these transactions, and the market
values of the securities purchased may vary from the purchase prices.
Accordingly, the Funds may pay more or less than the market value of the
securities on the settlement date. A Fund may dispose of a commitment prior to
settlement if the Fund's investment adviser deems it appropriate to do so. In
addition, EVERGREEN INTERNATIONAL EQUITY FUND and EVERGREEN EMERGING MARKETS
GROWTH FUND may enter into transactions to sell their purchase commitments to
third parties at current market values and simultaneously acquire other
commitments to purchase similar securities at later dates. The Funds may realize
short-term profits or losses upon the sale of such commitments.
Temporary Investments. The Funds may invest in U.S. and foreign short-term money
market instruments (denominated in U.S. and/or foreign currencies), including
interest-bearing call deposits with banks, government obligations, certificates
of deposit, bankers' acceptances, commercial paper, short-term corporate debt
securities, and repurchase agreements. These investments may be used to
temporarily invest cash received from the sale of
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Fund shares, to establish and maintain reserves for temporary defensive
purposes, or to take advantage of market opportunities.
Illiquid or Restricted Securities. Each Fund may invest up to 15% of its net
assets in illiquid securities and other securities which are not readily
marketable. Illiquid securities include certain restricted securities not
determined by the Trustees to be liquid, non-negotiable time deposits and
repurchase agreements providing for settlement in more than seven days after
notice. Securities eligible for resale pursuant to Rule 144A under the
Securities Act of 1933, 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. In the event that such a security is deemed to be no longer
liquid, a Fund's holdings will be reviewed to determine what action, if any, is
required to ensure that the retention of such security does not result in a Fund
having more than 15% of its assets invested in illiquid or not readily
marketable securities.
Borrowing. As a matter of fundamental policy, the Funds may not borrow money
except as a temporary measure to facilitate redemption requests or 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 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. The Funds' investment advisers or sub-advisers 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 the total assets of
the EVERGREEN GLOBAL REAL ESTATE EQUITY FUND, and one-third of the value of the
total assets of EVERGREEN INTERNATIONAL EQUITY FUND and EVERGREEN EMERGING
MARKETS GROWTH FUND, 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.
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.
Foreign Currency Transactions. The Funds will enter into foreign currency
transactions to obtain the necessary currencies to settle securities
transactions. Currency transactions may be conducted either on a spot or cash
basis at prevailing rates or through forward foreign currency exchange
contracts. The Funds may also enter into foreign currency transactions to
protect Fund assets against adverse changes in foreign currency exchange rates
or exchange control regulations. Such changes could unfavorably affect the value
of Fund assets which are denominated in foreign currencies, such as foreign
securities or funds deposited in foreign banks, as measured in U.S. dollars.
Although foreign currency exchanges may be used by a Fund to protect against a
decline in the value of one or more currencies, such efforts may also limit any
potential gain that might result from a relative increase in the value of such
currencies and might, in certain cases, result in losses to the Fund.
Forward Foreign Currency Exchange Contracts. A forward foreign currency exchange
contract ("forward contract") is an obligation to purchase or sell an amount of
a particular currency at a specific price and on a future date agreed upon by
the parties. Generally, no commission charges or deposits are involved. At the
time a Fund enters into a forward contract, Fund assets with a value equal to
the Fund's obligation under the forward contract are segregated and are
maintained until the contract has been settled. The Funds will not enter into a
forward contract with a term of more than one year. The Funds will generally
enter into a forward contract to provide the proper currency to settle a
securities transaction at the time the transaction occurs ("trade date"). The
period between trade date and settlement date will vary between 24 hours and 60
days, depending upon local custom.
The Funds may also protect against the decline of a particular foreign
currency by entering into a forward contract to sell an amount of that currency
approximating the value of all or a portion of the Funds' assets
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<PAGE>
denominated in that currency ("hedging"). The success of this type of short-term
hedging strategy is highly uncertain due to the difficulties of predicting
short-term currency market movements and of precisely matching forward contract
amounts and the constantly changing value of the securities involved. Although
each Fund's investment adviser or sub-adviser will consider the likelihood of
changes in currency values when making investment decisions, each Fund's
investment adviser or sub-adviser believes that it is important to be able to
enter into forward contracts when it believes the interests of a Fund will be
served. The Funds will not enter into forward contracts for hedging purposes in
a particular currency in an amount in excess of the Funds' assets denominated in
that currency.
Options And Futures. The Funds may deal in options on foreign currencies,
portfolio securities and, in the case of EVERGREEN INTERNATIONAL EQUITY FUND and
EVERGREEN EMERGING MARKETS GROWTH FUND, securities indices. Such options may be
traded on an international securities exchange. The Funds will use these options
to manage interest rate and currency risks. The Funds also may write covered
call options and secured put options to generate income or to lock in gains.
EVERGREEN INTERNATIONAL EQUITY FUND and EVERGREEN EMERGING MARKETS GROWTH FUND
may write covered call options and securities put options on up to 25% of their
net assets. EVERGREEN GLOBAL REAL ESTATE EQUITY FUND may write covered call
options and secured put options on up to 15% of its net assets. EVERGREEN
INTERNATIONAL EQUITY FUND and EVERGREEN EMERGING MARKETS GROWTH FUND may
purchase put and call options provided that no more than 5% of the fair market
value of their net assets is invested in premiums on such options.
A call option gives the purchaser the right to buy, and the writer the
obligation to sell, the underlying asset at the exercise price during the option
period. A put option gives the purchaser the right to sell, and the writer the
obligation to buy, the underlying asset at the exercise price during the option
period. The writer of a covered call owns assets that are acceptable for escrow
and the writer of a secured put invests an amount not less than the exercise
price in eligible assets to the extent that it is obligated as a writer. If a
call written by a Fund is exercised, the Fund forgoes any possible profit from
an increase in the market price of the underlying asset over the exercise price
plus the premium received. In writing puts, there is a risk that a Fund may be
required to take delivery of the underlying asset at a disadvantageous price.
The Funds may enter into futures contracts involving foreign currency
and, in the case of EVERGREEN INTERNATIONAL EQUITY FUND and EVERGREEN EMERGING
MARKETS GROWTH FUND, securities indices or options on currency, for bona fide
hedging purposes. The Funds may not enter into futures contracts or related
options if, immediately thereafter, the amounts committed to margin and premiums
paid for unexpired options would exceed 5% of a Fund's net assets and, in the
case of EVERGREEN GLOBAL REAL ESTATE EQUITY FUND, more than 30% of the Fund's
net assets would be hedged thereby. EVERGREEN INTERNATIONAL EQUITY FUND and
EVERGREEN EMERGING MARKETS GROWTH FUND, may also enter into such futures
contracts or related options for purposes other than bona fide hedging if the
aggregate amount of initial margin deposits on a Fund's futures and related
options positions would not exceed 5% of the net liquidation value of the Fund's
assets, provided further that in the case of an option that is in-the-money at
the time of the purchase, the in-the-money amount may be excluded in calculating
the 5% limitation. In addition, a Fund may not sell futures contracts if the
value of such futures contracts exceeds the total market value of the Fund's
portfolio securities. Futures contracts sold by a Fund are generally subject to
segregation and coverage requirements established by either the Commodity
Futures Trading Commission ("CFTC") or the Securities and Exchange Commission
("SEC"), with the result that, if a Fund does not hold the instrument underlying
the futures contract or option, the Fund will be required to segregate, on an
ongoing basis with its custodian, cash, U.S. government securities, or other
liquid high grade debt obligations in an amount at least equal to the Fund's
obligations with respect to such instruments.
EVERGREEN INTERNATIONAL EQUITY FUND and EVERGREEN EMERGING MARKETS GROWTH
FUND may enter into securities index futures contracts and purchase and write
put and call options on securities index futures contracts that are traded on
regulated exchanges, including non-U.S. exchanges, to the extent permitted by
the CFTC. Securities index futures contracts are based on indices that reflect
the market value of securities of the firms included in the indices. An index
futures contract is an agreement pursuant to which two parties agree to take or
make delivery of an amount of cash equal to the differences between the value of
the index at the close of the last trading day of the contract and the price at
which the index contract was originally written.
EVERGREEN INTERNATIONAL EQUITY FUND and EVERGREEN EMERGING MARKETS GROWTH
FUND may enter into securities index futures contracts to sell a securities
index in anticipation of or during a market decline to attempt to offset the
decrease in market value of securities in its portfolio that might otherwise
result. When a Fund is not fully invested and anticipates a significant market
advance, it may enter into futures contracts to purchase the index in
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<PAGE>
order to gain rapid market exposure that may in part or entirely offset
increases in the cost of securities that it intends to purchase. In many of
these transactions, a Fund will purchase such securities upon termination of the
futures position but, depending on market conditions, a futures position may be
terminated without the corresponding purchases of common stock. A Fund may also
invest in securities index futures contracts when its investment adviser or
sub-adviser believes such investment is more efficient, liquid or cost-effective
than investing directly in the securities underlying the index.
The use of futures and related options involves special considerations
and risks, including: (1) the ability of a Fund to utilize futures successfully
will depend on the ability of its investment adviser or sub-adviser to predict
pertinent market movements; and (2) the fact that there might be an imperfect
correlation (or conceivably no correlation) between the change in the market
value of the securities held by a Fund and the prices of the futures relating to
the securities purchased or sold by the Fund. The use of futures and related
options may reduce risk of loss by wholly or partially offsetting the negative
effect of unfavorable price movements, but these instruments can also reduce the
opportunity for gain by offsetting the positive effect of favorable price
movements in positions. No assurance can be given that the investment adviser's
or sub-adviser's judgment in this respect will be correct.
It is not certain that a secondary market for positions in futures
contracts or for options will exist at all times. Although each investment
adviser or sub-adviser will consider liquidity before entering into these
transactions, there is no assurance that a liquid secondary market on an
exchange or otherwise will exist for any particular futures contract or option
at any particular time. A Fund's ability to establish and close out futures and
options positions depends on this secondary market.
Risk Characteristics Of Foreign Securities. Investing in non-U.S. securities
involves additional risks not normally associated with domestic investments. In
an attempt to reduce some of these risks, the Funds diversify their investments
broadly among foreign countries which may include both developed and developing
countries. With respect to EVERGREEN INTERNATIONAL EQUITY FUND, at least three
different countries will always be represented. The Funds may take advantage of
the unusual opportunities for higher returns available from investing in
developing countries. As discussed in detail below under "Emerging Markets",
however, these investments carry considerably more volatility and risk because
they generally are associated with less mature economies and less stable
political systems.
Foreign securities are denominated in foreign currencies. Therefore, the
value in U.S. dollars of a Fund's assets and income may be affected by changes
in exchange rates and regulations. Although the Funds value their assets daily
in U.S. dollars, they will not convert their holdings of foreign currencies to
U.S. dollars daily. When a Fund converts its holdings to another currency, it
may incur conversion costs. Foreign exchange dealers realize a profit on the
difference between the prices at which such dealers buy and sell currencies.
To the extent that securities purchased by the Funds are denominated in
currencies other than the U.S. dollar, changes in foreign currency exchange
rates will affect the Funds' net asset values; the value of interest earned;
gains and losses realized on the sale of securities; and net investment income
and capital gains, if any, to be distributed to shareholders by a Fund. If the
value of a foreign currency rises against the U.S. dollar, the value of a Fund's
assets denominated in that currency will increase; correspondingly, if the value
of a foreign currency declines against the U.S. dollar, the value of a Fund's
assets denominated in that currency will decrease.
Other differences between investing in foreign and U.S. companies
include: less publicly available information about foreign companies; the lack
of uniform financial accounting standards applicable to foreign companies; less
readily available market quotations on foreign companies; differences in
government regulation and supervision of foreign stock exchanges, brokers,
listed companies, and banks; differences in legal systems which may affect the
ability to enforce contractual obligations or obtain court judgments; generally
lower foreign stock market volume; the likelihood that foreign securities may be
less liquid or more volatile; foreign brokerage commissions may be higher;
unreliable mail service between countries; and political or financial changes
which adversely affect investments in some countries. In the past, U.S.
government policies have discouraged or restricted certain investments abroad by
investors such as the Funds. Although the Funds are unaware of any current
restrictions, investors are advised that these policies could be reinstituted.
Emerging Markets. The economies of individual emerging countries may differ
favorably or unfavorably from the U.S. economy in such respects as growth of
gross domestic product, rate of inflation, currency depreciation, capital
reinvestment, resource self-sufficiency and balance of payments position.
Further, the economies of developing countries generally are heavily dependent
on international trade and, accordingly, have been, and may continue to be,
adversely affected by trade barriers, exchange controls, managed adjustments in
relative currency
14
<PAGE>
values and other protectionist measures imposed or negotiated by the countries
with which they trade. These economies also have been, and may continue to be,
adversely affected by economic conditions in the countries with which they
trade.
Prior governmental approval for foreign investments may be required under
certain circumstances in some emerging countries, and the extent of foreign
investment in certain debt securities and domestic companies may be subject to
limitation in other emerging countries. Foreign ownership limitations also may
be imposed by the charters of individual companies in emerging countries to
prevent, among other concerns, violation of foreign investment limitations.
Repatriation of investment income, capital and the proceeds of sales by
foreign investors may require governmental registration and/or approval in some
emerging countries. A Fund could be adversely affected by delays in, or a
refusal to grant, any required governmental registration or approval for such
repatriation. Any investment subject to such repatriation controls will be
considered illiquid if it appears reasonably likely that this process will take
more than seven days.
With respect to any emerging country, there is the possibility of
nationalization, expropriation or confiscatory taxation, political changes,
governmental regulation, social instability or diplomatic developments
(including war) which could affect adversely the economics of such countries or
the value of the Funds' investments in those countries. In addition, it may be
difficult to obtain and enforce a judgment in a court outside of the U.S.
Investments Related to Real Estate. 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 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.
MANAGEMENT OF THE FUNDS
INVESTMENT ADVISERS
The management of each Fund is supervised by the Trustees of the Trust
under which the Fund has been established ("Trustees"). Evergreen Asset
Management Corp. ("Evergreen Asset") has been retained by EVERGREEN GLOBAL REAL
ESTATE EQUITY 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"), one of the ten largest bank holding companies
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 Fund. The Capital Management Group of FUNB ("CMG")
serves as investment adviser to EVERGREEN INTERNATIONAL EQUITY FUND and
EVERGREEN EMERGING MARKETS GROWTH FUND. Boston International Advisers, Inc.
("BIA") is sub-adviser to EVERGREEN INTERNATIONAL EQUITY FUND and Marvin &
Palmer Associates, Inc. ("Marvin & Palmer") is sub-adviser to EVERGREEN EMERGING
MARKETS GROWTH FUND.
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First Union is a bank holding company headquartered in Charlotte, North
Carolina, which had $86.8 billion in consolidated assets as of September 30,
1995. First Union and its subsidiaries provide a broad range of financial
services to individuals and businesses through offices in 37 states. CMG manages
or otherwise oversees the investment of over $31 billion in assets belonging to
a wide range of clients, including all the series of Evergreen Investment Trust
(formerly known as First Union Funds). 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 GLOBAL REAL ESTATE EQUITY FUND,
Evergreen Asset manages the Fund's investments, provides various administrative
services and supervises the Fund's daily business affairs, subject to the
authority of the Trustees. Evergreen Asset is entitled to receive a fee equal to
1% of average daily net assets on an annual basis from EVERGREEN GLOBAL REAL
ESTATE EQUITY FUND.
CMG, along with BIA and Marvin & Palmer, respectively, manages
investments and supervises the daily business affairs of EVERGREEN INTERNATIONAL
EQUITY FUND and EVERGREEN EMERGING MARKETS GROWTH FUND. As compensation
therefor, CMG is entitled to receive an annual fee from EVERGREEN INTERNATIONAL
EQUITY FUND equal to: .82 of 1% of the first $20 million of average daily net
assets; .79 of 1% of the next $30 million of average daily net assets; .76 of 1%
of the next $50 million of average daily net assets; and .73 of 1% of average
daily net assets in excess of $100 million. From EVERGREEN EMERGING MARKETS
GROWTH FUND, CMG is entitled to receive an annual fee equal to: 1.50% of the
first $100 million of average daily net assets; 1.45% of the next $100 million
of average daily net assets; 1.40% of the next $100 million of average daily net
assets; and 1.35% of average daily net assets in excess of $300 million.
The fees paid by the Funds are higher than the rate paid by most other
investment companies, but are not higher than the fees paid by many funds with
similar investment objectives. The total expenses as a percentage of average
daily net assets on an annual basis of the Funds for the fiscal period ended
October 31, 1995 are set forth in the section entitled "Financial Highlights".
CMG has agreed to pay BIA, the sub-adviser to EVERGREEN INTERNATIONAL EQUITY
FUND, a fee equal to: .32 of 1% of the first $20 million of average daily net
assets; .29 of 1% of the next $30 million of average daily net assets; .26 of 1%
of the next $50 million of average daily net assets; and .23 of 1% of average
daily net assets in excess of $100 million. For its services as sub-adviser to
EVERGREEN EMERGING MARKETS GROWTH FUND, Marvin & Palmer receives from CMG a fee
equal to: 1% of the first $100 million of average daily net assets; .95 of 1% of
the next $100 million of average daily net assets; .90 of 1% of the next $100
million of average daily net assets; and .85 of 1% of average daily net assets
in excess of $300 million.
Evergreen Asset serves as administrator to EVERGREEN INTERNATIONAL EQUITY
FUND and EVERGREEN EMERGING MARKETS GROWTH FUND and is entitled to receive a fee
based on the average daily net assets of these Funds 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
Incorporated, an affiliate of Evergreen Funds Distributor, Inc., distributor for
the Evergreen group of mutual funds, serves as sub-administrator to EVERGREEN
INTERNATIONAL EQUITY FUND and EVERGREEN EMERGING MARKETS GROWTH FUND and is
entitled to receive a fee from each Fund calculated on the average daily net
assets of each 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 $10.5 billion as of November 30,
1995.
The portfolio manager for EVERGREEN GLOBAL 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 managers for EVERGREEN INTERNATIONAL EQUITY FUND are
Richard Wagoner, Executive Vice President, Head of CMG since 1973, and a
Director of Evergreen Asset since 1994, together with Maureen Ghublikian and
David A. Umstead, who are Managing Directors of BIA and have been associated
therewith since prior to 1989.
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The portfolio managers for EVERGREEN EMERGING MARKETS GROWTH FUND, all of
whom have served since the Fund's inception in September 1994, are David F.
Marvin, who is Chairman of Marvin & Palmer and is primarily responsible for
Latin America and currency management, Stanley Palmer, who is President of
Marvin & Palmer and primarily responsible for Southeast Asia and the India
subcontinent, Terry B. Mason, who is a Vice President of Marvin & Palmer and is
primarily responsible for Eastern Europe and Africa, Jay F. Middleton, who is a
portfolio manager for Marvin & Palmer and primarily responsible for Latin
America and the Middle East, and Todd D. Marvin, who is a portfolio manager for
Marvin & Palmer and, along with Mr. Palmer, primarily responsible for Southeast
Asia and the India subcontinent. David F. Marvin and Stanley Palmer, President,
founded Marvin & Palmer in 1986. Mr. Mason and Mr. Middleton both joined Marvin
& Palmer in 1990. Mr. Todd Marvin joined Marvin & Palmer in 1991 and, prior
thereto, was employed by Oppenheimer & Company as an analyst in its investment
banking department from 1989 until 1991.
SUB-ADVISERS
Evergreen Asset has entered into a sub-advisory agreement with Lieber &
Company with respect to EVERGREEN GLOBAL REAL ESTATE EQUITY FUND which provides
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 Fund's portfolio. 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 GLOBAL REAL ESTATE EQUITY
FUND for the services provided by Lieber & Company. It is contemplated that
Lieber & Company will, to the extent practicable, effect substantially all of
the portfolio transactions for this Fund on the New York and American Stock
Exchanges. The address of Lieber & Company is 2500 Westchester Avenue, Purchase,
New York 10577. Lieber & Company is an indirect, wholly-owned, subsidiary of
First Union.
BIA, the sub-adviser to the EVERGREEN INTERNATIONAL EQUITY FUND, has been
in operation since 1986 and specializes in the management of international
equity portfolios. BIA currently manages twenty international portfolios,
including five group trust funds, for pension fund sponsors and endowment plans
worldwide. Messrs. Lyle H. Davis, Norman H. Meltz and David A. Umstead are the
principal executive officers of BIA and each own more than 25% of the
outstanding voting securities thereof. As of September 30, 1995 BIA managed a
total of $2.5 billion in assets and served as sub-adviser to one other
investment company with total assets of $148 million.
Marvin & Palmer, sub-adviser to the EVERGREEN EMERGING MARKETS GROWTH
FUND, was founded in 1986 and is engaged in the management of global, non-United
States and emerging markets equity portfolios for institutional accounts. At
September 30, 1995, Marvin & Palmer managed a total of $3.1 billion in
investments for thirty-four institutional investors and five commingled funds
and served as sub-adviser to another investment company with total assets of $33
million.
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
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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
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 the Trustees of each Trust under which each Fund operates
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 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 Fund shares. 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 8:30 a.m. and 5:30
p.m. (Eastern time) each business day (i.e., any weekday
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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 the 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 by telephone or mail as
described below. An exchange which represents an initial investment in another
Evergreen mutual fund must amount to at least $1,000. 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.
Exchanges are subject to minimum investment and suitability requirements.
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
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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, 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.
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.
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 $100. 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 the
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. If you elect to receive dividends and
distributions in cash and the U.S. Postal Service cannot deliver the checks, or
if the checks remain uncashed for six months, the checks will be reinvested into
your account at the then current net asset value.
Tax Sheltered Retirement Plans. You 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 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.
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OTHER INFORMATION
DIVIDENDS, DISTRIBUTIONS AND TAXES
It is the policy of each Fund to distribute to shareholders its
investment company income, if any, annually and any net realized capital gains
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 of 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 has
made a written request for 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 whether such dividends and distributions are made in cash or
in additional shares. Questions on how any distributions will be taxed to the
investor should be directed to the investor's own tax adviser.
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%. 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.
A Fund may be subject to foreign withholding taxes which would reduce the
yield on its investments. Tax treaties between certain countries and the United
States may reduce or eliminate such taxes. Shareholders of a Fund who are
subject to United States Federal income tax may be entitled, subject to certain
rules and limitations, to claim a Federal income tax credit or deduction for
foreign income taxes paid by a Fund. See the Statement of Additional Information
for additional details. A Fund's transactions in options, futures and forward
contracts may be subject to special tax rules. These rules can affect the
amount, timing and characteristics of distributions to shareholders.
A Fund may be subject to foreign withholding taxes which would reduce the
yield on its investments. Tax treaties between certain countries and the United
States may reduce or eliminate such taxes. Shareholders of a Fund who are
subject to United States Federal income tax may be entitled, subject to certain
rules and limitations, to claim a Federal income tax credit or deduction for
foreign income taxes paid by a Fund. See the Statement of Additional Information
for additional details. A Fund's transactions in options, futures and forward
contracts may be subject to special tax rules. These rules can affect the
amount, timing and characteristics of distributions to shareholders.
If more than 50% of the value of a Fund's assets at the end of the tax
year is represented by stock or securities of foreign corporations, the Fund
intends to qualify for certain Code stipulations that would allow shareholders
to claim a foreign tax credit or deduction on their U.S. income tax returns. The
Code may limit a shareholder's ability to claim a foreign tax credit.
Furthermore, shareholders who elect to deduct their portion of a Fund's foreign
taxes rather than take the foreign tax credit must itemize deductions on their
income tax returns.
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 your social security or
taxpayer identification number is correct and that you are not currently subject
to backup withholding or are 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
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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 GLOBAL REAL ESTATE EQUITY FUND is a separate series
of the Evergreen Equity Trust (formerly Evergreen Real Estate Equity Trust), a
Massachusetts business trust organized in 1988. EVERGREEN INTERNATIONAL EQUITY
FUND and EVERGREEN EMERGING MARKETS GROWTH FUND are separate investment series
of Evergreen Investment Trust (formerly First Union Funds), which is a
Massachusetts business trust organized in 1984. 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 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 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 Fund, each share of the series
or Class 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, that affect each series and Class in
substantially the same manner. Class A, B, C and Y shares have identical voting,
dividend, liquidation and other rights, except that each Class bears, to the
extent applicable, its own distribution, shareholder service 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
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.
Principal Underwriter. EFD, an affiliate of Furman Selz Incorporated, located
230 Park Avenue, New York, New York 10169, is the principal underwriter of the
Funds. Furman Selz Incorporated also acts as sub-administrator to EVERGREEN
INTERNATIONAL EQUITY FUND and EVERGREEN EMERGING MARKETS GROWTH FUND and
provides certain sub-administrative services to Evergreen Asset in connection
with its role as investment adviser to EVERGREEN GLOBAL REAL ESTATE EQUITY 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 CMG, Evergreen
Asset or 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
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
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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.
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
Funds 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
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.
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INVESTMENT ADVISERS
Capital Management Group of First Union National Bank of North Carolina, 201
South College Street, Charlotte, North Carolina 28288
EVERGREEN EMERGING MARKETS GROWTH FUND, EVERGREEN INTERNATIONAL EQUITY
FUND
Evergreen Asset Management Corp., 2500 Westchester Avenue, Purchase, New York
10577
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND
CUSTODIAN & TRANSFER AGENT
State Street Bank & Trust Company, Box 9021, Boston, Massachusetts 02205-9827
LEGAL COUNSEL
Sullivan & Worcester LLP, 1025 Connecticut Avenue, N.W., Washington, D.C.
20036
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP, One Mellon Bank Center, Pittsburgh, Pennsylvania 15219
EVERGREEN EMERGING MARKETS GROWTH FUND, EVERGREEN INTERNATIONAL EQUITY
FUND
Price Waterhouse LLP, 1177 Avenue of the Americas, New York, New York 10036
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND
DISTRIBUTOR
Evergreen Funds Distributor, Inc., 230 Park Avenue, New York, New York 10169
536121REV01
*******************************************************************************
STATEMENT OF ADDITIONAL INFORMATION
December 29, 1995
THE EVERGREEN INTERNATIONAL/GLOBAL GROWTH FUNDS 2500
Westchester Avenue, Purchase, New York 10577
800-807-2940
Evergreen Emerging Markets Growth Fund (formerly First Union Emerging Markets
Growth Portfolio) ("Emerging Markets")
Evergreen International Equity Fund (formerly First Union International Equity
Portfolio) ("International Equity")
Evergreen Global Real Estate Equity Fund ("Global")
Evergreen Global Leaders Fund ("Global Leaders")
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 for the Fund in which you are making or contemplating an
investment. The Evergreen International/Global Growth Funds are offered through
three separate prospectuses: one offering Class A, Class B and Class C shares of
Emerging Markets, International and Global, a separate prospectus offering Class
Y shares of Emerging Markets, International and Global, and a separate
prospectus offering Class Y shares of Global Leaders. Copies of each Fund's
Prospectus may be obtained without charge by calling the number listed above.
TABLE OF CONTENTS
Investment Objectives and Policies................................2
Investment Restrictions...........................................9
Certain Risk Considerations.......................................15
Management........................................................16
Investment Adviser................................................24
Distribution Plans................................................29
Allocation of Brokerage...........................................32
Additional Tax Information........................................34
Net Asset Value...................................................38
Purchase of Shares................................................39
General Information About the Funds...............................50
Performance Information...........................................52
Financial Statements..............................................56
Appendix A - Description of Bond, Municipal Note and Commercial
Paper Ratings........................................58
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INVESTMENT OBJECTIVES AND POLICIES
(See also "Description of the Funds - Investment Objectives
and Policies" in each Fund's Prospectus)
The investment objective of each Fund and a description of the securities
in which each Fund may invest is set forth under "Description of the Funds
Investment Objectives and Policies" in the relevant Prospectus. The investment
objectives of Emerging Growth, International Equity and Global are fundamental
and may not be changed without the approval of a majority of the outstanding
voting securities of the Fund.
Types of Investments
Convertible Securities -- (All Funds)
Each Fund may invest in convertible securities. Convertible securities
include fixed-income securities that may be exchanged or converted into a
predetermined number of shares of the issuer's underlying common stock at the
option of the holder during a specified period. Convertible securities may take
the form of convertible preferred stock, convertible bonds or debentures, units
consisting of "usable" bonds and warrants or a combination of the features of
several of these securities. The investment characteristics of each convertible
security vary widely, which allow convertible securities to be employed for a
variety of investment strategies.
Each Fund will exchange or convert convertible securities into shares of
underlying common stock when, in the opinion of its investment adviser or
sub-adviser, the investment characteristics of the underlying common shares will
assist a Fund in achieving its investment objective. A Fund may also elect to
hold or trade convertible securities. In selecting convertible securities, the
adviser or sub-adviser evaluates the investment characteristics of the
convertible security as a fixed-income instrument, and the investment potential
of the underlying equity security for capital appreciation. In evaluating these
matters with respect to a particular convertible security, the adviser or
sub-adviser considers numerous factors, including the economic and political
outlook, the value of the security relative to other investment alternatives,
trends in the determinants of the issuer's profits, and the issuer's management
capability and practices.
Warrants (All Funds)
Each Fund may invest in warrants. Warrants are options to purchase common
stock at a specific price (usually at a premium above the market value of the
optioned common stock at issuance) valid for a specific period of time. Warrants
may have a life ranging from less than one year to twenty years, or they may be
perpetual. However, most warrants have expiration dates after which they are
worthless. In addition, a warrant is worthless if the market price of the common
stock does not exceed the warrant's exercise price during the life of the
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warrant. Warrants have no voting rights, pay no dividends, and have no rights
with respect to the assets of the corporation issuing them. The percentage
increase or decrease in the market price of the warrant may tend to be greater
than the percentage increase or decrease in the market price of the optioned
common stock.
Sovereign Debt Obligations (All Funds)
Each Fund may purchase sovereign debt instruments issued or guaranteed by
foreign governments or their agencies, including debt of Latin American nations
or other developing countries. Sovereign debt may be in the form of conventional
securities or other types of debt instruments such as loans or loan
participations. Sovereign debt of developing countries may involve a high degree
of risk, and may be in default or present the risk of default. Governmental
entities responsible for repayment of the debt may be unable or unwilling to
repay principal and interest when due, and may require renegotiation or
rescheduling of debt payments. In addition, prospects for repayment of principal
and interest may depend on political as well as economic factors.
Closed-End Investment Companies (All Funds)
Each Fund may purchase the equity securities of closed-end investment
companies to facilitate investment in certain countries. Equity securities of
closed-end investment companies generally trade at a discount to their net asset
value. Investments in closed-end investment companies involve the payment of
management fees to the advisers of such investment companies.
Strategic Investments (All Funds)
Foreign Currency Transactions; Currency Risks
The exchange rates between the U.S. dollar and foreign currencies are a
function of such factors as supply and demand in the currency exchange markets,
international balances of payments, governmental intervention, speculation and
other economic and political conditions. Although a Fund values its assets daily
in U.S. dollars, a Fund generally does not convert its holdings to U.S. dollars
or any other currency. Foreign exchange dealers may realize a profit on the
difference between the price at which a Fund buys and sells currencies.
Each Fund will engage in foreign currency exchange transactions in
connection with its portfolio investments. A Fund will conduct its foreign
currency exchange transactions either on a spot (i.e., cash) basis at the spot
rate prevailing in the foreign currency exchange market or through forward
contracts to purchase or sell foreign currencies.
Forward Foreign Currency Exchange Contracts
Each Fund may enter into forward foreign currency exchange contracts in
order to protect against a possible loss resulting from an adverse change in the
relationship between the U.S. dollar and a foreign currency involved in an
underlying transaction. A forward foreign currency exchange contract involves an
obligation to purchase or sell a specific currency at a future date, which may
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be any fixed number of days (usually less than one year) from the date of the
contract agreed upon by the parties, at a price set at the time of the contract.
These contracts are traded in the interbank market conducted directly between
currency traders (usually large commercial banks) and their customers. A forward
contract generally has a deposit requirement, and no commissions are charged at
any stage for trades. Although foreign exchange dealers do not charge a fee for
conversion, they do realize a profit based on the difference (the spread)
between the price at which they are buying and selling various currencies.
However, forward foreign currency exchange contracts may limit potential gains
which could result from a positive change in such currency relationships. The
adviser and the sub-advisers believe that it is important to have the
flexibility to enter into forward foreign currency exchange contracts whenever
they determine that it is in a Fund's best interest to do so. A Fund will not
speculate in foreign currency exchange.
Except for cross-hedges, a Fund will not enter into forward foreign
currency exchange contracts or maintain a net exposure in such contracts when it
would be obligated to deliver an amount of foreign currency in excess of the
value of its portfolio securities or other assets denominated in that currency
or, in the case of a "cross-hedge" denominated in a currency or currencies that
the adviser or sub-adviser believes will tend to be closely correlated with that
currency with regard to price movements. At the consummation of such a forward
contract, a Fund may either make delivery of the foreign currency or terminate
its contractual obligation to deliver the foreign currency by purchasing an
offsetting contract obligating it to purchase, at the same maturity date, the
same amount of such foreign currency. If a Fund chooses to make delivery of the
foreign currency, it may be required to obtain such currency through the sale of
portfolio securities denominated in such currency or through conversion of other
assets of the Fund into such currency. If a Fund engages in an offsetting
transaction, the Fund will incur a gain or loss to the extent that there has
been a change in forward contract prices.
The Funds will place cash or high grade debt securities in a separate
account of a Fund at its custodian bank in an amount equal to the value of the
Fund's total assets committed to forward foreign currency exchange contracts
entered into as a hedge against a substantial decline in the value of a
particular foreign currency. If the value of the securities placed in the
separate account declines, additional cash or securities will be placed in the
account on a daily basis so that the value of the account will equal the amount
of the Fund's commitments with respect to such contracts.
It should be realized that this method of protecting the value of a Fund's
portfolio securities against a decline in the value of a currency does not
eliminate fluctuations in the underlying prices of the securities. It simply
establishes a rate of exchange which can be achieved at some future point in
time. Additionally, although such contracts tend to minimize the risk of loss
due to a decline in the value of the hedged currency, at the same time they tend
to limit any potential gain which might result should the value of such currency
increase. Generally, a Fund will not enter into a forward foreign currency
exchange contract with a term longer than one year.
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Foreign Currency Options
A foreign currency option provides the option buyer with the right to buy
or sell a stated amount of foreign currency at the exercise price on a specified
date or during the option period. The owner of a call option has the right, but
not the obligation, to buy the currency. Conversely, the owner of a put option
has the right, but not the obligation, to sell the currency.
When the option is exercised, the seller (i.e., writer) of the option is
obligated to fulfill the terms of the sold option. However, either the seller or
the buyer may, in the secondary market, close its position during the option
period at any time prior to expiration.
A call option on a foreign currency generally rises in value if the
underlying currency appreciates in value, and a put option on a foreign currency
generally rises in value if the underlying currency depreciates in value.
Although purchasing a foreign currency option can protect the Fund against an
adverse movement in the value of a foreign currency, the option will not limit
the movement in the value of such currency. For example, if a Fund was holding
securities denominated in a foreign currency that was appreciating and had
purchased a foreign currency put to hedge against a decline in the value of the
currency, the Fund would not have to exercise its put option. Likewise, if a
Fund were to enter into a contract to purchase a security denominated in foreign
currency and, in conjunction with that purchase, were to purchase a foreign
currency call option to hedge against a rise in value of the currency, and if
the value of the currency instead depreciated between the date of purchase and
the settlement date, the Fund would not have to exercise its call. Instead, the
Fund could acquire in the spot market the amount of foreign currency needed for
settlement.
Special Risks Associated with Foreign Currency Options
Buyers and sellers of foreign currency options are subject to the same
risks that apply to options generally. In addition, there are certain additional
risks associated with foreign currency options. The markets in foreign currency
options are relatively new, and the Fund's ability to establish and close out
positions on such options is subject to the maintenance of a liquid secondary
market. Although the Funds will not purchase or write such options unless and
until, in the opinion of the adviser or sub-advisers, the market for them has
developed sufficiently to ensure that the risks in connection with such options
are not greater than the risks in connection with the underlying currency, there
can be no assurance that a liquid secondary market will exist for a particular
option at any specific time.
In addition, options on foreign currencies are affected by all of those
factors that influence foreign exchange rates and investments generally.
The value of a foreign currency option depends upon the value of the
underlying currency relative to the U.S. dollar. As a result, the price of the
option position may vary with changes in the value of either or both currencies
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and may have no relationship to the investment merits of a foreign security.
Because foreign currency transactions occurring in the interbank market involve
substantially larger amounts than those that may be involved in the use of
foreign currency options, investors may be disadvantaged by having to deal in an
odd lot market (generally consisting of transactions of less than $1 million)
for the underlying foreign currencies at prices that are less favorable than for
round lots.
There is no systematic reporting of last sale information for foreign
currencies or any regulatory requirement that quotations available through
dealers or other market sources be firm or revised on a timely basis. Available
quotation information is generally representative of very large transactions in
the interbank market and thus may not reflect relatively smaller transactions
(i.e, less than $1 million) where rates may be less favorable. The interbank
market in foreign currencies is a global, around-the-clock market. To the extent
that the U.S. option markets are closed while the markets for the underlying
currencies remain open, significant price and rate movements may take place in
the underlying markets that cannot be reflected in the options markets until
they reopen.
Foreign Currency Futures Transactions
By using foreign currency futures contracts and options on such contracts,
a Fund may be able to achieve many of the same objectives as it would through
the use of forward foreign currency exchange contracts. The Funds may be able to
achieve these objectives possibly more effectively and at a lower cost by using
futures transactions instead of forward foreign currency exchange contracts.
A foreign currency futures contract sale creates an obligation by the Fund,
as seller, to deliver the amount of currency called for in the contract at a
specified future time for a specified price. A currency futures contract
purchase creates an obligation by the Fund, as purchaser, to take delivery of an
amount of currency at a specified future time at a specified price. Although the
terms of currency futures contracts specify actual delivery or receipt, in most
instances the contracts are closed out before the settlement date without the
making or taking of delivery of the currency. Closing out of currency futures
contracts is effected by entering into an offsetting purchase or sale
transaction. An offsetting transaction for a currency futures contract sale is
effected by the Fund entering into a currency futures contract purchase for the
same aggregate amount of currency and same delivery date. If the price of the
sale exceeds the price of the offsetting purchase, the Fund is immediately paid
the difference and realizes a loss. Similarly, the closing out of a currency
futures contract purchase is effected by the Fund entering into a currency
futures contract sale. If the offsetting sale price exceeds the purchase price,
the Fund realizes a gain, and if the offsetting sale price is less than the
purchase price, the Fund realizes a loss.
Special Risks Associated with Foreign Currency Futures Contracts and Related
Options
Buyers and sellers of foreign currency futures contracts are subject to the
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same risks that apply to the use of futures generally. In addition, there are
risks associated with foreign currency futures contracts and their use as a
hedging device similar to those associated with options on futures currencies,
as described above.
Options on foreign currency futures contracts may involve certain
additional risks. Trading options on foreign currency futures contracts is
relatively new. The ability to establish and close out positions on such options
is subject to the maintenance of a liquid secondary market. To reduce this risk,
the Funds will not purchase or write options on foreign currency futures
contracts unless and until, in the opinion of the adviser or the sub-advisers,
the market for such options has developed sufficiently that the risks in
connection with such options are not greater than the risks in connection with
transactions in the underlying foreign currency futures contracts. Compared to
the purchase or sale of foreign currency futures contracts, the purchase of call
or put options on futures contracts involves less potential risk to the Funds
because the maximum amount at risk is the premium paid for the option (plus
transaction costs). However, there may be circumstances when the purchase of a
call or put option on a futures contract would result in a loss, such as when
there is no movement in the price of the underlying currency or futures
contract.
Restricted and Illiquid Securities (All Funds)
The ability of the Board of Trustees ("Trustees") to determine the
liquidity of certain restricted securities is permitted under a Securities and
Exchange Commission ("SEC") Staff position set forth in the adopting release for
Rule 144A under the Securities Act of 1933 (the "Rule"). The Rule is a
non-exclusive, safe-harbor for certain secondary market transactions involving
securities subject to restrictions on resale under federal securities laws. The
Rule provides an exemption from registration for resales of otherwise restricted
securities to qualified institutional buyers. The Rule was expected to further
enhance the liquidity of the secondary market for securities eligible for sale
under the Rule. The Funds which invest in Rule 144A Securities believe that the
Staff of the SEC has left the question of determining the liquidity of all
restricted securities (eligible for resale under the Rule) for determination by
the Trustees. The Trustees consider the following criteria in determining the
liquidity of certain restricted securities:
(i) the frequency of trades and quotes for the security;
(ii) the number of dealers willing to purchase or sell the security and the
number of other potential buyers;
(iii) dealer undertakings to make a market in the security; and
(iv) the nature of the security and the nature of the marketplace trades.
When-Issued and Delayed Delivery Securities (Emerging Markets, International
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Equity and Global Leaders)
These transactions are made to secure what is considered to be an
advantageous price or yield for a Fund. No fees or other expenses, other than
normal transaction costs, are incurred. However, liquid assets of a Fund
sufficient to make payment for the securities to be purchased are segregated on
the Fund's records at the trade date. These assets are marked to market daily
and are maintained until the transaction has been settled. Emerging Markets and
International Equity do not intend to engage in when-issued and delayed delivery
transactions to an extent that would cause the segregation of more than 20% of
the total value of their assets.
Lending of Portfolio Securities (All Funds)
The collateral received when a Fund lends portfolio securities must be
valued daily and, should the market value of the loaned securities increase, the
borrower must furnish additional collateral to the lending Fund. During the time
portfolio securities are on loan, the borrower pays the Fund any dividends or
interest paid on such securities. Loans are subject to termination at the option
of the Fund or the borrower. A Fund may pay reasonable administrative and
custodial fees in connection with a loan and may pay a negotiated portion of the
interest earned on the cash or equivalent collateral to the borrower or placing
broker. A Fund does not have the right to vote securities on loan, but would
terminate the loan and regain the right to vote if that were considered
important with respect to the investment.
Repurchase Agreements (All Funds)
The Funds or their custodian will take possession of the securities subject
to repurchase agreements, and these securities will be marked to market daily.
To the extent that the original seller does not repurchase the securities from
the Funds, the Funds could receive less than the repurchase price on any sale of
such securities. In the event that such a defaulting seller filed for bankruptcy
or became insolvent, disposition of such securities by the Funds might be
delayed pending court action. The Funds believe that under the regular
procedures normally in effect for custody of a Fund's portfolio securities
subject to repurchase agreements, a court of competent jurisdiction would rule
in favor of the Fund and allow retention or disposition of such securities. The
Funds will only enter into repurchase agreements with banks and other recognized
financial institutions, such as broker-dealers, which are deemed by the adviser
or a sub-adviser to be creditworthy pursuant to guidelines established by the
Trustees.
Reverse Repurchase Agreements (All Funds)
The Funds may also enter into reverse repurchase agreements. These
transactions are similar to borrowing cash. In a reverse repurchase agreement, a
Fund transfers possession of a portfolio instrument to another person, such as a
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financial institution, broker, or dealer, in return for a percentage of the
instrument's market value in cash, and agrees that on a stipulated date in the
future the Fund will repurchase the portfolio instrument by remitting the
original consideration plus interest at an agreed upon rate.
The use of reverse repurchase agreements may enable a Fund to avoid selling
portfolio instruments at a time when a sale may be deemed to be disadvantageous,
but the ability to enter into reverse repurchase agreements does not ensure that
the Fund will be able to avoid selling portfolio instruments at a
disadvantageous time.
When effecting reverse repurchase agreements, liquid assets of a Fund, in a
dollar amount sufficient to make payment for the obligations to be purchased,
are segregated at the trade date. These securities are marked to market daily
and maintained until the transaction is settled.
INVESTMENT RESTRICTIONS
FUNDAMENTAL INVESTMENT RESTRICTIONS
.........Except as noted, the investment restrictions set forth below are
fundamental and may not be changed with respect to each Fund without the
affirmative vote of a majority of the outstanding voting securities of the Fund.
Where an asterisk (*) appears after a Fund's name, the relevant policy is
non-fundamental with respect to that Fund and may be changed by the Fund's
investment adviser without shareholder approval, subject to review and approval
by the Trustees. As used in this Statement of Additional Information and in the
Prospectus, "a majority of the outstanding voting securities of the Fund" means
the lesser of (1) the holders of more than 50% of the outstanding shares of
beneficial interest of the Fund or (2) 67% of the shares present if more than
50% of the shares are present at a meeting in person or by proxy.
1........ Diversification
........No Fund 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 and, with respect to Emerging
Markets and International Equity, repurchase agreements collateralized by such
securities except that up to 25% of the value of a Fund's total assets may be
invested without regard to such 5% limitation.
2........Ten Percent Limitation on Securities of Any One Issuer
.........Global and Global Leaders may not purchase more than 10% of any class
of securities of any one issuer other than the U.S. government and its agencies
or instrumentalities.
.........Neither Emerging Markets nor International Equity may purchase more
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than 10% of the outstanding voting securities of any one issuer.
3........Investment for Purposes of Control or Management
.........Global and Global Leaders may not invest in companies for the purpose
of exercising control or management.
4........Purchase of Securities on Margin
.........No Fund 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
........Emerging Markets*, International Equity* Global and Global Leaders* may
not invest more than 15% of their net 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
.........The Funds will not underwrite any issue of securities except as they
may be deemed an underwriter under the Securities Act of 1933 in connection with
the sale of securities in accordance with their investment objectives, policies
and limitations.
7........Interests in Oil, Gas or Other Mineral Exploration or Development
Programs
.........Global and Global Leaders* may not purchase, sell or invest in
interests in oil, gas or other mineral exploration or development programs.
.........Neither Emerging Markets* nor International Equity* will purchase
interests in oil, gas or other mineral exploration or development programs or
leases, although each Fund may purchase the securities of other issuers which
invest in or sponsor such programs.
8........Concentration in Any One Industry
.........Global may not concentrate its investments in any one industry, except
that it will invest at least 65% of its total assets in securities of companies
engaged principally in the real estate industry.
.........Emerging Markets, International Equity and Global Leaders* will not
invest 25% or more of the value of their total assets in any one industry except
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that they may invest more than 25% of their total assets in securities issued or
guaranteed by the U.S. government, its agencies or instrumentalities. For
purposes of this restriction, utility companies, gas, electric, water and
telephone companies will be considered separate industries.
9........Warrants
.........Global and Global Leaders* may not invest more than 5% of their net
assets in warrants, and, of this amount, no more than 2% of the Fund's total net
assets may be invested in warrants that are listed on neither the New York nor
the American Stock Exchanges.
.........Emerging Markets* and International Equity* will not invest more than
5% of their net assets in warrants, including those acquired in units or
attached to other securities. To comply with certain state restrictions, the
Funds will limit their investment in such warrants not listed on the New York
Stock Exchange or the American Stock Exchange to 2% of their net assets. (If
state restrictions change, this latter restriction may be changed without notice
to shareholders). For purposes of this restriction, warrants acquired by the
Funds' in units or attached to securities may be deemed to be without value.
10.......Ownership by Trustees/Officers
.........None of Emerging Markets*, International Equity*, Global or Global
Leaders* may purchase or retain the securities of any issuer if (i) one or more
officers or Trustees of a Fund or its investment adviser or investment
sub-advisers 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
.........Neither Emerging Markets nor International Equity will sell any
securities short.
.........Global and Global Leaders* may not make short sales of securities
unless, at the time of each such sale and thereafter while a short position
exists, either 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.
12.......Lending of Funds and Securities
.........Global and Global Leaders* 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. Global and Global
Leaders* may not lend their portfolio securities, unless the borrower is a
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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.
.........Emerging Markets and International Equity will not lend any of their
assets, except portfolio securities up to one-third of the value of their total
assets. This does not prevent the Funds from purchasing or holding corporate or
government bonds, debentures, notes, certificates of indebtedness or other debt
securities of an issuer, repurchase agreements, or other transactions which are
permitted by a Fund's investment objectives and policies or the Declaration of
Trust governing the Fund.
13.......Commodities
.........Emerging Markets and International Equity will not invest in
commodities except that each Fund reserves the right to engage in transactions
including futures contracts, options and forward contracts with respect to
securities indices or currencies.
.........Global and Global Leaders* will not purchase, sell or invest in
commodities or commodity contracts; provided, however, that this policy does not
prevent either Fund from purchasing and selling currency futures contracts and
entering into forward foreign currency contracts.+
14.......Real Estate
.........Neither Emerging Markets nor International Equity will purchase or sell
real estate, including limited partnership interests in real estate, although
each Fund may invest in securities of companies whose business involves the
purchase or sale of real estate or in securities which are secured by real
estate or interests in real estate.
.........Global and Global Leaders* may not purchase or invest in real estate or
interests in real estate (although they may purchase securities secured by real
estate or interests therein or issued by companies or investment trusts which
invest in real estate or interests therein).
15.......Borrowing, Senior Securities, Reverse Repurchase Agreements
.........Emerging Markets and International Equity will not issue senior
securities except that each Fund may borrow money directly or through reverse
repurchase agreements in amounts up to one-third of the value of its total
assets, including the amount borrowed and except to the extent that a Fund may
enter into futures contracts. The Funds will not borrow money or engage in
reverse repurchase agreements for investment leverage, but rather as a
temporary, extraordinary or emergency measure to facilitate management of their
portfolios by enabling them to, for example, meet redemption requests when the
liquidation of portfolio securities is deemed to be inconvenient or
disadvantageous.
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A Fund will not purchase any securities while borrowings in excess of 5% of its
total assets are outstanding.++
.........Global and Global Leaders* 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, provided that Global will not purchase any securities at times when
any borrowings (including reverse repurchase agreements) are outstanding. Global
and Global Leaders* will not enter into reverse repurchase agreements exceeding
5% of the value of its total assets.
16.......Joint Trading
.........Global, Global Leaders*, Emerging Markets* and International Equity*
may not participate on a joint or joint and several basis in any trading account
in any securities. (The "bunching" of orders for the purchase or sale of
portfolio securities with its investment adviser or accounts under its
management to reduce brokerage commissions, to average prices among them or to
facilitate such transactions is not considered a trading account in securities
for purposes of this restriction.)
17.......Options
......... Global and Global Leaders*, may not write, purchase or sell put or
call options, or combinations thereof except as permitted under "Description
of Funds -Investment Practices and Restrictions" in each Fund's Prospectus.
.........Emerging Markets* and International Equity* may write covered call
options and secured put options on up to 25% of their net assets and may
purchase put and call options provided that no more than 5% of the market value
of its net assets may be invested in premiums on such options.
18.......Pledging Assets
.........Neither Emerging Markets nor International Equity will mortgage, pledge
or hypothecate any assets except to secure permitted borrowings. In these cases,
a Fund may pledge assets having a market value not exceeding the lesser of the
dollar amounts borrowed or 15% of the value of total assets at the time of
borrowing. For purposes of this limitation, the following are not deemed to be
pledges: margin deposits for the purchase and sale of financial futures
contracts and related options and segregation or collateral arrangements made in
connection with options activities or the purchase of securities on a
when-issued basis.
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19.......Investing in Securities of Other Investment Companies
......Emerging Markets*, International Equity*, Global* and Global Leaders* will
limit their investment in other investment companies to no more than 3% of the
total outstanding voting stock of any investment company, will invest no more
than 5% of their total assets in any one investment company and will invest no
more than 10% of their total assets in investment companies in general. A Fund
will purchase securities of closed-end investment companies only in open-market
transactions involving customary broker's commissions. However, these
limitations are not applicable if the securities are acquired in a merger,
consolidation or acquisition of assets. It should be noted that investment
companies incur certain expenses such as management fees and therefore any
investment by a Fund in shares of another investment company would be subject to
such duplicate expenses. There is no present intention of making such
investments on behalf of Global Leaders.
20.......Restricted Securities
.........Emerging Markets* and International Equity* will not invest more than
5% of their total assets in securities subject to restrictions on resale under
the Securities Act of 1933, except for restricted securities which meet criteria
for liquidity established by the Trustees.
21........Illiquid Securities.
.........Global* and Global Leaders* may not invest more than 15% of their net
assets in illiquid securities and other securities which are not readily
marketable, including repurchase agreements which have a maturity of longer than
seven days, but excluding securities eligible for resale under Rule 144A of the
Securities Act of 1933, as amended, which the Trustees have determined to be
liquid.
.........Emerging Markets* and International Equity* will not invest more than
15% of their net assets in illiquid securities, including repurchase agreements
providing for settlement in more than seven days after notice and certain
securities not determined by the Trustees to be liquid.
22........Other. In order to comply with certain state blue sky limitations:
...........Global* and Global Leaders* interpret fundamental investment
restriction 7 to prohibit investments in oil, gas and mineral leases.
...........Global* and Global Leaders* interpret fundamental investment
restriction 14 to prohibit investment in real estate limited partnerships which
are not readily marketable.
Except with respect to borrowing money, if a percentage limitation is
adhered to at the time of investment, a later increase or decrease in percentage
resulting from any change in value of net assets will not result in a violation
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of such restriction.
+ To comply with registration requirements in certain states, Emerging
Markets* and International Equity* will limit the margin deposits on futures
contracts entered into by a Fund to 5% of its net assets. (If state requirements
change, these restrictions may be revised without shareholder notification.)
++ Emerging Markets* and International Equity* have no present intention to
borrow money or enter into reverse repurchase agreements in excess of 5% of the
value of their net assets during the coming fiscal year.
For purposes of their policies and limitations, the Funds consider
certificates of deposit and demand and time deposits issued by a U.S. branch of
a domestic bank or savings and loan association having capital, surplus, and
undivided profits in excess of $100,000,000 at the time of investment to be
"cash items".
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 each Fund's Prospectus.
...........While Global 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 the 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.
Global has borrowings outstanding. It is in essence leveraged and,
therefore, share price fluctuations may be more pronounced than the market in
general. The table set forth below describes the extent to which Global entered
into borrowing transactions during the fiscal year ended October 31, 1995.
15
<PAGE>
Global
Average
Amount of Debt Average Amount of Average Number of Amount 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* $ 4,885,000 $ 2,090,861 10,670,806 $0.20
9/30/1995 $ 0 $ 1,572,261 7,184,794 $0.22
10/31/95** $ 1,050,000 $ 283,871 5,474,147 $0.05
* Nine Months
**One Month
MANAGEMENT
The Trustees and executive officers of the Trusts, their ages, addresses
and principal occupations during the past five years are set forth below:
Laurence B. Ashkin (67), 180 East Pearson Street, Chicago, IL-Trustee. Real
estate developer and construction consultant since 1980; President of Centrum
Equities since 1987 and Centrum Properties, Inc. since 1980.
Foster Bam*(68), Greenwich Plaza, Greenwich, CT-Trustee. Partner in the law firm
of Cummings and Lockwood since 1968.
James S. Howell (71), 4124 Crossgate Road, Charlotte, NC-Chairman and Trustee.
Retired Vice President of Lance Inc. (food manufacturing); Chairman of the
Distribution Comm. Foundation for the Carolinas from 1989 to 1993.
Robert J. Jeffries (72), 2118 New Bedford Drive, Sun City Center, FL-Trustee.
Corporate consultant since 1967.
Gerald M. McDonnell (56), 821 Regency Drive, Charlotte, NC-Trustee. Sales
Representative with Nucor-Yamoto Inc. (steel producer) since 1988.
Thomas L. McVerry (57), 4419 Parkview Drive, Charlotte, NC-Trustee. Director of
Carolina Cooperative Federal Credit Union since 1990 and Rexham Corporation from
1988 to 1990; Vice President of Rexham Industries, Inc. (diversified
manufacturer) from 1989 to 1990; Vice President-Finance and Resources, Rexham
Corporation from 1979 to 1990.
William Walt Pettit*(40), Holcomb and Pettit, P.A., 207 West Trade St.,
Charlotte, NC-Trustee. 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. (48), 1010 Charlotte Plaza,Charlotte, NC-Trustee.
Medical Director, Aetna Health Plans since July 1995; President, Primary
Physician Care from 1990 to 1995.
Michael S. Scofield (52), 212 S. Tryon Street Suite 980, Charlotte, NC-Trustee.
Attorney, Law Offices of Michael S. Scofield since prior to 1989.
16
<PAGE>
John J. Pileggi (36), 230 Park Avenue, Suite 910, New York, NY-President and
Treasurer. Senior Managing Director, Furman Selz Incorporated since 1992,
Managing Director from 1984 to 1992.
Joan V. Fiore (39), 230 Park Avenue, Suite 910, New York, NY-Secretary. Managing
Director and Counsel, Furman Selz Incorporated since 1991; Staff Attorney,
Securities and Exchange Commission from 1986 to 1991.
Except for Messrs. Ashkin, Bam and Jeffries, who are not Trustees of
Evergreen Investment Trust (formerly First Union Funds), the Trustees and
officers listed above hold the same positions with a total of ten registered
investment companies offering a total of thirty-two investment funds within the
Evergreen mutual fund complex.
- --------
* Mr. Bam and Mr. Pettit may each be deemed to be an "interested person"
within the meaning of the 1940 Act.
The officers of the Trusts are all officers and/or employees of Furman Selz
Incorporated. Furman Selz Incorporated is an affiliate of Evergreen Funds
Distributor, Inc., the distributor of each Class of shares of each Fund.
The Funds do not pay any direct remuneration to any officer or Trustee
who is an "affiliated person" of either First Union National Bank of North
Carolina or Evergreen Asset Management Corp. or their affiliates. See
"Investment Adviser". Currently, none of the Trustees is an "affiliated person"
as defined in the 1940 Act. The Trusts pay each Trustee who is not an
"affiliated person" an annual retainer and a fee per meeting attended, plus
expenses (and $500 for each telephone conference meeting) as follows:
Name of Trust/Fund Annual Retainer Meeting Fee
Evergreen Equity Trust 1,000*
Global 100
Global Leaders 100
Evergreen Investment Trust 9,000** 1,500**
Emerging Markets
International
--------------------
* This reflects the aggregate retainer paid by Evergreen Equity Trust with
respect to all of its investment series, which are Evergreen U.S. Real Estate
Equity Fund, Evergreen Global Real Estate Equity Fund and Evergreen Global
Leaders Fund.
** Evergreen Investment Trust pays an annual retainer to each Trustee and a
per-meeting fee that are allocated among its fifteen series. Additionally, each
17
<PAGE>
member of the Audit Committee receives $200 for attendance at each meeting of
the of the Audit Committee and an additional fee is paid to the Chairman of the
Board of $2,000.
Set forth below for each of the Trustees is the aggregate compensation
(and expenses) paid to such Trustees by each Trust for the fiscal period ended
October 31, 1995.
TRUSTEES COMPENSATION TABLE
Total
Compensation
Aggregate Compensation From Each Trust From Trusts
Evergreen Evergreen & Fund
Name of Equity Trust* Investment Complex Paid
Trustee Trust** to Trustees
Laurence Ashkin $ 1,438 $ 28,829
Foster Bam 1,443 28,867
James S. Howell 1,319 19,327 46,250
Robert J.
Jeffries 1,428 28,668
Gerald M.
McDonnell 1,319 16,818 43,740
Thomas L.
McVerry 1,319 18,293 45,265
William Walt
Pettit 1,319 18,093 45,015
Russell A.
Salton, III, M.D. 1,319 15,743 42,665
Michael S.
Scofield 1,319 16,818 43,740
* Global Leaders commenced investment operations on November 1, 1995.
Accordingly, no Trustees' fees for Global Leaders are included in the above
table. Global changed its fiscal year end during the period covered by the
foregoing table from September 30 to October 31. Accordingly, the Trustees fees
reported in the foregoing table reflect, for Evergreen Equity Trust, the period
from October 1, 1994 to October 31,
18
<PAGE>
1995.
** Formerly known as First Union Funds. Emerging Markets and International
Equity changed their fiscal year-end during the period covered by the
foregoing table from December 31 to October 31. Accordingly, the Trustees'
fees reported in the foregoing table reflect, for Emerging Markets and
International Equity the period from January 1, 1995 through October 31, 1995.
The number and percent of outstanding shares of each Fund owned by
officers and Trustees as a group on November 30, 1995, is as follows:
No. of Shares Owned
By Officers and Ownership by Officers and
Trustees Trustees as a % of
Name of Fund as a Group Shares Outstanding
Emerging Markets 1,812 1.29% (Class A)
International Equity -0-
Global 22,403 .44% (Class Y)
Global Leaders 35,000 7.67% (Class Y)
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 30, 1995.
Name of % of
Name and Address Fund/Class No. of Shares Class/Fund
- ---------------- ---------- ------------- ----------
Fubs & Co. Febo Emerging Markets/C 1,000 13.99%/.06%
Frances B. Goldstein
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
Fubs & Co. Febo Emerging Markets/C 507 7.09%/.03%
Victor McCauley
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
Fubs & Co. Febo Emerging Markets/C 513 7.17%/.03%
Gales Chimney Rock Shop Inc.
Attn: Steve Gale
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
Fubs & Co. Febo Emerging Markets/C 1,812 25.35%/.11%
Scott B. McEvoy
19
<PAGE>
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
Fubs & Co. Febo Emerging Markets/C 372 5.21%/.02%
Donna Marion Sullivan
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
Fubs & Co. Febo Emerging Markets/C 1,236 17.29%/.08%
M. Albert Carmichael and
Ann K. Carmichael
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
First Union Natl. Bank-TN C/F Emerging Markets/C 364 5.09%/.02%
David M. Resha IRA
301 S/ Tryon Street
Charlotte, NC 28288-0001
Fubs & Co. Febo Emerging Markets/C 424 5.94%/.03%
Elizabeth A. Naughten C/F
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
First Union National Bank* Emerging Markets/Y 935,463 77.19%/58.44%
Trust Accounts
Attn: Ginny Batten
11th Floor CMG-1151
301 S. Tryon Street
Charlotte, NC 28288-0001
First Union National Bank* Emerging Markets/Y 261,606 21.59%/16.34%
Trust Accounts
Attn: Ginny Batten
11th Floor CMG-1151
301 S. Tryon Street
Charlotte, NC 28288-0001
First Union National Bank* International/Y 2,632,067 49.25%/40.32%
Trust Accounts Equity
Attn: Ginny Batten
11th Floor CMG-1151
301 S. Tryon Street
Charlotte, NC 28288-0001
20
<PAGE>
First Union National Bank* International/Y 2,683,942 50.22%/41.12%
Trust Accounts Equity
Attn: Ginny Batten
11th Floor CMG-1151
301 S. Tryon Street
Charlotte, NC 28288-0001
Fubs & Co. Febo International/C 2,874 14.00%/.04%
Richard K. Hamilton and Equity
Sandra H. Hamilton
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
Fubs & Co. Febo International/C 1,139 5.54%/.02%
C. Wilson Construction Company Equity
Profit Sharing Plan
U/A/D 7-1-87
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
Fubs & Co. Febo International/C 4,227 20.59%/.06%
Julio Noltenius and Equity
Julio G. Noltenius
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
Fubs & Co. Febo International/C 1,093 5.32%/.02%
Mildred H. Newton Equity
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
Fubs & Co. Febo International/C 2,951 14.37%/.05%
G. Gene Wilhelm Equity
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
Fubs & Co. Febo Global/A 134 5.88%/0%
Mark Major Thomsen
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
Fubs & Co. Febo Global/A 540 8.53%/.01%
John E. Benson
Vivianle M. Benson
C/O First Union National Bank
21
<PAGE>
301 S. Tryon Street
Charlotte, NC 28288-0001
Fubs & Co. Febo Global/A 338 5.35%/.01%
Joan B. Huber C/F
Andrew P. Huber
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
Fubs & Co. Febo Global/A 338 5.35%/.01%
Joan B. Huber C/F
Marissa A. Huber
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
First Union Natl. Bank VA C/F Global/A 1,690 26.72%/.03%
Deborah R. Shore IRA
301 S. Tryon Street
Charlotte, NC 28288-0001
First Union Natl. Bank VA C/F Global/A 1,663 26.30%/.03%
Harris T. Shore IRA
301 S. Tryon Street
Charlotte, NC 28288-0001
NFSC Febo #CMY-700380 Global/A 948 14.99%/.02%
NFSC/FMTC IRA Sepp
FBO Gary H. Wolff
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
Fubs & & Co. Febo Global/B 645 8.24%/.01%
Bill Souter
Mina Souter
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
Fubs & Co. Febo Global/B 1,669 21.30%/.03%
Mahammad Sissiq Khan
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
Fubs & Co. Febo Global/B 1,938 24.73%/.04%
Dr. Nsidibe Ikpe
C/O First Union National Bank
301 S. Tryon Street
22
<PAGE>
Charlotte, NC 28288-0001
Fubs & Co. Febo Global/B 1,643 20.97%/.03%
Siddiq Khan & Associates Inc.
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
Fubs & Co. Febo Global/B 609 7.77%/.01%
Walter R. Parry
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
Fubs & Co. Febo Global/C 87 27.72%/0%
Patrick K. De Garay
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
Norman Kranzdorf Global/C 209 66.12%/0%
C/O First Union National Bank
301 S. Tryon St.
Charlotte, NC 28288-0001
Stephen A. Lieber Global/Y 1,164,329 22.68%/22.64%
C/O Lieber & Co.
2500 Westchester Avenue
Purchase, NY 10577
Charles Schwab & Co. Inc. Global/Y 1,138,346 22.17%/22.11%
Reinvest Account
Attn: Mutual Funds Dept.
101 Montgomery Street
San Francisco, CA 94104-4122
Nola Maddox Falcone Global Leaders/Y 49,627 10.88%/
C/O Lieber & Co.
2500 Westchester Ave.
Purchase, NY 10577
Stephen A. Lieber Global Leaders/Y 100,100 21.94%/
C/O Lieber & Co.
2500 Westchester Ave.
Purchase, NY 10577
Foster & Foster Global Leaders/Y 35,000 7.67%/
C/O Lieber & Co.
2500 Westchester Ave.
Purchase, NY 10577
23
<PAGE>
- ---------------------------------
*Acting in various capacities for numerous accounts. As a result of its
ownership of 63.41% and 77.08% of Emerging Markets and International Equity,
respectively, on November 30, 1995, First Union National Bank of North Carolina
may be deemed to "control" each Fund as that term is defined in the 1940 Act.
As a result of the ownership of 28.10% of the shares of Global on
November 30, 1995, Charles Schwab & Co., Inc. 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 Global and Global Leaders 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 Emerging Markets and International Equity is FUNB which
provides investment advisory services through its Capital Management Group.
Marvin & Palmer Associates, Inc. ("Marvin & Palmer") and Boston International
Advisors, Inc. ("Boston International") are the sub-advisers for Emerging
Markets and International Equity, respectively, under the terms of Sub- Advisory
Agreements between FUNB and the respective sub-adviser. 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, Theodore J. Israel, Jr., Executive Vice President, Joseph J. McBrien,
Senior Vice President and General Counsel, and George R. Gaspari, Senior Vice
President and Chief Financial Officer.
On June 30, 1994, Evergreen Asset and Lieber & 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
an affiliate 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.", Global 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 Incorporated. 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.
24
<PAGE>
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.
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. Global Leaders operations commenced
investment on November 1, 1995 and therefore has not yet completed a full fiscal
period. The advisory fees paid by each of the other Funds for the three most
recent fiscal periods, or the period from inception, reflected in its
registration statement are set forth below:
One Month Nine Months
GLOBAL Period Ended Year Ended Period Ended
10/31/95 9/30/95 9/30/94
Advisory Fee $55,450 $ 869,965 $1,133,380
========== ========== ==========
Expense
Reimbursement $8,469 $ 39,432 $ 0
-------- -------- ------
Period from
September 6, 1994
EMERGING Ten Months (commencement of
MARKETS Period Ended operations) through
10/31/95 12/31/94
Advisory Fee $130,542 $35,047
Waiver (130,542) ($35,047)
Net Advisory Fee --------- --------
$ 0 $ 0
======== ========
Period from
September 2, 1994
Ten Months (commencement of
INTERNATIONAL Ended operations) through
EQUITY 10/31/95 12/31/94
Advisory Fee $299,412 $60,885
Waiver (212,295) ($44,928)
--------- --------
25
<PAGE>
Net Advisory Fee $86,917 $15,957
========= =========
Global changed its fiscal year end from December 31 to September 30,
and then from September 30 to October 31, during the periods covered by the
foregoing table. Accordingly, the investment advisory fees reported in the
foregoing table reflect for Global, the period from January 1, 1994 through
September 30, 1994, the fiscal year ended September 30, 1995 and one month
period ended October 31, 1995.
In addition, Emerging Markets and International Equity commenced
operations on September 6, 1994 and September 2, 1994, respectively. Therefore,
the first year's figures set forth in the table above reflect for Emerging
Markets and International Equity investment advisory fees paid for the
period from commencement of operations through December 31, 1994. Emerging
Markets and International Equity then changed their fiscal year-end from
December 31 to October 31 during the periods covered by the foregoing table.
Accordingly, the investment advisory fees reported in the foregoing table
reflect for Emerging Markets and International Equity, the period from January
1, 1995 through October 31, 1995.
Marvin & Palmer Associates, Inc. earned sub-advisory fees from Emerging
Markets for the period from September 6, 1994 (commencement of operations) to
December 31, 1994, and the period from January 1, 1995 through October 31, 1995
of $23,133 and $87,463, respectively. Boston International Advisers, Inc. earned
sub-advisory fees from International Equity for the period from September 2,
1994 (commencement of operations) to December 31, 1994, and the period from
January 1, 1995 through October 31, 1995 of $23,505 and $116,844, respectively.
Expense Limitations
Each Adviser's fee will be reduced by, or the Adviser will reimburse
the Funds for any amount necessary to prevent such expenses (exclusive of taxes,
interest, brokerage commissions and extraordinary expenses, but inclusive of the
Adviser's fee) from exceeding the most restrictive of the expense limitations
imposed by state securities commissions of the states in which the Funds' shares
are then registered or qualified for sale. Reimbursement, when necessary, will
be made monthly in the same manner in which the advisory fee is paid. Currently
the most restrictive state expense limitation is 2.5% of the first $30,000,000
of the Fund's average daily net assets, 2% of the next $70,000,000 of such
assets and 1.5% of such assets in excess of $100,000,000.
Pursuant to the Sub-Advisory Agreements between FUNB and the
sub-advisers, in the event that the Adviser's fee is reduced in order to meet
the expense limitations established by certain states, the sub-advisory fee for
the sub-adviser to the affected Fund shall be reduced in accordance with the
mutual agreement of the Adviser and the sub-adviser.
In addition, each Adviser has in some instances voluntarily limited
(and may in the future limit) expenses of certain of the Funds. For further
information, refer to the expense information in the current Prospectus.
26
<PAGE>
The Investment Advisory Agreements and Sub-Advisory Agreements are
terminable, without the payment of any penalty, on sixty days' written notice,
by a vote of the holders of a majority of each Fund's outstanding shares, or by
a vote of a majority of each Trust's Trustees or by the respective Adviser. The
Investment Advisory Agreements will automatically terminate in the event of
their assignment. Each Investment Advisory Agreement provides in substance that
the Adviser shall not be liable for any action or failure to act in accordance
with its duties thereunder in the absence of willful misfeasance, bad faith or
gross negligence on the part of the Adviser or of reckless disregard of its
obligations thereunder. The Investment Advisory Agreement with respect to Global
was approved by the Fund's shareholders on June 23, 1994, became effective on
June 30, 1994, and will continue in effect until June 30, 1996, and thereafter
from year to year provided that its continuance is approved annually by a vote
of a majority of the Trustees of the Evergreen Equity Trust including a majority
of those Trustees who are not parties thereto or "interested persons" (as
defined in the 1940 Act) of any such party, 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 the Fund. The Investment Advisory Agreement with
respect to Global Leaders was approved by the sole shareholder of Global Leaders
on September 22, 1995. It became effective on September 29, 1995, and will
continue in effect until September 29, 1997, and thereafter, from year to year
provided that its continuance is approved annually by a vote of a majority of
the Trustees of the Evergreen Equity Trust including a majority of those
Trustees who are not parties thereto or "interested persons" (as defined in the
1940 Act) of any such party, 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 the Fund. With respect to Emerging Markets and International, the
Investment Advisory Agreement dated February 28, 1985 and amended from time to
time thereafter, and the Sub-Advisory Agreements dated July 28, 1994, were last
approved by the Trustees of Evergreen Investment Trust (formerly, First Union
Funds) on April 20, 1995 and each Agreement will continue from year to year with
respect to each Fund provided that such continuance is approved annually by a
vote of a majority of the Trustees of Evergreen Investment 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-advisers) 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.
27
<PAGE>
Although the investment objectives of the Funds are not the same, and
their investment decisions are made independently of each other, they rely upon
the same resources for investment advice and recommendations. Therefore, on
occasion, when a particular security meets the different investment objectives
of the various Funds, they may simultaneously purchase or sell the same
security. This could have a detrimental effect on the price and quantity of the
security available to each Fund. If simultaneous transactions occur, each
Adviser attempts to allocate the securities, both as to price and quantity, in
accordance with a method deemed equitable to each Fund and consistent with their
different investment objectives. In some cases, simultaneous purchases or sales
could have a beneficial effect, in that the ability of one Fund to participate
in volume transactions may produce better executions for that Fund.
Each Fund has adopted procedures under Rule 17a-7 of the 1940 Act to permit
purchase and sales transactions to be effected between each Fund and the other
registered investment companies for which either Evergreen Asset or FUNB act as
investment adviser, or between the Fund and any advisory clients of Evergreen
Asset, FUNB, Lieber, Marvin & Palmer or Boston International. 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.
Prior to July 7, 1995, Federated Administrative Services, a subsidiary
of Federated Investors, provided legal, accounting and other administrative
personnel and support services to each of the portfolios of Evergreen Investment
Trust. The Trust paid a fee for such services at the following annual rate: .15%
on the first $250 million average daily net assets of the Trust; .125% on the
next $250 million; .10% on the next $250 million and .075% on assets in excess
of $250 million. For the period from September 6, 1994 (commencement of
operations) to December 31, 1994, and from January 1, 1995 to July 7, 1995,
Emerging Markets incurred $15,890 and $3,922, respectively, in administrative
service costs, all of which was voluntarily waived. From September 2, 1994
(commencement of operations) to December 31, 1994 and from January 1, 1995 to
July 7, 1995, International incurred $16,438 and $16,062, respectively in
administrative service costs, all of which was voluntarily waived.
On July 7, 1995, Evergreen Asset commenced providing administrative
services to each of the portfolios of Evergreen Investment Trust. Evergreen
Asset provides administrative services to Emerging Markets, International and
Global Leaders for a fee based on the average daily net assets of each fund
administered by Evergreen Asset for which Evergreen Asset or FUNB also serve as
investment adviser, calculated daily and payable monthly at the following annual
rates: .050% on the first $7 billion; .035% on the next $3 billion; .030% on the
next $5 billion; .020% on the next $10 billion; .015% on the next $5 billion;
and .010% on assets in excess of $30 billion. For the period July 8, 1995
through October 31, 1995, Emerging Markets and International Equity incurred
$1,980 and $8,466 respectively in administration service costs, all of which was
voluntarily waived. Furman Selz Incorporated, an affiliate of the Distributor,
serves as sub-administrator to Emerging Markets, International and Global
Leaders and is
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entitled to receive a fee from each Fund calculated on the average daily net
assets of each Fund at a rate based 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 as of November, 30, 1995 were approximately $10.5
billion.
DISTRIBUTION PLANS
Reference is made to "Management of the Funds - Distribution Plans and
Agreements" in the Prospectus of each Fund offering Class A, Class B and Class C
shares 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 (except Global Leaders, which only offers Class Y shares) with respect to
each of their 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 for their review on a quarterly basis. Also, each
Plan provides that the selection and nomination of Trustees who are not
"interested persons" of each Trust (as defined in the 1940 Act) are committed to
the discretion of such disinterested Trustees then in office.
Each Adviser may from time to time and from its own funds or such other
resources as may be permitted by rules of the Securities and Exchange Commission
(the "SEC") make payments for distribution services to the Distributor; the
latter may in turn pay part or all of such compensation to brokers or other
persons for their distribution assistance.
Global commenced offering Class A, Class B and Class C shares on January 3,
1995. The Plans with respect to Global became effective on December 30, 1994 and
was initially approved by the sole shareholder of each Class of shares of the
Fund with respect to which a Plan was adopted on that date and by the unanimous
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vote of the Trustees of the Trust, including the disinterested Trustees voting
separately, at a meeting called for that purpose and held on December 13, 1994.
The Distribution Agreement between the Fund and the Distributor, pursuant to
which distribution fees are paid under the Plan by the Fund with respect to its
Class A, Class B and Class C shares was also approved at the December 13, 1994
meeting by the unanimous vote of the Trustees, including the disinterested
Trustees 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 of the
Trust 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 of the Trust who are not parties to the Agreement or
interested persons, as defined in the 1940 Act, of any such party (other than as
Trustees of the Trust) and who have no direct or indirect financial interest in
the operation of the Plan or any agreement related thereto.
Prior to July 8, 1995, Federated Securities Corp., a subsidiary of
Federated Investors, served as the distributor for Emerging Markets and
International as well as other portfolios of Evergreen Investment Trust. 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 approved on June 15, 1995 by the
unanimous vote of the Trustees including the disinterested Trustees voting
separately.
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 addition to the Plans, Emerging Markets and International have each
adopted a Shareholder Services Plan whereby shareholder servicing agents may
receive fees from the Fund for providing services which include, but are not
limited to, distributing prospectuses and other information, providing
shareholder assistance, and communicating or facilitating purchases and
redemptions of Class B and Class C shares of the Fund.
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In the event that a Plan or Distribution Agreement is terminated or not
continued with respect to one or more Classes of a Fund, (i) no distribution
fees (other than current amounts accrued but not yet paid) would be owed by the
Fund to the Distributor with respect to that Class or Classes, and (ii) the Fund
would not be obligated to pay the Distributor for any amounts expended under the
Distribution Agreement not previously recovered by the Distributor from
distribution services fees in respect of shares of such Class or Classes through
deferred sales charges.
All material amendments to any Plan or Distribution Agreement must be
approved by a vote of the Trustees of a Trust or the holders of the Fund's
outstanding voting securities, voting separately by Class, and in either case,
by a majority of the disinterested Trustees, cast in person at a meeting called
for the purpose of voting on such approval; and any Plan or Distribution
Agreement may not be amended in order to increase materially the costs that a
particular Class of shares of a Fund may bear pursuant to the Plan or
Distribution Agreement without the approval of a majority of the holders of the
outstanding voting shares of the Class affected. With respect to Emerging
Markets and International, amendments to the Shareholder Services Plan require a
majority vote of the disinterested Trustees but do not require a shareholders
vote. Any Plan, Shareholder Services Plan or Distribution Agreement may be
terminated (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 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.
Emerging Markets incurred distributions fees on behalf of Class A, B,
and C shares, respectively, of $505, $2,294, and $163, respectively, from
September 6, 1994 (commencement of operations) through December 31, 1994 and
incurred $2,083, $10,858, and $240, respectively, for the period January 1, 1995
through October 31, 1995.
International Equity incurred distribution fees on behalf on Class A,
B, and C shares, respectively, of $1,270, $8,718, and $281, respectively, from
September 2, 1994 (commencement of operations) through December 31, 1994 and
incurred $6,269, $40,874, and $1,422, respectively, for the period January 1,
1995 through October 31, 1995.
Global incurred distribution fees on behalf of Class A, B, and C
shares, of $165, $164, and $49, respectively, for the period February 10, 1995,
February 8, 1995, and February 9, 1995, respectively, (commencement of class
operations) through September 30, 1995 and incurred $16, $97, and $6,
respectively, for the period October 1, 1995 through October 31, 1995.
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Shareholder Services Plans - Emerging Markets and International Equity
Emerging Markets incurred shareholder services fees on behalf of Class
B and C shares, of $975 and $54, respectively, from September 6, 1994
(commencement of operations) through December 31, 1994 and incurred $3,620, and
$80, respectively, for the period January 1, 1995 through October 31, 1995.
International Equity incurred shareholder services fees on behalf of
Classes B, and C shares, of $2,906 and $93, respectively, from September 2, 1994
(commencement of operations) through December 31, 1994 and incurred $13, 624,
and $474, respectively, for the period January 1, 1995 through October 31, 1995.
ALLOCATION OF BROKERAGE
Decisions regarding each Fund's portfolio are made by its Adviser or,
in the case of Emerging Markets and International Equity, the sub-advisers,
subject to the supervision and control of the Trustees. Orders for the purchase
and sale of securities and other investments are placed by employees of the
Adviser or sub-advisers, 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 or sub-advisers. A Fund
will not effect any brokerage transactions with any broker or dealer affiliated
directly or indirectly with the Adviser or sub-advisers unless such transactions
are fair and reasonable, under the circumstances, to the Fund's shareholders.
Circumstances that may indicate that such transactions are fair or reasonable
include the frequency of such transactions, the selection process and the
commissions payable in connection with such transactions.
A substantial portion of the transactions in equity securities for each
Fund will occur on foreign 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
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commission paid by the issuer to the underwriter. Purchases or sales from
dealers will normally reflect the spread between the bid and ask price.
In selecting firms to effect securities transactions, the primary
consideration of each Fund shall be prompt execution at the most favorable
price. A Fund 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 Fund will also consider the availability of
statistical and investment data and economic facts and opinions helpful to the
Fund. The extent of receipt of these services would tend to reduce the expenses
for which the Adviser or its affiliates might otherwise have paid.
No Fund, other than Global, allocated brokerage commissions to firms in
exchange for research during the most recent fiscal year. Of the total brokerage
commissions paid by Global for its fiscal year ended September 30, 1995,
$410,113 or 77% and for the period October 1, 1995 through October 31, 1995,
$5,940 or 71% were allocated in exchange for best execution and research.
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 such Funds with respect to substantially all securities
transactions effected on the New York and American Stock Exchanges. In such
transactions, each Fund will seek the best execution at the most favorable price
while paying a commission rate no higher than that offered to other clients of
Lieber or that which can be reasonably expected to be offered by an unaffiliated
broker-dealer having comparable execution capability in a similar transaction.
However, no Fund will engage in transactions in which Lieber would be a
principal. While no Fund advised by Evergreen Asset contemplates any ongoing
arrangements with other brokerage firms, brokerage business may be given from
time to time to other firms. In addition, the Trustees have adopted procedures
pursuant to Rule 17e-1 under the 1940 Act to ensure that all brokerage
transactions with Lieber, as an affiliated broker-dealer, are fair and
reasonable.
Any profits from brokerage commissions accruing to Lieber as a result
of portfolio transactions for Global and Global Leaders 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 Global
during its last three fiscal years; (2) the amount and percentage thereof paid
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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:
One Month Twelve Months Nine Months
GLOBAL Ended Ended Ended
10/31/95 9/30/95 9/30/94
Total Brokerage $8,314 $532,714 $917,989
Commissions
Dollar Amount and % $2,374 $106,123 $174,137
paid to Lieber 29% 20% 19%
% of Transactions
Effected by Lieber 36% 31% 33%
Global changed its fiscal year end from December 31 to September 30,
and then from September 30 to October 31, during the periods covered by the
forgoing table. Accordingly, the commissions reported in the foregoing table
reflect for Global, the period from January 1, 1994 through September 30, 1994,
the fiscal year ended September 30, 1995, and the one month period ended October
31, 1995.
Global Leaders commenced investment operations on November 1, 1995.
Accordingly, no commissions for Global Leaders are included in the above table.
Emerging Markets and International Equity did not pay any commissions
to Lieber. Emerging Markets paid commissions on brokerage commissions for the
period from September 6, 1994 (commencement of operations) through December 31,
1994, and the period from January 1, 1995 through October 31, 1995, of $41532
and $60,543, respectively. International Equity paid commissions on brokerage
commissions for the period from September 2, 1994 (commencement of operations)
through December 31, 1994, and the period from January 1, 1995 through October
1, 1995 of $16,438 and $71,508, respectively.
ADDITIONAL TAX INFORMATION (See also "Taxes" in the Prospectus)
Each Fund other than Global Leaders has qualified and intends to continue
to qualify for and elect, and Global Leaders intends to qualify for and elect,
the tax treatment applicable to regulated investment companies ("RIC") under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code").
(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, (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
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thereto) held for less than three months; and (c)diversify its holdings so that,
at the end of each quarter of its taxable year, (i) at least 50% of the market
value of the Fund's total assets is represented by cash, U.S. government
securities and other securities limited in respect of any one issuer, to an
amount not greater than 5% of the Fund's total assets and 10% of the outstanding
voting securities of such issuer, and (ii) not more than 25% of the value of its
total assets is invested in the securities of any one issuer (other than U.S.
government securities and securities of other regulated investment companies).
By so qualifying, a Fund is not subject to Federal income tax if it timely
distributes its investment company taxable income and any net realized capital
gains. A 4% nondeductible excise tax will be imposed on a Fund to the extent it
does not meet certain distribution requirements by the end of each calendar
year. Each Fund anticipates meeting such distribution requirements.
Dividends paid by a Fund from investment company taxable income
generally will be taxed to the shareholders as ordinary income. Investment
company taxable income includes net investment income and net realized
short-term gains (if any). Any dividends received by a Fund from domestic
corporations will constitute a portion of the Fund's gross investment income. It
is anticipated that this portion of the dividends paid by a Fund (other than
distributions of securities profits) will qualify for the 70% dividends-received
deduction for corporations. Shareholders will be informed of the amounts of
dividends which so qualify.
Distributions of the excess of net long-term capital gain over net
short-term capital loss are taxable to shareholders (who are not exempt from
tax) as long-term capital gain, regardless of the length of time the shares of a
Fund have been held by such shareholders. Short-term capital gains distributions
are taxable to shareholders who are not exempt from tax as ordinary income. Such
distributions are not eligible for the dividends-received deduction. Any loss
recognized upon the sale of shares of a Fund held by a shareholder for six
months or less will be treated as a long-term capital loss to the extent that
the shareholder received a long-term capital gain distribution with respect to
such shares.
Distributions of investment company taxable income and any net
short-term capital gains will be taxable as ordinary income as described above
to shareholders (who are not exempt from tax), whether made in shares or in
cash. Shareholders electing to receive distributions in the form of additional
shares will have a cost basis for Federal income tax purposes in each share so
received equal to the net asset value of a share of a Fund on the reinvestment
date.
Distributions by each Fund result in a reduction in the net asset value
of the Fund's shares. Should a distribution reduce the net asset value below a
shareholder's cost basis, such distribution nevertheless would be taxable as
ordinary income or capital gain as described above to shareholders (who are not
exempt from tax), even though, from an investment standpoint, it may constitute
a return of capital. In particular, investors should be careful to consider the
tax implications of buying shares just prior to a distribution. The price of
shares purchased at that time includes the amount of the forthcoming
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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 gain or loss
will be treated as a capital gain or loss if the shares are capital assets in
the investor's hands and will be a long-term capital gain or loss if the shares
have been held for more than one year. Generally, any loss realized on a sale or
exchange will be disallowed to the extent shares disposed of are replaced within
a period of sixty-one days beginning thirty days before and ending thirty days
after the shares are disposed of. 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.
Special Tax Considerations
Each Fund maintains accounts and calculates income in U.S. dollars. In
general, gains or losses on the disposition of debt securities denominated in a
foreign currency that are attributable to fluctuations in exchange rates between
the date the debt security is acquired and the date of disposition, gains and
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losses attributable to fluctuations in exchange rates that occur between the
time the Fund accrues interest or other receivables or accrues expenses or other
liabilities denominated in a foreign currency and the time the Fund actually
collects such receivable or pays such liabilities, and gains and losses from the
disposition of foreign currencies and foreign currency forward contracts will be
treated as ordinary income or loss. These gains or losses increase or decrease,
respectively, the amount of the Fund's investment company taxable income
available to be distributed to its shareholders as ordinary income.
Each Fund's transactions in foreign currencies, forward contracts,
options and futures contracts (including options and futures contracts on
foreign currencies) are subject to special provisions of the Code that, among
other things, may affect the character of gains and losses of the Fund (i.e.,
may affect whether gains or losses are ordinary or capital), accelerate
recognition of income to the Fund and defer Fund losses. These rules could
therefore affect the character, amount and timing of distributions to
shareholders. These provisions also (a) require the Fund to mark-to-market
certain types of positions in its portfolio (i.e., treat them as if they were
closed out) and (b) may cause the Fund to recognize income without receiving
cash with which to pay dividends or make distributions in amounts necessary to
satisfy the distribution requirements for avoiding U.S. Federal income and
excise taxes. Each Fund will monitor its transactions, make appropriate tax
elections and make appropriate entries in its books and records when it acquires
any foreign currency, forward contract, option, futures contract or hedged
investment in order to mitigate the effect of these rules. The Funds anticipate
that their hedging activities will not adversely affect their regulated
investment company status.
Income received by a Fund from sources within various foreign countries
may be subject to foreign income tax. If more than 50% of the value of the
Fund's total assets at the close of its taxable year consists of the stock or
securities of foreign corporations, the Fund may elect to "pass through" to the
Fund's shareholders the amount of foreign income taxes paid by the Fund.
Pursuant to such election, shareholders would be required: (i) to treat a
proportionate share of dividends paid by the Fund which represent foreign source
income received by the Fund plus the foreign taxes paid by the Fund as foreign
source income; and (ii) either to deduct their pro-rata share of foreign taxes
in computing their taxable income, or to use it as a foreign tax credit against
Federal income taxes (but not both). No deduction for foreign taxes could be
claimed by a shareholder who does not itemize deductions.
Each Fund intends to meet for each taxable year the requirements of the
Code to "pass through" to its shareholders foreign income taxes paid if it is
determined by its Adviser to be beneficial to do so. There can be no assurance
that the Fund will be able to pass through foreign income taxes paid. Each
shareholder will be notified within 60 days after the close of each taxable year
of the Fund whether the foreign taxes paid by the Fund will "pass through" for
that year, and, if so, the amount of each shareholder's pro-rata share (by
country) of (i) the foreign taxes paid and (ii) the Fund's gross income from
foreign sources. Of course, shareholders who are not liable for Federal income
taxes, such as retirement plans qualified under Section 401 of the Code, will
not be affected by any such "pass through" of foreign tax credits.
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Each Fund may invest in certain entities that may qualify as "passive
foreign investment companies". Generally, the income of such companies may
become taxable to the Fund prior to the receipt of distributions, or,
alternatively, income taxes and interest charges may be imposed on the Fund on
"excess distributions" received by the Fund or on gain from the disposition of
such investments by the Fund. In addition, gains from the sale of such
investments held for less than three months will count toward the 30% of gross
income test described above. Each Fund will take steps to minimize income taxes
and interest charges arising form such investments, and will monitor such
investments to insure that the Fund complies with the 30% of gross income test.
Proposed tax regulations, if they become effective, will allow the Funds to mark
to market and recognize gains on such investments at each Fund's taxable year
end. The Funds would not be subject to income tax on these gains if they are
distributed subject to these proposed rules.
NET ASSET VALUE
The following information supplements that set forth in each Fund's
Prospectus under the subheading "How to Buy Shares - How the Funds Value Their
Shares" in the Section entitled "Purchase and Redemption of Shares".
The public offering price of shares of a Fund is its net asset value,
plus, in the case of Class A shares, a sales charge which will vary depending 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 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.
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
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certain circumstances, however, the per share net asset values of the Class B
and Class C shares may be lower than the per share net asset value of the Class
A shares (and, in turn, that of Class A shares may be lower than Class Y shares)
as a result of the greater daily expense accruals, relative to Class A and Class
Y shares, of Class B and Class C shares relating to distribution services fees
(and, with respect to Emerging Market and International shareholder service fee)
and, to the extent applicable, transfer agency fees and the fact that Class Y
shares bear no additional distribution, shareholder service or transfer agency
related fees. While it is expected that, in the event each Class of shares of a
Fund realizes net investment income or does not realize a net operating loss for
a period, the per share net asset values of the four classes will tend to
converge immediately after the payment of dividends, which dividends will differ
by approximately the amount of the expense accrual differential among the
Classes, there is no assurance that this will be the case. In the event one or
more Classes of a Fund experiences a net operating loss for any fiscal period,
the net asset value per share of such Class or Classes will remain lower than
that of Classes that incurred lower expenses for the period.
To the extent that any Fund invests in non-U.S. dollar denominated
securities, the value of all assets and liabilities will be translated into
United States dollars at the mean between the buying and selling rates of the
currency in which such a security is denominated against United States dollars
last quoted by any major bank. If such quotations are not available, the rate of
exchange will be determined in accordance with policies established by the Fund.
The Trustees will monitor, on an ongoing basis, a Fund's method of valuation.
Trading in securities on European and Far Eastern securities exchanges and
over-the-counter markets is normally completed well before the close of business
on each business day in New York. In addition, European or Far Eastern
securities trading generally or in a particular country or countries may not
take place on all business days in New York. Furthermore, trading takes place in
various foreign markets on days which are not business days in New York and on
which the Fund's net asset value is not calculated. Such calculation does not
take place contemporaneously with the determination of the prices of the
majority of the portfolio securities used in such calculation. Events affecting
the values of portfolio securities that occur between the time their prices are
determined and the close of the Exchange will not be reflected in a Fund's
calculation of net asset value unless the Trustees deem that the particular
event would materially affect net asset value, in which case an adjustment will
be made. Securities transactions are accounted for on the trade date, the date
the order to buy or sell is executed. Dividend income and other distributions
are recorded on the ex-dividend date, except certain dividends and distributions
from foreign securities which are recorded as soon as the Fund is informed after
the ex-dividend date.
PURCHASE OF SHARES
The following information supplements that set forth in each Fund's
Prospectus under the heading "Purchase and Redemption of Shares - How To Buy
Shares."
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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
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.
Alternative Purchase Arrangements
Each Fund (other than Global Leaders, which only offers Class Y shares)
issues four classes of shares: (i) Class A shares, which are sold to investors
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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) Class A,
Class B and Class C shares are subject to a Rule 12b-1 distribution fee, (II)
Class B and Class C shares of Emerging Markets and International are subject to
a shareholder service fee, (III) Class A shares bear the expense of the
front-end sales charge and Class B and Class C shares bear the expense of the
deferred sales charge, (IV) Class B shares and Class C shares each bear the
expense of a higher Rule 12b-1 distribution services fee and shareholder service
fee than Class A shares and, in the case of Class B shares, higher transfer
agency costs, (V) with the exception of Class Y shares, each Class of each Fund
has exclusive voting rights with respect to provisions of the Rule 12b-1 Plan
pursuant to which its distribution services (and, to the extent applicable,
shareholder service) fee is paid which relates to a specific Class and other
matters for which separate Class voting is appropriate under applicable law,
provided that, if the Fund submits to a simultaneous vote of Class A, Class B
and Class C shareholders an amendment to the Rule 12b-1 Plan that would
materially increase the amount to be paid thereunder with respect to the Class A
shares, the Class A shareholders and the Class B and Class C shareholders will
vote separately by Class, and (VI) only the Class B shares are subject to a
conversion feature. Each Class has different exchange privileges and certain
different shareholder service options available.
The alternative purchase arrangements permit an investor to choose the
method of purchasing shares that is most beneficial given the amount of the
purchase, the length of time the investor expects to hold the shares, and other
circumstances. Investors should consider whether, during the anticipated life of
their investment in the Fund, the accumulated distribution services (and, to the
extent applicable, shareholder service) fee and contingent deferred sales
charges on Class B shares prior to conversion, or the accumulated distribution
services (and, to the extent applicable, shareholder service) fee on Class C
shares, would be less than the front-end sales charge and accumulated
distribution services fee on Class A shares purchased at the same time, and to
what extent such differential would be offset by the higher return of Class A
shares. Class B and Class C shares will normally not be suitable for the
investor who qualifies to purchase Class A shares at the lowest applicable sales
charge. For this reason, the Distributor will reject any order (except orders
for Class B shares from certain retirement plans) for more than $2,500,000 for
Class B or Class C shares.
Class A shares are subject to a lower distribution services fee and no
shareholder service 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
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initially own fewer shares. Investors not qualifying for reduced front-end sales
charges who expect to maintain their investment for an extended period of time
might consider purchasing Class A shares because the accumulated continuing
distribution (and, to the extent applicable, shareholder service) charges on
Class B shares or Class C shares may exceed the front-end sales charge on Class
A shares during the life of the investment. Again, however, such investors must
weigh this consideration against the fact that, because of such front-end sales
charges, not all their funds will be invested initially.
Other investors might determine, however, that it would be more
advantageous to purchase Class B shares or Class C shares in order to have all
their funds invested initially, although remaining subject to higher continuing
distribution services (and, to the extent applicable, shareholder service) fees
and, in the case of Class B shares, being subject to a contingent deferred sales
charge for a seven-year period. For example, based on current fees and expenses,
an investor subject to the 4.75% front-end sales charge would have to hold his
or her investment approximately seven years for the Class B and Class C
distribution services (and, to the extent applicable, shareholders service)
fees, to exceed the front-end sales charge plus the accumulated distribution
services fee of Class A shares. In this example, an investor intending to
maintain his or her investment for a longer period might consider purchasing
Class A shares. This example does not take into account the time value of money,
which further reduces the impact of the Class B and Class C distribution
services (and, to the extent applicable, shareholder service) fees on the
investment, fluctuations in net asset value or the effect of different
performance assumptions.
Those investors who prefer to have all of their funds invested
initially but may not wish to retain Fund shares for the seven year period
during which Class B shares are subject to a contingent deferred sales charge
may find it more advantageous to purchase Class C shares.
With respect to each Fund, the Trustees have determined that currently
no conflict of interest exists between or among the Class A, Class B, Class C
and Class Y shares. On an ongoing basis, the Trustees, pursuant to their
fiduciary duties under the 1940 Act and state laws, will seek to ensure that no
such conflict arises.
Front-end Sales Charge Alternative--Class A Shares
The public offering price of Class A shares for purchasers choosing the
front-end sales charge alternative is the net asset value plus a sales charge as
set forth in the Prospectus for each Fund.
Shares issued pursuant to the automatic reinvestment of income
dividends or capital gains distributions are not subject to any sales charges.
The Fund receives the entire net asset value of its Class A shares sold to
investors. The Distributor's commission is the sales charge set forth in the
Prospectus for each Fund, less any applicable discount or commission "reallowed"
to selected dealers and agents. The Distributor will reallow discounts to
selected dealers and agents in the amounts indicated in the table in the
Prospectus. In this regard, the Distributor may elect to reallow the entire
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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
Emerging
Markets $7.90 $.39 10/31/95 $8.29
International $9.58 $.48 10/31/95 $10.06
Equity
Global $11.58 $.58 10/31/95 $12.16
Prior to January 3, 1995, shares of Global were offered exclusively on
a no-load basis and, accordingly, no underwriting commissions were paid in
respect of sales of shares of the Fund or retained by 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 commissions on behalf of Emerging Markets and International Equity were
paid to and retained by Federated Securities Corp, the principal underwriter of
the portfolios of Evergreen Investment Trust up to July 7, 1995, and
subsequently paid to and retained by Evergreen Funds Distributor (the
"Distributor") who, effective July 7, 1995, became the principal underwriter of
the portfolios of Evergreen Investment Trust.
Period From Period From Period From
July 7, 1995 January 1, September 6,
to October 31, 1995 to July 1994 to December
1995 6, 1995 31, 1994
Emerging Markets:
Commissions Received $4,835 $3,194 $11,000
Commissions Retained 561 388 ----
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Period From Period From Period From
July 7, 1995 January 1, September 2,
To October 31, 1995 to July 1994 to December
1995 6, 1995 31, 1994
International:
Commissions Received $24,198 $12,195 $6,000
Commissions Retained 2,958 1,470 $1,000
Investors choosing the front-end sales charge alternative may under
certain circumstances be entitled to pay reduced sales charges. The
circumstances under which such investors may pay reduced sales charges are
described below.
Combined Purchase Privilege. Certain persons may qualify for the sales
charge reductions by combining purchases of shares of one or more Evergreen
mutual funds other than money market funds into a single "purchase", if the
resulting "purchase" totals at least $100,000. The term "purchase" refers to:
(I) a single purchase by an individual, or to concurrent purchases, which in the
aggregate are at least equal to the prescribed amounts, by an individual, his or
her spouse and their children under the age of 21 years purchasing shares for
his, her or their own account(s); (ii) a single purchase by a trustee or other
fiduciary purchasing shares for a single trust, estate or single fiduciary
account although more than one beneficiary is involved; or (iii) a single
purchase for the employee benefit plans of a single employer. The term
"purchase" also includes purchases by any "company", as the term is defined in
the 1940 Act, but does not include purchases by any such company which has not
been in existence for at least six months or which has no purpose other than the
purchase of shares of a Fund or shares of other registered investment companies
at a discount. The term "purchase" does not include purchases by any group of
individuals whose sole organizational nexus is that the participants therein are
credit card holders of a company, policy holders of an insurance company,
customers of either a bank or broker-dealer or clients of an investment adviser.
A "purchase" may also include shares, purchased at the same time through a
single selected dealer or agent, of any Evergreen mutual fund. Currently, the
Evergreen mutual funds include:
Evergreen Fund
Evergreen Global Real Estate Equity Fund Evergreen Global Leaders Fund
Evergreen U.S. Real Estate Equity Fund The Evergreen Limited Market Fund,
Inc. Evergreen Growth and Income Fund Evergreen Total Return Fund Evergreen
American Retirement Fund Evergreen Small Cap Equity Income Fund Evergreen
Tax Strategic Foundation Fund Evergreen Short-Intermediate Municipal Fund
Evergreen Short-Intermediate Municipal Fund-CA Evergreen Tax Exempt Money
Market Fund Evergreen Money Market Fund
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Evergreen Foundation Fund
Evergreen Florida High Income Municipal Bond Fund
Evergreen Aggressive Growth Fund
Evergreen Balanced Fund*
Evergreen Utility Fund*
Evergreen Value Fund*
Evergreen U.S. Government Fund*
Evergreen Fixed Income Fund*
Evergreen Managed Bond Fund*
Evergreen Emerging Markets Growth Fund* Evergreen International Equity
Fund* Evergreen Treasury Money Market 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*
* Prior to July 7, 1995, each Fund was named "First Union" instead of
"Evergreen."
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 would be at the 3.00% rate
applicable to a single $300,000 purchase of shares of the Fund, rather than the
3.75% rate.
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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.
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 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. Current Class A
shareholders desiring to do so can obtain a form of Statement of Intention by
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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 income tax purposes except that no
loss will be recognized to the extent that the proceeds are reinvested in shares
of the Fund. The reinstatement privilege may be used by the shareholder only
once, irrespective of the number of shares redeemed or repurchased, except that
the privilege may be used without limit in connection with transactions whose
sole purpose is to transfer a shareholder's interest in the Fund to his or her
individual retirement account or other qualified retirement plan account.
Investors may exercise the reinstatement privilege by written request sent to
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 of the Trusts; present or former trustees of other investment companies
managed by the Advisers; officers, directors and present and full-time employees
of selected dealers or agents; or the spouse, sibling, direct ancestor or direct
descendant (collectively "relatives") of any such person; or any trust,
individual retirement account or retirement plan account for the benefit of any
such person or relative; or the estate of any such person or relative, if such
shares are purchased for investment purposes (such shares may not be resold
except to the Fund); (iii) certain employee benefit plans for employees of the
Advisers, the Distributor and their affiliates; (iv) persons participating in a
fee-based program, sponsored and maintained by a registered broker-dealer and
approved by the Distributor, pursuant to which such persons pay an asset-based
fee to such broker-dealer, or its affiliate or agent, for service in the nature
of investment advisory or administrative services. These provisions are intended
to provide additional job-related incentives to persons who serve the Funds or
work for companies associated with the Funds and selected dealers and agents of
the Funds. Since these persons are
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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
services fee (and, with respect to Emerging Markets and International Equity,
the shareholder service fee) enables the Fund to sell the Class B shares without
a sales charge being deducted at the time of purchase. The higher distribution
services fee (and, with respect to Emerging Markets and International Equity,
the shareholder service 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 seven 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.
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To illustrate, assume that an investor purchased 100 Class B shares at
$10 per share (at a cost of $1,000) and in the second year after purchase, the
net asset value per share is $12 and, during such time, the investor has
acquired 10 additional Class B shares upon dividend reinvestment. If at such
time the investor makes his or her first redemption of 50 Class B shares, 10
Class B shares will not be subject to charge because of dividend reinvestment.
With respect to the remaining 40 Class B shares, the charge is applied only to
the original cost of $10 per share and not to the increase in net asset value of
$2 per share. Therefore, of the $600 of the shares redeemed $400 of the
redemption proceeds (40 shares x $10 original purchase price) will be charged at
a rate of 4.0% (the applicable rate in the second year after purchase for a
contingent deferred sales charge of $16).
The contingent deferred sales charge is waived on redemptions of shares
(i) following the death or disability, as defined in the Code, of a shareholder,
or (ii) to the extent that the redemption represents a minimum required
distribution from an individual retirement account or other retirement plan to a
shareholder who has attained the age of 70-1/2.
Conversion Feature. At the end of the period ending seven years after
the end of the calendar month in which the shareholder's purchase order was
accepted, Class B shares will automatically convert to Class A shares and will
no longer be subject to a higher distribution services fee (and, with respect to
Emerging Markets and International, the shareholder service 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.
For purposes of conversion to Class A, Class B shares purchased through
the reinvestment of dividends and distributions paid in respect of Class B
shares in a shareholder's account will be considered to be held in a separate
sub-account. Each time any Class B shares in the shareholder's account (other
than those in the sub-account) convert to Class A, an equal pro-rata portion of
the Class B shares in the sub-account will also convert to Class A.
The conversion of Class B shares to Class A shares is subject to the
continuing availability of an opinion of counsel to the effect that (i) the
assessment of the higher distribution services fee (and, with respect to
Emerging Markets and International, shareholder service fee) and transfer agency
costs with respect to Class B shares does not result in the dividends or
distributions payable with respect to other Classes of a Fund's shares being
deemed "preferential dividends" under the Code, and (ii) the conversion of Class
B shares to Class A shares does not constitute a taxable event under Federal
income tax law. The conversion of Class B shares to Class A shares may be
suspended if such an opinion is no longer available at the time such conversion
is to occur. In that event, no further conversions of Class B shares would
occur, and shares might continue to be subject to the higher distribution
services fee (and, with respect to Emerging Markets and International,
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shareholder services fee)for an indefinite period which may extend beyond the
period ending eight 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 (and, with respect to
Emerging Markets and International, shareholder service 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 (and, with respect to Emerging Markets and International,
shareholder service 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)
Capitalization and Organization
The Evergreen Emerging Markets Growth Fund and Evergreen International
Equity Fund, which prior to July 7, 1995 were known as the First Union Emerging
Markets Growth Portfolio and First Union International Equity Portfolio, are
each separate series of Evergreen Investment Trust, a Massachusetts business
trust. On July 7, 1995, First Union Funds changed its name to Evergreen
Investment Trust. On December 14, 1992, The Salem Funds changed its name to
First Union Funds. The Evergreen Global Real Estate Equity Fund and Evergreen
Global Leaders Fund are each separate series of Evergreen Equity Trust (formerly
Evergreen Real Estate Equity Trust), a Massachusetts business trust. The
above-named Trusts are individually referred to in this Statement of Additional
Information as the "Trust" and collectively as the "Trusts".
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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.
Global and Global Leaders may issue an unlimited number of shares of
beneficial interest with a $0.0001 par value. Emerging Markets and International
may issue an unlimited number of shares of beneficial interest without par
value. All shares of these Funds have equal rights and privileges. Each share is
entitled to one vote, to participate equally in dividends and distributions
declared by the Funds and on liquidation to their proportionate share of the
assets remaining after satisfaction of outstanding liabilities. Shares of these
Funds are fully paid, nonassessable and fully transferable when issued and have
no pre-emptive, conversion or exchange rights. Fractional shares have
proportionally the same rights, including voting rights, as are provided for a
full share.
Under each Trust's Declaration of Trust, each Trustee will continue in
office until the termination of the Trust or his or her earlier death,
incapacity, resignation or removal. Shareholders can remove a Trustee upon a
vote of two-thirds of the outstanding shares of beneficial interest of the
Trust. Vacancies will be filled by a majority of the remaining Trustees, subject
to the 1940 Act. As a result, normally no annual or regular meetings of
shareholders will be held, unless otherwise required by the Declaration of Trust
of each Trust or the 1940 Act.
Shares have noncumulative voting rights, which means that the holders
of more than 50% of the shares voting for the election of Trustees can elect
100% of the Trustees if they choose to do so and in such event the holders of
the remaining shares so voting will not be able to elect any Trustees.
The Trustees of each Trust are authorized to reclassify and issue any
unissued shares to any number of additional series without shareholder approval.
Accordingly, in the future, for reasons such as the desire to establish one or
more additional portfolios of a Trust with different investment objectives,
policies or restrictions, additional series of shares may be created by one or
more Funds. Any issuance of shares of another series or class would be governed
by the 1940 Act and the law of the Commonwealth of Massachusetts. If shares of
another series of a Trust were issued in connection with the creation of
additional investment portfolios, each share of the newly created portfolio
would normally be entitled to one vote for all purposes. Generally, shares of
all portfolios would vote as a single series on matters, such as the election of
Trustees, that affected all portfolios in substantially the same manner. As to
matters affecting each portfolio differently, such as approval of the Investment
Advisory Agreement and changes in investment policy, shares of each portfolio
would vote separately.
In addition any Fund may, in the future, create additional classes of
shares which represent an interest in the same investment portfolio. Except for
the different distribution related and other specific costs borne by such
additional classes, they will have the same voting and other rights described
for the existing classes of each Fund.
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Procedures for calling a shareholders meeting for the removal of the
Trustees of each Trust, similar to those set forth in Section 16(c) of the 1940
Act will be available to shareholders of each Fund. The rights of the holders of
shares of a series of a Fund may not be modified except by the vote of a
majority of the outstanding shares of such series.
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 the Fund and the Distributor, the Fund has agreed to indemnify the
Distributor, in the absence of its willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations thereunder, against certain
civil liabilities, including liabilities under the Securities Act of 1933, as
amended.
Counsel
Sullivan & Worcester LLP, Washington, D.C., serves as counsel to the
Funds.
Independent Auditors
Price Waterhouse LLP has been selected to be the independent auditors
of Global and Global Leaders.
KPMG Peat Marwick LLP has been selected to be the independent auditors
of Emerging Markets and International.
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
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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 Global, the shares of the Fund outstanding prior to
January 3, 1995 have been reclassified as Class Y shares. The average annual
compounded total return for each Class of shares offered by the Funds for the
most recently completed one and five year fiscal periods and the period from
inception through October 31, 1995 is set forth in the table below.
From
Global 1 Year 5 Years 2/1/89
Ended Ended (inception)
10/31/95 10/31/95 to 10/31/95
Class A (14.05%) 7.18% 3.01%
Class B (14.43%) 7.84% 3.56%
Class C (11.01%) 8.14% 3.69%
Class Y ( 9.68%) 8.25% 3.77%
Emerging Ten Months From 9/6/94
Markets Ended (inception)
10/31/95 to 10/31/95
Class A (7.90%) (21.85%)
Class B (8.61%) (21.75%)
Class C (4.88%) (19.02%)
Class Y (3.06%) (18.30%)
International Ten Months From 9/6/94
Equity Ended (inception)
10/31/95 to 10/31/95
Class A (3.75%) (7.46%)
Class B (4.47%) (7.34%)
Class C ( .47%) (4.04%)
Class Y 1.25% (3.30%)
The performance numbers for Global 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.
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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 SEC yield formula) for
a given 30-day or one month period, net of expenses, by the average number of
shares entitled to receive distributions during the period, dividing this figure
by the Fund's net asset value per share at the end of the period and annualizing
the result (assuming compounding of income) in order to arrive at an annual
percentage rate.
The formula for calculating yield is as follows:
YIELD = 2[(a-b+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.
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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 each Fund for the thirty-day period ended October 31, 1995
for each Class of shares offered by the Funds is set forth in the table below:
10/31/95
Global
Class A 1.27%
Class B .51%
Class C .45%
Class Y 1.34%
Emerging Markets
Class A (.30%)
Class B (1.06%)
Class C (1.05%)
Class Y ( .05%)
International
Class A 2.04%
Class B 1.29%
Class C 1.29%
Class Y 2.28%
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, Europe, Australia and Far East index, Morgan Stanley Capital
International Emerging Markets Free Index or any other commonly quoted
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index of common stock prices, which 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
All shareholder inquiries may be directed to the shareholder's broker
or to each Adviser at the address or telephone number shown on the front cover
of this Statement of Additional Information. This Statement of Additional
Information does not contain all the information set forth in the Registration
Statement filed by the Trusts 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 (other than Global Leaders') financial statements appearing
in their most current fiscal year Annual Report to shareholders and the report
thereon of the independent auditors appearing therein, namely Price Waterhouse
LLP (in the case of Global) or KPMG Peat Marwick LLP (in the case of Emerging
Markets and International) are incorporated by reference in this Statement of
Additional Information. The Annual Reports to Shareholders for each Fund, which
contain the referenced statements, are available upon request and without
charge. The initial audited financial statement of Global Leaders is part of
this Statement of Additional Information.
EVERGREEN GLOBAL LEADERS FUND
STATEMENT OF ASSETS AND LIABILITIES
September 7, 1995
Assets:
Cash $ 1,000
Deferred organizational expenses 44,500
Total assets 45,500
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Liabilities:
Organizational expenses payable 44,500
Net assets:
Paid-in Capital 1,000
Net assets $ 1,000
Net asset value per share (100 shares of
beneficial interest issued and outstanding) $10.00
See accompanying notes to financial statements.
EVERGREEN GLOBAL LEADERS FUND
NOTES TO FINANCIAL STATEMENTS
September 7, 1995
Note 1 - Organization
Evergreen Global Leaders Fund (the "Fund") is a newly organized, separate
investment series of Evergreen Equity Trust (the "Trust"), a Massachusetts
business trust. The Fund is registered under the Investment Company Act of 1940,
as amended (the "Act"), as an open-end, diversified management company. The Fund
has had no operations other than the sale of 100 shares of Class Y shares of
beneficial interest to Stephen A. Lieber, Chairman of Evergreen Asset Management
Corp. ("Evergreen Asset"). Evergreen Asset is a related party to Capital
Management Group of First Union Bank of North Carolina ("First Union"). First
Union has agreed to advance all of the costs incurred and to be incurred in
connection with the organization and initial registration of the Fund and the
Fund has agreed to reimburse First Union for such costs. These costs have been
deferred and will be amortized by the Fund over a period of benefit not to
exceed 60 months from the date the Fund commences operations.
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Note 2 - Investment Advisory and Administration Agreements
The Fund has agreed to enter into an investment advisory agreement with
Evergreen Asset pursuant to which Evergreen Asset will manage the Fund's
investments, subject to the authority of the Fund's Trustees. In consideration
of Evergreen Asset performing its obligations, the Fund will pay to Evergreen
Asset an investment advisory fee accrued daily and payable monthly, at an annual
rate of .95 of 1% of the Fund's daily net assets. Evergreen Asset has agreed to
limit the Fund's aggregate operating expenses to 1.50% of average net assets
until the Fund reaches net assets of $15 million.
Evergreen Asset has agreed to furnish the Fund with administrative services and
will supervise the Fund's daily business affairs. The Fund will pay Evergreen
Asset an administration fee accrued daily and payable monthly, at a rate based
on the average daily net assets of all of the Funds administered by Evergreen
Asset for which either Evergreen Asset or First Union serves as investment
adviser. The fee is 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,
.010% on assets in excess of $30 billion.
Furman Selz Incorporated will serve as sub-administrator and will pay the cost
of compensation of the officers of the Fund. The Fund will pay Furman Selz a fee
based on the average daily net assets of all of the Funds administered by
Evergreen Asset for which either Evergreen Asset or First Union serves as
investment adviser. The fee is calculated daily and payable monthly at the
following annual rates: .010% on the first $7 billion, .0075% on the next $3
billion, .005% on the next $15 billion, .004% on assets in excess of $25
billion. Evergreen Funds Distributor Inc., a wholly owned subsidiary of Furman
Selz, will be the Fund's distributor.
Report of Independent Accountants
To the Shareholder and Trustees of
Evergreen Global Leaders Fund
In our opinion, the accompanying statement of assets and liabilities presents
fairly, in all material respects, the financial position of Evergreen Global
Leaders Fund (the "Fund"), a series of Evergreen Real Estate Trust, at September
7, 1995, in conformity with generally accepted accounting principles. This
financial statement is the responsibility of the Fund's management; our
responsibility is to express an opinion on this financial statement based on our
audit. We conducted our audit of this financial statement in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statement is
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statement,
assessing the accounting principles used and significant estimates made by
management and evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for the opinion expressed
above.
Price Waterhouse LLP
1177 Avenue of the Americas
New York, N.Y. 10036
September 7, 1995
APPENDIX "A"
DESCRIPTION OF BOND RATINGS
Standard & Poor's Ratings Group. A Standard & Poor's corporate or
municipal bond rating is a current assessment of the credit worthiness of an
obligor with respect to a specific obligation. This assessment of credit
worthiness may take into consideration obligers such as guarantors,
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insurers or lessees. The debt rating is not a recommendation to purchase, sell
or hold a security, inasmuch as it does not comment as to market price or
suitability for a particular investor.
The ratings are based on current information furnished to Standard &
Poor's by the issuer or obtained by Standard & Poor's from other sources it
considers reliable. Standard & Poor's does not perform any audit in connection
with the ratings and may, on occasion, rely on unaudited financial information.
The ratings may be changed, suspended or withdrawn as a result of changes in,
unavailability of such information, or for other circumstances.
The ratings are based, in varying degrees, on the following
considerations:
1. Likelihood of default-capacity and willingness of the obligor as to
the timely payment of interest and repayment of principal in accordance with the
terms of the obligation.
2. Nature of and provisions of the obligation.
3. Protection afforded by, and relative position of, the obligation in
the event of bankruptcy, reorganization or their arrangement under the laws of
bankruptcy and other laws affecting creditors' rights.
AAA - This is the highest rating assigned by Standard & Poor's to a
debt obligation and indicates an extremely strong capacity to pay interest and
repay any principal.
AA - Debt rated AA also qualifies as high quality debt obligations.
Capacity to pay interest and repay principal is very strong and in the majority
of instances they differ from AAA issues only in small degree.
A - Debt rated A has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.
BBB - Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB, B, CCC, CC, C - Debt rated BB, B, CCC, CC and C is regarded, on a
balance, as predominantly speculative with respect to capacity to pay interest
and repay principal in accordance with the terms of the obligation.
BB indicates the lowest degree of speculation and C the highest degree
of speculation. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
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exposures to adverse conditions.
BB - Debt rated BB has less near-term vulnerability to default than
other speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could lead
to inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB - rating.
B - Debt rated B has greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The B rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
BB or BB- rating.
CCC - Debt rated CCC has a currently indefinable vulnerability to
default, and is dependent upon favorable business, financial and economic
conditions to meet timely payment of interest and repayment of principal. In the
event of adverse business, financial or economic conditions, it is not likely to
have the capacity to pay interest and repay principal. The CCC rating category
is also used for debt subordinated to senior debt that is assigned an actual or
implied B or B- rating.
CC - The rating CC is typically applied to debt subordinated to senior
debt that is assigned an actual or implied CCC rating.
C - The rating C is typically applied to debt subordinated to senior
debt which is assigned an actual or implied CCC- debt rating. The C rating may
be used to cover a situation where a bankruptcy petition has been filed, but
debt service payments are continued.
C1 - The rating C1 is reserved for income bonds on which no interest is
being paid.
D - Debt rated D is in payment default. It is used when interest
payments or principal payments are not made on a due date even if the applicable
grace period has not expired, unless Standard & Poor's believes that such
payments will be made during such grace periods; it will also be used upon a
filing of a bankruptcy petition if debt service payments are jeopardized.
Plus (+) or Minus (-) - To provide more detailed indications of credit
quality, the ratings from AA to CCC may be modified by the addition of a plus or
minus sign to show relative standing within the major rating categories.
NR - indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that Standard & Poor's
does not rate a particular type of obligation as a matter of policy. Debt
obligations of issuers outside the United States and its territories are rated
on the same basis as domestic corporate and municipal issues. The ratings
measure the credit worthiness of the obligor but do not take into account
currency exchange and related uncertainties.
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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
rating symbols of Moody's Investors Service Inc. and their meanings follows:
Aaa - Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt edge". Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
Aa - Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuations of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.
A - Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate, but elements
may be present which suggest a susceptibility to impairment sometime in the
future.
Baa - Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Some bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
NOTE: Bonds within the above categories which possess the strongest investment
attributes are designated by the symbol "1" following the rating.
Ba - Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
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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 Inc.: AAA -- highest credit quality, with an
exceptionally strong ability to pay interest and repay principal; AA -- very
high credit quality, with very strong ability to pay interest and repay
principal; A -- high credit quality, considered strong as regards principal and
interest protection, but may be more vulnerable to adverse changes in economic
conditions and circumstances. The indicators "+" and "-" to the AA, A and BBB
categories indicate the relative position of credit within those rating
categories.
DESCRIPTION OF MUNICIPAL NOTE RATINGS
A Standard & Poor's note rating reflects the liquidity concerns and
market access risks unique to notes. Notes due in three years or less will
likely receive a note rating. Notes maturing beyond three years will most likely
receive a long-term debt rating. The following criteria will be used in making
that assessment.
o Amortization schedule (the larger the final maturity relative to other
maturities the more likely it will be treated as a note).
o Source of Payment (the more dependent the issue is on the market for its
refinancing, the more likely it will be treated as a note.) Note rating symbols
are as follows:
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o SP-1 Very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics will be given a
plus (+) designation.
o SP-2 Satisfactory capacity to pay principal and interest.
o SP-3 Speculative capacity to pay principal and interest.
Moody's Short-Term Loan Ratings - Moody's ratings for state and
municipal short-term obligations will be designated Moody's Investment Grade
(MIG). This distinction is in recognition of the differences between short-term
credit risk and long-term risk. Factors affecting the liquidity of the borrower
are uppermost in importance in short-term borrowing, while various factors of
major importance in bond risk are of lesser importance over the short run.
Rating symbols and their meanings follow:
o MIG 1 - This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or demonstrated
broad-based access to the market for refinancing.
o MIG 2 - This designation denotes high quality. Margins of protection are
ample although not so large as in the preceding group.
o MIG 3 - This designation denotes favorable quality. All security elements
are accounted for but this is lacking the undeniable strength of the preceding
grades. Liquidity and cash flow protection may be narrow and market access for
refinancing is likely to be less well established.
o MIG 4 - This designation denotes adequate quality. Protection commonly
regarded as required of an investment security is present and although not
distinctly or predominantly speculative, there is specific risk.
COMMERCIAL PAPER RATINGS
Moody's Investors Service, Inc.: Commercial paper rated "Prime" carries the
smallest degree of investment risk. The modifiers 1, 2, and 3 are used to denote
relative strength within this highest classification.
Standard & Poor's Ratings Group: "A" is the highest commercial paper
rating category utilized by Standard & Poor's Ratings Group which uses the
numbers 1+, 1, 2 and 3 to denote relative strength within its "A"
classification.
Duff & Phelps Inc.: Duff 1 is the highest commercial paper rating
category utilized by Duff & Phelps which uses + or - to denote relative strength
within this classification. Duff 2 represents good certainty of timely payment,
with minimal risk factors. Duff 3 represents satisfactory protection factors,
with risk factors larger and subject to more variation.
Fitch Investors Service Inc.: F-1+ -- denotes exceptionally strong
credit quality
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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.
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*******************************************************************************
PART C. OTHER INFORMATION.
Item 24. Financial Statements and Exhibits:
(a) Financial Statements
Included in Part A of this Registration Statement:
Financial Highlights for Evergreen Emerging Markets Growth
Fund for the fiscal period from September 6, 1994
(commencement of operations) through December 31, 1994 and the
fiscal period ended October 31, 1995.
Financial Highlights for Evergreen International Equity Fund
for the fiscal period from September 2, 1994 (commencement of
operations) through December 31, 1994 and the fiscal period
ended October 31, 1995.
Included in Part B of this Registration Statement:*
Statement of Investments for Evergreen Emerging Markets Growth
Fund and Evergreen International Equity Fund as of October 31,
1995
Statement of Assets and Liabilities for Evergreen Emerging
Markets Growth Fund and Evergreen International Equity Fund as
of October 31, 1995.
Statement of Operations of Evergreen Emerging Markets Growth
Fund and Evergreen International Equity Fund for the year
ended October 31, 1995.
Statement of Changes in Net Assets of Evergreen Emerging
Markets Growth Fund for the fiscal period from September 6,
1994 (commencement of operations) through December 31, 1994
and the fiscal period ended October 31, 1995.
Statement of Changes in Net Assets of Evergreen International
Equity Fund for the fiscal period from September 2, 1994
(commencement of operations) through December 31, 1994 and the
fiscal period ended October 31, 1995.
Financial Highlights of Evergreen Emerging Markets Growth Fund
and Evergreen International Equity Fund.
Notes to Financial Statements of Evergreen Emerging Markets
Growth Fund and Evergreen International Equity Fund.
Report of Independent Auditors of Evergreen Emerging Markets
Growth Fund and Evergreen International Equity Fund
-----------------------------------------------------------
* Incorporated by reference to the Annual Report to
Shareholders for the fiscal year ended October 31, 1995,
which has previously been filed with the Commission, and by
reference to the Annual Report of Registrant on Form N-SAR
for the aforementioned period.
(b) Exhibits:
(1) Copy of Declaration of Trust of the Registrant (1); (i)
Copy of Amendment to Declaration of Trust (14); (ii)
Copy of Form of Amendment to Declaration of Trust(22)
(2) Copy of By-Laws of the Registrant (1);
(i) Copy of amendment to the By-Laws of the
Registrant (3);
(3) Not applicable;
(4) Copy of Specimen Certificate for Shares of Beneficial
Interest of the Registrant (19);
(5) Conformed copy of Investment Advisory Contract of the
Registrant (21);
(i) Conformed copy of Sub-Advisory Agreement
between First Union National Bank of North
Carolina and Marvin & Palmer Associates, Inc.(21);
(ii) Conformed copy of Sub-Advisory Agreement
between First Union National Bank of North
Carolina and Boston International
Advisors, Inc. (21);
(6) Conformed copy of Distributor's Contract of the
Registrant (22);
(i) Conformed copy of the previous Distributors
Contract of the Registrant (21);
(7) Conformed copy of Administrative Agreement of the
Registrant (22);
(7a) Conformed copy of Sub-Administrator Agreement of the
Registrant (22);
(8) Conformed copy of Custodian Contract of the
Registrant (21);
(9) Conformed copy of the Fund Accounting and Shareholder
Recordkeeping Agreement of the Registrant (20);
(i) Conformed copy of the previous
Transfer Agency and Service Agreement of the
Registrant (21);
(ii) Conformed copy of Shareholder Services
Plan (21);
(iii) Conformed copy of Shareholder Services
Agreement (21);
(10) Copy of Opinion and Consent of Counsel as to
legality of shares being registered (8);
(11) Copy of Consent of Independent Auditors; + (12) Not
applicable; (13) Copy of Initial Capital Understanding (1);
(14) Model Plans used in establishment of Retirement
Plans (2);
(15) (i) Distribution Plan;
(a) Copy of First Union Emerging Markets
Growth Portfolio and First Union
International Equity Portfolio -
Class B Investment Shares (21);
(i) Copy of First Union South
Carolina Municipal Bond Portfolio -
Class B Investment Shares (21);
(ii) Copy of First Union Virginia
Municipal Bond Portfolio, First Union
Georgia Municipal Bond Portfolio,
First Union Florida Municipal Bond
Portfolio - Class B Investment Shares (21);
(iii) Copy of First Union Utility
Portfolio - Class B Investment Shares (21);
(b) First Union Funds - Class C
Investment Shares (17);
(i) Conformed copy of Exhibit to
Class C Investment Shares (21);
(c) Conformed copy of First Union Funds -
Class D Investment Shares (21);
(ii) Rule 12b-1 Agreement (14);
(iii) Copy of Amendment Number 5 to 12b-1 Agreement(21);
(16) Copy of Schedules for Computation of Fund
Performance Data (20.);
(i) Copy of Schedules for Computation of Fund
Performance Data for Evergreen Emerging
Markets Growth Fund and Evergreen
International Equity Fund; +
(17) Copy of Financial Data Schedules; + (18) Not applicable;
(19) Conformed copy of the Power of Attorney (19).
+ All exhibits have been filed electronically.
(1) Response is incorporated by reference to Registrant's Initial
Registration Statement on Form N-1A. (File Nos. 2-94560 and 811-4154).
(2) Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 1 on Form N-1A (File Nos. 2-94560 and 811-4154).
(5) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 11 filed on July 30, 1990 on Form N-1A (File Nos. 2-94560
and 811-4154).
(11) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 20 filed on August 26, 1992 on Form N-1A (File Nos. 2-
94560 and 811-4154).
(14) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 28 filed on April 15, 1993 on Form N-1A (File Nos. 2-
94560 and 811-4154).
(15) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 29 filed on April 30, 1993 on Form N-1A (File Nos. 2-
94560 and 811-4154).
(16) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 31 filed on June 14, 1993 on Form N-1A (File Nos. 2-94560
and 811-4154).
(17) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 32 filed on November 2, 1993 on Form N-1A (File Nos. 2-
94560 and 811-4154).
(18) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 33 filed on December 29, 1993 on Form N-1A (File Nos. 2-
94560 and 811-4154).
(19) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 35 filed on February 25, 1994 on Form N-1A (File Nos. 2-
94560 and 811-4154).
(20) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 36 filed on June 28, 1994 on Form N-1A (File Nos. 2-94560
and 811-4154).
(21) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 38 filed on December 30, 1994 on Form N-1A (File Nos. 2-
94560 and 811-4154).
(22) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 40 filed on July 6, 1995 on Form N-14 (File Nos. 2-94560
and 811-4154).
Item 25. Persons Controlled by or Under Common Control with Registrant:
None
Item 26. Number of Holders of Securities:
Number of Record Holders
Title of Class as of November 30, 1995
Shares of beneficial interest
(no par value)
First Union Emerging Markets Growth Fund
a) Y Shares 16
b) Class A Investment Shares 376
c) Class B Investment Shares 479
d) Class C Investment Shares 22
First Union International Equity Fund
a) Y Shares 17
b) Class A Investment Shares 1,080
c) Class B Investment Shares 1,736
d) Class C Investment Shares 56
Item 27. Indemnification: (1.)
- --------------------------------------
(1.) Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 35 filed on February 25, 1994 on Form N-1A
(File Nos. 2-94560 and 811-4154).
Item 28. Business and 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.
The Trustees and principal executive officers of the Fund's
Investment Adviser, and the Directors of the Fund's Manager, are
set forth in the following tables:
FIRST UNION NATIONAL BANK OF NORTH CAROLINA
BOARD OF DIRECTORS
Ben Mayo Boddie Raymond A. Bryan, Jr.
Chairman & CEO Chairman & CEO
Boddie-Noell Enterprises, Inc. T.A. Loving Company
P.O. Box 1908 P.O. Drawer 919
Rocky Mount, NC 27802 Goldsboro, NC 27530
John F.A.V. Cecil John W. Copeland
President President
Biltmore Dairy Farms, Inc. Ruddick Corporation
P.O. Box 5355 2000 Two First Union Center
Asheville, NC 28813 Charlotte, NC 28282
John Crosland, Jr. J. William Disher
Chairman of the Board Chairman & President
The Crosland Group, Inc. Lance Incorporated
135 Scaleybark Road P.O. Box 32368
Charlotte, NC 28209 Charlotte, NC 28232
Frank H. Dunn Malcolm E. Everett, III
Chairman and CEO President
First Union National Bank First Union National Bank
of North Carolina of North Carolina
One First Union Center 310 S. Tryon Street
Charlotte, NC 28288-0006 Charlotte, NC 28288-0156
James F. Goodmon Shelton Gorelick
President & Chief President
Executive Officer SGIC, Inc.
Capitol Broadcasting 741 Kenilworth Ave., Suite 200
Company, Inc. Charlotte, NC 28204
2619 Western Blvd.
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
Daniel W. Mathis Earl N. Phillips, Jr.
Vice Chairman President
First Union National Bank First Factors Corporation
of North Carolina P.O. Box 2730
One First Union Center High Point, NC 27261
Charlotte, NC 28288-0009
J. Gregory Poole, Jr. John P. Rostan, III
Chairman & President Senior Vice President
Gregory Poole Equipment Company Waldensian Bakeries, Inc.
P.O. Box 469 P.O. Box 220
Raleigh, NC 27602 Valdese, NC 28690
Nelson Schwab, III Charles M. Shelton, Sr.
Chairman & CEO Chairman & CEO
Paramount Parks The Shelton Companies, Inc
8720 Red Oak Boulevard, Suite 315 3600 One First Union Center
Charlotte, NC 28217 Charlotte, NC 28202
George Shinn Harley F. Shuford, Jr.
Owner and Chairman President and CEO
Shinn Enterprises, Inc. Shuford Industries
One Hive Drive P.O. Box 608
Charlotte, NC 28217 Hickory, NC 28603
FIRST UNION NATIONAL BANK OF NORTH CAROLINA
EXECUTIVE OFFICERS
James Maynor, President, First Union Mortgage Corporation; Austin
A. Adams, Executive Vice President; Howard L. Arthur, Senior Vice
President; Robert T. Atwood, Executive Vice President and Chief
Financial Officer; Marion A. Cowell, Jr., Executive Vice
President, Secretary and General Counsel; Edward E. Crutchfield,
Jr., Chairman, CEO, First Union Corporation; Frank H. Dunn, Jr.,
Chairman and CEO; Malcolm E. Everett, III, President; John R.
Georgius, President, First Union Corporation; James Hatch, Senior
Vice President and Corporate Controller; Don R. Johnson,
Executive Vice President; Mark Mahoney, Senior Vice President;
Barbara K. Massa, Senior Vice President; Daniel W. Mathis, Vice
Chairman; H. Burt Melton, Executive Vice President; Malcolm T.
Murray, Jr., Executive Vice President; Alvin T. Sale, Executive
Vice President; Louis A. Schmitt, Jr., Executive Vice President;
Ken Stancliff, Senior Vice President and Corporate Treasurer;
Richard K. Wagoner, Executive Vice President and General Fund
Officer.
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.
(b) For a description of the other business of the sub-adviser to
Evergreen Emerging Markets Growth Fund ("Emerging Markets Growth
Fund"), see the section entitled "Management of the Funds-Sub-
Advisers-Emerging Markets Growth Fund" in Part A.
The Principals and principal executive officers of the Emerging
Markets Growth Fund's Sub-Adviser, and the Members of the
Advisory Board of the Sub-Adviser, are set forth in the following
tables. Unless otherwise noted, the position listed under Other
Substantial Business, Profession, Vocation or Employment is with
Marvin & Palmer Associates, Inc.:
MARVIN & PALMER ASSOCIATES, INC.
Other Substantial
Position With Business, Profession,
Name the Sub-Adviser Vocation or Employment
---- --------------- ----------------------
David F. Marvin, CFA Chairman Portfolio Manager-
Americas & Currency
Stanley Palmer, CFA President Portfolio Manager-
Non-U.S.
Karen T. Buckley Senior Vice President and
Chief Financial Officer
Jon A. Stiklorius Senior Vice President
Eugene J. Mulvaney Senior Vice President
Terry B. Mason Vice President Portfolio Manager-
Non-U.S.
Jay F. Middleton Vice President Portfolio Manager-
Americas
Todd D. Marvin Vice President Portfolio Manager-
Non-U.S.
William Nord Vice President
Robert P. Sanna Vice President
David L. Schaen Vice President
Raymond J. Deschenes Vice President
ADVISORY BOARD MEMBERS
Irving S. Shapiro Paul Craig Roberts
William C. Lickle The Hon. Charles J. Pilliod, Jr.
Charles L. Brown Dr.-Ing. Klaus G. Lederer
Alexander F. Giacco The Rt. Hon. Lord Moore, P.C.
(c) For a description of the other business of the sub-adviser to
Evergreen International Equity Fund ("International Equity
Fund"), see the section entitled "Management of the Union
Funds-Sub-Advisers-International Equity Fund" in Part A.
The Trustees and principal executive officers of the
International Equity Fund's Sub-Adviser, and the Directors and
officers of the Fund's Sub-Adviser, are set forth in the
following tables. Unless otherwise noted, the position listed
under Other Substantial Business, Profession, Vocation or
Employment is with Boston International Advisors, Inc.:
BOSTON INTERNATIONAL ADVISORS, INC.
Other Substantial
Position With Business, Profession,
Name the Sub-Adviser Vocation or Employment
---- --------------- ----------------------
Lyle H. Davis President and
Managing Director
Robert E. Denneen, Jr. Vice President Portfolio Manager
Dennis J. Fogarty Vice President Research Associate
Maureen A. Ghublikian Managing Director
Norman H. Meltz Vice President &
Managing Director
Patricia A. Thompson Vice President &
Treasurer
David A. Umstead Managing Director
BOARD OF DIRECTORS
George A. Chamberlain, III Philip A. Cooper
Lyle H. Davis Norman H. Meltz
David A. Umstead
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:
The 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
The Evergreen 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 Fixed Income Fund Evergreen Managed 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
Item 30. Location of Accounts and Records:
All accounts and records required to be maintained by Section 31(a) of the
Investment Company Act of 1940 and Rules 31a-1 through 31a-3 promulgated
thereunder are maintained at one of the following locations:
Evergreen Asset Management Corp., 2500 Westchester Avenue, Purchase NY 10577
First Union National Bank of North Carolina One First Union Center,
301 S. College Street, Charlotte, North Carolina 28288
State Street Bank and Fund Company P.O. Box 8609, Boston, MA 02266-8609
Item 31. Management Services: Not applicable.
Item 32. Undertakings:
Registrant hereby undertakes to comply with the provisions of
Section 16(c) of the 1940 Act with respect to the removal of
Trustees and the calling of special shareholder meetings by
shareholders.
Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest
annual report to shareholders, upon request and without charge.
- --------------------
As required by the Securities Act of 1933, this Registration has been signed
on behalf of the Registrant, in the City of New York and the State of New York,
on the 29th day of December, 1995.
SIGNATURES
Evergreen Investment Trust
by /s/John J. Pileggi
-----------------------------
John J. Pileggi, Vice President
Each person whose signature appears below hereby authorized John J.
Pileggi, Joan V. Fiore and Joseph J. McBrien, as attorney-in-fact, to sing on
his behalf, individually and in each capacity stated below, any amendments to
this Registration Statement and to file the same, with all exhibits thereto,
with the Securities and Exchange Commission and any state securities commission.
As required by the Securities Act of 1933, this 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
- ------------------------------- Vice President and December 29, 1995
John J. Pileggi Assistant Treasurer
/s/ James S. Howell
- ------------------------------- Trustee December 29, 1995
James S. Howell
/s/ Gerald M. McDonnell
- ------------------------------- Trustee December 29, 1995
Gerald M. McDonnell
/s/ Thomas L. McVerry
- ------------------------------- Trustee December 29, 1995
Thomas L. McVerry
/s/ William Walt Pettit
- ------------------------------- Trustee December 29, 1995
William Walt Pettit
/s/ Russell A. Salton, III, M.D
- ------------------------------- Trustee December 29, 1995
Russell A. Salton, III, M.D
/s/ Michael S. Scofield
- ------------------------------- Trustee December 29, 1995
Michael S. Scofield
<PAGE>
JAMES P. WALLIN, ESQ.
2500 WESTCHESTER AVENUE
Purchase, New York 10577
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re Post-Effective Amendment of
EVERGREEN INVESTMENT TRUST
Registration No. 2-94560; Investment Company File No.811-4154
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. 43 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
11 Consent of Independent
Accountants
17 Financial Data Schedules
<PAGE>
Exhibit 11 under Form N-1A
Exhibit 23 under Item 601/Reg
INDEPENDENT AUDITORS' CONSENT
The Board of Trustees
First Union Funds:
With respect to the Post-Effective Amendment No. 43 to the Registration
Statement on Form N-1A of Evergreen Investment Trust, formerly First Union
Funds, we consent to the use of our reports, dated December 8, 1995,
incorporated by reference and to the references to our Firm under the headings
"Financial Highlights" in Part A of the Registration Statement and "Financial
Statements" in Part B of the Registration Statement.
* Evergreen Emerging Markets Growth Fund
* Evergreen International Equity Fund
By: KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Pittsburgh, Pennsylvania
December 27, 1995
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<INVESTMENTS-AT-VALUE> 12,640,950
<RECEIVABLES> 134,772
<ASSETS-OTHER> 50,147
<OTHER-ITEMS-ASSETS> 0
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<PAID-IN-CAPITAL-COMMON> 14,140,486
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<SHARES-COMMON-PRIOR> 194,720
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<OVERDISTRIBUTION-GAINS> 0
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<EXPENSES-NET> 145,558
<NET-INVESTMENT-INCOME> 67,179
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<NET-CHANGE-FROM-OPS> (106,668)
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<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 95,843
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<NET-CHANGE-IN-ASSETS> 4,043,822
<ACCUMULATED-NII-PRIOR> 3,717
<ACCUMULATED-GAINS-PRIOR> (103,062)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
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<AVERAGE-NET-ASSETS> 2,009,078
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<PER-SHARE-NII> 0.01
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<PER-SHARE-DIVIDEND> 0.00
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<PER-SHARE-NAV-END> 7.85
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<AVG-DEBT-PER-SHARE> 0
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<SHARES-COMMON-PRIOR> 10,933
<ACCUMULATED-NII-CURRENT> 100,254
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<ACCUMULATED-NET-GAINS> (1,775,146)
<OVERDISTRIBUTION-GAINS> 0
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<REALIZED-GAINS-CURRENT> (1,643,892)
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<ACCUMULATED-NII-PRIOR> 3,717
<ACCUMULATED-GAINS-PRIOR> (103,062)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 130,542
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 339,592
<AVERAGE-NET-ASSETS> 52,631
<PER-SHARE-NAV-BEGIN> 8.16
<PER-SHARE-NII> 0.02
<PER-SHARE-GAIN-APPREC> (0.34)
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