Registration No. 33-25378
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933 X
Pre-Effective Amendment No.
Post-Effective Amendment No. 10 X
and/or
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 10 X
(Check appropriate box or boxes)
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EVERGREEN REAL ESTATE EQUITY 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)
Immediately upon filing pursuant to paragraph (b) or
on (date) pursuant to paragraph (b) or
X 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 July 7, 1995
EVERGREEN(SM) INTERNATIONAL/GLOBAL GROWTH FUNDS (Evergreen Logo appears here)
EVERGREEN EMERGING MARKETS GROWTH FUND
EVERGREEN INTERNATIONAL EQUITY FUND
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND
CLASS A SHARES
CLASS B SHARES
CLASS C SHARES
The Evergreen International/Global Growth Funds (the "Funds") are
designed to provide investors with a selection of investment alternatives
which seek to provide capital growth and diversification. This Prospectus
provides information regarding the Class A, Class B and Class C shares
offered by the Funds. Each Fund is, or is a series of, an open-end,
diversified, management investment company. This Prospectus sets forth
concise information about the Funds that a prospective investor should know
before investing. The address of the Funds is 2500 Westchester Avenue,
Purchase, New York 10577.
A "Statement of Additional Information" for the Funds dated July
7, 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
EVERGREEN(SM) is a Service Mark of Evergreen Asset Management Corp.
Copyright 1995, Evergreen Asset Management Corp.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
OVERVIEW OF THE FUNDS 2
EXPENSE INFORMATION 3
FINANCIAL HIGHLIGHTS 5
DESCRIPTION OF THE FUNDS
Investment Objectives and Policies 9
Investment Practices and Restrictions 10
MANAGEMENT OF THE FUNDS
Investment Adviser 15
Sub-Advisers 17
Distribution Plan and Agreements 17
PURCHASE AND REDEMPTION OF SHARES
How to Buy Shares 18
How to Redeem Shares 21
Exchange Privilege 22
Shareholder Services 23
Effect of Banking Laws 23
OTHER INFORMATION
Dividends, Distributions and Taxes 24
Management's Discussion of Fund Performance 25
General Information 26
</TABLE>
OVERVIEW OF THE FUNDS
The following summary is qualified in its entirety by the more detailed
information contained elsewhere in this Prospectus. See "Description of the
Funds" and "Management of the Funds".
The Investment Adviser to EVERGREEN GLOBAL REAL ESTATE EQUITY FUND is
Evergreen Asset Management Corp. ("Evergreen Asset") which, with its
predecessors, has served as an 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 EMERGING MARKETS GROWTH FUND and EVERGREEN INTERNATIONAL EQUITY FUND.
EVERGREEN EMERGING MARKETS GROWTH FUND (formerly First Union Emerging
Markets Growth Portfolio) seeks to provide long-term capital appreciation. The
EVERGREEN EMERGING MARKETS GROWTH FUND invests in equity securities of issuers
located in countries with emerging markets.
EVERGREEN INTERNATIONAL EQUITY FUND (formerly First Union International
Equity Portfolio) seeks to provide long-term capital appreciation. The EVERGREEN
INTERNATIONAL EQUITY FUND invests in equity securities of non-U.S. issuers.
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND seeks long-term capital growth.
Current income is a secondary objective. It invests primarily in equity
securities of United States and non-United States companies which are
principally engaged in the real estate industry or which own significant real
estate assets. It will not purchase direct interests in real estate.
THERE IS NO ASSURANCE THAT THE INVESTMENT OBJECTIVE OF ANY FUND WILL BE
ACHIEVED.
2
<PAGE>
EXPENSE INFORMATION
The table set forth below summarizes the shareholder transaction costs
associated with an investment in each Class A, Class B and Class C Shares of a
Fund. For further information see "Purchase and Redemption of Shares" and
"General Information -- Other Classes of Shares".
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES Class A Shares Class B Shares Class C Shares
<S> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases 4.75% None None
(as a % of offering price)
Sales Charge on Dividend Reinvestments None None None
Contingent Deferred Sales Charge (as a % of None 5% during the first year, 4% during the 1% during the
original purchase price or redemption second year, 3% during the third and fourth first year and
proceeds, whichever is lower) years, 2% during the fifth year, 1% during 0% thereafter
the sixth and seventh years and 0% after the
seventh year
Redemption Fee None None None
Exchange Fee None None None
</TABLE>
The following tables show for each Fund the estimated annual operating
expenses (as a percentage of average net assets) attributable to each Class of
Shares, together with examples of the cumulative effect of such expenses on a
hypothetical $1,000 investment in each Class for the periods specified assuming
(i) a 5% annual return, and (ii) redemption at the end of each period and,
additionally for Class B and C, no redemption at the end of each period.
In the following examples (i) the expenses for Class A Shares assume
deduction of the maximum 4.75% sales charge at the time of purchase, (ii) the
expenses for Class B Shares and Class C Shares assume deduction at the time of
redemption (if applicable) of the maximum contingent deferred sales charge
applicable for that time period, and (iii) the expenses for Class B Shares
reflect the conversion to Class A Shares eight years after purchase (years eight
through ten, therefore, reflect Class A expenses).
EVERGREEN EMERGING MARKETS GROWTH FUND
<TABLE>
<CAPTION>
EXAMPLES
Assuming
Assuming Redemption at End of no
ANNUAL OPERATING EXPENSES** Period Redemption
Class B Class C Class A Class B Class C Class B
Class A
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Advisory Fees 1.50% 1.50% 1.50% After 1 Year $ 71 $ 82 $ 42 $ 32
Administrative Fees .06% .06% .06% After 3 Years $ 119 $ 127 $ 97 $ 97
12b-1 Fees* .25% .75% .75% After 5 Years $ 169 $ 185 $ 165 $ 165
Shareholder Service Fees -- .25% .25% After 10 Years $ 308 $ 320 $ 346 $ 320
Other Expenses .59% .59% .59%
Total 2.40% 3.15% 3.15%
<CAPTION>
Class C
<S> <C> <C>
Advisory Fees After 1 Year $ 32
Administrative Fees After 3 Years $ 97
12b-1 Fees* After 5 Years $ 165
Shareholder Service Fees After 10 Years $ 346
Other Expenses
Total
</TABLE>
EVERGREEN INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
EXAMPLES
Assuming
Assuming Redemption at End of no
ANNUAL OPERATING EXPENSES** Period Redemption
Class B Class C Class A Class B Class C Class B
Class A
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Advisory Fees .82% .82% .82% After 1 Year $ 61 $ 72 $ 32 $ 22
Administrative Fees .06% .06% .06% After 3 Years $ 90 $ 98 $ 68 $ 68
12b-1 Fees* .25% .75% .75% After 5 Years $ 121 $ 136 $ 116 $ 116
Shareholder Service Fees -- .25% .25% After 10 Years $ 209 $ 272 $ 250 $ 222
Other Expenses .29% .29% .29%
Total 1.42% 2.17% 2.17%
<CAPTION>
Class C
<S> <C> <C>
Advisory Fees After 1 Year $ 22
Administrative Fees After 3 Years $ 68
12b-1 Fees* After 5 Years $ 116
Shareholder Service Fees After 10 Years $ 250
Other Expenses
Total
</TABLE>
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND
<TABLE>
<CAPTION>
EXAMPLES
Assuming
Assuming Redemption at End of no
ANNUAL OPERATING EXPENSES** Period Redemption
Class B Class C Class A Class B Class C Class B
Class A
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Advisory Fees 1.00% 1.00% 1.00% After 1 Year $ 64 $ 75 $ 35 $ 25
12b-1 Fees* .25% 1.00% 1.00% After 3 Years $ 99 $ 107 $ 77 $ 77
Other Expenses .46% .46% .46% After 5 Years $ 136 $ 151 $ 131 $ 131
Total 1.71% 2.46% 2.46% After 10 Years $ 240 $ 252 $ 280 $ 252
<CAPTION>
Class C
<S> <C> <C>
Advisory Fees After 1 Year $ 25
12b-1 Fees* After 3 Years $ 77
Other Expenses After 5 Years $ 131
Total After 10 Years $ 280
</TABLE>
3
<PAGE>
*Class A Shares can pay up to .75 of 1% of average net assets as a 12b-1 Fee.
For the forseeable future, the Class A 12b-1 Fees will be limited to .25 of 1%
of average net assets. For Class B and Class C Shares of EVERGREEN GLOBAL REAL
ESTATE EQUITY FUND, a portion of the 12b-1 Fees equivalent to .25 of 1% of
average net assets will be shareholder servicing-related. Distribution-related
12b-1 Fees will be limited to .75 of 1% of average net assets as permitted under
the rules of the National Association of Securities Dealers, Inc.
**The annual operating expenses and examples do not reflect fee waivers and
expense reimbursements for the most recent fiscal period. Actual expenses net of
fee waivers and expense reimbursements for the fiscal period ended December 31,
1994 or September 30, 1994, as applicable, for Class A, B and C Shares were as
follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
<S> <C> <C> <C>
Evergreen Emerging Markets Growth Fund 1.78% 2.53% 2.53%
Evergreen International Equity Fund 1.26% 2.02% 2.01%
</TABLE>
From time to time, each Fund's investment adviser may, at its discretion,
reduce or waive its fees or reimburse the Funds for certain of their expenses in
order to reduce their expense ratios. Each Fund's investment adviser may cease
these waivers and reimbursements at any time.
The purpose of the foregoing table is to assist an investor in
understanding the various costs and expenses that an investor in each Class of
Shares of the Funds will bear directly or indirectly. The amounts set forth both
in the tables and in the examples are estimated amounts based on the experience
of each Fund for the most recent fiscal period. Such expenses have been restated
to reflect current fee arrangements and in the case of Funds that did not offer
all of the above-referenced Classes of shares during such periods, the amounts
set forth in the tables are based on the expenses incurred by the Classes which
were offered. THE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES OR ANNUAL RETURN. ACTUAL EXPENSES AND ANNUAL RETURN MAY BE
GREATER OR LESS THAN THOSE SHOWN. For a more complete description of the various
costs and expenses borne by the Funds see "Management of the Funds". As a result
of asset-based sales charges, long-term shareholders may pay more than the
economic equivalent of the maximum front-end sales charges permitted under the
rules of the National Association of Securities Dealers, Inc.
4
<PAGE>
FINANCIAL HIGHLIGHTS
The tables on the following pages present, for each Fund, financial
highlights for a share outstanding throughout each period indicated. The
information in the tables for the five most recent fiscal years or the life of
the Fund if shorter for EVERGREEN EMERGING MARKETS GROWTH FUND and EVERGREEN
INTERNATIONAL EQUITY FUND has been audited by KPMG Peat Marwick LLP, each Fund's
independent auditors, for EVERGREEN GLOBAL REAL ESTATE EQUITY FUND has, except
as noted otherwise, been audited by Price Waterhouse LLP, the Fund's independent
auditors. A report of KPMG Peat Marwick LLP or Price Waterhouse LLP, as the case
may be, on the audited information with respect to each Fund is incorporated by
reference in the Fund's Statement of Additional Information. The following
information for each Fund should be read in conjunction with the financial
statements and related notes which are incorporated by reference in the Fund's
Statement of Additional Information.
Further information about a Fund's performance is contained in the Fund's
annual report to shareholders, which may be obtained without charge.
EVERGREEN EMERGING MARKETS GROWTH FUND
<TABLE>
<CAPTION>
SEPTEMBER 6, 1994*
THROUGH DECEMBER 31, 1994
CLASS A CLASS B CLASS C CLASS Y
SHARES SHARES SHARES SHARES
<S> <C> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning of period............................................. $10.00 $10.00 $10.00 $ 10.00
Income (loss) from investment operations:
Net investment income (loss)..................................................... -- (.02) (.02) .01
Net realized and unrealized loss on investments and foreign currency
transactions................................................................... (1.83) (1.82) (1.82) (1.84)
Total from investment operations............................................... (1.83) (1.84) (1.84) (1.83)
Net asset value, end of period................................................... $8.17 $8.16 $8.16 $8.17
TOTAL RETURN+.................................................................... (18.3%) (18.4%) (18.4%) (18.3%)
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's omitted)........................................ $867 $1,589 $89 $5,878
Ratios to average net assets:
Expenses (a)................................................................... 1.78%++ 2.53%++ 2.53%++ 1.53%++
Net investment income (loss) (a)............................................... (.12%)++ (.84%)++ (.82%)++ .43%++
Portfolio turnover rate.......................................................... 17% 17% 17% 17%
</TABLE>
* Commencement of operations.
+ Total return is calculated on net asset value per share for the period
indicated and is not annualized. Initial sales charge or contingent deferred
sales charge is not reflected.
++ Annualized.
(a) Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were assumed or waived by the investment adviser, the
annualized ratios of expenses and net investment income (loss) to average
net assets, exclusive of any applicable state expense limitations, for the
period from September 6, 1994 through December 31, 1994 would have been the
following:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS Y
SHARES SHARES SHARES SHARES
<S> <C> <C> <C> <C>
Expenses..................................................... 3.96% 4.71% 4.71% 3.71%
Net investment income (loss)................................. (2.30%) (3.02%) (3.00%) (1.75%)
</TABLE>
5
<PAGE>
EVERGREEN INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
CLASS A CLASS C
SHARES CLASS B SHARES SHARES
<S> <C> <C> <C>
SEPTEMBER 2, 1994*
THROUGH DECEMBER 31, 1994
PER SHARE DATA
Net asset value, beginning of period.............................................. $10.00 $ 10.00 $10.00
Income (loss) from investment operations:
Net investment income............................................................. .02 -- .03
Net realized and unrealized loss on investments................................... (.52) (.50 ) (.54)
Total from investment operations................................................ (.50) (.50 ) (.51)
Less distributions to shareholders from:
Net investment income............................................................. -- -- --
Net asset value, end of period.................................................... $9.50 $9.50 $9.49
TOTAL RETURN+..................................................................... (5.1%) (5.2% ) (5.2%)
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's omitted)......................................... $2,545 $5,602 $163
Ratios to average net assets:
Expenses (a).................................................................... 1.26%++ 2.02% ++ 2.01%++
Net investment income (a)....................................................... .91%++ .10% ++ .85%++
Portfolio turnover rate........................................................... 1% 1% 1%
<CAPTION>
CLASS Y
SHARES
<S> <C>
PER SHARE DATA
Net asset value, beginning of period.............................................. $10.00
Income (loss) from investment operations:
Net investment income............................................................. .02
Net realized and unrealized loss on investments................................... (.51 )
Total from investment operations................................................ (.49 )
Less distributions to shareholders from:
Net investment income............................................................. (.01 )
Net asset value, end of period.................................................... $9.50
TOTAL RETURN+..................................................................... (5.0% )
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's omitted)......................................... $23,830
Ratios to average net assets:
Expenses (a).................................................................... 1.06% ++
Net investment income (a)....................................................... 1.03% ++
Portfolio turnover rate........................................................... 1%
</TABLE>
* Commencement of operations.
+ Total return is calculated on net asset value per share for the period
indicated and is not annualized. Initial sales charge or contingent deferred
sales charge is not reflected.
++ Annualized.
(a) Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were assumed or waived by the investment adviser, the
annualized ratios of expenses and net investment income (loss) to average
net assets, exclusive of any applicable state expense limitations, for the
period from September 2, 1994 through December 31, 1994 would have been the
following:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS Y
SHARES SHARES SHARES SHARES
<S> <C> <C> <C> <C>
Expenses..................................................... 2.09% 2.85% 2.84% 1.89%
Net investment income (loss)................................. .08% (.73%) .02% .20%
</TABLE>
6
<PAGE>
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND -- CLASS Y SHARES
<TABLE>
<CAPTION>
SIX MONTHS NINE MONTHS FEBRUARY 1, 1989*
ENDED MARCH ENDED THROUGH
31, 1995 SEPTEMBER 30, YEAR ENDED DECEMBER 31, DECEMBER 31,
(UNAUDITED) 1994# 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning of
period............................ $ 13.81 $ 14.75 $9.86 $9.16 $8.10 $10.03 $10.00
Income (loss) from investment
operations:
Net investment income (loss)........ .01 .07 -- (.01) (.02) (.03) .17
Net realized and unrealized gain
(loss) on investments............. (2.48) (1.01) 5.07 .94 1.08 (1.90) .03
Total from investment
operations.................... (2.47) (.94) 5.07 .93 1.06 (1.93) .20
Less distributions to shareholders
from:
Net investment income............... (.10) -- -- -- -- -- (.17)
Net realized gains.................. (.52) -- (.18) (.23) -- -- --
Total distributions............. (.62) -- (.18) (.23) -- -- (.17)
Net asset value, end of period...... $ 10.72 $ 13.81 $14.75 $9.86 $9.16 $8.10 $10.03
TOTAL RETURN+....................... (18.4%) (6.4%) 51.4% 10.2% 13.1% (19.2%) 2.0%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's
omitted).......................... $74,001 $132,294 $146,173 $8,618 $7,557 $6,004 $7,336
Ratios to average net assets:
Operating expenses................ 1.51%++ 1.46%++ 1.56%(a) 2.00%(a) 2.00%(a) 2.00%(a) 2.00%(a)++
Interest expense.................. .08%++ .08%++ -- -- -- -- --
Net investment income (loss)...... .39%++ .56%++ .03%(a) (.10%)(a) (.27%)(a) (.39%)(a) 2.23%(a)++
Portfolio turnover rate............. 17% 63% 88% 245% 207% 325% 151%
</TABLE>
# On September 21, 1994, the Fund changed its fiscal year end from December 31
to September 30.
* Commencement of operations.
+ Total return is calculated on net asset value per share and is not
annualized.
++ Annualized.
(a) Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were assumed or waived by the investment adviser, the
annualized ratios of expenses and net investment income (loss) to average
net assets, exclusive of any applicable state expense limitations, would
have been the following:
<TABLE>
<CAPTION>
FEBRUARY 1,
1989 THROUGH
YEAR ENDED DECEMBER 31, DECEMBER 31,
1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
Operating expenses................................ 1.64% 3.72% 3.76% 3.99% 3.17%
Net investment income (loss)...................... (.05%) (1.82%) (2.02%) (2.38%) 1.06%
</TABLE>
7
<PAGE>
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND -- CLASS A, B AND C SHARES
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
FEBRUARY 10, 1995* FEBRUARY 8, 1995* FEBRUARY 9, 1995*
THROUGH THROUGH THROUGH
MARCH 31, 1995 MARCH 31, 1995 MARCH 31, 1995
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning of period.............................. $11.46 $ 11.44 $ 11.43
Income (loss) from investment operations:
Net investment income............................................. .02 .02 .01
Net realized and unrealized loss on investments................... (.76) (.75) (.73)
Total from investment operations................................ (.74) (.73) (.72)
Net asset value, end of period.................................... $10.72 $ 10.71 $ 10.71
TOTAL RETURN+..................................................... (6.5%) (6.4%) (6.3%)
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's omitted)......................... $2,531 $ 3,362 $ 1,146
Ratios to average net assets:
Operating expenses (a).......................................... 1.51%++ 2.27%++ 2.31%++
Interest expense................................................ .02%++ .01%++ .01%++
Net investment income (a)....................................... 3.21%++ 1.53%++ .87%++
Portfolio turnover rate#.......................................... 17% 17% 17%
</TABLE>
* Commencement of class operations.
+ Total return is calculated on net asset value per share for the period
indicated and is not annualized. Initial sales charge or contingent deferred
sales charge is not reflected.
++ Annualized. Due to the recent commencement of their offering, the ratios for
Class A, Class B and Class C shares are not necessarily comparable to that
of the Class Y shares, and are not necessarily indicative of future ratios.
# Portfolio turnover rate is calculated for the six months ended March 31,
1995.
(a) Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were assumed or waived by the investment adviser, the
annualized ratios of expenses and net investment income (loss) to average
net assets, exclusive of any applicable state expense limitations, would
have been the following:
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
FEBRUARY 10, 1995 FEBRUARY 8, 1995 FEBRUARY 9, 1995
THROUGH THROUGH THROUGH
MARCH 31, 1995 MARCH 31, 1995 MARCH 31, 1995
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
Operating expenses........................ 2.73% 3.49% 3.49%
Net investment income (loss).............. 1.99% .31% (.31%)
</TABLE>
8
9
- --------------------------------------------------------------------------------
DESCRIPTION OF THE FUNDS
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES AND POLICIES
Evergreen Emerging Markets Growth Fund
The objective of Evergreen Emerging Markets Growth Fund is long-term
capital appreciation. In seeking this objective, the Fund invests in equity
securities of issuers located in emerging markets. The Fund is suitable for
aggressive investors interested in the investment opportunities offered by
securities of issuers located in emerging or developing markets and the
resulting potential for growth opportunities resulting from political change,
economic deregulation and liberalized trade policies. The objective is
fundamental and may not be changed without shareholder approval.
The Fund seeks long-term capital appreciation. The Fund invests
primarily in a diversified portfolio of equity securities of issuers located in
countries with emerging markets. As a matter of policy, the Fund will invest at
least 65% of the value of its total assets in securities of emerging market
issuers.
A country will be considered to have an "emerging market" if it has
relatively low gross national product per capita compared to the world's major
economies and the potential for rapid economic growth. Countries with emerging
markets include those that have an emerging stock market (as defined by the
International Finance Corporation), those with low-to middle income economies
(according to the World Bank), and those listed in World Bank publications as
"developing." The Fund will normally invest in at least six different countries,
although it may invest all of its assets in a single country. At the present
time, the Fund has no intention of investing all of its assets in a single
country. The Fund focuses on equity securities, but may also invest in other
types of instruments, including debt securities. Marvin & Palmer Associates, the
Sub-Adviser to the Fund, will make investment decisions regarding equity
securities based on its analysis of returns, price momentum, business and
industry considerations, and management quality.
The Fund may employ certain additional investment strategies which are
discussed in "Investment Practices and Restrictions", below.
Evergreen International Equity Fund
The objective of Evergreen International Equity Fund is long-term
capital appreciation. The Fund invests primarily in equity securities of
non-U.S. issuers and is suitable for investors who want to pursue their
investment goals in markets outside the United States. The Fund provides
investors with a vehicle to pursue investment opportunities in countries outside
the U.S. whose securities markets may benefit from differing economic and
political cycles. The objective is fundamental and may not be changed without
shareholder approval.
The Fund invests primarily in foreign equity securities that Boston
International Advisers, Inc., the Sub-Adviser to the Fund, determines, through
both fundamental and technical analysis, to be undervalued compared to other
securities in their industries and countries. In most market conditions, the
stocks comprising the Fund's assets will exhibit traditional value
characteristics, such as higher than average dividend yields, lower than average
price to book value, and will include stocks of companies with unrecognized or
undervalued assets. As a matter of policy, the Fund will invest at least 65% of
the value of its total assets in equity securities of issuers located in at
least three countries outside of the United States.
The Fund will emphasize value stocks, primarily of companies which are
listed on one or more of thirty-two stock markets: twenty developed markets and
twelve emerging markets. While the current intention of the Fund is to invest in
32 stock markets, the Fund may invest in more or less, depending upon market
conditions as determined by the Sub-Adviser. The Fund will invest substantially
in industrialized companies throughout the world that comprise the Morgan
Stanley Capital International EAFE (Europe, Australia and the Far East) Index.
In addition, the Fund intends to invest up to 10% of its assets in emerging
country equity securities, as described above under "Evergreen Emerging Markets
Growth Fund."
The Fund may employ certain additional investment strategies which are
discussed in "Investment Practices and Restrictions", below.
<PAGE>
Evergreen Global Real Estate Equity Fund
The Evergreen Global Real Estate Equity Fund seeks to achieve its
investment objective of long-term capital growth through investment primarily in
equity securities of domestic and foreign companies which are principally
engaged in the real estate industry or which own significant real estate assets;
the Fund will not purchase direct interests in real estate. Current income will
be a secondary objective. Equity securities will include common stock, preferred
stock and securities convertible into common stock. The objective is fundamental
and may not be changed without shareholder approval.
The Fund will, under normal conditions, invest at least 65% of its
total assets in equity securities of domestic and foreign exchange or NASDAQ
listed companies which are principally engaged in the real estate industry. A
company is deemed to be "principally engaged" in the real estate industry if at
least 50% of its assets (marked to market), gross income or net profits are
attributable to ownership, construction, management or sale of residential,
commercial or industrial real estate. Real estate industry companies may include
among others: equity real estate investment trusts, which pool investors' funds
for investment primarily in commercial real estate properties; mortgage real
estate investment trusts, which invest pooled funds in real estate related
loans; brokers or real estate developers; and companies with substantial real
estate holdings, such as paper and lumber producers and hotel and entertainment
companies. The Fund will only invest in real estate equity trusts and limited
partnerships which are traded on major exchanges. As a matter of fundamental
policy, the Fund will also invest at least 65% of its total assets in the equity
securities of companies of at least three countries, including the United
States, except when abnormal market or financial conditions warrant the
assumption of a temporary defensive position. See "Investment Practices and
Restrictions" and "Special Risk Considerations".
The remainder of the Fund's investments may be made in equity
securities of issuers whose products and services are related to the real estate
industry, such as manufacturers and distributors of building supplies and
financial institutions which issue or service mortgages. The Fund may invest
more than 25% of its total assets in any one sector of the real estate or real
estate related industries. In addition, the Fund may, from time to time, invest
in the securities of companies unrelated to the real estate industry whose real
estate assets are substantial relative to the price of the companies'
securities.
The Fund pursues a flexible strategy of investing in a diversified
portfolio of securities of companies throughout the world. The Fund's investment
adviser anticipates that the Fund will give particular consideration to
investments in the United Kingdom, Western Europe, Australia, Canada, the Far
East (Japan, Hong Kong, Singapore, Malaysia and Thailand) and the United States.
The percentage of the Fund's assets invested in particular geographic regions
will shift from time to time in accordance with the judgment of the Fund's
investment adviser. Generally, a substantial portion of the assets of the Fund
will be denominated or traded in foreign currencies.
Investments may also be made in securities of issuers unrelated to the
real estate industry believed by the Fund's investment adviser to be undervalued
and to have capital appreciation potential. Also, consistent with the secondary
objective of current income, investments may also be made in nonconvertible debt
securities of such companies. The debt securities purchased (except for those
described below) will be of investment grade or better quality (e.g., rated no
lower than A by Moody's Investors Service ("Moody's") or Standard & Poor's
Ratings Group ("S&P")or if not so rated, believed by the Fund's investment
adviser to be of comparable quality). However, up to 10% of total assets may be
invested in unrated debt securities of issuers secured by real estate assets
where the Fund's investment adviser believes that the securities are trading at
a discount and the underlying collateral will ensure repayment of principal. In
such situations, it is conceivable that the Fund could, in the event of default,
end up holding the underlying real estate directly.
It is anticipated that the annual portfolio turnover rate for the Fund
may exceed 100%. The Fund may employ certain additional investment strategies
which are discussed in "Investment Practices and Restrictions", below.
INVESTMENT PRACTICES AND RESTRICTIONS
General. The Funds primarily invest in:
common and preferred stocks, convertible securities and warrants of
foreign corporations. Common stocks represent an equity interest in a
corporation. This ownership interest often gives the Funds the right to
vote on measures affecting the company's organization and operations.
Although common stocks have a history of long-term growth in value,
their prices tend to fluctuate in the short-term, particularly those of
smaller capitalization companies. Smaller capitalization companies may
have limited product lines, markets, or financial resources. These
conditions may make them more susceptible to setbacks and reversals.
Therefore, their securities may have limited marketability and may be
subject to more abrupt or erratic market movements than securities of
larger companies;
obligations of foreign governments and supranational organizations;
corporate and foreign government fixed income securities denominated in
currencies other than U.S. dollars, rated, at the time of purchase, Baa
or higher by Moody's or BBB or higher by S&P, or which, if unrated, are
considered to be of comparable quality by the Fund's investment adviser
or sub-advisers. Bonds rated Baa by Moody's or BBB by S&P have
speculative characteristics. Changes in economic conditions or other
circumstances are more likely to lead to weakened capacity to make
principal and interest payments than higher rated bonds. Although the
Funds do not intend to invest significantly in debt securities, it
should be noted that the prices of fixed income securities fluctuate
inversely to the direction of interest rates;
strategic investments, such as options and futures contracts on
currency transactions, securities index futures contracts, and forward
foreign currency exchange contracts. The Funds can use these techniques
to increase or decrease their exposure to changing security prices,
interest rates, currency exchange rates, or other factors that affect
security values. (Although, of course, there can be no assurance that
these strategic investments will be successful in protecting the value
of the Funds' securities.); and
securities of closed-end investment companies.
Defensive Investments. The Funds may invest without limitation in high quality
money market instruments, such as notes, certificates of deposit or bankers'
acceptances, or U.S. government securities if, in the opinion of a Fund's
investment adviser or sub-adviser, market conditions warrant a temporary
defensive investment strategy.
Portfolio Turnover and Brokerage. 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 Global Real Estate Equity Fund effected on
those exchanges. See the Statement of Additional Information for further
information regarding the brokerage allocation practices of the Funds. The
portfolio turnover rate for each Fund is set forth in the tables contained in
the section entitled "Financial Highlights".
Repurchase Agreements. The Funds may invest in repurchase agreements. Repurchase
agreements are agreements by which a Fund purchases a security for cash and
obtains a simultaneous commitment from the seller (usually a bank or
broker/dealer) to repurchase the security at an agreed-upon price and specified
future date. The repurchase price reflects an agreed-upon interest rate for the
time period of the agreement. The Funds' risk is the inability of the seller to
pay the agreed-upon price on the delivery date. However, this risk is tempered
by the ability of the Funds to sell the security in the open market in the case
of a default. In such a case, the Funds may incur costs in disposing of the
security which would increase Fund expenses. Each Fund's investment adviser will
monitor the creditworthiness of the firms with which the Funds enter into
repurchase agreements.
When-Issued And Delayed Delivery Transactions. Evergreen International Equity
Fund and Evergreen Emerging Markets Growth Fund may purchase securities on a
when-issued or delayed delivery basis. These transactions are arrangements in
which the Funds purchase securities with payment and delivery scheduled for a
future time. The seller's failure to complete these transactions may cause the
Funds to miss a price or yield considered to be advantageous. Settlement dates
may be a month or more after entering into these transactions, and the market
values of the securities purchased may vary from the purchase prices.
Accordingly, the Funds may pay more or less than the market value of the
securities on the settlement date. A Fund may dispose of a commitment prior to
settlement if the Fund's investment adviser deems it appropriate to do so. In
addition, Evergreen International Equity Fund and Evergreen Emerging Markets
Growth Fund may enter into transactions to sell their purchase commitments to
third parties at current market values and simultaneously acquire other
commitments to purchase similar securities at later dates. The Funds may realize
short-term profits or losses upon the sale of such commitments.
Temporary Investments. The Funds may invest in U.S. and foreign short-term money
market instruments (denominated in U.S. and/or foreign currencies), including
interest-bearing call deposits with banks, government obligations, certificates
of deposit, bankers' acceptances, commercial paper, short-term corporate debt
securities, and repurchase agreements. These investments may be used to
temporarily invest cash received from the sale of Fund shares, to establish and
maintain reserves for temporary defensive purposes, or to take advantage of
market opportunities.
Illiquid or Restricted Securities. Each Fund may invest up to 15% of its net
assets in illiquid securities and other securities which are not readily
marketable. Illiquid securities include certain restricted securities not
determined by the Trustees to the liquid, non-negotiable time deposits and
repurchase agreements providing for settlement in more than seven days after
notice. Securities eligible for resale pursuant to Rule 144A under the
Securities Act of 1933, which have been determined to be liquid, will not be
considered by the Funds' investment advisers to be illiquid or not readily
marketable and, therefore, are not subject to the aforementioned 15% limit. The
inability of a Fund to dispose of illiquid or not readily marketable investments
readily or at a reasonable price could impair the Fund's ability to raise cash
for redemptions or other purposes. The liquidity of securities purchased by a
Fund which are eligible for resale pursuant to Rule 144A will be monitored by
the each Fund's investment adviser on an ongoing basis, subject to the oversight
of the Trustees. In the event that such a security is deemed to be no longer
liquid, a Fund's holdings will be reviewed to determine what action, if any, is
required to ensure that the retention of such security does not result in a Fund
having more than 15% of its assets invested in illiquid or not readily
marketable securities.
Borrowing. As a matter of fundamental policy, the Funds may not borrow money
except as a temporary measure to facilitate redemption requests or for
extraordinary or emergency purposes. The proceeds from borrowings may be used to
facilitate redemption requests which might otherwise require the untimely
disposition of portfolio securities. The specific limits applicable to borrowing
by each Fund are set forth in the Statement of Additional Information.
Lending of Portfolio Securities. In order to generate income and to offset
expenses, the Funds may lend portfolio securities to brokers, dealers and other
financial institutions. The Funds' investment advisers or sub-advisers will
monitor the creditworthiness of such borrowers. Loans of securities by the
Funds, if and when made, may not exceed 30% of the value of the total assets of
the Evergreen Global Real Estate Equity Fund, and must be collateralized by cash
or U.S. Government securities that are maintained at all times in an amount
equal to at least 100% of the current market value of the securities loaned,
including accrued interest. While such securities are on loan, the borrower will
pay a Fund any income accruing thereon, and the Fund may invest the cash
collateral in portfolio securities, thereby increasing its return. Any gain or
loss in the market price of the loaned securities which occurs during the term
of the loan would affect a Fund and its investors. A Fund has the right to call
a loan and obtain the securities loaned at any time on notice of not more than
five business days. A Fund may pay reasonable fees in connection with such
loans.
Fixed-Income Securities -- Downgrades. If any security invested in by any of the
Funds loses its rating or has its rating reduced after the Fund has purchased
it, the Fund is not required to sell or otherwise dispose of the security, but
may consider doing so.
Foreign Currency Transactions. The Funds will enter into foreign currency
transactions to obtain the necessary currencies to settle securities
transactions. Currency transactions may be conducted either on a spot or cash
basis at prevailing rates or through forward foreign currency exchange
contracts. The Funds may also enter into foreign currency transactions to
protect Fund assets against adverse changes in foreign currency exchange rates
or exchange control regulations. Such changes could unfavorably affect the value
of Fund assets which are denominated in foreign currencies, such as foreign
securities or funds deposited in foreign banks, as measured in U.S. dollars.
Although foreign currency exchanges may be used by a Fund to protect against a
decline in the value of one or more currencies, such efforts may also limit any
potential gain that might result from a relative increase in the value of such
currencies and might, in certain cases, result in losses to the Fund.
Forward Foreign Currency Exchange Contracts. A forward foreign currency exchange
contract ("forward contract") is an obligation to purchase or sell an amount of
a particular currency at a specific price and on a future date agreed upon by
the parties. Generally, no commission charges or deposits are involved. At the
time a Fund enters into a forward contract, Fund assets with a value equal to
the Fund's obligation under the forward contract are segregated and are
maintained until the contract has been settled. The Funds will not enter into a
forward contract with a term of more than one year. The Funds will generally
enter into a forward contract to provide the proper currency to settle a
securities transaction at the time the transaction occurs ("trade date"). The
period between trade date and settlement date will vary between 24 hours and 60
days, depending upon local custom.
<PAGE>
The Funds may also protect against the decline of a particular foreign currency
by entering into a forward contract to sell an amount of that currency
approximating the value of all or a portion of the Funds' assets denominated in
that currency ("hedging"). The success of this type of short-term hedging
strategy is highly uncertain due to the difficulties of predicting short-term
currency market movements and of precisely matching forward contract amounts and
the constantly changing value of the securities involved. Although each Fund's
investment adviser or sub-adviser will consider the likelihood of changes in
currency values when making investment decisions, each Fund's investment adviser
or sub-adviser believes that it is important to be able to enter into forward
contracts when it believes the interests of a Fund will be served. The Funds
will not enter into forward contracts for hedging purposes in a particular
currency in an amount in excess of the Funds' assets denominated in that
currency, but as consistent with their other investment policies and as not
otherwise limited in their ability to use this strategy.
Options And Futures. The Funds may deal in options on foreign currencies, and
portfolio securities, and, in the case of Evergreen International Equity Fund
and Evergreen Emerging Markets Growth Fund, securities indices, which options
may be listed for trading on an international securities exchange. The Funds
will use these options to manage interest rate and currency risks. The Funds
also may write covered call options and secured put options to generate income
or to lock in gains. Each Fund may write covered call options and secured put
options on up to 25% of its net assets in the case of Evergreen International
Equity Fund and Evergreen Emerging Markets Growth Fund and 15% of its net assets
in the case of Evergreen Global Real Estate Equity Fund, and Evergreen
International Equity Fund and Evergreen Emerging Markets Growth Fund may
purchase put and call options provided that no more than 5% of the fair market
value of its net assets may be invested in premiums on such options.
A call option gives the purchaser the right to buy, and the writer the
obligation to sell, the underlying asset at the exercise price during the option
period. A put option gives the purchaser the right to sell, and the writer the
obligation to buy, the underlying asset at the exercise price during the option
period. The writer of a covered call owns assets that are acceptable for escrow
and the writer of a secured put invests an amount not less than the exercise
price in eligible assets to the extent that it is obligated as a writer. If a
call written by a Fund is exercised, the Fund forgoes any possible profit from
an increase in the market price of the underlying asset over the exercise price
plus the premium received. In writing puts, there is a risk that a Fund may be
required to take delivery of the underlying asset at a disadvantageous price.
The Funds may enter into futures contracts involving foreign currency
and, in the case of Evergreen International Equity Fund and Evergreen Emerging
Markets Growth Fund, securities indices,, or options on currency, for bona fide
hedging purposes The Funds may not enter into futures contracts or related
options if, immediately thereafter, the amounts committed to margin and premiums
paid for unexpired options would exceed 5% of a Fund's total assets and, in the
case of Evergreen Global Real Estate Equity Fund, more than 30% of the Fund's
net assets would be hedged thereby. Evergreen International Equity Fund and
Evergreen Emerging Markets Growth Fund, may also enter into such futures
contracts or related options for purposes other than bona fide hedging if the
aggregate amount of initial margin deposits on a Fund's futures and related
options positions would not exceed 5% of the net liquidation value of the Fund's
assets, provided further that in the case of an option that is in-the-money at
the time of the purchase, the in-the-money amount may be excluded in calculating
the 5% limitation. In addition, a Fund may not sell futures contracts if the
value of such futures contracts exceeds the total market value of the Fund's
portfolio securities. Futures contracts sold by a Fund are generally subject to
segregation and coverage requirements established by either the Commodity
Futures Trading Commission ("CFTC") or the Securities and Exchange Commission
("SEC"), with the result that, if a Fund does not hold the instrument underlying
the futures contract or option, the Fund will be required to segregate, on an
ongoing basis with its custodian, cash, U.S. government securities, or other
liquid high grade debt obligations in an amount at least equal to the Fund's
obligations with respect to such instruments.
Evergreen International Equity Fund and Evergreen Emerging Markets
Growth Fund may enter into securities index futures contracts and purchase and
write put and call options on securities index futures contracts that are traded
on regulated exchanges, including non-U.S. exchanges, to the extent permitted by
the CFTC. Securities index futures contracts are based on indices that reflect
the market value of securities of the firms included in the indices. An index
futures contract is an agreement pursuant to which two parties agree to take or
make delivery of an amount of cash equal to the differences between the value of
the index at the close of the last trading day of the contract and the price at
which the index contract was originally written.
Evergreen International Equity Fund and Evergreen Emerging Markets
Growth Fund may enter into securities index futures contracts to sell a
securities index in anticipation of or during a market decline to attempt to
offset the decrease in market value of securities in its portfolio that might
otherwise result. When a Fund is not fully invested and anticipates a
significant market advance, it may enter into futures contracts to purchase the
index in order to gain rapid market exposure that may in part or entirely offset
increases in the cost of securities that it intends to purchase. In many of
these transactions, a Fund will purchase such securities upon termination of the
futures position but, depending on market conditions, a futures position may be
terminated without the corresponding purchases of common stock. A Fund may also
invest in securities index futures contracts when its investment adviser or
sub-adviser believes such investment is more efficient, liquid or cost-effective
than investing directly in the securities underlying the index.
The use of futures and related options involves special considerations
and risks, including: (1) the ability of a Fund to utilize futures successfully
will depend on its investment adviser's or sub-adviser's ability to predict
pertinent market movements; and (2) there might be an imperfect correlation (or
conceivably no correlation) between the change in the market value of the
securities held by a Fund and the prices of the futures relating to the
securities purchased or sold by the Fund. The use of futures and related options
may reduce risk of loss by wholly or partially offsetting the negative effect of
unfavorable price movements, but these instruments can also reduce the
opportunity for gain by offsetting the positive effect of favorable price
movements in positions. No assurance can be given that the investment adviser's
or sub-adviser's judgment in this respect will be correct.
It is not certain that a secondary market for positions in futures
contracts or for options will exist at all times. Although each investment
adviser or sub-adviser will consider liquidity before entering into these
transactions, there is no assurance that a liquid secondary market on an
exchange or otherwise will exist for any particular futures contract or option
at any particular time. A Fund's ability to establish and close out futures and
options positions depends on this secondary market.
Risk Characteristics Of Foreign Securities. Investing in non-U.S. securities
carries substantial risks in addition to those associated with domestic
investments. In an attempt to reduce some of these risks, the Funds diversify
their investments broadly among foreign countries which may include both
developed and developing countries. With respect to Evergreen International
Equity Fund, at least three different countries will always be represented. The
Funds may take advantage of the unusual opportunities for higher returns
available from investing in developing countries. As discussed in detail below
under "Emerging Markets," however, these investments carry considerably more
volatility and risk because they generally are associated with less mature
economies and less stable political systems.
Foreign securities are denominated in foreign currencies. Therefore,
the value in U.S. dollars of a Fund's assets and income may be affected by
changes in exchange rates and regulations. Although the Funds value their assets
daily in U.S. dollars, they will not convert their holdings of foreign
currencies to U.S. dollars daily. When a Fund converts its holdings to another
currency, it may incur conversion costs. Foreign exchange dealers realize a
profit on the difference between the prices at which such dealers buy and sell
currencies.
To the extent that securities purchased by the Funds are denominated in
currencies other than the U.S. dollar, changes in foreign currency exchange
rates will affect the Funds' net asset values; the value of interest earned;
gains and losses realized on the sale of securities; and net investment income
and capital gains, if any, to be distributed to shareholders by a Fund. If the
value of a foreign currency rises against the U.S. dollar, the value of a Fund's
assets denominated in that currency will increase; correspondingly, if the value
of a foreign currency declines against the U.S.
dollar, the value of a Fund's assets denominated in that currency will decrease.
Other differences between investing in foreign and U.S. companies
include: less publicly available information about foreign companies; the lack
of uniform financial accounting standards applicable to foreign companies; less
readily available market quotations on foreign companies; differences in
government regulation and supervision of foreign stock exchanges, brokers,
listed companies, and banks; differences in legal systems which may affect the
ability to enforce contractual obligations or obtain court judgments; generally
lower foreign stock market volume; the likelihood that foreign securities may be
less liquid or more volatile; foreign brokerage commissions may be higher;
unreliable mail service between countries; and political or financial changes
which adversely affect investments in some countries. In the past, U.S.
government policies have discouraged or restricted certain investments abroad by
investors such as the Funds. Although the Funds are unaware of any current
restrictions, investors are advised that these policies could be reinstituted.
Emerging Markets. The economies of individual emerging countries may differ
favorably or unfavorably from the U.S. economy in such respects as growth of
gross domestic product, rate of inflation, currency depreciation, capital
reinvestment, resource self-sufficiency and balance of payments position.
Further, the economies of developing countries generally are heavily dependent
on international trade and, accordingly, have been, and may continue to be,
adversely affected by trade barriers, exchange controls, managed adjustments in
relative currency values and other protectionist measures imposed or negotiated
by the countries with which they trade. These economies also have been, and may
continue to be, adversely affected by economic conditions in the countries with
which they trade.
Prior governmental approval for foreign investments may be required
under certain circumstances in some emerging countries, and the extent of
foreign investment in certain debt securities and domestic companies may be
subject to limitation in other emerging countries. Foreign ownership limitations
also may be imposed by the charters of individual companies in emerging
countries to prevent, among other concerns, violation of foreign investment
limitations.
Repatriation of investment income, capital and the proceeds of sales by
foreign investors may require governmental registration and/or approval in some
emerging countries. A Fund could be adversely affected by delays in, or a
refusal to grant, any required governmental registration or approval for such
repatriation. Any investment subject to such repatriation controls will be
considered illiquid if it appears reasonably likely that this process will take
more than seven days.
With respect to any emerging country, there is the possibility of
nationalization, expropriation or confiscatory taxation, political changes,
governmental regulation, social instability or diplomatic developments
(including war) which could affect adversely the economics of such countries or
the value of the Funds' investments in those countries. In addition, it may be
difficult to obtain and enforce a judgment in a court outside of the U.S.
Investments Related to Real Estate. Risks associated with investment in
securities of companies in the real estate industry include: declines in the
value of real estate, risks related to general and local economic conditions,
overbuilding and increased competition, increases in property taxes and
operating expenses, changes in zoning laws, casualty or condemnation losses,
variations in rental income, changes in neighborhood values, the appeal of
properties to tenants and increase in interest rates. In addition, equity real
estate investment trusts may be affected by changes in the value of the
underlying property owned by the trusts, while mortgage real estate investment
trusts may be affected by the quality of credit extended. Equity and mortgage
real estate investment trusts are dependent upon management skills, may not be
diversified and are subject to the risks of financing projects. Such trusts are
also subject to heavy cash flow dependency, defaults by borrowers, self
liquidation and the possibility of failing to qualify for tax-free pass-through
of income under the Internal Revenue Code (the "Code") and to maintain exemption
from the Investment Company Act of 1940, as amended (the "1940 Act"). In the
event an issuer of debt securities collateralized by real estate defaulted, it
is conceivable that a Fund could end up holding the underlying real estate.
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MANAGEMENT OF THE FUNDS
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INVESTMENT ADVISERS
The management of each Fund is supervised by the Trustees of the Trust
under which the Fund has been established ("Trustees").. Evergreen Asset
Management Corp. (the "Evergreen Asset") has been retained by Evergreen Global
Real Estate Equity Fund as investment adviser. Evergreen Asset succeeded on June
30, 1994 to the advisory business of the same name, but under different
ownership, which was organized in 1971. Evergreen Asset, with its predecessors,
has served as investment adviser to the Evergreen mutual funds since 1971.
Evergreen Asset is a wholly-owned subsidiary of First Union National Bank of
North Carolina ("FUNB"). The address of Evergreen Asset is 2500 Westchester
Avenue, Purchase, New York 10577. FUNB is a subsidiary of First Union
Corporation ("First Union"), one of the ten largest bank holding companies in
the United States. Stephen A. Lieber and Nola Maddox Falcone serve as the chief
investment officers of Evergreen Asset and, along with Theodore J. Israel, Jr.,
were the owners of Evergreen Asset's predecessor and the former general partners
of Lieber & Company, which, as described below, provides certain subadvisory
services to Evergreen Asset in connection with its duties as investment adviser
to the Fund. The Capital Management Group of FUNB ("CMG") serves as investment
adviser to Evergreen International Equity Fund and Evergreen Emerging Markets
Growth Fund. Boston International Advisers, Inc. ("BIA") is Sub-Adviser to
Evergreen International Equity Fund and Marvin & Palmer Associates, Inc.
("Marvin & Palmer") is Sub-Adviser to Evergreen Emerging Markets Growth Fund
First Union is a bank holding company headquartered in Charlotte, North
Carolina, which had $77.9 billion in consolidated assets as of March 31, 1995.
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 all the series of
Evergreen Investment Trust (formerly known as First Union Funds). First Union
Brokerage Services, Inc., a wholly-owned subsidiary of FUNB, is a registered
broker-dealer that is principally engaged in providing retail brokerage services
consistent with its federal banking authorizations. First Union Capital Markets
Corp., a wholly-owned subsidiary of First Union, is a registered broker-dealer
principally engaged in providing, consistent with its federal banking
authorizations, private placement, securities dealing, and underwriting
services.
As investment adviser to Evergreen Global Real Estate Equity Fund,
Evergreen Asset manages each Fund's investments, provides various administrative
services and supervises each Fund's daily business affairs, subject to the
authority of the Trustees. Evergreen Asset is entitled to receive a fee equal to
1% of average daily net assets on an annual basis from Evergreen Global Real
Estate Equity Fund. The fee paid by Evergreen Global Real Estate Equity Fund is
higher than the rate paid by most other investment companies. The total expenses
as a percentage of average daily net assets on an annual basis of Evergreen
Global Real Estate Equity Fund for the fiscal period ended September 30, 1994
are set forth in the section entitled "Financial Highlights". The
above-mentioned expense ratios for Evergreen Global Real Estate Equity Fund is
net of voluntary advisory fee waivers and expense reimbursements by Evergreen
Asset which may, at its discretion, revise or cease this voluntary waiver at any
time.
CMG, along with BIA and Marvin & Palmer, respectively, manages
investments and supervises the daily business affairs of Evergreen International
Equity Fund and Evergreen Emerging Markets Growth Fund. As compensation
therefor, CMG is entitled to receive an annual fee from Evergreen International
Equity Fund equal to: .82 of 1% of the first $20 million of average daily net
assets; .79 of 1% of the next $30 million of average daily net assets; .76 of 1%
of the next $50 million of average daily net assets; and .73 of 1% of average
daily net assets in excess of $100 million. From Evergreen Emerging Markets
Growth Fund, CMG is entitled to receive an annual fee equal to: 1.50% of the
first $100 million of average daily net assets; 1.45% of the next $100 million
of average daily net assets; 1.40% of the next $100 million of average daily net
assets; and 1.35% of average daily net assets in excess of $300 million. The
fees paid by Evergreen International Equity Fund and Evergreen Emerging Markets
Growth Fund are higher than the rate paid by most other investment companies,
but are not higher than the fee paid by many funds with similar investment
objectives. The total expenses as a percentage of average daily net assets on an
annual basis of Evergreen International Equity Fund and Evergreen Emerging
Markets Growth Fund for the fiscal year ended December 31, 1994 are set forth in
the section entitled "Financial Highlights". CMG has agreed to pay the sub
adviser to Evergreen International Equity Fund, BIA, a fee equal to: .32 of 1%
of the first $20 million of average daily net assets; .29 of 1% of the next $30
million of average daily net assets; .26 of 1% of the next $50 million of
average daily net assets; and .23 of 1% of average daily net assets in excess of
$100 million. For its services as sub-adviser to Evergreen Emerging Markets
Growth Fund, Marvin & Palmer receives from CMG a fee equal to: 1.00% of the
first $100 million of average daily net assets; .95 of 1% of the next $100
million of average daily net assets; .90 of 1% of the next $100 million of
average daily net assets; and .85 of 1% of average daily net assets in excess of
$300 million. Evergreen Asset serves as administrator to Evergreen International
Equity Fund and Evergreen Emerging Markets Growth Fund and is entitled to
receive a fee based on the average daily net assets of these Funds at a rate
based on the total assets of the mutual funds administered by Evergreen Asset
for which CMG or Evergreen Asset also serve as investment adviser, calculated in
accordance with the following schedule: .050% of the first $7 billion; .035% on
the next $3 billion; .030% on the next $5 billion; .020% on the next $10
billion; .015% on the next $5 billion; and .010% on assets in excess of $30
billion. Furman Selz Incorporated, the parent of Evergreen Funds Distributor,
Inc., distributor for the Evergreen group of mutual funds, serves as
sub-administrator to Evergreen International Equity Fund and Evergreen Emerging
Markets Growth Fund and is entitled to receive a fee from each Fund calculated
on the average daily net assets of each Fund at a rate based on the total assets
of the mutual funds administered by Evergreen Asset for which CMG or Evergreen
Asset also serve as investment adviser, calculated in accordance with the
following schedule: .0100% of the first $7 billion; .0075% on the next $3
billion; .0050% on the next $15 billion; and .0040% on assets in excess of $25
billion. The total assets of the mutual funds administered by Evergreen Asset
for which CMG or Evergreen Asset serve as investment adviser as of March 31,
1995 were approximately $8 billion.
The portfolio manager for Evergreen Global Real Estate Equity Fund is
Samuel A. Lieber. Mr. Samuel Lieber has been the Fund's principal manager since
inception and has been associated with the Evergreen Asset since prior to 1989.
The portfolio managers for Evergreen International Equity Fund are Maureen
Ghublikian and David A. Umstead, who are Managing Directors of BIA and have been
associated therewith since prior to 1989.
The portfolio managers for Evergreen Emerging Markets Growth Fund, all
of whom have served since its inception in September 1994, are David F. Marvin,
who is Chairman of Marvin & Palmer and is primarily responsible for Latin
America and currency management, Stanley Palmer, who is President of Marvin &
Palmer and primarily responsible for Southeast Asia and the India subcontinent,
Terry B. Mason, who is a Vice President of Marvin & Palmer and is primarily
responsible for Eastern Europe and Africa, Jay F. Middleton, who is a portfolio
manager for Marvin & Palmer and primarily responsible for Latin America and the
Middle East, and Todd D. Marvin, who is a portfolio manager for Marvin & Palmer
and, along with Mr. Palmer, primarily responsible for Southeast Asia and the
India subcontinent. David F. Marvin, and Stanley Palmer, President, founded
Marvin & Palmer in 1986. Mr. Mason and Mr. Middleton both joined Marvin & Palmer
in 1990. Mr. Todd Marvin joined Marvin & Palmer in 1991 and, prior thereto, was
employed by Oppenheimer & Company as an analyst in its investment banking
department from 1989 until 1991.
SUB-ADVISERS
Evergreen Asset has entered into sub-advisory agreements with Lieber &
Company with respect to Evergreen Global Real Estate Equity Fund which provides
that Lieber & Company's research department and staff will furnish Evergreen
Asset with information, investment recommendations, advice and assistance, and
will be generally available for consultation on each such Fund's portfolio.
Lieber & Company will be reimbursed by Evergreen Asset in connection with the
rendering of services on the basis of the direct and indirect costs of
performing such services. There is no additional charge to Evergreen Global Real
Estate Equity Fund for the services provided by Lieber & Company. It is
contemplated that Lieber & Company will, to the extent practicable, effect
substantially all of the portfolio transactions for this Fund on the New York
and American Stock Exchanges. The address of Lieber & Company is 2500
Westchester Avenue, Purchase, New York 10577. Lieber & Company is an indirect,
wholly-owned, subsidiary of First Union.
The sub-adviser to the Evergreen International Equity Fund, BIA, has
been in operation since 1986 and specializes in the management of international
equity portfolios. BIA currently manages twenty international portfolios,
including five group trust funds, for pension fund sponsors and endowment plans
worldwide. Messrs. Lyle H. Davis, Norman H. Meltz and David A. Umstead are the
principal executive officers of BIA and each own more than 25% of the
outstanding voting securities thereof. As of March 31, 1995 BIA managed a total
of $2.7 billion in assets and served as sub-adviser to one other investment
company with total assets of $148 million.
Marvin & Palmer, Sub-Adviser for Evergreen Emerging Markets Growth Fund
was founded in 1986 and is engaged in the management of global, non-United
States and emerging markets equity portfolios for institutional accounts. At
March 31, 1995, Marvin & Palmer managed a total of $2.5 billion in investments
for 34 institutional investors and 5 commingled funds and served as sub-adviser
to another investment company with total assets of $33 million.
DISTRIBUTION PLANS AND AGREEMENTS
Rule 12b-1 under the 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 aggregate average daily net assets
attributable to each Fund's Class A shares, 1.00% of the aggregate average daily
net assets attributable to the Class B and Class C shares of Evergreen Global
Real Estate Equity Fund, and .75 of 1% of the aggregate average daily net assets
attributable to the Class B and Class C shares of Evergreen International Equity
Fund and Evergreen Emerging Markets Growth Fund. Payments under the Plans
adopted with respect to Class A shares are currently voluntarily limited to .25
of 1% of each Fund's aggregate average daily net assets attributable to Class A
shares. The Plans provide that a portion of the fee payable thereunder may
constitute a service fee to be used for providing ongoing personal services
and/or the maintenance of shareholder accounts. Evergreen International Equity
Fund and Evergreen Emerging Markets Growth Fund have each, in addition to the
Plans adopted with respect to their Class B and Class C shares, adopted
shareholder service plans ("Service Plans") relating to the Class B and Class C
shares which permit each Fund to incur a fee of up to .25 of 1% of the aggregate
average daily net assets attributable to the Class B and Class C shares for
ongoing personal services and/or the maintenance of shareholder accounts. Such
service fee payments to financial intermediaries for such purposes, whether
pursuant to a Plan or Service Plan, will not to exceed .25% of the aggregate
average daily net assets attributable to each Class of shares of each Fund.
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 ( and in the case
of Evergreen International Equity Fund and Evergreen Emerging Markets Growth
Fund, the Service Plans), in amounts up to .25 of 1% of a Fund's aggregate
average daily net assets on an annual basis attributable to Class B and Class C
shares, to compensate organizations, which may include EFD and each Fund's
investment adviser or their affiliates, for personal services rendered to
shareholders and/or the maintenance of shareholder accounts.
The Funds may not pay any distribution or services fees during any
fiscal period in excess of the amounts set forth above. Since EFD's compensation
under the Distribution Agreements is not directly tied to the expenses incurred
by EFD, the amount of compensation received by it under the Distribution
Agreements during any year may be more or less than its actual expenses and may
result in a profit to EFD. Distribution expenses incurred by EFD in one fiscal
year that exceed the level of compensation paid to EFD for that year may be paid
from distribution fees received from a Fund in subsequent fiscal years.
The Plans are in compliance with rules of the National Association of
Securities Dealers, Inc. which effectively limit the annual asset-based sales
charges and service fees that a mutual fund may pay on a class of shares to .75
of 1% and .25 of 1%, respectively, of the average annual net assets attributable
to that class. The rules also limit the aggregate of all front-end, deferred and
asset-based sales charges imposed with respect to a class of shares by a mutual
fund that also charges a service fee to 6.25% of cumulative gross sales of
shares of that class, plus interest at the prime rate plus 1% per annum.
------------------------------------------------------------------------------
PURCHASE AND REDEMPTION OF SHARES
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HOW TO BUY SHARES
You can purchase shares of any of the Funds through broker-dealers,
banks or other financial intermediaries, or directly through EFD. The minimum
initial investment is $1,000, which may be waived in certain situations. There
is no minimum for subsequent investments. Investments of $25 or more are allowed
under the systematic investment plan. Share certificates are not issued. In
states where EFD is not registered as a broker-dealer shares of a Fund will only
be sold through other broker-dealers or other financial institutions that are
registered. See the Share Purchase Application and Statement of Additional
Information for more information. Only Class A, Class B and Class C shares are
offered through this Prospectus (See "General Information" - "Other Classes of
Shares").
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:
<PAGE>
Initial Sales Charge
------------------------ ----------------- --------------- ------------------
Commission to
Dealer/Agent
as a % of the Net as a % of the as a % of
Amount of Purchase Amount Invested Offering Price Offering Price
------------------------ ----------------- --------------- ------------------
------------------------ ----------------- --------------- ------------------
------------------------ ----------------- --------------- ------------------
------------------------ ----------------- --------------- ------------------
Less than $100,000 4.99% 4.75% 4.25%
------------------------ ----------------- --------------- ------------------
------------------------ ----------------- --------------- ------------------
$100,000 - $249,999 3.90% 3.75% 3.25%
------------------------ ----------------- --------------- ------------------
------------------------ ----------------- --------------- ------------------
$250,000 - $499,999 3.09% 3.00% 2.50%
------------------------ ----------------- --------------- ------------------
------------------------ ----------------- --------------- ------------------
$500,000 - $999,999 2.04% 2.00% 1.75%
------------------------ ----------------- --------------- ------------------
------------------------ ----------------- --------------- ------------------
$1,000,000 - $2,499,999 1.01% 1.00% 1.00%
------------------------ ----------------- --------------- ------------------
------------------------ ----------------- --------------- ------------------
Over $2,500,000 .25% .25% .25%
------------------------ ----------------- --------------- ------------------
No front-end sales charges are imposed on Class A shares purchased by:
institutional investors, which may include bank trust departments and registered
investment advisers; investment advisers, consultants or financial planners who
place trades for their own accounts or the accounts of their clients and who
charge such clients a management, consulting, advisory or other fee; clients of
investment advisers or financial planners who place trades for their own
accounts if the accounts are linked to the master account of such investment
advisers or financial planners on the books of the broker-dealer through whom
shares are purchased; institutional clients of broker-dealers, including
retirement and deferred compensation plans and the trusts used to fund these
plans, which place trades through an omnibus account maintained with a Fund by
the broker-dealer; shareholders of record on October 12, 1990 in any series of
Evergreen Investment Trust in existence on that date, and the members of their
immediate families; employees of FUNB and its affiliates, EFD and any
broker-dealer with whom EFD has entered into an agreement to sell shares of the
Funds, and members of the immediate families of such employees; and upon the
initial purchase of an Evergreen mutual fund by investors reinvesting the
proceeds from a redemption within the preceeding thirty days of shares of other
mutual funds, provided such shares were initially purchased with a front-end
sales charge or subject to a CDSC. Certain broker-dealers or other financial
institutions may impose a fee in connection with transactions in shares of the
Funds.
Class A shares may also be purchased at net asset value by qualified
and non-qualified employee benefit and savings plans which make shares of the
Funds and the other Evergreen mutual funds available to their participants, and
which: (a) are employee benefit plans having at least $1,000,000 in investable
assets, or 250 or more eligible participants; or (b) are non-qualified benefit
or profit sharing plans which are sponsored by an organization which also makes
the Evergreen mutual funds available through a qualified plan meeting the
criteria specified under (a). In connection with sales made to plans of the type
described in the preceeding sentence that are clients of broker-dealers, and
which do not qualify for sales at net asset value under the conditions set forth
in the paragraph above, payments may be made in an amount equal to .50 of 1% of
the net asset value of shares purchased. These payments are subject to reclaim
in the event shares are redeemed within 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.
<PAGE>
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 and/or shareholder service fees than Class A shares for a period of
seven years (after which it is expected that they will convert to Class A
shares) . The higher fees mean a higher expense ratio, so Class B shares pay
correspondingly lower dividends and may have a lower net asset value than Class
A shares. See the Statement of Additional Information for further details.
Class C Shares--Level-Load Alternative. You can purchase Class C shares without
any initial sales charge and, therefore, the full amount of your investment will
be used to purchase Fund shares. However, you will pay a 1.0% CDSC if you redeem
shares during the first year after purchase. Class C shares incur higher
distribution and/or shareholder service fees than Class A shares but, unlike
Class B shares, do not convert to any other class of shares of the Fund. The
higher fees mean a higher expense ratio, so Class C shares pay correspondingly
lower dividends and may have a lower net asset value than Class A shares. Shares
obtained from dividend or distribution reinvestment are not subject to the CDSC.
No contingent deferred sales charge will be imposed on Class C shares
purchased by institutional investors, and through employee benefit and savings
plans eligible for the exemption from front-end sales charges described under
"Class A Shares-Front End Sales Charge Alternative", above. Broker-dealers and
other financial intermediaries whose clients have purchased Class C shares may
receive a trailing commission equal to .75 of 1% of the average daily value of
such shares on an annual basis held by their clients more than one year from the
date of purchase. The payment of trailing commissions will commence immediately
with respect to shares eligible for exemption from the contingent deferred sales
charge normally applicable to Class C shares.
With respect to Class B Shares and Class C Shares, no CDSC will be
imposed on: (1) the portion of redemption proceeds attributable to increases in
the value of the account due to increases in the net asset value per Share, (2)
Shares acquired through reinvestment of dividends and capital gains, (3) Shares
held for more than seven years (in the case of Class B Shares) or one year (in
the case of Class C Shares) after the end of the calendar month of acquisition,
(4) accounts following the death or disability of a shareholder, or (5) minimum
required distributions to a shareholder over the age of 70 1/2 from an IRA or
other retirement plan.
How the Funds Value Their Shares. The net asset value of each Class of shares of
a Fund is calculated by dividing the value of the amount of the Fund's net
assets attributable to that Class by the number of outstanding shares of that
Class. Shares are valued each day the New York Stock Exchange (the "Exchange")
is open as of the close of regular trading (currently 4:00 p.m. Eastern time).
The securities in a Fund are valued at their current market value determined on
the basis of market quotations or, if such quotations are not readily available,
such other methods as the Trustees believe would accurately reflect fair value.
Non-dollar denominated securities will be valued as of the close of the Exchange
at the closing price of such securities in their principal trading market.
General. The decision as to which Class of shares is more beneficial to you
depends on the amount of your investment and the length of time you will hold
it. If you are making a large investment, thus qualifying for a reduced sales
charge, you might consider Class A shares. If you are making a smaller
investment, you might consider Class B shares since 100% of your purchase is
invested immediately and since such shares will convert to Class A shares, which
incur lower ongoing distribution and/or shareholder service fees, after seven
years. If you are unsure of the time period of your investment, you might
consider Class C shares since there are no initial sales charges and, although
there is no conversion feature, the CDSC only applies to redemptions made during
the first year. Consult your financial intermediary for further information. The
compensation received by dealers and agents may differ depending on whether they
sell Class A, Class B or Class C shares. There is no size limit on purchases of
Class A shares.
<PAGE>
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 the Fund's investment
adviser incurs. If such investor is an existing shareholder, a Fund may redeem
shares from an investor's account to reimburse the Fund or its investment
adviser for any loss. In addition, such investors may be prohibited or
restricted from making further purchases in any of the Evergreen mutual funds.
HOW TO REDEEM SHARES
You may "redeem", i.e., sell your shares in a Fund to the Fund on any
day the Exchange is open, either directly or through your financial
intermediary. The price you will receive is the net asset value (less any
applicable CDSC for Class B or Class C shares) next calculated after the Fund
receives your request in proper form. Proceeds generally will be sent to you
within seven days. However, for shares recently purchased by check, a Fund will
not send proceeds until it is reasonably satisfied that the check has been
collected (which may take up to 10 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. Certain
financial intermediaries may require that you give instructions earlier than
4:00 p.m.
Redeeming Shares Directly by Mail or Telephone. Send a signed letter of
instruction or stock power form to State Street Bank and Trust Company ("State
Street") which is the registrar, transfer agent and dividend-disbursing agent
for each Fund. Stock power forms are available from your financial intermediary,
State Street, and many commercial banks. Additional documentation is required
for the sale of shares by corporations, financial intermediaries, fiduciaries
and surviving joint owners. Signature guarantees are required for all redemption
requests for shares with a value of more than $10,000 or where the redemption
proceeds are to be mailed to an address other than that shown in the account
registration. A signature guarantee must be provided by a bank or trust company
(not a Notary Public), a member firm of a domestic stock exchange or by other
financial institutions whose guarantees are acceptable to State Street.
Shareholders may withdraw amounts of $1,000 or more from their accounts
by calling the phone number on the front page of this Prospectus between the
hours of 8:00 a.m. and 5:30 p.m. (Eastern time) each business day (i.e., any
weekday exclusive of days on which the Exchange or State Street's offices are
closed). The Exchange is closed on New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
Redemption requests made after 4:00 p.m. (Eastern time) will be processed using
the net asset value determined on the next business day. Such redemption
requests must include the shareholder's account name, as registered with a Fund,
and the account number. During periods of drastic economic or market changes,
shareholders may experience difficulty in effecting telephone redemptions.
Shareholders who are unable to reach a Fund by telephone should follow the
procedures outlined above for redemption by mail.
The telephone redemption service is not made available to shareholders
automatically. Shareholders wishing to use the telephone redemption service must
indicate this on the Share Purchase Application and choose how the redemption
proceeds are to be paid. Redemption proceeds will either (i) be mailed by check
to the shareholder at the address in which the account is registered or (ii) be
wired to an account with the same registration as the shareholder's account in a
Fund at a designated commercial bank. State Street currently deducts a $5 wire
charge from all redemption proceeds wired. This charge is subject to change
without notice. A shareholder who decides later to use this service, or to
change instructions already given, should fill out a Shareholder Services Form
and send it to State Street Bank and Trust Company, P.O. Box 9021, Boston,
Massachusetts 02205-9827, with such shareholder's signature guaranteed by a bank
or trust company (not a Notary Public), a member firm of a domestic stock
exchange or by other financial institutions whose guarantees are acceptable to
State Street. Shareholders should allow approximately ten days for such form to
be processed. The Funds will employ reasonable procedures to verify that
telephone requests are genuine. These procedures include requiring some form of
personal identification prior to acting upon instructions and tape recording of
conversations. If 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 redemption 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
sixty days' written notice to increase the account value before the account is
closed. The Funds have elected to be governed by Rule 18f-1 under the 1940 Act
pursuant to which each Fund is obligated to redeem shares solely in cash, up to
the lesser of $250,000 or 1% of a Fund's total net assets during any ninety day
period for any one shareholder. See the Statement of Additional Information for
further details.
EXCHANGE PRIVILEGE
How To Exchange Shares. You may exchange some or all of your shares for shares
of the same Class in the other Evergreen mutual funds through your financial
intermediary, or by telephone or mail as described below. An exchange which
represents an initial investment in another Evergreen mutual fund must amount to
at least $1,000. Once an exchange request has been telephoned or mailed, it is
irrevocable and may not be modified or canceled. Exchanges will be made on the
basis of the relative net asset 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 mutual 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 mutual
funds. If you redeem shares, the CDSC applicable to the Class B or Class C
shares of the Evergreen mutual fund originally purchased for cash is applied.
Also, Class B shares will continue to age following an exchange for purposes of
conversion to Class A shares and determining the amount of the applicable CDSC.
Exchanges Through Your Financial Intermediary. A Fund must receive exchange
instructions from your financial intermediary before 4:00 p.m. Eastern time for
you to receive that day's net asset value. Your financial intermediary is
responsible for furnishing all necessary documentation to a Fund and may charge
you for this service.
Exchanges by Telephone and Mail. You may exchange shares with a value of $1,000
or more by telephone by calling the telephone number on the front of this
Prospectus. Exchange requests made after 4:00 p.m. (Eastern time) will be
processed using the net asset value determined on the next business day. During
periods of drastic economic or market changes, shareholders may experience
difficulty in effecting telephone exchanges. You should follow the procedures
outlined below for exchanges by mail if you are unable to reach State Street by
telephone. If you wish to use the telephone exchange service you should indicate
this on the Share Purchase Application. As noted above, each Fund will employ
reasonable procedures to confirm that instructions for the redemption or
exchange of shares communicated by telephone are genuine. A telephone exchange
may be refused by a Fund or State Street if it is believed advisable to do so.
Procedures for exchanging Fund shares by telephone may be modified or terminated
at any time. Written requests for exchanges should follow the same procedures
outlined for written redemption requests in the section entitled "How to Redeem
Shares", however, no signature guarantee is required.
SHAREHOLDER SERVICES
The Funds offer the following shareholder services. For more
information about these services or your account, contact your financial
intermediary, EFD or the toll-free number on the front page of this Prospectus.
Some services are described in more detail in the Share Purchase Application.
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 mutual funds available to their participants. Investments made
by such employee benefit plans may be exempt from front-end sales charges if
they meet the criteria set forth under "Class A Shares-Front End Sales Charge
Alternative". Each Fund's investment adviser may provide compensation to
organizations providing administrative and recordkeeping services to plans which
make shares of the Evergreen mutual funds available to their participants.
Automatic Reinvestment Plan. For the convenience of investors, all dividends and
distributions are automatically reinvested in full and fractional shares of the
Fund at the net asset value per share at the close of business on the record
date, unless otherwise requested by a shareholder in writing. If the transfer
agent does not receive a written request for subsequent dividends and/or
distributions to be paid in cash at least three full business days prior to a
given record date, the dividends and/or distributions to be paid to a
shareholder will be reinvested. If you elect to receive dividends and
distributions in cash and the U.S. Postal Service cannot deliver the checks, or
if the checks remain uncashed for six months, the checks will be reinvested into
your account at the then current net asset value.
Tax Sheltered Retirement Plans. You may open a pension and profit sharing
account in any Evergreen mutual fund (except those funds having an objective of
providing tax free income), including: (i) Individual Retirement Accounts
("IRAs") and Rollover IRAs; (ii) Simplified Employee Pension (SEP) for sole
proprietors, partnerships and corporations; and (iii) Profit-Sharing and Money
Purchase Pension Plans for corporations and their employees.
EFFECT OF BANKING LAWS
The Glass-Steagall Act and other banking laws and regulations presently
prohibit member banks of the Federal Reserve System ("Member Banks") or their
non-bank affiliates from sponsoring, organizing, controlling, or distributing
the shares of registered open-end investment companies such as the Funds. Such
laws and regulations also prohibit banks from issuing, underwriting or
distributing securities in general. However, under the Glass-Steagall Act and
such other laws and regulations, a Member Bank or an affiliate thereof may act
as investment adviser, transfer agent or custodian to a registered open-end
investment company and may also act as agent in connection with the purchase of
shares of such an investment company upon the order of their customer. Evergreen
Asset, since it is a subsidiary of FUNB, and CMG are subject to and in
compliance with the aforementioned laws and regulations.
Changes to applicable laws and regulations or future judicial or
administrative decisions could result in CMG or Evergreen Asset being prevented
from continuing to perform the services required under the investment advisory
contract or from acting as agent in connection with the purchase of shares of a
Fund by its customers. If CMG or Evergreen Asset were prevented from continuing
to provide the services called for under the investment advisory agreement, it
is expected that the Trustees would identify, and call upon each Fund's
shareholders to approve, a new investment adviser. If this were to occur, it is
not anticipated that the shareholders of any Fund would suffer any adverse
financial consequences.
- -------------------------------------------------------------------------------
OTHER INFORMATION
- -------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAXES
It is the policy of each Fund to distribute to shareholders its
investment company taxable and tax-exempt income, if any, quarterly and any net
realized capital gains annually or more frequently as required as a condition of
continued qualification as a regulated investment company by the Code. Dividends
and distributions generally are taxable in the year in which they are paid,
except any dividends paid in January that were declared in the previous calendar
quarter may be treated as paid in December of the previous year. Income
dividends and capital gain distributions are automatically reinvested in
additional shares of the Fund making the distribution at the net asset value per
share at the close of business on the record date, unless the shareholder has
made a written request for payment in cash.
Each Fund has qualified and intends to continue to qualify to be
treated as a regulated investment company under the Code. While so qualified, it
is expected that each Fund will not be required to pay any Federal income 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 whether such dividends and distributions are made in
cash or in additional shares. Questions on how any distributions will be taxed
to the investor should be directed to the investor's own tax adviser.
Under current law, the highest Federal income tax rate applicable to
net long-term capital gains realized by individuals is 28%. The rate applicable
to corporations is 35%. Certain income from a Fund may qualify for a corporate
dividends-received deduction of 70%. Following the end of each calendar year,
every shareholder of the Fund will be sent applicable tax information and
information regarding the dividends and capital gain distributions made during
the calendar year.
A Fund may be subject to foreign withholding taxes which would reduce
the yield on its investments. Tax treaties between certain countries and the
United States may reduce or eliminate such taxes. Shareholders of a Fund who are
subject to United States Federal income tax may be entitled, subject to certain
rules and limitations, to claim a Federal income tax credit or deduction for
foreign income taxes paid by a Fund. See the Statement of Additional Information
for additional details. A Fund's transactions in options, futures and forward
contracts may be subject to special tax rules. These rules can affect the
amount, timing and characteristics of distributions to shareholders.
A Fund may be subject to foreign withholding taxes which would reduce
the yield on its investments. Tax treaties between certain countries and the
United States may reduce or eliminate such taxes. Shareholders of a Fund who are
subject to United States Federal income tax may be entitled, subject to certain
rules and limitations, to claim a Federal income tax credit or deduction for
foreign income taxes paid by a Fund. See the Statement of Additional Information
for additional details. A Fund's transactions in options, futures and forward
contracts may be subject to special tax rules. These rules can affect the
amount, timing and characteristics of distributions to shareholders.
If more than 50% of the value of a Fund's assets at the end of the tax
year is represented by stock or securities of foreign corporations, the Fund
intends to qualify for certain Code stipulations that would allow shareholders
to claim a foreign tax credit or deduction on their U.S. income tax returns. The
Code may limit a shareholder's ability to claim a foreign tax credit.
Furthermore, shareholders who elect to deduct their portion of a Fund's foreign
taxes rather than take the foreign tax credit must itemize deductions on their
income tax returns.
Each Fund is required by Federal law to withhold 31% of reportable
payments (which may include dividends, capital gain distributions and
redemptions) paid to certain shareholders. In order to avoid this backup
withholding requirement, you must certify on the Share Purchase Application, or
on a separate form supplied by State Street, that your social security or
taxpayer identification number is correct and that you are not currently subject
to backup withholding or are exempt from backup withholding. A shareholder who
acquires Class A shares of a Fund and sells or otherwise disposes of such shares
within 90 days of acquisition may not be allowed to include certain sales
charges incurred in acquiring such shares for purposes of calculating gain and
loss realized upon a sale or exchange of shares of the Fund.
The foregoing discussion of Federal income tax consequences is based on
tax laws and regulations in effect on the date of this Prospectus, and is
subject to change by legislative or administrative action. As the foregoing
discussion is for general information only, you should also review the
discussion of "Additional Tax Information" contained in the Statement of
Additional Information. In addition, you should consult your own tax adviser as
to the tax consequences of investments in the Funds, including the application
of state and local taxes which may be different from Federal income tax
consequences described above.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
A discussion of the performance of Evergreen Global Real Estate Equity
Fund for its most recent fiscal year is set forth below. A similar discussion
relating to Evergreen International Equity Fund and Evergreen Emerging Markets
Growth Fund is contained in the annual report of each Fund for the fiscal year
ended December 31, 1994.
Evergreen Global Real Estate Equity Fund. For the nine month period ending
September 30, 1994, the Evergreen Global Real Estate Equity Fund was
significantly impacted by a combination of rising interest rates worldwide
leading to a performance decline of -6.4%. The relative indices performance was
similar, as the Morgan Stanley Global Real Estate Sub Index fell -9.9% and the
Wall Street Journal/Dow Jones World Sub Index of real estate stocks lost -11.5%.
The rise in interest rates in Europe was significantly higher than it was in the
U.S., despite little prospect of imminent inflation due to continued slow
economic recovery. We believe that both property and stock markets viewed rising
rates as a brake on economic growth. This resulted in weak performance for
European property shares. Japan also remained a relatively dull performer after
the first quarter as little evidence of economic growth was visible. Only
Southeast Asia and Latin America provided the Fund with significant
opportunities for capital appreciation during this period.
[CHART]
<PAGE>
GENERAL INFORMATION
Portfolio Transactions. Consistent with the Rules of Fair Practice of the
National Association of Securities Dealers, Inc., and subject to seeking best
price and execution, a Fund may consider sales of its shares as a factor in the
selection of dealers to enter into portfolio transactions with the Fund.
Organization. The Evergreen Global Real Estate Equity Fund is a separate series
of the Evergreen Real Estate Equity Trust, a Massachusetts business trust
organized in 1988. Evergreen International Equity Fund and Evergreen Emerging
Markets Growth Fund are separate investment series of Evergreen Investment Trust
(formerly First Union Funds), which is a Massachusetts business trust organized
in 1984. The Funds do not intend to hold annual shareholder meetings;
shareholder meetings will be held only when required by applicable law.
Shareholders have available certain procedures for the removal of Trustees.
A shareholder in each class of a Fund will be entitled to his or her
share of all dividends and distributions from a Fund's assets, based upon the
relative value of such shares to those of other Classes of the Fund, and, upon
redeeming shares, will receive the then current net asset value of the Class of
shares of the Fund represented by the redeemed shares less any applicable CDSC.
Each Trust named above is empowered to establish, without shareholder approval,
additional investment series, which may have different investment objectives,
and additional classes of shares for any existing or future series. If an
additional series or class were established in a Fund, each share of the series
or class would normally be entitled to one vote for all purposes. Generally,
shares of each series and class would vote together as a single class on
matters, such as the election of Trustees, that affect each series and class in
substantially the same manner. Class A, B, C and Y shares have identical voting,
dividend, liquidation and other rights, except that each class bears, to the
extent applicable, its own distribution, shareholder service and transfer agency
expenses as well as any other expenses applicable only to a specific class. Each
class of shares votes separately with respect to Rule 12b-1 distribution plans
and other matters for which separate class voting is appropriate under
applicable law. Shares are entitled to dividends as determined by the Trustees
and, in liquidation of a Fund, are entitled to receive the net assets of the
Fund.
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 237 Park Avenue, New York, New York 10017, is the
principal underwriter of the Funds. Furman Selz Incorporated, also acts as
sub-administrator to Evergreen International Equity Fund and Evergreen Emerging
Markets Growth Fund and which provides certain sub-administrative services to
Evergreen Asset in connection with its role as investment adviser Evergreen
Global Real Estate Equity Fund, including providing personnel to serve as
officers of the Funds.
Other Classes of Shares. Each Fund currently offers four classes of shares,
Class A, Class B, Class C and Class Y, and may in the future offer additional
classes. Class Y shares are not offered by this Prospectus and are only
available to (i) all shareholders of record in one or more of the Funds for
which Evergreen Asset serves as investment adviser as of December 30, 1994, (ii)
certain institutional investors and (iii) investment advisory clients of CMG,
Evergreen Asset or their affiliates. The dividends payable with respect to Class
A, Class B and Class C shares will be less than those payable with respect to
Class Y shares due to the distribution and distribution and shareholder
servicing related expenses borne by Class A, Class B and Class C shares and the
fact that such expenses are not borne by Class Y shares.
Performance Information. From time to time, the Funds may quote their "total
return" or "yield" for a specified period in advertisements, reports or other
communications to shareholders, Total return and yield are computed separately
for Class A, Class B and Class C shares. A Fund's total return for each such
period is computed by finding, through the use of a formula prescribed by the
Securities and Exchange Commission ("SEC"), the average annual compounded rate
of return over the period that would equate an assumed initial amount invested
to the value of the investment at the end of the period. For purposes of
computing total return, dividends and capital gains distributions paid on shares
of a Fund are assumed to have been reinvested when paid and the maximum sales
charges applicable to purchases of a Fund's shares are assumed to have been
paid. Yield is a way of showing the rate of income the Fund earns on its
investments as a percentage of the Fund's share price. The Fund's yield is
calculated according to accounting methods that are standardized by the SEC for
all stock and bond funds. Because yield accounting methods differ from the
method used for other accounting purposes, the Fund's yield may not equal its
distribution rate, the income paid to your account or the net investment income
reported in the Fund's financial statements. To calculate yield, the Fund takes
the interest income it earned from its portfolio of investments (as defined by
the SEC formula) for a 30-day period (net of expenses), divides it by the
average number of shares entitled to receive dividends, and expresses the result
as an annualized percentage rate based on the Fund's share price at the end of
the 30-day period. This yield does not reflect gains or losses from selling
securities
Performance data for each class of shares will be included in any
advertisement or sales literature using performance data of a Fund. These
advertisements may quote performance rankings or ratings of a Fund by financial
publications or independent organizations such as Lipper Analytical Services,
Inc. and Morningstar, Inc. or compare a Fund's performance to various indices.
The Fund may also advertise in items of sales literature an "actual distribution
rate" which is computed by dividing the total ordinary income distributed (which
may include the excess of short-term capital gains over losses) to shareholders
for the latest twelve month period by the maximum public offering price per
share on the last day of the period. Investors should be aware that past
performance may not be reflective of future results.
Liability Under Massachusetts Law. Under Massachusetts law, Trustees and
shareholders of a business trust may, in certain circumstances, be held
personally liable for its obligations. The Declarations of Trust under which the
Funds operate provide that no Trustee or shareholder will be personally liable
for the obligations of the Trust and that every written contract made by the
Trust contain a provision to that effect. If any Trustee or shareholder were
required to pay any liability of the Trust, that person would be entitled to
reimbursement from the general assets of the Trust.
Additional Information. This Prospectus and the Statement of Additional
Information, which has been incorporated by reference herein, do not contain all
the information set forth in the Registration Statements filed by the Trusts
with the 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>
INVESTMENT ADVISER
Capital Management Group of First Union National Bank, 201 South College
Street, Charlotte, North Carolina 28288
EVERGREEN EMERGING MARKETS GROWTH FUND, EVERGREEN INTERNATIONAL EQUITY
FUND
Evergreen Asset Management Corp., 2500 Westchester Avenue, Purchase, New York
10577
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND
CUSTODIAN & TRANSFER AGENT
State Street Bank & Trust Company, Box 9021, Boston, Massachusetts 02205-9827
LEGAL COUNSEL
Sullivan & Worcester, 1025 Connecticut Avenue, N.W., Washington, D.C. 20036
INDEPENDENT ACCOUNTANTS
KPMG Peat Marwick LLP, One Mellon Bank Center, Pittsburgh, Pennsylvania 15219
EVERGREEN EMERGING MARKETS GROWTH FUND, EVERGREEN INTERNATIONAL EQUITY
FUND
Price Waterhouse LLP, 1177 Avenue of the Americas, New York, New York 10036
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND
DISTRIBUTOR
Evergreen Funds Distributor, Inc., 237 Park Avenue, New York, New York 10017
536113
<PAGE>
PROSPECTUS July 7, 1995
EVERGREEN(SM mark) INTERNATIONAL GROWTH FUNDS (Evergreen Logo appears here)
EVERGREEN EMERGING MARKETS GROWTH FUND
EVERGREEN INTERNATIONAL EQUITY FUND
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND
CLASS Y SHARES
The Evergreen International Growth Funds (the "Funds") are
designed to provide investors with a selection of investment alternatives
which seek to provide capital growth and diversification. This Prospectus
provides information regarding the Class Y shares offered by the Funds.
Each Fund is, or is a series of, an open-end, diversified, management
investment company. This Prospectus sets forth concise information about
the Funds that a prospective investor should know before investing. The
address of the Funds is 2500 Westchester Avenue, Purchase, New York 10577.
A "Statement of Additional Information" for the Funds dated July
7, 1995 has been filed with the Securities and Exchange Commission and is
incorporated by reference herein. The Statement of Additional Information
provides information regarding certain matters discussed in this Prospectus
and other matters which may be of interest to investors, and may be
obtained without charge by calling the Funds at (800) 235-0064. There can
be no assurance that the investment objective of any Fund will be achieved.
Investors are advised to read this Prospectus carefully.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF
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
EVERGREEN(SM mark) is a Service Mark of Evergreen Asset
Management Corp. Copyright 1995, Evergreen Asset Management Corp.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
OVERVIEW OF THE FUNDS
EXPENSE INFORMATION
FINANCIAL HIGHLIGHTS
DESCRIPTION OF THE FUNDS
Investment Objectives and Policies
Investment Practices and Restrictions
MANAGEMENT OF THE FUNDS
Investment Adviser
Sub-Advisers
Distribution Plans and Agreements
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
</TABLE>
OVERVIEW OF THE FUNDS
The following summary is qualified in its entirety by the more detailed
information contained elsewhere in this Prospectus. See "Description of the
Funds" and "Management of the Funds".
The Investment Adviser to EVERGREEN GLOBAL REAL ESTATE EQUITY FUND is
Evergreen Asset Management Corp. ("Evergreen Asset") which, with its
predecessors, has served as an 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 EMERGING MARKETS GROWTH FUND and EVERGREEN INTERNATIONAL EQUITY FUND.
EVERGREEN EMERGING MARKETS GROWTH FUND (formerly First Union Emerging
Markets Growth Portfolio) seeks to provide long-term capital appreciation. The
EMERGING MARKETS GROWTH FUND invests in equity securities of issuers located in
countries with emerging markets.
EVERGREEN INTERNATIONAL EQUITY FUND (formerly First Union International
Equity Portfolio) seeks to provide long-term capital appreciation. The EVERGREEN
INTERNATIONAL EQUITY FUND invests in equity securities of non-U.S. issuers.
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND seeks long-term capital growth.
Current income is a secondary objective. It invests primarily in equity
securities of United States and non-United States companies which are
principally engaged in the real estate industry or which own significant real
estate assets. It will not purchase direct interests in real estate.
THERE IS NO ASSURANCE THAT THE INVESTMENT OBJECTIVE OF ANY FUND WILL BE
ACHIEVED.
2
<PAGE>
EXPENSE INFORMATION
The table set forth below summarizes the shareholder transaction costs
associated with an investment in the Class Y Shares of the Fund. For further
information see "Purchase and Redemption of Shares".
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES
<S> <C>
Maximum Sales Charge Imposed on Purchases None
Sales Charge on Dividend Reinvestments None
Contingent Deferred Sales Charge None
Redemption Fee None
Exchange Fee (only applies after 4 exchanges per year) $5.00
</TABLE>
The following table shows for the Fund the estimated annual operating
expenses (as a percentage of average net assets) attributable to Class Y Shares,
together with examples of the cumulative effect of such expenses on a
hypothetical $1,000 investment for the periods specified assuming (i) a 5%
annual return and (ii) redemption at the end of each period.
EVERGREEN EMERGING MARKETS GROWTH FUND
<TABLE>
<CAPTION>
ANNUAL OPERATING
EXPENSES* EXAMPLE
<S> <C> <C> <C>
Advisory Fees 1.50%
After 1 Year $ 22
Administrative Fees .06%
After 3 Years $ 67
12b-1 Fees --
After 5 Years $ 115
Other Expenses .59%
After 10 Years $ 248
Total 2.15%
</TABLE>
EVERGREEN INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
ANNUAL OPERATING
EXPENSES* EXAMPLE
<S> <C> <C> <C>
Advisory Fees .82%
After 1 Year $ 12
Administrative Fees .06%
After 3 Years $ 37
12b-1 Fees --
After 5 Years $ 64
Other Expenses .29%
After 10 Years $ 142
Total 1.17%
</TABLE>
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND
<TABLE>
<CAPTION>
ANNUAL OPERATING
EXPENSES* EXAMPLE
<S> <C> <C> <C>
Advisory Fees 1.00%
After 1 Year $ 15
12b-1 Fees --
After 3 Years $ 46
Other Expenses .46%
After 5 Years $ 80
After 10 Years $ 175
Total 1.46%
</TABLE>
*The estimated annual operating expenses and examples do not reflect fee waivers
and expense reimbursements for the most recent fiscal period. Actual expenses
for Class Y Shares net of fee waivers and expense reimbursements for the fiscal
periods ended December 31, 1994 or September 30, 1994, as applicable, were as
follows:
<TABLE>
<CAPTION>
Evergreen Emerging Markets Growth Fund 1.53%
<S> <C>
Evergreen International Equity Fund 1.06%
Evergreen Global Real Estate Equity Fund 1.46%
</TABLE>
3
<PAGE>
From time to time, each Fund's investment adviser may, at its discretion,
reduce or waive its fees or reimburse the Funds for certain of their expenses in
order to reduce their expense ratios. Each Fund's investment adviser may cease
these waivers and reimbursements at any time.
The purpose of the foregoing table is to assist an investor in
understanding the various costs and expenses that an investor in each Class of
Shares of the Funds will bear directly or indirectly. The amounts set forth both
in the tables and in the examples are estimated amounts based on the experience
of each Fund for the most recent fiscal period. Such expenses have been restated
to reflect current fee arrangements. THE EXAMPLES SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES OR ANNUAL RETURN. ACTUAL EXPENSES AND
ANNUAL RETURN MAY BE GREATER OR LESS THAN THOSE SHOWN. For a more complete
description of the various costs and expenses borne by the Funds see "Management
of the Funds". As a result of asset-based sales charges, long-term shareholders
may pay more than the economic equivalent of the maximum front-end sales charges
permitted under the rules of the National Association of Securities Dealers,
Inc.
4
<PAGE>
FINANCIAL HIGHLIGHTS
The tables on the following pages present, for each Fund, financial
highlights for a share outstanding throughout each period indicated. The
information in the tables for the five most recent fiscal years or the life of
the Fund if shorter for EVERGREEN EMERGING MARKETS GROWTH FUND and EVERGREEN
INTERNATIONAL EQUITY FUND has been audited by KPMG Peat Marwick LLP, each Fund's
independent auditors, for EVERGREEN GLOBAL REAL ESTATE EQUITY FUND has, except
as noted otherwise, been audited by Price Waterhouse LLP, the Fund's independent
auditors. A report of KPMG Peat Marwick LLP or Price Waterhouse LLP, as the case
may be, on the audited information with respect to each Fund is incorporated by
reference in the Fund's Statement of Additional Information. The following
information for each Fund should be read in conjuction with the financial
statements and related notes which are incorporated by reference in the Fund's
Statement of Additional Information.
Further information about a Fund's performance is contained in the Fund's
annual report to shareholders, which may be obtained without charge.
EVERGREEN EMERGING MARKETS GROWTH FUND
<TABLE>
<CAPTION>
CLASS B CLASS C CLASS Y
SHARES SHARES SHARES
CLASS A
SHARES
SEPTEMBER 6, 1994*
THROUGH DECEMBER 31, 1994
<S> <C> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning of period................................................. $10.00 $10.00 $10.00 $10.00
Income (loss) from investment operations:
Net investment income (loss)......................................................... -- (.02 ) (.02 ) .01
Net realized and unrealized loss on investments and foreign currency transactions.... (1.83 ) (1.82 ) (1.82 ) (1.84 )
Total from investment operations................................................... (1.83 ) (1.84 ) (1.84 ) (1.83 )
Net asset value, end of period....................................................... $8.17 $8.16 $8.16 $8.17
TOTAL RETURN+........................................................................ (18.3% ) (18.4% ) (18.4% ) (18.3% )
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's omitted)............................................ $867 $1,589 $89 $5,878
Ratios to average net assets:
Expenses (a)....................................................................... 1.78% ++ 2.53% ++ 2.53% ++ 1.53% ++
Net investment income (loss)(a).................................................... (.12% )++ (.84% )++ (.82% )++ .43% ++
Portfolio turnover rate.............................................................. 17% 17% 17% 17%
</TABLE>
* Commencement of operations.
+ Total return is calculated on net asset value per share for the period
indicated and is not annualized. Initial sales charge or contingent deferred
sales charge is not reflected.
++ Annualized.
(a) Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were assumed or waived by the investment adviser, the
annualized ratios of expenses and net investment income (loss) to average
net assets, exclusive of any applicable state expense limitations, for the
period from September 6, 1994 through December 31, 1994 would have been the
following:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS Y
SHARES SHARES SHARES SHARES
<S> <C> <C> <C> <C>
Expenses..................................................... 3.96% 4.71% 4.71% 3.71%
Net investment income (loss)................................. (2.30%) (3.02%) (3.00%) (1.75%)
</TABLE>
5
<PAGE>
EVERGREEN INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
SEPTEMBER 2, 1994*
THROUGH DECEMBER 31, 1994
<S> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning of period............................................... $10.00 $10.00 $10.00
Income (loss) from investment operations:
Net investment income.............................................................. .02 -- .03
Net realized and unrealized loss on investments.................................... (.52) (.50) (.54)
Total from investment operations................................................. (.50) (.50) (.51)
Less distributions to shareholders from:
Net investment income.............................................................. -- -- --
Net asset value, end of period..................................................... $9.50 $9.50 $9.49
TOTAL RETURN+...................................................................... (5.1%) (5.2%) (5.2%)
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's omitted).......................................... $2,545 $5,602 $163
Ratios to average net assets:
Expenses (a)..................................................................... 1.26%++ 2.02%++ 2.01%++
Net investment income (a)........................................................ .91%++ .10%++ .85%++
Portfolio turnover rate............................................................ 1% 1% 1%
<CAPTION>
CLASS Y
SHARES
<S> <C>
PER SHARE DATA
Net asset value, beginning of period............................................... $10.00
Income (loss) from investment operations:
Net investment income.............................................................. .02
Net realized and unrealized loss on investments.................................... (.51 )
Total from investment operations................................................. (.49 )
Less distributions to shareholders from:
Net investment income.............................................................. (.01 )
Net asset value, end of period..................................................... $9.50
TOTAL RETURN+...................................................................... (5.0% )
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's omitted).......................................... $23,830
Ratios to average net assets:
Expenses (a)..................................................................... 1.06% ++
Net investment income (a)........................................................ 1.03% ++
Portfolio turnover rate............................................................ 1%
</TABLE>
* Commencement of operations.
+ Total return is calculated on net asset value per share for the period
indicated and is not annualized. Initial sales charge or contingent deferred
sales charge is not reflected.
++ Annualized.
(a) Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were assumed or waived by the investment adviser, the
annualized ratios of expenses and net investment income (loss) to average
net assets, exclusive of any applicable state expense limitations, for the
period from September 2, 1994 through December 31, 1994 would have been the
following:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS Y
SHARES SHARES SHARES SHARES
<S> <C> <C> <C> <C>
Expenses..................................................... 2.09% 2.85% 2.84% 1.89%
Net investment income (loss)................................. .08% (.73% ) .02% .20%
</TABLE>
6
<PAGE>
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND -- CLASS Y SHARES
<TABLE>
<CAPTION>
SIX MONTHS NINE MONTHS FEBRUARY 1, 1989*
ENDED ENDED THROUGH
MARCH 31, 1995 SEPTEMBER 30, YEAR ENDED DECEMBER 31, DECEMBER 31,
(UNAUDITED) 1994# 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning
of period................ $13.81 $14.75 $9.86 $9.16 $8.10 $10.03 $10.00
Income (loss) from
investment operations:
Net investment income
(loss)................... .01 .07 -- (.01) (.02) (.03) .17
Net realized and unrealized
gain (loss) on
investments.............. (2.48) (1.01) 5.07 .94 1.08 (1.90) .03
Total from investment
operations........... (2.47) (.94) 5.07 .93 1.06 (1.93) .20
Less distributions to
shareholders from:
Net investment income...... (.10) -- -- -- -- -- (.17)
Net realized gains......... (.52) -- (.18) (.23) -- -- --
Total distributions.... (.62) -- (.18) (.23) -- -- (.17)
Net asset value, end of
period................... $10.72 $13.81 $14.75 $9.86 $9.16 $8.10 $10.03
TOTAL RETURN+.............. (18.4%) (6.4%) 51.4% 10.2% 13.1% (19.2%) 2.0%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted).......... $74,001 $132,294 $146,173 $8,618 $7,557 $6,004 $7,336
Ratios to average net
assets:
Operating expenses....... 1.51%++ 1.46%++ 1.56%(a) 2.00%(a) 2.00%(a) 2.00%(a) 2.00%(a)++
Interest expense......... .08%++ .08%++ -- -- -- -- --
Net investment income
(loss)................. .39%++ .56%++ .03%(a) (.10%)(a) (.27%)(a) (.39%)(a) 2.23%(a)++
Portfolio turnover rate.... 17% 63% 88% 245% 207% 325% 151%
</TABLE>
# On September 21, 1994, the Fund changed its fiscal year end from December 31
to September 30.
* Commencement of operations.
+ Total return is calculated on net asset value per share and is not
annualized.
++ Annualized.
(a) Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were assumed or waived by the investment adviser, the
annualized ratios of expenses and net investment income (loss) to average
net assets, exclusive of any applicable state expense limitations, would
have been the following:
<TABLE>
<CAPTION>
FEBRUARY 1, 1989
THROUGH
YEAR ENDED DECEMBER 31, DECEMBER 31,
1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
Operating expenses............................. 1.64% 3.72% 3.76% 3.99% 3.17%
Net investment income (loss)................... (.05%) (1.82%) (2.02%) (2.38%) 1.06%
</TABLE>
7
<PAGE>
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND -- CLASS A, B AND C SHARES
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
FEBRUARY 10, 1995* FEBRUARY 8, 1995* FEBRUARY 9, 1995*
THROUGH THROUGH THROUGH
MARCH 31, 1995 MARCH 31, 1995 MARCH 31, 1995
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning of period.............................. $11.46 $ 11.44 $ 11.43
Income (loss) from investment operations:
Net investment income............................................. .02 .02 .01
Net realized and unrealized loss on investments................... (.76) (.75) (.73)
Total from investment operations.............................. (.74) (.73) (.72)
Net asset value, end of period.................................... $10.72 $ 10.71 $ 10.71
TOTAL RETURN+..................................................... (6.5%) (6.4%) (6.3%)
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's omitted)......................... $2,531 $ 3,362 $ 1,146
Ratios to average net assets:
Operating expenses (a).......................................... 1.51%++ 2.27%++ 2.31%++
Interest expense................................................ .02%++ .01%++ .01%++
Net investment income (a)....................................... 3.21%++ 1.53%++ .87%++
Portfolio turnover rate #......................................... 17% 17% 17%
</TABLE>
* Commencement of class operations.
+ Total return is calculated on net asset value per share for the period
indicated and is not annualized. Initial sales charge or contingent deferred
sales charge is not reflected.
++ Annualized. Due to the recent commencement of their offering, the ratios for
Class A, Class B and Class C shares are not necessarily comparable to that
of the Class Y shares, and are not necessarily indicative of future ratios.
# Portfolio turnover rate is calculated for the six months ended March 31,
1995.
(a) Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were assumed or waived by the investment adviser, the
annualized ratios of expenses and net investment income (loss) to average
net assets, exclusive of any applicable state expense limitations, would
have been the following:
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
FEBRUARY 10, 1995 FEBRUARY 8, 1995 FEBRUARY 9, 1995
THROUGH THROUGH THROUGH
MARCH 31, 1995 MARCH 31, 1995 MARCH 31, 1995
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
Operating expenses.......................... 2.73% 3.49% 3.49%
Net investment income (loss)................ 1.99% .31% (.31%)
</TABLE>
8
9
- -------------------------------------------------------------------------------
DESCRIPTION OF THE FUNDS
- -------------------------------------------------------------------------------
INVESTMENT OBJECTIVES AND POLICIES
Evergreen Emerging Markets Growth Fund
The objective of Evergreen Emerging Markets Growth Fund is long-term
capital appreciation. In seeking this objective, the Fund invests in equity
securities of issuers located in emerging markets. The Fund is suitable for
aggressive investors interested in the investment opportunities offered by
securities of issuers located in emerging or developing markets and the
resulting potential for growth opportunities resulting from political change,
economic deregulation and liberalized trade policies. The objective is
fundamental and may not be changed without shareholder approval.
The Fund seeks long-term capital appreciation. The Fund invests
primarily in a diversified portfolio of equity securities of issuers located in
countries with emerging markets. As a matter of policy, the Fund will invest at
least 65% of the value of its total assets in securities of emerging market
issuers.
A country will be considered to have an "emerging market" if it has
relatively low gross national product per capita compared to the world's major
economies and the potential for rapid economic growth. Countries with emerging
markets include those that have an emerging stock market (as defined by the
International Finance Corporation), those with low-to middle income economies
(according to the World Bank), and those listed in World Bank publications as
"developing." The Fund will normally invest in at least six different countries,
although it may invest all of its assets in a single country. At the present
time, the Fund has no intention of investing all of its assets in a single
country. The Fund focuses on equity securities, but may also invest in other
types of instruments, including debt securities. Marvin & Palmer Associates, the
Sub-Adviser to the Fund, will make investment decisions regarding equity
securities based on its analysis of returns, price momentum, business and
industry considerations, and management quality.
The Fund may employ certain additional investment strategies which are
discussed in "Investment Practices and Restrictions", below.
Evergreen International Equity Fund
The objective of Evergreen International Equity Fund is long-term
capital appreciation. The Fund invests primarily in equity securities of
non-U.S. issuers and is suitable for investors who want to pursue their
investment goals in markets outside the United States. The Fund provides
investors with a vehicle to pursue investment opportunities in countries outside
the U.S. whose securities markets may benefit from differing economic and
political cycles. The objective is fundamental and may not be changed without
shareholder approval.
The Fund invests primarily in foreign equity securities that Boston
International Advisers, Inc., the Sub-Adviser to the Fund, determines, through
both fundamental and technical analysis, to be undervalued compared to other
securities in their industries and countries. In most market conditions, the
stocks comprising the Fund's assets will exhibit traditional value
characteristics, such as higher than average dividend yields, lower than average
price to book value, and will include stocks of companies with unrecognized or
undervalued assets. As a matter of policy, the Fund will invest at least 65% of
the value of its total assets in equity securities of issuers located in at
least three countries outside of the United States.
The Fund will emphasize value stocks, primarily of companies which are
listed on one or more of thirty-two stock markets: twenty developed markets and
twelve emerging markets. While the current intention of the Fund is to invest in
32 stock markets, the Fund may invest in more or less, depending upon market
conditions as determined by the Sub-Adviser. The Fund will invest substantially
in industrialized companies throughout the world that comprise the Morgan
Stanley Capital International EAFE (Europe, Australia and the Far East) Index.
In addition, the Fund intends to invest up to 10% of its assets in emerging
country equity securities, as described above under "Evergreen Emerging Markets
Growth Fund."
The Fund may employ certain additional investment strategies which are
discussed in "Investment Practices and Restrictions", below.
<PAGE>
Evergreen Global Real Estate Equity Fund
The Evergreen Global Real Estate Equity Fund seeks to achieve its
investment objective of long-term capital growth through investment primarily in
equity securities of domestic and foreign companies which are principally
engaged in the real estate industry or which own significant real estate assets;
the Fund will not purchase direct interests in real estate. Current income will
be a secondary objective. Equity securities will include common stock, preferred
stock and securities convertible into common stock. The objective is fundamental
and may not be changed without shareholder approval.
The Fund will, under normal conditions, invest at least 65% of its
total assets in equity securities of domestic and foreign exchange or NASDAQ
listed companies which are principally engaged in the real estate industry. A
company is deemed to be "principally engaged" in the real estate industry if at
least 50% of its assets (marked to market), gross income or net profits are
attributable to ownership, construction, management or sale of residential,
commercial or industrial real estate. Real estate industry companies may include
among others: equity real estate investment trusts, which pool investors' funds
for investment primarily in commercial real estate properties; mortgage real
estate investment trusts, which invest pooled funds in real estate related
loans; brokers or real estate developers; and companies with substantial real
estate holdings, such as paper and lumber producers and hotel and entertainment
companies. The Fund will only invest in real estate equity trusts and limited
partnerships which are traded on major exchanges. As a matter of fundamental
policy, the Fund will also invest at least 65% of its total assets in the equity
securities of companies of at least three countries, including the United
States, except when abnormal market or financial conditions warrant the
assumption of a temporary defensive position. See "Investment Practices and
Restrictions" and "Special Risk Considerations".
The remainder of the Fund's investments may be made in equity
securities of issuers whose products and services are related to the real estate
industry, such as manufacturers and distributors of building supplies and
financial institutions which issue or service mortgages. The Fund may invest
more than 25% of its total assets in any one sector of the real estate or real
estate related industries. In addition, the Fund may, from time to time, invest
in the securities of companies unrelated to the real estate industry whose real
estate assets are substantial relative to the price of the companies'
securities.
The Fund pursues a flexible strategy of investing in a diversified
portfolio of securities of companies throughout the world. The Fund's investment
adviser anticipates that the Fund will give particular consideration to
investments in the United Kingdom, Western Europe, Australia, Canada, the Far
East (Japan, Hong Kong, Singapore, Malaysia and Thailand) and the United States.
The percentage of the Fund's assets invested in particular geographic regions
will shift from time to time in accordance with the judgment of the Fund's
investment adviser. Generally, a substantial portion of the assets of the Fund
will be denominated or traded in foreign currencies.
Investments may also be made in securities of issuers unrelated to the
real estate industry believed by the Fund's investment adviser to be undervalued
and to have capital appreciation potential. Also, consistent with the secondary
objective of current income, investments may also be made in nonconvertible debt
securities of such companies. The debt securities purchased (except for those
described below) will be of investment grade or better quality (e.g., rated no
lower than A by Moody's Investors Service ("Moody's") or Standard & Poor's
Ratings Group ("S&P")or if not so rated, believed by the Fund's investment
adviser to be of comparable quality). However, up to 10% of total assets may be
invested in unrated debt securities of issuers secured by real estate assets
where the Fund's investment adviser believes that the securities are trading at
a discount and the underlying collateral will ensure repayment of principal. In
such situations, it is conceivable that the Fund could, in the event of default,
end up holding the underlying real estate directly.
It is anticipated that the annual portfolio turnover rate for the Fund
may exceed 100%. The Fund may employ certain additional investment strategies
which are discussed in "Investment Practices and Restrictions", below.
INVESTMENT PRACTICES AND RESTRICTIONS
General. The Funds primarily invest in:
common and preferred stocks, convertible securities and warrants of
foreign corporations. Common stocks represent an equity interest in a
corporation. This ownership interest often gives the Funds the right to
vote on measures affecting the company's organization and operations.
Although common stocks have a history of long-term growth in value,
their prices tend to fluctuate in the short-term, particularly those of
smaller capitalization companies. Smaller capitalization companies may
have limited product lines, markets, or financial resources. These
conditions may make them more susceptible to setbacks and reversals.
Therefore, their securities may have limited marketability and may be
subject to more abrupt or erratic market movements than securities of
larger companies;
obligations of foreign governments and supranational organizations;
corporate and foreign government fixed income securities denominated in
currencies other than U.S. dollars, rated, at the time of purchase, Baa
or higher by Moody's or BBB or higher by S&P, or which, if unrated, are
considered to be of comparable quality by the Fund's investment adviser
or sub-advisers. Bonds rated Baa by Moody's or BBB by S&P have
speculative characteristics. Changes in economic conditions or other
circumstances are more likely to lead to weakened capacity to make
principal and interest payments than higher rated bonds. Although the
Funds do not intend to invest significantly in debt securities, it
should be noted that the prices of fixed income securities fluctuate
inversely to the direction of interest rates;
strategic investments, such as options and futures contracts on
currency transactions, securities index futures contracts, and forward
foreign currency exchange contracts. The Funds can use these techniques
to increase or decrease their exposure to changing security prices,
interest rates, currency exchange rates, or other factors that affect
security values. (Although, of course, there can be no assurance that
these strategic investments will be successful in protecting the value
of the Funds' securities.); and
securities of closed-end investment companies.
Defensive Investments. The Funds may invest without limitation in high quality
money market instruments, such as notes, certificates of deposit or bankers'
acceptances, or U.S. government securities if, in the opinion of a Fund's
investment adviser or sub-adviser, market conditions warrant a temporary
defensive investment strategy.
Portfolio Turnover and Brokerage. 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 Global Real Estate Equity Fund effected on
those exchanges. See the Statement of Additional Information for further
information regarding the brokerage allocation practices of the Funds. The
portfolio turnover rate for each Fund is set forth in the tables contained in
the section entitled "Financial Highlights".
Repurchase Agreements. The Funds may invest in repurchase agreements. Repurchase
agreements are agreements by which a Fund purchases a security for cash and
obtains a simultaneous commitment from the seller (usually a bank or
broker/dealer) to repurchase the security at an agreed-upon price and specified
future date. The repurchase price reflects an agreed-upon interest rate for the
time period of the agreement. The Funds' risk is the inability of the seller to
pay the agreed-upon price on the delivery date. However, this risk is tempered
by the ability of the Funds to sell the security in the open market in the case
of a default. In such a case, the Funds may incur costs in disposing of the
security which would increase Fund expenses. Each Fund's investment adviser will
monitor the creditworthiness of the firms with which the Funds enter into
repurchase agreements.
When-Issued And Delayed Delivery Transactions. Evergreen International Equity
Fund and Evergreen Emerging Markets Growth Fund may purchase securities on a
when-issued or delayed delivery basis. These transactions are arrangements in
which the Funds purchase securities with payment and delivery scheduled for a
future time. The seller's failure to complete these transactions may cause the
Funds to miss a price or yield considered to be advantageous. Settlement dates
may be a month or more after entering into these transactions, and the market
values of the securities purchased may vary from the purchase prices.
Accordingly, the Funds may pay more or less than the market value of the
securities on the settlement date. A Fund may dispose of a commitment prior to
settlement if the Fund's investment adviser deems it appropriate to do so. In
addition, Evergreen International Equity Fund and Evergreen Emerging Markets
Growth Fund may enter into transactions to sell their purchase commitments to
third parties at current market values and simultaneously acquire other
commitments to purchase similar securities at later dates. The Funds may realize
short-term profits or losses upon the sale of such commitments.
Temporary Investments. The Funds may invest in U.S. and foreign short-term money
market instruments (denominated in U.S. and/or foreign currencies), including
interest-bearing call deposits with banks, government obligations, certificates
of deposit, bankers' acceptances, commercial paper, short-term corporate debt
securities, and repurchase agreements. These investments may be used to
temporarily invest cash received from the sale of Fund shares, to establish and
maintain reserves for temporary defensive purposes, or to take advantage of
market opportunities.
Illiquid or Restricted Securities. Each Fund may invest up to 15% of its net
assets in illiquid securities and other securities which are not readily
marketable. Illiquid securities include certain restricted securities not
determined by the Trustees to the liquid, non-negotiable time deposits and
repurchase agreements providing for settlement in more than seven days after
notice. Securities eligible for resale pursuant to Rule 144A under the
Securities Act of 1933, which have been determined to be liquid, will not be
considered by the Funds' investment advisers to be illiquid or not readily
marketable and, therefore, are not subject to the aforementioned 15% limit. The
inability of a Fund to dispose of illiquid or not readily marketable investments
readily or at a reasonable price could impair the Fund's ability to raise cash
for redemptions or other purposes. The liquidity of securities purchased by a
Fund which are eligible for resale pursuant to Rule 144A will be monitored by
the each Fund's investment adviser on an ongoing basis, subject to the oversight
of the Trustees. In the event that such a security is deemed to be no longer
liquid, a Fund's holdings will be reviewed to determine what action, if any, is
required to ensure that the retention of such security does not result in a Fund
having more than 15% of its assets invested in illiquid or not readily
marketable securities.
Borrowing. As a matter of fundamental policy, the Funds may not borrow money
except as a temporary measure to facilitate redemption requests or for
extraordinary or emergency purposes. The proceeds from borrowings may be used to
facilitate redemption requests which might otherwise require the untimely
disposition of portfolio securities. The specific limits applicable to borrowing
by each Fund are set forth in the Statement of Additional Information.
Lending of Portfolio Securities. In order to generate income and to offset
expenses, the Funds may lend portfolio securities to brokers, dealers and other
financial institutions. The Funds' investment advisers or sub-advisers will
monitor the creditworthiness of such borrowers. Loans of securities by the
Funds, if and when made, may not exceed 30% of the value of the total assets of
the Evergreen Global Real Estate Equity Fund, and must be collateralized by cash
or U.S. Government securities that are maintained at all times in an amount
equal to at least 100% of the current market value of the securities loaned,
including accrued interest. While such securities are on loan, the borrower will
pay a Fund any income accruing thereon, and the Fund may invest the cash
collateral in portfolio securities, thereby increasing its return. Any gain or
loss in the market price of the loaned securities which occurs during the term
of the loan would affect a Fund and its investors. A Fund has the right to call
a loan and obtain the securities loaned at any time on notice of not more than
five business days. A Fund may pay reasonable fees in connection with such
loans.
Fixed-Income Securities -- Downgrades. If any security invested in by any of the
Funds loses its rating or has its rating reduced after the Fund has purchased
it, the Fund is not required to sell or otherwise dispose of the security, but
may consider doing so.
Foreign Currency Transactions. The Funds will enter into foreign currency
transactions to obtain the necessary currencies to settle securities
transactions. Currency transactions may be conducted either on a spot or cash
basis at prevailing rates or through forward foreign currency exchange
contracts. The Funds may also enter into foreign currency transactions to
protect Fund assets against adverse changes in foreign currency exchange rates
or exchange control regulations. Such changes could unfavorably affect the value
of Fund assets which are denominated in foreign currencies, such as foreign
securities or funds deposited in foreign banks, as measured in U.S. dollars.
Although foreign currency exchanges may be used by a Fund to protect against a
decline in the value of one or more currencies, such efforts may also limit any
potential gain that might result from a relative increase in the value of such
currencies and might, in certain cases, result in losses to the Fund.
Forward Foreign Currency Exchange Contracts. A forward foreign currency exchange
contract ("forward contract") is an obligation to purchase or sell an amount of
a particular currency at a specific price and on a future date agreed upon by
the parties. Generally, no commission charges or deposits are involved. At the
time a Fund enters into a forward contract, Fund assets with a value equal to
the Fund's obligation under the forward contract are segregated and are
maintained until the contract has been settled. The Funds will not enter into a
forward contract with a term of more than one year. The Funds will generally
enter into a forward contract to provide the proper currency to settle a
securities transaction at the time the transaction occurs ("trade date"). The
period between trade date and settlement date will vary between 24 hours and 60
days, depending upon local custom.
<PAGE>
The Funds may also protect against the decline of a particular foreign currency
by entering into a forward contract to sell an amount of that currency
approximating the value of all or a portion of the Funds' assets denominated in
that currency ("hedging"). The success of this type of short-term hedging
strategy is highly uncertain due to the difficulties of predicting short-term
currency market movements and of precisely matching forward contract amounts and
the constantly changing value of the securities involved. Although each Fund's
investment adviser or sub-adviser will consider the likelihood of changes in
currency values when making investment decisions, each Fund's investment adviser
or sub-adviser believes that it is important to be able to enter into forward
contracts when it believes the interests of a Fund will be served. The Funds
will not enter into forward contracts for hedging purposes in a particular
currency in an amount in excess of the Funds' assets denominated in that
currency, but as consistent with their other investment policies and as not
otherwise limited in their ability to use this strategy.
Options And Futures. The Funds may deal in options on foreign currencies, and
portfolio securities, and, in the case of Evergreen International Equity Fund
and Evergreen Emerging Markets Growth Fund, securities indices, which options
may be listed for trading on an international securities exchange. The Funds
will use these options to manage interest rate and currency risks. The Funds
also may write covered call options and secured put options to generate income
or to lock in gains. Each Fund may write covered call options and secured put
options on up to 25% of its net assets in the case of Evergreen International
Equity Fund and Evergreen Emerging Markets Growth Fund and 15% of its net assets
in the case of Evergreen Global Real Estate Equity Fund, and Evergreen
International Equity Fund and Evergreen Emerging Markets Growth Fund may
purchase put and call options provided that no more than 5% of the fair market
value of its net assets may be invested in premiums on such options.
A call option gives the purchaser the right to buy, and the writer the
obligation to sell, the underlying asset at the exercise price during the option
period. A put option gives the purchaser the right to sell, and the writer the
obligation to buy, the underlying asset at the exercise price during the option
period. The writer of a covered call owns assets that are acceptable for escrow
and the writer of a secured put invests an amount not less than the exercise
price in eligible assets to the extent that it is obligated as a writer. If a
call written by a Fund is exercised, the Fund forgoes any possible profit from
an increase in the market price of the underlying asset over the exercise price
plus the premium received. In writing puts, there is a risk that a Fund may be
required to take delivery of the underlying asset at a disadvantageous price.
The Funds may enter into futures contracts involving foreign currency
and, in the case of Evergreen International Equity Fund and Evergreen Emerging
Markets Growth Fund, securities indices,, or options on currency, for bona fide
hedging purposes The Funds may not enter into futures contracts or related
options if, immediately thereafter, the amounts committed to margin and premiums
paid for unexpired options would exceed 5% of a Fund's total assets and, in the
case of Evergreen Global Real Estate Equity Fund, more than 30% of the Fund's
net assets would be hedged thereby. Evergreen International Equity Fund and
Evergreen Emerging Markets Growth Fund, may also enter into such futures
contracts or related options for purposes other than bona fide hedging if the
aggregate amount of initial margin deposits on a Fund's futures and related
options positions would not exceed 5% of the net liquidation value of the Fund's
assets, provided further that in the case of an option that is in-the-money at
the time of the purchase, the in-the-money amount may be excluded in calculating
the 5% limitation. In addition, a Fund may not sell futures contracts if the
value of such futures contracts exceeds the total market value of the Fund's
portfolio securities. Futures contracts sold by a Fund are generally subject to
segregation and coverage requirements established by either the Commodity
Futures Trading Commission ("CFTC") or the Securities and Exchange Commission
("SEC"), with the result that, if a Fund does not hold the instrument underlying
the futures contract or option, the Fund will be required to segregate, on an
ongoing basis with its custodian, cash, U.S. government securities, or other
liquid high grade debt obligations in an amount at least equal to the Fund's
obligations with respect to such instruments.
Evergreen International Equity Fund and Evergreen Emerging Markets
Growth Fund may enter into securities index futures contracts and purchase and
write put and call options on securities index futures contracts that are traded
on regulated exchanges, including non-U.S. exchanges, to the extent permitted by
the CFTC. Securities index futures contracts are based on indices that reflect
the market value of securities of the firms included in the indices. An index
futures contract is an agreement pursuant to which two parties agree to take or
make delivery of an amount of cash equal to the differences between the value of
the index at the close of the last trading day of the contract and the price at
which the index contract was originally written.
Evergreen International Equity Fund and Evergreen Emerging Markets
Growth Fund may enter into securities index futures contracts to sell a
securities index in anticipation of or during a market decline to attempt to
offset the decrease in market value of securities in its portfolio that might
otherwise result. When a Fund is not fully invested and anticipates a
significant market advance, it may enter into futures contracts to purchase the
index in order to gain rapid market exposure that may in part or entirely offset
increases in the cost of securities that it intends to purchase. In many of
these transactions, a Fund will purchase such securities upon termination of the
futures position but, depending on market conditions, a futures position may be
terminated without the corresponding purchases of common stock. A Fund may also
invest in securities index futures contracts when its investment adviser or
sub-adviser believes such investment is more efficient, liquid or cost-effective
than investing directly in the securities underlying the index.
The use of futures and related options involves special considerations
and risks, including: (1) the ability of a Fund to utilize futures successfully
will depend on its investment adviser's or sub-adviser's ability to predict
pertinent market movements; and (2) there might be an imperfect correlation (or
conceivably no correlation) between the change in the market value of the
securities held by a Fund and the prices of the futures relating to the
securities purchased or sold by the Fund. The use of futures and related options
may reduce risk of loss by wholly or partially offsetting the negative effect of
unfavorable price movements, but these instruments can also reduce the
opportunity for gain by offsetting the positive effect of favorable price
movements in positions. No assurance can be given that the investment adviser's
or sub-adviser's judgment in this respect will be correct.
It is not certain that a secondary market for positions in futures
contracts or for options will exist at all times. Although each investment
adviser or sub-adviser will consider liquidity before entering into these
transactions, there is no assurance that a liquid secondary market on an
exchange or otherwise will exist for any particular futures contract or option
at any particular time. A Fund's ability to establish and close out futures and
options positions depends on this secondary market.
Risk Characteristics Of Foreign Securities. Investing in non-U.S. securities
carries substantial risks in addition to those associated with domestic
investments. In an attempt to reduce some of these risks, the Funds diversify
their investments broadly among foreign countries which may include both
developed and developing countries. With respect to Evergreen International
Equity Fund, at least three different countries will always be represented. The
Funds may take advantage of the unusual opportunities for higher returns
available from investing in developing countries. As discussed in detail below
under "Emerging Markets," however, these investments carry considerably more
volatility and risk because they generally are associated with less mature
economies and less stable political systems.
Foreign securities are denominated in foreign currencies. Therefore,
the value in U.S. dollars of a Fund's assets and income may be affected by
changes in exchange rates and regulations. Although the Funds value their assets
daily in U.S. dollars, they will not convert their holdings of foreign
currencies to U.S. dollars daily. When a Fund converts its holdings to another
currency, it may incur conversion costs. Foreign exchange dealers realize a
profit on the difference between the prices at which such dealers buy and sell
currencies.
To the extent that securities purchased by the Funds are denominated in
currencies other than the U.S. dollar, changes in foreign currency exchange
rates will affect the Funds' net asset values; the value of interest earned;
gains and losses realized on the sale of securities; and net investment income
and capital gains, if any, to be distributed to shareholders by a Fund. If the
value of a foreign currency rises against the U.S. dollar, the value of a Fund's
assets denominated in that currency will increase; correspondingly, if the value
of a foreign currency declines against the U.S.
dollar, the value of a Fund's assets denominated in that currency will decrease.
Other differences between investing in foreign and U.S. companies
include: less publicly available information about foreign companies; the lack
of uniform financial accounting standards applicable to foreign companies; less
readily available market quotations on foreign companies; differences in
government regulation and supervision of foreign stock exchanges, brokers,
listed companies, and banks; differences in legal systems which may affect the
ability to enforce contractual obligations or obtain court judgments; generally
lower foreign stock market volume; the likelihood that foreign securities may be
less liquid or more volatile; foreign brokerage commissions may be higher;
unreliable mail service between countries; and political or financial changes
which adversely affect investments in some countries. In the past, U.S.
government policies have discouraged or restricted certain investments abroad by
investors such as the Funds. Although the Funds are unaware of any current
restrictions, investors are advised that these policies could be reinstituted.
Emerging Markets. The economies of individual emerging countries may differ
favorably or unfavorably from the U.S. economy in such respects as growth of
gross domestic product, rate of inflation, currency depreciation, capital
reinvestment, resource self-sufficiency and balance of payments position.
Further, the economies of developing countries generally are heavily dependent
on international trade and, accordingly, have been, and may continue to be,
adversely affected by trade barriers, exchange controls, managed adjustments in
relative currency values and other protectionist measures imposed or negotiated
by the countries with which they trade. These economies also have been, and may
continue to be, adversely affected by economic conditions in the countries with
which they trade.
Prior governmental approval for foreign investments may be required
under certain circumstances in some emerging countries, and the extent of
foreign investment in certain debt securities and domestic companies may be
subject to limitation in other emerging countries. Foreign ownership limitations
also may be imposed by the charters of individual companies in emerging
countries to prevent, among other concerns, violation of foreign investment
limitations.
Repatriation of investment income, capital and the proceeds of sales by
foreign investors may require governmental registration and/or approval in some
emerging countries. A Fund could be adversely affected by delays in, or a
refusal to grant, any required governmental registration or approval for such
repatriation. Any investment subject to such repatriation controls will be
considered illiquid if it appears reasonably likely that this process will take
more than seven days.
With respect to any emerging country, there is the possibility of
nationalization, expropriation or confiscatory taxation, political changes,
governmental regulation, social instability or diplomatic developments
(including war) which could affect adversely the economics of such countries or
the value of the Funds' investments in those countries. In addition, it may be
difficult to obtain and enforce a judgment in a court outside of the U.S.
Investments Related to Real Estate. Risks associated with investment in
securities of companies in the real estate industry include: declines in the
value of real estate, risks related to general and local economic conditions,
overbuilding and increased competition, increases in property taxes and
operating expenses, changes in zoning laws, casualty or condemnation losses,
variations in rental income, changes in neighborhood values, the appeal of
properties to tenants and increase in interest rates. In addition, equity real
estate investment trusts may be affected by changes in the value of the
underlying property owned by the trusts, while mortgage real estate investment
trusts may be affected by the quality of credit extended. Equity and mortgage
real estate investment trusts are dependent upon management skills, may not be
diversified and are subject to the risks of financing projects. Such trusts are
also subject to heavy cash flow dependency, defaults by borrowers, self
liquidation and the possibility of failing to qualify for tax-free pass-through
of income under the Internal Revenue Code (the "Code") and to maintain exemption
from the Investment Company Act of 1940, as amended (the "1940 Act"). In the
event an issuer of debt securities collateralized by real estate defaulted, it
is conceivable that a Fund could end up holding the underlying real estate.
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MANAGEMENT OF THE FUNDS
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INVESTMENT ADVISERS
The management of each Fund is supervised by the Trustees of the Trust
under which the Fund has been established ("Trustees"). Evergreen Asset
Management Corp. (the "Evergreen Asset") has been retained by Evergreen Global
Real Estate Equity Fund as investment adviser. Evergreen Asset succeeded on June
30, 1994 to the advisory business of the same name, but under different
ownership, which was organized in 1971. Evergreen Asset, with its predecessors,
has served as investment adviser to the Evergreen mutual funds since 1971.
Evergreen Asset is a wholly-owned subsidiary of First Union National Bank of
North Carolina ("FUNB"). The address of Evergreen Asset is 2500 Westchester
Avenue, Purchase, New York 10577. FUNB is a subsidiary of First Union
Corporation ("First Union"), one of the ten largest bank holding companies in
the United States. Stephen A. Lieber and Nola Maddox Falcone serve as the chief
investment officers of Evergreen Asset and, along with Theodore J. Israel, Jr.,
were the owners of Evergreen Asset's predecessor and the former general partners
of Lieber & Company, which, as described below, provides certain subadvisory
services to Evergreen Asset in connection with its duties as investment adviser
to the Fund. The Capital Management Group of FUNB ("CMG") serves as investment
adviser to Evergreen International Equity Fund and Evergreen Emerging Markets
Growth Fund. Boston International Advisers, Inc. ("BIA") is Sub-Adviser to
Evergreen International Equity Fund and Marvin & Palmer Associates, Inc.
("Marvin & Palmer") is Sub-Adviser to Evergreen Emerging Markets Growth Fund
First Union is a bank holding company headquartered in Charlotte, North
Carolina, which had $77.9 billion in consolidated assets as of March 31, 1995.
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 all the series of
Evergreen Investment Trust (formerly known as First Union Funds). First Union
Brokerage Services, Inc., a wholly-owned subsidiary of FUNB, is a registered
broker-dealer that is principally engaged in providing retail brokerage services
consistent with its federal banking authorizations. First Union Capital Markets
Corp., a wholly-owned subsidiary of First Union, is a registered broker-dealer
principally engaged in providing, consistent with its federal banking
authorizations, private placement, securities dealing, and underwriting
services.
As investment adviser to Evergreen Global Real Estate Equity Fund,
Evergreen Asset manages each Fund's investments, provides various administrative
services and supervises each Fund's daily business affairs, subject to the
authority of the Trustees. Evergreen Asset is entitled to receive a fee equal to
1% of average daily net assets on an annual basis from Evergreen Global Real
Estate Equity Fund. The fee paid by Evergreen Global Real Estate Equity Fund is
higher than the rate paid by most other investment companies. The total expenses
as a percentage of average daily net assets on an annual basis of Evergreen
Global Real Estate Equity Fund for the fiscal period ended September 30, 1994
are set forth in the section entitled "Financial Highlights". The
above-mentioned expense ratios for Evergreen Global Real Estate Equity Fund is
net of voluntary advisory fee waivers and expense reimbursements by Evergreen
Asset which may, at its discretion, revise or cease this voluntary waiver at any
time.
CMG, along with BIA and Marvin & Palmer, respectively, manages
investments and supervises the daily business affairs of Evergreen International
Equity Fund and Evergreen Emerging Markets Growth Fund. As compensation
therefor, CMG is entitled to receive an annual fee from Evergreen International
Equity Fund equal to: .82 of 1% of the first $20 million of average daily net
assets; .79 of 1% of the next $30 million of average daily net assets; .76 of 1%
of the next $50 million of average daily net assets; and .73 of 1% of average
daily net assets in excess of $100 million. From Evergreen Emerging Markets
Growth Fund, CMG is entitled to receive an annual fee equal to: 1.50% of the
first $100 million of average daily net assets; 1.45% of the next $100 million
of average daily net assets; 1.40% of the next $100 million of average daily net
assets; and 1.35% of average daily net assets in excess of $300 million. The
fees paid by Evergreen International Equity Fund and Evergreen Emerging Markets
Growth Fund are higher than the rate paid by most other investment companies,
but are not higher than the fee paid by many funds with similar investment
objectives. The total expenses as a percentage of average daily net assets on an
annual basis of Evergreen International Equity Fund and Evergreen Emerging
Markets Growth Fund for the fiscal year ended December 31, 1994 are set forth in
the section entitled "Financial Highlights". CMG has agreed to pay the sub
adviser to Evergreen International Equity Fund, BIA, a fee equal to: .32 of 1%
of the first $20 million of average daily net assets; .29 of 1% of the next $30
million of average daily net assets; .26 of 1% of the next $50 million of
average daily net assets; and .23 of 1% of average daily net assets in excess of
$100 million. For its services as sub-adviser to Evergreen Emerging Markets
Growth Fund, Marvin & Palmer receives from CMG a fee equal to: 1.00% of the
first $100 million of average daily net assets; .95 of 1% of the next $100
million of average daily net assets; .90 of 1% of the next $100 million of
average daily net assets; and .85 of 1% of average daily net assets in excess of
$300 million. Evergreen Asset serves as administrator to Evergreen International
Equity Fund and Evergreen Emerging Markets Growth Fund and is entitled to
receive a fee based on the average daily net assets of these Funds at a rate
based on the total assets of the mutual funds administered by Evergreen Asset
for which CMG or Evergreen Asset also serve as investment adviser, calculated in
accordance with the following schedule: .050% of the first $7 billion; .035% on
the next $3 billion; .030% on the next $5 billion; .020% on the next $10
billion; .015% on the next $5 billion; and .010% on assets in excess of $30
billion. Furman Selz Incorporated, the parent of Evergreen Funds Distributor,
Inc., distributor for the Evergreen group of mutual funds, serves as
sub-administrator to Evergreen International Equity Fund and Evergreen Emerging
Markets Growth Fund and is entitled to receive a fee from each Fund calculated
on the average daily net assets of each Fund at a rate based on the total assets
of the mutual funds administered by Evergreen Asset for which CMG or Evergreen
Asset also serve as investment adviser, calculated in accordance with the
following schedule: .0100% of the first $7 billion; .0075% on the next $3
billion; .0050% on the next $15 billion; and .0040% on assets in excess of $25
billion. The total assets of the mutual funds administered by Evergreen Asset
for which CMG or Evergreen Asset serve as investment adviser as of March 31,
1995 were approximately $8 billion.
The portfolio manager for Evergreen Global Real Estate Equity Fund is
Samuel A. Lieber. Mr. Samuel Lieber has been the Fund's principal manager since
inception and has been associated with the Evergreen Asset since prior to 1989.
The portfolio managers for Evergreen International Equity Fund are Maureen
Ghublikian and David A. Umstead, who are Managing Directors of BIA and have been
associated therewith since prior to 1989.
The portfolio managers for Evergreen Emerging Markets Growth Fund, all
of whom have served since its inception in September 1994, are David F. Marvin,
who is Chairman of Marvin & Palmer and is primarily responsible for Latin
America and currency management, Stanley Palmer, who is President of Marvin &
Palmer and primarily responsible for Southeast Asia and the India subcontinent,
Terry B. Mason, who is a Vice President of Marvin & Palmer and is primarily
responsible for Eastern Europe and Africa, Jay F. Middleton, who is a portfolio
manager for Marvin & Palmer and primarily responsible for Latin America and the
Middle East, and Todd D. Marvin, who is a portfolio manager for Marvin & Palmer
and, along with Mr. Palmer, primarily responsible for Southeast Asia and the
India subcontinent. David F. Marvin, and Stanley Palmer, President, founded
Marvin & Palmer in 1986. Mr. Mason and Mr. Middleton both joined Marvin & Palmer
in 1990. Mr. Todd Marvin joined Marvin & Palmer in 1991 and, prior thereto, was
employed by Oppenheimer & Company as an analyst in its investment banking
department from 1989 until 1991.
SUB-ADVISERS
Evergreen Asset has entered into sub-advisory agreements with Lieber &
Company with respect to Evergreen Global Real Estate Equity Fund which provides
that Lieber & Company's research department and staff will furnish Evergreen
Asset with information, investment recommendations, advice and assistance, and
will be generally available for consultation on each such Fund's portfolio.
Lieber & Company will be reimbursed by Evergreen Asset in connection with the
rendering of services on the basis of the direct and indirect costs of
performing such services. There is no additional charge to Evergreen Global Real
Estate Equity Fund for the services provided by Lieber & Company. It is
contemplated that Lieber & Company will, to the extent practicable, effect
substantially all of the portfolio transactions for this Fund on the New York
and American Stock Exchanges. The address of Lieber & Company is 2500
Westchester Avenue, Purchase, New York 10577. Lieber & Company is an indirect,
wholly-owned, subsidiary of First Union.
The sub-adviser to the Evergreen International Equity Fund, BIA, has
been in operation since 1986 and specializes in the management of international
equity portfolios. BIA currently manages twenty international portfolios,
including five group trust funds, for pension fund sponsors and endowment plans
worldwide. Messrs. Lyle H. Davis, Norman H. Meltz and David A. Umstead are the
principal executive officers of BIA and each own more than 25% of the
outstanding voting securities thereof. As of March 31, 1995 BIA managed a total
of $2.7 billion in assets and served as sub-adviser to one other investment
company with total assets of $148 million.
Marvin & Palmer, Sub-Adviser for Evergreen Emerging Markets Growth Fund
was founded in 1986 and is engaged in the management of global, non-United
States and emerging markets equity portfolios for institutional accounts. At
March 31, 1995, Marvin & Palmer managed a total of $2.5 billion in investments
for 34 institutional investors and 5 commingled funds and served as sub-adviser
to another investment company with total assets of $33 million.
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PURCHASE AND REDEMPTION OF SHARES
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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 on the front page of this Prospectus. Some
services are described in more detail in the Share Purchase Application.
Systematic Investment Plan. You may make monthly or quarterly investments into
an existing account automatically in amounts of not less than $25.
Telephone Investment Plan. You may make investments into an existing account
electronically in amounts of not less than $100 or more than $10,000 per
investment. Telephone investment requests received by 3:00 p.m. (Eastern time)
will be credited to a shareholder's account the day the request is received.
Systematic Cash Withdrawal Plan. When an account of $10,000 or more is opened or
when an existing account reaches that size, you may participate in the 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.
Automatic Reinvestment Plan. For the convenience of investors, all dividends and
distributions are automatically reinvested in full and fractional shares of the
Fund at the net asset value per share at the close of business on the record
date, unless otherwise requested by a shareholder in writing. If the transfer
agent does not receive a written request for subsequent dividends and/or
distributions to be paid in cash at least three full business days prior to a
given record date, the dividends and/or distributions to be paid to a
shareholder will be reinvested. If you elect to receive dividends and
distributions in cash and the U.S. Postal Service cannot deliver the checks, or
if the checks remain uncashed for six months, the checks will be reinvested into
your account at the then current net asset value.
Tax Sheltered Retirement Plans. You may open a pension and profit sharing
account in any Evergreen mutual fund (except those funds having an objective of
providing tax free income), including: (i) Individual Retirement Accounts
("IRAs") and Rollover IRAs; (ii) Simplified Employee Pension (SEP) for sole
proprietors, partnerships and corporations; and (iii) Profit-Sharing and Money
Purchase Pension Plans for corporations and their employees.
EFFECT OF BANKING LAWS
The Glass-Steagall Act and other banking laws and regulations presently
prohibit member banks of the Federal Reserve System ("Member Banks") or their
non-bank affiliates from sponsoring, organizing, controlling, or distributing
the shares of registered open-end investment companies such as the Funds. Such
laws and regulations also prohibit banks from issuing, underwriting or
distributing securities in general. However, under the Glass-Steagall Act and
such other laws and regulations, a Member Bank or an affiliate thereof may act
as investment adviser, transfer agent or custodian to a registered open-end
investment company and may also act as agent in connection with the purchase of
shares of such an investment company upon the order of their customer. Evergreen
Asset, since it is a subsidiary of FUNB, and CMG are subject to and in
compliance with the aforementioned laws and regulations.
Changes to applicable laws and regulations or future judicial or
administrative decisions could result in CMG or Evergreen Asset being prevented
from continuing to perform the services required under the investment advisory
contract or from acting as agent in connection with the purchase of shares of a
Fund by its customers. If CMG or Evergreen Asset were prevented from continuing
to provide the services called for under the investment advisory agreement, it
is expected that the Trustees would identify, and call upon each Fund's
shareholders to approve, a new investment adviser. If this were to occur, it is
not anticipated that the shareholders of any Fund would suffer any adverse
financial consequences.
- -------------------------------------------------------------------------------
OTHER INFORMATION
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DIVIDENDS, DISTRIBUTIONS AND TAXES
It is the policy of each Fund to distribute to shareholders its
investment company taxable and tax-exempt income, if any, quarterly and any net
realized capital gains annually or more frequently as required as a condition of
continued qualification as a regulated investment company by the Code. Dividends
and distributions generally are taxable in the year in which they are paid,
except any dividends paid in January that were declared in the previous calendar
quarter may be treated as paid in December of the previous year. Income
dividends and capital gain distributions are automatically reinvested in
additional shares of the Fund making the distribution at the net asset value per
share at the close of business on the record date, unless the shareholder has
made a written request for payment in cash.
Each Fund has qualified and intends to continue to qualify to be
treated as a regulated investment company under the Code. While so qualified, it
is expected that each Fund will not be required to pay any Federal income 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 whether such dividends and distributions are made in
cash or in additional shares. Questions on how any distributions will be taxed
to the investor should be directed to the investor's own tax adviser.
Under current law, the highest Federal income tax rate applicable to
net long-term capital gains realized by individuals is 28%. The rate applicable
to corporations is 35%. Certain income from a Fund may qualify for a corporate
dividends-received deduction of 70%. Following the end of each calendar year,
every shareholder of the Fund will be sent applicable tax information and
information regarding the dividends and capital gain distributions made during
the calendar year.
A Fund may be subject to foreign withholding taxes which would reduce
the yield on its investments. Tax treaties between certain countries and the
United States may reduce or eliminate such taxes. Shareholders of a Fund who are
subject to United States Federal income tax may be entitled, subject to certain
rules and limitations, to claim a Federal income tax credit or deduction for
foreign income taxes paid by a Fund. See the Statement of Additional Information
for additional details. A Fund's transactions in options, futures and forward
contracts may be subject to special tax rules. These rules can affect the
amount, timing and characteristics of distributions to shareholders.
A Fund may be subject to foreign withholding taxes which would reduce
the yield on its investments. Tax treaties between certain countries and the
United States may reduce or eliminate such taxes. Shareholders of a Fund who are
subject to United States Federal income tax may be entitled, subject to certain
rules and limitations, to claim a Federal income tax credit or deduction for
foreign income taxes paid by a Fund. See the Statement of Additional Information
for additional details. A Fund's transactions in options, futures and forward
contracts may be subject to special tax rules. These rules can affect the
amount, timing and characteristics of distributions to shareholders.
If more than 50% of the value of a Fund's assets at the end of the tax
year is represented by stock or securities of foreign corporations, the Fund
intends to qualify for certain Code stipulations that would allow shareholders
to claim a foreign tax credit or deduction on their U.S. income tax returns. The
Code may limit a shareholder's ability to claim a foreign tax credit.
Furthermore, shareholders who elect to deduct their portion of a Fund's foreign
taxes rather than take the foreign tax credit must itemize deductions on their
income tax returns.
Each Fund is required by Federal law to withhold 31% of reportable
payments (which may include dividends, capital gain distributions and
redemptions) paid to certain shareholders. In order to avoid this backup
withholding requirement, you must certify on the Share Purchase Application, or
on a separate form supplied by State Street, that your social security or
taxpayer identification number is correct and that you are not currently subject
to backup withholding or are exempt from backup withholding. A shareholder who
acquires Class A shares of a Fund and sells or otherwise disposes of such shares
within 90 days of acquisition may not be allowed to include certain sales
charges incurred in acquiring such shares for purposes of calculating gain and
loss realized upon a sale or exchange of shares of the Fund.
The foregoing discussion of Federal income tax consequences is based on
tax laws and regulations in effect on the date of this Prospectus, and is
subject to change by legislative or administrative action. As the foregoing
discussion is for general information only, you should also review the
discussion of "Additional Tax Information" contained in the Statement of
Additional Information. In addition, you should consult your own tax adviser as
to the tax consequences of investments in the Funds, including the application
of state and local taxes which may be different from Federal income tax
consequences described above.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
A discussion of the performance of Evergreen Global Real Estate Equity
Fund for its most recent fiscal year is set forth below. A similar discussion
relating to Evergreen International Equity Fund and Evergreen Emerging Markets
Growth Fund is contained in the annual report of each Fund for the fiscal year
ended December 31, 1994.
Evergreen Global Real Estate Equity Fund. For the nine month period ending
September 30, 1994, the Evergreen Global Real Estate Equity Fund was
significantly impacted by a combination of rising interest rates worldwide
leading to a performance decline of -6.4%. The relative indices performance was
similar, as the Morgan Stanley Global Real Estate Sub Index fell -9.9% and the
Wall Street Journal/Dow Jones World Sub Index of real estate stocks lost -11.5%.
The rise in interest rates in Europe was significantly higher than it was in the
U.S., despite little prospect of imminent inflation due to continued slow
economic recovery. We believe that both property and stock markets viewed rising
rates as a brake on economic growth. This resulted in weak performance for
European property shares. Japan also remained a relatively dull performer after
the first quarter as little evidence of economic growth was visible. Only
Southeast Asia and Latin America provided the Fund with significant
opportunities for capital appreciation during this period.
[CHART]
<PAGE>
GENERAL INFORMATION
Portfolio Transactions. Consistent with the Rules of Fair Practice of the
National Association of Securities Dealers, Inc., and subject to seeking best
price and execution, a Fund may consider sales of its shares as a factor in the
selection of dealers to enter into portfolio transactions with the Fund.
Organization. The Evergreen Global Real Estate Equity Fund is a separate series
of the Evergreen Real Estate Equity Trust, a Massachusetts business trust
organized in 1988. Evergreen International Equity Fund and Evergreen Emerging
Markets Growth Fund are separate investment series of Evergreen Investment Trust
(formerly First Union Funds), which is a Massachusetts business trust organized
in 1984. The Funds do not intend to hold annual shareholder meetings;
shareholder meetings will be held only when required by applicable law.
Shareholders have available certain procedures for the removal of Trustees.
A shareholder in each class of a Fund will be entitled to his or her
share of all dividends and distributions from a Fund's assets, based upon the
relative value of such shares to those of other Classes of the Fund, and, upon
redeeming shares, will receive the then current net asset value of the Class of
shares of the Fund represented by the redeemed shares less any applicable CDSC.
Each Trust named above is empowered to establish, without shareholder approval,
additional investment series, which may have different investment objectives,
and additional classes of shares for any existing or future series. If an
additional series or class were established in a Fund, each share of the series
or class would normally be entitled to one vote for all purposes. Generally,
shares of each series and class would vote together as a single class on
matters, such as the election of Trustees, that affect each series and class in
substantially the same manner. Class A, B, C and Y shares have identical voting,
dividend, liquidation and other rights, except that each class bears, to the
extent applicable, its own distribution, shareholder service and transfer agency
expenses as well as any other expenses applicable only to a specific class. Each
class of shares votes separately with respect to Rule 12b-1 distribution plans
and other matters for which separate class voting is appropriate under
applicable law. Shares are entitled to dividends as determined by the Trustees
and, in liquidation of a Fund, are entitled to receive the net assets of the
Fund.
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 237 Park Avenue, New York, New York 10017, is the
principal underwriter of the Funds. Furman Selz Incorporated, also acts as
sub-administrator to Evergreen International Equity Fund and Evergreen Emerging
Markets Growth Fund and which provides certain sub-administrative services to
Evergreen Asset in connection with its role as investment adviser Evergreen
Global Real Estate Equity Fund, including providing personnel to serve as
officers of the Funds.
Other Classes of Shares. Each Fund currently offers four classes of shares,
Class A, Class B, Class C and Class Y, and may in the future offer additional
classes. Class Y shares are the only class of shares offered by this Prospectus
and are only available to (i) all shareholders of record in one or more of the
Funds for which Evergreen Asset serves as investment adviser as of December 30,
1994, (ii) certain institutional investors and (iii) investment advisory clients
of CMG, Evergreen Asset or their affiliates. The dividends payable with respect
to Class A, Class B and Class C shares will be less than those payable with
respect to Class Y shares due to the distribution and distribution and
shareholder servicing related expenses borne by Class A, Class B and Class C
shares and the fact that such expenses are not borne by Class Y shares.
Performance Information. From time to time, the Funds may quote their "total
return" or "yield" for a specified period in advertisements, reports or other
communications to shareholders, Total return and yield are computed separately
for Class A, Class B and Class C shares. A Fund's total return for each such
period is computed by finding, through the use of a formula prescribed by the
Securities and Exchange Commission ("SEC"), the average annual compounded rate
of return over the period that would equate an assumed initial amount invested
to the value of the investment at the end of the period. For purposes of
computing total return, dividends and capital gains distributions paid on shares
of a Fund are assumed to have been reinvested when paid and the maximum sales
charges applicable to purchases of a Fund's shares are assumed to have been
paid. Yield is a way of showing the rate of income the Fund earns on its
investments as a percentage of the Fund's share price. The Fund's yield is
calculated according to accounting methods that are standardized by the SEC for
all stock and bond funds. Because yield accounting methods differ from the
method used for other accounting purposes, the Fund's yield may not equal its
distribution rate, the income paid to your account or the net investment income
reported in the Fund's financial statements. To calculate yield, the Fund takes
the interest income it earned from its portfolio of investments (as defined by
the SEC formula) for a 30-day period (net of expenses), divides it by the
average number of shares entitled to receive dividends, and expresses the result
as an annualized percentage rate based on the Fund's share price at the end of
the 30-day period. This yield does not reflect gains or losses from selling
securities
Performance data for each class of shares will be included in any
advertisement or sales literature using performance data of a Fund. These
advertisements may quote performance rankings or ratings of a Fund by financial
publications or independent organizations such as Lipper Analytical Services,
Inc. and Morningstar, Inc. or compare a Fund's performance to various indices.
The Fund may also advertise in items of sales literature an "actual distribution
rate" which is computed by dividing the total ordinary income distributed (which
may include the excess of short-term capital gains over losses) to shareholders
for the latest twelve month period by the maximum public offering price per
share on the last day of the period. Investors should be aware that past
performance may not be reflective of future results.
Liability Under Massachusetts Law. Under Massachusetts law, Trustees and
shareholders of a business trust may, in certain circumstances, be held
personally liable for its obligations. The Declarations of Trust under which the
Funds operate provide that no Trustee or shareholder will be personally liable
for the obligations of the Trust and that every written contract made by the
Trust contain a provision to that effect. If any Trustee or shareholder were
required to pay any liability of the Trust, that person would be entitled to
reimbursement from the general assets of the Trust.
Additional Information. This Prospectus and the Statement of Additional
Information, which has been incorporated by reference herein, do not contain all
the information set forth in the Registration Statements filed by the Trusts
with the 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>
INVESTMENT ADVISER
Capital Management Group of First Union National Bank, 201 South College
Street, Charlotte, North Carolina 28288
EVERGREEN EMERGING MARKETS GROWTH FUND, EVERGREEN INTERNATIONAL EQUITY
FUND
Evergreen Asset Management Corp., 2500 Westchester Avenue, Purchase, New York
10577
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND
CUSTODIAN & TRANSFER AGENT
State Street Bank & Trust Company, Box 9021, Boston, Massachusetts 02205-9827
LEGAL COUNSEL
Sullivan & Worcester, 1025 Connecticut Avenue, N.W., Washington, D.C. 20036
INDEPENDENT ACCOUNTANTS
KPMG Peat Marwick LLP, One Mellon Bank Center, Pittsburgh, Pennsylvania 15219
EVERGREEN EMERGING MARKETS GROWTH FUND, EVERGREEN INTERNATIONAL EQUITY
FUND
Price Waterhouse LLP, 1177 Avenue of the Americas, New York, New York 10036
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND
DISTRIBUTOR
Evergreen Funds Distributor, Inc., 237 Park Avenue, New York, New York 10017
536121
B
STATEMENT OF ADDITIONAL INFORMATION
July 7, 1995
THE EVERGREEN INTERNATIONAL GROWTH FUNDS
2500 Westchester Avenue, Purchase, New York 10577
800-807-2940
Evergreen Emerging Markets Growth Fund (formerly First Union Emerging Markets
Growth Portfolio) ("Emerging Markets")
Evergreen International Equity Fund (formerly First Union International Equity
Portfolio) ("International")
Evergreen Global Real Estate Equity Fund ("Global")
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 Prospectus dated July 7, 1995 for the Fund in which you are making or
contemplating an investment. The Evergreen International Growth Funds are
offered through two separate prospectuses: one offering Class A, Class B and
Class C shares, and a separate prospectus offering Class Y shares of each Fund.
Copies of each Prospectus may be obtained without charge by calling the number
listed above.
TABLE OF CONTENTS
Page
Investment Objectives and Policies................................
Investment Restrictions...........................................
Non-Fundamental Operating Policies................................
Certain Risk Considerations.......................................
Management........................................................
Investment Adviser................................................
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
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
(See also "Description of the Funds - Investment Objective
and Policies" in each Fund's Prospectus)
The investment objective of each Fund and a description of the securities in
which each Fund may invest is set forth under "Description of the Funds -
Investment Objective and Policies" in the relevant Prospectus. The investment
objectives of Emerging Growth and International Equity are fundamental and
cannot be changed without the approval of shareholders. The following expands
the discussions in the Prospectus regarding certain investment practices of each
Fund.
Types of Investments
Convertible Securities -- (All Funds)
Each Fund may invest in convertible securities. Convertible securities
include fixed-income securities that may be exchanged or converted into a
predetermined number of shares of the issuer's underlying common stock at the
option of the holder during a specified period. Convertible securities may take
the form of convertible preferred stock, convertible bonds or debentures, units
consisting of "usable" bonds and warrants or a combination of the features of
several of these securities. The investment characteristics of each convertible
security vary widely, which allow convertible securities to be employed for a
variety of investment strategies.
Each Fund will exchange or convert convertible securities into shares of
underlying common stock when, in the opinion of its investment adviser or
sub-adviser, the investment characteristics of the underlying common shares will
assist a Fund in achieving its investment objective. A Fund may also elect to
hold or trade convertible securities. In selecting convertible securities, the
adviser or sub-adviser evaluates the investment characteristics of the
convertible security as a fixed-income instrument, and the investment potential
of the underlying equity security for capital appreciation. In evaluating these
matters with respect to a particular convertible security, the adviser or
sub-adviser considers numerous factors, including the economic and political
outlook, the value of the security relative to other investments alternatives,
trends in the determinants of the issuer's profits, and the issuer's management
capability and practices.
Warrants (All Funds)
Each Fund may invest in warrants. Warrants are options to purchase common
stock at a specific price (usually at a premium above the market value of the
optioned common stock at issuance) valid for a specific period of time. Warrants
may have a life ranging form less than one year to twenty years, or they may be
perpetual. However, most warrants have expiration dates after which they are
worthless. In addition, a warrant is worthless if the market price of the common
stock does not exceed the warrant's exercise price during the life of the
warrant. Warrants have no voting rights, pay no dividends, and have no rights
with respect to the assets of the corporation issuing them. The percentage
increase or decrease in the market price of the warrant may tend to be greater
than the percentage increase or decrease in the market price of the optioned
common stock.
Sovereign Debt Obligations (All Funds)
Each Fund may purchase sovereign debt instruments issued or guaranteed by
foreign governments or their agencies, including debt of Latin American nations
or other developing countries. Sovereign debt may be in the form of conventional
securities or other types of debt instruments such as loans or loan
participations. Sovereign debt of developing countries may involve a high degree
of risk, and may be in default or present the risk of default. Governmental
entities responsible for repayment of the debt may be unable or unwilling to
repay principal and interest when due, and may require renegotiation or
rescheduling of debt payments. In addition, prospects for repayment of principal
and interest may depend on political as well as economic factors.
Closed-End Investment Companies (All Funds)
Each Fund may purchase the equity securities of closed-end investment
companies to facilitate investment in certain countries. Equity securities of
closed-end investment companies generally trade at a discount to their net asset
value.
<PAGE>
Strategic Investments (All Funds)
Foreign Currency Transactions; Currency Risks
The exchange rates between the U.S. dollar and foreign currencies are a
function of such factors as supply and demand in the currency exchange markets,
international balances of payments, governmental intervention, speculation and
other economic and political conditions. Although a Fund values its assets daily
in U.S. dollars, a Fund may not convert its holdings to another currency.
Foreign exchange dealers may realize a profit on the difference between the
price at which a Fund buys and sells currencies.
Each Fund will engage in foreign currency exchange transactions in
connection with its portfolio investments. A Fund will conduct its foreign
currency exchange transactions either on a spot (i.e., cash) basis at the spot
rate prevailing in the foreign currency exchange market or through forward
contracts to purchase or sell foreign currencies.
Forward Foreign Currency Exchange Contracts
Each Fund may enter into forward foreign currency exchange contracts in
order to protect against a possible loss resulting from an adverse change in the
relationship between the U.S. dollar and a foreign currency involved in an
underlying transaction. A forward foreign currency exchange contract involves an
obligation to purchase or sell a specific currency at a future date, which may
be any fixed number of days (usually less than one year) from the date of the
contract agreed upon by the parties, at a price set at the time of the contract.
These contracts are traded in the interbank market conducted directly between
currency traders (usually large commercial banks) and their customers. A forward
contract generally has a deposit requirement, and no commissions are charged at
any stage for trades. Although foreign exchange dealers do not charge a fee for
conversion, they do realize a profit based on the difference (the spread)
between the price at which they are buying and selling various currencies.
However, forward foreign currency exchange contracts may limit potential gains
which could result from a positive change in such currency relationships. The
adviser and the sub-advisers believe that it is important to have the
flexibility to enter into forward foreign currency exchange contracts whenever
they determine that it is in a Fund's best interest to do so. A Fund will not
speculate in foreign currency exchange.
Except for cross-hedges, a Fund will not enter into forward foreign
currency exchange contracts or maintain a net exposure in such contracts when it
would be obligated to deliver an amount of foreign currency in excess of the
value of its portfolio securities or other assets denominated in that currency
or, in the case of a "cross-hedge" denominated in a currency or currencies that
the adviser or sub-adviser believes will tend to be closely correlated with that
currency with regard to price movements. At the consummation of such a forward
contract, a Fund may either make delivery of the foreign currency or terminate
its contractual obligation to deliver the foreign currency by purchasing an
offsetting contract obligating it to purchase, at the same maturity date, the
same amount of such foreign currency. If a Fund chooses to make delivery of the
foreign currency, it may be required to obtain such currency through the sale of
portfolio securities denominated in such currency or through conversion of other
assets of the Fund into such currency. If a Fund engages in an offsetting
transaction, the Fund will incur a gain or loss to the extent that there has
been a change in forward contract prices.
The Funds will place cash or high grade debt securities in a separate
account of a Fund at its custodian bank in an amount equal to the value of the
Fund's total assets committed to forward foreign currency exchange contracts
entered into as a hedge against a substantial decline in the value of a
particular foreign currency. If the value of the securities placed in the
separate account declines, additional cash or securities will be placed in the
account on a daily basis so that the value of the account will equal the amount
of the Fund's commitments with respect to such contracts.
It should be realized that this method of protecting the value of a Fund's
portfolio securities against a decline in the value of a currency does not
eliminate fluctuations in the underlying prices of the securities. It simply
establishes a rate of exchange which can be achieved at some future point in
time. Additionally, although such contracts tend to minimize the risk of loss
due to a decline in the value of the hedged currency, at the same time they tend
to limit any potential gain which might result should the value of such
3
<PAGE>
currency increase. Generally, a Fund will not enter into a forward foreign
currency exchange contract with a term longer than one year.
Foreign Currency Options
A foreign currency option provides the option buyer with the right to buy
or sell a stated amount of foreign currency at the exercise price on a specified
date or during the option period. The owner of a call option has the right, but
not the obligation, to buy the currency. Conversely, the owner of a put option
has the right, but not the obligation, to sell the currency.
When the option is exercised, the seller (i.e., writer) of the option is
obligated to fulfill the terms of the sold option. However, either the seller or
the buyer may, in the secondary market, close its position during the option
period at any time prior to expiration.
A call option on a foreign currency generally rises in value if the
underlying currency appreciates in value, and a put option on a foreign currency
generally falls in value if the underlying currency depreciates in value.
Although purchasing a foreign currency option can protect the Fund against an
adverse movement in the value of a foreign currency, the option will not limit
the movement in the value of such currency. For example, if a Fund was holding
securities denominated in a foreign currency that was appreciating and had
purchased a foreign currency put to hedge against a decline in the value of the
currency, the Fund would not have to exercise its put option. Likewise, if a
Fund were to enter into a contract to purchase a security denominated in foreign
currency and, in conjunction with that purchase, were to purchase a foreign
currency call option to hedge against a rise in value of the currency, and if
the value of the currency instead depreciated between the date of purchase and
the settlement date, the Fund would not have to exercise its call. Instead, the
Fund could acquire in the spot market the amount of foreign currency needed for
settlement.
Special Risks Associated with Foreign Currency Options
Buyers and sellers of foreign currency options are subject to the same
risks that apply to options generally. In addition, there are certain additional
risks associated with foreign currency options. The markets in foreign currency
options are relatively new, and the Fund's ability to establish and close out
positions on such options is subject to the maintenance of a liquid secondary
market. Although the Funds will not purchase or write such options unless and
until, in the opinion of the adviser or sub-advisers, the market for them has
developed sufficiently to ensure that the risks in connection with such options
are not greater than the risks in connection with the underlying currency, there
can be no assurance that a liquid secondary market will exist for a particular
option at any specific time.
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 a 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 a Fund's
investment adviser or sub- 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.
In addition, options on foreign currencies are affected by all of those
factors that influence foreign exchange rates and investments generally.
The value of a foreign currency option depends upon the value of the
underlying currency relative to the U.S. dollar. As a result, the price of the
option position may vary with changes in the value of either or both currencies
and may have no relationship to the investment merits of a foreign security.
Because foreign currency transactions occurring in the interbank market involve
substantially larger amounts than those that may be involved in the use of
foreign currency options, investors may be disadvantaged by having to deal in an
odd lot market (generally consisting of transactions of less than $1
4
<PAGE>
million) for the underlying foreign currencies at prices that are less favorable
than for round lots.
There is no systematic reporting of last sale information for foreign
currencies or any regulatory requirement that quotations available through
dealers or other market sources be firm or revised on a timely basis. Available
quotation information is generally representative of very large transactions in
the interbank market and thus may not reflect relatively smaller transactions
(i.e, less than $1 million) where rates may be less favorable. The interbank
market in foreign currencies is a global, around-the-clock market. To the extent
that the U.S. option markets are closed while the markets for the underlying
currencies remain open, significant price and rate movements may take place in
the underlying markets that cannot be reflected in the options markets until
they reopen.
Foreign Currency Futures Transactions
By using foreign currency futures contracts and options on such contracts,
a Fund may be able to achieve many of the same objectives as it would through
the use of forward foreign currency exchange contracts. The Funds may be able to
achieve these objectives possibly more effectively and at a lower cost by using
futures transactions instead of forward foreign currency exchange contracts.
A foreign currency futures contract sale creates an obligation by the Fund,
as seller, to deliver the amount of currency called for in the contract at a
specified future time for a specified price. A currency futures contract
purchase creates an obligation by the Fund, as purchaser, to take delivery of an
amount of currency at a specified future time at a specified price. Although the
terms of currency futures contracts specify actual delivery or receipt, in most
instances the contracts are closed out before the settlement date without the
making or taking of delivery of the currency. Closing out of currency futures
contracts is effected by entering into an offsetting purchase or sale
transaction. An offsetting transaction for a currency futures contract sale is
effected by the Fund entering into a currency futures contract purchase for the
same aggregate amount of currency and same delivery date. If the price of the
sale exceeds the price of the offsetting purchase, the Fund is immediately paid
the difference and realizes a loss. Similarly, the closing out of a currency
futures contract purchase is effected by the Fund entering into a currency
futures contract sale. If the offsetting sale price exceeds the purchase price,
the Fund realizes a gain, and if the offsetting sale price is less than the
purchase price, the Fund realizes a loss.
Special Risks Associated with Foreign Currency Futures Contracts and Related
Options
Buyers and sellers of foreign currency futures contracts are subject to the
same risks that apply to the use of futures generally. In addition, there are
risks associated with foreign currency futures contracts and their use as a
hedging device similar to those associated with options on futures currencies,
as described above.
Options on foreign currency futures contracts may involve certain
additional risks. Trading options on foreign currency futures contracts is
relatively new. The ability to establish and close out positions on such options
is subject to the maintenance of a liquid secondary market. To reduce this risk,
the Funds will not purchase or write options on foreign currency futures
contracts unless and until, in the opinion of the adviser or the sub-advisers,
the market for such options has developed sufficiently that the risks in
connection with such options are not greater than the risks in connection with
transactions in the underlying foreign currency futures contracts. Compared to
the purchase or sale of foreign currency futures contracts, the purchase of call
or put options on futures contracts involves less potential risk to the Funds
because the maximum amount at risk is the premium paid for the option (plus
transaction costs). However, there may be circumstances when the purchase of a
call or put option on a futures contract would result in a loss, such as when
there is no movement in the price of the underlying currency or futures
contract.
Restricted and Illiquid Securities
The ability of the Board of Trustees ("Trustees") to determine the
liquidity of certain restricted securities is permitted under a Securities and
Exchange Commission ("SEC") Staff position set forth in the adopting release for
Rule 144A under the Securities Act of 1933 (the "Rule"). The Rule is a
non-exclusive, safe-harbor for certain secondary
5
<PAGE>
market transactions involving securities subject to restrictions on resale under
federal securities laws. The Rule provides an exemption from registration for
resales of otherwise restricted securities to qualified institutional buyers.
The Rule was expected to further enhance the liquidity of the secondary market
for securities eligible for sale under the Rule. The Funds which invest in Rule
144A Securities believe that the Staff of the SEC has left the question of
determining the liquidity of all restricted securities (eligible for resale
under the Rule) for determination by the Trustees. The Trustees consider the
following criteria in determining the liquidity of certain restricted
securities:
(i) the frequency of trades and quotes for the security;
(ii) the number of dealers willing to purchase or sell the security and the
number of other potential buyers;
(iii) dealer undertakings to make a market in the security; and
(iv) the nature of the security and the nature of the marketplace trades.
When-Issued and Delayed Delivery Securities (Emerging Markets and International
Equity)
These transactions are made to secure what is considered to be an
advantageous price or yield for a Fund. No fees or other expenses, other than
normal transaction costs, are incurred. However, liquid assets of a Fund
sufficient to make payment for the securities to be purchased are segregated on
the Fund's records at the trade date. These assets are marked to market daily
and are maintained until the transaction has been settled. Emerging Markets and
International Equity do not intend to engage in when-issued and delayed delivery
transactions to an extent that would cause the segregation of more than 20% of
the total value of their assets.
Lending of Portfolio Securities
The collateral received when a Fund lends portfolio securities must be
valued daily and, should the market value of the loaned securities increase, the
borrower must furnish additional collateral to the lending Fund. During the time
portfolio securities are on loan, the borrower pays the Fund any dividends or
interest paid on such securities. Loans are subject to termination at the option
of the Fund or the borrower. A Fund may pay reasonable administrative and
custodial fees in connection with a loan and may pay a negotiated portion of the
interest earned on the cash or equivalent collateral to the borrower or placing
broker. A Fund does not have the right to vote securities on loan, but would
terminate the loan and regain the right to vote if that were considered
important with respect to the investment.
Repurchase Agreements
The Funds or their custodian will take possession of the securities subject
to repurchase agreements, and these securities will be marked to market daily.
To the extent that the original seller does not repurchase the securities from
the Funds, the Funds could receive less than the repurchase price on any sale of
such securities. In the event that such a defaulting seller filed for bankruptcy
or became insolvent, disposition of such securities by the Funds might be
delayed pending court action. The Funds believe that under the regular
procedures normally in effect for custody of a Fund's portfolio securities
subject to repurchase agreements, a court of competent jurisdiction would rule
in favor of the Fund and allow retention or disposition of such securities. The
Funds will only enter into repurchase agreements with banks and other recognized
financial institutions, such as broker-dealers, which are deemed by the adviser
or a sub-adviser to be creditworthy pursuant to guidelines established by the
Trustees.
Reverse Repurchase Agreements
The Funds may also enter into reverse repurchase agreements. These
transactions are similar to borrowing cash. In a reverse repurchase agreement, a
Fund transfers possession of a portfolio instrument to another person, such as a
financial institution, broker, or dealer, in return for a percentage of the
instrument's market value in cash, and agrees that on a stipulated date in the
future the Fund will repurchase the portfolio instrument by remitting the
original consideration plus interest at an agreed upon rate.
6
<PAGE>
The use of reverse repurchase agreements may enable a Fund to avoid selling
portfolio instruments at a time when a sale may be deemed to be disadvantageous,
but the ability to enter into reverse repurchase agreements does not ensure that
the Fund will be able to avoid selling portfolio instruments at a
disadvantageous time.
When effecting reverse repurchase agreements, liquid assets of a Fund, in a
dollar amount sufficient to make payment for the obligations to be purchased,
are segregated at the trade date. These securities are marked to market daily
and maintained until the transaction is settled.
INVESTMENT RESTRICTIONS
FUNDAMENTAL INVESTMENT RESTRICTIONS
.........Except as noted, the investment restrictions set forth below are
fundamental and may not be changed with respect to each Fund without the
affirmative vote of a majority of the outstanding voting securities of the Fund.
Where an asterisk (*) appears after a Fund's name, the relevant policy is
non-fundamental with respect to that Fund and may be changed by the Fund's
investment adviser without shareholder approval, subject to review and approval
by the Trustees. As used in this Statement of Additional Information and in the
Prospectus, "a majority of the outstanding voting securities of the Fund" means
the lesser of (1) the holders of more than 50% of the outstanding shares of
beneficial interest of the Fund or (2) 67% of the shares present if more than
50% of the shares are present at a meeting in person or by proxy.
1........Concentration of Assets in Any One Issuer
........No Fund may invest more than 5% of its total assets, at the time of the
investment in question, in the securities of any one issuer other than the U.S.
government and its agencies or instrumentalities and, with respect to Emerging
Markets and International Equity, repurchase agreements collateralized by such
securities except that up to 25% of the value of a Fund's total assets may be
invested without regard to such 5% limitation.
2........Ten Percent Limitation on Securities of Any One Issuer
.........Global may not purchase more than 10% of any class of securities of any
one issuer other than the U.S. government and its agencies or instrumentalities.
.........Neither Emerging Markets nor International Equity may purchase more
than 10% of the outstanding voting securities of any one issuer.
3........Investment for Purposes of Control or Management
.........Global may not invest in companies for the purpose of exercising
control or management.
4........Purchase of Securities on Margin
.........No Fund may purchase securities on margin, except that each Fund may
obtain such short-term credits as may be necessary for the clearance of
transactions. A deposit or payment by a Fund of initial or variation margin in
connection with financial futures contracts or related options transactions is
not considered the purchase of a security on margin.
5........Unseasoned Issuers
........Emerging Markets*, International Equity* and Global may not invest more
than 15% of their total assets in securities of unseasoned issuers that have
been in continuous operation for less than three years, including operating
periods of their predecessors, except obligations issued or guaranteed by the
U.S. government and its agencies or instrumentalities (this limitation does not
apply to real estate investment trusts).
7
<PAGE>
6........Underwriting
.........The Funds will not underwrite any issue of securities except as they
may be deemed an underwriter under the Securities Act of 1933 in connection with
the sale of securities in accordance with their investment objectives, policies
and limitations.
7........Interests in Oil, Gas or Other Mineral Exploration or Development
Programs
.........Global may not purchase, sell or invest in interests in oil, gas or
other mineral exploration or development programs.
.........Neither Emerging Markets* nor International Equity* will purchase
interests in oil, gas or other mineral exploration or development programs or
leases, although each Fund may purchase the securities of other issuers which
invest in or sponsor such programs.
8........Concentration in Any One Industry
.........Global may not concentrate its investments in any one industry, except
that it will invest at least 65% of its total assets in securities of companies
engaged principally in the real estate industry.
.........Emerging Markets and International Equity will not invest 25% or more
of the value of their total assets in any one industry except that they may
invest more than 25% of their total assets in securities issued or guaranteed by
the U.S. government, its agencies or instrumentalities.
9........Warrants
.........Global may not invest more than 5% of its net assets in warrants, and,
of this amount, no more than 2% of the Fund's total net assets may be invested
in warrants that are listed on neither the New York nor the American Stock
Exchanges.
.........Emerging Markets* and International Equity* will not invest more than
5% of their net assets in warrants, including those acquired in units or
attached to other securities. To comply with certain state restrictions, the
Funds will limit their investment in such warrants not listed on the New York
Stock Exchange or the American Stock Exchange to 2% of their net assets. (If
state restrictions change, this latter restriction may be changed without notice
to shareholders). For purposes of this restriction, warrants acquired by the
Funds' in units or attached to securities may be deemed to be without value.
10.......Ownership by Trustees/Officers
.........None of Emerging Markets*, International Equity* or Global may purchase
or retain the securities of any issuer if (i) one or more officers or Trustees
of a Fund or its investment adviser or investment sub-advisers individually owns
or would own, directly or beneficially, more than 1/2 of 1% of the securities of
such issuer, and (ii) in the aggregate, such persons own or would own, directly
or beneficially, more than 5% of such securities.
11.......Short Sales
.........Neither Emerging Markets nor International Equity will sell any
securities short.
.........Global may not make short sales of securities unless, at the time of
each such sale and thereafter while a short position exists, the Fund owns an
equal amount of securities of the same issue or owns securities which, without
payment by the Fund of any consideration, are convertible into, or are
exchangeable for, an equal amount of securities of the same issue.
12.......Lending of Funds and Securities
.........Global may not lend its funds to other persons, except through the
purchase of a portion of an issue of debt securities publicly distributed or the
entering into of repurchase agreements. Global may not lend its portfolio
securities, unless the borrower is a broker dealer or financial institution that
pledges and maintains collateral with the Fund consisting of cash or securities
issued or guaranteed by the U.S. government having a value at all times not less
8
<PAGE>
than 100% of the current market-value of the loaned securities, including
accrued interest, provided that the aggregate amount of such loans shall not
exceed 30% of the Fund's net assets.
.........Emerging Markets and International Equity will not lend any of their
assets, except portfolio securities up to one-third of the value of their total
assets. This does not prevent the Funds from purchasing or holding corporate or
government bonds, debentures, notes, certificates of indebtedness or other debt
securities of an issuer, repurchase agreements, or other transactions which are
permitted by a Fund's investment objectives and policies or the Declaration of
Trust governing the Fund.
13.......Commodities
.........Emerging Markets and International Equity will not invest in
commodities except that each Fund reserves the right to engage in transactions
including futures contracts, options and forward contracts with respect to
securities indices or currencies.
.........Global will 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.
14.......Real Estate
.........Neither Emerging Markets nor International Equity will purchase or sell
real estate, including limited partnership interests in real estate, although
each Fund may invest in securities of companies whose business involves the
purchase or sale of real estate or in securities which are secured by real
estate or interests in real estate.
.........Global 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).
15.......Borrowing, Senior Securities, Reverse Repurchase Agreements
.........Emerging Markets and International Equity will not issue senior
securities except that each Fund may borrow money directly or through reverse
repurchase agreements in amounts up to one-third of the value of its total
assets, including the amount borrowed and except to the extent that a Fund may
enter into futures contracts. The Funds will not borrow money or engage in
reverse repurchase agreements for investment leverage, but rather as a
temporary, extraordinary or emergency measure to facilitate management of their
portfolios by enabling them to, for example, meet redemption requests when the
liquidation of portfolio securities is deemed to be inconvenient or
disadvantageous. A Fund will not purchase any securities while borrowings in
excess of 5% of its total assets are outstanding.
.........Global may not borrow money, issue senior securities or enter into
reverse repurchase agreements, except for temporary or emergency purposes, and
not for leveraging, and then in amounts not in excess of 10% of the value of the
Fund's total assets at the time of such borrowing; or mortgage, pledge or
hypothecate any assets except in connection with any such borrowing and in
amounts not in excess of the lesser of the dollar amounts borrowed or 10% of the
value of the Fund's total assets at the time of such borrowing, provided that
Global will not purchase any securities at times when any borrowings (including
reverse repurchase agreements) are outstanding. The Fund will not enter into
reverse repurchase agreements exceeding 5% of the value of its total assets.
16.......Joint Trading
.........Global may not participate on a joint or joint and several basis in any
trading account in any securities. (The "bunching" of orders for the purchase or
sale of portfolio securities with its investment adviser or accounts under its
management to reduce brokerage commissions, to average prices among them or to
facilitate such transactions is not considered a trading account in securities
for purposes of this restriction.)
17.......Options
9
<PAGE>
.........Global may not write, purchase or sell put or call options, or
combinations thereof except as permitted under "Description of Funds -
Investment Practices and Restrictions" in its Prospectus.
.........Emerging Markets* and International Equity* may write covered call
options and secured put options on up to 25% of their net assets and may
purchase put and call options provided that no more than 5% of the fair market
value of its net assets may be invested in premiums on such options.
18.......Pledging Assets
.........Neither Emerging Markets nor International Equity will mortgage, pledge
or hypothecate any assets except to secure permitted borrowings. In these cases,
a Fund may pledge assets having a market value not exceeding the lesser of the
dollar amounts borrowed or 15% of the value of total assets at the time of
borrowing. For purposes of this limitation, the following are not deemed to be
pledges: margin deposits for the purchase and sale of financial futures
contracts and related options and segregation or collateral arrangements made in
connection with options activities or the purchase of securities on a
when-issued basis.
19.......Investing in Securities of Other Investment Companies
.........Emerging Markets* and International Equity* will limit their investment
in other investment companies to no more than 3% of the total outstanding voting
stock of any investment company, will invest no more than 5% of their total
assets in any one investment company and will invest no more than 10% of their
total assets in investment companies in general. A Fund will purchase securities
of closed-end investment companies only in open-market transactions involving
customary broker's commissions. However, these limitations are not applicable if
the securities are acquired in a merger, consolidation or acquisition of assets.
It should be noted that investment companies incur certain expenses such as
management fees and therefore any investment by a Fund in shares of another
investment company would be subject to such duplicate expenses.
20.......Restricted Securities
.........Emerging Markets* and International Equity* will not invest more than
5% of their total assets in securities subject to restrictions on resale under
the Securities Act of 1933, except for restricted securities which meet criteria
for liquidity established by the Trustees.
21........Illiquid Securities.
.........Global* may not invest more than 15% of its net assets in illiquid
securities and other securities which are not readily marketable, including
repurchase agreements which have a maturity of longer than seven days, but
excluding securities eligible for resale under Rule 144A of the Securities Act
of 1933, as amended, which the Trustees have determined to be liquid.
.........Emerging Markets* and International Equity* will not invest more than
15% of their net assets in illiquid securities, including repurchase agreements
providing for settlement in more than seven days after notice and certain
securities not determined by the Trustees to be liquid.
22........Other. In order to comply with certain state blue sky limitations:
-----
...........Global* interprets fundamental investment restriction 7 to prohibit
investments in oil, gas and mineral leases.
...........Global* interprets fundamental investment restriction 14 to prohibit
investment in real estate limited partnerships which are not readily marketable.
Except with respect to borrowing money, if a percentage limitation is
adhered to at the time of investment, a later increase or decrease in percentage
resulting from any change in value of net assets will not result in a violation
of such restriction.
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<PAGE>
To comply with registration requirements in certain states, Emerging
Markets* and International Equity* will limit the margin deposits on futures
contracts entered into by a Fund to 5% of its net assets. (If state requirements
change, these restrictions may be revised without shareholder notification.)
Emerging Markets* and International Equity* have no present intention to
borrow money or enter into reverse repurchase agreements in excess of 5% of the
value of their net assets during the coming fiscal year.
For purposes of their policies and limitations, the Funds consider
certificates of deposit and demand and time deposits issued by a U.S. branch of
a domestic bank or savings and loan having capital, surplus, and undivided
profits in excess of $100,000,000 at the time of investment to be "cash items".
CERTAIN RISK CONSIDERATIONS
...........There can be no assurance that a Fund will achieve its investment
objective and an investment in the Fund involves certain risks which are
described under "Description of the Funds - Investment Objective and Policies"
in the Prospectus.
...........While Global is technically diversified within the meaning of the
Investment Company Act of 1940, as amended (the "1940 Act"), because the
investment alternatives of the Fund are restricted by a policy of concentrating
at least 65% of its total assets in companies in the real estate industry,
investors should understand that investment in the Fund may be subject to
greater risk and market fluctuation than an investment in a portfolio of
securities representing a broader range of industry investment alternatives.
Borrowing.
The table set forth below describes the extent to which Global entered into
borrowing transactions during the fiscal year ended September 30, 1994.
Global
Average
Amount of Debt Average Amount of Average Number of Amount of Debt
Outstanding Debt Outstanding Shares Outstanding Per-Share
Year Ended End of Year During the Year During the Year During Year
- ---------- ----------- ----------------- ------------------ --------------
9/30/1994 $0 $ 1,369,863 50,301,298 $0.03
MANAGEMENT
The Trustees and executive officers of the Trusts, their ages, addresses
and principal occupations during the past five years are set forth below:
Laurence B. Ashkin (67), 180 East Pearson Street, Chicago, IL-Trustee. Real
estate developer and construction consultant since 1980; President of Centrum
Equities since 1987 and Centrum Properties, Inc. since 1980.
Foster Bam*(68), Greenwich Plaza, Greenwich, CT-Trustee. Partner in the law firm
of Cummings and Lockwood since 1968.
James S. Howell (70), 4124 Crossgate Road, Charlotte, NC-Chairman and Trustee.
Retired Vice President of Lance Inc. (food manufacturing); Chairman of the
Distribution Comm. Foundation for the Carolinas from 1989 to 1993.
Robert J. Jeffries (72), 2118 New Bedford Drive, Sun City Center, FL-Trustee.
Corporate consultant since 1967.
Gerald M. McDonnell (55), 821 Regency Drive, Charlotte, NC-Trustee. Sales
Representative with Nucor-Yamoto Inc. (steel producer) since 1988.
Thomas L. McVerry (56), 4419 Parkview Drive, Charlotte, NC-Trustee. Director of
Carolina Cooperative Federal Credit Union since 1990 and Rexham Corporation from
1988 to 1990; Vice President of Rexham Industries, Inc. (diversified
manufacturer) from 1989 to 1990; Vice President-Finance and Resources, Rexham
Corporation from 1979 to 1990.
11
<PAGE>
William Walt Pettit*(39), Holcomb and Pettit, P.A., 207 West Trade St.,
Charlotte, NC-Trustee. Partner in the law firm Holcomb and Pettit, P.A. since
1990; Attorney, Clontz and Clontz from 1980 to 1990.
Russell A. Salton, III, M.D. (47), Primary Physician Care, 1515 Mockingbird
Lane, Charlotte, NC-Trustee. President, Primary Physician Care since 1990.
Michael S. Scofield (52), 212 S. Tryon Street Suite 980, Charlotte, NC-Trustee.
Attorney, Law Offices of Michael S. Scofield since prior to 1989.
John J. Pileggi (35), 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 (39), 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.
Except for Messrs. Ashkin, Bam and Jeffries, who are not Trustees of
Evergreen Investment Trust (formerly First Union Funds), the Trustees and
officers listed above hold the same positions with a total of ten registered
investment companies offering a total of thirty-one investment funds within the
Evergreen mutual fund complex.
- --------
* Mr. Bam and Mr. Pettit may each be deemed to be an "interested person"
within the meaning of the 1940 Act.
The officers of the Trusts are all officers and/or employees of Furman
Selz Incorporated. Furman Selz Incorporated is the parent of Evergreen Funds
Distributor, Inc., the distributor of each Class of shares of each Fund.
The Funds do not pay any direct remuneration to any officer or Trustee
who is an "affiliated person" of either First Union National Bank of North
Carolina or Evergreen Asset Management Corp. or their affiliates. See
"Investment Adviser." Currently, none of the Trustees is an "affiliated person"
as defined in the 1940 Act. The Trusts pay each Trustee who is not an
"affiliated person" an annual retainer and a fee per meeting attended, plus
expenses (and $50 for each telephone conference meeting) as follows:
Name of Trust/Fund Annual Retainer Meeting Fee
Evergreen Real Estate Equity Trust 1,000*
Global 100
Evergreen Investment Trust 9,000** 1,500**
Emerging Markets
International
- --------------------
* This reflects the aggregate retainer paid by Evergreen Real Estate Equity
Trust with respect to both of its investment series, which are Evergreen U.S.
Real Estate Equity Fund and Evergreen Global Real Estate Equity Fund.
** Evergreen Investment Trust pays an annual retainer to each trustee and a
per-meeting fee that are allocated among its fifteen series. Additionally, each
member of the Audit Committee receives $200 for attendance at each meeting of
the of the Audit Committee and an additional fee is paid to the Chairman of the
Board of $2,000.
Set forth below for each of the Trustees is the aggregate compensation
paid to such Trustees by each Trust for the fiscal year ended December 31, 1994
(fiscal year ended September 30, 1994 for Global)
Total
Compensation
Aggregate Compensation From Trust From Trusts
& Fund
Name of Investment Complex Paid
Person Global* Trust** to Trustees
Laurence Ashkin 1,494 29,800
Foster Bam 1,494 29,850
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<PAGE>
James S. Howell 622 14,900 26,900
Robert J.
Jeffries 1,494 29,800
Gerald M.
McDonnell 722 11,900 26,100
Thomas L.
McVerry 722 11,900 26,150
William Walt
Pettit 722 11,900 26,100
Russell A.
Salton, III, M.D. 722 11,900 26,100
Michael S.
Scofield 1,108 11,700 25,650
* Global changed its fiscal year end during the period covered by the foregoing
table from December 31 to September 30. Accordingly, the Trustees fees reported
in the foregoing table reflect, for Global, the period from January 1, 1994 to
September 30, 1994.
** Formerly known as First Union Funds.
No officer or Trustee of the Trusts owned Class B or C shares of any
Fund as of the date hereof. The number and percent of outstanding shares of each
Fund owned by officers and Trustees as a group on June 15, 1995, is as follows:
No. of Shares Owned
By Officers and Ownership by Officers and
Trustees Trustees as a % of Class Y
Name of Fund as a Group Shares Outstanding
Emerging Markets -0- -0-
International -0- -0-
Global 22,588 .35%
Set forth below is information with respect to each person, who, to
each Fund's knowledge, owned beneficially or of record more than 5% of a class
of each Fund's total outstanding shares and their aggregate ownership of the
Fund's total outstanding shares as of June 15, 1995.
Name of % of
Name and Address Fund/Class No. of Shares Class/Fund
- ---------------- ---------- ------------- ----------
Fubs & Co. Febo Emerging Markets/C 1,000 39.80%/
Frances B. Goldstein
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
Fubs & Co. Febo Emerging Markets/C 507 20.18%/
Victor McCauley
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
Fubs & Co. Febo Emerging Markets/C 357 14.21%/
Gales Chimney Rock Shop Inc.
Attn: Steve Gale
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
13
<PAGE>
Fubs & Co. Febo Emerging Markets/C 204 8.15%/
Elizabeth R. Langdon
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
Fubs & Co. Febo Emerging Markets/C 139 5.57%/
C. Robert Gidlow C/F
Amy Gidlow
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
Fubs & Co. Febo Emerging Markets/C 137 5.46%/
Matthew S. Palmer
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
First Union National Bank Emerging Markets/C 766,762 77.48%/
Trust Accounts
Attn: Ginny Batten
11th Floor CMG-1151
301 S. Tryon Street
Charlotte, NC 28288-0001
First Union National Bank Emerging Markets/Y 222,795 22.51%/
Trust Accounts
Attn: Ginny Batten
11th Floor CMG-1151
301 S. Tryon Street
Charlotte, NC 28288-0001
Fubs & Co. Febo Emerging Markets/C 4,227 18.92%/
Julio Noltenius
Julio G. Noltenius
Alicia Noltenius
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
Fubs & Co. Febo Emerging Markets/C 2,950 11.81%/
G. Gene Wilhelm
Pola Wilhelm
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
Fubs & Co. Febo Emerging Markets/C 2,873 11.51%/
Richard K. Hamilton and
Sandra H. Hamilton
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
Fubs & Co. Febo Emerging Markets/C 2,703 10.82%/
George M. Kingsbury
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
Fubs & Co. Febo Emerging Markets/C 1,632 6.54%/
C. Wilson Construction Company
Profit Sharing Plan
U/A/D 7-1-87
C/O First Union National Bank
301 S. Tryon Street Charlotte, NC
28288-0001
First Union National Bank International Equity/Y 1,762,827 51.51%/
Trust Accounts
Attn: Ginny Batten
11th Floor CMG-1151
301 S. Tryon Street
Charlotte, NC 28288-0001
First Union National Bank International Equity/Y 1,659,266 48.49%/
Trust Accounts
Attn: Ginny Batten
11th Floor CMG-1151
301 S. Tryon Street
Charlotte, NC 28288-0001
14
<PAGE>
Fubs & Co. Febo Global Real Estate/A 134 5.88%/
Mark Major Thomsen
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
Fubs & Co. Febo Global Real Estate/A 539 23.56%/
John E. Benson
Vivianle M. Benson
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
Fubs & Co. Febo Global Real Estate/A 338 14.77%/
Joan B. Huber C/F
Andrew P. Huber
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
Fubs & Co. Febo Global Real Estate/A 338 14.77%/
Joan B. Huber C/F
Marissa A. Huber
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
Fubs & Co. Febo Global Real Estate/A 261 11.40%/
Richard Leyba Rubio
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
First Union National Bank- Global Real Estate/A 134 5.86%/
VA C/F
Alisa Van Zant Shannon IRA
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
First Union National Bank- Global Real Estate/ 190 14.46%/
NC C/F
Glenda E. Laws
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
Fubs & & Co. Febo Global Real Estate/B 87 8.63%/
Christian Saade
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
Fubs & Co. Febo Global Real Estate/B 85 6.54%/
Richard D. Zuroweste
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
Fubs & Co. Febo Global Real Estate/B 832 63.34%/
Allie M. Frazier
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
First Union National Bank- Global Real Estate/B 100 7.61%/
FL C/F
David L. Schurger IRA
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
Fubs & Co. Febo Global Real Estate/C 87 7.13%/
Patrick K. De Garay
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
NFSC Febo #144-285862 Global Real Estate/C 247 20.22%/
Eric J. Jorgenson
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
15
<PAGE>
Fubs & Co. Febo Global Real Estate/C 871 71.05%/
R. Frazior Inc.
Investment Account
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
Stephen A. Lieber Global Real Estate/Y 1,089,041 16.82%/
C/O Lieber & Co.
2500 Westchester Avenue
Purchase, NY 10577
Charles Schwab & Co. Inc. Global Real Estate/Y 1,823,491 25.07%/
Reinvest Account
Attn: Mutual Funds Dept.
101 Montgomery Street
San Francisco, CA 94104-4122
- ---------------------------------
*Acting in various capacities for numerous accounts. As a result of its
ownership of %, % and % of Global, Emerging Markets and International,
respectively, on June 15, 1995, First Union National Bank of North Carolina may
be deemed to "control" each Fund as that term is defined in the 1940 Act.
INVESTMENT ADVISER
(See also "Management of the Fund" in each Fund's Prospectus)
The investment adviser of Global is Evergreen Asset Management Corp., a
New York corporation, with offices at 2500 Westchester Avenue, Purchase, New
York or ("Evergreen Asset" or the "Adviser."). Evergreen Asset is owned by First
Union National Bank of North Carolina ("FUNB" or the "Adviser") which, in turn,
is a subsidiary of First Union Corporation ("First Union"), a bank holding
company headquartered in Charlotte, North Carolina. The investment adviser of
Emerging Markets and International is FUNB which provides investment
16
<PAGE>
advisory services through its Capital Management Group. Marvin & Palmer
Associates, Inc. ("Marvin & Palmer") and Boston International Advisors, Inc.
("Boston International") are the sub-advisers for Emerging Markets and
International, respectively, under the terms of Sub- Advisory Agreements between
FUNB and the respective sub-adviser. The Directors of Evergreen Asset are
Richard K. Wagoner and Barbara I. Colvin. The executive officers of Evergreen
Asset are Stephen A. Lieber, Chairman and Co-Chief Executive Officer, Nola
Maddox Falcone, President and Co-Chief Executive Officer, Theodore J. Israel,
Jr., Executive Vice President, Joseph J. McBrien, Senior Vice President and
General Counsel, and George R. Gaspari, Senior Vice President and Chief
Financial Officer.
On June 30, 1994, Evergreen Asset and Lieber and Company ("Lieber")
were acquired by First Union through certain of its subsidiaries. Evergreen
Asset was acquired by FUNB, a wholly-owned subsidiary (except for directors'
qualifying shares) of First Union, by merger into EAMC Corporation ("EAMC") a
wholly-owned subsidiary of FUNB. EAMC then assumed the name "Evergreen Asset
Management Corp." and succeeded to the business of Evergreen Asset.
Contemporaneously with the succession of EAMC to the business of Evergreen Asset
and its assumption of the name "Evergreen Asset Management Corp.", Global
entered into a new investment advisory agreement with EAMC and into a
distribution agreement with Evergreen Funds Distributor, Inc., (the
"Distributor") 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.
The partnership interests in Lieber, a New York general partnership,
were acquired by Lieber I Corp. and Lieber II Corp., which are both wholly-owned
subsidiaries of FUNB. The business of Lieber is being continued. The new
advisory and sub-advisory agreements were approved by the shareholders of Global
at their meeting held on June 23, 1994, and became effective on June 30, 1994.
Under its Investment Advisory Agreement with each Fund, each Adviser
has agreed to furnish reports, statistical and research services and
recommendations with respect to each Fund's portfolio of investments. In
addition, each Adviser provides office facilities to the Funds and performs a
variety of administrative services. Each Fund pays the cost of all of its other
expenses and liabilities, including expenses and liabilities incurred in
connection with maintaining their registration under the Securities Act of 1933,
as amended, and the 1940 Act, printing prospectuses (for existing shareholders)
as they are updated, state qualifications, 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, each Adviser will pay the costs of printing and
distributing prospectuses used for prospective shareholders.
The method of computing the investment advisory fee for each Fund is
described in such Fund's Prospectus. The advisory fees paid by each Fund for the
three most recent fiscal periods reflected in its registration statement are set
forth below:
GLOBAL Period Ended Year Ended Year Ended
9/30/94 12/31/93 12/31/92
Advisory Fee $1,133,380 $523,294 $75,696
========== ========== ========
Expense
Reimbursement --- $41,226 $130,246
------ -------
EMERGING
MARKETS Year Ended
12/31/94
Advisory Fee $35,047
--------
Waiver ($35,047)
Net Advisory Fee $ 0
========
INTERNATIONAL Year Ended
12/31/94
Advisory Fee $60,885
---------
Waiver ($44,928)
Net Advisory Fee $15,957
=========
17
<PAGE>
Global changed its fiscal year end from December 31 to September 30
during the periods covered by the foregoing table. Accordingly, the investment
advisory fees reported in the foregoing table reflect for Global, the period
from January 1, 1994 to September 30, 1994. In addition, Emerging Markets and
International commenced operations on September 6, 1994 and September 2, 1994,
respectively, and, therefore, the first year's figures set forth in the table
above reflect for Emerging Markets and International investment advisory fees
paid for the period from commencement of operations through December 31, 1994.
For their sub-advisory services, Marvin & Palmer and Boston
International receive an annual sub-advisory fee as described in the
Prospectuses. For the period from September 6, 1994 (commencement of operations)
to December 31, 1994, Marvin & Palmer Associates, Inc. earned sub-advisory fees
from the Emerging Markets of $23,133. For the period from September 2, 1994
(commencement of operations) to December 31, 1994, Boston International
Advisers, Inc.
earned sub-advisory fees from the International of $23,505.
Expense Limitations
Each Adviser's fee will be reduced by, or the Adviser will reimburse
the Funds for any amount necessary to prevent such expenses (exclusive of taxes,
interest, brokerage commissions and extraordinary expenses, but inclusive of the
Adviser's fee) from exceeding the most restrictive of the expense limitations
imposed by state securities commissions of the states in which the Funds' shares
are then registered or qualified for sale. Reimbursement, when necessary, will
be made monthly in the same manner in which the advisory fee is paid. Currently
the most restrictive state expense limitation is 2.5% of the first $30,000,000
of the Fund's average daily net assets, 2% of the next $70,000,000 of such
assets and 1.5% of such assets in excess of $100,000,000.
Pursuant to the Sub-Advisory Agreements between FUNB and the
sub-advisers, in the event that the Adviser's fee is reduced in order to meet
the expense limitations established by certain states, the sub-advisory fee for
the sub-adviser to the affected Fund shall be reduced in accordance with the
mutual agreement of the Adviser and the sub-adviser.
In addition, each Adviser has in some instances voluntarily limited
(and may in the future limit) expenses of certain of the Funds. For the years
ended December 31, 1991 and 1992, and for the four month period ended March 31,
1993, Evergreen Asset voluntarily limited the expenses of Global to 2% of
average net assets.
The Investment Advisory Agreements and Sub-Advisory Agreements are
terminable, without the payment of any penalty, on sixty days' written notice,
by a vote of the holders of a majority of each Fund's outstanding shares, or by
a vote of a majority of each Trust's Trustees or by the respective Adviser. The
Investment Advisory Agreements will automatically terminate in the event of
their assignment. Each Investment Advisory Agreement provides in substance that
the Adviser shall not be liable for any action or failure to act in accordance
with its duties thereunder in the absence of willful misfeasance, bad faith or
gross negligence on the part of the Adviser or of reckless disregard of its
obligations thereunder. The Investment Advisory Agreement with respect to Global
was approved by the Fund's shareholders on June 23, 1994, became effective on
June 30, 1994, and will continue in effect until June 30, 1996, and thereafter
from year to year provided that its continuance is approved annually by a vote
of a majority of the Trustees of the Trust including a majority of those
Trustees who are not parties thereto or "interested persons" (as defined in the
1940 Act) of any such party, cast in person at a meeting duly called for the
purpose of voting on such approval or a majority of the outstanding voting
shares of the Fund. With respect to Emerging Markets and International, the
Investment Advisory Agreement dated February 28, 1985 and amended from time to
time thereafter and the Sub-Advisory Agreements dated ------------- were last
approved by the Trustees of Evergreen Investment Trust (formerly, First Union
Funds) on April 20, 1995 and each Agreement will continue from year to year with
respect to each Fund provided that such continuance is approved annually by a
vote of a majority of the Trustees of Evergreen Investment Trust including a
majority of those Trustees who are not parties thereto or "interested persons"
of any such party cast in person at a meeting duly called for the purpose of
voting on such approval or by a vote of a majority of the outstanding voting
securities of each Fund.
Certain other clients of each Adviser may have investment objectives
and policies similar to those of the Funds. Each Adviser (including the
sub-advisers) may, from time to time, make recommendations which result in the
purchase or sale of a particular security
18
<PAGE>
by its other clients simultaneously with a Fund. If transactions on behalf of
more than one client during the same period increase the demand for securities
being purchased or the supply of securities being sold, there may be an adverse
effect on price or quantity. It is the policy of each Adviser to allocate
advisory recommendations and the placing of orders in a manner which is deemed
equitable by the Adviser to the accounts involved, including the Funds. When two
or more of the clients of the Adviser (including one or more of the Funds) are
purchasing or selling the same security on a given day from the same
broker-dealer, such transactions may be averaged as to price.
Although the investment objectives of the Funds are not the same, and
their investment decisions are made independently of each other, they rely upon
the same resources for investment advice and recommendations. Therefore, on
occasion, when a particular security meets the different investment objectives
of the various Funds, they may simultaneously purchase or sell the same
security. This could have a detrimental effect on the price and quantity of the
security available to each Fund. If simultaneous transactions occur, the Adviser
attempts to allocate the securities, both as to price and quantity, in
accordance with a method deemed equitable to each Fund and consistent with their
different investment objectives. In some cases, simultaneous purchases or sales
could have a beneficial effect, in that the ability of one Fund to participate
in volume transactions may produce better executions for that Fund.
Each Fund has adopted procedures under Rule 17a-7 of the 1940 Act to permit
purchase and sales transactions to be effected between each Fund and the other
registered investment companies for which either Evergreen Asset or FUNB acts as
investment adviser or between the Fund and any advisory clients of Evergreen
Asset, FUNB, Lieber & Company, Marvin & Palmer or Boston International. Each
Fund may from time to time engage in such transactions but only in accordance
with these procedures and if they are equitable to each participant and
consistent with each participant's investment objectives.
Prior to July 1, 1995, Federated Administrative Services, a subsidiary
of Federated Investors, provided legal, accounting and other administrative
personnel and support services to each of the portfolios of Evergreen Investment
Trust. The Trust paid a fee for such services at the following annual rate: .15%
on the first $250 million average daily net assets of the Trust; .125% on the
next $250 million; .10% on the next $250 million and .075% on assets in excess
of $250 million. For the period from September 6, 1994 (commencement of
operations) to December 31, 1994, Emerging Markets incurred $15,890 in
administrative service costs, all of which was voluntarily waived. From
September 2, 1994 (commencement of operations) to December 31, 1994,
International incurred $16,438 in administrative service costs, all of which was
voluntarily waived.
Commencing July 1, 1995, Evergreen Asset will provide administrative
services to each of the portfolios of Evergreen Investment Trust for a fee based
on the average daily net assets of each fund administered by Evergreen Asset for
which Evergreen Asset or FUNB also serves as investment adviser, calculated
daily and payable monthly at the following annual rates: .050% on the first $7
billion; .035% on the next $3 billion; .030% on the next $5 billion; .020% on
the next $10 billion; .015% on the next $10 billion; and .010% on assets in
excess of $30 billion. Furman Selz Incorporated, the parent of the Distributor,
serves as sub-administrator to Emerging Markets and International and is
entitled to receive a fee from each Fund calculated on the average daily net
assets of each Fund at a rate based on the total assets of the mutual funds
administered by Evergreen Asset for which FUNB or Evergreen Asset also serve as
investment adviser, calculated in accordance with the following schedule: .0100%
of the first $7 billion; .0075% on the next $3 billion; .0050% on the next $15
billion; and .0040% on assets in excess of $25 billion. The total assets of
mutual funds administered by Evergreen Asset for which Evergreen Asset or FUNB
serves as investment adviser as of March 31, 1995 were approximately $7.95
billion.
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 a front-end sales charge, and, in the
case of Class C shares, without the assessment of a contingent deferred sales
charge after the first year following purchase, while at the same time
permitting the
19
<PAGE>
Distributor to compensate broker-dealers in connection with the sale of such
shares. In this regard the purpose and function of the combined contingent
deferred sales charge and distribution services fee on the Class B shares and
the Class C shares, are the same as those of the front-end sales charge and
distribution fee with respect to the Class A shares in that in each case the
sales charge and/or distribution fee provide for the financing of the
distribution of the Fund's shares.
Under the Rule 12b-1 Distribution Plans that have been adopted by each
Fund with respect to each of its Class A, Class B and Class C shares (each a
"Plan" and collectively, the "Plans"), the Treasurer of each Fund reports the
amounts expended under the Plan and the purposes for which such expenditures
were made to the Trustees of each Trust for their review on a quarterly basis.
Also, each Plan provides that the selection and nomination of Trustees who are
not "interested persons" of each Trust (as defined in the 1940 Act) are
committed to the discretion of such disinterested Trustees then in office.
Each Adviser may from time to time and from its own funds or such other
resources as may be permitted by rules of the Securities and Exchange Commission
make payments for distribution services to the Distributor; the latter may in
turn pay part or all of such compensation to brokers or other persons for their
distribution assistance.
Global commenced offering Class A, B or C shares on January 3, 1995.
The Plan with respect to the Fund became effective on December 30, 1994 and was
initially approved by the sole shareholder of each Class of shares of the Fund
with respect to which a Plan was adopted on that date and by the unanimous vote
of the Trustees of the Trust, including the disinterested Trustees voting
separately, at a meeting called for that purpose and held on December 13, 1994.
The Distribution Agreement between the Fund and the Distributor, pursuant to
which distribution fees are paid under the Plan by the Fund with respect to its
Class A, Class B and Class C shares was also approved at the December 13, 1994
meeting by the unanimous vote of the Trustees, including the disinterested
Trustees voting separately. Each Plan and Distribution Agreement will continue
in effect for successive twelve-month periods provided, however, that such
continuance is specifically approved at least annually by the Trustees of the
Trust or by vote of the holders of a majority of the outstanding voting
securities (as defined in the 1940 Act) of that Class, and, in either case, by a
majority of the Trustees of the Trust who are not parties to the Agreement or
interested persons, as defined in the 1940 Act, of any such party (other than as
Trustees of the Trust) and who have no direct or indirect financial interest in
the operation of the Plan or any agreement related thereto.
Prior to July 7, 1995, Federated Securities Corp., a subsidiary of
Federated Investors, served as the distributor for Emerging Markets and
International as well as other portfolios of Evergreen Investment Trust. The
Distribution Agreements between each Fund and the Distributor pursuant to which
distribution fees are paid under the Plans by each Fund with respect to its
Class A, Class B and Class C shares were approved on April 20, 1995 by the
unanimous vote of the Trustees including the disinterested Trustees voting
separately.
The Plans permit the payment of fees to brokers and others for
distribution and shareholder-related administrative services and to
broker-dealers, depository institutions, financial intermediaries and
administrators for administrative services as to Class A, Class B and Class C
shares. The Plans are designed to (i) stimulate brokers to provide distribution
and administrative support services to each Fund and holders of Class A, Class B
and Class C shares and (ii) stimulate administrators to render administrative
support services to the Fund and holders of Class A, Class B and Class C shares.
The administrative services are provided by a representative who has knowledge
of the shareholder's particular circumstances and goals, and include, but are
not limited to providing office space, equipment, telephone facilities, and
various personnel including clerical, supervisory, and computer, as necessary or
beneficial to establish and maintain shareholder accounts and records;
processing purchase and redemption transactions and automatic investments of
client account cash balances; answering routine client inquiries regarding Class
A, Class B and Class C shares; assisting clients in changing dividend options,
account designations, and addresses; and providing such other services as the
Fund reasonably requests for its Class A, Class B and Class C shares.
In addition to the Plans, Emerging Markets and International have each
adopted a Shareholder Services Plan whereby shareholder servicing agents may
receive fees from the Fund for providing services which include, but are not
limited to, distributing prospectuses and other information, providing
shareholder assistance, and communicating or facilitating purchases and
redemptions of Class B and Class C shares of the Fund.
20
<PAGE>
In the event that a Plan or Distribution Agreement is terminated or not
continued with respect to one or more Classes of a Fund, (i) no distribution
fees (other than current amounts accrued but not yet paid) would be owed by the
Fund to the Distributor with respect to that Class or Classes, and (ii) the Fund
would not be obligated to pay the Distributor for any amounts expended under the
Distribution Agreement not previously recovered by the Distributor from
distribution services fees in respect of shares of such Class or Classes through
deferred sales charges.
All material amendments to any Plan or Distribution Agreement must be
approved by a vote of the Trustees of a Trust or the holders of the Fund's
outstanding voting securities, voting separately by Class, and in either case,
by a majority of the disinterested Trustees, cast in person at a meeting called
for the purpose of voting on such approval; and any Plan or Distribution
Agreement may not be amended in order to increase materially the costs that a
particular Class of shares of a Fund may bear pursuant to the Plan or
Distribution Agreement without the approval of a majority of the holders of the
outstanding voting shares of the Class affected. With respect to Emerging
Markets and International, amendments to the Shareholder Services Plan require a
majority vote of the disinterested Trustees but do not require a shareholders
vote. Any Plan, Shareholder Services Plan or Distribution Agreement may be
terminated (a) by a Fund without penalty at any time by a majority vote of the
holders of the outstanding voting securities of the Fund, voting separately by
Class or by a majority vote of the Trustees who are not "interested persons" as
defined in the 1940 Act, or (b) by the Distributor. To terminate any
Distribution Agreement, any party must give the other parties 60 days' written
notice; to terminate a Plan only, the Fund need give no notice to the
Distributor. Any Distribution Agreement will terminate automatically in the
event of its assignment.
For the period from September 6, 1994 (commencement of operations) to
December 31, 1994, Emerging Markets incurred $505 in distribution services fees
on behalf of Class A shares. For the period from September 2, 1994 (commencement
of operations) to December 31, 1994, International incurred $1,270 in
distribution services fees on behalf of Class A shares.
For the period from September 6, 1994 (commencement of operations) to
December 31, 1994, Emerging Markets incurred $2,924 in distribution services
fees of Class B shares. For the period from September 2, 1994 (commencement of
operations) to December 31, 1994, International incurred $8,718 in distribution
services fees on behalf of Class B shares.
For the period from September 6, 1994 (commencement of operations) to
December 31, 1994, Emerging Markets incurred $163 in distribution services fees
on behalf of Class C shares. For the period from September 2, 1994 (commencement
of operations) to December 31, 1994, International incurred $281 in distribution
service fees on behalf of its Class C shares.
Shareholder Services Plans - Emerging Markets and International
For the period ended December 31, 1994, Emerging Markets incurred
shareholder services fees of $975 and $54 on behalf of Class B shares and Class
C shares, respectively; and International incurred shareholder services fees of
$2,906 and $93 on behalf of Class B shares and Class C shares, respectively.
ALLOCATION OF BROKERAGE
Decisions regarding each Fund's portfolio are made by its Adviser or,
in the case of Emerging Markets and International, the sub-advisers, subject to
the supervision and control of the Trustees. Orders for the purchase and sale of
securities and other investments are placed by employees of the Adviser or
sub-advisers, all of whom, in the case of Evergreen Asset, are associated with
Lieber. In general, the same individuals perform the same functions for the
other funds managed by the Adviser or sub-advisers. A Fund will not effect any
brokerage transactions with any broker or dealer affiliated directly or
indirectly with the Adviser or sub-advisers unless such transactions are fair
and reasonable, under the circumstances, to the Fund's shareholders.
Circumstances that may indicate that such transactions are fair or reasonable
include the frequency of such transactions, the selection process and the
commissions payable in connection with such transactions.
A substantial portion of the transactions in equity securities for each
Fund will occur on foreign stock exchanges. Transactions on stock exchanges
involve the payment of
21
<PAGE>
brokerage commissions. In transactions on stock exchanges in the United States,
these commissions are negotiated, whereas on many foreign stock exchanges these
commissions are fixed. In the case of securities traded in the foreign and
domestic over-the-counter markets, there is generally no stated commission, but
the price usually includes an undisclosed commission or markup. Over-the-counter
transactions will generally be placed directly with a principal market maker,
although the Fund may place an over-the-counter order with a broker-dealer if a
better price (including commission) and execution are available.
It is anticipated that most purchase and sale transactions involving
fixed income securities will be with the issuer or an underwriter or with major
dealers in such securities acting as principals. Such transactions are normally
on a net basis and generally do not involve payment of brokerage commissions.
However, the cost of securities purchased from an underwriter usually includes a
commission paid by the issuer to the underwriter. Purchases or sales from
dealers will normally reflect the spread between bid and ask prices.
In selecting firms to effect securities transactions, the primary
consideration of each Fund shall be prompt execution at the most favorable
price. 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. To the extent that receipt of these services for which the Adviser or its
affiliates might otherwise have paid, it would tend to reduce their expenses.
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 may be compensated for effecting transactions in portfolio securities for
a Fund on a national securities exchange provided the conditions of the rules
are met. Each Fund advised by Evergreen Asset has entered into an agreement with
Lieber authorizing Lieber to retain compensation for brokerage services. In
accordance with such agreement, it is contemplated that Lieber, a member of the
New York and American Stock Exchanges, will, to the extent practicable, provide
brokerage services to the Fund with respect to substantially all securities
transactions effected on the New York and American Stock Exchanges. In such
transactions, 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 or that which can be reasonably expected to be offered by an unaffiliated
broker-dealer having comparable execution capability in a similar transaction.
However, no Fund will engage in transactions in which Lieber would be a
principal. While no Fund advised by Evergreen Asset contemplates any ongoing
arrangements with other brokerage firms, brokerage business may be given from
time to time to other firms. In addition, the Trustees have adopted procedures
pursuant to Rule 17e-1 under the 1940 Act to ensure that all brokerage
transactions with Lieber, as an affiliated broker-dealer, are fair and
reasonable.
Any profits from brokerage commissions accruing to Lieber as a result
of portfolio transactions for the Fund will accrue to FUNB and to its ultimate
parent, First Union. The Investment Advisory Agreements does not provide for a
reduction of the Adviser's fee with respect to any fund by the amount of any
profits earned by Lieber from brokerage commissions generated by portfolio
transactions of the Fund.
The following chart shows: (1) the brokerage commissions paid by Global
during its last three fiscal years; (2) the amount and percentage thereof paid
to Lieber; and (3) the percentage of the total dollar amount of all portfolio
transactions with respect to which commissions have been paid which were
effected by Lieber:
GLOBAL Period Ended Year Ended Year Ended
9/30/94 12/31/93 12/31/92
Total Brokerage $917,989 $868,367 $196,719
Commissions
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<PAGE>
Dollar Amount and % $174,137 $154,666 $5,685
paid to Lieber 19% 18% 26%
% of Transactions
Effected by Lieber 33% 29% 35%
Global changed its fiscal year end from December 31 to September 30
during the periods covered by the foregoing table. Accordingly, the commissions
reported in the foregoing table reflect for Global the period from January 1,
1994 to September 30, 1994.
Emerging Markets and International did not pay any commissions to
Lieber. For the period from September 6, 1994 (commencement of operations) to
December 31, 1994, Emerging Markets paid $41,532 in commissions on brokerage
transactions. For the period from September 2, 1994 (commencement of operations)
to December 31, 1994, International paid $16,438 in commissions on brokerage
transactions.
ADDITIONAL TAX INFORMATION
(See also "Taxes" in the Prospectus)
Each Fund has qualified and intends to continue to qualify for and
elect the tax treatment applicable to regulated investment companies ("RIC")
under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"). (Such qualification does not involve supervision of management or
investment practices or policies by the Internal Revenue Service.) In order to
qualify as a regulated investment company, a Fund must, among other things, (a)
derive at least 90% of its gross income from dividends, interest, payments with
respect to proceeds from securities loans, gains from the sale or other
disposition of securities or foreign currencies and other income (including
gains from options, futures or forward contracts) derived with respect to its
business of investing in such securities; (b) derive less than 30% of its gross
income from the sale or other disposition of securities, options, futures or
forward contracts (other than those on foreign currencies), or foreign
currencies (or options, futures or forward contracts thereon) that are not
directly related to the RIC's principal business of investing in securities (or
options and futures with respect thereto) held for less than three months; and
(c) diversify its holdings so that, at the end of each quarter of its taxable
year, (i) at least 50% of the market value of the Fund's total assets is
represented by cash, U.S. government securities and other securities limited in
respect of any one issuer, to an amount not greater than 5% of the Fund's total
assets and 10% of the outstanding voting securities of such issuer, and (ii) not
more than 25% of the value of its total assets is invested in the securities of
any one issuer (other than U.S. government securities and securities of other
regulated investment companies). By so qualifying, a Fund is not subject to
Federal income tax if it timely distributes its investment company taxable
income and any net realized capital gains. A 4% nondeductible excise tax will be
imposed on a Fund to the extent it does not meet certain distribution
requirements by the end of each calendar year. Each Fund anticipates meeting
such distribution requirements.
Dividends paid by a Fund from investment company taxable income
generally will be taxed to the shareholders as ordinary income. Investment
company taxable income includes net investment income and net realized
short-term gains (if any). Any dividends received by a Fund from domestic
corporations will constitute a portion of the Fund's gross investment income. It
is anticipated that this portion of the dividends paid by a Fund (other than
distributions of securities profits) will qualify for the 70% dividends-received
deduction for corporations. Shareholders will be informed of the amounts of
dividends which so qualify.
Distributions of the excess of net long-term capital gain over net
short-term capital loss are taxable to shareholders (who are not exempt from
tax) as long-term capital gain, regardless of the length of time the shares of a
Fund have been held by such shareholders. Short-term capital gains distributions
are taxable to shareholders who are not exempt from tax as ordinary income. Such
distributions are not eligible for the dividends-received deduction. Any loss
recognized upon the sale of shares of a Fund held by a shareholder for six
months or less will be treated as a long-term capital loss to the extent that
the shareholder received a long-term capital gain distribution with respect to
such shares.
Distributions of investment company taxable income and any net
short-term capital gains will be taxable as ordinary income as described above
to shareholders (who
23
<PAGE>
are not exempt from tax), whether made in shares or in cash. Shareholders
electing to receive distributions in the form of additional shares will have a
cost basis for Federal income tax purposes in each share so received equal to
the net asset value of a share of a Fund on the reinvestment date.
Distributions by each Fund result in a reduction in the net asset value
of the Fund's shares. Should a distribution reduce the net asset value below a
shareholder's cost basis, such distribution nevertheless would be taxable as
ordinary income or capital gain as described above to shareholders (who are not
exempt from tax), even though, from an investment standpoint, it may constitute
a return of capital. In particular, investors should be careful to consider the
tax implications of buying shares just prior to a distribution. The price of
shares purchased at that time includes the amount of the
forthcoming distribution. Those purchasing just prior to a distribution will
then receive what is in effect a return of capital upon the distribution which
will nevertheless be taxable to shareholders subject to taxes.
Upon a sale or exchange of its shares, a shareholder will realize a
taxable gain or loss depending on its basis in the shares. Such gains or loss
will be treated as a capital gain or loss if the shares are capital assets in
the investor's hands and will be a long-term capital gain or loss if the shares
have been held for more than one year. Generally, any loss realized on a sale or
exchange will be disallowed to the extent shares disposed of are replaced within
a period of sixty-one days beginning thirty days before and ending thirty days
after the shares are disposed of. Any loss realized by a shareholder on the sale
of shares of the Fund held by the shareholder for six months or less will be
disallowed to the extent of any exempt interest dividends received by the
shareholder with respect to such shares, and will be treated for tax purposes as
a long-term capital loss to the extent of any distributions of net capital gains
received by the shareholder with respect to such shares.
All distributions, whether received in shares or cash, must be reported
by each shareholder on his or her Federal income tax return. Each shareholder
should consult his or her own tax adviser to determine the state and local tax
implications of Fund distributions.
Shareholders who fail to furnish their taxpayer identification numbers
to a Fund and to certify as to its correctness and certain other shareholders
may be subject to a 31% Federal income tax backup withholding requirement on
dividends, distributions of capital gains and redemption proceeds paid to them
by the Fund. If the withholding provisions are applicable, any such dividends or
capital gain distributions to these shareholders, whether taken in cash or
reinvested in additional shares, and any redemption proceeds will be reduced by
the amounts required to be withheld. Investors may wish to consult their own tax
advisers about the applicability of the backup withholding provisions.
The foregoing discussion relates solely to U.S. Federal income tax law as
applicable to U.S. persons (i.e., U.S. citizens and residents and U.S. domestic
corporations, partnerships, trusts and estates). It does not reflect the special
tax consequences to certain taxpayers (e.g., banks, insurance companies, tax
exempt organizations and foreign persons). Shareholders are encouraged to
consult their own tax advisers regarding specific questions relating to Federal,
state and local tax consequences of investing in shares of a Fund. Each
shareholder who is not a U.S. person should consult his or her tax adviser
regarding the U.S. and foreign tax consequences of ownership of shares of a
Fund, including the possibility that such a shareholder may be subject to a U.S.
withholding tax at a rate of 31% (or at a lower rate under a tax treaty) on
amounts treated as income from U.S. sources under the Code.
Special Tax Considerations
Each Fund maintains accounts and calculates income in U.S. dollars. In
general, gains or losses on the disposition of debt securities denominated in a
foreign currency that are attributable to fluctuations in exchange rates between
the date the debt security is acquired and the date of disposition, gains and
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
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<PAGE>
of the Fund's investment company taxable income available to be distributed to
its shareholders as ordinary income.
Each Fund's transactions in foreign currencies, forward contracts,
options and futures contracts (including options and futures contracts on
foreign currencies) are subject to special provisions of the Code that, among
other things, may affect the character of gains and losses of the Fund (i.e.,
may affect whether gains or losses are ordinary or capital), accelerate
recognition of income to the Fund and defer Fund losses. These rules could
therefore affect the character, amount and timing of distributions to
shareholders. These provisions also (a) require the Fund to mark-to-market
certain types of positions in its portfolio (i.e., treat them as if they were
closed out) and (b) may cause the Fund to recognize income without receiving
cash with which to pay dividends or make distributions in amounts necessary to
satisfy the distribution requirements for avoiding U.S. Federal income and
excise taxes. Each Fund will monitor its transactions, make appropriate tax
elections and make appropriate entries in its books and records when it acquires
any foreign currency, forward contract, option, futures contract or hedged
investment in order to mitigate the effect of these rules. The Funds anticipate
that their hedging activities will not adversely affect their regulated
investment company status.
Income received by a Fund from sources within various foreign countries
may be subject to foreign income tax. If more than 50% of the value of the
Fund's total assets at the close of its taxable year consists of the stock or
securities of foreign corporations, the Fund may elect to "pass through" to the
Fund's shareholders the amount of foreign income taxes paid by the Fund.
Pursuant to such election, shareholders would be required: (i) to treat a
proportionate share of dividends paid by the Fund which represent foreign source
income received by the Fund plus the foreign taxes paid by the Fund as foreign
source income; and (ii) either to deduct their pro-rata share of foreign taxes
in computing their taxable income, or to use it as a foreign tax credit against
Federal income taxes (but not both). No deduction for foreign taxes could be
claimed by a shareholder who does not itemize deductions.
Each Fund intends to meet for each taxable year the requirements of the
Code to "pass through" to its shareholders foreign income taxes paid if it is
determined by its Adviser to be beneficial to do so. There can be no assurance
that the Fund will be able to pass through foreign income taxes paid. Each
shareholder will be notified within 60 days after the close of each taxable year
of the Fund whether the foreign taxes paid by the Fund will "pass through" for
that year, and, if so, the amount of each shareholder's pro-rate 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.
Each Fund may invest in certain entities that may qualify as "passive
foreign investment companies." Generally, the income of such companies may
become taxable to the Fund prior to the receipt of distributions, or,
alternatively, income taxes and interest charges may be imposed on the Fund on
"excess distributions" received by the Fund or on gain from the disposition of
such investments by the Fund. In addition, gains from the sale of such
investments held for less than three months will count toward the 30% of gross
income test described above. Each Fund will take steps to minimize income taxes
and interest charges arising form such investments, and will monitor such
investments to insure that the Fund complies with the 30% of gross income test.
Proposed tax regulations, if they become effective, will allow the Funds to mark
to market and recognize gains on such investments at each Fund's taxable year
end. The Funds would not be subject to income tax on these gains if they are
distributed subject to these proposed rules.
NET ASSET VALUE
The following information supplements that set forth in each Prospectus
under the subheading "How to Buy Shares - How the Funds Value Their Shares" in
the Section entitled "Purchase and Redemption of Shares".
The public offering price of shares of a Fund is its net asset value,
plus, in the case of Class A shares, a sales charge which will vary depending on
the purchase alternative chosen by the investor, as more fully described in the
Prospectus. See "Purchase of Shares - Class A Shares - Front-End Sales Charge
Alternative. " On each Fund business day on which a purchase or redemption order
is received by a Fund and trading in the types of securities in which a Fund
invests might materially affect the value of Fund shares, the
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<PAGE>
per share net asset value of each such Fund is computed in accordance with the
Declaration of Trust and By-Laws governing each Fund as of the next close of
regular trading on the New York Stock Exchange (the "Exchange") (currently 4:00
p.m. Eastern time) by dividing the value of the Fund's total assets, less its
liabilities, by the total number of its shares then outstanding. A Fund business
day is any weekday, exclusive of national holidays on which the Exchange is
closed and Good Friday. For each Fund, securities for which the primary market
is on a domestic or foreign exchange and over-the-counter securities admitted to
trading on the NASDAQ National List are valued at the last quoted sale or, if no
sale, at the mean of closing bid and asked prices and portfolio bonds are
presently valued by a recognized pricing service when such prices are believed
to reflect the fair value of the security. Over-the-counter securities not
included in the NASDAQ National List for which market quotations are readily
available are valued at a price quoted by one or more brokers. If accurate
quotations are not available, securities will be valued at fair value determined
in good faith by the Board of Trustees.
The respective per share net asset values of the Class A, Class B,
Class C and Class Y shares are expected to be substantially the same. Under
certain circumstances, however, the per share net asset values of the Class B
and Class C shares may be lower than the per share net asset value of the Class
A shares (and, in turn, that of Class A shares may be lower than Class Y shares)
as a result of the greater daily expense accruals, relative to Class A and Class
Y shares, of Class B and Class C shares relating to distribution services fees
(and, with respect to Emerging Market and International shareholder service fee)
and, to the extent applicable, transfer agency fees and the fact that Class Y
shares bear no additional distribution, shareholder service or transfer agency
related fees. While it is expected that, in the event each Class of shares of a
Fund realizes net investment income or does not realize a net operating loss for
a period, the per share net asset values of the four classes will tend to
converge immediately after the payment of dividends, which dividends will differ
by approximately the amount of the expense accrual differential among the
Classes, there is no assurance that this will be the case. In the event one or
more Classes of a Fund experiences a net operating loss for any fiscal period,
the net asset value per share of such Class or Classes will remain lower than
that of Classes that incurred lower expenses for the period.
To the extent that any Fund invests in non-U.S. dollar denominated
securities, the value of all assets and liabilities will be translated into
United States dollars at the mean between the buying and selling rates of the
currency in which such a security is denominated against United States dollars
last quoted by any major bank. If such quotations are not available, the rate of
exchange will be determined in accordance with policies established by the Fund.
The Trustees will monitor, on an ongoing basis, a Fund's method of valuation.
Trading in securities on European and Far Eastern securities exchanges and
over-the-counter markets is normally completed well before the close of business
on each business day in New York. In addition, European or Far Eastern
securities trading generally or in a particular country or countries may not
take place on all business days in New York. Furthermore, trading takes place in
various foreign markets on days which are not business days in New York and on
which the Fund's net asset value is not calculated. Such calculation does not
take place contemporaneously with the determination of the prices of the
majority of the portfolio securities used in such calculation. Events affecting
the values of portfolio securities that occur between the time their prices are
determined and the close of the Exchange will not be reflected in a Fund's
calculation of net asset value unless the Trustees deem that the particular
event would materially affect net asset value, in which case an adjustment will
be made. Securities transactions are accounted for on the trade date, the date
the order to buy or sell is executed. Dividend income and other distributions
are recorded on the ex-dividend date, except certain dividends and distributions
from foreign securities which are recorded as soon as the Fund is informed after
the ex-dividend date.
PURCHASE OF SHARES
The following information supplements that set forth in each Prospectus
under the heading "Purchase and Redemption of Shares - How To Buy Shares."
General
Shares of each Fund will be offered on a continuous basis at a price
equal to their net asset value plus an initial sales charge at the time of
purchase (the "front-end sales charge alternative"), with a contingent deferred
sales charge (the deferred
26
<PAGE>
sales charge alternative"), or without any front-end sales charge, but with a
contingent deferred sales charge imposed only during the first year after
purchase (the "level-load alternative"), as described below. Class Y shares
which, as described below, are not offered to the general public, are offered
without any front-end or contingent sales charges. Shares of each Fund are
offered on a continuous basis through (i) investment dealers that are members of
the National Association of Securities Dealers, Inc. and have entered into
selected dealer agreements with the Distributor ("selected dealers"), (ii)
depository institutions and other financial intermediaries or their affiliates,
that have entered into selected agent agreements with the Distributor ("selected
agents"), or (iii) the Distributor. The minimum for initial investments is
$1,000; there is no minimum for subsequent investments. The subscriber may use
the Share Purchase Application available from the Distributor for his or her
initial investment. Sales personnel of selected dealers and agents distributing
a Fund's shares may receive differing compensation for selling Class A, Class B
or Class C shares.
Investors may purchase shares of a Fund in the United States either
through selected dealers or agents or directly through the Distributor. A Fund
reserves the right to suspend the sale of its shares to the public in response
to conditions in the securities markets or for other reasons.
Each Fund will accept unconditional orders for its shares to be
executed at the public offering price equal to the net asset value next
determined (plus for Class A shares, the applicable sales charges), as described
below. Orders received by the Distributor prior to the close of regular trading
on the Exchange on each day the Exchange is open for trading are priced at the
net asset value computed as of the close of regular trading on the Exchange on
that day (plus for Class A shares the sales charges). In the case of orders for
purchase of shares placed through selected dealers or agents, the applicable
public offering price will be the net asset value as so determined, but only if
the selected dealer or agent receives the order prior to the close of regular
trading on the Exchange and transmits it to the Distributor prior to its close
of business that same day (normally 5:00 p.m. Eastern time). The selected dealer
or agent is responsible for transmitting such orders by 5:00 p.m. If the
selected dealer or agent fails to do so, the investor's right to that day's
closing price must be settled between the investor and the selected dealer or
agent. If the selected dealer or agent receives the order after the close of
regular trading on the Exchange, the price will be based on the net asset value
determined as of the close of regular trading on the Exchange on the next day it
is open for trading.
Following the initial purchase of shares of a Fund, a shareholder may
place orders to purchase additional shares by telephone if the shareholder has
completed the appropriate portion of the Share Purchase Application. Payment for
shares purchased by telephone can be made only by Electronic Funds Transfer from
a bank account maintained by the shareholder at a bank that is a member of the
National Automated Clearing House Association ("ACH"). If a shareholder's
telephone purchase request is received before 3:00 p.m. New York time on a Fund
business day, the order to purchase shares is automatically placed the same Fund
business day for non-money market funds, and two days following the day the
order is received for money market funds, and the applicable public offering
price will be the public offering price determined as of the close of business
on such business day. Full and fractional shares are credited to a subscriber's
account in the amount of his or her subscription. As a convenience to the
subscriber, and to avoid unnecessary expense to a Fund, stock certificates
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.
Alternative Purchase Arrangements
Each Fund issues four classes of shares: (i) Class A shares, which are
sold to investors choosing the front-end sales charge alternative; (ii) Class B
shares, which are sold to investors choosing the deferred sales charge
alternative; (iii) Class C shares, which are sold to investors choosing the
level-load sales charge alternative; and (iv) Class Y shares, which are offered
only to (a) persons who at or prior to December 30, 1994 owned shares in a
mutual fund advised by Evergreen Asset, (b) certain investment advisory clients
of the Advisers and their affiliates, and (c) institutional investors. The four
classes of shares each represent an interest in the same portfolio of
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<PAGE>
investments of the Fund, have the same rights and are identical in all respects,
except that (I) Class A, Class B and Class C shares are subject to a Rule 12b-1
distribution fee, (II) Class B and Class C shares of Emerging Markets and
International are subject to a shareholder service fee, (III) Class A shares
bear the expense of the front-end sales charge and Class B and Class C shares
bear the expense of the deferred sales charge, (IV) Class B shares and Class C
shares each bear the expense of a higher Rule 12b-1 distribution services fee
and shareholder service fee than Class A shares and, in the case of Class B
shares, higher transfer agency costs, (V) with the exception of Class Y shares,
each Class of each Fund has exclusive voting rights with respect to provisions
of the Rule 12b-1 Plan pursuant to which its distribution services (and, to the
extent applicable, shareholder service) fee is paid which relates to a specific
Class and other matters for which separate Class voting is appropriate under
applicable law, provided that, if the Fund submits to a simultaneous vote of
Class A, Class B and Class C shareholders an amendment to the Rule 12b-1 Plan
that would materially increase the amount to be paid thereunder with respect to
the Class A shares, the Class A shareholders and the Class B and Class C
shareholders will vote separately by Class, and (VI) only the Class B shares are
subject to a conversion feature. Each Class has different exchange privileges
and certain different shareholder service options available.
The alternative purchase arrangements permit an investor to choose the
method of purchasing shares that is most beneficial given the amount of the
purchase, the length of time the investor expects to hold the shares, and other
circumstances. Investors should consider whether, during the anticipated life of
their investment in the Fund, the accumulated distribution services (and, to the
extent applicable, shareholder service) fee and contingent deferred sales
charges on Class B shares prior to conversion, or the accumulated distribution
services (and, to the extent applicable, shareholder service) fee on Class C
shares, would be less than the front-end sales charge and accumulated
distribution services fee on Class A shares purchased at the same time, and to
what extent such differential would be offset by the higher return of Class A
shares. Class B and Class C shares will normally not be suitable for the
investor who qualifies to purchase Class A shares at the lowest applicable sales
charge. For this reason, the Distributor will reject any order (except orders
for Class B shares from certain retirement plans) for more than $2,500,000 for
Class B or Class C shares.
Class A shares are subject to a lower distribution services fee and no
shareholder service fee and, accordingly, pay correspondingly higher dividends
per share than Class B shares or Class C shares. However, because front-end
sales charges are deducted at the time of purchase, investors purchasing Class A
shares would not have all their funds invested initially and, therefore, would
initially own fewer shares. Investors not qualifying for reduced front-end sales
charges who expect to maintain their investment for an extended period of time
might consider purchasing Class A shares because the accumulated continuing
distribution (and, to the extent applicable, shareholder service) charges on
Class B shares or Class C shares may exceed the front-end sales charge on Class
A shares during the life of the investment. Again, however, such investors must
weigh this consideration against the fact that, because of such front-end sales
charges, not all their funds will be invested initially.
Other investors might determine, however, that it would be more
advantageous to purchase Class B shares or Class C shares in order to have all
their funds invested initially, although remaining subject to higher continuing
distribution services (and, to the extent applicable, shareholder service) fees
and, in the case of Class B shares, being subject to a contingent deferred sales
charge for a seven-year period. For example, based on current fees and expenses,
an investor subject to the 4.75% front-end sales charge would have to hold his
or her investment approximately seven years for the Class B and Class C
distribution services (and, to the extent applicable, shareholders service)
fees, to exceed the front-end sales charge plus the accumulated distribution
services fee of Class A shares. In this example, an investor intending to
maintain his or her investment for a longer period might consider purchasing
Class A shares. This example does not take into account the time value of money,
which further reduces the impact of the Class B and Class C distribution
services (and, to the extent applicable, shareholder service) fees on the
investment, fluctuations in net asset value or the effect of different
performance assumptions.
Those investors who prefer to have all of their funds invested
initially but may not wish to retain Fund shares for the seven year period
during which Class B
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<PAGE>
shares are subject to a contingent deferred sales charge may find it more
advantageous to purchase Class C shares.
With respect to each Fund, the Trustees have determined that currently
no conflict of interest exists between or among the Class A, Class B, Class C
and Class Y shares. On an ongoing basis, the Trustees, pursuant to their
fiduciary duties under the 1940 Act and state laws, will seek to ensure that no
such conflict arises.
Front-end Sales Charge Alternative--Class A Shares
The public offering price of Class A shares for purchasers choosing the
front-end sales charge alternative is the net asset value plus a sales charge as
set forth in the Prospectus for each Fund.
Shares issued pursuant to the automatic reinvestment of income
dividends or capital gains distributions are not subject to any sales charges.
The Fund receives the entire net asset value of its Class A shares sold to
investors. The Distributor's commission is the sales charge set forth in the
Prospectus for each Fund, less any applicable discount or commission "reallowed"
to selected dealers and agents. The Distributor will reallow discounts to
selected dealers and agents in the amounts indicated in the table in the
Prospectus. In this regard, the Distributor may elect to reallow the entire
sales charge to selected dealers and agents for all sales with respect to which
orders are placed with the Distributor.
Set forth below is an example of the method of computing the offering
price of the Class A shares of each Fund. The example assumes a purchase of
Class A shares of a Fund aggregating less than $100,000 subject to the schedule
of sales charges set forth in the Prospectus at a price based upon the net asset
value of Class A shares of each Fund at the end of each Fund's latest fiscal
year.
Net Per Share Offering
Asset Sales Price
Value Charge Date Per Share
Emerging
Markets $ 8.17 $.41 12/31/94 $ 8.58
International $ 9.50 $.47 12/31/94 $9.97
Global $13.81 $.69 9/30/94 $14.50
Prior to January 3, 1995, shares of Global were offered exclusively on
a no-load basis and, accordingly, no underwriting commissions were paid in
respect of sales of shares of the Fund or retained by the Distributor. In
addition, since Class B and Class C shares were not offered prior to January 3,
1995, contingent deferred sales charges have been paid to the Distributor with
respect to Class B or Class C shares only since January 3, 1995.
With respect to Emerging Markets, and International for the periods
indicated, the following commissions were paid to and amounts were retained by
Federated Securities Corp., which, prior to July 7, 1995, was the principal
underwriter of portfolios of Evergreen Investment Trust:
Period From
September 6, 1994
to 12/31/94
Emerging Markets:
Commissions Received $11,000
Commissions Retained
Period From
September 2, 1994
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<PAGE>
International: to December 31, 1994
Commissions Received $6,000
Commissions Retained $1,000
Investors choosing the front-end sales charge alternative may under
certain circumstances be entitled to pay reduced sales charges. The
circumstances under which such investors may pay reduced sales charges are
described below.
Combined Purchase Privilege. Certain persons may qualify for the sales
charge reductions by combining purchases of shares of one or more Evergreen
mutual funds other than money market funds into a single "purchase", if the
resulting "purchase" totals at least $100,000. The term "purchase" refers to:
(i) a single purchase by an individual, or to concurrent purchases, which in the
aggregate are at least equal to the prescribed amounts, by an individual, his or
her spouse and their children under the age of 21 years purchasing shares for
his, her or their own account(s); (ii) a single purchase by a trustee or other
fiduciary purchasing shares for a single trust, estate or single fiduciary
account although more than one beneficiary is involved; or (iii) a single
purchase for the employee benefit plans of a single employer. The term
"purchase" also includes purchases by any "company", as the term is defined in
the 1940 Act, but does not include purchases by any such company which has not
been in existence for at least six months or which has no purpose other than the
purchase of shares of a Fund or shares of other registered investment companies
at a discount. The term "purchase" does not include purchases by any group of
individuals whose sole organizational nexus is that the participants therein are
credit card holders of a company, policy holders of an insurance company,
customers of either a bank or broker-dealer or clients of an investment adviser.
A "purchase" may also include shares, purchased at the same time through a
single selected dealer or agent, of any Evergreen mutual fund. Currently, the
Evergreen mutual funds include:
Evergreen Fund
Evergreen Global Real Estate Equity Fund Evergreen U.S. Real Estate Equity Fund
The Evergreen Limited Market Fund, Inc. Evergreen Growth and Income Fund
Evergreen Total Return Fund Evergreen American Retirement Fund Evergreen Small
Cap Equity Income Fund Evergreen Tax Strategic Foundation Fund Evergreen
Short-Intermediate Municipal Fund Evergreen Short-Intermediate Municipal Fund-CA
Evergreen Tax Exempt Money Market Fund Evergreen Money Market Fund Evergreen
U.S. Government Fund* Evergreen Foundation Fund Evergreen Florida High Income
Fund Evergreen Aggressive Growth Fund Evergreen Balanced Fund* Evergreen Utility
Fund* Evergreen Value Fund* Evergreen Fixed Income Fund* Evergreen Managed Bond
Fund* Evergreen Emerging Markets Growth Fund* Evergreen International Equity
Fund* Evergreen Treasury Money Market Fund* Evergreen Florida Municipal Bond
Fund* Evergreen Georgia Municipal Bond Fund* Evergreen North Carolina Municipal
Bond Fund* Evergreen South Carolina Municipal Bond Fund* Evergreen Virginia
Municipal Bond Fund* Evergreen High Grade Tax Free Fund*
* Prior to July 7, 1995, each Fund was named "First Union" instead of
"Evergreen."
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Prospectuses for the Evergreen mutual funds may be obtained without
charge by contacting the Distributor or the Advisers at the address or telephone
number shown on the front cover of this Statement of Additional Information.
Cumulative Quantity Discount (Right of Accumulation). An investor's
purchase of additional Class A shares of a Fund may qualify for a Cumulative
Quantity Discount. The applicable sales charge will be based on the total of:
(i) the investor's current purchase;
(ii) the net asset value (at the close of business on the
previous day) of (a) all Class A, Class B and Class C shares
of the Fund held by the investor and (b) all such shares of
any other Evergreen mutual fund held by the investor; and
(iii) the net asset value of all shares described in paragraph
(ii) owned by another shareholder eligible to combine his or
her purchase with that of the investor into a single
"purchase" (see above).
For example, if an investor owned Class A, 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 Prospectus by means of a written Statement of
Intention, which expresses the investor's intention to invest not less than
$100,000 within a period of 13 months in Class A shares (or Class A, Class B
and/or Class C shares) of the Fund or any other Evergreen mutual fund. Each
purchase of shares under a Statement of Intention will be made at the public
offering price or prices applicable at the time of such purchase to a single
transaction of the dollar amount indicated in the Statement of Intention. At the
investor's option, a Statement of Intention may include purchases of Class A, 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
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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 number
shown on the cover of this Statement of Additional Information.
Investments Through Employee Benefit and Savings Plans. Certain
qualified and non-qualified benefit and savings plans may make shares of the
Evergreen mutual funds available to their participants. Investments made by such
employee benefit plans may be exempt from any applicable front-end sales charges
if they meet the criteria set forth in the Prospectus under "Class A
Shares-Front End Sales Charge Alternative". The Advisers may provide
compensation to organizations providing administrative and recordkeeping
services to plans which make shares of the Evergreen mutual funds available to
their participants.
Reinstatement Privilege. A Class A shareholder who has caused any or
all of his or her shares of the Fund to be redeemed or repurchased may reinvest
all or any portion of the redemption or repurchase proceeds in Class A shares of
the Fund at net asset value without any sales charge, provided that such
reinvestment is made within 30 calendar days after the redemption or repurchase
date. Shares are sold to a reinvesting shareholder at the net asset value next
determined as described above. A reinstatement pursuant to this privilege will
not cancel the redemption or repurchase transaction; therefore, any gain or loss
so realized will be recognized for Federal tax purposes except that no loss will
be recognized to the extent that the proceeds are reinvested in shares of the
Fund. The reinstatement privilege may be used by the shareholder only once,
irrespective of the number of shares redeemed or repurchased, except that the
privilege may be used without limit in connection with transactions whose sole
purpose is to transfer a shareholder's interest in the Fund to his or her
individual retirement account or other qualified retirement plan account.
Investors may exercise the reinstatement privilege by written request sent to
the Fund at the address shown on the cover of this Statement of Additional
Information.
Sales at Net Asset Value. In addition to the categories of investors
set forth in the Prospectus, each Fund may sell its Class A shares at net asset
value, i.e., without any sales charge, to: (i) certain investment advisory
clients of the Advisers or their affiliates; (ii) officers and present or former
Trustees of the Trust; present or former trustees of other investment companies
managed by the Advisers; 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; (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
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Class B shares are sold without a front-end sales charge so that the full amount
of the investor's purchase payment is invested in the Fund initially.
Proceeds from the contingent deferred sales charge are paid to the
Distributor and are used by the Distributor to defray the expenses of the
Distributor related to providing distribution-related services to the Fund in
connection with the sale of the Class B shares, such as the payment of
compensation to selected dealers and agents for selling Class B shares. The
combination of the contingent deferred sales charge and the distribution
services fee (and, with respect to Emerging Markets and International, the
shareholder service fee) enables the Fund to sell the Class B shares without a
sales charge being deducted at the time of purchase. The higher distribution
services fee (and, with respect to Emerging Markets and International, the
shareholder service fee) incurred by Class B shares will cause such shares to
have a higher expense ratio and to pay lower dividends than those related to
Class A shares.
Contingent Deferred Sales Charge. Class B shares which are redeemed
within seven years of purchase will be subject to a contingent deferred sales
charge at the rates set forth in the Prospectus charged as a percentage of the
dollar amount subject thereto. The charge will be assessed on an amount equal to
the lesser of the cost of the shares being redeemed or their net asset value at
the time of redemption. Accordingly, no sales charge will be imposed on
increases in net asset value above the initial purchase price. In addition, no
contingent deferred sales charge will be assessed on shares derived from
reinvestment of dividends or capital gains distributions. The amount of the
contingent deferred sales charge, if any, will vary depending on the number of
years from the time of payment for the purchase of Class B shares until the time
of redemption of such shares.
In determining the contingent deferred sales charge applicable to a
redemption, it will be assumed, that the redemption is first of any Class A
shares or Class C shares in the shareholder's Fund account, second of Class B
shares held for over 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
contingent deferred sales charge of $16).
The contingent deferred sales charge is waived on redemptions of shares
(i) following the death or disability, as defined in the Code, of a shareholder,
or (ii) to the extent that the redemption represents a minimum required
distribution from an individual retirement account or other retirement plan to a
shareholder who has attained the age of 70-1/2.
Conversion Feature. At the end of the period ending seven years after
the end of the calendar month in which the shareholder's purchase order was
accepted, Class B shares will automatically convert to Class A shares and will
no longer be subject to a higher distribution services fee (and, with respect to
Emering Markets and International, the shareholder service fee) imposed on Class
B shares. Such conversion will be on the basis of the relative net asset values
of the two classes, without the imposition of any sales load, fee or other
charge. The purpose of the conversion feature is to reduce the distribution
services fee paid by holders of Class B shares that have been outstanding long
enough for the Distributor to have been compensated for the expenses associated
with the sale of such shares.
For purposes of conversion to Class A, Class B shares purchased through
the reinvestment of dividends and distributions paid in respect of Class B
shares in a shareholder's account will be considered to be held in a separate
sub-account. Each time any Class B shares in the shareholder's account (other
than those in the sub-account) convert to Class A, an equal pro-rata portion of
the Class B shares in the sub-account will also convert to Class A.
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The conversion of Class B shares to Class A shares is subject to the
continuing availability of an opinion of counsel to the effect that (i) the
assessment of the higher distribution services fee (and, with respect to
Emerging Markets and International, shareholder service fee) and transfer agency
costs with respect to Class B shares does not result in the dividends or
distributions payable with respect to other Classes of a Fund's shares being
deemed "preferential dividends" under the Code, and (ii) the conversion of Class
B shares to Class A shares does not constitute a taxable event under Federal
income tax law. The conversion of Class B shares to Class A shares may be
suspended if such an opinion is no longer available at the time such conversion
is to occur. In that event, no further conversions of Class B shares would
occur, and shares might continue to be subject to the higher distribution
services fee for an indefinite period which may extend beyond the period ending
eight years after the end of the calendar month in which the shareholder's
purchase order was accepted.
Level-Load Alternative--Class C Shares
Investors choosing the level load sales charge alternative purchase
Class C shares at the public offering price equal to the net asset value per
share of the Class C shares on the date of purchase without the imposition of a
front-end sales charge. However, you will pay a 1.0% contingent deferred sales
charge if you redeem shares during the first year after purchase. No charge is
imposed in connection with redemptions made more than one year from the date of
purchase. Class C shares are sold without a front-end sales charge so that the
Fund will receive the full amount of the investor's purchase payment and after
the first year without a contingent deferred sales charge so that the investor
will receive as proceeds upon redemption the entire net asset value of his or
her Class C shares. The Class C distribution services fee (and, with respect to
Emerging Markets and International, shareholder service fee) enables the Fund to
sell Class C shares without either a front-end or contingent deferred sales
charge. However, unlike Class B shares, Class C shares do not convert to any
other class shares of the Fund. Class C shares incur higher distribution
services fees (and, with respect to Emerging Markets and International,
shareholder service fees) than Class A shares, and will thus have a higher
expense ratio and pay correspondingly lower dividends than Class A shares.
Class Y Shares
Class Y shares are not offered to the general public and are available
only to (i) persons who at or prior to December 30, 1994 owned shares in a
mutual fund advised by Evergreen Asset, (ii) certain investment advisory clients
of the Advisers and their affiliates, and (iii) institutional investors. Class Y
shares do not bear any Rule 12b-1 distribution expenses and are not subject to
any front-end or contingent deferred sales charges.
GENERAL INFORMATION ABOUT THE FUNDS (See also "Other
Information - General Information"
in each Fund's Prospectus)
Capitalization and Organization
The Evergreen Emerging Markets Growth Fund and Evergreen International
Equity Fund, which prior to July 7, 1995 were known as the First Union Emerging
Markets Growth Portfolio, and First Union International Equity Portfolio,
respectively, are each separate series of Evergreen Investment Trust, a
Massachusetts business trust. On July 7, 1995, First Union Funds changed its
name to Evergreen Investment Trust. On December 14, 1992, The Salem Funds
changed its name to First Union Funds. The Evergreen Global Real Estate Equity
Fund is a separate series of Evergreen Real Estate Equity Trust, a Massachusetts
business trust. The above-named Trusts are individually referred to in this
Statement of Additional Information as the "Trust" and collectively as the
"Trusts." Each Trust is governed by a board of trustees. Unless otherwise
stated, references to the "Board of Trustees" or "Trustees" in this Statement of
Additional Information refer to the Trustees of all the Trusts.
Global may issue an unlimited number of shares of beneficial interest
with a $0.0001 par value. Emerging Markets and International may issue an
unlimited number of shares of beneficial interest without par value. All shares
of these Funds have equal rights and privileges. Each share is entitled to one
vote, to participate equally in dividends and distributions declared by the
Funds and on liquidation to their proportionate share of the
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assets remaining after satisfaction of outstanding liabilities. Shares of these
Funds are fully paid, nonassessable and fully transferable when issued and have
no pre-emptive, conversion or exchange rights. Fractional shares have
proportionally the same rights, including voting rights, as are provided for a
full share.
Under each Trust's Declaration of Trust, each Trustee will continue in
office until the termination of the 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 Trust or the 1940 Act.
Shares have noncumulative voting rights, which means that the holders
of more than 50% of the shares voting for the election of Trustees can elect
100% of the Trustees if they choose to do so and in such event the holders of
the remaining shares so voting will not be able to elect any Trustees.
The Trustees of each Trust are authorized to reclassify and issue any
unissued shares to any number of additional series without shareholder approval.
Accordingly, in the future, for reasons such as the desire to establish one or
more additional portfolios of a Trust with different investment objectives,
policies or restrictions, additional series of shares may be created by one or
more Funds. Any issuance of shares of another series or class would be governed
by the 1940 Act and the law of the State of Massachusetts. If shares of another
series of a Trust were issued in connection with the creation of additional
investment portfolios, each share of the newly created portfolio would normally
be entitled to one vote for all purposes. Generally, shares of all portfolios
would vote as a single series on matters, such as the election of Trustees, that
affected all portfolios in substantially the same manner. As to matters
affecting each portfolio differently, such as approval of the Investment
Advisory Agreement and changes in investment policy, shares of each portfolio
would vote separately.
In addition any Fund may, in the future, create additional classes of
shares which represent an interest in the same investment portfolio. Except for
the different distribution related 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 of each Trust, similar to those set forth in Section 16(c) of the 1940
Act will be available to shareholders of each Fund. The rights of the holders of
shares of a series of a Fund may not be modified except by the vote of a
majority of the outstanding shares of such series.
An order has been received from the Securities and Exchange Commission
permitting the issuance and sale of multiple classes of shares representing
interests in each Fund. In the event a Fund were to issue additional Classes of
shares other than those described herein, no further relief from the Securities
and Exchange Commission would be required.
Distributor
Evergreen Funds Distributor, Inc. (the "Distributor"), 230 Park Avenue,
New York, New York 10169, serves as each Fund's principal underwriter, and as
such may solicit orders from the public to purchase shares of any Fund. The
Distributor is not obligated to sell any specific amount of shares and will
purchase shares for resale only against orders for shares. Under the Agreement
between the Fund and the Distributor, the Fund has agreed to indemnify the
Distributor, in the absence of its willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations thereunder, against certain
civil liabilities, including liabilities under the Securities Act of 1933, as
amended.
Counsel
Sullivan & Worcester, Washington, D.C., serves as counsel to the Funds.
Independent Auditors
Price Waterhouse LLP has been selected to be the independent auditors
of Global.
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KPMG Peat Marwick LLP has been selected to be the independent auditors
of Emerging Markets and International.
PERFORMANCE INFORMATION
Total Return
From time to time a Fund may advertise its "total return." Computed
separately for each class, the Fund's "total return" is its average annual
compounded total return for recent one, five, and ten-year periods (or the
period since the Fund's inception). The Fund's total return for such a period is
computed by finding, through the use of a formula prescribed by the Securities
and Exchange Commission, the average annual compounded rate of return over the
period that would equate an assumed initial amount invested to the value of such
investment at the end of the period. For purposes of computing total return,
income dividends and capital gains distributions paid on shares of the Fund are
assumed to have been reinvested when paid and the maximum sales charge
applicable to purchases of Fund shares is assumed to have been paid. The Fund
will include performance data for Class A, Class B, Class C and Class Y shares
in any advertisement or information including performance data of the Fund.
With respect to Global, the shares of the Fund outstanding prior to
January 3, 1995 have been reclassified as Class Y shares. The average annual
compounded total return for each Class of shares offered by the Funds for the
most recently completed one, five and ten year fiscal periods is set forth in
the table below.
From
GLOBAL 1 Year 5 Years 2/1/89
Ended Ended (inception)
9/30/94 9/30/94 to 9/30/94
Class A -1.74% 6.28% 5.92%
Class B -1.84% 7.01% 5.70%
Class C 2.16% 7.32% 6.83%
Class Y 3.16% 7.32% 6.83%
From
EMERGING 9/6/94
MARKETS (inception)
to 12/31/94
Class A -22.19%
Class B -22.50%
Class C -19.20%
Class Y -18.30%
INTERNATIONAL From 9/2/94 (Inception)
to 12/31/94
Class A -9.60%
Class B -9.89%
Class C -6.09%
Class Y -5.02%
The performance numbers for Global for the Class A, Class B and Class C
shares are hypothetical numbers based on the performance for Class Y shares as
adjusted for any applicable front-end sales charge or contingent deferred sales
charge.
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
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principal invested in a Fund is not fixed and will fluctuate in response to
prevailing market conditions.
YIELD CALCULATIONS
From time to time, a Fund may quote its yield in advertisements or in
reports or other communications to shareholders. Yield quotations are expressed
in annualized terms and may be quoted on a compounded basis. Yields are computed
by dividing the Fund's interest income (as defined in the SEC yield formula) for
a given 30-day or one month period, net of expenses, by the average number of
shares entitled to receive distributions during the period, dividing this figure
by the Fund's net asset value per share at the end of the period and annualizing
the result (assuming compounding of income) in order to arrive at an annual
percentage rate. The formula for calculating yield is as follows:
YIELD = 2[(a-b+1)6-1]
cd
Where a = Interest earned during the period
b = Expenses accrued for the period (net of reimbursements) c = The
average daily number of shares outstanding during the period
that were entitled to receive dividends
d = The maximum offering price per share on the last day of the period
Income is calculated for purposes of yield quotations in accordance
with standardized methods applicable to all stock and bond funds. Gains and
losses generally are excluded from the calculation. Income calculated for
purposes of determining a Fund's yield differs from income as determined for
other accounting purposes. Because of the different accounting methods used, and
because of the compounding assumed in yield calculations, the yields quoted for
a Fund may differ from the rate of distributions a Fund paid over the same
period, or the net investment income reported in a Fund's financial statements.
Yield information is useful in reviewing a Fund's performance, but
because yields fluctuate, such information cannot necessarily be used to compare
an investment in a Fund's shares with bank deposits, savings accounts and
similar investment alternatives which often provide an agreed or guaranteed
fixed yield for a stated period of time. Shareholders should remember that yield
is a function of the kind and quality of the instruments in the Funds'
investment portfolios, portfolio maturity, operating expenses and market
conditions.
It should be recognized that in periods of declining interest rates the
yields will tend to be somewhat higher than prevailing market rates, and in
periods of rising interest rates the yields will tend to be somewhat lower.
Also, when interest rates are falling, the inflow of net new money to a Fund
from the continuous sale of its shares will likely be invested in instruments
producing lower yields than the balance of the Fund's investments, thereby
reducing the current yield of the Fund. In periods of rising interest rates, the
opposite can be expected to occur.
The yield of each Fund for the thirty-day period ended December 31,
1994 (May 31, 1995 with respect to Global) for each Class of shares offered by
the Funds is set forth in the table below:
Global Class A 1.05% Class B .41% Class C .43% Class Y 1.13%
Emerging Markets
Class A N/A
Class B N/A
Class C N/A
Class Y N/A
International
Class A N/A
Class B N/A
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Class C N/A
Class Y N/A
Non-Standardized Performance
In addition to the performance information described above, a Fund may
provide total return information for designated periods, such as for the most
recent six months or most recent twelve months. This total return information is
computed as described under "Total Return" above except that no annualization is
made.
GENERAL
From time to time, a Fund may quote its performance in advertising and other
types of literature as compared to the performance of the Standard & Poor's 500
Composite Stock Price Index, the Dow Jones Industrial Average, Russell 2000
Index, Europe, Australia and Far East index, Morgan Stanley Capital
International Emerging Markets Free Index or any other commonly quoted index of
common stock prices, which are unmanaged indices of selected common stock
prices. A Fund's performance may also be compared to those of other mutual funds
having similar objectives. This comparative performance would be expressed as a
ranking prepared by Lipper Analytical Services, Inc. or similar independent
services monitoring mutual fund performance. A Fund's performance will be
calculated by assuming, to the extent applicable, reinvestment of all capital
gains distributions and income dividends paid. Any such comparisons may be
useful to investors who wish to compare a Fund's past performance with that of
its competitors. Of course, past performance cannot be a guarantee of future
results.
Additional Information
Any shareholder inquiries may be directed to the shareholder's broker
or to each Adviser at the address or telephone number shown on the front cover
of this Statement of Additional Information. This Statement of Additional
Information does not contain all the information set forth in the Registration
Statement filed by the Trusts with the Securities and Exchange Commission under
the Securities Act of 1933. Copies of the Registration Statement may be obtained
at a reasonable charge from the Securities and Exchange Commission or may be
examined, without charge, at the offices of the Securities and Exchange
Commission in Washington, D.C.
FINANCIAL STATEMENTS
Each Fund's financial statements appearing in their most current fiscal
year Annual Report to shareholders and the report thereon of the independent
auditors appearing therein, namely Price Waterhouse LLP (in the case of Global)
or KPMG Peat Marwick LLP (in the case of Emerging Markets and International) are
incorporated by reference in this Statement of Additional Information. The
Annual Reports to Shareholders for each Fund, which contain the referenced
statements, are available upon request and without charge.
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APPENDIX A - NOTE, BOND AND COMMERCIAL PAPER RATINGS
NOTE RATINGS
Moody's Investors Service, Inc.: 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, Inc.: SP-1 -- Very strong or strong
capacity to pay principal and interest. SP-2 -- Satisfactory capacity to pay
principal and interest.
BOND RATINGS
Moody's Investors Service: Aaa -- judged to be the best quality, carry
the smallest degree of investment risk; Aa -- judged to be of high quality by
all standards; A -- possess many favorable investment attributes and are to be
considered as higher medium grade obligations; Baa -- considered as medium grade
obligations which are neither highly protected nor poorly secured. Moody's
Investors Service also applies numerical indicators, 1, 2 and 3, to rating
categories Aa through Baa. The modifier 1 indicates that the security is in the
higher end of its rating category; the modifier 2 indicates a mid-range ranking;
and 3 indicates a ranking toward the lower end of the category.
Standard & Poor's Ratings Group: AAA -- highest grade obligations,
possesses the ultimate degree of protection as to principal and interest; AA --
also qualify as high grade obligations, and in the majority of instances differ
from AAA issues only in small degree; A -- regarded as upper medium grade, have
considerable investment strength but are not entirely free from adverse effects
of changes in economic and trade conditions, interest and principal are regarded
as safe; BBB -- regarded as having adequate capacity to pay interest and repay
principal but are more susceptible than higher rated obligations to the adverse
effects of changes in economic and trade conditions. Standard & Poor's Ratings
Group applies indicators "+", no character, and "-" to the above rating
categories AA through BBB. The indicators show relative standing within the
major rating categories.
Duff & Phelps: AAA - highest credit quality, with negligible risk
factors; AA -- high credit quality, with strong protection factors and modest
risk, which may vary very slightly from time to time because of economic
conditions; A -- average credit quality with adequate protection factors, but
with greater and more variable risk factors in periods of economic stress. The
indicators "+" and "-" to the AA and A categories indicate the relative position
of a credit within those rating categories.
Fitch: AAA -- highest credit quality, with an exceptionally strong
ability to pay interest and repay principal; AA -- very high credit quality,
with a very strong ability to pay interest and repay principal; A -- high credit
quality, considered strong as regards principal and interest protection, but may
be more vulnerable to adverse changes in economic conditions; and BBB --
satisfactory credit quality with adequate ability with regard to interest and
principal, and likely to be affected by adverse changes in economic conditions
and circumstances. The indicators "+" and "-" to the AA, A and BBB categories
indicate the relative position of a credit within those rating categories.
COMMERCIAL PAPER RATINGS
Moody's Investors Service, Inc.: Commercial paper rated "Prime" carries
the smallest degree of investment risk. The modifiers 1, 2 and 3 are used to
denote relative strength within this highest classification.
Standard & Poor's Ratings Group: "A" is the highest commercial paper
rating category utilized by Standard & Poor's Ratings Group which uses the
numbers 1+, 1, 2 and 3 to denote relative strength within its "A"
classification.
Duff & Phelps: Duff 1 is the highest commercial paper rating category
utilized by Duff & Phelps which uses + or - to denote relative strength within
this classification. Duff 2 represents good certainty of timely payment, with
minimal risk factors. Duff 3
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represents satisfactory protection factors, with risk factors larger and subject
to more variation.
Fitch: F-1+ -- denotes exceptionally strong credit quality given to
issues regarded as having strongest degree of assurance for timely payment; F-1
- -- very strong credit quality, with only slightly less degree of assurance for
timely payment than F-1+; F-2 -- good credit quality, carrying a satisfactory
degree of assurance for timely payment.
PROSPECTUS July 7, 1995
EVERGREEN(SM) DOMESTIC GROWTH FUNDS (Evergreen Logo appears here)
EVERGREEN FUND
EVERGREEN U.S. REAL ESTATE EQUITY FUND
EVERGREEN LIMITED MARKET FUND
EVERGREEN AGGRESSIVE GROWTH FUND
CLASS A SHARES
CLASS B SHARES
CLASS C SHARES
The Evergreen Domestic Growth Funds (the "Funds") are designed to
provide investors with a selection of investment alternatives which seek to
provide capital growth and diversification. This Prospectus provides
information regarding the Class A, Class B and Class C shares offered by
the Funds. Each Fund is, or is a series of, an open-end, diversified,
management investment company. This Prospectus sets forth concise
information about the Funds that a prospective investor should know before
investing. The address of the Funds is 2500 Westchester Avenue, Purchase,
New York 10577.
A "Statement of Additional Information" for the Funds dated July
7, 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
EVERGREEN(SM) is a Service Mark of Evergreen Asset Management Corp.
Copyright 1995, Evergreen Asset Management Corp.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
OVERVIEW OF THE FUNDS 2
EXPENSE INFORMATION 3
FINANCIAL HIGHLIGHTS 5
DESCRIPTION OF THE FUNDS
Investment Objectives and Policies 12
Investment Practices and Restrictions 14
MANAGEMENT OF THE FUNDS
Investment Advisers 16
Sub-Adviser 17
Distribution Plans & Agreements 18
PURCHASE AND REDEMPTION OF SHARES
How to Buy Shares 18
How to Redeem Shares 21
Exchange Privilege 22
Shareholder Services 23
Effect of Banking Laws 23
OTHER INFORMATION
Dividends, Distributions and Taxes 24
Management's Discussion of Fund Performance 24
General Information 26
</TABLE>
OVERVIEW OF THE FUNDS
The following summary is qualified in its entirety by the more detailed
information contained elsewhere in this Prospectus. See "Description of the
Funds" and "Management of the Funds".
The Investment Adviser to the EVERGREEN FUND, EVERGREEN U.S. REAL ESTATE
EQUITY FUND and EVERGREEN LIMITED MARKET FUND, INC. is Evergreen Asset
Management Corp. ("Evergreen Asset") which, with its predecessors, has served as
an 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 U.S. REAL ESTATE EQUITY FUND seeks long-term capital growth.
Current income is a secondary objective. It invests primarily in equity
securities of United States companies which are principally engaged in the real
estate industry or which own significant real estate assets. It will not
purchase direct interests in real estate.
EVERGREEN LIMITED MARKET FUND, 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 (successor to ABT Emerging Growth Fund)
seeks long-term capital appreciation by investing primarily in common stocks of
emerging growth companies and in larger, more well established companies, all of
which are viewed by the Fund's investment adviser as having above average
appreciation potential.
THERE IS NO ASSURANCE THAT THE INVESTMENT OBJECTIVE OF ANY FUND WILL BE
ACHIEVED.
2
<PAGE>
EXPENSE INFORMATION
The table set forth below summarizes the shareholder transaction costs
associated with an investment in each Class A, Class B and Class C Shares of a
Fund. For further information see "Purchase and Redemption of Shares" and
"General Information -- Other Classes of Shares".
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES Class A Shares Class B Shares Class C Shares
<S> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases 4.75% None None
(as a % of offering price)
Sales Charge on Dividend Reinvestments None None None
Contingent Deferred Sales Charge (as a % of None 5% during the first year, 4% during the 1% during the
original purchase price or redemption second year, 3% during the third and fourth first year and
proceeds, whichever is lower) years, 2% during the fifth year, 1% during 0% thereafter
the sixth and seventh years and 0% after the
seventh year
Redemption Fee None None None
Exchange Fee None None None
</TABLE>
The following tables show for each Fund the estimated annual operating
expenses (as a percentage of average net assets) attributable to each Class of
Shares, together with examples of the cumulative effect of such expenses on a
hypothetical $1,000 investment in each Class for the periods specified assuming
(i) a 5% annual return, and (ii) redemption at the end of each period and,
additionally for Class B and C, no redemption at the end of each period.
In the following examples (i) the expenses for Class A Shares assume
deduction of the maximum 4.75% sales charge at the time of purchase, (ii) the
expenses for Class B Shares and Class C Shares assume deduction at the time of
redemption (if applicable) of the maximum contingent deferred sales charge
applicable for that time period, and (iii) the expenses for Class B Shares
reflect the conversion to Class A Shares eight years after purchase (years eight
through ten, therefore, reflect Class A expenses).
EVERGREEN FUND
<TABLE>
<CAPTION>
EXAMPLES
Assuming
Assuming Redemption No
ANNUAL OPERATING EXPENSES at End of Period Redemption
Class B Class C Class A Class B Class C Class B
Class A
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Advisory Fees 1.00% 1.00% 1.00%
After 1 Year $ 61 $ 72 $ 32 $ 22
12b-1 Fees* .25% 1.00% 1.00%
After 3 Years $ 89 $ 97 $ 67 $ 67
Other Expenses .13% .13% .13%
After 5 Years $ 119 $ 134 $ 114 $ 114
After 10 Years $ 205 $ 218 $ 246 $ 218
Total 1.38% 2.13% 2.13%
<CAPTION>
Class C
<S> <C> <C>
After 1 year $ 22
12b-1 Fees*
After 3 years $ 67
Other Expenses
After 5 years $ 114
After 10 years $ 246
Total
<CAPTION>
Advisory Fees
</TABLE>
EVERGREEN U.S. REAL ESTATE EQUITY FUND
<TABLE>
<CAPTION>
EXAMPLES
Assuming
Assuming Redemption at End of No
ANNUAL OPERATING EXPENSES Period Redemption
Class B Class C Class A Class B Class C Class B
Class A
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Advisory Fees 1.00% 1.00% 1.00%
After 1 Year $ 64 $ 75 $ 35 $ 25
12b-1 Fees* .25% 1.00% 1.00%
After 3 Years $ 100 $ 108 $ 78 $ 78
Other Expenses
After 5 Years $ 138 $ 153 $ 133 $ 133
(after reimbursement)** .50% .50% .50%
After 10 Years $ 224 $ 252 $ 284 $ 257
Total 1.75% 2.50% 2.50%
<CAPTION>
Class C
<S> <C> <C>
After 1 year $ 25
12b-1 Fees*
After 3 years $ 78
Other Expenses
After 5 years $ 133
(after reimbursement)**
After 10 years $ 284
Total
<CAPTION>
Advisory Fees
</TABLE>
EVERGREEN LIMITED MARKET FUND
<TABLE>
<CAPTION>
EXAMPLES
Assuming
Assuming Redemption at End of No
ANNUAL OPERATING EXPENSES Period Redemption
Class B Class C Class A Class B Class C Class B
Class A
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Advisory Fees 1.00% 1.00% 1.00%
After 1 Year $ 63 $ 74 $ 34 $ 24
12b-1 Fees* .25% 1.00% 1.00%
After 3 Years $ 96 $ 104 $ 74 $ 74
Other Expenses .37% .37% .37%
After 5 Years $ 131 $ 147 $ 127 $ 127
After 10 Years $ 231 $ 243 $ 271 $ 243
Total 1.62% 2.37% 2.37%
<CAPTION>
Class C
<S> <C> <C>
After 1 year $ 24
12b-1 Fees*
After 3 years $ 74
Other Expenses
After 5 years $ 127
After 10 years $ 271
Total
<CAPTION>
Advisory Fees
</TABLE>
3
<PAGE>
EVERGREEN AGGRESSIVE GROWTH FUND (A)
<TABLE>
<CAPTION>
EXAMPLES
Assuming
Assuming Redemption at End of No
ANNUAL OPERATING EXPENSES Period Redemption
Class B Class C Class A Class B Class C Class B
Class A
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Advisory Fees .60% .60% .60%
After 1 Year $ 59 $ 70 $ 30 $ 20
Administrative Fees .06% .06% .06%
After 3 Years $ 83 $ 91 $ 61 $ 61
12b-1 Fees* .25% 1.00% 1.00%
After 5 Years $ 109 $ 124 $ 104 $ 104
Other Expenses .27% .27% .27%
After 10 Years $ 184 $ 197 $ 225 $ 197
Total 1.18% 1.93% 1.93%
<CAPTION>
Class C
<S> <C> <C>
After 1 year $ 20
Administrative Fees
After 3 years $ 61
12b-1 Fees*
After 5 years $ 104
Other Expenses
After 10 years $ 225
Total
<CAPTION>
Advisory Fees
</TABLE>
(a) Estimated annual operating expenses reflect the combination of EVERGREEN
AGRESSIVE GROWTH FUND and ABT Emerging Growth Fund. These estimates are based on
the ABT Emerging Growth Fund Class A Shares as restated to reflect current fee
arrangements since the other Classes had no operations.
*Class A Shares can pay up to . 75 of 1% of average net assets as a 12b-1 Fee.
For the foreseeable future, the Class A shares 12b-1 Fees will be limited to .25
of 1% of average net assets. For Class B and Class C Shares a portion of the
12b-1 Fees equivalent to .25 of 1% of average net assets will be shareholder
servicing-related. Distribution-related 12b-1 Fees will be limited to .75 of 1%
of average net assets as permitted under the rules of the National Association
of Securities Dealers, Inc.
**Reflects agreements by Evergreen Asset to limit aggregate operating expenses
(including the Advisory Fees, but excluding interest, taxes, brokerage
commissions, Rule 12b-1 distribution fees and shareholder servicing fees and
extraordinary expenses) of EVERGREEN U.S. REAL ESTATE EQUITY FUND to 1.50% of
average net assets until the Fund reaches net assets of $15 million. Absent such
agreements, the estimated annual operating expenses for the Fund would be 2.75%
of average net assets for Class A and 3.50% of average net assets for Class B
and C Shares.
From time to time, each Fund's investment adviser may, at its discretion,
reduce or waive its fees or reimburse the Funds for certain of their expenses in
order to reduce their expense ratios. Each Fund's investment adviser may cease
these waivers and reimbursements at any time.
The purpose of the foregoing table is to assist an investor in
understanding the various costs and expenses that an investor in each Class of
Shares of the Funds will bear directly or indirectly. The amounts set forth both
in the tables and in the examples are estimated amounts based on the experience
of each Fund for the most recent fiscal period. These amounts have been restated
to reflect current fee arrangements and in the case of Funds that did not offer
all of the above-referenced Classes of shares during such periods, the amounts
set forth in the tables are based on the expenses incurred by the Classes which
were offered.THE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES OR ANNUAL RETURN. ACTUAL EXPENSES AND ANNUAL RETURN MAY BE
GREATER OR LESS THAN THOSE SHOWN. For a more complete description of the various
costs and expenses borne by the Funds see "Management of the Funds". As a result
of asset-based sales charges, long-term shareholders may pay more than the
economic equivalent of the maximum front-end sales charges permitted under the
rules of the National Association of Securities Dealers, Inc.
4
<PAGE>
FINANCIAL HIGHLIGHTS
The tables on the following pages present, for each Fund, financial
highlights for a share outstanding throughout each period indicated. The
information in the tables for the five most recent fiscal years or the life of
the Fund if shorter for EVERGREEN FUND and EVERGREEN U.S. REAL ESTATE EQUITY
FUND has, except as noted otherwise, been audited by Price Waterhouse LLP, each
Fund's independent auditors, for EVERGREEN LIMITED MARKET FUND has, except as
noted otherwise, been audited by Ernst & Young LLP, the Fund's independent
auditors and for EVERGREEN AGGRESSIVE GROWTH FUND has, except as noted
otherwise, been audited by Tait, Weller & Baker, the Fund's independent
auditors. A report of Price Waterhouse LLP, Ernst & Young LLP or Tait Weller &
Baker, as the case may be, on the audited information with respect to each Fund
is incorporated by reference in the Fund's Statement of Additional Information.
The following information for each Fund should be read in conjunction with the
financial statements and related notes which are incorporated by reference in
the Fund's Statement of Additional Information.
No financial highlights are shown for Class C Shares of Evergreen U.S.
Real Estate Equity Fund since this class did not have any operations prior to
March 31, 1995. No financial highlights are shown for Class B, C and Y Shares of
Evergreen Aggressive Growth Fund since these classes did not have any operations
prior to April 30, 1995.
Further information about a Fund's performance is contained in the Fund's
annual report to shareholders, which may be obtained without charge.
EVERGREEN FUND -- CLASS Y SHARES
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
MARCH 31,
1995 YEAR ENDED SEPTEMBER 30,*
(UNAUDITED) 1994 1993 1992 1991 1990 1989 1988** 1987** 1986**
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning
of period..................... $ 14.62 $14.46 $13.10 $13.32 $ 9.66 $14.01 $12.47 $15.12 $13.55 $11.03
Income (loss) from investment
operations:
Net investment income........... .04 .07 .09 .09 .17 .24 .32 .21 .17 .14
Net realized and unrealized gain
(loss) on investments......... .99 .79 1.96 .55 3.93 (3.62) 1.99 (1.05) 2.65 3.18
Total from investment
operations.................. 1.03 .86 2.05 .64 4.10 (3.38) 2.31 (.84) 2.82 3.32
Less distributions to
shareholders from:
Net investment income........... (.07) (.09) (.07) (.17) (.18) (.36) (.21) (.25) (.13) (.14)
Net realized gains.............. (2.16) (.61) (.62) (.69) (.26) (.61) (.56) (1.56) (1.12) (.66)
Total distributions........... (2.23) (.70) (.69) (.86) (.44) (.97) (.77) (1.81) (1.25) (.80)
Net asset value, end of
period........................ $ 13.42 $14.62 $14.46 $13.10 $13.32 $9.66 $14.01 $12.47 $15.12 $13.55
TOTAL RETURN+................... 9.1% 6.2% 15.8% 5.2% 43.7% (25.4%) 20.0% 1.9% 22.5% 30.9%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (in
millions)..................... $508 $526 $657 $722 $755 $525 $867 $751 $808 $639
Ratios to average net assets:
Operating expenses............ 1.15%++ 1.13% 1.11% 1.13% 1.15% 1.15% 1.11% 1.03% 1.03% 1.04%
Interest expense.............. .13%++ .09% .01% -- -- -- -- -- -- --
Net investment income......... .48%++ .40% .60% .56% 1.45% 1.83% 2.46% 1.70% 1.32% 1.41%
Portfolio turnover rate......... 11% 19% 21% 32% 35% 39% 40% 42% 46% 48%
<CAPTION>
1985**
<S> <C>
PER SHARE DATA
Net asset value, beginning
of period..................... $ 9.78
Income (loss) from investment
operations:
Net investment income........... .16
Net realized and unrealized gain
(loss) on investments......... 1.66
Total from investment
operations.................. 1.82
Less distributions to
shareholders from:
Net investment income........... (.16)
Net realized gains.............. (.41)
Total distributions........... (.57)
Net asset value, end of
period........................ $11.03
TOTAL RETURN+................... 19.8%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (in
millions)..................... $334
Ratios to average net assets:
Operating expenses............ 1.08%
Interest expense.............. --
Net investment income......... 1.73%
Portfolio turnover rate......... 59%
</TABLE>
* 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.
+ Total return is calculated on net asset value for the period indicated and is
not annualized.
++ Annualized.
5
<PAGE>
EVERGREEN FUND -- CLASS A, B AND C SHARES
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
JANUARY 5, 1995* THROUGH MARCH 31, 1995
(UNAUDITED)
<S> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning of period..................................... $11.97 $11.97 $11.97
Income (loss) from investment operations:
Net investment income (loss)............................................. .01 (.01) (.01)
Net realized and unrealized gain on investments.......................... 1.43 1.43 1.43
Total from investment operations....................................... 1.44 1.42 1.42
Net asset value, end of period........................................... $13.41 $13.39 $13.39
TOTAL RETURN+............................................................ 12.0% 11.9% 11.9%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's omitted)................................ $5,545 $ 12,308 $408
Ratios to average net assets:
Operating expenses (a)................................................. 1.37%++ 2.12%++ 2.14%++
Interest expense....................................................... .16%++ .16%++ .16%++
Net investment income (a).............................................. .35%++ (.41%)++ (.35%)++
Portfolio turnover rate (#).............................................. 11% 11% 11%
</TABLE>
* Commencement of class operations.
+ Total return is calculated on net asset value per share for the period
indicated and is not annualized. Initial sales charge or contingent deferred
sales charge is not reflected.
++ Annualized. Due to the recent commencement of their offering, the ratios for
Class A, Class B and Class C shares are not necessarily comparable to that
of the Class Y shares, and are not necessarily indicative of future ratios.
# Portfolio turnover rate is calculated for the six months ended March 31,
1995.
(a) Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were assumed or waived by the investment adviser, the
annualized ratios of expenses and net investment income (loss) to average
net assets, exclusive of any applicable state expense limitations, would
have been the following:
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
JANUARY 3, 1995 THROUGH MARCH 31, 1995
(UNAUDITED)
<S> <C> <C> <C>
Expenses....................................... 1.64% 2.24% 5.97%
Net investment income (loss)................... .08% (.53%) (4.18%)
</TABLE>
6
<PAGE>
EVERGREEN U.S. REAL ESTATE EQUITY FUND -- CLASS Y SHARES
<TABLE>
<CAPTION>
SIX MONTHS
ENDED NINE MONTHS SEPTEMBER 1, 1993*
MARCH 31, 1995 ENDED THROUGH
(UNAUDITED) SEPTEMBER 30, 1994# DECEMBER 31, 1993
<S> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning of period........................... $10.07 $ 10.71 $ 10.00
Income (loss) from investment operations:
Net investment income.......................................... .13 .11 .04
Net realized and unrealized gain (loss) on investments......... (.58) (.75) .72
Total from investment operations........................... (.45) (.64) .76
Less distributions to shareholders from:
Net investment income.......................................... (.12) -- (.04)
In excess of net investment income............................. (.20) -- (.01)
Total distributions........................................ (.32) -- (.05)
Net asset value, end of period................................. $ 9.30 $ 10.07 $ 10.71
TOTAL RETURN+.................................................. (4.4%) (6.0%) 7.6%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's omitted)...................... $8,229 $8,630 $4,610
Ratios to average net assets:
Expenses..................................................... 1.50%++ 1.49%++(a) .44%++(a)
Net investment income........................................ 3.10%++ 1.60%++(a) 1.93%++(a)
Portfolio turnover rate........................................ 62% 102% 17%
</TABLE>
# On September 21, 1994, the Fund changed its fiscal year end from December 31
to September 30.
* Commencement of operations.
+ Total return is calculated on net asset value for the period indicated and is
not annualized.
++ Annualized.
(a) Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were assumed or waived by the investment adviser, the
annualized ratios of expenses and net investment income to average net
assets, exclusive of any applicable state expense limitations, would have
been the following:
<TABLE>
<CAPTION>
NINE MONTHS SEPTEMBER 1, 1993
ENDED THROUGH
SEPTEMBER 30, 1994 DECEMBER 31, 1993
<S> <C> <C>
Expenses................................................... 2.65% 3.59%
Net investment income (loss)............................... .44% (1.21%)
</TABLE>
7
<PAGE>
EVERGREEN U.S. REAL ESTATE EQUITY FUND -- CLASS A AND B SHARES
<TABLE>
<CAPTION>
CLASS A CLASS B
MARCH 10, 1995* MARCH 7, 1995*
THROUGH THROUGH
MARCH 31, 1995 MARCH 31, 1995
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
PER SHARE DATA
Net asset value, beginning of period....................................................... $9.21 $9.19
Income from investment operations:
Net investment income...................................................................... .04 .04
Net realized and unrealized gain on investments............................................ .05 .06
Total from investment operations......................................................... .09 .10
Net asset value, end of period............................................................. $9.30 $9.29
TOTAL RETURN+.............................................................................. 1.0% 1.1%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's omitted).................................................. $10 $52
Ratios to average net assets:
Expenses................................................................................. 1.75%++ 2.50%++
Net investment income.................................................................... 9.49%++ 6.94%++
Portfolio turnover rate**.................................................................. 62% 62%
</TABLE>
* Commencement of class operations.
** Portfolio turnover rate is calculated for the six month period ended March
31, 1995.
+ Total return is calculated on net asset value per share for the period
indicated and is not annualized. Initial sales charge and contingent deferred
sales charge is not reflected.
++ Annualized. Due to the recent commencement of their offering, the ratios for
Class A and Class B shares are not necessarily comparable to that of the
Class Y shares, and are not necessarily indicative of future ratios.
8
<PAGE>
EVERGREEN LIMITED MARKET FUND, INC. -- CLASS Y SHARES
<TABLE>
<CAPTION>
SIX MONTHS
ENDED FOUR MONTHS
MARCH 31, ENDED
1995 SEPTEMBER 30, YEAR ENDED MAY 31,
(UNAUDITED) 1994# 1994 1993 1992 1991 1990 1989* 1988 1987
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value,
beginning of
period............... $21.74 $21.20 $20.87 $21.02 $18.81 $17.69 $21.02 $16.82 $18.55 $20.16
Income (loss) from
investment
operations:
Net investment income
(loss)............... (.06) (.05) (.07) (.03) .02 .56 .45 .16 -- (.04)
Net realized and
unrealized gain
(loss) on
investments.......... (1.60) .59 1.67 1.57 3.33 1.67 .25 4.37 (.78) 1.05
Total from investment
operations......... (1.66) .54 1.60 1.54 3.35 2.23 .70 4.53 (.78) 1.01
Less distributions to
shareholders from:
Net investment
income............... -- -- -- -- (.14) (.53) (.36) (.05) -- --
Net realized gains..... (3.68) -- (1.27) (1.69) (1.00) (.58) (3.67) (.28) (.95) (2.62)
Total
distributions...... (3.68) -- (1.27) (1.69) (1.14) (1.11) (4.03) (.33) (.95) (2.62)
Net asset value, end of
period............... $16.40 $21.74 $21.20 $20.87 $21.02 $18.81 $17.69 $21.02 $16.82 $18.55
TOTAL RETURN+.......... (6.7%) 2.6% 7.6% 7.5% 18.3% 14.4% 4.2% 27.4% (4.0%) 6.3%
RATIOS & SUPPLEMENTAL
DATA
Net assets, end of
period
(000's omitted)...... $78,609 $99,340 $96,357 $80,605 $62,172 $45,687 $37,838 $37,292 $23,007 $20,881
Ratios to average net
assets:
Expenses............. 1.32%++ 1.37%++ 1.26% 1.24% 1.25% 1.32% 1.33% 1.30% 1.47% 1.44%
Net investment income
(loss)............. (.78%)++ (.70%)++ (.33%) (.07%) .22% 3.32% 2.25% .86% .01% (.20%)
Portfolio turnover
rate................. 40% 36% 89% 29% 55% 59% 46% 45% 47% 43%
<CAPTION>
1986
<S> <C>
PER SHARE DATA
Net asset value,
beginning of
period............... $14.97
Income (loss) from
investment
operations:
Net investment income
(loss)............... (.02)
Net realized and
unrealized gain
(loss) on
investments.......... 6.37
Total from investment
operations......... 6.35
Less distributions to
shareholders from:
Net investment
income............... --
Net realized gains..... (1.16)
Total
distributions...... (1.16)
Net asset value, end of
period............... $20.16
TOTAL RETURN+.......... 45.7%
RATIOS & SUPPLEMENTAL
DATA
Net assets, end of
period
(000's omitted)...... $19,783
Ratios to average net
assets:
Expenses............. 1.44%
Net investment income
(loss)............. (.10%)
Portfolio turnover
rate................. 56%
</TABLE>
# On September 21, 1994, the Fund changed its fiscal year end from May 31 to
September 30.
* Investment income, expenses and net investment income are based on average
monthly shares outstanding for the period indicated.
+ Total return is calculated on net asset value for the period indicated and is
not annualized.
++ Annualized.
9
<PAGE>
EVERGREEN LIMITED MARKET FUND, INC. -- CLASS A, B AND C SHARES
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
JANUARY 3, 1995* THROUGH MARCH 31, 1995
(UNAUDITED)
<S> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning of period..................................... $15.76 $15.76 $15.76
Income (loss) from investment operations:
Net investment loss...................................................... (.01) (.03) (.03)
Net realized and unrealized gain on investments.......................... .65 .63 .64
Total from investment operations....................................... .64 .60 .61
Net asset value, end of period........................................... $16.40 $16.36 $16.37
TOTAL RETURN+............................................................ 4.1% 3.8% 3.9%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's omitted)................................ $732 $1,598 $59
Ratios to average net assets:
Expenses (a)........................................................... 1.41%++ 2.17%++ 2.15%++
Net investment loss (a)................................................ (.71%)++ (1.47%)++ (1.38%)++
Portfolio turnover rate**................................................ 40% 40% 40%
</TABLE>
* Commencement of class operations.
** Portfolio turnover rate is calculated for the six months period ended March
31, 1995.
+ Total return is calculated on net asset value per share for the period
indicated and is not annualized. Initial sales charge and contingent deferred
sales charge is not reflected.
++ Annualized. Due to the recent commencement of their offering, the ratios for
Class A, Class B and Class C shares are not necessarily comparable to that
of the Class Y shares, and are not necessarily indicative of future ratios.
(a) Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were assumed or waived by the investment adviser, the
annualized ratios of expenses and net investment income (loss) to average
net assets, exclusive of any applicable state expense limitations, would
have been the following:
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
JANUARY 3, 1995 THROUGH MARCH 31, 1995
(UNAUDITED)
<S> <C> <C> <C>
Expenses....................................... 2.75% 2.77% 3.50%
Net investment income (loss)................... (2.05%) (2.07%) (2.73%)
</TABLE>
10
<PAGE>
EVERGREEN AGGRESSIVE GROWTH FUND -- CLASS A SHARES*
<TABLE>
<CAPTION>
SIX MONTHS TEN MONTHS
ENDED ENDED
APRIL 30, OCTOBER YEAR ENDED
1995 YEAR ENDED OCTOBER 31, 31, DECEMBER 31,
(UNAUDITED) 1994 1993 1992 1991 1990 1989 1988** 1987 1986
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning of
period...................... $13.85 $14.44 $11.76 $12.22 $7.37 $11.06 $7.62 $7.07 $8.77 $7.75
Income (loss) from investment
operations:
Net investment loss........... (.07) (.13) (.12) (.10) (.08) (.04) (.11) (.21) (.11) (.08)
Net realized and unrealized
gain (loss)................. .46 (.22) 3.06 1.84 5.59 (2.02) 3.55 .76 (1.34) 1.10
Total from investment
operations................ .39 (.35) 2.94 1.74 5.51 (2.06) 3.44 .55 (1.45) 1.02
Less distributions to
shareholders from:
Net realized gains............ -- (.24) (.26) (2.20) (.66) (1.63) -- -- (.25) --
Net asset value, end of
period...................... $14.24 $13.85 $14.44 $11.76 $12.22 $7.37 $11.06 $7.62 $7.07 $8.77
TOTAL RETURN+................. 2.8% (2.4%) 25.3% 17.4% 79.8% (20.5%) 45.1% 9.3% (16.5%) 13.2%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted)............. $62,993 $64,635 $58,053 $29,302 $23,509 $14,325 $21,241 $19,900 $25,700 $37,100
Ratios to average net assets
of:
Expenses.................... 1.41%++ 1.25% 1.31% 1.44% 1.59% 1.86% 1.78% 2.02%++ 1.57% 1.65%
Net investment loss......... (1.01%)++ (.92%) (.92%) (.93%) (.71%) (.49%) (1.19%) (1.36%)++ (1.05%) (.90%)
Portfolio turnover rate....... 14% 59% 48% 46% 108% 100% 120% 45% 65% 49%
<CAPTION>
1985
<S> <C>
PER SHARE DATA
Net asset value, beginning of
period...................... $5.43
Income (loss) from investment
operations:
Net investment loss........... (.09)
Net realized and unrealized
gain (loss)................. 2.59
Total from investment
operations................ 2.50
Less distributions to
shareholders from:
Net realized gains............ (.18)
Net asset value, end of
period...................... $7.75
TOTAL RETURN+................. 46.0%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted)............. $16,100
Ratios to average net assets
of:
Expenses.................... 2.34%
Net investment loss......... (1.29%)
Portfolio turnover rate....... 101%
</TABLE>
* The information set forth in the table above reflects the operating history
of ABT Emerging Growth Fund, predecessor to Evergreen Aggressive Growth Fund,
for the periods indicated.
** The Fund changed its fiscal year from December 31 to October 31.
+ Total return is calculated on net asset value for the period indicated and is
not annualized. Initial sales charge is not reflected.
++ Annualized.
11
12
- -------------------------------------------------------------------------------
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 the
opinion of the Fund's investment adviser, offer potential for capital
appreciation. The Fund's investment objective is fundamental policy, which may
not be changed without shareholder approval. A "little-known" company means one
whose business is limited to a regional market or whose securities are closely
held with only a small proportion traded publicly. A "relatively small" company
means one which has a small share of the market for its products or services in
comparison with other companies in its field, or which provides goods or
services for a limited market. A "special situation" company is one which offers
potential for capital appreciation because of a recent or anticipated change in
structure, management, products or services. In addition to the securities
described above, the Evergreen Fund may invest in securities of relatively
well-known and large companies with potential for capital appreciation.
Investments may also be made to a limited degree in non-convertible debt
securities and preferred stocks which offer an opportunity for capital
appreciation. Short-term investments may also be made if the Fund's investment
adviser believes that such action will benefit the Fund. See "Special Risk
Considerations".
It is anticipated that the annual portfolio turnover rate for the Fund
will not exceed 100%. The Fund may employ certain additional investment
strategies which are discussed in "Investment Practices and Restrictions",
below.
Evergreen U.S. Real Estate Equity Fund
The Fund's investment objective is long-term capital growth which it
seeks to achieve through investment primarily in equity securities of domestic
companies which are principally engaged in the real estate industry or which own
significant real estate assets; the Fund will not purchase direct interests in
real estate. Current income will be a secondary objective. Equity securities
will include common stock, preferred stock and securities convertible into
common stock. The Fund's investment objective is fundamental policy, which may
not be changed without shareholder approval.
Under normal conditions, the Fund will invest not less than 65% of its
total assets in equity securities of United States exchange or NASDAQ listed
companies principally engaged in the real estate industry. A company is deemed
to be "principally engaged" in the real estate industry if at least 50% of its
assets (marked to market), gross income or net profits are attributable to
ownership, construction, management or sale of residential, commercial or
industrial real estate. Real estate industry companies may include among others:
equity real estate investment trusts, which pool investors' funds for investment
primarily in commercial real estate properties; mortgage real estate investment
trusts, which invest pooled funds in real estate related loans; brokers or real
estate developers; and companies with substantial real estate holdings, such as
paper and lumber producers and hotel and entertainment companies. The Fund will
only invest in real estate equity trusts and limited partnerships which are
traded on major exchanges. See "Special Risk Considerations".
The remainder of the Fund's investments may be made in equity
securities of issuers whose products and services are related to the real estate
industry, such as manufacturers and distributors of building supplies and
financial institutions which issue or service mortgages. The Fund may invest
more than 25% of its total assets in any one sector of the real estate or real
estate related industries. In addition, the Fund may, from time to time, invest
in the securities of companies unrelated to the real estate industry whose real
estate assets are substantial relative to the price of the companies'
securities.
Investments may also be made in securities of issuers unrelated to the
real estate industry believed by the Fund's investment adviser to be undervalued
and to have capital appreciation potential. Also, consistent with the secondary
objective of current income, investments may also be made in nonconvertible debt
securities of such companies. The debt securities purchased (except for those
described below) will be of investment grade or better quality (e.g., rated no
lower than A by Standard & Poor's Ratings Group ("S&P") or Moody's Investors
Service, Inc. ("Moody's") or any other nationally recognized statistical rating
organization ("SRO"), or if not so rated, believed by the Fund's investment
adviser to be of comparable quality). However, up to 10% of total assets may be
invested in unrated debt securities of issuers secured by real estate assets
where the Fund's investment adviser believes that the securities are trading at
a discount and the underlying collateral will ensure repayment of principal. In
such situations, it is conceivable that the Fund could, in the event of default,
end up holding the underlying real estate directly.
It is anticipated that the annual portfolio turnover rate for the Fund
may exceed 100%. The Fund may employ certain additional investment strategies
which are discussed in "Investment Practices and Restrictions", 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, the Fund's sub adviser, 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.
It is anticipated that the annual portfolio turnover rate for the Fund
may exceed 100%. The Fund may employ certain additional investment strategies
which are discussed in "Investment Practices and Restrictions", 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 objective is fundamental policy, which may not
be changed without shareholder approval. Under normal circumstances, the Fund
intends to invest at least 65% of its net assets in common stocks or securities
convertible into common stocks. The Fund's investment adviser considers an
emerging growth company to be one which is still in the developmental stage, yet
has demonstrated, or is expected to achieve, growth of earnings over various
major business cycles. Important qualities of any emerging growth company
include sound management and a good product with growing market opportunities.
To the extent that its assets are not invested in common stocks or securities
convertible into common stocks, the Fund also may invest its assets in, or enter
into repurchase agreements with banks or broker-dealers with respect to,
investment grade corporate bonds, U.S. government securities, commercial paper
and certificates of deposit of domestic banks.
Consistent with its investment objective, the Fund also may invest in
equity securities of seasoned, established companies which its investment
adviser believes have above-average appreciation potential similar to that of
companies in the developmental stage. This may be due, for example, to
management change, new technology, new product or service developments, changes
in demand, or other factors. Investments in stocks of emerging growth companies
may involve special risks. Securities of lesser-known, relatively small and
special situation companies tend to be speculative and volatile. Therefore, the
current net asset value of the Fund's shares may vary significantly.
Accordingly, the Fund should not be considered suitable for investors who are
unable or unwilling to assume the risks of loss inherent in such a program, nor
should investment in the Fund be considered a balanced or complete investment
program.
It is anticipated that the annual portfolio turnover rate for the Fund
will not exceed 100%. The Fund may employ certain additional investment
strategies which are discussed in "Investment Practices and Restrictions",
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, U.S. Government securities, non-convertible investment grade debt
securities or preferred stocks or hold its assets in cash if, in the opinion of
the Funds investment advisers, market conditions warrant a temporary defensive
investment strategy.
Portfolio Turnover and Brokerage. 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, Evergreen U.S. Real Estate Equity
Fund and Evergreen Limited Market Fund effected on those exchanges. See the
Statement of Additional Information for further information regarding the
brokerage allocation practices of the Funds. The portfolio turnover rate for
each Fund is set forth in the tables contained in the section entitled
"Financial Highlights".
Borrowing. As a matter of fundamental policy, the Funds may not borrow money
except as a temporary measure for extraordinary or emergency purposes. The
proceeds from borrowings may be used to facilitate redemption requests which
might otherwise require the untimely disposition of portfolio securities. The
specific limits and other terms applicable to borrowing by each Fund are set
forth in the Statement of Additional Information.
Lending of Portfolio Securities. In order to generate income and to offset
expenses, the Funds may lend portfolio securities to brokers, dealers and other
financial institutions. Each Fund's investment adviser will monitor the
creditworthiness of such borrowers. Loans of securities by the Funds, if and
when made, may not exceed 30% of the value of a Fund's net assets and must be
collateralized by cash or U.S. Government securities that are maintained at all
times in an amount equal to at least 100% of the current market value of the
securities loaned, including accrued interest. While such securities are on
loan, the borrower will pay a Fund any income accruing thereon, and the Fund may
invest the cash collateral in portfolio securities, thereby increasing its
return. Any gain or loss in the market price of the loaned securities which
occurs during the term of the loan would affect a Fund and its investors. A Fund
has the right to call a loan and obtain the securities loaned at any time on
notice of not more than five business days. A Fund may pay reasonable fees in
connection with such loans.
There is the risk that when lending portfolio securities, the
securities may not be available to a Fund on a timely basis and the Fund may,
therefore, lose the opportunity to sell the securities at a desirable price. In
addition, in the event that a borrower of securities would file for bankruptcy
or become insolvent, disposition of the securities may be delayed pending court
action.
Illiquid Securities. The Funds may invest up to 15% of their net assets in
illiquid securities and other securities which are not readily marketable,
including non-negotiable time deposits, certain restricted securities not deemed
by the Trustees to be liquid and repurchase agreements with maturities longer
than seven days, except that Evergreen U.S. Real Estate Equity Fund may only
invest up to 10% of its assets in repurchase agreements with maturities longer
than seven days. Securities eligible for resale pursuant to Rule 144A under the
Securities Act of 1933, which have been determined to be liquid, will not be
considered by the Funds investment advisers to be illiquid or not readily
marketable and, therefore, are not subject to the aforementioned 15% limit. The
inability of a Fund to dispose of illiquid or not readily marketable investments
readily or at a reasonable price could impair the Fund's ability to raise cash
for redemptions or other purposes. The liquidity of securities purchased by a
Fund which are eligible for resale pursuant to Rule 144A will be monitored by
each Funds 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
<PAGE>
ensure that the retention of such security does not result in a Fund having more
than 15% of its assets invested in illiquid or not readily marketable
securities.
Repurchase Agreements and Reverse Repurchase Agreements. The Funds may enter
into repurchase agreements with member banks of the Federal Reserve System,
including the Custodian or primary dealers in U.S. Government securities. A
repurchase agreement is an arrangement pursuant to which a buyer purchases a
security and simultaneously agrees to resell it to the vendor at a price that
results in an agreed-upon market rate of return which is effective for the
period of time (which is normally one to seven days, but may be longer) the
buyer's money is invested in the security. The arrangement results in a fixed
rate of return that is not subject to market fluctuations during the holding
period. A Fund requires continued maintenance of collateral with its Custodian
in an amount at least equal to the repurchase price (including accrued
interest). In the event a vendor defaults on its repurchase obligation, a Fund
might suffer a loss to the extent that the proceeds from the sale of the
collateral were less than the repurchase price. If the vendor becomes the
subject of bankruptcy proceedings, a Fund might be delayed in selling the
collateral. The Funds investment advisers will review and continually monitor
the creditworthiness of each institution with which a Fund enters into a
repurchase agreement to evaluate these risks.
Evergreen U.S. Real Estate Equity Fund and Evergreen Aggressive Growth
Fund may borrow money by entering into a "reverse repurchase agreement" by which
it agrees to sell portfolio securities to financial institutions such as banks
and broker-dealers, and to repurchase them at a mutually agreed upon date and
price, for temporary or emergency purposes. At the time the Fund enters into a
reverse repurchase agreement, it will place in a segregated custodial account
cash, U.S. government securities or liquid high grade debt obligations having a
value at least equal to the repurchase price (including accrued interest) and
will subsequently monitor the account to ensure that such equivalent value is
maintained. Reverse repurchase agreements involve the risk that the market value
of the securities sold by the Fund may decline below the repurchase price of
those securities. The Fund will not enter into reverse repurchase agreements
exceeding 5% of the value of its total assets.
Fixed Income Securities - Downgrades. If any security invested in by any of the
Funds loses its rating or has its rating reduced after the Fund has purchased
it, the Fund is not required to sell or otherwise dispose of the security, but
may consider doing so.
Futures and Related Options. The Evergreen U.S. Real Estate Equity Fund may, to
a limited extent, enter into financial futures contracts, including futures
contracts based on securities indices, and purchase and sell options on such
futures contracts. The sale of a futures contract obligates the Fund to deliver
the amount of securities, currency, or in the case of an index futures contract,
cash, called for in the futures contract on a specific future date and price.
Conversely, the purchase of a futures contract obligates the Fund to receive
(purchase) the amount of securities, currency, or in the case of an index
futures contract, cash, called for in the futures contract on a specific future
date and at a specific price. While the terms of futures contracts call for
actual delivery or receipt of the underlying property, the majority of such
contracts are "closed out" prior to settlement date by entering into an
offsetting purchase or sale transaction. Upon entering into a futures contract,
the Fund must make an initial margin deposit representing a portion of the funds
that would be required to settle the contract. Thereafter, on each day that
futures contracts to which the Fund is a party trade, the Fund may be required
to post additional "variation" margin as a result of changes in the value of the
futures contract. The Fund does not segregate assets in an amount equal to its
total exposure under futures contracts.
While the Fund will enter into futures contracts only if there appears
to be a liquid secondary market for such contracts, there can be no assurance
that the Fund will be able to close out their position in a specific contract at
any specific time. The Fund will not enter into a particular index-based futures
contract unless the Fund's investment adviser determines that a correlation
exists between price movements in the index-based futures contract and in
securities in the Fund's portfolio. Such correlation is not likely to be
perfect, since the Fund's portfolio is not likely to contain the same securities
used in the index.
An option on a futures contract entitles its holder to enter into a
futures contract on specific terms which remain fixed until the expiration of
the option, regardless of the movement of futures prices in general. If the
movement of currency futures prices during the term of the option are such that
it does not become advantageous for the Fund to exercise the option or enter
into an offsetting options transaction, the option will expire and have no
further value. The exposure of the Fund in connection with purchase of an option
on a futures contract is limited to the premium paid for the option. The Funds
will only use futures instruments for hedging, not speculative, purposes. The
Fund may not enter into futures contracts or related options if, immediately
thereafter, more than 30% of the Fund's total assets would be hedged thereby or
the amounts committed to margin and premiums paid for unexpired options would
exceed 5% of the Fund's total assets. Special Risk Considerations
Investment in Small Companies. Investments in securities of little-known,
relatively small and special situation companies may tend to be speculative and
volatile. A lack of management depth in such companies could increase the risks
associated with the loss of key personnel. Also, the material and financial
resources of such companies may be limited, with the consequence that funds or
external financing necessary for growth may be unavailable. Such companies may
also be involved in the development or marketing of new products or services for
which there are no established markets. If projected markets do not materialize
or only regional markets develop, such companies may be adversely affected or be
subject to the consequences of local events. Moreover, such companies may be
insignificant factors in their industries and may become subject to intense
competition from larger companies. Securities of companies in which the Funds
may invest will frequently be traded only in the over-the-counter market or on
regional stock exchanges and will often be closely held. Securities of this type
may have limited liquidity and be subject to wide price fluctuations. As a
result of the risk factors described above, the net asset value of each Fund's
shares can be expected to vary significantly. Accordingly, each Fund should not
be considered suitable for investors who are unable or unwilling to assume the
associated risks, nor should investment in the Funds be considered a balanced or
complete investment program.
Investments Related to Real Estate. Evergreen U.S. Real Estate Equity Fund
invests primarily in issuers whose activities are real estate related. Risks
associated with investment in securities of companies in the real estate
industry include: declines in the value of real estate, risks related to general
and local economic conditions, overbuilding and increased competition, increases
in property taxes and operating expenses, changes in zoning laws, casualty or
condemnation losses, variations in rental income, changes in neighborhood
values, the appeal of properties to tenants and increase in interest rates. In
the event of a default on such securities, the holder thereof could end up
holding real estate directly and therefore be more directly subject to such
risks. In addition, equity real estate investment trusts may be affected by
changes in the value of the underlying property owned by the trusts, while
mortgage real estate investment trusts may be affected by the quality of credit
extended. Equity and mortgage real estate investment trusts are dependent upon
management skills, may not be diversified and are subject to the risks of
financing projects. Such trusts are also subject to heavy cash flow dependency,
defaults by borrowers, self liquidation and the possibility of failing to
qualify for tax-free pass-through of income under the Internal Revenue Code of
1986, as amended (the "Code") and to maintain exemption from the Investment
Company Act of 1940, as amended (the "1940 Act"). In the event an issuer of debt
securities collateralized by real estate defaulted, it is conceivable that a
Fund could end up holding the underlying real estate.
Other Investment Restrictions. Each Fund has adopted additional investment
restrictions that are set forth in the Statement of Additional Information.
Unless otherwise noted, the restrictions and policies set forth above are not
fundamental and may be changed without shareholder approval.
- -------------------------------------------------------------------------------
MANAGEMENT OF THE FUNDS
- -------------------------------------------------------------------------------
INVESTMENT ADVISERS
The management of each Fund is supervised by the Trustees of the Trust
under which the Fund has been established ("Trustees") or, in the case of
Evergreen Limited Market Fund, its directors. Evergreen Asset Management Corp.
(the "Evergreen Asset") has been retained by Evergreen Fund, Evergreen U.S. Real
Estate Equity Fund and Evergreen Limited Market Fund as investment adviser.
Evergreen Asset succeeded on June 30, 1994 to the advisory business of the same
name, but under different ownership, which was organized in 1971. Evergreen
Asset, with its predecessors, has served as investment adviser to the Evergreen
mutual funds since 1971. Evergreen Asset is a wholly-owned subsidiary of First
Union National Bank of North Carolina ("FUNB"). The address of Evergreen Asset
is 2500 Westchester Avenue, Purchase, New York 10577. FUNB is a subsidiary of
First Union Corporation ("First Union"), one of the ten largest bank holding
companies in the United States. Stephen A. Lieber and Nola Maddox Falcone serve
as the chief investment officers of Evergreen Asset and, along with Theodore J.
Israel, Jr., were the owners of Evergreen Asset's predecessor and the former
general partners of Lieber & Company, which, as described below, provides
certain subadvisory services to Evergreen Asset in connection with its duties as
investment adviser to the Funds. The Capital Management Group of FUNB ("CMG")
serves as investment adviser to Evergreen Aggressive Growth Fund.
First Union is headquartered in Charlotte, North Carolina, and had
$77.9 billion in consolidated assets as of March 31, 1995. 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 all the series of Evergreen
Investment Trust (formerly known as First Union Funds). First Union Brokerage
Services, Inc., a wholly-owned subsidiary of FUNB, is a registered broker-dealer
that is principally engaged in providing retail brokerage services consistent
with its federal banking authorizations. First Union Capital Markets Corp., a
wholly-owned subsidiary of First Union, is a registered broker-dealer
principally engaged in providing, consistent with its federal banking
authorizations, private placement, securities dealing, and underwriting
services.
As investment adviser to Evergreen Fund, Evergreen U.S. Real Estate
Equity Fund and Evergreen Limited Market Fund, Evergreen Asset manages each
Fund's investments, provides various administrative services and supervises each
Fund's daily business affairs, subject to the authority of the Trustees.
Evergreen Asset is entitled to receive a fee from each of Evergreen Fund,
Evergreen U.S. Real Estate Equity Fund and Evergreen Limited Market Fund equal
to to 1% of average daily net assets on an annual basis on the first $750
million in assets, .9 of 1% of average daily net assets on an annual basis on
the next $250 million in assets, and .8 of 1% of average daily net assets on an
annual basis on assets over $1 billion. The fee paid by Evergreen Fund,
Evergreen U.S. Real Estate Equity Fund and Evergreen Limited Market Fund is
higher than the rate paid by most other investment companies. The total
annualized operating expenses of Evergreen Fund, Evergreen U.S. Real Estate
Equity Fund and Evergreen Limited Market Fund for the fiscal period ended
September 30, 1994, are set forth in the section entitled "Financial
Highlights". Until Evergreen U.S. Real Estate Equity Fund reaches net assets of
$15 million, Evergreen Asset will reimburse the Fund to the extent the Fund's
aggregate operating expenses (including Evergreen Asset's fee, but excluding
interest, taxes, brokerage commissions, Rule 12b-1 distribution fees and
shareholder servicing fees and extraordinary expenses) exceed 1.50% of average
net assets for any fiscal year. From time to time, Evergreen Asset may further
reduce or waive its fee or reimburse the Fund for certain of its expenses in
order to reduce the Fund's expense ratio. As a result the Fund's total return
would be higher than if the fees and any expenses had been paid by the Fund.
CMG manages investments and supervises the daily business affairs of
Evergreen Aggressive Growth Fund and, as compensation therefor, is entitled to
receive an annual fee equal to .60 of 1% of average daily net assets of the
Fund. The total annualized operating expenses of the predecessor of Evergreen
Aggressive Growth Fund for its most recent fiscal year ended October 30, 1994,
are set forth in the section entitled "Financial Highlights". Evergreen Asset
serves as administrator to Evergreen Aggressive Growth Fund and is entitled to
receive a fee based on the average daily net assets of these Funds at a rate
based on the total assets of the mutual funds administered by Evergreen Asset
for which CMG or Evergreen Asset also serve as investment adviser, calculated in
accordance with the following schedule: .050% of the first $7 billion; .035% on
the next $3 billion; .030% on the next $5 billion; .020% on the next $10
billion; .015% on the next $5 billion; and .010% on assets in excess of $30
billion. Furman Selz Incorporated, the parent of Evergreen Funds Distributor,
Inc., distributor for the Evergreen group of mutual funds, serves as
sub-administrator to Evergreen Aggressive Growth Fund and is entitled to receive
a fee from the Fund calculated on the average daily net assets of the Fund at a
rate based on the total assets of the mutual funds administered by Evergreen
Asset for which CMG or Evergreen Asset also serve as investment adviser,
calculated in accordance with the following schedule: .0100% of the first $7
billion; .0075% on the next $3 billion; .0050% on the next $15 billion; and
.0040% on assets in excess of $25 billion. The total assets of the mutual funds
administered by Evergreen Asset for which CMG or Evergreen Asset serve as
investment adviser as of March 31, 1995 were approximately $8 billion.
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
U.S. Real Estate Equity Fund is Samuel A. Lieber. Mr. Samuel Lieber has been the
Fund's principal manager since inception and has been associated with the
Evergreen Asset 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 of Evergreen Fund, Evergreen U.S. Real Estate Equity Fund and
Evergreen Limited Market Fund. Lieber & Company will be reimbursed by Evergreen
Asset in connection with the rendering of services on the basis of the direct
and indirect costs of performing such services. There is no additional charge to
Evergreen Fund, Evergreen U.S. Real Estate Equity Fund and Evergreen Limited
Market Fund for the services provided by Lieber & Company. The address of Lieber
& Company is 2500 Westchester Avenue, Purchase, New York 10577. Lieber & Company
is an indirect, wholly-owned, subsidiary of First Union.
DISTRIBUTION PLANS AND AGREEMENTS
Rule 12b-1 under the 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, CMG and Evergreen Asset or their affiliates, for personal
services rendered to shareholders and/or the maintenance of shareholder
accounts.
The Funds may not pay any distribution or services fees during any
fiscal period in excess of the amounts set forth above. Since EFD's compensation
under the Distribution Agreements is not directly tied to the expenses incurred
by EFD, the amount of compensation received by it under the Distribution
Agreements during any year may be more or less than its actual expenses and may
result in a profit to EFD. Distribution expenses incurred by EFD in one fiscal
year that exceed the level of compensation paid to EFD for that year may be paid
from distribution fees received from a Fund in subsequent fiscal years.
The Plans are in compliance with rules of the National Association of
Securities Dealers, Inc. which effectively limit the annual asset-based sales
charges and service fees that a mutual fund may pay on a class of shares to .75
of 1% and .25 of 1%, respectively, of the average annual net assets attributable
to that class. The rules also limit the aggregate of all front-end, deferred and
asset-based sales charges imposed with respect to a class of shares by a mutual
fund that also charges a service fee to 6.25% of cumulative gross sales of
shares of that class, plus interest at the prime rate plus 1% per annum.
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PURCHASE AND REDEMPTION OF SHARES
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HOW TO BUY SHARES
You can purchase shares of any of the Funds through broker-dealers,
banks or other financial intermediaries, or directly through EFD. The minimum
initial investment is $1,000, which may be waived in certain situations. There
is no minimum for subsequent investments. Investments of $25 or more are allowed
under the systematic investment plan. Share certificates are not issued 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
"General Information" - "Other Classes of Shares").
Class A Shares-Front-End Sales Charge Alternative. You can purchase Class A
shares at net asset value plus an initial sales charge, as follows:
Initial Sales Charge
------------------------ ----------------- --------------- ------------------
Commission to
Dealer/Agent
as a % of the Net as a % of the as a % of
Amount of Purchase Amount Invested Offering Price Offering Price
------------------------ ----------------- --------------- ------------------
------------------------ ----------------- --------------- ------------------
------------------------ ----------------- --------------- ------------------
------------------------ ----------------- --------------- ------------------
Less than $100,000 4.99% 4.75% 4.25%
------------------------ ----------------- --------------- ------------------
------------------------ ----------------- --------------- ------------------
$100,000 - $249,999 3.90% 3.75% 3.25%
------------------------ ----------------- --------------- ------------------
------------------------ ----------------- --------------- ------------------
$250,000 - $499,999 3.09% 3.00% 2.50%
------------------------ ----------------- --------------- ------------------
------------------------ ----------------- --------------- ------------------
$500,000 - $999,999 2.04% 2.00% 1.75%
------------------------ ----------------- --------------- ------------------
------------------------ ----------------- --------------- ------------------
$1,000,000 - $2,499,999 1.01% 1.00% 1.00%
------------------------ ----------------- --------------- ------------------
------------------------ ----------------- --------------- ------------------
Over $2,500,000 .25% .25% .25%
------------------------ ----------------- --------------- ------------------
No front-end sales charges are imposed on Class A shares purchased by:
institutional investors, which may include bank trust departments and registered
investment advisers; investment advisers, consultants or financial planners who
place trades for their own accounts or the accounts of their clients and who
charge such clients a management, consulting, advisory or other fee; clients of
investment advisers or financial planners who place trades for their own
accounts if the accounts are linked to the master account of such investment
advisers or financial planners on the books of the broker-dealer though whom
shares are purchased; institutional clients of broker-dealers, including
retirement and deferred compensation plans and the trusts used to fund these
plans, which place trades through an omnibus account maintained with a Fund by
the broker-dealer; shareholders of record on October 12, 1990 in any series of
Evergreen Investment Trust in existence on that date, and the members of their
immediate families; employees of FUNB and its affiliates, EFD and any
broker-dealer with whom EFD has entered into an agreement to sell shares of the
Funds, and members of the immediate families of such employees; and upon the
initial purchase of an Evergreen mutual fund by investors reinvesting the
proceeds from a redemption within the preceeding thirty days of shares of other
mutual funds, provided such shares were initially purchased with a front-end
sales charge or subject to a CDSC. Certain broker-dealers or other financial
institutions may impose a fee on transactions in shares of the Funds.
Class A shares may also be purchased at net asset value by qualified
and non-qualified employee benefit and savings plans which make shares of the
Funds and the other Evergreen mutual funds available to their participants, and
which: (a) are employee benefit plans having at least $1,000,000 in investable
assets, or 250 or more eligible participants; or (b) are non-qualified benefit
or profit sharing plans which are sponsored by an organization which also makes
the Evergreen mutual funds available through a qualified plan meeting the
criteria specified under (a). In connection with sales made to plans of the type
described in the preceeding sentence that are clients of broker-dealers, and
which do not qualify for sales at net asset value under the conditions set forth
in the paragraph above, payments may be made in an amount equal to .50 of 1% of
the net asset value of shares purchased. These payments are subject to reclaim
in the event shares are redeemed within 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 and/or shareholder service fees than Class A shares for a period of
seven years (after which it is expected that they will convert to Class A
shares) . The higher fees mean a higher expense ratio, so Class B shares pay
correspondingly lower dividends and may have a lower net asset value than Class
A shares. See the Statement of Additional Information for further details.
Class C Shares--Level-Load Alternative. You can purchase Class C shares without
any initial sales charge and, therefore, the full amount of your investment will
be used to purchase Fund shares. However, you will pay a 1.0% CDSC if you redeem
shares during the first year after purchase. Class C shares incur higher
distribution and/or shareholder service fees than Class A shares but, unlike
Class B shares, do not convert to any other class of shares of a Fund. The
higher fees mean a higher expense ratio, so Class C shares pay correspondingly
lower dividends and may have a lower net asset value than Class A shares. Shares
obtained from dividend or distribution reinvestment are not subject to the CDSC.
No contingent deferred sales charge will be imposed on Class C shares
purchased by institutional investors, and through employee benefit and savings
plans eligible for the exemption from front-end sales charges described under
"Class A Shares-Front End Sales Charge Alternative", above. Broker-dealers and
other financial intermediaries whose clients have purchased Class C shares may
receive a trailing commission equal to .75 of 1% of the average daily value of
such shares on an annual basis held by their clients more than one year from the
date of purchase. The payment of trailing commissions will commence immediately
with respect to shares eligible for exemption from the contingent deferred sales
charge normally applicable to Class C shares.
With respect to Class B Shares and Class C Shares, no CDSC will be
imposed on: (1) the portion of redemption proceeds attributable to increases in
the value of the account due to increases in the net asset value per Share, (2)
Shares acquired through reinvestment of dividends and capital gains, (3) Shares
held for more than seven years (in the case of Class B Shares) or one year (in
the case of Class C Shares) after the end of the calendar month of acquisition,
(4) accounts following the death or disability of a shareholder, or (5) minimum
required distributions to a shareholder over the age of 70 1/2 from an IRA or
other retirement plan.
How the Funds Value Their Shares. The net asset value of each Class of shares of
a Fund is calculated by dividing the value of the amount of the Fund's net
assets attributable to that Class by the number of outstanding shares of that
Class. Shares are valued each day the New York Stock Exchange (the "Exchange")
is open as of the close of regular trading (currently 4:00 p.m. Eastern time).
The securities in a Fund are valued at their current market value determined on
the basis of market quotations or, if such quotations are not readily available,
such other methods as the Trustees or Directors 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 and/or shareholder service fees, after seven
years. If you are unsure of the time period of your investment, you might
consider Class C shares since there are no initial sales charges and, although
there is no conversion feature, the CDSC only applies to redemptions made during
the first year. Consult your financial intermediary for further information. The
compensation received by dealers and agents may differ depending on whether they
sell Class A, Class B or Class C shares. There is no size limit on purchases of
Class A shares.
<PAGE>
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 mutual funds.
HOW TO REDEEM SHARES
You may "redeem", i.e., sell your shares in a Fund to the Fund on any
day the Exchange is open, either directly or through your financial
intermediary. The price you will receive is the net asset value (less any
applicable CDSC for Class B or Class C shares) next calculated after the Fund
receives your request in proper form. Proceeds generally will be sent to you
within seven days. However, for shares recently purchased by check, a Fund will
not send proceeds until it is reasonably satisfied that the check has been
collected (which may take up to 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. Certain
financial intermediaries may require that you give instructions earlier than
4:00 p.m.
Redeeming Shares Directly by Mail or Telephone. Send a signed letter of
instruction or stock power form to State Street Bank and Trust Company ("State
Street") which is the registrar, transfer agent and dividend-disbursing agent
for each Fund. Stock power forms are available from your financial intermediary,
State Street, and many commercial banks. Additional documentation is required
for the sale of shares by corporations, financial intermediaries, fiduciaries
and surviving joint owners. Signature guarantees are required for all redemption
requests for shares with a value of more than $10,000 or where the redemption
proceeds are to be mailed to an address other than that shown in the account
registration. A signature guarantee must be provided by a bank or trust company
(not a Notary Public), a member firm of a domestic stock exchange or by other
financial institutions whose guarantees are acceptable to State Street.
Shareholders may withdraw amounts of $1,000 or more from their accounts
by calling the phone number on the front page of this Prospectus between the
hours of 8:00 a.m. and 5:30 p.m.(Eastern time) each business day (i.e., any
weekday exclusive of days on which the Exchange or State Street's offices are
closed). The Exchange is closed on New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
Redemption requests made after 4:00 p.m. (Eastern time) will be processed using
the net asset value determined on the next business day. Such redemption
requests must include the shareholder's account name, as registered with a Fund,
and the account number. During periods of drastic economic or market changes,
shareholders may experience difficulty in effecting telephone redemptions.
Shareholders who are unable to reach a Fund 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 mutual 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 mutual 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 mutual
funds. If you redeem shares, the CDSC applicable to the Class B or Class C
shares of the Evergreen Mutual Fund originally purchased for cash is applied.
Also, Class B shares will continue to age following an exchange for purposes of
conversion to Class A shares and determining the amount of the applicable CDSC.
Exchanges Through Your Financial Intermediary. A Fund must receive exchange
instructions from your financial intermediary before 4:00 p.m. Eastern time for
you to receive that day's net asset value. Your financial intermediary is
responsible for furnishing all necessary documentation to a Fund and may charge
you for this service.
Exchanges by Telephone and Mail. You may exchange shares with a value of $1,000
or more by telephone by calling the telephone number on the front of this
Prospectus. Exchange requests made after 4:00 p.m. (Eastern time) will be
processed using the net asset value determined on the next business day. During
periods of drastic economic or market changes, shareholders may experience
difficulty in effecting telephone exchanges. You should follow the procedures
outlined below for exchanges by mail if you are unable to reach State Street by
telephone. If you wish to use the telephone exchange service you should indicate
this on the Share Purchase Application. As noted above, each Fund will employ
reasonable procedures to confirm that instructions for the redemption or
exchange of shares communicated by telephone are genuine. A telephone exchange
may be refused by a Fund or State Street if it is believed advisable to do so.
Procedures for exchanging Fund shares by telephone may be modified or terminated
at any time. Written requests for exchanges should follow the same procedures
outlined for written redemption requests in the section entitled "How to Redeem
Shares", however, no signature guarantee is required.
<PAGE>
SHAREHOLDER SERVICES
The Funds offer the following shareholder services. For more information about
these services or your account, contact your financial intermediary, EFD or the
toll-free number on the front of this Prospectus. Some services are described in
more detail in the Share Purchase Application.
Systematic Investment Plan. You may make monthly or quarterly investments into
an existing account automatically in amounts of not less than $25.
Telephone Investment Plan. You may make investments into an existing account
electronically in amounts of not less than $100 or more than $10,000 per
investment. Telephone investment requests received by 3:00 p.m. (Eastern time)
will be credited to a shareholder's account the day the request is received.
Systematic Cash Withdrawal Plan. When an account of $10,000 or more is opened or
when an existing account reaches that size, you may participate in the 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 mutual funds available to their participants. Investments made
by such employee benefit plans may be exempt from front-end sales charges if
they meet the criteria set forth under "Class A Shares-Front End Sales Charge
Alternative". Evergreen Asset or CMG may provide compensation to organizations
providing administrative and recordkeeping services to plans which make shares
of the Evergreen mutual funds available to their participants.
Automatic Reinvestment Plan. For the convenience of investors, all dividends and
distributions are automatically reinvested in full and fractional shares of the
Fund at the net asset value per share at the close of business on the record
date, unless otherwise requested by a shareholder in writing. If the transfer
agent does not receive a written request for subsequent dividends and/or
distributions to be paid in cash at least three full business days prior to a
given record date, the dividends and/or distributions to be paid to a
shareholder will be reinvested. If you elect to receive dividends and
distributions in cash and the U.S. Postal Service cannot deliver the checks, or
if the checks remain uncashed for six months, the checks will be reinvested into
your account at the then current net asset value.
Tax Sheltered Retirement Plans. You may open a pension and profit sharing
account in any Evergreen mutual fund (except those funds having an objective of
providing tax free income), including: (i) Individual Retirement Accounts
("IRAs") and Rollover IRAs; (ii) Simplified Employee Pension (SEP) for sole
proprietors, partnerships and corporations; and (iii) Profit-Sharing and Money
Purchase Pension Plans for corporations and their employees.
EFFECT OF BANKING LAWS
The Glass-Steagall Act and other banking laws and regulations presently
prohibit member banks of the Federal Reserve System ("Member Banks") or their
non-bank affiliates from sponsoring, organizing, controlling, or distributing
the shares of registered open-end investment companies such as the Funds. Such
laws and regulations also prohibit banks from issuing, underwriting or
distributing securities in general. However, under the Glass-Steagall Act and
such other laws and regulations, a Member Bank or an affiliate thereof may act
as investment adviser, transfer agent or custodian to a registered open-end
investment company and may also act as agent in connection with the purchase of
shares of such an investment company upon the order of their customer. Evergreen
Asset, since it is a subsidiary of FUNB, and CMG are subject to and in
compliance with the aforementioned laws and regulations.
Changes to applicable laws and regulations or future judicial or
administrative decisions could result in CMG or Evergreen Asset being prevented
from continuing to perform the services required under the investment advisory
contract or from acting as agent in connection with the purchase of shares of a
Fund by its customers. If CMG or Evergreen Asset were prevented from continuing
to provide the services called for under the investment advisory agreement, it
is expected that the Trustees or Directors would identify, and call upon each
<PAGE>
Fund's shareholders to approve, a new investment adviser. If this were to occur,
it is not anticipated that the shareholders of any Fund would suffer any adverse
financial consequences.
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OTHER INFORMATION
- -------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAXES
It is the policy of each Fund to distribute its investment company
taxable income and any net realized capital gains to shareholders annually or
more frequently as required as a condition of continued qualification as a
regulated investment company by the Code. Dividends and distributions generally
are taxable in the year in which they are paid, except any dividends paid in
January that were declared in the previous calendar quarter may be treated as
paid in December in the previous year. Income dividends and capital gain
distributions are automatically reinvested in additional shares of the Fund
making the distribution at the net asset value per share at the close of
business on the record date, unless the shareholder writes to the Fund's
transfer agent and requests payment in cash.
Each Fund has qualified and intends to continue to qualify to be
treated as a regulated investment company under the Code. While so qualified, it
is expected that each Fund will not be required to pay any Federal income 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.
Evergreen U.S. Real Estate Equity Fund invests in real estate
investment trusts which report the tax characteristics of their distributions to
the Fund annually on a calendar year basis. The timing of such reporting to the
Fund may affect the tax characteristics of distributions by the Fund to
shareholders.
Each Fund is required by Federal law to withhold 31% of reportable
payments (which may include dividends, capital gain distributions and
redemptions) paid to certain shareholders. In order to avoid this backup
withholding requirement, you must certify on the Share Purchase Application, or
on a separate form supplied by State Street, that the investor's social security
or taxpayer identification number is correct and that the investor is not
currently subject to backup withholding or is exempt from backup withholding.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
A discussion of the performance of Evergreen Fund, Evergreen U.S. Real
Estate Equity Fund and Evergreen Limited Market Fund for their most recent
fiscal year is set forth below. A similar discussion relating to the predecessor
of Evergreen Aggressive Growth Fund, ABT Emerging Growth Fund, is contained in
the annual report of such fund for its fiscal year ended October 30, 1994.
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
Evergreen Asset considers 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.
[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.
[CHART]
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
Evergreen Asset 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.
Evergreen U.S. Real Estate Equity Fund. For the nine month period ending
September 30, 1994, the Fund's total return declined by -6%, while the Wilshire
Real Estate Index increased by 1.9% and the Standard and Poor's Homebuilding
Index fell by 43.9%. This was the result of a combination of rising interest
rates, investor concern over economically sensitive real estate and homebuilding
stocks and the gradual deflation of the liquidity bubble which led to many real
estate investment trusts being overvalued relative to historic norms.
[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. The Evergreen Fund and Evergreen Aggressive Growth Fund are each
separate investment series of the Evergreen Trust, a Massachusetts business
trust reorganized in 1988 from a Maryland predecessor corporation. The Evergreen
U.S. Real Estate Equity Fund is a separate series of Evergreen Real Estate
Equity Trust, a Massachusetts business trust organized in 1988. Evergreen
Limited Market Fund, Inc. is a Maryland corporation organized in 1983. The Funds
do not intend to hold annual shareholder meetings; shareholder meetings will be
held only when required by applicable law. Shareholders have available certain
procedures for the removal of Directors or Trustees.
A shareholder in each class of a Fund will be entitled to his or her
share of all dividends and distributions from a Fund's assets, based upon the
relative value of such shares to those of other Classes of the Fund, and, upon
redeeming shares, will receive the then current net asset value of the Class of
shares of the Fund represented by the redeemed shares less any applicable CDSC.
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 Trustees 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 237 Park Avenue, New York, New York 10017, is the
principal underwriter of the Funds. Furman Selz Incorporated, also acts as
sub-administrator to Evergreen Aggressive Growth Fund and which provides certain
sub-administrative services to Evergreen Asset in connection with its role as
investment adviser to Evergreen Fund, Evergreen U.S. Real Estate Equity Fund and
Evergreen Limited Market Fund including providing personnel to serve as officers
of the Funds.
Other Classes of Shares. Each Fund currently offers four classes of shares,
Class A, Class B, Class C and Class Y, and may in the future offer additional
classes. Class Y shares are not offered by this Prospectus and are only
available to (i) all shareholders of record in one or more of the Funds for
which Evergreen Asset served as investment adviser as of December 30, 1994, (ii)
certain institutional investors and (iii) investment advisory clients of
Evergreen Asset, CMG and their affiliates. The dividends payable with respect to
Class A, Class B and Class C shares will be less than those payable with respect
to Class Y shares due to the distribution and distribution and shareholder
servicing related expenses borne by Class A, Class B and Class C shares and the
fact that such expenses are not borne by Class Y shares.
Performance Information. From time to time, the Funds may quote their "total
return" or "yield" for a specified period in advertisements, reports or other
communications to shareholders, Total return and yield are computed separately
for Class A, Class B and Class C shares. A Fund's total return for each such
period is computed by finding, through the use of a formula prescribed by the
Securities and Exchange Commission ("SEC"), the average annual compounded rate
of return over the period that would equate an assumed initial amount invested
to the value of the investment at the end of the period. For purposes of
computing total return, dividends and capital gains distributions paid on shares
of a Fund are assumed to have been reinvested when paid and the maximum sales
charges applicable to purchases of a Fund's shares are assumed to have been
paid. Yield is a way of showing the rate of income the Fund earns on its
investments as a percentage of the Fund's share price. The Fund's yield is
calculated according to accounting methods that are standardized by the SEC for
all stock and bond funds. Because yield accounting methods differ from the
method used for other accounting purposes, the Fund's yield may not equal its
distribution rate, the income paid to your account or the net investment income
reported in the Fund's financial statements. To calculate yield, the Fund takes
the interest income it earned from its portfolio of investments (as defined by
the SEC formula) for a 30-day period (net of expenses), divides it by the
average number of shares entitled to receive dividends, and expresses the result
as an annualized percentage rate based on the Fund's share price at the end of
the 30-day period. This yield does not reflect gains or losses from selling
securities
Performance data for each class of shares will be included in any
advertisement or sales literature using performance data of a Fund. These
advertisements may quote performance rankings or ratings of a Fund by financial
publications or independent organizations such as Lipper Analytical Services,
Inc. and Morningstar, Inc. or compare a Fund's performance to various indices.
The Fund may also advertise in items of sales literature an "actual distribution
rate" which is computed by dividing the total ordinary income distributed (which
may include the excess of short-term capital gains over losses) to shareholders
for the latest twelve month period by the maximum public offering price per
share on the last day of the period. Investors should be aware that past
performance may not be reflective of future results.
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 (except for Evergreen Limited Market Fund, Inc.) operate provide that no
trustee or shareholder will be personally liable for the obligations of the
Trust and that every written contract made by the Trust contain a provision to
that effect. If any Trustee or shareholder were required to pay any liability of
the Trust, that person would be entitled to reimbursement from the general
assets of the Trust.
Additional Information. This Prospectus and the Statement of Additional
Information, which has been incorporated by reference herein, do not contain all
the information set forth in the Registration Statements filed by the Trusts or
Evergreen Limited Market Fund, Inc. with the 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>
INVESTMENT ADVISER
Evergreen Asset Management Corp., 2500 Westchester Avenue, Purchase, New York
10577
EVERGREEN FUND, EVERGREEN U.S. REAL ESTATE EQUITY FUND, EVERGREEN LIMITED
MARKET FUND
Capital Management Group of First Union National Bank, 201 South College
Street, Charlotte, North Carolina 28288
EVERGREEN AGGRESSIVE GROWTH FUND
CUSTODIAN & TRANSFER AGENT
State Street Bank & Trust Company, Box 9021, Boston, Massachusetts 02205-9827
LEGAL COUNSEL
Sullivan & Worcester, 1025 Connecticut Avenue, N.W., Washington, D.C. 20036
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP, 1177 Avenue of the Americas, New York, New York 10036
EVERGREEN FUND, EVERGREEN U.S. REAL ESTATE EQUITY FUND, EVERGREEN
AGGRESSIVE GROWTH FUND
Ernst & Young LLP, 200 Clarendon Street, Boston, Massachusetts 02116-5072
EVERGREEN LIMITED MARKET FUND
DISTRIBUTOR
Evergreen Funds Distributor, Inc., 237 Park Avenue, New York, New York 10017
536114
<PAGE>
PROSPECTUS July 7, 1995
EVERGREEN(SM) DOMESTIC GROWTH FUNDS (Evergreen logo appears here)
EVERGREEN FUND
EVERGREEN U.S. REAL ESTATE EQUITY FUND
EVERGREEN LIMITED MARKET FUND
EVERGREEN AGGRESSIVE GROWTH FUND
CLASS Y SHARES
The Evergreen Domestic Growth Funds (the "Funds") are designed to
provide investors with a selection of investment alternatives which seek to
provide capital growth and diversification. This Prospectus provides
information regarding the Class Y shares offered by the Funds. Each Fund
is, or is a series of, an open-end, diversified, management investment
company. This Prospectus sets forth concise information about the Funds
that a prospective investor should know before investing. The address of
the Funds is 2500 Westchester Avenue, Purchase, New York 10577.
A "Statement of Additional Information" for the Funds dated July
7, 1995 has been filed with the Securities and Exchange Commission and is
incorporated by reference herein. The Statement of Additional Information
provides information regarding certain matters discussed in this Prospectus
and other matters which may be of interest to investors, and may be
obtained without charge by calling the Funds at (800) 235-0064. There can
be no assurance that the investment objective of any Fund will be achieved.
Investors are advised to read this Prospectus carefully.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF
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
EVERGREEN (SM) is a Service Mark of Evergreen Asset Management Corp.
Copyright 1995, Evergreen Asset Management Corp.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
OVERVIEW OF THE FUNDS 2
EXPENSE INFORMATION 3
FINANCIAL HIGHLIGHTS 5
DESCRIPTION OF THE FUNDS
Investment Objectives and Policies 12
Investment Practices and Restrictions 14
MANAGEMENT OF THE FUNDS
Investment Advisers 16
Sub-Adviser 17
PURCHASE AND REDEMPTION OF SHARES
How to Buy Shares 18
How to Redeem Shares 19
Exchange Privilege 20
Shareholder Services 20
Effect of Banking Laws 21
OTHER INFORMATION
Dividends, Distributions and Taxes 21
Management's Discussion of Fund Performance 22
General Information 24
</TABLE>
OVERVIEW OF THE FUNDS
The following summary is qualified in its entirety by the more detailed
information contained elsewhere in this Prospectus. See "Description of the
Funds" and "Management of the Funds".
The Investment Adviser to the EVERGREEN FUND, EVERGREEN U.S. REAL ESTATE
EQUITY FUND and EVERGREEN LIMITED MARKET FUND, INC. is Evergreen Asset
Management Corp. ("Evergreen Asset") which, with its predecessors, has served as
an 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 U.S. REAL ESTATE EQUITY FUND seeks long-term capital growth.
Current income is a secondary objective. It invests primarily in equity
securities of United States companies which are principally engaged in the real
estate industry or which own significant real estate assets. It will not
purchase direct interests in real estate.
EVERGREEN LIMITED MARKET FUND, 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 (successor to ABT Emerging Growth Fund)
seeks long-term capital appreciation by investing primarily in common stocks of
emerging growth companies and in larger, more well established companies, all of
which are viewed by the Fund's investment adviser as having above average
appreciation potential.
THERE IS NO ASSURANCE THAT THE INVESTMENT OBJECTIVE OF ANY FUND WILL BE
ACHIEVED.
2
<PAGE>
EXPENSE INFORMATION
The table set forth below summarizes the shareholder transaction costs
associated with an investment in the Class Y Shares of the Fund. For further
information see "Purchase and Redemption of Shares".
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES
<S> <C>
Maximum Sales Charge Imposed on Purchases None
Sales Charge on Dividend Reinvestments None
Contingent Deferred Sales Charge None
Redemption Fee None
Exchange Fee (only applies after 4 exchanges per
year) $ 5.00
</TABLE>
The following table shows for the Fund the estimated annual operating
expenses (as a percentage of average net assets) attributable to Class Y Shares,
together with examples of the cumulative effect of such expenses on a
hypothetical $1,000 investment for the periods specified assuming (i) a 5%
annual return and (ii) redemption at the end of each period.
EVERGREEN FUND
<TABLE>
<CAPTION>
ANNUAL OPERATING
EXPENSES EXAMPLE
<S> <C> <C> <C>
Advisory Fees 1.00%
After 1 Year $ 12
12b-1 Fees --
After 3 Years $ 36
Other Expenses .13%
After 5 Years $ 62
After 10 Years $ 137
Total 1.13%
</TABLE>
EVERGREEN U.S. REAL ESTATE EQUITY FUND
<TABLE>
<CAPTION>
ANNUAL OPERATING
EXPENSES EXAMPLE
<S> <C> <C> <C>
Advisory Fees 1.00%
After 1 Year $ 15
12b-1 Fees --
After 3 Years $ 47
Other Expenses* .50%
After 5 Years $ 82
After 10 Years $ 179
Total 1.50%
</TABLE>
EVERGREEN LIMITED MARKET FUND
<TABLE>
<CAPTION>
ANNUAL OPERATING
EXPENSES EXAMPLE
<S> <C> <C> <C>
Advisory Fees 1.00%
After 1 Year $ 14
12b-1 Fees --
After 3 Years $ 43
Other Expenses .37%
After 5 Years $ 75
After 10 Years $ 165
Total 1.37%
</TABLE>
EVERGREEN AGGRESSIVE GROWTH FUND(A)
<TABLE>
<CAPTION>
ANNUAL OPERATING
EXPENSES EXAMPLE
<S> <C> <C> <C>
Advisory Fees .60%
After 1 Year $ 9
Administrative Fees .06%
After 3 Years $ 30
12b-1 Fees --
After 5 Years $ 51
Other Expenses .27%
After 10 Years $ 114
Total .93%
</TABLE>
(a) Estimated annual operating expenses reflect the combination of Evergreen
Aggressive Growth Fund and ABT Emerging Growth Fund. These estimates are
based on the ABT Emerging Growth Fund Class A Shares as restated to reflect
current fee arrangements since the other classes had no operations.
*Reflects agreement by Evergreen Asset to limit aggregate operating
expenses (including the Adviser's fee, but excluding interest, taxes, brokerage
commissions, Rule 12b-1 distribution fees, shareholder servicing fees and
extraordinary expenses) of EVERGREEN U.S. REAL ESTATE EQUITY FUND to 1.50% of
average net assets until the
3
<PAGE>
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, each Fund's investment adviser may, at its discretion,
reduce or waive its fees or reimburse the Fund for certain of its expenses in
order to reduce the Fund's expense ratio. Each Fund's investment adviser may
cease these waivers and reimbursements at any time.
The purpose of the foregoing table is to assist an investor in
understanding the various costs and expenses that an investor in the Class Y
Shares of the Funds will bear directly or indirectly. The amounts set forth
under "Other Expenses", as well as the amounts set forth in the example, are
estimated amounts for the current fiscal year based on historical experience for
the most recent fiscal period. These amounts have been restated to reflect
current fee arrangements. THE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION
OF PAST OR FUTURE EXPENSES OR INVESTMENT RETURN, ACTUAL EXPENSES OR RETURN MAY
BE GREATER OR LESS THAN THOSE SHOWN. For a more complete description of the
various costs and expenses borne by the Funds see "Management of the Funds".
4
<PAGE>
FINANCIAL HIGHLIGHTS
The tables on the following pages present, for each Fund, financial
highlights for a share outstanding throughout each period indicated. The
information in the tables for the five most recent fiscal years or the life of
the Fund if shorter for EVERGREEN FUND and EVERGREEN U.S. REAL ESTATE EQUITY
FUND has, except as noted otherwise, been audited by Price Waterhouse LLP, each
Fund's independent auditors, for EVERGREEN LIMITED MARKET FUND has, except as
noted otherwise, been audited by Ernst & Young LLP, the Fund's independent
auditors, and for EVERGREEN AGGRESSIVE GROWTH FUND has, except as noted
otherwise, been audited by Tait, Weller & Baker, the Fund's independent
auditors. A report of Price Waterhouse LLP, Ernst & Young LLP or Tait, Weller &
Baker, as the case may be, on the audited information with respect to each Fund
is incorporated by reference in the Fund's Statement of Additional Information.
The following information for each Fund should be read in conjunction with the
financial statements and related notes which are incorporated by reference in
the Fund's Statement of Additional Information.
No financial highlights are shown for Class C Shares of EVERGREEN U.S.
REAL ESTATE EQUITY FUND since this class did not have any operations prior to
March 31, 1995. No financial highlights are shown for Class B, C or Y Shares of
EVERGREEN AGGRESSIVE GROWTH FUND since these classes did not have any operations
prior to April 30, 1995.
Further information about a Fund's performance is contained in the Fund's
annual report to shareholders, which may be obtained without charge.
EVERGREEN FUND -- CLASS Y SHARES
<TABLE>
<CAPTION>
SIX
MONTHS
ENDED
MARCH 31,
1995 YEAR ENDED SEPTEMBER 30,*
(UNAUDITED) 1994 1993 1992 1991 1990 1989 1988** 1987**
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning of
period...................... $ 14.62 $14.46 $13.10 $13.32 $9.66 $14.01 $12.47 $15.12 $13.55
Income (loss) from investment
operations:
Net investment income......... .04 .07 .09 .09 .17 .24 .32 .21 .17
Net realized and unrealized
gain (loss) on
investments................. .99 .79 1.96 .55 3.93 (3.62) 1.99 (1.05) 2.65
Total from investment
operations................ 1.03 .86 2.05 .64 4.10 (3.38) 2.31 (.84) 2.82
Less distributions to
shareholders from:
Net investment income......... (.07) (.09) (.07) (.17) (.18) (.36) (.21) (.25) (.13)
Net realized gains............ (2.16) (.61) (.62) (.69) (.26) (.61) (.56) (1.56) (1.12)
Total distributions......... (2.23) (.70) (.69) (.86) (.44) (.97) (.77) (1.81) (1.25)
Net asset value, end of
period...................... $ 13.42 $14.62 $14.46 $13.10 $13.32 $9.66 $14.01 $12.47 $15.12
TOTAL RETURN+................. 9.1% 6.2% 15.8% 5.2% 43.7% (25.4%) 20.0% 1.9% 22.5%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (in
millions)................... $508 $526 $657 $722 $755 $525 $867 $751 $808
Ratios to average net assets
Operating expenses.......... 1.15%++ 1.13% 1.11% 1.13% 1.15% 1.15% 1.11% 1.03% 1.03%
Interest expense............ .13%++ .09% .01% -- -- -- -- -- --
Net investment income....... .48%++ .40% .60% .56% 1.45% 1.83% 2.46% 1.70% 1.32%
Portfolio turnover
rate........................ 11% 19% 21% 32% 35% 39% 40% 42% 46%
<CAPTION>
1986** 1985**
<S> <C> <C>
PER SHARE DATA
Net asset value, beginning of
period...................... $11.03 $ 9.78
Income (loss) from investment
operations:
Net investment income......... .14 .16
Net realized and unrealized
gain (loss) on
investments................. 3.18 1.66
Total from investment
operations................ 3.32 1.82
Less distributions to
shareholders from:
Net investment income......... (.14) (.16)
Net realized gains............ (.66) (.41)
Total distributions......... (.80) (.57)
Net asset value, end of
period...................... $13.55 $11.03
TOTAL RETURN+................. 30.9% 19.8%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (in
millions)................... $639 $334
Ratios to average net assets
Operating expenses.......... 1.04% 1.08%
Interest expense............ -- --
Net investment income....... 1.41% 1.73%
Portfolio turnover
rate........................ 48% 59%
</TABLE>
* 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.
+ Total return is calculated on net asset value for the period indicated and is
not annualized.
++ Annualized.
5
<PAGE>
EVERGREEN FUND -- CLASS A, B AND C SHARES
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
<S> <C> <C> <C>
JANUARY 3, 1995* THROUGH MARCH 31, 1995
(UNAUDITED)
PER SHARE DATA
Net asset value, beginning of period..................................... $11.97 $11.97 $11.97
Income (loss) from investment operations:
Net investment income (loss)............................................. .01 (.01) (.01)
Net realized and unrealized gain on investments.......................... 1.43 1.43 1.43
Total from investment operations..................................... 1.44 1.42 1.42
Net asset value, end of period........................................... $13.41 $13.39 $13.39
TOTAL RETURN+............................................................ 12.0% 11.9% 11.9%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's omitted)................................ $5,545 $ 12,308 $408
Ratios to average net assets:
Operating expenses (a)................................................. 1.37%++ 2.12%++ 2.14%++
Interest expense....................................................... .16%++ .16%++ .16%++
Net investment income (a).............................................. .35%++ (.41%)++ (.35%)++
Portfolio turnover rate#................................................. 11% 11% 11%
</TABLE>
* Commencement of class operations.
+ Total return is calculated on net asset value per share for the period
indicated and is not annualized. Initial sales charge or contingent deferred
sales charge is not reflected.
++ Annualized. Due to the recent commencement of their offering, the ratios for
Class A, Class B and Class C shares are not necessarily comparable to that
of the Class Y shares, and are not necessarily indicative of future ratios.
# Portfolio turnover rate is calculated for the six months ended March 31,
1995.
(a) Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were assumed or waived by the investment adviser, the
annualized ratios of expenses and net investment income (loss) to average
net assets, exclusive of any applicable state expense limitations, would
have been the following:
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
<S> <C> <C> <C>
JANUARY 3, 1995 THROUGH MARCH 31, 1995
(UNAUDITED)
Expenses....................................... 1.64% 2.24% 5.97%
Net investment income (loss)................... .08% (.53%) (4.18%)
</TABLE>
6
<PAGE>
EVERGREEN U.S. REAL ESTATE EQUITY FUND -- CLASS Y SHARES
<TABLE>
<CAPTION>
SIX MONTHS
ENDED NINE MONTHS SEPTEMBER 1, 1993*
MARCH 31, 1995 ENDED THROUGH
(UNAUDITED) SEPTEMBER 30, 1994# DECEMBER 31, 1993
<S> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning of period........................... $10.07 $ 10.71 $ 10.00
Income (loss) from investment operations:
Net investment income.......................................... .13 .11 .04
Net realized and unrealized gain (loss) on investments......... (.58) (.75) .72
Total from investment operations........................... (.45) (.64) .76
Less distributions to shareholders from:
Net investment income.......................................... (.12) -- (.04)
In excess of net investment income............................. (.20) -- (.01)
Total distributions........................................ (.32) -- (.05)
Net asset value, end of period................................. $ 9.30 $ 10.07 $ 10.71
TOTAL RETURN+.................................................. (4.4%) (6.0%) 7.6%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's omitted)...................... $8,229 $ 8,630 $ 4,610
Ratios to average net assets:
Expenses..................................................... 1.50%++ 1.49%++(a) .44%++(a)
Net investment income........................................ 3.10%++ 1.60%++(a) 1.93%++(a)
Portfolio turnover rate........................................ 62% 102% 17%
</TABLE>
# On September 21, 1994, the Fund changed its fiscal year end from December 31
to September 30.
* Commencement of operations.
+ Total return is calculated on net asset value for the period indicated and is
not annualized.
++ Annualized.
(a) Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were assumed or waived by the investment adviser, the
annualized ratios of expenses and net investment income to average net
assets, exclusive of any applicable state expense limitations, would have
been the following:
<TABLE>
<CAPTION>
NINE MONTHS SEPTEMBER 1, 1993
ENDED THROUGH
SEPTEMBER 30, 1994 DECEMBER 31, 1993
<S> <C> <C>
Expenses................................................. 2.65% 3.59%
Net investment income (loss)............................. .44% (1.21%)
</TABLE>
7
<PAGE>
EVERGREEN U.S. REAL ESTATE EQUITY FUND -- CLASS A AND B SHARES
<TABLE>
<CAPTION>
CLASS A CLASS B
<S> <C> <C>
MARCH 10, 1995* MARCH 7, 1995*
THROUGH THROUGH
MARCH 31, 1995 MARCH 31, 1995
(UNAUDITED) (UNAUDITED)
PER SHARE DATA
Net asset value, beginning of period...................................................... $9.21 $9.19
Income from investment operations:
Net investment income..................................................................... .04 .04
Net realized and unrealized gain on investments........................................... .05 .06
Total from investment operations...................................................... .09 .10
Net asset value, end of period............................................................ $9.30 $9.29
TOTAL RETURN+............................................................................. 1.0% 1.1%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's omitted)................................................. $10 $52
Ratios to average net assets:
Expenses................................................................................ 1.75%++ 2.50%++
Net investment income................................................................... 9.49%++ 6.94%++
Portfolio turnover rate**................................................................. 62% 62%
</TABLE>
* Commencement of class operations.
** Portfolio turnover rate is calculated for the six month period ended March
31, 1995.
+ Total return is calculated on net asset value per share for the period
indicated and is not annualized. Initial sales charge and contingent deferred
sales charge is not reflected.
++ Annualized. Due to the recent commencement of their offering, the ratios for
Class A and Class B shares are not necessarily comparable to that of the
Class Y shares, and are not necessarily indicative of future ratios.
8
<PAGE>
EVERGREEN LIMITED MARKET FUND, INC. -- CLASS Y SHARES
<TABLE>
<CAPTION>
SIX MONTHS
ENDED MARCH FOUR MONTHS
31, ENDED
1995 SEPTEMBER 30, YEAR ENDED MAY 31,
(UNAUDITED) 1994# 1994 1993 1992 1991 1990 1989* 1988 1987
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value,
beginning of
period............... $21.74 $21.20 $20.87 $21.02 $18.81 $17.69 $21.02 $16.82 $18.55 $20.16
Income (loss) from
investment
operations:
Net investment income
(loss)............... (.06) (.05) (.07) (.03) .02 .56 .45 .16 -- (.04)
Net realized and
unrealized gain
(loss) on
investments.......... (1.60) .59 1.67 1.57 3.33 1.67 .25 4.37 (.78) 1.05
Total from investment
operations......... (1.66) .54 1.60 1.54 3.35 2.23 .70 4.53 (.78) 1.01
Less distributions to
shareholders from:
Net investment
income............... -- -- -- -- (.14) (.53) (.36) (.05) -- --
Net realized gains..... (3.68) -- (1.27) (1.69) (1.00) (.58) (3.67) (.28) (.95) (2.62)
Total
distributions...... (3.68) -- (1.27) (1.69) (1.14) (1.11) (4.03) (.33) (.95) (2.62)
Net asset value, end of
period............... $16.40 $21.74 $21.20 $20.87 $21.02 $18.81 $17.69 $21.02 $16.82 $18.55
TOTAL RETURN+.......... 6.7% 2.6% 7.6% 7.5% 18.3% 14.4% 4.2% 27.4% (4.0%) 6.3%
RATIOS & SUPPLEMENTAL
DATA
Net assets, end of
period (in
millions)............ $78,609 $99,340 $96,357 $80,605 $62,172 $45,687 $37,838 $37,292 $23,007 $20,881
Ratios to average net
assets:
Expenses............. 1.32%++ 1.37%++ 1.26% 1.24% 1.25% 1.32% 1.33% 1.30% 1.47% 1.44%
Net investment income
(loss)............. (.78%)++ (.70%)++ (.33%) (.07%) .22% 3.32% 2.25% .86% .01% (.20%)
Portfolio turnover
rate................. 40% 36% 89% 29% 55% 59% 46% 45% 47% 43%
<CAPTION>
1986
<S> <C>
PER SHARE DATA
Net asset value,
beginning of
period............... $14.97
Income (loss) from
investment
operations:
Net investment income
(loss)............... (.02)
Net realized and
unrealized gain
(loss) on
investments.......... 6.37
Total from investment
operations......... 6.35
Less distributions to
shareholders from:
Net investment
income............... --
Net realized gains..... (1.16)
Total
distributions...... (1.16)
Net asset value, end of
period............... $20.16
TOTAL RETURN+.......... 45.7%
RATIOS & SUPPLEMENTAL
DATA
Net assets, end of
period (in
millions)............ $19,783
Ratios to average net
assets:
Expenses............. 1.44%
Net investment income
(loss)............. (.10%)
Portfolio turnover
rate................. 56%
</TABLE>
# On September 21, 1994, the Fund changed its fiscal year end from May 31 to
September 30.
* Investment income, expenses and net investment income are based on average
monthly shares outstanding for the period indicated.
+ Total return is calculated on net asset value for the period indicated and is
not annualized.
++ Annualized.
9
<PAGE>
EVERGREEN LIMITED MARKET FUND, INC. -- CLASS A, B AND C SHARES
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
<S> <C> <C> <C>
JANUARY 3, 1995* THROUGH MARCH 31, 1995
(UNAUDITED)
PER SHARE DATA
Net asset value, beginning of period..................................... $15.76 $ 15.76 $15.76
Income (loss) from investment operations:
Net investment loss...................................................... (.01) (.03) (.03)
Net realized and unrealized gain on investments.......................... .65 .63 .64
Total from investment operations..................................... .64 .60 .61
Net asset value, end of period........................................... $16.40 $ 16.36 $16.37
TOTAL RETURN+............................................................ 4.1% 3.8% 3.9%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's omitted)................................ $732 $ 1,598 $59
Ratios to average net assets:
Expenses (a)........................................................... 1.41%++ 2.17%++ 2.15%++
Net investment loss (a)................................................ (.71%)++ (1.47%)++ (1.38%)++
Portfolio turnover rate**................................................ 40% 40% 40%
</TABLE>
* Commencement of class operations.
** Portfolio turnover rate is calculated for the six months period ended March
31, 1995.
+ Total return is calculated on net asset value per share for the period
indicated and is not annualized. Initial sales charge and contingent deferred
sales charge is not reflected.
++ Annualized. Due to the recent commencement of their offering, the ratios for
Class A, Class B and Class C shares are not necessarily comparable to that
of the Class Y shares, and are not necessarily indicative of future ratios.
(a) Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were assumed or waived by the investment adviser, the
annualized ratios of expenses and net investment income (loss) to average
net assets, exclusive of any applicable state expense limitations, would
have been the following:
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
<S> <C> <C> <C>
JANUARY 3, 1995 THROUGH MARCH 31, 1995
(UNAUDITED)
Expenses....................................... 2.75% 2.77% 3.50%
Net investment loss............................ (2.05%) (2.07%) (2.73%)
</TABLE>
10
<PAGE>
EVERGREEN AGGRESSIVE GROWTH FUND -- CLASS A SHARES*
<TABLE>
<CAPTION>
SIX MONTHS TEN MONTHS
ENDED APRIL ENDED YEAR ENDED
30, 1995 YEAR ENDED OCTOBER 31, OCTOBER 31, DECEMBER 31,
(UNAUDITED) 1994 1993 1992 1991 1990 1989 1988** 1987 1986
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning
of period................. $13.85 $14.44 $11.76 $12.22 $7.37 $11.06 $7.62 $7.07 $8.77 $7.75
Income (loss) from
investment operations:
Net investment loss......... (.07) (.13) (.12) (.10) (.08) (.04) (.11) (.21) (.11) (.08)
Net realized and unrealized
gain (loss)............... .46 (.22) 3.06 1.84 5.59 (2.02) 3.55 .76 (1.34) 1.10
Total from investment
operations............ .39 (.35) 2.94 1.74 5.51 (2.06) 3.44 .55 (1.45) 1.02
Less distributions to
shareholders from:
Net realized gains.......... -- (.24) (.26) (2.20) (.66) (1.63) -- -- (.25) --
Net asset value, end of
period.................... $14.24 $13.85 $14.44 $11.76 $12.22 $7.37 $11.06 $7.62 $7.07 $8.77
TOTAL RETURN+............... 2.8% (2.4%) 25.3% 17.4% 79.8% (20.5%) 45.1% 9.3% (16.5%) 13.2%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted)........... $62,993 $64,635 $58,053 $29,302 $23,509 $14,325 $21,241 $19,900 $25,700 $37,100
Ratios to average net assets
of:
Expenses.................. 1.41%++ 1.25% 1.31% 1.44% 1.59% 1.86% 1.78% 2.02%++ 1.57% 1.65%
Net investment loss....... (1.01%)++ (.92%) (.92%) (.93%) (.71%) (.49%) (1.19%) (1.36%)++ (1.05%) (.90%)
Portfolio turnover rate..... 14% 59% 48% 46% 108% 100% 120% 45% 65% 49%
<CAPTION>
1985
<S> <C>
PER SHARE DATA
Net asset value, beginning
of period................. $5.43
Income (loss) from
investment operations:
Net investment loss......... (.09)
Net realized and unrealized
gain (loss)............... 2.59
Total from investment
operations............ 2.50
Less distributions to
shareholders from:
Net realized gains.......... (.18)
Net asset value, end of
period.................... $7.75
TOTAL RETURN+............... 46.0%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted)........... $16,100
Ratios to average net assets
of:
Expenses.................. 2.34%
Net investment loss....... (1.29%)
Portfolio turnover rate..... 101%
</TABLE>
* The information set forth in the table above reflects the operating history
of ABT Emerging Growth Fund, predecessor to Evergreen Agressive Growth Fund,
for the periods indicated.
** The Fund changed its fiscal year from December 31 to October 31.
+ Total return is calculated on net asset value for the period indicated and is
not annualized. Initial sales charge is not reflected.
++ Annualized.
11
<PAGE>
12
- -------------------------------------------------------------------------------
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 the
opinion of the Fund's investment adviser, offer potential for capital
appreciation. The Fund's investment objective is fundamental policy, which may
not be changed without shareholder approval. A "little-known" company means one
whose business is limited to a regional market or whose securities are closely
held with only a small proportion traded publicly. A "relatively small" company
means one which has a small share of the market for its products or services in
comparison with other companies in its field, or which provides goods or
services for a limited market. A "special situation" company is one which offers
potential for capital appreciation because of a recent or anticipated change in
structure, management, products or services. In addition to the securities
described above, the Evergreen Fund may invest in securities of relatively
well-known and large companies with potential for capital appreciation.
Investments may also be made to a limited degree in non-convertible debt
securities and preferred stocks which offer an opportunity for capital
appreciation. Short-term investments may also be made if the Fund's investment
adviser believes that such action will benefit the Fund. See "Special Risk
Considerations".
It is anticipated that the annual portfolio turnover rate for the Fund
will not exceed 100%. The Fund may employ certain additional investment
strategies which are discussed in "Investment Practices and Restrictions",
below.
Evergreen U.S. Real Estate Equity Fund
The Fund's investment objective is long-term capital growth which it
seeks to achieve through investment primarily in equity securities of domestic
companies which are principally engaged in the real estate industry or which own
significant real estate assets; the Fund will not purchase direct interests in
real estate. Current income will be a secondary objective. Equity securities
will include common stock, preferred stock and securities convertible into
common stock. The Fund's investment objective is fundamental policy, which may
not be changed without shareholder approval.
Under normal conditions, the Fund will invest not less than 65% of its
total assets in equity securities of United States exchange or NASDAQ listed
companies principally engaged in the real estate industry. A company is deemed
to be "principally engaged" in the real estate industry if at least 50% of its
assets (marked to market), gross income or net profits are attributable to
ownership, construction, management or sale of residential, commercial or
industrial real estate. Real estate industry companies may include among others:
equity real estate investment trusts, which pool investors' funds for investment
primarily in commercial real estate properties; mortgage real estate investment
trusts, which invest pooled funds in real estate related loans; brokers or real
estate developers; and companies with substantial real estate holdings, such as
paper and lumber producers and hotel and entertainment companies. The Fund will
only invest in real estate equity trusts and limited partnerships which are
traded on major exchanges. See "Special Risk Considerations".
The remainder of the Fund's investments may be made in equity
securities of issuers whose products and services are related to the real estate
industry, such as manufacturers and distributors of building supplies and
financial institutions which issue or service mortgages. The Fund may invest
more than 25% of its total assets in any one sector of the real estate or real
estate related industries. In addition, the Fund may, from time to time, invest
in the securities of companies unrelated to the real estate industry whose real
estate assets are substantial relative to the price of the companies'
securities.
Investments may also be made in securities of issuers unrelated to the
real estate industry believed by the Fund's investment adviser to be undervalued
and to have capital appreciation potential. Also, consistent with the secondary
objective of current income, investments may also be made in nonconvertible debt
securities of such companies. The debt securities purchased (except for those
described below) will be of investment grade or better quality (e.g., rated no
lower than A by Standard & Poor's Ratings Group ("S&P") or Moody's Investors
Service, Inc. ("Moody's") or any other nationally recognized statistical rating
organization ("SRO"), or if not so rated, believed by the Fund's investment
adviser to be of comparable quality). However, up to 10% of total assets may be
invested in unrated debt securities of issuers secured by real estate assets
where the Fund's investment adviser believes that the securities are trading at
a discount and the underlying collateral will ensure repayment of principal. In
such situations, it is conceivable that the Fund could, in the event of default,
end up holding the underlying real estate directly.
It is anticipated that the annual portfolio turnover rate for the Fund
may exceed 100%. The Fund may employ certain additional investment strategies
which are discussed in "Investment Practices and Restrictions", 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, the Fund's sub adviser, 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.
It is anticipated that the annual portfolio turnover rate for the Fund
may exceed 100%. The Fund may employ certain additional investment strategies
which are discussed in "Investment Practices and Restrictions", 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 objective is fundamental policy, which may not
be changed without shareholder approval. Under normal circumstances, the Fund
intends to invest at least 65% of its net assets in common stocks or securities
convertible into common stocks. The Fund's investment adviser considers an
emerging growth company to be one which is still in the developmental stage, yet
has demonstrated, or is expected to achieve, growth of earnings over various
major business cycles. Important qualities of any emerging growth company
include sound management and a good product with growing market opportunities.
To the extent that its assets are not invested in common stocks or securities
convertible into common stocks, the Fund also may invest its assets in, or enter
into repurchase agreements with banks or broker-dealers with respect to,
investment grade corporate bonds, U.S. government securities, commercial paper
and certificates of deposit of domestic banks.
Consistent with its investment objective, the Fund also may invest in
equity securities of seasoned, established companies which its investment
adviser believes have above-average appreciation potential similar to that of
companies in the developmental stage. This may be due, for example, to
management change, new technology, new product or service developments, changes
in demand, or other factors. Investments in stocks of emerging growth companies
may involve special risks. Securities of lesser-known, relatively small and
special situation companies tend to be speculative and volatile. Therefore, the
current net asset value of the Fund's shares may vary significantly.
Accordingly, the Fund should not be considered suitable for investors who are
unable or unwilling to assume the risks of loss inherent in such a program, nor
should investment in the Fund be considered a balanced or complete investment
program.
It is anticipated that the annual portfolio turnover rate for the Fund
will not exceed 100%. The Fund may employ certain additional investment
strategies which are discussed in "Investment Practices and Restrictions",
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, U.S. Government securities, non-convertible investment grade debt
securities or preferred stocks or hold its assets in cash if, in the opinion of
the Funds investment advisers, market conditions warrant a temporary defensive
investment strategy.
Portfolio Turnover and Brokerage. 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, Evergreen U.S. Real Estate Equity
Fund and Evergreen Limited Market Fund effected on those exchanges. See the
Statement of Additional Information for further information regarding the
brokerage allocation practices of the Funds. The portfolio turnover rate for
each Fund is set forth in the tables contained in the section entitled
"Financial Highlights".
Borrowing. As a matter of fundamental policy, the Funds may not borrow money
except as a temporary measure for extraordinary or emergency purposes. The
proceeds from borrowings may be used to facilitate redemption requests which
might otherwise require the untimely disposition of portfolio securities. The
specific limits and other terms applicable to borrowing by each Fund are set
forth in the Statement of Additional Information.
Lending of Portfolio Securities. In order to generate income and to offset
expenses, the Funds may lend portfolio securities to brokers, dealers and other
financial institutions. Each Fund's investment adviser will monitor the
creditworthiness of such borrowers. Loans of securities by the Funds, if and
when made, may not exceed 30% of the value of a Fund's net assets and must be
collateralized by cash or U.S. Government securities that are maintained at all
times in an amount equal to at least 100% of the current market value of the
securities loaned, including accrued interest. While such securities are on
loan, the borrower will pay a Fund any income accruing thereon, and the Fund may
invest the cash collateral in portfolio securities, thereby increasing its
return. Any gain or loss in the market price of the loaned securities which
occurs during the term of the loan would affect a Fund and its investors. A Fund
has the right to call a loan and obtain the securities loaned at any time on
notice of not more than five business days. A Fund may pay reasonable fees in
connection with such loans.
There is the risk that when lending portfolio securities, the
securities may not be available to a Fund on a timely basis and the Fund may,
therefore, lose the opportunity to sell the securities at a desirable price. In
addition, in the event that a borrower of securities would file for bankruptcy
or become insolvent, disposition of the securities may be delayed pending court
action.
Illiquid Securities. The Funds may invest up to 15% of their net assets in
illiquid securities and other securities which are not readily marketable,
including non-negotiable time deposits, certain restricted securities not deemed
by the Trustees to be liquid and repurchase agreements with maturities longer
than seven days, except that Evergreen U.S. Real Estate Equity Fund may only
invest up to 10% of its assets in repurchase agreements with maturities longer
than seven days. Securities eligible for resale pursuant to Rule 144A under the
Securities Act of 1933, which have been determined to be liquid, will not be
considered by the Funds investment advisers to be illiquid or not readily
marketable and, therefore, are not subject to the aforementioned 15% limit. The
inability of a Fund to dispose of illiquid or not readily marketable investments
readily or at a reasonable price could impair the Fund's ability to raise cash
for redemptions or other purposes. The liquidity of securities purchased by a
Fund which are eligible for resale pursuant to Rule 144A will be monitored by
each Funds 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
<PAGE>
ensure that the retention of such security does not result in a Fund having more
than 15% of its assets invested in illiquid or not readily marketable
securities.
Repurchase Agreements and Reverse Repurchase Agreements. The Funds may enter
into repurchase agreements with member banks of the Federal Reserve System,
including the Custodian or primary dealers in U.S. Government securities. A
repurchase agreement is an arrangement pursuant to which a buyer purchases a
security and simultaneously agrees to resell it to the vendor at a price that
results in an agreed-upon market rate of return which is effective for the
period of time (which is normally one to seven days, but may be longer) the
buyer's money is invested in the security. The arrangement results in a fixed
rate of return that is not subject to market fluctuations during the holding
period. A Fund requires continued maintenance of collateral with its Custodian
in an amount at least equal to the repurchase price (including accrued
interest). In the event a vendor defaults on its repurchase obligation, a Fund
might suffer a loss to the extent that the proceeds from the sale of the
collateral were less than the repurchase price. If the vendor becomes the
subject of bankruptcy proceedings, a Fund might be delayed in selling the
collateral. The Funds investment advisers will review and continually monitor
the creditworthiness of each institution with which a Fund enters into a
repurchase agreement to evaluate these risks.
Evergreen U.S. Real Estate Equity Fund and Evergreen Aggressive Growth
Fund may borrow money by entering into a "reverse repurchase agreement" by which
it agrees to sell portfolio securities to financial institutions such as banks
and broker-dealers, and to repurchase them at a mutually agreed upon date and
price, for temporary or emergency purposes. At the time the Fund enters into a
reverse repurchase agreement, it will place in a segregated custodial account
cash, U.S. government securities or liquid high grade debt obligations having a
value at least equal to the repurchase price (including accrued interest) and
will subsequently monitor the account to ensure that such equivalent value is
maintained. Reverse repurchase agreements involve the risk that the market value
of the securities sold by the Fund may decline below the repurchase price of
those securities. The Fund will not enter into reverse repurchase agreements
exceeding 5% of the value of its total assets.
Fixed Income Securities - Downgrades. If any security invested in by any of the
Funds loses its rating or has its rating reduced after the Fund has purchased
it, the Fund is not required to sell or otherwise dispose of the security, but
may consider doing so.
Futures and Related Options. The Evergreen U.S. Real Estate Equity Fund may, to
a limited extent, enter into financial futures contracts, including futures
contracts based on securities indices, and purchase and sell options on such
futures contracts. The sale of a futures contract obligates the Fund to deliver
the amount of securities, currency, or in the case of an index futures contract,
cash, called for in the futures contract on a specific future date and price.
Conversely, the purchase of a futures contract obligates the Fund to receive
(purchase) the amount of securities, currency, or in the case of an index
futures contract, cash, called for in the futures contract on a specific future
date and at a specific price. While the terms of futures contracts call for
actual delivery or receipt of the underlying property, the majority of such
contracts are "closed out" prior to settlement date by entering into an
offsetting purchase or sale transaction. Upon entering into a futures contract,
the Fund must make an initial margin deposit representing a portion of the funds
that would be required to settle the contract. Thereafter, on each day that
futures contracts to which the Fund is a party trade, the Fund may be required
to post additional "variation" margin as a result of changes in the value of the
futures contract. The Fund does not segregate assets in an amount equal to its
total exposure under futures contracts.
While the Fund will enter into futures contracts only if there appears
to be a liquid secondary market for such contracts, there can be no assurance
that the Fund will be able to close out their position in a specific contract at
any specific time. The Fund will not enter into a particular index-based futures
contract unless the Fund's investment adviser determines that a correlation
exists between price movements in the index-based futures contract and in
securities in the Fund's portfolio. Such correlation is not likely to be
perfect, since the Fund's portfolio is not likely to contain the same securities
used in the index.
An option on a futures contract entitles its holder to enter into a
futures contract on specific terms which remain fixed until the expiration of
the option, regardless of the movement of futures prices in general. If the
movement of currency futures prices during the term of the option are such that
it does not become advantageous for the Fund to exercise the option or enter
into an offsetting options transaction, the option will expire and have no
further value. The exposure of the Fund in connection with purchase of an option
on a futures contract is limited to the premium paid for the option. The Funds
will only use futures instruments for hedging, not speculative, purposes. The
Fund may not enter into futures contracts or related options if, immediately
thereafter, more than 30% of the Fund's total assets would be hedged thereby or
the amounts committed to margin and premiums paid for unexpired options would
exceed 5% of the Fund's total assets. Special Risk Considerations
Investment in Small Companies. Investments in securities of little-known,
relatively small and special situation companies may tend to be speculative and
volatile. A lack of management depth in such companies could increase the risks
associated with the loss of key personnel. Also, the material and financial
resources of such companies may be limited, with the consequence that funds or
external financing necessary for growth may be unavailable. Such companies may
also be involved in the development or marketing of new products or services for
which there are no established markets. If projected markets do not materialize
or only regional markets develop, such companies may be adversely affected or be
subject to the consequences of local events. Moreover, such companies may be
insignificant factors in their industries and may become subject to intense
competition from larger companies. Securities of companies in which the Funds
may invest will frequently be traded only in the over-the-counter market or on
regional stock exchanges and will often be closely held. Securities of this type
may have limited liquidity and be subject to wide price fluctuations. As a
result of the risk factors described above, the net asset value of each Fund's
shares can be expected to vary significantly. Accordingly, each Fund should not
be considered suitable for investors who are unable or unwilling to assume the
associated risks, nor should investment in the Funds be considered a balanced or
complete investment program.
Investments Related to Real Estate. Evergreen U.S. Real Estate Equity Fund
invests primarily in issuers whose activities are real estate related. Risks
associated with investment in securities of companies in the real estate
industry include: declines in the value of real estate, risks related to general
and local economic conditions, overbuilding and increased competition, increases
in property taxes and operating expenses, changes in zoning laws, casualty or
condemnation losses, variations in rental income, changes in neighborhood
values, the appeal of properties to tenants and increase in interest rates. In
the event of a default on such securities, the holder thereof could end up
holding real estate directly and therefore be more directly subject to such
risks. In addition, equity real estate investment trusts may be affected by
changes in the value of the underlying property owned by the trusts, while
mortgage real estate investment trusts may be affected by the quality of credit
extended. Equity and mortgage real estate investment trusts are dependent upon
management skills, may not be diversified and are subject to the risks of
financing projects. Such trusts are also subject to heavy cash flow dependency,
defaults by borrowers, self liquidation and the possibility of failing to
qualify for tax-free pass-through of income under the Internal Revenue Code of
1986, as amended (the "Code") and to maintain exemption from the Investment
Company Act of 1940, as amended (the "1940 Act"). In the event an issuer of debt
securities collateralized by real estate defaulted, it is conceivable that a
Fund could end up holding the underlying real estate.
Other Investment Restrictions. Each Fund has adopted additional investment
restrictions that are set forth in the Statement of Additional Information.
Unless otherwise noted, the restrictions and policies set forth above are not
fundamental and may be changed without shareholder approval.
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MANAGEMENT OF THE FUNDS
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INVESTMENT ADVISERS
The management of each Fund is supervised by the Trustees of the Trust
under which the Fund has been established ("Trustees") or, in the case of
Evergreen Limited Market Fund, its directors. Evergreen Asset Management Corp.
(the "Evergreen Asset") has been retained by Evergreen Fund, Evergreen U.S. Real
Estate Equity Fund and Evergreen Limited Market Fund as investment adviser.
Evergreen Asset succeeded on June 30, 1994 to the advisory business of the same
name, but under different ownership, which was organized in 1971. Evergreen
Asset, with its predecessors, has served as investment adviser to the Evergreen
mutual funds since 1971. Evergreen Asset is a wholly-owned subsidiary of First
Union National Bank of North Carolina ("FUNB"). The address of Evergreen Asset
is 2500 Westchester Avenue, Purchase, New York 10577. FUNB is a subsidiary of
First Union Corporation ("First Union"), one of the ten largest bank holding
companies in the United States. Stephen A. Lieber and Nola Maddox Falcone serve
as the chief investment officers of Evergreen Asset and, along with Theodore J.
Israel, Jr., were the owners of Evergreen Asset's predecessor and the former
general partners of Lieber & Company, which, as described below, provides
certain subadvisory services to Evergreen Asset in connection with its duties as
investment adviser to the Funds. The Capital Management Group of FUNB ("CMG")
serves as investment adviser to Evergreen Aggressive Growth Fund.
First Union is headquartered in Charlotte, North Carolina, and had
$77.9 billion in consolidated assets as of March 31, 1995. 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 all the series of Evergreen
Investment Trust (formerly known as First Union Funds). First Union Brokerage
Services, Inc., a wholly-owned subsidiary of FUNB, is a registered broker-dealer
that is principally engaged in providing retail brokerage services consistent
with its federal banking authorizations. First Union Capital Markets Corp., a
wholly-owned subsidiary of First Union, is a registered broker-dealer
principally engaged in providing, consistent with its federal banking
authorizations, private placement, securities dealing, and underwriting
services.
As investment adviser to Evergreen Fund, Evergreen U.S. Real Estate
Equity Fund and Evergreen Limited Market Fund, Evergreen Asset manages each
Fund's investments, provides various administrative services and supervises each
Fund's daily business affairs, subject to the authority of the Trustees.
Evergreen Asset is entitled to receive a fee from each of Evergreen Fund,
Evergreen U.S. Real Estate Equity Fund and Evergreen Limited Market Fund equal
to 1% of average daily net assets on an annual basis on the first $750 million
in assets, .9 of 1% of average daily net assets on an annual basis on the next
$250 million in assets, and .8 of 1% of average daily net assets on an annual
basis on assets over $1 billion. The fee paid by Evergreen Fund, Evergreen U.S.
Real Estate Equity Fund and Evergreen Limited Market Fund is higher than the
rate paid by most other investment companies. The total annualized operating
expenses of Evergreen Fund, Evergreen U.S. Real Estate Equity Fund and Evergreen
Limited Market Fund for the fiscal period ended September 30, 1994, are set
forth in the section entitled "Financial Highlights". Until Evergreen U.S. Real
Estate Equity Fund reaches net assets of $15 million, Evergreen Asset will
reimburse the Fund to the extent the Fund's aggregate operating expenses
(including Evergreen Asset's fee, but excluding interest, taxes, brokerage
commissions, Rule 12b-1 distribution fees and shareholder servicing fees and
extraordinary expenses) exceed 1.50% of average net assets for any fiscal year.
From time to time, Evergreen Asset may further reduce or waive its fee or
reimburse the Fund for certain of its expenses in order to reduce the Fund's
expense ratio. As a result the Fund's total return would be higher than if the
fees and any expenses had been paid by the Fund.
CMG manages investments and supervises the daily business affairs of
Evergreen Aggressive Growth Fund and, as compensation therefor, is entitled to
receive an annual fee equal to .60 of 1% of average daily net assets of the
Fund. The total annualized operating expenses of the predecessor of Evergreen
Aggressive Growth Fund for its most recent fiscal year ended October 30, 1994,
are set forth in the section entitled "Financial Highlights". Evergreen Asset
serves as administrator to Evergreen Aggressive Growth Fund and is entitled to
receive a fee based on the average daily net assets of these Funds at a rate
based on the total assets of the mutual funds administered by Evergreen Asset
for which CMG or Evergreen Asset also serve as investment adviser, calculated in
accordance with the following schedule: .050% of the first $7 billion; .035% on
the next $3 billion; .030% on the next $5 billion; .020% on the next $10
billion; .015% on the next $5 billion; and .010% on assets in excess of $30
billion. Furman Selz Incorporated, the parent of Evergreen Funds Distributor,
Inc., distributor for the Evergreen group of mutual funds, serves as
sub-administrator to Evergreen Aggressive Growth Fund and is entitled to receive
a fee from the Fund calculated on the average daily net assets of the Fund at a
rate based on the total assets of the mutual funds administered by Evergreen
Asset for which CMG or Evergreen Asset also serve as investment adviser,
calculated in accordance with the following schedule: .0100% of the first $7
billion; .0075% on the next $3 billion; .0050% on the next $15 billion; and
.0040% on assets in excess of $25 billion. The total assets of the mutual funds
administered by Evergreen Asset for which CMG or Evergreen Asset serve as
investment adviser as of March 31, 1995 were approximately $8 billion.
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
U.S. Real Estate Equity Fund is Samuel A. Lieber. Mr. Samuel Lieber has been the
Fund's principal manager since inception and has been associated with the
Evergreen Asset 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 of Evergreen Fund, Evergreen U.S. Real Estate Equity Fund and
Evergreen Limited Market Fund. Lieber & Company will be reimbursed by Evergreen
Asset in connection with the rendering of services on the basis of the direct
and indirect costs of performing such services. There is no additional charge to
Evergreen Fund, Evergreen U.S. Real Estate Equity Fund and Evergreen Limited
Market Fund for the services provided by Lieber & Company. The address of Lieber
& Company is 2500 Westchester Avenue, Purchase, New York 10577. Lieber & Company
is an indirect, wholly-owned, subsidiary of First Union.
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PURCHASE AND REDEMPTION OF SHARES
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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 10 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 on the front page of this Prospectus. Some
services are described in more detail in the Share Purchase Application.
Systematic Investment Plan. You may make monthly or quarterly investments into
an existing account automatically in amounts of not less than $25.
Telephone Investment Plan. You may make investments into an existing account
electronically in amounts of not less than $100 or more than $10,000 per
investment. Telephone investment requests received by 3:00 p.m. (Eastern time)
will be credited to a shareholder's account the day the request is received.
Systematic Cash Withdrawal Plan. When an account of $10,000 or more is opened or
when an existing account reaches that size, you may participate in the 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.
Tax Sheltered Retirement Plans. You may open a pension and profit sharing
account in any Evergreen mutual fund (except those funds having an objective of
providing tax free income), including: (i) Individual Retirement Accounts
("IRAs") and Rollover IRAs; (ii) Simplified Employee Pension (SEP) for sole
proprietors, partnerships and corporations; and (iii) Profit-Sharing and Money
Purchase Pension Plans for corporations and their employees.
EFFECT OF BANKING LAWS
The Glass-Steagall Act and other banking laws and regulations presently
prohibit member banks of the Federal Reserve System ("Member Banks") or their
non-bank affiliates from sponsoring, organizing, controlling, or distributing
the shares of registered open-end investment companies such as the Funds. Such
laws and regulations also prohibit banks from issuing, underwriting or
distributing securities in general. However, under the Glass-Steagall Act and
such other laws and regulations, a Member Bank or an affiliate thereof may act
as investment adviser, transfer agent or custodian to a registered open-end
investment company and may also act as agent in connection with the purchase of
shares of such an investment company upon the order of their customer. Evergreen
Asset, since it is a subsidiary of FUNB, and CMG are subject to and in
compliance with the aforementioned laws and regulations.
Changes to applicable laws and regulations or future judicial or
administrative decisions could result in CMG or Evergreen Asset being prevented
from continuing to perform the services required under the investment advisory
contract or from acting as agent in connection with the purchase of shares of a
Fund by its customers. If CMG or Evergreen Asset were prevented from continuing
to provide the services called for under the investment advisory agreement, it
is expected that the Trustees or Directors would identify, and call upon each
Fund's shareholders to approve, a new investment adviser. If this were to occur,
it is not anticipated that the shareholders of any Fund would suffer any adverse
financial consequences.
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OTHER INFORMATION
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DIVIDENDS, DISTRIBUTIONS AND TAXES
It is the policy of each Fund to distribute its investment company
taxable income and any net realized capital gains to shareholders annually or
more frequently as required as a condition of continued qualification as a
regulated investment company by the Code. Dividends and distributions generally
are taxable in the year in which they are paid, except any dividends paid in
January that were declared in the previous calendar quarter may be treated as
paid in December in the previous year. Income dividends and capital gain
distributions are automatically reinvested in additional shares of the Fund
making the distribution at the net asset value per share at the close of
business on the record date, unless the shareholder writes to the Fund's
transfer agent and requests payment in cash.
Each Fund has qualified and intends to continue to qualify to be
treated as a regulated investment company under the Code. While so qualified, it
is expected that each Fund will not be required to pay any Federal income 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.
Evergreen U.S. Real Estate Equity Fund invests in real estate
investment trusts which report the tax characteristics of their distributions to
the Fund annually on a calendar year basis. The timing of such reporting to the
Fund may affect the tax characteristics of distributions by the Fund to
shareholders.
Each Fund is required by Federal law to withhold 31% of reportable
payments (which may include dividends, capital gain distributions and
redemptions) paid to certain shareholders. In order to avoid this backup
withholding requirement, you must certify on the Share Purchase Application, or
on a separate form supplied by State Street, that the investor's social security
or taxpayer identification number is correct and that the investor is not
currently subject to backup withholding or is exempt from backup withholding.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
A discussion of the performance of Evergreen Fund, Evergreen U.S. Real
Estate Equity Fund and Evergreen Limited Market Fund for their most recent
fiscal year is set forth below. A similar discussion relating to the predecessor
of Evergreen Aggressive Growth Fund, ABT Emerging Growth Fund, is contained in
the annual report of such fund for its fiscal year ended October 30, 1994.
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
Evergreen Asset considers 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.
[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
Evergreen Asset 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.
[CHART]
Evergreen U.S. Real Estate Equity Fund. For the nine month period ending
September 30, 1994, the Fund's total return declined by -6%, while the Wilshire
Real Estate Index increased by 1.9% and the Standard and Poor's Homebuilding
Index fell by 43.9%. This was the result of a combination of rising interest
rates, investor concern over economically sensitive real estate and homebuilding
stocks and the gradual deflation of the liquidity bubble which led to many real
estate investment trusts being overvalued relative to historic norms.
[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. The Evergreen Fund and Evergreen Aggressive Growth Fund are each
separate investment series of the Evergreen Trust, a Massachusetts business
trust reorganized in 1988 from a Maryland predecessor corporation. The Evergreen
U.S. Real Estate Equity Fund is a separate series of Evergreen Real Estate
Equity Trust, a Massachusetts business trust organized in 1988. Evergreen
Limited Market Fund, Inc. is a Maryland corporation organized in 1983. The Funds
do not intend to hold annual shareholder meetings; shareholder meetings will be
held only when required by applicable law. Shareholders have available certain
procedures for the removal of Directors or Trustees.
A shareholder in each class of a Fund will be entitled to his or her
share of all dividends and distributions from a Fund's assets, based upon the
relative value of such shares to those of other Classes of the Fund, and, upon
redeeming shares, will receive the then current net asset value of the Class of
shares of the Fund represented by the redeemed shares less any applicable CDSC.
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 Trustees 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 237 Park Avenue, New York, New York 10017, is the
principal underwriter of the Funds. Furman Selz Incorporated, also acts as
sub-administrator to Evergreen Aggressive Growth Fund and which provides certain
sub-administrative services to Evergreen Asset in connection with its role as
investment adviser to Evergreen Fund, Evergreen U.S. Real Estate Equity Fund and
Evergreen Limited Market Fund including providing personnel to serve as officers
of the Funds.
Other Classes of Shares. Each Fund currently offers four classes of shares,
Class A, Class B, Class C and Class Y, and may in the future offer additional
classes. Class Y shares are the only Class of shares offered by this Prospectus
and are only available to (i) all shareholders of record in one or more of the
Funds for which Evergreen Asset served as investment adviser as of December 30,
1994, (ii) certain institutional investors and (iii) investment advisory clients
of Evergreen Asset, CMG and their affiliates. The dividends payable with respect
to Class A, Class B and Class C shares will be less than those payable with
respect to Class Y shares due to the distribution and distribution and
shareholder servicing related expenses borne by Class A, Class B and Class C
shares and the fact that such expenses are not borne by Class Y shares.
Performance Information. From time to time, the Funds may quote their "total
return" or "yield" for a specified period in advertisements, reports or other
communications to shareholders, Total return and yield are computed separately
for Class A, Class B and Class C shares. A Fund's total return for each such
period is computed by finding, through the use of a formula prescribed by the
Securities and Exchange Commission ("SEC"), the average annual compounded rate
of return over the period that would equate an assumed initial amount invested
to the value of the investment at the end of the period. For purposes of
computing total return, dividends and capital gains distributions paid on shares
of a Fund are assumed to have been reinvested when paid and the maximum sales
charges applicable to purchases of a Fund's shares are assumed to have been
paid. Yield is a way of showing the rate of income the Fund earns on its
investments as a percentage of the Fund's share price. The Fund's yield is
calculated according to accounting methods that are standardized by the SEC for
all stock and bond funds. Because yield accounting methods differ from the
method used for other accounting purposes, the Fund's yield may not equal its
distribution rate, the income paid to your account or the net investment income
reported in the Fund's financial statements. To calculate yield, the Fund takes
the interest income it earned from its portfolio of investments (as defined by
the SEC formula) for a 30-day period (net of expenses), divides it by the
average number of shares entitled to receive dividends, and expresses the result
as an annualized percentage rate based on the Fund's share price at the end of
the 30-day period. This yield does not reflect gains or losses from selling
securities
Performance data for each class of shares will be included in any
advertisement or sales literature using performance data of a Fund. These
advertisements may quote performance rankings or ratings of a Fund by financial
publications or independent organizations such as Lipper Analytical Services,
Inc. and Morningstar, Inc. or compare a Fund's performance to various indices.
The Fund may also advertise in items of sales literature an "actual distribution
rate" which is computed by dividing the total ordinary income distributed (which
may include the excess of short-term capital gains over losses) to shareholders
for the latest twelve month period by the maximum public offering price per
share on the last day of the period. Investors should be aware that past
performance may not be reflective of future results.
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 (except for Evergreen Limited Market Fund, Inc.) operate provide that no
trustee or shareholder will be personally liable for the obligations of the
Trust and that every written contract made by the Trust contain a provision to
that effect. If any Trustee or shareholder were required to pay any liability of
the Trust, that person would be entitled to reimbursement from the general
assets of the Trust.
Additional Information. This Prospectus and the Statement of Additional
Information, which has been incorporated by reference herein, do not contain all
the information set forth in the Registration Statements filed by the Trusts or
Evergreen Limited Market Fund, Inc. with the 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>
INVESTMENT ADVISER
Evergreen Asset Management Corp., 2500 Westchester Avenue, Purchase, New York
10577
EVERGREEN FUND, EVERGREEN U.S. REAL ESTATE EQUITY FUND, EVERGREEN LIMITED
MARKET FUND
Capital Management Group of First Union National Bank, 201 South College
Street, Charlotte, North Carolina 28288
EVERGREEN AGGRESSIVE GROWTH FUND
CUSTODIAN & TRANSFER AGENT
State Street Bank & Trust Company, Box 9021, Boston, Massachusetts 02205-9827
LEGAL COUNSEL
Sullivan & Worcester, 1025 Connecticut Avenue, N.W., Washington, D.C. 20036
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP, 1177 Avenue of the Americas, New York, New York 10036
EVERGREEN FUND, EVERGREEN U.S. REAL ESTATE EQUITY FUND, EVERGREEN
AGGRESSIVE GROWTH FUND
Ernst & Young LLP, 200 Clarendon Street, Boston, Massachusetts 02116-5072
EVERGREEN LIMITED MARKET FUND
DISTRIBUTOR
Evergreen Funds Distributor, Inc., 237 Park Avenue, New York, New York 10017
536122
STATEMENT OF ADDITIONAL INFORMATION
July 7, 1995
THE EVERGREEN DOMESTIC GROWTH FUNDS
2500 Westchester Avenue, Purchase, New York 10577
800-807-2940
Evergreen Fund ("Evergreen")
Evergreen U.S. Real Estste Fund ("U.S. Real Estate")
Evergreen Limited Market Fund, Inc. ("Limited Market")
Evergreen Aggressive Growth Fund ("Aggressive")
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 Prospectus dated July 7, 1995 for the Fund in which you are making or
contemplating an investment. The Evergreen Domestic Growth Funds are offered
through two separate prospectuses: one offering Class A, Class B and Class C
shares, and a separate prospectus offering Class Y shares of each Fund. Copies
of each Prospectus may be obtained without charge by calling the number listed
above.
TABLE OF CONTENTS
Page
Investment Objectives and Policies................................
Investment Restrictions...........................................
Non-Fundamental Operating Policies................................
Certain Risk Considerations.......................................
Management........................................................
Investment Adviser................................................
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
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES (See also "Description
of Funds - Investment Objective and Policies"
in each Fund's Prospectus)
The investment objective of each Fund and a description of the
securities in which each Fund may invest is set forth under "Description of the
Funds - Investment Objective and Policies"in the relevant Prospectus. The
following expands upon the discussion in the Prospectus regarding certain
investments of each Fund.
Options
..........Evergreen may write covered call options to a limited extent on its
portfolio securities ("covered options") in an attempt to earn additional
income. A call option gives the purchaser of the option the right to buy a
security from the writer at the exercise price at any time during the option
period. The premium paid to the writer is the consideration for undertaking the
obligations under the option contract. The writer forgoes the opportunity to
profit from an increase in the market price of the underlying security above the
exercise price except insofar as the premium represents such a profit. The Fund
retains the risk of loss should the price of the underlying security decline.
The Fund will write only covered call option contracts and will receive premium
income from the writing of such contracts. Evergreen may purchase call options
to close out a previously written call option. In order to do so, the Fund will
make a "closing purchase transaction" -- the purchase of a call option on the
same security with the same exercise price and expiration date as the call
option which it has previously written. The Fund will realize a profit or loss
from a closing purchase transaction if the cost of the transaction is less or
more than the premium received from the writing of the option. If an option is
exercised, a Fund realizes a long-term or short-term gain or loss from the sale
of the underlying security and the proceeds of the sale are increased by the
premium originally received.
INVESTMENT RESTRICTIONS
FUNDAMENTAL INVESTMENT RESTRICTIONS
.........Except as noted, the investment restrictions set forth below are
fundamental and may not be changed with respect to each Fund without the
affirmative vote of a majority of the outstanding voting securities of the Fund.
Where an asterisk (*) appears after a Fund's name, the relevant policy is
non-fundamental with respect to that Fund and may be changed by the Fund's
investment adviser without shareholder approval, subject to review and approval
by the Trustees/Directors. As used in this Statement of Additional Information
and in the Prospectus, "a majority of the outstanding voting securities of the
Fund" means the lesser of (1) the holders of more than 50% of the outstanding
shares of beneficial interest of the Fund or (2) 67% of the shares present if
more than 50% of the shares are present at a meeting in person or by proxy.
1........Concentration of Assets in Any One Issuer
.........Evergreen and Limited Market may not invest more than 5% of their net
assets, at the time of the investment in question, in the securities of any one
issuer other than the U.S. government and its agencies or instrumentalities.
.........Neither Aggressive nor U.S. Real Estate may invest more than 5% of its
total assets, at the time of the investment in question, in the securities of
any one issuer other than the U.S. government and its agencies or
instrumentalities, except that up to 25% of the value of a Fund's total assets
may be invested without regard to such 5% limitation.
2........Ten Percent Limitation on Securities of Any One Issuer
.........None of Aggressive*, Evergreen, Limited Market or U.S. Real Estate* may
purchase more than 10% of any class of securities of any one issuer other than
the U.S. government and its agencies or instrumentalities.
3........Investment for Purposes of Control or Management
<PAGE>
.........None of Evergreen, U.S. Real Estate*, Limited Market* or Aggressive*
may invest in companies for the purpose of exercising control or management.
4........Purchase of Securities on Margin
.........None of Evergreen, Aggressive*, Limited Market, or U.S. Real Estate*
may purchase securities on margin, except that each Fund may obtain such
short-term credits as may be necessary for the clearance of transactions. A
deposit or payment by a Fund of initial or variation margin in connection with
financial futures contracts or related options transactions is not considered
the purchase of a security on margin.
5........Unseasoned Issuers
.........Evergreen may not invest more than 5% of its net assets in securities
of unseasoned issuers that have been in continuous operation for less than three
years, including operating periods of their predecessors.
.........Neither Aggressive* nor U.S. Real Estate* may invest more than 15% of
its total assets in securities of unseasoned issuers that have been in
continuous operation for less than three years, including operating periods of
their predecessors, except obligations issued or guaranteed by the U.S.
government and its agencies or instrumentalities (this limitation does not apply
to real estate investment trusts).
6........Underwriting
.........None of Aggressive*, Evergreen, Limited Market or U.S. Real Estate* may
engage in the business of underwriting the securities of other issuers.
7........Interests in Oil, Gas or Other Mineral Exploration or Development
Programs
......... No Fund may purchase, sell or invest in interests in oil, gas or other
mineral exploration or development programs.
8........Concentration in Any One Industry
.........U.S. Real Estate may not concentrate its investments in any one
industry, except that the Fund will invest at least 65% of its total assets in
securities of companies engaged principally in the real estate industry.
.........None of Evergreen, Limited Market or Aggressive may concentrate its
investments in any one industry, except that each Fund may invest up to 25% of
its total net assets in any one industry; provided, that this limitation shall
not apply with respect to each Fund, to obligations issued or guaranteed by the
U.S. government or its agencies or instrumentalities. For purposes of this
restriction, utility companies, gas, electric, water and telephone companies
will be considered separate industries.
9........Warrants
.........None of Aggressive*, Evergreen, Limited Market or U.S. Real Estate* may
invest more than 5% of its net assets in warrants, and, of this amount, no more
than 2% of each Fund's total net assets may be invested in warrants that are
listed on neither the New York nor the American Stock Exchange.
10.......Ownership by Trustees/Officers
.........None of Aggressive*, Evergreen, Limited Market or U.S. Real Estate* may
purchase or retain the securities of any issuer if (i) one or more officers or
Trustees/Directors of a Fund or its investment adviser individually owns or
would own, directly or beneficially, more than 1/2 of 1% of the securities of
such issuer, and (ii) in the aggregate, such persons own or would own, directly
or beneficially, more than 5% of such securities.
11.......Short Sales
.........Aggressive*, Evergreen, Limited Market or U.S. Real Estate* may not
make short sales of securities unless, at the time of each such sale and
thereafter while a short position exists, each Fund owns an equal amount of
securities of the same issue
3
<PAGE>
or owns securities which, without payment by the Fund of any consideration, are
convertible into, or are exchangeable for, an equal amount of securities of the
same issue (and provided that transactions in futures contracts and options are
not deemed to constitute selling securities short).
12.......Lending of Funds and Securities
.........The Funds may not lend their funds to other persons, except through the
purchase of a portion of an issue of debt securities publicly distributed or the
entering into of repurchase agreements.
.........None of Aggressive*, U.S. Real Estate, Evergreen or Limited Market may
lend its portfolio securities, unless the borrower is a broker, dealer or
financial institution that pledges and maintains collateral with the Fund
consisting of cash or securities issued or guaranteed by the U.S. government
having a value at all times not less than 100% of the current market value of
the loaned securities, including accrued interest, provided that the aggregate
amount of such loans shall not exceed 30% of the Fund's net assets.
13.......Commodities
.........Neither Aggressive* nor U.S. Real Estate may purchase, sell or invest
in physical commodities unless acquired as a result of ownership of securities
or other instruments (but this shall not prevent a Fund from purchasing or
selling options and futures contracts or from investing in securities or other
instruments backed by physical commodities).
.........Neither Evergreen nor Limited Market may purchase, sell or invest in
commodities or commodity contracts.
14.......Real Estate
.............None of Aggressive*, Evergreen, Limited Market or U.S. Real Estate*
may purchase, sell or invest in real estate or interests in real estate, except
that (i) each Fund may purchase, sell or invest in marketable securities of
companies holding real estate or interests in real estate, including real estate
investment trusts; and (ii) U.S. Real Estate may purchase securities secured by
real estate or interests therein, or issued by companies or investment trusts
which invest in real estate or interests therein.
15.......Borrowing, Senior Securities, Reverse Repurchase Agreements
.........Limited Market may not borrow money except from banks as a temporary
measure to facilitate redemption requests which might otherwise require the
untimely disposition of portfolio investments and for extraordinary or emergency
purposes provided that the aggregate amount of such borrowings shall not exceed
5% of the value of the Fund's total net assets at the time of any such
borrowing, or mortgage, pledge or hypothecate its assets, except in an amount
sufficient to secure any such borrowing. Limited Market may not issue senior
securities, as defined in the Investment Company Act of 1940, as amended, except
insofar as the Fund may be deemed to have issued a senior security by reason of
borrowing money in accordance with the restrictions described above.
.........Evergreen may not borrow money except from banks as a temporary measure
for extraordinary or emergency purposes (i) on an unsecured basis, subject to
the requirements that the value of the Fund's assets, including the proceeds of
borrowings, does not at any time become less than 300% of the Fund's
indebtedness; provided, however, that if the value of the Fund's assets becomes
less than such amount, the Fund will reduce its borrowings within three business
days so that the value of the Fund's assets will be at least 300% of its
indebtedness, or (ii) may make such borrowings on a secured basis, provided that
the aggregate amount of such borrowings shall not exceed 5% of the value of its
total net assets at the time of any such borrowing, or mortgage, pledge or
hypothecate its assets, except in an amount not exceeding 15% of its total net
assets taken at cost to secure such borrowing.
.........Aggressive may not borrow money except on an unsecured basis up to 25%
of its net assets, subject to the requirements that the value of the Fund's
assets, including the proceeds of borrowings, does not at any time become less
than 300% of the Fund's
4
<PAGE>
indebtedness; provided, however, that if the value of the Fund's assets becomes
less than such amount, the Fund will reduce its borrowings within three business
days so that the value of the Fund's assets will be at least 300% of its
indebtedness.
.........U.S. Real Estate may not borrow money, issue senior securities or enter
into reverse repurchase agreements, except for temporary or emergency purposes,
and not for leveraging, and then in amounts not in excess of 10% of the value of
the Fund's total assets at the time of such borrowing; or mortgage, pledge or
hypothecate any assets except in connection with any such borrowing and in
amounts not in excess of the lesser of the dollar amounts borrowed or 10% of the
value of each Fund's total assets at the time of such borrowing. The Fund will
not enter into reverse repurchase agreements exceeding 5% of the value of its
total assets.
16.......Joint Trading
.........None of Aggressive*, Evergreen, Limited Market or U.S. Real Estate* may
participate on a joint or joint and several basis in any trading account in any
securities. (A Fund's "bunching" of orders for the purchase or sale of portfolio
securities with its investment adviser or accounts under its management to
reduce brokerage commissions, to average prices among them or to facilitate such
transactions is not considered a trading account in securities for purposes of
this restriction).
17.......Options
.........Neither Limited Market nor U.S. Real Estate* may write, purchase or
sell put or call options, or combinations thereof, except that U.S. Real Estate
may do so as permitted under "Description of the Funds - Investment Objective
and Policies" in its Prospectus.
.........Evergreen may not write, purchase or sell put or call options, or
combinations thereof, except that the Fund is authorized to write covered call
options on portfolio securities and to purchase call options in closing purchase
transactions, provided that (i) such options are listed on a national securities
exchange, (ii) the aggregate market value of the underlying securities does not
exceed 25% of the Fund's total net assets, taken at current market value on the
date of any such writing, and (iii) the Fund retains the underlying securities
for so long as call options written against them make the shares subject to
transfer upon the exercise of any options.
NON FUNDAMENTAL OPERATING POLICIES
.........Certain Funds have adopted additional non-fundamental operating
policies. Operating policies may be changed by the Board of Trustees/Directors
without a shareholder vote.
1........Futures and Options Transactions
With respect to U.S. Real Estate, which may invest in futures and options,
the Fund will not: (i) sell futures contracts, purchase put options or write
call options if, as a result, more than 30% of the Fund's total assets would be
hedged with futures and options under normal conditions; (ii) purchase futures
contracts or write put options if, as a result, the Fund's total obligations
upon settlement or exercise of purchased futures contracts and written put
options would exceed 30% of its total assets; or (iii) purchase call options if,
as a result, the current value of option premiums for options purchased by the
Fund would exceed 5% of the Fund's total assets. These limitations do not apply
to options attached to, or acquired or traded together with their underlying
securities, and do not apply to securities that incorporate features similar to
options.
2........Illiquid Securities.
.........None of Evergreen*, Limited Market* or U.S. Real Estate* may invest
more than 15% of its net assets in illiquid securities and other securities
which are not readily marketable, including repurchase agreements which have a
maturity of longer than seven days, but excluding securities eligible for resale
under Rule 144A of the Securities Act of 1933, as amended, which the Trustees
have determined to be liquid.
5
<PAGE>
3........Other. In order to comply with certain state blue sky limitations:
-----
...........Evergreen and U.S. Real Estate interpret fundamental investment
restriction 7 to prohibit investments in oil, gas and mineral leases.
...........Evergreen and U.S. Real Estate interpret fundamental investment
restriction 14 to prohibit investment in real estate limited partnerships which
are not readily marketable.
CERTAIN RISK CONSIDERATIONS
...........There can be no assurance that a Fund will achieve its investment
objective and an investment in the Fund involves certain risks which are
described under "Description of the Funds - Investment Objective and Policies"
in the Prospectus.
...........While U. S. Real Estate is technically diversified within the meaning
of the Investment Company Act of 1940, as amended (the "1940 Act"), because the
investment alternatives of the Fund are restricted by a policy of concentrating
at least 65% of its total assets in companies in the real estate industry,
investors should understand that investment in this Fund may be subject to
greater risk and market fluctuation than an investment in a portfolio of
securities representing a broader range of industry investment alternatives.
Borrowing.
The table set forth below describes the extent to which Evergreen
entered into borrowing transactions during the fiscal years ended September 30,
1993 and 1994.
EVERGREEN
Average
Amount
Amount of Debt Average Amount of Average Number of of Debt
Outstanding Debt Outstanding Shares Outstanding Per-Share
Year Ended End of Year During the Year During the Year During Year
- ---------- ----------- ----------------- ------------------ -----------
9/30/93 $0 $ 1,369,863 50,301,298 $0.03
9/30/94 $0 $11,164,110 39,709,107 $0.28
MANAGEMENT
The Trustees and executive officers of the Trusts and the Directors and
executive officers of Limited Market, their ages, addresses and principal
occupations during the past five years are set forth below:
Laurence B. Ashkin (67), 180 East Pearson Street, Chicago, IL-Trustee. Real
estate developer and construction consultant since 1980; President of Centrum
Equities since 1987 and Centrum Properties, Inc. since 1980.
Foster Bam*(68), Greenwich Plaza, Greenwich, CT-Trustee. Partner in the law firm
of Cummings and Lockwood since 1968.
James S. Howell (70), 4124 Crossgate Road, Charlotte, NC-Chairman and Trustee.
Retired Vice President of Lance Inc. (food manufacturing); Chairman of the
Distribution Comm. Foundation for the Carolinas from 1989 to 1993.
Robert J. Jeffries (72), 2118 New Bedford Drive, Sun City Center, FL-Trustee.
Corporate consultant since 1967.
Gerald M. McDonnell (55), 821 Regency Drive, Charlotte, NC-Trustee. Sales
Representative with Nucor-Yamoto Inc. (steel producer) since 1988.
Thomas L. McVerry (56), 4419 Parkview Drive, Charlotte, NC-Trustee. Director of
Carolina Cooperative Federal Credit Union since 1990 and Rexham Corporation from
1988 to 1990; Vice President of Rexham Industries, Inc. (diversified
manufacturer) from 1989 to 1990; Vice President-Finance and Resources, Rexham
Corporation from 1979 to 1990.
6
<PAGE>
William Walt Pettit*(39), Holcomb and Pettit, P.A., 207 West Trade St.,
Charlotte, NC-Trustee. Partner in the law firm Holcomb and Pettit, P.A. since
1990; Attorney, Clontz and Clontz from 1980 to 1990.
Russell A. Salton, III, M.D. (47), Primary Physician Care, 1515 Mockingbird
Lane, Charlotte, NC-Trustee. President, Primary Physician Care since 1990.
Michael S. Scofield (52), 212 S. Tryon Street Suite 980, Charlotte, NC-Trustee.
Attorney, Law Offices of Michael S. Scofield since prior to 1989.
John J. Pileggi (35), 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 (39), 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.
Except for Messrs. Ashkin, Bam and Jeffries, who are not Trustees of
Evergreen Investment Trust (formerly First Union Funds), the Trustees and
officers listed above hold the same positions with a total of ten registered
investment companies offering a total of thirty-one investment funds within the
Evergreen mutual fund complex.
- --------
* Mr. Bam and Mr. Pettit may each be deemed to be an "interested person"
within the meaning of the Investment Company Act of 1940, as amended (the "1940
Act").
The officers of the Trusts and Limited Market 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.
The Funds do not pay any direct remuneration to any officer or
Trustee/Director who is an "affiliated person" of either First Union National
Bank of North Carolina or Evergreen Asset Management Corp. or their affiliates.
See "Investment Adviser." Currently, none of the Trustees/Directors is an
"affiliated person" as defined in the 1940 Act. The Trusts and Limited Market
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 $ 300
Evergreen
Aggressive
Evergreen Real Estate Equity Trust $1,000*
U.S. Real Estate 100
Limited Market 500 100
- --------------------
* This reflects the aggregate retainer paid by Evergreen Real Estate Equity
Trust with respect to both of its investment series, which are Evergreen U.S.
Real Estate Equity Fund and Evergreen Global Real Estate Equity Fund.
Set forth below for each of the Trustees/Directors is the aggregate
compensation paid to such Trustees/Directors by each Trust and Limited Market
for the fiscal year ended September 30, 1994 (fiscal year ended October 31, 1994
for Aggressive.)
7
<PAGE>
Total
Compensation
Aggregate Compensation From Trust From Trusts
& Fund
Name of Evergreen Real Estate Equity Limited Complex Paid
Person Trust* Trust** Market*** to Trustees
Laurence Ashkin 6,050 606 1,050 29,800
Foster Bam 6,060 606 1,050 29,850
James S. Howell 2,600 178 400 26,900
Robert J.
Jeffries 6,050 606 1,050 29,800
Gerald M.
McDonnell 2,900 278 500 26,100
Thomas L.
McVerry 2,900 278 500 26,150
William Walt
Pettit 2,900 278 500 26,100
Russell A.
Salton, III, M.D. 2,900 278 500 26,100
Michael S.
Scofield 2,900 278 500 25,650
* Aggressive commenced operations on June 30, 1995 and, therefore, compensation
with regard to such Fund is not included in this table.
**U.S. Real Estate changed its fiscal year end during the period covered by the
foregoing table from December 31 to September 30. Accordingly, the Trustees fees
reported in the foregoing table reflect, for U.S. Real Estate, the period from
January 1, 1994 to September 30, 1994.
***Limited Market changed its fiscal year end during the period covered by the
foregoing table from May 31 to September 30. Accordingly, the Directors fees
reported in the foregoing table reflect for Limited Market, the period from June
1, 1994 to September 30, 1994.
No officer or Trustee/Director of the Trusts and Limited Market owned Class
A, B or C shares of any Fund as of the date hereof. The number and percent of
outstanding Class Y shares shares of each Fund owned by officers and
Trustees/Directors as a group on June 15, 1995, is as follows:
No. of Shares Owned
By Officers and Ownership by Officers and
Trustees/Directors Trustees/Directors as a %
Name of Fund as a Group of Class Y Shares Outstanding
Evergreen 219,536 .57%
U.S. Real Estate -0- -0-
Limited Market 43,373 1.04%
Aggressive -0- -0-
Set forth below is information with respect to each person, who, to
each Fund's knowledge, owned beneficially or of record more than 5% of a class
of each Fund's total outstanding shares and their aggregate ownership of the
Fund's total outstanding shares as of June 15, 1995.
8
<PAGE>
Name of % of
Name and Address Fund/Class No. of Shares Class/Fund
- ---------------- ---------- ------------- ----------
Fubs & Co. Febo Evergreen/C 3,855 7.20%/0%
Elizabeth A. Lott
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
Fubs & Co. Febo Evergreen/C 7,604 14.20%/.01%
Mary Anne Riordan Rev. Trust
Mary Ann Riordan TTEE
U/A/D 05/04/95
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
First Union National Bank- Evergreen/C 2,631 5.28%/0%
NC C/F
William T. Palmer IRA
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
Fubs & Co. Febo Evergreen/C 7,087 13.19%/.02%
Clara Caudill
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
Fubs & Co. Febo U.S. Real Estate/B 5,440 94.27%/.64%
Alan R. Finnieston
Karen L. Finnieston
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
Stephen A. Lieber U.S. Real Estate/C 1 100%/0%
C/O Lieber & Co.
2500 Westchester Avenue
Purchase, NY 10577
First Union National Bank- U.S. Real Estate/A 108 82.64%/.01%
NC C/F
Daniel E. Polk IRA
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
Constance E. Lieber U.S. Real Estate/Y 74,945 5.91%/8.85%
C/O Lieber & Co.
2500 Westchester Avenue
Purchase, NY 10577
Stephen A. Lieber* U.S. Real Estate/Y 218,380 25.97%/25.79%
C/O Lieber & Co.
2500 Westchester Avenue
Purchase, NY 10577
The Essel Foundation U.S. Real Estate/Y 48,454 5.76%/5.72%
1210 Greacen Point Road
Mamaroneck, NY 10543-4613
Charles Schwab & Co. Inc U.S. Real Estate/Y 84,748 10.08%/10.0%
Reinvest Account
Attn: Mutual Funds Dept.
101 Montgomery Street
San Francisco, CA 94104-4122
Fubs & Co. Cust Limited Market/A 5,610 10.04%/.13%
FBO Edward M. Armfield, Sr.
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
Fubs & Co. Febo Limited Market/A 2,913 5.04%/.07%
Gerald Herson
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
Fubs & Co. Febo Limited Market/A 3,008 5.20%/.07%
9
<PAGE>
Janet P. Lipov and
Larry A. Lipov
C/O First Union National Bank
301 S Tryon Street
Charlotte, NC 28288-0001
Fubs & Co. Febo Limited Market/B 8,150 5.58%/.19%
Jean Pierree Papaix
C/O First Union National Bank
301 S Tryon Street
Charlotte, NC 28288-0001
Charles Schwab & Co. Inc. Limited Market/Y 535,346 12.85%/12.33%
Reinvest Account
Mutual Fund Dept.
101 Montgomery Street
San Francisco, CA 94104-4122
Stephen A. Lieber Limited Market/Y 230,158 5.52%/5.30%
C/O Lieber & Co.
2500 Westchester Avenue
Purchase, NY 10577
- ---------------------------------
*As a result of his ownership of 25.79% of the shares of U.S. Real Estate
on June 15, 1995, Mr. Lieber may be deemed to "control" the Fund, as that term
is defined in the 1940 Act.
INVESTMENT ADVISER
(See also "Management of the Fund" in each Fund's Prospectus)
The investment adviser of Evergreen, U.S. Real Estate and Limited
Market is Evergreen Asset Management Corp., a New York corporation, with offices
at 2500 Westchester Avenue, Purchase, New York or ("Evergreen Asset" or the
"Adviser."). Evergreen Asset is owned by First Union National Bank of North
Carolina ("FUNB" or the "Adviser") which, in turn, is a subsidiary of First
Union Corporation ("First Union"), a bank holding company headquartered in
Charlotte, North Carolina. The investment adviser of Aggressive is FUNB which
provides investment advisory services through its Capital Management Group. The
Directors of Evergreen Asset are Richard K. Wagoner and Barbara I. Colvin. The
executive officers of Evergreen Asset are Stephen A. Lieber, Chairman and
Co-Chief Executive Officer, Nola Maddox Falcone, President and Co-Chief
Executive Officer, Theodore J. Israel, Jr., Executive Vice President, Joseph J.
McBrien, Senior Vice President and General Counsel, and George R. Gaspari,
Senior Vice President and Chief Financial Officer.
On June 30, 1994, Evergreen Asset and Lieber and Company ("Lieber")
were acquired by First Union through certain of its subsidiaries. Evergreen
Asset was acquired by FUNB, a wholly-owned subsidiary (except for directors'
qualifying shares) of First Union, by merger into EAMC Corporation ("EAMC") a
wholly-owned subsidiary of FUNB. EAMC then assumed the name "Evergreen Asset
Management Corp." and succeeded to the business of Evergreen Asset.
Contemporaneously with the succession of EAMC to the business of Evergreen Asset
and its assumption of the name "Evergreen Asset Management Corp.", Evergreen,
U.S. Real Estate and Limited Market entered into a new investment advisory
agreement with EAMC and into a distribution agreement with Evergreen Funds
Distributor, Inc., (the "Distributor") 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.
The partnership interests in Lieber, a New York general partnership,
were acquired by Lieber I Corp. and Lieber II Corp., which are both wholly-owned
subsidiaries of FUNB. The business of Lieber is being continued. The new
advisory and sub-advisory agreements were approved by the shareholders of
Evergreen, U.S. Real Estate and Limited Market at their meeting held on June 23,
1994, and became effective on June 30, 1994. Aggressive, which commenced
operations on June 30, 1995, entered into an advisory agreement with FUNB on
June30, 1995.
10
<PAGE>
Under its Investment Advisory Agreement with each Fund, each Adviser
has agreed to furnish reports, statistical and research services and
recommendations with respect to each Fund's portfolio of investments. In
addition, each Adviser provides office facilities to the Funds and performs a
variety of administrative services. Each Fund pays the cost of all of its other
expenses and liabilities, including expenses and liabilities incurred in
connection with maintaining their registration under the Securities Act of 1933,
as amended, and the 1940 Act, printing prospectuses (for existing shareholders)
as they are updated, state qualifications, 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, each Adviser will pay the costs of printing and
distributing prospectuses used for prospective shareholders.
The method of computing the investment advisory fee for each Fund is
described in such Fund's Prospectus. The advisory fees paid by each Fund for the
three most recent fiscal periods reflected in its registration statement are set
forth below:
EVERGREEN Year Ended Year Ended Year Ended
9/30/94 9/30/93 9/30/92
Advisory Fee $5,738,633 $7,217,230 $7,588,372
========== ========== ==========
U.S. REAL ESTATE Year Ended Year Ended
9/30/94 12/31/93
Advisory Fee $ 57,506 $ 8,624
-------- --------
Waiver ($57,506) ($8,624)
Net Advisory Fee $ 0 $ 0
========= =========
Expense
Reimbursement $9,102 $18,480
------- -------
LIMITED MARKET Year Ended Year Ended Year Ended
9/30/94 5/31/94 5/31/93
Advisory Fee $314,648 $964,383 $658,014
======== ======== ========
The following Funds changed their fiscal year ends during the periods
covered by the foregoing table: 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 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. In addition, U.S. Real Estate
commenced operations on September 1, 1993 and, therefore, the first year's
figures set forth in the table above reflect for U.S. Real Estate, investment
advisory fees paid for the period from commencement of operations through
December 31, 1993.
Expense Limitations
Each Adviser's fee will be reduced by, or the Adviser will reimburse
the Funds for any amount necessary to prevent such expenses (exclusive of taxes,
interest, brokerage commissions and extraordinary expenses, but inclusive of the
Adviser's fee) from exceeding the most restrictive of the expense limitations
imposed by state securities commissions of the states in which the Funds' shares
are then registered or qualified for sale. Reimbursement, when necessary, will
be made monthly in the same manner in which the advisory fee is paid. Currently
the most restrictive state expense limitation is 2.5% of the first $30,000,000
of the Fund's average daily net assets, 2% of the next $70,000,000 of such
assets and 1.5% of such assets in excess of $100,000,000.
In addition, each Adviser has in some instances voluntarily limited
(and may in the future limit) expenses of certain of the Funds. Until U.S. Real
Estate reaches $15 million in net assets, Evergreen Asset has voluntarily agreed
to reimburse the Fund to the extent that the Fund's aggregate operating expenses
(including the Adviser's fee but excluding interest, taxes, brokerage
commissions, Rule 12b-1 distribution fees and extraordinary expenses) exceed
1.50% of its average net assets for any fiscal year.
The Investment Advisory Agreements are terminable, without the payment
of any penalty, on sixty days' written notice, by a vote of the holders of a
majority of each Fund's outstanding shares, or by a vote of a majority of each
Trust's and Limited Market's Trustees/Directors or by the respective Adviser.
The Investment Advisory Agreements will automatically terminate in the event of
their assignment. Each Investment Advisory Agreement provides in substance that
the Adviser shall not be liable for any action or failure to act in accordance
with its duties thereunder in the absence of willful misfeasance, bad faith or
gross negligence on the part of the Adviser or of reckless disregard of its
11
<PAGE>
obligations thereunder. The Investment Advisory Agreements with respect to
Evergreen, U.S. Real Estate and Limited Market were approved by each Fund's
shareholders on June 23, 1994, became effective on June 30, 1994, 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 Trust and Directors of Limited Market including a majority
of those Trustees/Directors who are not parties thereto or "interested persons"
(as defined in the 1940 Act) of any such party, cast in person at a meeting duly
called for the purpose of voting on such approval or a majority of the
outstanding voting shares of each Fund. With respect to Aggressive, the
Investment Advisory Agreement dated June 30, 1995 was initially approved by the
Trustees of Evergreen Trust on April 20, 1995 and it will continue from year to
year with respect to the Fund provided that such continuance is approved
annually by a vote of a majority of the Trustees of Evergreen Trust including a
majority of those Trustees who are not parties thereto or "interested persons"
of any such party cast in person at a meeting duly called for the purpose of
voting on such approval or by a vote of a majority of the outstanding voting
securities of each Fund.
Certain other clients of each Adviser may have investment objectives
and policies similar to those of the Funds. Each Adviser (including the
sub-adviser) may, from time to time, make recommendations which result in the
purchase or sale of a particular security by its other clients simultaneously
with a Fund. If transactions on behalf of more than one client during the same
period increase the demand for securities being purchased or the supply of
securities being sold, there may be an adverse effect on price or quantity. It
is the policy of each Adviser to allocate advisory recommendations and the
placing of orders in a manner which is deemed equitable by the Adviser to the
accounts involved, including the Funds. When two or more of the clients of the
Adviser (including one or more of the Funds) are purchasing or selling the same
security on a given day from the same broker-dealer, such transactions may be
averaged as to price.
Although the investment objectives of the Funds are not the same, and
their investment decisions are made independently of each other, they rely upon
the same resources for investment advice and recommendations. Therefore, on
occasion, when a particular security meets the different investment objectives
of the various Funds, they may simultaneously purchase or sell the same
security. This could have a detrimental effect on the price and quantity of the
security available to each Fund. If simultaneous transactions occur, the Adviser
attempts to allocate the securities, both as to price and quantity, in
accordance with a method deemed equitable to each Fund and consistent with their
different investment objectives. In some cases, simultaneous purchases or sales
could have a beneficial effect, in that the ability of one Fund to participate
in volume transactions may produce better executions for that Fund.
Each Fund has adopted procedures under Rule 17a-7 of the 1940 Act to
permit purchase and sales transactions to be effected between each Fund and the
other registered investment companies for which either Evergreen Asset or FUNB
acts as investment adviser or between the Fund and any advisory clients of
Evergreen Asset, FUNB 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.
Commencing July 1, 1995, Evergreen Asset will provide administrative
services to each of the portfolios of Evergreen Investment Trust for a fee based
on the average daily net assets of each fund administered by Evergreen Asset for
which Evergreen Asset or FUNB also serves as investment adviser, calculated
daily and payable monthly at the following annual rates: .050% on the first $7
billion; .035% on the next $3 billion; .030% on the next $5 billion; .020% on
the next $10 billion; .015% on the next $5 billion; and .010% on assets in
excess of $30 billion. Furman Selz Incorporated, the parent of the Distributor,
serves as sub-administrator to Aggressive and is entitled to receive a fee from
the Fund based on the average daily net assets of Aggressive at a rate
calculated on the total assets of the mutual funds administered by Evergreen
Asset for which FUNB or Evergreen Asset also serve as investment adviser,
calculated in accordance with the following schedule: .0100% of the first $7
billion; .0075% on the next $3 billion; .0050% on the next $15 billion; and
.0040% on assets in excess of $25 billion. The total assets of mutual funds
administered by Evergreen Asset for which Evergreen Asset or FUNB serves as
investment adviser as of March 31, 1995 were approximately $7.95 billion.
12
<PAGE>
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 a front-end sales charge, and, in the
case of Class C shares, without the assessment of a contingent deferred sales
charge after the first year following purchase, while at the same time
permitting the Distributor to compensate broker-dealers in connection with the
sale of such shares. In this regard the purpose and function of the combined
contingent deferred sales charge and distribution services fee on the Class B
shares and the Class C shares, are the same as those of the front-end sales
charge and distribution fee with respect to the Class A shares in that in each
case the sales charge and/or distribution fee provide for the financing of the
distribution of the Fund's shares.
Under the Rule 12b-1 Distribution Plans that have been adopted by each
Fund with respect to each of its Class A, Class B and Class C shares (each a
"Plan" and collectively, the "Plans"), the Treasurer of each Fund reports the
amounts expended under the Plan and the purposes for which such expenditures
were made to the Trustees of each Trust and the Directors of Limited Market for
their review on a quarterly basis. Also, each Plan provides that the selection
and nomination of Trustees/Directors who are not "interested persons" of each
Trust and Limited Market (as defined in the 1940 Act) are committed to the
discretion of such disinterested Trustees/Directors then in office.
Each Adviser may from time to time and from its own funds or such other
resources as may be permitted by rules of the Securities and Exchange Commission
make payments for distribution services to the Distributor; the latter may in
turn pay part or all of such compensation to brokers or other persons for their
distribution assistance.
Evergreen, U.S. Real Estate, and Limited Market commenced offering
Class A, B or C shares on January 3, 1995 and Aggressive commenced offering
Class A, Class B and Class C shares on June 30, 1995. Each Plan with respect to
such Funds became effective on December 30, 1994 (April 20, 1995 with respect to
Aggressive) and was initially approved by the sole shareholder of each Class of
shares of each Fund with respect to which a Plan was adopted on that date and by
the unanimous vote of the Trustees/Directors of each Trust and Limited Market,
including the disinterested Trustees/Directors voting separately, at a meeting
called for that purpose and held on December 13, 1994 (April 20, 1995 with
respect to Aggressive). The Distribution Agreements between each Fund and the
Distributor, pursuant to which distribution fees are paid under the Plans by
each Fund with respect to its Class A, Class B and Class C shares were also
approved at the December 13, 1994 (April 20, 1995 with respect to Aggressive)
meeting by the unanimous vote of the Trustees/Directors, including the
disinterested Trustees/Directors voting separately. Each Plan and Distribution
Agreement will continue in effect for successive twelve-month periods provided,
however, that such continuance is specifically approved at least annually by the
Trustees/Directors of each Trust and Limited Market or by vote of the holders of
a majority of the outstanding voting securities (as defined in the 1940 Act) of
that Class, and, in either case, by a majority of the Trustees/Directors who are
not parties to the Agreement or interested persons, as defined in the 1940 Act,
of any such party (other than as Trustees/Directors) and who have no direct or
indirect financial interest in the operation of the Plan or any agreement
related thereto.
The Plans permit the payment of fees to brokers and others for
distribution and shareholder-related administrative services and to
broker-dealers, depository institutions, financial intermediaries and
administrators for administrative services as to Class A, Class B and Class C
shares. The Plans are designed to (i) stimulate brokers to provide distribution
and administrative support services to each Fund and holders of Class A, Class B
and Class C shares and (ii) stimulate administrators to render administrative
support services to the Fund and holders of Class A, Class B and Class C shares.
The administrative services are provided by a representative who has knowledge
of the shareholder's particular circumstances and goals, and include, but are
not limited to providing office space, equipment, telephone facilities, and
various personnel including clerical, supervisory, and computer, as necessary or
beneficial to establish and maintain shareholder accounts and records;
processing purchase and redemption transactions and automatic investments of
client account cash balances; answering routine client inquiries regarding Class
A, Class B and Class C shares; assisting clients in
13
<PAGE>
changing dividend options, account designations, and addresses; and providing
such other services as the Fund reasonably requests for its Class A, Class B and
Class C shares.
In the event that a Plan or Distribution Agreement is terminated or not
continued with respect to one or more Classes of a Fund, (i) no distribution
fees (other than current amounts accrued but not yet paid) would be owed by the
Fund to the Distributor with respect to that Class or Classes, and (ii) the Fund
would not be obligated to pay the Distributor for any amounts expended under the
Distribution Agreement not previously recovered by the Distributor from
distribution services fees in respect of shares of such Class or Classes through
deferred sales charges.
All material amendments to any Plan or Distribution Agreement must be
approved by a vote of the Trustees/Directors of a Trust and Limited Market or
the holders of the Fund's outstanding voting securities, voting separately by
Class, and in either case, by a majority of the disinterested
Trustees/Directors, cast in person at a meeting called for the purpose of voting
on such approval; and any Plan or Distribution Agreement may not be amended in
order to increase materially the costs that a particular Class of shares of a
Fund may bear pursuant to the Plan or Distribution Agreement without the
approval of a majority of the holders of the outstanding voting shares of the
Class affected. Any Plan or Distribution Agreement may be terminated (a) by a
Fund without penalty at any time by a majority vote of the holders of the
outstanding voting securities of the Fund, voting separately by Class or by a
majority vote of the Trustees/Directors who are not "interested persons" as
defined in the 1940 Act, or (b) by the Distributor. To terminate any
Distribution Agreement, any party must give the other parties 60 days' written
notice; to terminate a Plan only, the Fund need give no notice to the
Distributor. Any Distribution Agreement will terminate automatically in the
event of its assignment.
ALLOCATION OF BROKERAGE
Decisions regarding each Fund's portfolio are made by its Adviser,
subject to the supervision and control of the Trustees/Directors. Orders for the
purchase and sale of securities and other investments are placed by employees of
the Adviser, all of whom, in the case of Evergreen Asset, are associated with
Lieber. In general, the same individuals perform the same functions for the
other funds managed by the Adviser. A Fund will not effect any brokerage
transactions with any broker or dealer affiliated directly or indirectly with
the Adviser unless such transactions are fair and reasonable, under the
circumstances, to the Fund's shareholders. Circumstances that may indicate that
such transactions are fair or reasonable include the frequency of such
transactions, the selection process and the commissions payable in connection
with such transactions.
A substantial portion of the transactions in equity securities for each
Fund will occur on domestic stock exchanges. Transactions on stock exchanges
involve the payment of brokerage commissions. In transactions on stock exchanges
in the United States, these commissions are negotiated, whereas on many foreign
stock exchanges these commissions are fixed. In the case of securities traded in
the foreign and domestic over-the-counter markets, there is generally no stated
commission, but the price usually includes an undisclosed commission or markup.
Over-the-counter transactions will generally be placed directly with a principal
market maker, although the Fund may place an over-the-counter order with a
broker-dealer if a better price (including commission) and execution are
available.
It is anticipated that most purchase and sale transactions involving
fixed income securities will be with the issuer or an underwriter or with major
dealers in such securities acting as principals. Such transactions are normally
on a net basis and generally do not involve payment of brokerage commissions.
However, the cost of securities purchased from an underwriter usually includes a
commission paid by the issuer to the underwriter. Purchases or sales from
dealers will normally reflect the spread between bid and ask prices.
In selecting firms to effect securities transactions, the primary
consideration of each Fund shall be prompt execution at the most favorable
price. 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. To the extent that receipt of these services for which the Adviser or its
affiliates might otherwise have paid, it would tend to reduce their expenses.
14
<PAGE>
Under Section 11(a) of the Securities Exchange Act of 1934, as amended,
and the rules adopted thereunder by the Securities and Exchange Commission,
Lieber may be compensated for effecting transactions in portfolio securities for
a Fund on a national securities exchange provided the conditions of the rules
are met. Each Fund advised by Evergreen Asset has entered into an agreement with
Lieber authorizing Lieber to retain compensation for brokerage services. In
accordance with such agreement, it is contemplated that Lieber, a member of the
New York and American Stock Exchanges, will, to the extent practicable, provide
brokerage services to the Fund with respect to substantially all securities
transactions effected on the New York and American Stock Exchanges. In such
transactions, 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 or that which can be reasonably expected to be offered by an unaffiliated
broker-dealer having comparable execution capability in a similar transaction.
However, no Fund will engage in transactions in which Lieber would be a
principal. While no Fund advised by Evergreen Asset contemplates any ongoing
arrangements with other brokerage firms, brokerage business may be given from
time to time to other firms. In addition, the Trustees/Directors have adopted
procedures pursuant to Rule 17e-1 under the 1940 Act to ensure that all
brokerage transactions with Lieber, as an affiliated broker-dealer, are fair and
reasonable.
Any profits from brokerage commissions accruing to Lieber as a result
of portfolio transactions for the Fund will accrue to FUNB and to its ultimate
parent, First Union. The Investment Advisory Agreements does not provide for a
reduction of the Adviser's fee with respect to any Fund by the amount of any
profits earned by Lieber from brokerage commissions generated by portfolio
transactions of the Fund.
The following chart shows: (1) the brokerage commissions paid by each
Fund advised by Evergreen Asset during their last three fiscal years; (2) the
amount and percentage thereof paid to Lieber; and (3) the percentage of the
total dollar amount of all portfolio transactions with respect to which
commissions have been paid which were effected by Lieber:
EVERGREEN Year Ended Year Ended Year Ended
9/30/94 9/30/93 9/30/92
Total Brokerage $535,816 $534,533 $595,552
Commissions
Dollar Amount and % $478,391 $477,691 $548,346
paid to Lieber 89% 89% 92%
% of Transactions
Effected by Lieber 90% 90% 91%
U.S. REAL ESTATE Period Ended Year Ended
9/30/94 12/31/93
Total Brokerage $49,723 $14,287
Commissions
Dollar Amount and % $48,400 $13,657
paid to Lieber 97% 96%
% of Transactions
Effected by Lieber 98% 97%
LIMITED MARKET Period Ended Year Ended Year Ended
9/30/94 5/31/94 5/31/93
Total Brokerage $94,996 $183,282 $43,664
Commissions
Dollar Amount and % $51,736 $82,104 $25,221
paid to Lieber 54% 45% 58%
% of Transactions
Effected by Lieber 50% 40% 57%
The following Funds changed their fiscal year ends during the periods
covered by the foregoing table: 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 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. In addition, U.S. Real Estate
commenced operations on September 1, 1993 and, therefore, the first year's
figures set forth in the table above reflect commissions paid for the period
from commencement of operations through December 31, 1993.
ADDITIONAL TAX INFORMATION
(See also "Taxes" in the Prospectus)
Each Fund has qualified and intends to continue to qualify for and
elect the tax treatment applicable to regulated investment companies ("RIC")
under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"). (Such qualification does not involve
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<PAGE>
supervision of management or investment practices or policies by the Internal
Revenue Service.) In order to qualify as a regulated investment company, a Fund
must, among other things, (a) derive at least 90% of its gross income from
dividends, interest, payments with respect to proceeds from securities loans,
gains from the sale or other disposition of securities or foreign currencies and
other income (including gains from options, futures or forward contracts)
derived with respect to its business of investing in such securities; (b) derive
less than 30% of its gross income from the sale or other disposition of
securities, options, futures or forward contracts (other than those on foreign
currencies), or foreign currencies (or options, futures or forward contracts
thereon) that are not directly related to the RIC's principal business of
investing in securities (or options and futures with respect thereto) held for
less than three months; and (c) diversify its holdings so that, at the end of
each quarter of its taxable year, (i) at least 50% of the market value of the
Fund's total assets is represented by cash, U.S. government securities and other
securities limited in respect of any one issuer, to an amount not greater than
5% of the Fund's total assets and 10% of the outstanding voting securities of
such issuer, and (ii) not more than 25% of the value of its total assets is
invested in the securities of any one issuer (other than U.S. government
securities and securities of other regulated investment companies). By so
qualifying, a Fund is not subject to Federal income tax if it timely distributes
its investment company taxable income and any net realized capital gains. A 4%
nondeductible excise tax will be imposed on a Fund to the extent it does not
meet certain distribution requirements by the end of each calendar year. Each
Fund anticipates meeting such distribution requirements.
Dividends paid by a Fund from investment company taxable income
generally will be taxed to the shareholders as ordinary income. Investment
company taxable income includes net investment income and net realized
short-term gains (if any). Any dividends received by a Fund from domestic
corporations will constitute a portion of the Fund's gross investment income. It
is anticipated that this portion of the dividends paid by a Fund (other than
distributions of securities profits) will qualify for the 70% dividends-received
deduction for corporations. Shareholders will be informed of the amounts of
dividends which so qualify.
Distributions of the excess of net long-term capital gain over net
short-term capital loss are taxable to shareholders (who are not exempt from
tax) as long-term capital gain, regardless of the length of time the shares of a
Fund have been held by such shareholders. Short-term capital gains distributions
are taxable to shareholders who are not exempt from tax as ordinary income. Such
distributions are not eligible for the dividends-received deduction. Any loss
recognized upon the sale of shares of a Fund held by a shareholder for six
months or less will be treated as a long-term capital loss to the extent that
the shareholder received a long-term capital gain distribution with respect to
such shares.
Distributions of investment company taxable income and any net
short-term capital gains will be taxable as ordinary income as described above
to shareholders (who are not exempt from tax), whether made in shares or in
cash. Shareholders electing to receive distributions in the form of additional
shares will have a cost basis for Federal income tax purposes in each share so
received equal to the net asset value of a share of a Fund on the reinvestment
date.
Distributions by each Fund result in a reduction in the net asset value
of the Fund's shares. Should a distribution reduce the net asset value below a
shareholder's cost basis, such distribution nevertheless would be taxable as
ordinary income or capital gain as described above to shareholders (who are not
exempt from tax), even though, from an investment standpoint, it may constitute
a return of capital. In particular, investors should be careful to consider the
tax implications of buying shares just prior to a distribution. The price of
shares purchased at that time includes the amount of the
forthcoming distribution. Those purchasing just prior to a distribution will
then receive what is in effect a return of capital upon the distribution which
will nevertheless be taxable to shareholders subject to taxes.
Upon a sale or exchange of its shares, a shareholder will realize a
taxable gain or loss depending on its basis in the shares. Such gains or 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
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<PAGE>
ending thirty days after the shares are disposed of. Any loss realized by a
shareholder on the sale of shares of the Fund held by the shareholder for six
months or less will be disallowed to the extent of any exempt interest dividends
received by the shareholder with respect to such shares, and will be treated for
tax purposes as a long-term capital loss to the extent of any distributions of
net capital gains received by the shareholder with respect to such shares.
All distributions, whether received in shares or cash, must be reported
by each shareholder on his or her Federal income tax return. Each shareholder
should consult his or her own tax adviser to determine the state and local tax
implications of Fund distributions.
Shareholders who fail to furnish their taxpayer identification numbers
to a Fund and to certify as to its correctness and certain other shareholders
may be subject to a 31% Federal income tax backup withholding requirement on
dividends, distributions of capital gains and redemption proceeds paid to them
by the Fund. If the withholding provisions are applicable, any such dividends or
capital gain distributions to these shareholders, whether taken in cash or
reinvested in additional shares, and any redemption proceeds will be reduced by
the amounts required to be withheld. Investors may wish to consult their own tax
advisers about the applicability of the backup withholding provisions.
The foregoing discussion relates solely to U.S. Federal income tax law as
applicable to U.S. persons (i.e., U.S. citizens and residents and U.S. domestic
corporations, partnerships, trusts and estates). It does not reflect the special
tax consequences to certain taxpayers (e.g., banks, insurance companies, tax
exempt organizations and foreign persons). Shareholders are encouraged to
consult their own tax advisers regarding specific questions relating to Federal,
state and local tax consequences of investing in shares of a Fund. Each
shareholder who is not a U.S. person should consult his or her tax adviser
regarding the U.S. and foreign tax consequences of ownership of shares of a
Fund, including the possibility that such a shareholder may be subject to a U.S.
withholding tax at a rate of 31% (or at a lower rate under a tax treaty) on
amounts treated as income from U.S. sources under the Code.
NET ASSET VALUE
The following information supplements that set forth in each Prospectus
under the subheading "How to Buy Shares - How the Funds Value Their Shares" in
the Section entitled "Purchase and Redemption of Shares".
The public offering price of shares of a Fund is its net asset value,
plus, in the case of Class A shares, a sales charge which will vary depending on
the purchase alternative chosen by the investor, as more fully described in the
Prospectus. See "Purchase of Shares - Class A Shares - Front-End Sales Charge
Alternative. " On each Fund business day on which a purchase or redemption order
is received by a Fund and trading in the types of securities in which a Fund
invests might materially affect the value of Fund shares, the per share net
asset value of each such Fund is computed in accordance with the Declaration of
Trust/Articles of Incorporation and By-Laws governing each Fund as of the next
close of regular trading on the New York Stock Exchange (the "Exchange")
(currently 4:00 p.m. Eastern time) by dividing the value of the Fund's total
assets, less its liabilities, by the total number of its shares then
outstanding. A Fund business day is any weekday, exclusive of national holidays
on which the Exchange is closed and Good Friday. For each Fund, securities for
which the primary market is on a domestic or foreign exchange and
over-the-counter securities admitted to trading on the NASDAQ National List are
valued at the last quoted sale or, if no sale, at the mean of closing bid and
asked prices and portfolio bonds are presently valued by a recognized pricing
service when such prices are believed to reflect the fair value of the security.
Over-the-counter securities not included in the NASDAQ National List for which
market quotations are readily available are valued at a price quoted by one or
more brokers. If accurate quotations are not available, securities will be
valued at fair value determined in good faith by the Board of
Trustees/Directors.
The respective per share net asset values of the Class A, Class B,
Class C and Class Y shares are expected to be substantially the same. Under
certain circumstances, however, the per share net asset values of the Class B
and Class C shares may be lower than the per share net asset value of the Class
A shares (and, in turn, that of Class A shares may be lower than Class Y shares)
as a result of the greater daily expense accruals, relative to Class A and Class
Y shares, of Class B and Class C shares relating to distribution services
17
<PAGE>
fees and, to the extent applicable, transfer agency fees and the fact that Class
Y shares bear no additional distribution or transfer agency related fees. While
it is expected that, in the event each Class of shares of a Fund realizes net
investment income or does not realize a net operating loss for a period, the per
share net asset values of the four classes will tend to converge immediately
after the payment of dividends, which dividends will differ by approximately the
amount of the expense accrual differential among the Classes, there is no
assurance that this will be the case. In the event one or more Classes of a Fund
experiences a net operating loss for any fiscal period, the net asset value per
share of such Class or Classes will remain lower than that of Classes that
incurred lower expenses for the period.
To the extent that any Fund invests in non-U.S. dollar denominated
securities, the value of all assets and liabilities will be translated into
United States dollars at the mean between the buying and selling rates of the
currency in which such a security is denominated against United States dollars
last quoted by any major bank. If such quotations are not available, the rate of
exchange will be determined in accordance with policies established by the Fund.
The Trustees/Directors will monitor, on an ongoing basis, a Fund's method of
valuation. Trading in securities on European and Far Eastern securities
exchanges and over-the-counter markets is normally completed well before the
close of business on each business day in New York. In addition, European or Far
Eastern securities trading generally or in a particular country or countries may
not take place on all business days in New York. Furthermore, trading takes
place in various foreign markets on days which are not business days in New York
and on which the Fund's net asset value is not calculated. Such calculation does
not take place contemporaneously with the determination of the prices of the
majority of the portfolio securities used in such calculation. Events affecting
the values of portfolio securities that occur between the time their prices are
determined and the close of the Exchange will not be reflected in a Fund's
calculation of net asset value unless the Trustees/Directors deem that the
particular event would materially affect net asset value, in which case an
adjustment will be made. Securities transactions are accounted for on the trade
date, the date the order to buy or sell is executed. Dividend income and other
distributions are recorded on the ex-dividend date, except certain dividends and
distributions from foreign securities which are recorded 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 "front-end sales charge alternative"), with a contingent deferred
sales charge (the deferred sales charge alternative"), or without any front-end
sales charge, but with a contingent deferred sales charge imposed only during
the first year after purchase (the "level-load alternative"), as described
below. Class Y shares which, as described below, are not offered to the general
public, are offered without any front-end or contingent sales charges. Shares of
each Fund are offered on a continuous basis through (i) investment dealers that
are members of the National Association of Securities Dealers, Inc. and have
entered into selected dealer agreements with the Distributor ("selected
dealers"), (ii) depository institutions and other financial intermediaries or
their affiliates, that have entered into selected agent agreements with the
Distributor ("selected agents"), or (iii) the Distributor. The minimum for
initial investments is $1,000; there is no minimum for subsequent investments.
The subscriber may use the Share Purchase Application available from the
Distributor for his or her initial investment. Sales personnel of selected
dealers and agents distributing a Fund's shares may receive differing
compensation for selling Class A, Class B or Class C shares.
Investors may purchase shares of a Fund in the United States either
through selected dealers or agents or directly through the Distributor. A Fund
reserves the right to suspend the sale of its shares to the public in response
to conditions in the securities markets or for other reasons.
Each Fund will accept unconditional orders for its shares to be
executed at the public offering price equal to the net asset value next
determined (plus for Class
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<PAGE>
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 3:00 p.m. New York time on a Fund
business day, the order to purchase shares is automatically placed the same Fund
business day for non-money market funds, and two days following the day the
order is received for money market funds, and the applicable public offering
price will be the public offering price determined as of the close of business
on such business day. Full and fractional shares are credited to a subscriber's
account in the amount of his or her subscription. As a convenience to the
subscriber, and to avoid unnecessary expense to a Fund, stock certificates
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.
Alternative Purchase Arrangements
Each Fund issues four classes of shares: (i) Class A shares, which are
sold to investors choosing the front-end sales charge alternative; (ii) Class B
shares, which are sold to investors choosing the deferred sales charge
alternative; (iii) Class C shares, which are sold to investors choosing the
level-load sales charge alternative; and (iv) Class Y shares, which are offered
only to (a) persons who at or prior to December 30, 1994 owned shares in a
mutual fund advised by Evergreen Asset, (b) certain investment advisory clients
of the Advisers and their affiliates, and (c) institutional investors. The four
classes of shares each represent an interest in the same portfolio of
investments of the Fund, have the same rights and are identical in all respects,
except that (I) only Class A, Class B and Class C shares are subject to a Rule
12b-1 distribution fee, (II) Class A shares bear the expense of the front-end
sales charge and Class B and Class C shares bear the expense of the deferred
sales charge, (III) Class B shares and Class C shares each bear the expense of a
higher Rule 12b-1 distribution services fee than Class A shares and, in the case
of Class B shares, higher transfer agency costs, (IV) with the exception of
Class Y shares, each Class of each Fund has exclusive voting rights with respect
to provisions of the Rule 12b-1 Plan pursuant to which its distribution services
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
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<PAGE>
shares prior to conversion, or the accumulated distribution services fee on
Class C shares, would be less than the front-end sales charge and accumulated
distribution services fee on Class A shares purchased at the same time, and to
what extent such differential would be offset by the higher return of Class A
shares. Class B and Class C shares will normally not be suitable for the
investor who qualifies to purchase Class A shares at the lowest applicable sales
charge. For this reason, the Distributor will reject any order (except orders
for Class B shares from certain retirement plans) for more than $2,500,000 for
Class B 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 front-end sales charges are deducted at the
time of purchase, investors purchasing Class A shares would not have all their
funds invested initially and, therefore, would initially own fewer shares.
Investors not qualifying for reduced front-end sales charges who expect to
maintain their investment for an extended period of time might consider
purchasing Class A shares because the accumulated continuing distribution
charges on Class B shares or Class C shares may exceed the front-end sales
charge on Class A shares during the life of the investment. Again, however, such
investors must weigh this consideration against the fact that, because of such
front-end sales charges, not all their funds will be invested initially.
Other investors might determine, however, that it would be more
advantageous to purchase Class B shares or Class C shares in order to have all
their funds invested initially, although remaining subject to higher continuing
distribution services fees and, in the case of Class B shares, being subject to
a contingent deferred sales charge for a seven-year period. For example, based
on current fees and expenses, an investor subject to the 4.75% front-end sales
charge would have to hold his or her investment approximately seven years for
the Class B and Class C distribution services fees, to exceed the front-end
sales charge plus the accumulated distribution services fee of Class A shares.
In this example, an investor intending to maintain his or her investment for a
longer period might consider purchasing Class A shares. This example does not
take into account the time value of money, which further reduces the impact of
the Class B and Class C distribution services fees on the investment,
fluctuations in net asset value or the effect of different performance
assumptions.
Those investors who prefer to have all of their funds invested
initially but may not wish to retain Fund shares for the seven year period
during which Class B shares are subject to a contingent deferred sales charge
may find it more advantageous to purchase Class C shares.
With respect to each Fund, the Trustees/Directors have determined that
currently no conflict of interest exists between or among the Class A, Class B,
Class C and Class Y shares. On an ongoing basis, the Trustees/Directors,
pursuant to their fiduciary duties under the 1940 Act and state laws, will seek
to ensure that no such conflict arises.
Front-end Sales Charge Alternative--Class A Shares
The public offering price of Class A shares for purchasers choosing the
front-end sales charge alternative is the net asset value plus a sales charge as
set forth in the Prospectus for each Fund.
Shares issued pursuant to the automatic reinvestment of income
dividends or capital gains distributions are not subject to any sales charges.
The Fund receives the entire net asset value of its Class A shares sold to
investors. The Distributor's commission is the sales charge set forth in the
Prospectus for each Fund, less any applicable discount or commission "reallowed"
to selected dealers and agents. The Distributor will reallow discounts to
selected dealers and agents in the amounts indicated in the table in the
Prospectus. In this regard, the Distributor may elect to reallow the entire
sales charge to selected dealers and agents for all sales with respect to which
orders are placed with the Distributor.
Set forth below is an example of the method of computing the offering
price of the Class A shares of each Fund. The example assumes a purchase of
Class A shares of a Fund aggregating less than $100,000 subject to the schedule
of sales charges set forth in the Prospectus at a price based upon the net asset
value of Class A shares of each Fund at the end of each Fund's latest fiscal
year and, with respect to Aggressive, as at June 30, 1995.
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Net Per Share Offering
Asset Sales Price
Value Charge Date Per Share
Evergreen $14.62 $ .73 9/30/94 $15.35
U.S. Real
Estate $10.07 $ .50 9/30/94 $10.57
Limited Market $21.74 $1.08 9/30/94 $22.82
Aggressive $15.63 $ .74 6/23/95 $16.37
Prior to January 3, 1995, shares of the Funds then offering shares were
offered exclusively on a no-load basis and, accordingly, no underwriting
commissions were paid in respect of sales of shares of the Funds or retained by
the Distributor. In addition, since Class B and Class C shares were not offered
prior to January 3, 1995, contingent deferred sales charges have been paid to
the Distributor with respect to Class B or Class C shares only since January 3,
1995.
Investors choosing the front-end sales charge alternative may under
certain circumstances be entitled to pay reduced sales charges. The
circumstances under which such investors may pay reduced sales charges are
described below.
Combined Purchase Privilege. Certain persons may qualify for the sales
charge reductions by combining purchases of shares of one or more Evergreen
mutual funds other than money market funds into a single "purchase", if the
resulting "purchase" totals at least $100,000. The term "purchase" refers to:
(i) a single purchase by an individual, or to concurrent purchases, which in the
aggregate are at least equal to the prescribed amounts, by an individual, his or
her spouse and their children under the age of 21 years purchasing shares for
his, her or their own account(s); (ii) a single purchase by a trustee or other
fiduciary purchasing shares for a single trust, estate or single fiduciary
account although more than one beneficiary is involved; or (iii) a single
purchase for the employee benefit plans of a single employer. The term
"purchase" also includes purchases by any "company", as the term is defined in
the 1940 Act, but does not include purchases by any such company which has not
been in existence for at least six months or which has no purpose other than the
purchase of shares of a Fund or shares of other registered investment companies
at a discount. The term "purchase" does not include purchases by any group of
individuals whose sole organizational nexus is that the participants therein are
credit card holders of a company, policy holders of an insurance company,
customers of either a bank or broker-dealer or clients of an investment adviser.
A "purchase" may also include shares, purchased at the same time through a
single selected dealer or agent, of any Evergreen mutual fund. Currently, the
Evergreen mutual funds include:
Evergreen Fund
Evergreen Global Real Estate Equity Fund
Evergreen U.S. Real Estate Equity Fund
The Evergreen Limited Market Fund, Inc.
Evergreen Growth and Income Fund
Evergreen Total Return Fund
Evergreen American Retirement Fund
Evergreen Small Cap Equity Income Fund
Evergreen Tax Strategic Foundation Fund
Evergreen Short-Intermediate Municipal Fund
Evergreen Short-Intermediate Municipal Fund-CA
Evergreen Tax Exempt Money Market Fund
Evergreen Money Market Fund
Evergreen Foundation Fund
Evergreen Florida High Income Fund
Evergreen Aggressive Growth Fund
Evergreen Balanced Fund*
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<PAGE>
Evergreen Utility Fund*
Evergreen Value Fund*
Evergreen U.S. Government Fund*
Evergreen Fixed Income Fund*
Evergreen Managed Bond Fund*
Evergreen Emerging Markets Growth Fund*
Evergreen International Equity Fund*
Evergreen Treasury Money Market Fund*
Evergreen Florida Municipal Bond Fund*
Evergreen Georgia Municipal Bond Fund*
Evergreen North Carolina Municipal Bond Fund*
Evergreen South Carolina Municipal Bond Fund*
Evergreen Virginia Municipal Bond Fund*
Evergreen High Grade Tax Free Fund*
* Prior to July 7, 1995, each Fund was named "First Union" instead of
"Evergreen."
Prospectuses for the Evergreen mutual funds may be obtained without charge
by contacting the Distributor or the Advisers at the address or telephone number
shown on the front cover of this Statement of Additional Information.
Cumulative Quantity Discount (Right of Accumulation). An investor's
purchase of additional Class A shares of a Fund may qualify for a Cumulative
Quantity Discount. The applicable sales charge will be based on the total of:
(i) the investor's current purchase;
(ii) the net asset value (at the close of business on the
previous day) of (a) all Class A, Class B and Class C shares
of the Fund held by the investor and (b) all such shares of
any other Evergreen mutual fund held by the investor; and
(iii) the net asset value of all shares described in paragraph
(ii) owned by another shareholder eligible to combine his or
her purchase with that of the investor into a single
"purchase" (see above).
For example, if an investor owned Class A, 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 Prospectus by means of a written Statement of
Intention, which expresses the investor's intention to invest not less than
$100,000 within a period of 13 months in Class A shares (or Class A, Class B
and/or Class C shares) of the Fund or any other Evergreen mutual fund. Each
purchase of shares under a Statement of Intention will be made at the public
offering price or prices applicable at the time of such purchase to a single
transaction of the dollar amount indicated in the Statement of Intention. At the
investor's option, a Statement of Intention may include purchases of Class A, 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
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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 number
shown on the cover of this Statement of Additional Information.
Investments Through Employee Benefit and Savings Plans. Certain
qualified and non-qualified benefit and savings plans may make shares of the
Evergreen mutual funds available to their participants. Investments made by such
employee benefit plans may be exempt from any applicable front-end sales charges
if they meet the criteria set forth in the Prospectus under "Class A
Shares-Front End Sales Charge Alternative". The Advisers may provide
compensation to organizations providing administrative and recordkeeping
services to plans which make shares of the Evergreen mutual funds available to
their participants.
Reinstatement Privilege. A Class A shareholder who has caused any or
all of his or her shares of the Fund to be redeemed or repurchased may reinvest
all or any portion of the redemption or repurchase proceeds in Class A shares of
the Fund at net asset value without any sales charge, provided that such
reinvestment is made within 30 calendar days after the redemption or repurchase
date. Shares are sold to a reinvesting shareholder at the net asset value next
determined as described above. A reinstatement pursuant to this privilege will
not cancel the redemption or repurchase transaction; therefore, any gain or loss
so realized will be recognized for Federal tax purposes except that no loss will
be recognized to the extent that the proceeds are reinvested in shares of the
Fund. The reinstatement privilege may be used by the shareholder only once,
irrespective of the number of shares redeemed or repurchased, except that the
privilege may be used without limit in connection with transactions whose sole
purpose is to transfer a shareholder's interest in the Fund to his or her
individual retirement account or other qualified retirement plan account.
Investors may exercise the reinstatement privilege by written request sent to
the Fund at the address shown on the cover of this Statement of Additional
Information.
Sales at Net Asset Value. In addition to the categories of investors
set forth in the Prospectus, each Fund may sell its Class A shares at net asset
value, i.e., without any sales charge, to: (i) certain investment advisory
clients of the Advisers or their affiliates; (ii) officers and present or former
Trustees/Directors of the Trust or Limited Market; present or former trustees of
other investment companies managed by the Advisers; 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; (iv) persons participating in a fee-based program,
sponsored and maintained by a registered broker-dealer and approved by the
Distributor,
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pursuant to which such persons pay an asset-based fee to such broker-dealer, or
its affiliate or agent, for service in the nature of investment advisory or
administrative services. These provisions are intended to provide additional
job-related incentives to persons who serve the Funds or work for companies
associated with the Funds and selected dealers and agents of the Funds. Since
these persons are in a position to have a basic understanding of the nature of
an investment company as well as a general familiarity with the Fund, sales to
these persons, as compared to sales in the normal channels of distribution,
require substantially less sales effort. Similarly, these provisions extend the
privilege of purchasing shares at net asset value to certain classes of
institutional investors who, because of their investment sophistication, can be
expected to require significantly less than normal sales effort on the part of
the Funds and the Distributor.
Deferred Sales Charge Alternative--Class B Shares
Investors choosing the deferred sales charge alternative purchase Class
B shares at the public offering price equal to the net asset value per share of
the Class B shares on the date of purchase without the imposition of a sales
charge at the time of purchase. The Class B shares are sold without a front-end
sales charge so that the full amount of the investor's purchase payment is
invested in the Fund initially.
Proceeds from the contingent deferred sales charge are paid to the
Distributor and are used by the Distributor to defray the expenses of the
Distributor related to providing distribution-related services to the Fund in
connection with the sale of the Class B shares, such as the payment of
compensation to selected dealers and agents for selling Class B shares. The
combination of the contingent deferred sales charge and the distribution
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
contingent deferred sales charge will be assessed on shares derived from
reinvestment of dividends or capital gains distributions. The amount of the
contingent deferred sales charge, if any, will vary depending on the number of
years from the time of payment for the purchase of Class B shares until the time
of redemption of such shares.
In determining the contingent deferred sales charge applicable to a
redemption, it will be assumed, that the redemption is first of any Class A
shares or Class C shares in the shareholder's Fund account, second of Class B
shares held for over 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
contingent deferred sales charge of $16).
The contingent deferred sales charge is waived on redemptions of shares
(i) following the death or disability, as defined in the Code, of a shareholder,
or (ii) to the extent that the redemption represents a minimum required
distribution from an individual retirement account or other retirement plan to a
shareholder who has attained the age of 70-1/2.
Conversion Feature. At the end of the period ending seven years after the
end of the calendar month in which the shareholder's purchase order was
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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.
Level-Load Alternative--Class C Shares
Investors choosing the level load sales charge alternative purchase
Class C shares at the public offering price equal to the net asset value per
share of the Class C shares on the date of purchase without the imposition of a
front-end sales charge. However, you will pay a 1.0% contingent deferred sales
charge if you redeem shares during the first year after purchase. No charge is
imposed in connection with redemptions made more than one year from the date of
purchase. Class C shares are sold without a front-end sales charge so that the
Fund will receive the full amount of the investor's purchase payment and after
the first year without a contingent deferred sales charge so that the investor
will receive as proceeds upon redemption the entire net asset value of his or
her Class C shares. The Class C distribution services fee enables the Fund to
sell Class C shares without either a front-end or contingent deferred sales
charge. However, unlike Class B shares, Class C shares do not convert to any
other class shares of the Fund. Class C shares incur higher distribution
services fees than Class A shares, and will thus have a higher expense ratio and
pay correspondingly lower dividends than Class A shares.
Class Y Shares
Class Y shares are not offered to the general public and are available
only to (i) persons who at or prior to December 30, 1994 owned shares in a
mutual fund advised by Evergreen Asset, (ii) certain investment advisory clients
of the Advisers and their affiliates, and (iii) institutional investors. Class Y
shares do not bear any Rule 12b-1 distribution expenses and are not subject to
any front-end or contingent deferred sales charges.
GENERAL INFORMATION ABOUT THE FUNDS
(See also "Other Information - General Information" in each Fund's Prospectus)
Capitalization and Organization
Evergreen Limited Market Fund, Inc. is a Maryland corporation. Each of the
Evergreen Fund and Evergreen Aggressive Growth Fund is a separate series of the
Evergreen Trust, a Massachusetts business trust. The Evergreen U.S. Real Estate
Equity Fund is a series of Evergreen Real Estate Equity Trust, a Massachusetts
business Trust. The Evergreen Aggressive Growth Fund, which is a newly created
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series of Evergreen Trust, acquired substantially all of the assets of ABT
Emerging Growth Fund (the "ABT Fund") on June 30, 1995. The above-named Trusts
are individually referred to in this Statement of Additional Information as the
"Trust" and collectively as the "Trusts." Each Trust is governed by a board of
trustees. Unless otherwise stated, references to the "Board of Trustees" or
"Trustees" in this Statement of Additional Information refer to the Trustees of
all the Trusts.
Evergreen and Aggressive may issue an unlimited number of shares of
beneficial interest with a $0.001 par value. U.S. Real Estate may issue an
unlimited number of shares of beneficial interest with a $0.0001 par value. All
shares of these Funds have equal rights and privileges. Each share is entitled
to one vote, to participate equally in dividends and distributions declared by
the Funds and on liquidation to their proportionate share of the assets
remaining after satisfaction of outstanding liabilities. Shares of these Funds
are fully paid, nonassessable and fully transferable when issued and have no
pre-emptive, conversion or exchange rights. Fractional shares have
proportionally the same rights, including voting rights, as are provided for a
full share.
The authorized capital stock of Limited Market consists of 25,000,000
shares of common stock having a par value of $0.10 per share. Each share of
Limited Market is entitled to one vote and to participate equally in dividends
and distributions declared by Limited Market and, on liquidation, to its
proportionate share of the net assets remaining after satisfaction of
outstanding liabilities (including fractional shares on a proportional basis).
All shares of Limited Market when issued will be fully paid and non-assessable
and have no preemptive, conversion or exchange rights. Fractional shares have
proportionally the same rights, including voting rights, as are provided for a
full share. The rights of the holders of shares of common stock may not be
modified except by vote of the holders of a majority of the outstanding shares.
Under each Trust's Declaration of Trust, each Trustee will continue in
office until the termination of the 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 Trust or the 1940 Act.
Under the Bylaws of Limited Market, each Director will continue in
office until such time as less than a majority of the Directors then holding
office have been elected by the shareholders or upon the occurrence of any of
the conditions described under Section 16 of the 1940 Act. As a result, normally
no annual or regular meetings of shareholders will be held, unless otherwise
required by the Bylaws or the 1940 Act.
Shares have noncumulative voting rights, which means that the holders
of more than 50% of the shares voting for the election of Trustees/Directors can
elect 100% of the Trustees/Directors if they choose to do so and in such event
the holders of the remaining shares so voting will not be able to elect any
Trustees/Directors.
The Trustees/Directors of each Trust and Limited Market are authorized
to reclassify and issue any unissued shares to any number of additional series
without shareholder approval. Accordingly, in the future, for reasons such as
the desire to establish one or more additional portfolios of a Trust or Limited
Market with different investment objectives, policies or restrictions,
additional series of shares may be created by one or more 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/Directors, that affected all portfolios in substantially
the same manner. As to matters affecting each portfolio differently, such as
approval of the Investment Advisory Agreement and changes in investment policy,
shares of each portfolio would vote separately.
In addition any Fund may, in the future, create additional classes of
shares which represent an interest in the same investment portfolio. Except for
the different distribution related an other specific costs borne by such
additional classes, they will have the same voting and other rights described
for the existing classes of each Fund.
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Procedures for calling a shareholders' meeting for the removal of the
Trustees/Directors of each Trust or Limited Market, similar to those set forth
in Section 16(c) of the 1940 Act will be available to shareholders of each Fund.
The rights of the holders of shares of a series of a Fund may not be modified
except by the vote of a majority of the outstanding shares of such series.
An order has been received from the Securities and Exchange Commission
permitting the issuance and sale of multiple classes of shares representing
interests in each Fund. In the event a Fund were to issue additional Classes of
shares other than those described herein, no further relief from the Securities
and Exchange Commission would be required.
Distributor
Evergreen Funds Distributor, Inc. (the "Distributor"), 230 Park Avenue,
New York, New York 10169, serves as each Fund's principal underwriter, and as
such may solicit orders from the public to purchase shares of any Fund. The
Distributor is not obligated to sell any specific amount of shares and will
purchase shares for resale only against orders for shares. Under the Agreement
between the Fund and the Distributor, the Fund has agreed to indemnify the
Distributor, in the absence of its willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations thereunder, against certain
civil liabilities, including liabilities under the Securities Act of 1933, as
amended.
Counsel
Sullivan & Worcester, Washington, D.C., serves as counsel to the Funds.
Independent Auditors
Ernst & Young LLP has been selected to be the independent auditors of
Limited Market.
Price Waterhouse LLP has been selected to be the independent auditors of
Evergreen, U.S. Real Estate and Aggressive.
PERFORMANCE INFORMATION
Total Return
From time to time a Fund may advertise its "total return." Computed
separately for each class, the Fund's "total return" is its average annual
compounded total return for recent one, five, and ten-year periods (or the
period since the Fund's inception). The Fund's total return for such a period is
computed by finding, through the use of a formula prescribed by the Securities
and Exchange Commission, the average annual compounded rate of return over the
period that would equate an assumed initial amount invested to the value of such
investment at the end of the period. For purposes of computing total return,
income dividends and capital gains distributions paid on shares of the Fund are
assumed to have been reinvested when paid and the maximum sales charge
applicable to purchases of Fund shares is assumed to have been paid. The Fund
will include performance data for Class A, Class B, Class C and Class Y shares
in any advertisement or information including performance data of the Fund.
With respect to Evergreen, U.S. Real Estate and Limited Market, the
shares of each Fund outstanding prior to January 3, 1995 have been reclassified
as Class Y shares. With respect to Aggressive, the Fund is the successor of the
ABT Fund and the information presented is with respect to the ABT Fund's Class A
shares, the only outstanding class. The average annual compounded total return
for each Class of shares offered by the Funds for the most recently completed
one, five and ten year fiscal periods is set forth in the table below.
EVERGREEN 1 Year 5 Years 10 Years
Ended Ended Ended
9/30/94 9/30/94 9/30/94
Class A 1.12% 5.73% 11.57%
Class B 1.16% 6.46% 12.11%
Class C 5.16% 6.77% 12.11%
Class Y 6.16% 6.77% 12.11%
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LIMITED 1 Year 5 Years 10 Years
MARKET Ended Ended Ended
9/30/94 9/30/94 9/30/94
Class A -2.74% 8.58% 15.32%
Class B -2.71% 9.37% 15.89%
Class C 1.15% 9.64% 15.89%
Class Y 2.11% 9.64% 15.89%
U.S. REAL From
ESTATE 1 Year 9/1/93
Ended (inception)
9/30/94 to 12/31/94
Class A -6.89% -3.37%
Class B -7.11% -2.62%
Class C -3.22% 1.08%
Class Y -2.25% 1.08%
AGGRESSIVE 1 Year 5 Years 10 Years
Ended Ended Ended
4/30/95 4/30/95 4/30/95
Class A - 4.68% 17.16% 13.91%
Class B - 4.93% 18.11% 14.46%
Class C - .93% 18.31% 14.46%
Class Y .07% 18.31% 14.46%
The performance numbers for Evergreen, U.S. Real Estate and Limited
Market for the Class A, Class B and Class C shares are hypothetical numbers
based on the performance for Class Y shares as adjusted for any applicable
front-end sales charge or contingent deferred sales charge. For Aggressive, the
performance numbers for the Class B, Class C and Class Y shares are hypothetical
numbers based upon the performance for the Class A shares of ABT Emerging
Growth Fund, which is the predecessor to Aggressive for accounting purposes as
adjusted for any applicable contingent deferred sales charge.
A Fund's total return is not fixed and will fluctuate in response to
prevailing market conditions or as a function of the type and quality of the
securities in a Fund's portfolio and its expenses. Total return information is
useful in reviewing a Fund's performance but such information may not provide a
basis for comparison with bank deposits or other investments which pay a fixed
yield for a stated period of time. An investor's principal invested in a Fund is
not fixed and will fluctuate in response to prevailing market conditions.
YIELD CALCULATIONS
From time to time, a Fund may quote its yield in advertisements or in
reports or other communications to shareholders. Yield quotations are expressed
in annualized terms and may be quoted on a compounded basis. Yields are computed
by dividing the Fund's interest income (as defined in the SEC yield formula) for
a given 30-day or one month period, net of expenses, by the average number of
shares entitled to receive distributions during the period, dividing this figure
by the Fund's net asset value per share at the end of the period and annualizing
the result (assuming compounding of income) in order to arrive at an annual
percentage rate. The formula for calculating yield is as follows:
YIELD = 2[(a-b+1)6-1]
cd
Where a = Interest earned during the period
b = Expenses accrued for the period (net of reimbursements) c = The
average daily number of shares outstanding during the period
that were entitled to receive dividends
d = The maximum offering price per share on the last day of the period
Income is calculated for purposes of yield quotations in accordance
with standardized methods applicable to all stock and bond funds. Gains and
losses generally are excluded from the calculation. Income calculated for
purposes of determining a Fund's yield differs from income as determined for
other accounting purposes. Because of the different accounting methods used, and
because of the compounding assumed in yield calculations, the yields quoted for
a Fund may differ from the rate of distributions a
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Fund paid over the same period, or the net investment income reported in a
Fund's financial statements.
Yield information is useful in reviewing a Fund's performance, but
because yields fluctuate, such information cannot necessarily be used to compare
an investment in a Fund's shares with bank deposits, savings accounts and
similar investment alternatives which often provide an agreed or guaranteed
fixed yield for a stated period of time. Shareholders should remember that yield
is a function of the kind and quality of the instruments in the Funds'
investment portfolios, portfolio maturity, operating expenses and market
conditions.
It should be recognized that in periods of declining interest rates the
yields will tend to be somewhat higher than prevailing market rates, and in
periods of rising interest rates the yields will tend to be somewhat lower.
Also, when interest rates are falling, the inflow of net new money to a Fund
from the continuous sale of its shares will likely be invested in instruments
producing lower yields than the balance of the Fund's investments, thereby
reducing the current yield of the Fund. In periods of rising interest rates, the
opposite can be expected to occur.
The yield of the following Funds for the thirty-day period ended May
31, 1995 for each Class of shares offered by the Funds is set forth in the table
below:
Evergreen
Class A .31%
Class B -.39%
Class C -.39%
Class Y .51%
U.S. Real Estate
Class A 3.71%
Class B 3/15%
Class C N/A
Class Y 4.12%
Limited Market Class A -1.09% Class B -1.76% Class C -1.76% Class Y - .93%
Non-Standardized Performance
In addition to the performance information described above, a Fund may
provide total return information for designated periods, such as for the most
recent six months or most recent twelve months. This total return information is
computed as described under "Total Return" above except that no annualization is
made.
GENERAL
From time to time, a Fund may quote its performance in advertising and other
types of literature as compared to the performance of the Standard & Poor's 500
Composite Stock Price Index, the Dow Jones Industrial Average, Russell 2000
Index, or any other commonly quoted index of common stock prices. The Standard &
Poor's 500 Composite Stock Price Index, the Dow Jones Industrial Average and the
Russell 2000 Index are unmanaged indices of selected common stock prices. A
Fund's performance may also be compared to those of other mutual funds having
similar objectives. This comparative performance would be expressed as a ranking
prepared by Lipper Analytical Services, Inc. or similar independent services
monitoring mutual fund performance. A Fund's performance will be calculated by
assuming, to the extent applicable, reinvestment of all capital gains
distributions and income dividends paid. Any such comparisons may be useful to
investors who wish to compare a Fund's past performance with that of its
competitors. Of course, past performance cannot be a guarantee of future
results.
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Additional Information
Any shareholder inquiries may be directed to the shareholder's broker or to
each Adviser at the address or telephone number shown on the front cover of this
Statement of Additional Information. This Statement of Additional Information
does not contain all the information set forth in the Registration Statement
filed by the Trusts and Limited Market with the Securities and Exchange
Commission under the Securities Act of 1933. Copies of the Registration
Statement may be obtained at a reasonable charge from the Securities and
Exchange Commission or may be examined, without charge, at the offices of the
Securities and Exchange Commission in Washington, D.C.
FINANCIAL STATEMENTS
Each Fund's financial statements appearing in their most current fiscal
year Annual Report (or in the case of Aggressive, its balance sheet as of June
23, 1995) to shareholders and the report thereon of the independent auditors
appearing therein, namely Ernst & Young, LLP (in the case of Limited Market),
Price Waterhouse LLP (in the case of Evergreen, U.S. Real Estate and Aggressive
are incorporated by reference in the Statement of Additional Information. The
Annual Reports to Shareholders for each Fund, which contain the referenced
statements, are available upon request and without charge.
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APPENDIX A - NOTE, BOND AND COMMERCIAL PAPER RATINGS
NOTE RATINGS
Moody's Investors Service, Inc.: 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, Inc.: SP-1 -- Very strong or strong
capacity to pay principal and interest. SP-2 -- Satisfactory capacity to pay
principal and interest.
BOND RATINGS
Moody's Investors Service: Aaa -- judged to be the best quality, carry
the smallest degree of investment risk; Aa -- judged to be of high quality by
all standards; A -- possess many favorable investment attributes and are to be
considered as higher medium grade obligations; Baa -- considered as medium grade
obligations which are neither highly protected nor poorly secured. Moody's
Investors Service also applies numerical indicators, 1, 2 and 3, to rating
categories Aa through Baa. The modifier 1 indicates that the security is in the
higher end of its rating category; the modifier 2 indicates a mid-range ranking;
and 3 indicates a ranking toward the lower end of the category.
Standard & Poor's Ratings Group: AAA -- highest grade obligations,
possesses the ultimate degree of protection as to principal and interest; AA --
also qualify as high grade obligations, and in the majority of instances differ
from AAA issues only in small degree; A -- regarded as upper medium grade, have
considerable investment strength but are not entirely free from adverse effects
of changes in economic and trade conditions, interest and principal are regarded
as safe; BBB -- regarded as having adequate capacity to pay interest and repay
principal but are more susceptible than higher rated obligations to the adverse
effects of changes in economic and trade conditions. Standard & Poor's Ratings
Group applies indicators "+", no character, and "-" to the above rating
categories AA through BBB. The indicators show relative standing within the
major rating categories.
Duff & Phelps: AAA - highest credit quality, with negligible risk
factors; AA -- high credit quality, with strong protection factors and modest
risk, which may vary very slightly from time to time because of economic
conditions; A -- average credit quality with adequate protection factors, but
with greater and more variable risk factors in periods of economic stress. The
indicators "+" and "-" to the AA and A categories indicate the relative position
of a credit within those rating categories.
Fitch Investors Service: AAA -- highest credit quality, with an
exceptionally strong ability to pay interest and repay principal; AA -- very
high credit quality, with a very strong ability to pay interest and repay
principal; A -- high credit quality, considered strong as regards principal and
interest protection, but may be more vulnerable to adverse changes in economic
conditions; and BBB -- satisfactory credit quality with adequate ability with
regard to interest and principal, and likely to be affected by adverse changes
in economic conditions and circumstances. The indicators "+" and "-" to the AA,
A and BBB categories indicate the relative position of a credit within those
rating categories.
COMMERCIAL PAPER RATINGS
Moody's Investors Service, Inc.: Commercial paper rated "Prime" carries
the smallest degree of investment risk. The modifiers 1, 2 and 3 are used to
denote relative strength within this highest classification.
Standard & Poor's Ratings Group: "A" is the highest commercial paper
rating category utilized by Standard & Poor's Ratings Group which uses the
numbers 1+, 1, 2 and 3 to denote relative strength within its "A"
classification.
Duff & Phelps: Duff 1 is the highest commercial paper rating category
utilized by Duff & Phelps which uses + or - to denote relative strength within
this classification. Duff 2 represents good certainty of timely payment, with
minimal risk factors. Duff 3
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represents satisfactory protection factors, with risk factors larger and subject
to more variation.
Fitch Investors Service: F-1+ -- denotes exceptionally strong credit
quality given to issues regarded as having strongest degree of assurance for
timely payment; F-1 -- very strong credit quality, with only slightly less
degree of assurance for timely payment than F-1+; F-2 -- good credit quality,
carrying a satisfactory degree of assurance for timely payment.
*******************************************************************************
<PAGE>
C-5
EVERGREEN REAL ESTATE EQUITY 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 Evergreen Global Real Estate Equity Fund for
the fiscal period from February 1, 1989 (commencement of operations)
through December 31, 1989, for the fiscal years ended December 31, 1990
through December 31, 1993 and for the fiscal period ended September 30,
1994 and the six months ended March 31, 1995.
Financial Highlights for Evergreen U.S. Real Estate Equity Fund for the
fiscal period from September 1, 1993 (commencement of operations)
through December 31, 1993 and for the fiscal period ended September 30,
1994 and the six months ended March 31, 1995.
Included in Part B of this Registration Statement:*
Statement of Investments for Evergreen Global Real Estate Equity Fund
and Evergreen U.S. Real Estate Equity Fund as of September 30, 1994 and
March 31, 1995
Statement of Assets and Liabilities for Evergreen Global Real Estate
Equity Fund and Evergreen U.S. Real Estate Equity Fund as of September
30, 1994 and March 31, 1995
Statement of Operations of Evergreen Global Real Estate Equity Fund and
Evergreen U.S. Real Estate Equity Fund for the year ended September 30,
1994 and the six months ended March 31, 1995.
Statements of Changes in Net Assets of Evergreen Global Real Estate
Equity Fund and Evergreen U.S. Real Estate Equity Fund for the fiscal
years ended December 31, 1993 and September 30, 1994 and the six months
ended March 31, 1995.
Financial Highlights of Evergreen Global Real Estate Equity Fund and
Evergreen U.S. Real Estate Equity Fund
Notes to Financial Statements of Evergreen Global Real Estate Equity
Fund and Evergreen U.S. Real Estate Equity Fund
Report of Independent Auditors of Evergreen Global Real Estate Equity
Fund and Evergreen U.S. Real Estate Equity Fund
Statements, schedules and historical information other than those
listed above have been omitted since they are either not applicable or
are not required or the required information is shown in the financial
statements or notes thereto.
b. Exhibits
Number Description
1(A) Declaration of Trust**
1(B) Certification of Amendment to Declaration of Trust**
1(C) Form of Instrument providing for the Establishment and
Designation of Classes**
2 By-Laws*
3 None
4 Instruments Defining Rights of Shareholders**
5(A) Investment Advisory Agreement
5(B) Investment Subadvisory Agreement
6 Distribution Agreement
7 None
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**
16 None
17 None
- --------------------------
* Incorporated by reference to the Annual Report to Shareholders for
the fiscal period ended September 30, 1994 Semi-Annual Report to
Shareholders for the fiscal period ended March 31, 1995 which has been
previously filed with the Commission and which is attached as an
Exhibit to this Post-Effective Amendment and by reference to the Annual
Report of Registrant on form NSAR for the aforementioned period.
** Incorporated by reference to Registrant's previous filings on
Form N-1A.
Item 25. Persons Controlled by or Under Common Control with Registrant
Stephen A. Lieber, Chairman and Co-Chief Executive Officer of Evergreen
Asset Management Corp., the investment adviser to both of Registrant's
separate investment series, owns, as of the date of this Post Effective
Amendment to the Registration Statement 25.79% of the outstanding
shares of one such series, namely Evergreen U.S. Real Estate Equity
Fund, and therefore, with respect to matters on which only shareholders
of that investment series may vote, Mr. Lieber may be presumed to
"control" that series.
Item 26. Number of Holders of Securities (as of June 15, 1994)
(1) (2)
Number of Record
Title of Class Shareholders
Evergreen Global Real Estate Equity Fund:
Class Y Shares of Beneficial Interest ($0.0001 par value) 4,012
Class A Shares of Beneficial Interest ($0.0001 par value) 21
Class B Shares of Beneficial Interest ($0.0001 par value) 10
Class C Shares of Beneficial Interest ($0.0001 par value) 9
Evergreen U.S. Real Estate Equity Fund:
Class Y Shares of Beneficial Interest ($0.0001 par value) 487
Class A Shares of Beneficial Interest ($0.0001 par value) 8
Class B Shares of Beneficial Interest ($0.0001 par value) 10
Class C Shares of Beneficial Interest ($0.0001 par value) 2
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 willful 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 willful
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 separate 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.
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
Evergreen Funds Distributor, Inc. acts as Distributor for the
following registered investment companies or separate series thereof:
Evergreen Trust
Evergreen Fund
Evergreen Aggressive Growth Fund
The Evergreen Real Estate Equity Trust:
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 Trust:
The Evergreen American Retirement Fund
Evergreen Small Cap Equity Income Fund
The Evergreen Foundation Trust:
Evergreen Foundation Fund
Evergreen Tax Strategic Foundation Fund
The Evergreen Municipal Trust:
Evergreen Short-Intermediate Municipal Fund
Evergreen Short-Intermediate Municipal Fund-CA
Evergreen Florida High Income Municipal Bond Fund
Evergreen Tax Exempt Money Market Fund
The Evergreen Money Market Fund
Evergreen Investment Trust
Evergreen Emerging Markets Growth Fund
Evergreen International Equity Fund
Evergreen Balanced Fund
Evergreen Value Fund
Evergreen Utility Fund
Evergreen Fixed Income Fund
Evergreen Managed Bond Fund
Evergreen U.S. Government Fund
Evergreen Florida Municipal Bond Fund
Evergreen Georgia Municipal Bond Fund
Evergreen North Carolina Municipal Bond Fund
Evergreen South Carolina Municipal Bond Fund
Evergreen Virginia Municipal Bond Fund
Evergreen High Grade Tax Free Fund
Evergreen Treasury Money Market Fund
Item 30. Location of Accounts and Records
Accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the Rules promulgated
thereunder are maintained at the offices of the Registrant's Custodian, State
Street Bank and Trust Company, 2 Heritage Drive, North Quincy, Massachusetts
02171 or the offices of Evergreen Asset Management Corp., 2500 Westchester
Avenue, Purchase, New York 10577.
Item 31. Management Services
Not Applicable.
Item 32. Undertakings
Not Applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and
the Investment Company Act of 1940, as amended, the Registrant certifies that it
has duly caused this Post-Effective Amendment No. 10 to the Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in The City of New York, State of New York, on the 30th day of June,
1995.
Evergreen Real Estate Equity Trust
by /s/John J. Pileggi
-----------------------------
John J. Pileggi, President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Post-Effective Amendment No. 10 to the Registration Statement has been
signed below by the following persons in the capacities and on the dates
indicated.
Signatures Title Date
- ----------- ----- ----
/s/ John J. Pileggi
- ------------------------------- President and June 30, 1995
John J. Pileggi Treasurer
/s/ Laurence B. Ashkin
- ------------------------------- Trustee June 30, 1995
Laurence B. Ashkin
/s/ Foster Bam
- ------------------------------- Trustee June 30, 1995
Foster Bam
/s/ James S. Howell
- ------------------------------- Trustee June 30, 1995
James S. Howell
/s/ Robert J. Jeffries
- ------------------------------- Trustee June 30, 1995
Robert J. Jeffries
/s/ Gerald M. McDonnell
- ------------------------------- Trustee June 30, 1995
Gerald M. McDonnell
/s/ Thomas L. McVerry
- ------------------------------- Trustee June 30, 1995
Thomas L. McVerry
/s/ William Walt Pettit
- ------------------------------- Trustee June 30, 1995
William Walt Pettit
/s/ Russell A. Salton, III, M.D
- ------------------------------- Trustee June 30, 1995
Russell A. Salton, III, M.D
/s/ Michael S. Scofield
- ------------------------------- Trustee June 30, 1995
Michael S. Scofield
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description Page
11 Consent of Independent
Accountants
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectuses and
Statement of Additional Information constituting parts of this Post-Effective
Amendment No. 10 to the registration statement on Form N-lA (the "Registration
Statement") for the Evergreen Real Estate Equity Trust 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 Evergreen
U.S. Real Estate Equity Fund and our report dated November 22, 1994, relating to
the financial statements and financial highlights appearing in the September 30,
1994 Annual Report to Shareholders of Evergreen Global Real Estate Equity
Fundwhich 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 Statements of Additional Information.
/s/ Price Waterhouse LLP
- --------------------------------
Price Waterhouse LLP
New York, NY 10036
June 30, 1995
