SEC Info  
    Home      Search      My Interests      Help      Sign In      Please Sign In

Evergreen Income & Growth Fund – ‘485APOS’ on 7/6/95

As of:  Thursday, 7/6/95   ·   Accession #:  275346-95-9   ·   File #s:  2-61391, 811-02829

Previous ‘485APOS’:  None   ·   Next:  ‘485APOS’ on 1/22/97   ·   Latest:  ‘485APOS’ on 1/31/97

  in   Show  &   Hints

  As Of                Filer                Filing    For·On·As Docs:Size

 7/06/95  Evergreen Income & Growth Fund    485APOS                8:497K

Post-Effective Amendment
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 485APOS     Post Effective Amendment                             176±   792K 
 4: EX-27.FINANDATASCHED  Financial Data Schedule (Pre-XBRL)           2±     9K 
 5: EX-27.FINANDATASCHED  Financial Data Schedule (Pre-XBRL)           2±     9K 
 6: EX-27.FINANDATASCHED  Financial Data Schedule (Pre-XBRL)           2±     9K 
 7: EX-27.FINANDATASCHED  Financial Data Schedule (Pre-XBRL)           2±     9K 
 8: EX-99       Performance Schedule                                   1      5K 
 2: EX-99.11    Consent of Auditors                                    1      6K 
 3: EX-99.16    Performance Quotation Computation                      1      6K 


485APOS   —   Post Effective Amendment
Document Table of Contents

Page (sequential) | (alphabetic) Top
 
11st Page   -   Filing Submission
"Item 1. Cover Page Cover Page
"Item 2. Synopsis and Fee Table Overview of the Fund(s); Expense Information
"Item 3. Condensed Financial Information Financial Highlights
"Item 4. General Description of Registrant Cover Page; Description of the Funds; General Information
"Item 5. Management of the Fund Management of the Fund(s); General Information
"Item 5A. Management's Discussion Management's Discussion of Fund Performance
"Item 6. Capital Stock and Other Securities Dividends, Distributions and Taxes; General Information
"Item 7. Purchase of Securities Being Offered Purchase and Redemption of Shares
"Item 8. Redemption or Repurchase Purchase and Redemption of Shares
"Item 9. Pending Legal Proceedings Not Applicable
"Item 12. General Information and History Not Applicable
"Item 14. Management of the Fund Management
"Item 15. Control Persons and Principal Management Holders of Securities
"Item 16. Investment Advisory and Other Services Investment Adviser; Purchase of Shares
"Item 17. Brokerage Allocation Allocation of Brokerage
"Item 18. Capital Stock and Other Securities Purchase of Shares
"Item 19. Purchase, Redemption and Pricing of Distribution Plans; Purchase Securities Being Offered of Shares; Net Asset Value
"Item 20. Tax Status Additional Tax Information
"Item 21. Underwriters Distribution Plans; Purchase of Shares
"Item 22. Calculation of Performance Data Performance Information
"Item 23. Financial Statements Financial Statements
3Table of Contents
6Financial Highlights
14Description of the Funds
"Investment Objectives and Policies
"Investment Practices and Restrictions
"Management of the Funds
"Investment Advisers
"Distribution Plans and Agreements
"Purchase and Redemption of Shares
"How to Buy Shares
"How the Funds Value Their Shares
"How to Redeem Shares
"Other Information
"General Information
"Other Classes of Shares
"Performance Information
15Distributor
30Statement of Additional Information
34Junk Bonds
"Investment Restrictions
42Certain Risk Considerations
"Management
51Investment Adviser
54Distribution Plans
56Allocation of Brokerage
58Additional Tax Information
60Net Asset Value
61Purchase of Shares
64Value
70Total Return
73Foundation
74Financial Statements
77Item 24. Financial Statements and Exhibits
78Item 25. Persons Controlled by or Under Common Control with Registrant
"Item 26. Number of Holders of Securities (as of June 15, 1995)
"Item 27. Indemnification
"Item 28. Business or Other Connections of Investment Adviser
"Item 29. Principal Underwriters
"Item 30. Location of Accounts and Records
"Item 31. Management Services
"Item 32. Undertakings
485APOS1st "Page" of 81TOCTopPreviousNextBottomJust 1st
 

Registration No.2-61391 -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------- FORM N-1A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /x/ Pre-Effective Amendment No. / / Post-Effective Amendment No.23 /x/ and/or REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /x/ Amendment No.23 /x/ (Check appropriate box or boxes) -------------------- THE EVERGREEN TOTAL RETURN FUND (Exact name of registrant as specified in charter) 2500 Westchester Avenue Purchase, N.Y. 10577 (Address of Principal Executive Offices) (Registrant's Telephone Number, Including Area Code (914) 694-2020) Joseph J. McBrien, Esq. Evergreen Asset Management Corp. 2500 Westchester Avenue, Purchase, N.Y. 10577 (Name and address of Agent for Service) It is proposed that this filing will become effective (check appropriate box) / / Immediately upon filing pursuant to paragraph (b) or / / on (date) pursuant to paragraph (b) or /x/ 60 days after filing pursuant to paragraph (a)(i) or / / on (date) pursuant to paragraph (a)(i) or / / 75 days after filing pursuant to paragraph (a)(ii) or / / on (date) pursuant to paragraph (a)(ii) of Rule 485 If appropriate, check the following box: / / This post-effective amendment designates a new effective date for a previously filed post-effective amendment / / 60 days after filing pursuant to paragraph (a)(i) / / on (date) pursuant to paragraph (a)(i) Registrant has registered an indefinite number of shares under the Securities Act of 1933 pursuant to Rule 24f-2 under the Investment Company Act of 1940. Registrant's Rule 24f-2 notice for its fiscal year ended January 31, 1995, was filed on or about March 28, 1995. CROSS REFERENCE SHEET (as required by Rule 481(a)) N-1A Item No. Location in Prospectus(es) Part A Item 1. Cover Page Cover Page Item 2. Synopsis and Fee Table Overview of the Fund(s); Expense Information Item 3. Condensed Financial Information Financial Highlights Item 4. General Description of Registrant Cover Page; Description of the Funds; General Information Item 5. Management of the Fund Management of the Fund(s); General Information Item 5A. Management's Discussion Management's Discussion of Fund Performance Item 6. Capital Stock and Other Securities Dividends, Distributions and Taxes; General Information Item 7. Purchase of Securities Being Offered Purchase and Redemption of Shares Item 8. Redemption or Repurchase Purchase and Redemption of Shares Item 9. Pending Legal Proceedings Not Applicable Location in Statement of Part B Additional Information Item 10. Cover Page Cover Page Item 11. Table of Contents Table of Contents Item 12. General Information and History Not Applicable Item 13. Investment Objectives and Policies Investment Objectives and Policies;Investment Restrictions; Other Restrictions and Operating Policies Item 14. Management of the Fund Management Item 15. Control Persons and Principal Management Holders of Securities Item 16. Investment Advisory and Other Services Investment Adviser; Purchase of Shares Item 17. Brokerage Allocation Allocation of Brokerage Item 18. Capital Stock and Other Securities Purchase of Shares Item 19. Purchase, Redemption and Pricing of Distribution Plans; Purchase Securities Being Offered of Shares; Net Asset Value Item 20. Tax Status Additional Tax Information Item 21. Underwriters Distribution Plans; Purchase of Shares Item 22. Calculation of Performance Data Performance Information Item 23. Financial Statements Financial Statements Part C Information required to be included in Part C is set forth under the appropriate item, so numbered, in Part C to this Registration Statement.
485APOS2nd "Page" of 81TOC1stPreviousNextBottomJust 2nd
******************************************************************************* PROSPECTUS July 7, 1995 EVERGREEN(SM) GROWTH AND INCOME FUNDS (Evergreen Logo appears here) EVERGREEN BALANCED FUND EVERGREEN GROWTH AND INCOME FUND EVERGREEN VALUE FUND EVERGREEN AMERICAN RETIREMENT FUND EVERGREEN FOUNDATION FUND EVERGREEN TOTAL RETURN FUND CLASS A SHARES CLASS B SHARES CLASS C SHARES The Evergreen Growth and Income Funds (the "Funds") are designed to provide investors with a selection of investment alternatives which seek to provide capital growth, income 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 and certain other funds in the Evergreen Group of mutual 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.
485APOS3rd "Page" of 81TOC1stPreviousNextBottomJust 3rd
TABLE OF CONTENTS [Download Table] OVERVIEW OF THE FUNDS 2 EXPENSE INFORMATION 3 FINANCIAL HIGHLIGHTS 5 DESCRIPTION OF THE FUNDS Investment Objectives and Policies 14 Investment Practices and Restrictions 18 MANAGEMENT OF THE FUNDS Investment Advisers 23 Sub-Adviser 24 Distribution Plans and Agreements 25 PURCHASE AND REDEMPTION OF SHARES How to Buy Shares 26 How to Redeem Shares 28 Exchange Privilege 29 Shareholder Services 30 Effect of Banking Laws 30 OTHER INFORMATION Dividends, Distributions and Taxes 31 Management's Discussion of Fund Performance 32 General Information 35 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 GROWTH AND INCOME FUND, EVERGREEN AMERICAN RETIREMENT FUND, EVERGREEN FOUNDATION FUND, and EVERGREEN TOTAL RETURN 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 BALANCED FUND and EVERGREEN VALUE FUND. EVERGREEN BALANCED FUND (formerly First Union Balanced Portfolio) seeks to produce long-term total return through capital appreciation, dividends, and interest income. EVERGREEN GROWTH AND INCOME FUND seeks to achieve a return composed of capital appreciation in the value of its shares and current income. The Fund will attempt to meet its objective by investing in the securities of companies which are undervalued in the marketplace relative to those companies' assets, breakup value, earnings, or potential earnings growth. EVERGREEN VALUE FUND (formerly First Union Value Portfolio) seeks long-term capital growth, with current income as a secondary objective. EVERGREEN AMERICAN RETIREMENT FUND seeks, in order of priority, conservation of capital, reasonable income and capital growth. To achieve these objectives, the Fund invests in a diversified and balanced portfolio of equity and fixed income securities, with emphasis on income-producing securities which appear to have potential for capital appreciation. Investments in equity securities will be limited to 75% of the value of the Fund's total assets measured at the time any such investment is made. Normally, the Fund anticipates that approximately half of the fixed income portion of the Fund's portfolio will be invested in marketable obligations of, or guaranteed by, the U.S. government, its agencies or instrumentalities. EVERGREEN FOUNDATION FUND seeks, in order of priority, reasonable income, conservation of capital and capital appreciation. The Fund invests principally in income-producing common and preferred stocks, securities convertible into or exchangeable for common stocks and fixed income securities. EVERGREEN TOTAL RETURN FUND attempts to maximize the "total return" on its portfolio of investments. It invests primarily in common and preferred stocks, securities convertible into or exchangeable for common stocks and fixed income securities. THERE IS NO ASSURANCE THAT THE INVESTMENT OBJECTIVE OF ANY FUND WILL BE ACHIEVED. 2
485APOS4th "Page" of 81TOC1stPreviousNextBottomJust 4th
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 the Fund. For further information see "Purchase and Redemption of Fund Shares" and "General Information -- Other Classes of Shares". [Enlarge/Download Table] SHAREHOLDER TRANSACTION EXPENSES Class A Shares Class B Shares Class C Shares 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 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 reflects the conversion to Class A Shares eight years after purchase (years eight through ten, therefore, reflect Class A expenses). EVERGREEN BALANCED FUND [Enlarge/Download Table] 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 Advisory Fees .50% .50% .50% After 1 Year $ 56 $ 66 $ 26 $ 16 Administrative Fees .06% .06% .06% After 3 Years $ 74 $ 81 $ 51 $ 81 12b-1 Fees* .25% .75% .75% After 5 Years $ 93 $ 108 $ 88 $ 88 Shareholder Service Fees -- .25% .25% After 10 Years $ 150 $ 163 $ 192 $ 163 Other Expenses .06% .06% .06% Total .87% 1.62% 1.62% Class C Advisory Fees $ 16 Administrative Fees $ 51 12b-1 Fees* $ 88 Shareholder Service Fees $ 192 Other Expenses Total EVERGREEN GROWTH AND INCOME FUND [Enlarge/Download Table] 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 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 $ 95 $ 103 $ 73 $ 73 Other Expenses .33% .33% .33% After 5 Years $ 129 $ 145 $ 125 $ 125 Total 1.58% 2.33% 2.33% After 10 Years $ 226 $ 239 $ 267 $ 239 Class C Advisory Fees $ 24 12b-1 Fees* $ 73 Other Expenses $ 125 Total $ 267 EVERGREEN VALUE FUND [Enlarge/Download Table] 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 Advisory Fees .50% .50% .50% After 1 Year $ 56 $ 67 $ 27 $ 17 Administrative Fees .06% .06% .06% After 3 Years $ 75 $ 82 $ 52 $ 52 12b-1 Fees* .25% .75% .75% After 5 Years $ 95 $ 110 $ 90 $ 90 Shareholder Service Fees -- .25% .25% After 10 Years $ 154 $ 167 $ 197 $ 167 Other Expenses .10% .10% .10% Total .91% 1.66% 1.66% Class C Advisory Fees $ 17 Administrative Fees $ 52 12b-1 Fees* $ 90 Shareholder Service Fees $ 197 Other Expenses Total 3
485APOS5th "Page" of 81TOC1stPreviousNextBottomJust 5th
EVERGREEN AMERICAN RETIREMENT FUND [Enlarge/Download Table] 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 Advisory Fees .75% .75% .75% After 1 Year $ 62 $ 73 $ 33 $ 23 12b-1 Fees* .25% 1.00% 1.00% After 3 Years $ 94 $ 101 $ 71 $ 71 Other Expenses .53% .53% .53% After 5 Years $ 127 $ 142 $ 122 $ 122 Total 1.53% 2.28% 2.28% After 10 Years $ 221 $ 234 $ 262 $ 234 Class C Advisory Fees $ 23 12b-1 Fees* $ 71 Other Expenses $ 122 Total $ 262 EVERGREEN FOUNDATION FUND [Enlarge/Download Table] 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 Advisory Fees .875% .875% .875% After 1 Year $ 61 $ 72 $ 32 $ 22 12b-1 Fees* .250% 1.000% 1.000% After 3 Years $ 89 $ 97 $ 67 $ 67 Other Expenses .265% .265% .265% After 5 Years $ 120 $ 135 $ 115 $ 115 Total 1.390% 2.140% 2.140% After 10 Years $ 206 $ 219 $ 247 $ 219 Class C Advisory Fees $ 22 12b-1 Fees* $ 67 Other Expenses $ 115 Total $ 247 EVERGREEN TOTAL RETURN FUND [Enlarge/Download Table] 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 Advisory Fees 1.00% 1.00% 1.00% After 1 Year $ 62 $ 73 $ 33 $ 23 12b-1 Fees* .25% 1.00% 1.00% After 3 Years $ 92 $ 100 $ 70 $ 70 Other Expenses .24% .24% .24% After 5 Years $ 125 $ 140 $ 120 $ 120 Total 1.49% 2.24% 2.24% After 10 Years $ 217 $ 230 $ 257 $ 230 Class C Advisory Fees $ 23 12b-1 Fees* $ 70 Other Expenses $ 120 Total $ 257 *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 GROWTH AND INCOME FUND, EVERGREEN AMERICAN RETIREMENT FUND, EVERGREEN FOUNDATION FUND and EVERGREEN TOTAL RETURN 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. From time to time, each Fund's investment adviser may, at its descretion, 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 charges permitted under the rules of the National Association of Securities Dealers, Inc. 4
485APOS6th "Page" of 81TOC1stPreviousNextBottomJust 6th
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 BALANCED FUND and EVERGREEN VALUE FUND has been audited by KPMG Peat Marwick LLP, each Fund's independent auditors, for EVERGREEN FOUNDATION FUND has been audited by Price Waterhouse LLP, the Fund's independent auditors and for EVERGREEN AMERICAN RETIREMENT FUND, EVERGREEN GROWTH AND INCOME FUND and EVERGREEN TOTAL RETURN FUND has been audited by Ernst & Young LLP, each Fund's independent auditors. A report of KPMG Peat Marwick LLP, Price Waterhouse LLP, or Ernst & Young 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. No financial highlights are shown for Class A, B or C Shares of EVERGREEN GROWTH and INCOME FUND, EVERGREEN AMERICAN RETIREMENT FUND or EVERGREEN FOUNDATION FUND, since these classes did not have any operations prior to December 31, 1994. Further information about a Fund's performance is contained in the Fund's annual report to shareholders, which may be obtained without charge. EVERGREEN BALANCED FUND -- CLASS A, B, C AND Y SHARES [Enlarge/Download Table] CLASS A SHARES CLASS C CLASS Y SHARES CLASS B SHARES SHARES JUNE 10, JANUARY 26, SEPTEMBER 2, 1991* 1993* 1994* YEAR ENDED THROUGH YEAR ENDED THROUGH THROUGH DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, YEAR ENDED DECEMBER 31, 1994 1993 1992 1991 1994 1993 1994 1994 1993 1992 PER SHARE DATA Net asset value, beginning of period............. $12.07 $11.41 $11.02 $10.00 $12.08 $11.54 $12.00 $12.07 $11.41 $11.02 Income (loss) from investment operations: Net investment income............. .43 .42 .42 .30 .36 .34 .18 .46 .45 .46 Net realized and unrealized gain (loss) on investments........ (.71) .75 .43 1.08 (.71) .65 (.61) (.71) .75 .42 Total from investment operations....... (.28) 1.17 .85 1.38 (.35) .99 (.43) (.25) 1.20 .88 Less distributions to shareholders from: Net investment income............. (.43) (.42) (.42) (.35) (.36) (.34) (.21) (.46) (.45) (.45) Net realized gains.............. (.19) (.09) (.04) (.01) (.19) (.09) (.19) (.19) (.09) (.04) In excess of net investment income............. -- -- -- -- -- (.02)(a) -- -- -- -- Total distributions.... (.62) (.51) (.46) (.36) (.55) (.45) (.40) (.65) (.54) (.49) Net asset value, end of period.......... $11.17 $12.07 $11.41 $11.02 $11.18 $12.08 $11.17 $11.17 $12.07 $11.41 TOTAL RETURN+....... (2.4%) 10.4% 7.9% 11.8% (3.0%) 8.7% (3.6%) (2.2%) 10.7% 8.2% RATIOS & SUPPLEMENTAL DATA Net assets, end of period (000's omitted).... $41,010 $35,032 $17,408 $334 $100,052 $ 65,475 $195 $778,657 $760,147 $520,232 Ratios to average net assets: Expenses........... .89% .91% .91% .92%++ 1.48% 1.41%++ 1.64%++ .64% .66% .66% Net investment income............. 3.69% 3.61% 3.93% 4.38%++ 3.12% 3.09%++ 3.23%++ 3.93% 3.86% 4.20% Portfolio turnover rate............... 35% 19% 12% 19% 35% 19% 35% 35% 19% 12% APRIL 1, 1991* THROUGH DECEMBER 31, 1991 PER SHARE DATA Net asset value, beginning of period............. $10.00 Income (loss) from investment operations: Net investment income............. .36 Net realized and unrealized gain (loss) on investments........ 1.03 Total from investment operations....... 1.39 Less distributions to shareholders from: Net investment income............. (.36) Net realized gains.............. (.01) In excess of net investment income............. -- Total distributions.... (.37) Net asset value, end of period.......... $11.02 TOTAL RETURN+....... 15.0% RATIOS & SUPPLEMENTAL DATA Net assets, end of period (000's omitted).... $247,472 Ratios to average net assets: Expenses........... .68%++ Net investment income............. 4.86%++ Portfolio turnover rate............... 19% * 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) Distributions in excess of net investment income for the year ended December 31, 1993 were the result of certain book and tax differences. These differences did not represent a return of capital for federal income tax purposes for the year ended December 31, 1993. 5
485APOS7th "Page" of 81TOC1stPreviousNextBottomJust 7th
EVERGREEN GROWTH AND INCOME FUND -- CLASS Y SHARES [Enlarge/Download Table] YEAR ENDED DECEMBER 31, 1994 1993 1992 1991 1990 1989 1988** PER SHARE DATA Net asset value, beginning of period................. $15.41 $14.18 $12.99 $10.72 $12.03 $10.62 $9.38 Income (loss) from investment operations: Net investment income....... .14 .14 .15 .19 .30 .52 .19 Net realized and unrealized gain (loss) on investments............... .12 1.91 1.65 2.58 (.84) 2.17 2.10 Total from investment operations.............. .26 2.05 1.80 2.77 (.54) 2.69 2.29 Less distributions to shareholders from: Net investment income....... (.14) (.14) (.15) (.19) (.30) (.52) (.19) Net realized gains.......... (1.01) (.68) (.46) (.31) (.47) (.76) (.86) Total distributions....... (1.15) (.82) (.61) (.50) (.77) (1.28) (1.05) Net asset value, end of period.................... $14.52 $15.41 $14.18 $12.99 $10.72 $12.03 $10.62 TOTAL RETURN+............... 1.7% 14.4% 13.8% 25.8% (4.5%) 25.4% 24.6% RATIOS & SUPPLEMENTAL DATA Net assets, end of period (000's omitted)........... $73,457 $77,062 $63,841 $47,763 $36,222 $31,540 $24,399 Ratios to average net assets: Expenses.................. 1.33% 1.26% 1.33% 1.41% 1.50% 1.54% 1.56% Net investment income..... .96% .99% 1.18% 1.55% 2.62% 4.13% 1.70% Portfolio turnover rate..... 29% 28% 30% 23% 41% 53% 41% OCTOBER 15, 1986* THROUGH DECEMBER 31, 1987** 1986** PER SHARE DATA Net asset value, beginning of period................. $10.05 $10.00 Income (loss) from investment operations: Net investment income....... .20 .07 Net realized and unrealized gain (loss) on investments............... (.63) (.02) Total from investment operations.............. (.43) .05 Less distributions to shareholders from: Net investment income....... (.24) -- Net realized gains.......... -- -- Total distributions....... (.24) -- Net asset value, end of period.................... $9.38 $10.05 TOTAL RETURN+............... (4.3%) .5% RATIOS & SUPPLEMENTAL DATA Net assets, end of period (000's omitted)........... $21,471 $20,696 Ratios to average net assets: Expenses.................. 1.76% 1.73%++ Net investment income..... 1.90% 3.23%++ Portfolio turnover rate..... 48% 4% * Commencement of operations. ** Net investment income is based on the average monthly shares outstanding for the periods indicated. + Total return is calculated on net asset value per share for the period indicated and is not annualized. ++ Annualized. 6
485APOS8th "Page" of 81TOC1stPreviousNextBottomJust 8th
EVERGREEN VALUE FUND -- CLASS Y SHARES [Enlarge/Download Table] JANUARY 3, 1991* THROUGH YEAR ENDED DECEMBER 31, DECEMBER 31, 1994 1993 1992 1991 PER SHARE DATA Net asset value, beginning of period...................................... $17.63 $17.11 $17.08 $14.28 Income from investment operations: Net investment income..................................................... .56 .52 .49 .47 Net realized and unrealized gain (loss) on investments.................... (.20) 1.12 .90 3.53 Total from investment operations........................................ .36 1.64 1.39 4.00 Less distributions to shareholders from: Net investment income..................................................... (.56) (.52) (.49) (.47) Net realized gains........................................................ (.82) (.58) (.87) (.73) In excess of net investment income........................................ -- (.02)(b) -- -- Total distributions..................................................... (1.38) (1.12) (1.36) (1.20) Net asset value, end of period............................................ $16.61 $17.63 $17.11 $17.08 TOTAL RETURN+............................................................. 2.1% 9.7% 8.3% 25.4% RATIOS & SUPPLEMENTAL DATA Net assets, end of period (000's omitted)................................. $507,028 $463,087 $326,154 $271,391 Ratios to average net assets: Expenses................................................................ .68% .65% .68%(a) .69%++(a) Net investment income................................................... 3.21% 2.98% 2.90%(a) 3.04%++(a) Portfolio turnover rate................................................... 70% 46% 56% 69% * Commencement of class operations. + Total return is calculated on net asset value per share 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: [Enlarge/Download Table] JANUARY 3, 1991 YEAR ENDED THROUGH DECEMBER 31, 1992 DECEMBER 31, 1991 Expenses.................................................. .69% .77% Net investment income..................................... 2.89% 2.96% (b) Distributions in excess of net investment income for the period ended December 31, 1993 were the result of certain book and tax timing differences. These distributions did not represent a return of capital for federal income tax purposes for the year ended December 31, 1993. 7
485APOS9th "Page" of 81TOC1stPreviousNextBottomJust 9th
EVERGREEN VALUE FUND -- CLASS A SHARES [Enlarge/Download Table] NINE MONTHS ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, YEAR ENDED MARCH 31, 1994 1993 1992 1991 1990* 1990 1989 1988 PER SHARE DATA Net asset value, beginning of period.......................... $17.63 $17.11 $17.08 $14.61 $15.12 $14.45 $12.83 $14.66 Income (loss) from investment operations...................... Net investment income............ .52 .47 .44 .46 .36 .54 .36 .26 Net realized and unrealized gain (loss) on investments........... (.20) 1.10 .89 3.17 (.44) 1.70 2.11 (1.30) Total from investment operations.................... .32 1.57 1.33 3.63 (.08) 2.24 2.47 (1.04) Less distributions to shareholders from: Net investment income............ (.51) (.47) (.43) (.43) (.36) (.57) (.38) (.26) Net realized gains............... (.82) (.58) (.87) (.73) (.02) (1.00) (.47) (.53) In excess of net investment income.......................... -- -- -- -- (.05)(c) -- -- -- Total distributions............. (1.33) (1.05) (1.30) (1.16) (.43) (1.57) (.85) (.79) Net asset value, end of period.......................... $16.62 $17.63 $17.11 $17.08 $14.61 $15.12 $14.45 $12.83 TOTAL RETURN+.................... 1.9% 9.3% 8.0% 25.1% (.5%) 15.5% 19.7% (7.1%) RATIOS & SUPPLEMENTAL DATA Net assets, end of period (000's omitted)................. $188,807 $189,983 $169,310 $135,565 $104,637 $95,995 $83,121 $21,914 Ratios to average net assets: Expenses........................ .93% .99% 1.01%(a) .96%(a) 1.39%++ 1.55% 1.71% 1.74% Net investment income........................ 2.96% 2.63% 2.37%(a) 2.78%(a) 3.28%++ 3.42% 2.72% 1.92% Portfolio turnover rate (b)........................ 70% 46% 56% 69% 13% 11% 24% 24% 1987 1986 PER SHARE DATA Net asset value, beginning of period.......................... $12.35 $10.04 Income (loss) from investment operations...................... Net investment income............ .15 .19 Net realized and unrealized gain (loss) on investments........... 2.38 2.32 Total from investment operations.................... 2.53 2.51 Less distributions to shareholders from: Net investment income............ (.13) (.20) Net realized gains............... (.09) -- In excess of net investment income.......................... -- -- Total distributions............. (.22) (.20) Net asset value, end of period.......................... $14.66 $12.35 TOTAL RETURN+.................... 20.8% 25.3% RATIOS & SUPPLEMENTAL DATA Net assets, end of period (000's omitted)................. $23,221 $5,595 Ratios to average net assets: Expenses........................ 1.97% 2.00% Net investment income........................ 1.41% 2.34% Portfolio turnover rate (b)........................ 20% 20% * The Fund changed its fiscal year end to December 31. + 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 to average net assets, exclusive of any applicable state expense limitations, would have been the following: [Enlarge/Download Table] YEAR ENDED DECEMBER 31, 1992 1991 Expenses........................................................................... 1.02% 1.05% Net investment income.............................................................. 2.36% 2.69% (b) Portfolio turnover rate for periods ending on or after March 31, 1986 include certain U.S. government obligations. (c) Distributions in excess of net investment income for the period ended December 31, 1990 were a result of certain book and tax timing differences. These distributions did not represent a return of capital for federal income tax purposes for the year ended December 31, 1990. 8
485APOS10th "Page" of 81TOC1stPreviousNextBottomJust 10th
EVERGREEN VALUE FUND -- CLASS B AND C SHARES [Enlarge/Download Table] CLASS C CLASS B SHARES SHARES FEBRUARY 2, SEPTEMBER 2, 1993* 1994* YEAR ENDED THROUGH THROUGH DECEMBER 31, DECEMBER 31, DECEMBER 31, 1994 1993 1994 PER SHARE DATA Net asset value, beginning of period.......................................... $17.63 $17.24 $18.28 Income (loss) from investment operations: Net investment income......................................................... .42 .35 .19 Net realized and unrealized gain (loss) on investments........................ (.20) 1.01 (.81) Total from investment operations............................................ .22 1.36 (.62) Less distributions to shareholders from: Net investment income......................................................... (.41) (.35) (.19) Net realized gains............................................................ (.82) (.58) (.82) In excess of net investment income............................................ -- (.04)(a) (.04)(a) Total distributions......................................................... (1.23) (.97) (1.05) Net asset value, end of period................................................ $16.62 $17.63 $16.61 TOTAL RETURN+................................................................. 1.3% 8.0% (3.4%) RATIOS & SUPPLEMENTAL DATA Net assets, end of period (000's omitted)..................................... $104,297 $ 59,953 $485 Ratios to average net assets: Expenses.................................................................... 1.53% 1.48%++ 1.68%++ Net investment income....................................................... 2.36% 2.09%++ 2.16%++ Portfolio turnover rate....................................................... 70% 46% 70% * Commencement of class operations. + Total return is calculated on net asset value per share for the period indicated and is not annualized. Contingent deferred sales charge is not reflected. ++ Annualized. (a) Distributions in excess of net investment income, for the Class B Shares, for the period ended December 31, 1993 and for the Class C Shares, for the period ended December 31, 1994, were the result of certain book and tax timing differences. These distributions did not represent a return of capital for federal income tax purposes for the year ended December 31, 1993 and December 31, 1994. 9
485APOS11th "Page" of 81TOC1stPreviousNextBottomJust 11th
EVERGREEN AMERICAN RETIREMENT FUND -- CLASS Y SHARES [Enlarge/Download Table] YEAR ENDED DECEMBER 31, 1994 1993 1992 1991 1990 1989 PER SHARE DATA Net asset value, beginning of period........... $11.60 $10.95 $10.52 $9.59 $10.41 $10.09 Income (loss) from investment operations: Net investment income.......................... .60 .56 .66 .60 .60 .57 Net realized and unrealized gain (loss) on investments.................................. (.93) .96 .55 1.15 (.66) .76 Total from investment operations............. (.33) 1.52 1.21 1.75 (.06) 1.33 Less distributions to shareholders from: Net investment income.......................... (.60) (.60) (.61) (.60) (.60) ) (.59 Net realized gains............................. -- (.24) (.17) (.22) (.16) ) (.42 In excess of net realized gains................ -- (.03)(b) -- -- -- -- Total distributions.......................... (.60) (.87) (.78) (.82) (.76) )(1.01 Net asset value, end of period................. $10.67 $11.60 $10.95 $10.52 $9.59 $10.41 TOTAL RETURN+.................................. (2.9%) 14.1% 11.8% 18.8% (.5%) 13.4% RATIOS & SUPPLEMENTAL DATA Net assets, end of period (000's omitted)...... $37,176 $37,336 $23,781 $15,632 $12,351 $ 11,610 Ratios to average net assets: Expenses..................................... 1.28% 1.36% 1.51%(a) 1.50%(a) 1.50%(a) (1.88%a) Net investment income........................ 5.40% 5.13% 6.23%(a) 5.91%(a) 6.04%(a) (5.49%a) Portfolio turnover rate........................ 136% 92% 151% 97% 33% 152% MARCH 14, 1988* THROUGH DECEMBER 31, 1988** PER SHARE DATA Net asset value, beginning of period........... $10.00 Income (loss) from investment operations: Net investment income.......................... .39 Net realized and unrealized gain (loss) on investments.................................. .18 Total from investment operations............. .57 Less distributions to shareholders from: Net investment income.......................... (.36) Net realized gains............................. (.12) In excess of net realized gains................ -- Total distributions.......................... (.48) Net asset value, end of period................. $10.09 TOTAL RETURN+.................................. 5.8% RATIOS & SUPPLEMENTAL DATA Net assets, end of period (000's omitted)...... $9,449 Ratios to average net assets: Expenses..................................... 2.00%++ Net investment income........................ 5.01%++ Portfolio turnover rate........................ 52% * Commencement of operations. ** Investment income, expenses and net investment income are based upon the 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. (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: [Enlarge/Download Table] YEAR ENDED DECEMBER 31, 1992 1991 1990 1989 Expenses.................................................... 1.59% 1.82% 1.95% 2.03% Net investment income....................................... 6.15% 5.59% 5.59% 5.34% (b) Distributions in excess of net realized gains were the result of certain book and tax timing differences. These distributions did not represent a return of capital for federal income tax purposes. 10
485APOS12th "Page" of 81TOC1stPreviousNextBottomJust 12th
EVERGREEN FOUNDATION FUND -- CLASS Y SHARES [Enlarge/Download Table] JANUARY 2, 1990* YEAR ENDED DECEMBER 31, THROUGH 1994 1993 1992 1991 DECEMBER 31, 1990 PER SHARE DATA Net asset value, beginning of period................................. $13.12 $11.98 $10.75 $8.95 $10.00 Income (loss) from investment operations: Net investment income................................................ .42 .31 .27 .33 1.23(b) Net realized and unrealized gain (loss) on investments............... (.57) 1.55 1.83 2.77 (.59) Total from investment operations................................... (.15) 1.86 2.10 3.10 .64 Less distributions to shareholders from: Net investment income................................................ (.42) (.31) (.24) (.33) (1.17) Net realized gains................................................... (.28) (.41) (.63) (.97) (.52) Total distributions................................................ (.70) (.72) (.87) (1.30) (1.69) Net asset value, end of period....................................... $12.27 $13.12 $11.98 $10.75 $8.95 TOTAL RETURN+........................................................ (1.1%) 15.7% 20.0% 36.4% 6.6% RATIOS & SUPPLEMENTAL DATA Net assets, end of period (in millions).............................. $332 $240 $64 $11 $2 Ratios to average net assets: Expenses........................................................... 1.14% 1.20% 1.40%(a) 1.20%(a) 0%(a)++ Net investment income.............................................. 3.51% 2.81% 2.93%(a) 2.86%(a) 15.07%(a,b)++ Portfolio turnover rate.............................................. 33% 60% 127% 178% 131% * Commencement of operations. + Total return is calculated on net asset value per share for the period indicated and is not annualized. ++ Annualized (a) Net of expense waivers and reimbursements by the Adviser. 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: [Enlarge/Download Table] JANUARY 2, 1990 YEAR ENDED THROUGH DECEMBER 31, DECEMBER 31, 1992 1991 1990 Expenses................................................... 1.43% 2.58% 3.64% Net investment income...................................... 2.90% 1.48% 11.43% (b) Includes receipt of a special dividend representing $.62 per share net investment income and 7.59% of average net assets. 11
485APOS13th "Page" of 81TOC1stPreviousNextBottomJust 13th
EVERGREEN TOTAL RETURN FUND -- CLASS A, B AND C SHARES [Enlarge/Download Table] CLASS A CLASS B CLASS C SHARES SHARES SHARES JANUARY 3, 1995* THROUGH JANUARY 31, 1995 PER SHARE DATA Net asset value, beginning of period........................................................ $17.09 $17.09 $17.09 Income from investment operations: Net investment income....................................................................... .02 .02 .01 Net realized and unrealized gain on investments............................................. .17 .17 .17 Total from investment operations.......................................................... .19 .19 .18 Net asset value, end of period.............................................................. $17.28 $17.28 $17.27 TOTAL RETURN+............................................................................... 1.1% 1.1% 1.1% RATIOS & SUPPLEMENTAL DATA Net assets, end of period (000's omitted)................................................... $119 $599 $24 Ratios to average net assets: Expenses.................................................................................. 1.45% ++ 2.23% ++ 2.22% ++ Net investment income..................................................................... 4.09% ++ 3.23% ++ 2.68% ++ Portfolio turnover rate**................................................................... 151% 151% 151% * Commencement of class operations. ** Portfolio turnover rate is calculated for the ten month period ended January 31, 1995. + Total return calculated is for the period indicated and is not annualized. Initial sales charge or contingent deferred sales charge is not reflected. ++ Annualized. 12
485APOS14th "Page" of 81TOC1stPreviousNextBottomJust 14th
EVERGREEN TOTAL RETURN FUND -- CLASS Y SHARES [Enlarge/Download Table] TEN MONTHS ENDED JANUARY YEAR ENDED MARCH 31, 31, 1995* 1994 1993 1992 1991 1990 1989 1988 1987 PER SHARE DATA Net asset value, beginning of period........................... $18.29 $20.90 $18.82 $18.12 $18.26 $17.92 $17.11 $20.37 $19.72 Income (loss) from investment operations: Net investment income................. 87 1.08 1.11 1.08 1.02 1.07 1.12 1.06 1.14 Net realized and unrealized gain (loss) on investments............... (.55) (1.41) 2.51 .70 (.08) .36 .79 (2.64) 1.76 Total from investment operations........................ .32 (.33) 3.62 1.78 .94 1.43 1.91 (1.58) 2.90 Less distributions to shareholders from: Net investment income................. (1.08) (1.08) (1.08) (1.08) (1.08) (1.09) (1.08) (.80) (1.14) Net realized gains.................... (.25) (1.20) (.46) -- -- -- (.02) (.88) (1.11) Total distributions................. (1.33) (2.28) (1.54) (1.08) (1.08) (1.09) (1.10) (1.68) (2.25) Net asset value, end of period........ $17.28 $18.29 $20.90 $18.82 $18.12 $18.26 $17.92 $17.11 $20.37 TOTAL RETURN+......................... 1.9% (2.1%) 20.2% 10.2% 5.8% 7.9% 1.3% (7.8%) 15.7% RATIOS & SUPPLEMENTAL DATA Net assets, end of period (in millions)....................... $942 $1,065 $1,142 $1,032 $1,151 $1,292 $1,312 $1,346 $1,636 Ratios to average net assets: Expenses............................ 1.24%++ 1.18% 1.18% 1.21% 1.23% 1.18% 1.02%** 1.01%** 1.02%** Net investment income............... 5.70%++ 5.29% 5.65% 5.73% 5.90% 5.64% 6.36%** 5.80%** 5.68%** Portfolio turnover rate............... 151% 106% 164% 137% 137% 89% 86% 81% 44% 1986 PER SHARE DATA Net asset value, beginning of period........................... $16.63 Income (loss) from investment operations: Net investment income................. 1.03 Net realized and unrealized gain (loss) on investments............... 4.26 Total from investment operations........................ 5.29 Less distributions to shareholders from: Net investment income................. (1.22) Net realized gains.................... (.98) Total distributions................. (2.20) Net asset value, end of period........ $19.72 TOTAL RETURN+......................... 35.2% RATIOS & SUPPLEMENTAL DATA Net assets, end of period (in millions)....................... $408 Ratios to average net assets: Expenses............................ 1.11%** Net investment income............... 6.06%** Portfolio turnover rate............... 65% * On September 21, 1994, the Fund changed its fiscal year end to January 31. ** Net of expense limitation in fiscal years 1986, 1987, 1988 and 1989. + Total return is calculated on net asset value per share for the period indicated and is not annualized. ++ Annualized. 13 14 ------------------------------------------------------------------------------- DESCRIPTION OF THE FUNDS ------------------------------------------------------------------------------- INVESTMENT OBJECTIVES AND POLICIES Evergreen Balanced Fund The investment objective of the Evergreen Balanced Fund (formerly First Union Balanced Portfolio) is to achieve a long-term total return through capital appreciation, dividends and interest income. This objective is a fundamental policy and may not be changed without shareholder approval. The Fund invests in common and preferred stocks for growth and fixed income securities to provide a stable income flow. There can be no assurance that the Fund's investment objective will be achieved. The percentage of the Fund's assets invested in common and preferred stocks will vary from time to time in accordance with changing economic and market conditions. It is anticipated that over the long term the Fund's portfolio will average 60% in common and preferred stocks and 40% in bonds. However, normally the Fund's asset allocation will range between 40-75% in common and preferred stocks, 25-50% fixed income securities (including some convertible securities) and 0-25% cash equivalents. Moderate shifts between types of assets are made in an attempt to maximize returns or reduce risk. The Funds invest in common, preferred and convertible preferred stocks and bonds of U.S. companies with a minimum of $100 million in market capitalization and which are listed on major stock exchanges or traded over-the-counter. The criteria for such investment selection includes a company's financial strength (such as cash flow and low debt-to-equity ratio), earnings growth and price in relation to current earnings, dividends and book value to identify growth opportunities. The Fund may also invest in American Depositary Receipts ("ADRs") of foreign companies which are traded on the New York or American Stock Exchanges or the over-the-counter market. The fixed income portion of the Fund's portfolio may be invested in corporate bonds (including convertible bonds) which are rated A or higher 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 which, if unrated, are considered to be of comparable quality by the Fund's investment adviser. Bonds are selected based upon the outlook for interest rates and their yield in relation to other bonds of similar quality and maturity. The maturities of these bonds may be medium (i.e., from five to ten years) to long-term (i.e., over ten years), but in no event will they be longer than twenty years. The Fund also invests in securities which are either issued or guaranteed by the U.S. government, its agencies or instrumentalities. These securities include direct obligations of the U.S. Treasury, such as U.S. Treasury bills, notes and bonds; and notes, bonds and discount notes of U.S. government agencies or instrumentalities, such as the Farm Credit System, including the National Bank for Cooperatives, Farm Credit Banks and Banks for Cooperatives, Farmers Home Administration, Federal Home Loan Banks, Federal Home Loan Mortgage Corporation, Federal National Mortgage Association, Government National Mortgage Association, Student Loan Marketing Association, Tennessee Valley Authority, Export-Import Bank of the United State, Commodity Credit Corporation, Federal Financing Bank and National Credit Union Administration. Some of these securities are supported by the full faith and credit of the U.S. government, and others are supported only by the credit of the agency or instrumentality. The Fund may also invest short-term in cash equivalents for defensive purposes; securities issued and/or guaranteed by the U.S. government, its agencies or instrumentalities, and repurchase agreements collateralized by eligible investments. As of December 31, 1992, 1993 and 1994, approximately 59%, 63% and 55%, respectively, of the Fund's portfolio consisted of equity securities. The Fund may employ certain additional investment strategies which are discussed in "Investment Practices and Restrictions", below. Evergreen Growth and Income Fund The investment objective of Evergreen Growth and Income Fund (formerly known as the Evergreen Value Timing Fund) is to achieve a return composed of capital appreciation in the value of its shares and current income. (The Fund's investment objective is a fundamental policy.) There can be no assurance that the Fund's investment objective will be achieved. The Fund seeks to achieve its investment objective by investing in the securities of companies which are undervalued in the marketplace relative to those companies' assets, breakup value, earnings or potential earnings growth. These companies are often found among those which have had a record of financial success but are currently in disfavor in the marketplace for reasons the Fund's investment adviser perceives as temporary or erroneous. Such investments when successfully timed are expected to be the means for achieving the Fund's investment objective. This inherently contrarian approach may require greater reliance upon the analytical and research capabilities of the Fund's investment adviser than an investment in certain other equity funds. Consequently, an investment in the Fund may involve more risk than other equity funds. 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 the Fund be considered a balanced or complete investment program. The Fund will use the "value timing" approach as a process for purchasing securities when events indicate that fundamental investment values are being ignored in the marketplace. Fundamental investment value is based on one or more of the following: assets -- tangible and intangible (examples of the latter include brand names or licenses), capitalization of earnings, cash flow or potential earnings growth. A discrepancy between market valuation and fundamental value often arises due to the presence of unrecognized assets or business opportunities, or as a result of incorrectly perceived or short-term negative factors. Changes in regulations, basic economic or monetary shifts and legal action (including the initiation of bankruptcy proceedings) are some of the factors that create these capital appreciation opportunities. If the securities in which the Fund invests never reach their perceived potential or the valuation of such securities in the marketplace does not in fact reflect significant undervaluation, there may be little or no appreciation or a depreciation in the value of such securities. The Fund will invest primarily in common stocks and securities convertible into or exchangeable for common stock. It is anticipated that the Fund's investments in these securities will contribute to the Fund's return primarily through capital appreciation. In addition, the Fund will invest in nonconvertible preferred stocks and debt securities. It is anticipated that the Fund's investments in these securities will also produce capital appreciation but the current income component of return will be a more significant factor in their selection. However, the Fund will invest in nonconvertible preferred stock and debt securities only if the anticipated capital appreciation plus income from such investments is equivalent to that anticipated from investments in equity or equity-related securities. The Fund may invest up to 5% of its total assets in debt securities which are rated below investment grade, commonly known as "junk bonds". Investments of this type are subject to greater risk of loss of principal and interest. 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 Value Fund The investment objective of the Evergreen Value Fund (formerly the First Union Value Portfolio) is long-term capital appreciation with current income as a secondary objective. The Fund's objective is a fundamental policy and may not be changed without shareholder approval. Normally, at least 75% of the Fund's assets will be invested in equity securities of U.S. companies with prospects for earnings growth and dividends. There can be no assurance that the Fund's investment objective will be achieved. The Fund's investments, in order of priority, consist of: common and preferred stocks, bonds and convertible preferred stock of U.S. companies with a minimum market capitalization of $100 million which are listed on the New York or American Stock Exchanges or traded in over-the-counter markets. The primary consideration is for those industries and companies with the potential for capital appreciation; income is a secondary consideration; ADRs of foreign companies traded on the New York or American Stock Exchanges or the over-the-counter market; foreign securities (either foreign or U.S. securities traded in foreign markets). The Fund may also invest in obligations denominated in foreign currencies. In making these decisions, the Fund's investment adviser will consider such factors as the condition and growth potential of various economies and securities markets, currency and taxation implications and other pertinent financial, social, national and political factors. (See "Investment Practices and Restrictions Special Risk Considerations"); convertible bonds rated no lower than BBB by S&P or Baa by Moody's or, if not rated, determined to be of comparable quality by the Fund's investment adviser; money market instruments; fixed rate notes and bonds and adjustable and variable rate notes of companies whose common stock the Fund may acquire rated no lower than BBB by S&P or Baa by Moody's or which, if not rated, determined to be of comparable quality by the Fund's investment adviser (up to 5% of total assets); zero coupon bonds issued or guaranteed by the U.S. government, its agencies or instrumentalities (up to 5% of total assets); obligations, including certificates of deposit and bankers' acceptances, of banks or savings and loan associations having at least $1 billion in deposits and insured by the Bank Insurance Fund or the Savings Association Insurance Fund, including U.S. branches of foreign banks and foreign branches of U.S. banks; and prime commercial paper, including master demand notes rated no lower than A-1 by S&P or Prime 1 by Moody's. Bonds rated BBB by S&P or Baa by Moody's may have speculative characteristics. Changes in economic conditions or other circumstances are more likely to weaken such bonds' prospects for principal and interests payments than higher rated bonds. However, like the higher rated bonds, these securities are considered investment grade. As of December 31, 1992, 1993 and 1994, approximately 92%, 95% and 97%, respectively, of the Fund's portfolio consisted of equity securities. The Fund may employ certain additional investment strategies which are discussed in "Investment Practices and Restrictions", below. Evergreen American Retirement Fund The investment objectives of Evergreen American Retirement Fund in order of priority are conservation of capital, reasonable income and capital growth. The Fund offers a structured investment approach designed specifically for retirees and persons contemplating retirement which may also be appropriate for the qualified retirement plans of smaller companies. There can be no assurance that the Fund's investment objectives will be achieved. The Fund's objective is a fundamental policy and may not be changed without shareholder approval. The Fund will invest in a diversified and balanced portfolio of equity and fixed income securities, with emphasis on income-producing securities which appear to have potential for capital enhancement. Ordinarily, the Fund anticipates that approximately 50% of its portfolio will consist of equity securities (including securities convertible into equity securities) and 50% of fixed income securities. The Fund's investment adviser may vary the amount invested in each type of security in response to changing market conditions to take advantage of relative undervaluation in either the stock or bond markets. The Fund will, however, not make an additional investment in equity securities if more than 75% of its total assets at the time the investment is made would include investments in equity securities. Generally, approximately half of the equity portion of the Fund's portfolio will be invested in common stocks which the Fund's investment adviser believes will yield current income and have potential for long-term capital growth and half in bonds and preferred stocks convertible into such common stock. With respect to the fixed income portion of the Fund's portfolio, emphasis will be placed on acquiring non-speculative issues expected to fluctuate little in value, except with changes in prevailing interest rates. The market value of the debt obligations in the Fund's portfolio can be expected to vary inversely to changes in prevailing interest rates. The Fund may at times emphasize the generation of interest income by investing in high-yielding debt securities, with short and medium to long-term maturities. Investment in medium (i.e., with maturities from five to ten years) to long-term (i.e., with maturities over ten years) debt securities may also be made with a view to realizing capital appreciation when the Fund's investment adviser believes that interest rates on such investments may decline, thereby increasing their market value. Normally, the Fund anticipates that approximately half of the fixed income portion of the Fund's portfolio will be invested in marketable obligations of, or guaranteed by, the U.S. government, its agencies or instrumentalities which are supported by the full faith and credit of the United States or by the right of the issuer to borrow from the U.S. Treasury. These include issues of the Treasury, such as bills, certificates of indebtedness, notes and bonds, and issues of agencies and instrumentalities established under the authority of an act of Congress. Agencies or instrumentalities whose securities are supported by the full faith and credit of the United States include, but are not limited to, the Federal Housing Administration, Farmers Home Administration, Export-Import Bank of the United States, Small Business Administration and Government National Mortgage Association. Examples of agencies or instrumentalities whose securities are supported by the right of the issuer to borrow from the Treasury include, but are not limited to, the Federal Home Loan Bank, Federal Intermediate Credit Banks, Federal National Mortgage Association and Tennessee Valley Authority. The balance will be invested in corporate obligations rated no lower than A by Moody's or S&P. It is anticipated that the annual portfolio turnover rate for the Fund will generally not exceed 100% for the equity portion of its portfolio and 200% for the fixed income portion. The Fund may employ certain additional investment strategies which are discussed in "Investment Practices and Restrictions", below. Evergreen Foundation Fund The investment objectives of Evergreen Foundation Fund, in order of priority, are reasonable income, conservation of capital and capital appreciation. The Fund seeks to achieve these objectives by investing in a combination of common stocks, preferred stocks, securities convertible into or exchangeable for common stocks, corporate and U.S. Government debt obligations, and short-term debt instruments, such as commercial paper. Additionally, income from time to time may be generated by the lending of securities. The Fund's common stock investments will include those which (at the time of purchase) pay dividends and in the view of the Fund's investment adviser have potential for capital enhancement. The Fund may make investments in securities regardless of whether or not such securities are traded on a national securities exchange. The value of portfolio securities and their yields are expected to fluctuate over time because of varying general economic and market conditions. Accordingly, there can be no assurance that the Fund's investment objectives will be achieved. The Fund's objective is a fundamental policy and may not be changed without shareholder approval. The Fund's asset allocation will vary from time to time in accordance with changing economic and market conditions, including: inflation rates, business cycle trends, business regulations and tax law impacts on the investment markets. The composition of its portfolio will be largely unrestricted and subject to the discretion of the Fund's investment adviser. Under normal circumstances, the Fund anticipates that at least 25% of its net assets will consist of fixed income securities. The balance will be invested in equity securities (including securities convertible into equity securities). In selecting fixed income securities for the Fund's portfolio, emphasis will be placed on issues expected to fluctuate little in value other than as a result of changes in prevailing interest rates. The market value of the debt obligations in the Fund's portfolio can be expected to vary inversely to changes in prevailing interest rates. The Fund may at times emphasize the generation of interest income by investing in high-yielding debt securities, with short, medium or long-term maturities. While fixed income investments will generally be made for the purpose of generating interest income, investments in medium to long-term debt securities (i.e., those with maturities from five to ten years and those with maturities over ten years, respectively) may be made with a view to realizing capital appreciation when the Fund's investment adviser believes changes in interest rates will lead to an increase in the value of such securities. The fixed income portion of the Fund's portfolio may include: 1. Marketable obligations of, or guaranteed by, the U.S. government, its agencies or instrumentalities, including issues of the U.S. Treasury, such as bills, certificates of indebtedness, notes and bonds, and issues of agencies and instrumentalities established under the authority of an act of Congress. Some of these securities are supported by the full faith and credit of the U.S. Government, and others are supported only by the credit of the agency or instrumentality. Agencies or instrumentalities whose securities are supported by the full faith and credit of the United States include, but are not limited to, the Federal Housing Administration, Farmers Home Administration, Export-Import Bank of the United States, Small Business Administration and Government National Mortgage Association. Agencies or instrumentalities whose securities are supported only by the credit of the agency or instrumentality include the Interamerican Development Bank and the International Bank for Reconstruction and Development. These obligations are supported by appropriated but unpaid commitments of their member countries. There are no assurances that the commitments will be fulfilled in the future. 2. Corporate obligations rated no lower than A by Moody's or S&P. 3. Obligations of banks or banking institutions having total assets of more than $2 billion which are members of the Federal Deposit Insurance Corporation. 4. Commercial paper of high quality (rated no lower than A-2 by S&P or Prime-2 by Moody's or, if not rated, issued by companies which have an outstanding long-term debt issue rated AAA or AA by S&P or Aaa or Aa by Moody's). Certain obligations may be entitled to the benefit of standby letters of credit or similar commitments issued by banks and, in such instances, the Fund's investment adviser will take into account the obligation of the bank in assessing the quality of such security. It is anticipated that the annual portfolio turnover rate for the Fund will generally not exceed 100% for the equity portion of its portfolio and 200% for the fixed income portion. The Fund may employ certain additional investment strategies which are discussed in "Investment Practices and Restrictions", below. Evergreen Total Return Fund The investment objective of Evergreen Total Return Fund is to achieve a return consisting of current income and capital appreciation in the value of its shares. The emphasis on current income and capital appreciation will be relatively equal although, over time, changes in the outlook for market conditions and the level of interest rates will cause the Fund to vary its emphasis between these two elements in its search for the optimum return for its shareholders. The Fund seeks to achieve its investment objective through investments in common stocks, preferred stocks, securities convertible into or exchangeable for common stocks and fixed income securities. The Fund may invest up to 20% of its total assets in the securities of foreign issuers either directly or in the form of ADRs, European Depository Receipts ("EDRs") or other securities convertible into securities of foreign issuers. The Fund may also write covered call options. The Fund's investment objective is a fundamental policy. There can be no assurance that the Fund's investment objective will be achieved. To the extent that the Fund seeks capital appreciation, it expects that its investments will provide growth over the long-term. Investments, however, may be made on occasion for the purpose of short-term capital appreciation if the Fund believes that such investments will benefit its shareholders. The Fund may make investments in securities (other than options) regardless of whether or not such securities are traded on a national securities exchange. The value of portfolio securities and their yields, as well as opportunities to realize net gains from a covered call options writing program, are expected to fluctuate over time because of varying general economic and market conditions. The Fund's portfolio will vary over time depending upon the economic outlook and market conditions. The composition of its portfolio will be largely unrestricted and subject to the discretion of the Fund's investment adviser. Ordinarily, the Fund anticipates that approximately 75% of its portfolio will consist of equity securities and the other 25% of debt securities (including convertible debt securities). As of March 31, 1993 and 1994 and January 31, 1995, approximately 88%, 96% and 91%, respectively, of the Fund's portfolio consisted of equity securities. The balance of the Fund's portfolio consisted of debt securities (including convertible debt securities). If, in the judgment of the Fund's investment adviser, the appreciation potential for equity securities exceeds the return available from debt securities or government securities, investments in equity securities could exceed 75% of the Fund's portfolio. Most equity investments, however, will be income producing. The quality standards for debt securities include: Obligations of banks having total assets of at least one billion dollars which are members of the FDIC; commercial paper rated no lower than P-2 by Moody's or A-2 by S&P; and non-convertible debt securities rated no lower than Baa by Moody's or BBB by Standard & Poor's. Securities rated Baa or BBB may have speculative characteristics. See the discussion above with respect to Evergreen Value Fund. 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 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 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 must pay. 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 the Evergreen Total Return Fund, Evergreen Growth and Income Fund, Evergreen American Retirement Fund and Evergreen Foundation Fund on those exchanges. The portfolio turnover rate for each Fund is set forth in the tables contained in the section entitled "Financial Highlights". See the Statement of Additional Information for further information regarding the brokerage allocation practices of the Funds. Borrowing. As a matter of fundamental policy, the Funds, except Evergreen American Retirement Fund, may not borrow money except as a temporary measure to facilitate redemption requests or for extraordinary or emergency purposes. Evergreen American Retirement Fund may borrow for purposes of leverage. 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 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 net assets of the Evergreen Total Return Fund, Evergreen Growth and Income Fund and Evergreen American Retirement Fund, 30% of the net assets of the Evergreen Foundation Fund, and 5% of the value of the total assets of Evergreen Balanced Fund and Evergreen Value 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. 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. Short Sales. The Evergreen Total Return Fund, Evergreen Growth and Income Fund, Evergreen Balanced Fund, Evergreen American Retirement Fund and Evergreen Foundation Fund may, as a defensive strategy, make short sales of securities. A short sale occurs when a seller sells a security and makes delivery to the buyer by borrowing the security. Short sales of a security are generally made in cases where the seller expects the market value of the security to decline. To complete a short sale, the seller must replace the security borrowed by purchasing it at the market price at the time of replacement, or by delivering securities from the seller's own position to the lender. In the event the market value of a security sold short were to increase, the seller would realize a loss to the extent that the cost of purchasing the security for delivery to the lender were greater than the proceeds from the short sale. In the event a short sale is completed by delivery of securities to the lender from the seller's own position, the seller would forego any gain that would otherwise be realized on such securities. The Evergreen American Retirement Fund and Evergreen Foundation Fund may only make short sales "against the box" which means it must own the securities sold short, or other securities convertible into, or which carry rights to acquire, such securities. Illiquid or Restricted Securities. Evergreen Growth and Income Fund, Evergreen American Retirement Fund, Evergreen Foundation Fund and Evergreen Total Return Fund may invest up to 15% of their net assets, and Evergreen Balanced Fund and Evergreen Value Fund may invest up to 10% 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. 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% or 10 % limits. 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 Funds' investment advisers 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%, or with respect to Evergreen Value Fund 10%, of its assets invested in illiquid or not readily marketable securities. Repurchase Agreements and Reverse Repurchase Agreements. Evergreen Growth and Income Fund, Evergreen Balanced Fund, Evergreen Value Fund and Evergreen Total Return Fund 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 Balanced Fund and Evergreen Value 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. Each Fund will not enter into reverse repurchase agreements exceeding 5% of the value of its total assets. When-Issued and Delayed Delivery Transactions. Evergreen Balanced Fund and Evergreen Value Fund may purchase securities on a when-issued or delayed delivery basis. These transactions are arrangements in which a Fund purchases securities with payment and delivery scheduled for a future time. The seller's failure to complete these transactions may cause a Fund 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, a Fund may pay more or less than the market value of the securities on the settlement date. The Funds may dispose of a commitment prior to settlement if the Funds investment adviser deems it appropriate to do so. In addition, the Funds 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. 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. Options and Futures. Each of Evergreen Total Return Fund, Evergreen Growth and Income Fund and Evergreen American Retirement Fund may write covered call options on certain portfolio securities in an attempt to earn income and realize a higher return on its portfolio. A call option may not be written by the Funds if, afterwards, securities comprising more than 25% of the market value of the equity securities of Evergreen Growth and Income Fund and Evergreen Total Return Fund, or 15% of the market value of the equity securities of Evergreen American Retirement Fund would be subject to call options. A Fund realizes income from the premium paid to it in exchange for writing the call option. Once it has written a call option on a portfolio security and until the expiration of such option, a Fund forgoes the opportunity to profit from increases in the market price of such security in excess of the exercise price of the call option. Should the price of the security on which a call has been written decline, a Fund retains the risk of loss, which would be offset to the extent the Fund has received premium income. A Fund will only write "covered" call options traded on U.S. national securities exchanges. An option will be deemed covered when a Fund either (i) owns the security (or securities convertible into such security) on which the option has been written in an amount sufficient to satisfy the obligations arising under the option; or (ii) a Fund's Custodian maintains cash or high-grade liquid debt securities belonging to the Fund in an amount not less that the amount needed to satisfy the Fund's obligations with respect to options written on securities it does not own. A "closing purchase transaction" may be entered into with respect to a call option written by a Fund for the purpose of closing its position. Evergreen Balanced Fund and Evergreen Value Fund may engage in options and futures transactions. Options and futures transactions are intended to enable a Fund to manage market, interest rate or exchange rate risk, and the Funds do not use these transactions for speculation or leverage. Evergreen Balanced Fund and Evergreen Value Fund may attempt to hedge all or a portion of their portfolios through the purchase of both put and call options on their portfolio securities and listed put options on financial futures contracts for portfolio securities. The Funds may also write covered call options on their portfolio securities to attempt to increase their current income. The Funds will maintain their positions in securities, option rights and segregated cash subject to puts and calls until the options are exercised, closed or have expired. An option position may be closed out only on an exchange which provides a secondary market for an option of the same series. The Funds may purchase listed put options on financial futures contracts. These options will be used only to protect portfolio securities against decreases in value resulting from market factors such as an anticipated increase in interest rates. The Funds may write (i.e., sell) covered call and put options. By writing a call option, a Fund becomes obligated during the term of the option to deliver the securities underlying the option upon payment of the exercise price. By writing a put option, a Fund becomes obligated during the term of the option to purchase the securities underlying the option at the exercise price if the option is exercised. The Funds may also write straddles (combinations of covered puts and calls on the same underlying security). Evergreen Balanced Fund and Evergreen Value Fund may only write "covered" options. This means that so long as a Fund is obligated as the writer of a call option, it will own the underlying securities subject to the option or, in the case of call options on U.S. Treasury bills, the Fund might own substantially similar U.S. Treasury bills. A Fund will be considered "covered" with respect to a put option it writes if, so long as it is obligated as the writer of the put option, it deposits and maintains with its custodian in a segregated account liquid assets having a value equal to or greater than the exercise price of the option. The principal reason for writing call or put options is to obtain, through a receipt of premiums, a greater current return than would be realized on the underlying securities alone. The Funds receive a premium from writing a call or put option which they retain whether or not the option is exercised. By writing a call option, the Funds might lose the potential for gain on the underlying security while the option is open, and by writing a put option the Funds might become obligated to purchase the underlying securities for more than their current market price upon exercise. Evergreen Balanced Fund and Evergreen Value Fund may also, as stated previously, purchase futures contracts and options thereon. A futures contract is a firm commitment by two parties: the seller, who agrees to make delivery of the specific type of instrument called for in the contract ("going short"), and the buyer, who agrees to take delivery of the instrument ("going long") at a certain time in the future. Financial futures contracts call for the delivery of particular debt instruments issued or guaranteed by the U.S. Treasury or by specific agencies or instrumentalities of the U.S. government. If a Fund would enter into financial futures contracts directly to hedge its holdings of fixed income securities, it would enter into contracts to deliver securities at an undetermined price (i.e., "go short") to protect itself against the possibility that the prices of its fixed income securities may decline during the Fund's anticipated holding period. A Fund would "go long" (agree to purchase securities in the future at a predetermined price) to hedge against a decline in market interest rates. The Funds may also enter into currency and other financial futures contracts and write options on such contracts. The Funds intend to enter into such contracts and related options for hedging purposes. The Funds will enter into futures on securities, currencies or index-based futures contracts in order to hedge against changes in interest or exchange rates or securities prices. A futures contract on securities or currencies is an agreement to buy or sell securities or currencies during a designated month at whatever price exists at that time. A futures contact on a securities index does not involve the actual delivery of securities, but merely requires the payment of a cash settlement based on changes in the securities index. The Funds do not make payment or deliver securities upon entering into a futures contract. Instead, they put down a margin deposit, which is adjusted to reflect changes in the value of the contract and which remains in effect until the contract is terminated. The Funds may sell or purchase currency and other financial futures contracts. When a futures contract is sold by a Fund, the profit on the contract will tend to rise when the value of the underlying securities or currencies declines and to fall when the value of such securities or currencies increases. Thus, the Funds sell futures contracts in order to offset a possible decline in the profit on their securities or currencies. If a futures contract is purchased by a Fund, the value of the contract will tend to rise when the value of the underlying securities or currencies increases and to fall when the value of such securities or currencies declines. The Funds may enter into closing purchase and sale transactions in order to terminate a futures contract and may buy or sell put and call options for the purpose of closing out their options positions. The Funds ability to enter into closing transactions depends on the development and maintenance of a liquid secondary market. There is no assurance that a liquid secondary market will exist for any particular contract or at any particular time. As a result, there can be no assurance that the Funds will be able to enter into an offsetting transaction with respect to a particular contract at a particular time. If the Funds are not able to enter into an offsetting transaction, the Funds will continue to be required to maintain the margin deposits on the contract and to complete the contract according to its terms, in which case the Funds would continue to bear market risk on the transaction. Risk Characteristics of Options and Futures. Although options and futures transactions are intended to enable the Funds to manage market, exchange or interest rate risks, these investment devices can be highly volatile, and the Funds use of them can result in poorer performance (i.e., the Funds return may be reduced). The Funds attempt to use such investment devices for hedging purposes may not be successful. Successful futures strategies require the ability to predict future movements in securities prices, interest rates and other economic factors. When the Funds use financial futures contract and options on financial futures contract as hedging devices, there is a risk that the prices of the securities subject to the financial futures contracts and options on financial futures contracts may not correlate perfectly with the prices of the securities in the Funds' portfolios. This may cause the financial futures contract and any related options to react to market changes differently than the portfolio securities. In addition, the Funds investment adviser could be incorrect in its expectations and forecasts about the direction or extent of market factors, such as interest rates, securities price movements and other economic factors. Even if the Funds investment adviser correctly predicts interest rate movements, a hedge could be unsuccessful if changes in the value of a Fund's futures position did not correspond to changes in the value of its financial futures contracts. It is not certain that a secondary market for positions in financial futures contracts or for options on financial futures contracts will exist at all times. Although the Funds investment adviser will consider liquidity before entering into financial futures contracts or options on financial futures contracts transactions, there is no assurance that a liquid secondary market on an exchange will exist for any particular financial futures contract or option on a financial futures contract at any particular time. The Funds ability to establish and close out financial futures contracts and options on financial futures contract positions depends on this secondary market. If a Fund is unable to close out its position due to disruptions in the market or lack of liquidity, the Fund may lose money on the futures contract or option, and the losses to the Fund could be significant. Special Risk Considerations Investment in Foreign Securities. Evergreen Total Return Fund, Evergreen Balanced Fund and Evergreen Value Fund may invest in foreign securities. Investments in foreign securities require consideration of certain factors not normally associated with investments in securities of U.S. issuers. For example, a change in the value of any foreign currency relative to the U.S. dollar will result in a corresponding change in the U.S. dollar value of securities denominated in that currency. Accordingly, a change in the value of any foreign currency relative to the U.S. dollar will result in a corresponding change in the U.S. dollar value of the assets of the Fund denominated or traded in that currency. If the value of a particular foreign currency falls relative to the U.S. dollar, the U.S. dollar value of the assets of a Fund denominated in such currency will also fall. The performance of a Fund will be measured in U.S. dollars. Securities markets of foreign countries generally are not subject to the same degree of regulation as the U.S. markets and may be more volatile and less liquid. Lack of liquidity may affect a Fund's ability to purchase or sell large blocks of securities and thus obtain the best price. The lack of uniform accounting standards and practices among countries impairs the validity of direct comparisons of valuation measures (such as price/earnings ratios) for securities in different countries. In addition, a Fund may incur costs associated with currency hedging and the conversion of foreign currency into U.S. dollars and may be adversely affected by restrictions on the conversion or transfer of foreign currency. Other considerations include political and social instability, expropriation, the lack of available information, higher transaction costs (including brokerage charges), increased custodian charges associated with holding foreign securities and different securities settlement practices. Settlement periods for foreign securities, which are sometimes longer than those for securities of U.S. issuers, may affect portfolio liquidity. These different settlement practices may cause missed purchasing opportunities and/or the loss of interest on money market and debt investments pending further equity or long-term debt investments. In addition, foreign securities held by a Fund may be traded on days that the Fund does not value its portfolio securities, such as Saturdays and customary business holidays, and, accordingly, a Fund's net asset value may be significantly affected on days when shareholders do not have access to the Fund. Additionally, accounting procedures and government supervision may be less stringent than those applicable to U.S. companies. It may also be more difficult to enforce contractual obligations abroad than would be the case in the United States because of differences in the legal systems. Foreign securities may be subject to foreign taxes, which may reduce yield, and may be less marketable than comparable U.S. securities. All these factors are considered by each Fund's investment adviser before making any of these types of investments. ADRs and EDRs and other securities convertible into securities of foreign issuers may not necessarily be denominated in the same currency as the securities into which they may be converted but rather in the currency of the market in which they are traded. ADRs are receipts typically issued by an American bank or trust company which evidence ownership of underlying securities issued by a foreign corporation. EDRs are receipts issued in Europe by banks or depositories which evidence a similar ownership arrangement. Generally ADRs, in registered form, are designed for use in United States securities markets and EDRs, in bearer form, are designed for use in European securities markets. 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. 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. Shareholders will be notified of any changes in policies that are not fundamental. -------------------------------------------------------------------------------- MANAGEMENT OF THE FUNDS -------------------------------------------------------------------------------- INVESTMENT ADVISERS The management of each Fund is supervised by the Trustees of the Trust under which the Fund has been established ("Trustees"). Evergreen Asset Management Corp. ("Evergreen Asset") has been retained by Evergreen Total Return Fund, Evergreen Growth and Income Fund, Evergreen American Retirement Fund and Evergreen Foundation 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 Balanced Fund and Evergreen Value 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 Total Return Fund, Evergreen Growth and Income Fund, Evergreen American Retirement Fund and Evergreen Foundation 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 from each of Evergreen Total Return Fund and Evergreen Growth and Income Fund fee 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. Evergreen Asset is entitled to receive from Evergreen Foundation Fund a fee equal to .875 of 1% of average daily net assets on an annual basis on the first $750 million in assets, .75 of 1% of average daily net assets on an annual basis on the next $250 million in assets, and .7 of 1% of average daily net assets on an annual basis on assets over $1 billion, and from Evergreen American Retirement Fund a fee equal to .75 of 1% of average daily net assets on an annual basis on the first $1 billion in assets, and .7 of 1% of average daily net assets on an annual basis on assets over $1 billion. The fee paid by Evergreen Total Return Fund and Evergreen Growth and Income Fund is higher than the rate paid by most other investment companies. The total expenses of each Fund for the fiscal year ended December 31, 1994, expressed as a percentage of average daily net assets on an annual basis are set forth in the section entitled "Financial Highlights". CMG manages investments and supervises the daily business affairs of Evergreen Balanced Fund and Evergreen Value Fund and, as compensation therefor, is entitled to receive an annual fee equal to .50 of 1% of average daily net assets of each Fund. The total annualized operating expenses of Evergreen Balanced Fund and Evergreen Value Fund for their most recent fiscal year ended December 31, 1994, are set forth in the section entitled "Financial Highlights". Evergreen Asset serves as administrator to Evergreen Balanced Fund and Evergreen Value 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 Balanced Fund and Evergreen Value 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 Total Return Fund is Nola Maddox Falcone, C.F.A., who is President and Co-Chief Executive Officer of Evergreen Asset. Ms. Falcone has served as the principal manager of Evergreen Total Return Fund since 1985. The portfolio manager for Evergreen Foundation Fund is Stephen A. Lieber, who is Chairman and Co-Chief Executive Officer of the Evergreen Asset. Mr. Lieber has served as such Fund's principal manager since its inception. The portfolio manager for Evergreen Growth and Income Fund is Edmund H. Nicklin, Jr. C.F.A. Mr. Nicklin has served as the Fund's principal manager since its inception. The portfolio manager for Evergreen American Retirement Fund is Irene D. O'Neill, C.F.A. Ms. O'Neill has served as the Fund's principal manager since its inception. Each of the aforementioned individuals has been associated with the Evergreen Asset and its predecessor since prior to 1989. The portfolio manager for Evergreen Balanced Fund since its inception in January 1991 is R. Dean Hawes, who is a Vice President of FUNB and is the Director of Employee Benefit Portfolio Management. Mr. Hawes joined FUNB in 1981 after spending five years with Merrill Lynch, Pierce, Fenner, & Smith and Townsend Investments. William T. Davis, Jr., the portfolio manager of Evergreen Value Fund since March, 1991, is a Vice President of FUNB and has been with First Union since 1986. Prior to that, Mr. Davis served as a securities analyst for Seibels Bruce (Insurance) Group. 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 Total Return Fund, Evergreen Growth and Income Fund, Evergreen American Retirement Fund and Evergreen Foundation 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 Total Return Fund, Evergreen Growth and Income Fund, Evergreen American Retirement Fund and Evergreen Foundation 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 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 Total Return Fund, Evergreen Growth and Income Fund, Evergreen American Retirement Fund and Evergreen Foundation Fund, and .75 of 1% of the aggregate average daily net assets attributable to the Class B and Class C shares of Evergreen Balanced Fund and Evergreen Value 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 Balanced Fund and Evergreen Value 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 Balanced Fund and Evergreen Value 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 program. Share certificates are not issued for Class A, Class B and Class C shares. In states where EFD is not registered as a broker-dealer shares of a Fund will only be sold through other broker-dealers or other financial institutions that are registered. See the Share Purchase Application and Statement of Additional Information for more information. Only Class A, Class B and Class C shares are offered through this Prospectus (See "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 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 on transactions in shares of a Fund. 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 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, 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 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 charges and/or shareholder service fees, after seven years. If you are unsure of the time period of your investment, you might consider Class C shares since there are no initial sales charges and, although there is no conversion feature, the CDSC only applies to redemptions made during the first year. Consult your financial intermediary for further information. The compensation received by dealers and agents may differ depending on whether they sell Class A, Class B or Class C shares. There is no size limit on purchases of Class A shares. In addition to the discount or commission paid to dealers, EFD will from time to time pay to dealers additional cash or other incentives that are conditioned upon the sale of a specified minimum dollar amount of shares of a Fund and/or other Evergreen mutual funds. Such incentives will take the form of payment for attendance at seminars, lunches, dinners, sporting events or theater performances, or payment for travel, lodging and entertainment incurred in connection with travel by persons associated with a dealer and their immediate 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 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 or State Street by telephone should follow the procedures outlined above for redemption by mail. The telephone redemption service is not made available to shareholders automatically. Shareholders wishing to use the telephone redemption service must indicate this on the Share Purchase Application and choose how the redemption proceeds are to be paid. Redemption proceeds will either (i) be mailed by check to the shareholder at the address in which the account is registered or (ii) be wired to an account with the same registration as the shareholder's account in a Fund at a designated commercial bank. State Street currently deducts a $5 wire charge from all redemption proceeds wired. This charge is subject to change without notice. A shareholder who decides later to use this service, or to change instructions already given, should fill out a Shareholder Services Form and send it to State Street Bank and Trust Company, P.O. Box 9021, Boston, Massachusetts 02205-9827, with such shareholder's signature guaranteed by a bank or trust company (not a Notary Public), a member firm of a domestic stock exchange or by other financial institutions whose guarantees are acceptable to State Street. Shareholders should allow approximately ten days for such form to be processed. The Funds will employ reasonable procedures to verify that telephone requests are genuine. These procedures include requiring some form of personal identification prior to acting upon instructions and tape recording of conversations. If the Fund fails to follow such procedures, it may be liable for any losses due to unauthorized or fraudulent instructions. The Fund shall not be liable for following telephone instructions reasonably believed to be genuine. Also, 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 phone number on the front page 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 Internal Revenue Code of 1986, as amended (the "Code"). Dividends and distributions generally are taxable in the year in which they are paid, except any dividends paid in January that were declared in the previous calendar quarter may be treated as paid in December 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. 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 Growth and Income Fund, Evergreen American Retirement Fund, Evergreen Foundation Fund and Evergreen Total Return Fund for their most recent fiscal year is set forth below. A similar discussion relating to Evergreen Balanced Fund and Evergreen Value Fund is contained in the annual report of each Fund for the fiscal year ended December 31, 1994. Evergreen Growth and Income Fund The total return of the Class Y no-load shares of the Evergreen Growth and Income Fund was +1.69% for the year ended December 31, 1994. This return compared favorably with the +1.31% return of the Standard and Poor's 500 Reinvested Index (the "S&P 500 Index") and the -0.94% return from the Lipper Growth and Income Fund Average. This performance was achieved through the implementation of the "value timing" strategy which focuses on undervalued securities. At year-end 1994, the majority of the portfolio was comprised of out-of-favor growth companies, restructured companies and other companies which the Fund's investment adviser believes are substantially undervalued. While the domestic economy's rate of growth accelerated dramatically in 1994, the Federal Reserve's more stringent monetary policy resulted in a less hospitable environment for financial assets. The Fund performed well relative to its competition and the S&P 500 Index in 1994, but the Fed's tightening of monetary policy kept the absolute return low, in keeping with the depressing influence on financial assets generally. The principal contributors to the Fund's positive performance during 1994 were the following industries: (1) business equipment and services which facilitated the productivity enhancing efforts of their customers; (2) chemical issues which benefited from the robust economic growth and previous restructuring efforts that lowered cost structures; and (3) shares of healthcare companies which continued their rebound from the market's adverse reaction to the perceived impact of the healthcare program proposed by the Clinton Administration in 1993. The industry groups which had the largest negative impact on the Fund's performance were the following: (i) banks and thrifts, insurance and utilities, all of which suffered from the Federal Reserve's more stringent monetary policy; (ii) retail which suffered from lack of pricing flexibility and excess capacity; and (iii) energy which was negatively impacted by lower prices for natural gas and declining refining margins. [CHART] Evergreen American Retirement Fund The total return of the Class Y no-load shares of the Evergreen American Retirement Fund for the fiscal year ended December 31, 1994, was -2.86%. This performance lagged the Wilshire 5000 Index which returned -.06% and exceeded the Lehman General Bond Mutual Fund Index which returned -3.51% for the year. The Fund concentrated the equity portion of its portfolio in high dividend-paying common stocks, convertible bonds and convertible preferreds. Fixed-income issues were represented by investments in U.S. Treasury and agency obligations and high quality corporate bonds and notes. Interest rates rose through much of 1994 as the Federal Reserve moved to slow the rapid and potentially inflationary pace of U.S. economic growth. Over the course of the year, the Federal Fund's rate was increased from 3.0% to 5.5%, and market forces lifted interest rates on 30 year U.S. Treasury bonds from 6.35% to 7.88%. This rising interest rate environment was negative for the bond market and produced mixed results for the stock market. Because of the Fund's income-oriented style of investing, this period of rising interest rates negatively affected performance. The industry groups which had the largest positive impact on the Fund's performance included the chemicals and metals industries which benefited from rising demand and product prices, and bank stocks which rose in response to stronger loan growth and reduced loan loss provisions. The Fund was negatively impacted by its holdings in the automotive industry and related suppliers, and utility stocks which declined in response to higher interest rates. The Fund's exposure to utilities was reduced in early 1994 to a group of special situation companies. But even the improving fundamentals of these companies could not overcome the impact of rising rates. Despite strong earnings for the auto industry and suppliers, these stocks declined as the market anticipated slower consumer spending in response to higher rates. The Fund's practice has been to provide a stable quarterly income dividend. During the past fiscal year, the Fund distributed a dividend of $0.15 per quarter. These distributions were funded entirely from net investment income. None represented a return of capital. To maintain the dividend rate the Fund purchased issues which had dividend increases, and frequently repositioned the portfolio in order to assure participation in large dividends (particularly from utility stocks or special dividends announced by other types of companies). The repositioning of the portfolio resulted in higher brokerage commissions. As noted above, the Fund's investment objectives in order of priority are conservation of capital, reasonable income and capital growth. To the extent that the Fund sought to maintain a stable dividend during the past fiscal year and therefore emphasized current income over capital growth, the Fund's overall return may have been reduced. Beginning in the first quarter of 1995, the Fund changed its dividend strategy. The Fund's income dividend distribution will move toward a fluctuating dividend and away from the stable dividend pattern of the past. [CHART] Evergreen Foundation Fund. The total return of the Class Y no-load shares of the Evergreen Foundation Fund for the almost five years since inception on January 2, 1990 to December 31, 1994 was +99.57%, which calculated to an average annual compounded return of +14.83%. This compared favorably with the return of the Standard & Poor's 500 Reinvested Index (+51.45%) and the Lipper Balanced Fund Average (+44.03%) for the same time period. For the fiscal year ended 1994, the Fund produced a total return of -1.12% versus returns of +1.31% for the Standard & Poor's 500 Reinvested Index and -2.52% for the Lipper Balanced Fund Average. Asset allocation was a primary determinant of performance. Consistent with the Fund's investment objectives of reasonable income, conservation of capital and capital appreciation, Evergreen Asset sought to strategically position the Fund to maximize opportunities in each asset class. The average allocation during 1994 was 62% equities, 28% fixed-income and 10% short-term cash equivalents. The equity portion of the portfolio had a return of +4.91% for 1994. The fixed-income segment of the portfolio, whose primary focus is income and preservation of capital, was comprised on average of three-quarters long-term U.S. government obligations and one-quarter short-term cash equivalents. It generated a return of -11.06%, which was in line with its benchmarks, when assessed in terms of credit quality, liquidity and overall weighted maturity. The equity segment of the portfolio was largely responsible for the capital appreciation during 1994. Stock selection focused on issues believed to be conservatively valued and financially strong. Concentration on health care issues provided relative outperformance as these issues benefited from renewed confidence in the growth of pharmaceutical and medical services industries. A secondary focus on technological issues (semi-conductors and electronic components) also provided excellent relative performance, as these sectors benefited from a resurgence in the U.S. economy. The portfolio was negatively impacted by its investments in real estate companies, utilities and banks. Evergreen Total Return Fund. Steady income flow has been an important goal since the inception of the Fund. The Fund continued its annual $1.08 per share income dividend. The dividend was maintained for the seventh successive year. The portfolio of the Evergreen Total Return Fund, although primarily equities and convertibles, has a high level of interest rate sensitivity. Since the Fund seeks to pay a substantial dividend, Evergreen Asset looked toward the utility sector, financial issues, real estate investment trusts, convertible preferreds and convertible debentures to provide high yields. The sharp downward swing in the 1994 bond market had a deleterious effect on the interest sensitive sectors of the equity and convertible markets, particularly impacting utilities, financial and convertible issues. During the period from March 31, 1994 through January 31, 1995, the Dow Jones Utility Average was down -6.23%, the New York Stock Exchange Financial Index was down -3.00%, the Merrill Lynch Convertible Index was down -4.85%, and the Wilshire Real Estate Securities Index was down -3.80%. The performance of the Class Y no-load shares of the Fund for the same period was up +1.86%. This compares also with the performance of the Wilshire 5000 of +6.04% and +3.01% for the Lipper Equity Income Average. One of the best groups in the portfolio was the health sector which rebounded when the Clinton Health Care Plan ran into trouble. Restructured companies as well as selected cyclicals, such as banks and thrift issues and chemicals and energy issues, also helped the portfolio. Five bank and thrift mergers produced gains. During the year, the portfolio was restructured to reduce the utility sector especially electric utilities. Evergreen Asset decided to reduce dependence on this sector as it faces deregulation and resulting competitive pressures. Currently, the Fund's focus is on special situations resulting from such events as rate relief or corporate changes. Evergreen Asset also switched into international issues in order to diversify risk across country lines and to reduce the portfolio's sensitivity to changes in U.S. interest rates. Toward the end of the year, Evergreen Asset added to the portfolio's holdings in the retail sector as it saw a number of these companies at attractive valuation levels. Many of these issues were in the process of restructuring, thereby providing the possibility of improved margins in the near future. The Fund's dividend was funded entirely from net investment income. It did not represent a return of capital. To maintain the dividend rate the Fund purchased issues which had dividend increases, and frequently repositioned the portfolio in order to assure participation in large dividends, particularly from utility stocks or special dividends announced by other types of companies. The repositioning of the portfolio resulted in higher brokerage commissions. As noted above, the Fund's investment objective is to achieve a return consisting of current income and capital appreciation. To the extent that the Fund sought to maintain a stable dividend during the past fiscal year and therefore emphasized current income over capital appreciation, the Fund's overall return may have been reduced. On January 3, 1995, the Fund introduced a multiple class distribution structure. The Fund's total return for the period 1/3/95 to 1/31/95 for the A, B, C and Y Class of Shares was -3.45% (reflects maximum front end sales charge of 4.75%), -3.53% (reflects maximum contingent deferred sales charge of 5%), -0.41% (reflects 1% contingent deferred sales charge within first year of purchase), and 1.47% (no-load), respectively. [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 Total Return Fund is a Massachusetts business trust organized in 1986, and was originally organized as Maryland corporation in 1978. Evergreen Growth and Income Fund is a Massachusetts business trust organized in 1986. The Evergreen American Retirement Fund is a separate series of The Evergreen American Retirement Trust, a Massachusetts business trust organized in 1987. Evergreen Foundation Fund is a separate series of the Evergreen Foundation Trust, a Massachusetts business trust organized in 1989. Evergreen Balanced Fund and Evergreen Value 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 Balanced Fund and Evergreen Value Fund and which provides certain sub-administrative services to Evergreen Asset in connection with its role as investment adviser to Evergreen Growth and Income Fund, Evergreen American Retirement Fund, Evergreen Foundation Fund and Evergreen Total Return 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.
485APOS15th "Page" of 81TOC1stPreviousNextBottomJust 15th
INVESTMENT ADVISER Evergreen Asset Management Corp., 2500 Westchester Avenue, Purchase, New York 10577 EVERGREEN GROWTH AND INCOME FUND, EVERGREEN AMERICAN RETIREMENT FUND, EVERGREEN FOUNDATION FUND, EVERGREEN TOTAL RETURN FUND Capital Management Group of First Union National Bank, 210 South College Street, Charlotte, North Carolina, 28228 EVERGREEN BALANCED FUND, EVERGREEN VALUE 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 FOUNDATION FUND Ernst & Young LLP, 200 Clarendon Street, Boston, Massachusetts 02116-5072 EVERGREEN TOTAL RETURN FUND, EVERGREEN GROWTH AND INCOME FUND, EVERGREEN AMERICAN RETIREMENT FUND KPMG Peat Marwick LLP, One Mellon Bank Center, Pittsburgh, Pennsylvania 15219 EVERGREEN BALANCED FUND, EVERGREEN VALUE FUND DISTRIBUTOR Evergreen Funds Distributor, Inc., 237 Park Avenue, New York, New York 10017
485APOS16th "Page" of 81TOC1stPreviousNextBottomJust 16th
PROSPECTUS July 7, 1995 EVERGREEN(SM) GROWTH AND INCOME FUNDS (Evergreen Logo appears here) EVERGREEN BALANCED FUND EVERGREEN GROWTH AND INCOME FUND EVERGREEN VALUE FUND EVERGREEN AMERICAN RETIREMENT FUND EVERGREEN FOUNDATION FUND EVERGREEN TOTAL RETURN FUND CLASS Y SHARES The Evergreen Growth and Income Funds (the "Funds") are designed to provide investors with a selection of investment alternatives which seek to provide capital growth, income 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 and certain other funds in the Evergreen Group of mutual 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.
485APOS17th "Page" of 81TOC1stPreviousNextBottomJust 17th
TABLE OF CONTENTS [Download Table] 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 Advisers Sub-Adviser 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 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 GROWTH AND INCOME FUND, EVERGREEN AMERICAN RETIREMENT FUND, EVERGREEN FOUNDATION FUND, and EVERGREEN TOTAL RETURN 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 BALANCED FUND and EVERGREEN VALUE FUND. EVERGREEN BALANCED FUND (formerly First Union Balanced Portfolio) seeks to produce long-term total return through capital appreciation, dividends, and interest income. EVERGREEN GROWTH AND INCOME FUND seeks to achieve a return composed of capital appreciation in the value of its shares and current income. The Fund will attempt to meet its objective by investing in the securities of companies which are undervalued in the marketplace relative to those companies' assets, breakup value, earnings, or potential earnings growth. EVERGREEN VALUE FUND (formerly First Union Value Portfolio) seeks long-term capital growth, with current income as a secondary objective. EVERGREEN AMERICAN RETIREMENT FUND seeks, in order of priority, conservation of capital, reasonable income and capital growth. To achieve these objectives, the Fund invests in a diversified and balanced portfolio of equity and fixed income securities, with emphasis on income-producing securities which appear to have potential for capital appreciation. Investments in equity securities will be limited to 75% of the value of the Fund's total assets measured at the time any such investment is made. Normally, the Fund anticipates that approximately half of the fixed income portion of the Fund's portfolio will be invested in marketable obligations of, or guaranteed by, the U.S. government, its agencies or instrumentalities. EVERGREEN FOUNDATION FUND seeks, in order of priority, reasonable income, conservation of capital and capital appreciation. The Fund invests principally in income-producing common and preferred stocks, securities convertible into or exchangeable for common stocks and fixed income securities. EVERGREEN TOTAL RETURN FUND attempts to maximize the "total return" on its portfolio of investments. It invests primarily in common and preferred stocks, securities convertible into or exchangeable for common stocks and fixed income securities. THERE IS NO ASSURANCE THAT THE INVESTMENT OBJECTIVE OF ANY FUND WILL BE ACHIEVED. 2
485APOS18th "Page" of 81TOC1stPreviousNextBottomJust 18th
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". [Download Table] SHAREHOLDER TRANSACTION EXPENSES 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 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 BALANCED FUND [Download Table] ANNUAL OPERATING EXPENSES EXAMPLE Advisory Fees .50% After 1 Year $ 6 Administrative Fees .06% After 3 Years $ 20 12b-1 Fees -- After 5 Years $ 35 Other Expenses .06% After 10 Years $ 77 Total .62% EVERGREEN GROWTH AND INCOME FUND [Download Table] ANNUAL OPERATING EXPENSES EXAMPLE Advisory Fees 1.00% After 1 Year $ 14 12b-1 Fees -- After 3 Years $ 42 Other Expenses .33% After 5 Years $ 73 After 10 Years $ 160 Total 1.33% EVERGREEN VALUE FUND [Download Table] ANNUAL OPERATING EXPENSES EXAMPLE Advisory Fees .50% After 1 Year $ 7 Administrative Fees .06% After 3 Years $ 21 12b-1 Fees -- After 5 Years $ 37 Other Expenses .10% After 10 Years $ 82 Total .66% EVERGREEN AMERICAN RETIREMENT FUND [Download Table] ANNUAL OPERATING EXPENSES EXAMPLE Advisory Fees .75% After 1 Year $ 13 12b-1 Fees -- After 3 Years $ 41 Other Expenses .53% After 5 Years $ 70 After 10 Years $ 155 Total 1.28% 3
485APOS19th "Page" of 81TOC1stPreviousNextBottomJust 19th
EVERGREEN FOUNDATION FUND [Download Table] ANNUAL OPERATING EXPENSES EXAMPLE Advisory Fees .875% After 1 Year $ 12 12b-1 Fees -- After 3 Years $ 36 Other Expenses .265% After 5 Years $ 63 After 10 Years $ 139 Total 1.14% EVERGREEN TOTAL RETURN FUND [Download Table] ANNUAL OPERATING EXPENSES EXAMPLE Advisory Fees 1.00% After 1 Year $ 13 12b-1 Fees -- After 3 Years $ 39 Other Expenses .24% After 5 Years $ 68 After 10 Years $ 150 Total 1.24% The purpose of the foregoing table is to assist an investor in understanding the various costs and expenses that an investor in each Class of Shares of the Funds will bear directly or indirectly. The amounts set forth both in the tables and in the examples are estimated amounts based on the experience of each Fund's Y Class 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
485APOS20th "Page" of 81TOC1stPreviousNextBottomJust 20th
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 years or the life of the Fund if shorter for EVERGREEN BALANCED FUND and EVERGREEN VALUE FUND has been audited by KPMG Peat Marwick LLP, each Fund's independent auditors, for EVERGREEN FOUNDATION FUND has been audited by Price Waterhouse LLP, the Fund's independent auditors and for EVERGREEN AMERICAN RETIREMENT FUND, EVERGREEN GROWTH AND INCOME FUND and EVERGREEN TOTAL RETURN FUND has been audited by Ernst & Young LLP, each Fund's independent auditors. A report of KPMG Peat Marwick LLP, Price Waterhouse LLP, or Ernst & Young 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. No financial highlights are shown for Class A, B or C shares of EVERGREEN GROWTH AND INCOME FUND, EVERGREEN AMERICAN RETIREMENT FUND or EVERGREEN FOUNDATION FUND, since these classes did not have any operations prior to December 31, 1994. Further information about a Fund's performance is contained in the Fund's annual report to shareholders, which may be obtained without charge. EVERGREEN BALANCED FUND -- CLASS A, B, C AND Y SHARES [Enlarge/Download Table] CLASS A CLASS Y SHARES CLASS B CLASS C SHARES SHARES SHARES JUNE 10, JANUARY 26, SEPTEMBER 2, 1991* 1993* 1994* YEAR ENDED THROUGH YEAR ENDED THROUGH THROUGH YEAR ENDED DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, 1994 1993 1992 1991 1994 1993 1994 1994 1993 1992 PER SHARE DATA Net asset value, beginning of period............. $12.07 $11.41 $11.02 $10.00 $12.08 $11.54 $12.00 $12.07 $11.41 $11.02 Income (loss) from investment operations: Net investment income............. .43 .42 .42 .30 .36 .34 .18 .46 .45 .46 Net realized and unrealized gain (loss) on investments........ (.71) .75 .43 1.08 (.71) .65 (.61) (.71) .75 .42 Total from investment operations....... (.28) 1.17 .85 1.38 (.35) .99 (.43) (.25) 1.20 .88 Less distributions to shareholders from: Net investment income............. (.43) (.42) (.42) (.35) (.36) (.34) (.21) (.46) (.45) (.45) Net realized gains.............. (.19) (.09) (.04) (.01) (.19) (.09) (.19) (.19) (.09) (.04) In excess of net investment income............. -- -- -- -- -- (.02)(a) -- -- -- -- Total distributions..... (.62) (.51) (.46) (.36) (.55) (.45) (.40) (.65) (.54) (.49) Net asset value, end of period.......... $11.17 $12.07 $11.41 $11.02 $11.18 $12.08 $11.17 $11.17 $12.07 $11.41 TOTAL RETURN+....... (2.4%) 10.4% 7.9% 11.8% (3.0%) 8.7% (3.6%) (2.2%) 10.7% 8.2% RATIOS & SUPPLEMENTAL DATA Net assets, end of period (000's omitted).... $41,010 $35,032 $17,408 $334 $100,052 $65,475 $195 $778,657 $760,147 $520,232 Ratios to average net assets: Expenses........... .89% .91% .91% .92%++ 1.48% 1.41%++ 1.64%++ .64% .66% .66% Net investment income............. 3.69% 3.61% 3.93% 4.38%++ 3.12% 3.09%++ 3.23%++ 3.93% 3.86% 4.20% Portfolio turnover rate............... 35% 19% 12% 19% 35% 19% 35% 35% 19% 12% APRIL 1, 1991* THROUGH DECEMBER 31, 1991 PER SHARE DATA Net asset value, beginning of period............. $10.00 Income (loss) from investment operations: Net investment income............. .36 Net realized and unrealized gain (loss) on investments........ 1.03 Total from investment operations....... 1.39 Less distributions to shareholders from: Net investment income............. (.36) Net realized gains.............. (.01) In excess of net investment income............. -- Total distributions..... (.37) Net asset value, end of period.......... $11.02 TOTAL RETURN+....... 15.0% RATIOS & SUPPLEMENTAL DATA Net assets, end of period (000's omitted).... $247,472 Ratios to average net assets: Expenses........... .68%++ Net investment income............. 4.86%++ Portfolio turnover rate............... 19% * 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) Distributions in excess of net investment income for the year ended December 31, 1993 were the result of certain book and tax differences. These differences did not represent a return of capital for federal income tax purposes for the year ended December 31, 1993. 5
485APOS21st "Page" of 81TOC1stPreviousNextBottomJust 21st
EVERGREEN GROWTH AND INCOME FUND -- CLASS Y SHARES [Enlarge/Download Table] YEAR ENDED DECEMBER 31, 1994 1993 1992 1991 1990 1989 1988** 1987** PER SHARE DATA Net asset value, beginning of period...... $15.41 $14.18 $12.99 $10.72 $12.03 $10.62 $9.38 $10.05 Income (loss) from investment operations: Net investment income..................... .14 .14 .15 .19 .30 .52 .19 .20 Net realized and unrealized gain (loss) on investments............................. .12 1.91 1.65 2.58 (.84) 2.17 2.10 (.63) Total from investment operations........ .26 2.05 1.80 2.77 (.54) 2.69 2.29 (.43) Less distributions to shareholders from: Net investment income..................... (.14) (.14) (.15) (.19) (.30) (.52) (.19) (.24) Net realized gains........................ (1.01) (.68) (.46) (.31) (.47) (.76) (.86) -- Total distributions..................... (1.15) (.82) (.61) (.50) (.77) (1.28) (1.05) (.24) Net asset value, end of period............ $14.52 $15.41 $14.18 $12.99 $10.72 $12.03 $10.62 $9.38 TOTAL RETURN+............................. 1.7% 14.4% 13.8% 25.8% (4.5%) 25.4% 24.6% (4.3%) RATIOS & SUPPLEMENTAL DATA Net assets, end of period (000's omitted)................................ $73,457 $77,062 $63,841 $47,763 $36,222 $31,540 $24,399 $21,471 Ratios to average net assets: Expenses................................ 1.33% 1.26% 1.33% 1.41% 1.50% 1.54% 1.56% 1.76% Net investment income................... .96% .99% 1.18% 1.55% 2.62% 4.13% 1.70% 1.90% Portfolio turnover rate................... 29% 28% 30% 23% 41% 53% 41% 48% OCTOBER 15, 1986* THROUGH DECEMBER 31, 1986** PER SHARE DATA Net asset value, beginning of period...... $10.00 Income (loss) from investment operations: Net investment income..................... .07 Net realized and unrealized gain (loss) on investments............................. (.02) Total from investment operations........ .05 Less distributions to shareholders from: Net investment income..................... -- Net realized gains........................ -- Total distributions..................... -- Net asset value, end of period............ $10.05 TOTAL RETURN+............................. .5% RATIOS & SUPPLEMENTAL DATA Net assets, end of period (000's omitted)................................ $20,696 Ratios to average net assets: Expenses................................ 1.73%++ Net investment income................... 3.23%++ Portfolio turnover rate................... 4% * Commencement of operations. ** Net investment income is based on the average monthly shares outstanding for the periods indicated. + Total return is calculated on net asset value per share for the period indicated and is not annualized. ++ Annualized. 6
485APOS22nd "Page" of 81TOC1stPreviousNextBottomJust 22nd
EVERGREEN VALUE FUND -- CLASS Y SHARES [Enlarge/Download Table] JANUARY 3, 1991* YEAR ENDED DECEMBER 31, THROUGH DECEMBER 1994 1993 1992 31, 1991 PER SHARE DATA Net asset value, beginning of period...................................... $17.63 $17.11 $17.08 $14.28 Income from investment operations: Net investment income..................................................... .56 .52 .49 .47 Net realized and unrealized gain (loss) on investments.................... (.20) 1.12 .90 3.53 Total from investment operations........................................ .36 1.64 1.39 4.00 Less distributions to shareholders from: Net investment income..................................................... (.56) (.52) (.49) (.47) Net realized gains........................................................ (.82) (.58) (.87) (.73) In excess of net investment income........................................ -- (.02)(b) -- -- Total distributions..................................................... (1.38) (1.12) (1.36) (1.20) Net asset value, end of period............................................ $16.61 $17.63 $17.11 $17.08 TOTAL RETURN+............................................................. 2.1% 9.7% 8.3% 25.4% RATIOS & SUPPLEMENTAL DATA Net assets, end of period (000's omitted)................................. $507,028 $463,087 $326,154 $271,391 Ratios to average net assets: Expenses................................................................ .68% .65% .68%(a) .69%++(a) Net investment income................................................... 3.21% 2.98% 2.90%(a) 3.04%++(a) Portfolio turnover rate................................................... 70% 46% 56% 69% * Commencement of class operations. + Total return is calculated on net asset value per share 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: [Enlarge/Download Table] JANUARY 3, 1991 YEAR ENDED THROUGH DECEMBER 31, 1992 DECEMBER 31, 1991 Expenses.................................................. .69% .77% Net investment income..................................... 2.89% 2.96% (b) Distributions in excess of net investment income for the period ended December 31, 1993 were the result of certain book and tax timing differences. These distributions did not represent a return of capital for federal income tax purposes for the year ended December 31, 1993. 7
485APOS23rd "Page" of 81TOC1stPreviousNextBottomJust 23rd
EVERGREEN VALUE FUND -- CLASS A SHARES [Enlarge/Download Table] NINE MONTHS ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, YEAR ENDED MARCH 31, 1994 1993 1992 1991 1990* 1990 1989 1988 PER SHARE DATA Net asset value, beginning of period.......................... $17.63 $17.11 $17.08 $14.61 $15.12 $14.45 $12.83 $14.66 Income (loss) from investment operations: Net investment income............ .52 .47 .44 .46 .36 .54 .36 .26 Net realized and unrealized gain (loss) on investments........... (.20) 1.10 .89 3.17 (.44) 1.70 2.11 (1.30) Total from investment operations.................... .32 1.57 1.33 3.63 (.08) 2.24 2.47 (1.04) Less distributions to shareholders from: Net investment income.......................... (.51) (.47) (.43) (.43) (.36) (.57) (.38) (.26) Net realized gains............... (.82) (.58) (.87) (.73) (.02) (1.00) (.47) (.53) In excess of net investment income.......................... -- -- -- -- (.05)(c) -- -- -- Total distributions............. (1.33) (1.05) (1.30) (1.16) (.43) (1.57) (.85) (.79) Net asset value, end of period... $16.62 $17.63 $17.11 $17.08 $14.61 $15.12 $14.45 $12.83 TOTAL RETURN+.................... 1.9% 9.3% 8.0% 25.1% (.5%) 15.5% 19.7% (7.1%) RATIOS & SUPPLEMENTAL DATA Net assets, end of period (000's omitted)................. $188,807 $189,983 $169,310 $135,565 $104,637 $95,995 $83,121 $21,914 Ratios to average net assets: Expenses........................ .93% .99% 1.01%(a) .96%(a) 1.39%++ 1.55% 1.71% 1.74% Net investment income........... 2.96% 2.63% 2.37%(a) 2.78%(a) 3.28%++ 3.42% 2.72% 1.92% Portfolio turnover rate (b)...... 70% 46% 56% 69% 13% 11% 24% 24% 1987 1986 PER SHARE DATA Net asset value, beginning of period.......................... $12.35 $10.04 Income (loss) from investment operations: Net investment income............ .15 .19 Net realized and unrealized gain (loss) on investments........... 2.38 2.32 Total from investment operations.................... 2.53 2.51 Less distributions to shareholders from: Net investment income.......................... (.13) (.20) Net realized gains............... (.09) -- In excess of net investment income.......................... -- -- Total distributions............. (.22) (.20) Net asset value, end of period... $14.66 $12.35 TOTAL RETURN+.................... 20.8% 25.3% RATIOS & SUPPLEMENTAL DATA Net assets, end of period (000's omitted)................. $23,221 $5,595 Ratios to average net assets: Expenses........................ 1.97% 2.00% Net investment income........... 1.41% 2.34% Portfolio turnover rate (b)...... 20% 20% * The Fund changed its fiscal year end to December 31. + 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 to average net assets, exclusive of any applicable state expense limitations, would have been the following: [Enlarge/Download Table] YEAR ENDED DECEMBER 31, 1992 1991 Expenses........................................................................... 1.02% 1.05% Net investment income.............................................................. 2.36% 2.69% (b) Portfolio turnover rate for periods ended on or after March 31, 1986 include certain U.S. government obligations. (c) Distributions in excess of net investment income for the period ended December 31, 1990 were a result of certain book and tax timing differences. These distributions did not represent a return of capital for federal income tax purposes for the year ended December 31, 1990. 8
485APOS24th "Page" of 81TOC1stPreviousNextBottomJust 24th
EVERGREEN VALUE FUND -- CLASS B AND C SHARES [Enlarge/Download Table] CLASS B CLASS C SHARES SHARES FEBRUARY 2, SEPTEMBER 2, 1993* 1994* YEAR ENDED THROUGH THROUGH DECEMBER 31, DECEMBER 31, DECEMBER 31, 1994 1993 1994 PER SHARE DATA Net asset value, beginning of period.......................................... $17.63 $17.24 $18.28 Income (loss) from investment operations: Net investment income......................................................... .42 .35 .19 Net realized and unrealized gain (loss) on investments........................ (.20) 1.01 (.81) Total from investment operations............................................ .22 1.36 (.62) Less distributions to shareholders from: Net investment income......................................................... (.41) (.35) (.19) Net realized gains............................................................ (.82) (.58) (.82) In excess of net investment income............................................ -- (.04)(a) (.04)(a) Total distributions......................................................... (1.23) (.97) (1.05) Net asset value, end of period................................................ $16.62 $17.63 $16.61 TOTAL RETURN+................................................................. 1.3% 8.0% (3.4%) RATIOS & SUPPLEMENTAL DATA Net assets, end of period (000's omitted)..................................... $104,297 $ 59,953 $485 Ratios to average net assets: Expenses.................................................................... 1.53% 1.48%++ 1.68%++ Net investment income....................................................... 2.36% 2.09%++ 2.16%++ Portfolio turnover rate....................................................... 70% 46% 70% * Commencement of class operations. + Total return is calculated on net asset value per share for the period indicated and is not annualized. Contingent deferred sales charge is not reflected. ++ Annualized. (a) Distributions in excess of net investment income, for the Class B Shares, for the period ended December 31, 1993 and for the Class C Shares, for the period ended December 31, 1994, were the result of certain book and tax timing differences. These distributions did not represent a return of capital for federal income tax purposes for the year ended December 31, 1993 and December 31, 1994. 9
485APOS25th "Page" of 81TOC1stPreviousNextBottomJust 25th
EVERGREEN AMERICAN RETIREMENT FUND -- CLASS Y SHARES [Enlarge/Download Table] YEAR ENDED DECEMBER 31, 1994 1993 1992 1991 1990 1989 PER SHARE DATA Net asset value, beginning of period..... $11.60 $10.95 $10.52 $9.59 $10.41 $ 10.09 Income (loss) from investment operations: Net investment income.................... .60 .56 .66 .60 .60 .57 Net realized and unrealized gain (loss) on investments......................... (.93) .96 .55 1.15 (.66) .76 Total from investment operations....... (.33) 1.52 1.21 1.75 (.06) 1.33 Less distributions to shareholders from: Net investment income.................... (.60) (.60) (.61) (.60) (.60) (.59) Net realized gains....................... -- (.24) (.17) (.22) (.16) (.42) In excess of net realized gains.......... -- (.03)(b) -- -- -- -- Total distributions.................... (.60) (.87) (.78) (.82) (.76) (1.01) Net asset value, end of period........... $10.67 $11.60 $10.95 $10.52 $9.59 $ 10.41 TOTAL RETURN+............................ (2.9%) 14.1% 11.8% 18.8% (.5%) 13.4% RATIOS & SUPPLEMENTAL DATA Net assets, end of period (000's omitted)............................... $37,176 $37,336 $23,781 $15,632 $12,351 $11,610 Ratios to average net assets: Expenses............................... 1.28% 1.36% 1.51%(a) 1.50%(a) 1.50%(a) 1.88%(a) Net investment income.................. 5.40% 5.13% 6.23%(a) 5.91%(a) 6.04%(a) 5.49%(a) Portfolio turnover rate.................. 136% 92% 151% 97% 33% 152% MARCH 14, 1988* THROUGH DECEMBER 31, 1988** PER SHARE DATA Net asset value, beginning of period..... $ 10.00 Income (loss) from investment operations: Net investment income.................... .39 Net realized and unrealized gain (loss) on investments......................... .18 Total from investment operations....... .57 Less distributions to shareholders from: Net investment income.................... (.36) Net realized gains....................... (.12) In excess of net realized gains.......... -- Total distributions.................... (.48) Net asset value, end of period........... $ 10.09 TOTAL RETURN+............................ 5.8% RATIOS & SUPPLEMENTAL DATA Net assets, end of period (000's omitted)............................... $9,449 Ratios to average net assets: Expenses............................... 2.00%++ Net investment income.................. 5.01%++ Portfolio turnover rate.................. 52% * Commencement of operations. ** Investment income, expenses and net investment income are based upon the average monthly shares outstanding for the period indicated. + Total return is calculated on net asset value per share 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: [Enlarge/Download Table] YEAR ENDED DECEMBER 31, 1992 1991 1990 1989 Expenses...................................................... 1.59% 1.82% 1.95% 2.03% Net investment income......................................... 6.15% 5.59% 5.59% 5.34% (b) Distributions in excess of net realized gains were the result of certain book and tax timing differences. These distributions did not represent a return of capital for federal income tax purposes. 10
485APOS26th "Page" of 81TOC1stPreviousNextBottomJust 26th
EVERGREEN FOUNDATION FUND -- CLASS Y SHARES [Enlarge/Download Table] JANUARY 2, 1990* YEAR ENDED DECEMBER 31, THROUGH 1994 1993 1992 1991 DECEMBER 31, 1990 PER SHARE DATA Net asset value, beginning of period................................. $13.12 $11.98 $10.75 $8.95 $10.00 Income (loss) from investment operations: Net investment income................................................ .42 .31 .27 .33 1.23(b) Net realized and unrealized gain (loss) on investments............... (.57) 1.55 1.83 2.77 (.59) Total from investment operations................................... (.15) 1.86 2.10 3.10 .64 Less distributions to shareholders from: Net investment income................................................ (.42) (.31) (.24) (.33) (1.17) Net realized gains................................................... (.28) (.41) (.63) (.97) (.52) Total distributions................................................ (.70) (.72) (.87) (1.30) (1.69) Net asset value, end of period....................................... $12.27 $13.12 $11.98 $10.75 $8.95 TOTAL RETURN+........................................................ (1.1%) 15.7% 20.0% 36.4% 6.6% RATIOS & SUPPLEMENTAL DATA Net assets, end of period (in millions).............................. $332 $240 $64 $11 $2 Ratios to average net assets: Expenses........................................................... 1.14% 1.20% 1.40%(a) 1.20%(a) 0%(a)++ Net investment income.............................................. 3.51% 2.81% 2.93%(a) 2.86%(a) 15.07%(a,b)++ Portfolio turnover rate.............................................. 33% 60% 127% 178% 131% * Commencement of operations. + Total return is calculated on net asset value per share 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: [Enlarge/Download Table] YEAR ENDED JANUARY 2, 1990 DECEMBER 31, THROUGH DECEMBER 31, 1992 1991 1990 Expenses.............................................. 1.43% 2.58% 3.64% Net investment income................................. 2.90% 1.48% 11.43% (b) Includes receipt of a special dividend representing $.62 per share net investment income and 7.59% of average net assets. 11
485APOS27th "Page" of 81TOC1stPreviousNextBottomJust 27th
EVERGREEN TOTAL RETURN FUND -- CLASS Y SHARES [Enlarge/Download Table] TEN MONTHS ENDED JANUARY YEAR ENDED MARCH 31, 31, 1995* 1994 1993 1992 1991 1990 1989 1988 1987 PER SHARE DATA Net asset value, beginning of period.............................. $18.29 $20.90 $18.82 $18.12 $18.26 $17.92 $17.11 $20.37 $19.72 Income (loss) from investment operations: Net investment income................. .87 1.08 1.11 1.08 1.02 1.07 1.12 1.06 1.14 Net realized and unrealized gain (loss) on investments............... (.55) (1.41) 2.51 .70 (.08) .36 .79 (2.64) 1.76 Total from investment operations.... .32 (.33) 3.62 1.78 .94 1.43 1.91 (1.58) 2.90 Less distributions to shareholders from: Net investment income................. (1.08) (1.08) (1.08) (1.08) (1.08) (1.09) (1.08) (.80) (1.14) Net realized gains.................... (.25) (1.20) (.46) -- -- -- (.02) (.88) (1.11) Total distributions................. (1.33) (2.28) (1.54) (1.08) (1.08) (1.09) (1.10) (1.68) (2.25) Net asset value, end of period........ $17.28 $18.29 $20.90 $18.82 $18.12 $18.26 $17.92 $17.11 $20.37 TOTAL RETURN+......................... 1.9% (2.1%) 20.2% 10.2% 5.8% 7.9% 1.3% (7.8%) 15.7% RATIOS & SUPPLEMENTAL DATA Net assets, end of period (in millions)........................... $942 $1,065 $1,142 $1,032 $1,151 $1,292 $1,312 $1,346 $1,636 Ratios to average net assets: Expenses............................ 1.24%++ 1.18% 1.18% 1.21% 1.23% 1.18% 1.02%** 1.01%** 1.02%** Net investment income............... 5.70%++ 5.29% 5.65% 5.73% 5.90% 5.64% 6.36%** 5.80%** 5.68%** Portfolio turnover rate............... 151% 106% 164% 137% 137% 89% 86% 81% 44% 1986 PER SHARE DATA Net asset value, beginning of period.............................. $16.63 Income (loss) from investment operations: Net investment income................. 1.03 Net realized and unrealized gain (loss) on investments............... 4.26 Total from investment operations.... 5.29 Less distributions to shareholders from: Net investment income................. (1.22) Net realized gains.................... (.98) Total distributions................. (2.20) Net asset value, end of period........ $19.72 TOTAL RETURN+......................... 35.2% RATIOS & SUPPLEMENTAL DATA Net assets, end of period (in millions)........................... $408 Ratios to average net assets: Expenses............................ 1.11%** Net investment income............... 6.06%** Portfolio turnover rate............... 65% * On September 21, 1994, the Fund changed its fiscal year end to January 31. ** Net of expense limitation in fiscal years 1986, 1987, 1988 and 1989. + Total return is calculated on net asset value per share for the period indicated and is not annualized. ++ Annualized. 12
485APOS28th "Page" of 81TOC1stPreviousNextBottomJust 28th
EVERGREEN TOTAL RETURN FUND -- CLASS A, B AND C SHARES [Enlarge/Download Table] CLASS A CLASS B CLASS C SHARES SHARES SHARES JANUARY 3, 1995* THROUGH JANUARY 31, 1995 PER SHARE DATA Net asset value, beginning of period........................................................ $17.09 $17.09 $17.09 Income from investment operations: Net investment income....................................................................... .02 .02 .01 Net realized and unrealized gain on investments............................................. .17 .17 .17 Total from investment operations.......................................................... .19 .19 .18 Net asset value, end of period.............................................................. $17.28 $17.28 $17.27 TOTAL RETURN+............................................................................... 1.1% 1.1% 1.1% RATIOS & SUPPLEMENTAL DATA Net assets, end of period (000's omitted)................................................... $119 $599 $24 Ratios to average net assets: Expenses.................................................................................. 1.45% ++ 2.23% ++ 2.22% ++ Net investment income..................................................................... 4.09% ++ 3.23% ++ 2.68% ++ Portfolio turnover rate**................................................................... 151% 151% 151% * Commencement of class operations. ** Portfolio turnover rate is calculated for the ten month period ended January 31, 1995. + 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. 13
485APOS29th "Page" of 81TOC1stPreviousNextBottomJust 29th
14 ------------------------------------------------------------------------------- DESCRIPTION OF THE FUNDS ------------------------------------------------------------------------------- INVESTMENT OBJECTIVES AND POLICIES Evergreen Balanced Fund The investment objective of the Evergreen Balanced Fund (formerly First Union Balanced Portfolio) is to achieve a long-term total return through capital appreciation, dividends and interest income. This objective is a fundamental policy and may not be changed without shareholder approval. The Fund invests in common and preferred stocks for growth and fixed income securities to provide a stable income flow. There can be no assurance that the Fund's investment objective will be achieved. The percentage of the Fund's assets invested in common and preferred stocks will vary from time to time in accordance with changing economic and market conditions. It is anticipated that over the long term the Fund's portfolio will average 60% in common and preferred stocks and 40% in bonds. However, normally the Fund's asset allocation will range between 40-75% in common and preferred stocks, 25-50% fixed income securities (including some convertible securities) and 0-25% cash equivalents. Moderate shifts between types of assets are made in an attempt to maximize returns or reduce risk. The Funds invest in common, preferred and convertible preferred stocks and bonds of U.S. companies with a minimum of $100 million in market capitalization and which are listed on major stock exchanges or traded over-the-counter. The criteria for such investment selection includes a company's financial strength (such as cash flow and low debt-to-equity ratio), earnings growth and price in relation to current earnings, dividends and book value to identify growth opportunities. The Fund may also invest in American Depositary Receipts ("ADRs") of foreign companies which are traded on the New York or American Stock Exchanges or the over-the-counter market. The fixed income portion of the Fund's portfolio may be invested in corporate bonds (including convertible bonds) which are rated A or higher 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 which, if unrated, are considered to be of comparable quality by the Fund's investment adviser. Bonds are selected based upon the outlook for interest rates and their yield in relation to other bonds of similar quality and maturity. The maturities of these bonds may be medium (i.e., from five to ten years) to long-term (i.e., over ten years), but in no event will they be longer than twenty years. The Fund also invests in securities which are either issued or guaranteed by the U.S. government, its agencies or instrumentalities. These securities include direct obligations of the U.S. Treasury, such as U.S. Treasury bills, notes and bonds; and notes, bonds and discount notes of U.S. government agencies or instrumentalities, such as the Farm Credit System, including the National Bank for Cooperatives, Farm Credit Banks and Banks for Cooperatives, Farmers Home Administration, Federal Home Loan Banks, Federal Home Loan Mortgage Corporation, Federal National Mortgage Association, Government National Mortgage Association, Student Loan Marketing Association, Tennessee Valley Authority, Export-Import Bank of the United State, Commodity Credit Corporation, Federal Financing Bank and National Credit Union Administration. Some of these securities are supported by the full faith and credit of the U.S. government, and others are supported only by the credit of the agency or instrumentality. The Fund may also invest short-term in cash equivalents for defensive purposes; securities issued and/or guaranteed by the U.S. government, its agencies or instrumentalities, and repurchase agreements collateralized by eligible investments. As of December 31, 1992, 1993 and 1994, approximately 59%, 63% and 55%, respectively, of the Fund's portfolio consisted of equity securities. The Fund may employ certain additional investment strategies which are discussed in "Investment Practices and Restrictions", below. Evergreen Growth and Income Fund The investment objective of Evergreen Growth and Income Fund (formerly known as the Evergreen Value Timing Fund) is to achieve a return composed of capital appreciation in the value of its shares and current income. (The Fund's investment objective is a fundamental policy.) There can be no assurance that the Fund's investment objective will be achieved. The Fund seeks to achieve its investment objective by investing in the securities of companies which are undervalued in the marketplace relative to those companies' assets, breakup value, earnings or potential earnings growth. These companies are often found among those which have had a record of financial success but are currently in disfavor in the marketplace for reasons the Fund's investment adviser perceives as temporary or erroneous. Such investments when successfully timed are expected to be the means for achieving the Fund's investment objective. This inherently contrarian approach may require greater reliance upon the analytical and research capabilities of the Fund's investment adviser than an investment in certain other equity funds. Consequently, an investment in the Fund may involve more risk than other equity funds. 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 the Fund be considered a balanced or complete investment program. The Fund will use the "value timing" approach as a process for purchasing securities when events indicate that fundamental investment values are being ignored in the marketplace. Fundamental investment value is based on one or more of the following: assets -- tangible and intangible (examples of the latter include brand names or licenses), capitalization of earnings, cash flow or potential earnings growth. A discrepancy between market valuation and fundamental value often arises due to the presence of unrecognized assets or business opportunities, or as a result of incorrectly perceived or short-term negative factors. Changes in regulations, basic economic or monetary shifts and legal action (including the initiation of bankruptcy proceedings) are some of the factors that create these capital appreciation opportunities. If the securities in which the Fund invests never reach their perceived potential or the valuation of such securities in the marketplace does not in fact reflect significant undervaluation, there may be little or no appreciation or a depreciation in the value of such securities. The Fund will invest primarily in common stocks and securities convertible into or exchangeable for common stock. It is anticipated that the Fund's investments in these securities will contribute to the Fund's return primarily through capital appreciation. In addition, the Fund will invest in nonconvertible preferred stocks and debt securities. It is anticipated that the Fund's investments in these securities will also produce capital appreciation but the current income component of return will be a more significant factor in their selection. However, the Fund will invest in nonconvertible preferred stock and debt securities only if the anticipated capital appreciation plus income from such investments is equivalent to that anticipated from investments in equity or equity-related securities. The Fund may invest up to 5% of its total assets in debt securities which are rated below investment grade, commonly known as "junk bonds". Investments of this type are subject to greater risk of loss of principal and interest. 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 Value Fund The investment objective of the Evergreen Value Fund (formerly the First Union Value Portfolio) is long-term capital appreciation with current income as a secondary objective. The Fund's objective is a fundamental policy and may not be changed without shareholder approval. Normally, at least 75% of the Fund's assets will be invested in equity securities of U.S. companies with prospects for earnings growth and dividends. There can be no assurance that the Fund's investment objective will be achieved. The Fund's investments, in order of priority, consist of: common and preferred stocks, bonds and convertible preferred stock of U.S. companies with a minimum market capitalization of $100 million which are listed on the New York or American Stock Exchanges or traded in over-the-counter markets. The primary consideration is for those industries and companies with the potential for capital appreciation; income is a secondary consideration; ADRs of foreign companies traded on the New York or American Stock Exchanges or the over-the-counter market; foreign securities (either foreign or U.S. securities traded in foreign markets). The Fund may also invest in obligations denominated in foreign currencies. In making these decisions, the Fund's investment adviser will consider such factors as the condition and growth potential of various economies and securities markets, currency and taxation implications and other pertinent financial, social, national and political factors. (See "Investment Practices and Restrictions Special Risk Considerations"); convertible bonds rated no lower than BBB by S&P or Baa by Moody's or, if not rated, determined to be of comparable quality by the Fund's investment adviser; money market instruments; fixed rate notes and bonds and adjustable and variable rate notes of companies whose common stock the Fund may acquire rated no lower than BBB by S&P or Baa by Moody's or which, if not rated, determined to be of comparable quality by the Fund's investment adviser (up to 5% of total assets); zero coupon bonds issued or guaranteed by the U.S. government, its agencies or instrumentalities (up to 5% of total assets); obligations, including certificates of deposit and bankers' acceptances, of banks or savings and loan associations having at least $1 billion in deposits and insured by the Bank Insurance Fund or the Savings Association Insurance Fund, including U.S. branches of foreign banks and foreign branches of U.S. banks; and prime commercial paper, including master demand notes rated no lower than A-1 by S&P or Prime 1 by Moody's. Bonds rated BBB by S&P or Baa by Moody's may have speculative characteristics. Changes in economic conditions or other circumstances are more likely to weaken such bonds' prospects for principal and interests payments than higher rated bonds. However, like the higher rated bonds, these securities are considered investment grade. As of December 31, 1992, 1993 and 1994, approximately 92%, 95% and 97%, respectively, of the Fund's portfolio consisted of equity securities. The Fund may employ certain additional investment strategies which are discussed in "Investment Practices and Restrictions", below. Evergreen American Retirement Fund The investment objectives of Evergreen American Retirement Fund in order of priority are conservation of capital, reasonable income and capital growth. The Fund offers a structured investment approach designed specifically for retirees and persons contemplating retirement which may also be appropriate for the qualified retirement plans of smaller companies. There can be no assurance that the Fund's investment objectives will be achieved. The Fund's objective is a fundamental policy and may not be changed without shareholder approval. The Fund will invest in a diversified and balanced portfolio of equity and fixed income securities, with emphasis on income-producing securities which appear to have potential for capital enhancement. Ordinarily, the Fund anticipates that approximately 50% of its portfolio will consist of equity securities (including securities convertible into equity securities) and 50% of fixed income securities. The Fund's investment adviser may vary the amount invested in each type of security in response to changing market conditions to take advantage of relative undervaluation in either the stock or bond markets. The Fund will, however, not make an additional investment in equity securities if more than 75% of its total assets at the time the investment is made would include investments in equity securities. Generally, approximately half of the equity portion of the Fund's portfolio will be invested in common stocks which the Fund's investment adviser believes will yield current income and have potential for long-term capital growth and half in bonds and preferred stocks convertible into such common stock. With respect to the fixed income portion of the Fund's portfolio, emphasis will be placed on acquiring non-speculative issues expected to fluctuate little in value, except with changes in prevailing interest rates. The market value of the debt obligations in the Fund's portfolio can be expected to vary inversely to changes in prevailing interest rates. The Fund may at times emphasize the generation of interest income by investing in high-yielding debt securities, with short and medium to long-term maturities. Investment in medium (i.e., with maturities from five to ten years) to long-term (i.e., with maturities over ten years) debt securities may also be made with a view to realizing capital appreciation when the Fund's investment adviser believes that interest rates on such investments may decline, thereby increasing their market value. Normally, the Fund anticipates that approximately half of the fixed income portion of the Fund's portfolio will be invested in marketable obligations of, or guaranteed by, the U.S. government, its agencies or instrumentalities which are supported by the full faith and credit of the United States or by the right of the issuer to borrow from the U.S. Treasury. These include issues of the Treasury, such as bills, certificates of indebtedness, notes and bonds, and issues of agencies and instrumentalities established under the authority of an act of Congress. Agencies or instrumentalities whose securities are supported by the full faith and credit of the United States include, but are not limited to, the Federal Housing Administration, Farmers Home Administration, Export-Import Bank of the United States, Small Business Administration and Government National Mortgage Association. Examples of agencies or instrumentalities whose securities are supported by the right of the issuer to borrow from the Treasury include, but are not limited to, the Federal Home Loan Bank, Federal Intermediate Credit Banks, Federal National Mortgage Association and Tennessee Valley Authority. The balance will be invested in corporate obligations rated no lower than A by Moody's or S&P. It is anticipated that the annual portfolio turnover rate for the Fund will generally not exceed 100% for the equity portion of its portfolio and 200% for the fixed income portion. The Fund may employ certain additional investment strategies which are discussed in "Investment Practices and Restrictions", below. Evergreen Foundation Fund The investment objectives of Evergreen Foundation Fund, in order of priority, are reasonable income, conservation of capital and capital appreciation. The Fund seeks to achieve these objectives by investing in a combination of common stocks, preferred stocks, securities convertible into or exchangeable for common stocks, corporate and U.S. Government debt obligations, and short-term debt instruments, such as commercial paper. Additionally, income from time to time may be generated by the lending of securities. The Fund's common stock investments will include those which (at the time of purchase) pay dividends and in the view of the Fund's investment adviser have potential for capital enhancement. The Fund may make investments in securities regardless of whether or not such securities are traded on a national securities exchange. The value of portfolio securities and their yields are expected to fluctuate over time because of varying general economic and market conditions. Accordingly, there can be no assurance that the Fund's investment objectives will be achieved. The Fund's objective is a fundamental policy and may not be changed without shareholder approval. The Fund's asset allocation will vary from time to time in accordance with changing economic and market conditions, including: inflation rates, business cycle trends, business regulations and tax law impacts on the investment markets. The composition of its portfolio will be largely unrestricted and subject to the discretion of the Fund's investment adviser. Under normal circumstances, the Fund anticipates that at least 25% of its net assets will consist of fixed income securities. The balance will be invested in equity securities (including securities convertible into equity securities). In selecting fixed income securities for the Fund's portfolio, emphasis will be placed on issues expected to fluctuate little in value other than as a result of changes in prevailing interest rates. The market value of the debt obligations in the Fund's portfolio can be expected to vary inversely to changes in prevailing interest rates. The Fund may at times emphasize the generation of interest income by investing in high-yielding debt securities, with short, medium or long-term maturities. While fixed income investments will generally be made for the purpose of generating interest income, investments in medium to long-term debt securities (i.e., those with maturities from five to ten years and those with maturities over ten years, respectively) may be made with a view to realizing capital appreciation when the Fund's investment adviser believes changes in interest rates will lead to an increase in the value of such securities. The fixed income portion of the Fund's portfolio may include: 1. Marketable obligations of, or guaranteed by, the U.S. government, its agencies or instrumentalities, including issues of the U.S. Treasury, such as bills, certificates of indebtedness, notes and bonds, and issues of agencies and instrumentalities established under the authority of an act of Congress. Some of these securities are supported by the full faith and credit of the U.S. Government, and others are supported only by the credit of the agency or instrumentality. Agencies or instrumentalities whose securities are supported by the full faith and credit of the United States include, but are not limited to, the Federal Housing Administration, Farmers Home Administration, Export-Import Bank of the United States, Small Business Administration and Government National Mortgage Association. Agencies or instrumentalities whose securities are supported only by the credit of the agency or instrumentality include the Interamerican Development Bank and the International Bank for Reconstruction and Development. These obligations are supported by appropriated but unpaid commitments of their member countries. There are no assurances that the commitments will be fulfilled in the future. 2. Corporate obligations rated no lower than A by Moody's or S&P. 3. Obligations of banks or banking institutions having total assets of more than $2 billion which are members of the Federal Deposit Insurance Corporation. 4. Commercial paper of high quality (rated no lower than A-2 by S&P or Prime-2 by Moody's or, if not rated, issued by companies which have an outstanding long-term debt issue rated AAA or AA by S&P or Aaa or Aa by Moody's). Certain obligations may be entitled to the benefit of standby letters of credit or similar commitments issued by banks and, in such instances, the Fund's investment adviser will take into account the obligation of the bank in assessing the quality of such security. It is anticipated that the annual portfolio turnover rate for the Fund will generally not exceed 100% for the equity portion of its portfolio and 200% for the fixed income portion. The Fund may employ certain additional investment strategies which are discussed in "Investment Practices and Restrictions", below. Evergreen Total Return Fund The investment objective of Evergreen Total Return Fund is to achieve a return consisting of current income and capital appreciation in the value of its shares. The emphasis on current income and capital appreciation will be relatively equal although, over time, changes in the outlook for market conditions and the level of interest rates will cause the Fund to vary its emphasis between these two elements in its search for the optimum return for its shareholders. The Fund seeks to achieve its investment objective through investments in common stocks, preferred stocks, securities convertible into or exchangeable for common stocks and fixed income securities. The Fund may invest up to 20% of its total assets in the securities of foreign issuers either directly or in the form of ADRs, European Depository Receipts ("EDRs") or other securities convertible into securities of foreign issuers. The Fund may also write covered call options. The Fund's investment objective is a fundamental policy. There can be no assurance that the Fund's investment objective will be achieved. To the extent that the Fund seeks capital appreciation, it expects that its investments will provide growth over the long-term. Investments, however, may be made on occasion for the purpose of short-term capital appreciation if the Fund believes that such investments will benefit its shareholders. The Fund may make investments in securities (other than options) regardless of whether or not such securities are traded on a national securities exchange. The value of portfolio securities and their yields, as well as opportunities to realize net gains from a covered call options writing program, are expected to fluctuate over time because of varying general economic and market conditions. The Fund's portfolio will vary over time depending upon the economic outlook and market conditions. The composition of its portfolio will be largely unrestricted and subject to the discretion of the Fund's investment adviser. Ordinarily, the Fund anticipates that approximately 75% of its portfolio will consist of equity securities and the other 25% of debt securities (including convertible debt securities). As of March 31, 1993 and 1994 and January 31, 1995, approximately 88%, 96% and 91%, respectively, of the Fund's portfolio consisted of equity securities. The balance of the Fund's portfolio consisted of debt securities (including convertible debt securities). If, in the judgment of the Fund's investment adviser, the appreciation potential for equity securities exceeds the return available from debt securities or government securities, investments in equity securities could exceed 75% of the Fund's portfolio. Most equity investments, however, will be income producing. The quality standards for debt securities include: Obligations of banks having total assets of at least one billion dollars which are members of the FDIC; commercial paper rated no lower than P-2 by Moody's or A-2 by S&P; and non-convertible debt securities rated no lower than Baa by Moody's or BBB by Standard & Poor's. Securities rated Baa or BBB may have speculative characteristics. See the discussion above with respect to Evergreen Value Fund. 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 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 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 must pay. 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 the Evergreen Total Return Fund, Evergreen Growth and Income Fund, Evergreen American Retirement Fund and Evergreen Foundation Fund on those exchanges. The portfolio turnover rate for each Fund is set forth in the tables contained in the section entitled "Financial Highlights". See the Statement of Additional Information for further information regarding the brokerage allocation practices of the Funds. Borrowing. As a matter of fundamental policy, the Funds, except Evergreen American Retirement Fund, may not borrow money except as a temporary measure to facilitate redemption requests or for extraordinary or emergency purposes. Evergreen American Retirement Fund may borrow for purposes of leverage. 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 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 net assets of the Evergreen Total Return Fund, Evergreen Growth and Income Fund and Evergreen American Retirement Fund, 30% of the net assets of the Evergreen Foundation Fund, and 5% of the value of the total assets of Evergreen Balanced Fund and Evergreen Value 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. 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. Short Sales. The Evergreen Total Return Fund, Evergreen Growth and Income Fund, Evergreen Balanced Fund, Evergreen American Retirement Fund and Evergreen Foundation Fund may, as a defensive strategy, make short sales of securities. A short sale occurs when a seller sells a security and makes delivery to the buyer by borrowing the security. Short sales of a security are generally made in cases where the seller expects the market value of the security to decline. To complete a short sale, the seller must replace the security borrowed by purchasing it at the market price at the time of replacement, or by delivering securities from the seller's own position to the lender. In the event the market value of a security sold short were to increase, the seller would realize a loss to the extent that the cost of purchasing the security for delivery to the lender were greater than the proceeds from the short sale. In the event a short sale is completed by delivery of securities to the lender from the seller's own position, the seller would forego any gain that would otherwise be realized on such securities. The Evergreen American Retirement Fund and Evergreen Foundation Fund may only make short sales "against the box" which means it must own the securities sold short, or other securities convertible into, or which carry rights to acquire, such securities. Illiquid or Restricted Securities. Evergreen Growth and Income Fund, Evergreen American Retirement Fund, Evergreen Foundation Fund and Evergreen Total Return Fund may invest up to 15% of their net assets, and Evergreen Balanced Fund and Evergreen Value Fund may invest up to 10% 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. 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% or 10 % limits. 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 Funds' investment advisers 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%, or with respect to Evergreen Value Fund 10%, of its assets invested in illiquid or not readily marketable securities. Repurchase Agreements and Reverse Repurchase Agreements. Evergreen Growth and Income Fund, Evergreen Balanced Fund, Evergreen Value Fund and Evergreen Total Return Fund 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 Balanced Fund and Evergreen Value 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. Each Fund will not enter into reverse repurchase agreements exceeding 5% of the value of its total assets. When-Issued and Delayed Delivery Transactions. Evergreen Balanced Fund and Evergreen Value Fund may purchase securities on a when-issued or delayed delivery basis. These transactions are arrangements in which a Fund purchases securities with payment and delivery scheduled for a future time. The seller's failure to complete these transactions may cause a Fund 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, a Fund may pay more or less than the market value of the securities on the settlement date. The Funds may dispose of a commitment prior to settlement if the Funds investment adviser deems it appropriate to do so. In addition, the Funds 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. 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. Options and Futures. Each of Evergreen Total Return Fund, Evergreen Growth and Income Fund and Evergreen American Retirement Fund may write covered call options on certain portfolio securities in an attempt to earn income and realize a higher return on its portfolio. A call option may not be written by the Funds if, afterwards, securities comprising more than 25% of the market value of the equity securities of Evergreen Growth and Income Fund and Evergreen Total Return Fund, or 15% of the market value of the equity securities of Evergreen American Retirement Fund would be subject to call options. A Fund realizes income from the premium paid to it in exchange for writing the call option. Once it has written a call option on a portfolio security and until the expiration of such option, a Fund forgoes the opportunity to profit from increases in the market price of such security in excess of the exercise price of the call option. Should the price of the security on which a call has been written decline, a Fund retains the risk of loss, which would be offset to the extent the Fund has received premium income. A Fund will only write "covered" call options traded on U.S. national securities exchanges. An option will be deemed covered when a Fund either (i) owns the security (or securities convertible into such security) on which the option has been written in an amount sufficient to satisfy the obligations arising under the option; or (ii) a Fund's Custodian maintains cash or high-grade liquid debt securities belonging to the Fund in an amount not less that the amount needed to satisfy the Fund's obligations with respect to options written on securities it does not own. A "closing purchase transaction" may be entered into with respect to a call option written by a Fund for the purpose of closing its position. Evergreen Balanced Fund and Evergreen Value Fund may engage in options and futures transactions. Options and futures transactions are intended to enable a Fund to manage market, interest rate or exchange rate risk, and the Funds do not use these transactions for speculation or leverage. Evergreen Balanced Fund and Evergreen Value Fund may attempt to hedge all or a portion of their portfolios through the purchase of both put and call options on their portfolio securities and listed put options on financial futures contracts for portfolio securities. The Funds may also write covered call options on their portfolio securities to attempt to increase their current income. The Funds will maintain their positions in securities, option rights and segregated cash subject to puts and calls until the options are exercised, closed or have expired. An option position may be closed out only on an exchange which provides a secondary market for an option of the same series. The Funds may purchase listed put options on financial futures contracts. These options will be used only to protect portfolio securities against decreases in value resulting from market factors such as an anticipated increase in interest rates. The Funds may write (i.e., sell) covered call and put options. By writing a call option, a Fund becomes obligated during the term of the option to deliver the securities underlying the option upon payment of the exercise price. By writing a put option, a Fund becomes obligated during the term of the option to purchase the securities underlying the option at the exercise price if the option is exercised. The Funds may also write straddles (combinations of covered puts and calls on the same underlying security). Evergreen Balanced Fund and Evergreen Value Fund may only write "covered" options. This means that so long as a Fund is obligated as the writer of a call option, it will own the underlying securities subject to the option or, in the case of call options on U.S. Treasury bills, the Fund might own substantially similar U.S. Treasury bills. A Fund will be considered "covered" with respect to a put option it writes if, so long as it is obligated as the writer of the put option, it deposits and maintains with its custodian in a segregated account liquid assets having a value equal to or greater than the exercise price of the option. The principal reason for writing call or put options is to obtain, through a receipt of premiums, a greater current return than would be realized on the underlying securities alone. The Funds receive a premium from writing a call or put option which they retain whether or not the option is exercised. By writing a call option, the Funds might lose the potential for gain on the underlying security while the option is open, and by writing a put option the Funds might become obligated to purchase the underlying securities for more than their current market price upon exercise. Evergreen Balanced Fund and Evergreen Value Fund may also, as stated previously, purchase futures contracts and options thereon. A futures contract is a firm commitment by two parties: the seller, who agrees to make delivery of the specific type of instrument called for in the contract ("going short"), and the buyer, who agrees to take delivery of the instrument ("going long") at a certain time in the future. Financial futures contracts call for the delivery of particular debt instruments issued or guaranteed by the U.S. Treasury or by specific agencies or instrumentalities of the U.S. government. If a Fund would enter into financial futures contracts directly to hedge its holdings of fixed income securities, it would enter into contracts to deliver securities at an undetermined price (i.e., "go short") to protect itself against the possibility that the prices of its fixed income securities may decline during the Fund's anticipated holding period. A Fund would "go long" (agree to purchase securities in the future at a predetermined price) to hedge against a decline in market interest rates. The Funds may also enter into currency and other financial futures contracts and write options on such contracts. The Funds intend to enter into such contracts and related options for hedging purposes. The Funds will enter into futures on securities, currencies or index-based futures contracts in order to hedge against changes in interest or exchange rates or securities prices. A futures contract on securities or currencies is an agreement to buy or sell securities or currencies during a designated month at whatever price exists at that time. A futures contact on a securities index does not involve the actual delivery of securities, but merely requires the payment of a cash settlement based on changes in the securities index. The Funds do not make payment or deliver securities upon entering into a futures contract. Instead, they put down a margin deposit, which is adjusted to reflect changes in the value of the contract and which remains in effect until the contract is terminated. The Funds may sell or purchase currency and other financial futures contracts. When a futures contract is sold by a Fund, the profit on the contract will tend to rise when the value of the underlying securities or currencies declines and to fall when the value of such securities or currencies increases. Thus, the Funds sell futures contracts in order to offset a possible decline in the profit on their securities or currencies. If a futures contract is purchased by a Fund, the value of the contract will tend to rise when the value of the underlying securities or currencies increases and to fall when the value of such securities or currencies declines. The Funds may enter into closing purchase and sale transactions in order to terminate a futures contract and may buy or sell put and call options for the purpose of closing out their options positions. The Funds ability to enter into closing transactions depends on the development and maintenance of a liquid secondary market. There is no assurance that a liquid secondary market will exist for any particular contract or at any particular time. As a result, there can be no assurance that the Funds will be able to enter into an offsetting transaction with respect to a particular contract at a particular time. If the Funds are not able to enter into an offsetting transaction, the Funds will continue to be required to maintain the margin deposits on the contract and to complete the contract according to its terms, in which case the Funds would continue to bear market risk on the transaction. Risk Characteristics of Options and Futures. Although options and futures transactions are intended to enable the Funds to manage market, exchange or interest rate risks, these investment devices can be highly volatile, and the Funds use of them can result in poorer performance (i.e., the Funds return may be reduced). The Funds attempt to use such investment devices for hedging purposes may not be successful. Successful futures strategies require the ability to predict future movements in securities prices, interest rates and other economic factors. When the Funds use financial futures contract and options on financial futures contract as hedging devices, there is a risk that the prices of the securities subject to the financial futures contracts and options on financial futures contracts may not correlate perfectly with the prices of the securities in the Funds' portfolios. This may cause the financial futures contract and any related options to react to market changes differently than the portfolio securities. In addition, the Funds investment adviser could be incorrect in its expectations and forecasts about the direction or extent of market factors, such as interest rates, securities price movements and other economic factors. Even if the Funds investment adviser correctly predicts interest rate movements, a hedge could be unsuccessful if changes in the value of a Fund's futures position did not correspond to changes in the value of its financial futures contracts. It is not certain that a secondary market for positions in financial futures contracts or for options on financial futures contracts will exist at all times. Although the Funds investment adviser will consider liquidity before entering into financial futures contracts or options on financial futures contracts transactions, there is no assurance that a liquid secondary market on an exchange will exist for any particular financial futures contract or option on a financial futures contract at any particular time. The Funds ability to establish and close out financial futures contracts and options on financial futures contract positions depends on this secondary market. If a Fund is unable to close out its position due to disruptions in the market or lack of liquidity, the Fund may lose money on the futures contract or option, and the losses to the Fund could be significant. Special Risk Considerations Investment in Foreign Securities. Evergreen Total Return Fund, Evergreen Balanced Fund and Evergreen Value Fund may invest in foreign securities. Investments in foreign securities require consideration of certain factors not normally associated with investments in securities of U.S. issuers. For example, a change in the value of any foreign currency relative to the U.S. dollar will result in a corresponding change in the U.S. dollar value of securities denominated in that currency. Accordingly, a change in the value of any foreign currency relative to the U.S. dollar will result in a corresponding change in the U.S. dollar value of the assets of the Fund denominated or traded in that currency. If the value of a particular foreign currency falls relative to the U.S. dollar, the U.S. dollar value of the assets of a Fund denominated in such currency will also fall. The performance of a Fund will be measured in U.S. dollars. Securities markets of foreign countries generally are not subject to the same degree of regulation as the U.S. markets and may be more volatile and less liquid. Lack of liquidity may affect a Fund's ability to purchase or sell large blocks of securities and thus obtain the best price. The lack of uniform accounting standards and practices among countries impairs the validity of direct comparisons of valuation measures (such as price/earnings ratios) for securities in different countries. In addition, a Fund may incur costs associated with currency hedging and the conversion of foreign currency into U.S. dollars and may be adversely affected by restrictions on the conversion or transfer of foreign currency. Other considerations include political and social instability, expropriation, the lack of available information, higher transaction costs (including brokerage charges), increased custodian charges associated with holding foreign securities and different securities settlement practices. Settlement periods for foreign securities, which are sometimes longer than those for securities of U.S. issuers, may affect portfolio liquidity. These different settlement practices may cause missed purchasing opportunities and/or the loss of interest on money market and debt investments pending further equity or long-term debt investments. In addition, foreign securities held by a Fund may be traded on days that the Fund does not value its portfolio securities, such as Saturdays and customary business holidays, and, accordingly, a Fund's net asset value may be significantly affected on days when shareholders do not have access to the Fund. Additionally, accounting procedures and government supervision may be less stringent than those applicable to U.S. companies. It may also be more difficult to enforce contractual obligations abroad than would be the case in the United States because of differences in the legal systems. Foreign securities may be subject to foreign taxes, which may reduce yield, and may be less marketable than comparable U.S. securities. All these factors are considered by each Fund's investment adviser before making any of these types of investments. ADRs and EDRs and other securities convertible into securities of foreign issuers may not necessarily be denominated in the same currency as the securities into which they may be converted but rather in the currency of the market in which they are traded. ADRs are receipts typically issued by an American bank or trust company which evidence ownership of underlying securities issued by a foreign corporation. EDRs are receipts issued in Europe by banks or depositories which evidence a similar ownership arrangement. Generally ADRs, in registered form, are designed for use in United States securities markets and EDRs, in bearer form, are designed for use in European securities markets. 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. 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. Shareholders will be notified of any changes in policies that are not fundamental. -------------------------------------------------------------------------------- MANAGEMENT OF THE FUNDS -------------------------------------------------------------------------------- INVESTMENT ADVISERS The management of each Fund is supervised by the Trustees of the Trust under which the Fund has been established ("Trustees"). Evergreen Asset Management Corp. ("Evergreen Asset") has been retained by Evergreen Total Return Fund, Evergreen Growth and Income Fund, Evergreen American Retirement Fund and Evergreen Foundation 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 Balanced Fund and Evergreen Value 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 Total Return Fund, Evergreen Growth and Income Fund, Evergreen American Retirement Fund and Evergreen Foundation 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 from each of Evergreen Total Return Fund and Evergreen Growth and Income Fund fee 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. Evergreen Asset is entitled to receive from Evergreen Foundation Fund a fee equal to .875 of 1% of average daily net assets on an annual basis on the first $750 million in assets, .75 of 1% of average daily net assets on an annual basis on the next $250 million in assets, and .7 of 1% of average daily net assets on an annual basis on assets over $1 billion, and from Evergreen American Retirement Fund a fee equal to .75 of 1% of average daily net assets on an annual basis on the first $1 billion in assets, and .7 of 1% of average daily net assets on an annual basis on assets over $1 billion. The fee paid by Evergreen Total Return Fund and Evergreen Growth and Income Fund is higher than the rate paid by most other investment companies. The total expenses of each Fund for the fiscal year ended December 31, 1994, expressed as a percentage of average daily net assets on an annual basis are set forth in the section entitled "Financial Highlights". CMG manages investments and supervises the daily business affairs of Evergreen Balanced Fund and Evergreen Value Fund and, as compensation therefor, is entitled to receive an annual fee equal to .50 of 1% of average daily net assets of each Fund. The total annualized operating expenses of Evergreen Balanced Fund and Evergreen Value Fund for their most recent fiscal year ended December 31, 1994, are set forth in the section entitled "Financial Highlights". Evergreen Asset serves as administrator to Evergreen Balanced Fund and Evergreen Value 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 Balanced Fund and Evergreen Value 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 Total Return Fund is Nola Maddox Falcone, C.F.A., who is President and Co-Chief Executive Officer of Evergreen Asset. Ms. Falcone has served as the principal manager of Evergreen Total Return Fund since 1985. The portfolio manager for Evergreen Foundation Fund is Stephen A. Lieber, who is Chairman and Co-Chief Executive Officer of the Evergreen Asset. Mr. Lieber has served as such Fund's principal manager since its inception. The portfolio manager for Evergreen Growth and Income Fund is Edmund H. Nicklin, Jr. C.F.A. Mr. Nicklin has served as the Fund's principal manager since its inception. The portfolio manager for Evergreen American Retirement Fund is Irene D. O'Neill, C.F.A. Ms. O'Neill has served as the Fund's principal manager since its inception. Each of the aforementioned individuals has been associated with the Evergreen Asset and its predecessor since prior to 1989. The portfolio manager for Evergreen Balanced Fund since its inception in January 1991 is R. Dean Hawes, who is a Vice President of FUNB and is the Director of Employee Benefit Portfolio Management. Mr. Hawes joined FUNB in 1981 after spending five years with Merrill Lynch, Pierce, Fenner, & Smith and Townsend Investments. William T. Davis, Jr., the portfolio manager of Evergreen Value Fund since March, 1991, is a Vice President of FUNB and has been with First Union since 1986. Prior to that, Mr. Davis served as a securities analyst for Seibels Bruce (Insurance) Group. 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 Total Return Fund, Evergreen Growth and Income Fund, Evergreen American Retirement Fund and Evergreen Foundation 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 Total Return Fund, Evergreen Growth and Income Fund, Evergreen American Retirement Fund and Evergreen Foundation Fund for the services provided by Lieber & Company. The address of Lieber & Company is 2500 Westchester Avenue, Purchase, New York 10577. Lieber & Company is an indirect, wholly-owned, subsidiary of First Union. ------------------------------------------------------------------------------- PURCHASE AND REDEMPTION OF SHARES ------------------------------------------------------------------------------- HOW TO BUY SHARES Eligible Investors may purchase Fund shares at net asset value by mail or wire as described below. The Funds impose no sales charges on Class Y shares. Class Y shares are the only class of shares offered by this Prospectus and are only available to (i) all shareholders of record in one or more of the Evergreen Funds as of December 30, 1994, (ii) certain institutional investors and (iii) investment advisory clients of the Adviser and its affiliates. The minimum initial investment is $1,000, which may be waived in certain situations. There is no minimum for subsequent investments. Investors may make subsequent investments by establishing a Systematic Investment Plan or a Telephone Investment Plan. Purchases by Mail or Wire. Each investor must complete the enclosed Share Purchase Application and mail it together with a check made payable to the Fund whose shares are being purchased, to State Street Bank and Trust Company ("State Street") at P.O. Box 9021, Boston, Massachusetts 02205-9827. Checks not drawn on U.S. banks will be subject to foreign collection which will delay an investor's investment date and will be subject to processing fees. When making subsequent investments, an investor should either enclose the return remittance portion of the statement, or indicate on the face of the check, the name of the Fund in which an investment is to be made, the exact title of the account, the address, and the Fund account number. Purchase requests should not be sent to a Fund in New York. If they are, the Fund must forward them to State Street, and the request will not be effective until State Street receives them. Initial investments may also be made by wire by (i) calling State Street at 800-423-2615 for an account number and (ii) instructing your bank, which may charge a fee, to wire federal funds to State Street, as follows: State Street Bank and Trust Company, ABA No.0110-0002-8, Attn: Custodian and Shareholder Services. The wire must include references to the Fund in which an investment is being made, account registration, and the account number. A completed Application must also be sent to State Street indicating that the shares have been purchased by wire, giving the date the wire was sent and referencing the account number. Subsequent wire investments may be made by existing shareholders by following the instructions outlined above. It is not necessary, however, for existing shareholders to call for another account number. How the Funds Value Their Shares. The net asset value of each Class of shares of a Fund is calculated by dividing the value of the amount of the Fund's net assets attributable to that Class by the number of outstanding shares of that Class. Shares are valued each day the New York Stock Exchange (the "Exchange") is open as of the close of regular trading (currently 4:00 p.m. Eastern time). The securities in a Fund are valued at their current market value determined on the basis of market quotations or, if such quotations are not readily available, such other methods as a Fund's Trustees believe would accurately reflect fair market value. Non-dollar denominated securities will be valued as of the close of the Exchange at the closing price of such securities in their principal trading market. Additional Purchase Information. As a condition of this offering, if a purchase is canceled due to nonpayment or because an investor's check does not clear, the investor will be responsible for any loss a Fund or the Adviser incurs. If such investor is an existing shareholder, a Fund may redeem shares from an investor's account to reimburse the Fund or the Adviser for any loss. In addition, such investors may be prohibited or restricted from making further purchases in any of the Evergreen Funds. The Share Purchase Application may not be used to invest in any of the prototype retirement plans for which the Funds are an available investment. For information about the requirements to make such investments, including copies of the necessary application forms, please call the telephone number set forth on the cover page of this Prospectus. A Fund cannot accept investments specifying a certain price or date and reserves the right to reject any specific purchase order, including orders in connection with exchanges from the other Evergreen Funds. Although not currently anticipated, each Fund reserves the right to suspend the offer of shares for a period of time. Shares of each Fund are sold at the net asset value per share next determined after a shareholder's order is received. Investments by federal funds wire or by check will be effective upon receipt by State Street. Qualified institutions may telephone orders for the purchase of Fund shares. Investors may also purchase shares through a broker/dealer, which may charge a fee for the service. HOW TO REDEEM SHARES You may "redeem", i.e., sell your shares in a Fund to the Fund on any day the Exchange is open, either directly or through your financial intermediary. The price you will receive is the net asset value next calculated after the Fund receives your request in proper form. Proceeds generally will be sent to you within seven days. However, for shares recently purchased by check, a Fund will not send proceeds until it is reasonably satisfied that the check has been collected (which may take up to 15 days). Once a redemption request has been telephoned or mailed, it is irrevocable and may not be modified or canceled. Redeeming Shares Directly by Mail or Telephone. Send a signed letter of instruction or stock power form to State Street which is the registrar, transfer agent and dividend-disbursing agent for each Fund. Stock power forms are available from your financial intermediary, State Street, and many commercial banks. Additional documentation is required for the sale of shares by corporations, financial intermediaries, fiduciaries and surviving joint owners. Signature guarantees are required for all redemption requests for shares with a value of more than $10,000 or where the redemption proceeds are to be mailed to an address other than that shown in the account registration. A signature guarantee must be provided by a bank or trust company (not a Notary Public), a member firm of a domestic stock exchange or by other financial institutions whose guarantees are acceptable to State Street. Shareholders may withdraw amounts of $1,000 or more from their accounts by calling State Street (800-423-2615) between the hours of 9:00 a.m. and 4:00 p.m. (Eastern time) each business day (i.e., any weekday exclusive of days on which the New York Stock Exchange or State Street's offices are closed). The New York Stock Exchange is closed on New Year's Day, Presidents Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. Redemption requests made after 4:00 p.m. (Eastern time) will be processed using the net asset value determined on the next business day. Such redemption requests must include the shareholder's account name, as registered with a Fund, and the account number. During periods of drastic economic or market changes, shareholders may experience difficulty in effecting telephone redemptions. Shareholders who are unable to reach a Fund or State Street by telephone should follow the procedures outlined above for redemption by mail. The telephone redemption service is not made available to shareholders automatically. Shareholders wishing to use the telephone redemption service must indicate this on the enclosed Application and choose how the redemption proceeds are to be paid. Redemption proceeds will either (i) be mailed by check to the shareholder at the address in which the account is registered or (ii) be wired to an account with the same registration as the shareholder's account in a Fund at a designated commercial bank. State Street currently deducts a $5 wire charge from all redemption proceeds wired. This charge is subject to change without notice. A shareholder who decides later to use this service, or to change instructions already given, should fill out a Shareholder Services Form and send it to State Street Bank and Trust Company, P.O. Box 9021, Boston, Massachusetts 02205-9827, with such shareholder's signature guaranteed by a bank or trust company (not a Notary Public), a member firm of a domestic stock exchange or by other financial institutions whose guarantees are acceptable to State Street. Shareholders should allow approximately ten days for such form to be processed. The Funds will employ reasonable procedures to verify that telephone requests are genuine. These procedures include requiring some form of personal identification prior to acting upon instructions and tape recording of conversations. If the Fund fails to follow such procedures, it may be liable for any losses due to unauthorized or fraudulent instructions. The Fund shall not be liable for following telephone instructions reasonably believed to be genuine. Also, the Fund reserves the right to refuse a telephone redemption request, if it is believed advisable to do so. Financial intermediaries may charge a fee for handling telephonic requests. The telephone redemption option may be suspended or terminated at any time without notice. General. The sale of shares is a taxable transaction for Federal tax purposes. Under unusual circumstances, a Fund may suspend redemptions or postpone payment for up to seven days or longer, as permitted by Federal securities law. The Funds reserve the right to close an account that through redemption has remained below $1,000 for 30 days. Shareholders will receive 60 days' written notice to increase the account value before the account is closed. The Funds have elected to be governed by Rule 18f-1 under the Investment Company Act of 1940 pursuant to which each Fund is obligated to redeem shares solely in cash, up to the lesser of $250,000 or 1% of a Fund's total net assets during any ninety day period for any one shareholder. See the Statement of Additional Information for further details. EXCHANGE PRIVILEGE How To Exchange Shares. You may exchange some or all of your shares for shares of the same Class in the other Evergreen Funds by telephone or mail as described below. An exchange which represents an initial investment in another Evergreen Fund must amount to at least $1,000. Once an exchange request has been telephoned or mailed, it is irrevocable and may not be modified or canceled. Exchanges will be made on the basis of the relative net asset values of the shares exchanged next determined after an exchange request is received. Exchanges are subject to minimum investment and suitability requirements. Each of the Evergreen Funds have different investment objectives and policies. For complete information, a prospectus of the fund into which an exchange will be made should be read prior to the exchange. An exchange is treated for Federal income tax purposes as a redemption and purchase of shares and may result in the realization of a capital gain or loss. Each Fund imposes a fee of $5 per exchange on shareholders who exchange in excess of four times per calendar year. This exchange privilege may be modified or discontinued at any time by the Fund upon sixty days' notice to shareholders and is only available in states in which shares of the fund being acquired may lawfully be sold. Exchanges by Telephone and Mail. You may exchange shares with a value of $1,000 or more by telephone by calling State Street (800-423-2615). Exchange requests made after 4:00 p.m. (Eastern time) will be processed using the net asset value determined on the next business day. During periods of drastic economic or market changes, shareholders may experience difficulty in effecting telephone exchanges. You should follow the procedures outlined below for exchanges by mail if you are unable to reach State Street by telephone. If you wish to use the telephone exchange service you should indicate this on the Share Purchase Application. As noted above, each Fund will employ reasonable procedures to confirm that instructions for the redemption or exchange of shares communicated by telephone are genuine. A telephone exchange may be refused by a Fund or State Street if it is believed advisable to do so. Procedures for exchanging Fund shares by telephone may be modified or terminated at any time. Written requests for exchanges should follow the same procedures outlined for written redemption requests in the section entitled "How to Redeem Shares", however, no signature guarantee is required. SHAREHOLDER SERVICES The Funds offer the following shareholder services. For more information about these services or your account, contact your financial intermediary, Evergreen Funds Distributor, Inc.("EFD"), the distributor of the Funds, or the toll-free number on the front page of this Prospectus. Some services are described in more detail in the Share Purchase Application. Systematic Investment Plan. You may make monthly or quarterly investments into an existing account automatically in amounts of not less than $25. Telephone Investment Plan. You may make investments into an existing account electronically in amounts of not less than $100 or more than $10,000 per investment. Telephone investment requests received by 3:00 p.m. (Eastern time) will be credited to a shareholder's account the day the request is received. Systematic Cash Withdrawal Plan. When an account of $10,000 or more is opened or when an existing account reaches that size, you may participate in the Fund's Systematic Cash Withdrawal Plan by filling out the appropriate part of the Share Purchase Application. Under this plan, you may receive (or designate a third party to receive) a monthly or quarterly check in a stated amount of not less than $100. Fund shares will be redeemed as necessary to meet withdrawal payments. All participants must elect to have their dividends and capital gain distributions reinvested automatically. Automatic Reinvestment Plan. For the convenience of investors, all dividends and distributions are automatically reinvested in full and fractional shares of the Fund at the net asset value per share at the close of business on the record date, unless otherwise requested by a shareholder in writing. If the transfer agent does not receive a written request for subsequent dividends and/or distributions to be paid in cash at least three full business days prior to a given record date, the dividends and/or distributions to be paid to a shareholder will be reinvested. If you elect to receive dividends and distributions in cash and the U.S. Postal Service cannot deliver the checks, or if the checks remain uncashed for six months, the checks will be reinvested into your account at the then current net asset value. Tax Sheltered Retirement Plans. You may open a pension and profit sharing account in any Evergreen mutual fund (except those funds having an objective of providing tax free income), including: (i) Individual Retirement Accounts ("IRAs") and Rollover IRAs; (ii) Simplified Employee Pension (SEP) for sole proprietors, partnerships and corporations; and (iii) Profit-Sharing and Money Purchase Pension Plans for corporations and their employees. EFFECT OF BANKING LAWS The Glass-Steagall Act and other banking laws and regulations presently prohibit member banks of the Federal Reserve System ("Member Banks") or their non-bank affiliates from sponsoring, organizing, controlling, or distributing the shares of registered open-end investment companies such as the Funds. Such laws and regulations also prohibit banks from issuing, underwriting or distributing securities in general. However, under the Glass-Steagall Act and such other laws and regulations, a Member Bank or an affiliate thereof may act as investment adviser, transfer agent or custodian to a registered open-end investment company and may also act as agent in connection with the purchase of shares of such an investment company upon the order of their customer. Evergreen Asset, since it is a subsidiary of FUNB, and CMG are subject to and in compliance with the aforementioned laws and regulations. Changes to applicable laws and regulations or future judicial or administrative decisions could result in CMG or Evergreen Asset being prevented from continuing to perform the services required under the investment advisory contract or from acting as agent in connection with the purchase of shares of a Fund by its customers. If CMG or Evergreen Asset were prevented from continuing to provide the services called for under the investment advisory agreement, it is expected that the Trustees would identify, and call upon each Fund's shareholders to approve, a new investment adviser. If this were to occur, it is not anticipated that the shareholders of any Fund would suffer any adverse financial consequences. ------------------------------------------------------------------------------- OTHER INFORMATION ------------------------------------------------------------------------------- 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 Internal Revenue Code of 1986, as amended (the "Code"). Dividends and distributions generally are taxable in the year in which they are paid, except any dividends paid in January that were declared in the previous calendar quarter may be treated as paid in December 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. 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 Growth and Income Fund, Evergreen American Retirement Fund, Evergreen Foundation Fund and Evergreen Total Return Fund for their most recent fiscal year is set forth below. A similar discussion relating to Evergreen Balanced Fund and Evergreen Value Fund is contained in the annual report of each Fund for the fiscal year ended December 31, 1994. Evergreen Growth and Income Fund The total return of the Class Y no-load shares of the Evergreen Growth and Income Fund was +1.69% for the year ended December 31, 1994. This return compared favorably with the +1.31% return of the Standard and Poor's 500 Reinvested Index (the "S&P 500 Index") and the -0.94% return from the Lipper Growth and Income Fund Average. This performance was achieved through the implementation of the "value timing" strategy which focuses on undervalued securities. At year-end 1994, the majority of the portfolio was comprised of out-of-favor growth companies, restructured companies and other companies which the Fund's investment adviser believes are substantially undervalued. [CHART] While the domestic economy's rate of growth accelerated dramatically in 1994, the Federal Reserve's more stringent monetary policy resulted in a less hospitable environment for financial assets. The Fund performed well relative to its competition and the S&P 500 Index in 1994, but the Fed's tightening of monetary policy kept the absolute return low, in keeping with the depressing influence on financial assets generally. The principal contributors to the Fund's positive performance during 1994 were the following industries: (1) business equipment and services which facilitated the productivity enhancing efforts of their customers; (2) chemical issues which benefited from the robust economic growth and previous restructuring efforts that lowered cost structures; and (3) shares of healthcare companies which continued their rebound from the market's adverse reaction to the perceived impact of the healthcare program proposed by the Clinton Administration in 1993. The industry groups which had the largest negative impact on the Fund's performance were the following: (i) banks and thrifts, insurance and utilities, all of which suffered from the Federal Reserve's more stringent monetary policy; (ii) retail which suffered from lack of pricing flexibility and excess capacity; and (iii) energy which was negatively impacted by lower prices for natural gas and declining refining margins. Evergreen American Retirement Fund The total return of the Class Y no-load shares of the Evergreen American Retirement Fund for the fiscal year ended December 31, 1994, was -2.86%. This performance lagged the Wilshire 5000 Index which returned -.06% and exceeded the Lehman General Bond Mutual Fund Index which returned -3.51% for the year. The Fund concentrated the equity portion of its portfolio in high dividend-paying common stocks, convertible bonds and convertible preferreds. Fixed-income issues were represented by investments in U.S. Treasury and agency obligations and high quality corporate bonds and notes. Interest rates rose through much of 1994 as the Federal Reserve moved to slow the rapid and potentially inflationary pace of U.S. economic growth. Over the course of the year, the Federal Fund's rate was increased from 3.0% to 5.5%, and market forces lifted interest rates on 30 year U.S. Treasury bonds from 6.35% to 7.88%. This rising interest rate environment was negative for the bond market and produced mixed results for the stock market. Because of the Fund's income-oriented style of investing, this period of rising interest rates negatively affected performance. The industry groups which had the largest positive impact on the Fund's performance included the chemicals and metals industries which benefited from rising demand and product prices, and bank stocks which rose in response to stronger loan growth and reduced loan loss provisions. The Fund was negatively impacted by its holdings in the automotive industry and related suppliers, and utility stocks which declined in response to higher interest rates. The Fund's exposure to utilities was reduced in early 1994 to a group of special situation companies. But even the improving fundamentals of these companies could not overcome the impact of rising rates. Despite strong earnings for the auto industry and suppliers, these stocks declined as the market anticipated slower consumer spending in response to higher rates. [CHART] The Fund's practice has been to provide a stable quarterly income dividend. During the past fiscal year, the Fund distributed a dividend of $0.15 per quarter. These distributions were funded entirely from net investment income. None represented a return of capital. To maintain the dividend rate the Fund purchased issues which had dividend increases, and frequently repositioned the portfolio in order to assure participation in large dividends (particularly from utility stocks or special dividends announced by other types of companies). The repositioning of the portfolio resulted in higher brokerage commissions. As noted above, the Fund's investment objectives in order of priority are conservation of capital, reasonable income and capital growth. To the extent that the Fund sought to maintain a stable dividend during the past fiscal year and therefore emphasized current income over capital growth, the Fund's overall return may have been reduced. Beginning in the first quarter of 1995, the Fund changed its dividend strategy. The Fund's income dividend distribution will move toward a fluctuating dividend and away from the stable dividend pattern of the past. Evergreen Foundation Fund. The total return of the Class Y no-load shares of the Evergreen Foundation Fund for the almost five years since inception on January 2, 1990 to December 31, 1994 was +99.57%, which calculated to an average annual compounded return of +14.83%. This compared favorably with the return of the Standard & Poor's 500 Reinvested Index (+51.45%) and the Lipper Balanced Fund Average (+44.03%) for the same time period. For the fiscal year ended 1994, the Fund produced a total return of -1.12% versus returns of +1.31% for the Standard & Poor's 500 Reinvested Index and -2.52% for the Lipper Balanced Fund Average. Asset allocation was a primary determinant of performance. Consistent with the Fund's investment objectives of reasonable income, conservation of capital and capital appreciation, Evergreen Asset sought to strategically position the Fund to maximize opportunities in each asset class. The average allocation during 1994 was 62% equities, 28% fixed-income and 10% short-term cash equivalents. The equity portion of the portfolio had a return of +4.91% for 1994. The fixed-income segment of the portfolio, whose primary focus is income and preservation of capital, was comprised on average of three-quarters long-term U.S. government obligations and one-quarter short-term cash equivalents. It generated a return of -11.06%, which was in line with its benchmarks, when assessed in terms of credit quality, liquidity and overall weighted maturity. The equity segment of the portfolio was largely responsible for the capital appreciation during 1994. Stock selection focused on issues believed to be conservatively valued and financially strong. Concentration on health care issues provided relative outperformance as these issues benefited from renewed confidence in the growth of pharmaceutical and medical services industries. A secondary focus on technological issues (semi-conductors and electronic components) also provided excellent relative performance, as these sectors benefited from a resurgence in the U.S. economy. The portfolio was negatively impacted by its investments in real estate companies, utilities and banks. Evergreen Total Return Fund. Steady income flow has been an important goal since the inception of the Fund. The Fund continued its annual $1.08 per share income dividend. The dividend was maintained for the seventh successive year. The portfolio of the Evergreen Total Return Fund, although primarily equities and convertibles, has a high level of interest rate sensitivity. Since the Fund seeks to pay a substantial dividend, Evergreen Asset looked toward the utility sector, financial issues, real estate investment trusts, convertible preferreds and convertible debentures to provide high yields. The sharp downward swing in the 1994 bond market had a deleterious effect on the interest sensitive sectors of the equity and convertible markets, particularly impacting utilities, financial and convertible issues. During the period from March 31, 1994 through January 31, 1995, the Dow Jones Utility Average was down -6.23%, the New York Stock Exchange Financial Index was down -3.00%, the Merrill Lynch Convertible Index was down -4.85%, and the Wilshire Real Estate Securities Index was down -3.80%. The performance of the Class Y no-load shares of the Fund for the same period was up +1.86%. This compares also with the performance of the Wilshire 5000 of +6.04% and +3.01% for the Lipper Equity Income Average. One of the best groups in the portfolio was the health sector which rebounded when the Clinton Health Care Plan ran into trouble. Restructured companies as well as selected cyclicals, such as banks and thrift issues and chemicals and energy issues, also helped the portfolio. Five bank and thrift mergers produced gains. During the year, the portfolio was restructured to reduce the utility sector especially electric utilities. Evergreen Asset decided to reduce dependence on this sector as it faces deregulation and resulting competitive pressures. Currently, the Fund's focus is on special situations resulting from such events as rate relief or corporate changes. Evergreen Asset also switched into international issues in order to diversify risk across country lines and to reduce the portfolio's sensitivity to changes in U.S. interest rates. Toward the end of the year, Evergreen Asset added to the portfolio's holdings in the retail sector as it saw a number of these companies at attractive valuation levels. Many of these issues were in the process of restructuring, thereby providing the possibility of improved margins in the near future. The Fund's dividend was funded entirely from net investment income. It did not represent a return of capital. To maintain the dividend rate the Fund purchased issues which had dividend increases, and frequently repositioned the portfolio in order to assure participation in large dividends, particularly from utility stocks or special dividends announced by other types of companies. The repositioning of the portfolio resulted in higher brokerage commissions. As noted above, the Fund's investment objective is to achieve a return consisting of current income and capital appreciation. To the extent that the Fund sought to maintain a stable dividend during the past fiscal year and therefore emphasized current income over capital appreciation, the Fund's overall return may have been reduced. On January 3, 1995, the Fund introduced a multiple class distribution structure. The Fund's total return for the period 1/3/95 to 1/31/95 for the A, B, C and Y Class of Shares was -3.45% (reflects maximum front end sales charge of 4.75%), -3.53% (reflects maximum contingent deferred sales charge of 5%), -0.41% (reflects 1% contingent deferred sales charge within first year of purchase), and 1.47% (no-load), respectively. [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 Total Return Fund is a Massachusetts business trust organized in 1986, and was originally organized as Maryland corporation in 1978. Evergreen Growth and Income Fund is a Massachusetts business trust organized in 1986. The Evergreen American Retirement Fund is a separate series of The Evergreen American Retirement Trust, a Massachusetts business trust organized in 1987. Evergreen Foundation Fund is a separate series of the Evergreen Foundation Trust, a Massachusetts business trust organized in 1989. Evergreen Balanced Fund and Evergreen Value 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 Balanced Fund and Evergreen Value Fund and which provides certain sub-administrative services to Evergreen Asset in connection with its role as investment adviser to Evergreen Growth and Income Fund, Evergreen American Retirement Fund, Evergreen Foundation Fund and Evergreen Total Return 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.
485APOS30th "Page" of 81TOC1stPreviousNextBottomJust 30th
INVESTMENT ADVISER Evergreen Asset Management Corp., 2500 Westchester Avenue, Purchase, New York 10577 EVERGREEN GROWTH AND INCOME FUND, EVERGREEN AMERICAN RETIREMENT FUND, EVERGREEN FOUNDATION FUND, EVERGREEN TOTAL RETURN FUND Capital Management Group of First Union National Bank, 210 South College Street, Charlotte, North Carolina, 28228 EVERGREEN BALANCED FUND, EVERGREEN VALUE 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 FOUNDATION FUND Ernst & Young LLP, 200 Clarendon Street, Boston, Massachusetts 02116-5072 EVERGREEN TOTAL RETURN FUND, EVERGREEN GROWTH AND INCOME FUND, EVERGREEN AMERICAN RETIREMENT FUND KPMG Peat Marwick LLP, One Mellon Bank Center, Pittsburgh, Pennsylvania 15219 EVERGREEN BALANCED FUND, EVERGREEN VALUE FUND DISTRIBUTOR Evergreen Funds Distributor, Inc., 237 Park Avenue, New York, New York 10017 536123 STATEMENT OF ADDITIONAL INFORMATION July 7, 1995 THE EVERGREEN GROWTH AND INCOME FUNDS 2500 Westchester Avenue, Purchase, New York 10577 800-807-2940 Evergreen Balanced Fund (formerly First Union Balanced Portfolio) ("Balanced") Evergreen Growth and Income Fund ("Growth and Income") The Evergreen Total Return Fund ("Total Return") The Evergreen American Retirement Fund ("American Retirement") Evergreen Small Cap Equity Income Fund ("Small Cap") Evergreen Foundation Fund ("Foundation") Evergreen Tax Strategic Foundation Fund ("Tax Strategic") Evergreen Utility Fund (formerly First Union Utility Portfolio) ("Utility") Evergreen Value Fund (formerly First Union Value Portfolio) ("Value") This Statement of Additional Information pertains to all classes of shares of the Funds listed below. It is not a prospectus and should be read in conjunction with the Prospectus dated July 7, 1995 for the Fund in which you are making or contemplating an investment. The Evergreen Growth and Income Funds are offered through four separate prospectuses: one offering Class A, Class B and Class C shares, and a separate prospectus offering Class Y shares of Balanced, Growth and Income, Total Return, American Retirement, Foundation and Value; and one offering Class A, Class B and Class C shares and a separate prospectus offering Class Y shares of Small Cap, Tax Strategic and Utility. Copies of each Prospectus may be obtained without charge by calling the number listed above. TABLE OF CONTENTS Page Investment Objectives and Policies................................ Investment Restrictions........................................... Non-Fundamental Operating Policies................................ Certain Risk Considerations....................................... Management........................................................ Investment Adviser................................................ Distribution Plans................................................ Allocation of Brokerage........................................... Additional Tax Information........................................ Net Asset Value................................................... Purchase of Shares................................................ Performance Information........................................... Financial Statements.............................................. Appendix A - Note, Bond And Commercial Paper Ratings
485APOS31st "Page" of 81TOC1stPreviousNextBottomJust 31st
INVESTMENT OBJECTIVES AND POLICIES (See also "Description of the Funds - Investment Objective and Policies" in each Fund's Prospectus) The investment objective of each Fund and a description of the securities in which each Fund may invest is set forth under "Description of the Funds - "Investment Objective and Policies" in the relevant Prospectus. The investment objectives of Balanced, Utility and Value are fundamental and cannot be changed without the approval of shareholders. The following expands upon the discussion in the Prospectus regarding certain investments of each Fund. U.S. Government Securities The types of U.S. government securities in which the Funds may invest generally include direct obligations of the U.S. Treasury such as U. S. Treasury bills, notes and bonds and obligations issued or guaranteed by U.S. government agencies or instrumentalities. These securities are backed by: (i) the full faith and credit of the U.S. Treasury; (ii) the issuer's right to borrow from the U.S. Treasury; (iii) the discretionary authority of the U.S. government to purchase certain obligations of agencies or instrumentalities; or (iv) the credit of the agency or instrumentality issuing the obligations. Examples of agencies and instrumentalities that may not always receive financial support from the U.S. government are: (i) Farm Credit System, including the National Bank for Cooperatives, Farm Credit Banks and Banks for Cooperatives; (ii) Farmers Home Administration; (iii) Federal Home Loan Banks; (iv) Federal Home Loan Mortgage Corporation; (v) Federal National Mortgage Association; (vi) Government National Mortgage Association; and (vii) Student Loan Marketing Association Restricted and Illiquid Securities Each Fund may invest in restricted and illiquid securities. The ability of the Board of Trustees ("Trustees") to determine the liquidity of certain restricted securities is permitted under a Securities and Exchange Commission ("SEC") Staff position set forth in the adopting release for Rule 144A under the Securities Act of 1933 (the "Rule"). The Rule is a non-exclusive, safe-harbor for certain secondary market transactions involving securities subject to restrictions on resale under federal securities laws. The Rule provides an exemption from registration for resales of otherwise restricted securities to qualified institutional buyers. The Rule was expected to further enhance the liquidity of the secondary market for securities eligible for sale under the Rule. The Funds which invest in Rule 144A Securities believe that the Staff of the SEC has left the question of determining the liquidity of all restricted securities (eligible for resale under the Rule) for determination by the Trustees. The Trustees consider the following criteria in determining the liquidity of certain restricted securities: (i) the frequency of trades and quotes for the security; (ii) the number of dealers willing to purchase or sell the security and the number of other potential buyers; (iii) dealer undertakings to make a market in the security; and
485APOS32nd "Page" of 81TOC1stPreviousNextBottomJust 32nd
(iv) the nature of the security and the nature of the marketplace trades. Restricted securities would generally be acquired either from institutional investors who originally acquired the securities in private placements or directly from the issuers of the securities in private placements. Restricted securities and securities that are not readily marketable may sell at a discount from the price they would bring if freely marketable. When-Issued and Delayed Delivery Securities Balanced, Tax Strategic, Utility and Value may purchase securities on a when-issued or delayed delivery basis. These transactions are made to secure what is considered to be an advantageous price or yield for a Fund. No fees or other expenses, other than normal transaction costs, are incurred. However, liquid assets of a Fund sufficient to make payment for the securities to be purchased are segregated on the Fund's records at the trade date. These assets are marked to market daily and are maintained until the transaction has been settled. Balanced, Utility and Value do not intend to engage in when- issued and delayed delivery transactions to an extent that would cause the segregation of more than 20% of the total value of their assets and Tax Strategic's commitment to purchase when-issued securities will not exceed 25% of the Fund's total assets. Lending of Portfolio Securities Each Fund may lend its portfolio securities to generate income and to offset expenses. The collateral received when a Fund lends portfolio securities must be valued daily and, should the market value of the loaned securities increase, the borrower must furnish additional collateral to the lending Fund. During the time portfolio securities are on loan, the borrower pays the Fund any dividends or interest paid on such securities. Loans are subject to termination at the option of the Fund or the borrower. A Fund may pay reasonable administrative and custodial fees in connection with a loan and may pay a negotiated portion of the interest earned on the cash or equivalent collateral to the borrower or placing broker. A Fund does not have the right to vote securities on loan, but would terminate the loan and regain the right to vote if that were considered important with respect to the investment. Reverse Repurchase Agreements The Funds other than American Retirement, Foundation, Total Return and Growth and Income may also enter into reverse repurchase agreements. These transactions are similar to borrowing cash. In a reverse repurchase agreement, a Fund transfers possession of a portfolio instrument to another person, such as a financial institution, broker, or dealer, in return for a percentage of the instrument's market value in cash, and agrees that on a stipulated date in the future the Fund will repurchase the portfolio instrument by remitting the original consideration plus interest at an agreed upon rate. The use of reverse repurchase agreements may enable a Fund to avoid selling portfolio instruments at a time when a sale may be deemed to be disadvantageous, but the ability to enter into reverse repurchase agreements does not ensure that the Fund will be able to avoid selling portfolio instruments at a disadvantageous time. When effecting reverse repurchase agreements, liquid assets of a Fund, in a dollar amount sufficient to make payment for the obligations to be purchased, are segregated at the trade date. These securities are marked to market daily and maintained until the transaction is settled. Options and Futures Transactions Options which Balanced, Utility and Value trade must be listed on national securities exchanges. .........Purchasing Put and Call Options on Financial Futures Contracts Balanced, Utility and Value may purchase put and call options on financial futures contracts (in the case of Utility and Value limited to options on financial futures contracts for U.S. government securities). Unlike entering directly into a futures contract, which requires the purchaser to buy a financial instrument on a set date at an 3
485APOS33rd "Page" of 81TOC1stPreviousNextBottomJust 33rd
undetermined price, the purchase of a put option on a futures contract entitles (but does not obligate) its purchaser to decide on or before a future date whether to assume a short position at the specified price. The Fund may purchase put and call options on futures to protect portfolio securities against decreases in value resulting from an anticipated increase in market interest rates. Generally, if the hedged portfolio securities decrease in value during the term of an option, the related futures contracts will also decrease in value and the put option will increase in value. In such an event, a Fund will normally close out its option by selling an identical put option. If the hedge is successful, the proceeds received by the Fund upon the sale of the put option plus the realized decrease in value of the hedged securities. Alternately, a Fund may exercise its put option to close out the position. To do so, it would enter into a futures contract of the type underlying the option. If the Fund neither closes out nor exercises an option, the option will expire on the date provided in the option contract, and only the premium paid for the contract will be lost. .........Purchasing Options Balanced, Utility and Value may purchase both put and call options on their portfolio securities. These options will be used as a hedge to attempt to protect securities which a Fund holds or will be purchasing against decreases or increases in value. A Fund may purchase call and put options for the purpose of offsetting previously written call and put options of the same series. If the Fund is unable to effect a closing purchase transaction with respect to covered options it has written, the Fund will not be able to sell the underlying securities or dispose of assets held in a segregated account until the options expire or are exercised. Balanced, Utility and Value intend to purchase put and call options on currency and other financial futures contracts for hedging purposes. A put option purchased by a Fund would give it the right to assume a position as the seller of a futures contract. A call option purchased by the Fund would give it the right to assume a position as the purchaser of a futures contract. The purchase of an option on a futures contract requires the Fund to pay a premium. In exchange for the premium, the Fund becomes entitled to exercise the benefits, if any, provided by the futures contract, but is not required to take any action under the contract. If the option cannot be exercised profitably before it expires, the Fund's loss will be limited to the amount of the premium and any transaction costs. Utility and Value currently do not intend to invest more than 5% of their net assets in options transactions. Balanced, Utility, Value and Small Cap, may not purchase or sell futures contracts or related options if immediately thereafter the sum of the amount of margin deposits on the Fund's existing futures positions and premiums paid for related options would exceed 5% of the market value of the Fund's total assets. When the Fund purchases futures contracts, an amount of cash and cash equivalents, equal to the underlying commodity value of the futures contracts (less any related margin deposits), will be deposited in a segregated account with the Fund's custodian (or the broker, if legally permitted) to collateralize the position and thereby insure that the sue of such futures contracts is unleveraged. ........."Margin" in Futures Transactions Unlike the purchase or sale of a security, a Fund does not pay or receive money upon the purchase or sale of a futures contract. Rather, a Fund is required to deposit an amount of "initial margin" in cash or U.S. Treasury bills with its custodian (or the broker, if legally permitted). The nature of initial margin in futures transactions is different from that of margin in securities transactions in that futures contract initial margin does not involve the borrowing of funds by a Fund to finance the transactions. Initial margin is in the nature of a performance bond or good faith deposit on the contract which is returned to the Fund upon termination of the futures contract, assuming all contractual obligations have been satisfied. A futures contract held by a Fund is valued daily at the official settlement price of the exchange on which it is traded. Each day the Fund pays or receives cash, called "variation margin," equal to the daily change in value 4
485APOS34th "Page" of 81TOC1stPreviousNextBottomJust 34th
of the futures contract. This process is known as "marking to market." Variation margin does not represent a borrowing or loan by the Fund but is instead settlement between the Fund and the broker of the amount one would owe the other if the futures contract expired. In computing its daily net asset value, a Fund will mark-to-market its open futures positions. The Fund is also required to deposit and maintain margin when it writes call options on futures contracts. Balanced will not maintain open positions in futures contracts it has sold or call options it has written on futures contracts if, in the aggregate, the value of the open positions (marked to market) exceeds the current market value of its securities portfolio plus or minus the unrealized gain or loss on those open positions, adjusted for the correlation of volatility between the hedged securities and the futures contracts. If this limitation is exceeded at any time, the Fund will take prompt action to close out a sufficient number of open contracts to bring its open futures and options positions within this limitation. .........Total Return and Growth and Income may write covered call options to a limited extent on their portfolio securities ("covered options") in an attempt to earn additional income. The Fund will write only covered call option contracts and will receive premium income from the writing of such contracts. Total Return and Growth and Income may purchase call options to close out a previously written call option. In order to do so, the Fund will make a "closing purchase transaction" -- the purchase of a call option on the same security with the same exercise price and expiration date as the call option which it has previously written. A Fund will realize a profit or loss from a closing purchase transaction if the cost of the transaction is less or more than the premium received from the writing of the option. If an option is exercised, a Fund realizes a long-term or short-term gain or loss from the sale of the underlying security and the proceeds of the sale are increased by the premium originally received. Junk Bonds .........Consistent with its strategy of investing in "undervalued" securities, Growth and Income may invest in lower medium and low-quality bonds also known as "junk bonds" and may also purchase bonds in default if, in the opinion of the Adviser, there is significant potential for capital appreciation. Growth and Income, however, will not invest more than 5% of its total assets in debt securities which are rated below investment grade. These bonds are regarded as speculative with respect to the issuer's continuing ability to meet principal and interest payments. High yield bonds may be more susceptible to real or perceived adverse economic and competitive industry conditions than investment grade bonds. A projection of an economic downturn, or higher interest rates, for example, could cause a decline in high yield bond prices because such events could lessen the ability of highly leveraged companies to make principal and interest payments on their debt securities. In addition, the secondary trading market for high yield bonds may be less liquid than the market for higher grade bonds, which can adversely affect the ability to dispose of such securities. Variable and Floating Rate Securities .........Foundation may invest no more than 5% of its total assets, at the time of the investment in question, in variable and floating rate securities. The terms of variable and floating rate instruments provide for the interest rate to be adjusted according to a formula on certain predetermined dates. Variable and floating rate instruments that are repayable on demand at a future date are deemed to have a maturity equal to the time remaining until the principal will be received on the assumption that the demand feature is exercised on the earliest possible date. For the purposes of evaluating the interest-rate sensitivity of the Fund, variable and floating rate instruments are deemed to have a maturity equal to the period remaining until the next interest-rate readjustment. For the purposes of evaluating the credit risks of variable and floating rate instruments, these instruments are deemed to have a maturity equal to the time remaining until the earliest date the Fund is entitled to demand repayment of principal. INVESTMENT RESTRICTIONS FUNDAMENTAL INVESTMENT RESTRICTIONS .........Except as noted, the investment restrictions set forth below are fundamental and may not be changed with respect to each Fund without the 5
485APOS35th "Page" of 81TOC1stPreviousNextBottomJust 35th
affirmative vote of a majority of the outstanding voting securities of the Fund. Where an asterisk (*) appears after a Fund's name, the relevant policy is non-fundamental with respect to that Fund and may be changed by the Fund's investment adviser without shareholder approval, subject to review and approval by the Trustees. As used in this Statement of Additional Information and in the Prospectus, "a majority of the outstanding voting securities of the Fund" means the lesser of (1) the holders of more than 50% of the outstanding shares of beneficial interest of the Fund or (2) 67% of the shares present if more than 50% of the shares are present at a meeting in person or by proxy. 1........Concentration of Assets in Any One Issuer .........Neither Growth and Income nor Total Return may invest more than 5% of its net assets, at the time of the investment in question, in the securities of any one issuer other than the U.S. government and its agencies or instrumentalities. .........American Retirement may not invest more than 5% of its total assets, at the time of the investment in question, in the securities of any one issuer other than the U.S. government and its agencies or instrumentalities. ........None of Balanced, Foundation, Small Cap, Utility or Value may invest more than 5% of its total assets, at the time of the investment in question, in the securities of any one issuer other than the U.S. government and its agencies or instrumentalities, except that up to 25% of the value of a Fund's total assets may be invested without regard to such 5% limitation. .........Tax Strategic may not invest more than 5% of its total assets, at the time of the investment in question, in the securities of any one issuer other than the U.S. government and its agencies or instrumentalities, except that up to 25% of the value of each Fund's total assets may be invested without regard to such 5% limitation. For this purpose each political subdivision, agency, or instrumentality and each multi-state agency of which a state is a member, and each public authority which issues industrial development bonds on behalf of a private entity, will be regarded as a separate issuer for determining the diversification of each Fund's portfolio. 2........Ten Percent Limitation on Securities of Any One Issuer .........None of American Retirement, Foundation, Small Cap, Growth and Income or Total Return may purchase more than 10% of any class of securities of any one issuer other than the U.S. government and its agencies or instrumentalities. .........Neither Value nor Utility may purchase more than 10% of the outstanding voting securities of any one issuer. .........Tax Strategic* may not purchase more than 10% of the voting securities of any one issuer other than the U.S. government and its agencies or instrumentalities. 3........Investment for Purposes of Control or Management .........None of American Retirement, Foundation, Growth and Income, Small Cap*, Tax Strategic*, Total Return, Utility* or Value may invest in companies for the purpose of exercising control or management. 4........Purchase of Securities on Margin .........None of American Retirement, Balanced, Foundation, Growth and Income, Small Cap*, Tax Strategic*, Total Return, Utility or Value may purchase securities on margin, except that each Fund may obtain such short-term credits as may be necessary for the clearance of transactions. A deposit or payment by a Fund of initial or variation margin in connection with financial futures contracts or related options transactions is not considered the purchase of a security on margin. 6
485APOS36th "Page" of 81TOC1stPreviousNextBottomJust 36th
5........Unseasoned Issuers .........Neither American Retirement nor Foundation may invest in the securities of unseasoned issuers that have been in continuous operation for less than three years, including operating periods of their predecessors. .........None of Total Return, Value* or Utility* may invest more than 5% of its total assets in securities of unseasoned issuers that have been in continuous operation for less than three years, including operating periods of their predecessors. .........None of Growth and Income, Small Cap* and Tax Strategic* may invest more than 15% of its total assets (10% of total net assets in the case of Growth and Income) in securities of unseasoned issuers that have been in continuous operation for less than three years, including operating periods of their predecessors. 6........Underwriting .........American Retirement, Foundation, Growth and Income, Small Cap,* Tax Strategic*, Total Return, Balanced, Utility and Value will not underwrite any issue of securities except as they may be deemed an underwriter under the Securities Act of 1933 in connection with the sale of securities in accordance with their investment objectives, policies and limitations. 7........Interests in Oil, Gas or Other Mineral Exploration or Development Programs ......... None of American Retirement, Foundation, Growth and Income, Small Cap, Tax Strategic or Total Return may purchase, sell or invest in interests in oil, gas or other mineral exploration or development programs. .........Neither Balanced* nor Utility* will purchase interests in oil, gas or other mineral exploration or development programs or leases, although each Fund may purchase the securities of other issuers which invest in or sponsor such programs. .........Value will not purchase interests in oil, gas or other mineral exploration or development programs or leases, although it may purchase the publicly traded securities of companies engaged in such activities. 8........Concentration in Any One Industry .........Neither Growth and Income nor Total Return may concentrate its investments in any one industry, except that each Fund may invest up to 25% of its total net assets in any one industry. .........None of American Retirement, Foundation, Small Cap and Tax Strategic may invest 25% or more of its total assets in the securities of issuers conducting their principal business activities in any one industry; provided, that this limitation shall not apply (i) with respect to each Fund, to obligations issued or guaranteed by the U.S. government or its agencies or instrumentalities, or (ii) with respect to Tax Strategic, to municipal securities. For purposes of this restriction, utility companies, gas, electric, water and telephone companies will be considered separate industries. .........Balanced and Value will not invest 25% or more of the value of their total assets in any one industry except Balanced may invest more than 25% and Value may invest 25% or more of its total assets in securities issued or guaranteed by the U.S. government, its agencies or instrumentalities. .........Utility will not invest more than 25% of its total assets (valued at the time of investment) in securities of companies engaged principally in any one industry other than the utilities industry, except that this restriction does not apply to cash or cash items and securities issued or guaranteed by the U.S. government, its agencies or instrumentalities. 9........Warrants .........None of American Retirement, Growth and Income, Small Cap,* or Total Return may invest more than 5% of its net assets in warrants, and, of this 7
485APOS37th "Page" of 81TOC1stPreviousNextBottomJust 37th
amount, no more than 2% of each Fund's net assets may be invested in warrants that are listed on neither the New York nor the American Stock Exchange. .........Neither Foundation nor Tax Strategic* may invest more than 5% of its net assets in warrants, and of this amount, no more than 2% of each Fund's net assets may be invested in warrants that are listed on neither the New York nor the American Stock Exchanges. .........Utility* and Value* will not invest more than 5% of their net assets in warrants, including those acquired in units or attached to other securities. To comply with certain state restrictions, Utility and Value will limit their investment in such warrants not listed on the New York Stock Exchange or the American Stock Exchange to 2% of their net assets. (If state restrictions change, this latter restriction may be changed without notice to shareholders). For purposes of this restriction, warrants acquired by the Funds' in units or attached to securities may be deemed to be without value. 10.......Ownership by Trustees/Officers .........None of American Retirement, Balanced*, Foundation, Growth and Income, Small Cap*, Tax Strategic*, Total Return, Utility* or Value* may purchase or retain the securities of any issuer if (i) one or more officers or Trustees of a Fund or its investment adviser individually owns or would own, directly or beneficially, more than 1/2 of 1% of the securities of such issuer, and (ii) in the aggregate, such persons own or would own, directly or beneficially, more than 5% of such securities. 11.......Short Sales .........Neither American Retirement nor Foundation may make short sales of securities unless, at the time of each such sale and thereafter while a short position exists, each Fund owns the securities sold or securities convertible into or carrying rights to acquire such securities. .........None of Growth and Income, Tax Strategic* and Total Return may make short sales of securities unless, at the time of each such sale and thereafter while a short position exists, each Fund owns an equal amount of securities of the same issue or owns securities which, without payment by the Fund of any consideration, are convertible into, or are exchangeable for, an equal amount of securities of the same issue. .........Small Cap,* may not make short sales of securities unless, at the time of each such sale and thereafter while a short position exists, each Fund owns an equal amount of securities of the same issue or owns securities which, without payment by the Fund of any consideration, are convertible into, or are exchangeable for, an equal amount of securities of the same issue (and provided that transactions in futures contracts and options are not deemed to constitute selling securities short). .........Balanced will not make short sales of securities or maintain a short position, unless at all times when a short position is open it owns an equal amount of such securities or of securities which, without payment of any further consideration are convertible into or exchangeable for securities of the same issue as, and equal in amount to, the securities sold short. The use of short sales will allow the Fund to retain certain bonds in its portfolio longer than it would without such sales. To the extent that the Fund receives the current income produced by such bonds for a longer period than it might otherwise, the Fund's investment objective is furthered. .........Utility and Value will not sell any securities short. 12.......Lending of Funds and Securities .........Neither Small Cap nor Tax Strategic may lend its funds to other persons, except through the purchase of a portion of an issue of debt securities publicly distributed or the entering into of repurchase agreements. .........None of American Retirement, Foundation, Growth and Income and Total Return may lend its funds to other persons, except through the purchase of a portion of an issue of debt securities publicly distributed. 8
485APOS38th "Page" of 81TOC1stPreviousNextBottomJust 38th
.........None of Foundation, Small Cap or Tax Strategic, may lend its portfolio securities, unless the borrower is a broker, dealer or financial institution that pledges and maintains collateral with the Fund consisting of cash or securities issued or guaranteed by the U.S. government having a value at all times not less than 100% of the current market value of the loaned securities, including accrued interest, provided that the aggregate amount of such loans shall not exceed 30% of the Fund's total assets. .........Neither American Retirement or Growth and Income may lend its portfolio securities, unless the borrower is a broker, dealer or financial institution that pledges and maintains collateral with the Fund consisting of cash or securities issued or guaranteed by the U.S. government having a value at all times not less than 100% of the value of the loaned securities (100% of the current market value for American Retirement), provided that the aggregate amount of such loans shall not exceed 30% of the Fund's net assets. .........Total Return may not lend its portfolio securities, unless the borrower is a broker, dealer or financial institution that pledges and maintains collateral with the Fund consisting of cash, letters of credit or securities issued or guaranteed by the U.S. government having a value at all times not less than 100% of the current market value of the loaned securities (100% of the value of the loaned securities for Total Return), including accrued interest, provided that the aggregate amount of such loans shall not exceed 30% of the Fund's net assets. .........Balanced will not lend any of its assets except portfolio securities in accordance with its investment objective, policies and limitations. .........Utility will not lend any of its assets, except portfolio securities up to 15% of the value of its total assets. This does not prevent the Fund from purchasing or holding corporate or government bonds, debentures, notes, certificates of indebtedness or other debt securities of an issuer, repurchase agreements, or other transactions which are permitted by the Fund's investment objectives and policies or the Declaration of Trust governing the Fund. .........Value will not lend any of its assets except that it may purchase or hold corporate or government bonds, debentures, notes, certificates of indebtedness or other debt securities of an issuer, repurchase agreements or other transactions which are permitted by the Fund's investment objectives and policies or the Declaration of Trust by which the Fund is governed or lend portfolio securities valued at not more than 5% of its total assets to broker-dealers. 13.......Commodities .........Tax Strategic may not purchase, sell or invest in commodities, commodity contracts or financial futures contracts. .........Small Cap may not purchase, sell or invest in physical commodities unless acquired as a result of ownership of securities or other instruments (but this shall not prevent the Fund from purchasing or selling options and futures contracts or from investing in securities or other instruments backed by physical commodities). .........None of American Retirement, Foundation, Growth and Income, Total Return may purchase, sell or invest in commodities or commodity contracts. .........None of Balanced, Utility or Value will purchase or sell commodities or commodity contracts; however, each Fund may enter into futures contracts on financial instruments or currency and sell or buy options on such contracts. 14.......Real Estate .........Small Cap may not purchase or invest in real estate or interests in real estate (but this shall not prevent either Fund from investing in marketable securities issued by companies such as real estate investment trusts which deal in real estate or interests therein). 9
485APOS39th "Page" of 81TOC1stPreviousNextBottomJust 39th
.............None of American Retirement, Foundation, Growth and Income, Tax Strategic or Total Return may purchase, sell or invest in real estate or interests in real estate, except that (i) each Fund may purchase, sell or invest in marketable securities of companies holding real estate or interests in real estate, including real estate investment trusts, and (ii) Tax Strategic may purchase, sell or invest in municipal securities or other debt securities secured by real estate or interests therein. .........None of Balanced, Utility or Value will buy or sell real estate although each Fund may invest in securities of companies whose business involves the purchase or sale of real estate or in securities which are secured by real estate or interests in real estate. Neither Utility nor Value will invest in limited partnership interests in real estate. 15.......Borrowing, Senior Securities, Repurchase Agreements and Reverse Repurchase Agreements .........None of American Retirement, Foundation or Total Return may borrow money except from banks as a temporary measure to facilitate redemption requests which might otherwise require the untimely disposition of portfolio investments and for extraordinary or emergency purposes (and, with respect to American Retirement only, for leverage), provided that the aggregate amount of such borrowings shall not exceed 5% of the value of the Fund's total net assets (5% of total assets for American Retirement and Foundation) at the time of any such borrowing, or mortgage, pledge or hypothecate its assets, except in an amount sufficient to secure any such borrowing. Neither American Retirement nor Foundation may issue senior securities, except as permitted by the Investment Company Act of 1940. Neither Foundation nor American Retirement may enter into repurchase agreements or reverse repurchase agreements. .........Neither Small Cap nor Tax Strategic, may borrow money, issue senior securities or enter into reverse repurchase agreements, except for temporary or emergency purposes, and not for leveraging, and then in amounts not in excess of 10% of the value of each Fund's total assets at the time of such borrowing; or mortgage, pledge or hypothecate any assets except in connection with any such borrowing and in amounts not in excess of the lesser of the dollar amounts borrowed or 10% of the value of each Fund's total assets at the time of such borrowing, provided that each of Small Cap, Tax Strategic, will not purchase any securities at any time when borrowings, including reverse repurchase agreements, exceed 5% of the value of its total assets. No Fund will enter into reverse repurchase agreements exceeding 5% of the value of its total assets. ........Growth and Income may not borrow money except from banks as a temporary measure for extraordinary or emergency purposes, provided that the aggregate amount of such borrowings shall not exceed 5% of the value of the Fund's total assets at the time of such borrowing; or mortgage, pledge or hypothecate its assets, except in an amount not exceeding 15% of its assets taken at cost to secure such borrowing. Growth and Income may not issue senior securities, as defined in the Investment Company Act of 1940, except that this restriction shall not be deemed to prohibit the Fund from (i) making any permitted borrowings, mortgages or pledges, (ii) lending its portfolio securities, or (iii) entering into permitted repurchase transactions. .........Balanced and Utility will not issue senior securities except that each Fund may borrow money and engage in reverse repurchase agreements in amounts up to one-third of the value of its total assets, including the amounts borrowed and except to the extent a Fund may enter into futures contracts. The Funds will not borrow money or engage in reverse repurchase agreements for investment leverage, but rather as a temporary, extraordinary or emergency measure to facilitate management of their portfolios by enabling them to, for example, meet redemption requests when the liquidation of portfolio securities is deemed to be inconvenient or disadvantageous. A Fund will not purchase any securities while any borrowings are outstanding. Utility will not purchase any securities while borrowings in excess of 5% of its total assets are outstanding. Neither Balanced, nor Utility will mortgage, pledge or hypothecate any assets except to secure permitted borrowings. In these cases, Balanced and Utility may pledge assets having a market value not exceeding the lesser of the dollar amounts borrowed or 15% of the value of total assets at the time of borrowing. Margin deposits for the purchase and sale of financial futures contracts and related options and segregation or collateral arrangements made in connection with options activities are not deemed to be a pledge. 10
485APOS40th "Page" of 81TOC1stPreviousNextBottomJust 40th
.........Value will not issue senior securities except that the Fund may borrow money directly or through reverse repurchase agreements as a temporary measure for extraordinary or emergency purposes and then only in amounts not in excess of 10% of the value of its total assets; provided that while borrowings exceed 5% of the Fund's total assets, any such borrowings will be repaid before additional investments are made. The Fund will not purchase any securities while borrowings in excess of 5% of the value of its total assets are outstanding. The Fund will not borrow money or engage in reverse repurchase agreements for investment leverage purposes. Value will not mortgage, pledge or hypothecate any assets except to secure permitted borrowings. In these cases, Value may pledge assets having a market value not exceeding the lesser of the dollar amounts borrowed or 10% of the value of total assets at the time of borrowing. Margin deposits for the purchase and sale of financial futures contracts and related options and segregation or collateral arrangements made in connection with options activities are not deemed to be a pledge. 16.......Joint Trading .........None of American Retirement, Foundation, Growth and Income, Small Cap,* Tax Strategic,* or Total Return may participate on a joint or joint and several basis in any trading account in any securities. (The "bunching of orders for the purchase or sale of portfolio securities with its investment adviser or accounts under its management to reduce brokerage commissions, to average prices among them or to facilitate such transactions is not considered a trading account in securities for purposes of this restriction). 17.......Options .........Foundation and Tax Strategic* may not write, purchase or sell put or call options, or combinations thereof. .........Neither Growth and Income nor Total Return may write, purchase or sell put or call options, or combinations thereof, except that each Fund is authorized to write covered call options on portfolio securities and to purchase call options in closing purchase transactions, provided that (i) such options are listed on a national securities exchange, (ii) the aggregate market value of the underlying securities does not exceed 25% of the Fund's net assets, taken at current market value on the date of any such writing, and (iii) the Fund retains the underlying securities for so long as call options written against them make the shares subject to transfer upon the exercise of any options. .........American Retirement may not write, purchase or sell put or call options, or combinations thereof, except that the Fund is authorized (i) to write call options traded on a national securities exchange against no more than 15% of the value of the equity securities (including securities convertible into equity securities) held in its portfolio, provided that the Fund owns the optioned securities or securities convertible into or carrying rights to acquire the optioned securities and (ii) to purchase call options in closing purchase transactions. .........Utility* will not purchase put options on securities unless the securities are held in the Fund's portfolio and not more than 5% of the Fund's total assets would be invested in premiums on open put options. Utility* will not write call options on securities unless securities are held in the Fund's portfolio or unless the Fund is entitled to them in deliverable form without further payment or after segregating cash in the amount of any further payment. 18.......Investment in Equity Securities .........American Retirement may not invest more than 75% of the value of its total assets in equity securities (including securities convertible into equity securities). 19.......Investing in Securities of Other Investment Companies .........Balanced*, Utility and Value will purchase securities of investment companies only in open-market transactions involving customary broker's commissions. However, these limitations are not applicable if the securities are acquired in a merger, consolidation or acquisition of assets. It should be noted that investment companies incur certain expenses 11
485APOS41st "Page" of 81TOC1stPreviousNextBottomJust 41st
such as management fees and therefore any investment by a Fund in shares of another investment company would be subject to such duplicate expenses. .........Each other Fund may purchase the securities of other investment companies, except to the extent such purchases are not permitted by applicable law. 20.......Restricted Securities .........Balanced and Value will not invest more than 10% of their net assets in securities subject to restrictions on resale under the Securities Act of 1933 (except for, in the case of Balanced, certain restricted securities which meet criteria for liquidity established by the Trustees). .........Utility* will not invest more than 10% of the value of its net assets in securities subject to restrictions on resale under the Securities Act of 1933, except for commercial paper issued under Section 4(2) of the Securities Act of 1933 and certain other restricted securities which meet the criteria for liquidity as established by the Trustees. To comply with certain state restrictions, the Fund will limit these transactions to 5% of its total assets. (If state restrictions change this latter restriction may be revised without shareholder approval or notification). NON FUNDAMENTAL OPERATING POLICIES .........Certain Funds have adopted additional non-fundamental operating policies. Operating policies may be changed by the Board of Trustees without a shareholder vote. 1........Futures and Options Transactions .........Small Cap* will not: (i) sell futures contracts, purchase put options or write call options if, as a result, more than 30% of the Fund's total assets would be hedged with futures and options under normal conditions; (ii) purchase futures contracts or write put options if, as a result, the Fund's total obligations upon settlement or exercise of purchased futures contracts and written put options would exceed 30% of its total assets; or (iii) purchase call options if, as a result, the current value of option premiums for options purchased by the Fund would exceed 5% of the Fund's total assets. These limitations do not apply to options attached to, or acquired or traded together with their underlying securities, and do not apply to securities that incorporate features similar to options. 2........Illiquid Securities. .........None of American Retirement, Foundation, Growth and Income, Small Cap, Tax Strategic or Total Return may invest more than 15% of its net assets in illiquid securities and other securities which are not readily marketable, including repurchase agreements which have a maturity of longer than seven days, but excluding securities eligible for resale under Rule 144A of the Securities Act of 1933, as amended, which the Trustees have determined to be liquid. .........Balanced* and Utility* will not invest more than 10% (in the case of Balanced) or 15% (in the case of Utility) of its net assets in illiquid securities, including repurchase agreements providing for settlement in more than seven days after notice and certain securities determined by the Trustees not to be liquid and, in the case of Utility, in non-negotiable time deposits. 3........Other. In order to comply with certain state blue sky limitations: ----- ...........Each of American Retirement, Foundation, Growth and Income, Small Cap, Tax Strategic and Total Return interprets fundamental investment restriction 7 to prohibit investments in oil, gas and mineral leases. ...........Each of American Retirement, Foundation, Growth and Income, Small Cap, Tax Strategic and Total Return interprets fundamental investment restriction 14 to prohibit investment in real estate limited partnerships which are not readily marketable. 12
485APOS42nd "Page" of 81TOC1stPreviousNextBottomJust 42nd
...........Foundation interprets fundamental investment restriction 11 to permit short sales only where the Fund owns the securities sold or securities convertible into or carrying rights to acquire such securities without payment of any additional consideration therefor. ...........Except with respect to borrowing money, if a percentage limitation is adhered to at the time of investment, a later increase or decrease in percentage resulting from any change in value or net assets will not result in a violation of such restriction. CERTAIN RISK CONSIDERATIONS ...........There can be no assurance that a Fund will achieve its investment objective and an investment in the Fund involves certain risks which are described under "Description of the Funds - Investment Objective and Policies" in the Prospectus. ......... In addition, the ability of Tax Strategic to achieve its investment objective is dependent on the continuing ability of the issuers of Municipal Bonds in which the Fund invests -- and of banks issuing letters of credit backing such securities -- to meet their obligations with respect to the payment of interest and principal when due. The ratings of Moody's Investors Service, Inc., Standard & Poor's Ratings Group and other nationally recognized rating organizations represent their opinions as to the quality of Municipal Bonds which they undertake to rate. Ratings are not absolute standards of quality; consequently, Municipal Bonds with the same maturity, coupon, and rating may have different yields. There are variations in Municipal Bonds, both within a particular classification and between classifications, resulting from numerous factors. ......... Unlike other types of investments, Municipal Bonds have traditionally not been subject to regulation by, or registration with, the Securities and Exchange Commission, although there have been proposals which would provide for regulation in the future. ......... The federal bankruptcy statutes relating to the debts of political subdivisions and authorities of states of the United States provide that, in certain circumstances, such subdivisions or authorities may be authorized to initiate bankruptcy proceedings without prior notice to or consent of creditors, which proceedings could result in material and adverse changes in the rights of holders of their obligations. In addition, there have been lawsuits challenging the issuance of pollution control revenue bonds or the validity of their issuance under state or Federal law which could ultimately affect the validity of those Municipal Bonds or the tax-free nature of the interest thereon. MANAGEMENT The Trustees and executive officers of the Trusts, their ages, addresses and principal occupations during the past five years are set forth below: Laurence B. Ashkin (67), 180 East Pearson Street, Chicago, IL-Trustee. Real estate developer and construction consultant since 1980; President of Centrum Equities since 1987 and Centrum Properties, Inc. since 1980. Foster Bam*(68), Greenwich Plaza, Greenwich, CT-Trustee. Partner in the law firm of Cummings and Lockwood since 1968. James S. Howell (70), 4124 Crossgate Road, Charlotte, NC-Chairman and Trustee. Retired Vice President of Lance Inc. (food manufacturing); Chairman of the Distribution Comm. Foundation for the Carolinas from 1989 to 1993. Robert J. Jeffries (72), 2118 New Bedford Drive, Sun City Center, FL-Trustee. Corporate consultant since 1967. Gerald M. McDonnell (55), 821 Regency Drive, Charlotte, NC-Trustee. Sales Representative with Nucor-Yamoto Inc. (steel producer) since 1988. 13
485APOS43rd "Page" of 81TOC1stPreviousNextBottomJust 43rd
Thomas L. McVerry (56), 4419 Parkview Drive, Charlotte, NC-Trustee. Director of Carolina Cooperative Federal Credit Union since 1990 and Rexham Corporation from 1988 to 1990; Vice President of Rexham Industries, Inc. (diversified manufacturer) from 1989 to 1990; Vice President-Finance and Resources, Rexham Corporation from 1979 to 1990. William Walt Pettit*(39), Holcomb and Pettit, P.A., 207 West Trade St., Charlotte, NC-Trustee. Partner in the law firm Holcomb and Pettit, P.A. since 1990; Attorney, Clontz and Clontz from 1980 to 1990. Russell A. Salton, III, M.D. (47), Primary Physician Care, 1515 Mockingbird Lane, Charlotte, NC-Trustee. President, Primary Physician Care since 1990. Michael S. Scofield (52), 212 S. Tryon Street Suite 980, Charlotte, NC-Trustee. Attorney, Law Offices of Michael S. Scofield since prior to 1989. John J. Pileggi (35), 237 Park Avenue, Suite 910, New York, NY-President and Treasurer. Senior Managing Director, Furman Selz Incorporated since 1992, Managing Director from 1984 to 1992. Joan V. Fiore (39), 237 Park Avenue, Suite 910, New York, NY-Secretary. Managing Director and Counsel, Furman Selz Incorporated since 1991; Staff Attorney, Securities and Exchange Commission from 1986 to 1991. Except for Messrs. Ashkin, Bam and Jeffries, who are not Trustees of Evergreen Investment Trust, the Trustees and officers listed above hold the same positions with a total of ten registered investment companies offering a total of thirty-one investment funds within the Evergreen mutual fund complex. -------- * Mr. Bam and Mr. Pettit may each be deemed to be an "interested person" within the meaning of the Investment Company Act of 1940, as amended (the "1940 Act"). The officers of the Trusts are all officers and/or employees of Furman Selz Incorporated. Furman Selz Incorporated is the parent of Evergreen Funds Distributor, Inc., the distributor of each Class of shares of each Fund. The Funds do not pay any direct remuneration to any officer or Trustee who is an "affiliated person" of either First Union National Bank of North Carolina or Evergreen Asset Management Corp. or their affiliates. See "Investment Adviser." Currently, none of the Trustees is an "affiliated person" as defined in the 1940 Act. The Trusts pay each Trustee who is not an "affiliated person" an annual retainer and a fee per meeting attended, plus expenses (and $50 for each telephone conference meeting) as follows: Name of Trust/Fund Annual Retainer Meeting Fee Total Return 5,500 300 Growth and Income 500 100 The Evergreen American Retirement Trust 1,000 American Retirement 100 Small Cap 100 Evergreen Foundation Trust 500 Foundation 100 Tax Strategic 100 Evergreen Investment Trust 9,000** 1,500** Balanced Utility Value -------------------- ** Evergreen Investment Trust pays an annual retainer to each trustee and a per-meeting fee that are allocated among its fifteen series. Additionally, each member of the Audit Committee receives $200 for attendance at each meeting of the of the Audit Committee and an additional fee is paid to the Chairman of the Board of $2,000. 14
485APOS44th "Page" of 81TOC1stPreviousNextBottomJust 44th
Set forth below for each of the Trustees is the aggregate compensation paid to such Trustees by each Trust for the fiscal year ended December 31, 1994 (fiscal year ended January 31, 1995 for Total Return) Total Compensation Aggregate Compensation From Trust From Trusts & Fund Complex Name of Total Growth Retirement Foundation Investment Paid Person Return* & Income Trust Trust Trust** to Trustees ------ ------ -------- ---------- ---------- ---------- ----------- Laurence Ashkin 7,150 1,050 1,569 1,137 29,800 Foster Bam 7,150 1,050 1,569 1,137 29,850 James S. Howell 3,150 400 660 444 14,900 26,900 Robert J. Jeffries 7,150 1,050 1,569 1,137 29,800 Gerald M. McDonnell 3,450 500 760 544 11,900 26,100 Thomas L. McVerry 3,450 500 760 544 11,900 26,150 William Walt Pettit 3,450 500 760 544 11,900 26,100 Russell A. Salton, III, M.D. 3,450 500 760 544 11,900 26,100 Michael S. Scofield 3,400 500 710 494 11,700 25,650 * Total Return changed its fiscal year end during the period covered by the foregoing table from March 31 to January 31. Accordingly, the Trustees fees reported in the foregoing table reflect, for Total Return, the period from April 1, 1994 to January 31, 1995. ** Formerly known as First Union Funds. No officer or Trustee of the Trusts owned B or C shares of any Fund as of the date hereof. The number and percent of outstanding shares of each Fund owned by officers and Trustees as a group on June 15, 1995, is as follows: No. of Shares Owned By Officers and Ownership by Officers and Trustees Trustees as a % of Class Y Name of Fund as a Group Shares Outstanding Balanced -0- -0- Total Return 31,953 .06% Growth and Income 116,111 2.08% American Retirement 63,016 1.93% Small Cap -0- -0- Foundation 213,803 .74% Tax Strategic -0- -0- Utility -0- -0- Value -0- -0- Set forth below is information with respect to each person, who, to each Fund's knowledge, owned beneficially or of record more than 5% of a class 15
485APOS45th "Page" of 81TOC1stPreviousNextBottomJust 45th
of each Fund's total outstanding shares and their aggregate ownership of the Fund's total outstanding shares as of June 15, 1995. Name of % of Name and Address Fund/Class No. of Shares Class/Fund ---------------- ---------- ------------- --------------- Fubs & Co. Febo Balanced/C 9,013 45.90%/.01% Naomi Hamuy Benjamin Hamyu Poa C/O First Union National Bank 301 S. Tryon Street Charlotte, NC 28288-0001 Fubs & Co. Febo Balanced/C 1,847 9.41%/0% Leroy Selby, Jr. Leroy Selby, III C/O First Union National Bank 301 S. Tron Street Charlotte, NC 28288-0001 Fubs & Co. Febo Balanced/C 1,330 6.77%/0% Mary Martha McBee Summerour C/O First Union National Bank 301 S. Tryon Street Charlotte, NC 28288-0001 First Union National Bank Balanced/Y 67,402,700 98.22%/42.98% Trust Accounts Attn: Ginny Batten 11th Floor CMG-1151 301 S. Tryon Street Charlotte, NC 28288-0001 Fubs & Co. Febo Total Return/A 6,946 9.36%/.01% Addice Denham and Lucretia Young C/O First Union National Bank 301 S. Tryon Street Charlotee, NC 28288-0001 Fubs & Co. Febo Total Return/A 4,167 5.62%/.01% Janet P. Lipov and Larry A. Lipov C/O First Union National Bank 301 S. Tryon Street Charlotte, NC 28288-0001 Fubs & Co. Febo Total Return/C 693 13.53%/0% Emmett L. Howell C/O First Union National Bank 301 S. Tryon Street Charlotte, NC 28288-0001 Fubs & Co. Febo Total Return/C 691 13.53%/0% Emmett L. Howell 1221 W. Broad Street Griffin, GA 30223-2154 Fubs & Co. Febo Total Return/C 579 11.35%/0% Grace L. Nielsen Trust Grace L. Nielsen TTEE C/O First Union National Bank 301 S. Tryon Street Charlotte, NC 28288-0001 Fubs & Co. Febo Total Return/C 1,153 22.57%/0% F. C. Tyler and Lisette W. Tyler C/O First Union National Bank 301 S. Tryon Street Charlotte, NC 28288-0001 Fubs & Co. Febo Total Return/C 284 5.57%/0% Richard D. Dresdner C/O First Union National Bank 301 S. Tryon Street Charlotte, NC 28288-0001 Fubs & Co. Febo Total Return/C 532 10.43%/0% John P. Kolb C/O First Union National Bank 301 S. Tryon Street Charlotte, NC 28288-0001 16
485APOS46th "Page" of 81TOC1stPreviousNextBottomJust 46th
Fubs & Co. Febo Total Return/C 545 10.88%/0% Wanda L. Cardin C/O First Union National Bank 301 S. Tryon Street Charlotte, NC 28288-0001 Fubs & Co. Febo Total Return/C 538 10.53%/0% Betty C. Starrett Willis M. Callaway, Jr. C/O First Union National Bank 301 S. Tryon Street Charlotte, NC 28288-0001 First Union National Bank-NC Total Return/C 537 10.53%/0% C/F, Inc. Marsha Marie Berls IRA C/O First Union National Bank 301 S. Tryon Street Charlotte, NC 28288-0001 John Hancock Clearing Corp. Growth & Income/C 3,079 5.34%/.04% 1 World Financial Center 200 Liberty Street New York, NY 10281-1003 Fubs & Co. Febo Growth & Income/C 29,868 51.78%/.42% Clara Caudill C/O First Union National Bank 301 S. Tryon Street Charlotte, NC 28288-0001 Charles Schwab & Co. Inc. Growth & Income/Y 792,727 14.17%/11.11% Reinvest Account Attn. Mutual Funds Dept. 101 Mongomery Street San Francisco, CA 94104-4122 First Union National Bank/EB/INT Growth & Income/Y 485,404 8.67%/6.80% Reinvest Account Attn. Trust Operations Fund Group 401 S. Tryon Street, 3rd Floor CMG 1151 Charlotte, NC 28202-1911 Stephen A. Lieber Growth & Income/Y 498,119 8.90%/6.98% C/O Lieber & Co. Purchase, NY 10577 Fubs & Co. Febo American Retirement/A 1,704 13.14%/.05% Theodora H. Wendler C/O First Union National Bank 301 S. Tryon Street Charlotte, NC 28288-0001 Fubs & Co. Febo American Retirement/A 2,248 17.33%/.07% Walter E. Gilbert Alice J. Gilbert C/O First Union National Bank 301 S. Tryon Street Charlotte, NC 28288-0001 First Union National Bank- American Retirement/A 1,796 13.84%/.05% VA C/F Ruth L. Harris IRA C/O First Union National Bank 301 S. Tryon Street Charlotte, NC 28288-0001 First Union National Bank- American Retirement/A 1,696 13.07%/.05% VA C/F William P. Clements IRA C/O First Union National Bank 301 S. Tryon Street Charlotte, NC 28288-0001 First Union National Bank- American Retirement/A 1,926 14.84%/.06% FL C/F Audrey F. Newell IRA C/O First Union National Bank 301 S. Tryon Street Charlotte, NC 28288-0001 17
485APOS47th "Page" of 81TOC1stPreviousNextBottomJust 47th
First Union National Bank- American Retirement/A 1,571 12.11%/.05% GA C/F William Lee Barker IRA C/O First Union National Bank 301 S. Tryon Street Charlotte, NC 28288-0001 Fubs & Co. Febo American Retirement/B 3,801 5.65%/.11% Walter E. Vermilya 506 Pleasant Hill Drive Richmond, VA 23236 First Union National Bank Cust American Retirement/B 5,414 8.04%/.16% Fredric C. Porton C/O First Union National Bank 301 S. Tryon Street Charlotte, NC 28288-0001 Fubs & Co. Febo American Retirement/B 4,645 6.90%/.14% Edyth E. Brigham Rev. Liv. Trust Edyth E. Brigham TTEE U/A/D 04/03/76 C/O First Union National Bank 301 S Tryon Street Charlotte, NC 28288-0001 First Union National Bank- American Retirement/C 751 97.45%/.02% VA C/F James L. Wilkinson Rollover IRA C/O First Union National Bank 301 S. Tryon Street Charlotte, NC 28288-0001 Charles Schwab & Co. Inc. American Retirement/Y 183,524 5.63%/5.48% Cash Account Attn: Mutual Funds Dept. 101 Montgomery Street San Francisco, CA 94104-4122 Charles Schwab & Co. Inc. Reinvest Account Attn: Mutual Funds Dept. 101 Montgomery Street San Francisco, CA 94104-4122 American Retirement/Y 689,073 21.12%/20.58% Stephen A. Lieber American Retirement/Y 166,600 5.11%/4.98% C/O Lieber & Co. Purchase, NY 10577 Fubs & Co. Febo Small Cap/A 8,158 48.96%/1.44% Elizabeth M. Screven C/O First Union National Bank 301 S. Tryon Street Charlotte, NC 28288-0001 First Union National Bank- Small Cap/A 1,038 8.26%/.24% FL C/F Aura Dominguez C/O First Union National Bank 301 S. Tryon Street Charlotte, NC 28288-0001 Fubs & Co. Febo Small Cap/A 2,484 19.75%/.58% Dorothy Friedland C/O First Union National Bank 301 S. Tryon Street Charlotte, NC 28288-0001 First Union National Bank- Small Cap/B 824 6.59%/.19% NC C/F Harold T. Brooks IRA C/O First Union National Bank 301 S. Tryon Street Charlotte, NC 28288-0001 First Union National Bank Small Cap/B 727 5.82%/.17% Manuel A. Barrios DDS C/O First Union National Bank 301 S. Tryon Street Charlotte, NC 28288-0001 18
485APOS48th "Page" of 81TOC1stPreviousNextBottomJust 48th
Fubs & Co. Febo Small Cap/B 632 5.05%/.15% Silvia M. Tamayo C/O First Union National Bank 301 S. Tryon Street Charlotte, NC 28288-0001 First Union National Bank- Small Cap/B 681 5.45%/.16% VA C/F Wayne H. Sherman IRA C/O First Union National Bank 301 S. Tryon Street Charlotte, NC 28288-0001 First Union National Bank- Small Cap/B 1,253 10.02%/.29% NC C/F J. Kevin Moore IRA C/O First Union National Bank 301 S. Tryon Street Charlotte, NC 28288-0001 First Union National Bank- Small Cap/B 1,439 11.51%/.34% FL C/F Robert H. Carr IRA C/O First Union National Bank 301 S. Tryon Street Charlotte, NC 28288-0001 First Union National Bank- Small Cap/B 1,317 10.53%/.31% NC C/F Eric W. Johnson IRA C/O First Union National Bank 301 S. Tryon Street Charlotte, NC 28288-0001 First Union National Bank- Small Cap/C 104 5.38%/.02% FL C/F, Inc. Michael A. Sorg IRA C/O First Union National Bank 301 S. Tryon Street Charlotte, NC 28288-0001 First Union National Bank- Small Cap/C 104 5.38%/.02% FL C/F, Inc. Matthew R. Sorg IRA C/O First Union National Bank 301 S. Tryon Street Charlotte, NC 28288-0001 First Union National Bank- Small Cap/C 1,289 66.75%/.30% VA C/F, Inc. Bruce S. Barker SEP C/O First Union National Bank 301 S. Tryon Street Charlotte, NC 28288-0001 First Union National Bank- Small Cap/C 412 21.36%/.10% VA C/F Brenton S. Farmer SEP C/O First Union National Bank 301 S Tryon Street Charlotte, NC 28288-0001 Nola Maddox Falcone Small Cap/Y 53,272 13.31%/12.46% C/O Lieber & Co. 2500 Westchester Avenue Purchase, NY 10577 Stephen A. Lieber Small Cap/Y 106,548 26.62%/24.95% C/O Lieber & Co. 2500 Westchester Avenue Purchase, NY 10577 Charles Schwab & Co. Inc. Small Cap/Y 26,816 6.70%/6.27% Reinvest Account 101 Montgomery Street Mutual Fund Dept. San Francisco, CA 94104-4122 First Union National Bank/EB Small Cap/Y 87,728 18.92%/20.53% Cash Account Attn: Trust Operations Fund 401 S. Tryon Street 3rd Floor CMG 11 Charlotte, NC 28202-1911 19
485APOS49th "Page" of 81TOC1stPreviousNextBottomJust 49th
North Carolina Trust Co. Foundation/A 178,455 7.25%/.46% FBO Miller Clinic C/O First Union National Bank 301 S. Tryon Street Charlotte, NC 28288-0001 Fubs & Co. Febo Foundation/C 18,070 5.45%/.05% Holmes Drug Co. Inc. Employees Pension Plan U/A/D 01/02/69 F/B/O William J. Miller C/O First Union National Bank 301 S. Tryon Street Charlotte, NC 28288-0001 Fubs & Co. Febo Foundation/C 28,715 8.86%/.07% Clara Caudill C/O First Union National Bank 301 S. Tryon Street Charlotte, NC 28288-0001 Charles Schwab & Co. Inc. Foundation/Y 4,943 17.13%/12.69% 101 Montgomery Street San Francisco, CA 94104-4122 Mac & Co. Foundation/Y 3,862,477 13.38%/9.92% A/C 195-643 C/O Mellon Bank NA Mutual Funds P.O. Box 320 Pittsburgh, PA 15230-0320 Eleanor C. McCallum TR Tax Strategic /A 5,577 10.47%/.42% Eleanor C. McCallum Living Trust U/A 1/14/93 C/O First Union National Bank 301 S. Tryon Street Charlotte, NC 28288-0001 Eleanor C. McCallum TTEE Tax Strategic /A 3,601 7.14%/.27% McCallum Family Trust U/A/D 2/9/94 C/O First Union National Bank 301 S. Tryon Street Charlotte, NC 28288-0001 Fubs & Co. Febo Tax Strategic /A 4,576 8.59%/.35% Curtis J. Morris C/O First Union National Bank 301 S. Tryon Street Charlotte, NC 28288-0001 Fubs & Co. Febo Tax Strategic /A 3,542 6.65%/.27% Judy A. Smith C/O First Union National Bank 301 S Tryon Street Charlotte, NC 28288-0001 Fubs & Co. Febo Tax Strategic /A 4,269 8.02%/.32% Dr. Thomas E. Baily, Sr. C/O First Union National Bank 301 S. Tryon Street Charlotte, NC 28288-0001 Fubs & Co. Febo Tax Strategic /A 4,441 8.34%/.34% Norman N. Dorosin Harriette H. Dorosin C/O First Union National Bank 301 S. Tryon Street Charlotte, NC 28288-0001 Fubs & Co. FBO Tax Strategic /A 4,226 7.94%/.32% Lie Lin C/O First Union National Bank 301 S. Tryon Street Charlotte, NC 28288-0001 Fubs & Co. Febo Tax Strategic /B 11,791 5.26%/.89% Dr. Charles Wm. Kepner C/O First Union National Bank 301 S. Tryon Street Charlotte, NC 28288-0001 20
485APOS50th "Page" of 81TOC1stPreviousNextBottomJust 50th
Fubs & Co. Febo Tax Strategic /B 12,378 5.52%/.94% Susan Hooper C/O First Union National Bank 301 S. Tryon Street Charlotte, NC 28288-0001 Fubs & Co. Febo Tax Strategic /C 4,758 37.31%/.36% Harry A. Edwards Jr. Linda R. Edwards C/O First Union National Bank 301 S. Tryon Street Charlotte, NC 28288-0001 Fubs & Co. Febo Tax Strategic /C 675 5.30%/.07% Evie Kontos C/O First Union National Bank 301 S. Tryon Street Charlotte, NC 28288-0001 Fubs & Co. Febo Tax Strategic /C 782 6.14%/.06% Pearl L. Holland Trustee Pearl L. Holland Rev. Trust U/A/D 12/04/89 C/O First Union National Bank 301 S. Tryon Street Charlotte, NC 28288-0001 Fubs & Co. Febo Tax Strategic /C 6,516 51.09%/.49% Wade H. Moser, Jr. M.D. C/O First Union National Bank 301 S. Tryon Street Charlotte, NC 28288-0001 Nola Maddox Falcone Tax Strategic /Y 95,494 9.24%/7.22% C/O Lieber & Co. 2500 Westchester Avenue Purchase, NY 10577 Constance E. Lieber Tax Strategic /Y 55,928 5.41%/4.23% C/O Lieber & Co. 2500 Westchester Avenue Purchase, NY 10577 Stephen A. Lieber Tax Strategic/Y 484,652 46.89%/36.65% C/O Lieber & Co. 2500 Westchester Avenue Purchase, NY 10577 Fubs & Co. Febo Utility/C 5,556 35.50%/.13% Elsie B. Strom Lewis F. Strom C/O First Union National Bank 301 S. Tryon Street Charlotte, NC 28288-0001 Fubs & Co. Febo Utility/C 3,020 19.30%/.07% Laura Alyce Hulbert Ronald F. Hulbert C/O First Union National Bank 301 S. Tryon Street Charlotte, NC 28288-0001 Fubs & Co. Febo Utility/C 1,107 7.07%/.03% Evelyn L. Smith Greg Smith C/O First Union National Bank 301 S. Tryon Street Charlotte, NC 28288-0001 Fubs & Co. Febo Utility/C 1,086 6.94%/.03% Max Ray Jeralyne Ray C/O First Union National Bank 301 S. Tryon Street Charlotte, NC 28288-0001 First Union National Bank Utility/Y 567,133 83.92%/13.18% Trust Accounts Attn: Ginny Batten 11th Floor CMG-1151 301 S. Tryon Street Charlotte, NC 28288-0001 21
485APOS51st "Page" of 81TOC1stPreviousNextBottomJust 51st
First Union National Bank Utility/Y 108,640 18.08%/12.52% Trust Accounts Attn: Ginny Batten 11th Floor CMG-1151 301 S. Tryon Street Charlotte, NC 28288-0001 Fubs & Co. Febo Value/C 6,055 18.68%/.14% Benjamin Hamuy Naomi Hamuy POA C/O First Union National Bank 301 S. Tryon Street Charlotte, NC 28288-0001 Fubs & Co. Febo Value/C 4,307 13.29%/.10 C. Wilson Construction Company Profit Sharing Plan U/A/D 7-1-87 C/O First Union National Bank 301 S. Tryon Street Charlotte, NC 28288-0001 Fubs & Co. Febo Value/C 1,826 5.63%/.04% William H. Smith C/O First Union National Bank 301 S. Tryon Street Charlotte, NC 28288-0001 First Union National Bank- Value/C 1,716 5.30%/.04% FL C/F St. Elmo Dowling IRA C/O First Union National Bank 301 S. Tryon Street Charlotte, NC 28288-0001 First Union National Bank Value/Y 31,721,695 90.20%/60.43% Trust Accounts Attn: Ginny Batten 11th Floor CMG-1151 301 S. Tryon Street Charlotte, NC 28288-0001 First Union National Bank Value/Y 3,442,203 9.79%/6.56% Trust Accounts Attn: Ginny Batten 11th Floor CMG-1151 301 S. Tryon Street Charlotte, NC 28288-0001 --------------------------------- *As a result of his ownership of 36.65%, of the shares of Tax Strategic, respectively, on June 15, 1995, Mr. Lieber may be deemed to "control" the Fund, as that term is defined in the 1940 Act. As a result of its beneficial ownership of 26.63% of the shares of American Retirement on June 15, 1995, Charles Schwab & Co., Inc. may be deemed to "control" the Fund, as that term is defined in the 1940 Act. **First Union National Bank of North Carolina and its affiliates act in various capacities for numerous accounts. As a result of its ownership of 42.98%, 66.99% and 25.7% of Balanced, Value and Utility, respectively, on June 15, 1995, First Union National Bank of North Carolina may be deemed to "control" each Fund as that term is defined in the 1940 Act. INVESTMENT ADVISER (See also "Management of the Fund" in each Fund's Prospectus) The investment adviser of Total Return, Growth and Income, American Retirement, Small Cap, Foundation and Tax Strategic is Evergreen Asset Management Corp., a New York corporation, with offices at 2500 Westchester Avenue, Purchase, New York or ("Evergreen Asset" or the "Adviser."). Evergreen Asset is owned by First Union National Bank of North Carolina ("FUNB" or the "Adviser") which, in turn, is a subsidiary of First Union Corporation ("First Union"), a bank holding company headquartered in Charlotte, North Carolina. The investment adviser of Balanced, Utility and Value is FUNB which provides investment advisory services through its Capital Management Group. The Directors of Evergreen Asset are Richard K. Wagoner and Barbara I. Colvin. The executive officers of Evergreen Asset are Stephen A. Lieber, Chairman and Co-Chief Executive Officer, Nola Maddox Falcone, President and Co-Chief Executive Officer, Theodore J. Israel, Jr., Executive Vice President, Joseph J. McBrien, Senior Vice President and General Counsel, and George R. Gaspari, Senior Vice President and Chief Financial Officer. On June 30, 1994, Evergreen Asset and Lieber and Company ("Lieber") were acquired by First Union through certain of its subsidiaries. Evergreen Asset was acquired by FUNB, a wholly-owned subsidiary (except for directors' qualifying shares) of First Union, by merger into EAMC Corporation ("EAMC") a wholly-owned subsidiary of FUNB. EAMC then assumed the name "Evergreen Asset Management Corp." and succeeded to the business of Evergreen Asset. Contemporaneously with the succession of EAMC to the business of Evergreen Asset and its assumption of the name "Evergreen Asset Management Corp.", Total Return, Growth and Income, American Retirement, Small Cap, Foundation and Tax Strategic entered into a new investment advisory agreement with EAMC and into a distribution agreement with Evergreen Funds Distributor, Inc. (the "Distributor"), a subsidiary of Furman Selz Incorporated. At that time, EAMC also entered into a new sub-advisory agreement with Lieber pursuant to which Lieber provides certain services to Evergreen Asset in connection with its duties as investment adviser. The partnership interests in Lieber, a New York general partnership, were acquired by Lieber I Corp. and Lieber II Corp., which are both wholly-owned subsidiaries of FUNB. The 23
485APOS52nd "Page" of 81TOC1stPreviousNextBottomJust 52nd
business of Lieber is being continued. The new advisory and sub-advisory agreements were approved by the shareholders of Total Return, Growth and Income, American Retirement, Small Cap, Foundation and Tax Strategic at their meeting held on June 23, 1994, and became effective on June 30, 1994. Under its Investment Advisory Agreement with each Fund, each Adviser has agreed to furnish reports, statistical and research services and recommendations with respect to each Fund's portfolio of investments. In addition, each Adviser provides office facilities to the Funds and performs a variety of administrative services. Each Fund pays the cost of all of its other expenses and liabilities, including expenses and liabilities incurred in connection with maintaining their registration under the Securities Act of 1933, as amended, and the 1940 Act, printing prospectuses (for existing shareholders) as they are updated, state qualifications, share certificates, mailings, brokerage, custodian and stock transfer charges, printing, legal and auditing expenses, expenses of shareholder meetings and reports to shareholders. Notwithstanding the foregoing, each Adviser will pay the costs of printing and distributing prospectuses used for prospective shareholders. The method of computing the investment advisory fee for each Fund is described in such Fund's Prospectus. The advisory fees paid by each Fund for the three most recent fiscal periods reflected in its registration statement are set forth below: BALANCED Year Ended Year Ended Year Ended 12/31/94 12/31/93 12/31/92 Advisory Fee $4,621,512 $3,425,786 $2,319,251 ========== ========== ========== TOTAL RETURN Year Ended Year Ended Year Ended 1/31/95 3/31/94 3/31/93 Advisory Fee $8,542,289 $11,613,964 $10,671,425 ========== =========== =========== Expense FOUNDATION Year Ended Year Ended Year Ended 12/31/94 12/31/93 12/31/92 Advisory Fee $2,551,768 $1,290,748 $257,141 ========== ========== ======== Expense Reimbursement $ 7,926 -------- SMALL CAP Year Ended Year Ended 12/31/94 12/31/93 Advisory Fee $ 29,075 $ 4,929 -------- -------- Waiver ($29,075) ($ 4,929) Net Advisory Fee $ 0 $ 0 ========= ========= Expense Reimbursement $63,704 $16,800 ------- ------- UTILITY Year Ended 12/31/94 Advisory Fee $153,458 --------- Waiver ($152,038) Net Advisory Fee $1,420 ========= GROWTH AND INCOME Year Ended Year Ended Year Ended 12/31/94 12/31/93 12/31/92 Advisory Fee $684,891 $722,166 $528,190 ======== ======== ======== AMERICAN Year Ended Year Ended Year Ended RETIREMENT 12/31/94 12/31/93 12/31/92 Advisory Fee $292,628 $226,080 $152,055 ======== ======== ======== Reimbursement $ 16,093 -------- TAX STRATEGIC Year Ended Year Ended 12/31/94 12/31/93 Advisory Fee $ 65,915 $ 4,989 -------- ------- Waiver ($65,915) ($4,989) Net Advisory Fee $ 0 $ 0 ========== ========= Expense Reimbursement $ 3,777 $ 12,700 --------- --------- VALUE Year Ended Year Ended Year Ended 12/31/94 12/31/93 12/31/92 Advisory Fee $3,850,673 $3,016,457 $2,208,618 Total Return changed its fiscal year end from March 31 to January 31 during the periods covered by the foregoing table. Accordingly, the investment advisory fees reported in the foregoing table reflect for Total Return, the period from April 1, 1994 to January 31, 1995. In addition, Small Cap, Tax Strategic and Utility commenced operations on October 1, 1993, November 2, 1993 and January 4, 1994, respectively, and, therefore, the first year's figures set forth in the table above reflect for Small Cap and Tax Strategic investment advisory fees paid for the period from commencement of operations through December 31, 1993 and, with respect to Utility, December 31, 1994. Expense Limitations Each Adviser's fee will be reduced by, or the Adviser will reimburse the Funds for any amount necessary to prevent such expenses (exclusive of taxes, interest, brokerage commissions and extraordinary expenses, but inclusive of the Adviser's fee) from exceeding the most restrictive of the expense limitations imposed by state securities commissions 24
485APOS53rd "Page" of 81TOC1stPreviousNextBottomJust 53rd
of the states in which the Funds' shares are then registered or qualified for sale. Reimbursement, when necessary, will be made monthly in the same manner in which the advisory fee is paid. Currently the most restrictive state expense limitation is 2.5% of the first $30,000,000 of the Fund's average daily net assets, 2% of the next $70,000,000 of such assets and 1.5% of such assets in excess of $100,000,000. In addition, each Adviser has in some instances voluntarily limited (and may in the future limit) expenses of certain of the Funds. For the four month period January 1, 1992 to April 30, 1992, Evergreen Asset voluntarily limited the expenses of American Retirement to 1.50% of average net assets. Evergreen Asset has voluntarily agreed to reimburse Small Cap and Tax Strategic to the extent that any of these Funds' aggregate operating expenses (including the Adviser's fee but excluding interest, taxes, brokerage commissions, Rule 12b-1 distribution fees and shareholder servicing fees and extraordinary expenses) exceed 1.50% of their average net assets until such time as said Funds' net assets reach $15 million. During the fiscal year ended December 31, 1992, Evergreen Asset voluntarily absorbed a portion of Foundation's expenses and reimbursed the Fund for expenses in excess of the voluntary expense limitation in an amount equal to .03% of its average daily net assets. The voluntary expense limitation and the absorption of Fund expenses ceased on May 1, 1992. The Investment Advisory Agreements are terminable, without the payment of any penalty, on sixty days' written notice, by a vote of the holders of a majority of each Fund's outstanding shares, or by a vote of a majority of each Trust's Trustees or by the respective Adviser. The Investment Advisory Agreements will automatically terminate in the event of their assignment. Each Investment Advisory Agreement provides in substance that the Adviser shall not be liable for any action or failure to act in accordance with its duties thereunder in the absence of willful misfeasance, bad faith or gross negligence on the part of the Adviser or of reckless disregard of its obligations thereunder. The Investment Advisory Agreements with respect to Total Return, Growth and Income, American Retirement, Small Cap, Foundation and Tax Strategic were approved by each Fund's shareholders on June 23, 1994, became effective on June 30, 1994, and will continue in effect until June 30, 1996, and thereafter from year to year provided that their continuance is approved annually by a vote of a majority of the Trustees of each Trust including a majority of those Trustees who are not parties thereto or "interested persons" (as defined in the 1940 Act) of any such party, cast in person at a meeting duly called for the purpose of voting on such approval or a majority of the outstanding voting shares of each Fund. With respect to Balanced, Utility and Value, the Investment Advisory Agreement dated February 28, 1985 and amended from time to time thereafter was last approved by the Trustees of Evergreen Investment Trust (formerly, First Union Funds) on April 20, 1995 and it will continue from year to year with respect to each Fund provided that such continuance is approved annually by a vote of a majority of the Trustees of Evergreen Investment Trust including a majority of those Trustees who are not parties thereto or "interested persons" of any such party cast in person at a meeting duly called for the purpose of voting on such approval or by a vote of a majority of the outstanding voting securities of each Fund. Certain other clients of each Adviser may have investment objectives and policies similar to those of the Funds. Each Adviser (including the sub-adviser) may, from time to time, make recommendations which result in the purchase or sale of a particular security by its other clients simultaneously with a Fund. If transactions on behalf of more than one client during the same period increase the demand for securities being purchased or the supply of securities being sold, there may be an adverse effect on price or quantity. It is the policy of each Adviser to allocate advisory recommendations and the placing of orders in a manner which is deemed equitable by the Adviser to the accounts involved, including the Funds. When two or more of the clients of the Adviser (including one or more of the Funds) are purchasing or selling the same security on a given day from the same broker-dealer, such transactions may be averaged as to price. Although the investment objectives of the Funds are not the same, and their investment decisions are made independently of each other, they rely upon the same resources for investment advice and recommendations. Therefore, on occasion, when a particular security meets the different investment objectives of the various Funds, they may simultaneously purchase or sell the same security. This could have a detrimental effect on the price and quantity of the security available to each Fund. If simultaneous transactions 25
485APOS54th "Page" of 81TOC1stPreviousNextBottomJust 54th
occur, the Adviser attempts to allocate the securities, both as to price and quantity, in accordance with a method deemed equitable to each Fund and consistent with their different investment objectives. In some cases, simultaneous purchases or sales could have a beneficial effect, in that the ability of one Fund to participate in volume transactions may produce better executions for that Fund. Each Fund has adopted procedures under Rule 17a-7 of the 1940 Act to permit purchase and sales transactions to be effected between each Fund and the other registered investment companies for which either Evergreen Asset or FUNB acts as investment adviser or between the Fund and any advisory clients of Evergreen Asset, FUNB or Lieber & Company. Each Fund may from time to time engage in such transactions but only in accordance with these procedures and if they are equitable to each participant and consistent with each participant's investment objectives. Prior to July 1, 1995, Federated Administrative Services, a subsidiary of Federated Investors, provided legal, accounting and other administrative personnel and support services to each of the portfolios of Evergreen Investment Trust. The Trust paid a fee for such services at the following annual rate: .15% on the first $250 million average daily net assets of the Trust; .125% on the next $250 million; .10% on the next $250 million and .075% on assets in excess of $250 million. For the fiscal years ended December 31, 1994, 1993 and 1992, Balanced incurred $779,584, $597,752 and $427,255, respectively, in administrative service costs. For the period from January 4, 1994 (commencement of operations) to December 31, 1994, Utility incurred $104,384 in administrative service costs, all of which was voluntarily waived. For the fiscal years ended December 31, 1994, 1993 and 1992, Value incurred $649,487, $526,836 and $407,134 in administrative service costs, of which $17,263 were voluntarily waived in 1992. Commencing July 1, 1995, Evergreen Asset will provide administrative services to each of the portfolios of Evergreen Investment Trust for a fee based on the average daily net assets of each fund administered by Evergreen Asset for which Evergreen Asset or FUNB also serves as investment adviser, calculated daily and payable monthly at the following annual rates: .050% on the first $7 billion; .035% on the next $3 billion; .030% on the next $5 billion; .020% on the next $10 billion; .015% on the next $5 billion; and .010% on assets in excess of $30 billion. Furman Selz Incorporated, the parent of the Distributor, serves as sub-administrator to Balanced, Utility and Value and is entitled to receive a fee from each Fund calculated on the average daily net assets of each Fund at a rate based on the total assets of the mutual funds administered by Evergreen Asset for which FUNB or Evergreen Asset also serve as investment adviser, calculated in accordance with the following schedule: .0100% of the first $7 billion; .0075% on the next $3 billion; .0050% on the next $15 billion; and .0040% on assets in excess of $25 billion. The total assets of mutual funds administered by Evergreen Asset for which Evergreen Asset or FUNB serves as investment adviser as of March 31, 1995 were approximately $7.95 billion. DISTRIBUTION PLANS Reference is made to "Management of the Fund - Distribution Plans and Agreements" in the Prospectus of each Fund for additional disclosure regarding the Funds' distribution arrangements. Distribution fees are accrued daily and paid monthly on the Class A, B and C shares and are charged as class expenses, as accrued. The distribution fees attributable to the Class B shares and Class C shares are designed to permit an investor to purchase such shares through broker-dealers without the assessment of a front-end sales charge, and, in the case of Class C shares, without the assessment of a contingent deferred sales charge after the first year following purchase, while at the same time permitting the Distributor to compensate broker-dealers in connection with the sale of such shares. In this regard the purpose and function of the combined contingent deferred sales charge and distribution services fee on the Class B shares and the Class C shares, are the same as those of the front-end sales charge and distribution fee with respect to the Class A shares in that in each case the sales charge and/or distribution fee provide for the financing of the distribution of the Fund's shares. Under the Rule 12b-1 Distribution Plans that have been adopted by each Fund with respect to each of its Class A, Class B and Class C shares (each a "Plan" and collectively, the "Plans"), the Treasurer of each Fund reports the amounts expended under the Plan and the purposes for which such expenditures were made to the Trustees of each Trust for their review on a quarterly basis. Also, each Plan provides that the selection and nomination of 26
485APOS55th "Page" of 81TOC1stPreviousNextBottomJust 55th
Trustees who are not "interested persons" of each Trust (as defined in the 1940 Act) are committed to the discretion of such disinterested Trustees then in office. Each Adviser may from time to time and from its own funds or such other resources as may be permitted by rules of the Securities and Exchange Commission make payments for distribution services to the Distributor; the latter may in turn pay part or all of such compensation to brokers or other persons for their distribution assistance. Growth and Income, Total Return, American Retirement, Small Cap, Foundation and Tax Strategic commenced offering Class A, B or C shares on January 3, 1995. Each Plan with respect to such Funds became effective on December 30, 1994 and was initially approved by the sole shareholder of each Class of shares of each Fund with respect to which a Plan was adopted on that date and by the unanimous vote of the Trustees of each Trust, including the disinterested Trustees voting separately, at a meeting called for that purpose and held on December 13, 1994. The Distribution Agreements between each Fund and the Distributor pursuant to which distribution fees are paid under the Plans by each Fund with respect to its Class A, Class B and Class C shares were also approved at the December 13, 1994 meeting by the unanimous vote of the Trustees, including the disinterested Trustees voting separately. Each Plan and Distribution Agreement will continue in effect for successive twelve-month periods provided, however, that such continuance is specifically approved at least annually by the Trustees of each Trust or by vote of the holders of a majority of the outstanding voting securities (as defined in the 1940 Act) of that Class, and, in either case, by a majority of the Trustees of the Trust who are not parties to the Agreement or interested persons, as defined in the 1940 Act, of any such party (other than as Trustees of the Trust) and who have no direct or indirect financial interest in the operation of the Plan or any agreement related thereto. Prior to July 8, 1995, Federated Securities Corp., a subsidiary of Federated Investors, served as the distributor for Balanced, Utility and Value as well as other portfolios of Evergreen Investment Trust. The Distribution Agreements between each Fund and the Distributor pursuant to which distribution fees are paid under the Plans by each Fund with respect to its Class A, Class B and Class C shares were approved on June 15, 1995 by the unanimous vote of the Trustees including the disinterested Trustees voting separately. The Plans permit the payment of fees to brokers and others for distribution and shareholder-related administrative services and to broker-dealers, depository institutions, financial intermediaries and administrators for administrative services as to Class A, Class B and Class C shares. The Plans are designed to (i) stimulate brokers to provide distribution and administrative support services to each Fund and holders of Class A, Class B and Class C shares and (ii) stimulate administrators to render administrative support services to the Fund and holders of Class A, Class B and Class C shares. The administrative services are provided by a representative who has knowledge of the shareholder's particular circumstances and goals, and include, but are not limited to providing office space, equipment, telephone facilities, and various personnel including clerical, supervisory, and computer, as necessary or beneficial to establish and maintain shareholder accounts and records; processing purchase and redemption transactions and automatic investments of client account cash balances; answering routine client inquiries regarding Class A, Class B and Class C shares; assisting clients in changing dividend options, account designations, and addresses; and providing such other services as the Fund reasonably requests for its Class A, Class B and Class C shares. In addition to the Plans, Balanced, Utility and Value have each adopted a Shareholder Services Plan whereby shareholder servicing agents may receive fees from the Fund for providing services which include, but are not limited to, distributing prospectuses and other information, providing shareholder assistance, and communicating or facilitating purchases and redemptions of Class B and Class C shares of the Fund. In the event that a Plan or Distribution Agreement is terminated or not continued with respect to one or more Classes of a Fund, (i) no distribution fees (other than current amounts accrued but not yet paid) would be owed by the Fund to the Distributor with respect to that Class or Classes, and (ii) the Fund would not be obligated to pay the Distributor for any amounts expended under the Distribution Agreement not previously recovered by the Distributor from distribution services fees in respect of shares of such Class or Classes through deferred sales charges. All material amendments to any Plan or Distribution Agreement must be approved by a vote of the Trustees of a Trust or the holders of the Fund's outstanding voting securities, 27
485APOS56th "Page" of 81TOC1stPreviousNextBottomJust 56th
voting separately by Class, and in either case, by a majority of the disinterested Trustees, cast in person at a meeting called for the purpose of voting on such approval; and any Plan or Distribution Agreement may not be amended in order to increase materially the costs that a particular Class of shares of a Fund may bear pursuant to the Plan or Distribution Agreement without the approval of a majority of the holders of the outstanding voting shares of the Class affected. With respect to Balanced, Utility, and Value, amendments to the Shareholder Services Plan require a majority vote of the disinterested Trustees but do not require a shareholders vote. Any Plan, Shareholder Services Plan or Distribution Agreement may be terminated (a) by a Fund without penalty at any time by a majority vote of the holders of the outstanding voting securities of the Fund, voting separately by Class or by a majority vote of the Trustees who are not "interested persons" as defined in the 1940 Act, or (b) by the Distributor. To terminate any Distribution Agreement, any party must give the other parties 60 days' written notice; to terminate a Plan only, the Fund need give no notice to the Distributor. Any Distribution Agreement will terminate automatically in the event of its assignment. For the fiscal year ended December 31, 1994, Balanced incurred $102,621 and Value incurred $473,347 in distribution services fees on behalf of Class A shares. For the period from January 4, 1994 (commencement of operations) to December 31, 1994, Utility incurred $9,658 in distribution services fees on behalf of Class A shares. For the fiscal year ended December 31, 1994, Balanced incurred $670,202 and Value incurred $621,330 in distribution services fees of Class B shares. For the period from January 4, 1994 (commencement of operations) to December 31, 1994, Utility incurred $169,007 in distribution services fees on behalf of Class B shares. For the period from September 2, 1994 (commencement of operations) to December 31, 1994, Balanced incurred $310, Value incurred $716 and Utility incurred $232 in distribution services fees on behalf of Class C shares. Shareholder Services Plans - Balanced, Utility and Value For the period ended December 31, 1994, Balanced incurred shareholder services fees of $83,641 and $103 on behalf of Class B shares and Class C shares, respectively; Utility incurred shareholder services fees of $24,141 and $77 on behalf of Class B shares and Class C shares, respectively; and Value incurred shareholder services fees of $83,225 and $239 on behalf of Class B shares and Class C shares, respectively. ALLOCATION OF BROKERAGE Decisions regarding each Fund's portfolio are made by its Adviser, subject to the supervision and control of the Trustees. Orders for the purchase and sale of securities and other investments are placed by employees of the Adviser, all of whom, in the case of Evergreen Asset, are associated with Lieber. In general, the same individuals perform the same functions for the other funds managed by the Adviser. A Fund will not effect any brokerage transactions with any broker or dealer affiliated directly or indirectly with the Adviser unless such transactions are fair and reasonable, under the circumstances, to the Fund's shareholders. Circumstances that may indicate that such transactions are fair or reasonable include the frequency of such transactions, the selection process and the commissions payable in connection with such transactions. A substantial portion of the transactions in equity securities for each Fund will occur on domestic stock exchanges. Transactions on stock exchanges involve the payment of brokerage commissions. In transactions on stock exchanges in the United States, these commissions are negotiated, whereas on many foreign stock exchanges these commissions are fixed. In the case of securities traded in the foreign and domestic over-the-counter markets, there is generally no stated commission, but the price usually includes an undisclosed commission or markup. Over-the-counter transactions will generally be placed directly with a principal market maker, although the Fund may place an over-the-counter order with a broker-dealer if a better price (including commission) and execution are available. It is anticipated that most purchase and sale transactions involving fixed income securities will be with the issuer or an underwriter or with major dealers in such securities acting as principals. Such transactions are normally on a net basis and generally do not involve payment of brokerage commissions. However, the cost of securities purchased 28
485APOS57th "Page" of 81TOC1stPreviousNextBottomJust 57th
from an underwriter usually includes a commission paid by the issuer to the underwriter. Purchases or sales from dealers will normally reflect the spread between bid and ask prices. In selecting firms to effect securities transactions, the primary consideration of each Fund shall be prompt execution at the most favorable price. A Fund will also consider such factors as the price of the securities and the size and difficulty of execution of the order. If these objectives may be met with more than one firm, the Fund will also consider the availability of statistical and investment data and economic facts and opinions helpful to the Fund. To the extent that receipt of these services for which the Adviser or its affiliates might otherwise have paid, it would tend to reduce their expenses. Under Section 11(a) of the Securities Exchange Act of 1934, as amended, and the rules adopted thereunder by the Securities and Exchange Commission, Lieber may be compensated for effecting transactions in portfolio securities for a Fund on a national securities exchange provided the conditions of the rules are met. Each Fund advised by Evergreen Asset has entered into an agreement with Lieber authorizing Lieber to retain compensation for brokerage services. In accordance with such agreement, it is contemplated that Lieber, a member of the New York and American Stock Exchanges, will, to the extent practicable, provide brokerage services to the Fund with respect to substantially all securities transactions effected on the New York and American Stock Exchanges. In such transactions, a Fund will seek the best execution at the most favorable price while paying a commission rate no higher than that offered to other clients of Lieber or that which can be reasonably expected to be offered by an unaffiliated broker-dealer having comparable execution capability in a similar transaction. However, no Fund will engage in transactions in which Lieber would be a principal. While no Fund advised by Evergreen Asset contemplates any ongoing arrangements with other brokerage firms, brokerage business may be given from time to time to other firms. In addition, the Trustees have adopted procedures pursuant to Rule 17e-1 under the 1940 Act to ensure that all brokerage transactions with Lieber, as an affiliated broker-dealer, are fair and reasonable. Any profits from brokerage commissions accruing to Lieber as a result of portfolio transactions for the Fund will accrue to FUNB and to its ultimate parent, First Union. The Investment Advisory Agreements does not provide for a reduction of the Adviser's fee with respect to any fund by the amount of any profits earned by Lieber from brokerage commissions generated by portfolio transactions of the Fund. The following chart shows: (1) the brokerage commissions paid by each Fund advised by Evergreen Asset during their last three fiscal years; (2) the amount and percentage thereof paid to Lieber; and (3) the percentage of the total dollar amount of all portfolio transactions with respect to which commissions have been paid which were effected by Lieber: TOTAL RETURN Period Ended Year Ended Year Ended 1/31/95 3/31/94 3/31/93 Total Brokerage $3,755,606 $3,234,684 $4,873,169 Commissions Dollar Amount and % $3,465,900 $3,199,114 $4,842,437 paid to Lieber 92% 99% 99% % of Transactions Effected by Lieber 97% 99% 99% FOUNDATION Year Ended Year Ended Year Ended 12/31/94 12/31/93 12/31/92 Total Brokerage $282,250 $291,295 $128,811 Commissions Dollar Amount and % $276,985 $284,864 $124,801 paid to Lieber 98% 98% 97% % of Transactions Effected by Lieber 98% 98% 96% SMALL CAP Year Ended Period Ended 12/31/94 12/31/93 Total Brokerage $3,998 $2,091 Commissions Dollar Amount and % $3,618 $1,729 paid to Lieber 90% 83% % of Transactions 29
485APOS58th "Page" of 81TOC1stPreviousNextBottomJust 58th
Effected by Lieber 90% 73% GROWTH AND INCOME Year Ended Year Ended Year Ended 12/31/94 12/31/93 12/31/92 Total Brokerage $80,871 $76,427 $66,266 Commissions Dollar Amount and % $71,721 $66,670 $57,686 paid to Lieber 89% 87% 87% % of Transactions Effected by Lieber 88% 84% 86% AMERICAN RETIREMENT Year Ended Year Ended Year Ended 12/31/94 12/31/93 12/31/92 Total Brokerage $203,922 $99,435 $99,293 Commissions Dollar Amount and % $202,838 $96,950 $98,793 paid to Lieber 99% 98% 99% % of Transactions Effected by Lieber 99% 98% 99% TAX STRATEGIC Year Ended Period Ended 12/31/94 12/31/93 Total Brokerage $24,872 $3,260 Commissions Dollar Amount and % $24,072 $3,210 paid to Lieber 97% 98% % of Transactions Effected by Lieber 98% 98% Total Return changed its fiscal year end from March 31 to January 31 during the periods covered by the foregoing table. Accordingly, the commissions reported in the foregoing table reflect for Total Return the period from April 1, 1994 to January 31, 1995. In addition, Small Cap and Tax Strategic commenced operations on October 1, 1993 and November 2, 1993, respectively, and, therefore, the first year's figures set forth in the table above reflect commissions paid for the period from commencement of operations through December 31, 1993. Balanced, Value and Utility did not pay any commissions to Lieber. For the fiscal years ended December 31, 1994, 1993 and 1992, Balanced paid $450,569, $389,044 and $152,802, respectively, in commissions on brokerage transactions. For the period from January 4, 1994 (commencement of operations) to December 31, 1994, Utility paid $66,294 in commissions on brokerage transactions. For the fiscal years ended December 31, 1994, 1993 and 1992, Value paid $1,437,338, $894,400 and $642,338, respectively, in commissions on brokerage transactions. ADDITIONAL TAX INFORMATION (See also "Taxes" in the Prospectus) Each Fund has qualified and intends to continue to qualify for and elect the tax treatment applicable to regulated investment companies ("RIC") under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). (Such qualification does not involve supervision of management or investment practices or policies by the Internal Revenue Service.) In order to qualify as a regulated investment company, a Fund must, among other things, (a) derive at least 90% of its gross income from dividends, interest, payments with respect to proceeds from securities loans, gains from the sale or other disposition of securities and other income (including gains from options, futures or forward contracts) derived with respect to its business of investing in such securities; (b) derive less than 30% of its gross income from the sale or other disposition of securities, options, futures or forward contracts (other than those on foreign currencies), or foreign currencies (or options, futures or forward contracts thereon) that are not directly related to the RIC's principal business of investing in securities (or options and futures with respect thereto) held for less than three months; and (c) diversify its holdings so that, at the end of each quarter of its taxable year, (i) at least 50% of the market value of the Fund's total assets is represented by cash, U.S. government securities and other securities limited in respect of any one issuer, to an amount not greater than 5% of the Fund's total assets and 10% of the outstanding voting securities of such issuer, and (ii) not more than 25% of the value of its total assets is invested in the securities of any one issuer (other than U.S. Government securities and securities of other regulated investment companies). By so qualifying, a Fund is not subject to Federal income tax if it timely distributes its investment company taxable income and any net realized capital gains. A 4% nondeductible excise tax will be imposed on a Fund to the extent it does not meet certain distribution requirements by the end of each calendar year. Each Fund anticipates meeting such distribution requirements. Dividends paid by a Fund from investment company taxable income generally will be taxed to the shareholders as ordinary income. Investment company taxable income includes net investment income and net realized short-term gains (if any). Any dividends received by a Fund from domestic corporations will constitute a portion of the Fund's gross investment income. It is anticipated that this portion of the dividends paid by a Fund (other than distributions of securities profits) will qualify for the 70% dividends-received deduction for corporations. Shareholders will be informed of the amounts of dividends which so qualify. Distributions of the excess of net long-term capital gain over net short-term capital loss are taxable to shareholders (who are not exempt from tax) as long-term capital gain, regardless of the length of time the shares of a Fund have been held by such shareholders. Short-term capital gains distributions are taxable to shareholders who are not exempt from tax as ordinary income. Such distributions are not eligible for the dividends-received deduction. Any loss recognized upon the sale of shares of a Fund held by a shareholder for six months or less will be treated as a long-term capital loss to the extent that the shareholder received a long-term capital gain distribution with respect to such shares. 30
485APOS59th "Page" of 81TOC1stPreviousNextBottomJust 59th
Distributions of investment company taxable income and any net short-term capital gains will be taxable as ordinary income as described above to shareholders (who are not exempt from tax), whether made in shares or in cash. Shareholders electing to receive distributions in the form of additional shares will have a cost basis for Federal income tax purposes in each share so received equal to the net asset value of a share of a Fund on the reinvestment date. Distributions by each Fund result in a reduction in the net asset value of the Fund's shares. Should a distribution reduce the net asset value below a shareholder's cost basis, such distribution nevertheless would be taxable as ordinary income or capital gain as described above to shareholders (who are not exempt from tax), even though, from an investment standpoint, it may constitute a return of capital. In particular, investors should be careful to consider the tax implications of buying shares just prior to a distribution. The price of shares purchased at that time includes the amount of the forthcoming distribution. Those purchasing just prior to a distribution will then receive what is in effect a return of capital upon the distribution which will nevertheless be taxable to shareholders subject to taxes. Upon a sale or exchange of its shares, a shareholder will realize a taxable gain or loss depending on its basis in the shares. Such gains or loss will be treated as a capital gain or loss if the shares are capital assets in the investor's hands and will be a long-term capital gain or loss if the shares have been held for more than one year. Generally, any loss realized on a sale or exchange will be disallowed to the extent shares disposed of are replaced within a period of sixty-one days beginning thirty days before and ending thirty days after the shares are disposed of. Any loss realized by a shareholder on the sale of shares of the Fund held by the shareholder for six months or less will be disallowed to the extent of any exempt interest dividends received by the shareholder with respect to such shares, and will be treated for tax purposes as a long-term capital loss to the extent of any distributions of net capital gains received by the shareholder with respect to such shares. All distributions, whether received in shares or cash, must be reported by each shareholder on his or her Federal income tax return. Each shareholder should consult his or her own tax adviser to determine the state and local tax implications of Fund distributions. Shareholders who fail to furnish their taxpayer identification numbers to a Fund and to certify as to its correctness and certain other shareholders may be subject to a 31% Federal income tax backup withholding requirement on dividends, distributions of capital gains and redemption proceeds paid to them by the Fund. If the withholding provisions are applicable, any such dividends or capital gain distributions to these shareholders, whether taken in cash or reinvested in additional shares, and any redemption proceeds will be reduced by the amounts required to be withheld. Investors may wish to consult their own tax advisers about the applicability of the backup withholding provisions. The foregoing discussion relates solely to U.S. Federal income tax law as applicable to U.S. persons (i.e., U.S. citizens and residents and U.S. domestic corporations, partnerships, trusts and estates). It does not reflect the special tax consequences to certain taxpayers (e.g., banks, insurance companies, tax exempt organizations and foreign persons). Shareholders are encouraged to consult their own tax advisers regarding specific questions relating to Federal, state and local tax consequences of investing in shares of a Fund. Each shareholder who is not a U.S. person should consult his or her tax adviser regarding the U.S. and foreign tax consequences of ownership of shares of a Fund, including the possibility that such a shareholder may be subject to a U.S. withholding tax at a rate of 31% (or at a lower rate under a tax treaty) on amounts treated as income from U.S. sources under the Code. Special Tax Considerations for Tax Strategic With respect to Tax Strategic, to the extent that the Fund distributes exempt interest dividends to a shareholder, interest on indebtedness incurred or continued by such shareholder to purchase or carry shares of the Fund is not deductible. Furthermore, entities or persons who are "substantial users" (or related persons) of facilities financed by "private activity" bonds (some of which were formerly referred to as "industrial development" bonds) should consult their tax advisers before purchasing shares of the Fund. "Substantial user" is defined generally as including a "non-exempt 31
485APOS60th "Page" of 81TOC1stPreviousNextBottomJust 60th
person" who regularly uses in its trade or business a part of a facility financed from the proceeds of industrial development bonds. The percentage of the total dividends paid by a Fund with respect to any taxable year that qualifies as exempt interest dividends will be the same for all shareholders of the Fund receiving dividends with respect to such year. If a shareholder receives an exempt interest dividend with respect to any share and such share has been held for six months or less, any loss on the sale or exchange of such share will be disallowed to the extent of the exempt interest dividend amount. NET ASSET VALUE The following information supplements that set forth in each Prospectus under the subheading "How to Buy Shares - How the Funds Value Their Shares" in the Section entitled "Purchase and Redemption of Shares". The public offering price of shares of a Fund is its net asset value, plus, in the case of Class A shares, a sales charge which will vary depending on the purchase alternative chosen by the investor, as more fully described in the Prospectus. See "Purchase of Shares - Class A Shares - Front-End Sales Charge Alternative. " On each Fund business day on which a purchase or redemption order is received by a Fund and trading in the types of securities in which a Fund invests might materially affect the value of Fund shares, the per share net asset value of each such Fund is computed in accordance with the Declaration of Trust and By-Laws governing each Fund as of the next close of regular trading on the New York Stock Exchange (the "Exchange") (currently 4:00 p.m. Eastern time) by dividing the value of the Fund's total assets, less its liabilities, by the total number of its shares then outstanding. A Fund business day is any weekday, exclusive of national holidays on which the Exchange is closed and Good Friday. For each Fund, securities for which the primary market is on a domestic or foreign exchange and over-the-counter securities admitted to trading on the NASDAQ National List are valued at the last quoted sale or, if no sale, at the mean of closing bid and asked prices and portfolio bonds are presently valued by a recognized pricing service when such prices are believed to reflect the fair value of the security. Over-the-counter securities not included in the NASDAQ National List for which market quotations are readily available are valued at a price quoted by one or more brokers. If accurate quotations are not available, securities will be valued at fair value determined in good faith by the Board of Trustees. The respective per share net asset values of the Class A, Class B, Class C and Class Y shares are expected to be substantially the same. Under certain circumstances, however, the per share net asset values of the Class B and Class C shares may be lower than the per share net asset value of the Class A shares (and, in turn, that of Class A shares may be lower than Class Y shares) as a result of the greater daily expense accruals, relative to Class A and Class Y shares, of Class B and Class C shares relating to distribution services fees (and, with respect to Balanced, Utility and Value, shareholder service fee) and, to the extent applicable, transfer agency fees and the fact that Class Y shares bear no additional distribution, shareholder service or transfer agency related fees. While it is expected that, in the event each Class of shares of a Fund realizes net investment income or does not realize a net operating loss for a period, the per share net asset values of the four classes will tend to converge immediately after the payment of dividends, which dividends will differ by approximately the amount of the expense accrual differential among the Classes, there is no assurance that this will be the case. In the event one or more Classes of a Fund experiences a net operating loss for any fiscal period, the net asset value per share of such Class or Classes will remain lower than that of Classes that incurred lower expenses for the period. To the extent that any Fund invests in non-U.S. dollar denominated securities, the value of all assets and liabilities will be translated into United States dollars at the mean between the buying and selling rates of the currency in which such a security is denominated against United States dollars last quoted by any major bank. If such quotations are not available, the rate of exchange will be determined in accordance with policies established by the Fund. The Trustees will monitor, on an ongoing basis, a Fund's method of valuation. Trading in securities on European and Far Eastern securities exchanges and over-the-counter markets is normally completed well before the close of business on each business day in New York. In addition, European or Far Eastern securities trading generally or in a particular country or countries may not take place on all business days in New York. 32
485APOS61st "Page" of 81TOC1stPreviousNextBottomJust 61st
Furthermore, trading takes place in various foreign markets on days which are not business days in New York and on which the Fund's net asset value is not calculated. Such calculation does not take place contemporaneously with the determination of the prices of the majority of the portfolio securities used in such calculation. Events affecting the values of portfolio securities that occur between the time their prices are determined and the close of the Exchange will not be reflected in a Fund's calculation of net asset value unless the Trustees deem that the particular event would materially affect net asset value, in which case an adjustment will be made. Securities transactions are accounted for on the trade date, the date the order to buy or sell is executed. Dividend income and other distributions are recorded on the ex-dividend date, except certain dividends and distributions from foreign securities which are recorded as soon as the Fund is informed after the ex-dividend date. PURCHASE OF SHARES The following information supplements that set forth in each Prospectus under the heading "Purchase and Redemption of Shares - How To Buy Shares." General Shares of each Fund will be offered on a continuous basis at a price equal to their net asset value plus an initial sales charge at the time of purchase (the "front-end sales charge alternative"), with a contingent deferred sales charge (the deferred sales charge alternative"), or without any front-end sales charge, but with a contingent deferred sales charge imposed only during the first year after purchase (the "level-load alternative"), as described below. Class Y shares which, as described below, are not offered to the general public, are offered without any front-end or contingent sales charges. Shares of each Fund are offered on a continuous basis through (i) investment dealers that are members of the National Association of Securities Dealers, Inc. and have entered into selected dealer agreements with the Distributor ("selected dealers"), (ii) depository institutions and other financial intermediaries or their affiliates, that have entered into selected agent agreements with the Distributor ("selected agents"), or (iii) the Distributor. The minimum for initial investments is $1,000; there is no minimum for subsequent investments. The subscriber may use the Share Purchase Application available from the Distributor for his or her initial investment. Sales personnel of selected dealers and agents distributing a Fund's shares may receive differing compensation for selling Class A, Class B or Class C shares. Investors may purchase shares of a Fund in the United States either through selected dealers or agents or directly through the Distributor. A Fund reserves the right to suspend the sale of its shares to the public in response to conditions in the securities markets or for other reasons. Each Fund will accept unconditional orders for its shares to be executed at the public offering price equal to the net asset value next determined (plus for Class A shares, the applicable sales charges), as described below. Orders received by the Distributor prior to the close of regular trading on the Exchange on each day the Exchange is open for trading are priced at the net asset value computed as of the close of regular trading on the Exchange on that day (plus for Class A shares the sales charges). In the case of orders for purchase of shares placed through selected dealers or agents, the applicable public offering price will be the net asset value as so determined, but only if the selected dealer or agent receives the order prior to the close of regular trading on the Exchange and transmits it to the Distributor prior to its close of business that same day (normally 5:00 p.m. Eastern time). The selected dealer or agent is responsible for transmitting such orders by 5:00 p.m. If the selected dealer or agent fails to do so, the investor's right to that day's closing price must be settled between the investor and the selected dealer or agent. If the selected dealer or agent receives the order after the close of regular trading on the Exchange, the price will be based on the net asset value determined as of the close of regular trading on the Exchange on the next day it is open for trading. Following the initial purchase of shares of a Fund, a shareholder may place orders to purchase additional shares by telephone if the shareholder has completed the appropriate portion of the Share Purchase Application. Payment for shares purchased by telephone can be made only by Electronic Funds Transfer from a bank account maintained by the shareholder at a bank that is a member of the National Automated Clearing House Association ("ACH"). If a shareholder's telephone purchase request is received before 3:00 p.m. New York time on a 33
485APOS62nd "Page" of 81TOC1stPreviousNextBottomJust 62nd
Fund business day, the order to purchase shares is automatically placed the same Fund business day for non-money market funds, and two days following the day the order is received for money market funds, and the applicable public offering price will be the public offering price determined as of the close of business on such business day. Full and fractional shares are credited to a subscriber's account in the amount of his or her subscription. As a convenience to the subscriber, and to avoid unnecessary expense to a Fund, stock certificates representing Class Y shares of a Fund are not issued except upon written request to the Fund by the shareholder or his or her authorized selected dealer or agent. This facilitates later redemption and relieves the shareholder of the responsibility for and inconvenience of lost or stolen certificates. No certificates are issued for fractional shares, although such shares remain in the shareholder's account on the records of a Fund, or for Class A, B or C shares of any Fund. Alternative Purchase Arrangements Each Fund issues four classes of shares: (i) Class A shares, which are sold to investors choosing the front-end sales charge alternative; (ii) Class B shares, which are sold to investors choosing the deferred sales charge alternative; (iii) Class C shares, which are sold to investors choosing the level-load sales charge alternative; and (iv) Class Y shares, which are offered only to (a) persons who at or prior to December 30, 1994 owned shares in a mutual fund advised by Evergreen Asset, (b) certain investment advisory clients of the Advisers and their affiliates, and (c) institutional investors. The four classes of shares each represent an interest in the same portfolio of investments of the Fund, have the same rights and are identical in all respects, except that (I) only Class A, Class B and Class C shares are subject to a Rule 12b-1 distribution fee, (II) Class B and Class C shares of Balanced, Utility and Value are subject to a shareholder service fee, (III) Class A shares bear the expense of the front-end sales charge and Class B and Class C shares bear the expense of the deferred sales charge, (IV) Class B shares and Class C shares each bear the expense of a higher Rule 12b-1 distribution services fee and shareholder service fee than Class A shares and, in the case of Class B shares, higher transfer agency costs, (V) with the exception of Class Y shares, each Class of each Fund has exclusive voting rights with respect to provisions of the Rule 12b-1 Plan pursuant to which its distribution services (and, to the extent applicable, shareholder service) fee is paid which relates to a specific Class and other matters for which separate Class voting is appropriate under applicable law, provided that, if the Fund submits to a simultaneous vote of Class A, Class B and Class C shareholders an amendment to the Rule 12b-1 Plan that would materially increase the amount to be paid thereunder with respect to the Class A shares, the Class A shareholders and the Class B and Class C shareholders will vote separately by Class, and (VI) only the Class B shares are subject to a conversion feature. Each Class has different exchange privileges and certain different shareholder service options available. The alternative purchase arrangements permit an investor to choose the method of purchasing shares that is most beneficial given the amount of the purchase, the length of time the investor expects to hold the shares, and other circumstances. Investors should consider whether, during the anticipated life of their investment in the Fund, the accumulated distribution services (and, to the extent applicable, shareholder service) fee and contingent deferred sales charges on Class B shares prior to conversion, or the accumulated distribution services (and, to the extent applicable, shareholder service) fee on Class C shares, would be less than the front-end sales charge and accumulated distribution services fee on Class A shares purchased at the same time, and to what extent such differential would be offset by the higher return of Class A shares. Class B and Class C shares will normally not be suitable for the investor who qualifies to purchase Class A shares at the lowest applicable sales charge. For this reason, the Distributor will reject any order (except orders for Class B shares from certain retirement plans) for more than $2,500,000 for Class B or Class C shares. Class A shares are subject to a lower distribution services fee and no shareholder service fee and, accordingly, pay correspondingly higher dividends per share than Class B shares or Class C shares. However, because front-end sales charges are deducted at the time of purchase, investors purchasing Class A shares would not have all their funds invested initially and, therefore, would initially own fewer shares. Investors not qualifying for reduced front-end sales charges who expect to maintain their investment for an extended period of time might consider purchasing Class A shares because the accumulated continuing distribution (and, to the extent applicable, shareholder service) charges on Class B shares or Class C shares may exceed the front-end sales charge on Class A 34
485APOS63rd "Page" of 81TOC1stPreviousNextBottomJust 63rd
shares during the life of the investment. Again, however, such investors must weigh this consideration against the fact that, because of such front-end sales charges, not all their funds will be invested initially. Other investors might determine, however, that it would be more advantageous to purchase Class B shares or Class C shares in order to have all their funds invested initially, although remaining subject to higher continuing distribution services (and, to the extent applicable, shareholder service) fees and, in the case of Class B shares, being subject to a contingent deferred sales charge for a seven-year period. For example, based on current fees and expenses, an investor subject to the 4.75% front-end sales charge would have to hold his or her investment approximately seven years for the Class B and Class C distribution services (and, to the extent applicable, shareholders service) fees, to exceed the front-end sales charge plus the accumulated distribution services fee of Class A shares. In this example, an investor intending to maintain his or her investment for a longer period might consider purchasing Class A shares. This example does not take into account the time value of money, which further reduces the impact of the Class B and Class C distribution services (and, to the extent applicable, shareholder service) fees on the investment, fluctuations in net asset value or the effect of different performance assumptions. Those investors who prefer to have all of their funds invested initially but may not wish to retain Fund shares for the seven year period during which Class B shares are subject to a contingent deferred sales charge may find it more advantageous to purchase Class C shares. With respect to each Fund, the Trustees have determined that currently no conflict of interest exists between or among the Class A, Class B, Class C and Class Y shares. On an ongoing basis, the Trustees, pursuant to their fiduciary duties under the 1940 Act and state laws, will seek to ensure that no such conflict arises. Front-end Sales Charge Alternative--Class A Shares The public offering price of Class A shares for purchasers choosing the front-end sales charge alternative is the net asset value plus a sales charge as set forth in the Prospectus for each Fund. Shares issued pursuant to the automatic reinvestment of income dividends or capital gains distributions are not subject to any sales charges. The Fund receives the entire net asset value of its Class A shares sold to investors. The Distributor's commission is the sales charge set forth in the Prospectus for each Fund, less any applicable discount or commission "reallowed" to selected dealers and agents. The Distributor will reallow discounts to selected dealers and agents in the amounts indicated in the table in the Prospectus. In this regard, the Distributor may elect to reallow the entire sales charge to selected dealers and agents for all sales with respect to which orders are placed with the Distributor. Set forth below is an example of the method of computing the offering price of the Class A shares of each Fund. The example assumes a purchase of Class A shares of a Fund aggregating less than $100,000 subject to the schedule of sales charges set forth in the Prospectus at a price based upon the net asset value of Class A shares of each Fund at the end of each Fund's latest fiscal year. [Download Table] Net Per Share Asset Sales Value Charge Date Balanced $11.17 $.56 12/31/94 Growth and 35
485APOS64th "Page" of 81TOC1stPreviousNextBottomJust 64th
Income $14.52 $.72 12/31/94 $15.24 Total Return $17.28 $.86 1/31/95 $18.14 American Retirement $10.67 $.53 12/31/94 $11.20 Small Cap $9.70 $.48 12/31/94 $10.18 Offering Net Per Share Offering Price Asset Sales Price Per Per Share Value Charge Date Share Foundation $12.27 $.61 12/31/94 $12.88 Tax Strategic $10.27 $.51 12/31/94 $10.78 Utility $ 9.00 $.45 12/31/94 $ 9.45 $11.73 Value $16.62 $.83 12/31/94 $17.45 Prior to January 3, 1995, shares of the Funds other than Balanced, Utility and Value were offered exclusively on a no-load basis and, accordingly, no underwriting commissions were paid in respect of sales of shares of the Funds or retained by the Distributor. In addition, since Class B and Class C shares were not offered prior to January 3, 1995, contingent deferred sales charges have been paid to the distributor with respect to Class B or Class C shares only since January 3, 1995. With respect to Balanced, Utility and Value for the periods indicated, the following commissions were paid to and amounts were retained by Federated Securities Corp., which, prior to July 8, 1995, was the principal underwriter of portfolios of Evergreen Investment Trust: Year Ended Year Ended Year Ended 12/31/94 12/31/93 12/31/92 BALANCED: Commissions Received $605,000 $283,000 $360,000 Commissions Retained 12,000 42,000 55,000 VALUE: Commissions Received $1,003,000 $392,000 $713,000 Commissions Retained 36,000 59,000 107,000 Period From January 4, 1994 UTILITY: to December 31, 1994 Commissions Received $243,000 Commissions Retained 10,000 With respect to Total Return for the period indicated, the following commissions were paid to and amounts were retained by Evergreen Funds Distributor Inc: Period from January 3, 1995 TOTAL RETURN to January 31, 1995 Commissions Received Commissions Retained Investors choosing the front-end sales charge alternative may under certain circumstances be entitled to pay reduced sales charges. The circumstances under which such investors may pay reduced sales charges are described below. Combined Purchase Privilege. Certain persons may qualify for the sales charge reductions by combining purchases of shares of one or more Evergreen mutual funds other than the money market funds into a single "purchase", if the resulting "purchase" totals at least $100,000. The term "purchase" refers to: (i) a single purchase by an individual, or to concurrent purchases, which in the aggregate are at least equal to the prescribed amounts, by an individual, his or her spouse and their children under the age of 21 years purchasing shares for his, her or their own account(s); (ii) a single purchase by a trustee or other fiduciary purchasing shares for a single trust, estate or single fiduciary account although more than one beneficiary is involved; or (iii) a single purchase for the employee benefit plans of a single employer. The term "purchase" also includes purchases by any "company", as the term is defined in the 1940 Act, but does not include purchases by any such company which has not been in existence for at least six months or which has no purpose other than the purchase of shares of a Fund or shares of other registered investment companies at a discount. The term "purchase" does not include purchases by any group of individuals whose sole organizational nexus is that the participants therein are 36
485APOS65th "Page" of 81TOC1stPreviousNextBottomJust 65th
credit card holders of a company, policy holders of an insurance company, customers of either a bank or broker-dealer or clients of an investment adviser. A "purchase" may also include shares, purchased at the same time through a single selected dealer or agent, of any Evergreen mutual fund. Currently, the Evergreen mutual funds include: Evergreen Fund Evergreen Global Real Estate Equity Fund Evergreen U.S. Real Estate Equity Fund The Evergreen Limited Market Fund, Inc. Evergreen Growth and Income Fund Evergreen Total Return Fund Evergreen American Retirement Fund Evergreen Small Cap Equity Income Fund Evergreen Tax Strategic Foundation Fund Evergreen Short-Intermediate Municipal Fund Evergreen Short-Intermediate Municipal Fund-CA Evergreen Tax Exempt Money Market Fund Evergreen Money Market Fund Evergreen U.S. Government Fund* Evergreen Foundation Fund Evergreen Florida High Income Fund Evergreen Aggressive Growth Fund Evergreen Balanced Fund* Evergreen Utility Fund* Evergreen Value Fund* Evergreen Fixed Income Fund* Evergreen Managed Bond Fund* Evergreen Emerging Markets Growth Fund* Evergreen International Equity Fund* Evergreen Treasury Money Market Fund* Evergreen Florida Municipal Bond Fund* Evergreen Georgia Municipal Bond Fund* Evergreen North Carolina Municipal Bond Fund* Evergreen South Carolina Municipal Bond Fund* Evergreen Virginia Municipal Bond Fund* Evergreen High Grade Tax Free Fund* * Prior to July 7, 1995, each Fund was named "First Union" instead of "Evergreen." Prospectuses for the Evergreen Mutual Funds may be obtained without charge by contacting the Distributor or the Advisers at the address or telephone number shown on the front cover of this Statement of Additional Information. Cumulative Quantity Discount (Right of Accumulation). An investor's purchase of additional Class A shares of a Fund may qualify for a Cumulative Quantity Discount. The applicable sales charge will be based on the total of: (i) the investor's current purchase; (ii) the net asset value (at the close of business on the previous day) of (a) all Class A, Class B and Class C shares of the Fund held by the investor and (b) all such shares of any other Evergreen Mutual Fund held by the investor; and (iii) the net asset value of all shares described in paragraph (ii) owned by another shareholder eligible to combine his or her purchase with that of the investor into a single "purchase" (see above). For example, if an investor owned Class A, B or C shares of an Evergreen mutual fund worth $200,000 at their then current net asset value and, subsequently, purchased Class A shares of a Fund worth an additional $100,000, the sales charge for the $100,000 purchase would be at the 3.00% rate applicable to a single $300,000 purchase of shares of the Fund, rather than the 3.75% rate. 37
485APOS66th "Page" of 81TOC1stPreviousNextBottomJust 66th
To qualify for the Combined Purchase Privilege or to obtain the Cumulative Quantity Discount on a purchase through a selected dealer or agent, the investor or selected dealer or agent must provide the Distributor with sufficient information to verify that each purchase qualifies for the privilege or discount. Statement of Intention. Class A investors may also obtain the reduced sales charges shown in the Prospectus by means of a written Statement of Intention, which expresses the investor's intention to invest not less than $100,000 within a period of 13 months in Class A shares (or Class A, Class B and/or Class C shares) of the Fund or any other Evergreen mutual fund. Each purchase of shares under a Statement of Intention will be made at the public offering price or prices applicable at the time of such purchase to a single transaction of the dollar amount indicated in the Statement of Intention. At the investor's option, a Statement of Intention may include purchases of Class A, B or C shares of the Fund or any other Evergreen mutual fund made not more than 90 days prior to the date that the investor signs a Statement of Intention; however, the 13-month period during which the Statement of Intention is in effect will begin on the date of the earliest purchase to be included. Investors qualifying for the Combined Purchase Privilege described above may purchase shares of the Evergreen mutual funds under a single Statement of Intention. For example, if at the time an investor signs a Statement of Intention to invest at least $100,000 in Class A shares of the Fund, the investor and the investor's spouse each purchase shares of the Fund worth $20,000 (for a total of $40,000), it will only be necessary to invest a total of $60,000 during the following 13 months in shares of the Fund or any other Evergreen mutual fund, to qualify for the 3.75% sales charge on the total amount being invested (the sales charge applicable to an investment of $100,000). The Statement of Intention is not a binding obligation upon the investor to purchase the full amount indicated. The minimum initial investment under a Statement of Intention is 5% of such amount. Shares purchased with the first 5% of such amount will be held in escrow (while remaining registered in the name of the investor) to secure payment of the higher sales charge applicable to the shares actually purchased if the full amount indicated is not purchased, and such escrowed shares will be involuntarily redeemed to pay the additional sales charge, if necessary. Dividends on escrowed shares, whether paid in cash or reinvested in additional Fund shares, are not subject to escrow. When the full amount indicated has been purchased, the escrow will be released. To the extent that an investor purchases more than the dollar amount indicated on the Statement of Intention and qualifies for a further reduced sales charge, the sales charge will be adjusted for the entire amount purchased at the end of the 13-month period. The difference in sales charge will be used to purchase additional shares of the Fund subject to the rate of sales charge applicable to the actual amount of the aggregate purchases. Investors wishing to enter into a Statement of Intention in conjunction with their initial investment in Class A shares of the Fund should complete the appropriate portion of the Subscription Application found in the Prospectus while current Class A shareholders desiring to do so can obtain a form of Statement of Intention by contacting a Fund at the address or telephone number shown on the cover of this Statement of Additional Information. Investments Through Employee Benefit and Savings Plans. Certain qualified and non-qualified benefit and savings plans may make shares of the Evergreen mutual funds available to their participants. Investments made by such employee benefit plans may be exempt from any applicable front-end sales charges if they meet the criteria set forth in the Prospectus under "Class A Shares-Front End Sales Charge Alternative". The Advisers may provide compensation to organizations providing administrative and recordkeeping services to plans which make shares of the Evergreen mutual funds available to their participants. Reinstatement Privilege. A Class A shareholder who has caused any or all of his or her shares of the Fund to be redeemed or repurchased may reinvest all or any portion of the redemption or repurchase proceeds in Class A shares of the Fund at net asset value without any sales charge, provided that such reinvestment is made within 30 calendar days after the redemption or repurchase date. Shares are sold to a reinvesting shareholder at the net asset value next determined as described above. A reinstatement pursuant to this privilege will not cancel the redemption or repurchase transaction; therefore, any gain or loss so realized will be recognized for Federal tax purposes except that no loss will be recognized to the extent that the proceeds are reinvested in shares of the Fund. The reinstatement 38
485APOS67th "Page" of 81TOC1stPreviousNextBottomJust 67th
privilege may be used by the shareholder only once, irrespective of the number of shares redeemed or repurchased, except that the privilege may be used without limit in connection with transactions whose sole purpose is to transfer a shareholder's interest in the Fund to his or her individual retirement account or other qualified retirement plan account. Investors may exercise the reinstatement privilege by written request sent to the Fund at the address shown on the cover of this Statement of Additional Information. Sales at Net Asset Value. In addition to the categories of investors set forth in the Prospectus, each Fund may sell its Class A shares at net asset value, i.e., without any sales charge, to: (i) certain investment advisory clients of the Advisers or their affiliates; (ii) officers and present or former Trustees of the Trust; present or former trustees of other investment companies managed by the Adviser; present or retired full-time employees of the Adviser; officers, directors and present or retired full-time employees of the Adviser, the Distributor, and their affiliates; officers, directors and present and full-time employees of selected dealers or agents; or the spouse, sibling, direct ancestor or direct descendant (collectively "relatives") of any such person; or any trust, individual retirement account or retirement plan account for the benefit of any such person or relative; or the estate of any such person or relative, if such shares are purchased for investment purposes (such shares may not be resold except to the Fund); (iii) certain employee benefit plans for employees of the Adviser, the Distributor and their affiliates; (iv) persons participating in a fee-based program, sponsored and maintained by a registered broker-dealer and approved by the Distributor, pursuant to which such persons pay an asset-based fee to such broker-dealer, or its affiliate or agent, for service in the nature of investment advisory or administrative services. These provisions are intended to provide additional job-related incentives to persons who serve the Funds or work for companies associated with the Funds and selected dealers and agents of the Funds. Since these persons are in a position to have a basic understanding of the nature of an investment company as well as a general familiarity with the Fund, sales to these persons, as compared to sales in the normal channels of distribution, require substantially less sales effort. Similarly, these provisions extend the privilege of purchasing shares at net asset value to certain classes of institutional investors who, because of their investment sophistication, can be expected to require significantly less than normal sales effort on the part of the Funds and the Distributor. Deferred Sales Charge Alternative--Class B Shares Investors choosing the deferred sales charge alternative purchase Class B shares at the public offering price equal to the net asset value per share of the Class B shares on the date of purchase without the imposition of a sales charge at the time of purchase. The Class B shares are sold without a front-end sales charge so that the full amount of the investor's purchase payment is invested in the Fund initially. Proceeds from the contingent deferred sales charge are paid to the Distributor and are used by the Distributor to defray the expenses of the Distributor related to providing distribution-related services to the Fund in connection with the sale of the Class B shares, such as the payment of compensation to selected dealers and agents for selling Class B shares. The combination of the contingent deferred sales charge and the distribution services fee (and, with respect to Balanced, Utility and Value, the shareholder service fee) enables the Fund to sell the Class B shares without a sales charge being deducted at the time of purchase. The higher distribution services fee (and, with respect to Balanced, Utility and Value, the shareholder service fee) incurred by Class B shares will cause such shares to have a higher expense ratio and to pay lower dividends than those related to Class A shares. Contingent Deferred Sales Charge. Class B shares which are redeemed within seven years of purchase will be subject to a contingent deferred sales charge at the rates set forth in the Prospectus charged as a percentage of the dollar amount subject thereto. The charge will be assessed on an amount equal to the lesser of the cost of the shares being redeemed or their net asset value at the time of redemption. Accordingly, no sales charge will be imposed on increases in net asset value above the initial purchase price. In addition, no contingent deferred sales charge will be assessed on shares derived from reinvestment of dividends or capital gains distributions. The amount of the contingent deferred sales charge, if any, will vary depending on the number of years from the time of payment for the purchase of Class B shares until the time of redemption of such shares. 39
485APOS68th "Page" of 81TOC1stPreviousNextBottomJust 68th
In determining the contingent deferred sales charge applicable to a redemption, it will be assumed, that the redemption is first of any Class A shares or Class C shares in the shareholder's Fund account, second of Class B shares held for over eight years or Class B shares acquired pursuant to reinvestment of dividends or distributions and third of Class B shares held longest during the eight-year period. To illustrate, assume that an investor purchased 100 Class B shares at $10 per share (at a cost of $1,000) and in the second year after purchase, the net asset value per share is $12 and, during such time, the investor has acquired 10 additional Class B shares upon dividend reinvestment. If at such time the investor makes his or her first redemption of 50 Class B shares, 10 Class B shares will not be subject to charge because of dividend reinvestment. With respect to the remaining 40 Class B shares, the charge is applied only to the original cost of $10 per share and not to the increase in net asset value of $2 per share. Therefore, of the $600 of the shares redeemed $400 of the redemption proceeds (40 shares x $10 original purchase price) will be charged at a rate of 4.0% (the applicable rate in the second year after purchase for a contingent deferred sales charge of $16). The contingent deferred sales charge is waived on redemptions of shares (i) following the death or disability, as defined in the Code, of a shareholder, or (ii) to the extent that the redemption represents a minimum required distribution from an individual retirement account or other retirement plan to a shareholder who has attained the age of 70-1/2. Conversion Feature. At the end of the period ending seven years after the end of the calendar month in which the shareholder's purchase order was accepted, Class B shares will automatically convert to Class A shares and will no longer be subject to a higher distribution services fee (and, with respect to Balanced, Utility and Value, the shareholder service fee) imposed on Class B shares. Such conversion will be on the basis of the relative net asset values of the two classes, without the imposition of any sales load, fee or other charge. The purpose of the conversion feature is to reduce the distribution services fee paid by holders of Class B shares that have been outstanding long enough for the Distributor to have been compensated for the expenses associated with the sale of such shares. For purposes of conversion to Class A, Class B shares purchased through the reinvestment of dividends and distributions paid in respect of Class B shares in a shareholder's account will be considered to be held in a separate sub-account. Each time any Class B shares in the shareholder's account (other than those in the sub-account) convert to Class A, an equal pro-rata portion of the Class B shares in the sub-account will also convert to Class A. The conversion of Class B shares to Class A shares is subject to the continuing availability of an opinion of counsel to the effect that (i) the assessment of the higher distribution services fee (and, with respect to Balanced, Utility and Value, shareholder service fee) and transfer agency costs with respect to Class B shares does not result in the dividends or distributions payable with respect to other Classes of a Fund's shares being deemed "preferential dividends" under the Code, and (ii) the conversion of Class B shares to Class A shares does not constitute a taxable event under Federal income tax law. The conversion of Class B shares to Class A shares may be suspended if such an opinion is no longer available at the time such conversion is to occur. In that event, no further conversions of Class B shares would occur, and shares might continue to be subject to the higher distribution services fee for an indefinite period which may extend beyond the period ending eight years after the end of the calendar month in which the shareholder's purchase order was accepted. Level-Load Alternative--Class C Shares Investors choosing the level load sales charge alternative purchase Class C shares at the public offering price equal to the net asset value per share of the Class C shares on the date of purchase without the imposition of a front-end sales charge. However, you will pay a 1.0% contingent deferred sales charge if you redeem shares during the first year after purchase. No charge is imposed in connection with redemptions made more than one year from the date of purchase. Class C shares are sold without a front-end sales charge so that the Fund will receive the full amount of the investor's purchase payment and after the first year without a contingent deferred sales charge so that the investor will receive as proceeds upon redemption the entire net asset value of his or her Class C shares. The Class C distribution services fee (and, with respect to Balanced, Utility and Value, shareholder service fee) 40
485APOS69th "Page" of 81TOC1stPreviousNextBottomJust 69th
enables the Fund to sell Class C shares without either a front-end or contingent deferred sales charge. However, unlike Class B shares, Class C shares do not convert to any other class shares of the Fund. Class C shares incur higher distribution services fees (and, with respect to Balanced, Utility and Value, shareholder service fees) than Class A shares, and will thus have a higher expense ratio and pay correspondingly lower dividends than Class A shares. Class Y Shares Class Y shares are not offered to the general public and are available only to (i) persons who at or prior to December 30, 1994 owned shares in a mutual fund advised by Evergreen Asset, (ii) certain investment advisory clients of the Advisers and their affiliates, and (iii) institutional investors. Class Y shares do not bear any Rule 12b-1 distribution expenses and are not subject to any front-end or contingent deferred sales charges. GENERAL INFORMATION ABOUT THE FUNDS (See also "Other Information - General Information" in each Fund's Prospectus) Capitalization and Organization Each of the Evergreen Growth and Income Fund and Evergreen Total Return Fund is a Massachusetts business trust. The Evergreen American Retirement Fund and Evergreen Small Cap Equity Income Fund are each separate series of The Evergreen American Retirement Trust, a Massachusetts business trust. The Evergreen Foundation Fund and Evergreen Tax Strategic Foundation Fund are each separate series of the Evergreen Foundation Trust, a Massachusetts business trust. The Evergreen Balanced Fund, Evergreen Utility Fund and Evergreen Value Fund, which prior to July 7, 1995 were known as the First Union Balanced Portfolio, First Union Utility Portfolio and First Union Value Portfolio, respectively, are each separate series of Evergreen Investment Trust, a Massachusetts business trust. On July 7, 1995, First Union Funds changed its name to Evergreen Investment Trust. On December 14, 1992, The Salem Funds changed its name to First Union Funds. The above-named Trusts are individually referred to in this Statement of Additional Information as the "Trust" and collectively as the "Trusts." Each Trust is governed by a board of trustees. Unless otherwise stated, references to the "Board of Trustees" or "Trustees" in this Statement of Additional Information refer to the Trustees of all the Trusts. Total Return and Growth and Income may issue an unlimited number of shares of beneficial interest with a $0.001 par value. American Retirement, Small Cap, Foundation and Tax Strategic may issue an unlimited number of shares of beneficial interest with a $0.0001 par value. Balanced, Value and Utility may issue an unlimited number of shares of beneficial interest without par value. All shares of these Funds have equal rights and privileges. Each share is entitled to one vote, to participate equally in dividends and distributions declared by the Funds and on liquidation to their proportionate share of the assets remaining after satisfaction of outstanding liabilities. Shares of these Funds are fully paid, nonassessable and fully transferable when issued and have no pre-emptive, conversion or exchange rights. Fractional shares have proportionally the same rights, including voting rights, as are provided for a full share. Under each Trust's Declaration of Trust, each Trustee will continue in office until the termination of the Fund or his or her earlier death, incapacity, resignation or removal. Shareholders can remove a Trustee upon a vote of two-thirds of the outstanding shares of beneficial interest of the Trust. Vacancies will be filled by a majority of the remaining Trustees, subject to the 1940 Act. As a result, normally no annual or regular meetings of shareholders will be held, unless otherwise required by the Declaration of Trust of each Trust or the 1940 Act. Shares have noncumulative voting rights, which means that the holders of more than 50% of the shares voting for the election of Trustees can elect 100% of the Trustees if they choose to do so and in such event the holders of the remaining shares so voting will not be able to elect any Trustees. The Trustees of each Trust are authorized to reclassify and issue any unissued shares to any number of additional series without shareholder approval. Accordingly, in the 41
485APOS70th "Page" of 81TOC1stPreviousNextBottomJust 70th
future, for reasons such as the desire to establish one or more additional portfolios of a Trust with different investment objectives, policies or restrictions, additional series of shares may be created by one or more Funds. Any issuance of shares of another series or class would be governed by the 1940 Act and the law of the State of Massachusetts. If shares of another series of a Trust were issued in connection with the creation of additional investment portfolios, each share of the newly created portfolio would normally be entitled to one vote for all purposes. Generally, shares of all portfolios would vote as a single series on matters, such as the election of Trustees, that affected all portfolios in substantially the same manner. As to matters affecting each portfolio differently, such as approval of the Investment Advisory Agreement and changes in investment policy, shares of each portfolio would vote separately. In addition any Fund may, in the future, create additional classes of shares which represent an interest in the same investment portfolio. Except for the different distribution related an other specific costs borne by such additional classes, they will have the same voting and other rights described for the existing classes of each Fund. Procedures for calling a shareholders' meeting for the removal of the Trustees of each Trust, similar to those set forth in Section 16(c) of the 1940 Act will be available to shareholders of each Fund. The rights of the holders of shares of a series of a Fund may not be modified except by the vote of a majority of the outstanding shares of such series. An order has been received from the Securities and Exchange Commission permitting the issuance and sale of multiple classes of shares representing interests in each Fund. In the event a Fund were to issue additional Classes of shares other than those described herein, no further relief from the Securities and Exchange Commission would be required. Distributor Evergreen Funds Distributor, Inc. (the "Distributor"), 230 Park Avenue, New York, New York 10169, serves as each Fund's principal underwriter, and as such may solicit orders from the public to purchase shares of any Fund. The Distributor is not obligated to sell any specific amount of shares and will purchase shares for resale only against orders for shares. Under the Agreement between the Fund and the Distributor, the Fund has agreed to indemnify the Distributor, in the absence of its willful misfeasance, bad faith, gross negligence or reckless disregard of its obligations thereunder, against certain civil liabilities, including liabilities under the Securities Act of 1933, as amended. Counsel Sullivan & Worcester, Washington, D.C., serves as counsel to the Funds. Independent Auditors Ernst & Young LLP has been selected to be the independent auditors of Total Return, Growth and Income, American Retirement and Small Cap. Price Waterhouse LLP has been selected to be the independent auditors of Foundation and Tax Strategic. KPMG Peat Marwick LLP has been selected to be the independent auditors of Balanced, Utility and Value. PERFORMANCE INFORMATION Total Return From time to time a Fund may advertise its "total return." Computed separately for each class, the Fund's "total return" is its average annual compounded total return for recent one, five, and ten-year periods (or the period since the Fund's inception). The Fund's total return for such a period is computed by finding, through the use of a formula prescribed by the Securities and Exchange Commission, the average annual compounded rate of return over the period that would equate an assumed initial amount invested to the value of such investment at the end of the period. For purposes of computing total return, income dividends and capital gains distributions paid on shares of the Fund are assumed to have been reinvested when paid and the maximum sales charge applicable to purchases of 42
485APOS71st "Page" of 81TOC1stPreviousNextBottomJust 71st
Fund shares is assumed to have been paid. The Fund will include performance data for Class A, Class B, Class C and Class Y shares in any advertisement or information including performance data of the Fund. With respect to Total Return, Growth and Income, American Retirement, Small Cap, Foundation and Tax Strategic, the shares of each Fund outstanding prior to January 3, 1995 have been reclassified as Class Y shares. The average annual compounded total return for each Class of shares offered by the Funds for the most recently completed one, five and ten year fiscal periods is set forth in the table below. TOTAL RETURN 1 Year 5 Years 10 Years Ended Ended Ended 1/31/95 1/31/95 1/31/95 Class A -9.79% 6.34% 9.06% Class B -9.68% 7.08% 9.59% Class C -6.22% 7.36% 9.58% Class Y -5.29% 7.37% 9.59% From GROWTH AND 1 Year 5 Years 10/15/86 INCOME Ended Ended (inception) 12/31/94 12/31/94 to 12/31/94 Class A -3.14% 8.69% 10.53% Class B -3.02% 9.47% 11.19% Class C .75% 9.75% 11.19% Class Y 1.69% 9.75% 11.19% From AMERICAN 1 Year 5 Years 3/14/88 RETIREMENT Ended Ended (inception) 12/31/94 12/31/94 to 12/31/94 Class A -7.47% 6.89% 7.86% Class B -7.46% 7.64% 8.55% Class C -3.78% 7.93% 8.64% Class Y -2.86% 7.93% 8.64% From SMALL CAP 1 Year 10/1/93 Ended (inception) 12/31/94 to 12/31/94 Class A -5.37% -2.41% Class B -5.43% -1.67% Class C -1.61% 1.44% Class Y -0.65% 1.44% FOUNDATION 1 Year From 1/2/90 Ended (inception) 12/31/94 to 12/31/94 Class A -5.82% 13.72% Class B -5.80% 14.60% Class C -2.06% 14.83% Class Y -1.12% 14.83% TAX STRATEGIC 1 Year From 11/02/93 Ended (inception) to 12/31/94 12/31/94 Class A -1.47% 1.74% Class B -1.54% 2.67% Class C 2.44% 6.06% Class Y 3.44% 6.06% BALANCED 1 Year Ended From inception* 12/31/94 to 12/31/94 Class A -7.03% 6.05% Class B -7.85% 0.64% Class C -- -4.53% Class Y -2.15% 8.30% UTILITY From inception** to 12/31/94 43
485APOS72nd "Page" of 81TOC1stPreviousNextBottomJust 72nd
Class A -10.10% Class B -10.93% Class C - 3.20% Class Y - 1.55% VALUE 1 Year 5 Years Ended Ended From inception*** 12/31/94 12/31/94 to 12/31/94 Class A -2.98% 6.71% 11.06% Class B -3.80% -- 3.15% Class C -- -- -4.40% Class Y 2.07% -- 11.06% * Inception date: Class A - June 6, 1991; Class B - January 25, 1993; Class C - September 2, 1994; Class Y - April 1, 1991. ** Inception date: Class A - January 4, 1994; Class B - January 4, 1994; Class C - September 2, 1994; Class Y - February 28, 1994. *** Inception date: Class A - April 12, 1985; Class B - January 25, 1993; Class C - September 2, 1994; Class Y - December 31, 1990. The performance numbers for Growth and Income, American Retirement, Small Cap, Foundation and Tax Strategic for the Class A, Class B and Class C shares are hypothetical numbers based on the performance for Class Y shares as adjusted for any applicable front-end sales charge or contingent deferred sales charge. For Total Return the performance numbers for the Class A, Class B and Class C shares are hypothetical numbers based upon the performance for the Class Y shares as adjusted for any applicable front-end sales charges or contingent deferred sales charge through January 3, 1995 (commencement of class operations) and the actual performance of each class subsequent to January 3, 1995. The performance data calculated prior to January 3, 1995, does not reflect any Rule 12b-1 fees. If such fees were reflected the returns would be lower. A Fund's total return is not fixed and will fluctuate in response to prevailing market conditions or as a function of the type and quality of the securities in a Fund's portfolio and its expenses. Total return information is useful in reviewing a Fund's performance but such information may not provide a basis for comparison with bank deposits or other investments which pay a fixed yield for a stated period of time. An investor's principal invested in a Fund is not fixed and will fluctuate in response to prevailing market conditions. YIELD CALCULATIONS From time to time, a Fund may quote its yield in advertisements or in reports or other communications to shareholders. Yield quotations are expressed in annualized terms and may be quoted on a compounded basis. Yields are computed by dividing the Fund's interest income (as defined in the SEC yield formula) for a given 30-day or one month period, net of expenses, by the average number of shares entitled to receive distributions during the period, dividing this figure by the Fund's net asset value per share at the end of the period and annualizing the result (assuming compounding of income) in order to arrive at an annual percentage rate. The formula for calculating yield is as follows: YIELD = 2[(a-b+1)6-1] cd Where a = Interest earned during the period b = Expenses accrued for the period (net of reimbursements) c = The average daily number of shares outstanding during the period that were entitled to receive dividends d = The maximum offering price per share on the last day of the period Income is calculated for purposes of yield quotations in accordance with standardized methods applicable to all stock and bond funds. Gains and losses generally are excluded from the calculation. Income calculated for purposes of determining a Fund's yield differs from income as determined for other accounting purposes. Because of the 44
485APOS73rd "Page" of 81TOC1stPreviousNextBottomJust 73rd
different accounting methods used, and because of the compounding assumed in yield calculations, the yields quoted for a Fund may differ from the rate of distributions a Fund paid over the same period, or the net investment income reported in a Fund's financial statements. Yield information is useful in reviewing a Fund's performance, but because yields fluctuate, such information cannot necessarily be used to compare an investment in a Fund's shares with bank deposits, savings accounts and similar investment alternatives which often provide an agreed or guaranteed fixed yield for a stated period of time. Shareholders should remember that yield is a function of the kind and quality of the instruments in the Funds' investment portfolios, portfolio maturity, operating expenses and market conditions. It should be recognized that in periods of declining interest rates the yields will tend to be somewhat higher than prevailing market rates, and in periods of rising interest rates the yields will tend to be somewhat lower. Also, when interest rates are falling, the inflow of net new money to a Fund from the continuous sale of its shares will likely be invested in instruments producing lower yields than the balance of the Fund's investments, thereby reducing the current yield of the Fund. In periods of rising interest rates, the opposite can be expected to occur. The yield of each Fund for the thirty-day period ended December 31, 1994 (May 31, 1995 with respect to Tax Strategic, Growth & Income, American Retirement, Small Cap, Total Return and Foundation) for each Class of shares offered by the Funds is set forth in the table below: Total Return Tax Strategic Class A 4.14% Class A 2.59% Class B 3.62% Class B 2.00% Class C 3.62% Class C 1.99% Class Y 4.44% Class Y 2.97% Growth and Income Balanced Class A .69% Class A - 4.36% Class B 0% Class B - 3.82% Class C .01% Class C - 3.82% Class Y .92% Class Y - 4.84% American Retirement Utility Class A 3.24% Class A - 4.67% Class B 2.68% Class B - 4.14% Class C 2.67% Class C - 4.14% Class Y 3.52% Class Y - 5.16% Small Cap Value Class A 3.17% Class A - 3.04% Class B 2.59% Class B - 2.42% Class C 2.68% Class C - 2.42% Class Y 3.57% Class Y - 3.45% Foundation Class A 3.41% Class B 2.90% Class C 2.47% Class Y 3.76% Non-Standardized Performance In addition to the performance information described above, a Fund may provide total return information for designated periods, such as for the most recent six months or most recent twelve months. This total return information is computed as described under "Total Return" above except that no annualization is made. GENERAL 45
485APOS74th "Page" of 81TOC1stPreviousNextBottomJust 74th
From time to time, a Fund may quote its performance in advertising and other types of literature as compared to the performance of the Standard & Poor's 500 Composite Stock Price Index, the Dow Jones Industrial Average, Russell 2000 Index, or any other commonly quoted index of common stock prices. The Standard & Poor's 500 Composite Stock Price Index, the Dow Jones Industrial Average and the Russell 2000 Index are unmanaged indices of selected common stock prices. A Fund's performance may also be compared to those of other mutual funds having similar objectives. This comparative performance would be expressed as a ranking prepared by Lipper Analytical Services, Inc. or similar independent services monitoring mutual fund performance. A Fund's performance will be calculated by assuming, to the extent applicable, reinvestment of all capital gains distributions and income dividends paid. Any such comparisons may be useful to investors who wish to compare a Fund's past performance with that of its competitors. Of course, past performance cannot be a guarantee of future results. Additional Information Any shareholder inquiries may be directed to the shareholder's broker or to each Adviser at the address or telephone number shown on the front cover of this Statement of Additional Information. This Statement of Additional Information does not contain all the information set forth in the Registration Statement filed by the Trusts with the Securities and Exchange Commission under the Securities Act of 1933. Copies of the Registration Statement may be obtained at a reasonable charge from the Securities and Exchange Commission or may be examined, without charge, at the offices of the Securities and Exchange Commission in Washington, D.C. FINANCIAL STATEMENTS Each Fund's financial statements appearing in their most current fiscal year Annual Report to shareholders and the report thereon of the independent auditors appearing therein, namely Ernst & Young, LLP (in the case of Total Return, Growth and Income, American Retirement and Small Cap), Price Waterhouse LLP (in the case of Foundation and Tax Strategic) or KPMG Peat Marwick LLP (in the case of Balanced, Utility and Value) are incorporated by reference in this Statement of Additional Information. The Annual Reports to Shareholders for each Fund, which contain the referenced statements, are available upon request and without charge. 46
485APOS75th "Page" of 81TOC1stPreviousNextBottomJust 75th
APPENDIX A - NOTE, BOND AND COMMERCIAL PAPER RATINGS NOTE RATINGS Moody's Investors Service, Inc.: MIG-1 -- the best quality. MIG-2 -- high quality, with margins of protection ample though not so large as in the preceding group. MIG-3 -- favorable quality, with all security elements accounted for, but lacking the undeniable strength of the preceding grades. Market access for refinancing, in particular, is likely to be less well established. Standard & Poor's Ratings Group, Inc.: SP-1 -- Very strong or strong capacity to pay principal and interest. SP-2 -- Satisfactory capacity to pay principal and interest. BOND RATINGS Moody's Investors Service: Aaa -- judged to be the best quality, carry the smallest degree of investment risk; Aa -- judged to be of high quality by all standards; A -- possess many favorable investment attributes and are to be considered as higher medium grade obligations; Baa -- considered as medium grade obligations which are neither highly protected nor poorly secured. Moody's Investors Service also applies numerical indicators, 1, 2 and 3, to rating categories Aa through Baa. The modifier 1 indicates that the security is in the higher end of its rating category; the modifier 2 indicates a mid-range ranking; and 3 indicates a ranking toward the lower end of the category. Standard & Poor's Ratings Group: AAA -- highest grade obligations, possesses the ultimate degree of protection as to principal and interest; AA -- also qualify as high grade obligations, and in the majority of instances differ from AAA issues only in small degree; A -- regarded as upper medium grade, have considerable investment strength but are not entirely free from adverse effects of changes in economic and trade conditions, interest and principal are regarded as safe; BBB -- regarded as having adequate capacity to pay interest and repay principal but are more susceptible than higher rated obligations to the adverse effects of changes in economic and trade conditions. Standard & Poor's Ratings Group applies indicators "+", no character, and "-" to the above rating categories AA through BBB. The indicators show relative standing within the major rating categories. Duff & Phelps: AAA - highest credit quality, with negligible risk factors; AA -- high credit quality, with strong protection factors and modest risk, which may vary very slightly from time to time because of economic conditions; A -- average credit quality with adequate protection factors, but with greater and more variable risk factors in periods of economic stress. The indicators "+" and "-" to the AA and A categories indicate the relative position of a credit within those rating categories. Fitch Investor Service: AAA -- highest credit quality, with an exceptionally strong ability to pay interest and repay principal; AA -- very high credit quality, with a very strong ability to pay interest and repay principal; A -- high credit quality, considered strong as regards principal and interest protection, but may be more vulnerable to adverse changes in economic conditions; and BBB -- satisfactory credit quality with adequate ability with regard to interest and principal, and likely to be affected by adverse changes in economic conditions and circumstances. The indicators "+" and "-" to the AA, A and BBB categories indicate the relative position of a credit within those rating categories. COMMERCIAL PAPER RATINGS Moody's Investors Service, Inc.: Commercial paper rated "Prime" carries the smallest degree of investment risk. The modifiers 1, 2 and 3 are used to denote relative strength within this highest classification. Standard & Poor's Ratings Group: "A" is the highest commercial paper rating category utilized by Standard & Poor's Ratings Group which uses the numbers 1+, 1, 2 and 3 to denote relative strength within its "A" classification. Duff & Phelps: Duff 1 is the highest commercial paper rating category utilized by Duff & Phelps which uses + or - to denote relative strength within this classification. Duff 2 represents good certainty of timely payment, with minimal risk factors. Duff 3 47
485APOS76th "Page" of 81TOC1stPreviousNextBottomJust 76th
represents satisfactory protection factors, with risk factors larger and subject to more variation. Fitch Investor Service: F-1+ -- denotes exceptionally strong credit quality given to issues regarded as having strongest degree of assurance for timely payment; F-1 -- very strong credit quality, with only slightly less degree of assurance for timely payment than F-1+; F-2 -- good credit quality, carrying a satisfactory degree of assurance for timely payment. *******************************************************************************
485APOS77th "Page" of 81TOC1stPreviousNextBottomJust 77th
THE EVERGREEN TOTAL RETURN FUND PART C. OTHER INFORMATION Item 24. Financial Statements and Exhibits a. Financial Statements Included in Part A of this Registration Statement: Financial Highlights for the fiscal years ended March 31, 1985 through March 31, 1994 and for the ten months ended January 31, 1995 (audited). (Class Y Shares) Financial Highlights for the period January 3, 1995 (commencement of distribution) through January 31, 1995 (audited). (Classes A, B and C Shares) Included in Part B of this Registration Statement:* Statement of Investments as of January 31, 1995 (audited) Statement of Assets and Liabilities as of January 31, 1995 (audited) Statement of Operations for the ten months ended January 31, 1995 Statements of Changes in Net Assets for the fiscal year ended March 31, 1994 and the ten months ended January 31, 1995 (audited) Financial Highlights (Classes A, B, C and Y Shares) Notes to Financial Statements Report of Independent Auditors Statements, schedules and historical information other than those listed above have been omitted since they are either not applicable or are not required or the required information is shown in the financial statements or notes thereto. b. Exhibits Number Description 1(A) Amended and Restated Declaration of Trust** 1(B) Form of Instrument providing for the Establishment and Designation of Classes** 2 By-Laws** 3 None 4 Instruments Defining Rights of Shareholders** 5(A) Investment Advisory Agreement** 5(B) Investment Subadvisory Agreement** 6 Distribution Agreement** 7 None 8 Custodian Agreement*** 9 None 10 None 11 Consent of Ernst & Young, independent auditors 12 None 13 None 14 None 15 Rule 12b-1 Distribution Plans** 16 Performance Calculation 17 Copy of Financial Data Schedules 18 Not applicable 19 Not Applicable Other Exhibits: Performance Schedule -------------------------- * Incorporated by reference to the Annual Report to Shareholders for the fiscal year ended December 31, 1994 which has been previously filed with the Commission and by reference to the Semi-Annual and Annual Reports of Registrant on form NSAR for the aforementioned period. ** Incorporated by reference to Post-Effective Amendment No. 21 to Registrant's registration statement on Form N-1A, File No.2-61391, filed January 3, 1995. *** Incorporated by reference to Post-Effective Amendment No.11 to Registrant's registration statement on Form N-1A, File No.2-61391, filed February 6, 1986.
485APOS78th "Page" of 81TOC1stPreviousNextBottomJust 78th
Item 25. Persons Controlled by or Under Common Control with Registrant None Item 26. Number of Holders of Securities (as of June 15, 1995) (1) (2) Title of Class Number of Record Shareholders Class Y Shares of Beneficial Interest ($0.001 par value) 66,041 Class A Shares of Beneficial Interest ($0.001 par value) 243 Class B Shares of Beneficial Interest ($0.001 par value) 425 Class C Shares of Beneficial Interest ($0.001 par value) 20 Item 27. Indemnification Article XI of the Registrant's By-laws contains the following provisions regarding indemnification of Trustees and officers: SECTION 11.1 Actions Against Trustee or Officer. The Trust shall indemnify any individual who is a present or former Trustee or officer of the Trust and who, by reason of his position as such, was, is, or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than any action or suit by or in the right of the Trust) against expenses, including attorneys' fees, judgments, fines, and amounts paid in settlement, actually and reasonably incurred by him in connection with the claim, action, suit, or proceeding, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Trust, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon the plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Trust, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. SECTION 11.2 Derivative Actions Against Trustees or Officers. The Trust shall indemnify any individual who is a present or former Trustee or officer of the Trust and who, by reason of his position as such, was, is, or is threatened to be made a party to any threatened, pending or completed action or suit by or on behalf of the Trust to obtain a judgment or decree in its favor, against expenses, including attorneys' fees, actually and reasonably incurred by him in connection with the defense or settlement of the action or suit, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Trust, except that no indemnification shall be made in respect of any claim, issue or matter as to which the individual has been adjudged to be liable for negligence or misconduct in the performance of his duty to the Trust, except to the extent that the court in which the action or suit was brought determines upon application that, despite the adjudication of liability but in view of all circumstances of the case, the person is fairly and reasonably entitled to indemnity for those expenses which the court shall deem proper, provided such Trustee or officer is not adjudged to be liable by reason of his wilful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office. SECTION 11.3 Expenses of Successful Defense. To the extent that a Trustee or officer of the Trust has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Section 11.1 or 11.2 or in defense of any claim, issue, or matter therein, he shall be indemnified against expenses, including attorneys' fees, actually and reasonably incurred by him in connection therewith. SECTION 11.4 Required Standard of Conduct. (a) Unless a court orders otherwise, any indemnification under Section 11.1 or 11.2 may be made by the Trust only as authorized in the specific case after a determination that indemnification of the Trustee or officer is proper in the circumstances because he has met the applicable standard of conduct set forth in Section 11.1 or 11.2. The determination shall be made by: (i) the Trustees, by a majority vote of a quorum consisting of Trustees who were not parties to the action, suit or proceeding; or if the required quorum is not obtainable, or if a quorum of disinterested Trustees so directs, (ii) an independent legal counsel in a written opinion. (b) Nothing contained in this Article XI shall be construed to protect any Trustee or officer of the Trust against any liability to the Trust or its Shareholders to which he would otherwise be subject by reason of wilful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of his office (any such conduct being hereinafter called "Disabling Conduct"). No indemnification shall be made pursuant to this Article XI unless: (i) There is a final determination on the merits by a court or other body before whom the action, suit or proceeding was brought that the individual to be indemnified was not liable by reason of Disabling Conduct; or (ii) In the absence of such a judicial determination, there is a reasonable determination, based upon a review of the facts, that such individual was not liable by reason of Disabling Conduct, which determination shall be made by: (A) A majority of a quorum of Trustees who are neither "interested persons" of the Trust, as defined in section 2(a) (19) of the 1940 Act, nor parties to the action, suit or proceeding; or (B) An independent legal counsel in a written opinion. SECTION 11.5 Advance Payments. Notwithstanding any provision of this Article XI, any advance payment of expenses by the Trust to any Trustee or officer of the Trust shall be made only upon the undertaking by or on behalf of such Trustee or officer to repay the advance unless it is ultimately determined that he is entitled to indemnification as above provided, and only if one of the following conditions is met: (a) the Trustee or officer to be indemnified provides a security for his undertaking; or (b) The Trust is insured against losses arising by reason of any lawful advances; or (c) There is a determination, based on a review of readily available facts, that there is reason to believe that the Trustee or officer to be indemnified ultimately will be entitled to indemnification, which determination shall be made by: (i) A majority of a quorum of Trustees who are neither "interested persons" of the Trust, as defined in Section 2(a) (19) of the 1940 Act, nor parties to the action, suit or proceeding; or (ii) An independent legal counsel in a written opinion. SECTION 11.6 Former Trustees and Officers. The indemnification provided by this Article XI shall continue as to an individual who has ceased to be a Trustee or officer of the Trust and inure to the benefit of the legal representatives of such individual and shall not be deemed exclusive of any other rights to which any Trustee, officer, employee or agent of the Trust may be entitled under any agreement, vote of Trustees or otherwise, both as to action in his official capacity and as to action in another capacity while holding office as such; provided, that no Person may satisfy any right of indemnity granted herein or to which he may be otherwise entitled, except out of the Trust Property, and no Shareholder shall be personally liable with respect to any claim for indemnity. SECTION 11.7 Insurance. The Trust may purchase and maintain insurance on behalf of any person who is or was a Trustee, officer, employee, or agent of the Trust, against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such. However, the Trust shall not purchase insurance to indemnify any Trustee or officer against liability for any conduct in respect of which the 1940 Act prohibits the Trust itself from indemnifying him. SECTION 11.8 Other Rights to Indemnification. The indemnification provided for herein shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under any By-Law, agreement, vote of Shareholders or disinterested Trustees or otherwise. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to Trustees, officers and controlling persons of the Registrant pursuant to the foregoing provisions or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a Trustee, officer, or controlling person of the Registrant in connection with the successful defense of any action, suit or proceeding) is asserted by such Trustee, officer or controlling person in connection with the shares being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. Item 28. Business or Other Connections of Investment Adviser (a) For a description of the other business of the investment adviser, see the section entitled "Management of the Funds-Investment Adviser" in Part A. Evergreen Asset Management Corp., the Registrant's investment adviser, and Lieber and Company, the Registrant's sub-adviser also act as such to the Evergreen Trust, The Evergreen Total Return Fund, The Evergreen Limited Market Fund, Inc., Evergreen Growth and Income Fund, The Evergreen Money Market Trust, The Evergreen American Retirement Trust, The Evergreen Municipal Trust, Evergreen Real Estate Equity Trust and Evergreen Fixed-Income Trust, all registered investment companies. Stephen A. Lieber, Theodore J. Israel, Jr., Nola Maddox Falcone, George R. Gaspari and Joseph J. McBrien, officers of the Adviser and Lieber and Company, were, prior to June 30, 1994 officers and/or directors or trustees of the Registrant and the other funds for which the Adviser acts as investment adviser. Evergreen Asset Management Corp. and Lieber and Company are wholly-owned subsidiaries of First Union National Bank Of North Carolina. The Trustees and principal executive officers of First Union National Bank of North Carolina, parent of the Registrants's investment adviser and sub-adviser, and the Directors of First Union National Bank of North Carolina, are set forth in the following tables: FIRST UNION NATIONAL BANK OF NORTH CAROLINA BOARD OF DIRECTORS Ben Mayo Boddie Raymond A. Bryan, Jr. Chairman & CEO Chairman & CEO Boddie-Noell Enterprises, Inc. T.A. Loving Company P.O. Box 1908 P.O. Drawer 919 Rocky Mount, NC 27802 Goldsboro, NC 27530 John F.A.V. Cecil John W. Copeland President President Biltmore Dairy Farms, Inc. Ruddick Corporation P.O. Box 5355 2000 Two First Union Center Asheville, NC 28813 Charlotte, NC 28282 John Crosland, Jr. J. William Disher Chairman of the Board Chairman & President The Crosland Group, Inc. Lance Incorporated 135 Scaleybark Road P.O. Box 32368 Charlotte, NC 28209 Charlotte, NC 28232 Frank H. Dunn Malcolm E. Everett, III Chairman and CEO President First Union National Bank First Union National Bank of North Carolina of North Carolina One First Union Center 310 S. Tryon Street Charlotte, NC 28288-0006 Charlotte, NC 28288-0156 James F. Goodmon Shelton Gorelick President & Chief President Executive Officer SGIC, Inc. Capitol Broadcasting 741 Kenilworth Ave., Suite 200 Company, Inc. Charlotte, NC 28204 2619 Western Blvd. Raleigh, NC 27605 Charles L. Grace James E. S. Hynes President Chairman Cummins Atlantic, Inc. Hynes Sales Company, Inc. P.O. Box 240729 P.O. Box 220948 Charlotte, NC 28224-0729 Charlotte, NC 28222 Daniel W. Mathis Earl N. Phillips, Jr. Vice Chairman President First Union National Bank First Factors Corporation of North Carolina P.O. Box 2730 One First Union Center High Point, NC 27261 Charlotte, NC 28288-0009 J. Gregory Poole, Jr. John P. Rostan, III Chairman & President Senior Vice President Gregory Poole Equipment Company Waldensian Bakeries, Inc. P.O. Box 469 P.O. Box 220 Raleigh, NC 27602 Valdese, NC 28690 Nelson Schwab, III Charles M. Shelton, Sr. Chairman & CEO Chairman & CEO Paramount Parks The Shelton Companies, Inc 8720 Red Oak Boulevard, Suite 315 3600 One First Union Center Charlotte, NC 28217 Charlotte, NC 28202 George Shinn Harley F. Shuford, Jr. Owner and Chairman President and CEO Shinn Enterprises, Inc. Shuford Industries One Hive Drive P.O. Box 608 Charlotte, NC 28217 Hickory, NC 28603 FIRST UNION NATIONAL BANK OF NORTH CAROLINA EXECUTIVE OFFICERS James Maynor, President, First Union Mortgage Corporation; Austin A. Adams, Executive Vice President; Howard L. Arthur, Senior Vice President; Robert T. Atwood, Executive Vice President and Chief Financial Officer; Marion A. Cowell, Jr., Executive Vice President, Secretary and General Counsel; Edward E. Crutchfield, Jr., Chairman, CEO, First Union Corporation; Frank H. Dunn, Jr., Chairman and CEO; Malcolm E. Everett, III, President; John R. Georgius, President, First Union Corporation; James Hatch, Senior Vice President and Corporate Controller; Don R. Johnson, Executive Vice President; Mark Mahoney, Senior Vice President; Barbara K. Massa, Senior Vice President; Daniel W. Mathis, Vice Chairman; H. Burt Melton, Executive Vice President; Malcolm T. Murray, Jr., Executive Vice President; Alvin T. Sale, Executive Vice President; Louis A. Schmitt, Jr., Executive Vice President; Ken Stancliff, Senior Vice President and Corporate Treasurer; Richard K. Wagoner, Executive Vice President and General Fund Officer. All of the Executive Officers are located at the following address: First Union National Bank of North Carolina, One First Union Center, Charlotte, NC 28288. Item 29. Principal Underwriters Evergreen Funds Distributor, Inc. The Director and principal executive officers are: Director Michael C. Petrycki Officers Robert A. Hering President Michael C. Petrycki Vice President Gordon Forrester Vice President Lawrence Wagner VP, Chief Financial Officer Steven D. Blecher VP, Treasurer, Secretary Elizabeth Q. Solazzo Assistant Secretary Thalia M. Cody Assistant Secretary Evergreen Funds Distributor, Inc. acts as Distributor for the following registered investment companies or separate series thereof: Evergreen Trust Evergreen Fund Evergreen Aggressive Growth Fund The Evergreen Real Estate Equity Trust: Evergreen Global Real Estate Equity Fund Evergreen U.S. Real Estate Equity Fund The Evergreen Limited Market Fund, Inc. Evergreen Growth and Income Fund The Evergreen Total Return Fund The Evergreen American Retirement Trust: The Evergreen American Retirement Fund Evergreen Small Cap Equity Income Fund The Evergreen Foundation Trust: Evergreen Foundation Fund Evergreen Tax Strategic Foundation Fund The Evergreen Municipal Trust: Evergreen Short-Intermediate Municipal Fund Evergreen Short-Intermediate Municipal Fund-CA Evergreen Florida High Income Municipal Bond Fund Evergreen Tax Exempt Money Market Fund The Evergreen Money Market Fund Evergreen Investment Trust Evergreen Emerging Markets Growth Fund Evergreen International Equity Fund Evergreen Balanced Fund Evergreen Value Fund Evergreen Utility Fund Evergreen Fixed Income Fund Evergreen Managed Bond Fund Evergreen U.S. Government Fund Evergreen Florida Municipal Bond Fund Evergreen Georgia Municipal Bond Fund Evergreen North Carolina Municipal Bond Fund Evergreen South Carolina Municipal Bond Fund Evergreen Virginia Municipal Bond Fund Evergreen High Grade Tax Free Fund Evergreen Treasury Money Market Fund Item 30. Location of Accounts and Records Accounts, books and other documents required to be maintained by Section 31(a) of the Investment Company Act of 1940 and the Rules promulgated thereunder are maintained at the offices of the Registrant's Custodian, State Street Bank and Trust Company, 2 Heritage Drive, North Quincy, Massachusetts 02171 or the offices of Evergreen Asset Management Corp., 2500 Westchester Avenue, Purchase, New York 10577. Item 31. Management Services Not Applicable. Item 32. Undertakings Not Applicable.
485APOS79th "Page" of 81TOC1stPreviousNextBottomJust 79th
SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, and the Investment Company Act of 1940, as amended, the Registrant certifies that it has duly caused this Post-Effective Amendment No. 23 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in The City of New York, State of New York, on the 30th day of June, 1995. Evergreen Total Return Fund by /s/John J. Pileggi ----------------------------- John J. Pileggi, President Pursuant to the requirements of the Securities Act of 1933, as amended, this Post-Effective Amendment No. 23 to the Registration Statement has been signed below by the following persons in the capacities and on the dates indicated. Signatures Title Date ----------- ----- ---- /s/ John J. Pileggi ------------------------------- President and June 30, 1995 John J. Pileggi Treasurer /s/ Laurence B. Ashkin ------------------------------- Trustee June 30, 1995 Laurence B. Ashkin /s/ Foster Bam ------------------------------- Trustee June 30, 1995 Foster Bam /s/ James S. Howell ------------------------------- Trustee June 30, 1995 James S. Howell /s/ Robert J. Jeffries ------------------------------- Trustee June 30, 1995 Robert J. Jeffries /s/ Gerald M. McDonnell ------------------------------- Trustee June 30, 1995 Gerald M. McDonnell /s/ Thomas L. McVerry ------------------------------- Trustee June 30, 1995 Thomas L. McVerry /s/ William Walt Pettit ------------------------------- Trustee June 30, 1995 William Walt Pettit /s/ Russell A. Salton, III, M.D ------------------------------- Trustee June 30, 1995 Russell A. Salton, III, M.D /s/ Michael S. Scofield ------------------------------- Trustee June 30, 1995 Michael S. Scofield
485APOS80th "Page" of 81TOC1stPreviousNextBottomJust 80th
INDEX TO EXHIBITS Exhibit Number Description ------- ------------ 11 Consent of Independent Accountants 16 Performance Quotation Computation 17 Financial Data Schedules Other Exhibit Performance Schedule
485APOSLast "Page" of 81TOC1stPreviousNextBottomJust 81st

Dates Referenced Herein   and   Documents Incorporated by Reference

Referenced-On Page
This ‘485APOS’ Filing    Date First  Last      Other Filings
6/30/9653
7/8/955564
7/7/95269
Filed on:7/6/95
7/1/9554
6/30/9579
6/15/954478
5/31/9573
4/20/9553
3/31/95145424F-2NT
3/28/951
1/31/9517724F-2NT,  N-30D/A,  NSAR-BT
1/3/951377
12/31/94677
12/30/941469
12/13/9455
9/21/941427
9/2/945672
6/30/941478
6/23/945253
4/1/944458
3/31/941477NSAR-B
2/28/9472
1/4/945272
12/31/93658
11/2/935258
10/1/935258
9/2/931024
3/31/931429
1/25/9372
12/31/92858
12/14/9269
5/1/9253
4/30/9253
1/1/9253
 List all Filings 
Top
Filing Submission 0000275346-95-000009   –   Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

Copyright © 2018 Fran Finnegan & Company.  All Rights Reserved.
AboutPrivacyRedactionsHelp — Sun., Feb. 18, 10:40:54.1pm ET