-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BqwAkyHCV8sTvOOa/Pe8Ga6v8dyWhDzTw+dqIK1ZqbyYpfGlOrYoirrUoPOYRvXv isDwiyckMLU30wV9jbvmMg== 0000842436-96-000008.txt : 19960715 0000842436-96-000008.hdr.sgml : 19960715 ACCESSION NUMBER: 0000842436-96-000008 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960430 FILED AS OF DATE: 19960712 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: EVERGREEN INVESTMENT TRUST CENTRAL INDEX KEY: 0000757440 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 046599663 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-04154 FILM NUMBER: 96593858 BUSINESS ADDRESS: STREET 1: 2500 WESTCHESTER AVE CITY: PURCHASE STATE: NY ZIP: 10577 BUSINESS PHONE: 9146412305 MAIL ADDRESS: STREET 1: 2500 WESTCHESTER AVE CITY: PURCHASE STATE: NY ZIP: 10577 FORMER COMPANY: FORMER CONFORMED NAME: FIRST UNION FUNDS/ DATE OF NAME CHANGE: 19940628 FORMER COMPANY: FORMER CONFORMED NAME: FIRST UNION HIGH GRADE TAX FREE PORT DATE OF NAME CHANGE: 19940519 FORMER COMPANY: FORMER CONFORMED NAME: FIRST UNION FUNDS DATE OF NAME CHANGE: 19921230 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EVERGREEN GLOBAL REAL ESTATE EQUITY TRUST CENTRAL INDEX KEY: 0000842436 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 136915301 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-05684 FILM NUMBER: 96593859 BUSINESS ADDRESS: STREET 1: 2500 WESTCHESTER CITY: PURCHASE STATE: NY ZIP: 10577 BUSINESS PHONE: 9146942020 MAIL ADDRESS: STREET 1: 2500 WESTCHESTER AVENUE CITY: PURCHASE STATE: NY ZIP: 10577 N-30D 1 EVERGREEN INTERNATIONAL GLOBAL GROWTH FUNDS EVERGREEN ASSET MANAGEMENT 2500 WESTCHESTER AVENUE PURCHASE, N.Y. 10577 July 12, 1996 Securities and Exchange Commission Judiciary Plaza 450 Fifth Street, N.W. Washington, D.C. Attention: File Room Re: EVERGREEEN INVESTMENT TRUST File No. 811-4154 EVERGREEN EQUITY TRUST File No. 811-5684 Commissionioners: Please be advised that the final Semi-Annual Reports for the above referenced Trusts which include Evergreen Global Real Estate Equity Fund, Evergreen Global Leaders Fund, Evergreen Emerging Markets Growth Fund, and Evergreen International Equity Fund were submitted to your office on July 12, 1996, via electronic transmission (Edgar). Any questions or comments about this documemt should be directed to the undersigned at (914) 641-2206. Very Truly Yours, /s/ James P. Wallin James P. Wallin Vice President and Assistant General Counsel EVERGREEN INTERNATIONAL/GLOBAL GROWTH FUNDS TABLE OF CONTENTS Economic Overview......................................................... 1 (Photo of money EMERGING MARKETS A Report From Your Portfolio Manager...................................... 3 appears here) GROWTH FUND Statement of Investments.................................................. 4 Industry Diversification.................................................. 6 Statement of Assets and Liabilities....................................... 7 Statement of Operations................................................... 8 Statement of Changes in Net Assets........................................ 9 Financial Highlights...................................................... 10
(Global Leaders Fund GLOBAL LEADERS A Report From Your Portfolio Managers..................................... 12 Logo appears here) FUND Statement of Investments.................................................. 15 Industry Diversification.................................................. 17 Statement of Assets and Liabilities....................................... 18 Statement of Operations................................................... 19 Statement of Changes in Net Assets........................................ 20 Financial Highlights...................................................... 21
(Photo of Globe GLOBAL REAL A Report From Your Portfolio Manager...................................... 22 appears here) ESTATE EQUITY Statement of Investments.................................................. 26 FUND Statement of Assets and Liabilities....................................... 28 Statement of Operations................................................... 29 Statement of Changes...................................................... 30 Financial Highlights...................................................... 31
(Photo of flags INTERNATIONAL A Report From Your Portfolio Manager...................................... 33 appears here) EQUITY FUND Statement of Investments.................................................. 36 Industry Diversification.................................................. 42 Statement of Assets and Liabilities....................................... 43 Statement of Operations................................................... 44 Statement of Changes in Net Assets........................................ 45 Financial Highlights...................................................... 46
Combined Notes to Financial Statements.................................... 48 Trustees and Officers...................................... Inside Back Cover
EVERGREEN INTERNATIONAL/GLOBAL GROWTH FUNDS ECONOMIC OVERVIEW BY EVERGREEN ASSET MANAGEMENT CHAIRMAN, STEPHEN A. LIEBER It is vital for investors to emphasize an (Photo of Stephen A. international perspective in this ever broadening, Lieber appears here) highly competitive world economy. Issues of currency stability, and the United States export and import positions, will be of increased importance to investors this year. In contrast with 1995, this year the dollar has risen in value, particularly against the Japanese yen. We believe it is relevant that, in 1993 through 1995, Japan suffered through its deepest recession of the post-war years, as its currency was appreciating versus the dollar and other currencies. This yen rise limited Japanese exports, created more pressure for imports, and brought considerable motivation for Japanese companies to move their manufacturing to other Asian countries, particularly China, with far lower labor costs. Japan's recession was aggravating a major banking crisis, one which many saw as potentially threatening the Japanese financial structure. We think it not unlikely that the Federal Reserve chose to facilitate a rise in the dollar versus the yen by allowing interest rates in the United States to rise and, therefore, allowed buying of the dollar by those in the international market who wanted comparatively higher yields. This move took pressure off the yen and currencies of other major trading nations which were caught in a period of very slow growth or even decline, such as Germany and France. We believe that the Federal Reserve recognizes an international responsibility for coordination to sustain the values of currencies and the liquidity of international markets. A rise in the dollar could be considered acceptable provided that it does not slow the growth of the United States economy. During the second quarter, Japanese economic growth did again accelerate, reflecting better export demand. European economies have yet to recover momentum, despite lower interest rates, as corporate restructuring has sustained double-digit unemployment levels in many countries. There has been widespread expectation that U.S. exports would prove a significant stimulus to economic growth in 1996. For this expectation to be fulfilled, it is necessary that the dollar not move too high relative to other currencies, and also that the dollar not rise so much as to significantly stimulate imports because products originating in other currencies begin to look like bargains to our buyers. The most recent trade deficit figures are not encouraging, suggesting to us that any sustained trend to reduced exports and increased imports may well cause the Federal Reserve to facilitate a decline of the dollar through lower interest rates, if such a lowering is not considered unduly stimulative. Further, reductions in European interest rates, in turn, might energize those economies and increase demand for U.S. products. These complex choices and underlying demand factors are not yet clear for the balance of 1996. Our view of the economy and of the interest rate environment is that it is likely to be steady, but sensitive. Order backlogs have shortened; production must more accurately reflect current demand, and demand itself shows no very strong trends in either direction. Outside the United States and its major trading partners, there continue to be developing nations with strongly growing demand. China is central in this trend, as its industrialization moves ahead rapidly, its exports grow, and the major industrial powers pour capital goods into its economy. The China trade is booming as never before. It has positive impacts on the many large American companies who are supplying it with equipment ranging from power plants and jet engines to computer systems. 1 EVERGREEN INTERNATIONAL/GLOBAL GROWTH FUNDS ECONOMIC OVERVIEW -- (CONTINUED) It provides commerce for Hong Kong and manufactures goods for Hong Kong, while it also provides capital investment opportunities for Taiwan and Singapore, and demand stimulus to raw material producers and intermediate products manufacturers throughout Southeast Asia. China's trade surplus with the United States is rapidly growing in importance. Because of these and other factors, Asian markets outperformed those of the United States and Europe in recent months, once again bringing investor attention to the so-called emerging markets and heightening sensitivity to the opportunities in international investing. Over the balance of 1996, great attention will be paid by investors to the trends of the dollar, the impacts of international trade, and the consequences of interest rate moves. Our nation must look abroad in establishing and maintaining its economic policies. This perhaps will not be emphasized in the rhetoric of an election year as Presidential and Congressional candidates try to focus the public on what they can accomplish for the nation. For the investor, however, the need to study international economic relationships will be paramount in understanding the trends of financial liquidity and capital markets. 2 EVERGREEN EMERGING MARKETS GROWTH FUND (Photo of money appears here) A REPORT FROM YOUR PORTFOLIO MANAGER RICHARD WAGONER For the six-month period ended April 30, 1996, Evergreen (Photo of Emerging Markets Growth Fund's total return (Class A shares at Richard Wagoner NAV) was 16.8%*, as compared with 12.5% for the Morgan Stanley appears here) Capital International (MSCI) Emerging Markets Index**, the Fund's benchmark index. The six-month total returns for the Fund's Class B shares at NAV, Class C shares at NAV, and Class Y, no-load, shares, were 16.4%, 16.4%. and 16.9%, respectively. Class A shares are subject to a maximum 4.75% front end sales charge, Class B shares are subject to a maximum 5% contingent deferred sales charge, and Class C shares are subject to a 1% contingent deferred sales charge within the first year of purchase. Sales charges are not reflected in figures above, and if reflected, performance would be lower. Leading markets during the six months included Taiwan, Mexico and Argentina, each of which posted total returns in excess of 30%, as measured by their respective MSCI country sub-indexes***. Lagging markets were South Korea and Chile, which declined 2% and 4%, respectively. The global investment environment was extremely positive for the emerging markets during the six-month period. Global financial liquidity was ample, as the developed nations pursued an accommodative monetary policy in an attempt to energize their economies. An environment of slow growth and low interest rates in the mature markets stimulated interest in the higher growth emerging economies. As compared with the MSCI Emerging Markets Index, our overweights in Argentina, Indonesia and Peru, helped performance versus the Index, as did our underweights of South Korea and Brazil. While we were underweighted in several other countries that did post strong gains, particularly Taiwan and Mexico, reasonable sector and stock selection helped to compensate. Our major industry overweights were in the financial and services sectors. As we look forward, the global backdrop for emerging markets appears to have changed slightly. Stock markets have become concerned that growth and inflation in the developed world might accelerate during the latter part of 1996. Bond markets have reacted to this concern and long-term interest rates have risen 50 to 100 basis points in Europe, Japan and the United States. We remain convinced, however, that growth and inflation will stay relatively subdued and that the environment for emerging market equities will be generally positive. We continue to emphasize the Pacific Rim and Latin American markets, and remain substantially underweight in South Africa. In addition, our underweights in the pro-cyclical markets of South Korea and Taiwan have been reduced. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. INTERNATIONAL INVESTING MAY INVOLVE CERTAIN ADDITIONAL RISKS SUCH AS CURRENCY FLUCTUATIONS, ECONOMIC AND POLITICAL INSTABILITY, AND DIFFERENCES IN ACCOUNTING STANDARDS. * PERFORMANCE FIGURES INCLUDE REINVESTMENT OF INCOME DIVIDEND AND CAPITAL GAIN DISTRIBUTIONS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE. INVESTORS' SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENTLY, THE ADVISER IS WAIVING ITS ADVISORY FEE AND ABSORBING A PORTION OF THE FUND'S OTHER EXPENSES. HAD FEE NOT BEEN WAIVED OR EXPENSES ABSORBED, PERFORMANCE WOULD HAVE BEEN LOWER. FEE WAIVER AND EXPENSE ABSORPTION MAY BE REVISED AT ANY TIME. FOR ADDITIONAL INFORMATION ABOUT FEE WAIVER AND EXPENSE ABSORPTION, PLEASE SEE THE PROSPECTUS. ** SOURCE: MORGAN STANLEY CAPITAL INTERNATIONAL. THE MSCI EMERGING MARKETS INDEX IS AN UNMANAGED INDEX OF SELECTED SECURITIES. AN INVESTMENT CAN NOT BE MADE IN AN INDEX. *** MSCI COUNTRY-SPECIFIC SUB INDEX WITHIN THE EMERGING MARKETS INDEX 3 EVERGREEN EMERGING MARKETS GROWTH FUND (Photo of money STATEMENT OF INVESTMENTS appears here) APRIL 30, 1996 (UNAUDITED)
SHARES VALUE COMMON STOCKS -- 92.7% ARGENTINA -- 9.1% 14,010 Banco de Galicia y Buenos Aires SA de CV, ADR..................... $ 329,235 24,500 Banco Frances del Rio de la Plata SA, ADR..................... 704,375 42,675 Cementera Argentina................. 187,789 58,100* Comercial del Plata SA.............. 173,736 8,509 IRSA Inversiones y Representaciones SA, GDR.......... 255,270 50,000 Perez Companc SA.................... 311,031 6,000 YPF Sociedad Anonima, ADR........... 131,250 2,092,686 BRAZIL -- 3.5% 15,000* Telecomunicacoes Brasileiras, ADR... 811,875 CHILE -- 4.0% 3,600 Embotelladora Andina SA, ADR........ 126,000 2,500 Madeco SA........................... 62,500 7,500* Santa Isabel SA, ADR................ 216,562 10,000 Sociedad Quimica y Minera de Chile SA, ADR........................... 535,000 940,062 CHINA -- 1.4% 12,000 China Steel Corp., ADR.............. 225,251 190,000 Shanghai Post & Telecom............. 101,840 327,091 CZECH REPUBLIC -- 2.0% 3,400 Komercni Banka, AS.................. 265,654 1,500 SPT Telekom, AS..................... 183,631 449,285 HONG KONG -- 11.6% 28,000 Cheung Kong Holdings Ltd............ 199,987 568,000 China Hong Kong Photo Products.......................... 280,861 300,000 First Pacific Co.................... 399,457 210,000 Giordano International Ltd.......... 194,105 300,000 Goldlion Holdings Ltd............... 252,085 86,000 Hongkong Land Holdings Ltd.......... 184,040 45,000 Hutchison Whampoa Ltd............... 279,232 250,000 National Mutual Asia................ 211,686 414,000 Pokphand (CP) Co.................... 175,276 22,000 Sun Hung Kai Properties............. 209,747 50,000 Varitronix International Ltd........ 91,785 120,000 VTech Holdings Ltd.................. 206,322 2,684,583 SHARES VALUE HUNGARY -- 1.6% 4,200 EGIS Gyogyszergyar.................. $ 182,095 5,200 Richter Gedeon GDR.................. 181,418 363,513 INDIA -- 8.1% 3,400 Bajaj Auto Ltd., GDR................ 85,321 15,500 East India Hotels Ltd., GDR......... 453,375 28,000 Indian Hotels Co. Ltd., GDR......... 624,478 12,000 Larson & Toubro Ltd., GDR........... 225,000 11,000 Mahindra & Mahindra Ltd., GDR....... 91,010 9,500 Ranbaxy Laboratories Ltd., GDR...... 180,437 12,200 Tata Engineering & Locomotive Ltd., GDR............................... 219,600 1,879,221 INDONESIA -- 4.4% 44,000 Astra International................. 65,052 35,000 Bank Bali........................... 89,994 100,000 Bank International Indonesia........ 491,751 28,000 HM Sampoerna........................ 308,978 32,000 Kawasan Industries.................. 64,452 1,020,227 ISLE OF MAN -- .2% 25,000 Genting International PLC........... 45,000 KOREA -- 3.1% 9,800 Korea Mobile Telecommunications, GDR............................... 558,600 3,877* Samsung Electronics Ltd, GDR........ 161,946 720,546 LUXEMBOURG -- 1.1% 3,800 Millicom International Cellular SA................................ 179,550 5,500 Quilmes Industrial Quinsa SA, ADR... 66,000 245,550 MALAYSIA -- 5.1% 20,000 AMMB Holdings, Berhad............... 302,812 28,000 Malayan Bank, Berhad................ 272,891 70,000 New Straits Times Press, Berhad..... 376,208 52,000* Technology Resources Industries, Berhad............................ 177,275 4,000 Telekom Malaysia, Berhad............ 37,701 1,166,887 MEXICO -- 8.8% 87,600* Cifra SA de CV, ADR................. 120,100 12,000 Empresas ICA Sociedad Controladora SA de CV, ADR..................... 166,500 8,000* Grupo Carso SA de CV, ADR........... 122,345
4 EVERGREEN EMERGING MARKETS GROWTH FUND (Photo of money STATEMENT OF INVESTMENTS -- (CONTINUED) appears here) APRIL 30, 1996 (UNAUDITED)
SHARES VALUE COMMON STOCK -- CONTINUED MEXICO -- CONTINUED 232,780 Grupo Finance Banamex Accival, SA de CV, Series B...................... $ 536,365 1,751 Grupo Finance Banamex Accival, SA de CV, Series L...................... 3,596 61,000 Grupo Finance Imbursa............... 209,354 36,800 Grupo Modelo SA de CV............... 173,104 443,000 Grupo Posadas SA de CV.............. 199,737 90,000 Grupo Synkro, ADR................... 15,921 4,500 Grupo Televisa SA, ADR.............. 139,500 18,000 Kimberly Clark Corp. de Mexico...... 329,475 2,015,997 NETHERLANDS -- .4% 5,800* Advanced Semiconductor Materials International NV, GDR............. 84,322 PERU -- 4.0% 86,000 CPT Telefonica del Peru............. 192,280 17,650 Credicorp Ltd....................... 300,050 15,359 Minas Buenaventura.................. 103,674 4,800 PT Indosat, ADR..................... 167,400 4,500 PT Telekomunikasi Indonesia, ADR.... 153,563 916,967 PHILIPPINES -- 3.3% 4,000 Philippine National Bank............ 59,610 350,000 Philipino Telephone Corp............ 514,903 56,700 San Miguel Corp..................... 177,661 752,174 PORTUGAL -- .5% 4,800 Portugal Telecom SA, ADR............ 103,800 SINGAPORE -- 2.9% 11,000 Cerebos Pacific Ltd................. 99,374 4,000 City Developments Ltd............... 34,998 10,000 Fraser & Neave Ltd.................. 110,969 12,000 Keppel Corp Ltd..................... 108,408 70,000 Public Bank, Berhad................. 199,175 5,600 Singapore Precision Industries Ltd............................... 105,961 658,885 SOUTH AFRICA -- .9% 3,000 Anglo American Corp., Ltd., ADR............................... 202,500 SPAIN -- 1.6% 14,000 Compania Energetica de Minas, ADR... 363,332 SHARES VALUE TAIWAN -- 3.1% 29,218 President Enterprises Corp., GDR.... $ 429,081 22,000 Siliconware Precision Industries Co., GDR.......................... 291,502 720,583 THAILAND -- 9.2% 9,000 Advanced Information Services Plc............................... 152,588 18,200 Balanced Information Services Plc............................... 308,566 30,000 Bangkok Bank Public Co., Ltd........ 434,946 82,000 IND Finance Thailand................ 328,547 15,000 Siam Commercial Bank Co., Ltd....... 221,038 60,000 Total Access Communication Public Co., Ltd................... 528,000 9,800 UTD Communications.................. 136,648 2,110,333 UNITED KINGDOM -- .2% 3,600 HSBC Holdings Plc................... 53,752 UNITED STATES -- 2.6% 22,500 ECI Telecommunications Ltd. Designs........................... 587,813 TOTAL COMMON STOCKS (COST $18,862,073).................. 21,316,984 PRINCIPAL AMOUNT REPURCHASE AGREEMENT -- 6.4% $1,472,000 State Street Bank & Trust Co., 4.75% dated 4/30/96, due 5/1/96 -- Collateralized by $1,160,000 U.S. Treasury Bonds, 10.75%, due 8/15/05; value, including accrued interest -- $1,532,905 (COST $1,472,000)................. 1,472,000
TOTAL INVESTMENTS (COST $20,334,073)...... 99.1% 22,788,984 OTHER ASSETS AND LIABILITIES -- NET...... .9 214,871 NET ASSETS................. 100.0% $23,003,855
* Non-income producing securities ADR -- American Depositary Receipts GDR -- Global Depositary Receipts See accompanying notes to financial statements. 5 EVERGREEN EMERGING MARKETS GROWTH FUND (Photo of money INDUSTRY DIVERSIFICATION appears here) APRIL 30, 1996 (UNAUDITED)
PERCENTAGE OF NET ASSETS Automotive Equipment & Manufacturing............................................................................... 0.4% Banks.............................................................................................................. 13.3% Building, Construction & Furnishings............................................................................... 2.3% Business Equipment & Services...................................................................................... 1.9% Chemical & Agricultural Products................................................................................... 2.3% Electrical Equipment & Services.................................................................................... 4.5% Energy............................................................................................................. 1.9% Finance & Insurance................................................................................................ 8.5% Food & Beverage Products........................................................................................... 5.3% Food Retailing & Distribution...................................................................................... 1.9% Health Care Products & Services.................................................................................... 3.8% Holding Companies.................................................................................................. 0.5% Information Services & Technology.................................................................................. 2.0% Machinery -- Diversified........................................................................................... 0.5% Manufacturing -- Distributing...................................................................................... 0.3% Metal Products & Services.......................................................................................... 1.0% Mining............................................................................................................. 3.9% Multi-Industry..................................................................................................... 3.5% Leisure & Tourism.................................................................................................. 0.9% Publishing, Broadcasting & Entertainment........................................................................... 2.7% Real Estate........................................................................................................ 8.9% Retailing & Wholesale.............................................................................................. 2.4% Telecommunication Services & Equipment............................................................................. 19.9% Textile & Apparel.................................................................................................. 0.1% Total Long-Term Investments.................................................................................. 92.7% Short-Term Investment.............................................................................................. 6.4% Other Assets and Liabilities -- net................................................................................ .9% Net Assets................................................................................................... 100.0%
6 EVERGREEN EMERGING MARKETS GROWTH FUND (Photo of money STATEMENT OF ASSETS AND LIABILITIES appears here) APRIL 30, 1996 (UNAUDITED)
ASSETS: Investments at value (identified cost $20,334,073)............................................................. $22,788,984 Foreign currencies at value (identified cost $15,995).......................................................... 16,048 Cash........................................................................................................... 395,879 Receivable for investments sold................................................................................ 173,651 Dividends and interest receivable.............................................................................. 66,835 Unamortized organization expenses and other assets............................................................. 41,086 Receivable for Fund shares sold................................................................................ 6,728 Total assets............................................................................................. 23,489,211 LIABILITIES: Payable for investments purchased.............................................................................. 394,892 Accrued expenses............................................................................................... 81,369 Payable for Fund shares repurchased............................................................................ 6,578 Distribution fee payable....................................................................................... 2,517 Total liabilities........................................................................................ 485,356 NET ASSETS........................................................................................................ $23,003,855 NET ASSETS CONSIST OF: Paid-in capital................................................................................................ $22,374,221 Undistributed net investment income............................................................................ 30,574 Accumulated net realized loss on investment and foreign currency transactions.................................. (1,856,082) Net unrealized appreciation of investments and foreign currencies.............................................. 2,455,142 Net assets.................................................................................................. $23,003,855 CALCULATION OF NET ASSET VALUE AND MAXIMUM OFFERING PRICE PER SHARE: Class A Shares ($1,783,021(division sign)194,358 shares of beneficial interest outstanding).................... $ 9.17 Sales charge -- 4.75% of offering price........................................................................ .46 Maximum offering price................................................................................... $9.63 Class B Shares ($2,708,012(division sign)296,311 shares of beneficial interest outstanding).................... $9.14 Class C Shares ($65,080(division sign)7,128 shares of beneficial interest outstanding)......................... $9.13 Class Y Shares ($18,447,742(division sign)2,008,844 shares of beneficial interest outstanding)................. $9.18
See accompanying notes to financial statements. 7 EVERGREEN EMERGING MARKETS GROWTH FUND (Photo of money STATEMENT OF OPERATIONS appears here) SIX MONTHS ENDED APRIL 30, 1996 (UNAUDITED)
INVESTMENT INCOME: Dividends (net of foreign withholding taxes of $12,003)........................................... $ 113,622 Interest.......................................................................................... 42,459 Total investment income........................................................................ 156,081 EXPENSES: Advisory fee...................................................................................... $ 124,566 Administration personnel and services fees........................................................ 4,318 Distribution fee -- Class A Shares................................................................ 1,686 Distribution fee -- Class B Shares................................................................ 8,131 Distribution fee -- Class C Shares................................................................ 188 Shareholder services fee -- Class B Shares........................................................ 2,710 Shareholder services fee -- Class C Shares........................................................ 63 Custodian fee..................................................................................... 64,053 Transfer agent fee................................................................................ 34,850 Registration and filing fees...................................................................... 28,455 Reports and notices to shareholders............................................................... 28,038 Professional fees................................................................................. 12,707 Deferred organizational expense................................................................... 8,140 Trustees' fees and expenses....................................................................... 4,983 Insurance......................................................................................... 664 Miscellaneous..................................................................................... 2,326 Total expenses............................................................................... 325,878 Less: Fee waivers and expense reimbursments....................................................... (188,787) Net expenses................................................................................ 137,091 Net investment income................................................................................ 18,990 NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES: Net realized loss on investment transactions...................................................... (75,322) Net realized loss on foreign currency transactions................................................ (5,614) Net change in unrealized appreciation of investments and foreign currencies....................... 2,453,461 Net gain on investments and foreign currencies....................................................... 2,372,525 NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................................. $2,391,515
See accompanying notes to financial statements. 8 (Photo of money EVERGREEN EMERGING MARKETS GROWTH FUND appears here) STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED TEN MONTHS APRIL 30, 1996 ENDED (UNAUDITED) OCTOBER 31, 1995 INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment income....................................................................... $ 18,990 $ 67,179 Net realized loss on investment transactions................................................ (75,322) (1,677,645) Net realized gain (loss) on foreign currency transactions................................... (5,614) 33,753 Net change in unrealized appreciation of investments and foreign currencies................. 2,453,461 1,470,045 Net increase (decrease) in net assets resulting from operations.......................... 2,391,515 (106,668) DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME: Class A Shares.............................................................................. (6,742) -- Class Y Shares.............................................................................. (81,928) -- Total distributions to shareholders from net investment income........................ (88,670) -- FUND SHARE TRANSACTIONS: Proceeds from shares sold................................................................... 9,957,564 5,594,810 Proceeds from reinvestment of distributions................................................. 22,693 -- Payment for shares redeemed................................................................. (1,746,522) (1,444,320) Net increase resulting from Fund share transactions...................................... 8,233,735 4,150,490 Net increase in net assets............................................................... 10,536,580 4,043,822 NET ASSETS: Beginning of period......................................................................... 12,467,275 8,423,453 End of period (including undistributed net investment income of $30,574 and $100,254, respectively)............................................................................. $ 23,003,855 $ 12,467,275
See accompanying notes to financial statements. 9 (Photo of money EVERGREEN EMERGING MARKETS GROWTH FUND appears here) FINANCIAL HIGHLIGHTS
CLASS A SHARES CLASS B SHARES SIX MONTHS SEPTEMBER 6, SIX MONTHS ENDED TEN MONTHS 1994* ENDED TEN MONTHS APRIL 30, ENDED THROUGH APRIL 30, ENDED 1996 OCTOBER 31, DECEMBER 31, 1996 OCTOBER 31, (UNAUDITED)++ 1995# 1994 (UNAUDITED)++ 1995# PER SHARE DATA: Net asset value, beginning of period....................... $7.90 $8.17 $10.00 $7.85 $8.16 Income (loss) from investment operations: Net investment income (loss)............................. -- .05 -- (.03) .01 Net realized and unrealized gain (loss) on investments and foreign currency transactions...................... 1.32 (.32) (1.83) 1.32 (.32) Total from investment operations....................... 1.32 (.27) (1.83) 1.29 (.31) Less distributions to shareholders from net investment income................................................... (.05) -- -- -- -- Net asset value, end of period............................. $9.17 $7.90 $8.17 $9.14 $7.85 TOTAL RETURN+.............................................. 16.8% (3.3%) (18.3%) 16.4% (3.8%) RATIOS & SUPPLEMENTAL DATA: Net assets, end of period (000's omitted).................. $1,783 $1,117 $867 $2,708 $1,940 Ratios to average net assets: Expenses++**............................................. 1.75% 1.73% 1.78% 2.50% 2.48% Net investment income (loss)++**......................... .11% .76% (.12%) (.68%) .03% Portfolio turnover rate.................................... 48% 65% 17% 48% 65% Average commission rate paid............................... $.0147 N/A N/A $.0147 N/A SEPTEMBER 6, 1994* THROUGH DECEMBER 31, 1994 PER SHARE DATA: Net asset value, beginning of period....................... $10.00 Income (loss) from investment operations: Net investment income (loss)............................. (.02) Net realized and unrealized gain (loss) on investments and foreign currency transactions...................... (1.82) Total from investment operations....................... (1.84) Less distributions to shareholders from net investment income................................................... -- Net asset value, end of period............................. $8.16 TOTAL RETURN+.............................................. (18.4%) RATIOS & SUPPLEMENTAL DATA: Net assets, end of period (000's omitted).................. $1,589 Ratios to average net assets: Expenses++**............................................. 2.53% Net investment income (loss)++**......................... (.84%) Portfolio turnover rate.................................... 17% Average commission rate paid............................... N/A
++ Per share data is calculated based on average shares outstanding during the period. * Commencement of operations. # The Fund changed its year end from December 31 to October 31. + Total return is calculated on net asset value per share for the periods indicated and is not annualized. Initial sales charge or contingent deferred sales charge is not reflected. ++ Annualized. ** 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 loss to average net assets, exclusive of any applicable state expense limitations, would have been the following:
CLASS A SHARES CLASS B SHARES SIX MONTHS SEPTEMBER 6, SIX MONTHS ENDED TEN MONTHS 1994* ENDED TEN MONTHS APRIL 30, ENDED THROUGH APRIL 30, ENDED 1996 OCTOBER 31, DECEMBER 31, 1996 OCTOBER 31, (UNAUDITED) 1995# 1994 (UNAUDITED) 1995# Expenses.................................................... 4.02% 3.97% 3.96% 4.77% 4.72% Net investment loss......................................... (2.16%) (1.48%) (2.30%) (2.95%) (2.21%) SEPTEMBER 6, 1994* THROUGH DECEMBER 31, 1994 Expenses.................................................... 4.71% Net investment loss......................................... (3.02%)
See accompanying notes to financial statements. 10 (Photo of money EVERGREEN EMERGING MARKETS GROWTH FUND appears here) FINANCIAL HIGHLIGHTS
CLASS C SHARES CLASS Y SHARES SIX MONTHS SEPTEMBER 6, SIX MONTHS ENDED TEN MONTHS 1994* ENDED TEN MONTHS APRIL 30, ENDED THROUGH APRIL 30, ENDED 1996 OCTOBER 31, DECEMBER 31, 1996 OCTOBER 31, (UNAUDITED)++ 1995# 1994 (UNAUDITED)++ 1995# PER SHARE DATA: Net asset value, beginning of period....................... $7.84 $8.16 $10.00 $7.92 $8.17 Income (loss) from investment operations: Net investment income (loss)............................. (.03) .02 (.02) .02 .05 Net realized and unrealized gain (loss) on investments and foreign currency transactions...................... 1.32 (.34) (1.82) 1.31 (.30) Total from investment operations....................... 1.29 (.32) (1.84) 1.33 (.25) Less distributions to shareholders from net investment income................................................... -- -- -- (.07) -- Net asset value, end of period............................. $9.13 $7.84 $8.16 $9.18 $7.92 TOTAL RETURN+.............................................. 16.4% (3.9%) (18.4%) 16.9% (3.1%) RATIOS & SUPPLEMENTAL DATA: Net assets, end of period (000's omitted).................. $65 $56 $89 $18,448 $9,355 Ratios to average net assets: Expenses++**............................................. 2.50% 2.50% 2.53% 1.50% 1.48% Net investment income (loss)++**......................... (.68%) .72% (.82%) .39% .94% Portfolio turnover rate.................................... 48% 65% 17% 48% 65% Average commission rate paid............................... $.0147 N/A N/A $.0147 N/A SEPTEMBER 6, 1994* THROUGH DECEMBER 31, 1994 PER SHARE DATA: Net asset value, beginning of period....................... $10.00 Income (loss) from investment operations: Net investment income (loss)............................. .01 Net realized and unrealized gain (loss) on investments and foreign currency transactions...................... (1.84) Total from investment operations....................... (1.83) Less distributions to shareholders from net investment income................................................... -- Net asset value, end of period............................. $8.17 TOTAL RETURN+.............................................. (18.3%) RATIOS & SUPPLEMENTAL DATA: Net assets, end of period (000's omitted).................. $5,878 Ratios to average net assets: Expenses++**............................................. 1.53% Net investment income (loss)++**......................... .43% Portfolio turnover rate.................................... 17% Average commission rate paid............................... N/A
++ Per share data is calculated based on average shares outstanding during the period. * Commencement of operations. # The Fund changed its year end from December 31 to October 31. + Total return is calculated on net asset value per share for the periods indicated and is not annualized. Contingent deferred sales charge is not reflected. ++ Annualized. ** 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 loss to average net assets, exclusive of any applicable state expense limitations, would have been the following:
CLASS C SHARES CLASS Y SHARES SIX MONTHS SEPTEMBER 6, SIX MONTHS ENDED TEN MONTHS 1994* ENDED TEN MONTHS APRIL 30, ENDED THROUGH APRIL 30, ENDED 1996 OCTOBER 31, DECEMBER 31, 1996 OCTOBER 31, (UNAUDITED) 1995# 1994 (UNAUDITED) 1995# Expenses.................................................... 4.77% 4.74% 4.71% 3.77% 3.72% Net investment loss......................................... (2.95%) (1.52%) (3.00%) (1.88%) (1.30%) SEPTEMBER 6, 1994* THROUGH DECEMBER 31, 1994 Expenses.................................................... 3.71% Net investment loss......................................... (1.75%)
See accompanying notes to financial statements. 11 EVERGREEN GLOBAL LEADERS FUND (Logo of Global Leaders Fund appears here) A REPORT FROM YOUR PORTFOLIO MANAGERS STEPHEN A. LIEBER EDWIN D. MISKA Evergreen Global Leaders Fund commenced operations on (Photo of November 1, 1995. For the six months ended April 30, 1996, the Stephen A. first half of its fiscal year, the Fund (Class Y, no-load Lieber shares) provided an 11.7%* total return. While this has been a appears here) period for building a fledgling fund, it has also been a time for carrying out a very carefully formulated and tested plan (Photo of to develop an investment vehicle that would seek to meet our Edwin D. goal of holding what we believe to be the 100 best companies Miska in the world. The definition of "the 100 best" is a appears here) comparative one based on the Adviser's proprietary selection of financial performance and investment characteristic criteria. Within major industrialized nations, we seek out companies that are among the most highly profitable, have the highest returns on shareholders equity, are most consistent in earnings, and that combine a strong past record of earnings growth with an outlook for continued success. The Fund's management actively compares financial performance among companies in its selected universe and omits those which fail to consistently meet its criteria, while bringing in others which do. We continually seek out investment opportunities that meet our standards and we monitor macroeconomic and financial conditions to correct the optimized country and currency exposures. Our aim is to utilize this diligent, structured approach to achieve maximized shareholder returns. During the period under review, several issues registered outstanding investment results. Across the globe, the Fund benefited from strong earnings performance, and an equally strong outlook. From Canada, the Fund's most significant overall performer was DuPont Canada, Inc. (Cl. A shares) which rose 30.9%. This company, which represents 2.8% of the Fund's net assets, had the largest overall dollar gain in the portfolio. The company saw strong profit growth from its diverse product offerings of specialty chemicals, plastics, and films, and forecasts another equally strong year for 1996. From Belgium, grocery store operator Colruyt SA was up 25.5%, after posting superb earnings growth and enacting an expansion program which will elevate its presence throughout Europe. From Hong Kong, real estate developer New Asia Realty Ltd. surged 77.1%, as the company benefited from a restructuring and higher property prices. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. INTERNATIONAL INVESTING MAY INVOLVE CERTAIN ADDITIONAL RISKS SUCH AS CURRENCY FLUCTUATIONS, ECONOMIC AND POLITICAL INSTABILITY, AND DIFFERENCES IN ACCOUNTING STANDARDS. * PERFORMANCE FIGURES INCLUDE REINVESTMENT OF INCOME DIVIDEND AND CAPITAL GAIN DISTRIBUTIONS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE. INVESTORS' SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. AS OF 4/30/96, THE FUND'S CLASS A SHARES (SUBJECT TO A MAXIMUM 4.75% FRONT END SALES CHARGE), CLASS B SHARES (SUBJECT TO A MAXIMUM 5% CONTINGENT DEFERRED SALES CHARGE) AND CLASS C SHARES (SUBJECT TO A 1% CONTINGENT DEFERRED SALES CHARGE WITHIN THE FIRST YEAR OF PURCHASE) HAD NOT YET COMMENCED OPERATIONS. CURRENTLY, THE ADVISER IS WAIVING ITS ADVISORY FEE AND ABSORBING A PORTION OF THE FUND'S OTHER EXPENSES. HAD FEE NOT BEEN WAIVED OR EXPENSES ABSORBED, PERFORMANCE WOULD HAVE BEEN LOWER. FEE WAIVER AND EXPENSE ABSORPTION MAY BE REVISED AT ANY TIME. FOR ADDITIONAL INFORMATION ABOUT FEE WAIVER AND EXPENSE ABSORPTION, PLEASE SEE THE PROSPECTUS. 12 EVERGREEN GLOBAL LEADERS FUND (Logo of Global Leaders Fund appears here) A REPORT FROM YOUR PORTFOLIO MANAGERS -- (CONTINUED) In terms of country performance, Malaysia led the way with a return of 17.1%. Strong sustainable profits growth among our diverse holdings and a surging economy bolstered stock prices. Despite our small 1.9% allocation, there were some notable standouts: Malaysian Oxygen Berhad, +48.5%, Land & General, which was sold for a gain of 30.5%, a partial sale of Magnum Corp. Berhad, +25.9%, and AMMB Holdings Berhad, +23.3%. Of our most heavily-weighted country exposures, the United States at 33.6% of net assets, registered the most impressive return as a whole, +12.5%. Some of the best performing issues were: Gap, Inc., +32.6%, US Healthcare, Inc., which received a takeover offer from Aetna Life & Casualty Co., +30.3%, Student Loan Marketing Corp., +23.7%, Computer Associates International, Inc., +20.1%, and Microsoft Corp., +14.8%. All of the above-mentioned companies were prime examples of our investment strategy at work. Prices rose in response to the continued recognition of these companies achievements in growth, profitability, and enhancing shareholder value. These characteristics clearly distinguish them as "Global Leaders". Our most disappointing areas were in Japan and Germany, the portfolio's next two largest allocations, at 11.0% and 8.4%, respectively. In both cases, some solid performances were negated by the poor results of one holding. In Germany, pharmaceutical and chemical firm ALTANA AG, and utility giant RWE AG rose 6.7% and 6.5%, respectively, but the software development firm SAP AG fell 17.8%, as the market was disappointed with its 40%+ growth for fiscal 1995. The company has reiterated a positive outlook for 1996, and the stock has recovered somewhat from its lows. With Japan, solid results by chemical manufacturer Nippon Chemical, +17.2%, and retailer Seven-Eleven Japan Co., Ltd., +11.3%, were offset by the poor performance of Nintendo Co., Ltd., which is still in transition toward its new game platform scheduled for launch later this year. Currency also played a significant factor in the returns of the portfolio holdings of these nations as the U.S. dollar appreciated some 3% versus the German Deutsche mark, and 7% versus the Japanese Yen, negating a significant portion of our investment returns. The global markets continued their upward momentum during the first calendar quarter. Despite increased volatility, as evidenced by the swift declines in the world's equity markets in early March, all indicators continue to point toward continued, yet perhaps sluggish growth. In Europe, interest rates are falling, increasing the demand for credit, and fueling a renewed consumer confidence, as evidenced by recent strong automobile sales. In France, the economic turbulence caused by the massive strikes of last November seems to have abated, and the economy is stabilizing under lower rates. In Italy and Spain, where political uncertainty has masked what are otherwise healthy economies, lower inflation and falling public deficits have led to a generally favorable economic outlook. With the exception of Germany, where the economic climate is weakening, despite increased efforts to focus on international competitiveness and shareholder value, most European economies are stabilizing or even rebounding. In anticipation and recognition of such, the European markets performed strongly in the quarter. In the Far East, resurgence in Japan's corporate profit, aided by the Bank of Japan's aggressive monetary policies and continued growth in Hong Kong, Singapore, and Malaysia, drove equity prices higher. Only the tensions of China's expansionary threats toward Taiwan impeded an otherwise strong quarter. 13 EVERGREEN GLOBAL LEADERS FUND (Logo of Global Leaders Fund appears here) A REPORT FROM YOUR PORTFOLIO MANAGERS -- (CONTINUED) As the year unfolds and the world's major central banks increase their reflationary monetary policies and, in many cases, lower interest rates, it will become increasingly likely that corporations will deliver strong bottom-line performance. This should serve as the impetus for equity prices. We believe the Fund's strategy will make it well positioned to benefit in the coming months. Consistent with the objective of investing in the 100 leading companies of the world, the Fund has sought out companies which are among the most likely beneficiaries of this economic scenario: companies which are highly profitable, with consistent earnings, and combine a prosperous current outlook with a past record of achievement. In the few months since its inception, the Fund is already demonstrating a number of the favorable historical characteristics of the Evergreen group of funds. One has been a long-term pattern of the acquisition or merger by other companies of Fund holdings with attractive business franchises, usually at substantial profits to the Fund. One such acquisition has been proposed in this portfolio, US Healthcare, Inc., one of the initial purchases of the Fund, received an acquisition offer from Aetna Life & Casualty Co. Since its purchase, U.S. Healthcare has provided an unrealized gain to the Fund of 30.3% as of April 30, 1996. Another typical group is companies which have had outstanding long-term records, have had some current difficulty in sustaining those records, and are initiating re-structuring or re-engineering programs to increase shareholder values. In the portfolio, companies with these characteristics were: Legal & General Group PLC and Prudential Corp. PLC in the United Kingdom, and Torchmark Corp. in the United States. We will be diligent in our effort to not only maintain, but also accelerate the historical asset value growth curve that the Fund established. The resources, modeling, and testing we put in place prior to the Fund's inception produced the results we seek, and we believe will help provide further growth of the Fund. We thank the original investors for their confidence in our program, and for their sharing our enthusiasm for what we believe is a truly exciting investment concept. 14 EVERGREEN GLOBAL LEADERS FUND (Logo of Global Leaders STATEMENT OF INVESTMENTS Fund appears here) APRIL 30, 1996 (UNAUDITED)
SHARES VALUE COMMON STOCKS -- 97.9% AUSTRALIA -- 1.9% 10,000 Arnotts Ltd............................ $ 66,614 14,700 Incitec Ltd............................ 75,059 141,673 BELGIUM -- .9% 200 Colruyt SA............................. 62,325 CANADA -- 2.8% 9,500 DuPont Canada, Inc..................... 209,328 FRANCE -- 7.7% 1,000 LAPEYRE SA............................. 55,133 600 Promodes, Inc.......................... 172,424 200 Sagem Co. SA........................... 124,819 800 SEB SA................................. 134,688 800 Television Francaise................... 86,696 573,760 GERMANY -- 8.4% 100 ALTANA AG.............................. 61,663 50 Hugo Boss AG........................... 49,971 50 Rheinelektra AG........................ 35,927 6,000 RWE AG................................. 233,588 1,500 SAP AG................................. 194,493 100 Sudzucker AG........................... 47,227 622,869 HONG KONG -- 3.9% 10,000 Cheung Kong Holdings Ltd............... 71,424 7,500 China Light & Power Co., Ltd........... 35,389 2,400 * Henderson China Holdings Ltd........... 6,655 8,000 Henderson Land Development Co Ltd...... 57,398 5,500 Hong Kong Telecommunication Sponsored ADR.................................... 104,500 7,000 Kumagai Gumi Ltd....................... 6,470 2,000 New Asia Realty Ltd.................... 6,696 288,532 ITALY -- 6.5% 4,500 Benneton Group SpA ADS................. 108,562 1,300 Fila Holding SpA ADS................... 88,725 2,800 Industrie Natuzzi SpA ADS.............. 145,600 1,800 Luxottica Group SpA ADS................ 144,900 487,787 SHARES VALUE JAPAN -- 11.0% 15,000 Mitsui Soko Co......................... $ 128,770 2,400 Nintendo Co., Ltd...................... 185,383 13,000 Nippon Chemical........................ 126,762 5,400 Seven-Eleven Japan Co., Ltd............ 382,525 823,440 MALAYSIA -- 1.9% 2,000 AMMB Holdings Berhad................... 30,281 3,000 Carlsberg Brewery Berhad............... 20,816 1,500 Magnum Corp. Berhad.................... 2,599 3,000 Malaysian Oxygen Berhad................ 16,003 2,000 Nestle Berhad.......................... 17,005 4,000 Resorts World Berhad................... 24,225 5,000 United Engineers Ltd. Berhad........... 34,292 145,221 NETHERLANDS -- 3.6% 4,000 Elsevier NV............................ 60,228 1,200 Elsevier NV ADS........................ 36,450 200 Getronics NV........................... 13,890 1,200 PolyGram NV ADS........................ 70,350 800 Wolters Kluwer NV...................... 87,447 268,365 NEW ZEALAND -- .6% 700 Telecom Corp. of New Zealand Ltd. ADS............................... 47,250 NORWAY -- 1.1% 2,000 Kvaerner AS............................ 82,197 SINGAPORE -- .8% 3,000 Singapore Press Holdings Ltd........... 56,765 SPAIN -- 4.5% 2,000 Centros Comerciales Pryca, SA.......... 46,148 2,900 Empresa Nacional de Electridad ADS..... 181,612 3,000 Repsol, SA ADS......................... 111,000 338,760 SWEDEN -- 2.0% 2,600 Astra AB............................... 115,592 500 H&M Hennes & Mauritz AB................ 34,505 150,097
15 EVERGREEN GLOBAL LEADERS FUND (Logo of Global STATEMENT OF INVESTMENTS -- (CONTINUED) Leaders Fund APRIL 30, 1996 appears here) (UNAUDITED)
SHARES VALUE COMMON STOCKS -- CONTINUED UNITED KINGDOM -- 6.7% 5,000 Abbey National Plc..................... $ 42,752 600 Argos Plc.............................. 5,857 4,000 BAT Industries Plc ADS................. 61,750 9,400 BTR Plc................................ 45,281 800 Carlton Communications Plc ADS......... 28,300 500 Chubb Security Plc..................... 2,864 600 De la Rue Plc.......................... 6,706 900 Granada Group Plc...................... 11,157 600 Legal & General Group Plc.............. 6,467 300 Premier Farnell Plc.................... 3,324 142 * Premier Farnell Rights Plc............. 1,573 6,000 Prudential Corp. Plc................... 41,322 4,600 Rentokil Group Plc..................... 26,521 1,100 Reuters Holdings Plc ADS............... 74,388 1,600 Smithkline Beecham Plc ADS............. 86,400 700 United News & Media Plc................ 7,308 1,000 Vodafone Group Plc ADS................. 40,125 800 Wolseley Plc........................... 5,642 497,737 UNITED STATES -- 33.6% 4,400 AT&T Corp.............................. 269,500 1,000 Albertsons, Inc........................ 38,500 1,000 * Amgen, Inc............................. 57,500 250 Avon Products, Inc..................... 22,219 200 Briggs & Stratton Corp................. 9,075 1,500 * CUC International, Inc................. 49,312 2,500 Coca Cola Co. (The).................... 203,750 700 Computer Associates International, Inc.................................... 51,362 1,000 Emerson Electric Co.................... 83,625 300 * FMC Corp............................... 20,812 2,600 Federal National Mortgage Association.. 79,625 1,000 Gap, Inc............................... 30,125 2,300 General Electric Co.................... 178,250 1,000 Gillette Co. (The)..................... 54,000 800 Goodyear Tire and Rubber Co. (The)..... 41,700 1,200 Home Depot, Inc. (The)................. 56,850 SHARES VALUE UNITED STATES -- CONTINUED 2,100 Intel Corp............................. $ 142,275 600 Marsh & McLennan Co., Inc.............. 56,400 625 Mattel, Inc............................ 16,250 1,900 McDonalds Corp......................... 90,962 2,000 Merck & Co., Inc....................... 121,000 700 Merrill Lynch & Co., Inc............... 42,262 1,500 * Microsoft Corp......................... 169,875 500 Monsanto Co............................ 75,750 300 Nalco Chemical Co...................... 9,150 1,100 Norwest Corp........................... 39,738 600 Phelps Dodge Corp...................... 44,100 200 Pioneer Hi-Bred International, Inc..... 11,150 1,000 Quaker Oats Co. (The).................. 34,375 1,200 Schering-Plough Corp................... 68,850 200 Student Loan Marketing Corp............ 14,650 200 Torchmark Corp......................... 8,600 300 US Healthcare, Inc..................... 15,638 1,000 UST, Inc............................... 32,000 7,500 Wal-Mart Stores, Inc................... 179,063 1,400 Walt Disney Co. (The).................. 86,800 2,505,093 TOTAL COMMON STOCKS (COST $6,827,810)...................... 7,301,199 PRINCIPAL AMOUNT SHORT TERM INVESTMENT -- 8.0% $600,000 Federal Home Loan Mortgage, 5.18%, 5/28/96 (COST $597,669)........................ 597,669
TOTAL INVESTMENTS (COST $7,425,479)........... 105.9% 7,898,868 OTHER ASSETS AND LIABILITIES -- NET.......... (5.9) (439,898) NET ASSETS..................... 100.0% $7,458,970
* Non-income producing securities ADR -- American Depositary Receipts ADS -- American Depositary Shares See accompanying notes to financial statements. 16 EVERGREEN GLOBAL LEADERS FUND (Logo of Global INDUSTRY DIVERSIFICATION Leaders Fund APRIL 30, 1996 appears here) (UNAUDITED)
PERCENTAGE OF NET ASSETS Building, Construction & Furnishings............................................................................... 5.4% Chemicals.......................................................................................................... 8.0% Consumer Products & Services....................................................................................... 11.9% Electrical Equipment & Electronics................................................................................. 18.8% Energy............................................................................................................. 4.6% Finance & Insurance................................................................................................ 4.9% Food Products...................................................................................................... 4.7% Health Care Products & Services.................................................................................... 8.2% Publishing, Broadcasting & Entertainment........................................................................... 8.5% Real Estate........................................................................................................ 1.9% Retailing & Wholesale.............................................................................................. 14.8% Telecommunication Services & Equipment............................................................................. 6.2% Total Long-Term Investments.................................................................................. 97.9% Short-Term Investment.............................................................................................. 8.0% Other Assets and Liabilities -- net................................................................................ (5.9%) Net Assets................................................................................................... 100.0%
17 EVERGREEN GLOBAL LEADERS FUND (Logo of Global STATEMENT OF ASSETS AND LIABILITIES Leaders Fund APRIL 30, 1996 appears here) (UNAUDITED)
ASSETS: Investments at value (identified cost $7,425,479)................................................................ $7,898,868 Foreign currencies at value (identified cost $28,078)............................................................ 27,904 Cash............................................................................................................. 70,478 Prepaid expenses and other assets................................................................................ 43,794 Receivable for investments sold.................................................................................. 40,602 Unamortized organization expense................................................................................. 40,175 Receivable from Adviser.......................................................................................... 18,935 Dividends receivable............................................................................................. 15,347 Receivable for Fund shares sold.................................................................................. 425 Total assets............................................................................................... 8,156,528 LIABILITIES: Payable for investments purchased................................................................................ 628,560 Accrued expenses................................................................................................. 68,998 Total liabilities.......................................................................................... 697,558 NET ASSETS.......................................................................................................... $7,458,970 NET ASSETS CONSIST OF: Paid-in capital.................................................................................................. $6,891,929 Distributions in excess of net investment income................................................................. (3,638) Net realized gain on investment and foreign currency transactions................................................ 98,285 Net unrealized appreciation of investments and foreign currencies................................................ 472,394 Net assets................................................................................................. $7,458,970 CALCULATION OF NET ASSET VALUE PER SHARE: Class Y Shares ($7,458,970(division sign)669,972 shares of beneficial interest outstanding)...................... $11.13
See accompanying notes to financial statements. 18 EVERGREEN GLOBAL LEADERS FUND (Logo of Global STATEMENT OF OPERATIONS Leaders Fund SIX MONTHS ENDED APRIL 30, 1996 appears here) (UNAUDITED)
INVESTMENT INCOME: Dividends (net of foreign withholding taxes of $4,033)................................................ $ 42,216 Interest.............................................................................................. 11,318 Total investment income............................................................................ 53,534 EXPENSES: Advisory fee.......................................................................................... $ 25,368 Administration personnel and services fees............................................................ 1,350 Custodian fee......................................................................................... 24,607 Registration and filing fees.......................................................................... 15,137 Professional fees..................................................................................... 8,667 Reports and notices to shareholders................................................................... 6,603 Transfer agent fee.................................................................................... 6,231 Deferred organizational expense....................................................................... 4,340 Insurance expense..................................................................................... 1,287 Trustees' fees and expenses........................................................................... 712 Miscellaneous......................................................................................... 803 Total expenses..................................................................................... 95,105 Less: Fee waivers and expense reimbursements.......................................................... (57,523) Net expenses....................................................................................... 37,582 Net investment income.................................................................................... 15,952 NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND FOREIGN CURRENCIES: Net realized gain on investment transactions.......................................................... 94,369 Net realized gain on foreign currency transactions.................................................... 3,916 Net change in unrealized appreciation of investments and foreign currencies........................... 472,394 Net gain on investments and foreign currencies........................................................... 570,679 NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS..................................................... $586,631
See accompanying notes to financial statements. 19 (Logo of Global EVERGREEN GLOBAL LEADERS FUND Leaders Fund STATEMENT OF CHANGES IN NET ASSETS appears here) (UNAUDITED)
SIX MONTHS* ENDED APRIL 30, 1996 INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment income........................................................................................... $ 15,952 Net realized gain on investment transactions.................................................................... 94,369 Net realized gain on foreign currency transactions.............................................................. 3,916 Net change in unrealized appreciation of investments and foreign currencies..................................... 472,394 Net increase in net assets resulting from operations......................................................... 586,631 DISTRIBUTIONS TO SHAREHOLDERS: From net investment income...................................................................................... (15,952) In excess of net investment income.............................................................................. (3,638) Total distributions to shareholders.......................................................................... (19,590) FUND SHARE TRANSACTIONS: Proceeds from shares sold....................................................................................... 7,260,977 Proceeds from reinvestment of distributions..................................................................... 14,211 Payment for shares redeemed..................................................................................... (383,259) Net increase from Fund share transactions.................................................................... 6,891,929 Net increase in net assets................................................................................... 7,458,970 NET ASSETS: Beginning of period............................................................................................. -- End of period (including distributions in excess of net investment income of $3,638)............................ $7,458,970
* The Fund commenced investment operations on November 1, 1995. See accompanying notes to financial statements. 20 (Logo of Global EVERGREEN GLOBAL LEADERS FUND Leaders Fund FINANCIAL HIGHLIGHTS appears here) (UNAUDITED)
SIX MONTHS* ENDED APRIL 30, 1996 PER SHARE DATA: Net asset value, beginning of period................................................................................ $10.00 Income from investment operations: Net investment income............................................................................................ .04 Net realized and unrealized gain on investment and foreign currency transactions................................. 1.13 Total from investment operations................................................................................. 1.17 Less distributions to shareholders from net investment income....................................................... (.04) Net asset value, end of period...................................................................................... $11.13 TOTAL RETURN**...................................................................................................... 11.7% RATIOS & SUPPLEMENTAL DATA: Net assets, end of period (000's omitted)........................................................................... $7,459 Ratios to average net assets:+# Expenses......................................................................................................... 1.44% Net investment income............................................................................................ .61% Portfolio turnover rate............................................................................................. 28% Average commission rate paid........................................................................................ $.0745
* The Fund commenced investment operations on November 1, 1995. ** Total return is calculated on net asset value per share for the period indicated and is not annualized. + Annualized. # 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:
SIX MONTHS* ENDED APRIL 30, 1996 Expenses........................................................................................................... 3.65% Net investment loss................................................................................................ (1.60%)
See accompanying notes to financial statements. 21 EVERGREEN GLOBAL REAL ESTATE EQUITY FUND (Photo of Globe appears here) A REPORT FROM YOUR PORTFOLIO MANAGER SAMUEL A. LIEBER Evergreen Global Real Estate Equity Fund's total return (Photo of (Class Y, no-load shares) for the six months ended April 30, Samuel A. 1996, the first half of its 1996 fiscal year, was 13.2%*. This Lieber compares with the 10.4% total return for the 43 real estate appears here) mutual funds tracked by Lipper Analytical Services** during that time. The six-month total returns at NAV for the Fund's Class A shares, Class B shares and Class C shares were 13.1%, 12.8%, and 12.8%, respectively. Class A shares are subject to a maximum 4.75% front end sales charge, Class B shares are subject to a maximum 5% contingent deferred sales charge, and Class C shares are subject to a 1% contingent deferred sales charge within the first year of purchase. Sales charges are not reflected in figures above, and if reflected, performance would be lower. We anticipate that this is the beginning of a sustainable recovery after the negative performance of most international property share indexes in 1994 and much of 1995. International property shares significant returns in 1993 enabled this Fund to produce exceptional returns that year before the ensuing price correction during 1994 to 1995. This subsequent correction has set a realistic base from which we are hopeful that renewed economic growth will provide an environment in which real estate securities can again generate strong returns over an extended period. REAL ESTATE STOCK MARKETS REVIEW During the six months under review, the performance of unmanaged property share indexes in their local currencies was led by the Philippines, where the Philippines Property Index+ rose by 33%. Close behind were Malaysia where the Kuala Lumpur Property Index+ rose 31% and Singapore, where the Singapore SESALL- Singapore Property Index+ rose 28%. In Japan, the TOPIX Real Estate Index+ rose 30%, although the Japanese gain was mitigated by a 3% decline in the value of the Yen versus the dollar. Most other markets provided no more than single-digit returns, and in fact a number of markets were decidedly negative. For this six-month period, South African Property Trusts+ fell over 13%. The Toronto Stock Exchange Real Estate Index+, was down 8%, the Thai Property Developers Index+ fell 9%, and in Australia, the ASX Property Trusts Index+ fell 6%. While German real estate stocks lost only 1%, as measured by the CDAX Construction Index+, the U.S. dollar's 9% rise versus the Deutsche mark compounded that decline and negatively impacted the returns of most European stock investments when viewed in U.S. dollar terms. The Wilshire Real Estate Securities Index+, a measure of U.S. real estate stocks in general, rose 6%. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. INTERNATIONAL INVESTING MAY INVOLVE CERTAIN ADDITIONAL RISKS SUCH AS CURRENCY FLUCTUATIONS, ECONOMIC AND POLITICAL INSTABILITY, AND DIFFERENCES IN ACCOUNTING STANDARDS. INVESTMENT CONCENTRATION IN REAL ESTATE SECURITIES INCREASES RISKS THAT WOULD NOT BE AS GREAT IN MORE DIVERSE INVESTMENTS. * PERFORMANCE FIGURES INCLUDE REINVESTMENT OF INCOME DIVIDEND AND CAPITAL GAIN DISTRIBUTIONS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE. INVESTORS' SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. EFFECTIVE MARCH 1, 1996, THE ADVISER COMMENCED WAIVING A PORTION OF ITS ADVISORY FEE AND CEASED ABSORBING OTHER OF THE FUND'S EXPENSES. HAD FEE NOT BEEN WAIVED OR EXPENSES ABSORBED, PERFORMANCE WOULD HAVE BEEN LOWER. FEE WAIVER AND EXPENSE ABSORPTION MAY BE REVISED AT ANY TIME. FOR ADDITIONAL INFORMATION ON FEE WAIVER AND EXPENSE ABSORPTION, PLEASE SEE THE PROSPECTUS. ** SOURCE: LIPPER ANALYTICAL SERVICES, INC., AND INDEPENDENT MUTUAL FUNDS PERFORMANCE MONITOR. + UNMANAGED INDEXES OF SELECTED SECURITIES. AN INVESTMENT CAN NOT BE MADE IN AN INDEX. 22 EVERGREEN GLOBAL REAL ESTATE EQUITY FUND (Photo of Globe appears here) SELECTED INVESTMENT PERFORMANCE The best performance for the period under review was in Asia and the biggest underperformance was in Europe, compounded by the decline in European currencies. This held true for the Fund's holdings as well. The top gainers during the six months under review include current holdings in the Philippines, such as Filinvest Land which led with a 92% return, while Megaworld Properties, the Fund's second largest holding rose 53%, and Robinson's Land Corp. rose 44%. Even though many European holdings were rather dull or even slightly negative, the Fund's investment in Immeubles de France rose 50% as the market concluded that the company's financially troubled parent, Fonciere de France, would be forced to sell its majority stake in IDF in order to equitize the underlying value of its real estate. Latin America also provided strong returns as the Fund's only Mexican investment, Grupo Posados, a hotel company, continued to recover from Mexico's financial crisis, rising over 40% during this period. Similarly, the Fund's investment in Argentina's IRSA rose over 43% as economic prospects continued to improve south of the border. The strength in Japanese real estate stocks were particularly notable during this period, with the Fund's holdings in Diamond City Company leading the way with a 50% return. The Fund's largest Japanese investment, Kansei Sekiwa, rose only 6% during this buoyant period before catching up to the performance of its peer group during the month following the close of this fiscal period. Thailand has proved to be something of an enigma, with the Thai Property Developers Index+ trading at levels 65% below its market peak in January 1994, while most of its Southeast Asian peers have seen their property shares indexes rise above their recent two-year lows (most bottomed during November 1995). Of the Fund's five investments in Thailand, 40% is in three homebuilders, Sammakorn, M.K. Real Estate, and Property Perfect, which declined by 13%, 30%, and 36%, respectively, as a combination of rising interest rates and rising flood waters in Bangkok impacted sales during early 1996. However, the majority of the Fund's current holdings in Thailand are in industrial property developers, Hemaraj Land and Saha Pathana Interholding, which rose 61% and 28%, respectively, during this period. In the U.S., the Fund enjoyed appreciation in a diverse group of stocks ranging from Studio Plus Hotels, +42%, to shopping center Real Estate Investment Trust (REIT) Alexander's, the Fund's second largest holding, +18%. Continental Homes, the Fund's largest holding, appreciated 12%, in sharp contrast to the Standard and Poor's Homebuilding Index+ which declined by 10% during this period and mirrored some of the Fund's other holdings, notably M.I. Schottenstein Homes, Washington Homes, and U.S. Home Corp., which fell by 17%, 14%, and 8%, respectively. Rising interest rates in the U.S. led to a broad sell-off of homebuilder stocks during February and a rebound has yet to materialize despite continued evidence of growing strength in the single-family home market for both new and existing houses. New order backlogs are at or near record levels for most builders. Ironically, inflation fears have been fueled in part by this strength in housing demand. PROPERTY MARKET REVIEW AND PROSPECTS The most fundamental factor which has been driving property market performance is the rate of economic expansion. With the U.S. recovery starting in 1991, followed by the U.K. and Australia in late 1992 and the initial end of economic decline apparent in both Continental Europe and Japan during 1993, we would normally expect to see a stronger performance in the real estate markets today, since they typically lag the economic cycle's recovery by a few years. 23 EVERGREEN GLOBAL REAL ESTATE EQUITY FUND (Photo of Globe appears here) OFFICE SECTOR Even in the economies which recovered earlier and saw their property markets benefit from improved absorption of existing space, leading to lower vacancy rates, the pace of economic growth has not led to a high level of sustained demand. Absorption of vacant office space in Australia, England, and the U.S. appears to have peaked in 1994. This amount was typically less than half the peak level of the mid 1980s. Thus, while office vacancies have fallen to 13.8% nationwide in the U.S., this has led only to a moderate firming of realizable rent levels. In fact, there have been some signs of price sensitivity in the marketplace which indicates that a reversal of the trend of prior years may be occurring in which tenants upgraded from Class B space to Class A space at little extra cost. Even in Sidney, Australia, where the Class A vacancy rate is around 6% and available new construction is still three years in the future, there has been some difficulty in achieving rapidly rising rent levels. In general, economic growth has yet not been strong enough to produce rapid rental growth. In Continental Europe, office vacancy rates range from a low of 5% in Copenhagen, to over 20% in Milan, while the key markets of Paris and Frankfurt appear to have stabilized at about 10% to 12% vacancy rates. Rent levels appear to have bottomed for much of Europe, but the weak economic recovery over the past two years, combined with double-digit unemployment rates, suggests that tenants still have an opportunity to make good deals. Strong economic growth in much of Asia, in contrast, has fueled considerable demand for real estate which has led to significant levels of new space under development. Nonetheless, for much of Asia, office vacancy rates typically average between 7% to 10%, with major exceptions such as Beijing and Shanghai, where vacancies are in the mid-teens. With the prospect of a significant pipeline of new construction, some markets equilibrium will be tested, notably Jakarta with almost 9 million square feet due for completion over the next two years and Shanghai with 8 million square feet in the wings and possibly more in later years for this already somewhat saturated market. By comparison, all of the U.S. had just over 12 million square feet of new space under construction. Notably, some of this U.S. new space was not the "build-to-suit" space prearranged for tenants. Speculative development has returned to some of the country's stronger major markets, such as Atlanta and Washington, D.C. RETAIL AND INSTITUTIONAL SECTORS The strongest institutional demand appears to be in the retail sector, as many investors are betting that improving economic growth rates will lead to increased levels of domestic consumption. In a number of countries this expansion is prudent, but in the heavily saturated retail markets of the U.S., it is creating a competitive environment for retailers which itself is increasing the risk of ownership for some shopping center properties. This is less of a problem abroad, as most countries have considerably less retail real estate per capita, and shopping center development is more constrained. Industrial real estate has in fact been among the strongest performing sectors in many countries benefiting from both the gradual economic expansion and the changing needs of manufacturers and distributors who typically utilize such space. RESIDENTIAL SECTOR Residential construction has been very strong in the U.S., with near record levels of existing home sales and high levels of new construction due to the combination of high employment levels and historically high affordability. Solid apartment demand reflects moderate levels of new construction compared with peak levels of the last decade. Housing demand also appears to be nearing peak levels in Japan as low interest rates and a 24 EVERGREEN GLOBAL REAL ESTATE EQUITY FUND (Photo of Globe appears here) desire for more modern earthquake proof construction has fueled demand there. In Europe, the slow economic rebound is taking its toll on home construction which is significantly below historic norms despite falling interest rates. Demand in much of Southeast Asia remains very strong for housing, particularly in Singapore, Malaysia, and the Philippines. The Hong Kong housing market has recovered from its lows of 1994/1995, while the housing markets of Thailand, Indonesia, and South Korea remain rather sluggish. STRATEGY AND OPPORTUNITY Underlying the investment strategy and direction of the Fund is our reading of demographic and economic patterns and trends. Our investments in the U.S. are based upon our perception that the Federal Reserve has achieved a slow growth, low inflation environment in which meaningful capital appreciation of real estate will be difficult to achieve over the near to intermediate term. Thus, our focus continues to be on companies and sectors whose cashflow stability or growth is not currently appreciated by the stock market. The economy and real estate market in Canada are fairly anemic, so we have been cautious there, although continued share price depreciation may create some interesting values. Latin America has begun to rebound following the Mexican financial crisis in late 1994, but investment opportunities are limited at the current time. Most European economies and real estate markets have stabilized and begun to grow, however there are questions as to the pace of recovery. Nevertheless, we believe that low interest rates will prevail throughout Europe, which will make real estate equities increasingly attractive. While the Japanese economy has finally begun to rebound after two years of nominal growth, the real estate market has shown only modest signs of improvement, as vacancy rates are falling, but rents are not rising. Japanese land prices have not fully stabilized, and will probably require a U.S. type RTC to inject liquidity into the property market. We are concerned that such an RTC may not have the necessary powers to affect a rapid turnaround in the market, and thus, we may reduce our exposure to Japan over the coming months unless a substantive approach is undertaken. The Fund has only nominal exposure in Hong Kong due to our concern over U.S.-China trade talks and the potential for negative fall-out. However, we are positive on the prospects for Hong Kong long-term, as it reverts to Chinese ownership next year. While the economic prospects in the Philippines are still very strong, we will be reducing our exposure there somewhat since our Fund has such a high weighting in this relatively small stock market. Despite our current caution on the prospects for certain sectors in Indonesia and Thailand, we believe that there may be increasingly interesting investment opportunities in selected real estate companies over the balance of the year. Both Singapore and Malaysian governments have created regulations designed to slow or cap residential property prices and in turn, this has impacted such shares in the stock markets and may yet create additional investment opportunities for the Fund. The Fund's overall approach continues to focus on buying real estate company shares at a discount to their underlying property value and finding growth situations which can take advantage of strong demographic and/or economic trends. We believe that this economic cycle is very different from the boom/bust pattern of the 1970s and 1980s and thus, the prospect for achieving 30% to 50% annual growth rates in real estate values is not as likely. However, we believe that the increase securitization of real estate, which started in the U.S. in 1993, is clearly spreading to other countries and will continue to provide new and interesting investment opportunities as the global economic rebound gathers steam. We appreciate your continued interest and support, and look forward to updating you on our performance after the Fund's fiscal year-end in October. 25 EVERGREEN GLOBAL REAL ESTATE EQUITY FUND (Photo of Globe STATEMENT OF INVESTMENTS appears here) APRIL 30, 1996 (UNAUDITED)
SHARES VALUE EQUITY SECURITIES -- 97.8% ARGENTINA -- 3.5% 281,313 Inversiones y Representaciones......... $ 849,650 40,868 Inversiones y Representaciones, GDS.... 1,226,040 2,075,690 BELGIUM -- 1.4% 7,342 Bernheim-Comofi........................ 419,809 6,000 Immobiliere de Belgique................ 419,314 839,123 CANADA -- .5% 70,000 Monarch Development Corp............... 334,190 DENMARK -- 4.0% 25,000* Nordicom AS............................ 372,755 34,325 Thorkild Kristensen.................... 2,018,091 2,390,846 FRANCE -- 10.5% 11,000 Simco Registered Shares................ 1,051,572 576* Simco Registered New Ordinary Shares... 49,602 20,000 Societe des Immeubles.................. 1,373,198 51,078 Societe du Louvre...................... 1,868,165 3,346 Societe Financiere Interbail........... 163,755 18,450 Unibail................................ 1,803,048 6,309,340 GERMANY -- 2.1% 35,897 Kampa-Haus AG.......................... 1,242,760 HONG KONG -- 1.0% 1,082,600 CDL Hotels International Ltd........... 615,790 INDONESIA -- .7% 300,000 P.T. Jakarta International Hotels and Development................. 398,543 JAPAN -- 14.1% 24,200 Chubu Sekiwa Real Estate, Ltd.......... 402,543 117,000 Daibiru Corp........................... 1,577,076 190,000 Diamond City Co., Ltd.................. 1,703,743 133,100 Kansai Sekiwa Real Estate Co., Ltd..... 2,341,227 20,000 Sawako Corp............................ 630,945 47,000 Tachihi Enterprise Co., Ltd............ 1,797,237 8,452,771 SHARES VALUE MALAYSIA -- 1.3% 161,000 Asiatic Development Berhad............. $ 178,867 168,300 IOI Properties Berhad.................. 556,882 39,200* IOI Properties Berhad Warrants expiring 5/18/98 @ MR $2.75............................. 80,183 815,932 MEXICO -- 2.2% 930,000 Grupo Posadas, SA de CV, Class A Shares................................. 419,314 1,930,000 Grupo Posadas, SA de CV, Class L Shares................................. 883,176 1,302,490 NETHERLANDS -- 2.7% 110,500 German City Estates NV................. 1,612,197 NORWAY -- 1.2% 45,000 Steen & Strom.......................... 712,372 PHILIPPINES -- 14.6% 4,500,000* Belle Corp............................. 662,017 500,000* DMCI Holdings, Inc..................... 334,352 2,500,000* Filinvest Land, Inc.................... 1,289,645 1,500,000 Guoco Holdings......................... 355,369 4,199,590* Megaworld Properties and Holdings...... 3,008,877 5,961,000 Robinson's Land Corp. Class B.......... 1,389,457 1,712,000 SM Fund Inc............................ 215,880 5,127,750 SM Prime Holdings, Inc................. 1,489,144 8,744,741 SINGAPORE -- 1.1% 651,200 Hotel Grand Central Ltd................ 680,939 SOUTH KOREA -- .1% 620 Chosun Brewery Co...................... 21,350 SPAIN -- 4.6% 80,000 Inmobilaria Urbis SA................... 324,528 439,993* Sotogrande SA.......................... 968,538 80,000 Vallehermoso SA........................ 1,446,541 2,739,607 THAILAND -- 4.9% 123,700 Hemaraj Land and Development Public Co., Ltd............................... 862,414 154,800 MK Real Estate Development Public Co., Ltd.................................... 355,657 68,100 Property Perfect Co., Ltd.............. 338,551 400,000 Saha Pathana Inter-Holdings Co......... 950,702 209,400 Sammakorn Co., Ltd..................... 431,334 2,938,658
26 EVERGREEN GLOBAL REAL ESTATE EQUITY FUND (Photo of Globe STATEMENT OF INVESTMENTS -- (CONTINUED) appears here) APRIL 30, 1996 (UNAUDITED)
SHARES VALUE UNITED KINGDOM -- 3.5% 81,000 Capital and Regional Properties Plc.... $ 226,795 46,285* Capital and Regional Properties Rights Plc.................................... 4,180 701,921* Clubhaus Plc........................... 73,964 701,921 Ex-Lands Properties Plc................ 126,796 500,000 Greycoat Plc........................... 1,204,275 1,000,000 Hemingway Properties Plc............... 436,550 100,000* Tops Estates Plc Warrants expiring 8/21/00 @ L240......................... 10,537 2,083,097 UNITED STATES -- 23.8% 36,900* Alexander's, Inc....................... 2,725,988 18,400 Bradley Real Estate, Inc............... 271,400 48,000 Chelsea GCA Realty, Inc................ 1,368,000 152,700 Continental Homes Holding Corp......... 3,493,013 85,816 HGI Realty, Inc........................ 1,759,228 32,100 Kranzco Realty Trust................... 501,563 85,500* M/I Schottenstein Homes, Inc........... 844,313 258,100* Presley Companies...................... 419,413 74,200 Standard Pacific Corp.................. 473,025 12,000 Starwood Lodging Trust................. 397,500 15,000* Studio Plus Hotels, Inc................ 416,250 13,800* U.S. Home Corp......................... 343,275 54,000* U.S. Home Corp. Warrants expiring 6/22/98 @ $20........ 418,500 180,200 Washington Homes, Inc.................. 833,424 14,264,892 TOTAL COMMON STOCKS (COST $54,493,036)..................... 58,575,328 PRINCIPAL AMOUNT VALUE SHORT TERM INVESTMENTS -- .8% $300,000 Federal Home Loan Mortgage, 5.17%, 5/16/96......................... $ 299,354 200,000 Federal Home Loan Mortgage, 5.20%, 6/4/96.......................... 199,018 TOTAL SHORT TERM INVESTMENTS (COST $498,372)........................ 498,372
TOTAL INVESTMENTS (COST $54,991,408) 98.6% 59,073,700 OTHER ASSETS AND LIABILITIES -- NET.......... 1.4 793,087 NET ASSETS.................... 100.0% $59,866,787
* Non-income producing securities ADS -- American Depositary Shares. GDS -- Global Depositary Shares. # Represents common stock investments unless otherwise indicated. The percentage of net assets in each type of security is as follows: Common Stock............................ 89.6% Real Estate Investment Trusts........... 7.3 Warrants................................ .9 Total Equity Securities................. 97.8%
See accompanying notes to financial statements. 27 EVERGREEN GLOBAL REAL ESTATE EQUITY FUND (Photo of Globe STATEMENT OF ASSETS AND LIABILITIES appears here) APRIL 30, 1996 (UNAUDITED)
ASSETS: Investments at value (identified cost $54,991,408)............................................................. $59,073,700 Foreign currencies at value (identified cost $107,243)......................................................... 109,441 Cash........................................................................................................... 118,224 Receivable for investments sold................................................................................ 1,216,160 Dividends receivable........................................................................................... 192,503 Prepaid expenses and other assets.............................................................................. 80,604 Receivable for Fund shares sold................................................................................ 35,534 Total assets............................................................................................. 60,826,166 LIABILITIES: Payable for investments purchased.............................................................................. 756,360 Accrued expenses............................................................................................... 124,565 Accrued advisory fee........................................................................................... 44,037 Payable for Fund shares repurchased............................................................................ 34,417 Total liabilities........................................................................................ 959,379 NET ASSETS........................................................................................................ $59,866,787 NET ASSETS CONSIST OF: Paid-in capital................................................................................................ $63,753,115 Accumulated net investment loss................................................................................ (77,107) Accumulated net realized loss on investment and foreign currency transactions.................................. (7,892,595) Net unrealized appreciation of investments and foreign currencies.............................................. 4,083,374 Net assets............................................................................................... $59,866,787 CALCULATION OF NET ASSET VALUE AND MAXIMUM OFFERING PRICE PER SHARE: Class A Shares ($1,875,067(division sign)143,189 shares of beneficial interest outstanding).................... $ 13.10 Sales charge -- 4.75% of offering price........................................................................ .65 Maximum offering price................................................................................... $ 13.75 Class B Shares ($91,481(division sign)7,039 shares of beneficial interest outstanding)......................... $ 13.00 Class C Shares ($8,880(division sign)683 shares of beneficial interest outstanding)............................ $ 13.00 Class Y Shares ($57,891,359(division sign)4,413,988 shares of beneficial interest outstanding)................. $ 13.12
See accompanying notes to financial statements. 28 EVERGREEN GLOBAL REAL ESTATE EQUITY FUND (Photo of Globe STATEMENT OF OPERATIONS appears here) SIX MONTHS ENDED APRIL 30, 1996 (UNAUDITED)
INVESTMENT INCOME: Dividends (net of foreign withholding taxes of $26,105)............................................ $ 408,021 Interest........................................................................................... 15,850 Total investment income...................................................................... 423,871 EXPENSES: Advisory fee....................................................................................... $298,439 Distribution fee -- Class A Shares................................................................. 1,109 Distribution fee -- Class B Shares................................................................. 360 Distribution fee -- Class C Shares................................................................. 25 Shareholder services fee -- Class B Shares......................................................... 120 Shareholder services fee -- Class C Shares......................................................... 8 Custodian fee...................................................................................... 65,641 Transfer agent fee................................................................................. 49,041 Registration and filing fees....................................................................... 40,334 Professional fees.................................................................................. 35,057 Reports and notices to shareholders................................................................ 13,675 Insurance.......................................................................................... 13,247 Trustees' fees and expenses........................................................................ 6,064 Miscellaneous...................................................................................... 897 Total operating expenses........................................................................ 524,017 Interest........................................................................................... 8,709 Less: Fee waivers and expense reimbursments........................................................ (45,582) Net expenses................................................................................. 487,144 Net investment loss................................................................................... (63,273) NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES: Net realized loss on investment transactions....................................................... (380,241) Net realized loss on foreign currency transactions................................................. (25,546) Net change in unrealized appreciation (depreciation) of investments and foreign currencies......... 7,853,423 Net gain on investments and foreign currencies........................................................ 7,447,636 NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................................................. $7,384,363
See accompanying notes to financial statements. 29 (Photo of Globe EVERGREEN GLOBAL REAL ESTATE EQUITY FUND appears here) STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED ONE MONTH APRIL 30, 1996 ENDED (UNAUDITED) OCTOBER 31, 1995 INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment loss........................................................................ $ (63,273) $ (63,653) Net realized loss on investment transactions............................................... (380,241) (28,407) Net realized loss on foreign currency transactions......................................... (25,546) (1,146) Net change in unrealized appreciation (depreciation) of investments and foreign currencies............................................................................... 7,853,423 (2,841,208) Net increase (decrease) in net assets resulting from operations......................... 7,384,363 (2,934,414) FUND SHARE TRANSACTIONS: Proceeds from shares sold.................................................................. 10,557,459 640,465 Proceeds from reinvestment of distributions................................................ -- -- Payment for shares redeemed................................................................ (19,670,636) (3,957,113) Net decrease resulting from Fund share transactions.................................. (9,113,177) (3,316,648) Net decrease in net assets........................................................... (1,728,814) (6,251,062) NET ASSETS: Beginning of period........................................................................ 61,595,601 67,846,663 End of period (including net investment loss of $77,107 and $13,834, respectively)......... $ 59,866,787 $ 61,595,601
See accompanying notes to financial statements. 30 (Photo of Globe EVERGREEN GLOBAL REAL ESTATE EQUITY FUND appears here) FINANCIAL HIGHLIGHTS
CLASS A SHARES CLASS B SHARES SIX MONTHS SIX MONTHS ENDED ONE MONTH FEBRUARY 10, ENDED ONE MONTH APRIL 30, ENDED 1995* THROUGH APRIL 30, ENDED 1996 OCTOBER 31, SEPTEMBER 30, 1996 OCTOBER 31, (UNAUDITED) 1995# 1995 (UNAUDITED) 1995# PER SHARE DATA: Net asset value, beginning of period............................ $11.58 $12.12 $11.46 $11.53 $12.08 Income (loss) from investment operations: Net investment income (loss).................................. (.15) (.01) .07 (.07) (.02) Net realized and unrealized gain (loss) on investments and foreign currency transactions............... 1.67 (.53) .59 1.54 (.53) Total from investment operations............................ 1.52 (.54) .66 1.47 (.55) Net asset value, end of period.................................. $13.10 $11.58 $12.12 $13.00 $11.53 TOTAL RETURN+................................................... 13.1% (4.5%) 5.8% 12.8% (4.6%) RATIOS & SUPPLEMENTAL DATA: Net assets, end of period (000's omitted)....................... $1,875 $74 $66 $91 $100 Ratios to average net assets: Operating expenses++**........................................ 1.71% 1.73% 1.61% 2.46% 2.44% Interest expense.............................................. .03% .03% .01% .03% .03% Net investment income (loss)++**.............................. (.20%) (1.26%) .98% (1.14%) (1.98%) Portfolio turnover rate......................................... 19% 1% 28% 19% 1% Average commission rate paid.................................... $.0052 N/A N/A $.0052 N/A FEBRUARY 8, 1995* THROUGH SEPTEMBER 30, 1995 PER SHARE DATA: Net asset value, beginning of period............................ $11.44 Income (loss) from investment operations: Net investment income (loss).................................. .08 Net realized and unrealized gain (loss) on investments and foreign currency transactions............... .56 Total from investment operations............................ .64 Net asset value, end of period.................................. $12.08 TOTAL RETURN+................................................... 5.6% RATIOS & SUPPLEMENTAL DATA: Net assets, end of period (000's omitted)....................... $128 Ratios to average net assets: Operating expenses++**........................................ 2.42% Interest expense.............................................. .03% Net investment income (loss)++**.............................. 1.38% Portfolio turnover rate......................................... 28% Average commission rate paid.................................... N/A
* Commencement of class operations. # The Fund changed its year end from September 30 to October 31. + Total return is calculated on net asset value per share for the periods indicated and is not annualized. Initial sales charge or contingent deferred sales charge is not reflected. ++ Annualized. ** 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 loss to average net assets, exclusive of any applicable state expense limitations, would have been the following:
CLASS A SHARES CLASS B SHARES SIX MONTHS FEBRUARY 10, SIX MONTHS ENDED ONE MONTH 1995* ENDED ONE MONTH APRIL 30, ENDED THROUGH APRIL 30, ENDED 1996 OCTOBER 31, SEPTEMBER 30, 1996 OCTOBER 31, (UNAUDITED) 1995# 1995 (UNAUDITED) 1995# Operating expenses............................................. 4.58% 46.90% 21.59% 27.66% 31.39% Net investment loss............................................ (3.07%) (46.44%) (19.00%) (26.34%) (30.94%) FEBRUARY 8, 1995* THROUGH SEPTEMBER 30, 1995 Operating expenses............................................. 82.74% Net investment loss............................................ (79.94%)
See accompanying notes to financial statements. 31 (Photo of Globe EVERGREEN GLOBAL REAL ESTATE EQUITY FUND appears here) FINANCIAL HIGHLIGHTS
CLASS C SHARES CLASS Y SHARES SIX MONTHS FEBRUARY 9, SIX MONTHS ENDED ONE MONTH 1995* ENDED ONE MONTH NINE MONTHS APRIL 30, ENDED THROUGH APRIL 30, ENDED YEAR ENDED ENDED 1996 OCTOBER 31, SEPTEMBER 30, 1996 OCTOBER 31, SEPTEMBER 30, SEPTEMBER 30, (UNAUDITED) 1995# 1995 (UNAUDITED) 1995# 1995 1994## PER SHARE DATA: Net asset value, beginning of period........................... $11.53 $12.08 $11.43 $11.59 $12.13 $13.81 $14.75 Income (loss) from investment operations: Net investment income (loss)..... (.16) (.02) .06 (.01) (.01) .11 .07 Net realized and unrealized gain (loss) on investments and foreign currency transactions................... 1.63 (.53) .59 1.54 (.53) (1.17) (1.01) Total from investment operations................... 1.47 (.55) .65 1.53 (.54) (1.06) (.94) Less distributions to shareholders from: Net investment income............ -- -- -- -- -- (.10) -- Net realized gains............... -- -- -- -- -- (.52) -- Total distributions to shareholders................. -- -- -- -- -- (.62) -- Net asset value, end of period..... $13.00 $11.53 $12.08 $13.12 $11.59 $12.13 $13.81 TOTAL RETURN+...................... 12.8% (4.6%) 5.7% 13.2% (4.5%) (7.7%) (6.4%) RATIOS & SUPPLEMENTAL DATA: Net assets, end of period (000's omitted)......................... $9 $4 $7 $57,891 $61,418 $67,645 $132,294 Ratios to average net assets: Operating expenses............... 2.40%++** 2.37%++** 1.54%++** 1.60%++** 1.62%++ 1.54% 1.46%++ Interest expense................. .03%++ .02%++ .01%++ .03%++ .03%++ .05% .08%++ Net investment income (loss)..... (1.05%)++** (1.94%)++** .86%++** (.21%)++** (1.14%)++ .92% .56%++ Portfolio turnover rate............ 19% 1% 28% 19% 1% 28% 63% Average commission rate paid....... $.0052 N/A N/A $.0052 N/A N/A N/A YEAR ENDED DECEMBER 31, 1993 1992 PER SHARE DATA: Net asset value, beginning of period........................... $9.86 $9.16 Income (loss) from investment operations: Net investment income (loss)..... -- (.01) Net realized and unrealized gain (loss) on investments and foreign currency transactions................... 5.07 .94 Total from investment operations................... 5.07 .93 Less distributions to shareholders from: Net investment income............ -- -- Net realized gains............... (.18) (.23) Total distributions to shareholders................. (.18) (.23) Net asset value, end of period..... $14.75 $9.86 TOTAL RETURN+...................... 51.4% 10.2% RATIOS & SUPPLEMENTAL DATA: Net assets, end of period (000's omitted)......................... $146,173 $8,618 Ratios to average net assets: Operating expenses............... 1.56%** 2.00%** Interest expense................. -- -- Net investment income (loss)..... .03%** (.10%)** Portfolio turnover rate............ 88% 245% Average commission rate paid....... N/A N/A
* Commencement of class operations. # The Fund changed its fiscal year end from September 30 to October 31. ## The Fund changed its fiscal year end from December 31 to September 30. + Total return is calculated on net asset value per share for the periods indicated and is not annualized. Contingent deferred sales charge is not reflected. ++ Annualized. ** 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 loss to average net assets, exclusive of any applicable state expense limitations, would have been the following:
CLASS Y CLASS C SHARES SHARES SIX MONTHS FEBRUARY 9, SIX MONTHS ENDED ONE MONTH 1995* ENDED APRIL 30, ENDED THROUGH APRIL 30, 1996 OCTOBER 31, SEPTEMBER 30, 1996 (UNAUDITED) 1995# 1995 (UNAUDITED) Operating expenses....................................................... 368.91% 570.26% 269.60% 1.63% Net investment loss...................................................... (367.56%) (569.83%) (266.32%) (.24%) YEAR ENDED DECEMBER 31, 1993 1992 Operating expenses....................................................... 1.64% 3.72% Net investment loss...................................................... (.05%) (1.82%)
See accompanying notes to financial statements. 32 (Photo of Flags EVERGREEN INTERNATIONAL EQUITY FUND appears here) A REPORT FROM YOUR PORTFOLIO MANAGER RICHARD WAGONER Evergreen International Equity Fund completed the first (Photo of half of its fiscal year on April 30, 1996, with a net asset Richard Wagoner value per share (Class Y, no-load shares) of $10.84. The appears here) Fund's 14.2%* total return for that time outperformed the 12.0% total return for the Lipper International Funds average of the 323 international funds tracked by Lipper Analytical Services during that time**. The Fund also outperformed the 13.3% total return for the MSCI EAFE Index***. The total returns at NAV for the six months ended April 30, for the Fund's Class A shares, Class B shares and Class C shares were 14.0%, 13.7%, and 13.8%, respectively. Class A shares are subject to a maximum 4.75% front end sales charge, Class B shares are subject to a maximum 5% contingent deferred sales charge, and Class C shares are subject to a 1% contingent deferred sales charge within the first year of purchase. Sales charges are not reflected in figures above, and if reflected, performance would be lower. Most foreign markets have performed well during the past six months, and the Fund, which owns stocks from over 400 companies in forty countries, was well positioned to take advantage of this. Our largest country allocation, at just under 23% of net assets, was Japan. The Japanese stock market rose 19%, as measured MSCI EAFE/Japan Index+, for the six months ended April 30. The Fund also benefited from its position in Malaysia, 6% of net assets at April 30, which was up nearly 30%. Among developed markets, which represent approximately 90% of net assets, Finland was the only equity market with a negative return during the period under review. The Finnish market has finally cooled off after a phenomenal run which produced a return of 80% for calendar 1993, 50% for calendar 1994, and 47.6% through the third quarter of calendar 1995, as measured by the MSCI EAFE/Finland Index+. During the last six months, the Finnish market declined 8.1% and the currency 12.5%. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. INTERNATIONAL INVESTING MAY INVOLVE CERTAIN ADDITIONAL RISKS SUCH AS CURRENCY FLUCTUATIONS, ECONOMIC AND POLITICAL INSTABILITY, AND DIFFERENCES IN ACCOUNTING STANDARDS. * PERFORMANCE FIGURES INCLUDE REINVESTMENT OF INCOME DIVIDEND AND CAPITAL GAIN DISTRIBUTIONS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE. INVESTORS' SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENTLY, THE ADVISER IS WAIVING A PORTION OF ITS ADVISORY FEE AND ABSORBING A PORTION OF THE FUND'S OTHER EXPENSES. HAD FEE NOT BEEN WAIVED OR EXPENSES ABSORBED, PERFORMANCE WOULD HAVE BEEN LOWER. FEE WAIVER AND EXPENSE ABSORPTION MAY BE REVISED AT ANY TIME. FOR ADDITIONAL INFORMATION ON FEE WAIVER AND EXPENSE ABSORPTION, PLEASE SEE THE PROSPECTUS. ** SOURCE: LIPPER ANALYTICAL SERVICES, INC., AND INDEPENDENT MUTUAL FUNDS PERFORMANCE MONITOR. *** THE MSCI EAFE INDEX IS A STANDARD UNMANAGED FOREIGN SECURITIES INDEX REPRESENTING 1,112 SECURITIES FROM 20 DEVELOPED COUNTRIES IN EUROPE, AUSTRALIA, AND THE FAR EAST AS MONITORED BY MORGAN STANLEY CAPITAL INTERNATIONAL. ALL COUNTRY RETURNS, INCLUDING THAT OF THE U.S., DIFFER FROM INDEX RETURNS BECAUSE THEY REPRESENT TOTAL STOCK MARKET RETURNS AS CALCULATED BY MORGAN STANLEY CAPITAL INTERNATIONAL. AN INVESTMENT CAN NOT BE MADE IN AN INDEX. + MSCI COUNTRY-SPECIFIC SUB INDEX WITHIN THE MSCI EAFE INDEX. 33 (Photo of Flags EVERGREEN INTERNATIONAL EQUITY FUND appears here) A REPORT FROM YOUR PORTFOLIO MANAGER -- (CONTINUED) Most foreign currencies, in fact, have been weak. The Deutsche mark declined about 8% and even the mighty yen declined about 2%. It looks as though the U.S. dollar's long steady decline has finally hit bottom. The modest rebound of the dollar has given a bit of breathing room to foreign firms that export products to the U.S. Most emerging markets, which in aggregate represent about 10% of the Fund, were strong performers. The IFCI Index++ was up 15.3% for the six months ended April 30. Some emerging market countries delivered absolutely outstanding numbers. Argentina, as measured by the IFCI/Argentina Index+++, was up 39% in U.S. dollar terms while Taiwan, Mexico and Hungary, as measured by their respective IFCI Indexes, were each up over 25%. We employ a highly systematic process in the management of our Fund. The focus of this process is an effort to have the Fund outperform the MSCI EAFE Index. This process employs a three-part strategy in relation to the EAFE: 1) a more uniform country allocation within the EAFE markets, 2) a strong emphasis on value stocks culled from our research universe of about 1,900 stocks within the EAFE markets and, 3) diversified holdings in emerging markets. Our policy is to invest 90% of the portfolio in the twenty developed markets represented by EAFE Index and 10% in the twenty six emerging markets represented by the IFCI Index. The Fund commenced operations on September 2, 1994. For its first full fiscal year, which ended October 31, 1995, we underperformed the EAFE Index by 3.6 percentage points. The second and third elements of our strategy worked against us during this period. The Fund is now half-way through its second full fiscal year. Our value stocks and our emerging markets holdings have started to perform and we have begun to close our performance gap relative to the EAFE Index. Our value-oriented stock selections in Japan have worked particularly well for us during the last six months. We have attempted to systematically select low-priced stocks across all sectors of the market, and our holdings have outperformed the Japanese market by over 20 percentage points. Matsushita Electric is a good example. It is a mammoth manufacturing operation that produces many well-known appliances, household durables, and consumer electric products, for example, those under the Panasonic name. The firm has a capitalization of about $35 billion with 1995 sales of 7 trillion yen, approximately $74 billion. On April 30, Matsushita was selling at 1,850 yen (approximately $17.66) which is up nearly 30% from six months earlier. But, it remains one of the cheapest stocks in the Japanese market on a variety of measures. It is selling a shade over book value, and is still nearly 40% below its peak which was in 1988. Toyota, our largest holding in Japan, is another good example. This stock is up 26% for the six months through April 30, and still sells at only 1.8x book value. which puts it at a 22% discount to the overall Japanese market. Nissan and Mazda have also performed well and remained cheap. Some of the securities in the financial sector have performed even better. For example, Yamaichi Securities, one of the large Japanese brokers, is up 54% for the last six months and was selling at 1.6 times book value at April 30. ++ THE INTERNATIONAL FINANCE CORPORATION INDEX OF 1,116 STOCKS FROM 26 DEVELOPING COUNTRIES FROM AROUND THE WORLD. THE IFCI INDEXES ARE UNMANAGED INDEXES. +++ AN IFCI COUNTRY-SPECIFIC SUB INDEX WITHIN THE IFCI INDEX. 34 (Photo of Flags EVERGREEN INTERNATIONAL EQUITY FUND appears here) A REPORT FROM YOUR PORTFOLIO MANAGER -- (CONTINUED) As we look ahead to the second half of the fiscal year, we plan to make a change to the strategic allocation of developed-markets portion of Fund. This change will be effective on July 1. We are concerned with the course of events in Hong Kong as that country approaches the transfer of power to China in June of 1997. We are convinced that the uncertainty is now too great to warrant a 6% allocation of net assets. Hong Kong was a strong performer last year and again last quarter, but no one knows just how much economic freedom will remain in the economy that has, for the last twenty years, been the most free-wheeling in the world. There are numerous signs that there will be, at the very least, a dramatic increase in bureaucracy. We will cut Hong Kong to 2% of net assets. Secondly, we are very encouraged by the gradual improvement in the economic environment in Japan. Valuations are attractive, analysts are increasing their numbers and flows have started to come back into the market. The market, in local currency terms. has been strong for the last year or so, but the over-valued yen has declined and offset most of the equity gains. The yen is no longer too far above its purchasing power parity and we thus feel that the time is right to move Japan back up to a weight more reflective of the underlying size of the market. We will therefore move Japan to a 34% weights, with approximately four percentage points of the increase to come from Hong Kong, and two each from Australia, Malaysia and Singapore. We look forward to the second half of the year. International markets are booming and we are well positioned to take advantage of opportunities all over the globe. 35 EVERGREEN INTERNATIONAL EQUITY FUND (Photo of Flags STATEMENT OF INVESTMENTS appears here) APRIL 30, 1996 (UNAUDITED)
SHARES VALUE COMMON STOCKS -- 95.4% AFRICA -- .1% 12,200 Morgan Stanley Africa Investment Fund............................. $ 154,025 ARGENTINA -- .8% 15,000 Astra Cia Argentina de Petro....... 31,878 8,838 Banco de Galicia Buenos Aires...... 52,856 5,300* Banco Frances del Rio de la Plata SA............................... 50,726 600 Buenos Aires Embotelladora SA, ADR.............................. 9,525 7,000 Cementera Argentina................ 30,803 5,900 Central Puerto SA.................. 21,242 10,000* Comercial del Plata SA............. 29,903 617* IRSA Inversiones y Representaciones SA, GDR.......................... 18,510 3,500 Molinos Rio de la Plata SA......... 36,404 6,000 Perez Companc SA................... 37,324 12,237 Perez Companc SA, ADR.............. 153,832 42,000 Siderca SA......................... 48,725 15,000 Telecom Argentina.................. 67,807 5,100 Telefonica de Argentina, ADR....... 149,175 15,000 Transportadora de Gas Sur.......... 38,554 4,000 YPF SA............................. 88,009 6,200 YPF SA, ADR........................ 135,625 1,000,898 AUSTRALIA -- 4.7% 161,000 Adelaide Brighton Ltd.............. 159,356 1,300 AFP Providia SA, ADR............... 29,737 217,900* Ampolex Ltd........................ 744,592 60,800 Australian & New Zealand Banking Group Ltd........................ 290,388 384,000 Australian National Industries..... 349,914 26,000 Boral Ltd.......................... 67,808 115,900 Caltex Australia Ltd............... 505,298 25,100 Commonwealth Bank of Australia..... 206,045 304,100 General Property Trust............. 525,546 346,500 Goodman Fielder Ltd................ 342,962 55,000 MIM Holdings Ltd................... 81,225 204,700 News Corp. Ltd..................... 1,199,577 304,800 Quantas Airways.................... 541,122 312,600 Westfield Trust.................... 535,324 106,300 Westpac Bank Corp. Ltd............. 516,052 6,094,946 AUSTRIA -- 1.5% 9,100 Creditanstalt-Bankverein Stamm..... 618,783 5,900 Oester Elektrizita................. 417,083 3,200 OMV AG............................. 318,068 8,100 Virginia Stahl AG.................. 267,868 10,050 Z Laenderbank Bank Austria AG...... 350,093 1,971,895 BELGIUM -- 1.3% 336 Banque National Belgique........... 457,357 61,433 Cockerill Sambre................... 333,705 3,915 Electrafina SA..................... 380,556 7,214 Societe Generale de Belgique....... 561,446 1,733,064 SHARES VALUE BRAZIL -- .4% 14,226 Brazil Fund, Inc................... $ 307,637 4,706* Telecomunicacoes Brasileiras, ADR.. 254,712 562,349 CHILE -- .5% 1,400 Banco Osorno y La Union, ADR....... 21,175 1,000 Chilectra SA, ADR.................. 53,286 1,900 Chilgener SA, ADR.................. 42,512 2,400 Compania Cervecerias Unidas SA, ADR.............................. 51,000 1,000 Compania de Telecomunicacione, ADR.............................. 91,250 1,400 Cristalerias de Chile ADR.......... 33,250 1,100 Embotelladora Andina SA, ADR....... 38,500 600 Empresas Telex Chile SA, ADR....... 6,225 4,600 Enersis SA, ADR.................... 136,850 1,600 Laboratorio Chile SA, ADR.......... 21,600 1,600 Madeco SA, ADR..................... 40,000 1,700 Maderas y Sinteticos Sociedad, ADR.............................. 26,988 500 Sociedad Quimica y Minera de Chile SA, ADR.......................... 26,750 1,500 Vina Concha y Toro SA, ADR......... 25,125 614,511 COLOMBIA -- .4% 18,000 Banco Industrial Colombiano SA, ADR.............................. 353,250 7,100 Cementos Diamante SA, ADR.......... 138,387 491,637 CZECH REPUBLIC -- .1% 1,700 Cez................................ 65,189 300 Skoda Koncern Plzen, AS............ 8,479 800 SPT Telecom, AS.................... 97,937 171,605 DENMARK -- 1.9% 11,680 Den Danske Bank AS................. 761,911 3,250 Jyske Bank AS...................... 200,441 1,100 Lauritzen J Holdings AS............ 130,269 5,400 NKT Holdings AS.................... 258,929 4,640 Tele Danmark AS.................... 233,494 2,850* Topdanmark AS...................... 289,732 11,450 Unidanmark AS...................... 510,225 2,385,001 FINLAND -- 1.4% 94,500 Enso-Gutzeit OY.................... 736,146 51,000 Kesko OY........................... 579,593 249,560* Merita Ltd......................... 536,289 1,852,028
36 EVERGREEN INTERNATIONAL EQUITY FUND (Photo of Flags STATEMENT OF INVESTMENTS -- (CONTINUED) appears here) APRIL 30, 1996 (UNAUDITED)
SHARES VALUE COMMON STOCKS -- CONTINUED FRANCE -- 6.3% 7,150 Alcatel Alsthom (Cie Genel)........ $ 672,453 18,350 Assurances Generales de France..... 501,052 16,200 Banque Nationale de Paris.......... 676,528 9,100* Cerus Compagnies Europeenes Reunies SA............................... 175,749 18,600 Cie de Suez........................ 770,636 11,750 Cie Fin de Paribas................. 755,820 2,626 Compagnie Bancaire SA.............. 290,169 4,200* Credit Lyonnais SA................. 140,203 5,300 Credit Nationale SA................ 414,769 955 EuraFrance......................... 367,400 10,450* Groupe des Assurances Nationales (GAN)............................ 314,865 4,825 Peugeot SA......................... 674,146 14,000 Renault Regie Nationale............ 424,538 14,450 Rhone Poulenc SA................... 346,744 1,950 Societe Generale................... 226,415 5,200 Societe Elf Aquitaine.............. 386,717 7,250 Thomson-CSF SA..................... 193,053 4,760 TOTAL SA........................... 323,044 9,550 Uap Cie Uap........................ 206,801 5,550 Worms & Cie........................ 297,611 8,158,713 GERMANY -- 6.2% 2,140 Bankgesellschaft Berlin AG......... 439,630 3,570 BASF AG............................ 974,760 1,785 Bayer AG........................... 574,828 28,090 Bayerische Hypotheken- und Wechsel-Bank AG.................. 698,718 24,950 Bayerische Vereinsbank AG.......... 733,392 1,920 Berl Kraft & Licht................. 525,495 18,690 BHF-Bank International AG.......... 458,674 2,510 Commerzbank AG..................... 543,514 430* Daimler-Benz AG.................... 235,518 29,300 Dresdner Bank AG................... 737,237 1,710 Ikb Dt Industriebk AG.............. 319,459 7 Muenchener Ruckvers AG............. 12,711 295 Siemens AG......................... 161,538 2,650* Varta AG........................... 502,858 9,940 Veba AG............................ 494,111 1,100 Volkswagen AG...................... 379,744 2,410* Zanders Feinpapiere AG............. 173,166 7,965,353 GREECE -- .3% 1,380 Aegek SA........................... 8,778 600 Aktor.............................. 7,867 1,066 Alpha Credit Bank.................. 53,346 420 Alpha Leasing SA................... 7,997 300 Aluminum Co. of Greece............. 13,542 1,040 Commercl Bank of Greece............ 34,120 840 Delta Dairy SA..................... 10,410 740 Elais Oleaginous SA................ 23,792 3,260 Epilektos Textile.................. 12,709 800 Ergo Bank SA....................... 40,248 1,560 Hellenic Bottling Co., SA.......... 56,014 SHARES VALUE GREECE -- CONTINUED 1,420 Hellenic Sugar Industry, SA........ $ 13,315 2,700 Heracles General Cement, SA........ 30,912 700 Intracom SA........................ 16,976 1,100 Ionian Bank SA..................... 19,500 700 Michaniki SA....................... 8,014 740 National Bank Of Greece............ 35,802 600 National Mortgage Bank of Greece... 19,082 540 Titan Cement Co., SA............... 24,929 437,353 HONG KONG -- 6.4% 363,000 Amoy Properties Ltd................ 408,261 234,000 Chinese Estates Holdings Ltd....... 211,751 157,200 Great Eagle Holdings Ltd........... 451,146 160,000 Harbour Centre Development Ltd..... 217,180 218,000 Hongkong Land Holdings Ltd......... 466,520 154,000 Hongkong & Shanghai Hotels Ltd..... 265,775 196,000 Hong Kong Ferry Holdings........... 217,904 21,000 Hutchison Whampoa, Ltd............. 130,308 205,800 Hysan Development Co............... 629,643 146,000* Jardine Strategic Holdings Ltd..... 478,880 343,000 Mandarin Oriental International, Ltd.............................. 487,060 58,000 New World Develelopment Co. Ltd.... 260,177 1,012,000 Regal Hotels International Holdings Ltd.............................. 256,418 837,000 Sino Land Co....................... 827,749 614,000 Stelux Holdings International Ltd.............................. 140,493 49,000 Sun Hung Kai Properties Ltd........ 467,164 76,500 Swire Pacific Ltd.................. 652,705 198,000 Wharf (Holdings) Ltd (The)......... 733,333 228,000 Wheelock & Co...................... 465,697 228,000 Wing on International Holdings..... 403,801 8,171,965 HUNGARY -- .3% 4,300 Danubius Hotel & Spa............... 58,260 4,200 Egis Gyogyszergyar................. 182,095 33,700 Fotex RT........................... 38,811 1,400 Pick Szeged Right, GDR............. 67,262 2,500 Skala-Coop. RT..................... 27,944 374,372 INDIA -- .3% 1,900 Bajaj Auto Ltd., GDR............... 66,500 750 East India Hotels, GDR............. 21,937 3,000 Grasim Industries Ltd.............. 58,500 150* Hindalco Industries Ltd, GDR....... 6,638 1,250 Indian Rayon & Industries, GDR..... 21,062 4,400 Larsen & Toubro Ltd., GDR.......... 82,500 2,900 Raymond Woolen Mil Ltd............. 44,950 1,700 Reliance Industries Ltd............ 28,050 1,500 Tata Engineering & Locomotion Ltd.............................. 27,000 357,137
37 EVERGREEN INTERNATIONAL EQUITY FUND (Photo of Flags STATEMENT OF INVESTMENTS -- (CONTINUED) appears here) APRIL 30, 1996 (UNAUDITED)
SHARES VALUE COMMON STOCK -- CONTINUED INDONESIA -- .5% 40,500 Astra International................ $ 59,878 26,500 Bank International Indonesia....... 130,314 8,000 Gudang Garam Perus................. 49,460 4,000 HM Sampoerna....................... 44,140 98,888 Indah Kiat Paper................... 102,765 12,000 Indofoods Suksesi.................. 56,182 23,500 PT Semen Gresek.................... 81,321 57,000 PT Telekomunikasi Ind.............. 94,654 618,714 IRELAND -- 1.8% 89,600 Allied Irish Bank Plc.............. 467,321 64,600 Bank of Ireland.................... 466,673 81,100 James Crean Plc.................... 292,303 349,600 Jefferson Smurfit Group Plc........ 944,350 105,000 Waterford Foods Plc................ 163,475 2,334,122 ITALY -- 2.1% 613,400* BCA Naz Agricolt................... 236,014 50,400 BCA Pop di Milano.................. 231,511 486,800* Banca di Roma...................... 486,800 445,100 CIR Compagnie Industriali Riunite SpA.............................. 152,451 287,300 Credito Italiano SpA............... 366,574 22,000 Finanziaria Autogrill SpA.......... 23,380 325,700* Finmeccanica SpA................... 165,769 12,200 Grassetto SpA...................... 3,165 120,000 INA-Istituto Nazionale delle Assicurazione SpA................ 184,379 153,200 Italcementi SpA.................... 422,722 13,100 Italmobiliare...................... 203,797 105,300 Telecom Italia SpA................. 214,712 2,691,274 JAPAN -- 22.7% 24,000 Aida Engineering................... 229,435 50,000 Amada Co........................... 583,146 6,500 Aoyama Trading Co.................. 204,436 28,000 Asahi Denka Kogyo.................. 247,598 14,000 Canon, Inc......................... 278,381 9,000 Chubu Electrical Power Co, Inc..... 228,001 25,000 Daicel Chemical Industries, Ltd.... 166,818 28,000 Daiwa Securities Co., Ltd.......... 430,955 23,000 Ezaki Glico Co..................... 239,663 25,000 Fuji Photo Film Co................. 779,121 46,000 Fujisawa Pharm Co.................. 514,507 30,000 Fujita Corp........................ 149,993 36,000 Fujitsu, Ltd....................... 371,684 38,000 Fukuoka City Bank, Ltd............. 304,421 22,000 Gunze, Ltd......................... 144,486 46,000 Haseko Corp........................ 211,959 94,000 Hitachi, Ltd....................... 1,015,439 56,000 Hokkaido Bank, Ltd................. 183,624 48,000 Hokkaido Takushoku Bank, Ltd....... 139,037 93,000 Hokuriku Bank, Ltd................. 626,786 19,000 Honda Motor Co., Ltd............... 434,109 39,000 Inax Corp.......................... 425,027 28,000 Itoham Foods, Inc.................. 227,790 51 Japan Tobacco, Inc................. 471,947 19,000 Kansai Electric Power Co., Inc..... 461,355 SHARES VALUE JAPAN -- CONTINUED 15,000 Katokichi Co....................... $ 374,265 74,000 Komatsu, Ltd....................... 714,497 39,000 Kureha Chemical Industry Co., Ltd.............................. 238,239 27,000 Kyudenko Corpu..................... 397,495 26,000 Long-Term Credit Bank of Japan, Ltd.............................. 225,439 30,000 Maeda Corp......................... 321,208 67,000 Marubeni Corp...................... 401,596 65,000 Marudai Food Co.................... 518,857 9,000 Maruichi Steel Tube................ 190,144 43,000 Matsushita Electric Works Ltd...... 489,174 59,000 Matsushita Electric Industrial Co., Ltd.............................. 1,043,449 81,000* Mazda Motor Corp................... 392,591 107,000 Mitsubishi Chemical Corp........... 587,142 34,000 Mitsubishi Electric Corp........... 267,827 17,000 Mitsubishi Heavy Industries........ 151,790 43,000 Mitsui Fudosan Co.................. 567,277 12,000 Nagase & Co........................ 119,306 46,000 Nippon Credit Bank Co.............. 187,773 103,000 Nippon Oil Co...................... 713,876 27,000 Nippon Sheet Glass Co.............. 138,865 23,000 Nippon Shinpan Co.................. 171,722 11,000 Nippondenso Co., Ltd............... 239,759 100,000 Nissan Motor Co., Ltd.............. 845,084 17,000 Nisshin Oil Mills, Ltd............. 137,326 32,000 Nisshinbo Industries, Inc.......... 354,859 38,000 Obayashi Corp...................... 353,463 13,000 Pioneer Electronic Co.............. 290,808 91,000 Sanyo Electric Co., Ltd............ 581,119 14,000 Seino Transportation Co, Ltd....... 246,260 51,000 Sekisui House, Ltd................. 633,813 49,000* Settsu Corp........................ 184,093 50,000 Shiseido Co., Ltd.................. 630,945 6,000 Sony Corp.......................... 390,039 21,000 Stanley Electric Co., Ltd.......... 155,184 60,000 Sumitomo Corp...................... 716,983 30,000 Sumitomo Metal Industries, Ltd..... 304,001 30,000 Sumitomo Realty & Development Co., Ltd.............................. 241,480 37,000 Sumitomo Trust & Banking Co., Ltd.............................. 541,179 26,000 Takeda Chemical Industries, Ltd.... 449,883 37,000 TEC Corp........................... 263,515 38,000 Tokyo Sowa Bank Ltd................ 204,159 19,600 Tokyo Steel Manufacturing.......... 395,354 12,000 Tokyo Style Co..................... 213,374 9,000 Toyo Seikan Kaisha Ltd............. 319,201 15,000 Toyo Trust & Banking Co., Ltd...... 163,472 67,000 Toyota Motor Corp.................. 1,530,806 13,000* Victor Co. of Japan................ 180,202 22,000 Yakult Honsha Co................... 323,885 70,000 Yamaichi Securities Co., Ltd....... 553,415 64,000 Yasuda Trust & Banking Co, Ltd..... 424,607 19,000 Yokogawa Electric Corp............. 221,596 29,372,114
38 EVERGREEN INTERNATIONAL EQUITY FUND (Photo of Flags STATEMENT OF INVESTMENTS -- (CONTINUED) appears here) APRIL 30, 1996 (UNAUDITED)
SHARES VALUE COMMON STOCK -- CONTINUED KOREA -- .5% 28,000 Korea Fund, Inc.................... $ 672,000 840 Pohang Iron & Steel Ltd, ADR....... 23,100 695,100 LUXEMBOURG -- .2% 2,612 Arbed SA........................... 284,092 MALAYSIA -- 6.7% 5,000 Affin Holdings Berhad.............. 12,333 1,000 AMMB Industrial, SA................ 15,141 17,000 Amsteel Corp....................... 13,773 3,000 Commerce Asset-Holdings Berhad..... 20,455 5,000 DCB Holdings Berhad................ 18,249 16,000 Edaran Otomobil Nasional Berhad........................... 136,686 49,400* Faber Group Berhad................. 49,533 3,000 Genting Berhad..................... 26,952 307,000 Golden Hope Plantations Berhad..... 549,160 6,000 Hicom Holdings Berhad.............. 17,687 9,000 Highlands & Lowlands Berhad........ 16,965 3,000 Hong Leong Credit Berhad........... 14,920 10,000 Hong Leong Properties Berhad....... 12,915 3,000 Hume Industries M Berhad........... 17,086 13,000 IOI Corp........................... 19,500 54,500 Kuala Lumpur Kepong Berhad, A Shares......................... 139,895 109,000 Kuala Lumpur Kepong Berhad......... 279,790 8,000 Kumpulan Guthrie Berhad............ 12,706 5,000 Leader University Holdings Berhad........................... 14,739 9,000 Magnum CP Berhad................... 15,594 266,000 Malaysia International Shipping Corp. Berhad..................... 853,487 290,000 Malaysia Mining Corp. Berhad....... 569,927 198,000 Malaysian Airline System........... 655,156 34,000 Malayan Bank, Berhad............... 331,368 147,000 Malaysian Plantations Berhad....... 207,532 606,000 Malaysian United Industries Berhad........................... 614,920 14,000 Metroplex Berhad................... 14,038 417,000 Pan Malaysia Cement Works Berhad... 518,469 112,000 Perlis Plantations Berhad.......... 471,664 3,000 Perusahaan Otomobile Nasional Berhad-Proton.................... 14,800 9,000 Petronas Gas Berhad................ 39,706 156,000 Renong Berhad...................... 271,544 5,000 Resorts World Berhad............... 30,281 2,000 Rothmans of Pall Mall Berhad....... 20,455 63,000 Sarawak Enterprise................. 138,972 131,000 Sime Darby Berhad.................. 362,532 230,000 Tan Chong Motor Holdings Berhad.... 370,834 4,000* Technology Resources Industries, Berhad........................... 13,637 19,000 Telekom Malaysia Berhad............ 179,080 305,000 Tenaga Nasional Berhad............. 1,296,675 34,122 United Engineers Berhad............ 234,022 3,000 YTL Corp........................... 15,040 8,628,218 SHARES VALUE MEXICO -- .8% 4,000 Alfa SA............................ $ 58,412 8,000 Apasco SA de CV.................... 43,392 200 Banco O Higgins, ADR............... 4,900 23,000 Cemex SA........................... 97,974 66,900 Cifra SA de CV..................... 91,121 2,900 Empresas ICA Sociedad Controladora SA de CV......................... 39,890 8,000 Empresas la Modern................. 36,931 15,000 Fomentos Economico Mexicano, SA de CV......................... 45,222 7,000 Grupo Industrial Bimbo SA de CV......................... 31,797 17,000 Grupo Carso SA de CV............... 129,273 26,265 Grupo Financiero Banamex Accival, SA de CV, Series L............... 53,944 10,400 Grupo Mexica SA.................... 39,332 1,300 Grupo Televisa SA, ADR............. 40,300 6,000 Grupo Tribasa SA de CV............. 20,592 8,000 Hylsamex SA de CV.................. 31,763 7,000 Industrias Penoles SA de CV........ 29,489 3,800 Kimberly-Clark Corp. de Mexico SA de CV............................ 69,556 5,900 Telefonos de Mexico SA, ADR........ 200,600 1,064,488 NETHERLANDS -- 2.1% 15,760 ABN-AMRO Holdings NV............... 815,823 3,950 DSM NV............................. 403,414 9,350 Internationale Nederlanden Groep NV............................... 721,917 4,300 Kon Hoogovensnv.................... 161,862 40,900* Pirelli Tyre Holding NV............ 338,944 1,500 Royal Dutch Petroleum Co........... 213,685 2,655,645 NEW ZEALAND -- 1.8% 721,800 Brierley Invmt Ltd................. 679,306 345,350 Carter Holt Harvey Ltd............. 818,477 27,975* Fletcher Challenge, Building Shares........................... 66,301 27,975* Fletcher Challenge, Energy Shares........................... 59,959 55,950* Fletcher Challenge, Paper Shares... 115,305 242,400 Lion Nathan Ltd.................... 604,460 2,343,808 NORWAY -- 2.4% 26,600 Aker AS, Series A.................. 493,972 19,520 Aker AS, Series B.................. 323,867 141,230 Den Norske Bank AS................. 406,303 10,580 Kvaerner AS........................ 434,821 9,400 Kvaerner AS, Series B.............. 362,716 12,120 Norske Skogindustrier AS, Class A.......................... 370,817 11,920 Norske Skogindustrier AS, Class B.......................... 341,111 7,000 Orkla AS........................... 342,030 3,075,637 PAKISTAN -- .2% 41,500 Pakistan Investment Fund, Inc...... 274,937
39 EVERGREEN INTERNATIONAL EQUITY FUND (Photo of Flags STATEMENT OF INVESTMENTS -- (CONTINUED) appears here) APRIL 30, 1996 (UNAUDITED)
SHARES VALUE COMMON STOCK -- CONTINUED PERU -- .4% 2,400 Backus & Johnston, Class C......... $ 33,208 12,200 Backus & Johnston, Class T......... 16,366 18,900 BCO Wiese Pesl..................... 41,460 1,931 Cementos Lima SA................... 22,727 1,460 Compania Nazional de Cerveza C..... 5,728 110,800 CPT Telefonica del Peru............ 247,728 4,578 Credicorp Ltd...................... 77,826 4,700 Enrique Ferreyros.................. 6,345 8,594 Minas Buenaventura................. 72,508 1,900 Minsur............................. 15,389 500 Pacifico Peru Suiz................. 10,304 1,800 Portucel Industria................. 10,901 560,490 PHILIPPINES -- .6% 25,000 Ayala Corp......................... 35,346 67,000 Ayala Land Inc..................... 103,687 50,000 C & P Homes Inc.................... 42,988 700 Far East Bank & Trust.............. 25,545 52,000 Filinvest Land..................... 26,825 85,000 JG Summit Holdings Inc............. 34,916 3,400 Manila Electric Co................. 31,700 21,500 Mega World Properties.............. 15,404 2,500 Metro Bank & Trust Co.............. 67,348 50,000 Metro Pacific Corp................. 11,846 110,500 Petron Corp........................ 47,502 2,900 Philippine Commerce International Bank............................. 38,785 900 Philippine Long Distance Telephone Co............................... 45,739 1,800 Philippine National Bank........... 26,825 19,300 Pilipino Telephone Corp............ 28,393 12,800 San Miguel Corp.................... 40,107 145,000 SM Prime Holdings.................. 42,109 97,000 Southeast Asia Cement Holdings, Inc.............................. 14,270 9,700 Union Bank Philippines............. 11,861 31,700 Universal Robina Corp.............. 16,050 707,246 PORTUGAL -- .2% 300 Banif BCO Int Fchl................. 2,706 700 BCO Chemical Portugal.............. 7,408 3,200 BCO Commerce Portugal.............. 36,721 2,200 BCO Espir Santo.................... 33,787 1,400 BCO Totta E Acores................. 26,954 1,700 BPI Society Gestora................ 21,188 600 Cimpor Cimentos de Portugal SA..... 11,280 400 Jeronimo Martins Sgps.............. 32,156 1,100 Modelo Contin Sgps................. 28,050 1,200 Portugal Telecom, SA............... 26,102 500 Seguros Tranquilid................. 8,989 1,400 Sonae Investimentos, SA............ 32,372 1,000 Soporcel Sociedad Portegeesa de Celulose, SA..................... 21,994 600 Unicer Uniao Cervejeira, SA........ 10,825 300,532 SINGAPORE -- 3.1% 83,000 Auric Pacific GP Ltd............... 128,710 429,000 Chuan Hup Holdings Ltd............. 344,836 SHARES VALUE SINGAPORE -- CONTINUED 49,000 DBS Land........................... $ 198,677 30,000 Fraser & Neave Ltd................. 332,906 118,000 Metro Holdings Ltd................. 428,084 87,000 Prima Ltd.......................... 321,810 65,000 Singapore Land Ltd................. 462,370 75,000 Straits Steamship Land Ltd......... 261,417 54,000 Times Publishing................... 144,430 122,000 United Engineers................... 245,597 585,000 United Industrial Corp............. 595,070 258,000 United OverSeas Land Ltd........... 537,729 4,001,636 SOUTH AFRICA -- .2% 7,900 Amalgamated Banks of South Africa Ltd.............................. 35,660 350 Anglo America Gold Investment Co., Ltd.............................. 36,377 3,250 Barlow Ltd......................... 37,428 1,400 De Beers Centenary................. 31,759 1,000 Liberty Life Assn. of Africa Ltd.............................. 29,861 14,600 Norwich Holdings SA Ltd............ 23,826 6,200 Smith CG, Ltd...................... 31,574 830 South Africa Breweries Ltd......... 24,064 250,549 SPAIN -- 2.4% 25,900 Banco Central Hispan............... 542,638 6,200 Empresa Nacional de Electricidad, ADR................ 120,900 32,200 Europistas, Concesionaria Espanola, SA..................... 250,613 58,400 Fuerzas Electricia Catal........... 408,157 47,000 Iberdrola SA....................... 460,024 49,700 Sevillana de Electridad............ 416,120 24,000 Telefonica de Espana, SA........... 427,358 83,400 Union Electrica Fenosa, SA......... 498,958 3,124,768 SWEDEN -- 3.1% 3,850 Electrolux AB...................... 194,158 28,700 Skandinaviska Enskilda Banken...... 215,834 27,350 Sparbanken Sverige AB.............. 308,522 28,000 Stadshypotek AB.................... 611,065 36,500 Stora Kopparbergs Besgslogs, Series A......................... 492,472 27,100 Stora Kopparbergs Besgslogs, Series B......................... 363,646 33,300 Svenska Cellulosa AB-SCA........... 628,524 12,750 Svenska Handelsbanken, Series A.... 261,332 8,550 Svenska Handelsbanken, Series B.... 166,421 11,450 Sydkraft AB, Series A.............. 251,571 20,296 Sydkraft AB, Series C.............. 395,050 27,350 Tornet Fastighet................... 20,165 4,500 Volvo AB........................... 103,184 4,011,944 SWITZERLAND -- 2.5% 225 Baloise Holdings................... 482,945 1,930 Banque Cant Vaudoise............... 582,917 770 Saurer AG Arbon.................... 316,285 260 Schweizerischer Bankgesellsch...... 258,409 2,240 Schweizerischer Bankverein......... 624,984
40 EVERGREEN INTERNATIONAL EQUITY FUND (Photo of Flags STATEMENT OF INVESTMENTS -- (CONTINUED) appears here) APRIL 30, 1996 (UNAUDITED)
SHARES VALUE COMMON STOCK -- CONTINUED SWITZERLAND -- CONTINUED 440 Swissair AG........................ 434,826 1,890 Zurich Versicherun Bearer.......... 528,214 3,228,580 TAIWAN -- .2% 25,900 ROC Taiwan Fund.................... $ 278,425 THAILAND -- .7% 3,900 Advanced Information Services Plc..................... 66,121 10,600 Bangkok Bank Public Co, Ltd........ 153,681 4,800 Dhana Siam Finance & Securities.... 29,662 3,200 Finance One Public Co Ltd.......... 18,254 23,800 IND Finance Thailand............... 94,278 1,900 Italian Thailand Development....... 20,405 3,300 Krung Thailand Bank Plc............ 16,210 4,600 National Finance & Secs............ 21,137 7,100 One Holding Co Ltd................. 19,939 2,000 PTT Explortn & Prd................. 27,570 800 Shinawatra Computer Co. Plc........ 19,141 700 Siam Cement Public Co. Ltd......... 32,886 9,100 Telecomasia........................ 25,053 19,800 Thailand Capital Fund, Inc......... 297,000 8,000 Thailand Farmers Bank Public Co. Ltd.............................. 91,901 1,400 UTD Communications................. 19,521 952,759 TURKEY -- .4% 338,400 Adana Cimento...................... 57,314 384,100 Akal Tekstil....................... 39,288 543,000 Akbank Turk Anonim Sirket.......... 64,196 385,000 Arcelik AS......................... 44,494 154,000 Bagfas Bandirma Gubre Fabrikalari AS............................... 43,983 176,000 Brisa Bridgestone Sabanci Lastik San....................... 65,462 86,000 Erciyas Biracilik Ve Malt.......... 60,547 93,600 Migros Turk Tas.................... 106,929 187,000 Netas Northern Elektric Telekomunikasyon, AS............. 48,439 530,652 UNITED KINGDOM -- 6.9% 87,200 3I Group........................... 605,136 32,500 Anglian Water Plc.................. 283,268 51,800 Arjo Wiggins Appleton Plc.......... 142,308 18,300 British Airport Authority Plc...... 150,411 13,800 Barclays Bank Plc.................. 153,103 15,400 Bass British Plc................... 181,633 155,800 British Gas........................ 553,497 46,560 British Land Co., Plc.............. 302,433 24,100 British Petroleum Co., Plc......... 217,491 131,200 British Steel Plc.................. 392,040 46,400 British Telecommunications Plc..... 254,596 21,300 Commercial Union Plc............... 184,848 23,386 Granada Group...................... 289,905 15,800 HSBC Holdings Plc.................. 233,920 127,100 Ladbroke Group Plc................. 374,049 61,900 Land Securities Plc................ 609,868 33,529 Lloyds TSB Group Plc............... 160,755 28,000 MEPC Plc........................... 180,611 SHARES VALUE UNITED KINGDOM -- CONTINUED 59,875 Pilkington Plc..................... $ 191,982 27,500 Royal Insurance Holdings Plc....... 150,271 58,000 Severn Trent Water Plc............. 521,677 44,600 Shell Transportation & Trading Co., Plc.............................. 588,468 28,900 Southern Water Plc................. 331,286 69,500 Thames Water Plc................... 598,434 65,500 United Utilities Plc............... 585,684 23,700 Whitbread Plc...................... 267,932 36,700 Yorkshire Water Plc................ 370,702 8,876,308 UNITED STATES -- .0% 100 Cepap AS........................... 5,041 TOTAL COMMON STOCKS (COST $112,623,533).............. 123,363,931 PREFERRED STOCKS -- 2.5% AUSTRALIA -- .6% 145,950 News Corp. Ltd..................... 750,960 AUSTRIA -- .9% 3,800 Bank Austria AG.................... 300,046 10,650 Creditanstalt-Bankverein........... 594,580 7,250Z Laenderbank Bank Austria AG........ 305,086 1,199,712 GERMANY -- .8% 4,370 Rheinmetall Berlin................. 510,961 2,130 Volkswagen AG...................... 541,231 1,052,192 ITALY -- .2% 18,100 Ifi Istit Finance Ind.............. 188,822 TOTAL PREFERRED STOCKS (COST $3,073,200)................ 3,191,686 TOTAL LONG-TERM INVESTMENTS (COST $115,696,733).............. 126,555,617 PRINCIPAL AMOUNT REPURCHASE AGREEMENT -- 1.5% $1,895,000 State Street Bank & Trust Co., 4.75% dated 4/30/96, due 5/1/96 -- Collateralized by $1,910,000 U.S. Treasury Notes, 5.50%, due 3/31/97; value, including accrued interest -- $1,947,504 (COST $1,895,000)................ 1,895,000
TOTAL INVESTMENTS -- (COST $117,591,733).......... 99.4% 128,450,617 OTHER ASSETS AND LIABILITIES -- NET..... .6 762,763 NET ASSETS................ 100.0% $129,213,380
* Non-income producing securities ADR -- American Depositary Receipts GDR -- Global Depositary Receipts See accompanying notes to financial statements. 41 EVERGREEN INTERNATIONAL EQUITY FUND (Photo of Flags INDUSTRY DIVERSIFICATION appears here) APRIL 30, 1996 (UNAUDITED)
PERCENTAGE OF NET ASSETS Aerospace & Defense........................................................................ 0.5% Automotive Equipment & Manufacturing....................................................... 4.5% Banks...................................................................................... 19.1% Building, Construction & Furnishings....................................................... 4.2% Business Equipment & Services.............................................................. 1.1% Chemical & Agricultural Products........................................................... 3.1% Consumer Products and Services............................................................. 1.9% Diversified Companies...................................................................... 0.7% Electrical Equipment & Services............................................................ 3.1% Energy..................................................................................... 3.9% Finance & Insurance........................................................................ 6.5% Food & Beverage Products................................................................... 3.1% Food Retailing & Distribution.............................................................. 0.2% Forest Products & Paper.................................................................... 4.1% Health Care Products & Services............................................................ 1.5% Holding Companies.......................................................................... 2.7% Industrial Commercial Goods & Services..................................................... 1.6% Industrial Specialty Products.............................................................. 0.6% Information Services & Technology.......................................................... 0.1% Machinery -- Diversified................................................................... 2.1% Manufacturing -- Distributing.............................................................. 1.2% Metal Products & Services.................................................................. 2.5% Mining..................................................................................... 0.2% Multi-Industry............................................................................. 3.4% Mutual Funds............................................................................... 1.0% Leisure & Tourism.......................................................................... 1.3% Office Equipment & Supplies................................................................ 0.7% Paper & Packaging.......................................................................... 0.4% Publishing, Broadcasting & Entertainment................................................... 1.7% Real Estate................................................................................ 6.4% Retailing & Wholesale...................................................................... 2.0% Telecommunication Services & Equipment..................................................... 2.2% Textile & Apparel.......................................................................... 0.5% Tobacco.................................................................................... 0.7% Transportation............................................................................. 2.5% Utilities.................................................................................. 6.6% Total Long Term Investments.......................................................... 97.9% Short Term Investment...................................................................... 1.5% Other Assets and Liabilities -- net........................................................ .6% Net Assets........................................................................... 100.0%
42 EVERGREEN INTERNATIONAL EQUITY FUND (Photo of Flags STATEMENT OF ASSETS AND LIABILITIES appears here) APRIL 30, 1996 (UNAUDITED)
ASSETS: Investments at value (identified cost $117,591,733)........................................................... $128,450,617 Foreign currency at value (identified cost $1,407,578)........................................................ 1,393,809 Cash.......................................................................................................... 2,810 Dividends and interest receivable............................................................................. 677,858 Receivable for Fund shares sold............................................................................... 326,542 Receivable for investments sold............................................................................... 78,544 Unamortized organization expense and other assets............................................................. 40,556 Total assets............................................................................................ 130,970,736 LIABILITIES: Payable for investments purchased............................................................................. 1,428,702 Accrued expenses.............................................................................................. 210,818 Payable for Fund shares repurchased........................................................................... 113,499 Distribution fee payable...................................................................................... 4,337 Total liabilities....................................................................................... 1,757,356 NET ASSETS....................................................................................................... $129,213,380 NET ASSETS CONSIST OF: Paid-in capital............................................................................................... $117,487,390 Undistributed net investment income........................................................................... 587,104 Undistributed net realized gain on investment transactions.................................................... 300,755 Net unrealized appreciation of investments and foreign currencies............................................. 10,838,131 Net assets................................................................................................. $129,213,380 CALCULATION OF NET ASSET VALUE AND MAXIMUM OFFERING PRICE PER SHARE: Class A Shares ($6,153,050(division sign)568,877 shares of beneficial interest outstanding)................... $ 10.82 Sales charge -- 4.75% of offering price....................................................................... .54 Maximum offering price.................................................................................. $ 11.36 Class B Shares ($13,011,829(division sign)1,205,209 shares of beneficial interest outstanding)................ $ 10.80 Class C Shares ($260,287(division sign)24,022 shares of beneficial interest outstanding)...................... $ 10.84 Class Y Shares ($109,788,214(division sign)10,131,138 shares of beneficial interest outstanding).............. $ 10.84
See accompanying notes to financial statements. 43 EVERGREEN INTERNATIONAL EQUITY FUND (Photo of Flags STATEMENT OF OPERATIONS appears here) SIX MONTHS ENDED APRIL 30, 1996 (UNAUDITED)
INVESTMENT INCOME: Dividends (net of foreign withholding taxes of $150,899)........................................ $ 1,169,791 Interest........................................................................................ 18,623 Total investment income................................................................... 1,188,414 EXPENSES: Advisory fee.................................................................................... $ 364,025 Administrative personnel and service fees....................................................... 23,322 Distribution fee -- Class A Shares.............................................................. 5,815 Distribution fee -- Class B Shares.............................................................. 34,794 Distribution fee -- Class C Shares.............................................................. 781 Shareholder services fee -- Class B Shares...................................................... 11,598 Shareholder services fee -- Class C Shares...................................................... 260 Custodian fee................................................................................... 108,527 Registration and filing fees.................................................................... 69,437 Transfer agent fee.............................................................................. 57,611 Reports and notices to shareholders............................................................. 27,100 Professional fees............................................................................... 18,447 Insurance....................................................................................... 5,497 Trustees' fees and expenses..................................................................... 1,418 Miscellaneous................................................................................... 14,374 Total expenses............................................................................ 743,006 Less: Fee waivers............................................................................... (233,594) Net expenses.............................................................................. 509,412 Net investment income.............................................................................. 679,002 NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES: Net realized gain on investment transactions.................................................... 557,191 Net realized loss on foreign currency transactions.............................................. (443) Net change in unrealized appreciation of investments and foreign currencies..................... 10,559,411 Net gain on investments and foreign currencies..................................................... 11,116,159 NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............................................... $11,795,161
See accompanying notes to financial statements. 44 (Photo of Flags EVERGREEN INTERNATIONAL EQUITY FUND appears here) STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED TEN MONTHS APRIL 30, 1996 ENDED (UNAUDITED) OCTOBER 31, 1995 INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment income.................................................................... $ 679,002 $ 524,164 Net realized gain (loss) on investment transactions...................................... 557,191 (255,993) Net realized gain (loss) on foreign currency transactions................................ (443) 107,669 Net change in unrealized appreciation (depreciation) of investments and foreign currencies............................................................................. 10,559,411 (462,577) Net increase (decrease) in net assets resulting from operations....................... 11,795,161 (86,737) DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME: Class A Shares........................................................................... (39,833) (3,090) Class B Shares........................................................................... (23,525) -- Class C Shares........................................................................... (60) -- Class Y Shares........................................................................... (645,172) (30,566) Total distributions to shareholders from net investment income........................ (708,590) (33,656) FUND SHARE TRANSACTIONS: Proceeds from shares sold................................................................ 32,374,078 33,765,660 Proceeds from shares issued from acquisition of FFB Diversified International Growth Fund................................................................................... 29,658,717 -- Proceeds from reinvestment of distributions.............................................. 365,799 19,562 Payment for shares redeemed.............................................................. (4,914,337) (5,161,804) Net increase resulting from Fund share transactions................................... 57,484,257 28,623,418 Net increase in net assets............................................................ 68,570,828 28,503,025 NET ASSETS: Beginning of period...................................................................... 60,642,552 32,139,527 End of period (including undistributed net investment income of $587,104 and $616,692, respectively).......................................................................... $ 129,213,380 $ 60,642,552
See accompanying notes to financial statements. 45 (Photo of Flags EVERGREEN INTERNATIONAL EQUITY FUND appears here) FINANCIAL HIGHLIGHTS
CLASS A SHARES CLASS B SHARES SEPTEMBER 2, SIX MONTHS TEN MONTHS 1994* SIX MONTHS TEN MONTHS ENDED ENDED THROUGH ENDED ENDED APRIL 30, 1996 OCTOBER 31, DECEMBER 31, APRIL 30, 1996 OCTOBER 31, (UNAUDITED) 1995# 1994 (UNAUDITED) 1995# PER SHARE DATA: Net asset value, beginning of period........ $9.58 $9.50 $10.00 $9.53 $9.50 Income (loss) from investment operations: Net investment income..................... .04 .09 .02 .01 .06 Net realized and unrealized gain (loss) on investments and foreign currency transactions............................ 1.30 -- (.52 ) 1.29 (.03 ) Total from investment operations........ 1.34 .09 (.50 ) 1.30 .03 Less distributions to shareholders from net investment income..................... (.10 ) (.01 ) -- (.03 ) -- Net asset value, end of period.............. $10.82 $9.58 $9.50 $10.80 $9.53 TOTAL RETURN+............................... 14.0% 1.1% (5.1% ) 13.7% .5% RATIOS & SUPPLEMENTAL DATA: Net assets, end of period (000's omitted)... $6,153 $3,594 $2,545 $13,012 $7,278 Ratios to average net assets: Expenses++**.............................. 1.24% 1.19% 1.26% 1.99% 1.94% Net investment income++**................. 1.35% 1.38% .91% .61% .66% Portfolio turnover rate..................... 33% 4% 1% 33% 4% Average commission rate paid................ $ .0105 N/A N/A $.0105 N/A SEPTEMBER 2, 1994* THROUGH DECEMBER 31, 1994 PER SHARE DATA: Net asset value, beginning of period........ $10.00 Income (loss) from investment operations: Net investment income..................... -- Net realized and unrealized gain (loss) on investments and foreign currency transactions............................ (.50 ) Total from investment operations........ (.50 ) Less distributions to shareholders from net investment income..................... -- Net asset value, end of period.............. $9.50 TOTAL RETURN+............................... (5.2% ) RATIOS & SUPPLEMENTAL DATA: Net assets, end of period (000's omitted)... $5,602 Ratios to average net assets: Expenses++**.............................. 2.02% Net investment income++**................. .10% Portfolio turnover rate..................... 1% Average commission rate paid................ N/A
* Commencement of operations. # The Fund changed its year end from December 31 to October 31. + Total return is calculated on net asset value per share for the periods indicated and is not annualized. Initial sales charge or contingent deferred sales charge is not reflected. ++ Annualized. ** Net of expense waivers and reimbursements. If the Fund had borne all expenses that were assumed or waived by the investment adviser, the annualized ratios of expenses and net investment income (loss) to average net assets, exclusive of any applicable state expense limitations, would have been the following:
CLASS A SHARES CLASS B SHARES SEPTEMBER 2, SIX MONTHS TEN MONTHS 1994* SIX MONTHS TEN MONTHS ENDED ENDED THROUGH ENDED ENDED APRIL 30, 1996 OCTOBER 31, DECEMBER 31, APRIL 30, 1996 OCTOBER 31, (UNAUDITED) 1995# 1994 (UNAUDITED) 1995# Expenses................................... 1.74% 1.84% 2.09% 2.49% 2.59% Net investment income (loss)............... .85% .73% .08% .11% .01% SEPTEMBER 2, 1994* THROUGH DECEMBER 31, 1994 Expenses................................... 2.85% Net investment income (loss)............... (.73%)
See accompanying notes to financial statements. 46 (Photo of Flags EVERGREEN INTERNATIONAL EQUITY FUND appears here) FINANCIAL HIGHLIGHTS
CLASS C SHARES CLASS Y SHARES SEPTEMBER 2, SIX MONTHS TEN MONTHS 1994* SIX MONTHS TEN MONTHS ENDED ENDED THROUGH ENDED ENDED APRIL 30, 1996 OCTOBER 31, DECEMBER 31, APRIL 30, 1996 OCTOBER 31, (UNAUDITED) 1995# 1994 (UNAUDITED) 1995# PER SHARE DATA: Net asset value, beginning of period........ $ 9.53 $ 9.49 $10.00 $ 9.60 $ 9.50 Income (loss) from investment operations: Net investment income..................... .02 .08 .03 .06 .08 Net realized and unrealized gain (loss) on investments and foreign currency transactions............................ 1.29 (.04) (.54) 1.30 .03 Total from investment operations........ 1.31 .04 (.51) 1.36 .11 Less distributions to shareholders from net investment income..................... .00++ -- -- (.12) (.01) Net asset value, end of period.............. $10.84 $9.53 $9.49 $10.84 $9.60 TOTAL RETURN+............................... 13.8% .5% (5.2% ) 14.2% 1.3% RATIOS & SUPPLEMENTAL DATA: Net assets, end of period (000's omitted)... $260 $196 $163 $109,788 $49,575 Ratios to average net assets: Expenses++**.............................. 1.99% 1.94% 2.01% .98% .94% Net investment income++**................. .68% .79% .85% 1.57% 1.58% Portfolio turnover rate..................... 33% 4% 1% 33% 4% Average commission rate paid................ $ .0105 N/A N/A $.0105 N/A SEPTEMBER 2, 1994* THROUGH DECEMBER 31, 1994 PER SHARE DATA: Net asset value, beginning of period........ $ 10.00 Income (loss) from investment operations: Net investment income..................... .02 Net realized and unrealized gain (loss) on investments and foreign currency transactions............................ (.51) Total from investment operations........ (.49) Less distributions to shareholders from net investment income..................... (.01) Net asset value, end of period.............. $9.50 TOTAL RETURN+............................... (5.0% ) RATIOS & SUPPLEMENTAL DATA: Net assets, end of period (000's omitted)... $23,830 Ratios to average net assets: Expenses++**.............................. 1.06% Net investment income++**................. 1.03% Portfolio turnover rate..................... 1% Average commission rate paid................ N/A
* Commencement of operations. # The Fund changed its year end from December 31 to October 31. ++ Less than one cent per share. + Total return is calculated on net asset value per share for the periods indicated and is not annualized. Contingent deferred sales charge is not reflected. ++ Annualized. ** 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:
CLASS C SHARES CLASS Y SHARES SEPTEMBER 2, SIX MONTHS TEN MONTHS 1994* SIX MONTHS TEN MONTHS ENDED ENDED THROUGH ENDED ENDED APRIL 30, 1996 OCTOBER 31, DECEMBER 31, APRIL 30, 1996 OCTOBER 31, (UNAUDITED) 1995# 1994 (UNAUDITED) 1995# Expenses................................... 2.49% 2.59% 2.84% 1.48% 1.59% Net investment income...................... .18% .14% .02% 1.07% .93% SEPTEMBER 2, 1994* THROUGH DECEMBER 31, 1994 Expenses................................... 1.89% Net investment income...................... .20%
47 COMBINED NOTES TO FINANCIAL STATEMENTS NOTE 1 -- ORGANIZATION AND NATURE OF OPERATIONS The Evergreen International Global/Growth Funds (the "Funds") are separate series of open-end management companies registered under the Investment Company Act of 1940, as amended (the "Act"). The Funds consist of Evergreen Emerging Markets Growth Fund ("Emerging Markets"), Evergreen Global Leaders Fund ("Global Leaders"), Evergreen Global Real Estate Equity Fund ("Global Real Estate"), and Evergreen International Equity Fund ("International"), collectively referred to as the "Funds". Emerging Market's investment objective is long-term appreciation through investment in equity securities of issuers located in emerging markets. Global Leaders' investment objective is to provide long-term capital growth by investing in a diversified portfolio of U.S. and non-U.S. equity securities of companies located in the world's major industrialized countries. Global Real Estate's investment objective is long-term capital growth through investment primarily in equity securities of domestic and foreign companies which are principally engaged in the real estate industry or which own significant real estate assets. International's investment objective is long-term capital appreciation through investment in equity securities of non-U.S. issuers. Effective January 1, 1996, First Fidelity Bancorporation ("First Fidelity") merged with First Union National Bank of North Carolina ("First Union"). Effective at the close of business on January 19, 1996, International acquired substantially all of the net assets of FFB Diversified International Growth Fund, an open-end management company registered under the Act, valued at $29,658,717. The net assets were exchanged through a non-taxable transaction for 2,898,154 Class Y shares of International valued at $10.23 per share. The acquired net assets consisted primarily of portfolio securities with unrealized appreciation of $1,835,426. The aggregate net assets of International after the acquisition were $104,471,175. NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies followed by the Funds in the preparation of their financial statements. These policies are in conformity with generally accepted accounting principles. SECURITY VALUATIONS -- Portfolio securities that are listed on a securities exchange are valued at the last quoted sales price taken from the exchange where the security is primarily traded. Securities listed on an exchange that are not traded on the valuation date are valued at the mean between the bid and asked price. Unlisted securities for which market quotations are readily available are valued at a price quoted by one or more brokers. Other securities for which no quotations are readily available are valued at fair value as determined in good faith by the Trustees. Short-term obligations are stated at amortized cost which approximates market value. SECURITY TRANSACTIONS -- Security transactions are accounted for on the date purchased or sold. Net realized gains or losses are determined on the identified cost basis. FOREIGN CURRENCY TRANSLATION -- The Funds' accounting records are maintained in U.S. dollars. Assets and liabilities denominated in foreign currencies are translated daily into U.S. dollars at the prevailing exchange rates. Purchases and sales of securities and income and expenses are translated into U.S. dollars at the prevailing rates on the dates of such transactions. The effect of changes in foreign exchange rates on realized and unrealized security gains and losses are reflected as a component of such gains and losses. FORWARD FOREIGN CURRENCY CONTRACTS -- The Funds may enter into forward foreign currency contracts for the purchase or sale of a specific foreign currency at a fixed price on a future date in order to hedge its exposure to changes in foreign currency exchange rates. Forward currency contracts are revalued daily at the prevailing rates of contracts of the same maturity. Gains and losses on forward currency contracts are reported as realized or unrealized losses on foreign currency transactions. Risks may arise upon entering into these contracts from the potential inability of the counterparties to meet the terms of their contracts and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar. 48 COMBINED NOTES TO FINANCIAL STATEMENTS NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES -- continued REPURCHASE AGREEMENTS -- Securities pledged as collateral for repurchase agreements are held by the Federal Reserve Bank and are designated as being held on the Funds' behalf by its custodian under a book-entry system. The Funds monitor the adequacy of the collateral on a daily basis, and can require the seller to provide additional collateral in the event the market value of the securities pledged falls below the carrying value of the repurchase agreement, including accrued interest. The Funds will only enter into repurchase agreements with banks and other financial institutions which are deemed by the Funds' investment adviser to be creditworthy pursuant to guidelines established by the Trustees. INVESTMENT INCOME AND EXPENSES -- Dividend income is recorded on the ex-dividend date. Interest income and expenses are accrued daily. DISTRIBUTIONS TO SHAREHOLDERS -- Distributions from net investment income and from net capital gains on investments for the Funds are declared and paid annually or more frequently as required. Income distributions and capital gain distributions are determined in accordance with income tax regulations, which may differ from the amounts available under generally accepted accounting principles. To the extent these differences are permanent in nature, such amounts are reclassified within the components of net assets. INCOME TAXES -- It is each Fund's policy to meet the requirements of the Internal Revenue Code (the "Code") applicable to regulated investment companies and to distribute substantially all of its taxable net income to its shareholders. Accordingly, no provisions for federal income or excise taxes are necessary. To the extent that realized capital gains can be offset by capital loss carryforwards, it is the Funds' policy not to distribute such gains. As of October 31, 1995, each fund's most recent fiscal year end, Emerging Markets, Global Real Estate and International had capital loss carryforwards of $1,695,776, $7,373,102 and $255,531, respectively. Pursuant to the Code, these capital losses carryforwards will expire as follows:
2002 2003 Emerging Markets $69,824 $1,625,952 Global Real Estate -- 7,373,102 International -- 255,531
WHEN ISSUED AND DELAYED DELIVERY TRANSACTIONS -- The Funds record when-issued or delayed delivery transactions on the trade date and maintain security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. DEFERRED ORGANIZATIONAL EXPENSES -- The costs incurred by Emerging Markets, Global Leaders and International with respect to their organization have been deferred and are being amortized using the straight-line method not to exceed a period of five years from each Fund's commencement. ALLOCATION OF EXPENSES -- Expenses specifically identifiable to a class of shares are charged to that class. Expenses common to the Trust as a whole are allocated to the funds in that Trust. Investment income, net of expenses (other than class specific expenses) and realized and unrealized gains and losses are allocated daily to each class of shares based upon the relative proportion of net assets of each class. REAL ESTATE INVESTMENT TRUSTS -- Global Real Estate owns shares of real estate investment trusts which report information on the source of their distributions annually. A portion of their distributions received during the year is estimated to be a return of capital and is recorded as a reduction of their cost. USE OF ESTIMATES -- The preparation of the financial statements is in accordance with generally accepted accounting principles which requires management to make estimates and assumptions that affect the reported amounts and disclosures. Actual results could differ from those estimates. 49 COMBINED NOTES TO FINANCIAL STATEMENTS NOTE 3 -- INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES INVESTMENT ADVISORY AGREEMENT -- First Union is Emerging Markets' and International's investment adviser, and is entitled to a fee based on a percentage of each Fund's average daily net assets as shown in the table below. For Emerging Markets and International, First Union voluntary waived $124,566 and $229,311 respectively, of its advisory fee for the six-month period ended April 30, 1996. In addition, First Union voluntarily reimbursed $60,630 in operating expenses for Emerging Markets for the six-month period ended April 30, 1996. First Union can modify or terminate this voluntary waiver at any time.
AVERAGE DAILY ADVISORY FEE NET ASSETS EMERGING MARKETS 1.50% on the first $100 million 1.45% on the next $100 million 1.40% on the next $100 million 1.35% in excess of $300 million
AVERAGE DAILY ADVISORY FEE NET ASSETS INTERNATIONAL 0.82% on the first $20 million 0.79% on the next $30 million 0.76% on the next $50 million 0.73% in excess of $100 million
Under terms of a sub-advisory agreement between First Union and Marvin & Palmer Associates, Inc., Marvin & Palmer Associates, Inc. is entitled to the following annual fee from First Union based on Emerging Markets' average daily net assets:
AVERAGE DAILY ADVISORY FEE NET ASSETS 1.00% on the first $100 million 0.95% on the next $100 million 0.90% on the next $100 million 0.85% in excess of $300 million
Under terms of a sub-advisory agreement between First Union and Boston International Advisors, Inc., Boston International Advisors, Inc. is entitled to the following annual fee from First Union based on International's average daily net assets:
AVERAGE DAILY SUB-ADVISORY FEE NET ASSETS 0.32% on the first $20 million 0.29% on the next $30 million 0.26% on the next $50 million 0.23% in excess of $100 million
Pursuant to an agreement with Global Leaders' and Global Real Estate's investment adviser, Evergreen Asset Management Corp. ("Evergreen Asset"), a wholly owned subsidiary of First Union, is entitled to an annual fee of .95% and 1% of Global Leaders' and Global Real Estate's average daily net assets, respectively. Evergreen Asset has agreed to reimburse Global Leaders to the extent that the Fund's operating expenses (including the investment advisory fee and amortization of organization expenses but excluding interest, taxes, brokerage commissions, 12b-1 distribution and shareholder servicing fees and extraordinary expense) exceed 1.50% of its average daily net assets for the forseeable future. For the six-month period ended April 30, 1996, Evergreen Asset waived all of its advisory fee and 50 COMBINED NOTES TO FINANCIAL STATEMENTS NOTE 3 -- INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES -- continued reimbursed $31,031 in expenses under this limitation. In addition, Evergreen Asset voluntarily waived $9,154 of its advisory fee and reimbursed $36,428 in expenses for Global Real Estate. Evergreen Asset may revise or cease these voluntary expense waivers and expense reimbursements at any time. Lieber & Company, an affiliate of First Union, is the investment sub-adviser to Global Leaders and Global Real Estate and also provides brokerage services with respect to substantially all security transactions executed on the New York or American Stock Exchanges. For transactions executed during the six-month period ended April 30, 1996, Global Leaders and Global Real Estate incurred brokerage commissions of $6,990 and $21,971, respectively, with Lieber & Company. Lieber & Company is reimbursed by Evergreen Asset at no additional expense to the funds for its cost of providing investment advisory services. ADMINISTRATIVE AGREEMENT -- Evergreen Asset furnishes Global Real Estate with administrative services as part of its advisory agreement and accordingly, Global Real Estate does not pay a separate administration fee. Furman Selz LLC ("Furman Selz") is the Fund's sub-administrator. As sub-administrator, Furman Selz provides the officers of the Funds. For Global Real Estate, Furman Selz' fee is paid by Evergreen Asset and is not a fund expense. Evergreen Asset is also Emerging Markets', Global Leaders' and International's administrator and Furman Selz is sub-administrator. Evergreen Asset's and Furman Selz' fees for these funds are based on the average daily net assets of all of the funds administered by Evergreen Asset for which either First Union or Evergreen Asset is also the investment adviser. These fees are calculated at the following annual rates:
AVERAGE DAILY ADMINISTRATION FEE NET ASSETS 0.050% on the first $7 billion 0.035% on the next $3 billion 0.030% on the next $5 billion 0.020% on the next $10 billion 0.015% on the next $5 billion 0.010% in excess of $30 billion
AVERAGE DAILY SUB-ADMINISTRATION FEE NET ASSETS 0.0100% on the first $7 billion 0.0075% on the next $3 billion 0.0050% on the next $15 billion 0.0040% in excess of $25 billion
At April 30, 1996, assets for which Evergreen Asset was the administrator for which either Evergreen Asset or First Union was the investment adviser totaled approximately $14.7 billion. Evergreen Asset voluntarily waived $3,591, $1,122 and $4,283 in administration fees for Emerging Markets, Global Leaders and International, respectively. PLAN OF DISTRIBUTION AND SHAREHOLDER SERVICING -- The Funds have adopted for each of their Class A, Class B and Class C shares, Distribution Plans (the "Plans") pursuant to Rule 12b-1 under the Act. Under the terms of the Plans, the Funds may incur distribution-related and shareholder servicing expenses which may not exceed and annual fee of .75 of 1% for Class A shares and annual fee of 1% for Class B and Class C shares. For each of these Funds, the payments for Class A shares were voluntarily limited to .25 of 1% of average daily net assets. 51 COMBINED NOTES TO FINANCIAL STATEMENTS NOTE 3 -- INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES -- continued In connection with its Plan, Global Real Estate has entered into a distribution agreement with Evergreen Funds Distributor, Inc. ("EFD"), a subsidiary of Furman Selz, whereby Global Real Estate will compensate EFD for its services at a rate which may not exceed an annual fee of .25 of 1% of Class A shares average daily net assets and annual fee of 1% of Class B and Class C shares average daily net assets. A portion of the payments of Class B and Class C shares, up to .25 of 1% may constitute a shareholder services fee. In connection with their Plans, Emerging Markets and International have entered into a distribution agreement with EFD they will compensate EFD for its services at a rate which may not exceed an annual fee of .25 of 1% of Class A shares average daily net assets and annual fee of .75 of 1% of Class B and Class C shares average daily net assets. EFD has entered into a shareholder services agreement with First Union Brokerage ("FUBS"), an affiliate of First Union, whereby they will compensate FUBS for certain services provided to shareholders and or maintenance of shareholder accounts relating to the Funds Class B and Class C Shares. As of April 30, 1996, Global Leaders did not offer Class A, Class B or Class C shares and therefore, did not participate in the Plans. SALES CHARGES -- EFD has advised the Funds that it has retained the following amounts from front-end sales charges resulting from sales of Class A shares during the six-month period ended April 30, 1996: Emerging Markets $ 800 Global Real Estate 547 International 4,961
NOTE 4 -- INVESTMENT TRANSACTIONS The cost of purchases and proceeds from sales of investments, excluding short-term securities, for the six-month period ended April 30, 1996 were as follows:
PURCHASES SALES Emerging Markets $15,145,373 $ 7,303,641 Global Leaders 8,276,727 1,544,029 Global Real Estate 11,153,960 21,610,802 International 60,998,776 31,020,305
On April 30, 1996, the composition of unrealized appreciation and depreciation of investment securities based on the aggregate cost of investments for federal tax purposes was as follows:
FEDERAL TAX APPRECIATION DEPRECIATION NET COST Emerging Markets $2,933,210 $ 507,716 $ 2,425,494 $20,363,490 Global Leaders 562,294 90,208 472,086 7,426,782 Global Real Estate 9,815,960 5,783,668 4,082,292 54,493,037 International 13,474,408 2,615,986 10,858,422 117,592,195
NOTE 5 -- SHARES OF BENEFICIAL INTEREST Emerging Markets and International have an unlimited number of $0.0001 par value shares of beneficial interest authorized. Global Leaders and Global Real Estate have an unlimited number of $0.001 par value shares authorized. The shares of Emerging Markets, Global Real Estate and International are divided into four classes which are designated Class A, Class B, Class C and Class Y shares. Class A shares are offered with a front-end sales charge of up to 4.75%. Class B shares are offered with a contingent deferred sales charge payable when shares are redeemed which declines from 5% to zero depending on the period of time the shares were held (after which they will convert to Class A shares). Class C shares are offered with a 1% contingent deferred sales charge on shares redeemed within the first year of purchase. Class Y shares are sold without a sales charge and are available only to investment advisory clients of the Adviser and its affiliates, institutional investors or 52 COMBINED NOTES TO FINANCIAL STATEMENTS NOTE 5 -- SHARES OF BENEFICIAL INTEREST -- continued Class Y shareholders of record of certain other funds managed by the Adviser and its affiliates as of December 30, 1994. All classes have identical voting, dividend, liquidation and other rights, except that certain classes bear different distribution expenses (see Note 3) and have exclusive voting rights with respect to their distribution plan. As of April 30, 1995 Global Leaders offered only Class Y shares, which were open to all shareholders (see Note 7). Transactions in shares of beneficial interest were as follows:
SIX MONTHS ENDED APRIL 30, 1996 TEN MONTHS ENDED (UNAUDITED) OCTOBER 31, 1995 EMERGING MARKETS SHARES AMOUNT SHARES AMOUNT CLASS A Shares sold............................................................... 74,102 $ 650,480 64,702 $ 496,478 Shares issued on reinvestment of distributions............................ 817 6,713 -- -- Shares redeemed........................................................... (21,922) (186,203) (29,531) (228,199) Net increase...................................................... 52,997 470,990 35,171 268,279 CLASS B Shares sold............................................................... 68,532 600,952 95,843 737,910 Shares redeemed........................................................... (19,376) (160,829) (43,408) (335,151) Net increase...................................................... 49,156 440,123 52,435 402,759 CLASS C Shares sold............................................................... 2,082 18,532 5,116 41,284 Shares redeemed........................................................... (2,070) (16,637) (8,933) (64,678) Net increase (decrease)........................................... 12 1,895 (3,817) (23,394) CLASS Y Shares sold............................................................... 984,033 8,687,600 566,623 4,319,138 Shares issued on reinvestment of distributions............................ 1,942 15,980 -- -- Shares redeemed........................................................... (158,472) (1,382,853) (105,109) (816,292) Net increase...................................................... 827,503 7,320,727 461,514 3,502,846 Total net increase resulting from Fund share transactions............................................................ 929,668 $8,233,735 545,303 $ 4,150,490
SIX MONTHS ENDED APRIL 30, 1996 (UNAUDITED) GLOBAL LEADERS SHARES AMOUNT CLASS Y Shares sold............................................................................................. 705,503 $7,260,977 Shares issued on reinvestment of distributions.......................................................... 1,378 14,211 Shares redeemed......................................................................................... (36,909) (383,259) Net increase resulting from Fund share transactions............................................. 669,972 $6,891,929
53 COMBINED NOTES TO FINANCIAL STATEMENTS NOTE 5 -- SHARES OF BENEFICIAL INTEREST -- continued
SIX MONTHS ENDED APRIL 30, 1996 ONE MONTH ENDED (UNAUDITED) OCTOBER 31, 1995 GLOBAL REAL ESTATE SHARES AMOUNT SHARES AMOUNT CLASS A Shares sold............................................................ 153,570 $ 1,928,949 956 $ 11,527 Shares redeemed........................................................ (16,804) (212,967) -- -- Net increase........................................................... 136,766 1,715,982 956 11,527 CLASS B Shares sold............................................................ 2,596 32,269 197 2,360 Shares redeemed........................................................ (4,226) (51,194) (2,136) (25,616) Net decrease........................................................... (1,630) (18,925) (1,939) (23,256) CLASS C Shares sold............................................................ 367 4,498 -- -- Shares redeemed........................................................ -- -- (248) (2,941) Net increase (decrease)................................................ 367 4,498 (248) (2,941) CLASS Y Shares sold............................................................ 700,880 8,591,743 52,172 626,578 Shares redeemed........................................................ (1,586,829) (19,406,475) (329,743) (3,928,556) Net decrease........................................................... (885,949) (10,814,732) (277,571) (3,301,978) Total net decrease resulting from Fund share transactions.............. (750,446) $ (9,113,177) (278,802) $(3,316,648)
54 COMBINED NOTES TO FINANCIAL STATEMENTS NOTE 5 -- SHARES OF BENEFICIAL INTEREST -- continued
SIX MONTHS ENDED APRIL 30, 1996 TEN MONTHS ENDED (UNAUDITED) OCTOBER 31, 1995 INTERNATIONAL SHARES AMOUNT SHARES AMOUNT CLASS A Shares sold............................................................ 240,234 $ 2,465,225 178,686 $ 1,741,458 Shares issued on reinvestment of distributions......................... 3,882 39,171 314 3,081 Shares redeemed........................................................ (50,336) (515,585) (71,833) (698,595) Net increase........................................................... 193,780 1,988,811 107,167 1,045,944 CLASS B Shares sold............................................................ 520,369 5,366,386 339,054 3,280,684 Shares issued on reinvestment of distributions......................... 2,297 23,175 180 1,652 Shares redeemed........................................................ (81,452) (829,048) (165,193) (1,606,194) Net increase........................................................... 441,214 4,560,513 174,041 1,676,142 CLASS C Shares sold............................................................ 7,554 78,107 12,504 116,208 Shares issued on reinvestment of distributions......................... 6 56 -- -- Shares redeemed........................................................ (4,072) (41,979) (9,102) (89,151) Net increase........................................................... 3,488 36,184 3,402 27,057 CLASS Y Shares sold............................................................ 2,380,468 24,464,360 2,935,478 28,627,310 Shares issued from acquisition of FFB Diversified International Growth Fund................................................................. 2,898,154 29,658,717 -- -- Shares issued on reinvestment of distributions......................... 30,069 303,397 1,510 14,829 Shares redeemed........................................................ (341,200) (3,527,725) (282,738) (2,767,864) Net increase........................................................... 4,967,491 50,898,749 2,654,250 25,874,275 Total net increase resulting from Fund share transactions.............. 5,605,973 $57,484,257 2,938,860 $28,623,418
NOTE 6 -- FINANCING AGREEMENT Global Real Estate has a financing agreement with its custodian, State Street Bank and Trust Company (the "Bank"), which provides the Fund with a line of credit, in the aggregate amount of the lesser of $5,000,000 or 5% of the value of the Fund's net assets, to be accessed for temporary or emergency purposes. Borrowings under the line of credit bear interest at 1% above the Bank's cost of funds as set periodically by the Bank and are secured by securities pledged by the Fund. During the period ended April 30, 1996, the Fund had borrowings outstanding for 90 days under the line of credit and incurred interest charges amounting to $8,709. The Funds average debt outstanding during the period aggregated $536,111 at a weighted average interest rate of 6.50%. The Fund had no outstanding borrowings at April 30, 1996. NOTE 7 -- SUBSEQUENT EVENTS On June 3, 1996, Class A, Class B and Class C of Global Leaders commenced operations with a net asset value of $11.29 per share. 55 (This Page Left Blank Intentionally) 56 TRUSTEES AND OFFICERS TRUSTEES: Laurence B. Ashkin* Foster Bam* James S. Howell, Chairman Robert J. Jeffries* Gerald M. McDonnell Thomas L. McVerry William W. Pettit Russell A. Salton, III M.D. Michael S. Scofield OFFICERS: John J. Pileggi President and Treasurer Joan V. Fiore Secretary Sheryl Hirschfeld Assistant Secretary Donald E. Brostrom Assistant Treasurer Stephen W. St. Clair Assistant Treasurer * These individuals are not Trustees for Emerging Markets or International. -----END PRIVACY-ENHANCED MESSAGE-----