Registration No. 33-25378
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM N-1A
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933 X
Pre-Effective Amendment No.
Post-Effective Amendment No. 11 X
and/or
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 11 X
(Check appropriate box or boxes)
--------------------
EVERGREEN 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
60 days after filing pursuant to paragraph (a)(i) or
on (date) pursuant to paragraph (a)(i) or
X 75 days after filing pursuant to paragraph (a)(ii) or
on (date) pursuant to paragraph (a)(ii) of Rule 485
If appropriate, check the following box:
This post-effective amendment designates a new effective date for a
previously filed post-effective amendment
60 days after filing pursuant to paragraph (a)(i)
on (date) pursuant to paragraph (a)(i)
Registrant has registered an indefinite number of shares under the
Securities Act of 1933 pursuant to Rule 24f-2 under the Investment Company Act
of 1940. Registrant's Rule 24f-2 notice for its fiscal year ended September 30,
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
September , 1995
Evergreen Global Leaders Fund
--------------------------------------------------------
CLASS Y SHARES
-------------------------
The Evergreen Global Leaders Fund (the "Fund") is designed to provide
investors with the opportunity to invest in a diversified portfolio of non-U.S.
equity securities of companies located in the world's major industrialized
countries. This Prospectus provides information regarding the Class Y shares
offered by the Fund. The Fund is a series of a diversified, open-end management
investment company. This Prospectus sets forth concise information about the
Fund that a prospective investor should know before investing. The address of
the Fund is 2500 Westchester Avenue, Purchase, New York 10577.
A "Statement of Additional Information" for the Fund and certain other
funds in the Evergreen Group of mutual funds (collectively, with the Fund the
"Evergreen Funds") dated September , 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 Fund at (800) 807-2940. There can
be no assurance that the investment objective of any Fund will be achieved.
Investors are advised to read this Prospectus carefully.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF ANY
BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK OR ANY SUBSIDIARIES OF ANY
BANK, 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
<PAGE>
TABLE OF CONTENTS
OVERVIEW OF THE FUND
EXPENSE INFORMATION
FINANCIAL HIGHLIGHTS
DESCRIPTION OF THE FUND
Investment Objectives And Policies
Investment Practices And Restrictions
MANAGEMENT OF THE FUND
Investment Adviser
Sub-Adviser
PURCHASE AND REDEMPTION OF SHARES
How To Buy Shares
How To Redeem Shares
Exchange Privilege
Shareholder Services
Effect Of Banking Laws
OTHER INFORMATION
Dividends, Distributions And Taxes
General Information
- -------------------------------------------------------------------------------
OVERVIEW OF THE FUND
- -------------------------------------------------------------------------------
The following summary is qualified in its entirety by the more detailed
information contained elsewhere in this Prospectus. See "Description of the
Fund" and "Management of the Fund".
The investment adviser to the Fund is Evergreen Asset Management Corp.
(the "Adviser") which, with its predecessors, has served as investment adviser
to the Evergreen Funds since 1971. The Adviser 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 Fund seeks to achieve capital appreciation by investing in a
diversified portfolio of non-U.S. equity securities of companies located in the
world's major industrialized countries. Evergreen Asset Management Corp., the
Fund's investment adviser (the "Adviser"), will attempt to screen the largest
companies in the World's major industrialized countries and cause the Fund to
invest in the 100 best based on certain qualitative and quantitative criteria,
including those with the highest return on equity and consistent earnings
growth.
There is no assurance the investment objective of the Fund will be achieved.
- -------------------------------------------------------------------------------
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 "Purchases and Redemption of Shares".
SHAREHOLDER TRANSACTION EXPENSES Class Y Shares
Maximum Sales Charge Imposed on Purchases None
Sales Charge on Dividend Reinvestments None
None
Contingent Deferred Sales Charge
Redemption Fee None
Exchange Fee (only applies after 4 exchanges per calendar $5.00
year)
The following tables show for the Fund the 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 Global Leaders Fund
Annual Operating Expenses Example
Class Y Class Y
Advisory Fees 0.95% After 1 Year $
12b-1 Fees None After 3 Years $
Other Expenses* 0.55% After 5 Years $
------
Total 1.50% After 10 Years $
-----
*Reflects agreement by the Adviser to limit aggregate operating expenses
(including the Adviser's fee, but excluding interest, taxes, brokerage
commissions and extraordinary expenses) of the Fund to 1.50% of average net
assets until the Fund reaches net assets of $15 million. From time to time, the
Adviser may further reduce or waive its fee or reimburse the Fund for certain of
its expenses in order to reduce the Fund's expense ratio.
The purpose of the foregoing table is to assist an investor in understanding the
various costs and expenses that an investor in the Class Y Shares of the Fund
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
first fiscal year of the operations of the Fund and are based on historical
experience of other investment companies managed by the Adviser. 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 Fund".
- -------------------------------------------------------------------------------
DESCRIPTION OF THE FUND
- -------------------------------------------------------------------------------
INVESTMENT OBJECTIVES AND POLICIES
The Fund's investment objective is to provide long-term capital growth. It
will attempt to achieve its objective by investing primarily in a diversified
portfolio of U.S. and non-U.S. equity securities of companies located in the
world's major industrialized countries. There can be no assurance that the Fund
will be able to achieve its investment objective. Under normal conditions at
least 65% of the Fund's total assets will consist of global equity securities.
The Fund will make investments in no less than three countries, which may
include the United States. In addition to the United States, the countries in
which the fund may invest include but are not limited to, Australia, Austria,
Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Italy, Japan,
Netherlands, New Zealand, Norway, Singapore, Malaysia, Spain, Sweden,
Switzerland, the United Kingdom and the United States. Evergreen Asset
Management Corp., the Fund's investment adviser (the "Adviser"), will attempt to
screen the largest companies in these and other major industrialized countries
and cause the Fund to invest in the 100 best based on certain qualitative and
quantitative criteria, including those with the highest return on equity and
consistent earnings growth. The criteria will be reviewed and evaluated on an
ongoing basis by the Adviser.
In determining what constitutes a major industrialized country, the
Adviser will look to classifications set forth in the Morgan Stanley Capital
International ("MSCI") Index and the various reports on this subject
disseminated by the World Bank. The Adviser will utilize a series of weighing
techniques to insure adequate diversification by country and industry.
At times when the Adviser deems it necessary for temporary defensive
purposes, the Fund may invest without limit in high quality money market
instruments. The Adviser will attempt to identify the largest companies in
each market primarily by reference to the market capitalizations published in
the MSCI Index.
Although, as stated above, the Fund expects that investments will be made
in no less than three countries including the United States, the Fund
may invest more than 25% of its assets in one country. To the extent that the
Fund invests more than 25% of its assets in the securites of issuers located in
one country, the value of the Fund's shares may be subject to greater
fluctuations due to the lesser degree of diversification across countries such a
policy affords, and the fact that the securities markets of certain countries
may be subject to greater risks and volatility than that which exists in the
U.S.
At times when the Adviser deems it necessary for temporary defensive
purposes, the Fund may invest without limit in high quality money market
instruments. These include commercial paper, certificates of deposit, bankers'
acceptances and other bank obligations, short-term obligations issued or
guaranteed by the U.S. Government, its instrumentalities or agencies, and
short-term obligations of foreign issuers, denominated in U.S. dollars and
traded in the United States.
It is anticipated that under normal circumstances the Fund's annual
portfolio turnover rate will not exceed 100%. A rate of portfolio turnover of
100% would occur if all of the Fund's portfolio were replaced in a period of one
year. The Fund may employ certain additional investment strategies which are
discussed in "Investment Practices and Restrictions", below.
INVESTMENT PRACTICES AND RESTRICTIONS
Borrowing. As a matter of fundamental policy, the Fund may not borrow money
except from banks as a temporary measure or for extraordinary or emergency
purposes, provided that the aggregate amount of such borrowings shall not exceed
10% of the value of the total net assets at the time of such borrowing. The Fund
may use the proceeds from borrowings to facilitate redemption requests which
might otherwise require the untimely disposition of portfolio securities or to
facilitate purchases of securities made in anticipation of receiving the
proceeds from the sale of portfolio securities involving delayed settlement. The
Fund also will not purchase any securities at any time when borrowings,
including reverse repurchase agreements, exceed 5% of the value of its
net assets.
The Fund may agree to sell portfolio securities to financial
institutions such as banks and broker-dealers, and to repurchase them at a
mutually agreed upon date and price (a "reverse repurchase agreement") 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,
United States 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.
Lending of Portfolio Securities. In order to generate income and to offset
expenses, the Fund may lend portfolio securities to brokers, dealers and other
financial institutions. The Adviser will monitor the creditworthiness of such
borrowers. Loans of securities by the Fund, if and when made, may not exceed 30%
of the Fund's total assets and will 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 loaned securities, including accrued
interest. While such securities are on loan, the borrower will pay the Fund the
equivalent of any income accruing thereon, and the Fund may invest the cash
collateral in portfolio securities, thereby increasing its return. The Fund will
have the right to call any such loan and obtain the securities loaned at any
time on five days' notice. Any gain or loss in the market price of the loaned
securities which occurs during the term of the loan would affect the Fund and
its investors. The Fund may pay reasonable fees in connection with such loans.
Options. To a limited extent, the Fund may write covered call options
on certain portfolio securities in an attempt to earn income and realize a
higher return on its portfolio or to partially offset an expected decline in the
price of a security. The Fund may write call options against not more than 15%
of the value of the securities held in its portfolio. A call option gives the
purchaser of the option the right to buy a security from the writer at the
exercise price at any time during the option period. 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. Where such options are used
for hedging purposes, if the Adviser's forecast of the direction of stock prices
is incorrect, the Fund may be better off if it had not engaged in such
transactions. The Fund will write call options only when the options are traded
on national securities exchanges in the United States and the options are
covered (i.e., the Fund owns the optioned securities or securities convertible
into or carrying rights to acquire the optioned securities, or the Fund's
custodian has segregated and maintains cash or liquid high-grade debt securities
belonging to the Fund in an amount not less than the value of the assets
committed to written options.) The Fund may purchase call options to close out a
position. 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 on
any particular security.
Repurchase Agreements. The Fund may enter into repurchase agreements with
member banks of the Federal Reserve System, including State Street Bank and
Trust Company, the Fund's custodian (the "Custodian" or "State Street"), or
"primary dealers" (as designated by the Federal Reserve Bank of New York) in
United States 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 Fund's holding period. The 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, the 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, the Fund might be
delayed in selling the collateral. The Adviser will review and continually
monitor the creditworthiness of each institution with which the Fund enters into
a repurchase agreement to evaluate these risks. The Fund may not enter into
repurchase agreements if, as a result, more than 15% of the Fund's net
assets would be held in repurchase agreements maturing in more than
seven days and in other securities which are not readily marketable.
lliquid Securities. The Fund may invest up to 15% of its net assets in illiquid
securities and other securities which are not readily marketable, including
repurchase agreements with maturities longer than seven days. Securities
eligible for resale pursuant to Rule 144A under the Securities Act of 1933,
which have been determined to be liquid, will not be considered by each Fund's
investment adviser to be illiquid or not readily marketable and, therefore, are
not subject to the aforementioned 15% limit. The inability of the 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 the Fund which are
eligible for resale pursuant to Rule 144A will be monitored by the Fund's
investment adviser on an ongoing basis, subject to the oversight of the Trustees
or Directors. In the event that such a security is deemed to be no longer
liquid, the 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
the violating the above-mentioned limits on assets invested in illiquid or not
readily marketable securities.
Other Investment Policies. In addition to purchasing equity securities
of international issuers, the Fund may invest in American Depositary Receipts
("ADRs"), European Depositary Receipts ("EDRs") or other securities convertible
into securities of corporations domiciled in foreign countries. These securities
may not necessarily be denominated in the same currency as the securities into
which they may be converted. Generally, ADRs, in registered form, are designed
for use in the United States securities markets and EDRs, in bearer form, are
designed for use in European securities markets.
Hedging Techniques
The following hedging techniques may be utilized by the Fund.
Cross-Hedges. A cross hedge is accomplished by entering into a forward
contract or other arrangement with respect to one foreign currency for the
purpose of hedging against a possible decline in the value of another foreign
currency in which certain of the Fund's portfolio instruments are denominated.
The Adviser may enter into a cross hedge, rather than hedge directly, in
instances where (i) the rates for forward contracts, options, futures contracts
or options on futures contracts relating to the currency in which the cross
hedge is effected are more favorable than rates for similar instruments
denominated in the currency that is to be hedged and (ii) there is a high degree
of correlation between the two currencies with respect to their movement against
the U.S. dollar. Cross hedges may be effected using the various hedging
instruments described below. A cross hedge cannot protect against exchange rate
risks perfectly, and if the Adviser is incorrect in its judgment of future
exchange rate relationships, the Fund could be in a less advantageous position
than if such a hedge had not been established.
Options on Foreign Currencies. The Fund may also purchase foreign
currency put options on U.S. exchanges or U.S. over-the-counter markets. A put
option gives the holder, upon payment of a premium, the right to sell a currency
at the exercise price until the expiration of the option and serves to ensure
against adverse currency price movements in the underlying portfolio assets
denominated in that currency. Exchange listed options on seven major foreign
currencies are traded in the U.S. In addition, several major U.S. investment
firms make markets in unlisted options on foreign currencies. Such unlisted
options may be available with respect to a wide range of foreign currencies than
listed options and may have more flexible terms. Unlisted foreign currency
options are generally less liquid than listed options and involve the credit
risk associated with the individual issuer. No more than 5% of the Fund's assets
may be represented by premiums paid by the Fund with respect to options on
foreign currencies outstanding at any one time. Furthermore, the market value of
unlisted options on foreign currencies will be included with other illiquid
assets held by the Fund for purposes of the 15% limit on such assets.
The Fund may write a call option on a foreign currency only in
conjunction with a purchase of a put option on that currency. A call option
written by the Fund gives the purchaser, upon payment of a premium, the right to
purchase from the Fund a currency at the exercise price until the expiration of
the option. Writing call options in this manner is designed to reduce the cost
of downside currency protection but has the effect of limiting currency
appreciation potential.
Forward Foreign Currency Contracts. The Fund may enter into forward
foreign currency contracts in order to protect against uncertainty in the level
of future foreign exchange rates. A forward foreign currency contract involves
an obligation to purchase or sell a specific amount of a designated currcncy at
a set price on a future date.
The Fund may enter into forward contracts in primarily two
circumstances. First, when the Fund enters into a contract for the purchase or
sale of a security denominated in a foreign currency, it may desire to" lock in"
the U.S. dollar price of the security. By entering into a forward contract for
the purchase or sale, for a fixed amount of dollars, of the amount of foreign
currency involved in the underlying security transaction, the Fund will be able
to protect itself against a possible loss resulting from an adverse change in
the relationship between the U.S. dollar and the subject foreign currency during
the period between the date the security is purchased or sold and the date on
which payment is made or received.
Second, when management of the Fund believes that the currency of a
particular foreign country may suffer a decline against the U.S. dollar, the
Fund may enter into a forward contract to sell, for a fixed amount of dollars,
the amount of foreign currency approximating the value of some or all of the
Fund's portfolio securities denominated in such foreign currency. The precise
matching of the forward contract amount and the value of the securities involved
will not generally be possible since the future value of such securities
denominated in foreign currencies will change as a consequence of market
movements in the value of those securities between the date the forward contract
is entered into and the date it matures. The Fund does not intend to enter into
such forward contracts under this second circumstance on a regular or continuous
basis.
In the second circumstance, the Custodian will segregate cash or liquid
high-grade debt securities belonging to the Fund in an amount not less than the
value of the assets committed to forward foreign currency contracts entered into
under such transactions. If the value of the securities segregated declines,
additional cash or debt securities will be added on a daily basis (i.e., marked
to market) so that the segregated amount will not be less than the amount of the
Fund's commitments with respect to such contracts.
Currency Futures and Related Options. The Fund may invest in currency
futures contracts and options thereon. If the Adviser anticipates that exchange
rates for a particular currency will fall, the Fund may sell a currency futures
contract or a call option thereon or purchase a put option on such futures
contract as a hedge (or in the case of a sale of a call option, a partial hedge)
against a decrease in the value of the Fund's securities denominated in such
currency. If the Adviser anticipates that exchange rates will rise, the Fund may
purchase a currency futures contract or a call option thereon to protect against
an increase in the price of securities denominated in a particular currency the
Fund intends to purchase. These futures contracts and related options will be
used only as a hedge against anticipated currency rate changes.
A currency futures contract sale creates an obligation by the Fund, as
seller, to deliver the amount of currency called for in the contract at a
specified future time for a specified price. A currency futures contract
purchase creates an obligation by the Fund, as purchaser, to take delivery of an
amount of currency at a specified future time at a specified price. Although the
terms of currency futures contracts specify actual delivery or receipt, in most
instances the contracts are closed out before the settlement date without the
making or taking of delivery of the currency. Closing out of a currency futures
contract is effected by entering into an offsetting purchase or sale
transaction.
Unlike a currency futures contract, which requires the parties to buy
and sell currency on a set date, an option on a currency futures contract
entitles its holder to decide on or before a future date whether to enter into
such a contract. If the holder decides not to enter into a contract, the premium
paid for the option is lost. There are no daily payments of cash in the nature
of "variation" or "maintenance" margin by the purchaser of such an option to
reflect the change in the value of the underlying contract as there are by a
purchaser or seller of a currency futures contract.
The ability to establish and close out positions in currency futures
and options on currency futures will be subject to the development and
maintenance of a liquid secondary market. It is not certain that this market
will develop or be maintained.
The Fund may not enter into currency futures contracts or related
options if immediately thereafter the aggregate initial margin plus the premiums
required to establish such positions exceed 5% of the fair market value of the
Fund's portfolio. The Fund may not sell currency futures contracts, purchase put
options or write call options if, as a result, more than 30% of its total assets
would be hedged.
Special Risk Considerations
Investment in the Fund requires considerations of certain factors that are not
normally involved in investment in U.S. securities. Generally, a substantial
portion of the assets of the Fund will be denominated or traded in foreign
currencies. Accordingly, a change in the value of any foreign currency relative
to the U. S. dollar will result in a corresponding change in the U.S. dollar
value of the assets of the Fund denominated or traded in that currency. If the
value of a particular foreign currency falls relative to the U. S. dollar, the
U.S. dollar value of the assets of the Fund denominated in such currency will
also fall. The performance of the Fund will be measured in U.S. dollars, the
base currency for the Fund.
Securities markets of foreign countries in which the Fund may invest
generally are not subject to the same degree of regulation as the U. S. markets
and may be more volatile and less liquid than the major U.S. markets. Lack of
liquidity may affect the Fund's ability to purchase or sell large blocks of
securities and thus obtain the best price. The lack of uniform accounting
standards and practices among countries impairs the validity of direct
comparisons of valuation measures (such as price/earnings ratios) for securities
in different countries. In addition, the Fund may incur costs associated with
currency hedging and the conversion of foreign currency into U.S. dollars and
may be adversely affected by restrictions on the conversion or transfer of
foreign currency. Other considerations include political and social instability,
expropriation, the lack of available information, higher transaction costs
(including brokerage charges), increased custodian charges associated with
holding foreign securities and different securities settlement practices.
Settlement periods for foreign securities, which are sometimes longer than those
for securities of U. S. issuers, may affect portfolio liquidity. These different
settlement practices may cause missed purchasing opportunities and/or loss of
interest on money market and debt investments. In addition, foreign securities
held by the Fund may be traded on days that the Fund does not value its
portfolio securities, such as Saturdays and customary business holidays, and
accordingly, the Fund's net asset value may be significantly affected on days
when shareholders do not have access to the Fund.
The Fund may engage in transactions in foreign securities which are listed
on foreign securities exchanges and/or traded in the over-the-counter market.
Transactions in listed securities may be effected in the over-the-counter
markets if, in the opinion of the Adviser, this affords the Fund the ability to
obtain best price and execution. Foreign securities markets are subject to less
regulation that those in the U.S. and there may be less financial and other
information available about the issuers of securites that trade in foreign
markets. Transactions in foreign securities may settle on a delayed basis, in
comparison to those in the U.S., or may settle only on specific days of the
month. In the event the Fund enters into a significant number of transactions
which provide for a settlement period in excess of seven days, the Fund's
ability to raise cash to meet redemption requests may be impaired.
Unless otherwise stated in this Prospectus, the Fund's investment policies
are not fundamental and they may be changed without shareholder approval.
Fundamental policies may not be changed without shareholder approval.
Shareholders will be notified of any changes in policies that are not
fundamental.
Additional information about the Fund's investment practices is
contained in the Fund's Statement of Additional Information.
INVESTMENT RESTRICTIONS
The Fund has adopted a number of investment restrictions which are set
forth in the Statement of Additional Inforrnation, some of which are fundamental
and may not be changed without shareholder approval.
- ----------------------------------------------------------------------------
MANAGEMENT OF THE FUND
- ----------------------------------------------------------------------------
INVESTMENT ADVISERS
The management of the Fund is supervised by the Trustees of Evergreen
Equity Trust ("Trust"), under which the Fund has been established ("Trustees").
Evergreen Asset Management Corp. (the "Evergreen Asset") has been retained by
the Trust as investment adviser for the Fund. 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.
First Union is headquartered in Charlotte, North Carolina, and had
$77.9 billion in consolidated assets as of June 30, 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 $29 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, Evergreen Asset manages the 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 the Fund equal to .95 of 1% of average daily net
assets on an annual basis. The fee paid by the Fund is higher than the rate paid
by most other investment companies, but is not higher than the fee paid by many
funds with similar investment objectives. Until the 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. The
portfolio of the Fund is managed by committee composed of portfolio management
and analytical personnel employed by Evergreen Asset. The members of this
committee include Stephen A. Lieber, who is Chairman and Co-Chief Executive
Officer of Evergreen Asset and Edwin A. Miska, who is an analyst with Evergeen
Asset. Mr. Lieber and Mr. Miska are responsible for the day to day operations of
the Fund. Mr. Lieber is the founder of Evergreen Asset and has been associated
with Evergreen Asset and its predecessor since 1971. Mr. Miska has been a
quantitative analyst with Evergreen Asset and its predecessor since 1989.
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
portfolio of the 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 the
Fund for the services provided by Lieber & Company. The address of Lieber &
Company is 2500 Westchester Avenue, Purchase, New York 10577. Lieber & Company
is an indirect, wholly-owned, subsidiary of First Union.
- -------------------------------------------------------------------------------
PURCHASE AND REDEMPTION OF SHARES
- -------------------------------------------------------------------------------
HOW TO BUY SHARES
Eligible investors may purchase Fund shares at net asset value by mail
or wire as described below. The Fund only offers Class Y shares on which no
sales charges are imposed. Class Y shares 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 the 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 Fund Value its Shares. The net asset value of each Class of shares of
the 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 the 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 Trust'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 the Fund or the Adviser incurs. If
such investor is an existing shareholder, the 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 Fund is 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. The 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, the Fund reserves the right to
suspend the offer of shares for a period of time.
Shares of the 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 the 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, the 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 the 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 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 the 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 the 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 the
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 Fund 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 Fund reserves 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 Fund has elected to be governed by Rule 18f-1 under the Investment Company
Act of 1940 pursuant to which the Fund is obligated to redeem shares solely in
cash, up to the lesser of $250,000 or 1% of the 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. The 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, the 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
the 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
without notice . 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 Fund offers 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
Fund, 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 Fund. 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 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 the Fund's shareholders
to approve, a new investment adviser. If this were to occur, it is not
anticipated that the shareholders of the Fund would suffer any adverse financial
consequences.
- ------------------------------------------------------------------------------
OTHER INFORMATION
- ------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAXES
It is the policy of the Fund to distribute to shareholders its investment
company taxable 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 Internal Revenue Code of
1986 (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.
The Fund intends to qualify to be treated as a regulated investment company
under the Code. While so qualified, it is expected that the 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 Fund, to the extent it does not meet certain
distribution requirements by the end of each calendar year. The 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 the 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 the 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.
The 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 the 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 the Fund. See the Statement of Additional
Information for additional details. The 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 the Fund's foreign taxes
rather than take the foreign tax credit must itemize deductions on their income
tax returns.
The 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 the 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 Fund, including the application of
state and local taxes which may be different from Federal income tax
consequences described above.
GENERAL INFORMATION
Portfolio Transactions. Consistent with the Rules of Fair Practice of the
National Association of Securities Dealers, Inc., and subject to seeking best
price and execution, the 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 Leaders Fund is a separate series of the
Evergreen Equity Trust, a Massachusetts business trust organized in 1986. The
Fund does 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, including the right to demand
that a meeting of shareholders be called for the purpose of voting thereon if
10% of the shareholders so request in writing.
A shareholder in each class of a Fund will be entitled to his or her share
of all dividends and distributions from the 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. The 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 the 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.
Shares are entitled to dividends as determined by the Trustees and, in
liquidation of the 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 the
Fund's registrar, transfer agent and dividend-disbursing agent for a fee based
upon the number of shareholder accounts maintained for the Fund.
Principal Underwriter. EFD, an affiliate 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 the Fund, and
in connection therewith, provides personnel to serve as officers of the Funds.
Other Classes of Shares. The Fund currently offers only Class Y shares, and
may in the future offer additional classes. Class Y shares 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.
Performance Information. From time to time, the Fund may quote its "total
return" or "yield" for a specified period in advertisements, reports or other
communications to shareholders, Total return and yield are computed separately
for each Class of shares. The 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 the
Fund are assumed to have been reinvested when paid and the maximum sales charges
applicable to purchases of the 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 the Fund. These
advertisements may quote performance rankings or ratings of the 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 Declaration of Trust under which the
Fund operates 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 Statement filed by the Trust with
the SEC under the Securities Act. Copies of the Registration Statements may be
obtained at a reasonable charge from the SEC or may be examined, without charge,
at the offices of the SEC in Washington, D.C.
*******************************************************************************
STATEMENT OF ADDITIONAL INFORMATION
September , 1995
THE EVERGREEN GLOBAL AND INTERNATIONAL 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")
Evergreen Global Leaders Fund ("Global Leaders")
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 for the Fund in which you are making or contemplating an
investment. The Evergreen International Growth Funds are offered through three
separate prospectuses: one offering Class A, Class B and Class C shares of
Emerging Markets, International and Global, a separate prospectus offering Class
Y shares of Emerging Markets, International and Global, and a separate
prospectus offering Class Y shares of Global Leaders. Copies of each Prospectus
may be obtained without charge by calling the number listed above.
TABLE OF CONTENTS
<PAGE>
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
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 a majority of the outstanding voting
securities of the Fund.
Types of Investments
Convertible Securities -- (All Funds)
Each Fund may invest in convertible securities. Convertible securities
include fixed-income securities that may be exchanged or converted into a
predetermined number of shares of the issuer's underlying common stock at the
option of the holder during a specified period. Convertible securities may take
the form of convertible preferred stock, convertible bonds or debentures, units
consisting of "usable" bonds and warrants or a combination of the features of
several of these securities. The investment characteristics of each convertible
security vary widely, which allow convertible securities to be employed for a
variety of investment strategies.
Each Fund will exchange or convert convertible securities into shares of
underlying common stock when, in the opinion of its investment adviser or
sub-adviser, the investment characteristics of the underlying common shares will
assist a Fund in achieving its investment objective. A Fund may also elect to
hold or trade convertible securities. In selecting convertible securities, the
adviser or sub-adviser evaluates the investment characteristics of the
convertible security as a fixed-income instrument, and the investment potential
of the underlying equity security for capital appreciation. In evaluating these
matters with respect to a particular convertible security, the adviser or
sub-adviser considers numerous factors, including the economic and political
outlook, the value of the security relative to other 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
<PAGE>
ranging from less than one year to twenty years, or they may be perpetual.
However, most warrants have expiration dates after which they are worthless. In
addition, a warrant is worthless if the market price of the common stock does
not exceed the warrant's exercise price during the life of the warrant. Warrants
have no voting rights, pay no dividends, and have no rights with respect to the
assets of the corporation issuing them. The percentage increase or decrease in
the market price of the warrant may tend to be greater than the percentage
increase or decrease in the market price of the optioned common stock.
Sovereign Debt Obligations (All Funds)
Each Fund may purchase sovereign debt instruments issued or guaranteed by
foreign governments or their agencies, including debt of Latin American nations
or other developing countries. Sovereign debt may be in the form of conventional
securities or other types of debt instruments such as loans or loan
participations. Sovereign debt of developing countries may involve a high degree
of risk, and may be in default or present the risk of default. Governmental
entities responsible for repayment of the debt may be unable or unwilling to
repay principal and interest when due, and may require renegotiation or
rescheduling of debt payments. In addition, prospects for repayment of principal
and interest may depend on political as well as economic factors.
Closed-End Investment Companies (All Funds)
Each Fund may purchase the equity securities of closed-end investment
companies to facilitate investment in certain countries. Equity securities of
closed-end investment companies generally trade at a discount to their net asset
value. Investments in closed-end investment companies involve the
payment of management fees to the advisers of such investment companies.
Strategic Investments (All Funds)
Foreign Currency Transactions; Currency Risks
The exchange rates between the U.S. dollar and foreign currencies are a
function of such factors as supply and demand in the currency exchange markets,
international balances of payments, governmental intervention, speculation and
other economic and political conditions. Although a Fund values its assets daily
in U.S. dollars, a Fund 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
<PAGE>
may limit potential gains which could result from a positive change in such
currency relationships. The adviser and the sub-advisers believe that it is
important to have the flexibility to enter into forward foreign currency
exchange contracts whenever they determine that it is in a Fund's best interest
to do so. A Fund will not speculate in foreign currency exchange.
Except for cross-hedges, a Fund will not enter into forward foreign
currency exchange contracts or maintain a net exposure in such contracts when it
would be obligated to deliver an amount of foreign currency in excess of the
value of its portfolio securities or other assets denominated in that currency
or, in the case of a "cross-hedge" denominated in a currency or currencies that
the adviser or sub-adviser believes will tend to be closely correlated with that
currency with regard to price movements. At the consummation of such a forward
contract, a Fund may either make delivery of the foreign currency or terminate
its contractual obligation to deliver the foreign currency by purchasing an
offsetting contract obligating it to purchase, at the same maturity date, the
same amount of such foreign currency. If a Fund chooses to make delivery of the
foreign currency, it may be required to obtain such currency through the sale of
portfolio securities denominated in such currency or through conversion of other
assets of the Fund into such currency. If a Fund engages in an offsetting
transaction, the Fund will incur a gain or loss to the extent that there has
been a change in forward contract prices.
The Funds will place cash or high grade debt securities in a separate
account of a Fund at its custodian bank in an amount equal to the value of the
Fund's total assets committed to forward foreign currency exchange contracts
entered into as a hedge against a substantial decline in the value of a
particular foreign currency. If the value of the securities placed in the
separate account declines, additional cash or securities will be placed in the
account on a daily basis so that the value of the account will equal the amount
of the Fund's commitments with respect to such contracts.
It should be realized that this method of protecting the value of a Fund's
portfolio securities against a decline in the value of a currency does not
eliminate fluctuations in the underlying prices of the securities. It simply
establishes a rate of exchange which can be achieved at some future point in
time. Additionally, although such contracts tend to minimize the risk of loss
due to a decline in the value of the hedged currency, at the same time they tend
to limit any potential gain which might result should the value of such currency
increase. Generally, a Fund will not enter into a forward foreign currency
exchange contract with a term longer than one year.
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
<PAGE>
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 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
<PAGE>
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 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:
<PAGE>
(i) the frequency of trades and quotes for the security;
(ii) the number of dealers willing to purchase or sell the security and the
number of other potential buyers;
(iii) dealer undertakings to make a market in the security; and (iv) the
nature of the security and the nature of the marketplace trades.
When-Issued and Delayed Delivery Securities (Emerging Markets, International
Equity and Global Leaders)
These transactions are made to secure what is considered to be an
advantageous price or yield for a Fund. No fees or other expenses, other than
normal transaction costs, are incurred. However, liquid assets of a Fund
sufficient to make payment for the securities to be purchased are segregated on
the Fund's records at the trade date. These assets are marked to market daily
and are maintained until the transaction has been settled. Emerging Markets and
International Equity do not intend to engage in when-issued and delayed delivery
transactions to an extent that would cause the segregation of more than 20% of
the total value of their assets.
Lending of Portfolio Securities
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.
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
<PAGE>
the ability to enter into reverse repurchase agreements does not ensure that the
Fund will be able to avoid selling portfolio instruments at a disadvantageous
time.
When effecting reverse repurchase agreements, liquid assets of a Fund, in a
dollar amount sufficient to make payment for the obligations to be purchased,
are segregated at the trade date. These securities are marked to market daily
and maintained until the transaction is settled.
INVESTMENT RESTRICTIONS
FUNDAMENTAL INVESTMENT RESTRICTIONS
.........Except as noted, the investment restrictions set forth below are
fundamental and may not be changed with respect to each Fund without the
affirmative vote of a majority of the outstanding voting securities of the Fund.
Where an asterisk (*) appears after a Fund's name, the relevant policy is
non-fundamental with respect to that Fund and may be changed by the Fund's
investment adviser without shareholder approval, subject to review and approval
by the Trustees. As used in this Statement of Additional Information and in the
Prospectus, "a majority of the outstanding voting securities of the Fund" means
the lesser of (1) the holders of more than 50% of the outstanding shares of
beneficial interest of the Fund or (2) 67% of the shares present if more than
50% of the shares are present at a meeting in person or by proxy.
1........ Diversification
........No Fund may invest more than 5% of its total assets, at the time of the
investment in question, in the securities of any one issuer other than the U.S.
government and its agencies or instrumentalities and, with respect to Emerging
Markets and International Equity, repurchase agreements collateralized by such
securities except that up to 25% of the value of a Fund's total assets may be
invested without regard to such 5% limitation.
2........Ten Percent Limitation on Securities of Any One Issuer
.........Global and Global Leaders may not purchase more than 10% of any class
of securities of any one issuer other than the U.S. government and its agencies
or instrumentalities.
.........Neither Emerging Markets nor International Equity may purchase more
than 10% of the outstanding voting securities of any one issuer.
3........Investment for Purposes of Control or Management
.........Global and Global Leaders may not invest in companies for the purpose
of exercising control or management.
4........Purchase of Securities on Margin
.........No Fund may purchase securities on margin, except that each Fund may
obtain such short-term credits as may be necessary for the clearance of
transactions. A deposit or payment by a Fund of initial or variation margin in
connection with financial futures contracts or related options transactions is
not considered the purchase of a security on margin.
5........Unseasoned Issuers
........Emerging Markets*, International Equity* Global and Global Leaders* may
not invest more than 15% of their net assets in securities of
unseasoned issuers that have been in continuous operation for less than three
years, including operating periods of their predecessors, except obligations
issued or guaranteed by the U.S. government and its agencies or
instrumentalities (this limitation does not apply to real estate investment
trusts).
<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 and Global Leaders* may not purchase, sell or invest in
interests in oil, gas or other mineral exploration or development programs.
.........Neither Emerging Markets* nor International Equity* will purchase
interests in oil, gas or other mineral exploration or development programs or
leases, although each Fund may purchase the securities of other issuers which
invest in or sponsor such programs.
8........Concentration in Any One Industry
.........Global may not concentrate its investments in any one industry, except
that it will invest at least 65% of its total assets in securities of companies
engaged principally in the real estate industry.
.........Emerging Markets and International Equity and Global Leaders* 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. For
purposes of this restriction, utility companies, gas, electric, water and
telephone companies will be considered separate industries.
9........Warrants
.........Global and Global Leaders* may not invest more than 5% of their net
assets in warrants, and, of this amount, no more than 2% of the Fund's total net
assets may be invested in warrants that are listed on neither the New York nor
the American Stock Exchanges.
.........Emerging Markets* and International Equity* will not invest more than
5% of their net assets in warrants, including those acquired in units or
attached to other securities. To comply with certain state restrictions, the
Funds will limit their investment in such warrants not listed on the New York
Stock Exchange or the American Stock Exchange to 2% of their net assets. (If
state restrictions change, this latter restriction may be changed without notice
to shareholders). For purposes of this restriction, warrants acquired by the
Funds' in units or attached to securities may be deemed to be without value.
10.......Ownership by Trustees/Officers
.........None of Emerging Markets*, International Equity*, Global or Global
Leaders* may purchase or retain the securities of any issuer if (i) one or more
officers or Trustees of a Fund or its investment adviser or investment
sub-advisers individually owns or would own, directly or beneficially, more than
1/2 of 1% of the securities of such issuer, and (ii) in the aggregate, such
persons own or would own, directly or beneficially, more than 5% of such
securities.
11.......Short Sales
.........Neither Emerging Markets nor International Equity will sell any
securities short.
<PAGE>
.........Global and Global Leaders* may not make short sales of securities
unless, at the time of each such sale and thereafter while a short position
exists, either Fund owns an equal amount of securities of the same issue or owns
securities which, without payment by the Fund of any consideration, are
convertible into, or are exchangeable for, an equal amount of securities of the
same issue.
12.......Lending of Funds and Securities
.........Global and Global Leaders* may not lend their funds to other persons,
except through the purchase of a portion of an issue of debt securities publicly
distributed or the entering into of repurchase agreements. Global and Global
Leaders* may not lend their portfolio securities, unless the borrower is a
broker dealer or financial institution that pledges and maintains collateral
with the Fund consisting of cash or securities issued or guaranteed by the U.S.
government having a value at all times not less than 100% of the current
market-value of the loaned securities, including accrued interest, provided that
the aggregate amount of such loans shall not exceed 30% of the Fund's net
assets.
.........Emerging Markets and International Equity will not lend any of their
assets, except portfolio securities up to one-third of the value of their total
assets. This does not prevent the Funds from purchasing or holding corporate or
government bonds, debentures, notes, certificates of indebtedness or other debt
securities of an issuer, repurchase agreements, or other transactions which are
permitted by a Fund's investment objectives and policies or the Declaration of
Trust governing the Fund.
13.......Commodities
.........Emerging Markets and International Equity will not invest in
commodities except that each Fund reserves the right to engage in transactions
including futures contracts, options and forward contracts with respect to
securities indices or currencies.
.........Global and Global Leaders* will not purchase, sell or invest in
commodities or commodity contracts; provided, however, that this policy does not
prevent either Fund from purchasing and selling currency futures contracts and
entering into forward foreign currency contracts.
14.......Real Estate
.........Neither Emerging Markets nor International Equity will purchase or sell
real estate, including limited partnership interests in real estate, although
each Fund may invest in securities of companies whose business involves the
purchase or sale of real estate or in securities which are secured by real
estate or interests in real estate.
.........Global and Global Leaders* may not purchase or invest in real estate or
interests in real estate (although they may purchase securities secured by real
estate or interests therein or issued by companies or investment trusts which
invest in real estate or interests therein).
15.......Borrowing, Senior Securities, Reverse Repurchase Agreements
.........Emerging Markets and International Equity will not issue senior
securities except that each Fund may borrow money directly or through reverse
repurchase agreements in amounts up to one-third of the value of its total
assets, including the amount borrowed and except to the extent that a Fund may
enter into futures contracts. The Funds will not borrow money or engage in
reverse repurchase agreements for investment leverage, but rather as a
temporary, extraordinary or emergency measure to facilitate management of their
portfolios by enabling them to, for example, meet redemption requests when the
liquidation of
<PAGE>
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 and Global Leaders* may not borrow money, issue senior
securities or enter into reverse repurchase agreements, except for temporary or
emergency purposes, and not for leveraging, and then in amounts not in excess of
10% of the value of the Fund's total assets at the time of such borrowing; or
mortgage, pledge or hypothecate any assets except in connection with any such
borrowing and in amounts not in excess of the lesser of the dollar amounts
borrowed or 10% of the value of each Fund's total assets at the time of such
borrowing, provided that Global will not purchase any securities at times when
any borrowings (including reverse repurchase agreements) are outstanding. Global
and Global Leaders* will not enter into reverse repurchase agreements exceeding
5% of the value of its total assets.
16.......Joint Trading
.........Global and Global Leaders* may not participate on a joint or joint and
several basis in any trading account in any securities. (The "bunching" of
orders for the purchase or sale of portfolio securities with its investment
adviser or accounts under its management to reduce brokerage commissions, to
average prices among them or to facilitate such transactions is not considered a
trading account in securities for purposes of this restriction.)
17.......Options
.........Global and Global Leaders* may not write, purchase or sell put or
call options, or combinations thereof except as permitted under "Description of
Funds - Investment Practices and Restrictions" in each Fund's Prospectus.
.........Emerging Markets* and International Equity* may write covered call
options and secured put options on up to 25% of their net assets and may
purchase put and call options provided that no more than 5% of the 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*, International Equity* and Global Leaders* will
limit their investment in other investment companies to no more than 3% of the
total outstanding voting stock of any investment company, will invest no more
than 5% of their total assets in any one investment company and will invest no
more than 10% of their total assets in investment companies in general. A Fund
will purchase securities of closed-end investment companies only in open-market
transactions involving customary broker's commissions. However, these
limitations are not applicable if the securities are acquired in a merger,
consolidation or acquisition of assets. It should be noted that investment
companies incur certain expenses such as management fees and therefore any
investment by a Fund in shares of another investment company would be subject to
such duplicate expenses. There is no present intention of making such
investments on behalf of Global Leaders.
20.......Restricted Securities
<PAGE>
20.......Restricted Securities
.........Emerging Markets* and International Equity* will not invest more than
5% of their total assets in securities subject to restrictions on resale under
the Securities Act of 1933, except for restricted securities which meet criteria
for liquidity established by the Trustees.
21........Illiquid Securities.
.........Global* and Global Leaders* may not invest more than 15% of their net
assets in illiquid securities and other securities which are not readily
marketable, including repurchase agreements which have a maturity of longer than
seven days, but excluding securities eligible for resale under Rule 144A of the
Securities Act of 1933, as amended, which the Trustees have determined to be
liquid.
.........Emerging Markets* and International Equity* will not invest more than
15% of their net assets in illiquid securities, including repurchase agreements
providing for settlement in more than seven days after notice and certain
securities not determined by the Trustees to be liquid.
22........Other. In order to comply with certain state blue sky limitations:
- -----
...........Global* and Global Leaders* interpret fundamental investment
restriction 7 to prohibit investments in oil, gas and mineral leases.
...........Global* and Global Leaders* interpret fundamental investment
restriction 14 to prohibit investment in real estate limited partnerships which
are not readily marketable.
Except with respect to borrowing money, if a percentage limitation is
adhered to at the time of investment, a later increase or decrease in percentage
resulting from any change in value of net assets will not result in a violation
of such restriction.
To comply with registration requirements in certain states, Emerging
Markets* and International Equity* will limit the margin deposits on futures
contracts entered into by a Fund to 5% of its net assets. (If state requirements
change, these restrictions may be revised without shareholder notification.)
Emerging Markets* and International Equity* have no present intention to
borrow money or enter into reverse repurchase agreements in excess of 5% of the
value of their net assets during the coming fiscal year.
For purposes of their policies and limitations, the Funds consider
certificates of deposit and demand and time deposits issued by a U.S. branch of
a domestic bank or savings and loan 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.
<PAGE>
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.
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,
<PAGE>
Securities and Exchange Commission from 1986 to 1991.
Except for Messrs. Ashkin, Bam and Jeffries, who are not Trustees of
Evergreen Investment Trust (formerly First Union Funds), the Trustees and
officers listed above hold the same positions with a total of ten registered
investment companies offering a total of thirty-two investment funds within the
Evergreen mutual fund complex.
- --------
* Mr. Bam and Mr. Pettit may each be deemed to be an "interested person"
within the meaning of the 1940 Act.
The officers of the Trusts are all officers and/or employees of Furman Selz
Incorporated. Furman Selz Incorporated is 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 $500 for each telephone conference meeting) as follows:
Name of Trust/Fund Annual Retainer Meeting Fee
Evergreen Equity Trust 1,000*
Global 500
Global Leaders
Evergreen Investment Trust 9,000** 1,500**
Emerging Markets
International
--------------------
* This reflects the aggregate retainer paid by Evergreen 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)
TRUSTEES' COMPENSATION TABLE
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
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 A, 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%/.07%
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%/.04%
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%/.03%
Gales Chimney Rock Shop Inc.
Attn: Steve Gale
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
Fubs & Co. Febo Emerging Markets/C 204 8.15%/.02%
<PAGE>
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%/.01%
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%/.01%
Matthew S. Palmer
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
First Union National Bank* Emerging Markets/Y 766,762 77.48%/56.88%
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%/6.53%
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%/.09%
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%/.07%
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%/.06%
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%/.06%
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%/.04%
<PAGE>
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/Y 1,762,827 51.51%/39.71%
Trust Accounts
Attn: Ginny Batten
11th Floor CMG-1151
301 S. Tryon Street
Charlotte, NC 28288-0001
First Union National Bank* International/Y 1,659,266 48.49%/37.37%
Trust Accounts
Attn: Ginny Batten
11th Floor CMG-1151
301 S. Tryon Street
Charlotte, NC 28288-0001
Fubs & Co. Febo Global/A 134 5.88%/0%
Mark Major Thomsen
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
Fubs & Co. Febo Global/A 539 23.56%/.01%
John E. Benson
Vivianle M. Benson
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
Fubs & Co. Febo Global/A 338 14.77%/0%
Joan B. Huber C/F
Andrew P. Huber
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
Fubs & Co. Febo Global/A 338 14.77%/0%
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/A 261 11.40%/0%
Richard Leyba Rubio
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
First Union National Bank- Global/A 134 5.86%/0%
VA C/F
Alisa Van Zant Shannon IRA
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
<PAGE>
First Union National Bank- Global/B 190 14.46%/0%
NC C/F
Glenda E. Laws
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
Fubs & & Co. Febo Global/B 87 8.63%/0%
Christian Saade
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
Fubs & Co. Febo Global/B 85 6.54%/0%
Richard D. Zuroweste
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
Fubs & Co. Febo Global/B 832 63.34%/.01%
Allie M. Frazier
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
First Union National Bank- Global/B 100 7.61%/0%
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/C 87 7.13%/0%
Patrick K. De Garay
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
NFSC Febo #144-285862 Global/C 247 20.22%/0%
Eric J. Jorgenson
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
Fubs & Co. Febo Global/C 871 71.05%/.01%
R. Frazior Inc.
Investment Account
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
Stephen A. Lieber Global/Y 1,089,041 16.82%/16.79%
C/O Lieber & Co.
2500 Westchester Avenue
Purchase, NY 10577
Charles Schwab & Co. Inc. Global/Y 1,623,491 25.07%/28.10%
Reinvest Account
Attn: Mutual Funds Dept.
101 Montgomery Street
San Francisco, CA 94104-4122
<PAGE>
- ---------------------------------
*Acting in various capacities for numerous accounts. As a result of its
ownership of 63.41% and 77.08% of Emerging Markets and International,
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.
As a result of the ownership of 28.10% of the shares of Global on June
15, 1995, Charles Schwab & Co., Inc. 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 Global and Global Leaders 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 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
<PAGE>
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. Global Leaders has not had any operations
prior to the date of this Statement of Additional Information and therefore has
not yet paid any advisory fees. The advisory fees paid by each of the other
Funds 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
=========
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
<PAGE>
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 Evergreen Equity Trust including a majority
of those Trustees who are not parties thereto or "interested persons" (as
defined in the 1940 Act) of any such party, cast in person at a meeting duly
called for the purpose of voting on such approval or a majority of the
outstanding voting shares of the Fund. The Investment Advisory Agreement with
respect to Global Leaders was approved by the sole shareholder of Global Leaders
on September 22, 1995. It became effective on September 29, 1995, and will
continue in effect until September 29, 1997, and thereafter from year to year
provided that its continuance is approved annually by a vote of a majority of
the Trustees of the Trust including a majority of those Trustees who are not
parties thereto or "interested persons" (as defined in the 1940 Act) of any such
party, cast in person at a meeting duly called for the purpose of voting on such
approval or a majority of the outstanding voting shares of the Fund. With
respect to Emerging Markets and International, the Investment Advisory Agreement
dated February 28, 1985 and amended from time to time thereafter and the
Sub-Advisory Agreements dated July 28, 1994 were last approved by the Trustees
of Evergreen Investment Trust (formerly, First Union Funds) on April 20, 1995
and each Agreement will continue from year to year with respect to each Fund
provided that such continuance is approved annually by a vote of a majority of
the Trustees of Evergreen Investment Trust including a majority of those
Trustees who are not parties thereto or "interested persons" of any such party
cast in person at a meeting duly called for the purpose of voting on such
approval or by a vote of a majority of the outstanding voting securities of each
Fund.
Certain other clients of each Adviser may have investment objectives
and policies similar to those of the Funds. Each Adviser (including the
sub-advisers) may, from time to time, make recommendations which result in the
purchase or sale of a particular security by its other clients simultaneously
with a Fund. If transactions on behalf of more than one client during the same
period increase the demand for securities being purchased or the supply of
securities being sold, there may be an adverse effect on price or quantity. It
is the policy of each
<PAGE>
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 and to Global
Leaders for a fee based on the average daily net assets of each fund
administered by Evergreen Asset for which Evergreen Asset or FUNB also 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,
International and Global Leaders 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.
<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 (except Global Leaders, which only offers Class Y shares) 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 and 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 8, 1995, Federated Securities Corp., a subsidiary of
Federated Investors, served as the distributor for Emerging Markets and
International as well as other portfolios of Evergreen Investment Trust. The
Distribution Agreements between each Fund and the Distributor pursuant to which
distribution fees are paid under the Plans by each Fund with respect to its
Class A, Class B and Class C shares were approved on June 15, 1995 by the
unanimous vote of the Trustees including the disinterested Trustees voting
separately.
The Plans permit the payment of fees to brokers and others for
distribution and shareholder-related administrative services and to
broker-dealers, depository institutions, financial intermediaries and
<PAGE>
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.
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
<PAGE>
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 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 the bid and ask price.
In selecting firms to effect securities transactions, the primary
consideration of each Fund shall be prompt execution at the most favorable
price. A Fund will also consider such factors as the price of the securities and
the size and difficulty of execution of the order. If these objectives may be
met with more than one firm, the Fund will also consider the availability of
statistical and investment data and economic facts and opinions helpful to the
Fund. 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
<PAGE>
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 do not provide for a
reduction of the Adviser's fee with respect to any Fund by the amount of any
profits earned by Lieber from brokerage commissions generated by portfolio
transactions of the Fund.
The following chart shows: (1) the brokerage commissions paid by Global
during its last three fiscal years; (2) the amount and percentage thereof paid
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
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 other than Global Leaders has qualified and intends to continue
to qualify for and elect, and Global Leaders intends to qualify for and elect,
the tax treatment applicable to regulated investment companies ("RIC") under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code").
<PAGE>
(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 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
<PAGE>
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 receivables or accrues expenses or other
liabilities denominated in a foreign currency and the time the Fund actually
collects such receivable or pays such liabilities, and gains and losses from the
disposition of foreign currencies and foreign currency forward contracts will be
treated as ordinary income or loss. These gains or losses increase or decrease,
respectively, the amount of the Fund's investment company taxable income
available to be distributed to its shareholders as ordinary income.
Each Fund's transactions in foreign currencies, forward contracts,
options and futures contracts (including options and futures contracts on
<PAGE>
foreign currencies) are subject to special provisions of the Code that, among
other things, may affect the character of gains and losses of the Fund (i.e.,
may affect whether gains or losses are ordinary or capital), accelerate
recognition of income to the Fund and defer Fund losses. These rules could
therefore affect the character, amount and timing of distributions to
shareholders. These provisions also (a) require the Fund to mark-to-market
certain types of positions in its portfolio (i.e., treat them as if they were
closed out) and (b) may cause the Fund to recognize income without receiving
cash with which to pay dividends or make distributions in amounts necessary to
satisfy the distribution requirements for avoiding U.S. Federal income and
excise taxes. Each Fund will monitor its transactions, make appropriate tax
elections and make appropriate entries in its books and records when it acquires
any foreign currency, forward contract, option, futures contract or hedged
investment in order to mitigate the effect of these rules. The Funds anticipate
that their hedging activities will not adversely affect their regulated
investment company status.
Income received by a Fund from sources within various foreign countries
may be subject to foreign income tax. If more than 50% of the value of the
Fund's total assets at the close of its taxable year consists of the stock or
securities of foreign corporations, the Fund may elect to "pass through" to the
Fund's shareholders the amount of foreign income taxes paid by the Fund.
Pursuant to such election, shareholders would be required: (i) to treat a
proportionate share of dividends paid by the Fund which represent foreign source
income received by the Fund plus the foreign taxes paid by the Fund as foreign
source income; and (ii) either to deduct their pro-rata share of foreign taxes
in computing their taxable income, or to use it as a foreign tax credit against
Federal income taxes (but not both). No deduction for foreign taxes could be
claimed by a shareholder who does not itemize deductions.
Each Fund intends to meet for each taxable year the requirements of the
Code to "pass through" to its shareholders foreign income taxes paid if it is
determined by its Adviser to be beneficial to do so. There can be no assurance
that the Fund will be able to pass through foreign income taxes paid. Each
shareholder will be notified within 60 days after the close of each taxable year
of the Fund whether the foreign taxes paid by the Fund will "pass through" for
that year, and, if so, the amount of each shareholder's pro-rata share (by
country) of (i) the foreign taxes paid and (ii) the Fund's gross income from
foreign sources. Of course, shareholders who are not liable for Federal income
taxes, such as retirement plans qualified under Section 401 of the Code, will
not be affected by any such "pass through" of foreign tax credits.
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".
<PAGE>
The public offering price of shares of a Fund is its net asset value,
plus, in the case of Class A shares, a sales charge which will vary depending on
the purchase alternative chosen by the investor, as more fully described in the
Prospectus. See "Purchase of Shares - Class A Shares - Front-End Sales Charge
Alternative. " On each Fund business day on which a purchase or redemption order
is received by a Fund and trading in the types of securities in which a Fund
invests might materially affect the value of Fund shares, the per share net
asset value of each such Fund is computed in accordance with the Declaration of
Trust and By-Laws governing each Fund as of the next close of regular trading on
the New York Stock Exchange (the "Exchange") (currently 4:00 p.m. Eastern time)
by dividing the value of the Fund's total assets, less its liabilities, by the
total number of its shares then outstanding. A Fund business day is any weekday,
exclusive of national holidays on which the Exchange is closed and Good Friday.
For each Fund, securities for which the primary market is on a domestic or
foreign exchange and over-the-counter securities admitted to trading on the
NASDAQ National List are valued at the last quoted sale or, if no sale, at the
mean of closing bid and asked price and portfolio bonds are presently valued by
a recognized pricing service when such prices are believed to reflect the fair
value of the security. Over-the-counter securities not included in the NASDAQ
National List for which market quotations are readily available are valued at a
price quoted by one or more brokers. If accurate quotations are not available,
securities will be valued at fair value determined in good faith by the Board of
Trustees.
The respective per share net asset values of the Class A, Class B,
Class C and Class Y shares are expected to be substantially the same. Under
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
<PAGE>
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 A shares, the applicable sales charges), as described
below. Orders received by the Distributor prior to the close of regular trading
on the Exchange on each day the Exchange is open for trading are priced at the
net asset value computed as of the close of regular trading on the Exchange on
that day (plus for Class A shares the sales charges). In the case of orders for
purchase of shares placed through selected dealers or agents, the applicable
public offering price will be the net asset value as so determined, but only if
the selected dealer or agent receives the order prior to the close of regular
trading on the Exchange and transmits it to the Distributor prior to its close
of business that same day (normally 5:00 p.m. Eastern time). The selected dealer
or agent is responsible for transmitting such orders by 5:00 p.m. If the
selected dealer or agent fails to do so, the investor's right to that day's
closing price must be settled between the investor and the selected dealer or
agent. If the selected dealer or agent receives the order after the close of
regular trading on the Exchange, the price will be based on the net asset value
determined as of the close of regular trading on the Exchange on the next day it
is open for trading.
Alternative Purchase Arrangements
Each Fund (other than Global Leaders, which only offers Class Y shares)
issues four classes of shares: (i) Class A shares, which are sold to investors
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,
<PAGE>
which are sold to investors choosing the level-load sales charge alternative;
and (iv) Class Y shares, which are offered only to (a) persons who at or prior
to December 30, 1994 owned shares in a mutual fund advised by Evergreen Asset,
(b) certain investment advisory clients of the Advisers and their affiliates,
and (c) institutional investors. The four classes of shares each represent an
interest in the same portfolio of investments of the Fund, have the same rights
and are identical in all respects, except that (I) Class A, Class B and Class C
shares are subject to a Rule 12b-1 distribution fee, (II) Class B and Class C
shares of Emerging Markets and International are subject to a shareholder
service fee, (III) Class A shares bear the expense of the front-end sales charge
and Class B and Class C shares bear the expense of the deferred sales charge,
(IV) Class B shares and Class C shares each bear the expense of a higher Rule
12b-1 distribution services fee and shareholder service fee than Class A shares
and, in the case of Class B shares, higher transfer agency costs, (V) with the
exception of Class Y shares, each Class of each Fund has exclusive voting rights
with respect to provisions of the Rule 12b-1 Plan pursuant to which its
distribution services (and, to the extent applicable, shareholder service) fee
is paid which relates to a specific Class and other matters for which separate
Class voting is appropriate under applicable law, provided that, if the Fund
submits to a simultaneous vote of Class A, Class B and Class C shareholders an
amendment to the Rule 12b-1 Plan that would materially increase the amount to be
paid thereunder with respect to the Class A shares, the Class A shareholders and
the Class B and Class C shareholders will vote separately by Class, and (VI)
only the Class B shares are subject to a conversion feature. Each Class has
different exchange privileges and certain different shareholder service options
available.
The alternative purchase arrangements permit an investor to choose the
method of purchasing shares that is most beneficial given the amount of the
purchase, the length of time the investor expects to hold the shares, and other
circumstances. Investors should consider whether, during the anticipated life of
their investment in the Fund, the accumulated distribution services (and, to the
extent applicable, shareholder service) fee and contingent deferred sales
charges on Class B shares prior to conversion, or the accumulated distribution
services (and, to the extent applicable, shareholder service) fee on Class C
shares, would be less than the front-end sales charge and accumulated
distribution services fee on Class A shares purchased at the same time, and to
what extent such differential would be offset by the higher return of Class A
shares. Class B and Class C shares will normally not be suitable for the
investor who qualifies to purchase Class A shares at the lowest applicable sales
charge. For this reason, the Distributor will reject any order (except orders
for Class B shares from certain retirement plans) for more than $2,500,000 for
Class B or Class C shares.
Class A shares are subject to a lower distribution services fee and no
shareholder service fee and, accordingly, pay correspondingly higher dividends
per share than Class B shares or Class C shares. However, because front-end
sales charges are deducted at the time of purchase, investors purchasing Class A
shares would not have all their funds invested initially and, therefore, would
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
<PAGE>
4.75% front-end sales charge would have to hold his or her investment
approximately seven years for the Class B and Class C distribution services
(and, to the extent applicable, shareholders service) fees, to exceed the
front-end sales charge plus the accumulated distribution services fee of Class A
shares. In this example, an investor intending to maintain his or her investment
for a longer period might consider purchasing Class A shares. This example does
not take into account the time value of money, which further reduces the impact
of the Class B and Class C distribution services (and, to the extent applicable,
shareholder service) fees on the investment, fluctuations in net asset value or
the effect of different performance assumptions.
Those investors who prefer to have all of their funds invested
initially but may not wish to retain Fund shares for the seven year period
during which Class B shares are subject to a contingent deferred sales charge
may find it more advantageous to purchase Class C shares.
With respect to each Fund, the Trustees have determined that currently
no conflict of interest exists between or among the Class A, Class B, Class C
and Class Y shares. On an ongoing basis, the Trustees, pursuant to their
fiduciary duties under the 1940 Act and state laws, will seek to ensure that no
such conflict arises.
Front-end Sales Charge Alternative--Class A Shares
The public offering price of Class A shares for purchasers choosing the
front-end sales charge alternative is the net asset value plus a sales charge as
set forth in the Prospectus for each Fund.
Shares issued pursuant to the automatic reinvestment of income
dividends or capital gains distributions are not subject to any sales charges.
The Fund receives the entire net asset value of its Class A shares sold to
investors. The Distributor's commission is the sales charge set forth in the
Prospectus for each Fund, less any applicable discount or commission "reallowed"
to selected dealers and agents. The Distributor will reallow discounts to
selected dealers and agents in the amounts indicated in the table in the
Prospectus. In this regard, the Distributor may elect to reallow the entire
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.
<PAGE>
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
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 Global Leaders Fund
Evergreen U.S. Real Estate Equity Fund
The Evergreen Limited Market Fund, Inc.
Evergreen Growth and Income Fund
Evergreen Total Return Fund
Evergreen American Retirement Fund
Evergreen Small Cap Equity Income Fund
Evergreen Tax Strategic Foundation Fund
Evergreen Short-Intermediate Municipal Fund
Evergreen Short-Intermediate Municipal Fund-CA
Evergreen Tax Exempt Money Market Fund
Evergreen Money Market Fund Evergreen Foundation Fund
<PAGE>
Evergreen Florida High Income Fund
Evergreen Aggressive Growth Fund
Evergreen Balanced Fund*
Evergreen Utility Fund*
Evergreen Value Fund*
Evergreen U.S. Government Fund*
Evergreen Fixed Income Fund*
Evergreen Managed Bond Fund*
Evergreen Emerging Markets Growth Fund*
Evergreen International Equity Fund*
Evergreen Treasury Money Market Fund*
Evergreen Florida Municipal Bond Fund*
Evergreen Georgia Municipal Bond Fund*
Evergreen North Carolina Municipal Bond Fund*
Evergreen South Carolina Municipal Bond Fund*
Evergreen Virginia Municipal Bond Fund*
Evergreen High Grade Tax Free Fund*
* Prior to July 7, 1995, each Fund was named "First Union" instead of
"Evergreen."
Prospectuses for the Evergreen mutual funds may be obtained without
charge by contacting the Distributor or the Advisers at the address or telephone
number shown on the front cover of this Statement of Additional Information.
Cumulative Quantity Discount (Right of Accumulation). An investor's
purchase of additional Class A shares of a Fund may qualify for a Cumulative
Quantity Discount. The applicable sales charge will be based on the total of:
(i) the investor's current purchase;
(ii) the net asset value (at the close of business on the
previous day) of (a) all Class A, Class B and Class C shares
of the Fund held by the investor and (b) all such shares of
any other Evergreen mutual fund held by the investor; and
(iii) the net asset value of all shares described in paragraph
(ii) owned by another shareholder eligible to combine his or
her purchase with that of the investor into a single
"purchase" (see above).
For example, if an investor owned Class A, 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
<PAGE>
indicated in the Statement of Intention. At the investor's option, a Statement
of Intention may include purchases of Class A, B or C shares of the Fund or any
other Evergreen mutual fund made not more than 90 days prior to the date that
the investor signs a Statement of Intention; however, the 13-month period during
which the Statement of Intention is in effect will begin on the date of the
earliest purchase to be included.
Investors qualifying for the Combined Purchase Privilege described
above may purchase shares of the Evergreen mutual funds under a single Statement
of Intention. For example, if at the time an investor signs a Statement of
Intention to invest at least $100,000 in Class A shares of the Fund, the
investor and the investor's spouse each purchase shares of the Fund worth
$20,000 (for a total of $40,000), it will only be necessary to invest a total of
$60,000 during the following 13 months in shares of the Fund or any other
Evergreen mutual fund, to qualify for the 3.75% sales charge on the total amount
being invested (the sales charge applicable to an investment of $100,000).
The Statement of Intention is not a binding obligation upon the investor to
purchase the full amount indicated. The minimum initial investment under a
Statement of Intention is 5% of such amount. Shares purchased with the first 5%
of such amount will be held in escrow (while remaining registered in the name of
the investor) to secure payment of the higher sales charge applicable to the
shares actually purchased if the full amount indicated is not purchased, and
such escrowed shares will be involuntarily redeemed to pay the additional sales
charge, if necessary. Dividends on escrowed shares, whether paid in cash or
reinvested in additional Fund shares, are not subject to escrow. When the full
amount indicated has been purchased, the escrow will be released. To the extent
that an investor purchases more than the dollar amount indicated on the
Statement of Intention and qualifies for a further reduced sales charge, the
sales charge will be adjusted for the entire amount purchased at the end of the
13-month period. The difference in sales charge will be used to purchase
additional shares of the Fund subject to the rate of sales charge applicable to
the actual amount of the aggregate purchases.
Investors wishing to enter into a Statement of Intention in conjunction
with their initial investment in Class A shares of the Fund should complete the
appropriate portion of the Subscription Application found in the Prospectus
while current Class A shareholders desiring to do so can obtain a form of
Statement of Intention by contacting a Fund at the address or telephone 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,
<PAGE>
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 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
<PAGE>
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
Emerging Markets and International, the shareholder service fee) imposed on
Class B shares. Such conversion will be on the basis of the relative net asset
values of the two classes, without the imposition of any sales load, fee or
other charge. The purpose of the conversion feature is to reduce the
distribution services fee paid by holders of Class B shares that have been
outstanding long enough for the Distributor to have been compensated for the
expenses associated with the sale of such shares.
For purposes of conversion to Class A, Class B shares purchased through
the reinvestment of dividends and distributions paid in respect of Class B
shares in a shareholder's account will be considered to be held in a separate
sub-account. Each time any Class B shares in the shareholder's account (other
than those in the sub-account) convert to Class A, an equal pro-rata portion of
the Class B shares in the sub-account will also convert to Class A.
The conversion of Class B shares to Class A shares is subject to the
continuing availability of an opinion of counsel to the effect that (i) the
assessment of the higher distribution services fee (and, with respect to
Emerging Markets and International, shareholder service fee) and transfer agency
costs with respect to Class B shares does not result in the dividends or
distributions payable with respect to other Classes of a Fund's shares being
deemed "preferential dividends" under the Code, and (ii) the conversion of Class
B shares to Class A shares does not constitute a taxable event under Federal
income tax law. The conversion of Class B shares to Class A shares may be
suspended if such an opinion is no longer available at the time such conversion
is to occur. In that event, no further
<PAGE>
conversions of Class B shares would occur, and shares might continue to be
subject to the higher distribution services fee (and, with respect to Emerging
Markets and International, shareholder services fee)for an indefinite period
which may extend beyond the period ending eight years after the end of the
calendar month in which the shareholder's purchase order was accepted.
Level-Load Alternative--Class C Shares
Investors choosing the level load sales charge alternative purchase
Class C shares at the public offering price equal to the net asset value per
share of the Class C shares on the date of purchase without the imposition of a
front-end sales charge. However, you will pay a 1.0% contingent deferred sales
charge if you redeem shares during the first year after purchase. No charge is
imposed in connection with redemptions made more than one year from the date of
purchase. Class C shares are sold without a front-end sales charge so that the
Fund will receive the full amount of the investor's purchase payment and after
the first year without a contingent deferred sales charge so that the investor
will receive as proceeds upon redemption the entire net asset value of his or
her Class C shares. The Class C distribution services fee (and, with respect to
Emerging Markets and International, shareholder service fee) enables the Fund to
sell Class C shares without either a front-end or contingent deferred sales
charge. However, unlike Class B shares, Class C shares do not convert to any
other class shares of the Fund. Class C shares incur higher distribution
services fees (and, with respect to Emerging Markets and International,
shareholder service fees) than Class A shares, and will thus have a higher
expense ratio and pay correspondingly lower dividends than Class A shares. Class
Y Shares
Class Y shares are not offered to the general public and are available
only to (i) persons who at or prior to December 30, 1994 owned shares in a
mutual fund advised by Evergreen Asset, (ii) certain investment advisory clients
of the Advisers and their affiliates, and (iii) institutional investors. Class Y
shares do not bear any Rule 12b-1 distribution expenses and are not subject to
any front-end or contingent deferred sales charges.
GENERAL INFORMATION ABOUT THE FUNDS
(See also "Other Information - General Information" in each Fund's Prospectus)
Capitalization and Organization
The Evergreen Emerging Markets Growth Fund and Evergreen International
Equity Fund, which prior to July 7, 1995 were known as the First Union Emerging
Markets Growth Portfolio, and First Union International Equity Portfolio,
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 and Evergreen Global Leaders Fund are each separate series of Evergreen
Equity Trust (formerly Evergreen Real Estate Equity Trust), a Massachusetts
business trust. The above-named Trusts are individually referred to in this
Statement of Additional Information as the "Trust" and collectively as the
"Trusts." Each Trust is governed by a board of trustees. Unless otherwise
stated, references to the "Board of Trustees" or "Trustees" in this Statement of
Additional Information refer to the Trustees of all the Trusts.
Global and Global Leaders may issue an unlimited number of shares of
beneficial interest with a $0.0001 par value. Emerging Markets and International
may issue an unlimited number of shares of beneficial interest without par
value. All shares of these Funds have equal rights and privileges. Each share is
entitled to one vote, to participate equally in dividends and distributions
declared by the Funds and on liquidation to their proportionate share of the
assets remaining after satisfaction of outstanding liabilities. Shares of these
Funds are fully paid,
<PAGE>
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.
<PAGE>
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 and Global Leaders.
KPMG Peat Marwick LLP has been selected to be the independent auditors
of Emerging Markets and International.
PERFORMANCE INFORMATION
Total Return
From time to time a Fund may advertise its "total return." Computed
separately for each class, the Fund's "total return" is its average annual
compounded total return for recent one, five, and ten-year periods (or the
period since the Fund's inception). The Fund's total return for such a period is
computed by finding, through the use of a formula prescribed by the Securities
and Exchange Commission, the average annual compounded rate of return over the
period that would equate an assumed initial amount invested to the value of such
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%
<PAGE>
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 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.
<PAGE>
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
37
<PAGE>
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
<PAGE>
the Securities and Exchange Commission or may be examined, without charge, at
the offices of the Securities and Exchange Commission in Washington, D.C.
FINANCIAL STATEMENTS
Each Fund's (other than Global Leaders') financial statements appearing
in their most current fiscal year Annual Report to shareholders and the report
thereon of the independent auditors appearing therein, namely Price Waterhouse
LLP (in the case of Global) or KPMG Peat Marwick LLP (in the case of Emerging
Markets and International) are incorporated by reference in this Statement of
Additional Information. The Annual Reports to Shareholders for each Fund, which
contain the referenced statements, are available upon request and without
charge. The inital audited financial statement of Global Leaders is part of this
Statement of Additional Information.
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
<PAGE>
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 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.
*******************************************************************************
*******************************************************************************
<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 September 20, 1995)
(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 Equity Trust:
Evergreen Global Real Estate Equity Fund
Evergreen Global Leaders Fund
Evergreen U.S. Real Estate Equity Fund
The Evergreen Limited Market Fund, Inc.
Evergreen Growth and Income Fund
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 29th day of
September, 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. 11 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 September 29, 1995
John J. Pileggi Treasurer
/s/ Laurence B. Ashkin
- ------------------------------- Trustee September 29, 1995
Laurence B. Ashkin
/s/ Foster Bam
- ------------------------------- Trustee September 29, 1995
Foster Bam
/s/ James S. Howell
- ------------------------------- Trustee September 29, 1995
James S. Howell
/s/ Robert J. Jeffries
- ------------------------------- Trustee September 29, 1995
Robert J. Jeffries
/s/ Gerald M. McDonnell
- ------------------------------- Trustee September 29, 1995
Gerald M. McDonnell
/s/ Thomas L. McVerry
- ------------------------------- Trustee September 29, 1995
Thomas L. McVerry
/s/ William Walt Pettit
- ------------------------------- Trustee September 29, 1995
William Walt Pettit
/s/ Russell A. Salton, III, M.D
- ------------------------------- Trustee September 29, 1995
Russell A. Salton, III, M.D
/s/ Michael S. Scofield
- ------------------------------- Trustee September 29, 1995
Michael S. Scofield
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description Page
11 Consent of Independent
Accountants
Evergreen Asset Management Corp.
2500 Westchester Avenue
Purchase, New York 10577
September 29, 1995
Lieber & Company
2500 Westchester Avenue
Purchase, New York 10577
Dear Sirs:
We have entered into an agreement with the Evergreen Equity Trust (the
"Trust"), an investment company organized as a series company, pursuant to which
we act as investment adviser to the Evergreen Global Leaders Fund series of the
Trust (the "Fund"). Accordingly, this will confirm our agreement as follows:
1. You agree for the duration of this Agreement that you will provide
us with office facilities and, through your research personnel, furnish us with
all such factual information and investment recommendations and such other
services as we shall reasonably request. We shall expect of you, and you shall
give us the benefit of, your best judgement and efforts in rendering these
services to us, and we agree as an inducement to your undertaking such services
that you shall not be liable for any mistake of judgment or in any other event
whatsoever, except for lack of good faith, provided that nothing herein shall be
deemed to protect you against any liability to the Fund or to the shareholders
of the Fund to which you would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of your duties
hereunder or by reason of your reckless disregard of your obligations and duties
hereunder.
2. We agree to reimburse you on the basis of your direct and indirect
costs of performing the services set forth in paragraph 1 above. Indirect costs
shall be allocated on a basis mutually satisfactory to you and us.
3. As used in this Agreement, the terms "assignment" and "vote of a
majority of the outstanding voting securities" shall have the meanings given to
them by Sections 2(a)(4) and 2(a)(42), respectively, of the Investment Company
Act of 1940, as amended (the "Act").
This Agreement shall be automatically terminated in the event of its
assignment (as such term is defined in the Act), or upon termination of the
above-mentioned agreement between the Trust and the undersigned.
This Agreement may be terminated at any time, without payment of any
penalty, (a) by the Trustees of the Trust or by vote of a majority of the Fund's
outstanding voting securities, or by the undersigned, on sixty (60) days'
written notice addressed to you at your principal place of business; and (b) by
you, without payment of any penalty, on sixty (60) days' written notice
addressed to the Trust at the Trust's principal place of business.
<PAGE>
This Agreement shall be in effect until June 30, 1997. This Agreement
shall continue in effect from year to year thereafter, so long as such
continuance is specifically approved at least annually by a vote of a majority
of Trustees of the Fund who are not interested persons (as such term is defined
in the Act) of any party to this Agreement, voting in person at a meeting duly
called for the purpose of voting on such approval, and by a vote of the Trustees
of the Trust or a majority of the outstanding voting securities of the Fund. A
vote of a majority of the outstanding voting securities of the Fund is defined
in the Act to mean a vote of the lesser of (i) more than 50% of the outstanding
voting securities of the Fund or (ii) 67% or more of the voting securities
present at the meeting if more than 50% of the outstanding voting securities are
present or represented by proxy.
You agree to advise us of any change in your partnership within a
reasonable time after such a change.
4. This Agreement may not be transferred, assigned, sold or in any manner
hypothecated or pledged by you.
5. It is expected that you will provide brokerage services to the Fund.
Accordingly, you agree to comply with Section 11(a)(1) of the Securities
Exchange Act of 1934 and any rules prescribed by the Securities and Exchange
Commission thereunder, as amended from time to time, with respect to brokerage
transactions effected and/or executed by you on behalf of the Fund. In addition,
you shall furnish at least annually to us a statement setting forth the total
amount of all compensation retained by you in connection with effecting and/or
executing transactions for the account during the period covered by the
statement, as required by Section 11(a)(1).
If you are in agreement with the foregoing, please sign the form of
acceptance on the enclosed counterpart hereof and return the same to us.
Very truly yours,
Evergreen Asset Management Corp.
By:_________________
The foregoing Agreement is
hereby accepted as of the
date first above written
LIEBER & COMPANY
By:_________________
Evergreen Asset Management Corp.
2500 Westchester Avenue
Purchase, New York 10577
September 29, 1995
Lieber & Company
2500 Westchester Avenue
Purchase, New York 10577
Dear Sirs:
We have entered into an agreement with the Evergreen Equity Trust (the
"Trust"), an investment company organized as a series company, pursuant to which
we act as investment adviser to the Evergreen Global Leaders Fund series of the
Trust (the "Fund"). Accordingly, this will confirm our agreement as follows:
1. You agree for the duration of this Agreement that you will provide
us with office facilities and, through your research personnel, furnish us with
all such factual information and investment recommendations and such other
services as we shall reasonably request. We shall expect of you, and you shall
give us the benefit of, your best judgement and efforts in rendering these
services to us, and we agree as an inducement to your undertaking such services
that you shall not be liable for any mistake of judgment or in any other event
whatsoever, except for lack of good faith, provided that nothing herein shall be
deemed to protect you against any liability to the Fund or to the shareholders
of the Fund to which you would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of your duties
hereunder or by reason of your reckless disregard of your obligations and duties
hereunder.
2. We agree to reimburse you on the basis of your direct and indirect
costs of performing the services set forth in paragraph 1 above. Indirect costs
shall be allocated on a basis mutually satisfactory to you and us.
3. As used in this Agreement, the terms "assignment" and "vote of a
majority of the outstanding voting securities" shall have the meanings given to
them by Sections 2(a)(4) and 2(a)(42), respectively, of the Investment Company
Act of 1940, as amended (the "Act").
This Agreement shall be automatically terminated in the event of its
assignment (as such term is defined in the Act), or upon termination of the
above-mentioned agreement between the Trust and the undersigned.
This Agreement may be terminated at any time, without payment of any
penalty, (a) by the Trustees of the Trust or by vote of a majority of the Fund's
outstanding voting securities, or by the undersigned, on sixty (60) days'
written notice addressed to you at your principal place of business; and (b) by
you, without payment of any penalty, on sixty (60) days' written notice
addressed to the Trust at the Trust's principal place of business.
<PAGE>
This Agreement shall be in effect until June 30, 1997. This Agreement
shall continue in effect from year to year thereafter, so long as such
continuance is specifically approved at least annually by a vote of a majority
of Trustees of the Fund who are not interested persons (as such term is defined
in the Act) of any party to this Agreement, voting in person at a meeting duly
called for the purpose of voting on such approval, and by a vote of the Trustees
of the Trust or a majority of the outstanding voting securities of the Fund. A
vote of a majority of the outstanding voting securities of the Fund is defined
in the Act to mean a vote of the lesser of (i) more than 50% of the outstanding
voting securities of the Fund or (ii) 67% or more of the voting securities
present at the meeting if more than 50% of the outstanding voting securities are
present or represented by proxy.
You agree to advise us of any change in your partnership within a
reasonable time after such a change.
4. This Agreement may not be transferred, assigned, sold or in any manner
hypothecated or pledged by you.
5. It is expected that you will provide brokerage services to the Fund.
Accordingly, you agree to comply with Section 11(a)(1) of the Securities
Exchange Act of 1934 and any rules prescribed by the Securities and Exchange
Commission thereunder, as amended from time to time, with respect to brokerage
transactions effected and/or executed by you on behalf of the Fund. In addition,
you shall furnish at least annually to us a statement setting forth the total
amount of all compensation retained by you in connection with effecting and/or
executing transactions for the account during the period covered by the
statement, as required by Section 11(a)(1).
If you are in agreement with the foregoing, please sign the form of
acceptance on the enclosed counterpart hereof and return the same to us.
Very truly yours,
Evergreen Asset Management Corp.
By:_________________
The foregoing Agreement is
hereby accepted as of the
date first above written
LIEBER & COMPANY
By:_________________
ADMINISTRATIVE SERVICES AGREEMENT
This Administrative Services Agreement is made as of this __th
day of _____ 1995 between First Union Funds, a Massachusetts business trust
(herein called the "Trust"), and Evergreen Asset Management Corp., a New York
corporation (herein called "EAMC").
WHEREAS, the Trust is a Massachusetts business trust
consisting of one or more portfolios which operates as an open-end management
investment company and is so registered under the Investment Company Act of
1940; and
WHEREAS, the Trust desires to retain EAMC as its Administrator
to provide it with administrative services, and EAMC is willing to render such
services.
NOW, THEREFORE, in consideration of the premises and mutual
covenants set forth herein, the parties hereto agree as follows:
1. Appointment of Administrator. The Trust hereby appoints EAMC as
Administrator of the Trust and each of its portfolios on the terms and
conditions set forth in this Agreement; and EAMC hereby accepts such appointment
and agrees to perform the services and duties set forth in Section 2 of this
Agreement in consideration of the compensation provided for in Section 4 hereof.
2. Services and Duties. As Administrator, and subject to the
supervision and control of the Trustees of the Trust, EAMC will hereafter
provide facilities, equipment and personnel to carry out the following
administrative services for operation of the business and affairs of the Trust
and each of its portfolios:
(a) prepare, file and maintain the Trust's governing documents,
including the Declaration of Trust (which has previously been prepared and
filed), the By- laws, minutes of meetings of Trustees and shareholders, and
proxy statements for meetings of shareholders;
(b) prepare and file with the Securities and Exchange Commission and
the appropriate state securities authorities the registration statements for the
Trust and the Trust's shares and all amendments thereto, reports to regulatory
authorities and shareholders, prospectuses, proxy statements, and such other
documents as may be necessary or convenient to enable the Trust to make a
continuous offering of its shares;
(c) prepare, negotiate and administer contracts on behalf of the Trust
with, among others, the Trust's distributor, custodian and transfer agent;
(d) supervise the Trust's fund accounting agent in the maintenance of
the Trust's general ledger and in the preparation of the Trust's financial
statements, including oversight of expense accruals and payments and the
determination of the net asset value of the Trust's assets and of the Trust's
shares, and of the declaration and payment of dividends and other distributions
to shareholders;
(e) calculate performance data of the Trust for dissemination to
information services covering the investment company industry;
(f) prepare and file the Trust's tax returns;
(g) examine and review the operations of the Trust's custodian and
transfer agent;
(h) coordinate the layout and printing of publicly disseminated
prospectuses and reports;
(i) prepare various shareholder reports;
(j) assist with the design, development and operation of new portfolios
of the Trust;
(k) coordinate shareholder meetings;
(l) provide general compliance services; and
(m) advise the Trust and its Trustees on matters concerning the Trust
and its affairs.
The foregoing, along with any additional services that EAMC shall agree
in writing to perform for the Trust hereunder, shall hereafter be referred to as
"Administrative Services." Administrative Services shall not include any duties,
functions, or services to be performed for the Trust by the Trust's investment
adviser, distributor, custodian or transfer agent pursuant to their agreements
with the Trust.
3. Expenses. EAMC shall be responsible for expenses incurred in
providing office space, equipment and personnel as may be necessary or
convenient to provide the Administrative Services to the Trust. The Trust shall
be responsible for all other expenses incurred by EAMC on behalf of the Trust,
including without limitation postage and courier expenses, printing expenses,
registration fees, filing fees, fees of outside counsel and independent
auditors, insurance premiums, fees payable to Trustees who are not EAMC
employees, and trade association dues.
4. Compensation. For the Administrative Services provided, the Trust
hereby agrees to pay and EAMC hereby agrees to accept as full compensation for
its services rendered hereunder an administrative fee, calculated daily and
payable monthly, at an annual rate determined in accordance with the table
below.
Aggregate Daily Net Assets of
Funds Administered by EAMC
For Which EAMC or First Union
Administrative National Bank of North Carolina
Fee Serve as Investment Adviser
.050% on the first $7 billion
.035% on the next $3 billion
.030% on the next $5 billion
.020% on the next $10 billion
.015% on the next $5 billion
.010% on assets in excess of $30 billion
Each portfolio of the Trust shall pay a portion of the administrative fee equal
to the rate determined above times that portfolios average annual daily net
assets.
5. Responsibility of Administrator. EAMC shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Trust in
connection with the matters to which this Agreement relates, except a loss
resulting from wilful misfeasance, bad faith or gross negligence on its part in
the performance of its duties or from reckless disregard by it of its
obligations and duties under this Agreement. EAMC shall be entitled to rely on
and may act upon advice of counsel (who may be counsel for the Trust) on all
matters, and shall be without liability for any action reasonably taken or
omitted pursuant to such advice. Any person, even though also an officer,
director, partner, employee or agent of EAMC, who may be or become an officer,
trustee, employee or agent of the Trust, shall be deemed, when rendering
services to the Trust or acting on any business of the Trust (other than
services or business in connection with the duties of EAMC hereunder) to be
rendering such services to or acting solely for the Trust and not as an officer,
director, partner, employee or agent or one under the control or direction of
EAMC even though paid by EAMC.
6. Duration and Termination.
(a) This Agreement shall be in effect until July____, 1997, and shall
continue in effect from year to year thereafter, provided it is approved, at
least annually, by a vote of a majority of Trustees of the Trust including a
majority of the disinterested Trustees.
(b) This Agreement may be terminated at any time, without payment of
any penalty, on sixty (60) day's prior written notice by a vote of a majority of
the Trust's Trustees or by EAMC.
7. Amendment. No provision of this Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against which an enforcement of the change, waiver, discharge or
termination is sought.
8. Notices. Notices of any kind to be given to the Trust hereunder by
EAMC shall be in writing and shall be duly given if delivered to the Trust and
to its investment adviser at the following address: First Union National Bank of
North Carolina, One First Union Center, Charlotte, NC 28288. Notices of any kind
to be given to EAMC hereunder by the Trust shall be in writing and shall be duly
given if delivered to EAMC at 2500 Westchester Avenue, Purchase, New York 10577,
Attention: General Counsel.
9. Limitation of Liability. EAMC is hereby expressly put on notice of
the limitation of liability as set forth in Article IX of the Declaration of
Trust and agrees that the obligations pursuant to this Agreement of a particular
portfolio and of the Trust with respect to that particular portfolio be limited
solely to the assets of that particular portfolio, and EAMC shall not seek
satisfaction of any such obligation from the assets of any other portfolio, the
shareholders of any portfolio, the Trustees, officers, employees or agents of
the Trust, or any of them.
10. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provison of this Agreement shall be held or made invalid by a court or
regulatory agency decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby. Subject to the provisions of Section 5
hereof, this Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and shall be governed by New
York law; provided, however, that nothing herein shall be construed in a manner
inconsistent with the Investment Company Act of 1940 or any rule or regulation
promulgated by the Securities and Exchange Commission thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
FIRST UNION FUNDS
By____________________
Its:__________________
Attest:_________________
Its:_______________________
EVERGREEN ASSET MANAGEMENT CORP.
By_________________________________________
Its:_______________________________________
Attest:________________________
Its:___________________________
SUB-ADMINISTRATOR AGREEMENT
This Sub-Administrator Agreement is made as of this 7th day of
July, 1995 between First Union Funds, a Massachusetts business trust (herein
called the "Trust"), and Furman Selz Incorporated, a New York corporation
(herein called "Furman").
WHEREAS, the Trust is a Massachusetts business trust
consisting of one or more portfolios which operates as an open-end management
investment company and is so registered under the Investment Company Act of
1940; and
WHEREAS, the Trust has appointed Evergreen Asset Management
Corp. ("EAMC") as administrator to the Trust and desires to retain Furman as its
Sub-Administrator to provide it with certain additional administrative services
not provided for under its arrangement with EAMC ("Sub-Administrative
Services"), and Furman is willing to render such services.
NOW, THEREFORE, in consideration of the premises and mutual
covenants set forth herein, the parties hereto agree as follows:
1. Appointment of Sub-Administrator. The Trust hereby appoints Furman
as Sub-Administrator of the Trust and each of its portfolios on the terms and
conditions set forth in this Agreement; and Furman hereby accepts such
appointment and agrees to perform the services and duties set forth in Section 2
of this Agreement in consideration of the compensation provided for in Section 4
hereof.
2. Services and Duties. As Sub-Administrator, and subject to the
supervision and control of the Trustees of the Trust, Furman will hereafter
provide facilities, equipment and personnel to carry out the following
Sub-Administrative services to assist in the operation of the business and
affairs of the Trust and each of its portfolios:
(a) provide individuals reasonably acceptable to the Trustees of the
Trust for nomination, appointment or election as officers of the Trust
and who will be responsible for the management of certain of the
Trust's affairs as determined from time to time by the Trustees;
(b) review filings with the Securities and Exchange Commission and
state securities authorities that have been prepared on behalf of the
Trust by the administrator and take such actions as may be reasonably
requested by the administrator to effect such filings;
(c) verify, authorize and transmit to the Trust's Custodian, Transfer
Agent and Dividend Disbursing Agent all necessary instructions for the
disbursement of cash, issuance of shares, tender and receipt of
portfolio securities, payment of expenses and payment of dividends; and
(d) advise the Trust and its Trustees on matters concerning the Trust
and its affairs.
Furman may, in addition, agree in writing to perform additional
Sub-Administrative Services for the Trust. Sub-Administrative Services shall not
include any duties, functions, or services to be performed for the Trust by the
Trust's investment adviser, administrator, distributor, custodian or transfer
agent pursuant to their agreements with the Trust.
3. Expenses. Furman shall be responsible for expenses incurred in
providing office space, equipment and personnel as may be necessary or
convenient to provide the Sub-Administrative Services to the Trust. The Trust
shall be responsible for all other expenses incurred by Furman on behalf of the
Trust, including without limitation postage and courier expenses, printing
expenses, registration fees, filing fees, fees of outside counsel and
independent auditors, insurance premiums, fees payable to Trustees who are not
Furman employees, and trade association dues.
4. Compensation. For the Sub-Administrative Services provided, the
Trust hereby agrees to pay and Furman hereby agrees to accept as full
compensation for its services rendered hereunder a sub-administrative fee,
calculated daily and payable monthly at an annual rate determined in accordance
with the table below.
Aggregate Daily Net Assets of
Sub-Administrative Funds Administered by EAMC
Fee as a % of For Which EAMC or First Union
Average Annual National Bank of North Carolina
Daily Net Assets Serve as Investment Adviser
.0100% on the first $7 billion
.0075% on the next $3 billion
.0050% on the next $15 billion
.0040% on assets in excess of $25 billion
Each portfolio of the Trust shall pay a portion of the sub-administrative fee
equal to the rate determined above times that portfolio's average annual daily
net assets.
5. Responsibility of Sub-Administrator. Furman shall not be liable for
any error of judgment or mistake of law or for any loss suffered by the Trust in
connection with the matters to which this Agreement relates, except a loss
resulting from wilful misfeasance, bad faith or gross negligence on its part in
the performance of its duties or from reckless disregard by it of its
obligations and duties under this Agreement. Furman shall be entitled to rely on
and may act upon advice of counsel (who may be counsel for the Trust) on all
matters, and shall be without liability for any action reasonably taken or
omitted pursuant to such advice. Any person, even though also an officer,
director, partner, employee or agent of Furman, who may be or become an officer,
trustee, employee or agent of the Trust, shall be deemed, when rendering
services to the Trust or acting on any business of the Trust (other than
services or business in connection with the duties of Furman hereunder) to be
rendering such services to or acting solely for the Trust and not as an officer,
director, partner, employee or agent or one under the control or direction of
Furman even though paid by Furman.
6. Duration and Termination.
(a) This Agreement shall be in effect until July____, 1997, and shall
continue in effect from year to year thereafter, provided it is approved, at
least annually, by a vote of a majority of Trustees of the Trust, including a
majority of the disinterested Trustees.
(b) This Agreement may be terminated at any time, without payment of
any penalty, on sixty (60) day's prior written notice by a vote of a majority of
the Trust's Trustees or by Furman.
7. Amendment. No provision of this Agreement may be changed, waived, discharged
or terminated orally, but only by an instrument in writing signed by the party
against which an enforcement of the change, waiver, discharge or termination is
sought.
8. Notices. Notices of any kind to be given to the Trust hereunder by Furman
shall be in writing and shall be duly given if delivered to the Trust and to its
investment adviser at the following address: First Union National Bank of North
Carolina, One First Union Center, Charlotte, NC 28288. Notices of any kind to be
given to Furman hereunder by the Trust shall be in writing and shall be duly
given if delivered to Furman at 237 Park Avenue, New York, New York 10022,
Attention: General Counsel.
9. Limitation of Liability. Furman is hereby expressly put on notice of the
limitation of liability as set forth in Article IX of the Declaration of Trust
and agrees that the obligations pursuant to this Agreement of a particular
portfolio and of the Trust with respect to that particular portfolio be limited
solely to the assets of that particular portfolio, and Furman shall not seek
satisfaction of any such obligation from the assets of any other portfolio, the
shareholders of any portfolio, the Trustees, officers, employees or agents of
the Trust, or any of them.
10. Miscellaneous. The captions in this Agreement are included for convenience
of reference only and in no way define or delimit any of the provisions hereof
or otherwise affect their construction or effect. If any provison of this
Agreement shall be held or made invalid by a court or regulatory agency
decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby. Subject to the provisions of Section 5 hereof, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and shall be governed by New York law;
provided, however, that nothing herein shall be construed in a manner
inconsistent with the Investment Company Act of 1940 or any rule or regulation
promulgated by the Securities and Exchange Commission thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
FIRST UNION FUNDS
By____________________
Its:____________________
Attest:_________________
Its:____________________
FURMAN SELZ INCORPORATED
By_________________________________________
Its:_______________________________________
Attest:________________________
Its:___________________________
Consent of Independent Accountants
We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 11 to the registration
statement on Form N-1A (the "Registration Statement") of our report dated
September 7, 1995, relating to the statement of assets and liabilities at
September 7, 1995 of Evergreen Global Leaders Fund, which appears in such
Statement of Additional Information, and to the incorporation by reference of
our report into the Prospectus which constitutes a part of this Registration
Statement. We also consent to the references to us under the headings
"Independent Auditors" and "Financial Statements" in the Statement of Additional
Information.
Price Waterhouse LLP
New York, New York
September 7, 1995
