<PAGE>
EVERGREEN GROWTH FUNDS
(FORMERLY FIRST UNION GROWTH FUNDS)
TABLE OF CONTENTS
<TABLE>
<C> <S> <C>
President's Message....................................................... 1
A Review of 1st Half
and Prospects for Remainder of 1995....................................... 2
INTERNATIONAL A Report From Your Portfolio Manager...................................... 4
(Picture of passport) EQUITY FUND Statement of Investments.................................................. 5
Industry Diversification.................................................. 9
Statement of Assets and Liabilities....................................... 10
Statement of Operations................................................... 11
Statement of Changes in Net Assets........................................ 12
Financial Highlights...................................................... 13
(Picture of Globe) EMERGING MARKETS A Report From Your Portfolio Manager...................................... 14
GROWTH FUND Statement of Investments.................................................. 15
Industry Diversification.................................................. 17
Statement of Assets and Liabilities....................................... 18
Statement of Operations................................................... 19
Statement of Changes in Net Assets........................................ 20
Financial Highlights...................................................... 21
Combined Notes to Financial Statements.................................... 22
Trustees and Officers..................................................... IBC
</TABLE>
<PAGE>
EVERGREEN GROWTH FUNDS
(FORMERLY FIRST UNION GROWTH FUNDS)
PRESIDENT'S MESSAGE
BY JOHN J. PILEGGI
Dear Valued Shareholder:
I am pleased to present you with the Semi-Annual (Photo of John J.
Report for the Evergreen Growth Funds (formerly the Pileggi appears
First Union Growth Funds) for the six-month period ended here)
June 30, 1995. This Report contains complete financial
information -- including the Investment Reviews and Statements of Investments
for the Evergreen Emerging Markets Growth Fund and Evergreen International
Equity Fund.
As you can see, this Report features our new family of the Evergreen Funds.
This is the result of the First Union Funds combining with and taking the name
of the Evergreen Funds effective July 7, 1995. In addition, we have completed
the acquisition of the ABT Funds, which added two new funds to our expanding
fund family, Florida High Income Municipal Bond and Aggressive Growth funds. The
Evergreen Family of Funds now consists of more than 30 funds, each carefully
designed to help meet specific objectives.
We are excited about the creation of one COMBINED fund family, since it
offers our shareholders a wider range of mutual fund options to help achieve a
broad spectrum of investment needs.
The combination of funds and the acquisition of two new funds provides you
with the following benefits:
(Bullet) a wider array of fund options, many with outstanding track records
(Bullet) free exchanges among all funds*
(Bullet) the investment expertise of two experienced investment
advisors -- Evergreen Asset Management Corp. and First Union
National Bank of North Carolina's Capital Management Group
If you wish to receive more complete information about any of the Evergreen
Funds, please call 1-800-807-2940 to speak with a First Union Brokerage
Services' registered representative. We'll be glad to send you a prospectus
describing the fund choices and their objectives, fees and expenses. Please read
the prospectus carefully before you invest or send money.
I hope you're pleased with the recent growth we have experienced, and the
opportunities this growth affords you. As always, we welcome any questions,
comments, and suggestions you may have. We look forward to serving your
investment needs in the months and years to come.
Sincerely,
(Signature of John Pileggi)
August 15, 1995
*EXCHANGES MUST BE WITHIN THE SAME CLASS OF SHARES. SHARE EXCHANGES ARE SUBJECT
TO CERTAIN LIMITATIONS DESCRIBED IN THE PROSPECTUS.
1
<PAGE>
EVERGREEN GROWTH FUNDS
(FORMERLY FIRST UNION GROWTH FUNDS)
SOFT LANDING OR PERFECT LANDING?
REVIEW OF 1ST HALF AND PROSPECTS
FOR REMAINDER OF 1995
BY DICK WAGONER, CHIEF INVESTMENT OFFICER
In our last report we stated, "In our view, the (Picture of Dick
investment climate for 1995 is improving," and we looked Wagoner appears
for much improved investment returns. here)
The basis for our optimism was our belief that the
Federal Reserve's interest rate increases,
designed to slow the economy and pre-empt inflation were, in fact, going to be
effective and would permit the economy to come in for a "soft landing" after a
period of rapid growth in 1994. In addition to the Fed's actions, we believed
then as we believe now that several powerful secular forces -- including global
competition, demographics and significant productivity gains -- are working to
keep inflation in check longer-term.
Evidence today confirms our view of moderating economic growth in 1995.
Leading economic indicators have fallen 4 out of 5 consecutive months and are
likely to fall again. Industrial production and capacity utilization have also
begun to moderate. Further confirming a slowdown were the back-to-back rises in
unemployment claims in April and May, the first such occurrence in over three
years. These increases, along with rising inventories and sluggish retail sales,
assure that slower economic growth is at hand for the remainder of the year.
WHILE WE CONTINUE TO BE OPTIMISTIC ABOUT THE INVESTMENT OUTLOOK FOR 1995, WE
BELIEVE THE MARKETS MAY BE GETTING AHEAD OF THEMSELVES IN ANTICIPATION OF A
"PERFECT LANDING."
STANDING OVATION FROM WALL STREET
As the economy began to slow, interest rates fell and the markets responded
with a standing ovation to the prospects of a "soft landing" -- perhaps even
anticipating a "perfect landing" in the economy. For the six months ended June
30, 1995, the S&P 500 Reinvested Index* was up over 20% and the Lehman Brothers
Intermediate Bond Index was up over 9%. An increasing number of investors
believe the transition to a slow growth, low inflation economy will be
smooth -- providing a highly favorable investment climate.
While we continue to be optimistic about the investment outlook for 1995, we
believe the markets may be getting ahead of themselves in anticipation of a
"perfect landing" rather than a slowdown. It is likely to be characterized by
modestly higher inflation, a choppy and subdued pattern of economic growth, and
less favorable corporate earnings comparisons.
INTERNATIONAL MARKETS IN THE DOLDRUMS
Overall, the international equity markets provided dull returns in the first
half of 1995, especially when compared with the U.S. equity markets. The MSCI
EAFE Index** (Europe, Australia and Far East) return in U.S. dollars was 2.6%
through June. Currency was the major positive factor in international returns.
The U.S. dollar declined against the EAFE currencies by nearly 10%. That
produced a currency gain for U.S. investors in foreign markets. Without this
currency gain, EAFE would have declined about 7.4%. All of the lackluster return
is the result of Japan's performance.
Japan, the largest market in the EAFE Index, produced a negative return of 8%
despite a 17% appreciation of the yen. For local investors, the Japanese market
declined nearly 22% as the Tokyo Stock Market approached new low levels.
Among the 20 countries in the EAFE Index, all but Japan and Italy produced
positive returns. In fact, without Japan, the majority of the countries produced
a return of over 11%. The Scandinavian markets continued their excellent returns
which began in 1994, led by Finland with a 30% return. Belgium, the Netherlands,
New Zealand, Spain, Sweden and Switzerland each produced returns of 15% or more.
* THE S&P 500 IS A REINVESTED UNMANAGED
COMPOSITE INDEX OF 425 INDUSTRIAL, 20
TRANSPORTATION, AND 55 PUBLIC UTILITY
COMMON STOCKS.
** UNMANAGED INDICES.
2
<PAGE>
EVERGREEN GROWTH FUNDS
(FORMERLY FIRST UNION GROWTH FUNDS)
REVIEW OF 1ST HALF AND PROSPECTS
FOR REMAINDER OF 1995 -- (CONTINUED)
Among the emerging markets, the first half of 1995 was a real roller coaster.
The IFC's Emerging Markets Investable Composite Index** of 24 countries declined
nearly 15% in the first quarter, recovered up nearly 9% in the second quarter,
and produced an overall return falling 7% for the first half of the year.
SECOND HALF OUTLOOK
The U.S. investment climate for the balance of 1995 is likely to require a
more cautious stance on the part of investors.
The first half of the year witnessed a rapid run-up in equity prices, powered
by the declining interest rates and improved corporate profit performance.
Further substantial interest rate declines from current levels are less likely,
which removes one of the driving forces for higher stock prices.
For the balance of 1995 and into 1996, profit comparisons will be less robust
related to the moderation in the economy and more difficult year-over-year
comparisons. However, in the absence of a further slowdown in the economy,
profits should continue to grow, but at a more measured pace.
Valuations on stocks are high reflecting the aforementioned variables. While
this in and of itself is not a reason for stocks to fall, it indicates that a
reasonable degree of caution is appropriate. At this point, it appears that the
U.S. economic recovery is intact and that inflation is under control.
THE INTERNATIONAL MARKETPLACE
The global economy appears to be at a turning point. After good growth in
recent years, a slowdown is in the making.
Both the U.S. and Japan are entering periods of slow growth. In recognition
of the coming slowdown, interest rates in the U.S. have been cut by the Federal
Reserve. Japan especially is looking at a slowdown with zero real growth or
possible negative growth. Short-term interest rates in Tokyo are at or below 1
percent. It's difficult to see how rates could go lower in Japan.
With most international stock markets lagging the exceptional returns of the
U.S. in 1995, many of the foreign markets are selling at lower valuations levels
than valuations in the United States. Japan, in spite of its economic problems,
is especially intriguing. Valuations are lower in Japan now than they have been
in many years. Other markets including the U.K., France and Switzerland are
selling at lower P/Es (price to earnings ratios) and higher dividend yields than
our market.
INTERNATIONAL OUTLOOK
The rest of the world's economies will follow the two "engines" -- the U.S.
and Japan. European countries are challenged to control interest rates, as their
recent economic growth was not as robust as in the U.S. While there is the need
to reduce rates to stimulate their economies, interest rates cannot be reduced
too far as Eurpoean currencies are likely to strengthen against the U.S. dollar.
In Asia, outside Japan, there is good growth.
The emerging markets continue to offer excellent participation in the world's
fastest economic growth. We believe international equities will provide both
good diversification and improved returns in the coming 6 to 12 months.
** UNMANAGED INDICES.
3
<PAGE>
EVERGREEN INTERNATIONAL EQUITY FUND
(Picture of Passport) (FORMERLY FIRST UNION INTERNATIONAL EQUITY PORTFOLIO)
A REPORT FROM YOUR
PORTFOLIO MANAGER
BY DICK WAGONER
The Evergreen International Equity Fund (the "Fund") began (Picture of
operation on September 2, 1994. The goal of the Fund's manager and Dick Wagoner
sub-adviser, Boston International Advisors, Inc., is to seek appears here)
to provide long term capital appreciation and outperform the
Morgan Stanley, Europe, Australia and Far East Index* (the
"EAFE Index") by 1 to 2% annually over a five-year period.
At mid-year, the Fund held 244 securities representing all
20 countries in the EAFE Index. In addition, the Fund held
shares of 15 emerging market mutual funds, representing 9% of
the portfolio's total net asset value.
To pursue attractive long-term returns, we select stocks
with value characteristics, such as a low price-to-book-value ratios and
above-average dividend yields that exceed the S&P 500. At mid-year, the
portfolio had an average price-to-book-value ratio of 1.0x, substantially below
the 1.8x ratio for the EAFE Index.
While each country in EAFE is represented in the portfolio, a proprietary
country-weighting strategy which establishes fixed country portfolio weights
(re-balanced annually) employed by the Fund differs substantially from the EAFE
Index. For example, Japanese stocks represent 20% of the portfolio compared with
41% of the EAFE Index.
While value characteristics like those exhibited by the Fund performed well
in 1994 and prior years, they tended to under-perform the EAFE Index during the
first half. Of course, the Fund is managed as a long-term investment. Short-term
fluctuations in return are typical.
Looking ahead, we remain convinced that international equities should provide
competitive returns for investors over the balance of the decade. We will seek
to enhance the Fund's returns by pursuing three distinct investment strategies.
First, a disciplined, value-oriented stock selection methodology should
result in the addition of above-average stocks to the Fund's portfolio. Second,
the fixed-country weighting strategy, referred to above, should permit the Fund
to benefit from the volatility inherent in the international markets. And third,
the prudent use of emerging market equities -- up to 10 percent of the total
Fund value -- should allow the Fund to benefit from rapidly growing non-EAFE
Index markets.
* UNMANAGED INDEX OF SELECTED SECURITIES.
4
<PAGE>
EVERGREEN INTERNATIONAL EQUITY FUND
(FORMERLY FIRST UNION INTERNATIONAL EQUITY PORTFOLIO)
STATEMENT OF INVESTMENTS
(Picture of Passport) JUNE 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
COMMON STOCKS -- 95.8%
ARGENTINA -- .6%
24,400 Argentina Fund, Inc................. $ 274,500
AUSTRALIA -- 5.1%
111,800 Adelaide Brighton Ltd............... 104,887
50,900 Ampolex Ltd......................... 115,764
54,400 Australian & New Zealand
Banking Group....................... 193,319
115,900 Caltex Australia Ltd................ 331,967
22,200 Commonwealth Bank of
Australia........................... 147,211
17,900 CSR Ltd............................. 55,977
246,500 Dominion Mining Ltd................. 45,551
146,600 General Property Trust.............. 247,980
59,900 Goodman Fielder Ltd................. 49,810
39,100 Hardie (James) Industries Ltd....... 61,693
55,100 News Corporation Ltd................ 307,808
6,600 Normandy Poseidon Ltd............... 8,162
45,500 Pancontinental Mining Ltd........... 61,443
33,000 Pioneer International Ltd........... 82,090
700 Publishing & Broadcasting........... 2,060
55,400 Schroders Property Fund............. 84,655
59,800 Westfield Trust..................... 104,554
66,300 Westpac Banking Corp................ 239,849
2,244,780
AUSTRIA -- 1.4%
1,000 Bank Austria AG..................... 83,273
3,050 Creditanstalt -- Bankverein......... 179,983
3,200 OMV AG.............................. 369,446
632,702
BELGIUM -- 2.1%
1,667 Arbed S.A........................... 243,593
200 Banque Nationale de Belgique........ 272,359
5,434 Societe Generale de Belgique........ 388,416
904,368
BRAZIL -- .6%
10,670 Brazil Fund, Inc.................... 268,084
CHILE -- .6%
5,272 Chile Fund, Inc..................... 283,370
DENMARK -- 2.0%
9,650 Den Danske Bank Aktieselskab........ 606,311
5,900 Unidanmark A/S...................... 289,778
896,089
<CAPTION>
SHARES VALUE
<C> <S> <C>
COMMON STOCKS -- CONTINUED
FINLAND -- 1.9%
6,300 Enso -- Gutzeit OY.................. $ 57,076
294,180 Kansallis Yhtyma.................... 320,232
140,300 Unitas.............................. 453,248
830,556
FRANCE -- 6.7%
2,950 Banque Nationale de Paris........... 142,242
883 Christian Dior...................... 77,729
14,650 Cie de Suez......................... 814,761
3,100 Cie Fin Paribas..................... 186,268
1,276 Compagnie Bancaire S.A.............. 152,499
2,350 Credit Lyonnais S.A................. 135,296
400 Erindania Beghin S.A................ 61,653
472 EuraFrance.......................... 155,975
4,650 Gan GRP............................. 147,462
102 Gaz Et Eaux......................... 39,724
333 LVMH Moet Hennessy Louis Vuitton.... 59,903
1,700 Peugot S.A.......................... 235,751
4,100 Societe Elf Aquitaine............... 302,875
1,800 Societe Generale.................... 210,303
6,750 Thompson -- CSF S.A................. 151,190
1,000 Total............................... 60,169
2,933,800
GERMANY -- 6.4%
460 Bankgesellschaft Berlin............. 121,691
1,830 BASF AG............................. 390,735
870 Bayer A.G........................... 216,321
1,750 Bayerishe Vereinsbank AG............ 530,629
2,160 Berliner Kraft-und Licht
(Bewag)-A.G......................... 532,389
1,140 BHF-Bank International S.A.......... 299,111
1,510 Bremer Vulkan Verbundag AG.......... 87,315
1,380 Commerzbank AG...................... 329,963
2,100 Dresdner Bank AG.................... 60,716
200 GEA AG.............................. 70,546
530 Volkswagen AG....................... 153,043
2,792,459
HONG KONG -- 5.3%
65,000 Amoy Properties Ltd................. 57,123
134,000 Chinese Estates Holdings............ 96,114
78,200 Great Eagle Holdings Ltd............ 166,755
</TABLE>
5
<PAGE>
EVERGREEN INTERNATIONAL EQUITY FUND
(FORMERLY FIRST UNION INTERNATIONAL EQUITY PORTFOLIO)
STATEMENT OF INVESTMENTS -- (CONTINUED)
(Picture of Passport) JUNE 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
COMMON STOCKS -- CONTINUED
HONG KONG -- CONTINUED
38,000 Harbour Centre Developement Ltd..... $ 40,761
76,000 Hongkong Land Holdings Ltd.......... 138,320
131,000 Hongkong and Shanghai
Hotels, Ltd......................... 161,682
59,000 Hopewell Holdings Ltd............... 49,944
120,000 Hysan Development Co., Ltd.......... 274,500
13,000 Jardine Strategic Holdings Ltd...... 41,860
52,000 Miramar Hotel & Investment
Co., Ltd............................ 106,181
55,000 New World Development
Co., Ltd............................ 183,032
130,000 Regal Hotels International Holdings
Ltd................................. 25,705
17,500 Swire Pacific Ltd................... 133,437
118,000 Wharf (Holdings) Ltd. (The)......... 385,063
289,000 Wheelock & Co....................... 479,942
2,340,419
INDIA -- .6%
14,343 India Growth Fund, Inc.............. 263,553
INDONESIA -- .6%
23,100 Indonesia Fund, Inc................. 256,988
IRELAND -- 1.7%
69,000 Bank of Ireland..................... 394,852
45,200 James Crean Plc..................... 164,801
64,400 Jefferson Smurfit Group Plc......... 194,794
754,447
ITALY -- 2.0%
438,500 BCO di Roma......................... 401,175
156,300 CIR Compagnie Industries............ 75,135
183,400 Cofide.............................. 63,454
145,100 Credito Italiano S.A................ 167,921
128,700 Finneccanica S.p.A.................. 80,940
78,300 GAIC................................ 23,447
65,100 Grassetto S.p.A..................... 32,371
70,000 Montefibre S.p.A.................... 39,008
883,451
JAPAN -- 20.4%
6,000 Aida Engineering.................... 40,825
8,000 Aisin Seiki Co...................... 91,321
17,000 Amada Co............................ 145,342
22,000 Aoki Corp........................... 79,906
21,000 Asahi Denka Kogyo................... 174,835
<CAPTION>
SHARES VALUE
<C> <S> <C>
COMMON STOCKS -- CONTINUED
JAPAN -- CONTINUED
6,000 Chubu Electrical Power Co., Inc..... $ 164,151
3,000 Chugoku Bank Ltd. (The)............. 55,896
13,000 Daicel Chemical Industries, Ltd..... 66,533
19,000 Fuji Photo Film Co.................. 450,354
26,000 Fujitsu Ltd......................... 259,080
11,000 Gakken Co........................... 67,583
18,000 Hanwa Co............................ 47,123
38,000 Haseko Corp......................... 179,245
75,000 Hitachi Ltd......................... 747,347
7,000 Hitachi Maxell Ltd.................. 98,231
36,000 Hokkaido Bank, Ltd.................. 127,358
46,000 Hokkaido Takushoku Bank, Ltd........ 125,849
11,000 Honda Motor Co., Ltd................ 168,632
20,000 Hyogo Bank.......................... 37,972
9,000 Inax Corp........................... 86,710
9,000 Komatsu Ltd......................... 68,667
7,000 Koyo Seiko Co....................... 52,005
53,000 Kumagai Gumi Corp................... 221,875
9,000 Marubeni Corp....................... 45,743
21,000 Marudai Food Co..................... 140,413
41,000 Matsushita Electric Industrial
Co., Ltd............................ 638,208
18,000 Mazda Motor Corp.................... 63,255
29,000 Mitsubishi Electric Corp............ 203,821
6,000 Mitsubishi Trust Banking Corp....... 55,189
25,000 Nichiei Co.......................... 100,236
46,000 Nippon Oil Co....................... 289,127
67,000 Nissan Motor Co..................... 428,231
17,000 Nisshinbo Industries, Inc........... 134,116
14,000 Nomura Securities Co., Ltd.......... 244,340
36,000 Renown, Inc......................... 106,132
5,000 Ricoh Co............................ 42,924
7,000 Royal Co............................ 97,406
25,000 Sanyo Electric Co................... 122,936
6,000 Seino Transportation Co., Ltd....... 101,179
27,000 Sekisui House, Ltd.................. 334,316
24,000 Settsu Corp......................... 73,585
28,000 Shiseido Co......................... 315,330
8,000 Sony Corp........................... 383,962
26,000 Sumitomo Corp....................... 236,698
35,000 Sumitomo Metal Industries, Ltd...... 91,215
18,000 Sumitomo Realty & Development Co.,
Ltd................................. 107,406
1,000 TDK Corp............................ 45,519
</TABLE>
6
<PAGE>
EVERGREEN INTERNATIONAL EQUITY FUND
(FORMERLY FIRST UNION INTERNATIONAL EQUITY PORTFOLIO)
STATEMENT OF INVESTMENTS -- (CONTINUED)
(Picture of Passport) JUNE 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
COMMON STOCKS -- CONTINUED
JAPAN -- CONTINUED
15,000 Tokai Bank Ltd...................... $ 166,274
28,000 Toyota Motor Corp................... 554,717
40,000 Yamaichi Securities Co.............. 214,151
8,000 Yasuda Trust & Banking Co........... 52,358
8,945,627
KOREA -- .7%
14,600 Korea Fund, Inc..................... 286,525
MALAYSIA -- 5.8%
83,000 Berjaya Group Berhad................ 72,840
93,000 Faber Group Berhad.................. 89,625
86,000 Golden Hope Plantations Berhad...... 157,999
43,000 Highlands & Lowlands Berhad......... 82,526
47,000 Kuala Lumpur Kepong Bertial......... 149,375
64,000 Malayan United Industries Berhad.... 110,232
13,200 Malaysia Fund Inc................... 255,750
88,000 Malaysia Mining Corp. Berhad........ 159,508
108,000 Malaysian Airline Systems........... 365,388
39,000 Malaysian International Shipping
Corp. Berhad........................ 114,353
14,000 Malaysian Mosaics Berhad............ 19,405
46,000 Perlis Plantations Berhad........... 152,799
146,000 Renong Berhad....................... 271,823
20,000 Sime Darby Berhad................... 55,772
3,000 Telekom Malaysia Berhad............. 22,760
111,000 Tenaga Nasional Berhad.............. 452,922
2,533,077
MEXICO -- .7%
17,425 Mexico Fund, Inc.................... 287,513
NETHERLANDS -- 2.3%
18,650 ABN-AMRO Holdings NV................ 719,761
5,050 Internationale -- Nederlande........ 279,306
999,067
NEW ZEALAND -- 1.1%
49,450 Carter Holt Harvey Ltd.............. 120,718
129,900 Fletcher Challenge Ltd.............. 363,902
484,620
NORWAY -- 1.8%
14,120 Aker A.S............................ 189,107
8,400 Norske Skogindustrier A.S........... 294,545
6,920 Orkla A.S........................... 310,052
793,704
<CAPTION>
SHARES VALUE
<C> <S> <C>
COMMON STOCKS -- CONTINUED
PAKISTAN -- .6%
41,500 Pakistan Investment Fund............ $ 280,125
PHILIPPINE -- .6%
16,050 First Philippine Fund, Inc.......... 268,838
PORTUGAL -- .6%
19,600 Portugal Fund, Inc.................. 264,600
SINGAPORE -- 4.8%
80,000 Auric Pacific GP Ltd................ 127,221
264,000 Chuan Hup Holdings Ltd.............. 215,587
6,000 Development Bank of Singapore
Ltd................................. 68,338
19,000 Fraser & Neave Ltd.................. 219,126
43,000 Parkway Holdings Ltd................ 104,112
30,000 Prima Ltd........................... 111,748
24,000 Singapore Airlines Ltd.............. 221,777
53,000 Singapore Land Ltd.................. 347,385
45,000 Straits Steamship Land Ltd.......... 156,017
52,000 Times Publishing.................... 128,883
312,000 United Industrial Corp., Ltd........ 301,719
49,000 WBL Corp. Ltd....................... 110,215
2,112,128
SOUTH AFRICA -- .3%
10,700 Morgan Stanley African Investment
Fund, Inc........................... 123,050
SPAIN -- 2.8%
32,900 Fuerzas Electrica Catal S.A......... 191,418
38,400 Iberdrola S.A....................... 289,428
49,700 Sevillana de Electricidad S.A....... 306,004
16,200 Telefonica de Espana S.A............ 208,859
49,900 Union Electrica-Fenosa S.A.......... 234,241
1,229,950
SWEDEN -- 2.9%
2,550 Mo Oh Domsjo AB..................... 147,142
16,950 Skandinaviska Enskilda Banken....... 88,131
8,250 Stora Kopparbergs Besgslogs, Series
A................................... 111,778
11,500 Stora Kopparbergs Besgslogs, Series
B................................... 154,230
16,350 Svenska Cellulosa AB-SCA............ 303,611
5,900 Svenska Handelsbanken, Series A..... 83,184
10,200 Svenska Handelsbanken, Series B..... 152,228
8,750 Sydkraft AB, Series A............... 137,208
</TABLE>
7
<PAGE>
EVERGREEN INTERNATIONAL EQUITY FUND
(FORMERLY FIRST UNION INTERNATIONAL EQUITY PORTFOLIO)
STATEMENT OF INVESTMENTS -- (CONTINUED)
(Picture of Passport) JUNE 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
COMMON STOCKS -- CONTINUED
SWEDEN -- CONTINUED
5,900 Sydkraft AB, Series C............... $ 79,938
1,257,450
SWITZERLAND -- 3.4%
95 Baloise Holdings.................... 216,471
375 Rieter Holdings Ltd................. 112,305
110 Schweizerische Bankgesellsch........ 113,915
690 Schweizerischer Bankverein AG....... 244,375
200 Winterhur........................... 120,139
350 Zurich Versicherun BR............... 439,627
180 Zurich Versicherun REG.............. 226,094
1,472,926
TAIWAN -- .6%
25,900 R.O.C. Taiwan Fund, Inc............. 284,900
THAILAND -- .6%
15,100 Thailand Capital Fund, Inc.......... 262,363
TURKEY -- .6%
42,000 Turkish Investment Fund, Inc........ 267,750
UNITED KINGDOM -- 7.6%
9,900 Anglian Water Plc................... 78,887
14,300 Bass Plc............................ 136,806
1,000 B-A-T Industries Plc................ 7,666
20,160 British Land Co. Plc (The).......... 128,098
4,900 British Petroleum Co., Plc (The).... 35,110
127,000 British Steel Plc................... 346,924
41,400 British Telecommunications Plc...... 258,119
80,200 Forte Plc........................... 290,195
27,600 General Accident Plc................ 252,851
40,800 Ladbroke Group Plc.................. 109,668
45,900 Land Securities Plc................. 443,864
14,700 MEPC Plc............................ 89,430
24,900 Royal Insurance Ltd................. 122,375
23,200 Severn Trent Plc.................... 199,996
10,700 Shell Transportation & Trading Co.,
Plc................................. 127,893
10,600 Southern Water Plc.................. 101,577
14,700 Tesco Plc........................... 67,803
18,200 Thames Water Plc.................... 137,643
28,800 3I Group............................ 167,193
23,700 Whitbread Plc....................... 226,169
3,328,267
TOTAL COMMON STOCKS
(COST $42,024,632)........... 42,042,046
<CAPTION>
SHARES VALUE
<C> <S> <C>
PREFERRED STOCKS -- 2.5%
AUSTRALIA -- .5%
13,750 News Corporation Limited............ $ 68,115
44,900 Publishing & Broadcasting........... 132,434
200,549
AUSTRIA -- .5%
4,150 Creditanstalt -- Bankverein......... 239,349
200 MIBA AG............................. 8,759
248,108
BELGIUM -- .2%
12,432 Cockerill Sambre S.A................ 79,232
GERMANY -- 1.2%
550 GEA AG.............................. 176,509
1,550 Volkswagen AG....................... 341,706
518,215
ITALY -- .1%
103,456 Alitalia -- Linee Aeree
Italiane S.p.A...................... 34,528
TOTAL PREFERRED STOCKS
(COST $1,085,452)............ 1,080,632
TOTAL LONG-TERM INVESTMENTS
(COST $43,110,084)........... 43,122,678
**REPURCHASE AGREEMENT -- .9%
$382,000 State Street Bank & Trust Co., 5.5%
dated 6/30/95, due 7/3/95 (cost
$382,000)........................... 382,000
TOTAL INVESTMENTS -- 99.2%
(COST $43,492,084)........... 43,504,678
OTHER ASSETS AND
LIABILITIES -- NET .8%....... 370,187
TOTAL NET ASSETS -- 100%....... $43,874,865
</TABLE>
** Fully collateralized by U.S. government and/or agency obligations based on
market price at June 30, 1995.
See accompanying notes to financial statements.
8
<PAGE>
EVERGREEN INTERNATIONAL EQUITY FUND
(FORMERLY FIRST UNION INTERNATIONAL EQUITY PORTFOLIO)
INDUSTRY DIVERSIFICATION
(Picture of Passport) JUNE 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
PERCENT
OF NET
ASSETS
<S> <C>
Banking.......................................... 16.0%
Utilities -- Electrical & Gas.................... 6.5%
Multi-Industry................................... 6.2%
Real Estate...................................... 5.7%
Automobiles...................................... 4.7%
Insurance........................................ 4.1%
Energy Sources................................... 3.9%
Miscellaneous.................................... 3.9%
Forest Products & Paper.......................... 3.1%
Appliances & Household Durables.................. 2.6%
Machinery & Engineering.......................... 2.3%
Building Materials............................... 2.3%
Electrical & Electronics......................... 2.2%
Chemicals........................................ 2.0%
Construction & Housing........................... 1.9%
Financial Services............................... 1.8%
Food & Household Products........................ 1.7%
Metals/Steel..................................... 1.7%
Broadcasting & Publishing........................ 1.6%
Leisure & Tourism................................ 1.5%
Beverages & Tobacco.............................. 1.5%
Transportation -- Airlines....................... 1.4%
Recreation & Other Consumer Goods................ 1.3%
<CAPTION>
PERCENT
OF NET
ASSETS
<S> <C>
Telecommunications............................... 1.1%
Business & Public Services....................... 1.1%
Wholesale & International Trade.................. 0.8%
Health & Personal Care........................... 0.7%
Miscellaneous Materials.......................... 0.7%
Data Processing & Reproduction................... 0.7%
Japanese City Banks.............................. 0.7%
Japanese Regional Banks.......................... 0.6%
Textiles & Apparel............................... 0.6%
Aerospace & Military Technology.................. 0.5%
Energy Equipment & Services...................... 0.5%
Metals -- Non Ferrous............................ 0.4%
Industrial Components............................ 0.4%
Transportation -- Shipping....................... 0.3%
Transportation -- Road & Rail.................... 0.2%
Merchandising.................................... 0.2%
Gold Mines....................................... 0.1%
Electronic Components............................ 0.1%
Mutual Funds..................................... 8.7%
Short-Term Investments........................... 0.9%
Other Assets Less Liabilities.................... 0.8%
Total Net Assets................................. 100.0%
</TABLE>
9
<PAGE>
EVERGREEN INTERNATIONAL EQUITY FUND
(FORMERLY FIRST UNION INTERNATIONAL EQUITY PORTFOLIO)
STATEMENT OF ASSETS AND LIABILITIES
(Picture of Passport) JUNE 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments at value (identified cost $43,492,084)............................................................. $43,504,678
Foreign currency at value (identified cost $52,125)............................................................ 52,230
Cash........................................................................................................... 76
Dividends and interest receivable.............................................................................. 274,803
Receivable for Fund shares sold................................................................................ 216,349
Prepaid expenses............................................................................................... 11,202
Total assets............................................................................................. 44,059,338
LIABILITIES:
Payable for investments purchased.............................................................................. 124,465
Withholding tax liability...................................................................................... 36,345
Payable for Fund shares repurchased............................................................................ 7,064
Accrued expenses............................................................................................... 16,599
Total liabilities........................................................................................ 184,473
NET ASSETS........................................................................................................ $43,874,865
NET ASSETS CONSIST OF:
Paid-in capital................................................................................................ 43,575,042
Accumulated net realized loss.................................................................................. (155,268)
Undistributed net investment income............................................................................ 438,647
Net unrealized appreciation of investments and foreign currency................................................ 16,444
Net assets............................................................................................... $43,874,865
CALCULATION OF NET ASSET VALUE PER SHARE:
Class A Shares ($3,009,352 (divided sign) 307,510 shares of beneficial interest outstanding)................... $ 9.79
Sales charge -- 4.75% of offering price........................................................................ 0.49
Maximum offering price...................................................................................... $ 10.28
Class B Shares ($6,646,745 (divided sign) 681,234 shares of beneficial interest outstanding)................... $ 9.76
Class C Shares ($243,838 (divided sign) 24,980 shares of beneficial interest outstanding)...................... $ 9.76
Class Y Shares ($33,974,930 (divided sign) 3,467,987 shares of beneficial interest outstanding)................ $ 9.80
</TABLE>
See accompanying notes to financial statements.
10
<PAGE>
EVERGREEN INTERNATIONAL EQUITY FUND
(FORMERLY FIRST UNION INTERNATIONAL EQUITY PORTFOLIO)
STATEMENT OF OPERATIONS
(Picture of Passport) SIX MONTHS ENDED JUNE 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding taxes of $86,981)........................................... $ 612,468
Interest.......................................................................................... 21,541
Total income................................................................................ 634,009
EXPENSES:
Advisory fee...................................................................................... $ 154,513
Administrative personnel and services fees........................................................ 15,373
Distribution fee -- Class A Shares................................................................ 3,448
Distribution and shareholder services fees -- Class B Shares...................................... 30,603
Distribution and shareholder services fees -- Class C Shares...................................... 1,140
Custodian fee..................................................................................... 67,219
Transfer agent fee................................................................................ 20,191
Registration and filing fees...................................................................... 15,359
Professional fees................................................................................. 12,863
Reports and notices to shareholders............................................................... 7,655
Insurance expense................................................................................. 3,050
Trustees' fees and expenses....................................................................... 313
Miscellaneous..................................................................................... 6,660
338,387
Less: Fee waivers and expense reimbursements...................................................... (126,036)
Total expenses.............................................................................. 212,351
Net investment income................................................................................ 421,658
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY:
Net realized loss on investments and foreign currency transactions................................ (123,136)
Net change in unrealized appreciation of investments and foreign currency......................... 1,110,572
Net gain on investments and foreign currency......................................................... 987,436
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................................. $1,409,094
</TABLE>
See accompanying notes to financial statements.
11
<PAGE>
EVERGREEN INTERNATIONAL EQUITY FUND
(FORMERLY FIRST UNION INTERNATIONAL EQUITY PORTFOLIO)
(Picture of Passport) STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED SEPTEMBER 2, 1994*
JUNE 30, 1995 THROUGH
(UNAUDITED) DECEMBER 31, 1994
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income.................................................................. $ 421,658 $ 64,959
Net realized loss on investments and foreign currency transactions..................... (123,136) (27,654)
Net change in unrealized appreciation (depreciation) of investments and foreign
currency............................................................................. 1,110,572 (1,094,129)
Net increase (decrease) in net assets resulting from operations..................... 1,409,094 (1,056,824)
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME:
Class A shares......................................................................... (3,090) (259)
Class Y shares......................................................................... (30,566) (14,055)
Total distributions to shareholders from net investment income......................... (33,656) (14,314)
NET REALIZED GAINS:
Class A shares......................................................................... -- (363)
Class B shares......................................................................... -- (811)
Class C shares......................................................................... -- (24)
Class Y shares......................................................................... -- (3,279)
Total distributions to shareholders from net realized gains............................ -- (4,477)
Total distributions to shareholders................................................. (33,656) (18,791)
FUND SHARE TRANSACTIONS:
Proceeds from shares sold.............................................................. 13,644,832 33,532,764
Proceeds from reinvestment of dividends................................................ 19,562 8,355
Payments of shares redeemed............................................................ (3,304,494) (325,977)
Net increase from Fund share transactions........................................... 10,359,900 33,215,142
Net increase in net assets.......................................................... 11,735,338 32,139,527
NET ASSETS:
Beginning of period.................................................................... 32,139,527 --
End of period (including undistributed net investment income of $438,647 and $50,645,
respectively)........................................................................ $ 43,874,865 $ 32,139,527
</TABLE>
* Commencement of operations.
See accompanying notes to financial statements.
12
<PAGE>
EVERGREEN INTERNATIONAL EQUITY FUND
(FORMERLY FIRST UNION INTERNATIONAL EQUITY PORTFOLIO)
(Picture of Passport) FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
PERIOD FROM PERIOD FROM PERIOD FROM
SIX MONTHS SEPTEMBER 2, SIX MONTHS SEPTEMBER 2, SIX MONTHS SEPTEMBER 2,
ENDED 1994* ENDED 1994* ENDED 1994*
JUNE 30, THROUGH JUNE 30, THROUGH JUNE 30, THROUGH
1995 DECEMBER 31, 1995 DECEMBER 31, 1995 DECEMBER 31,
(UNAUDITED) 1994 (UNAUDITED) 1994 (UNAUDITED) 1994
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning of period.... $9.50 $10.00 $9.50 $10.00 $9.49 $10.00
Income (loss) from investment
operations:
Net investment income................... .09 .02 .06 -- .08 .03
Net realized and unrealized gain (loss)
on investments........................ .21 (.52) .20 (.50) .19 (.54)
Total from investment operations.... .30 (.50) .26 (.50) .27 (.51)
Less distributions to shareholders from
net investment income................. (.01) -- -- -- -- --
Net asset value, end of period.......... $9.79 $9.50 $9.76 $9.50 $9.76 $9.49
TOTAL RETURN(|)......................... 3.3% (5.1%) 3.0% (5.2%) 3.0% (5.2%)
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's
omitted).............................. $3,009 $2,545 $6,647 $5,602 $244 $163
Ratios to average net assets:
Expenses(|)(|)(a)..................... 1.19% 1.26% 1.94% 2.02% 1.94% 2.01%
Net investment income(|)(|)(a)........ 1.97% .91% 1.24% .10% 1.34% .85%
Portfolio turnover rate................. 3% 1% 3% 1% 3% 1%
<CAPTION>
CLASS Y SHARES
PERIOD FROM
SIX MONTHS SEPTEMBER 2,
ENDED 1994*
JUNE 30, THROUGH
1995 DECEMBER 31,
(UNAUDITED) 1994
<S> <C> <C>
PER SHARE DATA
Net asset value, beginning of period.... $9.50 $10.00
Income (loss) from investment
operations:
Net investment income................... .10 .02
Net realized and unrealized gain (loss)
on investments........................ .21 (.51)
Total from investment operations.... .31 (.49)
Less distributions to shareholders from
net investment income................. (.01) (.01)
Net asset value, end of period.......... $9.80 $9.50
TOTAL RETURN(|)......................... 3.4% (5.0%)
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's
omitted).............................. $33,975 $23,830
Ratios to average net assets:
Expenses(|)(|)(a)..................... .94% 1.06%
Net investment income(|)(|)(a)........ 2.30% 1.03%
Portfolio turnover rate................. 3% 1%
</TABLE>
* Commencement of operations.
(|) Total return is calculated on net asset value per share for the periods
indicated and is not annualized. Initial sales charges or contingent
deferred sales charges are not reflected.
(|)(|) Annualized.
(a) Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were assumed or waived by the investment adviser, the
annualized ratios of expenses and net investment income (loss) to average
net assets, exclusive of any applicable state expense limitations, would
have been the following:
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES CLASS Y
PERIOD FROM PERIOD FROM PERIOD FROM SHARES
SIX MONTHS SEPTEMBER 2, SIX MONTHS SEPTEMBER 2, SIX MONTHS SEPTEMBER 2, SIX MONTHS
ENDED 1994* ENDED 1994* ENDED 1994* ENDED
JUNE 30, THROUGH JUNE 30, THROUGH JUNE 30, THROUGH JUNE 30,
1995 DECEMBER 31, 1995 DECEMBER 31, 1995 DECEMBER 31, 1995
(UNAUDITED) 1994 (UNAUDITED) 1994 (UNAUDITED) 1994 (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
Expenses............................... 1.86% 2.09% 2.61% 2.85% 1.27% 2.84% 1.61%
Net investment income (loss)........... 1.30% .08% .57% (.73%) .67% .02% 1.63%
<CAPTION>
CLASS Y SHARES
PERIOD FROM
SEPTEMBER 2,
1994*
THROUGH
DECEMBER 31,
1994
<S> <C>
Expenses............................... 1.89%
Net investment income (loss)........... .20%
</TABLE>
13
<PAGE>
EVERGREEN EMERGING MARKETS GROWTH FUND
(FORMERLY FIRST UNION EMERGING MARKETS GROWTH PORTFOLIO)
(Picture of Globe)
A REPORT FROM YOUR
PORTFOLIO MANAGER
BY DICK WAGONER
The Evergreen Emerging Markets Growth Fund (the "Fund") (Picture of Dick
began operation on September 6, 1994. Marvin and Palmer Wagoner appears
Associates, a nationally recognized global equity manager here)
located in Wilmington, Delaware, serves as sub-adviser to the
Fund.
The current investment strategy for the Fund is focused on
two key areas of the world* -- the Far East and Latin America.
Exposure to the emerging markets of Eastern Europe, the Middle
East and Africa are at this time minimal because we do not see
favorable economic dynamics in these areas.
The correction which began in late 1994 in emerging country
stock markets continued during the first quarter. Brought on by Mexico's
devaluation of the peso, investors feared this problem was endemic to the
emerging markets as a group.
In the first quarter, the Morgan Stanley Emerging Market Index** was down
11.7%. As the dust settled, however, it became evident that the Mexico problem
was not endemic to all emerging countries. During the second quarter, investors
perceived the attractive values which existed in the emerging markets and the
index rose 9.7%.
The fundamental growth story of the Pacific Rim and Latin America-ex Mexico
is still largely intact. Fresh capital inflows are now putting downward pressure
on interest rates, external debt is falling, and growth continues to be the
strongest and most consistent in the world. Despite recent rallies, the markets
are cheap -- multiples of projected earnings are roughly equal to or less than
forecasted earnings per share growth rates. While much more volatile than the
U.S. and mature international markets, we continue to focus investment in this
area as one of the world's premier "growth" opportunity.
Our strategy is focused on: (1) Hong Kong as the most direct exposure to the
emergence of China; (2) Malaysia and the rest of Southeast Asia allows us
participation in the growth of intra-Asian trade.
(3) Latin America to take advantage of the opportunities of deregulation and
increased trade with the U.S.
Despite the volatility and turmoil many of the markets have experienced, we
are convinced that the long-term opportunity presented by capital-friendly
economic policies and strong economic growth remains intact.
* THIS FUND MAY NOT BE SUITABLE FOR ALL INVESTORS DUE TO CERTAIN RISKS IN
INTERNATIONAL INVESTING, SUCH AS CURRENCY FLUCTUATIONS AND POLITICAL
INSTABILITY.
** UNMANAGED INDEX OF SELECTED SECURITIES
14
<PAGE>
EVERGREEN EMERGING MARKETS GROWTH FUND
(FORMERLY FIRST UNION EMERGING MARKETS GROWTH PORTFOLIO)
STATEMENTS OF INVESTMENTS
(Picture of Globe) JUNE 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <C> <S> <C>
COMMON STOCKS -- 93.3%
ARGENTINA -- 4.4%
4,500 Banco DaGalicia, ADR............... 70,875
30,675 Cementera Argentina................ 134,997
45,600 Comercial del la Plata............. 113,111
2,500 Irsa Inversiones y Republica S.A... 58,125
5,800 YPF Sociedad Anonima ADR........... 109,475
486,583
BRAZIL -- 1.8%
6,000 Acesita Cia Acos Especials......... 81,000
10,000 Aracruz Celulose S.A............... 117,500
198,500
CHILE -- 1.8%
1,000 Madeco S.A......................... 28,750
3,600 Sociedad Quimica Y Minera de Chile,
ADR................................ 170,100
198,850
CHINA -- .4%
2,500 Huaneng Power International, Inc,
ADR................................ 45,938
COLOMBIA -- .8%
3,000 (|) Cemetos Paz Del Rio, ADR........... 49,500
2,113 Corporacion Financiera Del Columbia
S.A................................ 34,865
84,365
HONG KONG -- 8.1%
10,000 Cheung Kong Holdings............... 49,498
470,000 First Pacific Co................... 416,080
29,000 Hang Lung Development Co........... 46,099
7,600 HSBC Holdings Plc.................. 97,484
29,000 Hutchison Whampoa Ltd.............. 140,171
28,000 Shaw Bothers Ltd................... 26,235
62,000 Varitronix International........... 108,572
884,139
INDIA -- 6.0%
7,500 East India Hotels, Ltd., GDR....... 114,375
16,000 Indian Hotels, Ltd., GDR........... 256,000
11,100 (|) ITC, Inc, GDR...................... 77,700
8,500 (|) Ranbaxy Laboratories, Ltd., GDR.... 212,500
660,575
INDONESIA -- 5.2%
14,000 Bank International Indonesia....... 32,815
10,000 HM Sampoerna....................... 78,581
11,000 Perusahaan Per Indosat, ADR........ 420,750
2,400 PT Tri Polyta Indonesia, ADR....... 41,700
573,846
<CAPTION>
SHARES VALUE
<C> <C> <S> <C>
COMMON STOCKS -- CONTINUED
ISRAEL -- 3.0%
11,300 ECI Telecom, Ltd................... 154,668
2,400 Teva Pharmaceutical Industries,
Ltd................................ 90,000
3,200 Tower Semi Conductor Ltd........... 92,800
337,468
KOREA -- 9.9%
12,625 Korea Fund, Inc.................... 247,766
12,500 Korea Mobile Telecommunication
Corp............................... 446,875
4,100 Pohang Iron & Steel Co., Ltd....... 120,950
4,974 (|) Samsung Electronics Ltd............ 268,596
1,084,187
LUXEMBURG -- 2.0%
57,000 Genting International Place 97,470
6,000 Quilmes Industrial 117,000
214,470
MALAYSIA -- 11.1%
16,000 AMMB Holdings, Berhad.............. 190,281
20,000 Malayan Bank, Berhad............... 158,294
38,000 New Straits Times Press............ 117,654
31,000 Resorts World, Berhad.............. 181,792
18,000 Sime Darby, Berhad................. 50,195
84,000 Technology Resources Industries,
Berhad............................. 242,032
6,000 Telekom Malaysia, Berhad........... 45,520
37,000 UTD Engineers BLD.................. 235,186
1,220,954
MEXICO -- 5.1%
19,000 Cemex, S.A. de C.V. 65,664
30,000 Cifro S.A. de C.V., ADR 40,668
8,500 (|) Grupo Carso, S.A. de C.V. 92,872
1,700 Grupo Finance Bankaex AC 2,584
34,000 Grupo Finance Banamex 52,224
26,000 Grupo Finance Imbursa 63,232
4,500 Grupo Iusacell, S.A. de C.V. ADR 54,000
130,000 Grupo Posadas S.A. 43,680
10,000 Grupo Sidek, S.A. de C.V., ADR 35,000
30,000 Grupo Synkro, S.A. de C.V. 10,077
</TABLE>
15
<PAGE>
EVERGREEN EMERGING MARKETS GROWTH FUND
(FORMERLY FIRST UNION EMERGING MARKETS GROWTH PORTFOLIO)
STATEMENTS OF INVESTMENTS -- (CONTINUED)
(Picture of Globe) JUNE 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <C> <S> <C>
COMMON STOCKS -- CONTINUED
MEXICO -- CONTINUED
2,400 Grupo Televisa S.A. de C.V. ADR 48,900
4,000 Kimberly-Clark Corp. 45,952
554,853
PERU -- 7.7%
130,000 Banco de Credito del Peru.......... 227,916
5,900 Banco Frances del Rio.............. 106,200
19,000 Banco Wiese Ltd., ADR.............. 156,750
2,800 Bufete Indl SA..................... 45,500
12,000 Cementos Norte Pac................. 34,633
11,294 Compania de Minas.................. 64,478
100,000 CPT Telefonica del Peru............ 170,825
30,696 Tele 2000 La Nueva................. 39,465
845,767
PHILLIPINES -- 4.2%
142,300 Pilipino Telephone................. 136,505
77,000 San Miguel Corp.................... 319,577
456,082
PORTUGAL -- .9%
4,600 Portucel-Empresa de Celulose e
Papel.............................. 32,775
3,300 Portugal Telecom de Portugal,
S.A................................ 62,700
95,475
SINGAPORE -- 8.5%
14,000 Cerebos Pacific, Ltd............... 82,235
57,000 DBS Land Ltd....................... 178,840
6,000 Keppel Corp........................ 48,997
17,000 Overseas Union Enterprises Ltd..... 104,118
70,000 Public Bank........................ 146,920
3,600 Singapore Press Holdings Ltd....... 53,897
55,000 Straits Steamship Land Ltd......... 190,688
14,400 United Overseas Bank, Ltd.......... 136,160
941,855
TAIWAN -- .9%
6,200 President Enterprises Corp. 103,461
<CAPTION>
SHARES VALUE
<C> <C> <S> <C>
COMMON STOCKS -- CONTINUED
THAILAND -- 8.4%
16,000 Advanced Info Services............. 228,016
7,600 Alphatec Electonics Plc 138,462
17,000 Bangkok Bank Ltd................... 187,206
4,000 Land & House Co.................... 84,211
22,000 Telecomasia........................ 77,490
13,800 UTD Communications................. 207,838
923,223
UNITED STATES -- 3.1%
3,000 Millicom International Cellular.... 88,875
4,000 Mutual Risk Mgmt. Ltd.............. 134,000
4,000 Tommy Hilfiger Corp................ 112,000
334,875
TOTAL COMMON STOCKS (COST
$10,629,138)................ 10,245,466
<CAPTION>
*REPURCHASE AGREEMENT -- 8.7%
<C> <C> <S> <C>
956,000 State Street Bank and Trust Co.,
5.50%, dated 6/30/95,
due 7/3/95......................... 956,000
TOTAL INVESTMENTS (COST
$11,585,138) -- 102%........ 11,201,466
OTHER ASSETS AND
LIABILITIES -- NET (2.0%)... (222,916)
TOTAL NET ASSETS -- 100%...... $10,978,550
</TABLE>
* Repurchase Agreement is fully collateralized by U.S. government and/or agency
obligations based on market prices at June 30, 1995.
See accompanying notes to financial statements.
ADR -- American Depository Shares.
(|) Restricted security which represents an investment in a security not
registered under the Securities Act of 1933.
16
<PAGE>
EVERGREEN EMERGING MARKETS GROWTH FUND
(FORMERLY FIRST UNION EMERGING MARKETS GROWTH PORTFOLIO)
INDUSTRY DIVERSIFICATION
(Picture of Globe) JUNE 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
PERCENTS
OF NET
ASSETS
<S> <C>
Telecommunications............................... 28.0%
Banking.......................................... 12.9%
Miscellaneous Securities......................... 10.3%
Leisure & Tourism................................ 5.4%
Multi-Industry................................... 4.7%
Real Estate...................................... 4.7%
Electrical & Electronics......................... 3.7%
Beverages & Tobacco.............................. 3.6%
Health & Personal Care........................... 2.8%
Building Material................................ 2.6%
Financial Services............................... 2.3%
Chemicals........................................ 1.9%
Construction & Housing........................... 1.9%
<CAPTION>
PERCENTS
OF NET
ASSETS
<S> <C>
Broadcasting & Publishing........................ 1.6%
Food & Household Products........................ 1.2%
Metals/Steel..................................... 1.1%
Forest Products & Paper.......................... 1.1%
Recreation & Other Consumer Goods................ 1.0%
Energy Sources................................... 1.0%
Industrial Components............................ 0.9%
Utilities -- Electrical & Gas.................... 0.4%
Retail........................................... 0.4%
Short Term Investments........................... 8.7%
Other Assets Less Liabilities.................... (2.2%)
Total Net Assets................................. 100.0%
</TABLE>
17
<PAGE>
EVERGREEN EMERGING MARKETS GROWTH FUND
(FORMERLY FIRST UNION EMERGING MARKETS GROWTH PORTFOLIO)
STATEMENT OF ASSETS AND LIABILITIES
(Picture of Globe) JUNE 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments at value (identified cost $11,585,138)............................................................. $11,201,466
Foreign currency at value (identified cost $26,129)............................................................ 26,170
Cash........................................................................................................... 541
Receivable for investments sold................................................................................ 210,036
Receivable for foreign currency sold........................................................................... 84,025
Receivable for Fund shares sold................................................................................ 20,591
Dividends and interest receivable.............................................................................. 10,125
Prepaid expenses............................................................................................... 5,277
Total assets............................................................................................. 11,558,231
LIABILITIES:
Payable for investments purchased.............................................................................. 479,379
Payable for foreign currency purchased......................................................................... 83,630
Accrued expenses............................................................................................... 13,941
Withholding tax liability...................................................................................... 1,921
Payable for Fund shares repurchased............................................................................ 810
Total liabilities........................................................................................ 579,681
NET ASSETS........................................................................................................ $10,978,550
NET ASSETS CONSIST OF:
Paid-in capital................................................................................................ 12,503,473
Accumulated net realized loss.................................................................................. (1,258,319)
Undistributed net investment income............................................................................ 88,212
Net unrealized depreciation of investments and foreign currency................................................ (354,816)
Net assets............................................................................................... $10,978,550
CALCULATION OF NET ASSET VALUE PER SHARE:
Class A Shares ($1,076,703 (divided sign) 135,136 shares of beneficial interest outstanding)................... $ 7.97
Sales charge -- 4.75% of offering price........................................................................ .40
Maximum offering price...................................................................................... $ 8.37
Class B Shares ($1,776,546 (divided sign) 223,717 shares of beneficial interest outstanding)................... $ 7.94
Class C Shares ($20,171 (divided sign) 2,544 shares of beneficial interest outstanding)........................ $ 7.93
Class Y Shares ($8,105,130 (divided sign) 1,015,774 shares of beneficial interest outstanding)................. $ 7.98
</TABLE>
See accompanying notes to financial statements.
18
<PAGE>
EVERGREEN EMERGING MARKETS GROWTH FUND
(FORMERLY FIRST UNION EMERGING MARKETS GROWTH PORTFOLIO)
STATEMENT OF OPERATIONS
(Picture of Globe) SIX MONTHS ENDED JUNE 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME:
Dividends........................................................................................ $ 127,998
Interest......................................................................................... 33,060
Total income............................................................................... 161,058
EXPENSES:
Advisory fee..................................................................................... $ 68,994
Administrative personnel and services fees....................................................... 3,799
Distribution fee -- Class A Shares............................................................... 1,122
Distribution and shareholder services fees -- Class B Shares..................................... 7,858
Distribution and shareholder services fees -- Class C Shares..................................... 181
Custodian fee.................................................................................... 42,562
Transfer agent fee............................................................................... 22,412
Registration and filing fees..................................................................... 16,794
Professional fees................................................................................ 12,855
Reports and notices to shareholders.............................................................. 7,590
Insurance expense................................................................................ 1,677
Trustees' fees and expenses...................................................................... 110
Miscellaneous.................................................................................... 2,930
188,884
Less: Fee waivers and expense reimbursements..................................................... (112,321)
Total expenses............................................................................. 76,563
Net investment income............................................................................... 84,495
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY:
Net realized loss on investments and foreign currency transactions............................... (1,155,257)
Net change in unrealized depreciation of investments and foreign currency........................ 1,113,548
Net loss on investments and foreign currency........................................................ (41,709)
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................................ $ 42,786
</TABLE>
See accompanying notes to financial statements.
19
<PAGE>
EVERGREEN EMERGING MARKETS GROWTH FUND
(FORMERLY FIRST UNION EMERGING MARKETS GROWTH PORTFOLIO)
(Picture of Globe) STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, 1995 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1994*
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income.................................................................. $ 84,495 $ 3,717
Net realized loss on investments and foreign currency transactions..................... (1,155,257) (103,062)
Net change in unrealized depreciation of investments and foreign currency.............. 1,113,548 (1,468,364)
Net increase (decrease) in net assets resulting from operations..................... 42,786 (1,567,709)
FUND SHARE TRANSACTIONS:
Proceeds from shares sold.............................................................. 3,475,013 10,115,458
Payments for shares redeemed........................................................... (962,702) (124,296)
Net increase from Fund share transactions........................................ 2,512,311 9,991,162
Net increase in net assets....................................................... 2,555,097 8,423,453
NET ASSETS:
Beginning of period.................................................................... 8,423,453 --
End of period (including undistributed net investment income of $88,212 and ($3,717),
respectively)........................................................................ $ 10,978,550 $ 8,423,453
</TABLE>
* For the period from September 6, 1994 (commencement of operations) to December
31, 1994.
See accompanying notes to financial statements.
20
<PAGE>
EVERGREEN EMERGING MARKETS GROWTH FUND
(FORMERLY FIRST UNION EMERGING MARKETS PORTFOLIO)
(Picture of Globe) FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
SIX MONTHS PERIOD FROM SIX MONTHS PERIOD FROM SIX MONTHS PERIOD FROM
ENDED SEPTEMBER 6, ENDED SEPTEMBER 6, ENDED SEPTEMBER 6,
JUNE 30, 1994 THROUGH JUNE 30, 1994 THROUGH JUNE 30, 1994 THROUGH
1995 DECEMBER 31, 1995 DECEMBER 31, 1995 DECEMBER 31,
(UNAUDITED) 1994 (UNAUDITED) 1994 (UNAUDITED) 1994
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning of period.... $8.17 $10.00 $8.16 $10.00 $8.16 $10.00
Income (loss) from investment
operations:
Net investment income (loss)............ .06 -- .04 (.02) .09 (.02)
Net realized and unrealized loss on
investments and foreign currency
transactions.......................... (.26) (1.83) (.26) (1.82) (.32) (1.82)
Total from investment operations.... (.20) (1.83) (.22) (1.84) (.23) (1.84)
Net asset value, end of period.......... $7.97 $8.17 $7.94 $8.16 $7.93 $8.16
TOTAL RETURN(|)......................... (2.5%) (18.3%) (2.7%) (18.4%) (2.8%) (18.4%)
RATIO & SUPPLEMENTAL DATA
Net assets, end of period (000's
omitted).............................. $1,077 $867 $1,777 $1,589 $20 $89
Ratios to average net assets:
Expenses(|)(|)(a)..................... 1.72% 1.78% 2.47% 2.53% 2.49% 2.53%
Net investment income(|)(|)(a)........ 2.65% (.12%) 1.86% (.84%) 2.32% (.82%)
Portfolio turnover rate................. 42% 17% 42% 17% 42% 17%
<CAPTION>
CLASS Y SHARES
SIX MONTHS PERIOD FROM
ENDED SEPTEMBER 6,
JUNE 30, 1994 THROUGH
1995 DECEMBER 31,
(UNAUDITED) 1994
<S> <C> <C>
PER SHARE DATA
Net asset value, beginning of period.... $8.17 $10.00
Income (loss) from investment
operations:
Net investment income (loss)............ .06 .01
Net realized and unrealized loss on
investments and foreign currency
transactions.......................... (.25) (1.82)
Total from investment operations.... (.19) (1.83)
Net asset value, end of period.......... $7.98 $8.17
TOTAL RETURN(|)......................... (2.3%) (18.3%)
RATIO & SUPPLEMENTAL DATA
Net assets, end of period (000's
omitted).............................. $8,105 $5,878
Ratios to average net assets:
Expenses(|)(|)(a)..................... 1.46% 1.53%
Net investment income(|)(|)(a)........ 2.84% .43%
Portfolio turnover rate................. 42% 17%
</TABLE>
* Commencement of operations.
(|) Total return is calculated on net asset value per share for the period
indicated and is not annualized. Initial sales charges or contingent
deferred sales charges are not reflected.
(|)(|) Annualized.
(a) Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were assumed or waived by the investment adviser, the
annualized ratios of expenses and net investment income (loss) to average
net assets, exclusive of any applicable state expense limitations, would
have been the following:
<TABLE>
<CAPTION>
CLASS Y
CLASS A SHARES CLASS B SHARES CLASS C SHARES SHARES
SIX MONTHS PERIOD FROM SIX MONTHS PERIOD FROM SIX MONTHS PERIOD FROM SIX MONTHS
ENDED SEPTEMBER 6, ENDED SEPTEMBER 6, ENDED SEPTEMBER 6, ENDED
JUNE 30, 1994 THROUGH JUNE 30, 1994 THROUGH JUNE 30, 1994 THROUGH JUNE 30,
1995 DECEMBER 31, 1995 DECEMBER 31, 1995 DECEMBER 31, 1995
(UNAUDITED) 1994 (UNAUDITED) 1994 (UNAUDITED) 1994 (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
Expenses............................... 4.16% 3.96% 4.91% 4.71% 4.93% 4.71% 3.90%
Net investment income (loss)........... .21% (2.30%) (.58%) (3.02%) (.12%) (3.00%) .40%
<CAPTION>
CLASS Y SHARES
PERIOD FROM
SEPTEMBER 6,
1994 THROUGH
DECEMBER 31,
1994
<S> <C>
Expenses............................... 3.71%
Net investment income (loss)........... (1.75%)
</TABLE>
21
<PAGE>
COMBINED NOTES TO FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 1995
(UNAUDITED)
NOTE 1 -- ORGANIZATION
Evergreen Investment Trust (formerly First Union Funds) (the "Trust") is a
Massachusetts business trust registered under the Investment Company Act of
1940, as amended (the "Act"), as an open-end management company. The Trust
consisted of seventeen funds at June 30, 1995. The financial statements included
herein are only those of the Evergreen Growth Funds -- Evergreen International
Equity Fund ("International"), and Evergreen Emerging Markets Fund ("Emerging
Markets") collectively referred to as the "Funds" (see Note 8).
NOTE 2 -- CHANGE IN FISCAL YEAR
On March 15, 1995, the Trustees approved a change in the Funds' fiscal year
from December 31 to October 31. These financial statements are as of and for the
six months ended June 30, 1995.
NOTE 3 -- SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by
the Funds in the preparation of their financial statements. These policies are
in conformity with generally accepted accounting principles.
SECURITY VALUATIONS -- Equity securities listed or regularly traded on a
securities exchange are valued at the last sale price reported on the primary
national securities exchange on which the security is traded. Other equity
securities are valued at mean between the bid and asked price as provided by an
independent pricing service. Short term securities purchased with remaining
maturities of sixty days or less are stated at amortized cost which approximates
market value.
SECURITY TRANSACTIONS -- Security transactions are accounted for on the
date purchased or sold. Net realized gains or losses are determined on the
identified cost basis.
FOREIGN CURRENCY TRANSLATION -- The Funds' accounting records are
maintained in U.S. dollars. Assets and liabilities are translated into U.S.
dollars at the prevailing exchange rates at the end of each day. Purchases and
sales of securities and income and expenses are translated in U.S. dollars at
the prevailing rates on the dates of such transactions. The effect of changes in
foreign exchange rates on realized and unrealized security gains and losses is
reflected as a component of such gains and losses.
INVESTMENT INCOME AND EXPENSES -- Dividend income is recorded on the
ex-dividend date. Interest income and expenses are accrued daily. Premiums and
discounts paid on securities are amortized or accreted into income as required
by the Internal Revenue Code, as amended, (the "Code").
REPURCHASE AGREEMENTS -- Securities pledged as collateral for repurchase
agreements are held by the Federal Reserve Bank and are designated as being held
on the Funds' behalf by its custodian under a book-entry system. The Funds
monitor the adequacy of the collateral on a daily basis, and can require the
seller to provide additional collateral in the event the market value of the
securities pledged falls below the carrying value of the repurchase agreement,
including accrued interest. The Funds will only enter into repurchase agreements
with banks and other financial institutions which are deemed by the Funds'
investment adviser to be creditworthy pursuant to guidelines established by the
Trustees.
DIVIDENDS TO SHAREHOLDERS -- Dividends from net investment income and from
net capital gains on investments for the Funds are declared and paid annually.
Income distributions and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted accounting
principles. To the extent these differences are permanent in nature, such
amounts are reclassified within the capital accounts.
INCOME TAXES -- It is each Fund's policy to meet the requirements of the
Code applicable to regulated investment companies and to distribute
substantially all of its taxable net income to its shareholders. Accordingly, no
provisions for federal
22
<PAGE>
COMBINED NOTES TO FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 1995 -- CONTINUED
NOTE 3 -- SIGNIFICANT ACCOUNTING POLICIES -- continued
income or excise taxes are necessary. To the extent that realized capital gains
can be offset by capital loss carryforwards, it is the Funds' policy not to
distribute such gains. At December 31, 1994 (the Fund's most recent fiscal year
end), Emerging Markets had a capital loss carryforward of $69,824. Pursuant to
the Code, this capital loss carryforward will expire in 2002.
FORWARD FOREIGN CURRENCY CONTRACTS -- The Funds may enter into forward
foreign currency contracts for the purchase or sale of a specific foreign
currency at a fixed price on a future date in order to hedge its exposure to
changes in foreign exchange rates. Risks may arise upon entering into these
contracts from the potential inability of the counterparties to meet the terms
of their contracts and from unanticipated movements in the value of a foreign
currency relative to the U.S. dollar. Forward currency contracts are revalued
daily at the prevailing rates of contracts of the same maturity. Gains and
losses on forward currency contracts are reported as realized or unrealized
losses on foreign currency transactions.
WHEN ISSUED AND DELAYED DELIVERY TRANSACTIONS -- The Funds record
when-issued or delayed delivery transactions on the trade date and maintain
security positions such that sufficient liquid assets will be available to make
payment for the securities purchased. Securities purchased on a when-issued or
delayed delivery basis are marked to market daily and begin earning interest on
the settlement date.
DEFERRED EXPENSES -- The costs incurred by each Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering the shares, have been deferred and are being amortized
using the straight-line method not to exceed a period of five years from the
Fund's commencement.
NOTE 4 -- INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY AGREEMENT -- First Union National Bank of North
Carolina (the "Adviser"), each Fund's investment adviser, is entitled to a fee
based on a percentage of the Funds' average daily net assets as shown in the
table below. For International and Emerging Growth, the Adviser voluntarily
waived $110,663 and $68,994 respectively, of its advisory fee for the six month
period ended June 30, 1995. The Adviser can modify or terminate this voluntary
waiver at any time.
INTERNATIONAL EQUITY
<TABLE>
<CAPTION>
ADVISORY FEE AVERAGE DAILY NET ASSETS
<S> <C>
0.82%...................................................... on the first $20 million
0.79%...................................................... on the next $30 million
0.76%...................................................... on the next $50 million
0.73%...................................................... on assets in excess of $100 million
</TABLE>
EMERGING GROWTH
<TABLE>
<CAPTION>
ADVISORY FEE AVERAGE DAILY NET ASSETS
<S> <C>
1.50%...................................................... on the first $100 million
1.45%...................................................... on the next $100 million
1.40%...................................................... on the next $100 million
1.35%...................................................... on assets in excess of $300 million
</TABLE>
23
<PAGE>
COMBINED NOTES TO FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 1995 -- CONTINUED
NOTE 4 -- INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH
AFFILIATES -- continued
Under terms of a sub-advisory agreement between the Adviser and Boston
International Advisors, Inc., Boston International Advisors, Inc. is entitled to
an annual fee from the Adviser based on International's average daily net assets
(see below):
<TABLE>
<CAPTION>
SUB-ADVISORY FEE AVERAGE DAILY NET ASSETS
<S> <C>
0.32%...................................................... on the first $20 million
0.29%...................................................... on the next $30 million
0.26%...................................................... on the next $50 million
0.23%...................................................... on assets in excess of $100 million
</TABLE>
Under terms of a sub-advisory agreement between the Adviser and Marvin &
Palmer Associates, Inc., Marvin & Palmer Associates, Inc. is entitled to an
annual fee from the Adviser based on Emerging Growth's average daily net assets
(see below):
<TABLE>
<CAPTION>
SUB-ADVISORY FEE AVERAGE DAILY NET ASSETS
<S> <C>
1.00%...................................................... on the first $100 million
0.95%...................................................... on the next $100 million
0.90%...................................................... on the next $100 million
0.85%...................................................... on assets in excess of $300 million
</TABLE>
ADMINISTRATIVE AGREEMENT -- Federated Investor Services ("FAS") provided
each Fund with certain administrative personnel and services including certain
clerical and recordkeeping services for the six-month period ended June 30, 1995
(see Note 8). In addition, certain of the Trust's officers and Trustees were
officers or directors of FAS. FAS' fee was based on the level of average net
assets of the Trust for the period, subject to a minimum fee for each Fund. For
International and Emerging Growth, FAS voluntarily waived its fee of $15,373 and
$3,799 for the six month period ended June 30, 1995.
PLAN OF DISTRIBUTION AND SHAREHOLDER SERVICING -- The Trust has adopted a
Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Act. Under the
terms of the Plan, the Trust compensated Federated Securities Corp. ("FSC"), the
principal distributor, from the net assets of all of the funds in the Trust to
finance activities intended to result in the sale of Class A, Class B and Class
C shares (see Note 8). The Plan provides that the Funds may incur distribution
expenses up to .75 of 1% of the average daily net assets of the Class A, Class B
and Class C shares, annually, to finance such activities. For the six-month
period ended June 30, 1995, FSC limited its fees on Class A shares to .25 of 1%
of Class A shares average daily net assets for each Fund.
Under the terms of a Shareholder Services Agreement with First Union
Brokerage Services ("FUBS"), the Funds will pay FUBS up to .25 of 1% of average
daily net assets of the Funds' Class B and Class C shares for the period. This
fee is designed to obtain certain services for shareholders and to maintain the
shareholder accounts.
TRANSFER AND DIVIDEND DISBURSEMENT AGENT -- Federated Services Company
("FServ") served as Transfer and dividend disbursing agent for the Trust for the
six-month period ended June 30, 1995 (see Note 8). FServ's fee was based on the
size, type and number of accounts and transactions made by shareholders.
24
<PAGE>
COMBINED NOTES TO FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 1995 -- CONTINUED
NOTE 4 -- INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH
AFFILIATES -- continued
ORGANIZATIONAL EXPENSES -- Organizational expenses were borne initially by
FAS. The Funds agreed to reimburse FAS for the organizational expenses during
the five-year period following the date it commenced operations. Pursuant to
these arrangements, for the six months ended June 30, 1995, the Funds paid and
have a remaining liability as follows:
<TABLE>
<CAPTION>
COMMENCEMENT ORGANIZATIONAL
OF ORGANIZATIONAL EXPENSES
OPERATIONS EXPENSES PAID REMAINING
<S> <C> <C> <C>
International........................... 9/2/94 $5,811 $ 43,521
Emerging Growth......................... 9/6/94 819 $ 42,775
</TABLE>
As a result of the change in the administration agreement (see Note 8), the
Adviser purchased the remaining unreimbursed initial organizational expenses
from FAS. No change will be made to the payment schedule as a result of this
transaction.
NOTE 5 -- INVESTMENT TRANSACTIONS
The cost of purchases and proceeds from sales of investments, excluding
short-term securities, for the six months ended June 30, 1995 were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
<S> <C> <C>
International...................................................... $12,741,043 $1,820,766
Emerging Growth.................................................... 7,492,546 3,454,316
</TABLE>
On June 30, 1995, the composition of unrealized appreciation and
depreciation of investment securities based on the aggregate cost of investments
for federal tax purposes was as follows:
<TABLE>
<CAPTION>
APPRECIATION DEPRECIATION NET
<S> <C> <C> <C>
International..................................... $2,787,086 ($2,789,124 ) $ 2,038
Emerging Growth................................... 778,759 (1,161,930 ) (383,171)
</TABLE>
NOTE 6 -- SHARES OF BENEFICIAL INTEREST
There is an unlimited number of no par value shares of beneficial interest
authorized for each of the Funds. The shares are divided into four classes which
are designated Class A, Class B, Class C and Class Y shares. Class A shares are
offered with a front-end sales charge of 4.75%. Class B shares are offered with
a contingent deferred sales charge payable when shares are redeemed which would
decline from 5% to zero over a seven-year period (after which it is expected
that they will convert to Class A shares). Class C shares are offered with a 1%
contingent deferred sales charge on shares redeemed within the first year of
purchase. Class Y shares are sold without a sales charge and are available only
to investment advisory clients of the Adviser and its affiliates, certain
institutional investors and Class Y shareholders of record of certain other
funds managed by the Adviser and its affiliates as of December 30, 1994. All
classes have identical voting, dividend, liquidation and other rights, except
that certain classes bear different distribution expenses (see Note 4) and have
exclusive voting rights with respect to their distribution plan.
25
<PAGE>
COMBINED NOTES TO FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 1995 -- CONTINUED
NOTE 6 -- SHARES OF BENEFICIAL INTEREST -- continued
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1995 DECEMBER 31, 1994*
INTERNATIONAL EQUITY SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
CLASS A*
Shares sold............................................................... 70,570 $ 671,078 271,932 $ 2,657,505
Shares issued on reinvestment of dividends................................ 314 3,081 65 614
Shares redeemed........................................................... (31,304) (297,697) (4,068) (38,325)
Net increase.............................................................. 39,580 376,462 267,929 2,619,794
CLASS B*
Shares sold............................................................... 157,255 1,490,727 601,778 5,886,527
Shares issued on reinvestment of dividends................................ 180 1,652 86 802
Shares redeemed........................................................... (66,155) (633,153) (11,910) (113,721)
Net increase.............................................................. 91,280 859,226 589,954 5,773,608
CLASS C*
Shares sold............................................................... 11,571 107,187 17,281 168,242
Shares issued on reinvestment of dividends................................ -- -- 3 24
Shares redeemed........................................................... (3,723) (35,740) (151) (1,419)
Net increase.............................................................. 7,848 71,447 17,133 166,847
CLASS Y*
Shares sold............................................................... 1,196,457 11,375,840 2,526,593 24,820,491
Shares issued on reinvestment of dividends................................ 1,510 14,829 739 6,914
Shares redeemed........................................................... (239,377) (2,337,904) (17,935) (172,512)
Net increase.............................................................. 958,590 9,052,765 2,509,397 24,654,893
Total net increase resulting from Fund share transactions................. 1,097,298 $10,359,900 3,384,413 $33,215,142
</TABLE>
* The Fund share transaction activity is for the period September 2, 1994
(commencement of class operations) through December 31, 1994.
26
<PAGE>
COMBINED NOTES TO FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 1995 -- CONTINUED
NOTE 6 -- SHARES OF BENEFICIAL INTEREST -- continued
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1995 DECEMBER 31, 1994*
EMERGING MARKETS AMOUNT SHARES AMOUNT
SHARES
<S> <C> <C> <C> <C>
CLASS A*
Shares sold..................................................................... 43,393 $ 320,745 107,331 $1,026,176
Shares redeemed................................................................. (14,447) (104,943) (1,141) (10,403)
Net increase.................................................................... 28,946 215,802 106,190 1,015,773
CLASS B*
Shares sold..................................................................... 55,226 404,073 202,997 1,942,811
Shares redeemed................................................................. (26,229) (194,532) (8,277) (71,499)
Net increase.................................................................... 28,997 209,541 194,720 1,871,312
CLASS C*
Shares sold..................................................................... 479 3,500 10,933 105,500
Shares redeemed................................................................. (8,868) (64,147) -- --
Net increase (decrease)......................................................... (8,389) (60,647) 10,933 105,500
CLASS Y*
Shares sold..................................................................... 374,522 2,746,696 724,945 7,040,972
Shares redeemed................................................................. (78,575) (599,081) (5,118) (42,395)
Net increase.................................................................... 295,947 2,147,615 719,827 6,998,577
Total net increase resulting from Fund share transactions....................... 345,501 $2,512,311 1,031,670 $9,991,162
</TABLE>
* The Fund share transaction activity is for the period September 6, 1994
(commencement of class operations) through December 31, 1994.
NOTE 7 -- RESTRICTED SECURITIES
Restricted securities are securities that may only be resold upon
registration under federal securities laws or in transactions exempt from such
registration. The Funds' restricted securities are valued at the price provided
by dealers in the secondary market or, if no market prices are available, at the
fair value as determined by the Funds' pricing committee. Additional information
on each restricted security held at June 30, 1995 is as follows:
<TABLE>
<CAPTION>
FUND SECURITY ACQUISITION DATE ACQUISITION COST
<S> <C> <C> <C>
Emerging Markets Cementos Paz Del Rio ADR 9/23/94-11/4/94 $ 73,350
ITC, Inc., GDR 9/6/94 166,750
Ranbaxy Laboratories, Ltd,
GDR 10/12/94-11/15/94 88,950
Samsung Electronics, Ltd, GDR 9/6/94 200,100
Grupo Carso, SA de CV ADR 9/6/94-9/7/94 133,125
</TABLE>
27
<PAGE>
COMBINED NOTES TO FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 1995 -- CONTINUED
NOTE 8 -- SUBSEQUENT EVENTS
Pursuant to a contract approved by the Trustees on April 20, 1995,
effective July 7, 1995, Evergreen Asset Management Corp. and Boston Financial
Data Services became the Administrator and transfer agent respectively.
Evergreen Funds Distributor, Inc., a wholly owned subsidiary of Furman Selz,
Inc., became the Funds' distributor and sub-administrator. Officers or directors
of Furman Selz, Inc. became the Trust's officers. In addition, effective July 7,
1995, the Funds changed their names as follows:
<TABLE>
<CAPTION>
FORMER NAME NEW NAME
<S> <C>
First Union International Equity Portfolio Evergreen International Equity Fund
First Union Emerging Markets Growth Portfolio Evergreen Emerging Markets Growth Fund
</TABLE>
28
<PAGE>
TRUSTEES AND OFFICERS
TRUSTEES:
Mr. James S. Howell, Chairman
Mr. Gerald M. McDonnell
Mr. Thomas L. McVerry
Mr. William W. Pettit
Mr. Russell A. Salton, III M.D.
Mr. Michael S. Scofield
OFFICERS (EFFECTIVE JULY 7, 1995):
John J. Pileggi
President and Treasurer
Joan V. Fiore
Secretary
Sheryl Hirschfeld
Assistant Secretary
Donald E. Brostrom
Assistant Treasurer
Stephen W. St. Clair
Assistant Treasurer
