1933 Act Registration No. 333-
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-14AE
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
[ ] Pre-Effective [ ] Post-Effective
Amendment No. Amendment No.
EVERGREEN INTERNATIONAL TRUST
(Evergreen International Growth Fund)
[Exact Name of Registrant as Specified in Charter]
Area Code and Telephone Number: (617) 210-3200
200 Berkeley Street
Boston, Massachusetts 02116
-----------------------------------
(Address of Principal Executive Offices)
Michael H. Koonce, Esq.
Keystone Investment Management Company
200 Berkeley Street
Boston, Massachusetts 02116
-----------------------------------------
(Name and Address of Agent for Service)
Copies of All Correspondence to:
Robert N. Hickey, Esq.
Sullivan & Worcester LLP 1025
Connecticut Avenue, N.W.
Washington, D.C. 20036
Approximate date of proposed public offering: As soon as possible after
the effective date of this Registration Statement.
The Registrant has registered an indefinite amount of securities under
the Securities Act of 1933 pursuant to Section 24(f) under the Investment
Company Act of 1940 (File No. 333- 42195); accordingly, no fee is payable
herewith. Pursuant to Rule 429, this Registration Statement relates to the
aforementioned registration on Form N-1A. A Rule 24f-2 Notice for the
Registrant's fiscal year ended October 31, 1997 was filed with the Commission on
or about January 29, 1998.
It is proposed that this filing will become effective on September 3,
1998 pursuant to Rule 488 of the Securities Act of 1933.
<PAGE>
EVERGREEN INTERNATIONAL TRUST
CROSS REFERENCE SHEET
Pursuant to Rule 481(a) under the Securities Act of 1933
<TABLE>
<CAPTION>
Location in Prospectus/Proxy
Item of Part A of Form N-14 Statement
<S> <C> <C>
1. Beginning of Registration Cross Reference Sheet; Cover
Statement and Outside Page
Front Cover Page of
Prospectus
2. Beginning and Outside Table of Contents
Back Cover Page of
Prospectus
3. Fee Table, Synopsis and Comparison of Fees and
Risk Factors Expenses; Summary; Comparison
of Investment Objectives and
Policies; Risks
4. Information About the Summary; Reasons for the
Transaction Reorganization; Comparative
Information on Shareholders'
Rights; Exhibit A (Agreement
and Plan of Reorganization)
5. Information about the Cover Page; Summary; Risks;
Registrant Comparison of Investment
Objectives and Policies;
Comparative Information on
Shareholders' Rights;
Additional Information
6. Information about the Cover Page; Summary; Risks;
Company Being Acquired Comparison of Investment
Objective and Policies;
Comparative Information on
Shareholders' Rights;
Additional Information
<PAGE>
7. Voting Information Cover Page; Summary; Voting
Information Concerning the
Meeting
8. Interest of Certain Financial Statements and
Persons and Experts Experts; Legal Matters
9. Additional Information Inapplicable
Required for Reoffering
by Persons Deemed to be
Underwriters
Item of Part B of Form N-14
10. Cover Page Cover Page
11. Table of Contents Omitted
12. Additional Information Statement of Additional
About the Registrant Information of Evergreen
International Growth Fund
dated March 1, 1998
13. Additional Information Statement of Additional
about the Company Being Information of Evergreen
Acquired International Equity Fund
dated March 1, 1998
14. Financial Statements Financial Statements dated
October 31, 1997 and April 30,
1998 (unaudited) of Evergreen
International Growth Fund (formerly,
Keystone International Fund Inc.);
Financial Statements of
Evergreen International Equity
Fund dated October 31, 1997
and April 30, 1998
(unaudited); Pro Forma
Financial Statements for April
30, 1998 and the twelve months
then ended (unaudited)
<PAGE>
Item of Part C of Form N-14
15. Indemnification Incorporated by Reference to
Part A Caption - "Comparative
Information on Shareholders'
Rights - Liability and
Indemnification of Trustees"
16. Exhibits Item 16. Exhibits
17. Undertakings Item 17. Undertakings
</TABLE>
<PAGE>
[EVERGREEN LOGO]
September 3, 1998
Dear Shareholder,
I am writing to shareholders of Evergreen International Equity Fund (the
"Fund"), to inform you of a Special Shareholders' meeting to be held on October
16, 1998. Before that meeting, I would like your vote on the important issues
affecting your Fund as described in the attached Prospectus/Proxy Statement.
The Prospectus/Proxy Statement includes the proposal which requests that
shareholders consider and act upon an Agreement and Plan of Reorganization
whereby all of the assets of the Fund would be acquired by Evergreen
International Growth Fund in exchange for shares of Evergreen International
Growth Fund and the assumption by Evergreen International Growth Fund of the
identified liabilities of the Fund. You will receive shares of Evergreen
International Growth Fund in the same class with the same letter designations,
the same contingent deferred sales charges as the shares you held prior to the
reorganization. Such shares will have an aggregate net asset value equal to the
aggregate net asset value of your Fund shares. Details about Evergreen
International Growth Fund's investment objective, portfolio management team,
performance, etc. are contained in the attached Prospectus/Proxy Statement. For
federal income tax purposes, the transaction is a non-taxable event for
shareholders.
The Board of Trustees has approved the proposal and recommends that you vote FOR
this proposal.
I realize that this Prospectus/Proxy Statement will take time to review, but
your vote is very important. Please take the time to familiarize yourself with
the proposals. If you attend the meeting, you may vote your shares in person. If
you do not expect to attend the meeting, please complete, date, sign and return
the enclosed proxy card in the enclosed postage paid envelope. Instructions on
how to complete the proxy card are included immediately after the Notice of
Special Meeting.
If you have any questions about the proxy, please call Evergreen Service Company
at 800-343-2898. You may also FAX your completed and signed proxy card to Alamo
Direct, our proxy tabulator, at 800-796-9932.
Thank you for taking this matter seriously and participating in this important
process.
<PAGE>
Sincerely,
/s/William M. Ennis
-------------------
William M. Ennis
Managing Director
Evergreen Funds
<PAGE>
[SUBJECT TO COMPLETION, AUGUST 4, 1998 PRELIMINARY COPY]
EVERGREEN INTERNATIONAL EQUITY FUND
200 Berkeley Street
Boston, Massachusetts 02116
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 16, 1998
Notice is hereby given that a Special Meeting (the "Meeting") of
Shareholders of Evergreen International Equity Fund (the "Fund"), a series of
Evergreen International Trust, will be held at the offices of the Evergreen
Funds, 26th Floor, 200 Berkeley Street, Boston, Massachusetts 02116, on October
16, 1998 at 2:00 p.m. for the following purposes:
1. To consider and act upon the Agreement and Plan of Reorganization
(the "Plan") dated as of August 14, 1998, providing for the acquisition of all
of the assets of the Fund by Evergreen International Growth Fund, a series of
Evergreen International Trust, ("International Growth") in exchange for shares
of International Growth and the assumption by International Growth of the
identified liabilities of the Fund. The Plan also provides for distribution of
these shares of International Growth to shareholders of the Fund in liquidation
and subsequent termination of the Fund. A vote in favor of the Plan is a vote in
favor of the liquidation and dissolution of the Fund.
2. To transact any other business which may properly come before the
Meeting or any adjournment or adjournments thereof.
On behalf of the Fund, the Trustees of Evergreen International Trust
have fixed the close of business on August 31, 1998 as the record date for the
determination of shareholders of the Fund entitled to notice of and to vote at
the Meeting or any adjournment thereof.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. SHAREHOLDERS WHO DO
NOT EXPECT TO ATTEND IN PERSON ARE URGED WITHOUT DELAY TO SIGN AND RETURN THE
ENCLOSED PROXY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE, SO THAT
THEIR SHARES MAY BE REPRESENTED AT THE MEETING. YOUR PROMPT ATTENTION TO THE
ENCLOSED PROXY WILL HELP TO AVOID THE EXPENSE OF FURTHER SOLICITATION.
By Order of the Board of Trustees
<PAGE>
D'Ray Moore
Secretary
September 3, 1998
<PAGE>
INSTRUCTIONS FOR EXECUTING PROXY CARDS
The following general rules for signing proxy cards may be of
assistance to you and may help to avoid the time and expense involved in
validating your vote if you fail to sign your proxy card properly.
1. INDIVIDUAL ACCOUNTS: Sign your name exactly as it
appears in the Registration on the proxy card.
2. JOINT ACCOUNTS: Either party may sign, but the name of
the party signing should conform exactly to a name shown in the
Registration on the proxy card.
3. ALL OTHER ACCOUNTS: The capacity of the individual
signing the proxy card should be indicated unless it is reflected
in the form of Registration. For example:
REGISTRATION VALID SIGNATURE
CORPORATE
ACCOUNTS
(1) ABC Corp. ABC Corp.
(2) ABC Corp. John Doe, Treasurer
(3) ABC Corp. John Doe, Treasurer
c/o John Doe, Treasurer
(4) ABC Corp. Profit Sharing Plan John Doe, Trustee
TRUST ACCOUNTS
(1) ABC Trust Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee Jane B. Doe
u/t/d 12/28/78
CUSTODIAL OR ESTATE ACCOUNTS
(1) John B. Smith, Cust. John B. Smith
f/b/o John B. Smith, Jr. UGMA
(2) John B. Smith John B. Smith, Jr., Executor
<PAGE>
PROSPECTUS/PROXY STATEMENT DATED September 3, 1998
Acquisition of Assets of
EVERGREEN INTERNATIONAL EQUITY FUND
a series of
Evergreen International Trust
200 Berkeley Street
Boston, Massachusetts 02116
By and in Exchange for Shares of
EVERGREEN INTERNATIONAL GROWTH FUND
a series of
Evergreen International Trust
200 Berkeley Street
Boston, Massachusetts 02116
This Prospectus/Proxy Statement is being furnished to shareholders of
Evergreen International Equity Fund ("International Equity") in connection with
a proposed Agreement and Plan of Reorganization (the "Plan") to be submitted to
shareholders of International Equity for consideration at a Special Meeting of
Shareholders to be held on October 16, 1998 at 2:00 p.m. at the offices of the
Evergreen Funds, 200 Berkeley Street, 26th Floor, Boston, Massachusetts 02116,
and any adjournments thereof (the "Meeting"). The Plan provides for all of the
assets of International Equity to be acquired by Evergreen International Growth
Fund ("International Growth") in exchange for shares of International Growth and
the assumption by International Growth of the identified liabilities of
International Equity (hereinafter referred to as the "Reorganization").
International Growth and International Equity are sometimes hereinafter referred
to individually as the "Fund" and collectively as the "Funds." Following the
Reorganization, shares of International Growth will be distributed to
shareholders of International Equity in liquidation of International Equity and
such Fund will be terminated. Holders of shares of each class of International
Equity will receive shares of International Growth (the "Corresponding Shares")
having the same letter description and the same distribution- related fees,
shareholder servicing-related fees and contingent deferred sales charges
("CDSCs"), if any, as the shares of the class of International Equity held by
them prior to the Reorganization. No sales charge will be imposed in connection
with Class A shares of International Growth received by holders of Class A
shares of International Equity. In addition, no CDSC will be deducted at the
time of the Reorganization in connection with the Class B and Class C shares of
International Growth received by holders of Class B and Class C shares of
<PAGE>
International Equity. As a result of the proposed Reorganization, shareholders
of International Equity will receive that number of full and fractional
Corresponding Shares of International Growth having an aggregate net asset value
equal to the aggregate net asset value of such shareholder's shares of
International Equity. The Reorganization is being structured as a tax-free
reorganization for federal income tax purposes.
International Growth and International Equity are each a separate
series of Evergreen International Trust, an open-end management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act"). Prior to January 9, 1998, International Growth was known as
Keystone International Fund. The primary investment objective of International
Growth is to seek long-term growth of capital by investing primarily in equity
securities issued by well-established, quality companies located in countries
with developed markets. As a secondary objective, the Fund seeks modest income.
The investment objective of International Equity is substantially similar -- to
seek long-term capital appreciation, by investing primarily in equity securities
of companies located outside the United States. Each Fund invests substantially
all of its assets in foreign securities.
This Prospectus/Proxy Statement, which should be retained for future
reference, sets forth concisely the information about International Growth that
shareholders of International Equity should know before voting on the
Reorganization. Certain relevant documents listed below, which have been filed
with the Securities and Exchange Commission ("SEC"), are incorporated in whole
or in part by reference. A Statement of Additional Information dated September
3, 1998, relating to this Prospectus/Proxy Statement and the Reorganization
which includes the financial statements of International Growth and
International Equity dated October 31, 1997 and April 30, 1998, has been filed
with the SEC and is incorporated by reference in its entirety into this
Prospectus/Proxy Statement. A copy of such Statement of Additional Information
is available upon request and without charge by writing to International Growth
at 200 Berkeley Street, Boston, Massachusetts 02116 or by calling toll-free
1-800-343-2898.
The two Prospectuses of International Growth dated March 1, 1998, its
Annual Report for the fiscal year ended October 31, 1997 and its Semi-Annual
Report for the six month period ended April 30, 1998 are incorporated herein by
reference in their entirety, insofar as they relate to International Growth
only, and not to any other fund described therein. The Prospectuses, which
pertain (i) to Class A, Class B and Class C shares and (ii) to Class Y shares,
differ only insofar as they describe the
<PAGE>
separate distribution and shareholder servicing arrangements applicable to the
classes. Shareholders of International Equity will receive, with this
Prospectus/Proxy Statement, copies of the Prospectus pertaining to the class of
shares of International Growth that they will receive as a result of the
consummation of the Reorganization. Additional information about International
Growth is contained in its Statement of Additional Information of the same date
which has been filed with the SEC and which is available upon request and
without charge by writing to or calling International Growth at the address or
telephone number listed in the preceding paragraph.
The two Prospectuses of International Equity which pertain (i) as
applicable, to Class A, Class B and Class C shares and (ii) to Class Y shares
dated March 1, 1998, insofar as they relate to International Equity only, and
not to any other funds described therein, are incorporated herein in their
entirety by reference. Copies of the Prospectuses, related Statement of
Additional Information dated the same date, the Annual Report for the fiscal
year ended October 31, 1997 and the Semi-Annual Report for the six month period
ended April 30, 1998, are available upon request without charge by writing to
International Equity at the address listed on the cover page of this
Prospectus/Proxy Statement or by calling toll-free 1-800-355-2673.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS/PROXY
STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The shares offered by this Prospectus/Proxy Statement are not deposits
or obligations of any bank and are not insured or otherwise protected by the
U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve
Board or any other government agency and involve investment risk, including
possible
loss of capital.
<PAGE>
TABLE OF CONTENTS
Page
COMPARISON OF FEES AND EXPENSES...............................................6
SUMMARY ....................................................................12
Proposed Plan of Reorganization ....12
Tax Consequences ....13
Investment Objectives and Policies of the Funds ....13
Comparative Performance Information for each Fund ....14
Management of the Funds ....15
Investment Advisers ....15
Administrator ....16
Portfolio Management ....16
Distribution of Shares ....17
Purchase and Redemption Procedures ....19
Exchange Privileges ....20
Dividend Policy ....20
Risks ....21
REASONS FOR THE REORGANIZATION...............................................22
Agreement and Plan of Reorganization ....24
Federal Income Tax Consequences ....26
Pro-forma Capitalization ....28
Shareholder Information ....29
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES.............................31
INFORMATION ON SHAREHOLDERS' RIGHTS..........................................32
Form of Organization ....32
Capitalization ....32
Shareholder Liability ....33
Shareholder Meetings and Voting Rights ....34
Liquidation or Dissolution ....34
Liability and Indemnification of Trustees ....34
ADDITIONAL INFORMATION.......................................................35
VOTING INFORMATION CONCERNING THE MEETING....................................36
FINANCIAL STATEMENTS AND EXPERTS.............................................38
LEGAL MATTERS................................................................39
OTHER BUSINESS...............................................................39
EXHIBIT A...................................................................A-1
<PAGE>
EXHIBIT B...................................................................B-1
<PAGE>
COMPARISON OF FEES AND EXPENSES
The amounts for Class A, Class B, Class C and Class Y shares of
International Growth set forth in the following tables and in the examples are
based on the estimated expenses of International Growth for the fiscal year
ending October 31, 1998. The amounts for Class Y, Class A, Class B and Class C
shares of International Equity set forth in the following tables and in the
examples are based on the estimated expenses for International Equity for the
fiscal year ending October 31, 1998. The pro forma amounts for Class Y, Class A,
Class B and Class C shares of International Growth are based on what the
estimated combined expenses of International Growth would be for the fiscal year
ending October 31, 1998. All amounts are adjusted for voluntary expense waivers.
The following tables show for International Growth, International
Equity and International Growth pro forma, assuming consummation of the
Reorganization, the shareholder transaction expenses and annual fund operating
expenses associated with an investment in the Class Y, Class A, Class B and
Class C shares of each Fund.
<PAGE>
Comparison of Class Y, Class A, Class B and Class C Shares
of International Growth With Class Y, Class A,
Class B and Class C Shares of International Equity
<TABLE>
<CAPTION>
International International
Growth Equity
Class Y Class A Class B Class C Class Y Class A Class B Class C
<S> <C> <C> <C> <C> <C> <C> <C>
Shareholder
Transaction
Expenses
Maximum Sales None 4.75% None None None 4.75% None None
Load Imposed on
Purchases (as a
percentage of
offering price)
Contingent None None(1) 5.00% 1.00% in None None(1) 5.00% 1.00% in
Deferred Sales in the the in the the first
Charge (as a first first first year and
percentage of year year and year 0.00%
original purchase declin 0.00% declin there-
price or ing to there- ing to after
redemption 1.00% after 1.00%
proceeds, in the in the
whichever is sixth fifth
lower) year year
and and
0.00% 0.00%
therea there-
fter after
Annual Fund
Operating
Expenses (as a
percentage of
average daily net
assets)
Management Fee 0.75% 0.75% 0.75% 0.75% 0.72% 0.72% 0.72% 0.72%
(After Waiver)(2)
12b-1 Fees (3) None 0.25% 0.75% 0.75% None 0.25% 0.75% 0.75%
Shareholder None None 0.25% 0.25% None None 0.25% 0.25%
Service Fees
Other Expenses 0.52% 0.52% 0.52% 0.52% 0.31% 0.31% 0.31% 0.31%
----- ----- ----- ----- ---- ----- ----- -----
Annual Fund 1.27% 1.52% 2.27% 2.27% 1.03% 1.28% 2.03% 2.03%
===== ===== ===== ===== ===== ===== ===== =====
Operating
Expenses (4)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
International Growth Pro Forma
Class Y Class A Class B Class C
<S> <C> <C> <C> <C>
Shareholder
Transaction
Expenses
Maximum Sales Load None 4.75% None None
Imposed on
Purchases (as a
percentage of
offering price)
Contingent None None(1) 5.00% in 1.00% in
Deferred Sales the first the first
Charge (as a year year and
percentage of declining 0.00%
original purchase to 1.00% in thereafter
price or the sixth
redemption year and
proceeds, 0.00%
whichever is thereafter
lower)
Annual Fund
Operating Expenses
(as a percentage
of average daily
net assets)
Management Fee 0.63% 0.63% 0.63% 0.63%
12b-1 Fees (3) None 0.25% 0.75% 0.75%
Shareholder None None 0.25% 0.25%
Service Fees
Other Expenses 0.30% 0.30% 0.30% 0.30%
------- ------- ------ ------
Annual Fund 0.93% 1.18% 1.93% 1.93%
Operating Expenses ====== ======= ====== ======
</TABLE>
- -------------------
(1) Investments of $1 million or more are not subject to a front-end sales
charge, but may be subject to a contingent deferred sales charge upon
redemption within one year after the month of purchase.
<PAGE>
(2) Absent waivers, International Equity's Management Fee would have been
0.74% for Class Y, Class A, Class B and Class C shares.
(3) Class A shares can pay up to 0.75% of average daily net assets as a
12b-1 fee. For the foreseeable future, the Class A 12b-1 fees will be
limited to 0.25% of average daily net assets.
(4) Annual Operating Expenses for the Class Y, Class A, Class B and Class C
shares of International Equity are estimated to be 1.05%, 1.30%, 2.05% and
2.05%, respectively, for the fiscal year ending October 31, 1998 absent fee
waivers.
Examples. The following tables show for International Growth and
International Equity, and for International Growth pro forma, assuming
consummation of the Reorganization, examples of the cumulative effect of
shareholder transaction expenses and annual fund operating expenses indicated
above on a $1,000 investment in each class of shares for the periods specified,
assuming (i) a 5% annual return, and (ii) redemption at the end of such period.
For Class B and Class C shares, the tables also show the effect if the shares
are not redeemed. In the case of International Growth pro forma, the examples do
not reflect the imposition of the 4.75% maximum sales load on purchases since
International Equity shareholders who receive Class A shares of International
Growth in the Reorganization will not incur any sales load.
<TABLE>
<CAPTION>
International Growth
Three Five
One Year Years Years Ten Years
<S> <C> <C> <C> <C>
Class Y $ 13 $ 40 $ 70 $153
Class A $ 62 $ 93 $126 $220
Class B $73 $101 $142 $232
(assuming
redemption at the
end of the period)
Class B $23 $71 $122 $232
(assuming no
redemption at the
end of the period)
Class C (assuming $33 $71 $122 $261
redemption at the
end of the period)
<PAGE>
Class C (assuming
no redemption at $23 $71 $122 $261
the end of the
period)
</TABLE>
<TABLE>
<CAPTION>
International Equity
Three Five
One Year Years Years Ten Years
<S> <C> <C> <C> <C>
Class Y $ 11 $ 33 $ 57 $126
Class A $ 60 $ 86 $114 $195
Class B $ 71 $ 94 $129 $207
(assuming
redemption at the
end of the period)
Class B $ 21 $ 64 $109 $207
(assuming no
redemption at the
end of the period)
Class C (assuming $31 $64 $109 $236
redemption at the
end of the period)
Class C (assuming $21 $64 $109 $236
no redemption at
the end of the
period)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
International Growth Pro Forma
Three Five
One Year Years Years Ten Years
<S> <C> <C> <C> <C>
Class Y $ 9 $ 30 $ 51 $114
Class A $ 12 $ 37 $ 65 $ 143
Class B $ 70 $ 91 $ 124 $ 196
(assuming
redemption at
the end of the
period)
Class B $ 20 $ 61 $104 $196
(assuming no
redemption at
the end of the
period)
Class C $30 $61 $104 $225
(assuming
redemption at
the end of the
period)
Class C $20 $61 $104 $225
(assuming no
redemption at
the end of the
period)
</TABLE>
The purpose of the foregoing examples is to assist International Equity
shareholders in understanding the various costs and expenses that an investor in
International Growth as a result of the Reorganization would bear directly and
indirectly, as compared with the various direct and indirect expenses currently
borne by a shareholder in International Equity. These examples should not be
considered a representation of past or future expenses or annual return. Actual
expenses may be greater or less than those shown.
SUMMARY
<PAGE>
This summary is qualified in its entirety by reference to the
additional information contained elsewhere in this Prospectus/Proxy Statement,
the Prospectuses of International Growth and International Equity dated March 1,
1998 (which are incorporated herein by reference) and the Plan, the form of
which is attached to this Prospectus/Proxy Statement as Exhibit A.
Proposed Plan of Reorganization
The Plan provides for the transfer of all of the assets of
International Equity in exchange for shares of International Growth and the
assumption by International Growth of the identified liabilities of
International Equity. The identified liabilities consist only of those
liabilities reflected on the Fund's statement of assets and liabilities
determined immediately preceding the Reorganization. The Plan also calls for the
distribution of shares of International Growth to International Equity
shareholders in liquidation of International Equity as part of the
Reorganization. As a result of the Reorganization, the shareholders of
International Equity will become the owners of that number of full and
fractional Corresponding Shares of International Growth having an aggregate net
asset value equal to the aggregate net asset value of the shareholders' shares
of International Equity, as of the close of business immediately prior to the
date that International Equity's assets are exchanged for shares of
International Growth. See "Reasons for the Reorganization - Agreement and Plan
of Reorganization."
The Trustees of Evergreen International Trust, including the Trustees
who are not "interested persons," as such term is defined in the 1940 Act (the
"Independent Trustees"), have concluded that the Reorganization would be in the
best interests of shareholders of International Equity, and that the interests
of the shareholders of International Equity will not be diluted as a result of
the transactions contemplated by the Reorganization. Accordingly, the Trustees
have submitted the Plan for the approval of International Equity's shareholders.
THE BOARD OF TRUSTEES OF EVERGREEN INTERNATIONAL TRUST
RECOMMENDS APPROVAL BY SHAREHOLDERS OF INTERNATIONAL EQUITY
OF THE PLAN EFFECTING THE REORGANIZATION.
The Trustees of Evergreen International Trust have also approved the
Plan on behalf of International Growth.
Approval of the Reorganization on the part of International Equity will
require the affirmative vote of a majority of International Equity's shares
voted, with all classes voting together as a single class, at a Meeting at which
a quorum of the Fund's shares is present. Twenty-five percent of the outstanding
<PAGE>
shares entitled to vote, represented in person or by proxy, is required to
constitute a quorum at the Meeting. See "Voting Information Concerning the
Meeting."
The Reorganization is scheduled to take place on or about October 26,
1998. If the shareholders of International Equity do not vote to approve the
Reorganization, the Directors will consider other possible courses of action in
the best interests of shareholders.
Tax Consequences
Prior to or at the completion of the Reorganization, International
Equity will have received an opinion of Sullivan & Worcester LLP that the
Reorganization has been structured so that no gain or loss will be recognized by
the Fund or its shareholders for federal income tax purposes as a result of the
receipt of shares of International Growth in the Reorganization. The holding
period and aggregate tax basis of shares of International Growth that are
received by International Equity's shareholders will be the same as the holding
period and aggregate tax basis of shares of the Fund previously held by such
shareholders, provided that shares of the Fund are held as capital assets. In
addition, the holding period and tax basis of the assets of International Equity
in the hands of International Growth as a result of the Reorganization will be
the same as in the hands of the Fund immediately prior to the Reorganization,
and no gain or loss will be recognized by International Growth upon the receipt
of the assets of the Fund in exchange for shares of International Growth and the
assumption by International Growth of the identified liabilities.
Investment Objectives and Policies of the Funds
The investment objectives and policies of International Growth and
International Equity are substantially similar.
The investment objective of International Growth is to seek long-term
growth of capital. As a secondary objective, the Fund seeks modest income. In
pursuing its investment objectives, the Fund invests primarily in equity
securities issued by established, quality companies located in countries with
developed markets. The Fund may invest a portion of its assets in equity
securities of companies located in certain emerging markets and the formerly
communist countries of Eastern Europe.
The investment objective of International Equity is to seek long-term
capital appreciation by investing primarily in equity securities of non-U.S.
issuers. See "Comparison of Investment Objectives and Policies" below.
<PAGE>
Comparative Performance Information for each Fund
Discussions of the manner of calculation of total return are contained
in the Prospectuses and Statement of Additional Information of the Funds. The
following tables set forth, as applicable, the total return of the Class B
shares of International Growth for the one year, five year and ten year periods
ended April 30, 1998, of the Class Y, Class A, Class B and Class C shares of
International Equity for the one year period ended April 30, 1998 and for all
classes of both Funds for the period from inception through April 30, 1998. The
calculations of total return assume the reinvestment of all dividends and
capital gains distributions on the reinvestment date and the deduction of all
recurring expenses (including sales charges) that were charged to shareholders'
accounts.
<TABLE>
<CAPTION>
Average Annual Total Return (1)
1 Year
Ended 5 Years 10 Years From
April Ended Ended Inception To
30, April 30, April 30, April 30, Inception
1998 1998 1998 1998 Date
------- ------- -------- --------- ---------
<S> <C> <C> <C> <C> <C>
International
Growth
Class A shares N/A N/A N/A 15.32% 1/20/98
Class B shares 21.55% 13.41% 7.13% 10.93% 12/1/75
Class C shares N/A N/A N/A 7.77% 3/6/98
Class Y shares N/A N/A N/A 7.90% 3/9/98
International
Equity
Class A shares 5.54% N/A N/A 4.94% 9/2/94
4.88% N/A N/A 4.90% 9/2/94
Class B shares
Class C shares 8.91% N/A N/A 5.65% 9/2/94
Class Y shares 10.95% N/A N/A 6.59% 9/2/94
- --------------
</TABLE>
<PAGE>
(1) Reflects waiver of advisory fees and reimbursements and/or waivers of
expenses. Without such reimbursements and/or waivers, the average
annual total returns during the periods would have been lower.
Important information about International Growth is also contained in
management's discussion of International Growth's performance, attached hereto
as Exhibit B. This information also appears in International Growth's most
recent Annual Report.
Management of the Funds
The overall management of International Growth and of International
Equity is the responsibility of, and is supervised by, the Board of Trustees of
Evergreen International Trust.
Investment Advisers
The investment adviser to International Growth is Keystone Investment
Management Company ("Keystone"). Keystone has provided investment advisory and
management services to investment companies and private accounts since 1932.
Keystone is an indirect wholly-owned subsidiary of First Union National Bank
("FUNB"). FUNB is a subsidiary of First Union Corporation ("First Union"), the
sixth largest bank holding company in the United States based on total assets as
of September 30, 1997. Keystone and its affiliates manage the Evergreen family
of mutual funds with assets of approximately $46 billion as of March 31, 1998.
For further information regarding Keystone, FUNB and First Union, see
"Management of the Funds - Investment Advisers" in the Prospectuses of
International Growth.
Keystone manages investments and supervises the daily business affairs
of International Growth subject to the authority of the Trustees. Keystone is
entitled to receive from the Fund an annual fee equal to 0.75% of the first
$200,000,000 of the Fund's average daily net assets, plus 0.65% of the next
$200,000,000, plus 0.55% of the next $200,000,000, plus 0.45% of amounts over
$600,000,000.
The Capital Management Group of FUNB ("CMG") serves as the investment
adviser for International Equity. As investment adviser, CMG has overall
responsibility for portfolio management of the Fund. Warburg, Pincus
Counsellors, Inc. is the Fund's subadviser. For its services as investment
adviser, CMG is entitled to receive a fee equal to 0.82% of the first
$20,000,000 of the Fund's average daily net assets, plus 0.79% of the next
$30,000,000, plus 0.76% of the next $50,000,000, plus 0.73% of amounts over
$100,000,000.
<PAGE>
Each investment adviser may, at its discretion, reduce or waive its fee
or reimburse a Fund for certain of its other expenses in order to reduce its
expense ratios. Each investment adviser may reduce or cease these voluntary
waivers and reimbursements at any time.
Year 2000 Risks. Like other investment companies, financial and
business organizations and individuals around the world, International Growth
could be adversely affected if the computer systems used by the Fund's
investment adviser and the Fund's other service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. This is commonly known as the "Year 2000 Problem." The Fund's
investment adviser is taking steps to address the Year 2000 Problem with respect
to the computer systems that it uses and to obtain assurances that comparable
steps are being taken by the Fund's other major service providers. At this time,
however, there can be no assurance that these steps will be sufficient to avoid
any adverse impact on the Fund.
Administrator
Evergreen Investment Services, Inc. ("EIS") acts as the administrator
for International Equity and provides the Fund with facilities, equipment and
personnel. EIS is entitled to receive an administration fee from the Fund based
on the aggregate average daily net assets of all the mutual funds advised by
FUNB and its affiliates for which EIS serves as administrator, calculated in
accordance with the following schedule: 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 and 0.010% on assets in excess of $30
billion. EIS also provides facilities, equipment and personnel to International
Growth on behalf of the Fund's investment adviser and is reimbursed by the Fund
for its services.
Portfolio Management
Gilman C. Gunn has been Senior Vice President and Chief Investment Officer
- - International at Keystone and Portfolio Manager of International Growth since
joining Keystone in 1991. Mr. Gunn has 24 years of banking and investment
management experience.
Distribution of Shares
Evergreen Distributor, Inc. ("EDI"), an affiliate of BISYS Fund Services,
acts as underwriter of shares of International Growth and International Equity.
EDI distributes each Fund's shares directly or through broker-dealers, banks
(including
<PAGE>
FUNB), or other financial intermediaries. International Growth and International
Equity each offer four classes of shares: Class A, Class B, Class C and Class Y.
Each class has separate distribution arrangements. (See "Distribution-Related
and Shareholder Servicing-Related Expenses" below.) No class bears the
distribution expenses relating to the shares of any other class.
In the proposed Reorganization, shareholders of International Equity
will receive the Corresponding Shares of International Growth. The Class Y,
Class A, Class B and Class C shares of International Growth have substantially
identical arrangements with respect to the imposition of Rule 12b-1 distribution
and service fees as the Class Y, Class A, Class B and Class C shares of
International Equity. Because the Reorganization will be effected at net asset
value without the imposition of a sales charge, International Growth shares
acquired by shareholders of International Equity pursuant to the proposed
Reorganization would not be subject to any initial sales charge or CDSC as a
result of the Reorganization. However, Class B and Class C shares acquired as a
result of the Reorganization would continue to be subject to a CDSC upon
subsequent redemption to the same extent as if shareholders had continued to
hold their shares of International Equity.
The following is a summary description of charges and fees for the
Class Y, Class A, Class B and Class C shares of International Growth which will
be received by International Equity shareholders in the Reorganization. More
detailed descriptions of the distribution arrangements applicable to the classes
of shares are contained in the International Growth and International Equity
Prospectuses and in the Funds' Statement of Additional Information.
Class Y Shares. Class Y shares are sold at net asset value without any
initial or deferred sales charge and are not subject to distribution-related
fees. Class Y shares are only available to certain classes of investors as is
more fully described in the Prospectuses for International Growth.
Class A Shares. Class A shares are sold at net asset value plus an
initial sales charge and, as indicated below, are subject to
distribution-related fees. For a description of the initial sales charges
applicable to purchases of Class A shares, see "Purchase and Redemption of
Shares - How to Buy Shares" in the applicable Prospectus for International
Growth. No initial sales charge will be imposed on Class A shares of
International Growth received by International Equity's shareholders in the
Reorganization.
<PAGE>
Class B Shares. Class B shares are sold without an initial sales charge
but are subject to a CDSC, which ranges from 5% to 1%, if shares are redeemed
during the first six years after the month of purchase. In addition, Class B
shares are subject to distribution-related fees and shareholder
servicing-related fees as described below. For purposes of determining when
Class B shares issued in the Reorganization to shareholders of International
Equity will convert to Class A shares, such shares will be deemed to have been
purchased as of the date Class B shares of International Equity were originally
purchased.
Class B shares are subject to higher distribution-related fees than the
corresponding Class A shares on which a front-end sales charge is imposed (until
they convert to Class A shares). The higher fees mean a higher expense ratio, so
Class B shares pay correspondingly lower dividends and may have a lower net
asset value than Class A shares of the Fund.
Class C Shares. Class C shares are sold without initial sales charges
but, as indicated below, are subject to distribution and shareholder
servicing-related fees. Class C shares are subject to a 1% CDSC if such shares
are redeemed during the month of purchase and the 12-month period following the
month of purchase. No CDSC is imposed on amounts redeemed thereafter. Class C
shares incur higher distribution and shareholder servicing-related fees than
Class A shares, but unlike Class B shares, do not convert to any other class of
shares.
Additional information regarding the classes of shares of each Fund is
included in its Prospectuses and Statement of Additional Information.
Distribution-Related and Shareholder Servicing-Related Expenses.
International Growth and International Equity have each adopted a Rule 12b-1
plan with respect to its Class A shares under which the Class may pay for
distribution-related expenses at an annual rate which may not exceed 0.75% of
average daily net assets attributable to the Class. Payments with respect to
Class A shares are currently limited to 0.25% of average daily net assets
attributable to the Class. This amount may be increased to the full plan rate
for each Fund by the Trustees without shareholder approval.
Each of International Growth and International Equity has also adopted a
12b-1 plan with respect to its Class B and Class C shares under which the Class
may pay for distribution-related expenses at an annual rate which may not exceed
1.00% (0.75% with respect to International Equity). International Equity has
also adopted a shareholder service plan
<PAGE>
whereby the Fund may incur a fee of up to 0.25% of average daily
net assets for shareholder services.
The Class B and Class C Rule 12b-1 plans of International Growth
provide that, of the total 1.00% 12b-1 fees, up to 0.25% may be for payment in
respect of "shareholder services." Consistent with the requirements of Rule
12b-1 and the applicable rules of the National Association of Securities
Dealers, Inc. ("NASD"), following the Reorganization International Growth may
make distribution-related and shareholder servicing-related payments with
respect to International Equity shares sold prior to the Reorganization.
Additional information regarding the Rule 12b-1 plans adopted by each
Fund is included in its Prospectuses and Statement of Additional Information.
Purchase and Redemption Procedures
Information concerning applicable sales charges and
distribution-related fees is provided above. Investments in the Funds are not
insured. The minimum initial purchase requirement for each Fund is $1,000. There
is no minimum for subsequent purchases of shares of either Fund. Each Fund
provides for telephone, mail or wire redemption of shares at net asset value,
less any CDSC, as next determined after receipt of a redemption request on each
day the New York Stock Exchange ("NYSE") is open for trading. Additional
information concerning purchases and redemptions of shares, including how each
Fund's net asset value is determined, is contained in the Funds' Prospectuses.
Each Fund may involuntarily redeem shareholders' accounts that have less than
$1,000 of invested funds. All funds invested in each Fund are invested in full
and fractional shares. The Funds reserve the right to reject any purchase order.
Exchange Privileges
Holders of shares of a class of each Fund may exchange their shares for
shares of the same class of any other Evergreen fund. Each Fund limits exchanges
to five per calendar year and three per calendar quarter. No sales charge is
imposed on an exchange. An exchange which represents an initial investment in
another Evergreen fund must amount to at least $1,000. The current exchange
privileges, and the requirements and limitations attendant thereto, are
described in the Funds' Prospectuses and Statement of Additional Information.
Dividend Policy
<PAGE>
Each Fund distributes its investment company taxable income annually
and its net realized gains at least annually. Shareholders begin to earn
dividends on the first business day after shares are purchased unless shares
were not paid for, in which case dividends are not earned until the next
business day after payment is received. Dividends and distributions are
reinvested in additional shares of the same class of the respective Fund, or
paid in cash, as a shareholder has elected. See the Funds' Prospectuses for
further information concerning dividends and distributions.
After the Reorganization, shareholders of International Equity who have
elected to have their dividends and/or distributions reinvested will have
dividends and/or distributions received from International Growth reinvested in
shares of International Growth. Shareholders of International Equity who have
elected to receive dividends and/or distributions in cash will receive dividends
and/or distributions from International Growth in cash after the Reorganization,
although they may, after the Reorganization, elect to have such dividends and/or
distributions reinvested in additional shares of International Growth.
Each of International Growth and International Equity has qualified and
intends to continue to qualify to be treated as a regulated investment company
under the Internal Revenue Code of 1986, as amended (the "Code"). While so
qualified, so long as each Fund distributes all of its net investment company
taxable income and any net realized gains to shareholders, it is expected that a
Fund will not be required to pay any federal income taxes on the amounts so
distributed. A 4% nondeductible excise tax will be imposed on amounts not
distributed if a Fund does not meet certain distribution requirements by the end
of each calendar year. Each Fund anticipates meeting such distribution
requirements.
Risks
An investment in each Fund is subject to certain risks. There is no
assurance that investment performances will be positive and that the Funds will
meet their investment objectives. For a discussion of each Fund's objectives and
policies, see "Comparison of Investment Objectives and Policies."
Both Funds may employ for hedging purposes the strategy of engaging in
options and futures transactions. The risks involved in these strategies are
described in the "Investment Practices and Restrictions-Options and Futures"
section in the Prospectuses of International Growth and International Equity.
<PAGE>
Both Funds invest substantially all of their assets in foreign
securities. Securities markets in foreign countries in which the Funds may
invest are generally not subject to the same degree of regulation as the U.S.
markets and may be more volatile and less liquid than the major U.S. markets.
The differences between investing in foreign and U.S. companies include: (1)
less publicly available information about foreign companies; (2) the lack of
uniform financial accounting standards and practices among countries which could
impair the validity of direct comparisons valuations measures (such as
price/earnings ratios) for securities in different countries; (3) less readily
available market quotations on foreign companies; (4) differences in government
regulation and supervision of foreign stock exchanges, brokers, listed
companies, and banks; (5) differences in legal systems which may affect the
ability to enforce contractual obligations or obtain court judgments; (6)
generally lower foreign stock market volume; (7) the likelihood that foreign
securities may be less liquid or more volatile, which may affect the Fund's
ability to purchase or sell large blocks of securities and thus obtain the best
price; (8) transaction costs, including brokerage charges and custodian charges
associated with holding foreign securities, may be higher; (9) the settlement
period for foreign securities, which are sometimes longer than those for
securities of U.S. issuers, may affect portfolio liquidity; (10) the possibility
that foreign securities held by a Fund may be traded on days that the Fund does
not value its portfolio securities, such as Saturdays and customary business
holidays, and accordingly, the Fund's net asset value may be significantly
affected on days when shareholders do not have access to the Fund; and (11)
political and social instability, expropriation, and political or financial
changes which adversely affect investment in some countries.
Each Fund may invest in securities of issuers in emerging markets
countries and the formerly communist countries of Eastern Europe. Investing in
securities of issuers in emerging markets countries involves exposure to
economic systems that are generally less stable than those of developed
countries. Investing in companies in emerging markets countries may involve
exposure to national policies that may restrict investment by foreigners and
undeveloped legal systems governing private and foreign investments and private
property. The typically small size of the markets for securities issued by
companies in emerging markets countries and the possibility of a low or
nonexistent volume of trading in those securities may also result in a lack of
liquidity and in price volatility for those securities.
When a Fund invests in foreign securities, they usually will be
denominated in foreign currencies, and the Fund temporarily
<PAGE>
may hold funds in foreign currencies. Thus, the value of a Fund's shares may be
affected by changes in exchange rates.
REASONS FOR THE REORGANIZATION
At a regular meeting held on June 26, 1998, all of the Trustees,
including the Independent Trustees, considered and approved the Reorganization
as in the best interests of shareholders of International Equity and determined
that the interests of existing shareholders of International Equity will not be
diluted as a result of the transactions contemplated by the Reorganization.
In approving the Plan, the Trustees reviewed various factors about the
Funds and the proposed Reorganization. There are substantial similarities
between International Growth and International Equity. Specifically,
International Growth and International Equity have substantially similar
investment objectives and policies and comparable risk profiles. See "Comparison
of Investment Objectives and Policies" below. At the same time, the Board of
Trustees evaluated the potential economies of scale associated with larger
mutual funds and concluded that operational efficiencies may be achieved upon
the combination of International Equity with International Growth. As of April
30, 1998, International Growth's net assets were approximately $363 million
(assuming completion of the acquisition of CoreFunds, Inc.'s International
Growth Fund series) and International Equity's net assets were approximately
$294 million.
In addition, assuming that an alternative to the Reorganization would
be to propose that International Equity continue its existence and be separately
managed by FUNB or one of its affiliates, International Equity would be offered
through common distribution channels with the similar International Growth.
International Equity would also have to bear the cost of maintaining its
separate existence. FUNB believes that the prospect of dividing the resources of
the Evergreen mutual fund organization between two similar funds could result in
each Fund being disadvantaged due to an inability to achieve optimum size,
performance levels and greater economies of scale. Accordingly, for the reasons
noted above and recognizing that there can be no assurance that any economies of
scale or other benefits will be realized, FUNB believes that the proposed
Reorganization would be in the best interests of each Fund and its shareholders.
The Board of Trustees of Evergreen International Trust met and
considered the recommendation of FUNB, and, in addition, considered among other
things, (i) the terms and conditions of the Reorganization; (ii) whether the
Reorganization would result
<PAGE>
in the dilution of shareholders' interests; (iii) expense ratios, fees and
expenses of International Growth and International Equity; (iv) the comparative
performance records of each of the Funds; (v) compatibility of their investment
objectives and policies; (vi) the investment experience, expertise and resources
of Keystone; (vii) the service and distribution resources available to the
Evergreen funds and the broad array of investment alternatives available to
shareholders of the Evergreen funds; (viii) the personnel and financial
resources of First Union and its affiliates; (ix) the fact that FUNB will bear
the expenses incurred by International Equity in connection with the
Reorganization; (x) the fact that International Growth will assume the
identified liabilities of International Equity; and (xi) the expected federal
income tax consequences of the Reorganization.
The Trustees also considered the benefits to be derived by shareholders
of International Equity from the sale of its assets to International Growth. In
this regard, the Trustees considered the potential benefits of being associated
with a larger entity and the economies of scale that could be realized by the
participation in such an entity by shareholders of International Equity.
In addition, the Trustees considered that there are alternatives
available to shareholders of International Equity, including the ability to
redeem their shares, as well as the option to vote against the Reorganization.
During their consideration of the Reorganization the Trustees met with
Fund counsel and counsel to the Independent Trustees regarding the legal issues
involved. The Trustees also concluded at the meeting that the proposed
Reorganization would be in the best interests of shareholders of International
Growth and that the interests of the shareholders of International Growth would
not be diluted as a result of the transactions contemplated by the
Reorganization.
THE TRUSTEES OF EVERGREEN INTERNATIONAL TRUST RECOMMEND
THAT THE SHAREHOLDERS OF INTERNATIONAL EQUITY APPROVE
THE PROPOSED REORGANIZATION.
Agreement and Plan of Reorganization
The following summary is qualified in its entirety by reference to the
Plan (Exhibit A hereto).
The Plan provides that International Growth will acquire all of the
assets of International Equity in exchange for shares of International Growth
and the assumption by International Growth
<PAGE>
of the identified liabilities of International Equity on or about October 26,
1998 or such other date as may be agreed upon by the parties (the "Closing
Date"). Prior to the Closing Date, International Equity will endeavor to
discharge all of its known liabilities and obligations. International Growth
will not assume any liabilities or obligations of International Equity other
than those reflected in an unaudited statement of assets and liabilities of
International Equity prepared as of the close of regular trading on the NYSE,
currently 4:00 p.m. Eastern time, on the business day immediately prior to the
Closing Date. The number of full and fractional shares of each class of
International Growth to be received by the shareholders of International Equity
will be determined by multiplying the respective outstanding class of shares of
International Equity by a factor which shall be computed by dividing the net
asset value per share of the respective class of shares of International Equity
by the net asset value per share of the respective class of shares of
International Growth. Such computations will take place as of the close of
regular trading on the NYSE on the business day immediately prior to the Closing
Date. The net asset value per share of each class will be determined by dividing
assets, less liabilities, in each case attributable to the respective class, by
the total number of outstanding shares.
State Street Bank and Trust Company, the custodian for the Funds, will
compute the value of each Fund's respective portfolio securities. The method of
valuation employed will be consistent with the procedures set forth in the
Prospectuses and Statement of Additional Information of International Growth,
Rule 22c-1 under the 1940 Act, and with the interpretations of such Rule by the
SEC's Division of Investment Management.
At or prior to the Closing Date, International Equity will have
declared a dividend or dividends and distribution or distributions which,
together with all previous dividends and distributions, shall have the effect of
distributing to the Fund's shareholders (in shares of the Fund, or in cash, as
the shareholder has previously elected) all of the Fund's net investment company
taxable income for the taxable period ending on the Closing Date (computed
without regard to any deduction for dividends paid) and all of its net capital
gains realized in all taxable periods ending on the Closing Date (after
reductions for any capital loss carryforward).
As soon after the Closing Date as conveniently practicable,
International Equity will liquidate and distribute pro rata to shareholders of
record as of the close of business on the Closing Date the full and fractional
shares of International Growth received by International Equity. Such
liquidation and distribution will be accomplished by the establishment of
<PAGE>
accounts in the names of the Fund's shareholders on International Growth's share
records of its transfer agent. Each account will represent the respective pro
rata number of full and fractional shares of International Growth due to the
Fund's shareholders. All issued and outstanding shares of International Equity,
including those represented by certificates, will be canceled. The shares of
International Growth to be issued will have no preemptive or conversion rights.
After these distributions and the winding up of its affairs, International
Equity will be terminated.
The consummation of the Reorganization is subject to the conditions set
forth in the Plan, including approval by International Equity's shareholders,
accuracy of various representations and warranties and receipt of opinions of
counsel, including opinions with respect to those matters referred to in
"Federal Income Tax Consequences" below. Notwithstanding approval of
International Equity's shareholders, the Plan may be terminated (a) by the
mutual agreement of International Equity and International Growth; or (b) at or
prior to the Closing Date by either party (i) because of a breach by the other
party of any representation, warranty, or agreement contained therein to be
performed at or prior to the Closing Date if not cured within 30 days, or (ii)
because a condition to the obligation of the terminating party has not been met
and it reasonably appears that it cannot be met.
The expenses of International Equity in connection with the
Reorganization (including the cost of any proxy soliciting agent) will be borne
by FUNB whether or not the Reorganization is consummated. No portion of such
expenses will be borne directly or indirectly by International Equity or its
shareholders.
If the Reorganization is not approved by shareholders of International
Equity, the Board of Trustees of Evergreen International Trust will consider
other possible courses of
action in the best interests of shareholders.
Federal Income Tax Consequences
The Reorganization is intended to qualify for federal income tax
purposes as a tax-free reorganization under section 368(a) of the Code. As a
condition to the closing of the Reorganization, International Equity will
receive an opinion of Sullivan & Worcester LLP to the effect that, on the basis
of the existing provisions of the Code, U.S. Treasury regulations issued
thereunder, current administrative rules, pronouncements and court decisions,
for federal income tax purposes, upon consummation of the Reorganization:
<PAGE>
(1) The transfer of all of the assets of International Equity solely in
exchange for shares of International Growth and the assumption by International
Growth of the identified liabilities, followed by the distribution of
International Growth's shares by International Equity in dissolution and
liquidation of International Equity, will constitute a "reorganization" within
the meaning of section 368(a)(1)(C) of the Code, and International Growth and
International Equity will each be a "party to a reorganization" within the
meaning of section 368(b) of the Code;
(2) No gain or loss will be recognized by International Equity on the
transfer of all of its assets to International Growth solely in exchange for
International Growth's shares and the assumption by International Growth of the
identified liabilities of International Equity or upon the distribution of
International Growth's shares to International Equity's shareholders in exchange
for their shares of International Equity;
(3) The tax basis of the assets transferred will be the same to
International Growth as the tax basis of such assets to International Equity
immediately prior to the Reorganization, and the holding period of such assets
in the hands of International Growth will include the period during which the
assets were held by International Equity;
(4) No gain or loss will be recognized by International Growth upon the
receipt of the assets from International Equity solely in exchange for the
shares of International Growth and the assumption by International Growth of the
identified liabilities of International Equity;
(5) No gain or loss will be recognized by International Equity's
shareholders upon the issuance of the shares of International Growth to them,
provided they receive solely such shares (including fractional shares) in
exchange for their shares of International Equity; and
(6) The aggregate tax basis of the shares of International Growth,
including any fractional shares, received by each of the shareholders of
International Equity pursuant to the Reorganization will be the same as the
aggregate tax basis of the shares of International Equity held by such
shareholder immediately prior to the Reorganization, and the holding period of
the shares of International Growth, including fractional shares, received by
each such shareholder will include the period during which the shares of
International Equity exchanged therefor were held by such shareholder (provided
that the shares
<PAGE>
of International Equity were held as a capital asset on the date
of the Reorganization).
Opinions of counsel are not binding upon the Internal Revenue Service
or the courts. If the Reorganization is consummated but does not qualify as a
tax-free reorganization under the Code, a shareholder of International Equity
would recognize a taxable gain or loss equal to the difference between his or
her tax basis in his or her Fund shares and the fair market value of
International Growth shares he or she received. Shareholders of International
Equity should consult their tax advisers regarding the effect, if any, of the
proposed Reorganization in light of their individual circumstances. It is not
anticipated that the securities of the combined portfolio will be sold in
significant amounts in order to comply with the policies and investment
practices of International Growth. Since the foregoing discussion relates only
to the federal income tax consequences of the Reorganization, shareholders of
International Equity should also consult their tax advisers as to the state and
local tax consequences, if any, of the Reorganization.
Capital loss carryforwards of International Equity will be available to
International Growth to offset capital gains recognized after the
Reorganization, subject to limitations imposed by the Code. These limitations
provide generally that the amount of loss carryforward which may be used in any
year following the closing is an amount equal to the value of all of the
outstanding stock of International Equity immediately prior to the
Reorganization, multiplied by a long-term tax-exempt bond rate determined
monthly by the Internal Revenue Service. The rate for July, 1998 was 5.15%. A
capital loss carryforward may generally be used without any limit to offset
gains recognized on sale of assets transferred by International Equity to
International Growth pursuant to the Reorganization, to the extent of the excess
of the value of any such asset on the Closing Date over its tax basis.
Pro-forma Capitalization
The following table sets forth the capitalizations of International
Growth and International Equity as of April 30, 1998, and the capitalization of
International Growth on a pro forma basis as of that date, giving effect to the
proposed acquisition of assets at net asset value and the acquisition of
approximately $179 million of assets of International Growth Fund, a series of
CoreFunds, Inc. on July 27, 1998. The pro forma data reflects an exchange ratio
of approximately 1.36975, 1.36735, 1.36101, and 1.36943 Class Y, Class A, Class
B and Class C shares respectively, of International Growth issued for each
<PAGE>
Class Y, Class A, Class B and Class C share, respectively, of International
Equity.
<TABLE>
<CAPTION>
Capitalization of International Equity,
International Growth and International
Growth (Pro Forma)
International International International Growth
Equity Growth (After Reorganization)
------------- ------------- ----------
<S> <C> <C> <C>
Net Assets
Class A........................ $ 12,910,914 $107,756,761 $120,667,675
Class B........................ $ 23,519,130 $ 52,862,974 $ 76,382,104
Class C........................ $ 593,940 $ 233,751 $ 827,691
Class Y........................ $257,333,404 $201,931,689 $459,265,093
------------ ----------- ------------
Total Net Assets . $294,357,388 $362,785,175 $657,142,563
Net Asset Value Per
Share
Class A........................ $11.39 $8.33 $8.33
Class B........................ $11.31 $8.31 $8.31
Class C........................ $11.38 $8.31 $8.31
Class Y........................ $11.41 $8.33 $8.33
Shares Outstanding
Class A........................ 1,133,986 12,941,060 14,491,612
Class B........................ 2,078,769 6,361,501 9,190,728
Class C........................ 52,195 28,125 99,603
Class Y........................ 22,549,581 24,245,678 55,132,920
----------- --------- ----------
All Classes.................... 25,814,531 43,576,364 78,914,862
</TABLE>
The table set forth above should not be relied upon to reflect the
number of shares to be received in the Reorganization; the actual number of
shares to be received will depend upon the net asset value and number of shares
outstanding of each Fund at the time of the Reorganization.
<PAGE>
Shareholder Information
As of August 31, 1998 (the "Record Date"), the following number of each
Class of shares of beneficial interest of International Equity was outstanding:
Class of Shares
- ---------------
Class Y.................................................
Class A.................................................
Class B.................................................
Class C.................................................
All Classes............................................. ------------
As of July 31, 1998, the officers and Trustees of Evergreen
International Trust beneficially owned as a group less than 1% of the
outstanding shares of International Equity. To Evergreen International Trust's
knowledge, the following persons owned beneficially or of record more than 5% of
International Equity's total outstanding shares as of July 31, 1998:
<TABLE>
<CAPTION>
Percentage
Percentage of Shares
of Shares of of Class
Class Before After
Reorgani- Reorgani-
Name and Address Class No. of Shares zation zation
- ---------------- ----- ------------- --------- ---------
<S> <C> <C> <C> <C>
First Union National Y 20,701,160 99.63% 47.83%
Bank
Trust Accounts
Attn: Ginny Batten
11th Floor CMG-1151
301 S. Tryon Street
Charlotte, NC 2828-
0002
Prudential Securities Inc. A 279,838 17.98% 2.39%
FBO ED&F Man International Inc.
Customer Omnibus Acct #10
440 S. LaSalle St. Fl. 20
Chicago, IL 60605-1028
Prudential Securities Inc. A 208,297 13.38% 1.78%
FBO ED&F Man International Inc.
Customer Omnibus Acct #8
440 S. LaSalle St. Fl. 20
Chicago, IL 60605-1028
Prudential Securities Inc. A 80,478 5.17% 0.69%
FBO ED&F Man International Inc.
Customer Omnibus Acct #1
440 S. LaSalle St. Fl. 20
Chicago, IL 60605-1028
<PAGE>
Percentage
Percentage of Shares
of Shares of of Class
Class Before After
Reorgani- Reorgani-
Name and Address Class No. of Shares zation zation
- ---------------- ----- ------------- --------- ---------
MLPF&S for the Sole C 10,732 18.66% 3.31%
Benefit of its
Customers
Attn: Fund
Administration
4800 Deer Lake Dr. E.,
3rd FL
Jacksonville, FL
32246-6484
Emery Jahnke C 4,977 8.66% 1.54%
2402 Lilac Lane
Fargo, ND 58102-2124
Matt D. Cullen C 3,054 5.31% 0.94%
2740 Walnut Circle S.
Moorhead, MN 56560-3262
</TABLE>
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES
The following discussion is based upon and qualified in its entirety by
the descriptions of the respective investment objectives, policies and
restrictions set forth in the Prospectuses and Statement of Additional
Information of the Funds. The investment objectives, policies and restrictions
of each Fund can be found in the Prospectuses for International Growth and
International Equity under the caption "Description of the Funds - Investment
Objectives and Policies." The Prospectuses for International Growth and
International Equity also offer additional funds advised by FUNB or its
affiliates. These additional funds are not involved in the Reorganization, their
investment objectives and policies are not discussed in this Prospectus/Proxy
Statement, and their shares are not offered hereby. The investment objective of
each Fund is non-fundamental and can be changed by the Board of Trustees without
shareholder approval.
The investment objective of International Growth is to seek long-term
growth of capital. As a secondary objective, the Fund seeks modest income. In
pursuing its investment objectives, the Fund invests primarily in equity
securities issued by established, quality companies located in countries with
developed markets. The Fund may invest a portion of its assets in equity
securities of companies located in certain emerging
<PAGE>
markets and the formerly communist countries of Eastern Europe. Countries with
emerging markets are generally those where the per capita income is in the low
to middle ranges, as determined by the World Bank.
Under normal circumstances, International Growth invests at least 65%
of its total assets in the securities of companies in at least three different
countries (other than the United States). For this purpose, a company is deemed
to be located in a particular country if (1) it is organized under the laws of
that country; (2) its principal securities trading market is in that country;
(3) it derives at least 50% of its revenues or profits from goods produced or
sold, investments made, or services performed in that country; or (4) it has at
least 50% of its assets located in that country. Excluding repurchase
agreements, the Fund currently follows a policy of investing solely in
securities of non-U.S. issuers.
While International Growth focuses on equity securities, it may, unlike
International Equity, invest a portion of its assets in debt securities issued
by public or private issuers with any rating or that are unrated; provided,
however, that the Fund may only invest up to 10% of its total assets in high
yield/high risk bonds, which are debt securities rated below investment grade;
i.e., BB or lower by Standard & Poor's Ratings Group or Ba or lower by Moody's
Investors Service. Securities rated below investment grade are considered
predominantly speculative with respect to the ability of the issuer to meet
principal and interest payments. For additional information concerning the risks
of investments in high yield bonds, see "Special Risk Considerations-Risk
Characteristics of High Yield Bonds" in the Prospectuses of International
Growth.
International Growth may also invest in payment-in-kind securities
issued by public or private issuers, as well as preferred stocks, convertible
securities, and rights and warrants to purchase common stocks, when the Fund's
investment adviser determines that such investment is consistent with the Fund's
investment objectives.
The investment objective of International Equity is to seek long-term
capital appreciation. The Fund invests primarily in equity securities of
non-U.S. issuers. As a matter of policy, the Fund will invest at least 65% of
its total assets in the equity securities of companies located in at least three
different countries outside the United States, including emerging markets.
The characteristics of each investment policy and the associated risks are
described in the Funds' Prospectuses and
<PAGE>
Statement of Additional Information. The Funds have other investment policies
and restrictions which are also set forth in the Prospectuses and Statement of
Additional Information.
INFORMATION ON SHAREHOLDERS' RIGHTS
Form of Organization
Evergreen International Trust is an open-end management investment company
registered with the SEC under the 1940 Act, which continuously offers shares to
the public. Evergreen International Trust is organized as a Delaware business
trust and is governed by its Declaration of Trust, By-Laws, a Board of Trustees
and by applicable Delaware and federal law. International Growth and
International Equity are series of Evergreen International Trust.
Capitalization
The beneficial interests in International Growth and International Equity
are represented by an unlimited number of transferable shares of beneficial
interest, $.001 par value per share. Evergreen International Trust's Declaration
of Trust permit the Trustees or Directors, respectively, to allocate shares into
an unlimited number of series, and classes thereof, with rights determined by
the Trustees, all without shareholder approval. Fractional shares may be issued
by either Fund. Each Fund's shares represent equal proportionate interests in
the assets belonging to the Funds. Shareholders of each Fund are entitled to
receive dividends and other amounts as determined by the Trustees. Shareholders
of each Fund vote separately, by class, as to matters, such as approval of or
amendments to Rule 12b-1 distribution plans, that affect only their particular
class and by Fund as to matters, such as approval of or amendments to investment
advisory agreements or proposed reorganizations, that affect only their
particular Fund.
Shareholder Liability
Under Delaware law, shareholders of a Delaware business trust are
entitled to the same limitation of personal liability extended to stockholders
of Delaware corporations. No similar statutory or other authority limiting
business trust shareholder liability exists in any other state. As a result, to
the extent that Evergreen International Trust or a shareholder is subject to the
jurisdiction of courts in those states, it is possible that a court may not
apply Delaware law, and may thereby subject shareholders of Evergreen
International Trust to liability. To guard against this risk, the Declaration of
Trust of Evergreen International Trust (a) provides that any written obligation
of
<PAGE>
the Trust may contain a statement that such obligation may only be enforced
against the assets of the Trust or the particular series in question and the
obligation is not binding upon the shareholders of the Trust; however, the
omission of such a disclaimer will not operate to create personal liability for
any shareholder; and (b) provides for indemnification out of Trust property of
any shareholder held personally liable for the obligations of the Trust.
Accordingly, the risk of a shareholder of Evergreen International Trust
incurring financial loss beyond that shareholder's investment because of
shareholder liability is limited to circumstances in which: (i) the court
refuses to apply Delaware law; (ii) no contractual limitation of liability was
in effect; and (iii) the Trust itself is unable to meet its obligations. In
light of Delaware law, the nature of the Trust's business, and the nature of its
assets, the risk of personal liability to a shareholder of Evergreen
International Trust is remote.
Shareholder Meetings and Voting Rights
Evergreen International Trust on behalf of International Growth and
International Equity is not required to hold annual meetings of shareholders.
However, a meeting of shareholders for the purpose of voting upon the question
of removal of a Trustee must be called when requested in writing by the holders
of at least 10% of the outstanding shares of Evergreen International Trust. In
addition, Evergreen International Trust is required to call a meeting of
shareholders for the purpose of electing Trustees if, at any time, less than a
majority of the Trustees then holding office were elected by shareholders.
Evergreen International Trust does not currently intend to hold regular
shareholder meetings. Cumulative voting is not permitted. Except when a larger
quorum is required by applicable law, with respect to both Funds, twenty-five
percent (25%) of the outstanding shares entitled to vote constitutes a quorum
for consideration of such matter. For each Fund, a majority of the votes cast
and entitled to vote is sufficient to act on a matter (unless otherwise
specifically required by the applicable governing documents or other law,
including the 1940 Act).
Under the Declaration of Trust of Evergreen International Trust, each
share of International Growth and International Equity will be entitled to one
vote for each dollar of net asset value applicable to each share.
Liquidation or Dissolution
In the event of the liquidation of International Growth or
International Equity, the shareholders are entitled to receive, when and as
declared by the Trustees the excess of the assets
<PAGE>
belonging to such Fund or attributable to the class over the liabilities
belonging to the Fund or attributable to the class. In either case, the assets
so distributable to shareholders of the Fund will be distributed among the
shareholders in proportion to the number of shares of a class of the Fund held
by them and recorded on the books of the Fund.
Liability and Indemnification of Trustees
Under the Declaration of Trust of Evergreen International Trust, a
Trustee is liable to the Trust and its shareholders only for such Trustee's own
willful misfeasance, bad faith, gross negligence, or reckless disregard of the
duties involved in the conduct of the office of Trustee or the discharge of such
Trustee's functions. As provided in the Declaration of Trust, each Trustee of
the Trust is entitled to be indemnified against all liabilities against him or
her, including the costs of litigation, unless it is determined that the Trustee
(i) did not act in good faith in the reasonable belief that such Trustee's
action was in or not opposed to the best interests of the Trust; (ii) had acted
with willful misfeasance, bad faith, gross negligence or reckless disregard of
such Trustee's duties; and (iii) in a criminal proceeding, had reasonable cause
to believe that such Trustee's conduct was unlawful (collectively, "disabling
conduct"). A determination that the Trustee did not engage in disabling conduct
and is, therefore, entitled to indemnification may be based upon the outcome of
a court action or administrative proceeding or by (a) a vote of a majority of
those Trustees who are neither "interested persons" within the meaning of the
1940 Act nor parties to the proceeding or (b) an independent legal counsel in a
written opinion. The Trust may also advance money for such litigation expenses
provided that the Trustee undertakes to repay the Trust if his or her conduct is
later determined to preclude indemnification and certain other conditions are
met.
The foregoing is only a summary of certain characteristics of the
operations of the Declaration of Trust of Evergreen International Trust, By-Laws
and Delaware law and is not a complete description of those documents or law.
Shareholders should refer to the provisions of such Declaration of Trust,
Articles of Incorporation, By-Laws and Delaware law directly for more complete
information.
ADDITIONAL INFORMATION
International Growth. Information concerning the operation and management
of International Growth is incorporated herein by reference from the
Prospectuses dated March 1, 1998, copies of which are enclosed, and Statement of
Additional Information of
<PAGE>
the same date. A copy of such Statement of Additional Information is available
upon request and without charge by writing to International Growth at the
address listed on the cover page of this Prospectus/Proxy Statement or by
calling toll-free 1-800-343-2898.
International Equity . Information about the Fund is included in its
current Prospectuses dated March 1, 1998 and in the Statement of Additional
Information of the same date, that have been filed with the SEC, all of which
are incorporated herein by reference. Copies of the Prospectuses and Statement
of Additional Information are available upon request and without charge by
writing to International Equity at the address listed on the cover page of this
Prospectus/Proxy Statement or by calling toll-free 1-800-343-2898.
International Growth and International Equity are each subject to the
informational requirements of the Securities Exchange Act of 1934 and the 1940
Act, and in accordance therewith file reports and other information including
proxy material, and charter documents with the SEC. These items can be inspected
and copies obtained at the Public Reference Facilities maintained by the SEC at
450 Fifth Street, N.W., Washington, D.C. 20549, and at the SEC's Regional
Offices located at Northwest Atrium Center, 500 West Madison Street, Chicago,
Illinois 60661- 2511 and Seven World Trade Center, Suite 1300, New York, New
York 10048.
The SEC maintains a Web site (http://www.sec.gov) that contains the
Funds' Statement of Additional Information and other material incorporated by
reference herein together with other information regarding International Growth
and International
Equity.
VOTING INFORMATION CONCERNING THE MEETING
This Prospectus/Proxy Statement is furnished in connection with a
solicitation of proxies by the Trustees of the Trust, to be used at the Special
Meeting of Shareholders to be held at 2:00 p.m., October 16, 1998, at the
offices of the Evergreen Funds, 200 Berkeley Street, 26th Floor, Boston,
Massachusetts 02116, and at any adjournments thereof. This Prospectus/Proxy
Statement, along with a Notice of the Meeting and a proxy card, is first being
mailed to shareholders of International Equity on or about September 10, 1998.
Only shareholders of record as of the close of business on the Record Date will
be entitled to notice of, and to vote at, the Meeting or any adjournment
thereof. The holders of twenty-five percent (25%) of the outstanding shares
entitled to vote at the close of business on the Record Date present in person
or represented by proxy will constitute a quorum for the
<PAGE>
Meeting. If the enclosed form of proxy is properly executed and returned in time
to be voted at the Meeting, the proxies named therein will vote the shares
represented by the proxy in accordance with the instructions marked thereon.
Unmarked proxies will be voted FOR the proposed Reorganization and FOR any other
matters deemed appropriate. Proxies that reflect abstentions and "broker
non-votes" (i.e., shares held by brokers or nominees as to which (i)
instructions have not been received from the beneficial owners or the persons
entitled to vote or (ii) the broker or nominee does not have discretionary
voting power on a particular matter) will be counted as shares that are present
and entitled to vote for purposes of determining the presence of a quorum, but
will not have the effect of being counted as votes against the Plan, which must
be approved by a majority of the votes cast and entitled to vote. A proxy may be
revoked at any time on or before the Meeting by written notice to the Secretary
of Evergreen International Trust at the address set forth on the cover of this
Prospectus/Proxy Statement. Unless revoked, all valid proxies will be voted in
accordance with the specifications thereon or, in the absence of such
specifications, FOR approval of the Plan and the Reorganization contemplated
thereby.
Approval of the Plan will require the affirmative vote of a majority of
the votes cast and entitled to vote, with all classes voting together as a
single class at the Meeting at which a quorum of the Fund's shares is present.
Each share outstanding is entitled to one vote for each dollar of net asset
value applicable to each share.
Proxy solicitations will be made primarily by mail, but proxy
solicitations may also be made by telephone, telegraph or personal solicitations
conducted by officers and employees of FUNB, its affiliates or other
representatives of International Equity (who will not be paid for their
soliciting activities). If you wish to participate in the Meeting, you may
submit the proxy card included with this Prospectus/Proxy Statement, vote by fax
or attend in person. Any proxy given by you is revocable.
In the event that sufficient votes to approve the Reorganization are
not received by October 16, 1998, the persons named as proxies may propose one
or more adjournments of the Meeting to permit further solicitation of proxies.
In determining whether to adjourn the Meeting, the following factors may be
considered: the percentage of votes actually cast, the percentage of negative
votes actually cast, the nature of any further solicitation and the information
to be provided to shareholders with respect to the reasons for the solicitation.
Any such adjournment will require an affirmative vote by the holders of a
majority of the shares present in person or by proxy
<PAGE>
at the Meeting. The persons named as proxies will vote upon such adjournment
after consideration of all circumstances which may bear upon a decision to
adjourn the Meeting.
A shareholder who objects to the proposed Reorganization will not be
entitled under either Delaware law or the Declaration of Trust of Evergreen
International Trust to demand payment for, or an appraisal of, his or her
shares. However, shareholders should be aware that the Reorganization as
proposed is not expected to result in recognition of gain or loss to
shareholders for federal income tax purposes and that, if the Reorganization is
consummated, shareholders will be free to redeem the shares of International
Growth which they receive in the transaction at their then-current net asset
value. Shares of International Equity may be redeemed at any time prior to the
consummation of the Reorganization. Shareholders of International Equity may
wish to consult their tax advisers as to any differing consequences of redeeming
Fund shares prior to the Reorganization or exchanging such shares in the
Reorganization.
International Equity does not hold annual shareholder meetings. If the
Reorganization is not approved, shareholders wishing to submit proposals for
consideration for inclusion in a proxy statement for a subsequent shareholder
meeting should send their written proposals to the Secretary of Evergreen
International Trust at the address set forth on the cover of this
Prospectus/Proxy Statement such that they will be received by the Fund in a
reasonable period of time prior to any such meeting.
The votes of the shareholders of International Growth are not being
solicited by this Prospectus/Proxy Statement and are not required to carry out
the Reorganization.
NOTICE TO BANKS, BROKER-DEALERS AND VOTING TRUSTEES AND THEIR NOMINEES.
Please advise International Equity whether other persons are beneficial owners
of shares for which proxies are being solicited and, if so, the number of copies
of this Prospectus/Proxy Statement needed to supply copies to the beneficial
owners of the respective shares.
FINANCIAL STATEMENTS AND EXPERTS
The Annual Report of International Growth (formerly, Keystone International
Fund Inc.) as of October 31, 1997, and the financial statements and financial
highlights for the periods indicated therein, have been incorporated by
reference herein and in the Registration Statement in reliance upon the report
of KPMG Peat Marwick LLP, independent certified public accountants, incorporated
by reference herein, and upon the authority of said firm as experts in
accounting and auditing.
<PAGE>
The Annual Report of International Equity as of October 31, 1997 and
the financial Highlights and financial statements for the periods indicated
therein have been incorporated by reference herein and in the Registration
Statement in reliance upon the report of PricewaterhouseCoopers LLP, independent
certified public accountants, incorporated by reference herein and upon the
authority of said firm as experts in accounting and auditing.
LEGAL MATTERS
Certain legal matters concerning the issuance of shares of
International Growth will be passed upon by Sullivan & Worcester LLP,
Washington, D.C.
OTHER BUSINESS
The Trustees of Evergreen International Trust do not intend to present
any other business at the Meeting. If, however, any other matters are properly
brought before the Meeting, the persons named in the accompanying form of proxy
will vote thereon in accordance with their judgment.
THE TRUSTEES OF THE TRUST RECOMMEND APPROVAL OF THE PLAN AND ANY UNMARKED
PROXIES WITHOUT INSTRUCTIONS TO THE CONTRARY WILL BE VOTED IN FAVOR OF APPROVAL
OF THE PLAN.
September 3, 1998
<PAGE>
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as
of this 14th day of August, 1998, by and between Evergreen International Trust,
a Delaware business trust, with its principal place of business at 200 Berkeley
Street, Boston, Massachusetts 02116 (the "Trust"), with respect to its Evergreen
International Growth Fund series (the "Acquiring Fund"), and the Trust, with
respect to its Evergreen International Equity Fund series (the "Selling Fund").
This Agreement is intended to be, and is adopted as, a plan of
reorganization and liquidation within the meaning of Section 368(a)(1)(D) of the
United States Internal Revenue Code of 1986, as amended (the "Code"). The
reorganization (the "Reorganization") will consist of (i) the transfer of all of
the assets of the Selling Fund in exchange solely for Class A, Class B, Class C
and Class Y shares of beneficial interest, $.001 par value per share, of the
Acquiring Fund (the "Acquiring Fund Shares"); (ii) the assumption by the
Acquiring Fund of the identified liabilities of the Selling Fund; and (iii) the
distribution, after the Closing Date hereinafter referred to, of the Acquiring
Fund Shares to the shareholders of the Selling Fund in liquidation of the
Selling Fund as provided herein, all upon the terms and conditions hereinafter
set forth in this Agreement.
WHEREAS, the Selling Fund and the Acquiring Fund are each a separate
investment series of an open-end, registered investment company of the
management type and the Selling Fund owns securities that generally are assets
of the character in which the Acquiring Fund is permitted to invest;
WHEREAS, both Funds are authorized to issue their shares of
beneficial interest;
WHEREAS, the Trustees of the Trust have determined that the exchange of
all of the assets of the Selling Fund for Acquiring Fund Shares and the
assumption of the identified liabilities of the Selling Fund by the Acquiring
Fund on the terms and conditions hereinafter set forth are in the best interests
of the Acquiring Fund's shareholders;
WHEREAS, the Trustees of the Trust have determined that the Selling
Fund should exchange all of its assets and the identified liabilities for
Acquiring Fund Shares and that the interests of the existing shareholders of the
Selling Fund will not be diluted as a result of the transactions contemplated
herein;
<PAGE>
NOW, THEREFORE, in consideration of the premises and of the covenants
and agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
ARTICLE I
TRANSFER OF ASSETS OF THE SELLING FUND IN EXCHANGE FOR
THE ACQUIRING FUND SHARES AND ASSUMPTION OF SELLING FUND
LIABILITIES AND LIQUIDATION OF THE SELLING FUND
1.1 THE EXCHANGE. Subject to the terms and conditions herein set forth
and on the basis of the representations and warranties contained herein, the
Selling Fund agrees to transfer all of the Selling Fund's assets as set forth in
paragraph 1.2 to the Acquiring Fund. The Acquiring Fund agrees in exchange
therefor (i) to deliver to the Selling Fund the number of Acquiring Fund Shares,
including fractional Acquiring Fund Shares, determined by multiplying the shares
outstanding of each class of the Selling Fund by the ratio computed by dividing
the net asset value per share of each such class of the Selling Fund by the net
asset value per share of the corresponding class of Acquiring Fund Shares
computed in the manner and as of the time and date set forth in paragraph 2.2;
and (ii) to assume the identified liabilities of the Selling Fund, as set forth
in paragraph 1.3. Such transactions shall take place at the closing provided for
in paragraph 3.1 (the "Closing Date").
1.2 ASSETS TO BE ACQUIRED. The assets of the Selling Fund to be
acquired by the Acquiring Fund shall consist of all property, including, without
limitation, all cash, securities, commodities, interests in futures and
dividends or interest receivables, that is owned by the Selling Fund and any
deferred or prepaid expenses shown as an asset on the books of the Selling Fund
on the Closing Date.
The Selling Fund has provided the Acquiring Fund with its most recent
audited financial statements, which contain a list of all of Selling Fund's
assets as of the date thereof. The Selling Fund hereby represents that as of the
date of the execution of this Agreement there have been no changes in its
financial position as reflected in said financial statements other than those
occurring in the ordinary course of its business in connection with the purchase
and sale of securities and the payment of its normal operating expenses. The
Selling Fund reserves the right to sell any of such securities, but will not,
without the prior written approval of the Acquiring Fund, acquire any additional
securities other than securities of the type in which the Acquiring Fund is
permitted to invest.
<PAGE>
The Acquiring Fund will, within a reasonable time prior to the Closing
Date, furnish the Selling Fund with a list of the securities, if any, on the
Selling Fund's list referred to in the second sentence of this paragraph that do
not conform to the Acquiring Fund's investment objectives, policies, and
restrictions. The Selling Fund will, within a reasonable period of time prior to
the Closing Date, furnish the Acquiring Fund with a list of its portfolio
securities and other investments. In the event that the Selling Fund holds any
investments that the Acquiring Fund may not hold, the Selling Fund, if requested
by the Acquiring Fund, will dispose of such securities prior to the Closing
Date. In addition, if it is determined that the Selling Fund and the Acquiring
Fund portfolios, when aggregated, would contain investments exceeding certain
percentage limitations imposed upon the Acquiring Fund with respect to such
investments, the Selling Fund if requested by the Acquiring Fund will dispose of
a sufficient amount of such investments as may be necessary to avoid violating
such limitations as of the Closing Date. Notwithstanding the foregoing, nothing
herein will require the Selling Fund to dispose of any investments or securities
if, in the reasonable judgment of the Selling Fund, such disposition would
adversely affect the tax-free nature of the Reorganization or would violate the
Selling Fund's fiduciary duty to its shareholders.
1.3 LIABILITIES TO BE ASSUMED. The Selling Fund will endeavor to
discharge all of its known liabilities and obligations prior to the Closing
Date. The Acquiring Fund shall assume only those liabilities, expenses, costs,
charges and reserves reflected on a Statement of Assets and Liabilities of the
Selling Fund prepared on behalf of the Selling Fund, as of the Valuation Date
(as defined in paragraph 2.1), in accordance with generally accepted accounting
principles consistently applied from the prior audited period. The Acquiring
Fund shall assume only those liabilities of the Selling Fund reflected in such
Statement of Assets and Liabilities and shall not assume any other liabilities,
whether absolute or contingent, known or unknown, accrued or unaccrued, all of
which shall remain the obligation of the Selling Fund.
In addition, upon completion of the Reorganization, for purposes of
calculating the maximum amount of sales charges (including asset based sales
charges) permitted to be imposed by the Acquiring Fund under the National
Association of Securities Dealers, Inc. Conduct Rule 2830 ("Aggregate NASD
Cap"), the Acquiring Fund will add to its Aggregate NASD Cap immediately prior
to the Reorganization the Aggregate NASD Cap of the Selling Fund immediately
prior to the Reorganization, in each case calculated in accordance with such
Rule 2830.
<PAGE>
1.4 LIQUIDATION AND DISTRIBUTION. On or as soon after the Closing Date
as is conveniently practicable (the "Liquidation Date"), (a) the Selling Fund
will liquidate and distribute pro rata to the Selling Fund's shareholders of
record, determined as of the close of business on the Valuation Date (the
"Selling Fund Shareholders"), the Acquiring Fund Shares received by the Selling
Fund pursuant to paragraph 1.1; and (b) the Selling Fund will thereupon proceed
to dissolve as set forth in paragraph 1.8 below. Such liquidation and
distribution will be accomplished by the transfer of the Acquiring Fund Shares
then credited to the account of the Selling Fund on the books of the Acquiring
Fund to open accounts on the share records of the Acquiring Fund in the names of
the Selling Fund Shareholders and representing the respective pro rata number of
the Acquiring Fund Shares due such shareholders. All issued and outstanding
shares of the Selling Fund will simultaneously be canceled on the books of the
Selling Fund. The Acquiring Fund shall not issue certificates representing the
Acquiring Fund Shares in connection with such exchange.
1.5 OWNERSHIP OF SHARES. Ownership of Acquiring Fund Shares will be
shown on the books of the Acquiring Fund's transfer agent. Shares of the
Acquiring Fund will be issued in the manner described in the combined Prospectus
and Proxy Statement on Form N-14 to be distributed to shareholders of the
Selling Fund as described in paragraph 5.7.
1.6 TRANSFER TAXES. Any transfer taxes payable upon issuance of the
Acquiring Fund Shares in a name other than the registered holder of the Selling
Fund shares on the books of the Selling Fund as of that time shall, as a
condition of such issuance and transfer, be paid by the person to whom such
Acquiring Fund Shares are to be issued and transferred.
1.7 REPORTING RESPONSIBILITY. Any reporting responsibility of the
Selling Fund is and shall remain the responsibility of the Selling Fund up to
and including the Closing Date and such later date on which the Selling Fund is
terminated.
1.8 TERMINATION. The Selling Fund shall be terminated promptly
following the Closing Date and the making of all distributions pursuant to
paragraph 1.4.
ARTICLE II
VALUATION
2.1 VALUATION OF ASSETS. The value of the Selling Fund's
assets to be acquired by the Acquiring Fund hereunder shall be
<PAGE>
the value of such assets computed as of the close of business on the New York
Stock Exchange on the business day next preceding the Closing Date (such time
and date being hereinafter called the "Valuation Date"), using the valuation
procedures set forth in the Trust's Declaration of Trust and the Acquiring
Fund's then current prospectuses and statement of additional information or such
other valuation procedures as shall be mutually agreed upon by the parties.
2.2 VALUATION OF SHARES. The net asset value per share of the Acquiring
Fund Shares shall be the net asset value per share computed as of the close of
business on the New York Stock Exchange on the Valuation Date, using the
valuation procedures set forth in the Trust's Declaration of Trust and the
Acquiring Fund's then current prospectuses and statement of additional
information.
2.3 SHARES TO BE ISSUED. The number of the Acquiring Fund Shares of
each class to be issued (including fractional shares, if any) in exchange for
the Selling Fund's assets shall be determined by multiplying the shares
outstanding of each class of the Selling Fund by the ratio computed by dividing
the net asset value per share of the Selling Fund attributable to each of its
classes by the net asset value per share of the respective classes of the
Acquiring Fund determined in accordance with paragraph 2.2. Holders of Class A,
Class B, Class C and Class Y shares of the Selling Fund will receive Class A,
Class B, Class C and Class Y shares, respectively, of the Acquiring Fund.
2.4 DETERMINATION OF VALUE. All computations of value shall be made by
State Street Bank and Trust Company in accordance with its regular practice in
pricing the shares and assets of the Acquiring Fund.
ARTICLE III
CLOSING AND CLOSING DATE
3.1 CLOSING DATE. The Closing (the "Closing") shall take place on or
about October 26, 1998 or such other date as the parties may agree to in writing
(the "Closing Date"). All acts taking place at the Closing shall be deemed to
take place simultaneously immediately prior to the opening of business on the
Closing Date unless otherwise provided. The Closing shall be held as of 9:00
a.m. at the offices of the Evergreen Funds, 200 Berkeley Street, Boston, MA
02116, or at such other time and/or place as the parties may agree.
3.2 CUSTODIAN'S CERTIFICATE. State Street Bank and Trust
Company, as custodian for the Selling Fund (the "Custodian"),
<PAGE>
shall deliver at the Closing a certificate of an authorized officer stating that
(a) the Selling Fund's portfolio securities, cash, and any other assets shall
have been delivered in proper form to the Acquiring Fund on the Closing Date;
and (b) all necessary taxes including all applicable federal and state stock
transfer stamps, if any, shall have been paid, or provision for payment shall
have been made, in conjunction with the delivery of portfolio securities by the
Selling Fund.
3.3 EFFECT OF SUSPENSION IN TRADING. In the event that on the Valuation
Date (a) the New York Stock Exchange or another primary trading market for
portfolio securities of the Acquiring Fund or the Selling Fund shall be closed
to trading or trading thereon shall be restricted; or (b) trading or the
reporting of trading on said Exchange or elsewhere shall be disrupted so that
accurate appraisal of the value of the net assets of the Acquiring Fund or the
Selling Fund is impracticable, the Valuation Date shall be postponed until the
first business day after the day when trading shall have been fully resumed and
reporting shall have been restored.
3.4 TRANSFER AGENT'S CERTIFICATE. Evergreen Service Company, as
transfer agent for the Selling Fund, shall deliver at the Closing a certificate
of an authorized officer stating that its records contain the names and
addresses of the Selling Fund Shareholders and the number and percentage
ownership of outstanding shares owned by each such shareholder immediately prior
to the Closing. The Acquiring Fund shall issue and deliver or cause Evergreen
Service Company, its transfer agent, to issue and deliver a confirmation
evidencing the Acquiring Fund Shares to be credited on the Closing Date to the
Secretary of the Trust or provide evidence satisfactory to the Selling Fund that
such Acquiring Fund Shares have been credited to the Selling Fund's account on
the books of the Acquiring Fund. At the Closing, each party shall deliver to the
other such bills of sale, checks, assignments, share certificates, if any,
receipts and other documents as such other party or its counsel may reasonably
request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS OF THE SELLING FUND. The Selling Fund represents
and warrants to the Acquiring Fund as follows:
(a) The Selling Fund is a separate investment series of a
Delaware business trust duly organized, validly existing, and in good standing
under the laws of the State of Delaware.
<PAGE>
(b) The Selling Fund is a separate investment series of a
Delaware business trust that is registered as an investment company classified
as a management company of the open-end type, and its registration with the
Securities and Exchange Commission (the "Commission") as an investment company
under the Investment Company Act of 1940, as amended (the "1940 Act"), is in
full force and effect.
(c) The current prospectuses and statement of additional
information of the Selling Fund conform in all material respects to the
applicable requirements of the Securities Act of 1933, as amended (the "1933
Act"), and the 1940 Act and the rules and regulations of the Commission
thereunder and do not include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(d) The Selling Fund is not, and the execution, delivery, and
performance of this Agreement (subject to shareholder approval) will not result,
in violation of any provision of the Trust's Declaration of Trust or By-Laws or
of any material agreement, indenture, instrument, contract, lease, or other
undertaking to which the Selling Fund is a party or by which it is bound.
(e) The Selling Fund has no material contracts or other
commitments (other than this Agreement) that will be terminated with liability
to it prior to the Closing Date, except for liabilities, if any, to be
discharged or reflected in the Statement of Assets and Liabilities as provided
in paragraph 1.3 hereof.
(f) Except as otherwise disclosed in writing to and accepted
by the Acquiring Fund, no litigation, administrative proceeding, or
investigation of or before any court or governmental body is presently pending
or to its knowledge threatened against the Selling Fund or any of its properties
or assets, which, if adversely determined, would materially and adversely affect
its financial condition, the conduct of its business, or the ability of the
Selling Fund to carry out the transactions contemplated by this Agreement. The
Selling Fund knows of no facts that might form the basis for the institution of
such proceedings and is not a party to or subject to the provisions of any
order, decree, or judgment of any court or governmental body that materially and
adversely affects its business or its ability to consummate the transactions
herein contemplated.
<PAGE>
(g) The financial statements of the Selling Fund at April 30,
1998 are in accordance with generally accepted accounting principles
consistently applied, and such statements (copies of which have been furnished
to the Acquiring Fund) fairly reflect the financial condition of the Selling
Fund as of such date, and there are no known contingent liabilities of the
Selling Fund as of such date not disclosed therein.
(h) Since April 30, 1998 there has not been any material
adverse change in the Selling Fund's financial condition, assets, liabilities,
or business other than changes occurring in the ordinary course of business, or
any incurrence by the Selling Fund of indebtedness maturing more than one year
from the date such indebtedness was incurred, except as otherwise disclosed to
and accepted by the Acquiring Fund. For the purposes of this subparagraph (h), a
decline in the net asset value of the Selling Fund shall not constitute a
material adverse change.
(i) At the Closing Date, all federal and other tax returns and
reports of the Selling Fund required by law to have been filed by such dates
shall have been filed, and all federal and other taxes shown due on said returns
and reports shall have been paid, or provision shall have been made for the
payment thereof. To the best of the Selling Fund's knowledge, no such return is
currently under audit, and no assessment has been asserted with respect to such
returns.
(j) For each fiscal year of its operation, the Selling Fund
has met the requirements of Subchapter M of the Code for qualification and
treatment as a regulated investment company and has distributed in each such
year all net investment income and realized capital gains.
(k) All issued and outstanding shares of the Selling Fund are,
and at the Closing Date will be, duly and validly issued and outstanding, fully
paid and non-assessable by the Selling Fund. All of the issued and outstanding
shares of the Selling Fund will, at the time of the Closing Date, be held by the
persons and in the amounts set forth in the records of the transfer agent as
provided in paragraph 3.4. The Selling Fund does not have outstanding any
options, warrants, or other rights to subscribe for or purchase any of the
Selling Fund shares, nor is there outstanding any security convertible into any
of the Selling Fund shares.
(l) At the Closing Date, the Selling Fund will have good and
marketable title to the Selling Fund's assets to be transferred to the Acquiring
Fund pursuant to paragraph 1.2 and full right, power, and authority to sell,
assign, transfer, and deliver such assets hereunder, and, upon delivery and
payment for
<PAGE>
such assets, the Acquiring Fund will acquire good and marketable title thereto,
subject to no restrictions on the full transfer thereof, including such
restrictions as might arise under the 1933 Act, other than as disclosed to the
Acquiring Fund and accepted by the Acquiring Fund.
(m) The execution, delivery, and performance of this Agreement
have been duly authorized by all necessary action on the part of the Selling
Fund and, subject to approval by the Selling Fund Shareholders, this Agreement
constitutes a valid and binding obligation of the Selling Fund, enforceable in
accordance with its terms, subject as to enforcement, to bankruptcy, insolvency,
reorganization, moratorium, and other laws relating to or affecting creditors'
rights and to general equity principles.
(n) The information to be furnished by the Selling Fund for
use in no-action letters, applications for orders, registration statements,
proxy materials, and other documents that may be necessary in connection with
the transactions contemplated hereby shall be accurate and complete in all
material respects and shall comply in all material respects with federal
securities and other laws and regulations thereunder applicable thereto.
(o) The Prospectus and Proxy Statement of the Selling Fund to
be included in the Registration Statement (as defined in paragraph 5.7)(other
than information therein that relates to the Acquiring Fund) will, on the
effective date of the Registration Statement and on the Closing Date, not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which such statements were made, not
misleading.
4.2 REPRESENTATIONS OF THE ACQUIRING FUND. The Acquiring
Fund represents and warrants to the Selling Fund as follows:
(a) The Acquiring Fund is a separate investment series of a
Delaware business trust duly organized, validly existing and in good standing
under the laws of the State of Delaware.
(b) The Acquiring Fund is a separate investment series of a
Delaware business trust that is registered as an investment company classified
as a management company of the open-end type, and its registration with the
Commission as an investment company under the 1940 Act is in full force and
effect.
<PAGE>
(c) The current prospectuses and statement of additional
information of the Acquiring Fund conform in all material respects to the
applicable requirements of the 1933 Act and the 1940 Act and the rules and
regulations of the Commission thereunder and do not include any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(d) The Acquiring Fund is not, and the execution, delivery and
performance of this Agreement will not result, in violation of the Trust's
Declaration of Trust or By-Laws or of any material agreement, indenture,
instrument, contract, lease, or other undertaking to which the Acquiring Fund is
a party or by which it is bound.
(e) Except as otherwise disclosed in writing to the Selling
Fund and accepted by the Selling Fund, no litigation, administrative proceeding
or investigation of or before any court or governmental body is presently
pending or to its knowledge threatened against the Acquiring Fund or any of its
properties or assets, which, if adversely determined, would materially and
adversely affect its financial condition and the conduct of its business or the
ability of the Acquiring Fund to carry out the transactions contemplated by this
Agreement. The Acquiring Fund knows of no facts that might form the basis for
the institution of such proceedings and is not a party to or subject to the
provisions of any order, decree, or judgment of any court or governmental body
that materially and adversely affects its business or its ability to consummate
the transactions contemplated herein.
(f) The financial statements of the Acquiring Fund at April
30, 1998 are in accordance with generally accepted accounting principles
consistently applied, and such statements (copies of which have been furnished
to the Selling Fund) fairly reflect the financial condition of the Acquiring
Fund as of such date, and there are no known contingent liabilities of the
Acquiring Fund as of such date not disclosed therein.
(g) Since April 30, 1998 there has not been any material
adverse change in the Acquiring Fund's financial condition, assets, liabilities,
or business other than changes occurring in the ordinary course of business, or
any incurrence by the Acquiring Fund of indebtedness maturing more than one year
from the date such indebtedness was incurred, except as otherwise disclosed to
and accepted by the Selling Fund. For the purposes of this subparagraph (g), a
decline in the net asset value of the Acquiring Fund shall not constitute a
material adverse change.
<PAGE>
(h) At the Closing Date, all federal and other tax returns and
reports of the Acquiring Fund required by law then to be filed by such dates
shall have been filed, and all federal and other taxes shown due on said returns
and reports shall have been paid or provision shall have been made for the
payment thereof. To the best of the Acquiring Fund's knowledge, no such return
is currently under audit, and no assessment has been asserted with respect to
such returns.
(i) For each fiscal year of its operation, the Acquiring Fund
has met the requirements of Subchapter M of the Code for qualification and
treatment as a regulated investment company and has distributed in each such
year all net investment income and realized capital gains.
(j) All issued and outstanding Acquiring Fund Shares are, and
at the Closing Date will be, duly and validly issued and outstanding, fully paid
and non-assessable. The Acquiring Fund does not have outstanding any options,
warrants, or other rights to subscribe for or purchase any Acquiring Fund
Shares, nor is there outstanding any security convertible into any Acquiring
Fund Shares.
(k) The execution, delivery, and performance of this Agreement
have been duly authorized by all necessary action on the part of the Acquiring
Fund, and this Agreement constitutes a valid and binding obligation of the
Acquiring Fund enforceable in accordance with its terms, subject as to
enforcement, to bankruptcy, insolvency, reorganization, moratorium, and other
laws relating to or affecting creditors' rights and to general equity
principles.
(l) The Acquiring Fund Shares to be issued and delivered to
the Selling Fund, for the account of the Selling Fund Shareholders, pursuant to
the terms of this Agreement will, at the Closing Date, have been duly authorized
and, when so issued and delivered, will be duly and validly issued Acquiring
Fund Shares, and will be fully paid and non-assessable.
(m) The information to be furnished by the Acquiring Fund for
use in no-action letters, applications for orders, registration statements,
proxy materials, and other documents that may be necessary in connection with
the transactions contemplated hereby shall be accurate and complete in all
material respects and shall comply in all material respects with federal
securities and other laws and regulations applicable thereto.
(n) The Prospectus and Proxy Statement (as defined in
paragraph 5.7) to be included in the Registration Statement (only
<PAGE>
insofar as it relates to the Acquiring Fund) will, on the effective date of the
Registration Statement and on the Closing Date, not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which such statements were made, not misleading.
(o) The Acquiring Fund agrees to use all reasonable efforts to
obtain the approvals and authorizations required by the 1933 Act, the 1940 Act,
and such of the state Blue Sky or securities laws as it may deem appropriate in
order to continue its operations after the Closing Date.
ARTICLE V
COVENANTS OF THE ACQUIRING FUND AND THE SELLING FUND
5.1 OPERATION IN ORDINARY COURSE. The Acquiring Fund and the Selling
Fund each will operate its business in the ordinary course between the date
hereof and the Closing Date, it being understood that such ordinary course of
business will include customary dividends and distributions.
5.2 APPROVAL OF SHAREHOLDERS. The Trust will call a meeting of the
Selling Fund Shareholders to consider and act upon this Agreement and to take
all other action necessary to obtain approval of the transactions contemplated
herein.
5.3 INVESTMENT REPRESENTATION. The Selling Fund covenants that the
Acquiring Fund Shares to be issued hereunder are not being acquired for the
purpose of making any distribution thereof other than in accordance with the
terms of this Agreement.
5.4 ADDITIONAL INFORMATION. The Selling Fund will assist the Acquiring
Fund in obtaining such information as the Acquiring Fund reasonably requests
concerning the beneficial ownership of the Selling Fund shares.
5.5 FURTHER ACTION. Subject to the provisions of this Agreement, the
Acquiring Fund and the Selling Fund will each take, or cause to be taken, all
action, and do or cause to be done, all things reasonably necessary, proper or
advisable to consummate and make effective the transactions contemplated by this
Agreement, including any actions required to be taken after the Closing Date.
5.6 STATEMENT OF EARNINGS AND PROFITS. As promptly as
practicable, but in any case within sixty days after the Closing
<PAGE>
Date, the Selling Fund shall furnish the Acquiring Fund, in such form as is
reasonably satisfactory to the Acquiring Fund, a statement of the earnings and
profits of the Selling Fund for federal income tax purposes that will be carried
over by the Acquiring Fund as a result of Section 381 of the Code, and which
will be reviewed by KPMG Peat Marwick LLP and certified by the Trust's President
and Treasurer.
5.7 PREPARATION OF FORM N-14 REGISTRATION STATEMENT. The Selling Fund will
provide the Acquiring Fund with information reasonably necessary for the
preparation of a prospectus, which will include the proxy statement, referred to
in paragraph 4.1(o) (the "Prospectus and Proxy Statement"), all to be included
in a Registration Statement on Form N-14 of the Acquiring Fund (the
"Registration Statement"), in compliance with the 1933 Act, the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and the 1940 Act in
connection with the meeting of the Selling Fund Shareholders to consider
approval of this Agreement and the transactions contemplated herein.
5.8 CAPITAL LOSS CARRYFORWARDS. As promptly as practicable, but in any
case within sixty days after the Closing Date, the Acquiring Fund and the
Selling Fund shall cause KPMG Peat Marwick LLP to issue a letter addressed to
the Acquiring Fund and the Selling Fund, in form and substance satisfactory to
the Funds, setting forth the federal income tax implications relating to capital
loss carryforwards (if any) of the Selling Fund and the related impact, if any,
of the proposed transfer of all of the assets of the Selling Fund to the
Acquiring Fund and the ultimate dissolution of the Selling Fund, upon the
shareholders of the Selling Fund.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLING FUND
The obligations of the Selling Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance by the
Acquiring Fund of all the obligations to be performed by it hereunder on or
before the Closing Date, and, in addition thereto, the following further
conditions:
6.1 All representations, covenants, and warranties of the Acquiring
Fund contained in this Agreement shall be true and correct as of the date hereof
and as of the Closing Date with the same force and effect as if made on and as
of the Closing Date, and the Acquiring Fund shall have delivered to the Selling
Fund a certificate executed in its name by the Trust's President or Vice
President and its Treasurer or Assistant Treasurer, in form and
<PAGE>
substance reasonably satisfactory to the Selling Fund and dated as of the
Closing Date, to such effect and as to such other matters as the Selling Fund
shall reasonably request.
6.2 The Selling Fund shall have received on the Closing Date an opinion
from Sullivan & Worcester LLP, counsel to the Acquiring Fund, dated as of the
Closing Date, in a form reasonably satisfactory to the Selling Fund, covering
the following points:
(a) The Acquiring Fund is a separate investment series of a
Delaware business trust duly organized, validly existing and in good standing
under the laws of the State of Delaware and has the power to own all of its
properties and assets and to carry on its business as presently conducted.
(b) The Acquiring Fund is a separate investment series of a
Delaware business trust registered as an investment company under the 1940 Act,
and, to such counsel's knowledge, such registration with the Commission as an
investment company under the 1940 Act is in full force and effect.
(c) This Agreement has been duly authorized, executed, and
delivered by the Acquiring Fund and, assuming due authorization, execution and
delivery of this Agreement by the Selling Fund, is a valid and binding
obligation of the Acquiring Fund enforceable against the Acquiring Fund in
accordance with its terms, subject as to enforcement, to bankruptcy, insolvency,
reorganization, moratorium, and other laws relating to or affecting creditors'
rights generally and to general equity principles.
(d) Assuming that a consideration therefor not less than the
net asset value thereof has been paid, the Acquiring Fund Shares to be issued
and delivered to the Selling Fund on behalf of the Selling Fund Shareholders as
provided by this Agreement are duly authorized and upon such delivery will be
legally issued and outstanding and fully paid and non-assessable, and no
shareholder of the Acquiring Fund has any preemptive rights in respect thereof.
(e) The Registration Statement, to such counsel's knowledge,
has been declared effective by the Commission and no stop order under the 1933
Act pertaining thereto has been issued, and to the knowledge of such counsel, no
consent, approval, authorization or order of any court or governmental authority
of the United States or the State of Delaware is required for consummation by
the Acquiring Fund of the transactions contemplated herein, except such as have
been obtained under the
<PAGE>
1933 Act, the 1934 Act and the 1940 Act, and as may be required under state
securities laws.
(f) The execution and delivery of this Agreement did not, and
the consummation of the transactions contemplated hereby will not, result in a
violation of the Trust's Declaration of Trust or By-Laws or any provision of any
material agreement, indenture, instrument, contract, lease or other undertaking
(in each case known to such counsel) to which the Acquiring Fund is a party or
by which it or any of its properties may be bound or to the knowledge of such
counsel, result in the acceleration of any obligation or the imposition of any
penalty, under any agreement, judgment, or decree to which the Acquiring Fund is
a party or by which it is bound.
(g) Only insofar as they relate to the Acquiring Fund, the
descriptions in the Prospectus and Proxy Statement of statutes, legal and
governmental proceedings and material contracts, if any, are accurate and fairly
present the information required to be shown.
(h) Such counsel does not know of any legal or governmental
proceedings, only insofar as they relate to the Acquiring Fund, existing on or
before the effective date of the Registration Statement or the Closing Date
required to be described in the Registration Statement or to be filed as
exhibits to the Registration Statement which are not described or filed as
required.
(i) To the knowledge of such counsel, no litigation or
administrative proceeding or investigation of or before any court or
governmental body is presently pending or threatened as to the Acquiring Fund or
any of its properties or assets and the Acquiring Fund is not a party to or
subject to the provisions of any order, decree or judgment of any court or
governmental body, which materially and adversely affects its business, other
than as previously disclosed in the Registration Statement.
Such opinion shall contain such assumptions and limitations as shall be in the
opinion of Sullivan & Worcester LLP appropriate to render the opinions expressed
therein.
In this paragraph 6.2, references to the Prospectus and Proxy Statement
include and relate to only the text of such Prospectus and Proxy Statement and
not to any exhibits or attachments thereto or to any documents incorporated by
reference therein.
ARTICLE VII
<PAGE>
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND
The obligations of the Acquiring Fund to complete the transactions
provided for herein shall be subject, at its election, to the performance by the
Selling Fund of all the obligations to be performed by it hereunder on or before
the Closing Date and, in addition thereto, the following conditions:
7.1 All representations, covenants, and warranties of the Selling Fund
contained in this Agreement shall be true and correct as of the date hereof and
as of the Closing Date with the same force and effect as if made on and as of
the Closing Date, and the Selling Fund shall have delivered to the Acquiring
Fund on the Closing Date a certificate executed in its name by the Trust's
President or Vice President and the Treasurer or Assistant Treasurer, in form
and substance satisfactory to the Acquiring Fund and dated as of the Closing
Date, to such effect and as to such other matters as the Acquiring Fund shall
reasonably request.
7.2 The Selling Fund shall have delivered to the Acquiring Fund a
statement of the Selling Fund's assets and liabilities, together with a list of
the Selling Fund's portfolio securities showing the tax costs of such securities
by lot and the holding periods of such securities, as of the Closing Date,
certified by the Treasurer of the Trust.
7.3 The Acquiring Fund shall have received on the Closing Date an
opinion of Sullivan & Worcester LLP, counsel to the Selling Fund, in a form
satisfactory to the Acquiring Fund covering the following points:
(a) The Selling Fund is a separate investment series of a
Delaware business trust duly organized, validly existing and in good standing
under the laws of the State of Delaware and has the power to own all of its
properties and assets and to carry on its business as presently conducted.
(b) The Selling Fund is a separate investment series of a
Delaware business trust registered as an investment company under the 1940 Act,
and, to such counsel's knowledge, such registration with the Commission as an
investment company under the 1940 Act is in full force and effect.
(c) This Agreement has been duly authorized, executed and
delivered by the Selling Fund and, assuming due authorization, execution, and
delivery of this Agreement by the Acquiring Fund, is a valid and binding
obligation of the Selling Fund enforceable against the Selling Fund in
accordance with its terms, subject as to enforcement, to bankruptcy, insolvency,
<PAGE>
reorganization, moratorium and other laws relating to or affecting creditors'
rights generally and to general equity principles.
(d) To the knowledge of such counsel, no consent, approval,
authorization or order of any court or governmental authority of the United
States or the State of Delaware is required for consummation by the Selling Fund
of the transactions contemplated herein, except such as have been obtained under
the 1933 Act, the 1934 Act and the 1940 Act, and as may be required under state
securities laws.
(e) The execution and delivery of this Agreement did not, and
the consummation of the transactions contemplated hereby will not, result in a
violation of the Trust's Declaration of Trust or By-laws, or any provision of
any material agreement, indenture, instrument, contract, lease or other
undertaking (in each case known to such counsel) to which the Selling Fund is a
party or by which it or any of its properties may be bound or, to the knowledge
of such counsel, result in the acceleration of any obligation or the imposition
of any penalty, under any agreement, judgment, or decree to which the Selling
Fund is a party or by which it is bound.
(f) Only insofar as they relate to the Selling Fund, the
descriptions in the Prospectus and Proxy Statement of statutes, legal and
government proceedings and material contracts, if any, are accurate and fairly
present the information required to be shown.
(g) Such counsel does not know of any legal or governmental
proceedings, insofar as they relate to the Selling Fund existing on or before
the date of mailing of the Prospectus and Proxy Statement and the Closing Date,
required to be described in the Prospectus and Proxy Statement or to be filed as
an exhibit to the Registration Statement which are not described or filed as
required.
(h) To the knowledge of such counsel, no litigation or
administrative proceeding or investigation of or before any court or
governmental body is presently pending or threatened as to the Selling Fund or
any of its respective properties or assets and the Selling Fund is neither a
party to nor subject to the provisions of any order, decree or judgment of any
court or governmental body, which materially and adversely affects its business
other than as previously disclosed in the Prospectus and Proxy Statement.
(i) Assuming that a consideration therefor of not less than
the net asset value thereof has been paid, and assuming that
<PAGE>
such shares were issued in accordance with the terms of the Selling Fund's
registration statement, or any amendment thereto, in effect at the time of such
issuance, all issued and outstanding shares of the Selling Fund are legally
issued and fully paid and non-assessable.
Such opinion shall contain such other assumptions and limitations as shall be in
the opinion of Sullivan & Worcester LLP appropriate to render the opinions
expressed therein.
In this paragraph 7.3, references to the Prospectus and Proxy Statement
include and relate to only the text of such Prospectus and Proxy Statement and
not to any exhibits or attachments thereto or to any documents incorporated by
reference therein.
ARTICLE VIII
FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING
FUND AND THE SELLING FUND
If any of the conditions set forth below do not exist on or before the
Closing Date with respect to the Selling Fund or the Acquiring Fund, the other
party to this Agreement shall, at its option, not be required to consummate the
transactions contemplated by this Agreement:
8.1 This Agreement and the transactions contemplated herein shall have
been approved by the requisite vote of the holders of the outstanding shares of
the Selling Fund in accordance with the provisions of the Trust's Declaration of
Trust and By-Laws and certified copies of the resolutions evidencing such
approval shall have been delivered to the Acquiring Fund. Notwithstanding
anything herein to the contrary, neither the Acquiring Fund nor the Selling Fund
may waive the conditions set forth in this paragraph 8.1.
8.2 On the Closing Date, the Commission shall not have issued an
unfavorable report under Section 25(b) of the 1940 Act, nor instituted any
proceeding seeking to enjoin the consummation of the transactions contemplated
by this Agreement under Section 25(c) of the 1940 Act and no action, suit or
other proceeding shall be threatened or pending before any court or governmental
agency in which it is sought to restrain or prohibit, or obtain damages or other
relief in connection with, this Agreement or the transactions contemplated
herein.
8.3 All required consents of other parties and all other consents,
orders, and permits of federal, state and local regulatory authorities
(including those of the Commission and of
<PAGE>
state Blue Sky securities authorities, including any necessary "no-action"
positions of and exemptive orders from such federal and state authorities) to
permit consummation of the transactions contemplated hereby shall have been
obtained, except where failure to obtain any such consent, order, or permit
would not involve a risk of a material adverse effect on the assets or
properties of the Acquiring Fund or the Selling Fund, provided that either party
hereto may for itself waive any of such conditions.
8.4 The Registration Statement shall have become effective under the
1933 Act, and no stop orders suspending the effectiveness thereof shall have
been issued and, to the best knowledge of the parties hereto, no investigation
or proceeding for that purpose shall have been instituted or be pending,
threatened or contemplated under the 1933 Act.
8.5 The Selling Fund shall have declared a dividend or dividends which,
together with all previous such dividends, shall have the effect of distributing
to the Selling Fund Shareholders all of the Selling Fund's net investment
company taxable income for all taxable periods ending on or prior to the Closing
Date (computed without regard to any deduction for dividends paid) and all of
its net capital gains realized in all taxable periods ending on or prior to the
Closing Date (after reduction for any capital loss carryforward).
8.6 The parties shall have received a favorable opinion of Sullivan &
Worcester LLP addressed to the Acquiring Fund and the Selling Fund substantially
to the effect that for federal income tax purposes:
(a) The transfer of all of the Selling Fund assets in exchange
for the Acquiring Fund Shares and the assumption by the Acquiring Fund of the
identified liabilities of the Selling Fund followed by the distribution of the
Acquiring Fund Shares to the Selling Fund in dissolution and liquidation of the
Selling Fund will constitute a "reorganization" within the meaning of Section
368(a)(1)(C) of the Code and the Acquiring Fund and the Selling Fund will each
be a "party to a reorganization" within the meaning of Section 368(b) of the
Code.
(b) No gain or loss will be recognized by the Acquiring Fund
upon the receipt of the assets of the Selling Fund solely in exchange for the
Acquiring Fund Shares and the assumption by the Acquiring Fund of the identified
liabilities of the Selling Fund.
(c) No gain or loss will be recognized by the Selling Fund
upon the transfer of the Selling Fund assets to the
<PAGE>
Acquiring Fund in exchange for the Acquiring Fund Shares and the assumption by
the Acquiring Fund of the identified liabilities of the Selling Fund or upon the
distribution (whether actual or constructive) of the Acquiring Fund Shares to
Selling Fund Shareholders in exchange for their shares of the Selling Fund.
(d) No gain or loss will be recognized by the Selling Fund
Shareholders upon the exchange of their Selling Fund shares for the Acquiring
Fund Shares in liquidation of the Selling Fund.
(e) The aggregate tax basis for the Acquiring Fund Shares
received by each Selling Fund Shareholder pursuant to the Reorganization will be
the same as the aggregate tax basis of the Selling Fund shares held by such
shareholder immediately prior to the Reorganization, and the holding period of
the Acquiring Fund Shares to be received by each Selling Fund Shareholder will
include the period during which the Selling Fund shares exchanged therefor were
held by such shareholder (provided the Selling Fund shares were held as capital
assets on the date of the Reorganization).
(f) The tax basis of the Selling Fund assets acquired by the
Acquiring Fund will be the same as the tax basis of such assets to the Selling
Fund immediately prior to the Reorganization, and the holding period of the
assets of the Selling Fund in the hands of the Acquiring Fund will include the
period during which those assets were held by the Selling Fund.
Notwithstanding anything herein to the contrary, neither the Acquiring
Fund nor the Selling Fund may waive the conditions set forth in this paragraph
8.6.
8.7 The Acquiring Fund shall have received from KPMG Peat Marwick LLP a
letter addressed to the Acquiring Fund, in form and substance satisfactory to
the Acquiring Fund, to the effect that:
(a) they are independent certified public accountants with
respect to the Selling Fund within the meaning of the 1933 Act and the
applicable published rules and regulations thereunder;
(b) on the basis of limited procedures agreed upon by the
Acquiring Fund and described in such letter (but not an examination in
accordance with generally accepted auditing standards), the Capitalization Table
appearing in the Registration Statement and Prospectus and Proxy Statement has
been obtained from and is consistent with the accounting records of the Selling
Fund; and
<PAGE>
(c) on the basis of limited procedures agreed upon by the
Acquiring Fund and described in such letter (but not an examination in
accordance with generally accepted auditing standards), the pro forma financial
statements that are included in the Registration Statement and Prospectus and
Proxy Statement were prepared based on the valuation of the Selling Fund's
assets in accordance with the Trust's Declaration of Trust and the Acquiring
Fund's then current prospectuses and statement of additional information
pursuant to procedures customarily utilized by the Acquiring Fund in valuing its
own assets;
(d) on the basis of limited procedures agreed upon by the
Acquiring Fund and described in such letter (but not an examination in
accordance with generally accepted auditing standards), the data utilized in the
calculations of the projected expense ratios appearing in the Registration
Statement and Prospectus and Proxy Statement agree with underlying accounting
records of the Selling Fund or with written estimates by Selling Fund's
management and were found to be mathematically correct.
In addition, unless waived by the Acquiring Fund, the Acquiring Fund shall
have received from KPMG Peat Marwick LLP a letter addressed to the Acquiring
Fund dated on the Closing Date, in form and substance satisfactory to the
Acquiring Fund, to the effect that on the basis of limited procedures agreed
upon by the Acquiring Fund (but not an examination in accordance with generally
accepted auditing standards), the calculation of net asset value per share of
the Selling Fund as of the Valuation Date was determined in accordance with
generally accepted accounting principles and the portfolio valuation practices
of the Acquiring Fund.
8.8 The Selling Fund shall have received from KPMG Peat Marwick LLP a
letter addressed to the Selling Fund, in form and substance satisfactory to the
Selling Fund, to the effect that:
(a) they are independent certified public accountants with
respect to the Acquiring Fund within the meaning of the 1933 Act and the
applicable published rules and regulations thereunder;
(b) on the basis of limited procedures agreed upon by the
Selling Fund and described in such letter (but not an examination in accordance
with generally accepted auditing standards) consisting of a reading of any
unaudited pro forma financial statements included in the Registration Statement
and Prospectus and Proxy Statement, and inquiries of appropriate officials of
the Trust responsible for financial and accounting matters, nothing came to
their attention that caused them to
<PAGE>
believe that such unaudited pro forma financial statements do not comply as to
form in all material respects with the applicable accounting requirements of the
1933 Act and the published rules and regulations thereunder;
(c) on the basis of limited procedures agreed upon by the
Selling Fund and described in such letter (but not an examination in accordance
with generally accepted auditing standards), the Capitalization Table appearing
in the Registration Statement and Prospectus and Proxy Statement has been
obtained from and is consistent with the accounting records of the Acquiring
Fund; and
(d) on the basis of limited procedures agreed upon by the
Selling Fund (but not an examination in accordance with generally accepted
auditing standards), the data utilized in the calculations of the projected
expense ratio appearing in the Registration Statement and Prospectus and Proxy
Statement agree with written estimates by each Fund's management and were found
to be mathematically correct.
ARTICLE IX
EXPENSES
9.1 Except as otherwise provided for herein, all expenses of the
transactions contemplated by this Agreement incurred by the Selling Fund and the
Acquiring Fund will be borne by First Union National Bank ("FUNB"). Such
expenses include, without limitation, (a) expenses incurred in connection with
the entering into and the carrying out of the provisions of this Agreement; (b)
expenses associated with the preparation and filing of the Registration
Statement under the 1933 Act covering the Acquiring Fund Shares to be issued
pursuant to the provisions of this Agreement; (c) registration or qualification
fees and expenses of preparing and filing such forms as are necessary under
applicable state securities laws to qualify the Acquiring Fund Shares to be
issued in connection herewith in each state in which the Selling Fund
Shareholders are resident as of the date of the mailing of the Prospectus and
Proxy Statement to such shareholders; (d) postage; (e) printing; (f) accounting
fees; (g) legal fees; and (h) solicitation costs of the transaction.
Notwithstanding the foregoing, the Acquiring Fund shall pay its own federal and
state registration fees.
ARTICLE X
ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
<PAGE>
10.1 The Acquiring Fund and the Selling Fund agree that neither party
has made any representation, warranty or covenant not set forth herein and that
this Agreement constitutes the entire agreement between the parties.
10.2 The representations, warranties, and covenants contained in this
Agreement or in any document delivered pursuant hereto or in connection herewith
shall not survive the consummation of the transactions contemplated hereunder.
ARTICLE XI
TERMINATION
11.1 This Agreement may be terminated by the mutual agreement of the
Acquiring Fund and the Selling Fund. In addition, either the Acquiring Fund or
the Selling Fund may at its option terminate this Agreement at or prior to the
Closing Date because:
(a) of a breach by the other of any representation, warranty,
or agreement contained herein to be performed at or prior to the Closing Date,
if not cured within 30 days; or
(b) a condition herein expressed to be precedent to the
obligations of the terminating party has not been met and it reasonably appears
that it will not or cannot be met.
11.2 In the event of any such termination, in the absence of willful
default, there shall be no liability for damages on the part of either the
Acquiring Fund, the Selling Fund, the Trust, the respective Trustees or
officers, to the other party or its Trustees or officers, but each shall bear
the expenses incurred by it incidental to the preparation and carrying out of
this Agreement as provided in paragraph 9.1.
ARTICLE XII
AMENDMENTS
12.1 This Agreement may be amended, modified, or supplemented in such
manner as may be mutually agreed upon in writing by the authorized officers of
the Selling Fund and the Acquiring Fund; provided, however, that following the
meeting of the Selling Fund Shareholders called by the Selling Fund pursuant to
paragraph 5.2 of this Agreement, no such amendment may have the effect of
changing the provisions for determining the number of the Acquiring Fund Shares
to be issued to the Selling Fund Shareholders under this Agreement to the
detriment of such shareholders without their further approval.
<PAGE>
ARTICLE XIII
HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT;
LIMITATION OF LIABILITY
13.1 The Article and paragraph headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
13.2 This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original.
13.3 This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware, without giving effect to the conflicts
of laws provisions thereof.
13.4 This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but, except as provided in
this paragraph, no assignment or transfer hereof or of any rights or obligations
hereunder shall be made by any party without the written consent of the other
party. Nothing herein expressed or implied is intended or shall be construed to
confer upon or give any person, firm, or corporation, other than the parties
hereto and their respective successors and assigns, any rights or remedies under
or by reason of this Agreement.
13.5 It is expressly agreed that the obligations of the Acquiring Fund
and the Selling Fund hereunder shall not be binding upon any of the Trustees,
shareholders, nominees, officers, agents, or employees of the Trust personally,
but shall bind only the trust property of the Acquiring Fund and of the Selling
Fund, as provided in the Declaration of Trust of the Trust. The execution and
delivery of this Agreement have been authorized by the Trustees of the Trust on
behalf of the Acquiring Fund and the Selling Fund and signed by authorized
officers of the Trust, acting as such, and neither such authorization by such
Trustees nor such execution and delivery by such officers shall be deemed to
have been made by any of them individually or to impose any liability on any of
them personally, but shall bind only the trust property of the Acquiring Fund
and of the Selling Fund as provided in the Declaration of Trust of the Trust.
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement, all
as of the date first written above.
EVERGREEN INTERNATIONAL
TRUST ON BEHALF OF EVERGREEN
INTERNATIONAL GROWTH FUND
By:
Name:
Title:
EVERGREEN INTERNATIONAL TRUST
ON BEHALF OF EVERGREEN
INTERNATIONAL EQUITY FUND
By:
Name:
Title:
<PAGE>
EXHIBIT E
A DISCUSSION WITH YOUR FUND MANAGER
[PICTURE OF GILMAN GUNN APPEARS HERE]
Q. GILMAN, HOW WOULD YOU DESCRIBE THE PERFORMANCE OF THE FUND DURING THE PAST
YEAR?
A. I think the Fund has performed quite well. For the 12 months that ended on
October 31, 1997, Keystone International Fund had a total return of 15.69%,
outperforming its benchmark, the Morgan Stanley Capital International EAFE
Index, which had a return of 4.63%. The EAFE Index measures performance of
stocks in Europe, Australia and the Far East.
Q. WHAT CONTRIBUTED TO THIS STRONG, RELATIVE PERFORMANCE?
A. There were several factors. First, during a period of strength by the U.S.
dollar, we hedged part of our foreign currency exposure. This strategy has been
successful in adding to the performance of the Fund. Second, we had a heavy
emphasis on Europe throughout the year. At the end of the fiscal year, the
Fund's weighting in Europe was approximately 60% of net assets. In general the
European markets have increased by 15% to 40% during the 12 month period in
local terms, although these local returns were mitigated by the fall of the
currencies against the U.S. dollar. Third, we have kept our exposure in Japan
and the Far East very moderate. Our emphasis on emerging markets, in general,
has been very light, less than 10%, throughout the year. Earlier in the year, we
did have larger weightings in Latin America, and this did help the performance
of the Fund.
Q. WHY HAS EUROPE BEEN SUCH A RELATIVELY STRONG PERFORMER?
A. Europe has presented good investment opportunities for several reasons.
First, the weaker European currencies have helped European exporters become more
competitive against U.S. companies. Second, lower interest rates have been good
for European companies. Third, many European companies have started
restructuring and cost-cutting programs, and these restructurings have added to
the bottom line, even in a period of flat economic growth. Fourth, there has
been a major portfolio shift in Europe, as people have moved out of cash and
bonds and into equities, and this shift has helped the European equity markets.
Q. JAPAN IS THE WORLD'S SECOND LARGEST MARKET, AND YET THE FUND'S WEIGHTING IN
JAPAN HAS BEEN REDUCED FROM ABOUT 20% OF ASSETS TO LESS THAN 7%. WHY IS THAT?
A. Japan continues to be very disappointing. In general, we have wanted to keep
our exposure light. We have invested in some major Japanese exporters, and the
weak yen and strong dollar have helped these investments. One major holding that
has been a very strong performer is Sony Corp. We also have invested in some
Japanese pharmaceutical companies and property and casualty companies.
There are some good things happening in Japan. Interest rates are very low,
and the financial system is slowly improving. But the overall market has been
hurt throughout the year by the lack of domestic growth, and more recently by
the fallout from the Asian problems.
10
<PAGE>
KEYSTONE INTERNATIONAL FUND INC.
We expect we will be keeping our exposure to the Japanese market fairly light.
We are very lightly weighted, and have been lightly weighted, in Southeast
Asia and Asia. We think Asia will continue to be a volatile area. There are
longer-term structural problems that need to be addressed.
Q. WHAT INDUSTRIES HAVE YOU BEEN EMPHASIZING?
A. We have tended to be conservative. Several of the industries we have
emphasized have been fairly defensive in nature. These include pharmaceuticals,
<PAGE>
healthcare, food and beverages, and energy. We have been underweighted in
technology and Japanese banks.
Q. WHAT ARE SOME OF THE COMPANIES THAT HAVE CONTRIBUTED TO THE PERFORMANCE?
A. Some of our best investments have been global companies with strong
franchises. Many of them also have been restructuring to increase their
efficiency and competitiveness.
Philips Electronics NV, a Dutch company that is the Fund's third largest
holding, is a good example of a company that is benefitting from restructuring,
cutting costs and getting out of its non-core businesses. This is also a company
that has a very large market share in its primary businesses. It is dominant in
Europe.
Other companies that have helped the fund include the largest holding, Nestle
SA, which is prominent globally; British Petroleum Co. Plc, which has been
restructuring; Societe Nationale Elf Aquitaine of France, another large oil
company that is benefitting from restructuring; and Novartis AG, our largest
pharmaceutical company.
One very strong performer has been Holderbank Financiere Glarus AG, a Swiss
company. This corporation owns cement companies all over the world, particularly
in emerging markets, and is very well run. The cement industry is becoming more
consolidated, with fewer players, and a few are becoming dominant; therefore,
pricing is becoming easier for them.
All these companies have been top ten holdings, so their performance has
helped the Fund.
Q. GILMAN, THE UNITED STATES STOCK MARKET HAS OUTPERFORMED FOREIGN MARKETS FOR
THE PAST SEVERAL YEARS. WHY DOES IT STILL MAKE SENSE TO INVEST INTERNATIONALLY,
ESPECIALLY IN LIGHT OF THE VOLATILITY OF FOREIGN MARKETS?
A. Volatility is not limited to outside the United States. There are many people
who think the U.S. market is highly valued after significantly outperforming the
rest of the world markets over the past several years. U.S. corporations have
significantly benefitted during the past few years from cost-cuttings and
restructurings. This trend just started over the last two years in Europe and is
only just beginning in Japan. As a result, looking ahead, there will be more
investment opportunities from restructuring outside the United States than
inside. In addition, the strength of the U.S. dollar will make it more difficult
for U.S. exporters to compete in the international markets, while foreign
exporters should have an easier time. Finally, outside the United states there
are many opportunities that did not exist within the United States. One example
is privatization.
It is true that markets outside the United States can be more volatile. We
have tried to be cognizant of the risks as we've invested, and this awareness
has helped the fund achieve competitive performance with below-average risk.
Q. GILMAN, WHAT IS YOUR OUTLOOK?
A. We see opportunities, particularly in Europe where economies are growing,
interest rates are low, and corporations are restructuring to increase their
efficiency and competitiveness. We have about half the Fund's assets in Europe,
and we expect this emphasis to continue. We are less optimistic about the
near-term opportunities in Japan and Asia, and we expect to keep our weightings
modest in those regions, concentrating on selective opportunities, such as
Japanese exporters
11
<PAGE>
that have been helped by the strength of the U.S. dollar. We also expect to keep
a fairly modest weighting in the emerging markets, less than 10%, although we
will be available to take advantage of selective opportunities.
We have been very mindful of the recent volatility in the emerging markets,
and we expect to have light weightings there. Our relatively large cash
<PAGE>
weighting, at about 22% at the end of the fiscal year, as well as active
currency management should help reduce the risk of the Fund. We believe there
are some very attractive opportunities in international investing, and it makes
more sense than ever to have part of one's portfolio diversified
internationally.
<TABLE>
<CAPTION>
TOP 10 HOLDINGS
as of October 31, 1997 as a percentage of net assets
<S> <C>
Nestle SA (Switzerland) 2.7%
- - -----------------------------------------------------------------------------
Novartis AG (Switzerland) 2.6%
- - -----------------------------------------------------------------------------
Philips Electronics NV (Netherlands) 2.4%
- - -----------------------------------------------------------------------------
British Petroleum Co. Plc (U.K.) 2.3%
- - -----------------------------------------------------------------------------
Karstadt AG (Germany) 2.1%
- - -----------------------------------------------------------------------------
Societe Nationale Elf Aquitaine (France) 2.1%
- - -----------------------------------------------------------------------------
Holderbank Financiere Glarus AG (Switzerland) 2.0%
- - -----------------------------------------------------------------------------
B.A.T. Industries Plc (U.K.) 1.9%
- - -----------------------------------------------------------------------------
Sony Corp. (Japan) 1.8%
- - -----------------------------------------------------------------------------
Telecom Italia SpA (Italy) 1.7%
- - -----------------------------------------------------------------------------
</TABLE>
<PAGE>
KEYSTONE INTERNATIONAL FUND INC.
GROWTH OF AN INVESTMENT
[CHART APPEARS HERE] [CHART APPEARS HERE]
<TABLE>
<CAPTION>
HISTORICAL PERFORMANCE as of October 31, 1997
- - ----------------------------------------------------------------------
<S> <C>
Cumulative Total Return
1 year w/o sales charge 15.69%
1 year w/sales charge* 12.69%
5 years 72.94%
10 years 87.31%
Average Annual Total Return
1 year w/o sales charge 15.69%
1 year w/sales charge* 12.69%
5 years 11.58%
10 years 6.48%
</TABLE>
* Adjusted for maximum contingent deferred sales charge of 3.0% for those
investors who sold fund shares after one calendar year.
<PAGE>
International investing involves increased risk and volatility.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
Acquisition of the Assets of
EVERGREEN INTERNATIONAL EQUITY FUND
a Series of
EVERGREEN INTERNATIONAL TRUST
200 Berkeley Street
Boston, Massachusetts 02116
(800) 343-2898
By and In Exchange For Shares of
EVERGREEN INTERNATIONAL GROWTH FUND
a Series of
EVERGREEN INTERNATIONAL TRUST
200 Berkeley Street
Boston, Massachusetts 02116
(800) 343-2898
This Statement of Additional Information, relating specifically to the
proposed transfer of the assets and liabilities of Evergreen International
Equity Fund ("International Equity"), a series of Evergreen International Trust,
to Evergreen International Growth Fund ("International Growth"), a series of
Evergreen International Trust, in exchange for Class A shares (to be issued to
holders of Class A shares of International Equity), Class B shares (to be issued
to holders of Class B shares of International Equity), Class C shares (to be
issued to holders of Class C shares of International Equity) and Class Y shares
(to be issued to holders of Class Y shares of International Equity) of
beneficial interest, $.001 par value per share, of International Growth,
consists of this cover page and the following described documents, each of which
is attached hereto and incorporated by reference herein:
(1) The Statement of Additional Information of
International Growth and International Equity dated
March 1, 1998;
(2) Annual Report of International Equity for the year ended
October 31, 1997;
(3) Semi-Annual Report of International Equity for the six month
period ended April 30, 1998;
<PAGE>
(4) Annual Report of International Growth (formerly known as
Keystone International Fund Inc.) for the year ended October
31, 1997;
(5) Semi-Annual Report of International Growth for the six month
period ended April 30, 1998; and
(6) Pro-Forma Combining Financial Statements for April 30, 1998
and the twelve months then ended (unaudited).
This Statement of Additional Information, which is not a prospectus,
supplements, and should be read in conjunction with, the Prospectus/Proxy
Statement of International Growth and International Equity dated September 3,
1998. A copy of the Prospectus/Proxy Statement may be obtained without charge by
calling or writing to International Growth or International Equity at the
telephone numbers or addresses set forth above.
The date of this Statement of Additional Information is September 3,
1998.
<PAGE>
EVERGREEN INTERNATIONAL TRUST
200 BERKELEY STREET
BOSTON, MASSACHUSETTS 02116
(800) 633-2700
INTERNATIONAL AND GLOBAL GROWTH FUNDS
STATEMENT OF ADDITIONAL INFORMATION
MARCH 1, 1998
EVERGREEN EMERGING MARKETS GROWTH FUND ("EMERGING MARKETS")
EVERGREEN INTERNATIONAL EQUITY FUND ("INTERNATIONAL EQUITY")
EVERGREEN GLOBAL LEADERS FUND ("GLOBAL LEADERS")
EVERGREEN GLOBAL OPPORTUNITIES FUND ("GLOBAL OPPORTUNITIES")
EVERGREEN INTERNATIONAL GROWTH FUND ("INTERNATIONAL GROWTH")
EVERGREEN PRECIOUS METALS FUND ("PRECIOUS METALS")
EVERGREEN LATIN AMERICA FUND ("LATIN AMERICA")
EVERGREEN NATURAL RESOURCES FUND ("NATURAL RESOURCES")
(EACH A "FUND"; TOGETHER, THE "FUNDS")
EACH FUND IS A SERIES OF AN OPEN-END MANAGEMENT
INVESTMENT COMPANY KNOWN AS EVERGREEN
INTERNATIONAL TRUST (THE "TRUST").
This Statement of Additional Information ("SAI") pertains to all
classes of shares of the Funds listed above. It is not a prospectus and should
be read in conjunction with the Funds' prospectuses dated March 1, 1998, as
supplemented from time to time. The Funds are offered through two separate
prospectuses: one offering Class A, Class B and Class C shares of each Fund and
one offering Class Y shares of each Fund except Natural Resources and Precious
Metals. You may obtain any of these prospectuses from Evergreen Distributor,
Inc.
23569
<PAGE>
TABLE OF CONTENTS
FUND INVESTMENTS............................................................3
General Information..............................................3
Fundamental Policies...............................................9
Investment Guidelines.............................................10
MANAGEMENT OF THE TRUST....................................................11
PRINCIPAL HOLDERS OF FUND SHARES...........................................14
INVESTMENT ADVISORY AND OTHER SERVICES.....................................19
Investment Adviser................................................19
Investment Advisory Agreements....................................21
Distributor.......................................................22
Distribution Plans and Agreements.................................22
Additional Service Providers......................................23
BROKERAGE..................................................................24
Brokerage Commissions............................................ 24
Selection of Brokers..............................................24
Simultaneous Transactions........................................ 25
TRUST ORGANIZATION........................................................ 25
Form of Organization..............................................25
Description of Shares.............................................25
Voting Rights.....................................................25
Limitation of Trustees' Liability.................................26
PURCHASE, REDEMPTION AND PRICING OF SHARES.................................26
How the Funds Offer Shares to the Public..........................26
Contingent Deferred Sales Charge..................................27
Sales Charge Waivers or Reductions................................27
Exchanges.........................................................29
<PAGE>
Calculation of Net Asset Value Per Share..........................29
Valuation of Portfolio Securities.................................30
Shareholder Services..............................................30
PRINCIPAL UNDERWRITER......................................................30
ADDITIONAL TAX INFORMATION.................................................31
Requirements for Qualification as a
Registered Investment Company...............................31
Taxes on Distributions............................................31
Taxes on the Sale or Exchange of Fund Shares......................32
Other Tax Considerations..........................................33
FINANCIAL INFORMATION......................................................33
Expenses..........................................................33
Brokerage Commissions Paid........................................35
Computation of Class A Offering Price.............................36
Performance.......................................................37
ADDITIONAL INFORMATION.....................................................39
APPENDIX A................................................................A-1
23569
2
<PAGE>
FUND INVESTMENTS
GENERAL INFORMATION
The investment objective of each Fund and a description of the
securities in which each Fund may invest are set forth in each Fund's
prospectus. The following expands upon the discussion in the prospectuses
regarding certain investments of the Fund.
U.S. Government Securities
Each Fund may invest in securities issued or guaranteed by U.S.
Government agencies or instrumentalities.
These securities are backed by (1) the discretionary authority of the
U.S. Government to purchase certain obligations of agencies or instrumentalities
or (2) the credit of the agency or instrumentality issuing the obligations.
Some government agencies and instrumentalities may not receive
financial support from the U.S. Government. Examples of such agencies are:
(i) Farm Credit System, including the National Bank for
Cooperatives, Farm Credit Banks and Banks for Cooperatives;
(ii) Farmers Home Administration;
(iii) Federal Home Loan Banks;
(iv) Federal Home Loan Mortgage Corporation;
(v) Federal National Mortgage Association; and
(vi) Student Loan Marketing Association.
Securities Issued by the Government National Mortgage Association ("GNMA")
The Funds may invest in securities issued by the GNMA, a corporation
wholly-owned by the U.S. Government. GNMA securities or "certificates" represent
ownership in a pool of underlying mortgages. The timely payment of principal and
interest due on these securities is guaranteed.
Unlike conventional bonds, the principal on GNMA certificates is not
paid at maturity but over the life of the security in scheduled monthly
payments. While mortgages pooled in a GNMA certificate may have maturities of up
to 30 years, the certificate itself will have a shorter average maturity and
less principal volatility than a comparable 30-year bond.
The market value and interest yield of GNMA certificates can vary due
not only to market fluctuations, but also to early prepayments of mortgages
within the pool. Since prepayment rates vary widely, it is impossible to
accurately predict the average maturity of a GNMA pool. In addition to the
guaranteed principal payments, GNMA certificates may also make unscheduled
<PAGE>
principal payments resulting from prepayments on the underlying mortgages.
23569
3
<PAGE>
Although GNMA certificates may offer yields higher than those available
from other types of U.S. Government securities, they may be less effective as a
means of locking in attractive long- term rates because of the prepayment
feature. For instance, when interest rates decline, prepayments are likely to
increase as the holders of the underlying mortgages seek refinancing. As a
result, the value of a GNMA certificate is not likely to rise as much as the
value of a comparable debt security would in response to same decline. In
addition, these prepayments can cause the price of a GNMA certificate originally
purchased at a premium to decline in price compared to its par value, which may
result in a loss.
When-Issued, Delayed-Delivery and Forward Commitment Transactions
The Funds may purchase securities on a when-issued or delayed delivery
basis and may purchase or sell securities on a forward commitment basis.
Settlement of such transactions normally occurs within a month or more after the
purchase or sale commitment is made.
The Funds may purchase securities under such conditions only with the
intention of actually acquiring them, but may enter into a separate agreement to
sell the securities before the settlement date. Since the value of securities
purchased may fluctuate prior to settlement, a Fund may be required to pay more
at settlement than the security is worth. In addition, the purchaser is not
entitled to any of the interest earned prior to settlement.
Upon making a commitment to purchase a security on a when-issued,
delayed delivery or forward commitment basis, a Fund will hold liquid assets
worth at least the equivalent of the amount due. The liquid assets will be
monitored on a daily basis and adjusted as necessary to maintain the necessary
value.
Purchases made under such conditions are a form of leveraging and may
involve the risk that yields secured at the time of commitment may be lower than
otherwise available by the time settlement takes place, causing an unrealized
loss to the fund. In addition, when a Fund engages in such purchases, it relies
on the other party to consummate the sale. If the other party fails to perform
its obligations, the Fund may miss the opportunity to obtain a security at a
favorable price or yield.
Loans of Securities
To generate income, each Fund may lend portfolio securities to
broker-dealers and other financial institutions. A Fund will require borrowers
to provide collateral in cash or government securities at least equal to the
value of the securities loaned. A Fund may invest such collateral in additional
portfolio securities, such as U.S. Treasury notes, certificates of deposit,
other high-grade, short-term obligations or interest-bearing cash equivalents.
While securities are on loan, the borrower will pay a Fund any income accruing
on the security.
Each Fund may make loans only to borrowers which meet credit standards
set by the Board of Trustees. Income to be earned from the loan must justify the
attendant risks. If a borrower fails financially, a Fund may have difficulty
recovering the securities lent or may lose its right to the collateral.
Each Fund has the right to call a loan and obtain the securities lent
upon giving notice of not more than five business days.
Repurchase Agreements
The Funds may enter into repurchase agreements with entities that are
registered as U.S. Government securities dealers, including member banks of the
Federal Reserve System having at least $1 billion in assets, primary dealers in
U.S. Government securities or other financial institutions believed by the
Adviser (as defined later) to be creditworthy. In a repurchase agreement, a Fund
obtains a security and
23569
<PAGE>
4
<PAGE>
simultaneously commits to return the security to the seller at a set price
(including principal and interest) within period of time usually not exceeding
seven days. The resale price reflects the purchase price plus an agreed upon
market rate of interest which is unrelated to the coupon rate or maturity of the
underlying security. A repurchase agreement involves the obligation of the
seller to pay the agreed upon price, which obligation is in effect secured by
the value of the underlying security.
A Fund or its custodian will take possession of the securities subject
to repurchase agreements, and these securities will be marked to market daily.
To the extent that the original seller does not repurchase the securities from a
Fund, a Fund could receive less than the repurchase price on any sale of such
securities. In the event that such a defaulting seller filed for bankruptcy or
became insolvent, disposition of such securities by the Fund might be delayed
pending court action. Each Fund's Adviser believes that under the regular
procedures normally in effect for custody of the Fund's portfolio securities
subject to repurchase agreements, a court of competent jurisdiction would rule
in favor of the Fund and allow retention or disposition of such securities. The
Funds will only enter into repurchase agreements with banks and other recognized
financial institutions, such as broker-dealers, which are deemed by the
investment adviser to be creditworthy pursuant to guidelines established by the
Board of Trustees.
Reverse Repurchase Agreements
Each Fund may enter into reverse repurchase agreements. These
transactions are similar to borrowing cash. In a reverse repurchase agreement, a
Fund transfers possession of a portfolio instrument to another person, such as a
financial institution, broker, or dealer, in return for a percentage of the
instrument's market value in cash, and agrees that on a stipulated date in the
future the Fund will repurchase the portfolio instrument by remitting the
original consideration plus interest at an agreed upon rate.
The use of reverse repurchase agreements may enable a Fund to avoid
selling portfolio instruments at a time when a sale may be deemed to be
disadvantageous, but the ability to enter into reverse repurchase agreements
does not ensure that the Fund will be able to avoid selling portfolio
instruments at a disadvantageous time.
When effecting reverse repurchase agreements, liquid assets of a Fund,
in a dollar amount sufficient to make payment for the obligations to be
purchased, are segregated at the trade date. These securities are marked to
market daily and maintained until the transaction is settled.
Options
The Funds may buy or sell (i.e., write) put and call options on
securities they hold or intends to acquire. The Funds may also buy and sell
options on financial futures contracts. The Funds will use options as a hedge
against decreases or increases in the value of securities it holds or intends to
acquire. The Funds may purchase put and call options for the purpose of
offsetting previously written put and call options of the same series.
The Funds may write only covered options. With regard to a call option,
this means that a Fund will own, for the life of the option, the securities
subject to the call option. Each Fund will cover put options by holding, in a
segregated account, liquid assets having a value equal to or greater than the
price of securities subject to the put option. If a Fund is unable to effect a
closing purchase transaction with respect to the covered options it has sold, it
will not be able to sell the underlying securities or dispose of assets held in
a segregated account until the options expire or are exercised.
Futures Transactions
Each Fund may enter into currency and other financial futures contracts
and write options on such
23569
5
<PAGE>
<PAGE>
contracts. Each Fund intends to enter into such contracts and related options
for hedging purposes. Each Fund will enter into futures contracts on securities,
currencies or indices in order to hedge against changes in interest or exchange
rates or securities prices. A futures contract on securities or currencies is an
agreement to buy or sell securities or currencies at a specified price during a
designated month. A futures contract on a securities index does not involve the
actual delivery of securities, but merely requires the payment of a cash
settlement based on changes in the securities index. A Fund does not make
payment or deliver securities upon entering into a futures contract. Instead, it
puts down a margin deposit, which is adjusted to reflect changes in the value of
the contract and which continues until the contract is terminated.
Each Fund may sell or purchase futures contracts. When a futures
contract is sold by a Fund, the value of the contract will tend to rise when the
value of the underlying securities declines and to fall when the value of such
securities or currencies increases. Thus, each Fund sells futures contracts in
order to offset a possible decline in the value of its securities or currencies.
If a futures contract is purchased by a Fund, the value of the contract will
tend to rise when the value of the underlying securities or currencies increases
and to fall when the value of such securities or currencies declines. Each Fund
intends to purchase futures contracts in order to establish what is believed by
the Adviser to be a favorable price and rate of return for securities, or
favorable exchange rate for currencies, the Fund intends to purchase.
Each Fund also intends to purchase put and call options on futures
contracts for hedging purposes. A put option purchased by a Fund would give it
the right to assume a position as the seller of a futures contract. A call
option purchased by a Fund would give it the right to assume a position as the
purchaser of a futures contract. The purchase of an option on a futures contract
requires a Fund to pay a premium. In exchange for the premium, a Fund becomes
entitled to exercise the benefits, if any, provided by the futures contract, but
is not required to take any action under the contract. If the option cannot be
exercised profitably before it expires, a Fund's loss will be limited to the
amount of the premium and any transaction costs.
Each Fund may enter into closing purchase and sale transactions in
order to terminate a futures contract and may sell put and call options for the
purpose of closing out its options positions. A Fund's ability to enter into
closing transactions depends on the development and maintenance of a liquid
secondary market. There is no assurance that a liquid secondary market will
exist for any particular contract or at any particular time. As a result, there
can be no assurance that a Fund will be able to enter into an offsetting
transaction with respect to a particular contract at a particular time. If a
Fund is not able to enter into an offsetting transaction, the Fund will continue
to be required to maintain the margin deposits on the contract and to complete
the contract according to its terms, in which case it would continue to bear
market risk on the transaction.
Although futures and options transactions are intended to enable a Fund
to manage market, interest rate or exchange rate risk, unanticipated changes in
market prices, interest rates or exchange rates could result in poorer
performance than if it had not entered into these transactions. Even if the
Adviser correctly predicts interest or exchange rate movements, a hedge could be
unsuccessful if changes in the value of a Fund's futures position did not
correspond to changes in the value of its investments. This lack of correlation
between a Fund's futures and securities or currencies positions may be caused by
differences between the futures and securities or currencies markets or by
differences between the securities or currencies underlying a Fund's futures
position and the securities or currencies held by or to be purchased for a Fund.
Each Fund's Adviser will attempt to minimize these risks through careful
selection and monitoring of the Fund's futures and options positions.
The Funds do not intend to use futures transactions for speculation or
leverage. Each Fund has the ability to write options on futures, but currently
intends to write such options only to close out options purchased by a Fund.
Each Fund will not change these policies without supplementing the information
in the prospectus and SAI.
23569
6
<PAGE>
The Funds will not maintain open positions in futures contracts it has
sold or call options it has written on futures contracts if, in the aggregate,
the value of the open positions (marked to market) exceeds the current market
<PAGE>
value of its securities portfolio plus or minus the unrealized gain or loss on
those open positions, adjusted for the correlation of volatility between the
hedged securities and the futures contracts. If this limitation is exceeded at
any time, each Fund will take prompt action to close out a sufficient number of
open contracts to bring its open futures and options positions within this
limitation.
"Margin" in Futures Transactions
Unlike the purchase or sale of a security, the Funds do not pay or
receive money upon the purchase or sale of a futures contract. Rather, each Fund
is required to deposit an amount of "initial margin" in cash or U.S. Treasury
bills with its custodian (or the broker, if legally permitted). The nature of
initial margin in futures transactions is different from that of margin in
securities transactions in that futures contract initial margin does not involve
the borrowing of funds by a Fund to finance the transactions. Initial margin is
in the nature of a performance bond or good faith deposit on the contract which
is returned to a Fund upon termination of the futures contract, assuming all
contractual obligations have been satisfied.
A futures contract held by a Fund is valued daily at the official
settlement price of the exchange on which it is traded. Each day, a Fund pays or
receives cash, called "variation margin", equal to the daily change in value of
the futures contract. This process is known as "marking to market". Variation
margin does not represent a borrowing or loan by a Fund but is instead
settlement between the Fund and the broker of the amount one would owe the other
if the futures contract expired. In computing its daily net asset value, a Fund
will mark-to-market its open futures positions. The Funds are also required to
deposit and maintain margin when it writes call options on futures contracts.
Foreign Securities
Each Fund may invest in foreign securities or U.S. securities traded in
foreign markets. Permissible investments may consist of obligations of foreign
branches of U.S. banks and of foreign banks, including European certificates of
deposit, European time deposits, Canadian time deposits and Yankee certificates
of deposit, and investments in Canadian commercial paper, foreign securities and
Europaper. These instruments may subject a Fund to investment risks that differ
in some respects from those related to investments in obligations of U.S.
issuers. Such risks include future adverse political and economic developments;
the possible imposition of withholding taxes on interest or other income; the
possible seizure, nationalization, or expropriation of foreign deposits; the
possible establishment of exchange controls or taxation at the source; greater
fluctuations in value due to changes in exchange rates, or the adoption of other
foreign governmental restrictions which might adversely affect the payment of
principal and interest on such obligations. Such investments may also entail
higher custodial fees and sales commissions than domestic investments. Foreign
issuers of securities or obligations are often subject to accounting treatment
and engage in business practices different from those respecting domestic
issuers of similar securities or obligations. Foreign branches of U.S. banks and
foreign banks may be subject to less stringent reserve requirements than those
applicable to domestic branches of U.S. banks.
Foreign Currency Transactions
As one way of managing exchange rate risk, each Fund may enter into forward
currency exchange contracts (agreements to purchase or sell currencies at a
specified price and date). The exchange rate for the transaction (the amount of
currency a Fund will deliver and receive when the contract is completed) is
fixed when a Fund enters into the contract. A Fund usually will enter into these
contracts to stabilize the U.S. dollar value of a security it has agreed to buy
or sell. Each Fund intends to use these contracts to hedge the U.S. dollar value
of a security it already owns, particularly if a Fund expects a decrease in the
23569
7
<PAGE>
value of the currency in which the foreign security is denominated. Although
each Fund will attempt to benefit from using forward contracts, the success of
its hedging strategy will depend on the Adviser's ability to predict accurately
the future exchange rates between foreign currencies and the U.S. dollar. The
value of a Fund's investments denominated in foreign currencies will depend on
the relative strengths of those currencies and the U.S. dollar, and a Fund may
be affected favorably or unfavorably by changes in the exchange rates or
exchange control regulations between foreign currencies and the U.S. dollar.
<PAGE>
Changes in foreign currency exchange rates also may affect the value of
dividends and interest earned, gains and losses realized on the sale of
securities and net investment income and gains, if any, to be distributed to
shareholders by each Fund. Each Fund may also purchase and sell options related
to foreign currencies in connection with hedging strategies.
High Yield Bonds (Natural Resources, International Growth and Latin America)
Each Fund may invest in high yield, high risk bonds. While investment
in high yield bonds provides opportunities to maximize return over time,
investors should be aware of the following risks associated with high yield
bonds:
(1) High yield bonds are rated below investment grade, i.e., BB or
lower by Standard & Poor's Ratings Group ("S&P") or Ba or lower by Moody's
Investors Service ("Moody's"). Securities so rated are considered predominantly
speculative with respect to the ability of the issuer to meet principal and
interest payments.
(2) The lower ratings of these securities reflect a greater possibility
that adverse changes in the financial condition of the issuer or in general
economic conditions, or both, or an unanticipated rise in interest rates may
impair the ability of the issuer to make payments of interest and principal,
especially if the issuer is highly leveraged. Such issuer's ability to meet its
debt obligations may also be adversely affected by specific corporate
developments or the issuer's inability tomeet specific projected business
forecasts or the unavailability of additional financing. Also, an economic
downturn or an increase in interest rates may increase the potential for default
by the issuers of these securities.
(3) Their value may be more susceptible to real or perceived adverse
economic, company or industry conditions and publicity than is the case for
higher quality securities.
(4) Their value, like those of other fixed income securities,
fluctuates in response to changes in interest rates, generally rising when
interest rates decline and falling when interest rates rise. For example, if
interest rates increase after a fixed income security is purchased, the
security, if sold prior to maturity, may return less than its cost. The prices
of below-investment grade bonds, however, are generally less sensitive to
interest rate changes than the prices of higher-rated bonds, but are more
sensitive to adverse or positive economic changes o individual corporate
developments.
(5) The secondary market for such securities may be less liquid at
certain times than the secondary market for higher quality debt securities,
which may adversely effect (1) the market price of the security, (2) the Fund's
ability to dispose o particular issues and (3) the Fund's ability to obtain
accurate market quotations for purposes of valuing its assets.
(6) Zero coupon bonds and PIKs involve additional special
considerations. For example, zero coupon bonds pay no interest to holders prior
to maturity of interest. PIKs are debt obligations that provide that the issuer
may, at its option, pay interest on such bonds in cash or in the form of
additional debt obligations. Such investments may experience greater fluctuation
in value due to changes in interest rates than debt obligations that pay
interest currently. Even though these investments do not pay current interest in
cash, the Fund is, nonetheless, required by tax laws to accrue interest income
on such investments and to distribute such amounts at least annually to
shareholders. Thus, the Fund could be required at times to liquidate investments
in order to fulfill its intention to distribute substantially all of its net
23569
8
<PAGE>
income as dividends. The Fund will not be able to purchase additional income
producing securities with cash used to make such distributions, and its current
income ultimately may be reduced as a result.
Each Fund may invest in securities rated as low as D by S&P or C- by
Moody's. Such securities may have defaulted on payments of principal and/or
interest at the time of investment. (Rating categories are described in the
Appendix.) A Fund will invest in debt so rated only when the investment adviser
believes the issuer's financial condition will improve through reorganization or
other measures. Each Fund may also invest in high yield, high risk securities
<PAGE>
which are unrated or rated under a different system if a Fund's investment
adviser believes they are comparable to high yield securities in which each Fund
may otherwise invest.
The investment adviser considers the ratings of S&P and Moody's
assigned to various securities, but does not rely solely on these ratings
because (1) S&P and Moody's assigned ratings are based largely on historical
financial data and may not accurately reflect the current financial outlook of
companies; and (2) there can be large differences among the current financial
conditions of issuers within the same category.
FUNDAMENTAL POLICIES
The Funds have adopted the fundamental investment restrictions set
forth below which may not be changed without the vote of a majority of each
Fund's outstanding shares, as defined in the Investment Company Act of 1940, as
amended (the "1940 Act"). Unless otherwise stated, all references to the assets
of a Fund are in terms of current market value.
Diversification
Each Fund may not make any investment that is inconsistent with its
classification as a diversified investment company under the 1940 Act.
Concentration
Each Fund may not concentrate its investments in the securities of
issuers primarily engaged in a particular industry (other than securities issued
or guaranteed by the U.S. Government or its agencies or instrumentalities),
except that (1) Precious Metals will concentrate its investments in industries
related to mining, processing or dealing in gold or other precious metals and
minerals and (2) Latin America will concentrate in the banking, construction,
energy, food and beverage, retail, telecommunications and utility industries.
Issuing Senior Securities
Except as permitted under in the 1940 Act, each Fund may not issue
senior securities.
Borrowing
Each Fund may not borrow money, except to the extent permitted by
applicable law.
Underwriting
Each Fund may not underwrite securities of other issuers, except
insofar as each Fund may be deemed an underwriter in connection with the
disposition of its portfolio securities.
23569
9
<PAGE>
Real Estate
Each Fund may not purchase or sell real estate, except that, to the
extent permitted by applicable law, each Fund may invest in (a) securities that
are directly or indirectly secured by real estate, or (b) securities issued by
issuers that invest in real estate.
Commodities
Each Fund may not purchase or sell commodities or contracts on
commodities except to the extent that each Fund may engage in financial futures
contacts and related options and currency contracts and related options and may
otherwise do so in accordance with applicable law, and without registering as a
commodity pool operator under the Commodity Exchange Act.
Loans to Other Persons
Each Fund may not make loans to other persons, except that the Fund may
lend its portfolio securities in accordance with applicable law. The acquisition
of investment securities or other investment instruments shall not be deemed to
<PAGE>
be the making of a loan.
INVESTMENT GUIDELINES
Unlike the Fundamental Policies above, the following guidelines may be
changed by the Trust's Board of Trustees without shareholder approval. Unless
otherwise stated, all references to the assets of a Fund are in terms of current
market value.
Diversification
To remain classified as a diversified investment company under the 1940
Act, each Fund must conform with the following: With respect to the 75% of its
total assets, a diversified investment company may not invest more than 5% of
its total assets, determined at market or other fair value at the time of
purchase, in the securities of any one issuer, or invest in more than 10% of the
outstanding voting securities of any one issuer, determined at the time of
purchase. These limitations do not apply to investments in securities issued or
guaranteed by the U.S. Government or its agencies or instrumentalities.
Borrowings
Each Fund may borrow money from banks or enter into reverse repurchase
agreements in an amount up to one third of its total assets. Each Fund may also
borrow an additional 5% of its total assets from banks or others. Each Fund may
borrow only as a temporary measure for extraordinary or emergency purposes. Each
Fund will not purchase securities while borrowings are outstanding except to
exercise prior commitments and to exercise subscription rights. Each Fund may
obtain such short-term credit as may be necessary for the clearance of purchases
and sales of portfolio securities. Each Fund may purchase securities on margin
to the extent permitted by applicable law.
Illiquid and Restricted Securities
Each Fund may not invest more than 15% of its net assets in securities
that are illiquid. A security is illiquid when a Fund cannot dispose of it in
the ordinary course of business within seven days at approximately the value at
which each Fund has the investment on its books.
23569
10
<PAGE>
Each Fund may invest in "restricted" securities, i.e., securities
subject to restrictions on resale under federal securities laws. Rule 144A under
the Securities Act of 1933 ("Rule 144A") allows certain restricted securities to
trade freely among qualified institutional investors. Since Rule 144A securities
may have limited markets, the Board of Trustees will determine whether such
securities should be considered illiquid for the purpose of determining a Fund's
compliance with the limit on illiquid securities indicated above. In determine
the liquidity of Rule 144A securities, the Trustees will consider: (1) the
frequency of trades and quotes for the security; (2) the number of dealers
willing to purchase or sell the security and the number of other potential
buyers; (3) dealer undertakings to make a market in the security; and (4) the
nature of the security and the nature of the marketplace trades.
Investment in Other Investment Companies
Each Fund may purchase the shares of other investment companies to the
extent permitted under the 1940 Act. Currently, each Fund may not (1) own more
than 3% of the outstanding voting stock of another investment company, (2)
invest more than 5% of its assets in any single investment company, and (3)
invest more than 10% of its assets in investment companies. However, each Fund
may invest all of its investable assets in securities of a single open-end
management investment company with substantially the same fundamental investment
objectives, policies and limitations as each Fund.
Short Sales
Each Fund may not make short sales of securities or maintain a short
position unless, at all times when a short position is open, it owns an equal
amount of such securities or of securities which, without payment of any further
consideration, are convertible into or exchangeable for securities of the same
issue as, and equal in amount to, the securities sold short. Each Fund may
effect a short sale in connection with an underwriting in which a Fund is a
participant.
MANAGEMENT OF THE TRUST
<PAGE>
Set forth below are the Trustees and officers of the Trust and their
principal occupations and some of their affiliations over the last five years.
Unless otherwise indicated, the address for each Trustee and officer is 200
Berkeley Street, Boston, Massachusetts 02116. Each Trustee is also a Trustee of
each of the other Trusts in the Evergreen fund complex, other than Evergreen
Variable Trust of which Messrs. Howell, Salton and Scofield are the only
Trustees.
<TABLE>
<CAPTION>
NAME POSITION WITH TRUST PRINCIPAL OCCUPATIONS FOR LAST FIVE YEARS
- -------------------------------- -------------------------- ------------------------------------------
<S> <C> <C>
Laurence B. Ashkin Trustee Real estate developer and construction consultant;
(DOB: 2/2/28) and President of Centrum Equities and Centrum
Properties, Inc.
Charles A. Austin III Trustee Investment Counselor to Appleton Partners, Inc.; and
(DOB: 10/23/34) former Managing Director, Seaward Management
Corporation (investment advice).
23569
11
<PAGE>
NAME POSITION WITH TRUST PRINCIPAL OCCUPATIONS FOR LAST FIVE YEARS
- - ------------------------------- -------------------------- -------------------------------------------------------------
K. Dun Gifford Trustee Trustee, Treasurer and Chairman of the Finance
(DOB: 10/12/38) Committee, Cambridge College; Chairman Emeritus and
Director,
American
Institute
of Food and
Wine;
Chairman
and
President,
Oldways
Preservation
and
Exchange
Trust
(education);
former
Chairman of
the Board,
Director,
and
Executive
Vice
President,
The London
Harness
Company;
former
Managing
Partner,
Roscommon
Capital
Corp.;
former
Chief
Executive
Officer,
Gifford
Gifts of
Fine Foods;
former
Chairman,
Gifford,
Drescher &
Associates
(environmental
consult
ing); and
former
Director,
Keystone
Investments,
Inc.
James S. Howell Chairman of the Former Chairman of the Distribution Foundation for the
(DOB: 8/13/24) Board of Trustees Carolinas; and former Vice President of Lance Inc.
(food manufacturing).
Leroy Keith, Jr. Trustee Chairman of the Board and Chief Executive Officer,
(DOB: 2/14/39) Carson Products Company; Director of Phoenix Total
Return Fund
and
Equifax,
Inc.;
Trustee of
Phoenix
Series
Fund,
Phoenix
Multi-Portfolio
Fund, and
The Phoenix
Big Edge
Series
Fund; and
former
President,
Morehouse
College.
Gerald M. McDonnell Trustee Sales Representative with Nucor-Yamoto, Inc. (steel
(DOB: 7/14/39) producer).
Thomas L. McVerry Trustee Former Vice President and Director of Rexham
(DOB: 8/2/39) Corporation; and former Director of Carolina
Cooperative Federal Credit Union.
William Walt Pettit Trustee Partner in the law firm of William Walt Pettit, P.A.
(DOB: 8/26/55)
David M. Richardson Trustee Vice Chair and former Executive Vice President, DHR
(DOB: 9/14/41) International, Inc. (executive recruitment); former
Senior Vice President, Boyden International Inc.
(executive recruitment); and Director, Commerce and
Industry Association of New Jersey, 411 International,
Inc., and J&M Cumming Paper Co.
Russell A. Salton, III MD Trustee Medical Director, U.S. Health Care/Aetna Health
(DOB: 6/2/47) Services; former Managed Health Care Consultant;
and former President, Primary Physician Care.
Michael S. Scofield Trustee Attorney, Law Offices of Michael S. Scofield.
(DOB: 2/20/43)
23569
12
<PAGE>
NAME POSITION WITH TRUST PRINCIPAL OCCUPATIONS FOR LAST FIVE YEARS
- - ------------------------------- -------------------------- -------------------------------------------------------------
<PAGE>
Richard J. Shima Trustee Former Chairman, Environmental Warranty, Inc.
(DOB: 8/11/39) (insurance agency); Executive Consultant, Drake
Beam Morin,
Inc.
(executive
outplacement);
Director of
Connecticut
Natural Gas
Corporation,
Hartford
Hospi tal,
Old State
House
Association,
Middlesex
Mutual
Assurance
Company,
and Enhance
Financial
Services,
Inc.;
Chairman,
Board of
Trustees,
Hartford
Graduate
Center;
Trustee,
Greater
Hartford
YMCA;
former
Director,
Vice
Chairman
and Chief
Investment
Officer,
The
Travelers
Corporation;
former
Trustee,
Kingswood-Oxford
School; and
former
Managing
Director
and
Consultant,
Russell
Miller,
Inc.
William J. Tomko* President and Senior Vice President and Operations Executive,
(DOB:8/30/58) Treasurer BISYS Fund Services.
Nimish S. Bhatt* Vice President Vice President, Tax, BISYS Fund Services; former
(DOB: 6/6/63) and Assistant Treasurer Assistant Vice President, Evergreen Asset
Management
Corp./First
Union Bank;
former
Senior Tax
Consulting/Acting
Manager,
Investment
Companies
Group,
Price
Waterhouse,
LLP, New
York.
Bryan Haft* Vice President Team Leader, Fund Administration, BISYS Fund
(DOB: 1/23/65) Services.
D'Ray Moore* Secretary Vice President, Client Services, BISYS Fund Services.
(DOB: 3/30/59)
</TABLE>
*Address: BISYS, 3435 Stelzer Road, Columbus, Ohio 43219-8001
The officers of the Trust are all officers and/or employees of BISYS
Fund Services.
Trustee Compensation
Listed below is the Trustee compensation for the twelve-month period
ended October 31, 1997.
13
<PAGE>
COMPENSATION FROM COMPENSATION FROM
TRUSTEE TRUST TRUST AND FUND
COMPLEX
Laurence B. Ashkin $4,543 $68,600
Charles A. Austin III $1,117 $41,400
K. Dun Gifford $4,362 $38,700
James S. Howell $5,814 $109,868
Leroy Keith Jr. $4,275 $37,800
Gerald M. McDonnell $5,585 $94,750
Thomas L. McVerry $5,418 $99,217
William Walt Pettit $5,464 $96,717
David M. Richardson $4,656 $41,400
Russell A. Salton, III $5,206 $99,447
Michael S. Scofield $5,474 $102,047
Richard J. Shima $4,254 $65,242
PRINCIPAL HOLDERS OF FUND SHARES
As of the date of this SAI, the officers and Trustees of the Trust
owned as a group less than 1% of the outstanding of any class of each Fund.
Set forth below is information with respect to each person who, to each
Fund's knowledge, owned beneficially or of record more than 5% of a class of a
Fund's outstanding shares as of January 30, 1998.
EMERGING MARKETS CLASS A
Trust Company of America 17.086%
FBO HCM
<PAGE>
P.O. Box 6503
Englewood, CO 80155
Charles Schwab & Co. Inc. 7.613%
Special Custody Account for the
Exclusive Benefit of Customers
Reinvest Account
Mutual Funds Department
101 Montgomery Street
San Francisco, CA 94104-4122
14
<PAGE>
FTC & Co. 5.579%
Datalynx # 113
P.O. Box 173736
Denver, CO 80217
EMERGING MARKETS CLASS B
None
EMERGING MARKETS CLASS C
RHONA B. MILLER 5.264%
5742 BANCROFT DRIVE
NEW ORLEANS, LA 70122-1314
R. ORMONDE PLATER 5.147%
SEPARATE PROPERTY
1453 ARABELLA STREET
NEW ORLEANS, LA 70115-4277
EMERGING MARKETS CLASS Y
FIRST UNION NATIONAL BANK 66.607%
TRUST ACCOUNTS
ATTN: GINNY BATTEN
11TH FLOOR CMG-1151
301 S. TRYON STREET
CHARLOTTE, NC 28288-0002
FIRST UNION NATIONAL BANK 31.956%
TRUST ACCOUNTS
ATTN: GINNY BATTEN
11TH FLOOR CMG-1151
301 S. TRYON STREET
CHARLOTTE, NC 28288-0002
GLOBAL LEADERS CLASS A
NONE
GLOBAL LEADERS CLASS B
NONE
GLOBAL LEADERS CLASS C
MLPF&S FOR THE SOLE BENEFIT OF ITS 16.621%
CUSTOMERS
ATTN: FUND ADMINISTRATION
4800 DEER LAKE DRIVE E., 3RD FL
JACKSONVILLE, FL 32246
GLOBAL LEADERS CLASS Y
FIRST UNION NATIONAL BANK/EB/INT 56.099%
CASH ACCOUNT
ATTN: TRUST OPERATIONS FUND GROUP
401 S. TRYON ST., 3RD FL
CMG 1151
CHARLOTTE, NC 28202-1911
15
<PAGE>
FIRST UNION NATIONAL BANK/EB/INT 15.066%
REINVEST ACCOUNT
ATTN: TRUST OPERATIONS FUND GROUP
401 S. TRYON ST., 3RD FL
CMG 1151
CHARLOTTE, NC 28202-1911
GLOBAL OPPORTUNITIES CLASS A
ROFE & CO. 17.053%
C/O STATE STREET BANK & TRUST CO.
FOR SUB ACCOUNT
KOKUSAI SECURITIES CO. LTD.
P.O. BOX 5061
BOSTON, MA 02206-5061
MLPF&S FOR THE SOLE BENEFIT 10.833%
OF ITS CUSTOMERS
ATTN: FUND ADMINISTRATION
4800 DEER LAKE DR. E, 3RD FL
JACKSONVILLE, FL 32246-6484
GLOBAL OPPORTUNITIES CLASS B
MLPF&S FOR THE SOLE BENEFIT 24.664%
OF ITS CUSTOMERS
ATTN: FUND ADMINISTRATION
4800 DEER LAKE DR. E., 3RD FL
JACKSONVILLE, FL 32246-6484
GLOBAL OPPORTUNITIES CLASS C
MLPF&S FOR THE SOLE BENEFIT 46.337%
OF ITS CUSTOMERS
ATTN: FUND ADMINISTRATION
4800 DEER LAKE DR. E., 3RD FL
JACKSONVILLE, FL 32246-6484
GLOBAL OPPORTUNITIES CLASS Y
STATE STREET BANK & TRUST CO. 67.682%
CUST. FOR THE IRA OF
THOMAS V. YOUNG
850 N. DEWITT PL., APT. 22E
CHICAGO, IL 60611-2343
STATE STREET BANK & TRUST CO. 32.170%
IRA FBO
DOUGLAS D. LUNDBERG
765 ORIOLE LANE
HUDSON, WI 54016-7675
INTERNATIONAL EQUITY CLASS A
AMERICAN NATIONAL BANK OF CHICAGO 11.771%
TTEE
LINCOLN GROUP LTD. PARTNERSHIP UNDER
TR
DTD 4-18-96
707 LAKE COOK ROAD
DEERFIELD, IL 60015
16
<PAGE>
INTERNATIONAL EQUITY CLASS B
NONE
INTERNATIONAL EQUITY CLASS C
MLPF&S FOR THE SOLE BENEFIT 21.353%
OF ITS CUSTOMERS
ATTN: FUND ADMINISTRATION
4800 DEER LAKE DR. E., 3RD FL
JACKSONVILLE, FL 32246-6484
<PAGE>
EMERY JAHNKE 10.107%
2402 LILAC LANE
FARGO, ND 58102-2124
INTERNATIONAL EQUITY CLASS Y
FIRST UNION NATIONAL BANK 56.059%
TRUST ACCOUNTS
ATTN: GINNY BATTEN
11TH FLOOR CMG-1151
301 S. TRYON STREET
CHARLOTTE, NC 28288-0002
FIRST UNION NATIONAL BANK 42.713%
TRUST ACCOUNTS
ATTN: GINNY BATTEN
11TH FLOOR CMG-1151
301 S. TRYON STREET
CHARLOTTE, NC 28288-0002
17
<PAGE>
LATIN AMERICA CLASS A
MLPF&S FOR THE SOLE BENEFIT 27.989%
OF ITS CUSTOMERS
ATTN: FUND ADMINISTRATION
4800 DEER LAKE DR., E., 3RD FL
JACKSONVILLE, FL 32246-6484
TRUST COMPANY OF AMERICA 8.316%
FBO HCM
P.O. BOX 6503
LATIN AMERICA CLASS B
MLPF&S FOR THE SOLE BENEFIT 42.315%
OF ITS CUSTOMERS
ATTN: FUND ADMINISTRATION
4800 DEER LAKE DR., E., 3RD FL
JACKSONVILLE, FL 32246-6484
LATIN AMERICA CLASS C
MLPF&S FOR THE SOLE BENEFIT 43.638%
OF ITS CUSTOMERS
ATTN: FUND ADMINISTRATION
4800 DEER LAKE DR., E., 3RD FL
JACKSONVILLE, FL 32246-6484
NATURAL RESOURCES CLASS A
MLPF&S for the Sole Benefit 23.530%
of its Customers
Attn: Fund Administration
4800 Deer Lake Dr. E., 3rd FL
Jacksonville, FL 32246-6484
NATURAL RESOURCES CLASS B
MLPF&S FOR THE SOLE BENEFIT 38.915%
OF ITS CUSTOMERS
ATTN: FUND ADMINISTRATION
4800 DEER LAKE DR. E., 3RD FL
JACKSONVILLE, FL 32246-6484
NATURAL RESOURCES CLASS C
MLPF&S FOR THE SOLE BENEFIT 8.208%
OF ITS CUSTOMERS
ATTN: FUND ADMINISTRATION
4800 DEER LAKE DR. E., 3RD FL
JACKSONVILLE, FL 32246-6484
18
<PAGE>
<PAGE>
PRECIOUS METALS CLASS A
MLPF&S FOR THE SOLE BENEFIT 9.516%
OF ITS CUSTOMERS
ATTN: FUND ADMINISTRATION
4800 DEER LAKE DR. E., 3RD FL
JACKSONVILLE, FL 32246-6484
PRECIOUS METALS CLASS B
MLPF&S FOR THE SOLE BENEFIT 17.920%
OF ITS CUSTOMERS
ATTN: FUND ADMINISTRATION
4800 DEER LAKE DR. E., 3RD FL
JACKSONVILLE, FL 32246-6484
PRECIOUS METALS CLASS C
NONE
INTERNATIONAL GROWTH CLASS A
MLPF&S FOR THE SOLE BENEFIT 7.167%
OF ITS CUSTOMERS
ATTN: FUND ADMINISTRATION
4800 DEER LAKE DR. E., 3RD FL
JACKSONVILLE, FL 32246-6484
INTERNATIONAL GROWTH CLASS B
MLPF&S FOR THE SOLE BENEFIT 22.677%
OF ITS CUSTOMERS
ATTN: FUND ADMINISTRATION
4800 DEER LAKE DR. E., 3RD FL
JACKSONVILLE, FL 32246-6484
INTERNATIONAL GROWTH CLASS C
NONE
INTERNATIONAL GROWTH CLASS Y
NONE
INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISER
Each Fund has its own investment adviser (the "Adviser"). Each adviser
is a subsidiary of First Union Corporation ("First Union"), a bank holding
company headquartered at 201 South College Street, Charlotte, North Carolina
28288-0630. First Union and its subsidiaries provide a broad range of financial
services to individuals and businesses throughout the United States.
Some of the Funds also have an investment subadviser (the "Subadviser")
or investment consultant (the "Consultant"). Each Fund's Adviser, Subadviser or
Consultant, and the fees paid for their services, are described below.
19
<PAGE>
EMERGING MARKETS
The Capital Management Group of First Union National Bank ("FUNB"), at
the same address as First Union, is the Adviser to Emerging Markets. The Fund
pays FUNB an annual percentage of the Fund's average daily net assets as
follows: 1.50% of the first $100 million; 1.45% of the next $100 million; 1.40%
of the next $100 million; and 1.35% of amounts over $300 million. Keystone
Investment Management Company ("Keystone"), 200 Berkeley Street, Boston,
Massachusetts 02116, is the Subadviser to Emerging Markets and receives from
FUNB a percentage of the Fund's average daily net assets as follows: 1.00% of
the first $100 million; 0.95% of the next $100 million; 0.90% of the next $100
million; and 0.85% of amounts over $300 million.
GLOBAL LEADERS
Evergreen Asset Management Corp. ("Evergreen Asset"), 2500 Westchester
<PAGE>
Avenue, Purchase, New York 10577, is the Adviser to Global Leaders, which pays
Evergreen Asset an annual fee equal to 0.95% of the Fund's average daily net
assets. Lieber & Company, a First Union subsidiary, is the Subadviser to Global
Leaders. Lieber & Company is reimbursed by Evergreen Asset for the direct and
indirect costs of providing subadvisory services to the Fund.
GLOBAL OPPORTUNITIES
Keystone is the Adviser to Global Opportunities, which pays Keystone an
annual percentage of the Fund's average daily net assets, as follows: 1.00% of
the first $200 million; 0.95% of the next $200 million; 0.85% of the next $200
million; plus 0.75% of amounts over $600 million.
INTERNATIONAL EQUITY
FUNB is the Adviser to International Equity, which pays FUNB an annual
percentage of the Fund's average daily net assets, as follows: 0.82% of the
first $20 million; 0.79% of the next $30 million; 0.76% of the next $50 million
and 0.73% of amounts over $100 million. Warburg, Pincus Counsellors, Inc., 466
Lexington Avenue, New York, New York, is the Subadviser to International Equity
and receives from FUNB a fee equal to 0.55% of the Fund's average daily net
assets.
LATIN AMERICA
Keystone is the Adviser to Latin America, which pays Keystone an annual
percentage of the Fund's average daily net assets, as follows: 0.75% of the
first $200 million; 0.65% of the next $200 million; 0.55% of the next $200
million; plus 0.45% of amounts over $600 million.
NATURAL RESOURCES
Keystone is the Adviser to Natural Resources, which pays Keystone an
annual fee equal to 1.00% of the Fund's average daily net assets. EquitiLink
International Management Limited ("EquitiLink"), Union House, Union Street, St.
Helier, Jersey, Channel Islands, is the Subadviser to Natural Resources.
EquitiLink receives from Keystone a monthly fee equal to (1) 20% of Keystone's
net fee for such month for services rendered in a nondiscretionary capacity,
plus (2) 10% of Keystone's net fee for such month on that portion of the Fund's
assets for which EquitiLink provided services in a discretionary capacity.
20
<PAGE>
PRECIOUS METALS
Keystone is the Adviser to Precious Metals, which pays Keystone an
annual percentage of the Fund's average daily net assets, as follows: 0.75% of
the first $100 million; 0.625% of the next $100 million, plus 0.50% of amounts
over $200 million. Harbor Capital Management Company, Inc., 125 High Street,
Boston, Massachusetts 02110, is the Consultant to Precious Metals and receives
from Keystone an annual fee equal to 0.10% of the Fund's average daily net
assets.
INTERNATIONAL GROWTH
Keystone is the Adviser to International Growth, which pays Keystone an
annual percentage of the aggregate net asset value of the Fund's shares, as
follows: 0.75% of the first $200 million; 0.65% of the next $200 million; 0.55%
of the next $200 million; plus 0.45% of amounts over $600 million, computed as
of the close of business each business day and payable monthly.
INVESTMENT ADVISORY AGREEMENTS
On behalf of each if its Funds, the Trust has entered into an
investment advisory agreement with the Adviser (the "Advisory Agreements") .
Under the Advisory Agreements, and subject to the supervision of the Trust's
Board of Trustees, the Adviser furnishes to the appropriate Fund investment
advisory, management and administrative services, office facilities, and
equipment in connection with its services for managing the investment and
reinvestment of the Fund's assets. The Adviser pays for all of the expenses
incurred in connection with the provision of its services. Each Fund pays for
all charges and expenses, other than those specifically referred to as being
borne by the Adviser, including, but not limited to, (1) custodian charges and
expenses; (2) bookkeeping and auditors' charges and expenses; (3) transfer agent
charges and expenses; (4) fees and expenses of Independent Trustees; (5)
<PAGE>
brokerage commissions, brokers' fees and expenses; (6) issue and transfer taxes;
(7) costs and expenses under the Distribution Plan (as applicable) (8) taxes and
trust fees payable to governmental agencies; (9) the cost of share certificates;
(10) fees and expenses of the registration and qualification of such Fund and
its shares with the Securities and Exchange Commission ("SEC") or under state or
other securities laws; (11) expenses of preparing, printing and mailing
prospectuses, SAIs, notices, reports and proxy materials to shareholders of each
Fund; (12) expenses of shareholders' and Trustees' meetings; (13) charges and
expenses of legal counsel for each Fund and for the Independent Trustees of the
Trust on matters relating to such Fund; (14) charges and expenses of filing
annual and other reports with the SEC and other authorities; and all
extraordinary charges and expenses of such Fund. (See also the section entitled
"Financial Information.")
Each Advisory Agreement continues in effect for two years from its
effective date and, thereafter, from year to year only if approved at least
annually by the Board of Trustees of the Trust or by a vote of a majority of
each Fund's outstanding shares. In either case, the terms of the Advisory
Agreement and continuance thereof must be approved by the vote of a majority of
the Independent Trustees (Trustees who are not interested persons of a Fund, as
defined in the 1940 Act) cast in person at a meeting called for the purpose of
voting on such approval. The Advisory Agreements may be terminated, without
penalty, on 60 days' written notice by the Trust's Board of Trustees or by a
vote of a majority of outstanding shares. Each Advisory Agreement will terminate
automatically upon its "assignment" as that term is defined in the 1940 Act.
TRANSACTIONS AMONG ADVISORY AFFILIATES
The Trust has adopted procedures pursuant to Rule 17a-7 of the 1940 Act
("Rule 17a-7 Procedures"). The Rule 17a-7 Procedures permit a Fund to buy or
sell securities from another investment company for which a subsidiary of First
Union is an investment adviser. The Rule 17a-7 Procedures also allow the Funds
to buy or sell securities from other advisory clients for whom a subsidiary of
First Union is an investment adviser. The Funds may engage in such transaction
if they
21
<PAGE>
are equitable to each participant and consistent with each participant's
investment objective.
DISTRIBUTOR
Evergreen Distributor, Inc. (the "Distributor") markets the Funds
through broker-dealers and other financial representatives. Its address is 125
W. 55th Street, New York, NY 10019.
DISTRIBUTION PLANS AND AGREEMENTS
Distribution fees are accrued daily and paid monthly on Class A, Class
B and Class C shares and are charged as class expenses, as accrued. The
distribution fees attributable to the Class B and Class C shares are designed to
permit an investor to purchase such shares through broker-dealers without the
assessment of a front-end sales charge, while at the same time permitting the
Distributor to compensate broker-dealers in connection with the sale of such
shares. In this regard, the purpose and function of the combined contingent
deferred sales charge and distribution services fee on the Class B shares are
the same as those of the front-end sales charge and distribution fee with
respect to the Class A shares in that in each case the sales charge and/or
distribution fee provide for the financing of the distribution of the Fund's
shares.
Under the Rule 12b-1 Distribution Plans that have been adopted by each
Fund with respect to each of its Class A, Class B and Class C shares (each a
"Plan" and collectively, the "Plans"), the Treasurer of the Trust reports the
amounts expended under the Plans for each Fund and the purposes for which such
expenditures were made to the Trustees of the Trust for their review on a
quarterly basis. Also, each Plan provides that the selection and nomination of
the disinterested Trustees are committed to the discretion of such disinterested
Trustees then in office.
The Adviser may from time to time from its own funds or such other
resources as may be permitted by rules of the SEC make payments for distribution
<PAGE>
services to the Distributor; the latter may in turn pay part or all of such
compensation to brokers or other persons for their distribution assistance.
Each Plan and Distribution Agreement will continue in effect for
successive twelve-month periods provided, however, that such continuance is
specifically approved at least annually by the Trustees of the Trust or by vote
of the holders of a majority of the outstanding voting securities of that class
and, in either case, by a majority of the Independent Trustees of the Trust who
have no direct or indirect financial interest in the operation of the Plan or
any agreement related thereto.
The Plans permit the payment of fees to brokers and others for
distribution and shareholder-related administrative services and to
broker-dealers, depository institutions, financial intermediaries and
administrators for administrative services as to Class A, Class B and Class C
shares. The Plans are designed to (i) stimulate brokers to provide distribution
and administrative support services to each Fund and holders of Class A, Class B
and Class C shares and (ii) stimulate administrators to render administrative
support services to the Fund and holders of Class A, Class B and Class C shares.
The administrative services are provided by a representative who has knowledge
of the shareholder's particular circumstances and goals, and include, but are
not limited to providing office space, equipment, telephone facilities, and
various personnel including clerical, supervisory, and computer, as necessary or
beneficial to establish and maintain shareholder accounts and records;
processing purchase and redemption transactions and automatic investments of
client account cash balances; answering routine client inquiries regarding Class
A, Class B and Class C shares; assisting clients in changing dividend options,
account designations, and addresses; and providing such other services as the
Fund reasonably requests for its Class A, Class B and Class C shares.
FUNB or its affiliates may finance the payments made by the Distributor
to compensate broker-dealers or other persons for distributing shares of a Fund.
In the event that a Plan or Distribution Agreement is terminated or not
continued with respect to one or more classes of a Fund, (i) no distribution
fees (other than current amounts accrued but not yet paid) would be owed by the
Fund to the Distributor with respect to that class or classes, and (ii) the Fund
would not be obligated to pay the Distributor for any amounts expended under the
Distribution Agreement not previously recovered by the Distributor from
distribution services fees in respect of shares of such class or classes through
deferred sales charges.
All material amendments to any Plan or Distribution Agreement must be
approved by a vote of the Trustees of the Trust or the holders of the Fund's
outstanding voting securities, voting separately by class, and in either case,
by a majority of the disinterested Trustees, cast in person at a meeting called
for the purpose of voting on such approval; and any Plan or Distribution
Agreement may not be amended in order to increase materially the costs that a
particular class of shares of a Fund may bear pursuant to the Plan or
Distribution Agreement without the approval of a majority of the holders of the
outstanding voting shares of the Class affected. Any Plan or Distribution
Agreement may be terminated (i) by a Fund without penalty at any time by a
majority vote of the holders of the outstanding voting securities of the Fund,
voting separately by class or by a majority vote of the disinterested Trustees,
or (ii) by the Distributor. To terminate any Distribution Agreement, any party
must give the other parties 60 days' written notice; to terminate a Plan only,
the Fund need give no notice to the Distributor. Any Distribution Agreement will
terminate automatically in the event of its assignment. (See also the section
entitled "Financial Information.")
ADDITIONAL SERVICE PROVIDERS
Administrator
Evergreen Investment Services, Inc. ("EIS") serves as administrator to
Emerging Markets, International Equity and Global Leaders, subject to the
supervision and control of the Trust's Board of Trustees. EIS provides the Fund
with facilities, equipment and personnel and is entitled to receive a fee from
the Fund based on the total assets of all mutual funds advised by First Union
subsidiaries, as follows: 0.050% of the first $7 billion; 0.035% of the next $3
billion; 0.030% of the next $5 billion; 0.020% of the next $10 billion; 0.015%
of the next $5 billion and 0.010% of amounts over $30 billion.
Transfer Agent
Evergreen Service Company ("ESC"), a subsidiary of First Union, is the
Funds' transfer agent. The transfer agent issues and redeems shares, pays
dividends and performs other duties in connection with the maintenance of
shareholder accounts. The transfer agent's address is Box 2121, Boston,
<PAGE>
Massachusetts 02106-2121.
Independent Auditors
KPMG Peat Marwick LLP, 99 High Street, Boston, Massachusetts 02110,
audits the annual financial statements of Global Opportunities, Latin America,
Natural Resources, Precious Metals and International Growth.
Price Waterhouse LLP, 1177 Avenue of the Americas, New York, New York,
10036, audits the annual financial statements of Emerging Markets, Global
Leaders and International Equity.
Custodian
State Street Bank and Trust Company is the Funds' custodian. The bank
keeps custody of each
22
<PAGE>
Fund's securities and cash and performs other related duties. The custodian's
address is 225 Franklin Street, Boston, Massachusetts 02110.
Legal Counsel
Sullivan & Worcester LLP provides legal advice to the Funds. Its
address is 1025 Connecticut Avenue, N.W., Washington, D.C. 20036.
BROKERAGE
Due to regulatory developments affecting the securities exchanges and
brokerage practices, the Board of Trustees may modify or eliminate any of the
following policies.
BROKERAGE COMMISSIONS
Generally, each Fund expects to purchase and sell its equity securities
through brokerage transactions for which commissions are payable. Purchases from
underwriters will include the underwriting commission or concession, and
purchases from dealers serving as market makers will include a dealer's mark-up
or reflect a dealer's mark-down. Where transactions are made in the
over-the-counter market, each Fund will deal with primary market makers unless
more favorable prices are otherwise obtainable.
Each Fund expects to buy and sell its fixed income securities directly
from the issuer or an underwriter or market maker for the securities. Generally,
each Fund will not pay brokerage commissions for such purchases. When a Fund
buys a security from an underwriter, the purchase price will usually include an
underwriting commission or concession. The purchase price for securities bought
from dealers serving as market makers will similarly include the dealer's mark
up or reflect a dealer's mark down. When a Fund executes transactions in the
over-the-counter market, it will deal with primary market makers unless more
favorable prices are otherwise obtainable.
SELECTION OF BROKERS
When buying and selling portfolio securities, each Adviser seeks
brokers who can provide the most benefit to the Fund or Funds for which a trade
is being made. When selecting a broker, an Advisor will primarily look for the
best price at the lowest commission, but in the context of the broker's:
1. ability to provide the best net financial result to the Fund;
2. efficiency in handling trades;
3. ability to trade large blocks of securities;
4. readiness to handle difficult trades;
5. financial strength and stability; and
6. provision of "research services," defined as (a) reports and
analyses concerning issuers, industries, securities and
economic factors and (b) other information useful in making
investment decisions.
Under each Advisory Agreement, each Fund may pay higher brokerage
commissions to a broker providing it with research services, as defined in item
6, above. Pursuant to Section 28(e) of the Securities Exchange Act of 1934, this
<PAGE>
practice is permitted if the commission is reasonable in relation to the
brokerage and research services provided. Research services provided by a broker
to an Adviser do not replace, but supplement, the services an Adviser is
required to deliver to a Fund under the Advisory Agreement. It is impracticable
for an Adviser to allocate the cost, value and specific application of such
research services among its clients because research services intended for one
client may indirectly benefit another.
24
<PAGE>
When selecting a broker for portfolio trades, an Adviser may also
consider the amount of Fund shares a broker has sold, subject to the other
requirements described above.
Lieber & Company, an affiliate of Evergreen Asset and a member of the
New York and American Stock Exchanges, will to the extent practicable effect
substantially all of the portfolio transactions for Global Leaders effected on
those exchanges.
SIMULTANEOUS TRANSACTIONS
Each Adviser makes investment decisions for each Fund independently of
decisions made for its other clients. When a security is suitable for the
investment objective of more than one client, it may be prudent for an Adviser
to engage in a simultaneous transaction, that is, buy or sell the same security
for more than one client. Each Adviser strives for an equitable result in such
transactions by using an allocation formula. The high volume involved in some
simultaneous transactions can result in greater value to the Funds, but the
ideal price or trading volume may not always be achieved for an individual Fund.
TRUST ORGANIZATION
FORM OF ORGANIZATION
Each Fund is a series of an open-end management investment company,
known as "Evergreen International Trust" (the "Trust"). The Trust was formed as
a Delaware business trust on September 17, 1997 (the "Declaration of Trust"). A
copy of the Declaration of Trust is on file as an exhibit to the Trust's
Registration Statement, of which this SAI is a part. This summary is qualified
in its entirety by reference to the Declaration of Trust.
DESCRIPTION OF SHARES
The Declaration of Trust authorizes the issuance of an unlimited number
of shares of beneficial interest of series and classes of shares. Each share of
each Fund represents an equal proportionate interest with each other share of
that series and/or class. Upon liquidation, shares are entitled to a pro rata
share of the Trust based on the relative net assets of each series and/or class.
Shareholders have no preemptive or conversion rights. Shares are redeemable and
transferable.
VOTING RIGHTS
Under the terms of the Declaration of Trust, the Trust is not required
to hold annual meetings. At meetings called for the initial election of Trustees
or to consider other matters, each share is entitled to one vote for each dollar
of net asset value applicable to such share. Shares generally vote together as
one class on all matters. Classes of shares of each Fund have equal voting
rights. No amendment may be made to the Declaration of Trust that adversely
affects any class of shares without the approval of a majority of the votes
applicable to the shares of that class. Shares have non-cumulative voting
rights, which means that the holders of more than 50% of the votes applicable to
shares voting for the election of Trustees can elect 100% of the Trustees to be
elected at a meeting and, in such event, the holders of the remaining 50% or
less of the shares voting will not be able to elect any Trustees.
After the initial meeting as described above, no further meetings of
shareholders for the purpose of electing Trustees will be held, unless required
by law, unless and until such time as less than a majority of the Trustees
holding office have been elected by shareholders, at which time, the Trustees
then in office will call a shareholders' meeting for the election of Trustees.
<PAGE>
25
<PAGE>
LIMITATION OF TRUSTEES' LIABILITY
The Declaration of Trust provides that a Trustee will not be liable for
errors of judgment or mistakes of fact or law, but nothing in the Declaration of
Trust protects a Trustee against any liability to which he would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of his duties involved in the conduct of his office.
PURCHASE, REDEMPTION AND PRICING OF SHARES
HOW THE FUNDS OFFER SHARES TO THE PUBLIC
You may buy shares of a Fund through the Distributor, broker-dealers
that have entered into special agreements with the Distributor or certain other
financial institutions. Each Fund offers up to four classes of shares that
differ primarily with respect to sales charges and distribution fees. Depending
upon the class of shares, you will pay an initial sales charge when you buy a
Fund's shares, a contingent deferred sales charge (a "CDSC") when you redeem a
Fund's shares or no sales charges at all.
CLASS A SHARES
With certain exceptions, when you purchase Class A shares you will pay
a maximum sales charge equal to 4.75% of the offering price. (The prospectus
contains a complete table of applicable sales charges and a discussion of sales
charge reductions or waivers that may apply to purchases. See also the section
in this SAI entitled "Financial Information" for an example of the method of
computing the offering price of Class A shares.) If you purchase Class A shares
in the amount of $1 million or more, without an initial sales charge, the Funds
will charge a CDSC of 1.00% if you redeem during the month of your purchase and
the 12-month period following the month of your purchase (see "Contingent
Deferred Sales Charge", below).
CLASS B SHARES
The Funds offer Class B shares at net asset value without an initial
sales charge. With certain exceptions, however, the Funds will charge a CDSC on
shares you redeem within 72 months after the month of your purchase, in
accordance with the following schedule:
REDEMPTION TIMING CDSC RATE
Month of purchase and the first twelve-month period
following the month of purchase................................5.00%
Second twelve-month period following the month of purchase.......4.00%
Third twelve-month period following the month of purchase........3.00%
Fourth twelve-month period following the month of purchase.......3.00%
Fifth twelve-month period following the month of purchase........2.00%
Sixth twelve-month period following the month of purchase........1.00%
Thereafter.......................................................0.00%
Class B shares that have been outstanding for seven years after the
month of purchase will automatically convert to Class A shares without
imposition of a front-end sales charge or exchange fee.
26
<PAGE>
(Conversion of Class B shares represented by stock certificates will require the
return of the stock certificate to ESC.)
Class C Shares
Class C shares are available only through broker-dealers who have
entered into special distribution agreements with the Distributor. The Funds
<PAGE>
offer Class C shares at net asset value without an initial sales charge. With
certain exceptions, however, the Funds will charge a CDSC of 1.00% on shares you
redeem within 12-months after the month of your purchase. See "Contingent
Deferred Sales Charge" below.
Class Y Shares (Not offered by Natural Resources and Precious Metals)
No CDSC is imposed on the redemption of Class Y shares. Class Y shares
are not offered to the general public and are available only to (1) persons who
at or prior to December 31, 1994 owned shares in a mutual fund advised by
Evergreen Asset, (2) certain institutional investors and (3) investment advisory
clients of FUNB, Evergreen Asset, Keystone, or their affiliates. Class Y shares
are offered at net asset value without a front-end or back-end sales charge and
do not bear any Rule 12b-1 distribution expenses.
CONTINGENT DEFERRED SALES CHARGE
The Funds charge a CDSC as reimbursement for certain expenses, such as
commissions or shareholder servicing fees, that it has incurred in connection
with the sale of its shares (see "Distribution Plans and Agreements," above). If
imposed, the Funds deduct the CDSC from the redemption proceeds you would
otherwise receive. The CDSC is a percentage of the lesser of (1) the net asset
value of the shares at the time of redemption or (2) the shareholder's original
net cost for such shares. Upon request for redemption, to keep the CDSC a
shareholder must pay as low as possible, a Fund will first seek to redeem shares
not subject to the CDSC and/or shares held the longest, in that order. The CDSC
on any redemption is, to the extent permitted by the National Association of
Securities Dealers, Inc. ("NASD"), paid to the Distributor or its predecessor.
SALES CHARGE WAIVERS OR REDUCTIONS
Reducing Class A Front-end Loads
With a larger purchase, there are several ways that you can combine
multiple purchases of Class A shares in Evergreen funds and take advantage of
lower sales charges.
Combined Purchases
You can reduce your sales charge by combining purchases of Class A
shares of multiple Evergreen funds. For example, if you invested $75,000 in each
of two different Evergreen funds, you would pay a sales charge based on a
$150,000 purchase (i.e., 3.75% of the offering price, rather than 4.75%).
Rights of Accumulation
You can reduce your sales charge by adding the value of Class A shares
of Evergreen funds you already own to the amount of your next Class A
investment. For example, if you hold Class A shares valued at $99,999 and
purchase an additional $5,000, the sales charge for the $5,000 purchase would be
27
<PAGE>
at the next lower sales charge of 3.75%, rather than 4.75%.
Letter of Intent
You can, by completing the "Letter of Intent" section of the
application, purchase Class A shares over a 13-month period and receive the same
sales charge as if you had invested all the money at once. All purchases of
Class A shares of an Evergreen fund during the period will qualify as Letter of
Intent purchases.
Waiver of Initial Sales Charges
The Funds may sell their shares at net asset value without an initial
sales charge to:
1. purchases of shares in the amount of $1 million or more;
2. a corporate or certain other qualified retirement plan or a
non-qualified deferred compensation plan or a Title 1 tax
sheltered annuity or TSA plan sponsored by an organization
<PAGE>
having 100 or more eligible employees (a "Qualifying Plan") or
a TSA plan sponsored by a public educational entity having
5,000 or more eligible employees (an "Educational TSA Plan");
3. institutional investors, which may include bank trust
departments and registered investment advisers;
4. investment advisers, consultants or financial planners who
place trades for their own accounts or the accounts of their
clients and who charge such clients a management, consulting,
advisory or other fee;
5. clients of investment advisers or financial planners who place
trades for their own accounts if the accounts are linked to
master account of such investment advisers or financial
planners on the books of the broker-dealer through whom shares
are purchased;
6. institutional clients of broker-dealers, including retirement
and deferred compensation plans and the trusts used to fund
these plans, which place trades through an omnibus account
maintained with a Fund by the broker-dealer;
7. employees of FUNB, its affiliates, the Distributor, any
broker-dealer with whom the Distributor has entered into an
agreement to sell shares of the Funds, and members of the
immediate families of such employees;
8. certain Directors, Trustees, officers and employees of the
Evergreen funds, the Distributor or their affiliates and to
the immediate families of such persons; or
9. a bank or trust company in a single account in the name of
such bank or trust company as trustee if the initial
investment in or any Evergreen fund made pursuant to this
waiver is at least $500,000 and any commission paid at the
time of such purchase is not more than 1% of the amount
invested.
With respect to items 8 and 9 above, each Fund will only sell shares to
these parties upon the purchasers written assurance that the purchase is for
their personal investment purposes only. Such purchasers may not resell the
securities except through redemption by the Fund. The Funds will not charge any
CDSC on redemptions by such purchasers.
Waiver of CDSCS
28
<PAGE>
The Funds do not impose a CDSC when the shares you are redeeming
represent:
1. an increase in the share value above the net cost of such
shares;
2. certain shares for which the Fund did not pay a commission on
issuance, including shares acquired through reinvestment of
dividend income and capital gains distributions;
3. shares that are in the accounts of a shareholder who has died
or become disabled;
4. a lump-sum distribution from a 401(k) plan or other benefit
plan qualified under the Employee Retirement Income Security
Act of 1974 ("ERISA");
5. an automatic withdrawal from the ERISA plan of a shareholder
who is a least 59 1/2 years old;
6. shares in an account that we have closed because the account
has an aggregate net asset value of less than $1,000;
7. an automatic withdrawal under an Systematic Income Plan of up
<PAGE>
to 1.0% per month of your initial account balance;
8. a withdrawal consisting of loan proceeds to a retirement plan
participant;
9. financial hardship withdrawals made by a retirement plan
participant;
10. a withdrawal consisting of returns of excess contributions or
excess deferral amounts made to a retirement plan; or
11. a redemption by an individual participant in a Qualifying Plan
that purchased Class C shares (this waiver is not available in
the event a Qualifying Plan, as a whole, redeems substantially
all of its assets).
EXCHANGES
Investors may exchange shares of a Fund for shares of the same class of
any other Evergreen fund, as described under the section entitled "Exchanges" in
the prospectus. Before you make an exchange, you should read the prospectus of
the Evergreen fund into which you want to exchange. The Trust's Board of
Trustees reserves the right to discontinue, alter or limit the exchange
privilege at any time.
CALCULATION OF NET ASSET VALUE PER SHARE ("NAV")
Each Fund computes its NAV once daily on Monday through Friday, as
described in the prospectus. A Fund will not compute its NAV on the day the
following legal holidays are observed: New Year's Day, Martin Luther King, Jr.
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.
The NAV of each class of shares of a Fund is calculated by dividing the
value of a Fund's net assets attributable to that class by the number of all
shares issued for that class.
29
<PAGE>
VALUATION OF PORTFOLIO SECURITIES
Current values for a Fund's portfolio securities are determined as
follows:
(1) Securities that are traded on an established exchange or the
over-the-counter National Market System ("NMS") are valued on the basis
of the last sales price on the exchange where primarily traded or on
the NMS prior to the valuation, provided that a sale has occurred.
(2) Securities traded on an established exchange or in the
over-the-counter market for which there has been no sale and other
securities traded in the over-the-counter market are valued at the mean
of the bid and asked prices at the time of valuation.
(3) Short-term investments maturing in more than sixty days, for which
market quotations are readily available, are valued at current market
value.
(4) Short-term investments maturing in sixty days or less are valued at
amortized cost, which approximates market.
(5) Securities, including restricted securities, for which market
quotations are not readily available; listed securities or those on NMS
if, in a Fund's opinion, the last sales price does not reflect a
current market value; and other assets are valued at prices deemed in
good faith to be fair under procedures established by the Board of
Trustees.
SHAREHOLDER SERVICES
As described in the prospectus, a shareholder may elect to receive
<PAGE>
their dividends and capital grains distributions in cash instead of shares.
However, ESC will automatically convert a shareholder's distribution option so
that the shareholder reinvests all dividends and distributions in additional
shares when it learns that the postal or other delivery service is unable to
deliver checks or transaction confirmations to the shareholder's address of
record. The Funds will hold the returned distribution or redemption proceeds in
a non interest-bearing account in the shareholder's name until the shareholder
updates their address. No interest will accrue on amounts represented by
uncashed distribution or redemption checks.
PRINCIPAL UNDERWRITER
The Distributor is the principal underwriter for the Trust and with
respect to each class of each Fund. The Trust has entered into a Principal
Underwriting Agreement ("Underwriting Agreement") with the Distributor with
respect to each class of each Fund. The Distributor is a subsidiary of The BISYS
Group, Inc.
The Distributor, as agent, has agreed to use its best efforts to find
purchasers for the shares. The Distributor may retain and employ representatives
to promote distribution of the shares and may obtain orders from broker-dealers,
and others, acting as principals, for sales of shares to them. The Underwriting
Agreement provides that the Distributor will bear the expense of preparing,
printing, and distributing advertising and sales literature and prospectuses
used by it.
All subscriptions and sales of shares by the Distributor are at the
public offering price of the shares, which is determined in accordance with the
provisions of the Trust's Declaration of Trust, By-Laws, current prospectuses
and SAI. All orders are subject to acceptance by the Trust and the Trust
reserves the right, in its sole discretion, to reject any order received. Under
the Underwriting Agreement, the Trust is not liable to anyone for failure to
accept any order.
30
<PAGE>
The Distributor has agreed that it will, in all respects, duly conform
with all state and federal laws applicable to the sale of the shares. The
Distributor has also agreed that it will indemnify and hold harmless the Trust
and each person who has been, is, or may be a Trustee or officer of the Trust
against expenses reasonably incurred by any of them in connection with any
claim, action, suit, or proceeding to which any of them may be a party that
arises out of or is alleged to arise out of any misrepresentation or omission to
state a material fact on the part of the Distributor or any other person for
whose acts the Distributor is responsible or is alleged to be responsible,
unless such misrepresentation or omission was made in reliance upon written
information furnished by the Trust.
The Underwriting Agreement provides that it will remain in effect as
long as its terms and continuance are approved annually (i) by a vote of a
majority of the Trust's Independent Trustees, and (ii) by vote of a majority of
the Trust's Trustees, in each case, cast in person at a meeting called for that
purpose.
The Underwriting Agreement may be terminated, without penalty, on 60
days' written notice by the Board of Trustees or by a vote of a majority of
outstanding shares subject to such agreement. The Underwriting Agreement will
terminate automatically upon its "assignment," as that term is defined in the
1940 Act.
From time to time, if, in the Distributor's judgment, it could benefit
the sales of shares, the Distributor may provide to selected broker-dealers
promotional materials and selling aids, including, but not limited to, personal
computers, related software, and data files.
ADDITIONAL TAX INFORMATION
REQUIREMENTS FOR QUALIFICATION AS A REGISTERED INVESTMENT COMPANY
Each Fund intends to qualify for and elect the tax treatment applicable
to a regulated investment company (a "RIC") under Subchapter M of the Internal
<PAGE>
Revenue Code of 1986 (the "Code"). (Such qualification does not involve
supervision of management or investment practices or policies by the Internal
Revenue Service.) In order to qualify as a RIC, a Fund must, among other things,
(i) derive at least 90% of its gross income from dividends, interest, payments
with respect to proceeds from securities loans, gains from the sale or other
disposition of securities or foreign currencies and other income (including
gains from options, futures or forward contracts) derived with respect to its
business of investing in such securities; and (ii) diversify its holdings so
that, at the end of each quarter of its taxable year, (a) at least 50% of the
market value of the Fund's total assets is represented by cash, U.S. Government
securities and other securities limited in respect of any one issuer, to an
amount not greater than 5% of the Fund's total assets and 10% of the outstanding
voting securities of such issuer, and (b) not more than 25% of the value of its
total assets is invested in the securities of any one issuer (other than U.S.
Government securities and securities of other regulated investment companies).
By so qualifying, a Fund is not subject to federal income tax if it timely
distributes its investment company taxable income and any net realized capital
gains. A 4% nondeductible excise tax will be imposed on a Fund to the extent it
does not meet certain distribution requirements by the end of each calendar
year. Each Fund anticipates meeting such distribution requirements.
TAXES ON DISTRIBUTIONS
Distributions will be taxable to shareholders whether made in shares or
in cash. Shareholders electing to receive distributions in the form of
additional shares will have a cost basis for federal income
31
<PAGE>
tax purposes in each share so received equal to the net asset value of a share
of a Fund on the reinvestment date.
To calculate ordinary income for federal income tax purposes,
shareholders must generally include dividends paid by the Fund from its
investment company taxable income (net taxable investment income plus net
realized short-term capital gains, if any). The Fund will include dividends it
receives from domestic corporations when the Fund calculates its gross
investment income. The Fund anticipates that all or a portion of the ordinary
dividends which it pays will qualify for the 70% dividends-received deduction
for corporations. The Fund will inform shareholders of the amounts that so
qualify.
From time to time, the Fund will distribute the excess of its net
long-term capital gains over its short-term capital loss to shareholders (i.e.,
capital gain dividends). For federal tax purposes, shareholders must include
such capital gain dividends when calculating their net long-term capital gains.
Capital gain dividends are taxable as net long-term capital gains to a
shareholder, no matter how long the shareholder has held the shares.
Distributions by a Fund reduce its NAV. A distribution that reduces the
Fund's NAV below a shareholder's cost basis is taxable as described above,
although from an investment standpoint, it is a return of capital. In
particular, if a shareholder buys Fund shares just before the Fund makes a
distribution, when the Fund makes the distribution the shareholder will receive
what is in effect a return of capital. Nevertheless, the shareholder may incur
taxes on the distribution. Therefore, shareholders should carefully consider the
tax consequences of buying Fund shares just before a distribution.
All distributions, whether received in shares or cash, must be reported
by each shareholder on his or her federal income tax return. Each shareholder
should consult a tax adviser to determine the state and local tax implications
of Fund distributions.
If more than 50% of the value of a Fund's total assets at the end of a
fiscal year is represented by securities of foreign corporations and a Fund
elects to make foreign tax credits available to its shareholders, a shareholder
will be required to include in his gross income both cash dividends and the
amount the Fund advises him is his pro rata portion of income taxes withheld by
foreign governments from interest and dividends paid on a Fund's investments.
The shareholder may be entitled, however, to take the amount of such foreign
taxes withheld as a credit against his U.S. income tax, or to treat the foreign
tax withheld as an itemized deduction from his gross income, if that should be
to his advantage. In substance, this policy enables the shareholder to benefit
from the same foreign tax credit or deduction that he would have received if he
<PAGE>
had been the individual owner of foreign securities and had paid foreign income
tax on the income therefrom. As in the case of individuals receiving income
directly from foreign sources, the credit or deduction is subject to a number of
limitations.
TAXES ON THE SALE OR EXCHANGE OF FUND SHARES
Upon a sale or exchange of Fund shares, a shareholder will realize a
taxable gain or loss depending on his or her basis in the shares. A shareholder
must treat such gains or losses as a capital gain or loss if the shareholder
held the shares as capital assets. Capital gain on assets held for more than
eighteen months is generally subject to a maximum federal income tax rate of 20%
for an individual. The maximum capital gains tax rate for capital assets held by
an individual for more than twelve months but not more than eighteen months is
generally 28%. Generally, the Code will not allow a shareholder to realize a
loss on shares he or she has sold or exchanged and replaced within a
sixty-one-day period beginning thirty days before and ending thirty days after
he or she sold or exchanged the shares. The Code will treat a shareholder's loss
on shares held for six months or less as a long-term capital loss to the extent
the shareholder received capital gain dividends on such shares.
Shareholders who fail to furnish their taxpayer identification numbers
to a Fund and to certify as to its
32
<PAGE>
correctness and certain other shareholders may be subject to a 31% federal
income tax backup withholding requirement on dividends, distributions of capital
gains and redemption proceeds paid to them by the Fund. If the withholding
provisions are applicable, any such dividends or capital gain distributions to
these shareholders, whether taken in cash or reinvested in additional shares,
and any redemption proceeds will be reduced by the amounts required to be
withheld. Investors may wish to consult their own tax advisers about the
applicability of the backup withholding provisions.
OTHER TAX CONSIDERATIONS
The foregoing discussion relates solely to U.S. federal income tax law
as applicable to U.S. persons (i.e., U.S. citizens and residents and U.S.
domestic corporations, partnerships, trusts and estates). It does not reflect
the special tax consequences to certain taxpayers (e.g., banks, insurance
companies, tax exempt organizations and foreign persons). Shareholders are
encouraged to consult their own tax advisers regarding specific questions
relating to federal, state and local tax consequences of investing in shares of
a Fund. Each shareholder who is not a U.S. person should consult his or her tax
adviser regarding the U.S. and foreign tax consequences of ownership of shares
of a Fund, including the possibility that such a shareholder may be subject to a
U.S. withholding tax at a rate of 30% (or at a lower rate under a tax treaty) on
amounts treated as income from U.S. sources under the Code.
FINANCIAL INFORMATION
EXPENSES
The table below shows the total dollar amounts paid by each Fund for
services rendered during the fiscal periods specified. For more information on
specific expenses, see "Investment Advisory and Other Services," "Distribution
Plans and Agreements," "Principal Underwriter" and "Purchase, Redemption and
Pricing of Shares."
1997 FUND EXPENSES
<TABLE>
<CAPTION>
Total Underwriting
Class A Class B Class C Underwriting Commissions
FUND Advisory Fees 12b-1 Fees 12b-1 Fees 12b-1 Fees Commissions Retained
========================= ================= =============== =================== ================ ================== =============
<S> <C> <C> <C> <C> <C> <C>
Emerging Markets (1) $703,822(a) $5,656 $36,635 $7,616 $72,733 $16,463
Global Leaders (1) $1,398,605 $67,888 $897,836 $16,245 $3,877,434 $188,288
Global Opportunities (2A) $325,228 $23,188 $199,880 $40,961 $206,755 $17,298
Global Opportunities (2B) $5,048,808 $371,892 $2,946,506 $814,386 $774,233 $23,841
International Equity (1) $1,543,621(b) $21,095 $191,870 $2,983 $298,649 $8,273
Latin America (1) $869,691 $33,104 $899,853 $116,589 $324,470 $29,070
<PAGE>
Natural Resources (3A) $157,633 $5,959 $102,986 $28,486 $28,662 $2,778
</TABLE>
33
<PAGE>
<TABLE>
<CAPTION>
1997 FUND EXPENSES
Total Underwriting
Class A Class B Class C Underwriting Commissions
FUND Advisory Fees 12b-1 Fees 12b-1 Fees 12b-1 Fees Commissions Retained
========================= ================ =============== =================== ================ ================== ===============
<S> <C> <C> <C> <C> <C> <C> <C>
Emerging Markets (1) $703,822(a) $5,656 $36,635 $7,616 $72,733 $16,463
Global Leaders (1) $1,398,605 $67,888 $897,836 $16,245 $3,877,434 $188,288
Global Opportunities (2A) $325,228 $23,188 $199,880 $40,961 $206,755 $17,298
Global Opportunities (2B) $5,048,808 $371,892 $2,946,506 $814,386 $774,233 $23,841
International Equity (1) $1,543,621(b) $21,095 $191,870 $2,983 $298,649 $8,273
Latin America (1) $869,691 $33,104 $899,853 $116,589 $324,470 $29,070
Natural Resources (3A) $157,633 $5,959 $102,986 $28,486 $28,662 $2,778
Natural Resources (3B) $243, 022 $11,027 $162,397 $32,622 $236,487 $124,799
Precious Metals (4A) $678,437 N/A $950,284* N/A $666,842 -0-
Precious Metals (4B) $1,322,411 N/A $1,923,248* N/A $2,088,781 $1,058,137
International Growth (1) $1,194,384 N/A $1,597,729* N/A $645,122 -0-
========================= ================ =============== =================== ================ ================== ===============
</TABLE>
(1) Year ended 10/31/97 (2A) One month ended 10/31/97 (2B) Year ended 9/30/97
(3A) Seven months ended 10/31/97 (3B) Year ended 3/31/97 (4A) Eight months ended
10/31/97 (4B) Year ended 2/28/97
(a) Of that amount, $240,240 waived by Adviser.
(b) Of that amount, $232,680 waived by Adviser.
* Not multiple class during this period; amount reflects all 12b-1 fees.
<TABLE>
<CAPTION>
1996 FUND EXPENSES
Total Underwriting
Class A Class B Class C Underwriting Commissions
FUND Advisory Fees 12b-1 Fees 12b-1 Fees 12b-1 Fees Commissions Retained
=============================== ================ =============== ============= ============== ================== ===============
<S> <C> <C> <C> <C> <C> <C>
Emerging Markets (1) $342,379 (a) $3,883 $19,319 $493 $12,924 $1,307
Global Leaders (2) $199,941 (b) $7,416 $64,024 $837 $221,285 $23,449
Global Opportunities (3) $5,668,408 $454,608 $3,210,981 $1,087,829 $6,424,039 -0-
International Equity (1) $891,137 (c) $14,674 $86,432 $1,589 $40,927 $6,190
Latin America (1) $831,618 $29,525 $886,788 $94,357 $1,172,200 $1,020,432
Natural Resources (4) $217,332 $11,886 $152,380 $17,285 $246,847 $93,134
Precious Metals (5) $1,354,605 N/A $1,979,775* N/A $1,979,775 $755,218
International Growth (1) $1,076,770 N/A $1,442,473* N/A $1,382,238 $442,507
=============================== ================ =============== ============= ============== ================== ==============
</TABLE>
(1) Year end 10/31/96
(2) Four months ended 10/31/96
(3) Year ended 9/30/96
(4) Year ended 3/31/96
34
<PAGE>
(5) Year ended 2/29/96
(a) Of that amount, $326,122 waived by Adviser.
(b) Of that amount, $138,323 waived by Adviser.
(c) Of that amount, $479,316 waived by Adviser.
* Not multiple class during this period; amount reflects all 12 b-1 fees.
1995 FUND EXPENSES
Total Underwriting
Underwriting Commissions
FUND Advisory Fees Commissions Retained
========================== ================== ================== ==============
Emerging Markets (1) $130,542 (a) $8,029 $949
Global Leaders N/A N/A N/A
<PAGE>
Global Opportunities (2) $3,009,974 $3,227,507 -0-
International Equity (1) $299,412 (b) $36,393 $4,428
Latin America (1) $1,099,920 $1,719,539 $1,451,551
Natural Resources (3) $217,332 $353,409 $612,702
Precious Metals (4) $1,396,523 $2,179,660 $255,046
International Growth (5) $985,652 $1,486,838 $807,110
========================== ================== ================== ==============
(1) Ten months ended 10/31/95 (2) Year ended 9/30/95 (3) Year ended 3/31/95 (4)
Year ended 2/28/95 (5) Year ended 10/31/95
(a) Entire amount waived by Adviser.
(b) Of that amount, $212,295 waived by Adviser.
BROKERAGE COMMISSIONS PAID
The table below shows (1) total amounts paid by each Fund in brokerage
commissions and (2) brokerage commissions paid by each Fund to Lieber & Company,
an affiliate of FUNB, during each of the fiscal periods specified.
<TABLE>
<CAPTION>
1997 1996 1995
Fund
================ --------------------------------- ----------------------------------------- --------------------------------------
Total Paid to Lieber Total Paid to Lieber Total Paid to Lieber
============== ================= ==================== =================== ==================== =================
<S> <C> <C> <C> <C> <C> <C>
Emerging (a) -0- (a) $242,847 (a) -0- (a) $60,543 (a) -0- (a)
Markets
35
<PAGE>
Global (a) $119,963(a) $203,040 (e) $54,074 (e) N/A N/A
Leaders
Global (b) (b) -0- (b) $454,203 (b)
Opportunities (c) (c) $1,809,181 (b) -0- (b)
International (a) -0- (a) $560,019 (a) -0- (a) $71,508 (a) -0- (a)
Equity
Latin (a) -0- (a) (a) (a) (a) (a)
America
Natural (d) (d)
Resources $62,307(e) (e) $52,549 (c) -0- (c) $300,142 (c) -0- (c)
Precious (f) (f) $438,893 (d) -0- (d) $523,800 (d)
Metals $477,545(g) (g) -0- (d)
International (a) (a) $749,530 (a) -0- (a) $707,000 (e) -0- (e)
Growth
================ ============== ================= ==================== =================== ==================== =================
</TABLE>
1997 FOOTNOTES:
(a) Year ended 10/31/97
(b) One month ended 10/31/97
(c) Year ended 9/30/97
(d) Seven months ended 10/31/97
(e) Year ended 3/31/97
(f) Eight months ended 10/31/97
(g) Year ended 2/28/97
1996 FOOTNOTES:
(a) Year ended 10/31/96
(b) One month ended 9/30/96
(c) Year ended 3/31/96
(d) Year ended 2/29/96
(e) Four months ended 10/31/96
1995 FOOTNOTES:
(a) Ten months ended 10/31/95
(b) Year ended 9/30/95
(c) Year ended 3/31/95
(d) Year ended 2/28/95
(e) Year ended 10/31/95
COMPUTATION OF CLASS A OFFERING PRICE
<PAGE>
Class A shares are sold at the NAV plus a sales charge. Below is an
example of the method of computing the offering price of Class A shares of each
Fund. The example assumes a purchase aggregating less than $50,000 subject to
the schedule of sales charges set forth in the prospectus at a price based upon
the NAV of each Fund's Class A shares as of October 31, 1997.
36
<PAGE>
FUND* NET ASSET VALUE PER SHARE OFFERING PRICE
SALES CHARGE PER SHARE
======================
Emerging Markets $9.99 $0.50 $10.49
Global Leaders $13.67 $0.68 $14.35
Global Opportunities $23.53 $1.17 $24.70
International Equity $11.07 $0.55 $11.62
Latin America $13.15 $0.66 $13.81
Natural Resources $12.58 $0.63 $13.21
*Excludes Precious Metals and International Growth, which had not yet offered
Class A shares.
PERFORMANCE
Total Return
Total return quotations for a class of shares of a Fund as they may
appear from time to time in advertisements are calculated by finding the average
annual compounded rates of return over one, five and ten year periods, or the
time periods for which such class of shares has been effective, whichever is
relevant, on a hypothetical $1,000 investment that would equate the initial
amount invested in the class to the ending redeemable value. To the initial
investment all dividends and distributions are added, and all recurring fees
charged to all shareholder accounts are deducted. The ending redeemable value
assumes a complete redemption at the end of each period.
The average annual total returns for each class of shares of the Funds
(including applicable sales charges) as of October 31, 1997 are as follows:
<TABLE>
<CAPTION>
TEN YEARS OR
SINCE INCEPTION
FUND/CLASS ONE YEAR FIVE YEARS INCEPTION DATE
EMERGING MARKETS
<S> <C> <C> <C> <C>
Class A 12.48% - -1.38% 9/6/94
Class B 12.40% - -1.43% 9/6/94
Class C 16.54% - -0.48% 9/6/94
Class Y 18.40% - 0.38% 9/6/94
GLOBAL LEADERS
Class A 9.43% - 10.69% 6/3/96
Class B 9.01% - 10.98% 6/3/96
Class C 13.02% - 13.62% 6/3/96
Class Y 15.22% - 17.35% 11/1/95
23569
37
<PAGE>
TEN YEARS OR
SINCE INCEPTION
FUND/CLASS ONE YEAR FIVE YEARS INCEPTION DATE
GLOBAL OPPORTUNITIES
Class A -0.70% 14.83% 11.60% 3/16/88
Class B -1.47% - 11.86% 2/1/93
Class C 2.44% - 12.17% 2/1/93
Class Y - - 3.69%** 1/13/97
INTERNATIONAL EQUITY
<PAGE>
Class A 2.51% - 2.48% 9/2/94
Class B 1.79% - 2.49% 9/2/94
Class C 5.76% - 3.40% 9/2/94
Class Y 7.92% - 4.33% 9/2/94
LATIN AMERICA
Class A 13.52% - 8.25% 11/1/93
Class B 13.40% - 8.41% 11/1/93
Class C 17.38% - 8.82% 11/1/93
NATURAL RESOURCES
Class A 4.10% - 6.12% 10/7/94
Class B 3.55% - 6.20% 10/7/94
Class C 7.55% - 7.07% 10/7/94
PRECIOUS METALS* -33.51% 3.76% 0.22% over ten years ago
INTERNATIONAL GROWTH* 12.69% 11.58% 6.48% over ten years ago
</TABLE>
* Not multiple class during this period.
** Cumulative since inception.
NON-STANDARDIZED PERFORMANCE
In addition to the performance information described above, a Fund may
provide total return information for designated periods, such as for the most
recent six months or most recent twelve months. This total return information is
computed as described under "Total Return" above except that no annualization is
made.
GENERAL
From time to time, a Fund may quote its performance in advertising and
other types of literature as compared to the performance of the Standard &
Poor's 500 Composite Stock Price Index, the Dow Jones
23569
38
<PAGE>
Industrial Average, Russell 2000 Index, or any other commonly quoted index of
common stock prices. The Standard & Poor's 500 Composite Stock Price Index, the
Dow Jones Industrial Average and the Russell 2000 Index are unmanaged indices of
selected common stock prices. A Fund's performance may also be compared to those
of other mutual funds having similar objectives. This comparative performance
would be expressed as a ranking prepared by Lipper Analytical Services, Inc. or
similar independent services monitoring mutual fund performance. A Fund's
performance will be calculated by assuming, to the extent applicable,
reinvestment of all capital gains distributions and income dividends paid. Any
such comparisons may be useful to investors who wish to compare a Fund's past
performance with that of its competitors. Of course, past performance cannot be
a guarantee of future results.
Financial Statements
The audited financial statements and the reports thereon are hereby
incorporated by reference to each Fund's Annual Report, a copy of which may be
obtained without charge from ESC, P.O. Box 2121, Boston, Massachusetts
02106-2121.
ADDITIONAL INFORMATION
Except as otherwise stated in its prospectus or required by law, each
Fund reserves the right to change the terms of the offer stated in its
prospectus without shareholder approval, including the right to impose or change
fees for services provided.
No dealer, salesman or other person is authorized to give any
information or to make any representation not contained in a Fund's prospectus,
SAI or in supplemental sales literature issued by such Fund or the Distributor,
and no person is entitled to rely on any information or representation not
contained therein.
Each Fund's prospectus and SAI omit certain information contained in
the Trust's registration statement, which you may obtain for a fee from the SEC
in Washington, D.C.
<PAGE>
23569
39
<PAGE>
APPENDIX A
S&P AND MOODY'S BOND RATINGS
S&P BOND RATINGS
An S&P bond rating is a current assessment of the creditworthiness of
an obligor, including obligors outside the U.S., with respect to a specific
obligation. This assessment may take into consideration obligors such as
guarantors, insurers or lessees. Ratings of foreign obligors do not take into
account currency exchange and related uncertainties. The ratings are based on
current information furnished by the issuer or obtained by S&P from other
sources it considers reliable.
The ratings are based, in varying degrees, on the following
considerations:
a. Likelihood of default and capacity and willingness of the obligor as
to the timely payment of interest and repayment of principal in accordance with
the terms of the obligation;
b. Nature of and provisions of the obligation; and
c. Protection afforded by and relative position of the obligation in
the event of bankruptcy reorganization or other arrangement under the laws of
bankruptcy and other laws affecting creditors' rights.
PLUS (+) OR MINUS (-): To provide more detailed indications of credit
quality, ratings from "AA" to "BBB" may be modified by the addition of a plus or
minus sign to show relative standing within the major rating categories.
A provisional rating is sometimes used by S&P. It assumes the
successful completion of the project being financed by the debt being rated and
indicates that payment of debt service requirements is largely or entirely
dependent upon the successful and timely completion of the project. This rating,
however, while addressing credit quality subsequent to completion of the
project, makes no comment on the likelihood of, or the risk of default upon
failure of, such completion.
S&P bond ratings are as follows:
a. AAA - Debt rated AAA has the highest rating assigned by S&P.
Capacity to pay interest and repay principal is extremely strong.
b. AA - Debt rated AA has a very strong capacity to pay interest and
repay principal and differs from the higher rated issues only in small degree.
3. A - Debt rated A has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.
4. BBB - Debt rated BBB is regarded as having an adequate capacity to
pay interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay interest and repay principal
22987
A-1
<PAGE>
for debt in this category than in higher rated categories.
5. BB, B, CCC, CC and C - Debt rated BB, B, CCC, CC and C is regarded,
on balance, as predominantly speculative with respect to capacity to pay
interest and repay principal in accordance with the terms of the obligation. BB
indicates the lowest degree of speculation and C the highest degree of
speculation. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
<PAGE>
exposures to adverse conditions.
Moody's Bond Ratings
Moody's ratings are as follows:
1. Aaa - Bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and are generally
referred to as "gilt-edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
2. Aa - Bonds which are rated Aa are judged to be of high quality by
all standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long term risks appear somewhat larger than in Aaa
securities.
3. A - Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate but elements
may be present which suggest a susceptibility to impairment sometime in the
future.
4. Baa - Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
5. Ba - Bonds which are rated Ba are judged to have speculative
elements. Their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate and thereby
not well safeguarded during both good and bad times over the future. Uncertainty
of position characterizes bonds in this class.
6. B - Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
7. Caa - Bonds which are rated Caa are of poor standing. Such issues
may be in default or there may be present elements of danger with respect to
principal or interest.
8. Ca - Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in defauolt or have other
market shortcomings.
9. C - Bonds which are rated as C are the lowest rated class of bonds
and issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
22987
A-2
<PAGE>
Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa through Baa in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.
MONEY MARKET INSTRUMENTS
Money market securities are instruments with remaining maturities of
one year or less such as bank certificates of deposit, bankers' acceptances,
commercial paper (including variable rate master demand notes), and obligations
issued or guaranteed by the U.S. government, its agencies or instrumentalities,
some of which may be subject to repurchase agreements.
<PAGE>
Commercial Paper
Commercial paper will consist of issues rated at the time of purchase
A-1, by S&P, or Prime-1 by Moody's or F-1 by Fitch Investor Services, L.P.; or,
if not rated, will be issued by companies which have an outstanding debt issue
rated at the time of purchase Aaa, Aa or A by Moody's, or AAA, AA or A by S&P or
Fitch, or will be determined by a Fund's investment adviser to be of comparable
quality.
A. S&P Ratings
An S&P commercial paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no more than
365 days. Ratings are graded into four categories, ranging from "A" for the
highest quality obligations to "D" for the lowest. The top category is as
follows:
1. A: Issues assigned this highest rating are regarded as having the
greatest capacity for timely payment. Issues in this category are delineated
with the numbers 1, 2 and 3 to indicate the relative degree of safety.
2. A-1: This designation indicates that the degree of safety regarding
timely payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics are denoted with a plus (+) sign
designation.
B. Moody's Ratings
The term "commercial paper" as used by Moody's means promissory
obligations not having an original maturity in excess of nine months. Moody's
commercial paper ratings are opinions of the ability of issuers to repay
punctually promissory obligations not having an original maturity in excess of
nine months. Moody's employs the following designation, judged to be investment
grade, to indicate the relative repayment capacity of rated issuers.
1. The rating Prime-1 is the highest commercial paper rating assigned
by Moody's. Issuers rated Prime-1 (or related supporting institutions) are
deemed to have a superior capacity for repayment of short term promissory
obligations. Repayment capacity of Prime-1 issuers is normally evidenced by the
following characteristics:
1) leading market positions in well-established industries;
2) high rates of return on funds employed;
3) conservative capitalization structures with moderate reliance
on debt and ample asset protection;
4) broad margins in earnings coverage of fixed financial charges
and high internal cash generation; and
22987
A-3
<PAGE>
5) well established access to a range of financial markets and
assured sources of alternate liquidity.
In assigning ratings to issuers whose commercial paper obligations are
supported by the credit of another entity or entities, Moody's evaluates the
financial strength of the affiliated corporations, commercial banks, insurance
companies, foreign governments or other entities, but only as one factor in the
total rating assessment.
C. Fitch Ratings
Fitch's short-term ratings apply to debt obligations that are payable
on demand or have original maturities of generally up to three years, including
commercial paper, certificates of deposit, medium-term notes, and municipal and
investment notes.
The short-term rating places greater emphasis than a long-term rating
on the existence of liquidity necessary to meet the issuer's obligations in a
timely manner.
F-1+: Exceptionally Strong Credit Quality. Issues assigned this rating
are regarded as having the strongest degree of assurance for timely payment.
<PAGE>
F-1: Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated
"F-1+."
F-2: Good Credit Quality. Issues assigned this rating have a
satisfactory degree of assurance for timely payment, but the margin of safety is
not as great as for issues assigned "F-1+" and "F-1" ratings.
F-3: Fair Credit Quality. Issues assigned this rating have
characteristics suggesting that the degree of assurance for timely payment is
adequate; however, near-term adverse changes could cause these securities to be
rated below investment grade.
F-5: Weak Credit Quality. Issues assigned this rating have
characteristics suggesting a minimal degree of assurance for timely payment and
are vulnerable to near-term adverse changes in financial and economic
conditions.
D: Default. Issues assigned this rating are in actual or imminent
payment default.
LOC: The symbol LOC indicates that the rating is based on a letter of
credit issued by a commercial bank.
A-4
<PAGE>
Evergreen
International
and Global
Growth Funds
1997 Annual Report
(Photo appears here)
(Evergreen tree logo)
Evergreen Funds(SM)
SINCE 1932
<PAGE>
Table of Contents
<TABLE>
<S> <C>
Letter to Shareholders ..................... 1
Evergreen Emerging Markets Growth
Fund
Fund at a Glance ........................ 2
Portfolio Manager Interview ............... 3
Evergreen Global Leaders Fund
Fund at a Glance ........................ 5
Portfolio Manager Interview ............... 6
Evergreen Global Real Estate Equity
Fund
Fund at a Glance ........................ 9
Portfolio Manager Interview ............... 10
Evergreen International Equity Fund
Fund at a Glance ........................ 13
Portfolio Manager Interview ............... 14
Evergreen Latin America Fund
Fund at a Glance ........................ 16
Portfolio Manager Interview ............... 17
<S> <C>
Financial Highlights
Evergreen Emerging Markets Growth
Fund ................................. 20
Evergreen Global Leaders Fund ............ 22
Evergreen Global Real Estate Equity Fund 24
Evergreen International Equity Fund ...... 27
Evergreen Latin America Fund ............ 29
Schedules of Investments
Evergreen Emerging Markets Growth
Fund ................................. 31
Evergreen Global Leaders Fund ............ 35
Evergreen Global Real Estate Equity Fund 39
Evergreen International Equity Fund ...... 41
Evergreen Latin America Fund ............ 46
Statements of Assets and Liabilities ......... 49
Statements of Operations ..................... 50
Statements of Changes in Net Assets -
Year-end October 31, 1997 ............... 51
Statements of Changes in Net Assets -
Year-end October 31, 1996 ............... 52
Notes to Financial Statements ............... 53
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
Evergreen Funds
Evergreen Funds is one of the nation's fastest growing investment companies with
more than $40 billion in assets under management.
With 65 mutual funds to choose among and acclaimed service and operations
capabilities, investors enjoy a broader range of quality investment products and
services designed to meet their needs.
The Evergreen Funds employ intensive, research-driven investment strategies
executed by over 90 research analysts and portfolio managers. The fund company
remains dedicated to meeting the needs of investors and their advisors in a
global economy. Look to the Evergreen Funds to provide a distinctive level of
service and excellence in investment management.
This brochure must be preceded or accompanied by a prospectus of an Evergreen
fund contained herein. The prospectus contains more complete information,
including fees and expenses, and should be read carefully before investing or
sending money.
----------------------------------------------------------------
Mutual Funds: ARE NOT FDIC INSURED May lose value o Are not bank guaranteed
----------------------------------------------------------------
Evergreen Funds Distributor, Inc.
International investing involves increased risk and volatility.
<PAGE>
Letter to Shareholders
----------------------
December 1997
Dear Shareholders:
It often seems that when international
investment diversification makes the most
intellectual sense, it makes the least
(Photo of emotional sense.
William M. Ennis)
Like many international and
William M. Ennis global funds, the Evergreen international and
Managing Director global funds have provided positive returns
during the past year. However, the returns for
the 12 months ended October 31, 1997, were held back by the market setbacks
during October when several Asian currencies were devalued and local stock
markets suffered severe losses. As a result of both this volatility and the
positive investment environment in the United States, most domestic equity funds
showed superior returns for the period.
It is easy to see why some mutual fund shareholders might question the value of
investing in an international fund. It just seems more comfortable to invest in
large U.S. companies, which have been the market leaders for the past three
years.
The Advantages of Diversification
The answer is simple. Over the longer term, international diversification of
<PAGE>
part of one's investment portfolio can help enhance returns and reduce
volatility. The United States stock market has had a wonderful rally for the
past three years. However, looking at present prices, many investment
professionals see more attractive values in the international markets that have
been lagging the U.S. market. In addition, the very large American companies,
whose stocks have been the best performers, may be less able to increase their
future earnings by the restructuring programs that have been helping them. Their
ability to export also is weakened by the strong U.S. dollar. Meanwhile, very
similar restructuring and cost-cutting proposals are just beginning to take hold
among corporations in Europe and Japan. Moreover, we believe the emerging
markets still have significant long-term opportunities, despite inevitable
periods of short-term volatility.
At Evergreen Funds, we encourage you to remain focused on your long-term goals
and to remain disciplined in your personal investment strategies. No one can
confidently say whether next year's market will follow last year's pattern, or
whether trends will reverse themselves so that last year's lagging strategy
becomes next year's winning strategy. We can say, however, that the most likely
winners in the long run are those who consistently follow long-term investment
strategies.
Upcoming Developments
In the next few weeks and months, shareholders of Evergreen and Keystone funds
will begin to notice some changes. The Evergreen Keystone Funds are becoming the
Evergreen Funds. On October 31, 1997, Keystone America Funds adopted the name of
Evergreen and in early 1998 the original Keystone Fund Family will take the
Evergreen name.
We believe that by putting all the funds under the umbrella name of Evergreen
Funds we will be creating a simpler and more cohesive image. Importantly, we
expect to create substantial cost savings for shareholders as a result of
consolidating prospectuses, annual reports, legal registrations and other
materials. It also will be easier for you to find all the funds of the Evergreen
Family, to which you have exchange privileges, under one heading in newspapers
and electronic services.
What will not change will be our commitment to provide you with the finest
investment products and shareholder services possible.
If you have any questions about these changes or other issues affecting your
investments, we encourage you to consult your financial advisor or call
Evergreen Funds at 1-800-343-2898.
Sincerely,
/s/ William M. Ennis
William M. Ennis
Managing Director
1
<PAGE>
EVERGREEN
Emerging Markets Growth Fund
Fund at a Glance as of October 31, 1997
We try to take advantage of the excellent opportunities in emerging markets,
while being very conscious of the risks and volatility of these markets.
<PAGE>
Portfolio
Management
- - ----------------------------------------
(Photo of Gilman Gunn)
Gilman Gunn
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS
<TABLE>
<CAPTION>
Class A Class B Class C Class Y
<S> <C> <C> <C> <C>
Inception Date 9/6/94 9/6/94 9/6/94 9/6/94
- - --------------------------------------------------------------------------------
Average Annual Returns*
- - --------------------------------------------------------------------------------
One year with sales charge 12.48% 12.40% 16.54% 18.40%
- - --------------------------------------------------------------------------------
One year w/o sales charge 18.09% 17.40% 17.54% 18.40%
- - --------------------------------------------------------------------------------
3 years 0.29% 0.26% 1.25% 2.17%
- - --------------------------------------------------------------------------------
5 years - - - -
- - --------------------------------------------------------------------------------
10 years - - - -
- - --------------------------------------------------------------------------------
Since Inception -1.38% -1.43% -0.48% 0.38%
- - --------------------------------------------------------------------------------
Cumulative Total Return since
inception -4.28% -4.45% -1.50% 1.22%
- - --------------------------------------------------------------------------------
</TABLE>
*Adjusted for maximum applicable sales charge
- --------------------------------------------------------------------------------
LONG TERM GROWTH
(A line graph appears here with the following plot points.)
9/94 10/94 10/95 10/96 10/97
Class A Shares $9,525 9,039 7,525 8,107 $9,572
Morgan Stanley Emerging
Markets Index (MS EMI) $10,000 9,472 7,522 7,814 $6,919
Morgan Stanley EAFE
Index (MS EAFE) $10,000 9,983 9,787 10,644 $10,968
Comparison of a change in value of a $10,000 investment in Evergreen Emerging
Markets Growth Fund Class A, the Morgan Stanley Emerging Markets Index and the
Morgan Stanley EAFE Index.
Past performance is no guarantee of future results. The performance of each
class may vary based on differences in loads and fees paid by the shareholder
investing in different classes. The investment return and principal value will
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than original cost.
- --------------------------------------------------------------------------------
INVESTMENT STYLE
<PAGE>
Morningstar's Style Box is based on a portfolio date as of
9/30/97.
(Graphic appears here)
The Equity Style Box placement is based on a fund's
price-to-earnings and price-to-book ratio relative to the
S&P 500, as well as the size of the companies in which it
invests, or median market capitalization.
Source: 1997 Morningstar, Inc.
2
<PAGE>
EVERGREEN
Emerging Markets Growth Fund
Portfolio Manager Interview
- --------------------------------------------------------------------------------
How did the Fund perform during the past year?
The Fund had excellent performance, especially in light of the volatility
in emerging markets in October, at the end of the fiscal year. The
Evergreen Emerging Markets Growth Fund's Y Class had a total return of
18.4% for the 12 months that ended on October 31, 1997. For the same
period, the Morgan Stanley Capital International Emerging Markets Index, an
unmanaged index of emerging market securities, had a return of -8.5%.
The Fund's A Class had a total return of 18.1%. The B and C Classes had
total returns, respectively, of 17.4% and 17.5%. All performance figures
are before deduction of any sales charges, if applicable.
- --------------------------------------------------------------------------------
What is the current strategy of the Fund, Gilman?
We at Keystone Investment Management Company started managing the Fund on
September 1, 1997. The Fund has had an excellent record, and it has
continued to do well since we took it over. Our philosophy and that of the
predecessor manager are very much alike. We try to take advantage of the
excellent opportunities in emerging markets, while being very conscious of
the risks and volatility of these markets. Since we took over management,
we have been very defensive, and this has worked to the Fund's advantage.
On September 1, when we assumed responsibility for the Fund, it had about
25% of its assets in Asia, including about 22% in Hong Kong and Taiwan. We
sold almost all our Asian holdings and increased cash because of our
feeling that clouds would darken over these two countries as they had in
other Asian countries. In fact, those two markets had sharp turndowns in
September and October, and we avoided that.
As a result of the sale of Asian securities and of the influx of a
significant amount of money in September, we had a large cash balance at
<PAGE>
the end of the fiscal year, more than 40% of net assets. We think this is
appropriate in this period of volatility in the emerging markets. It makes
more sense to be more defensive than in other international equity funds
that invest in more developed markets.
- --------------------------------------------------------------------------------
What countries are you emphasizing?
Our largest weighting is in Brazil, at about 13% of net assets. Brazil is a
very volatile market, but we think the valuation levels are attractive. We
are focusing primarily on companies undergoing privatization, including:
Telebras, a telecommunications company; CEMIG, an electric utility;
Petrobras, an oil company; and CVRD, a mining and natural resources
company. These companies that have been state-owned are extremely
attractive. The government is preparing for privatization, which usually
means that they are receiving rate relief and get ting a rate structure
that is more clear.
The second largest weighting is in Mexico, at about 10.5% of net assets.
Despite the volatility, we believe Latin America remains a good opportunity
because valuation levels still are attrac tive, relative to other markets,
and govern ment macroeconomic policies are sound.
Geographical
Allocation-
Equities
--------
(As a percentage of equities)
Brazil 21.6%
- - ----------------------------------------------------------
Mexico 16.9%
- - ----------------------------------------------------------
Portugal 10.3%
- - ----------------------------------------------------------
Turkey 9.1%
- - ----------------------------------------------------------
Hungary 9.0%
- - ----------------------------------------------------------
Egypt 4.0%
- - ----------------------------------------------------------
Argentina 3.7%
- - ----------------------------------------------------------
Russia 3.4%
- - ----------------------------------------------------------
South Africa 3.1%
- - ----------------------------------------------------------
Chile 3.0%
- - ----------------------------------------------------------
Other 15.9%
- - ----------------------------------------------------------
Equities represented 62.2% of net assets. Other investments totaled 37.8% and
included short-term investments, foreign currency holdings and other assets and
liabilities.
3
<PAGE>
<PAGE>
EVERGREEN
Emerging Markets Growth Fund
Portfolio Manager Interview
The next largest weightings are Portugal, at about 6.4% of net assets,
Turkey at about 5.7% and Hungary at 5.6%. Europe is a region that provides
good growth, and a good balance of diversification. We also have
investments in Russia, South Africa, Israel, Egypt and Poland. At the end
of the fiscal year, only about 3% of the portfolio was invested in Asia,
with Singapore the largest weighting at 1.0% of net assets.
Sector Allocation
-----------------
(As a percentage of net assets)
Telecommunication Services and Equipment 13.6%
-------------------------------------------------------------------
Finance & Insurance 12.2%
-------------------------------------------------------------------
Healthcare Products & Services 5.4%
-------------------------------------------------------------------
Food & Beverage Products 5.0%
-------------------------------------------------------------------
Oil/Energy 4.8%
-------------------------------------------------------------------
Diversified Companies 3.7%
-------------------------------------------------------------------
Utilities - Electric 3.2%
-------------------------------------------------------------------
Metals & Mining 2.6%
-------------------------------------------------------------------
Electrical Equipment & Services 2.1%
-------------------------------------------------------------------
Building, Construction & Furnishings 1.5%
-------------------------------------------------------------------
- --------------------------------------------------------------------------------
What sectors or industries are you emphasizing?
Telecommunications stocks, at about 14% of net assets, represent our
largest weighting. Our largest holding is in Brazil, Telebras. Around the
world, telecommunications companies have very good attributes in emerging
markets. These companies, typically large telephone companies, are usually
in dominant positions in the country and the local stock market. They also
are very important for the country, because the telecommunications industry
is an essential ingredient for infrastructure development, which is
required for economic growth.
We also are emphasizing banking and electric utilities. All of these
industries are represented by companies that are fairly large, are fairly
stable and are well run. They are all important industries to the futures
of their countries.
Top 10 Holdings
---------------
(As a percentage of net assets)
Richter Gedeon, GDR (Hungary) 2.7%
-------------------------------------------------------------------
Telecomunicacoes Brasileiras S.A., ADR
("Telebras")(Brazil) 2.7%
-------------------------------------------------------------------
Compania Vale Do Rio Doce
<PAGE>
Navegacao S.A. (Brazil) 2.6%
-------------------------------------------------------------------
LUKoil Oil Co., ADR (Russia) 2.1%
-------------------------------------------------------------------
Compania de Telecom de
Chile, S.A. (Chile) 1.9%
-------------------------------------------------------------------
Haci Omer Sabanci (Turkey) 1.9%
-------------------------------------------------------------------
Campofrio Alimentacion
S.A. (Spain) 1.8%
-------------------------------------------------------------------
YPF Sociedad Anonima ADR
(Argentina) 1.8%
-------------------------------------------------------------------
Portugal Telecom S.A., ADR
(Portugal) 1.5%
-------------------------------------------------------------------
Telecomunicacoes de Sao Paulo,
S.A. (Brazil) 1.5%
-------------------------------------------------------------------
- --------------------------------------------------------------------------------
What is your outlook?
Although emerging markets have been very volatile lately, we continue to
see excellent long-term opportunities in emerging markets. The good growth
rates in many of these markets, combined with economic reforms and
liberalization, provide strong long-term potential. Our investment team
makes frequent visits to these markets, to talk to government and company
officials and to make sure we keep our ears close to the ground. We think
there is significant investment potential, especially in some of the
industries I have mentioned. We also want to manage the portfolio with a
healthy respect for risk, because emerging markets are quite volatile.
4
<PAGE>
EVERGREEN
Global Leaders Fund
Fund at a Glance as of October 31, 1997
The Fund continued its disciplined strategy of seeking what we believe are the
"100 best companies in the world," based on Evergreen's quantitative and
qualitative analysis.
Portfolio
Management
- - ----------------------------------------
(Photo of Stephen A. Lieber)
Stephen A. Lieber
(Photo of Edwin D. Miska)
Edwin D. Miska
<PAGE>
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS
<TABLE>
<CAPTION>
Class A Class B Class C Class Y
<S> <C> <C> <C> <C>
Inception Date 6/3/96 6/3/96 6/3/96 11/1/95
- - --------------------------------------------------------------------------------
Average Annual Returns*
- - --------------------------------------------------------------------------------
One year with sales charge 9.43% 9.01% 13.02% 15.22%
- - --------------------------------------------------------------------------------
One year w/o sales charge 14.88% 14.01% 14.02% 15.22%
- - --------------------------------------------------------------------------------
5 years - - - -
- - --------------------------------------------------------------------------------
10 years - - - -
- - --------------------------------------------------------------------------------
Since Inception 10.69% 10.98% 13.62% 17.35%
- - --------------------------------------------------------------------------------
Cumulative Total Return since
inception 15.44% 15.86% 19.78% 37.77%
- - --------------------------------------------------------------------------------
12 month distribution per
share $0.01 $0.01 $0.01 $0.01
- - --------------------------------------------------------------------------------
</TABLE>
*Adjusted for maximum applicable sales charge
- --------------------------------------------------------------------------------
LONG TERM GROWTH
(Line graph appears here with the following plot points.)
6/96 10/96 1/97 4/97 7/97 10/97
Class A Shares 9,525 10,031 10,487 10,554 12,282 11,544
Consumer Price
Index (CPI) 10,000 10,108 10,160 10,230 10,246 10,287
MSCI World
Index (MSCIWI) 10,000 10,184 10,664 10,873 12,629 11,725
Comparison of a change in value of a $10,000 investment in Evergreen Global
Leaders Fund Class A, the MSCI World Index and the Consumer Price Index.
Past performance is no guarantee of future results. The performance of each
class may vary based on differences in loads and fees paid by the shareholder
investing in different classes. The investment return and principal value will
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than original cost.
- --------------------------------------------------------------------------------
INVESTMENT STYLE
Morningstar's Style Box is based on a portfolio date as of
9/30/97.
(Graphic appears here)
The Equity Style Box placement is based on a fund's
price-to-earnings and price-to-book ratio relative to the
S&P 500, as well as the size of the companies in which it
invests, or median market capitalization.
<PAGE>
Source: 1997 Morningstar, Inc.
5
<PAGE>
EVERGREEN
Global Leaders Fund
Portfolio Manager Interview
- --------------------------------------------------------------------------------
How did the Fund perform during the year?
The Fund did well, outperforming the relevant indices. For the 12-month
period that ended on October 31, 1997, the Evergreen Global Leaders Fund's
Y Class had a total return of 15.22%. For the same period, the Morgan
Stanley Capital International World Index, which is weighted according to
the capitalization of countries, had a return of 14.76% and the Morgan
Stanley EAFE Index, a commonly used index of markets outside the United
States, had a return of 3.04%.
The Fund's Class A Shares had a return of 14.88%, while Class B Shares and
Class C Shares had returns, respectively, of 14.01% and 14.02%. All
performance figures are before deduction of any sales charges, if
applicable.
- --------------------------------------------------------------------------------
What was the investment environment like during this fiscal period?
In general, the principal markets in which the Fund invests had strong
performance during the year, despite bouts of volatility that were
exacerbated by regional economic issues. Seventeen of the 23 nations
included in the Morgan Stanley Capital International World Index had
positive returns in U.S. dollar terms during the 12-month period. The
strongest performing markets were European, led by Finland (45.05%), Spain
(35.13%), and Italy (31.25%), while negative returns were concentrated in
countries in the Far East. The United States, which your Fund continued to
emphasize, had a strong 30.57% return during the year, as measured by the
S&P 500 Index.
- --------------------------------------------------------------------------------
What was your investment strategy during the year?
The Fund continued its disciplined strategy of seeking what we believe are
the "100 best companies in the world," based on Evergreen's quantitative
and qualitative analysis. Investing in an environment that was generally
positive toward equity investing, the Fund focused on companies whose
financial performance and products and services distinguished them as
leaders within their markets. Our investment discipline continued to
concentrate on building a portfolio of companies which have been
consistently profitable, exhibit a strong pattern of sustained earnings
<PAGE>
growth and show the potential to continue this pattern. We look for
companies that have generated relatively high returns on shareholders'
equity and offer what we believe are the best relative values. In
assembling this portfolio, we examine global macroeconomic and political
factors and utilize a qualitative stock selection process using a strong
value discipline.
Sector Allocation
-----------------
(As a percentage of net assets)
Information Services & Technology 10.8%
----------------------------------------------------------------------
Retailing & Wholesaling 10.5%
----------------------------------------------------------------------
Healthcare Products & Services 9.8%
----------------------------------------------------------------------
Consumer Products & Services 6.9%
----------------------------------------------------------------------
Chemical & Agricultural Products 6.5%
----------------------------------------------------------------------
Industrial Specialty Products & Services 5.8%
----------------------------------------------------------------------
Food & Beverage Products 5.5%
----------------------------------------------------------------------
Finance & Insurance 5.4%
----------------------------------------------------------------------
Publishing, Broadcasting & Entertainment 5.3%
----------------------------------------------------------------------
Textile & Apparel 5.2%
----------------------------------------------------------------------
- --------------------------------------------------------------------------------
Where did you have your greatest emphasis?
The Fund had its greatest emphasis in the United States, with a 34.5% asset
allocation at the end of the fiscal year, up from the 31.9% at the end of
the previous fiscal year. The equity market in the U.S. was very strong
during the year, aided by moderate economic growth, relatively low and
declining interest rates, low inflation, strengthening consumer demand and
low unemployment. In this environment, many large, blue-chip companies
continued to post strong earnings growth, and
6
<PAGE>
EVERGREEN
Global Leaders Fund
Portfolio Manager Interview
were favored by institutional and individual investors. This investor
sentiment was reflected in the strong performance of the U.S. dollar
versus other currencies. The Fund's U.S. portfolio segment had a return of
42.7% for the year.
The top-performing U.S. companies in the portfolio included major names
which have shown an ability to achieve consistently outstanding results.
These companies represented a number of diverse industries. For example,
the greatest performer during the year was Schwab (Charles) & Co., from
the financial services sector, with a 108.4% gain. Other strong performers
in the financial services sector included: SLM Holding Corp. (Sallie Mae),
<PAGE>
MBNA Corp., and Norwest Corp. Major contributors from the technology
sector included Microsoft Corp., with a 92.9% gain, and Compaq Computer
Corp., with a 75.7% gain. Schering-Plough Corp. had the highest return
among U.S. pharmaceutical companies, with a 74.1% total return during the
year. Other strong performers included two retailers, Gap Inc. and Home
Depot Inc., with returns of 83.0% and 52.2% respectively, and cruise
operator Carnival Corp. whose Class A Stock had a return of 49.4%.
In all, 32 of the 36 U.S. companies in the portfolio at the end of the year
had positive performance, with 22 companies having returns greater than 25%
during the 12-month fiscal period.
- --------------------------------------------------------------------------------
How did the Fund's foreign investments perform?
The Fund's foreign holdings returned lower absolute results than the U.S.
holdings, reflecting the more difficult conditions in some regions and the
challenge of international investing during a period when the U.S. dollar
was strengthening against foreign currencies.
Overall, the Fund's foreign holdings had a return of 5.48%. While this was
less than the performance of the U.S. portfolio, it was superior to the
benchmark Morgan Stanley Capital International EAFE Index, with its return
of 3.04% for the 12 months ended October 31, 1997. The non-U.S. portion of
the portfolio accounted for 65% of Fund assets at the end of the fiscal
year.
Two major factors contributed to the results that were less than those
achieved in the U.S.: the weakness of most foreign currencies versus the
U.S. dollar and the volatility of markets in the Far East. The dollar rose
in value versus most currencies, thus eroding at least part of the returns
realized in local currency terms. Your Fund did not engage in active
currency management, or hedging strategies, during the year. In the Far
East, the regional economic instability that began during the year in the
emerging market economies of Thailand, Indonesia and Korea spilled into the
neighboring markets of Hong Kong, China, Japan and Malaysia near the end of
the fiscal year. This regional instability spread throughout the world,
causing at least some volatility in virtually every market. The negative
impact on the Fund was limited, however, by the relatively light allocation
to the Far East.
- --------------------------------------------------------------------------------
How did the Fund do with individual countries in major foreign markets?
In general, the Fund had positive returns from the major non-U.S. markets.
In fact, the Fund's investments in Japan had a positive return of 9.9%,
despite over all weakness in the Japanese market, which was down 18.7%, as
measured by the MSCI Japan Country Index, and a depreciation of the Yen
versus the dollar. Among the successful investments in Japan were
Seven-Eleven Japan Co., Ltd. and Nintendo Co., Ltd., up 22.1% and 19.6%
respectively.
Geographical
Allocation
----------
(As a percentage of net assets)
Europe 47.0%
- - ---------------------------------------------------
North America 40.8%
<PAGE>
- - ---------------------------------------------------
Japan 6.8%
- - ---------------------------------------------------
Far East 5.4%
- - ---------------------------------------------------
7
<PAGE>
EVERGREEN
Global Leaders Fund
Portfolio Manager Interview
In other countries, the Fund had strong performance in Belgium, up 30.7%
for the year; Germany, up 25.3%; Great Britain, up 19.8%; Norway, up 16.7%;
and Canada, up 12.3%. The weakest performers, as one might expect, were in
the Far East, with investments in Malaysia posting a -52.4% return and Hong
Kong a -21.2% return. The Fund's investments in France had a -12.6% return
and Italy had a -4.5% return.
Among individual issues, the top-performing stock in the entire portfolio
was SAP AG, the German industrial process software giant, with a 132.1%
gain. Other strong foreign contributors to performance included several
British companies, including Lloyd's TSB Group, a banking company, with a
98.0% return; Legal and General Group PLC, an insurance company, with a
56.5% return; the pharmaceutical company, SmithKline Beecham PLC, up 54.7%;
and Vodafone Group Plc, a mobile phone operator with a 40.2% return.
Outside the United Kingdom, strong performers included UCB SA, the Belgian
pharmaceutical and chemical company with a 76.9% return; Hennes & Mauritz,
a Swedish clothing retailer that had a return of 59.3%; Getronics NV, a
Dutch systems integrator with a 31.1% return; and Benetton Group SpA, the
Italian clothing retailer, with a return of 30.2% for the portfolio.
Top 10 Holdings
---------------
(As a percentage of net assets)
Seven Eleven Japan Co., Ltd (Japan) 3.9%
-----------------------------------------------------------------------
RWE AG (Germany) 3.0%
-----------------------------------------------------------------------
Nintendo Co., Ltd. (Japan) 2.6%
-----------------------------------------------------------------------
Ems-Chemie Holding AG (Switzerland) 2.3%
-----------------------------------------------------------------------
SAP AG (Germany) 2.0%
-----------------------------------------------------------------------
Bombardier, Inc., Cl. B (Canada) 1.8%
-----------------------------------------------------------------------
General Electric Co. (U.S.) 1.8%
-----------------------------------------------------------------------
Wal-Mart Stores, Inc. (U.S.) 1.7%
-----------------------------------------------------------------------
Hugo Boss AG (Germany) 1.6%
-----------------------------------------------------------------------
Du Pont (E.I.) De Nemours & Co. (U.S.) 1.6%
-----------------------------------------------------------------------
- --------------------------------------------------------------------------------
What is your outlook?
<PAGE>
We retain a positive outlook for the near future. We continue to believe
that superior performance can be achieved by companies which consistently
demonstrate sustained and visible growth in any economic environment. We
will continue to be vigilant to identify such companies, and we will be
pro-active in managing the portfolio in light of changing global
macro-economic, political and social conditions.
8
<PAGE>
EVERGREEN
Global Real Estate Equity Fund
Fund at a Glance as of October 31, 1997
We'll continue with a balanced strategy, looking both for attractively priced
growth companies and undervalued real estate opportunities in the world's stock
markets.
Portfolio
Management
----------------------------------------
(Photo of Samuel A. Lieber)
Samuel A. Lieber
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS
<TABLE>
<CAPTION>
Class A Class B Class C Class Y
<S> <C> <C> <C> <C>
Inception Date 2/10/95 2/8/95 2/9/95 2/1/89
- - --------------------------------------------------------------------------------
Average Annual Returns*
- - --------------------------------------------------------------------------------
One year with sales charge 0.37% -0.47% 3.61% 5.54%
- - --------------------------------------------------------------------------------
One year w/o sales charge 5.37% 4.53% 4.61% 5.54%
- - --------------------------------------------------------------------------------
3 years - - - 0.41%
- - --------------------------------------------------------------------------------
5 years - - - 9.08%
- - --------------------------------------------------------------------------------
10 years - - - -
- - --------------------------------------------------------------------------------
Since Inception 2.71% 2.83% 3.94% 4.24%
- - --------------------------------------------------------------------------------
Cumulative Total Return since
inception 7.55% 7.93% 11.11% 43.86%
- - --------------------------------------------------------------------------------
12 month distribution per
share - - - $0.02
- - --------------------------------------------------------------------------------
</TABLE>
*Adjusted for maximum applicable sales charge
- --------------------------------------------------------------------------------
<PAGE>
LONG TERM GROWTH
(A line graph appears here with the following plot points.)
2/95 10/95 10/96 10/97
Class A Shares 9,525 9,964 10,566 10,755
MSCI Global Real Estate
Index (MSCIGRE) 10,000 10,186 10,491 10,677
MSCI World
Index (MSCIWI) 10,000 12,128 15,048 20,565
Comparison of a change in value of a $10,000 investment in Evergreen Global Real
Estate Equity Fund Class A, the MSCI Global Real Estate Index, and the MSCI
World Index.
Past performance is no guarantee of future results. The performance of each
class may vary based on differences in loads and fees paid by the shareholder
investing in different classes. The investment return and principal value will
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than original cost.
- --------------------------------------------------------------------------------
INVESTMENT STYLE
Morningstar's Style Box is based on a portfolio date as of
9/30/97.
(Graphic appears here)
The Equity Style Box placement is based on a fund's
price-to-earnings and price-to-book ratio relative to the
S&P 500, as well as the size of the companies in which it
invests, or median market capitalization.
Source: 1997 Morningstar, Inc.
9
<PAGE>
EVERGREEN
Global Real Estate Equity Fund
Portfolio Manager Interview
- --------------------------------------------------------------------------------
How did the Fund do during the fiscal year?
The Fund outperformed its benchmark, the Morgan Stanley Global Real Estate
Index, for both the six month and 12 month periods under review. For the 12
month period that ended on October 31, 1997, the Fund's Class Y shares had
a positive total return of 5.54%. In contrast, the Morgan Stanley Global
Real Estate Index had a negative return of -15.4%. During the same period,
Class A shares had a total return of 5.37%, Class B shares had a
<PAGE>
total return of 4.53%, and Class C shares had a total return of 4.61%. The
Fund's performance was especially strong in the final six months of the
year. Class Y shares had a positive total return of 13.97% for the
six-month period, even as the benchmark Morgan Stanley Global Real Estate
Index produced a loss of -15.5%.
- --------------------------------------------------------------------------------
What was the investment environment like during the fiscal year?
Speaking broadly, this has been a period of declining interest rates and
moderate economic growth in many regions of the world. This was positive
for both real estate and stock markets. However, the situation varied
dramatically from region to region. The so-called "Asian Contagion" started
slowly in Thailand before spreading throughout the "Asian Tigers" and
threatening other larger markets.
- --------------------------------------------------------------------------------
What factors created such major regional variations in performance?
In general, local property supply and demand situations combined with the
overall economic climate to influence performance. In the U.S., we did have
a brief rise in interest rates in April, as the Federal Reserve raised
short-term rates to thwart any increase in inflationary pressure. This had
a short-term effect in the stock markets in the United States and in Asia,
but markets bounced back as inflation worries receded and interest rates
resumed their downward trend. Over the full year, the economy was very
positive for the entire real estate industry in the United States,
especially in the homebuilding sector, where the Fund had a major emphasis.
Great Britain is also well into its business cycle, and has enjoyed a
strong market for real estate. In Europe, expanding economic growth in its
southern and northern countries has helped real estate, while the central
countries, Germany and France, continue to be bogged down by tight domestic
monetary policy and high unemployment as they prepare to join the European
Economic Union. Eastern Europe appears to be cooling off a bit, as well.
- --------------------------------------------------------------------------------
GEOGRAPHICAL ALLOCATION
As of 10/31/96
Asia 34.9%
Europe 33.1%
North and South America 28.6%
Other 3.4%
As of 10/31/97
Asia 16.1%
Europe 45.5%
North and South America 38.4%
In Asia, the economic environment worsened, especially after June. We
witnessed the continuation of a sluggish economy in Japan, with the
exception of its export-oriented companies. While the office sector has
improved, residential and retail properties are soft. Japan's economic
problems are being exacerbated by the problems in Southeast Asia. In the
afflicted Asian countries, the combination of both currency and liquidity
constraints created a rapidly destabilizing domino effect. Such a shock to
the system can devastate weak companies while creating opportunities for
the survivors.
<PAGE>
We believe the Asian problems were a reaction to the strength of the U.S.
dollar. Those economies closely linked to the U.S. currency experienced an
erosion of their competitiveness relative to countries such as China and
India. Thus, Indonesia, Malaysia, South Korea, and
10
<PAGE>
EVERGREEN
Global Real Estate Equity Fund
Portfolio Manager Interview
the Philippines became less competitive and their export growth slowed. As
a result, more attention was focused on capital flows and the amount of
foreign capital that had financed each country's expansion. Short-term debt
became more expensive as the local currencies declined against the U.S.
dollar. For the 12 month period, the Thai Baht declined 35% against the
dollar. The Indonesian Rupiah lost 34%, the Malaysian Ringgit lost 28%, and
the South Korean and Philippine currencies each lost 25% against the
dollar, by the end of October. The short-term impact is exceptionally
expensive capital and vastly reduced liquidity.
- --------------------------------------------------------------------------------
In light of these changing conditions, what was your investment strategy,
and what type of asset allocation changes did you make during the year?
The best performing markets were in North America and Great Britain. In
Great Britain, the property share indices increased by 33%, and in Canada
they increased by 54%. Real Estate Investment Trust (REITs) in the United
States were up 33.5% for the year, and homebuilders increased by 74%. The
Fund's investment strategy was to reduce exposure to weaker market sectors
and countries in Asia, while adding to the Fund's holdings in relatively
stable countries with positive real estate fundamentals and undemanding
share valuations.
During the period, we increased the Fund's investments in the United States
from 21.2% to 25.2% with a sizable portion going to the stocks of
homebuilders. By the fiscal year-end, two of the Fund's largest holdings
were Continental Homes and U.S. Home Corp., which gained 87% and 152%,
respectively, during the year.
The Fund's allocation to Canada was dramatically increased from 0.9% to
4.4% during the fiscal year, with the total allocation to both North and
South America increased from 28.6% to 38.4%.
In Europe, the Fund's holdings increased from 33.1% to 45.5%. The most
notable changes were in two of the strongest real estate markets: Spain,
which increased from 3.3% to 5.2%; and Sweden, where new investments raised
the Fund's exposure from zero to 4.7%. The total investment in Scandinavian
countries stood at 14.2% of net assets at the end of the year. While the
northern and southern regions of Europe were the best performers, the Fund
also benefited from several long-term investments in France and Germany,
most notably, Societe du Louvre, owner of prime Parisian hotels, which rose
by 112% in local currency as it continues to fight a hostile takeover bid.
In Asia, the Fund's allocation to Japan changed from 14.2% to 8.9%, while
the allocation to Southeast Asia went from 20.7% to 7.2% during the year.
The reduction in Southeast Asia was the result both of deliberate cutbacks
in that region's allocation to 10.7% by June 30, and then a combination of
<PAGE>
sales and price erosion during the summer's currency-induced market
collapses. However, in October we took advantage of buying opportunities in
Hong Kong, effectively doubling the Fund's Southeast Asian holdings in the
final days of the fiscal period.
Top 10 Holdings
---------------
(As a percentage of net assets)
Continental Homes Holding Corp. (U.S.) 8.0%
-----------------------------------------------------------------------
Societe du Louvre (France) 7.3%
-----------------------------------------------------------------------
Thorkild Kristensen (Denmark) 5.8%
-----------------------------------------------------------------------
Alexander's, Inc. REIT (U.S.) 5.6%
-----------------------------------------------------------------------
Grupo Posadas, SA de CV,
Class L & Class A Shares (Mexico) 4.4%
-----------------------------------------------------------------------
Inversiones y Representaciones SA (Argentina) 4.0%
-----------------------------------------------------------------------
European City Estates NV (Netherlands) 3.7%
-----------------------------------------------------------------------
U.S. Home Corp., Warrants Expiring
6/22/98 @ $20.00 3.6%
-----------------------------------------------------------------------
Societe de Immeubles (France) 3.3%
-----------------------------------------------------------------------
Steen & Strom ASA (Norway) 3.2%
-----------------------------------------------------------------------
11
<PAGE>
EVERGREEN
Global Real Estate Equity Fund
Portfolio Manager Interview
- --------------------------------------------------------------------------------
Given the recent turmoil, what is your outlook for Asia?
It is still unclear as to how long it will take the Asian real estate
market to emerge from the downturn. South Korea and Thailand may experience
an extended period of slow growth, even stagnation, as their financial
systems are restructured. There is greater underlying strength and more
economic diversity in Singapore and the Philippines so we are more
optimistic for medium-term recovery. Hong Kong is still questionable,
depending on what happens in China, although we believe that much of its
price bubble has been removed from share prices. We will still be sifting
through these markets, looking for a few gems as the opportunity may exist
for once-in-a-generation-type total returns over the next few years. The
situation in Japan is largely dependent on the government's ability to help
financial institutions re-capitalize and a renewal of domestic consumption.
- --------------------------------------------------------------------------------
What about Europe?
At this point in the economic cycle, real estate in Continental Europe has
finally begun to do well. While Britain's property markets have already
<PAGE>
recovered strongly, prospects are still positive. Scandinavia is a year or
two behind England, but it is recovering quickly. We see opportunity for
continued moderate acceleration in the Benelux countries and France.
Germany still faces a glut of property and a slow domestic economy, so we
remain cautious. On the other hand, Spain, Italy, and Portugal should
continue to benefit from the prospect of European union.
- --------------------------------------------------------------------------------
What is your current view of the market in North America?
The U.S. homebuilding industry had another exceptional year, and the Fund
benefited from major holdings in that sector. We expect a continued upward
re-rating of these stocks. The Fund's investments in U.S. office building
and hotel property companies also helped performance as fundamentals of
supply and demand remain positive. Even though the easy money has been
made, selective opportunities exist. Canada is following the U.S. and has
finally recovered momentum. While U.S. real estate markets remain
favorable, the economic cycle is more mature and I expect that real estate
stocks in the U.S. may not be the leading performer as they have been over
the past three years. Thus, the Fund's weighting in the U.S. may decrease
in 1998.
- --------------------------------------------------------------------------------
What is your overall outlook?
The greatest opportunities will arise from growing demand for quality
modern property in Europe, which should propel both rents and capital for
new construction where the economics permit. We'll continue to monitor the
situation in Asia to see how and when liquidity returns to the region. We
think that the surviving companies will offer the opportunity for
tremendous appreciation potential over the next three to five years. In
North America, and particularly the U.S., we will focus on the benefits of
low interest rates and a high employment economy which are both very
positive for the domestic side of the economy. In summary, we'll continue
with a balanced strategy, looking both for attractively priced growth
companies and undervalued real estate opportunities in the world's stock
markets.
12
<PAGE>
EVERGREEN
International Equity Fund
Fund at a Glance as of October 31, 1997
Our long-term strategy remains unchanged. We are looking to identify the most
promising securities in international markets, companies with good long-term
earnings prospects that are selling at attractive valuations.
Portfolio
Management
- - ----------------------------------------
(Photo of Richard K. Wagoner)
Richard K. Wagoner
<PAGE>
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS
<TABLE>
<CAPTION>
Class A Class B Class C Class Y
<S> <C> <C> <C> <C>
Inception Date 9/2/94 9/2/94 9/2/94 9/2/94
- - --------------------------------------------------------------------------------
Average Annual Returns*
- - --------------------------------------------------------------------------------
One year with sales charge 2.51% 1.79% 5.76% 7.92%
- - --------------------------------------------------------------------------------
One year w/o sales charge 7.62% 6.79% 6.76% 7.92%
- - --------------------------------------------------------------------------------
3 years 2.62% 2.63% 3.60% 4.57%
- - --------------------------------------------------------------------------------
5 years - - - -
- - --------------------------------------------------------------------------------
10 years - - - -
- - --------------------------------------------------------------------------------
Since Inception 2.48% 2.49% 3.40% 4.33%
- - --------------------------------------------------------------------------------
Cumulative Total Return since
inception 8.07% 8.09% 11.18% 14.36%
- - --------------------------------------------------------------------------------
12 month distribution per
share $0.15 $0.06 $0.06 $0.17
- - --------------------------------------------------------------------------------
</TABLE>
*Adjusted for maximum sales charge
- --------------------------------------------------------------------------------
LONG TERM GROWTH
(A line graph appears here with the following plot points.)
9/94 10/94 10/95 10/96 10/97
Class A Shares 9,525 9,525 9,136 10,042 10,807
Consumer Price
Index (CPI) 10,000 10,007 10,289 10,596 10,805
Morgan Stanley EAFE
Index (MS EAFE) 10,000 9,983 9,787 10,644 10,968
Comparison of a change in value of a $10,000 investment in Evergreen
International Equity Fund Class A, the Morgan Stanley EAFE Index and the
Consumer Price Index.
Past performance is no guarantee of future results. The performance of each
class may vary based on differences in loads and fees paid by the shareholder
investing in different classes. The investment return and principal value will
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than original cost.
- --------------------------------------------------------------------------------
INVESTMENT STYLE
Morningstar's Style Box is based on a portfolio date as of
9/30/97.
(Graphic appears here)
The Equity Style Box placement is based on a fund's
<PAGE>
price-to-earnings and price-to-book ratio relative to the
S&P 500, as well as the size of the companies in which it
invests, or median market capitalization.
Source: 1997 Morningstar, Inc.
13
<PAGE>
EVERGREEN
International Equity Fund
Portfolio Manager Interview
- --------------------------------------------------------------------------------
How has the Fund performed over the past 12 months?
The Fund outperformed its benchmark index, the Morgan Stanley Capital
International Europe, Australasia and Far East ("EAFE") Index, by
approximately 50 basis points over the 12 months ended October 31, 1997.
Much of that outperformance can be attributed to strong gains in the first
half of the fiscal period. The Fund's relative performance trailed that of
its benchmark over the latter part of the period, largely reflecting its
exposure to beleaguered Asian markets.
- --------------------------------------------------------------------------------
What were some of the factors in the Fund's solid performance?
Particularly strong performance for the Fund came from its holdings in
France, Germany and Spain, as well as its holdings in the Nordic region
collectively. These companies benefited from a strong fundamental backdrop
of falling interest rates, increasing optimism toward monetary union, and
an improving economic and earnings outlook. Specific companies, notably in
Germany, also benefited from restructuring efforts and a general increase
in emphasis towards shareholder value, a concept long familiar to
Americans, but still new in Europe.
- --------------------------------------------------------------------------------
How did the foreign markets perform during the fiscal period?
The performance of foreign markets during the fiscal period varied by
region. European stock markets showed universal strength, supported by
falling interest rates, optimism regarding the prospects for European
Monetary Union, and an improved earnings outlook for many companies. Latin
American markets also performed strongly, as investors responded favorably
to the region's progress on the economy, fiscal and political fronts.
Asian-Pacific markets performed poorly, with the bulk of that poor
performance coming at the end of the fiscal period.
Top 10 Holdings
---------------
(As a percentage of net assets)
<PAGE>
Philips Electronics N.V.
(Netherlands) 2.5%
-----------------------------------------------------------------------
YPF Sociedad Anonima, ADR
(Argentina) 1.7%
-----------------------------------------------------------------------
Electrolux AB, Series B (Sweden) 1.6%
-----------------------------------------------------------------------
Williams Holdings PLC (U.K.) 1.5%
-----------------------------------------------------------------------
Orange PLC (U.K.) 1.5%
-----------------------------------------------------------------------
AXA-UAP (France) 1.4%
-----------------------------------------------------------------------
Fresenius Medical Care AG
(Germany) 1.4%
-----------------------------------------------------------------------
Cimpor-Cimentos de Portugal SA
(Portugal) 1.3%
-----------------------------------------------------------------------
Orix Corp. (Japan) 1.3%
-----------------------------------------------------------------------
Rhone-Poulenc SA (France) 1.3%
-----------------------------------------------------------------------
- --------------------------------------------------------------------------------
What caused the volatility in foreign (especially emerging) markets during
October 1997?
The global volatility that came to a head in October traces its origins
back to July 2, 1997, when Thailand devalued its currency, leading to a
sell-off in the Thai stock market. What was originally confined to Thailand
subsequently spread to other Southeast Asian countries, as investors, with
some justification, drew analogies between the situation in Thailand - a
troubled banking system, an overheating property market, and swelling
current-account and trade deficits - and those in other regional markets.
In fairly short order, monetary authorities in Malaysia, the Philippines,
Singapore and Indonesia, facing speculative attacks from currency traders,
devalued their currencies, triggering sell-offs in their respective stock
markets.
- --------------------------------------------------------------------------------
How far did this "Asian flu" spread?
The contagion from this spread north and, ultimately, throughout Asia,
with currency and economic concerns leading to sharp pullbacks in the
stock markets of Taiwan, South Korea and, most recently, Hong Kong. Nor
14
<PAGE>
EVERGREEN
International Equity Fund
Portfolio Manager Interview
did it stop here; worries over emerging market instability triggered
sell-offs in the previously strong-performing Latin American markets and in
the markets in Eastern Europe. Virtually no emerging market escaped
unscathed.
Asia's economic troubles also weighed on more-developed markets e.g., the
U.S. and markets in Europe. Particularly hard hit were shares of
export-oriented firms with exposure to Asia, since the likely slowdown in
Asian economic growth will translate into lower sales for these companies.
<PAGE>
Japan has been impacted perhaps most directly, since much of its exports
are to Asia. Japan's banks also have exposure to Asian economies, rendering
them vulnerable to an economic slowdown.
- --------------------------------------------------------------------------------
What countries did you favor during the fiscal period?
Country exposure in the Fund is a reflection of our ability to find
attractively priced securities. Our process is primarily a "bottom-up" one,
where stock selection, rather than general macroeconomic analysis, is the
driving force. That said, we remained broadly diversified by country
through the fiscal period, with a slight over-weighting in Asian markets
(though, it should be noted, we had relatively limited exposure to
Southeast Asia). Our largest country weighting in Asia through the period
was Japan, where strong stock selection allowed us to substantially
outperform popular Japanese stock-market averages. We focused primarily on
the so-called "Nifties," which are large, blue-chip, export-oriented,
Japanese companies that have benefited from successful restructuring
efforts and also benefited, through the period, from the weakness of the
Yen vs. the U.S. dollar.
Geographical
Allocation
----------
(As a percentage of net assets)
Europe 42.7%
- - --------------------------------------------------
Americas 18.8%
- - --------------------------------------------------
Japan 18.5%
- - --------------------------------------------------
Far East 11.3%
- - --------------------------------------------------
Australasia 7.9%
- - --------------------------------------------------
Middle East/Africa 0.8%
- - --------------------------------------------------
The general emphasis on Asia reflected our view that there were a large
number of companies selling at very attractive valuations relative to their
growth prospects. We maintain that view, though, in light of recent events,
we have adjusted our positions slightly, focusing almost exclusively on
blue-chip firms with healthy balance sheets, strong cash flows and little
dollar-denominated debt. These should, we believe, weather any further
near-term volatility in Asia quite well and have considerable upside over a
more extended time period i.e., 12 to 18 months.
- --------------------------------------------------------------------------------
What is your strategy going forward?
Our long-term strategy remains unchanged. We are looking to identify the
most promising securities in international markets, companies with good
long-term earnings prospects that are selling at attractive valuations. We
believe that a carefully chosen portfolio of such stocks stands to provide
very attractive rates of return over time, notwithstanding the potential
for short-term volatility.
Near term, we continue to find good opportunity in Europe, and will likely
increase our weighting in European markets further in the coming months. In
Asia, our stock selection will remain highly focused and centered on
companies with the above-cited attributes i.e., little dollar-denominated
<PAGE>
debt, and strong balance sheets and cash flows. We are refraining, at
present, from aggressively buying in Asia, given the still-unsettled,
top-down environment, but we may look to increase the Fund's exposure when
the dust finally settles and it becomes easier to assess the prospects for
specific companies.
15
<PAGE>
EVERGREEN
Latin America Fund
Fund at a Glance as of October 31, 1997
We are seeing extremely attractive valuation levels and it is our belief that
fundamentally the Latin American region offers very good investment
opportunities.
Portfolio
Management
- - ----------------------------------------
(Photo of Francis Claro)
Francis Claro
(Photo of Antonio Docal)
Antonio Docal
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS
<TABLE>
<CAPTION>
Class A Class B Class C
<S> <C> <C> <C>
Inception Date 11/1/93 11/1/93 11/1/93
- - --------------------------------------------------------------------------------
Average Annual Returns*
- - --------------------------------------------------------------------------------
One year with sales charge 13.52% 13.40% 17.38%
- - --------------------------------------------------------------------------------
One year w/o sales charge 19.18% 18.40% 18.38%
- - --------------------------------------------------------------------------------
3 years 8.60% 8.76% 9.59%
- - --------------------------------------------------------------------------------
5 years - - -
- - --------------------------------------------------------------------------------
10 years - - -
- - --------------------------------------------------------------------------------
Since Inception 8.25% 8.41% 8.82%
- - --------------------------------------------------------------------------------
Cumulative Total Return since
inception 37.32% 38.17% 40.27%
- - --------------------------------------------------------------------------------
12 month distribution per share $0.10 $0.08 $0.08
- - --------------------------------------------------------------------------------
</TABLE>
*Adjusted for maximum applicable sales charge
<PAGE>
- --------------------------------------------------------------------------------
LONG TERM GROWTH
(A line graph appears here with the following plot points.)
11/93 10/94 10/95 10/96 10/97
Class A Shares 9,525 10,212 9,870 11,522 13,732
MSCI World
Index (MSCIWI) 10,000 16,709 17,984 20,588 23,704
Standard & Poor's 500
Index (S&P 500) 10,000 22,086 27,962 34,694 45,832
Comparison of a change in value of a $10,000 investment in Evergreen Latin
America Fund Class A, the MSCI World Index and the Standard & Poor's 500 Index.
Past performance is no guarantee of future results. The performance of each
class may vary based on difference in loads and fees paid by the shareholder
investing in different classes. The investment return and principal value will
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than original cost.
- --------------------------------------------------------------------------------
INVESTMENT STYLE
Morningstar's Style Box is based on a portfolio date as of
9/30/97.
(Graphic appears here)
The Equity Style Box placement is based on a fund's
price-to-earnings and price-to-book ratio relative to the
S&P 500, as well as the size of the companies in which it
invests, or median market capitalization.
Source: 1997 Morningstar, Inc.
16
<PAGE>
EVERGREEN
Latin America Fund
Portfolio Manager Interview
- --------------------------------------------------------------------------------
What was the Fund's performance?
Performance was good. The Evergreen Latin America Fund's Class A had a
total return of 19.2% for the 12-month period that ended on October 31,
1997. The total returns of the Fund's B and C classes each were 18.4% for
the same period. These returns are without deduction of any sales charges,
if applicable. We believe these returns reflected the very positive
economic fundamentals and investment environment for the period, even
despite the volatility in emerging markets that adversely affected Latin
American investments during the last two weeks of October, at the end of
<PAGE>
the fiscal year.
- --------------------------------------------------------------------------------
What was the investment environment like during the year?
Let's talk first about the first 50 weeks of the year. The investment
environment in Latin America was as strong as it had been in the previous
four to five years. This environment was marked by attractive valuations of
the stocks of Latin American companies, strong economic growth and sound
macro-economic policies throughout the region, and strong stock
performance. This environment had attracted many international investors in
search of diversification, and this had greatly improved the liquidity of
the markets.
- --------------------------------------------------------------------------------
What caused the correction in the market at the end of October, and does
this correction signal fundamental problems in the Latin American region?
No. The volatility we saw in Latin America was primarily in response to the
devaluation of currencies in Southeast Asia. Ever since the Mexican
devaluation in December 1994, emerging market investors have been very
carefully monitoring the levels of current account deficits and balance of
trade deficits, to gauge currency risk. Speculators frequently have
attacked currencies of countries with high current account deficits, and
that's what happened in Asia. They succeeded.
The devaluations in Asia had the short-term effect of jolting investor
confidence in emerging markets overall, and in particular those with
negative current accounts, such as Brazil. The first reaction of many
global investors was simply to leave emerging markets. Latin America was
affected because of its heavy weighting in emerging market indices.
Sector Allocation
-----------------
(As a percentage of net assets)
Telecommunication Services & Equipment 21.0%
-------------------------------------------------------------------
Utilities 11.6%
-------------------------------------------------------------------
Diversified Companies 7.7%
-------------------------------------------------------------------
Finance & Insurance 7.5%
-------------------------------------------------------------------
Food & Beverage Products 6.6%
-------------------------------------------------------------------
Oil/Energy 6.3%
-------------------------------------------------------------------
Iron & Steel 4.9%
-------------------------------------------------------------------
Building, Construction & Furnishings 4.5%
-------------------------------------------------------------------
Metals & Mining 4.3%
-------------------------------------------------------------------
Paper & Packaging 1.9%
-------------------------------------------------------------------
- --------------------------------------------------------------------------------
How have investment opportunities in Latin America been affected?
<PAGE>
After a significant market correction, we are seeing extremely attractive
valuation levels and it is our belief that fundamentally the Latin American
region offers very good investment opportunities. Basically, all the
reasons that made this region a good opportunity for most of the past year
still apply, but the values are better.
Let's look first at stock valuations. Latin American stocks are very
attractively priced, compared to other markets. Even before the market
correction in late October, Latin American stocks still were a relative
value compared to other markets. After the correction, the price/earnings
ratio of the average Latin American stock was about 11,
17
<PAGE>
EVERGREEN
Latin America Fund
Portfolio Manager Interview
based on 1998 earnings. On top of that, you had an average 20% earnings
growth. In the United States, by comparison, the price/earnings ratio is
about 19 to 20, with only 6% growth.
The macro-economic picture also is very good. The privatization momentum is
very strong. Credit rating agencies have been upgrading Latin American
economies, reflecting the decreasing country risk. The overall pace of
economic growth has been accelerating, but at a sustainable rate without
overheating. In addition, interest rates are coming down, which has been
favoring the equity markets. Inflation is under control, at record lows in
most countries.
Another favorable factor is the increased political stability. For example,
in both Argentina and Mexico during the past year, the ruling political
parties have lost mid-term elections, but the opposition candidates
supported the existing macro-economic policies. This stability has been a
source of encouragement to the financial markets.
This very favorable economic environment contributed to record inflows of
capital to the region during the past year, with top multi-national
corporations actively investing throughout Latin America.
- --------------------------------------------------------------------------------
The Fund has its largest weighting in Brazil, but you indicate its currency
is over-valued. Why are you confident about Brazil?
Although there may be a slight over-valuation of the Brazilian currency, we
believe low levels of inflation and healthy increases in productivity are
correcting this issue. Interestingly, after the market correction in
October, the Brazilian government imposed a tough austerity package,
including increases in taxes and reductions in public employment, to
control the trade and budget deficits that have concerned international
investors. This is indicative of the increased discipline of Latin American
governments in general. They have shown a renewed commitment to continue
substantive economic reforms, but at a quicker pace. This should be a
source of encouragement to investors in the region.
<PAGE>
- --------------------------------------------------------------------------------
What is your current country strategy?
In general, we are over-weighting Brazil and Mexico. These are the
countries that are most representative of the opportunities in the region.
They are the most liquid markets, they have attractive valuations, and they
are implementing substantive reforms. The positive features throughout the
region are crystal clear in these two countries.
We also have invest ments of about 5% of fund assets in Venezuela, which is
a fairly significant weighting. We have found very attractive values in
Venezuela, supported by eco nomic reforms by the Venezuelan govern ment.
Venezuela is the world's top oil exporter to the Equities represented 84.7%
of net United States, surassets. Other investments totaled 15.3% and
included short-term passing even Saudi investments, foreign currency
holdings and other assets and Arabia, and countries liabilities. all over
the world are investing in exploration and production in Venezuela.
Geographical
Allocation-
Equities
--------
(As a percentage of equities)
Brazil 45.5%
- - ---------------------------------------------------------
Mexico 35.5%
- - ---------------------------------------------------------
Argentina 6.7%
- - ---------------------------------------------------------
Venezuela 6.3%
- - ---------------------------------------------------------
Chile 2.8%
- - ---------------------------------------------------------
Peru 1.8%
- - ---------------------------------------------------------
Colombia 1.4%
- - ---------------------------------------------------------
18
<PAGE>
EVERGREEN
Latin America Fund
Portfolio Manager Interview
- --------------------------------------------------------------------------------
What investment themes are you emphasizing?
We are continuing with the privatization theme across industries and
countries. About 50% of the fund is in companies that either are scheduled
to be privatized or have been privatized. Before a government privatizes a
company it owns, it tends to reform the sector to add value to the company
it intends to privatize. An example would be telecommunications.
Governments typically increase phone rates when planning privatization, and
a company that formerly had been subsidized would become profitable and its
market value would increase. Once a company does become privatized, the new
private sector managers typically will take a number
<PAGE>
of steps to maximize profits and increase productivity. In general, the
telecommunications sector exemplifies this trend. In telecommunications,
companies are benefiting from economic growth, pent-up demand and limited
competition. The Fund's largest holding at the end of the fiscal year was
Telebras, a Brazilian telecommunications company, and the second largest
holding was Telmex, a Mexican telecommunications company.
Other major holdings that illustrate the privatization trend include YPF,
an Argentine oil company; and CVRD (Vale de Rio Doce S.A.), a Brazilian
corporation that is one of the world's largest mining companies.
- --------------------------------------------------------------------------------
Are there any examples of non-privatized companies that you like?
One very attractive company is FEMSA, a Mexican soft drink bottler, beer
brewer, packaging company and convenience store operator. This company has
Coca-Cola bottling franchises in Mexico and Argentina. It brews half the
beer in Mexico, with Dos Equis its best known brand in the United States.
In addition, it is involved in convenience stores throughout Mexico.
Interestingly, this company has formed alliances with dominant global
companies to help develop its own franchises.
Top 10 Holdings
---------------
(As a percentage of net assets)
Telecomunicacoes Brasileiras S.A.
("Telebras") ADR (Brazil) 5.8%
-----------------------------------------------------------------------
Telefonos de Mexico S.A., ADR
(Mexico) 4.2%
-----------------------------------------------------------------------
Vale do Rio Doce Navegacao S.A.
(Brazil) 3.7%
-----------------------------------------------------------------------
Eletrobras S.A. (Brazil) 3.6%
-----------------------------------------------------------------------
Petroleo Brasileiro S.A. (Brazil) 3.1%
-----------------------------------------------------------------------
Companhia Riograndense de
Telecomunicacoes (Brazil) 2.4%
-----------------------------------------------------------------------
YPF Sociedad Anonima, ADR
(Argentina) 2.2%
-----------------------------------------------------------------------
Desc S.A. de C.V., ADR (Mexico) 2.2%
-----------------------------------------------------------------------
Grupo Carso S.A. de C.V. (Mexico) 2.1%
-----------------------------------------------------------------------
Banco Provincial S.A. (Venezuela) 2.1%
-----------------------------------------------------------------------
- --------------------------------------------------------------------------------
What is your outlook?
Latin America is a very attractive market. As we have indicated, we are
seeing very good valuations and positive economic trends throughout the
region. We continue to be focused on stock selection. We are visiting and
meeting personally with many Latin American companies. We are seeing lots
of great investment stories, and their valuations are much more attractive
than they were a few weeks ago.
<PAGE>
19
<PAGE>
EVERGREEN
Emerging Markets Growth Fund
Financial Highlights
(For a share outstanding throughout each year)
<TABLE>
<CAPTION>
Year Ended October 31,
1997** 1996** 1995#
<S> <C> <C> <C>
- - -----------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Net asset value beginning of year $ 8.46 $ 7.90 $ 8.17
======= ========= ============
- - -----------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) 0 (0.01) 0.05
- - -----------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments and foreign currency
related transactions 1.53 0.62 (0.32)
---------- --------- ------------
- - -----------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.53 0.61 (0.27)
---------- --------- ------------
- - -----------------------------------------------------------------------------------------------------------------------
Less distributions from
Net investment income 0 (0.05) 0
---------- --------- ------------
- - -----------------------------------------------------------------------------------------------------------------------
Net asset value end of year $ 9.99 $ 8.46 $ 7.90
========== ========= ============
- - -----------------------------------------------------------------------------------------------------------------------
Total Return+ 18.1% 7.7% (3.3%)
- - -----------------------------------------------------------------------------------------------------------------------
Ratios & Supplemental Data:
Ratios to average net assets:
Expenses 1.75% 1.74% 1.73%++
- - -----------------------------------------------------------------------------------------------------------------------
Expenses, excluding indirectly paid expenses 1.74% N/A N/A
- - -----------------------------------------------------------------------------------------------------------------------
Expenses, excluding fee waivers & expense reimbursements 2.26% 3.58% 3.97%++
- - -----------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (0.02%) (0.09%) 0.76%++
- - -----------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 157% 107% 65%
- - -----------------------------------------------------------------------------------------------------------------------
Average commission rate per share $ .0019 $ .0103 N/A
- - -----------------------------------------------------------------------------------------------------------------------
Net assets end of year (thousands) $ 2,777 $ 1,645 $ 1,117
- - -----------------------------------------------------------------------------------------------------------------------
<CAPTION>
Year Ended
December 31,
1994*
<S> <C>
- - --------------------------------------------------------------------------------------------
CLASS A SHARES
Net asset value beginning of year $ 10.00
============
- - --------------------------------------------------------------------------------------------
Income (loss) from investment operations:
- - --------------------------------------------------------------------------------------------
Net investment income (loss) 0
- - --------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments and foreign currency
related transactions (1.83)
------------
- - --------------------------------------------------------------------------------------------
Total from investment operations (1.83)
------------
- - --------------------------------------------------------------------------------------------
Less distributions from
Net investment income 0
------------
- - --------------------------------------------------------------------------------------------
<PAGE>
Net asset value end of year $ 8.17
============
- - --------------------------------------------------------------------------------------------
Total Return+ (18.3%)
- - --------------------------------------------------------------------------------------------
Ratios & Supplemental Data:
Ratios to average net assets:
Expenses 1.78%++
- - --------------------------------------------------------------------------------------------
Expenses, excluding indirectly paid expenses N/A
- - --------------------------------------------------------------------------------------------
Expenses, excluding fee waivers & expense reimbursements 3.96%++
- - --------------------------------------------------------------------------------------------
Net investment income (loss) (0.12%)++
- - --------------------------------------------------------------------------------------------
Portfolio turnover rate 17%
- - --------------------------------------------------------------------------------------------
Average commission rate per share N/A
- - --------------------------------------------------------------------------------------------
Net assets end of year (thousands) $ 867
- - --------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Year Ended October 31,
1997** 1996** 1995#
<S> <C> <C> <C>
- - -----------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Net asset value beginning of year $ 8.39 $ 7.85 $ 8.16
========= ========= ============
- - -----------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (0.08) (0.08) 0.01
- - -----------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments and foreign currency
related transactions 1.54 0.62 (0.32)
--------- --------- ------------
- - -----------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.46 0.54 (0.31)
--------- --------- ------------
- - -----------------------------------------------------------------------------------------------------------------------
Net asset value end of year $ 9.85 $ 8.39 $ 7.85
========= ========= ============
- - -----------------------------------------------------------------------------------------------------------------------
Total Return+ 17.4% 6.9% (3.8%)
- - -----------------------------------------------------------------------------------------------------------------------
Ratios & Supplemental Data:
Ratios to average net assets:
Expenses 2.50% 2.50% 2.48%++
- - -----------------------------------------------------------------------------------------------------------------------
Expenses, excluding indirectly paid expenses 2.49% N/A N/A
- - -----------------------------------------------------------------------------------------------------------------------
Expenses, excluding fee waivers & expense reimbursements 3.00% 4.34% 4.72%++
- - -----------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (0.79%) (0.87%) 0.03%++
- - -----------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 157% 107% 65%
- - -----------------------------------------------------------------------------------------------------------------------
Average commission rate per share $ .0019 $ .0103 N/A
- - -----------------------------------------------------------------------------------------------------------------------
Net assets end of year (thousands) $ 4,020 $ 2,881 $ 1,940
- - -----------------------------------------------------------------------------------------------------------------------
<CAPTION>
Year Ended
December 31,
1994*
<S> <C>
- - --------------------------------------------------------------------------------------------
CLASS B SHARES
Net asset value beginning of year $ 10.00
============
- - --------------------------------------------------------------------------------------------
Income (loss) from investment operations:
- - --------------------------------------------------------------------------------------------
Net investment income (loss) (0.02)
- - --------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments and foreign currency
related transactions (1.82)
------------
- - --------------------------------------------------------------------------------------------
Total from investment operations (1.84)
------------
- - --------------------------------------------------------------------------------------------
Net asset value end of year $ 8.16
============
<PAGE>
- - --------------------------------------------------------------------------------------------
Total Return+ (18.4%)
- - --------------------------------------------------------------------------------------------
Ratios & Supplemental Data:
Ratios to average net assets:
Expenses 2.53%++
- - --------------------------------------------------------------------------------------------
Expenses, excluding indirectly paid expenses N/A
- - --------------------------------------------------------------------------------------------
Expenses, excluding fee waivers & expense reimbursements 4.71%++
- - --------------------------------------------------------------------------------------------
Net investment income (loss) (0.84%)++
- - --------------------------------------------------------------------------------------------
Portfolio turnover rate 17%
- - --------------------------------------------------------------------------------------------
Average commission rate per share N/A
- - --------------------------------------------------------------------------------------------
Net assets end of year (thousands) $ 1,589
- - --------------------------------------------------------------------------------------------
</TABLE>
* For the period from September 6, 1994 (commencement of operations) to
December 31, 1994.
** Net investment income is based on average monthly shares outstanding for the
periods indicated.
# The Fund changed its year end from December 31 to October 31, effective
October 31, 1995.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
See Combined Notes to Financial Statements
20
<PAGE>
EVERGREEN
Emerging Markets Growth Fund
Financial Highlights
(For a share outstanding throughout each year)
<TABLE>
<CAPTION>
Year Ended October 31,
1997** 1996** 1995#
<S> <C> <C> <C>
- - -----------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Net asset value beginning of year $ 8.38 $ 7.84 $ 8.16
========= ========= ============
- - -----------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (0.06) (0.08) 0.02
- - -----------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments and foreign currency
related transactions 1.53 0.62 (0.34)
--------- --------- ------------
- - -----------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.47 0.54 (0.32)
--------- --------- ------------
- - -----------------------------------------------------------------------------------------------------------------------
Net asset value end of year $ 9.85 $ 8.38 $ 7.84
========= ========= ============
- - -----------------------------------------------------------------------------------------------------------------------
Total Return+ 17.5% 6.9% (3.9%)
- - -----------------------------------------------------------------------------------------------------------------------
Ratios & Supplemental Data:
Ratios to average net assets:
Expenses 2.50% 2.51% 2.50%++
- - -----------------------------------------------------------------------------------------------------------------------
Expenses, excluding indirectly paid expenses 2.49% N/A N/A
- - -----------------------------------------------------------------------------------------------------------------------
Expenses, excluding fee waivers & expense reimbursements 3.01% 4.31% 4.74%++
- - -----------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (0.61%) (0.91%) 0.72%++
- - -----------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 157% 107% 65%
- - -----------------------------------------------------------------------------------------------------------------------
Average commission rate per share $ .0019 $ .0103 N/A
- - -----------------------------------------------------------------------------------------------------------------------
Net assets end of year (thousands) $ 1,282 $ 85 $ 56
- - -----------------------------------------------------------------------------------------------------------------------
<CAPTION>
Year Ended
December 31,
<PAGE>
1994*
<S> <C>
- - --------------------------------------------------------------------------------------------
CLASS C SHARES
Net asset value beginning of year $ 10.00
============
- - --------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (0.02)
- - --------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments and foreign currency
related transactions (1.82)
------------
- - --------------------------------------------------------------------------------------------
Total from investment operations (1.84)
------------
- - --------------------------------------------------------------------------------------------
Net asset value end of year $ 8.16
============
- - --------------------------------------------------------------------------------------------
Total Return+ (18.4%)
- - --------------------------------------------------------------------------------------------
Ratios & Supplemental Data:
Ratios to average net assets:
Expenses 2.53%++
- - --------------------------------------------------------------------------------------------
Expenses, excluding indirectly paid expenses N/A
- - --------------------------------------------------------------------------------------------
Expenses, excluding fee waivers & expense reimbursements 4.71%++
- - --------------------------------------------------------------------------------------------
Net investment income (loss) (0.82%)++
- - --------------------------------------------------------------------------------------------
Portfolio turnover rate 17%
- - --------------------------------------------------------------------------------------------
Average commission rate per share N/A
- - --------------------------------------------------------------------------------------------
Net assets end of year (thousands) $ 89
- - --------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Year Ended October 31,
1997** 1996** 1995#
<S> <C> <C> <C>
- - ----------------------------------------------------------------------------------------------------------------------
CLASS Y SHARES
Net asset value beginning of year $ 8.48 $ 7.92 $ 8.17
========= ========== ============
- - ----------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
- - ----------------------------------------------------------------------------------------------------------------------
Net investment income 0.03 0.01 0.05
- - ----------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments and foreign currency
related transactions 1.53 0.62 (0.30)
--------- ---------- ------------
- - ----------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.56 0.63 (0.25)
--------- ---------- ------------
- - ----------------------------------------------------------------------------------------------------------------------
Less distributions from
- - ----------------------------------------------------------------------------------------------------------------------
Net investment income 0 (0.07) 0
--------- ---------- ------------
- - ----------------------------------------------------------------------------------------------------------------------
Net asset value end of year $ 10.04 $ 8.48 $ 7.92
========= ========== ============
- - ----------------------------------------------------------------------------------------------------------------------
Total Return+ 18.4% 7.9% (3.1%)
- - ----------------------------------------------------------------------------------------------------------------------
Ratios & Supplemental Data:
Ratios to average net assets:
Expenses 1.50% 1.50% 1.48%++
- - ----------------------------------------------------------------------------------------------------------------------
Expenses, excluding indirectly paid expenses 1.49% N/A N/A
- - ----------------------------------------------------------------------------------------------------------------------
Expenses, excluding fee waivers & expense reimbursements 2.01% 3.27% 3.72%++
- - ----------------------------------------------------------------------------------------------------------------------
Net investment income 0.25% 0.11% 0.94%++
- - ----------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 157% 107% 65%
- - ----------------------------------------------------------------------------------------------------------------------
Average commission rate per share $ .0019 $ .0103 N/A
- - ----------------------------------------------------------------------------------------------------------------------
Net assets end of year (thousands) $ 61,142 $ 28,959 $ 9,355
- - ----------------------------------------------------------------------------------------------------------------------
<PAGE>
<CAPTION>
Year Ended
December 31,
1994*
<S> <C>
- - --------------------------------------------------------------------------------------------
CLASS Y SHARES
Net asset value beginning of year $ 10.00
=============
- - --------------------------------------------------------------------------------------------
Income (loss) from investment operations:
- - --------------------------------------------------------------------------------------------
Net investment income 0.01
- - --------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments and foreign currency
related transactions (1.84)
-------------
- - --------------------------------------------------------------------------------------------
Total from investment operations (1.83)
-------------
- - --------------------------------------------------------------------------------------------
Less distributions from
- - --------------------------------------------------------------------------------------------
Net investment income 0
-------------
- - --------------------------------------------------------------------------------------------
Net asset value end of year $ 8.17
=============
- - --------------------------------------------------------------------------------------------
Total Return+ (18.3%)
- - --------------------------------------------------------------------------------------------
Ratios & Supplemental Data:
Ratios to average net assets:
Expenses 1.53%++
- - --------------------------------------------------------------------------------------------
Expenses, excluding indirectly paid expenses N/A
- - --------------------------------------------------------------------------------------------
Expenses, excluding fee waivers & expense reimbursements 3.71%++
- - --------------------------------------------------------------------------------------------
Net investment income 0.43%++
- - --------------------------------------------------------------------------------------------
Portfolio turnover rate 17%
- - --------------------------------------------------------------------------------------------
Average commission rate per share N/A
- - --------------------------------------------------------------------------------------------
Net assets end of year (thousands) $ 5,878
- - --------------------------------------------------------------------------------------------
</TABLE>
* For the periods from September 6, 1994 (commencement of operations) to
December 31, 1994.
** Net investment income is based on average monthly shares outstanding for the
periods indicated.
# The Fund changed its year end from December 31 to October 31, effective
October 31, 1995.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
See Combined Notes to Financial Statements
21
<PAGE>
EVERGREEN
Global Leaders Fund
Financial Highlights
(For a share outstanding throughout each year)
<TABLE>
<CAPTION>
Year Ended October 31,
1997 1996*
<S> <C> <C>
- - --------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Net asset value beginning of year $ 11.91 $ 11.29
========== ============
- - --------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations: **
- - --------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) ( 0.01) 0
- - --------------------------------------------------------------------------------------------------------------------------
<PAGE>
Net realized and unrealized gain on investments and foreign currency related transactions 1.78 0.62
---------- ------------
- - --------------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.77 0.62
---------- ------------
- - --------------------------------------------------------------------------------------------------------------------------
Less distributions from
- - --------------------------------------------------------------------------------------------------------------------------
Net realized gain on investments ( 0.01) 0
---------- ------------
- - --------------------------------------------------------------------------------------------------------------------------
Net asset value end of year $ 13.67 $ 11.91
========== ============
- - --------------------------------------------------------------------------------------------------------------------------
Total Return+ 14.9% 5.5%
- - --------------------------------------------------------------------------------------------------------------------------
Ratios & Supplemental Data:
Ratios to average net assets:
Expenses 1.91% 1.75%++
- - --------------------------------------------------------------------------------------------------------------------------
Expenses, excluding indirectly paid expenses 1.90% N/A
- - --------------------------------------------------------------------------------------------------------------------------
Expenses, excluding fee waivers & expense reimbursements 1.98% 2.16%++
- - --------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.05%) 0.10%++
- - --------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 29% 20%
- - --------------------------------------------------------------------------------------------------------------------------
Average commission rate per share $ .0418 $ .0659
- - --------------------------------------------------------------------------------------------------------------------------
Net assets end of year (thousands) $ 38,604 $ 12,975
- - --------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Year Ended October 31,
1997 1996*
<S> <C> <C>
- - -------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
Net asset value beginning of year $ 11.87 $ 11.29
========== ===========
- - -------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations: **
- - -------------------------------------------------------------------------------------------------------------------------
Net investment loss (0.11) (0.02)
- - -------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments and foreign currency related transactions 1.77 0.60
---------- -----------
- - -------------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.66 0.58
---------- -----------
- - -------------------------------------------------------------------------------------------------------------------------
Less distributions from
- - -------------------------------------------------------------------------------------------------------------------------
Net realized gain on investments (0.01) 0
---------- -----------
- - -------------------------------------------------------------------------------------------------------------------------
Net asset value end of year $ 13.52 $ 11.87
========== ===========
- - -------------------------------------------------------------------------------------------------------------------------
Total Return+ 14.0% 5.1%
- - -------------------------------------------------------------------------------------------------------------------------
Ratios & Supplemental Data:
Ratios to average net assets:
Expenses 2.66% 2.50%++
- - -------------------------------------------------------------------------------------------------------------------------
Expenses, excluding indirectly paid expenses 2.66% N/A
- - -------------------------------------------------------------------------------------------------------------------------
Expenses, excluding fee waivers & expense reimbursements 2.74% 2.93%++
- - -------------------------------------------------------------------------------------------------------------------------
Net investment loss (0.83%) (0.68%)++
- - -------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 29% 20%
- - -------------------------------------------------------------------------------------------------------------------------
Average commission rate per share $ .0418 $ .0659
- - -------------------------------------------------------------------------------------------------------------------------
Net assets end of year (thousands) $ 134,375 $ 41,948
- - -------------------------------------------------------------------------------------------------------------------------
</TABLE>
* For the period from June 3, 1996 (commencement of operations) to October 31,
1996.
** Net investment income is based on average monthly shares outstanding for the
periods indicated.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
<PAGE>
See Combined Notes to Financial Statements
22
<PAGE>
EVERGREEN
Global Leaders Fund
Financial Highlights
(For a share outstanding throughout each year)
<TABLE>
<CAPTION>
Year Ended October 31,
1997 1996*
<S> <C> <C>
- - -------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
Net asset value beginning of year $ 11.86 $ 11.29
========== ===========
- - -------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations: **
- - -------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) ( 0.11) (0.02)
- - -------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments and foreign currency related transactions 1.77 0.59
---------- -----------
- - -------------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.66 0.57
---------- -----------
- - -------------------------------------------------------------------------------------------------------------------------
Less distributions from
- - -------------------------------------------------------------------------------------------------------------------------
Net realized gain on investments ( 0.01) 0
---------- -----------
- - -------------------------------------------------------------------------------------------------------------------------
Net asset value end of year $ 13.51 $ 11.86
========== ===========
- - -------------------------------------------------------------------------------------------------------------------------
Total Return+ 14.0% 5.0%
- - -------------------------------------------------------------------------------------------------------------------------
Ratios & Supplemental Data:
Ratios to average net assets:
Expenses 2.65% 2.50%++
- - -------------------------------------------------------------------------------------------------------------------------
Expenses, excluding indirectly paid expenses 2.65% N/A
- - -------------------------------------------------------------------------------------------------------------------------
Expenses, excluding fee waivers & expense reimbursements 2.73% 2.93%++
- - -------------------------------------------------------------------------------------------------------------------------
Net investment loss (0.80%) (0.67%)++
- - -------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 29% 20%
- - -------------------------------------------------------------------------------------------------------------------------
Average commission rate per share $ .0418 $ .0659
- - -------------------------------------------------------------------------------------------------------------------------
Net assets end of year (thousands) $ 2,386 $ 554
- - -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Year Ended October 31,
1997 1996
<S> <C> <C>
- - -------------------------------------------------------------------------------------------------------------------------
CLASS Y SHARES
Net asset value beginning of year $ 11.91 $ 10.00
========== ============
- - -------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations: **
- - -------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) 0.03 0.07
- - -------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments and foreign currency related transactions 1.78 1.88
---------- ------------
- - -------------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.81 1.95
---------- ------------
- - -------------------------------------------------------------------------------------------------------------------------
Less distributions from
- - -------------------------------------------------------------------------------------------------------------------------
Net investment income 0 (0.04)
- - -------------------------------------------------------------------------------------------------------------------------
Net realized gain on investments (0.01) 0
---------- ------------
- - -------------------------------------------------------------------------------------------------------------------------
<PAGE>
Total distributions (0.01) (0.04)
---------- ------------
- - -------------------------------------------------------------------------------------------------------------------------
Net asset value end of year $ 13.71 $ 11.91
========== =============
- - -------------------------------------------------------------------------------------------------------------------------
Total Return+ 15.2% 19.6%
- - -------------------------------------------------------------------------------------------------------------------------
Ratios & Supplemental Data:
Ratios to average net assets:
Expenses 1.64% 1.47%++
- - -------------------------------------------------------------------------------------------------------------------------
Expenses, excluding indirectly paid expenses 1.64% N/A
- - -------------------------------------------------------------------------------------------------------------------------
Expenses, excluding fee waivers & expense reimbursements 1.72% 2.51%++
- - -------------------------------------------------------------------------------------------------------------------------
Net investment income 0.23% 0.62%++
- - -------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 29% 20%
- - -------------------------------------------------------------------------------------------------------------------------
Average commission rate per share $ .0418 $ .0659
- - -------------------------------------------------------------------------------------------------------------------------
Net assets end of year (thousands) $ 35,461 $ 18,607
- - -------------------------------------------------------------------------------------------------------------------------
</TABLE>
* For the period from June 3, 1996 (commencement of operations) to October 31,
1996.
** Net investment income is based on average monthly shares outstanding for the
periods indicated.
+ Initial sale charge or contingent deferred sales charge is not reflected.
++ Annualized.
See Combined Notes to Financial Statements
23
<PAGE>
EVERGREEN
Global Real Estate Equity Fund
Financial Highlights
(For a share outstanding throughout each year)
<TABLE>
<CAPTION>
Year Ended October 31,
1997 1996 1995#
<S> <C> <C> <C>
CLASS A SHARES
Net asset value beginning of year $ 12.28 $ 11.58 $ 12.12
========== ============ ============
- - ---------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations: **
- - ---------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (0.06) 0.06 (0.01)
- - ---------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments and foreign currency
related transactions 0.72 0.64 (0.53)
---------- ------------ ------------
- - ---------------------------------------------------------------------------------------------------------------------------
Total from investment operations 0.66 0.70 (0.54)
---------- ------------ ------------
- - ---------------------------------------------------------------------------------------------------------------------------
Net asset value end of year $ 12.94 $ 12.28 $ 11.58
========== ============ ============
- - ---------------------------------------------------------------------------------------------------------------------------
Total Return+ 5.4% 6.0% (4.5%)
- - ---------------------------------------------------------------------------------------------------------------------------
Ratios & Supplemental Data:
Ratios to average net assets:
Expenses 2.10% 1.79% 1.73%++
- - ---------------------------------------------------------------------------------------------------------------------------
Interest expense 0.03% 0.03% 0.03%++
- - ---------------------------------------------------------------------------------------------------------------------------
Expenses, excluding indirectly paid expenses 2.10% N/A N/A
- - ---------------------------------------------------------------------------------------------------------------------------
Expenses, excluding fee waivers & expense reimbursements 2.19% 2.97% 46.90%++
- - ---------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (0.47%) 0.40% (1.26%)++
- - ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 44% 25% 1%
- - ---------------------------------------------------------------------------------------------------------------------------
Average commission rate per share $ .0039 $ .0037 N/A
- - ---------------------------------------------------------------------------------------------------------------------------
Net assets end of year (thousands) $ 336 $ 721 $ 74
<PAGE>
- - ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Year Ended
September 30,
1995*
<S> <C>
CLASS A SHARES
Net asset value beginning of year $ 11.46
=============
- - --------------------------------------------------------------------------------------------
Income (loss) from investment operations: **
- - --------------------------------------------------------------------------------------------
Net investment income (loss) 0.07
- - --------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments and foreign currency
related transactions 0.59
-------------
- - --------------------------------------------------------------------------------------------
Total from investment operations 0.66
-------------
- - --------------------------------------------------------------------------------------------
Net asset value end of year $ 12.12
=============
- - --------------------------------------------------------------------------------------------
Total Return+ 5.8%
- - --------------------------------------------------------------------------------------------
Ratios & Supplemental Data:
Ratios to average net assets:
Expenses 1.61%++
- - --------------------------------------------------------------------------------------------
Interest expense 0.01%++
- - --------------------------------------------------------------------------------------------
Expenses, excluding indirectly paid expenses N/A
- - --------------------------------------------------------------------------------------------
Expenses, excluding fee waivers & expense reimbursements 21.59%++
- - --------------------------------------------------------------------------------------------
Net investment income (loss) 0.98%++
- - --------------------------------------------------------------------------------------------
Portfolio turnover rate 28%
- - --------------------------------------------------------------------------------------------
Average commission rate per share N/A
- - --------------------------------------------------------------------------------------------
Net assets end of year (thousands) $ 66
- - --------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Year Ended October 31,
1997 1996 1995#
<S> <C> <C> <C>
CLASS B SHARES
Net asset value beginning of year $ 12.14 $ 11.53 $ 12.08
========== ========== ============
- - --------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations: **
- - --------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (0.15) (0.13) (0.02)
- - --------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments and foreign currency
related transactions 0.70 0.74 (0.53)
---------- ---------- ------------
- - --------------------------------------------------------------------------------------------------------------------------
Total from investment operations 0.55 0.61 (0.55)
---------- ---------- ------------
- - --------------------------------------------------------------------------------------------------------------------------
Net asset value end of year $ 12.69 $ 12.14 $ 11.53
========== ========== ============
- - --------------------------------------------------------------------------------------------------------------------------
Total Return+ 4.5% 5.3% (4.6%)
- - --------------------------------------------------------------------------------------------------------------------------
Ratios & Supplemental Data:
Ratios to average net assets:
Expenses 2.82% 2.56% 2.44%++
- - --------------------------------------------------------------------------------------------------------------------------
Interest expense 0.03% 0.03% 0.03%++
- - --------------------------------------------------------------------------------------------------------------------------
Expenses, excluding indirectly paid expenses 2.81% N/A N/A
- - --------------------------------------------------------------------------------------------------------------------------
Expenses, excluding fee waivers & expense reimbursements 2.90% 14.45% 31.39%++
- - --------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (1.23%) (1.03%) (1.98%)++
- - --------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 44% 25% 1%
- - --------------------------------------------------------------------------------------------------------------------------
Average commission rate per share $ .0039 $ .0037 N/A
- - --------------------------------------------------------------------------------------------------------------------------
<PAGE>
Net assets end of year (thousands) $ 213 $ 134 $ 100
- - --------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Year Ended
September 30,
1995*
<S> <C>
CLASS B SHARES
Net asset value beginning of year $ 11.44
=============
- - --------------------------------------------------------------------------------------------
Income (loss) from investment operations: **
- - --------------------------------------------------------------------------------------------
Net investment income (loss) 0.08
- - --------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments and foreign currency
related transactions 0.56
-------------
- - --------------------------------------------------------------------------------------------
Total from investment operations 0.64
-------------
- - --------------------------------------------------------------------------------------------
Net asset value end of year $ 12.08
=============
- - --------------------------------------------------------------------------------------------
Total Return+ 5.6%
- - --------------------------------------------------------------------------------------------
Ratios & Supplemental Data:
Ratios to average net assets:
Expenses 2.42%++
- - --------------------------------------------------------------------------------------------
Interest expense 0.03%++
- - --------------------------------------------------------------------------------------------
Expenses, excluding indirectly paid expenses N/A
- - --------------------------------------------------------------------------------------------
Expenses, excluding fee waivers & expense reimbursements 82.74%++
- - --------------------------------------------------------------------------------------------
Net investment income (loss) 1.38%++
- - --------------------------------------------------------------------------------------------
Portfolio turnover rate 28%
- - --------------------------------------------------------------------------------------------
Average commission rate per share N/A
- - --------------------------------------------------------------------------------------------
Net assets end of year (thousands) $ 128
- - --------------------------------------------------------------------------------------------
</TABLE>
* For the periods from February 10, 1995 for Class A and
February 8, 1995 for Class B, respectively
(commencement of operations) to September 30, 1995.
** Net investment income is based on average monthly shares outstanding.
# The Fund changed its year end from September 30 to October 31, effective
October 31, 1995.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
See Combined Notes to Financial Statements
24
<PAGE>
EVERGREEN
Global Real Estate Equity Fund
Financial Highlights
(For a share outstanding throughout each year)
<TABLE>
<CAPTION>
Year Ended October 31,
1997 1996 1995#
<S> <C> <C> <C>
CLASS C SHARES
Net asset value beginning of year $ 12.14 $ 11.53 $ 12.08
========== ========== ============
- - --------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations: **
- - --------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (0.14) (0.13) (0.02)
- - --------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments and foreign currency
related transactions 0.70 0.74 (0.53)
---------- ---------- ------------
- - --------------------------------------------------------------------------------------------------------------------------
Total from investment operations 0.56 0.61 (0.55)
---------- ---------- ------------
<PAGE>
- - --------------------------------------------------------------------------------------------------------------------------
Net asset value end of year $ 12.70 $ 12.14 $ 11.53
========== ========== ============
- - --------------------------------------------------------------------------------------------------------------------------
Total Return+ 4.6% 5.3% (4.6%)
- - --------------------------------------------------------------------------------------------------------------------------
Ratios & Supplemental Data:
Ratios to average net assets:
Expenses 2.83% 2.54% 2.37%++
- - --------------------------------------------------------------------------------------------------------------------------
Interest expense 0.03% 0.03% 0.02%++
- - --------------------------------------------------------------------------------------------------------------------------
Expenses, excluding indirectly paid expenses 2.83% N/A N/A
- - --------------------------------------------------------------------------------------------------------------------------
Expenses, excluding fee waivers & expense reimbursements 2.91% 118.64% 570.26%++
- - --------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (1.15%) (1.06%) (1.94%)++
- - --------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 44% 25% 1%
- - --------------------------------------------------------------------------------------------------------------------------
Average commission rate per share $ .0039 $ .0037 N/A
- - --------------------------------------------------------------------------------------------------------------------------
Net assets end of year (thousands) $ 106 $ 8 $ 4
- - --------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Year Ended
September 30,
1995*
<S> <C>
CLASS C SHARES
Net asset value beginning of year $ 11.43
=============
- - --------------------------------------------------------------------------------------------
Income (loss) from investment operations: **
- - --------------------------------------------------------------------------------------------
Net investment income (loss) 0.06
- - --------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments and foreign currency
related transactions 0.59
-------------
- - --------------------------------------------------------------------------------------------
Total from investment operations 0.65
-------------
- - --------------------------------------------------------------------------------------------
Net asset value end of year $ 12.08
=============
- - --------------------------------------------------------------------------------------------
Total Return+ 5.7%
- - --------------------------------------------------------------------------------------------
Ratios & Supplemental Data:
Ratios to average net assets:
Expenses 1.54%++
- - --------------------------------------------------------------------------------------------
Interest expense 0.01%++
- - --------------------------------------------------------------------------------------------
Expenses, excluding indirectly paid expenses N/A
- - --------------------------------------------------------------------------------------------
Expenses, excluding fee waivers & expense reimbursements 269.60%++
- - --------------------------------------------------------------------------------------------
Net investment income (loss) .86%++
- - --------------------------------------------------------------------------------------------
Portfolio turnover rate 28%
- - --------------------------------------------------------------------------------------------
Average commission rate per share N/A
- - --------------------------------------------------------------------------------------------
Net assets end of year (thousands) $ 7
- - --------------------------------------------------------------------------------------------
</TABLE>
* For the period from February 9, 1995 (commencement of operations) to
September 30, 1995.
** Net investment income is based on average monthly shares outstanding for the
periods indicated.
# The Fund changed its year end from September 30 to October 31, effective
October 31, 1995.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
See Combined Notes to Financial Statements
25
<PAGE>
EVERGREEN
Global Real Estate Equity Fund
<PAGE>
Financial Highlights
(For a share outstanding throughout each year)
<TABLE>
<CAPTION>
Year Ended October 31, 1997
<S> <C>
CLASS Y SHARES
Net asset value beginning of year $ 12.31
==========
- - -------------------------------------------------------------------------------------------------
Income (loss) from investment operations: *
- - -------------------------------------------------------------------------------------------------
Net investment income (loss) (0.03)
- - -------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments and foreign currency related 0.71
transactions ----------
- - -------------------------------------------------------------------------------------------------
Total from investment operations 0.68
----------
- - -------------------------------------------------------------------------------------------------
Less distributions from
- - -------------------------------------------------------------------------------------------------
Net investment income (0.02)
----------
- - -------------------------------------------------------------------------------------------------
Net asset value end of year $ 12.97
==========
- - -------------------------------------------------------------------------------------------------
Total Return+ 5.5%
- - -------------------------------------------------------------------------------------------------
Ratios & Supplemental Data:
Ratios to average net assets:
Expenses 1.82%
- - -------------------------------------------------------------------------------------------------
Interest expense 0.03%
- - -------------------------------------------------------------------------------------------------
Expenses, excluding indirectly paid expenses 1.82%
- - -------------------------------------------------------------------------------------------------
Expenses, excluding fee waivers & expense reimbursements 1.90%
- - -------------------------------------------------------------------------------------------------
Net investment income (loss) (0.21%)
- - -------------------------------------------------------------------------------------------------
Portfolio turnover rate 44%
- - -------------------------------------------------------------------------------------------------
Average commission rate per share $ .0039
- - -------------------------------------------------------------------------------------------------
Net assets end of year (thousands) $ 35,234
- - -------------------------------------------------------------------------------------------------
<CAPTION>
Year Ended October 31,
1996 1995#
<S> <C> <C>
CLASS Y SHARES
Net asset value beginning of year $ 11.59 $ 12.13
============ ============
- - -------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations: *
- - -------------------------------------------------------------------------------------------------------------------
Net investment income (loss) 0.01 (0.01)
- - -------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments and foreign currency related 0.71 (0.53)
transactions ------------ ------------
- - -------------------------------------------------------------------------------------------------------------------
Total from investment operations 0.72 (0.54)
------------ ------------
- - -------------------------------------------------------------------------------------------------------------------
Less distributions from
- - -------------------------------------------------------------------------------------------------------------------
Net investment income 0 0
------------ ------------
- - -------------------------------------------------------------------------------------------------------------------
Net asset value end of year $ 12.31 $ 11.59
============ ============
- - -------------------------------------------------------------------------------------------------------------------
Total Return+ 6.2% (4.5%)
- - -------------------------------------------------------------------------------------------------------------------
Ratios & Supplemental Data:
Ratios to average net assets:
Expenses 1.62% 1.62%++
- - -------------------------------------------------------------------------------------------------------------------
Interest expense 0.03% 0.03%++
- - -------------------------------------------------------------------------------------------------------------------
Expenses, excluding indirectly paid expenses N/A N/A
- - -------------------------------------------------------------------------------------------------------------------
Expenses, excluding fee waivers & expense reimbursements 1.67% N/A
<PAGE>
- - -------------------------------------------------------------------------------------------------------------------
Net investment income (loss) 0.11% (1.14%)++
- - -------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 25% 1%
- - -------------------------------------------------------------------------------------------------------------------
Average commission rate per share $ .0037 N/A
- - -------------------------------------------------------------------------------------------------------------------
Net assets end of year (thousands) $ 47,502 $ 61,418
- - -------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Year Ended September 30,
1995 1994##
<S> <C> <C>
CLASS Y SHARES
Net asset value beginning of year $ 13.81 $ 14.75
=========== =============
- - --------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations: *
- - --------------------------------------------------------------------------------------------------------------------
Net investment income (loss) 0.11 0.07
- - --------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments and foreign currency related (1.17) (1.01)
transactions ----------- -------------
- - --------------------------------------------------------------------------------------------------------------------
Total from investment operations (1.06) (0.94)
----------- -------------
- - --------------------------------------------------------------------------------------------------------------------
Less distributions from
- - --------------------------------------------------------------------------------------------------------------------
Net investment income (0.10) 0
- - --------------------------------------------------------------------------------------------------------------------
Net realized gain on investments (0.52) 0
----------- -------------
- - --------------------------------------------------------------------------------------------------------------------
Total distributions (0.62) 0
----------- -------------
- - --------------------------------------------------------------------------------------------------------------------
Net asset value end of year $ 12.13 $ 13.81
=========== =============
- - --------------------------------------------------------------------------------------------------------------------
Total Return+ (7.7%) (6.4%)
- - --------------------------------------------------------------------------------------------------------------------
Ratios & Supplemental Data:
Ratios to average net assets:
Expenses 1.54% 1.46%++
- - --------------------------------------------------------------------------------------------------------------------
Interest expense 0.05% 0.08%++
- - --------------------------------------------------------------------------------------------------------------------
Expenses, excluding indirectly paid expenses N/A N/A
- - --------------------------------------------------------------------------------------------------------------------
Expenses, excluding fee waivers & expense reimbursements N/A N/A
- - --------------------------------------------------------------------------------------------------------------------
Net investment income 0.92% 0.56%++
- - --------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 28% 63%
- - --------------------------------------------------------------------------------------------------------------------
Average commission rate per share N/A N/A
- - --------------------------------------------------------------------------------------------------------------------
Net assets end of year (thousands) $ 67,645 $ 132,294
- - --------------------------------------------------------------------------------------------------------------------
<CAPTION>
Year Ended
December 31,
1993
<S> <C>
CLASS Y SHARES
Net asset value beginning of year $ 9.86
=========
- - ------------------------------------------------------------------------------------------------
Income (loss) from investment operations: *
- - ------------------------------------------------------------------------------------------------
Net investment income (loss) 0
- - ------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments and foreign currency related 5.07
transactions ---------
- - ------------------------------------------------------------------------------------------------
Total from investment operations 5.07
---------
- - ------------------------------------------------------------------------------------------------
Less distributions from
- - ------------------------------------------------------------------------------------------------
Net investment income 0
- - ------------------------------------------------------------------------------------------------
Net realized gain on investments (0.18)
<PAGE>
---------
- - ------------------------------------------------------------------------------------------------
Total distributions (0.18)
---------
- - ------------------------------------------------------------------------------------------------
Net asset value end of year $ 14.75
=========
- - ------------------------------------------------------------------------------------------------
Total Return+ 51.4%
- - ------------------------------------------------------------------------------------------------
Ratios & Supplemental Data:
Ratios to average net assets:
Expenses 1.56%
- - ------------------------------------------------------------------------------------------------
Interest expense N/A
- - ------------------------------------------------------------------------------------------------
Expenses, excluding indirectly paid expenses N/A
- - ------------------------------------------------------------------------------------------------
Expenses, excluding fee waivers & expense reimbursements 1.64%
- - ------------------------------------------------------------------------------------------------
Net investment income 0.03%
- - ------------------------------------------------------------------------------------------------
Portfolio turnover rate 88%
- - ------------------------------------------------------------------------------------------------
Average commission rate per share N/A
- - ------------------------------------------------------------------------------------------------
Net assets end of year (thousands) $ 146,173
- - ------------------------------------------------------------------------------------------------
</TABLE>
* Net investment income is based on average monthly shares outstanding for the
periods indicated.
# The Fund changed its year end from September 30 to October 31, effective
October 31, 1995.
## The Fund changed its year end from December 31 to September 30, effective
September 30, 1994.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
See Combined Notes to Financial Statements
26
<PAGE>
EVERGREEN
International Equity Fund
Financial Highlights
(For a share outstanding throughout each year)
<TABLE>
<CAPTION>
Year Ended October 31,
1997** 1996** 1995#
<S> <C> <C> <C>
CLASS A SHARES
Net asset value beginning of year $ 10.43 $ 9.58 $ 9.50
========== ========== ============
- - ----------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
- - ----------------------------------------------------------------------------------------------------------------------
Net investment income 0.07 0.17 0.09
- - ----------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments and foreign currency
related transactions 0.72 0.78 0
---------- ---------- ------------
- - ----------------------------------------------------------------------------------------------------------------------
Total from investment operations 0.79 0.95 0.09
---------- ---------- ------------
- - ----------------------------------------------------------------------------------------------------------------------
Less distributions from
- - ----------------------------------------------------------------------------------------------------------------------
Net investment income (0.15) (0.10) (0.01)
---------- ---------- ------------
- - ----------------------------------------------------------------------------------------------------------------------
Net asset value end of year $ 11.07 $ 10.43 $ 9.58
========== ========== ============
- - ----------------------------------------------------------------------------------------------------------------------
Total Return+ 7.6% 9.9% 1.1%
- - ----------------------------------------------------------------------------------------------------------------------
Ratios & Supplemental Data:
Ratios to average net assets:
Expenses 1.25% 1.24% 1.19%++
- - ----------------------------------------------------------------------------------------------------------------------
Expenses, excluding indirectly paid expenses 1.24% N/A N/A
- - ----------------------------------------------------------------------------------------------------------------------
<PAGE>
Expenses, excluding fee waivers & expense reimbursements 1.36% 1.66% 1.84%++
- - ----------------------------------------------------------------------------------------------------------------------
Net investment income 0.70% 1.65% 1.38%++
- - ----------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 86% 113% 4%
- - ----------------------------------------------------------------------------------------------------------------------
Average commission rate per share $ .0187 $ .0068 N/A
- - ----------------------------------------------------------------------------------------------------------------------
Net assets end of year (thousands) $ 9,270 $ 7,234 $ 3,594
- - ----------------------------------------------------------------------------------------------------------------------
<CAPTION>
Year Ended
December 31,
1994*
<S> <C>
CLASS A SHARES
Net asset value beginning of year $ 10.00
=============
- - --------------------------------------------------------------------------------------------
Income (loss) from investment operations:
- - --------------------------------------------------------------------------------------------
Net investment income 0.02
- - --------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments and foreign currency
related transactions (0.52)
-------------
- - --------------------------------------------------------------------------------------------
Total from investment operations (0.50)
-------------
- - --------------------------------------------------------------------------------------------
Less distributions from
- - --------------------------------------------------------------------------------------------
Net investment income 0
-------------
- - --------------------------------------------------------------------------------------------
Net asset value end of year $ 9.50
=============
- - --------------------------------------------------------------------------------------------
Total Return+ (5.1%)
- - --------------------------------------------------------------------------------------------
Ratios & Supplemental Data:
Ratios to average net assets:
Expenses 1.26%++
- - --------------------------------------------------------------------------------------------
Expenses, excluding indirectly paid expenses N/A
- - --------------------------------------------------------------------------------------------
Expenses, excluding fee waivers & expense reimbursements 2.09%++
- - --------------------------------------------------------------------------------------------
Net investment income 0.91%++
- - --------------------------------------------------------------------------------------------
Portfolio turnover rate 1%
- - --------------------------------------------------------------------------------------------
Average commission rate per share N/A
- - --------------------------------------------------------------------------------------------
Net assets end of year (thousands) $ 2,545
- - --------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Year Ended October 31,
1997** 1996** 1995#
<S> <C> <C> <C>
CLASS B SHARES
Net asset value beginning of year $ 10.37 $ 9.53 $ 9.50
========== ========== ============
- - ------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
- - ------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) 0 0.11 0.06
- - ------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments and foreign currency
related transactions 0.70 0.76 (0.03)
---------- ---------- ------------
- - ------------------------------------------------------------------------------------------------------------------------
Total from investment operations 0.70 0.87 0.03
---------- ---------- ------------
- - ------------------------------------------------------------------------------------------------------------------------
Less distributions from
- - ------------------------------------------------------------------------------------------------------------------------
Net investment income (0.08) (0.03) 0
---------- ---------- ------------
- - ------------------------------------------------------------------------------------------------------------------------
Net asset value end of year $ 10.99 $ 10.37 $ 9.53
========== ========== ============
- - ------------------------------------------------------------------------------------------------------------------------
Total Return+ 6.8% 9.2% 0.5%
<PAGE>
- - ------------------------------------------------------------------------------------------------------------------------
Ratios & Supplemental Data:
Ratios to average net assets:
Expenses 2.00% 2.00% 1.94%++
- - ------------------------------------------------------------------------------------------------------------------------
Expenses, excluding indirectly paid expenses 2.00% N/A N/A
- - ------------------------------------------------------------------------------------------------------------------------
Expenses, excluding fee waivers & expense reimbursements 2.11% 2.42% 2.59%++
- - ------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (0.05%) 1.05% 0.66%++
- - ------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 86% 113% 4%
- - ------------------------------------------------------------------------------------------------------------------------
Average commission rate per share $ .0187 $ .0068 N/A
- - ------------------------------------------------------------------------------------------------------------------------
Net assets end of year (thousands) $ 22,164 $ 14,110 $ 7,278
- - ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Year Ended
December 31,
1994*
<S> <C>
CLASS B SHARES
Net asset value beginning of year $ 10.00
=============
- - --------------------------------------------------------------------------------------------
Income (loss) from investment operations:
- - --------------------------------------------------------------------------------------------
Net investment income (loss) 0
- - --------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments and foreign currency
related transactions (0.50)
-------------
- - --------------------------------------------------------------------------------------------
Total from investment operations (0.50)
-------------
- - --------------------------------------------------------------------------------------------
Less distributions from
- - --------------------------------------------------------------------------------------------
Net investment income 0
-------------
- - --------------------------------------------------------------------------------------------
Net asset value end of year $ 9.50
=============
- - --------------------------------------------------------------------------------------------
Total Return+ (5.2%)
- - --------------------------------------------------------------------------------------------
Ratios & Supplemental Data:
Ratios to average net assets:
Expenses 2.02%++
- - --------------------------------------------------------------------------------------------
Expenses, excluding indirectly paid expenses N/A
- - --------------------------------------------------------------------------------------------
Expenses, excluding fee waivers & expense reimbursements 2.85%++
- - --------------------------------------------------------------------------------------------
Net investment income (loss) 0.10%++
- - --------------------------------------------------------------------------------------------
Portfolio turnover rate 1%
- - --------------------------------------------------------------------------------------------
Average commission rate per share N/A
- - --------------------------------------------------------------------------------------------
Net assets end of year (thousands) $ 5,602
- - --------------------------------------------------------------------------------------------
</TABLE>
* For the period from September 2, 1994 (commencement of operations) to
December 31, 1994.
** Net investment income is based on average monthly shares outstanding for the
periods indicated.
# The Fund changed its year end from December 31 to October 31, effective
October 31, 1995.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
See Combined Notes to Financial Statements
27
<PAGE>
EVERGREEN
International Equity Fund
Financial Highlights
<PAGE>
(For a share outstanding throughout each year)
<TABLE>
<CAPTION>
Year Ended October 31,
1997** 1996**
<S> <C> <C>
CLASS C SHARES
Net asset value beginning of year $ 10.41 $ 9.53
========== ==========
- - ---------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
- - ---------------------------------------------------------------------------------------------------------
Net investment income (loss) (0.01) 0.12
- - ---------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments and foreign currency
related transactions 0.71 0.76
---------- ----------
- - ---------------------------------------------------------------------------------------------------------
Total from investment operations 0.70 0.88
---------- ----------
- - ---------------------------------------------------------------------------------------------------------
Less distributions from
- - ---------------------------------------------------------------------------------------------------------
Net investment income (0.06) (0.00) (a)
---------- ----------
- - ---------------------------------------------------------------------------------------------------------
Net asset value end of year $ 11.05 $ 10.41
========== ==========
- - ---------------------------------------------------------------------------------------------------------
Total Return+ 6.8% 9.3%
- - ---------------------------------------------------------------------------------------------------------
Ratios & Supplemental Data:
Ratios to average net assets:
Expenses 2.00% 1.99%
- - ---------------------------------------------------------------------------------------------------------
Expenses, excluding indirectly paid expenses 1.99% N/A
- - ---------------------------------------------------------------------------------------------------------
Expenses, excluding fee waivers & expense reimbursements 2.11% 2.43%
- - ---------------------------------------------------------------------------------------------------------
Net investment income (0.06%) 1.16%
- - ---------------------------------------------------------------------------------------------------------
Portfolio turnover rate 86% 113%
- - ---------------------------------------------------------------------------------------------------------
Average commission rate per share $ .0187 $ .0068
- - ---------------------------------------------------------------------------------------------------------
Net assets end of year (thousands) $ 429 $ 188
- - ---------------------------------------------------------------------------------------------------------
<CAPTION>
Year Ended Year Ended
October 31, December 31,
1995# 1994*
<S> <C> <C>
CLASS C SHARES
Net asset value beginning of year $ 9.49 $ 10.00
============ =============
- - -----------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
- - -----------------------------------------------------------------------------------------------------------------
Net investment income (loss) 0.08 0.30
- - -----------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments and foreign currency
related transactions (0.04) (0.54)
------------ -------------
- - -----------------------------------------------------------------------------------------------------------------
Total from investment operations 0.04 (0.51)
------------ -------------
- - -----------------------------------------------------------------------------------------------------------------
Less distributions from
- - -----------------------------------------------------------------------------------------------------------------
Net investment income 0 0
------------ -------------
- - -----------------------------------------------------------------------------------------------------------------
Net asset value end of year $ 9.53 $ 9.49
============ =============
- - -----------------------------------------------------------------------------------------------------------------
Total Return+ 0.5% (5.2%)
- - -----------------------------------------------------------------------------------------------------------------
Ratios & Supplemental Data:
Ratios to average net assets:
Expenses 1.94%++ 2.01%++
- - -----------------------------------------------------------------------------------------------------------------
Expenses, excluding indirectly paid expenses N/A N/A
- - -----------------------------------------------------------------------------------------------------------------
Expenses, excluding fee waivers & expense reimbursements 2.59%++ 2.84%++
- - -----------------------------------------------------------------------------------------------------------------
Net investment income 0.79%++ 0.85%++
<PAGE>
- - -----------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 4% 1%
- - -----------------------------------------------------------------------------------------------------------------
Average commission rate per share N/A N/A
- - -----------------------------------------------------------------------------------------------------------------
Net assets end of year (thousands) $ 196 $ 163
- - -----------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Year Ended October 31,
1997** 1996** 1995#
<S> <C> <C> <C>
CLASS Y SHARES
Net asset value beginning of year $ 10.46 $ 9.60 $ 9.50
========== ========= ============
- - ----------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
- - ----------------------------------------------------------------------------------------------------------------------
Net investment income 0.10 0.20 0.08
- - ----------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments and foreign currency
related transactions 0.72 0.78 0.03
---------- --------- ------------
- - ----------------------------------------------------------------------------------------------------------------------
Total from investment operations 0.82 0.98 0.11
---------- --------- ------------
- - ----------------------------------------------------------------------------------------------------------------------
Less distributions from
- - ----------------------------------------------------------------------------------------------------------------------
Net investment income (0.17) (0.12) (0.01)
---------- --------- ------------
- - ----------------------------------------------------------------------------------------------------------------------
Net asset value end of year $ 11.11 $ 10.46 $ 9.60
========== ========= ============
- - ----------------------------------------------------------------------------------------------------------------------
Total Return+ 7.9% 10.3% 1.3%
- - ----------------------------------------------------------------------------------------------------------------------
Ratios & Supplemental Data:
Ratios to average net assets:
Expenses 0.99% 0.99% 0.94%++
- - ----------------------------------------------------------------------------------------------------------------------
Expenses, excluding indirectly paid expenses 0.99% N/A N/A
- - ----------------------------------------------------------------------------------------------------------------------
Expenses, excluding fee waivers & expense reimbursements 1.11% 1.41% 1.59%++
- - ----------------------------------------------------------------------------------------------------------------------
Net investment income 0.96% 1.95% 1.58%++
- - ----------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 86% 113% 4%
- - ----------------------------------------------------------------------------------------------------------------------
Average commission rate per share $ .0187 $ .0068 N/A
- - ----------------------------------------------------------------------------------------------------------------------
Net assets end of year (thousands) $ 233,906 $ 124,695 $ 49,575
- - ----------------------------------------------------------------------------------------------------------------------
<CAPTION>
Year Ended
December 31,
1994*
<S> <C>
CLASS Y SHARES
Net asset value beginning of year $ 10.00
=============
- - --------------------------------------------------------------------------------------------
Income (loss) from investment operations:
- - --------------------------------------------------------------------------------------------
Net investment income 0.02
- - --------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments and foreign currency
related transactions (0.51)
-------------
- - --------------------------------------------------------------------------------------------
Total from investment operations (0.49)
-------------
- - --------------------------------------------------------------------------------------------
Less distributions from
- - --------------------------------------------------------------------------------------------
Net investment income (0.01)
-------------
- - --------------------------------------------------------------------------------------------
Net asset value end of year $ 9.50
=============
- - --------------------------------------------------------------------------------------------
Total Return+ (5.0%)
- - --------------------------------------------------------------------------------------------
Ratios & Supplemental Data:
Ratios to average net assets:
<PAGE>
Expenses 1.06%++
- - --------------------------------------------------------------------------------------------
Expenses, excluding indirectly paid expenses N/A
- - --------------------------------------------------------------------------------------------
Expenses, excluding fee waivers & expense reimbursements 1.89%++
- - --------------------------------------------------------------------------------------------
Net investment income 1.03%++
- - --------------------------------------------------------------------------------------------
Portfolio turnover rate 1%
- - --------------------------------------------------------------------------------------------
Average commission rate per share N/A
- - --------------------------------------------------------------------------------------------
Net assets end of year (thousands) $ 23,830
- - --------------------------------------------------------------------------------------------
</TABLE>
* For the period from September 2, 1994 (commencement of operations) to
December 31, 1994.
** Net investment income is based on average monthly shares outstanding for the
periods indicated.
# The Fund changed its year end from December 31 to October 31, effective
October 31, 1995.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
(a) Less than one cent per share.
See Combined Notes to Financial Statements
28
<PAGE>
EVERGREEN
Latin America Fund
Financial Highlights
(For a share outstanding throughout each year)
<TABLE>
<CAPTION>
Year Ended October 31,
1997 1996
<S> <C> <C>
CLASS A SHARES
Net asset value beginning of year $ 11.13 $ 9.86
========= ========
- - -----------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
- - -----------------------------------------------------------------------------------------------------------
Net investment income 0.02 0.39
- - -----------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments and foreign currency related
transactions 2.10 1.24
--------- --------
- - -----------------------------------------------------------------------------------------------------------
Total from investment operations 2.12 1.63
--------- --------
- - -----------------------------------------------------------------------------------------------------------
Less distributions from
- - -----------------------------------------------------------------------------------------------------------
Net investment income (0.10) ( 0.31)
- - -----------------------------------------------------------------------------------------------------------
In excess of net investment income 0 ( 0.05)
- - -----------------------------------------------------------------------------------------------------------
Net realized gain on investments 0 0
--------- --------
- - -----------------------------------------------------------------------------------------------------------
Total distributions (0.10) ( 0.36)
--------- --------
- - -----------------------------------------------------------------------------------------------------------
Net asset value end of year $ 13.15 $11.13
========= ========
- - -----------------------------------------------------------------------------------------------------------
Total Return+ 19.2% 16.7%
- - -----------------------------------------------------------------------------------------------------------
Ratios & Supplemental Data:
Ratios to average net assets:
Expenses 1.69% 1.83%
- - -----------------------------------------------------------------------------------------------------------
Expenses, excluding indirectly paid expenses 1.68% 1.81%
- - -----------------------------------------------------------------------------------------------------------
Net investment income 0.20% 3.05%
- - -----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 105% 112%
- - -----------------------------------------------------------------------------------------------------------
Average commission rate per share $ .0002 $ .0005
- - -----------------------------------------------------------------------------------------------------------
<PAGE>
Net assets end of year (thousands) $ 13,621 $ 11,021
- - -----------------------------------------------------------------------------------------------------------
<CAPTION>
Year Ended October 31,
1995 1994
<S> <C> <C>
CLASS A SHARES
Net asset value beginning of year $ 10.55 $ 10.00
========== ==========
- - --------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
- - --------------------------------------------------------------------------------------------------------------
Net investment income 0.44 0.21
- - --------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments and foreign currency related
transactions (0.81) 0.50
---------- ----------
- - --------------------------------------------------------------------------------------------------------------
Total from investment operations (0.37) 0.71
---------- ----------
- - --------------------------------------------------------------------------------------------------------------
Less distributions from
- - --------------------------------------------------------------------------------------------------------------
Net investment income (0.30) (0.10)
- - --------------------------------------------------------------------------------------------------------------
In excess of net investment income 0 (0.01)
- - --------------------------------------------------------------------------------------------------------------
Net realized gain on investments (0.02) (0.05)
---------- ----------
- - --------------------------------------------------------------------------------------------------------------
Total distributions (0.32) (0.16)
---------- ----------
- - --------------------------------------------------------------------------------------------------------------
Net asset value end of year $ 9.86 $ 10.55
========== ==========
- - --------------------------------------------------------------------------------------------------------------
Total Return+ (3.4%) 7.2%
- - --------------------------------------------------------------------------------------------------------------
Ratios & Supplemental Data:
Ratios to average net assets:
Expenses 1.86% 1.79%
- - --------------------------------------------------------------------------------------------------------------
Expenses, excluding indirectly paid expenses 1.84% N/A
- - --------------------------------------------------------------------------------------------------------------
Net investment income 4.02% 2.45%
- - --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 57% 104%
- - --------------------------------------------------------------------------------------------------------------
Average commission rate per share N/A N/A
- - --------------------------------------------------------------------------------------------------------------
Net assets end of year (thousands) $ 14,333 $ 23,880
- - --------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Year Ended October 31,
1997 1996
<S> <C> <C>
CLASS B SHARES
Net asset value beginning of year $ 10.98 $ 9.76
========= ========
- - -------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
- - --------------------------------------------------------------------------------------------------------------
Net investment income (loss) (0.08) 0.23
- - --------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments and foreign currency related
transactions 2.09 1.30
--------- --------
- - --------------------------------------------------------------------------------------------------------------
Total from investment operations 2.01 1.53
--------- --------
- - --------------------------------------------------------------------------------------------------------------
Less distributions from
- - --------------------------------------------------------------------------------------------------------------
Net investment income (0.02) ( 0.27)
- - --------------------------------------------------------------------------------------------------------------
In excess of net investment income (0.06) ( 0.04)
- - --------------------------------------------------------------------------------------------------------------
Net realized gain on investments 0 0
--------- --------
- - --------------------------------------------------------------------------------------------------------------
Total distributions (0.08) ( 0.31)
--------- --------
- - --------------------------------------------------------------------------------------------------------------
Net asset value end of year $ 12.91 $10.98
<PAGE>
========= ========
- - --------------------------------------------------------------------------------------------------------------
Total Return+ 18.4% 15.8%
- - --------------------------------------------------------------------------------------------------------------
Ratios & Supplemental Data:
Ratios to average net assets:
Expenses 2.50% 2.59%
- - --------------------------------------------------------------------------------------------------------------
Expenses, excluding indirectly paid expenses 2.49% 2.58%
- - --------------------------------------------------------------------------------------------------------------
Net investment income (loss) (0.51%) 2.30%
- - --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 105% 112%
- - --------------------------------------------------------------------------------------------------------------
Average commission rate per share $ .0002 $ .0005
- - --------------------------------------------------------------------------------------------------------------
Net assets end of year (thousands) $ 75,271 $ 79,026
- - --------------------------------------------------------------------------------------------------------------
<CAPTION>
1995 1994
<S> <C> <C>
CLASS B SHARES
Net asset value beginning of year $ 10.49 $ 10.00
========== =========
- - --------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
- - --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 0.32 0.14
- - --------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments and foreign currency related
transactions (0.75) 0.50
---------- ---------
- - --------------------------------------------------------------------------------------------------------------
Total from investment operations (0.43) 0.64
---------- ---------
- - --------------------------------------------------------------------------------------------------------------
Less distributions from
- - --------------------------------------------------------------------------------------------------------------
Net investment income (0.28) (0.09)
- - --------------------------------------------------------------------------------------------------------------
In excess of net investment income 0 (0.01)
- - --------------------------------------------------------------------------------------------------------------
Net realized gain on investments (0.02) (0.05)
---------- ---------
- - --------------------------------------------------------------------------------------------------------------
Total distributions (0.30) (0.15)
---------- ---------
- - --------------------------------------------------------------------------------------------------------------
Net asset value end of year $ 9.76 $ 10.49
========== =========
- - --------------------------------------------------------------------------------------------------------------
Total Return+ (4.0%) 6.5%
- - --------------------------------------------------------------------------------------------------------------
Ratios & Supplemental Data:
Ratios to average net assets:
Expenses 2.61% 2.54%
- - --------------------------------------------------------------------------------------------------------------
Expenses, excluding indirectly paid expenses 2.59% N/A
- - --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 3.27% 1.70%
- - --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 57% 104%
- - --------------------------------------------------------------------------------------------------------------
Average commission rate per share N/A N/A
- - --------------------------------------------------------------------------------------------------------------
Net assets end of year (thousands) $ 97,165 $ 148,769
- - --------------------------------------------------------------------------------------------------------------
</TABLE>
+ Initial sales charge or contingent deferred sales charge is not reflected.
See Combined Notes to Financial Statements
29
<PAGE>
EVERGREEN
Latin America Fund
Financial Highlights
(For a share outstanding throughout each year)
<TABLE>
<PAGE>
<CAPTION>
Year Ended October 31,
1997 1996
<S> <C> <C>
CLASS C SHARES
Net asset value beginning of year $ 10.99 $ 9.77
========= ========
- - --------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
- - --------------------------------------------------------------------------------------------------------------
Net investment income (loss) (0.07) 0.23
- - --------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments
and foreign currency related transactions 2.08 1.30
--------- --------
- - --------------------------------------------------------------------------------------------------------------
Total from investment operations 2.01 1.53
--------- --------
- - --------------------------------------------------------------------------------------------------------------
Less distributions from
- - --------------------------------------------------------------------------------------------------------------
Net investment income 0 (0.27)
- - --------------------------------------------------------------------------------------------------------------
In excess of net investment income (0.08) (0.04)
- - --------------------------------------------------------------------------------------------------------------
Net realized gain on investments 0 0
--------- --------
- - --------------------------------------------------------------------------------------------------------------
Total distributions (0.08) (0.31)
--------- --------
- - --------------------------------------------------------------------------------------------------------------
Net asset value end of year $ 12.92 $10.99
========= ========
- - --------------------------------------------------------------------------------------------------------------
Total Return+ 18.4% 15.8%
- - --------------------------------------------------------------------------------------------------------------
Ratios & Supplemental Data:
Ratios to average net assets:
Expenses 2.47% 2.59%
- - --------------------------------------------------------------------------------------------------------------
Expenses, excluding indirectly paid expenses 2.46% 2.58%
- - --------------------------------------------------------------------------------------------------------------
Net investment income (loss) (0.52%) 2.26%
- - --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 105% 112%
- - --------------------------------------------------------------------------------------------------------------
Average commission rate per share $ .0002 $ .0005
- - --------------------------------------------------------------------------------------------------------------
Net assets end of year (thousands) $10,961 $ 8,791
- - --------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
1995 1994
CLASS C SHARES
Net asset value beginning of year $ 10.50 $ 10.00
========== ==========
- - ---------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
- - ---------------------------------------------------------------------------------------------------------------
Net investment income (loss) 0.32 0.14
- - ---------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments and foreign currency related
transactions (0.75) 0.51
---------- ----------
- - ---------------------------------------------------------------------------------------------------------------
Total from investment operations (0.43) 0.65
---------- ----------
- - ---------------------------------------------------------------------------------------------------------------
Less distributions from
- - ---------------------------------------------------------------------------------------------------------------
Net investment income (0.28) (0.09)
- - ---------------------------------------------------------------------------------------------------------------
In excess of net investment income 0 (0.01)
- - ---------------------------------------------------------------------------------------------------------------
Net realized gain on investments (0.02) (0.05)
---------- ----------
- - ---------------------------------------------------------------------------------------------------------------
Total distributions (0.30) (0.15)
---------- ----------
- - ---------------------------------------------------------------------------------------------------------------
Net asset value end of year $ 9.77 $ 10.50
========== ==========
- - ---------------------------------------------------------------------------------------------------------------
Total Return+ (4.0%) 6.6%
- - ---------------------------------------------------------------------------------------------------------------
Ratios & Supplemental Data:
Ratios to average net assets:
<PAGE>
Expenses 2.61% 2.54%
- - ---------------------------------------------------------------------------------------------------------------
Expenses, excluding indirectly paid expenses 2.59% N/A
- - ---------------------------------------------------------------------------------------------------------------
Net investment income (loss) 3.27% 1.74%
- - ---------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 57% 104%
- - ---------------------------------------------------------------------------------------------------------------
Average commission rate per share N/A N/A
- - ---------------------------------------------------------------------------------------------------------------
Net assets end of year (thousands) $ 11,242 $ 17,740
- - ---------------------------------------------------------------------------------------------------------------
</TABLE>
+ Initial sales charge or contingent deferred sales charge is not reflected.
See Combined Notes to Financial Statements
30
<PAGE>
EVERGREEN
Emerging Markets Growth Fund
Schedule of Investments
October 31, 1997
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - 53.6% Argentina - 2.3% Iron & Steel - 0.5%
134,500 Siderca SA ...... $ 329,724
----------
Oil / Energy - 1.8%
39,000 YPF Sociedad
Anonima ADR... 1,248,000
----------
Total Argentina ... 1,577,724
==========
Brazil - 4.8%
Electrical Equipment
& Services - 1.1%
19,600 Companhia Energetica
de Minas
Gerais, ADR ("CEMIG")... 782,434
----------
Utilities - Electric
- 1.0%
1,660,000 Eletrobras SA ... 670,053
----------
Telecommunication
Services &
Equipment - 2.7%
18,550 Telecomunicacoes
Brasileiras SA, ADR
("Telebras") ...... 1,882,825
Total Brazil ...... 3,335,312
==========
Chile - 1.9%
Telecommunication
Services &
Equipment - 1.9%
47,300 Compania de Telecom
de Chile, SA,
ADR ............... 1,312,575
==========
Egypt - 2.5%
Building,
Construction &
<PAGE>
Furnishings - 0.1%
3,700 Arabian International
Construction....... 96,782
----------
Consumer Products &
Services - 0.1%
3,700 * Eastern Tobacco Co... 92,704
----------
Food & Beverage
Products - 1.0%
22,100 * Al-Ahram Beverage
Company S.A.E....... 607,750
3,600 International Food
Company........... 87,818
----------
695,568
----------
Healthcare Products &
Services - 1.0%
9,350 Egyptian
International
Pharmaceutical
Industries Co ... 676,003
----------
Real Estate - 0.3%
2,575 Nasr City For House &
Reconstruction ...... 177,839
----------
Total Egypt ...... 1,738,896
==========
Hong Kong - 0.9%
Diversified Companies
- 0.2%
118,000 Li & Fung ......... 118,282
----------
Finance & Insurance -
0.7%
120 Bank of East Asia
Ltd................. 269
20,400 HSBC Holdings Plc 461,747
----------
462,016
----------
Total Hong Kong ... 580,298
==========
Hungary - 5.6%
Building,
Construction &
Furnishings - 0.4%
5,200 Zalakeramia ...... 244,379
----------
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
Hungary - continued
Chemical &
Agricultural
Products - 1.3%
4,875 Pannonplast RT ... $ 268,183
32,600 Tiszai Vegyi
Kombinat RT... 663,784
----------
931,967
----------
Finance & Insurance -
0.4%
9,700 Otp Bank ......... 309,227
----------
Healthcare Products &
Services - 3.5%
10,400 EGIS Gyogyszergya.... 488,757
20,650 Richter Gedeon, GDR... 1,900,584
----------
2,389,341
----------
Total Hungary ... 3,874,914
==========
India - 0.4%
Healthcare Products &
Services - 0.3%
8,200 Ranbaxy Laboratories
Ltd., GDR, 144A** ... 186,960
==========
Leisure & Tourism -
0.1%
7,400 * East India Hotels
<PAGE>
Ltd., GDR, 144A**.... 113,960
----------
Total India ......... 300,920
==========
Indonesia - 0.0%
Finance & Insurance -
0.0%
8 Bank International
Indonesia............. 2
==========
Israel - 1.1%
Telecommunication
Services &
Equipment - 1.1%
28,300 ECI
Telecommunications,
Ltd.................. 781,788
==========
Korea - 0.2%
Metal Products & Services - 0.2%
7,400 Pohang Iron &
Steel Ltd., ADR....... 120,250
==========
Luxembourg - 0.9%
Telecommunication
Services &
Equipment - 0.9%
14,430 * Millicom
International Cellular
SA, GDR............... 606,060
==========
Mexico - 10.5%
Automotive Equipment
& Manufacturing - 0.7%
64,000 Sanluis Corp SA de
CV ................ 494,598
----------
Diversified Companies
- 3.5%
52,000 Alfa SA de CV ... 379,535
25,900 Desc SA de CV, ADR.... 877,362
100,000 Grupo Carso SA de CV... 633,274
23,100 Grupo Imsa SA de CV,
ADR ............... 550,069
----------
2,440,240
----------
Finance & Insurance -
2.0%
113,700 Fomento Economico
Mexicano,............. 800,036
1,307,000 Grupo Financiero
Bancomer SA
de CV, Class B ....... 615,700
----------
1,415,736
----------
</TABLE>
31
<PAGE>
EVERGREEN
Emerging Markets Growth Fund
Schedule of Investments (continued)
October 31, 1997
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
Mexico - continued
Healthcare Products &
Services - 0.6%
<PAGE>
90,000 Kimberly Clark Corp. de Mexico SA de
CV, Class A .............................. $ 394,991
----------
Leisure & Tourism - 1.0%
1,195,000 Grupo Posadas SA de CV Class A
Shares ................................. 712,582
----------
Metal Products & Services - 0.4%
13,300 Tubos de Acero de Mexico SA, ADR ......... 268,494
----------
Publishing, Broadcasting &
Entertainment - 0.1%
2,200 * Grupo Televisa SA, ADR .................. 68,200
----------
Retailing & Wholesale - 0.8%
402,000 Grupo Elektra SA de CV .................. 546,547
----------
Telecommunication Services &
Equipment - 1.4%
21,800 Telefonos de Mexico SA, ADR ............ 942,850
----------
Total Mexico ........................... 7,284,238
==========
Peru - 0.3%
Telecommunication Services &
Equipment - 0.3%
11,800 Telefonica del Peru SA, ADR ............ 233,050
==========
Poland - 0.6%
Building, Construction &
Furnishings - 0.2%
30,000 Polifarb Cieszyn ........................ 144,620
----------
Business Equipment &
Services - 0.2%
8,000 * ComputerLand Poland SA .................. 135,437
----------
Retailing & Wholesale - 0.2%
7,600 * Amica Wronki SA ........................ 142,841
----------
Total Poland ........................... 422,898
==========
Portugal - 6.4%
Building, Construction &
Furnishings - 0.8%
21,600 Cimpor Cimentos de Portugal SA ......... 546,602
----------
Finance & Insurance - 2.7%
43,400 Banco Comercial Portugues, ADR ......... 868,000
26,600 Banco Espirito Santo e Comercial
de Lisboa SA ........................... 771,453
6,000 Sonae Investimentos SA .................. 224,168
----------
1,863,621
----------
Telecommunication Services &
Equipment - 1.5%
25,400 Portugal Telecom SA, ADR ............... 1,047,750
----------
Utilities - Electric - 1.4%
55,200 Electricidade de Portugal, SA ............ 969,963
----------
Total Portugal ........................... 4,427,936
==========
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
Singapore - 1.0%
Telecommunication Services &
Equipment - 1.0%
308,000 Datacraft Asia Ltd. ..................... $ 702,240
==========
South Africa - 2.0%
Finance & Insurance - 1.3%
35,800 Liberty Life Association of Africa, Ltd... 892,675
----------
Publishing, Broadcasting &
Entertainment - 0.3%
22,500 Nasionale Pers Beperk .................. 215,065
----------
Retailing & Wholesale - 0.4%
187,050 New Clicks Holdings ..................... 244,866
----------
Total South Africa ..................... 1,352,606
==========
Spain - 1.8%
Food & Beverage Products - 1.8%
25,965 Campofrio Alimentacion SA ............... 1,253,003
==========
<PAGE>
Switzerland - 0.6%
Finance & Insurance - 0.6%
37,500 Richemont Securities AG .................. 441,818
==========
Taiwan - 0.9%
Business Equipment &
Services - 0.2%
120,000 * Acer Inc. .............................. 164,394
----------
Food & Beverage Products - 0.7%
55,000 * President Enterprises .................. 63,086
34,706 President Enterprises Corp.,
GDR,144A** .............................. 390,447
----------
453,533
----------
Total Taiwan ........................... 617,927
==========
Turkey - 5.7%
Finance & Insurance - 2.9%
10,136,000 Akbank Turk Anonim Sirket ............... 690,162
22,227,000 * Haci Omer Sabanci ........................ 1,295,506
----------
1,985,668
----------
Food & Beverage Products - 1.5%
4,363,000 Erciyas Biracilik Ve Malt ............... 617,921
5,890,000 Guney Biracilik .......................... 433,136
----------
1,051,057
----------
Household Products &
Services - 1.0%
8,200,000 Turk Sise ve Cam Fabrikalari AS ......... 703,508
----------
Manufacturing - Distributing - 0.3%
1,546,000 Arcelik AS .............................. 172,638
----------
Total Turkey ........................... 3,912,871
==========
Russia - 2.1%
Oil / Energy - 2.1%
16,800 LUKoil Oil Co., ADR ..................... 1,467,846
=========
</TABLE>
32
<PAGE>
EVERGREEN
Emerging Markets Growth Fund
Schedule of Investments (continued)
October 31, 1997
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
Venezuela - 1.1%
Finance & Insurance - 0.5%
150,000 Banco Provincial SA .................. $ 299,242
-----------
Telecommunication Services &
Equipment - 0.6%
9,900 Compania Anonima Nacional Telefonos
de Venezuela ........................ 433,125
-----------
Total Venezuela ..................... 732,367
===========
Total Common Stocks
(Cost - $36,538,187).................. 37,077,539
===========
PREFERRED STOCKS - 8.6% Brazil - 8.6% Electrical Equipment & Services -
1.0%
17,500,000 Companhia Energetica de Minas Gerais
("CEMIG") ........................... 698,444
-----------
<PAGE>
Finance & Insurance - 1.1%
100,000,000 Banco Bradesco SA .................. 743,798
-----------
Metals & Mining - 2.6%
94,000 Compania Vale Do Rio Doce Navegacao
SA ("CVRD") ........................ 1,816,137
-----------
Oil/Energy - 0.9%
3,373,700 Petroleo Brasileiro SA ("Petrobras") ... 627,338
-----------
Telecommunication Services &
Equipment - 2.2%
610,000 Compania Riograndense de
Telecomunica ........................ 470,316
3,985,000 * Telecomunicaoes de Sao Paulo SA ...... 1,041,028
95,467 * Telesponsora Telefonos de Sao Paulo,
Rights .............................. 46
-----------
1,511,390
===========
Shares Value
<S> <C> <C>
PREFERRED STOCKS - continued
Brazil - continued
Utilities - Electric - 0.8%
1,274,900 * Electrobras SA, Class B Shares ...... $ 551,614
Total Brazil ........................ 5,948,721
===========
Total Preferred Stocks
(Cost - $6,941,150) .................. 5,948,721
===========
PUT OPTION PURCHASED - 0.0%
Brazil - 0.0%
4,000 * Brazilian Real Strike price 1.2, expires
12/1/97 .............................. 24,673
-----------
Total Put Option Purchased
(Cost - $23,557) ..................... 24,673
===========
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C> <C>
SHORT-TERM INVESTMENTS - 44.3% United States - 44.3% Government Agency Notes
& Bonds - 44.3%
$30,680,000 Federal Home Loan Bank Discount
Notes, 5.55%, 11/3/97 ......... 30,670,540
----------
Total Short-Term Investments
(Cost - $30,670,540)............ 30,670,540
==========
Total Investments
(Cost $74,173,434) 106.5% 73,721,473
Other Assets And
Liabilities - Net ( 6.5%) (4,500,549)
===== ----------
Net Assets ......... 100% $ 69,220,924
===== ===========
</TABLE>
* Non-income producing securities
** Securities that may be resold to "qualified institutional buyers" under Rule
144A of the Securities Act of 1933. These securities have been determined to
be liquid under guidelines established by the Board of Directors.
Legend of Portfolio Abbreviations:
ADR American Depository Receipts
GDR Global Depository Receipts
33
<PAGE>
[GRAPHIC OMITTED]
EVERGREEN
Emerging Markets Growth Fund
[GRAPHIC OMITTED]
<PAGE>
Schedule of Investments (continued)
October 31, 1997
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
<TABLE>
<CAPTION>
Forward Foreign Currency Exchange Contracts to Buy:
Unrealized
U.S. $ Value at In Exchange Appreciation
Exchange Date Contracts to Receive October 31, 1997 for U.S. $ (Depreciation)
- - --------------- -------------------------------- ------------------ ------------- ---------------
<S> <C> <C> <C> <C> <C>
11/5/97 98,961 Argentine Peso $ 99,021 $ 98,963 $ 57
10/31/97 26,031 Brazilian Real 23,612 23,558 54
11/3/97 80,039 Brazilian Real 72,601 72,585 16
11/3/97 353,508 Brazilian Real 320,657 320,875 (218)
11/5/97 856,361 Brazilian Real 776,780 774,988 1,792
11/2/97 18,187 Egyptian Pound 5,345 5,350 (5)
11/5/97 1,427,143 Egyptian Pound 419,439 419,562 (123)
11/6/97 186,572,485 Hungarian Forint 959,316 957,101 2,215
11/4/97 6,183,437 Mexican Peso 737,440 744,992 (7,552)
11/4/97 1,038,482 Polish Zloty 297,986 298,200 (214)
11/4/97 34,939,285 Spanish Peseta 240,182 241,377 (1,195)
Forward Foreign Currency Exchange Contracts to Sell:
Contracts to Deliver
-------------------------------
10/30/97 426,880 Brazilian Real $387,210 $387,791 $ 581
10/31/97 456,127 Brazilian Real 413,740 413,609 (131)
11/1/97 136,995,200 South Korean Won 141,964 141,744 (220)
</TABLE>
See combined notes to financial statements.
34
<PAGE>
EVERGREEN
Global Leaders Fund
Schedule of Investments
October 31, 1997
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - 99.4% Belgium - 2.4% Healthcare Products & Services -
0.8%
500 UCB SA ........................ $ 1,727,682
------------
Industrial Specialty Products &
Services - 0.7%
7,500 * Barco NV ..................... 1,446,776
------------
Retailing & Wholesale - 0.9%
3,500 Colruyt SA ..................... 1,877,640
------------
Total Belgium .................. 5,052,098
============
Canada - 6.1%
Automotive Equipment &
Manufacturing - 1.4%
<PAGE>
44,600 Magna International, Inc. ...... 2,938,025
------------
Chemical & Agricultural
Products - 1.4%
120,000 DuPont Canada, Inc. Cl. A ...... 2,894,952
------------
Energy - 1.5%
110,000 * Canadian Natural Resources, Ltd... 3,200,057
------------
Industrial Specialty Products &
Services - 1.8%
200,000 Bombardier, Inc., Cl. B ...... 3,831,553
------------
Total Canada .................. 12,864,587
============
Denmark - 1.1%
Healthcare Products &
Services - 1.1%
30,000 Coloplast AS .................. 2,220,018
============
France - 6.5%
Automotive Equipment &
Manufacturing - 0.9%
30,000 BERTRAND FAURE ............... 1,809,908
Building, Construction &
Furnishings - 1.7%
25,000 LAPEYRE SA ..................... 1,460,582
19,320 Societe Technip ............... 2,043,115
------------
3,503,697
============
Food & Beverage Products - 0.8%
3,500 Sodexho Alliance ............... 1,745,677
------------
Healthcare Products &
Services - 0.9%
17,000 Synthelabo ..................... 2,001,127
------------
Retailing & Wholesale - 1.3%
3,800 Carrefour SA .................. 1,982,923
8,050 Castorama Dubois Investisse ... 838,738
------------
2,821,661
------------
Textile & Apparel - 0.9%
27,000 Hermes International ......... 1,820,829
------------
Total France .................. 13,702,899
=============
Germany - 10.2%
Electrical Equipment &
Services - 0.7%
4,468 VEW AG ........................ 1,503,330
------------
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
Germany - continued
Food & Beverage Products - 1.1%
5,000 Suedzucker AG .................. $ 2,407,472
------------
Healthcare Products &
Services - 0.9%
25,000 Altana AG ..................... 1,817,206
------------
Information Services &
Technology - 2.0%
15,000 SAP AG ........................ 4,302,994
------------
<PAGE>
Textile & Apparel - 2.9%
18,000 Adidas AG ..................... 2,605,291
2,700 Hugo Boss AG .................. 3,445,875
------------
Utilities - Electric - 2.6%
126,300 RWE AG ........................ 5,480,473
------------
6,051,166
------------
Total Germany .................. 21,562,641
============
Hong Kong - 4.3%
Diversified Companies - 0.6%
2,120,000 First Pacific Ltd. ............ 1,336,739
------------
Finance & Insurance - 0.5%
1,135,000 National Mutual Asia Ltd. ...... 1,027,614
------------
Real Estate - 1.2%
176,000 Cheung Kong Holdings, Ltd. ... 1,223,566
152,400 Henderson China Holdings, Ltd. 163,606
200,000 Henderson Land Development Co.,
Ltd. ........................... 1,107,159
------------
2,494,331
------------
Retailing & Wholesale - 0.3%
1,500,000 Giordano International, Ltd. ... 552,933
------------
Telecommunication Services &
Equipment - 1.0%
106,000 Hong Kong Telecommunications, Ltd.
ADS .............................. 2,033,875
------------
Utilities - 0.7%
850,000 Hongkong & China Gas ......... 1,605,122
------------
Total Hong Kong ............... 9,050,614
============
Italy - 3.7%
Consumer Products &
Services - 1.1%
100,000 Industrie Natuzzi SpA ADS ...... 2,237,500
------------
Healthcare Products &
Services - 1.2%
40,500 Luxottica Group SpA ADS .......... 2,586,937
------------
Textile & Apparel - 1.4%
99,100 Benetton Group SpA ADS ......... 2,873,900
------------
Total Italy .................. 7,698,337
============
Japan - 6.8%
Consumer Products &
Services - 2.6%
63,000 Nintendo Co., Ltd. ............ 5,444,121
------------
</TABLE>
35
<PAGE>
EVERGREEN
Global Leaders Fund
<PAGE>
Schedule of Investments (continued)
October 31, 1997
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
Japan - continued
Publishing, Broadcasting &
Entertainment - 0.1%
50,000 Kyodo Printing Co. .................. $ 270,046
------------
Retailing & Wholesale - 3.9%
110,400 Seven-Eleven Japan Co., Ltd. ...... 8,255,920
------------
Transportation - 0.2%
100,000 Keisei Electric Railway ............ 378,064
------------
Total Japan ........................ 14,348,151
============
Malaysia - 1.1%
Automotive Equipment &
Manufacturing - 0.1%
134,000 Perusahaan Otomobil Nasional Berhad... 321,584
------------
.
Banks - 0.4%
240,000 Commerce Asset Holding Berhad ...... 187,191
115,000 Malayan Banking Berhad ............ 445,028
155,000 RHB Capital Berhad .................. 130,193
------------
762,412
------------
Building, Construction &
Furnishings - 0.2%
157,000 United Engineers Ltd. Berhad ...... 372,071
------------
Chemical & Agricultural
Products - 0.1%
92,000 Malaysian Oxygen Berhad ............ 289,786
------------
Finance & Insurance - 0.1%
101,000 AMMB Holdings Berhad ............... 165,127
------------
Food & Beverage Products - 0.2%
81,000 Nestle Malaysia Berhad ............ 410,649
------------
Total Malaysia ..................... 2,321,629
============
Netherlands - 5.2%
Energy - 0.6%
20,000 IHC Caland NV ..................... 1,229,977
------------
Food & Beverage Products - 1.3%
20,000 CSM NV, Certificates ............... 912,697
15,000 CSM NV, Ordinary Shares ............ 684,522
42,500 Nutricia Verenigde Bedrijven NV ... 1,214,911
------------
2,812,130
------------
Information Services &
Technology - 0.8%
49,200 Getronics NV ........................ 1,624,373
<PAGE>
------------
Publishing, Broadcasting &
Entertainment - 2.5%
14,000 Elsevier NV ........................ 219,933
55,000 Elsevier NV ADS ..................... 1,718,750
70,000 VNU ................................. 1,658,511
14,550 Wolters Kluwer NV .................. 1,786,619
------------
5,383,813
------------
Total Netherlands .................. 11,050,293
============
Norway - 2.7%
Food & Beverage Products - 1.6%
35,000 Orkla ASA ........................... 3,225,413
------------
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
Norway - continued
Publishing, Broadcasting &
Entertainment - 1.1%
125,000 Schibsted ASA ..................... $ 2,346,863
------------
Total Norway ........................ 5,572,276
============
Spain - 1.8%
Industrial Specialty Products &
Services - 0.6%
115,000 Prosegur, CIA de Seguridad SA ...... 1,288,582
------------
Utilities - Electric - 1.2%
130,000 Empresa Nacional de Electricidad ADS 2,421,250
------------
Total Spain ........................ 3,709,832
============
Sweden - 2.1%
Healthcare Products &
Services - 1.3%
6,933 Astra AB ........................... 112,003
168,000 Astra AB ADS ........................ 2,677,500
------------
2,789,503
------------
Retailing & Wholesale - 0.8%
41,000 Hennes & Mauritz Cl. B ............ 1,677,793
------------
Total Sweden ........................ 4,467,296
============
Switzerland - 2.3%
Chemical & Agricultural
Products - 2.3%
1,000 * Ems-Chemie Holdings AG ............ 4,924,121
------------
United Kingdom - 8.6%
Banks - 0.6%
110,000 Lloyds TSB Group Plc ............... 1,374,917
------------
Building, Construction &
Furnishings - 0.5%
125,800 Wolseley Plc ........................ 1,048,446
------------
Chemical & Agricultural
Products - 0.4%
50,000 Burmah Castrol Plc .................. 859,847
------------
Consumer Products &
Services - 0.6%
80,000 Reckitt & Colman Plc ............... 1,227,443
<PAGE>
------------
Finance & Insurance - 0.4%
92,750 Legal & General Group Plc ......... 770,276
------------
Healthcare Products &
Services - 1.3%
56,200 SmithKline Beecham Plc - ADR ...... 2,676,525
------------
Industrial Specialty Products &
Services - 1.9%
100,000 Morgan Crucible Company Plc ......... 813,709
230,200 Rentokil Initial Plc ............... 926,924
50,000 Smiths Industries Plc ............... 725,628
95,000 TI Group Plc ........................ 872,640
------------
100,000 Williams Holdings Plc ............... 600,635
------------
3,939,536
------------
Publishing, Broadcasting &
Entertainment - 1.6%
35,000 Carlton Communications Plc, ADS ... 1,474,375
95,400 Granada Group Plc .................. 1,315,672
</TABLE>
36
<PAGE>
[GRAPHIC OMITTED]
EVERGREEN
Global Leaders Fund
[GRAPHIC OMITTED]
Schedule of Investments (continued)
October 31, 1997
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
United Kingdom - continued
47,700 United News & Media Plc ...... $ 600,216
------------
3,390,263
------------
Retailing & Wholesale - 0.9%
79,560 Argos Plc ..................... 847,610
90,000 Next Plc ..................... 1,072,083
------------
1,919,693
------------
Telecommunication Services &
Equipment - 0.4%
17,500 Vodafone Group Plc, ADR ...... 960,312
------------
Total United Kingdom ......... 18,167,258
------------
United States - 34.5%
Advertising & Related
Services - 0.9%
<PAGE>
35,800 Gannett Co., Inc. ............ 1,881,737
------------
Banks - 0.7%
44,000 Norwest Corp. .................. 1,410,750
------------
Building, Construction &
Furnishings - 1.2%
45,000 Home Depot, Inc. (The) ......... 2,503,125
------------
Capital Goods - 0.8%
34,800 Deere & Co. .................. 1,831,350
------------
Chemical & Agricultural
Products - 2.3%
57,800 Du Pont (E. I.) De Nemours & Co. 3,287,375
37,500 Nalco Chemical Company ......... 1,500,000
------------
4,787,375
------------
Consumer Products &
Services - 2.6%
18,500 Avon Products, Inc. ............ 1,211,750
45,900 Callaway Golf Co. ............ 1,480,275
43,250 * CUC International, Inc. ...... 1,275,875
37,700 Mattel, Inc. .................. 1,465,587
------------
5,433,487
------------
Diversified Companies - 0.9%
50,900 AlliedSignal, Inc. ............ 1,832,400
------------
Electrical Equipment &
Services - 3.2%
59,000 General Electric Co. ......... 3,809,187
52,300 Sundstrand Corp. ............... 2,843,813
------------
6,653,000
------------
Energy - 0.8%
40,000 Dresser Industries Inc. ...... 1,685,000
------------
Finance & Insurance - 4.4%
43,000 Fannie Mae ..................... 2,082,812
11,400 Marsh & McLennan Co., Inc. ... 809,400
74,850 MBNA Corp. ..................... 1,969,491
37,500 Schwab (Charles) & Co., Inc. ... 1,279,688
10,000 SLM Holding Corp. ............ 1,403,750
50,000 SunAmerica, Inc. ............... 1,796,875
------------
9,342,016
------------
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
United States - continued
Food & Beverage Products - 0.5%
18,400 Coca Cola Co. (The) ............ $ 1,039,600
------------
Healthcare Products &
Services - 2.3%
34,000 Merck & Co., Inc. ............ 3,034,500
34,000 Schering-Plough Corp. ......... 1,906,125
------------
4,940,625
------------
Industrial Specialty Products &
Services - 0.5%
15,000 Dover Corp. .................. 1,012,500
------------
<PAGE>
Information Services &
Technology - 8.0%
32,500 * Cisco Systems, Inc. ............ 2,666,016
40,000 Compaq Computer Corp. ......... 2,550,000
30,000 Computer Associates International,
Inc. ........................... 2,236,875
31,200 Intel Corp. .................. 2,402,400
23,500 * Microsoft Corp. ............... 3,055,000
60,000 * Oracle Systems Corp. ......... 2,146,875
43,000 * Parametric Technology Corp. ... 1,897,375
------------
16,954,541
------------
Leisure & Tourism - 3.0%
40,000 Carnival, Corp. Cl. A ......... 1,940,000
24,300 Disney Walt Co. (The) ......... 1,998,675
34,300 Marriott International, Inc. ... 2,392,425
------------
6,331,100
------------
Retailing & Wholesale - 2.4%
30,000 Gap, Inc. ..................... 1,595,625
101,200 Wal-Mart Stores, Inc. ......... 3,554,650
------------
5,150,275
------------
Total United States ............ 72,788,881
============
Total Common Stocks
(Cost - $190,656,262)............ 209,500,931
============
PREFERRED STOCKS - 0.4%
Germany - 0.4%
Utilities-Electric - 0.4%
25,000 RWE AG ........................ 902,077
------------
Total Preferred Stocks
(Cost - $966,606)............... 902,077
============
WARRANTS - 0.0%
Malaysia - 0.0%
Banks - 0.0%
25,000 * Commerce Asset Holding, Warrants @
7.45 MYR expire 3/16/2002 ...... 4,050
------------
Total Warrants
(Cost - $15,235) ............... 4,050
============
</TABLE>
37
<PAGE>
EVERGREEN
Global Leaders Fund
Schedule of Investments (continued)
October 31, 1997
<TABLE>
<CAPTION>
Principal
Amount Value
<PAGE>
<S> <C> <C> <C>
SHORT-TERM INVESTMENTS - 0.0%
United States - 0.0%
$80,000 Federal National Mortgage
Association
Discount Notes, 5.45%, 11/6/97 $ 79,939
------------
Total Short-Term Investments
(Cost - $79,939) ............ 79,939
============
Total Investments -
(Cost $191,718,042) 99.8% 210,486,997
Other Assets And
Liabilities - Net ... 0.2% 338,436
---- ------------
Net Assets ......... 100% $210,825,433
==== =============
</TABLE>
* Non-income producing securities
Legend of Portfolio Abbreviations:
ADR American Depository Receipts
ADS American Depository Shares
See combined notes to financial statements.
38
<PAGE>
EVERGREEN
Global Real Estate Equity Fund
Schedule of Investments
October 31, 1997
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - 99.6%
Argentina - 4.0%
281,313 Inversiones y Representaciones SA ... $ 945,784
14,668 Inversiones y Representaciones
SA, GDR ........................ 495,045
<PAGE>
----------
Total Argentina .................. 1,440,829
==========
Belgium - 1.0%
7,342 Bernheim-Comofi .................. 351,490
==========
Canada - 4.4%
25,000 Bentall Corp ..................... 354,774
30,000 * Burcon Properties Ltd. ......... 319,296
35,000 Canadian Hotel Income Properties... 238,408
100,000 * Gentra, Inc. ..................... 350,516
40,000 Monarch Development Corp. ...... 305,105
----------
Total Canada .................. 1,568,099
==========
Denmark - 6.3%
12,600 * Nordicom AS ..................... 157,644
20,525 Thorkild Kristensen ............ 1,675,447
5,131 * Thorkild Kristensen, New Shares... 418,841
----------
Total Denmark .................. 2,251,932
==========
France - 14.2%
6,576 Simco Registered Shares ......... 477,674
20,000 Societe de Immeubles ............ 1,192,736
51,078 Societe du Louvre ............... 2,612,232
8,450 Unibail ........................ 805,704
----------
Total France ..................... 5,088,346
==========
Germany - 2.5%
29,871 Kampa Haus AG .................. 911,483
==========
Hong Kong - 3.1%
1,000,000 China Resources Beijing ......... 407,424
200,000 New World Develelopment Co., Ltd.... 703,615
----------
Total Hong Kong .................. 1,111,039
==========
Japan - 8.9%
220 Chubu Sekiwa Real Estate, Ltd. ... 1,736
52,000 Daibiru Corp. .................. 557,374
190,000 Diamond City Co., Ltd. ......... 757,790
146,410 Kansai Sekiwa Real Estate Co.,
Ltd. ........................... 727,488
47,000 Tachihi Enterprise Co., Ltd ...... 1,140,341
----------
Total Japan ..................... 3,184,729
==========
Malaysia - 0.3%
39,200 IOI Properties Berhad
Warrants expiring 5/18/98 @ 2.75
MYR .............................. 8,349
108,300 IOI Properties Berhad ............ 85,769
----------
Total Malaysia .................. 94,118
==========
Mexico - 4.4%
930,000 * Grupo Posadas, SA de CV, Class A
Shares ........................... 554,562
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
Mexico - continued
1,930,000 * Grupo Posadas, SA de CV, Class L
Shares ........................... $1,035,778
----------
Total Mexico ..................... 1,590,340
==========
<PAGE>
Netherlands - 3.7%
90,500 European City Estates NV ......... 1,342,467
==========
Norway - 3.2%
65,000 * Steen & Strom ASA ............... 1,164,474
==========
Philippines - 1.7%
3,000,000 * Filinvest Land, Inc. ............ 270,804
1,000,000 * Robinson's Land Corp. Class B ... 41,749
12,825,000 * SM Development Corp. ............ 285,804
----------
Total Philippines ............... 598,357
==========
Spain - 5.2%
40,000 * Inmobiliaria Urbis SA ............ 340,964
239,993 * Sotogrande SA .................. 494,933
40,000 Vallehermoso SA .................. 1,017,392
----------
Total Spain ..................... 1,853,289
==========
Sweden - 4.7%
49,800 * Dioes (Anders) AB ............... 295,878
100,000 * Castellum AB ..................... 934,592
62,000 * NK Cityfastigheter AB ............ 463,558
----------
Total Sweden ..................... 1,694,028
==========
Thailand - 2.1%
9,000 Dusit Thani Public Co., Ltd. ... 6,362
123,700 Hemaraj Land & Development Public
Co., Ltd. ........................ 165,838
400,000 Saha Pathana Inter-Holding Co. ... 567,946
125,500 Sammakorn Public Co., Ltd. ...... 25,697
----------
Total Thailand .................. 765,843
==========
United Kingdom - 4.7%
275,000 Greycoat Plc ..................... 942,371
1,000,000 Hemingway Properties Plc ......... 754,988
----------
Total United Kingdom ............ 1,697,359
==========
United States - 25.2%
22,900 * Alexander's, Inc. REIT ......... 2,003,750
95,600 Continental Homes Holding Corp. 2,879,950
10,000 Crescent Real Estate Equities, Inc... 360,000
20,000 * Crossmann Communities, Inc. ...... 435,000
10,000 Equity Office Properties Trust REIT 305,625
9,800 Forest City Enterprises, Inc. ... 565,950
46,516 Horizon Group, Inc. REIT ......... 619,244
258,100 * Presley Companies (The), Cl. A ... 274,231
81,000 US Home Corp.,
*Warrants expiring 6/22/98 @ $20 .... 1,275,750
39,000 * Washington Homes, Inc. ......... 180,375
</TABLE>
39
<PAGE>
EVERGREEN
Global Real Estate Equity Fund
Schedule of Investments (continued)
<PAGE>
October 31, 1997
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C> <C>
COMMON STOCKS - continued
United States - continued
10,000 Western Investment Real Estate
Trust
REIT ........................ $ 139,375
-----------
Total United States ......... 9,039,250
===========
Total Investments -
(cost $35,691,976)... 99.6% 35,747,472
Other Assets and
Liabilities - net ... 0.4% 143,128
----- -----------
Net Assets - ...... 100.0% $35,890,600
===== ===========
</TABLE>
* Non-income producing securities
Legend of Portfolio Abbreviations:
GDR Global Depository Receipts
REIT Real Estate Investment Trust
See combined notes to financial statements.
40
<PAGE>
EVERGREEN
International Equity Fund
Schedule of Investments
October 31, 1997
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - 84.4%
Argentina - 2.5%
Energy - 1.7%
4,000 YPF Sociedad
Anonima,........ $ 127,277
138,400 YPF Sociedad
<PAGE>
Anonima, ADR .... 4,428,800
-----------
4,556,077
-----------
Telecommunication
Services
& Equipment -
0.8%
75,200 Telefonica de
Argentina, ADR.... 2,115,000
-----------
Total Argentina... 6,671,077
===========
Australia - 4.4%
Building,
Construction &
Furnishings -
0.2%
241,500 Boral Ltd. ... 635,183
-----------
Finance &
Insurance - 1.1%
202,500 National
Australia Bank
Ltd............ 2,769,839
-----------
Food & Beverage
Products - 1.7%
2,467,840 Burns Philp &
Co., Ltd......... 1,301,632
244,596 Foodland
Associated Ltd..... 1,823,329
440,900 Woolworths Ltd.... 1,423,189
-----------
4,548,150
-----------
Metals & Mining
- 0.6%
733,700 Orogen Minerals
Ltd.......... 1,599,521
-----------
Publishing,
Broadcasting &
Entertainment -
0.2%
124,500 News Corp., Ltd.... 596,247
-----------
Transportation -
0.6%
862,200 Qantas Airways
Ltd. ........... 1,546,173
-----------
Total Australia ... 11,695,113
===========
Austria - 1.8%
Engineering -
0.4%
10,100 VAE
Eisenbahnsysteme
AG............. 990,563
-----------
Information
Services &
<PAGE>
Technology -
1.2%
18,500 VA Technologie AG.. 3,282,688
-----------
Metal Products &
Services - 0.2%
8,920 Boehler-Uddeholm
AG................. 639,585
-----------
Total Austria ... 4,912,836
===========
Brazil - 1.5%
Food & Beverage
Products - 0.7%
65,600 Panamerican
Beverages, Inc.
ADR, ......... 2,033,600
-----------
Telecommunicatio
Services &
Equipment - 0.5%
13,000 Telecomunicacoes
Brasileiras SA
("Telebras") ADR.... 1,319,500
-----------
Utilities - 0.3%
3,844,900 Compania de
Saneamento
Basico
do Estado
("SABESP")...... 711,470
-----------
Total Brazil .... 4,064,570
===========
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
China - 0.8%
Transportation -
0.8%
6,733,800 * Guangshen
Railway Co.,
Ltd........... $ 2,090,296
===========
Denmark - 1.2%
Consumer
Products &
Services - 0.6%
53,500 ISS
International
Service
System AS,
Series B....... 1,624,428
----------
Transportation -
0.6%
96,700 SAS Danmark AS... 1,667,241
-----------
Total Denmark... 3,291,669
===========
Finland - 2.1%
Diversified
Companies - 1.0%
67,716 Huhtamaki Group ... 2,788,094
<PAGE>
-----------
Forest Products
- 0.6%
69,300 UPM-Kymmene
Corp.......... 1,541,861
-----------
Machinery -
Diversified -
0.5%
67,666 Rauma OY ... 1,268,758
-----------
Total Finland ... 5,598,713
===========
France - 8.2%
Automotive
Equipment &
Manufacturing -
0.8%
33,850 BERTRAND FAURE .... 2,042,179
-----------
Diversified
Companies - 0.4%
8,000 Eaux Cie
Generale ........ 933,386
400 Marine-Wendel SA ... 46,045
-----------
979,431
===========
Finance &
Insurance - 3.8%
52,650 AXA-UAP ...... 3,605,383
13,000 * Banque Nationale
de Paris......... 574,698
20,800 Societe Generale... 2,848,698
123,600 * Societe Generale
d'Enterprises SA.. 3,167,005
-----------
10,195,784
===========
Healthcare
Products &
Services - 1.2%
76,550 Rhone-Poulenc SA... 3,337,637
-----------
Industrial
Specialty
Products &
Services - 1.8%
96,900 Bouygues Offshore
SA, ADR......... 2,349,825
16,970 Compagnie de
Saint Gobain ..... 2,435,949
-----------
4,785,774
===========
Oil / Energy -
0.2%
4,760 Total SA ... 528,132
-----------
Total France..... 21,868,937
===========
Germany - 4.0%
Automotive
Equipment &
Manufacturing -
0.6%
<PAGE>
1,963 Bayer Motoren
Werk AG ("BMW")..... 1,420,038
-----------
Finance &
Insurance - 0.5%
21,300 Deutsche
Bank AG ......... 1,393,804
-----------
</TABLE>
41
<PAGE>
EVERGREEN
International Equity Fund
Schedule of Investments (continued)
October 31, 1997
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
Germany - continued
Healthcare Products &
Services - 2.6%
51,000 * Fresenius Medical Care AG ............ $ 3,594,675
86,300 Hoechst AG ........................... 3,284,186
-----------
6,878,861
-----------
Retailing & Wholesale - 0.3%
3,200 AVA Allgemeine Handelsgesellschaft
der Verbraucher AG .................. 816,800
-----------
Total Germany ........................ 10,509,503
===========
Hong Kong - 2.3%
Diversified Companies - 2.0%
109,000 Cheung Kong (Holdings) Ltd. ......... 757,777
3,930,793 First Pacific Company Ltd. ......... 2,478,512
310,600 * Jardine Matheson
Holdings Ltd. ........................ 1,987,840
-----------
5,224,129
-----------
Finance & Insurance - 0.3%
275,000 Wing Hang Bank Ltd .................. 707,818
-----------
Real Estate - 0.0%
41,170 Hongkong Land Holdings Ltd., ADR ... 93,868
9,800 * Hysan Development Co. ............... 329
-----------
94,197
-----------
Total Hong Kong ..................... 6,026,144
===========
India - 2.2%
Automotive Equipment &
<PAGE>
Manufacturing - 1.2%
289,997 Tata Engineering & Locomotive
Co.,Ltd., GDR ........................ 3,015,969
-----------
Finance & Insurance - 0.6%
91,200 State Bank of India, GDR ............ 1,678,080
-----------
Metal Products & Services - 0.4%
38,025 Hindalco Industries Ltd., GDR ...... 1,098,922
-----------
Total India ........................ 5,792,971
===========
Indonesia - 1.3%
Building, Construction &
Furnishings - 0.6%
1,536,000 PT Semen Gresik ..................... 1,491,262
-----------
Finance & Insurance - 0.7%
1,033,500 PT Hanjaya Mandala Sampoerna ......... 1,798,950
25,500 PT Indosat ........................... 57,472
-----------
1,856,422
-----------
Total Indonesia ..................... 3,347,684
===========
Ireland - 0.8%
Food & Beverage Products - 0.8%
185,575 Kerry Group PLC ..................... 2,246,644
===========
Israel - 0.4%
Telecommunication Services &
Equipment - 0.4%
41,500 * ECI Telecommunications Ltd. ......... 1,146,437
===========
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
Italy - 2.9%
Diversified Companies - 0.0%
12,200 * Grassetto SpA ........................ $ 732
-----------
Energy - 1.0%
476,600 ENI SpA .............................. 2,679,995
-----------
Finance & Insurance - 0.5%
891,200 Parmalat Finanziara SpA ............ 1,237,047
-----------
Other - 0.6%
77,000 Assicruz Generali .................. 1,721,471
-----------
Telecommunication Services &
Equipment - 0.8%
328,000 Telecom Italia SpA .................. 2,055,570
-----------
Total Italy ........................ 7,694,815
===========
Japan - 18.5%
Automotive Equipment &
Manufacturing - 0.2%
200,000 Isuzu Motors Ltd. .................. 468,633
-----------
Business Equipment &
Services - 1.0%
235,000 Fujitsu Ltd. ........................ 2,577,482
-----------
Chemical & Agricultural
Products - 0.5%
250,000 Toray Industries, Inc. ............... 1,391,774
-----------
<PAGE>
Communication Systems &
Services - 0.8%
6,000 Nippon Television Network ............ 2,133,776
-----------
Electrical Equipment &
Services - 4.9%
300,000 Fujikura Ltd. ........................ 2,056,502
309,000 Matsushita Electric Works Ltd. ...... 2,798,587
227,000 NEC Corp. ........................... 2,489,738
29,000 Rohm Co. Ltd. ........................ 2,867,470
52,000 Tokyo Electron Ltd. .................. 2,592,439
25,000 Yokogawa Electric Corp. ............ 158,911
-----------
12,963,647
-----------
Finance & Insurance - 4.7%
230,000 Fuji Bank Ltd. ..................... 1,987,536
80,000 Japan Asia Investment Co., Ltd. ...... 245,949
156,000 Nomura Securities International Inc... 1,814,707
50,100 Orix Corp. ........................... 3,421,870
9,500 Shohkoh Fund & Co. Ltd. ............ 2,762,775
210,000 Sumitomo Bank Ltd. .................. 2,233,486
-----------
12,466,323
-----------
Food & Beverage
Products - 0.2%
55,000 Mycal Corp. ........................ 525,550
-----------
Healthcare Products &
Services - 2.0%
75,000 Sankyo Co. Ltd. .................... 2,474,034
115,000 Yamanouchi Pharmaceutical Co. Ltd..... 2,828,417
-----------
5,302,451
-----------
Manufacturing - Distributing - 0.2%
40,400 Fujitsu Denso ......................... 631,093
-----------
</TABLE>
42
<PAGE>
EVERGREEN
International Equity Fund
Schedule of Investments (continued)
October 31, 1997
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
Japan - continued
Real Estate - 0.7%
45,000 Hankyu Realty Co. ............... $ 292,023
45,500 Meiwa Estate Co., Ltd. ............ 536,851
<PAGE>
48,000 Mitsubishi Estate Co., Ltd. ...... 606,232
43,000 Mitsui Fudosan Co. ............... 485,916
-----------
1,921,022
-----------
Retailing & Wholesale - 2.8%
53,000 Jusco Co. Ltd. .................. 1,184,628
210,000 Kao Corp. ........................ 2,931,450
40,000 Sony Corp. ........................ 3,320,316
-----------
7,436,394
-----------
Telecommunication Services &
Equipment - 0.5%
150 * DDI Corp. ........................ 501,039
70,000 Sumitomo Electric Industries ...... 924,802
-----------
1,425,841
-----------
Total Japan ..................... 49,243,986
===========
Korea - 1.2%
Building, Construction &
Furnishings - 0.2%
42,200 LG Construction Co ............... 371,710
-----------
Electrical Equipment &
Services - 0.0%
2,600 Samsung Electronic ............... 102,114
-----------
Finance & Insurance - 0.2%
50,800 Housing & Commercial Bank, Korea.... 438,404
625 Kookmin Bank ..................... 5,052
21,900 Ssangyong Investment &
Securities Co. Ltd. ............... 121,414
-----------
564,870
-----------
Oil / Energy - 0.8%
152,400 Yukong Ltd. ..................... 2,053,057
-----------
Total Korea ..................... 3,091,751
=-----------
Mexico - 0.8%
Diversified Companies - 0.8%
277,220 Alfa SA de CV ..................... 2,023,359
-----------
Netherlands - 3.4%
Electrical Equipment &
Services - 3.4%
30,900 * ASM Lithography Holding N.V. ...... 2,263,425
85,550 Philips Electronics N.V. ......... 6,697,708
-----------
8,961,133
-----------
Total Netherlands ............... 8,961,133
===========
New Zealand - 3.2%
Building, Construction &
Furnishings - 0.8%
743,800 Fletcher Challenge Building, ADR 2,246,166
-----------
Diversified Companies - 1.0%
2,683,090 Fletcher Challenge Forests ...... 2,589,470
-----------
Finance & Insurance - 1.1%
3,711,700 Brierley Investments Ltd. ......... 2,865,751
-----------
Shares Value
<PAGE>
<S> <C> <C>
COMMON STOCKS - continued
New Zealand - continued
Forest Products - 0.3%
345,350 Carter Holt Harvey Ltd. ......... $ 602,090
132,850 Fletcher Challenge Paper ......... 218,378
-----------
820,468
-----------
Total New Zealand ............... 8,521,855
===========
Norway - 1.7%
Energy - 1.2%
111,800 Smedvig ASA ..................... 3,300,771
2,300 Smedvig ASA, ADR .................. 66,988
-----------
3,367,759
-----------
Transportation - 0.5%
73,500 SAS Norge ASA ..................... 1,243,013
-----------
Total Norway ..................... 4,610,772
===========
Pakistan - 0.0%
Energy - 0.0%
38,000 * Hub Power Co., Ltd. ............... 50,775
29,925 * Sui Southern Gas Co., Ltd ......... 20,128
-----------
70,903
-----------
Telecommunication Services &
Equipment - 0.0%
44,500 * Pakistan Telecommunications Corp. ... 37,466
-----------
Total Pakistan .................. 108,369
===========
Philippines - 0.4%
Telecommunication Services &
Equipment - 0.4%
22,500 * Millicom International Cellular
SA,GDR ........................... 945,000
-----------
Portugal - 1.9%
Building, Construction &
Furnishings - 1.9%
139,800 Cimpor-Cimentos de Portugal SA ... 3,537,731
82,100 Mota e Companhia S.A. ............ 1,377,282
-----------
4,915,013
-----------
Total Portugal .................. 4,915,013
===========
Singapore - 1.6%
Finance & Insurance - 1.3%
304,300 Development Bank of Singapore
Ltd................................ 2,840,133
320,000 Keppel Bank ..................... 522,159
-----------
3,362,292
-----------
Real Estate - 0.3%
525,600 DBS Land Ltd. ..................... 894,354
-----------
Total Singapore .................. 4,256,646
===========
South Africa - 0.4%
Diversified Companies - 0.4%
48,600 De Beers Centenary ............... 1,159,331
-----------
</TABLE>
<PAGE>
43
<PAGE>
EVERGREEN
International Equity Fund
Schedule of Investments (continued)
October 31, 1997
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
Sweden - 2.4%
Electrical
Equipment &
Services -
2.4%
196,900 AAB, Series B... $ 2,273,976
49,900 Electrolux
AB, Series B ... 4,130,629
------------
6,404,605
------------
Total Sweden 6,404,605
============
Switzerland - 2.8%
Diversified
Companies -
1.0%
21,000 * Oerlikon Buhrle
Holding AG 2,684,521
------------
Finance &
Insurance -
1.2%
2,205 Julius Baer
Holding AG..... 3,291,162
------------
Retailing &
Wholesale -
0.6%
11,404 * Tag Heuer
International
SA........ 1,303,081
12,600 * Tag Heuer
International SA,
ADR....... 144,900
------------
1,447,981
------------
Total
Switzerland..... 7,423,664
============
<PAGE>
Thailand - 0.3%
Building,
Construction &
Furnishings - 0.1%
30,900 Siam Cement
Public Co.,
Ltd............. 257,594
------------
Finance &
Insurance -
0.2%
2,700 Bangkok Bank
Public Co.,
Ltd........... 7,174
657,400 IND Finance
Thailand .... 544,829
154,200 Thai Military
Bank Public
Co., Ltd........ 60,139
------------
612,142
------------
Manufacturing -
Distributing - 0.0%
1,420 * One Holding
Public Co., Ltd. 0
------------
Real Estate - 0.0%
3,941 Land & House
Public Co.,
Ltd.
Foreign
Shares....... 3,362
------------
Telecommunication
Services &
Equipment - 0.0%
9,400 Jasmine
International
Public Co.,Ltd.... 4,926
------------
Total Thailand.. 878,024
============
United
Kingdom - 9.4
Automotive
Equipment &
Manufacturing - 0.9%
692,600 Rolls-Royce PLC... 2,486,702
------------
Building,
Construction &
Furnishings - 1.4%
327,775 * Hanson PLC... 1,677,271
804,400 Pilkington PLC ... 2,024,374
------------
3,701,645
------------
Chemical &
Agricultural
Products - 1.3%
225,500 Imperial
Chemical
Industries PLC... 3,329,329
------------
<PAGE>
Diversified
Companies - 1.2%
823,400 Cookson Group
PLC............ 3,315,505
------------
Healthcare
Products &
Services - 1.0%
32,800 *
Biocompatible
International
PLC ........... 313,673
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
United Kingdom - continued
652,800 Medeva PLC ... $ 2,267,138
------------
2,580,811
------------
Leisure &
Tourism - 0.6%
616,992 Thistle
Hotels PLC... 1,573,442
============
Other - 1.5%
672,491 Williams
Holdings PLC.. 4,039,215
Telecommunication
Services &
Equipment - 1.5%
1,008,800 * Orange PLC..... 3,854,703
------------
Total United
Kingdom......... 24,881,352
============
Total Common
Stocks (Cost
$231,622,099)... 224,382,269
============
PREFERRED STOCKS - 0.3% Australia - 0.3% Publishing, Broadcasting &
Entertainment - 0.3%
148,050 News Corp. Ltd.... 656,973
------------
Total
Preferred
Stocks (Cost
$699,357)....... 656,973
============
WARRANTS - 0.0%
France - 0.0%
Diversified
Companies - 0.0%
25,300 Eaux
Cie Generale .... 13,377
------------
Healthcare
Products &
<PAGE>
Services - 0.0%
32,000 Rhone-
Poulenc SA .... 104,018
------------
Total France... 117,395
============
Total Warrants
(Cost $5,391)... 117,395
============
CALL OPTION PURCHASED - 0.0% Singapore - 0.3% Finance & Insurance -
0.0%
387 * DBS 50 Index,
expires
2/26/98.............. 0
------------
Total Call
Option
Purchased
(Cost $17,000)....... 0
==========
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
CONVERTIBLE CORPORATE BONDS - 1.2% China - 0.5% Automotive Equipment &
Manufacturing - 0.5%
$1,166,000 Qingling Motors Co., 3.50%,
1/22/2002 ............... 1,171,830
---------
Korea - 0.4%
Electrical Equipment &
Services - 0.4%
1,160,000 Samsung Electronics, .25%,
12/31/2006 ............ 1,102,000
---------
</TABLE>
44
<PAGE>
EVERGREEN
International Equity Fund
Schedule of Investments (continued)
October 31, 1997
<TABLE>
<CAPTION>
Principal
<PAGE>
Amount Value
<S> <C> <C>
CONVERTIBLE CORPORATE BONDS - continued
Thailand - 0.3%
Finance & Insurance - 0.3%
$1,580,000 Bangkok Bank Public Co.,
Ltd.,
3.25%, 3/3/2004 ......... $ 845,300
------------
Total Corporate Bonds
(Cost $3,927,050)......... 3,119,130
============
Principal
Amount Value
<S> <C> <C>
REPURCHASE AGREEMENT - 14.0% United States - 14.0% Repurchase Agreement -
14.0%
$37,179,000 State Street Bank & Trust Co., purchased 10/31/97, 5.55%,
maturing 11/3/97, maturity value $37,184,732 (a) (cost,
$37,179,000)........... $ 37,179,000
------------
Total Short-Term Investments
(Cost - $37,179,000)...... 37,179,000
=============
Total Investments -
(Cost $273,449,897)...99.9% 265,454,767
Other Assets and
Liabilities - Net... 0.1% 313,326
----- ------------
Net Assets ......... 100% $265,768,093
===== ==============
</TABLE>
* Non-income producing securities
** Securities that may be resold to "qualified institutional buyers"under Rule
144A of the Securities Act of 1933. These securities have been determined to
be liquid under guidelines established by the Board of Directors.
(a) Repurchase agreements are fully collaterallized by U.S. government and/or
agency obligations based on market prices plus accrued interest at October
31, 1997.
Legend of Portfolio Abbreviations:
ADR American Depository Receipts
GDR Global Depository Receipts
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
<TABLE>
<CAPTION>
Forward Foreign Currency Exchange Contracts to Buy:
Unrealized
U.S. $ Value at In Exchange Appreciation
Exchange Date Contracts to Receive October 31, 1997 for U.S. $ (Depreciation)
- - --------------- ---------------------------------------- ------------------ ------------- ---------------
<S> <C> <C> <C> <C> <C>
11/3/97 1,767 Australian Dollar $ 1,243 $ 1,233 $ 10
11/5/97 26,691 Australian Dollar 18,771 18,831 (60)
11/6/97 49,948 Australian Dollar 35,126 35,029 97
11/3/97 161,785 British Pound Sterling 271,434 271,426 8
11/5/97 48,434 British Pound Sterling 81,261 80,808 453
<PAGE>
11/5/97 803,126 British Pound Sterling 1,347,446 1,344,915 2,531
11/4/97 2,205,286 Finnish Markka 426,287 425,723 564
11/28/97 4,561,896 French Franc 790,863 790,856 7
11/4/97 8,416,000 French Franc 1,459,021 1,409,243 49,778
11/28/97 795,765 French Franc 137,956 138,766 (810)
12/12/97 41,500,000 French Franc 7,212,675 7,128,772 83,903
11/4/97 288,979 German Marks 167,641 167,515 126
11/3/97 1,913,696 Hong Kong Dollar 247,519 247,439 80
11/6/97 274,293,016 Indonesian Rupiah 76,087 76,193 (106)
11/4/97 399,748 Irish Pound 601,181 594,985 6,196
11/4/97 2,307,200,000 Italian Lira 1,362,788 1,367,635 (4,847)
Forward Foreign Currency Exchange Contracts to Sell:
Contracts to Deliver
---------------------------------------
11/4/97 110,129 British Pound Sterling $ 184,769 $ 183,486 $ (1,283)
11/28/97 12,088,909 French Franc 2,095,767 2,077,275 (18,492)
12/12/97 41,500,000 French Franc 7,212,675 6,772,083 (440,592)
11/5/97 131,292,334 Japanese Yen 1,090,921 1,091,374 453
11/28/97 4,071,510,000 Japanese Yen 33,966,366 35,159,844 1,193,478
11/28/97 593,440,000 Japanese Yen 4,950,743 5,046,859 96,116
11/28/97 341,000,000 Japanese Yen 2,844,775 2,897,565 52,790
10/31/97 76,401,078 South Korean Won 79,172 79,106 (66)
</TABLE>
See combined notes to financial statements.
45
<PAGE>
[GRAPHIC OMITTED]
EVERGREEN
Latin America Fund
[GRAPHIC OMITTED]
Schedule of Investments
October 31, 1997
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - 62.9%
Argentina - 5.7%
Diversified
Companies - 0.6%
146,483 * CEI Citicorp
Holdings S.A.,
Class B....... $ 586,287
-----------
Finance & Insurance
- 0.8%
51,440 * Banco Bansud
S.A., Class B....... 458,093
13,400 Banco de Galicia y
Buenos Aires
S.A. de C.V., ADR .... 325,369
-----------
783,462
------------
Iron & Steel - 0.7%
314,535 Siderca S.A. ... 771,077
-----------
Oil/Energy - 3.2%
158,079 * Perez Compancia
S.A., Class B...... 990,173
<PAGE>
68,925 YPF Sociedad
Anonima, ADR ...... 2,205,600
-------------
3,195,773
------------
Telecommunication
Services &
Equipment - 0.4%
15,200 Telecom Argentina
S.A., ADR ......... 384,750
------------
Total Argentina..... 5,721,349
=============
Brazil - 16.8%
Food & Beverage
Products - 0.7%
21,600 Panamerican Beverages,
Inc., ADR...... 669,600
-----------
Telecommunication
Services &
Equipment - 9.0%
110,700 * Compania
Riograndense de
Telecommunica,
Receipts**...... 85,351
9,668,700 Telecomunicacoes
Brasileiras S.A.
("Telebras") ... 859,391
56,950 Telecomunicacoes
Brasileiras S.A.
("Telebras") ADR .... 5,780,425
1,421,700 Telecomunicacoes de
Parana S.A....... 747,945
69,344 Telecomunicacoes de
Parana S.A.,
Rights ......... 0
7,083,567 * Telecomunicacoes de
Sao Paulo S.A........ 1,509,944
264,483 Telesponsora
Telefonos de Sao
Paulo, Rights ... 240
-----------
8,983,296
-----------
Utilities - 7.1%
6,000,000 * Companhia de
Eletricidade do
Estado
da Bahia ("COELBA") ..... 326,545
3,432,100 Companhia de
Saneamento Basico do
Estado ("SABESP")... 635,084
50,000,000 Companhia
Paranaense de
Energia-Copel ... 585,061
34,000 Companhia
Paranaense de
Energia-Copel, ADR .... 405,875
5,300,000 Companhia Paulista
de Forca e Luz 776,359
8,948,400 Eletrobras S.A..... 3,611,990
2,859,500 Light Participacoes
S.A. ............ 731,443
-----------
<PAGE>
7,072,357
------------
Total Brazil ... 16,725,253
===========
Chile - 2.3%
Chemical &
Agricultural
Products - 0.5%
10,600 Sociedad Quimica y
Minera de Chile
S.A., ADR ...... 549,875
-----------
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
Chile - continued
Industrial
Specialty Products &
Services - 0.3%
159,968 Madeco S.A. ... $ 333,622
-----------
Paper & Packaging -
0.3%
33,918 Empresas CMPC S.A. 341,632
-----------
Retailing &
Wholesale - 0.4%
19,200 Santa Isabel
S.A., ADR ............ 355,200
-----------
Telecommunication
Services &
Equipment - 0.6%
20,200 Compania de Telecom
de Chile S.A........ 560,550
-----------
Utilities - 0.2%
502,462 Chilgener S.A..... 198,865
------------
Total Chile ... 2,339,744
===========
Colombia - 1.2%
Food & Beverage
Products - 1.2%
110,952 Bavaria ......... 1,172,013
===========
Mexico - 30.1%
Building,
Construction &
Furnishings - 3.8%
119,300 * Bufete Industrial ... 583,339
314,100 Cemex S.A. de C.V. ... 1,378,519
71,700 * Corp. Geo S.A. de
C.V., Series B...... 386,504
58,600 Empresas ICA
Sociedad
Controladora
S.A. de C.V., ADR..... 780,113
34,400 * Tubos de Accro de
Mexico
S.A., ADR. ...... 694,450
------------
3,822,925
------------
Diversified
Companies - 6.4%
138,900 ALFA S.A. de C.V. ...... 1,013,796
74,416 Cifra S.A. de C.V.,
<PAGE>
Class A .............. 136,496
233,663 Cifra S.A. de C.V.,
Class B................. 464,818
287,000 Cifra S.A. de C.V.,
Class C ..... 496,303
64,356 Desc S.A. de C.V.,
ADR ............ 2,180,060
327,500 Grupo Carso S.A.
de C.V........... 2,073,971
-----------
6,365,444
-----------
Finance & Insurance - 2.6%
601,000 Grupo Finance
Banamex Accival
S.A. de C.V.,
Series B............. 1,189,815
1,440,000 Grupo Financiero
Bancomer S.A. de
C.V., Class B ... 678,354
499,750 Grupo Financiero
Banorte S.A. de
C.V., Class B ... 685,406
-----------
2,553,575
------------
Food & Beverage
Products - 4.5%
214,700 Fomento Economico
Mexicano, ("FEMSA")
Series B ...... 1,510,710
234,130 GPO Industries
Bimbo................ 1,761,908
769,300 Grupo Industrial
Maseca, Class B....... 743,152
219,421 Tablex S.A. de C.V..... 473,646
-----------
4,489,416
------------
Healthcare Products
& Services - 0.5%
90,000 Grupo Casa Autrey
S.A. de C.V. ............ 161,002
</TABLE>
46
<PAGE>
EVERGREEN
Latin America Fund
Schedule of Investments (continued)
October 31, 1997
<TABLE>
<CAPTION>
Shares Value
<PAGE>
<S> <C> <C>
COMMON STOCKS - continued
Mexico - continued
18,800 Grupo Casa Autrey
S.A. de C.V., A..... $ 321,950
-----------
482,952
------------
Industrial Specialty
Products &
Services - 1.2%
190,700 Hylsamex S.A. de
C.V., Series B..... 1,228,122
-----------
Metals & Mining - 1.6%
243,000 Industrias Penoles
S.A. de C.V.......... 963,596
88,000 Sanluis Corp
S.A. de C.V..... 680,071
------------
1,643,667
-------------
Machinery -
Diversified - 0.3%
50,000 * Industrias CH S.A.,
Class B...... 256,410
--------------
Manufacturing -
Distributing -
1.1%
1,496,000 * Empaques Ponderosa
S.A. de C.V.,
Class B ......... 1,124,007
-----------
Paper & Packaging -
1.5%
352,000 Kimberly-Clark de
Mexico S.A. de
C.V., Class A ... 1,544,854
-------------
Publishing,
Broadcasting &
Entertainment - 0.7%
23,000 * Grupo Televisa S.A.,
ADR ....... 713,000
-----------
Retailing &
Wholesale - 1.0%
290,000 Organiz Soriana.... 964,937
-------------
Telecommunication
Services &
Equipment - 4.2%
96,750 Telefonos de Mexico
S.A., ("Telmex")
ADR ............ 4,184,437
------------
Utilities - 0.7%
34,700 Empresa Nacional de
Electric, ADR ..... 698,338
------------
Total Mexico...... 30,072,084
=============
Peru - 1.5%
Metals & Mining -
1.5%
172,742 Minas Buenaventura.... 1,501,551
==============
<PAGE>
Venezuela - 5.3%
Building,
Construction &
Furnishings - 0.6%
218,153 Corporacion
Venezolana De
Cementos,
Series 1 ......... 441,327
101,579 Corporacion
Venezolana De
Cementos,
Series 2 ......... 203,663
------------
644,990
------------
Diversified
Companies - 0.7%
3,643,814 Mavesa S.A. ...... 657,517
------------
Finance & Insurance
- 2.1%
1,030,900 Banco Provincial
S.A. .... 2,056,591
------------
Utilities - 1.9%
1,480,266 Electricidad
Caracas de......... 1,943,970
-------------
Total Venezuela 5,303,068
=============
Total Common Stocks
(Cost - $63,497,912) 62,835,062
==============
Shares Value
<S> <C> <C>
PREFERRED STOCKS - 21.8% Brazil - 21.8% Aerospace & Defense - 1.0%
75,207,347 * Empresa Brasileira
de Aeronautica..... $ 1,016,454
------------
Automotive
Equipment &
Manufacturing - 0.7%
58,000 * Companhia
Fabricadora de Pecas... 368,271
5,530,000 * Freios Varga S.A. .... 310,998
------------
679,269
------------
Chemical &
Agricultural
Products - 0.1%
3,480,000 Manah S.A. ...... 85,228
------------
Finance &
Insurance - 2.1%
107,473,500 Banco Bradesco S.A. ... 799,386
1,320,000 Banco Itau S.A. .... 532,813
30,600,000 Uniao de Bancos
Brasileiros S.A. .... 776,623
-----------
2,108,822
-----------
Food & Beverage
Products - 0.3%
409,600 Sadia Concordia ... 297,229
<PAGE>
-----------
Iron & Steel - 4.1%
291,100,000 Companhia de Acos
Especiais Itabir ... 435,680
190,500 Vale do Rio Doce
Navegacao S.A. ... 3,680,575
------------
4,116,255
------------
Metals &
Mining - 1.2%
24,460,000 * Caemi Mineracao E
Metalurgia S.A. .... 1,187,002
-------------
Machinery -
Diversified - 0.7%
373,700,000 * Inepar S.A.
Industria e
Construcoes ..... 633,878
--------------
Oil / Energy - 3.1%
16,588,800 * Petroleo Brasileiro
S.A. .... 3,084,679
---------------
Telecommunication
Services &
Equipment - 6.9%
3,110,200 Companhia
Riograndense de
Telecomunicacoes ... 2,397,995
13,900,000 * Ericsson Telecom S.A ... 409,769
5,681,500 Telecomunicacoes de
Minas Gerais .... 711,186
150,226 Telecomunicacoes de
Minas Gerais,
Rights ......... 13,627
380,684 Telecomunicacoes de
Parana S.A. ... 198,548
40,317 Telecomunicacoes de
Parana S.A., Rights .... 0
12,332,921 Telecomunicacoes de
Rio de Janeiro S.A...... 1,174,617
478,196 Telecomunicacoes de
Rio de Janiero
S.A., Rights ... 6,506
7,550,860 * Telecomunicacoes de
Sao Paulo .... 1,972,559
233,256 Telesponsora Telefonos
de Sao Paulo,
Rights ...... 212
-----------
6,885,019
------------
Utilities - 1.6%
121,000,000 * Companhia Energetica
Ceara .... 439,022
29,690,700 Companhia Energetica
de Minas Gerais ... 1,184,989
19,176 Companhia Paulista
De Forca e Luz .... 2,696
--------------
1,626,707
--------------
Total Brazil ... 21,720,542
===============
Total Preferred
Stocks
(Cost - $26,813,252) ... 21,720,542
=================
</TABLE>
<PAGE>
47
<PAGE>
[GRAPHIC OMITTED]
EVERGREEN
Latin America Fund
[GRAPHIC OMITTED]
Schedule of Investments (continued)
October 31, 1997
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
CONVERTIBLE DEBENTURES - 0.0% Brazil - 0.0% Iron & Steel - 0.0%
207,800 * Vale do Rio Doce
Navagacao S.A. ** ... $ 19
-----------
Total Convertible
Debentures
(Cost - $0) ...... 19
===========
CORPORATE BONDS - 0.0%
Brazil - 0.0%
Diversified
Companies - 0.0%
200,000 * Mesbla S.A 13.25%,
11/1/96** (b) .... 31,700
-----------
Total Corporate Bonds
(Cost - $214,460) 31,700
===========
PUT OPTION PURCHASED - 0.2%
Brazil - 0.2%
Options - 0.2%
33,000,000 Brazilian Real,
strike price 1.2,
expires 12/1/97 ... 196,656
----------
Total Put Option
Purchased
(Cost - $196,300) ... 196,656
===========
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C> <C>
REPURCHASE AGREEMENT - 16.0% United States - 16.0% Repurchase Agreement -
16.0%
$15,975,000 Keystone Joint Repurchase Agreement, Investments in repurchase
agreements, in a joint trading account purchased 10/31/97, 5.73%,
<PAGE>
maturity value $15,982,524 (a) (cost,
$15,975,000)..................... $ 15,975,000
-------------
Total Repurchase Agreement
(Cost - $15,975,000) ............ 15,975,000
==============
Total Investments -
(Cost $106,696,924)... 100.9% 100,758,979
Other Assets And
Liabilities - Net ... ( 0.9%) (906,144)
-------- --------------
Net Assets ......... 100% $ 99,852,835
======== ===============
</TABLE>
* Non-income producing securities
** Illiquid securities. The total market value of these illiquid securities at
October 31, 1997 is $117,070 (0.12% of the Fund's net assets).
(a) The repurchase agreements are fully collateralized by U.S. government and/or
agency obligations based on market prices plus accrued interest at October
31, 1997.
(b) Securities which have defaulted on payment of interest and/or principal. The
Fund has stopped accruing income on those so identified. At October 31,
1997, the fair value of this security is $31,700 (0.03% of the Fund's net
assets).
Legend of Portfolio Abbreviations:
ADR American Depository Receipts
GDR Global Depository Receipts
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
<TABLE>
<CAPTION>
Forward Foreign Currency Exchange Contracts to Buy:
Unrealized
U.S. $ Value at In Exchange Appreciation
Exchange Date Contracts to Receive October 31, 1997 for U.S. $ (Depreciation)
- - -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
11/3/97 472,317 Brazilian Real $428,425 $428,328 $ 97
11/3/97 1,014,016 Brazilian Real 919,784 919,575 209
11/3/97 820,442 Brazilian Real 744,198 744,706 (508)
10/31/97 169,204 Brazilian Real 153,480 153,125 355
Forward Foreign Currency Exchange Contracts to Sell:
Contracts to Deliver
- - -----------------------------------------------------------------------------------------------------
10/31/97 1,048,844 Brazilian Real $951,376 $951,074 $ (302)
10/30/97 659,018 Brazilian Real 597,776 598,672 896
10/30/97 515,992 Brazilian Real 468,041 468,743 702
10/30/97 502,038 Brazilian Real 455,383 456,066 683
10/31/97 438,680 Brazilian Real 397,914 397,788 (126)
10/30/97 326,408 Brazilian Real 296,075 296,519 444
10/30/97 323,113 Brazilian Real 293,087 293,526 439
10/30/97 287,455 Brazilian Real 260,742 261,133 391
10/30/97 280,341 Brazilian Real 254,289 254,670 381
10/30/97 209,469 Brazilian Real 190,003 190,288 285
10/30/97 82,552 Brazilian Real 74,880 74,992 112
10/30/97 61,786 Brazilian Real 56,045 56,129 84
11/3/97 89,276 Brazilian Real 80,980 80,962 (18)
11/3/97 675,974 Brazilian Real 613,156 613,017 (139)
10/30/97 423,944,488 Columbian Peso 330,497 333,355 2,858
</TABLE>
See combined notes to financial statements.
<PAGE>
48
<PAGE>
[GRAPHIC OMITTED]
EVERGREEN
International & Global Growth Funds
[GRAPHIC OMITTED]
Statements of Assets and Liabilities
October 31, 1997
<TABLE>
<CAPTION>
Evergreen Evergreen
Emerging Markets Global Leaders
Growth Fund Fund
- - -------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Investments at cost ........................... $74,173,434 $191,718,042
Unrealized appreciation (depreciation) ......... (451,961) 18,768,955
- - -------------------------------------------------------------------------------------
Investments at value ........................... 73,721,473 210,486,997
Foreign currency, at value (identified
cost - $31,576, $32,610, $52,967,
$2,553,654, and $556,465, respectively)......... 29,156 33,150
Cash .......................................... 6,484 0
Receivable for investments sold ............... 1,037,224 1,684,389
Receivable for Fund shares sold ............... 13,271 878,962
Dividends and interest receivable ............... 52,850 276,558
Unrealized appreciation on open forward
foreign currency exchange contracts ............ 4,715 0
Foreign tax reclaim receivable .................. 0 69,921
Unamortized organization expenses ............... 18,796 23,763
Prepaid expenses and other assets ............... 14,918 61,453
- - -------------------------------------------------------------------------------------
Total assets ................................. 74,898,887 213,515,193
- - -------------------------------------------------------------------------------------
Liabilities
Due to custodian bank ........................... 0 1,834,548
Payable for investments purchased ............... 5,425,941 197,829
Payable for Fund shares repurchased ............ 62,866 161,670
Distribution fee payable ........................ 11,197 144,000
Due to related parties ........................ 104,197 123,505
Unrealized depreciation on open forward
foreign currency exchange contracts ............ 9,658 0
Foreign taxes payable ........................... 220 16,276
Accrued expenses and other liabilities ......... 63,884 211,932
- - -------------------------------------------------------------------------------------
Total liabilities ........................... 5,677,963 2,689,760
- - -------------------------------------------------------------------------------------
Net assets ....................................... $69,220,924 $210,825,433
=====================================================================================
Net assets represented by
Paid-in capital ................................. $68,352,883 $191,174,678
Undistributed (distributions in excess of) net
investment income (loss) ..................... 66,746 (9,878)
Accumulated undistributed net realized gain
(loss) on investments and foreign currency
related transactions ........................... 1,257,422 888,333
Net unrealized appreciation (depreciation) on
investments and foreign currency related
<PAGE>
transactions ................................. (456,127) 18,772,300
- - -------------------------------------------------------------------------------------
Total net assets .............................. $69,220,924 $210,825,433
=====================================================================================
Net assets consists of
Class A ....................................... $ 2,776,796 $ 38,603,853
Class B ....................................... 4,020,156 134,375,411
Class C ....................................... 1,282,132 2,385,594
Class Y ....................................... 61,141,840 35,460,575
- - -------------------------------------------------------------------------------------
$69,220,924 $210,825,433
=====================================================================================
Shares outstanding
Class A ....................................... 277,892 2,823,790
Class B ....................................... 407,935 9,936,877
Class C ....................................... 130,192 176,636
Class Y ....................................... 6,086,862 2,586,664
- - -------------------------------------------------------------------------------------
Net asset value per share
Class A ....................................... $ 9.99 $ 13.67
=====================================================================================
Class A - Offering price (based on sales
charge of 4.75%) .............................. $ 10.49 $ 14.35
=====================================================================================
Class B ....................................... $ 9.85 $ 13.52
=====================================================================================
Class C ....................................... $ 9.85 $ 13.51
=====================================================================================
Class Y ....................................... $ 10.04 $ 13.71
=====================================================================================
<CAPTION>
Evergreen Evergreen Evergreen
Global Real Estate International Equity Latin America
Equity Fund Fund Fund
- - ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets
Investments at cost ........................... $ 35,691,976 $273,449,897 $106,696,924
Unrealized appreciation (depreciation) ......... 55,496 (7,995,130) (5,937,945)
- - --------------------------------------------------------------------------------------------------------------
Investments at value ........................... 35,747,472 265,454,767 100,758,979
Foreign currency, at value (identified
cost - $31,576, $32,610, $52,967,
$2,553,654, and $556,465, respectively)......... 33,673 2,547,272 551,040
Cash .......................................... 1,742 100,752 11,361
Receivable for investments sold ............... 868,593 9,207,451 6,378,840
Receivable for Fund shares sold ............... 0 664,577 330,313
Dividends and interest receivable ............... 19,879 521,879 96,939
Unrealized appreciation on open forward
foreign currency exchange contracts ............ 0 1,486,590 7,936
Foreign tax reclaim receivable .................. 55,387 107,965 645
Unamortized organization expenses ............... 0 13,640 13,160
Prepaid expenses and other assets ............... 46,321 43,711 26,631
- - ------------------------------------------------------------------------------------------------------------
Total assets ................................. 36,773,067 280,148,604 108,175,844
- - ------------------------------------------------------------------------------------------------------------
Liabilities
Due to custodian bank ........................... 775,000 2,821,600 0
Payable for investments purchased ............... 0 10,572,869 7,538,910
Payable for Fund shares repurchased ............ 5,884 42,872 545,825
Distribution fee payable ........................ 519 23,288 110,517
Due to related parties ........................ 22,244 290,019 83,964
Unrealized depreciation on open forward
foreign currency exchange contracts ............ 0 466,256 1,093
Foreign taxes payable ........................... 7,341 43,970 834
Accrued expenses and other liabilities ......... 71,479 119,637 41,866
- - ------------------------------------------------------------------------------------------------------------
Total liabilities ........................... 882,467 14,380,511 8,323,009
- - ------------------------------------------------------------------------------------------------------------
Net assets ....................................... $ 35,890,600 $265,768,093 $ 99,852,835
============================================================================================================
Net assets represented by
Paid-in capital ................................. $ 40,990,537 $256,692,907 $ 84,700,295
Undistributed (distributions in excess of) net
investment income (loss) ..................... (18,581) 5,226,484 (2,760)
Accumulated undistributed net realized gain
(loss) on investments and foreign currency
related transactions ........................... (5,117,558) 10,933,681 21,101,621
Net unrealized appreciation (depreciation) on
investments and foreign currency related
<PAGE>
transactions ................................. 36,202 (7,084,979) (5,946,321)
- - ------------------------------------------------------------------------------------------------------------
Total net assets .............................. $ 35,890,600 $265,768,093 $ 99,852,835
============================================================================================================
Net assets consists of
Class A ....................................... $ 336,486 $ 9,269,541 $ 13,620,780
Class B ....................................... 213,340 22,163,817 75,270,852
Class C ....................................... 106,425 428,949 10,961,203
Class Y ....................................... 35,234,349 233,905,786 0
- - ------------------------------------------------------------------------------------------------------------
$ 35,890,600 $265,768,093 $ 99,852,835
============================================================================================================
Shares outstanding
Class A ....................................... 26,001 837,704 1,035,649
Class B ....................................... 16,810 2,017,142 5,830,798
Class C ....................................... 8,378 38,810 848,711
Class Y ....................................... 2,715,847 21,061,667 0
- - ------------------------------------------------------------------------------------------------------------
Net asset value per share
Class A ....................................... $ 12.94 $ 11.07 $ 13.15
============================================================================================================
Class A - Offering price (based on sales
charge of 4.75%) .............................. $ 13.59 $ 11.62 $ 13.81
============================================================================================================
Class B ....................................... $ 12.69 $ 10.99 $ 12.91
============================================================================================================
Class C ....................................... $ 12.70 $ 11.05 $ 12.92
============================================================================================================
Class Y ....................................... $ 12.97 $ 11.11
============================================================================================================
</TABLE>
See Combined Notes to Financial Statements.
49
<PAGE>
[GRAPHIC OMITTED]
EVERGREEN
International & Global Growth Funds
[GRAPHIC OMITTED]
Statements of Operations
For the year ended October 31, 1997
<TABLE>
<CAPTION>
Evergreen Evergreen
Emerging Markets Global Leaders
Growth Fund Fund
- - ---------------------------------------------------------------------------------
<S> <C> <C>
Investment income
Dividends (net of foreign withholding
taxes of $69,506, $224,188, $68,486,
$395,692 and $77,690, respectively) ...... $ 555,608 $ 2,451,826
Interest ................................. 262,933 255,722
- - ------------------------------------------------------------------------------
Total income .............................. 818,541 2,707,548
Expenses
Management fee ........................... 703,822 1,398,605
Distribution Plan expenses ............... 49,907 981,969
Transfer agent fees ........................ 39,083 579,048
Trustees' fees ........................... 889 11,510
Custodian fees ........................... 99,902 154,416
Administrative and services fees ......... 17,363 53,874
Professional fees ........................ 20,990 25,044
Printing ................................. 10,832 206,881
Registration fees ........................ 28,873 94,596
Amortization of organization expenses ...... 10,180 7,891
<PAGE>
Other .................................... 12,704 10,611
- - ------------------------------------------------------------------------------
Total expenses ........................... 994,545 3,524,445
Less: Indirectly paid expenses ............ (3,592) (4,192)
Fee waivers and/or reimbursement
from Investment Adviser ............ (240,240) (113,024)
- - ------------------------------------------------------------------------------
Net expenses .............................. 750,713 3,407,229
- - ------------------------------------------------------------------------------
Net investment income (loss) ............... 67,828 (699,681)
==============================================================================
Net realized and unrealized gain (loss) on investments and foreign currency
related transactions Net realized gain (loss) from
Investments .............................. 3,347,991 1,610,743
Foreign currency related transactions ... (244,302) (6,682)
- - ------------------------------------------------------------------------------
Net realized gain on investments and
foreign currency related transactions ... 3,103,689 1,604,061
Net change in unrealized appreciation
(depreciation) of investments and
foreign currency related transactions ... (419,272) 15,243,876
- - ------------------------------------------------------------------------------
Net realized and unrealized gain on
investments and foreign currency
related transactions ..................... 2,684,417 16,847,937
- - ------------------------------------------------------------------------------
Net increase in net assets
resulting from operations ............... $2,752,245 $16,148,256
==============================================================================
<CAPTION>
Evergreen Evergreen Evergreen
Global Real Estate International Latin America
Equity Fund Equity Fund Fund
- - ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment income
Dividends (net of foreign withholding
taxes of $69,506, $224,188, $68,486,
$395,692 and $77,690, respectively) ...... $ 650,377 $ 3,054,824 $ 2,204,642
Interest ................................. 9,487 905,617 37,954
- - -------------------------------------------------------------------------------------------------
Total income .............................. 659,864 3,960,441 2,242,596
Expenses
Management fee ........................... 410,740 1,543,621 869,691
Distribution Plan expenses ............... 4,404 215,948 1,049,546
Transfer agent fees ........................ 99,937 139,289 408,628
Trustees' fees ........................... 25,753 7,176 14,808
Custodian fees ........................... 95,926 306,800 255,426
Administrative and services fees ......... 0 75,362 22,183
Professional fees ........................ 27,008 35,615 19,161
Printing ................................. 27,880 55,474 64,109
Registration fees ........................ 56,612 61,341 17,144
Amortization of organization expenses ...... 0 14,560 8,563
Other .................................... 37,107 14,543 7,015
- - -------------------------------------------------------------------------------------------------
Total expenses ........................... 785,367 2,469,729 2,736,274
Less: Indirectly paid expenses ............ (864) (8,748) (10,003)
Fee waivers and/or reimbursement
from Investment Adviser ............ (33,874) (232,680) 0
- - -------------------------------------------------------------------------------------------------
Net expenses .............................. 750,629 2,228,301 2,726,271
- - -------------------------------------------------------------------------------------------------
Net investment income (loss) ............... (90,765) 1,732,140 (483,675)
=================================================================================================
Net realized and unrealized gain (loss) on
investments and foreign currency
<PAGE>
related transactions
Net realized gain (loss) from
Investments .............................. 1,982,501 12,954,712 39,731,573
Foreign currency related transactions ... (41,372) 3,015,387 (3,644,273)
- - -------------------------------------------------------------------------------------------------
Net realized gain on investments and
foreign currency related transactions ... 1,941,129 15,970,099 36,087,300
Net change in unrealized appreciation
(depreciation) of investments and
foreign currency related transactions ... 302,113 (13,032,715) (17,271,713)
- - -------------------------------------------------------------------------------------------------
Net realized and unrealized gain on
investments and foreign currency
related transactions ..................... 2,243,242 2,937,384 18,815,587
- - -------------------------------------------------------------------------------------------------
Net increase in net assets
resulting from operations ............... $2,152,477 $ 4,669,524 $ 18,331,912
=================================================================================================
</TABLE>
See Combined Notes to Financial Statements.
50
<PAGE>
[GRAPHIC OMITTED]
EVERGREEN
International & Global Growth Funds
[GRAPHIC OMITTED]
Statements of Changes in Net Assets
For the year ended October 31, 1997
<TABLE>
<CAPTION>
Evergreen Evergreen
Emerging Markets Global Leaders
Growth Fund Fund
- - -----------------------------------------------------------------------------------
<S> <C> <C>
Operations
Net investment income (loss) ............... $ 67,828 $ (699,681)
Net realized gain on investments and
foreign currency related transactions ...... 3,103,689 1,604,061
Net change in unrealized appreciation
(depreciation) on investments and
foreign currency related transactions ...... (419,272) 15,243,876
- - ---------------------------------------------------------------------------------
Net increase in net assets resulting
from operations ........................... 2,752,245 16,148,256
- - ---------------------------------------------------------------------------------
Distributions to shareholders from Net investment income:
Class A .................................... 0 0
Class B .................................... 0 0
Class C .................................... 0 0
Class Y .................................... 0 0
In excess of net investment income:
Class B .................................... 0 0
Class C .................................... 0 0
Net realized gain on investments:
Class A .................................... 0 (15,146)
Class B .................................... 0 (48,643)
<PAGE>
Class C .................................... 0 (735)
Class Y .................................... 0 (19,126)
- - ---------------------------------------------------------------------------------
Total distributions to shareholders ......... 0 (83,650)
- - ---------------------------------------------------------------------------------
Capital share transactions
Proceeds from shares sold .................. 44,864,733 135,313,747
Payment for shares redeemed .................. (11,964,860) (14,708,624)
Net asset value of shares issued in
reinvestment of distributions ............... 0 72,520
- - ---------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from capital share
transactions .............................. 32,899,873 120,677,643
- - ---------------------------------------------------------------------------------
Total increase (decrease) in net
assets .................................... 35,652,118 136,742,249
Net assets
Beginning of year ........................... 33,568,806 74,083,184
- - ---------------------------------------------------------------------------------
End of year ................................. $ 69,220,924 $ 210,825,433
=================================================================================
Undistributed (distributions in excess of) net
investment income ........................... $ 66,746 $ (9,878)
=================================================================================
<CAPTION>
Evergreen Evergreen Evergreen
Global Real Estate International Latin America
Equity Fund Equity Fund Fund
- - --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operations
Net investment income (loss) ............... $ (90,765) $ 1,732,140 $ (483,675)
Net realized gain on investments and
foreign currency related transactions ...... 1,941,129 15,970,099 36,087,300
Net change in unrealized appreciation
(depreciation) on investments and
foreign currency related transactions ...... 302,113 (13,032,715) (17,271,713)
- - -----------------------------------------------------------------------------------------------------
Net increase in net assets resulting
from operations ........................... 2,152,477 4,669,524 18,331,912
- - -----------------------------------------------------------------------------------------------------
Distributions to shareholders from Net investment income:
Class A .................................... 0 (107,348) (91,845)
Class B .................................... 0 (116,095) (139,227)
Class C .................................... 0 (1,194) 0
Class Y .................................... (76,344) (2,176,422) 0
In excess of net investment income:
Class B .................................... 0 0 (430,575)
Class C .................................... 0 0 (62,177)
Net realized gain on investments:
Class A .................................... 0 0 0
Class B .................................... 0 0 0
Class C .................................... 0 0 0
Class Y .................................... 0 0 0
- - ------------------------------------------------------------------------------------------------------
Total distributions to shareholders ......... (76,344) (2,401,059) (723,824)
- - ------------------------------------------------------------------------------------------------------
Capital share transactions
Proceeds from shares sold .................. 1,779,852 164,093,117 35,265,301
Payment for shares redeemed .................. (16,374,343) (48,052,334) (52,499,496)
Net asset value of shares issued in
reinvestment of distributions ............... 43,582 1,232,582 639,781
- - ----------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from capital share
transactions .............................. (14,550,909) 117,273,365 (16,594,414)
<PAGE>
- - -----------------------------------------------------------------------------------------------------
Total increase (decrease) in net
assets .................................... (12,474,776) 119,541,830 1,013,674
Net assets
Beginning of year ........................... 48,365,376 146,226,263 98,839,161
- - ------------------------------------------------------------------------------------------------------
End of year ................................. $ 35,890,600 $265,768,093 $ 99,852,835
=======================================================================================================
Undistributed (distributions in excess of) net
investment income ........................... $ (18,581) $ 5,226,484 $ (2,760)
======================================================================================================
</TABLE>
See Combined Notes to Financial Statements.
51
<PAGE>
[GRAPHIC OMITTED]
EVERGREEN
International & Global Growth Funds
[GRAPHIC OMITTED]
Statements of Changes in Net Assets
For the year ended October 31, 1996
<TABLE>
<CAPTION>
Evergreen Evergreen
Emerging Markets Global Leaders
Growth Fund Fund
- - -----------------------------------------------------------------------------------
<S> <C> <C>
Operations
Net investment income (loss) ............... $ (4,321) $ 2,343
Net realized gain (loss) on investments
and foreign currency related
transactions .............................. (96,636) 77,271
Net change in unrealized appreciation
(depreciation) on investments and
foreign currency related transactions ...... (38,536) 3,528,424
- - --------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations .................. (139,493) 3,608,038
- - --------------------------------------------------------------------------------
Distributions to shareholders from Net investment income:
Class A .................................... (6,742) 0
Class B .................................... 0 0
Class C .................................... 0 0
Class Y .................................... (81,928) (2,343)
In excess of net investment income:
Class A .................................... 0 0
Class B .................................... 0 0
Class C .................................... 0 0
Class Y .................................... 0 (17,247)
- - --------------------------------------------------------------------------------
Total distributions to shareholders ...... (88,670) (19,590)
- - --------------------------------------------------------------------------------
Capital share transactions
Proceeds from shares sold .................. 24,970,951 72,602,018
Proceeds from shares issued from
acquisition of FFB Diversified
<PAGE>
International Growth Fund .................. 0 0
Payment for shares redeemed .................. (3,663,950) (2,122,493)
Net asset value of shares issued in
reinvestment of distributions ............... 22,693 14,211
- - --------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from capital share
transactions .............................. 21,329,694 70,493,736
- - --------------------------------------------------------------------------------
Total increase (decrease) in net
assets .................................... 21,101,531 74,082,184
Net assets
Beginning of year ........................... 12,467,275 1,000
- - --------------------------------------------------------------------------------
End of year ................................. $ 33,568,806 $ 74,083,184
================================================================================
Undistributed (distributions in excess of) net
investment income ........................... $ (328) $ (2,299)
================================================================================
<CAPTION>
Evergreen
Evergreen International Evergreen
Global Real Estate Equity Latin America
Equity Fund Fund Fund
- - -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operations
Net investment income (loss) ............... $ 66,648 $ 2,119,654 $ 2,640,542
Net realized gain (loss) on investments
and foreign currency related
transactions .............................. 495,328 (823,687) 5,955,109
Net change in unrealized appreciation
(depreciation) on investments and
foreign currency related transactions ...... 3,504,138 5,669,016 7,956,482
- - --------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations .................. 4,066,114 6,964,983 16,552,133
- - --------------------------------------------------------------------------------------------------
Distributions to shareholders from Net investment income:
Class A .................................... 0 (39,834) (361,523)
Class B .................................... 0 (23,543) (2,175,018)
Class C .................................... 0 (59) (231,347)
Class Y .................................... 0 (645,172) 0
In excess of net investment income:
Class A .................................... 0 0 (61,278)
Class B .................................... 0 0 (368,664)
Class C .................................... 0 0 (39,213)
Class Y .................................... 0 0 0
- - --------------------------------------------------------------------------------------------------
Total distributions to shareholders ...... - (708,608) (3,237,043)
- - --------------------------------------------------------------------------------------------------
Capital share transactions
Proceeds from shares sold .................. 16,042,743 63,370,539 10,584,948
Proceeds from shares issued from
acquisition of FFB Diversified
International Growth Fund .................. 0 29,658,717 0
Payment for shares redeemed .................. (33,339,082) (14,067,718) (50,668,403)
Net asset value of shares issued in
reinvestment of distributions ............... 0 365,798 2,867,537
- - --------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from capital share
transactions .............................. (17,296,339) 79,327,336 (37,215,918)
- - --------------------------------------------------------------------------------------------------
Total increase (decrease) in net
assets .................................... (13,230,225) 85,583,711 (23,900,828)
Net assets
<PAGE>
Beginning of year ........................... 61,595,601 60,642,552 122,739,989
- - --------------------------------------------------------------------------------------------------
End of year ................................. $ 48,365,376 $146,226,263 $ 98,839,161
==================================================================================================
Undistributed (distributions in excess of) net
investment income ........................... $ 32,553 $ 1,837,370 $ 993,649
==================================================================================================
</TABLE>
See Combined Notes to Financial Statements.
52
<PAGE>
[GRAPHIC OMITTED]
[GRAPHIC OMITTED]
Combined Notes to Financial Statements
1. ORGANIZATION
The Evergreen International & Global Growth 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"),
Evergreen International Equity Fund ("International") and Evergreen Latin
America Fund ("Latin America"), (formerly Keystone Fund of the Americas), each
of which are registered under the Investment Company Act of 1940, as amended
(the "1940 Act"), as diversified, open-end management investment companies.
Global Leaders and Global Real Estate are separate series of the Evergreen
Equity Trust (formerly Evergreen Real Estate Equity Trust), a Massachusetts
business trust organized in 1988. Emerging Markets and International are
separate series of Evergreen Investment Trust (formerly First Union Funds), a
Massachusetts business trust organized in 1984. Latin America is a Massachusetts
business trust organized in 1993. Emerging Markets, Global Leaders, Global Real
Estate, International and Latin America are collectively referred to herein as
the "Funds".
The Funds offer Class A, Class B, Class C and Class Y shares with the exception
of Latin America which offers Class A, Class B, and Class C shares. Class A
shares are sold with a maximum front-end sales charge of 4.75%. Class B and
Class C shares are sold without a front end sales charge, but pay a higher
ongoing distribution fee than Class A shares. Class B shares are sold subject to
a contingent deferred sales charge that is payable upon redemption and decreases
depending on how long the shares have been held. Class B shares purchased after
January 1, 1997 will automatically convert to Class A shares after seven years.
Class B shares purchased prior to January 1, 1997 retain their existing
conversion rights. Class C shares are sold subject to a contingent deferred
sales charge payable on shares redeemed within one year after the month of
purchase. Class Y shares are sold at net asset value and are not subject to
contingent deferred sales charges or distribution fees. Class Y shares are sold
only to investment advisory clients of First Union Corporation ("First Union")
and its affiliates, certain institutional investors or Class Y shareholders of
record of certain other funds managed by First Union and its affiliates as of
December 30, 1994.
2. ACQUISITION INFORMATION
Effective January 1, 1996, First Fidelity Bancorporation ("First Fidelity")
merged with 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 investment company managed by
a subsidiary of First Fidelity registered under the Act,
<PAGE>
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.
3. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. The
policies are in conformity with generally accepted accounting principles, which
require management to make estimates and assumptions that affect amounts
reported herein. Actual results could differ from these estimates.
A. Valuation of Securities
The Funds value investments traded on an established exchange on the basis of
the last sales price on the exchange where primarily traded. The Funds value
securities traded in the over-the counter market at the mean between the bid and
asked prices. Securities for which market quotations are not available from an
independent pricing service, are valued at fair value as determined in good
faith according to procedures approved by the Board of Trustees. Short-term
investments with remaining maturities of 60 days or less are carried at
amortized cost, which approximates market value.
B. Repurchase Agreements
Each Fund may invest in repurchase agreements. Securities pledged as collateral
for repurchase agreements are held by the custodian on the Fund's behalf. Each
Fund monitors the adequacy of the collateral daily and will 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. Each Fund will only enter into repurchase agreements with
banks and other financial institutions which are deemed by the investment
adviser to be creditworthy pursuant to guidelines established by the Board of
Trustees.
Pursuant to an exemptive order issued by the Securities and Exchange Commission,
Latin America, along with certain other funds managed by Keystone Investment
Management Company ("Keystone"), may transfer uninvested cash balances into a
joint trading account. These balances are invested in one or more repurchase
agreements that are fully collateralized by U.S. Treasury and/or federal agency
obligations.
53
<PAGE>
[GRAPHIC OMITTED]
[GRAPHIC OMITTED]
Combined Notes to Financial Statements (continued)
C. Foreign Currency
The books and records of the Funds are maintained in United States (U.S.)
dollars. Foreign currency amounts are translated into United States dollars as
follows: market value of investments, other assets and liabilities at the daily
rate of exchange; purchases and sales of investments, income and expenses at the
rate of exchange prevailing on the respective dates of such transactions. Net
unrealized foreign exchange gain (loss) resulting from changes in foreign
currency exchange rates is a component of net unrealized appreciation
(depreciation) on investments and foreign currency related transactions. Net
realized foreign currency gains and losses resulting from changes in exchange
rates include foreign currency gains and losses between trade date and
settlement date on investment securities transactions, foreign currency related
transactions and the difference between the amounts of interest and dividends
recorded on the books of the Fund and the amounts that are actually received
<PAGE>
and are included in realized gain (loss) on foreign currency related
transactions. The portion of foreign currency gains and losses related to
fluctuations in exchange rates between the initial purchase trade date and
subsequent sale trade date is included in realized gain (loss) on foreign
currency related transactions.
D. Futures Contracts
In order to gain exposure to or protect against changes in security values, the
Funds may buy and sell futures contracts.
The initial margin deposited with a broker when entering into a futures
transaction is subsequently adjusted by daily payments or receipts as the value
of the contract changes. Such changes are recorded as unrealized gains or
losses. Realized gains or losses are recognized on closing the contract.
Risks of entering into futures contracts include (i) the possibility of an
illiquid market for the contract, (ii) the possibility that a change in the
value of the contract may not correlate with changes in the value of the
underlying instrument or index, and (iii) the credit risk that the other party
will not fulfill their obligations under the contract. Futures contracts also
involve elements of market risk in excess of the amount reflected in the
statement of assets and liabilities.
E. Forward Foreign Currency Exchange Contracts
The Funds may enter into forward foreign currency exchange contracts ("forward
contracts") to settle portfolio purchases and sales of securities denominated in
a foreign currency and to hedge certain foreign currency assets or liabilities.
Forward contracts are recorded at the forward rate and marked-to-market daily.
Realized gains and losses arising from such transactions are included in net
realized gain (loss) on foreign currency related transactions. The Fund bears
the risk of an unfavorable change in the foreign currency exchange rate
underlying the forward contract and is subject to the credit risk that the other
party will not fulfill their obligations under the contract. Forward contracts
involve elements of market risk in excess of the amount reflected in the
statement of assets and liabilities.
F. Security Transactions and Investment Income
Securities transactions are accounted for no later than one business day after
the trade date. Realized gains and losses are computed on the identified cost
basis. Interest income is recorded on the accrual basis and includes accretion
of discounts and amortization of premiums. Dividend income is recorded on the
ex-dividend date, or in the case of some foreign securities, on the date
thereafter when the Fund is made aware of the dividend. Foreign income may be
subject to foreign withholding taxes which are accrued as applicable. Capital
gains realized on some foreign securities are subject to foreign taxes and are
accrued as applicable.
G. Federal Taxes
The Funds have qualified and intend to continue to qualify as regulated
investment companies under the Internal Revenue Code of 1986, as amended (the
"Code"). Thus, the Funds will not incur any federal income tax liability since
they are expected to distribute all of their net investment company taxable
income and net capital gains, if any, to their shareholders. The Funds also
intend to avoid excise tax liability by making the required distributions under
the Code. Accordingly, no provision for federal taxes is required. To the extent
that realized capital gains can be offset by capital loss carryforwards, it is
each Fund's policy not to distribute such gains.
H. Distributions
Distributions from net investment income for the Funds are declared and paid
annually. Distributions from net realized capital gains, if any, are paid at
least annually. Distributions to shareholders are recorded at the close of
business on the ex-dividend date.
Income and capital gains distributions to shareholders are determined in
accordance with income tax regulations, which may differ from generally accepted
accounting principles. The significant differences between financial statement
amounts available for distributions and distributions made in accordance with
income tax regulations are primarily due to differing treatment for net
operating losses and certain distributions received from passive
<PAGE>
foreign investment companies.
54
<PAGE>
[GRAPHIC OMITTED]
[GRAPHIC OMITTED]
Combined Notes to Financial Statements (continued)
I. Class Allocations
Income, expenses (other than class specific expenses) and realized and
unrealized gains and losses are prorated among the classes based on the relative
net assets of each class. Currently, class specific expenses are limited to
expenses incurred under the Distribution Plans for each class.
J. Organization Expenses
Organization expenses are amortized to operations over a five-year period on a
straight-line basis. In the event any of the initial shares of the Funds are
redeemed by any holder during the five-year amortization period, redemption
proceeds will be reduced by any unamortized organization expenses in the same
proportion as the number of initial shares being redeemed bears to the number of
initial shares outstanding at the time of the redemption.
4. CAPITAL SHARE TRANSACTIONS
Latin America has an unlimited number of shares of beneficial interest with no
par value authorized. Emerging Markets, Global Leaders, Global Real Estate and
International have an unlimited number of shares of beneficial interest with a
par value of $0.0001 authorized. Shares of beneficial interest of the Funds are
currently divided into Class A, Class B, Class C and Class Y with the exception
of Latin America which does not offer Class Y shares. Transactions in shares of
the Funds were as follows:
- --------------------------------------------------------------------------------
EMERGING MARKETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended Year Ended
October 31, 1997 October 31, 1996
----------------------------- -----------------------------
Shares Amount Shares Amount
- - --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A
Shares sold ......................................................... 373,278 $ 3,938,592 108,210 $ 958,874
Shares redeemed ................................................... (289,832) (3,032,756) (55,942) (493,377)
Shares issued on reinvestment of distributions ..................... 0 0 817 6,713
- - -------------------------------------------------------------------------------------------------------------------------------
Net increase ...................................................... 83,446 905,836 53,085 472,210
- - -------------------------------------------------------------------------------------------------------------------------------
Class B
Shares sold ......................................................... 164,864 1,717,956 147,629 1,317,529
Shares redeemed ................................................... (100,251) (1,000,964) (51,462) (443,501)
- - -------------------------------------------------------------------------------------------------------------------------------
Net increase ...................................................... 64,613 716,992 96,167 874,028
- - -------------------------------------------------------------------------------------------------------------------------------
Class C
Shares sold ......................................................... 128,876 1,301,468 8,040 72,696
Shares redeemed ................................................... (8,773) (93,284) (5,067) (43,102)
- - -------------------------------------------------------------------------------------------------------------------------------
Net increase ...................................................... 120,103 1,208,184 2,973 29,594
- - -------------------------------------------------------------------------------------------------------------------------------
Class Y
Shares sold ......................................................... 3,444,422 37,906,717 2,531,857 22,621,852
Shares redeemed ................................................... (770,870) (7,837,856) (301,830) (2,683,970)
Shares issued on reinvestment of distributions ..................... 0 0 1,942 15,980
- - -------------------------------------------------------------------------------------------------------------------------------
<PAGE>
Net increase ...................................................... 2,673,552 30,068,861 2,231,969 19,953,862
- - -------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from capital share transactions 2,941,714 $ 32,899,873 2,384,194 $ 21,329,694
===============================================================================================================================
</TABLE>
55
<PAGE>
[GRAPHIC OMITTED]
[GRAPHIC OMITTED]
Combined Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
GLOBAL LEADERS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended Year Ended
October 31, 1997 October 31, 1996
----------------------------- --------------------------
Shares Amount Shares Amount
- - ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A
Shares sold ......................................................... 2,037,338 $ 26,561,220 1,128,476 $ 12,914,033
Shares redeemed ................................................... (304,314) (4,039,813) (38,955) (450,952)
Shares issued on reinvestment of distributions ..................... 1,245 15,030 0 0
- - -------------------------------------------------------------------------------------------------------------------------------
Net increase ...................................................... 1,734,269 22,536,437 1,089,521 12,463,081
- - -------------------------------------------------------------------------------------------------------------------------------
Class B
Shares sold ......................................................... 6,953,600 90,590,909 3,561,481 40,763,569
Shares redeemed ................................................... (555,510) (7,324,691) (26,709) (307,417)
Shares issued on reinvestment of distributions ..................... 4,015 48,220 0 0
- - -------------------------------------------------------------------------------------------------------------------------------
Net increase ...................................................... 6,402,105 83,314,438 3,534,772 40,456,152
- - -------------------------------------------------------------------------------------------------------------------------------
Class C
Shares sold ......................................................... 173,061 2,249,794 48,546 557,221
Shares redeemed ................................................... (43,171) (592,995) (1,852) (21,683)
Shares issued on reinvestment of distributions ..................... 52 629 0 0
- - -------------------------------------------------------------------------------------------------------------------------------
Net increase ...................................................... 129,942 1,657,428 46,694 535,538
- - -------------------------------------------------------------------------------------------------------------------------------
Class Y
Shares sold ......................................................... 1,227,611 15,911,824 1,680,883 18,367,195
Shares redeemed ................................................... (203,730) (2,751,116) (120,293) (1,342,441)
Shares issued on reinvestment of distributions ..................... 715 8,632 1,378 14,211
- - -------------------------------------------------------------------------------------------------------------------------------
Net increase ...................................................... 1,024,596 13,169,340 1,561,968 17,038,965
- - -------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from capital share transactions 9,290,912 $120,677,643 6,232,955 $ 70,493,736
===============================================================================================================================
</TABLE>
- --------------------------------------------------------------------------------
GLOBAL REAL ESTATE
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended
October 31, 1997
--------------------------------
Shares Amount
- - ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Class A
Shares sold ......................................................... 40,811 $ 505,405
Shares redeemed ................................................... (73,533) (893,699)
- - ----------------------------------------------------------------------------------------------------
Net increase ...................................................... (32,722) (388,294)
- - ----------------------------------------------------------------------------------------------------
Class B
Shares sold ......................................................... 14,681 182,292
Shares redeemed ................................................... (8,946) (109,808)
- - ----------------------------------------------------------------------------------------------------
Net increase ...................................................... 5,735 72,484
<PAGE>
- - ----------------------------------------------------------------------------------------------------
Class C
Shares sold ......................................................... 8,782 109,223
Shares redeemed ................................................... (1,080) (13,742)
- - ----------------------------------------------------------------------------------------------------
Net increase ...................................................... 7,702 95,481
- - ----------------------------------------------------------------------------------------------------
Class Y
Shares sold ......................................................... 79,254 982,932
Shares redeemed ................................................... (1,226,663) (15,357,094)
Shares issued on reinvestment of distributions ..................... 3,475 43,582
- - ----------------------------------------------------------------------------------------------------
Net decrease ...................................................... (1,143,934) (14,330,580)
- - ----------------------------------------------------------------------------------------------------
Net decrease in net assets resulting from capital share transactions (1,163,219) $ (14,550,909)
====================================================================================================
<CAPTION>
Year Ended
October 31, 1996
---------------------------------
Shares Amount
- - ------------------------------------------------------------------------------------- -----------------
<S> <C> <C>
Class A
Shares sold ......................................................... 208,609 $ 2,645,216
Shares redeemed ................................................... (156,309) (2,008,136)
- - ----------------------------------------------------------------------------------------------------
Net increase ...................................................... 52,300 637,080
- - ----------------------------------------------------------------------------------------------------
Class B
Shares sold ......................................................... 7,284 91,539
Shares redeemed ................................................... (4,878) (59,333)
- - ------------------------------------------------------------------------------------------------------
Net increase ...................................................... 2,406 32,206
- - ----------------------------------------------------------------------------------------------------
Class C
Shares sold ......................................................... 2,142 27,504
Shares redeemed ................................................... (1,782) (22,492)
- - ----------------------------------------------------------------------------------------------------
Net increase ...................................................... 360 5,012
- - ----------------------------------------------------------------------------------------------------
Class Y
Shares sold ......................................................... 1,060,595 13,278,484
Shares redeemed ................................................... (2,500,751) (31,249,121)
Shares issued on reinvestment of distributions ..................... 0 0
- - ----------------------------------------------------------------------------------------------------
Net decrease ...................................................... (1,440,156) (17,970,637)
- - ----------------------------------------------------------------------------------------------------
Net decrease in net assets resulting from capital share transactions (1,385,090) $ (17,296,339)
====================================================================================================
</TABLE>
56
<PAGE>
[GRAPHIC OMITTED]
[GRAPHIC OMITTED]
Combined Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended
October 31, 1997
--------------------------------
Shares Amount
- - -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Class A
Shares sold ............................................................... 1,195,960 $ 14,003,449
Shares redeemed ............................................................ (1,061,687) (12,445,598)
Shares issued on reinvestment of distributions ........................... 9,990 105,895
- - -----------------------------------------------------------------------------------------------------------
Net increase ............................................................... 144,263 1,663,746
- - -----------------------------------------------------------------------------------------------------------
<PAGE>
Class B
Shares sold ............................................................... 883,172 10,152,518
Shares redeemed ............................................................ (237,081) (2,706,025)
Shares issued on reinvestment of distributions ........................... 10,629 112,666
- - -----------------------------------------------------------------------------------------------------------
Net increase ............................................................... 656,720 7,559,159
- - -----------------------------------------------------------------------------------------------------------
Class C
Shares sold ............................................................... 28,287 332,705
Shares redeemed ............................................................ (7,619) (84,799)
Shares issued on reinvestment of distributions ........................... 103 1,096
- - -----------------------------------------------------------------------------------------------------------
Net increase (decrease) ................................................... 20,771 249,002
- - -----------------------------------------------------------------------------------------------------------
Class Y
Shares sold ............................................................... 11,916,116 139,604,445
Shares issued from acquisition of FFB Diversified International Growth Fund 0 0
Shares redeemed ............................................................ (2,865,928) (32,815,912)
Shares issued on reinvestment of distributions ........................... 95,469 1,012,925
- - -----------------------------------------------------------------------------------------------------------
Net increase ............................................................... 9,145,657 107,801,458
- - -----------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from capital share transactions ...... 9,967,411 $ 117,273,365
===========================================================================================================
<CAPTION>
Year Ended
October 31, 1996
------------------------------
Shares Amount
- - -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Class A
Shares sold ............................................................... 459,233 $ 4,772,348
Shares redeemed ............................................................ (144,771) (1,513,977)
Shares issued on reinvestment of distributions ........................... 3,882 39,171
- - --------------------------------------------------------------------------------------------------------
Net increase ............................................................... 318,344 3,297,542
- - --------------------------------------------------------------------------------------------------------
Class B
Shares sold ............................................................... 802,691 8,346,658
Shares redeemed ............................................................ (208,561) (2,169,847)
Shares issued on reinvestment of distributions ........................... 2,297 23,175
- - --------------------------------------------------------------------------------------------------------
Net increase ............................................................... 596,427 6,199,986
- - --------------------------------------------------------------------------------------------------------
Class C
Shares sold ............................................................... 11,595 120,774
Shares redeemed ............................................................ (14,095) (148,202)
Shares issued on reinvestment of distributions ........................... 5 55
- - --------------------------------------------------------------------------------------------------------
Net increase (decrease) ................................................... (2,495) (27,373)
- - --------------------------------------------------------------------------------------------------------
Class Y
Shares sold ............................................................... 4,796,183 50,130,759
Shares issued from acquisition of FFB Diversified International Growth Fund 2,898,154 29,658,717
Shares redeemed ............................................................ (972,043) (10,235,692)
Shares issued on reinvestment of distributions ........................... 30,069 303,397
- - --------------------------------------------------------------------------------------------------------
Net increase ............................................................... 6,752,363 69,857,181
- - --------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from capital share transactions ...... 7,664,639 $ 79,327,336
========================================================================================================
</TABLE>
- --------------------------------------------------------------------------------
LATIN AMERICA
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended
October 31, 1997
--------------------------------
Shares Amount
- - ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Class A
Shares sold ......................................................... 793,746 $ 12,013,304
Shares redeemed ................................................... (755,902) (10,989,824)
Shares issued on reinvestment of distributions ..................... 7,159 82,042
- - ----------------------------------------------------------------------------------------------------
Net increase (decrease) ............................................. 45,003 1,105,522
- - ----------------------------------------------------------------------------------------------------
Class B ............................................................
Shares sold ......................................................... 1,353,616 18,851,845
Shares redeemed ................................................... (2,761,745) (37,765,324)
Shares issued on reinvestment of distributions ..................... 44,425 502,887
<PAGE>
- - ----------------------------------------------------------------------------------------------------
Net decrease ...................................................... (1,363,704) (18,410,592)
- - ----------------------------------------------------------------------------------------------------
Class C
Shares sold ......................................................... 305,017 4,400,152
Shares redeemed ................................................... (261,244) (3,744,348)
Shares issued on reinvestment of distributions ..................... 4,841 54,852
- - ----------------------------------------------------------------------------------------------------
Net increase (decrease) ............................................. 48,614 710,656
- - ----------------------------------------------------------------------------------------------------
Net decrease in net assets resulting from capital share transactions (1,270,087) $ (16,594,414)
====================================================================================================
<CAPTION>
Year Ended
October 31, 1996
---------------------------------
Shares Amount
- - -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Class A
Shares sold ......................................................... 176,782 $ 1,884,412
Shares redeemed ................................................... (676,261) (7,167,407)
Shares issued on reinvestment of distributions ..................... 36,036 382,390
- - ----------------------------------------------------------------------------------------------------
Net increase (decrease) ............................................. (463,443) (4,900,605)
- - ----------------------------------------------------------------------------------------------------
Class B ............................................................
Shares sold ......................................................... 765,039 7,991,078
Shares redeemed ................................................... (3,737,221) (39,001,039)
Shares issued on reinvestment of distributions ..................... 215,054 2,248,867
- - ----------------------------------------------------------------------------------------------------
Net decrease ...................................................... (2,757,128) (28,761,094)
- - ----------------------------------------------------------------------------------------------------
Class C
Shares sold ......................................................... 66,448 709,458
Shares redeemed ................................................... (439,812) (4,499,957)
Shares issued on reinvestment of distributions ..................... 22,570 236,280
- - ----------------------------------------------------------------------------------------------------
Net increase (decrease) ............................................. (350,794) (3,554,219)
- - ----------------------------------------------------------------------------------------------------
Net decrease in net assets resulting from capital share transactions (3,571,365) $ (37,215,918)
====================================================================================================
</TABLE>
57
<PAGE>
[GRAPHIC OMITTED]
[GRAPHIC OMITTED]
Combined Notes to Financial Statements (continued)
5. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of investment securities (excluding
short-term securities) were as follows for the year ended October 31, 1997:
<TABLE>
<CAPTION>
Cost of Proceeds
Purchases from Sales
----------------------------
<S> <C> <C>
Emerging Markets ......... $ 71,667,295 $ 62,939,992
Global Leaders ......... 164,558,067 41,158,707
Global Real Estate ...... 17,710,348 30,241,815
International ............ 261,456,076 160,069,736
Latin America ............ 117,791,685 150,966,605
</TABLE>
On October 31, 1997, the composition of unrealized appreciation and depreciation
of investment securities based on the aggregate cost of investments for federal
tax purposes was as follows:
<TABLE>
<CAPTION>
Gross Gross Net Unrealized
<PAGE>
Tax Unrealized Unrealized Appreciation
Cost Appreciation Depreciation (Depreciation)
------------------------------------------------------------
<S> <C> <C> <C> <C>
Emerging Markets ... $ 74,619,420 $ 3,438,255 $ 4,336,202 $ (897,947)
Global Leaders ...... 191,718,042 28,990,107 10,221,152 18,768,955
Global Real Estate 35,839,296 7,297,219 7,389,043 (91,824)
International ...... 274,567,908 21,713,757 30,826,898 (9,113,141)
Latin America ...... 107,458,058 4,626,170 11,325,249 (6,699,079)
</TABLE>
As of October 31, 1997, Global Real Estate had a capital loss carryover for
federal income tax purposes of $4,970,238 that expires October 31, 2003.
6. DISTRIBUTION PLANS
Evergreen Distributor, Inc. (formerly, Evergreen Keystone Distributors, Inc.)
("EDI"), a wholly-owned subsidiary of The BISYS Group Inc. ("BISYS") serves as
principal underwriter to Latin America. Prior to December 11, 1996, Evergreen
Investment Services, Inc. (formerly, Evergreen Keystone Investment Services
Inc.) ("EIS"), a wholly-owned subsidiary of Keystone, served as Latin America's
principal underwriter. EDI also serves as the principal underwriter for
Emerging Markets, Global Leaders, Global Real Estate and International.
Each Fund has adopted Distribution Plans for each class of shares, except Class
Y, as allowed by Rule 12b-1 of the 1940 Act. Distribution plans permit the Funds
to reimburse its principal underwriter for costs related to selling shares of
the Funds and for various other services. These costs, which consist primarily
of commissions and service fees to broker/dealers who sell shares of the fund,
are paid by the fund through expenses called "Distribution Plan expenses". Each
class, except Class Y, currently pays a service fee equal to 0.25% of the
average daily net asset value of the class. Class B and Class C also pay
distribution fees equal to 0.75% of the average daily net assets of the Class.
Distribution Plan expenses are calculated daily and paid monthly.
Emerging Markets, Global Leaders, Global Real Estate and International have
entered into Shareholder Services Agreements with First Union Brokerage Services
("FUBS"), an affiliate of First Union, whereby the Funds will compensate FUBS up
to an annual limit of .25 of 1% of Class B and Class C's average daily net
assets, as referred to above, for certain services provided to shareholders
and/or maintenance of shareholder accounts relating to the Funds' Class B shares
and Class C shares. Emerging Markets, Global Leaders, Global Real Estate and
International paid $16,179, $228,520, $349 and $48,713 to FUBS during the year
ended October 31, 1997 under the Shareholder Services Agreement.
During the year ended October 31, 1997, amounts paid to EDI and/or EIS pursuant
to each Fund's Class A, Class B and Class C Distribution Plans were as follows
<TABLE>
<CAPTION>
Class A Class B Class C
------------------------------
<S> <C> <C> <C>
Emerging Markets ......... $ 5,656 $ 36,635 $ 7,616
Global Leaders ......... 67,888 897,836 16,245
Global Real Estate ...... 1,597 1,937 870
International ............ 21,095 191,870 2,983
Latin America ............ 33,104 899,853 116,589
</TABLE>
With respect to Class B and Class C shares, the principal underwriter may pay
distribution fees greater than the allowable annual amounts the Fund is
permitted to pay under the Distribution Plans. Latin America may reimburse the
principal underwriter for such excess amounts in later years with annual
interest at prime plus 1.00%. EDI intends to seek full payment of such
distribution costs
58
<PAGE>
<PAGE>
[GRAPHIC OMITTED]
[GRAPHIC OMITTED]
Combined Notes to Financial Statements (continued)
from Latin America at such time in the future as, and to the extent that,
payment thereof by the Class B or Class C shares would be within permitted
limits.
Each of the Distribution Plans may be terminated at any time by vote of the
Independent Trustees or by vote of a majority of the outstanding voting shares
of the respective class. However, after the termination of any Distribution Plan
for Latin America, and subject to the discretion of the Independent Trustees
payments to EIS and/or EDI may continue as compensation for services which had
been earned while the Distribution Plan was in effect.
7. INVESTMENT MANAGEMENT AGREEMENT AND OTHER AFFILIATED TRANSACTIONS
Keystone, a subsidiary of First Union, is the investment adviser for Latin
America. In return for providing investment management and administrative
services to Latin America, the Fund pays Keystone a management fee that is
calculated daily and paid monthly. The management fee is determined by applying
percentage rates starting at 0.75% and declining to 0.45% per annum as net
assets increase, to the average daily net assets of the Fund.
First Union serves as the investment adviser to Emerging Markets and
International and is paid a management fee that is computed daily and paid
monthly in accordance with the following schedules:
<TABLE>
<CAPTION>
Advisory Fee Average Daily Net Assets
-------------- --------------------------
<S> <C> <C>
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
</TABLE>
<TABLE>
<CAPTION>
Advisory Fee Average Daily Net Assets
-------------- --------------------------
<S> <C> <C>
International ...... .82% on the first $20 million
.79% on the next $30 million
.76% on the next $50 million
.73% in excess of $100 million
</TABLE>
Through August 31, 1997, Marvin & Palmer Associates, Inc. ("Marvin & Palmer")
was the sub-adviser for Emerging Markets. Effective September 1, 1997, Keystone
became Emerging Markets' sub-adviser.
Keystone is entitled to a sub-advisory fee from First Union calculated by
applying percentage rates, which start at .32% and decline, as net assets
increase, to .23% based on the average daily net assets of the Fund.
Warburg, Pincus Counsellors, Inc. ("Warburg") is International's sub-adviser.
<PAGE>
Under the terms of Emerging Markets' and International's sub-advisory
agreements, Keystone and Warburg are responsible for the investment decisions
for their respective funds and are paid by First Union.
For Emerging Markets and International, First Union voluntarily waived $240,240
and $232,680, respectively, of its advisory fee for the year ended October 31,
1997.
Evergreen Asset Management Corp. ("Evergreen Asset"), a wholly-owned subsidiary
of First Union, serves as investment adviser to Global Leaders and Global Real
Estate, and is paid a management fee that is computed daily and paid monthly at
an annual rate of .95% and 1.00%, of Global Leaders and Global Real Estate's
average daily net assets, respectively. Evergreen Asset has voluntarily 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 expenses) exceed 1.50% of its
average daily net assets. Evergreen Asset waived advisory fees aggregating
$111,487 for the year ended October 31, 1997 pursuant to this agreement.
Additionally, for the year ended October 31, 1997 Evergreen Asset reimbursed
other expenses amounting to $1,537. Evergreen Asset also waived advisory fees
aggregating $33,874 for Global Real Estate for the year ended October 31, 1997.
Evergreen Asset can modify or terminate voluntary waivers at any time.
EIS is the administrator and BISYS is the sub-administrator to the Funds. For
Emerging Markets, Global Leaders, and International, prior to March 11, 1997,
Evergreen Asset was the administrator. Furman Selz LLC ("Furman Selz") was the
sub-administrator through December 31, 1996 for Emerging Markets, Global
Leaders, Global Real Estate and International. Effective January 1, 1997, BISYS
acquired Furman Selz' mutual fund unit and accordingly, BISYS Fund Services
became sub-administrator. As sub-administrator to the Funds, BISYS Fund Services
provides the officers of the Funds. The administrator and sub-administrator for
each Fund are entitled to an annual fee based on the average daily net assets of
the funds administered by EIS for which First Union or its investment advisory
59
<PAGE>
[GRAPHIC OMITTED]
[GRAPHIC OMITTED]
Combined Notes to Financial Statements (continued)
subsidiaries are also the investment advisers. The administration fee is
calculated by applying percentage rates, which start at 0.05% and decline to
0.01% per annum as net assets increase, to the average daily net asset value of
the Fund. The sub-administration fee, for Emerging Markets, Global Leaders,
Global Real Estate and International is calculated by applying percentage rates,
which start at 0.01% and decline to .004% as net assets increase, to the average
daily net asset value of the Fund.
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 of the Fund effected on the
New York or American Stock Exchanges. For the year ended October 31, 1997,
Global Leaders and Global Real Estate incurred brokerage commissions of $119,963
and $41,644, respectively with Lieber & Company. Lieber & Company is reimbursed
by Evergreen Asset, at no additional expense to the Fund, for its cost of
providing investment advisory services.
At October 31, 1997, Stephen A. Lieber, Chairman of Evergreen Asset owned,
directly or beneficially, 35% of the outstanding shares of Global Real Estate.
<PAGE>
Evergreen Service Company ("ESC") (formerly, Evergreen Keystone Service
Company), a wholly-owned subsidiary of Keystone, serves as the transfer and
dividend disbursing agent for Latin America. Effective May 5, 1997, ESC also
began providing transfer and dividend disbursing agent services for Emerging
Markets, Global Leaders, Global Real Estate and International that were formerly
provided by State Street Bank and Trust Company ("State Street"). Total transfer
agent fees paid by Emerging Markets, Global Leaders, Global Real Estate,
International, and Latin America to ESC for the year ended October 31, 1997,
were $39,083, $579,048, $99,937, $139,289 and $408,628, respectively. For
certain accounts, First Union had been sub-contracted by ESC, and previously by
State Street to maintain shareholder sub-account records, take fund purchase and
redemption orders and answer inquiries. For each account of International, First
Union earned fees aggregating $3,578 for the year ended October 31, 1997.
Officers of the Funds and affiliated Trustees receive no compensation directly
from the Funds.
8. EXPENSE OFFSET ARRANGEMENT
The Funds have entered into an expense offset arrangement with their custodian.
The assets deposited with the custodian under this expense offset arrangement
could have been invested in income-producing assets.
9. DEFERRED INDEPENDENT TRUSTEES' FEES
Each Independent Trustee of Emerging Markets, Global Leaders, Global Real Estate
and International may defer any or all compensation related to performance of
their duties as Trustees. The Trustees' deferred balances are allocated to
deferral accounts which are included in the accrued expenses for the Funds. The
investment performance of the deferral accounts are based on the investment
performance of certain Evergreen Funds. Any gains earned or losses incurred in
the deferral accounts are reported in the Fund's Trustees' fees and expenses.
Trustees will be paid either in one lump sum or in quarterly installments for up
to ten years at their election, not earlier than either the year in which the
Trustee ceases to be a member of the Board of Trustees or January 1, 2000. As of
October 31, 1997, the value of the Trustees deferral account was $1,412, $9,878,
$18,581, $6,005 and $2,760 for Emerging Markets, Global Leaders, Global Real
Estate, International and Latin America, respectively.
10. FINANCING AGREEMENT
On October 31, 1996, a financing agreement among all of the Evergreen Funds and
State Street, Societe Generale and ABN Amro Bank N.V. (Collectively, the
"Banks") became effective. Under this agreement, the Banks provide an unsecured
line of credit facility, in the aggregate amount of $225 million ($112.5 million
committed and $112.5 million uncommitted), allocated evenly among the Banks.
Borrowings under this facility bear interest at 0.75% per annum above the
Federal Funds rate. A commitment fee of 0.10% per annum will be incurred on the
unused portion of the committed facility which would be allocated to all
participating funds. State Street acts as agent for the Banks, and as agent is
entitled to a fee of $15,000 which is allocated to all of the Evergreen Funds.
During the year ended October 31, 1997, Global Real Estate had borrowings under
this agreement outstanding for 189 days under the line of credit, and incurred
interest charges amounting to $10,449. Global Real Estate's average debt
outstanding during the year aggregated $320,892 at a weighted average interest
rate of 6.29%. Global Real Estate had an outstanding line of credit of $775,000
as of October 31, 1997.
60
<PAGE>
[GRAPHIC OMITTED]
<PAGE>
[GRAPHIC OMITTED]
Combined Notes to Financial Statements (continued)
On October 31, 1997 a temporary financing agreement among all of the Evergreen
Funds and First Union became effective. Under this agreement, First Union
provides an unsecured line of credit facility in the aggregate amount of $300
million. Borrowings under this facility bear interest at 1.00% per annum above
the Federal Funds Rate.
Latin America is not a party to either financing agreement.
11. CONCENTRATION OF CREDIT RISK
Global Real Estate invests a substantial portion of its assets in real estate
investment trusts, therefore, it may be more affected by economic developments
in the real estate industry than would a general equity fund.
12. DISTRIBUTIONS TO SHAREHOLDERS
Distributions were declared on November 20, 1997 and payable on November 24,
1997 to shareholders of record November 20, 1997 for Emerging Markets, Global
Leaders, International and Latin America. They were comprised of the following,
on a per share basis:
<TABLE>
<CAPTION>
Long-Term Short-Term
Capital Gain Capital Gain
----------------------------
<S> <C> <C>
Emerging Markets ...... $0.250 -
Global Leaders ......... $0.032 $0.026
International ......... $0.267 $0.234
Latin America ......... $2.862 -
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
Income
Class A Class B Class C Class Y
-------------------------------------
Emerging Markets ...... - - - $0.008
International ......... $0.240 $0.193 $0.193 $0.266
</TABLE>
These distributions are not reflected in the accompanying financial statements.
13. SUBSEQUENT EVENTS
EIS has entered into an agreement to sell the Evergreen Global Real Estate
Equity Fund to Mr. Samuel A. Lieber, the Fund's portfolio manager.
On September 16, 1997 the Board of Trustees of Blanchard Global Growth Fund
approved the acquisition of Blanchard Global Growth Fund by Evergreen Global
Leaders Fund. A Shareholder Meeting is scheduled to take place in February 1998.
61
<PAGE>
<PAGE>
[GRAPHIC OMITTED]
[GRAPHIC OMITTED]
FEDERAL TAX STATUS OF DISTRIBUTIONS (UNAUDITED)
During the year ended October 31, 1997, the Funds paid the following
distributions in shares or cash:
<TABLE>
<CAPTION>
Long-term Ordinary
Total Capital Gain Income
Distributions Distributions Dividends
- - -----------------------------------------------------------------------
<S> <C> <C> <C>
Global Leaders ............ $ 83,650 - $ 83,650
Global Real Estate ...... 76,344 - 76,344
International Equity ...... 2,401,059 - 2,401,059
Latin America ............ 723,824 - 723,824
</TABLE>
Of the ordinary income distributions stated above for Global Leaders, Global
Real Estate and International Equity, 5.46%, 1.60% and 0.34%, respectively, are
eligible for the corporate dividend received deduction. The ordinary income
distribution for Latin America is not eligible for the corporate dividend
received deduction. The above figures may differ from previously reported and
those cited elsewhere in this report due to differences in the calculation of
income and capital gains for accounting (book) purposes and Internal Revenue
Service (tax) purposes. In January 1998, we will send you complete information
on the distributions paid during the calendar year 1997 to help you in
completing your federal tax return.
62
<PAGE>
[GRAPHIC OMITTED]
[GRAPHIC OMITTED]
Independent Auditors' Report
The Trustees and Shareholders
Evergreen Latin America Fund
We have audited the accompanying statement of assets and liabilities of
Evergreen Latin America Fund (formerly Keystone Fund of the Americas), including
the schedule of investments, as of October 31, 1997, and the related statement
of operations for the year then ended, statements of changes in net assets for
each of the years in the two-year period then ended and financial highlights for
each of the years in the four-year period then ended. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
<PAGE>
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of October 31, 1997 by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Evergreen Latin America Fund as of October 31, 1997, the results of its
operations for the year then ended, changes in its net assets for each of the
years in the two-year period then ended and financial highlights for each of the
years in the four-year period then ended in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Boston, Massachusetts
November 26, 1997
63
<PAGE>
[GRAPHIC OMITTED]
[GRAPHIC OMITTED]
Report of Independent Accountants
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF
EVERGREEN EMERGING MARKETS GROWTH FUND, EVERGREEN GLOBAL LEADERS
FUND, EVERGREEN GLOBAL REAL ESTATE EQUITY FUND AND EVERGREEN
INTERNATIONAL EQUITY FUND
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Evergreen Emerging Markets Growth
Fund, Evergreen Global Leaders Fund, Evergreen Global Real Estate Equity Fund
and Evergreen International Equity Fund (the "Funds") at October 31, 1997, the
results of each of their operations for the year then ended, the changes in each
of their net assets for each of the two years in the period then ended, and the
financial highlights for each of the two years in the period ended October 31,
1997 for Evergreen Emerging Markets Growth Fund, Evergreen Global Leaders Fund
and Evergreen International Equity Fund, and for each of the periods indicated
for Evergreen Global Real Estate Equity Fund, in conformity with generally
accepted accounting principles. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Funds' management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at October 31, 1997 by
correspondence with the custodian and the
<PAGE>
application of alternative auditing procedures where securities purchased had
not been received, provide a reasonable basis for the opinion expressed above.
The financial highlights of Evergreen Emerging Markets Growth Fund and Evergreen
International Equity Fund for the ten month period ended October 31, 1995 and
the period ended December 31, 1994 were audited by other independent
accountants, whose report dated December 8, 1995 was unqualified.
Price Waterhouse LLP
1177 Avenue of the Americas
New York, NY 10036
December 15, 1997
64
<PAGE>
Evergreen
INTERNATIONAL
AND
GLOBAL
GROWTH FUNDS
April 30, 1998
Semiannual Report
(logo appears here)
Evergreen Funds(sm)
Since 1932
<PAGE>
Table of Contents
<TABLE>
<S> <C>
Letter to Shareholders ..................... 1
Evergreen Global Opportunities Fund
Fund at a Glance ........................ 2
Portfolio Manager Interview ............. 3
Evergreen International Growth Fund
Fund at a Glance ........................ 6
Portfolio Manager Interview ............. 7
Evergreen Latin America Fund
Fund at a Glance ........................ 10
Portfolio Manager Interview ............. 11
Evergreen Natural Resources Fund
Fund at a Glance ........................ 14
Portfolio Manager Interview ............. 15
Evergreen Precious Metals Fund
Fund at a Glance ........................ 18
Portfolio Manager Interview ............. 19
</TABLE>
<TABLE>
<S> <C>
Financial Highlights
Evergreen Global Opportunities Fund ..... 22
Evergreen International Growth Fund ..... 26
Evergreen Latin America Fund ............ 29
Evergreen Natural Resources Fund ........ 31
Evergreen Precious Metals Fund .......... 33
Schedules of Investments
Evergreen Global Opportunities Fund ..... 36
Evergreen International Growth Fund ..... 42
Evergreen Latin America Fund ............ 47
Evergreen Natural Resources Fund ........ 50
Evergreen Precious Metals Fund .......... 52
Statements of Assets and Liabilities ....... 54
Statements of Operations ................... 55
Statements of Changes in Net Assets --
Six Months Ended April 30, 1998
(Unaudited) .......................... 56
Statements of Changes in Net Assets --
Period ended October 31, 1997 ........... 57
Statements of Changes in Net Assets --
Prior Periods ........................... 58
Notes to Financial Statements .............. 59
Additional Information ..................... 66
</TABLE>
- --------------------------------------------------------------------------------
Evergreen Funds
Evergreen Funds is one of the nation's fastest growing investment companies
with more than $47 billion in assets under management.
With over 80 mutual funds to choose among and acclaimed service and operations
capabilities, investors enjoy a broader range of quality investment products
and services designed to meet their needs.
The Evergreen Funds employ intensive, research-driven investment strategies
executed by over 90 research analysts and portfolio managers. The fund company
remains dedicated to meeting the needs of investors and their advisors in a
global economy. Look to the Evergreen Funds to provide a distinctive level of
service and excellence in investment management.
This semiannual report must be preceded or accompanied by a prospectus of an
Evergreen fund contained herein. The prospectus contains more complete
information, including fees and expenses, and should be read carefully before
investing or sending money.
<TABLE>
<S> <C>
Mutual Funds: ARE NOT FDIC INSURED May lose value o Are not bank guaranteed
</TABLE>
Evergreen Funds Distributor, Inc.
International investing involves increased risk and volatility.
<PAGE>
Letter to Shareholders
----------------------
June 1998
Dear Shareholders:
Investing in the global markets during recent
(Photo of William M. months has been nothing, if not interesting.
Ennis) Fortunately for most investors, it also has
been rewarding.
William M. Ennis In general, the world stock markets had a
Managing Director buoyant run during the six months ending
April 30, 1998, the period of this semiannual
report. Led by the continued health of the U.S. economy and by the very strong
economic recovery in Western Europe, most markets posted strong gains, as
evidenced by the 18.86% return of the Morgan Stanley Capital International
(MSCI) World Index. The exceptions, of course, were in Asia and the emerging
markets. The financial and currency crisis that erupted in October 1997
throughout the Pacific Basin has been persistent in its effects in the region.
Equity investments in Japan, Hong Kong and other Asian nations have been
challenging, to say the least. These problems have tarnished other emerging
markets, most notably in Latin America, despite good long-term prospects.
Large Cap Leadership
During the six months, the leadership in both the United States and Western
Europe has been maintained by the large, well-established, "blue chip"
companies that have been able to improve earnings, take advantage of their
visibility, and, in many cases, strengthen themselves through strategic
acquisitions. These large-cap companies have also attracted the major share of
the new investment dollars in their markets. Smaller and mid-sized companies,
as a group, have not experienced the same strength in stock performance,
although recent stock price valuations have been very attractive for smaller
companies, especially for those that have shown an ability to improve their
earnings.
The general strength of the world's equity markets, even with the exceptions
highlighted by the Asian crisis, demonstrates the importance of global
diversification of an investment portfolio. At Evergreen, we strongly believe
that most growth-oriented investors should have at least part of their equity
investments in global or international funds, both to take advantage of
opportunities not available in the United States and to increase the
diversification and risk profile of their overall portfolios.
We are very pleased to offer a strong group of international and global funds,
each of which has its own distinct strategy, reflecting the varying objectives,
and risk tolerances of different investors. In the following pages, we present
specific reports on the management and performance of Evergreen International
and Global Growth Funds for the six-month period.
The Evergreen Commitment
At Evergreen Funds, we are committed to providing a strong array of funds with
complementary objectives and strategies to help investors and their financial
advisors assemble personal portfolios that make sense for their needs and risk
tolerances.
We can assist by providing the information you need about our funds. If you
have any questions about the Evergreen International and Global Growth Funds or
other Evergreen Funds, we encourage you to consult your financial advisor or
call us at 800-343-2898.
Thank you for your continued investment with Evergreen Funds.
Sincerely,
/s/ William M. Ennis
William M. Ennis
Managing Director
Evergreen Funds
1
<PAGE>
EVERGREEN
Global Opportunities Fund
Fund at a Glance as of April 30, 1998
We saw the primary opportunity in Western Europe, where cyclical and structural
changes are happening to favor equity markets.
Portfolio
Management
----------
(Photo of Gary Craven)
Gary Craven
Tenure: January 1998
(Photo of Gilman Gunn)
Gilman Gunn
Tenure: June 1997
-------------------------------------------------------
CURRENT INVESTMENT STYLE
Morningstar's Style Box is based on a
portfolio date as of 3/31/98.
(GRAPHIC)
The Equity Style Box placement is based on a
fund's price-to-earnings and price-to-book
ratio relative to the S&P 500, as well as
the size of the companies in which it
invests, or median market capitalization.
Source: 1998 Morningstar, Inc.
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS*
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Class A Class B Class C Class Y
Inception Date 3/16/88 2/1/93 2/1/93 1/13/97
........................................................................
Average Annual Returns
........................................................................
6 months with sales charge 8.97% 9.03% 13.05% n/a
........................................................................
6 months w/o sales charge 14.41% 14.03% 14.05% 14.91%
........................................................................
1 year with sales charge 22.04% 22.21% 26.27% n/a
........................................................................
1 year w/o sales charge 28.13% 27.21% 27.27% 30.03%
........................................................................
3 years 10.88% 11.06% 11.84% --
........................................................................
5 years 13.16% 13.17% 13.46% --
........................................................................
10 years 12.66% -- -- --
........................................................................
Since Inception 12.48% 13.63% 13.78% 14.51%
........................................................................
Maximum Sales Charge 4.75% 5.00% 1.00% n/a
Front End CDSC CDSC
........................................................................
6-month capital gain
distributions per share $ 1.53 $ 1.53 $ 1.53 $ 1.53
........................................................................
</TABLE>
*Adjusted for maximum sales charge.
- --------------------------------------------------------------------------------
LONG TERM GROWTH
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
4/88 4/90 4/92 4/94 4/96 4/98
Class A Shares 9,525 10,665 13,469 21,961 29,636 32,926
MSCIWI 10,000 10,855 11,890 15,545 20,448 29,353
CPI 10,000 11,008 11,913 12,587 13,337 13,877
</TABLE>
Comparison of a $10,000 investment in Evergreen Global Opportunities Fund,
Class A shares, versus a similar investment in the Morgan Stanley Capital
International World Index (MSCIWI), and the Consumer Price Index (CPI).
Past performance is no guarantee of future results. The performance of each
class may vary based on differences in loads and fees paid by the shareholders
investing in each class. The investment return and principal value will
fluctuate so that an investor's shares, when redeemed, may be worth more or
less than original cost. The MSCIWI is an unmanaged index and does not include
transaction costs associated with buying and selling securities nor any
management fees. The Consumer Price Index is a commonly used measure of
inflation and does not represent an investment return. It is not possible to
invest directly in an index.
2
<PAGE>
EVERGREEN
Global Opportunities Fund
Portfolio Manager Interview
Gary Craven is the portfolio manager for the U.S. portion
of the Fund.
Gilman Gunn manages the Fund's international investments.
- --------------------------------------------------------------------------------
How was performance during the six-month period, Gilman?
G. Gunn: Performance was good. For the six months that ended on April 30,
1998, the Evergreen Global Opportunities Fund Class A shares had a total
return of 14.41%. During the same period, Class B and C shares had returns
of 14.03% and 14.05% respectively, while Class Y shares had a return of
14.91%. These returns are unadjusted for any sales charges. These results
were achieved during a period when larger company stocks in both the
United States and Europe tended to outperform the smaller company stocks
in which the Fund invests. For example, the Morgan Stanley Capital
International World Index, which is heavily weighted in large company
stocks, had a return of 18.86% during the same period. Indexes reflecting
smaller company stocks did not do as well. The Russell 2000 Index, a
measure of the U.S. small cap stocks, returned 9.95%.
Portfolio Characteristics
-------------------------
Total Net Assets $308,375,741
-----------------------------------------------------------------------
Number of Holdings 207
-----------------------------------------------------------------------
Were there any significant asset allocation changes during the period?
G. Gunn: Yes. We increased the emphasis in Western Europe. At the close of
the period, on April 30, the Fund had about 50% of net assets invested in
Western Europe and 40% invested in the United States, with the remaining
10% divided among cash, Japan, Australia, New Zealand, Canada, Africa and
Latin America. These weightings reflected a substantial re-allocation. At
the start of the fiscal year in November 1997, 60% of Fund assets were
invested in the United States, and 25% in
European small company stocks.
- --------------------------------------------------------------------
Why did you make such a substantial change?
G. Gunn: We saw the primary opportunity in Western Europe, where cyclical
and structural changes are happening to favor equity markets. Cyclically
speaking, Continental Europe is recovering after a multi-year period of
slow growth. In addition, structural changes like increased focus on
shareholder value, corporate restructuring, share buybacks and increased
merger-and-acquisition activity all favor equities. The Fund was able to
buy small company stocks in Europe at substantially cheaper
price-to-earnings ratios than in the United States. It looked like we could
generate better investment performance through this strategy.
We have very little invested in Japan -- 2.6% -- or the emerging markets.
Within Europe, the largest areas of emphasis include the United Kingdom,
with 18.6% of assets; France, with 7.0% of assets; Switzerland, with 6.9%
and Germany with 4.3% of assets. While we have been emphasizing growth
companies, we also have added a number of value stocks, with lower
price-to-earnings multiples, to add balance to the overall
portfolio.
Top 10 Holdings
---------------
(as a percentage of net assets)
Boewe Systec AG 2.1%
-----------------------------------------------------------------------
Kuoni Reisen Holding AG 1.9%
-----------------------------------------------------------------------
Aegis Group Plc 1.7%
-----------------------------------------------------------------------
Ashtead Group Plc 1.6%
-----------------------------------------------------------------------
Capita Group Plc 1.5%
-----------------------------------------------------------------------
Parity Plc 1.4%
-----------------------------------------------------------------------
Sage Group Plc 1.2%
-----------------------------------------------------------------------
DCC Plc 1.2%
-----------------------------------------------------------------------
ATOS SA 1.1%
-----------------------------------------------------------------------
Lindt & Spruengli AG 1.1%
-----------------------------------------------------------------------
Portfolio composition is subject to change.
3
<PAGE>
EVERGREEN
Global Opportunities Fund
Portfolio Manager Interview
- --------------------------------------------------------------------------------
What were some of the significant investments in Europe during the period?
G. Gunn: Several business service companies based in the United Kingdom
were significant contributors to performance during the period. As the
period progressed, their prices appreciated and we took the opportunity to
realize some profits and reduce our weightings.
The largest foreign holding at the end of the fiscal period is Boewe
Systec, a German company which manufactures high-speed mail insertion
machinery. This equipment is used for inserting materials for commercial
mass mailings. The company recently established a U.S. distributor.
Another interesting investment is Hero, a Swiss company that specializes
in fruit preserves. A new management team recently has been put in place,
and distribution has been greatly expanded in the United States.
- --------------------------------------------------------------------------------
What is your outlook for international small company investing, Gilman?
G. Gunn: Our outlook for European small company stocks is still very
favorable. Our research has helped us find a number of smaller companies
that are attractively priced relative to large, blue chip stocks. We have
de-emphasized Japan, Latin America and the emerging markets, where we
expect continued volatility.
- --------------------------------------------------------------------------------
Gary, what was the investment environment like in the United States for
small company stocks during the period?
G. Craven: It was mixed. On the one hand we had several pre-conditions in
the economy which usually are favorable to small company investing. These
included low to declining interest rates, low and stable inflation, and a
great deal of technological advancement. The primary negative, however,
was investor sentiment. Investors continued to prefer the more established
larger companies with greater visibility. These companies have been
enjoying good earnings growth, and the cash flow has been directed to
them. As a result, we believe the valuations of small company stocks have
become increasingly attractive relative to large company stocks,
but there has not been a lot of interest.
Top 5 Industries
----------------
(as a percentage of net assets)
Information Services & Technology 10.2%
Finance & Insurance 7.8%
Food and Beverage Products 7.1%
Healthcare Products and Services 6.9%
Business Equipment & Services 6.3%
- --------------------------------------------------------------------------------
Within the United States portion of the portfolio, were there any
significant industry shifts during the six months?
G. Craven: We de-emphasized healthcare, while we increased our emphasis on
telecommunications. Health care went from a 16.5% allocation in the U.S.
portion of the portfolio to 6.9% because of the poor fundamental outlook
in biotechnology and medical devices. The major increase was in
telecommunications. Early in the period, we had major investments in
several competitive local exchange carriers. These investments did very
well. The Fund's former largest holding, for example, was ACC, which was
bought by Teleport, which in turn was bought by AT&T. We took profits in
this industry group and increased the emphasis on international long-
distance carriers, where we see significant opportunities. The smaller
companies in this industry group are benefiting from deregulation and the
use of newer technologies, such as switches and fiber optic cables, which
gives them a cost advantage. At the same time, the demand for their
services in both voice and data transmission is growing as the economy
becomes more global. Three significant investments were in Global
4
<PAGE>
EVERGREEN
Global Opportunities Fund
Portfolio Manager Interview
Telesystems Group, Star Telecommunications and Pacific Gateway Exchange.
During the six months, the per-share price of Global Telesystems rose from
$26 to $46, the price of Star Telesystems went from $11 to $27, and the
price of Pacific Gateway Exchange went from $38 to $58.
Did the Asian financial crisis have any
impact on strategy in the United States?
G. Craven: The Asian crisis had a significant impact on many companies. At
the beginning of the period, 17% of the U.S. portfolio was invested in
electronic equipment companies, principally semiconductor firms. We sold
the Fund's positions in them rather quickly in early October. After a
sharp correction, however, we believed the market may have over-reacted,
so we bought back a number of these stocks and were able to get a bounce
in their stock prices. We then reduced the position again. At the close of
the period, it was about 6.1% of the U.S. portfolio.
We built up positions in a number of electronics companies we thought had
greater long-term opportunities. These included Vitesse, which makes
advanced computer chips for satellites, and Sipex, a diversified company
which makes semiconductors used to manage power in devices such as
cellular phones, pagers and hand-held computers.
Other areas where we have increased our investments include companies
involved in set-top boxes for cable television systems, which will be
greatly expanding their products; and commercial services, including
companies that help businesses in their target marketing programs.
Geographical Allocation
-----------------------
(as a percentage of net assets)
Europe 51.3%
North America 43.3%
Japan 2.6%
Middle East/Africa 1.2%
Australia 0.9%
Latin/South America 0.7%
Portfolio composition is subject to change.
What is your outlook for the U.S. small
company stock market?
G. Craven: For investors with a long-term focus, we believe the
opportunities in the small company market are above average. Of all the
areas in the U.S. market, small company stocks are the most attractive
both in current valuations and in growth outlook. Small companies now are
selling at a 20-year-low relative to the overall stock market, as measured
by price-earnings ratios. We think this market is extremely attractive for
investors with a long-term outlook, but they should understand that it
also is very volatile, and prices can move either up or down very quickly
in the short term. We believe this market has the opportunity to deliver
very competitive returns over the next three-to-five years.
Funds that invest in stocks of small companies, also called small-cap stocks,
involve certain risks and, therefore, may not be appropriate for all investors.
Although they may offer the potential for greater long-term returns, they also
may experience greater price volatility due to their limited focus on a
particular industry, market, product, or service, or because they invest in
smaller, less established companies.
5
<PAGE>
EVERGREEN
International Growth Fund
Fund at a Glance as of April 30, 1998
The Fund has been helped by the emphasis on Europe and the de-emphasis of Latin
America and Asia.
Portfolio
Management
----------------------------------------
(Photo of Gilman Gunn)
Gilman Gunn
Tenure: January 1991
-------------------------------------------------------
CURRENT INVESTMENT STYLE
Morningstar's Style Box is based on a
portfolio date as of 3/31/98.
(Graphic) The Equity Style Box placement is based on a
fund's price-to-earnings and price-to-book
ratio relative to the S&P 500, as well as
the size of the companies in which it
invests, or median market capitalization.
Source: 1998 Morningstar, Inc.
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS*
<TABLE>
<CAPTION>
Class A Class B Class C Class Y
<S> <C> <C> <C> <C>
Inception Date 1/20/98 12/1/75 3/6/98 3/9/98
..........................................................................
Average Annual Returns
..........................................................................
6 months with sales charge -- 17.50% -- --
..........................................................................
6 months w/o sales charge -- 22.30% -- --
..........................................................................
1 year with sales charge -- 21.55% -- --
..........................................................................
1 year w/o sales charge -- 26.37% -- --
..........................................................................
3 years -- 18.20% -- --
..........................................................................
5 years -- 13.41% -- --
..........................................................................
10 years -- 7.13% -- --
..........................................................................
Since Inception 15.32% 10.93% 7.77% 7.90%
..........................................................................
Maximum Sales Charge 4.75% 5.00% 1.00% n/a
Front End CDSC CDSC
..........................................................................
6-month income dividends per
share -- $ 0.33 -- --
..........................................................................
6-month capital gain
distributions per share -- $ 1.54 -- --
..........................................................................
</TABLE>
*Adjusted for maximum sales charge
- --------------------------------------------------------------------------------
LONG TERM GROWTH
4/88 4/90 4/92 4/94 4/96 4/98
Class B Shares 10,000 8,866 9,254 12,336 14,126 19,909
MSCI EAFEI 10,000 9,700 9,326 13,312 15,750 18,667
CPI 10,000 11,008 11,913 12,587 13,337 13,877
Comparison of a $10,000 investment in Evergreen International Growth Fund,
Class B shares, versus a similar investment in the Morgan Stanley Capital
International Europe, Australia, and Far East Index (MSCI EAFEI) and the
Consumer Price Index (CPI).
Past performance is no guarantee of future results. The performance of each
class may vary based on differences in loads and fees paid by the shareholders
investing in each class. The investment return and principal value will
fluctuate so that an investor's shares, when redeemed, may be worth more or
less than original cost. The MSEAFEI is an unmanaged index and does not include
transaction costs associated with buying and selling securities nor any
management fees. The Consumer Price Index is a commonly used measure of
inflation and does not represent an investment return. It is not possible to
invest directly in an index.
6
<PAGE>
EVERGREEN
International Growth Fund
Portfolio Manager Interview
- --------------------------------------------------------------------------------
How did the Fund perform during the
six months?
Performance has been quite good. For the six months that ended on April
30, 1998, the Evergreen International Growth Fund's Class B shares had a
total return of 22.30%, unadjusted for any sales charges. By comparison,
the Morgan Stanley Capital International EAFE Index had a return of
15.44%. The MSCI EAFE Index measures the performance of stock markets in
Europe, Australia and the Far East.
Portfolio Characteristics
-------------------------
Total Net Assets $183,451,234
Number of Holdings 130
- --------------------------------------------------------------------------------
How would you describe the investment
environment during the six months?
In Europe, the environment has been quite positive, especially since
January, with the markets producing very strong performance. In contrast,
the Asian markets have been very volatile for the past six months. The
Latin American markets have experienced both a ripple effect from the
problems in Asia and concerns related to domestic issues in some major
Latin American markets.
Globally, we have had low interest rates, low inflation, an economic
recovery in Europe and a very positive market in the United States. There
has been no growth, however, in Asia. During the six months, the value of
the U.S. dollar has been stable against other currencies.
Geographical Allocation
-----------------------
(as a percentage of net assets)
Europe 75.4%
North America 14.9%
Asia 3.1%
Australia 2.7%
Far East/Africa 2.5%
Latin/South America 1.4%
Portfolio composition is subject to change.
- --------------------------------------------------------------------------------
What have been your principal strategies
during the six months?
Our primary strategy has been to be heavily overweighted in Europe, and
heavily underweighted in Asia, including Japan. We also have been heavily
underweighted in emerging markets all over the world. At the end of the
fiscal period on April 30, about 75% of the fund's assets were invested in
Europe, with the largest concentrations in the United Kingdom (18.3%),
France (13.9%), Switzerland (11.8%), Sweden (9.7%), Germany (7.4%) and the
Netherlands (7.6%). We also have taken advantage of good, relative value
in medium- and smaller-cap companies in Europe. About 20% of the Fund's
assets in Europe are these types of companies. Japan, which has been a
disappointing performer, had only 2.9% of Fund assets at the end of the
fiscal period.
In addition, we have emphasized industries which could be considered
defensive. At the end of the period, for example, the top five industry
weightings were food, healthcare, banks, finance and insurance, and
construction. We also have been relatively neutral on currency, with about
half the Fund's assets denominated or hedged in the U.S. dollar, and half
denominated in foreign currencies.
7
<PAGE>
EVERGREEN
International Growth Fund
Portfolio Manager Interview
Top 5 Industries
----------------
(as a percentage of net assets)
Food & Beverage Products 12.1%
Healthcare Products & Services 11.9%
Banks 8.2%
Finance & Insurance 7.7%
Building, Construction & Furnishings 6.1%
- --------------------------------------------------------------------------------
What were the main contributors to the
strong performance of the Fund?
The Fund has been helped by the emphasis on Europe and the de-emphasis of
Latin America and Asia, including Japan. Our European holdings have been
divided among two types of stocks. We have invested in both growth and
value opportunities, although the Fund was weighted more toward growth
companies during the six months. This has been helpful, because growth has
outperformed value during the period. We have not had a major emphasis on
technology stocks, although technology did well in Europe during the six
months.
Top 10 Holdings
---------------
(as a percentage of net assets)
Nestle SA 4.4%
Karstadt AG 2.2%
Astra AB 2.1%
Holderbank Financiere Glarus AG 1.8%
B.A.T. Industries Plc 1.7%
Telecom Italia SpA 1.7%
Rhone-Poulenc SA, Cl. A 1.7%
Assa Abloy 1.6%
Berliner Kraft & Licht AG 1.6%
Novartis AG 1.6%
Portfolio composition is subject to change.
- --------------------------------------------------------------------------------
What individual stocks have supported
performance during the six months?
Nestle, the international food company based in Switzerland, is the Fund's
largest holding and has been a very strong performer. In fact, the stock
almost doubled in value in the January to April 1998 period. This stock
has been helped both by the company's strong growth as well as the heavy
inflow of investment dollars to Europe. This money has tended to be
invested in the larger, well-known companies, such as Nestle.
A second very strong performer has been another Swiss company in a very
different industry: Holderbank, one of the world's largest cement
companies. It owns cement companies throughout the world, and has
benefited from consolidation in the industry, which has given these
companies more pricing power than most companies in other
commodity-oriented industries. Holderbank is a very well-managed
enterprise whose subsidiaries are either the largest or second largest
companies in their markets.
- --------------------------------------------------------------------------------
What are the principal areas of concern
in the international markets?
We already have had a significant rally in Europe, and the U.S. market
certainly is priced rather high. Anytime there has been a rally over an
extended period of time, it is wise to proceed with caution. At the same
time, the problems in Asia are by no means over. We believe the economies
are still contracting and do not expect a quick recovery in the Pacific
Basin. Two other causes of concern would be a significant increase in
interest rates in either the United States or Europe or a significant
decline in earnings. This could cause problems in the equity markets.
8
<PAGE>
EVERGREEN
International Growth Fund
Portfolio Manager Interview
- --------------------------------------------------------------------------------
What is your outlook?
We continue to have a favorable outlook about Europe, not only because the
economies there are rebounding, but also because of structural changes we
see occurring. European companies are focusing more on return on equity,
on cost cutting and on their core competencies. In addition, there is a
benign interest rate environment in Europe, encouraging investment in
stocks.
In an era when the European Economic Union and the European Monetary Union
are advancing, many companies are getting ready to compete on a broader,
European scale and this trend is creating some interesting investment
opportunities.
Until recently, the weakness of European currencies against the dollar has
helped European companies exporting to other countries. In the future,
however, companies can also count on stronger domestic consumption to
support demand for their products.
Finally, the level of merger-and-acquisition activity in Europe is high,
and this tends to support stock prices. Certainly the most notable recent
merger development has been the announcement that Daimler-Benz, a stock
included in the Fund's portfolio, will be merging with Chrysler.
9
<PAGE>
EVERGREEN
Latin America Fund
Fund at a Glance as of April 30, 1998
We took a more conservative and highly selective approach during the six-month
period ended April 30, 1998.
Portfolio
Management
----------------------------------------
(Photo of Francis Claro)
Francis Claro
Tenure: October 1996
(Photo of Antonio Docal)
Antonio Docal
Tenure: October 1996
-------------------------------------------------------
CURRENT INVESTMENT STYLE
Morningstar's Style Box is based on a
portfolio date as of 3/31/98.
The Equity Style Box placement is based on a
(Graphic) fund's price-to-earnings and price-to-book
ratio relative to the S&P 500, as well as
the size of the companies in which it
invests, or median market capitalization.
Source: 1998 Morningstar, Inc.
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS*
<TABLE>
<CAPTION>
Class A Class B Class C Class Y
<S> <C> <C> <C> <C>
Inception Date 11/01/93 11/01/93 11/01/93 3/30/98
........................................................................
Average Annual Returns
........................................................................
6 months with sales charge 8.36% 8.88% 12.35% --
........................................................................
6 months w/o sales charge 13.76% 13.33% 13.24% --
........................................................................
1 year with sales charge 2.74% 2.90% 6.19% --
........................................................................
1 year w/o sales charge 7.86% 7.11% 7.03% --
........................................................................
3 years 17.13% 17.41% 18.13% --
........................................................................
Since Inception 10.43% 10.52% 10.83% 3.14%
........................................................................
Maximum Sales Charge 4.75% 5.00% 1.00%
Front End CDSC CDSC n/a
........................................................................
6-month capital gain
distributions per share $ 2.86 $ 2.86 $ 2.86 --
........................................................................
</TABLE>
*Adjusted for maximum sales charge.
- --------------------------------------------------------------------------------
LONG TERM GROWTH
11/93 4/94 4/95 4/96 4/97 4/98
Class A Shares 9,525 9,525 9,259 10,910 14,485 15,622
MSCIWI 10,000 10,281 11,339 13,524 14,989 19,414
S&P 500 10,000 9,768 11,474 14,941 18,696 26,373
CPI 10,000 10,117 10,425 10,719 10,995 11,153
Comparison of a $10,000 investment in Evergreen Latin America Fund, Class A
shares, versus a similar investment in the Morgan Stanley Capital International
World Index (MSCIWI), the S & P 500 Index, and the Consumer Price Index (CPI).
Past performance is no guarantee of future results. The performance of each
class may vary based on differences in loads and fees paid by the shareholders
investing in each class. The investment return and principal value will
fluctuate so that an investor's shares, when redeemed, may be worth more or
less than original cost. The MSCIWI and the S & P 500 Index are unmanaged
indices and do not include transaction costs associated with buying and selling
securities nor any management fees. The Consumer Price Index is a commonly used
measure of inflation and does not represent an investment return. It is not
possible to invest directly in an index.
10
<PAGE>
EVERGREEN
Latin America Fund
Portfolio Manager Interview
- --------------------------------------------------------------------------------
How did the Fund perform during the
six-month period that ended April 30, 1998?
The Evergreen Latin America Fund's Class A shares produced a total return
of 13.76% for the period. This return is without deduction of any sales
charges. For the same period, the Lipper Latin American Fund Average rose
10.14% and the MSCI World Index produced a return of 18.86%. We believe
the Fund's performance is the result of good stock and country selection.
Portfolio Characteristics
-------------------------
Total Net Assets $91,637,237
Number of Holdings 57
- --------------------------------------------------------------------------------
What was the investment environment
like during the period?
It was a particularly volatile period. The economic crisis that occurred
in Asia in October had a contagious effect on the Latin American financial
markets. While the economic fundamentals of most Latin American countries
remained strong, there was a tendency on the part of investors to believe
that the risks associated with the Asian emerging markets would affect
emerging markets all over the world. Therefore, many investors sold their
Latin American stocks. We used these difficulties to work to our
advantage. As prices declined, we purchased stocks at attractive prices.
After the initial market sell-off, Latin American stock prices rebounded.
Brazil and Mexico recovered the most -- the two areas in which most of the
Fund's assets are invested. We are still seeing some terrific bargains.
- --------------------------------------------------------------------------------
What differentiates the emerging markets
of Latin America from those of Asia?
The economic underpinnings in the Latin American economies are much
stronger than those of many of Asia's emerging markets. For example, there
is no real estate bubble in Latin America, so real estate prices are not
artificially high. Banks in Latin America today have a more solid
financial base after consolidation, capital increases and the entrance of
foreign partners. Cronyism and corruption in the Latin countries is on the
decline, and governments are more willing to work with the International
Monetary Fund (IMF) and other multinational agencies.
Latin America also has more functioning democracies that have held free
and fair elections. At the time that the Asian economies collapsed, Asia
had an overcapacity problem. In contrast, the Latin American countries are
trying to satisfy pent-up demand for goods and services. For example, in
Latin America there is a great need for infrastructure development. There
is strong demand for sewerage, roads, utilities, and telecommunications
services. The Latin American economies experienced a crisis in 1994, when
the Mexican economy collapsed. Out of that crisis came some very sound
solutions for managing emerging market economies. The results have been
prepaid debt, high growth, and more investment in the region.
Geographical Allocation
-----------------------
(as a percentage of net assets)
Brazil 47.9%
Mexico 36.3%
United States 7.6%
Argentina 5.1%
Peru 1.6%
Columbia 1.1%
Venezuela 0.9%
Chile 0.4%
Portfolio composition is subject to change.
11
<PAGE>
EVERGREEN
Latin America Fund
Portfolio Manager Interview
- --------------------------------------------------------------------------------
How did you manage the Fund during
the six-months?
We took a more conservative and highly selective approach. We reduced the
number of companies in the portfolio, and we aggressively sought stocks
that have value and growth attributes together with catalysts that we
believe will be recognized by investors in the future. We had a slightly
higher cash position than normal, but that allowed us to be more agile in
investing in companies where we saw opportunities. At the end of the
period, about 8% of the portfolio's assets were in cash, which we expect
to be investing at remarkably low valuations.
- --------------------------------------------------------------------------------
Brazil and Mexico continued to account for most of the fund's assets. Why
were these countries attractive?
Let's start with Brazil which, at 48% of assets, accounted for the Fund's
largest country allocation at the end of the six-month period. The
Brazilian economy is benefiting from an austerity program that the
government put in place after the stock market downturn in October. The
program called for increased taxes and reductions in government spending.
When investing in Brazil, we focused on companies reaping the rewards of
restructuring, privatization and increased productivity. We found
attractive investments in a variety of economic sectors, the largest being
the Brazilian telecommunications sector. Two companies that contributed
strongly to performance were Cofap, an auto parts manufacturer that was
bought by Fiat; and Caemi, the third largest iron ore producer in the
world. Caemi exports virtually all its production and, according to some
top sector analysts, is trading at about twice its cash flow.
- --------------------------------------------------------------------------------
. . .and Mexico?
Mexican stocks composed 36% of the Fund's assets at the end of the period.
Mexico has solid macro-economic fundamentals. Its Gross Domestic Product
(GDP) growth was between 4.5% and 5% in 1997 and should continue at the
same rate in 1998. Inflation and interest rates continue to trend downward
year-over-year. The only weakness we've seen has been a deterioration in
the current account deficit. We believe that while the trend is a concern,
it can be financed by direct foreign investment and capital flows. One
area that we favored in Mexico was the cement industry. About 85% of
cement sales are by "do-it-yourselfers," individuals buying cement to
construct or add on to their homes. Cemex, the third largest cement
company in the world, and Apasco are two companies that are benefiting
from this do-it-yourself trend. We also found opportunity in selected
banks. Since the Mexican economic crisis in 1994, banks have become more
stable. They are beginning to increase lending rates for the first time in
three years, and their stocks are attractively priced. Two banks that we
believe have potential for long-term gains are Banacci and Bancomer.
Top 10 Holdings
---------------
(As a percentage of net assets)
Telecomunicacoes Brasileiras SA, ("Telebras") ADR 9.3%
Companhia Riograndense de Telecomunica 8.2%
Telecomunicaoes de Sao Paulo SA 8.2%
Grupo Finance Banamex Accival SA de CV, Ser.B 5.2%
Fomento Economico Mexicano SA, Ser. B 3.5%
Telecomunicacoes de Rio de Janiero SA 3.4%
Telefonos de Mexico SA, ADR 3.3%
Apasco SA de CV 3.2%
Petroleo Brasileiro SA ("Petrobras") 3.1%
Panamerican Beverages, Inc., Cl. A, ADR 3.0%
Portfolio composition is subject to change.
12
<PAGE>
EVERGREEN
Latin America Fund
Portfolio Manager Interview
What positions did you reduce in the
portfolio?
Weak demand for commodities in the emerging nations and in Japan resulted
in a decline in prices. We cut back investments in countries that were
sensitive to commodity price declines. We eliminated investments in
Venezuela because of lower oil prices. We also reduced the Fund's position
in Argentina, an oil exporter, and we sold investments in Chile, which was
affected by lower copper prices. Toward the end of the period, commodity
prices began to stabilize as a result of a pick-up in demand from the U.S.
and Europe.
Top 5 Industries
----------------
(As a percentage of net assets)
Telecommunication Services & Equipment 36.6%
Finance & Insurance 10.3%
Food & Beverage Products 9.6%
Building, Construction & Furnishings 7.6%
Oil/Energy 5.9%
What was your strategy in Peru?
About 2% of the Fund's assets were invested in Peru. This is a market
where we believe there is opportunity in the future. Because the epicenter
of the El Nino phenomenon is in Peru, no country has been more negatively
affected by it. With El Nino subsiding, we believe we will see Peru's
Gross Domestic Product (GDP) rebound during the second half of 1998 and
into 1999. We believe there is potential for strong consumption growth,
increased construction development, and more mining activity. We have been
increasing our exposure in this market.
What is your outlook
We are optimistic about the prospects for the Latin American markets and
the Fund. We believe the concerns that arose over Asia's economic problems
and their effect on Latin American stocks will decline, and investors will
once again focus on the positive economic fundamentals and attractive
valuations of the region. International companies are investing in record
numbers in Latin America with a long-term perspective. U.S. auto makers,
utility companies, banks, and other businesses are competing for Latin
American business.
Because of recent stock market declines, price/earnings ratios (PEs) on
Latin American stocks are at recent historic lows. We believe this
situation presents opportunity for the Fund, as the stocks of many
attractive companies are undervalued and we are able to find investments
that offer a combination of good value and strong potential for growth.
The diversification that Latin American investments offer, the solid
economic fundamentals of the region, and the high quality of many Latin
American companies make it an attractive area in which to invest.
The Evergreen Latin America Fund may also be subject to the additional
risk of non-diversified "Regional Fund" investing.
13
<PAGE>
EVERGREEN
Natural Resources Fund
Fund at a Glance as of April 30, 1998
We increased the natural resources portion of the Fund because the prices of
stocks on some better quality natural resources companies declined and were at
attractive levels.
Portfolio
Management
(Photo of John Madden)
John Madden
Tenure: October 1994
-------------------------------------------------------
CURRENT INVESTMENT STYLE
(Graphic) Morningstar's Style Box is based on a
portfolio date as of 3/31/98.
The Equity Style Box placement is based on a
fund's price-to-earnings and price-to-book
ratio relative to the S&P 500, as well as
the size of the companies in which it
invests, or median market capitalization.
Source: 1998 Morningstar, Inc.
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS*
<TABLE>
<CAPTION>
Class A Class B Class C
<S> <C> <C> <C>
Inception Date 10/17/94 10/17/94 10/17/94
.................................................................
Average Annual Returns
.................................................................
6 months with sales charge (7.68%) (7.78%) (4.45%)
.................................................................
6 months w/o sales charge (3.08%) (3.52%) (3.60%)
.................................................................
1 year with sales charge (3.39%) (3.72%) (0.24%)
.................................................................
1 year w/o sales charge 1.43% 0.73% 0.64%
.................................................................
3 years 7.03% 7.08% 7.91%
.................................................................
Since Inception 4.34% 4.25% 4.98%
.................................................................
Maximum Sales Charge 4.75% 5.00% 1.00%
Front End CDSC CDSC
.................................................................
6-month income dividends per
share $ 0.13 $ 0.13 $ 0.13
.................................................................
6-month capital gain
distributions per share $ 1.25 $ 1.25 $ 1.25
.................................................................
</TABLE>
*Adjusted for maximum sales charge.
- --------------------------------------------------------------------------------
LONG TERM GROWTH
10/94 4/95 4/96 4/97 4/98
Class A Shares 9,525 9,003 10,692 11,423 11,587
MSCIWI 10,000 10,482 12,503 13,857 17,948
S&P 500 10,000 11,047 14,384 18,000 25,391
CPI 10,000 10,160 10,446 10,716 10,870
Comparison of a $10,000 investment in Evergreen Natural Resources Fund, Class A
shares, versus a similar investment in the Morgan Stanley Capital International
World Index (MSCIWI), the S&P 500 Index, and the Consumer Price Index (CPI).
Past performance is no guarantee of future results. The performance of each
class may vary based on differences in loads and fees paid by the shareholders
investing in each class. The investment return and principal value will
fluctuate so that an investor's shares, when redeemed, may be worth more or
less than original cost. The MSCIWI and the S&P 500 Index are unmanaged indices
and do not include transaction costs associated with buying and selling
securities nor any management fees. The Consumer Price Index is a commonly used
measure of inflation and does not represent an investment return. It is not
possible to invest directly in an index.
14
<PAGE>
EVERGREEN
Natural Resources Fund
Portfolio Manager Interview
- --------------------------------------------------------------------------------
How did the Fund perform during the
six-month period that ended April 30, 1998?
The Fund's Class A shares declined 3.08%, unadjusted for sales charges,
substantially underperforming the Dow Jones Industrial Average and the
Standard & Poor's 500 Composite Index (S&P 500). The Fund outperformed the
Lipper Analytical Services Natural Resources Peer Group average return of
(3.81)%.
Portfolio Characteristics
-------------------------
Total Net Assets $15,055,934
Number of Holdings 37
- --------------------------------------------------------------------------------
What contributed to performance?
In general, natural resources stocks performed poorly. Virtually all
resources -- including energy and non-ferrous metals -- were laggards,
relative to the S&P 500. As mentioned, the average return for the Lipper
Natural Resources Peer Group over the six-month period declined 3.81%.
The disappointing performance of the emerging markets of Asia and
Latin American was also a factor. The Fund had significant exposure to
both resources and infrastructure development investments in these
markets.
- --------------------------------------------------------------------------------
What was the investment environment like for natural resources stocks
during the period?
The economic difficulties in Asia were the most important element for
natural resources investing. This was because Asian economic growth rates
had been higher than the growth rates of the major industrialized
countries for some time. The nature of Asia's growth is based on the
development of basic industries and infrastructure, which means that
petrochemicals, steel and base metals are important in the region's
development. As a result, Asia is a major factor in the global consumption
of these resources. The Asian economies use between 30%-40% of the world's
output of nickel, copper and aluminum.
As the financial crisis swept through Asia and growth expectations
declined, commodity prices suffered. Copper, for example, sold for more
than $1.18/lb a year ago. It dropped to $0.83/lb. at the end of April
1998. Nickel and aluminum prices have declined by 24% and 11%,
respectively. Oil, which once was virtually immune to downturns, fully
participated in this one. West Texas crude sold for more than $21 a barrel
last fall. At the end of April, it closed at $15.15 per barrel and had
been much lower during the period. All of this resulted in poor
performance of the stocks of commodity producers, especially those in the
more leveraged natural resources industries, such as oil service and
exploration companies. Ironically, lower commodity prices were positive
for other industries and economies. They resulted in lower inflation in
many areas, which boosted the performance of broad market averages that
made the relative performance of resources companies look worse.
Top 10 Holdings
---------------
(as a percentage of net assets)
Schlumberger Ltd. 7.6%
Diamond Offshore Drilling, Inc. 7.4%
Potash Corp. of Saskatchewan, Inc. 5.0%
Halliburton Co. 4.7%
Alcan Aluminum Ltd. 4.2%
Aluminum Co. of America 4.1%
Industrias Penoles SA de CV 3.6%
Canadian Occidental Petroleum Ltd. 3.4%
Rio Tinto Plc 3.0%
Santos Ltd. 2.9%
Portfolio composition is subject to change.
15
<PAGE>
EVERGREEN
Natural Resources Fund
Portfolio Manager Interview
- --------------------------------------------------------------------------------
What was your investment strategy
during the period?
Because the prices of stocks on some better quality natural resources
companies declined and were at attractive levels, we increased the natural
resources portion of the Fund from 78% to 87%. We decreased the allocation
to infrastructure, fertilizer and agriculture stocks from 22% to 13%. In
those areas, we sold stocks that had performed well.
- --------------------------------------------------------------------------------
How did energy stocks perform during
the period?
Performance of energy stocks varied widely. After producing solid returns
for a relatively long period, energy service companies stocks were among
the worst performers. These are among the most volatile stocks, and they
are the most vulnerable to market downturns.
Stocks of the major integrated oil companies peaked in the fall of 1997.
Their prices declined about 20% by early January and climbed back to their
previous highs by the end of April. These stocks rose about 5% over the
six-month period. Under ordinary circumstances this might be considered
good performance, but it seems paltry when the Dow Jones Industrial
Average rose more than 20% in the same time frame. We increased the Fund's
exposure to energy stocks from 35% to just under 45% of net assets.
Top 5 Industries
----------------
(as a percentage of net assets)
Metals & Mining 24.6%
Oil Field Services 24.5%
Oil/Energy 19.5%
Chemical & Agricultural Products 7.8%
Iron & Steel 5.0%
- --------------------------------------------------------------------------------
Did you make changes to the mining
portion of the portfolio?
We made two changes in this segment of the portfolio. First, we added to
the precious metals component, which at the end of the period composed
about 40% of portfolio assets. Precious metals stocks were attractive
because of an improving supply/demand balance and because we feel they may
benefit from the turmoil in Asia. Second, we largely eliminated Australian
mining companies. These companies are most vulnerable to Asia's economic
problems, because they ship the bulk of their output to Asia.
- --------------------------------------------------------------------------------
What were some of your success stories?
Several gold stocks performed well. These included Durban Deep in South
Africa, and Stillwater Mining, a platinum-palladium producer in Montana.
Several European investments were also success stories, such as Lafarge,
the French building materials company. The Fund's holdings in Brazil also
were solid performers, despite their volatility.
Geographical Allocation
-----------------------
(as a percentage of net assets)
United States 43.0%
Canada 21.4%
United Kingdom 9.0%
Brazil 7.6%
France 6.9%
Australia 5.5%
Mexico 3.6%
Peru 1.9%
South Africa 1.1%
Portfolio composition is subject to change.
16
<PAGE>
EVERGREEN
Natural Resources Fund
Portfolio Manager Interview
- --------------------------------------------------------------------------------
Did you make changes to the Fund's
country allocations?
We reduced the North American allocation from 67% to 63% of assets and the
Asia/Pacific portion of the portfolio from 11% to 6%. The change in Asia
was largely due to selling Australian mining companies. We raised
investments slightly in Europe, from 13% to 16% of assets. At the end of
the period, Latin America also accounted for 15% of assets, up from 9%.
Market appreciation was the primary driver behind the increase in our
Latin American allocation.
- --------------------------------------------------------------------------------
What is your outlook?
Because metals depend on strong growth in Asia, the pace of economic
recovery in that region is critical. We believe it is unlikely that Asia's
problems could get much worse and result in another round of devaluations
and drawn out recovery. Still, growth rate estimates are being revised
downward, and any growth sufficient to materially impact metals prices is
probably a year away. We have concentrated our metals holdings in
companies that are less susceptible to these problems, such as aluminum
stocks, special situations and broad-based companies. Our outlook for
energy is more positive, because we believe OPEC caused some of the
problems in the energy sector, and it has the ability to solve them. We
expect the current oil inventory bulge to be under control by fall of
1998. We continue to believe that a strong position in energy is
appropriate for the Fund. We will probably increase the Fund's European
investments, both in resources and in infrastructure development. In our
opinion, natural resources stocks discounted Asia's problems ahead of most
other investments, and we think they will react early to a resolution in
Asia. Many of these stocks are very attractively priced and represent good
value that should become apparent over the next twelve months.
17
<PAGE>
EVERGREEN
Precious Metals Fund
Fund at a Glance as of April 30, 1998
We maintained our strategy of seeking companies with large, low-cost reserves
and the ability to expand output.
Portfolio
Management
----------------------------------------
(Photo of John Madden)
John Madden
Tenure: October 1995
-------------------------------------------------------
CURRENT INVESTMENT STYLE
(Graphic) Morningstar's Style Box is based on a
portfolio date as of 3/31/98.
The Equity Style Box placement is based on a
fund's price-to-earnings and price-to-book
ratio relative to the S&P 500, as well as
the size of the companies in which it
invests, or median market capitalization.
Source: 1998 Morningstar, Inc.
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS*
<TABLE>
<CAPTION>
Class A Class B Class C
<S> <C> <C> <C>
Inception Date 1/20/98 1/30/78 1/29/98
...............................................................
Average Annual Returns
...............................................................
6 months with sales charge -- ( 0.64%) --
...............................................................
6 months w/o sales charge -- 4.27% --
...............................................................
1 year with sales charge -- (19.72%) --
...............................................................
1 year w/o sales charge -- (15.74%) --
...............................................................
3 years -- ( 8.39%) --
...............................................................
5 years -- ( 1.48%) --
...............................................................
10 years -- 0.43% --
...............................................................
Since Inception 19.58% 8.50% 11.88%
...............................................................
Maximum Sales Charge 4.75% 5.00% 1.00%
Front End CDSC CDSC
...............................................................
6-month capital gain
distributions per share -- $ 0.81 --
...............................................................
</TABLE>
*Adjusted for maximum sales charge.
- --------------------------------------------------------------------------------
LONG TERM GROWTH
4/88 4/90 4/92 4/94 4/96 4/98
Class B Shares 10,000 9,174 8,389 14,025 16,171 10,438
S&P 500 10,000 13,589 18,227 20,969 32,074 56,616
CPI 10,000 11,008 11,913 12,587 13,337 13,877
Comparison of a $10,000 investment in Evergreen Precious Metals Fund, Class B
shares, versus a similar investment in the S & P 500 Index, and the Consumer
Price Index (CPI).
Past performance is no guarantee of future results. The performance of each
class may vary based on differences in loads and fees paid by the shareholders
investing in each class. The investment return and principal value will
fluctuate so that an investor's shares, when redeemed, may be worth more or
less than original cost. The S & P 500 Index is an unmanaged index and does not
include transaction costs associated with buying and selling securities nor any
management fees. The Consumer Price Index is a commonly used measure of
inflation and does not represent an investment return. It is not possible to
invest directly in an index.
18
<PAGE>
EVERGREEN
Precious Metals Fund
Portfolio Manager Interview
- --------------------------------------------------------------------------------
How did the Fund perform?
The Fund produced strong performance relative to its peers. For the
six-month period that ended April 30, 1998, the Fund's Class B shares
generated a 4.27% total return, strongly outpacing the Lipper Gold Fund
average, which declined 3.03%. This return is unadjusted for sales charge.
The Fund also outperformed the XAU Index, an index composed primarily of
North American gold stocks, which rose 0.48%. Gold prices declined 1.54%.
Sector allocation was an important contributor to performance. During the
period only about one-third of the Fund was invested in non-North American
stocks, which significantly underperformed the Australian and South
African segments of the gold market.
Portfolio Characteristics
-------------------------
Total Net Assets 154,402,578
Number of Holdings 70
- --------------------------------------------------------------------------------
What was the investment environment
like during the period?
The investment environment for precious metals stocks was quite volatile.
Early in the period, gold prices continued to decline, as they had for
almost two years. In January, we believe they hit their lows, trading
briefly below $280 per ounce. Gold prices subsequently rose above $300 per
ounce, trading as high as $314 in late April and closed the period at
$306. This modest recovery was paralleled by a rally in gold stocks. For
example, the XAU Index rose from a multi-year low of 61.23 in January 1998
to over 90 in mid-April, while the South African and Australian stocks in
the Financial Times Indexes rose 56% and 71%, respectively, from the
lowest levels of December 1997. The rally in gold stalled during the last
few weeks of the period and prices weakened. The immediate causes of the
weakness are debatable, but we believe the dramatic strength of the U.S.
dollar was an important factor. On balance, we believe the investment
environment for gold has improved over the past six months, but the
conditions for generating broad investor interest in the metal have not
yet developed and will probably depend on how events unfold in Asia.
- --------------------------------------------------------------------------------
What caused the turnaround in gold
prices?
Before discussing the turnaround, we should explain what we believe were
the causes for the downturn in gold prices. We believe, the primary
reasons for the gradual price erosion of gold since early 1996 have been
commodity fund short-selling, outright sales by central banks, and
producer forward-selling, all done in an environment of relatively little
investor interest in gold or gold stocks.
The change of sentiment that prompted gold to rally relates to a growing
conviction that the European currency (EMU) will go forward, that there
will be a reasonable (though as yet undefined) percentage of gold backing
for the EMU, and that the major central banks in Germany and France will
not be sellers of gold for the foreseeable future. Other factors include
the sharp move in the price of silver and the announcement that investor
Warren Buffett had taken a major position in gold. Finally, we believe
that those with short positions in gold began to cover, perhaps thinking
that the long, extremely profitable run from over $400 per ounce down to
under $300 was approaching the end.
- --------------------------------------------------------------------------------
What effect did Asia's economic troubles
have on the prices of precious metals?
The turmoil in Asia seemed to have very little effect on precious metals
prices, at least in the short term; however, there may be a long-term
impact. A great deal of wealth has vanished in Asia, and the lesson that
ownership of gold would have preserved much of what is
19
<PAGE>
EVERGREEN
Precious Metals Fund
Portfolio Manager Interview
gone won't be lost on either individuals or central banks. Asia has always
been a major source of gold demand, and the problems in those economies
could have a negative impact on consumer purchasing ability in the region.
- --------------------------------------------------------------------------------
What was your investment strategy?
We maintained our strategy of seeking companies with large, low-cost
reserves and the ability to expand output. These types of companies have
served the Fund best over the years. We made two decisions regarding
short-term holdings. First, we stopped reducing holdings in South Africa
and Australia, because we felt that these segments of the market were
oversold. We added modestly to our investments in these two areas, and
this move was successful. Second, we maintained exposure to some smaller
companies that had been hit hard in the market but we believe have viable
projects, good potential growth prospects, and that should perform well if
gold prices rise. We think there is room in the Fund for other assets,
smaller gold stocks, even non-gold investments, such as diamond and
platinum, but the larger, well-managed firms have been the mainstay of the
Fund.
Geographical Allocation
-----------------------
(as a percentage of net assets)
Canada 47.5%
South Africa 24.7%
United States 16.2%
Australia 8.5%
Papua New Guinea 1.2%
Peru 1.0%
Mexico 0.9%
Portfolio composition is subject to change.
- --------------------------------------------------------------------------------
Did you change the Fund's geographic
allocations?
The geographic allocations changed very little over the period. About 65%
of Fund assets were invested in North and South America, 25% in Africa,
and 10% in Australia and other countries. The biggest change in the Fund
came with the merger of Evergreen Precious Metals Fund with Blanchard
Precious Metals Fund in February. The Blanchard fund was more concentrated
in North America than the Evergreen Precious Metals Fund, so we made some
adjustments. Many of the companies in the Blanchard fund, however, were
already in the Evergreen Precious Metals Fund. For example, two Canadian
gold mining companies -- Franco-Nevada Mining and Euro-Nevada Mining --
were in both funds and have served shareholders well and remain attractive
investments.
Industry Allocation
-------------------
(As a percentage of assets)
Gold Mining 64.3%
Metals & Mining 41.3%
- --------------------------------------------------------------------------------
Where did you find the most opportunity?
Two stocks were particularly solid performers -- Stillwater Mining and
Durban Deep. Stillwater Mining is a Montana palladium and platinum miner,
the largest source of these metals outside Russia and South Africa.
Stillwater recently completed an expansion program and expects to show
substantial profits this year. The company should benefit from the very
positive supply/demand outlook for the "platinum group metals." Durban
Deep is a South African producer undergoing significant restructuring in
its financial properties, management, and mining techniques. The company is
a high-cost miner and leveraged to gold prices; however, with a market
capitalization of only $10 per ounce of reserves, its risk-reward
characteristics are appealing.
20
<PAGE>
EVERGREEN
Precious Metals Fund
Portfolio Manager Interview
Top 10 Holdings
---------------
(As a percentage of assets)
Franco Nevada Mining Ltd. 9.1%
Euro Nevada Mining Ltd. 7.0%
Newmont Mining Corp. 6.5%
Barrick Gold Corp. 5.2%
Ashanti Goldfields Ltd., GDR 4.0%
Homestake Mining Co. 3.9%
Stillwater Mining Co. 3.8%
Pioneer Group, Inc. 3.4%
TVX Gold, Inc. 3.3%
Kinross Gold Corp. 3.0%
Portfolio composition is subject to change.
- --------------------------------------------------------------------------------
Any disappointments?
One disappointment would be SouthernEra Resources, Inc., a diamond company
in South Africa highlighted in the last shareholder report. SouthernEra
made a promising new discovery that was amenable to surface and
shallow-depth mining. It was slated to begin production this year.
Unfortunately, the company is involved in a property dispute and the
company's stock has suffered.
- --------------------------------------------------------------------------------
What is your outlook?
We believe the worst is behind us for gold. Gold has to compete with a
number of alternatives for the investor's dollar. To date, the metal is
lagging other financial assets, such as stocks and the U.S. dollar, but
there are clouds on the horizon that may cause gold to regain some of its
appeal. Asia still has a number of political and economic problems.
Valuations in the U.S. and European stock markets are very high. Tensions
are rising in the Indian subcontinent, and Russia is wavering on the edge
of currency devaluation. On the positive side, satisfactory progress
toward the EMU should eliminate some of the most nettlesome worries about
central bank sales. Any or all of these factors contain the seeds of
greater investor interest in gold and in gold stocks. As individuals in
Asia have discovered, there are times when there is nothing better to own,
and current circumstances in the U.S. and abroad have the potential to
make the next twelve months one of those times.
21
<PAGE>
EVERGREEN
Global Opportunities Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months
Ended One-Month
April 30,1998 Period Ended
(Unaudited)# October 31, 1997*
<S> <C> <C>
CLASS A SHARES
Net asset value beginning of
period $ 23.53 $ 24.90
----------- -----------
.......................................................................
Income (loss) from investment
operations
.......................................................................
Net investment income (loss) (0.11) 0.02
.......................................................................
Net realized and unrealized gain
(loss) on investments and foreign
currency related transactions 3.27 ( 1.39)
----------- -----------
.......................................................................
Total from investment operations 3.16 (1.37)
----------- -----------
.......................................................................
Less distributions
.......................................................................
From net realized gain on
investments and foreign currency
related transactions (1.53) 0
----------- -----------
.......................................................................
Total distributions (1.53) 0
----------- -----------
.......................................................................
Net asset value end of period $ 25.16 $ 23.53
----------- -----------
.......................................................................
Total return + 14.41 % (5.50%)
.......................................................................
Ratios/supplemental data
Ratios to average net assets
Total expenses 1.88%++ 1.87%
.......................................................................
Total expenses, excluding
indirectly paid expenses 1.87%++ 1.85%++
.......................................................................
Net investment loss (1.00%)++ (1.40%)++
.......................................................................
Portfolio turnover rate 62% 7%
.......................................................................
Average commissions rate paid
per share $ 0.0116 $ 0.0019
.......................................................................
Net assets end of period
(thousands) $ 81,970 $ 98,031
.......................................................................
</TABLE>
<TABLE>
<CAPTION>
Year Ended September 30,
1997# 1996 1995 1994
<S> <C> <C> <C> <C>
CLASS A SHARES
Net asset value beginning of
period $ 24.56 $ 23.43 $ 19.42 $ 18.02
---------- ---------- ---------- ----------
.............................................................................................
Income (loss) from investment
operations
.............................................................................................
Net investment income (loss) (0.17) (0.06) (0.16) (0.04)
.............................................................................................
Net realized and unrealized gain
(loss) on investments and foreign
currency related transactions 1.76 1.19 4.17 1.60
---------- ---------- ---------- ----------
.............................................................................................
Total from investment operations 1.59 1.13 4.01 1.56
---------- ---------- ---------- ----------
.............................................................................................
Less distributions
.............................................................................................
From net realized gain on
investments and foreign currency
related transactions (1.25) 0 0 (0.16)
---------- ---------- ---------- ----------
.............................................................................................
Total distributions (1.25) 0 0 (0.16)
---------- ---------- ---------- ----------
.............................................................................................
Net asset value end of period $ 24.90 $ 24.56 $ 23.43 $ 19.42
---------- ---------- ---------- ----------
.............................................................................................
Total return + 6.95% 4.82% 20.65% 8.74%
.............................................................................................
Ratios/supplemental data
Ratios to average net assets
Total expenses 1.67% 1.62% 1.83% 2.01%
.............................................................................................
Total expenses, excluding
indirectly paid expenses 1.66% 1.60% 1.81% N/A
.............................................................................................
Net investment loss (0.69%) (0.53%) (0.83%) (0.86%)
.............................................................................................
Portfolio turnover rate 72% 67% 35% 32%
.............................................................................................
Average commissions rate paid
per share $ 0.0066 $ 0.0079 N/A N/A
.............................................................................................
Net assets end of period
(thousands) $ 113,477 $ 250,427 $ 94,679 $ 71,122
.............................................................................................
</TABLE>
<TABLE>
<CAPTION>
Year Ended September 30,
1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
CLASS A SHARES
Net asset value beginning of period $ 11.69 $ 12.89 $ 9.89 $ 11.17 $ 9.77
--------- --------- -------- --------- --------
....................................................................................................................
Income (loss) from investment operations
....................................................................................................................
Net investment income (loss) (0.14) (0.08) 0.17 0.19 0.09
....................................................................................................................
Net realized and unrealized gain (loss) on
investments and foreign currency related
transactions 6.47 0.23 3.06 (1.27) 1.66
--------- --------- -------- --------- --------
....................................................................................................................
Total from investment operations 6.33 0.15 3.23 (1.08) 1.75
--------- --------- -------- --------- --------
....................................................................................................................
Less distributions
....................................................................................................................
From net investment income 0 0 (0.23) (0.12) (0.09)
....................................................................................................................
From net realized gain on investments and foreign
currency related transactions 0 (1.35) 0 (0.08) (0.26)
--------- --------- --------- --------- ---------
....................................................................................................................
Total distributions 0 (1.35) (0.23) (0.20) (0.35)
--------- --------- --------- --------- ---------
....................................................................................................................
Net asset value end of period $ 18.02 $ 11.69 $ 12.89 $ 9.89 $ 11.17
--------- --------- --------- --------- ---------
....................................................................................................................
Total return + 54.15% 1.81% 32.71% (9.65%) 16.94%
....................................................................................................................
Ratios/supplemental data
Ratios to average net assets
Total expenses 2.84% 2.50% 2.03% 2.00% 2.00%
....................................................................................................................
Total expenses, excluding fee waivers and
expense reimbursements N/A N/A 3.67% 7.77% 13.06%
....................................................................................................................
Net investment income (1.72%) (0.69%) 1.49% 1.80% 0.86%
....................................................................................................................
Portfolio turnover rate 64% 75% 134% 51% 13%
....................................................................................................................
Net assets end of period (thousands) $ 29,942 $ 10,859 $ 2,159 $ 1,519 $ 1,378
....................................................................................................................
</TABLE>
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
# Net Investment income is based on average shares outstanding during the
period.
* The Fund changed its fiscal year end from September 30 to October 31,
effective October 31, 1997.
See Combined Notes to Financial Statements.
22
<PAGE>
EVERGREEN
Global Opportunities Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months
Ended One-Month
April 30, 1998 Period Ended
(Unaudited)# October 31, 1997**
<S> <C> <C>
CLASS B SHARES
Net asset value beginning of
period $ 22.69 $ 24.03
----------- ------------
....................................................................
Income (loss) from
investment operations
....................................................................
Net investment loss (0.19) (0.06)
....................................................................
Net realized and unrealized gain
(loss) on investments and
foreign currency related
transactions 3.15 (1.28)
----------- ------------
....................................................................
Total from investment
operations 2.96 (1.34)
----------- ------------
....................................................................
Less distributions
....................................................................
From net realized gain on
investments and foreign
currency related transactions (1.53) 0
----------- ------------
....................................................................
Total distributions (1.53) 0
----------- ------------
....................................................................
Net asset value end of period $ 24.12 $ 22.69
----------- ------------
....................................................................
Total return + 14.03% (5.58%)
....................................................................
Ratios/supplemental data
Ratios to average net assets:
Total expenses 2.63%++ 2.62%++
....................................................................
Total expenses, excluding
indirectly paid expenses 2.62%++ 2.61%++
....................................................................
Net investment loss (1.75%)++ (2.15%)++
....................................................................
Portfolio turnover rate 62% 7%
....................................................................
Average commissions rate
paid per share $ 0.0116 $ 0.0019
....................................................................
Net assets end of period
(thousands) $ 189,677 $ 216,471
....................................................................
<CAPTION>
Year Ended September 30,
1997# 1996 1995 1994 1993*
<S> <C> <C> <C> <C> <C>
CLASS B SHARES
Net asset value beginning of
period $ 23.92 $ 23.00 $ 19.20 $ 17.95 $ 14.04
---------- --------- -------- -------- ----------
..........................................................................................................
Income (loss) from
investment operations
..........................................................................................................
Net investment loss (0.32) (0.21) (0.25) (0.15) (0.04)
..........................................................................................................
Net realized and unrealized gain
(loss) on investments and
foreign currency related
transactions 1.68 1.13 4.05 1.56 3.95
---------- --------- -------- -------- ----------
..........................................................................................................
Total from investment
operations 1.36 0.92 3.80 1.41 3.91
---------- --------- -------- -------- ----------
..........................................................................................................
Less distributions
..........................................................................................................
From net realized gain on
investments and foreign
currency related transactions (1.25) 0 0 ( 0.16) 0
---------- --------- -------- -------- ----------
..........................................................................................................
Total distributions (1.25) 0 0 ( 0.16) 0
---------- --------- -------- -------- ----------
..........................................................................................................
Net asset value end of period $ 24.03 $ 23.92 $ 23.00 $ 19.20 $ 17.95
---------- --------- -------- -------- ----------
..........................................................................................................
Total return + 6.14% 4.00% 19.79% 7.93% 27.85%
..........................................................................................................
Ratios/supplemental data
Ratios to average net assets:
Total expenses 2.46% 2.40% 2.58% 2.83% 3.35%++
..........................................................................................................
Total expenses, excluding
indirectly paid expenses 2.44% 2.38% 2.56% N/A N/A
..........................................................................................................
Net investment loss (1.45%) (1.37%) (1.59%) (1.61%) (1.86%)++
..........................................................................................................
Portfolio turnover rate 72% 67% 35% 32% 64%
..........................................................................................................
Average commissions rate
paid per share $ 0.0066 $ 0.0079 N/A N/A N/A
..........................................................................................................
Net assets end of period
(thousands) $ 238,936 $ 385,839 $238,320 $131,695 $ 15,534
..........................................................................................................
</TABLE>
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
# Net investment income is based on average shares outstanding during the
period.
* For the period from February 1, 1993 (commencement of class operations) to
September 30, 1993.
** The Fund changed its fiscal year end from September 30 to October 31,
effective October 31, 1997.
See Combined Notes to Financial Statements.
23
<PAGE>
EVERGREEN
Global Opportunities Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months
Ended One-Month
April 30, 1998 Period Ended
(Unaudited)# October 31, 1997**
<S> <C> <C>
CLASS C SHARES
Net asset value beginning of
period $ 22.73 $ 24.07
----------- -----------
........................................................................
Income (loss) from investment
operations
........................................................................
Net investment loss (0.19) (0.07)
........................................................................
Net realized and unrealized gain
(loss) on investments and foreign
currency related transactions 3.16 (1.27)
----------- -----------
........................................................................
Total from investment operations 2.97 (1.34)
----------- -----------
........................................................................
Less distributions
........................................................................
From net realized gain on
investments and foreign currency
related transactions (1.53) 0
----------- -----------
........................................................................
Total distributions (1.53) 0
----------- -----------
........................................................................
Net asset value end of period $ 24.17 $ 22.73
----------- -----------
........................................................................
Total Return + 14.05% (5.57%)
........................................................................
Ratios/supplemental data
Ratios to average net assets:
Total expenses 2.63%++ 2.62%++
........................................................................
Total expenses, excluding
indirectly paid expenses 2.62%++ 2.61%++
........................................................................
Net investment loss (1.75%)++ (2.15%)++
........................................................................
Portfolio turnover rate 62% 7%
........................................................................
Average commissions rate paid
per share $ 0.0116 $ 0.0019
........................................................................
Net assets end of period
(thousands) $ 36,707 $ 43,869
........................................................................
<CAPTION>
Year Ended September 30,
1997# 1996 1995 1994 1993*
<S> <C> <C> <C> <C> <C>
CLASS C SHARES
Net asset value beginning of
period $ 23.97 $ 23.04 $ 19.26 $ 17.99 $ 14.04
--------- --------- --------- --------- -----------
............................................................................................................
Income (loss) from investment
operations
............................................................................................................
Net investment loss (0.33) (0.24) (0.27) (0.15) (0.04)
............................................................................................................
Net realized and unrealized gain
(loss) on investments and foreign
currency related transactions 1.68 1.17 4.05 1.58 3.99
--------- --------- --------- --------- -----------
............................................................................................................
Total from investment operations 1.35 0.93 3.78 1.43 3.95
--------- --------- --------- --------- -----------
............................................................................................................
Less distributions
............................................................................................................
From net realized gain on
investments and foreign currency
related transactions (1.25) 0 0 (0.16) 0
--------- --------- --------- --------- -----------
............................................................................................................
Total distributions (1.25) 0 0 (0.16) 0
--------- --------- --------- --------- -----------
............................................................................................................
Net asset value end of period $ 24.07 $ 23.97 $ 23.04 $ 19.26 $ 17.99
--------- --------- --------- --------- -----------
............................................................................................................
Total Return + 6.08% 4.04% 19.63% 8.02% 28.13%
............................................................................................................
Ratios/supplemental data
Ratios to average net assets:
Total expenses 2.45% 2.40% 2.58% 2.85% 3.04%++
............................................................................................................
Total expenses, excluding
indirectly paid expenses 2.43% 2.38% 2.56% N/A N/A
............................................................................................................
Net investment loss (1.48%) (1.38%) (1.59%) (1.62%) (1.55%)++
............................................................................................................
Portfolio turnover rate 72% 67% 35% 32% 64%
............................................................................................................
Average commissions rate paid
per share $ 0.0066 $ 0.0079 N/A N/A N/A
............................................................................................................
Net assets end of period
(thousands) $ 49,524 $ 124,549 $ 86,339 $ 50,535 $ 6,217
............................................................................................................
</TABLE>
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
# Net investment income is based on average shares outstanding during the
period.
* For the period from February 1, 1993 (commencement of class operations) to
September 30, 1993.
** The Fund changed its fiscal year end from September 30 to October 31,
effective October 31, 1997.
See Combined Notes to Financial Statements.
24
<PAGE>
EVERGREEN
Global Opportunities Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months Ended
April 30, 1998
(Unaudited)#
<S> <C>
CLASS Y SHARES
Net asset value beginning of period $ 23.90
----------
.............................................................................................
Income (loss) from investment operations
.............................................................................................
Net investment loss (0.04)
.............................................................................................
Net realized and unrealized gain (loss) on investments and foreign currency
related transactions 3.38
----------
.............................................................................................
Total from investment operations 3.34
----------
.............................................................................................
Less distributions
.............................................................................................
From net realized gain on investments (1.53)
----------
.............................................................................................
Total distributions (1.53)
----------
.............................................................................................
Net asset value end of period $ 25.71
----------
.............................................................................................
Total return 14.91%
.............................................................................................
Ratios/supplemental data
Ratios to average net assets:
Total expenses 1.58%+
.............................................................................................
Total expenses, excluding indirectly paid expenses 1.57%+
.............................................................................................
Net investment loss (0.60%)+
.............................................................................................
Portfolio turnover rate 62%
.............................................................................................
Average commissions rate paid per share $ 0.0116
.............................................................................................
Net assets end of period (thousands) $ 22
.............................................................................................
<CAPTION>
January 13, 1997
One-Month (commencement
Period Ended of class operations) to
October 31, 1997** September 30, 1997
<S> <C> <C>
CLASS Y SHARES
Net asset value beginning of period $ 25.24 $ 23.05
---------- ----------
........................................................................................................................
Income (loss) from investment operations
........................................................................................................................
Net investment loss 0 (0.28)
........................................................................................................................
Net realized and unrealized gain (loss) on investments and foreign currency
related transactions (1.34) 2.47
----------- -----------
........................................................................................................................
Total from investment operations (1.34) 2.19
----------- -----------
........................................................................................................................
Less distributions
........................................................................................................................
From net realized gain on investments 0 0
----------- -----------
........................................................................................................................
Total distributions 0 0
----------- -----------
........................................................................................................................
Net asset value end of period $ 23.90 $ 25.24
----------- -----------
........................................................................................................................
Total return (5.31%) 9.50%
........................................................................................................................
Ratios/supplemental data
Ratios to average net assets:
Total expenses 1.62%+ 1.42%+
........................................................................................................................
Total expenses, excluding indirectly paid expenses 1.62%+ 1.42%+
........................................................................................................................
Net investment loss (1.62%)+ (1.22%)+
........................................................................................................................
Portfolio turnover rate 7% 72%
........................................................................................................................
Average commissions rate paid per share $ 0.0019 $ 0.0066
........................................................................................................................
Net assets end of period (thousands) $ 0 $ 0
........................................................................................................................
</TABLE>
+ Annualized.
# Net investment income is based on average shares outstanding during the
period.
* The Fund changed its fiscal year end from September 30 to October 31,
effective October 31, 1997.
See Combined Notes to Financial Statements.
25
<PAGE>
EVERGREEN
International Growth Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Period Ended
April 30, 1998*#
(Unaudited)
<S> <C>
CLASS A SHARES
Net asset value beginning of period $ 6.88
---------
..........................................................................................................
Income from investment operations
..........................................................................................................
Net investment income 0.01
..........................................................................................................
Net realized and unrealized gain on investments and foreign currency related transactions 1.44
---------
..........................................................................................................
Total from investment operations 1.45
---------
..........................................................................................................
Net asset value end of period $ 8.33
---------
..........................................................................................................
Total return + 21.08%
..........................................................................................................
Ratios/supplemental data
Ratios to average net assets
Total expenses 1.72%++
..........................................................................................................
Total expenses, excluding indirectly paid expenses 1.71%++
..........................................................................................................
Net investment income 0.56%++
..........................................................................................................
Portfolio turnover rate 49%
..........................................................................................................
Average commission rate paid $ 0.0013
..........................................................................................................
Net assets end of period (thousands) $ 105,134
..........................................................................................................
</TABLE>
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
# Net investment income is based on average shares outstanding during the
period.
* For the period from January 20, 1998 (commencement of class operations) to
April 30, 1998.
See Combined Notes to Financial Statements
26
<PAGE>
EVERGREEN
International Growth Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months Ended
April 30, 1998# Year Ended October 31,
(Unaudited) 1997 1996 1995 1994*#
<S> <C> <C> <C> <C> <C>
CLASS B SHARES
Net asset value beginning of period $ 8.65 $ 7.69 $ 7.11 $ 7.77 $ 7.67
---------- -------- -------- ------- ----------
......................................................................................................................
Income (loss) from investment
operations
......................................................................................................................
Net investment income (loss) (0.02) (0.05) (0.02) 0.07 0
......................................................................................................................
Net realized and unrealized gain on
investments and foreign currency related
transactions 1.55 1.27 0.75 0.05 0.10
---------- -------- -------- ------- ----------
......................................................................................................................
Total from investment operations 1.53 1.22 0.73 0.12 0.10
---------- -------- -------- ------- ----------
......................................................................................................................
Less distributions
......................................................................................................................
From net investment income (0.33) 0 (0.09) (0.04) 0
......................................................................................................................
In excess of net investment income 0 (0.10) (0.01) 0 0
......................................................................................................................
From net realized gain on investments and
foreign currency related transations (1.54) (0.16) (0.05) (0.74) 0
---------- -------- -------- -------- ----------
......................................................................................................................
Total distributions (1.87) (0.26) (0.15) (0.78) 0
---------- -------- -------- -------- ----------
......................................................................................................................
Net asset value end of period $ 8.31 $ 8.65 $ 7.69 $ 7.11 $ 7.77
---------- -------- -------- -------- ----------
......................................................................................................................
Total return + 22.3% 15.69% 10.47% 2.19% 1.30%
......................................................................................................................
Ratios/supplemental data
Ratios to average net assets
Total expenses 2.38%++ 2.39% 2.43% 2.57% 2.52%++
......................................................................................................................
Total expenses, excluding indirectly paid
expenses 2.37%++ 2.38% 2.42% 2.56% N/A
......................................................................................................................
Net investment income (loss) (0.56%)++ (0.49%) (0.21%) 0.88% (0.20%)++
......................................................................................................................
Portfolio turnover rate 49% 101% 52% 76% 2%
......................................................................................................................
Average commission rate paid $ 0.0013 $ 0.0010 $ 0.0011 N/A N/A
......................................................................................................................
Net assets end of period (thousands) $ 52,819 $ 151,806 $ 147,911 $128,674 $ 157,929
......................................................................................................................
<CAPTION>
Year Ended
September 30,
1994#
<S> <C>
CLASS B SHARES
Net asset value beginning of period $ 7.08
-------
........................................................
Income (loss) from investment
operations
........................................................
Net investment income (loss) 0
........................................................
Net realized and unrealized gain on
investments and foreign currency related
transactions 0.62
--------
........................................................
Total from investment operations 0.62
--------
........................................................
Less distributions
........................................................
From net investment income (0.02)
........................................................
In excess of net investment income (0.01)
........................................................
From net realized gain on investments and
foreign currency related transations 0
--------
........................................................
Total distributions (0.03)
--------
........................................................
Net asset value end of period $ 7.67
--------
........................................................
Total return + 8.75%
........................................................
Ratios/supplemental data
Ratios to average net assets
Total expenses 2.54%
........................................................
Total expenses, excluding indirectly paid
expenses N/A
........................................................
Net investment income (loss) 0.01%
........................................................
Portfolio turnover rate 121%
........................................................
Average commission rate paid N/A
........................................................
Net assets end of period (thousands) $154,529
........................................................
</TABLE>
<TABLE>
<CAPTION>
Year Ended September 30,
1993# 1992# 1991 1990 1989
<S> <C> <C> <C> <C> <C>
CLASS B SHARES
Net asset value beginning of period $ 6.01 $ 5.91 $ 5.35 $ 7.51 $ 6.66
-------- -------- -------- -------- --------
.................................................................................................................
Income (loss) from investment operations
.................................................................................................................
Net investment income (loss) (0.03) (0.01) (0.01) (0.07) (0.14)
.................................................................................................................
Net realized and unrealized gain (loss) on
investments and foreign currency related
transactions 1.14 0.34 0.83 (1.74) 1.06
-------- -------- -------- -------- --------
.................................................................................................................
Total from investment operations 1.11 0.33 0.82 (1.81) 0.92
-------- -------- -------- -------- --------
.................................................................................................................
Less distributions
.................................................................................................................
From net investment income 0 0 0 0 (0.07)
.................................................................................................................
In excess of net investment income (0.04) (0.23) (0.03) 0 0
.................................................................................................................
From net realized gain on investments and foreign
currency related transactions 0 0 (0.23) (0.35) 0
-------- -------- -------- -------- --------
.................................................................................................................
Total distributions (0.04) (0.23) (0.26) (0.35) (0.07)
-------- -------- -------- -------- --------
.................................................................................................................
Net asset value end of period $ 7.08 $ 6.01 $ 5.91 $ 5.35 $ 7.51
-------- -------- -------- -------- --------
.................................................................................................................
Total return + 18.59% 5.78% 15.59% (25.12%) 13.55%
.................................................................................................................
Ratios/supplemental data+
Ratios to average net assets
Total expenses + 2.94% 3.41% 3.14% 2.92% 2.65%
.................................................................................................................
Net investment income (loss) (0.46%) (0.09%) (0.07%) (0.51%) (0.79%)
.................................................................................................................
Portfolio turnover rate 68% 74% 85% 42% 42%
.................................................................................................................
Net assets end of period (thousands) $111,752 $ 64,135 $ 72,923 $ 73,768 $121,047
.................................................................................................................
</TABLE>
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
# Net investment income is based on average shares outstanding during the
period.
* The Fund changed its fiscal year end from September 30 to October 31,
effective October 31, 1994.
See Combined Notes to Financial Statements.
27
<PAGE>
EVERGREEN
International Growth Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months Ended
April 30, 1998*#
(Unaudited)
<S> <C>
CLASS C SHARES
Net asset value beginning of period $ 7.64
----------
..........................................................................................................
Income from investment operations
..........................................................................................................
Net investment income 0.01
..........................................................................................................
Net realized and unrealized gain on investments and foreign currency related transactions 0.66
----------
..........................................................................................................
Total from investment operations 0.67
----------
..........................................................................................................
Net asset value end of period $ 8.31
----------
..........................................................................................................
Total return + 8.77%
..........................................................................................................
Ratios/supplemental data
Ratios to average net assets
Total expenses 2.54%++
..........................................................................................................
Total expenses, excluding indirectly paid expenses 2.53%++
..........................................................................................................
Net investment income 1.29%++
..........................................................................................................
Portfolio turnover rate 49%
..........................................................................................................
Average commission rate paid $ 0.0013
..........................................................................................................
Net assets end of period (thousands) $ 234
..........................................................................................................
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended
April 30, 1998**#
(Unaudited)
<S> <C>
CLASS Y SHARES
Net asset value beginning of period $ 7.72
----------
...........................................................................................................
Income from investment operations
...........................................................................................................
Net investment income 0.02
...........................................................................................................
Net realized and unrealized gain on investments and foreign currency related transactions 0.59
----------
...........................................................................................................
Total from investment operations 0.61
----------
...........................................................................................................
Net asset value end of period $ 8.33
----------
...........................................................................................................
Total return 7.90%
...........................................................................................................
Ratios/Supplemental data
Ratios to average net assets
Total expenses 1.52%++
...........................................................................................................
Total expenses, excluding indirectly paid expenses 1.51%++
...........................................................................................................
Net investment income 2.86%++
...........................................................................................................
Portfolio turnover rate 49%
...........................................................................................................
Average commission rate paid $ 0.0013
...........................................................................................................
Net assets end of period (thousands) $ 25,265
...........................................................................................................
</TABLE>
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
# Net investment income is based on average shares outstanding during the
period.
* For the period from March 6, 1998 (commencement of class operations) to
April 30, 1998.
** For the period from March 9, 1998 (commencement of class operations) to
April 30, 1998.
See Combined Notes to Financial Statements.
28
<PAGE>
EVERGREEN
Latin America Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months Ended
April 30, 1998#
Year Ended October 31,
------------------------------------------------------
<S> <C> <C> <C> <C> <C>
(Unaudited) 1997 1996 1995 1994
CLASS A SHARES
Net asset value beginning of period $ 13.15 $ 11.13 $ 9.86 $ 10.55 $ 10.00
------------ ----------- ---------- -------- ---------
..............................................................................................................................
Income (loss) from investment operations
..............................................................................................................................
Net investment income 0.09 0.01 0.39 0.44 0.21
..............................................................................................................................
Net realized and unrealized gain (loss) on investments
and foreign currency related transactions 1.43 2.11 1.24 (0.81) 0.50
------------ ----------- ---------- -------- ---------
..............................................................................................................................
Total from investment income 1.52 2.12 1.63 (0.37) 0.71
------------ ----------- ---------- -------- ---------
..............................................................................................................................
Less distributions
..............................................................................................................................
From net investment income 0 (0.10) (0.31) (0.30) (0.10)
..............................................................................................................................
In excess of net investment income 0 0 (0.05) 0 (0.01)
..............................................................................................................................
From net realized gain on investments
and foreign currency related transactions (2.86) 0 0 (0.02) (0.05)
------------ ----------- ---------- -------- ---------
..............................................................................................................................
Total distributions (2.86) (0.10) (0.36) (0.32) (0.16)
------------ ----------- ---------- -------- ---------
..............................................................................................................................
Net asset value end of period $ 11.81 $ 13.15 $ 11.13 $ 9.86 $ 10.55
------------ ----------- ---------- -------- ---------
..............................................................................................................................
Total Return + 13.76% 19.18% 16.74% (3.35%) 7.21%
..............................................................................................................................
Ratios & supplemental data
Ratios to average net assets:
Total expenses 1.82%++ 1.69% 1.83% 1.86% 1.79%
..............................................................................................................................
Total expenses, excluding indirectly paid expenses 1.81%++ 1.68% 1.81% 1.84% N/A
..............................................................................................................................
Net investment income 1.68%++ 0.20% 3.05% 4.02% 2.45%
..............................................................................................................................
Portfolio turnover rate 69% 105% 112% 57% 104%
..............................................................................................................................
Average commission rate per share $ 0.0003 $ 0.0002 $ 0.0005 N/A N/A
..............................................................................................................................
Net assets end of period (thousands) $ 13,070 $ 13,621 $ 11,021 $ 14,333 $ 23,880
..............................................................................................................................
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended
April 30, 1998#
Year Ended October 31,
------------------------------------------------------
<S> <C> <C> <C> <C> <C>
(Unaudited) 1997 1996 1995 1994
CLASS B SHARES
Net asset value beginning of period $ 12.91 $ 10.98 $ 9.76 $ 10.49 $ 10.00
------------ --------- ---------- -------- --------
..............................................................................................................................
Income (loss) from investment operations
..............................................................................................................................
Net investment income (loss) 0.05 (0.07) 0.23 0.32 0.14
..............................................................................................................................
Net realized and unrealized gain (loss) on investments
and foreign currency related transactions 1.39 2.08 1.30 (0.75) 0.50
------------ --------- ---------- -------- --------
..............................................................................................................................
Total from investment income 1.44 2.01 1.53 (0.43) 0.64
------------ --------- ---------- -------- --------
..............................................................................................................................
Less distributions
From net investment income 0 (0.02) (0.27) (0.28) (0.09)
..............................................................................................................................
In excess of net investment income 0 (0.06) (0.04) 0 (0.01)
..............................................................................................................................
From realized gain on investments
and foreign currency related transactions (2.86) 0 0 (0.02) (0.05)
------------ --------- ---------- -------- --------
..............................................................................................................................
Total distributions (2.86) (0.08) (0.31) (0.30) (0.15)
------------ --------- ---------- -------- --------
..............................................................................................................................
Net asset value end of period $ 11.49 $ 12.91 $ 10.98 $ 9.76 $ 10.49
------------ --------- ---------- -------- --------
..............................................................................................................................
Total Return + 13.33% 18.40% 15.82% (4.00%) 6.48%
..............................................................................................................................
Ratios & supplemental data
Ratios to average net assets:
Total expenses 2.57%++ 2.50% 2.59% 2.61% 2.54%
..............................................................................................................................
Total expenses, excluding indirectly paid expenses 2.56%++ 2.49% 2.58% 2.59% N/A
..............................................................................................................................
Net investment income (loss) 0.95%++ (0.51%) 2.30% 3.27% 1.70%
..............................................................................................................................
Portfolio turnover rate 69% 105% 112% 57% 104%
..............................................................................................................................
Average commission rate per share $ 0.0003 $ 0.0002 $ 0.0005 N/A N/A
..............................................................................................................................
Net assets end of period (thousands) $ 69,359 $ 75,271 $ 79,026 $ 97,165 $148,769
..............................................................................................................................
</TABLE>
+ Initial sales charge or contingent sales charge is not reflected.
++ Annualized.
# Net investment income is based on average shares outstanding during the
period.
See Combined Notes to Financial Statements.
29
<PAGE>
EVERGREEN
Latin America Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months Ended
April 30, 1998#
Year Ended October 31,
---------------------------------------------------------
<S> <C> <C> <C> <C> <C>
(Unaudited) 1997 1996 1995 1994
CLASS C SHARES
Net asset value beginning of period $ 12.92 $ 10.99 $ 9.77 $ 10.50 $ 10.00
------------ --------- ---------- --------- ---------
Income (loss) from investment operations
Net investment income (loss) 0.05 (0.07) 0.23 0.32 0.14
Net realized and unrealized gain (loss) on investments
and foreign currency related transactions 1.38 2.08 1.30 (0.75) 0.51
------------ --------- ---------- --------- ---------
Total from investment operations 1.43 2.01 1.53 (0.43) 0.65
------------ --------- ---------- --------- ---------
Less distributions
Net investment income 0 0 (0.27) (0.28) (0.09)
In excess of net investment income 0 (0.08) (0.04) 0 (0.01)
From net realized gain on investments
and foreign currency related transactions (2.86) 0 0 (0.02) (0.05)
------------ --------- ---------- --------- ---------
Total distributions (2.86) (0.08) (0.31) (0.30) (0.15)
------------ --------- ---------- --------- ---------
Net asset value end of period $ 11.49 $ 12.92 $ 10.99 $ 9.77 $ 10.50
------------ --------- ---------- --------- ---------
Total Return + 13.24% 18.38% 15.80% (4.00%) 6.58%
Ratios & supplemental data
Ratios to average net assets:
Total expenses 2.57%++ 2.47% 2.59% 2.61% 2.54%
Total expenses, excluding indirectly paid expenses 2.56%++ 2.46% 2.58% 2.59% N/A
Net investment income (loss) 0.85%++ (0.52%) 2.26% 3.27% 1.74%
Portfolio turnover rate 69% 105% 112% 57% 104%
Average commission rate per share $ 0.0003 $ 0.0002 $ 0.0005 N/A N/A
Net assets end of period (thousands) $ 9,207 $ 10,961 $ 8,791 $ 11,242 $ 17,740
</TABLE>
<TABLE>
<CAPTION>
Period Ended
April 30, 1998#*
(Unaudited)
<S> <C>
CLASS Y SHARES
Net asset value beginning of period $ 11.46
----------
.......................................................................
Income (loss) from investment operations
.......................................................................
Net investment income (loss) 0.11
.......................................................................
Net realized and unrealized gain (loss) on investments
and foreign currency related transactions 0.25
----------
.......................................................................
Total from investment operations 0.36
----------
.......................................................................
Net asset value end of period $ 11.82
----------
.......................................................................
Total Return 3.14%
.......................................................................
Ratios & supplemental data
Ratios to average net assets:
Total expenses 1.28%++
.......................................................................
Total expenses, excluding indirectly paid expenses 1.28%++
.......................................................................
Net investment income (loss) 7.78%++
.......................................................................
Portfolio turnover rate 69%
.......................................................................
Average commission rate per share $ 0.0003
.......................................................................
Net assets end of period (thousands) $ 1
.......................................................................
</TABLE>
+ Initial sales charge or contingent sales charge is not reflected.
++ Annualized.
* For the period from March 30, 1998 (commencement of class operations) to
April 30, 1998.
# Net investment income is based on average shares outstanding during the
period.
See Combined Notes to Financial Statements.
30
<PAGE>
EVERGREEN
Natural Resources Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months Ended Seven-Month
April 30, 1998# Period Ended
(Unaudited) October 31, 1997**
<S> <C> <C>
CLASS A SHARES
Net asset value beginning of period $ 12.58 $ 12.11
----------- ---------
................................................................................
Income (loss) from investment operations
................................................................................
Net investment income (loss) (0.02) 0.03
................................................................................
Net realized and unrealized gain (loss) on
investments and foreign currency related
transactions (0.38) 0.44
----------- ---------
................................................................................
Total from investment operations (0.40) 0.47
----------- ---------
................................................................................
Less distributions
................................................................................
From net investment income (0.13)## 0
................................................................................
From net realized gain on investments and
foreign currency related transactions (1.25) 0
----------- ----------
................................................................................
Total distributions (1.38) 0
----------- ----------
................................................................................
Net asset value end of period $ 10.80 $ 12.58
----------- ----------
................................................................................
Total return+ (3.08%) 3.88%
................................................................................
Ratios/supplemental data
Ratios to average net assets:
Total expenses 2.94%++ 2.01%++
................................................................................
Total expenses, excluding indirectly paid
expenses 2.93%++ 2.01%++
................................................................................
Net investment income (loss) (0.38%)++ 0.02%++
................................................................................
Portfolio turnover rate 18% 13%
................................................................................
Average commission rate paid $ 0.0255 $ 0.0057
................................................................................
Net assets end of period (thousands) $ 3,880 $ 3,890
................................................................................
<CAPTION>
Year Ended March 31,
1997 1996 1995*
<S> <C> <C> <C>
CLASS A SHARES
Net asset value beginning of period $ 10.74 $ 9.02 $ 10.00
---------- --------- -----------
...........................................................................................
Income (loss) from investment operations
...........................................................................................
Net investment income (loss) (0.04) (0.04) 0(a)
...........................................................................................
Net realized and unrealized gain (loss) on
investments and foreign currency related
transactions 1.41 1.76 (0.98)
---------- --------- -----------
...........................................................................................
Total from investment operations 1.37 1.72 (0.98)
---------- --------- -----------
...........................................................................................
Less distributions
...........................................................................................
From net investment income 0 0 0
...........................................................................................
From net realized gain on investments and
foreign currency related transactions 0 0 0
---------- --------- -----------
...........................................................................................
Total distributions 0 0 0
---------- --------- -----------
...........................................................................................
Net asset value end of period $ 12.11 $ 10.74 $ 9.02
---------- --------- -----------
...........................................................................................
Total return+ 12.76% 19.07% (9.80%)
..........................................................................................
Ratios/supplemental data
Ratios to average net assets:
Total expenses 2.40% 2.38% 2.77%++
..........................................................................................
Total expenses, excluding indirectly paid
expenses 2.39% 2.37% N/A
..........................................................................................
Net investment income (loss) (0.45%) (0.41%) (0.07%)++
...........................................................................................
Portfolio turnover rate 39% 40% 13%
.........................................................................................
Average commission rate paid $ 0.0023 $ 0.0025 N/A
...........................................................................................
Net assets end of period (thousands) $ 4,462 $ 4,574 $ 4,890
...........................................................................................
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended Seven-Month
April 30, 1998# Period Ended
(Unaudited) October 31, 1997**
<S> <C> <C>
CLASS B SHARES
Net asset value beginning of period $ 12.31 $ 11.89
----------- -----------
................................................................................
Income (loss) from investment operations
................................................................................
Net investment loss (0.08) (0.07)
................................................................................
Net realized and unrealized gain (loss) on
investments and foreign currency related
transactions (0.36) 0.49
----------- -----------
................................................................................
Total from investment operations (0.44) 0.42
----------- -----------
................................................................................
Less distributions
................................................................................
From net investment income (0.02)## 0
................................................................................
In excess of net investment income (0.11) 0
................................................................................
From net realized gain on investments and
foreign currency related transactions (1.25) 0
----------- -----------
................................................................................
Total distributions (1.38) 0
----------- -----------
................................................................................
Net asset value end of period $ 10.49 $ 12.31
----------- -----------
................................................................................
Total return+ (3.52%) 3.53%
...............................................................................
Ratios/supplemental data
Ratios to average net assets:
Total expenses 3.80%++ 2.79%++
...............................................................................
Total expenses, excluding indirectly paid
expenses 3.79%++ 2.78%++
...............................................................................
Net investment loss (1.58%)++ (0.77%)++
................................................................................
Portfolio turnover rate 18% 13%
................................................................................
Average commission rate paid $ 0.0255 $ 0.0057
................................................................................
Net assets end of period (thousands) $ 9,845 $ 15,333
................................................................................
<CAPTION>
Year Ended March 31,
1997 1996 1995*
<S> <C> <C> <C>
CLASS B SHARES
Net asset value beginning of period $ 10.62 $ 8.99 $ 10.00
---------- --------- -----------
...........................................................................................
Income (loss) from investment operations
...........................................................................................
Net investment loss (0.14) (0.13) (0.03)
...........................................................................................
Net realized and unrealized gain (loss) on
investments and foreign currency related
transactions 1.41 1.76 (0.98)
---------- --------- -----------
...........................................................................................
Total from investment operations 1.27 1.63 (1.01)
---------- --------- -----------
...........................................................................................
Less distributions
...........................................................................................
From net investment income 0 0 0
...........................................................................................
In excess of net investment income 0 0 0
...........................................................................................
From net realized gain on investments and
foreign currency related transactions 0 0 0
---------- --------- -----------
...........................................................................................
Total distributions 0 0 0
---------- --------- -----------
...........................................................................................
Net asset value end of period $ 11.89 $ 10.62 $ 8.99
---------- --------- -----------
...........................................................................................
Total return+ 11.96% 18.13% (10.10%)
...........................................................................................
Ratios/supplemental data
Ratios to average net assets:
Total expenses 3.16% 3.13% 3.55%++
...........................................................................................
Total expenses, excluding indirectly paid
expenses 3.15% 3.12% N/A
...........................................................................................
Net investment loss (1.22%) (1.16%) (0.80%)++
...........................................................................................
Portfolio turnover rate 39% 40% 13%
...........................................................................................
Average commission rate paid $ 0.0023 $ 0.0025 N/A
...........................................................................................
Net assets end of period (thousands) $ 17,208 $ 15,161 $ 4,688
...........................................................................................
</TABLE>
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
# Net investment income is based on average shares outstanding during the
period.
## A portion of the distributions from net investment income were paid from
realized foreign currency gains earned. Such gains are reported for
financial statement purposes as realized gain on investments and foreign
currency related transactions and are distributed as ordinary income for tax
purposes.
* For the period from October 7, 1994 (commencement of class operations) to
March 31, 1995.
** The Fund changed its fiscal year end from March 31, to October 31,
effective October 31, 1997.
(a)Less than one cent per share.
See Combined Notes to Financial Statements.
31
<PAGE>
EVERGREEN
Natural Resources Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months Ended Seven-Month
April 30, 1998# Period Ended
(Unaudited) October 31, 1997**
<S> <C> <C>
CLASS C SHARES
Net asset value beginning of period $ 12.31 $ 11.89
----------- -----------
................................................................................
Income (loss) from investment operations
................................................................................
Net investment loss (0.08) (0.13)
................................................................................
Net realized and unrealized gain (loss) on
investments and foreign currency related
transactions (0.37) 0.55
----------- -----------
................................................................................
Total from investment operations (0.45) 0.42
----------- -----------
................................................................................
Less distributions
................................................................................
From net investment income (0.01)## 0
................................................................................
In excess of net investment income (0.12) 0
................................................................................
From net realized gain on investments and
foreign currency related transactions (1.25) 0
----------- -----------
................................................................................
Total distributions (1.38) 0
----------- -----------
................................................................................
Net asset value end of period $ 10.48 $ 12.31
----------- -----------
................................................................................
Total return + (3.60%) 3.53%
................................................................................
Ratios/supplemental data
Ratios to average net assets:
Total expenses 3.83%++ 2.79%++
.............................................................................
Total expenses, excluding indirectly paid
expenses 3.82%++ 2.79%++
.............................................................................
Net investment loss (1.65%)++ (0.80%)++
................................................................................
Portfolio turnover rate 18% 13%
................................................................................
Average commission rate paid $ 0.0255 $ 0.0057
................................................................................
Net assets, end of period (thousands) $ 1,331 $ 2,716
................................................................................
<CAPTION>
Year Ended March 31,
1997 1996 1995*
<S> <C> <C> <C>
CLASS C SHARES
Net asset value beginning of period $ 10.62 $ 8.99 $ 10.00
---------- --------- -----------
...........................................................................................
Income (loss) from investment operations
...........................................................................................
Net investment loss (0.10) (0.10) (0.03)
...........................................................................................
Net realized and unrealized gain (loss) on
investments and foreign currency related
transactions 1.37 1.73 (0.98)
---------- --------- -----------
...........................................................................................
Total from investment operations 1.27 1.63 (1.01)
---------- --------- -----------
...........................................................................................
Less distributions
...........................................................................................
From net investment income 0 0 0
...........................................................................................
In excess of net investment income 0 0 0
...........................................................................................
From net realized gain on investments and
foreign currency related transactions 0 0 0
---------- --------- -----------
...........................................................................................
Total distributions 0 0 0
---------- --------- -----------
...........................................................................................
Net asset value end of period $ 11.89 $ 10.62 $ 8.99
---------- --------- -----------
...........................................................................................
Total return + 11.96% 18.13% (10.10%)
..........................................................................................
Ratios/supplemental data
Ratios to average net assets:
Total expenses 3.13% 3.13% 3.51%++
..........................................................................................
Total expenses, excluding indirectly paid
expenses 3.12% 3.12% N/A
..........................................................................................
Net investment loss (1.27%) (1.16%) (0.93%)++
...........................................................................................
Portfolio turnover rate 39% 40% 13%
...........................................................................................
Average commission rate paid $ 0.0023 $ 0.0025 N/A
...........................................................................................
Net assets, end of period (thousands) $ 4,567 $ 2,023 $ 1,393
...........................................................................................
</TABLE>
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
# Net investment income is based on average shares outstanding during the
period.
## A portion of the distributions from net investment income were paid from
realized foreign currency gains earned. Such gains are reported for financial
statement purposes as realized gain on investments and foreign currency
related transactions and are distributed as ordinary income for tax purposes.
* For the period from October 7, 1994 (commencement of class operations) to
March 31, 1995.
** The Fund changed its fiscal year end from March 31 to October 31, effective
October 31, 1997.
See Combined Notes to Financial Statements.
32
<PAGE>
EVERGREEN
Precious Metals Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Period Ended
April 30, 1998#*
(Unaudited)
<S> <C>
CLASS A SHARES
Net asset value beginning of period $ 12.38
----------
..........................................................................................................
Income from investment operations
..........................................................................................................
Net investment income 0.04
..........................................................................................................
Net realized and unrealized gain on investments and foreign currency related transactions 3.21
----------
..........................................................................................................
Total from investment operations 3.25
----------
..........................................................................................................
Net asset value end of period $ 15.63
----------
..........................................................................................................
Total return + 25.54%
..........................................................................................................
Ratios/supplemental data
Ratios to average net assets:
Total expenses 1.90%++
..........................................................................................................
Total expenses, excluding indirectly paid expenses 1.90%++
..........................................................................................................
Net investment income 0.93%++
..........................................................................................................
Portfolio turnover rate 13%
..........................................................................................................
Average commission rate paid $ 0.0147
..........................................................................................................
Net assets end of period (thousands) $ 118,143
..........................................................................................................
</TABLE>
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
# Net investment income is based on average shares outstanding during the
period.
* For the period from January 20, 1998 (commencement of class operations) to
April 30, 1998.
See Combined Notes to Financial Statements.
33
<PAGE>
EVERGREEN
Precious Metals Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months Ended Eighth-Month Ended
April 30, 1998# Period Ended
(Unaudited) October 31, 1997#*
<S> <C> <C>
CLASS B SHARES
Net asset value beginning of period $ 15.87 $ 23.94
----------- ----------
.................................................................................
Income (loss) from investment operations
.................................................................................
Net investment loss (0.10) (0.14)
.................................................................................
Net realized and unrealized gain (loss) on
investments and foreign currency related
transactions 0.64 (7.93)
----------- -----------
.................................................................................
Total from investment operations 0.54 (8.07)
----------- -----------
.................................................................................
Less distributions
.................................................................................
From net investment income 0 0
.................................................................................
From realized gain on investments and
foreign currency related transactions (0.81) 0
----------- -----------
.................................................................................
Total distributions (0.81) 0
----------- -----------
.................................................................................
Net asset value end of period $ 15.60 $ 15.87
----------- -----------
.................................................................................
Total return + 4.27% (33.71%)
.................................................................................
Ratios/supplemental data
Ratios to average net assets:
Total expenses 2.67%++ 2.48%++
.................................................................................
Total expenses, excluding indirectly paid
expenses 2.67%++ 2.48%++
.................................................................................
Net investment loss (1.53%)++ (1.04%)++
.................................................................................
Portfolio turnover rate 13% 19%
.................................................................................
Average commission rate paid $ 0.0147 $ 0.0267
.................................................................................
Net assets end of period (thousands) $ 35,473 $ 111,173
.................................................................................
<CAPTION>
Year Ended
------------------------------------------------------
Feb. 28, Feb. 29, Feb. 28, Feb. 28,
1997 1996 1995 1994
<S> <C> <C> <C> <C>
CLASS B SHARES
Net asset value beginning of period $ 26.35 $ 19.30 $ 25.09 $ 14.38
--------- ---------- -------- --------
................................................................................................
Income (loss) from investment operations
................................................................................................
Net investment loss (0.26) (0.25) (0.13) (0.17)
................................................................................................
Net realized and unrealized gain (loss) on
investments and foreign currency related
transactions (1.16) 7.30 (5.54) 10.88
--------- ---------- -------- --------
................................................................................................
Total from investment operations (1.42) 7.05 (5.67) 10.71
--------- ---------- -------- --------
................................................................................................
Less distributions
................................................................................................
From net investment income 0 0 (0.12) 0
................................................................................................
From realized gain on investments and
foreign currency related transactions (0.99) 0 0 0
--------- ---------- -------- --------
................................................................................................
Total distributions (0.99) 0 (0.12) 0
--------- ---------- -------- --------
................................................................................................
Net asset value end of period $ 23.94 $ 26.35 $ 19.30 $ 25.09
--------- ---------- -------- --------
................................................................................................
Total return + (5.16%) 36.53% (22.70%) 74.48%
................................................................................................
Ratios/supplemental data
Ratios to average net assets:
Total expenses 2.33% 2.28% 2.33% 2.34%
................................................................................................
Total expenses, excluding indirectly paid
expenses 2.31% 2.26% N/A N/A
................................................................................................
Net investment loss (1.08%) (1.08%) (0.54%) (0.75%)
................................................................................................
Portfolio turnover rate 41% 39% 75% 73%
................................................................................................
Average commission rate paid $ 0.0164 N/A N/A N/A
................................................................................................
Net assets end of period (thousands) $ 190,108 $ 217,270 $171,193 $200,489
................................................................................................
</TABLE>
<TABLE>
<CAPTION>
Year Ended
-------------------------------------------------------------------------
Feb. 28, Feb. 29, Feb. 28, Feb. 28, Feb. 28,
1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
CLASS B SHARES
Net asset value beginning of period $ 15.37 $ 14.22 $ 19.15 $ 16.82 $ 15.50
-------- --------- --------- --------- --------
...............................................................................................................................
Income (loss) from investment operations
...............................................................................................................................
Net investment income (loss) (0.12) (0.02) 0 0.06 0.05
...............................................................................................................................
Net realized and unrealized gain (loss) on investments
and foreign currency related transactions (0.76) 1.30 (4.61) 2.27 1.59
-------- --------- --------- --------- --------
...............................................................................................................................
Total from investment operations (0.88) 1.28 (4.61) 2.33 1.64
-------- --------- --------- --------- --------
...............................................................................................................................
Less distributions
...............................................................................................................................
From net investment income 0 0 (0.06) 0 (0.12)
...............................................................................................................................
In excess of net investment income (0.11) ( 0.13) (0.26) 0 0
...............................................................................................................................
From realized gain on investments and
foreign currency related transactions 0 0 0 0 (0.20)
-------- --------- --------- ---------- --------
...............................................................................................................................
Total distributions (0.11) (0.13) (0.32) 0 (0.32)
-------- --------- --------- ---------- --------
...............................................................................................................................
Net asset value end of period $ 14.38 $ 15.37 $ 14.22 $ 19.15 $ 16.82
-------- --------- --------- ---------- --------
...............................................................................................................................
Total return + (5.74%) 9.07% (24.37%) 13.85% 10.64%
...............................................................................................................................
Ratios/supplemental data
Ratios to average net assets:
Total expenses 2.83% 2.70% 2.76% 2.20% 1.68%
...............................................................................................................................
Net investment income (loss) (0.86%) (0.14%) (0.02%) 0.32% 0.28%
...............................................................................................................................
Portfolio turnover rate 58% 53% 68% 95% 82%
...............................................................................................................................
Net assets end of period (thousands) $114,364 $ 131,356 $ 150,200 $ 195,837 $222,079
...............................................................................................................................
</TABLE>
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
# Net investment income is based on average shares outstanding during the
period.
* The Fund changed its fiscal year end from February 28, to October 31,
effective October 31, 1997.
See Combined Notes to Financial Statements.
34
<PAGE>
EVERGREEN
Precious Metals Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Period Ended
April 30, 1998#*
(Unaudited)
<S> <C>
CLASS C SHARES
Net asset value beginning of period $ 13.82
-----------
..........................................................................................................
Income (loss) from investment operations
..........................................................................................................
Net investment loss (0.04)
..........................................................................................................
Net realized and unrealized gain on investments and foreign currency related transactions 1.82
-----------
..........................................................................................................
Total from investment operations 1.78
-----------
..........................................................................................................
Net asset value end of period $ 15.60
-----------
..........................................................................................................
Total return + 12.88%
..........................................................................................................
Ratios/supplemental data
Ratios to average net assets:
Total expenses 2.81%++
..........................................................................................................
Total expenses excluding indirectly paid expenses 2.81%++
..........................................................................................................
Net investment loss (1.15%)++
..........................................................................................................
Portfolio turnover rate 13%
..........................................................................................................
Average commission rate paid $ 0.0147
..........................................................................................................
Net assets end of period (thousands) $ 786
..........................................................................................................
</TABLE>
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
# Net investment income is based on average shares outstanding during the
period.
* For the period from January 29, 1998 (commencement of class operations) to
April 30, 1998.
See Combined Notes to Financial Statements.
35
<PAGE>
EVERGREEN
Global Opportunities Fund
Schedule of Investments
April 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS -- 96.0%
ARGENTINA -- 0.2%
Oil/Energy -- 0.2%
65,300 Transportadora de Gas del Sur
SA, ADR ("TGS") .................. $ 755,031
==========
AUSTRALIA -- 0.9%
Business Equipment &
Services -- 0.1%
61,278 Computershare Ltd. ............... 205,838
----------
Finance & Insurance -- 0.4%
104,638 QBE Insurance Group Ltd. ......... 480,481
436,122 Tyndall Australia Ltd. ........... 753,821
----------
1,234,302
----------
Healthcare Products &
Services -- 0.4%
48,943 Cochlear Ltd. .................... 215,481
784,553 Sonic Healthcare Ltd. ............ 1,049,036
----------
1,264,517
----------
Total Australia .................. 2,704,657
==========
AUSTRIA -- 0.5%
Food & Beverage Products -- 0.5%
40,470 Julius Meinl International ....... 1,394,246
==========
CANADA -- 0.9%
Finance & Insurance -- 0.8%
23,300 Dundee Bancorp, Inc., Cl. A ...... 465,202
127,200 Mackenzie Financial Corp. ........ 1,912,514
----------
2,377,716
----------
Oil/Energy -- 0.1%
21,400 * Seven Seas Petroleum, Inc. ....... 454,750
----------
Total Canada ..................... 2,832,466
==========
DENMARK -- 0.4%
Banks -- 0.4%
10,400 Jyske Bank AS .................... 1,208,215
==========
FINLAND -- 0.2%
Paper & Packaging -- 0.2%
31,350 Valmet OYJ ....................... 519,756
==========
FRANCE -- 7.0%
Advertising & Related Services --
0.3%
11,500 Dauphin O.T.A. ................... 1,063,717
----------
Automotive Equipment &
Manufacturing -- 0.3%
11,911 Sylea ............................ 1,079,936
----------
Building, Construction &
Furnishings -- 0.4%
8,983 Societe Technip .................. 1,141,742
----------
Business Equipment &
Services -- 1.1%
21,150 * ATOS SA .......................... 3,536,142
----------
Electrical Equipment &
Services -- 0.9%
6,642 Le Carbone Lorraine .............. 2,723,761
----------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS -- continued
Engineering -- 0.3%
20,474 Assystem SA ...................... $ 946,893
----------
Finance & Insurance -- 0.6%
8,430 Scor ............................. 520,021
2,116 * Societe Eurafrance SA ............ 1,189,832
----------
1,709,853
----------
Food & Beverage Products -- 0.3%
14,700 Pernod Ricard SA ................. 1,014,889
----------
Healthcare Products &
Services -- 0.1%
1,000 Ile de France Pharmaceutique ..... 214,440
----------
Industrial Specialty Products &
Services -- 0.1%
2,873 Manutan .......................... 224,640
----------
Machinery--Diversified -- 1.5%
8,475 GFI Industries SA ................ 2,114,873
15,460 Norbert Dentressangle SA ......... 2,199,019
3,200 Sidel ............................ 244,884
----------
4,558,776
----------
Manufacturing--Distributing -- 1.0%
74,820 Grandoptical Photoservice ........ 3,012,218
----------
Textile & Apparel -- 0.1%
2,400 Deveaux SA ....................... 347,363
----------
Transportation -- 0.0%)
1,710 Faiveley SA ...................... 73,964
----------
Total France ..................... 21,648,334
==========
GERMANY -- 4.3%
Automotive Equipment &
Manufacturing -- 1.1%
186,450 SAI Automotive AG ................ 3,324,733
----------
Building, Construction &
Furnishings -- 0.1%
830 Grohe (Friedrich) AG ............. 261,319
----------
Household Products &
Services -- 0.3%
69,400 Gerresheimer Glas AG ............. 1,003,555
----------
Information Services &
Technology -- 2.0%
135,410 Boewe Systec AG .................. 6,338,324
----------
Metal Products & Services -- 0.7%
14,250 KM Europa Metal AG ............... 2,024,881
----------
Publishing, Broadcasting &
Entertainment -- 0.1%
280 Springer (Axel) Verlag AG ........ 248,865
----------
Retailing & Wholesale -- 0.0% (a)
2,550 Moebel Walther AG ................ 106,573
----------
Total Germany .................... 13,308,250
==========
IRELAND -- 1.2%
Diversified Companies -- 1.1%
380,247 DCC Plc .......................... 3,469,641
----------
</TABLE>
36
<PAGE>
EVERGREEN
Global Opportunities Fund
Schedule of Investments (continued)
April 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS -- continued
Finance & Insurance -- 0.1%
26,000 Irish Life Plc ................... $ 241,257
----------
Total Ireland .................... 3,710,898
==========
ISRAEL -- 0.1%
Pharmaceuticals -- 0.1%
7,000 Teva Pharmaceutical Industries
Ltd., ADR ........................ 298,375
==========
ITALY -- 2.4%
Automotive Equipment &
Manufacturing -- 0.4%
94,250 Brembo SpA ....................... 1,274,332
----------
Finance & Insurance -- 0.7%
71,700 Mediolanum SpA ................... 2,149,361
----------
Industrial Specialty Products &
Services -- 0.8%
435,000 Interpump Group SpA .............. 2,385,765
44,000 Manuli Rubber .................... 238,462
----------
2,624,227
----------
Telecommunication Services &
Equipment -- 0.5%
22,100 Ericsson SpA ..................... 1,397,352
----------
Total Italy ...................... 7,445,272
==========
JAPAN -- 2.6%
Advertising & Related
Services -- 0.2%
29,300 Asatsu, Inc. ..................... 526,931
----------
Building, Construction &
Furnishings -- 0.3%
126,000 Nishimatsu Construction .......... 542,693
89,000 Okumura Corp. .................... 329,530
----------
872,223
----------
Consumer Products &
Services -- 0.3%
34,000 Hitachi Maxell ................... 647,423
6,000 Matsumotokiyoshi ................. 207,194
----------
854,617
----------
Electrical Equipment &
Services -- 0.5%
10,800 Aiwa Co. Ltd. .................... 322,351
11,600 Mabuchi Motor Co. ................ 671,422
23,000 Matsushita Kotobuk ............... 637,827
----------
1,631,600
----------
Finance & Insurance -- 0.8%
160,000 Dowa Fire & Marine Insurance Co. . 513,828
9,000 Orix Corp. ....................... 622,261
3,900 Shohkoh Fund & Co. Ltd. .......... 1,240,668
----------
2,376,757
----------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS -- continued
Food & Beverage Products -- 0.2%
25,000 Chukyo Coca Cola ................. $ 202,131
12,000 Kinki Coca Cola Bottling ......... 141,454
19,000 Kirin Beverage Corp. ............. 371,845
----------
715,430
----------
Industrial Specialty Products &
Services -- 0.2%
2,000 Disco Corp. ...................... 57,428
51,500 THK Co. .......................... 494,219
----------
551,647
----------
Retailing & Wholesale -- 0.1%
2,310 Fujimi, Inc. ..................... 92,686
2,600 Ryohin Keikaku Co ................ 222,004
10,000 Yamada Denki Co. ................. 105,033
----------
419,723
----------
Total Japan ...................... 7,948,928
==========
NETHERLANDS -- 4.1%
Diversified Companies -- 1.5%
75,562 Fugro NV Certificate ............. 2,992,406
34,941 GTI Holding NV ................... 1,305,898
7,700 Unique Intl NV ................... 245,092
----------
4,543,396
----------
Finance & Insurance -- 0.2%
7,700 Kempen & Co. NV .................. 546,978
----------
Food & Beverage Products -- 0.7%
29,395 De Boer Unigro NV ................ 1,440,575
26,330 Nutreco Holding NV ............... 939,752
----------
2,380,327
----------
Manufacturing--Distributing -- 0.8%
72,400 Koninklijke Ahrend Groep NV ...... 2,508,787
----------
Publishing, Broadcasting &
Entertainment -- 0.1%
10,000 Endemol Entertainment NV ......... 232,167
----------
Retailing & Wholesale -- 0.8%
45,386 Ceteco Holding NV Certificate .... 2,536,547
----------
Total Netherlands ................ 12,748,202
==========
NORWAY -- 1.6%
Banks -- 0.5%
137,000 Den Norske Bank AS ............... 720,226
89,700 Fokus Bank ASA ................... 757,870
----------
1,478,096
----------
Business Equipment &
Services -- 0.7%
89,810 * Tandberg ASA ..................... 2,047,556
----------
Telecommunication Services &
Equipment -- 0.4%
103,563 * Tandberg Television ASA .......... 1,374,997
----------
Total Norway ..................... 4,900,649
==========
</TABLE>
37
<PAGE>
EVERGREEN
Global Opportunities Fund
Schedule of Investments (continued)
April 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS -- continued
PORTUGAL -- 0.1%
Finance & Insurance -- 0.1%
11,750 Banco Comercial Portugues SA ..... $ 411,937
==========
SOUTH AFRICA -- 1.1%
Diversified Companies -- 0.2%
89,200 Rembrandt Group Ltd. ............. 811,872
----------
Finance & Insurance -- 0.9%
78,700 Liberty Life Association of Africa, 2,662,782
Ltd. ----------
Total South Africa ............... 3,474,654
==========
SPAIN -- 1.6%
Food & Beverage Products -- 1.4%
28,300 * Baron de Ley SA .................. 866,838
27,370 Campofrio Alimentacion SA ........ 2,244,592
9,095 * Telepizza ........................ 1,307,817
----------
4,419,247
----------
Leisure & Tourism -- 0.2%
10,400 Sol Melia SA ..................... 495,076
----------
Total Spain ...................... 4,914,323
==========
SWEDEN -- 2.1%
Consumer Products &
Services -- 0.4%
376,100 * Swedish Match Co. AB ............. 1,301,922
----------
Healthcare Products &
Services -- 0.8%
116,400 Getinge Industrier AB, Ser. B .... 2,585,998
----------
Manufacturing--Distributing -- 0.1%
12,000 BT Industries AB ................. 240,248
----------
Metal Products & Services -- 0.1%
14,700 * Granges AB ....................... 267,722
----------
Retailing & Wholesale -- 0.7%
56,200 Lindex AB ........................ 2,141,436
----------
Total Sweden ..................... 6,537,326
==========
SWITZERLAND -- 6.9%
Advertising & Related
Services -- 0.2%
1,525 Societe Generale D'Affichage ..... 579,307
----------
Automotive Equipment &
Manufacturing -- 0.3%
2,675 Fischer Georg AG ................. 1,033,989
----------
Banks -- 0.2%
190 Verwalt & Private Bank ........... 522,959
----------
Business Equipment &
Services -- 0.3%
3,190 Danzas Holding AG ................ 856,761
----------
Diversified Companies -- 0.3%
4,000 Valora Holding AG ................ 1,044,985
----------
Electrical Equipment &
Services -- 0.7%
4,185 Phoenix Meccano AG ............... 2,245,201
----------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS -- continued
Food & Beverage Products -- 1.6%
2,110 Hero AG .......................... $1,476,508
1,546 Lindt & Spruengli AG ............. 3,379,460
----------
4,855,968
----------
Healthcare Products &
Services -- 1.1%
711 Disetronic Holding AG ............ 2,004,352
1,480 Phonak Holding AG ................ 1,301,966
----------
3,306,318
----------
Leisure & Tourism -- 1.9%
1,075 Kuoni Reisen Holding AG .......... 5,767,244
----------
Retailing & Wholesale -- 0.3%
9,600 * Tag Heuer International SA ....... 1,010,863
----------
Total Switzerland ................ 21,223,595
==========
UNITED KINGDOM -- 18.7%
Advertising & Related
Services -- 2.3%
3,330,100 Aegis Group Plc .................. 5,124,636
241,800 Cordiant Commerce Plc ............ 473,217
126,500 Dorling Kindersley Holdings Plc .. 543,803
305,050 Saatchi & Saatchi Plc ............ 806,206
----------
6,947,862
----------
Aerospace & Defense -- 0.6%
511,490 Alvis Plc ........................ 1,368,911
33,300 Close Brothers Group Plc ......... 424,998
----------
1,793,909
----------
Building, Construction &
Furnishings -- 0.9%
208,310 Berkeley Group Plc ............... 2,679,504
----------
Business Equipment &
Services -- 2.1%
553,916 Capita Group Plc ................. 4,679,002
486,132 Corporate Services Group Plc ..... 1,959,698
----------
6,638,700
----------
Chemical & Agricultural
Products -- 0.4%
155,900 Courtaulds Plc ................... 1,144,797
----------
Consumer Products &
Services -- 0.6%
88,100 Helen of Troy Ltd. ............... 1,789,531
----------
Diversified Companies -- 0.5%
30,500 DCC Plc .......................... 275,494
172,113 Lonrho Plc ....................... 1,240,820
----------
1,516,314
----------
Electrical Equipment &
Services -- 1.2%
90,400 Critchley Group Plc .............. 1,239,939
475,163 Pressac Holdings Plc ............. 2,344,674
----------
3,584,613
----------
Finance & Insurance -- 0.2%
276,700 Sedgwick Group Plc ............... 712,768
----------
</TABLE>
38
<PAGE>
EVERGREEN
Global Opportunities Fund
Schedule of Investments (continued)
April 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS -- continued
Food & Beverage Products -- 0.6%
188,400 Allied Domecq Plc ................ $1,938,090
----------
Healthcare Products &
Services -- 0.7%
82,000 London International Group Plc ... 270,208
278,703 Westminster Healthcare Holdings Plc 1,846,098
----------
2,116,306
----------
Information Services &
Technology -- 2.6%
322,700 Parity Plc ....................... 4,188,694
180,993 Sage Group Plc ................... 3,799,474
----------
7,988,168
----------
Leisure & Tourism -- 3.2%
123,063 Compass Group Plc ................ 2,130,521
210,000 Games Workshop Group Plc ......... 2,827,698
168,770 Millennium & Copthorne Hotels Plc 1,648,641
165,754 Regent Inns Plc .................. 1,053,575
721,414 Vardon Plc ....................... 2,160,009
----------
9,820,444
----------
Machinery -- Diversified 1.6%
1,119,748 Ashtead Group Plc ................ 5,057,105
----------
Manufacturing--Distributing -- 0.9%
383,900 Renishaw Plc ..................... 2,729,135
----------
Retailing & Wholesale -- 0.3%
62,000 Carpetright Plc .................. 358,828
152,778 Harvey Nichols Plc ............... 674,656
----------
1,033,484
----------
Total United Kingdom ............. 57,490,730
==========
UNITED STATES -- 39.1%
Advertising & Related
Services -- 0.6%
67,200 ADVO, Inc. ....................... 1,923,600
----------
Banks -- 2.4%
31,800 Astoria Financial Corp. .......... 1,858,312
70,900 Dime Community Bancorp, Inc. ..... 1,998,494
28,700 SIS Bancorp, Inc. ................ 1,234,100
72,500 TCF Financial Corp. .............. 2,360,781
----------
7,451,687
----------
Building, Construction &
Furnishings -- 0.9%
57,500 General Cable Corp. .............. 2,605,469
----------
Business Equipment &
Services -- 2.0%
55,000 * Lason Holdings, Inc. ............. 2,145,000
38,600 Market Facts, Inc. ............... 885,388
64,400 * Rental Service Corp. ............. 1,871,625
33,600 * Superior Consultant, Inc. ........ 1,295,700
----------
6,197,713
----------
Chemical & Agricultural
Products -- 0.8%
55,300 OM Group, Inc. ................... 2,450,481
----------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS -- continued
Consumer Products & Services --
1.6%
69,700 * Action Performance Co, Inc. ...... $2,415,540
35,000 * Scotts Co., Cl. A ................ 1,277,500
32,100 Universal Corp. .................. 1,201,744
----------
4,894,784
----------
Education -- 1.2%
40,000 Career Education Corp. ........... 910,000
137,000 Computer Learning Centers, Inc. .. 1,648,281
46,600 CorporateFamily Solutions, Inc. .. 1,231,988
----------
3,790,269
----------
Electrical Equipment &
Services -- 2.8%
13,900 * Analog Devices, Inc. ............. 541,231
75,300 Applied Power, Inc., Cl. A ....... 2,814,338
45,000 * Pri Automation, Inc. ............. 1,202,344
29,600 * QLogic Corp. ..................... 1,307,950
12,100 * Sipex Corp. ...................... 241,622
43,800 * Vitesse Semiconductor Corp. ...... 2,522,606
----------
8,630,091
----------
Finance & Insurance -- 3.1%
50,000 Blanch E W Holdings, Inc. ........ 1,763,640
38,100 Capital RE Corp. ................. 2,812,256
100,300 * First Alliance Co. ............... 1,658,084
23,700 * Freedom Secs Corp. ............... 525,844
21,800 Investors Financial Services
Corp. ............................ 1,171,750
81,600 Penn-America Group, Inc. ......... 1,647,300
----------
9,578,874
----------
Food & Beverage Products -- 1.7%
42,100 * Suiza Foods Corp. ................ 2,494,425
68,900 * Twinlab Corp. .................... 2,695,713
----------
5,190,138
----------
Healthcare Products &
Services -- 3.8%
68,500 * Bioreliance Corp. ................ 1,027,500
38,986 * Concentra Managed Care, Inc. ..... 1,208,566
89,600 * Health Management Associates,
Inc., Cl. A ...................... 2,822,400
85,500 * Idexx Laboratories, Inc. ......... 1,883,672
118,800 * Mariner Health Group, Inc. ....... 2,142,112
35,966 * Total Renal Care Holdings, Inc. .. 1,191,374
48,500 * Wesley Jessen Visioncare, Inc. ... 1,494,406
----------
11,770,030
----------
Industrial Specialty Products &
Services -- 0.8%
79,100 Roper Industries, Inc. ........... 2,452,100
----------
Information Services &
Technology -- 5.5%
73,700 * CCC Information Services Group,Inc. 1,791,831
71,500 * Discreet Logic, Inc. .............. 1,269,125
96,700 * Eletronics for Imaging, Inc. ...... 1,979,328
37,200 * EMC Corp. ......................... 1,715,850
40,000 * FileNet Corp. ..................... 2,177,500
55,200 * JDA Software Group, Inc. .......... 2,780,700
</TABLE>
39
<PAGE>
EVERGREEN
Global Opportunities Fund
Schedule of Investments (continued)
April 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS -- continued
Information Services &
Technology -- continued
19,400 * Lycos, Inc. ........................ $ 1,198,556
19,525 * Mobius Management Systems, Inc. .... 359,992
92,700 * Platinum Software Corp. ............ 2,062,575
47,500 * SunGuard Data Systems, Inc. ........ 1,692,188
------------
17,027,645
------------
Oil/Energy -- 0.4%
63,800 * Basin Exploration, Inc. ............ 1,270,019
------------
Oil Field Services -- 1.0%
31,400 * EVI, Inc. .......................... 1,672,050
41,200 * R & B Falcon Corp. ................. 1,320,975
------------
2,993,025
------------
Pharmaceuticals -- 0.3%
19,300 * Incyte Pharmacuticals, Inc. ........ 869,706
------------
Publishing, Broadcasting &
Entertainment -- 3.5%
58,800 * Big Flower Holdings, Inc. .......... 1,782,375
33,800 * Hearst-Argyle Television, Inc. ..... 1,208,350
36,300 * Jacor Communications, Inc. ......... 2,063,428
38,600 * Sinclair Broadcast Group, Inc., Cl. A 2,002,375
42,000 * Univision Communications, Inc. Cl. A . 1,609,125
51,000 * Valassis Communications, Inc. ...... 2,001,750
------------
10,667,403
------------
Retailing & Wholesale -- 1.1%
29,400 * Brylane, Inc. ...................... 1,727,250
8,800 * Goodys Family Clothing, Inc. ....... 432,850
44,000 Michaels Stores, Inc. .............. 1,338,399
------------
3,498,499
------------
Telecommunication Services &
Equipment -- 3.6%
135,000 * Antec Corp. ........................ 2,670,469
43,200 * Global TeleSystems Group, Inc. ..... 2,038,500
37,700 * IDT Corp. .......................... 1,158,097
22,500 * Natural Microsystems Corp. ......... 722,813
22,500 * Pacific Gateway Exchange, Inc. ..... 1,283,906
58,300 * Pairgain Technologies, Inc. ........ 1,073,084
93,700 Scientific Atlanta, Inc. ........... 2,237,087
------------
11,183,956
------------
Transportation -- 1.5%
50,000 Covenant Transport, Inc., Cl. A .... 950,000
120,200 * Fritz Companies, Inc. .............. 1,750,413
60,400 * Mesaba Holdings Inc. ............... 1,996,975
------------
4,697,388
------------
Utilities--Telephone -- 0.5%
50,000 * Star Telecommunications, Inc. ...... 1,351,563
------------
Total United States ................ 120,494,440
============
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS -- continued
Utilities--Telephone -- continued
Total Common Stocks
(cost $220,882,364)................. $295,970,284
============
PREFERRED STOCKS -- 0.4%
BRAZIL -- 0.4%
Aerospace & Defense -- 0.4%
72,696,030 Empresa Brasileira de
Aeronautica ........................ 1,271,298
------------
Telecommunication Services &
Equipment 0.0% --
48,084 Compania Riograndense de
Telecommunica, Receipts ............ 54,658
------------
Total Brazil ....................... 1,325,956
============
Total Preferred Stocks
(cost $1,337,486)................... 1,325,956
============
Rights -- 0.0% (a)
AUSTRALIA -- 0.0% (a)
Finance & Insurance -- 0.0%
43,612 Tyndall Australia Ltd., Expires 5/98. 17,636
============
PORTUGAL -- 0.0% (a)
Finance & Insurance -- 0.0%
2,323 Banco Comercial Portuges SA ........ 38,517
============
Total Rights
(cost $56,897)...................... 56,153
============
MUTUAL FUND SHARES -- 0.2%
NETHERLANDS -- 0.2%
Mutual Funds -- 0.2%
11,400 Orange Fund NV ..................... 467,828
============
Total Mutual Fund Shares
(cost $445,322)..................... 467,828
============
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C> <C>
REPURCHASE AGREEMENT -- 2.3%
UNITED STATES -- 2.3%
$ 7,231,000 Keystone Joint Repurchase Agreement,
Investments in repurchase
agreements, in a joint trading
account, purchased 4/30/98, 5.52%
maturing 5/1/98, maturity value
$7,232,109 (b) .................... 7,231,000
---------
Total Repurchase
Agreement
(cost $7,231,000).................. 7,231,000
---------
Total Investments --
(cost $229,953,069) ..... 98.9% 305,051,221
Other Assets and
Liabilities -- Net ...... 1.1% 3,324,520
---- -----------
Net Assets ............... 100% $308,375,741
==== ============
</TABLE>
* Non-income producing securities.
(a) Less than one-tenth percent.
(b) The repurchase agreements are fully collateralized by U.S. government
and/or agency obligations based on market prices plus accrued interest at
April 30, 1998.
See Combined Notes to Financial Statements.
40
<PAGE>
EVERGREEN
Global Opportunities Fund
Schedule of Investments (continued)
April 30, 1998 (unaudited)
Summary of Portfolio Abbreviations:
ADR American Depository Receipt
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
<TABLE>
<CAPTION>
Forward Foreign Currency Exchange Contracts to Sell:
Unrealized
U.S. Value at In Exchange Appreciation
Exchange Date Contracts to Deliver April 30, 1998 for U.S. $ (Depreciation)
- --------------- ----------------------------------------- ---------------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
7/27/98 2,592,888 Australian Dollar $ 1,694,168 $ 1,693,000 $ (1,168)
5/1/98 14,555 British Pound Sterling 24,346 24,263 (83)
5/6/98 298,921 British Pound Sterling 500,005 498,779 (1,226)
5/6/98 300,143 British Pound Sterling 502,048 500,818 (1,231)
5/6/98 298,490 British Pound Sterling 499,283 498,060 (1,224)
5/4/98 1,191,016 French Franc 198,139 198,212 73
5/5/98 1,218,428 French Franc 202,700 202,296 (404)
5/18/98 72,106,905 French Franc 12,008,179 11,890,000 (118,179)
5/29/98 2,940,308 French Franc 489,154 490,084 929
5/4/98 642,355 German Marks 357,947 358,437 489
5/4/98 236,797 German Marks 131,954 131,840 (114)
5/18/98 14,369,018 German Marks 8,015,138 7,940,000 (75,138)
5/4/98 443,311,065 Italian Lira 250,267 250,600 333
5/6/98 547,562,399 Italian Lira 309,122 308,225 (896)
5/6/98 734,504,138 Italian Lira 414,658 413,456 (1,202)
7/27/98 930,959,430 Japanese Yen 7,122,830 7,233,000 110,170
5/4/98 473,592 Netherlands Guilder 234,440 234,905 465
5/5/98 327,916.25 Netherlands Guilder 162,327 162,206 (120)
5/18/98 12,096,014 Netherlands Guilder 5,994,060 5,930,000 (64,060)
5/4/98 44,787,234 Spanish Peseta 294,072 294,053 (19)
6/3/98 376,111,750 Spanish Peseta 2,472,334 2,450,000 (22,334)
6/3/98 23,635,008 Swedish Krona 3,055,936 2,960,000 (95,936)
5/1/98 9,485 Swiss Franc 6,321 6,307 (14)
5/4/98 729,394 Swiss Franc 486,101 489,001 2,900
5/4/98 376,124 Swiss Franc 250,666 252,162 1,496
5/18/98 14,023,290 Swiss Franc 9,365,099 9,700,000 334,901
</TABLE>
See Combined Notes to Financial Statements.
41
<PAGE>
EVERGREEN
International Growth Fund
Schedule of Investments
April 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS -- 87.2%
ARGENTINA -- 0.3%
Oil/Energy -- 0.3%
44,800 Transportadora de Gas del Sur
SA, ADR ("TGS") .................. $ 518,000
==========
AUSTRALIA -- 2.7%
Banks -- 0.9%
116,000 National Australia Bank Ltd. ..... 1,649,410
----------
Finance & Insurance -- 0.3%
55,625 QBE Insurance Group Ltd. ......... 255,421
181,500 Tyndall Australia Ltd. ........... 313,716
----------
569,137
----------
Food & Beverage Products -- 0.2%
162,000 Fosters Brewing Group Ltd. ....... 352,920
----------
Healthcare Products &
Services -- 1.0%
1,369,387 Sonic Healthcare Ltd. ............ 1,831,025
----------
Machinery--Diversified -- 0.2%
108,500 Evans Deakin Industries Ltd. ..... 304,307
----------
Manufacturing--Distributing -- 0.1%
45,937 Siddons Ramset Ltd. .............. 215,730
----------
Total Australia .................. 4,922,529
==========
CANADA -- 3.5%
Banks -- 1.5%
136,100 National Bank of Canada .......... 2,807,755
----------
Chemical & Agricultural
Products -- 0.7%
13,780 Potash Corp. of Saskatchewan, Inc. 1,227,716
----------
Finance & Insurance -- 0.4%
6,000 * BRL Enterprises, Inc. ............ 21,190
16,400 Power Corp. of Canada ............ 655,449
----------
676,639
----------
Publishing, Broadcasting &
Entertainment -- 0.9%
87,305 Quebecor, Inc., Cl. B ............ 1,737,003
----------
Total Canada ..................... 6,449,113
==========
FINLAND -- 0.1%
Paper & Packaging -- 0.1%
15,500 Valmet OYJ ....................... 256,977
==========
FRANCE -- 13.8%
Advertising & Related
Services -- 0.3%
5,449 Dauphin O.T.A. ................... 504,017
----------
Automotive Equipment &
Manufacturing -- 0.3%
8,383 Compagnie Generale des
Etablissements Michelin, Cl. B ... 528,418
----------
Banks -- 2.2%
20,250 * Banque Nationale de Paris ........ 1,707,994
2,400 * Cie Fin de Paribas, Cl. A ........ 255,531
20,353 Credit Commerce de France ........ 1,625,260
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS -- continued
Banks -- continued
2,500 Societe Generale SA .............. $ 520,712
----------
4,109,497
----------
Building, Construction &
Furnishings -- 1.0%
19,317 Lafarge SA ....................... 1,825,329
----------
Business Equipment &
Services -- 1.5%
16,829 * ATOS SA .......................... 2,813,699
----------
Electrical Equipment &
Services -- 0.4%
1,900 Le Carbone Lorraine .............. 779,155
----------
Finance & Insurance -- 3.6%
22,800 AXA-UAP .......................... 2,677,891
17,970 Scor ............................. 1,108,514
4,829 * Societe Eurafrance SA ............ 2,715,358
----------
6,501,763
----------
Food & Beverage Products -- 1.0%
26,350 Pernod Ricard SA ................. 1,819,206
----------
Healthcare Products &
Services -- 1.7%
62,511 Rhone-Poulenc SA, Cl. A .......... 3,058,474
----------
Information Services &
Technology -- 0.3%
11,800 Dassault Systemes SA ............. 463,284
----------
Machinery--Diversified -- 0.3%
4,347 Norbert Dentressangle SA ......... 618,314
----------
Oil/Energy -- 1.2%
16,945 Societe Nationale Elf Aquitaine SA. 2,224,190
----------
Total France ..................... 25,245,346
==========
GERMANY -- 7.2%
Automotive Equipment &
Manufacturing -- 0.6%
10,850 Daimler- Benz AG ................. 1,059,274
----------
Information Services &
Technology -- 0.8%
30,620 Boewe Systec AG .................. 1,433,273
----------
Metal Products & Services -- 0.4%
4,725 KM Europa Metal AG ............... 671,408
----------
Paper & Packaging -- 0.7%
4,875 Schmalbach Lubeca AG ............. 1,200,176
----------
Publishing, Broadcasting &
Entertainment -- 0.9%
1,960 Springer (Axel) Verlag AG ........ 1,742,052
----------
Retailing & Wholesale -- 2.2%
9,070 Karstadt AG ...................... 4,093,895
----------
Utilities--Electric -- 1.6%
59,230 Berliner Kraft & Licht AG ........ 2,970,494
----------
Total Germany .................... 13,170,572
==========
</TABLE>
42
<PAGE>
EVERGREEN
International Growth Fund
Schedule of Investments (continued)
April 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS -- continued
GREECE -- 0.3%
Banks -- 0.3%
6,000 Ergo Bank SA, GDR ..................... $ 564,903
==========
HONG KONG -- 0.2%
Leisure &
Tourism -- 0.2%
618,000 Mandarin Oriental International, Ltd... 438,780
==========
INDIA -- 0.1%
Textile & Apparel -- 0.1%
14,000 * Reliance Industries Ltd., GDR, 144A ... 127,750
5,000 * Reliance Industries Ltd., GDS ......... 45,625
----------
Total India ........................... 173,375
==========
ITALY -- 3.3%
Finance &
Insurance -- 0.2%
117,000 Parmalat Finanziara SpA ............... 263,875
----------
Publishing,
Broadcasting &
Entertainment -- 0.9%
152,450 Arn Mondadori Edit SpA ................ 1,721,716
----------
Telecommunication
Services &
Equipment -- 2.2%
157,500 Telecom Italia Mobile ................. 898,044
(TIM) SpA
414,598 Telecom Italia SpA .................... 3,101,264
----------
3,999,308
----------
Total Italy ........................... 5,984,899
==========
JAPAN -- 2.9%
Automotive Equipment &
Manufacturing -- 0.2%
13,000 Toyota Motor Corp. .................... 338,900
----------
Business Equipment &
Services -- 0.4%
38,000 Fujitsu Ltd. .......................... 443,630
6,000 Secom Co. Ltd. ........................ 353,635
----------
797,265
----------
Consumer Products &
Services -- 0.2%
28,000 Kao Corp. ............................. 411,516
600 Sony Corp. ............................ 49,917
----------
461,433
----------
Finance &
Insurance -- 0.7%
3,190 Nichiei Co. Ltd. ...................... 248,277
2,000 Shohkoh Fund & Co. Ltd................. 636,240
15,000 Sumitomo Fire & Marine
Insurance Co. ......................... 89,429
69,000 Yasuda Fire & Marine Insurance Co...... 312,831
----------
1,286,777
----------
Healthcare Products &
Services -- 0.4%
36,000 Taisho Pharmaceutical Co............... 761,674
----------
Leisure &
Tourism -- 0.6%
30,000 Fuji Photo Film Co..................... 1,067,704
----------
Retailing &
Wholesale -- 0.2%
5,000 Seven-Eleven Japan Co. Ltd. ........... 334,366
----------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS -- continued
Utilities--Telephone -- 0.2%
40 Nippon Telephone & Telegraph Corp. $ 350,612
----------
Total Japan ........................... 5,398,731
==========
MEXICO -- 0.3%
Food & Beverage
Products -- 0.3%
15,610 Panamerican Beverages, Inc., Cl. A .... 622,449
----------
NETHERLANDS -- 7.6%
Advertising & Related
Services -- 0.5%
40,000 Telegraaf Holdings NV Certificate ..... 920,747
----------
Building, Construction &
Furnishings -- 0.7%
78,700 Boskalis Westminster NV ............... 1,289,525
----------
Consumer Products &
Services -- 1.4%
29,715 Philips Electronics NV ................ 2,610,966
----------
Diversified
Companies -- 0.7%
7,480 Fugro NV Certificate 296,223
15,196 Unilever NV CVA ....................... 1,081,721
----------
1,377,944
----------
Finance &
Insurance -- 1.3%
18,315 AEGON NV .............................. 2,373,579
----------
Food & Beverage Products -- 1.1%
29,910 De Boer Unigro NV ..................... 1,465,814
16,710 Koninklijke Ahold NV .................. 516,164
----------
1,981,978
----------
Oil/Energy -- 1.1%
35,095 Royal Dutch Petroleum Co. ............. 1,933,604
----------
Retailing &
Wholesale -- 0.2%
5,665 Ceteco Holding NV Certificate.......... 316,607
----------
Transportation -- 0.6%
27,100 Koninklijke Van Ommeren NV
Certificate ........................... 1,167,121
----------
Total Netherlands ..................... 13,972,071
==========
SOUTH AFRICA -- 2.4%
Diversified Companies -- 0.8%
102,000 Rembrandt Controlling
Investments Ltd. ...................... 615,552
65,200 Rembrandt Group Ltd. 593,431
73,000 Technical & Industrial
Investments Ltd. ...................... 350,267
----------
1,559,250
----------
Finance &
Insurance -- 1.3%
58,725 Liberty Life Association of Africa, Ltd. 1,986,936
90,000 Tegniese Beleggings Korp BPK .......... 400,673
----------
2,387,609
----------
Retailing &
Wholesale -- 0.3%
339,250 New Clicks Holdings Ltd. .............. 537,000
----------
Total South Africa .................... 4,483,859
==========
</TABLE>
43
<PAGE>
EVERGREEN
International Growth Fund
Schedule of Investments (continued)
April 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS -- continued
SPAIN - 2.7%
Banks - 1.8%
14,380 Banco Popular Espana SA .............. $1,180,237
35,700 Banco Santander SA ................... 1,886,967
2,792 Corporacion Bancaria de Espana SA .... 232,819
----------
3,300,023
----------
Oil/Energy - 0.9%
30,650 Repsol SA (RG) ....................... 1,680,417
----------
Total Spain .......................... 4,980,440
==========
SWEDEN - 9.7%
Automotive Equipment &
Manufacturing - 1.2%
73,000 Volvo AB, Ser. B ..................... 2,130,974
----------
Banks - 1.4%
100,200 Skandinaviska Enskilda Banken, Ser. B. 1,669,568
14,700 Sparbanken Sverige AB, Ser. A ........ 459,494
10,500 Svenska Handelsbanken, Ser. A ........ 476,040
----------
2,605,102
----------
Building, Construction &
Furnishings -- 1.6%
85,800 Assa Abloy AB, Ser. B ................ 2,992,250
----------
Consumer Products &
Services -- 1.3%
17,500 Electrolux AB, Ser. B ................ 1,627,486
235,700 Swedish Match Co. AB ................. 815,908
----------
2,443,394
----------
Healthcare Products &
Services -- 4.0%
186,982 Astra AB, Ser. A ..................... 3,840,111
41,600 Getinge Industrier AB, Ser. B ........ 924,206
56,387 Pharmacia & Upjohn, Inc............... 2,458,100
----------
7,222,417
----------
Metal Products &
Services -- 0.2%
16,750 Granges AB ........................... 305,057
----------
Real Estate -- 0.0%
14,700 Mandamus AB .......................... 0
----------
Total Sweden ......................... 17,699,194
==========
SWITZERLAND -- 11.8%
Advertising & Related
Services -- 1.1%
6,295 Edipresse SA ......................... 2,013,729
----------
Building, Construction &
Furnishings -- 1.8%
3,185 Holderbank Financiere Glarus AG ...... 3,370,729
----------
Business Equipment &
Services -- 1.1%
1,140 SGS Holding AG ....................... 1,941,153
----------
Food & Beverage
Products -- 5.5%
1,170 Hero AG .............................. 818,727
550 Lindt & Spruengli AG ................. 1,202,266
4,155 Nestle SA ............................ 8,058,014
----------
10,079,007
----------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS -- continued
Healthcare Products &
Services -- 2.3%
1,722 Novartis AG .......................... $2,855,272
806 Novartis AG, Registered Shares ....... 1,332,143
----------
4,187,415
----------
Total Switzerland .................... 21,592,033
==========
UNITED KINGDOM -- 18.3%
Advertising & Related
Services -- 1.8%
319,950 Cordiant Commerce Plc ................ 626,161
132,000 Pearson Publishing Plc ............... 2,068,862
251,350 Saatchi & Saatchi Plc ................ 664,284
----------
3,359,307
----------
Aerospace & Defense -- 1.5%
219,800 Close Brothers Group Plc ............. 2,805,241
----------
Building, Construction &
Furnishings -- 0.3%
236,000 Pilkington Plc ....................... 495,420
----------
Diversified Companies -- 1.8%
215,996 Lonrho Plc ........................... 1,557,188
238,500 Morgan Crucible Co. Plc .............. 1,800,291
----------
3,357,479
----------
Food & Beverage Products -- 4.0%
337,686 B.A.T. Industries Plc ................ 3,185,738
236,814 Diageo Plc ........................... 2,820,365
37,276 Diageo Plc, Ser. B ................... 317,993
175,000 Gallaher Group Plc ................... 913,294
----------
7,237,390
----------
Healthcare Products & Services -- 2.6%
32,257 Glaxo Wellcome Plc ................... 911,861
804,200 London International Group Plc ....... 2,650,014
19,600 SmithKline Beecham Plc, ADR .......... 1,167,425
----------
4,729,300
----------
Leisure & Tourism -- 2.2%
155,717 Compass Group Plc .................... 2,695,841
61,960 Games Workshop Group Plc ............. 834,306
157,603 Vardon Plc ........................... 471,884
----------
4,002,031
----------
Machinery--Diversified - 1.1%
436,100 Ashtead Group Plc .................... 1,969,554
----------
Oil/Energy - 1.4%
158,082 British Petroleum Co. Plc ............ 2,498,804
----------
Retailing & Wholesale -- 0.2%
62,000 Carpetright Plc ...................... 358,827
----------
Telecommunication Services &
Equipment - 1.1%
188,717 Vodafone Group Plc ................... 2,067,618
----------
</TABLE>
44
<PAGE>
EVERGREEN
International Growth Fund
Schedule of Investments (continued)
April 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS -- continued
Transportation -- 0.3%
57,400 British Airways Plc ........................ $ 598,161
------------
Total United Kingdom ....................... 33,479,132
============
Total Common Stocks
(cost $115,116,861)......................... 159,952,403
============
PREFERRED STOCKS -- 1.4%
BRAZIL -- 0.8%
Aerospace & Defense -- 0.8%
87,362,077 Empresa Brasileira de Aeronautica .......... 1,527,777
------------
Telecommunication Services &
Equipment -- 0.0% (a)
41,316 Compania Riograndense de
Telecommunica, Receipts .................... 46,964
------------
Total Brazil ............................... 1,574,741
============
FRANCE -- 0.1%
Building, Construction &
Furnishings -- 0.1%
1,609 Lafarge SA ................................. 147,757
============
GERMANY -- 0.5%
Building, Construction &
Furnishings -- 0.5%
3,000 Grohe (Friedrich) AG ....................... 944,526
============
Total Preferred Stocks
(cost $2,430,846)........................... 2,667,024
============
RIGHTS -- 0.0% (a)
AUSTRALIA -- 0.0% (a)
Finance & Insurance -- 0.0%
18,150 * Tyndall Australia Ltd., Expires 5/98 ....... 7,340
------------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
RIGHTS -- continued
FRANCE -- 0.0% (a)
Building, Construction &
Furnishings -- 0.0%
7 * Lafarge SA, Expires 4/30/98 ................ $ 6
============
Total Rights
(cost $6,195)............................... 7,346
============
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount
<S> <C> <C> <C>
CONVERTIBLE DEBENTURES -- 0.0% (a)
BRAZIL -- 0.0%
Iron & Steel -- 0.0%
$ 56,500 * Compania Vale do Rio Doce
Navegacao SA ................................ 5
----------
Total Convertible Debentures
(cost $0).................................... 5
----------
REPURCHASE AGREEMENT -- 10.3%
UNITED STATES -- 10.3%
$18,834,000 Keystone Joint Repurchase
Agreement, Investments in
repurchase agreements, in
a joint trading account, purchased
4/30/98, 5.52% maturing 5/1/98,
maturity value $18,836,888
(cost $18,834,000) (b)....................... 18,834,000
----------
Total Repurchase
Agreements
(cost $18,834,000)........................... 18,834,000
----------
Total Investments --
(cost $136,387,902) ................. 98.9% 181,460,778
Other Assets and
Liabilities -- Net ................... 1.1% 1,990,456
---- -----------
Net Assets ............................ 100% $183,451,234
==== ============
</TABLE>
* Non-income producing securities.
144A Securities that may be resold to qualified institutional buyers under
Rule 144A of the Securities Act of 1933. These securities have been
determined to be liquid under guidelines established by the Fund's Board
of Trustees.
(a) Less than one-tenth percent.
(b) The repurchase agreements are fully collateralized by U.S. government
and/or agency obligations based on market prices plus accrued interest at
April 30, 1998.
Summary of Portfolio Abbreviations:
ADR American Depository Receipts
ADS American Depository Shares
GDR Global Depository Receipts
GDS Global Depository Shares
See Combined Notes to Financial Statements.
45
<PAGE>
EVERGREEN
International Growth Fund
Schedule of Investments (continued)
April 30, 1998 (unaudited)
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
<TABLE>
<CAPTION>
Forward Foreign Currency Exchange Contracts to Buy:
Unrealized
U.S. Value at In Exchange Appreciation
Exchange Date Contracts to Receive April 30, 1998 for U.S. $ (Depreciation)
- --------------- -------------------------------- ---------------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
5/4/98 91,902,375 French Franc $15,292,531 $15,271,249 $21,282
6/3/98 257,029,894 Spanish Peseta 1,689,561 1,658,659 30,902
</TABLE>
<TABLE>
<CAPTION>
Forward Foreign Currency Exchange Contracts to Sell:
Unrealized
U.S. Value at In Exchange Appreciation
Exchange Date Contracts to Deliver April 30, 1998 for U.S. $ (Depreciation)
- --------------- ------------------------------------ ---------------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
7/8/98 4,632,503 Australian Dollar $ 3,025,626 $ 3,060,000 $ 34,374
5/4/98 91,902,375 French Franc 15,292,531 15,100,000 (192,531)
8/5/98 90,763,678 French Franc 15,181,424 15,160,000 (21,424)
5/18/98 15,515,971 German Marks 8,654,916 8,562,000 (92,916)
5/4/98 188,357,044 Greek Drachma 599,119 597,011 (2,108)
5/7/98 91,682,755 Italian Lira 51,759 51,653 (106)
7/27/98 625,868,100 Japanese Yen 4,788,557 4,863,000 74,443
5/18/98 21,718,900 Netherlands Guilder 10,762,587 10,640,000 (122,587)
6/3/98 588,165,440 Spanish Peseta 3,866,248 3,830,000 (36,248)
6/3/98 74,717,136 Swedish Krona 9,660,704 9,360,000 (300,704)
5/18/98 21,408,525 Swiss Franc 14,297,141 14,790,000 492,859
</TABLE>
See Combined Notes to Financial Statements.
46
<PAGE>
EVERGREEN
Latin America
Schedule of Investments
April 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS -- 59.5%
ARGENTINA -- 5.1%
Diversified Companies -- 0.7%
146,483 * CEI Citicorp Holdings SA, Cl. B ....... $ 615,318
----------
Oil/Energy -- 2.8%
209,979 * Perez Compancia SA, Cl. B ............. 1,262,157
38,525 YPF Sociedad Anonima, ADR ............. 1,343,559
----------
2,605,716
----------
Telecommunication Services &
Equipment -- 1.6%
13,400 Telecom Argentina STET -- France
Telecom SA, ADR ....................... 482,400
25,260 Telefonica de Argentina, ADR, Cl. B ... 974,089
----------
1,456,489
----------
Total Argentina ....................... 4,677,523
==========
BRAZIL -- 15.0
Finance & Insurance -- 1.1%
25,550 Uniao de Bancos Brasileiros SA, GDR ... 1,015,613
----------
Machinery--Diversified -- 0.0% a)
76,320 * Inepar SA, Receipts ................... 0
----------
Telecommunication Services &
Equipment -- 9.3%
70,105 * Telecomunicacoes Brasileiras SA,
("Telebras") ADR ...................... 8,539,665
----------
Utilities--Water -- 0.9%
3,509,100 * Companhia de Saneamento Basicodo
Estado ("SABESP") ..................... 797,767
----------
Utilities -- 3.7%
13,201 * Cia Paulista De Forca E ............... 0
Luz,Receipts
50,000,000 Companhia Paranaense de
Energia-Copel ......................... 577,099
26,700 Companhia Paranaense de
Energia-Copel, ADR, 6.25%,TIDES ....... 380,475
----------
41,451,100 Eletrobras SA ......................... 1,703,495
2,859,500 Light Participacoes SA ................ 700,092
----------
3,361,161
----------
Total Brazil .......................... 13,714,206
==========
CHILE -- 0.4%
Chemical & Agricultural
Products -- 0.2%
5,200 Sociedad Quimica y Minera de Chile
SA, ADR ............................... 225,875
----------
Industrial Specialty Products &
Services -- 0.2%
10,234 Madeco SA, ADR ........................ 163,744
----------
Total Chile ........................... 389,619
==========
COLOMBIA -- 1.1%
Finance & Insurance -- 0.3%
110,952 Valores Bavaria SA .................... 276,354
----------
Food & Beverage Products -- 0.8%
110,952 Bavaria ............................... 707,059
----------
Total Colombia ........................ 983,413
==========
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS -- continued
MEXICO -- 36.3%
Building, Construction &
Furnishings -- 7.5%
431,100 Apasco SA de CV ............................ $2,928,226
56,300 * Bufete Industrial .......................... 105,961
444,800 Cemex SA de CV, Ser. B ..................... 2,675,094
44,000 * Corp. Geo SA de CV, Ser. B ................. 304,057
49,200 * Tubos de Acero de Mexico SA, ADR ........... 904,050
----------
6,917,388
----------
Diversified Companies -- 1.1%
166,400 Grupo Carso SA de CV, Ser. A1 .............. 1,047,849
----------
Finance & Insurance -- 8.2%
1,511,950 Grupo Finance Banamex Accival SA de
CV, Ser. B ................................. 4,724,844
3,986,400 * Grupo Financiero Bancomer SA
de CV, Cl. B ............................... 2,754,753
----------
7,479,597
----------
Food & Beverage Products -- 8.9%
437,480 Fomento Economico Mexicano
SA, Ser. B ................................. 3,239,828
517,320 GPO Industries Bimbo, Ser. A ............... 1,299,400
69,300 Panamerican Beverages, Inc.,
Cl. A, ADR ................................. 2,763,338
61,000 Pepsi Gemex SA de CV ....................... 827,312
----------
8,129,878
----------
Machinery--Diversified -- 0.3%
50,000 Industrias CH SA, Cl. B .................... 247,052
----------
Publishing, Broadcasting &
Entertainment -- 3.6%
46,600 * Grupo Televisa SA, ADR ..................... 1,910,600
75,850 TV Azteca SA de CV ......................... 1,412,706
----------
3,323,306
----------
Retailing & Wholesale -- 3.4%
560,000 Cifra SA de CV, Cl. C ...................... 952,264
409,167 Cifra SA de CV, Ser. V ..................... 718,937
379,000 Organiz Soriana, Ser. B .................... 1,432,424
----------
3,103,625
----------
Telecommunication Services &
Equipment -- 3.3%
53,902 Telefonos de Mexico SA, ADR ................ 3,052,201
----------
Total Mexico ............................... 33,300,896
==========
PERU -- 1.6%
Finance & Insurance -- 0.8%
125,732 Cem Norte Pacasmay ......................... 200,246
29,000 Credicorp Ltd. ............................. 485,750
----------
685,996
----------
Telecommunication Services &
Equipment -- 0.8%
162,500 Enrique Ferreyros .......................... 204,167
</TABLE>
47
<PAGE>
EVERGREEN
Latin America
Schedule of Investments (continued)
April 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS -- continued
Telecommunication Services &
Equipment -- continued
25,500 Telefonica del Peru SA, ADR ....... $ 564,188
-----------
768,355
-----------
Total Peru ........................ 1,454,351
===========
Total Common Stocks
(Cost -- $46,272,408).............. 54,520,008
===========
PREFERRED STOCKS -- 32.9%
BRAZIL -- 32.9%
Aerospace & Defense -- 2.6%
136,607,347 Empresa Brasileira de Aeronautica . 2,388,971
-----------
Automotive Equipment &
Manufacturing -- 0.3%
5,530,000 * Freios Varga SA ................... 241,238
-----------
Electrical Equipment & Services --
2.1%
39,490,700 Compania Energetica de Minas Gerais 1,916,438
-----------
Iron & Steel -- 3.3%
30,160,000 * Caemi Mineracao E Metalurgia SA ... 2,162,480
35,347 Compania Vale do Rio Doce
Navegacao SA ...................... 834,494
-----------
2,996,974
-----------
Oil/Energy -- 3.1%
11,103,000 * Petroleo Brasileiro SA,("Petrobras") 2,815,433
-----------
Telecommunication Services &
Equipment -- 21.5%
5,674,600 Companhia Riograndense de
Telecomunica ...................... 7,492,367
110,700 Compania Riograndense de
Telecommunica, Receipts ........... 125,834
24,600,000 * Ericsson Telecom SA ............... 752,853
5,111,726 Telecomunicacoes de Minas Gerais .. 788,895
19,644,921 Telecomunicacoes de Rio de Janiero SA 3,091,930
22,017,860 * Telecomunicaoes de Sao Paulo SA ... 7,489,133
-----------
19,741,012
-----------
Total Brazil ...................... 30,100,066
===========
Total Preferred Stocks
(Cost -- $27,001,227).............. 30,100,066
===========
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
WARRANTS -- 0.0% (a)
BRAZIL -- 0.0%
Machinery--Diversified -- 0.0%
38,160 Inepar Energia, Warrants, Ser. B ... $ 0
38,160 Inepar Energia, Warrants, Ser. C ... 0
-----------
Total Brazil ......................... 0
===========
Total Warrants
(Cost -- $0).......................... 0
===========
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount
<S> <C> <C> <C>
CONVERTIBLE DEBENTURES -- 0.0% (a)
BRAZIL -- 0.0%
Iron & Steel -- 0.0%
$ 207,800 Compania Vale do Rio Doce Navegacao
SA ............................... 18
======
Total Convertible Debentures
(Cost -- $0)...................... 18
======
CORPORATE BONDS -- 0.0% (a)
BRAZIL -- 0.0%
Diversified Companies -- 0.0%
200,000 * Mesbla SA (c) .................... 31,700
======
Total Corporate Bonds
(Cost -- $214,460)................ 31,700
======
REPURCHASE AGREEMENT -- 6.4%
UNITED STATES -- 6.4%
5,905,000 Keystone Joint Repurchase Agreement,
Investments in repurchase
agreements, in a joint trading
account, purchased 4/30/98, 5.52%
maturing 5/1/98, maturity value
$5,905,905 (cost $5,905,000) (b).. 5,905,000
---------
Total Repurchase Agreement
(Cost -- $5,905,000).............. 5,905,000
---------
Total Investments --
(Cost $79,393,095) ...... 98.8% 90,556,792
Other Assets and
Liabilities -- Net ...... 1.2% 1,080,445
---- ----------
Net Assets .............. 100% $91,637,237
==== ===========
</TABLE>
* Non-income producing securities.
(a) Less than one-tenth percent.
(b) The repurchase agreements are fully collateralized by U.S. government
and/or agency obligations based on market prices plus accrued interest at
April 30, 1998.
(c) Securities which have defaulted on payment of interest and/or principal.
The Fund has stopped accruing income on those so identified. At April 30,
1998, the fair value of this security is $31,700 (0.03% of the Fund's
net assets).
Summary of Portfolio Abbreviations:
ADR American Depository Receipts
GDR Global Depository Receipts
TIDES Term Income Deferrable Equity Securities
48
<PAGE>
EVERGREEN
Latin America
Schedule of Investments (continued)
April 30, 1998 (Unaudited)
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
<TABLE>
<CAPTION>
Forward Foreign Currency Exchange Contracts to Buy:
Unrealized
U.S. Value at In Exchange Appreciation
Exchange Date Contracts to Receive April 30, 1998 for U.S. $ (Depreciation)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
5/6/98 4,249,083 Mexican Peso $499,745 $501,071 $ 1,326
Forward Foreign Currency Exchange Contracts to Sell:
Contracts to Deliver
- --------------------------------------------------------------------------------------------------------
4/30/98 76,475 Brazilian Real $ 66,907 $ 66,869 $ 38
5/6/98 8,388,161 Mexican Peso 986,552 989,170 (2,618)
5/6/98 31,251,610 Venezuelan Bolivar 58,346 58,318 27
</TABLE>
See Combined Notes to Financial Statements.
49
<PAGE>
EVERGREEN
Natural Resources Fund
Schedule of Investments
April 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS -- 84.3%
AUSTRALIA -- 5.5%
Finance & Insurance -- 0.6%
600,000 * First Resources Development Fund** $ 84,140
----------
Oil / Energy -- 4.9%
119,800 * Santos Ltd. ........................ 432,112
46,800 Woodside Petroleum ................. 306,169
----------
738,281
----------
Total Australia .................... 822,421
==========
CANADA -- 21.4%
Chemical & Agricultural
Products -- 5.0%
8,500 Potash Corp. of Saskatchewan, Inc. . 757,299
----------
Gold Mining -- 1.6%
10,000 * Getchell Gold Corp. ................ 246,250
----------
Metals & Mining -- 8.4%
19,700 Alcan Aluminum Ltd. ................ 639,239
7,300 Inco Ltd. .......................... 127,882
20,000 Noranda, Inc. ...................... 412,602
20,000 * Repadre Capital Corp. .............. 78,325
----------
1,258,048
----------
Oil / Energy -- 5.9%
25,100 Canadian Occidental Petroleum Ltd. . 509,916
18,000 * Seven Seas Petroleum, Inc. ......... 382,500
----------
892,416
----------
Oil Field Services -- 0.5%
40,000 * Arakis Energy Corp. ................ 70,625
----------
Total Canada ....................... 3,224,638
==========
FRANCE -- 6.9%
Building, Construction &
Furnishings -- 2.4%
3,900 Lafarge SA ......................... 368,525
----------
Oil / Energy -- 4.5%
2,500 Societe Nationale Elf Aquitaine SA . 328,148
2,944 Total SA, Cl. B .................... 350,185
----------
678,333
----------
Total France ....................... 1,046,858
==========
MEXICO -- 3.6%
Metals & Mining -- 3.6%
130,000 * Industrias Penoles SA de CV ........ 536,557
==========
PERU -- 1.9%
Metals & Mining -- 1.9%
18,820 * Compania de Minas Buenaventura SA 146,537
8,700 * Compania de Minas Buenaventura
SA, ADR ............................ 134,850
----------
Total Peru ......................... 281,387
==========
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS -- continued
SOUTH AFRICA -- 1.1%
Gold Mining -- 1.1%
50,000 Durban Roodepoort Deep Ltd., ADR ... $ 166,406
----------
UNITED KINGDOM -- 9.0%
Diversified Companies -- 2.5%
52,250 Lonrho Plc ......................... 376,688
----------
Metals & Mining -- 4.9%
100,000 Billiton Plc ....................... 286,031
31,539 Rio Tinto Plc ...................... 452,904
----------
738,935
----------
Oil / Energy -- 1.6%
2,500 British Petroleum Plc, ADR ......... 236,250
----------
Total United Kingdom ............... 1,351,873
==========
UNITED STATES -- 34.9%
Chemical & Agricultural
Products -- 2.8%
15,600 AGCO Corp. ......................... 417,300
----------
Gold Mining -- 2.2%
15,000 Homestake Mining Co. ............... 174,375
5,000 Newmont Mining Corp. ............... 160,938
----------
335,313
----------
Metals & Mining -- 5.9%
8,000 Aluminum Co. of America ............ 620,000
10,000 * Stillwater Mining Co. .............. 264,375
----------
884,375
----------
Oil Field Services -- 24.0%
11,000 * BJ Services Co., Inc. .............. 412,500
3,500 Camco International, Inc. .......... 237,562
22,000 * Diamond Offshore Drilling, Inc. .... 1,113,750
13,000 Halliburton Co. .................... 715,000
13,800 Schlumberger Ltd. .................. 1,143,675
----------
3,622,487
----------
Total United States ................ 5,259,475
==========
Total Common Stocks
(Cost -- $9,461,647)................ 12,689,615
==========
PREFERRED STOCKS -- 7.6%
BRAZIL -- 7.6%
Iron & Steel -- 5.0%
5,970,000 * Caemi Mineracao E Metalurgia SA .... 428,050
13,588 Compania Vale do Rio Doce
Navegacao SA ....................... 320,794
----------
748,844
----------
Oil / Energy -- 2.6%
1,580,000 Petroleo Brasileiro SA, ("Petrobras") 400,647
----------
Total Brazil ....................... 1,149,491
==========
Total Preferred Stocks
(Cost -- $790,166).................. 1,149,491
==========
</TABLE>
50
<PAGE>
EVERGREEN
Natural Resources Fund
Schedule of Investments (continued)
April 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C> <C>
CONVERTIBLE DEBENTURES -- 0.0% (a)
BRAZIL -- 0.0%
Iron & Steel -- 0.0%
$ 23,588 Compania Vale do Rio Doce
Navegacao SA** ................... $ 2
-----------
Total Convertible Debentures
(Cost -- $0)...................... 2
-----------
Total Investments --
(Cost $10,251,813)....... 91.9% 13,839,108
Other Assets and
Liabilities -- Net ...... 8.1% 1,216,826
---- -----------
Net Assets .............. 100% $15,055,934
==== ===========
</TABLE>
* Non-income producing securities.
** Illiquid securities. The total market value of these illiquid securities at
April 30, 1998 was $84,142 (0.01% of the Fund's net assets).
(a) Less than one-tenth percent.
Summary of Portfolio Abbreviations:
ADR American Depository Receipts
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
<TABLE>
<CAPTION>
Unrealized
U.S. Value at In Exchange Appreciation
Exhange Date April 30, 1998 for U.S. $ (Depreciation)
- -------------------------------------------------------------------------------------------------
Forward Foreign Currency Exchange Contracts to Sell:
Contracts to Deliver
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
7/8/98 749,527 Australian Dollar $489,538 $495,100 $ 5,562
5/4/98 4,333,410 French Franc 721,079 712,000 (9,079)
8/5/98 3,652,101 French Franc 610,862 610,000 (862)
</TABLE>
See Combined Notes to Financial Statements.
51
<PAGE>
EVERGREEN
Precious Metals Fund
Schedule of Investments
April 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS -- 105.5%
AUSTRALIA -- 8.5%
Gold Mining -- 5.5%
800,000 Delta Gold NL .................... $ 1,179,269
3,284,824 Normandy Mining Ltd. ............. 3,663,721
3,500,000 * Perilya Mines NL** ............... 1,232,753
1,020,629 Ross Mining NL ................... 605,792
599,600 Sons of Gwalia Ltd.** ............ 1,849,852
-----------
8,531,387
-----------
Metals & Mining -- 3.0%
2,899,200 * Acacia Resources Ltd. ............ 4,557,319
-----------
Total Australia .................. 13,088,706
===========
CANADA -- 47.4%
Gold Mining -- 37.5%
50,000 Cambior, Inc. .................... 393,750
511,000 Cambior, Inc. .................... 4,020,245
1,405,500 * Eldorado Gold Corp. .............. 1,179,482
597,000 Euro Nevada Mining Ltd. .......... 10,750,551
575,000 Franco Nevada Mining Ltd. ........ 14,073,919
179,700 * Getchell Gold Corp. .............. 4,425,112
100,000 * Goldcorp, Inc. Cl. A ............. 562,500
462,000 * Greenstone Resources Ltd. ........ 2,810,867
910,000 * Kinross Gold Corp. ............... 4,151,875
100,000 * Kinross Gold Corp. ............... 458,058
1,258,000 * Lone Star Exploration NL ......... 52,785
546,500 * Meridian Gold, Inc. .............. 2,151,844
337,100 * Orvana Minerals Corp. ............ 447,911
194,300 * Philex Gold, Inc. ................ 203,818
100,000 Placer Dome, Inc. ................ 1,475,576
349,800 Prime Resources Group, Inc. ...... 2,654,170
4,000 * Rio Narcea Gold Mine, Inc. ....... 13,287
6,000,000 * Santa Cruz Gold, Inc. ............ 965,069
1,260,000 * TVX Gold, Inc. ................... 5,066,611
1,000,000 * Viceroy Resource Corp. ........... 1,958,110
-----------
57,815,540
-----------
Metals & Mining -- 9.9%
100,100 * Aber Resources Ltd. .............. 1,137,540
1,640,000 * Ariel Resources Ltd. ............. 344,068
125,000 Barrick Gold Corp. ............... 2,804,688
229,700 Barrick Gold Corp. ............... 5,148,351
222,700 * Bema Gold Corp. .................. 552,876
600,000 * Dayton Mining Corp. .............. 900,000
800,000 * Geomaque Exploration Ltd. ........ 1,454,596
501,500 * Golden Knight Resources, Inc. .... 519,053
300,000 * Repadre Capital Corp. ............ 1,174,866
200,000 * SouthernEra Resources Ltd. ....... 1,293,752
-----------
15,329,790
-----------
Total Canada ..................... 73,145,330
===========
MEXICO -- 0.9%
Metals & Mining -- 0.9%
350,000 * Industrias Penoles SA de CV ...... 1,444,576
===========
PAPUA NEW GUINEA -- 1.2%
Gold Mining -- 1.2%
1,100,000 * Lihir Gold Ltd. .................. 1,915,659
===========
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS -- continued
PERU -- 1.0%
Metals & Mining -- 1.0%
100,000 * Compania de Minas Buenaventura
SA, ADR .......................... $ 1,550,000
===========
SOUTH AFRICA -- 24.7%
Gold Mining -- 7.4%
2,932,916 * Avgold Ltd.** .................... 2,605,618
200,000 * Durban Roodepoort ................ 732,093
200,000 * Durban Roodepoort Deep Ltd., ADR . 665,625
358,000 Free State Consolidated Gold Mines
Ltd. ............................. 2,195,884
288,585 Western Areas Gold Mining Ltd., ADR 1,769,228
45,900 Western Deep Levels Ltd. ......... 1,284,183
75,000 Western Deep Levels Ltd., ADR .... 2,104,688
-----------
11,357,319
-----------
Metals & Mining -- 17.3%
157,800 Anglo-American Platinum Holdings . 2,522,802
629,520 Ashanti Goldfields Ltd., GDR ..... 6,216,510
150,000 Avmin Ltd., ADR .................. 780,000
155,200 De Beers Centenary ............... 4,022,794
751,700 East Rand Gold & Uranium Ltd., ADR . 1,100,038
300,000 Elandsrand Gold Mining Ltd., ADR** . 1,334,910
1,800,000 Gencor Ltd. ...................... 4,291,650
500,200 * Harmony Gold Mining Ltd.** ....... 2,969,133
67,000 * Harmony Gold Mining Ltd., ADR** .. 397,504
175,000 Impala Platinum Holdings Ltd. .... 2,274,931
300,000 * Randgold & Exploration Co. Ltd. .. 433,320
70,000 * Randgold Resources, Inc., GDR** .. 437,500
-----------
26,781,092
-----------
Total South Africa ............... 38,138,411
===========
UNITED STATES -- 21.8%
Gold Mining -- 12.7%
538,000 Anglogold Ltd. ................... 2,740,437
100,000 Battle Mountain Gold Co. ......... 718,750
523,000 Homestake Mining Co. ............. 6,079,875
312,650 Newmont Mining Corp. ............. 10,063,422
-----------
19,602,484
-----------
Metals & Mining -- 9.1%
1,999,000 * Canyon Resources Corp. ........... 2,248,875
100,000 * Hecla Mining Co. ................. 637,500
170,000 Pioneer Group, Inc. .............. 5,312,500
220,900 * Stillwater Mining Co. ............ 5,840,044
-----------
14,038,919
-----------
Total United States .............. 33,641,403
===========
Total Common Stocks
(Cost: $204,751,542).............. 162,924,085
===========
</TABLE>
52
<PAGE>
EVERGREEN
Precious Metals Fund
Schedule of Investments (continued)
April 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C> <C>
WARRANTS -- 0.1%
CANADA -- 0.1%
Metals & Mining -- 0.1%
162,500 * Geomaque Exploration Ltd.,
Expire 3/18/99 .................... $ 7,955
429,000 * Vengold, Inc., Ser. B, Expire 6/13/00 114,004
------------
Total Canada ...................... 121,959
------------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C> <C>
WARRANTS -- continued
UNITED STATES -- 0.0% (a)
Metals & Mining -- 0.0%
227,500 * Atlas Corp., Expire 12/15/99 ...... $ 1,137
75,000 * Canyon Resources Corp. ............ 0
------------
Total United States ............... 1,137
============
Total Warrants
(Cost: $304,340)................... 123,096
============
Total Investments --
(Cost $205,055,882)...... 105.6% 163,047,181
Investment In
Wholly-Owned
Unconsolidated
Foreign Subsidiary
Precious Metals (Bermuda) Ltd. .... 828,788
Other Assets and
Liabilities -- Net ...... ( 5.6%) (9,473,391)
----- ------------
Net Assets .............. 100% $154,402,578
===== ============
</TABLE>
* Non-income producing securities.
** Illiquid securities. The total market value of these illiquid securities at
April 30, 1998 was $10,827,270 (7.01% of the Fund's net assets).
(a) Less than one-tenth percent.
Summary of Portfolio Abbreviations:
ADR American Depository Receipts
GDR Global Depository Receipts
See Combined Notes to Financial Statements.
53
<PAGE>
EVERGREEN
International and Global Growth Funds
Statements of Assets and Liabilities
April 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Global International
Opportunities Growth
Fund Fund
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Investments at value (identified cost -- $229,953,069,
$136,387,902, $79,393,095, $10,251,813 and
$205,055,882, respectively)..................................... $305,051,221 $ 181,460,778
Investment in wholly-owned unconsolidated foreign
subsidiary, at fair value ...................................... 0 0
Foreign currency, at value (identified cost -- $99,919, $899,
$825,364, $50, and $0, respectively)............................ 100,019 920
Cash ............................................................ 981 790
Receivable for investments sold ................................. 10,100,300 650,878
Receivable for Fund shares sold ................................. 2,278,649 1,458,679
Dividends and interest receivable ............................... 383,678 636,094
Unrealized appreciation on open forward foreign currency
exchange contracts ............................................. 451,756 653,860
Foreign tax reclaim receivable .................................. 136,572 98,827
Unamortized organization expenses ............................... 0 0
Prepaid expenses and other assets ............................... 50,553 106,721
- -------------------------------------------------------------------------------------------------
Total assets .................................................. 318,553,729 185,067,547
- -------------------------------------------------------------------------------------------------
Liabilities
Payable for investments purchased ............................... 7,576,810 109,744
Payable for Fund shares repurchased ............................. 1,510,090 332,534
Advisory fee payable ............................................ 231,613 104,371
Distribution fee payable ........................................ 159,338 64,331
Due to related parties .......................................... 4,000 2,678
Unrealized depreciation on open forward foreign currency
exchange contracts ............................................. 383,348 768,624
Foreign taxes payable ........................................... 49,028 71,669
Distributions payable ........................................... 42,629 2,493
Due to custodian bank ........................................... 0 0
Accrued expenses and other liabilities .......................... 221,132 159,869
- -------------------------------------------------------------------------------------------------
Total liabilities ............................................. 10,177,988 1,616,313
- -------------------------------------------------------------------------------------------------
Net assets ....................................................... $308,375,741 $ 183,451,234
=================================================================================================
Net assets represented by
Paid-in capital ................................................. $214,429,866 $ 135,457,764
Undistributed (distributions in excess of) net investment
income (loss) .................................................. (1,910,129) 1,021,158
Accumulated net realized gain (loss) on investments and
foreign currency related transactions .......................... 20,696,032 2,016,787
Net unrealized appreciation (depreciation) of investments
and foreign currency related transactions ...................... 75,159,972 44,955,525
- -------------------------------------------------------------------------------------------------
Total net assets .............................................. $308,375,741 $ 183,451,234
=================================================================================================
Net assets consists of
Class A ......................................................... $ 81,969,660 $ 105,133,890
Class B ......................................................... 189,677,201 52,818,828
Class C ......................................................... 36,707,193 233,751
Class Y ......................................................... 21,687 25,264,765
- -------------------------------------------------------------------------------------------------
$308,375,741 $ 183,451,234
=================================================================================================
Shares outstanding
Class A ......................................................... 3,258,000 12,626,241
Class B ......................................................... 7,865,103 6,356,189
Class C ......................................................... 1,518,733 28,125
Class Y ......................................................... 844 3,033,755
=================================================================================================
Net asset value per share
Class A ......................................................... $ 25.16 $ 8.33
=================================================================================================
Class A -- Offering price (based on sales charge of 4.75%) ...... $ 26.41 $ 8.75
=================================================================================================
Class B ......................................................... $ 24.12 $ 8.31
=================================================================================================
Class C ......................................................... $ 24.17 $ 8.31
=================================================================================================
Class Y ......................................................... $ 25.71 $ 8.33
=================================================================================================
<CAPTION>
Latin Natural Precious
America Resources Metals
Fund Fund Fund
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets
Investments at value (identified cost -- $229,953,069,
$136,387,902, $79,393,095, $10,251,813 and
$205,055,882, respectively)..................................... $ 90,556,792 $13,839,108 $ 163,047,181
Investment in wholly-owned unconsolidated foreign
subsidiary, at fair value ...................................... 0 0 828,788
Foreign currency, at value (identified cost -- $99,919, $899,
$825,364, $50, and $0, respectively)............................ 828,026 42 0
Cash ............................................................ 766 268,470 1,642,824
Receivable for investments sold ................................. 1,114,358 0 0
Receivable for Fund shares sold ................................. 127,995 993,112 95,812
Dividends and interest receivable ............................... 1,023,087 65,722 467,451
Unrealized appreciation on open forward foreign currency
exchange contracts ............................................. 1,391 5,562 0
Foreign tax reclaim receivable .................................. 649 10,501 0
Unamortized organization expenses ............................... 6,634 5,553 0
Prepaid expenses and other assets ............................... 49,358 25,995 74,483
- ---------------------------------------------------------------------------------------------------------------
Total assets .................................................. 93,709,056 15,214,065 166,156,539
- ---------------------------------------------------------------------------------------------------------------
Liabilities
Payable for investments purchased ............................... 1,526,491 0 0
Payable for Fund shares repurchased ............................. 362,453 92,197 4,608,839
Advisory fee payable ............................................ 57,443 11,881 90,962
Distribution fee payable ........................................ 66,003 8,799 55,485
Due to related parties .......................................... 2,997 10,863 1,700
Unrealized depreciation on open forward foreign currency
exchange contracts ............................................. 2,618 9,941 0
Foreign taxes payable ........................................... 2,224 613 4,721
Distributions payable ........................................... 17,142 0 8,741
Due to custodian bank ........................................... 0 0 6,922,000
Accrued expenses and other liabilities .......................... 34,448 23,837 61,513
- ---------------------------------------------------------------------------------------------------------------
Total liabilities ............................................. 2,071,819 158,131 11,753,961
- ---------------------------------------------------------------------------------------------------------------
Net assets ....................................................... $ 91,637,237 $15,055,934 $ 154,402,578
===============================================================================================================
Net assets represented by
Paid-in capital ................................................. $ 86,815,376 $11,758,453 $ 206,977,044
Undistributed (distributions in excess of) net investment
income (loss) .................................................. 486,008 (159,739) (220,548)
Accumulated net realized gain (loss) on investments and
foreign currency related transactions .......................... (6,825,611) (125,238) (10,342,763)
Net unrealized appreciation (depreciation) of investments
and foreign currency related transactions ...................... 11,161,464 3,582,458 (42,011,155)
- ---------------------------------------------------------------------------------------------------------------
Total net assets .............................................. $ 91,637,237 $15,055,934 $ 154,402,578
===============================================================================================================
Net assets consists of
Class A ......................................................... $ 13,070,392 $ 3,879,510 $ 118,143,458
Class B ......................................................... 69,358,714 9,844,983 35,472,662
Class C ......................................................... 9,206,843 1,331,441 786,458
Class Y ......................................................... 1,288 0 0
- ---------------------------------------------------------------------------------------------------------------
$ 91,637,237 $15,055,934 $ 154,402,578
===============================================================================================================
Shares outstanding
Class A ......................................................... 1,106,770 359,168 7,559,977
Class B ......................................................... 6,034,932 938,430 2,274,357
Class C ......................................................... 801,466 127,046 50,428
Class Y ......................................................... 109 0 0
===============================================================================================================
Net asset value per share
Class A ......................................................... $ 11.81 $ 10.80 $ 15.63
===============================================================================================================
Class A -- Offering price (based on sales charge of 4.75%) ...... $ 12.40 $ 11.34 $ 16.41
===============================================================================================================
Class B ......................................................... $ 11.49 $ 10.49 $ 15.60
===============================================================================================================
Class C ......................................................... $ 11.49 $ 10.48 $ 15.60
===============================================================================================================
Class Y ......................................................... $ 11.82 -- --
===============================================================================================================
</TABLE>
See Combined Notes to Financial Statements.
54
<PAGE>
EVERGREEN
International and Global Growth Funds
Statements of Operations
Six Months Ended April 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Global International
Opportunities Growth
Fund Fund
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Investment income
Dividends (net of foreign withholding taxes of $101,901,
$138,671, 29,319, $6,532, and $52,224, respectively)........... $ 876,073 $ 1,173,321
Interest ....................................................... 499,946 329,088
- -----------------------------------------------------------------------------------------------
Total income .................................................... 1,376,019 1,502,409
Expenses
Advisory fee ................................................... 1,552,411 556,665
Distribution Plan expenses ..................................... 1,266,047 521,108
Transfer agent fees ............................................ 547,631 248,030
Trustees fees .................................................. 3,265 2,045
Custodian fees ................................................. 79,999 22,929
Administrative service fees .................................... 15,062 13,235
Professional fees .............................................. 16,764 10,716
Printing ....................................................... 299,884 67,918
Registration fees .............................................. 50,059 40,246
Amortization of organization expenses .......................... 0 0
Other .......................................................... 5,981 88,141
- -----------------------------------------------------------------------------------------------
Total expenses ................................................ 3,837,103 1,571,033
Less: Indirectly paid expenses ................................. (10,549) (2,235)
- -----------------------------------------------------------------------------------------------
Net expenses .................................................. 3,826,554 1,568,798
- -----------------------------------------------------------------------------------------------
Net investment income (loss) ................................... (2,450,535) (66,389)
- -----------------------------------------------------------------------------------------------
Equity in earnings of wholly-owned unconsolidated foreign
subsidiary ..................................................... 0 0
===============================================================================================
Net realized and unrealized gain (loss) on investments and
foreign currency related transactions
Net realized gain (loss) from
Investments ................................................... 19,271,896 1,484,806
Foreign currency related transactions ......................... 1,445,561 2,217,854
- -----------------------------------------------------------------------------------------------
Net realized gain (loss) on investments and foreign currency
related transactions .......................................... 20,717,457 3,702,660
- -----------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) of
investments and foreign currency related transactions ......... 20,878,672 26,387,704
- -----------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments and
foreign currency related transactions ......................... 41,596,129 30,090,364
- -----------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations .................................................... $ 39,145,594 $30,023,975
===============================================================================================
<CAPTION>
Latin Natural Precious
America Resources Metals
Fund Fund Fund
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment income
Dividends (net of foreign withholding taxes of $101,901,
$138,671, 29,319, $6,532, and $52,224, respectively)........... $ 1,575,056 $ 182,680 $ 1,004,627
Interest ....................................................... 62,957 8,348 74,916
- -------------------------------------------------------------------------------------------------------------
Total income .................................................... 1,638,013 191,028 1,079,543
Expenses
Advisory fee ................................................... 351,933 83,659 411,986
Distribution Plan expenses ..................................... 418,983 70,830 366,295
Transfer agent fees ............................................ 170,728 26,994 308,464
Trustees fees .................................................. 1,871 506 1,342
Custodian fees ................................................. 95,615 12,898 47,396
Administrative service fees .................................... 7,222 1,468 9,098
Professional fees .............................................. 10,678 13,015 24,261
Printing ....................................................... 49,475 36,295 76,605
Registration fees .............................................. 37,657 44,171 9,818
Amortization of organization expenses .......................... 6,526 7,068 0
Other .......................................................... 4,456 6,531 50,788
- -------------------------------------------------------------------------------------------------------------
Total expenses ................................................ 1,155,144 303,435 1,306,053
Less: Indirectly paid expenses ................................. (5,899) (604) (276)
- -------------------------------------------------------------------------------------------------------------
Net expenses .................................................. 1,149,245 302,831 1,305,777
- -------------------------------------------------------------------------------------------------------------
Net investment income (loss) ................................... 488,768 (111,803) (226,234)
- -------------------------------------------------------------------------------------------------------------
Equity in earnings of wholly-owned unconsolidated foreign
subsidiary ..................................................... 0 0 8,443
=============================================================================================================
Net realized and unrealized gain (loss) on investments and
foreign currency related transactions
Net realized gain (loss) from
Investments ................................................... (5,572,768) (340,839) (9,891,961)
Foreign currency related transactions ......................... (413,799) 221,088 (11,835)
- -------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments and foreign currency
related transactions .......................................... (5,986,567) (119,751) (9,903,796)
- -------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) of
investments and foreign currency related transactions ......... 17,107,785 (740,141) 22,060,759
- -------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments and
foreign currency related transactions ......................... 11,121,218 (859,892) 12,156,963
- -------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations .................................................... $ 11,609,986 $ (971,695) $ 11,939,172
=============================================================================================================
</TABLE>
See Combined Notes to Financial Statements.
55
<PAGE>
EVERGREEN
International and Global Growth Funds
Statements of Changes in Net Assets
Six Months Ended April 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Global International
Opportunities Growth
Fund Fund
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations
Net investment income (loss) ................................ $ (2,450,535) $ (66,389)
Equity in earnings of wholly-owned unconsolidated foreign
subsidiary ................................................. 0 0
Net realized gain (loss) on investments and foreign
currency related transactions .............................. 20,717,457 3,702,660
Net change in unrealized appreciation (depreciation) of
investments and foreign currency related transactions ...... 20,878,672 26,387,704
- -------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations ................................................. 39,145,594 30,023,975
- -------------------------------------------------------------------------------------------------
Distributions to shareholders
From net investment income:
Class A .................................................... 0 0
Class B .................................................... 0 (5,718,223)
Class C .................................................... 0 0
In excess of net investment income:
Class B .................................................... 0 0
Class C .................................................... 0 0
From net realized gain on investments and foreign
currency related transactions:
Class A .................................................... (6,152,515) 0
Class B .................................................... (14,270,760) (26,737,026)
Class C .................................................... (2,859,903) 0
Class Y .................................................... (1) 0
- -------------------------------------------------------------------------------------------------
Total distributions to shareholders ........................ (23,283,179) (32,455,249)
- -------------------------------------------------------------------------------------------------
Capital share transactions
Proceeds from shares sold ................................... 29,146,699 60,391,745
Payment for shares redeemed ................................. (115,559,613) (54,725,416)
Net asset value of shares issued in reinvestment of
distributions .............................................. 20,555,694 28,410,069
Shares issued in acquisition of Blanchard Precious Metals
Fund ....................................................... 0 0
- -------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
capital share transactions ................................ (65,857,220) 34,076,398
- -------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets ................... (49,994,805) 31,645,124
Net assets
Beginning of period ......................................... 358,370,546 151,806,110
- -------------------------------------------------------------------------------------------------
End of period ............................................... $ 308,375,741 $ 183,451,234
=================================================================================================
Undistributed (distributions in excess of) net investment
income (loss) ............................................... $ (1,910,129) $ 1,021,158
=================================================================================================
<CAPTION>
Latin Natural Precious
America Resources Metals
Fund Fund Fund
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operations
Net investment income (loss) ................................ $ 488,768 $ (111,803) $ (226,234)
Equity in earnings of wholly-owned unconsolidated foreign
subsidiary ................................................. 0 0 8,443
Net realized gain (loss) on investments and foreign
currency related transactions .............................. (5,986,567) (119,751) (9,903,796)
Net change in unrealized appreciation (depreciation) of
investments and foreign currency related transactions ...... 17,107,785 (740,141) 22,060,759
- -----------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations ................................................. 11,609,986 (971,695) 11,939,172
- -----------------------------------------------------------------------------------------------------------------
Distributions to shareholders
From net investment income:
Class A .................................................... 0 (39,137) 0
Class B .................................................... 0 (20,850) 0
Class C .................................................... 0 (2,848) 0
In excess of net investment income:
Class B .................................................... 0 (135,522) 0
Class C .................................................... 0 (24,217) 0
From net realized gain on investments and foreign
currency related transactions:
Class A .................................................... (2,915,764) (376,317) 0
Class B .................................................... (16,639,668) (1,503,573) (5,647,344)
Class C .................................................... (2,385,233) (260,243) 0
Class Y .................................................... 0 0 0
- -----------------------------------------------------------------------------------------------------------------
Total distributions to shareholders ........................ (21,940,665) (2,362,707) (5,647,344)
- -----------------------------------------------------------------------------------------------------------------
Capital share transactions
Proceeds from shares sold ................................... 12,922,303 16,033,889 112,171,009
Payment for shares redeemed ................................. (30,432,722) (21,742,072) (119,417,487)
Net asset value of shares issued in reinvestment of
distributions .............................................. 19,625,500 2,160,001 4,759,767
Shares issued in acquisition of Blanchard Precious Metals
Fund ....................................................... 0 0 39,424,759
- -----------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
capital share transactions ................................ 2,115,081 (3,548,182) 36,938,048
- -----------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets ................... (8,215,598) (6,882,584) 43,229,876
Net assets
Beginning of period ......................................... 99,852,835 21,938,518 111,172,702
- --------------------------------------------------------------- -------------------------------------------------
End of period ............................................... $ 91,637,237 $ 15,055,934 $ 154,402,578
=================================================================================================================
Undistributed (distributions in excess of) net investment
income (loss) ............................................... $ 486,008 $ (159,739) $ (220,548)
=================================================================================================================
</TABLE>
See Combined Notes to Financial Statements.
56
<PAGE>
EVERGREEN
International and Global Growth Funds
Statements of Changes in Net Assets
Period Ended October 31, 1997
<TABLE>
<CAPTION>
Global International
Opportunities Growth
Fund*** Fund
- ----------------------------------------------------------------------------- -----------------
<S> <C> <C>
Operations
Net investment loss ......................................... $ (648,601) $ (786,796)
Equity in earnings of wholly-owned unconsolidated foreign
subsidiary ................................................. 0 0
Net realized gain on investments and foreign currency
related transactions ....................................... 8,871,051 33,079,318
Net change in unrealized depreciation of investments and
foreign currency related transactions ...................... (29,437,805) (8,385,742)
- -----------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations ................................................ (21,215,355) 23,906,780
- -----------------------------------------------------------------------------------------------
Distributions to shareholders
From net investment income:
Class A .................................................... 0 0
Class B .................................................... 0 (1,828,737)
In excess of net investment income:
Class B .................................................... 0 0
Class C .................................................... 0 0
From net realized gain on investments and foreign
currency related transactions:
Class B .................................................... 0 (2,926,339)
- -----------------------------------------------------------------------------------------------
Total distributions to shareholders ........................ 0 (4,755,076)
- -----------------------------------------------------------------------------------------------
Capital share transactions
Proceeds from shares sold ................................... 5,938,720 159,178,048
Payment for shares redeemed ................................. (28,290,639) (178,656,491)
Net asset value of shares issued in reinvestment of
distributions .............................................. 0 4,222,295
- -----------------------------------------------------------------------------------------------
Net decrease in net assets resulting from capital share
transactions .............................................. (22,351,919) (15,256,148)
- -----------------------------------------------------------------------------------------------
Total increase (decrease) in net assets ................... (43,567,274) 3,895,556
Net assets
Beginning of year ........................................... 401,937,820 147,910,554
- -----------------------------------------------------------------------------------------------
End of year ................................................. $ 358,370,546 $ 151,806,110
===============================================================================================
Undistributed (distributions in excess of) net investment
income (loss) ............................................... $ 540,406 $ 6,805,770
===============================================================================================
<CAPTION>
Latin Natural Precious
America Resources Metals
Fund Fund** Fund*
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operations
Net investment loss ......................................... $ (483,675) $ (102,070) $ (1,019,679)
Equity in earnings of wholly-owned unconsolidated foreign
subsidiary ................................................. 0 0 13,054
Net realized gain on investments and foreign currency
related transactions ....................................... 36,087,300 2,079,956 3,388,158
Net change in unrealized depreciation of investments and
foreign currency related transactions ...................... (17,271,713) (835,993) (61,446,526)
- ---------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations ................................................ 18,331,912 1,141,893 (59,064,993)
- ---------------------------------------------------------------------------------------------------------------
Distributions to shareholders
From net investment income:
Class A .................................................... (91,845) 0 0
Class B .................................................... (139,227) 0 0
In excess of net investment income:
Class B .................................................... (430,575) 0 0
Class C .................................................... (62,177) 0 0
From net realized gain on investments and foreign
currency related transactions:
Class B .................................................... 0 0 0
- ---------------------------------------------------------------------------------------------------------------
Total distributions to shareholders ........................ (723,824) 0 0
- ---------------------------------------------------------------------------------------------------------------
Capital share transactions
Proceeds from shares sold ................................... 35,265,301 1,626,365 83,990,548
Payment for shares redeemed ................................. (52,499,496) (7,066,862) (103,860,464)
Net asset value of shares issued in reinvestment of
distributions .............................................. 639,781 0 0
- ---------------------------------------------------------------------------------------------------------------
Net decrease in net assets resulting from capital share
transactions .............................................. (16,594,414) (5,440,497) (19,869,916)
- ---------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets ................... 1,013,674 (4,298,604) (78,934,909)
Net assets
Beginning of year ........................................... 98,839,161 26,237,122 190,107,611
- ---------------------------------------------------------------------------------------------------------------
End of year ................................................. $ 99,852,835 $ 21,938,518 $ 111,172,702
===============================================================================================================
Undistributed (distributions in excess of) net investment
income (loss) ............................................... $ (2,760) $ 174,638 $ (2,757)
===============================================================================================================
</TABLE>
* The Fund changed its fiscal year end to October 31. The Statements of
Changes are for the eight-month period ended October 31, 1997.
** The Fund changed its fiscal year end to October 31. The Statements of
Changes are for the seven-month period ended October 31, 1997.
*** The Fund changed its fiscal year end to October 31. The Statements of
Changes are for the 1-month period ended October 31, 1997.
See Combined Notes to Financial Statements.
57
<PAGE>
EVERGREEN
International and Global Growth Funds
Statements of Changes in Net Assets
Prior Periods
<TABLE>
<CAPTION>
Global
Opportunities
Fund***
- -----------------------------------------------------------------------------------------------------------
<S> <C>
Operations
Net investment loss ..................................................................... $ (6,655,024)
Equity in earnings of wholly-owned unconsolidated foreign subsidiary .................... 0
Net realized gain on investments and foreign currency related transactions .............. 26,795,363
Net change in unrealized appreciation (depreciation) of investments and foreign currency
related transactions ................................................................... (6,946,269)
- -----------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations ........................ 13,194,070
- -----------------------------------------------------------------------------------------------------------
Distributions to shareholders
From net realized gain on investments and foreign currency related transactions:
Class A ................................................................................ (11,550,719)
Class B ................................................................................ (19,127,005)
Class C ................................................................................ (6,057,525)
- -----------------------------------------------------------------------------------------------------------
Total distributions to shareholders .................................................... (36,735,249)
- -----------------------------------------------------------------------------------------------------------
Capital share transactions
Proceeds from shares sold ............................................................... 72,496,510
Payment for shares redeemed ............................................................. (437,692,552)
Net asset value of shares issued in reinvestment of distributions ....................... 29,860,344
- -----------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from capital share transactions ........ (335,335,698)
- -----------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets ............................................... (358,876,877)
Net assets
Beginning of year ....................................................................... 760,814,697
- -----------------------------------------------------------------------------------------------------------
End of year ............................................................................. $ 401,937,820
===========================================================================================================
Undistributed net investment income (loss) ............................................... $ (966,557)
===========================================================================================================
<CAPTION>
Natural Precious
Resources Metals
Fund** Fund*
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations
Net investment loss ..................................................................... $ (261,955) $ (2,063,632)
Equity in earnings of wholly-owned unconsolidated foreign subsidiary .................... 0 69,764
Net realized gain on investments and foreign currency related transactions .............. 1,096,497 14,024,717
Net change in unrealized appreciation (depreciation) of investments and foreign currency
related transactions ................................................................... 1,919,418 (17,875,249)
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations ........................ 2,753,960 (5,844,400)
- ---------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders
From net realized gain on investments and foreign currency related transactions:
Class A ................................................................................ 0 0
Class B ................................................................................ 0 (7,301,560)
Class C ................................................................................ 0 0
- ---------------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders .................................................... 0 (7,301,560)
- ---------------------------------------------------------------------------------------------------------------------------
Capital share transactions
Proceeds from shares sold ............................................................... 9,241,182 618,026,217
Payment for shares redeemed ............................................................. (7,515,475) (638,015,009)
Net asset value of shares issued in reinvestment of distributions ....................... 0 5,971,990
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from capital share transactions ........ 1,725,707 (14,016,802)
- ---------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets ............................................... 4,479,667 (27,162,762)
Net assets
Beginning of year ....................................................................... 21,757,455 217,270,373
- ---------------------------------------------------------------------------------------------------------------------------
End of year ............................................................................. $ 26,237,122 $ 190,107,611
===========================================================================================================================
Undistributed net investment income (loss) ............................................... $ (33,055) $ 4,722,048
===========================================================================================================================
</TABLE>
* For the year ended February 28, 1997.
** For the year ended March 31, 1997.
*** For the year ended September 30, 1997.
See Combined Notes to Financial Statements.
58
<PAGE>
Combined Notes to Financial Statements
1. ORGANIZATION
The Evergreen International & Global Growth Funds consist of the Evergreen
Global Opportunities Fund ("Global Opportunities"), Evergreen International
Growth Fund ("International Growth"), Evergreen Latin American Fund ("Latin
America"), Evergreen Natural Resources Fund ("Natural Resources") and Evergreen
Precious Metals Fund ("Precious Metals") each of which are registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as diversified,
open-end management investment companies. Each Fund is a series of the
Evergreen International Trust, a Delaware business trust organized on September
17, 1997. Formerly, each Fund was organized as either a Delaware business trust
or a series of a Massachusetts business trust. Global Opportunities,
International, Latin America, Natural Resources and Precious Metals are
collectively referred to herein as the "Funds".
The Funds offer Class A, Class B, Class C and Class Y Shares with the exception
of Natural Resources and Precious Metals which do not offer class Y shares.
Class A shares are sold with a maximum front-end sales charge of 4.75%. Class B
and Class C shares are sold without a front end sales charge, but pay a higher
ongoing distribution fee than Class A. Class B shares are sold subject to a
contingent deferred sales charge that is payable upon redemption and decreases
depending on how long the shares have been held. Class B shares purchased after
January 1, 1997 will automatically convert to Class A shares after seven years.
Class B shares purchased prior to January 1, 1997 retain their existing
conversion rights. Class C shares are sold subject to a contingent deferred
sales charge payable on shares redeemed within one year after the month of
purchase. Class Y shares are sold at net asset value and are not subject to
contingent deferred sales charges or distribution fees. Class Y shares are sold
only to investment advisory clients of First Union Corporation ("First Union")
and its affiliates, certain institutional investors or Class Y shareholders of
record of certain other funds managed by First Union and its affiliates as of
December 30, 1994.
2. ACQUISITION INFORMATION
Effective December 1, 1997, Signet Banking Corporation ("Signet") merged with
First Union Corporation ("First Union"). Effective at the close of business on
February 27, 1998, Precious Metals acquired substantially all of the net assets
of Blanchard Precious Metals Fund, an open-end management investment company
managed by a subsidiary of Signet and registered under the 1940 Act, valued at
$39,424,759. The net assets were exchanged through a non-taxable transaction
for 3,176,709 Class A Shares of Precious Metals valued at $3.83 per share. The
acquired net assets consisted primarily of portfolio securities with unrealized
depreciation of $69,315,421. The aggregate net assets of Precious Metals after
the acquisition were $144,108,204.
3. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. The
policies are in conformity with generally accepted accounting principles, which
require management to make estimates and assumptions that affect amounts
reported herein. Actual results could differ from these estimates.
A. Valuation of Securities
The Funds value investments traded on an established exchange on the basis of
the last sales price on the exchange where primarily traded. The Funds value
securities traded in the over-the counter market at the mean between the bid
and asked prices. Securities for which market quotations are not available from
an independent pricing service, are valued at fair value as determined in good
faith according to procedures approved by the Board of Trustees. Short-term
investments with remaining maturities of 60 days or less are carried at
amortized cost, which approximates market value.
B. Repurchase Agreements
Each Fund may invest in repurchase agreements. Securities pledged as collateral
for repurchase agreements are held by the custodian on the Fund's behalf. Each
Fund monitors the adequacy of the collateral daily and will 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. Each Fund will only enter into repurchase
agreements with banks and other financial institutions which are deemed by the
investment adviser to be creditworthy pursuant to guidelines established by the
Board of Trustees.
Pursuant to an exemptive order issued by the Securities and Exchange
Commission, the Funds, along with certain other funds managed by Keystone
Investment Management Company ("Keystone"), may transfer uninvested cash
balances into a joint trading account. These balances are invested in one or
more repurchase agreements that are fully collateralized by U.S. Treasury
and/or federal agency obligations.
59
<PAGE>
Combined Notes to Financial Statements (continued)
C. Reverse Repurchase Agreements
To obtain short-term financing, the Funds may enter into reverse repurchase
agreements with qualified third-party broker-dealers. Interest on the value of
reverse repurchase agreements is based upon competitive market rates at the
time of issuance. At the time a Fund enters into a reverse repurchase
agreement, it will establish and maintain a segregated account with the
custodian containing qualifying assets having a value not less than the
repurchase price, including accrued interest. If the counterparty to the
transaction is rendered insolvent, the ultimate realization of the securities
to be repurchased by the Fund may be delayed or limited.
D. Foreign Currency
The books and records of the Funds are maintained in United States (U.S.)
dollars. Foreign currency amounts are translated into U.S. dollars as follows:
market value of investments, assets and liabilities at the daily rate of
exchange; purchases and sales of investments, income and expenses at the rate
of exchange prevailing on the respective dates of such transactions. Net
unrealized foreign exchange gain (loss) resulting from changes in foreign
currency exchange rates is a component of net unrealized appreciation
(depreciation) on investments and foreign currency related transactions. Net
realized foreign currency gains and losses resulting from changes in exchange
rates include: foreign currency gains and losses between trade date and
settlement date on investment securities transactions, foreign currency related
transactions and the difference between the amounts of interest and dividends
recorded on the books of the Fund and the amount actually received. Such gains
and losses are included in realized gain (loss) on foreign currency related
transactions. The portion of foreign currency gains and losses related to
fluctuations in exchange rates between the initial purchase trade date and
subsequent sale trade date is included in realized gain (loss) on foreign
currency related transactions.
E. Forward Foreign Currency Exchange Contracts
The Funds may enter into forward foreign currency exchange contracts ("forward
contracts") to settle portfolio purchases and sales of securities denominated
in a foreign currency and to hedge certain foreign currency assets or
liabilities. Forward contracts are recorded at the forward rate and
marked-to-market daily. Realized gains and losses arising from such
transactions are included in net realized gain (loss) on foreign currency
related transactions. The Fund bears the risk of an unfavorable change in the
foreign currency exchange rate underlying the forward contract and is subject
to the credit risk that the other party will not fulfill their obligations
under the contract. Forward contracts involve elements of market risk in excess
of the amount reflected in the statements of assets and liabilities.
F. Security Transactions and Investment Income
Securities transactions are accounted for no later than one business day after
the trade date. Realized gains and losses are computed on the identified cost
basis. Interest income is recorded on the accrual basis and includes accretion
of discounts and amortization of premiums. Dividend income is recorded on the
ex-dividend date, or in the case of some foreign securities, on the date
thereafter when the Fund is made aware of the dividend. Foreign income may be
subject to foreign withholding taxes which are accrued as applicable. Capital
gains realized on some foreign securities may be subject to foreign taxes and
are accrued as applicable.
G. Federal Taxes
The Funds have qualified and intend to continue to qualify as regulated
investment companies under the Internal Revenue Code of 1986, as amended (the
"Code"). Thus, the Funds will not incur any federal income tax liability since
they are expected to distribute all of their net investment company taxable
income and net capital gains, if any, to their shareholders. The Funds also
intend to avoid excise tax liability by making the required distributions under
the Code. Accordingly, no provision for federal taxes is required. To the
extent that realized capital gains can be offset by capital loss carryforwards,
it is each Fund's policy not to distribute such gains.
H. Distributions
Distributions from net investment income for the Funds are declared and paid
annually. Distributions from net realized capital gains, if any, are paid at
least annually. Distributions to shareholders are recorded at the close of
business on the ex-dividend date.
Income and capital gains distributions to shareholders are determined in
accordance with income tax regulations, which may differ from generally
accepted accounting principles. The significant differences between financial
statement amounts available for distributions and distributions made in
accordance with income tax regulations are primarily due to differing treatment
for net operating losses.
I. Class Allocations
Income, expenses (other than class specific expenses) and realized and
unrealized gains and losses are prorated among the classes based on the
relative net assets of each class. Currently, class specific expenses are
limited to expenses incurred under the Distribution Plans for each class.
60
<PAGE>
Combined Notes to Financial Statements (continued)
J. Organization Expenses
Organization expenses for Latin America and Natural Resources are being
amortized to operations over a five-year period on a straight-line basis. In
the event any of the initial shares of these Funds are redeemed by any holder
during the five-year amortization period, redemption proceeds will be reduced
by any unamortized organization expenses in the same proportion as the number
of initial shares being redeemed bears to the number of initial shares
outstanding at the time of the redemption.
4. INVESTMENT IN FOREIGN SUBISDIARY
Precious Metals (Bermuda) Ltd., Precious Metals' wholly-owned foreign
subsidiary, was acquired in May 1975 and has as its primary objective the
acquisition of precious metals. The Fund accounts for its investments in the
subsidiary under the equity method of accounting. At April 30, 1998, the fair
value of the Fund's investment in the foreign subsidiary was determined as
follows:
<TABLE>
<S> <C>
Cash and cash equivalents ... $ 848,358
Accrued expenses ............ (19,570)
- ------------------------------------------
$ 828,788
==========================================
</TABLE>
During the six months ended April 30, 1998, the foreign subsidiary had no
purchases or sales of precious metals. Investment activities of the foreign
subsidiary resulted in gross investment income, general and administrative
expenses, and net investment income $40,403, $18,906 and $21,497, respectively.
Management fees paid or accrued by the foreign subsidiary to Keystone totaled
$6,731 for the six months ended April 30, 1998.
5. CAPITAL SHARE TRANSACTIONS
The Funds have an unlimited number of shares of beneficial interest with a par
value of $0.0001 authorized. Shares of beneficial interest of the Funds are
currently divided into Class A, Class B, Class C and Class Y. Transactions in
shares of the Funds were as follows:
- --------------------------------------------------------------------------------
GLOBAL OPPORTUNITIES
<TABLE>
<CAPTION>
Six Months Ended Period Ended
April 30, 1997 October 31, 1997*
-------------------------------- ------------------------------
Shares Amount Shares Amount
--------------- ---------------- ------------- ----------------
<S> <C> <C> <C> <C>
Class A
Shares sold ................................... 1,020,523 $ 24,343,026 205,158 $ 5,151,881
Shares redeemed ............................... (2,153,045) (49,416,369) (595,578) (14,880,208)
Shares issued in reinvestment of distributions 224,107 4,890,006 0 0
- -------------------------------------------------------------------------------------------------------------
Net decrease .................................. (908,415) (20,183,337) (390,420) (9,728,327)
- -------------------------------------------------------------------------------------------------------------
Class B
Shares sold ................................... 170,505 3,820,396 22,401 532,211
Shares redeemed ............................... (2,465,776) (53,444,806) (424,559) (10,089,631)
Shares issued in reinvestment of distributions 620,043 13,008,494 0 0
- -------------------------------------------------------------------------------------------------------------
Net decrease .................................. (1,675,228) (36,615,916) (402,158) (9,557,420)
- -------------------------------------------------------------------------------------------------------------
Class C
Shares sold ................................... 43,031 964,703 10,542 254,628
Shares redeemed ............................... (580,611) (12,698,438) (137,741) (3,320,800)
Shares issued in reinvestment of distributions 126,413 2,657,194 0 0
- -------------------------------------------------------------------------------------------------------------
Net decrease .................................. (411,167) (9,076,541) (127,199) (3,066,172)
- -------------------------------------------------------------------------------------------------------------
Class Y
Shares sold ................................... 843 18,574 0 0
Shares redeemed ............................... -- -- 0 0
Shares issued in reinvestment of distributions -- -- 0 0
- -------------------------------------------------------------------------------------------------------------
Net increase .................................. 843 18,574 0 0
- -------------------------------------------------------------------------------------------------------------
Net decrease .................................. (2,993,967) $ (65,857,220) (919,777) $ (22,351,919)
=============================================================================================================
<CAPTION>
Year Ended
September 30, 1997
---------------------------------
Shares Amount
--------------- -----------------
<S> <C> <C>
Class A
Shares sold ................................... 1,724,686 $ 40,645,838
Shares redeemed ............................... (7,656,939) (176,796,539)
Shares issued in reinvestment of distributions 293,025 6,669,240
- -------------------------------------------------------------------------------
Net decrease .................................. (5,639,228) (129,481,461)
- -------------------------------------------------------------------------------
Class B
Shares sold ................................... 1,025,563 23,070,741
Shares redeemed ............................... (8,009,248) (177,499,072)
Shares issued in reinvestment of distributions 798,355 17,651,626
- -------------------------------------------------------------------------------
Net decrease .................................. (6,185,330) (136,776,705)
- --------------------------------------------------------------------------------
Class C
Shares sold ................................... 390,436 8,779,908
Shares redeemed ............................... (3,780,382) (83,396,941)
Shares issued in reinvestment of distributions 250,089 5,539,478
- -------------------------------------------------------------------------------
Net decrease .................................. (3,139,857) (69,077,555)
- -------------------------------------------------------------------------------
Class Y
Shares sold ................................... 1 23
Shares redeemed ............................... 0 0
Shares issued in reinvestment of distributions 0 0
- -------------------------------------------------------------------------------
Net increase .................................. 1 23
- -------------------------------------------------------------------------------
Net decrease .................................. (14,964,414) $ (335,335,698)
===============================================================================
</TABLE>
* The Fund changed its fiscal year end from September 30 to October 31,
effective October 31, 1997.
61
<PAGE>
Combined Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
INTERNATIONAL GROWTH
<TABLE>
<CAPTION>
Six Months Ended Year Ended
April 30, 1997 October 31, 1997
-------------------------------- ----------------------------------
Shares Amount Shares Amount
--------------- ---------------- ---------------- -----------------
<S> <C> <C> <C> <C>
Class A
Shares sold ............................................. 1,421,738 $ 11,172,599 0 0
Automatic conversion of Class B shares to Class A shares 13,877,478 95,438,329 0 0
Shares redeemed ......................................... (2,672,975) (20,536,106) 0 0
- ---------------------------------------------------------------------------------------------------------------------------
Net increase ............................................ 12,626,241 86,074,822 0 0
- ---------------------------------------------------------------------------------------------------------------------------
Class B
Shares sold ............................................. 3,142,827 23,891,948 18,930,328 $ 159,178,048
Automatic conversion of Class B shares to Class A shares (13,877,478) (95,438,329) 0 0
Shares redeemed ......................................... (4,598,183) (34,184,349) (21,092,806) (178,656,491)
Shares issued in reinvestment of distributions .......... 4,141,410 28,410,069 463,479 4,222,295
- ---------------------------------------------------------------------------------------------------------------------------
Net decrease ............................................ (11,191,424) (77,320,661) (1,698,999) (15,256,148)
- ---------------------------------------------------------------------------------------------------------------------------
Class C
Shares sold ............................................. 28,125 233,226 0 0
- ---------------------------------------------------------------------------------------------------------------------------
Net increase ............................................ 28,125 233,226 0 0
- ---------------------------------------------------------------------------------------------------------------------------
Class Y
Shares sold ............................................. 3,034,353 25,093,972 0 0
Shares redeemed ......................................... (598) (4,961) 0 0
- ---------------------------------------------------------------------------------------------------------------------------
Net increase ............................................ 3,033,755 25,089,011 0 0
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) ................................. 4,496,697 $ 34,076,398 (1,698,999) $ (15,256,148)
===========================================================================================================================
</TABLE>
- --------------------------------------------------------------------------------
LATIN AMERICA
<TABLE>
<CAPTION>
Six Months Ended Year Ended
April 30, 1997 October 31, 1997
------------------------------- --------------------------------
Shares Amount Shares Amount
--------------- --------------- --------------- ----------------
<S> <C> <C> <C> <C>
Class A
Shares sold ................................... 719,315 $ 7,820,054 793,746 $ 12,013,304
Shares redeemed ............................... (901,590) (9,821,763) (755,902) (10,989,824)
Shares issued in reinvestment of distributions 253,396 2,718,936 7,159 82,042
- --------------------------------------------------------------------------------------------------------------
Net increase (decrease) ....................... 71,121 717,227 45,003 1,105,522
- --------------------------------------------------------------------------------------------------------------
Class B
Shares sold ................................... 384,222 4,351,465 1,353,616 18,851,845
Shares redeemed ............................... (1,591,035) (17,167,188) (2,761,745) (37,765,324)
Shares issued in reinvestment of distributions 1,410,947 14,772,617 44,425 502,887
- --------------------------------------------------------------------------------------------------------------
Net increase (decrease) ....................... 204,134 1,956,894 (1,363,704) (18,410,592)
- --------------------------------------------------------------------------------------------------------------
Class C
Shares sold ................................... 69,304 749,560 305,017 4,400,152
Shares redeemed ............................... (320,364) (3,443,771) (261,244) (3,744,348)
Shares issued in reinvestment of distributions 203,815 2,133,947 4,841 54,852
- --------------------------------------------------------------------------------------------------------------
Net increase (decrease) ....................... (47,245) (560,264) 48,614 710,656
- --------------------------------------------------------------------------------------------------------------
Class Y
Shares sold ................................... 109 1,224 0 0
Shares redeemed ............................... 0 0 0 0
Shares issued in reinvestment of distributions 0 0 0 0
- --------------------------------------------------------------------------------------------------------------
Net increase .................................. 109 1,224 -- --
- --------------------------------------------------------------------------------------------------------------
Net increase (decrease) ....................... 228,119 $ 2,115,081 (1,270,087) $ (16,594,414)
==============================================================================================================
</TABLE>
62
<PAGE>
Combined Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
NATURAL RESOURCES
<TABLE>
<CAPTION>
Six Months Ended
April 30, 1998
--------------------------------
Shares Amount
--------------- ----------------
<S> <C> <C>
Class A
Shares sold ........................................ 1,130,293 $ 11,710,893
Shares redeemed .................................... (1,116,328) (11,691,990)
Shares issued in reinvestment of distributions ..... 36,032 383,007
- -----------------------------------------------------------------------------------
Net increase (decrease) ............................ 49,997 401,910
- -----------------------------------------------------------------------------------
Class B
Shares sold ........................................ 421,148 4,269,921
Shares redeemed .................................... (872,787) (8,780,605)
Shares issued in reinvestment of distributions ..... 144,444 1,497,881
- -----------------------------------------------------------------------------------
Net increase (decrease) ............................ (307,195) (3,012,803)
- -----------------------------------------------------------------------------------
Class C
Shares sold ........................................ 5,254 53,075
Shares redeemed .................................... (125,836) (1,269,477)
Shares issued in reinvestment of distributions ..... 26,942 279,113
- -----------------------------------------------------------------------------------
Net increase (decrease) ............................ (93,640) (937,289)
- -----------------------------------------------------------------------------------
Net increase (decrease) ............................ (350,838) $ (3,548,182)
===================================================================================
<CAPTION>
Seven Month
Period Ended Year Ended
October 31, 1997* March 31, 1997
---------------------------- -----------------------------
Shares Amount Shares Amount
------------ --------------- ------------- ---------------
<S> <C> <C> <C> <C>
Class A
Shares sold ........................................ 20,364 $ 257,582 99,899 $ 1,149,694
Shares redeemed .................................... (79,574) (1,059,272) (157,432) (1,830,659)
Shares issued in reinvestment of distributions ..... 0 0 0 0
- --------------------------------------------------------------------------------------------------------------
Net increase (decrease) ............................ (59,210) (801,690) (57,533) (680,965)
- --------------------------------------------------------------------------------------------------------------
Class B
Shares sold ........................................ 78,508 1,020,278 391,020 4,494,545
Shares redeemed .................................... (279,700) (3,612,501) (371,723) (4,250,880)
Shares issued in reinvestment of distributions ..... 0 0 0 0
- --------------------------------------------------------------------------------------------------------------
Net increase (decrease) ............................ (201,192) (2,592,223) 19,297 243,665
- --------------------------------------------------------------------------------------------------------------
Class C
Shares sold ........................................ 27,528 348,505 317,784 3,596,943
Shares redeemed .................................... (190,823) (2,395,089) (124,231) (1,433,936)
Shares issued in reinvestment of distributions ..... 0 0 0 0
- --------------------------------------------------------------------------------------------------------------
Net increase (decrease) ............................ (163,295) (2,046,584) 193,553 2,163,007
- --------------------------------------------------------------------------------------------------------------
Net increase (decrease) ............................ (423,697) $ (5,440,497) 155,317 $ 1,725,707
==============================================================================================================
</TABLE>
* The Fund changed its fiscal year end from March 31 to October 31, effective
October 31, 1997.
- --------------------------------------------------------------------------------
PRECIOUS METALS
<TABLE>
<CAPTION>
Six Months Ended Period Ended
April 30, 1997 October 31, 1997**
-------------------------------- ---------------------------------
Shares Amount Shares Amount
--------------- ---------------- --------------- -----------------
<S> <C> <C> <C> <C>
Class A
Shares sold ........................................ 3,686,408 $ 55,739,085 0 0
Automatic conversion of Class B shares to ..........
Class A shares .................................... 5,262,793 65,498,249 0 0
Shares redeemed .................................... (4,565,933) (64,977,321) 0 0
Shares issued in acquisition of Blanchard ..........
Precious Metals Fund .............................. 3,176,709 39,424,759 0 0
- ---------------------------------------------------------------------------------------------------------------------
Net increase ....................................... 7,559,977 95,684,772 0 0
- ---------------------------------------------------------------------------------------------------------------------
Class B
Shares sold ........................................ 4,305,775 55,730,500 4,394,845 $ 83,990,548
Automatic conversion of Class B shares to ..........
Class A shares .................................... (5,262,793) (65,498,249) 0 0
Shares redeemed .................................... (4,128,952) (54,440,166) (5,332,804) (103,860,464)
Shares issued in reinvestment of distributions ..... 357,072 4,759,767 0 0
- ---------------------------------------------------------------------------------------------------------------------
Net decrease ....................................... (4,728,898) (59,448,148) (937,959) (19,869,916)
- ---------------------------------------------------------------------------------------------------------------------
Class C
Shares sold ........................................ 50,428 701,424 0 0
- ---------------------------------------------------------------------------------------------------------------------
Net increase ....................................... 50,428 701,424 0 0
- ---------------------------------------------------------------------------------------------------------------------
Net increase (decrease) ............................ 2,881,507 $ 36,938,048 (937,959) $ (19,869,916)
=====================================================================================================================
<CAPTION>
Year Ended
February 28, 1997
----------------------------------
Shares Amount
---------------- -----------------
<S> <C> <C>
Class A
Shares sold ........................................ 0 0
Automatic conversion of Class B shares to ..........
Class A shares .................................... 0 0
Shares redeemed .................................... 0 0
Shares issued in acquisition of Blanchard ..........
Precious Metals Fund .............................. 0 0
- -------------------------------------------------------------------------------------
Net increase ....................................... 0 0
- -------------------------------------------------------------------------------------
Class B
Shares sold ........................................ 25,602,726 $ 618,026,217
Automatic conversion of Class B shares to ..........
Class A shares .................................... 264,364 5,971,990
Shares redeemed .................................... (26,171,322) (638,015,009)
Shares issued in reinvestment of distributions ..... 0 0
- -------------------------------------------------------------------------------------
Net decrease ....................................... (304,232) (14,016,802)
- -------------------------------------------------------------------------------------
Class C
Shares sold ........................................ 0 0
- -------------------------------------------------------------------------------------
Net increase ....................................... 0 0
- -------------------------------------------------------------------------------------
Net increase (decrease) ............................ (304,232) $ (14,016,802)
=====================================================================================
</TABLE>
** The Fund changed its fiscal year end from February 28 to October 31,
effective October 31, 1997.
6. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of investment securities (excluding
short-term investments) were as follows for the six months ended April 30,
1998:
<TABLE>
<CAPTION>
Cost of Proceeds
Purchases from Sales
--------------- ---------------
<S> <C> <C>
Global Opportunities ...... $188,291,632 $255,481,696
International Growth ...... 82,070,923 67,367,938
Latin America ............. 62,528,298 74,189,360
Natural Resources ......... 3,072,372 9,134,354
Precious Metals ........... 94,111,361 14,450,473
</TABLE>
63
<PAGE>
Combined Notes to Financial Statements (continued)
7. DISTRIBUTION PLANS
Evergreen Distributor, Inc.("EDI"), a wholly-owned subsidiary of The BISYS
Group Inc. ("BISYS") serves as principal underwriter to the Funds.
Each Fund has adopted Distribution Plans for each class of shares, except Class
Y, as allowed by Rule 12b-1 of the 1940 Act. Distribution plans permit the
Funds to reimburse its principal underwriter for costs related to selling
shares of the Funds and for various other services. These costs, which consist
primarily of commissions and service fees to broker/dealers who sell shares of
the fund, are paid by the fund through expenses called "Distribution Plan
expenses". Each class, except Class Y, currently pays a service fee equal to
0.25% of the average daily net asset value of the class. Class B and Class C
also pay distribution fees equal to 0.75% of the average daily net assets of
the class. Distribution Plan expenses are calculated daily and paid monthly.
With respect to Class B and Class C shares, the principal underwriter may pay
12b-1 fees greater than the allowable annual amounts the Fund is permitted to
pay. The Fund may reimburse the principal underwriter for such excess amounts
in later years with annual interest at the prime rate plus 1.00%.
During the six months ended April 30, 1998, amounts paid to EDI and/or its
predecessor pursuant to each Fund's Class A, Class B and Class C Distribution
Plans were as follows:
<TABLE>
<CAPTION>
Class A Class B Class C
----------- ----------- -----------
<S> <C> <C> <C>
Global Opportunities ....... $105,223 $968,197 $192,627
International Growth ....... 69,846 451,157 105
Latin America .............. 16,848 353,466 48,669
Natural Resources .......... 4,189 58,108 8,533
Precious Metals ............ 65,788 299,759 748
</TABLE>
Each of the Distribution Plans may be terminated at any time by vote of the
Independent Trustees or by vote of a majority of the outstanding voting shares
of the respective class. However, after the termination of any Distribution
Plan, and subject to the discretion of the Independent Trustees, payments to
EDI and/or its predecessor may continue as compensation for services that had
been provided while the Distribution Plan was in effect.
Contingent deferred sales charges paid by redeeming shareholders are paid to
EDI or its predecessor.
8. INVESTMENT MANAGEMENT AGREEMENT AND OTHER AFFILIATED TRANSACTIONS
The investment advisor to the Funds is Keystone. Keystone is a subsidiary of
First Union, and is entitled to an annual fee based on each of the Funds'
average daily net assets, respectively, in accordance with the following
schedules:
<TABLE>
<CAPTION>
Advisory Fee Average Daily Net Assets
-------------- --------------------------
<S> <C> <C>
Global Opportunities 1.00% on the first $200 million
.95% on the next $200 million
.85% on the next $200 million
.75% in excess of $600 million
</TABLE>
<TABLE>
<CAPTION>
Advisory Fee Average Daily Net Assets
-------------- --------------------------
<S> <C> <C>
International Growth .75% on the first $200 million
.65% on the next $200 million
.55% on the next $200 million
.45% in excess of $600 million
</TABLE>
<TABLE>
<CAPTION>
Advisory Fee Average Daily Net Assets
-------------- --------------------------
<S> <C> <C>
Latin America .75% on the first $200 million
.65% on the next $200 million
.55% on the next $200 million
.45% in excess of $600 million
</TABLE>
<TABLE>
<CAPTION>
Advisory Fee Average Daily Net Assets
-------------- --------------------------
<S> <C> <C>
Precious Metals .75% on the first $100 million
.625% on the next $100 million
.50% in excess of $200 million
</TABLE>
Natural Resources pays a fee for its services at the annual rate of 1.00% of
the Fund's average daily net assets.
64
<PAGE>
Combined Notes to Financial Statements (continued)
For Natural Resources, Keystone has entered into a Sub-Investment Advisory
Agreement with Equitilink International Management Limited ("EIML"), under
which EIML provides Keystone with investment research and advice and may
provide investment supervision or furnish an investment program for certain
assets of the Fund. For its services, EIML receives from Keystone a monthly fee
equal to (1) 20% of Keystone's net fee for such month for services rendered in
a non-discretionary capacity, plus (2) 10% of Keystone's net fee for such month
on that portion of the Fund's assets for which EIML provided services in a
discretionary capacity.
For Precious Metals, Harbor Capital Management Company, Inc. ("Harbor
Capital"), serves as a consultant to Keystone and its subsidiary pursuant to a
Consultant Agreement. In accordance with the terms of the Consultant Agreement,
Harbor Capital provides Keystone with monthly reports discussing the world's
gold bullion markets and gold stock markets, and advice regarding economic
factors and trends in the precious metals sectors.
For its services, Harbor Capital receives from Keystone a fee at the annual
rate of 0.10% of the Fund's average daily net assets. The Fund has no
responsibility to pay Harbor Capital's fee.
EIS is the administrator and BISYS is the sub-administrator to the Funds . As
sub-administrator to the Funds, BISYS Fund Services provides the officers of
the Funds. The administrator and sub-administrator for each Fund are entitled
to an annual fee based on the average daily net assets of the funds
administered by EIS for which First Union or its investment advisory
subsidiaries are also the investment advisers. The administration fee is
calculated by applying percentage rates, which start at 0.05% and decline to
0.01% per annum as net assets increase, to the average daily net asset value of
the Fund. The sub-administration fee, for the Funds is calculated by applying
percentage rates, which start at 0.01% and decline to .004% as net assets
increase, to the average daily net asset value of the Fund.
Evergreen Service Company ("ESC"), a wholly-owned subsidiary of Keystone,
serves as the transfer and dividend disbursing agent for the Funds.
Officers of the Funds and affiliated Trustees receive no compensation directly
from the Funds.
9. EXPENSE OFFSET ARRANGEMENT
The Funds have entered into an expense offset arrangement with their custodian.
The assets deposited with the custodian under this expense offset arrangement
could have been invested in income-producing assets.
10. DEFERRED INDEPENDENT TRUSTEES' FEES
Each Independent Trustee of the Funds may defer any or all compensation related
to performance of their duties as Trustees. The Trustees' deferred balances are
allocated to deferral accounts which are included in the accrued expenses for
the Funds. The investment performance of the deferral accounts are based on the
investment performance of certain Evergreen Funds. Any gains earned or losses
incurred in the deferral accounts are reported in the Fund's Trustees' fees and
expenses. Trustees will be paid either in one lump sum or in quarterly
installments for up to ten years at their election, not earlier than either the
year in which the Trustee ceases to be a member of the Board of Trustees or
January 1, 2000. As of April 30, 1998, the value of the Trustees deferral
account for $12,681, $3,960, $3,366, $323 and $3,101 for Global Opportunities,
International Growth, Latin America, Natural Resources and Precious Metals,
respectively.
11. FINANCING AGREEMENT
On December 22, 1997, a financing agreement among all of the Evergreen Funds,
State Street and a group of Banks became effective. Under this agreement, the
Banks provide an unsecured credit facility in the aggregate amount of $400
million ($275 million committed and $125 million uncommitted). The credit
facility is allocated, under the terms of the financing agreement, among the
Banks. The credit facility is to be accessed by the Funds for temporary or
emergency purposes only and is subject to each Fund's borrowing restrictions.
Borrowings under this facility bear interest at 0.50% per annum above the
Federal Funds rate. A commitment fee of 0.065% per annum will be incurred on
the unused portion of the committed facility, which will be allocated to all
Funds. For its assistance in arranging this financing agreement, the Capital
Market Group of First Union was paid a one time arrangement fee of $27,500.
State Street serves as administrative agent for the Banks, and as
administrative agent is entitled to a fee of $20,000 per annum which is
allocated to all of the Funds.
During the six months ended April 30, 1998, the Funds had no significant
borrowings under these agreements.
65
<PAGE>
ADDITIONAL INFORMATION (Unaudited)
Special Meeting of Shareholders
On December 15, 1997, a special meeting of shareholders for Global
Opportunities, International Growth, Latin America and Precious Metals was held
to consider a number of proposals and had the following shares represented at
the meeting.
On October 16, 1997, the record date for the meeting, the Funds had the
following shares outstanding:
<TABLE>
<CAPTION>
Global International Latin Precious
Opportunities Growth America Metals
--------------- --------------- ------------- -------------
<S> <C> <C> <C> <C>
Record date shares outstanding ............................. 16,090,802 17,612,775 8,054,739 7,002,302
Shares represented at meeting .............................. 8,912,562 10,148,590 4,406,779 4,274,852
Percentage of record date shares represented at meeting .... 55.4% 57.6% 54.7% 61.0%
</TABLE>
The votes recorded at the meeting, by proposal, were as follows:
<TABLE>
<CAPTION>
Global International Latin Precious
Opportunities Growth America Metals
--------------- --------------- ----------- ------------
<S> <C> <C> <C> <C>
Proposal 1 -- The proposed reorganization of each Fund as a series of the Evergreen
International Trust, a Delaware business trust:
Shares voted "For" ............. 8,139,314 9,253,913 4,036,101 3,685,665
Shares voted "Against" ......... 175,792 243,725 78,460 200,598
Shares voted "Abstain" ......... 597,456 650,952 292,218 388,589
Proposal 2 -- Reclassification as non-fundamental of the investment objective currently
classified as fundamental:
Shares voted "For" ............. 8,029,681 9,132,425 3,959,155 3,597,947
Shares voted "Against" ......... 258,231 350,098 134,930 285,167
Shares voted "Abstain" ......... 624,650 665,807 312,694 391,738
Proposal 3 -- Changes to Fundamental investment restrictions:
Proposal 3A -- To amend the Fundamental restriction concerning diversification of
investments:
Shares voted "For" ............. 8,015,020 9,106,305 3,930,971 3,596,088
Shares voted "Against" ......... 176,406 300,539 137,729 265,234
Shares voted "Abstain" ......... 721,136 741,746 338,079 413,530
Proposal 3B -- To amend the Fundamental restriction concerning concentration of a Fund's
assets in a particular industry:
Shares voted "For" ............. 8,068,465 9,101,322 3,930,971 3,596,088
Shares voted "Against" ......... 176,975 303,149 137,729 265,234
Shares voted "Abstain" ......... 667,122 744,119 338,079 413,530
Proposal 3C -- To amend the Fundamental restriction concerning the issuance of senior
securities:
Shares voted "For" ............. 8,072,417 9,102,842 3,930,033 3,595,310
Shares voted "Against" ......... 173,023 301,629 138,667 266,012
Shares voted "Abstain" ......... 667,122 744,119 338,079 413,530
Proposal 3D -- To amend the Fundamental restriction concerning borrowing:
Shares voted "For" ............. 80,168,371 9,103,631 3,930,139 3,593,368
Shares voted "Against" ......... 177,069 300,840 138,561 267,954
Shares voted "Abstain" ......... 667,122 744,119 338,079 413,530
Proposal 3E -- To amend the Fundamental restriction concerning underwriting:
Shares voted "For" ............. 8,071,914 9,104,267 3,930,865 3,594,834
Shares voted "Against" ......... 173,526 300,204 137,835 266,488
Shares voted "Abstain" ......... 667,122 744,119 338,079 413,530
Proposal 3F -- To amend the Fundamental restriction concerning investments in Real Estate:
Shares voted "For" ............. 8,073,115 9,104,267 3,932,344 3,592,924
Shares voted "Against" ......... 172,325 300,204 136,356 268,398
Shares voted "Abstain" ......... 667,122 744,119 338,079 413,530
Proposal 3G -- To amend the Fundamental restriction concerning commodities:
Shares voted "For" ............. 8,069,564 9,103,631 3,932,089 3,594,829
Shares voted "Against" ......... 175,876 300,840 136,611 266,493
Shares voted "Abstain" ......... 667,122 744,119 338,079 413,530
</TABLE>
66
<PAGE>
ADDITIONAL INFORMATION (Unaudited) (continued)
<TABLE>
<CAPTION>
Global International Latin Precious
Opportunities Growth America Metals
--------------- --------------- ----------- ------------
<S> <C> <C> <C> <C>
Proposal 3H -- To amend the Fundamental restriction concerning lending:
Shares voted "For" ............. 8,069,593 9,104,187 3,930,181 3,594,307
Shares voted "Against" ......... 175,847 300,284 138,519 267,015
Shares voted "Abstain" ......... 667,122 744,119 338,079 413,530
Proposal 3J9 -- Reclassification as non-fundamental of current fundamental restriction:
Unseasoned Issuers
Shares voted "For" ............. 8,028,843 9,091,679 3,929,188 3,593,351
Shares voted "Against" ......... 178,186 311,158 138,159 268,256
Shares voted "Abstain" ......... 705,533 745,753 339,432 413,245
Proposal 3J10 -- Reclassification as non-fundamental of current fundamental restriction:
Control or Management
Shares voted "For" ............. 8,067,703 9,092,559 N/A 3,595,062
Shares voted "Against" ......... 176,699 310,278 N/A 266,544
Shares voted "Abstain" ......... 668,160 745,753 N/A 413,246
Proposal 3J11 -- Reclassification as non-fundamental of current fundamental restriction:
Short Sales
Shares voted "For" ............. 8,066,531 9,091,082 N/A 3,593,067
Shares voted "Against" ......... 178,854 310,278 N/A 268,540
Shares voted "Abstain" ......... 667,177 747,230 N/A 413,245
Proposal 3J12 -- Reclassification as non-fundamental of current fundamental restriction:
Margin Purchases
Shares voted "For" ............. 8,064,822 9,089,503 N/A 3,595,733
Shares voted "Against" ......... 176,227 311,945 N/A 265,874
Shares voted "Abstain" ......... 671,513 747,142 N/A 413,245
Proposal 3J13 -- Reclassification as non-fundamental of current fundamental restriction:
Other Investment Companies
Shares voted "For" ............. 8,060,185 9,089,399 N/A 3,594,976
Shares voted "Against" ......... 181,322 312,826 N/A 268,243
Shares voted "Abstain" ......... 671,055 746,365 N/A 411,633
Proposal 3J14 -- Reclassification as non-fundamental of current fundamental restriction:
Officers' and Director's Ownership of Shares
Shares voted "For" ............. 8,066,166 N/A N/A 3,597,951
Shares voted "Against" ......... 175,688 N/A N/A 265,268
Shares voted "Abstain" ......... 670,708 N/A N/A 411,633
Proposal 3J15 -- Reclassification as non-fundamental of current fundamental restriction:
Warrants
Shares voted "For" ............. N/A N/A N/A 3,598,475
Shares voted "Against" ......... N/A N/A N/A 264,681
Shares voted "Abstain" ......... N/A N/A N/A 411,696
Proposal 3J16 -- Reclassification as non-fundamental of current fundamental restriction:
Interests in Oil, Gas, or Other Mineral Explorations or Development Programs
Shares voted "For" ............. N/A N/A N/A 3,596,516
Shares voted "Against" ......... N/A N/A N/A 266,640
Shares voted "Abstain" ......... N/A N/A N/A 411,696
Proposal 3J17 -- Reclassification as non-fundamental of current fundamental restriction:
Joint Trading
Shares voted "For" ............. N/A N/A N/A 3,597,121
Shares voted "Against" ......... N/A N/A N/A 266,035
Shares voted "Abstain" ......... N/A N/A N/A 411,696
Proposal 5 -- Amendment to the Investment Objective
Shares voted "For" ............. N/A N/A 3,890,925 N/A
Shares voted "Against" ......... N/A N/A 183,710 N/A
Shares voted "Abstain" ......... N/A N/A 332,144 N/A
Proposal 6 -- Amendment to the Fundamental Restriction
Shares voted "For" ............. N/A N/A 3,926,583 N/A
Shares voted "Against" ......... N/A N/A 146,203 N/A
Shares voted "Abstain" ......... N/A N/A 333,993 N/A
</TABLE>
67
<PAGE>
(This Page Intentionally Left Blank)
Evergreen Funds
MONEY MARKET
Treasury Money Market Fund
Money Market Fund
Municipal Money Market Fund
Pennsylvania Municipal Money Market Fund
TAX EXEMPT
Short Intermediate Municipal Fund
High Grade Tax Free Fund
Tax Free Fund
California Tax Free Fund
Connecticut Municipal Bond Fund
Florida Municipal Bond Fund
Florida High Income Municipal Bond Fund
Georgia Municipal Bond Fund
Maryland Municipal Bond Fund
Massachusetts Tax Free Fund
Missouri Tax Free Fund
New Jersey Tax Free Income Fund
New York Tax Free Fund
North Carolina Municipal Bond Fund
Pennsylvania Tax Free Fund
South Carolina Municipal Bond Fund
Virginia Municipal Bond Fund
INCOME
Capital Preservation and Income Fund
Short Intermediate Bond Fund
Intermediate Term Government Securities Fund
Intermediate Term Bond Fund
U.S. Government Fund
Diversified Bond Fund
Strategic Income Fund
High Yeild Bond Fund
BALANCED
American Retirement Fund
Balanced Fund
Tax Strategic Foundation Fund
Foundation Fund
GROWTH & INCOME
Utility Fund
Income and Growth Fund
Fund for Total Return
Value Fund
Blue Chip Fund
Growth & Income Fund
Small Cap Equity Income Fund
DOMESTIC GROWTH
Evergreen Fund
Omega Fund
Small Company Growth Fund
Strategic Growth Fund
Aggressive Growth Fund
Micro Cap Fund
GLOBAL
Global Leaders Fund
International Growth Fund
International Equity Fund
Global Opportunities Fund
Natural Resources Fund
Precious Metals Fund
Emerging Markets Growth Fund
Latin America Fund
EXPRESS LINE
800-346-3858
INVESTOR SERVICES
800-343-2898
RETIREMENT PLAN SERVICES
800-247-4075
www.evergreenfunds.com
69357 544028 RV00 6/98
BULK RATE
Logo Appears Here U.S. POSTAGE
Evergreen Funds PAID
Since 1932 CHARLOTTE, NC
PERMIT NO. 136
201 South College St.
Charlotte, NC 28288
<PAGE>
EVERGREEN FUNDS
EVERGREEN INVESTMENT SERVICES INC.
200 Berkeley Street
Boston, MA 02116-5034
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, NW
Washington, D.C.
Attn: File Room
Re: Evergreen International Trust
Evergreen Global Opportunities Fund
Evergreen International Growth Fund
Evergreen Latin America Fund
Evergreen Natural Resources Fund
Evergreen Precious Metals Fund
File No. 811-08553
CIK No. 0001046027
CCC No. bf8gn$un
Commissioners:
Please be advised that the Semi Annual Report for the above referenced Fund(s)
were submitted to your office on July 6, 1998, via electronic transmission
(EDGAR).
Any questions or comments about this document should be directed to the
undersigned at (617) 210-3570.
Very Truly Yours,
/s/ Douglas C. Miller
Douglas C. Miller
Assistant Vice President
<PAGE>
PAGE 1
- ---------------------------------------------------------
KEYSTONE INTERNATIONAL FUND INC.
Dear Shareholders:
It often seems that when international investment
diversification makes the most intellectual sense, it makes the
least emotional sense.
Like many international and global funds, the Keystone
International Fund has provided positive returns during the
past year. However, the returns for the 12 months that ended on
October 31, 1997 were held back by the market setbacks during
October when several Asian currencies were devalued and local
stock markets suffered severe losses. As a result of both this
volatility and the positive investment environment in the
United States, most domestic equity funds showed superior
returns for the period.
It is easy to see why some mutual fund shareholders might
question the value of investing in an international fund. It
just seems more comfortable to invest in large U.S. companies,
which have been the market leaders for the past three years.
(Photo of William M.
Ennis appears here)
WILLIAM M. ENNIS
THE ADVANTAGES OF DIVERSIFICATION
The answer is simple. Over the longer term, international diversification of
part of one's investment portfolio can enhance returns and reduce volatility.
The United States stock market has had a wonderful rally for the past three
years. However, looking at present prices, many investment professionals see
more attractive values in the international markets that have been lagging the
U.S. market. In addition, the very large American companies, whose stocks have
been the best performers, may be less able to increase their future earnings by
the restructuring programs that have been helping them. Their ability to export
also is weakened by the strong U.S. dollar. Meanwhile, very similar
restructuring and cost-cutting proposals are just beginning to take hold among
corporations in Europe and Japan.
At Evergreen Funds, we encourage you to remain focused on your long-term goals
and to remain disciplined in your personal investment strategies. No one can
confidently say whether next year's market will follow last year's pattern, or
whether trends will reverse themselves so that last year's lagging strategy
becomes next year's winning strategy. We can say, however, that the most likely
winners in the long run are those who consistently follow long-term investment
strategies.
UPCOMING DEVELOPMENTS
In the next few weeks and months, shareholders of Evergreen and Keystone funds
will begin to notice some changes. The Evergreen Keystone Funds are becoming the
Evergreen Funds. On October 31, 1997 Keystone America Funds adopted the name of
Evergreen and in early 1998 the original Keystone Fund Family, including
Keystone International Fund, will take the Evergreen name.
We believe that by putting all the funds under the umbrella name of Evergreen
Funds we will be creating a simpler and more cohesive image. Importantly, we
expect to create substantial cost savings for shareholders as a result of
consolidating prospectuses, annual reports, legal registrations and other
materials. It also will be easier for you to find all the funds of the Evergreen
Family, to which you have exchange privileges, under one heading in newspapers
and electronic services.
-- CONTINUED--
<PAGE>
PAGE 2
- ---------------------------------------------------------
KEYSTONE INTERNATIONAL FUND INC.
What will not change will be our commitment to provide you with the finest
investment products and shareholder services possible.
If you should have any questions about these changes or other issues affecting
your investments, we encourage you to consult your financial adviser or call
Evergreen Funds at 1-800-343-2898.
Sincerely,
/s/ William M. Ennis
William M. Ennis
MANAGING DIRECTOR
<PAGE>
PAGE 3
- ---------------------------------------------------------
A Discussion With
Your Fund Manager
GILMAN GUNN IS THE SENIOR VICE PRESIDENT AND CHIEF INVESTMENT OFFICER OF
INTERNATIONAL INVESTMENTS AT KEYSTONE INVESTMENT MANAGEMENT COMPANY, WITH
MORE THAN 24 YEARS OF EXPERIENCE.
Q GILMAN, HOW WOULD YOU DESCRIBE THE PERFORMANCE OF THE FUND DURING THE PAST
YEAR?
A I think the Fund has performed quite well. For the 12 months that ended on
October 31, 1997, Keystone International Fund had a total return of 15.69%,
outperforming its benchmark, the Morgan Stanley Capital International EAFE
Index, which had a return of 4.63%. The EAFE Index measures performance of
stocks in Europe, Australia and the Far East.
Q WHAT CONTRIBUTED TO THIS STRONG, RELATIVE PERFORMANCE?
A There were several factors. First, during a period of strength by the U.S.
dollar, we hedged part of our foreign currency exposure. This strategy has been
successful in adding to the performance of the Fund. Second, we had a heavy
emphasis on Europe throughout the year. At the end of the fiscal year, the
Fund's weighting in Europe was approximately 60% of net assets. In general the
European markets have increased by 15% to 40% during the 12 month period in
local terms, although these local returns were mitigated by the fall of the
currencies against the U.S. dollar. Third, we have kept our exposure in Japan
and the Far East very moderate. Our emphasis on emerging markets, in general,
has been very light, less than 10%, throughout the year. Earlier in the year, we
did have larger weightings in Latin America, and this did help the performance
of the Fund.
Q WHY HAS EUROPE BEEN SUCH A RELATIVELY STRONG PERFORMER?
A Europe has presented good investment opportunities for several reasons. First,
the weaker European currencies have helped European exporters become more
competitive against U.S. companies. Second, lower interest rates have been good
for European companies. Third, many European companies have started
restructuring and cost-cutting programs, and these restructurings have added to
the bottom line, even in a period of flat economic growth. Fourth, there has
been a major portfolio shift in Europe, as people have moved out of cash and
bonds and into equities, and this shift has helped the European equity markets.
Q JAPAN IS THE WORLD'S SECOND LARGEST MARKET, AND YET THE FUND'S WEIGHTING IN
JAPAN HAS BEEN REDUCED FROM ABOUT 20% OF ASSETS TO LESS THAN 7%. WHY IS THAT?
A Japan continues to be very disappointing. In general, we have wanted to keep
our exposure light. We have invested in some major Japanese exporters, and the
weak yen and strong dollar have helped these investments. One major holding that
has been a very strong performer is Sony Corp. We also have invested in some
Japanese pharmaceutical companies and property and casualty companies.
There are some good things happening in Japan. Interest rates are very low,
and the financial system is slowly improving. But the overall market has been
hurt throughout the year by the lack of domestic growth, and more recently by
the fallout from the Asian problems.
<PAGE>
PAGE 4
- ---------------------------------------------------------
KEYSTONE INTERNATIONAL FUND INC.
We expect we will be keeping our exposure to the Japanese market fairly light.
We are very lightly weighted, and have been lightly weighted, in Southeast
Asia and Asia. We think Asia will continue to be a volatile area. There are
longer-term structural problems that need to be addressed.
Q WHAT INDUSTRIES HAVE YOU BEEN EMPHASIZING?
A We have tended to be conservative. Several of the industries we have
emphasized have been fairly defensive in nature. These include pharmaceuticals,
healthcare, food and beverages, and energy. We have been underweighted in
technology and Japanese banks.
Q WHAT ARE SOME OF THE COMPANIES THAT HAVE CONTRIBUTED TO THE PERFORMANCE?
A Some of our best investments have been global companies with strong
franchises. Many of them also have been restructuring to increase their
efficiency and competitiveness.
Philips Electronics NV, a Dutch company that is the Fund's third largest
holding, is a good example of a company that is benefitting from restructuring,
cutting costs and getting out of its non-core businesses. This is also a company
that has a very large market share in its primary businesses. It is dominant in
Europe.
Other companies that have helped the fund include the largest holding, Nestle
SA, which is prominent globally; British Petroleum Co. Plc, which has been
restructuring; Societe Nationale Elf Aquitaine of France, another large oil
company that is benefitting from restructuring; and Novartis AG, our largest
pharmaceutical company.
One very strong performer has been Holderbank Financiere Glarus AG, a Swiss
company. This corporation owns cement companies all over the world, particularly
in emerging markets, and is very well run. The cement industry is becoming more
consolidated, with fewer players, and a few are becoming dominant; therefore,
pricing is becoming easier for them.
All these companies have been top ten holdings, so their performance has
helped the Fund.
Q GILMAN, THE UNITED STATES STOCK MARKET HAS OUTPERFORMED FOREIGN MARKETS FOR
THE PAST SEVERAL YEARS. WHY DOES IT STILL MAKE SENSE TO INVEST INTERNATIONALLY,
ESPECIALLY IN LIGHT OF THE VOLATILITY OF FOREIGN MARKETS?
A Volatility is not limited to outside the United States. There are many people
who think the U.S. market is highly valued after significantly outperforming the
rest of the world markets over the past several years. U.S. corporations have
significantly benefitted during the past few years from cost-cuttings and
restructurings. This trend just started over the last two years in Europe and is
only just beginning in Japan. As a result, looking ahead, there will be more
investment opportunities from restructuring outside the United States than
inside. In addition, the strength of the U.S. dollar will make it more difficult
for U.S. exporters to compete in the international markets, while foreign
exporters should have an easier time. Finally, outside the United States there
are many opportunities that did not exist within the United States. One example
is privatization.
It is true that markets outside the United States can be more volatile. We
have tried to be cognizant of the risks as we've invested, and this awareness
has helped the fund achieve competitive performance with below-average risk.
Q GILMAN, WHAT IS YOUR OUTLOOK?
A We see opportunities, particularly in Europe where economies are growing,
interest rates are low, and corporations are restructuring to increase their
efficiency and competitiveness. We have about half the Fund's assets in Europe,
and we expect this emphasis to continue. We are less optimistic about the
near-term opportunities in Japan and Asia, and we expect to keep our weightings
modest in those regions, concentrating on selective opportunities, such as
Japanese exporters
<PAGE>
PAGE 5
- ---------------------------------------------------------
that have been helped by the strength of the U.S. dollar. We also expect to keep
a fairly modest weighting in the emerging markets, less than 10%, although we
will be available to take advantage of selective opportunities.
We have been very mindful of the recent volatility in the emerging markets,
and we expect to have light weightings there. Our relatively large cash
weighting, at about 22% at the end of the fiscal year, as well as active
currency management should help reduce the risk of the Fund. We believe there
are some very attractive opportunities in international investing, and it makes
more sense than ever to have part of one's portfolio diversified
internationally.
TOP 10 HOLDINGS
AS OF OCTOBER 31, 1997 AS A PERCENTAGE OF NET ASSETS
<TABLE>
<S> <C>
Nestle SA (Switzerland) 2.7%
- ---------------------------------------------------------
Novartis AG (Switzerland) 2.6%
- ---------------------------------------------------------
Philips Electronics NV (Netherlands) 2.4%
- ---------------------------------------------------------
British Petroleum Co. Plc (U.K.) 2.3%
- ---------------------------------------------------------
Karstadt AG (Germany) 2.1%
- ---------------------------------------------------------
Societe Nationale Elf Aquitaine (France) 2.1%
- ---------------------------------------------------------
Holderbank Financiere Glarus AG (Switzerland) 2.0%
- ---------------------------------------------------------
B.A.T. Industries Plc (U.K.) 1.9%
- ---------------------------------------------------------
Sony Corp. (Japan) 1.8%
- ---------------------------------------------------------
Telecom Italia SpA (Italy) 1.7%
- ---------------------------------------------------------
</TABLE>
<PAGE>
PAGE 6
- ---------------------------------------------------------
KEYSTONE INTERNATIONAL FUND INC.
Growth of an Investment
[Graph appears below with the following information:]
Growth of an investment in
Keystone International Fund Inc.
October 31, 1987 through October 31, 1997
Initial Dividend
Investment Reinvestment
---------- ------------
(In Thousands)
10/31/87 10,000 10,000
10/89 9,423 11,477
10/91 7,811 10,465
10/93 9,581 13,440
10/95 9,318 14,656
10/97 11,337 18,731
A $10,000 investment in Keystone International Fund Inc. made on October 31,
1987 with all distributions reinvested was worth $18,731 on October 31, 1997.
Past performance is no guarantee of future results.
<TABLE>
<CAPTION>
HISTORICAL PERFORMANCE AS OF OCTOBER 31, 1997
<S> <C>
- ----------------------------------------------------------
<CAPTION>
CUMULATIVE TOTAL RETURN
<S> <C>
1 year w/o sales charge 15.69%
1 year w/sales charge* 12.69%
5 years 72.94%
10 years 87.31%
AVERAGE ANNUAL TOTAL RETURN
1 year w/o sales charge 15.69%
1 year w/sales charge* 12.69%
5 years 11.58%
10 years 6.48%
</TABLE>
*ADJUSTED FOR MAXIMUM CONTINGENT DEFERRED SALES CHARGE OF 3.0% FOR THOSE
INVESTORS WHO SOLD FUND SHARES AFTER ONE CALENDAR YEAR.
INTERNATIONAL INVESTING INVOLVES INCREASED RISK AND VOLATILITY.
[Graph appears below with the following information:]
Comparison of a change in value of a $10,000 investment in Keystone
International Fund Inc., the Morgan Stanley Europe, Australia, and Far East
Index and the Consumer Price Index.
Initial
Investment Fund CPI MS EAFE
- ---------- ------ ------ --------
(In Thousands)
10/87 10,000 10,000 10,000
10/89 11,477 10,895 13,503
10/91 10,465 11,919 12,182
10/93 13,440 12,637 14,018
10/95 14,656 13,332 14,915
10/97 18,731 14,001 16,714
Past performance is no guarantee of future results. The one-year return reflects
the deduction of the Fund's 3% contingent deferred sales charge for the shares
held for at least one year.
<PAGE>
PAGE 7
- ---------------------------------------------------------
SCHEDULE OF INVESTMENTS-- OCTOBER 31, 1997
<TABLE>
<CAPTION>
SHARES VALUE
- ---------------------------------------------------------------
COMMON STOCKS-- 77.4%
<S> <C> <C> <C>
ARGENTINA-- 0.0%
HOLDING COMPANIES-- 0.0%
5,000 CEI Citicorp Holdings SA...... $ 20,012
------------
AUSTRALIA-- 2.8%
BANKS-- 1.0%
116,000 National Australia Bank
Ltd......................... 1,586,673
------------
FINANCE & INSURANCE-- 0.4%
44,500 QBE Insurance Group Ltd....... 208,109
11,125 QBE Insurance Group Ltd.,
Bonus Shares................ 50,697
181,500 Tyndall Australia Ltd......... 292,296
------------
551,102
------------
FOOD & BEVERAGE
PRODUCTS-- 0.2%
162,000 Fosters Brewing Group Ltd..... 307,602
------------
HEALTHCARE PRODUCTS &
SERVICES-- 0.8%
1,128,887 Sonic Healthcare Ltd.......... 1,190,835
------------
MACHINERY-- DIVERSIFIED-- 0.2%
108,500 Evans Deakin Industries
Ltd......................... 285,372
------------
MANUFACTURING-- DISTRIBUTING-- 0.2%
45,937 Siddons Ramset Ltd............ 229,367
------------
TOTAL AUSTRALIA............... 4,150,951
------------
BRAZIL-- 0.6%
MACHINERY-- DIVERSIFIED-- 0.0%
21,900,000 Avipal SA..................... 67,540
------------
TELECOMMUNICATION SERVICES &
EQUIPMENT-- 0.6%
41,316 Compania Riograndense de
Telecommunica, Receipts..... 31,855
8,400 Telecomunicacoes Brasileiras,
ADR......................... 852,600
------------
884,455
------------
TOTAL BRAZIL.................. 951,995
------------
CANADA-- 5.1%
BANKS-- 1.4%
147,900 National Bank of Canada....... 2,104,087
------------
CHEMICAL & AGRICULTURAL
PRODUCTS-- 1.0%
19,280 Potash Corp. of Saskatchewan,
Inc......................... 1,573,892
------------
<CAPTION>
SHARES VALUE
- ---------------------------------------------------------------
COMMON STOCKS-- CONTINUED
<S> <C> <C> <C>
CANADA-- CONTINUED
DIVERSIFIED COMPANIES-- 0.3%
13,600 Power Corp. of Canada......... $ 403,363
------------
FINANCE & INSURANCE-- 0.8%
2,000 * BRL Enterprises Inc........... 7,095
49,100 Onex Corp..................... 1,297,744
------------
1,304,839
------------
PUBLISHING, BROADCASTING &
ENTERTAINMENT-- 1.6%
112,705 Quebecor Inc., Class B........ 2,399,085
------------
TOTAL CANADA.................. 7,785,266
------------
FRANCE-- 7.6%
ADVERTISING & RELATED
SERVICES-- 0.1%
3,100 Dauphin O.T.A................. 214,970
------------
AUTOMOTIVE EQUIPMENT &
MANUFACTURING-- 0.3%
8,383 Michelin...................... 430,032
------------
BANKS-- 0.8%
20,353 Credit Commerce de France..... 1,153,098
------------
BUILDING PRODUCTS-- 0.6%
13,867 Lafarge....................... 866,410
------------
BUSINESS EQUIPMENT &
SERVICES-- 0.3%
4,000 * ATOS SA....................... 449,356
------------
ELECTRICAL EQUIPMENT &
SERVICES-- 0.2%
1,050 Le Carbone Lorraine........... 278,507
------------
ENERGY-- 2.0%
25,190 Societe Nationale Elf
Aquitaine................... 3,118,044
------------
FINANCE & INSURANCE-- 2.4%
23,900 AXA-UAP....................... 1,636,632
4,829 Societe Eurafrance SA......... 1,966,510
------------
3,603,142
------------
HEALTHCARE PRODUCTS &
SERVICES-- 0.8%
26,759 Rhone Poulenc SA.............. 1,166,712
------------
LEISURE & TOURISM-- 0.1%
1,100 Zodiac SA..................... 220,830
------------
TOTAL FRANCE.................. 11,501,101
------------
</TABLE>
<PAGE>
PAGE 8
- ---------------------------------------------------------
KEYSTONE INTERNATIONAL FUND INC.
SCHEDULE OF INVESTMENTS-- OCTOBER 31, 1997
<TABLE>
<CAPTION>
SHARES VALUE
- ---------------------------------------------------------------
COMMON STOCKS-- CONTINUED
<S> <C> <C> <C>
GERMANY-- 4.1%
AUTOMOTIVE EQUIPMENT &
MANUFACTURING-- 0.6%
12,600 Daimler-Benz AG............... $ 844,239
------------
ELECTRICAL EQUIPMENT &
SERVICES-- 0.3%
23,400 Berliner Kraft & Licht AG..... 530,769
------------
HEALTHCARE PRODUCTS &
SERVICES-- 0.4%
17,700 Hoechst AG.................... 673,582
------------
MACHINERY-- DIVERSIFIED-- 0.2%
7,970 Boewe Systec AG............... 235,799
------------
PAPER & PACKAGING-- 0.5%
3,700 Schmalbach Lubeca AG.......... 686,855
------------
RETAILING & WHOLESALE-- 2.1%
9,240 Karstadt AG................... 3,216,150
------------
TOTAL GERMANY................. 6,187,394
------------
HONG KONG-- 0.0%
FINANCE & INSURANCE-- 0.0%
77 HSBC Holdings Plc............. 1,743
------------
LEISURE & TOURISM-- 0.0%
400 Regal Hotels International
Holdings Ltd................ 75
------------
TOTAL HONG KONG............... 1,818
------------
INDIA-- 0.6%
TEXTILE & APPAREL-- 0.6%
11,000 * Reliance Industries Ltd.,
GDS......................... 231,000
33,000 Reliance Industries Ltd., GDR,
144A........................ 693,000
------------
924,000
------------
TOTAL INDIA................... 924,000
------------
ITALY-- 3.1%
HOUSEHOLD PRODUCTS &
SERVICES-- 0.6%
40,500 Industrie Natuzzi SpA ADS..... 906,188
------------
TELECOMMUNICATION SERVICES &
EQUIPMENT-- 2.5%
315,000 Telecom Italia Mobile SpA..... 1,168,458
421,666 Telecom Italia SpA............ 2,642,573
------------
3,811,031
------------
TOTAL ITALY................... 4,717,219
------------
<CAPTION>
SHARES VALUE
- ---------------------------------------------------------------
COMMON STOCKS-- CONTINUED
<S> <C> <C> <C>
JAPAN-- 6.3%
CHEMICAL & AGRICULTURAL
PRODUCTS-- 0.2%
40,000 Sanyo Chemical Industries..... $ 317,407
------------
FINANCE & INSURANCE-- 0.4%
5,900 * Nichiei Co.................... 647,113
------------
FOOD & BEVERAGE
PRODUCTS-- 0.0%
200 Kirin Brewery Co.............. 1,678
------------
HEALTHCARE PRODUCTS &
SERVICES-- 2.0%
73,000 Taisho Pharmaceutical Co...... 1,868,218
74,000 Terumo Corp................... 1,217,449
------------
3,085,667
------------
HOUSEHOLD PRODUCTS &
SERVICES-- 1.8%
32,500 Sony Corp..................... 2,697,756
------------
LEISURE & TOURISM-- 0.7%
31,000 Fuji Photo Film Co............ 1,123,058
------------
OFFICE EQUIPMENT &
SUPPLIES-- 0.6%
76,000 Fujitsu Ltd................... 833,569
------------
TIRES & RUBBER-- 0.6%
42,000 Bridgestone Corp.............. 907,353
------------
TOTAL JAPAN................... 9,613,601
------------
MEXICO-- 0.0%
BANKS-- 0.0%
15,600 * Grupo Finance Banamex Accival
SA de CV, Series B.......... 30,884
------------
NETHERLANDS-- 8.1%
ADVERTISING & RELATED
SERVICES-- 0.6%
40,000 Telegraaf NV.................. 824,105
------------
BUILDING, CONSTRUCTION &
FURNISHINGS-- 0.8%
69,200 Boskalis Westminster.......... 1,172,640
------------
DIVERSIFIED COMPANIES-- 0.5%
15,196 Unilever NV................... 807,740
------------
ENGINEERING-- 0.3%
14,480 Fugro NV...................... 510,883
------------
FINANCE & INSURANCE-- 1.4%
26,920 AEGON NV...................... 2,121,432
------------
</TABLE>
<PAGE>
PAGE 9
- ---------------------------------------------------------
SCHEDULE OF INVESTMENTS-- OCTOBER 31, 1997
<TABLE>
<CAPTION>
SHARES VALUE
- ---------------------------------------------------------------
COMMON STOCKS-- CONTINUED
<S> <C> <C> <C>
NETHERLANDS-- CONTINUED
FOOD & BEVERAGE PRODUCTS-- 0.3%
16,710 Ahold Kon NV.................. $ 427,755
------------
HOUSEHOLD PRODUCTS &
SERVICES-- 2.4%
47,195 Philips Electronics NV........ 3,694,896
------------
OIL / ENERGY-- 1.1%
32,395 Royal Dutch Petroleum......... 1,713,606
------------
TRANSPORTATION-- 0.7%
27,100 Van Ommeren Kon NV............ 970,101
------------
TOTAL NETHERLANDS............. 12,243,158
------------
SOUTH AFRICA-- 3.3%
FINANCE & INSURANCE-- 1.0%
43,725 Liberty Life Association of
Africa, Ltd................. 1,090,286
29,500 Richemont Securities AG....... 347,563
------------
1,437,849
------------
FOOD & BEVERAGE PRODUCTS-- 0.8%
155,000 Premier Group................. 170,701
41,625 South Africa Brews............ 1,107,117
------------
1,277,818
------------
GOLD MINING-- 0.1%
16,900 Johnnies Industrial Corp.
Ltd......................... 189,631
------------
PUBLISHING, BROADCASTING &
ENTERTAINMENT-- 0.4%
66,500 Nasionale Pers Beperk......... 635,637
------------
RETAILING & WHOLESALE-- 1.0%
110,200 JD Group Ltd.................. 739,628
531,150 New Clicks Holdings........... 695,324
------------
1,434,952
------------
TOTAL SOUTH AFRICA............ 4,975,887
------------
SPAIN-- 1.7%
BANKS-- 0.9%
47,400 BCO Santander................. 1,327,799
------------
ENERGY-- 0.8%
30,650 Repsol SA..................... 1,285,248
------------
TOTAL SPAIN................... 2,613,047
------------
SWEDEN-- 6.9%
AUTOMOTIVE EQUIPMENT &
MANUFACTURING-- 1.2%
73,000 Volvo AB...................... 1,910,306
------------
<CAPTION>
SHARES VALUE
- ---------------------------------------------------------------
COMMON STOCKS-- CONTINUED
<S> <C> <C> <C>
SWEDEN-- CONTINUED
BUILDING, CONSTRUCTION &
FURNISHINGS-- 1.6%
85,800 Assa Abloy.................... $ 1,958,878
164,700 * Swedish Match Co.............. 505,761
------------
2,464,639
------------
HEALTHCARE PRODUCTS &
SERVICES-- 2.6%
115,382 Astra AB...................... 1,864,006
41,600 Getinge Industrier............ 716,485
41,487 Pharmacia & Upjohn............ 1,321,066
------------
3,901,557
------------
HOUSEHOLD PRODUCTS &
SERVICES-- 1.3%
23,600 Electrolux AB, Series B....... 1,953,564
------------
METAL PRODUCTS &
SERVICES-- 0.2%
16,750 * Granges AB.................... 273,952
------------
TOTAL SWEDEN.................. 10,504,018
------------
SWITZERLAND-- 8.9%
BUILDING, CONSTRUCTION &
FURNISHINGS-- 2.0%
3,805 Holderbank Financiere Glarus
AG.......................... 3,062,478
------------
BUSINESS EQUIPMENT &
SERVICES-- 1.3%
1,005 SGS Holding................... 1,937,869
------------
FINANCE & INSURANCE-- 0.3%
350 Compagnie Financiere Richemont
AG.......................... 424,924
------------
FOOD & BEVERAGE PRODUCTS-- 2.7%
2,931 Nestle SA..................... 4,129,879
------------
HEALTHCARE PRODUCTS &
SERVICES-- 2.6%
1,722 Novartis AG................... 2,715,355
806 Novartis AG, Registered
Shares...................... 1,262,316
------------
3,977,671
------------
TOTAL SWITZERLAND............. 13,532,821
------------
TURKEY-- 3.7%
BANKS-- 0.7%
15,521,000 Akbank Turk Anonim Sirket..... 1,056,828
------------
FINANCE & INSURANCE-- 0.9%
22,025,000 * Haci Omer Sabanci............. 1,283,732
------------
</TABLE>
<PAGE>
PAGE 10
- ---------------------------------------------------------
KEYSTONE INTERNATIONAL FUND INC.
SCHEDULE OF INVESTMENTS-- OCTOBER 31, 1997
<TABLE>
<CAPTION>
SHARES VALUE
- ---------------------------------------------------------------
COMMON STOCKS-- CONTINUED
<S> <C> <C> <C>
TURKEY-- CONTINUED
FOOD & BEVERAGE PRODUCTS-- 0.7%
4,385,000 Erciyas Biracilik Ve Malt..... $ 621,037
6,679,000 Guney Biracilik............... 491,157
------------
1,112,194
------------
HOUSEHOLD PRODUCTS &
SERVICES-- 0.9%
12,489,500 Arcelik AS.................... 1,394,677
------------
INDUSTRIAL SPECIALTY PRODUCTS
& SERVICES-- 0.5%
8,925,000 * Turk Sise ve Cam Fabrikalari
AS.......................... 765,708
------------
TOTAL TURKEY.................. 5,613,139
------------
UNITED KINGDOM-- 14.6%
ADVERTISING & RELATED
SERVICES-- 1.1%
132,000 Pearson Publishing Plc........ 1,727,412
------------
DIVERSIFIED COMPANIES-- 1.9%
605,684 Lonrho Plc.................... 995,863
238,500 Morgan Crucible Company Plc... 1,940,697
------------
2,936,560
------------
ENERGY-- 2.3%
236,082 British Petroleum Co. Plc..... 3,469,721
------------
FOOD & BEVERAGE PRODUCTS-- 3.0%
337,686 B.A.T Industries Plc.......... 2,954,574
170,891 Guinness Plc.................. 1,528,178
------------
4,482,752
------------
HEALTHCARE PRODUCTS &
SERVICES-- 0.9%
63,500 Glaxo Wellcome Plc............ 1,361,545
------------
INDUSTRIAL SPECIALTY PRODUCTS
& SERVICES-- 0.7%
420,200 London International Group
Plc......................... 1,068,061
------------
LEISURE & TOURISM-- 2.2%
189,188 Compass Group Plc............. 1,999,685
52,500 Games Workshop Group Plc...... 603,361
153,300 London Clubs International.... 799,890
------------
3,402,936
------------
MACHINERY-- DIVERSIFIED-- 0.5%
134,050 Ashtead Group Plc............. 787,159
------------
<CAPTION>
SHARES VALUE
- ---------------------------------------------------------------
COMMON STOCKS-- CONTINUED
<S> <C> <C> <C>
UNITED KINGDOM-- CONTINUED
RETAILING & WHOLESALE-- 0.9%
154,600 Close Brothers Group Plc...... $ 1,296,902
150 Vendome Lux Group Plc......... 912
------------
1,297,814
------------
TELECOMMUNICATION SERVICES &
EQUIPMENT-- 0.7%
188,717 Vodafone Group Plc............ 1,029,015
------------
TRANSPORTATION-- 0.4%
57,400 British Airways Plc........... 560,483
------------
TOTAL UNITED KINGDOM.......... 22,123,458
------------
TOTAL COMMON STOCKS
(COST-- $97,221,491)........ 117,489,769
------------
PREFERRED STOCKS-- 2.3%
<S> <C> <C> <C>
BRAZIL-- 1.7%
AEROSPACE & DEFENSE-- 0.6%
65,162,053 Empresa Brasileira de
Aeronautica................. 880,688
------------
BANKS-- 0.2%
45,000,000 BCO Bradesco SA............... 334,709
------------
CHEMICAL & AGRICULTURAL
PRODUCTS-- 0.0%
3,420,000 Manah SA...................... 83,759
------------
DIVERSIFIED COMPANIES-- 0.7%
52,000 Vale Do Rio Doce Navegacao
SA.......................... 1,004,671
------------
INDUSTRIAL SPECIALTY PRODUCTS
& SERVICES-- 0.0%
7,800 * Cofap Cia Fab Peca............ 49,526
------------
REAL ESTATE-- 0.2%
106,000 Brazil Realty SA.............. 283,641
------------
TOTAL BRAZIL.................. 2,636,994
------------
GERMANY-- 0.6%
BUILDING, CONSTRUCTION &
FURNISHINGS-- 0.6%
3,000 Grohe Friedrich AG............ 885,835
------------
TOTAL PREFERRED STOCKS
(COST-- $4,142,003)........... 3,522,829
------------
</TABLE>
<PAGE>
PAGE 11
- ---------------------------------------------------------
SCHEDULE OF INVESTMENTS-- OCTOBER 31, 1997
<TABLE>
<CAPTION>
SHARES VALUE
- ---------------------------------------------------------------
RIGHTS-- 0.0%
<S> <C> <C> <C>
BRAZIL-- 0.0%
METALS & MINING-- 0.0%
56,500 Compania Vale do Rio Doce
Navagacao SA................ $ 0
------------
TOTAL RIGHTS
(COST-- $0)................... 0
------------
</TABLE>
PRINCIPAL
AMOUNT
- ------------
REPURCHASE AGREEMENT-- 22.4%
UNITED STATES-- 22.4%
$33,980,000 Investment in repurchase
agreement, in a joint
trading account, purchased
10/31/97, 5.73% maturing
11/3/97, maturity value
$33,996,234 (a)............. 33,980,000
----------
TOTAL REPURCHASE AGREEMENT
(COST-- $33,980,000)........ 33,980,000
----------
VALUE
- ----------------------------------------------------------------
TOTAL INVESTMENTS--
(COST $135,343,494).................... 102.1% $154,992,598
FOREIGN CURRENCY HOLDINGS-- 0.5%
TOTAL FOREIGN CURRENCY
(COST $860,335)..... 824,109
------------
OTHER ASSETS AND
LIABILITIES-- NET...................... (2.6%) (4,010,597)
------ ------------
NET ASSETS............................... 100.0% $151,806,110
------ ------------
* Non-income producing securities
<TABLE>
<S> <C>
ADR American Depositary Receipts
ADS American Depositary Shares
GDR Global Depositary Receipts
GDS Global Depositary Shares
144a Securities that may be resold to "qualified institutional buyers" under Rule 144a of the Federal Securities Act of
1933. These securities have been determined to be liquid under guidelines established by the Board of Directors.
</TABLE>
(a) The repurchase agreement is fully collaterallized by U.S. government and/or
agency obligations based on market prices at October 31, 1997.
<PAGE>
PAGE 12
- ---------------------------------------------------------
KEYSTONE INTERNATIONAL FUND INC.
SCHEDULE OF INVESTMENTS-- OCTOBER 31, 1997
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
<TABLE>
<CAPTION>
Foreign Currency Exchange Contracts to Sell:
<S> <C> <C> <C> <C>
UNREALIZED
EXCHANGE IN EXCHANGE U.S. VALUE AT APPRECIATION/
DATE CONTRACTS TO DELIVER FOR U.S. $ OCTOBER 31, 1997 (DEPRECIATION)
- --------------------------------------------------------------------------------------------------------------------------
01/08/98 4,311,531 Australian Dollar $3,127,800 $ 3,037,173 $ 90,627
11/05/97 356,423 Australian Dollar 253,203 250,655 2,548
11/04/97 2,891 Brazilian Real 2,624 2,623 1
10/31/97 266,288 Brazilian Real 241,466 241,542 (76)
11/03/97 28,272 British Pound 46,222 47,434 (1,212)
11/05/97 62,846 British Pound 104,953 105,440 (487)
11/19/97 3,088,675 British Pound 4,953,000 5,177,789 (224,789)
11/03/97 32,004,440 French Franc 5,200,000 5,549,354 (349,354)
02/03/98 31,059,950 French Franc 5,437,000 5,414,256 22,744
11/03/97 7,300,969 French Franc 1,229,634 1,265,716 (36,082)
11/24/97 6,371,700 German Mark 3,457,000 3,701,521 (244,521)
11/03/97 1,731,926,240 Italian Lira 999,986 1,022,992 (23,006)
01/28/98 1,405,729,688 Japanese Yen 11,745,000 11,833,221 (88,221)
11/03/97 2,488,052 Mexican Peso 300,435 296,726 3,709
11/24/97 14,053,127 Netherlands Guilder 6,762,000 7,248,737 (486,737)
11/24/97 9,937,807 Swiss Franc 6,587,000 7,115,663 (528,663)
<CAPTION>
Foreign Currency Exchange Contracts to Buy:
CONTRACTS TO RECEIVE
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
11/03/97 285,173 Brazilian Real $ 258,613 $ 258,672 $ 59
11/06/97 113,767 British Pound 189,993 190,874 881
11/03/97 81,065 British Pound 132,532 136,006 3,474
11/04/97 72,221 British Pound 120,219 121,169 950
11/05/97 1,020,576 British Pound 1,703,036 1,712,273 9,237
11/03/97 2,207,940 Canadian Dollar 1,575,524 1,566,637 (8,887)
11/03/97 32,004,440 French Franc 5,572,774 5,549,354 (23,420)
11/24/97 6,371,770 German Mark 3,561,239 3,701,521 140,282
11/24/97 14,053,127 Netherlands Guilder 6,972,267 7,248,737 276,470
11/03/97 1,492,283 Netherlands Guilder 764,607 768,623 4,016
11/03/97 148,810,155 Spanish Peseta 1,018,550 1,022,961 4,411
11/03/97 27,795,796 Swedish Krona 3,703,094 3,711,104 8,010
11/24/97 9,937,807 Swiss Franc 6,747,789 7,115,663 367,874
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
PAGE 13
- ---------------------------------------------------------
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, ONE MONTH
-------------------------------- ENDED
1997 1996 1995 OCTOBER 31, 1994 (C)
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE BEGINNING OF YEAR $ 7.69 $ 7.11 $ 7.77 $ 7.67
- --------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (0.05) (0.02) 0.07 0
Net realized and unrealized gain (loss) on investments, futures and
foreign currency related transactions 1.27 0.75 0.05 0.10
- --------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.22 0.73 0.12 0.10
- --------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income 0 (0.09) (0.04) 0
In excess of net investment income (0.10) (0.01) 0 0
Net realized gains on investments, futures and foreign currency
related transactions (0.16) (0.05) (0.74) 0
- --------------------------------------------------------------------------------------------------------------------------------
Total distributions (0.26) (0.15) (0.78) 0
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE END OF YEAR $ 8.65 $ 7.69 $ 7.11 $ 7.77
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(A) 15.69% 10.47% 2.19% 1.30%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses 2.39% 2.43% 2.57% 2.52%(b)
Total expenses excluding indirectly paid expenses 2.38% 2.42% 2.58% N/A
Net investment income (loss) (0.49%) (0.21%) 0.88% (0.20%)(b)
PORTFOLIO TURNOVER RATE 101% 52% 76% 2%
AVERAGE COMMISSION RATE PAID PER SHARE $ 0.0010 $ 0.0011 N/A N/A
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSETS END OF YEAR (THOUSANDS) $151,806 $147,911 $128,674 $157,929
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
------------------------------------------------------------------------------
1994 (C) 1993 (C) 1992 (C) 1991 1990 1989 1988
<S> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE BEGINNING OF YEAR $ 7.08 $ 6.01 $ 5.91 $ 5.35 $ 7.51 $ 6.66 $ 9.53
- -----------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) 0 (0.03) (0.01 ) (0.01) (0.07) (0.14) 0.03
Net realized and unrealized gain (loss) on
investments, futures and foreign currency
related transactions 0.62 1.14 0.34 0.83 (1.74) 1.06 (1.60)
- -----------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 0.62 1.11 0.33 0.82 (1.81) 0.92 (1.57)
- -----------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income (0.02) 0 0 0 0 (0.07) (0.08)
In excess of net investment income (0.01) (0.04) (0.23 ) (0.03) 0 0 0
Net realized gains on investments, futures and
foreign currency related transactions 0 0 0 (0.23) (0.35) 0 (1.22)
- -----------------------------------------------------------------------------------------------------------------------------------
Total distributions (0.03) (0.04) (0.23 ) (0.26) (0.35) (0.07) (1.30)
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE END OF YEAR $ 7.67 $ 7.08 $ 6.01 $ 5.91 $ 5.35 $ 7.51 $ 6.66
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(A) 8.75% 18.59% 5.78% 15.59% (25.12%) 13.55% (15.55%)
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses 2.54% 2.94% 3.41% 3.14% 2.92% 2.65% 2.04%
Total expenses excluding indirectly paid
expenses N/A N/A N/A N/A N/A N/A N/A
Net investment income (loss) 0.01% (0.46%) (0.09%) (0.07%) (0.51%) (0.79%) 0.33%
PORTFOLIO TURNOVER RATE 121% 68% 74% 85% 42% 42% 60%
AVERAGE COMMISSION RATE PAID PER SHARE N/A N/A N/A N/A N/A N/A N/A
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS END OF YEAR (THOUSANDS) $154,529 $111,752 $64,135 $72,923 $73,768 $121,047 $115,712
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Excluding applicable sales charges.
(b) Annualized.
(c) Calculation based on average shares outstanding.
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
PAGE 14
- ---------------------------------------------------------
KEYSTONE INTERNATIONAL FUND INC.
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1997
<TABLE>
<CAPTION>
<S> <C>
- ------------------------------------------------------------
ASSETS:
Investments at market value (identified
cost--$135,343,494) $154,992,598
Foreign currency holdings (identified
cost--$860,335) 824,109
- ------------------------------------------------------------
Total investments and foreign currency
holdings (identified
cost--$136,203,829) 155,816,707
- ------------------------------------------------------------
Cash 71,909
Receivable for investments sold 9,906,396
Unrealized appreciation on open forward
foreign currency exchange contracts 935,293
Receivable for Fund shares sold 748,359
Interest and dividends receivable 364,074
Receivable for foreign tax witheld 126,033
Prepaid expenses 38,407
- ------------------------------------------------------------
Total assets 168,007,178
- ------------------------------------------------------------
LIABILITIES:
Payable for investments purchased 13,473,934
Unrealized depreciation on open forward
foreign currency exchange contracts 2,015,455
Payable for Fund shares redeemed 309,031
Due to related parties 106,615
Payable for foreign taxes withheld 41,383
Other accrued expenses 254,650
- ------------------------------------------------------------
Total liabilities 16,201,068
- ------------------------------------------------------------
NET ASSETS $151,806,110
- ------------------------------------------------------------
NET ASSETS REPRESENTED BY
Paid-in capital $101,381,366
Undistributed net investment income 6,805,770
Accumulated net realized gains on
investments, futures and foreign currency
related transactions 25,051,153
Net unrealized appreciation (depreciation)
on investments, futures and foreign
currency related transactions 18,567,821
- ------------------------------------------------------------
Total net assets $151,806,110
- ------------------------------------------------------------
NET ASSET VALUE AND REDEMPTION PRICE PER
SHARE
Net assets of $151,806,110417,547,613
shares outstanding $ 8.65
- ------------------------------------------------------------
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
- -------------------------------------------------------------
INVESTMENT INCOME
Dividends (net of foreign
withholding taxes of $324,155) $ 2,473,326
Interest 536,696
- -------------------------------------------------------------
Total income 3,010,022
- -------------------------------------------------------------
EXPENSES
Distribution Plan expenses $1,597,729
Management fee 1,194,384
Transfer agent fees 556,157
Custodian fees 276,146
Administrative service fee 27,681
Directors fees 16,656
Miscellaneous expenses 140,973
- -------------------------------------------------------------
Total expenses 3,809,726
Less: Expenses paid indirectly (12,908)
- -------------------------------------------------------------
Net expenses 3,796,818
- -------------------------------------------------------------
Net investment loss (786,796)
- -------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY RELATED
TRANSACTIONS
Realized gain (loss) on:
Investments and futures 33,504,191
Foreign currency related
transactions (424,873)
- -------------------------------------------------------------
Net realized gain on
investments, futures and
foreign currency related
transactions 33,079,318
- -------------------------------------------------------------
Net change in unrealized
appreciation (depreciation)
on:
Investments and futures (7,060,342)
Foreign currency related
transactions (1,325,400)
- -------------------------------------------------------------
Net change in unrealized
appreciation (depreciation) on
investments, futures and
foreign currency related
transactions (8,385,742)
- -------------------------------------------------------------
Net realized and unrealized gain
on investments, futures and
foreign currency related
transactions 24,693,576
- -------------------------------------------------------------
Net increase in net assets
resulting from operations $ 23,906,780
- -------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
PAGE 15
- ---------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
----------------------------
1997 1996
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment loss $ (786,796) $ (304,691)
Net realized gain on investments, futures and foreign currency related transactions 33,079,318 4,704,866
Net change in unrealized appreciation (depreciation) on investments, futures and
foreign currency related transactions (8,385,742) 9,450,694
- ----------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 23,906,780 13,850,869
- ----------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income (1,828,737) (1,681,273)
In excess of net investment income 0 (117,517)
Net realized gains on investments, futures and foreign currency related transactions (2,926,339) (894,973)
- ----------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders (4,755,076) (2,693,763)
- ----------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold 159,178,048 216,278,164
Payments for shares redeemed (178,656,491) (210,495,769)
Net asset value of shares issued in reinvestment of distributions 4,222,295 2,297,398
- ----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from capital share transactions (15,256,148) 8,079,793
- ----------------------------------------------------------------------------------------------------------------------
Total increase in net assets 3,895,556 19,236,899
- ----------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of year 147,910,554 128,673,655
- ----------------------------------------------------------------------------------------------------------------------
End of year [including undistributed net investment income and accumulated net
investment loss of $6,805,770 and ($129,662), respectively.] $151,806,110 $147,910,554
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
PAGE 16
- ---------------------------------------------------------
KEYSTONE INTERNATIONAL FUND INC.
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
Keystone International Fund Inc., (the "Fund") is a Massachusetts business trust
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as a diversified, open-end management investment company. The Fund's
primary investment objective is long term growth of capital. As a secondary
objective, the Fund seeks modest income from its investments.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles, which
require management to make estimates and assumptions that affect amounts
reported herein. Actual results could differ from these estimates.
A. VALUATION OF SECURITIES
The Fund values investments traded on an established exchange on the basis of
the last sales price on the exchange where primarily traded. The Fund values
securities traded in the over-the-counter market at the mean between the bid and
asked prices. Securities, for which market quotations are not readily available,
including restricted securities, are valued at fair value as determined in good
faith according to procedures established by the Board of Directors.
Short-term investments with remaining maturities of 60 days or less are
carried at amortized cost, which approximates market value.
B. REPURCHASE AGREEMENTS
The Fund may invest in repurchase agreements. Securities pledged as collateral
for repurchase agreements are held by the custodian on the Fund's behalf. The
Fund monitors the adequacy of the collateral daily and will 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 Fund will only enter into repurchase agreements with banks
and other financial institutions which are deemed by the investment advisor to
be creditworthy pursuant to guidelines established by the Board of Directors.
Pursuant to an exemptive order issued by the Securities and Exchange
Commission, the Fund, along with certain other funds managed by Keystone
Investment Management Company ("Keystone"), may transfer uninvested cash
balances into a joint trading account. These balances are invested in one or
more repurchase agreements that are fully collateralized by U.S. Treasury and/or
federal agency obligations.
C. FOREIGN CURRENCY
The books and records of the Fund are maintained in United States ("U.S.")
dollars. Foreign currency amounts are translated into U.S. dollars as follows:
market value of investments, assets and liabilities at the daily rate of
exchange; purchases and sales of investments, income and expenses at the rate of
exchange prevailing on the respective dates of such transactions. Net unrealized
foreign exchange gain (loss) resulting from changes in foreign currency exchange
rates is a component of net unrealized appreciation (depreciation) on
investments and foreign currency related transactions. Net realized foreign
currency gains and losses resulting from changes in exchange rates include
foreign currency gains and losses between trade date and settlement date on
investment securities transactions, foreign currency related transactions and
the difference between the amounts of interest and dividends recorded on the
books of the Fund and the amount actually received and is included in realized
gain (loss) on foreign currency related transactions. The portion of foreign
currency gains and losses related to fluctuations in exchange rates between the
initial purchase trade date and subsequent sale trade
<PAGE>
PAGE 17
- ---------------------------------------------------------
date is included in realized gain (loss) on foreign currency related
transactions.
D. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
The Fund may enter into forward foreign currency exchange contracts ("forward
contracts") to settle portfolio purchases and sales of securities denominated in
a foreign currency and to hedge certain foreign currency assets or liabilities.
Forward contracts are recorded at the forward rate and are marked-to-market
daily. Realized gains and losses arising from such transactions are included in
net realized gain (loss) on foreign currency related transactions. The Fund
bears the risk of an unfavorable change in the foreign currency exchange rate
underlying the forward contract and is subject to the credit risk that the other
party will not fulfill their obligations under the contract. Forward contracts
involve elements of market risk in excess of the amount reflected in the
statement of assets and liabilities.
E. SECURITY TRANSACTIONS AND INVESTMENT INCOME
Securities transactions are accounted for no later than one business day after
the trade date. Realized gains and losses are computed on the identified cost
basis. Interest income is recorded on the accrual basis and includes accretion
of discounts and amortization of premiums. Dividend income is recorded on the
ex-dividend date or in the case of some foreign securities, on the date
thereafter when the Fund is made aware of the dividend. Foreign income may be
subject to foreign withholding taxes which are accrued as applicable. Capital
gains realized on some foreign securities are subject to foreign taxes which are
accrued as applicable.
F. FEDERAL TAXES
The Fund has qualified and intends to qualify in the future as a regulated
investment company under the Internal Revenue Code of 1986, as amended (the
"Code"). Thus, the Fund will not incur any federal income tax liability since it
is expected to distribute all of its net investment company taxable income and
net taxable capital gains, if any, to its shareholders. The Fund also intends to
avoid any excise tax liability by making the required distributions under the
Code. Accordingly, no provision for federal taxes is required.
G. DISTRIBUTIONS
The Fund distributes net investment income and net capital gains, if any, at
least annually. Distributions to shareholders are recorded at the close of
business on the ex-dividend date.
Income and capital gains distributions to shareholders are determined in
accordance with income tax regulations, which may differ from generally accepted
accounting principles. The significant differences between financial statement
amounts available for distributions and distributions made in accordance with
income tax regulations are primarily due to differing treatment of foreign
currency gains(losses) generated by the Fund.
H. FUTURES CONTRACTS
In order to gain exposure to or protect against changes in security values, the
Funds may buy and sell futures contracts.
The initial margin deposited with a broker when entering into a futures
transaction is subsequently adjusted by daily payments or receipts as the value
of the contract changes. Such changes are recorded as unrealized gains or
losses. Realized gains or losses are recognized on closing the contract.
Risks of entering into futures contracts include (i) the possibility of an
illiquid market for the contract, (ii) the possibility that a change in the
value of the contract may not correlate with changes in the value of the
underlying instrument or index, and (iii) the credit risk that the other party
will not fulfill their obligations under the contract. Futures contracts also
involve elements of market risk in excess of the amount reflected in the
statement of assets and liabilities.
3. CAPITAL SHARE TRANSACTIONS
The Fund has an unlimited number of shares of beneficial interest with a par
value of $1.00 authorized. Transactions in shares of the Fund were as follows:
<PAGE>
PAGE 18
- ---------------------------------------------------------
KEYSTONE INTERNATIONAL FUND INC.
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
----------------------------
1997 1996
<S> <C> <C>
- ---------------------------------------------------------
Shares sold 18,930,328 28,960,907
Shares redeemed (21,092,806) (28,130,870)
Shares issued in
reinvestment
of distributions 463,479 327,732
- ---------------------------------------------------------
Net increase (decrease) (1,698,999) 1,157,769
- ---------------------------------------------------------
</TABLE>
4. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of investment securities (excluding
short-term securities and foreign currencies) for the year ended October 31,
1997 were $148,772,633 and $185,000,221, respectively. On October 31, 1997, the
cost of investments for federal income tax purposes was $136,487,018, gross
unrealized appreciation of investments was $22,578,473 and gross unrealized
depreciation of investments was $4,072,893 resulting in net unrealized
appreciation of $18,505,580 for federal income tax purposes.
5. DISTRIBUTION PLAN
Evergreen Distributors, Inc. ("EDI"), formerly Evergreen Keystone Distributors,
Inc., a wholly-owned subsidiary of The BISYS Group, Inc. ("BISYS") serves as
principal underwriter to the Fund. Prior to December 11, 1996, Evergreen
Investment Services, Inc. ("EIS"), formerly Evergreen Keystone Investment
Services, Inc. ("EKIS"), a wholly-owned subsidiary of Keystone, served as the
Fund's principal underwriter.
The Fund has adopted a Distribution Plan, as allowed by Rule 12b-1 of the 1940
Act. The Distribution Plan permits the Fund to reimburse its principal
underwriter for costs related to selling shares of the Fund and for various
other services. These costs, which consist primarily of commissions and services
fees to broker-dealers who sell shares of the fund, are paid by shareholders
through expenses called "Distribution Plan expenses". Under the Distribution
Plan, the Fund pays a distribution fee which may not exceed 1.00% of the Fund's
average daily net assets. Distribution Plan expenses are calculated daily and
paid monthly.
EDI intends to seek full payment of such distribution costs from the Fund at
such time in the future as, and to the extent that, payments thereof by the Fund
would be within permitted limits.
The Distribution Plan may be terminated at any time by vote of the Independent
Trustees or by vote of a majority of the outstanding voting shares. However,
after the termination of the Distribution Plan, and subject to the discretion of
the Independent Directors, payments to EIS and/or EDI may continue as
compensation for services which had been provided while the Distribution Plan
was in effect.
6. INVESTMENT ADVISORY AGREEMENT AND
OTHER AFFILIATED TRANSACTIONS
Keystone, a subsidiary of First Union Corporation ("First Union"), is the
investment advisor for the Fund. In return for providing investment management
and administrative services to the Fund, the Fund pays Keystone a management
fee, calculated daily and paid monthly, by applying percentage rates which start
at 0.75% and decline, as net assets increase, to 0.45% per annum, to the net
asset value of the shares of the Fund.
During the year ended October 31, 1997, the Fund paid or accrued $27,681 to
Keystone for certain administrative services.
Evergreen Service Company ("ESC"), formerly Evergreen Keystone Service Company
("EKSC"), a wholly-owned subsidiary of Keystone, serves as the transfer and
dividend disbursing agent for the Fund.
BISYS Fund Services, Inc., an affiliate of EDI, serves as the Fund's
sub-administrator. As sub-administrator, BISYS Fund Services, Inc. provides the
officers of the Fund. For this service, BISYS Fund Services, Inc. is paid a fee
by Keystone, which is not a Fund expense. Officers of the Fund and affiliated
Directors receive no compensation directly from the Fund.
<PAGE>
PAGE 19
- ---------------------------------------------------------
7. EXPENSE OFFSET ARRANGEMENT
The Fund has entered into an expense offset arrangement with its custodian. The
assets deposited with the custodian under this expense offset arrangement could
have been invested in income-producing assets.
8. DISTRIBUTION TO SHAREHOLDERS
A capital gain distribution of $1.54 per share was declared on November 20, 1997
and payable on November 24, 1997 to shareholders of record November 20, 1997.
This distribution is comprised of long-term capital gains of $1.36 and
short-term capital gains of $0.18 per share. A distribution from net investment
income of $0.33 was declared on November 20, 1997 and payable on November 24,
1997 to shareholders of record November 20, 1997. These distributions are not
reflected in the accompanying financial statements.
FEDERAL TAX STATUS-- FISCAL 1997
DISTRIBUTIONS (UNAUDITED)
For the fiscal year ended October 31, 1997 a dividend of $0.10 per share was
paid. This dividend is taxable to shareholders as ordinary income and 3% is
eligible for the corporate dividend received deduction.
In January 1998 we will send you complete information on the distributions
paid during the calendar year to help you in completing your federal tax return.
<PAGE>
PAGE 20 64088E
- ---------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
THE TRUSTEES AND SHAREHOLDERS
KEYSTONE INTERNATIONAL FUND INC.
We have audited the accompanying statement of assets and liabilities of Keystone
International Fund Inc., including the schedule of investments, as of October
31, 1997, and the related statement of operations for the year then ended, the
statements of changes in net assets for each of the years in the two-year period
then ended and the financial highlights for each of the periods presented
herein. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1997 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Keystone International Fund Inc. as of October 31, 1997, the results of its
operations for the year then ended, the changes in its net assets for each of
the years in the two-year period then ended and financial highlights for the
periods specified in the first paragraph above in conformity with generally
accepted accounting principles.
KPMG Peat Marwick LLP
Boston, Massachusetts
November 26, 1997
<PAGE>
(This Page Left Blank Intentionally)
<PAGE>
(This Page Left Blank Intentionally)
<PAGE>
(This Page Left Blank Intentionally)
<PAGE>
This report was prepared primarily for the information of the Fund's
shareholders. It is authorized for distribution if preceded or accompanied by
the Fund's current prospectus. The prospectus contains important information
about the Fund including fees and expenses. Read it carefully before you invest
or send money. For a free prospectus on other Evergreen Funds, contact your
financial adviser or call Evergreen Funds.
NOT
FDIC MAY LOSE VALUE
INSURED NO BANK GUARANTEE
EVERGREEN DISTRIBUTOR, INC.
Evergreen is a Service Mark of Evergreen
Investment Services, Inc. Copyright 1997.
542303 (Recycle logo appears here)
KEYSTONE
(Photo appears here)
INTERNATIONAL
FUND INC.
(Evergreen Funds logo appears here)
Evergreen Funds (SM)
Since 1942
ANNUAL REPORT
OCTOBER 31, 1997
<PAGE>
EVERGREEN FUNDS
EVERGREEN INVESTMENT SERVICES, INC.
200 Berkeley Street
Boston, MA 02116-5034
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, NW
Washington, D.C.
Attn: File Room
Re: Keystone International Fund (KIF)
File No. 811-1231
CIK # 0000079321
CCC # azz*ud8s
Commissioners:
Please be advised that the Annual Report for the above referenced Fund(s) were
submitted to your office on January 2, 1998 via electronic transmission
(EDGAR).
Any questions or comments about this document should be directed to the
undersigned at (617) 210-3265.
Very Truly Yours,
/s/ Elizabeth Snee
Elizabeth Snee
Assistant Vice President
<PAGE>
<PAGE>
Evergreen International Growth Fund
April 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Evergreen Evergreen
International Growth Fund International Equity Fund
--------------------------------------------------------------------------
Shares Value Shares Value
-------- ------- -------- -------
<S> <C> <C> <C> <C>
COMMON STOCKS 79.3%
ARGENTINA 1.8%
Oil / Energy 1.1%
Transportadora de Gas del Sur SA, ADR ("TGS") 45 518
YPF SA, ADR 138 4,827
YPF SA, Cl. D 4 139
--------------------------------------------------------------------------
518 4,966
--------------------------------------------------------------------------
Telecommunication Services & Equipment 0.6%
Telefonica de Argentina, ADR, Cl. B 75 2,900
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL ARGENTINA 518 7,866
- ------------------------------------------------------------------------------------------------------------------------------------
AUSTRALIA 1.2%
Banks 0.3%
National Australia Bank Ltd. 116 1,649
--------------------------------------------------------------------------
Finance & Insurance 0.1%
QBE Insurance Group Ltd. 56 255
Tyndall Australia Ltd. 182 314
--------------------------------------------------------------------------
569
--------------------------------------------------------------------------
Food & Beverage Products 0.3%
Burns Philp & Co., Ltd. 2,873 375
Foodland Associates Ltd. 85 612
Fosters Brewing Group Ltd. 162 353
--------------------------------------------------------------------------
353 987
--------------------------------------------------------------------------
Healthcare Products & Services 0.4%
Sonic Healthcare Ltd. 1,369 1,831
--------------------------------------------------------------------------
Machinery - Diversified 0.1%
Evans Deakin Industries Ltd. 109 305
--------------------------------------------------------------------------
Manufacturing - Distributing 0.0% (a)
Siddons Ramset Ltd. 46 216
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL AUSTRALIA 4,923 987
- ------------------------------------------------------------------------------------------------------------------------------------
AUSTRIA 1.5%
Energy 0.4%
OMV AG 11 1,562
--------------------------------------------------------------------------
Engineering 0.5%
VAE Eisenbahnsysteme AG 27 2,554
--------------------------------------------------------------------------
Information Services & Technology 0.6%
VA Technologie AG 21 3,004
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL AUSTRIA 7,120
- ------------------------------------------------------------------------------------------------------------------------------------
BELGIUM 0.3%
Finance & Insurance 0.3%
Dexia Belgium (Credit Communal) 11 1,498
- ------------------------------------------------------------------------------------------------------------------------------------
BRAZIL 0.7%
Banks 0.3%
Unibanco Uniao de Barncos Braseieiras SA, GDR 39 1,562
--------------------------------------------------------------------------
Telecommunication Services & Equipment 0.2%
Telecomunicacoes Brasileiras SA, ADR ("Telebras") 7 865
--------------------------------------------------------------------------
Utilities - Water 0.2%
* Companhia de Saneamento Basico do Estado ("SABESP") 3,845 874
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL BRAZIL 3,301
- ------------------------------------------------------------------------------------------------------------------------------------
CANADA 1.3%
Banks 0.6%
National Bank of Canada 136 2,808
--------------------------------------------------------------------------
Chemical & Agricultural Products 0.1%
Potash Corp. of Saskatchewan, Inc. 14 1,228
--------------------------------------------------------------------------
Finance & Insurance 0.1%
* BRL Enterprises, Inc. 6 21
Power Corp. of Canada 16 655
--------------------------------------------------------------------------
676
--------------------------------------------------------------------------
Publishing, Broadcasting & Entertainment 0.4%
Quebecor, Inc., Cl. B 87 1,737
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL CANADA 6,449
- ------------------------------------------------------------------------------------------------------------------------------------
CHINA 0.3%
Transportation 0.3%
* Guangshen Railway Co. Ltd. 6,518 1,220
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Pro Forma
Combined
------------------------------------------
Shares Value
-------------- ----------------
<S> <C> <C> <C>
COMMON STOCKS 79.3%
ARGENTINA 1.8%
Oil / Energy 1.1%
Transportadora de Gas del Sur SA, ADR ("TGS") 45 518 0.1%
YPF SA, ADR 138 4,827 1.0%
YPF SA, Cl. D 4 139 0.0%
--------------------------------------
5,484 1.1%
--------------------------------------
Telecommunication Services & Equipment 0.6%
Telefonica de Argentina, ADR, Cl. B 75 2,900 0.6%
- ------------------------------------------------------------------------------------------------
TOTAL ARGENTINA 8,384 1.8%
- ------------------------------------------------------------------------------------------------
AUSTRALIA 1.2%
Banks 0.3%
National Australia Bank Ltd. 116 1,649 0.3%
--------------------------------------
Finance & Insurance 0.1%
QBE Insurance Group Ltd. 56 255 0.1%
Tyndall Australia Ltd. 182 314 0.1%
--------------------------------------
569 0.1%
--------------------------------------
Food & Beverage Products 0.3%
Burns Philp & Co., Ltd. 2,873 375 0.1%
Foodland Associates Ltd. 85 612 0.1%
Fosters Brewing Group Ltd. 162 353 0.1%
--------------------------------------
1,340 0.3%
--------------------------------------
Healthcare Products & Services 0.4%
Sonic Healthcare Ltd. 1,369 1,831 0.4%
--------------------------------------
Machinery - Diversified 0.1%
Evans Deakin Industries Ltd. 109 305 0.1%
--------------------------------------
Manufacturing - Distributing 0.0% (a)
Siddons Ramset Ltd. 46 216 0.0%
- ------------------------------------------------------------------------------------------------
TOTAL AUSTRALIA 5,910 1.2%
- ------------------------------------------------------------------------------------------------
AUSTRIA 1.5%
Energy 0.4%
OMV AG 11 1,562 0.4%
--------------------------------------
Engineering 0.5%
VAE Eisenbahnsysteme AG 27 2,554 0.5%
--------------------------------------
Information Services & Technology 0.6%
VA Technologie AG 21 3,004 0.6%
------------------------------------------------------------------------------------------------
TOTAL AUSTRIA 7,120 1.5%
- ------------------------------------------------------------------------------------------------
BELGIUM 0.3%
Finance & Insurance 0.3%
Dexia Belgium (Credit Communal) 11 1,498 0.3%
- ------------------------------------------------------------------------------------------------
BRAZIL 0.7%
Banks 0.3%
Unibanco Uniao de Barncos Braseieiras SA, GDR 39 1,562 0.3%
--------------------------------------
Telecommunication Services & Equipment 0.2%
Telecomunicacoes Brasileiras SA, ADR ("Telebras") 7 865 0.2%
--------------------------------------
Utilities - Water 0.2%
* Companhia de Saneamento Basico do Estado ("SABESP") 3,845 874 0.2%
- ------------------------------------------------------------------------------------------------
TOTAL BRAZIL 3,301 0.7%
- ------------------------------------------------------------------------------------------------
CANADA 1.3%
Banks 0.6%
National Bank of Canada 136 2,808 0.6%
--------------------------------------
Chemical & Agricultural Products 0.1%
Potash Corp. of Saskatchewan, Inc. 14 1,228 0.3%
--------------------------------------
Finance & Insurance 0.1%
* BRL Enterprises, Inc. 6 21 0.0%
Power Corp. of Canada 16 655 0.1%
--------------------------------------
676 0.1%
--------------------------------------
Publishing, Broadcasting & Entertainment 0.4%
Quebecor, Inc., Cl. B 87 1,737 0.4%
- ------------------------------------------------------------------------------------------------
TOTAL CANADA 6,449 1.3%
- ------------------------------------------------------------------------------------------------
CHINA 0.3%
Transportation 0.3%
* Guangshen Railway Co. Ltd. 6,518 1,220 0.3%
- ------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Evergreen International Growth Fund
April 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Evergreen Evergreen Pro Forma
International Growth Fund International Equity Fund Combined
-----------------------------------------------------------------------
Shares Value Shares Value Shares Value
-------- ------- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
DENMARK 1.5%
Banks 0.6%
Unidanmark AS, Registered Shares 36 2,983 36 2,983 0.6%
----------------------------------------------------------------------
Consumer Products & Services 0.5%
* ISS International Service System AS, Ser. B 48 2,601 48 2,601 0.5%
----------------------------------------------------------------------
Transportation 0.4%
SAS Danmark AS 97 1,724 97 1,724 0.4%
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL DENMARK 7,308 7,308 1.5%
- ---------------------------------------------------------------------------------------------------------------------------
FINLAND 1.1%
Diversified Companies 0.8%
Huhtamaki Group 68 3,916 68 3,916 0.8%
----------------------------------------------------------------------
Machinery - Diversified 0.3%
Rauma OY 68 1,267 68 1,267 0.3%
----------------------------------------------------------------------
Paper & Packaging 0.1%
Valmet OYJ 16 257 16 257 0.1%
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL FINLAND 257 5,183 5,440 1.1%
- ---------------------------------------------------------------------------------------------------------------------------
FRANCE 11.4%
Advertising & Related Services 0.1%
Dauphin O.T.A. 5 504 5 504 0.1%
----------------------------------------------------------------------
Automotive Equipment & Manufacturing 0.1%
Compagnie Generale des Etablissments
Michelin, Cl. B 8 528 8 528 0.1%
----------------------------------------------------------------------
Banks 1.7%
* Banque Nationale de Paris 20 1,708 48 4,010 68 5,718 1.2%
* Cie Fin de Paribas, Cl. A 2 255 2 255 0.1%
Credit Commerce de France 20 1,625 20 1,625 0.3%
Societe Generale SA 3 521 3 521 0.1%
----------------------------------------------------------------------
4,109 4,010 8,119 1.7%
----------------------------------------------------------------------
Building, Construction & Furnishings 0.4%
Lafarge SA 19 1,826 19 1,826 0.4%
----------------------------------------------------------------------
Business Equipment & Services 0.6%
* ATOS SA 17 2,814 17 2,814 0.6%
----------------------------------------------------------------------
Electrical Equipment & Services 0.2%
Le Carbone Lorraine 2 779 2 779 0.2%
----------------------------------------------------------------------
Finance & Insurance 2.7%
AXA-UAP 23 2,678 12 1,444 35 4,122 0.9%
Scor 18 1,109 18 1,109 0.2%
* Societe Eurafrance SA 5 2,715 5 2,715 0.6%
* Societe Genrale d'Enterprises SA 124 4,822 124 4,822 1.0%
----------------------------------------------------------------------
6,502 6,266 12,768 2.7%
----------------------------------------------------------------------
Food & Beverage Products 0.4%
Pernod Ricard SA 26 1,819 26 1,819 0.4%
----------------------------------------------------------------------
Healthcare Products & Services 1.8%
Rhone-Poulenc SA, Cl. A 63 3,058 118 5,776 181 8,834 1.8%
----------------------------------------------------------------------
Industrial Specialty Products & Services 1.1%
Bouygues Offshore SA, ADR 97 2,077 97 2,077 0.4%
Compagnie de Saint Gobain 18 3,046 18 3,046 0.6%
----------------------------------------------------------------------
5,123 5,123 1.1%
----------------------------------------------------------------------
Information Services & Technology 0.1%
Dassault Systemes SA 12 463 12 463 0.1%
----------------------------------------------------------------------
Machinery - Diversified 0.1%
Norbert Dentressangle SA 4 619 4 619 0.1%
----------------------------------------------------------------------
Oil / Energy 2.2%
Societe Nationale Elf Aquitaine SA 17 2,224 36 4,726 53 6,950 1.5%
Total SA, Cl. B 29 3,397 29 3,397 0.7%
----------------------------------------------------------------------
2,224 8,123 10,347 2.2%
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL FRANCE 25,245 29,298 54,543 11.4%
- ---------------------------------------------------------------------------------------------------------------------------
GERMANY 7.3%
Automotive Equipment & Manufacturing 0.2%
Daimler- Benz AG 11 1,059 11 1,059 0.2%
----------------------------------------------------------------------
Diversified Companies 0.3%
Preussag AG 4 1,493 4 1,493 0.3%
----------------------------------------------------------------------
</TABLE>
<PAGE>
Evergreen International Growth Fund
April 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Evergreen Evergreen Pro Forma
International Growth Fund International Equity Fund Combined
-----------------------------------------------------------------------
Shares Value Shares Value Shares Value
-------- ------- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Finance & Insurance 1.2%
Hannover Rueckversicherungs AG 24 3,011 24 3,011 0.6%
Munchener Ruckvers 6 2,787 6 2,787 0.6%
----------------------------------------------------------------------
5,798 5,798 1.2%
----------------------------------------------------------------------
Healthcare Products & Services 1.9%
Degussa AG 54 2,929 54 2,929 0.6%
* Fresenius Medical Care AG 51 3,470 51 3,470 0.7%
Hoechst AG 62 2,509 62 2,509 0.5%
----------------------------------------------------------------------
8,908 8,908 1.9%
----------------------------------------------------------------------
Information Services & Technology 0.3%
Boewe Systec AG 31 1,433 31 1,433 0.3%
----------------------------------------------------------------------
Manufacturing - Distributing 0.7%
Mannesmann AG 4 3,297 4 3,297 0.7%
----------------------------------------------------------------------
Metal Products & Services 0.1%
KM Europa Metal AG 5 672 5 672 0.1%
----------------------------------------------------------------------
Paper & Packaging 0.3%
Schmalbach Lubeca AG 5 1,200 5 1,200 0.3%
----------------------------------------------------------------------
Publishing, Broadcasting & Entertainment 0.4%
Springer (Axel) Verlag AG 2 1,742 2 1,742 0.4%
----------------------------------------------------------------------
Retailing & Wholesale 0.9%
Karstadt AG 9 4,094 9 4,094 0.9%
----------------------------------------------------------------------
Transportation 0.5%
GEA AG 6 2,306 6 2,306 0.5%
----------------------------------------------------------------------
Utilities - Electric 0.6%
Berliner Kraft & Licht AG 59 2,971 59 2,971 0.6%
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL GERMANY 13,171 21,802 34,973 7.3%
- ---------------------------------------------------------------------------------------------------------------------------
GREECE 0.1%
Banks 0.1%
Ergo Bank SA, GDR 6 565 6 565 0.1%
- ---------------------------------------------------------------------------------------------------------------------------
HONG KONG 1.1%
Banks 0.1%
Wing Hang Bank Ltd. 125 350 125 350 0.1%
----------------------------------------------------------------------
Diversified Companies 0.9%
Cosco Pacific Ltd. 3,393 2,300 3,393 2,300 0.5%
First Pacific Ltd. 3,581 1,722 3,581 1,722 0.4%
* Jardine Matheson Holdings Ltd. 112 474 112 474 0.1%
----------------------------------------------------------------------
4,496 4,496 0.9%
----------------------------------------------------------------------
Leisure & Tourism 0.1%
Mandarin Oriental International, Ltd. 618 439 618 439 0.1%
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL HONG KONG 439 4,846 5,285 1.1%
- ---------------------------------------------------------------------------------------------------------------------------
INDIA 0.6%
Banks 0.4%
State Bank of India, GDR, 144A 91 1,733 91 1,733 0.4%
----------------------------------------------------------------------
Metal Products & Services 0.2%
Hindalco Industries Ltd., GDR, 144A 38 732 38 732 0.2%
----------------------------------------------------------------------
Textile & Apparel 0.0% (a)
* Reliance Industries Ltd., GDR, 144A 14 128 14 128 0.0%
* Reliance Industries Ltd., GDS 5 45 5 45 0.0%
----------------------------------------------------------------------
173 173 0.0%
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL INDIA 173 2,465 2,638 0.6%
- ---------------------------------------------------------------------------------------------------------------------------
IRELAND 0.9%
Food & Beverage Products 0.9%
Greencore Group Plc 193 1,179 193 1,179 0.2%
Kerry Group Plc 186 2,931 186 2,931 0.6%
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL IRELAND 4,110 4,110 0.9%
- ---------------------------------------------------------------------------------------------------------------------------
ISRAEL 0.6%
Manufacturing - Distributing 0.3%
Orbotech Ltd. 36 1,282 36 1,282 0.3%
----------------------------------------------------------------------
Telecommunication Services & Equipment 0.3%
ECI Telecommunications Ltd. 54 1,641 54 1,641 0.3%
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL ISRAEL 2,923 2,923 0.6%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Evergreen International Growth Fund
April 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Evergreen Evergreen Pro Forma
International Growth Fund International Equity Fund Combined
-----------------------------------------------------------------------
Shares Value Shares Value Shares Value
-------- ------- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
ITALY 4.4%
Diversified Companies 0.0% (a)
* Grassetto SpA 12 1 12 1 0.0%
----------------------------------------------------------------------
Energy 0.8%
ENI SpA 591 3,969 591 3,969 0.8%
----------------------------------------------------------------------
Finance & Insurance 0.7%
Parmalat Finanziara SpA 117 264 1,361 3,068 1,478 3,332 0.7%
----------------------------------------------------------------------
Other 0.5%
Assicruz Generali 77 2,317 77 2,317 0.5%
----------------------------------------------------------------------
Publishing, Broadcasting & Entertainment 0.7%
Arn Mondadori Edit SpA 152 1,722 152 1,722 0.4%
Seat SpA 2,929 1,455 2,929 1,455 0.3%
----------------------------------------------------------------------
1,722 1,455 3,177 0.7%
----------------------------------------------------------------------
Telecommunication Services & Equipment 1.8%
Telecom Italia Mobile (TIM) SpA 158 898 158 898 0.2%
Telecom Italia SpA 415 3,101 584 4,366 999 7,467 1.6%
----------------------------------------------------------------------
3,999 4,366 8,365 1.8%
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL ITALY 5,985 15,176 21,161 4.4%
- ---------------------------------------------------------------------------------------------------------------------------
JAPAN 7.7%
Automotive Equipment & Manufacturing 0.1%
Toyota Motor Corp. 13 339 13 339 0.1%
----------------------------------------------------------------------
Banks 0.0% (a)
Sumitomo Bank Ltd. 1 3 1 3 0.0%
----------------------------------------------------------------------
Business Equipment & Services 0.7%
Fujitsu Ltd. 38 444 220 2,568 258 3,012 0.6%
Secom Co. Ltd. 6 353 6 353 0.1%
----------------------------------------------------------------------
797 2,568 3,365 0.7%
Consumer Products & Services 1.3%
Kao Corp. 28 411 28 411 0.1%
Sony Corp. 1 50 34 2,829 35 2,879 0.6%
TDK Corp. 37 2,924 37 2,924 0.6%
----------------------------------------------------------------------
461 5,753 6,214 1.3%
----------------------------------------------------------------------
Electrical Equipment & Services 2.6%
Advantest Corp. 22 1,484 22 1,484 0.3%
Fujikura Ltd. 300 1,546 300 1,546 0.3%
NEC Corp. 284 3,197 284 3,197 0.7%
Rohm Co. Ltd. 37 4,177 37 4,177 0.9%
Tokyo Electron Ltd. 52 2,043 52 2,043 0.4%
----------------------------------------------------------------------
12,447 12,447 2.6%
----------------------------------------------------------------------
Finance & Insurance 1.5%
Nichiei Co. Ltd. 3 248 3 248 0.1%
Orix Corp. 63 4,335 63 4,335 0.9%
Shohkoh Fund & Co. Ltd. 2 636 2 636 0.1%
Sumitomo Fire & Marine Insurance Co. 15 90 15 90 0.0%
Takefuji Corp 27 1,418 27 1,418 0.3%
Yasuda Fire & Marine Insurance Co. 69 313 69 313 0.1%
----------------------------------------------------------------------
1,287 5,753 7,040 1.5%
----------------------------------------------------------------------
Healthcare Products & Services 0.2%
Taisho Pharmaceutical Co. 36 762 36 762 0.2%
----------------------------------------------------------------------
Leisure & Tourism 0.2%
Fuji Photo Film Co. 30 1,068 30 1,068 0.2%
----------------------------------------------------------------------
Manufacturing - Distributing 0.9%
Minebea Co. Ltd. 404 4,518 404 4,518 0.9%
----------------------------------------------------------------------
Real Estate 0.0% (a)
Hankyu Realty Co. 45 213 45 213 0.0%
----------------------------------------------------------------------
Retailing & Wholesale 0.1%
Seven-Eleven Japan Co. Ltd. 5 334 5 334 0.1%
----------------------------------------------------------------------
Utilities - Telephone 0.1%
Nippon Telephone & Telegraph Corp. 0 351 0 351 0.1%
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL JAPAN 5,399 31,255 36,654 7.7%
- ---------------------------------------------------------------------------------------------------------------------------
KOREA 1.1%
Electrical Equipment & Services 0.3%
</TABLE>
<PAGE>
Evergreen International Growth Fund
April 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Evergreen Evergreen Pro Forma
International Growth Fund International Equity Fund Combined
-----------------------------------------------------------------------
Shares Value Shares Value Shares Value
-------- ------- ------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Samsung Display Devices 29 1,466 29 1,466 0.3%
----------------------------------------------------------------------
Industrial Specialty Products & Services 0.2%
Samsung Heavy Industries 157 1,110 157 1,110 0.2%
----------------------------------------------------------------------
Manufacturing - Distributing 0.2%
Hyundai Heavy Industries 29 920 29 920 0.2%
----------------------------------------------------------------------
Telecommunication Services & Equipment 0.4%
Goldstar Telecommunications Co. 156 1,856 156 1,856 0.4%
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL KOREA 5,352 5,352 1.1%
- ---------------------------------------------------------------------------------------------------------------------------
LUXEMBOURG 0.2%
Telecommunication Services & Equipment 0.2%
* Millicom International Cellular SA, GDR 23 880 23 880 0.2%
- ---------------------------------------------------------------------------------------------------------------------------
MEXICO 0.5%
Food & Beverage Products 0.5%
Fomento Economic Mexico 245 1,814 245 1,814 0.4%
Panamerican Beverages, Inc., Cl. A 16 622 16 622 0.1%
- ---------------------------------------------------------------------------------------------------------------------------
Total Mexico 622 1,814 2,436 0.5%
- ---------------------------------------------------------------------------------------------------------------------------
NETHERLANDS 6.8%
Advertising & Related Services 0.2%
Telegraaf Holdings NV Certificate 40 921 40 921 0.2%
----------------------------------------------------------------------
Building, Construction & Furnishings 0.3%
Boskalis Westminster NV 79 1,289 79 1,289 0.3%
----------------------------------------------------------------------
Consumer Products & Services 2.6%
Hagemeyer NV 54 2,550 54 2,550 0.5%
Philips Electronics NV 30 2,610 84 7,368 114 9,978 2.1%
----------------------------------------------------------------------
2,610 9,918 12,528 2.6%
----------------------------------------------------------------------
Diversified Companies 0.3%
Fugro NV Certificate 7 296 7 296 0.1%
Unilever NV CVA 15 1,082 15 1,082 0.2%
----------------------------------------------------------------------
1,378 1,378 0.3%
----------------------------------------------------------------------
Finance & Insurance 1.7%
AEGON NV 18 2,374 18 2,374 0.5%
ING Groep NV 90 5,832 90 5,832 1.2%
----------------------------------------------------------------------
2,374 5,832 8,206 1.7%
----------------------------------------------------------------------
Food & Beverage Products 0.7%
CSM NV, Certificates 25 1,361 25 1,361 0.3%
De Boer Unigro NV 30 1,466 30 1,466 0.3%
Koninklijke Ahold NV 17 516 17 516 0.1%
----------------------------------------------------------------------
1,982 1,361 3,343 0.7%
----------------------------------------------------------------------
Oil / Energy 0.4%
Royal Dutch Petroleum Co. 35 1,934 35 1,934 0.4%
----------------------------------------------------------------------
Retailing & Wholesale 0.1%
Ceteco Holding NV Certificate 6 317 6 317 0.1%
----------------------------------------------------------------------
Transportation 0.5%
Koninklijke Van Ommeren NV Certificate 27 1,167 27 1,167 0.2%
Pakhoed NV Kon 39 1,440 39 1,440 0.3%
----------------------------------------------------------------------
1,167 1,440 2,607 0.5%
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL NETHERLANDS 13,972 18,551 32,523 6.8%
- ---------------------------------------------------------------------------------------------------------------------------
NEW ZEALAND 0.9%
Building, Construction & Furnishings 0.3%
Fletcher Challenge Building, ADR 744 1,504 744 1,504 0.3%
----------------------------------------------------------------------
Finance & Insurance 0.4%
Brierley Investments Ltd. 3,712 2,144 3,712 2,144 0.4%
----------------------------------------------------------------------
Forest Products 0.1%
Carter Holt Harvey Ltd. 345 459 345 459 0.1%
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL NEW ZEALAND 4,107 4,107 0.9%
- ---------------------------------------------------------------------------------------------------------------------------
NORWAY 1.0%
Banks 0.2%
Sparebanken Nor 22 747 22 747 0.2%
----------------------------------------------------------------------
Energy 0.5%
Smedvig ASA, ADR 2 46 2 46 0.0%
Smedvig ASA, Ser. B 112 2,249 112 2,249 0.5%
----------------------------------------------------------------------
2,295 2,295 0.5%
----------------------------------------------------------------------
</TABLE>
<PAGE>
Evergreen International Growth Fund
April 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Evergreen Evergreen Pro Forma
International Growth Fund International Equity Fund Combined
------------------------- ------------------------- ----------------
Shares Value Shares Value Shares Value
-------- ------- -------- ------- ------ -----
<S> <C> <C> <C> <C> <C> <C>
Oil / Energy 0.4%
Transocean Offshore, Inc. 32 1,799 32 1,799 0.4%
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL NORWAY 4,841 4,841 1.0%
- ---------------------------------------------------------------------------------------------------------------------------
PAKISTAN 0.0% (a)
Energy 0.0%
* Sui Southern Gas Co., Ltd 4 2 4 2 0.0%
- ---------------------------------------------------------------------------------------------------------------------------
PORTUGAL 0.4%
Banks 0.2%
Bco Mello SA 65 971 65 971 0.2%
----------------------------------------------------------------------
Building, Construction & Furnishings 0.2%
Mota e Companhia SA 68 1,125 68 1,125 0.2%
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL PORTUGAL 2,096 2,096 0.4%
- ---------------------------------------------------------------------------------------------------------------------------
SINGAPORE 1.0%
Banks 0.8%
Development Bank of Singapore Ltd. 546 3,625 546 3,625 0.8%
Keppel Bank 320 417 320 417 0.1%
----------------------------------------------------------------------
4,042 4,042 0.8%
----------------------------------------------------------------------
Real Estate 0.2%
DBS Land Ltd. 486 733 486 733 0.2%
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL SINGAPORE 4,775 4,775 1.0%
- ---------------------------------------------------------------------------------------------------------------------------
SOUTH AFRICA 0.9%
Diversified Companies 0.3%
Rembrandt Controlling Investments Ltd. 102 616 102 616 0.1%
Rembrandt Group Ltd. 65 593 65 593 0.1%
Technical & Industrial Investments Ltd. 73 350 73 350 0.1%
----------------------------------------------------------------------
1,559 1,559 0.3%
----------------------------------------------------------------------
Finance & Insurance 0.5%
Liberty Life Association of Africa, Ltd. 59 1,987 59 1,987 0.4%
Tegniese Beleggings Korp BPK 90 401 90 401 0.1%
----------------------------------------------------------------------
2,388 2,388 0.5%
----------------------------------------------------------------------
Retailing & Wholesale 0.1%
New Clicks Holdings Ltd. 339 537 339 537 0.1%
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL SOUTH AFRICA 4,484 4,484 0.9%
- ---------------------------------------------------------------------------------------------------------------------------
SPAIN 2.2%
Banks 1.3%
Banco Popular Espana SA 14 1,180 14 1,180 0.2%
Banco Santander SA 36 1,887 36 1,887 0.4%
Corporacion Bancaria de Espana SA 3 233 35 2,877 38 3,110 0.7%
----------------------------------------------------------------------
3,300 2,877 6,177 1.3%
----------------------------------------------------------------------
Oil/Energy 0.6%
Repsol SA (RG) 31 1,680 31 1,680 0.4%
----------------------------------------------------------------------
Utilities 0.6%
Iberdrola SA 164 2,630 164 2,630 0.6%
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL SPAIN 4,980 5,507 10,487 2.2%
- ---------------------------------------------------------------------------------------------------------------------------
SWEDEN 7.5%
Automotive Equipment & Manufacturing 0.4%
Volvo AB, Ser. B 73 2,131 73 2,131 0.4%
----------------------------------------------------------------------
Banks 0.5%
Skandinaviska Enskilda Banken, Ser. B 100 1,670 100 1,670 0.3%
Sparbanken Sverige AB, Ser. A 15 459 15 459 0.1%
Svenska Handelsbanken, Ser. A 11 476 11 476 0.1%
----------------------------------------------------------------------
2,605 2,605 0.5%
----------------------------------------------------------------------
Building, Construction & Furnishings 1.5%
Assa Abloy AB, Ser. B 86 2,992 86 2,992 0.6%
----------------------------------------------------------------------
Consumer Products & Services 1.2%
Electrolux AB, Ser. B 18 1,628 50 4,640 68 6,268 1.3%
Swedish Match Co. AB 236 816 236 816 0.2%
----------------------------------------------------------------------
2,444 4,640 7,084 1.5%
----------------------------------------------------------------------
Electrical Equipment & Services 0.8%
AAB AB, Ser. B 242 3,745 242 3,745 0.8%
----------------------------------------------------------------------
Finance & Insurance 1.0%
Nordbanken Holding 663 4,880 663 4,880 1.0%
----------------------------------------------------------------------
Healthcare Products & Services 1.8%
</TABLE>
<PAGE>
Evergreen International Growth Fund
April 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Evergreen Evergreen Pro Forma
International Growth Fund International Equity Fund Combined
------------------------- ------------------------- ----------------
Shares Value Shares Value Shares Value
---------- ---------- ---------- ---------- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C>
Astra AB, Ser. A 187 3,840 187 3,840 0.8%
Biora AB, ADR 40 1,249 40 1,249 0.3%
Getinge Industrier AB, Ser. B 42 924 42 924 0.2%
Pharmacia & Upjohn, Inc. 56 2,458 56 2,458 0.5%
----------------------------------------------------------------------
7,222 1,249 8,471 1.8%
----------------------------------------------------------------------
Manufacturing - Distributing 0.8%
SKF AB, Ser. B 179 3,607 179 3,607 0.8%
----------------------------------------------------------------------
Metal Products & Services 0.1%
Granges AB 17 305 17 305 0.1%
----------------------------------------------------------------------
Real Estate 0.0%
Mandamus AB 15 - 15 -
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL SWEDEN 17,699 18,121 35,820 7.5%
- ---------------------------------------------------------------------------------------------------------------------------
SWITZERLAND 7.6%
Advertising & Related Services 0.4%
Edipresse SA 6 2,014 6 2,014 0.4%
----------------------------------------------------------------------
Building, Construction & Furnishings 0.7%
Holderbank Financiere Glarus AG 3 3,371 3 3,371 0.7%
----------------------------------------------------------------------
Business Equipment & Services 0.4%
SGS Holding AG 1 1,941 1 1,941 0.4%
----------------------------------------------------------------------
Diversified Companies 0.6%
* Oerlikon Buhrle Holding AG 17 2,841 17 2,841 0.6%
----------------------------------------------------------------------
Finance & Insurance 1.8%
Julius Baer Holding AG 2 5,752 2 5,752 1.2%
Schweizerische Rueckversicherungs-Gesellschaft 1 2,868 1 2,868 0.6%
----------------------------------------------------------------------
8,620 8,620 1.8%
----------------------------------------------------------------------
Food & Beverage Products 2.1%
Hero AG 1 819 1 819 0.2%
Lindt & Spruengli AG 1 1,202 1 1,202 0.3%
Nestle SA 4 8,058 4 8,058 1.7%
----------------------------------------------------------------------
10,079 10,079 2.1%
----------------------------------------------------------------------
Healthcare Products & Services 0.9%
Novartis AG 2 2,855 2 2,855 0.6%
Novartis AG, Registered Shares 1 1,332 1 1,332 0.3%
----------------------------------------------------------------------
4,187 4,187 0.9%
----------------------------------------------------------------------
Industrial Specialty Products & Services 0.4%
Sulzer AG 3 2,135 3 2,135 0.4%
----------------------------------------------------------------------
Retailing & Wholesale 0.3%
* Tag Heuer International SA 11 1,201 11 1,201 0.3%
* Tag Heuer International SA, ADR 13 137 13 137 0.0%
----------------------------------------------------------------------
1,338 1,338 0.3%
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL SWITZERLAND 21,592 14,934 36,526 7.6%
- ---------------------------------------------------------------------------------------------------------------------------
THAILAND 0.0% (a)
Building, Construction & Furnishings 0.0%
Siam Cement Public Co. Ltd. 6 82 6 82 0.0%
----------------------------------------------------------------------
Real Estate 0.0% (a)
Land & House Public Co., Ltd. Foreign Shares 4 2 4 2 0.0%
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL THAILAND 84 84 0.0%
- ---------------------------------------------------------------------------------------------------------------------------
UNITED KINGDOM 15.4%
Advertising & Related Services 0.7%
Cordiant Commerce Plc 320 626 320 626 0.1%
Pearson Publishing Plc 132 2,069 132 2,069 0.4%
Saatchi & Saatchi Plc 251 664 251 664 0.1%
----------------------------------------------------------------------
3,359 3,359 0.7%
----------------------------------------------------------------------
Aerospace & Defense 0.6%
Close Brothers Group Plc 220 2,805 220 2,805 0.6%
----------------------------------------------------------------------
Automotive Equipment & Manufacturing 0.7%
Rolls- Royce Plc 693 3,232 693 3,232 0.7%
----------------------------------------------------------------------
Banks 0.6%
Standard Chartered 188 2,829 188 2,829 0.6%
----------------------------------------------------------------------
Building, Construction & Furnishings 0.8%
Pilkington Plc 236 496 1,695 3,558 1,931 4,054 0.8%
----------------------------------------------------------------------
</TABLE>
<PAGE>
Evergreen International Growth Fund
April 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Evergreen Evergreen Pro Forma
International Growth Fund International Equity Fund Combined
------------------------- ------------------------- ----------------
Shares Value Shares Value Shares Value
---------- --------- ---------- --------- ------ -----
<S> <C> <C> <C> <C> <C> <C>
Chemical & Agricultural Products 0.3%
Imperial Chemical Industries Plc. 80 1,459 80 1,459 0.3%
----------------------------------------------------------------------
Diversified Companies 2.9%
Cookson Group Plc 996 4,472 996 4,472 0.9%
Lonrho Plc 216 1,557 216 1,557 0.3%
Morgan Crucible Co. Plc 239 1,800 239 1,800 0.4%
Perpetual Plc 9 589 9 589 0.1%
Williams Holdings Plc 698 5,359 698 5,359 1.1%
----------------------------------------------------------------------
3,357 10,420 13,777 2.9%
----------------------------------------------------------------------
Electrical Equipment & Services 0.2%
Siebe Plc 35 789 35 789 0.2%
----------------------------------------------------------------------
Finance & Insurance 1.4%
HSBC Holdings Plc 141 4,017 141 4,018 0.8%
Royal & Sun Alliance Insurance Group Plc. 220 2,463 220 2,462 0.5%
----------------------------------------------------------------------
6,480 6,480 1.4%
----------------------------------------------------------------------
Food & Beverage Products 1.7%
B.A.T. Industries Plc 338 3,186 338 3,186 0.7%
Diageo Plc 237 2,821 237 2,821 0.6%
Diageo Plc, Ser. B 37 318 37 318 0.1%
Gallaher Group Plc 175 913 175 913 0.2%
Safeway Plc 112 665 112 665 0.1%
----------------------------------------------------------------------
7,238 665 7,903 1.7%
----------------------------------------------------------------------
Healthcare Products & Services 1.9%
Glaxo Wellcome Plc 32 912 84 2,372 116 3,284 0.7%
London International Group Plc 804 2,650 804 2,650 0.6%
Medeva Plc 653 1,943 653 1,943 0.4%
SmithKline Beecham Plc, ADR 20 1,167 20 1,167 0.2%
----------------------------------------------------------------------
4,729 4,315 9,044 1.9%
----------------------------------------------------------------------
Leisure & Tourism 1.2%
Compass Group Plc 156 2,696 156 2,696 0.6%
Games Workshop Group Plc 62 834 62 834 0.2%
Thistle Hotels Plc 617 1,796 617 1,796 0.4%
Vardon Plc 158 472 158 472 0.1%
----------------------------------------------------------------------
4,002 1,796 5,798 1.2%
----------------------------------------------------------------------
Machinery - Diversified 0.4%
Ashtead Group Plc 436 1,970 436 1,970 0.4%
----------------------------------------------------------------------
Oil/Energy 0.5%
British Petroleum Co. Plc 158 2,499 158 2,499 0.5%
----------------------------------------------------------------------
Retailing & Wholesale 0.4%
Carpetright Plc 62 359 62 359 0.1%
Dixons Group 174 1,659 174 1,659 0.3%
----------------------------------------------------------------------
359 1,659 2,018 0.4%
----------------------------------------------------------------------
Telecommunication Services & Equipment 1.1%
* Orange Plc 417 2,995 417 2,995 0.6%
Vodafone Group Plc 189 2,068 189 2,068 0.4%
----------------------------------------------------------------------
2,068 2,995 5,063 1.1%
----------------------------------------------------------------------
Transportation 0.1%
British Airways Plc 57 598 57 598 0.1%
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL UNITED KINGDOM 33,480 40,197 73,677 15.4%
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost---$115,117, $241,478 and $356,595,
respectively) 159,953 267,619 427,572 89.5%
- ---------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS 2.7%
AUSTRIA 0.8%
Banks 0.8%
Bank Austria AG 47 3,649 47 3,649 0.8%
- ---------------------------------------------------------------------------------------------------------------------------
BRAZIL 1.4%
Aerospace & Defense 0.3%
Empresa Brasileira de Aeronautica 87,362 1,528 87,362 1,528 0.3%
----------------------------------------------------------------------
Iron & Steel 0.3%
Compania Vale do Rio Doce Navegacao SA, ("CURD") 63 1,494 63 1,494 0.3%
----------------------------------------------------------------------
Oil/Energy 0.3%
Petroleo Brasileiro SA, ("Petrobras") 5,245 1,330 5,245 1,330 0.3%
----------------------------------------------------------------------
Telecommunication Services & Equipment 0.4%
Compania Riograndense de Telecommunica, Receipts 41 47 41 47 0.0%
</TABLE>
<PAGE>
Evergreen International Growth Fund
April 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Evergreen Evergreen Pro Forma
International Growth Fund International Equity Fund Combined
------------------------- ------------------------- ----------------
Shares Value Shares Value Shares Value
---------- --------- ---------- --------- ------ -----
<S> <C> <C> <C> <C> <C> <C>
Telecomunicacoes de Rio de Janiero SA 3,691 581 3,691 581 0.1%
* Telecomunicaoes de Sao Paulo SA 4,396 1,495 4,396 1,495 0.3%
----------------------------------------------------------------------
47 2,076 2,123 0.4%
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL BRAZIL 1,575 4,900 6,475 1.4%
- ---------------------------------------------------------------------------------------------------------------------------
FRANCE 0.0% (a)
Building, Construction & Furnishings 0.1%
Lafarge SA 2 148 2 148 0.0%
- ---------------------------------------------------------------------------------------------------------------------------
GERMANY 0.5%
Building, Construction & Furnishings 0.5%
Grohe (Friedrich) AG 3 944 3 944 0.2%
KSB AG 5 1,543 5 1,543 0.3%
- ---------------------------------------------------------------------------------------------------------------------------
Total Germany 944 1,543 2,487 0.5%
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL PREFERRED STOCKS
(Cost---$2,431, $8,442 and $10,873, respectively) 2,667 10,092 12,759 2.7%
- ---------------------------------------------------------------------------------------------------------------------------
WARRANTS 0.0%
THAILAND 0.0%
Manufacturing - Distributing 0.0%
* One Holding Public Co. Ltd.,
Warrants @ 44 THB, expiring 11/20/01 1 - 1 - 0.0%
----------------------------------------------------------------------
TOTAL WARRANTS
(Cost---$0, $0, and $0, respectively) -
- ---------------------------------------------------------------------------------------------------------------------------
RIGHTS 0.1%
AUSTRALIA 0.0% (a)
Finance & Insurance 0.0% (a)
* Tyndall Australia Ltd., Expires 5/98 18 7 18 7 0.0%
----------------------------------------------------------------------
FRANCE 0.0%
Building, Construction & Furnishings 0.0% (a)
* Lafarge SA, Expires 4/30/98 0 - 0 - 0.0%
----------------------------------------------------------------------
KOREA 0.1%
Electrical Equipment & Services 0.1%
* Samsung Display Devices, Rights,
Expiring 5/13/98 29 512 29 512 0.1%
----------------------------------------------------------------------
TOTAL RIGHTS
(Cost---$6,196, $0, and $6,195, respectively) 7 512 519 0.1%
- ---------------------------------------------------------------------------------------------------------------------------
CONVERTIBLE DEBENTURES 0.0%
BRAZIL 0.0%
Iron & Steel 0.0%
* Compania Vale do Rio Doce Navagacao SA 57 - 57 - 0.0%
----------------------------------------------------------------------
TOTAL CONVERTIBLE DEBENTURES
(Cost---$0, and $0, respectively) -
- ---------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT 7.1%
UNITED STATES
Keystone Joint Repurchase Agreement
Purchased 4/30/98, 5.52%, maturing 5/1/98,
maturity value $18,837 (b) (cost $18,834) 18,834 18,834 18,834 18,834 3.9%
State Street Bank & Trust Co.
Purchased 4/30/98, 5.40%, maturing 5/1/98
maturity value $15,158 (b) (cost $15,156) 15,156 15,156 15,156 15,156 3.2%
----------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENT (Cost, $18,834,
$15,156 and $33,990, respectively) 18,834 15,156 33,990 7.1%
------------------------------------------------------------------------------------------------------------------------
Total Investments -(cost $136,388, $265,076 and
$401,464, respectively) 181,461 293,379 474,840 99.4%
Other Assets and Liabilities 1,990 978 2,968 0.6%
--------- --------- -------
Net Assets - 183,451 294,357 477,808 100.0%
========= ========= =======
</TABLE>
* Non-income producing securities.
144A Securities that may be resold to "qualified institutional buyers"
under Rule 144A of the Securities Act of 1933. These securities have
been determined to be liquid under guidelines established by the
Funds Board of Trustees.
(a) Less than one-tenth percent.
(b) The repurchase agreements are fully collateralized by U.S. government
and/or agency obligations based on market prices plus accrued
interest at April 30, 1998.
<PAGE>
Evergreen International Growth Fund
April 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Evergreen Evergreen Pro Forma
International Growth Fund International Equity Fund Combined
------------------------- ------------------------- ----------------
Shares Value Shares Value Shares Value
---------- --------- ---------- --------- ------ -----
<S> <C> <C> <C> <C> <C> <C>
Summary of Portfolio Abbreviations:
ADR American Depository Receipts
ADS American Depository Shares
GDR Global Depository Receipts
GDS Global Depository Shares
</TABLE>
<PAGE>
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
Evergreen International Growth
<TABLE>
<CAPTION>
Unrealized
Exchange U.S. Value at In Exchange Appreciation
Date April 30, 1998 for U.S. $ (Depreciation)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Forward Foreign Currency Exchange Contracts to Buy:
Contracts to Receive
- ----------------------------------------------------------------------------------------------------------------------------------
6/3/98 257,030 Spanish Peseta 1,689 1,658 31
Forward Foreign Currency Exchange Contracts to Sell:
Contracts to Deliver
- ----------------------------------------------------------------------------------------------------------------------------------
7/8/98 4,633 Australian Dollar $ 3,026 $ 3,061 $ 35
8/5/98 90,764 French Franc 15,181 15,160 (21)
5/18/98 15,516 German Marks 8,655 8,562 (93)
5/4/98 188,357 Greek Drachma 599 597 (2)
5/7/98 91,683 Italian Lira 52 52 0
7/27/98 625,868 Japanese Yen 4,789 4,863 74
5/18/98 21,719 Netherlands Guilder 10,763 10,640 (123)
6/3/98 588,165 Spanish Peseta 3,866 3,830 (36)
6/3/98 74,717 Swedish Krona 9,661 9,360 (301)
5/18/98 21,409 Swiss Franc 14,297 14,790 493
Unrealized appreciation on open forward contracts 633
==================
Unrealized depreciation on open forward contracts (576)
==================
<CAPTION>
Evergreen International Equity Fund
Unrealized
Exchange U.S. Value at In Exchange Appreciation
Date April 30, 1998 for U.S. $ (Depreciation)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Forward Foreign Currency Exchange Contracts to Buy:
Contracts to Receive
- ------------------------------------------------------------------------------------------
5/1/98 287 British Pounds $ 480 $ 479 $ 1
5/29/98 516,000 Japanese Yen 3,916 3,933 (17)
5/29/98 232,000 Japanese Yen 1,761 1,797 (36)
5/4/98 180 Norwegian Krone 24 24 0
5/4/98 87,221 Portuguese Escudo 474 475 (1)
Forward Foreign Currency Exchange Contracts to Sell:
Contracts to Deliver
- ------------------------------------------------------------------------------------------
5/1/98 8,339 Japanese Yen $ 63 $ 63 $ -
5/29/98 4,700 Japanese Yen 35,669 37,001 1,332
Unrealized appreciation on open forward contracts 1,333
==================
Unrealized depreciation on open forward contracts (54)
==================
Combined pro forma
Unrealized appreciation on open forward contracts 1,966
==================
Unrealized depreciation on open forward contracts (630)
==================
</TABLE>
<PAGE>
EVERGREEN INTERNATIONAL GROWTH FUND
PROFORMA STATEMENT OF ASSETS AND LIABILITIES
April 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
International Growth International Equity
Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Investments at value (identified cost - $136,388,
$265,076, and $401,464, respectively) $ 181,461 $ 293,379
Foreign currency, at value (identified cost - $1
$462, and $463, respectively) 1 465
Cash 1 1
Receivable for investments sold 672 972
Receivable for Fund shares sold 1,459 1,568
Dividends and interest receivable 636 1,236
Unrealized appreciation on open forward
foreign currency exchange contracts 633 1,333
Foreign tax reclaim receivable 99 0
Unamortized organization expenses 0 6
Prepaid expenses and other assets 106 53
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets 185,068 299,013
- ------------------------------------------------------------------------------------------------------------------------------------
Liabilities
Payable for investments purchased 303 3,671
Payable for Fund shares repurchased 333 471
Advisory fee payable 104 215
Distribution fee payable 64 22
Due to related parties 3 7
Unrealized depreciation on open forward
foreign currency exchange contracts 576 54
Foreign taxes payable 72 0
Accrued expenses and other liabilities 162 216
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 1,617 4,656
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets $ 183,451 $ 294,357
====================================================================================================================================
Net assets represented by
Paid-in capital $ 135,458 $ 275,656
Undistributed net investment income 1,021 304
Accumulated net realized gain (loss) on investments
and foreign currency related transactions 1,845 (11,179)
Net unrealized appreciation of investments
and foreign currency related transactions 45,127 29,576
- ------------------------------------------------------------------------------------------------------------------------------------
Total net assets $ 183,451 $ 294,357
====================================================================================================================================
Class A net assets $ 105,134 $ 12,911
shares 12,626 1,134
NAV $ 8.33 $ 11.39
Offering Price $ 8.75 $ 11.96
Class B net assets $ 52,819 $ 23,519
shares 6,356 2,079
NAV $ 8.31 $ 11.31
Class C net assets $ 233 594
shares 28 52
NAV $ 8.31 $ 11.38
Class Y net assets $ 25,265 $ 257,333
shares 3,034 22,550
NAV $ 8.33 $ 11.41
<CAPTION>
Combined
Adjustments ProForma
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Investments at value (identified cost - $136,388,
$265,076, and $401,464, respectively) $ 474,840
Foreign currency, at value (identified cost - $1
$462, and $463, respectively) 466
Cash 2
Receivable for investments sold 1,644
Receivable for Fund shares sold 3,027
Dividends and interest receivable 1,872
Unrealized appreciation on open forward
foreign currency exchange contracts 1,966
Foreign tax reclaim receivable 99
Unamortized organization expenses 6
Prepaid expenses and other assets 159
- --------------------------------------------------------------------------------------------------------------------
Total assets 484,081
- --------------------------------------------------------------------------------------------------------------------
Liabilities
Payable for investments purchased 3,974
Payable for Fund shares repurchased 804
Advisory fee payable 319
Distribution fee payable 86
Due to related parties 10
Unrealized depreciation on open forward
foreign currency exchange contracts 630
Foreign taxes payable 72
Accrued expenses and other liabilities 378
- --------------------------------------------------------------------------------------------------------------------
Total liabilities 6,273
- --------------------------------------------------------------------------------------------------------------------
Net assets $ - $ 477,808
====================================================================================================================
Net assets represented by
Paid-in capital $ 411,114
Undistributed net investment income 1,325
Accumulated net realized gain (loss) on investments
and foreign currency related transactions (9,334)
Net unrealized appreciation of investments
and foreign currency related transactions 74,703
- --------------------------------------------------------------------------------------------------------------------
Total net assets $ 477,808
====================================================================================================================
$ 118,045
417 (a) 14,177
$ 8.33
$ 8.75
$ 76,338
751 (a) 9,186
$ 8.31
$ 827
19 (a) 99
$ 8.31
$ 282,598
8,338 (a) 33,922
$ 8.33
</TABLE>
(a) Reflects impact of converting shares of the target fund.
<PAGE>
EVERGREEN INTERNATIONAL GROWTH FUND
PROFORMA STATEMENT OF OPERATIONS
Twelve Months Ended April 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
International Growth International Equity
Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Investment income
Dividends (net of foreign withholding taxes of $139, $264,
and $403, respectively) $ 2,626 $ 3,780
Interest 691 1,181
- ------------------------------------------------------------------------------------------------------------------------------------
Total income 3,317 4,961
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses
Advisory fee 1,182 1,891
Distribution Plan expenses 1,356 247
Transfer agent fees 505 151
Administrative service fees 33 81
Trustees fees 12 9
Custodian fees 243 253
Printing 127 67
Registration fees 49 62
Professional fees 17 25
Amortization of organization expenses - 15
Other 9 19
- ------------------------------------------------------------------------------------------------------------------------------------
Total expenses 3,533 2,820
Less: Fee waivers and/or reimbursement from Investment Advisor 0 (15)
- ------------------------------------------------------------------------------------------------------------------------------------
Net expenses 3,533 2,805
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (216) 2,156
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments
and foreign currency related transactions
Net realized gain (loss) from
Investments 22,504 (9,704)
Foreign currency related transactions (536) 6,800
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments and
foreign currency related transactions 21,968 (2,904)
- ------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments
and foreign currency related transactions 22,729 35,165
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments
and foreign currency related transactions 44,697 32,261
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets
resulting from operations $ 44,481 $ 34,417
====================================================================================================================================
<CAPTION>
Combined
Adjustments ProForma
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Investment income
Dividends (net of foreign withholding taxes of $139, $264,
and $403, respectively) $ 6,406
Interest $ 1,872
- -------------------------------------------------------------------------------------------------------------------------------
Total income - 8,278
- -------------------------------------------------------------------------------------------------------------------------------
Expenses
Advisory fee (231) 2,842
Distribution Plan expenses 1,603
Transfer agent fees 47 703
Administrative service fees (28) 86
Trustees fees 11 32
Custodian fees 115 611
Printing (18) 176
Registration fees (62) 49
Professional fees (23) 26
Amortization of organization expenses (15) -
Other 21
- -------------------------------------------------------------------------------------------------------------------------------
Total expenses (204) 6,149
Less: Fee waivers and/or reimbursement from Investment Advisor 15 -
- -------------------------------------------------------------------------------------------------------------------------------
Net expenses (189) 6,149
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) 189 2,129
- -------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments
and foreign currency related transactions
Net realized gain (loss) from
Investments 12,800
Foreign currency related transactions 6,264
- -------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments and
foreign currency related transactions - 19,064
- -------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments
and foreign currency related transactions 57,894
- -------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments
and foreign currency related transactions - 76,958
- -------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets
resulting from operations $ 189 $ 79,087
===============================================================================================================================
</TABLE>
See Combined Notes to Financial Statements.
<PAGE>
Evergreen International Growth Fund
Notes to Pro-Forma Combining Financial Statements (Unaudited)
April 30, 1998
1. Basis of Combination - The Pro-Forma Statement of Assets and Liabilities,
including the Pro- Forma Portfolio of Investments, and the related Pro-Forma
Statement of Operations (APro-Forma Statements@) reflect the accounts of
Evergreen International Growth Fund ("International Growth") and Evergreen
International Equity Fund ("International Equity") at April 30, 1998 and for the
twelve months then ended.
The Pro-Forma Statements give effect to the proposed Agreement and Plan of
Reorganization (the "Reorganization") to be submitted to shareholders of
International Equity. The Reorganization provides for the acquisition of all the
assets and the assumption of all identified liabilities of International Equity
by International Growth, in exchange for Class A, Class B, Class C and Class Y
shares of International Growth. Thereafter, there will be a distribution of
Class A, Class B, Class C and Class Y shares of International Growth to the
respective shareholders of International Equity in liquidation and subsequent
termination thereof. As a result of the Reorganization, the shareholders of
International Equity will become the owners of that number of full and
fractional Class A, Class B, Class C and Class Y shares of International Growth
having an aggregate net asset value equal to the aggregate net asset value of
their shares of International Equity as of the close of business immediately
prior to the date that International Equity assets are exchanged for Class A,
Class B, Class C and Class Y shares of International Growth.
The Pro Forma Statements reflect the expenses of each Fund in carrying out its
obligations under the Reorganization as though the merger occurred at the
beginning of the period presented.
The information contained herein is based on the experience of each Fund for the
twelve months ended April 30, 1998 and is designed to permit shareholders of the
consolidating mutual funds to evaluate the financial effect of the proposed
Reorganization. The expenses of International Equity in connection with the
Reorganization (including the cost of any proxy soliciting agents) will be borne
by First Union National Bank of North Carolina. It is not anticipated that the
securities of the combined portfolio will be sold in significant amounts in
order to comply with the investment policies and investment practices of
International Growth.
2. Shares of Beneficial Interest - The Pro-Forma net asset values per share
assumes the issuance of additional shares of International Growth Class A, Class
B, Class C and Class Y which would have been issued at April 30, 1998 in
connection with the proposed Reorganization. Shareholders of International
Equity would receive Class A, Class B, Class C and Class Y shares of
International Growth based on conversion ratios determined on April 30, 1998.
The conversion ratios are calculated by dividing the net asset value of
International Equity by the net asset value per share of the respective class of
International Growth.
3. Pro-Forma Operations - Pro-Forma operating expenses include the actual
expenses of each Fund and the combined Fund, with certain expenses adjusted to
reflect the expected expenses of the combined entity. The investment advisory,
administrative personnel and service fees have been calculated for the combined
Fund based on the fee schedule in effect for International Growth at the
combined level of average net assets for the twelve months ended April 30, 1998.
<PAGE>
EVERGREEN INTERNATIONAL TRUST
PART C
OTHER INFORMATION
Item 15. Indemnification.
The response to this item is incorporated by reference to "Liability
and Indemnification of Trustees" under the caption "Comparative Information on
Shareholders' Rights" in Part A of this Registration Statement.
Item 16. Exhibits:
1. Declaration of Trust. Incorporated by reference to
Evergreen International Trust's Registration Statement on Form
N-1A filed on December 12, 1997 Registration No. 333-42195 ("Form
N-1A Registration Statement")
2. Bylaws. Incorporated by reference to the Form N-1A Registration Statement.
3. Not applicable.
4. Agreement and Plan of Reorganization. Exhibit A to Prospectus contained in
Part A of this Registration Statement.
5. Declaration of Evergreen International Trust Articles II., III.6(c), IV.(3),
IV.(8), V., VI., VII., and VIII and ByLaws Articles II., III. and VIII.
6. Form of Investment Advisory Agreement between Keystone Investment Management
Company and Evergreen International Trust. Incorporated by reference to the Form
N-1A Registration Statement.
7(a). Form of Distribution Agreement between Evergreen
Distributor, Inc. and Evergreen International Trust.
Incorporated by reference to the Form N-1A Registration
Statement.
7(b). Form of Dealer Agreement for Class A, Class B and Class C shares used by
Evergreen Distributor, Inc. Incorporated by reference to the Form N-1A
Registration Statement.
8. Form of Deferred Compensation Plan. Incorporated by reference to the Form
N-1A Registration Statement.
<PAGE>
9. Form of Custody Agreement between State Street Bank and Trust Company and
Evergreen International Trust. Incorporated by reference to Form N-1A
Registration Statement.
10. Form of Rule 12b-1 Distribution Plan. Incorporated by reference to the Form
N-1A Registration Statement.
11. Opinion and consent of Sullivan & Worcester LLP. Filed herewith.
12. Tax opinion and consent of Sullivan & Worcester LLP. Filed herewith.
13. Not applicable.
14(a). Consent of KPMG Peat Marwick LLP. Filed herewith.
14(b). Consent of PricewaterhouseCoopers LLP. Filed herewith.
15. Not applicable.
16. Powers of Attorney. Filed herewith.
17. Form of Proxy Card. Filed herewith.
Item 17. Undertakings.
(1) The undersigned Registrant agrees that prior to any public
reoffering of the securities registered through the use of a prospectus that is
a part of this Registration Statement by any person or party who is deemed to be
an underwriter within the meaning of Rule 145(c) of the Securities Act of 1933,
the reoffering prospectus will contain the information called for by the
applicable registration form for reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items of
the applicable form.
(2) The undersigned Registrant agrees that every prospectus that is
filed under paragraph (1) above will be filed as a part of an amendment to the
Registration Statement and will not be used until the amendment is effective,
and that, in determining any liability under the Securities Act of 1933, each
post-effective amendment shall be deemed to be a new Registration Statement for
the securities offered therein, and the offering of the securities at that time
shall be deemed to be the initial bona fide offering of them.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933, this Registration Statement
has been signed on behalf of the Registrant, in the City of Columbus and State
of Ohio, on the 3rd day of August, 1998.
EVERGREEN INTERNATIONAL TRUST
By: /s/ William J. Tomko
-----------------------
Name: William J. Tomko
Title: President
As required by the Securities Act of 1933, the following persons have
signed this Registration Statement in the capacities indicated on the 3rd day of
August, 1998.
Signatures Title
- ---------- -----
/s/William J. Tomko President and
- ------------------- Treasurer
William J. Tomko
/s/Laurence B. Ashkin* Trustee
- ---------------------
Laurence B. Ashkin
/s/Charles A. Austin III* Trustee
- -------------------------
Charles A. Austin III
/s/K. Dun Gifford* Trustee
- -----------------
K. Dun Gifford
/s/James S. Howell* Trustee
- ------------------
James S. Howell
/s/Leroy Keith, Jr.* Trustee
- -------------------
Leroy Keith, Jr.
/s/Gerald M. McDonnell* Trustee
- ----------------------
Gerald M. McDonnell
<PAGE>
/s/Thomas L. McVerry* Trustee
- --------------------
Thomas L. McVerry
/s/William Walt Pettit* Trustee
- ---------------------
William Walt Pettit
/s/David M. Richardson* Trustee
- ----------------------
David M. Richardson
/s/Russell A. Salton III* Trustee
- -------------------------
Russell A. Salton III
/s/Michael S. Scofield* Trustee
- ----------------------
Michael S. Scofield
/s/Richard J. Shima* Trustee
- -------------------
Richard J. Shima
* By: /s/William J. Tomko
-------------------
Attorney-in-Fact
William J. Tomko, by signing his name hereto, does hereby sign this
document on behalf of each of the above-named individuals pursuant to powers of
attorney duly executed by such persons and included as Exhibit 16 to this
Registration Statement.
<PAGE>
INDEX TO EXHIBITS
N-14
EXHIBIT NO.
11 Opinion and Consent of Sullivan & Worcester LLP
12 Tax Opinion and Consent of Sullivan & Worcester LLP
14(a) Consent of KPMG Peat Marwick LLP
14(b) Consent of PricewaterhouseCoopers LLP
16 Powers of Attorney
17 Form of Proxy
- --------------------
<PAGE>
SULLIVAN & WORCESTER LLP
1025 CONNECTICUT AVENUE, N.W.
WASHINGTON, D.C. 20036
TELEPHONE: 202-775-8190
FACSIMILE: 202-293-2275
767 THIRD AVENUE ONE POST OFFICE SQUARE
NEW YORK, NEW YORK 10017 BOSTON, MASSACHUSETTS 02109
TELEPHONE: 212-486-8200 TELEPHONE: 617-338-2800
FACSIMILE: 212-758-2151 FACSIMILE: 617-338-2880
August 3, 1998
Evergreen International Trust
200 Berkeley Street
Boston, Massachusetts 02116
Ladies and Gentlemen:
We have been requested by the Evergreen International Trust, a Delaware
business trust with transferable shares (the "Trust") established under an
Agreement and Declaration of Trust dated September 18, 1997, as amended (the
"Declaration"), for our opinion with respect to certain matters relating to
Evergreen International Growth Fund (the "Acquiring Fund"), a series of the
Trust. We understand that the Trust is about to file a Registration Statement on
Form N-14 for the purpose of registering shares of the Trust under the
Securities Act of 1933, as amended (the "1933 Act"), in connection with the
proposed acquisition by the Acquiring Fund of all of the assets of Evergreen
International Equity Fund (the "Acquired Fund"), a series of the Trust, in
exchange solely for shares of the Acquiring Fund and the assumption by the
Acquiring Fund of the identified liabilities of the Acquired Fund pursuant to an
Agreement and Plan of Reorganization, the form of which is included in the Form
N-14 Registration Statement (the "Plan").
We have, as counsel, participated in various business and other
proceedings relating to the Trust. We have examined copies, either certified or
otherwise proved to be genuine to our satisfaction, of the Trust's Declaration
and By-Laws, and other documents relating to its organization, operation, and
proposed operation, including the proposed Plan and we have made such other
investigations as, in our judgment, are necessary or appropriate to enable us to
render the opinion expressed below.
We are admitted to the Bars of The Commonwealth of Massachusetts and
the District of Columbia and generally do not purport to be familiar with the
laws of the State of Delaware. To the extent that the conclusions based on the
laws of the State of Delaware are involved in the opinion set forth herein
below,
<PAGE>
we have relied, in rendering such opinions, upon our examination of Chapter 38
of Title 12 of the Delaware Code Annotated, as amended, entitled "Treatment of
Delaware Business Trusts" (the "Delaware business trust law") and on our
knowledge of interpretation of analogous common law of The Commonwealth of
Massachusetts.
Based upon the foregoing, and assuming the approval by shareholders of
the Acquired Fund of certain matters scheduled for their consideration at a
meeting presently anticipated to be held on October 16, 1998, it is our opinion
that the shares of the Acquiring Fund currently being registered, when issued in
accordance with the Plan and the Trust's Declaration and By-Laws, will be
legally issued, fully paid and non-assessable by the Trust, subject to
compliance with the 1933 Act, the Investment Company Act of 1940, as amended and
applicable state laws regulating the offer and sale of securities.
We hereby consent to the filing of this opinion with and as a part of
the Registration Statement on Form N-14 and to the reference to our firm under
the caption "Legal Matters" in the Prospectus/Proxy Statement filed as part of
the Registration Statement. In giving such consent, we do not thereby admit that
we come within the category of persons whose consent is required under Section 7
of the 1933 Act or the rules and regulations promulgated thereunder.
Very truly yours,
/s/SULLIVAN & WORCESTER LLP
---------------------------
SULLIVAN & WORCESTER LLP
<PAGE>
SULLIVAN & WORCESTER LLP
1025 CONNECTICUT AVENUE, N.W.
WASHINGTON, D.C. 20036
TELEPHONE: 202-775-8190
FACSIMILE: 202-293-2275
767 THIRD AVENUE ONE POST OFFICE SQUARE
NEW YORK, NEW YORK 10017 BOSTON, MASSACHUSETTS 02109
TELEPHONE: 212-486-8200 TELEPHONE: 617-338-2800
FACSIMILE: 212-758-2151 FACSIMILE: 617-338-2880
August 4, 1998
Evergreen International Equity Fund
Evergreen International Growth Fund
200 Berkeley Street
Boston, Massachusetts 02116
Re: Acquisition of Assets of Evergreen International
Equity Fund by Evergreen International Growth Fund
Ladies and Gentlemen:
You have asked for our opinion as to certain Federal income tax
consequences of the transactions described below:
Parties to the Transaction. Evergreen International Equity Fund ("Target
Fund") is a series of Evergreen International Trust, a Delaware business trust.
Evergreen International Growth Fund ("Acquiring Fund") is a series of
Evergreen International Trust.
Description of Proposed Transaction. Acquiring Fund will issue its
shares to Target Fund and assume the identified liabilities of Target Fund, in
exchange for all of the assets of Target Fund. Target Fund will then immediately
dissolve and distribute all of the Acquiring Fund shares which it holds to its
shareholders pro rata in proportion to their shareholdings in Target Fund, in
complete redemption of all outstanding shares of Target Fund.
Scope of Review and Assumptions. In rendering our opinion, we have
reviewed and relied upon the form of Agreement and Plan of Reorganization (the
"Reorganization Agreement") between Acquiring Fund and Target Fund to be dated
as of August 14, 1998 which is enclosed in a draft preliminary prospectus/proxy
statement to be filed with the United States Securities and Exchange Commission
on or about August 4, 1998 which describes the proposed transaction, and on the
information provided in such prospectus/proxy statement. We have relied, without
independent verification, upon the factual statements made therein, and assume
that there will be no change in material facts disclosed
<PAGE>
therein between the date of this letter and the date of the closing of the
transaction. We further assume that the transaction will be carried out in
accordance with the Reorganization Agreement.
Representations. Written representations, copies of which are attached
hereto, have been made to us by the appropriate officers of Target Fund and of
Acquiring Fund, and we have without independent verification relied upon such
representations in rendering our opinions.
Opinions
Based on and subject to the foregoing, and our examination of the legal
authority we have deemed to be relevant, we have the following opinions:
1. The acquisition by Acquiring Fund of all of the assets of Target
Fund solely in exchange for voting shares of Acquiring Fund and assumption of
the identified liabilities of Target Fund followed by the distribution by Target
Fund of said Acquiring Fund shares to the shareholders of Target Fund in
exchange for their Target Fund shares will constitute a reorganization within
the meaning of ss. 368(a)(1)(C) of the Code, and Acquiring Fund and Target Fund
will each be "a party to a reorganization" within the meaning of ss. 368(b) of
the Code.
2. No gain or loss will be recognized to Target Fund upon the transfer
of all of its assets to Acquiring Fund solely in exchange for Acquiring Fund
voting shares and assumption by Acquiring Fund of the identified liabilities of
Target Fund, or upon the distribution of such Acquiring Fund voting shares to
the shareholders of Target Fund in exchange for all of their Target Fund shares.
3. No gain or loss will be recognized by Acquiring Fund upon the
receipt of the assets of Target Fund solely in exchange for Acquiring Fund
voting shares and assumption by Acquiring Fund of any liabilities of Target
Fund.
4. The basis of the assets of Target Fund acquired by Acquiring Fund
will be the same as the basis of those assets in the hands of Target Fund
immediately prior to the transfer, and the holding period of the assets of
Target Fund in the hands of Acquiring Fund will include the period during which
those assets were held by Target Fund.
5. The shareholders of Target Fund will recognize no gain or loss upon
the exchange of all of their Target Fund shares solely for Acquiring Fund voting
shares.
<PAGE>
6. The basis of the Acquiring Fund voting shares to be received by the
Target Fund shareholders will be the same as the basis of the Target Fund shares
surrendered in exchange therefor.
7. The holding period of the Acquiring Fund voting shares to be
received by the Target Fund shareholders will include the period during which
the Target Fund shares surrendered in exchange therefor were held, provided the
Target Fund shares were held as a capital asset on the date of the exchange.
This opinion letter is delivered to you in satisfaction of the
requirements of Section 8.6 of the Reorganization Agreement. We hereby consent
to the filing of this opinion as an exhibit to the Registration Statement on
Form N-14 and to use of our name and any reference to our firm in such
Registration Statement or in the Prospectus/Proxy Statement constituting a part
thereof. In giving such consent, we do not thereby admit that we come within the
category of persons whose consent is required under Section 7 of the Securities
Act of 1933, as amended, or the rules and regulations of the Securities and
Exchange Commission thereunder.
Very truly yours,
/s/Sullivan & Worcester LLP
---------------------------
SULLIVAN & WORCESTER LLP
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
The Trustees and Shareholders
Evergreen International Trust
We consent to the use of our report dated November 26, 1997 for Evergreen
International Growth Fund incorporated by reference herein and to the reference
to our firm under the caption "FINANCIAL STATEMENTS AND EXPERTS" in the
Prospectus/Proxy
Statement.
/s/KPMG Peat Marwick LLP
------------------------
KPMG Peat Marwick LLP
Boston, Massachusetts
August 3, 1998
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference into the Prospectus/Proxy
Statement (the "Prospectus/Proxy") and Statement of Additional Information
constituting parts of this Registration Statement on Form N-14 (the
"Registration Statement") of Evergreen International Trust of our report dated
December 15, 1997, relating to the financial statements and financial highlights
of Evergreen International Equity Fund (the "Fund") appearing in the Fund's
October 31, 1997 Annual Report to Shareholders, which is also incorporated by
reference into the Registration Statement.
We also consent to the reference to us under the heading "Financial Statements
and Experts" in such Prospectus/Proxy.
/s/PricewaterhouseCoopers LLP
- -----------------------------
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
August 3, 1998
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Maureen E. Towle, Michael H. Koonce,
T. Hal Clarke, John A. Dudley, Robert N. Hickey, David M. Leahy and William J.
Tomko, and each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-14 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Trustee and for which Keystone Investment Management
Company, Evergreen Asset Management Corp., First Union National Bank, or any
other investment advisory affiliate of First Union National Bank, serves as
Adviser or Manager and registering from time to time the shares of such
companies, and generally to do all such things in my name and on my behalf to
enable such investment companies to comply with the provisions of the Securities
Act of 1933, as amended, the Investment Company Act of 1940, as amended, and all
requirements and regulations of the Securities and Exchange Commission
thereunder, hereby ratifying and confirming my signature as it may be signed by
my said attorneys to any and all registration statements and amendments thereto.
In Witness Whereof, I have executed this Power of Attorney as of March
27, 1998.
Signature Title
/s/Charles A. Austin III Trustee
- ------------------------
Charles A. Austin III
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Maureen E. Towle, Michael H. Koonce,
T. Hal Clarke, John A. Dudley, Robert N. Hickey, David M. Leahy and William J.
Tomko, and each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-14 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Trustee and for which Keystone Investment Management
Company, Evergreen Asset Management Corp., First Union National Bank, or any
other investment advisory affiliate of First Union National Bank, serves as
Adviser or Manager and registering from time to time the shares of such
companies, and generally to do all such things in my name and on my behalf to
enable such investment companies to comply with the provisions of the Securities
Act of 1933, as amended, the Investment Company Act of 1940, as amended, and all
requirements and regulations of the Securities and Exchange Commission
thereunder, hereby ratifying and confirming my signature as it may be signed by
my said attorneys to any and all registration statements and amendments thereto.
In Witness Whereof, I have executed this Power of Attorney as of March
27, 1998.
Signature Title
/s/Russell A. Salton, III M.D. Trustee
- ------------------------------
Russell A. Salton, III M.D.
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Maureen E. Towle, Michael H. Koonce,
T. Hal Clarke, John A. Dudley, Robert N. Hickey, David M. Leahy and William J.
Tomko, and each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-14 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Trustee and for which Keystone Investment Management
Company, Evergreen Asset Management Corp., First Union National Bank, or any
other investment advisory affiliate of First Union National Bank, serves as
Adviser or Manager and registering from time to time the shares of such
companies, and generally to do all such things in my name and on my behalf to
enable such investment companies to comply with the provisions of the Securities
Act of 1933, as amended, the Investment Company Act of 1940, as amended, and all
requirements and regulations of the Securities and Exchange Commission
thereunder, hereby ratifying and confirming my signature as it may be signed by
my said attorneys to any and all registration statements and amendments thereto.
In Witness Whereof, I have executed this Power of Attorney as of March
27, 1998.
Signature Title
/s/K. Dun Gifford Trustee
- -----------------
K. Dun Gifford
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Maureen E. Towle, Michael H. Koonce,
T. Hal Clarke, John A. Dudley, Robert N. Hickey, David M. Leahy and William J.
Tomko, and each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-14 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Trustee and for which Keystone Investment Management
Company, Evergreen Asset Management Corp., First Union National Bank, or any
other investment advisory affiliate of First Union National Bank, serves as
Adviser or Manager and registering from time to time the shares of such
companies, and generally to do all such things in my name and on my behalf to
enable such investment companies to comply with the provisions of the Securities
Act of 1933, as amended, the Investment Company Act of 1940, as amended, and all
requirements and regulations of the Securities and Exchange Commission
thereunder, hereby ratifying and confirming my signature as it may be signed by
my said attorneys to any and all registration statements and amendments thereto.
In Witness Whereof, I have executed this Power of Attorney as of March
27, 1998.
Signature Title
/s/Laurence B. Ashkin Trustee
- ---------------------
Laurence B. Ashkin
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Maureen E. Towle, Michael H. Koonce,
T. Hal Clarke, John A. Dudley, Robert N. Hickey, David M. Leahy and William J.
Tomko, and each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-14 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Trustee and for which Keystone Investment Management
Company, Evergreen Asset Management Corp., First Union National Bank, or any
other investment advisory affiliate of First Union National Bank, serves as
Adviser or Manager and registering from time to time the shares of such
companies, and generally to do all such things in my name and on my behalf to
enable such investment companies to comply with the provisions of the Securities
Act of 1933, as amended, the Investment Company Act of 1940, as amended, and all
requirements and regulations of the Securities and Exchange Commission
thereunder, hereby ratifying and confirming my signature as it may be signed by
my said attorneys to any and all registration statements and amendments thereto.
In Witness Whereof, I have executed this Power of Attorney as of March
27, 1998.
Signature Title
/s/William Walt Pettit Trustee
- ----------------------
William Walt Pettit
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Maureen E. Towle, Michael H. Koonce,
T. Hal Clarke, John A. Dudley, Robert N. Hickey, David M. Leahy and William J.
Tomko, and each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-14 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Trustee and for which Keystone Investment Management
Company, Evergreen Asset Management Corp., First Union National Bank, or any
other investment advisory affiliate of First Union National Bank, serves as
Adviser or Manager and registering from time to time the shares of such
companies, and generally to do all such things in my name and on my behalf to
enable such investment companies to comply with the provisions of the Securities
Act of 1933, as amended, the Investment Company Act of 1940, as amended, and all
requirements and regulations of the Securities and Exchange Commission
thereunder, hereby ratifying and confirming my signature as it may be signed by
my said attorneys to any and all registration statements and amendments thereto.
In Witness Whereof, I have executed this Power of Attorney as of March
27, 1998.
Signature Title
/s/James S. Howell Trustee
- ------------------
James S. Howell
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Maureen E. Towle, Michael H. Koonce,
T. Hal Clarke, John A. Dudley, Robert N. Hickey, David M. Leahy and William J.
Tomko, and each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-14 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Trustee and for which Keystone Investment Management
Company, Evergreen Asset Management Corp., First Union National Bank, or any
other investment advisory affiliate of First Union National Bank, serves as
Adviser or Manager and registering from time to time the shares of such
companies, and generally to do all such things in my name and on my behalf to
enable such investment companies to comply with the provisions of the Securities
Act of 1933, as amended, the Investment Company Act of 1940, as amended, and all
requirements and regulations of the Securities and Exchange Commission
thereunder, hereby ratifying and confirming my signature as it may be signed by
my said attorneys to any and all registration statements and amendments thereto.
In Witness Whereof, I have executed this Power of Attorney as of March
27, 1998.
Signature Title
/s/Leroy Keith, Jr. Trustee
- -------------------
Leroy Keith, Jr.
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Maureen E. Towle, Michael H. Koonce,
T. Hal Clarke, John A. Dudley, Robert N. Hickey, David M. Leahy and William J.
Tomko, and each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-14 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Trustee and for which Keystone Investment Management
Company, Evergreen Asset Management Corp., First Union National Bank, or any
other investment advisory affiliate of First Union National Bank, serves as
Adviser or Manager and registering from time to time the shares of such
companies, and generally to do all such things in my name and on my behalf to
enable such investment companies to comply with the provisions of the Securities
Act of 1933, as amended, the Investment Company Act of 1940, as amended, and all
requirements and regulations of the Securities and Exchange Commission
thereunder, hereby ratifying and confirming my signature as it may be signed by
my said attorneys to any and all registration statements and amendments thereto.
In Witness Whereof, I have executed this Power of Attorney as of March
27, 1998.
Signature Title
/s/Gerald M. McDonnell Trustee
- ----------------------
Gerald M. McDonnell
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Maureen E. Towle, Michael H. Koonce,
T. Hal Clarke, John A. Dudley, Robert N. Hickey, David M. Leahy and William J.
Tomko, and each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-14 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Trustee and for which Keystone Investment Management
Company, Evergreen Asset Management Corp., First Union National Bank, or any
other investment advisory affiliate of First Union National Bank, serves as
Adviser or Manager and registering from time to time the shares of such
companies, and generally to do all such things in my name and on my behalf to
enable such investment companies to comply with the provisions of the Securities
Act of 1933, as amended, the Investment Company Act of 1940, as amended, and all
requirements and regulations of the Securities and Exchange Commission
thereunder, hereby ratifying and confirming my signature as it may be signed by
my said attorneys to any and all registration statements and amendments thereto.
In Witness Whereof, I have executed this Power of Attorney as of March
27, 1998.
Signature Title
/s/Thomas L. McVerry Trustee
- --------------------
Thomas L. McVerry
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Maureen E. Towle, Michael H. Koonce,
T. Hal Clarke, John A. Dudley, Robert N. Hickey, David M. Leahy and William J.
Tomko, and each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-14 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Trustee and for which Keystone Investment Management
Company, Evergreen Asset Management Corp., First Union National Bank, or any
other investment advisory affiliate of First Union National Bank, serves as
Adviser or Manager and registering from time to time the shares of such
companies, and generally to do all such things in my name and on my behalf to
enable such investment companies to comply with the provisions of the Securities
Act of 1933, as amended, the Investment Company Act of 1940, as amended, and all
requirements and regulations of the Securities and Exchange Commission
thereunder, hereby ratifying and confirming my signature as it may be signed by
my said attorneys to any and all registration statements and amendments thereto.
In Witness Whereof, I have executed this Power of Attorney as of March
27, 1998.
Signature Title
/s/David M. Richardson Trustee
- ----------------------
David M. Richardson
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Maureen E. Towle, Michael H. Koonce,
T. Hal Clarke, John A. Dudley, Robert N. Hickey, David M. Leahy and William J.
Tomko, and each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-14 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Trustee and for which Keystone Investment Management
Company, Evergreen Asset Management Corp., First Union National Bank, or any
other investment advisory affiliate of First Union National Bank, serves as
Adviser or Manager and registering from time to time the shares of such
companies, and generally to do all such things in my name and on my behalf to
enable such investment companies to comply with the provisions of the Securities
Act of 1933, as amended, the Investment Company Act of 1940, as amended, and all
requirements and regulations of the Securities and Exchange Commission
thereunder, hereby ratifying and confirming my signature as it may be signed by
my said attorneys to any and all registration statements and amendments thereto.
In Witness Whereof, I have executed this Power of Attorney as of March
27, 1998.
Signature Title
/s/Richard J. Shima Trustee
- -------------------
Richard J. Shima
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Maureen E. Towle, Michael H. Koonce,
T. Hal Clarke, John A. Dudley, Robert N. Hickey, David M. Leahy and William J.
Tomko, and each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-14 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Trustee and for which Keystone Investment Management
Company, Evergreen Asset Management Corp., First Union National Bank, or any
other investment advisory affiliate of First Union National Bank, serves as
Adviser or Manager and registering from time to time the shares of such
companies, and generally to do all such things in my name and on my behalf to
enable such investment companies to comply with the provisions of the Securities
Act of 1933, as amended, the Investment Company Act of 1940, as amended, and all
requirements and regulations of the Securities and Exchange Commission
thereunder, hereby ratifying and confirming my signature as it may be signed by
my said attorneys to any and all registration statements and amendments thereto.
In Witness Whereof, I have executed this Power of Attorney as of March
27, 1998.
Signature Title
/s/Michael S. Scofield Trustee
- ----------------------
Michael S. Scofield
<PAGE>
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH PROPOSAL.
PLEASE VOTE, SIGN, DATE AND PROMPTLY RETURN YOUR PROXY IN THE
ENCLOSED ENVELOPE TODAY!
Please detach at perforation before mailing.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
EVERGREEN INTERNATIONAL EQUITY FUND,
a series of Evergreen International Trust
PROXY FOR THE MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 16, 1998
The undersigned, revoking all Proxies heretofore given, hereby appoints
Gordon Forrester, Michael H. Koonce and Maureen E. Towle or any of them as
Proxies of the undersigned, with full power of substitution, to vote on behalf
of the undersigned all shares of Evergreen International Equity Fund, a series
of Evergreen International Trust ("International Equity") that the undersigned
is entitled to vote at the special meeting of shareholders of International
Equity to be held at 2:00 p.m. on Friday, October 16, 1998 at the offices of the
Evergreen Funds, 200 Berkeley Street, 26th Floor, Boston, Massachusetts 02116
and at any adjournments thereof, as fully as the undersigned would be entitled
to vote if personally present.
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME(S)
APPEAR ON THIS PROXY. If joint owners,
EITHER may sign this Proxy. When signing as
attorney, executor, administrator, trustee,
guardian, or custodian for a minor, please
give your full title. When signing on behalf
of a corporation or as a partner for a
partnership, please give the full corporate
or partnership name and your title, if any.
Date , 1998
----------------------------------------
----------------------------------------
Signature(s) and Title(s), if applicable
-1-
<PAGE>
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF EVERGREEN
INTERNATIONAL TRUST. THIS PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO
THE ACTION TO BE TAKEN ON THE FOLLOWING PROPOSALS. THE SHARES REPRESENTED HEREBY
WILL BE VOTED AS INDICATED OR FOR THE PROPOSALS IF NO CHOICE IS INDICATED. THE
BOARD OF TRUSTEES OF EVERGREEN INTERNATIONAL TRUST RECOMMENDS A VOTE FOR THE
PROPOSALS. PLEASE MARK YOUR VOTE BELOW IN BLUE OR BLACK INK. DO NOT USE RED INK.
EXAMPLE: X
1. To approve an Agreement and Plan of Reorganization whereby Evergreen
International Growth Fund, a series of Evergreen International Trust, will (i)
acquire all of the assets of International Equity in exchange for shares of
Evergreen International Growth Fund; and (ii) assume the identified liabilities
of International Equity, as substantially described in the accompanying
Prospectus/Proxy Statement.
- ---- FOR ---- AGAINST ---- ABSTAIN
2. To consider and vote upon such other matters as may properly come
before said meeting or any adjournments thereof.
- ---- FOR ---- AGAINST ---- ABSTAIN
-2-
<PAGE>
