-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, eCg0HVTRNLUH/NwNAZKMMLZC4ADksqeRy1OFqKWjZLgibJ7CY2vUONyYS93+gKCg MWfFc1fNQKy0fleFl62zog== 0000950168-95-000753.txt : 19950830 0000950168-95-000753.hdr.sgml : 19950830 ACCESSION NUMBER: 0000950168-95-000753 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950829 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST UNION FUNDS/ 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: 95568613 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 HIGH GRADE TAX FREE PORT DATE OF NAME CHANGE: 19940519 FORMER COMPANY: FORMER CONFORMED NAME: FIRST UNION FUNDS DATE OF NAME CHANGE: 19921230 FORMER COMPANY: FORMER CONFORMED NAME: SALEM FUNDS DATE OF NAME CHANGE: 19920703 N-30D 1 FUNB/EVERGREEN #82261 N30D EVERGREEN GROWTH FUNDS (FORMERLY FIRST UNION GROWTH FUNDS) TABLE OF CONTENTS President's Message....................................................... 1 A Review of 1st Half and Prospects for Remainder of 1995....................................... 2 INTERNATIONAL A Report From Your Portfolio Manager...................................... 4 (Picture of passport) EQUITY FUND Statement of Investments.................................................. 5 Industry Diversification.................................................. 9 Statement of Assets and Liabilities....................................... 10 Statement of Operations................................................... 11 Statement of Changes in Net Assets........................................ 12 Financial Highlights...................................................... 13 (Picture of Globe) EMERGING MARKETS A Report From Your Portfolio Manager...................................... 14 GROWTH 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 Combined Notes to Financial Statements.................................... 22 Trustees and Officers..................................................... IBC
EVERGREEN GROWTH FUNDS (FORMERLY FIRST UNION GROWTH FUNDS) PRESIDENT'S MESSAGE BY JOHN J. PILEGGI Dear Valued Shareholder: I am pleased to present you with the Semi-Annual (Photo of John J. Report for the Evergreen Growth Funds (formerly the Pileggi appears First Union Growth Funds) for the six-month period ended here) June 30, 1995. This Report contains complete financial information -- including the Investment Reviews and Statements of Investments for the Evergreen Emerging Markets Growth Fund and Evergreen International Equity Fund. As you can see, this Report features our new family of the Evergreen Funds. This is the result of the First Union Funds combining with and taking the name of the Evergreen Funds effective July 7, 1995. In addition, we have completed the acquisition of the ABT Funds, which added two new funds to our expanding fund family, Florida High Income Municipal Bond and Aggressive Growth funds. The Evergreen Family of Funds now consists of more than 30 funds, each carefully designed to help meet specific objectives. We are excited about the creation of one COMBINED fund family, since it offers our shareholders a wider range of mutual fund options to help achieve a broad spectrum of investment needs. The combination of funds and the acquisition of two new funds provides you with the following benefits: (Bullet) a wider array of fund options, many with outstanding track records (Bullet) free exchanges among all funds* (Bullet) the investment expertise of two experienced investment advisors -- Evergreen Asset Management Corp. and First Union National Bank of North Carolina's Capital Management Group If you wish to receive more complete information about any of the Evergreen Funds, please call 1-800-807-2940 to speak with a First Union Brokerage Services' registered representative. We'll be glad to send you a prospectus describing the fund choices and their objectives, fees and expenses. Please read the prospectus carefully before you invest or send money. I hope you're pleased with the recent growth we have experienced, and the opportunities this growth affords you. As always, we welcome any questions, comments, and suggestions you may have. We look forward to serving your investment needs in the months and years to come. Sincerely, (Signature of John Pileggi) August 15, 1995 *EXCHANGES MUST BE WITHIN THE SAME CLASS OF SHARES. SHARE EXCHANGES ARE SUBJECT TO CERTAIN LIMITATIONS DESCRIBED IN THE PROSPECTUS. 1 EVERGREEN GROWTH FUNDS (FORMERLY FIRST UNION GROWTH FUNDS) SOFT LANDING OR PERFECT LANDING? REVIEW OF 1ST HALF AND PROSPECTS FOR REMAINDER OF 1995 BY DICK WAGONER, CHIEF INVESTMENT OFFICER In our last report we stated, "In our view, the (Picture of Dick investment climate for 1995 is improving," and we looked Wagoner appears for much improved investment returns. here) The basis for our optimism was our belief that the Federal Reserve's interest rate increases, designed to slow the economy and pre-empt inflation were, in fact, going to be effective and would permit the economy to come in for a "soft landing" after a period of rapid growth in 1994. In addition to the Fed's actions, we believed then as we believe now that several powerful secular forces -- including global competition, demographics and significant productivity gains -- are working to keep inflation in check longer-term. Evidence today confirms our view of moderating economic growth in 1995. Leading economic indicators have fallen 4 out of 5 consecutive months and are likely to fall again. Industrial production and capacity utilization have also begun to moderate. Further confirming a slowdown were the back-to-back rises in unemployment claims in April and May, the first such occurrence in over three years. These increases, along with rising inventories and sluggish retail sales, assure that slower economic growth is at hand for the remainder of the year. WHILE WE CONTINUE TO BE OPTIMISTIC ABOUT THE INVESTMENT OUTLOOK FOR 1995, WE BELIEVE THE MARKETS MAY BE GETTING AHEAD OF THEMSELVES IN ANTICIPATION OF A "PERFECT LANDING." STANDING OVATION FROM WALL STREET As the economy began to slow, interest rates fell and the markets responded with a standing ovation to the prospects of a "soft landing" -- perhaps even anticipating a "perfect landing" in the economy. For the six months ended June 30, 1995, the S&P 500 Reinvested Index* was up over 20% and the Lehman Brothers Intermediate Bond Index was up over 9%. An increasing number of investors believe the transition to a slow growth, low inflation economy will be smooth -- providing a highly favorable investment climate. While we continue to be optimistic about the investment outlook for 1995, we believe the markets may be getting ahead of themselves in anticipation of a "perfect landing" rather than a slowdown. It is likely to be characterized by modestly higher inflation, a choppy and subdued pattern of economic growth, and less favorable corporate earnings comparisons. INTERNATIONAL MARKETS IN THE DOLDRUMS Overall, the international equity markets provided dull returns in the first half of 1995, especially when compared with the U.S. equity markets. The MSCI EAFE Index** (Europe, Australia and Far East) return in U.S. dollars was 2.6% through June. Currency was the major positive factor in international returns. The U.S. dollar declined against the EAFE currencies by nearly 10%. That produced a currency gain for U.S. investors in foreign markets. Without this currency gain, EAFE would have declined about 7.4%. All of the lackluster return is the result of Japan's performance. Japan, the largest market in the EAFE Index, produced a negative return of 8% despite a 17% appreciation of the yen. For local investors, the Japanese market declined nearly 22% as the Tokyo Stock Market approached new low levels. Among the 20 countries in the EAFE Index, all but Japan and Italy produced positive returns. In fact, without Japan, the majority of the countries produced a return of over 11%. The Scandinavian markets continued their excellent returns which began in 1994, led by Finland with a 30% return. Belgium, the Netherlands, New Zealand, Spain, Sweden and Switzerland each produced returns of 15% or more. * THE S&P 500 IS A REINVESTED UNMANAGED COMPOSITE INDEX OF 425 INDUSTRIAL, 20 TRANSPORTATION, AND 55 PUBLIC UTILITY COMMON STOCKS. ** UNMANAGED INDICES. 2 EVERGREEN GROWTH FUNDS (FORMERLY FIRST UNION GROWTH FUNDS) REVIEW OF 1ST HALF AND PROSPECTS FOR REMAINDER OF 1995 -- (CONTINUED) Among the emerging markets, the first half of 1995 was a real roller coaster. The IFC's Emerging Markets Investable Composite Index** of 24 countries declined nearly 15% in the first quarter, recovered up nearly 9% in the second quarter, and produced an overall return falling 7% for the first half of the year. SECOND HALF OUTLOOK The U.S. investment climate for the balance of 1995 is likely to require a more cautious stance on the part of investors. The first half of the year witnessed a rapid run-up in equity prices, powered by the declining interest rates and improved corporate profit performance. Further substantial interest rate declines from current levels are less likely, which removes one of the driving forces for higher stock prices. For the balance of 1995 and into 1996, profit comparisons will be less robust related to the moderation in the economy and more difficult year-over-year comparisons. However, in the absence of a further slowdown in the economy, profits should continue to grow, but at a more measured pace. Valuations on stocks are high reflecting the aforementioned variables. While this in and of itself is not a reason for stocks to fall, it indicates that a reasonable degree of caution is appropriate. At this point, it appears that the U.S. economic recovery is intact and that inflation is under control. THE INTERNATIONAL MARKETPLACE The global economy appears to be at a turning point. After good growth in recent years, a slowdown is in the making. Both the U.S. and Japan are entering periods of slow growth. In recognition of the coming slowdown, interest rates in the U.S. have been cut by the Federal Reserve. Japan especially is looking at a slowdown with zero real growth or possible negative growth. Short-term interest rates in Tokyo are at or below 1 percent. It's difficult to see how rates could go lower in Japan. With most international stock markets lagging the exceptional returns of the U.S. in 1995, many of the foreign markets are selling at lower valuations levels than valuations in the United States. Japan, in spite of its economic problems, is especially intriguing. Valuations are lower in Japan now than they have been in many years. Other markets including the U.K., France and Switzerland are selling at lower P/Es (price to earnings ratios) and higher dividend yields than our market. INTERNATIONAL OUTLOOK The rest of the world's economies will follow the two "engines" -- the U.S. and Japan. European countries are challenged to control interest rates, as their recent economic growth was not as robust as in the U.S. While there is the need to reduce rates to stimulate their economies, interest rates cannot be reduced too far as Eurpoean currencies are likely to strengthen against the U.S. dollar. In Asia, outside Japan, there is good growth. The emerging markets continue to offer excellent participation in the world's fastest economic growth. We believe international equities will provide both good diversification and improved returns in the coming 6 to 12 months. ** UNMANAGED INDICES. 3 EVERGREEN INTERNATIONAL EQUITY FUND (Picture of Passport) (FORMERLY FIRST UNION INTERNATIONAL EQUITY PORTFOLIO) A REPORT FROM YOUR PORTFOLIO MANAGER BY DICK WAGONER The Evergreen International Equity Fund (the "Fund") began (Picture of operation on September 2, 1994. The goal of the Fund's manager and Dick Wagoner sub-adviser, Boston International Advisors, Inc., is to seek appears here) to provide long term capital appreciation and outperform the Morgan Stanley, Europe, Australia and Far East Index* (the "EAFE Index") by 1 to 2% annually over a five-year period. At mid-year, the Fund held 244 securities representing all 20 countries in the EAFE Index. In addition, the Fund held shares of 15 emerging market mutual funds, representing 9% of the portfolio's total net asset value. To pursue attractive long-term returns, we select stocks with value characteristics, such as a low price-to-book-value ratios and above-average dividend yields that exceed the S&P 500. At mid-year, the portfolio had an average price-to-book-value ratio of 1.0x, substantially below the 1.8x ratio for the EAFE Index. While each country in EAFE is represented in the portfolio, a proprietary country-weighting strategy which establishes fixed country portfolio weights (re-balanced annually) employed by the Fund differs substantially from the EAFE Index. For example, Japanese stocks represent 20% of the portfolio compared with 41% of the EAFE Index. While value characteristics like those exhibited by the Fund performed well in 1994 and prior years, they tended to under-perform the EAFE Index during the first half. Of course, the Fund is managed as a long-term investment. Short-term fluctuations in return are typical. Looking ahead, we remain convinced that international equities should provide competitive returns for investors over the balance of the decade. We will seek to enhance the Fund's returns by pursuing three distinct investment strategies. First, a disciplined, value-oriented stock selection methodology should result in the addition of above-average stocks to the Fund's portfolio. Second, the fixed-country weighting strategy, referred to above, should permit the Fund to benefit from the volatility inherent in the international markets. And third, the prudent use of emerging market equities -- up to 10 percent of the total Fund value -- should allow the Fund to benefit from rapidly growing non-EAFE Index markets. * UNMANAGED INDEX OF SELECTED SECURITIES. 4 EVERGREEN INTERNATIONAL EQUITY FUND (FORMERLY FIRST UNION INTERNATIONAL EQUITY PORTFOLIO) STATEMENT OF INVESTMENTS (Picture of Passport) JUNE 30, 1995 (UNAUDITED)
SHARES VALUE COMMON STOCKS -- 95.8% ARGENTINA -- .6% 24,400 Argentina Fund, Inc................. $ 274,500 AUSTRALIA -- 5.1% 111,800 Adelaide Brighton Ltd............... 104,887 50,900 Ampolex Ltd......................... 115,764 54,400 Australian & New Zealand Banking Group....................... 193,319 115,900 Caltex Australia Ltd................ 331,967 22,200 Commonwealth Bank of Australia........................... 147,211 17,900 CSR Ltd............................. 55,977 246,500 Dominion Mining Ltd................. 45,551 146,600 General Property Trust.............. 247,980 59,900 Goodman Fielder Ltd................. 49,810 39,100 Hardie (James) Industries Ltd....... 61,693 55,100 News Corporation Ltd................ 307,808 6,600 Normandy Poseidon Ltd............... 8,162 45,500 Pancontinental Mining Ltd........... 61,443 33,000 Pioneer International Ltd........... 82,090 700 Publishing & Broadcasting........... 2,060 55,400 Schroders Property Fund............. 84,655 59,800 Westfield Trust..................... 104,554 66,300 Westpac Banking Corp................ 239,849 2,244,780 AUSTRIA -- 1.4% 1,000 Bank Austria AG..................... 83,273 3,050 Creditanstalt -- Bankverein......... 179,983 3,200 OMV AG.............................. 369,446 632,702 BELGIUM -- 2.1% 1,667 Arbed S.A........................... 243,593 200 Banque Nationale de Belgique........ 272,359 5,434 Societe Generale de Belgique........ 388,416 904,368 BRAZIL -- .6% 10,670 Brazil Fund, Inc.................... 268,084 CHILE -- .6% 5,272 Chile Fund, Inc..................... 283,370 DENMARK -- 2.0% 9,650 Den Danske Bank Aktieselskab........ 606,311 5,900 Unidanmark A/S...................... 289,778 896,089 SHARES VALUE COMMON STOCKS -- CONTINUED FINLAND -- 1.9% 6,300 Enso -- Gutzeit OY.................. $ 57,076 294,180 Kansallis Yhtyma.................... 320,232 140,300 Unitas.............................. 453,248 830,556 FRANCE -- 6.7% 2,950 Banque Nationale de Paris........... 142,242 883 Christian Dior...................... 77,729 14,650 Cie de Suez......................... 814,761 3,100 Cie Fin Paribas..................... 186,268 1,276 Compagnie Bancaire S.A.............. 152,499 2,350 Credit Lyonnais S.A................. 135,296 400 Erindania Beghin S.A................ 61,653 472 EuraFrance.......................... 155,975 4,650 Gan GRP............................. 147,462 102 Gaz Et Eaux......................... 39,724 333 LVMH Moet Hennessy Louis Vuitton.... 59,903 1,700 Peugot S.A.......................... 235,751 4,100 Societe Elf Aquitaine............... 302,875 1,800 Societe Generale.................... 210,303 6,750 Thompson -- CSF S.A................. 151,190 1,000 Total............................... 60,169 2,933,800 GERMANY -- 6.4% 460 Bankgesellschaft Berlin............. 121,691 1,830 BASF AG............................. 390,735 870 Bayer A.G........................... 216,321 1,750 Bayerishe Vereinsbank AG............ 530,629 2,160 Berliner Kraft-und Licht (Bewag)-A.G......................... 532,389 1,140 BHF-Bank International S.A.......... 299,111 1,510 Bremer Vulkan Verbundag AG.......... 87,315 1,380 Commerzbank AG...................... 329,963 2,100 Dresdner Bank AG.................... 60,716 200 GEA AG.............................. 70,546 530 Volkswagen AG....................... 153,043 2,792,459 HONG KONG -- 5.3% 65,000 Amoy Properties Ltd................. 57,123 134,000 Chinese Estates Holdings............ 96,114 78,200 Great Eagle Holdings Ltd............ 166,755
5 EVERGREEN INTERNATIONAL EQUITY FUND (FORMERLY FIRST UNION INTERNATIONAL EQUITY PORTFOLIO) STATEMENT OF INVESTMENTS -- (CONTINUED) (Picture of Passport) JUNE 30, 1995 (UNAUDITED)
SHARES VALUE COMMON STOCKS -- CONTINUED HONG KONG -- CONTINUED 38,000 Harbour Centre Developement Ltd..... $ 40,761 76,000 Hongkong Land Holdings Ltd.......... 138,320 131,000 Hongkong and Shanghai Hotels, Ltd......................... 161,682 59,000 Hopewell Holdings Ltd............... 49,944 120,000 Hysan Development Co., Ltd.......... 274,500 13,000 Jardine Strategic Holdings Ltd...... 41,860 52,000 Miramar Hotel & Investment Co., Ltd............................ 106,181 55,000 New World Development Co., Ltd............................ 183,032 130,000 Regal Hotels International Holdings Ltd................................. 25,705 17,500 Swire Pacific Ltd................... 133,437 118,000 Wharf (Holdings) Ltd. (The)......... 385,063 289,000 Wheelock & Co....................... 479,942 2,340,419 INDIA -- .6% 14,343 India Growth Fund, Inc.............. 263,553 INDONESIA -- .6% 23,100 Indonesia Fund, Inc................. 256,988 IRELAND -- 1.7% 69,000 Bank of Ireland..................... 394,852 45,200 James Crean Plc..................... 164,801 64,400 Jefferson Smurfit Group Plc......... 194,794 754,447 ITALY -- 2.0% 438,500 BCO di Roma......................... 401,175 156,300 CIR Compagnie Industries............ 75,135 183,400 Cofide.............................. 63,454 145,100 Credito Italiano S.A................ 167,921 128,700 Finneccanica S.p.A.................. 80,940 78,300 GAIC................................ 23,447 65,100 Grassetto S.p.A..................... 32,371 70,000 Montefibre S.p.A.................... 39,008 883,451 JAPAN -- 20.4% 6,000 Aida Engineering.................... 40,825 8,000 Aisin Seiki Co...................... 91,321 17,000 Amada Co............................ 145,342 22,000 Aoki Corp........................... 79,906 21,000 Asahi Denka Kogyo................... 174,835 SHARES VALUE COMMON STOCKS -- CONTINUED JAPAN -- CONTINUED 6,000 Chubu Electrical Power Co., Inc..... $ 164,151 3,000 Chugoku Bank Ltd. (The)............. 55,896 13,000 Daicel Chemical Industries, Ltd..... 66,533 19,000 Fuji Photo Film Co.................. 450,354 26,000 Fujitsu Ltd......................... 259,080 11,000 Gakken Co........................... 67,583 18,000 Hanwa Co............................ 47,123 38,000 Haseko Corp......................... 179,245 75,000 Hitachi Ltd......................... 747,347 7,000 Hitachi Maxell Ltd.................. 98,231 36,000 Hokkaido Bank, Ltd.................. 127,358 46,000 Hokkaido Takushoku Bank, Ltd........ 125,849 11,000 Honda Motor Co., Ltd................ 168,632 20,000 Hyogo Bank.......................... 37,972 9,000 Inax Corp........................... 86,710 9,000 Komatsu Ltd......................... 68,667 7,000 Koyo Seiko Co....................... 52,005 53,000 Kumagai Gumi Corp................... 221,875 9,000 Marubeni Corp....................... 45,743 21,000 Marudai Food Co..................... 140,413 41,000 Matsushita Electric Industrial Co., Ltd............................ 638,208 18,000 Mazda Motor Corp.................... 63,255 29,000 Mitsubishi Electric Corp............ 203,821 6,000 Mitsubishi Trust Banking Corp....... 55,189 25,000 Nichiei Co.......................... 100,236 46,000 Nippon Oil Co....................... 289,127 67,000 Nissan Motor Co..................... 428,231 17,000 Nisshinbo Industries, Inc........... 134,116 14,000 Nomura Securities Co., Ltd.......... 244,340 36,000 Renown, Inc......................... 106,132 5,000 Ricoh Co............................ 42,924 7,000 Royal Co............................ 97,406 25,000 Sanyo Electric Co................... 122,936 6,000 Seino Transportation Co., Ltd....... 101,179 27,000 Sekisui House, Ltd.................. 334,316 24,000 Settsu Corp......................... 73,585 28,000 Shiseido Co......................... 315,330 8,000 Sony Corp........................... 383,962 26,000 Sumitomo Corp....................... 236,698 35,000 Sumitomo Metal Industries, Ltd...... 91,215 18,000 Sumitomo Realty & Development Co., Ltd................................. 107,406 1,000 TDK Corp............................ 45,519
6 EVERGREEN INTERNATIONAL EQUITY FUND (FORMERLY FIRST UNION INTERNATIONAL EQUITY PORTFOLIO) STATEMENT OF INVESTMENTS -- (CONTINUED) (Picture of Passport) JUNE 30, 1995 (UNAUDITED)
SHARES VALUE COMMON STOCKS -- CONTINUED JAPAN -- CONTINUED 15,000 Tokai Bank Ltd...................... $ 166,274 28,000 Toyota Motor Corp................... 554,717 40,000 Yamaichi Securities Co.............. 214,151 8,000 Yasuda Trust & Banking Co........... 52,358 8,945,627 KOREA -- .7% 14,600 Korea Fund, Inc..................... 286,525 MALAYSIA -- 5.8% 83,000 Berjaya Group Berhad................ 72,840 93,000 Faber Group Berhad.................. 89,625 86,000 Golden Hope Plantations Berhad...... 157,999 43,000 Highlands & Lowlands Berhad......... 82,526 47,000 Kuala Lumpur Kepong Bertial......... 149,375 64,000 Malayan United Industries Berhad.... 110,232 13,200 Malaysia Fund Inc................... 255,750 88,000 Malaysia Mining Corp. Berhad........ 159,508 108,000 Malaysian Airline Systems........... 365,388 39,000 Malaysian International Shipping Corp. Berhad........................ 114,353 14,000 Malaysian Mosaics Berhad............ 19,405 46,000 Perlis Plantations Berhad........... 152,799 146,000 Renong Berhad....................... 271,823 20,000 Sime Darby Berhad................... 55,772 3,000 Telekom Malaysia Berhad............. 22,760 111,000 Tenaga Nasional Berhad.............. 452,922 2,533,077 MEXICO -- .7% 17,425 Mexico Fund, Inc.................... 287,513 NETHERLANDS -- 2.3% 18,650 ABN-AMRO Holdings NV................ 719,761 5,050 Internationale -- Nederlande........ 279,306 999,067 NEW ZEALAND -- 1.1% 49,450 Carter Holt Harvey Ltd.............. 120,718 129,900 Fletcher Challenge Ltd.............. 363,902 484,620 NORWAY -- 1.8% 14,120 Aker A.S............................ 189,107 8,400 Norske Skogindustrier A.S........... 294,545 6,920 Orkla A.S........................... 310,052 793,704 SHARES VALUE COMMON STOCKS -- CONTINUED PAKISTAN -- .6% 41,500 Pakistan Investment Fund............ $ 280,125 PHILIPPINE -- .6% 16,050 First Philippine Fund, Inc.......... 268,838 PORTUGAL -- .6% 19,600 Portugal Fund, Inc.................. 264,600 SINGAPORE -- 4.8% 80,000 Auric Pacific GP Ltd................ 127,221 264,000 Chuan Hup Holdings Ltd.............. 215,587 6,000 Development Bank of Singapore Ltd................................. 68,338 19,000 Fraser & Neave Ltd.................. 219,126 43,000 Parkway Holdings Ltd................ 104,112 30,000 Prima Ltd........................... 111,748 24,000 Singapore Airlines Ltd.............. 221,777 53,000 Singapore Land Ltd.................. 347,385 45,000 Straits Steamship Land Ltd.......... 156,017 52,000 Times Publishing.................... 128,883 312,000 United Industrial Corp., Ltd........ 301,719 49,000 WBL Corp. Ltd....................... 110,215 2,112,128 SOUTH AFRICA -- .3% 10,700 Morgan Stanley African Investment Fund, Inc........................... 123,050 SPAIN -- 2.8% 32,900 Fuerzas Electrica Catal S.A......... 191,418 38,400 Iberdrola S.A....................... 289,428 49,700 Sevillana de Electricidad S.A....... 306,004 16,200 Telefonica de Espana S.A............ 208,859 49,900 Union Electrica-Fenosa S.A.......... 234,241 1,229,950 SWEDEN -- 2.9% 2,550 Mo Oh Domsjo AB..................... 147,142 16,950 Skandinaviska Enskilda Banken....... 88,131 8,250 Stora Kopparbergs Besgslogs, Series A................................... 111,778 11,500 Stora Kopparbergs Besgslogs, Series B................................... 154,230 16,350 Svenska Cellulosa AB-SCA............ 303,611 5,900 Svenska Handelsbanken, Series A..... 83,184 10,200 Svenska Handelsbanken, Series B..... 152,228 8,750 Sydkraft AB, Series A............... 137,208
7 EVERGREEN INTERNATIONAL EQUITY FUND (FORMERLY FIRST UNION INTERNATIONAL EQUITY PORTFOLIO) STATEMENT OF INVESTMENTS -- (CONTINUED) (Picture of Passport) JUNE 30, 1995 (UNAUDITED)
SHARES VALUE COMMON STOCKS -- CONTINUED SWEDEN -- CONTINUED 5,900 Sydkraft AB, Series C............... $ 79,938 1,257,450 SWITZERLAND -- 3.4% 95 Baloise Holdings.................... 216,471 375 Rieter Holdings Ltd................. 112,305 110 Schweizerische Bankgesellsch........ 113,915 690 Schweizerischer Bankverein AG....... 244,375 200 Winterhur........................... 120,139 350 Zurich Versicherun BR............... 439,627 180 Zurich Versicherun REG.............. 226,094 1,472,926 TAIWAN -- .6% 25,900 R.O.C. Taiwan Fund, Inc............. 284,900 THAILAND -- .6% 15,100 Thailand Capital Fund, Inc.......... 262,363 TURKEY -- .6% 42,000 Turkish Investment Fund, Inc........ 267,750 UNITED KINGDOM -- 7.6% 9,900 Anglian Water Plc................... 78,887 14,300 Bass Plc............................ 136,806 1,000 B-A-T Industries Plc................ 7,666 20,160 British Land Co. Plc (The).......... 128,098 4,900 British Petroleum Co., Plc (The).... 35,110 127,000 British Steel Plc................... 346,924 41,400 British Telecommunications Plc...... 258,119 80,200 Forte Plc........................... 290,195 27,600 General Accident Plc................ 252,851 40,800 Ladbroke Group Plc.................. 109,668 45,900 Land Securities Plc................. 443,864 14,700 MEPC Plc............................ 89,430 24,900 Royal Insurance Ltd................. 122,375 23,200 Severn Trent Plc.................... 199,996 10,700 Shell Transportation & Trading Co., Plc................................. 127,893 10,600 Southern Water Plc.................. 101,577 14,700 Tesco Plc........................... 67,803 18,200 Thames Water Plc.................... 137,643 28,800 3I Group............................ 167,193 23,700 Whitbread Plc....................... 226,169 3,328,267 TOTAL COMMON STOCKS (COST $42,024,632)........... 42,042,046 SHARES VALUE PREFERRED STOCKS -- 2.5% AUSTRALIA -- .5% 13,750 News Corporation Limited............ $ 68,115 44,900 Publishing & Broadcasting........... 132,434 200,549 AUSTRIA -- .5% 4,150 Creditanstalt -- Bankverein......... 239,349 200 MIBA AG............................. 8,759 248,108 BELGIUM -- .2% 12,432 Cockerill Sambre S.A................ 79,232 GERMANY -- 1.2% 550 GEA AG.............................. 176,509 1,550 Volkswagen AG....................... 341,706 518,215 ITALY -- .1% 103,456 Alitalia -- Linee Aeree Italiane S.p.A...................... 34,528 TOTAL PREFERRED STOCKS (COST $1,085,452)............ 1,080,632 TOTAL LONG-TERM INVESTMENTS (COST $43,110,084)........... 43,122,678 **REPURCHASE AGREEMENT -- .9% $382,000 State Street Bank & Trust Co., 5.5% dated 6/30/95, due 7/3/95 (cost $382,000)........................... 382,000 TOTAL INVESTMENTS -- 99.2% (COST $43,492,084)........... 43,504,678 OTHER ASSETS AND LIABILITIES -- NET .8%....... 370,187 TOTAL NET ASSETS -- 100%....... $43,874,865
** Fully collateralized by U.S. government and/or agency obligations based on market price at June 30, 1995. See accompanying notes to financial statements. 8 EVERGREEN INTERNATIONAL EQUITY FUND (FORMERLY FIRST UNION INTERNATIONAL EQUITY PORTFOLIO) INDUSTRY DIVERSIFICATION (Picture of Passport) JUNE 30, 1995 (UNAUDITED)
PERCENT OF NET ASSETS Banking.......................................... 16.0% Utilities -- Electrical & Gas.................... 6.5% Multi-Industry................................... 6.2% Real Estate...................................... 5.7% Automobiles...................................... 4.7% Insurance........................................ 4.1% Energy Sources................................... 3.9% Miscellaneous.................................... 3.9% Forest Products & Paper.......................... 3.1% Appliances & Household Durables.................. 2.6% Machinery & Engineering.......................... 2.3% Building Materials............................... 2.3% Electrical & Electronics......................... 2.2% Chemicals........................................ 2.0% Construction & Housing........................... 1.9% Financial Services............................... 1.8% Food & Household Products........................ 1.7% Metals/Steel..................................... 1.7% Broadcasting & Publishing........................ 1.6% Leisure & Tourism................................ 1.5% Beverages & Tobacco.............................. 1.5% Transportation -- Airlines....................... 1.4% Recreation & Other Consumer Goods................ 1.3% PERCENT OF NET ASSETS Telecommunications............................... 1.1% Business & Public Services....................... 1.1% Wholesale & International Trade.................. 0.8% Health & Personal Care........................... 0.7% Miscellaneous Materials.......................... 0.7% Data Processing & Reproduction................... 0.7% Japanese City Banks.............................. 0.7% Japanese Regional Banks.......................... 0.6% Textiles & Apparel............................... 0.6% Aerospace & Military Technology.................. 0.5% Energy Equipment & Services...................... 0.5% Metals -- Non Ferrous............................ 0.4% Industrial Components............................ 0.4% Transportation -- Shipping....................... 0.3% Transportation -- Road & Rail.................... 0.2% Merchandising.................................... 0.2% Gold Mines....................................... 0.1% Electronic Components............................ 0.1% Mutual Funds..................................... 8.7% Short-Term Investments........................... 0.9% Other Assets Less Liabilities.................... 0.8% Total Net Assets................................. 100.0%
9 EVERGREEN INTERNATIONAL EQUITY FUND (FORMERLY FIRST UNION INTERNATIONAL EQUITY PORTFOLIO) STATEMENT OF ASSETS AND LIABILITIES (Picture of Passport) JUNE 30, 1995 (UNAUDITED)
ASSETS: Investments at value (identified cost $43,492,084)............................................................. $43,504,678 Foreign currency at value (identified cost $52,125)............................................................ 52,230 Cash........................................................................................................... 76 Dividends and interest receivable.............................................................................. 274,803 Receivable for Fund shares sold................................................................................ 216,349 Prepaid expenses............................................................................................... 11,202 Total assets............................................................................................. 44,059,338 LIABILITIES: Payable for investments purchased.............................................................................. 124,465 Withholding tax liability...................................................................................... 36,345 Payable for Fund shares repurchased............................................................................ 7,064 Accrued expenses............................................................................................... 16,599 Total liabilities........................................................................................ 184,473 NET ASSETS........................................................................................................ $43,874,865 NET ASSETS CONSIST OF: Paid-in capital................................................................................................ 43,575,042 Accumulated net realized loss.................................................................................. (155,268) Undistributed net investment income............................................................................ 438,647 Net unrealized appreciation of investments and foreign currency................................................ 16,444 Net assets............................................................................................... $43,874,865 CALCULATION OF NET ASSET VALUE PER SHARE: Class A Shares ($3,009,352 (divided sign) 307,510 shares of beneficial interest outstanding)................... $ 9.79 Sales charge -- 4.75% of offering price........................................................................ 0.49 Maximum offering price...................................................................................... $ 10.28 Class B Shares ($6,646,745 (divided sign) 681,234 shares of beneficial interest outstanding)................... $ 9.76 Class C Shares ($243,838 (divided sign) 24,980 shares of beneficial interest outstanding)...................... $ 9.76 Class Y Shares ($33,974,930 (divided sign) 3,467,987 shares of beneficial interest outstanding)................ $ 9.80
See accompanying notes to financial statements. 10 EVERGREEN INTERNATIONAL EQUITY FUND (FORMERLY FIRST UNION INTERNATIONAL EQUITY PORTFOLIO) STATEMENT OF OPERATIONS (Picture of Passport) SIX MONTHS ENDED JUNE 30, 1995 (UNAUDITED)
INVESTMENT INCOME: Dividends (net of foreign withholding taxes of $86,981)........................................... $ 612,468 Interest.......................................................................................... 21,541 Total income................................................................................ 634,009 EXPENSES: Advisory fee...................................................................................... $ 154,513 Administrative personnel and services fees........................................................ 15,373 Distribution fee -- Class A Shares................................................................ 3,448 Distribution and shareholder services fees -- Class B Shares...................................... 30,603 Distribution and shareholder services fees -- Class C Shares...................................... 1,140 Custodian fee..................................................................................... 67,219 Transfer agent fee................................................................................ 20,191 Registration and filing fees...................................................................... 15,359 Professional fees................................................................................. 12,863 Reports and notices to shareholders............................................................... 7,655 Insurance expense................................................................................. 3,050 Trustees' fees and expenses....................................................................... 313 Miscellaneous..................................................................................... 6,660 338,387 Less: Fee waivers and expense reimbursements...................................................... (126,036) Total expenses.............................................................................. 212,351 Net investment income................................................................................ 421,658 NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY: Net realized loss on investments and foreign currency transactions................................ (123,136) Net change in unrealized appreciation of investments and foreign currency......................... 1,110,572 Net gain on investments and foreign currency......................................................... 987,436 NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................................. $1,409,094
See accompanying notes to financial statements. 11 EVERGREEN INTERNATIONAL EQUITY FUND (FORMERLY FIRST UNION INTERNATIONAL EQUITY PORTFOLIO) (Picture of Passport) STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED SEPTEMBER 2, 1994* JUNE 30, 1995 THROUGH (UNAUDITED) DECEMBER 31, 1994 INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment income.................................................................. $ 421,658 $ 64,959 Net realized loss on investments and foreign currency transactions..................... (123,136) (27,654) Net change in unrealized appreciation (depreciation) of investments and foreign currency............................................................................. 1,110,572 (1,094,129) Net increase (decrease) in net assets resulting from operations..................... 1,409,094 (1,056,824) DISTRIBUTIONS TO SHAREHOLDERS FROM: NET INVESTMENT INCOME: Class A shares......................................................................... (3,090) (259) Class Y shares......................................................................... (30,566) (14,055) Total distributions to shareholders from net investment income......................... (33,656) (14,314) NET REALIZED GAINS: Class A shares......................................................................... -- (363) Class B shares......................................................................... -- (811) Class C shares......................................................................... -- (24) Class Y shares......................................................................... -- (3,279) Total distributions to shareholders from net realized gains............................ -- (4,477) Total distributions to shareholders................................................. (33,656) (18,791) FUND SHARE TRANSACTIONS: Proceeds from shares sold.............................................................. 13,644,832 33,532,764 Proceeds from reinvestment of dividends................................................ 19,562 8,355 Payments of shares redeemed............................................................ (3,304,494) (325,977) Net increase from Fund share transactions........................................... 10,359,900 33,215,142 Net increase in net assets.......................................................... 11,735,338 32,139,527 NET ASSETS: Beginning of period.................................................................... 32,139,527 -- End of period (including undistributed net investment income of $438,647 and $50,645, respectively)........................................................................ $ 43,874,865 $ 32,139,527
* Commencement of operations. See accompanying notes to financial statements. 12 EVERGREEN INTERNATIONAL EQUITY FUND (FORMERLY FIRST UNION INTERNATIONAL EQUITY PORTFOLIO) (Picture of Passport) FINANCIAL HIGHLIGHTS
CLASS A SHARES CLASS B SHARES CLASS C SHARES PERIOD FROM PERIOD FROM PERIOD FROM SIX MONTHS SEPTEMBER 2, SIX MONTHS SEPTEMBER 2, SIX MONTHS SEPTEMBER 2, ENDED 1994* ENDED 1994* ENDED 1994* JUNE 30, THROUGH JUNE 30, THROUGH JUNE 30, THROUGH 1995 DECEMBER 31, 1995 DECEMBER 31, 1995 DECEMBER 31, (UNAUDITED) 1994 (UNAUDITED) 1994 (UNAUDITED) 1994 PER SHARE DATA Net asset value, beginning of period.... $9.50 $10.00 $9.50 $10.00 $9.49 $10.00 Income (loss) from investment operations: Net investment income................... .09 .02 .06 -- .08 .03 Net realized and unrealized gain (loss) on investments........................ .21 (.52) .20 (.50) .19 (.54) Total from investment operations.... .30 (.50) .26 (.50) .27 (.51) Less distributions to shareholders from net investment income................. (.01) -- -- -- -- -- Net asset value, end of period.......... $9.79 $9.50 $9.76 $9.50 $9.76 $9.49 TOTAL RETURN(|)......................... 3.3% (5.1%) 3.0% (5.2%) 3.0% (5.2%) RATIOS & SUPPLEMENTAL DATA Net assets, end of period (000's omitted).............................. $3,009 $2,545 $6,647 $5,602 $244 $163 Ratios to average net assets: Expenses(|)(|)(a)..................... 1.19% 1.26% 1.94% 2.02% 1.94% 2.01% Net investment income(|)(|)(a)........ 1.97% .91% 1.24% .10% 1.34% .85% Portfolio turnover rate................. 3% 1% 3% 1% 3% 1% CLASS Y SHARES PERIOD FROM SIX MONTHS SEPTEMBER 2, ENDED 1994* JUNE 30, THROUGH 1995 DECEMBER 31, (UNAUDITED) 1994 PER SHARE DATA Net asset value, beginning of period.... $9.50 $10.00 Income (loss) from investment operations: Net investment income................... .10 .02 Net realized and unrealized gain (loss) on investments........................ .21 (.51) Total from investment operations.... .31 (.49) Less distributions to shareholders from net investment income................. (.01) (.01) Net asset value, end of period.......... $9.80 $9.50 TOTAL RETURN(|)......................... 3.4% (5.0%) RATIOS & SUPPLEMENTAL DATA Net assets, end of period (000's omitted).............................. $33,975 $23,830 Ratios to average net assets: Expenses(|)(|)(a)..................... .94% 1.06% Net investment income(|)(|)(a)........ 2.30% 1.03% Portfolio turnover rate................. 3% 1%
* Commencement of operations. (|) Total return is calculated on net asset value per share for the periods indicated and is not annualized. Initial sales charges or contingent deferred sales charges are not reflected. (|)(|) Annualized. (a) Net of expense waivers and reimbursements. If the Fund had borne all expenses that were assumed or waived by the investment adviser, the annualized ratios of expenses and net investment income (loss) to average net assets, exclusive of any applicable state expense limitations, would have been the following:
CLASS A SHARES CLASS B SHARES CLASS C SHARES CLASS Y PERIOD FROM PERIOD FROM PERIOD FROM SHARES SIX MONTHS SEPTEMBER 2, SIX MONTHS SEPTEMBER 2, SIX MONTHS SEPTEMBER 2, SIX MONTHS ENDED 1994* ENDED 1994* ENDED 1994* ENDED JUNE 30, THROUGH JUNE 30, THROUGH JUNE 30, THROUGH JUNE 30, 1995 DECEMBER 31, 1995 DECEMBER 31, 1995 DECEMBER 31, 1995 (UNAUDITED) 1994 (UNAUDITED) 1994 (UNAUDITED) 1994 (UNAUDITED) Expenses............................... 1.86% 2.09% 2.61% 2.85% 1.27% 2.84% 1.61% Net investment income (loss)........... 1.30% .08% .57% (.73%) .67% .02% 1.63% CLASS Y SHARES PERIOD FROM SEPTEMBER 2, 1994* THROUGH DECEMBER 31, 1994 Expenses............................... 1.89% Net investment income (loss)........... .20%
13 EVERGREEN EMERGING MARKETS GROWTH FUND (FORMERLY FIRST UNION EMERGING MARKETS GROWTH PORTFOLIO) (Picture of Globe) A REPORT FROM YOUR PORTFOLIO MANAGER BY DICK WAGONER The Evergreen Emerging Markets Growth Fund (the "Fund") (Picture of Dick began operation on September 6, 1994. Marvin and Palmer Wagoner appears Associates, a nationally recognized global equity manager here) located in Wilmington, Delaware, serves as sub-adviser to the Fund. The current investment strategy for the Fund is focused on two key areas of the world* -- the Far East and Latin America. Exposure to the emerging markets of Eastern Europe, the Middle East and Africa are at this time minimal because we do not see favorable economic dynamics in these areas. The correction which began in late 1994 in emerging country stock markets continued during the first quarter. Brought on by Mexico's devaluation of the peso, investors feared this problem was endemic to the emerging markets as a group. In the first quarter, the Morgan Stanley Emerging Market Index** was down 11.7%. As the dust settled, however, it became evident that the Mexico problem was not endemic to all emerging countries. During the second quarter, investors perceived the attractive values which existed in the emerging markets and the index rose 9.7%. The fundamental growth story of the Pacific Rim and Latin America-ex Mexico is still largely intact. Fresh capital inflows are now putting downward pressure on interest rates, external debt is falling, and growth continues to be the strongest and most consistent in the world. Despite recent rallies, the markets are cheap -- multiples of projected earnings are roughly equal to or less than forecasted earnings per share growth rates. While much more volatile than the U.S. and mature international markets, we continue to focus investment in this area as one of the world's premier "growth" opportunity. Our strategy is focused on: (1) Hong Kong as the most direct exposure to the emergence of China; (2) Malaysia and the rest of Southeast Asia allows us participation in the growth of intra-Asian trade. (3) Latin America to take advantage of the opportunities of deregulation and increased trade with the U.S. Despite the volatility and turmoil many of the markets have experienced, we are convinced that the long-term opportunity presented by capital-friendly economic policies and strong economic growth remains intact. * THIS FUND MAY NOT BE SUITABLE FOR ALL INVESTORS DUE TO CERTAIN RISKS IN INTERNATIONAL INVESTING, SUCH AS CURRENCY FLUCTUATIONS AND POLITICAL INSTABILITY. ** UNMANAGED INDEX OF SELECTED SECURITIES 14 EVERGREEN EMERGING MARKETS GROWTH FUND (FORMERLY FIRST UNION EMERGING MARKETS GROWTH PORTFOLIO) STATEMENTS OF INVESTMENTS (Picture of Globe) JUNE 30, 1995 (UNAUDITED)
SHARES VALUE COMMON STOCKS -- 93.3% ARGENTINA -- 4.4% 4,500 Banco DaGalicia, ADR............... 70,875 30,675 Cementera Argentina................ 134,997 45,600 Comercial del la Plata............. 113,111 2,500 Irsa Inversiones y Republica S.A... 58,125 5,800 YPF Sociedad Anonima ADR........... 109,475 486,583 BRAZIL -- 1.8% 6,000 Acesita Cia Acos Especials......... 81,000 10,000 Aracruz Celulose S.A............... 117,500 198,500 CHILE -- 1.8% 1,000 Madeco S.A......................... 28,750 3,600 Sociedad Quimica Y Minera de Chile, ADR................................ 170,100 198,850 CHINA -- .4% 2,500 Huaneng Power International, Inc, ADR................................ 45,938 COLOMBIA -- .8% 3,000 (|) Cemetos Paz Del Rio, ADR........... 49,500 2,113 Corporacion Financiera Del Columbia S.A................................ 34,865 84,365 HONG KONG -- 8.1% 10,000 Cheung Kong Holdings............... 49,498 470,000 First Pacific Co................... 416,080 29,000 Hang Lung Development Co........... 46,099 7,600 HSBC Holdings Plc.................. 97,484 29,000 Hutchison Whampoa Ltd.............. 140,171 28,000 Shaw Bothers Ltd................... 26,235 62,000 Varitronix International........... 108,572 884,139 INDIA -- 6.0% 7,500 East India Hotels, Ltd., GDR....... 114,375 16,000 Indian Hotels, Ltd., GDR........... 256,000 11,100 (|) ITC, Inc, GDR...................... 77,700 8,500 (|) Ranbaxy Laboratories, Ltd., GDR.... 212,500 660,575 INDONESIA -- 5.2% 14,000 Bank International Indonesia....... 32,815 10,000 HM Sampoerna....................... 78,581 11,000 Perusahaan Per Indosat, ADR........ 420,750 2,400 PT Tri Polyta Indonesia, ADR....... 41,700 573,846 SHARES VALUE COMMON STOCKS -- CONTINUED ISRAEL -- 3.0% 11,300 ECI Telecom, Ltd................... 154,668 2,400 Teva Pharmaceutical Industries, Ltd................................ 90,000 3,200 Tower Semi Conductor Ltd........... 92,800 337,468 KOREA -- 9.9% 12,625 Korea Fund, Inc.................... 247,766 12,500 Korea Mobile Telecommunication Corp............................... 446,875 4,100 Pohang Iron & Steel Co., Ltd....... 120,950 4,974 (|) Samsung Electronics Ltd............ 268,596 1,084,187 LUXEMBURG -- 2.0% 57,000 Genting International Place 97,470 6,000 Quilmes Industrial 117,000 214,470 MALAYSIA -- 11.1% 16,000 AMMB Holdings, Berhad.............. 190,281 20,000 Malayan Bank, Berhad............... 158,294 38,000 New Straits Times Press............ 117,654 31,000 Resorts World, Berhad.............. 181,792 18,000 Sime Darby, Berhad................. 50,195 84,000 Technology Resources Industries, Berhad............................. 242,032 6,000 Telekom Malaysia, Berhad........... 45,520 37,000 UTD Engineers BLD.................. 235,186 1,220,954 MEXICO -- 5.1% 19,000 Cemex, S.A. de C.V. 65,664 30,000 Cifro S.A. de C.V., ADR 40,668 8,500 (|) Grupo Carso, S.A. de C.V. 92,872 1,700 Grupo Finance Bankaex AC 2,584 34,000 Grupo Finance Banamex 52,224 26,000 Grupo Finance Imbursa 63,232 4,500 Grupo Iusacell, S.A. de C.V. ADR 54,000 130,000 Grupo Posadas S.A. 43,680 10,000 Grupo Sidek, S.A. de C.V., ADR 35,000 30,000 Grupo Synkro, S.A. de C.V. 10,077
15 EVERGREEN EMERGING MARKETS GROWTH FUND (FORMERLY FIRST UNION EMERGING MARKETS GROWTH PORTFOLIO) STATEMENTS OF INVESTMENTS -- (CONTINUED) (Picture of Globe) JUNE 30, 1995 (UNAUDITED)
SHARES VALUE COMMON STOCKS -- CONTINUED MEXICO -- CONTINUED 2,400 Grupo Televisa S.A. de C.V. ADR 48,900 4,000 Kimberly-Clark Corp. 45,952 554,853 PERU -- 7.7% 130,000 Banco de Credito del Peru.......... 227,916 5,900 Banco Frances del Rio.............. 106,200 19,000 Banco Wiese Ltd., ADR.............. 156,750 2,800 Bufete Indl SA..................... 45,500 12,000 Cementos Norte Pac................. 34,633 11,294 Compania de Minas.................. 64,478 100,000 CPT Telefonica del Peru............ 170,825 30,696 Tele 2000 La Nueva................. 39,465 845,767 PHILLIPINES -- 4.2% 142,300 Pilipino Telephone................. 136,505 77,000 San Miguel Corp.................... 319,577 456,082 PORTUGAL -- .9% 4,600 Portucel-Empresa de Celulose e Papel.............................. 32,775 3,300 Portugal Telecom de Portugal, S.A................................ 62,700 95,475 SINGAPORE -- 8.5% 14,000 Cerebos Pacific, Ltd............... 82,235 57,000 DBS Land Ltd....................... 178,840 6,000 Keppel Corp........................ 48,997 17,000 Overseas Union Enterprises Ltd..... 104,118 70,000 Public Bank........................ 146,920 3,600 Singapore Press Holdings Ltd....... 53,897 55,000 Straits Steamship Land Ltd......... 190,688 14,400 United Overseas Bank, Ltd.......... 136,160 941,855 TAIWAN -- .9% 6,200 President Enterprises Corp. 103,461 SHARES VALUE COMMON STOCKS -- CONTINUED THAILAND -- 8.4% 16,000 Advanced Info Services............. 228,016 7,600 Alphatec Electonics Plc 138,462 17,000 Bangkok Bank Ltd................... 187,206 4,000 Land & House Co.................... 84,211 22,000 Telecomasia........................ 77,490 13,800 UTD Communications................. 207,838 923,223 UNITED STATES -- 3.1% 3,000 Millicom International Cellular.... 88,875 4,000 Mutual Risk Mgmt. Ltd.............. 134,000 4,000 Tommy Hilfiger Corp................ 112,000 334,875 TOTAL COMMON STOCKS (COST $10,629,138)................ 10,245,466 *REPURCHASE AGREEMENT -- 8.7% 956,000 State Street Bank and Trust Co., 5.50%, dated 6/30/95, due 7/3/95......................... 956,000 TOTAL INVESTMENTS (COST $11,585,138) -- 102%........ 11,201,466 OTHER ASSETS AND LIABILITIES -- NET (2.0%)... (222,916) TOTAL NET ASSETS -- 100%...... $10,978,550
* Repurchase Agreement is fully collateralized by U.S. government and/or agency obligations based on market prices at June 30, 1995. See accompanying notes to financial statements. ADR -- American Depository Shares. (|) Restricted security which represents an investment in a security not registered under the Securities Act of 1933. 16 EVERGREEN EMERGING MARKETS GROWTH FUND (FORMERLY FIRST UNION EMERGING MARKETS GROWTH PORTFOLIO) INDUSTRY DIVERSIFICATION (Picture of Globe) JUNE 30, 1995 (UNAUDITED)
PERCENTS OF NET ASSETS Telecommunications............................... 28.0% Banking.......................................... 12.9% Miscellaneous Securities......................... 10.3% Leisure & Tourism................................ 5.4% Multi-Industry................................... 4.7% Real Estate...................................... 4.7% Electrical & Electronics......................... 3.7% Beverages & Tobacco.............................. 3.6% Health & Personal Care........................... 2.8% Building Material................................ 2.6% Financial Services............................... 2.3% Chemicals........................................ 1.9% Construction & Housing........................... 1.9% PERCENTS OF NET ASSETS Broadcasting & Publishing........................ 1.6% Food & Household Products........................ 1.2% Metals/Steel..................................... 1.1% Forest Products & Paper.......................... 1.1% Recreation & Other Consumer Goods................ 1.0% Energy Sources................................... 1.0% Industrial Components............................ 0.9% Utilities -- Electrical & Gas.................... 0.4% Retail........................................... 0.4% Short Term Investments........................... 8.7% Other Assets Less Liabilities.................... (2.2%) Total Net Assets................................. 100.0%
17 EVERGREEN EMERGING MARKETS GROWTH FUND (FORMERLY FIRST UNION EMERGING MARKETS GROWTH PORTFOLIO) STATEMENT OF ASSETS AND LIABILITIES (Picture of Globe) JUNE 30, 1995 (UNAUDITED)
ASSETS: Investments at value (identified cost $11,585,138)............................................................. $11,201,466 Foreign currency at value (identified cost $26,129)............................................................ 26,170 Cash........................................................................................................... 541 Receivable for investments sold................................................................................ 210,036 Receivable for foreign currency sold........................................................................... 84,025 Receivable for Fund shares sold................................................................................ 20,591 Dividends and interest receivable.............................................................................. 10,125 Prepaid expenses............................................................................................... 5,277 Total assets............................................................................................. 11,558,231 LIABILITIES: Payable for investments purchased.............................................................................. 479,379 Payable for foreign currency purchased......................................................................... 83,630 Accrued expenses............................................................................................... 13,941 Withholding tax liability...................................................................................... 1,921 Payable for Fund shares repurchased............................................................................ 810 Total liabilities........................................................................................ 579,681 NET ASSETS........................................................................................................ $10,978,550 NET ASSETS CONSIST OF: Paid-in capital................................................................................................ 12,503,473 Accumulated net realized loss.................................................................................. (1,258,319) Undistributed net investment income............................................................................ 88,212 Net unrealized depreciation of investments and foreign currency................................................ (354,816) Net assets............................................................................................... $10,978,550 CALCULATION OF NET ASSET VALUE PER SHARE: Class A Shares ($1,076,703 (divided sign) 135,136 shares of beneficial interest outstanding)................... $ 7.97 Sales charge -- 4.75% of offering price........................................................................ .40 Maximum offering price...................................................................................... $ 8.37 Class B Shares ($1,776,546 (divided sign) 223,717 shares of beneficial interest outstanding)................... $ 7.94 Class C Shares ($20,171 (divided sign) 2,544 shares of beneficial interest outstanding)........................ $ 7.93 Class Y Shares ($8,105,130 (divided sign) 1,015,774 shares of beneficial interest outstanding)................. $ 7.98
See accompanying notes to financial statements. 18 EVERGREEN EMERGING MARKETS GROWTH FUND (FORMERLY FIRST UNION EMERGING MARKETS GROWTH PORTFOLIO) STATEMENT OF OPERATIONS (Picture of Globe) SIX MONTHS ENDED JUNE 30, 1995 (UNAUDITED)
INVESTMENT INCOME: Dividends........................................................................................ $ 127,998 Interest......................................................................................... 33,060 Total income............................................................................... 161,058 EXPENSES: Advisory fee..................................................................................... $ 68,994 Administrative personnel and services fees....................................................... 3,799 Distribution fee -- Class A Shares............................................................... 1,122 Distribution and shareholder services fees -- Class B Shares..................................... 7,858 Distribution and shareholder services fees -- Class C Shares..................................... 181 Custodian fee.................................................................................... 42,562 Transfer agent fee............................................................................... 22,412 Registration and filing fees..................................................................... 16,794 Professional fees................................................................................ 12,855 Reports and notices to shareholders.............................................................. 7,590 Insurance expense................................................................................ 1,677 Trustees' fees and expenses...................................................................... 110 Miscellaneous.................................................................................... 2,930 188,884 Less: Fee waivers and expense reimbursements..................................................... (112,321) Total expenses............................................................................. 76,563 Net investment income............................................................................... 84,495 NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY: Net realized loss on investments and foreign currency transactions............................... (1,155,257) Net change in unrealized depreciation of investments and foreign currency........................ 1,113,548 Net loss on investments and foreign currency........................................................ (41,709) NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................................ $ 42,786
See accompanying notes to financial statements. 19 EVERGREEN EMERGING MARKETS GROWTH FUND (FORMERLY FIRST UNION EMERGING MARKETS GROWTH PORTFOLIO) (Picture of Globe) STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED JUNE 30, 1995 YEAR ENDED (UNAUDITED) DECEMBER 31, 1994* INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment income.................................................................. $ 84,495 $ 3,717 Net realized loss on investments and foreign currency transactions..................... (1,155,257) (103,062) Net change in unrealized depreciation of investments and foreign currency.............. 1,113,548 (1,468,364) Net increase (decrease) in net assets resulting from operations..................... 42,786 (1,567,709) FUND SHARE TRANSACTIONS: Proceeds from shares sold.............................................................. 3,475,013 10,115,458 Payments for shares redeemed........................................................... (962,702) (124,296) Net increase from Fund share transactions........................................ 2,512,311 9,991,162 Net increase in net assets....................................................... 2,555,097 8,423,453 NET ASSETS: Beginning of period.................................................................... 8,423,453 -- End of period (including undistributed net investment income of $88,212 and ($3,717), respectively)........................................................................ $ 10,978,550 $ 8,423,453
* For the period from September 6, 1994 (commencement of operations) to December 31, 1994. See accompanying notes to financial statements. 20 EVERGREEN EMERGING MARKETS GROWTH FUND (FORMERLY FIRST UNION EMERGING MARKETS PORTFOLIO) (Picture of Globe) FINANCIAL HIGHLIGHTS
CLASS A SHARES CLASS B SHARES CLASS C SHARES SIX MONTHS PERIOD FROM SIX MONTHS PERIOD FROM SIX MONTHS PERIOD FROM ENDED SEPTEMBER 6, ENDED SEPTEMBER 6, ENDED SEPTEMBER 6, JUNE 30, 1994 THROUGH JUNE 30, 1994 THROUGH JUNE 30, 1994 THROUGH 1995 DECEMBER 31, 1995 DECEMBER 31, 1995 DECEMBER 31, (UNAUDITED) 1994 (UNAUDITED) 1994 (UNAUDITED) 1994 PER SHARE DATA Net asset value, beginning of period.... $8.17 $10.00 $8.16 $10.00 $8.16 $10.00 Income (loss) from investment operations: Net investment income (loss)............ .06 -- .04 (.02) .09 (.02) Net realized and unrealized loss on investments and foreign currency transactions.......................... (.26) (1.83) (.26) (1.82) (.32) (1.82) Total from investment operations.... (.20) (1.83) (.22) (1.84) (.23) (1.84) Net asset value, end of period.......... $7.97 $8.17 $7.94 $8.16 $7.93 $8.16 TOTAL RETURN(|)......................... (2.5%) (18.3%) (2.7%) (18.4%) (2.8%) (18.4%) RATIO & SUPPLEMENTAL DATA Net assets, end of period (000's omitted).............................. $1,077 $867 $1,777 $1,589 $20 $89 Ratios to average net assets: Expenses(|)(|)(a)..................... 1.72% 1.78% 2.47% 2.53% 2.49% 2.53% Net investment income(|)(|)(a)........ 2.65% (.12%) 1.86% (.84%) 2.32% (.82%) Portfolio turnover rate................. 42% 17% 42% 17% 42% 17% CLASS Y SHARES SIX MONTHS PERIOD FROM ENDED SEPTEMBER 6, JUNE 30, 1994 THROUGH 1995 DECEMBER 31, (UNAUDITED) 1994 PER SHARE DATA Net asset value, beginning of period.... $8.17 $10.00 Income (loss) from investment operations: Net investment income (loss)............ .06 .01 Net realized and unrealized loss on investments and foreign currency transactions.......................... (.25) (1.82) Total from investment operations.... (.19) (1.83) Net asset value, end of period.......... $7.98 $8.17 TOTAL RETURN(|)......................... (2.3%) (18.3%) RATIO & SUPPLEMENTAL DATA Net assets, end of period (000's omitted).............................. $8,105 $5,878 Ratios to average net assets: Expenses(|)(|)(a)..................... 1.46% 1.53% Net investment income(|)(|)(a)........ 2.84% .43% Portfolio turnover rate................. 42% 17%
* Commencement of operations. (|) Total return is calculated on net asset value per share for the period indicated and is not annualized. Initial sales charges or contingent deferred sales charges are not reflected. (|)(|) Annualized. (a) Net of expense waivers and reimbursements. If the Fund had borne all expenses that were assumed or waived by the investment adviser, the annualized ratios of expenses and net investment income (loss) to average net assets, exclusive of any applicable state expense limitations, would have been the following:
CLASS Y CLASS A SHARES CLASS B SHARES CLASS C SHARES SHARES SIX MONTHS PERIOD FROM SIX MONTHS PERIOD FROM SIX MONTHS PERIOD FROM SIX MONTHS ENDED SEPTEMBER 6, ENDED SEPTEMBER 6, ENDED SEPTEMBER 6, ENDED JUNE 30, 1994 THROUGH JUNE 30, 1994 THROUGH JUNE 30, 1994 THROUGH JUNE 30, 1995 DECEMBER 31, 1995 DECEMBER 31, 1995 DECEMBER 31, 1995 (UNAUDITED) 1994 (UNAUDITED) 1994 (UNAUDITED) 1994 (UNAUDITED) Expenses............................... 4.16% 3.96% 4.91% 4.71% 4.93% 4.71% 3.90% Net investment income (loss)........... .21% (2.30%) (.58%) (3.02%) (.12%) (3.00%) .40% CLASS Y SHARES PERIOD FROM SEPTEMBER 6, 1994 THROUGH DECEMBER 31, 1994 Expenses............................... 3.71% Net investment income (loss)........... (1.75%)
21 COMBINED NOTES TO FINANCIAL STATEMENTS SIX MONTHS ENDED JUNE 30, 1995 (UNAUDITED) NOTE 1 -- ORGANIZATION Evergreen Investment Trust (formerly First Union Funds) (the "Trust") is a Massachusetts business trust registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management company. The Trust consisted of seventeen funds at June 30, 1995. The financial statements included herein are only those of the Evergreen Growth Funds -- Evergreen International Equity Fund ("International"), and Evergreen Emerging Markets Fund ("Emerging Markets") collectively referred to as the "Funds" (see Note 8). NOTE 2 -- CHANGE IN FISCAL YEAR On March 15, 1995, the Trustees approved a change in the Funds' fiscal year from December 31 to October 31. These financial statements are as of and for the six months ended June 30, 1995. NOTE 3 -- 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 -- Equity securities listed or regularly traded on a securities exchange are valued at the last sale price reported on the primary national securities exchange on which the security is traded. Other equity securities are valued at mean between the bid and asked price as provided by an independent pricing service. Short term securities purchased with remaining maturities of sixty days or less 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 are translated into U.S. dollars at the prevailing exchange rates at the end of each day. Purchases and sales of securities and income and expenses are translated in 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 is reflected as a component of such gains and losses. INVESTMENT INCOME AND EXPENSES -- Dividend income is recorded on the ex-dividend date. Interest income and expenses are accrued daily. Premiums and discounts paid on securities are amortized or accreted into income as required by the Internal Revenue Code, as amended, (the "Code"). 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. DIVIDENDS TO SHAREHOLDERS -- Dividends from net investment income and from net capital gains on investments for the Funds are declared and paid annually. Income distributions and capital gain distributions are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. To the extent these differences are permanent in nature, such amounts are reclassified within the capital accounts. INCOME TAXES -- It is each Fund's policy to meet the requirements of 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 22 COMBINED NOTES TO FINANCIAL STATEMENTS SIX MONTHS ENDED JUNE 30, 1995 -- CONTINUED NOTE 3 -- SIGNIFICANT ACCOUNTING POLICIES -- continued 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. At December 31, 1994 (the Fund's most recent fiscal year end), Emerging Markets had a capital loss carryforward of $69,824. Pursuant to the Code, this capital loss carryforward will expire in 2002. 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 exchange rates. 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. 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. 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 EXPENSES -- The costs incurred by each Fund with respect to registration of its shares in its first fiscal year, excluding the initial expense of registering the shares, have been deferred and are being amortized using the straight-line method not to exceed a period of five years from the Fund's commencement. NOTE 4 -- INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES INVESTMENT ADVISORY AGREEMENT -- First Union National Bank of North Carolina (the "Adviser"), each Fund's investment adviser, is entitled to a fee based on a percentage of the Funds' average daily net assets as shown in the table below. For International and Emerging Growth, the Adviser voluntarily waived $110,663 and $68,994 respectively, of its advisory fee for the six month period ended June 30, 1995. The Adviser can modify or terminate this voluntary waiver at any time. INTERNATIONAL EQUITY
ADVISORY FEE AVERAGE DAILY NET ASSETS 0.82%...................................................... on the first $20 million 0.79%...................................................... on the next $30 million 0.76%...................................................... on the next $50 million 0.73%...................................................... on assets in excess of $100 million
EMERGING GROWTH
ADVISORY FEE AVERAGE DAILY NET ASSETS 1.50%...................................................... on the first $100 million 1.45%...................................................... on the next $100 million 1.40%...................................................... on the next $100 million 1.35%...................................................... on assets in excess of $300 million
23 COMBINED NOTES TO FINANCIAL STATEMENTS SIX MONTHS ENDED JUNE 30, 1995 -- CONTINUED NOTE 4 -- INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES -- continued Under terms of a sub-advisory agreement between the Adviser and Boston International Advisors, Inc., Boston International Advisors, Inc. is entitled to an annual fee from the Adviser based on International's average daily net assets (see below):
SUB-ADVISORY FEE AVERAGE DAILY 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%...................................................... on assets in excess of $100 million
Under terms of a sub-advisory agreement between the Adviser and Marvin & Palmer Associates, Inc., Marvin & Palmer Associates, Inc. is entitled to an annual fee from the Adviser based on Emerging Growth's average daily net assets (see below):
SUB-ADVISORY FEE AVERAGE DAILY 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%...................................................... on assets in excess of $300 million
ADMINISTRATIVE AGREEMENT -- Federated Investor Services ("FAS") provided each Fund with certain administrative personnel and services including certain clerical and recordkeeping services for the six-month period ended June 30, 1995 (see Note 8). In addition, certain of the Trust's officers and Trustees were officers or directors of FAS. FAS' fee was based on the level of average net assets of the Trust for the period, subject to a minimum fee for each Fund. For International and Emerging Growth, FAS voluntarily waived its fee of $15,373 and $3,799 for the six month period ended June 30, 1995. PLAN OF DISTRIBUTION AND SHAREHOLDER SERVICING -- The Trust has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Trust compensated Federated Securities Corp. ("FSC"), the principal distributor, from the net assets of all of the funds in the Trust to finance activities intended to result in the sale of Class A, Class B and Class C shares (see Note 8). The Plan provides that the Funds may incur distribution expenses up to .75 of 1% of the average daily net assets of the Class A, Class B and Class C shares, annually, to finance such activities. For the six-month period ended June 30, 1995, FSC limited its fees on Class A shares to .25 of 1% of Class A shares average daily net assets for each Fund. Under the terms of a Shareholder Services Agreement with First Union Brokerage Services ("FUBS"), the Funds will pay FUBS up to .25 of 1% of average daily net assets of the Funds' Class B and Class C shares for the period. This fee is designed to obtain certain services for shareholders and to maintain the shareholder accounts. TRANSFER AND DIVIDEND DISBURSEMENT AGENT -- Federated Services Company ("FServ") served as Transfer and dividend disbursing agent for the Trust for the six-month period ended June 30, 1995 (see Note 8). FServ's fee was based on the size, type and number of accounts and transactions made by shareholders. 24 COMBINED NOTES TO FINANCIAL STATEMENTS SIX MONTHS ENDED JUNE 30, 1995 -- CONTINUED NOTE 4 -- INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES -- continued ORGANIZATIONAL EXPENSES -- Organizational expenses were borne initially by FAS. The Funds agreed to reimburse FAS for the organizational expenses during the five-year period following the date it commenced operations. Pursuant to these arrangements, for the six months ended June 30, 1995, the Funds paid and have a remaining liability as follows:
COMMENCEMENT ORGANIZATIONAL OF ORGANIZATIONAL EXPENSES OPERATIONS EXPENSES PAID REMAINING International........................... 9/2/94 $5,811 $ 43,521 Emerging Growth......................... 9/6/94 819 $ 42,775
As a result of the change in the administration agreement (see Note 8), the Adviser purchased the remaining unreimbursed initial organizational expenses from FAS. No change will be made to the payment schedule as a result of this transaction. NOTE 5 -- INVESTMENT TRANSACTIONS The cost of purchases and proceeds from sales of investments, excluding short-term securities, for the six months ended June 30, 1995 were as follows:
PURCHASES SALES International...................................................... $12,741,043 $1,820,766 Emerging Growth.................................................... 7,492,546 3,454,316
On June 30, 1995, the composition of unrealized appreciation and depreciation of investment securities based on the aggregate cost of investments for federal tax purposes was as follows:
APPRECIATION DEPRECIATION NET International..................................... $2,787,086 ($2,789,124 ) $ 2,038 Emerging Growth................................... 778,759 (1,161,930 ) (383,171)
NOTE 6 -- SHARES OF BENEFICIAL INTEREST There is an unlimited number of no par value shares of beneficial interest authorized for each of the Funds. The shares 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 4.75%. Class B shares are offered with a contingent deferred sales charge payable when shares are redeemed which would decline from 5% to zero over a seven-year period (after which it is expected that 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, certain institutional investors and 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 4) and have exclusive voting rights with respect to their distribution plan. 25 COMBINED NOTES TO FINANCIAL STATEMENTS SIX MONTHS ENDED JUNE 30, 1995 -- CONTINUED NOTE 6 -- SHARES OF BENEFICIAL INTEREST -- continued Transactions in shares of beneficial interest were as follows:
SIX MONTHS ENDED YEAR ENDED JUNE 30, 1995 DECEMBER 31, 1994* INTERNATIONAL EQUITY SHARES AMOUNT SHARES AMOUNT CLASS A* Shares sold............................................................... 70,570 $ 671,078 271,932 $ 2,657,505 Shares issued on reinvestment of dividends................................ 314 3,081 65 614 Shares redeemed........................................................... (31,304) (297,697) (4,068) (38,325) Net increase.............................................................. 39,580 376,462 267,929 2,619,794 CLASS B* Shares sold............................................................... 157,255 1,490,727 601,778 5,886,527 Shares issued on reinvestment of dividends................................ 180 1,652 86 802 Shares redeemed........................................................... (66,155) (633,153) (11,910) (113,721) Net increase.............................................................. 91,280 859,226 589,954 5,773,608 CLASS C* Shares sold............................................................... 11,571 107,187 17,281 168,242 Shares issued on reinvestment of dividends................................ -- -- 3 24 Shares redeemed........................................................... (3,723) (35,740) (151) (1,419) Net increase.............................................................. 7,848 71,447 17,133 166,847 CLASS Y* Shares sold............................................................... 1,196,457 11,375,840 2,526,593 24,820,491 Shares issued on reinvestment of dividends................................ 1,510 14,829 739 6,914 Shares redeemed........................................................... (239,377) (2,337,904) (17,935) (172,512) Net increase.............................................................. 958,590 9,052,765 2,509,397 24,654,893 Total net increase resulting from Fund share transactions................. 1,097,298 $10,359,900 3,384,413 $33,215,142
* The Fund share transaction activity is for the period September 2, 1994 (commencement of class operations) through December 31, 1994. 26 COMBINED NOTES TO FINANCIAL STATEMENTS SIX MONTHS ENDED JUNE 30, 1995 -- CONTINUED NOTE 6 -- SHARES OF BENEFICIAL INTEREST -- continued
SIX MONTHS ENDED YEAR ENDED JUNE 30, 1995 DECEMBER 31, 1994* EMERGING MARKETS AMOUNT SHARES AMOUNT SHARES CLASS A* Shares sold..................................................................... 43,393 $ 320,745 107,331 $1,026,176 Shares redeemed................................................................. (14,447) (104,943) (1,141) (10,403) Net increase.................................................................... 28,946 215,802 106,190 1,015,773 CLASS B* Shares sold..................................................................... 55,226 404,073 202,997 1,942,811 Shares redeemed................................................................. (26,229) (194,532) (8,277) (71,499) Net increase.................................................................... 28,997 209,541 194,720 1,871,312 CLASS C* Shares sold..................................................................... 479 3,500 10,933 105,500 Shares redeemed................................................................. (8,868) (64,147) -- -- Net increase (decrease)......................................................... (8,389) (60,647) 10,933 105,500 CLASS Y* Shares sold..................................................................... 374,522 2,746,696 724,945 7,040,972 Shares redeemed................................................................. (78,575) (599,081) (5,118) (42,395) Net increase.................................................................... 295,947 2,147,615 719,827 6,998,577 Total net increase resulting from Fund share transactions....................... 345,501 $2,512,311 1,031,670 $9,991,162
* The Fund share transaction activity is for the period September 6, 1994 (commencement of class operations) through December 31, 1994. NOTE 7 -- RESTRICTED SECURITIES Restricted securities are securities that may only be resold upon registration under federal securities laws or in transactions exempt from such registration. The Funds' restricted securities are valued at the price provided by dealers in the secondary market or, if no market prices are available, at the fair value as determined by the Funds' pricing committee. Additional information on each restricted security held at June 30, 1995 is as follows:
FUND SECURITY ACQUISITION DATE ACQUISITION COST Emerging Markets Cementos Paz Del Rio ADR 9/23/94-11/4/94 $ 73,350 ITC, Inc., GDR 9/6/94 166,750 Ranbaxy Laboratories, Ltd, GDR 10/12/94-11/15/94 88,950 Samsung Electronics, Ltd, GDR 9/6/94 200,100 Grupo Carso, SA de CV ADR 9/6/94-9/7/94 133,125
27 COMBINED NOTES TO FINANCIAL STATEMENTS SIX MONTHS ENDED JUNE 30, 1995 -- CONTINUED NOTE 8 -- SUBSEQUENT EVENTS Pursuant to a contract approved by the Trustees on April 20, 1995, effective July 7, 1995, Evergreen Asset Management Corp. and Boston Financial Data Services became the Administrator and transfer agent respectively. Evergreen Funds Distributor, Inc., a wholly owned subsidiary of Furman Selz, Inc., became the Funds' distributor and sub-administrator. Officers or directors of Furman Selz, Inc. became the Trust's officers. In addition, effective July 7, 1995, the Funds changed their names as follows:
FORMER NAME NEW NAME First Union International Equity Portfolio Evergreen International Equity Fund First Union Emerging Markets Growth Portfolio Evergreen Emerging Markets Growth Fund
28 TRUSTEES AND OFFICERS TRUSTEES: Mr. James S. Howell, Chairman Mr. Gerald M. McDonnell Mr. Thomas L. McVerry Mr. William W. Pettit Mr. Russell A. Salton, III M.D. Mr. Michael S. Scofield OFFICERS (EFFECTIVE JULY 7, 1995): 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 -----END PRIVACY-ENHANCED MESSAGE-----