PROSPECTUS July 7, 1995
EVERGREEN(SM) INTERNATIONAL/GLOBAL GROWTH FUNDS (Evergreen Logo appears here)
EVERGREEN EMERGING MARKETS GROWTH FUND
EVERGREEN INTERNATIONAL EQUITY FUND
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND
CLASS A SHARES
CLASS B SHARES
CLASS C SHARES
The Evergreen International/Global Growth Funds (the "Funds") are
designed to provide investors with a selection of investment alternatives
which seek to provide capital growth and diversification. This Prospectus
provides information regarding the Class A, Class B and Class C shares
offered by the Funds. Each Fund is, or is a series of, an open-end,
diversified, management investment company. This Prospectus sets forth
concise information about the Funds that a prospective investor should know
before investing. The address of the Funds is 2500 Westchester Avenue,
Purchase, New York 10577.
A "Statement of Additional Information" for the Funds dated July
7, 1995 has been filed with the Securities and Exchange Commission and is
incorporated by reference herein. The Statement of Additional Information
provides information regarding certain matters discussed in this Prospectus
and other matters which may be of interest to investors, and may be
obtained without charge by calling the Funds at (800) 807-2940. There can
be no assurance that the investment objective of any Fund will be achieved.
Investors are advised to read this Prospectus carefully.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF
FIRST UNION OR ANY SUBSIDIARIES OF FIRST UNION, ARE NOT ENDORSED OR
GUARANTEED BY FIRST UNION OR ANY SUBSIDIARIES OF FIRST UNION, AND ARE NOT
INSURED OR OTHERWISE PROTECTED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY AND
INVOLVE RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
KEEP THIS PROSPECTUS FOR FUTURE REFERENCE
EVERGREEN(SM) is a Service Mark of Evergreen Asset Management Corp.
Copyright 1995, Evergreen Asset Management Corp.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
OVERVIEW OF THE FUNDS 2
EXPENSE INFORMATION 3
FINANCIAL HIGHLIGHTS 5
DESCRIPTION OF THE FUNDS
Investment Objectives and Policies 9
Investment Practices and Restrictions 10
MANAGEMENT OF THE FUNDS
Investment Adviser 15
Sub-Advisers 17
Distribution Plan and Agreements 17
PURCHASE AND REDEMPTION OF SHARES
How to Buy Shares 18
How to Redeem Shares 21
Exchange Privilege 22
Shareholder Services 23
Effect of Banking Laws 23
OTHER INFORMATION
Dividends, Distributions and Taxes 24
Management's Discussion of Fund Performance 25
General Information 26
</TABLE>
OVERVIEW OF THE FUNDS
The following summary is qualified in its entirety by the more detailed
information contained elsewhere in this Prospectus. See "Description of the
Funds" and "Management of the Funds".
The Investment Adviser to EVERGREEN GLOBAL REAL ESTATE EQUITY FUND is
Evergreen Asset Management Corp. ("Evergreen Asset") which, with its
predecessors, has served as an investment adviser to the Evergreen Funds since
1971. Evergreen Asset is a wholly-owned subsidiary of First Union National Bank
of North Carolina ("FUNB"), which in turn is a subsidiary of First Union
Corporation, one of the ten largest bank holding companies in the United States.
The Capital Management Group of FUNB ("CMG") serves as investment adviser to
EVERGREEN EMERGING MARKETS GROWTH FUND and EVERGREEN INTERNATIONAL EQUITY FUND.
EVERGREEN EMERGING MARKETS GROWTH FUND (formerly First Union Emerging
Markets Growth Portfolio) seeks to provide long-term capital appreciation. The
EVERGREEN EMERGING MARKETS GROWTH FUND invests in equity securities of issuers
located in countries with emerging markets.
EVERGREEN INTERNATIONAL EQUITY FUND (formerly First Union International
Equity Portfolio) seeks to provide long-term capital appreciation. The EVERGREEN
INTERNATIONAL EQUITY FUND invests in equity securities of non-U.S. issuers.
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND seeks long-term capital growth.
Current income is a secondary objective. It invests primarily in equity
securities of United States and non-United States companies which are
principally engaged in the real estate industry or which own significant real
estate assets. It will not purchase direct interests in real estate.
THERE IS NO ASSURANCE THAT THE INVESTMENT OBJECTIVE OF ANY FUND WILL BE
ACHIEVED.
2
<PAGE>
EXPENSE INFORMATION
The table set forth below summarizes the shareholder transaction costs
associated with an investment in each Class A, Class B and Class C Shares of a
Fund. For further information see "Purchase and Redemption of Shares" and
"General Information -- Other Classes of Shares".
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES Class A Shares Class B Shares Class C Shares
<S> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases 4.75% None None
(as a % of offering price)
Sales Charge on Dividend Reinvestments None None None
Contingent Deferred Sales Charge (as a % of None 5% during the first year, 4% during the 1% during the
original purchase price or redemption second year, 3% during the third and fourth first year and
proceeds, whichever is lower) years, 2% during the fifth year, 1% during 0% thereafter
the sixth and seventh years and 0% after the
seventh year
Redemption Fee None None None
Exchange Fee None None None
</TABLE>
The following tables show for each Fund the estimated annual operating
expenses (as a percentage of average net assets) attributable to each Class of
Shares, together with examples of the cumulative effect of such expenses on a
hypothetical $1,000 investment in each Class for the periods specified assuming
(i) a 5% annual return, and (ii) redemption at the end of each period and,
additionally for Class B and C, no redemption at the end of each period.
In the following examples (i) the expenses for Class A Shares assume
deduction of the maximum 4.75% sales charge at the time of purchase, (ii) the
expenses for Class B Shares and Class C Shares assume deduction at the time of
redemption (if applicable) of the maximum contingent deferred sales charge
applicable for that time period, and (iii) the expenses for Class B Shares
reflect the conversion to Class A Shares eight years after purchase (years eight
through ten, therefore, reflect Class A expenses).
EVERGREEN EMERGING MARKETS GROWTH FUND
<TABLE>
<CAPTION>
EXAMPLES
Assuming
Assuming Redemption at End of no
ANNUAL OPERATING EXPENSES** Period Redemption
Class B Class C Class A Class B Class C Class B
Class A
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Advisory Fees 1.50% 1.50% 1.50% After 1 Year $ 71 $ 82 $ 42 $ 32
Administrative Fees .06% .06% .06% After 3 Years $ 119 $ 127 $ 97 $ 97
12b-1 Fees* .25% .75% .75% After 5 Years $ 169 $ 185 $ 165 $ 165
Shareholder Service Fees -- .25% .25% After 10 Years $ 308 $ 320 $ 346 $ 320
Other Expenses .59% .59% .59%
Total 2.40% 3.15% 3.15%
<CAPTION>
Class C
<S> <C> <C>
Advisory Fees After 1 Year $ 32
Administrative Fees After 3 Years $ 97
12b-1 Fees* After 5 Years $ 165
Shareholder Service Fees After 10 Years $ 346
Other Expenses
Total
</TABLE>
EVERGREEN INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
EXAMPLES
Assuming
Assuming Redemption at End of no
ANNUAL OPERATING EXPENSES** Period Redemption
Class B Class C Class A Class B Class C Class B
Class A
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Advisory Fees .82% .82% .82% After 1 Year $ 61 $ 72 $ 32 $ 22
Administrative Fees .06% .06% .06% After 3 Years $ 90 $ 98 $ 68 $ 68
12b-1 Fees* .25% .75% .75% After 5 Years $ 121 $ 136 $ 116 $ 116
Shareholder Service Fees -- .25% .25% After 10 Years $ 209 $ 272 $ 250 $ 222
Other Expenses .29% .29% .29%
Total 1.42% 2.17% 2.17%
<CAPTION>
Class C
<S> <C> <C>
Advisory Fees After 1 Year $ 22
Administrative Fees After 3 Years $ 68
12b-1 Fees* After 5 Years $ 116
Shareholder Service Fees After 10 Years $ 250
Other Expenses
Total
</TABLE>
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND
<TABLE>
<CAPTION>
EXAMPLES
Assuming
Assuming Redemption at End of no
ANNUAL OPERATING EXPENSES** Period Redemption
Class B Class C Class A Class B Class C Class B
Class A
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Advisory Fees 1.00% 1.00% 1.00% After 1 Year $ 64 $ 75 $ 35 $ 25
12b-1 Fees* .25% 1.00% 1.00% After 3 Years $ 99 $ 107 $ 77 $ 77
Other Expenses .46% .46% .46% After 5 Years $ 136 $ 151 $ 131 $ 131
Total 1.71% 2.46% 2.46% After 10 Years $ 240 $ 252 $ 280 $ 252
<CAPTION>
Class C
<S> <C> <C>
Advisory Fees After 1 Year $ 25
12b-1 Fees* After 3 Years $ 77
Other Expenses After 5 Years $ 131
Total After 10 Years $ 280
</TABLE>
3
<PAGE>
*Class A Shares can pay up to .75 of 1% of average net assets as a 12b-1 Fee.
For the forseeable future, the Class A 12b-1 Fees will be limited to .25 of 1%
of average net assets. For Class B and Class C Shares of EVERGREEN GLOBAL REAL
ESTATE EQUITY FUND, a portion of the 12b-1 Fees equivalent to .25 of 1% of
average net assets will be shareholder servicing-related. Distribution-related
12b-1 Fees will be limited to .75 of 1% of average net assets as permitted under
the rules of the National Association of Securities Dealers, Inc.
**The annual operating expenses and examples do not reflect fee waivers and
expense reimbursements for the most recent fiscal period. Actual expenses net of
fee waivers and expense reimbursements for the fiscal period ended December 31,
1994 or September 30, 1994, as applicable, for Class A, B and C Shares were as
follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
<S> <C> <C> <C>
Evergreen Emerging Markets Growth Fund 1.78% 2.53% 2.53%
Evergreen International Equity Fund 1.26% 2.02% 2.01%
</TABLE>
From time to time, each Fund's investment adviser may, at its discretion,
reduce or waive its fees or reimburse the Funds for certain of their expenses in
order to reduce their expense ratios. Each Fund's investment adviser may cease
these waivers and reimbursements at any time.
The purpose of the foregoing table is to assist an investor in
understanding the various costs and expenses that an investor in each Class of
Shares of the Funds will bear directly or indirectly. The amounts set forth both
in the tables and in the examples are estimated amounts based on the experience
of each Fund for the most recent fiscal period. Such expenses have been restated
to reflect current fee arrangements and in the case of Funds that did not offer
all of the above-referenced Classes of shares during such periods, the amounts
set forth in the tables are based on the expenses incurred by the Classes which
were offered. THE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES OR ANNUAL RETURN. ACTUAL EXPENSES AND ANNUAL RETURN MAY BE
GREATER OR LESS THAN THOSE SHOWN. For a more complete description of the various
costs and expenses borne by the Funds see "Management of the Funds". As a result
of asset-based sales charges, long-term shareholders may pay more than the
economic equivalent of the maximum front-end sales charges permitted under the
rules of the National Association of Securities Dealers, Inc.
4
<PAGE>
FINANCIAL HIGHLIGHTS
The tables on the following pages present, for each Fund, financial
highlights for a share outstanding throughout each period indicated. The
information in the tables for the five most recent fiscal years or the life of
the Fund if shorter for EVERGREEN EMERGING MARKETS GROWTH FUND and EVERGREEN
INTERNATIONAL EQUITY FUND has been audited by KPMG Peat Marwick LLP, each Fund's
independent auditors, for EVERGREEN GLOBAL REAL ESTATE EQUITY FUND has, except
as noted otherwise, been audited by Price Waterhouse LLP, the Fund's independent
auditors. A report of KPMG Peat Marwick LLP or Price Waterhouse LLP, as the case
may be, on the audited information with respect to each Fund is incorporated by
reference in the Fund's Statement of Additional Information. The following
information for each Fund should be read in conjunction with the financial
statements and related notes which are incorporated by reference in the Fund's
Statement of Additional Information.
Further information about a Fund's performance is contained in the Fund's
annual report to shareholders, which may be obtained without charge.
EVERGREEN EMERGING MARKETS GROWTH FUND
<TABLE>
<CAPTION>
SEPTEMBER 6, 1994*
THROUGH DECEMBER 31, 1994
CLASS A CLASS B CLASS C CLASS Y
SHARES SHARES SHARES SHARES
<S> <C> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning of period............................................. $10.00 $10.00 $10.00 $ 10.00
Income (loss) from investment operations:
Net investment income (loss)..................................................... -- (.02) (.02) .01
Net realized and unrealized loss on investments and foreign currency
transactions................................................................... (1.83) (1.82) (1.82) (1.84)
Total from investment operations............................................... (1.83) (1.84) (1.84) (1.83)
Net asset value, end of period................................................... $8.17 $8.16 $8.16 $8.17
TOTAL RETURN+.................................................................... (18.3%) (18.4%) (18.4%) (18.3%)
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's omitted)........................................ $867 $1,589 $89 $5,878
Ratios to average net assets:
Expenses (a)................................................................... 1.78%++ 2.53%++ 2.53%++ 1.53%++
Net investment income (loss) (a)............................................... (.12%)++ (.84%)++ (.82%)++ .43%++
Portfolio turnover rate.......................................................... 17% 17% 17% 17%
</TABLE>
* Commencement of operations.
+ Total return is calculated on net asset value per share for the period
indicated and is not annualized. Initial sales charge or contingent deferred
sales charge is not reflected.
++ Annualized.
(a) Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were assumed or waived by the investment adviser, the
annualized ratios of expenses and net investment income (loss) to average
net assets, exclusive of any applicable state expense limitations, for the
period from September 6, 1994 through December 31, 1994 would have been the
following:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS Y
SHARES SHARES SHARES SHARES
<S> <C> <C> <C> <C>
Expenses..................................................... 3.96% 4.71% 4.71% 3.71%
Net investment income (loss)................................. (2.30%) (3.02%) (3.00%) (1.75%)
</TABLE>
5
<PAGE>
EVERGREEN INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
CLASS A CLASS C
SHARES CLASS B SHARES SHARES
<S> <C> <C> <C>
SEPTEMBER 2, 1994*
THROUGH DECEMBER 31, 1994
PER SHARE DATA
Net asset value, beginning of period.............................................. $10.00 $ 10.00 $10.00
Income (loss) from investment operations:
Net investment income............................................................. .02 -- .03
Net realized and unrealized loss on investments................................... (.52) (.50 ) (.54)
Total from investment operations................................................ (.50) (.50 ) (.51)
Less distributions to shareholders from:
Net investment income............................................................. -- -- --
Net asset value, end of period.................................................... $9.50 $9.50 $9.49
TOTAL RETURN+..................................................................... (5.1%) (5.2% ) (5.2%)
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's omitted)......................................... $2,545 $5,602 $163
Ratios to average net assets:
Expenses (a).................................................................... 1.26%++ 2.02% ++ 2.01%++
Net investment income (a)....................................................... .91%++ .10% ++ .85%++
Portfolio turnover rate........................................................... 1% 1% 1%
<CAPTION>
CLASS Y
SHARES
<S> <C>
PER SHARE DATA
Net asset value, beginning of period.............................................. $10.00
Income (loss) from investment operations:
Net investment income............................................................. .02
Net realized and unrealized loss on investments................................... (.51 )
Total from investment operations................................................ (.49 )
Less distributions to shareholders from:
Net investment income............................................................. (.01 )
Net asset value, end of period.................................................... $9.50
TOTAL RETURN+..................................................................... (5.0% )
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's omitted)......................................... $23,830
Ratios to average net assets:
Expenses (a).................................................................... 1.06% ++
Net investment income (a)....................................................... 1.03% ++
Portfolio turnover rate........................................................... 1%
</TABLE>
* Commencement of operations.
+ Total return is calculated on net asset value per share for the period
indicated and is not annualized. Initial sales charge or contingent deferred
sales charge is not reflected.
++ Annualized.
(a) Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were assumed or waived by the investment adviser, the
annualized ratios of expenses and net investment income (loss) to average
net assets, exclusive of any applicable state expense limitations, for the
period from September 2, 1994 through December 31, 1994 would have been the
following:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS Y
SHARES SHARES SHARES SHARES
<S> <C> <C> <C> <C>
Expenses..................................................... 2.09% 2.85% 2.84% 1.89%
Net investment income (loss)................................. .08% (.73%) .02% .20%
</TABLE>
6
<PAGE>
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND -- CLASS Y SHARES
<TABLE>
<CAPTION>
SIX MONTHS NINE MONTHS FEBRUARY 1, 1989*
ENDED MARCH ENDED THROUGH
31, 1995 SEPTEMBER 30, YEAR ENDED DECEMBER 31, DECEMBER 31,
(UNAUDITED) 1994# 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning of
period............................ $ 13.81 $ 14.75 $9.86 $9.16 $8.10 $10.03 $10.00
Income (loss) from investment
operations:
Net investment income (loss)........ .01 .07 -- (.01) (.02) (.03) .17
Net realized and unrealized gain
(loss) on investments............. (2.48) (1.01) 5.07 .94 1.08 (1.90) .03
Total from investment
operations.................... (2.47) (.94) 5.07 .93 1.06 (1.93) .20
Less distributions to shareholders
from:
Net investment income............... (.10) -- -- -- -- -- (.17)
Net realized gains.................. (.52) -- (.18) (.23) -- -- --
Total distributions............. (.62) -- (.18) (.23) -- -- (.17)
Net asset value, end of period...... $ 10.72 $ 13.81 $14.75 $9.86 $9.16 $8.10 $10.03
TOTAL RETURN+....................... (18.4%) (6.4%) 51.4% 10.2% 13.1% (19.2%) 2.0%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's
omitted).......................... $74,001 $132,294 $146,173 $8,618 $7,557 $6,004 $7,336
Ratios to average net assets:
Operating expenses................ 1.51%++ 1.46%++ 1.56%(a) 2.00%(a) 2.00%(a) 2.00%(a) 2.00%(a)++
Interest expense.................. .08%++ .08%++ -- -- -- -- --
Net investment income (loss)...... .39%++ .56%++ .03%(a) (.10%)(a) (.27%)(a) (.39%)(a) 2.23%(a)++
Portfolio turnover rate............. 17% 63% 88% 245% 207% 325% 151%
</TABLE>
# On September 21, 1994, the Fund changed its fiscal year end from December 31
to September 30.
* Commencement of operations.
+ Total return is calculated on net asset value per share and is not
annualized.
++ Annualized.
(a) Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were assumed or waived by the investment adviser, the
annualized ratios of expenses and net investment income (loss) to average
net assets, exclusive of any applicable state expense limitations, would
have been the following:
<TABLE>
<CAPTION>
FEBRUARY 1,
1989 THROUGH
YEAR ENDED DECEMBER 31, DECEMBER 31,
1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
Operating expenses................................ 1.64% 3.72% 3.76% 3.99% 3.17%
Net investment income (loss)...................... (.05%) (1.82%) (2.02%) (2.38%) 1.06%
</TABLE>
7
<PAGE>
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND -- CLASS A, B AND C SHARES
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
FEBRUARY 10, 1995* FEBRUARY 8, 1995* FEBRUARY 9, 1995*
THROUGH THROUGH THROUGH
MARCH 31, 1995 MARCH 31, 1995 MARCH 31, 1995
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning of period.............................. $11.46 $ 11.44 $ 11.43
Income (loss) from investment operations:
Net investment income............................................. .02 .02 .01
Net realized and unrealized loss on investments................... (.76) (.75) (.73)
Total from investment operations................................ (.74) (.73) (.72)
Net asset value, end of period.................................... $10.72 $ 10.71 $ 10.71
TOTAL RETURN+..................................................... (6.5%) (6.4%) (6.3%)
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's omitted)......................... $2,531 $ 3,362 $ 1,146
Ratios to average net assets:
Operating expenses (a).......................................... 1.51%++ 2.27%++ 2.31%++
Interest expense................................................ .02%++ .01%++ .01%++
Net investment income (a)....................................... 3.21%++ 1.53%++ .87%++
Portfolio turnover rate#.......................................... 17% 17% 17%
</TABLE>
* Commencement of class operations.
+ Total return is calculated on net asset value per share for the period
indicated and is not annualized. Initial sales charge or contingent deferred
sales charge is not reflected.
++ Annualized. Due to the recent commencement of their offering, the ratios for
Class A, Class B and Class C shares are not necessarily comparable to that
of the Class Y shares, and are not necessarily indicative of future ratios.
# Portfolio turnover rate is calculated for the six months ended March 31,
1995.
(a) Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were assumed or waived by the investment adviser, the
annualized ratios of expenses and net investment income (loss) to average
net assets, exclusive of any applicable state expense limitations, would
have been the following:
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
FEBRUARY 10, 1995 FEBRUARY 8, 1995 FEBRUARY 9, 1995
THROUGH THROUGH THROUGH
MARCH 31, 1995 MARCH 31, 1995 MARCH 31, 1995
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
Operating expenses........................ 2.73% 3.49% 3.49%
Net investment income (loss).............. 1.99% .31% (.31%)
</TABLE>
8
9
- --------------------------------------------------------------------------------
DESCRIPTION OF THE FUNDS
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES AND POLICIES
Evergreen Emerging Markets Growth Fund
The objective of Evergreen Emerging Markets Growth Fund is long-term
capital appreciation. In seeking this objective, the Fund invests in equity
securities of issuers located in emerging markets. The Fund is suitable for
aggressive investors interested in the investment opportunities offered by
securities of issuers located in emerging or developing markets and the
resulting potential for growth opportunities resulting from political change,
economic deregulation and liberalized trade policies. The objective is
fundamental and may not be changed without shareholder approval.
The Fund seeks long-term capital appreciation. The Fund invests
primarily in a diversified portfolio of equity securities of issuers located in
countries with emerging markets. As a matter of policy, the Fund will invest at
least 65% of the value of its total assets in securities of emerging market
issuers.
A country will be considered to have an "emerging market" if it has
relatively low gross national product per capita compared to the world's major
economies and the potential for rapid economic growth. Countries with emerging
markets include those that have an emerging stock market (as defined by the
International Finance Corporation), those with low-to middle income economies
(according to the World Bank), and those listed in World Bank publications as
"developing." The Fund will normally invest in at least six different countries,
although it may invest all of its assets in a single country. At the present
time, the Fund has no intention of investing all of its assets in a single
country. The Fund focuses on equity securities, but may also invest in other
types of instruments, including debt securities. Marvin & Palmer Associates, the
Sub-Adviser to the Fund, will make investment decisions regarding equity
securities based on its analysis of returns, price momentum, business and
industry considerations, and management quality.
The Fund may employ certain additional investment strategies which are
discussed in "Investment Practices and Restrictions", below.
Evergreen International Equity Fund
The objective of Evergreen International Equity Fund is long-term
capital appreciation. The Fund invests primarily in equity securities of
non-U.S. issuers and is suitable for investors who want to pursue their
investment goals in markets outside the United States. The Fund provides
investors with a vehicle to pursue investment opportunities in countries outside
the U.S. whose securities markets may benefit from differing economic and
political cycles. The objective is fundamental and may not be changed without
shareholder approval.
The Fund invests primarily in foreign equity securities that Boston
International Advisers, Inc., the Sub-Adviser to the Fund, determines, through
both fundamental and technical analysis, to be undervalued compared to other
securities in their industries and countries. In most market conditions, the
stocks comprising the Fund's assets will exhibit traditional value
characteristics, such as higher than average dividend yields, lower than average
price to book value, and will include stocks of companies with unrecognized or
undervalued assets. As a matter of policy, the Fund will invest at least 65% of
the value of its total assets in equity securities of issuers located in at
least three countries outside of the United States.
The Fund will emphasize value stocks, primarily of companies which are
listed on one or more of thirty-two stock markets: twenty developed markets and
twelve emerging markets. While the current intention of the Fund is to invest in
32 stock markets, the Fund may invest in more or less, depending upon market
conditions as determined by the Sub-Adviser. The Fund will invest substantially
in industrialized companies throughout the world that comprise the Morgan
Stanley Capital International EAFE (Europe, Australia and the Far East) Index.
In addition, the Fund intends to invest up to 10% of its assets in emerging
country equity securities, as described above under "Evergreen Emerging Markets
Growth Fund."
The Fund may employ certain additional investment strategies which are
discussed in "Investment Practices and Restrictions", below.
<PAGE>
Evergreen Global Real Estate Equity Fund
The Evergreen Global Real Estate Equity Fund seeks to achieve its
investment objective of long-term capital growth through investment primarily in
equity securities of domestic and foreign companies which are principally
engaged in the real estate industry or which own significant real estate assets;
the Fund will not purchase direct interests in real estate. Current income will
be a secondary objective. Equity securities will include common stock, preferred
stock and securities convertible into common stock. The objective is fundamental
and may not be changed without shareholder approval.
The Fund will, under normal conditions, invest at least 65% of its
total assets in equity securities of domestic and foreign exchange or NASDAQ
listed companies which are principally engaged in the real estate industry. A
company is deemed to be "principally engaged" in the real estate industry if at
least 50% of its assets (marked to market), gross income or net profits are
attributable to ownership, construction, management or sale of residential,
commercial or industrial real estate. Real estate industry companies may include
among others: equity real estate investment trusts, which pool investors' funds
for investment primarily in commercial real estate properties; mortgage real
estate investment trusts, which invest pooled funds in real estate related
loans; brokers or real estate developers; and companies with substantial real
estate holdings, such as paper and lumber producers and hotel and entertainment
companies. The Fund will only invest in real estate equity trusts and limited
partnerships which are traded on major exchanges. As a matter of fundamental
policy, the Fund will also invest at least 65% of its total assets in the equity
securities of companies of at least three countries, including the United
States, except when abnormal market or financial conditions warrant the
assumption of a temporary defensive position. See "Investment Practices and
Restrictions" and "Special Risk Considerations".
The remainder of the Fund's investments may be made in equity
securities of issuers whose products and services are related to the real estate
industry, such as manufacturers and distributors of building supplies and
financial institutions which issue or service mortgages. The Fund may invest
more than 25% of its total assets in any one sector of the real estate or real
estate related industries. In addition, the Fund may, from time to time, invest
in the securities of companies unrelated to the real estate industry whose real
estate assets are substantial relative to the price of the companies'
securities.
The Fund pursues a flexible strategy of investing in a diversified
portfolio of securities of companies throughout the world. The Fund's investment
adviser anticipates that the Fund will give particular consideration to
investments in the United Kingdom, Western Europe, Australia, Canada, the Far
East (Japan, Hong Kong, Singapore, Malaysia and Thailand) and the United States.
The percentage of the Fund's assets invested in particular geographic regions
will shift from time to time in accordance with the judgment of the Fund's
investment adviser. Generally, a substantial portion of the assets of the Fund
will be denominated or traded in foreign currencies.
Investments may also be made in securities of issuers unrelated to the
real estate industry believed by the Fund's investment adviser to be undervalued
and to have capital appreciation potential. Also, consistent with the secondary
objective of current income, investments may also be made in nonconvertible debt
securities of such companies. The debt securities purchased (except for those
described below) will be of investment grade or better quality (e.g., rated no
lower than A by Moody's Investors Service ("Moody's") or Standard & Poor's
Ratings Group ("S&P")or if not so rated, believed by the Fund's investment
adviser to be of comparable quality). However, up to 10% of total assets may be
invested in unrated debt securities of issuers secured by real estate assets
where the Fund's investment adviser believes that the securities are trading at
a discount and the underlying collateral will ensure repayment of principal. In
such situations, it is conceivable that the Fund could, in the event of default,
end up holding the underlying real estate directly.
It is anticipated that the annual portfolio turnover rate for the Fund
may exceed 100%. The Fund may employ certain additional investment strategies
which are discussed in "Investment Practices and Restrictions", below.
INVESTMENT PRACTICES AND RESTRICTIONS
General. The Funds primarily invest in:
common and preferred stocks, convertible securities and warrants of
foreign corporations. Common stocks represent an equity interest in a
corporation. This ownership interest often gives the Funds the right to
vote on measures affecting the company's organization and operations.
Although common stocks have a history of long-term growth in value,
their prices tend to fluctuate in the short-term, particularly those of
smaller capitalization companies. Smaller capitalization companies may
have limited product lines, markets, or financial resources. These
conditions may make them more susceptible to setbacks and reversals.
Therefore, their securities may have limited marketability and may be
subject to more abrupt or erratic market movements than securities of
larger companies;
obligations of foreign governments and supranational organizations;
corporate and foreign government fixed income securities denominated in
currencies other than U.S. dollars, rated, at the time of purchase, Baa
or higher by Moody's or BBB or higher by S&P, or which, if unrated, are
considered to be of comparable quality by the Fund's investment adviser
or sub-advisers. Bonds rated Baa by Moody's or BBB by S&P have
speculative characteristics. Changes in economic conditions or other
circumstances are more likely to lead to weakened capacity to make
principal and interest payments than higher rated bonds. Although the
Funds do not intend to invest significantly in debt securities, it
should be noted that the prices of fixed income securities fluctuate
inversely to the direction of interest rates;
strategic investments, such as options and futures contracts on
currency transactions, securities index futures contracts, and forward
foreign currency exchange contracts. The Funds can use these techniques
to increase or decrease their exposure to changing security prices,
interest rates, currency exchange rates, or other factors that affect
security values. (Although, of course, there can be no assurance that
these strategic investments will be successful in protecting the value
of the Funds' securities.); and
securities of closed-end investment companies.
Defensive Investments. The Funds may invest without limitation in high quality
money market instruments, such as notes, certificates of deposit or bankers'
acceptances, or U.S. government securities if, in the opinion of a Fund's
investment adviser or sub-adviser, market conditions warrant a temporary
defensive investment strategy.
Portfolio Turnover and Brokerage. A portfolio turnover rate of 100% would occur
if all of a Fund's portfolio securities were replaced in one year. The portfolio
turnover rate experienced by a Fund directly affects brokerage commissions and
other transaction costs which the Fund bears directly. A high rate of portfolio
turnover will increase such costs. It is contemplated that Lieber & Company, an
affiliate of Evergreen Asset and a member of the New York and American Stock
Exchanges, will to the extent practicable effect substantially all of the
portfolio transactions for Evergreen Global Real Estate Equity Fund effected on
those exchanges. See the Statement of Additional Information for further
information regarding the brokerage allocation practices of the Funds. The
portfolio turnover rate for each Fund is set forth in the tables contained in
the section entitled "Financial Highlights".
Repurchase Agreements. The Funds may invest in repurchase agreements. Repurchase
agreements are agreements by which a Fund purchases a security for cash and
obtains a simultaneous commitment from the seller (usually a bank or
broker/dealer) to repurchase the security at an agreed-upon price and specified
future date. The repurchase price reflects an agreed-upon interest rate for the
time period of the agreement. The Funds' risk is the inability of the seller to
pay the agreed-upon price on the delivery date. However, this risk is tempered
by the ability of the Funds to sell the security in the open market in the case
of a default. In such a case, the Funds may incur costs in disposing of the
security which would increase Fund expenses. Each Fund's investment adviser will
monitor the creditworthiness of the firms with which the Funds enter into
repurchase agreements.
When-Issued And Delayed Delivery Transactions. Evergreen International Equity
Fund and Evergreen Emerging Markets Growth Fund may purchase securities on a
when-issued or delayed delivery basis. These transactions are arrangements in
which the Funds purchase securities with payment and delivery scheduled for a
future time. The seller's failure to complete these transactions may cause the
Funds to miss a price or yield considered to be advantageous. Settlement dates
may be a month or more after entering into these transactions, and the market
values of the securities purchased may vary from the purchase prices.
Accordingly, the Funds may pay more or less than the market value of the
securities on the settlement date. A Fund may dispose of a commitment prior to
settlement if the Fund's investment adviser deems it appropriate to do so. In
addition, Evergreen International Equity Fund and Evergreen Emerging Markets
Growth Fund may enter into transactions to sell their purchase commitments to
third parties at current market values and simultaneously acquire other
commitments to purchase similar securities at later dates. The Funds may realize
short-term profits or losses upon the sale of such commitments.
Temporary Investments. The Funds may invest in U.S. and foreign short-term money
market instruments (denominated in U.S. and/or foreign currencies), including
interest-bearing call deposits with banks, government obligations, certificates
of deposit, bankers' acceptances, commercial paper, short-term corporate debt
securities, and repurchase agreements. These investments may be used to
temporarily invest cash received from the sale of Fund shares, to establish and
maintain reserves for temporary defensive purposes, or to take advantage of
market opportunities.
Illiquid or Restricted Securities. Each Fund may invest up to 15% of its net
assets in illiquid securities and other securities which are not readily
marketable. Illiquid securities include certain restricted securities not
determined by the Trustees to the liquid, non-negotiable time deposits and
repurchase agreements providing for settlement in more than seven days after
notice. Securities eligible for resale pursuant to Rule 144A under the
Securities Act of 1933, which have been determined to be liquid, will not be
considered by the Funds' investment advisers to be illiquid or not readily
marketable and, therefore, are not subject to the aforementioned 15% limit. The
inability of a Fund to dispose of illiquid or not readily marketable investments
readily or at a reasonable price could impair the Fund's ability to raise cash
for redemptions or other purposes. The liquidity of securities purchased by a
Fund which are eligible for resale pursuant to Rule 144A will be monitored by
the each Fund's investment adviser on an ongoing basis, subject to the oversight
of the Trustees. In the event that such a security is deemed to be no longer
liquid, a Fund's holdings will be reviewed to determine what action, if any, is
required to ensure that the retention of such security does not result in a Fund
having more than 15% of its assets invested in illiquid or not readily
marketable securities.
Borrowing. As a matter of fundamental policy, the Funds may not borrow money
except as a temporary measure to facilitate redemption requests or for
extraordinary or emergency purposes. The proceeds from borrowings may be used to
facilitate redemption requests which might otherwise require the untimely
disposition of portfolio securities. The specific limits applicable to borrowing
by each Fund are set forth in the Statement of Additional Information.
Lending of Portfolio Securities. In order to generate income and to offset
expenses, the Funds may lend portfolio securities to brokers, dealers and other
financial institutions. The Funds' investment advisers or sub-advisers will
monitor the creditworthiness of such borrowers. Loans of securities by the
Funds, if and when made, may not exceed 30% of the value of the total assets of
the Evergreen Global Real Estate Equity Fund, and must be collateralized by cash
or U.S. Government securities that are maintained at all times in an amount
equal to at least 100% of the current market value of the securities loaned,
including accrued interest. While such securities are on loan, the borrower will
pay a Fund any income accruing thereon, and the Fund may invest the cash
collateral in portfolio securities, thereby increasing its return. Any gain or
loss in the market price of the loaned securities which occurs during the term
of the loan would affect a Fund and its investors. A Fund has the right to call
a loan and obtain the securities loaned at any time on notice of not more than
five business days. A Fund may pay reasonable fees in connection with such
loans.
Fixed-Income Securities -- Downgrades. If any security invested in by any of the
Funds loses its rating or has its rating reduced after the Fund has purchased
it, the Fund is not required to sell or otherwise dispose of the security, but
may consider doing so.
Foreign Currency Transactions. The Funds will enter into foreign currency
transactions to obtain the necessary currencies to settle securities
transactions. Currency transactions may be conducted either on a spot or cash
basis at prevailing rates or through forward foreign currency exchange
contracts. The Funds may also enter into foreign currency transactions to
protect Fund assets against adverse changes in foreign currency exchange rates
or exchange control regulations. Such changes could unfavorably affect the value
of Fund assets which are denominated in foreign currencies, such as foreign
securities or funds deposited in foreign banks, as measured in U.S. dollars.
Although foreign currency exchanges may be used by a Fund to protect against a
decline in the value of one or more currencies, such efforts may also limit any
potential gain that might result from a relative increase in the value of such
currencies and might, in certain cases, result in losses to the Fund.
Forward Foreign Currency Exchange Contracts. A forward foreign currency exchange
contract ("forward contract") is an obligation to purchase or sell an amount of
a particular currency at a specific price and on a future date agreed upon by
the parties. Generally, no commission charges or deposits are involved. At the
time a Fund enters into a forward contract, Fund assets with a value equal to
the Fund's obligation under the forward contract are segregated and are
maintained until the contract has been settled. The Funds will not enter into a
forward contract with a term of more than one year. The Funds will generally
enter into a forward contract to provide the proper currency to settle a
securities transaction at the time the transaction occurs ("trade date"). The
period between trade date and settlement date will vary between 24 hours and 60
days, depending upon local custom.
<PAGE>
The Funds may also protect against the decline of a particular foreign currency
by entering into a forward contract to sell an amount of that currency
approximating the value of all or a portion of the Funds' assets denominated in
that currency ("hedging"). The success of this type of short-term hedging
strategy is highly uncertain due to the difficulties of predicting short-term
currency market movements and of precisely matching forward contract amounts and
the constantly changing value of the securities involved. Although each Fund's
investment adviser or sub-adviser will consider the likelihood of changes in
currency values when making investment decisions, each Fund's investment adviser
or sub-adviser believes that it is important to be able to enter into forward
contracts when it believes the interests of a Fund will be served. The Funds
will not enter into forward contracts for hedging purposes in a particular
currency in an amount in excess of the Funds' assets denominated in that
currency, but as consistent with their other investment policies and as not
otherwise limited in their ability to use this strategy.
Options And Futures. The Funds may deal in options on foreign currencies, and
portfolio securities, and, in the case of Evergreen International Equity Fund
and Evergreen Emerging Markets Growth Fund, securities indices, which options
may be listed for trading on an international securities exchange. The Funds
will use these options to manage interest rate and currency risks. The Funds
also may write covered call options and secured put options to generate income
or to lock in gains. Each Fund may write covered call options and secured put
options on up to 25% of its net assets in the case of Evergreen International
Equity Fund and Evergreen Emerging Markets Growth Fund and 15% of its net assets
in the case of Evergreen Global Real Estate Equity Fund, and Evergreen
International Equity Fund and Evergreen Emerging Markets Growth Fund may
purchase put and call options provided that no more than 5% of the fair market
value of its net assets may be invested in premiums on such options.
A call option gives the purchaser the right to buy, and the writer the
obligation to sell, the underlying asset at the exercise price during the option
period. A put option gives the purchaser the right to sell, and the writer the
obligation to buy, the underlying asset at the exercise price during the option
period. The writer of a covered call owns assets that are acceptable for escrow
and the writer of a secured put invests an amount not less than the exercise
price in eligible assets to the extent that it is obligated as a writer. If a
call written by a Fund is exercised, the Fund forgoes any possible profit from
an increase in the market price of the underlying asset over the exercise price
plus the premium received. In writing puts, there is a risk that a Fund may be
required to take delivery of the underlying asset at a disadvantageous price.
The Funds may enter into futures contracts involving foreign currency
and, in the case of Evergreen International Equity Fund and Evergreen Emerging
Markets Growth Fund, securities indices,, or options on currency, for bona fide
hedging purposes The Funds may not enter into futures contracts or related
options if, immediately thereafter, the amounts committed to margin and premiums
paid for unexpired options would exceed 5% of a Fund's total assets and, in the
case of Evergreen Global Real Estate Equity Fund, more than 30% of the Fund's
net assets would be hedged thereby. Evergreen International Equity Fund and
Evergreen Emerging Markets Growth Fund, may also enter into such futures
contracts or related options for purposes other than bona fide hedging if the
aggregate amount of initial margin deposits on a Fund's futures and related
options positions would not exceed 5% of the net liquidation value of the Fund's
assets, provided further that in the case of an option that is in-the-money at
the time of the purchase, the in-the-money amount may be excluded in calculating
the 5% limitation. In addition, a Fund may not sell futures contracts if the
value of such futures contracts exceeds the total market value of the Fund's
portfolio securities. Futures contracts sold by a Fund are generally subject to
segregation and coverage requirements established by either the Commodity
Futures Trading Commission ("CFTC") or the Securities and Exchange Commission
("SEC"), with the result that, if a Fund does not hold the instrument underlying
the futures contract or option, the Fund will be required to segregate, on an
ongoing basis with its custodian, cash, U.S. government securities, or other
liquid high grade debt obligations in an amount at least equal to the Fund's
obligations with respect to such instruments.
Evergreen International Equity Fund and Evergreen Emerging Markets
Growth Fund may enter into securities index futures contracts and purchase and
write put and call options on securities index futures contracts that are traded
on regulated exchanges, including non-U.S. exchanges, to the extent permitted by
the CFTC. Securities index futures contracts are based on indices that reflect
the market value of securities of the firms included in the indices. An index
futures contract is an agreement pursuant to which two parties agree to take or
make delivery of an amount of cash equal to the differences between the value of
the index at the close of the last trading day of the contract and the price at
which the index contract was originally written.
Evergreen International Equity Fund and Evergreen Emerging Markets
Growth Fund may enter into securities index futures contracts to sell a
securities index in anticipation of or during a market decline to attempt to
offset the decrease in market value of securities in its portfolio that might
otherwise result. When a Fund is not fully invested and anticipates a
significant market advance, it may enter into futures contracts to purchase the
index in order to gain rapid market exposure that may in part or entirely offset
increases in the cost of securities that it intends to purchase. In many of
these transactions, a Fund will purchase such securities upon termination of the
futures position but, depending on market conditions, a futures position may be
terminated without the corresponding purchases of common stock. A Fund may also
invest in securities index futures contracts when its investment adviser or
sub-adviser believes such investment is more efficient, liquid or cost-effective
than investing directly in the securities underlying the index.
The use of futures and related options involves special considerations
and risks, including: (1) the ability of a Fund to utilize futures successfully
will depend on its investment adviser's or sub-adviser's ability to predict
pertinent market movements; and (2) there might be an imperfect correlation (or
conceivably no correlation) between the change in the market value of the
securities held by a Fund and the prices of the futures relating to the
securities purchased or sold by the Fund. The use of futures and related options
may reduce risk of loss by wholly or partially offsetting the negative effect of
unfavorable price movements, but these instruments can also reduce the
opportunity for gain by offsetting the positive effect of favorable price
movements in positions. No assurance can be given that the investment adviser's
or sub-adviser's judgment in this respect will be correct.
It is not certain that a secondary market for positions in futures
contracts or for options will exist at all times. Although each investment
adviser or sub-adviser will consider liquidity before entering into these
transactions, there is no assurance that a liquid secondary market on an
exchange or otherwise will exist for any particular futures contract or option
at any particular time. A Fund's ability to establish and close out futures and
options positions depends on this secondary market.
Risk Characteristics Of Foreign Securities. Investing in non-U.S. securities
carries substantial risks in addition to those associated with domestic
investments. In an attempt to reduce some of these risks, the Funds diversify
their investments broadly among foreign countries which may include both
developed and developing countries. With respect to Evergreen International
Equity Fund, at least three different countries will always be represented. The
Funds may take advantage of the unusual opportunities for higher returns
available from investing in developing countries. As discussed in detail below
under "Emerging Markets," however, these investments carry considerably more
volatility and risk because they generally are associated with less mature
economies and less stable political systems.
Foreign securities are denominated in foreign currencies. Therefore,
the value in U.S. dollars of a Fund's assets and income may be affected by
changes in exchange rates and regulations. Although the Funds value their assets
daily in U.S. dollars, they will not convert their holdings of foreign
currencies to U.S. dollars daily. When a Fund converts its holdings to another
currency, it may incur conversion costs. Foreign exchange dealers realize a
profit on the difference between the prices at which such dealers buy and sell
currencies.
To the extent that securities purchased by the Funds are denominated in
currencies other than the U.S. dollar, changes in foreign currency exchange
rates will affect the Funds' net asset values; the value of interest earned;
gains and losses realized on the sale of securities; and net investment income
and capital gains, if any, to be distributed to shareholders by a Fund. If the
value of a foreign currency rises against the U.S. dollar, the value of a Fund's
assets denominated in that currency will increase; correspondingly, if the value
of a foreign currency declines against the U.S.
dollar, the value of a Fund's assets denominated in that currency will decrease.
Other differences between investing in foreign and U.S. companies
include: less publicly available information about foreign companies; the lack
of uniform financial accounting standards applicable to foreign companies; less
readily available market quotations on foreign companies; differences in
government regulation and supervision of foreign stock exchanges, brokers,
listed companies, and banks; differences in legal systems which may affect the
ability to enforce contractual obligations or obtain court judgments; generally
lower foreign stock market volume; the likelihood that foreign securities may be
less liquid or more volatile; foreign brokerage commissions may be higher;
unreliable mail service between countries; and political or financial changes
which adversely affect investments in some countries. In the past, U.S.
government policies have discouraged or restricted certain investments abroad by
investors such as the Funds. Although the Funds are unaware of any current
restrictions, investors are advised that these policies could be reinstituted.
Emerging Markets. The economies of individual emerging countries may differ
favorably or unfavorably from the U.S. economy in such respects as growth of
gross domestic product, rate of inflation, currency depreciation, capital
reinvestment, resource self-sufficiency and balance of payments position.
Further, the economies of developing countries generally are heavily dependent
on international trade and, accordingly, have been, and may continue to be,
adversely affected by trade barriers, exchange controls, managed adjustments in
relative currency values and other protectionist measures imposed or negotiated
by the countries with which they trade. These economies also have been, and may
continue to be, adversely affected by economic conditions in the countries with
which they trade.
Prior governmental approval for foreign investments may be required
under certain circumstances in some emerging countries, and the extent of
foreign investment in certain debt securities and domestic companies may be
subject to limitation in other emerging countries. Foreign ownership limitations
also may be imposed by the charters of individual companies in emerging
countries to prevent, among other concerns, violation of foreign investment
limitations.
Repatriation of investment income, capital and the proceeds of sales by
foreign investors may require governmental registration and/or approval in some
emerging countries. A Fund could be adversely affected by delays in, or a
refusal to grant, any required governmental registration or approval for such
repatriation. Any investment subject to such repatriation controls will be
considered illiquid if it appears reasonably likely that this process will take
more than seven days.
With respect to any emerging country, there is the possibility of
nationalization, expropriation or confiscatory taxation, political changes,
governmental regulation, social instability or diplomatic developments
(including war) which could affect adversely the economics of such countries or
the value of the Funds' investments in those countries. In addition, it may be
difficult to obtain and enforce a judgment in a court outside of the U.S.
Investments Related to Real Estate. Risks associated with investment in
securities of companies in the real estate industry include: declines in the
value of real estate, risks related to general and local economic conditions,
overbuilding and increased competition, increases in property taxes and
operating expenses, changes in zoning laws, casualty or condemnation losses,
variations in rental income, changes in neighborhood values, the appeal of
properties to tenants and increase in interest rates. In addition, equity real
estate investment trusts may be affected by changes in the value of the
underlying property owned by the trusts, while mortgage real estate investment
trusts may be affected by the quality of credit extended. Equity and mortgage
real estate investment trusts are dependent upon management skills, may not be
diversified and are subject to the risks of financing projects. Such trusts are
also subject to heavy cash flow dependency, defaults by borrowers, self
liquidation and the possibility of failing to qualify for tax-free pass-through
of income under the Internal Revenue Code (the "Code") and to maintain exemption
from the Investment Company Act of 1940, as amended (the "1940 Act"). In the
event an issuer of debt securities collateralized by real estate defaulted, it
is conceivable that a Fund could end up holding the underlying real estate.
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MANAGEMENT OF THE FUNDS
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INVESTMENT ADVISERS
The management of each Fund is supervised by the Trustees of the Trust
under which the Fund has been established ("Trustees").. Evergreen Asset
Management Corp. (the "Evergreen Asset") has been retained by Evergreen Global
Real Estate Equity Fund as investment adviser. Evergreen Asset succeeded on June
30, 1994 to the advisory business of the same name, but under different
ownership, which was organized in 1971. Evergreen Asset, with its predecessors,
has served as investment adviser to the Evergreen mutual funds since 1971.
Evergreen Asset is a wholly-owned subsidiary of First Union National Bank of
North Carolina ("FUNB"). The address of Evergreen Asset is 2500 Westchester
Avenue, Purchase, New York 10577. FUNB is a subsidiary of First Union
Corporation ("First Union"), one of the ten largest bank holding companies in
the United States. Stephen A. Lieber and Nola Maddox Falcone serve as the chief
investment officers of Evergreen Asset and, along with Theodore J. Israel, Jr.,
were the owners of Evergreen Asset's predecessor and the former general partners
of Lieber & Company, which, as described below, provides certain subadvisory
services to Evergreen Asset in connection with its duties as investment adviser
to the Fund. The Capital Management Group of FUNB ("CMG") serves as investment
adviser to Evergreen International Equity Fund and Evergreen Emerging Markets
Growth Fund. Boston International Advisers, Inc. ("BIA") is Sub-Adviser to
Evergreen International Equity Fund and Marvin & Palmer Associates, Inc.
("Marvin & Palmer") is Sub-Adviser to Evergreen Emerging Markets Growth Fund
First Union is a bank holding company headquartered in Charlotte, North
Carolina, which had $77.9 billion in consolidated assets as of March 31, 1995.
First Union and its subsidiaries provide a broad range of financial services to
individuals and businesses through offices in 36 states. The Capital Management
Group of FUNB manages or otherwise oversees the investment of over $36 billion
in assets belonging to a wide range of clients, including all the series of
Evergreen Investment Trust (formerly known as First Union Funds). First Union
Brokerage Services, Inc., a wholly-owned subsidiary of FUNB, is a registered
broker-dealer that is principally engaged in providing retail brokerage services
consistent with its federal banking authorizations. First Union Capital Markets
Corp., a wholly-owned subsidiary of First Union, is a registered broker-dealer
principally engaged in providing, consistent with its federal banking
authorizations, private placement, securities dealing, and underwriting
services.
As investment adviser to Evergreen Global Real Estate Equity Fund,
Evergreen Asset manages each Fund's investments, provides various administrative
services and supervises each Fund's daily business affairs, subject to the
authority of the Trustees. Evergreen Asset is entitled to receive a fee equal to
1% of average daily net assets on an annual basis from Evergreen Global Real
Estate Equity Fund. The fee paid by Evergreen Global Real Estate Equity Fund is
higher than the rate paid by most other investment companies. The total expenses
as a percentage of average daily net assets on an annual basis of Evergreen
Global Real Estate Equity Fund for the fiscal period ended September 30, 1994
are set forth in the section entitled "Financial Highlights". The
above-mentioned expense ratios for Evergreen Global Real Estate Equity Fund is
net of voluntary advisory fee waivers and expense reimbursements by Evergreen
Asset which may, at its discretion, revise or cease this voluntary waiver at any
time.
CMG, along with BIA and Marvin & Palmer, respectively, manages
investments and supervises the daily business affairs of Evergreen International
Equity Fund and Evergreen Emerging Markets Growth Fund. As compensation
therefor, CMG is entitled to receive an annual fee from Evergreen International
Equity Fund equal to: .82 of 1% of the first $20 million of average daily net
assets; .79 of 1% of the next $30 million of average daily net assets; .76 of 1%
of the next $50 million of average daily net assets; and .73 of 1% of average
daily net assets in excess of $100 million. From Evergreen Emerging Markets
Growth Fund, CMG is entitled to receive an annual fee equal to: 1.50% of the
first $100 million of average daily net assets; 1.45% of the next $100 million
of average daily net assets; 1.40% of the next $100 million of average daily net
assets; and 1.35% of average daily net assets in excess of $300 million. The
fees paid by Evergreen International Equity Fund and Evergreen Emerging Markets
Growth Fund are higher than the rate paid by most other investment companies,
but are not higher than the fee paid by many funds with similar investment
objectives. The total expenses as a percentage of average daily net assets on an
annual basis of Evergreen International Equity Fund and Evergreen Emerging
Markets Growth Fund for the fiscal year ended December 31, 1994 are set forth in
the section entitled "Financial Highlights". CMG has agreed to pay the sub
adviser to Evergreen International Equity Fund, BIA, a fee equal to: .32 of 1%
of the first $20 million of average daily net assets; .29 of 1% of the next $30
million of average daily net assets; .26 of 1% of the next $50 million of
average daily net assets; and .23 of 1% of average daily net assets in excess of
$100 million. For its services as sub-adviser to Evergreen Emerging Markets
Growth Fund, Marvin & Palmer receives from CMG a fee equal to: 1.00% of the
first $100 million of average daily net assets; .95 of 1% of the next $100
million of average daily net assets; .90 of 1% of the next $100 million of
average daily net assets; and .85 of 1% of average daily net assets in excess of
$300 million. Evergreen Asset serves as administrator to Evergreen International
Equity Fund and Evergreen Emerging Markets Growth Fund and is entitled to
receive a fee based on the average daily net assets of these Funds at a rate
based on the total assets of the mutual funds administered by Evergreen Asset
for which CMG or Evergreen Asset also serve as investment adviser, calculated in
accordance with the following schedule: .050% of the first $7 billion; .035% on
the next $3 billion; .030% on the next $5 billion; .020% on the next $10
billion; .015% on the next $5 billion; and .010% on assets in excess of $30
billion. Furman Selz Incorporated, the parent of Evergreen Funds Distributor,
Inc., distributor for the Evergreen group of mutual funds, serves as
sub-administrator to Evergreen International Equity Fund and Evergreen Emerging
Markets Growth Fund and is entitled to receive a fee from each Fund calculated
on the average daily net assets of each Fund at a rate based on the total assets
of the mutual funds administered by Evergreen Asset for which CMG or Evergreen
Asset also serve as investment adviser, calculated in accordance with the
following schedule: .0100% of the first $7 billion; .0075% on the next $3
billion; .0050% on the next $15 billion; and .0040% on assets in excess of $25
billion. The total assets of the mutual funds administered by Evergreen Asset
for which CMG or Evergreen Asset serve as investment adviser as of March 31,
1995 were approximately $8 billion.
The portfolio manager for Evergreen Global Real Estate Equity Fund is
Samuel A. Lieber. Mr. Samuel Lieber has been the Fund's principal manager since
inception and has been associated with the Evergreen Asset since prior to 1989.
The portfolio managers for Evergreen International Equity Fund are Maureen
Ghublikian and David A. Umstead, who are Managing Directors of BIA and have been
associated therewith since prior to 1989.
The portfolio managers for Evergreen Emerging Markets Growth Fund, all
of whom have served since its inception in September 1994, are David F. Marvin,
who is Chairman of Marvin & Palmer and is primarily responsible for Latin
America and currency management, Stanley Palmer, who is President of Marvin &
Palmer and primarily responsible for Southeast Asia and the India subcontinent,
Terry B. Mason, who is a Vice President of Marvin & Palmer and is primarily
responsible for Eastern Europe and Africa, Jay F. Middleton, who is a portfolio
manager for Marvin & Palmer and primarily responsible for Latin America and the
Middle East, and Todd D. Marvin, who is a portfolio manager for Marvin & Palmer
and, along with Mr. Palmer, primarily responsible for Southeast Asia and the
India subcontinent. David F. Marvin, and Stanley Palmer, President, founded
Marvin & Palmer in 1986. Mr. Mason and Mr. Middleton both joined Marvin & Palmer
in 1990. Mr. Todd Marvin joined Marvin & Palmer in 1991 and, prior thereto, was
employed by Oppenheimer & Company as an analyst in its investment banking
department from 1989 until 1991.
SUB-ADVISERS
Evergreen Asset has entered into sub-advisory agreements with Lieber &
Company with respect to Evergreen Global Real Estate Equity Fund which provides
that Lieber & Company's research department and staff will furnish Evergreen
Asset with information, investment recommendations, advice and assistance, and
will be generally available for consultation on each such Fund's portfolio.
Lieber & Company will be reimbursed by Evergreen Asset in connection with the
rendering of services on the basis of the direct and indirect costs of
performing such services. There is no additional charge to Evergreen Global Real
Estate Equity Fund for the services provided by Lieber & Company. It is
contemplated that Lieber & Company will, to the extent practicable, effect
substantially all of the portfolio transactions for this Fund on the New York
and American Stock Exchanges. The address of Lieber & Company is 2500
Westchester Avenue, Purchase, New York 10577. Lieber & Company is an indirect,
wholly-owned, subsidiary of First Union.
The sub-adviser to the Evergreen International Equity Fund, BIA, has
been in operation since 1986 and specializes in the management of international
equity portfolios. BIA currently manages twenty international portfolios,
including five group trust funds, for pension fund sponsors and endowment plans
worldwide. Messrs. Lyle H. Davis, Norman H. Meltz and David A. Umstead are the
principal executive officers of BIA and each own more than 25% of the
outstanding voting securities thereof. As of March 31, 1995 BIA managed a total
of $2.7 billion in assets and served as sub-adviser to one other investment
company with total assets of $148 million.
Marvin & Palmer, Sub-Adviser for Evergreen Emerging Markets Growth Fund
was founded in 1986 and is engaged in the management of global, non-United
States and emerging markets equity portfolios for institutional accounts. At
March 31, 1995, Marvin & Palmer managed a total of $2.5 billion in investments
for 34 institutional investors and 5 commingled funds and served as sub-adviser
to another investment company with total assets of $33 million.
DISTRIBUTION PLANS AND AGREEMENTS
Rule 12b-1 under the Investment Company Act of 1940 permits an
investment company to pay expenses associated with the distribution of its
shares in accordance with a duly adopted plan. Each Fund has adopted for each of
its Class A, Class B and Class C shares a Rule 12b-1 plan (each, a "Plan" or
collectively the "Plans"). Under the Plans, each Fund may incur
distribution-related and shareholder servicing-related expenses which may not
exceed an annual rate of .75 of 1% of the aggregate average daily net assets
attributable to each Fund's Class A shares, 1.00% of the aggregate average daily
net assets attributable to the Class B and Class C shares of Evergreen Global
Real Estate Equity Fund, and .75 of 1% of the aggregate average daily net assets
attributable to the Class B and Class C shares of Evergreen International Equity
Fund and Evergreen Emerging Markets Growth Fund. Payments under the Plans
adopted with respect to Class A shares are currently voluntarily limited to .25
of 1% of each Fund's aggregate average daily net assets attributable to Class A
shares. The Plans provide that a portion of the fee payable thereunder may
constitute a service fee to be used for providing ongoing personal services
and/or the maintenance of shareholder accounts. Evergreen International Equity
Fund and Evergreen Emerging Markets Growth Fund have each, in addition to the
Plans adopted with respect to their Class B and Class C shares, adopted
shareholder service plans ("Service Plans") relating to the Class B and Class C
shares which permit each Fund to incur a fee of up to .25 of 1% of the aggregate
average daily net assets attributable to the Class B and Class C shares for
ongoing personal services and/or the maintenance of shareholder accounts. Such
service fee payments to financial intermediaries for such purposes, whether
pursuant to a Plan or Service Plan, will not to exceed .25% of the aggregate
average daily net assets attributable to each Class of shares of each Fund.
Each Fund has also entered into a distribution agreement (each a
"Distribution Agreement" or collectively the "Distribution Agreements") with
Evergreen Funds Distributor, Inc. ("EFD"). Pursuant to the Distribution
Agreements, each Fund will compensate EFD for its services as distributor at a
rate which may not exceed an annual rate of .25 of 1% of a Fund's aggregate
average daily net assets attributable to Class A shares, .75 of 1% of a Fund's
aggregate average daily net assets attributable to the Class B shares and .75 of
1% of a Fund's aggregate average daily net assets attributable to the Class C
shares. The Distribution Agreements provide that EFD will use the distribution
fee received from a Fund for payments (i) to compensate broker-dealers or other
persons for distributing shares of the Funds, including interest and principal
payments made in respect of amounts paid to broker-dealers or other persons that
have been financed (EFD may assign its rights to receive compensation under the
Plans to secure such financings), (ii) to otherwise promote the sale of shares
of the Fund, and (iii) to compensate broker-dealers, depository institutions and
other financial intermediaries for providing administrative, accounting and
other services with respect to the Fund's shareholders. The financing of
payments made by EFD to compensate broker-dealers or other persons for
distributing shares of the Funds may be provided by First Union or its
affiliates. The Funds may also make payments under the Plans ( and in the case
of Evergreen International Equity Fund and Evergreen Emerging Markets Growth
Fund, the Service Plans), in amounts up to .25 of 1% of a Fund's aggregate
average daily net assets on an annual basis attributable to Class B and Class C
shares, to compensate organizations, which may include EFD and each Fund's
investment adviser or their affiliates, for personal services rendered to
shareholders and/or the maintenance of shareholder accounts.
The Funds may not pay any distribution or services fees during any
fiscal period in excess of the amounts set forth above. Since EFD's compensation
under the Distribution Agreements is not directly tied to the expenses incurred
by EFD, the amount of compensation received by it under the Distribution
Agreements during any year may be more or less than its actual expenses and may
result in a profit to EFD. Distribution expenses incurred by EFD in one fiscal
year that exceed the level of compensation paid to EFD for that year may be paid
from distribution fees received from a Fund in subsequent fiscal years.
The Plans are in compliance with rules of the National Association of
Securities Dealers, Inc. which effectively limit the annual asset-based sales
charges and service fees that a mutual fund may pay on a class of shares to .75
of 1% and .25 of 1%, respectively, of the average annual net assets attributable
to that class. The rules also limit the aggregate of all front-end, deferred and
asset-based sales charges imposed with respect to a class of shares by a mutual
fund that also charges a service fee to 6.25% of cumulative gross sales of
shares of that class, plus interest at the prime rate plus 1% per annum.
------------------------------------------------------------------------------
PURCHASE AND REDEMPTION OF SHARES
------------------------------------------------------------------------------
HOW TO BUY SHARES
You can purchase shares of any of the Funds through broker-dealers,
banks or other financial intermediaries, or directly through EFD. The minimum
initial investment is $1,000, which may be waived in certain situations. There
is no minimum for subsequent investments. Investments of $25 or more are allowed
under the systematic investment plan. Share certificates are not issued. In
states where EFD is not registered as a broker-dealer shares of a Fund will only
be sold through other broker-dealers or other financial institutions that are
registered. See the Share Purchase Application and Statement of Additional
Information for more information. Only Class A, Class B and Class C shares are
offered through this Prospectus (See "General Information" - "Other Classes of
Shares").
Class A Shares-Front-End Sales Charge Alternative. You can purchase Class A
shares at net asset value plus an initial sales charge, as follows:
<PAGE>
Initial Sales Charge
------------------------ ----------------- --------------- ------------------
Commission to
Dealer/Agent
as a % of the Net as a % of the as a % of
Amount of Purchase Amount Invested Offering Price Offering Price
------------------------ ----------------- --------------- ------------------
------------------------ ----------------- --------------- ------------------
------------------------ ----------------- --------------- ------------------
------------------------ ----------------- --------------- ------------------
Less than $100,000 4.99% 4.75% 4.25%
------------------------ ----------------- --------------- ------------------
------------------------ ----------------- --------------- ------------------
$100,000 - $249,999 3.90% 3.75% 3.25%
------------------------ ----------------- --------------- ------------------
------------------------ ----------------- --------------- ------------------
$250,000 - $499,999 3.09% 3.00% 2.50%
------------------------ ----------------- --------------- ------------------
------------------------ ----------------- --------------- ------------------
$500,000 - $999,999 2.04% 2.00% 1.75%
------------------------ ----------------- --------------- ------------------
------------------------ ----------------- --------------- ------------------
$1,000,000 - $2,499,999 1.01% 1.00% 1.00%
------------------------ ----------------- --------------- ------------------
------------------------ ----------------- --------------- ------------------
Over $2,500,000 .25% .25% .25%
------------------------ ----------------- --------------- ------------------
No front-end sales charges are imposed on Class A shares purchased by:
institutional investors, which may include bank trust departments and registered
investment advisers; investment advisers, consultants or financial planners who
place trades for their own accounts or the accounts of their clients and who
charge such clients a management, consulting, advisory or other fee; clients of
investment advisers or financial planners who place trades for their own
accounts if the accounts are linked to the master account of such investment
advisers or financial planners on the books of the broker-dealer through whom
shares are purchased; institutional clients of broker-dealers, including
retirement and deferred compensation plans and the trusts used to fund these
plans, which place trades through an omnibus account maintained with a Fund by
the broker-dealer; shareholders of record on October 12, 1990 in any series of
Evergreen Investment Trust in existence on that date, and the members of their
immediate families; employees of FUNB and its affiliates, EFD and any
broker-dealer with whom EFD has entered into an agreement to sell shares of the
Funds, and members of the immediate families of such employees; and upon the
initial purchase of an Evergreen mutual fund by investors reinvesting the
proceeds from a redemption within the preceeding thirty days of shares of other
mutual funds, provided such shares were initially purchased with a front-end
sales charge or subject to a CDSC. Certain broker-dealers or other financial
institutions may impose a fee in connection with transactions in shares of the
Funds.
Class A shares may also be purchased at net asset value by qualified
and non-qualified employee benefit and savings plans which make shares of the
Funds and the other Evergreen mutual funds available to their participants, and
which: (a) are employee benefit plans having at least $1,000,000 in investable
assets, or 250 or more eligible participants; or (b) are non-qualified benefit
or profit sharing plans which are sponsored by an organization which also makes
the Evergreen mutual funds available through a qualified plan meeting the
criteria specified under (a). In connection with sales made to plans of the type
described in the preceeding sentence that are clients of broker-dealers, and
which do not qualify for sales at net asset value under the conditions set forth
in the paragraph above, payments may be made in an amount equal to .50 of 1% of
the net asset value of shares purchased. These payments are subject to reclaim
in the event shares are redeemed within 12 months after purchase.
When Class A shares are sold, EFD will normally retain a portion of the
applicable sales charge and pay the balance to the broker-dealer or other
financial intermediary through whom the sale was made. EFD may also pay fees to
banks from sales charges for services performed on behalf of the bank's
customers in connection with the purchase of shares of the Funds. In addition to
compensation paid at the time of sale, entities whose clients have purchased
Class A shares may receive a trailing commission equal to .25 of 1% of the
average daily value on an annual basis of Class A shares held by their clients.
Certain purchases of Class A shares may qualify for reduced sales charges in
accordance with a Fund's Combined Purchase Privilege, Cumulative Quantity
Discount, Statement of Intention, Privilege for Certain Retirement Plans and
Reinstatement Privilege. Consult the Share Purchase Application and Statement of
Additional Information for additional information concerning these reduced sales
charges.
Class B Shares-Deferred Sales Charge Alternative. You can purchase Class B
shares at net asset value without an initial sales charge. However, you may pay
a contingent deferred sales charge ("CDSC") if you redeem shares within seven
years after purchase. Shares obtained from dividend or distribution reinvestment
are not subject to the CDSC. The amount of the CDSC (expressed as a percentage
of the lesser of the current net asset value or original cost) will vary
according to the number of years from the purchase of Class B shares as set
forth below.
<PAGE>
Year Since Purchase Contingent Deferred Sales Charge
FIRST 5%
SECOND 4%
THIRD and FOURTH 3%
FIFTH 2%
SIXTH and SEVENTH 1%
The CDSC is deducted from the amount of the redemption and is paid to EFD. The
CDSC will be waived on redemptions of shares following the death or disability
of a shareholder, to meet distribution requirements for certain qualified
retirement plans or in the case of certain redemptions made under a Fund's
Systematic Cash Withdrawal Plan. Class B shares are subject to higher
distribution and/or shareholder service fees than Class A shares for a period of
seven years (after which it is expected that they will convert to Class A
shares) . The higher fees mean a higher expense ratio, so Class B shares pay
correspondingly lower dividends and may have a lower net asset value than Class
A shares. See the Statement of Additional Information for further details.
Class C Shares--Level-Load Alternative. You can purchase Class C shares without
any initial sales charge and, therefore, the full amount of your investment will
be used to purchase Fund shares. However, you will pay a 1.0% CDSC if you redeem
shares during the first year after purchase. Class C shares incur higher
distribution and/or shareholder service fees than Class A shares but, unlike
Class B shares, do not convert to any other class of shares of the Fund. The
higher fees mean a higher expense ratio, so Class C shares pay correspondingly
lower dividends and may have a lower net asset value than Class A shares. Shares
obtained from dividend or distribution reinvestment are not subject to the CDSC.
No contingent deferred sales charge will be imposed on Class C shares
purchased by institutional investors, and through employee benefit and savings
plans eligible for the exemption from front-end sales charges described under
"Class A Shares-Front End Sales Charge Alternative", above. Broker-dealers and
other financial intermediaries whose clients have purchased Class C shares may
receive a trailing commission equal to .75 of 1% of the average daily value of
such shares on an annual basis held by their clients more than one year from the
date of purchase. The payment of trailing commissions will commence immediately
with respect to shares eligible for exemption from the contingent deferred sales
charge normally applicable to Class C shares.
With respect to Class B Shares and Class C Shares, no CDSC will be
imposed on: (1) the portion of redemption proceeds attributable to increases in
the value of the account due to increases in the net asset value per Share, (2)
Shares acquired through reinvestment of dividends and capital gains, (3) Shares
held for more than seven years (in the case of Class B Shares) or one year (in
the case of Class C Shares) after the end of the calendar month of acquisition,
(4) accounts following the death or disability of a shareholder, or (5) minimum
required distributions to a shareholder over the age of 70 1/2 from an IRA or
other retirement plan.
How the Funds Value Their Shares. The net asset value of each Class of shares of
a Fund is calculated by dividing the value of the amount of the Fund's net
assets attributable to that Class by the number of outstanding shares of that
Class. Shares are valued each day the New York Stock Exchange (the "Exchange")
is open as of the close of regular trading (currently 4:00 p.m. Eastern time).
The securities in a Fund are valued at their current market value determined on
the basis of market quotations or, if such quotations are not readily available,
such other methods as the Trustees believe would accurately reflect fair value.
Non-dollar denominated securities will be valued as of the close of the Exchange
at the closing price of such securities in their principal trading market.
General. The decision as to which Class of shares is more beneficial to you
depends on the amount of your investment and the length of time you will hold
it. If you are making a large investment, thus qualifying for a reduced sales
charge, you might consider Class A shares. If you are making a smaller
investment, you might consider Class B shares since 100% of your purchase is
invested immediately and since such shares will convert to Class A shares, which
incur lower ongoing distribution and/or shareholder service fees, after seven
years. If you are unsure of the time period of your investment, you might
consider Class C shares since there are no initial sales charges and, although
there is no conversion feature, the CDSC only applies to redemptions made during
the first year. Consult your financial intermediary for further information. The
compensation received by dealers and agents may differ depending on whether they
sell Class A, Class B or Class C shares. There is no size limit on purchases of
Class A shares.
<PAGE>
In addition to the discount or commission paid to dealers, EFD will
from time to time pay to dealers additional cash or other incentives that are
conditioned upon the sale of a specified minimum dollar amount of shares of a
Fund and/or other Evergreen mutual funds. Such incentives will take the form of
payment for attendance at seminars, lunches, dinners, sporting events or theater
performances, or payment for travel, lodging and entertainment incurred in
connection with travel by persons associated with a dealer and their immediate
family members to urban or resort locations within or outside the United States.
Such a dealer may elect to receive cash incentives of equivalent amount in lieu
of such payments.
Additional Purchase Information. As a condition of this offering, if a purchase
is canceled due to nonpayment or because an investor's check does not clear, the
investor will be responsible for any loss a Fund or the Fund's investment
adviser incurs. If such investor is an existing shareholder, a Fund may redeem
shares from an investor's account to reimburse the Fund or its investment
adviser for any loss. In addition, such investors may be prohibited or
restricted from making further purchases in any of the Evergreen mutual funds.
HOW TO REDEEM SHARES
You may "redeem", i.e., sell your shares in a Fund to the Fund on any
day the Exchange is open, either directly or through your financial
intermediary. The price you will receive is the net asset value (less any
applicable CDSC for Class B or Class C shares) next calculated after the Fund
receives your request in proper form. Proceeds generally will be sent to you
within seven days. However, for shares recently purchased by check, a Fund will
not send proceeds until it is reasonably satisfied that the check has been
collected (which may take up to 10 days). Once a redemption request has been
telephoned or mailed, it is irrevocable and may not be modified or canceled.
Redeeming Shares Through Your Financial Intermediary. A Fund must receive
instructions from your financial intermediary before 4:00 p.m. Eastern time for
you to receive that day's net asset value (less any applicable CDSC for Class B
or C shares). Your financial intermediary is responsible for furnishing all
necessary documentation to a Fund and may charge you for this service. Certain
financial intermediaries may require that you give instructions earlier than
4:00 p.m.
Redeeming Shares Directly by Mail or Telephone. Send a signed letter of
instruction or stock power form to State Street Bank and Trust Company ("State
Street") which is the registrar, transfer agent and dividend-disbursing agent
for each Fund. Stock power forms are available from your financial intermediary,
State Street, and many commercial banks. Additional documentation is required
for the sale of shares by corporations, financial intermediaries, fiduciaries
and surviving joint owners. Signature guarantees are required for all redemption
requests for shares with a value of more than $10,000 or where the redemption
proceeds are to be mailed to an address other than that shown in the account
registration. A signature guarantee must be provided by a bank or trust company
(not a Notary Public), a member firm of a domestic stock exchange or by other
financial institutions whose guarantees are acceptable to State Street.
Shareholders may withdraw amounts of $1,000 or more from their accounts
by calling the phone number on the front page of this Prospectus between the
hours of 8:00 a.m. and 5:30 p.m. (Eastern time) each business day (i.e., any
weekday exclusive of days on which the Exchange or State Street's offices are
closed). The Exchange is closed on New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
Redemption requests made after 4:00 p.m. (Eastern time) will be processed using
the net asset value determined on the next business day. Such redemption
requests must include the shareholder's account name, as registered with a Fund,
and the account number. During periods of drastic economic or market changes,
shareholders may experience difficulty in effecting telephone redemptions.
Shareholders who are unable to reach a Fund by telephone should follow the
procedures outlined above for redemption by mail.
The telephone redemption service is not made available to shareholders
automatically. Shareholders wishing to use the telephone redemption service must
indicate this on the Share Purchase Application and choose how the redemption
proceeds are to be paid. Redemption proceeds will either (i) be mailed by check
to the shareholder at the address in which the account is registered or (ii) be
wired to an account with the same registration as the shareholder's account in a
Fund at a designated commercial bank. State Street currently deducts a $5 wire
charge from all redemption proceeds wired. This charge is subject to change
without notice. A shareholder who decides later to use this service, or to
change instructions already given, should fill out a Shareholder Services Form
and send it to State Street Bank and Trust Company, P.O. Box 9021, Boston,
Massachusetts 02205-9827, with such shareholder's signature guaranteed by a bank
or trust company (not a Notary Public), a member firm of a domestic stock
exchange or by other financial institutions whose guarantees are acceptable to
State Street. Shareholders should allow approximately ten days for such form to
be processed. The Funds will employ reasonable procedures to verify that
telephone requests are genuine. These procedures include requiring some form of
personal identification prior to acting upon instructions and tape recording of
conversations. If the Fund fails to follow such procedures, it may be liable for
any losses due to unauthorized or fraudulent instructions. The Fund shall not be
liable for following telephone instructions reasonably believed to be genuine.
Also, the Fund reserves the right to refuse a telephone redemption request, if
it is believed advisable to do so. Financial intermediaries may charge a fee for
handling telephonic requests. The telephone redemption option may be suspended
or terminated at any time without notice.
General. The redemption of shares is a taxable transaction for Federal tax
purposes. Under unusual circumstances, a Fund may suspend redemptions or
postpone payment for up to seven days or longer, as permitted by Federal
securities law. The Funds reserve the right to close an account that through
redemption has remained below $1,000 for 30 days. Shareholders will receive
sixty days' written notice to increase the account value before the account is
closed. The Funds have elected to be governed by Rule 18f-1 under the 1940 Act
pursuant to which each Fund is obligated to redeem shares solely in cash, up to
the lesser of $250,000 or 1% of a Fund's total net assets during any ninety day
period for any one shareholder. See the Statement of Additional Information for
further details.
EXCHANGE PRIVILEGE
How To Exchange Shares. You may exchange some or all of your shares for shares
of the same Class in the other Evergreen mutual funds through your financial
intermediary, or by telephone or mail as described below. An exchange which
represents an initial investment in another Evergreen mutual fund must amount to
at least $1,000. Once an exchange request has been telephoned or mailed, it is
irrevocable and may not be modified or canceled. Exchanges will be made on the
basis of the relative net asset values of the shares exchanged next determined
after an exchange request is received. Exchanges are subject to minimum
investment and suitability requirements.
Each of the Evergreen mutual funds have different investment objectives
and policies. For complete information, a prospectus of the Fund into which an
exchange will be made should be read prior to the exchange. An exchange is
treated for Federal income tax purposes as a redemption and purchase of shares
and may result in the realization of a capital gain or loss. Shareholders are
limited to five exchanges per calendar year, with a maximum of three per
calendar quarter. This exchange privilege may be modified or discontinued at any
time by the Fund upon sixty days' notice to shareholders and is only available
in states in which shares of the fund being acquired may lawfully be sold.
No CDSC will be imposed in the event Class B or Class C shares are
exchanged for Class B or Class C shares, respectively, of other Evergreen mutual
funds. If you redeem shares, the CDSC applicable to the Class B or Class C
shares of the Evergreen mutual fund originally purchased for cash is applied.
Also, Class B shares will continue to age following an exchange for purposes of
conversion to Class A shares and determining the amount of the applicable CDSC.
Exchanges Through Your Financial Intermediary. A Fund must receive exchange
instructions from your financial intermediary before 4:00 p.m. Eastern time for
you to receive that day's net asset value. Your financial intermediary is
responsible for furnishing all necessary documentation to a Fund and may charge
you for this service.
Exchanges by Telephone and Mail. You may exchange shares with a value of $1,000
or more by telephone by calling the telephone number on the front of this
Prospectus. Exchange requests made after 4:00 p.m. (Eastern time) will be
processed using the net asset value determined on the next business day. During
periods of drastic economic or market changes, shareholders may experience
difficulty in effecting telephone exchanges. You should follow the procedures
outlined below for exchanges by mail if you are unable to reach State Street by
telephone. If you wish to use the telephone exchange service you should indicate
this on the Share Purchase Application. As noted above, each Fund will employ
reasonable procedures to confirm that instructions for the redemption or
exchange of shares communicated by telephone are genuine. A telephone exchange
may be refused by a Fund or State Street if it is believed advisable to do so.
Procedures for exchanging Fund shares by telephone may be modified or terminated
at any time. Written requests for exchanges should follow the same procedures
outlined for written redemption requests in the section entitled "How to Redeem
Shares", however, no signature guarantee is required.
SHAREHOLDER SERVICES
The Funds offer the following shareholder services. For more
information about these services or your account, contact your financial
intermediary, EFD or the toll-free number on the front page of this Prospectus.
Some services are described in more detail in the Share Purchase Application.
Systematic Investment Plan. You may make monthly or quarterly investments into
an existing account automatically in amounts of not less than $25.
Telephone Investment Plan. You may make investments into an existing account
electronically in amounts of not less than $100 or more than $10,000 per
investment. Telephone investment requests received by 3:00 p.m. (Eastern time)
will be credited to a shareholder's account the day the request is received.
Systematic Cash Withdrawal Plan. When an account of $10,000 or more is opened or
when an existing account reaches that size, you may participate in the Fund's
Systematic Cash Withdrawal Plan by filling out the appropriate part of the Share
Purchase Application. Under this plan, you may receive (or designate a third
party to receive) a monthly or quarterly check in a stated amount of not less
than $100. Fund shares will be redeemed as necessary to meet withdrawal
payments. All participants must elect to have their dividends and capital gain
distributions reinvested automatically. Any applicable Class B CDSC will be
waived with respect to redemptions occurring under a Systematic Cash Withdrawal
Plan during a calendar year to the extent that such redemptions do not exceed
10% of (i) the initial value of the account plus (ii) the value, at the time of
purchase, of any subsequent investments.
Investments Through Employee Benefit and Savings Plans. Certain qualified and
non-qualified benefit and savings plans may make shares of the Funds and the
other Evergreen mutual funds available to their participants. Investments made
by such employee benefit plans may be exempt from front-end sales charges if
they meet the criteria set forth under "Class A Shares-Front End Sales Charge
Alternative". Each Fund's investment adviser may provide compensation to
organizations providing administrative and recordkeeping services to plans which
make shares of the Evergreen mutual funds available to their participants.
Automatic Reinvestment Plan. For the convenience of investors, all dividends and
distributions are automatically reinvested in full and fractional shares of the
Fund at the net asset value per share at the close of business on the record
date, unless otherwise requested by a shareholder in writing. If the transfer
agent does not receive a written request for subsequent dividends and/or
distributions to be paid in cash at least three full business days prior to a
given record date, the dividends and/or distributions to be paid to a
shareholder will be reinvested. If you elect to receive dividends and
distributions in cash and the U.S. Postal Service cannot deliver the checks, or
if the checks remain uncashed for six months, the checks will be reinvested into
your account at the then current net asset value.
Tax Sheltered Retirement Plans. You may open a pension and profit sharing
account in any Evergreen mutual fund (except those funds having an objective of
providing tax free income), including: (i) Individual Retirement Accounts
("IRAs") and Rollover IRAs; (ii) Simplified Employee Pension (SEP) for sole
proprietors, partnerships and corporations; and (iii) Profit-Sharing and Money
Purchase Pension Plans for corporations and their employees.
EFFECT OF BANKING LAWS
The Glass-Steagall Act and other banking laws and regulations presently
prohibit member banks of the Federal Reserve System ("Member Banks") or their
non-bank affiliates from sponsoring, organizing, controlling, or distributing
the shares of registered open-end investment companies such as the Funds. Such
laws and regulations also prohibit banks from issuing, underwriting or
distributing securities in general. However, under the Glass-Steagall Act and
such other laws and regulations, a Member Bank or an affiliate thereof may act
as investment adviser, transfer agent or custodian to a registered open-end
investment company and may also act as agent in connection with the purchase of
shares of such an investment company upon the order of their customer. Evergreen
Asset, since it is a subsidiary of FUNB, and CMG are subject to and in
compliance with the aforementioned laws and regulations.
Changes to applicable laws and regulations or future judicial or
administrative decisions could result in CMG or Evergreen Asset being prevented
from continuing to perform the services required under the investment advisory
contract or from acting as agent in connection with the purchase of shares of a
Fund by its customers. If CMG or Evergreen Asset were prevented from continuing
to provide the services called for under the investment advisory agreement, it
is expected that the Trustees would identify, and call upon each Fund's
shareholders to approve, a new investment adviser. If this were to occur, it is
not anticipated that the shareholders of any Fund would suffer any adverse
financial consequences.
- -------------------------------------------------------------------------------
OTHER INFORMATION
- -------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAXES
It is the policy of each Fund to distribute to shareholders its
investment company taxable and tax-exempt income, if any, quarterly and any net
realized capital gains annually or more frequently as required as a condition of
continued qualification as a regulated investment company by the Code. Dividends
and distributions generally are taxable in the year in which they are paid,
except any dividends paid in January that were declared in the previous calendar
quarter may be treated as paid in December of the previous year. Income
dividends and capital gain distributions are automatically reinvested in
additional shares of the Fund making the distribution at the net asset value per
share at the close of business on the record date, unless the shareholder has
made a written request for payment in cash.
Each Fund has qualified and intends to continue to qualify to be
treated as a regulated investment company under the Code. While so qualified, it
is expected that each Fund will not be required to pay any Federal income taxes
on that portion of its investment company taxable income and any net realized
capital gains it distributes to shareholders. The Code imposes a 4%
nondeductible excise tax on regulated investment companies, such as the Funds,
to the extent they do not meet certain distribution requirements by the end of
each calendar year. Each Fund anticipates meeting such distribution
requirements. Most shareholders of the Funds normally will have to pay Federal
income taxes and any state or local taxes on the dividends and distributions
they receive from a Fund whether such dividends and distributions are made in
cash or in additional shares. Questions on how any distributions will be taxed
to the investor should be directed to the investor's own tax adviser.
Under current law, the highest Federal income tax rate applicable to
net long-term capital gains realized by individuals is 28%. The rate applicable
to corporations is 35%. Certain income from a Fund may qualify for a corporate
dividends-received deduction of 70%. Following the end of each calendar year,
every shareholder of the Fund will be sent applicable tax information and
information regarding the dividends and capital gain distributions made during
the calendar year.
A Fund may be subject to foreign withholding taxes which would reduce
the yield on its investments. Tax treaties between certain countries and the
United States may reduce or eliminate such taxes. Shareholders of a Fund who are
subject to United States Federal income tax may be entitled, subject to certain
rules and limitations, to claim a Federal income tax credit or deduction for
foreign income taxes paid by a Fund. See the Statement of Additional Information
for additional details. A Fund's transactions in options, futures and forward
contracts may be subject to special tax rules. These rules can affect the
amount, timing and characteristics of distributions to shareholders.
A Fund may be subject to foreign withholding taxes which would reduce
the yield on its investments. Tax treaties between certain countries and the
United States may reduce or eliminate such taxes. Shareholders of a Fund who are
subject to United States Federal income tax may be entitled, subject to certain
rules and limitations, to claim a Federal income tax credit or deduction for
foreign income taxes paid by a Fund. See the Statement of Additional Information
for additional details. A Fund's transactions in options, futures and forward
contracts may be subject to special tax rules. These rules can affect the
amount, timing and characteristics of distributions to shareholders.
If more than 50% of the value of a Fund's assets at the end of the tax
year is represented by stock or securities of foreign corporations, the Fund
intends to qualify for certain Code stipulations that would allow shareholders
to claim a foreign tax credit or deduction on their U.S. income tax returns. The
Code may limit a shareholder's ability to claim a foreign tax credit.
Furthermore, shareholders who elect to deduct their portion of a Fund's foreign
taxes rather than take the foreign tax credit must itemize deductions on their
income tax returns.
Each Fund is required by Federal law to withhold 31% of reportable
payments (which may include dividends, capital gain distributions and
redemptions) paid to certain shareholders. In order to avoid this backup
withholding requirement, you must certify on the Share Purchase Application, or
on a separate form supplied by State Street, that your social security or
taxpayer identification number is correct and that you are not currently subject
to backup withholding or are exempt from backup withholding. A shareholder who
acquires Class A shares of a Fund and sells or otherwise disposes of such shares
within 90 days of acquisition may not be allowed to include certain sales
charges incurred in acquiring such shares for purposes of calculating gain and
loss realized upon a sale or exchange of shares of the Fund.
The foregoing discussion of Federal income tax consequences is based on
tax laws and regulations in effect on the date of this Prospectus, and is
subject to change by legislative or administrative action. As the foregoing
discussion is for general information only, you should also review the
discussion of "Additional Tax Information" contained in the Statement of
Additional Information. In addition, you should consult your own tax adviser as
to the tax consequences of investments in the Funds, including the application
of state and local taxes which may be different from Federal income tax
consequences described above.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
A discussion of the performance of Evergreen Global Real Estate Equity
Fund for its most recent fiscal year is set forth below. A similar discussion
relating to Evergreen International Equity Fund and Evergreen Emerging Markets
Growth Fund is contained in the annual report of each Fund for the fiscal year
ended December 31, 1994.
Evergreen Global Real Estate Equity Fund. For the nine month period ending
September 30, 1994, the Evergreen Global Real Estate Equity Fund was
significantly impacted by a combination of rising interest rates worldwide
leading to a performance decline of -6.4%. The relative indices performance was
similar, as the Morgan Stanley Global Real Estate Sub Index fell -9.9% and the
Wall Street Journal/Dow Jones World Sub Index of real estate stocks lost -11.5%.
The rise in interest rates in Europe was significantly higher than it was in the
U.S., despite little prospect of imminent inflation due to continued slow
economic recovery. We believe that both property and stock markets viewed rising
rates as a brake on economic growth. This resulted in weak performance for
European property shares. Japan also remained a relatively dull performer after
the first quarter as little evidence of economic growth was visible. Only
Southeast Asia and Latin America provided the Fund with significant
opportunities for capital appreciation during this period.
[CHART]
<PAGE>
GENERAL INFORMATION
Portfolio Transactions. Consistent with the Rules of Fair Practice of the
National Association of Securities Dealers, Inc., and subject to seeking best
price and execution, a Fund may consider sales of its shares as a factor in the
selection of dealers to enter into portfolio transactions with the Fund.
Organization. The Evergreen Global Real Estate Equity Fund is a separate series
of the Evergreen Real Estate Equity Trust, a Massachusetts business trust
organized in 1988. Evergreen International Equity Fund and Evergreen Emerging
Markets Growth Fund are separate investment series of Evergreen Investment Trust
(formerly First Union Funds), which is a Massachusetts business trust organized
in 1984. The Funds do not intend to hold annual shareholder meetings;
shareholder meetings will be held only when required by applicable law.
Shareholders have available certain procedures for the removal of Trustees.
A shareholder in each class of a Fund will be entitled to his or her
share of all dividends and distributions from a Fund's assets, based upon the
relative value of such shares to those of other Classes of the Fund, and, upon
redeeming shares, will receive the then current net asset value of the Class of
shares of the Fund represented by the redeemed shares less any applicable CDSC.
Each Trust named above is empowered to establish, without shareholder approval,
additional investment series, which may have different investment objectives,
and additional classes of shares for any existing or future series. If an
additional series or class were established in a Fund, each share of the series
or class would normally be entitled to one vote for all purposes. Generally,
shares of each series and class would vote together as a single class on
matters, such as the election of Trustees, that affect each series and class in
substantially the same manner. Class A, B, C and Y shares have identical voting,
dividend, liquidation and other rights, except that each class bears, to the
extent applicable, its own distribution, shareholder service and transfer agency
expenses as well as any other expenses applicable only to a specific class. Each
class of shares votes separately with respect to Rule 12b-1 distribution plans
and other matters for which separate class voting is appropriate under
applicable law. Shares are entitled to dividends as determined by the Trustees
and, in liquidation of a Fund, are entitled to receive the net assets of the
Fund.
Registrar, Transfer Agent and Dividend-Disbursing Agent. State Street Bank and
Trust Company, P.O. Box 9021, Boston, Massachusetts 02205-9827 acts as each
Fund's registrar, transfer agent and dividend-disbursing agent for a fee based
upon the number of shareholder accounts maintained for the Funds. The transfer
agency fee with respect to the Class B shares will be higher than the transfer
agency fee with respect to the Class A shares or Class C shares.
Principal Underwriter. EFD, a wholly-owned subsidiary of Furman Selz
Incorporated, located 237 Park Avenue, New York, New York 10017, is the
principal underwriter of the Funds. Furman Selz Incorporated, also acts as
sub-administrator to Evergreen International Equity Fund and Evergreen Emerging
Markets Growth Fund and which provides certain sub-administrative services to
Evergreen Asset in connection with its role as investment adviser Evergreen
Global Real Estate Equity Fund, including providing personnel to serve as
officers of the Funds.
Other Classes of Shares. Each Fund currently offers four classes of shares,
Class A, Class B, Class C and Class Y, and may in the future offer additional
classes. Class Y shares are not offered by this Prospectus and are only
available to (i) all shareholders of record in one or more of the Funds for
which Evergreen Asset serves as investment adviser as of December 30, 1994, (ii)
certain institutional investors and (iii) investment advisory clients of CMG,
Evergreen Asset or their affiliates. The dividends payable with respect to Class
A, Class B and Class C shares will be less than those payable with respect to
Class Y shares due to the distribution and distribution and shareholder
servicing related expenses borne by Class A, Class B and Class C shares and the
fact that such expenses are not borne by Class Y shares.
Performance Information. From time to time, the Funds may quote their "total
return" or "yield" for a specified period in advertisements, reports or other
communications to shareholders, Total return and yield are computed separately
for Class A, Class B and Class C shares. A Fund's total return for each such
period is computed by finding, through the use of a formula prescribed by the
Securities and Exchange Commission ("SEC"), the average annual compounded rate
of return over the period that would equate an assumed initial amount invested
to the value of the investment at the end of the period. For purposes of
computing total return, dividends and capital gains distributions paid on shares
of a Fund are assumed to have been reinvested when paid and the maximum sales
charges applicable to purchases of a Fund's shares are assumed to have been
paid. Yield is a way of showing the rate of income the Fund earns on its
investments as a percentage of the Fund's share price. The Fund's yield is
calculated according to accounting methods that are standardized by the SEC for
all stock and bond funds. Because yield accounting methods differ from the
method used for other accounting purposes, the Fund's yield may not equal its
distribution rate, the income paid to your account or the net investment income
reported in the Fund's financial statements. To calculate yield, the Fund takes
the interest income it earned from its portfolio of investments (as defined by
the SEC formula) for a 30-day period (net of expenses), divides it by the
average number of shares entitled to receive dividends, and expresses the result
as an annualized percentage rate based on the Fund's share price at the end of
the 30-day period. This yield does not reflect gains or losses from selling
securities
Performance data for each class of shares will be included in any
advertisement or sales literature using performance data of a Fund. These
advertisements may quote performance rankings or ratings of a Fund by financial
publications or independent organizations such as Lipper Analytical Services,
Inc. and Morningstar, Inc. or compare a Fund's performance to various indices.
The Fund may also advertise in items of sales literature an "actual distribution
rate" which is computed by dividing the total ordinary income distributed (which
may include the excess of short-term capital gains over losses) to shareholders
for the latest twelve month period by the maximum public offering price per
share on the last day of the period. Investors should be aware that past
performance may not be reflective of future results.
Liability Under Massachusetts Law. Under Massachusetts law, Trustees and
shareholders of a business trust may, in certain circumstances, be held
personally liable for its obligations. The Declarations of Trust under which the
Funds operate provide that no Trustee or shareholder will be personally liable
for the obligations of the Trust and that every written contract made by the
Trust contain a provision to that effect. If any Trustee or shareholder were
required to pay any liability of the Trust, that person would be entitled to
reimbursement from the general assets of the Trust.
Additional Information. This Prospectus and the Statement of Additional
Information, which has been incorporated by reference herein, do not contain all
the information set forth in the Registration Statements filed by the Trusts
with the Commission under the Securities Act. Copies of the Registration
Statements may be obtained at a reasonable charge from the Commission or may be
examined, without charge, at the offices of the Commission in Washington, D.C.
<PAGE>
INVESTMENT ADVISER
Capital Management Group of First Union National Bank, 201 South College
Street, Charlotte, North Carolina 28288
EVERGREEN EMERGING MARKETS GROWTH FUND, EVERGREEN INTERNATIONAL EQUITY
FUND
Evergreen Asset Management Corp., 2500 Westchester Avenue, Purchase, New York
10577
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND
CUSTODIAN & TRANSFER AGENT
State Street Bank & Trust Company, Box 9021, Boston, Massachusetts 02205-9827
LEGAL COUNSEL
Sullivan & Worcester, 1025 Connecticut Avenue, N.W., Washington, D.C. 20036
INDEPENDENT ACCOUNTANTS
KPMG Peat Marwick LLP, One Mellon Bank Center, Pittsburgh, Pennsylvania 15219
EVERGREEN EMERGING MARKETS GROWTH FUND, EVERGREEN INTERNATIONAL EQUITY
FUND
Price Waterhouse LLP, 1177 Avenue of the Americas, New York, New York 10036
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND
DISTRIBUTOR
Evergreen Funds Distributor, Inc., 237 Park Avenue, New York, New York 10017
536113
<PAGE>
PROSPECTUS July 7, 1995
EVERGREEN(SM mark) INTERNATIONAL GROWTH FUNDS (Evergreen Logo appears here)
EVERGREEN EMERGING MARKETS GROWTH FUND
EVERGREEN INTERNATIONAL EQUITY FUND
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND
CLASS Y SHARES
The Evergreen International Growth Funds (the "Funds") are
designed to provide investors with a selection of investment alternatives
which seek to provide capital growth and diversification. This Prospectus
provides information regarding the Class Y shares offered by the Funds.
Each Fund is, or is a series of, an open-end, diversified, management
investment company. This Prospectus sets forth concise information about
the Funds that a prospective investor should know before investing. The
address of the Funds is 2500 Westchester Avenue, Purchase, New York 10577.
A "Statement of Additional Information" for the Funds dated July
7, 1995 has been filed with the Securities and Exchange Commission and is
incorporated by reference herein. The Statement of Additional Information
provides information regarding certain matters discussed in this Prospectus
and other matters which may be of interest to investors, and may be
obtained without charge by calling the Funds at (800) 235-0064. There can
be no assurance that the investment objective of any Fund will be achieved.
Investors are advised to read this Prospectus carefully.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF
FIRST UNION OR ANY SUBSIDIARIES OF FIRST UNION, ARE NOT ENDORSED OR
GUARANTEED BY FIRST UNION OR ANY SUBSIDIARIES OF FIRST UNION, AND ARE NOT
INSURED OR OTHERWISE PROTECTED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY AND
INVOLVE RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
KEEP THIS PROSPECTUS FOR FUTURE REFERENCE
EVERGREEN(SM mark) is a Service Mark of Evergreen Asset
Management Corp. Copyright 1995, Evergreen Asset Management Corp.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
OVERVIEW OF THE FUNDS
EXPENSE INFORMATION
FINANCIAL HIGHLIGHTS
DESCRIPTION OF THE FUNDS
Investment Objectives and Policies
Investment Practices and Restrictions
MANAGEMENT OF THE FUNDS
Investment Adviser
Sub-Advisers
Distribution Plans and Agreements
PURCHASE AND REDEMPTION OF SHARES
How to Buy Shares
How to Redeem Shares
Exchange Privilege
Shareholder Services
Effect of Banking Laws
OTHER INFORMATION
Dividends, Distributions and Taxes
Management's Discussion of Fund Performance
General Information
</TABLE>
OVERVIEW OF THE FUNDS
The following summary is qualified in its entirety by the more detailed
information contained elsewhere in this Prospectus. See "Description of the
Funds" and "Management of the Funds".
The Investment Adviser to EVERGREEN GLOBAL REAL ESTATE EQUITY FUND is
Evergreen Asset Management Corp. ("Evergreen Asset") which, with its
predecessors, has served as an investment adviser to the Evergreen Funds since
1971. Evergreen Asset is a wholly-owned subsidiary of First Union National Bank
of North Carolina ("FUNB"), which in turn is a subsidiary of First Union
Corporation, one of the ten largest bank holding companies in the United States.
The Capital Management Group of FUNB ("CMG") serves as investment adviser to
EVERGREEN EMERGING MARKETS GROWTH FUND and EVERGREEN INTERNATIONAL EQUITY FUND.
EVERGREEN EMERGING MARKETS GROWTH FUND (formerly First Union Emerging
Markets Growth Portfolio) seeks to provide long-term capital appreciation. The
EMERGING MARKETS GROWTH FUND invests in equity securities of issuers located in
countries with emerging markets.
EVERGREEN INTERNATIONAL EQUITY FUND (formerly First Union International
Equity Portfolio) seeks to provide long-term capital appreciation. The EVERGREEN
INTERNATIONAL EQUITY FUND invests in equity securities of non-U.S. issuers.
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND seeks long-term capital growth.
Current income is a secondary objective. It invests primarily in equity
securities of United States and non-United States companies which are
principally engaged in the real estate industry or which own significant real
estate assets. It will not purchase direct interests in real estate.
THERE IS NO ASSURANCE THAT THE INVESTMENT OBJECTIVE OF ANY FUND WILL BE
ACHIEVED.
2
<PAGE>
EXPENSE INFORMATION
The table set forth below summarizes the shareholder transaction costs
associated with an investment in the Class Y Shares of the Fund. For further
information see "Purchase and Redemption of Shares".
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES
<S> <C>
Maximum Sales Charge Imposed on Purchases None
Sales Charge on Dividend Reinvestments None
Contingent Deferred Sales Charge None
Redemption Fee None
Exchange Fee (only applies after 4 exchanges per year) $5.00
</TABLE>
The following table shows for the Fund the estimated annual operating
expenses (as a percentage of average net assets) attributable to Class Y Shares,
together with examples of the cumulative effect of such expenses on a
hypothetical $1,000 investment for the periods specified assuming (i) a 5%
annual return and (ii) redemption at the end of each period.
EVERGREEN EMERGING MARKETS GROWTH FUND
<TABLE>
<CAPTION>
ANNUAL OPERATING
EXPENSES* EXAMPLE
<S> <C> <C> <C>
Advisory Fees 1.50%
After 1 Year $ 22
Administrative Fees .06%
After 3 Years $ 67
12b-1 Fees --
After 5 Years $ 115
Other Expenses .59%
After 10 Years $ 248
Total 2.15%
</TABLE>
EVERGREEN INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
ANNUAL OPERATING
EXPENSES* EXAMPLE
<S> <C> <C> <C>
Advisory Fees .82%
After 1 Year $ 12
Administrative Fees .06%
After 3 Years $ 37
12b-1 Fees --
After 5 Years $ 64
Other Expenses .29%
After 10 Years $ 142
Total 1.17%
</TABLE>
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND
<TABLE>
<CAPTION>
ANNUAL OPERATING
EXPENSES* EXAMPLE
<S> <C> <C> <C>
Advisory Fees 1.00%
After 1 Year $ 15
12b-1 Fees --
After 3 Years $ 46
Other Expenses .46%
After 5 Years $ 80
After 10 Years $ 175
Total 1.46%
</TABLE>
*The estimated annual operating expenses and examples do not reflect fee waivers
and expense reimbursements for the most recent fiscal period. Actual expenses
for Class Y Shares net of fee waivers and expense reimbursements for the fiscal
periods ended December 31, 1994 or September 30, 1994, as applicable, were as
follows:
<TABLE>
<CAPTION>
Evergreen Emerging Markets Growth Fund 1.53%
<S> <C>
Evergreen International Equity Fund 1.06%
Evergreen Global Real Estate Equity Fund 1.46%
</TABLE>
3
<PAGE>
From time to time, each Fund's investment adviser may, at its discretion,
reduce or waive its fees or reimburse the Funds for certain of their expenses in
order to reduce their expense ratios. Each Fund's investment adviser may cease
these waivers and reimbursements at any time.
The purpose of the foregoing table is to assist an investor in
understanding the various costs and expenses that an investor in each Class of
Shares of the Funds will bear directly or indirectly. The amounts set forth both
in the tables and in the examples are estimated amounts based on the experience
of each Fund for the most recent fiscal period. Such expenses have been restated
to reflect current fee arrangements. THE EXAMPLES SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES OR ANNUAL RETURN. ACTUAL EXPENSES AND
ANNUAL RETURN MAY BE GREATER OR LESS THAN THOSE SHOWN. For a more complete
description of the various costs and expenses borne by the Funds see "Management
of the Funds". As a result of asset-based sales charges, long-term shareholders
may pay more than the economic equivalent of the maximum front-end sales charges
permitted under the rules of the National Association of Securities Dealers,
Inc.
4
<PAGE>
FINANCIAL HIGHLIGHTS
The tables on the following pages present, for each Fund, financial
highlights for a share outstanding throughout each period indicated. The
information in the tables for the five most recent fiscal years or the life of
the Fund if shorter for EVERGREEN EMERGING MARKETS GROWTH FUND and EVERGREEN
INTERNATIONAL EQUITY FUND has been audited by KPMG Peat Marwick LLP, each Fund's
independent auditors, for EVERGREEN GLOBAL REAL ESTATE EQUITY FUND has, except
as noted otherwise, been audited by Price Waterhouse LLP, the Fund's independent
auditors. A report of KPMG Peat Marwick LLP or Price Waterhouse LLP, as the case
may be, on the audited information with respect to each Fund is incorporated by
reference in the Fund's Statement of Additional Information. The following
information for each Fund should be read in conjuction with the financial
statements and related notes which are incorporated by reference in the Fund's
Statement of Additional Information.
Further information about a Fund's performance is contained in the Fund's
annual report to shareholders, which may be obtained without charge.
EVERGREEN EMERGING MARKETS GROWTH FUND
<TABLE>
<CAPTION>
CLASS B CLASS C CLASS Y
SHARES SHARES SHARES
CLASS A
SHARES
SEPTEMBER 6, 1994*
THROUGH DECEMBER 31, 1994
<S> <C> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning of period................................................. $10.00 $10.00 $10.00 $10.00
Income (loss) from investment operations:
Net investment income (loss)......................................................... -- (.02 ) (.02 ) .01
Net realized and unrealized loss on investments and foreign currency transactions.... (1.83 ) (1.82 ) (1.82 ) (1.84 )
Total from investment operations................................................... (1.83 ) (1.84 ) (1.84 ) (1.83 )
Net asset value, end of period....................................................... $8.17 $8.16 $8.16 $8.17
TOTAL RETURN+........................................................................ (18.3% ) (18.4% ) (18.4% ) (18.3% )
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's omitted)............................................ $867 $1,589 $89 $5,878
Ratios to average net assets:
Expenses (a)....................................................................... 1.78% ++ 2.53% ++ 2.53% ++ 1.53% ++
Net investment income (loss)(a).................................................... (.12% )++ (.84% )++ (.82% )++ .43% ++
Portfolio turnover rate.............................................................. 17% 17% 17% 17%
</TABLE>
* Commencement of operations.
+ Total return is calculated on net asset value per share for the period
indicated and is not annualized. Initial sales charge or contingent deferred
sales charge is not reflected.
++ Annualized.
(a) Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were assumed or waived by the investment adviser, the
annualized ratios of expenses and net investment income (loss) to average
net assets, exclusive of any applicable state expense limitations, for the
period from September 6, 1994 through December 31, 1994 would have been the
following:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS Y
SHARES SHARES SHARES SHARES
<S> <C> <C> <C> <C>
Expenses..................................................... 3.96% 4.71% 4.71% 3.71%
Net investment income (loss)................................. (2.30%) (3.02%) (3.00%) (1.75%)
</TABLE>
5
<PAGE>
EVERGREEN INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
SEPTEMBER 2, 1994*
THROUGH DECEMBER 31, 1994
<S> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning of period............................................... $10.00 $10.00 $10.00
Income (loss) from investment operations:
Net investment income.............................................................. .02 -- .03
Net realized and unrealized loss on investments.................................... (.52) (.50) (.54)
Total from investment operations................................................. (.50) (.50) (.51)
Less distributions to shareholders from:
Net investment income.............................................................. -- -- --
Net asset value, end of period..................................................... $9.50 $9.50 $9.49
TOTAL RETURN+...................................................................... (5.1%) (5.2%) (5.2%)
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's omitted).......................................... $2,545 $5,602 $163
Ratios to average net assets:
Expenses (a)..................................................................... 1.26%++ 2.02%++ 2.01%++
Net investment income (a)........................................................ .91%++ .10%++ .85%++
Portfolio turnover rate............................................................ 1% 1% 1%
<CAPTION>
CLASS Y
SHARES
<S> <C>
PER SHARE DATA
Net asset value, beginning of period............................................... $10.00
Income (loss) from investment operations:
Net investment income.............................................................. .02
Net realized and unrealized loss on investments.................................... (.51 )
Total from investment operations................................................. (.49 )
Less distributions to shareholders from:
Net investment income.............................................................. (.01 )
Net asset value, end of period..................................................... $9.50
TOTAL RETURN+...................................................................... (5.0% )
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's omitted).......................................... $23,830
Ratios to average net assets:
Expenses (a)..................................................................... 1.06% ++
Net investment income (a)........................................................ 1.03% ++
Portfolio turnover rate............................................................ 1%
</TABLE>
* Commencement of operations.
+ Total return is calculated on net asset value per share for the period
indicated and is not annualized. Initial sales charge or contingent deferred
sales charge is not reflected.
++ Annualized.
(a) Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were assumed or waived by the investment adviser, the
annualized ratios of expenses and net investment income (loss) to average
net assets, exclusive of any applicable state expense limitations, for the
period from September 2, 1994 through December 31, 1994 would have been the
following:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS Y
SHARES SHARES SHARES SHARES
<S> <C> <C> <C> <C>
Expenses..................................................... 2.09% 2.85% 2.84% 1.89%
Net investment income (loss)................................. .08% (.73% ) .02% .20%
</TABLE>
6
<PAGE>
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND -- CLASS Y SHARES
<TABLE>
<CAPTION>
SIX MONTHS NINE MONTHS FEBRUARY 1, 1989*
ENDED ENDED THROUGH
MARCH 31, 1995 SEPTEMBER 30, YEAR ENDED DECEMBER 31, DECEMBER 31,
(UNAUDITED) 1994# 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning
of period................ $13.81 $14.75 $9.86 $9.16 $8.10 $10.03 $10.00
Income (loss) from
investment operations:
Net investment income
(loss)................... .01 .07 -- (.01) (.02) (.03) .17
Net realized and unrealized
gain (loss) on
investments.............. (2.48) (1.01) 5.07 .94 1.08 (1.90) .03
Total from investment
operations........... (2.47) (.94) 5.07 .93 1.06 (1.93) .20
Less distributions to
shareholders from:
Net investment income...... (.10) -- -- -- -- -- (.17)
Net realized gains......... (.52) -- (.18) (.23) -- -- --
Total distributions.... (.62) -- (.18) (.23) -- -- (.17)
Net asset value, end of
period................... $10.72 $13.81 $14.75 $9.86 $9.16 $8.10 $10.03
TOTAL RETURN+.............. (18.4%) (6.4%) 51.4% 10.2% 13.1% (19.2%) 2.0%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted).......... $74,001 $132,294 $146,173 $8,618 $7,557 $6,004 $7,336
Ratios to average net
assets:
Operating expenses....... 1.51%++ 1.46%++ 1.56%(a) 2.00%(a) 2.00%(a) 2.00%(a) 2.00%(a)++
Interest expense......... .08%++ .08%++ -- -- -- -- --
Net investment income
(loss)................. .39%++ .56%++ .03%(a) (.10%)(a) (.27%)(a) (.39%)(a) 2.23%(a)++
Portfolio turnover rate.... 17% 63% 88% 245% 207% 325% 151%
</TABLE>
# On September 21, 1994, the Fund changed its fiscal year end from December 31
to September 30.
* Commencement of operations.
+ Total return is calculated on net asset value per share and is not
annualized.
++ Annualized.
(a) Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were assumed or waived by the investment adviser, the
annualized ratios of expenses and net investment income (loss) to average
net assets, exclusive of any applicable state expense limitations, would
have been the following:
<TABLE>
<CAPTION>
FEBRUARY 1, 1989
THROUGH
YEAR ENDED DECEMBER 31, DECEMBER 31,
1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
Operating expenses............................. 1.64% 3.72% 3.76% 3.99% 3.17%
Net investment income (loss)................... (.05%) (1.82%) (2.02%) (2.38%) 1.06%
</TABLE>
7
<PAGE>
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND -- CLASS A, B AND C SHARES
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
FEBRUARY 10, 1995* FEBRUARY 8, 1995* FEBRUARY 9, 1995*
THROUGH THROUGH THROUGH
MARCH 31, 1995 MARCH 31, 1995 MARCH 31, 1995
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning of period.............................. $11.46 $ 11.44 $ 11.43
Income (loss) from investment operations:
Net investment income............................................. .02 .02 .01
Net realized and unrealized loss on investments................... (.76) (.75) (.73)
Total from investment operations.............................. (.74) (.73) (.72)
Net asset value, end of period.................................... $10.72 $ 10.71 $ 10.71
TOTAL RETURN+..................................................... (6.5%) (6.4%) (6.3%)
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's omitted)......................... $2,531 $ 3,362 $ 1,146
Ratios to average net assets:
Operating expenses (a).......................................... 1.51%++ 2.27%++ 2.31%++
Interest expense................................................ .02%++ .01%++ .01%++
Net investment income (a)....................................... 3.21%++ 1.53%++ .87%++
Portfolio turnover rate #......................................... 17% 17% 17%
</TABLE>
* Commencement of class operations.
+ Total return is calculated on net asset value per share for the period
indicated and is not annualized. Initial sales charge or contingent deferred
sales charge is not reflected.
++ Annualized. Due to the recent commencement of their offering, the ratios for
Class A, Class B and Class C shares are not necessarily comparable to that
of the Class Y shares, and are not necessarily indicative of future ratios.
# Portfolio turnover rate is calculated for the six months ended March 31,
1995.
(a) Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were assumed or waived by the investment adviser, the
annualized ratios of expenses and net investment income (loss) to average
net assets, exclusive of any applicable state expense limitations, would
have been the following:
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
FEBRUARY 10, 1995 FEBRUARY 8, 1995 FEBRUARY 9, 1995
THROUGH THROUGH THROUGH
MARCH 31, 1995 MARCH 31, 1995 MARCH 31, 1995
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
Operating expenses.......................... 2.73% 3.49% 3.49%
Net investment income (loss)................ 1.99% .31% (.31%)
</TABLE>
8
9
- -------------------------------------------------------------------------------
DESCRIPTION OF THE FUNDS
- -------------------------------------------------------------------------------
INVESTMENT OBJECTIVES AND POLICIES
Evergreen Emerging Markets Growth Fund
The objective of Evergreen Emerging Markets Growth Fund is long-term
capital appreciation. In seeking this objective, the Fund invests in equity
securities of issuers located in emerging markets. The Fund is suitable for
aggressive investors interested in the investment opportunities offered by
securities of issuers located in emerging or developing markets and the
resulting potential for growth opportunities resulting from political change,
economic deregulation and liberalized trade policies. The objective is
fundamental and may not be changed without shareholder approval.
The Fund seeks long-term capital appreciation. The Fund invests
primarily in a diversified portfolio of equity securities of issuers located in
countries with emerging markets. As a matter of policy, the Fund will invest at
least 65% of the value of its total assets in securities of emerging market
issuers.
A country will be considered to have an "emerging market" if it has
relatively low gross national product per capita compared to the world's major
economies and the potential for rapid economic growth. Countries with emerging
markets include those that have an emerging stock market (as defined by the
International Finance Corporation), those with low-to middle income economies
(according to the World Bank), and those listed in World Bank publications as
"developing." The Fund will normally invest in at least six different countries,
although it may invest all of its assets in a single country. At the present
time, the Fund has no intention of investing all of its assets in a single
country. The Fund focuses on equity securities, but may also invest in other
types of instruments, including debt securities. Marvin & Palmer Associates, the
Sub-Adviser to the Fund, will make investment decisions regarding equity
securities based on its analysis of returns, price momentum, business and
industry considerations, and management quality.
The Fund may employ certain additional investment strategies which are
discussed in "Investment Practices and Restrictions", below.
Evergreen International Equity Fund
The objective of Evergreen International Equity Fund is long-term
capital appreciation. The Fund invests primarily in equity securities of
non-U.S. issuers and is suitable for investors who want to pursue their
investment goals in markets outside the United States. The Fund provides
investors with a vehicle to pursue investment opportunities in countries outside
the U.S. whose securities markets may benefit from differing economic and
political cycles. The objective is fundamental and may not be changed without
shareholder approval.
The Fund invests primarily in foreign equity securities that Boston
International Advisers, Inc., the Sub-Adviser to the Fund, determines, through
both fundamental and technical analysis, to be undervalued compared to other
securities in their industries and countries. In most market conditions, the
stocks comprising the Fund's assets will exhibit traditional value
characteristics, such as higher than average dividend yields, lower than average
price to book value, and will include stocks of companies with unrecognized or
undervalued assets. As a matter of policy, the Fund will invest at least 65% of
the value of its total assets in equity securities of issuers located in at
least three countries outside of the United States.
The Fund will emphasize value stocks, primarily of companies which are
listed on one or more of thirty-two stock markets: twenty developed markets and
twelve emerging markets. While the current intention of the Fund is to invest in
32 stock markets, the Fund may invest in more or less, depending upon market
conditions as determined by the Sub-Adviser. The Fund will invest substantially
in industrialized companies throughout the world that comprise the Morgan
Stanley Capital International EAFE (Europe, Australia and the Far East) Index.
In addition, the Fund intends to invest up to 10% of its assets in emerging
country equity securities, as described above under "Evergreen Emerging Markets
Growth Fund."
The Fund may employ certain additional investment strategies which are
discussed in "Investment Practices and Restrictions", below.
<PAGE>
Evergreen Global Real Estate Equity Fund
The Evergreen Global Real Estate Equity Fund seeks to achieve its
investment objective of long-term capital growth through investment primarily in
equity securities of domestic and foreign companies which are principally
engaged in the real estate industry or which own significant real estate assets;
the Fund will not purchase direct interests in real estate. Current income will
be a secondary objective. Equity securities will include common stock, preferred
stock and securities convertible into common stock. The objective is fundamental
and may not be changed without shareholder approval.
The Fund will, under normal conditions, invest at least 65% of its
total assets in equity securities of domestic and foreign exchange or NASDAQ
listed companies which are principally engaged in the real estate industry. A
company is deemed to be "principally engaged" in the real estate industry if at
least 50% of its assets (marked to market), gross income or net profits are
attributable to ownership, construction, management or sale of residential,
commercial or industrial real estate. Real estate industry companies may include
among others: equity real estate investment trusts, which pool investors' funds
for investment primarily in commercial real estate properties; mortgage real
estate investment trusts, which invest pooled funds in real estate related
loans; brokers or real estate developers; and companies with substantial real
estate holdings, such as paper and lumber producers and hotel and entertainment
companies. The Fund will only invest in real estate equity trusts and limited
partnerships which are traded on major exchanges. As a matter of fundamental
policy, the Fund will also invest at least 65% of its total assets in the equity
securities of companies of at least three countries, including the United
States, except when abnormal market or financial conditions warrant the
assumption of a temporary defensive position. See "Investment Practices and
Restrictions" and "Special Risk Considerations".
The remainder of the Fund's investments may be made in equity
securities of issuers whose products and services are related to the real estate
industry, such as manufacturers and distributors of building supplies and
financial institutions which issue or service mortgages. The Fund may invest
more than 25% of its total assets in any one sector of the real estate or real
estate related industries. In addition, the Fund may, from time to time, invest
in the securities of companies unrelated to the real estate industry whose real
estate assets are substantial relative to the price of the companies'
securities.
The Fund pursues a flexible strategy of investing in a diversified
portfolio of securities of companies throughout the world. The Fund's investment
adviser anticipates that the Fund will give particular consideration to
investments in the United Kingdom, Western Europe, Australia, Canada, the Far
East (Japan, Hong Kong, Singapore, Malaysia and Thailand) and the United States.
The percentage of the Fund's assets invested in particular geographic regions
will shift from time to time in accordance with the judgment of the Fund's
investment adviser. Generally, a substantial portion of the assets of the Fund
will be denominated or traded in foreign currencies.
Investments may also be made in securities of issuers unrelated to the
real estate industry believed by the Fund's investment adviser to be undervalued
and to have capital appreciation potential. Also, consistent with the secondary
objective of current income, investments may also be made in nonconvertible debt
securities of such companies. The debt securities purchased (except for those
described below) will be of investment grade or better quality (e.g., rated no
lower than A by Moody's Investors Service ("Moody's") or Standard & Poor's
Ratings Group ("S&P")or if not so rated, believed by the Fund's investment
adviser to be of comparable quality). However, up to 10% of total assets may be
invested in unrated debt securities of issuers secured by real estate assets
where the Fund's investment adviser believes that the securities are trading at
a discount and the underlying collateral will ensure repayment of principal. In
such situations, it is conceivable that the Fund could, in the event of default,
end up holding the underlying real estate directly.
It is anticipated that the annual portfolio turnover rate for the Fund
may exceed 100%. The Fund may employ certain additional investment strategies
which are discussed in "Investment Practices and Restrictions", below.
INVESTMENT PRACTICES AND RESTRICTIONS
General. The Funds primarily invest in:
common and preferred stocks, convertible securities and warrants of
foreign corporations. Common stocks represent an equity interest in a
corporation. This ownership interest often gives the Funds the right to
vote on measures affecting the company's organization and operations.
Although common stocks have a history of long-term growth in value,
their prices tend to fluctuate in the short-term, particularly those of
smaller capitalization companies. Smaller capitalization companies may
have limited product lines, markets, or financial resources. These
conditions may make them more susceptible to setbacks and reversals.
Therefore, their securities may have limited marketability and may be
subject to more abrupt or erratic market movements than securities of
larger companies;
obligations of foreign governments and supranational organizations;
corporate and foreign government fixed income securities denominated in
currencies other than U.S. dollars, rated, at the time of purchase, Baa
or higher by Moody's or BBB or higher by S&P, or which, if unrated, are
considered to be of comparable quality by the Fund's investment adviser
or sub-advisers. Bonds rated Baa by Moody's or BBB by S&P have
speculative characteristics. Changes in economic conditions or other
circumstances are more likely to lead to weakened capacity to make
principal and interest payments than higher rated bonds. Although the
Funds do not intend to invest significantly in debt securities, it
should be noted that the prices of fixed income securities fluctuate
inversely to the direction of interest rates;
strategic investments, such as options and futures contracts on
currency transactions, securities index futures contracts, and forward
foreign currency exchange contracts. The Funds can use these techniques
to increase or decrease their exposure to changing security prices,
interest rates, currency exchange rates, or other factors that affect
security values. (Although, of course, there can be no assurance that
these strategic investments will be successful in protecting the value
of the Funds' securities.); and
securities of closed-end investment companies.
Defensive Investments. The Funds may invest without limitation in high quality
money market instruments, such as notes, certificates of deposit or bankers'
acceptances, or U.S. government securities if, in the opinion of a Fund's
investment adviser or sub-adviser, market conditions warrant a temporary
defensive investment strategy.
Portfolio Turnover and Brokerage. A portfolio turnover rate of 100% would occur
if all of a Fund's portfolio securities were replaced in one year. The portfolio
turnover rate experienced by a Fund directly affects brokerage commissions and
other transaction costs which the Fund bears directly. A high rate of portfolio
turnover will increase such costs. It is contemplated that Lieber & Company, an
affiliate of Evergreen Asset and a member of the New York and American Stock
Exchanges, will to the extent practicable effect substantially all of the
portfolio transactions for Evergreen Global Real Estate Equity Fund effected on
those exchanges. See the Statement of Additional Information for further
information regarding the brokerage allocation practices of the Funds. The
portfolio turnover rate for each Fund is set forth in the tables contained in
the section entitled "Financial Highlights".
Repurchase Agreements. The Funds may invest in repurchase agreements. Repurchase
agreements are agreements by which a Fund purchases a security for cash and
obtains a simultaneous commitment from the seller (usually a bank or
broker/dealer) to repurchase the security at an agreed-upon price and specified
future date. The repurchase price reflects an agreed-upon interest rate for the
time period of the agreement. The Funds' risk is the inability of the seller to
pay the agreed-upon price on the delivery date. However, this risk is tempered
by the ability of the Funds to sell the security in the open market in the case
of a default. In such a case, the Funds may incur costs in disposing of the
security which would increase Fund expenses. Each Fund's investment adviser will
monitor the creditworthiness of the firms with which the Funds enter into
repurchase agreements.
When-Issued And Delayed Delivery Transactions. Evergreen International Equity
Fund and Evergreen Emerging Markets Growth Fund may purchase securities on a
when-issued or delayed delivery basis. These transactions are arrangements in
which the Funds purchase securities with payment and delivery scheduled for a
future time. The seller's failure to complete these transactions may cause the
Funds to miss a price or yield considered to be advantageous. Settlement dates
may be a month or more after entering into these transactions, and the market
values of the securities purchased may vary from the purchase prices.
Accordingly, the Funds may pay more or less than the market value of the
securities on the settlement date. A Fund may dispose of a commitment prior to
settlement if the Fund's investment adviser deems it appropriate to do so. In
addition, Evergreen International Equity Fund and Evergreen Emerging Markets
Growth Fund may enter into transactions to sell their purchase commitments to
third parties at current market values and simultaneously acquire other
commitments to purchase similar securities at later dates. The Funds may realize
short-term profits or losses upon the sale of such commitments.
Temporary Investments. The Funds may invest in U.S. and foreign short-term money
market instruments (denominated in U.S. and/or foreign currencies), including
interest-bearing call deposits with banks, government obligations, certificates
of deposit, bankers' acceptances, commercial paper, short-term corporate debt
securities, and repurchase agreements. These investments may be used to
temporarily invest cash received from the sale of Fund shares, to establish and
maintain reserves for temporary defensive purposes, or to take advantage of
market opportunities.
Illiquid or Restricted Securities. Each Fund may invest up to 15% of its net
assets in illiquid securities and other securities which are not readily
marketable. Illiquid securities include certain restricted securities not
determined by the Trustees to the liquid, non-negotiable time deposits and
repurchase agreements providing for settlement in more than seven days after
notice. Securities eligible for resale pursuant to Rule 144A under the
Securities Act of 1933, which have been determined to be liquid, will not be
considered by the Funds' investment advisers to be illiquid or not readily
marketable and, therefore, are not subject to the aforementioned 15% limit. The
inability of a Fund to dispose of illiquid or not readily marketable investments
readily or at a reasonable price could impair the Fund's ability to raise cash
for redemptions or other purposes. The liquidity of securities purchased by a
Fund which are eligible for resale pursuant to Rule 144A will be monitored by
the each Fund's investment adviser on an ongoing basis, subject to the oversight
of the Trustees. In the event that such a security is deemed to be no longer
liquid, a Fund's holdings will be reviewed to determine what action, if any, is
required to ensure that the retention of such security does not result in a Fund
having more than 15% of its assets invested in illiquid or not readily
marketable securities.
Borrowing. As a matter of fundamental policy, the Funds may not borrow money
except as a temporary measure to facilitate redemption requests or for
extraordinary or emergency purposes. The proceeds from borrowings may be used to
facilitate redemption requests which might otherwise require the untimely
disposition of portfolio securities. The specific limits applicable to borrowing
by each Fund are set forth in the Statement of Additional Information.
Lending of Portfolio Securities. In order to generate income and to offset
expenses, the Funds may lend portfolio securities to brokers, dealers and other
financial institutions. The Funds' investment advisers or sub-advisers will
monitor the creditworthiness of such borrowers. Loans of securities by the
Funds, if and when made, may not exceed 30% of the value of the total assets of
the Evergreen Global Real Estate Equity Fund, and must be collateralized by cash
or U.S. Government securities that are maintained at all times in an amount
equal to at least 100% of the current market value of the securities loaned,
including accrued interest. While such securities are on loan, the borrower will
pay a Fund any income accruing thereon, and the Fund may invest the cash
collateral in portfolio securities, thereby increasing its return. Any gain or
loss in the market price of the loaned securities which occurs during the term
of the loan would affect a Fund and its investors. A Fund has the right to call
a loan and obtain the securities loaned at any time on notice of not more than
five business days. A Fund may pay reasonable fees in connection with such
loans.
Fixed-Income Securities -- Downgrades. If any security invested in by any of the
Funds loses its rating or has its rating reduced after the Fund has purchased
it, the Fund is not required to sell or otherwise dispose of the security, but
may consider doing so.
Foreign Currency Transactions. The Funds will enter into foreign currency
transactions to obtain the necessary currencies to settle securities
transactions. Currency transactions may be conducted either on a spot or cash
basis at prevailing rates or through forward foreign currency exchange
contracts. The Funds may also enter into foreign currency transactions to
protect Fund assets against adverse changes in foreign currency exchange rates
or exchange control regulations. Such changes could unfavorably affect the value
of Fund assets which are denominated in foreign currencies, such as foreign
securities or funds deposited in foreign banks, as measured in U.S. dollars.
Although foreign currency exchanges may be used by a Fund to protect against a
decline in the value of one or more currencies, such efforts may also limit any
potential gain that might result from a relative increase in the value of such
currencies and might, in certain cases, result in losses to the Fund.
Forward Foreign Currency Exchange Contracts. A forward foreign currency exchange
contract ("forward contract") is an obligation to purchase or sell an amount of
a particular currency at a specific price and on a future date agreed upon by
the parties. Generally, no commission charges or deposits are involved. At the
time a Fund enters into a forward contract, Fund assets with a value equal to
the Fund's obligation under the forward contract are segregated and are
maintained until the contract has been settled. The Funds will not enter into a
forward contract with a term of more than one year. The Funds will generally
enter into a forward contract to provide the proper currency to settle a
securities transaction at the time the transaction occurs ("trade date"). The
period between trade date and settlement date will vary between 24 hours and 60
days, depending upon local custom.
<PAGE>
The Funds may also protect against the decline of a particular foreign currency
by entering into a forward contract to sell an amount of that currency
approximating the value of all or a portion of the Funds' assets denominated in
that currency ("hedging"). The success of this type of short-term hedging
strategy is highly uncertain due to the difficulties of predicting short-term
currency market movements and of precisely matching forward contract amounts and
the constantly changing value of the securities involved. Although each Fund's
investment adviser or sub-adviser will consider the likelihood of changes in
currency values when making investment decisions, each Fund's investment adviser
or sub-adviser believes that it is important to be able to enter into forward
contracts when it believes the interests of a Fund will be served. The Funds
will not enter into forward contracts for hedging purposes in a particular
currency in an amount in excess of the Funds' assets denominated in that
currency, but as consistent with their other investment policies and as not
otherwise limited in their ability to use this strategy.
Options And Futures. The Funds may deal in options on foreign currencies, and
portfolio securities, and, in the case of Evergreen International Equity Fund
and Evergreen Emerging Markets Growth Fund, securities indices, which options
may be listed for trading on an international securities exchange. The Funds
will use these options to manage interest rate and currency risks. The Funds
also may write covered call options and secured put options to generate income
or to lock in gains. Each Fund may write covered call options and secured put
options on up to 25% of its net assets in the case of Evergreen International
Equity Fund and Evergreen Emerging Markets Growth Fund and 15% of its net assets
in the case of Evergreen Global Real Estate Equity Fund, and Evergreen
International Equity Fund and Evergreen Emerging Markets Growth Fund may
purchase put and call options provided that no more than 5% of the fair market
value of its net assets may be invested in premiums on such options.
A call option gives the purchaser the right to buy, and the writer the
obligation to sell, the underlying asset at the exercise price during the option
period. A put option gives the purchaser the right to sell, and the writer the
obligation to buy, the underlying asset at the exercise price during the option
period. The writer of a covered call owns assets that are acceptable for escrow
and the writer of a secured put invests an amount not less than the exercise
price in eligible assets to the extent that it is obligated as a writer. If a
call written by a Fund is exercised, the Fund forgoes any possible profit from
an increase in the market price of the underlying asset over the exercise price
plus the premium received. In writing puts, there is a risk that a Fund may be
required to take delivery of the underlying asset at a disadvantageous price.
The Funds may enter into futures contracts involving foreign currency
and, in the case of Evergreen International Equity Fund and Evergreen Emerging
Markets Growth Fund, securities indices,, or options on currency, for bona fide
hedging purposes The Funds may not enter into futures contracts or related
options if, immediately thereafter, the amounts committed to margin and premiums
paid for unexpired options would exceed 5% of a Fund's total assets and, in the
case of Evergreen Global Real Estate Equity Fund, more than 30% of the Fund's
net assets would be hedged thereby. Evergreen International Equity Fund and
Evergreen Emerging Markets Growth Fund, may also enter into such futures
contracts or related options for purposes other than bona fide hedging if the
aggregate amount of initial margin deposits on a Fund's futures and related
options positions would not exceed 5% of the net liquidation value of the Fund's
assets, provided further that in the case of an option that is in-the-money at
the time of the purchase, the in-the-money amount may be excluded in calculating
the 5% limitation. In addition, a Fund may not sell futures contracts if the
value of such futures contracts exceeds the total market value of the Fund's
portfolio securities. Futures contracts sold by a Fund are generally subject to
segregation and coverage requirements established by either the Commodity
Futures Trading Commission ("CFTC") or the Securities and Exchange Commission
("SEC"), with the result that, if a Fund does not hold the instrument underlying
the futures contract or option, the Fund will be required to segregate, on an
ongoing basis with its custodian, cash, U.S. government securities, or other
liquid high grade debt obligations in an amount at least equal to the Fund's
obligations with respect to such instruments.
Evergreen International Equity Fund and Evergreen Emerging Markets
Growth Fund may enter into securities index futures contracts and purchase and
write put and call options on securities index futures contracts that are traded
on regulated exchanges, including non-U.S. exchanges, to the extent permitted by
the CFTC. Securities index futures contracts are based on indices that reflect
the market value of securities of the firms included in the indices. An index
futures contract is an agreement pursuant to which two parties agree to take or
make delivery of an amount of cash equal to the differences between the value of
the index at the close of the last trading day of the contract and the price at
which the index contract was originally written.
Evergreen International Equity Fund and Evergreen Emerging Markets
Growth Fund may enter into securities index futures contracts to sell a
securities index in anticipation of or during a market decline to attempt to
offset the decrease in market value of securities in its portfolio that might
otherwise result. When a Fund is not fully invested and anticipates a
significant market advance, it may enter into futures contracts to purchase the
index in order to gain rapid market exposure that may in part or entirely offset
increases in the cost of securities that it intends to purchase. In many of
these transactions, a Fund will purchase such securities upon termination of the
futures position but, depending on market conditions, a futures position may be
terminated without the corresponding purchases of common stock. A Fund may also
invest in securities index futures contracts when its investment adviser or
sub-adviser believes such investment is more efficient, liquid or cost-effective
than investing directly in the securities underlying the index.
The use of futures and related options involves special considerations
and risks, including: (1) the ability of a Fund to utilize futures successfully
will depend on its investment adviser's or sub-adviser's ability to predict
pertinent market movements; and (2) there might be an imperfect correlation (or
conceivably no correlation) between the change in the market value of the
securities held by a Fund and the prices of the futures relating to the
securities purchased or sold by the Fund. The use of futures and related options
may reduce risk of loss by wholly or partially offsetting the negative effect of
unfavorable price movements, but these instruments can also reduce the
opportunity for gain by offsetting the positive effect of favorable price
movements in positions. No assurance can be given that the investment adviser's
or sub-adviser's judgment in this respect will be correct.
It is not certain that a secondary market for positions in futures
contracts or for options will exist at all times. Although each investment
adviser or sub-adviser will consider liquidity before entering into these
transactions, there is no assurance that a liquid secondary market on an
exchange or otherwise will exist for any particular futures contract or option
at any particular time. A Fund's ability to establish and close out futures and
options positions depends on this secondary market.
Risk Characteristics Of Foreign Securities. Investing in non-U.S. securities
carries substantial risks in addition to those associated with domestic
investments. In an attempt to reduce some of these risks, the Funds diversify
their investments broadly among foreign countries which may include both
developed and developing countries. With respect to Evergreen International
Equity Fund, at least three different countries will always be represented. The
Funds may take advantage of the unusual opportunities for higher returns
available from investing in developing countries. As discussed in detail below
under "Emerging Markets," however, these investments carry considerably more
volatility and risk because they generally are associated with less mature
economies and less stable political systems.
Foreign securities are denominated in foreign currencies. Therefore,
the value in U.S. dollars of a Fund's assets and income may be affected by
changes in exchange rates and regulations. Although the Funds value their assets
daily in U.S. dollars, they will not convert their holdings of foreign
currencies to U.S. dollars daily. When a Fund converts its holdings to another
currency, it may incur conversion costs. Foreign exchange dealers realize a
profit on the difference between the prices at which such dealers buy and sell
currencies.
To the extent that securities purchased by the Funds are denominated in
currencies other than the U.S. dollar, changes in foreign currency exchange
rates will affect the Funds' net asset values; the value of interest earned;
gains and losses realized on the sale of securities; and net investment income
and capital gains, if any, to be distributed to shareholders by a Fund. If the
value of a foreign currency rises against the U.S. dollar, the value of a Fund's
assets denominated in that currency will increase; correspondingly, if the value
of a foreign currency declines against the U.S.
dollar, the value of a Fund's assets denominated in that currency will decrease.
Other differences between investing in foreign and U.S. companies
include: less publicly available information about foreign companies; the lack
of uniform financial accounting standards applicable to foreign companies; less
readily available market quotations on foreign companies; differences in
government regulation and supervision of foreign stock exchanges, brokers,
listed companies, and banks; differences in legal systems which may affect the
ability to enforce contractual obligations or obtain court judgments; generally
lower foreign stock market volume; the likelihood that foreign securities may be
less liquid or more volatile; foreign brokerage commissions may be higher;
unreliable mail service between countries; and political or financial changes
which adversely affect investments in some countries. In the past, U.S.
government policies have discouraged or restricted certain investments abroad by
investors such as the Funds. Although the Funds are unaware of any current
restrictions, investors are advised that these policies could be reinstituted.
Emerging Markets. The economies of individual emerging countries may differ
favorably or unfavorably from the U.S. economy in such respects as growth of
gross domestic product, rate of inflation, currency depreciation, capital
reinvestment, resource self-sufficiency and balance of payments position.
Further, the economies of developing countries generally are heavily dependent
on international trade and, accordingly, have been, and may continue to be,
adversely affected by trade barriers, exchange controls, managed adjustments in
relative currency values and other protectionist measures imposed or negotiated
by the countries with which they trade. These economies also have been, and may
continue to be, adversely affected by economic conditions in the countries with
which they trade.
Prior governmental approval for foreign investments may be required
under certain circumstances in some emerging countries, and the extent of
foreign investment in certain debt securities and domestic companies may be
subject to limitation in other emerging countries. Foreign ownership limitations
also may be imposed by the charters of individual companies in emerging
countries to prevent, among other concerns, violation of foreign investment
limitations.
Repatriation of investment income, capital and the proceeds of sales by
foreign investors may require governmental registration and/or approval in some
emerging countries. A Fund could be adversely affected by delays in, or a
refusal to grant, any required governmental registration or approval for such
repatriation. Any investment subject to such repatriation controls will be
considered illiquid if it appears reasonably likely that this process will take
more than seven days.
With respect to any emerging country, there is the possibility of
nationalization, expropriation or confiscatory taxation, political changes,
governmental regulation, social instability or diplomatic developments
(including war) which could affect adversely the economics of such countries or
the value of the Funds' investments in those countries. In addition, it may be
difficult to obtain and enforce a judgment in a court outside of the U.S.
Investments Related to Real Estate. Risks associated with investment in
securities of companies in the real estate industry include: declines in the
value of real estate, risks related to general and local economic conditions,
overbuilding and increased competition, increases in property taxes and
operating expenses, changes in zoning laws, casualty or condemnation losses,
variations in rental income, changes in neighborhood values, the appeal of
properties to tenants and increase in interest rates. In addition, equity real
estate investment trusts may be affected by changes in the value of the
underlying property owned by the trusts, while mortgage real estate investment
trusts may be affected by the quality of credit extended. Equity and mortgage
real estate investment trusts are dependent upon management skills, may not be
diversified and are subject to the risks of financing projects. Such trusts are
also subject to heavy cash flow dependency, defaults by borrowers, self
liquidation and the possibility of failing to qualify for tax-free pass-through
of income under the Internal Revenue Code (the "Code") and to maintain exemption
from the Investment Company Act of 1940, as amended (the "1940 Act"). In the
event an issuer of debt securities collateralized by real estate defaulted, it
is conceivable that a Fund could end up holding the underlying real estate.
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MANAGEMENT OF THE FUNDS
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INVESTMENT ADVISERS
The management of each Fund is supervised by the Trustees of the Trust
under which the Fund has been established ("Trustees"). Evergreen Asset
Management Corp. (the "Evergreen Asset") has been retained by Evergreen Global
Real Estate Equity Fund as investment adviser. Evergreen Asset succeeded on June
30, 1994 to the advisory business of the same name, but under different
ownership, which was organized in 1971. Evergreen Asset, with its predecessors,
has served as investment adviser to the Evergreen mutual funds since 1971.
Evergreen Asset is a wholly-owned subsidiary of First Union National Bank of
North Carolina ("FUNB"). The address of Evergreen Asset is 2500 Westchester
Avenue, Purchase, New York 10577. FUNB is a subsidiary of First Union
Corporation ("First Union"), one of the ten largest bank holding companies in
the United States. Stephen A. Lieber and Nola Maddox Falcone serve as the chief
investment officers of Evergreen Asset and, along with Theodore J. Israel, Jr.,
were the owners of Evergreen Asset's predecessor and the former general partners
of Lieber & Company, which, as described below, provides certain subadvisory
services to Evergreen Asset in connection with its duties as investment adviser
to the Fund. The Capital Management Group of FUNB ("CMG") serves as investment
adviser to Evergreen International Equity Fund and Evergreen Emerging Markets
Growth Fund. Boston International Advisers, Inc. ("BIA") is Sub-Adviser to
Evergreen International Equity Fund and Marvin & Palmer Associates, Inc.
("Marvin & Palmer") is Sub-Adviser to Evergreen Emerging Markets Growth Fund
First Union is a bank holding company headquartered in Charlotte, North
Carolina, which had $77.9 billion in consolidated assets as of March 31, 1995.
First Union and its subsidiaries provide a broad range of financial services to
individuals and businesses through offices in 36 states. The Capital Management
Group of FUNB manages or otherwise oversees the investment of over $36 billion
in assets belonging to a wide range of clients, including all the series of
Evergreen Investment Trust (formerly known as First Union Funds). First Union
Brokerage Services, Inc., a wholly-owned subsidiary of FUNB, is a registered
broker-dealer that is principally engaged in providing retail brokerage services
consistent with its federal banking authorizations. First Union Capital Markets
Corp., a wholly-owned subsidiary of First Union, is a registered broker-dealer
principally engaged in providing, consistent with its federal banking
authorizations, private placement, securities dealing, and underwriting
services.
As investment adviser to Evergreen Global Real Estate Equity Fund,
Evergreen Asset manages each Fund's investments, provides various administrative
services and supervises each Fund's daily business affairs, subject to the
authority of the Trustees. Evergreen Asset is entitled to receive a fee equal to
1% of average daily net assets on an annual basis from Evergreen Global Real
Estate Equity Fund. The fee paid by Evergreen Global Real Estate Equity Fund is
higher than the rate paid by most other investment companies. The total expenses
as a percentage of average daily net assets on an annual basis of Evergreen
Global Real Estate Equity Fund for the fiscal period ended September 30, 1994
are set forth in the section entitled "Financial Highlights". The
above-mentioned expense ratios for Evergreen Global Real Estate Equity Fund is
net of voluntary advisory fee waivers and expense reimbursements by Evergreen
Asset which may, at its discretion, revise or cease this voluntary waiver at any
time.
CMG, along with BIA and Marvin & Palmer, respectively, manages
investments and supervises the daily business affairs of Evergreen International
Equity Fund and Evergreen Emerging Markets Growth Fund. As compensation
therefor, CMG is entitled to receive an annual fee from Evergreen International
Equity Fund equal to: .82 of 1% of the first $20 million of average daily net
assets; .79 of 1% of the next $30 million of average daily net assets; .76 of 1%
of the next $50 million of average daily net assets; and .73 of 1% of average
daily net assets in excess of $100 million. From Evergreen Emerging Markets
Growth Fund, CMG is entitled to receive an annual fee equal to: 1.50% of the
first $100 million of average daily net assets; 1.45% of the next $100 million
of average daily net assets; 1.40% of the next $100 million of average daily net
assets; and 1.35% of average daily net assets in excess of $300 million. The
fees paid by Evergreen International Equity Fund and Evergreen Emerging Markets
Growth Fund are higher than the rate paid by most other investment companies,
but are not higher than the fee paid by many funds with similar investment
objectives. The total expenses as a percentage of average daily net assets on an
annual basis of Evergreen International Equity Fund and Evergreen Emerging
Markets Growth Fund for the fiscal year ended December 31, 1994 are set forth in
the section entitled "Financial Highlights". CMG has agreed to pay the sub
adviser to Evergreen International Equity Fund, BIA, a fee equal to: .32 of 1%
of the first $20 million of average daily net assets; .29 of 1% of the next $30
million of average daily net assets; .26 of 1% of the next $50 million of
average daily net assets; and .23 of 1% of average daily net assets in excess of
$100 million. For its services as sub-adviser to Evergreen Emerging Markets
Growth Fund, Marvin & Palmer receives from CMG a fee equal to: 1.00% of the
first $100 million of average daily net assets; .95 of 1% of the next $100
million of average daily net assets; .90 of 1% of the next $100 million of
average daily net assets; and .85 of 1% of average daily net assets in excess of
$300 million. Evergreen Asset serves as administrator to Evergreen International
Equity Fund and Evergreen Emerging Markets Growth Fund and is entitled to
receive a fee based on the average daily net assets of these Funds at a rate
based on the total assets of the mutual funds administered by Evergreen Asset
for which CMG or Evergreen Asset also serve as investment adviser, calculated in
accordance with the following schedule: .050% of the first $7 billion; .035% on
the next $3 billion; .030% on the next $5 billion; .020% on the next $10
billion; .015% on the next $5 billion; and .010% on assets in excess of $30
billion. Furman Selz Incorporated, the parent of Evergreen Funds Distributor,
Inc., distributor for the Evergreen group of mutual funds, serves as
sub-administrator to Evergreen International Equity Fund and Evergreen Emerging
Markets Growth Fund and is entitled to receive a fee from each Fund calculated
on the average daily net assets of each Fund at a rate based on the total assets
of the mutual funds administered by Evergreen Asset for which CMG or Evergreen
Asset also serve as investment adviser, calculated in accordance with the
following schedule: .0100% of the first $7 billion; .0075% on the next $3
billion; .0050% on the next $15 billion; and .0040% on assets in excess of $25
billion. The total assets of the mutual funds administered by Evergreen Asset
for which CMG or Evergreen Asset serve as investment adviser as of March 31,
1995 were approximately $8 billion.
The portfolio manager for Evergreen Global Real Estate Equity Fund is
Samuel A. Lieber. Mr. Samuel Lieber has been the Fund's principal manager since
inception and has been associated with the Evergreen Asset since prior to 1989.
The portfolio managers for Evergreen International Equity Fund are Maureen
Ghublikian and David A. Umstead, who are Managing Directors of BIA and have been
associated therewith since prior to 1989.
The portfolio managers for Evergreen Emerging Markets Growth Fund, all
of whom have served since its inception in September 1994, are David F. Marvin,
who is Chairman of Marvin & Palmer and is primarily responsible for Latin
America and currency management, Stanley Palmer, who is President of Marvin &
Palmer and primarily responsible for Southeast Asia and the India subcontinent,
Terry B. Mason, who is a Vice President of Marvin & Palmer and is primarily
responsible for Eastern Europe and Africa, Jay F. Middleton, who is a portfolio
manager for Marvin & Palmer and primarily responsible for Latin America and the
Middle East, and Todd D. Marvin, who is a portfolio manager for Marvin & Palmer
and, along with Mr. Palmer, primarily responsible for Southeast Asia and the
India subcontinent. David F. Marvin, and Stanley Palmer, President, founded
Marvin & Palmer in 1986. Mr. Mason and Mr. Middleton both joined Marvin & Palmer
in 1990. Mr. Todd Marvin joined Marvin & Palmer in 1991 and, prior thereto, was
employed by Oppenheimer & Company as an analyst in its investment banking
department from 1989 until 1991.
SUB-ADVISERS
Evergreen Asset has entered into sub-advisory agreements with Lieber &
Company with respect to Evergreen Global Real Estate Equity Fund which provides
that Lieber & Company's research department and staff will furnish Evergreen
Asset with information, investment recommendations, advice and assistance, and
will be generally available for consultation on each such Fund's portfolio.
Lieber & Company will be reimbursed by Evergreen Asset in connection with the
rendering of services on the basis of the direct and indirect costs of
performing such services. There is no additional charge to Evergreen Global Real
Estate Equity Fund for the services provided by Lieber & Company. It is
contemplated that Lieber & Company will, to the extent practicable, effect
substantially all of the portfolio transactions for this Fund on the New York
and American Stock Exchanges. The address of Lieber & Company is 2500
Westchester Avenue, Purchase, New York 10577. Lieber & Company is an indirect,
wholly-owned, subsidiary of First Union.
The sub-adviser to the Evergreen International Equity Fund, BIA, has
been in operation since 1986 and specializes in the management of international
equity portfolios. BIA currently manages twenty international portfolios,
including five group trust funds, for pension fund sponsors and endowment plans
worldwide. Messrs. Lyle H. Davis, Norman H. Meltz and David A. Umstead are the
principal executive officers of BIA and each own more than 25% of the
outstanding voting securities thereof. As of March 31, 1995 BIA managed a total
of $2.7 billion in assets and served as sub-adviser to one other investment
company with total assets of $148 million.
Marvin & Palmer, Sub-Adviser for Evergreen Emerging Markets Growth Fund
was founded in 1986 and is engaged in the management of global, non-United
States and emerging markets equity portfolios for institutional accounts. At
March 31, 1995, Marvin & Palmer managed a total of $2.5 billion in investments
for 34 institutional investors and 5 commingled funds and served as sub-adviser
to another investment company with total assets of $33 million.
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PURCHASE AND REDEMPTION OF SHARES
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HOW TO BUY SHARES
Eligible investors may purchase Fund shares at net asset value by mail
or wire as described below. The Funds impose no sales charges on Class Y shares.
Class Y shares are the only class of shares offered by this Prospectus and are
only available to (i) all shareholders of record in one or more of the Evergreen
Funds as of December 30, 1994, (ii) certain institutional investors and (iii)
investment advisory clients of the Adviser and its affiliates. The minimum
initial investment is $1,000, which may be waived in certain situations. There
is no minimum for subsequent investments. Investors may make subsequent
investments by establishing a Systematic Investment Plan or a Telephone
Investment Plan.
Purchases by Mail or Wire. Each investor must complete the enclosed Share
Purchase Application and mail it together with a check made payable to the Fund
whose shares are being purchased, to State Street Bank and Trust Company ("State
Street") at P.O. Box 9021, Boston, Massachusetts 02205-9827. Checks not drawn on
U.S. banks will be subject to foreign collection which will delay an investor's
investment date and will be subject to processing fees.
When making subsequent investments, an investor should either enclose
the return remittance portion of the statement, or indicate on the face of the
check, the name of the Fund in which an investment is to be made, the exact
title of the account, the address, and the Fund account number. Purchase
requests should not be sent to a Fund in New York. If they are, the Fund must
forward them to State Street, and the request will not be effective until State
Street receives them.
Initial investments may also be made by wire by (i) calling State
Street at 800-423-2615 for an account number and (ii) instructing your bank,
which may charge a fee, to wire federal funds to State Street, as follows: State
Street Bank and Trust Company, ABA No.0110-0002-8, Attn: Custodian and
Shareholder Services. The wire must include references to the Fund in which an
investment is being made, account registration, and the account number. A
completed Application must also be sent to State Street indicating that the
shares have been purchased by wire, giving the date the wire was sent and
referencing the account number. Subsequent wire investments may be made by
existing shareholders by following the instructions outlined above. It is not
necessary, however, for existing shareholders to call for another account
number.
How the Funds Value Their Shares. The net asset value of each Class of shares of
a Fund is calculated by dividing the value of the amount of the Fund's net
assets attributable to that Class by the number of outstanding shares of that
Class. Shares are valued each day the New York Stock Exchange (the "Exchange")
is open as of the close of regular trading (currently 4:00 p.m. Eastern time).
The securities in a Fund are valued at their current market value determined on
the basis of market quotations or, if such quotations are not readily available,
such other methods as a Fund's Trustees believe would accurately reflect fair
market value. Non-dollar denominated securities will be valued as of the close
of the Exchange at the closing price of such securities in their principal
trading market.
Additional Purchase Information. As a condition of this offering, if a purchase
is canceled due to nonpayment or because an investor's check does not clear, the
investor will be responsible for any loss a Fund or the Adviser incurs. If such
investor is an existing shareholder, a Fund may redeem shares from an investor's
account to reimburse the Fund or the Adviser for any loss. In addition, such
investors may be prohibited or restricted from making further purchases in any
of the Evergreen Funds.
The Share Purchase Application may not be used to invest in any of the
prototype retirement plans for which the Funds are an available investment. For
information about the requirements to make such investments, including copies of
the necessary application forms, please call the telephone number set forth on
the cover page of this Prospectus. A Fund cannot accept investments specifying a
certain price or date and reserves the right to reject any specific purchase
order, including orders in connection with exchanges from the other Evergreen
Funds. Although not currently anticipated, each Fund reserves the right to
suspend the offer of shares for a period of time.
Shares of each Fund are sold at the net asset value per share next
determined after a shareholder's order is received. Investments by federal funds
wire or by check will be effective upon receipt by State Street. Qualified
institutions may telephone orders for the purchase of Fund shares. Investors may
also purchase shares through a broker/dealer, which may charge a fee for the
service.
HOW TO REDEEM SHARES
You may "redeem", i.e., sell your shares in a Fund to the Fund on any
day the Exchange is open, either directly or through your financial
intermediary. The price you will receive is the net asset value next calculated
after the Fund receives your request in proper form. Proceeds generally will be
sent to you within seven days. However, for shares recently purchased by check,
a Fund will not send proceeds until it is reasonably satisfied that the check
has been collected (which may take up to 15 days). Once a redemption request has
been telephoned or mailed, it is irrevocable and may not be modified or
canceled.
Redeeming Shares Directly by Mail or Telephone. Send a signed letter of
instruction or stock power form to State Street which is the registrar, transfer
agent and dividend-disbursing agent for each Fund. Stock power forms are
available from your financial intermediary, State Street, and many commercial
banks. Additional documentation is required for the sale of shares by
corporations, financial intermediaries, fiduciaries and surviving joint owners.
Signature guarantees are required for all redemption requests for shares with a
value of more than $10,000 or where the redemption proceeds are to be mailed to
an address other than that shown in the account registration. A signature
guarantee must be provided by a bank or trust company (not a Notary Public), a
member firm of a domestic stock exchange or by other financial institutions
whose guarantees are acceptable to State Street.
Shareholders may withdraw amounts of $1,000 or more from their accounts
by calling State Street (800-423-2615) between the hours of 9:00 a.m. and 4:00
p.m. (Eastern time) each business day (i.e., any weekday exclusive of days on
which the New York Stock Exchange or State Street's offices are closed). The New
York Stock Exchange is closed on New Year's Day, Presidents Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
Redemption requests made after 4:00 p.m. (Eastern time) will be processed using
the net asset value determined on the next business day. Such redemption
requests must include the shareholder's account name, as registered with a Fund,
and the account number. During periods of drastic economic or market changes,
shareholders may experience difficulty in effecting telephone redemptions.
Shareholders who are unable to reach a Fund or State Street by telephone should
follow the procedures outlined above for redemption by mail.
The telephone redemption service is not made available to shareholders
automatically. Shareholders wishing to use the telephone redemption service must
indicate this on the enclosed Application and choose how the redemption proceeds
are to be paid. Redemption proceeds will either (i) be mailed by check to the
shareholder at the address in which the account is registered or (ii) be wired
to an account with the same registration as the shareholder's account in a Fund
at a designated commercial bank. State Street currently deducts a $5 wire charge
from all redemption proceeds wired. This charge is subject to change without
notice. A shareholder who decides later to use this service, or to change
instructions already given, should fill out a Shareholder Services Form and send
it to State Street Bank and Trust Company, P.O. Box 9021, Boston, Massachusetts
02205-9827, with such shareholder's signature guaranteed by a bank or trust
company (not a Notary Public), a member firm of a domestic stock exchange or by
other financial institutions whose guarantees are acceptable to State Street.
Shareholders should allow approximately ten days for such form to be processed.
The Funds will employ reasonable procedures to verify that telephone requests
are genuine. These procedures include requiring some form of personal
identification prior to acting upon instructions and tape recording of
conversations. If the Fund fails to follow such procedures, it may be liable for
any losses due to unauthorized or fraudulent instructions. The Fund shall not be
liable for following telephone instructions reasonably believed to be genuine.
Also, the Fund reserves the right to refuse a telephone redemption request, if
it is believed advisable to do so. Financial intermediaries may charge a fee for
handling telephonic requests. The telephone redemption option may be suspended
or terminated at any time without notice.
General. The sale of shares is a taxable transaction for Federal tax purposes.
Under unusual circumstances, a Fund may suspend redemptions or postpone payment
for up to seven days or longer, as permitted by Federal securities law. The
Funds reserve the right to close an account that through redemption has remained
below $1,000 for 30 days. Shareholders will receive 60 days' written notice to
increase the account value before the account is closed. The Funds have elected
to be governed by Rule 18f-1 under the Investment Company Act of 1940 pursuant
to which each Fund is obligated to redeem shares solely in cash, up to the
lesser of $250,000 or 1% of a Fund's total net assets during any ninety day
period for any one shareholder. See the Statement of Additional Information for
further details.
EXCHANGE PRIVILEGE
How To Exchange Shares. You may exchange some or all of your shares for shares
of the same Class in the other Evergreen Funds by telephone or mail as described
below. An exchange which represents an initial investment in another Evergreen
Fund must amount to at least $1,000. Once an exchange request has been
telephoned or mailed, it is irrevocable and may not be modified or canceled.
Exchanges will be made on the basis of the relative net asset values of the
shares exchanged next determined after an exchange request is received.
Exchanges are subject to minimum investment and suitability requirements.
Each of the Evergreen Funds have different investment objectives and
policies. For complete information, a prospectus of the fund into which an
exchange will be made should be read prior to the exchange. An exchange is
treated for Federal income tax purposes as a redemption and purchase of shares
and may result in the realization of a capital gain or loss. Each Fund imposes a
fee of $5 per exchange on shareholders who exchange in excess of four times per
calendar year. This exchange privilege may be modified or discontinued at any
time by the Fund upon sixty days' notice to shareholders and is only available
in states in which shares of the fund being acquired may lawfully be sold.
Exchanges by Telephone and Mail. You may exchange shares with a value of $1,000
or more by telephone by calling State Street (800-423-2615). Exchange requests
made after 4:00 p.m. (Eastern time) will be processed using the net asset value
determined on the next business day. During periods of drastic economic or
market changes, shareholders may experience difficulty in effecting telephone
exchanges. You should follow the procedures outlined below for exchanges by mail
if you are unable to reach State Street by telephone. If you wish to use the
telephone exchange service you should indicate this on the Share Purchase
Application. As noted above, each Fund will employ reasonable procedures to
confirm that instructions for the redemption or exchange of shares communicated
by telephone are genuine. A telephone exchange may be refused by a Fund or State
Street if it is believed advisable to do so. Procedures for exchanging Fund
shares by telephone may be modified or terminated at any time. Written requests
for exchanges should follow the same procedures outlined for written redemption
requests in the section entitled "How to Redeem Shares", however, no signature
guarantee is required.
SHAREHOLDER SERVICES
The Funds offer the following shareholder services. For more
information about these services or your account, contact your financial
intermediary, Evergreen Funds Distributor, Inc.("EFD"), the distributor of the
Funds, or the toll-free number on the front page of this Prospectus. Some
services are described in more detail in the Share Purchase Application.
Systematic Investment Plan. You may make monthly or quarterly investments into
an existing account automatically in amounts of not less than $25.
Telephone Investment Plan. You may make investments into an existing account
electronically in amounts of not less than $100 or more than $10,000 per
investment. Telephone investment requests received by 3:00 p.m. (Eastern time)
will be credited to a shareholder's account the day the request is received.
Systematic Cash Withdrawal Plan. When an account of $10,000 or more is opened or
when an existing account reaches that size, you may participate in the Fund's
Systematic Cash Withdrawal Plan by filling out the appropriate part of the Share
Purchase Application. Under this plan, you may receive (or designate a third
party to receive) a monthly or quarterly check in a stated amount of not less
than $100. Fund shares will be redeemed as necessary to meet withdrawal
payments. All participants must elect to have their dividends and capital gain
distributions reinvested automatically.
Automatic Reinvestment Plan. For the convenience of investors, all dividends and
distributions are automatically reinvested in full and fractional shares of the
Fund at the net asset value per share at the close of business on the record
date, unless otherwise requested by a shareholder in writing. If the transfer
agent does not receive a written request for subsequent dividends and/or
distributions to be paid in cash at least three full business days prior to a
given record date, the dividends and/or distributions to be paid to a
shareholder will be reinvested. If you elect to receive dividends and
distributions in cash and the U.S. Postal Service cannot deliver the checks, or
if the checks remain uncashed for six months, the checks will be reinvested into
your account at the then current net asset value.
Tax Sheltered Retirement Plans. You may open a pension and profit sharing
account in any Evergreen mutual fund (except those funds having an objective of
providing tax free income), including: (i) Individual Retirement Accounts
("IRAs") and Rollover IRAs; (ii) Simplified Employee Pension (SEP) for sole
proprietors, partnerships and corporations; and (iii) Profit-Sharing and Money
Purchase Pension Plans for corporations and their employees.
EFFECT OF BANKING LAWS
The Glass-Steagall Act and other banking laws and regulations presently
prohibit member banks of the Federal Reserve System ("Member Banks") or their
non-bank affiliates from sponsoring, organizing, controlling, or distributing
the shares of registered open-end investment companies such as the Funds. Such
laws and regulations also prohibit banks from issuing, underwriting or
distributing securities in general. However, under the Glass-Steagall Act and
such other laws and regulations, a Member Bank or an affiliate thereof may act
as investment adviser, transfer agent or custodian to a registered open-end
investment company and may also act as agent in connection with the purchase of
shares of such an investment company upon the order of their customer. Evergreen
Asset, since it is a subsidiary of FUNB, and CMG are subject to and in
compliance with the aforementioned laws and regulations.
Changes to applicable laws and regulations or future judicial or
administrative decisions could result in CMG or Evergreen Asset being prevented
from continuing to perform the services required under the investment advisory
contract or from acting as agent in connection with the purchase of shares of a
Fund by its customers. If CMG or Evergreen Asset were prevented from continuing
to provide the services called for under the investment advisory agreement, it
is expected that the Trustees would identify, and call upon each Fund's
shareholders to approve, a new investment adviser. If this were to occur, it is
not anticipated that the shareholders of any Fund would suffer any adverse
financial consequences.
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OTHER INFORMATION
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DIVIDENDS, DISTRIBUTIONS AND TAXES
It is the policy of each Fund to distribute to shareholders its
investment company taxable and tax-exempt income, if any, quarterly and any net
realized capital gains annually or more frequently as required as a condition of
continued qualification as a regulated investment company by the Code. Dividends
and distributions generally are taxable in the year in which they are paid,
except any dividends paid in January that were declared in the previous calendar
quarter may be treated as paid in December of the previous year. Income
dividends and capital gain distributions are automatically reinvested in
additional shares of the Fund making the distribution at the net asset value per
share at the close of business on the record date, unless the shareholder has
made a written request for payment in cash.
Each Fund has qualified and intends to continue to qualify to be
treated as a regulated investment company under the Code. While so qualified, it
is expected that each Fund will not be required to pay any Federal income taxes
on that portion of its investment company taxable income and any net realized
capital gains it distributes to shareholders. The Code imposes a 4%
nondeductible excise tax on regulated investment companies, such as the Funds,
to the extent they do not meet certain distribution requirements by the end of
each calendar year. Each Fund anticipates meeting such distribution
requirements. Most shareholders of the Funds normally will have to pay Federal
income taxes and any state or local taxes on the dividends and distributions
they receive from a Fund whether such dividends and distributions are made in
cash or in additional shares. Questions on how any distributions will be taxed
to the investor should be directed to the investor's own tax adviser.
Under current law, the highest Federal income tax rate applicable to
net long-term capital gains realized by individuals is 28%. The rate applicable
to corporations is 35%. Certain income from a Fund may qualify for a corporate
dividends-received deduction of 70%. Following the end of each calendar year,
every shareholder of the Fund will be sent applicable tax information and
information regarding the dividends and capital gain distributions made during
the calendar year.
A Fund may be subject to foreign withholding taxes which would reduce
the yield on its investments. Tax treaties between certain countries and the
United States may reduce or eliminate such taxes. Shareholders of a Fund who are
subject to United States Federal income tax may be entitled, subject to certain
rules and limitations, to claim a Federal income tax credit or deduction for
foreign income taxes paid by a Fund. See the Statement of Additional Information
for additional details. A Fund's transactions in options, futures and forward
contracts may be subject to special tax rules. These rules can affect the
amount, timing and characteristics of distributions to shareholders.
A Fund may be subject to foreign withholding taxes which would reduce
the yield on its investments. Tax treaties between certain countries and the
United States may reduce or eliminate such taxes. Shareholders of a Fund who are
subject to United States Federal income tax may be entitled, subject to certain
rules and limitations, to claim a Federal income tax credit or deduction for
foreign income taxes paid by a Fund. See the Statement of Additional Information
for additional details. A Fund's transactions in options, futures and forward
contracts may be subject to special tax rules. These rules can affect the
amount, timing and characteristics of distributions to shareholders.
If more than 50% of the value of a Fund's assets at the end of the tax
year is represented by stock or securities of foreign corporations, the Fund
intends to qualify for certain Code stipulations that would allow shareholders
to claim a foreign tax credit or deduction on their U.S. income tax returns. The
Code may limit a shareholder's ability to claim a foreign tax credit.
Furthermore, shareholders who elect to deduct their portion of a Fund's foreign
taxes rather than take the foreign tax credit must itemize deductions on their
income tax returns.
Each Fund is required by Federal law to withhold 31% of reportable
payments (which may include dividends, capital gain distributions and
redemptions) paid to certain shareholders. In order to avoid this backup
withholding requirement, you must certify on the Share Purchase Application, or
on a separate form supplied by State Street, that your social security or
taxpayer identification number is correct and that you are not currently subject
to backup withholding or are exempt from backup withholding. A shareholder who
acquires Class A shares of a Fund and sells or otherwise disposes of such shares
within 90 days of acquisition may not be allowed to include certain sales
charges incurred in acquiring such shares for purposes of calculating gain and
loss realized upon a sale or exchange of shares of the Fund.
The foregoing discussion of Federal income tax consequences is based on
tax laws and regulations in effect on the date of this Prospectus, and is
subject to change by legislative or administrative action. As the foregoing
discussion is for general information only, you should also review the
discussion of "Additional Tax Information" contained in the Statement of
Additional Information. In addition, you should consult your own tax adviser as
to the tax consequences of investments in the Funds, including the application
of state and local taxes which may be different from Federal income tax
consequences described above.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
A discussion of the performance of Evergreen Global Real Estate Equity
Fund for its most recent fiscal year is set forth below. A similar discussion
relating to Evergreen International Equity Fund and Evergreen Emerging Markets
Growth Fund is contained in the annual report of each Fund for the fiscal year
ended December 31, 1994.
Evergreen Global Real Estate Equity Fund. For the nine month period ending
September 30, 1994, the Evergreen Global Real Estate Equity Fund was
significantly impacted by a combination of rising interest rates worldwide
leading to a performance decline of -6.4%. The relative indices performance was
similar, as the Morgan Stanley Global Real Estate Sub Index fell -9.9% and the
Wall Street Journal/Dow Jones World Sub Index of real estate stocks lost -11.5%.
The rise in interest rates in Europe was significantly higher than it was in the
U.S., despite little prospect of imminent inflation due to continued slow
economic recovery. We believe that both property and stock markets viewed rising
rates as a brake on economic growth. This resulted in weak performance for
European property shares. Japan also remained a relatively dull performer after
the first quarter as little evidence of economic growth was visible. Only
Southeast Asia and Latin America provided the Fund with significant
opportunities for capital appreciation during this period.
[CHART]
<PAGE>
GENERAL INFORMATION
Portfolio Transactions. Consistent with the Rules of Fair Practice of the
National Association of Securities Dealers, Inc., and subject to seeking best
price and execution, a Fund may consider sales of its shares as a factor in the
selection of dealers to enter into portfolio transactions with the Fund.
Organization. The Evergreen Global Real Estate Equity Fund is a separate series
of the Evergreen Real Estate Equity Trust, a Massachusetts business trust
organized in 1988. Evergreen International Equity Fund and Evergreen Emerging
Markets Growth Fund are separate investment series of Evergreen Investment Trust
(formerly First Union Funds), which is a Massachusetts business trust organized
in 1984. The Funds do not intend to hold annual shareholder meetings;
shareholder meetings will be held only when required by applicable law.
Shareholders have available certain procedures for the removal of Trustees.
A shareholder in each class of a Fund will be entitled to his or her
share of all dividends and distributions from a Fund's assets, based upon the
relative value of such shares to those of other Classes of the Fund, and, upon
redeeming shares, will receive the then current net asset value of the Class of
shares of the Fund represented by the redeemed shares less any applicable CDSC.
Each Trust named above is empowered to establish, without shareholder approval,
additional investment series, which may have different investment objectives,
and additional classes of shares for any existing or future series. If an
additional series or class were established in a Fund, each share of the series
or class would normally be entitled to one vote for all purposes. Generally,
shares of each series and class would vote together as a single class on
matters, such as the election of Trustees, that affect each series and class in
substantially the same manner. Class A, B, C and Y shares have identical voting,
dividend, liquidation and other rights, except that each class bears, to the
extent applicable, its own distribution, shareholder service and transfer agency
expenses as well as any other expenses applicable only to a specific class. Each
class of shares votes separately with respect to Rule 12b-1 distribution plans
and other matters for which separate class voting is appropriate under
applicable law. Shares are entitled to dividends as determined by the Trustees
and, in liquidation of a Fund, are entitled to receive the net assets of the
Fund.
Registrar, Transfer Agent and Dividend-Disbursing Agent. State Street Bank and
Trust Company, P.O. Box 9021, Boston, Massachusetts 02205-9827 acts as each
Fund's registrar, transfer agent and dividend-disbursing agent for a fee based
upon the number of shareholder accounts maintained for the Funds. The transfer
agency fee with respect to the Class B shares will be higher than the transfer
agency fee with respect to the Class A shares or Class C shares.
Principal Underwriter. EFD, a wholly-owned subsidiary of Furman Selz
Incorporated, located 237 Park Avenue, New York, New York 10017, is the
principal underwriter of the Funds. Furman Selz Incorporated, also acts as
sub-administrator to Evergreen International Equity Fund and Evergreen Emerging
Markets Growth Fund and which provides certain sub-administrative services to
Evergreen Asset in connection with its role as investment adviser Evergreen
Global Real Estate Equity Fund, including providing personnel to serve as
officers of the Funds.
Other Classes of Shares. Each Fund currently offers four classes of shares,
Class A, Class B, Class C and Class Y, and may in the future offer additional
classes. Class Y shares are the only class of shares offered by this Prospectus
and are only available to (i) all shareholders of record in one or more of the
Funds for which Evergreen Asset serves as investment adviser as of December 30,
1994, (ii) certain institutional investors and (iii) investment advisory clients
of CMG, Evergreen Asset or their affiliates. The dividends payable with respect
to Class A, Class B and Class C shares will be less than those payable with
respect to Class Y shares due to the distribution and distribution and
shareholder servicing related expenses borne by Class A, Class B and Class C
shares and the fact that such expenses are not borne by Class Y shares.
Performance Information. From time to time, the Funds may quote their "total
return" or "yield" for a specified period in advertisements, reports or other
communications to shareholders, Total return and yield are computed separately
for Class A, Class B and Class C shares. A Fund's total return for each such
period is computed by finding, through the use of a formula prescribed by the
Securities and Exchange Commission ("SEC"), the average annual compounded rate
of return over the period that would equate an assumed initial amount invested
to the value of the investment at the end of the period. For purposes of
computing total return, dividends and capital gains distributions paid on shares
of a Fund are assumed to have been reinvested when paid and the maximum sales
charges applicable to purchases of a Fund's shares are assumed to have been
paid. Yield is a way of showing the rate of income the Fund earns on its
investments as a percentage of the Fund's share price. The Fund's yield is
calculated according to accounting methods that are standardized by the SEC for
all stock and bond funds. Because yield accounting methods differ from the
method used for other accounting purposes, the Fund's yield may not equal its
distribution rate, the income paid to your account or the net investment income
reported in the Fund's financial statements. To calculate yield, the Fund takes
the interest income it earned from its portfolio of investments (as defined by
the SEC formula) for a 30-day period (net of expenses), divides it by the
average number of shares entitled to receive dividends, and expresses the result
as an annualized percentage rate based on the Fund's share price at the end of
the 30-day period. This yield does not reflect gains or losses from selling
securities
Performance data for each class of shares will be included in any
advertisement or sales literature using performance data of a Fund. These
advertisements may quote performance rankings or ratings of a Fund by financial
publications or independent organizations such as Lipper Analytical Services,
Inc. and Morningstar, Inc. or compare a Fund's performance to various indices.
The Fund may also advertise in items of sales literature an "actual distribution
rate" which is computed by dividing the total ordinary income distributed (which
may include the excess of short-term capital gains over losses) to shareholders
for the latest twelve month period by the maximum public offering price per
share on the last day of the period. Investors should be aware that past
performance may not be reflective of future results.
Liability Under Massachusetts Law. Under Massachusetts law, Trustees and
shareholders of a business trust may, in certain circumstances, be held
personally liable for its obligations. The Declarations of Trust under which the
Funds operate provide that no Trustee or shareholder will be personally liable
for the obligations of the Trust and that every written contract made by the
Trust contain a provision to that effect. If any Trustee or shareholder were
required to pay any liability of the Trust, that person would be entitled to
reimbursement from the general assets of the Trust.
Additional Information. This Prospectus and the Statement of Additional
Information, which has been incorporated by reference herein, do not contain all
the information set forth in the Registration Statements filed by the Trusts
with the Commission under the Securities Act. Copies of the Registration
Statements may be obtained at a reasonable charge from the Commission or may be
examined, without charge, at the offices of the Commission in Washington, D.C.
<PAGE>
INVESTMENT ADVISER
Capital Management Group of First Union National Bank, 201 South College
Street, Charlotte, North Carolina 28288
EVERGREEN EMERGING MARKETS GROWTH FUND, EVERGREEN INTERNATIONAL EQUITY
FUND
Evergreen Asset Management Corp., 2500 Westchester Avenue, Purchase, New York
10577
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND
CUSTODIAN & TRANSFER AGENT
State Street Bank & Trust Company, Box 9021, Boston, Massachusetts 02205-9827
LEGAL COUNSEL
Sullivan & Worcester, 1025 Connecticut Avenue, N.W., Washington, D.C. 20036
INDEPENDENT ACCOUNTANTS
KPMG Peat Marwick LLP, One Mellon Bank Center, Pittsburgh, Pennsylvania 15219
EVERGREEN EMERGING MARKETS GROWTH FUND, EVERGREEN INTERNATIONAL EQUITY
FUND
Price Waterhouse LLP, 1177 Avenue of the Americas, New York, New York 10036
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND
DISTRIBUTOR
Evergreen Funds Distributor, Inc., 237 Park Avenue, New York, New York 10017
536121
B
PROSPECTUS July 7, 1995
EVERGREEN(SM) DOMESTIC GROWTH FUNDS (Evergreen Logo appears here)
EVERGREEN FUND
EVERGREEN U.S. REAL ESTATE EQUITY FUND
EVERGREEN LIMITED MARKET FUND
EVERGREEN AGGRESSIVE GROWTH FUND
CLASS A SHARES
CLASS B SHARES
CLASS C SHARES
The Evergreen Domestic Growth Funds (the "Funds") are designed to
provide investors with a selection of investment alternatives which seek to
provide capital growth and diversification. This Prospectus provides
information regarding the Class A, Class B and Class C shares offered by
the Funds. Each Fund is, or is a series of, an open-end, diversified,
management investment company. This Prospectus sets forth concise
information about the Funds that a prospective investor should know before
investing. The address of the Funds is 2500 Westchester Avenue, Purchase,
New York 10577.
A "Statement of Additional Information" for the Funds dated July
7, 1995 has been filed with the Securities and Exchange Commission and is
incorporated by reference herein. The Statement of Additional Information
provides information regarding certain matters discussed in this Prospectus
and other matters which may be of interest to investors, and may be
obtained without charge by calling the Funds at (800) 807-2940. There can
be no assurance that the investment objective of any Fund will be achieved.
Investors are advised to read this Prospectus carefully.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF
FIRST UNION OR ANY SUBSIDIARIES OF FIRST UNION, ARE NOT ENDORSED OR
GUARANTEED BY FIRST UNION OR ANY SUBSIDIARIES OF FIRST UNION, AND ARE NOT
INSURED OR OTHERWISE PROTECTED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY AND
INVOLVE RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
KEEP THIS PROSPECTUS FOR FUTURE REFERENCE
EVERGREEN(SM) is a Service Mark of Evergreen Asset Management Corp.
Copyright 1995, Evergreen Asset Management Corp.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
OVERVIEW OF THE FUNDS 2
EXPENSE INFORMATION 3
FINANCIAL HIGHLIGHTS 5
DESCRIPTION OF THE FUNDS
Investment Objectives and Policies 12
Investment Practices and Restrictions 14
MANAGEMENT OF THE FUNDS
Investment Advisers 16
Sub-Adviser 17
Distribution Plans & Agreements 18
PURCHASE AND REDEMPTION OF SHARES
How to Buy Shares 18
How to Redeem Shares 21
Exchange Privilege 22
Shareholder Services 23
Effect of Banking Laws 23
OTHER INFORMATION
Dividends, Distributions and Taxes 24
Management's Discussion of Fund Performance 24
General Information 26
</TABLE>
OVERVIEW OF THE FUNDS
The following summary is qualified in its entirety by the more detailed
information contained elsewhere in this Prospectus. See "Description of the
Funds" and "Management of the Funds".
The Investment Adviser to the EVERGREEN FUND, EVERGREEN U.S. REAL ESTATE
EQUITY FUND and EVERGREEN LIMITED MARKET FUND, INC. is Evergreen Asset
Management Corp. ("Evergreen Asset") which, with its predecessors, has served as
an investment adviser to the Evergreen Funds since 1971. Evergreen Asset is a
wholly-owned subsidiary of First Union National Bank of North Carolina ("FUNB"),
which in turn is a subsidiary of First Union Corporation, one of the ten largest
bank holding companies in the United States. The Capital Management Group of
FUNB ("CMG") serves as investment adviser to EVERGREEN AGGRESSIVE GROWTH FUND.
EVERGREEN FUND seeks to achieve capital appreciation by investing in the
securities of little-known or relatively small companies, or companies
undergoing changes which the Fund's investment adviser believes will have
favorable consequences. Income will not be a factor in the selection of
portfolio investments.
EVERGREEN U.S. REAL ESTATE EQUITY FUND seeks long-term capital growth.
Current income is a secondary objective. It invests primarily in equity
securities of United States companies which are principally engaged in the real
estate industry or which own significant real estate assets. It will not
purchase direct interests in real estate.
EVERGREEN LIMITED MARKET FUND, INC. seeks to achieve capital appreciation
in the value of its shares. Income is not a factor in the selection of portfolio
securities. In attempting to achieve its objective, the policy of EVERGREEN
LIMITED MARKET FUND is to invest principally in securities of companies for
which there is a relatively limited trading market. Generally these are
little-known, small or special situation companies.
EVERGREEN AGGRESSIVE GROWTH FUND (successor to ABT Emerging Growth Fund)
seeks long-term capital appreciation by investing primarily in common stocks of
emerging growth companies and in larger, more well established companies, all of
which are viewed by the Fund's investment adviser as having above average
appreciation potential.
THERE IS NO ASSURANCE THAT THE INVESTMENT OBJECTIVE OF ANY FUND WILL BE
ACHIEVED.
2
<PAGE>
EXPENSE INFORMATION
The table set forth below summarizes the shareholder transaction costs
associated with an investment in each Class A, Class B and Class C Shares of a
Fund. For further information see "Purchase and Redemption of Shares" and
"General Information -- Other Classes of Shares".
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES Class A Shares Class B Shares Class C Shares
<S> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases 4.75% None None
(as a % of offering price)
Sales Charge on Dividend Reinvestments None None None
Contingent Deferred Sales Charge (as a % of None 5% during the first year, 4% during the 1% during the
original purchase price or redemption second year, 3% during the third and fourth first year and
proceeds, whichever is lower) years, 2% during the fifth year, 1% during 0% thereafter
the sixth and seventh years and 0% after the
seventh year
Redemption Fee None None None
Exchange Fee None None None
</TABLE>
The following tables show for each Fund the estimated annual operating
expenses (as a percentage of average net assets) attributable to each Class of
Shares, together with examples of the cumulative effect of such expenses on a
hypothetical $1,000 investment in each Class for the periods specified assuming
(i) a 5% annual return, and (ii) redemption at the end of each period and,
additionally for Class B and C, no redemption at the end of each period.
In the following examples (i) the expenses for Class A Shares assume
deduction of the maximum 4.75% sales charge at the time of purchase, (ii) the
expenses for Class B Shares and Class C Shares assume deduction at the time of
redemption (if applicable) of the maximum contingent deferred sales charge
applicable for that time period, and (iii) the expenses for Class B Shares
reflect the conversion to Class A Shares eight years after purchase (years eight
through ten, therefore, reflect Class A expenses).
EVERGREEN FUND
<TABLE>
<CAPTION>
EXAMPLES
Assuming
Assuming Redemption No
ANNUAL OPERATING EXPENSES at End of Period Redemption
Class B Class C Class A Class B Class C Class B
Class A
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Advisory Fees 1.00% 1.00% 1.00%
After 1 Year $ 61 $ 72 $ 32 $ 22
12b-1 Fees* .25% 1.00% 1.00%
After 3 Years $ 89 $ 97 $ 67 $ 67
Other Expenses .13% .13% .13%
After 5 Years $ 119 $ 134 $ 114 $ 114
After 10 Years $ 205 $ 218 $ 246 $ 218
Total 1.38% 2.13% 2.13%
<CAPTION>
Class C
<S> <C> <C>
After 1 year $ 22
12b-1 Fees*
After 3 years $ 67
Other Expenses
After 5 years $ 114
After 10 years $ 246
Total
<CAPTION>
Advisory Fees
</TABLE>
EVERGREEN U.S. REAL ESTATE EQUITY FUND
<TABLE>
<CAPTION>
EXAMPLES
Assuming
Assuming Redemption at End of No
ANNUAL OPERATING EXPENSES Period Redemption
Class B Class C Class A Class B Class C Class B
Class A
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Advisory Fees 1.00% 1.00% 1.00%
After 1 Year $ 64 $ 75 $ 35 $ 25
12b-1 Fees* .25% 1.00% 1.00%
After 3 Years $ 100 $ 108 $ 78 $ 78
Other Expenses
After 5 Years $ 138 $ 153 $ 133 $ 133
(after reimbursement)** .50% .50% .50%
After 10 Years $ 224 $ 252 $ 284 $ 257
Total 1.75% 2.50% 2.50%
<CAPTION>
Class C
<S> <C> <C>
After 1 year $ 25
12b-1 Fees*
After 3 years $ 78
Other Expenses
After 5 years $ 133
(after reimbursement)**
After 10 years $ 284
Total
<CAPTION>
Advisory Fees
</TABLE>
EVERGREEN LIMITED MARKET FUND
<TABLE>
<CAPTION>
EXAMPLES
Assuming
Assuming Redemption at End of No
ANNUAL OPERATING EXPENSES Period Redemption
Class B Class C Class A Class B Class C Class B
Class A
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Advisory Fees 1.00% 1.00% 1.00%
After 1 Year $ 63 $ 74 $ 34 $ 24
12b-1 Fees* .25% 1.00% 1.00%
After 3 Years $ 96 $ 104 $ 74 $ 74
Other Expenses .37% .37% .37%
After 5 Years $ 131 $ 147 $ 127 $ 127
After 10 Years $ 231 $ 243 $ 271 $ 243
Total 1.62% 2.37% 2.37%
<CAPTION>
Class C
<S> <C> <C>
After 1 year $ 24
12b-1 Fees*
After 3 years $ 74
Other Expenses
After 5 years $ 127
After 10 years $ 271
Total
<CAPTION>
Advisory Fees
</TABLE>
3
<PAGE>
EVERGREEN AGGRESSIVE GROWTH FUND (A)
<TABLE>
<CAPTION>
EXAMPLES
Assuming
Assuming Redemption at End of No
ANNUAL OPERATING EXPENSES Period Redemption
Class B Class C Class A Class B Class C Class B
Class A
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Advisory Fees .60% .60% .60%
After 1 Year $ 59 $ 70 $ 30 $ 20
Administrative Fees .06% .06% .06%
After 3 Years $ 83 $ 91 $ 61 $ 61
12b-1 Fees* .25% 1.00% 1.00%
After 5 Years $ 109 $ 124 $ 104 $ 104
Other Expenses .27% .27% .27%
After 10 Years $ 184 $ 197 $ 225 $ 197
Total 1.18% 1.93% 1.93%
<CAPTION>
Class C
<S> <C> <C>
After 1 year $ 20
Administrative Fees
After 3 years $ 61
12b-1 Fees*
After 5 years $ 104
Other Expenses
After 10 years $ 225
Total
<CAPTION>
Advisory Fees
</TABLE>
(a) Estimated annual operating expenses reflect the combination of EVERGREEN
AGRESSIVE GROWTH FUND and ABT Emerging Growth Fund. These estimates are based on
the ABT Emerging Growth Fund Class A Shares as restated to reflect current fee
arrangements since the other Classes had no operations.
*Class A Shares can pay up to . 75 of 1% of average net assets as a 12b-1 Fee.
For the foreseeable future, the Class A shares 12b-1 Fees will be limited to .25
of 1% of average net assets. For Class B and Class C Shares a portion of the
12b-1 Fees equivalent to .25 of 1% of average net assets will be shareholder
servicing-related. Distribution-related 12b-1 Fees will be limited to .75 of 1%
of average net assets as permitted under the rules of the National Association
of Securities Dealers, Inc.
**Reflects agreements by Evergreen Asset to limit aggregate operating expenses
(including the Advisory Fees, but excluding interest, taxes, brokerage
commissions, Rule 12b-1 distribution fees and shareholder servicing fees and
extraordinary expenses) of EVERGREEN U.S. REAL ESTATE EQUITY FUND to 1.50% of
average net assets until the Fund reaches net assets of $15 million. Absent such
agreements, the estimated annual operating expenses for the Fund would be 2.75%
of average net assets for Class A and 3.50% of average net assets for Class B
and C Shares.
From time to time, each Fund's investment adviser may, at its discretion,
reduce or waive its fees or reimburse the Funds for certain of their expenses in
order to reduce their expense ratios. Each Fund's investment adviser may cease
these waivers and reimbursements at any time.
The purpose of the foregoing table is to assist an investor in
understanding the various costs and expenses that an investor in each Class of
Shares of the Funds will bear directly or indirectly. The amounts set forth both
in the tables and in the examples are estimated amounts based on the experience
of each Fund for the most recent fiscal period. These amounts have been restated
to reflect current fee arrangements and in the case of Funds that did not offer
all of the above-referenced Classes of shares during such periods, the amounts
set forth in the tables are based on the expenses incurred by the Classes which
were offered.THE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES OR ANNUAL RETURN. ACTUAL EXPENSES AND ANNUAL RETURN MAY BE
GREATER OR LESS THAN THOSE SHOWN. For a more complete description of the various
costs and expenses borne by the Funds see "Management of the Funds". As a result
of asset-based sales charges, long-term shareholders may pay more than the
economic equivalent of the maximum front-end sales charges permitted under the
rules of the National Association of Securities Dealers, Inc.
4
<PAGE>
FINANCIAL HIGHLIGHTS
The tables on the following pages present, for each Fund, financial
highlights for a share outstanding throughout each period indicated. The
information in the tables for the five most recent fiscal years or the life of
the Fund if shorter for EVERGREEN FUND and EVERGREEN U.S. REAL ESTATE EQUITY
FUND has, except as noted otherwise, been audited by Price Waterhouse LLP, each
Fund's independent auditors, for EVERGREEN LIMITED MARKET FUND has, except as
noted otherwise, been audited by Ernst & Young LLP, the Fund's independent
auditors and for EVERGREEN AGGRESSIVE GROWTH FUND has, except as noted
otherwise, been audited by Tait, Weller & Baker, the Fund's independent
auditors. A report of Price Waterhouse LLP, Ernst & Young LLP or Tait Weller &
Baker, as the case may be, on the audited information with respect to each Fund
is incorporated by reference in the Fund's Statement of Additional Information.
The following information for each Fund should be read in conjunction with the
financial statements and related notes which are incorporated by reference in
the Fund's Statement of Additional Information.
No financial highlights are shown for Class C Shares of Evergreen U.S.
Real Estate Equity Fund since this class did not have any operations prior to
March 31, 1995. No financial highlights are shown for Class B, C and Y Shares of
Evergreen Aggressive Growth Fund since these classes did not have any operations
prior to April 30, 1995.
Further information about a Fund's performance is contained in the Fund's
annual report to shareholders, which may be obtained without charge.
EVERGREEN FUND -- CLASS Y SHARES
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
MARCH 31,
1995 YEAR ENDED SEPTEMBER 30,*
(UNAUDITED) 1994 1993 1992 1991 1990 1989 1988** 1987** 1986**
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning
of period..................... $ 14.62 $14.46 $13.10 $13.32 $ 9.66 $14.01 $12.47 $15.12 $13.55 $11.03
Income (loss) from investment
operations:
Net investment income........... .04 .07 .09 .09 .17 .24 .32 .21 .17 .14
Net realized and unrealized gain
(loss) on investments......... .99 .79 1.96 .55 3.93 (3.62) 1.99 (1.05) 2.65 3.18
Total from investment
operations.................. 1.03 .86 2.05 .64 4.10 (3.38) 2.31 (.84) 2.82 3.32
Less distributions to
shareholders from:
Net investment income........... (.07) (.09) (.07) (.17) (.18) (.36) (.21) (.25) (.13) (.14)
Net realized gains.............. (2.16) (.61) (.62) (.69) (.26) (.61) (.56) (1.56) (1.12) (.66)
Total distributions........... (2.23) (.70) (.69) (.86) (.44) (.97) (.77) (1.81) (1.25) (.80)
Net asset value, end of
period........................ $ 13.42 $14.62 $14.46 $13.10 $13.32 $9.66 $14.01 $12.47 $15.12 $13.55
TOTAL RETURN+................... 9.1% 6.2% 15.8% 5.2% 43.7% (25.4%) 20.0% 1.9% 22.5% 30.9%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (in
millions)..................... $508 $526 $657 $722 $755 $525 $867 $751 $808 $639
Ratios to average net assets:
Operating expenses............ 1.15%++ 1.13% 1.11% 1.13% 1.15% 1.15% 1.11% 1.03% 1.03% 1.04%
Interest expense.............. .13%++ .09% .01% -- -- -- -- -- -- --
Net investment income......... .48%++ .40% .60% .56% 1.45% 1.83% 2.46% 1.70% 1.32% 1.41%
Portfolio turnover rate......... 11% 19% 21% 32% 35% 39% 40% 42% 46% 48%
<CAPTION>
1985**
<S> <C>
PER SHARE DATA
Net asset value, beginning
of period..................... $ 9.78
Income (loss) from investment
operations:
Net investment income........... .16
Net realized and unrealized gain
(loss) on investments......... 1.66
Total from investment
operations.................. 1.82
Less distributions to
shareholders from:
Net investment income........... (.16)
Net realized gains.............. (.41)
Total distributions........... (.57)
Net asset value, end of
period........................ $11.03
TOTAL RETURN+................... 19.8%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (in
millions)..................... $334
Ratios to average net assets:
Operating expenses............ 1.08%
Interest expense.............. --
Net investment income......... 1.73%
Portfolio turnover rate......... 59%
</TABLE>
* All shares and per share amounts reflect a 4-for-1 stock split, which was
approved by shareholders on January 27, 1986, retroactive to March 18, 1985.
** Net of expense limitation in fiscal years 1988, 1987, 1986 and 1985.
+ Total return is calculated on net asset value for the period indicated and is
not annualized.
++ Annualized.
5
<PAGE>
EVERGREEN FUND -- CLASS A, B AND C SHARES
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
JANUARY 5, 1995* THROUGH MARCH 31, 1995
(UNAUDITED)
<S> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning of period..................................... $11.97 $11.97 $11.97
Income (loss) from investment operations:
Net investment income (loss)............................................. .01 (.01) (.01)
Net realized and unrealized gain on investments.......................... 1.43 1.43 1.43
Total from investment operations....................................... 1.44 1.42 1.42
Net asset value, end of period........................................... $13.41 $13.39 $13.39
TOTAL RETURN+............................................................ 12.0% 11.9% 11.9%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's omitted)................................ $5,545 $ 12,308 $408
Ratios to average net assets:
Operating expenses (a)................................................. 1.37%++ 2.12%++ 2.14%++
Interest expense....................................................... .16%++ .16%++ .16%++
Net investment income (a).............................................. .35%++ (.41%)++ (.35%)++
Portfolio turnover rate (#).............................................. 11% 11% 11%
</TABLE>
* Commencement of class operations.
+ Total return is calculated on net asset value per share for the period
indicated and is not annualized. Initial sales charge or contingent deferred
sales charge is not reflected.
++ Annualized. Due to the recent commencement of their offering, the ratios for
Class A, Class B and Class C shares are not necessarily comparable to that
of the Class Y shares, and are not necessarily indicative of future ratios.
# Portfolio turnover rate is calculated for the six months ended March 31,
1995.
(a) Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were assumed or waived by the investment adviser, the
annualized ratios of expenses and net investment income (loss) to average
net assets, exclusive of any applicable state expense limitations, would
have been the following:
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
JANUARY 3, 1995 THROUGH MARCH 31, 1995
(UNAUDITED)
<S> <C> <C> <C>
Expenses....................................... 1.64% 2.24% 5.97%
Net investment income (loss)................... .08% (.53%) (4.18%)
</TABLE>
6
<PAGE>
EVERGREEN U.S. REAL ESTATE EQUITY FUND -- CLASS Y SHARES
<TABLE>
<CAPTION>
SIX MONTHS
ENDED NINE MONTHS SEPTEMBER 1, 1993*
MARCH 31, 1995 ENDED THROUGH
(UNAUDITED) SEPTEMBER 30, 1994# DECEMBER 31, 1993
<S> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning of period........................... $10.07 $ 10.71 $ 10.00
Income (loss) from investment operations:
Net investment income.......................................... .13 .11 .04
Net realized and unrealized gain (loss) on investments......... (.58) (.75) .72
Total from investment operations........................... (.45) (.64) .76
Less distributions to shareholders from:
Net investment income.......................................... (.12) -- (.04)
In excess of net investment income............................. (.20) -- (.01)
Total distributions........................................ (.32) -- (.05)
Net asset value, end of period................................. $ 9.30 $ 10.07 $ 10.71
TOTAL RETURN+.................................................. (4.4%) (6.0%) 7.6%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's omitted)...................... $8,229 $8,630 $4,610
Ratios to average net assets:
Expenses..................................................... 1.50%++ 1.49%++(a) .44%++(a)
Net investment income........................................ 3.10%++ 1.60%++(a) 1.93%++(a)
Portfolio turnover rate........................................ 62% 102% 17%
</TABLE>
# On September 21, 1994, the Fund changed its fiscal year end from December 31
to September 30.
* Commencement of operations.
+ Total return is calculated on net asset value for the period indicated and is
not annualized.
++ Annualized.
(a) Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were assumed or waived by the investment adviser, the
annualized ratios of expenses and net investment income to average net
assets, exclusive of any applicable state expense limitations, would have
been the following:
<TABLE>
<CAPTION>
NINE MONTHS SEPTEMBER 1, 1993
ENDED THROUGH
SEPTEMBER 30, 1994 DECEMBER 31, 1993
<S> <C> <C>
Expenses................................................... 2.65% 3.59%
Net investment income (loss)............................... .44% (1.21%)
</TABLE>
7
<PAGE>
EVERGREEN U.S. REAL ESTATE EQUITY FUND -- CLASS A AND B SHARES
<TABLE>
<CAPTION>
CLASS A CLASS B
MARCH 10, 1995* MARCH 7, 1995*
THROUGH THROUGH
MARCH 31, 1995 MARCH 31, 1995
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
PER SHARE DATA
Net asset value, beginning of period....................................................... $9.21 $9.19
Income from investment operations:
Net investment income...................................................................... .04 .04
Net realized and unrealized gain on investments............................................ .05 .06
Total from investment operations......................................................... .09 .10
Net asset value, end of period............................................................. $9.30 $9.29
TOTAL RETURN+.............................................................................. 1.0% 1.1%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's omitted).................................................. $10 $52
Ratios to average net assets:
Expenses................................................................................. 1.75%++ 2.50%++
Net investment income.................................................................... 9.49%++ 6.94%++
Portfolio turnover rate**.................................................................. 62% 62%
</TABLE>
* Commencement of class operations.
** Portfolio turnover rate is calculated for the six month period ended March
31, 1995.
+ Total return is calculated on net asset value per share for the period
indicated and is not annualized. Initial sales charge and contingent deferred
sales charge is not reflected.
++ Annualized. Due to the recent commencement of their offering, the ratios for
Class A and Class B shares are not necessarily comparable to that of the
Class Y shares, and are not necessarily indicative of future ratios.
8
<PAGE>
EVERGREEN LIMITED MARKET FUND, INC. -- CLASS Y SHARES
<TABLE>
<CAPTION>
SIX MONTHS
ENDED FOUR MONTHS
MARCH 31, ENDED
1995 SEPTEMBER 30, YEAR ENDED MAY 31,
(UNAUDITED) 1994# 1994 1993 1992 1991 1990 1989* 1988 1987
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value,
beginning of
period............... $21.74 $21.20 $20.87 $21.02 $18.81 $17.69 $21.02 $16.82 $18.55 $20.16
Income (loss) from
investment
operations:
Net investment income
(loss)............... (.06) (.05) (.07) (.03) .02 .56 .45 .16 -- (.04)
Net realized and
unrealized gain
(loss) on
investments.......... (1.60) .59 1.67 1.57 3.33 1.67 .25 4.37 (.78) 1.05
Total from investment
operations......... (1.66) .54 1.60 1.54 3.35 2.23 .70 4.53 (.78) 1.01
Less distributions to
shareholders from:
Net investment
income............... -- -- -- -- (.14) (.53) (.36) (.05) -- --
Net realized gains..... (3.68) -- (1.27) (1.69) (1.00) (.58) (3.67) (.28) (.95) (2.62)
Total
distributions...... (3.68) -- (1.27) (1.69) (1.14) (1.11) (4.03) (.33) (.95) (2.62)
Net asset value, end of
period............... $16.40 $21.74 $21.20 $20.87 $21.02 $18.81 $17.69 $21.02 $16.82 $18.55
TOTAL RETURN+.......... (6.7%) 2.6% 7.6% 7.5% 18.3% 14.4% 4.2% 27.4% (4.0%) 6.3%
RATIOS & SUPPLEMENTAL
DATA
Net assets, end of
period
(000's omitted)...... $78,609 $99,340 $96,357 $80,605 $62,172 $45,687 $37,838 $37,292 $23,007 $20,881
Ratios to average net
assets:
Expenses............. 1.32%++ 1.37%++ 1.26% 1.24% 1.25% 1.32% 1.33% 1.30% 1.47% 1.44%
Net investment income
(loss)............. (.78%)++ (.70%)++ (.33%) (.07%) .22% 3.32% 2.25% .86% .01% (.20%)
Portfolio turnover
rate................. 40% 36% 89% 29% 55% 59% 46% 45% 47% 43%
<CAPTION>
1986
<S> <C>
PER SHARE DATA
Net asset value,
beginning of
period............... $14.97
Income (loss) from
investment
operations:
Net investment income
(loss)............... (.02)
Net realized and
unrealized gain
(loss) on
investments.......... 6.37
Total from investment
operations......... 6.35
Less distributions to
shareholders from:
Net investment
income............... --
Net realized gains..... (1.16)
Total
distributions...... (1.16)
Net asset value, end of
period............... $20.16
TOTAL RETURN+.......... 45.7%
RATIOS & SUPPLEMENTAL
DATA
Net assets, end of
period
(000's omitted)...... $19,783
Ratios to average net
assets:
Expenses............. 1.44%
Net investment income
(loss)............. (.10%)
Portfolio turnover
rate................. 56%
</TABLE>
# On September 21, 1994, the Fund changed its fiscal year end from May 31 to
September 30.
* Investment income, expenses and net investment income are based on average
monthly shares outstanding for the period indicated.
+ Total return is calculated on net asset value for the period indicated and is
not annualized.
++ Annualized.
9
<PAGE>
EVERGREEN LIMITED MARKET FUND, INC. -- CLASS A, B AND C SHARES
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
JANUARY 3, 1995* THROUGH MARCH 31, 1995
(UNAUDITED)
<S> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning of period..................................... $15.76 $15.76 $15.76
Income (loss) from investment operations:
Net investment loss...................................................... (.01) (.03) (.03)
Net realized and unrealized gain on investments.......................... .65 .63 .64
Total from investment operations....................................... .64 .60 .61
Net asset value, end of period........................................... $16.40 $16.36 $16.37
TOTAL RETURN+............................................................ 4.1% 3.8% 3.9%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's omitted)................................ $732 $1,598 $59
Ratios to average net assets:
Expenses (a)........................................................... 1.41%++ 2.17%++ 2.15%++
Net investment loss (a)................................................ (.71%)++ (1.47%)++ (1.38%)++
Portfolio turnover rate**................................................ 40% 40% 40%
</TABLE>
* Commencement of class operations.
** Portfolio turnover rate is calculated for the six months period ended March
31, 1995.
+ Total return is calculated on net asset value per share for the period
indicated and is not annualized. Initial sales charge and contingent deferred
sales charge is not reflected.
++ Annualized. Due to the recent commencement of their offering, the ratios for
Class A, Class B and Class C shares are not necessarily comparable to that
of the Class Y shares, and are not necessarily indicative of future ratios.
(a) Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were assumed or waived by the investment adviser, the
annualized ratios of expenses and net investment income (loss) to average
net assets, exclusive of any applicable state expense limitations, would
have been the following:
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
JANUARY 3, 1995 THROUGH MARCH 31, 1995
(UNAUDITED)
<S> <C> <C> <C>
Expenses....................................... 2.75% 2.77% 3.50%
Net investment income (loss)................... (2.05%) (2.07%) (2.73%)
</TABLE>
10
<PAGE>
EVERGREEN AGGRESSIVE GROWTH FUND -- CLASS A SHARES*
<TABLE>
<CAPTION>
SIX MONTHS TEN MONTHS
ENDED ENDED
APRIL 30, OCTOBER YEAR ENDED
1995 YEAR ENDED OCTOBER 31, 31, DECEMBER 31,
(UNAUDITED) 1994 1993 1992 1991 1990 1989 1988** 1987 1986
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning of
period...................... $13.85 $14.44 $11.76 $12.22 $7.37 $11.06 $7.62 $7.07 $8.77 $7.75
Income (loss) from investment
operations:
Net investment loss........... (.07) (.13) (.12) (.10) (.08) (.04) (.11) (.21) (.11) (.08)
Net realized and unrealized
gain (loss)................. .46 (.22) 3.06 1.84 5.59 (2.02) 3.55 .76 (1.34) 1.10
Total from investment
operations................ .39 (.35) 2.94 1.74 5.51 (2.06) 3.44 .55 (1.45) 1.02
Less distributions to
shareholders from:
Net realized gains............ -- (.24) (.26) (2.20) (.66) (1.63) -- -- (.25) --
Net asset value, end of
period...................... $14.24 $13.85 $14.44 $11.76 $12.22 $7.37 $11.06 $7.62 $7.07 $8.77
TOTAL RETURN+................. 2.8% (2.4%) 25.3% 17.4% 79.8% (20.5%) 45.1% 9.3% (16.5%) 13.2%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted)............. $62,993 $64,635 $58,053 $29,302 $23,509 $14,325 $21,241 $19,900 $25,700 $37,100
Ratios to average net assets
of:
Expenses.................... 1.41%++ 1.25% 1.31% 1.44% 1.59% 1.86% 1.78% 2.02%++ 1.57% 1.65%
Net investment loss......... (1.01%)++ (.92%) (.92%) (.93%) (.71%) (.49%) (1.19%) (1.36%)++ (1.05%) (.90%)
Portfolio turnover rate....... 14% 59% 48% 46% 108% 100% 120% 45% 65% 49%
<CAPTION>
1985
<S> <C>
PER SHARE DATA
Net asset value, beginning of
period...................... $5.43
Income (loss) from investment
operations:
Net investment loss........... (.09)
Net realized and unrealized
gain (loss)................. 2.59
Total from investment
operations................ 2.50
Less distributions to
shareholders from:
Net realized gains............ (.18)
Net asset value, end of
period...................... $7.75
TOTAL RETURN+................. 46.0%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted)............. $16,100
Ratios to average net assets
of:
Expenses.................... 2.34%
Net investment loss......... (1.29%)
Portfolio turnover rate....... 101%
</TABLE>
* The information set forth in the table above reflects the operating history
of ABT Emerging Growth Fund, predecessor to Evergreen Aggressive Growth Fund,
for the periods indicated.
** The Fund changed its fiscal year from December 31 to October 31.
+ Total return is calculated on net asset value for the period indicated and is
not annualized. Initial sales charge is not reflected.
++ Annualized.
11
12
- -------------------------------------------------------------------------------
DESCRIPTION OF THE FUNDS
- -------------------------------------------------------------------------------
INVESTMENT OBJECTIVES AND POLICIES
Evergreen Fund
The Evergreen Fund seeks to achieve its investment objective of capital
appreciation principally through investments in common stock and securities
convertible into or exchangeable for common stock of companies which are
little-known, relatively small or represent special situations which, in the
opinion of the Fund's investment adviser, offer potential for capital
appreciation. The Fund's investment objective is fundamental policy, which may
not be changed without shareholder approval. A "little-known" company means one
whose business is limited to a regional market or whose securities are closely
held with only a small proportion traded publicly. A "relatively small" company
means one which has a small share of the market for its products or services in
comparison with other companies in its field, or which provides goods or
services for a limited market. A "special situation" company is one which offers
potential for capital appreciation because of a recent or anticipated change in
structure, management, products or services. In addition to the securities
described above, the Evergreen Fund may invest in securities of relatively
well-known and large companies with potential for capital appreciation.
Investments may also be made to a limited degree in non-convertible debt
securities and preferred stocks which offer an opportunity for capital
appreciation. Short-term investments may also be made if the Fund's investment
adviser believes that such action will benefit the Fund. See "Special Risk
Considerations".
It is anticipated that the annual portfolio turnover rate for the Fund
will not exceed 100%. The Fund may employ certain additional investment
strategies which are discussed in "Investment Practices and Restrictions",
below.
Evergreen U.S. Real Estate Equity Fund
The Fund's investment objective is long-term capital growth which it
seeks to achieve through investment primarily in equity securities of domestic
companies which are principally engaged in the real estate industry or which own
significant real estate assets; the Fund will not purchase direct interests in
real estate. Current income will be a secondary objective. Equity securities
will include common stock, preferred stock and securities convertible into
common stock. The Fund's investment objective is fundamental policy, which may
not be changed without shareholder approval.
Under normal conditions, the Fund will invest not less than 65% of its
total assets in equity securities of United States exchange or NASDAQ listed
companies principally engaged in the real estate industry. A company is deemed
to be "principally engaged" in the real estate industry if at least 50% of its
assets (marked to market), gross income or net profits are attributable to
ownership, construction, management or sale of residential, commercial or
industrial real estate. Real estate industry companies may include among others:
equity real estate investment trusts, which pool investors' funds for investment
primarily in commercial real estate properties; mortgage real estate investment
trusts, which invest pooled funds in real estate related loans; brokers or real
estate developers; and companies with substantial real estate holdings, such as
paper and lumber producers and hotel and entertainment companies. The Fund will
only invest in real estate equity trusts and limited partnerships which are
traded on major exchanges. See "Special Risk Considerations".
The remainder of the Fund's investments may be made in equity
securities of issuers whose products and services are related to the real estate
industry, such as manufacturers and distributors of building supplies and
financial institutions which issue or service mortgages. The Fund may invest
more than 25% of its total assets in any one sector of the real estate or real
estate related industries. In addition, the Fund may, from time to time, invest
in the securities of companies unrelated to the real estate industry whose real
estate assets are substantial relative to the price of the companies'
securities.
Investments may also be made in securities of issuers unrelated to the
real estate industry believed by the Fund's investment adviser to be undervalued
and to have capital appreciation potential. Also, consistent with the secondary
objective of current income, investments may also be made in nonconvertible debt
securities of such companies. The debt securities purchased (except for those
described below) will be of investment grade or better quality (e.g., rated no
lower than A by Standard & Poor's Ratings Group ("S&P") or Moody's Investors
Service, Inc. ("Moody's") or any other nationally recognized statistical rating
organization ("SRO"), or if not so rated, believed by the Fund's investment
adviser to be of comparable quality). However, up to 10% of total assets may be
invested in unrated debt securities of issuers secured by real estate assets
where the Fund's investment adviser believes that the securities are trading at
a discount and the underlying collateral will ensure repayment of principal. In
such situations, it is conceivable that the Fund could, in the event of default,
end up holding the underlying real estate directly.
It is anticipated that the annual portfolio turnover rate for the Fund
may exceed 100%. The Fund may employ certain additional investment strategies
which are discussed in "Investment Practices and Restrictions", below.
Evergreen Limited Market Fund
The investment objective of Evergreen Limited Market Fund is to achieve
capital appreciation; income is not a factor in the selection of portfolio
securities. The Fund seeks to achieve its objective principally through
investments in common stock of companies for which there is a relatively limited
trading market. A relatively limited trading market is one in which only small
amounts of stock are available at any given time generally through five or fewer
market makers. The securities of such companies are often traded only
over-the-counter or on a regional securities exchange, rarely on a national
securities exchange, and may not trade every day or in the volume typical of
trading on a national securities exchange. See "Special Risk Considerations".
The Fund's investment objective is a fundamental policy.
Investments by the Fund are made with a view toward taking advantage of
market inefficiencies. Market inefficiency can result from a company being too
small to be covered by most industry analysts, thereby resulting in a limited
dissemination of information about the company or its industry. Such companies
generally are small (but no smaller than $1,000,000 of market capitalization),
little-known or unpopular companies (those which are not widely recommended for
purchase by industry analysts due to the company's size or some situation unique
to the company or its industry). Companies in which investments will generally
be made are those with a total market capitalization of $150,000,000 or less.
There are no restrictions as to types of businesses or industries in which the
Fund may invest. The Fund's investment adviser believes that its investment
research programs will uncover a variety of relatively unexploited investment
opportunities. The methods used for the detection and selection of such
opportunities depends heavily upon the extensive library facilities of Lieber &
Company, the Fund's sub adviser, which contain information regarding over thirty
four thousand individual corporations as well as extensive industry and trade
literature.
While the focus of Evergreen Limited Market Fund is on long-term
capital appreciation, investments may on occasion be made with the expectation
of short-term capital appreciation. Securities held for a short time period may
be sold if the investment objective for such securities has been achieved or if
other circumstances warrant.
It is anticipated that the annual portfolio turnover rate for the Fund
may exceed 100%. The Fund may employ certain additional investment strategies
which are discussed in "Investment Practices and Restrictions", below.
Evergreen Aggressive Growth Fund
The Evergreen Aggressive Growth Fund's investment objective is to
achieve long-term capital appreciation by investing primarily in common stocks
of emerging growth companies and larger, more well established companies, all of
which are viewed by its investment adviser as having above-average appreciation
potential. The Fund's investment objective is fundamental policy, which may not
be changed without shareholder approval. Under normal circumstances, the Fund
intends to invest at least 65% of its net assets in common stocks or securities
convertible into common stocks. The Fund's investment adviser considers an
emerging growth company to be one which is still in the developmental stage, yet
has demonstrated, or is expected to achieve, growth of earnings over various
major business cycles. Important qualities of any emerging growth company
include sound management and a good product with growing market opportunities.
To the extent that its assets are not invested in common stocks or securities
convertible into common stocks, the Fund also may invest its assets in, or enter
into repurchase agreements with banks or broker-dealers with respect to,
investment grade corporate bonds, U.S. government securities, commercial paper
and certificates of deposit of domestic banks.
Consistent with its investment objective, the Fund also may invest in
equity securities of seasoned, established companies which its investment
adviser believes have above-average appreciation potential similar to that of
companies in the developmental stage. This may be due, for example, to
management change, new technology, new product or service developments, changes
in demand, or other factors. Investments in stocks of emerging growth companies
may involve special risks. Securities of lesser-known, relatively small and
special situation companies tend to be speculative and volatile. Therefore, the
current net asset value of the Fund's shares may vary significantly.
Accordingly, the Fund should not be considered suitable for investors who are
unable or unwilling to assume the risks of loss inherent in such a program, nor
should investment in the Fund be considered a balanced or complete investment
program.
It is anticipated that the annual portfolio turnover rate for the Fund
will not exceed 100%. The Fund may employ certain additional investment
strategies which are discussed in "Investment Practices and Restrictions",
below.
INVESTMENT PRACTICES AND RESTRICTIONS
Defensive Investments. The Funds may invest without limitation in high quality
money market instruments, such as notes, certificates of deposit or bankers'
acceptances, U.S. Government securities, non-convertible investment grade debt
securities or preferred stocks or hold its assets in cash if, in the opinion of
the Funds investment advisers, market conditions warrant a temporary defensive
investment strategy.
Portfolio Turnover and Brokerage. A portfolio turnover rate of 100% would occur
if all of a Fund's portfolio securities were replaced in one year. The portfolio
turnover rate experienced by a Fund directly affects brokerage commissions and
other transaction costs which the Fund bears directly. A high rate of portfolio
turnover will increase such costs. It is contemplated that Lieber & Company, an
affiliate of Evergreen Asset and a member of the New York and American Stock
Exchanges, will to the extent practicable effect substantially all of the
portfolio transactions for Evergreen Fund, Evergreen U.S. Real Estate Equity
Fund and Evergreen Limited Market Fund effected on those exchanges. See the
Statement of Additional Information for further information regarding the
brokerage allocation practices of the Funds. The portfolio turnover rate for
each Fund is set forth in the tables contained in the section entitled
"Financial Highlights".
Borrowing. As a matter of fundamental policy, the Funds may not borrow money
except as a temporary measure for extraordinary or emergency purposes. The
proceeds from borrowings may be used to facilitate redemption requests which
might otherwise require the untimely disposition of portfolio securities. The
specific limits and other terms applicable to borrowing by each Fund are set
forth in the Statement of Additional Information.
Lending of Portfolio Securities. In order to generate income and to offset
expenses, the Funds may lend portfolio securities to brokers, dealers and other
financial institutions. Each Fund's investment adviser will monitor the
creditworthiness of such borrowers. Loans of securities by the Funds, if and
when made, may not exceed 30% of the value of a Fund's net assets and must be
collateralized by cash or U.S. Government securities that are maintained at all
times in an amount equal to at least 100% of the current market value of the
securities loaned, including accrued interest. While such securities are on
loan, the borrower will pay a Fund any income accruing thereon, and the Fund may
invest the cash collateral in portfolio securities, thereby increasing its
return. Any gain or loss in the market price of the loaned securities which
occurs during the term of the loan would affect a Fund and its investors. A Fund
has the right to call a loan and obtain the securities loaned at any time on
notice of not more than five business days. A Fund may pay reasonable fees in
connection with such loans.
There is the risk that when lending portfolio securities, the
securities may not be available to a Fund on a timely basis and the Fund may,
therefore, lose the opportunity to sell the securities at a desirable price. In
addition, in the event that a borrower of securities would file for bankruptcy
or become insolvent, disposition of the securities may be delayed pending court
action.
Illiquid Securities. The Funds may invest up to 15% of their net assets in
illiquid securities and other securities which are not readily marketable,
including non-negotiable time deposits, certain restricted securities not deemed
by the Trustees to be liquid and repurchase agreements with maturities longer
than seven days, except that Evergreen U.S. Real Estate Equity Fund may only
invest up to 10% of its assets in repurchase agreements with maturities longer
than seven days. Securities eligible for resale pursuant to Rule 144A under the
Securities Act of 1933, which have been determined to be liquid, will not be
considered by the Funds investment advisers to be illiquid or not readily
marketable and, therefore, are not subject to the aforementioned 15% limit. The
inability of a Fund to dispose of illiquid or not readily marketable investments
readily or at a reasonable price could impair the Fund's ability to raise cash
for redemptions or other purposes. The liquidity of securities purchased by a
Fund which are eligible for resale pursuant to Rule 144A will be monitored by
each Funds investment adviser on an ongoing basis, subject to the oversight of
the Trustees or Directors. In the event that such a security is deemed to be no
longer liquid, a Fund's holdings will be reviewed to determine what action, if
any, is required to
<PAGE>
ensure that the retention of such security does not result in a Fund having more
than 15% of its assets invested in illiquid or not readily marketable
securities.
Repurchase Agreements and Reverse Repurchase Agreements. The Funds may enter
into repurchase agreements with member banks of the Federal Reserve System,
including the Custodian or primary dealers in U.S. Government securities. A
repurchase agreement is an arrangement pursuant to which a buyer purchases a
security and simultaneously agrees to resell it to the vendor at a price that
results in an agreed-upon market rate of return which is effective for the
period of time (which is normally one to seven days, but may be longer) the
buyer's money is invested in the security. The arrangement results in a fixed
rate of return that is not subject to market fluctuations during the holding
period. A Fund requires continued maintenance of collateral with its Custodian
in an amount at least equal to the repurchase price (including accrued
interest). In the event a vendor defaults on its repurchase obligation, a Fund
might suffer a loss to the extent that the proceeds from the sale of the
collateral were less than the repurchase price. If the vendor becomes the
subject of bankruptcy proceedings, a Fund might be delayed in selling the
collateral. The Funds investment advisers will review and continually monitor
the creditworthiness of each institution with which a Fund enters into a
repurchase agreement to evaluate these risks.
Evergreen U.S. Real Estate Equity Fund and Evergreen Aggressive Growth
Fund may borrow money by entering into a "reverse repurchase agreement" by which
it agrees to sell portfolio securities to financial institutions such as banks
and broker-dealers, and to repurchase them at a mutually agreed upon date and
price, for temporary or emergency purposes. At the time the Fund enters into a
reverse repurchase agreement, it will place in a segregated custodial account
cash, U.S. government securities or liquid high grade debt obligations having a
value at least equal to the repurchase price (including accrued interest) and
will subsequently monitor the account to ensure that such equivalent value is
maintained. Reverse repurchase agreements involve the risk that the market value
of the securities sold by the Fund may decline below the repurchase price of
those securities. The Fund will not enter into reverse repurchase agreements
exceeding 5% of the value of its total assets.
Fixed Income Securities - Downgrades. If any security invested in by any of the
Funds loses its rating or has its rating reduced after the Fund has purchased
it, the Fund is not required to sell or otherwise dispose of the security, but
may consider doing so.
Futures and Related Options. The Evergreen U.S. Real Estate Equity Fund may, to
a limited extent, enter into financial futures contracts, including futures
contracts based on securities indices, and purchase and sell options on such
futures contracts. The sale of a futures contract obligates the Fund to deliver
the amount of securities, currency, or in the case of an index futures contract,
cash, called for in the futures contract on a specific future date and price.
Conversely, the purchase of a futures contract obligates the Fund to receive
(purchase) the amount of securities, currency, or in the case of an index
futures contract, cash, called for in the futures contract on a specific future
date and at a specific price. While the terms of futures contracts call for
actual delivery or receipt of the underlying property, the majority of such
contracts are "closed out" prior to settlement date by entering into an
offsetting purchase or sale transaction. Upon entering into a futures contract,
the Fund must make an initial margin deposit representing a portion of the funds
that would be required to settle the contract. Thereafter, on each day that
futures contracts to which the Fund is a party trade, the Fund may be required
to post additional "variation" margin as a result of changes in the value of the
futures contract. The Fund does not segregate assets in an amount equal to its
total exposure under futures contracts.
While the Fund will enter into futures contracts only if there appears
to be a liquid secondary market for such contracts, there can be no assurance
that the Fund will be able to close out their position in a specific contract at
any specific time. The Fund will not enter into a particular index-based futures
contract unless the Fund's investment adviser determines that a correlation
exists between price movements in the index-based futures contract and in
securities in the Fund's portfolio. Such correlation is not likely to be
perfect, since the Fund's portfolio is not likely to contain the same securities
used in the index.
An option on a futures contract entitles its holder to enter into a
futures contract on specific terms which remain fixed until the expiration of
the option, regardless of the movement of futures prices in general. If the
movement of currency futures prices during the term of the option are such that
it does not become advantageous for the Fund to exercise the option or enter
into an offsetting options transaction, the option will expire and have no
further value. The exposure of the Fund in connection with purchase of an option
on a futures contract is limited to the premium paid for the option. The Funds
will only use futures instruments for hedging, not speculative, purposes. The
Fund may not enter into futures contracts or related options if, immediately
thereafter, more than 30% of the Fund's total assets would be hedged thereby or
the amounts committed to margin and premiums paid for unexpired options would
exceed 5% of the Fund's total assets. Special Risk Considerations
Investment in Small Companies. Investments in securities of little-known,
relatively small and special situation companies may tend to be speculative and
volatile. A lack of management depth in such companies could increase the risks
associated with the loss of key personnel. Also, the material and financial
resources of such companies may be limited, with the consequence that funds or
external financing necessary for growth may be unavailable. Such companies may
also be involved in the development or marketing of new products or services for
which there are no established markets. If projected markets do not materialize
or only regional markets develop, such companies may be adversely affected or be
subject to the consequences of local events. Moreover, such companies may be
insignificant factors in their industries and may become subject to intense
competition from larger companies. Securities of companies in which the Funds
may invest will frequently be traded only in the over-the-counter market or on
regional stock exchanges and will often be closely held. Securities of this type
may have limited liquidity and be subject to wide price fluctuations. As a
result of the risk factors described above, the net asset value of each Fund's
shares can be expected to vary significantly. Accordingly, each Fund should not
be considered suitable for investors who are unable or unwilling to assume the
associated risks, nor should investment in the Funds be considered a balanced or
complete investment program.
Investments Related to Real Estate. Evergreen U.S. Real Estate Equity Fund
invests primarily in issuers whose activities are real estate related. Risks
associated with investment in securities of companies in the real estate
industry include: declines in the value of real estate, risks related to general
and local economic conditions, overbuilding and increased competition, increases
in property taxes and operating expenses, changes in zoning laws, casualty or
condemnation losses, variations in rental income, changes in neighborhood
values, the appeal of properties to tenants and increase in interest rates. In
the event of a default on such securities, the holder thereof could end up
holding real estate directly and therefore be more directly subject to such
risks. In addition, equity real estate investment trusts may be affected by
changes in the value of the underlying property owned by the trusts, while
mortgage real estate investment trusts may be affected by the quality of credit
extended. Equity and mortgage real estate investment trusts are dependent upon
management skills, may not be diversified and are subject to the risks of
financing projects. Such trusts are also subject to heavy cash flow dependency,
defaults by borrowers, self liquidation and the possibility of failing to
qualify for tax-free pass-through of income under the Internal Revenue Code of
1986, as amended (the "Code") and to maintain exemption from the Investment
Company Act of 1940, as amended (the "1940 Act"). In the event an issuer of debt
securities collateralized by real estate defaulted, it is conceivable that a
Fund could end up holding the underlying real estate.
Other Investment Restrictions. Each Fund has adopted additional investment
restrictions that are set forth in the Statement of Additional Information.
Unless otherwise noted, the restrictions and policies set forth above are not
fundamental and may be changed without shareholder approval.
- -------------------------------------------------------------------------------
MANAGEMENT OF THE FUNDS
- -------------------------------------------------------------------------------
INVESTMENT ADVISERS
The management of each Fund is supervised by the Trustees of the Trust
under which the Fund has been established ("Trustees") or, in the case of
Evergreen Limited Market Fund, its directors. Evergreen Asset Management Corp.
(the "Evergreen Asset") has been retained by Evergreen Fund, Evergreen U.S. Real
Estate Equity Fund and Evergreen Limited Market Fund as investment adviser.
Evergreen Asset succeeded on June 30, 1994 to the advisory business of the same
name, but under different ownership, which was organized in 1971. Evergreen
Asset, with its predecessors, has served as investment adviser to the Evergreen
mutual funds since 1971. Evergreen Asset is a wholly-owned subsidiary of First
Union National Bank of North Carolina ("FUNB"). The address of Evergreen Asset
is 2500 Westchester Avenue, Purchase, New York 10577. FUNB is a subsidiary of
First Union Corporation ("First Union"), one of the ten largest bank holding
companies in the United States. Stephen A. Lieber and Nola Maddox Falcone serve
as the chief investment officers of Evergreen Asset and, along with Theodore J.
Israel, Jr., were the owners of Evergreen Asset's predecessor and the former
general partners of Lieber & Company, which, as described below, provides
certain subadvisory services to Evergreen Asset in connection with its duties as
investment adviser to the Funds. The Capital Management Group of FUNB ("CMG")
serves as investment adviser to Evergreen Aggressive Growth Fund.
First Union is headquartered in Charlotte, North Carolina, and had
$77.9 billion in consolidated assets as of March 31, 1995. First Union and its
subsidiaries provide a broad range of financial services to individuals and
businesses through offices in 36 states. The Capital Management Group of FUNB
manages or otherwise oversees the investment of over $36 billion in assets
belonging to a wide range of clients, including all the series of Evergreen
Investment Trust (formerly known as First Union Funds). First Union Brokerage
Services, Inc., a wholly-owned subsidiary of FUNB, is a registered broker-dealer
that is principally engaged in providing retail brokerage services consistent
with its federal banking authorizations. First Union Capital Markets Corp., a
wholly-owned subsidiary of First Union, is a registered broker-dealer
principally engaged in providing, consistent with its federal banking
authorizations, private placement, securities dealing, and underwriting
services.
As investment adviser to Evergreen Fund, Evergreen U.S. Real Estate
Equity Fund and Evergreen Limited Market Fund, Evergreen Asset manages each
Fund's investments, provides various administrative services and supervises each
Fund's daily business affairs, subject to the authority of the Trustees.
Evergreen Asset is entitled to receive a fee from each of Evergreen Fund,
Evergreen U.S. Real Estate Equity Fund and Evergreen Limited Market Fund equal
to to 1% of average daily net assets on an annual basis on the first $750
million in assets, .9 of 1% of average daily net assets on an annual basis on
the next $250 million in assets, and .8 of 1% of average daily net assets on an
annual basis on assets over $1 billion. The fee paid by Evergreen Fund,
Evergreen U.S. Real Estate Equity Fund and Evergreen Limited Market Fund is
higher than the rate paid by most other investment companies. The total
annualized operating expenses of Evergreen Fund, Evergreen U.S. Real Estate
Equity Fund and Evergreen Limited Market Fund for the fiscal period ended
September 30, 1994, are set forth in the section entitled "Financial
Highlights". Until Evergreen U.S. Real Estate Equity Fund reaches net assets of
$15 million, Evergreen Asset will reimburse the Fund to the extent the Fund's
aggregate operating expenses (including Evergreen Asset's fee, but excluding
interest, taxes, brokerage commissions, Rule 12b-1 distribution fees and
shareholder servicing fees and extraordinary expenses) exceed 1.50% of average
net assets for any fiscal year. From time to time, Evergreen Asset may further
reduce or waive its fee or reimburse the Fund for certain of its expenses in
order to reduce the Fund's expense ratio. As a result the Fund's total return
would be higher than if the fees and any expenses had been paid by the Fund.
CMG manages investments and supervises the daily business affairs of
Evergreen Aggressive Growth Fund and, as compensation therefor, is entitled to
receive an annual fee equal to .60 of 1% of average daily net assets of the
Fund. The total annualized operating expenses of the predecessor of Evergreen
Aggressive Growth Fund for its most recent fiscal year ended October 30, 1994,
are set forth in the section entitled "Financial Highlights". Evergreen Asset
serves as administrator to Evergreen Aggressive Growth Fund and is entitled to
receive a fee based on the average daily net assets of these Funds at a rate
based on the total assets of the mutual funds administered by Evergreen Asset
for which CMG or Evergreen Asset also serve as investment adviser, calculated in
accordance with the following schedule: .050% of the first $7 billion; .035% on
the next $3 billion; .030% on the next $5 billion; .020% on the next $10
billion; .015% on the next $5 billion; and .010% on assets in excess of $30
billion. Furman Selz Incorporated, the parent of Evergreen Funds Distributor,
Inc., distributor for the Evergreen group of mutual funds, serves as
sub-administrator to Evergreen Aggressive Growth Fund and is entitled to receive
a fee from the Fund calculated on the average daily net assets of the Fund at a
rate based on the total assets of the mutual funds administered by Evergreen
Asset for which CMG or Evergreen Asset also serve as investment adviser,
calculated in accordance with the following schedule: .0100% of the first $7
billion; .0075% on the next $3 billion; .0050% on the next $15 billion; and
.0040% on assets in excess of $25 billion. The total assets of the mutual funds
administered by Evergreen Asset for which CMG or Evergreen Asset serve as
investment adviser as of March 31, 1995 were approximately $8 billion.
The portfolio manager for Evergreen Fund is Stephen A. Lieber, who is
Chairman and Co-Chief Executive Officer of Evergreen Asset. Mr. Lieber has been
associated with Evergreen Asset and its predecessor since prior to 1989. The
portfolio manager for Evergreen Aggressive Growth Fund is Harold J. Ireland,
Jr., a Vice President of CMG who has been associated with CMG since July, 1995.
Prior to that, Mr. Ireland was a Vice President of Palm Beach Capital
Management, Inc. and served as Portfolio manager of the Fund's predecessor, ABT
Emerging Growth Fund, since prior to 1989. The portfolio manager for Evergreen
U.S. Real Estate Equity Fund is Samuel A. Lieber. Mr. Samuel Lieber has been the
Fund's principal manager since inception and has been associated with the
Evergreen Asset since prior to 1989. The portfolio manager for Evergreen Limited
Market Fund is Derrick E. Wenger. Mr. Wenger has been the Fund's principal
manager since November 1993 and has been associated with Evergreen Asset since
1989.
SUB-ADVISER
Evergreen Asset has entered into sub-advisory agreements with Lieber &
Company which provides that Lieber & Company's research department and staff
will furnish Evergreen Asset with information, investment recommendations,
advice and assistance, and will be generally available for consultation on the
portfolios of Evergreen Fund, Evergreen U.S. Real Estate Equity Fund and
Evergreen Limited Market Fund. Lieber & Company will be reimbursed by Evergreen
Asset in connection with the rendering of services on the basis of the direct
and indirect costs of performing such services. There is no additional charge to
Evergreen Fund, Evergreen U.S. Real Estate Equity Fund and Evergreen Limited
Market Fund for the services provided by Lieber & Company. The address of Lieber
& Company is 2500 Westchester Avenue, Purchase, New York 10577. Lieber & Company
is an indirect, wholly-owned, subsidiary of First Union.
DISTRIBUTION PLANS AND AGREEMENTS
Rule 12b-1 under the Investment Company Act of 1940 permits an
investment company to pay expenses associated with the distribution of its
shares in accordance with a duly adopted plan. Each Fund has adopted for each of
its Class A, Class B and Class C shares a Rule 12b-1 plan (each, a "Plan" or
collectively the "Plans"). Under the Plans, each Fund may incur
distribution-related and shareholder servicing-related expenses which may not
exceed an annual rate of .75 of 1% of the Fund's aggregate average daily net
assets attributable to Class A shares, 1.00% of the Fund's aggregate average
daily net assets attributable to the Class B shares and 1.00% of the Fund's
aggregate average daily net assets attributable to the Class C shares. Payments
with respect to Class A shares under the Plan are currently voluntarily limited
to .25 of 1% of each Fund's aggregate average daily net assets attributable to
Class A shares. The Plans provide that a portion of the fee payable thereunder
in an amount not to exceed .25% of the aggregate average daily net assets of
each Fund attributable to each Class of shares may constitute a service fee to
be used for providing ongoing personal service and/or the maintenance of
shareholder accounts.
Each Fund has also entered into a distribution agreement (each a
"Distribution Agreement" or collectively the "Distribution Agreements") with
Evergreen Funds Distributor, Inc. ("EFD"). Pursuant to the Distribution
Agreements, each Fund will compensate EFD for its services as distributor at a
rate which may not exceed an annual rate of .25 of 1% of a Fund's aggregate
average daily net assets attributable to Class A shares, .75 of 1% of a Fund's
aggregate average daily net assets attributable to the Class B shares and .75 of
1% of a Fund's aggregate average daily net assets attributable to the Class C
shares. The Distribution Agreements provide that EFD will use the distribution
fee received from a Fund for payments (i) to compensate broker-dealers or other
persons for distributing shares of the Funds, including interest and principal
payments made in respect of amounts paid to broker-dealers or other persons that
have been financed (EFD may assign its rights to receive compensation under the
Plans to secure such financings), (ii) to otherwise promote the sale of shares
of the Fund, and (iii) to compensate broker-dealers, depository institutions and
other financial intermediaries for providing administrative, accounting and
other services with respect to the Fund's shareholders. The financing of
payments made by EFD to compensate broker-dealers or other persons for
distributing shares of the Funds may be provided by First Union or its
affiliates. The Funds may also make payments under the Plans, in amounts up to
.25 of 1% of a Fund's aggregate average daily net assets on an annual basis
attributable to Class B and Class C shares, to compensate organizations, which
may include EFD, CMG and Evergreen Asset or their affiliates, for personal
services rendered to shareholders and/or the maintenance of shareholder
accounts.
The Funds may not pay any distribution or services fees during any
fiscal period in excess of the amounts set forth above. Since EFD's compensation
under the Distribution Agreements is not directly tied to the expenses incurred
by EFD, the amount of compensation received by it under the Distribution
Agreements during any year may be more or less than its actual expenses and may
result in a profit to EFD. Distribution expenses incurred by EFD in one fiscal
year that exceed the level of compensation paid to EFD for that year may be paid
from distribution fees received from a Fund in subsequent fiscal years.
The Plans are in compliance with rules of the National Association of
Securities Dealers, Inc. which effectively limit the annual asset-based sales
charges and service fees that a mutual fund may pay on a class of shares to .75
of 1% and .25 of 1%, respectively, of the average annual net assets attributable
to that class. The rules also limit the aggregate of all front-end, deferred and
asset-based sales charges imposed with respect to a class of shares by a mutual
fund that also charges a service fee to 6.25% of cumulative gross sales of
shares of that class, plus interest at the prime rate plus 1% per annum.
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PURCHASE AND REDEMPTION OF SHARES
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HOW TO BUY SHARES
You can purchase shares of any of the Funds through broker-dealers,
banks or other financial intermediaries, or directly through EFD. The minimum
initial investment is $1,000, which may be waived in certain situations. There
is no minimum for subsequent investments. Investments of $25 or more are allowed
under the systematic investment plan. Share certificates are not issued for
Class A, Class B and Class C shares. In states where EFD is not registered as a
broker-dealer shares of a Fund will only be sold through other broker-dealers or
other financial institutions that are registered. See the Share Purchase
Application and Statement of Additional Information for more information. Only
Class A, Class B and Class C shares are offered through this Prospectus (See
"General Information" - "Other Classes of Shares").
Class A Shares-Front-End Sales Charge Alternative. You can purchase Class A
shares at net asset value plus an initial sales charge, as follows:
Initial Sales Charge
------------------------ ----------------- --------------- ------------------
Commission to
Dealer/Agent
as a % of the Net as a % of the as a % of
Amount of Purchase Amount Invested Offering Price Offering Price
------------------------ ----------------- --------------- ------------------
------------------------ ----------------- --------------- ------------------
------------------------ ----------------- --------------- ------------------
------------------------ ----------------- --------------- ------------------
Less than $100,000 4.99% 4.75% 4.25%
------------------------ ----------------- --------------- ------------------
------------------------ ----------------- --------------- ------------------
$100,000 - $249,999 3.90% 3.75% 3.25%
------------------------ ----------------- --------------- ------------------
------------------------ ----------------- --------------- ------------------
$250,000 - $499,999 3.09% 3.00% 2.50%
------------------------ ----------------- --------------- ------------------
------------------------ ----------------- --------------- ------------------
$500,000 - $999,999 2.04% 2.00% 1.75%
------------------------ ----------------- --------------- ------------------
------------------------ ----------------- --------------- ------------------
$1,000,000 - $2,499,999 1.01% 1.00% 1.00%
------------------------ ----------------- --------------- ------------------
------------------------ ----------------- --------------- ------------------
Over $2,500,000 .25% .25% .25%
------------------------ ----------------- --------------- ------------------
No front-end sales charges are imposed on Class A shares purchased by:
institutional investors, which may include bank trust departments and registered
investment advisers; investment advisers, consultants or financial planners who
place trades for their own accounts or the accounts of their clients and who
charge such clients a management, consulting, advisory or other fee; clients of
investment advisers or financial planners who place trades for their own
accounts if the accounts are linked to the master account of such investment
advisers or financial planners on the books of the broker-dealer though whom
shares are purchased; institutional clients of broker-dealers, including
retirement and deferred compensation plans and the trusts used to fund these
plans, which place trades through an omnibus account maintained with a Fund by
the broker-dealer; shareholders of record on October 12, 1990 in any series of
Evergreen Investment Trust in existence on that date, and the members of their
immediate families; employees of FUNB and its affiliates, EFD and any
broker-dealer with whom EFD has entered into an agreement to sell shares of the
Funds, and members of the immediate families of such employees; and upon the
initial purchase of an Evergreen mutual fund by investors reinvesting the
proceeds from a redemption within the preceeding thirty days of shares of other
mutual funds, provided such shares were initially purchased with a front-end
sales charge or subject to a CDSC. Certain broker-dealers or other financial
institutions may impose a fee on transactions in shares of the Funds.
Class A shares may also be purchased at net asset value by qualified
and non-qualified employee benefit and savings plans which make shares of the
Funds and the other Evergreen mutual funds available to their participants, and
which: (a) are employee benefit plans having at least $1,000,000 in investable
assets, or 250 or more eligible participants; or (b) are non-qualified benefit
or profit sharing plans which are sponsored by an organization which also makes
the Evergreen mutual funds available through a qualified plan meeting the
criteria specified under (a). In connection with sales made to plans of the type
described in the preceeding sentence that are clients of broker-dealers, and
which do not qualify for sales at net asset value under the conditions set forth
in the paragraph above, payments may be made in an amount equal to .50 of 1% of
the net asset value of shares purchased. These payments are subject to reclaim
in the event shares are redeemed within 12 months after purchase.
When Class A shares are sold, EFD will normally retain a portion of the
applicable sales charge and pay the balance to the broker-dealer or other
financial intermediary through whom the sale was made. EFD may also pay fees to
banks from sales charges for services performed on behalf of the bank's
customers in connection with the purchase of shares of the Funds. In addition to
compensation paid at the time of sale, entities whose clients have purchased
Class A shares may receive a trailing commission equal to .25 of 1% of the
average daily value on an annual basis of Class A shares held by their clients.
Certain purchases of Class A shares may qualify for reduced sales charges in
accordance with a Fund's Combined Purchase Privilege, Cumulative Quantity
Discount, Statement of Intention, Privilege for Certain Retirement Plans and
Reinstatement Privilege. Consult the Share Purchase Application and Statement of
Additional Information for additional information concerning these reduced sales
charges.
Class B Shares-Deferred Sales Charge Alternative. You can purchase Class B
shares at net asset value without an initial sales charge. However, you may pay
a contingent deferred sales charge ("CDSC") if you redeem shares within seven
years after purchase. Shares obtained from dividend or distribution reinvestment
are not subject to the CDSC. The amount of the CDSC (expressed as a percentage
of the lesser of the current net asset value or original cost) will vary
according to the number of years from the purchase of Class B shares as set
forth below.
Year Since Purchase Contingent Deferred Sales Charge
FIRST 5%
SECOND 4%
THIRD and FOURTH 3%
FIFTH 2%
SIXTH and SEVENTH 1%
The CDSC is deducted from the amount of the redemption and is paid to EFD. The
CDSC will be waived on redemptions of shares following the death or disability
of a shareholder, to meet distribution requirements for certain qualified
retirement plans or in the case of certain redemptions made under a Fund's
Systematic Cash Withdrawal Plan. Class B shares are subject to higher
distribution and/or shareholder service fees than Class A shares for a period of
seven years (after which it is expected that they will convert to Class A
shares) . The higher fees mean a higher expense ratio, so Class B shares pay
correspondingly lower dividends and may have a lower net asset value than Class
A shares. See the Statement of Additional Information for further details.
Class C Shares--Level-Load Alternative. You can purchase Class C shares without
any initial sales charge and, therefore, the full amount of your investment will
be used to purchase Fund shares. However, you will pay a 1.0% CDSC if you redeem
shares during the first year after purchase. Class C shares incur higher
distribution and/or shareholder service fees than Class A shares but, unlike
Class B shares, do not convert to any other class of shares of a Fund. The
higher fees mean a higher expense ratio, so Class C shares pay correspondingly
lower dividends and may have a lower net asset value than Class A shares. Shares
obtained from dividend or distribution reinvestment are not subject to the CDSC.
No contingent deferred sales charge will be imposed on Class C shares
purchased by institutional investors, and through employee benefit and savings
plans eligible for the exemption from front-end sales charges described under
"Class A Shares-Front End Sales Charge Alternative", above. Broker-dealers and
other financial intermediaries whose clients have purchased Class C shares may
receive a trailing commission equal to .75 of 1% of the average daily value of
such shares on an annual basis held by their clients more than one year from the
date of purchase. The payment of trailing commissions will commence immediately
with respect to shares eligible for exemption from the contingent deferred sales
charge normally applicable to Class C shares.
With respect to Class B Shares and Class C Shares, no CDSC will be
imposed on: (1) the portion of redemption proceeds attributable to increases in
the value of the account due to increases in the net asset value per Share, (2)
Shares acquired through reinvestment of dividends and capital gains, (3) Shares
held for more than seven years (in the case of Class B Shares) or one year (in
the case of Class C Shares) after the end of the calendar month of acquisition,
(4) accounts following the death or disability of a shareholder, or (5) minimum
required distributions to a shareholder over the age of 70 1/2 from an IRA or
other retirement plan.
How the Funds Value Their Shares. The net asset value of each Class of shares of
a Fund is calculated by dividing the value of the amount of the Fund's net
assets attributable to that Class by the number of outstanding shares of that
Class. Shares are valued each day the New York Stock Exchange (the "Exchange")
is open as of the close of regular trading (currently 4:00 p.m. Eastern time).
The securities in a Fund are valued at their current market value determined on
the basis of market quotations or, if such quotations are not readily available,
such other methods as the Trustees or Directors believe would accurately reflect
fair market value. Non-dollar denominated securities will be valued as of the
close of the Exchange at the closing price of such securities in their principal
trading market.
General. The decision as to which Class of shares is more beneficial to you
depends on the amount of your investment and the length of time you will hold
it. If you are making a large investment, thus qualifying for a reduced sales
charge, you might consider Class A shares. If you are making a smaller
investment, you might consider Class B shares since 100% of your purchase is
invested immediately and since such shares will convert to Class A shares, which
incur lower ongoing distribution and/or shareholder service fees, after seven
years. If you are unsure of the time period of your investment, you might
consider Class C shares since there are no initial sales charges and, although
there is no conversion feature, the CDSC only applies to redemptions made during
the first year. Consult your financial intermediary for further information. The
compensation received by dealers and agents may differ depending on whether they
sell Class A, Class B or Class C shares. There is no size limit on purchases of
Class A shares.
<PAGE>
In addition to the discount or commission paid to dealers, EFD will
from time to time pay to dealers additional cash or other incentives that are
conditioned upon the sale of a specified minimum dollar amount of shares of a
Fund and/or other Evergreen Mutual Funds. Such incentives will take the form of
payment for attendance at seminars, lunches, dinners, sporting events or theater
performances, or payment for travel, lodging and entertainment incurred in
connection with travel by persons associated with a dealer and their immediate
family members to urban or resort locations within or outside the United States.
Such a dealer may elect to receive cash incentives of equivalent amount in lieu
of such payments.
Additional Purchase Information. As a condition of this offering, if a purchase
is canceled due to nonpayment or because an investor's check does not clear, the
investor will be responsible for any loss a Fund or its investment adviser
incurs. If such investor is an existing shareholder, a Fund may redeem shares
from an investor's account to reimburse the Fund or its investment adviser for
any loss. In addition, such investors may be prohibited or restricted from
making further purchases in any of the Evergreen mutual funds.
HOW TO REDEEM SHARES
You may "redeem", i.e., sell your shares in a Fund to the Fund on any
day the Exchange is open, either directly or through your financial
intermediary. The price you will receive is the net asset value (less any
applicable CDSC for Class B or Class C shares) next calculated after the Fund
receives your request in proper form. Proceeds generally will be sent to you
within seven days. However, for shares recently purchased by check, a Fund will
not send proceeds until it is reasonably satisfied that the check has been
collected (which may take up to 15 days). Once a redemption request has been
telephoned or mailed, it is irrevocable and may not be modified or canceled.
Redeeming Shares Through Your Financial Intermediary. A Fund must receive
instructions from your financial intermediary before 4:00 p.m. Eastern time for
you to receive that day's net asset value (less any applicable CDSC for Class B
or C shares). Your financial intermediary is responsible for furnishing all
necessary documentation to a Fund and may charge you for this service. Certain
financial intermediaries may require that you give instructions earlier than
4:00 p.m.
Redeeming Shares Directly by Mail or Telephone. Send a signed letter of
instruction or stock power form to State Street Bank and Trust Company ("State
Street") which is the registrar, transfer agent and dividend-disbursing agent
for each Fund. Stock power forms are available from your financial intermediary,
State Street, and many commercial banks. Additional documentation is required
for the sale of shares by corporations, financial intermediaries, fiduciaries
and surviving joint owners. Signature guarantees are required for all redemption
requests for shares with a value of more than $10,000 or where the redemption
proceeds are to be mailed to an address other than that shown in the account
registration. A signature guarantee must be provided by a bank or trust company
(not a Notary Public), a member firm of a domestic stock exchange or by other
financial institutions whose guarantees are acceptable to State Street.
Shareholders may withdraw amounts of $1,000 or more from their accounts
by calling the phone number on the front page of this Prospectus between the
hours of 8:00 a.m. and 5:30 p.m.(Eastern time) each business day (i.e., any
weekday exclusive of days on which the Exchange or State Street's offices are
closed). The Exchange is closed on New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
Redemption requests made after 4:00 p.m. (Eastern time) will be processed using
the net asset value determined on the next business day. Such redemption
requests must include the shareholder's account name, as registered with a Fund,
and the account number. During periods of drastic economic or market changes,
shareholders may experience difficulty in effecting telephone redemptions.
Shareholders who are unable to reach a Fund or State Street by telephone should
follow the procedures outlined above for redemption by mail.
The telephone redemption service is not made available to shareholders
automatically. Shareholders wishing to use the telephone redemption service must
indicate this on the enclosed Application and choose how the redemption proceeds
are to be paid. Redemption proceeds will either (i) be mailed by check to the
shareholder at the address in which the account is registered or (ii) be wired
to an account with the same registration as the shareholder's account in a Fund
at a designated commercial bank. State Street currently deducts a $5 wire charge
from all redemption proceeds wired. This charge is subject to change without
notice. A shareholder who decides later to use this service, or to change
instructions already given, should fill out a Shareholder Services Form and send
it to State Street Bank and Trust Company, P.O. Box 9021, Boston, Massachusetts
02205-9827, with such shareholder's signature guaranteed by a bank or trust
company (not a Notary Public), a member firm of a domestic stock exchange or by
other financial institutions whose guarantees are acceptable to State Street.
Shareholders should allow approximately ten days for such form to be processed.
The Funds will employ reasonable procedures to verify that telephone requests
are genuine. These procedures include requiring some form of personal
identification prior to acting upon instructions and tape recording of
conversations. If the Fund fails to follow such procedures, it may be liable for
any losses due to unauthorized or fraudulent instructions. The Fund shall not be
liable for following telephone instructions reasonably believed to be genuine.
Also, the Fund reserves the right to refuse a telephone redemption request, if
it is believed advisable to do so. Financial intermediaries may charge a fee for
handling telephonic requests. The telephone redemption option may be suspended
or terminated at any time without notice.
General. The sale of shares is a taxable transaction for Federal tax purposes.
Under unusual circumstances, a Fund may suspend redemptions or postpone payment
for up to seven days or longer, as permitted by Federal securities law. The
Funds reserve the right to close an account that through redemption has remained
below $1,000 for 30 days. Shareholders will receive 60 days' written notice to
increase the account value before the account is closed. The Funds have elected
to be governed by Rule 18f-1 under the Investment Company Act of 1940 pursuant
to which each Fund is obligated to redeem shares solely in cash, up to the
lesser of $250,000 or 1% of a Fund's total net assets during any ninety day
period for any one shareholder. See the Statement of Additional Information for
further details.
EXCHANGE PRIVILEGE
How To Exchange Shares. You may exchange some or all of your shares for shares
of the same Class in the other Evergreen mutual funds through your financial
intermediary, or by telephone or mail as described below. An exchange which
represents an initial investment in another Evergreen Fund must amount to at
least $1,000. Once an exchange request has been telephoned or mailed, it is
irrevocable and may not be modified or canceled. Exchanges will be made on the
basis of the relative net asset values of the shares exchanged next determined
after an exchange request is received. Exchanges are subject to minimum
investment and suitability requirements.
Each of the Evergreen mutual funds have different investment objectives
and policies. For complete information, a prospectus of the fund into which an
exchange will be made should be read prior to the exchange. An exchange is
treated for Federal income tax purposes as a redemption and purchase of shares
and may result in the realization of a capital gain or loss. Shareholders are
limited to five exchanges per calendar year, with a maximum of three per
calendar quarter. This exchange privilege may be modified or discontinued at any
time by the Fund upon sixty days' notice to shareholders and is only available
in states in which shares of the fund being acquired may lawfully be sold.
No CDSC will be imposed in the event Class B or Class C shares are
exchanged for Class B or Class C shares, respectively, of other Evergreen mutual
funds. If you redeem shares, the CDSC applicable to the Class B or Class C
shares of the Evergreen Mutual Fund originally purchased for cash is applied.
Also, Class B shares will continue to age following an exchange for purposes of
conversion to Class A shares and determining the amount of the applicable CDSC.
Exchanges Through Your Financial Intermediary. A Fund must receive exchange
instructions from your financial intermediary before 4:00 p.m. Eastern time for
you to receive that day's net asset value. Your financial intermediary is
responsible for furnishing all necessary documentation to a Fund and may charge
you for this service.
Exchanges by Telephone and Mail. You may exchange shares with a value of $1,000
or more by telephone by calling the telephone number on the front of this
Prospectus. Exchange requests made after 4:00 p.m. (Eastern time) will be
processed using the net asset value determined on the next business day. During
periods of drastic economic or market changes, shareholders may experience
difficulty in effecting telephone exchanges. You should follow the procedures
outlined below for exchanges by mail if you are unable to reach State Street by
telephone. If you wish to use the telephone exchange service you should indicate
this on the Share Purchase Application. As noted above, each Fund will employ
reasonable procedures to confirm that instructions for the redemption or
exchange of shares communicated by telephone are genuine. A telephone exchange
may be refused by a Fund or State Street if it is believed advisable to do so.
Procedures for exchanging Fund shares by telephone may be modified or terminated
at any time. Written requests for exchanges should follow the same procedures
outlined for written redemption requests in the section entitled "How to Redeem
Shares", however, no signature guarantee is required.
<PAGE>
SHAREHOLDER SERVICES
The Funds offer the following shareholder services. For more information about
these services or your account, contact your financial intermediary, EFD or the
toll-free number on the front of this Prospectus. Some services are described in
more detail in the Share Purchase Application.
Systematic Investment Plan. You may make monthly or quarterly investments into
an existing account automatically in amounts of not less than $25.
Telephone Investment Plan. You may make investments into an existing account
electronically in amounts of not less than $100 or more than $10,000 per
investment. Telephone investment requests received by 3:00 p.m. (Eastern time)
will be credited to a shareholder's account the day the request is received.
Systematic Cash Withdrawal Plan. When an account of $10,000 or more is opened or
when an existing account reaches that size, you may participate in the Fund's
Systematic Cash Withdrawal Plan by filling out the appropriate part of the Share
Purchase Application. Under this plan, you may receive (or designate a third
party to receive) a monthly or quarterly check in a stated amount of not less
than $100. Fund shares will be redeemed as necessary to meet withdrawal
payments. All participants must elect to have their dividends and capital gain
distributions reinvested automatically. Any applicable Class B CDSC will be
waived with respect to redemptions occurring under a Systematic Cash Withdrawal
Plan during a calendar year to the extent that such redemptions do not exceed
10% of (i) the initial value of the account plus (ii) the value, at the time of
purchase, of any subsequent investments.
Investments Through Employee Benefit and Savings Plans. Certain qualified and
non-qualified benefit and savings plans may make shares of the Funds and the
other Evergreen mutual funds available to their participants. Investments made
by such employee benefit plans may be exempt from front-end sales charges if
they meet the criteria set forth under "Class A Shares-Front End Sales Charge
Alternative". Evergreen Asset or CMG may provide compensation to organizations
providing administrative and recordkeeping services to plans which make shares
of the Evergreen mutual funds available to their participants.
Automatic Reinvestment Plan. For the convenience of investors, all dividends and
distributions are automatically reinvested in full and fractional shares of the
Fund at the net asset value per share at the close of business on the record
date, unless otherwise requested by a shareholder in writing. If the transfer
agent does not receive a written request for subsequent dividends and/or
distributions to be paid in cash at least three full business days prior to a
given record date, the dividends and/or distributions to be paid to a
shareholder will be reinvested. If you elect to receive dividends and
distributions in cash and the U.S. Postal Service cannot deliver the checks, or
if the checks remain uncashed for six months, the checks will be reinvested into
your account at the then current net asset value.
Tax Sheltered Retirement Plans. You may open a pension and profit sharing
account in any Evergreen mutual fund (except those funds having an objective of
providing tax free income), including: (i) Individual Retirement Accounts
("IRAs") and Rollover IRAs; (ii) Simplified Employee Pension (SEP) for sole
proprietors, partnerships and corporations; and (iii) Profit-Sharing and Money
Purchase Pension Plans for corporations and their employees.
EFFECT OF BANKING LAWS
The Glass-Steagall Act and other banking laws and regulations presently
prohibit member banks of the Federal Reserve System ("Member Banks") or their
non-bank affiliates from sponsoring, organizing, controlling, or distributing
the shares of registered open-end investment companies such as the Funds. Such
laws and regulations also prohibit banks from issuing, underwriting or
distributing securities in general. However, under the Glass-Steagall Act and
such other laws and regulations, a Member Bank or an affiliate thereof may act
as investment adviser, transfer agent or custodian to a registered open-end
investment company and may also act as agent in connection with the purchase of
shares of such an investment company upon the order of their customer. Evergreen
Asset, since it is a subsidiary of FUNB, and CMG are subject to and in
compliance with the aforementioned laws and regulations.
Changes to applicable laws and regulations or future judicial or
administrative decisions could result in CMG or Evergreen Asset being prevented
from continuing to perform the services required under the investment advisory
contract or from acting as agent in connection with the purchase of shares of a
Fund by its customers. If CMG or Evergreen Asset were prevented from continuing
to provide the services called for under the investment advisory agreement, it
is expected that the Trustees or Directors would identify, and call upon each
<PAGE>
Fund's shareholders to approve, a new investment adviser. If this were to occur,
it is not anticipated that the shareholders of any Fund would suffer any adverse
financial consequences.
- -------------------------------------------------------------------------------
OTHER INFORMATION
- -------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAXES
It is the policy of each Fund to distribute its investment company
taxable income and any net realized capital gains to shareholders annually or
more frequently as required as a condition of continued qualification as a
regulated investment company by the Code. Dividends and distributions generally
are taxable in the year in which they are paid, except any dividends paid in
January that were declared in the previous calendar quarter may be treated as
paid in December in the previous year. Income dividends and capital gain
distributions are automatically reinvested in additional shares of the Fund
making the distribution at the net asset value per share at the close of
business on the record date, unless the shareholder writes to the Fund's
transfer agent and requests payment in cash.
Each Fund has qualified and intends to continue to qualify to be
treated as a regulated investment company under the Code. While so qualified, it
is expected that each Fund will not be required to pay any Federal income taxes
on that portion of its investment company taxable income and any net realized
capital gains it distributes to shareholders. The Code imposes a 4%
nondeductible excise tax on regulated investment companies, such as the Funds,
to the extent they do not meet certain distribution requirements by the end of
each calendar year. Each Fund anticipates meeting such distribution
requirements. Most shareholders of the Funds normally will have to pay Federal
income taxes and any state or local taxes on the dividends and distributions
they receive from a Fund.
Following the end of each calendar year, every shareholder of the Fund
will be sent applicable tax information and information regarding the dividends
and capital gain distributions made during the calendar year. Under current law,
the highest Federal income tax rate applicable to net long-term capital gains
realized by individuals is 28%. The rate applicable to corporations is 35%.
Certain income from a Fund may qualify for a corporate dividends-received
deduction of 70%. Specific questions should be addressed to the investor's own
tax adviser.
Evergreen U.S. Real Estate Equity Fund invests in real estate
investment trusts which report the tax characteristics of their distributions to
the Fund annually on a calendar year basis. The timing of such reporting to the
Fund may affect the tax characteristics of distributions by the Fund to
shareholders.
Each Fund is required by Federal law to withhold 31% of reportable
payments (which may include dividends, capital gain distributions and
redemptions) paid to certain shareholders. In order to avoid this backup
withholding requirement, you must certify on the Share Purchase Application, or
on a separate form supplied by State Street, that the investor's social security
or taxpayer identification number is correct and that the investor is not
currently subject to backup withholding or is exempt from backup withholding.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
A discussion of the performance of Evergreen Fund, Evergreen U.S. Real
Estate Equity Fund and Evergreen Limited Market Fund for their most recent
fiscal year is set forth below. A similar discussion relating to the predecessor
of Evergreen Aggressive Growth Fund, ABT Emerging Growth Fund, is contained in
the annual report of such fund for its fiscal year ended October 30, 1994.
The Evergreen Fund. The Evergreen Fund's total return for the ten years ended
September 30, 1994 was +213.8%, which calculates to an average annual compounded
return of +12.1%. This compares favorably with the returns for the Russell 2000
Index (+194.9%) and the NASDAQ-OTC Composite (unreinvested) Index (+205.8%) for
the same time period. For the fiscal year ended 1994, the Fund produced a total
return of +6.2% versus returns of +2.7% for the Russell 2000 Index and +0.2% for
the NASDAQ-OTC Composite (unreinvested) Index. During the fiscal year ended
September 30, 1994, the Fund adhered to its historical strict guidelines
regarding market valuation and growth rates, resulting in a portfolio of what
Evergreen Asset considers under-recognized and undervalued securities with
excellent growth prospects.
Performance relative to comparative indices was positively impacted by
the sizable commitments in sectors with above-average performance. Especially
significant was the strengthening health care industry and the improving
financial strength of the bank and thrift industries. The health care products
and services group showed an average increase of 23.5% during the 12 month
period. The bank industry showed an average gain of 5.8% during the same period.
The most negative sizable sector in the portfolio was the performance of the
finance and insurance group, which had an average decline of 3.0%. This decline
particularly reflected pressure on re-insurance companies and municipal bond
insurance companies, both of which were fairly sizable within this group. The
Fund's portfolio was well diversified, with more than 197 holdings. During the
year, the Fund shifted holdings toward a smaller market capitalization profile
in order to benefit from the opportunities of entrepreneurial businesses.
Therefore, many smaller company positions were inaugurated in areas such as
information systems, technology, retail, and financial institutions. As a result
of these moves, the Fund's portfolio shifted from 37.5% of the portfolio in
market capitalizations over $2 billion, to 23.5% over $2 billion. The medium
market capitalization of the holdings of the Fund at the end of the fiscal year
was $341 million.
[CHART]
Evergreen Limited Market Fund. The Fund's total return for the ten years ended
September 30, 1994, was 337.64%, which equals an average annual compounded
return of 15.89%. This return compared favorably with the 11.83% return of the
NASDAQ OTC Composite and 11.42% of the Russell 2000 indices over this same time
period. The total return of the Fund for the year ended May 31, 1994 (the former
fiscal year end of the Fund) was 7.64%, compared to the 4.95% and 8.72% returns
of the NASDAQ Composite and Russell 2000 indices, respectively. The total return
of the Fund for the four month period ended September 30, 1994 was 2.55%,
compared to the 3.96% and 3.34% returns of the NASDAQ Composite and Russell 2000
indices, respectively.
[CHART]
During the past four months, the Fund continued its practice of
investing in relatively unknown companies with market capitalizations under $150
million which are believed by management to be undervalued. Companies with
strong projected earnings growth and below market price/earnings ratios
continued to be emphasized. Emphasis was also placed on investment in companies
Evergreen Asset believes are likely acquisition targets. The Fund remains well
diversified with approximately 150 companies represented. Positive contributions
to the Fund's performance came from portfolio holdings involved in merger and
acquisition activity and from individual stock selection. Negative factors in
the Fund's performance included an underweighting in the technology sector and
an overweighting in the consumer discretionary sector. Rising interest rates and
a shift out of the small-cap sector have also both negatively effected the Fund.
Evergreen U.S. Real Estate Equity Fund. For the nine month period ending
September 30, 1994, the Fund's total return declined by -6%, while the Wilshire
Real Estate Index increased by 1.9% and the Standard and Poor's Homebuilding
Index fell by 43.9%. This was the result of a combination of rising interest
rates, investor concern over economically sensitive real estate and homebuilding
stocks and the gradual deflation of the liquidity bubble which led to many real
estate investment trusts being overvalued relative to historic norms.
[CHART]
GENERAL INFORMATION
Portfolio Transactions. Consistent with the Rules of Fair Practice of the
National Association of Securities Dealers, Inc., and subject to seeking best
price and execution, a Fund may consider sales of its shares as a factor in the
selection of dealers to enter into portfolio transactions with the Fund.
Organization. The Evergreen Fund and Evergreen Aggressive Growth Fund are each
separate investment series of the Evergreen Trust, a Massachusetts business
trust reorganized in 1988 from a Maryland predecessor corporation. The Evergreen
U.S. Real Estate Equity Fund is a separate series of Evergreen Real Estate
Equity Trust, a Massachusetts business trust organized in 1988. Evergreen
Limited Market Fund, Inc. is a Maryland corporation organized in 1983. The Funds
do not intend to hold annual shareholder meetings; shareholder meetings will be
held only when required by applicable law. Shareholders have available certain
procedures for the removal of Directors or Trustees.
A shareholder in each class of a Fund will be entitled to his or her
share of all dividends and distributions from a Fund's assets, based upon the
relative value of such shares to those of other Classes of the Fund, and, upon
redeeming shares, will receive the then current net asset value of the Class of
shares of the Fund represented by the redeemed shares less any applicable CDSC.
The Funds are empowered to establish, without shareholder approval, additional
investment series, which may have different investment objectives, and
additional classes of shares for any existing or future series. If an additional
series or class were established in a Fund, each share of the series or class
would normally be entitled to one vote for all purposes. Generally, shares of
each series and class would vote together as a single class on matters, such as
the election of Trustees of Directors, that affect each series and class in
substantially the same manner. Class A, B, C and Y shares have identical voting,
dividend, liquidation and other rights, except that each class bears, to the
extent applicable, its own distribution and transfer agency expenses as well as
any other expenses applicable only to a specific class. Each class of shares
votes separately with respect to Rule 12b-1 distribution plans and other matters
for which separate class voting is appropriate under applicable law. Shares are
entitled to dividends as determined by the Trustees or Directors and, in
liquidation of a Fund, are entitled to receive the net assets of the Fund.
Registrar, Transfer Agent and Dividend-Disbursing Agent. State Street Bank and
Trust Company, P.O. Box 9021, Boston, Massachusetts 02205-9827 acts as each
Fund's registrar, transfer agent and dividend-disbursing agent for a fee based
upon the number of shareholder accounts maintained for the Funds. The transfer
agency fee with respect to the Class B shares will be higher than the transfer
agency fee with respect to the Class A shares or Class C shares.
Principal Underwriter. EFD, a wholly-owned subsidiary of Furman Selz
Incorporated, located 237 Park Avenue, New York, New York 10017, is the
principal underwriter of the Funds. Furman Selz Incorporated, also acts as
sub-administrator to Evergreen Aggressive Growth Fund and which provides certain
sub-administrative services to Evergreen Asset in connection with its role as
investment adviser to Evergreen Fund, Evergreen U.S. Real Estate Equity Fund and
Evergreen Limited Market Fund including providing personnel to serve as officers
of the Funds.
Other Classes of Shares. Each Fund currently offers four classes of shares,
Class A, Class B, Class C and Class Y, and may in the future offer additional
classes. Class Y shares are not offered by this Prospectus and are only
available to (i) all shareholders of record in one or more of the Funds for
which Evergreen Asset served as investment adviser as of December 30, 1994, (ii)
certain institutional investors and (iii) investment advisory clients of
Evergreen Asset, CMG and their affiliates. The dividends payable with respect to
Class A, Class B and Class C shares will be less than those payable with respect
to Class Y shares due to the distribution and distribution and shareholder
servicing related expenses borne by Class A, Class B and Class C shares and the
fact that such expenses are not borne by Class Y shares.
Performance Information. From time to time, the Funds may quote their "total
return" or "yield" for a specified period in advertisements, reports or other
communications to shareholders, Total return and yield are computed separately
for Class A, Class B and Class C shares. A Fund's total return for each such
period is computed by finding, through the use of a formula prescribed by the
Securities and Exchange Commission ("SEC"), the average annual compounded rate
of return over the period that would equate an assumed initial amount invested
to the value of the investment at the end of the period. For purposes of
computing total return, dividends and capital gains distributions paid on shares
of a Fund are assumed to have been reinvested when paid and the maximum sales
charges applicable to purchases of a Fund's shares are assumed to have been
paid. Yield is a way of showing the rate of income the Fund earns on its
investments as a percentage of the Fund's share price. The Fund's yield is
calculated according to accounting methods that are standardized by the SEC for
all stock and bond funds. Because yield accounting methods differ from the
method used for other accounting purposes, the Fund's yield may not equal its
distribution rate, the income paid to your account or the net investment income
reported in the Fund's financial statements. To calculate yield, the Fund takes
the interest income it earned from its portfolio of investments (as defined by
the SEC formula) for a 30-day period (net of expenses), divides it by the
average number of shares entitled to receive dividends, and expresses the result
as an annualized percentage rate based on the Fund's share price at the end of
the 30-day period. This yield does not reflect gains or losses from selling
securities
Performance data for each class of shares will be included in any
advertisement or sales literature using performance data of a Fund. These
advertisements may quote performance rankings or ratings of a Fund by financial
publications or independent organizations such as Lipper Analytical Services,
Inc. and Morningstar, Inc. or compare a Fund's performance to various indices.
The Fund may also advertise in items of sales literature an "actual distribution
rate" which is computed by dividing the total ordinary income distributed (which
may include the excess of short-term capital gains over losses) to shareholders
for the latest twelve month period by the maximum public offering price per
share on the last day of the period. Investors should be aware that past
performance may not be reflective of future results.
Liability Under Massachusetts Law. Under Massachusetts law, trustees and
shareholders of a business trust may, in certain circumstances, be held
personally liable for its obligations. The Declarations of Trust under which the
Funds (except for Evergreen Limited Market Fund, Inc.) operate provide that no
trustee or shareholder will be personally liable for the obligations of the
Trust and that every written contract made by the Trust contain a provision to
that effect. If any Trustee or shareholder were required to pay any liability of
the Trust, that person would be entitled to reimbursement from the general
assets of the Trust.
Additional Information. This Prospectus and the Statement of Additional
Information, which has been incorporated by reference herein, do not contain all
the information set forth in the Registration Statements filed by the Trusts or
Evergreen Limited Market Fund, Inc. with the Commission under the Securities
Act. Copies of the Registration Statements may be obtained at a reasonable
charge from the Commission or may be examined, without charge, at the offices of
the Commission in Washington, D.C.
<PAGE>
INVESTMENT ADVISER
Evergreen Asset Management Corp., 2500 Westchester Avenue, Purchase, New York
10577
EVERGREEN FUND, EVERGREEN U.S. REAL ESTATE EQUITY FUND, EVERGREEN LIMITED
MARKET FUND
Capital Management Group of First Union National Bank, 201 South College
Street, Charlotte, North Carolina 28288
EVERGREEN AGGRESSIVE GROWTH FUND
CUSTODIAN & TRANSFER AGENT
State Street Bank & Trust Company, Box 9021, Boston, Massachusetts 02205-9827
LEGAL COUNSEL
Sullivan & Worcester, 1025 Connecticut Avenue, N.W., Washington, D.C. 20036
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP, 1177 Avenue of the Americas, New York, New York 10036
EVERGREEN FUND, EVERGREEN U.S. REAL ESTATE EQUITY FUND, EVERGREEN
AGGRESSIVE GROWTH FUND
Ernst & Young LLP, 200 Clarendon Street, Boston, Massachusetts 02116-5072
EVERGREEN LIMITED MARKET FUND
DISTRIBUTOR
Evergreen Funds Distributor, Inc., 237 Park Avenue, New York, New York 10017
536114
<PAGE>
PROSPECTUS July 7, 1995
EVERGREEN(SM) DOMESTIC GROWTH FUNDS (Evergreen logo appears here)
EVERGREEN FUND
EVERGREEN U.S. REAL ESTATE EQUITY FUND
EVERGREEN LIMITED MARKET FUND
EVERGREEN AGGRESSIVE GROWTH FUND
CLASS Y SHARES
The Evergreen Domestic Growth Funds (the "Funds") are designed to
provide investors with a selection of investment alternatives which seek to
provide capital growth and diversification. This Prospectus provides
information regarding the Class Y shares offered by the Funds. Each Fund
is, or is a series of, an open-end, diversified, management investment
company. This Prospectus sets forth concise information about the Funds
that a prospective investor should know before investing. The address of
the Funds is 2500 Westchester Avenue, Purchase, New York 10577.
A "Statement of Additional Information" for the Funds dated July
7, 1995 has been filed with the Securities and Exchange Commission and is
incorporated by reference herein. The Statement of Additional Information
provides information regarding certain matters discussed in this Prospectus
and other matters which may be of interest to investors, and may be
obtained without charge by calling the Funds at (800) 235-0064. There can
be no assurance that the investment objective of any Fund will be achieved.
Investors are advised to read this Prospectus carefully.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF
FIRST UNION OR ANY SUBSIDIARIES OF FIRST UNION, ARE NOT ENDORSED OR
GUARANTEED BY FIRST UNION OR ANY SUBSIDIARIES OF FIRST UNION, AND ARE NOT
INSURED OR OTHERWISE PROTECTED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY AND
INVOLVE RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
KEEP THIS PROSPECTUS FOR FUTURE REFERENCE
EVERGREEN (SM) is a Service Mark of Evergreen Asset Management Corp.
Copyright 1995, Evergreen Asset Management Corp.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
OVERVIEW OF THE FUNDS 2
EXPENSE INFORMATION 3
FINANCIAL HIGHLIGHTS 5
DESCRIPTION OF THE FUNDS
Investment Objectives and Policies 12
Investment Practices and Restrictions 14
MANAGEMENT OF THE FUNDS
Investment Advisers 16
Sub-Adviser 17
PURCHASE AND REDEMPTION OF SHARES
How to Buy Shares 18
How to Redeem Shares 19
Exchange Privilege 20
Shareholder Services 20
Effect of Banking Laws 21
OTHER INFORMATION
Dividends, Distributions and Taxes 21
Management's Discussion of Fund Performance 22
General Information 24
</TABLE>
OVERVIEW OF THE FUNDS
The following summary is qualified in its entirety by the more detailed
information contained elsewhere in this Prospectus. See "Description of the
Funds" and "Management of the Funds".
The Investment Adviser to the EVERGREEN FUND, EVERGREEN U.S. REAL ESTATE
EQUITY FUND and EVERGREEN LIMITED MARKET FUND, INC. is Evergreen Asset
Management Corp. ("Evergreen Asset") which, with its predecessors, has served as
an investment adviser to the Evergreen Funds since 1971. Evergreen Asset is a
wholly-owned subsidiary of First Union National Bank of North Carolina ("FUNB"),
which in turn is a subsidiary of First Union Corporation, one of the ten largest
bank holding companies in the United States. The Capital Management Group of
FUNB ("CMG") serves as investment adviser to EVERGREEN AGGRESSIVE GROWTH FUND.
EVERGREEN FUND seeks to achieve capital appreciation by investing in the
securities of little-known or relatively small companies, or companies
undergoing changes which the Fund's investment adviser believes will have
favorable consequences. Income will not be a factor in the selection of
portfolio investments.
EVERGREEN U.S. REAL ESTATE EQUITY FUND seeks long-term capital growth.
Current income is a secondary objective. It invests primarily in equity
securities of United States companies which are principally engaged in the real
estate industry or which own significant real estate assets. It will not
purchase direct interests in real estate.
EVERGREEN LIMITED MARKET FUND, INC. seeks to achieve capital appreciation
in the value of its shares. Income is not a factor in the selection of portfolio
securities. In attempting to achieve its objective, the policy of EVERGREEN
LIMITED MARKET FUND is to invest principally in securities of companies for
which there is a relatively limited trading market. Generally these are
little-known, small or special situation companies.
EVERGREEN AGGRESSIVE GROWTH FUND (successor to ABT Emerging Growth Fund)
seeks long-term capital appreciation by investing primarily in common stocks of
emerging growth companies and in larger, more well established companies, all of
which are viewed by the Fund's investment adviser as having above average
appreciation potential.
THERE IS NO ASSURANCE THAT THE INVESTMENT OBJECTIVE OF ANY FUND WILL BE
ACHIEVED.
2
<PAGE>
EXPENSE INFORMATION
The table set forth below summarizes the shareholder transaction costs
associated with an investment in the Class Y Shares of the Fund. For further
information see "Purchase and Redemption of Shares".
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES
<S> <C>
Maximum Sales Charge Imposed on Purchases None
Sales Charge on Dividend Reinvestments None
Contingent Deferred Sales Charge None
Redemption Fee None
Exchange Fee (only applies after 4 exchanges per
year) $ 5.00
</TABLE>
The following table shows for the Fund the estimated annual operating
expenses (as a percentage of average net assets) attributable to Class Y Shares,
together with examples of the cumulative effect of such expenses on a
hypothetical $1,000 investment for the periods specified assuming (i) a 5%
annual return and (ii) redemption at the end of each period.
EVERGREEN FUND
<TABLE>
<CAPTION>
ANNUAL OPERATING
EXPENSES EXAMPLE
<S> <C> <C> <C>
Advisory Fees 1.00%
After 1 Year $ 12
12b-1 Fees --
After 3 Years $ 36
Other Expenses .13%
After 5 Years $ 62
After 10 Years $ 137
Total 1.13%
</TABLE>
EVERGREEN U.S. REAL ESTATE EQUITY FUND
<TABLE>
<CAPTION>
ANNUAL OPERATING
EXPENSES EXAMPLE
<S> <C> <C> <C>
Advisory Fees 1.00%
After 1 Year $ 15
12b-1 Fees --
After 3 Years $ 47
Other Expenses* .50%
After 5 Years $ 82
After 10 Years $ 179
Total 1.50%
</TABLE>
EVERGREEN LIMITED MARKET FUND
<TABLE>
<CAPTION>
ANNUAL OPERATING
EXPENSES EXAMPLE
<S> <C> <C> <C>
Advisory Fees 1.00%
After 1 Year $ 14
12b-1 Fees --
After 3 Years $ 43
Other Expenses .37%
After 5 Years $ 75
After 10 Years $ 165
Total 1.37%
</TABLE>
EVERGREEN AGGRESSIVE GROWTH FUND(A)
<TABLE>
<CAPTION>
ANNUAL OPERATING
EXPENSES EXAMPLE
<S> <C> <C> <C>
Advisory Fees .60%
After 1 Year $ 9
Administrative Fees .06%
After 3 Years $ 30
12b-1 Fees --
After 5 Years $ 51
Other Expenses .27%
After 10 Years $ 114
Total .93%
</TABLE>
(a) Estimated annual operating expenses reflect the combination of Evergreen
Aggressive Growth Fund and ABT Emerging Growth Fund. These estimates are
based on the ABT Emerging Growth Fund Class A Shares as restated to reflect
current fee arrangements since the other classes had no operations.
*Reflects agreement by Evergreen Asset to limit aggregate operating
expenses (including the Adviser's fee, but excluding interest, taxes, brokerage
commissions, Rule 12b-1 distribution fees, shareholder servicing fees and
extraordinary expenses) of EVERGREEN U.S. REAL ESTATE EQUITY FUND to 1.50% of
average net assets until the
3
<PAGE>
Fund reaches net assets of $15 million. Absent such agreement, the annual
operating expenses would be 2.50% of average net assets.
From time to time, each Fund's investment adviser may, at its discretion,
reduce or waive its fees or reimburse the Fund for certain of its expenses in
order to reduce the Fund's expense ratio. Each Fund's investment adviser may
cease these waivers and reimbursements at any time.
The purpose of the foregoing table is to assist an investor in
understanding the various costs and expenses that an investor in the Class Y
Shares of the Funds will bear directly or indirectly. The amounts set forth
under "Other Expenses", as well as the amounts set forth in the example, are
estimated amounts for the current fiscal year based on historical experience for
the most recent fiscal period. These amounts have been restated to reflect
current fee arrangements. THE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION
OF PAST OR FUTURE EXPENSES OR INVESTMENT RETURN, ACTUAL EXPENSES OR RETURN MAY
BE GREATER OR LESS THAN THOSE SHOWN. For a more complete description of the
various costs and expenses borne by the Funds see "Management of the Funds".
4
<PAGE>
FINANCIAL HIGHLIGHTS
The tables on the following pages present, for each Fund, financial
highlights for a share outstanding throughout each period indicated. The
information in the tables for the five most recent fiscal years or the life of
the Fund if shorter for EVERGREEN FUND and EVERGREEN U.S. REAL ESTATE EQUITY
FUND has, except as noted otherwise, been audited by Price Waterhouse LLP, each
Fund's independent auditors, for EVERGREEN LIMITED MARKET FUND has, except as
noted otherwise, been audited by Ernst & Young LLP, the Fund's independent
auditors, and for EVERGREEN AGGRESSIVE GROWTH FUND has, except as noted
otherwise, been audited by Tait, Weller & Baker, the Fund's independent
auditors. A report of Price Waterhouse LLP, Ernst & Young LLP or Tait, Weller &
Baker, as the case may be, on the audited information with respect to each Fund
is incorporated by reference in the Fund's Statement of Additional Information.
The following information for each Fund should be read in conjunction with the
financial statements and related notes which are incorporated by reference in
the Fund's Statement of Additional Information.
No financial highlights are shown for Class C Shares of EVERGREEN U.S.
REAL ESTATE EQUITY FUND since this class did not have any operations prior to
March 31, 1995. No financial highlights are shown for Class B, C or Y Shares of
EVERGREEN AGGRESSIVE GROWTH FUND since these classes did not have any operations
prior to April 30, 1995.
Further information about a Fund's performance is contained in the Fund's
annual report to shareholders, which may be obtained without charge.
EVERGREEN FUND -- CLASS Y SHARES
<TABLE>
<CAPTION>
SIX
MONTHS
ENDED
MARCH 31,
1995 YEAR ENDED SEPTEMBER 30,*
(UNAUDITED) 1994 1993 1992 1991 1990 1989 1988** 1987**
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning of
period...................... $ 14.62 $14.46 $13.10 $13.32 $9.66 $14.01 $12.47 $15.12 $13.55
Income (loss) from investment
operations:
Net investment income......... .04 .07 .09 .09 .17 .24 .32 .21 .17
Net realized and unrealized
gain (loss) on
investments................. .99 .79 1.96 .55 3.93 (3.62) 1.99 (1.05) 2.65
Total from investment
operations................ 1.03 .86 2.05 .64 4.10 (3.38) 2.31 (.84) 2.82
Less distributions to
shareholders from:
Net investment income......... (.07) (.09) (.07) (.17) (.18) (.36) (.21) (.25) (.13)
Net realized gains............ (2.16) (.61) (.62) (.69) (.26) (.61) (.56) (1.56) (1.12)
Total distributions......... (2.23) (.70) (.69) (.86) (.44) (.97) (.77) (1.81) (1.25)
Net asset value, end of
period...................... $ 13.42 $14.62 $14.46 $13.10 $13.32 $9.66 $14.01 $12.47 $15.12
TOTAL RETURN+................. 9.1% 6.2% 15.8% 5.2% 43.7% (25.4%) 20.0% 1.9% 22.5%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (in
millions)................... $508 $526 $657 $722 $755 $525 $867 $751 $808
Ratios to average net assets
Operating expenses.......... 1.15%++ 1.13% 1.11% 1.13% 1.15% 1.15% 1.11% 1.03% 1.03%
Interest expense............ .13%++ .09% .01% -- -- -- -- -- --
Net investment income....... .48%++ .40% .60% .56% 1.45% 1.83% 2.46% 1.70% 1.32%
Portfolio turnover
rate........................ 11% 19% 21% 32% 35% 39% 40% 42% 46%
<CAPTION>
1986** 1985**
<S> <C> <C>
PER SHARE DATA
Net asset value, beginning of
period...................... $11.03 $ 9.78
Income (loss) from investment
operations:
Net investment income......... .14 .16
Net realized and unrealized
gain (loss) on
investments................. 3.18 1.66
Total from investment
operations................ 3.32 1.82
Less distributions to
shareholders from:
Net investment income......... (.14) (.16)
Net realized gains............ (.66) (.41)
Total distributions......... (.80) (.57)
Net asset value, end of
period...................... $13.55 $11.03
TOTAL RETURN+................. 30.9% 19.8%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (in
millions)................... $639 $334
Ratios to average net assets
Operating expenses.......... 1.04% 1.08%
Interest expense............ -- --
Net investment income....... 1.41% 1.73%
Portfolio turnover
rate........................ 48% 59%
</TABLE>
* All shares and per share amounts reflect a 4-for-1 stock split, which was
approved by shareholders on January 27, 1986, retroactive to March 18, 1985.
** Net of expense limitation in fiscal years 1988, 1987, 1986 and 1985.
+ Total return is calculated on net asset value for the period indicated and is
not annualized.
++ Annualized.
5
<PAGE>
EVERGREEN FUND -- CLASS A, B AND C SHARES
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
<S> <C> <C> <C>
JANUARY 3, 1995* THROUGH MARCH 31, 1995
(UNAUDITED)
PER SHARE DATA
Net asset value, beginning of period..................................... $11.97 $11.97 $11.97
Income (loss) from investment operations:
Net investment income (loss)............................................. .01 (.01) (.01)
Net realized and unrealized gain on investments.......................... 1.43 1.43 1.43
Total from investment operations..................................... 1.44 1.42 1.42
Net asset value, end of period........................................... $13.41 $13.39 $13.39
TOTAL RETURN+............................................................ 12.0% 11.9% 11.9%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's omitted)................................ $5,545 $ 12,308 $408
Ratios to average net assets:
Operating expenses (a)................................................. 1.37%++ 2.12%++ 2.14%++
Interest expense....................................................... .16%++ .16%++ .16%++
Net investment income (a).............................................. .35%++ (.41%)++ (.35%)++
Portfolio turnover rate#................................................. 11% 11% 11%
</TABLE>
* Commencement of class operations.
+ Total return is calculated on net asset value per share for the period
indicated and is not annualized. Initial sales charge or contingent deferred
sales charge is not reflected.
++ Annualized. Due to the recent commencement of their offering, the ratios for
Class A, Class B and Class C shares are not necessarily comparable to that
of the Class Y shares, and are not necessarily indicative of future ratios.
# Portfolio turnover rate is calculated for the six months ended March 31,
1995.
(a) Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were assumed or waived by the investment adviser, the
annualized ratios of expenses and net investment income (loss) to average
net assets, exclusive of any applicable state expense limitations, would
have been the following:
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
<S> <C> <C> <C>
JANUARY 3, 1995 THROUGH MARCH 31, 1995
(UNAUDITED)
Expenses....................................... 1.64% 2.24% 5.97%
Net investment income (loss)................... .08% (.53%) (4.18%)
</TABLE>
6
<PAGE>
EVERGREEN U.S. REAL ESTATE EQUITY FUND -- CLASS Y SHARES
<TABLE>
<CAPTION>
SIX MONTHS
ENDED NINE MONTHS SEPTEMBER 1, 1993*
MARCH 31, 1995 ENDED THROUGH
(UNAUDITED) SEPTEMBER 30, 1994# DECEMBER 31, 1993
<S> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning of period........................... $10.07 $ 10.71 $ 10.00
Income (loss) from investment operations:
Net investment income.......................................... .13 .11 .04
Net realized and unrealized gain (loss) on investments......... (.58) (.75) .72
Total from investment operations........................... (.45) (.64) .76
Less distributions to shareholders from:
Net investment income.......................................... (.12) -- (.04)
In excess of net investment income............................. (.20) -- (.01)
Total distributions........................................ (.32) -- (.05)
Net asset value, end of period................................. $ 9.30 $ 10.07 $ 10.71
TOTAL RETURN+.................................................. (4.4%) (6.0%) 7.6%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's omitted)...................... $8,229 $ 8,630 $ 4,610
Ratios to average net assets:
Expenses..................................................... 1.50%++ 1.49%++(a) .44%++(a)
Net investment income........................................ 3.10%++ 1.60%++(a) 1.93%++(a)
Portfolio turnover rate........................................ 62% 102% 17%
</TABLE>
# On September 21, 1994, the Fund changed its fiscal year end from December 31
to September 30.
* Commencement of operations.
+ Total return is calculated on net asset value for the period indicated and is
not annualized.
++ Annualized.
(a) Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were assumed or waived by the investment adviser, the
annualized ratios of expenses and net investment income to average net
assets, exclusive of any applicable state expense limitations, would have
been the following:
<TABLE>
<CAPTION>
NINE MONTHS SEPTEMBER 1, 1993
ENDED THROUGH
SEPTEMBER 30, 1994 DECEMBER 31, 1993
<S> <C> <C>
Expenses................................................. 2.65% 3.59%
Net investment income (loss)............................. .44% (1.21%)
</TABLE>
7
<PAGE>
EVERGREEN U.S. REAL ESTATE EQUITY FUND -- CLASS A AND B SHARES
<TABLE>
<CAPTION>
CLASS A CLASS B
<S> <C> <C>
MARCH 10, 1995* MARCH 7, 1995*
THROUGH THROUGH
MARCH 31, 1995 MARCH 31, 1995
(UNAUDITED) (UNAUDITED)
PER SHARE DATA
Net asset value, beginning of period...................................................... $9.21 $9.19
Income from investment operations:
Net investment income..................................................................... .04 .04
Net realized and unrealized gain on investments........................................... .05 .06
Total from investment operations...................................................... .09 .10
Net asset value, end of period............................................................ $9.30 $9.29
TOTAL RETURN+............................................................................. 1.0% 1.1%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's omitted)................................................. $10 $52
Ratios to average net assets:
Expenses................................................................................ 1.75%++ 2.50%++
Net investment income................................................................... 9.49%++ 6.94%++
Portfolio turnover rate**................................................................. 62% 62%
</TABLE>
* Commencement of class operations.
** Portfolio turnover rate is calculated for the six month period ended March
31, 1995.
+ Total return is calculated on net asset value per share for the period
indicated and is not annualized. Initial sales charge and contingent deferred
sales charge is not reflected.
++ Annualized. Due to the recent commencement of their offering, the ratios for
Class A and Class B shares are not necessarily comparable to that of the
Class Y shares, and are not necessarily indicative of future ratios.
8
<PAGE>
EVERGREEN LIMITED MARKET FUND, INC. -- CLASS Y SHARES
<TABLE>
<CAPTION>
SIX MONTHS
ENDED MARCH FOUR MONTHS
31, ENDED
1995 SEPTEMBER 30, YEAR ENDED MAY 31,
(UNAUDITED) 1994# 1994 1993 1992 1991 1990 1989* 1988 1987
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value,
beginning of
period............... $21.74 $21.20 $20.87 $21.02 $18.81 $17.69 $21.02 $16.82 $18.55 $20.16
Income (loss) from
investment
operations:
Net investment income
(loss)............... (.06) (.05) (.07) (.03) .02 .56 .45 .16 -- (.04)
Net realized and
unrealized gain
(loss) on
investments.......... (1.60) .59 1.67 1.57 3.33 1.67 .25 4.37 (.78) 1.05
Total from investment
operations......... (1.66) .54 1.60 1.54 3.35 2.23 .70 4.53 (.78) 1.01
Less distributions to
shareholders from:
Net investment
income............... -- -- -- -- (.14) (.53) (.36) (.05) -- --
Net realized gains..... (3.68) -- (1.27) (1.69) (1.00) (.58) (3.67) (.28) (.95) (2.62)
Total
distributions...... (3.68) -- (1.27) (1.69) (1.14) (1.11) (4.03) (.33) (.95) (2.62)
Net asset value, end of
period............... $16.40 $21.74 $21.20 $20.87 $21.02 $18.81 $17.69 $21.02 $16.82 $18.55
TOTAL RETURN+.......... 6.7% 2.6% 7.6% 7.5% 18.3% 14.4% 4.2% 27.4% (4.0%) 6.3%
RATIOS & SUPPLEMENTAL
DATA
Net assets, end of
period (in
millions)............ $78,609 $99,340 $96,357 $80,605 $62,172 $45,687 $37,838 $37,292 $23,007 $20,881
Ratios to average net
assets:
Expenses............. 1.32%++ 1.37%++ 1.26% 1.24% 1.25% 1.32% 1.33% 1.30% 1.47% 1.44%
Net investment income
(loss)............. (.78%)++ (.70%)++ (.33%) (.07%) .22% 3.32% 2.25% .86% .01% (.20%)
Portfolio turnover
rate................. 40% 36% 89% 29% 55% 59% 46% 45% 47% 43%
<CAPTION>
1986
<S> <C>
PER SHARE DATA
Net asset value,
beginning of
period............... $14.97
Income (loss) from
investment
operations:
Net investment income
(loss)............... (.02)
Net realized and
unrealized gain
(loss) on
investments.......... 6.37
Total from investment
operations......... 6.35
Less distributions to
shareholders from:
Net investment
income............... --
Net realized gains..... (1.16)
Total
distributions...... (1.16)
Net asset value, end of
period............... $20.16
TOTAL RETURN+.......... 45.7%
RATIOS & SUPPLEMENTAL
DATA
Net assets, end of
period (in
millions)............ $19,783
Ratios to average net
assets:
Expenses............. 1.44%
Net investment income
(loss)............. (.10%)
Portfolio turnover
rate................. 56%
</TABLE>
# On September 21, 1994, the Fund changed its fiscal year end from May 31 to
September 30.
* Investment income, expenses and net investment income are based on average
monthly shares outstanding for the period indicated.
+ Total return is calculated on net asset value for the period indicated and is
not annualized.
++ Annualized.
9
<PAGE>
EVERGREEN LIMITED MARKET FUND, INC. -- CLASS A, B AND C SHARES
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
<S> <C> <C> <C>
JANUARY 3, 1995* THROUGH MARCH 31, 1995
(UNAUDITED)
PER SHARE DATA
Net asset value, beginning of period..................................... $15.76 $ 15.76 $15.76
Income (loss) from investment operations:
Net investment loss...................................................... (.01) (.03) (.03)
Net realized and unrealized gain on investments.......................... .65 .63 .64
Total from investment operations..................................... .64 .60 .61
Net asset value, end of period........................................... $16.40 $ 16.36 $16.37
TOTAL RETURN+............................................................ 4.1% 3.8% 3.9%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's omitted)................................ $732 $ 1,598 $59
Ratios to average net assets:
Expenses (a)........................................................... 1.41%++ 2.17%++ 2.15%++
Net investment loss (a)................................................ (.71%)++ (1.47%)++ (1.38%)++
Portfolio turnover rate**................................................ 40% 40% 40%
</TABLE>
* Commencement of class operations.
** Portfolio turnover rate is calculated for the six months period ended March
31, 1995.
+ Total return is calculated on net asset value per share for the period
indicated and is not annualized. Initial sales charge and contingent deferred
sales charge is not reflected.
++ Annualized. Due to the recent commencement of their offering, the ratios for
Class A, Class B and Class C shares are not necessarily comparable to that
of the Class Y shares, and are not necessarily indicative of future ratios.
(a) Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were assumed or waived by the investment adviser, the
annualized ratios of expenses and net investment income (loss) to average
net assets, exclusive of any applicable state expense limitations, would
have been the following:
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
<S> <C> <C> <C>
JANUARY 3, 1995 THROUGH MARCH 31, 1995
(UNAUDITED)
Expenses....................................... 2.75% 2.77% 3.50%
Net investment loss............................ (2.05%) (2.07%) (2.73%)
</TABLE>
10
<PAGE>
EVERGREEN AGGRESSIVE GROWTH FUND -- CLASS A SHARES*
<TABLE>
<CAPTION>
SIX MONTHS TEN MONTHS
ENDED APRIL ENDED YEAR ENDED
30, 1995 YEAR ENDED OCTOBER 31, OCTOBER 31, DECEMBER 31,
(UNAUDITED) 1994 1993 1992 1991 1990 1989 1988** 1987 1986
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning
of period................. $13.85 $14.44 $11.76 $12.22 $7.37 $11.06 $7.62 $7.07 $8.77 $7.75
Income (loss) from
investment operations:
Net investment loss......... (.07) (.13) (.12) (.10) (.08) (.04) (.11) (.21) (.11) (.08)
Net realized and unrealized
gain (loss)............... .46 (.22) 3.06 1.84 5.59 (2.02) 3.55 .76 (1.34) 1.10
Total from investment
operations............ .39 (.35) 2.94 1.74 5.51 (2.06) 3.44 .55 (1.45) 1.02
Less distributions to
shareholders from:
Net realized gains.......... -- (.24) (.26) (2.20) (.66) (1.63) -- -- (.25) --
Net asset value, end of
period.................... $14.24 $13.85 $14.44 $11.76 $12.22 $7.37 $11.06 $7.62 $7.07 $8.77
TOTAL RETURN+............... 2.8% (2.4%) 25.3% 17.4% 79.8% (20.5%) 45.1% 9.3% (16.5%) 13.2%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted)........... $62,993 $64,635 $58,053 $29,302 $23,509 $14,325 $21,241 $19,900 $25,700 $37,100
Ratios to average net assets
of:
Expenses.................. 1.41%++ 1.25% 1.31% 1.44% 1.59% 1.86% 1.78% 2.02%++ 1.57% 1.65%
Net investment loss....... (1.01%)++ (.92%) (.92%) (.93%) (.71%) (.49%) (1.19%) (1.36%)++ (1.05%) (.90%)
Portfolio turnover rate..... 14% 59% 48% 46% 108% 100% 120% 45% 65% 49%
<CAPTION>
1985
<S> <C>
PER SHARE DATA
Net asset value, beginning
of period................. $5.43
Income (loss) from
investment operations:
Net investment loss......... (.09)
Net realized and unrealized
gain (loss)............... 2.59
Total from investment
operations............ 2.50
Less distributions to
shareholders from:
Net realized gains.......... (.18)
Net asset value, end of
period.................... $7.75
TOTAL RETURN+............... 46.0%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted)........... $16,100
Ratios to average net assets
of:
Expenses.................. 2.34%
Net investment loss....... (1.29%)
Portfolio turnover rate..... 101%
</TABLE>
* The information set forth in the table above reflects the operating history
of ABT Emerging Growth Fund, predecessor to Evergreen Agressive Growth Fund,
for the periods indicated.
** The Fund changed its fiscal year from December 31 to October 31.
+ Total return is calculated on net asset value for the period indicated and is
not annualized. Initial sales charge is not reflected.
++ Annualized.
11
<PAGE>
12
- -------------------------------------------------------------------------------
DESCRIPTION OF THE FUNDS
- -------------------------------------------------------------------------------
INVESTMENT OBJECTIVES AND POLICIES
Evergreen Fund
The Evergreen Fund seeks to achieve its investment objective of capital
appreciation principally through investments in common stock and securities
convertible into or exchangeable for common stock of companies which are
little-known, relatively small or represent special situations which, in the
opinion of the Fund's investment adviser, offer potential for capital
appreciation. The Fund's investment objective is fundamental policy, which may
not be changed without shareholder approval. A "little-known" company means one
whose business is limited to a regional market or whose securities are closely
held with only a small proportion traded publicly. A "relatively small" company
means one which has a small share of the market for its products or services in
comparison with other companies in its field, or which provides goods or
services for a limited market. A "special situation" company is one which offers
potential for capital appreciation because of a recent or anticipated change in
structure, management, products or services. In addition to the securities
described above, the Evergreen Fund may invest in securities of relatively
well-known and large companies with potential for capital appreciation.
Investments may also be made to a limited degree in non-convertible debt
securities and preferred stocks which offer an opportunity for capital
appreciation. Short-term investments may also be made if the Fund's investment
adviser believes that such action will benefit the Fund. See "Special Risk
Considerations".
It is anticipated that the annual portfolio turnover rate for the Fund
will not exceed 100%. The Fund may employ certain additional investment
strategies which are discussed in "Investment Practices and Restrictions",
below.
Evergreen U.S. Real Estate Equity Fund
The Fund's investment objective is long-term capital growth which it
seeks to achieve through investment primarily in equity securities of domestic
companies which are principally engaged in the real estate industry or which own
significant real estate assets; the Fund will not purchase direct interests in
real estate. Current income will be a secondary objective. Equity securities
will include common stock, preferred stock and securities convertible into
common stock. The Fund's investment objective is fundamental policy, which may
not be changed without shareholder approval.
Under normal conditions, the Fund will invest not less than 65% of its
total assets in equity securities of United States exchange or NASDAQ listed
companies principally engaged in the real estate industry. A company is deemed
to be "principally engaged" in the real estate industry if at least 50% of its
assets (marked to market), gross income or net profits are attributable to
ownership, construction, management or sale of residential, commercial or
industrial real estate. Real estate industry companies may include among others:
equity real estate investment trusts, which pool investors' funds for investment
primarily in commercial real estate properties; mortgage real estate investment
trusts, which invest pooled funds in real estate related loans; brokers or real
estate developers; and companies with substantial real estate holdings, such as
paper and lumber producers and hotel and entertainment companies. The Fund will
only invest in real estate equity trusts and limited partnerships which are
traded on major exchanges. See "Special Risk Considerations".
The remainder of the Fund's investments may be made in equity
securities of issuers whose products and services are related to the real estate
industry, such as manufacturers and distributors of building supplies and
financial institutions which issue or service mortgages. The Fund may invest
more than 25% of its total assets in any one sector of the real estate or real
estate related industries. In addition, the Fund may, from time to time, invest
in the securities of companies unrelated to the real estate industry whose real
estate assets are substantial relative to the price of the companies'
securities.
Investments may also be made in securities of issuers unrelated to the
real estate industry believed by the Fund's investment adviser to be undervalued
and to have capital appreciation potential. Also, consistent with the secondary
objective of current income, investments may also be made in nonconvertible debt
securities of such companies. The debt securities purchased (except for those
described below) will be of investment grade or better quality (e.g., rated no
lower than A by Standard & Poor's Ratings Group ("S&P") or Moody's Investors
Service, Inc. ("Moody's") or any other nationally recognized statistical rating
organization ("SRO"), or if not so rated, believed by the Fund's investment
adviser to be of comparable quality). However, up to 10% of total assets may be
invested in unrated debt securities of issuers secured by real estate assets
where the Fund's investment adviser believes that the securities are trading at
a discount and the underlying collateral will ensure repayment of principal. In
such situations, it is conceivable that the Fund could, in the event of default,
end up holding the underlying real estate directly.
It is anticipated that the annual portfolio turnover rate for the Fund
may exceed 100%. The Fund may employ certain additional investment strategies
which are discussed in "Investment Practices and Restrictions", below.
Evergreen Limited Market Fund
The investment objective of Evergreen Limited Market Fund is to achieve
capital appreciation; income is not a factor in the selection of portfolio
securities. The Fund seeks to achieve its objective principally through
investments in common stock of companies for which there is a relatively limited
trading market. A relatively limited trading market is one in which only small
amounts of stock are available at any given time generally through five or fewer
market makers. The securities of such companies are often traded only
over-the-counter or on a regional securities exchange, rarely on a national
securities exchange, and may not trade every day or in the volume typical of
trading on a national securities exchange. See "Special Risk Considerations".
The Fund's investment objective is a fundamental policy.
Investments by the Fund are made with a view toward taking advantage of
market inefficiencies. Market inefficiency can result from a company being too
small to be covered by most industry analysts, thereby resulting in a limited
dissemination of information about the company or its industry. Such companies
generally are small (but no smaller than $1,000,000 of market capitalization),
little-known or unpopular companies (those which are not widely recommended for
purchase by industry analysts due to the company's size or some situation unique
to the company or its industry). Companies in which investments will generally
be made are those with a total market capitalization of $150,000,000 or less.
There are no restrictions as to types of businesses or industries in which the
Fund may invest. The Fund's investment adviser believes that its investment
research programs will uncover a variety of relatively unexploited investment
opportunities. The methods used for the detection and selection of such
opportunities depends heavily upon the extensive library facilities of Lieber &
Company, the Fund's sub adviser, which contain information regarding over thirty
four thousand individual corporations as well as extensive industry and trade
literature.
While the focus of Evergreen Limited Market Fund is on long-term
capital appreciation, investments may on occasion be made with the expectation
of short-term capital appreciation. Securities held for a short time period may
be sold if the investment objective for such securities has been achieved or if
other circumstances warrant.
It is anticipated that the annual portfolio turnover rate for the Fund
may exceed 100%. The Fund may employ certain additional investment strategies
which are discussed in "Investment Practices and Restrictions", below.
Evergreen Aggressive Growth Fund
The Evergreen Aggressive Growth Fund's investment objective is to
achieve long-term capital appreciation by investing primarily in common stocks
of emerging growth companies and larger, more well established companies, all of
which are viewed by its investment adviser as having above-average appreciation
potential. The Fund's investment objective is fundamental policy, which may not
be changed without shareholder approval. Under normal circumstances, the Fund
intends to invest at least 65% of its net assets in common stocks or securities
convertible into common stocks. The Fund's investment adviser considers an
emerging growth company to be one which is still in the developmental stage, yet
has demonstrated, or is expected to achieve, growth of earnings over various
major business cycles. Important qualities of any emerging growth company
include sound management and a good product with growing market opportunities.
To the extent that its assets are not invested in common stocks or securities
convertible into common stocks, the Fund also may invest its assets in, or enter
into repurchase agreements with banks or broker-dealers with respect to,
investment grade corporate bonds, U.S. government securities, commercial paper
and certificates of deposit of domestic banks.
Consistent with its investment objective, the Fund also may invest in
equity securities of seasoned, established companies which its investment
adviser believes have above-average appreciation potential similar to that of
companies in the developmental stage. This may be due, for example, to
management change, new technology, new product or service developments, changes
in demand, or other factors. Investments in stocks of emerging growth companies
may involve special risks. Securities of lesser-known, relatively small and
special situation companies tend to be speculative and volatile. Therefore, the
current net asset value of the Fund's shares may vary significantly.
Accordingly, the Fund should not be considered suitable for investors who are
unable or unwilling to assume the risks of loss inherent in such a program, nor
should investment in the Fund be considered a balanced or complete investment
program.
It is anticipated that the annual portfolio turnover rate for the Fund
will not exceed 100%. The Fund may employ certain additional investment
strategies which are discussed in "Investment Practices and Restrictions",
below.
INVESTMENT PRACTICES AND RESTRICTIONS
Defensive Investments. The Funds may invest without limitation in high quality
money market instruments, such as notes, certificates of deposit or bankers'
acceptances, U.S. Government securities, non-convertible investment grade debt
securities or preferred stocks or hold its assets in cash if, in the opinion of
the Funds investment advisers, market conditions warrant a temporary defensive
investment strategy.
Portfolio Turnover and Brokerage. A portfolio turnover rate of 100% would occur
if all of a Fund's portfolio securities were replaced in one year. The portfolio
turnover rate experienced by a Fund directly affects brokerage commissions and
other transaction costs which the Fund bears directly. A high rate of portfolio
turnover will increase such costs. It is contemplated that Lieber & Company, an
affiliate of Evergreen Asset and a member of the New York and American Stock
Exchanges, will to the extent practicable effect substantially all of the
portfolio transactions for Evergreen Fund, Evergreen U.S. Real Estate Equity
Fund and Evergreen Limited Market Fund effected on those exchanges. See the
Statement of Additional Information for further information regarding the
brokerage allocation practices of the Funds. The portfolio turnover rate for
each Fund is set forth in the tables contained in the section entitled
"Financial Highlights".
Borrowing. As a matter of fundamental policy, the Funds may not borrow money
except as a temporary measure for extraordinary or emergency purposes. The
proceeds from borrowings may be used to facilitate redemption requests which
might otherwise require the untimely disposition of portfolio securities. The
specific limits and other terms applicable to borrowing by each Fund are set
forth in the Statement of Additional Information.
Lending of Portfolio Securities. In order to generate income and to offset
expenses, the Funds may lend portfolio securities to brokers, dealers and other
financial institutions. Each Fund's investment adviser will monitor the
creditworthiness of such borrowers. Loans of securities by the Funds, if and
when made, may not exceed 30% of the value of a Fund's net assets and must be
collateralized by cash or U.S. Government securities that are maintained at all
times in an amount equal to at least 100% of the current market value of the
securities loaned, including accrued interest. While such securities are on
loan, the borrower will pay a Fund any income accruing thereon, and the Fund may
invest the cash collateral in portfolio securities, thereby increasing its
return. Any gain or loss in the market price of the loaned securities which
occurs during the term of the loan would affect a Fund and its investors. A Fund
has the right to call a loan and obtain the securities loaned at any time on
notice of not more than five business days. A Fund may pay reasonable fees in
connection with such loans.
There is the risk that when lending portfolio securities, the
securities may not be available to a Fund on a timely basis and the Fund may,
therefore, lose the opportunity to sell the securities at a desirable price. In
addition, in the event that a borrower of securities would file for bankruptcy
or become insolvent, disposition of the securities may be delayed pending court
action.
Illiquid Securities. The Funds may invest up to 15% of their net assets in
illiquid securities and other securities which are not readily marketable,
including non-negotiable time deposits, certain restricted securities not deemed
by the Trustees to be liquid and repurchase agreements with maturities longer
than seven days, except that Evergreen U.S. Real Estate Equity Fund may only
invest up to 10% of its assets in repurchase agreements with maturities longer
than seven days. Securities eligible for resale pursuant to Rule 144A under the
Securities Act of 1933, which have been determined to be liquid, will not be
considered by the Funds investment advisers to be illiquid or not readily
marketable and, therefore, are not subject to the aforementioned 15% limit. The
inability of a Fund to dispose of illiquid or not readily marketable investments
readily or at a reasonable price could impair the Fund's ability to raise cash
for redemptions or other purposes. The liquidity of securities purchased by a
Fund which are eligible for resale pursuant to Rule 144A will be monitored by
each Funds investment adviser on an ongoing basis, subject to the oversight of
the Trustees or Directors. In the event that such a security is deemed to be no
longer liquid, a Fund's holdings will be reviewed to determine what action, if
any, is required to
<PAGE>
ensure that the retention of such security does not result in a Fund having more
than 15% of its assets invested in illiquid or not readily marketable
securities.
Repurchase Agreements and Reverse Repurchase Agreements. The Funds may enter
into repurchase agreements with member banks of the Federal Reserve System,
including the Custodian or primary dealers in U.S. Government securities. A
repurchase agreement is an arrangement pursuant to which a buyer purchases a
security and simultaneously agrees to resell it to the vendor at a price that
results in an agreed-upon market rate of return which is effective for the
period of time (which is normally one to seven days, but may be longer) the
buyer's money is invested in the security. The arrangement results in a fixed
rate of return that is not subject to market fluctuations during the holding
period. A Fund requires continued maintenance of collateral with its Custodian
in an amount at least equal to the repurchase price (including accrued
interest). In the event a vendor defaults on its repurchase obligation, a Fund
might suffer a loss to the extent that the proceeds from the sale of the
collateral were less than the repurchase price. If the vendor becomes the
subject of bankruptcy proceedings, a Fund might be delayed in selling the
collateral. The Funds investment advisers will review and continually monitor
the creditworthiness of each institution with which a Fund enters into a
repurchase agreement to evaluate these risks.
Evergreen U.S. Real Estate Equity Fund and Evergreen Aggressive Growth
Fund may borrow money by entering into a "reverse repurchase agreement" by which
it agrees to sell portfolio securities to financial institutions such as banks
and broker-dealers, and to repurchase them at a mutually agreed upon date and
price, for temporary or emergency purposes. At the time the Fund enters into a
reverse repurchase agreement, it will place in a segregated custodial account
cash, U.S. government securities or liquid high grade debt obligations having a
value at least equal to the repurchase price (including accrued interest) and
will subsequently monitor the account to ensure that such equivalent value is
maintained. Reverse repurchase agreements involve the risk that the market value
of the securities sold by the Fund may decline below the repurchase price of
those securities. The Fund will not enter into reverse repurchase agreements
exceeding 5% of the value of its total assets.
Fixed Income Securities - Downgrades. If any security invested in by any of the
Funds loses its rating or has its rating reduced after the Fund has purchased
it, the Fund is not required to sell or otherwise dispose of the security, but
may consider doing so.
Futures and Related Options. The Evergreen U.S. Real Estate Equity Fund may, to
a limited extent, enter into financial futures contracts, including futures
contracts based on securities indices, and purchase and sell options on such
futures contracts. The sale of a futures contract obligates the Fund to deliver
the amount of securities, currency, or in the case of an index futures contract,
cash, called for in the futures contract on a specific future date and price.
Conversely, the purchase of a futures contract obligates the Fund to receive
(purchase) the amount of securities, currency, or in the case of an index
futures contract, cash, called for in the futures contract on a specific future
date and at a specific price. While the terms of futures contracts call for
actual delivery or receipt of the underlying property, the majority of such
contracts are "closed out" prior to settlement date by entering into an
offsetting purchase or sale transaction. Upon entering into a futures contract,
the Fund must make an initial margin deposit representing a portion of the funds
that would be required to settle the contract. Thereafter, on each day that
futures contracts to which the Fund is a party trade, the Fund may be required
to post additional "variation" margin as a result of changes in the value of the
futures contract. The Fund does not segregate assets in an amount equal to its
total exposure under futures contracts.
While the Fund will enter into futures contracts only if there appears
to be a liquid secondary market for such contracts, there can be no assurance
that the Fund will be able to close out their position in a specific contract at
any specific time. The Fund will not enter into a particular index-based futures
contract unless the Fund's investment adviser determines that a correlation
exists between price movements in the index-based futures contract and in
securities in the Fund's portfolio. Such correlation is not likely to be
perfect, since the Fund's portfolio is not likely to contain the same securities
used in the index.
An option on a futures contract entitles its holder to enter into a
futures contract on specific terms which remain fixed until the expiration of
the option, regardless of the movement of futures prices in general. If the
movement of currency futures prices during the term of the option are such that
it does not become advantageous for the Fund to exercise the option or enter
into an offsetting options transaction, the option will expire and have no
further value. The exposure of the Fund in connection with purchase of an option
on a futures contract is limited to the premium paid for the option. The Funds
will only use futures instruments for hedging, not speculative, purposes. The
Fund may not enter into futures contracts or related options if, immediately
thereafter, more than 30% of the Fund's total assets would be hedged thereby or
the amounts committed to margin and premiums paid for unexpired options would
exceed 5% of the Fund's total assets. Special Risk Considerations
Investment in Small Companies. Investments in securities of little-known,
relatively small and special situation companies may tend to be speculative and
volatile. A lack of management depth in such companies could increase the risks
associated with the loss of key personnel. Also, the material and financial
resources of such companies may be limited, with the consequence that funds or
external financing necessary for growth may be unavailable. Such companies may
also be involved in the development or marketing of new products or services for
which there are no established markets. If projected markets do not materialize
or only regional markets develop, such companies may be adversely affected or be
subject to the consequences of local events. Moreover, such companies may be
insignificant factors in their industries and may become subject to intense
competition from larger companies. Securities of companies in which the Funds
may invest will frequently be traded only in the over-the-counter market or on
regional stock exchanges and will often be closely held. Securities of this type
may have limited liquidity and be subject to wide price fluctuations. As a
result of the risk factors described above, the net asset value of each Fund's
shares can be expected to vary significantly. Accordingly, each Fund should not
be considered suitable for investors who are unable or unwilling to assume the
associated risks, nor should investment in the Funds be considered a balanced or
complete investment program.
Investments Related to Real Estate. Evergreen U.S. Real Estate Equity Fund
invests primarily in issuers whose activities are real estate related. Risks
associated with investment in securities of companies in the real estate
industry include: declines in the value of real estate, risks related to general
and local economic conditions, overbuilding and increased competition, increases
in property taxes and operating expenses, changes in zoning laws, casualty or
condemnation losses, variations in rental income, changes in neighborhood
values, the appeal of properties to tenants and increase in interest rates. In
the event of a default on such securities, the holder thereof could end up
holding real estate directly and therefore be more directly subject to such
risks. In addition, equity real estate investment trusts may be affected by
changes in the value of the underlying property owned by the trusts, while
mortgage real estate investment trusts may be affected by the quality of credit
extended. Equity and mortgage real estate investment trusts are dependent upon
management skills, may not be diversified and are subject to the risks of
financing projects. Such trusts are also subject to heavy cash flow dependency,
defaults by borrowers, self liquidation and the possibility of failing to
qualify for tax-free pass-through of income under the Internal Revenue Code of
1986, as amended (the "Code") and to maintain exemption from the Investment
Company Act of 1940, as amended (the "1940 Act"). In the event an issuer of debt
securities collateralized by real estate defaulted, it is conceivable that a
Fund could end up holding the underlying real estate.
Other Investment Restrictions. Each Fund has adopted additional investment
restrictions that are set forth in the Statement of Additional Information.
Unless otherwise noted, the restrictions and policies set forth above are not
fundamental and may be changed without shareholder approval.
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MANAGEMENT OF THE FUNDS
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INVESTMENT ADVISERS
The management of each Fund is supervised by the Trustees of the Trust
under which the Fund has been established ("Trustees") or, in the case of
Evergreen Limited Market Fund, its directors. Evergreen Asset Management Corp.
(the "Evergreen Asset") has been retained by Evergreen Fund, Evergreen U.S. Real
Estate Equity Fund and Evergreen Limited Market Fund as investment adviser.
Evergreen Asset succeeded on June 30, 1994 to the advisory business of the same
name, but under different ownership, which was organized in 1971. Evergreen
Asset, with its predecessors, has served as investment adviser to the Evergreen
mutual funds since 1971. Evergreen Asset is a wholly-owned subsidiary of First
Union National Bank of North Carolina ("FUNB"). The address of Evergreen Asset
is 2500 Westchester Avenue, Purchase, New York 10577. FUNB is a subsidiary of
First Union Corporation ("First Union"), one of the ten largest bank holding
companies in the United States. Stephen A. Lieber and Nola Maddox Falcone serve
as the chief investment officers of Evergreen Asset and, along with Theodore J.
Israel, Jr., were the owners of Evergreen Asset's predecessor and the former
general partners of Lieber & Company, which, as described below, provides
certain subadvisory services to Evergreen Asset in connection with its duties as
investment adviser to the Funds. The Capital Management Group of FUNB ("CMG")
serves as investment adviser to Evergreen Aggressive Growth Fund.
First Union is headquartered in Charlotte, North Carolina, and had
$77.9 billion in consolidated assets as of March 31, 1995. First Union and its
subsidiaries provide a broad range of financial services to individuals and
businesses through offices in 36 states. The Capital Management Group of FUNB
manages or otherwise oversees the investment of over $36 billion in assets
belonging to a wide range of clients, including all the series of Evergreen
Investment Trust (formerly known as First Union Funds). First Union Brokerage
Services, Inc., a wholly-owned subsidiary of FUNB, is a registered broker-dealer
that is principally engaged in providing retail brokerage services consistent
with its federal banking authorizations. First Union Capital Markets Corp., a
wholly-owned subsidiary of First Union, is a registered broker-dealer
principally engaged in providing, consistent with its federal banking
authorizations, private placement, securities dealing, and underwriting
services.
As investment adviser to Evergreen Fund, Evergreen U.S. Real Estate
Equity Fund and Evergreen Limited Market Fund, Evergreen Asset manages each
Fund's investments, provides various administrative services and supervises each
Fund's daily business affairs, subject to the authority of the Trustees.
Evergreen Asset is entitled to receive a fee from each of Evergreen Fund,
Evergreen U.S. Real Estate Equity Fund and Evergreen Limited Market Fund equal
to 1% of average daily net assets on an annual basis on the first $750 million
in assets, .9 of 1% of average daily net assets on an annual basis on the next
$250 million in assets, and .8 of 1% of average daily net assets on an annual
basis on assets over $1 billion. The fee paid by Evergreen Fund, Evergreen U.S.
Real Estate Equity Fund and Evergreen Limited Market Fund is higher than the
rate paid by most other investment companies. The total annualized operating
expenses of Evergreen Fund, Evergreen U.S. Real Estate Equity Fund and Evergreen
Limited Market Fund for the fiscal period ended September 30, 1994, are set
forth in the section entitled "Financial Highlights". Until Evergreen U.S. Real
Estate Equity Fund reaches net assets of $15 million, Evergreen Asset will
reimburse the Fund to the extent the Fund's aggregate operating expenses
(including Evergreen Asset's fee, but excluding interest, taxes, brokerage
commissions, Rule 12b-1 distribution fees and shareholder servicing fees and
extraordinary expenses) exceed 1.50% of average net assets for any fiscal year.
From time to time, Evergreen Asset may further reduce or waive its fee or
reimburse the Fund for certain of its expenses in order to reduce the Fund's
expense ratio. As a result the Fund's total return would be higher than if the
fees and any expenses had been paid by the Fund.
CMG manages investments and supervises the daily business affairs of
Evergreen Aggressive Growth Fund and, as compensation therefor, is entitled to
receive an annual fee equal to .60 of 1% of average daily net assets of the
Fund. The total annualized operating expenses of the predecessor of Evergreen
Aggressive Growth Fund for its most recent fiscal year ended October 30, 1994,
are set forth in the section entitled "Financial Highlights". Evergreen Asset
serves as administrator to Evergreen Aggressive Growth Fund and is entitled to
receive a fee based on the average daily net assets of these Funds at a rate
based on the total assets of the mutual funds administered by Evergreen Asset
for which CMG or Evergreen Asset also serve as investment adviser, calculated in
accordance with the following schedule: .050% of the first $7 billion; .035% on
the next $3 billion; .030% on the next $5 billion; .020% on the next $10
billion; .015% on the next $5 billion; and .010% on assets in excess of $30
billion. Furman Selz Incorporated, the parent of Evergreen Funds Distributor,
Inc., distributor for the Evergreen group of mutual funds, serves as
sub-administrator to Evergreen Aggressive Growth Fund and is entitled to receive
a fee from the Fund calculated on the average daily net assets of the Fund at a
rate based on the total assets of the mutual funds administered by Evergreen
Asset for which CMG or Evergreen Asset also serve as investment adviser,
calculated in accordance with the following schedule: .0100% of the first $7
billion; .0075% on the next $3 billion; .0050% on the next $15 billion; and
.0040% on assets in excess of $25 billion. The total assets of the mutual funds
administered by Evergreen Asset for which CMG or Evergreen Asset serve as
investment adviser as of March 31, 1995 were approximately $8 billion.
The portfolio manager for Evergreen Fund is Stephen A. Lieber, who is
Chairman and Co-Chief Executive Officer of Evergreen Asset. Mr. Lieber has been
associated with Evergreen Asset and its predecessor since prior to 1989. The
portfolio manager for Evergreen Aggressive Growth Fund is Harold J. Ireland,
Jr., a Vice President of CMG who has been associated with CMG since July, 1995.
Prior to that, Mr. Ireland was a Vice President of Palm Beach Capital
Management, Inc. and served as Portfolio manager of the Fund's predecessor, ABT
Emerging Growth Fund, since prior to 1989. The portfolio manager for Evergreen
U.S. Real Estate Equity Fund is Samuel A. Lieber. Mr. Samuel Lieber has been the
Fund's principal manager since inception and has been associated with the
Evergreen Asset since prior to 1989. The portfolio manager for Evergreen Limited
Market Fund is Derrick E. Wenger. Mr. Wenger has been the Fund's principal
manager since November 1993 and has been associated with Evergreen Asset since
1989.
SUB-ADVISER
Evergreen Asset has entered into sub-advisory agreements with Lieber &
Company which provides that Lieber & Company's research department and staff
will furnish Evergreen Asset with information, investment recommendations,
advice and assistance, and will be generally available for consultation on the
portfolios of Evergreen Fund, Evergreen U.S. Real Estate Equity Fund and
Evergreen Limited Market Fund. Lieber & Company will be reimbursed by Evergreen
Asset in connection with the rendering of services on the basis of the direct
and indirect costs of performing such services. There is no additional charge to
Evergreen Fund, Evergreen U.S. Real Estate Equity Fund and Evergreen Limited
Market Fund for the services provided by Lieber & Company. The address of Lieber
& Company is 2500 Westchester Avenue, Purchase, New York 10577. Lieber & Company
is an indirect, wholly-owned, subsidiary of First Union.
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PURCHASE AND REDEMPTION OF SHARES
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HOW TO BUY SHARES
Eligible investors may purchase Fund shares at net asset value by mail
or wire as described below. The Funds impose no sales charges on Class Y shares.
Class Y shares are the only class of shares offered by this Prospectus and are
only available to (i) all shareholders of record in one or more of the Evergreen
Funds as of December 30, 1994, (ii) certain institutional investors and (iii)
investment advisory clients of the Adviser and its affiliates. The minimum
initial investment is $1,000, which may be waived in certain situations. There
is no minimum for subsequent investments. Investors may make subsequent
investments by establishing a Systematic Investment Plan or a Telephone
Investment Plan.
Purchases by Mail or Wire. Each investor must complete the enclosed Share
Purchase Application and mail it together with a check made payable to the Fund
whose shares are being purchased, to State Street Bank and Trust Company ("State
Street") at P.O. Box 9021, Boston, Massachusetts 02205-9827. Checks not drawn on
U.S. banks will be subject to foreign collection which will delay an investor's
investment date and will be subject to processing fees.
When making subsequent investments, an investor should either enclose
the return remittance portion of the statement, or indicate on the face of the
check, the name of the Fund in which an investment is to be made, the exact
title of the account, the address, and the Fund account number. Purchase
requests should not be sent to a Fund in New York. If they are, the Fund must
forward them to State Street, and the request will not be effective until State
Street receives them.
Initial investments may also be made by wire by (i) calling State
Street at 800-423-2615 for an account number and (ii) instructing your bank,
which may charge a fee, to wire federal funds to State Street, as follows: State
Street Bank and Trust Company, ABA No.0110-0002-8, Attn: Custodian and
Shareholder Services. The wire must include references to the Fund in which an
investment is being made, account registration, and the account number. A
completed Application must also be sent to State Street indicating that the
shares have been purchased by wire, giving the date the wire was sent and
referencing the account number. Subsequent wire investments may be made by
existing shareholders by following the instructions outlined above. It is not
necessary, however, for existing shareholders to call for another account
number.
How the Funds Value Their Shares. The net asset value of each Class of shares of
a Fund is calculated by dividing the value of the amount of the Fund's net
assets attributable to that Class by the number of outstanding shares of that
Class. Shares are valued each day the New York Stock Exchange (the "Exchange")
is open as of the close of regular trading (currently 4:00 p.m. Eastern time).
The securities in a Fund are valued at their current market value determined on
the basis of market quotations or, if such quotations are not readily available,
such other methods as a Fund's Trustees believe would accurately reflect fair
market value. Non-dollar denominated securities will be valued as of the close
of the Exchange at the closing price of such securities in their principal
trading market.
Additional Purchase Information. As a condition of this offering, if a purchase
is canceled due to nonpayment or because an investor's check does not clear, the
investor will be responsible for any loss a Fund or the Adviser incurs. If such
investor is an existing shareholder, a Fund may redeem shares from an investor's
account to reimburse the Fund or the Adviser for any loss. In addition, such
investors may be prohibited or restricted from making further purchases in any
of the Evergreen Funds.
The Share Purchase Application may not be used to invest in any of the
prototype retirement plans for which the Funds are an available investment. For
information about the requirements to make such investments, including copies of
the necessary application forms, please call the telephone number set forth on
the cover page of this Prospectus. A Fund cannot accept investments specifying a
certain price or date and reserves the right to reject any specific purchase
order, including orders in connection with exchanges from the other Evergreen
Funds. Although not currently anticipated, each Fund reserves the right to
suspend the offer of shares for a period of time.
Shares of each Fund are sold at the net asset value per share next
determined after a shareholder's order is received. Investments by federal funds
wire or by check will be effective upon receipt by State Street. Qualified
institutions may telephone orders for the purchase of Fund shares. Investors may
also purchase shares through a broker/dealer, which may charge a fee for the
service.
HOW TO REDEEM SHARES
You may "redeem", i.e., sell your shares in a Fund to the Fund on any
day the Exchange is open, either directly or through your financial
intermediary. The price you will receive is the net asset value next calculated
after the Fund receives your request in proper form. Proceeds generally will be
sent to you within seven days. However, for shares recently purchased by check,
a Fund will not send proceeds until it is reasonably satisfied that the check
has been collected (which may take up to 10 days). Once a redemption request has
been telephoned or mailed, it is irrevocable and may not be modified or
canceled.
Redeeming Shares Directly by Mail or Telephone. Send a signed letter of
instruction or stock power form to State Street which is the registrar, transfer
agent and dividend-disbursing agent for each Fund. Stock power forms are
available from your financial intermediary, State Street, and many commercial
banks. Additional documentation is required for the sale of shares by
corporations, financial intermediaries, fiduciaries and surviving joint owners.
Signature guarantees are required for all redemption requests for shares with a
value of more than $10,000 or where the redemption proceeds are to be mailed to
an address other than that shown in the account registration. A signature
guarantee must be provided by a bank or trust company (not a Notary Public), a
member firm of a domestic stock exchange or by other financial institutions
whose guarantees are acceptable to State Street.
Shareholders may withdraw amounts of $1,000 or more from their accounts
by calling State Street (800-423-2615) between the hours of 9:00 a.m. and 4:00
p.m. (Eastern time) each business day (i.e., any weekday exclusive of days on
which the New York Stock Exchange or State Street's offices are closed). The New
York Stock Exchange is closed on New Year's Day, Presidents Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
Redemption requests made after 4:00 p.m. (Eastern time) will be processed using
the net asset value determined on the next business day. Such redemption
requests must include the shareholder's account name, as registered with a Fund,
and the account number. During periods of drastic economic or market changes,
shareholders may experience difficulty in effecting telephone redemptions.
Shareholders who are unable to reach a Fund or State Street by telephone should
follow the procedures outlined above for redemption by mail.
The telephone redemption service is not made available to shareholders
automatically. Shareholders wishing to use the telephone redemption service must
indicate this on the enclosed Application and choose how the redemption proceeds
are to be paid. Redemption proceeds will either (i) be mailed by check to the
shareholder at the address in which the account is registered or (ii) be wired
to an account with the same registration as the shareholder's account in a Fund
at a designated commercial bank. State Street currently deducts a $5 wire charge
from all redemption proceeds wired. This charge is subject to change without
notice. A shareholder who decides later to use this service, or to change
instructions already given, should fill out a Shareholder Services Form and send
it to State Street Bank and Trust Company, P.O. Box 9021, Boston, Massachusetts
02205-9827, with such shareholder's signature guaranteed by a bank or trust
company (not a Notary Public), a member firm of a domestic stock exchange or by
other financial institutions whose guarantees are acceptable to State Street.
Shareholders should allow approximately ten days for such form to be processed.
The Funds will employ reasonable procedures to verify that telephone requests
are genuine. These procedures include requiring some form of personal
identification prior to acting upon instructions and tape recording of
conversations. If the Fund fails to follow such procedures, it may be liable for
any losses due to unauthorized or fraudulent instructions. The Fund shall not be
liable for following telephone instructions reasonably believed to be genuine.
Also, the Fund reserves the right to refuse a telephone redemption request, if
it is believed advisable to do so. Financial intermediaries may charge a fee for
handling telephonic requests. The telephone redemption option may be suspended
or terminated at any time without notice.
General. The sale of shares is a taxable transaction for Federal tax purposes.
Under unusual circumstances, a Fund may suspend redemptions or postpone payment
for up to seven days or longer, as permitted by Federal securities law. The
Funds reserve the right to close an account that through redemption has remained
below $1,000 for 30 days. Shareholders will receive 60 days' written notice to
increase the account value before the account is closed. The Funds have elected
to be governed by Rule 18f-1 under the Investment Company Act of 1940 pursuant
to which each Fund is obligated to redeem shares solely in cash, up to the
lesser of $250,000 or 1% of a Fund's total net assets during any ninety day
period for any one shareholder. See the Statement of Additional Information for
further details.
EXCHANGE PRIVILEGE
How To Exchange Shares. You may exchange some or all of your shares for shares
of the same Class in the other Evergreen Funds by telephone or mail as described
below. An exchange which represents an initial investment in another Evergreen
Fund must amount to at least $1,000. Once an exchange request has been
telephoned or mailed, it is irrevocable and may not be modified or canceled.
Exchanges will be made on the basis of the relative net asset values of the
shares exchanged next determined after an exchange request is received.
Exchanges are subject to minimum investment and suitability requirements.
Each of the Evergreen Funds have different investment objectives and
policies. For complete information, a prospectus of the fund into which an
exchange will be made should be read prior to the exchange. An exchange is
treated for Federal income tax purposes as a redemption and purchase of shares
and may result in the realization of a capital gain or loss. Each Fund imposes a
fee of $5 per exchange on shareholders who exchange in excess of four times per
calendar year. This exchange privilege may be modified or discontinued at any
time by the Fund upon sixty days' notice to shareholders and is only available
in states in which shares of the fund being acquired may lawfully be sold.
Exchanges by Telephone and Mail. You may exchange shares with a value of $1,000
or more by telephone by calling State Street (800-423-2615). Exchange requests
made after 4:00 p.m. (Eastern time) will be processed using the net asset value
determined on the next business day. During periods of drastic economic or
market changes, shareholders may experience difficulty in effecting telephone
exchanges. You should follow the procedures outlined below for exchanges by mail
if you are unable to reach State Street by telephone. If you wish to use the
telephone exchange service you should indicate this on the Share Purchase
Application. As noted above, each Fund will employ reasonable procedures to
confirm that instructions for the redemption or exchange of shares communicated
by telephone are genuine. A telephone exchange may be refused by a Fund or State
Street if it is believed advisable to do so. Procedures for exchanging Fund
shares by telephone may be modified or terminated at any time. Written requests
for exchanges should follow the same procedures outlined for written redemption
requests in the section entitled "How to Redeem Shares", however, no signature
guarantee is required.
SHAREHOLDER SERVICES
The Funds offer the following shareholder services. For more
information about these services or your account, contact your financial
intermediary, Evergreen Funds Distributor, Inc.("EFD"), the distributor of the
Funds, or the toll-free number on the front page of this Prospectus. Some
services are described in more detail in the Share Purchase Application.
Systematic Investment Plan. You may make monthly or quarterly investments into
an existing account automatically in amounts of not less than $25.
Telephone Investment Plan. You may make investments into an existing account
electronically in amounts of not less than $100 or more than $10,000 per
investment. Telephone investment requests received by 3:00 p.m. (Eastern time)
will be credited to a shareholder's account the day the request is received.
Systematic Cash Withdrawal Plan. When an account of $10,000 or more is opened or
when an existing account reaches that size, you may participate in the Fund's
Systematic Cash Withdrawal Plan by filling out the appropriate part of the Share
Purchase Application. Under this plan, you may receive (or designate a third
party to receive) a monthly or quarterly check in a stated amount of not less
than $100. Fund shares will be redeemed as necessary to meet withdrawal
payments. All participants must elect to have their dividends and capital gain
distributions reinvested automatically.
Retirement Plans. Eligible investors may invest in each Fund under the following
prototype retirement plans: (i) Individual Retirement Account (IRA); (ii)
Simplified Employee Pension (SEP) for sole proprietors, partnerships and
corporations; and (iii) Profit-Sharing and Money Purchase Pension Plans for
corporations and their employees.
Automatic Reinvestment Plan. For the convenience of investors, all dividends and
distributions are automatically reinvested in full and fractional shares of the
Fund at the net asset value per share at the close of business on the record
date, unless otherwise requested by a shareholder in writing. If the transfer
agent does not receive a written request for subsequent dividends and/or
distributions to be paid in cash at least three full business days prior to a
given record date, the dividends and/or distributions to be paid to a
shareholder will be reinvested. If you elect to receive dividends and
distributions in cash and the U.S. Postal Service cannot deliver the checks, or
if the checks remain uncashed for six months, the checks will be reinvested into
your account at the then current net asset value.
Tax Sheltered Retirement Plans. You may open a pension and profit sharing
account in any Evergreen mutual fund (except those funds having an objective of
providing tax free income), including: (i) Individual Retirement Accounts
("IRAs") and Rollover IRAs; (ii) Simplified Employee Pension (SEP) for sole
proprietors, partnerships and corporations; and (iii) Profit-Sharing and Money
Purchase Pension Plans for corporations and their employees.
EFFECT OF BANKING LAWS
The Glass-Steagall Act and other banking laws and regulations presently
prohibit member banks of the Federal Reserve System ("Member Banks") or their
non-bank affiliates from sponsoring, organizing, controlling, or distributing
the shares of registered open-end investment companies such as the Funds. Such
laws and regulations also prohibit banks from issuing, underwriting or
distributing securities in general. However, under the Glass-Steagall Act and
such other laws and regulations, a Member Bank or an affiliate thereof may act
as investment adviser, transfer agent or custodian to a registered open-end
investment company and may also act as agent in connection with the purchase of
shares of such an investment company upon the order of their customer. Evergreen
Asset, since it is a subsidiary of FUNB, and CMG are subject to and in
compliance with the aforementioned laws and regulations.
Changes to applicable laws and regulations or future judicial or
administrative decisions could result in CMG or Evergreen Asset being prevented
from continuing to perform the services required under the investment advisory
contract or from acting as agent in connection with the purchase of shares of a
Fund by its customers. If CMG or Evergreen Asset were prevented from continuing
to provide the services called for under the investment advisory agreement, it
is expected that the Trustees or Directors would identify, and call upon each
Fund's shareholders to approve, a new investment adviser. If this were to occur,
it is not anticipated that the shareholders of any Fund would suffer any adverse
financial consequences.
- -------------------------------------------------------------------------------
OTHER INFORMATION
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DIVIDENDS, DISTRIBUTIONS AND TAXES
It is the policy of each Fund to distribute its investment company
taxable income and any net realized capital gains to shareholders annually or
more frequently as required as a condition of continued qualification as a
regulated investment company by the Code. Dividends and distributions generally
are taxable in the year in which they are paid, except any dividends paid in
January that were declared in the previous calendar quarter may be treated as
paid in December in the previous year. Income dividends and capital gain
distributions are automatically reinvested in additional shares of the Fund
making the distribution at the net asset value per share at the close of
business on the record date, unless the shareholder writes to the Fund's
transfer agent and requests payment in cash.
Each Fund has qualified and intends to continue to qualify to be
treated as a regulated investment company under the Code. While so qualified, it
is expected that each Fund will not be required to pay any Federal income taxes
on that portion of its investment company taxable income and any net realized
capital gains it distributes to shareholders. The Code imposes a 4%
nondeductible excise tax on regulated investment companies, such as the Funds,
to the extent they do not meet certain distribution requirements by the end of
each calendar year. Each Fund anticipates meeting such distribution
requirements. Most shareholders of the Funds normally will have to pay Federal
income taxes and any state or local taxes on the dividends and distributions
they receive from a Fund.
Following the end of each calendar year, every shareholder of the Fund
will be sent applicable tax information and information regarding the dividends
and capital gain distributions made during the calendar year. Under current law,
the highest Federal income tax rate applicable to net long-term capital gains
realized by individuals is 28%. The rate applicable to corporations is 35%.
Certain income from a Fund may qualify for a corporate dividends-received
deduction of 70%. Specific questions should be addressed to the investor's own
tax adviser.
Evergreen U.S. Real Estate Equity Fund invests in real estate
investment trusts which report the tax characteristics of their distributions to
the Fund annually on a calendar year basis. The timing of such reporting to the
Fund may affect the tax characteristics of distributions by the Fund to
shareholders.
Each Fund is required by Federal law to withhold 31% of reportable
payments (which may include dividends, capital gain distributions and
redemptions) paid to certain shareholders. In order to avoid this backup
withholding requirement, you must certify on the Share Purchase Application, or
on a separate form supplied by State Street, that the investor's social security
or taxpayer identification number is correct and that the investor is not
currently subject to backup withholding or is exempt from backup withholding.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
A discussion of the performance of Evergreen Fund, Evergreen U.S. Real
Estate Equity Fund and Evergreen Limited Market Fund for their most recent
fiscal year is set forth below. A similar discussion relating to the predecessor
of Evergreen Aggressive Growth Fund, ABT Emerging Growth Fund, is contained in
the annual report of such fund for its fiscal year ended October 30, 1994.
The Evergreen Fund. The Evergreen Fund's total return for the ten years ended
September 30, 1994 was +213.8%, which calculates to an average annual compounded
return of +12.1%. This compares favorably with the returns for the Russell 2000
Index (+194.9%) and the NASDAQ-OTC Composite (unreinvested) Index (+205.8%) for
the same time period. For the fiscal year ended 1994, the Fund produced a total
return of +6.2% versus returns of +2.7% for the Russell 2000 Index and +0.2% for
the NASDAQ-OTC Composite (unreinvested) Index. During the fiscal year ended
September 30, 1994, the Fund adhered to its historical strict guidelines
regarding market valuation and growth rates, resulting in a portfolio of what
Evergreen Asset considers under-recognized and undervalued securities with
excellent growth prospects.
Performance relative to comparative indices was positively impacted by
the sizable commitments in sectors with above-average performance. Especially
significant was the strengthening health care industry and the improving
financial strength of the bank and thrift industries. The health care products
and services group showed an average increase of 23.5% during the 12 month
period. The bank industry showed an average gain of 5.8% during the same period.
The most negative sizable sector in the portfolio was the performance of the
finance and insurance group, which had an average decline of 3.0%. This decline
particularly reflected pressure on re-insurance companies and municipal bond
insurance companies, both of which were fairly sizable within this group. The
Fund's portfolio was well diversified, with more than 197 holdings. During the
year, the Fund shifted holdings toward a smaller market capitalization profile
in order to benefit from the opportunities of entrepreneurial businesses.
Therefore, many smaller company positions were inaugurated in areas such as
information systems, technology, retail, and financial institutions. As a result
of these moves, the Fund's portfolio shifted from 37.5% of the portfolio in
market capitalizations over $2 billion, to 23.5% over $2 billion. The medium
market capitalization of the holdings of the Fund at the end of the fiscal year
was $341 million.
[CHART]
Evergreen Limited Market Fund. The Fund's total return for the ten years ended
September 30, 1994, was 337.64%, which equals an average annual compounded
return of 15.89%. This return compared favorably with the 11.83% return of the
NASDAQ OTC Composite and 11.42% of the Russell 2000 indices over this same time
period. The total return of the Fund for the year ended May 31, 1994 (the former
fiscal year end of the Fund) was 7.64%, compared to the 4.95% and 8.72% returns
of the NASDAQ Composite and Russell 2000 indices, respectively. The total return
of the Fund for the four month period ended September 30, 1994 was 2.55%,
compared to the 3.96% and 3.34% returns of the NASDAQ Composite and Russell 2000
indices, respectively.
During the past four months, the Fund continued its practice of
investing in relatively unknown companies with market capitalizations under $150
million which are believed by management to be undervalued. Companies with
strong projected earnings growth and below market price/earnings ratios
continued to be emphasized. Emphasis was also placed on investment in companies
Evergreen Asset believes are likely acquisition targets. The Fund remains well
diversified with approximately 150 companies represented. Positive contributions
to the Fund's performance came from portfolio holdings involved in merger and
acquisition activity and from individual stock selection. Negative factors in
the Fund's performance included an underweighting in the technology sector and
an overweighting in the consumer discretionary sector. Rising interest rates and
a shift out of the small-cap sector have also both negatively effected the Fund.
[CHART]
Evergreen U.S. Real Estate Equity Fund. For the nine month period ending
September 30, 1994, the Fund's total return declined by -6%, while the Wilshire
Real Estate Index increased by 1.9% and the Standard and Poor's Homebuilding
Index fell by 43.9%. This was the result of a combination of rising interest
rates, investor concern over economically sensitive real estate and homebuilding
stocks and the gradual deflation of the liquidity bubble which led to many real
estate investment trusts being overvalued relative to historic norms.
[CHART]
GENERAL INFORMATION
Portfolio Transactions. Consistent with the Rules of Fair Practice of the
National Association of Securities Dealers, Inc., and subject to seeking best
price and execution, a Fund may consider sales of its shares as a factor in the
selection of dealers to enter into portfolio transactions with the Fund.
Organization. The Evergreen Fund and Evergreen Aggressive Growth Fund are each
separate investment series of the Evergreen Trust, a Massachusetts business
trust reorganized in 1988 from a Maryland predecessor corporation. The Evergreen
U.S. Real Estate Equity Fund is a separate series of Evergreen Real Estate
Equity Trust, a Massachusetts business trust organized in 1988. Evergreen
Limited Market Fund, Inc. is a Maryland corporation organized in 1983. The Funds
do not intend to hold annual shareholder meetings; shareholder meetings will be
held only when required by applicable law. Shareholders have available certain
procedures for the removal of Directors or Trustees.
A shareholder in each class of a Fund will be entitled to his or her
share of all dividends and distributions from a Fund's assets, based upon the
relative value of such shares to those of other Classes of the Fund, and, upon
redeeming shares, will receive the then current net asset value of the Class of
shares of the Fund represented by the redeemed shares less any applicable CDSC.
The Funds are empowered to establish, without shareholder approval, additional
investment series, which may have different investment objectives, and
additional classes of shares for any existing or future series. If an additional
series or class were established in a Fund, each share of the series or class
would normally be entitled to one vote for all purposes. Generally, shares of
each series and class would vote together as a single class on matters, such as
the election of Trustees of Directors, that affect each series and class in
substantially the same manner. Class A, B, C and Y shares have identical voting,
dividend, liquidation and other rights, except that each class bears, to the
extent applicable, its own distribution and transfer agency expenses as well as
any other expenses applicable only to a specific class. Each class of shares
votes separately with respect to Rule 12b-1 distribution plans and other matters
for which separate class voting is appropriate under applicable law. Shares are
entitled to dividends as determined by the Trustees or Directors and, in
liquidation of a Fund, are entitled to receive the net assets of the Fund.
Registrar, Transfer Agent and Dividend-Disbursing Agent. State Street Bank and
Trust Company, P.O. Box 9021, Boston, Massachusetts 02205-9827 acts as each
Fund's registrar, transfer agent and dividend-disbursing agent for a fee based
upon the number of shareholder accounts maintained for the Funds. The transfer
agency fee with respect to the Class B shares will be higher than the transfer
agency fee with respect to the Class A shares or Class C shares.
Principal Underwriter. EFD, a wholly-owned subsidiary of Furman Selz
Incorporated, located 237 Park Avenue, New York, New York 10017, is the
principal underwriter of the Funds. Furman Selz Incorporated, also acts as
sub-administrator to Evergreen Aggressive Growth Fund and which provides certain
sub-administrative services to Evergreen Asset in connection with its role as
investment adviser to Evergreen Fund, Evergreen U.S. Real Estate Equity Fund and
Evergreen Limited Market Fund including providing personnel to serve as officers
of the Funds.
Other Classes of Shares. Each Fund currently offers four classes of shares,
Class A, Class B, Class C and Class Y, and may in the future offer additional
classes. Class Y shares are the only Class of shares offered by this Prospectus
and are only available to (i) all shareholders of record in one or more of the
Funds for which Evergreen Asset served as investment adviser as of December 30,
1994, (ii) certain institutional investors and (iii) investment advisory clients
of Evergreen Asset, CMG and their affiliates. The dividends payable with respect
to Class A, Class B and Class C shares will be less than those payable with
respect to Class Y shares due to the distribution and distribution and
shareholder servicing related expenses borne by Class A, Class B and Class C
shares and the fact that such expenses are not borne by Class Y shares.
Performance Information. From time to time, the Funds may quote their "total
return" or "yield" for a specified period in advertisements, reports or other
communications to shareholders, Total return and yield are computed separately
for Class A, Class B and Class C shares. A Fund's total return for each such
period is computed by finding, through the use of a formula prescribed by the
Securities and Exchange Commission ("SEC"), the average annual compounded rate
of return over the period that would equate an assumed initial amount invested
to the value of the investment at the end of the period. For purposes of
computing total return, dividends and capital gains distributions paid on shares
of a Fund are assumed to have been reinvested when paid and the maximum sales
charges applicable to purchases of a Fund's shares are assumed to have been
paid. Yield is a way of showing the rate of income the Fund earns on its
investments as a percentage of the Fund's share price. The Fund's yield is
calculated according to accounting methods that are standardized by the SEC for
all stock and bond funds. Because yield accounting methods differ from the
method used for other accounting purposes, the Fund's yield may not equal its
distribution rate, the income paid to your account or the net investment income
reported in the Fund's financial statements. To calculate yield, the Fund takes
the interest income it earned from its portfolio of investments (as defined by
the SEC formula) for a 30-day period (net of expenses), divides it by the
average number of shares entitled to receive dividends, and expresses the result
as an annualized percentage rate based on the Fund's share price at the end of
the 30-day period. This yield does not reflect gains or losses from selling
securities
Performance data for each class of shares will be included in any
advertisement or sales literature using performance data of a Fund. These
advertisements may quote performance rankings or ratings of a Fund by financial
publications or independent organizations such as Lipper Analytical Services,
Inc. and Morningstar, Inc. or compare a Fund's performance to various indices.
The Fund may also advertise in items of sales literature an "actual distribution
rate" which is computed by dividing the total ordinary income distributed (which
may include the excess of short-term capital gains over losses) to shareholders
for the latest twelve month period by the maximum public offering price per
share on the last day of the period. Investors should be aware that past
performance may not be reflective of future results.
Liability Under Massachusetts Law. Under Massachusetts law, trustees and
shareholders of a business trust may, in certain circumstances, be held
personally liable for its obligations. The Declarations of Trust under which the
Funds (except for Evergreen Limited Market Fund, Inc.) operate provide that no
trustee or shareholder will be personally liable for the obligations of the
Trust and that every written contract made by the Trust contain a provision to
that effect. If any Trustee or shareholder were required to pay any liability of
the Trust, that person would be entitled to reimbursement from the general
assets of the Trust.
Additional Information. This Prospectus and the Statement of Additional
Information, which has been incorporated by reference herein, do not contain all
the information set forth in the Registration Statements filed by the Trusts or
Evergreen Limited Market Fund, Inc. with the Commission under the Securities
Act. Copies of the Registration Statements may be obtained at a reasonable
charge from the Commission or may be examined, without charge, at the offices of
the Commission in Washington, D.C.
<PAGE>
INVESTMENT ADVISER
Evergreen Asset Management Corp., 2500 Westchester Avenue, Purchase, New York
10577
EVERGREEN FUND, EVERGREEN U.S. REAL ESTATE EQUITY FUND, EVERGREEN LIMITED
MARKET FUND
Capital Management Group of First Union National Bank, 201 South College
Street, Charlotte, North Carolina 28288
EVERGREEN AGGRESSIVE GROWTH FUND
CUSTODIAN & TRANSFER AGENT
State Street Bank & Trust Company, Box 9021, Boston, Massachusetts 02205-9827
LEGAL COUNSEL
Sullivan & Worcester, 1025 Connecticut Avenue, N.W., Washington, D.C. 20036
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP, 1177 Avenue of the Americas, New York, New York 10036
EVERGREEN FUND, EVERGREEN U.S. REAL ESTATE EQUITY FUND, EVERGREEN
AGGRESSIVE GROWTH FUND
Ernst & Young LLP, 200 Clarendon Street, Boston, Massachusetts 02116-5072
EVERGREEN LIMITED MARKET FUND
DISTRIBUTOR
Evergreen Funds Distributor, Inc., 237 Park Avenue, New York, New York 10017
536122
