Registration No. 2-40357
- -------------------------------------------------------------------------------
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. 29 X
and/or
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 29 X
(Check appropriate box or boxes)
--------------------
EVERGREEN TRUST
(Exact name of registrant as specified in charter)
2500 Westchester Avenue
Purchase, N.Y. 10577
(Address of Principal Executive Offices)
(Registrant's Telephone Number, Including Area Code (914) 694-2020)
Joseph J. McBrien, Esq.
Evergreen Asset Management Corp.
2500 Westchester Avenue, Purchase, N.Y. 10577
(Name and address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box)
X Immediately upon filing pursuant to paragraph (b) or
on (date) pursuant to paragraph (b) or
60 days after filing pursuant to paragraph (a)(i) or
on (date) pursuant to paragraph (a)(i) or
75 days after filing pursuant to paragraph (a)(ii) or
on (date) pursuant to paragraph (a)(ii) of Rule 485
If appropriate, check the following box:
This post-effective amendment designates a new effective date for a
previously filed post-effective amendment
60 days after filing pursuant to paragraph (a)(i)
on (date) pursuant to paragraph (a)(i)
Registrant has registered an indefinite number of shares under the Securities
Act of 1933 pursuant to Rule 24f-2 under the Investment Company Act of 1940.
Registrant's Rule 24f-2 notice for its fiscal year ended September 30, 1994 was
filed on or about November 28, 1994.
<PAGE>
CROSS REFERENCE SHEET
(as required by Rule 481(a))
N-1A Item No. Location in Prospectus(es)
Part A
Item 1. Cover Page Cover Page
Item 2. Synopsis and Fee Table Overview of the Fund(s);
Expense Information
Item 3. Condensed Financial Information Financial Highlights
Item 4. General Description of Registrant Cover Page; Description of
the Fund(s);
General Information
Item 5. Management of the Fund Management of the Fund(s);
General Information
Item 5A. Management's Discussion Management's Discussion of
Fund(s) 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;
Securities Being Offered Purchase of Shares;
Net Asset Value
Item 20. Tax Status Additional Tax Information
Item 21. Underwriters Distribution Plans;
Purchase of Shares
Item 22. Calculation of Performance Data Performance Information
Item 23. Financial Statements Financial Statements
Part C
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C to this Registration Statement.
<PAGE>
--------------------------------------------------------------
PROSPECTUS , 1995
Evergreen Growth Funds
--------------------------------------------------------
CLASS A SHARES
CLASS B SHARES
CLASS C SHARES
-------------------------
Evergreen Fund
Evergreen Aggressive Growth Fund
Evergreen Limited Market Fund, Inc.
The Evergreen 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, a diversified, open-end 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 and the other
funds in the Evergreen Group of mutual funds (collectively, with the Funds the
"Evergreen Funds") dated January 3, 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 First
Union or any subsidiaries of First Union, are not endorsed or guaranteed by
First Union or any subsidiaries of First Union, and are not insured or otherwise
protected by 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
TABLE OF CONTENTS
OVERVIEW OF THE FUND
EXPENSE INFORMATION
FINANCIAL HIGHLIGHTS
DESCRIPTION OF THE FUND
Investment Objectives And Policies
Other Investment Policies And
Techniques
MANAGEMENT OF THE FUND
Investment Adviser
Sub-Adviser
PURCHASE AND REDEMPTION OF SHARES
How To Buy Shares
How To Redeem Shares
Exchange Privilege
Shareholder Services
Effect Of Banking Laws
OTHER INFORMATION
Dividends, Distributions And Taxes
Management's Discussion of Fund
Performance
General Information
California Risk Considerations
Florida Risk Considerations
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 Fund and Evergreen Limited Market
Fund, Inc. is Evergreen Asset Management Corp. (the "Evergreen Asset") which,
with its predecessors, has served as investment adviser to the Evergreen Funds
since 1971. Evergreen Asset is a wholly-owned subsidiary of First Union National
Bank of North Carolina ("FUNB"), 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 FUNB ("CMG") serves as investment adviser to
Evergreen Aggressive Growth Fund.
Evergreen Fund seeks to achieve capital appreciation by investing in the
securities of little-known or relatively small companies, or companies
undergoing changes which the Fund's investment adviser believes will have
favorable consequences. Income will not be a factor in the selection of
portfolio investments.
Evergreen Limited Market Fund, Inc. seeks to achieve capital appreciation in the
value of its shares. Income is not a factor in the selection of portfolio
securities. In attempting to achieve its objective, the policy of Evergreen
Limited Market Fund is to invest principally in securities of companies for
which there is a relatively limited trading market.
Generally these are little-known, small or special situation companies.
Evergreen Aggressive Growth Fund seeks long-term capital appreciation by
investing primarily in common stocks of emerging growth companies and in larger,
more well established companies, all of which are viewed by the Fund's
investment adviser as having above average appreciation potential.
There is no assurance the investment objective of any Fund will be achieved.
<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 Fund Shares" and
"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 4.75% None None
Purchases (as a % of offering price)
Sales Charge on Dividend Reinvestments None None None
Contingent Deferred Sales Charge (as a % of None
net asset value redeemed)
Redemption Fee None None None
Exchange Fee None None None
</TABLE>
The following tables show for each Fund the 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).
<TABLE>
<CAPTION>
Evergreen Fund
Examples
Assuming Redemption Assuming no
Annual Operating Expenses at End of Period Redemption
Class A Class B Class C Class A Class B Class C Class B Class C
------- ------- ------- ------- ------- ------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Advisory Fees 1.00% 1.00% 1.00% After 1 Year $ 61 $ 72 $ 32 $ 22 $ 22
12b-1 Fees* .. .25% 1.00% 1.00% After 3 Years $ 89 $ 97 $ 67 $ 67 $ 67
Other Expenses .13% .13% .13% After 5 Years $119 $134 $114 $114 $114
---- ----
Total ........ 1.38% 2.13% 2.13% After 10 Years $205 $218 $246 $218 $246
----
</TABLE>
<TABLE>
<CAPTION>
Evergreen Limited Market Fund
Examples
Assuming Redemption Assuming no
Annual Operating Expenses at End of Period Redemption
Class A Class B Class C Class A Class B Class C Class B Class C
------- ------- ------- ------- ------- ------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Advisory Fees 1.00% 1.00% 1.00% After 1 Year $ 63 $ 74 $ 34 $ 24 $ 24
12b-1 Fees* .. .25% 1.00% 1.00% After 3 Years $ 96 $104 $ 74 $ 74 $ 74
Other Expenses .37% .37% .37% After 5 Years $131 $147 $127 $127 $127
----
Total ........ 1.62% 2.37% 2.37% After 10 Years $231 $243 $271 $243 $271
----
</TABLE>
<TABLE>
<CAPTION>
Evergreen Aggressive Growth Fund
Examples
Assuming Redemption Assuming no
Annual Operating Expenses at End of Period Redemption
Class A Class B Class C Class A Class B Class C Class B Class C
------- ------- ------- ------- ------- ------- ------ ------
<S> <C> <C> <C> <C>
Advisory Fees .60% ....60% .60% After 1 Year
12b-1 Fees* .. .25% 1.00% After 3 Years
Other Expenses .13% .13% .13% After 5 Years
Total ........ .98% 1.73% 1.73% After 10 Years
</TABLE>
*For Class B and Class C Shares, a portion of the 12b-1 Fees equivalent to .25
of 1% of average annual assets will be shareholder servicing-related.
Distribution-related 12b-1 Fees will be limited to .75 of 1% of average annual
assets as permitted under the rules of the National Association of Securities
Dealers, Inc.
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's Class Y shares for the fiscal periods ending September 30, 1994
and , 1994. 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.
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
EVERGREEN FUND
The following selected per share data and ratios for the five annual
periods ended September 30, 1994 have been audited by Price Waterhouse LLP,
independent accountants for EVERGREEN FUND whose report thereon was unqualified.
This information should be read in conjunction with the financial statements and
notes thereto which are incorporated in the Statement of Additional Information
by reference. The per share data set forth below pertains to the Class Y shares
of the Fund, which are offered through this prospectus. See "Other Classes of
Shares". No per share data and ratios are shown for Class A, B or C shares,
since these classes did not have any operations prior to the date of this
Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30, *
-----------------------------------------------------------------------------------------------
PER SHARE DATA 1994 1993 1992 1991 1990 1989 1988** 1987** 1986** 1985**
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
year. . . . . . . . . . . . . $14.46 $13.10 $13.32 $ 9.66 $14.01 $12.47 $15.12 $13.55 $11.03 $ 9.78
------ ------ ------ ------ ------ ----- ------ ------ ----- ------
INVESTMENT (LOSS) FROM
INVESTMENT OPERATIONS:
Net investment income. . . . . .07 .09 .09 .17 .24 .32 .21 .17 .14 .16
Net realized and unrealized
gain (loss) on investments. . .79 1.96 .55 3.93 (3.62) 1.99 (1.05) 2.65 3.18 1.66
------ ------ ------ ------ ------ ----- ------ ------ ----- ------
Total from investment
operations . . . . . . . . . .86 2.05 .64 4.10 (3.38) 2.31 (.84) 2.82 3.32 1.82
------ ------ ------ ------ ------ ----- ------ ------ ----- ------
LESS DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income. . . . . (.09) (.07) (.17) (.18) (.36) (.21) (.25) (.13) (.14) (.16)
Net realized gains . . . . . . (.61) (.62) (.69) (.26) (.61) (.56) (1.56) (1.12) (.66) (.41)
------ ------ ------ ------ ------ ----- ------ ------ ----- ------
Total distributions . . . . . (.70) (.69) (.86) (.44) (.97) (.77) (1.81) (1.25) (.80) (.57)
------ ------ ------ ------ ------ ----- ------ ------ ----- ------
Net asset value, end of year . $14.62 $14.46 $13.10 $13.32 $ 9.66 $14.01 $12.47 $15.12 $13.55 $11.03
------ ------ ------ ------ ------ ----- ------ ------ ----- ------
TOTAL RETURN . . . . . . . . . 6.2% 15.8% 5.2% 43.7% (25.4)% 20.0% 1.9% 22.5% 30.9% 19.8%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of year
(in millions) . . . . . . . . $526 $657 $722 $755 $525 $867 $751 $808 $639 $334
Ratios to average net assets:
Operating expenses. . . . . . 1.13% 1.11% 1.13% 1.15% 1.15% 1.11% 1.03% 1.03% 1.04% 1.08%
Interest expense. . . . . . . .09% .01% ---- ---- ---- ---- ---- ---- ---- ----
Net investment income . . . . .40% .60% .56% 1.45% 1.83% 2.46% 1.70% 1.32% 1.41% 1.73%
Portfolio turnover rate. . . . 19% 21% 32% 35% 39% 40% 42% 46% 48% 59%
<FN>
- ----------------
* All shares and per share amounts reflect a 4-for-1 stock split, which was
approved by shareholders on January 27, 1986, retroactive to March 18,
1985.
** Net of expense limitation in fiscal years 1988, 1987, 1986 and 1985.
</FN>
</TABLE>
EVERGREEN AGGRESSIVE GROWTH FUND
TO BE ADDED
<PAGE>
EVERGREEN LIMITED MARKET FUND
The following selected per share data and ratios for the four months ended
September 30, 1994 and the five annual periods ended May 31, 1994 have been
audited by Ernst & Young LLP, independent accountants for Evergreen Limited
Market Fund, Inc., whose report thereon was unqualified. This information should
be read in conjunction with the financial statements and notes thereto which are
incorporated in the Statement of Additional Information by reference. The per
share data set forth below pertains to the Class Y shares of the Fund, which are
offered through this prospectus. See "Other Classes of Shares". No per share
data and ratios are shown for Class A, B or C shares, since these classes did
not have any operations prior to the date of this Prospectus.
<TABLE>
<CAPTION>
FOUR MONTHS
ENDED YEAR ENDED MAY 31,
SEPTEMBER 30, -------------------------------------------------------------------------------
PER SHARE DATA 1994# 1994 1993 1992 1991 1990 1989*+ 1988* 1987* 1986*
----- ---- ---- ----- ---- ---- ------ ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
year . . . . . . . . . . . . . . $21.20 $20.87 $21.02 $18.81 $17.69 $21.02 $16.82 $18.55 $20.16 $14.97
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
INCOME (LOSS) FROM INVESTMENT
OPERATIONS:
Net investment income (loss) . . (.05) (.07) (.03) .02 .56 .45 .16 .00 (.04) (.02)
Net realized and unrealized
gain (loss) on investments . . . .59 1.67 1.57 3.33 1.67 .25 4.37 (.78) 1.05 6.37
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from investment
operations . . . . . . . . . . . .54 1.60 1.54 3.35 2.23 .70 4.53 (.78) 1.01 6.35
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income. . . . . . ---- ---- ---- (.14) (.53) (.36) (.05) ---- ---- ----
Net realized gains . . . . . . . ---- (1.27) (1.69) (1.00) (.58) (3.67) (.28) (.95) (2.62) (1.16)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total distributions. . . . . . . ---- (1.27) (1.69) (1.14) (1.11) (4.03) (.33) (.95) (2.62) (1.16)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of year . . $21.74 $21.20 $20.87 $21.02 $18.81 $17.69 $21.02 $16.82 $18.55 $20.16
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL RETURN . . . . . . . . . . 2.6%* 7.6% 7.5% 18.3% 14.4% 4.2% 27.4% (4.0%) 6.3% 45.7%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of year
(in millions). . . . . . . . . . $99 $96 $81 $62 $46 $38 $37 $23 $21 $20
Ratios to average net
assets:
Operating expenses . . . . . . . 1.37%++ 1.26% 1.24% 1.25% 1.32% 1.33% 1.30% 1.47% 1.44% 1.44%
Net investment income. . . . . . (.70%)++ (.33%) (.07%) .22% 3.32% 2.25% .86% .01% (.20%) (.10%)
Portfolio turnover rate. . . . . 35% 89% 29% 55% 59% 46% 45% 47% 43% 56%
<FN>
- ----------------
# On September 21, 1994, the Fund's Board of Directors approved a change in
the Fund's fiscal year end from May 31 to September 30.
* Not included in report of Ernst & Young referred to above.
+ Investment income, expenses and net investment income are based on average
monthly shares outstanding for the period indicated.
** Total return calculated for the four months ended September 30, 1994 is not
annualized.
++ Annualized.
</FN>
</TABLE>
------------------------------------------------------------------------
DESCRIPTION OF THE FUNDS
------------------------------------------------------------------------
INVESTMENT OBJECTIVES AND POLICIES
Evergreen Fund
The Evergreen Fund seeks to achieve its investment objective of capital
appreciation principally through investments in common stock and securities
convertible into or exchangeable for common stock of companies which are
little-known, relatively small or represent special situations which, in its
investment adviser's opinion, offer potential for capital appreciation. A
"little-known" company means one whose business is limited to a regional market
or whose securities are closely held with only a small proportion traded
publicly. A "relatively small" company means one which has a small share of the
market for its products or services in comparison with other companies in its
field, or which provides goods or services for a limited market. A "special
situation" company is one which offers potential for capital appreciation
because of a recent or anticipated change in structure, management, products or
services. In addition to the securities described above, the Evergreen Fund may
invest in securities of relatively well-known and large companies with potential
for capital appreciation. Investments may also be made to a limited degree in
non-convertible debt securities and preferred stocks which offer an opportunity
for capital appreciation. If in its investment adviser's judgment a defensive
position is appropriate, the Fund may take such a position and invest without
limit in non-convertible investment grade debt securities, government securities
or preferred stocks, or hold its assets in cash. Short-term investments may also
be made if its investment believes that such action will benefit the Fund. See
"Special Risk Considerations".
The Evergreen Fund may also borrow money on a temporary basis, invest
in cash and cash equivalents for defensive purposes and lend portfolio
securities. It is anticipated that the annual portfolio turnover rate for the
Fund will not exceed 100%. For the fiscal years ended September 30, 1992, 1993
and 1994, the Fund's portfolio turnover rate was 32%, 21% and 19%, respectively.
See "Investment Practices and Restrictions" and "Special Risk Considerations",
below.
Evergreen Limited Market Fund
The investment objective of Evergreen Limited Market Fund is to achieve
capital appreciation; income is not a factor in the selection of portfolio
securities. The Fund seeks to achieve its objective principally through
investments in common stock of companies for which there is a relatively limited
trading market. A relatively limited trading market is one in which only small
amounts of stock are available at any given time generally through five or fewer
market makers. The securities of such companies are often traded only
over-the-counter or on a regional securities exchange, rarely on a national
securities exchange, and may not trade every day or in the volume typical of
trading on a national securities exchange. See "Special Risk Considerations".
The Fund's investment objective is a fundamental policy.
Investments by the Fund are made with a view toward taking advantage of
market inefficiencies. Market inefficiency can result from a company being too
small to be covered by most industry analysts, thereby resulting in a limited
dissemination of information about the company or its industry. Such companies
generally are small (but no smaller than $1,000,000 of market capitalization),
little-known or unpopular companies (those which are not widely recommended for
purchase by industry analysts due to the company's size or some situation unique
to the company or its industry). Companies in which investments will generally
be made are those with a total market capitalization of $150,000,000 or less.
There are no restrictions as to types of businesses or industries in which the
Fund may invest. The Fund's investment adviser believes that its investment
research programs will uncover a variety of relatively unexploited investment
opportunities. The methods used for the detection and selection of such
opportunities depends heavily upon the extensive library facilities of Lieber &
Company, which contain information regarding over thirty four thousand
individual corporations as well as extensive industry and trade literature.
While the focus of Evergreen Limited Market Fund is on long-term capital
appreciation, investments may on occasion be made with the expectation of
short-term capital appreciation. Securities held for a short time period may be
sold if the investment objective for such securities has been achieved or if
other circumstances warrant. If in its investment adviser judgment a defensive
position is appropriate, the Fund may take such a position and invest without
limit in non-convertible investment grade debt securities, government securities
or preferred stocks, or hold its assets in cash.
The Fund may also invest to a limited degree in non-convertible debt
securities and preferred stocks which offer an opportunity for capital
appreciation. The Fund may also borrow money on a temporary basis, invest in
cash and cash equivalents for defensive purposes and lend portfolio securities.
It is anticipated that the annual portfolio turnover rate for the Fund may
exceed 100%. For the fiscal years ended May 31, 1993 and 1994, and the four
months ended September 30, 1994, the Fund's portfolio turnover rate was 29%, 89%
and 35%, respectively. See "Investment Practices and Restrictions" and "Special
Risk Considerations", below.
Evergreen Aggressive Growth Fund
The Evergreen Aggressive Growth Fund's investment objective is to
achieve long-term capital appreciation by investing primarily in common stocks
of emerging growth companies and larger, more well established companies, all of
which are viewed by its investment adviser as having above-average appreciation
potential. The Fund's investment adviser considers an emerging growth company to
be one which is still in the developmental stage, yet has demonstrated, or is
expected to achieve, growth of earnings over various major business cycles.
Important qualities of any emerging growth company include sound management and
a good product with growing market opportunities.
Consistent with its investment objective, the Fund also may invest in
equity securities of seasoned, established companies which its investment
adviser believes have above-average appreciation potential similar to that of
companies in the developmental stage. This may be due, for example, to
management change, new technology, new product or service developments, changes
in demand, or other factors. Investments in stocks of emerging growth companies
may involve special risks. Securities of lesser-known, relatively small and
special situation companies tend to be speculative and volatile. Therefore, the
current net asset value of the Fund's shares may vary significantly.
Accordingly, the Fund should not be considered suitable for investors who are
unable or unwilling to assume the risks of loss inherent in such a program, nor
should investment in the Fund be considered a balanced or complete investment
program.
The Evergreen Fund may also borrow money on a temporary basis, invest
in cash and cash equivalents for defensive purposes and lend portfolio
securities. It is anticipated that the annual portfolio turnover rate for the
Fund will not exceed 100%. See "Investment Practices and Restrictions" and
"Special Risk Considerations", below.
INVESTMENT PRACTICES AND RESTRICTIONS
Defensive Investments. The Funds may invest without limitation in high quality
money market instruments, such as notes, certificates of deposit or bankers'
acceptances, or U.S. Government securities if, in the opinion of each Fund's
investment adviser, market conditions warrant a temporary defensive investment
strategy.
Portfolio Turnover and Brokerage. 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 and a member of the New York and American Stock
Exchanges, will to the extent practicable effect substantially all of the
portfolio transactions for Evergreen Fund and Evergreen Limited Market Fund
effected on those exchanges. See the Statement of Additional Information for
further information regarding the brokerage allocation practices of the Funds.
Borrowing. As a matter of fundamental policy, the Funds may not borrow money
except from banks as a temporary measure for extraordinary or emergency
purposes. The proceeds from borrowings may be used to facilitate redemption
requests which might otherwise require the untimely disposition of portfolio
securities. The specific limits and other terms applicable to borrowing by each
Fund are set forth in the Statement of Additional Information.
Lending of Portfolio Securities. In order to generate income and to offset
expenses, the Funds may lend portfolio securities to brokers, dealers and other
financial institutions. Each Fund's investment adviser will monitor the
creditworthiness of such borrowers. Loans of securities by the Funds, if and
when made, may not exceed 30% of the value of a Fund's total assets and must be
collateralized by cash or U.S. Government securities that are maintained at all
times in an amount equal to at least 100% of the current market value of the
securities loaned, including accrued interest. While such securities are on
loan, the borrower will pay a Fund any income accruing thereon, and the Fund may
invest the cash collateral in portfolio securities, thereby increasing its
return. Any gain or loss in the market price of the loaned securities which
occurs during the term of the loan would affect a Fund and its investors. A Fund
has the right to call a loan and obtain the securities loaned at any time on
notice of not more than five business days. A Fund may pay reasonable fees in
connection with such loans.
lliquid Securities. The Funds may invest up to 15% of their net assets in
illiquid securities and other securities which are not readily marketable,
including repurchase agreements with maturities longer than seven days.
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 each
Fund's investment adviser to be illiquid or not readily marketable and,
therefore, are not subject to the aforementioned 15% limit. The inability of a
Fund to dispose of illiquid or not readily marketable investments readily or at
a reasonable price could impair the Fund's ability to raise cash for redemptions
or other purposes. The liquidity of securities purchased by a Fund which are
eligible for resale pursuant to Rule 144A will be monitored by each Fund's
investment adviser on an ongoing basis, subject to the oversight of the Trustees
or Directors. In the event that such a security is deemed to be no longer
liquid, a Fund's holdings will be reviewed to determine what action, if any, is
required to ensure that the retention of such security does not result in a Fund
violating the above-mentioned limits on assets invested in illiquid or not
readily marketable securities.
Special Risk Considerations
Investments in securities of little-known, relatively small and special
situation companies may tend to be speculative and volatile. A lack of
management depth in such companies could increase the risks associated with the
loss of key personnel. Also, the material and financial resources of such
companies may be limited, with the consequence that funds or external financing
necessary for growth may be unavailable. Such companies may also be involved in
the development or marketing of new products or services for which there are no
established markets. If projected markets do not materialize or only regional
markets develop, such companies may be adversely affected or be subject to the
consequences of local events. Moreover, such companies may be insignificant
factors in their industries and may become subject to intense competition from
larger companies. Securities of companies in which the Funds may invest will
frequently be traded only in the over-the-counter market or on regional stock
exchanges and will often be closely held. Securities of this type may have
limited liquidity and be subject to wide price fluctuations. As a result of the
risk factors described above, the net asset value of each Fund's shares can be
expected to vary significantly. Accordingly, each Fund should not be considered
suitable for investors who are unable or unwilling to assume the associated
risks, nor should investment in the Funds be considered a balanced or complete
investment program.
Other Investment Restrictions. Each Fund has adopted additional investment
restrictions that are set forth in the Statement of Additional Information.
Unless otherwise noted, the restrictions and policies set forth above are not
fundamental and may be changed without shareholder approval.
--------------------------------------------------------------------------
MANAGEMENT OF THE FUNDS
--------------------------------------------------------------------------
INVESTMENT ADVISER
The management of each Fund is supervised by its Trustees or Directors.
Evergreen Asset Management Corp. ("Evergreen Asset") has been retained to serve
as investment adviser to Evergreen Fund and Evergreen Limited Market Fund.
Evergreen Asset, with its predecessors, has served as investment adviser to the
Evergreen Group of Mutual Funds, which have assets in excess of $3 billion,
since 1971. Evergreen Asset is a wholly-owned subsidiary of First Union National
Bank of North Carolina ("FUNB-NC"). 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 aforementioned Funds. The Capital Management Group of
FUNB ("CMG") serves as investment adviser to Evergreen Aggressive Growth Fund.
First Union is a bank holding company headquartered in Charlotte, North
Carolina, which had $___ billion in consolidated assets as of December 31, 1994.
First Union and its subsidiaries provide a broad range of financial services to
individuals and businesses through offices in 36 states. The Capital Management
Group of FUNB manages or otherwise oversees the investment of over $36 billion
in assets belonging to a wide range of clients, including the First Union family
of mutual 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.
Evergreen Asset manages investments, provides various administrative
services and supervises the daily business affairs of Evergreen Fund and
Evergreen Limited Market Fund, subject to the authority of the Trustees or
Directors of each Fund. Evergreen Asset is entitled to receive an annual fee
equal to 1% of average daily net assets of Evergreen Fund and Evergreen Limited
Market Fund. This is higher than the rate paid by most other investment
companies. For the fiscal period ended September 30, 1994, total annualized
operating expenses of Evergreen Fund and Evergreen Limited Market Fund were
1.13% and 1.37%, respectively. CMG manages investments and supervises the daily
business affairs of Evergreen Aggressive Growth Fund and, as compensation
therefor, is entitled to receive an annual fee equal to .60 of 1% of average
daily net assets of Evergreen Aggressive Growth Fund. For its most recent fiscal
year ended _____________________, the total annualized operating expenses of ABT
Emerging Growth Fund, predecessor to Evergreen Aggressive Growth Fund, were
___%. _________________ serves as administrator to Evergreen Aggressive Growth
Fund and is entitled to receive an annual fee equal to .[7] of 1% of average
daily net assets of the Fund.
The portfolio manager for Evergreen Fund is Stephen A. Lieber, who is
Chairman and Co-Chief Executive Officer of Evergreen Asset. Mr. Lieber has been
associated with Evergreen Asset and its predecessor since prior to 1989. The
portfolio manager for Evergreen Aggressive Growth Fund is Harold J. Ireland,
Jr., a Vice President of CMG who has been associated with CMG since July, 1995.
Prior to that, Mr. Ireland was a Vice President of Palm Beach Capital
Management, Inc. and served as Portfolio manager of the Fund's predecessor, ABT
Emerging Growth Fund, since prior to 1989. The portfolio manager for Evergreen
Limited Market Fund is Derrick E. Wenger. Mr. Wenger has been the Fund's
principal manager since November 1993 and has been associated with Evergreen
Asset since 1989.
SUB-ADVISER
Evergreen Asset has entered into sub-advisory agreements with Lieber &
Company 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
portfolios Evergreen Fund and Evergreen Limited Market Fund. Lieber & Company
will be reimbursed by Evergreen Asset in connection with the rendering of
services on the basis of the direct and indirect costs of performing such
services. There is no additional charge to Evergreen Fund and Evergreen Limited
Market 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 Evergreen Fund and Evergreen Limited Market
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.
DISTRIBUTION PLANS AND AGREEMENTS
Rule 12b-1 under the Investment Company Act of 1940 permits an
investment company to pay expenses associated with the distribution of its
shares in accordance with a duly adopted plan. Each Fund has adopted for each of
its Class A, Class B and Class C shares a Rule 12b-1 plan (each, a "Plan" or
collectively the "Plans"). Under the Plans, each Fund may incur
distribution-related and shareholder servicing-related expenses which may not
exceed an annual rate of .75 of 1% of the Fund's aggregate average daily net
assets attributable to Class A shares, 1.00% of the Fund's aggregate average
daily net assets attributable to the Class B shares and 1.00% of the Fund's
aggregate average daily net assets attributable to the Class C shares. Payments
with respect to Class A shares under the Plan are currently voluntarily limited
to .25 of 1% of each Fund's aggregate average daily net assets attributable to
Class A shares. The Plans provide that a portion of the fee payable thereunder
in an amount not to exceed .25% of the aggregate average daily net assets of
each Fund attributable to each Class of shares may constitute a service fee to
be used for providing ongoing personal service and/or the maintenance of
shareholder accounts.
Each Fund has also entered into a distribution agreement (each a
"Distribution Agreement" or collectively the "Distribution Agreements") with
Evergreen Funds Distributor, Inc. ("EFD"). Pursuant to the Distribution
Agreements, each Fund will compensate EFD for its services as distributor at a
rate which may not exceed an annual rate of .25 of 1% of a Fund's aggregate
average daily net assets attributable to Class A shares, .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 First Union or its
affiliates. The Funds may also make payments under the Plans, in amounts up to
.25 of 1% of a Fund's aggregate average daily net assets on an annual basis
attributable to Class B and Class C shares, to compensate organizations, which
may include EFD or affiliates of First Union, 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 program. Share certificates are not issued for Class
A, Class B and Class C shares. 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
"Other Classes of Shares").
Class A Shares-Front-End Sales Charge Alternative. You can purchase Class A
shares at net asset value plus an initial sales charge, as follows:
Initial Sales Charge
Sales Charge as a Percentage
Amount of Transaction of Public Offering Price
$ 0-$ 99,999 4.75%
$ 100,000-$ 249,999 3.75%
$ 250,000-$ 499,999 3.00%
$ 500,000-$ 999,999 2.00%
$1,000,000-$2,499,999 1.00%
$2,500,000 and above 0.25%
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, and through qualified and non-qualified employee benefit
and savings plans which make shares of the Funds and the other Evergreen 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 makes the Evergreen Funds available
through a qualified plan meeting the criteria specified under (a). Payments may
be made to broker-dealers or other financial intermediaries whose employee
benefit plan clients purchase shares under the foregoing front-end sales charge
exemption 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 12 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 contingent deferred sales charge ("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 (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.
Year Since Purchase Contingent Deferred Sales Charge
FIRST 5%
SECOND 4%
THIRD and FOURTH 3%
FIFTH 2%
SIXTH and SEVENTH 1%
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 fees than Class A shares for a period of seven years (after which
it is expected that they will convert to Class A shares) . The higher fees mean
a higher expense ratio, so Class B shares pay correspondingly lower dividends
and may have a lower net asset value than Class A shares.
See the Statement of Additional Information for further details.
Class C Shares--Level-Load Alternative. You can purchase Class C shares without
any initial sales charge and, therefore, the full amount of your investment will
be used to purchase Fund shares. However, you will pay a 1.0% CDSC if you redeem
shares during the first year after purchase. Class C shares incur higher
distribution fees than Class A shares but, unlike Class B shares, do not convert
to any other class of shares of a Fund. The higher fees mean a higher expense
ratio, so Class C shares pay correspondingly lower dividends and may have a
lower net asset value than Class A shares. Shares obtained from dividend or
distribution reinvestment are not subject to the CDSC.
No contingent deferred sales charge will be imposed on Class C shares
purchased by institutional investors, and through employee benefit and savings
plans eligible for the exemption from front-end sales charges described under
"Class A Shares-Front End Sales Charge Alternative", above. Broker-dealers and
other financial intermediaries whose clients have purchased Class C shares may
receive a trailing commission equal to .75 of 1% of the average daily value of
such shares on an annual basis held by their clients more than one year from the
date of purchase. The payment of trailing commissions will commence immediately
with respect to shares eligible for exemption from the contingent deferred sales
charge normally applicable to Class C shares.
How the Funds Value Their Shares. The net asset value of each Class of shares of
a Fund is calculated by dividing the value of the amount of the Fund's net
assets attributable to that Class by the number of outstanding shares of that
Class. Shares are valued each day the New York Stock Exchange (the "Exchange")
is open as of the close of regular trading (currently 4:00 p.m. Eastern time).
The securities in a Fund are valued at their current market value determined on
the basis of market quotations or, if such quotations are not readily available,
such other methods as a Fund's Trustees believe would accurately reflect fair
market 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 charges, after seven years. If you are unsure
of the time period of your investment, you might consider Class C shares since
there are no initial sales charges and, although there is no conversion feature,
the CDSC only applies to redemptions made during the first year. Consult your
financial intermediary for further information. The compensation received by
dealers and agents may differ depending on whether they sell Class A, Class B or
Class C shares. There is no size limit on purchases of Class A shares.
In addition to the discount or commission paid to dealers, EFD will
from time to time pay to dealers additional cash or other incentives that are
conditioned upon the sale of a specified minimum dollar amount of shares of a
Fund and/or other Evergreen Mutual Funds. Such incentives will take the form of
payment for attendance at seminars, lunches, dinners, sporting events or theater
performances, or payment for travel, lodging and entertainment incurred in
connection with travel by persons associated with a dealer and their immediate
family members to urban or resort locations within or outside the United States.
Such a dealer may elect to receive cash incentives of equivalent amount in lieu
of such payments.
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 its 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 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 15 days). Once a redemption request has been
telephoned or mailed, it is irrevocable and may not be modified or canceled.
Redeeming Shares Through Your Financial Intermediary. A Fund must receive
instructions from your financial intermediary before 4:00 p.m. Eastern time for
you to receive that day's net asset value (less any applicable CDSC for Class B
or C shares). Your financial intermediary is responsible for furnishing all
necessary documentation to a Fund and may charge you for this service.
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 State Street (800- 423-2615) between the hours of 9:00 a.m. and 4:00
p.m. (Eastern time) each business day (i.e., any weekday exclusive of days on
which the New York Stock Exchange or State Street's offices are closed). The New
York Stock 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 enclosed 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, the 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 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 30 days. Shareholders will receive 60 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 Investment Company Act of 1940 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.
<PAGE>
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 Funds through your financial
intermediary, or by telephone or mail as described below. An exchange which
represents an initial investment in another Evergreen 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 values 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 Funds have 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 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 State Street (800-423-2615). Exchange requests
made after 4:00 p.m. (Eastern time) will be processed using the net asset value
determined on the next business day. During periods of drastic economic or
market changes, shareholders may experience difficulty in effecting telephone
exchanges. You should follow the procedures outlined below for exchanges by mail
if you are unable to reach State Street by telephone. If you wish to use the
telephone exchange service you should indicate this on the Share Purchase
Application. As noted above, each Fund will employ reasonable procedures to
confirm that instructions for the redemption or exchange of shares communicated
by telephone are genuine. A telephone exchange may be refused by a Fund or State
Street if it is believed advisable to do so. Procedures for exchanging Fund
shares by telephone may be modified or terminated at any time. Written requests
for exchanges should follow the same procedures outlined for written redemption
requests in the section entitled "How to Redeem Shares", however, no signature
guarantee is required.
SHAREHOLDER SERVICES
The Funds offer the following shareholder services. For more information about
these services or your account, contact your financial intermediary, EFD or the
toll-free number for the Funds, 800-807-2940. 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 Fund's
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 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". Affiliates of First Union may provide compensation to
organizations providing administrative and recordkeeping services to plans which
make shares of the Evergreen Funds available to their participants.
Retirement Plans. Eligible investors may invest in each Fund under the following
prototype retirement plans: (i) Individual Retirement Account (IRA); (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.
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.
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 their customer. FUNB and
Evergreen Asset, since it is a subsidiary of FUNB, is 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 FUNB and 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 FUNB and 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.
---------------------------------------------------------------------------
OTHER INFORMATION
---------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAXES
It is the policy of each Fund to distribute its investment company taxable
income and any net realized capital gains to shareholders annually or more
frequently as required as a condition of continued qualification as a regulated
investment company by the Internal Revenue Code of 1986, as amended. (the
"Code"). Dividends and distributions generally are taxable in the year in which
they are paid, except any dividends paid in January that were declared in the
previous calendar quarter may be treated as paid in December in the previous
year. Income dividends and capital gain distributions are automatically
reinvested in additional shares of the Fund making the distribution at the net
asset value per share at the close of business on the record date, unless the
shareholder writes to the Fund's transfer agent and requests payment in cash.
Each Fund has qualified and intends to continue to qualify to be
treated as a regulated investment company under the Code. While so qualified, it
is expected that each Fund will not be required to pay any Federal income taxes
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 taxes and any state or local taxes on the dividends and distributions
they receive from a Fund.
Following the end of each calendar year, every shareholder of the Fund
will be sent applicable tax information and information regarding the dividends
and capital gain distributions made during the calendar year. Under current law,
the highest Federal income tax rate applicable to net long-term capital gains
realized by individuals is 28%. The rate applicable to corporations is 35%.
Certain income from a Fund may qualify for a corporate dividends-received
deduction of 70%. Specific questions should be addressed to the investor's own
tax adviser.
Each Fund is required by Federal law to withhold 31% of reportable
payments (which may include dividends, capital gain distributions and
redemptions) paid to certain shareholders. In order to avoid this backup
withholding requirement, you must certify on the Share Purchase Application, or
on a separate form supplied by State Street, that the investor's social security
or taxpayer identification number is correct and that the investor is not
currently subject to backup withholding or is exempt from backup withholding.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
The Evergreen Fund. The Evergreen Fund's total return for the ten years ended
September 30, 1994 was +213.8%, which calculates to an average annual compounded
return of +12.1%. This compares favorably with the returns for the Russell 2000
Index (+194.9%) and the NASDAQ-OTC Composite (unreinvested) Index (+205.8%) for
the same time period. For the fiscal year ended 1994, the Fund produced a total
return of +6.2% versus returns of +2.7% for the Russell 2000 Index and +0.2% for
the NASDAQ-OTC Composite (unreinvested) Index. During the fiscal year ended
September 30, 1994, the Fund adhered to its historical strict guidelines
regarding market valuation and growth rates, resulting in a portfolio of what we
consider under-recognized and undervalued securities with excellent growth
prospects.
Performance relative to comparative indices was positively impacted by
the sizable commitments in sectors with above-average performance. Especially
significant was the strengthening health care industry and the improving
financial strength of the bank and thrift industries. The health care products
and services group showed an average increase of 23.5% during the 12 month
period. The bank industry showed an average gain of 5.8% during the same period.
The most negative sizable sector in the portfolio was the performance of the
finance and insurance group, which had an average decline of 3.0%. This decline
particularly reflected pressure on re-insurance companies and municipal bond
insurance companies, both of which were fairly sizable within this group. The
Fund's portfolio was well diversified, with more than 197 holdings. During the
year, the Fund shifted holdings toward a smaller market capitalization profile
in order to benefit from the opportunities of entrepreneurial businesses.
Therefore, many smaller company positions were inaugurated in areas such as
information systems, technology, retail, and financial institutions. As a result
of these moves, the Fund's portfolio shifted from 37.5% of the portfolio in
market capitalizations over $2 billion, to 23.5% over $2 billion. The medium
market capitalization of the holdings of the Fund at the end of the fiscal year
was $341 million.
Evergreen Aggressive Growth Fund
<PAGE>
to be added
[CHART]
Evergreen Limited Market Fund. The Fund's total return for the ten years ended
September 30, 1994, was 337.64%, which equals an average annual compounded
return of 15.89%. This return compared favorably with the 11.83% return of the
NASDAQ OTC Composite and 11.42% of the Russell 2000 indices over this same time
period. The total return of the Fund for the year ended May 31, 1994 (the former
fiscal year end of the Fund) was 7.64%, compared to the 4.95% and 8.72% returns
of the NASDAQ Composite and Russell 2000 indices, respectively. The total return
of the Fund for the four month period ended September 30, 1994 was 2.55%,
compared to the 3.96% and 3.34% returns of the NASDAQ Composite and Russell 2000
indices, respectively.
During the past four months, the Fund continued its practice of
investing in relatively unknown companies with market capitalizations under $150
million which are believed by management to be undervalued. Companies with
strong projected earnings growth and below market price/earnings ratios
continued to be emphasized. Emphasis was also placed on investment in companies
its investment adviser believes are likely acquisition targets.
The Fund remains well diversified with approximately 150 companies represented.
Positive contributions to the Fund's performance came from portfolio
holdings involved in merger and acquisition activity and from individual stock
selection. Negative factors in the Fund's performance included an underweighting
in the technology sector and an overweighting in the consumer discretionary
sector. Rising interest rates and a shift out of the small-cap sector have also
both negatively effected the Fund.
<PAGE>
[CHART]
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. Evergreen Limited Market Fund, Inc. is a Maryland corporation
organized in 1983. Evergreen Trust is a Massachusetts business trust organized
in 1988, which currently has two investment series, the Evergreen Fund and the
Evergreen Aggressive Growth Fund. Evergreen Aggressive Growth Fund is successor
to ABT Emerging Growth Fund, having exchanged its shares for substantially all
of the net assets and certain stated liabilities of ABT Emerging Growth Fund on
June 30, 1995. Prior to June 30, 1995 ABT Emerging Growth Fund was the only
investment portfolio of ABT Investment Series, Inc. which was a corporation
organized under the laws of the State of Maryland on December 24, 1981.
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 or
Directors.
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.
The Funds are 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 Directors, 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 and transfer agency expenses as well as any
other expenses applicable only to a specific class. Each class of shares votes
separately with respect to Rule 12b-1 distribution plans and other matters for
which separate class voting is appropriate under applicable law. Shares are
entitled to dividends as determined by the Trustees or Directors and, in
liquidation of
<PAGE>
a Fund, are entitled to receive the net assets of the Fund.
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 registrar, transfer agent and dividend-disbursing agent for 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, a wholly-owned subsidiary of Furman Selz
Incorporated, located at 237 Park Avenue, New York, New York 10017, is the
principal underwriter of the Funds. EFD provides personnel to serve as officers
of the Funds. The salaries and other expenses related to providing such
personnel are borne by EFD.
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) all shareholders of record in one or more of the Evergreen
Funds as of December 30, 1994, (ii) certain institutional investors and (iii)
investment advisory clients of First Union and its affiliates, including the
investment advisers to the Funds. 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 distribution-related expenses borne by
Class A, Class B and Class C shares and the fact that such expenses are not
borne by Class Y shares.
Performance Information. From time to time, the Funds may quote their "total
return" or "yield" for a specified period in advertisements, reports or other
communications to shareholders, Total return and yield are computed separately
for Class A, Class B and Class C shares. A Fund's total return for each such
period is computed by finding, through the use of a formula prescribed by the
Securities and Exchange Commission, the average annual compounded rate of return
over the period that would equate an assumed initial amount invested to the
value of the investment at the end of the period. For purposes of computing
total return, dividends and capital gains distributions paid on shares of a Fund
are assumed to have been reinvested when paid and the maximum sales charges
applicable to purchases of a Fund's shares are assumed to have been paid. Yield
is a way of showing the rate of income the Fund earns on its investments as a
percentage of the Fund's share price. The Fund's yield is calculated according
to accounting methods that are standardized by the SEC for all stock and bond
funds. Because yield accounting methods differ from the method used for other
accounting purposes, the Fund's yield may not equal its distribution rate, the
income paid to your account or the net investment income reported in the Fund's
financial statements. To calculate yield, the Fund takes the interest income it
earned from its portfolio of investments (as defined by the SEC formula) for a
30-day period (net of expenses), divides it by the average number of shares
entitled to receive dividends, and expresses the result as an annualized
percentage rate based on the Fund's share price at the end of the 30-day period.
This yield does not reflect gains or losses from selling securities
Performance data for each class of shares will be included in any
advertisement or sales literature using performance data of a Fund. These
advertisements may quote performance rankings or ratings of a Fund by financial
publications or independent organizations such as Lipper Analytical Services,
Inc. and Morningstar, Inc. or compare a Fund's performance to various indices.
The Fund may also advertise in items of sales literature an "actual distribution
rate" which is computed by dividing the total ordinary income distributed (which
may include the excess of short-term capital gains over losses) to shareholders
for the latest twelve month period by the maximum public offering price per
share on the last day of the period. Investors should be aware that past
performance may not be reflective of future results.
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 Fundswith
the Commission under the Securities Act. Copies of the Registration Statements
may be obtained at a reasonable charge from the Commission or may be examined,
without charge, at the offices of the Commission in Washington, D.C.
--------------------------------------------------------------
PROSPECTUS , 1995
Evergreen Growth Funds
--------------------------------------------------------
CLASS Y SHARES
-------------------------
Evergreen Fund
Evergreen Aggressive Growth Fund
Evergreen Limited Market Fund, Inc.
The Evergreen 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, a diversified,
open-end 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 and the other
funds in the Evergreen Group of mutual funds (collectively, with the Funds the
"Evergreen Funds") dated January 3, 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 First
Union or any subsidiaries of First Union, are not endorsed or guaranteed by
First Union or any subsidiaries of First Union, and are not insured or otherwise
protected by 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
TABLE OF CONTENTS
OVERVIEW OF THE FUND
EXPENSE INFORMATION
FINANCIAL HIGHLIGHTS
DESCRIPTION OF THE FUND
Investment Objectives And Policies
Other Investment Policies And
Techniques
MANAGEMENT OF THE FUND
Investment Adviser
Sub-Adviser
PURCHASE AND REDEMPTION OF SHARES
How To Buy Shares
How To Redeem Shares
Exchange Privilege
Shareholder Services
Effect Of Banking Laws
OTHER INFORMATION
Dividends, Distributions And Taxes
Management's Discussion of Fund
Performance
General Information
California Risk Considerations
Florida Risk Considerations
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 Fund and Evergreen Limited Market
Fund, Inc. is Evergreen Asset Management Corp. (the "Evergreen Asset") which,
with its predecessors, has served as investment adviser to the Evergreen Funds
since 1971. Evergreen Asset is a wholly-owned subsidiary of First Union National
Bank of North Carolina ("FUNB"), 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 FUNB ("CMG") serves as investment adviser to
Evergreen Aggressive Growth Fund.
Evergreen Fund seeks to achieve capital appreciation by investing in the
securities of little-known or relatively small companies, or companies
undergoing changes which the Fund's investment adviser believes will have
favorable consequences. Income will not be a factor in the selection of
portfolio investments.
Evergreen Limited Market Fund, Inc. seeks to achieve capital appreciation in the
value of its shares. Income is not a factor in the selection of portfolio
securities. In attempting to achieve its objective, the policy of Evergreen
Limited Market Fund is to invest principally in securities of companies for
which there is a relatively limited trading market.
Generally these are little-known, small or special situation companies.
Evergreen Aggressive Growth Fund seeks long-term capital appreciation by
investing primarily in common stocks of emerging growth companies and in larger,
more well established companies, all of which are viewed by the Fund's
investment adviser as having above average appreciation potential.
There is no assurance the investment objective of any Fund will be achieved.
<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 Fund Shares" and
"Other Classes of Shares".
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES Class Y Shares
--------------
<S> <C>
Maximum Sales Charge Imposed on None
Purchases (as a % of offering price)
Sales Charge on Dividend Reinvestments None
Contingent Deferred Sales Charge (as a % of None
original purchase price or redemption
proceeds, whichever is lower)
Redemption Fee None
Exchange Fee None
</TABLE>
The following tables show for each Fund the annual operating expenses
(as a percentage of average net assets) attributable to each Class of Shares,
together with examples of the cumulative effect of such expenses on a
hypothetical $1,000 investment in each Class for the periods specified assuming
(i) a 5% annual return, and (ii) redemption at the end of each period and,
additionally for Class B and C, no redemption at the end of each period.
In the following examples (i) the expenses for Class A Shares assume
deduction of the maximum 4.75% sales charge at the time of purchase, (ii) the
expenses for Class B Shares and Class C Shares assume deduction at the time of
redemption (if applicable) of the maximum contingent deferred sales charge
applicable for that time period, and (iii) the expenses for Class B Shares
reflect the conversion to Class A Shares eight years after purchase (years eight
through ten, therefore, reflect Class A expenses).
Evergreen Fund
Annual Operating Expenses Example
Class Y Class Y
Advisory Fees 1.00% After 1 Year $ 12
12b-1 Fees None After 3 Years $ 36
Other Expenses .13% After 5 Years $ 62
------
Total 1.13% After 10 Years $137
-----
Evergreen Limited Market Fund
Annual Operating Expenses Example
Class Y Class Y
Advisory Fees 1.00% After 1 Year $ 14
12b-1 Fees None After 3 Years $ 43
Other Expenses .37% After 5 Years $ 75
------
Total 1.37% After 10 Years $165
-----
* Reflects agreement by the Adviser to limit aggregate operating expenses
(including the Adviser's fee, but excluding interest, taxes, brokerage
commissions, Rule 12b-1 distribution fees and shareholder servicing fees and
extraordinary expenses) of Evergreen U.S. Real Estate Equity Fund to 1.50% of
average net assets until the Fund reaches net assets of $15 million. Absent such
agreement, the annual operating expenses would be 2.50% of average net assets.
From time to time, the Adviser may further reduce or waive its fee or reimburse
the Fund for certain of its expenses in order to reduce the Fund's expense
ratio.
The purpose of the foregoing table is to assist an investor in
understanding the various costs and expenses that an investor in the Class Y
Shares of the Funds will bear directly or indirectly. The amounts set forth
under "Other Expenses", as well as the amounts set forth in the example, are
estimated amounts for the current fiscal year based on historical experience for
the fiscal period ending September 30, 1994. THE EXAMPLES SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR INVESTMENT RETURN,
ACTUAL EXPENSES OR RETURN MAY BE GREATER OR LESS THAN THOSE SHOWN. For a more
complete description of the various costs and expenses borne by the Funds see
"Management of the Funds".
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
EVERGREEN FUND
The following selected per share data and ratios for the five annual
periods ended September 30, 1994 have been audited by Price Waterhouse LLP,
independent accountants for EVERGREEN FUND whose report thereon was unqualified.
This information should be read in conjunction with the financial statements and
notes thereto which are incorporated in the Statement of Additional Information
by reference. The per share data set forth below pertains to the Class Y shares
of the Fund, which are offered through this prospectus. See "Other Classes of
Shares". No per share data and ratios are shown for Class A, B or C shares,
since these classes did not have any operations prior to the date of this
Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30, *
-----------------------------------------------------------------------------------------------
PER SHARE DATA 1994 1993 1992 1991 1990 1989 1988** 1987** 1986** 1985**
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
year. . . . . . . . . . . . . $14.46 $13.10 $13.32 $ 9.66 $14.01 $12.47 $15.12 $13.55 $11.03 $ 9.78
------ ------ ------ ------ ------ ----- ------ ------ ----- ------
INVESTMENT (LOSS) FROM
INVESTMENT OPERATIONS:
Net investment income. . . . . .07 .09 .09 .17 .24 .32 .21 .17 .14 .16
Net realized and unrealized
gain (loss) on investments. . .79 1.96 .55 3.93 (3.62) 1.99 (1.05) 2.65 3.18 1.66
------ ------ ------ ------ ------ ----- ------ ------ ----- ------
Total from investment
operations . . . . . . . . . .86 2.05 .64 4.10 (3.38) 2.31 (.84) 2.82 3.32 1.82
------ ------ ------ ------ ------ ----- ------ ------ ----- ------
LESS DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income. . . . . (.09) (.07) (.17) (.18) (.36) (.21) (.25) (.13) (.14) (.16)
Net realized gains . . . . . . (.61) (.62) (.69) (.26) (.61) (.56) (1.56) (1.12) (.66) (.41)
------ ------ ------ ------ ------ ----- ------ ------ ----- ------
Total distributions . . . . . (.70) (.69) (.86) (.44) (.97) (.77) (1.81) (1.25) (.80) (.57)
------ ------ ------ ------ ------ ----- ------ ------ ----- ------
Net asset value, end of year . $14.62 $14.46 $13.10 $13.32 $ 9.66 $14.01 $12.47 $15.12 $13.55 $11.03
------ ------ ------ ------ ------ ----- ------ ------ ----- ------
TOTAL RETURN . . . . . . . . . 6.2% 15.8% 5.2% 43.7% (25.4)% 20.0% 1.9% 22.5% 30.9% 19.8%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of year
(in millions) . . . . . . . . $526 $657 $722 $755 $525 $867 $751 $808 $639 $334
Ratios to average net assets:
Operating expenses. . . . . . 1.13% 1.11% 1.13% 1.15% 1.15% 1.11% 1.03% 1.03% 1.04% 1.08%
Interest expense. . . . . . . .09% .01% ---- ---- ---- ---- ---- ---- ---- ----
Net investment income . . . . .40% .60% .56% 1.45% 1.83% 2.46% 1.70% 1.32% 1.41% 1.73%
Portfolio turnover rate. . . . 19% 21% 32% 35% 39% 40% 42% 46% 48% 59%
<FN>
- ----------------
* All shares and per share amounts reflect a 4-for-1 stock split, which was
approved by shareholders on January 27, 1986, retroactive to March 18,
1985.
** Net of expense limitation in fiscal years 1988, 1987, 1986 and 1985.
</FN>
</TABLE>
EVERGREEN AGGRESSIVE GROWTH FUND
TO BE ADDED
<PAGE>
EVERGREEN LIMITED MARKET FUND
The following selected per share data and ratios for the four months ended
September 30, 1994 and the five annual periods ended May 31, 1994 have been
audited by Ernst & Young LLP, independent accountants for Evergreen Limited
Market Fund, Inc., whose report thereon was unqualified. This information should
be read in conjunction with the financial statements and notes thereto which are
incorporated in the Statement of Additional Information by reference. The per
share data set forth below pertains to the Class Y shares of the Fund, which are
offered through this prospectus. See "Other Classes of Shares". No per share
data and ratios are shown for Class A, B or C shares, since these classes did
not have any operations prior to the date of this Prospectus.
<TABLE>
<CAPTION>
FOUR MONTHS
ENDED YEAR ENDED MAY 31,
SEPTEMBER 30, -------------------------------------------------------------------------------
PER SHARE DATA 1994# 1994 1993 1992 1991 1990 1989*+ 1988* 1987* 1986*
----- ---- ---- ----- ---- ---- ------ ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
year . . . . . . . . . . . . . . $21.20 $20.87 $21.02 $18.81 $17.69 $21.02 $16.82 $18.55 $20.16 $14.97
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
INCOME (LOSS) FROM INVESTMENT
OPERATIONS:
Net investment income (loss) . . (.05) (.07) (.03) .02 .56 .45 .16 .00 (.04) (.02)
Net realized and unrealized
gain (loss) on investments . . . .59 1.67 1.57 3.33 1.67 .25 4.37 (.78) 1.05 6.37
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from investment
operations . . . . . . . . . . . .54 1.60 1.54 3.35 2.23 .70 4.53 (.78) 1.01 6.35
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income. . . . . . ---- ---- ---- (.14) (.53) (.36) (.05) ---- ---- ----
Net realized gains . . . . . . . ---- (1.27) (1.69) (1.00) (.58) (3.67) (.28) (.95) (2.62) (1.16)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total distributions. . . . . . . ---- (1.27) (1.69) (1.14) (1.11) (4.03) (.33) (.95) (2.62) (1.16)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of year . . $21.74 $21.20 $20.87 $21.02 $18.81 $17.69 $21.02 $16.82 $18.55 $20.16
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL RETURN . . . . . . . . . . 2.6%* 7.6% 7.5% 18.3% 14.4% 4.2% 27.4% (4.0%) 6.3% 45.7%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of year
(in millions). . . . . . . . . . $99 $96 $81 $62 $46 $38 $37 $23 $21 $20
Ratios to average net
assets:
Operating expenses . . . . . . . 1.37%++ 1.26% 1.24% 1.25% 1.32% 1.33% 1.30% 1.47% 1.44% 1.44%
Net investment income. . . . . . (.70%)++ (.33%) (.07%) .22% 3.32% 2.25% .86% .01% (.20%) (.10%)
Portfolio turnover rate. . . . . 35% 89% 29% 55% 59% 46% 45% 47% 43% 56%
<FN>
- ----------------
# On September 21, 1994, the Fund's Board of Directors approved a change in
the Fund's fiscal year end from May 31 to September 30.
* Not included in report of Ernst & Young referred to above.
+ Investment income, expenses and net investment income are based on average
monthly shares outstanding for the period indicated.
** Total return calculated for the four months ended September 30, 1994 is not
annualized.
++ Annualized.
</FN>
</TABLE>
------------------------------------------------------------------------
DESCRIPTION OF THE FUNDS
------------------------------------------------------------------------
INVESTMENT OBJECTIVES AND POLICIES
Evergreen Fund
The Evergreen Fund seeks to achieve its investment objective of capital
appreciation principally through investments in common stock and securities
convertible into or exchangeable for common stock of companies which are
little-known, relatively small or represent special situations which, in its
investment adviser's opinion, offer potential for capital appreciation. A
"little-known" company means one whose business is limited to a regional market
or whose securities are closely held with only a small proportion traded
publicly. A "relatively small" company means one which has a small share of the
market for its products or services in comparison with other companies in its
field, or which provides goods or services for a limited market. A "special
situation" company is one which offers potential for capital appreciation
because of a recent or anticipated change in structure, management, products or
services. In addition to the securities described above, the Evergreen Fund may
invest in securities of relatively well-known and large companies with potential
for capital appreciation. Investments may also be made to a limited degree in
non-convertible debt securities and preferred stocks which offer an opportunity
for capital appreciation. If in its investment adviser's judgment a defensive
position is appropriate, the Fund may take such a position and invest without
limit in non-convertible investment grade debt securities, government securities
or preferred stocks, or hold its assets in cash. Short-term investments may also
be made if its investment believes that such action will benefit the Fund. See
"Special Risk Considerations".
The Evergreen Fund may also borrow money on a temporary basis, invest
in cash and cash equivalents for defensive purposes and lend portfolio
securities. It is anticipated that the annual portfolio turnover rate for the
Fund will not exceed 100%. For the fiscal years ended September 30, 1992, 1993
and 1994, the Fund's portfolio turnover rate was 32%, 21% and 19%, respectively.
See "Investment Practices and Restrictions" and "Special Risk Considerations",
below.
Evergreen Limited Market Fund
The investment objective of Evergreen Limited Market Fund is to achieve
capital appreciation; income is not a factor in the selection of portfolio
securities. The Fund seeks to achieve its objective principally through
investments in common stock of companies for which there is a relatively limited
trading market. A relatively limited trading market is one in which only small
amounts of stock are available at any given time generally through five or fewer
market makers. The securities of such companies are often traded only
over-the-counter or on a regional securities exchange, rarely on a national
securities exchange, and may not trade every day or in the volume typical of
trading on a national securities exchange. See "Special Risk Considerations".
The Fund's investment objective is a fundamental policy.
Investments by the Fund are made with a view toward taking advantage of
market inefficiencies. Market inefficiency can result from a company being too
small to be covered by most industry analysts, thereby resulting in a limited
dissemination of information about the company or its industry. Such companies
generally are small (but no smaller than $1,000,000 of market capitalization),
little-known or unpopular companies (those which are not widely recommended for
purchase by industry analysts due to the company's size or some situation unique
to the company or its industry). Companies in which investments will generally
be made are those with a total market capitalization of $150,000,000 or less.
There are no restrictions as to types of businesses or industries in which the
Fund may invest. The Fund's investment adviser believes that its investment
research programs will uncover a variety of relatively unexploited investment
opportunities. The methods used for the detection and selection of such
opportunities depends heavily upon the extensive library facilities of Lieber &
Company, which contain information regarding over thirty four thousand
individual corporations as well as extensive industry and trade literature.
While the focus of Evergreen Limited Market Fund is on long-term capital
appreciation, investments may on occasion be made with the expectation of
short-term capital appreciation. Securities held for a short time period may be
sold if the investment objective for such securities has been achieved or if
other circumstances warrant. If in its investment adviser judgment a defensive
position is appropriate, the Fund may take such a position and invest without
limit in non-convertible investment grade debt securities, government securities
or preferred stocks, or hold its assets in cash.
The Fund may also invest to a limited degree in non-convertible debt
securities and preferred stocks which offer an opportunity for capital
appreciation. The Fund may also borrow money on a temporary basis, invest in
cash and cash equivalents for defensive purposes and lend portfolio securities.
It is anticipated that the annual portfolio turnover rate for the Fund may
exceed 100%. For the fiscal years ended May 31, 1993 and 1994, and the four
months ended September 30, 1994, the Fund's portfolio turnover rate was 29%, 89%
and 35%, respectively. See "Investment Practices and Restrictions" and "Special
Risk Considerations", below.
Evergreen Aggressive Growth Fund
The Evergreen Aggressive Growth Fund's investment objective is to
achieve long-term capital appreciation by investing primarily in common stocks
of emerging growth companies and larger, more well established companies, all of
which are viewed by its investment adviser as having above-average appreciation
potential. The Fund's investment adviser considers an emerging growth company to
be one which is still in the developmental stage, yet has demonstrated, or is
expected to achieve, growth of earnings over various major business cycles.
Important qualities of any emerging growth company include sound management and
a good product with growing market opportunities.
Consistent with its investment objective, the Fund also may invest in
equity securities of seasoned, established companies which its investment
adviser believes have above-average appreciation potential similar to that of
companies in the developmental stage. This may be due, for example, to
management change, new technology, new product or service developments, changes
in demand, or other factors. Investments in stocks of emerging growth companies
may involve special risks. Securities of lesser-known, relatively small and
special situation companies tend to be speculative and volatile. Therefore, the
current net asset value of the Fund's shares may vary significantly.
Accordingly, the Fund should not be considered suitable for investors who are
unable or unwilling to assume the risks of loss inherent in such a program, nor
should investment in the Fund be considered a balanced or complete investment
program.
The Evergreen Fund may also borrow money on a temporary basis, invest
in cash and cash equivalents for defensive purposes and lend portfolio
securities. It is anticipated that the annual portfolio turnover rate for the
Fund will not exceed 100%. See "Investment Practices and Restrictions" and
"Special Risk Considerations", below.
INVESTMENT PRACTICES AND RESTRICTIONS
Defensive Investments. The Funds may invest without limitation in high quality
money market instruments, such as notes, certificates of deposit or bankers'
acceptances, or U.S. Government securities if, in the opinion of each Fund's
investment adviser, market conditions warrant a temporary defensive investment
strategy.
Portfolio Turnover and Brokerage. 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 and a member of the New York and American Stock
Exchanges, will to the extent practicable effect substantially all of the
portfolio transactions for Evergreen Fund and Evergreen Limited Market Fund
effected on those exchanges. See the Statement of Additional Information for
further information regarding the brokerage allocation practices of the Funds.
Borrowing. As a matter of fundamental policy, the Funds may not borrow money
except from banks as a temporary measure for extraordinary or emergency
purposes. The proceeds from borrowings may be used to facilitate redemption
requests which might otherwise require the untimely disposition of portfolio
securities. The specific limits and other terms applicable to borrowing by each
Fund are set forth in the Statement of Additional Information.
Lending of Portfolio Securities. In order to generate income and to offset
expenses, the Funds may lend portfolio securities to brokers, dealers and other
financial institutions. Each Fund's investment adviser will monitor the
creditworthiness of such borrowers. Loans of securities by the Funds, if and
when made, may not exceed 30% of the value of a Fund's total assets and must be
collateralized by cash or U.S. Government securities that are maintained at all
times in an amount equal to at least 100% of the current market value of the
securities loaned, including accrued interest. While such securities are on
loan, the borrower will pay a Fund any income accruing thereon, and the Fund may
invest the cash collateral in portfolio securities, thereby increasing its
return. Any gain or loss in the market price of the loaned securities which
occurs during the term of the loan would affect a Fund and its investors. A Fund
has the right to call a loan and obtain the securities loaned at any time on
notice of not more than five business days. A Fund may pay reasonable fees in
connection with such loans.
lliquid Securities. The Funds may invest up to 15% of their net assets in
illiquid securities and other securities which are not readily marketable,
including repurchase agreements with maturities longer than seven days.
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 each
Fund's investment adviser to be illiquid or not readily marketable and,
therefore, are not subject to the aforementioned 15% limit. The inability of a
Fund to dispose of illiquid or not readily marketable investments readily or at
a reasonable price could impair the Fund's ability to raise cash for redemptions
or other purposes. The liquidity of securities purchased by a Fund which are
eligible for resale pursuant to Rule 144A will be monitored by each Fund's
investment adviser on an ongoing basis, subject to the oversight of the Trustees
or Directors. In the event that such a security is deemed to be no longer
liquid, a Fund's holdings will be reviewed to determine what action, if any, is
required to ensure that the retention of such security does not result in a Fund
violating the above-mentioned limits on assets invested in illiquid or not
readily marketable securities.
Special Risk Considerations
Investments in securities of little-known, relatively small and special
situation companies may tend to be speculative and volatile. A lack of
management depth in such companies could increase the risks associated with the
loss of key personnel. Also, the material and financial resources of such
companies may be limited, with the consequence that funds or external financing
necessary for growth may be unavailable. Such companies may also be involved in
the development or marketing of new products or services for which there are no
established markets. If projected markets do not materialize or only regional
markets develop, such companies may be adversely affected or be subject to the
consequences of local events. Moreover, such companies may be insignificant
factors in their industries and may become subject to intense competition from
larger companies. Securities of companies in which the Funds may invest will
frequently be traded only in the over-the-counter market or on regional stock
exchanges and will often be closely held. Securities of this type may have
limited liquidity and be subject to wide price fluctuations. As a result of the
risk factors described above, the net asset value of each Fund's shares can be
expected to vary significantly. Accordingly, each Fund should not be considered
suitable for investors who are unable or unwilling to assume the associated
risks, nor should investment in the Funds be considered a balanced or complete
investment program.
Other Investment Restrictions. Each Fund has adopted additional investment
restrictions that are set forth in the Statement of Additional Information.
Unless otherwise noted, the restrictions and policies set forth above are not
fundamental and may be changed without shareholder approval.
--------------------------------------------------------------------------
MANAGEMENT OF THE FUNDS
--------------------------------------------------------------------------
INVESTMENT ADVISER
The management of each Fund is supervised by its Trustees or Directors.
Evergreen Asset Management Corp. ("Evergreen Asset") has been retained to serve
as investment adviser to Evergreen Fund and Evergreen Limited Market Fund.
Evergreen Asset, with its predecessors, has served as investment adviser to the
Evergreen Group of Mutual Funds, which have assets in excess of $3 billion,
since 1971. Evergreen Asset is a wholly-owned subsidiary of First Union National
Bank of North Carolina ("FUNB-NC"). 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 aforementioned Funds. The Capital Management Group of
FUNB ("CMG") serves as investment adviser to Evergreen Aggressive Growth Fund.
First Union is a bank holding company headquartered in Charlotte, North
Carolina, which had $___ billion in consolidated assets as of December 31, 1994.
First Union and its subsidiaries provide a broad range of financial services to
individuals and businesses through offices in 36 states. The Capital Management
Group of FUNB manages or otherwise oversees the investment of over $36 billion
in assets belonging to a wide range of clients, including the First Union family
of mutual 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.
Evergreen Asset manages investments, provides various administrative
services and supervises the daily business affairs of Evergreen Fund and
Evergreen Limited Market Fund, subject to the authority of the Trustees or
Directors of each Fund. Evergreen Asset is entitled to receive an annual fee
equal to 1% of average daily net assets of Evergreen Fund and Evergreen Limited
Market Fund. This is higher than the rate paid by most other investment
companies. For the fiscal period ended September 30, 1994, total annualized
operating expenses of Evergreen Fund and Evergreen Limited Market Fund were
1.13% and 1.37%, respectively. CMG manages investments and supervises the daily
business affairs of Evergreen Aggressive Growth Fund and, as compensation
therefor, is entitled to receive an annual fee equal to .60 of 1% of average
daily net assets of Evergreen Aggressive Growth Fund. For its most recent fiscal
year ended _____________________, the total annualized operating expenses of ABT
Emerging Growth Fund, predecessor to Evergreen Aggressive Growth Fund, were
___%. _________________ serves as administrator to Evergreen Aggressive Growth
Fund and is entitled to receive an annual fee equal to .[7] of 1% of average
daily net assets of the Fund.
The portfolio manager for Evergreen Fund is Stephen A. Lieber, who is
Chairman and Co-Chief Executive Officer of Evergreen Asset. Mr. Lieber has been
associated with Evergreen Asset and its predecessor since prior to 1989. The
portfolio manager for Evergreen Aggressive Growth Fund is Harold J. Ireland,
Jr., a Vice President of CMG who has been associated with CMG since July, 1995.
Prior to that, Mr. Ireland was a Vice President of Palm Beach Capital
Management, Inc. and served as Portfolio manager of the Fund's predecessor, ABT
Emerging Growth Fund, since prior to 1989. The portfolio manager for Evergreen
Limited Market Fund is Derrick E. Wenger. Mr. Wenger has been the Fund's
principal manager since November 1993 and has been associated with Evergreen
Asset since 1989.
SUB-ADVISER
Evergreen Asset has entered into sub-advisory agreements with Lieber &
Company 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
portfolios Evergreen Fund and Evergreen Limited Market Fund. Lieber & Company
will be reimbursed by Evergreen Asset in connection with the rendering of
services on the basis of the direct and indirect costs of performing such
services. There is no additional charge to Evergreen Fund and Evergreen Limited
Market 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 Evergreen Fund and Evergreen Limited Market
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.
------------------------------------------------------------------------------
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) all shareholders of record in one or more of the Evergreen
Funds as of December 30, 1994, (ii) certain institutional investors and (iii)
investment advisory clients of the Adviser and its 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 enclosed Share
Purchase Application and mail it together with a check made payable to the Fund
whose shares are being purchased, to State Street Bank and Trust Company ("State
Street") at P.O. Box 9021, Boston, Massachusetts 02205-9827. Checks not drawn on
U.S. banks will be subject to foreign collection which will delay an investor's
investment date and will be subject to processing fees.
When making subsequent investments, an investor should either enclose
the return remittance portion of the statement, or indicate on the face of the
check, the name of the Fund in which an investment is to be made, the exact
title of the account, the address, and the Fund account number. Purchase
requests should not be sent to a Fund in New York. If they are, the Fund must
forward them to State Street, and the request will not be effective until State
Street receives them.
Initial investments may also be made by wire by (i) calling State
Street at 800-423-2615 for an account number and (ii) instructing your bank,
which may charge a fee, to wire federal funds to State Street, as follows: State
Street Bank and Trust Company, ABA No.0110-0002-8, Attn: Custodian and
Shareholder Services. The wire must include references to the Fund in which an
investment is being made, account registration, and the account number. A
completed Application must also be sent to State Street indicating that the
shares have been purchased by wire, giving the date the wire was sent and
referencing the account number. Subsequent wire investments may be made by
existing shareholders by following the instructions outlined above. It is not
necessary, however, for existing shareholders to call for another account
number.
How the Funds Value Their Shares. The net asset value of each Class of shares of
a Fund is calculated by dividing the value of the amount of the Fund's net
assets attributable to that Class by the number of outstanding shares of that
Class. Shares are valued each day the New York Stock Exchange (the "Exchange")
is open as of the close of regular trading (currently 4:00 p.m. Eastern time).
The securities in a Fund are valued at their current market value determined on
the basis of market quotations or, if such quotations are not readily available,
such other methods as a Fund's Trustees believe would accurately reflect fair
market 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 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 Adviser for any loss. In addition, such
investors may be prohibited or restricted from making further purchases in any
of the Evergreen 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
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 15 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 9:00 a.m. and 4:00
p.m. (Eastern time) each business day (i.e., any weekday exclusive of days on
which the New York Stock Exchange or State Street's offices are closed). The New
York Stock 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 enclosed 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, the 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 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 30 days. Shareholders will receive 60 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 Investment Company Act of 1940 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 Funds by telephone or mail as described
below. An exchange which represents an initial investment in another Evergreen
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 values 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 Funds have different investment objectives and
policies. For complete information, a prospectus of the fund into which an
exchange will be made should be read prior to the exchange. An exchange is
treated for Federal income tax purposes as a redemption and purchase of shares
and may result in the realization of a capital gain or loss. Each Fund imposes a
fee of $5 per exchange on shareholders who exchange in excess of four times per
calendar year. This exchange privilege may be modified or discontinued at any
time by the Fund upon sixty days' notice to shareholders and is only available
in states in which shares of the fund being acquired may lawfully be sold.
Exchanges by Telephone and Mail. You may exchange shares with a value of $1,000
or more by telephone by calling State Street (800-423-2615). Exchange requests
made after 4:00 p.m. (Eastern time) will be processed using the net asset value
determined on the next business day. During periods of drastic economic or
market changes, shareholders may experience difficulty in effecting telephone
exchanges. You should follow the procedures outlined below for exchanges by mail
if you are unable to reach State Street by telephone. If you wish to use the
telephone exchange service you should indicate this on the Share Purchase
Application. As noted above, each Fund will employ reasonable procedures to
confirm that instructions for the redemption or exchange of shares communicated
by telephone are genuine. A telephone exchange may be refused by a Fund or State
Street if it is believed advisable to do so. Procedures for exchanging Fund
shares by telephone may be modified or terminated at any time. Written requests
for exchanges should follow the same procedures outlined for written redemption
requests in the section entitled "How to Redeem Shares", however, no signature
guarantee is required.
SHAREHOLDER SERVICES
The Funds offer the following shareholder services. For more
information about these services or your account, contact your financial
intermediary, Evergreen Funds Distributor, Inc.("EFD"), the distributor of the
Funds, or the toll-free number for the Funds, 800-807-2940. 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 Fund's
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.
Retirement Plans. Eligible investors may invest in each Fund under the following
prototype retirement plans: (i) Individual Retirement Account (IRA); (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.
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.
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 their customer. FUNB and
Evergreen Asset, since it is a subsidiary of FUNB, is 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 FUNB and 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 FUNB and 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.
---------------------------------------------------------------------------
OTHER INFORMATION
---------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAXES
It is the policy of each Fund to distribute its investment company taxable
income and any net realized capital gains to shareholders annually or more
frequently as required as a condition of continued qualification as a regulated
investment company by the Internal Revenue Code of 1986, as amended. (the
"Code"). Dividends and distributions generally are taxable in the year in which
they are paid, except any dividends paid in January that were declared in the
previous calendar quarter may be treated as paid in December in the previous
year. Income dividends and capital gain distributions are automatically
reinvested in additional shares of the Fund making the distribution at the net
asset value per share at the close of business on the record date, unless the
shareholder writes to the Fund's transfer agent and requests payment in cash.
Each Fund has qualified and intends to continue to qualify to be
treated as a regulated investment company under the Code. While so qualified, it
is expected that each Fund will not be required to pay any Federal income taxes
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 taxes and any state or local taxes on the dividends and distributions
they receive from a Fund.
Following the end of each calendar year, every shareholder of the Fund
will be sent applicable tax information and information regarding the dividends
and capital gain distributions made during the calendar year. Under current law,
the highest Federal income tax rate applicable to net long-term capital gains
realized by individuals is 28%. The rate applicable to corporations is 35%.
Certain income from a Fund may qualify for a corporate dividends-received
deduction of 70%. Specific questions should be addressed to the investor's own
tax adviser.
Each Fund is required by Federal law to withhold 31% of reportable
payments (which may include dividends, capital gain distributions and
redemptions) paid to certain shareholders. In order to avoid this backup
withholding requirement, you must certify on the Share Purchase Application, or
on a separate form supplied by State Street, that the investor's social security
or taxpayer identification number is correct and that the investor is not
currently subject to backup withholding or is exempt from backup withholding.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
The Evergreen Fund. The Evergreen Fund's total return for the ten years ended
September 30, 1994 was +213.8%, which calculates to an average annual compounded
return of +12.1%. This compares favorably with the returns for the Russell 2000
Index (+194.9%) and the NASDAQ-OTC Composite (unreinvested) Index (+205.8%) for
the same time period. For the fiscal year ended 1994, the Fund produced a total
return of +6.2% versus returns of +2.7% for the Russell 2000 Index and +0.2% for
the NASDAQ-OTC Composite (unreinvested) Index. During the fiscal year ended
September 30, 1994, the Fund adhered to its historical strict guidelines
regarding market valuation and growth rates, resulting in a portfolio of what we
consider under-recognized and undervalued securities with excellent growth
prospects.
Performance relative to comparative indices was positively impacted by
the sizable commitments in sectors with above-average performance. Especially
significant was the strengthening health care industry and the improving
financial strength of the bank and thrift industries. The health care products
and services group showed an average increase of 23.5% during the 12 month
period. The bank industry showed an average gain of 5.8% during the same period.
The most negative sizable sector in the portfolio was the performance of the
finance and insurance group, which had an average decline of 3.0%. This decline
particularly reflected pressure on re-insurance companies and municipal bond
insurance companies, both of which were fairly sizable within this group. The
Fund's portfolio was well diversified, with more than 197 holdings. During the
year, the Fund shifted holdings toward a smaller market capitalization profile
in order to benefit from the opportunities of entrepreneurial businesses.
Therefore, many smaller company positions were inaugurated in areas such as
information systems, technology, retail, and financial institutions. As a result
of these moves, the Fund's portfolio shifted from 37.5% of the portfolio in
market capitalizations over $2 billion, to 23.5% over $2 billion. The medium
market capitalization of the holdings of the Fund at the end of the fiscal year
was $341 million.
Evergreen Aggressive Growth Fund
<PAGE>
to be added
[CHART]
Evergreen Limited Market Fund. The Fund's total return for the ten years ended
September 30, 1994, was 337.64%, which equals an average annual compounded
return of 15.89%. This return compared favorably with the 11.83% return of the
NASDAQ OTC Composite and 11.42% of the Russell 2000 indices over this same time
period. The total return of the Fund for the year ended May 31, 1994 (the former
fiscal year end of the Fund) was 7.64%, compared to the 4.95% and 8.72% returns
of the NASDAQ Composite and Russell 2000 indices, respectively. The total return
of the Fund for the four month period ended September 30, 1994 was 2.55%,
compared to the 3.96% and 3.34% returns of the NASDAQ Composite and Russell 2000
indices, respectively.
During the past four months, the Fund continued its practice of
investing in relatively unknown companies with market capitalizations under $150
million which are believed by management to be undervalued. Companies with
strong projected earnings growth and below market price/earnings ratios
continued to be emphasized. Emphasis was also placed on investment in companies
its investment adviser believes are likely acquisition targets.
The Fund remains well diversified with approximately 150 companies represented.
Positive contributions to the Fund's performance came from portfolio
holdings involved in merger and acquisition activity and from individual stock
selection. Negative factors in the Fund's performance included an underweighting
in the technology sector and an overweighting in the consumer discretionary
sector. Rising interest rates and a shift out of the small-cap sector have also
both negatively effected the Fund.
<PAGE>
[CHART]
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. Evergreen Limited Market Fund, Inc. is a Maryland corporation
organized in 1983. Evergreen Trust is a Massachusetts business trust organized
in 1988, which currently has two investment series, the Evergreen Fund and the
Evergreen Aggressive Growth Fund. Evergreen Aggressive Growth Fund is successor
to ABT Emerging Growth Fund, having exchanged its shares for substantially all
of the net assets and certain stated liabilities of ABT Emerging Growth Fund on
June 30, 1995. Prior to June 30, 1995 ABT Emerging Growth Fund was the only
investment portfolio of ABT Investment Series, Inc. which was a corporation
organized under the laws of the State of Maryland on December 24, 1981.
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 or
Directors.
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.
The Funds are 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 Directors, 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 and transfer agency expenses as well as any
other expenses applicable only to a specific class. Each class of shares votes
separately with respect to Rule 12b-1 distribution plans and other matters for
which separate class voting is appropriate under applicable law. Shares are
entitled to dividends as determined by the Trustees or Directors and, in
liquidation of a Fund, are entitled to receive the net assets of the Fund.
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 registrar, transfer agent and dividend-disbursing agent for 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, a wholly-owned subsidiary of Furman Selz
Incorporated, located at 237 Park Avenue, New York, New York 10017, is the
principal underwriter of the Funds. EFD provides personnel to serve as officers
of the Funds. The salaries and other expenses related to providing such
personnel are borne by EFD.
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) all shareholders of record in one or more of the Evergreen
Funds as of December 30, 1994, (ii) certain institutional investors and (iii)
investment advisory clients of First Union and its affiliates, including the
investment advisers to the Funds. 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 distribution-related expenses borne by
Class A, Class B and Class C shares and the fact that such expenses are not
borne by Class Y shares.
Performance Information. From time to time, the Funds may quote their "total
return" or "yield" for a specified period in advertisements, reports or other
communications to shareholders, Total return and yield are computed separately
for Class A, Class B and Class C shares. A Fund's total return for each such
period is computed by finding, through the use of a formula prescribed by the
Securities and Exchange Commission, the average annual compounded rate of return
over the period that would equate an assumed initial amount invested to the
value of the investment at the end of the period. For purposes of computing
total return, dividends and capital gains distributions paid on shares of a Fund
are assumed to have been reinvested when paid and the maximum sales charges
applicable to purchases of a Fund's shares are assumed to have been paid. Yield
is a way of showing the rate of income the Fund earns on its investments as a
percentage of the Fund's share price. The Fund's yield is calculated according
to accounting methods that are standardized by the SEC for all stock and bond
funds. Because yield accounting methods differ from the method used for other
accounting purposes, the Fund's yield may not equal its distribution rate, the
income paid to your account or the net investment income reported in the Fund's
financial statements. To calculate yield, the Fund takes the interest income it
earned from its portfolio of investments (as defined by the SEC formula) for a
30-day period (net of expenses), divides it by the average number of shares
entitled to receive dividends, and expresses the result as an annualized
percentage rate based on the Fund's share price at the end of the 30-day period.
This yield does not reflect gains or losses from selling securities
Performance data for each class of shares will be included in any
advertisement or sales literature using performance data of a Fund. These
advertisements may quote performance rankings or ratings of a Fund by financial
publications or independent organizations such as Lipper Analytical Services,
Inc. and Morningstar, Inc. or compare a Fund's performance to various indices.
The Fund may also advertise in items of sales literature an "actual distribution
rate" which is computed by dividing the total ordinary income distributed (which
may include the excess of short-term capital gains over losses) to shareholders
for the latest twelve month period by the maximum public offering price per
share on the last day of the period. Investors should be aware that past
performance may not be reflective of future results.
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 Fundswith
the Commission under the Securities Act. Copies of the Registration Statements
may be obtained at a reasonable charge from the Commission or may be examined,
without charge, at the offices of the Commission in Washington, D.C.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
___________, 1995
THE EVERGREEN MUTUAL FUNDS
2500 Westchester Avenue, Purchase, New York 10577
800-807-2940
This Statement of Additional Information pertains to all classes of shares of
the Funds listed below. It is not a prospectus and should be read in conjunction
with the current Prospectus of the Fund in which you are making or contemplating
an investment. The Evergreen Mutual Funds are offered through 6 separate
prospectuses representing different investment categories, including growth,
growth and income, fixed-income, money market and tax exempt funds. Copies of
the Prospectuses for each Fund listed below may be obtained without charge by
calling the number listed above.
The Evergreen Fund ("Evergreen") The Evergreen Aggressive Growth Fund
("Aggressive") Evergreen Global Real Estate Equity Fund ("Global")
Evergreen U.S. Real Estate Equity Fund ("U.S. Real Estate") The
Evergreen Limited Market Fund, Inc. ("Limited Market") Evergreen Growth
and Income Fund ("Growth and Income") The Evergreen Total Return Fund
("Total Return") The Evergreen American Retirement Fund ("American
Retirement") Evergreen Small Cap Equity Income Fund ("Small Cap")
Evergreen Foundation Fund ("Foundation") Evergreen Tax Strategic
Foundation Fund ("Tax Strategic") Evergreen Short-Intermediate
Municipal Fund ("Short-Intermediate")
Evergreen Short-Intermediate Municipal Fund-CA("Short-Intermediate-CA")
Evergreen National Tax-Free Fund ("National")
Evergreen Florida High Income Fund ("Florida High Income")
Evergreen Tax Exempt Money Market Fund ("Tax Exempt")
The Evergreen Money Market Trust ("Money Market")
Evergreen U.S. Government Securities Fund ("U.S. Government")
<PAGE>
<PAGE>
TABLE OF CONTENTS
.
Page
Investment Objectives and Policies....................................
Investment Restrictions...............................................
Non-Fundamental Operating Policies....................................
Certain Risk Considerations...........................................
Management............................................................
Investment Advisers...................................................
Distribution Plans....................................................
Allocation of Brokerage...............................................
Additional Tax Information............................................
Net Asset Value.......................................................
Purchase of Shares....................................................
Performance Information...............................................
Financial Statements..................................................
Appendix A - Note, Bond And Commercial Paper Ratings i
Appendix B - Additional Information Concerning California ii
Appendix B - Additional Information Concerning Florida iii
<PAGE>
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
(See also "Investment Objective and Policies" in each
Fund's Prospectus)
.........The investment objective of each Fund and a description of the
securities in which they may invest is set forth under "Investment Objective and
Policies" in each Fund's Prospectus.
.........Each of the Funds, with the exception of Global and U.S. Real
Estate may not invest more than 25% of its net assets in any one industry. Under
normal circumstances, Global and U.S. Real Estate will invest not less than 65%
of their total assets in equity securities of companies principally engaged in
the real estate industry. Also, Florida High Income, National, Tax Strategic,
Short-Intermediate and Short-Intermediate-CA may, subject to the Investment
Restrictions set forth below, invest 25% or more of their total assets in
municipal securities that are related in such a way that an economic, business,
or political development or change affecting one such security could also affect
the other securities (for example, securities whose issuers are located in the
same state).
.........As a matter of non-fundamental investment policy, each Fund may
invest up to 15% of its net assets in illiquid securities and other securities
which are not readily marketable (10% for Money Market and Tax Exempt).
Repurchase agreements with maturities longer than seven days will be included
for the purpose of the foregoing 15% (or 10%) limit but, with respect to Global,
U.S. Real Estate, Small Cap, Tax Strategic, National, Short-Intermediate,
Short-Intermediate-CA, Tax Exempt, Money Market and U.S. Government,,
investments in such repurchase agreements are limited to 10% of a Fund's assets.
American Retirement and Foundation may not invest in repurchase agreements.
Securities eligible for resale pursuant to Rule 144A under the Securities Act of
1933, which the Trustees/Directors of a Fund have determined to be liquid, will
not be considered by the Fund 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 its investment
adviser on an ongoing basis, subject to the oversight of the Trustees/Directors.
Notwithstanding the fact that a favorable liquidity determination was made at
the time of purchase of such a security, subsequent developments affecting the
market for such securities held by a Fund could have a negative effect on their
liquidity. 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 the Fund
exceeding the applicable limit on assets invested in illiquid or not readily
marketable securities.
.........A portion of the assets of Florida High Income, National,
Short-Intermediate, Short-Intermediate-CA or Tax-Strategic may be invested in
health care bonds issued for public and non-profit hospitals. Since 1983, the
U.S. hospital industry has been under significant pressure from third party
payors to reduce expenses and limit length of stay, a phenomenon which has
negatively affected the financial health of many hospitals. National or
Tax-Strategic may also from time to time invest in electric revenue issues which
have exposure to or participate in nuclear projects. There may be substantial
construction or operating risks associated with such nuclear plants which could
affect the issuer's financial performance. Such risks include delay in
construction and operation due to increased regulation, unexpected outages or
plant shutdowns, increased Nuclear Regulatory Commission surveillance or
inadequate rate relief.
.........Evergreen, Florida High Income, Total Return and Growth and Income
may write covered call options to a limited extent on their portfolio securities
("covered options") in an attempt to earn additional income. A call option gives
the purchaser of the option the right to buy a security from the writer at the
exercise price at any time during the option period. The premium paid to the
writer is the consideration for undertaking the obligations under the option
contract. The writer foregoes the opportunity to profit from an increase in the
market price of the underlying security above the exercise price except insofar
as the premium represents such a profit. The Fund retains the risk of loss
should the price of the underlying security decline. The Fund will write only
covered call option contracts and will receive premium income from the writing
of such contracts. Evergreen, Total Return and Growth and Income may purchase
call options to close out a previously written call option. In order to do so,
the Fund will make a "closing purchase transaction" -- the purchase of a call
option on the same security with the same exercise price and expiration date as
the call option which it has previously written. A Fund will realize a profit or
loss from a closing purchase transaction if the cost of the transaction is less
or more than the premium received from the writing of the option. If an option
is exercised, a Fund realizes a long-term or short-term gain or loss from the
sale of the underlying security and the proceeds of the sale are increased by
the premium originally received.
.........Consistent with its strategy of investing in "undervalued" securities,
Growth and Income may invest in lower medium and low-quality bonds and may also
purchase bonds in default if, in the opinion of the Fund's investment adviser,
there is significant potential for capital appreciation. Growth and Income,
however, will not invest more than 5% of its total assets in debt securities
which are rated below investment grade. These bonds are regarded as speculative
with respect to the issuer's continuing ability to meet principal and interest
payments. High yield bonds may be more susceptible to real or perceived adverse
economic and competitive industry conditions than investment grade bonds. A
projection of an economic downturn, or higher interest rates, for example, could
cause a decline in high yield bond prices because such events could lessen the
ability of highly leveraged companies to make principal and interest payments on
their debt securities. In addition, the secondary trading market for high yield
bonds may be less liquid than the market for higher grade bonds, which can
adversely affect the ability to dispose of such securities.
.........Subject to the limits described in the Prospectus and this
Statement of Additional Information, Florida High Income, National, Small Cap,
U.S. Government, and U.S. Real Estate may, to a limited extent, enter into
financial futures contracts including futures contracts based on securities
indices, purchase and write put and call options on such futures contracts, and
engage in related closing transactions.
<PAGE>
.........Florida High Income, Foundation, National, Short-Intermediate and
Short-Intermediate-CA may invest in variable and floating rate securities. The
terms of variable and floating rate instruments provide for the interest rate to
be adjusted according to a formula on certain predetermined dates. Variable and
floating rate instruments that are repayable on demand at a future date are
deemed to have a maturity equal to the time remaining until the principal will
be received on the assumption that the demand feature is exercised on the
earliest possible date. For the purposes of evaluating the interest-rate
sensitivity of the Fund, variable and floating rate instruments are deemed to
have a maturity equal to the period remaining until the next interest-rate
readjustment. For the purposes of evaluating the credit risks of variable and
floating rate instruments, these instruments are deemed to have a maturity equal
to the time remaining until the earliest date the Fund is entitled to demand
repayment of principal. Foundation may invest no more than 5% of its total
assets, at the time of the investment in question, in variable and floating rate
securities. Florida High Income, National, Short-Intermediate and
Short-Intermediate-CA may invest no more than 10% of their total assets, at the
time of the investment in question, in variable and floating rate securities
which are not readily marketable.
Fixed Income Ratings. The ratings assigned by nationally recognized
statistical rating organizations ("NRSROs") such as Moody's Investors Service,
Inc. (Moody's") or Standard & Poor's Ratings Group ("S&P") represent their
respective opinions of the quality of the municipal bonds and notes and Taxable
Short Term Obligations which they undertake to rate. It should be emphasized,
however, that ratings are general and not absolute standards of quality.
Consequently, obligations with the same maturity, stated interest rate and
rating may have different yields, while obligations of the same maturity and
stated interest rate with different ratings may have the same yield. While the
each Fund's investment adviser intends to use NRSROs such as Moody's or S&P to
evaluate the risk involved in purchasing medium and lower rated and unrated
instruments, they will also rely heavily on their internal credit analysis. See
Appendix A for further information about the ratings of Moody's and S&P as to
the various rated Municipal Obligations which the Funds may purchase.
When-Issued and Delayed Delivery Obligations. Each Fund may purchase
Obligations on a when-issued or delayed delivery basis. The purchase price and
the interest rate payable on the Obligations are fixed on the transaction date.
At the time a Fund makes the commitment to purchase Obligations on a when-issued
or delayed delivery basis, it will record the transaction and thereafter reflect
the value each day of such Obligations in determining its net asset value. A
Fund will make commitments for such when-issued transactions only when it has
the intention of actually acquiring the Obligations. To facilitate such
acquisitions, such Fund will maintain with the Custodian a separate account with
portfolio Obligations in an amount at least equal to such commitments. On
delivery dates for such transactions, a Fund will meet its commitments by
selling the Obligations held in the separate account and/or from cash flow. At
the time of settlement, the market values of the securities purchased may vary
from the purchase prices. Although a Fund will only purchase Obligations on a
when-issued basis with the intention of actually acquiring the Obligations, such
Fund may sell these securities before the settlement date if it is deemed
advisable.
There may be risks of delay in receiving additional collateral, or risks of
delay in recovery of the securities or even loss of rights in the collateral if
the borrower of the securities becomes insolvent.
MUNICIPAL BONDS. The two principal classifications of municipal bonds are
"general obligation" bonds and "revenue" bonds. General obligation bonds are
secured by the issuer's pledge of its full faith, credit and unlimited taxing
power for the payment of principal and interest. Revenue or special tax bonds
are payable only from the revenues derived from a particular facility or class
of facilities or projects or, in a few cases, from the proceeds of a special
excise or other tax, but are not supported by the issuer's power to levy general
taxes. There are, of course, variations in the security of municipal bonds, both
within a particular classification and between classifications, depending on
numerous factors. The yields of municipal bonds depend on, among other things,
general money market conditions, general conditions of the municipal bond
market, size of a particular offering, the maturity of the obligations and
rating of the issue.
Since the Funds may invest in industrial development bonds, the Funds
may not be an appropriate investment for entities which are "substantial users"
of facilities financed by industrial development bonds or for investors who are
"related persons". Generally, an individual will not be a "related person" under
the Code unless such investor or his immediate family (spouse, brothers, sisters
and lineal descendants) own directly or indirectly in the aggregate more than 50
percent of the value of the equity of a corporation or partnership which is a
"substantial user" of a facility financed from proceeds of "industrial
development bonds". A "substantial user" of such facilities is defined generally
as a "non-exempt person who regularly uses a part of a facility" financed from
the proceeds of industrial development bonds.
As set forth in the Prospectus, the Code establishes new unified volume
caps for most "private purpose" municipal bonds (such as industrial development
bonds and obligations to finance low-interest mortgages on owner-occupied
housing and student loans). The unified volume cap is not expected to affect
adversely the availability of Municipal Obligations for investment by the Funds;
however, it is possible that proposals will be introduced before Congress to
further restrict or eliminate the federal income tax exemption for interest on
Municipal Obligations. Any such proposals, if enacted, could adversely affect
the availability of municipal bonds for investment by the Funds and the value of
each Fund's portfolio might be affected. In that event, each Fund might
reevaluate its investment policies and restrictions and consider recommending to
its shareholders changes in both.
CURRENCY HEDGING - Global
Forward Contracts
.........As noted in its Prospectus, Global may enter into forward foreign
currency exchange contracts in order to protect against uncertainty in the level
of future foreign exchange rates. A forward foreign currency exchange contract
involves an obligation to purchase or sell a specific currency at a future date,
which may 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.
.........Except for cross-hedges, the Fund will not enter into such forward
contracts or maintain a net exposure to such contracts where the consummation of
the contracts would obligate the Fund to deliver an amount of foreign currency
in excess of the value of the Fund's portfolio securities or other assets
denominated in that currency. At the consummation of such a forward contract,
the 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 the 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 the 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 Fund's investment adviser believes that it is important to have the
flexibility to enter into such forward contracts when it determines that the
best interest of the Fund will be served. The Fund will place cash or high grade
debt securities in a separate account of the 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
the 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.
.........Inasmuch as it is not clear whether the gross income from certain
foreign currency transactions will be excluded by the Internal Revenue Service
from "qualifying income" for the purpose of qualification of the Fund as a
regulated investment company under U.S. Federal income tax law, the Fund intends
to operate so that the gross income from such transactions, together with other
nonqualifying income, will be less than 10% of the gross income of the Fund in
any taxable year.
Futures Contracts on Currencies .........Global may also invest in currency
futures contracts and related options thereon. The Fund may sell a currency
futures contract or a call option thereon or purchase a put option on such
futures contract, if Evergreen Asset anticipates that exchange rates for a
particular currency will fall, as a hedge (or in the case of a sale of a call
option, a partial hedge) against a decrease in the value of the Fund's
securities denominated in such currency. If Evergreen Asset anticipates that
exchange rates will rise, the Fund may purchase a currency futures contract or a
call option thereon to protect against an increase in the price of securities
denominated in a particular currency the Fund intends to purchase. These futures
contracts and related options will be used only as a hedge against anticipated
currency rate changes.
.........A 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 a currency futures
contract 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.
.........Unlike a currency futures contract, which requires the parties to
buy and sell currency on a set date, an option on a futures contract entitles
its holder to decide on or before a future date whether to enter into such a
contract. If the holder decides not to enter into the contract, the premium paid
for the option is lost.
.........The Fund is required to maintain margin deposits with brokerage
firms through which it effects currency futures contracts and options thereon.
In addition, due to current industry practice, daily variations in gains and
losses on open contracts are required to be reflected in cash in the form of
variation margin payments. The Fund may be required to make additional margin
payments during the term of the contract.
.........A risk in employing currency futures contracts to protect against
the price volatility of portfolio securities denominated in a particular
currency is that the prices of such securities subject to currency futures
contracts may correlate imperfectly with the behavior of the cash prices of the
Fund's securities. The correlation may be distorted by the fact that the
currency futures market may be dominated by short-term traders seeking to profit
from changes in exchange rates. This would reduce their value for hedging
purposes over a short-term period. Such distortions are generally minor and
would diminish as the contract approached maturity. Another risk is that the
Fund's investment adviser could be incorrect in its expectations as to the
direction or extent of various exchange rate movements or the time span within
which the movements take place.
.........Put and call options on currency futures have characteristics
similar to those of other options. In addition to the risks associated with
investing in options on securities, there are particular risks associated with
investing in options on currency futures. In particular, the ability to
establish and close out positions on such options will be subject to the
development and maintenance of a liquid secondary market. It is not certain that
this market will develop.
.........The Fund may not enter into currency futures contracts or related
options thereon if immediately thereafter the amount committed to margin plus
the amount paid for premiums for unexpired options on currency futures exceeds
5% of the market value of the Fund's total assets. The Fund may not purchase or
sell currency futures contracts or related options if immediately thereafter
more than 30% of its net assets would be hedged. In instances involving the
purchase of currency futures contracts by the Fund, an amount equal to the
market value of the currency futures contract will be deposited in a segregated
account of cash and cash equivalents to collateralize the position and thereby
ensure that the use of such futures contract is unleveraged.
FUTURES CONTRACTS - Florida High Income, Small Cap, U.S. Government and
U.S. Real Estate.
Florida High Income, Small Cap, U.S. Government and U.S. Real Estate are
permitted to use futures contracts ("Futures") as a possible means of hedging
each Fund's exposure to the equity or fixed income markets. The following
discussion is intended to explain briefly the workings of Futures.
Unlike when a Fund purchases or sells a portfolio security, no money is
paid or received by theFund upon the purchase or sale of a Future. Initially,
however, when such transactions are entered into, a Fund will be required to
deposit with the futures commission merchant ("broker") an amount of cash or
portfolio securities equal to a varying specified percentage of the contract
amount. This amount is known as initial margin. Subsequent payments, called
variation margin, to and from the broker, will be made on a daily basis as the
price of the underlying securities fluctuate making the Future more or less
valuable, a process known as mark to market. Insolvency of the broker may make
it more difficult to recover initial or variation margin. Changes in variation
margin are recorded by each Fund as unrealized gains or losses. Margin deposits
do not involve borrowing by a Fund and may not be used to support any other
transactions. At any time prior to the expiration of the Future, a Fund may
elect to close the position by taking an opposite position which will operate to
terminate such Fund's position in the Future. A final determination of variation
margin is then made. Additional cash is required to be paid or released to such
Fund and it realizes a gain or a loss. Although Futures by their terms call for
the actual delivery or acceptance of cash or securities, in most cases the
contractual obligation is fulfilled without having to make or take delivery. All
transactions in the futures markets are subject to commissions payable and are
offset or fulfilled through a clearing house associated with the exchange on
which the contracts are traded. Although the Funds intend to buy and sell
Futures only on an exchange where there appears to be an active secondary
market, there is no assurance that a liquid secondary market will exist for any
particular Future at any particular time. In such event, or in the event of an
equipment failure at a clearing house, it may not be possible to close a Futures
position.
The "sale" of a Future means the acquisition by a Fund of an
obligations to deliver an amount of cash equal to a specified dollar amount
times the difference between the index value at the close of the last trading
day of the Future and the price at which the Future is originally struck (which
a Fund anticipates will be lower because of a subsequent rise in interest rates
and a corresponding decline in the index value). This is referred to as having a
"short" Futures position. The "purchase" of a Future means the acquisition by a
Fund of an obligation to take delivery of such an amount of cash. In this case,
a Fund anticipates that the closing index value will be higher than the price at
which the Future is originally struck. This is referred to as having a "long"
Futures position. No physical delivery of the securities making up the index is
made as to either a long or a short Futures position.
Risks Relating to Futures Contracts. One risk in employing Futures to
attempt to protect against the price volatility of a Fund's portfolio securities
is that the Fund's investment adviser could be incorrect in its expectations as
to the extent of various interest rate movements or the time span within which
the movements take place. For example, if a Fund sold a Future in anticipation
of an increase in interest rates, and then interest rates went down instead,
such Fund would lose money on the sale.
Another risk as to Futures arises because of the imperfect correlation
between movement in the price of the Future and movements in the prices of the
portfolio securities which are the subject of the hedge. The risk of imperfect
correlation increases as the composition of a Fund's portfolio diverges from the
securities underlying the Futures. The price of the Future may move more than or
less than the price of the portfolio securities being hedged. If the price of
the Future moves less than the price of the portfolio securities which are the
subject of the hedge, the hedge will not be fully effective but, if the price of
the portfolio securities being hedged has moved in an unfavorable direction, a
Fund would be in a better position than if it had not hedged at all. If the
price of the Fportfolio securities being hedged has moved in a favorable
direction, this advantage will be partially offset by the Future. If the price
of the Future moved more than the price of the portfolio securities, a Fund will
experience either a loss or gain on the Future which will not be completely
offset by movements in the price of the Fportfolio securities which are the
subject of the hedge. To compensate for the imperfect correlation of movements
in the price of the portfolio securities being hedged and movements in the price
of the Futures, a Fund may buy or sell Futures in a greater dollar amount than
the dollar amount of the Obligations being hedged if the historical volatility
of the prices of the Obligations being hedged is less than the historical
volatility of the debt securities underlying the Futures. It is also possible
that, where a Fund has sold Futures to hedge its portfolio against decline in
the market, the market may advance and the value of the Fportfolio securities
held in such Fund's portfolio may decline. If this occurred, such Fund would
lose money on the Future and also experience a decline in value of its portfolio
securities.
Where Futures are purchased to hedge against a possible increase in the
price of portfolio securities before a Fund is able to invest in them in an
orderly fashion, it is possible that the market may decline instead; if such
Fund then concludes not to invest in them at that time because of concern as to
possible further market decline or for other reasons, such Fund will realize a
loss on the Futures that is not offset by a reduction in the price of the
portfolio securities which it had anticipated purchasing.
There are daily price fluctuation limits established by contract
markets which limit the amount of fluctuation in a futures contract price during
a single trading day. Once the daily limit has been reached on a contract, no
trades may be entered into at prices beyond the limit, thus preventing the
liquidation of open Futures positions.
Risks Relating to Futures
Options. In addition to the risks which apply to Futures, there are several
special risks relating to Futures Options. The ability to establish and close
out a position on Futures Options is subject to the development and maintenance
of a liquid secondary market.
Compared to the purchase or sale of Futures, the purchase of call or
put Futures Options involves less potential risk to a Fund because the maximum
amount at risk is the premium paid for the Futures Options (plus transaction
costs). There may be circumstances, however, when the purchase of a call or put
Futures Option would result in a loss, and the purchase or sale of a Future
would not result in a loss, such as when there is no movement in the prices of
the underlying securities. The writing of a put or call Futures Option involves
risks similar to those relating to transactions in Futures as described above.
During the option period, a Fund as a call writer, in return for the
premium on the Futures Option, has given up the opportunity for capital
appreciation above the exercise price should the market price of the Future
increase, but has retained the risk of depreciation should the price of the
Future decline. As a secured put writer, a Fund also retains the risk of loss
should the market value of the Future decline below the exercise price of the
Futures Option. In both cases, a Fund has no control over the time when it may
be required to fulfill its obligation as a writer of the Futures Option.
If a Fund as a call Future Option writer is unable to effect a closing
purchase transaction, it would continue to bear the risk of an increase in the
market price of the Future until the Futures Option expires or is exercised. If
a Fund as a secured put Futures Option writer is unable to effect a closing
purchase transaction, it would continue to bear the risk of decline in the
market price of the Future until the Futures Option expires or is exercised.
In purchasing a put Futures Option, a Fund would realize a loss if the
price of the Future subject to the Futures Option increased or remained the same
or did not decrease during the option period by more than the amount of the
premium. In purchasing a call Futures Option, a Fund would realize a loss if the
price of the Future subject to the Futures Option decreased or remained the same
or did not increase during the option period by more than the amount of the
premium. In purchasing Futures Options, a Fund relies on a clearing corporation
to purchase or deliver the Future if the Futures Option is exercised. Failure of
a clearing corporation to do so may cause a Fund to lose the opportunity to
effect a profitable transaction.
Regulatory Aspects of Futures Contracts. Each Fund, due to requirements
under the Investment Company Act of 1940 (the "1940 Act"), will deposit in a
segregated account with its custodian bank portfolio maturing in one year or
less or cash, in an amount equal to the fluctuating market value of long Futures
it has purchased, less any margin deposited on long positions.
Each Fund must operate within certain restrictions as to its long and
short positions in Futures under a rule (the "CFTC Rule" ) adopted by the
Commodity Futures Trading Commission ( "CFTC" ) under the Commodity Exchange Act
(the "CEA" ) to be eligible for the exclusion provided by the CFTC Rule as a
"commodity pool operator" (as defined under the CEA), and must represent to the
CFTC that it will operate within such restrictions. Under these restrictions a
Fund will not, as to any positions, whether long, short or a combination
thereof, enter into Futures for which the aggregate initial margins exceed 5% of
the fair market value of its assets. Under the restrictions, a Fund also must,
as to its short positions, use Futures solely for bona- fide hedging purposes
within the meaning and intent of the applicable provisions under the CEA. As to
a Fund's long positions which are used as part of its portfolio strategy and are
incidental to its activities in the underlying cash market, the "underlying
commodity value" (see below) of its Futures must not exceed the sum of (i) cash
set aside in an identifiable manner, or short-term U.S. debt obligations or
other U.S. dollar-denominated high quality short-term money market instruments
so set aside, plus any funds deposited as margin; (ii) cash proceeds from
existing investments due in 30 days and (iii) accrued profits held at the
futures commission merchant. (There is described above the segregated account
which a Fund must maintain with its Custodian bank as to its Futures activities
due to requirements other than those of the CFTC Rule; a Fund will, as to long
positions, be required to abide by the more restrictive of this other
requirement or the above requirements of the CFTC Rule. ) The "underlying
commodity value" of a Future is computed by multiplying the size of the Future
by the daily settlement price of the Future.
INVESTMENT RESTRICTIONS
.........Except as noted, the investment restrictions set forth below are
fundamental and may not be changed with respect to each Fund without the
affirmative vote of a majority of the outstanding voting securities of the Fund.
Where an asterisk (*) appears after a Fund's name, the relevant policy is
non-fundamental with respect to that Fund and may be changed by the Fund's
investment adviser without shareholder approval, subject to review and approval
by the Trustees. As used in this Statement of Additional Information and in the
Prospectus, "a majority of the outstanding voting securities of the Fund" means
the lesser of (1) the holders of more than 50% of the outstanding shares of
beneficial interest of the Fund or (2) 67% of the shares present if more than
50% of the shares are present at a meeting in person or by proxy.
1........Concentration of Assets in Any One Issuer
.........None of Growth and Income, Limited Market and Total Return may
invest more than 5% of its total net assets, at the time of the investment in
question, in the securities of any one issuer other than the United States
Government and its instrumentalities.
.........Evergreen may not invest more than 5% of its total net assets in
the securities of any one issuer other than the United States Government and its
instrumentalities.
.........American Retirement may not 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 United States Government and its agencies or
instrumentalities.
........None of Aggressive, Foundation, Global, Small Cap and U.S. Real
Estate may invest more than 5% of its total assets, at the time of the
investment in question, in the securities of any one issuer other than the
United States Government and its agencies or instrumentalities, except that up
to 25% of the value of the Fund's total assets may be invested without regard to
such 5% limitation.
.........None of Florida High Income, National, Short Intermediate, Short
Intermediate-CA, Tax Exempt, and Tax Strategic 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 United States Government and its agencies or
instrumentalities, except that up to 25% of the value of each Fund's total
assets may be invested without regard to such 5% limitation. For this purpose
each political subdivision, agency, or instrumentality and each multi-state
agency of which a state is a member, and each public authority which issues
industrial development bonds on behalf of a private entity, will be regarded as
a separate issuer for determining the diversification of each Fund's portfolio.
.........Money Market may not 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 United States Government and its agencies or instrumentalities, except
that up to 25% of the value of the Fund's total assets may be invested without
regard to such 5% limitation. (In order to comply with amendments to the
applicable portfolio diversification requirements, the Fund as a matter of
operating policy, prohibits the investment of more than 5% of the Fund's total
assets in securities issued by any one issuer, except that the Fund may invest
more than 5% of its total assets in First Tier Securities of a single issuer for
a period of up to three business days after the purchase thereof. The Fund may
not make more than one such investment at any time.)
2........10% Limit on Securities of Any One Issuer
.........None of Aggressive*, American Retirement, Foundation, Global,
Money Market, Short Intermediate-CA, Small Cap*, Tax Exempt and U.S. Real
Estate* may purchase more than 10% of any class of securities of any one issuer
other than the United States Government and its agencies or instrumentalities.
.........None of Evergreen, Growth and Income, Limited Market and Total
Return may purchase more than 10% of any class of securities of any one issuer
other than the United States Government and its instrumentalities.
.........None of Florida High Income*, National*, Short-Intermediate* and
Tax Strategic* may invest more than 10% of the voting securities of any one
issuer other than the United States Government and its agencies or
instrumentalities.
3........Investment for Purposes of Control or Management
.........No Fund(2) may invest in companies for the purpose of exercising
control or management.
- --------
(2) Not fundamental for Small Cap, Tax Strategic, U.S. Real Estate,
National and U.S. Government.
4........Purchase of Securities on Margin
.........None of Agressive*, American Retirement, Evergreen, Foundation,
Global, Growth and Income, Limited Market, Money Market, National,*
Short-Intermediate, Short Intermediate-CA, Tax-Exempt, Tax Strategic* and Total
Return may purchase securities on margin, except that each Fund may obtain such
short-term credits as may be necessary for the clearance of transactions.
.........None of Florida High Income*, Small Cap,* U.S. Government* and
U.S. Real Estate* may purchase securities on margin, except that each Fund may
obtain such short-term credits as may be necessary for clearance of
transactions, and provided that margin payments in connection with futures
contracts and options on futures contracts shall not constitute purchasing
securities on margin.
5........Unseasoned Issuers
.........Neither American Retirement nor Foundation may invest in the
securities of unseasoned issuers that have been in continuous operation for less
than three years, including operating periods of their predecessors.
.........None of Evergreen, Money Market and Total Return may invest more than
5% of its total assets (5% of total net assets for Evergreen) in securities of
unseasoned issuers that have been in continuous operation for less than three
years, including operating periods of their predecessors.
.........None of Florida High Income*, National, Short-Intermediate,
Short-Intermediate-CA and Tax Exempt may invest more than 5% of its total assets
in securities of unseasoned issuers (taxable securities of unseasoned issuers
for Short Intermediate, Short-Intermediate-CA and Tax Exempt) that have been in
continuous operation for less than three years, including operating periods of
their predecessors, except that no such limitation shall apply to the extent
that (i) each Fund may invest in obligations issued or guaranteed by the United
States Government and its agencies or instrumentalities, (ii)
Short-Intermediate, Short-Intermediate-CA and Tax Exempt may invest in Municipal
Securities, and (iii) Florida High Income*, National* may invest in Municipal
Bonds.
.........None of Growth and Income, Small Cap* and Tax Strategic* may invest
more than 15% of its total assets (10% of total net assets for Growth and
Income) in securities of unseasoned issuers that have been in continuous
operation for less than three years, including operating periods of their
predecessors.
.........Aggressive* and U.S. Real Estate* may not invest more than 15% of
its total assets in securities of unseasoned issuers that have been in
continuous operation for less than three years, including operating periods of
their predecessors, except obligations issued or guaranteed by the United States
Government and its agencies or instrumentalities (this limitation does not apply
to real estate investment trusts).
.........Global may not invest more than 5% of its total assets in securities of
unseasoned issuers that have been in continuous operation for less than three
years, including operating periods of their predecessors, except obligations
issued or guaranteed by the United States Government and its agencies or
instrumentalities (this limitation does not apply to real estate investment
trusts).
<PAGE>
6........Underwriting
.........None of Aggressive*, American Retirement, Evergreen, Foundation,
Global, Growth and Income, Limited Market, Money Market, Small Cap,* Tax
Strategic,* Total Return, U.S. Government and U.S. Real Estate* may engage in
the business of underwriting the securities of other issuers.
.........None of Florida High Income*, National,* Short-Intermediate,
Short-Intermediate - CA and Tax-Exempt may engage in the business of
underwriting the securities of other issuers, provided that the purchase of
Municipal Securities (Municipal Bonds for National), or other permitted
investments, directly from the issuer thereof (or from an underwriter for an
issuer) and the later disposition of such securities in accordance with a Fund's
investment program shall not be deemed to be an underwriting.
7........Interests in Oil, Gas or Other Mineral Exploration or Development
Programs
......... No Fund may purchase, sell or invest in interests in oil, gas or
other mineral exploration or development programs.
8........Concentration in Any One Industry
.........Neither Global nor U.S. Real Estate may concentrate its
investments in any one industry, except that each Fund will invest at least 65%
of its total assets in securities of companies engaged principally in the real
estate industry.
.........None of Evergreen, Growth and Income, Limited Market and Total
Return may concentrate its investments in any one industry, except that each
Fund may invest up to 25% of its total net assets in any one industry.
.........None of Aggressive, American Retirement, Foundation, Money Market,
Small Cap and Tax Strategic may invest 25% or more of its total assets in the
securities of issuers conducting their principal business activities in any one
industry; provided, that this limitation shall not apply (i) with respect to
each Fund, to obligations issued or guaranteed by the United States Government
or its agencies or instrumentalities, (ii) with respect to Tax Strategic, to
Municipal Securities, or (iii) with respect to Money Market, to certificates of
deposit, bankers' acceptances and interest bearing savings deposits. For
purposes of this restriction, utility companies, gas, electric, water and
telephone companies will be considered separate industries.
.........U.S. Government may not purchase the securities of any issuer
(other than obligations issued or guaranteed by the government of the United
States or its agencies or instrumentalities) if, as a result, 25% or more of the
Fund's total assets would be invested in the securities of issuers having their
principal business activities in the same industry.
.........None of Short-Intermediate, Short-Intermediate-CA and Tax Exempt may
invest 25% or more of its total assets in the securities of issuers conducting
their principal business activities in any one industry; provided, that this
limitation shall not apply (i) with respect to each Fund, to obligations issued
or guaranteed by the United States Government or its agencies or
instrumentalities and Municipal Securities, or (ii) with respect to
Short-Intermediate-CA and Tax-Exempt, to certificates of deposit and bankers'
acceptances issued by domestic branches of United States banks).
.........Florida High Income and National may not invest more than 25% of
their total assets in the securities of issuers conducting their principal
business activities in any one industry; provided, that this limitation shall
not apply to obligations issued or guaranteed by the United States Government or
its agencies or instrumentalities or Municipal Bonds.
9........Warrants
.........None of Aggressive*, American Retirement, Evergreen, Florida High
Income*, lobal, Growth and Income, Limited Market, National,*
Short-Intermediate, Short-Intermediate - CA, Small Cap,* Tax-Exempt, Total
Return and U.S. Real Estate* may invest more than 5% of its total net assets in
warrants, and, of this amount, no more than 2% of each Fund's total net assets
may be invested in warrants that are listed on neither the New York nor the
American Stock Exchange.
.........Neither Foundation nor Tax Strategic* may invest more than 5% of
its net assets in warrants, and of this amount, no more than 2% of each Fund's
net assets may be invested in warrants that are listed on neither the New York
nor the American Stock Exchanges.
.........U.S. Government* may not invest more than 5% of its total net
assets in warrants, and of this amount, no more than 2% of the Fund's total net
assets may be invested in warrants that are not traded on principal domestic or
foreign exchanges.
10.......Ownership by Directors/Trustees
.........None of Agressive*, American Retirement, Evergreen, Foundation,
Florida High Income*, Global, Growth and Income, Limited Market, Money Market,
National, Short-Intermediate, Short-Intermediate-CA, Tax-Exempt, Total Return
and U.S. Government* may purchase or retain the securities of any issuer if (i)
one or more officers or trustees/directors of the Fund or its investment adviser
individually owns or would own, directly or beneficially, more than 1/2% 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.
.........None of Small Cap,* Tax Strategic* and U.S. Real Estate* may
purchase or retain the securities of any issuer if, to the Fund's knowledge, (i)
one or more officers or trustees/directors of the Fund or its investment adviser
individually owns or would own, directly or beneficially, more than 1/2% 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
.........None of Aggressive*, National,* Money Market, Short-Intermediate,
Short-Intermediate-CA and Tax Exempt may make short sales of securities or
maintain a short position.
.........Neither American Retirement nor Foundation may make short sales of
securities unless, at the time of each such sale and thereafter while a short
position exists, each Fund owns the securities sold or securities convertible
into or carrying rights to acquire such securities.
.........None of Evergreen, Growth and Income, Global, Limited Market, Tax
Strategic* and Total Return may make short sales of securities unless, at the
time of each such sale and thereafter while a short position exists, each Fund
owns an equal amount of securities of the same issue or owns securities which,
without payment by the Fund of any consideration, are convertible into, or are
exchangeable for, an equal amount of securities of the same issue.
.........None of Florida High Income*, Small Cap,* U.S. Real Estate* and
U.S. Government* may make short sales of securities unless, at the time of each
such sale and thereafter while a short position exists, each Fund owns an equal
amount of securities of the same issue or owns securities which, without payment
by the Fund of any consideration, are convertible into, or are exchangeable for,
an equal amount of securities of the same issue (and provided that transactions
in futures contracts and options are not deemed to constitute selling securities
short).
12.......Lending of Funds
.........None of Global, Small Cap, U.S. Government, U.S. Real Estate and
Tax Strategic may lend its funds to other persons, except through the purchase
of a portion of an issue of publicly distributed debt securities or the entering
into of repurchase agreements.
.........None of American Retirement, Evergreen, Foundation, Growth and
Income, Limited Market and Total Return may lend its funds to other persons,
except through the purchase of a portion of an issue of publicly distributed
debt securities.
.........None of Aggressive, Florida High Incoem, National,
Short-Intermediate, Short-Intermediate-CA and Tax Exempt may lend its funds to
other persons, provided that each Fund may purchase issues of debt securities,
acquire privately negotiated loans made to municipal borrowers and enter into
repurchase agreements.
.........Money Market may not lend its funds to other persons, provided
that it may purchase money market securities or enter into repurchase
agreements.
13.......Lending of Securities
.........None of Foundation, Aggressive*, Florida High Income*, Global,
National, Short-Intermediate, Small Cap, Tax Strategic, U.S. Government and U.S.
Real Estate may lend its portfolio securities, unless the borrower is a broker,
dealer or financial institution that pledges and maintains collateral with the
Fund consisting of cash or securities issued or guaranteed by the United States
Government having a value at all times not less than 100% of the current market
value of the loaned securities, including accrued interest, provided that the
aggregate amount of such loans shall not exceed 30% of the Fund's total assets
(30% of the Fund's total net assets for Global, U.S. Government and U.S. Real
Estate).
.........None of American Retirement, Evergreen, Growth and Income and Limited
Market may lend its portfolio securities, unless the borrower is a broker,
dealer or financial institution that pledges and maintains collateral with the
Fund consisting of cash or securities issued or guaranteed by the United States
Government having a value at all times not less than 100% of the value of the
loaned securities (100% of the current market value for American Retirement),
provided that the aggregate amount of such loans shall not exceed 30% of the
Fund's total net assets.
.........None of Money Market, Short-Intermediate-CA, Tax Exempt and Total
Return may lend its portfolio securities, unless the borrower is a broker,
dealer or financial institution that pledges and maintains collateral with the
Fund consisting of cash, letters of credit or securities issued or guaranteed by
the United States Government having a value at all times not less than 100% of
the current market value of the loaned securities (100% of the value of the
loaned securities for Total Return), including accrued interest, provided that
the aggregate amount of such loans shall not exceed 30% of the Fund's total
assets (30% of the Fund's total net assets for Total Return).
14.......Commodities
.........None of National,* Short-Intermediate, Short-Intermediate-CA, Tax
Exempt and Tax Strategic* may purchase, sell or invest in commodities, commodity
contracts or financial futures contracts.
.........None of Aggressive*, Florida High Income*, Small Cap, U.S.
Government and U.S. Real Estate may purchase, sell or invest in physical
commodities unless acquired as a result of ownership of securities or other
instruments (but this shall not prevent the Fund from purchasing or selling
options and futures contracts or from investing in securities or other
instruments backed by physical commodities).
.........None of American Retirement, Evergreen, Foundation, Growth and
Income, Limited Market, Money Market and Total Return may purchase, sell or
invest in commodities or commodity contracts.
.........Global may not purchase, sell or invest in commodities or commodity
contracts; provided, however, that this policy does not prevent the Fund from
purchasing and selling currency futures contracts and entering into forward
foreign currency contracts.
15.......Real Estate
.........Neither Small Cap nor U.S. Government may purchase or invest in
real estate or interests in real estate (but this shall not prevent either Fund
from investing in marketable securities issued by companies such as real estate
investment trusts which deal in real estate or interests therein, and shall not
prevent U.S. Government from investing in participation interests in pools of
real estate mortgage loans).
.........Global may not purchase or invest in real estate or interests in
real estate (although it 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).
.........U.S. Real Estate* may not purchase, sell or invest in real estate
or interests in real estate (although it 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).
.........None of Aggressive*, American Retirement, Evergreen, Foundation,
Florida High Income*, Growth and Income, Limited Market, Money Market, Tax
Strategic and Total Return may purchase, sell or invest in real estate or
interests in real estate, except that (i) each Fund may purchase, sell or invest
in marketable securities of companies holding real estate or interests in real
estate, including real estate investment trusts, and (ii) Tax Strategic may
purchase, sell or invest in Municipal Securities or other debt securities
secured by real estate or interests therein.
None of National, Short-Intermediate, Short-Intermediate-CA and Tax Exempt may
purchase, sell or invest in real estate or interests in real estate, except that
each Fund may purchase Municipal Securities (Municipal Bonds for National) and
other debt securities secured by real estate or interests therein.
16.......Borrowing, Senior Securities, Reverse Repurchase Agreements
.........(Certain Funds have additional fundamental policies relating to
senior securities, repurchase agreements and reverse repurchase agreements. (See
Items 17 and 20 below)).
.........None of American Retirement, Foundation, Limited Market and Total
Return may borrow money except from banks as a temporary measure to facilitate
redemption requests which might otherwise require the untimely disposition of
portfolio investments and for extraordinary or emergency purposes (and, with
respect to American Retirement only, for leverage), provided that the aggregate
amount of such borrowings shall not exceed 5% of the value of the Fund's total
net assets (5% of total assets for American Retirement and Foundation) at the
time of any such borrowing, or mortgage, pledge or hypothecate its assets,
except in an amount sufficient to secure any such borrowing.
.........Evergreen may not borrow money except from banks as a temporary measure
for extraordinary or emergency purposes (i) on an unsecured basis, subject to
the requirements that the value of the Fund's assets, including the proceeds of
borrowings, does not at any time become less than 300% of the Fund's
indebtedness; provided, however, that if the value of the Fund's assets becomes
less than such amount, the Fund will reduce its borrowings within three business
days so that the value of the Fund's assets will be at least 300% of its
indebtedness, or (ii) may make such borrowings on a secured basis, provided that
the aggregate amount of such borrowings shall not exceed 5% of the value of its
total net assets at the time of any such borrowing, or mortgage, pledge or
hypothecate its assets, except in an amount not exceeding 15% of its total net
assets taken at cost to secure such borrowing.
.........Aggressive may not borrow money except on an unsecured basis up to
25% of its net assets, subject to the requirements that the value of the Fund's
assets, including the proceeds of borrowings, does not at any time become less
than 300% of the Fund's indebtedness; provided, however, that if the value of
the Fund's assets becomes less than such amount, the Fund will reduce its
borrowings within three business days so that the value of the Fund's assets
will be at least 300% of its indebtedness.
.........None of Global, Short-Intermediate, Short-Intermediate-CA,
Small-Cap, Tax-Exempt, Tax Strategic, U.S. Government and U.S. Real Estate may
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 each 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 each of Small Cap, Tax
Strategic, U.S. Government and U.S. Real Estate will not purchase any securities
at any time when borrowings, including reverse repurchase agreements, exceed 5%
of the value of its total assets, and provided further that each of Global, Tax
Exempt, Short-Intermediate and Short-Intermediate-CA will not purchase any
securities at times when any borrowings (including reverse repurchase
agreements) are outstanding. No Fund will enter into reverse repurchase
agreements exceeding 5% of the value of its total assets.
.........Money Market 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 assets at the time of such borrowing; or mortgage,
pledge or hypothecate any assets except in connection with any such borrowing
and in amounts not in excess of the lesser of the dollar amounts borrowed or 10%
of the value of the Fund's assets at the time of such borrowing. The Fund will
not enter into reverse repurchase agreements exceeding 5% of the value of its
total assets. The Fund also will not purchase any additional securities whenever
any borrowings are outstanding.
.........Florida High Income and National may not borrow money or enter
into reverse repurchase agreements except for temporary or emergency purposes,
and not for leveraging, and then in amounts not in excess of 10% of the value of
the Fund's total assets at the time of such borrowing; or mortgage, pledge or
hypothecate any assets except in connection with any such borrowing and in
amounts not in excess of the lesser of the dollar amounts borrowed or 10% of the
value of the Fund's total assets at the time of such borrowing. The Fund will
not enter into reverse repurchase agreements exceeding 5% of the value of its
total assets.
.........Growth and Income may not borrow money except from banks as a temporary
measure for extraordinary or emergency purposes, provided that the aggregate
amount of such borrowings shall not exceed 5% of the value of the Fund's total
assets at the time of such borrowing; or mortgage, pledge or hypothecate its
assets, except in an amount not exceeding 15% of its assets taken at cost to
secure such borrowing.
17.......Senior Securities
.........(The policies of certain Funds concerning senior securities are
set forth in Item 16 above.)
.........National* may not issue senior securities.
.........Neither American Retirement nor Foundation may issue senior
securities, except as permitted by the Investment Company Act of 1940, as
amended.
.........Growth and Income may not issue senior securities, as defined in the
Investment Company Act of 1940, as amended, except that this restriction shall
not be deemed to prohibit the Fund from (i) making any permitted borrowings,
mortgages or pledges, (ii) lending its portfolio securities, or (iii) entering
into permitted repurchase transactions.
.........Limited Market may not issue senior securities as defined in the
Investment Company Act of 1940, as amended, except insofar as the Fund may be
deemed to have issued a senior security by reason of borrowing money in
accordance with the restrictions described above.
18.......Joint Trading
.........None of Aggressive, American Retirement, Evergreen, Florida High
Income, Foundation, Global, Growth and Income, Limited Market and Total Return,
Small Cap,* Tax Strategic,* U.S. Government* and U.S. Real Estate* may
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 the Fund's 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).
19.......Options
.........None of Foundation, Global, Limited Market, Money Market, Tax
Strategic* and U.S. Real Estate* may write, purchase or sell put or call
options, or combinations thereof, except that Global and U.S. Real Estate may do
so as permitted under "Investment Objective" in each such Fund's Prospectus.
.........None of National,* Short-Intermediate, Short-Intermediate-CA and
Tax Exempt may write, purchase or sell put or call options, or combinations
thereof; except each Fund may purchase securities with rights to put securities
to the seller in accordance with its investment program.
.........None of Evergreen, Growth and Income and Total Return may write,
purchase or sell put or call options, or combinations thereof, except that each
Fund is authorized to write covered call options on portfolio securities and to
purchase call options in closing purchase transactions, provided that (i) such
options are listed on a national securities exchange, (ii) the aggregate market
value of the underlying securities does not exceed 25% of the Fund's total net
assets, taken at current market value on the date of any such writing, and (iii)
the Fund retains the underlying securities for so long as call options written
against them make the shares subject to transfer upon the exercise of any
options.
.........American Retirement may not write, purchase or sell put or call
options, or combinations thereof, except that the Fund is authorized (i) to
write call options traded on a national securities exchange against no more than
15% of the value of the equity securities (including securities convertible into
equity securities) held in its portfolio, provided that the Fund owns the
optioned securities or securities convertible into or carrying rights to acquire
the optioned securities and (ii) to purchase call options in closing purchase
transactions.
20.......Repurchase Agreements; Reverse Repurchase Agreements.
.........(The policies of certain Funds concerning repurchase agreements
and/or reverse repurchase agreements are set forth in Item 16 above).
.........Money Market may not invest more than 10% of its total assets in
repurchase agreements maturing in more than seven days.
.........Neither American Retirement nor Foundation may enter into
repurchase agreements or reverse repurchase agreements.
21.......Investment in Equity Securities
.........American Retirement may not invest more than 75% of the value of
its total assets in equity securities (including securities convertible into
equity securities).
22. ....Investment in Municipal Securities
.........National may not invest more than 20% of its total assets in
securities other than Municipal Bonds (as described under "Investment Objective"
in the Fund's Prospectus), unless extraordinary circumstances dictate a more
defensive posture.
.........Neither Short-Intermediate nor Tax Exempt may invest more than 20%
of its total assets in securities other than Municipal Securities (as described
under "Investment Objective" in each Fund's Prospectus), unless extraordinary
circumstances dictate a more defensive posture.
.........Short-Intermediate-CA may not invest more than 20% of its total
assets in securities other than California Municipal Securities (as described
under "Investment Objective" in the Fund's Prospectus), unless extraordinary
circumstances dictate a more defensive posture.
........Florida High Income* will invest, under normal market conditions,
at least 80% of its net assets in municipal securities and at least 90% of such
assets will be invested in Florida obligations.
23.......Investment in Money Market Securities
.........Money Market may not purchase any securities other than money
market instruments (as described under "Investment Objective" in the Fund's
Prospectus).
NON FUNDAMENTAL OPERATING POLICIES
.........Certain Funds have adopted additional non-fundamental operating
policies. Operating policies may be changed by the Board of Trustees without a
shareholder vote.
1........Securities Issued by Government Units; Industrial Development Bonds.
Each of Short-Intermediate and Tax-Exempt have determined not to invest more
than 25% of its total assets (i) in securities issued by governmental units
located in any one state, territory or possession of the United States (but this
limitation does not apply to project notes backed by the full faith and credit
of the United States Government) or (ii) industrial development bonds not backed
by bank letters of credit. In addition, Short-Intermediate-CA has determined not
to invest more than 25% of its total assets in industrial development bonds not
backed by bank letters of credit.
2........Futures and Options Transactions. Each of Small Cap, U.S. Real Estate
and U.S. Government has adopted the following limitations on futures and options
transactions: Each Fund has filed a notice of eligibility for exclusion from the
definition of the term "commodity pool operator" with the Commodity Futures
Trading Commission (CFTC) and the National Futures Association, which regulate
trading in the futures markets. Pursuant to Section 4.5 of the regulations under
the Commodity Exchange Act, the notice of eligibility included the following
representations:
.........The Fund will use commodity futures or commodity options contracts
solely for bona fide hedging purposes within the meaning and intent of Section
1.3(z)(1) of the General Regulations under the Act (the "Regulations");
provided, however, that in addition, with respect to positions in commodity
futures or commodity option contracts which do not come within the meaning and
intent of Section 1.3(z)(i) of the Regulations, the Fund represents that the
aggregate initial margin and premiums required to establish such positions will
not exceed five percent (5%) of the fair market value of the Fund's portfolio,
after taking into account unrealized profits and unrealized losses on any such
contracts it has entered into; and, provided, further, that in the case of an
option that is in-the-money at the time of purchase, the in-the-money amount as
defined in Section 190.01(x) may be excluded in computing such five percent;
.........The Fund will not be, and has not been, marketing participations
to the public as or in a commodity pool or otherwise as or in a vehicle for
trading in the commodity future or commodity options market;
.........The Fund will disclose in writing to each prospective participant
the purpose of and the limitations on the scope of the commodity future and
commodity options trading in which it intends to engage; and
.........The Fund will submit to such special calls as the CFTC may make to
require the qualifying entity to demonstrate compliance with the provision of
Reg. 4.5(c).
.........In addition to the above limitations, the Fund will not: (i) sell
futures contracts, purchase put options or write call options if, as a result,
more than 30% of the Fund's total assets (25% of total assets for U.S.
Government) would be hedged with futures and options under normal conditions;
(ii) purchase futures contracts or write put options if, as a result, the Fund's
total obligations upon settlement or exercise of purchased futures contracts and
written put options would exceed 30% of its total assets (25% of total assets
for U.S. Government); or (iii) purchase call options if, as a result, the
current value of option premiums for options purchased by the Fund would exceed
5% of the Fund's total assets. These limitations do not apply to options
attached to, or acquired or traded together with their underlying securities,
and do not apply to securities that incorporate features similar to options.
3........Illiquid Securities.
.........None of Evergreen, Global, Growth and Income, Limited Market,
Money Market, National, Short-Intermediate, Short-Intermediate-CA, Small Cap,
Tax-Exempt, Tax Strategic, Total Return, U.S. Government and U.S. Real Estate
may invest more than 15% (10% for Money Market and Tax-Exempt) of its net assets
in illiquid securities and other securities which are not readily marketable,
including repurchase agreements which have a maturity of longer than seven days,
but excluding securities eligible for resale under Rule 144A of the Securities
Act of 1933, as amended, which the Directors/Trustees have determined to be
liquid.
.........Neither American Retirement nor Foundation may invest more than 15% of
its net assets in illiquid securities and other securities (other than
repurchase agreements) which are not readily marketable, excluding securities
eligible for resale under Rule 144A of the Securities Act of 1933, as amended,
which the Trustees have determined to be liquid.
4........Other Investment Companies. Each Fund may purchase the securities
of other investment companies, except to the extent such purchases are not
permitted by applicable law.
5........Other. In order to comply with certain state blue sky limitations:
-----
.........Each of American Retirement, Evergreen, Foundation, Global, Growth
and Income, National, Money Market, Short-Intermediate, Short-Intermediate-CA,
Small Cap, Tax-Exempt, Tax Strategic, Total Return, U.S. Government and U.S.
Real Estate interprets fundamental investment restriction 7 to prohibit
investments in oil, gas and mineral leases.
.........Each of American Retirement, Evergreen, Foundation, Global, Growth
and Income, National, Money Market, Short-Intermediate, Short-Intermediate-CA,
Small Cap, Tax-Exempt, Tax Strategic, Total Return, U.S. Government and U.S.
Real Estate interprets fundamental investment restriction 15 to prohibit
investment in real estate limited partnerships which are not readily marketable.
.........Foundation interprets fundamental investment restriction 11 to permit
short sales only where the Fund owns the securities sold or securities
convertible into or carrying rights to acquire such securities without payment
of any additional consideration therefor.
CERTAIN ADDITIONAL 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" in the Prospectus.
.........In addition, the ability of Florida High Income, National,
Short-Intermediate, Short-Intermediate-CA, Tax-Exempt, and Tax Strategic to
achieve their respective investment objectives is dependent on the continuing
ability of the issuers of Municipal Bonds in which the Funds' invest -- and of
banks issuing letters of credit backing such securities -- to meet their
obligations with respect to the payment of interest and principal when due. The
ratings of Moody's, S&P and other nationally recognized rating organizations
represent their opinions as to the quality of Municipal Bonds which they
undertake to rate. Ratings are not absolute standards of quality; consequently,
Municipal Bonds with the same maturity, coupon, and rating may have different
yields. There are variations in Municipal Bonds, both within a particular
classification and between classifications, resulting from numerous factors.
......... Unlike other types of investments, Municipal Bonds have
traditionally not been subject to regulation by, or registration with, the
Securities and Exchange Commission, although there have been proposals which
would provide for regulation in the future.
......... The federal bankruptcy statutes relating to the debts of
political subdivisions and authorities of states of the United States provide
that, in certain circumstances, such subdivisions or authorities may be
authorized to initiate bankruptcy proceedings without prior notice to or consent
of creditors, which proceedings could result in material and adverse changes in
the rights of holders of their obligations. In addition, there have been
lawsuits challenging the issuance of pollution control revenue bonds or the
validity of their issuance under state or Federal law which could ultimately
affect the validity of those Municipal Bonds or the tax-free nature of the
interest thereon.
......... While not anticipated, it is conceivable that substantial
redemptions could result in the realization by Florida High Income, National,
Short-Intermediate, Tax-Exempt, and Short-Intermediate-CA of gains. Short-term
gains would be taxable as ordinary income when distributed to the Fund's
shareholders. Long-term gains would be treated as capital gains.
......... While Global and U.S. Real Estate are technically diversified
within the meaning of the Investment Company Act of 1940, as amended (the "1940
Act"), because the investment alternatives of each 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 these Funds
may be subject to greater risk and market fluctuation than an investment in a
portfolio of securities representing a broader range of industry investment
alternatives.
Borrowing.
.........The table set forth below describes the extent to which Evergreen
and Global entered into borrowing transactions during the fiscal years ended
September 30, 1993 and 1994.
<TABLE>
<S> <C> <C> <C> <C>
Evergreen
Amount of Debt Average Amount of Average Number of Average Amount of
Outstanding Debt Outstanding Shares Outstanding Debt Per-Share
Year Ended During the Year During the Year During the Year During the Year
September 30, 1993 $0 $ 1,369,863 50,301,298 $0.03
September 30, 1994 $0 $11,164,110 39,709,107 $0.28
Global
September 30, 1993 $0 $ 1,369,863 50,301,298 $0.03
</TABLE>
<PAGE>
MANAGEMENT
.........The following is a list of the Trustees or Directors and executive
officers of each Fund:
Laurence B. Ashkin, 180 East Pearson Street, Chicago, IL
Trustee/Director. Real estate developer and construction consultant
since 1980; President of Centrum Equities since 1987 and Centrum
Properties, Inc. since 1980.
Foster Bam, Greenwich Plaza, Greenwich, CT Trustee/Director. Partner in the
law firm of Cummings and Lockwood since 1968.(3)(2)
James S. Howell, 4124 Crossgate Road, Charlotte, NC
Trustee/Director. Retired Vice President of Lance Inc.; Chairman of the
Distribution Comm. Foundation for the Carolinas from 1989 to 1993;
Chairman of the First Union Funds since 1984.
Robert J. Jeffries, 2118 New Bedford Drive, Sun City Center, FL
Trustee/Director. Corporate consultant since 1967.
Gerald M. McDonnell, 821 Regency Drive, Charlotte, NC Trustee/Director. Sales
Representative with Nucor-Yamoto Inc. since 1988; Trustee of the First
Union Funds since 1988.
Thomas L. McVerry, 4419 Parkview Drive, Charlotte, NC
Trustee/Director. Senior executive and advisor to the Board of Directors
of Rexham Corporation from 1973 to 1980; Director of Carolina
Cooperative Federal Credit Union since 1990 and Rexham Corporation from
1988 to 1990; Vice President of Rexham Industries, Inc. from 1989 to
1990; Vice President-Finance and Resources, Rexham Corporation from 1979
to 1990; Trustee of the First Union Funds since October 1993.
William Walt Pettit, Holcomb and Pettit, P.A., 207 West Trade St., Charlotte, NC
Trustee/Director. Partner in the law firm Holcomb and Pettit, P.A. since
1990; Attorney, Clontz and Clontz from 1980 to 1990; Trustee of the
First Union Funds since 1988.(4)
Russell A. Salton, III, M.D., Primary Physician Care, 1515 Mockingbird Lane,
Charlotte, NC Trustee/Director. President, Primary Physician Care since
1990; President, Metrolina Family Practice Group, P.A. from 1982 to 1989;
Trustee of the First Union Funds since 1984.
Michael S. Scofield, 212 S. Tryon Street Suite 980, Charlotte, NC
Trustee/Director. Attorney, Law Offices of Michael S. Scofield since
prior to 1989; Trustee of the First Union Funds since 1984.
John J. Pileggi, 237 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, 237 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.
Donald E. Brostrom, 237 Park Avenue, Suite 910, New York, NY Assistant
Treasurer. Director of Fund Services, Furman Selz Incorporated since
1992, Associate Director from 1986 to 1992.
Sheryl A. Hirschfeld, 237 Park Avenue, Suite 910, New York, NY Assistant
Secretary. Director, Corporate Secretary Services, Furman Selz Incorporated
since 1994; Assistant to the Corporate Secretary, The Dreyfus Corporation
since prior to 1989.
Stephen W. St. Clair, 237 Park Avenue, Suite 910, New York, NY
Assistant Treasurer. Associate Director of Fund Services, Furman Selz
Incorporated since 1994, Administrator from 1992 to 1994; Assistant
Treasurer of J. W. Seligman Co., Inc. from 1989 to 1992.
The officers of the Funds are all officers and/or employees of Furman
Selz Incorporated. Furman Selz Incorporated is the parent of Evergreen Funds
Distributor, Inc., the distributor of each Class of shares of each Fund.
- ------------
(3) Mr. Bam may be deemed to be an "interested person" within the meaning of
the Investment Company Act of 1940, as amended (the "1940 Act") due to the fact
that his son is employed by the Adviser.
(4) Mr. Pettit may be deemed to be an "interested person" within the
meaning of the 1940 Act as a result of the legal services rendered to a
subsidiary of First Union by the law firm of Holcomb and Pettit, P.A.
The Funds do not pay any direct remuneration to any officer or Trustee/
Director who is an "affiliated person" of the Evergreen Asset, First Union
National Bank of North Carolina ("FUNB") or their affiliates. Currently, none of
the Funds' Trustees/Directors is an "affiliated person". One of the
Trustees/Directors, Mr. Pettit, is considered an "interested person" of the
Funds by virtue of the fact that he and his firm provide legal services to FUNB.
Another Trustee/Director, Mr. Bam, is considered an "interested person" of the
Fund by virtue of the fact that his son is employed by Evergreen Asset. However,
Mr. Bam and Mr. Pettit are not considered "affiliated persons" of Evergreen
Asset or FUNB as defined in the 1940 Act. The Trusts or Funds pay each
Trustee/Director who is not an "affiliated person" an annual retainer and a fee
per meeting attended, plus expenses (and $50 for each telephone conference
meeting) as follows:
Name of Trust/Fund Annual Retainer Meeting Fee
Evergreen Trust $ 4,500
Evergreen $ 300
Aggressive 100
Total Return 5,500 300
Limited Market 500 100
Growth and Income 500 100
The Evergreen American Retirement Trust 1,000
American Retirement 100
Small Cap 100
The Evergreen Money Market Trust 300
Evergreen Municipal Trust and Fixed Income Trust 4,000
Tax Exempt 100
Short-Intermediate 100
Short-Intermediate-CA 100
National 100
Florida High Income 100
U.S. Government 100
Evergreen Real Estate Equity Trust 1,000
Global 100
U.S. Real Estate 100
Evergreen Foundation Trust 500
Foundation 100
Tax Strategic 100
The Trustees/Directors who were not affiliated with the Adviser during
each Fund's last fiscal year received total Trustees/Directors' fees and
expenses as follows:
Fees No. of
Name of Fund Fiscal Year Ended* Expenses Meetings
Evergreen September 30, 1994 $34,175 4
Global September 30, 1994 8,080 4
U.S. Real Estate September 30, 1994 2,847 4
Limited Market September 30, 1994 3,223 4
Total Return January 31, 1994
Growth and Income December 31, 1994
American Retirement December 31, 1994
Small Cap December 31, 1994
Foundation December 31, 1994
Tax Strategic December 31, 1994
Short-Intermediate August 31, 1994 4,377 4
Short-Intermediate-CA August 31, 1994 3,129 4
National August 31, 1994 3,620 4
Tax Exempt August 31, 1994 12,390 4
Money Market August 31, 1994 11,478 4
U.S. Government March 31, 1994 1,772 3
- ----------
* The following Funds changed their fiscal year ends during the periods
covered by the foregoing table: Global and U.S. Real Estate from December 31, to
September 30; and Limited Market, from May 31 to September 30. Accordingly, the
Trustees/Directors fees and expenses reported in the foregoing table reflect,
for Global and U.S. Real Estate, the period from January 1, 1994 to September
30, 1994 and, for Limited Market, the period from June 1, 1994 to September 30,
1994. Also Small Cap and Tax Strategic commenced operations on October 1, 1993,
November 2, 1993 and September 1, 1993, respectively, and therefore the figures
set forth in the table above reflect expenses incurred for the period from
commencement of operations through December 31, 1993.
No officer or Trustee/Director of the Funds owned Class A, B or C
shares of any Fund as of the date hereof. The number and percent of outstanding
shares Class Y shares of each Fund in the Evergreen Group of Funds owned by
officers and Trustees/Directors as a group on April 15, 1995, is as follows:
Ownership by Officers and Trustees/Directors
No. of Shares Owned No. of Shares Owned
By Officers Trustees/Directors as a % of Fund
Name of Fund as a as a Group Shares Outstanding
Evergreen - Y
Total Return - Y
Limited Market - Y
Growth and Income - Y
Money Market - Y
American Retirement - Y
Small Cap - Y
Tax Exempt - Y
Short-Intermediate - Y
Short-Intermediate-CA - Y
National - Y
Global - Y
U.S. Real Estate - Y
Foundation - Y
Tax Strategic - Y
U.S. Government- Y
Of the Funds set forth above where the Directors/Trustees or Officers
collectively own more than 1%, but less than 5%, of the outstanding shares, the
percentage owned by each Director/Trustee or Officer owning shares of such Funds
is as follows:
<TABLE>
<CAPTION>
Name and Address Name of Fund Number of Shares Percentage of Class
- ---------------- ------------ ---------------- -------------------
<S> <C> <C> <C>
Foster Bam Limited Market - Y
2 Greenwich Plaza Growth and Income - Y
Greenwich, CT 06830 American Retirement - Y
Short-Intermediate - Y
Robert J. Jeffries Limited Market - Y
2118 New Bedford Drive Growth and Income - Y
Sun City, FL 33573 American Retirement - Y
Short-Intermediate - Y
Joan V. Fiore American Retirement - Y
237 Park Avenue
New York, NY 10017
</TABLE>
The table below sets forth information with respect to each person,
including Directors or Trustees of the Funds who, to each Funds knowledge, owned
beneficially or of record more than 5% of each Fund's total outstanding shares
as of April 15, 1995:
<TABLE>
<CAPTION>
Name and Address Name of Fund Number of Shares % of Class
- ---------------- ------------ ---------------- ----------
<S> <C> <C> <C>
Stephen A. Lieber
2500 Westchester Ave.
Purchase, NY 10577
Foster Bam
2 Greenwich Plaza Greenwich, CT 06830
Nola Maddox Falcone 2500 Westchester Ave.
Purchase, NY 10577
Pax Beale DBA
Bush & Octavia Realty Co. 163 Alpine
San Francisco, CA 94117
</TABLE>
*As a result of his ownership of .......... and......... , of the shares of
National, Small Cap, U.S. Real Estate, Tax Strategic and U.S. Government,
respectively, on April 15, 1995, Mr. Lieber may be deemed to "control" the Fund,
as that term is defined in Section 2(a)(9) of the Investment Company Act of
1940, as amended (the "1940 Act"). If any matter was submitted for a shareholder
vote while Mr. Lieber owned more than 50% of any Fund's shares, the presence of
Mr. Lieber or his proxy would be required for, and constitute, a quorum and the
vote of Mr. Lieber or his proxy would be dispositive.
INVESTMENT ADVISERS
(See also "Management of the Fund" in each Fund's Prospectus)
EVERGREEN ASSET MANAGEMENT CORP.
The investment adviser of each Fund in the Evergreen Group of Funds,
except Aggressive and Florida High Income, is Evergreen Asset Management Corp.,
a New York corporation, with offices at 2500 Westchester Avenue, Purchase, New
York (the "Adviser"). Evergreen Asset is owned by First Union National Bank of
North Carolina (previously defined as "FUNB") which, in turn, is a subsidiary of
First Union Corporation. 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 and Lieber and Company ("Lieber") were
acquired by First Union Corporation ("First Union") through certain of its
subsidiaries. Evergreen was acquired by FUNB, a wholly-owned subsidiary (except
for directors' qualifying shares) of First Union, by merger into EAMC
Corporation ("EAMC") a wholly-owned subsidiary of FUNB. EAMC then assumed the
name "Evergreen Asset Management Corp." and succeeded to the business of
Evergreen. Contemporaneously with the succession of EAMC to the business of
Evergreen and its assumption of the name "Evergreen Asset Management Corp.",
each Fund entered into a new investment advisory agreement the ("Investment
Advisory Agreement") with EAMC and into a distribution agreement with Evergreen
Funds Distributor, Inc., a subsidiary 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 to each Fund.
The partnership interests in Lieber, a New York general partnership,
were acquired by Lieber I Corp. and Lieber II Corp., which are both wholly-owned
subsidiaries of FUNB. The business of Lieber is being continued. The new
advisory and sub-advisory agreements were approved by the Funds' shareholders at
their meeting held on June 23, 1994, and became effective on June 30, 1994.
Under its Investment Advisory Agreement with each Fund for which it
serves as investment adviser, Evergreen Asset has agreed to furnish reports,
statistical and research services and recommendations with respect to each Funds
portfolio of investments. In addition, Evergreen Asset 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
theirregistration under the Securities Act of 1933, as amended, and the 1940
Act, printing prospectuses (for existing shareholders) as they are updated,
state qualifications, share certificates, mailings, brokerage, custodian and
stock transfer charges, printing, legal and auditing expenses, expenses of
shareholder meetings and reports to shareholders. Notwithstanding the foregoing,
Evergreen Asset will pay the costs of printing and distributing prospectuses
used for prospective shareholders.
For the performance of its services Evergreen Asset is entitled to
receive a fee at the following annual rate of each Fund's daily net assets.
These fees are computed daily and paid monthly, and are accrued daily for
purposes of determining the redemption and offering price of each Fund's shares
(exclusive of Money Market and Tax Exempt, which seek to maintain a stable net
asset value of $1.00 per share):
Advisory Advisory
Name of Fund Fee Name of Fund Fee
Evergreen 1% Short-Intermediate .50%
Total Return 1% Short-Intermediate-CA .55%
Limited Market 1% National .50%
Growth and Income 1% Global 1%
American Retirement .75% U.S. Real Estate 1%
Small Cap 1% Foundation .875%
Money Market .50% Tax Strategic .875%
Tax Exempt .50% U.S. Government .50%
The rates of the advisory fees paid by Evergreen, Total Return, Limited Market,
Growth and Income, Small Cap, Global and U.S. Real Estate are higher than those
paid by most management investment companies. However the fee paid by Global is
not higher than that paid by other funds, which like Global, that invest a
substantial part of their assets in foreign securities. The advisory fees paid
by each Fund for the three most recent fiscal periods reflected in its
registration statement are set forth below:
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
EVERGREEN Year Ended Year Ended Year Ended GLOBAL Period Ended Year Ended Year Ended
9/30/94 9/30/93 9/30/92 9/30/94 12/31/93 12/31/92
Advisory Fee $5,738,633 $7,217,230 $7,588,372 Advisory Fee $1,133,380 $523, 294 $75,696
========== ========== ========== ========== ========= =========
Expense
Reimbursement $0 $ 41,226 $130,246
-------- ---------
Reimbursement as a
% of Average Daily
Net Assets 0.08% 1.72%
----- -----
U.S. REAL ESTATE Year Ended Year Ended LIMITED MARKET Year Ended Year Ended Year Ended
9/30/94 12/31/93 9/30/94 5/31/94 5/31/93
Advisory Fee $57,506 $8,624 Advisory Fee $314,648 $964,383 $658,014
-------- ------- ======== ======== ========
Waiver ($57,506) ($8,624)
Net Advisory Fee $ 0 $ 0
============ ==========
Expense
Reimbursement $9,102 $18,480
TOTAL RETURN Year Ended Year Ended Year Ended GROWTH AND INCOME Year Ended Year Ended Year Ended
3/31/94 3/31/93 3/31/92 12/31/93 12/31/92 12/31/91
Advisory Fee $11,613,964 $10,671,425 $11,065,156 Advisory Fee $722,166 $528,190 $427,498
=========== =========== =========== ======== ======== ========
FOUNDATION Year Ended Year Ended Year Ended AMERICAN Year Ended Year Ended Year Ended
12/31/93 12/31/92 12/31/91 RETIREMENT 12/31/93 12/31/92
12/31/91
Advisory Fee $1,290,748 $257,141 $42,202 Advisory Fee $226,080 $152,055 $102,456
========== ======== ======= ======== ========
========
Expense Expense
Reimbursement $ 7,926 $66,546 Reimbursement $ 16,093 $44,189
---------- ------- ---------
- ---------
SMALL CAP Year Ended TAX STRATEGIC Year Ended
12/31/93 12/31/93
Advisory Fee $ 4,929 Advisory Fee $ 4,989
-------- -------
Waiver ($ 4,929) Waiver ($4,989)
Net Advisory Fee 0 Net Advisory Fee $ 0
============ ==========
Expense Expense
Reimbursement $16,800 Reimbursement $12,700
------- -------
NATIONAL Year Ended Year Ended SHORT-INTERMEDIATE Year Ended Year Ended Year Ended
8/31/94 8/31/93 8/31/94 8/31/93 8/31/92
Advisory Fee $ 196,089 $72,564 Advisory Fee $301,565 $313,180 $135,976
--------- -------- -------- -------- ---------
Waiver ($190,396) ($72,564) Waiver ($150,194) ($256,324) ($124,013)
Net Advisory Fee $ 6, 413 $ 0 Net Advisory Fee $151,371 $56,856 $11,963
=========== ============ ======== ========== ==========
Expense Expense
Reimbursement $ 45,680 $61,146 Reimbursement $63,773
---------- --------
- ---------
SHORT-INTERMEDIATE-C Year Ended Year Ended Year Ended TAX EXEMPT Year Ended Year Ended Year Ended
8/31/94 8/31/93 8/31/92 8/31/94 8/31/93 8/31/92
Advisory Fee $164,447 $158,025 $213,131 Advisory Fee $2,126,246 $ 2,028,966 $2,272,890
--------- --------- --------- ---------- ----------- ------------
Waiver ($129,952) ($150,551) ($170,867) Waiver ($1,256,653) ($1,168,131) ($1,411,094)
Net Advisory Fee $34,495 $7,474 $42,264 Net Advisory Fee $869,593 $ 860,835 $861,796
========= =========== ========= ============ ============ ============
Expense
Reimbursement $44,957
MONEY MARKET Year Ended Year Ended Year Ended U.S. GOVERNMENT Year Ended
8/31/94 10/31/93 10/31/92 3/31/94
Advisory Fee $1,245,513 $1,637,123 $2,089,939 Advisory Fee $20,607
---------- ---------- ---------- ---------
Waiver ($974,438) (1,047,935) ($1,507,506) Waiver ($20,607)
Net Advisory Fee $271,075 $589,188 $582,433 Net Advisory Fee $ 0
========== ========== ============ Expense
Reimbursement $48,772
</TABLE>
The following Funds changed their fiscal year ends during the periods
covered by the foregoing table: Global and U.S. Real Estate from December 31, to
September 30; and Limited Market, from May 31 to September 30. Accordingly, the
investment advisory fees reported in the foregoing table reflect, for Global and
U.S. Real Estate, the period from January 1, 1994 to September 30, 1994 and, for
Limited Market, the period from June 1, 1994 to September 30, 1994. Also Small
Cap, Tax Strategic and U.S. Real Estate commenced operations on October 1, 1993,
November 2, 1993 and September 1, 1993, respectively, and therefore the figures
set forth in the table above reflect investment advisory fees paid for the
period from commencement of operations through December 31, 1993.
Expense Limitations
Evergreen Asset's fee will be reduced by, or Evergreen Asset will
reimburse the Funds (except Money Market, National, Tax Exempt,
Short-Intermediate, Short-Intermediate CA and U.S. Government, which have
specific percentage limitations described below) for any amount necessary to
prevent such expenses (exclusive of taxes, interest, brokerage commissions and
extraordinary expenses, but inclusive of Evergreen Asset's fee) from exceeding
the most restrictive of the expense limitations imposed by state securities
commissions of the states in which the Fund's shares are then registered or
qualified for sale.
<PAGE>
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.
With respect to Money Market, Tax Exempt, Short-Intermediate and
Short-Intermediate CA the Adviser has agreed to reimburse each Fund to the
extent that the Fund's aggregate operating expenses (including Evergreen Asset's
fee but excluding interest, taxes, brokerage commissions and extraordinary
expenses, and, for Class A, Class B and Class C shares Rule 12b-1 distribution
fees and shareholder servicing fees payable) exceed 1% of its average daily net
assets for any fiscal year. With respect to U.S. Government and National,
Evergreen Asset has agreed to reimburse each Fund to the extent that its
aggregate operating expenses (including Evergreen Asset's fee, but excluding
interest, taxes, brokerage commissions and extraordinary expenses, and, for
Class A, Class B and Class C shares, Rule 12b-1 distribution fees and
shareholder servicing fees) exceed 1.25% of its average net assets for any
fiscal year.
In addition, Evergreen Asset has in some instances voluntarily limited
(and may in the future limit) expenses of certain of the Funds. For the years
ended December 31, 1991 and 1992, and for the three month period ended March 31,
1993, the Adviser limited the expenses of Global to 2% of the Fund's average net
assets on an annual basis.
For the four month period January 1, 1992 to April 30, 1992, the
Adviser voluntarily limited the expenses of American Retirement to 1.50% of
average net assets.
For U.S. Government, during the period from June 14, 1993 (commencement
of investment operations) through March 31, 1994, Evergreen Asset voluntarily
waived its entire management fee of .50 of 1% of daily net assets which amounted
to $20,607, and reimbursed the Fund for all other expenses incurred by the Fund
representing 1.18% of average net assets
Evergreen Asset has voluntarily agreed to reimburse Small Cap to the
extent that the Fund's aggregate operating expenses (including Evergreen Asset's
fee but excluding interest, taxes, brokerage commissions and extraordinary
expenses) exceed 1.50% of its average net assets until such time as the Fund's
net assets reach $15 million.
During the fiscal years ended December 31, 1991 and December 31, 1992,
the Adviser voluntarily absorbed a portion of Foundation's expenses and
reimbursed the Fund for expenses in excess of the voluntary expense limitation
in an amount equal to 1.38% of its average daily net assets for fiscal 1991 and
in an amount equal to .03% of its average daily net assets for fiscal 1992; the
voluntary expense limitation and the absorption of Fund expenses ceased on May
1, 1992.
Evergreen Asset has agreed to voluntarily reimburse Tax Strategic until
the Fund reaches $15 million in net assets, to the extent that the Fund's
aggregate operating expenses (including the Advisory Fees, but excluding
interest, taxes, brokerage commissions, Rule 12b-1 distribution fees and
shareholder servicing fees and extraordinary expenses) exceed 1.50% of its
average net assets for any fiscal year. During the period from November 2, 1993
(commencement of investment operations) to December 31, 1993, Evergreen Asset
voluntarily waived its advisory fee with respect to Tax Strategic, which
amounted to $4,989, and reimbursed the Fund for all of the Fund's other expenses
which aggregated $12,700 (2.23% of average net assets).
Until U.S. Real Estate reaches $15 million in net assets, Evergreen
Asset has voluntarily agreed to reimburse the Fund to the extent that the Fund's
aggregate operating expenses (including Evergreen Asset's fee but excluding
taxes, interest, brokerage commissions and extraordinary expenses) exceed 1.50%
of its average net assets for any fiscal year.
During the period from December 30, 1992 (commencement of investment
operations) to August 31, 1993, Evergreen Asset voluntarily waived National's
entire management fee of .50 of 1% of daily net assets and reimbursed the Fund
for all other expenses incurred by the Fund representing .42% of the daily net
assets. During the fiscal year ended August 31, 1994, Evergreen Asset
voluntarily waived .78 of 1% of its advisory fee and absorbed a portion of the
Fund's other expenses equal to .12 % of average net assets. Evergreen Asset may,
at its discretion, revise or cease the voluntary absorption of Fund expenses at
any time.
The Investment Advisory Agreements are terminable, without the payment
of any penalty, on sixty days' written notice, by a vote of the holders of a
majority of each Fund's outstanding shares, or by a vote of a majority of each
Fund's Trustees/Directors or by Evergreen Asset. The Investment Advisory
Agreements will automatically terminate in the event of their assignment. Each
Investment Advisory Agreement provides in substance that Evergreen Asset shall
not be liable for any action or failure to act in accordance with its duties
thereunder in the absence of willful misfeasance, bad faith or gross negligence
on the part of the Adviser or of reckless disregard of its obligations
thereunder. The Investment Advisory Agreements were approved by each 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 their continuance is approved annually by a vote of a majority of
the Trustees/Directors of each Fund 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, and by a vote of
the Trustees/Directors of each Fund or a majority of the outstanding voting
shares of each Fund. With respect to Money Market, National, Short-Intermediate,
Short-Intermediate-California, Tax Exempt and U.S. Government, the Investment
Advisory Agreements were amended on December 13, 1994 by shareholder vote to
clarify that distribution fees and shareholder servicing fees applicable only to
a particular class of shares of any such Funds will not be included for the
purpose of calculating the expense limitations contained in such Investment
Advisory Agreements.
Certain other clients of Evergreen Asset may have investment objectives
and policies similar to those of the Funds. The Adviser (including the
sub-adviser)may, from time to time, make recommendations which result in the
purchase or sale of a particular security by its other clients simultaneously
with a Fund. If transactions on behalf of more than one client during the same
period increase the demand for securities being purchased or the supply of
securities being sold, there may be an adverse effect on price or quantity. It
is the policy of the Adviser to allocate advisory recommendations and the
placing of orders in a manner which is deemed equitable by Evergreen Asset to
the accounts involved, including the Funds. When two or more of the clients of
the Adviser (including one or more of the Funds) are purchasing or selling the
same security on a given day from the same broker-dealer, such transactions may
be averaged as to price.
Although the investment objectives of the Funds are not the same, and
their investment decisions are made independently of each other, they rely upon
the same resources for investment advice and recommendations. Therefore, on
occasion, when a particular security meets the different investment objectives
of the various Funds, they may simultaneously purchase or sell the same
security. This could have a detrimental effect on the price and quantity of the
security available to each Fund. If simultaneous transactions occur, Evergreen
Asset attempts to allocate the securities, both as to price and quantity, in
accordance with a method deemed equitable to each Fund and consistent with their
different investment objectives. In some cases, simultaneous purchases or sales
could have a beneficial effect, in that the ability of one Fund to participate
in volume transactions may produce better executions for that Fund.
Each Fund has adopted procedures under Rule 17a-7 of the 1940 Act to
permit purchase and sales transactions to be effected between each Fund and the
other registered investment companies for which Evergreen Asset acts as
investment adviser or between the Fund and any advisory clients of Evergreen
Asset or Lieber & Company. 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.
FIRST UNION NATIONAL BANK OF NORTH CAROLINA - CAPITAL MANAGEMENT GROUP
Aggressive and Florida High Income
The investment adviser to Aggressive and Florida High Income is FUNB. It
provides investment advisory services through its Capital Management Group.
First Union is a subsidiary of First Union Corporation, a bank holding company
headquartered in Charlotte, North Carolina.
FUNB's Capital Management Group employs an experienced staff of
professional investment analysts, portfolio managers, and traders, and uses
several proprietary computer-based systems in conjunction with fundamental
analysis to identify investment opportunities. The Capital Management Group has
been managing trust assets for over 50 years and currently oversees assets of
more than $51.2 billion. In addition, the Capital Management Group has advised
the Trust since its inception in 1984.
As part of its regular banking operations, FUNB may make loans to public
companies. Thus, it may be possible, from time to time, for the Funds to hold or
acquire the securities of issuers which are also lending clients of FUNB. The
lending relationship will not be a factor in the selection of securities.
FUNB shall not be liable to any Fund or any shareholder thereof for any
losses that may be sustained in the purchase, holding, or sale of any security,
or for anything done or omitted by it, except acts or omissions involving wilful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
imposed upon it by its contract with the Trust.
Because of the internal controls maintained by FUNB to restrict the flow of
non-public information, each Fund's investments are typically made without any
knowledge of FUNB's or its affiliates' lending relationships with an issuer.
The Investment Advisory Agreements are terminable, without the payment of
any penalty, on sixty days' written notice, by a vote of the holders of a
majority of each Fund's outstanding shares, or by a vote of a majority of each
Fund's Trustees or by FUNB. The Investment Advisory Agreements will
automatically terminate in the event of their assignment. Each Investment
Advisory Agreement provides in substance that FUNB 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 FUNB or of
reckless disregard of its obligations thereunder. The Investment Advisory
Agreements were approved by each Fund's shareholders on April 20, 1995, became
effective on July 1, 1995, and will continue in effect until June 30, 1996, and
thereafter from year to year provided that their continuance is approved
annually by a vote of a majority of the Trustees of each Fund 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, and by a vote of the Trustees of each Fund or a majority of the
outstanding voting shares of each Fund.
ADVISORY FEES
For its advisory services, FUNB receives an annual investment advisory fee
as described in the respective prospectus of Aggressive and Florida High Income.
ADMINISTRATIVE SERVICES
----------------------------------------------------------------------
provides administrative personnel and services to Aggressive and Florida High
Income and manages the business affairs of each Fund for a fee as described in
the respective prospectus of Aggressive and Florida High Income.
DISTRIBUTION PLANS
Reference is made to "Management of the Fund - Distribution Plans and
Agreements" in the Prospectus of each Fund for additional disclosure regarding
the Funds' distribution arrangements. Distribution fees are accrued daily and
paid monthly on the Class A, B and 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 an initial 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 initial sales charge
and distribution fee with respect to the Class A shares in that in each case the
sales charge and/or distribution fee provide for the financing of the
distribution of the Fund's shares.
Under the Rule 12b-1 Distribution Plans that have been adopted by each
Fund with respect to each of its Class A, Class B and Class C shares (to the
extent that each Fund offers such classes) (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 or
Directors of each Fund for their review on a quarterly basis. Also, each Plan
provides that the selection and nomination of Trustees or Directors who are not
interested persons of each Fund (as defined in the 1940 Act) are committed to
the discretion of such disinterested Trustees or Directors then in office.
The Adviser may from time to time and from its own funds or such other
resources as may be permitted by rules of the Securities and Exchange Commission
make payments for distribution services to the Distributor; the latter may in
turn pay part or all of such compensation to brokers or other persons for their
distribution assistance.
As of the date of this Statement of Additional Information, no Fund has
offered Class A, B or C shares.
Each Plan, except those pertaining to Aggressive and Florida High Income,
became effective on December 30, 1994 and were initially approved by the sole
shareholder of each Class of shares of each Fund with respect to which a Plan
was adopted on that date and by the unanimous vote of the Trustees or Directors
of each Fund, including the disinterested Trustees or Directors voting
separately, at a meeting called for that purpose and held on December 13, 1994.
The Plans of Aggressive and Florida High Income became effective on ---------,
1995 and were initially approved by the sole shareholder of each Class of shares
of those Funds with respect to which a Plan was adopted on that date and by the
unanimous vote of the Trustees or Directors of each Fund, including the
disinterested Trustees or Directors voting separately, at a meeting called for
that purpose and held on April 20, 1995. The Distribution Agreements between
each Fund and Evergreen Funds Distributor, Inc., pursuant to which distribution
fees are paid under the Plans by each Fund with respect to its Class A, and
where applicable Class B and Class C shares, were, in the case of all Funds
except Aggressive and Florida High Income, also approved at the December 13,
1994 meeting by the unanimous vote of the Trustees or Directors of each Fund,
including the disinterested Trustees or Directors voting separately. The
Distribution Agreements between Aggressive and Florida High Income and Evergreen
Funds Distributor, Inc., were approved at the April 20, 1995 meeting by the
unanimous vote of the Trustees or Directors of each Fund, including the
disinterested Trustees or Directors voting separately. Each Plan and
Distribution Agreement will continue in effect for successive twelve-month
periods provided, however, that such continuance is specifically approved at
least annually by the Trustees or Directors of each Fund 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 Directors of
the Fund who are not parties to the Agreement or interested persons, as defined
in the 1940 Act, of any such party (other than as trustees or directors of the
Fund) and who have no direct or indirect financial interest in the operation of
the Plan or any agreement related thereto.
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 or Directors of a Fund 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 or Directors, cast in person
at a meeting called for the purpose of voting on such approval; and any Plan or
Distribution Agreement may not be amended in order to increase materially the
costs that a particular Class of shares of a Fund may bear pursuant to the Plan
or Distribution Agreement without the approval of a majority of the holders of
the outstanding voting shares of the Class affected. Any Plan or Distribution
Agreement may be terminated (a) by a Fund without penalty at any time by a
majority vote of the holders of the outstanding voting securities of the Fund,
voting separately by Class or by a majority vote of the Trustees or Directors
who are not "interested persons" as defined in the 1940 Act, or (b) by the
Distributor. To terminate any Distribution Agreement, any party must give the
other parties 60 days' written notice; to terminate a Plan only, the Fund need
give no notice to the Distributor. Any Distribution Agreement will terminate
automatically in the event of its assignment.
ALLOCATION OF BROKERAGE
Decisions regarding the portfolio of each Fund other than Aggressive
and Florida High Income are made by Evergreen Asset, subject to the supervision
and control of the Trustees/Directors. Orders for the purchase and sale of
securities and other investments are placed by employees of Evergreen Asset, all
of whom are associated with Lieber. In general, the same individuals perform the
same functions for the other funds managed by Evergreen Asset. A Fund will not
effect any brokerage transactions with any broker or dealer affiliated directly
or indirectly with Evergreen Asset or FUNB 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.
Most of the transactions in equity securities for each Fund will occur
on domestic and, in the case of Global 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
Money Market, National, Short Intermediate, Short Intermediate-Ca, Tax Exempt
and U.S. Government (and the other Funds to the extent they purchase fixed
income securities) will be with the issuer or an underwriter or with major
dealers in such securities acting as principals. Such transactions are normally
on a net basis and generally do not involve payment of brokerage commissions.
However, the cost of securities purchased from an underwriter usually includes a
commission paid by the issuer to the underwriter. Purchases or sales from
dealers will normally reflect the spread between bid and ask prices.
In selecting firms to effect securities transactions, the primary
consideration of each Fund shall be prompt execution at the most favorable
price. 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. Any such research and analysis is not expected to reduce the costs of the
Adviser.
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, 1994,
$738,237 or 80% 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 & Company 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, other than Aggressiv and Florida High Income,
has entered into an agreement with Lieber authorizing Lieber to retain
compensation for brokerage services. In accordance with such agreement, it is
contemplated that Lieber a member of the New York and American Stock Exchanges,
will, to the extent practicable, provide brokerage services to the Fund with
respect to substantially all securities transactions effected on the New York
and American Stock Exchanges. In such transactions, a 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 & Company 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
contemplates any ongoing arrangements with other brokerage firms, brokerage
business may be given from time to time to other firms. In addition, the
Trustees or Directors have adopted procedures pursuant to Rule 17e-1 under the
1940 Act to ensure that all brokerage transactions with Lieber & Company, as an
affiliated broker-dealer, are fair and reasonable.
Any profits from brokerage commissions accruing to Lieber & Company as
a result of portfolio transactions for the Fund will accrue to FUNB and to its
ultimate parent, First Union Corporation. The Investment Advisory Agreements do
not provide for a reduction of Evergreen Asset's fee with respect to any fund by
the amount of any profits earned by Lieber & Company from brokerage commissions
generated by portfolio transactions of any Fund.
The following chart shows: (1) the brokerage commissions paid by the Funds
during their last three fiscal years; (2) the amount and percentage thereof, if
any, paid to Lieber & Company; ; and (3) the percentage of the total dollar
amount of all portfolio transactions with respect to which commission have been
paid which were effected by Lieber & Company:
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
EVERGREEN Year Ended Year Ended Year Ended GLOBAL Period Ended Year Ended Year Ended
9/30/94 9/30/93 9/30/92 9/30/94 12/31/93 12/31/92
Total Brokerage $535,816 $534,533 $595,552 Total Brokerage $917,989 $868,367 $196,719
Commissions Commissions
Dollar Amount and % $478,391 89% $477,691 89% $548,346 92% Dollar Amount and % $174,137 19% $154,666 18% $51,684 26%
paid to Lieber paid to Lieber
% of Transactions % of Transactions
Effected by Lieber 90% 90% 91% Effected by Lieber 33% 29% 35%
U.S. REAL ESTATE Period Ended Year Ended Year Ended LIMITED MARKET Period Ended Year Ended Year Ended
9/30/94 12/31/93 9/30/94 5/31/94 5/31/93
Total Brokerage $49,723 $14,287 Total Brokerage $94,996 $183,282 $43,664
Commissions Commissions
Dollar Amount and % $48,400 97% $13,657 96% Dollar Amount and % $51,736 54% $82,104 45% $25,221 58%
paid to Lieber paid to Lieber
% of Transactions % of Transactions
Effected by Lieber 98% 97% Effected by Lieber 50% 40% 57%
TOTAL RETURN Year Ended Year Ended Year Ended GROWTH AND INCOME Year Ended Year Ended Year Ended
3/31/94 3/31/93 3/31/92 12/31/93 12/31/92 12/31/91
Total Brokerage $3,234,684 4,873,169 $4,105,695 Total Brokerage $76,427 $66,266 $41,514
Commissions Commissions
Dollar Amount and % $3,199,114 $4,842,437 $4,047,326 Dollar Amount and % $66,670 87% $57,686 87% $38,829 94%
paid to Lieber 99% 99% 99% paid to Lieber
% of Transactions % of Transactions
Effected by Lieber 99% 99% 99% Effected by Lieber 84% 86% 92%
<PAGE>
FOUNDATION Year Ended Year Ended Year Ended AMERICAN RETIREMENT Year Ended Year Ended Year Ended
12/31/93 12/31/92 12/31/91 12/31/93 12/31/92 12/31/91
Total Brokerage $291,259 $128,811 $36,180 Total Brokerage $99,435 $99,293 $46,018
Commissions Commissions
Dollar Amount and % $284,864 98% $124,801 97% $35,655 99% Dollar Amount and % $96,950 98% $98,793 99.5% $45,868
paid to Lieber paid to Lieber 99.7%
% of Transactions % of Transactions
Effected by Lieber 98% 96% 98% Effected by Lieber 98% 99.6% 99.5%
SMALL CAP Period Ended TAX STRATEGIC Period Ended
12/31/93 12/31/93
Total Brokerage $2,091 Total Brokerage $3,260
Commissions Commissions
Dollar Amount and % $1,729 Dollar Amount and % $3,210
paid to Lieber 83% paid to Lieber 98%
% of Transactions % of Transactions
Effected by Lieber 73% Effected by Lieber 98%
</TABLE>
The following Funds changed their fiscal year ends during the periods
covered by the foregoing table: Global and U.S. Real Estate from December 31 to
September 30; and Limited Market, from May 31 to September 30. Accordingly, the
commissions reported in the foregoing table reflect, for Global and U.S. Real
Estate, the period from January 1, 1994 to September 30, 1994 and, for Limited
Market, the period from June 1, 1994 to September 30, 1994. Also Small Cap, Tax
Strategic and U.S. Real Estate commenced operations on October 1, 1993, November
2, 1993 and September 1, 1993, respectively, and therefore the figures set forth
in the table above reflect commissions paid for the period from commencement of
operations through December 31, 1993.
The transactions in which National, U.S. Government, Money Market,
Short-Intermediate, Tax Exempt, and Short-Intermediate-CA engage do not involve
the payment of brokerage commissions and are executed with brokers other than
Lieber & Company.
ADDITIONAL TAX INFORMATION
(See also "Taxes" in the Prospectus)
Each Fund has qualified and intends to continue to qualify for and
elect the tax treatment applicable to regulated investment companies ("RIC")
under Subchapter M of the 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 and other income (including gains
from options) 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 of any of the following: options, futures or forward
contracts (other than those on foreign currencies), or foreign currencies (or
options, futures or forward contracts thereon) that are not directly related to
the RIC's principal business of investing in securities (or options and futures
with respect thereto) held 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). 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.
<PAGE>
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 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
long-term capital gains will be taxable as ordinary income as described above to
shareholders (who are not exempt from tax), whether made in shares or in cash.
Shareholders electing to receive distributions in the form of additional shares
will have a cost basis for Federal income tax purposes in each share so received
equal to the net asset value of a share of a Fund on the reinvestment date.
Distributions by each Fund result in a reduction in the net asset value
of the Fund's shares. Should a distribution reduce the net asset value below a
shareholder's cost basis, such distribution nevertheless would be taxable as
ordinary income or capital gain as described above to shareholders (who are not
exempt from tax), even though, from an investment standpoint, it may constitute
a return of capital. In particular, investors should be careful to consider the
tax implications of buying shares just prior to a distribution. The price of
shares purchased at that time includes the amount of the forthcoming
distribution. Those purchasing just prior to a distribution will then receive,
what in effect is, a return of capital upon the distribution which will
nevertheless be taxable to shareholders subject to taxes.
Upon a sale or exchange of its shares, a shareholder will realize a
taxable gain or loss depending on its basis in the shares. Such gains or loss
will be treated as a capital gain or loss if the shares are capital assets in
the investor's hands and will be a long-term capital gain or loss if the shares
have been held for more than one year. Generally, any loss realized on a sale or
exchange will be disallowed to the extent shares disposed of are replaced within
a period of sixty-one days beginning thirty days before and ending thirty days
after the shares are disposed of. 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 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
<PAGE>
the possibility that such a shareholder may be subject to a U.S. withholding tax
at a rate of 30% (or at a lower rate under a tax treaty)on amounts treated as
income from U.S. sources under the Code.
Special Tax Consideration for Florida High Income, National, Tax Exempt, Short
Intermediate, Short Intermediate-CA, and Tax Strategic
With respect to Florida High Income, National, Tax Exempt, Short
Intermediate, Short Intermediate-CA, and Tax Strategic, to the extent that the
Fund distributes exempt interest dividends to a shareholder, interest on
indebtedness incurred or continued by such shareholder to purchase or carry
shares of the Fund is not deductible. Furthermore, entities or persons who are
"substantial users" (or related persons) of facilities financed by "private
activity" bonds (some of which were formerly referred to as "industrial
development" bonds) should consult their tax advisers before purchasing shares
of the Fund. "Substantial user" is defined generally as including a "non-exempt
person" who regularly uses in its trade or business a part of a facility
financed from the proceeds of industrial development bonds.
Special Tax Considerations for Global
Global 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
losses attributable to fluctuations in exchange rates that occur between the
time the Fund accrues interest or other receivable 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.
The 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 by 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. The 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 Fund anticipates
that its hedging activities will not adversely affect its regulated investment
company status.
Income received by the 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.
The 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 the 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.
The 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. The Fund will take steps to minimize income taxes
and interest charges arising from such investments, and will monitor such
investments to ensure that the Fund complies with the 30% of gross income test.
Proposed tax regulations, if they become effective, will allow the Fund to mark
to market and recognize gains on such investments at the Fund's taxable year
end. The Fund would not be subject to income tax on these gains if they are
distributed subject to these proposed rules.
<PAGE>
NET ASSET VALUE
The following information supplements that set forth in each Prospectus
under the subheading "How to Buy Shares - How the Funds Value Their Shares" in
the Section entitled "Purchase and Redemption of Shares".
The public offering price of 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 - Initial Sales Charge Alternative -- Class
A Shares." 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 each Fund's
Declaration of Trust or Articles of Incorporation, as applicable, and By-Laws 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 Tax Exempt and
Money Market, securities are valued at amortized cost. Under this method of
valuation, a security is initially valued at its acquisition cost and,
thereafter, a constant straight line amortization of any discount or premium is
assumed each day regardless of the impact of fluctuating interest rates on the
market value of the security. For each other Fund, Exchange-listed securities
and over-the-counter securities admitted to trading on the NASDAQ National List
are valued at the last quoted sale or, if no sale, at the mean of closing bid
and asked prices and portfolio bonds are presently valued by a recognized
pricing service when such prices are believed to reflect the fair value of the
security. Unlisted securities 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 or Directors.
The respective per share net asset values of the Class A, Class B,
Class C (if Class C shares are offered by a Fund) and Class Y shares are
expected to be substantially the same. Under certain circumstances, however, the
per share net asset values of the Class B and Class C shares may be lower than
the per share net asset value of the Class A shares (and, in turn, that of Class
A shares may be lower than Class Y shares) as a result of the greater daily
expense accruals, relative to Class A and Class Y shares, of Class B and Class C
shares relating to distribution and, to the extent applicable, transfer agency
fees and the fact that Class Y shares bear no additional distribution or
transfer agency related fees. While it is expected that, in the event each Class
of shares of a Fund realizes net investment income or does not realize a net
operating loss for a period, the per share net asset values of the four classes
will tend to converge immediately after the payment of dividends, which
dividends will differ by approximately the amount of the expense accrual
differential among the classes, there is no assurance that this will be the
case. In the event one or more Classes of a Fund experiences a net operating
loss for any fiscal period, the net asset value per share of such Class or
Classes will remain lower than that of Classes that incurred lower expenses for
the period.
To the extent that any Fund invests in non-U.S. dollar denominated
securities, the value of all assets and liabilities will be translated into
United States dollars at the mean between the buying and selling rates of the
currency in which such a security is denominated against United States dollars
last quoted by any major bank. If such quotations are not available, the rate of
exchange will be determined in accordance with policies established by the Fund.
The Trustees or Directors will monitor, on an ongoing basis, a Fund's method of
valuation. Trading in securities on European and Far Eastern securities
exchanges and over-the-counter markets is normally completed well before the
close of business on each business day in New York. In addition, European or Far
Eastern securities trading generally or in a particular country or countries may
not take place on all business days in New York. Furthermore, trading takes
place in various foreign markets on days which are not business days in New York
and on which the Fund's net asset value is not calculated. Such calculation does
not take place contemporaneously with the determination of the prices of the
majority of the portfolio securities used in such calculation. Events affecting
the values of portfolio securities that occur between the time their prices are
determined and the close of the New York Stock Exchange will not be reflected in
a Fund's calculation of net asset value unless the Trustees or Directors deem
that the particular event would materially affect net asset value, in which case
an adjustment will be made. Securities transactions are accounted for on the
trade date, the date the order to buy or sell is executed. Dividend income and
other distributions are recorded on the ex-dividend date, except certain
dividends and distributions from foreign securities which are recorded as soon
as the Fund is informed after the ex-dividend date.
PURCHASE OF SHARES
The following information supplements that set forth in each Prospectus
under the heading "Purchase and Redemption of Shares - How To Buy Shares."
General
Shares of each Fund will be offered on a continuous basis at a price
equal to their net asset value plus an initial sales charge at the time of
purchase (the "initial sales charge alternative"), with a contingent deferred
sales charge (the deferred sales charge alternative"), or without any initial
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 initial 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.
Following the initial purchase of shares of a Fund, a shareholder may
place orders to purchase additional shares by telephone if the shareholder has
completed the appropriate portion of the Share Purchase Application. Payment for
shares purchased by telephone can be made only by Electronic Funds Transfer from
a bank account maintained by the shareholder at a bank that is a member of the
National Automated Clearing House Association ("ACH"). If a shareholder's
telephone purchase request is received before 4:00 p.m. New York time on a Fund
business day, the order to purchase shares is automatically placed the same Fund
business day for non-money market funds, and two days following the day the
order is received for money market funds, and the applicable public offering
price will be the public offering price determined as of the close of business
on such business day. Full and fractional shares are credited to a subscriber's
account in the amount of his or her subscription. As a convenience to the
subscriber, and to avoid unnecessary expense to a Fund, stock certificates
representing Class Y shares of a Fund are not issued except upon written request
to the Fund by the shareholder or his or her authorized selected dealer or
agent. This facilitates later redemption and relieves the shareholder of the
responsibility for and inconvenience of lost or stolen certificates. No
certificates are issued for fractional shares, although such shares remain in
the shareholder's account on the records of a Fund, or for Class A, B or C
shares of any Fund.
In addition to the discount or commission amount paid to selected
dealers or agents, the Distributor may from time to time pay additional cash
bonuses or other incentives to selected dealers in connection with the sale of
shares, other than Class Y shares, of a Fund. On some occasions, such bonuses or
incentives may be conditioned upon the sale of a specified minimum dollar amount
of the shares of the Fund and/or other Evergreen Mutual Funds, as defined below,
during a specific period of time. At the option of the dealer such bonuses or
other incentives may take the form of payment for travel expenses, including
lodging incurred in connection with trips taken by persons associated with the
dealer and members of their families to places within or outside of the United
States.
Alternative Purchase Arrangements
Except as noted, each Fund issues four classes of shares: (i) Class A
shares, which are sold to investors choosing the initial sales charge
alternative; (ii) Class B shares, which are sold to investors choosing the
deferred sales charge alternative and which are not currently offered by Tax
Exempt; (iii) Class C shares, which are sold to investors choosing the
level-load sales charge alternative and which are not currently offered by
National, Short-Intermediate, Short-Intermediate-CA, Tax Exempt and Money
Market; and (iv) Class Y shares, which are offered only to (a) shareholders in
one or more of the Evergreen Mutual Funds prior to December 30, 1994., (b)
certain investment advisory clients of the Adviser and its affiliates, and (c)
institutional investors. The four classes of shares each represent an interest
in the same portfolio of investments of the Fund, have the same rights and are
identical in all respects, except that (I) only Class A, Class B and Class C
shares are subject to a Rule 12b-1 distribution fee, (II) Class A shares bear
the expense of the initial sales charge and Class B and Class C shares bear the
expense of the deferred sales charge, (III) Class B shares and Class C shares
each bear the expense of a higher Rule 12b-1 distribution fee than Class A
shares and, in the case of Class B shares, higher transfer agency costs, (IV)
with the exception of Class Y Shares, each Class of each Fund has exclusive
voting rights with respect to provisions of the Rule 12b-1 Plan pursuant to
which its distribution services fee is paid which relates to a specific Class
and other matters for which separate Class voting is appropriate under
applicable law, provided that, if the Fund submits to a simultaneous vote of
Class A, Class B and Class C shareholders an amendment to the Rule 12b-1 Plan
that would materially increase the amount to be paid thereunder with respect to
the Class A shares, the Class A shareholders and the Class B and Class C
shareholders will vote separately by Class, and (V) only the Class B shares are
subject to a conversion feature. Each Class has different exchange privileges
and certain different shareholder service options available.
The alternative purchase arrangements permit an investor to choose the
method of purchasing shares that is most beneficial given the amount of the
purchase, the length of time the investor expects to hold the shares, and other
circumstances. Investors should consider whether, during the anticipated life of
their investment in the Fund, the accumulated distribution services fee and
contingent deferred sales charges on Class B shares prior to conversion, or the
accumulated distribution services fee on Class C shares, would be less than the
initial 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,
accordingly, pay correspondingly higher dividends per share than Class B shares
or Class C shares. However, because initial sales charges are deducted at the
time of purchase, investors purchasing Class A shares would not have all their
funds invested initially and, therefore, would initially own fewer shares.
Investors not qualifying for reduced initial sales charges who expect to
maintain their investment for an extended period of time might consider
purchasing Class A shares because the accumulated continuing distribution
charges on Class B shares or Class C shares may exceed the initial 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
initial 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 charges 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% initial sales charge
would have to hold his or her investment approximately seven years for the B and
Class C distribution services fee, to exceed the initial 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 C
distribution services fees on the investment, fluctuations in net asset value or
the effect of different performance assumptions.
Those investors who prefer to have all of their funds invested
initially but may not wish to retain Fund shares for the 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.
The Trustees or Directors of each Fund 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 and Directors of each
Fund, pursuant to their fiduciary duties under the 1940 Act and state laws, will
seek to ensure that no such conflict arises.
Initial Sales Charge Alternative--Class A Shares
The public offering price of Class A shares for purchasers choosing the
initial sales charge alternative is the net asset value plus a sales charge
(except for Money Market and Tax Exempt), as set forth in the Prospectus for
each Fund.
Shares issued pursuant to the automatic reinvestment of income
dividends or capital gains distributions are not subject to any sales charges.
The Fund receives the entire net asset value of its Class A shares sold to
investors. The Distributor's commission is the sales charge set forth in the
Prospectus for each Fund, less any applicable discount or commission "reallowed"
to selected dealers and agents. The Distributor will reallow discounts to
selected dealers and agents in the amounts indicated in the table in the
Prospectus. In this regard, the Distributor may elect to reallow the entire
sales charge to selected dealers and agents for all sales with respect to which
orders are placed with the Distributor. A selected dealer who receives
reallowance in excess of 90% of such a sales charge may be deemed to be an
"underwriter" under the Securities Act of 1933, as amended.
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 above 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.
<TABLE>
<CAPTION>
Net Per Share Offering Net Per Share Offering
Asset Sales Price Asset Sales Price Per
Value Charge Date Per Share Value Charge Date Share
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Aggressive Evergreen $14.62 $.73 9/30/94 $15.35%
Florida High
Income Foundation $12.12 $.65 12/31/93 $13.77
Global $13.81 $.69 9/30/94 $14.50 Tax Strategic $10.31 $.51 12/31/93 $10.82
U.S. Real Short-Inter-
Estate $10.07 $.50 9/30/94 $10.57 mediate $10.21 $.51 8/31/94 $10.72
Short-Inter-
Limited Market $21.74 $1.08 9/30/94 $22.82 mediate-CA $10.09 $.50 8/31/94 $10.59
Growth and
Income $15.41 $.77 12/31/93 $16.18 National $9.99 $.47 8/31/94 $10.46
Total Return $18.29 $.91 3/31/94 $19.20 Tax Exempt $1.00 N/A 8/31/94 $1.00
American
Retirement $11.60 $.58 12/31/93 $12.18 U.S. Government $9.34 $.47 3/31/94 $9.81
Small Cap $10.15 $.51 12/31/93 $10.66 Money Market $1.00 N/A 8/31/94 $1.00
</TABLE>
Prior to the date of this Statement of Additional Information, shares
of the Funds were offered exclusively on a no-load basis and, accordingly, no
underwriting commissions have been paid in respect of sales of shares of the
Funds or retained by the Distributor. In addition, since Class B and Class C
shares were not offered prior to the date hereof, no contingent deferred sales
charges have been paid to the distributor with respect to Class B or Class C
shares.
Investors choosing the initial 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 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:
The Evergreen Fund
Evergreen Aggressive Growth Fund
Evergreen Global Real Estate Equity Fund
Evergreen U.S. Real Estate Equity Fund
The Evergreen Limited Market Fund, Inc.
Evergreen Growth and Income Fund
The Evergreen Total Return Fund
The 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 National Tax-Free Fund
Evergreen Florida High Income Municipal Fund
Evergreen Tax Exempt Money Market Fund
The Evergreen Money Market Trust
Evergreen U.S. Government Securities Fund
Evergreen Foundation Fund
Prospectuses for the Evergreen Mutual Funds may be obtained without charge
by contacting the Distributor, Evergreen Asset or FUNB 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, B or 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.
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 table above 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, B
or 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 Subscription Application found in the Prospectus
while current Class A shareholders desiring to do so can obtain a form of
Statement of Intention by contacting a Fund at the address or telephone numbers
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 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 Adviser may provide compensation
to organizations providing administrative and recordkeeping services to plans
which make shares of the Evergreen Funds available to their participants.
Reinstatement Privilege. A Class A shareholder who has caused any or
all of his or her shares of the Fund to be redeemed or repurchased may reinvest
all or any portion of the redemption or repurchase proceeds in Class A shares of
the Fund at net asset value without any sales charge, provided that such
reinvestment is made within 30 calendar days after the redemption or repurchase
date. Shares are sold to a reinvesting shareholder at the net asset value next
determined as described above. A reinstatement pursuant to this privilege will
not cancel the redemption or repurchase transaction; therefore, any gain or loss
so realized will be recognized for Federal tax purposes except that no loss will
be recognized to the extent that the proceeds are reinvested in shares of the
Fund. The reinstatement privilege may be used by the shareholder only once,
irrespective of the number of shares redeemed or repurchased, except that the
privilege may be used without limit in connection with transactions whose sole
purpose is to transfer a shareholder's interest in the Fund to his or her
individual retirement account or other qualified retirement plan account.
Investors may exercise the reinstatement privilege by written request sent to
the Fund at the address shown on the cover of this Statement of Additional
Information.
Sales at Net Asset Value. The Fund may sell its Class A shares at net
asset value, i.e., without any sales charge, to certain categories of investors
including: (i) certain investment advisory clients of the Adviser or its
affiliates; (ii) officers and present or former Trustees or Directors of the
Fund; present or former directors and trustees of other investment companies
managed by the Adviser; present or retired full-time employees of the Adviser;
officers, directors and present or retired full-time employees of the Adviser,
the Distributor, and their affiliates; officers, directors and present and
full-time employees of selected dealers or agents; or the spouse, sibling,
direct ancestor or direct descendant (collectively "relatives") of any such
person; or any trust, individual retirement account or retirement plan account
for the benefit of any such person or relative; or the estate of any such person
or relative, if such shares are purchased for investment purposes (such shares
may not be resold except to the Fund); (iii) certain employee benefit plans for
employees of the Adviser, the Distributor. and their affiliates; and (iv)
persons participating in a fee-based program, sponsored and maintained by a
registered broker-dealer and approved by the Distributor, pursuant to which such
persons pay an asset-based fee to such broker-dealer, or its affiliate or agent,
for service in the nature of investment advisory or administrative services.
These provisions are intended to provide additional job-related incentives to
persons who serve the Funds or work for companies associated with the Funds and
selected dealers and agents of the Funds. Since these persons are in a position
to have a basic understanding of the nature of an investment company as well as
a general familiarity with the Fund, sales to these persons, as compared to
sales in the normal channels of distribution, require substantially less sales
effort. Similarly, these provisions extend the privilege of purchasing shares at
net asset value to certain classes of institutional investors who, because of
their investment sophistication, can be expected to require significantly less
than normal sales effort on the part of the Funds and the Distributor.
Deferred Sales Charge Alternative--Class B Shares
Investors choosing the deferred sales charge alternative purchase Class
B shares at the public offering price equal to the net asset value per share of
the Class B shares on the date of purchase without the imposition of a sales
charge at the time of purchase. The Class B shares are sold without an initial
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 enables the Fund to sell the Class B shares without a sales charge
being deducted at the time of purchase. The higher distribution services fee
incurred by Class B shares will cause such shares to have a higher expense ratio
and to pay lower dividends than those related to Class A shares.
Contingent Deferred Sales Charge. Class B shares which are redeemed
within 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
CDSC 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 eight years or Class B shares acquired pursuant to
reinvestment of dividends or distributions and third of Class B shares held
longest during the eight-year period.
To illustrate, assume that an investor purchased 100 Class B shares at
$10 per share (at a cost of $1,000) and in the second year after purchase, the
net asset value per share is $12 and, during such time, the investor has
acquired 10 additional Class B shares upon dividend reinvestment. If at such
time the investor makes his or her first redemption of 50 Class B shares, 10
Class B shares will not be subject to charge because of dividend reinvestment.
With respect to the remaining 40 Class B shares, the charge is applied only to
the original cost of $10 per share and not to the increase in net asset value of
$2 per share. Therefore, of the $600 of the shares redeemed $400 of the
redemption proceeds (40 shares x $10 original purchase price) will be charged at
a rate of 4.0% (the applicable rate in the second year after purchase for a CDSC
of $16).
The contingent deferred sales charge is waived on redemptions of shares
(i) following the death or disability, as defined in the Internal Revenue Code
of 1986, as amended (the "Code"), of a shareholder, or (ii) to the extent that
the redemption represents a minimum required distribution from an individual
retirement account or other retirement plan to a shareholder who has attained
the age of 70-1/2.
Conversion Feature. At the end of the period ending seven years after
the end of the calendar month in which the shareholder's purchase order was
accepted, Class B shares will automatically convert to Class A shares and will
no longer be subject to a higher distribution services fee imposed on Class B
shares. Such conversion will be on the basis of the relative net asset values of
the two classes, without the imposition of any sales load, fee or other charge.
The purpose of the conversion feature is to reduce the distribution services fee
paid by holders of Class B shares that have been outstanding long enough for the
Distributor to have been compensated for the expenses associated with the sale
of such shares.
For purposes of conversion to Class A, Class B shares purchased through
the reinvestment of dividends and distributions paid in respect of Class B
shares in a shareholder's account will be considered to be held in a separate
sub-account. Each time any Class B shares in the shareholder's account (other
than those in the sub-account) convert to Class A, an equal pro-rata portion of
the Class B shares in the sub-account will also convert to Class A.
The conversion of Class B shares to Class A shares is subject to the
continuing availability of an opinion of counsel to the effect that (i) the
assessment of the higher distribution services fee and transfer agency costs
with respect to Class B shares does not result in the dividends or distributions
payable with respect to other Classes of a Fund's shares being deemed
"preferential dividends" under the Code, and (ii) the conversion of Class B
shares to Class A shares does not constitute a taxable event under Federal
income tax law. The conversion of Class B shares to Class A shares may be
suspended if such an opinion is no longer available at the time such conversion
is to occur. In that event, no further conversions of Class B shares would
occur, and shares might continue to be subject to the higher distribution
services fee for an indefinite period which may extend beyond the period ending
eight years after the end of the calendar month in which the shareholder's
purchase order was accepted, subject to the Rules of Fair Practice of the
National Association of Securities Dealers, Inc.
Level-Load Alternative--Class C Shares
Class C shares are offered by all Funds except Short-Intermediate,
Short-Intermediate-CA, Money Market and Tax Exempt. 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 sales charge. However, you will pay a
1.0% CDSC 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 an initial sales charge so that
the Fund will receive the full amount of the investor's purchase payment and
after the first year without a contingent deferred sales charge so that the
investor will receive as proceeds upon redemption the entire net asset value of
his or her Class C shares. The Class C distribution services fee enables the
Fund to sell Class C shares without either an initial or contingent deferred
sales charge. However, unlike Class B shares, Class C shares do not convert to
any other class of shares of the Fund. Class C shares incur higher distribution
services fees than Class A shares, and will thus have a higher expense ratio and
pay correspondingly lower dividends than Class A shares.
Class Y Shares
Class Y shares are not offered to the general public and are available
only to (i) investors that held shares in one or more of the Evergreen Mutual
Funds prior to December 30, 1994., (ii) certain investment advisory clients of
the Adviser and its 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
Capitalization and Organization.
All of the Funds, except Limited Market, are series of Massachusetts business
trusts (the "Trusts"). Evergreen and Aggressive are the two series of the
Evergreen Trust, which was originally organized in 1971 as a Delaware
corporation under the name "The Evergreen Fund, Inc." and reincorporated as a
Maryland corporation in 1981. On January 30, 1987, Evergreen was reorganized
from a Maryland corporation into a Massachusetts business trust. Total Return is
the only series of the Evergreen Total Return Fund and was originally organized
in 1978 as a Maryland corporation under the name "The Evergreen Total Return
Fund, Inc." On August 1, 1986, the Total Return was reorganized from a Maryland
corporation into a Massachusetts business trust. American Retirement and Small
Cap are series of The Evergreen American Retirement Trust, which was organized
as a Massachusetts business trust in 1987. Florida High Income, National,
Short-Intermediate, Short-Intermediate-CA and Tax Exempt, are series of the
Evergreen Municipal Trust, which was organized as a Massachusetts business trust
in 1988. Money Market is the only series of the Evergreen Money Market Trust,
which was organized as a Massachusetts business trust in 1987. Global and U.S.
Real Estate are the two series of Evergreen Real Estate Equity Trust, which was
organized as a Massachusetts business trust in 1988. Growth and Income, is the
only series of a Massachusetts business trust organized in 1986. U.S. Government
is the only series of Evergreen Fixed Income Trust, which was organized as a
Massachusetts business trust in 1992. Foundation and Tax Strategic are the two
series of Evergreen Foundation Trust which was organized as a Massachusetts
business trust in 1989. Limited Market is a Maryland corporation initially
organized in 1983.
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 Declaration of Trust under which the Fund operates provides 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.
Aggressive, Total Return, Evergreen and Growth and Income may issue an
unlimited number of shares of beneficial interest with a $0.001 par value.
American Retirement, Florida High Income, Small Cap, Global, U.S. Real Estate,
Foundation, Tax Strategic, U.S. Government, Money Market, Tax Exempt,
Short-Intermediate, Short-Intermediate-CA and National may issue an unlimited
number of shares of beneficial interest with a $0.0001 par value. All shares of
these Funds have equal rights and privileges. Each share is entitled to one
vote, to participate equally in dividends and distributions declared by the
Funds and on liquidation to their proportionate share of the assets remaining
after satisfaction of outstanding liabilities. Shares of these Funds are fully
paid, nonassessable and fully transferable when issued and have no pre-emptive,
conversion or exchange rights. Fractional shares have proportionally the same
rights, including voting rights, as are provided for a full share.
The authorized capital stock of Limited Market consists of 25,000,000
shares of Common Stock having a par value of $0.10 per share. Each share of
Limited Market is entitled to one vote and to participate equally in dividends
and distributions declared by Limited Market and, on liquidation, to its
proportionate share of the net assets remaining after satisfaction of
outstanding liabilities (including fractional shares on a proportional basis).
All shares of Limited Market when issued will be fully paid and non-assessable
and have no preemptive, conversion or exchange rights. Fractional shares have
proportionally the same rights, including voting rights, as are provided for a
full share. The rights of the holders of shares of Common Stock may not be
modified except by vote of the holders of a majority of the outstanding shares.
The Trustees of the Funds (with the exception of Limited Market) were
elected by the shareholders of each Fund at a Joint Special Meeting of
Shareholders held on June 23, 1994. Under each Funds Declaration of Trust, each
Trustee will continue in office until the termination of the Fund 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 Fund or the 1940 Act.
The Directors of Limited Market were elected by the shareholders of the
Fund at their meeting held June 23, 1994. Under the Fund's Bylaws, each Director
will continue in office until such time as less than a majority of the Directors
then holding office have been elected by the shareholders or upon the occurrence
of any of the conditions described under Section 16 of the 1940 Act. As a
result, normally no annual or regular meetings of shareholders will be held,
unless otherwise required by the Bylaws or the 1940 Act.
Shares have noncumulative voting rights, which means that the holders
of more than 50% of the shares voting for the election of Trustees or Directors
can elect 100% of the Trustees or Directors if they choose to do so and in such
event the holders of the remaining shares so voting will not be able to elect
any Trustees or Directors.
The Trustees or Directors of each Fund are authorized to reclassify and
issue any unissued shares to any number of additional series without shareholder
approval. Accordingly, in the future, for reasons such as the desire to
establish one or more additional portfolios of a Trust or Limited market with
different investment objectives, policies or restrictions, additional series of
shares may be created by one or more Funds. Any issuance of shares of another
series or class would be governed by the 1940 Act and the law of either the
State of Massachusetts or the State of Maryland. If shares of another series of
a Trust or Limited Market were issued in connection with the creation of
additional investment portfolios, each share of the newly created portfolio
would normally be entitled to one vote for all purposes. Generally, shares of
all portfolios would vote as a single series on matters, such as the election of
Trustees or Directors, that affected all portfolios in substantially the same
manner. As to matters affecting each portfolio differently, such as approval of
the Investment Advisory Contract and changes in investment policy, shares of
each portfolio would vote separately.
In addition any Fund may, in the future, create additional classes of
shares which represent an interest in the same investment portfolio. Except for
the different distribution related an other specific costs borne by such
additional classes, they will have the same voting and other rights described
for the existing classes of each Fund.
Procedures for calling a shareholders' meeting for the removal of the
Trustees or Directors of each Fund, 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.
As of April 15, 1995 each Fund had outstanding the following number of
shares of each Class:
<TABLE>
<CAPTION>
Total Shares Class A Class B Class C Class Y
<S> <C> <C> <C> <C> <C>
Evergreen
Total Return
Limited Market
Growth and Income
Money Market
American Retirement
Small Cap
Tax Exempt
Short-Intermediate
Short-Intermediate-CA
National
Global
U.S. Real Estate
Foundation
Tax Strategic
U.S. Government
</TABLE>
Custodian and Transfer Agent
State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110, acts as custodian for the securities and cash of each Fund
but plays no part in deciding the purchase or sale of portfolio securities.
State Street has entered into sub-custodian agreements with a number of major
financial institutions, pursuant to which cash and Global's portfolio securities
which are purchased outside the United States will be maintained in the custody
of such institutions. All sub-custodian arrangements will be approved by
Global's Trustees in accordance with Rule 17f-5 of the 1940 Act.
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.
Evergreen Funds Distributor, Inc. is not obligated to sell any specific amount
of shares and will purchase shares for resale only against orders for shares.
<PAGE>
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
Shereff, Friedman, Hoffman & Goodman, LLP, 919 Third Avenue, New York,
New York 10022 serves as counsel to the Funds.
Independent Auditors
Ernst & Young LLP has been selected to be the independent auditors of
Total Return, Limited Market, Growth and Income and the two series funds of The
Evergreen American Retirement Trust.
Price Waterhouse LLP has been selected to be the independent auditors
of the two series funds of Evergreen Trust, Money Market, the five series funds
of The Evergreen Municipal Trust, the two series funds of Evergreen Real Estate
Equity Trust, the two series funds of Evergreen Foundation Trust and the sole
series of Evergreen Fixed-Income Trust.
PERFORMANCE INFORMATION
Total Return
From time to time a Fund may advertise its "total return" . Computed
separately for each class, the Fund's "total return" is its average annual
compounded total return for recent one, five, and ten-year periods (or the
period since the Fund's inception). The Fund's total return for such a period is
computed by finding, through the use of a formula prescribed by the Securities
and Exchange Commission, the average annual compounded rate of return over the
period that would equate an assumed initial amount invested to the value of such
investment at the end of the period. For purposes of computing total return,
income dividends and capital gains distributions paid on shares of the Fund are
assumed to have been reinvested when paid and the maximum sales charge
applicable to purchases of Fund shares is assumed to have been paid. The Fund
will include performance data for Class A, Class B and Class C shares in any
advertisement or information including performance data of the Fund.
The shares of each Fund outstanding prior to January 3, 1995 have been
reclassified as Class Y shares. The average annual compounded total return, or
where applicable yield, for each Class of shares offered by the Funds for the
most recently completed one, five and ten year fiscal periods is set forth in
the table below.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
EVERGREEN 1 Year 5 Years 10 Years AGGRESSIVE 1 Year 5 Years 10 Years
-------
Ended Ended Ended Ended Ended Ended
------
9/30/94 9/30/94 9/30/94
Class A 1.12% 5.73% 11.57% Class A
Class B 1.16% 6.46% 12.11% Class B
Class C 5.16% 6.77% 12.11% Class C
Class Y 6.16% 6.77% 12.11% Class Y
FLORIDA HIGH
INCOME 1 Year 5 Years 10 Years TOTAL RETURN 1 Year 5 Years 10 Years
-------
Ended Ended Ended Ended Ended Ended
------
9/30/94 9/30/94 9/30/94 3/31/94 3/31/94 3/31/94
Class A 1.12% 5.73% 11.57% Class A -6.78% 7.11% 11.25%
Class B 1.16% 6.46% 12.11% Class B -6.51% 7.87% 11.79%
Class C 5.16% 6.77% 12.11% Class C -3.01% 8.16% 11.79%
<PAGE>
Class Y 6.16% 6.77% 12.11% Class Y -2.13% 8.16% 11.79%
LIMITED MARKET 1 Year 5 Years 10 Years GROWTH AND INCOME 1 Year 5 Years From
Ended Ended Ended Ended Ended 10/15/86
9/30/94 9/30/94 9/30/94 12/31/93 12/31/93 (inception)
Class A -2.74% 8.58% 15.32% Class A 9.00% 13.34% 11.81%
Class B -2.71% 9.37% 15.89% Class B 9.44% 14.22% 12.50%
Class C 1.15% 9.64% 15.89% Class C 13.44% 14.45% 12.57%
Class Y 2.11% 9.64% 15.89% Class Y 14.44% 14.45% 12.57%
MONEY MARKET 1 Year 5 Years From AMERICAN RETIREMENT 1 Year 5 Years From
Ended Ended 11/2/87 Ended Ended 3/14/88
8/31/94 8/31/94 (inception) 12/31/93 12/31/93 (inception)
Class A 3.60% 5.31% 6.16% Class A 8.64% 10.25% 9.82%
Class B -1.40% 4.98% 6.06% Class B 9.06% 11.07% 10.64%
Class Y 3.60% 5.31% 6.16% Class C 13.06% 11.33% 10.75%
Class Y 14.06% 11.33% 10.75%
SMALL CAP From TAX EXEMPT 1 Year 5 Years From
10/1/93 Ended Ended 11/2/88
(inception) 8/31/94 8/31/94 (inception)
Class A -2.41% Class A 2.50% 4.08% 4.44%
Class B -2.54% Class Y 2.50% 4.08% 4.44%
Class C 1.46%
Class Y 2.46%
SHORT INTERMEDIATE 1 Year From SHORT-INTERMEDIATE-CA 1 Year From
Ended 11/18/91 Ended 10/16/92
8/31/94 (inception) 8/31/94 (inception)
Class A -3.40% 3.96% -3.00% 2.12%
Class B -3.41% 4.81% -3.04% 2.74%
Class Y 1.42% 5.79% 1.84% 4.79%
NATIONAL 1 Year From GLOBAL 1 Year 5 Years From 2/1/89
Ended 10/1/93 Ended Ended (inception)
-----------
8/31/94 (inception) 9/30/94 9/30/94
Class A -6.93% 3.30% -1.74% 6.28% 5.92%
Class B -6.86% 4.04% -1.84% 7.01% 5.70%
Class C -2.29% 6.33% 2.16% 7.32% 6.83%
Class Y 3.16% 7.32% 6.83%
U.S. REAL ESTATE 1 Year From 9/1/93 FOUNDATION 1 Year From 1/2/90
Ended (inception) Ended (inception)
----------- -----------
9/30/94 12/31/93
Class A -6.89% -3.37% 10.21% 17.76%
Class B -7.11% -2.62% 10.71% 18.76%
Class C -3.22% 1.08% 14.71% 19.20%
Class Y -2.25% 1.08% 15.71% 19.20%
TAX STRATEGIC From 11/02/93 U.S. GOVERNMENT From 6/14/93 (inception)
(inception) to 12/31/93 to 3/31/94
Class A -1.37% -5.38%
Class B -1.45% -5.33%
Class C -2.55% -1.56%
Class Y 3.55% -0.66%
</TABLE>
The performance numbers for the Class A, B and C shares are
hypothetical numbers based on the performance for Class Y shares as adjusted for
any applicable front-end sales charge or CDSC. The performance data does not
reflect any Rule 12b-1 fees. If such fees were reflected the returns would be
lower.
A Fund's total return is not fixed and will fluctuate in response to
prevailing market conditions or as a function of the type and quality of the
securities in a Fund's portfolio and its expenses. Total return information is
useful in reviewing a Fund's performance but such information may not provide a
basis for comparison with bank deposits or other investments which pay a fixed
yield for a stated period of time. An investor's principal invested in a Fund is
not fixed and will fluctuate in response to prevailing market conditions.
YIELD CALCULATIONS - NON-MONEY MARKET FUNDS
The yields used by U.S. Government, National, Short-Intermediate and
Short-Intermediate-CA in advertising are computed by dividing the Fund's
interest income (as defined in the SEC yield formula) for a given 30-day or one
<PAGE>
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 examples for National, Short-Intermediate and Short-Intermediate-CA are
shown under "Tax Equivalent Yield', below. An example of the 30-day yield for
U.S. Government is set forth below:
Year Ended: Yield
U.S. Government 3/31/94 6.95%
Tax Equivalent Yield
National, Short-Intermediate and Short-Intermediate-CA invest principally in
obligations the interest from which is exempt from federal income tax other than
the AMT. In addition, the securities in which Short-Intermediate-CA invests will
also, to the extent practicable, be exempt from California income taxes. However
from time to time the Funds may make investments which generate taxable income.
A Fund's tax-equivalent yield is the rate an investor would have to earn from a
fully taxable investment in order to equal the Fund's yield after taxes.
Tax-equivalent yields are calculated by dividing a Fund's yield by the result of
one minus a stated federal or combined federal and state tax rate. (If only a
portion of the Fund's yield is tax-exempt, only that portion is adjusted in the
calculation.) Of course, no assurance can be given that a Fund will achieve any
specific tax-exempt yield. If only a portion of the Fund's yield is tax-exempt,
only that portion is adjusted in the calculation. Of course, no assurance can be
given that the Fund will achieve any specific tax-exempt yield.
The following formula is used to calculate Tax Equivalent Yield without taking
into account state tax:
Fund's Yield
1 - Fed Tax Rate
The following formula is used to calculate Tax Equivalent Yield taking into
account state tax:
Fund's Yield
1 - Fed Tax Rate + (State Tax Rate - [State Tax Rate x Fed Tax Rate])
Examples of the 30-day tax exempt and tax equivalent yields, assuming the 36%
federal income tax bracket and, for Short-Intermediate-CA only, the 11%
California income tax bracket, are set forth below:
Year Ended: Yield Tax Equivalent Yield
National 8/31/94 5.20% 8.12%
Short-Intermediate 8/31/94 4.23% 6.61%
Short-Intermediate-CA 8/31/94 4.10% 7.20%
<PAGE>
CURRENT YIELD - MONEY MARKET FUNDS
Money Market and Tax Exempt may quote a "Current Yield" or "Effective Yield"
from time to time. The Current Yield is an annualized yield based on the actual
total return for a seven-day period. The Effective Yield is an annualized yield
based on a compounding of the Current Yield. These yields are each computed by
first determining the "Net Change in Account Value" for a hypothetical account
having a share balance of one share at the beginning of a seven-day period
("Beginning Account Value"), excluding capital changes. The Net Change in
Account Value will generally equal the total dividends declared with respect to
the account.
The yields are then computed as follows:
Current Yield = Net Change in Account Value
Beginning Account Value x 365/7
Effective Yield = (1 + Total Dividend for 7 days)365/7- 1
Yield fluctuations may reflect changes in a Fund's net investment income, and
portfolio changes resulting from net purchases or net redemptions of the Fund's
shares may affect the yield. Accordingly, a Fund's yield may vary from day to
day, and the yield stated for a particular past period is not necessarily
representative of its future yield. Since the Funds use the amortized cost
method of net asset value computation, it does not anticipate any change in
yield resulting from any unrealized gains or losses or unrealized appreciation
or depreciation not reflected in the yield computation, or change in net asset
value during the period used for computing yield. If any of these conditions
should occur, yield quotations would be suspended. A Fund's yield is not
guaranteed, and the principal is not insured. However, a Fund will use its best
efforts to maintain its net asset value at $1.00 per share. Examples of seven
day current and effective yields for Money Market and Tax-Exempt are set forth
below:
7-Day Period Ended Current Yield Effective Yield
Money Market 8/31/94 4.21% 4.30%
Tax Exempt 8/31/94 2.87% 2.91%
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 S & P Index, the Dow
Jones Industrial Average, Russell 2000 Index, or any other commonly quoted index
of common stock prices. The S & P Index, the Dow Jones Industrial Average and
the Russell 2000 Index are unmanaged indices of selected common stock prices. A
Fund's performance may also be compared to those of other mutual funds having
similar objectives. This comparative performance would be expressed as a ranking
prepared by Lipper Analytical Services, Inc., an independent service which
monitors the performance of mutual funds. A Fund's performance will be
calculated by assuming, to the extent applicable, reinvestment of all capital
gains distributions and income dividends paid. Any such comparisons may be
useful to investors who wish to compare a Fund's past performance with that of
its competitors. Of course, past performance cannot be a guarantee of future
results.
Additional Information
Any shareholder inquiries may be directed to the shareholder's broker
or to the Adviser. at the address or telephone numbers 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 Fund 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.
<PAGE>
FINANCIAL STATEMENTS
Each Fund's financial statements appearing in their most current fiscal
year Annual Report to shareholders and the report thereon of the independent
auditors appearing therein, namely Ernst & Young, LLP (in the case of Total
Return, Limited Market, Growth and Income and the two series funds of The
Evergreen American Retirement Trust) or Price Waterhouse, (in the case of
Evergreen, Money Market, the four series funds of The Evergreen Municipal Trust,
the two series funds of Evergreen Real Estate Equity Trust, the two series funds
of Evergreen Foundation Trust and the sole series fund of Evergreen Fixed-Income
Trust) , and for Total Return, Growth and Income, American Retirement, Small
Cap, Foundation, Tax Strategic and U.S. Government the Semi-Annual Report for
the most recently completed semi-annual period, along with the reports of each
Fund for the aforementioned periods filed with the Securities and Exchange
Commission on form NSAR are incorporated by reference in this Statement of
Additional Information. The Annual and Semi-Annual Reports to Shareholders for
each Fund, which contain the referenced statements, are available upon request
and without charge.
<PAGE>
EVERGREEN AGGRESSIVE GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
June 23, 1995
Assets:
Cash $ 400
Deferred organizational expenses 25,500
------
Total assets 25,900
Liabilities:
Organizational expenses payable 25,500
Net assets:
Paid-in Capital 400
Net assets $ 400
=========
Net asset value per share:
Class A Shares ($100/6.40 shares of
beneficial interest outstanding) $15.63
======
Sales charge - 4.75% of offering price
Maximum offering price (100/95.25 *$15.63) $16.41
======
Class B Shares ($100/6.40 shares of
beneficial interest outstanding) $15.63
Class C Shares ($100/6.40 shares of
beneficial interest outstanding) $15.63
Class Y Shares ($100/6.40 shares of
beneficial interest outstanding) $15.63
See accompanying notes to financial statements.
<PAGE>
EVERGREEN AGGRESSIVE GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
June 23, 1995
Note 1 - Organization
Evergreen Aggressive Growth Fund (the "Fund") is a newly organized, separate
investment series of Evergreen 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 6.4 shares of each of Class A,
Class B, Class C and 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 (the "Adviser"). The Adviser 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 the
Adviser 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.
Note 2 - Description of Multiple Classes of Shares
The Fund is authorized to issue an unlimited number of shares in four classes.
Class A shares are offered with a front-end sales charge of 4.75%. Class B
shares are offered with a contingent deferred sales charge payable when shares
are redeemed which would decline from 5% to zero over a seven-year period (after
which it is expected that they will convert to Class A shares). Class C shares
are offered with a 1% contingent deferred sales charge on shares redeemed within
the first year of purchase. Class Y shares are available only to investment
advisory clients of the Adviser and its affiliates, certain institutional
investors and shareholders of other funds managed by the Evergreen Asset as of
December 30, 1994. Class Y shares are sold without a sales charge. All classes
have identical voting, dividend, liquidation and other rights, except that
certain classes bear different distribution expenses (see note 4) and have
exclusive voting rights with respect to their distribution plan.
Note 3 - Investment Advisory and Administration Agreements
The Fund has agreed to enter into an investment advisory agreement with the
Adviser pursuant to which the Adviser will manage the Fund's investments,
subject to the authority of the Fund's Trustees. In consideration of the Adviser
performing its obligations, the Fund will pay to the Adviser an advisory fee
accrued daily and payable monthly, at an annual rate of .60 of 1% of the Fund's
daily net assets.
<PAGE>
EVERGREEN AGGRESSIVE GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
Note 3 (continued) - 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 the
Adviser 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, the parent of Evergreen Funds Distributor, Inc.
("EFD"), distributor of the Evergreen group of mutual funds, will serve as
sub-administrator and will pay the cost of compensation of the officers of the
Fund. Furman Selz is entitled to receive a fee based on the average daily net
assets of all of the Funds administered by Evergreen Asset for which either
Evergreen Asset or the Adviser 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.
Note 4 - Distribution Plans
In connection with distribution plans pursuant to Rule 12b-1 of the Act, the
Fund has agreed to enter into a distribution agreement (the "Agreement") with
EFD whereby the Fund will compensate EFD for its services at a rate which may
not exceed, as a percentage of average daily net assets on an annual basis, .25
of 1% for Class A shares and .75 of 1% for Class B and C shares. Such fees are
accrued daily and paid monthly. The Agreement provides that EFD will use these
fees to finance activities that promote the sale of Class A, Class B and Class C
shares.
A portion of the payments under Class B and Class C plans of up to .25 of 1% of
average daily net assets may constitute a shareholder service fee. The Fund has
entered into a shareholder services agreement with First Union Brokerage
Services ("FUBS"), an affiliate of the Adviser, whereby the Fund will compensate
FUBS for certain services provided to shareholder accounts relating to the
Fund's Class B and Class C shares. Such fees are accrued daily and paid monthly.
Note 5 - Plan of Reorganization
In accordance with a Plan of Reorganization dated March 15, 1995 between the
Trust and ABT Investment Series, Inc. with respect to its ABT Emerging Growth
Fund series ("ABT Fund"), as of the close of business on June 30, 1995, the ABT
Fund will transfer substantially all of its assets, and certain stated
liabilities, in exchange for shares of the Fund.
Report of Independent Accountants
To the Shareholder and Trustees of
Evergreen Aggressive Growth Fund
In our opinion, the accompanying statement of assets and liabilities presents
fairly, in all material respects, the financial position of Evergreen Aggressive
Growth Fund (the "Fund"), a series of Evergreen Trust, at June 23, 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
June 30, 1995
<PAGE>
APPENDIX A - NOTE, BOND AND COMMERCIAL PAPER RATINGS
APPENDIX A - DESCRIPTION OF BOND RATINGS AND NOTE RATINGS
Bond Ratings
Standard & Poor's Corporation. A Standard & Poor's corporate or
municipal bond rating is a current assessment of the credit worthiness of an
obligor with respect to a specific obligation. This assessment of credit
worthiness may take into consideration obligors such as guarantors, insurers or
lessees. The debt rating is not a recommendation to purchase, sell or hold a
security, inasmuch as it does not comment as to market price or suitability for
a particular investor.
The ratings are based on current information furnished to Standard &
Poor's by the issuer or obtained by Standard & Poor's from other sources it
considers reliable. Standard & Poor's does not perform any audit in connection
with the ratings and may, on occasion, rely on unaudited financial information.
The ratings may be changed, suspended or withdrawn as a result of changes in,
unavailability of such information, or for other circumstances.
The ratings are based, in varying degrees, on the following
considerations:
1. Likelihood of default-capacity and willingness of the obligor as to
the timely payment of interest and repayment of principal in accordance with the
terms of the obligation.
2. Nature of and provisions of the obligation.
3. Protection afforded by, and relative position of, the obligation in
the event of bankruptcy, reorganization or their arrangement under the laws of
bankruptcy and other laws affecting creditors' rights.
AAA - This is the highest rating assigned by Standard & Poor's to a
debt obligation and indicates an extremely strong capacity to pay interest and
repay any principal.
AA - Debt rated AA also qualifies as high quality debt obligations.
Capacity to pay interest and repay principal is very strong and in the majority
of instances they differ from AAA issues only in small degree.
A - Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB - Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than is higher rated categories.
BB, B, CCC, CC, C - Debt rated BB, B, CCC, CC and C is regarded, on a
balance, as predominantly speculative with respect to capacity to pay interest
and repay principal in accordance with the terms of the obligation.
BB indicates the lowest degree of speculation and C the highest degree
of speculation. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
BB - Debt rated BB has less near-term vulnerability to default than
other speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could lead
to inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB - rating.
B - Debt rated B has greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The B rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
BB or BB- rating.
CCC - Debt rated CCC has a currently indefinable vulnerability to
default, and is dependent upon favorable business, financial and economic
conditions to meet timely payment of interest and repayment of principal. In the
event of adverse business, financial or economic conditions, it is not likely to
have the capacity to pay interest and repay principal. The CCC rating category
is also used for debt subordinated to senior debt that is assigned an actual or
implied B or B- rating.
CC - The rating CC is typically applied to debt subordinated to senior
debt that is assigned an actual or implied CCC rating.
C - The rating C is typically applied to debt subordinated to senior
debt which is assigned an actual or implied CCC- debt rating. The C rating may
be used to cover a situation where a bankruptcy petition has been filed, but
debt service payments are continued.
C1 - The rating C1 is reserved for income bonds on which no interest is
being paid.
D - Debt rated D is in payment default. It is used when interest
payments or principal payments are not made on a due date even if the applicable
grace period has not expired, unless Standard & Poor's believes that such
payments will be made during such grace periods; it will also be used upon a
filing of a bankruptcy petition if debt service payments are jeopardized.
Plus (+) or Minus (-) - To provide more detailed indications of credit
quality, the ratings from AA to CCC may be modified by the addition of a plus or
minus sign to show relative standing within the major rating categories.
NR - indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that Standard & Poor's
does not rate a particular type of obligation as a matter of policy. Debt
obligations of issuers outside the United States and its territories are rated
on the same basis as domestic corporate and municipal issues. The ratings
measure the credit worthiness of the obligor but do not take into account
currency exchange and related uncertainties.
Bond Investment Quality Standards: Under present commercial bank
regulations issued by the Comptroller of the Currency, bonds rated in the top
four categories (AAA, AA, A, BBB, commonly known as "Investment Grade" ratings)
are generally regarded as eligible for bank investment. In addition, the Legal
Investment Laws of various states may impose certain rating or other standards
for obligations eligible for investment by savings banks, trust companies,
insurance companies and fiduciaries generally.
Moody's Investors Service. A brief description of the applicable Moody's
Investors Service rating symbols and their meanings follows:
Aaa - Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt edge". Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
Aa - Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuations of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.
A - Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate, but elements
may be present which suggest a susceptibility to impairment sometime in the
future.
Baa - Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Some bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
NOTE: Bonds within the above categories which possess the strongest investment
attributes are designated by the symbol "1" following the rating.
Ba - Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B - Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
Caa - Bonds which are rated Caa are of poor standing. Such issues may
be in default or there may be present elements of danger with respect to
principal or interest.
Ca - bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have other
marked shortcomings.
C - bonds which are rated C are the lowest rated class of bonds and
issue so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
NOTE RATINGS
Moody's Investors Service: MIG-1 -- the best quality. MIG-2 -- high
quality, with margins of protection ample though not so large as in the
preceding group. MIG-3 -- favorable quality, with all security elements
accounted for, but lacking the undeniable strength of the preceding grades.
Market access for refinancing, in particular, is likely to be less well
established.
Standard & Poor's Ratings Group: SP-1 - Very strong or strong capacity to pay
<PAGE>
principal and interest. SP-2 -- Satisfactory capacity to pay principal
and interest.
Municipal Note Ratings. A Standard & Poor's note rating reflects the liquidity
concerns and market access risks unique to notes. Notes due in three years or
less will likely receive a note rating. Notes maturing beyond three years will
most likely receive a long-term debt rating. The following criteria will be used
in making that assessment.
o Amortization schedule (the larger the final maturity relative to other
maturities the more likely it will be treated as a note).
o Source of Payment (the more dependent the issue is on the market for
its refinancing, the more likely it will be treated as a note.)
Note rating symbols are as follows:
o SP-1 Very strong or strong capacity to pay principal and interest.
Those issues determined to possess overwhelming safety characteristics
will be given a plus (+) designation.
o SP-2 Satisfactory capacity to pay principal and interest.
o SP-3 Speculative capacity to pay principal and interest.
Moody's Short-Term Loan Ratings - Moody's ratings for state and
municipal short-term obligations will be designated Moody's Investment Grade
(MIG). This distinction is in recognition of the differences between short-term
credit risk and long-term risk. Factors affecting the liquidity of the borrower
are uppermost in importance in short-term borrowing, while various factors of
major importance in bond risk are of lesser importance over the short run.
Rating symbols and their meanings follow:
o MIG 1 - This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancing.
o MIG 2 - This designation denotes high quality. Margins of protection
are ample although not so large as in the preceding group.
o MIG 3 - This designation denotes favorable quality. All security
elements are accounted for but this is lacking the undeniable strength
of the preceding grades. Liquidity and cash flow protection may be
narrow and market access for refinancing is likely to be less well
established.
o MIG 4 - This designation denotes adequate quality. Protection commonly
regarded as required of an investment security is present and although
not distinctly or predominantly speculative, there is specific risk.
<PAGE>
APPENDIX B - ADDITIONAL INFORMATION CONCERNING CALIFORNIA
<PAGE>
The following information as to certain California risk factors is
given to investors in view of Short-Intermediate-CA's policy of investing
primarily in California state and municipal issuers. The information is based
primarily upon information derived from public documents relating to securities
offerings of California state and municipal issuers, from independent municipal
credit reports and historically reliable sources, but has not been independently
verified by the Fund.
On June 6, 1978, California voters approved Proposition 13, which added
Article XIIIA to the California Constitution. The principal thrust of Article
XIIIA is to limit the amount of ad valorem taxes on real property to one percent
of the full cash value as determined by the county assessor. The assessed
valuation of all real property may be increased, but not in excess of two
percent per year, or decreased to reflect the rate of inflation or deflation as
shown by the consumer price index. Article XIIIA requires a vote of two thirds
of the qualified electorate to impose special taxes, and completely prohibits
the imposition of any additional ad valorem, sales or transaction tax on real
property (other than ad valorem taxes to repay general obligation bonds issued
to acquire or improve real property), and requires the approval of two-thirds of
all members of the State Legislature to change any state tax laws resulting in
increased tax revenues.
On November 6, 1979, California voters approved the initiative seeking
to amend the California Constitution entitled "Limitation of Government
Appropriations" which added Article XIIIB to the California Constitution. Under
Article XIIIB state and local governmental entities have an annual
appropriations limit and may not spend certain monies which are called
appropriations subject to limitations (consisting of tax revenues, state
subventions and certain other funds) in an amount higher than the appropriations
limit. Generally, the appropriations limit is to be based on certain 1978-79
expenditures, and is to be adjusted annually to reflect changes in consumer
prices, population and services provided by these entities.
Decreased in state and local revenues in future fiscal years as a
consequence of these initiatives may continue to result in reductions in
allocations of state revenues to California municipal issuers or reduce the
ability of such California issuers to pay their obligations.
With the apparent onset of recovery in California's economy, revenue
growth over the next few years could recommence at levels that would enable
California to restore fiscal stability. The political environment, however,
combined with pressures on the state's financial flexibility, may frustrate its
ability to reach this goal. Strong interests in long-established state programs
ranging from low-cost public higher education access to welfare and health
benefits join with the more recently emerging pressure for expanded prison
construction and a heightened awareness and concern over the state's business
climate.
Adopted on July 8, 1994, the fiscal 1994 budget is designed to address
California's accumulated deficit over a 22-month period. In order to balance the
budget and generate sufficient cash to retire the $4 billion deficit Revenue
Anticipation Warrant and a $3 billion Revenue Anticipation Note to be issued in
July 1995, the state's fiscal plan relies upon aggressive assumptions of federal
aid, projected at about $760 million in fiscal year 1995 and $2.8 billion in
fiscal year 1995, to compensate the state for its costs of providing service to
illegal immigrants. These assumptions, combined with fiscal year 1996
constitutionally mandated increases in spending for K-14 education, and
<PAGE>
continued growth in social services and corrections expenditures, are risky. To
offset this risk, the state has enacted a Budget Adjustment Law, known as the
"trigger" legislation, which established a set of backup budget adjustment
mechanisms to address potential shortfalls in cash. The trigger mechanism will
be in effect for both fiscal years 1995 and 1996.
In July of 1994, S& P and Moody's lowered the general obligation bond
rating of the state of California. The rating agencies explained their actions
by citing the state's continuing deferral of substantial portions of its
estimated $3.8 billion accumulated deficit; continuing structural budgetary
constraints including a funding guarantee for K-14 education; overly optimistic
expectation of federal aid to balance fiscal year 1995's budget and fiscal year
1996's cash flow projections; and reliance upon a trigger mechanism to reduce
spending if the plan's federal aid assumptions prove to be inflated.
<PAGE>
<PAGE>
THE EVERGREEN TRUST
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
a. Financial Statements
Included in Part A of this Registration Statement:
Financial Highlights for the fiscal years ended September 30, 1985
through September 30, 1994.
Included in Part B of this Registration Statement:*
Statement of Investments as of September 30, 1994 and March 31 1995,
Statement of Assets and Liabilities of Evergreen Fund as of September 30, 1994
and March 31 1995, and of Evergreen Aggressive Growt Fund as of June 23, 1995,
Statement of Operations for the year ended September 30, 1994 and six months
ended March 31 1995, Statements of Changes in Net Assets for the fiscal years
ended September 30, 1993 and 1994 and six months ended March 31 1995,Financial
Highlights Notes to Financial Statements Report of Independent Auditors
b. Exhibits
No. Description
1(A) Amended and Restated Declaration of Trust***
1(B) Form of Instrument providing for the Establishment and
Designation of Classes***
2 By-Laws**
3 None
4 Instruments Defining Rights of Shareholders**
5(A) Evergreen Fund Investment Advisory Agreement***
5(B) Evergreen Fund Investment Subadvisory Agreement***
5(C) Evergreen Aggressive Growth Fund Investment Advisory Agreement
6 Distribution Agreement***
7 Form of Administration Agreement
8 Custodian Agreement**
9 None
10 None
11 Consent of Price Waterhouse, independent accountants
12 None
13 None
14 None
15 Rule 12b-1 Distribution Plans***
15 Form of Rule 12b-1 Distribution Plan
16 None
17 Other Exhibits
Annual Report of Registrant for the fiscal year ended
September 30, 1994
- --------------------------
* Incorporated all or in part by reference to the Annual Report to
Shareholders for the fiscal year ended September 30, 1994 which has been
previously filed with the Commission and which is attached as an Exhibit to this
Post-Effective Amendment, by reference to Semi Annual Report to Shareholders for
the period ended March 31, 1995.and by reference to the Annual Report of
Registrant on form NSAR for the aforementioned period.
** Incorporated all or in part by reference to Post-Effective Amendment No.
18 to Registrant's Registration Statement on Form N-1A filed on February 2,
1987.
*** Incorporated all or in part by reference to Post-Effective Amendment
No. 27 to Registrant's initial Registration on Form N-1A filed on January 3,
1995.
Item 25. Persons Controlled by or Under Common Control with Registrant
None
<PAGE>
Item 26. Number of Holders of Securities (as of April 3, 1995)
(1) (2)
Number of Record
Title of Class Shareholders
Evergreen Fund:
Class Y Shares of Beneficial Interest ($0.001 par value) 24,483
Class A Shares of Beneficial Interest ($0.001 par value) 1,071
Class B Shares of Beneficial Interest ($0.001 par value) 1,365
Class C Shares of Beneficial Interest ($0.001 par value) 49
Evergreen Aggressive Growth Fund:
Class Y Shares of Beneficial Interest ($0.001 par value) 1
Class A Shares of Beneficial Interest ($0.001 par value) 1
Class B Shares of Beneficial Interest ($0.001 par value) 1
Class C Shares of Beneficial Interest ($0.001 par value) 1
Item 27. Indemnification
Article XI of the Registrant's By-laws contains the following
provisions regarding indemnification of Trustees and officers:
SECTION 11.1 Actions Against Trustee or Officer. The Trust shall
indemnify any individual who is a present or former Trustee or officer of the
Trust and who, by reason of his position as such, was, is, or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
any action or suit by or in the right of the Trust) against expenses, including
attorneys' fees, judgments, fines, and amounts paid in settlement, actually and
reasonably incurred by him in connection with the claim, action, suit, or
proceeding, if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Trust, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon the plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be in or
not opposed to the best interests of the Trust, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his conduct
was unlawful.
SECTION 11.2 Derivative Actions Against Trustees or Officers. The Trust
shall indemnify any individual who is a present or former Trustee or officer of
the Trust and who, by reason of his position as such, was, is, or is threatened
to be made a party to any threatened, pending or completed action or suit by or
on behalf of the Trust to obtain a judgment or decree in its favor, against
expenses, including attorneys' fees, actually and reasonably incurred by him in
connection with the defense or settlement of the action or suit, if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Trust, except that no indemnification shall be made in
respect of any claim, issue or matter as to which the individual has been
adjudged to be liable for negligence or misconduct in the performance of his
duty to the Trust, except to the extent that the court in which the action or
suit was brought determines upon application that, despite the adjudication of
liability but in view of all circumstances of the case, the person is fairly and
reasonably entitled to indemnity for those expenses which the court shall deem
proper, provided such Trustee or officer is not adjudged to be liable by reason
of his wilful misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of his office.
SECTION 11.3 Expenses of Successful Defense. To the extent that a
Trustee or officer of the Trust has been successful on the merits or otherwise
in defense of any action, suit or proceeding referred to in Section 11.1 or 11.2
or in defense of any claim, issue, or matter therein, he shall be indemnified
against expenses, including attorneys' fees, actually and reasonably incurred by
him in connection therewith.
SECTION 11.4 Required Standard of Conduct.
(a) Unless a court orders otherwise, any indemnification under Section
11.1 or 11.2 may be made by the Trust only as authorized in the specific case
after a determination that indemnification of the Trustee or officer is proper
in the circumstances because he has met the applicable standard of conduct set
forth in Section 11.1 or 11.2. The determination shall be made by: (i) the
Trustees, by a majority vote of a quorum consisting of Trustees who were not
parties to the action, suit or proceeding; or if the required quorum is not
obtainable, or if a quorum of disinterested Trustees so directs, (ii) an
independent legal counsel in a written opinion.
(b) Nothing contained in this Article XI shall be construed to protect
any Trustee or officer of the Trust against any liability to the Trust or its
Shareholders to which he would otherwise be subject by reason of wilful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his office (any such conduct being hereinafter called
"Disabling Conduct"). No indemnification shall be made pursuant to this Article
XI unless:
(i) There is a final determination on the merits by a court or
other body before whom the action, suit or proceeding was brought that the
individual to be indemnified was not liable by reason of Disabling Conduct; or
(ii) In the absence of such a judicial determination, there is a
reasonable determination, based upon a review of the facts, that such individual
was not liable by reason of Disabling Conduct, which determination shall be made
by:
(A) A majority of a quorum of Trustees who are neither
"interested persons" of the Trust, as defined in section 2(a) (19) of the 1940
Act, nor parties to the action, suit or proceeding; or
(B) An independent legal counsel in a written opinion.
SECTION 11.5 Advance Payments. Notwithstanding any provision of this
Article XI, any advance payment of expenses by the Trust to any Trustee or
officer of the Trust shall be made only upon the undertaking by or on behalf of
such Trustee or officer to repay the advance unless it is ultimately determined
that he is entitled to indemnification as above provided, and only if one of the
following conditions is met:
(a) the Trustee or officer to be indemnified provides a security for his
undertaking; or
(b) The Trust is insured against losses arising by reason of any lawful
advances; or
(c) There is a determination, based on a review of readily available facts,
that there is reason to believe that the Trustee or officer to be indemnified
ultimately will be entitled to indemnification, which determination shall be
made by:
(i) A majority of a quorum of Trustees who are neither "interested persons"
of the Trust, as defined in Section 2(a) (19) of the 1940 Act, nor parties to
the action, suit or proceeding; or
(ii) An independent legal counsel in a written opinion.
SECTION 11.6 Former Trustees and Officers. The indemnification provided
by this Article XI shall continue as to an individual who has ceased to be a
Trustee or officer of the Trust and inure to the benefit of the legal
representatives of such individual and shall not be deemed exclusive of any
other rights to which any Trustee, officer, employee or agent of the Trust may
be entitled under any agreement, vote of Trustees or otherwise, both as to
action in his official capacity and as to action in another capacity while
holding office as such; provided, that no Person may satisfy any right of
indemnity granted herein or to which he may be otherwise entitled, except out of
the Trust Property, and no Shareholder shall be personally liable with respect
to any claim for indemnity.
SECTION 11.7 Insurance. The Trust may purchase and maintain insurance
on behalf of any person who is or was a Trustee, officer, employee, or agent of
the Trust, against any liability asserted against him and incurred by him in any
such capacity, or arising out of his status as such. However, the Trust shall
not purchase insurance to indemnify any Trustee or officer against liability for
any conduct in respect of which the 1940 Act prohibits the Trust itself from
indemnifying him.
SECTION 11.8 Other Rights to Indemnification. The indemnification
provided for herein shall not be deemed exclusive of any other rights to which
those seeking indemnification may be entitled under any By-Law, agreement, vote
of Shareholders or disinterested Trustees or otherwise.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to Trustees, officers and controlling persons of
the Registrant pursuant to the foregoing provisions or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a Trustee, officer, or controlling person of the Registrant in
connection with the successful defense of any action, suit or proceeding) is
asserted by such Trustee, officer or controlling person in connection with the
shares being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
Item 28. Business or Other Connections of Investment Adviser
Evergreen Asset Management Corp. ("Evergreen Asset"), the investment
adviser to Registrant's Evergreen Fund series, and Lieber and Company, the
sub-adviser to Registrant's Evergreen Fund series also acts as such to one or
more of the separate investment series offered by The Evergreen Total Return
Fund, The Evergreen Limited Market Fund, Inc., The Evergreen Value Timing Fund,
The Evergreen Money Market Trust, The Evergreen American Retirement Trust, The
Evergreen Municipal Trust, Evergreen Global Real Estate Equity Trust and
Evergreen Foundation Fund, all registered investment companies. Stephen A.
Lieber, Chairman and Co-CEO, Theodore J. Israel, Jr., Executive Vice President,
Nola Maddox Falcone, President and Co-CEO, George R. Gaspari, Senior Vice
President and CFO and Joseph J. McBrien, Senior Vice President and General
Counsel, are the principal executive officers of Evergreen Asset and Lieber and
Company, were, prior to June 30, 1994 officers and/or directors or trustees of
the Registrant and the other funds for which the Adviser acts as investment
adviser.
For a description of the other business of the First Union National Bank of
North Carolina ("FUNB-NC"), which will serve as investment adviser to
Registrant's Evergreen Aggressive Growth Fund series, see the section entitled
"Investment Advisers" in Part A.
The Directors and principal executive officers of FUNB, are set forth in
the following table:
FIRST UNION NATIONAL BANK OF NORTH CAROLINA
BOARD OF DIRECTORS
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.
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
Item 30. Location of Accounts and Records
Accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the Rules promulgated
thereunder are maintained at the offices of the Registrant's Custodian, State
Street Bank and Trust Company, 2 Heritage Drive, North Quincy, Massachusetts
02171 or the offices of Evergreen Asset Management Corp., 2500 Westchester
Avenue, Purchase, New York 10577.
Item 31. Management Services
Not Applicable.
Item 32. Undertakings
Not Applicable.
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant hereby certifies that it meets all of the requirements for
effectiveness of this registration statement pursuant to Rule 485(b) under the
Securities has caused this Post-Effective Amendment to Registrant's Registration
Statement has been signed on behalf of the Registrant, in the City of New York
and State of New York, on the 30th day of June, 1995.
Registrant: The Evergreen Trust
By: /s/ John J. Pileggi
----------------------
Name: John J. Pileggi
Title: President
As required by the Securities Act of 1933, this Post-Effective Amendment to
Registrant's Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
Signature Title Date
/s/ John J. Pileggi President (Principal June 30, 1995
- -------------------
John J. Pileggi Executive Officer) and
Treasurer (Principal
Financial and Accounting
Officer)
/s/ Laurence B. Ashkin* Trustee June 30, 1995
- ----------------------
Laurence B. Ashkin
/s/ Foster Bam* Trustee June 30, 1995
- -----------------------
Foster Bam
/s/ Robert J. Jefferies* Trustee June 30, 1995
- -----------------------
Robert J. Jefferies
/s/ James Howell* Trustee June 30, 1995
- -----------------------
James Howell
/s/ Gerald McDonnell* Trustee June 30, 1995
- -----------------------
Gerald McDonnell
/s/ Thomas L. McVerry* Trustee June 30, 1995
- -----------------------
Thomas L. McVerry
/s/ William W. Pettit* Trustee June 30, 1995
- -----------------------
William W. Pettit
/s/ Russell A. Salton, III* Trustee June 30, 1995
- --------------------------
Russell A. Salton, III
/s/ Michael S. Scofield* Trustee June 30, 1995
- -----------------------
Michael S. Scofield
- ------------------------------
* by Joseph J. McBrien, Attorney in Fact
<PAGE>
INDEX TO EXHIBITS
N-1A Item 24 EXHIBIT No. PAGE
1(B) Form of Instrument providing for the Establishment and
Designation of Classes
5(C) Evergreen Aggressive Growth Fund
Form of Investment Advisory Agreement
7 Form of Administration Agreement
14 Consent of Price Waterhouse LLP
15 Form of Rule 12b-1 Distribution Plan
27 Financial Data Schedules
OTHER EXHIBITS
Performance Chart
Annual Report of Evergreen Fund for the
fiscal year ended September 30, 1994.
- --------------------------
THE EVERGREEN FUND
Amendment to Declaration of Trust
Establishment and Designation of Series and
Establishment and Designation of Classes
The undersigned, being a majority of the Trustees of The Evergreen
Fund, a Massachusetts business trust (the "Trust"), acting pursuant to Section
9.3 of the Declaration of Trust of the Trust dated November 25, 1986 as amended
and restated December 13, 1994 (the "Declaration"), hereby certify that they
have duly adopted at a Special Meeting of Trustees held February 15, 1994 a
resolution amending Section 1.1 of the Declaration to read as follows:
Section 1.1 Name. The name of the trust established hereby (the
"Trust") is "Evergreen Trust" and, insofar as may be practicable, the
Trustees shall conduct the Trust's activities, execute all documents
and sue or be sued under that name, which name (and the word "Trust"
wherever herein used) shall refer to the Trustees as trustees, and not
as individuals, or personally, and shall not refer to the officers,
agents, employees or Shareholders of the Trust. If the Trustees
determine that the Trust's use of such name is not advisable, the
Trustees may adopt such other name for the Trust as they deem proper
and the Trust may hold its property and conduct its activities under
such other name.
The undersigned, being a majority of the Trustees of the Trust, acting
pursuant to Sections 6.1 and 6.6(j) of the Declaration, do hereby establish and
designate a series of shares of the Trust to be known as the "Evergreen Fund"
(the "Original Series"). All shares of all classes of the Trust issued and
outstanding as of the date of this instrument, and all shares of such classes
issued subsequent hereto and not otherwise designated, are and shall be shares
of the same respective classes of the Original Series.
The undersigned, being a majority of the Trustees of the Trust, acting
pursuant to Sections 6.1 and 6.6(j) of the Declaration, do hereby establish and
designate an additional series of the Trust to be known as the "Evergreen
Aggressive Growth Fund" (the "New Series").
The undersigned, being a majority of the Trustees of the Trust, acting
pursuant to Sections 6.1 and 6.6(j) of the Declaration, do hereby divide the
shares of beneficial interest of the New Series to create four classes of
shares, within the meaning of said Sections, as follows:
1. The four classes of shares are designated "Class A Shares," "Class B
Shares," "Class C Shares," and "Class Y Shares."
2. Such Class A Shares, Class B Shares, Class C Shares, and
Class Y Shares shall be entitled to all of the rights and
preferences accorded to shares of beneficial interest of the
Trust under the Declaration.
3. The purchase price, the method of determination of net
asset value, the price, terms and manner of redemption, and
the relative dividend rights of holders of such Class A
Shares, Class B Shares, Class C Shares, and Class Y Shares
shall be as established by the Trustees of the Trust in
accordance with the provisions of the Declaration and set
forth in the currently effective prospectus and statement of
additional information of the Trust relating to the New
Series, as amended from time to time, contained in the Trust's
registration statement under the Securities Act of 1933, as
amended.
4. Such Class A Shares, Class B Shares, Class C Shares, and
Class Y Shares shall vote together as a single class except
that shares of a class may vote separately on matters
affecting only that class and shares of a class not affected
by a matter will not vote on that matter.
5. A class of shares of the New Series may be terminated by the Trustees by
written notice to the Shareholders of the class.
The Declaration provides that the name of the Trust refers to the
Trustees under the Declaration collectively as Trustees, but not as individuals
or personally; and no Trustee, shareholder, officer, employee or agent of the
Trust shall be held to any personal liability, nor shall resort be had to their
private property for the satisfaction of any obligation or claim or otherwise in
connection with the affairs of the Trust but the Trust Property only shall be
liable.
<PAGE>
IN WITNESS WHEREOF, the undersigned have signed this
instrument in duplicate original counterparts and have caused a duplicate
original to be lodged among the records of the Trust this 13th day of March,
1995.
/s/ /s/
Laurence B. Ashkin Thomas L. McVerry
Trustee Trustee
/s/ /s/
Foster Bam William Walt Pettit
Trustee Trustee
/s/ /s/
James S. Howell Russell A. Salton, III
Trustee Trustee
/s/ /s/
Robert J. Jeffries Michael S. Scofield
Trustee Trustee
/s/
Gerald M. McDonnell
Trustee
First Union National Bank of North Carolina
Dear Sirs:
The undersigned, the Evergreen ......... Trust (the "Fund"), is an
investment company organized as a series company, which means that it may offer
separate classes (or series) of shares comprising different investment
portfolios. Presently, the Fund offers five investment funds:
..................................................................... The Fund
desires to employ its capital by investing and reinvesting the same in
securities in accordance with the limitations specified in its Declaration of
Trust and in its Prospectus as from time to time in effect, copies of which have
been, or will be, submitted to you, and in such manner and to such extent as may
from time to time be approved by the Fund's Trustees. Subject to the terms and
conditions of this Agreement, the Fund desires to employ your corporation (the
"Adviser") and the Adviser desires to be so employed, to supervise and assist in
the management of the business of its ....................... series(the
"Portfolio"). Accordingly, this will confirm our agreement as follows:
1. The Adviser shall, on a continuous basis, furnish reports, statistical
and research services, and advice and recommendations with respect to each
Portfolio of investments. The Adviser shall use its best judgment in rendering
these services to the Fund, and the Fund agrees as an inducement to the Adviser
undertaking such services that the Adviser shall not be liable for any mistake
of judgment or in any other event whatsoever, except for lack of good faith,
provided that nothing herein shall be deemed to protect the Adviser against any
liability to the Fund or to the shareholders of the Fund (or any Portfolio) to
which it would otherwise be subject by reason of wilful misfeasance, bad faith
or gross negligence in the performance of the Adviser's duties hereunder or by
reason of the Adviser's reckless disregard of its obligations and duties
hereunder.
2. The Adviser agrees that in any case where an officer or director of the
Adviser is also an officer or director of another corporation, and the purchase
or sale of securities issued by such other corporation is under consideration,
such officer or director shall abstain from participation in any decision made
on behalf of the Fund (or any Portfolio) to purchase or sell any securities
issued by such other corporation.
3. In consideration of the Adviser performing its obligations hereunder,
the Fund will pay to the Adviser an advisory fee, payable monthly, at an annual
rate of .-- of 1% of the daily net assets of the Portfolio.
4. The Fund understands that the Adviser acts as investment adviser to
other investment companies, and that the Adviser's parent acts as investment
adviser to individuals, partnerships, corporations, and pension funds, and the
Fund confirms that it has no objection to the Adviser or its parent so acting.
5. This Agreement shall be in effect until ............. This Agreement
shall continue in effect from year to year thereafter, provided it is approved,
at least annually, in the manner required by the Act. The Act requires that this
Agreement and any renewal thereof be approved by a vote of a majority of
Trustees of the Fund who are not parties thereto or interested persons (as
defined in the Act) of any such party, cast in person at a meeting duly called
for the purpose of voting on such approval, and by a vote of the Trustees of the
Fund or a majority of the outstanding voting securities of the Fund. A vote of a
majority of the outstanding voting securities of the Fund is defined in the Act
to mean a vote of the lesser of (i) more than 50% of the outstanding voting
securities of the Fund or (ii) 67% or more of the voting securities present at
the meeting if more than 50% of the outstanding voting securities are present or
represented by proxy.
This Agreement may be terminated at any time, without payment of
any penalty, on sixty (60) days' prior written notice by a vote of a majority of
the Fund's outstanding voting securities, by a vote of a majority of the Fund's
Trustees, or by the Adviser. This Agreement shall be automatically terminated in
the event of its assignment (as such term is defined in the Act).
7. This Agreement is made by the Fund pursuant to authority granted by the
Trustees, and the obligations created hereby are not binding on any of the
Trustees or shareholders of the Fund individually, but bind only the property of
the Fund.
If the foregoing is in accordance with your understanding, please
so indicate by signing and returning to the undersigned the enclosed copy
hereof.
Very truly yours,
EVERGREEN .......... TRUST
By:
ACCEPTED:
By:
MASTER ADMINISTRATIVE SERVICES CONTRACT
__________________ 1995
Dear Sirs:
This will confirm the agreement between the undersigned (the "Trust") and
you (the "Administrator") as follows:
1. The Trust is an open-end investment company organized as a Massachusetts
business trust and consists of one or more separate investment portfolios as may
be established and designated by the Trustees from time to time (the "Funds").
This contract shall pertain to such Funds as shall be designated in supplements
to this contract, as further agreed by the Trust and the Administrator. A
separate series of shares of beneficial interest in the Trust is offered to
investors with respect to each Fund. The Trust engages in the business of
investing and reinvesting the assets of each Fund in the manner and in
accordance with the investment objective and restrictions specified in the
currently effective prospectus (the "prospectus") relating to the Trust and the
Fund included in the Trust's Registration statement, as amended from time to
time (the "Registration statement"), filed by the Trust under the investment
Company Act of 1940 (the "1940 Act") and the securities Act of 1933 (the "1933
Act"). Copies of the documents referred to in the preceding sentence have been
furnished to the Administrator. Any amendments to those documents shall be
furnished to the Administrator promptly. The Trust has entered into an
investment advisory contract or contracts (the "Advisory contract") with respect
to the Funds with such advisors as are designated therein (each such advisor is
hereinafter referred to as an "Advisor") , and a Distribution Contract or
Contracts relating to the distribution of its shares (together, the
"Distribution contract") with such distributor as are designated therein (each
such distributor is hereinafter referred to as a "distributor") . The Trust also
has adopted a Distribution Plan or Plans (the "Plan") pursuant to Rule 12b-l
under the 1940 Act with respect to certain of the Funds.
2. (a) The Administrator shall provide all management and administrative
services reasonably necessary for the operation of the Trust and each Fund,
other than those investment management and administrative services which are to
be provided with respect to a Fund by an Advisor pursuant to an Advisory
contract. The Administrator may retain Service organizations (as defined in the
Prospectus) to provide these services to the Trust. The Administrator shall make
periodic reports to the Trust's Board of Trustees on the performance of its
obligations under this contract, other than servtces provided to the Trust by
service organizations retained in accordance with the previous sentence.
(b) The Administrator shall, at its expense, (i) provide the Trust with
office space and office facilities reasonably necessary for the operation of the
Trust and the Funds, (ii)employ or associate with itself such persons as it
believes appropriate to assist it in performing its obligations under this
contract and (iii) provide the Trust with persons satisfactory to the Trust's
Board of Trustees to serve as officers and employees of the Trust, including a
president, one or more vice presidents, a secretary and a treasurer. The
Administrator shall pay the entire compensation of all of the Trust's officers
and employees and the entire compensation of the trustees cf the Trust who are
affiliated persons of the Administrator and the compensation shall not be deemed
to be expenses of the Trust for purposes of paragraph 5 hereof.
(c) Except as provided in subparagraph (b) and, with respect to a Fund,
in an Advisory contract, the Trust shall be responsible for all of its expenses
and liabilities, including compensation of its Trustees who are not affiliated
with the Administratoror the Advisor or any of their affiliates; taxes and
governmental fees; interest charges; fees and expenses of the Trust's
independent accountants and legal counsel; trade association membership dues;
fees and expenses of any custodian (including maintenance cf books and accounts
and calculation of the net asset value of shares of the Fund) , transfer agent,
registrar and dividend disbursing agent of the Trust; expenses of issuing,
redeeming, registering and gualifying for sale shares of beneficial interest in
the Trust; expenses of preparing and printing share certificates, prospectuses
and reports to shareholders, notices, proxy statements and reports to regulatory
agencies; the cost of office supplies, including stationery; travel expenses of
all officers, trustees and employees; insurance premiums; brokerage and other
expenses of executing portfolio transactions; expenses of shareholders'
meetings; organizational expenses; extraordinary expenses; and reimbursements to
the Administrator in accordance with the Plan.
3. The Administrator shall give the Trust the benefit of the
Administrator's best judgment and efforts in rendering services under this
Contract. As an inducement to the Administrator's undertaking to render these
services, the Trust agrees that the Administrator shall not be liable under this
contract for any mistake in judgment or in any other event whatsoever except for
lack of good faith, provided that nothing in this Contract shall be deemed to
protect or purport to protect the Administrator against any liability to the
Trust or its shareholders to which the Administrator would otherwise be subject
by reason of willful misfeasance, bad faith or gross negligence in the
performance of the Administrator's duties under this contract or by reason of
the Administrator's reckless disregard of its obligations and duties hereunder.
4. in consideration of the services to be rendered by the Administrator
under this contract, the Trust shall pay the Administrator a monthly fee with
respect to each Fund on the first business day of each month, based upon the
average daily value of the net assets of that Fund during the preceding month at
annual rates set forth in a supplement to this contract with respect to that
Fund. If the fees payable to the Administrator pursuant to this paragraph 4
begin to accrue before the end of any month or if this contract terminates
before the end of any month, the fees for the period from that date to the end
of that month or from the beginning of that month to the date of termination, as
the case may be, shall be prorated according to the proportion that the period
bears to the full month in which the effectiveness or termination occurs. For
purposes of calculating the monthly fees, the value of the net assets of each
Fund shall be computed in the manner specified in its Prospectus for the
computation of net asset value. For purposes of this contract, a "business day"
is any day the New York stock Exchange is open for trading.
5. If the aggregate expenses of every character incurred by, or allocated
to, a Fund in any fiscal year, other than interest, taxes, brokerage commissions
and other portfolio transaction expenses, other expenditures which are
capitalized in accordance with generally accepted accounting principles and any
extraordinary expense (including, without limitation, litigation and
indemnification expense), but including the fees provided for in paragraph 4 and
under an Advisory contract with respect to a Fund ("includable expenses") ,
shall exceed the expense limitations applicable to that Fund imposed by state
securities law or regulations thereunder, as these limitations may be raised or
lowered from time to time, the Administrator shall pay that Fund an amount egual
to a percentage of that excess (the "Administrator's reimbursement"), such
Administrator's reimbursement to be in an amount set forth with respect to the
Fund in a supplement to this contract. With respect to portions of a fiscal year
in which this contract shall be in effect, the foregoing limitations shall be
prorated according to the proportion which that portion of the fiscal year bear
to the full fiscal year. At the end of each month of the Trust's fiscal year,
the Administrator will review the includable expenses accrued during that fiscal
year to the end of the period and shall estimate the contemplated includable
expenses for the balance cf that fiscal year. if, as a result of that review and
estimation, it appears likely that the includable expenses will exceed the
limitations referred to in this paragraph 5 for a fiscal year, the monthly fees
payable to the Administrator under this Contract for such month shall be
reduced, subject to a later reimbursement to reflect actual expenses, by an
amount egual to a percentage (which shall be egual to the Administrator's
reimbursement) of a pro rata portion (prorated on the basis of the remaining
months of the fiscal year, including the month just ended) of the amount by
which the includable expenses for the fiscal year (less an amount egual to the
aggregate of actual reductions made pursuant to this provision with respect to
prior months of the fiscal year) are expected to exceed the limitations provided
in this paragraph 5 For purposes of the foregoing, the value of the net assets
of each Fund shall be computed in the manner specified in paragraph 4, and any
payments required to be made by the Administrator shall be made once a year
promptly after the end of the Trust's fiscal year.
6. This contract, and any supplement, shall become effective with respect to
a Fund only when approved by vote of a majority of (i) the Board of Trustees of
the Trust, and (ii) the trustees who are not "interested persons" (as defined in
the 1940 Act) cf the Trust and who have no direct or indirect financial interest
in this contract, cast in person at a meeting called for the purpose of voting
on such approval. This contract and any supplement, shall continue in effect
with respect to a Fund until the last day of the calendar year next following
the date of effectiveness specified in a supplement to the contract, and
thereafter shall continue automatically for successive annual periods ending on
the last day of each calendar year, provided such continuance is specifically
approved at least annually by a vote of a majority of (i) the Trust's Board of
Trustees and (ji) the trustees who are not "interested persons" (as defined in
the 1940 Act) of the Trust and who have no direct or indirect financial interest
in the contract, by vote cast in person at a meeting called for the purpose of
voting on such approval. This contract may be terminated at any time, without
payment of any penalty, by a vote of a majority of the outstanding voting
securities of each Fund (as defined in the 1940 Act) or by a vote of a majority
of the trustees of the Trust who are not "interested persons" (as defined in the
1940 Act) and who have no direct or indirect financial interest in this contract
on 60 days written notice to the Administrator or by the Administrator on 60
days written notice to the Trust. This contract shall terminate automatically in
the event of its assignment (as defined in the 1940 Act)
7. Except to the extent necessary to perform the Administrator's
obligations under this contract, nothing herein shall be deemed to limit or
restrict the right of the Administrator, or any affiliate of the Administrator,
or any employee of the Administrator, to engage in any other business or to
devote time and attention to the management or other aspects of any other
business, whether of a similar or -dissimilar nature, or to render services of
any kind to any other corporation, firm, individual or association.
8. The Declaration of Trust establishing the Trust, filed on .............,
a copy of which, together with all amendments thereto (the "Declaration"), is on
file in the office of the Secretary of the Commonwealth of Massachusetts,
provides that the name "..........." refers to the trustees under the
Declaration collectively as trustees and not as individuals or personally, and
that no shareholder, trustee, officer, employee or agent of the Trust shall be
subject to claims against or obligations of the Trust to any extent whatsoever,
but that the Trust estate only shall be liable.
9. This contract shall be construed and its provisions interpreted in
accordance with the laws of the State of New York.
If the foregoing correctly sets forth the agreement between the Trust and
the Administrator, please so indicate by signing and returning to the Trust the
enclosed copy hereof.
Very truly yours,
ACCEPTED:
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 29 to the registration
statement on Form N-1A (the "Registration Statement") of our report dated June
30, 1995, relating to the statement of assets and liabilities at June 23, 1995
of Evergreen Aggressive Growth Fund, which appears in such Statement of
Additional Information, and to the incorporation by reference of our report into
the Prospectuses which constitute parts of this Registration Statement. We also
consent to the incorporation by reference in the Prospectuses and Statement of
Additional Information constituting parts of this Registration Statement of our
report dated November 15, 1994, relating to the financial statements and
financial highlights appearing in the September 30, 1994 Annual Report to
Shareholders of the Evergreen Fund, which are also incorporated by reference
into the Registration Statement. We also consent to the references to us under
the heading "Financial Highlights" in the Prospectuses and under the headings
"Independent Auditors" and "Financial Statements" in the Statement of Additional
Information.
Price Waterhouse LLP
New York, New York
June 30, 1995
1
DISTRIBUTION PLAN OF CLASS -- SHARES
THE EVERGREEN FUND
EVERGREEN FUND
Section 1. The (the "Trust") may act as the distributor of
securities which are issued in respect of one or more of its separate investment
series, pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the
"1940 Act") according to the terms of this Distribution Plan ("Plan").
Section 2. The Trust may expend daily amounts at an annual rate of 0.-- of 1%
of the average daily net asset value of the Class A Shares ("Shares") of its
Evergreen Fund Series ("Fund") to finance any activity which is principally
intended to result in the sale of Shares including, without limitation,
expenditures consisting of payments to a principal underwriter of the Fund
(Principal Underwriter) or others in order: (i) to enable payments to be made by
the Principal Underwriter or others for any activity primarily intended to
result in the sale of Shares, including, without limitation, (a) compensation to
public relations consultants or other persons assisting in, or providing
services in connection with, the distribution of Shares, (b) advertising, (c)
printing and mailing of prospectuses and reports for distribution to persons
other than existing shareholders, (d) preparation and distribution of
advertising material and sales literature, (e) commission payments, and
principal and interest expenses associated with the financing of commission
payments, made by the Principal Underwriter in connection with the sale of
Shares and (f) conducting public relations efforts such as seminars; (ii) to
enable the Principal Underwriter or others to receive, pay or to have paid to
others who have sold Shares, or who provide services to holders of Shares, a
maintenance or other fee in respect of services provided to holders of Shares,
at such intervals as the Principal Underwriter may determine, in respect of
Shares previously sold and remaining outstanding during the period in respect of
which such fee is or has been paid; and/or (iii) to compensate the Principal
Underwriter for its efforts in respect of sales of Shares since inception of the
Plan. Appropriate adjustments shall be made to the payments made pursuant to
this Section 2 to the extent necessary to ensure that no payment is made by the
Fund with respect to any Class in excess of the applicable limit imposed on
asset based, front end and deferred sales charges under subsection (d) of
Section 26 of Article III of the Rules of Fair Practice of the National
Association of Securities Dealers, Inc. (the "NASD"). In addition, to the extent
any amounts paid hereunder fall within the definition of an "asset based sales
charge" under said NASD Rule such payments shall be limited to .75 of 1% of the
aggregate net asset value of the Shares on an annual basis and, to the extent
that any such payments are made in respect of "shareholder services" as that
term is defined in the NASD Rule, such payments shall be limited to .25 of 1% of
the aggregate net asset value of the Shares on an annual basis and shall only be
made in respect of shareholder services rendered during the period in which such
amounts are accrued.
Section 3. This Plan shall not take effect with respect to any Fund until it
has been approved by votes of a majority of (a) the outstanding Shares of such
Series, (b) the Trustees of the Trust, and (c) those Trustees of the Trust who
are not "interested persons" of the Fund (as defined in the 1940 Act) and who
have no direct or indirect financial interest in the operation of this Plan or
any agreements of the Trust related hereto or any other person related to this
Plan ("Disinterested Trustees"), cast in person at a meeting called for the
purpose of voting on this Plan. In addition, any agreement related to this Plan
and entered into by the Fund in connection therewith shall not take effect until
it has been approved by votes of a majority of (a) the Board of Trustees of the
Trust, and (c) the Disinterested Trustees of the Trust.
Section 4. Unless sooner terminated pursuant to Section 6, this Plan shall
continue in effect for a period of one year from the date it takes effect and
thereafter shall continue in effect for additional periods that shall not exceed
one year so long as such continuance is specifically approved by votes of a
majority of both (a) the Board of Trustees of the Trust and (b) the
Disinterested Trustees of the Trust, cast in person at a meeting called for the
purpose of voting on this Plan.
Section 5. Any person authorized to direct the disposition of monies paid or
payable pursuant to this Plan or any related agreement shall provide to the
Trust's Board and the Board shall review at least quarterly a written report of
the amounts so expended and the purposes for which such expenditures were made.
Section 6. This Plan may be terminated at any time with respect to any Fund
by vote of a majority of the Disinterested Trustees, or by vote of a majority of
the Shares of the Fund.
Section 7. Any agreement of the Trust, with respect to any Fund, related to
this Plan shall be in writing and shall provide:
A. That such agreement may be terminated with respect to a Fund at any
time without payment of any penalty, by vote of a majority of the Disinterested
Trustees or by a vote of a majority of the outstanding Shares of such Fund on
not more than sixty days written notice to any other party to the agreement; and
B. That such agreement shall terminate automatically in the event of its
assignment.
Section 8. This Plan may not be amended to increase materially the amount
of distribution expenses provided for in Section 2 with respect to a Fund unless
such amendment is approved by a vote of at least a majority (as defined in the
1940 Act) of the outstanding Shares of such Fund, and no material amendment to
this Plan shall be made unless approved by votes of a majority of (a) the Board
of Trustees of the Trust, and (c) the Disinterested Trustees of the Trust, cast
in person at a meeting called for the purpose of voting on such amendment.
DATED:
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<PERIOD-TYPE> 12-Mos
<FISCAL-YEAR-END> Sep-30-1994
<PERIOD-END> Sep-30-1994
<INVESTMENTS-AT-COST> 323,656,344
<INVESTMENTS-AT-VALUE> 499,478,972
<RECEIVABLES> 40,028,512
<ASSETS-OTHER> 299,660
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 539,807,144
<PAYABLE-FOR-SECURITIES> 4,185,040
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 9,713,783
<TOTAL-LIABILITIES> 13,898,823
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 279,878,497
<SHARES-COMMON-STOCK> 35,968,335
<SHARES-COMMON-PRIOR> 45,455,501
<ACCUMULATED-NII-CURRENT> 1,714,748
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 68,492,448
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 175,822,628
<NET-ASSETS> 525,908,321
<DIVIDEND-INCOME> 9,122,174
<INTEREST-INCOME> 175,579
<OTHER-INCOME> 0
<EXPENSES-NET> 7,015,994
<NET-INVESTMENT-INCOME> 2,281,759
<REALIZED-GAINS-CURRENT> 72,013,209
<APPREC-INCREASE-CURRENT> (36,681,720)
<NET-CHANGE-FROM-OPS> 37,613,248
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3,823,912
<DISTRIBUTIONS-OF-GAINS> 25,464,732
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 74,919,356
<NUMBER-OF-SHARES-REDEEMED> 86,341,400
<SHARES-REINVESTED> 1,934,878
<NET-CHANGE-IN-ASSETS> (131,334,411)
<ACCUMULATED-NII-PRIOR> 3,256,901
<ACCUMULATED-GAINS-PRIOR> 21,943,971
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 5,738,633
<INTEREST-EXPENSE> 511,650
<GROSS-EXPENSE> 7,015,994
<AVERAGE-NET-ASSETS> 573,863,302
<PER-SHARE-NAV-BEGIN> 14.46
<PER-SHARE-NII> 0.07
<PER-SHARE-GAIN-APPREC> 0.79
<PER-SHARE-DIVIDEND> 0.09
<PER-SHARE-DISTRIBUTIONS> 0.61
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.62
<EXPENSE-RATIO> 1.13
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE>
<CAPTION>
Schedule for Computation Initial
of Fund Performance Data Invest of: $10,000
Evergreen Fund Offering
Price!
Share $9.78
Ten Year Return
ending 9130194 NAV= $9.78
FYE:September 30
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total
DECLARED: ANNUALLY Begin Capital Ending Ending
PAID: ANNUALLY Reinvest Period Dividend Gain Reinvest Period Investment
Dates Shares /Share /Share Price Shares Price Value
09-30-84 1,022.495 9.78 10,000.00
01-04-85 1,022.495 0.1648 0.4143 9.31 1,086.096 9.31 10,111.56
01-28-86 1,086.096 0.1400 0.6570 12.21 1,156.990 12.21 14,126.85
12-09-86 1,156.990 0.0000 1.0000 12.89 1,246.749 12.89 16,070.59
01-08-87 1,246.749 0.1290 0.1180 13.08 1,270.292 13.08 16,615.42
12-15-87 1,270.292 0.2480 1.5580 9.50 1,511.514 9.50 14,359.38
12-19-88 1,511.514 0.2100 0.5630 11.36 1,614.366 11.36 18,339.20
12-21-89 1,614.366 0.3600 0.6130 11.83 1,747.145 11.83 20,668.73
12-26-90 1,747.145 0.1800 0.2600 10.36 1,621.348 10.36 18,869.17
12-20-91 1,821.348 0.1700 0.6900 12.37 1,947.974 12.37 24,096.44
12-18-92 1,947.974 0.0680 0.6150 13.85 2,044.037 13.85 28,309.91
12-23-93 2,044.037 0.0910 0.6060 13.95 2,146.166 13.95 29,939.01
09-30-94 2,146.166 0.0000 0.0000 0.00 2,146.165 14.62 31,376.93
$10,000 (1+T) = End Value
T = 213.77%
</TABLE>
The
Evergreen
Fund
[PICTURE, SCENIC SEASIDE]
23rd Annual Report
1 9 9 4
<PAGE>
================================================================================
Dear Fellow Shareholder:
Evergreen Fund completed its twenty-third fiscal year on September 30,
1994, with a cumulative total return of +2,796%* since its inception on October
15, 1971, which is equivalent to an average annual compounded rate of return of
+15.8%. Evergreen Fund's total return for the fiscal year was +6.2%. The Fund's
average annual compounded rates of return for the five and ten-year periods
ended September 30, 1994, were +6.8% and +12.1%, respectively.
Despite broadly lackluster stock market trends and sharp rises in bond
yields, many of the Fund's holdings had sizable capital appreciation results.
During the fiscal year, twenty-two of the Fund's issues had increases in value
ranging from 30% to 85%. Twenty-eight of the issues purchased during the year
provided realized or unrealized gains of 20% or more, with five producing gains
of 50% or more. Not all results were as positive as these, and many were
negative. For example, losses were suffered in the finance and insurance sector,
as well as in retailing and wholesale. For the fiscal year these sectors were
down 9.7% and 9.8%, respectively. However, we choose to emphasize the sizable
gains to suggest that there is good reason for continued optimism about
achieving positive returns even in a lackluster or negative stock market.
Specific characteristics which we seek in investment opportunities should help
provide substantial appreciation. Illustrative are Fund holdings with some of
these positive characteristics.
Health Care
The best single gain among the Fund's holdings during the fiscal year was
in the shares of McKesson Corp., which increased 93.5%. We see McKesson as very
much a characteristically Evergreen story. This year, McKesson's great price
increase came about as a result of a bid by Eli Lilly for its PCS Health Systems
subsidiary, amounting to $76 per share. The shares were originally purchased by
the Fund in August 1993, at an average cost of $46.83 per share, and have since
risen to as high as $104.75. We purchased McKesson shares just after it was
announced that Merck planned to buy Medco Containment Systems, a provider of
pharmaceuticals to employer-financed, and other health plans. We reasoned that
the competitive picture was changing and that another major pharmaceutical
company would find it urgently necessary to buy McKesson's PCS subsidiary. Our
knowledge of McKesson and PCS was based on extensive studies. Evergreen Fund, in
fact, held PCS shares when PCS was acquired by McKesson in 1990.
The underlying assumption in our purchase of McKesson was a conviction that
the Clinton Administration's Health Care Plan would not prove as detrimental as
the stock market generally expected. In fact, nine of the twenty best performers
in the Evergreen Fund during the last twelve months were health care related, as
were seven of the twenty-eight purchases made during the period which had
realized or unrealized gains of 20% or more. The broad scale institutional
investment exit from the health care industry subsequent to the disclosure of
the Clinton Health Care Plan was a short sighted over-reaction. We recognized
that the Health Care Plan would create competitive conditions, putting pressure
on prices. But, it was also leading investors to underprice a technologically
leading, largest research spending, and largest foreign exchange earning
industry. Furthermore, too little attention was being paid to the prospect that
universal health care would vastly enlarge the market opportunity for the
industry. The Fund's health care position increased during this period of Wall
Street and institutional investor fear and skepticism. Subsequently, prices
recovered, particularly during the last quarter of the fiscal year.
- --------------------------------------------------------------------------------
Figures represent past performance which does not guarantee future results.
* Performance assumes the reinvestment of all income dividend and capital gain
distributions. The investment return and principal value of an investment will
fluctuate. Investors' shares, when redeemed, may be worth more or less than
their original cost.
<PAGE>
================================================================================
Undervalued Securities
The search for undervalued, inadequately recognized growth opportunities
remains central to Evergreen Fund's long-term approach. We search for companies
whose shares we believe have great appreciation potential. Sometimes, the shares
unfold steadily over the years, and then begin a phase of dramatic increase. An
example is Clear Channel Communications which has been held by the Fund since
1986 and has provided an unrealized gain of 1,202.4%, which includes the
dramatic gain of 66.7% during the 1994 fiscal year. In contrast, sometimes we
encounter a change of circumstances which appears to temporarily negate the
logic of our purchase and, yet, produces profound undervaluation. Such an
example is in the nine homebuilding companies held by the Fund. In fiscal 1994,
these holdings suffered severe declines as interest rates moved up and investors
ignored current strong earnings and sales in the expectation that the impact of
rising rates would prove very negative for corporate profits. But, we held these
shares because we thought they were valued well below normalized earnings, and
that each represented a growth potential in an improving regional market for
residential builders. These holdings will be added to at appropriate times in an
attempt to create a low cost base from which substantial gains may be realized.
Mergers & Acquisitions
Merger and acquisition activity continued to produce realized and
unrealized gains. During the fiscal year, nine companies were acquired among
portfolio holdings. This brought the number of Fund holdings that have been
acquired or have received acquisition offers since inception to 271, with an
average gain of 62.2% on the 267 completed acquisitions. The average gain on the
completed acquisitions during the fiscal year was 107.1%. Holding periods ranged
from eight years, as in the case of Wetterau Properties on which the Fund
realized a gain of 187.2%, to six months, as in the case of Zenith Laboratories
whose acquisition is pending. The largest sector for mergers and acquisitions
over the history of the Fund has been banks and thrifts. Since the Fund's
inception, forty-five such institutions have been acquired, or have received
acquisition offers, with an average gain of 115.7% on the completed
acquisitions. This year, First Amarillo Bancorporation was acquired, producing a
gain of 114% in twelve months.
Banks & Thrifts
Banks and thrifts continued to be the largest sector of investment for the
Fund. Now that interstate banking has finally been voted by Congress, we
anticipate further acquisition activity in this industry. The Fund's holdings
are largely of regional and community banks, each of which we believe represents
an undervalued opportunity for larger institutions to establish a strong
franchise. Our greatest attention is to the analysis of the quality of the
individual bank, and its growth opportunity in terms of the strength of its
franchise and customer base.
Market Capitalization
During the fiscal year, the average market capitalization of the Fund's
portfolio was reduced. Our goal has been to place more emphasis on smaller
entrepreneurial companies. Although small company stocks are generally more
volatile than large company stocks, these have been the most potent force for
capital appreciation in the Fund's history. However, past performance is no
guarantee of future results. By fiscal year-end, only 23.5% of the holdings were
of companies with market capitalizations of $2 billion or more. This was a
reduction by 14% of the portfolio in this size range from the beginning of the
fiscal year. Following is the allocation of the portfolio by market size:
Under $100 million 5.08%
$100 million to $300 million 17.12%
$300 million to $500 million 12.41%
$500 million to $1 billion 13.63%
$1 billion to $2 billion 22.41%
Over $2 billion 23.47%
Cash & Cash Equivalents 5.88%
Evergreen Fund's emphasis on corporate growth is the essence of our
strategy. While dividend return is not sought after, it nonetheless suggests the
growing financial strength of companies, as we saw 35% of the Fund's holdings
increase or initiate dividends.
<PAGE>
================================================================================
Economic Overview
During this fiscal year, the American economy achieved the best overall
performance in three decades, as measured by expansion of gross domestic
product, increase of employment and containment of inflation. This impressive
result, however, was not mirrored in the stock markets. The markets turned
increasingly cautious, with the widespread expectation that this coincidence of
favorable trends was simply too good to last. The highs of the period were made
in the first weeks of 1994, just prior to the Federal Reserve announcing what it
described as a preemptive strike against inflation. It increased the Federal
Funds rate, and has now done so on six separate occasions, bringing the Fed
Funds rate up from 3% to 5 1/2%. Each successive move by the Federal Reserve
further shattered investor equanimity, and cast into doubt both the continuity
of the recovery and the perception that inflation would remain well contained. A
year ago, consensus forecasts held that the U.S. economy would have modest
growth without stimulating a rise in inflation, and that interest rates would
remain in a narrow, stimulative band. Today, the consensus appears to be that
since demand in most sectors of the economy has outrun expectations, it is
challenging capacity and is therefore risking imminent inflation. Concerns are
that raw material costs may rise with further acceleration in demand, and labor
shortages may bring pressure for wage increases. Adding to purely domestic
expectations is the still anticipated recovery of export demand to the as-yet
stagnant European economy.
The price level of stocks generally reflects the alternative yields
available in fixed-income securities. While one certainly cannot say that an
interest rate peak for the cycle is assuredly at hand, the move of 30-year U.S.
Treasury rates from the 5.79% low one year ago, to just over 8% today, is
undoubtedly reflected in stocks prices. One high-yield equity segment of the
market, electric utility stocks, fell 21% through the first three quarters of
the year. Many leading, traditional growth stocks have had little or no price
movement through this period, even though earnings continue to rise. Financial
equities generally remained in a narrow range, despite markedly increased
earnings and dividends. The rush into equities, primarily through mutual funds,
was slowed in 1994. The flow of new issues to meet that rise in demand also
slowed. However, we believe that, despite a difficult year in the securities
markets and economic challenges to investments overall, the Evergreen Fund is
well positioned for the future.
In closing, we note with great sadness the death of Ben Weberman, a Trustee
of the Evergreen Funds of many years. Mr. Weberman was a thoughtful and wise
guide to the managers of our Funds, and a Trustee who felt deep responsibility
to act in the interests of shareholders. We will miss the benefit of his
extraordinarily broad experience in the analysis of monetary conditions and
financial markets. His years as a distinguished financial journalist and bond
market columnist provided us with a wisdom and judgment which both the
management and the Trustees of the Evergreen Funds will greatly miss.
Sincerely,
/s/ Stephen A. Lieber
Stephen A. Lieber
Chairman
Evergreen Asset
Management Corp.
November 15, 1994
<PAGE>
===============================================================================
Statement of Investments
September 30, 1994
COMMON STOCKS--94.1% Shares Value
------ -----
BANKS--21.2%
Amcore Financial, Inc. 45,000 $ 956,250
American Federal Bank, FSB 50,000 612,500
Amsouth Bancorporation 28,300 891,450
Arrow Financial Corp. 97,304 1,593,353
Barnett Banks, Inc. 273,320 12,094,410
Baybanks, Inc. 190,000 10,450,000
Central Fidelity Banks, Inc. 20,000 620,000
Chittenden Corp. 231,250 4,942,969
Crestar Financial Corp. 28,700 1,309,437
First Empire State Corp. 127,000 19,240,500
First Fidelity Bancorporation, Inc. 159,500 6,699,000
First Michigan Bank Corp. 260,875 6,065,344
First State Bancorp 50,000 725,000
Fort Wayne National Corp. 193,350 5,969,681
Hibernia Corp. Cl. A 889,540 7,116,320
Intercontinental Bank 100,000 1,975,000
Magna Group, Inc. 67,779 1,389,470
North Fork Bancorporation, Inc. 300,000 4,762,500
Old Kent Financial Corp. 110,412 3,533,184
ONBANCorp, Inc. 131,000 3,569,750
One Valley Bancorp of
West Virginia, Inc. 21,500 624,844
*Riggs National Corp. 50,000 509,375
River Forest Bancorp 35,000 1,216,250
United Carolina Bancshares Corp. 117,500 3,055,000
Univest Corp. of
Pennsylvania 31,428 1,119,622
USBancorp, Inc. 10,000 242,500
Valley National Bancorp 17,600 473,000
West Coast Bancorp 49,000 441,000
Westamerica Bancorporation 115,900 3,853,675
1st Source Corp. 201,100 5,228,600
------------
111,279,984
------------
HEALTH CARE PRODUCTS
& SERVICES--17.9%
Arbor Drugs, Inc. 50,000 962,500
*Biomet, Inc. 130,000 1,608,750
Caremark International, Inc. 136,000 3,179,000
*Circon Corp. 60,000 720,000
*Coherent, Inc. 90,000 1,260,000
Columbia Healthcare Corp. 85,200 3,706,200
*Coventry Corp. 50,000 1,175,000
*E-Z-Em, Inc. Cl. B 52,724 250,439
*Express Scripts, Inc. 40,000 1,380,000
*FHP International Corp. 54,828 1,603,719
*Idexx Laboratories, Inc. 140,000 4,130,000
*Intergroup Healthcare Corp. 15,000 960,938
Invacare Corp. 20,000 590,000
*Isomedix, Inc. 55,000 1,072,500
Johnson & Johnson 200,000 10,325,000
*Living Centers of America, Inc. 104,600 3,307,975
McKesson Corp. 117,900 11,996,325
Merck & Co., Inc. 500,000 17,750,000
Minntech Corp. 24,750 383,625
*Physicians Health Services, Inc. 85,000 1,933,750
*Psicor, Inc. 90,000 922,500
*Regency Health Services, Inc. 44,200 491,725
*Ren Corp.-USA 40,000 410,000
St. Jude Medical, Inc. 125,000 4,476,562
*Salick Health Care, Inc. 121,500 2,612,250
*Sci-Med Life Systems, Inc. 72,500 3,171,875
Stryker Corp. 236,500 8,218,375
*Sun Healthcare Group, Inc. 128,000 2,800,000
Superior Surgical
Manufacturing Co., Inc. 39,600 594,000
*Tecnol Medical Products, Inc. 75,750 1,136,250
*Zenith Laboratories, Inc. 40,000 950,000
------------
94,079,258
------------
FINANCE & INSURANCE--11.6%
Allmerica Property
& Casualty Cos., Inc. 172,200 2,841,300
AMBAC, Inc. 189,400 7,007,800
Cole Taylor Financial Group, Inc. 50,000 900,000
Countrywide Credit Industries, Inc. 25,000 353,125
Executive Risk, Inc. 150,000 1,950,000
Federal Home Loan
Mortgage Corp. 126,900 6,773,288
Federal National
Mortgage Association 166,500 13,111,875
Household International, Inc. 214,000 7,650,500
John Nuveen Co. (The) Cl. A 90,000 1,856,250
MBIA, Inc. 98,200 5,855,175
MGIC Investment Corp. 278,600 8,392,825
National RE Corp. 97,100 2,463,912
Providian Corp. 33,992 1,070,748
Resource Bancshares
Mortgage Group, Inc. 55,125 592,594
State Auto Financial Corp. 20,000 295,000
------------
61,114,392
------------
INDUSTRIAL SPECIALTY
PRODUCTS--8.4%
Brady (W.H.) Co. 6,000 282,000
*Dionex Corp. 72,500 2,591,875
Fisher Scientific International, Inc. 50,000 1,675,000
Flair Corp. 20,000 370,000
Fuller (H.B.) Co. 182,000 5,460,000
*Integrated Circuit Systems, Inc. 46,250 520,312
Leggett & Platt, Inc. 60,400 2,106,450
Masland Corp. 85,000 1,423,750
*Material Sciences Corp. 148,000 2,423,500
Nacco Industries, Inc. Cl. A 36,000 2,137,500
*Osmonics, Inc. 66,000 1,006,500
*Paxar Corp. 141,750 1,630,125
Smith (A.O.) Corp. 55,000 1,375,000
Superior Industries International, Inc. 60,000 1,732,500
<PAGE>
===============================================================================
Common Stocks (continued) Shares Value
------ -----
INDUSTRIAL SPECIALTY
PRODUCTS--(continued)
Tecumseh Products Co. Cl. A 178,400 $ 8,797,350
Tecumseh Products Co. Cl. B 57,800 2,716,600
Teleflex, Inc. 91,600 3,274,700
*Truck Components, Inc. 100,000 1,050,000
Walbro Corp. 160,300 3,446,450
------------
44,019,612
------------
RETAILING & WHOLESALE--6.1%
*Authentic Fitness Corp. 125,000 1,937,500
*Bed, Bath & Beyond, Inc. 20,000 515,000
Blair Corp. 41,800 1,755,600
*Campo Electronics, Appliances
& Computers, Inc. 60,000 686,250
Cato Corp. Cl. A 45,000 495,000
Charming Shoppes, Inc. 75,000 609,375
Dillard Department
Stores, Inc. Cl. A 300,000 8,025,000
Fingerhut Companies, Inc. 263,800 6,067,400
*Forstmann & Co., Inc. 36,300 326,700
*Jones Apparel Group, Inc. 40,000 980,000
*Leslie's Poolmart 85,225 1,102,599
Lillian Vernon Corp. 45,000 832,500
Medicine Shoppe International, Inc. 107,500 2,637,109
Mercantile Stores Co., Inc. 51,200 2,124,800
Strawbridge & Clothier Cl. A 75,075 1,726,725
*Tommy Hilfiger Corp. 34,600 1,345,075
*Younkers, Inc. 50,000 950,000
------------
32,116,633
------------
CONSUMER PRODUCTS
& SERVICES--4.8%
Aaron Rents, Inc. Cl. B 70,000 857,500
*American Business Information, Inc. 40,000 590,000
Anthony Industries, Inc. 34,600 588,200
Crown Crafts, Inc. 125,300 2,036,125
*Cruise America, Inc. 22,412 71,438
*Deckers Outdoor Corp. 62,700 1,018,875
Franklin Electric Co., Inc. 30,000 960,000
*Galey & Lord, Inc. 70,000 1,435,000
Garan, Inc. 60,600 969,600
Harman International
Industries, Inc. 62,000 2,162,250
*Integrity Music, Inc. 52,500 577,500
Kellwood Co. 18,750 452,344
Lancaster Colony Corp. 297,777 10,422,195
*Nautica Enterprises, Inc. 30,000 928,125
*Recovery Engineering, Inc. 25,000 418,750
Roto-Rooter, Inc. 23,000 563,500
Springs Industries, Inc. 39,000 1,404,000
------------
25,455,402
------------
INFORMATION SERVICES
& TECHNOLOGY--4.0%
American Software, Inc. Cl. A 120,000 540,000
Autodesk, Inc. 80,000 5,000,000
*Bisys (The) Group, Inc. 25,000 531,250
*C U C International, Inc. 25,000 825,000
First Financial Management Corp. 100,179 5,760,293
HBO & Co. 55,000 1,870,000
Intel Corp. 55,000 3,382,500
*Keane, Inc. 64,700 1,439,575
*Parametric Technology Corp. 30,000 997,500
*Rasterops 150,200 478,762
------------
20,824,880
------------
BUILDING, CONSTRUCTION
& FURNISHINGS--3.3%
Continental Homes Holding Corp. 78,000 1,209,000
Interface, Inc. Cl. A 250,900 3,261,700
Juno Lighting, Inc. 160,000 2,920,000
La-Z-Boy Chair Co. 99,600 2,776,350
*Lindal Cedar Homes, Inc. 48,125 192,500
*M/I Schottenstein Homes, Inc. 65,200 668,300
Medusa Corp. 92,650 2,466,806
Ryland Group, Inc. 85,700 1,360,488
Schult Homes Corp. 10,800 152,550
Standard Pacific Corp. 107,200 777,200
*Sundance Homes, Inc. 103,000 399,125
*Toll Brothers, Inc. 83,700 952,087
------------
17,136,106
------------
PUBLISHING, BROADCASTING
& ENTERTAINMENT--2.9%
*Clear Channel
Communications, Inc. 218,750 11,238,281
Wiley, (John) & Sons, Inc. Cl. A 95,000 4,203,750
------------
15,442,031
------------
CHEMICALS & AGRICULTURAL
PRODUCTS--2.5%
Delta & Pine Land Co. 25,000 450,000
Nalco Chemical Co. 30,000 986,250
Schulman (A.), Inc. 349,568 9,438,336
Sigma-Aldrich Corp. 65,000 2,307,500
------------
13,182,086
------------
BUSINESS EQUIPMENT
& SERVICES--2.5%
*Boole & Babbage, Inc. 35,000 1,076,250
Bowne & Co., Inc. 100,000 1,800,000
*Gradco Systems, Inc. 110,000 323,125
McGrath Rent Corp. 33,000 544,500
*Merisel, Inc. 119,430 1,209,229
Pitney Bowes, Inc. 115,700 4,107,350
*Silicon Graphics, Inc. 85,000 2,188,750
*Zebra Technologies Corp. 50,000 1,837,500
------------
13,086,704
------------
<PAGE>
===============================================================================
Statement of Investments (continued)
September 30, 1994
Common Stocks (continued) Shares Value
------ -----
TRANSPORTATION--1.9%
Atlantic Southeast Airlines, Inc. 95,000 $ 2,208,750
*Chicago & North Western
Transportation Co. 110,000 2,268,750
*Heartland Express, Inc. 94,166 2,777,897
*KLLM Transport Services, Inc. 50,000 962,500
TNT Freightways Corp. 70,000 1,802,500
------------
10,020,397
------------
REAL ESTATE--1.9%
*Alexander's, Inc. 138,760 7,562,420
*FRP Properties, Inc. 47,400 841,350
*Host Marriott Corp. 80,000 790,000
Webb (Del) Corp. 45,200 694,950
------------
9,888,720
------------
THRIFT INSTITUTIONS--1.8%
BSB Bancorp, Inc. 99,750 2,743,125
Collective Bancorp, Inc. 70,000 1,373,750
*Coral Gables Fedcorp, Inc. 35,000 669,375
*Dime Financial Corp. 255,000 2,805,000
Glacier Bancorp, Inc. 30,250 548,281
*Hawthorne Financial Corp. 73,500 606,375
Sandwich Co-Operative Bank 55,000 893,750
------------
9,639,656
------------
ENVIRONMENTAL SERVICES--0.7%
*Handex Environmental
Recovery, Inc. 147,000 1,286,250
Watts Industries, Inc. Cl. A 40,000 970,000
*Western Waste Industries, Inc. 82,300 1,460,825
------------
3,717,075
------------
PAPER & PACKAGING--0.7%
St. Joe Paper Co. 6,500 370,500
Wausau Paper Mills Co. 135,028 3,173,158
------------
3,543,658
------------
TELECOMMUNICATION SERVICES
& EQUIPMENT--0.5%
*Aspect Telecommunications Corp. 25,000 950,000
*Newbridge Networks Corp. 20,000 640,000
*Vertex Communications Corp. 110,000 1,237,500
------------
2,827,500
------------
FOOD RETAILING
& DISTRIBUTION--0.5%
Bruno's, Inc. 50,000 462,500
Cracker Barrel Old
Country Store, Inc. 40,405 929,315
**Seaway Food Town, Inc. 134,000 1,340,000
------------
2,731,815
------------
ENERGY--0.1%
*TransTexas Gas Corp. 50,000 568,750
------------
FOOD PRODUCTS--0.1%
+Coca-Cola Bottling Co.
Consolidated Cl. B 16,500 474,375
------------
OTHER--0.7% 3,833,425
------------
Total Common Stocks
(Cost $319,159,831) 494,982,459
------------
SHORT-TERM
U.S. GOVERNMENT Principal
AGENCY OBLIGATION--0.9% Amount
----------
FEDERAL NATIONAL
MORTGAGE ASSOCIATION
4.65% Due 10/07/94
(Amortized Cost $4,496,513) $4,500,000 4,496,513
------------
Total Investments
(Cost $323,656,344) 95.0% 499,478,972
Other Assets and Liabilities--Net 5.0 26,429,349
----- ------------
Total Net Assets 100.0% $525,908,321
===== ============
* Non-income producing.
** Investment in non-controlled affiliate--holding over 5% of outstanding
voting securities. During the year ended September 30, 1994, the Fund
recognized $48,240 in dividend income from this investment.
+ No market quotation available, valued at fair value as determined in good
faith by the Fund's Trustees.
<PAGE>
<TABLE>
<CAPTION>
======================================================================================================================
Statement of Assets and Liabilities
September 30, 1994
- ----------------------------------------------------------------------------------------------------------------------
<S> <C>
Assets:
Investments at market value (identified cost $323,656,344) $499,478,972
Cash 253,678
Receivable for investment securities sold 31,626,209
Receivable for Fund shares sold 7,538,012
Dividends receivable 864,291
Prepaid expenses 45,982
- ----------------------------------------------------------------------------------------------------------------------
Total assets 539,807,144
- ----------------------------------------------------------------------------------------------------------------------
Liabilities:
Payable for Fund shares repurchased 8,994,733
Payable for investment securities purchased 4,185,040
Accrued advisory fee 427,959
Accrued expenses 291,091
- ----------------------------------------------------------------------------------------------------------------------
Total liabilities 13,898,823
- ----------------------------------------------------------------------------------------------------------------------
Net assets:
Paid-in capital 279,878,497
Undistributed net realized gain on investment transactions 68,492,448
Undistributed net investment income 1,714,748
Net unrealized appreciation of investments 175,822,628
- ----------------------------------------------------------------------------------------------------------------------
Net assets $525,908,321
======================================================================================================================
Netasset value per share, based on 35,968,335 shares of beneficial interest
outstanding (unlimited shares
authorized of $.001 par value) $14.62
======================================================================================================================
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
======================================================================================================================
Statement of Operations
For the Year Ended September 30, 1994
- ----------------------------------------------------------------------------------------------------------------------
<S> <C>
Investment income:
Dividends $9,122,174
Interest 175,579
- ----------------------------------------------------------------------------------------------------------------------
Total income 9,297,753
Operating expenses:
Advisory fee $5,738,633
Transfer agent fee 301,020
Custodian fee 125,091
Professional fees 117,165
Reports and notices to shareholders 86,437
Registration and filing fees 46,598
Trustees' fees and expenses 34,175
Insurance 15,567
Other 39,658
----------
Total operating expenses 6,504,344
Interest expense 511,650
----------
Total expenses 7,015,994
- ----------------------------------------------------------------------------------------------------------------------
Net investment income 2,281,759
- ----------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments:
Net realized gain on investments 72,013,209
Net decrease in unrealized appreciation of investments (36,681,720)
- ----------------------------------------------------------------------------------------------------------------------
Net gain on investments 35,331,489
- ----------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $37,613,248
======================================================================================================================
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
======================================================================================================================
Statement of Changes in Net Assets
Year Ended
September 30,
-----------------------------------
1994 1993
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income $ 2,281,759 $ 4,297,854
Net realized gain on investments 72,013,209 26,616,343
Net increase (decrease) in unrealized appreciation of investments (36,681,720) 76,972,116
- ----------------------------------------------------------------------------------------------------------------------
Net increase resulting from operations 37,613,248 107,886,313
- ----------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income (3,823,912) (3,616,773)
Net realized gains on investment transactions (25,464,732) (32,710,517)
- ----------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders (29,288,644) (36,327,290)
- ----------------------------------------------------------------------------------------------------------------------
Fund share transactions:
Proceeds from sale of shares 1,081,247,408 1,232,825,968
Net asset value of shares issued on reinvestment of distributions 27,023,906 34,216,070
- ----------------------------------------------------------------------------------------------------------------------
1,108,271,314 1,267,042,038
Cost of shares repurchased (1,247,930,329) (1,403,827,420)
- ----------------------------------------------------------------------------------------------------------------------
Net decrease resulting from Fund share transactions (139,659,015) (136,785,382)
- ----------------------------------------------------------------------------------------------------------------------
Net decrease in net assets (131,334,411) (65,226,359)
Net assets:
Beginning of year 657,242,732 722,469,091
- ----------------------------------------------------------------------------------------------------------------------
End of year (including undistributed net investment income of
$1,714,748 and $3,256,901, respectively) $525,908,321 $657,242,732
======================================================================================================================
Number of Fund shares:
Sold 74,919,356 88,189,668
Issued on reinvestment of distributions 1,934,878 2,470,474
Repurchased (86,341,400) (100,351,735)
- ----------------------------------------------------------------------------------------------------------------------
Net decrease (9,487,166) (9,691,593)
Outstanding at beginning of year 45,455,501 55,147,094
- ----------------------------------------------------------------------------------------------------------------------
Outstanding at end of year 35,968,335 45,455,501
======================================================================================================================
</TABLE>
See accompanying notes to financial statements.
<PAGE>
================================================================================
Notes to Financial Statements September 30, 1994
Note 1--Significant Accounting Policies
The Evergreen Fund (the "Fund") is registered under the Investment Company Act
of 1940, as amended (the "Act"), as a diversified, open-end management
investment company. The following is a summary of significant accounting
policies consistently followed by the Fund in the preparation of its financial
statements. The policies are in conformity with generally accepted accounting
principles.
Security Valuation: Portfolio securities are valued at the last reported
sales price on an exchange which is the primary market for such securities,
or, if no sales were reported, as in the case of most securities traded
over-the-counter, the mean between the last reported bid and asked prices.
Unlisted securities for which market quotations are readily available are
valued at a price quoted by one or more brokers. Securities or other assets
for which market quotations are not readily available are valued at fair
value as determined in good faith by the Trustees. Short-term obligations
are stated at amortized cost, which approximates market value. Cost of
securities is determined and gains and losses are based upon the specific
identification method for both financial statement and Federal income tax
purposes.
Federal Income Taxes: It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute timely, all of its taxable income to
its shareholders. Therefore, no Federal income tax provision is required.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from distributions determined under
generally accepted accounting principles.
Other: Security transactions are accounted for on the trade date, the date
the order to buy or sell is executed. Dividend income and distributions to
shareholders are recorded on the ex-dividend date and interest income is
recorded on the accrual basis.
Note 2--Advisory Fee and Related Party
Transactions
Evergreen Asset Management Corp. (the "Adviser"), an affiliate of Lieber &
Company, is the investment adviser to the Fund and also furnishes the Fund with
administrative services. The Adviser, which is an indirect, wholly-owned
subsidiary of First Union Corporation, succeeded on June 30, 1994 to the
advisory business of the same name, but under different ownership. The Adviser
is entitled to a fee, accrued daily and payable monthly, for the performance of
its services at an annual rate of 1% of the daily net assets of the Fund.
Total operating expenses of the Fund, exclusive of taxes, interest, brokerage
fees and extraordinary expenses are subject to the most restrictive of expense
limitations, as may be amended from time to time, under the rules and
regulations of states where the Fund is authorized to sell its shares. If in any
fiscal year such operating expenses exceed the most restrictive expense
limitation then in effect, the Adviser will reimburse the Fund for the amount of
such excess. For the year ended September 30, 1994, the Fund's expenses did not
exceed the most restrictive limitation in effect.
Lieber & Company, is the investment sub-adviser to the Fund and also provides
brokerage services with respect to substantially all security transactions of
the Fund effected on the New York and American Stock Exchanges. For transactions
executed during the year ended September 30, 1994, the Fund incurred brokerage
commissions of $478,391 with Lieber & Company. Lieber & Company is reimbursed by
the Adviser, at no additional expense to the Fund, for its cost of providing
investment advisory services to the Adviser.
Evergreen Funds Distributor, Inc. (the "Distributor"), a subsidiary of Furman
Selz Incorporated, is the distributor of the Fund's shares and provides
personnel to serve as officers of the Fund. For its services, the Distributor is
paid an annual fee by the Adviser. No portion of this fee is borne by the Fund.
Note 3--Portfolio Transactions
Cost of purchases and proceeds from sales of investments, other than short-term
obligations, aggregated $109,419,941 and $290,896,208 respectively, for the year
ended September 30, 1994.
The aggregate cost of investments owned at September 30, 1994 for Federal income
tax purposes is $324,280,229 due to sales of certain portfolio securities on
which losses are deferred for Federal income tax purposes. Gross unrealized
appreciation and depreciation of securities was $195,337,643 and $20,138,900
respectively, resulting in net unrealized appreciation for Federal income tax
purposes of $175,198,743.
<PAGE>
================================================================================
Note 4--Financing Agreement
The Fund has a financing agreement with its custodian State Street Bank and
Trust Company (the "Bank"), which provides the Fund with a line of credit, in
the aggregate amount of the lesser of $35,000,000 or 5% of the value of the
Fund's net assets, to be accessed for temporary or emergency purposes.
Borrowings under the line of credit bear interest at 1% above the Bank's cost of
funds as set periodically by the Bank and are secured by securities pledged by
the Fund. During the year ended September 30, 1994, the Fund had borrowings
outstanding for 236 days under the line of credit and incurred $511,650 in
interest charges related to these borrowings. The Fund's average amount of debt
outstanding during the period aggregated $11,164,110 at a weighted average
interest rate of 4.52%. The Fund had no outstanding borrowings at September 30,
1994.
Note 5--Subsequent Event
On September 28, 1994, with approval of the Trustees, an application with the
Securities and Exchange Commission was filed on behalf of the Fund and the other
registered investment companies managed by the Adviser and its affiliates which,
subject to such regulatory and shareholder approval, will permit the Fund to
issue additional classes of shares to enable the Fund to take advantage of
alternative methods of selling shares through a multiple-class distribution
program. In addition, a meeting of the Fund's shareholders has been called for
December 13, 1994, for the purpose of, among other things, approval of
amendments to the Declaration of Trust to permit the issuance of additional
classes of shares. Notice of this meeting and requests for votes have been sent
to shareholders of record at the close of business on October 6, 1994.
<PAGE>
<TABLE>
<CAPTION>
======================================================================================================================
Financial Highlights
Year Ended September 30,
----------------------------------------------------------
Per Share Data 1994 1993 1992 1991 1990
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $14.46 $13.10 $13.32 $ 9.66 $14.01
- ----------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .07 .09 .09 .17 .24
Net realized and unrealized gain (loss) on
investments .79 1.96 .55 3.93 (3.62)
- ----------------------------------------------------------------------------------------------------------------------
Total from investment operations .86 2.05 .64 4.10 (3.38)
- ----------------------------------------------------------------------------------------------------------------------
Less distributions to shareholders from:
Net investment income (.09) (.07) (.17) (.18) (.36)
Net realized gains (.61) (.62) (.69) (.26) (.61)
- ----------------------------------------------------------------------------------------------------------------------
Total distributions (.70) (.69) (.86) (.44) (.97)
- ----------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $14.62 $14.46 $13.10 $13.32 $ 9.66
======================================================================================================================
Total Return 6.2% 15.8% 5.2% 43.7% (25.4)%
Ratios & Supplemental Data:
Net assets, end of year (in millions) $526 $657 $722 $755 $525
Ratios to average net assets:
Operating expenses 1.13% 1.11% 1.13% 1.15% 1.15%
Interest expense .09% .01% -- -- --
Net investment income .40% .60% .56% 1.45% 1.83%
Portfolio turnover rate 19% 21% 32% 35% 39%
======================================================================================================================
</TABLE>
See accompanying notes to financial statements.
<PAGE>
================================================================================
REPORT OF INDEPENDENT ACCOUNTANTS
To Trustees and Shareholders of
The Evergreen Fund
In our opinion, the accompanying Statement of Assets and Liabilities, including
the Statement of Investments, and the related Statements of Operations, Changes
in Net Assets and the Financial Highlights present fairly, in all material
respects, the financial position of The Evergreen Fund (the "Fund") at September
30, 1994, the results of its operations for the year then ended, the changes in
its net assets for each of the two years in the period then ended and the
financial highlights for each of the five years in the period then ended in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at September 30, 1994 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, NY 10036
November 15, 1994
------------------------------------------------------------
FEDERAL INCOME TAX STATUS
OF DISTRIBUTIONS
(Unaudited)
During the fiscal year ended September 30, 1994, The
Evergreen Fund paid on December 31, 1993, the following
distributions per share:
Net investment income $.091
Short-term gains .132
-----
Ordinary income $.223
=====
Long-term capital gains $.474
=====
For corporate taxpayers, 100% of the ordinary income
distributions paid during the fiscal year ended September
30, 1994, qualified for the corporate dividends received
deduction.
------------------------------------------------------------
<PAGE>
================================================================================
Evergreen Family of Funds
GROWTH FUNDS ___________________________________________________________________
EVERGREEN FUND seeks capital appreciation by investing in securities of little
known or relatively small companies and companies with entrepreneurial
management.
GLOBAL REAL ESTATE EQUITY FUND seeks capital appreciation by investing in
securities of companies involved in various aspects of the real estate industry
throughout the world.
LIMITED MARKET FUND seeks capital appreciation by investing in securities of
little-known, small or special situation companies.
U.S. REAL ESTATE EQUITY FUND seeks long-term capital growth by investing in
equity securities of U.S. companies which are principally engaged in the real
estate industry or which own significant real estate assets.
GROWTH & INCOME FUNDS __________________________________________________________
AMERICAN RETIREMENT FUND seeks conservation of capital, reasonable income and
capital growth by investing in a diversified and balanced portfolio of equity
and fixed income securities.
EVERGREEN FOUNDATION FUND seeks reasonable income, conservation of capital and
growth by investing in common and preferred stocks, convertibles and fixed
income securities.
GROWTH & INCOME FUND seeks capital appreciation and current income by investing
in securities of companies undervalued in the marketplace due to temporary
adverse circumstances or misperceptions of underlying values.
SMALL CAP EQUITY INCOME FUND seeks a return consisting of current income and
capital appreciation by investing primarily in companies with market
capitalizations of less than $500 million.
TAX STRATEGIC FOUNDATION FUND seeks to maximize the after tax total return on
its portfolio investments by investing in common and preferred stocks and
securities convertible into or exchangeable for common stocks, and municipal
securities.
TOTAL RETURN FUND seeks a total return consisting of current income and capital
appreciation by investing in common and preferred stocks, securities convertible
or exchangeable for common stocks and fixed income securities.
INCOME FUND ____________________________________________________________________
U.S. GOVERNMENT SECURITIES FUND seeks a high level of return from a combination
of current income and capital appreciation through investment in obligations
issued or guaranteed by the U.S. Government or its agencies or
instrumentalities.
TAX-FREE FUNDS__________________________________________________________________
NATIONAL TAX-FREE FUND seeks a high level of current income, exempt from Federal
income tax, by investing at least 80% of its portfolio in insured long-term
municipal securities.
SHORT-INTERMEDIATE MUNICIPAL FUND seeks as high a level of current income,
exempt from Federal income tax (other than the alternative minimum tax), as is
consistent with preserving capital and providing liquidity by investing in short
and intermediate-term municipal securities.
SHORT-INTERMEDIATE MUNICIPAL FUND-CALIFORNIA seeks as high a level of current
income, exempt from Federal and California state income taxes, as is consistent
with preserving capital and providing liquidity by investing in short and
intermediate-term municipal securities.
MONEY MARKET FUNDS ____________________________________________________________
MONEY MARKET TRUST seeks as high a level of current income as is consistent with
preserving capital and providing liquidity.
TAX EXEMPT MONEY MARKET FUND seeks as high a level of current income exempt from
Federal income taxes as is consistent with preserving capital and providing
liquidity.
THE PROSPECTUS(ES) CONTAIN MORE COMPLETE INFORMATION AND SHOULD BE READ
CAREFULLY PRIOR TO INVESTING.
<PAGE>
TRUSTEES
Laurence B. Ashkin
Foster Bam
James S. Howell
Robert J. Jeffries
Gerald M. McDonnell
Thomas L. McVerry
William Walt Pettit
Russell A. Salton, III, M.D.
Michael S. Scofield
INVESTMENT ADVISER
Evergreen Asset Management Corp.
2500 Westchester Avenue
Purchase, New York 10577
CUSTODIAN & TRANSFER AGENT
State Street Bank and Trust Company
LEGAL COUNSEL
Shereff, Friedman, Hoffman & Goodman
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
DISTRIBUTOR
Evergreen Funds Distributor, Inc.
The investment adviser to the Evergreen Funds is Evergreen Asset Management
Corp., which is wholly owned by First Union National Bank of North Carolina.
Investments in the Evergreen Funds are not endorsed or guaranteed by First
Union, are not deposits or other obligations of First Union, are not insured or
otherwise protected by the U.S. government, the FDIC or any other Government
agency and involve investment risks, including possible loss of principal.
The Evergreen Funds are sponsored and distributed by Evergreen Funds
Distributor, Inc. which is independent of Evergreen and First Union.
<PAGE>
The Evergreen Fund
2500 Westchester Avenue
Purchase, NY 10577-2555
(800) 235-0064
<PAGE>