EVERGREEN
INTERNATIONAL/GLOBAL
GROWTH FUNDS
(Photo of Buddha statues (Photo of Global Leaders Fund
appears here) logo appears here)
(Photo of Globe appears (Photo of European flags
here) appears here)
(Photo of Asian city harbor appears here)
1996 ANNUAL REPORT
(Evergreen Fund logo appears here)
<PAGE>
EVERGREEN INTERNATIONAL/GLOBAL GROWTH FUNDS
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<C> <S> <C>
Economic Overview......................................................... 1
(Photo of Buddha statues EMERGING MARKETS A Report From Your Portfolio Manager...................................... 3
appears here) GROWTH FUND Results to Date........................................................... 4
Statement of Investments.................................................. 5
Industry Diversification.................................................. 7
Statement of Assets and Liabilities....................................... 8
Statement of Operations................................................... 9
Statement of Changes in Net Assets........................................ 10
Financial Highlights...................................................... 11
</TABLE>
<TABLE>
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(Photo of Global Leaders Fund GLOBAL LEADERS A Report From Your Portfolio Managers..................................... 13
appears here) FUND Results to Date........................................................... 17
Statement of Investments.................................................. 18
Industry Diversification.................................................. 20
Statement of Assets and Liabilities....................................... 21
Statement of Operations................................................... 22
Statement of Changes in Net Assets........................................ 23
Financial Highlights...................................................... 24
</TABLE>
<TABLE>
<C> <S> <C>
(Photo of Globe GLOBAL REAL A Report From Your Portfolio Manager...................................... 25
appears here) ESTATE EQUITY Results to Date........................................................... 28
FUND Statement of Investments.................................................. 29
Statement of Assets and Liabilities....................................... 31
Statement of Operations................................................... 32
Statement of Changes in Net Assets........................................ 33
Financial Highlights...................................................... 34
</TABLE>
<TABLE>
<C> <S> <C>
(Photo of European flags INTERNATIONAL A Report From Your Portfolio Manager...................................... 36
appears here) EQUITY FUND Results to Date........................................................... 38
Statement of Investments.................................................. 39
Industry Diversification.................................................. 45
Statement of Assets and Liabilities....................................... 46
Statement of Operations................................................... 47
Statement of Changes in Net Assets........................................ 48
Financial Highlights...................................................... 49
</TABLE>
<TABLE>
<C> <S> <C>
Combined Notes to Financial Statements.................................... 51
Report of Independent Accountants -- Price Waterhouse LLP................. 60
Trustees and Officers...................................... Inside Back Cover
</TABLE>
<PAGE>
EVERGREEN INTERNATIONAL/GLOBAL GROWTH FUNDS
ECONOMIC OVERVIEW
BY EVERGREEN ASSET MANAGEMENT CHAIRMAN,
STEPHEN A. LIEBER
The continued expansion of the United States (Photo of Stephen A.
economy and the persistence of inflation at 3% or Lieber appears here)
less, has evidently sent mixed signals to the
investment markets. The equity market this year has
gone from new high to new high. The willingness of
American savers to put money into the hands of equity mutual funds to buy stocks
in the United States and abroad is unprecedented. Even foreign investors, who
have long been skeptical of the rising prices of U.S. equities and the recent
relatively higher valuations than in many other industrial countries, have begun
to move heavily into U.S. equities. Only the bond market has suffered negative
trends this year. But, it showed no further losses when measured from the end of
the second quarter to the end of the third quarter, and has since recovered to
the levels of last February.
Evidence of slowed final demand in many sectors of the economy has begun to
reduce the fears of many investors over inflationary pressures. While confidence
increases that both producer and consumer price indices will remain in a narrow
range, around 3%, apprehensions of possibly renewed inflation are now focused on
the trend of hourly wages, which showed some strength earlier in the fall.
The apparent consensus among business economists currently is to expect a 2%
growth rate for the U.S. economy in the second half of 1996, with a similar
level to continue into 1997. These views are, in part, based on historical
trends, in which the late stage expansion cycle characteristics of the U.S.
economy typically show economic deceleration. Such a deceleration is not widely
feared, in view of the fact that real income growth is like to be sustained by a
2% to 2 1/2% employment growth, plus a 3% to 3 1/2% earnings growth, before a 3%
inflation. The appearance of such decelerating trends and their continuation
would likely bring bond yields down, as the inflation premium would be removed
from bond market expectations. Many who dissent from the consensus view that the
economy will slow, argue that the European economies and Japan's are likely to
revive in 1997, which will create more export demand for U.S. products and,
therefore, increase our growth rate. More pessimistic observers of the American
economy believe that the American consumer has overspent, as evidenced by the
rising rate of credit card delinquencies, and by the "wealth effect" of a stock
market achieving record highs.
The stock market has achieved its historic highs, based not only on a rising
valuation, but also on significantly increased corporate profitability. Any
slowing of the economy will reduce the stimulus to stock buying from the
momentum of earnings growth. It remains questionable though, whether the
incentive to invest in equities would be correspondingly reduced. It may simply
produce a more selective environment, crowding investment interest into a
smaller spectrum of the market. We believe this a likely outcome, so long as the
basic inclination of American investors is increasingly to put their long-term
savings funds into common stocks or common stock mutual funds. We see four areas
of sustained demand for common stocks in the balance of 1996: companies with
internal growth based on innovative products and services, companies which are
using their excess retained earnings to buy back their own stock, companies
which are restructuring their operations to achieve better returns and, finally,
companies whose undervaluation makes them attractive acquisition candidates for
larger enterprises. For the bond market, we expect that fairly stable, rather
than rising, inflation, and a somewhat declining overall business rate of
growth, together with a narrow range currency market, should enable a gradual
decline in interest rates. This would have the effect of supporting the stock
market alternative to fixed income investments.
These economic and market volatilities suggest the need for a long-term
perspective. Taking advantage of declines in prices of quality stocks,
purchasing bonds in periods of exaggerated apprehensions over inflation,
together with systematic investing, should prove the most effective way to
capitalize on the volatilities of a period where many investors are dominated by
their uncertainties. Record corporate profits and strong growth trends by
leaders in new products or services encourage a positive investment
1
<PAGE>
EVERGREEN INTERNATIONAL/GLOBAL GROWTH FUNDS
ECONOMIC OVERVIEW -- (CONTINUED)
response. The confidence of managements in their ability to generate substantial
and even excess cash flows is shown by the still rising trend of corporate stock
buy-backs. The rising business cycle of the last five years has greatly
strengthened the balance sheets of most American companies. Any decline in
interest rates, such as experienced in recent weeks, should tend to focus even
more attention on comparative returns of strongly positioned, well financed, and
highly profitable companies.
Internationally, the Organization for Economic Cooperation and Development
estimates that, in 1997, there will be an average 2.4% growth in gross domestic
product for its member countries. Looking to "robust and sustainable growth in
the United States, and a continuation of expansions in Japan and Europe",
inflationary forces are seen as a potential risk, but not a probability. The
head of the OECD Economics Department projects a slowdown of economic activity
in the U.S. which would, if confirmed, reduce the risk of a rise in inflation.
Further, with U.S. growth projected at only 2.2% in 1997, against 2.4% in 1996,
and with U.S. gross fixed investment expected to fall to a 3.3% rate from 6% in
1996, the U.S. is not viewed as an expected inflationary force in the world
economic picture. Similarly, Japan is anticipated to have its growth rate fall
to 1.6% from 3.6% in 1996. The major expected increase in growth is in the long
delayed recovery in Europe, where the OECD predicts a growth rate of 2.4%, up
from 1.6% in 1996. Yet, even with this recovery projected for Europe, the OECD
is still fearful of further rises in the already high levels of unemployment in
such principal European economies as Germany, France, and Italy.
Economic growth rates in Southeast Asia, Latin America, and other more rapidly
industrializing nations, are widely expected to exceed those of the major
industrial countries in 1997. Led by the indicated better than 9% 1996 rate of
growth in GDP of China, and sustained 8% rate of growth estimated for Indonesia,
Malaysia, and Thailand, improving economies are seen elsewhere such as the
Philippines which has, this year, grown its GDP at 5.9%, and South Korea at
6.4%. Argentina, Brazil, and Mexico reported comparable levels of growth.
Expectations for 1997 are that these economies will sustain their expansion,
particularly if worldwide interest rate levels remain in recent bands, which
will permit the availability of capital. Inflation rates are a continuing risk
factor in numerous emerging economies, led by a recent 7% in China, and 11.8% in
Brazil, while Mexico, still in its readjustment phase, most recently reported a
28.7% inflation rate. Trade balances in many of these countries, are, however,
are increasingly favorable, providing capital to sustain their expansions. This
is particularly evident in China, which has built up its foreign dollar reserves
in the last year (ending September) to $97.4 billion from $71.4 billion, and in
Brazil, whose reserves increased to $57.5 billion in August from $45.6 billion
the year before. Stock markets in the varying countries have varying trends and
high volatility, led in the last eleven months by that of Venezuela, up 195%,
followed by Russia, up 153%, Hungary, up 148%, Turkey, up 129%, and China, up
126%. The weakest market in the Asian group was Thailand, down 30.8%.
These contrasts between growth rates, growth expectations, and stock market
performance suggest the continuing need for both a longer term perspective and
an investment policy guided by current political and economic analysis on a
national basis, as well as a company and commodity basis. Investment focus on
multi-national companies which take advantage of long-term growth opportunities
in dynamic economies would seem, in 1997, to again be a cautious strategy to
bridge local uncertainties, and yet benefit by major growth potentials. The
selection of individual securities in the mature economies should continue to be
supported by improving liquidity, as markets among the major trading nations
broaden and the flows of capital continue to increase. For companies based in
the so-called emerging markets, policies of concentration on the strongest
enterprises with healthy equity capital levels and major positions in domestic
markets, together with export markets, would seem to still be an appropriate
focus. In short, 1997's initial economic outlook for international investment
continue to be positive within a framework of restrained inflation and
continuing modest growth among the major industrial nations.
2
<PAGE>
EVERGREEN EMERGING MARKETS GROWTH FUND
(Photo of Buddha statues appears here)
A REPORT FROM YOUR
PORTFOLIO MANAGER
RICHARD WAGONER
We are pleased to bring you the Annual Report for Evergreen (Photo of
Emerging Markets Growth Fund. For the twelve-month period Richard Wagoner
ended October 31, 1996, Evergreen Emerging Markets Growth appears here)
Fund's total return for its Class A shares at net asset value
was 7.7%* as compared with 3.5% for the Morgan Stanley Capital
International (MSCI) Emerging Markets Index**, the Fund's
benchmark index. Class A shares are subject to a maximum 4.75%
front end sales charge which is not reflected in the Fund's
performance figure. If reflected, performance would be lower.
(For additional performance information, please see page 4.)
Taiwan, Malaysia, Brazil, Argentina and Poland lead the
performance of the emerging markets during the year, with total returns in
excess of 25%, as measured by their respective MSCI country sub-indexes. The
worst performing markets during this period were South Korea, Thailand and South
Africa, which declined 36%, 31% and 10%, respectively. The global investment
environment was negative for the emerging markets during the last year. Signs of
growing economic strength in the United States caused uncertainty over future
direction of monetary policy in the major markets. Global financial liquidity
plays a strategic role in shaping emerging markets' equity performance.
The Fund's overweights in Hong Kong, Peru and Czech Republic, as compared
with the MSCI Emerging Markets Index, helped performance, as did our
underweights in Korea, Thailand and South Africa. Strong stock selection in
Brazil and Chile was a key contributor to outperformance despite being neutrally
weighted. Our major sector overweights were in the financial and services
sectors, where our combined weighting was approximately 51% of the portfolio.
We believe the near-term outlook for emerging markets equities is extremely
bullish. Investor focus has been on the strength of the major economies and the
outlook for interest rates. The threat of higher interest rates was deferred
following the Federal Reserve Board's decision not to increase rates at its
September meeting. This inaction along with reductions in official lending rates
in several overseas markets has led to a world-wide rally in bond prices. In
turn, this has fostered positive conditions for stock markets around the world,
particularly for the interest-rate-sensitive emerging markets. We continue to
emphasize Latin America and selected Pacific Rim markets, while the markets of
Eastern Europe are becoming increasingly attractive. We remain substantially
underweighted in South Africa.
Thank you for your support in Evergreen Emerging Markets Fund. We look
forward to reporting the Fund's results to you in our Semiannual Report.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
INTERNATIONAL INVESTING MAY INVOLVE CERTAIN ADDITIONAL RISKS SUCH AS CURRENCY
FLUCTUATIONS, ECONOMIC AND POLITICAL INSTABILITY, AND DIFFERENCES IN ACCOUNTING
STANDARDS.
* PERFORMANCE FIGURES INCLUDE REINVESTMENT OF INCOME DIVIDEND AND CAPITAL GAIN
DISTRIBUTIONS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE. INVESTORS
SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
THE FUND ALSO OFFERS CLASS B SHARES WHICH ARE SUBJECT TO A MAXIMUM 5% CONTINGENT
DEFERRED SALES CHARGE, AND CLASS C SHARES WHICH ARE SUBJECT TO A 1% CONTINGENT
DEFERRED SALES CHARGE WITHIN THE FIRST YEAR OF PURCHASE. PERFORMANCE FOR THESE
CLASSES OF SHARES MAY BE DIFFERENT. THE FUND ALSO OFFERS CLASS Y SHARES WHICH
ARE NOT SUBJECT TO SALES CHARGES AND ARE AVAILABLE TO CERTAIN INSTITUTIONAL
INVESTORS AND INVESTMENT ADVISORY CLIENTS OF EVERGREEN ASSET AND ITS AFFILIATES.
DURING THE PERIOD UNDER REVIEW, THE ADVISER WAIVED A PORTION OF ITS ADVISORY FEE
AND ABSORBED A PORTION OF THE FUND'S OTHER EXPENSES. HAD FEE NOT BEEN WAIVED OR
EXPENSES ABSORBED, PERFORMANCE WOULD HAVE BEEN LOWER. FEE WAIVER AND EXPENSE
ABSORPTION MAY BE REVISED AT ANY TIME. FOR ADDITIONAL INFORMATION ON FEE WAIVER
AND EXPENSE ABSORPTION, PLEASE SEE THE PROSPECTUS.
** SOURCE: MORGAN STANLEY CAPITAL INTERNATIONAL. THE MSCI EMERGING MARKETS INDEX
IS AN UNMANAGED INDEX OF SELECTED SECURITIES. AN INVESTMENT CAN NOT BE MADE IN
AN INDEX.
3
<PAGE>
EVERGREEN EMERGING MARKETS GROWTH FUND
(Photo of Buddha statues appears here)
RESULTS TO DATE
PERFORMANCE OF $10,000 INVESTED IN THE
EVERGREEN EMERGING MARKETS GROWTH FUND
The graphs below compare a $10,000 investment in the Evergreen Emerging
Markets Growth Fund (Class A, Class B, Class C and Class Y Shares) with a
similar investment in the Morgan Stanley EAFE Index and the Morgan Stanley
Emerging Markets Index ("Indexes").
(The following are four graphs for Class A, B, C and Y Shares.
Customer to provide plot points)
<TABLE>
<CAPTION>
9/2/94* 12/31/94 10/31/95 4/30/96 10/31/96
<S> <C> <C> <C> <C> <C>
CLASS A
1-YEAR TOTAL RETURN=2.6%
AVERAGE ANNUAL COMPOUND
RETURN SINCE INCEPTION=9.3%
Evergreen Emerging Markets Growth Fund
Morgan Stanley Eafe Index
Morgan Stanley Emerging Markets Index
CLASS B
1-YEAR TOTAL RETURN=1.8%
AVERAGE ANNUAL COMPOUND
RETURN SINCE INCEPTION=9.2%
Evergreen Emerging Markets Growth Fund
Morgan Stanley Eafe Index
Morgan Stanley Emerging Markets Index
CLASS C
1-YEAR TOTAL RETURN=5.9%
AVERAGE ANNUAL COMPOUND
RETURN SINCE INCEPTION=7.9%
Evergreen Emerging Markets Growth Fund
Morgan Stanley Eafe Index
Morgan Stanley Emerging Markets Index
CLASS Y
1-YEAR TOTAL RETURN=7.9%
AVERAGE ANNUAL COMPOUND
RETURN SINCE INCEPTION=7.0%
Evergreen Emerging Markets Growth Fund
Morgan Stanley Eafe Index
Morgan Stanley Emerging Markets Index
</TABLE>
*Commencement of class operations.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE RESULTS. MUTUAL FUNDS
ARE
NOT OBLIGATIONS OF, OR GUARANTEED BY, ANY BANK AND ARE NOT FEDERALLY INSURED.
For the purposes of the graphs and the accompanying tables, it has been
assumed that (a) the maximum sales charge of 4.75% was deducted from the initial
$10,000 investment in Class A Shares; (b) the maximum applicable contingent
deferred sales charge was deducted from the value of the investment in Class B
and Class C Shares, assuming full redemption on October 31, 1996; (c) all
recurring fees (including investment advisory fees) were deducted; and (d) all
dividends and distributions were reinvested.
The indexes are unmanaged and include the reinvestment of income, but do
not reflect the payment of transaction costs and advisory fees associated with
an investment in the Fund.
4
<PAGE>
EVERGREEN EMERGING MARKETS GROWTH FUND
(Photo of Buddha statues appears here)
STATEMENT OF INVESTMENTS
OCTOBER 31, 1996
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
COMMON STOCKS -- 93.4%
BRAZIL -- 15.5%
1,000,000 Cia Cervejaria Brahma............... $ 618,065
20,700 Companhia Energetica de Minas
Gerais, ADR......................... 656,629
33,700 Companhia Vale do Rio Doce,
ADR................................. 708,509
2,008,000 * Eletrobras SA, Cl. B Shares......... 650,831
2,322,000 Eletrobras SA....................... 720,964
20,000 * Multicanal Participacoes SA, ADR.... 280,000
3,506,000 Petroleo Brasileiros SA............. 453,862
14,900 Telecomunicacoes Brasileiras, ADR... 1,110,050
5,198,910
CHILE -- 4.9%
12,900 Compania de Telecomunicacione,
ADR................................. 1,272,262
6,500 Sociedad Quimica y Minera de
Chile SA, ADR....................... 373,750
1,646,012
CHINA -- .2%
190,000 Shanghai Post & Telecom............. 68,400
CZECH REPUBLIC -- 3.3%
8,600 Komercni Banka AS................... 638,741
4,500 * SPT Telekom AS...................... 481,116
1,119,857
HONG KONG -- 13.0%
37,000 Bank of East Asia Ltd............... 144,512
50,000 Cheung Kong Holdings Ltd............ 400,921
400,000 * Cheung Kong Infrastructure
Holdings............................ 744,937
400,000 China Hong Kong Photo Products...... 151,315
500,000 China Overseas Land
& Investment Ltd.................... 185,911
50,000 Citic Pacific Ltd................... 243,139
286,000 First Pacific Ltd................... 393,924
414,000 Goldlion Holdings Ltd............... 337,317
9,200 HSBC Holdings Plc................... 187,398
118,000 Lai Sun Development Co., Ltd........ 152,609
260,000 National Mutual Asia Ltd............ 218,566
84,000 New World Develelopment Co., Ltd.... 488,865
56,000 Sun Hung Kai Properties Ltd......... 637,335
50,000 Varitronix International Ltd........ 91,177
4,377,926
HUNGARY -- 3.5%
10,400 EGIS Gyogyszergyar.................. 641,529
<CAPTION>
SHARES VALUE
<C> <S> <C>
</TABLE>
HUNGARY -- 3.5% -- CONTINUED
<TABLE>
<C> <S> <C>
9,900 Richter Gedeon, GDR................. $ 532,320
1,173,849
INDIA -- 3.7%
32,900 * East India Hotels Ltd., GDR, 144A... 502,274
31,200 * Indian Hotels Co., Ltd., GDR........ 571,849
9,500 Ranbaxy Laboratories Ltd., GDR,
144A................................ 165,382
1,239,505
INDONESIA -- 1.9%
302,578 Bank International Indonesia........ 353,460
100,000 Kawasan Industri Jababeka........... 134,161
4,500 PT Telekomunikasi Indonesia, ADR.... 135,000
622,621
ISRAEL -- 2.2%
37,000 ECI Telecommunications Ltd.......... 740,000
KOREA -- 2.3%
7,000 Korea Electric Power Corp., ADR..... 126,000
39,600 * Korea Mobile Telecommunications,
GDR................................. 495,000
6,200 Pohang Iron & Steel Ltd., ADR....... 128,650
154 Samsung Electronics Ltd., GDR,
144A................................ 3,311
752,961
LUXEMBOURG -- .9%
7,500 * Millicom International Cellular
SA.................................. 298,125
MALAYSIA -- 11.8%
90,000 AMMB Holdings, Berhad............... 609,143
110,000 Industrial Oxygen Inc., Berhad...... 173,283
70,400 Kian Joo Can Factory, Berhad........ 384,532
45,000 Malayan Bank, Berhad................ 445,280
140,000 New Straits Times Press, Berhad..... 736,988
40,000 Pan Pacific Asia, Berhad............ 121,908
185,000 Public Bank, Berhad................. 342,811
170,000 Sime Darby, Berhad.................. 602,217
76,000 Sungei Way Holdings, Berhad......... 433,168
52,000 * Technology Resources Industries,
Berhad.............................. 124,520
3,973,850
MEXICO -- 6.7%
46,000 Grupo Elektra SA de CV.............. 313,630
160,000 * Grupo Finance Banamex Accival
SA de CV, Series B.................. 338,414
124,000 Grupo Finance Inbursa............... 401,120
62,800 Grupo Modelo SA de CV............... 325,427
</TABLE>
5
<PAGE>
EVERGREEN EMERGING MARKETS GROWTH FUND
(Photo of Buddha statues appears here)
STATEMENT OF INVESTMENTS -- (CONTINUED)
OCTOBER 31, 1996
<TABLE>
<CAPTION>
<C> <S>
SHARES VALUE
</TABLE>
COMMON STOCKS -- 93.4% -- CONTINUED
MEXICO -- 6.7% -- CONTINUED
<TABLE>
<C> <S> <C>
1,150,000 * Grupo Posadas SA de CV.............. $ 522,239
219,000 * Grupo Synkro SA de CV, ADR.......... 31,492
17,000 Kimberly Clark Corp.
de Mexico SA de CV.................. 327,838
2,260,160
PERU -- 1.1%
16,000 * Compania de Minas Buenaventura
SA, ADR............................. 268,000
12,288 * Minas Buenaventura.................. 95,714
363,714
PHILIPPINES -- 2.4%
500,000 * Pilipino Telephone Corp............. 442,352
30,000 Philippine National Bank............ 345,320
5,670 San Miguel Corp..................... 20,496
808,168
POLAND -- 4.0%
9,700 Agros Holdings SA................... 250,115
15,500 Bank Rozwoju Eksportu SA............ 460,309
3,700 Bank Slaski SA...................... 342,142
36,100 Elektrim............................ 301,721
1,354,287
PORTUGAL -- 2.7%
35,000 Portugal Telecom SA, ADR............ 905,625
SINGAPORE -- 2.2%
22,000 Cerebos Pacific Ltd................. 170,252
24,000 Fraser & Neave Ltd.................. 238,551
75,000 Genting International Plc........... 183,000
20,000 Keppel Corp., Ltd................... 149,095
740,898
SOUTH AFRICA -- 1.5%
3,000 Anglo American Corp., Ltd., ADR..... 180,750
27,000 Sasol Ltd........................... 329,409
510,159
TAIWAN -- 7.5%
10,440 * Advanced Semiconductor Materials
International NV, GDR............... 75,246
71,000 Cathay Life Insurance Co., Ltd...... 425,381
200,000 China Steel Corp.................... 177,923
<CAPTION>
SHARES VALUE
<C> <S> <C>
</TABLE>
TAIWAN -- 7.5% -- CONTINUED
<TABLE>
<C> <S> <C>
24,300 * China Steel Corp., ADR, 144A........ $ 432,351
250,000 Chinatrust Commercial Bank.......... 442,992
200,000 * President Enterprises............... 281,046
49,222 * President Enterprises Corp., GDR,
144A................................ 691,672
2,526,611
THAILAND -- 2.1%
5,200 Advanced Information Services Plc... 70,571
10,000 Bangkok Bank Public Co., Ltd........ 106,688
10,000 Land & House Public Co., Ltd........ 83,153
62,400 Total Access Communication
Plc, Ltd............................ 430,560
690,972
TOTAL COMMON STOCKS
(COST $31,407,381)................ 31,372,610
<CAPTION>
PRINCIPAL
AMOUNT
<C> <S> <C>
REPURCHASE AGREEMENT -- 5.1%
$ 1,701,000 State Street Bank & Trust Co.,
4.75% dated 10/31/96, due
11/1/96 -- collateralized by
$1,760,000 U.S. Treasury Notes,
5.875%, due 2/15/04; value,
including accrued interest --
$1,739,830
(COST $1,701,000).................. 1,701,000
TOTAL INVESTMENTS --
(COST $33,108,381)..... 98.5% 33,073,610
OTHER ASSETS AND
LIABILITIES -- NET..... 1.5 495,196
NET ASSETS --............. 100.0% $33,568,806
</TABLE>
* Non-income producing securities
ADR -- American Depositary Receipts
GDR -- Global Depositary Receipts
Rule 144A securities are restricted as to resale to qualified institutional
investors.
See accompanying notes to financial statements.
6
<PAGE>
EVERGREEN EMERGING MARKETS GROWTH FUND
(Photo of Buddha statues appears here)
INDUSTRY DIVERSIFICATION
OCTOBER 31, 1996
<TABLE>
<CAPTION>
PERCENTAGE OF
NET ASSETS
<S> <C>
Banks.............................................................................................................. 12.5%
Beverages & Tobacco................................................................................................ 3.6
Building, Construction & Furnishings............................................................................... 1.3
Business Equipment & Services...................................................................................... .8
Chemical & Agricultural Products................................................................................... 2.1
Electrical Equipment & Services.................................................................................... 3.8
Energy............................................................................................................. 1.4
Finance & Insurance................................................................................................ 4.8
Food & Household Products.......................................................................................... 5.5
Health Care Products & Services.................................................................................... 5.0
Industrial Specialty Products & Services........................................................................... 2.0
Leisure & Tourism.................................................................................................. 5.3
Machinery -- Diversified........................................................................................... .4
Metal Products & Services.......................................................................................... 5.4
Mining............................................................................................................. .5
Multi-Industry..................................................................................................... 3.7
Publishing, Broadcasting & Entertainment........................................................................... 2.2
Real Estate........................................................................................................ 8.4
Retailing & Wholesale.............................................................................................. 1.0
Telecommunication Services & Equipment............................................................................. 17.2
Textile & Apparel.................................................................................................. .1
Utilities.......................................................................................................... 6.4
Total Long-Term Investments.................................................................................. 93.4
Short-Term Investment.............................................................................................. 5.1
Other Assets and Liabilities -- net................................................................................ 1.5
Net Assets................................................................................................... 100.0%
</TABLE>
7
<PAGE>
EVERGREEN EMERGING MARKETS GROWTH FUND
(Photo of Buddha statues appears here)
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1996
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments at value (identified cost $33,108,381)............................................................. $33,073,610
Foreign currencies at value (identified cost $221,045)......................................................... 220,851
Cash........................................................................................................... 90,906
Receivable for investments sold................................................................................ 1,047,369
Receivable for Fund shares sold................................................................................ 62,091
Unamortized organization expense............................................................................... 28,976
Dividends and interest receivable.............................................................................. 13,666
Prepaid expenses and other assets.............................................................................. 6,936
Total assets............................................................................................. 34,544,405
LIABILITIES:
Payable for investments purchased.............................................................................. 816,035
Accrued expenses............................................................................................... 116,546
Payable for Fund shares repurchased............................................................................ 34,093
Accrued advisory fee........................................................................................... 5,924
Distribution fee payable....................................................................................... 3,001
Total liabilities........................................................................................ 975,599
NET ASSETS........................................................................................................ $33,568,806
NET ASSETS CONSIST OF:
Paid-in capital................................................................................................ $35,453,010
Accumulated net investment loss................................................................................ (328)
Accumulated net realized loss on investment and foreign currency transactions.................................. (1,847,021)
Net unrealized depreciation of investments and foreign currencies.............................................. (36,855)
Net assets.................................................................................................. $33,568,806
CALCULATION OF NET ASSET VALUE AND MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares ($1,644,735 194,446 shares of beneficial interest outstanding).................................. $ 8.46
Sales charge -- 4.75% of offering price........................................................................ .42
Maximum offering price................................................................................... $8.88
Class B Shares ($2,880,916 343,322 shares of beneficial interest outstanding).................................. $8.39
Class C Shares ($84,587 10,089 shares of beneficial interest outstanding)...................................... $8.38
Class Y Shares ($28,958,568 3,413,310 shares of beneficial interest outstanding)............................... $8.48
</TABLE>
See accompanying notes to financial statements.
8
<PAGE>
EVERGREEN EMERGING MARKETS GROWTH FUND
(Photo of Buddha statues appears here)
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1996
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding taxes of $27,246)............................................ $ 255,316
Interest........................................................................................... 112,351
Total investment income......................................................................... 367,667
EXPENSES:
Advisory fee....................................................................................... $ 342,379
Administration personnel and services fees......................................................... 11,191
Distribution fee -- Class A Shares................................................................. 3,883
Distribution fee -- Class B Shares................................................................. 19,319
Shareholder services fee -- Class B Shares......................................................... 6,440
Distribution fee -- Class C Shares................................................................. 493
Shareholder services fee -- Class C Shares......................................................... 165
Custodian fee...................................................................................... 154,655
Registration and filing fees....................................................................... 77,173
Transfer agent fee................................................................................. 64,053
Professional fees.................................................................................. 42,550
Reports and notices to shareholders................................................................ 28,528
Deferred organizational expense.................................................................... 14,275
Insurance.......................................................................................... 3,576
Trustees' fees and expenses........................................................................ 1,692
Miscellaneous...................................................................................... 7,484
Total expenses................................................................................ 777,856
Less: Fee waivers and expense reimbursments........................................................ (405,868)
Net expenses................................................................................. 371,988
Net investment loss................................................................................... (4,321)
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS AND FOREIGN CURRENCIES:
Net realized loss on investment transactions....................................................... (71,875)
Net realized loss on foreign currency transactions................................................. (24,761)
Net change in unrealized appreciation (depreciation) of investments and foreign currencies......... (38,536)
Net loss on investments and foreign currencies........................................................ (135,172)
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS.................................................. $(139,493)
</TABLE>
See accompanying notes to financial statements.
9
<PAGE>
EVERGREEN EMERGING MARKETS GROWTH FUND
(Photo of Buddha statues appears here)
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR TEN MONTHS*
ENDED ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income (loss)............................................................. $ (4,321) $ 67,179
Net realized loss on investment transactions............................................. (71,875) (1,677,645)
Net realized gain (loss) on foreign currency transactions................................ (24,761) 33,753
Net change in unrealized appreciation (depreciation) of investments and
foreign currencies.................................................................... (38,536) 1,470,045
Net decrease in net assets resulting from operations.................................. (139,493) (106,668)
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME:
Class A Shares........................................................................... (6,742) --
Class Y Shares........................................................................... (81,928) --
Total distributions to shareholders from net investment income..................... (88,670) --
FUND SHARE TRANSACTIONS:
Proceeds from shares sold................................................................ 24,970,951 5,594,810
Proceeds from reinvestment of distributions.............................................. 22,693 --
Payment for shares redeemed.............................................................. (3,663,950) (1,444,320)
Net increase resulting from Fund share transactions................................... 21,329,694 4,150,490
Net increase in net assets............................................................ 21,101,531 4,043,822
NET ASSETS:
Beginning of period...................................................................... 12,467,275 8,423,453
End of period (including undistributed net investment income (accumulated net investment
loss) of ($328) and $100,254, respectively)............................................ $ 33,568,806 $ 12,467,275
</TABLE>
* The Fund changed its fiscal year end from December 31 to October 31.
See accompanying notes to financial statements.
10
<PAGE>
EVERGREEN EMERGING MARKETS GROWTH FUND
(Photo of Buddha statues appears here)
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES
SEPTEMBER 6,
YEAR TEN MONTHS 1994* YEAR TEN MONTHS
ENDED ENDED THROUGH ENDED ENDED
OCTOBER 31, OCTOBER 31, DECEMBER 31, OCTOBER 31, OCTOBER 31,
1996++ 1995# 1994 1996++ 1995#
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period.................... $7.90 $8.17 $10.00 $7.85 $8.16
Income (loss) from investment operations:
Net investment income (loss).......................... (.01) .05 -- (.08) .01
Net realized and unrealized gain (loss) on investments
and foreign currency transactions................... .62 (.32) (1.83) .62 (.32)
Total from investment operations.................... .61 (.27) (1.83) .54 (.31)
Less distributions to shareholders from net investment
income................................................ (.05) -- -- -- --
Net asset value, end of period.......................... $8.46 $7.90 $8.17 $8.39 $7.85
TOTAL RETURN+........................................... 7.7% (3.3%) (18.3%) 6.9% (3.8%)
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted)............... $1,645 $1,117 $867 $2,881 $1,940
Ratios to average net assets:
Expenses**............................................ 1.74% 1.73%++ 1.78%++ 2.50% 2.48%++
Net investment income (loss)**........................ (.09%) .76%++ (.12%)++ (.87%) .03%++
Portfolio turnover rate................................. 107% 65% 17% 107% 65%
Average commission rate paid............................ $ .0103 N/A N/A $ .0103 N/A
<CAPTION>
CLASS B SHARES
SEPTEMBER 6,
1994*
THROUGH
DECEMBER 31,
1994
<S> <C>
PER SHARE DATA:
Net asset value, beginning of period.................... $10.00
Income (loss) from investment operations:
Net investment income (loss).......................... (.02)
Net realized and unrealized gain (loss) on investments
and foreign currency transactions................... (1.82)
Total from investment operations.................... (1.84)
Less distributions to shareholders from net investment
income................................................ --
Net asset value, end of period.......................... $8.16
TOTAL RETURN+........................................... (18.4%)
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted)............... $1,589
Ratios to average net assets:
Expenses**............................................ 2.53%++
Net investment income (loss)**........................ (.84%)++
Portfolio turnover rate................................. 17%
Average commission rate paid............................ N/A
</TABLE>
++ Per share data is calculated based on average shares outstanding during the
period.
* Commencement of operations.
# The Fund changed its year end from December 31 to October 31.
+ Total return is calculated on net asset value per share for the periods
indicated and is not annualized. Initial sales charge or contingent deferred
sales charge is not reflected.
++ Annualized.
** Net of expense waivers and reimbursements. If the Fund had borne all expenses
that were assumed or waived by the investment adviser, the annualized ratios
of expenses and net investment loss to average net assets, exclusive of any
applicable state expense limitations, would have been the following:
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES
SEPTEMBER 6,
YEAR TEN MONTHS 1994* YEAR TEN MONTHS
ENDED ENDED THROUGH ENDED ENDED
OCTOBER 31, OCTOBER 31, DECEMBER 31, OCTOBER 31, OCTOBER 31,
1996 1995# 1994 1996 1995#
<S> <C> <C> <C> <C> <C>
Expenses............................................... 3.58% 3.97% 3.96% 4.34% 4.72%
Net investment loss.................................... (1.93%) (1.48%) (2.30%) (2.71%) (2.21%)
<CAPTION>
CLASS B SHARES
SEPTEMBER 6,
1994*
THROUGH
DECEMBER 31,
1994
<S> <C>
Expenses............................................... 4.71%
Net investment loss.................................... (3.02%)
</TABLE>
See accompanying notes to financial statements.
11
<PAGE>
EVERGREEN EMERGING MARKETS GROWTH FUND
(Photo of Buddha statues appears here)
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS C SHARES CLASS Y SHARES
SEPTEMBER 6,
YEAR TEN MONTHS 1994* YEAR TEN MONTHS
ENDED ENDED THROUGH ENDED ENDED
OCTOBER 31, OCTOBER 31, DECEMBER 31, OCTOBER 31, OCTOBER 31,
1996++ 1995# 1994 1996++ 1995#
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period................... $7.84 $8.16 $10.00 $7.92 $8.17
Income (loss) from investment operations:
Net investment income (loss)......................... (.08) .02 (.02) .01 .05
Net realized and unrealized gain (loss) on
investments and foreign currency transactions...... .62 (.34) (1.82) .62 (.30)
Total from investment operations................... .54 (.32) (1.84) .63 (.25)
Less distributions to shareholders from net investment
income............................................... -- -- -- (.07) --
Net asset value, end of period......................... $8.38 $7.84 $8.16 $8.48 $7.92
TOTAL RETURN+.......................................... 6.9% (3.9%) (18.4%) 7.9% (3.1%)
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted).............. $85 $56 $89 $28,959 $9,355
Ratios to average net assets:
Expenses**........................................... 2.51% 2.50%++ 2.53%++ 1.50% 1.48%++
Net investment income (loss)**....................... (.91%) .72%++ (.82%)++ .11% .94%++
Portfolio turnover rate................................ 107% 65% 17% 107% 65%
Average commission rate paid........................... $.0103 N/A N/A $.0103 N/A
<CAPTION>
CLASS Y SHARES
SEPTEMBER 6,
1994*
THROUGH
DECEMBER 31,
1994
<S> <C>
PER SHARE DATA:
Net asset value, beginning of period................... $10.00
Income (loss) from investment operations:
Net investment income (loss)......................... .01
Net realized and unrealized gain (loss) on
investments and foreign currency transactions...... (1.84)
Total from investment operations................... (1.83)
Less distributions to shareholders from net investment
income............................................... --
Net asset value, end of period......................... $8.17
TOTAL RETURN+.......................................... (18.3%)
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted).............. $5,878
Ratios to average net assets:
Expenses**........................................... 1.53%++
Net investment income (loss)**....................... .43%++
Portfolio turnover rate................................ 17%
Average commission rate paid........................... N/A
</TABLE>
++ Per share data is calculated based on average shares outstanding during the
period.
* Commencement of operations.
# The Fund changed its year end from December 31 to October 31.
+ Total return is calculated on net asset value per share for the periods
indicated and is not annualized. Contingent deferred sales charge is not
reflected.
++ Annualized.
** Net of expense waivers and reimbursements. If the Fund had borne all expenses
that were assumed or waived by the investment adviser, the annualized ratios
of expenses and net investment loss to average net assets, exclusive of any
applicable state expense limitations, would have been the following:
<TABLE>
<CAPTION>
CLASS C SHARES CLASS Y SHARES
SEPTEMBER 6,
YEAR TEN MONTHS 1994* YEAR TEN MONTHS
ENDED ENDED THROUGH ENDED ENDED
OCTOBER 31, OCTOBER 31, DECEMBER 31, OCTOBER 31, OCTOBER 31,
1996 1995# 1994 1996 1995#
<S> <C> <C> <C> <C> <C>
Expenses............................................... 4.31% 4.74% 4.71% 3.27% 3.72%
Net investment loss.................................... (2.71%) (1.52%) (3.00%) (1.66%) (1.30%)
<CAPTION>
CLASS Y SHARES
SEPTEMBER 6,
1994*
THROUGH
DECEMBER 31,
1994
<S> <C>
Expenses............................................... 3.71%
Net investment loss.................................... (1.75%)
</TABLE>
See accompanying notes to financial statements.
12
<PAGE>
EVERGREEN GLOBAL LEADERS FUND
(Photo of Global Leaders Fund logo appears here)
A REPORT FROM YOUR
PORTFOLIO MANAGERS
STEPHEN A. LIEBER
EDWIN D. MISKA
We are pleased to present the first annual report for (Photo of
Evergreen Global Leaders Fund. For the twelve months ended Stephen A.
October 31, 1996, the Fund's total return was +19.6%* (Class Lieber appears
Y, no-load shares) which compares favorably with the global here)
indexes. For the same time period, the total return for the
MSCI World Index** was +16.3%, the MSCI EAFE Index** returned (Photo of
+10.5%, and the total return for the Lipper Global Funds Edwin D.
average of the 153 global funds tracked by Lipper during that Miska appears
time was 15.5%***. (For additional performance information, here)
please see page 17.) The Fund's strategy of seeking out what
we believe to be the 100 best companies in the world was
successfully implemented against a backdrop of an environment
that was generally amenable to equity investing within the
world's most industrialized nations. Our investment discipline
concentrated on companies which have been and are consistently
profitable, have a strong pattern of earnings growth, both
historical and prospective, and which have provided the
highest returns on shareholders' equity. These characteristics
when reviewed on a global, country and industry perspective
distinguish the true corporate "leaders" from the rest. We
also continually monitor global macroeconomic events and
financial conditions to optimize country allocations and
currency exposures. This strategy of a disciplined stock
selection process combined with a thorough macroeconomic
review has been the hallmark of your Fund, and will continue
to be so, as we utilize this diligent, structured approach
to seek maximized shareholder returns.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
INTERNATIONAL INVESTING MAY INVOLVE CERTAIN ADDITIONAL RISKS SUCH AS CURRENCY
FLUCTUATIONS, ECONOMIC AND POLITICAL INSTABILITY, AND DIFFERENCES IN ACCOUNTING
STANDARDS.
* PERFORMANCE FIGURES INCLUDE REINVESTMENT OF INCOME DIVIDEND AND CAPITAL GAIN
DISTRIBUTIONS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE. INVESTORS'
SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
THE FUND'S CLASS A SHARES, CLASS B SHARES AND CLASS C SHARES WITHIN THE FIRST
YEAR OF PURCHASE WERE NOT IN EXISTENCE FOR THE FULL 12 MONTHS UNDER REVIEW.
PLEASE SEE THE PROSPECTUS FOR ADDITIONAL INFORMATION REGARDING THESE CLASSES OF
SHARES AND THEIR APPLICABLE SALES CHARGES.
DURING THE PERIOD UNDER REVIEW, THE ADVISER WAIVED A PORTION OF ITS ADVISORY
FEE. HAD FEE NOT BEEN WAIVED, PERFORMANCE WOULD HAVE BEEN LOWER. FEE WAIVER MAY
BE REVISED AT ANY TIME. FOR ADDITIONAL INFORMATION ON FEE WAIVER, PLEASE SEE THE
PROSPECTUS.
** MSCI WORLD INDEX IS AN UNMANAGED INDEX OF SELECTED SECURITIES.
MSCI EAFE INDEX IS A STANDARD UNMANAGED FOREIGN SECURITIES INDEX REPRESENTING
1,112 SECURITIES FROM 20 DEVELOPED COUNTRIES IN EUROPE, AUSTRALIA, AND THE FAR
EAST AS MONITORED BY MORGAN STANLEY CAPITAL INTERNATIONAL. ALL COUNTRY RETURNS
DIFFER FROM INDEX RETURNS BECAUSE THEY REPRESENT TOTAL STOCK MARKET RETURNS AS
CALCULATED BY MORGAN STANLEY CAPITAL INTERNATIONAL. AN INVESTMENT CAN NOT BE
MADE IN AN INDEX.
*** SOURCE: LIPPER ANALYTICAL SERVICES, INC., AN INDEPENDENT MUTUAL FUNDS
PERFORMANCE MONITOR. LIPPER PERFORMANCE FIGURE DOES NOT INCLUDE SALES CHARGES,
AND IF INCLUDED, PERFORMANCE WOULD BE LOWER.
13
<PAGE>
EVERGREEN GLOBAL LEADERS FUND
(Photo of Global Leaders Fund logo appears here)
A REPORT FROM YOUR
PORTFOLIO MANAGERS -- (CONTINUED)
PERFORMANCE REVIEW
World equity markets managed solid gains during the period under review,
despite periods of volatility in March and July due to concerns over rising
interest rates and inflation. A concentrating effect took place during the year,
as investors became increasingly narrow in their focus, favoring a smaller group
of selective larger, high-quality, high-visibility investments with no liquidity
constraints. These companies, many of which are positions in your Fund, rose to
new highs, discarding any previous levels of undervaluation. This helped
contribute to a strong performance, particularly in the U.S. portion of the
portfolio which rose 31.5%.
Our U.S. allocation at fiscal year-end stood at 31.9% of the Fund's net
assets down from 33.6% at midyear. The broadly diversified U. S. portfolio of 36
issues had some notable performers: Gillette Co., +53.1%; General Electric Co.,
+52.2%; Intel Corp., +51.5%; Federal National Mortgage Association, +42.8%; Coca
Cola Co., +40.9%; Microsoft Corp., +37.1%; and Home Depot, Inc., +37.1%. While
our enthusiasm for these issues and for the U.S. market as a whole has been
somewhat tempered by their steep rise, the high quality and consistent
predictability of these companies' earnings flows should continue to result in
premium valuations relative to the market as a whole. We initiated new purchases
when significant opportunities arose. Our recent buying activity is indicative:
SunAmerica, Inc., purchased June 1996, +31.7%; Dover Corp., purchased September
1996, +19.6%; MBNA Corp., purchased September 1996, +13%; PPG Industries, Inc.,
purchased August 1996, +12.7% and Cisco Systems, Inc., purchased August 1996,
+12%.
We have also not been reluctant to take profits or realize small losses when
there have been any short-term negative catalysts or changes in fundamental
status or valuation. Sales during the fiscal year included the shares of Compaq
Computer Corp. for a gain of 16.2% (held 3 months); Emerson Electric Co. for a
gain of 5.1% (held 6 months); Albertson's, Inc., for a loss of 12.4% (held 7
months); and Quaker Oats Co. for a loss of 9.5% (held 8 months). In the coming
months, our focus will remain on the "leaders" in their respective categories,
as strongly positioned, growing, profitable companies should continue to
stimulate a positive response from investors. We will be vigilant to adjust our
asset allocation in response to changes in fundamentals or deterioration in
macroeconomic conditions.
For the rest of the world, our performance was acceptable relative to the
market averages but below that in absolute terms to our U.S. allocation. Our
international segment as a whole returned 14.8% which exceeded the return of the
MSCI EAFE Index. At fiscal year-end, our diversified international segment
totaled 73 different companies in 16 countries. Our overall foreign exposure
totaled 62.8% of the Fund's net assets. It should be noted that returns on
currency played a significant role in reducing investment performance, as the
U.S. dollar appreciated significantly against many of the world's major
currencies, most notably: 7% versus the German mark and 10% versus the Japanese
yen, our top two foreign exposures. Our most significant non-U.S. country
contribution came from Canada, (at 5.8% of net assets) which saw a rebound in
industrial production and benefited from low inflation. Our holdings saw
dramatic stock appreciation: Canadian Natural Resources, Ltd., a natural gas
producer, benefiting from strong cash flow, good acquisitions and improved
natural gas pricing, rose 27.5%; DuPont Canada, Inc., a manufacturer of
specialty chemicals, films and fibers rose 26.5%, and Bombardier, Inc. a diverse
global manufacturer in three growing areas: mass transit, motorized consumer
products and business aircraft, rose 16%.
14
<PAGE>
EVERGREEN GLOBAL LEADERS FUND
(Photo of Global Leaders Fund logo appears here)
Our largest non-U.S. country exposures: Germany at 7.9% of net assets and
Japan at 7.4% posted mostly disappointing returns. After several "false dawns",
Germany appears poised to start on an economic recovery aided by the advent of
corporate restructurings and the return of the German investor. For most of 1996
though, growth remained weak, consumer demand depressed, and unemployment high.
The barriers to restructure businesses and make them more profitable have only
begun to come down, and it will be some time before results will begin to be
seen at the bottom line. While German stock performance was uninspired, there
were some standouts: RWE AG, the large energy/utility conglomerate and the
Fund's largest overall holding, rose 14.2% since our initial investment in
November 1995. RWE has begun restructuring its vast holdings, and is a strong
candidate for a stock buy-back program. Pharmaceutical firm ALTANA AG likewise
rose 30.4%. Hugo Boss AG, a global designer, manufacturer and retailer of fine
men's fashions also posted strong performance, up 37.7% since our initial
investment in November 1995.
For Japan, despite low interest rates (discount rate of 0.50%), recovery
remains illusive, and the recent weakness in their markets has undermined
sentiment further, indicating that another dip into recession is not out of the
question. Our low relative weighting toward Japan reflects the weak fundamentals
and poor dollar exchange trends. Our two largest issues, Seven-Eleven Japan Co.,
Ltd., -10.5% and Nintendo Co., Ltd., -28.5%, despite good operating results and
new products have not been able to escape the markets negative bias. We are
confident that 1997 should bring a recovery, and will be vigilant to adjust
our allocation as evidence of an economic revival presents itself.
Much of the Fund's outperformance can be credited to the smaller countries of
the world, where innovative, well-managed companies have posted outstanding
results in the face of an ever competitive global marketplace. Strong
performance was achieved by our holdings in Sweden, United Kingdom, Hong Kong,
and the Netherlands from a broad array of companies and industries. In Sweden,
with a weighting of 3.3%, our allocation benefited from low interest rates and
higher consumer spending. Shares of clothing retailer Hennes & Mauritz AB rose
46.6%. Pharmaceutical giant Astra AB rose 33.3%, and industrial conglomerate ABB
AB ADS rose 27.8%. From the United Kingdom, where our weighting is 6.8%, our
financial-issue-tilted portfolio benefited from a strong economic upturn
stimulated by lower rates. Our positions in these interest-sensitive areas
benefited handsomely as demand for credit increased: Lloyds TSB Group Plc,
+17.7%; Legal & General Group Plc, +12.6% and Prudential Corp. Plc, +11.0%. From
Hong Kong, where our allocation is 4.7%, the strong performance arose from the
continued demand for real estate development in preparation for re-unification
with China. Shares of real estate plays Kumagai Gumi Ltd., realized 26.8%,
Henderson Land Development Co., Ltd., rose 16%, Tai Cheung Holdings Ltd.
realized 13.6%, Cheung Kong Holdings, Ltd. rose 12.7% and New Asia Realty Ltd.
realized 11.0%. The Netherlands (weighting: 3.8%) provided strong operating
results from the large specialty publishing firms which have a growing share of
the world's printed magazines, books and professional journals. Shares of
Wolters Kluwer NV, a scientific and legal publisher rose 41.0% since November
1995; Elsevier NV in which we own both ordinary shares and American Depositary
Receipts (ADRs) rose 13.7% and publishing and broadcasting company VNU, rose
11.6% since our purchase in May 1996.
15
<PAGE>
EVERGREEN GLOBAL LEADERS FUND
(Photo of Global Leaders Fund logo appears here)
A REPORT FROM YOUR
PORTFOLIO MANAGERS -- (CONTINUED)
OUTLOOK AND CONCLUSION
The world equity markets have managed solid gains despite bouts of increased
market volatility caused by rising valuations, uncertainties over globally
higher interest rates and re-emerging fears of inflation. Economic indicators
continue to point toward continued, yet perhaps sluggish, growth ahead for the
United States economy, with improving trends across Europe and the Far East.
This environment will be difficult, but may benefit those companies which are
able to react quickly and operate successfully in a more competitive,
multi-national marketplace. The focus of the Fund will continue to be on the
outstanding profit growth opportunities of the world's leading corporations.
Quality of the issues purchased will remain foremost, with holdings based
consistency of results and the ability to deliver continued bottom line
performance.
We welcome our new shareholders who have chosen to utilize our unique product
as part of their overall investment program. We believe our long-term approach
to global investing is sound, focusing on only the best the world's markets have
to offer, through a diversified portfolio. As technological advances, political
and economic reforms, and pro-business policies continue to bring the world
closer, heightening competition for products and services, only the finest
companies will be successful. Our disciplined approach will continue to
highlight those which are. We believe this will lead to continued long-term
capital appreciation.
We thank you for your support and appreciate the enthusiasm that greeted
Evergreen Global Leaders Fund in its inaugural year. We look forward to the
challenge of delivering quality long-term investment results for many years to
come.
16
<PAGE>
EVERGREEN GLOBAL LEADERS FUND
(Photo of Global Leaders Fund logo appears here)
RESULTS TO DATE
PERFORMANCE OF $10,000 INVESTED IN THE
EVERGREEN GLOBAL LEADERS FUND
The graphs below compare a $10,000 investment in the Evergreen Global
Leaders Fund (Class A, Class B, Class C and Class Y Shares) with a similar
investment in the MSCI World Index ("Index").
[CHARTS TO FOLLOW FOR CLASS A, B, C AND Y SHARES. Customer to
provide plot points.]
<TABLE>
<CAPTION>
6/3/96* 6/30/96 9/30/96 10/31/96
<S> <C> <C> <C> <C>
CLASS A
TOTAL RETURN
SINCE INCEPTION=0.5%
Evergreen Global Leaders Fund
MSCI World Index
CLASS B
TOTAL RETURN
SINCE INCEPTION=0.1%
Evergreen Global Leaders Fund
MSCI World Index
CLASS C
TOTAL RETURN
SINCE INCEPTION=4.0%
Evergreen Global Leaders Fund
MSCI World Index
CLASS Y
TOTAL RETURN=19.6%
Evergreen Global Leaders Fund
MSCI World Index
</TABLE>
*Commencement of class operations.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE RESULTS. MUTUAL FUNDS
ARE
NOT OBLIGATIONS OF, OR GUARANTEED BY, ANY BANK AND ARE NOT FEDERALLY INSURED.
For the purposes of the graphs and the accompanying tables, it has been
assumed that (a) the maximum sales charge of 4.75% was deducted from the initial
$10,000 investment in Class A Shares; (b) the maximum applicable contingent
deferred sales charge was deducted from the value of the investment in Class B
and Class C Shares, assuming full redemption on October 31, 1996; (c) all
recurring fees (including investment advisory fees) were deducted; and (d) all
dividends and distributions were reinvested.
The index is unmanaged and includes the reinvestment of income, but does
not reflect the payment of transaction costs and advisory fees associated with
an investment in the Fund.
17
<PAGE>
EVERGREEN GLOBAL LEADERS FUND
(Photo of Global Leaders Fund logo appears here)
STATEMENT OF INVESTMENTS
OCTOBER 31, 1996
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
COMMON STOCKS -- 94.7%
AUSTRALIA -- 1.0%
139,924 Incitec, Ltd........................ $ 720,915
BELGIUM -- 3.5%
5,000* Barco NV............................ 822,379
2,380 Colruyt SA.......................... 1,026,323
350 UCB SA.............................. 771,481
2,620,183
CANADA -- 5.8%
110,000 Bombardier, Inc..................... 1,772,869
45,000* Canadian Natural Resources, Ltd..... 1,116,438
55,000 DuPont Canada, Inc.................. 1,374,795
4,264,102
DENMARK -- .7%
4,000 Sophus Berendsen A/S................ 494,125
FRANCE -- 6.1%
4,400 Castorama Dubois Investisse......... 753,056
6,500 LAPEYRE SA.......................... 318,103
4,600 Promodes, Inc....................... 1,241,663
800 Sagem Co. SA........................ 497,604
4,700 SEB SA.............................. 951,491
7,000 Television Francaise................ 744,841
4,506,758
GERMANY -- 7.9%
300 ALTANA AG........................... 239,699
550 Hugo Boss AG........................ 664,620
900 Rheinelektra AG..................... 725,039
68,300 RWE AG.............................. 2,811,557
7,200 SAP AG.............................. 974,643
1,000 Suedzucker AG....................... 449,023
5,864,581
HONG KONG -- 4.7%
92,000 Cheung Kong Holdings, Ltd........... 737,694
110,000 China Light & Power Co., Ltd........ 510,722
380,000 Giordano International, Ltd......... 383,332
52,400 Henderson China Holdings, Ltd....... 118,595
85,000 Henderson Land
Development Co., Ltd................ 755,768
55,000 Hong Kong Telecommunications, Ltd.
ADS................................. 969,375
3,475,486
ITALY -- 4.0%
29,000 Benneton Group SpA ADS.............. 674,250
3,000 Fila Holdings SpA ADS............... 216,000
17,100 Industrie Natuzzi SpA ADS........... 775,912
<CAPTION>
SHARES VALUE
<C> <S> <C>
</TABLE>
ITALY -- 4.0% -- CONTINUED
<TABLE>
<C> <S> <C>
21,000 Luxottica Group SpA ADS............. $ 1,333,500
2,999,662
JAPAN -- 7.4%
85,000 Mitsui Soko Co...................... 657,723
27,000 Nintendo Co., Ltd................... 1,726,406
68,000 Nippon Chemical..................... 645,031
42,400 Seven-Eleven Japan Co., Ltd......... 2,465,311
5,494,471
MALAYSIA -- 2.5%
36,000 AMMB Holdings Berhad................ 243,657
85,000 DCB Holdings Berhad................. 291,015
50,000 Malayan Banking Berhad.............. 494,756
10,000 Malaysian Oxygen Berhad............. 48,684
16,000 Nestle Berhad....................... 125,391
39,000 Resorts World Berhad................ 223,827
57,000 United Engineers Ltd. Berhad........ 451,217
1,878,547
NETHERLANDS -- 3.8%
14,000 Elsevier NV......................... 232,687
15,300 Elsevier NV ADS..................... 514,462
11,200 Getronics NV........................ 275,264
3,800 IHC Caland NV....................... 212,094
4,000 Nutricia Verenigde Bedrijven NV..... 561,089
26,000 VNU................................. 471,975
4,300 Wolters Kluwer NV................... 552,738
2,820,309
NEW ZEALAND -- 1.4%
12,400 Telecom Corp. of
New Zealand Ltd. ADS................ 1,032,300
SINGAPORE -- .8%
35,000 Singapore Press Holdings, Ltd....... 581,470
SPAIN -- 3.1%
25,000 Centros Comerciales Pryca, SA....... 574,082
17,500 Empresa Nacional de
Electricdad ADS..................... 1,076,250
18,700 Repsol, SA ADS...................... 610,088
2,260,420
SWEDEN -- 3.3%
6,000 ABB AB ADS.......................... 669,750
2,600 Astra AB............................ 119,409
31,500 Astra AB ADS........................ 1,445,062
1,700 Hennes & Mauritz AB................. 225,178
2,459,399
</TABLE>
18
<PAGE>
EVERGREEN GLOBAL LEADERS FUND
(Photo of Global Leaders Fund logo appears here)
STATEMENT OF INVESTMENTS -- (CONTINUED)
OCTOBER 31, 1996
<TABLE>
<CAPTION>
<C> <S>
SHARES VALUE
</TABLE>
COMMON STOCKS -- 94.7% -- CONTINUED
<TABLE>
<C> <S> <C>
UNITED KINGDOM -- 6.8%
14,560 Argos Plc........................... $ 182,829
12,500 BAT Industries Plc ADS.............. 173,438
31,400 BTR Plc............................. 131,600
5,800 Carlton Communications Plc ADS...... 236,350
29,000 Chubb Security Plc.................. 148,682
20,400 Granada Group Plc................... 293,848
47,750 Legal & General Group Plc........... 251,807
75,000 Lloyds TSB Group Plc................ 475,464
65,000 Prudential Corp. Plc................ 491,943
55,100 Rentokil Group Plc.................. 369,934
8,000 Reuters Holdings Plc ADS............ 595,000
10,100 SmithKline Beecham Plc ADS.......... 632,512
40,000 TI Group Plc........................ 370,117
17,700 United News & Media Plc............. 194,170
8,500 Vodafone Group Plc ADS.............. 328,312
20,300 Wolseley Plc........................ 157,603
5,033,609
UNITED STATES -- 31.9%
7,600* Amgen, Inc.......................... 465,975
33,000 AT&T Corp........................... 1,150,875
5,800 Avon Products, Inc.................. 314,650
10,000 Callaway Golf Co.................... 306,250
16,500* Cisco Systems, Inc.................. 1,020,937
17,500 Coca Cola Co. (The)................. 883,750
11,750 Computer Associates
International, Inc.................. 694,719
17,750* CUC International, Inc.............. 434,875
12,000 Dana Corp........................... 355,500
10,000 Deere & Co.......................... 417,500
11,900 Disney Walt Co. (The)............... 783,912
9,500 Dover Corp.......................... 488,063
27,000 Federal National Mortgage
Association......................... 1,056,375
10,000 Gap, Inc............................ 290,000
22,500 General Electric Co................. 2,176,875
8,000 Gillette Co. (The).................. 598,000
8,800 Goodyear Tire & Rubber Co. (The).... 403,700
12,000 Home Depot, Inc. (The).............. 657,000
11,600 Intel Corp.......................... 1,274,550
10,694 Lucent Technologies, Inc............ 502,618
<CAPTION>
SHARES VALUE
<C> <S> <C>
</TABLE>
UNITED STATES -- 31.9% -- CONTINUED
<TABLE>
<C> <S> <C>
8,500 Marriott International, Inc......... $ 483,437
3,200 Marsh & McLennan Co., Inc........... 333,200
9,000 MBNA Corp........................... 339,750
15,000 McDonalds Corp...................... 665,625
19,500 Merck & Co., Inc.................... 1,445,437
3,200 Merrill Lynch & Co., Inc............ 224,800
6,000* Microsoft Corp...................... 823,500
9,000 Monsanto Co......................... 356,625
11,000 Norwest Corp........................ 482,625
8,500 PPG Industries, Inc................. 484,500
7,000 Procter & Gamble Co. (The).......... 693,000
10,000 Schering-Plough Corp................ 640,000
15,000 Schwab (Charles) & Co., Inc......... 375,000
3,400 Student Loan Marketing Corp......... 281,350
11,000 SunAmerica, Inc..................... 412,500
50,000 Wal-Mart Stores, Inc................ 1,331,250
23,648,723
TOTAL COMMON STOCKS
(COST $66,627,840)............. 70,155,060
<CAPTION>
PRINCIPAL
AMOUNT
<C> <S> <C>
SHORT-TERM INVESTMENTS -- 6.2%
$3,650,000 Federal Home Loan Mortgage Corp.
5.16%-5.19%, 11/5/96-11/21/96....... 3,641,577
950,000 Federal National Mortgage
Association
5.18%, 11/26/96..................... 946,583
TOTAL SHORT-TERM INVESTMENTS
(COST $4,588,160).............. 4,588,160
</TABLE>
<TABLE>
<C> <S> <C> <C>
TOTAL INVESTMENTS --
(COST $71,216,000)....... 100.9% 74,743,220
OTHER ASSETS AND
LIABILITIES -- NET....... (.9) (660,036)
NET ASSETS --............... 100.0% $74,083,184
</TABLE>
* Non-income producing securities
ADS -- American Depositary Shares
See accompanying notes to financial statements.
19
<PAGE>
EVERGREEN GLOBAL LEADERS FUND
(Photo of Global Leaders Fund logo appears here)
INDUSTRY DIVERSIFICATION
OCTOBER 31, 1996
<TABLE>
<CAPTION>
PERCENTAGE OF
NET ASSETS
<S> <C>
Banks.............................................................................................................. 2.4%
Building, Construction & Furnishings............................................................................... 2.3
Chemicals.......................................................................................................... 5.2
Consumer Products & Services....................................................................................... 7.4
Diversified Companies.............................................................................................. 7.1
Electrical Equipment & Electronics................................................................................. 13.9
Energy............................................................................................................. 6.4
Finance & Insurance................................................................................................ 5.4
Food Products...................................................................................................... 3.6
Health Care Products & Services.................................................................................... 9.3
Industrial Specialty Products & Services........................................................................... 2.7
Publishing, Broadcasting & Entertainment........................................................................... 7.3
Real Estate........................................................................................................ 3.6
Retailing & Wholesale.............................................................................................. 12.7
Telecommunication Services & Equipment............................................................................. 5.4
Total Long-Term Investments.................................................................................. 94.7
Short-Term Investments............................................................................................. 6.2
Other Assets and Liabilities -- net................................................................................ (.9)
Net Assets................................................................................................... 100.0%
</TABLE>
20
<PAGE>
EVERGREEN GLOBAL LEADERS FUND
(Photo of Global Leaders Fund logo appears here)
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1996
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments at value (identified cost $71,216,000)............................................................. $74,743,220
Foreign currencies at value (identified cost $7,424)........................................................... 7,429
Cash........................................................................................................... 34,064
Receivable for Fund shares sold................................................................................ 1,488,265
Receivable for foreign currencies sold......................................................................... 129,449
Dividends receivable........................................................................................... 112,236
Prepaid expenses and other assets.............................................................................. 70,044
Unamortized organization expense............................................................................... 31,654
Total assets............................................................................................. 76,616,361
LIABILITIES:
Payable for investments purchased.............................................................................. 2,222,613
Payable for foreign currencies purchased....................................................................... 129,449
Accrued expenses............................................................................................... 87,418
Distribution fee payable....................................................................................... 45,036
Payable for Fund shares purchased.............................................................................. 34,087
Accrued advisory fee........................................................................................... 14,574
Total liabilities........................................................................................ 2,533,177
NET ASSETS........................................................................................................ $74,083,184
NET ASSETS CONSIST OF:
Paid-in capital................................................................................................ $70,494,736
Distributions in excess of net investment income............................................................... (2,299)
Net realized gain on investment and foreign currency transactions.............................................. 62,323
Net unrealized appreciation of investments and foreign currencies.............................................. 3,528,424
Net assets............................................................................................... $74,083,184
CALCULATION OF NET ASSET VALUE AND MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares ($12,975,171 1,089,521 shares of beneficial interest outstanding)............................... $ 11.91
Sales charge -- 4.75% of offering price........................................................................ .59
Maximum offering price...................................................................................... $ 12.50
Class B Shares ($41,947,533 3,534,772 shares of beneficial interest outstanding)............................... $ 11.87
Class C Shares ($553,875 46,694 shares of beneficial interest outstanding)..................................... $ 11.86
Class Y Shares ($18,606,605 1,562,068 shares of beneficial interest outstanding)............................... $ 11.91
</TABLE>
See accompanying notes to financial statements.
21
<PAGE>
EVERGREEN GLOBAL LEADERS FUND
(Photo of Global Leaders Fund logo appears here)
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1996
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding taxes of $30,108)........................................... $ 313,126
Interest.......................................................................................... 96,339
Total investment income........................................................................ 409,465
EXPENSES:
Advisory fee...................................................................................... $ 199,941
Administration personnel and services fees........................................................ 9,998
Distribution fee -- Class A Shares................................................................ 7,416
Distribution fee -- Class B Shares................................................................ 64,024
Shareholder services fee -- Class B Shares........................................................ 21,341
Distribution fee -- Class C Shares................................................................ 837
Shareholder services fee -- Class C Shares........................................................ 279
Custodian fee..................................................................................... 103,401
Registration and filing fees...................................................................... 50,207
Transfer agent fee................................................................................ 41,673
Professional fees................................................................................. 22,975
Reports and notices to shareholders............................................................... 12,925
Deferred organizational expense................................................................... 7,913
Insurance......................................................................................... 5,672
Trustees' fees and expenses....................................................................... 3,242
Miscellaneous..................................................................................... 2,010
Total expenses................................................................................. 553,854
Less: Fee waivers and expense reimbursements...................................................... (146,732)
Net expenses................................................................................... 407,122
Net investment income................................................................................ 2,343
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain on investment transactions...................................................... 105,791
Net realized loss on foreign currency transactions................................................ (28,520)
Net unrealized appreciation of investments and foreign currencies................................. 3,528,424
Net gain on investments and foreign currencies....................................................... 3,605,695
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................................. $3,608,038
</TABLE>
See accompanying notes to financial statements.
22
<PAGE>
EVERGREEN GLOBAL LEADERS FUND
(Photo of Global Leaders Fund logo appears here)
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31, 1996
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income........................................................................................ $ 2,343
Net realized gain on investment transactions................................................................. 105,791
Net realized loss on foreign currency transactions........................................................... (28,520)
Net unrealized appreciation of investments and foreign currencies............................................ 3,528,424
Net increase in net assets resulting from operations...................................................... 3,608,038
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income................................................................................... (2,343)
In excess of net investment income........................................................................... (17,247)
Total distributions to shareholders....................................................................... (19,590)
FUND SHARE TRANSACTIONS:
Proceeds from shares sold.................................................................................... 72,602,018
Proceeds from reinvestment of distributions.................................................................. 14,211
Payment for shares redeemed.................................................................................. (2,122,493)
Net increase from Fund share transactions................................................................. 70,493,736
Net increase in net assets................................................................................ 74,082,184
NET ASSETS:
Beginning of year............................................................................................ 1,000
End of year (including distributions in excess of net investment income of $2,299)........................... $ 74,083,184
</TABLE>
See accompanying notes to financial statements.
23
<PAGE>
EVERGREEN GLOBAL LEADERS FUND
(Photo of Global Leaders Fund logo appears here)
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
JUNE 3, 1996* JUNE 3, 1996* JUNE 3, 1996*
THROUGH THROUGH THROUGH
OCTOBER 31,1996 OCTOBER 31, 1996 OCTOBER 31, 1996
<S> <C> <C> <C>
PER SHARE DATA:++
Net asset value, beginning of period.......................... $11.29 $11.29 $11.29
Income (loss) from investment operations:
Net investment income (loss)................................ -- (.02) (.02)
Net realized and unrealized gain on investments and foreign
currency transactions..................................... .62 .60 .59
Total income from investment operations................... .62 .58 .57
Less distributions to shareholders from net investment
income...................................................... -- -- --
Net asset value, end of period................................ $11.91 $11.87 $11.86
TOTAL RETURN+................................................. 5.5% 5.1% 5.0%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted)..................... $ 12,975 $ 41,948 $554
Ratios to average net assets: ++
Expenses.................................................... 1.75%** 2.50%** 2.50%**
Net investment income (loss)................................ .10%** (.68%)** (.67%)**
Portfolio turnover rate#...................................... 20% 20% 20%
Average commission rate paid.................................. $.0659 $.0659 $.0659
<CAPTION>
CLASS Y SHARES
YEAR ENDED
OCTOBER 31, 1996
<S> <C>
PER SHARE DATA:++
Net asset value, beginning of period.......................... $10.00
Income (loss) from investment operations:
Net investment income (loss)................................ .07
Net realized and unrealized gain on investments and foreign
currency transactions..................................... 1.88
Total income from investment operations................... 1.95
Less distributions to shareholders from net investment
income...................................................... (.04)
Net asset value, end of period................................ $11.91
TOTAL RETURN+................................................. 19.6%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted)..................... $ 18,607
Ratios to average net assets: ++
Expenses.................................................... 1.47%
Net investment income (loss)................................ .62%
Portfolio turnover rate#...................................... 20%
Average commission rate paid.................................. $.0659
</TABLE>
* Commencement of class operations.
** Annualized. Due to the recent commencement of their offering, the ratios for
Class A, Class B and Class C shares are not necessarily comparable to that of
the Class Y shares and are not necessarily indicative of future ratios.
+ Total return is calculated for the periods indicated and is not annualized.
Initial sales charge or contingent deferred sales charges are not reflected.
++ Calculated based on average shares outstanding during the period.
# Calculated for the twelve months ended October 31, 1996.
++ Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were assumed or waived by the investment adviser, the
annualized ratios of expenses and net investment loss to average net assets,
exclusive of state expense limitations, would have been the following:
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
JUNE 3, 1996* JUNE 3, 1996* JUNE 3, 1996*
THROUGH THROUGH THROUGH
OCTOBER 31, 1996 OCTOBER 31, 1996 OCTOBER 31, 1996
<S> <C> <C> <C>
Expenses.................................................... 2.16% 2.93% 2.93%
Net investment loss......................................... (.31%) (1.11%) (1.10%)
<CAPTION>
CLASS Y SHARES
YEAR ENDED
OCTOBER 31, 1996
<S> <C>
Expenses.................................................... 2.51%
Net investment loss......................................... (.42%)
</TABLE>
See accompanying notes to financial statements.
24
<PAGE>
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND
(Photo of Globe appears here)
A REPORT FROM YOUR
PORTFOLIO MANAGER
SAMUEL A. LIEBER
Evergreen Global Real Estate Equity Fund's total return for (Photo of
the fiscal year ended October 31, 1996, was 6.2%* (Class Y, Samuel A.
no-load shares). This figure contrasts with the Fund's 13.2% Lieber
return for the six months ended mid-year April 30, 1996. The appears here)
Fund's net asset value declined by $.91, or 6.7%, from July 3,
through July 30, and had not recovered by the end of
September. The events which caused this sudden, sharp reversal
in one month were largely a unique concurrence of rising
interest rates in both the United States and Europe, and
negative market expectations of possibly slow economic growth
in Southeast Asia. The total return for the Fund's Class A shares with the
maximum 4.75% front-end sales charge for the twelve months ended October 31,
was 1.0%, as compared with 7.8% for the six months ended April 30. (For
additional performance information, please see page 28.)
Today, interest rates have declined significantly from their summer peaks and
evidence of sustained growth for Southeast Asian economies continues to mount,
so we believe that this interruption in the Fund's performance trend is passing.
Beyond the month-to-month volatility of international stock markets, the Fund's
basic portfolio strategy continues to emphasize quality real estate companies
owning unique assets or development projects throughout the world. The
inherently long-term cycle of real estate development, construction, and
maturation argues against a short-term, growth momentum emphasis in investing.
We believe that undervalued investment situations and the greatest real estate
appreciation typically occur during the early stages of an economic recovery.
Thus, our emphasis is on an economy's business cycle and short-term swings in
market sentiment are viewed as opportunities to adjust, but not necessarily
alter the portfolio.
INVESTMENT PERFORMANCE
For much of the year, the Fund was extremely overweighted in the best
performing property share market, the Philippines Stock Exchange Property Index,
which rose 61% from the end of fiscal 1995, through the end of June. During the
summer, however, some investors grew increasingly concerned about the potential
for overbuilding and an anticipated economic slowdown; these concerns led to a
decline of 14% from June through October, leaving the Philippine Index up 38.7%
for the Fund's fiscal year. By contrast, in Hong Kong, the Hang Seng Property
Index, which had been relatively dull after surging in January, ended fiscal
1996 as the top performer, up 40% for the year as it gained 19.5% during the
Fund's fourth quarter. Much of these gains in Hong Kong were paced by large
capitalization index stocks trading at the top of or above
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
INTERNATIONAL INVESTING MAY INVOLVE CERTAIN ADDITIONAL RISKS SUCH AS CURRENCY
FLUCTUATIONS, ECONOMIC AND POLITICAL INSTABILITY, AND DIFFERENCES IN ACCOUNTING
STANDARDS. INVESTMENT CONCENTRATION IN REAL ESTATE SECURITIES INCREASES RISKS
THAT WOULD NOT BE AS GREAT IN MORE DIVERSE INVESTMENTS.
* PERFORMANCE FIGURES INCLUDE REINVESTMENT OF DIVIDEND INCOME AND CAPITAL GAIN
DISTRIBUTIONS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE. INVESTORS'
SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
THE FUND ALSO OFFERS CLASS B SHARES WHICH ARE SUBJECT TO A MAXIMUM 5% CONTINGENT
DEFERRED SALES CHARGE, AND CLASS C SHARES WHICH ARE SUBJECT TO A 1% CONTINGENT
DEFERRED SALES CHARGE WITHIN THE FIRST YEAR OF PURCHASE. PERFORMANCE FOR THESE
CLASSES OF SHARES MAY BE DIFFERENT.
DURING THE PERIOD UNDER REVIEW, THE ADVISER WAIVED A PORTION OF ITS ADVISORY FEE
AND ABSORBED A PORTION OF THE FUND'S OTHER EXPENSES. HAD FEE NOT BEEN WAIVED OR
EXPENSES ABSORBED, PERFORMANCE WOULD HAVE BEEN LOWER. FEE WAIVER AND EXPENSE
ABSORPTION MAY BE REVISED AT ANY TIME. FOR ADDITIONAL INFORMATION ON FEE WAIVER
AND EXPENSE ABSORPTION, PLEASE SEE THE PROSPECTUS.
25
<PAGE>
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND
(Photo of Globe appears here)
A REPORT FROM YOUR
PORTFOLIO MANAGER -- (CONTINUED)
their normal valuation bands and not by the smaller capitalization companies,
which we believe are relatively undervalued. Our cautious stance on Hong Kong's
hand-over to China in mid 1997 led to the Fund's modest portfolio weighting.
Smaller capitalization stocks generally did fairly well in the beginning of
the year, whereas large cap stocks dominated most market's top performers in the
second half of the Fund's fiscal year. In terms of individual performances, the
Fund realized some significant gains in the Philippines in the second half of
the year. Notable gains were realized in SM Prime Holdings, Inc. (+61.7%) and
Megaworld Properties and Holdings, Inc., (+64.1%), in both cases where positions
were reduced after holding periods of roughly a year and a half. Filinvest Land,
Inc. gained 185% in less than a year and Belle Corp. provided a 69.7% gain in
less than a year. While Europe was generally dull, the Fund was able to realize
a 43.2% gain from selling some of its shares in Danish developer Thorkild
Kristensen. During the year, the Fund reduced its position slightly in
Argentina's Inversiones y Representaciones SA (IRSA), capturing a 74.9% gain. In
the U.S., the Fund realized gains at different times over the year averaging 45%
in Continental Homes Holding Corp., 58% in Chicago Dock and Canal Trust, and a
long-term gain of 162% in some of its shares in Alexander's, Inc.
The most disappointing area of the Fund's holdings in the fiscal year was in
Europe. Many of the Fund's longer-term holdings, including companies
distinguished by the ownership of properties with exceptional locations in major
commercial and trading centers, proved to be a drag on performance during the
quarter. Such outstanding companies include: Kampa Haus AG, a major German
residential builder which was voted Germany's best run company by MANAGER
MAGAZINE in 1994, sports a return-on-equity of 30%, yet trades at 11 times
earnings per share (EPS). Societe du Louvre, owner of Le Crillon, the top hotel
in Paris, is valued at a quarter of 1990's pre-recession level. These stocks
were negative performers, as were other recovery situations such as Sotogrande
SA in Spain, German City Estates NV, and Societe des Immeubles. Some European
stocks did rise in value, such as Steen & Strom Invest ASA in Norway and Spain's
Vallehermoso SA. However, the strength in the dollar also impacted the Fund's
European investments despite the benefit of a hedge against the German mark for
part of the year.
Similarly in Japan, the extraordinary rise of the dollar against the yen had
a negative impact on our Japanese investments. Uncertainty about both the pace
of Japan's economic growth and its newly elected government's political
commitment to increase liquidity in its real estate markets, depressed property
share prices since their June peak.
Thailand, which in recent years had a very powerful real estate economy, saw
its property shares collapse by 45% during the fiscal year as residential
overbuilding became evident. The Fund's primary commitment in Thailand remains
in industrial properties, such as Hemaraj Land and Development Public Co., Ltd.,
which posted a 13% return for the year and Saha Pathana Inter-Holdings Co., up
31%. The continued expansion of Thailand's industrial base, including new
factories moving from more expensive Asian, European, and North American
countries, was exemplified by General Motor's recent commitment to build a new
plant in one of Hemaraj's industrial parks.
In the Americas, our primary commitments have been in the United States. The
two largest holdings are Alexander's, Inc. and Continental Homes Holding Corp.
We have long believed these to be significantly undervalued and continue to
believe so, notwithstanding many sizable gains. Alexander's owns key retail
26
<PAGE>
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND
(Photo of Globe appears here)
locations in the New York metropolitan area, anchored by its square block
between 58th and 59th Street at Lexington Avenue. Prime suburban retail sites
are also being developed -- the Sears store at Alexander's Rego Park center is
reported to be the #2 store in sales nationwide! We believe the true value of
the shares is yet to be realized by the share price. Continental Homes, the
largest builder of residential homes in Arizona, is spreading its highly
efficient operating methods across the Sun Belt by acquiring local builders,
thereby transforming itself into a national developer. Volatility in these
shares literally reflected the ups and downs of the bond market, which has from
time-to-time led us to take profits and to reestablish positions. Our basic view
is that the company remains undervalued, trading at less than 7X EPS (Street
consensus) versus 11X to 12X for the established national builders. Other
housing development companies have been added to the portfolio during periods of
market weakness caused by interest rate swings, notably Pacific Greystone Corp.,
a California homebuilder. Real Estate Investment Trusts (REITs) as a group have
been reduced as a proportion of the U.S. holdings, reflecting our judgment that
many are now overvalued relative to their underlying properties by 20% to 30%.
Among the few that we continue to hold is Chelsea GCA Realty Inc., the premier
specialist in high fashion factory outlet malls.
In Canada, our principal holding is Monarch Development Corp. a homebuilding
specialist in the Toronto region. In Latin America, Argentina's IRSA is becoming
multi-national by investing alongside other real estate companies in Brazil,
Chile, and Venezuela. Hotelier Grupo Posadas SA de CV is the Fund's only Mexican
holding, as its dollar-based revenues offset a creeping devaluation of the Peso,
and it has partnered with Morgan Stanley to acquire depressed hotel assets in
Mexico. The Fund's holdings in Great Britain have done well with Capital and
Regional Properties Plc (+33%) and Hemingway Properties Plc (+47%) outperforming
the Financial Times Property Share Index, while Greycoat Plc has been the
subject of several merger proposals.
PROSPECTS
Anticipating a moderated growth rate in the United States economy, modest
continuing acceleration in the European economies, sustained growth in Southeast
Asia, gradual recovery in Japan, and improvement in Latin America, we project a
more stable environment in 1997 for real estate investing worldwide. Our focus
will continue to be on the search for and commitment to extraordinary properties
in the best locations with an emphasis on their below market real estate
valuations. We will look for undervaluation with regard to present markets and
prospectively in terms of the potential for the properties. We anticipate
sufficient financial liquidity to sustain property development and demand, with
an increase in cross-border allocations from the U.S. to Europe and the emerging
markets. Where there is a risk of overbuilding, such as in the residential
sector in Thailand, high-end condominiums in Manila, or office buildings in
Shanghai and Jakarta, we will continue to exercise a cautious approach. Where
the dynamics of resurgent demand and long-term potential are not appreciated by
stock market valuations, we will continue to aggressively invest, positioning
part of the portfolio at the early stages of the real estate cycle.
The Fund's overall commitment is to seek long-term growth opportunities in the
dynamic worldwide real estate environment. The negative results during the
Fund's fiscal fourth quarter are, we believe, merely an interruption in what
should continue to be a very positive trend, combining post-recession recovery
in values and demand-induced capital growth opportunities. We appreciate the
continued support of our shareholders and look forward to seeking to provide you
with rewarding returns.
27
<PAGE>
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND
(Photo of Globe appears here)
RESULTS TO DATE
PERFORMANCE OF $10,000 INVESTED IN THE
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND
The graphs below compare a $10,000 investment in the Evergreen Global Real
Estate Equity Fund (Class A, Class B, Class C and Class Y Shares) with a similar
investment in the MSCI World, MSCI Global Real Estate and Wilshire Real Estate
Indexes ("Indexes").
(Graphs for Class A, B, C and Y shares appear below. Customer to provide plot
points.)
<TABLE>
<CAPTION>
2/10/95* 4/30/95 10/31/95 4/30/96 10/31/96
<S> <C> <C> <C> <C> <C>
CLASS A
TOTAL RETURN=1.0%
SINCE INCEPTION=1.2%
Evergreen Global Real Estate Fund
MSCI Global Real Estate Index
Wilshire Real Estate Index
MSCI World Index
CLASS B
TOTAL RETURN=0.3%
SINCE INCEPTION=1.2%
Evergreen Global Real Estate Fund
MSCI Global Real Estate Index
Wilshire Real Estate Index
MSCI World Index
CLASS C
TOTAL RETURN=4.3%
SINCE INCEPTION=3.6%
Evergreen Global Real Estate Fund
MSCI Global Real Estate Index
Wilshire Real Estate Index
MSCI World Index
</TABLE>
<TABLE>
<CAPTION>
2/1/89* 10/31/89 10/31/90 10/31/91 10/31/92 10/31/93 10/31/94 10/31/95 10/31/96
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS Y
1-YEAR TOTAL RETURN=6.2%
AVERAGE ANNUAL COMPOUND RETURN:
5-YEAR=8.4%
SINCE INCEPTION=4.1%
Evergreen Global Real Estate Fund
MSCI Global Real Estate Index
Wilshire Real Estate Index
MSCI World Index
</TABLE>
*Commencement of class operations.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE RESULTS. MUTUAL FUNDS
ARE
NOT OBLIGATIONS OF, OR GUARANTEED BY, ANY BANK AND ARE NOT FEDERALLY INSURED.
For the purposes of the graphs and the accompanying tables, it has been
assumed that (a) the maximum sales charge of 4.75% was deducted from the initial
$10,000 investment in Class A Shares; (b) the maximum applicable contingent
deferred sales charge was deducted from the value of the investment in Class B
and Class C Shares, assuming full redemption on October 31, 1996; (c) all
recurring fees (including investment advisory fees) were deducted; and (d) all
dividends and distributions were reinvested.
The Indexes are unmanaged. MSCI World and Wilshire Real Estate Indexes
include the reinvestment of income, but do not reflect the payment of
transaction costs and advisory fees associated with an investment in the Fund.
28
<PAGE>
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND
(Photo of Globe appears here)
STATEMENT OF INVESTMENTS
OCTOBER 31, 1996
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
COMMON STOCKS -- 96.7%
ARGENTINA -- 4.0%
281,313 Inversiones y Representaciones SA..... $ 860,904
35,868 Inversiones y Representaciones
SA, GDR............................... 1,093,974
1,954,878
BELGIUM -- 1.6%
7,342 Bernheim-Comofi....................... 390,757
6,000* Immobiliere de Belgique............... 392,434
783,191
CANADA -- .9%
70,000 Monarch Development Corp.............. 436,129
DENMARK -- 5.3%
25,000* Nordicom AS........................... 367,755
30,525 Thorkild Kristensen................... 2,179,494
2,547,249
FRANCE -- 11.1%
10,358 Simco Registered Shares............... 879,290
20,000 Societe de Immeubles.................. 1,255,746
51,078 Societe du Louvre..................... 1,408,704
18,450 Unibail............................... 1,836,880
5,380,620
GERMANY -- 2.6%
35,897 Kampa Haus AG......................... 1,244,448
JAPAN -- 14.2%
11,200 Chubu Sekiwa Real Estate, Ltd......... 147,556
112,000 Daibiru Corp.......................... 1,268,982
190,000 Diamond City Co., Ltd................. 1,485,222
133,100 Kansai Sekiwa Real Estate Co., Ltd.... 1,882,140
26,000 Sawako Corp........................... 465,856
47,000 Tachihi Enterprise Co., Ltd........... 1,614,071
6,863,827
MALAYSIA -- 2.5%
168,300 IOI Properties Berhad................. 559,557
39,200* IOI Properties Berhad,
Warrants expiring 5/18/98 @MR 2.75.... 83,008
500,000 Metroplex Berhad...................... 575,895
1,218,460
MEXICO -- 2.5%
930,000 Grupo Posadas, SA de CV, Class A
Shares................................ 422,333
1,930,000 Grupo Posadas, SA de CV, Class L
Shares................................ 809,219
1,231,552
<CAPTION>
SHARES VALUE
<C> <S> <C>
</TABLE>
<TABLE>
<C> <S> <C>
NETHERLANDS -- 3.6%
110,500 German City Estates NV................ $ 1,745,388
NORWAY -- 1.5%
65,000 Steen & Strom Invest ASA.............. 713,077
PHILIPPINES -- 13.3%
2,000,000* Belle Corp............................ 532,724
1,420,000* Empire East Land Holdings, Inc........ 688,927
2,249,999* Filinvest Land, Inc................... 761,986
3,500,000 Guoco Holdings........................ 665,906
4,701,250 Megaworld Properties and
Holdings, Inc......................... 1,788,908
5,461,000* Robinson's Land Corp. Class B......... 997,443
7,125,000 SM Development Corp................... 908,248
367,800 SM Prime Holdings, Inc................ 78,374
6,422,516
SINGAPORE -- .7%
386,200 Hotel Grand Central, Ltd.............. 331,773
SPAIN -- 3.3%
40,000 Inmobilaria Urbis SA.................. 164,897
327,993 Sotogrande SA......................... 629,792
40,000 Vallehermoso SA....................... 789,999
1,584,688
THAILAND -- 4.2%
123,700 Hemaraj Land & Development
Public Co., Ltd....................... 562,824
154,700 MK Real Estate Development
Corp., Ltd............................ 204,790
38,100 Property Perfect Public Co., Ltd...... 60,524
400,000 Saha Pathana Inter-Holdings Co........ 949,206
209,400 Sammakorn Public Co., Ltd............. 240,241
2,017,585
UNITED KINGDOM -- 4.1%
81,000 Capital and Regional Properties Plc... 271,582
500,000 Greycoat Plc.......................... 1,196,289
1,000,000 Hemingway Properties Plc.............. 537,109
65,000* Tops Estates Plc,
Warrants expiring 8/21/00 @
(pounds)240........................... 3,174
2,008,154
</TABLE>
29
<PAGE>
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND
(Photo of Globe appears here)
STATEMENT OF INVESTMENTS -- (CONTINUED)
OCTOBER 31, 1996
<TABLE>
<CAPTION>
<C> <S>
SHARES VALUE
</TABLE>
COMMON STOCKS -- 96.7% -- CONTINUED
<TABLE>
<C> <S> <C>
UNITED STATES -- 21.2%
36,900* Alexander's, Inc...................... $ 2,712,150
32,000 Chelsea GCA Realty, Inc............... 964,000
147,600 Continental Homes Holding Corp........ 2,398,500
89,516 Horizon Group, Inc.................... 1,891,025
28,100* Pacific Greystone Corp................ 319,638
258,100* Presley Companies..................... 290,363
13,800* US Home Corp.......................... 298,425
120,000* US Home Corp.,
Warrants expiring 6/22/98 @ $20....... 750,000
162,700* Washington Homes, Inc................. 630,462
10,254,563
OTHER SECURITIES -- .1% 39,643
TOTAL COMMON STOCKS
(COST $47,043,417)............... 46,777,741
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C> <C>
SHORT-TERM U.S. GOVERNMENT AGENCY
OBLIGATIONS -- .5%
$150,000 Federal Farm Credit Banks
5.18%, 11/15/96............... $ 149,698
100,000 Federal Home Loan Mortgage
Corp.
5.18%, 11/21/96............... 99,712
TOTAL SHORT-TERM U.S.
GOVERNMENT AGENCY
OBLIGATIONS
(COST $249,410).......... 249,410
</TABLE>
<TABLE>
<C> <S> <C> <C>
TOTAL INVESTMENTS --
(COST $47,292,827)....... 97.2% 47,027,151
OTHER ASSETS AND
LIABILITIES -- NET....... 2.8 1,338,225
NET ASSETS --............... 100.0% $48,365,376
</TABLE>
* Non-income producing securities
GDR -- Global Depositary Receipts
See accompanying notes to financial statements.
30
<PAGE>
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND
(Photo of Globe appears here)
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1996
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments at value (identified cost $47,292,827)............................................................. $47,027,151
Foreign currencies at value (identified cost $101,414)......................................................... 100,977
Cash........................................................................................................... 51,843
Receivable for investments sold................................................................................ 1,284,810
Dividends receivable........................................................................................... 87,349
Prepaid expenses............................................................................................... 40,353
Receivable for foreign currency sold........................................................................... 37,977
Receivable for Fund shares sold................................................................................ 13,123
Total assets............................................................................................. 48,643,583
LIABILITIES:
Payable for Fund shares repurchased............................................................................ 103,549
Accrued expenses............................................................................................... 58,777
Payable for investments purchased.............................................................................. 39,642
Payable for foreign currency purchased......................................................................... 37,977
Accrued advisory fee........................................................................................... 38,001
Distribution fee payable....................................................................................... 261
Total liabilities........................................................................................ 278,207
NET ASSETS........................................................................................................ $48,365,376
NET ASSETS CONSIST OF:
Paid-in capital................................................................................................ $55,546,640
Undistributed net investment income............................................................................ 32,553
Accumulated net realized loss on investment and foreign currency transactions.................................. (6,947,906)
Net unrealized depreciation of investments and foreign currencies.............................................. (265,911)
Net assets............................................................................................... $48,365,376
CALCULATION OF NET ASSET VALUE AND MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares ($720,899 58,723 shares of beneficial interest outstanding)..................................... $ 12.28
Sales charge -- 4.75% of offering price........................................................................ .61
Maximum offering price................................................................................... $ 12.89
Class B Shares ($134,447 11,075 shares of beneficial interest outstanding)..................................... $ 12.14
Class C Shares ($8,205 676 shares of beneficial interest outstanding).......................................... $ 12.14
Class Y Shares ($47,501,825 3,859,781 shares of beneficial interest outstanding)............................... $ 12.31
</TABLE>
See accompanying notes to financial statements.
31
<PAGE>
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND
(Photo of Globe appears here)
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1996
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding taxes of $92,662)......................................... $1,001,766
Interest........................................................................................ 22,889
Total investment income................................................................... 1,024,655
EXPENSES:
Advisory fee.................................................................................... $ 580,089
Distribution fee -- Class A Shares.............................................................. 2,800
Distribution fee -- Class B Shares.............................................................. 765
Shareholder services fee -- Class B Shares...................................................... 255
Distribution fee -- Class C Shares.............................................................. 78
Shareholder services fee -- Class C Shares...................................................... 26
Custodian fee................................................................................... 146,731
Transfer agent fee.............................................................................. 118,097
Registration and filing fees.................................................................... 79,312
Reports and notices to shareholders............................................................. 35,783
Professional fees............................................................................... 22,495
Insurance....................................................................................... 10,324
Trustees' fees and expenses..................................................................... 6,821
Miscellaneous................................................................................... 2,907
Total operating expenses..................................................................... 1,006,483
Interest........................................................................................ 16,803
Less: Fee waivers and expense reimbursments..................................................... (65,279)
Net expenses.............................................................................. 958,007
Net investment income.............................................................................. 66,648
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain on investment transactions.................................................... 527,936
Net realized loss on foreign currency transactions.............................................. (32,608)
Net change in unrealized appreciation (depreciation) of investments and foreign currencies...... 3,504,138
Net gain on investments and foreign currencies..................................................... 3,999,466
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............................................... $4,066,114
</TABLE>
See accompanying notes to financial statements.
32
<PAGE>
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND
(Photo of Globe appears here)
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
ONE MONTH*
YEAR ENDED ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income (loss)............................................................. $ 66,648 $ (63,653)
Net realized gain (loss) on investment transactions...................................... 527,936 (28,407)
Net realized loss on foreign currency transactions....................................... (32,608) (1,146)
Net change in unrealized appreciation (depreciation) of investments and foreign
currencies............................................................................. 3,504,138 (2,841,208)
Net increase (decrease) in net assets resulting from operations....................... 4,066,114 (2,934,414)
FUND SHARE TRANSACTIONS:
Proceeds from shares sold................................................................ 16,042,743 640,465
Payment for shares redeemed.............................................................. (33,339,082) (3,957,113)
Net decrease resulting from Fund share transactions................................ (17,296,339) (3,316,648)
Net decrease in net assets......................................................... (13,230,225) (6,251,062)
NET ASSETS:
Beginning of period...................................................................... 61,595,601 67,846,663
End of period (including undistributed net investment income (accumulated net investment
loss) of $32,553 and ($13,834), respectively).......................................... $ 48,365,376 $ 61,595,601
</TABLE>
* The Fund changed its fiscal year end from September 30 to October 31.
See accompanying notes to financial statements.
33
<PAGE>
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND
(Photo of Globe appears here)
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES
ONE MONTH FEBRUARY 10, ONE MONTH
YEAR ENDED ENDED 1995* THROUGH YEAR ENDED ENDED
OCTOBER 31, OCTOBER 31, SEPTEMBER 30, OCTOBER 31, OCTOBER 31,
1996 1995# 1995 1996 1995#
<S> <C> <C> <C> <C> <C>
PER SHARE DATA++:
Net asset value, beginning of period............................ $11.58 $12.12 $11.46 $11.53 $12.08
Income (loss) from investment operations:
Net investment income (loss).................................. .06 (.01) .07 (.13) (.02)
Net realized and unrealized gain (loss) on
investments and foreign currency transactions............... .64 (.53) .59 .74 (.53)
Total from investment operations............................ .70 (.54) .66 .61 (.55)
Net asset value, end of period.................................. $12.28 $11.58 $12.12 $12.14 $11.53
TOTAL RETURN+................................................... 6.0% (4.5%) 5.8% 5.3% (4.6%)
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted)....................... $721 $74 $66 $134 $100
Ratios to average net assets:
Operating expenses**.......................................... 1.79% 1.73%++ 1.61%++ 2.56% 2.44%++
Interest expense.............................................. .03% .03%++ .01%++ .03% .03%++
Net investment income (loss)**................................ .40% (1.26%)++ .98%++ (1.03%) (1.98%)++
Portfolio turnover rate......................................... 25% 1% 28%## 25% 1%
Average commission rate paid.................................... $ .0037 N/A N/A $ .0037 N/A
<CAPTION>
CLASS B SHARES
FEBRUARY 8,
1995* THROUGH
SEPTEMBER 30,
1995
<S> <C>
PER SHARE DATA++:
Net asset value, beginning of period............................ $11.44
Income (loss) from investment operations:
Net investment income (loss).................................. .08
Net realized and unrealized gain (loss) on
investments and foreign currency transactions............... .56
Total from investment operations............................ .64
Net asset value, end of period.................................. $12.08
TOTAL RETURN+................................................... 5.6%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted)....................... $128
Ratios to average net assets:
Operating expenses**.......................................... 2.42%++
Interest expense.............................................. .03%++
Net investment income (loss)**................................ 1.38%++
Portfolio turnover rate......................................... 28%##
Average commission rate paid.................................... N/A
</TABLE>
* Commencement of class operations.
++ Calculated based on average shares outstanding during the period.
# The Fund changed its year end from September 30 to October 31.
+ Total return is calculated on net asset value per share for the periods
indicated and is not annualized. Initial sales charge or contingent deferred
sales charge is not reflected.
++ Annualized.
## Portfolio turnover is calculated for the twelve months ended September 30,
1995.
** Net of expense waivers and reimbursements. If the Fund had borne all expenses
that were assumed or waived by the investment adviser, the annualized ratios
of expenses and net investment loss to average net assets, exclusive of any
applicable state expense limitations, would have been the following:
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES
FEBRUARY 10,
ONE MONTH 1995* ONE MONTH
YEAR ENDED ENDED THROUGH YEAR ENDED ENDED
OCTOBER 31, OCTOBER 31, SEPTEMBER 30, OCTOBER 31, OCTOBER 31,
1996 1995# 1995 1996 1995#
<S> <C> <C> <C> <C> <C>
Operating expenses............................................ 2.97% 46.90% 21.59% 14.45% 31.39%
Net investment loss........................................... (.78%) (46.44%) (19.00%) (12.92%) (30.94%)
<CAPTION>
CLASS B SHARES
FEBRUARY 8,
1995*
THROUGH
SEPTEMBER 30,
1995
<S> <C>
Operating expenses............................................ 82.74%
Net investment loss........................................... (79.94%)
</TABLE>
See accompanying notes to financial statements.
34
<PAGE>
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND
(Photo of Globe appears here)
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS C SHARES
FEBRUARY 9, CLASS Y SHARES
ONE MONTH 1995* ONE MONTH
YEAR ENDED ENDED THROUGH YEAR ENDED ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, SEPTEMBER 30, OCTOBER 31, OCTOBER 31, SEPTEMBER 30,
1996++ 1995#++ 1995++ 1996++ 1995# 1995
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of
period.............................. $11.53 $12.08 $11.43 $11.59 $12.13 $13.81
Income (loss) from investment
operations:
Net investment income (loss)........ (.13) (.02) .06 .01 (.01) .11
Net realized and unrealized gain
(loss) on investments and foreign
currency transactions............. .74 (.53) .59 .71 (.53) (1.17)
Total from investment
operations...................... .61 (.55) .65 .72 (.54) (1.06)
Less distributions to shareholders
from:
Net investment income............... -- -- -- -- -- (.10)
Net realized gains.................. -- -- -- -- -- (.52)
Total distributions to
shareholders.................... -- -- -- -- -- (.62)
Net asset value, end of period........ $12.14 $11.53 $12.08 $12.31 $11.59 $12.13
TOTAL RETURN+......................... 5.3% (4.6%) 5.7% 6.2% (4.5%) (7.7%)
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (000's
omitted)............................ $8 $4 $7 $47,502 $61,418 $67,645
Ratios to average net assets:
Operating expenses.................. 2.54%** 2.37%++** 1.54%++** 1.62%** 1.62%++ 1.54%
Interest expense.................... .03% .02%++ .01%++ .03% .03%++ .05%
Net investment income (loss)........ (1.06%)** (1.94%)++** .86%++** .11%** (1.14%)++ .92%
Portfolio turnover rate............... 25% 1% 28%++++ 25% 1% 28%
Average commission rate paid.......... $ .0037 N/A N/A $ .0037 N/A N/A
<CAPTION>
CLASS Y SHARES
NINE MONTHS
ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
1994## 1993
<S> <C> <C>
PER SHARE DATA:
Net asset value, beginning of
period.............................. $14.75 $9.86
Income (loss) from investment
operations:
Net investment income (loss)........ .07 --
Net realized and unrealized gain
(loss) on investments and foreign
currency transactions............. (1.01) 5.07
Total from investment
operations...................... (.94) 5.07
Less distributions to shareholders
from:
Net investment income............... -- --
Net realized gains.................. -- (.18)
Total distributions to
shareholders.................... -- (.18)
Net asset value, end of period........ $13.81 $14.75
TOTAL RETURN+......................... (6.4%) 51.4%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (000's
omitted)............................ $132,294 $146,173
Ratios to average net assets:
Operating expenses.................. 1.46%++ 1.56%**
Interest expense.................... .08%++ --
Net investment income (loss)........ .56%++ .03%**
Portfolio turnover rate............... 63% 88%
Average commission rate paid.......... N/A N/A
</TABLE>
* Commencement of class operations.
++ Calculated based on average shares outstanding during the period.
# The Fund changed its fiscal year end from September 30 to October 31.
## The Fund changed its fiscal year end from December 31 to September 30.
+ Total return is calculated on net asset value per share for the periods
indicated and is not annualized. Contingent deferred sales charge is not
reflected.
++ Annualized.
++++ Portfolio turnover is calculated for the year ended September 30, 1995.
** Net of expense waivers and reimbursements. If the Fund had borne all expenses
that were assumed or waived by the investment adviser, the annualized ratios
of expenses and net investment loss to average net assets, exclusive of any
applicable state expense limitations, would have been the following:
<TABLE>
<CAPTION>
CLASS C SHARES
FEBRUARY 9, CLASS Y SHARES
ONE MONTH 1995* ONE MONTH
YEAR ENDED ENDED THROUGH YEAR ENDED ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, SEPTEMBER 30, OCTOBER 31, OCTOBER 31, SEPTEMBER 30,
1996 1995# 1995 1996 1995# 1995
<S> <C> <C> <C> <C> <C> <C>
Operating expenses.................... 118.64% 570.26% 269.60% 1.67% -- --
Net investment income (loss).......... (117.16%) (569.83%) (266.32%) .06% -- --
<CAPTION>
CLASS Y SHARES
NINE MONTHS
ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
1994## 1993
<S> <C> <C>
Operating expenses.................... -- 1.64%
Net investment income (loss).......... -- (.05%)
</TABLE>
See accompanying notes to financial statements.
35
<PAGE>
EVERGREEN INTERNATIONAL EQUITY FUND
(Photo of European Flags appears here)
A REPORT FROM YOUR
PORTFOLIO MANAGER
RICHARD WAGONER
Evergreen International Equity Fund completed its fiscal (Photo of
year on October 31, 1996, with a net asset value per share Richard Wagoner
(Class Y, no-load shares) of $10.46. The Fund's total return appears here)
for the twelve months ended October 31, was 10.3%*, versus
10.7% for the Lipper International Funds** average of the 324
international funds tracked by Lipper Analytical Services
during that time. The Fund slightly underperformed the MSCI
EAFE Index*** which had a total return of 10.5%. The total
return for the twelve-month period ended October 31, for the
Fund's Class A shares was 4.7%.
(For additional performance information, please see page 38.)
On October 1, 1996, after shareholder approval, the sub-adviser to Evergreen
International Fund was changed from Boston International Advisors to Warburg
Pincus Counsellors, Inc. Warburg Pincus was chosen after a thorough analysis of
a number of international managers. With $9.3 billion of institutional assets
under management and over $3 billion in international investments, Warburg has
extensive experience in international investing. Their seasoned investment team
utilizes is highly disciplined "business value" approach to investing.
The performance of foreign markets during the past fiscal year was
geographically mixed. European bourses, collectively, showed solid gains. In
Germany, for example, leading indicators of economic activity are calling for a
new spurt of growth due to contained inflation which allowed the Bundesbank to
lower its discount rate to one of the lowest levels in the post-war era.
Asian-Pacific markets generally fell. In Japan, government spending policies
aimed at stimulating the economy are wearing off and the pace of economic growth
has subsided. Latin American markets varied with Brazil, Mexico and Venezuela
advancing, Argentina and Chile lagging. In the United Kingdom, the equity market
has surged 9% since the end of July. Indicators suggest the growth is due to
resurgent consumer demand and an acceleration in the manufacturing sector.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS
INTERNATIONAL INVESTING MAY INVOLVE CERTAIN ADDITIONAL RISKS SUCH AS CURRENCY
FLUCTUATIONS, ECONOMIC AND POLITICAL INSTABILITY, AND DIFFERENCES IN ACCOUNTING
STANDARDS.
* PERFORMANCE FIGURES INCLUDE REINVESTMENT OF INCOME DIVIDEND AND CAPITAL GAIN
DISTRIBUTIONS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE. INVESTORS'
SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
CLASS A SHARES ARE SUBJECT TO A MAXIMUM 4.75% FRONT END SALES CHARGE. THE FUND
ALSO OFFERS CLASS B SHARES WHICH ARE SUBJECT TO A MAXIMUM 5% CONTINGENT DEFERRED
SALES CHARGE, AND CLASS C SHARES WHICH ARE SUBJECT TO A 1% CONTINGENT DEFERRED
SALES CHARGE WITHIN THE FIRST YEAR OF PURCHASE. PERFORMANCE FOR THESE CLASSES OF
SHARES MAY BE DIFFERENT.
DURING THE PERIOD UNDER REVIEW, THE ADVISER WAIVED A PORTION OF ITS ADVISORY
FEE. HAD FEE NOT BEEN WAIVED, PERFORMANCE WOULD HAVE BEEN LOWER. FEE WAIVER MAY
BE REVISED AT ANY TIME. FOR ADDITIONAL INFORMATION ON FEE WAIVER, PLEASE SEE THE
PROSPECTUS.
** SOURCE: LIPPER ANALYTICAL SERVICES, INC., AN INDEPENDENT MUTUAL FUNDS
PERFORMANCE MONITOR. LIPPER PERFORMANCE FIGURE DOES NOT INCLUDE SALES CHARGES,
AND IF INCLUDED, FIGURE WOULD BE LOWER.
*** MSCI EAFE INDEX IS A STANDARD UNMANAGED FOREIGN SECURITIES INDEX
REPRESENTING 1,112 SECURITIES FROM 20 DEVELOPED COUNTRIES IN EUROPE, AUSTRALIA,
AND THE FAR EAST AS MONITORED BY MORGAN STANLEY CAPITAL INTERNATIONAL. ALL
COUNTRY RETURNS DIFFER FROM INDEX RETURNS BECAUSE THEY REPRESENT TOTAL STOCK
MARKET RETURNS AS CALCULATED BY MORGAN STANLEY CAPITAL INTERNATIONAL. AN
INVESTMENT CAN NOT BE MADE IN AN INDEX.
36
<PAGE>
EVERGREEN INTERNATIONAL EQUITY FUND
(Photo of European Flags appears here)
Looking to the future, we are beginning to see clear, albeit small, signs of
economic recovery in Europe and Japan. Industrial production has increased as
has intra-regional trade in both Europe and Asia. European stock markets
continue to be very strong and many have reached new highs. Numerous
corporations have been revising up their full-year forecasts. Many analysts have
commented on a slowdown in Asia; while in the short term this has been true, we
feel this only a cyclical issue, as most of these economies are export led and
tied to economically sensitive areas (i.e., chemicals, autos, computers, and
consumer electronics). As global economic growth accelerates, so too should
these economies.
Warburg Pincus, upon becoming sub-adviser for International Equity Fund,
assessed the Fund's holdings and realigned the portfolio, making changes to
individual stocks as well as country weightings. Warburg Pincus' investment
advisory team emphasizes a disciplined bottom-up stock picking approach which
involves identifying solid companies in which to invest, rather than trying to
pick the best countries. The advisers believe it is much more difficult to
consistently pick the right countries and prefer to identify good businesses at
attractive prices as the first step in their analysis. Their approach is
conservative, and seeks to avoid exaggerated hopes and excessive risks by
focusing on secular trends and undervalued growth stocks. Thank you for your
support of Evergreen International Equity Fund.
37
<PAGE>
EVERGREEN INTERNATIONAL EQUITY FUND
(Photo of European Flags appears here)
RESULTS TO DATE
PERFORMANCE OF $10,000 INVESTED IN THE
EVERGREEN INTERNATIONAL EQUITY FUND
The graphs below compare a $10,000 investment in the Evergreen
International Equity Fund (Class A, Class B, Class C and Class Y Shares) with a
similar investment in the Morgan Stanley EAFE Index ("Index").
[CHARTS TO FOLLOW of Class A, B, C and Y Shares. Customer to provide plot
points.]
<TABLE>
<CAPTION>
9/2/94* 12/31/94 10/31/95 4/30/96 10/31/96
<S> <C> <C> <C> <C> <C>
CLASS A
1-YEAR TOTAL RETURN=4.7%
AVERAGE ANNUAL COMPOUND
RETURN SINCE INCEPTION=0.2%
Evergreen International Equity Fund
Morgan Stanley Eafe Index
CLASS B
1-YEAR TOTAL RETURN=4.1%
AVERAGE ANNUAL COMPOUND
RETURN SINCE INCEPTION=0.5%
Evergreen International Equity Fund
Morgan Stanley Eafe Index
CLASS C
1-YEAR TOTAL RETURN=8.3%
AVERAGE ANNUAL COMPOUND
RETURN SINCE INCEPTION=1.9%
Evergreen International Equity Fund
Morgan Stanley Eafe Index
CLASS Y
1-YEAR TOTAL RETURN=10.2%
AVERAGE ANNUAL COMPOUND
RETURN SINCE INCEPTION=2.7%
Evergreen International Equity Fund
Morgan Stanley Eafe Index
</TABLE>
*Commencement of class operations.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE RESULTS. MUTUAL FUNDS
ARE
NOT OBLIGATIONS OF, OR GUARANTEED BY, ANY BANK AND ARE NOT FEDERALLY INSURED.
For the purposes of the graphs and the accompanying tables, it has been
assumed that (a) the maximum sales charge of 4.75% was deducted from the initial
$10,000 investment in Class A Shares; (b) the maximum applicable contingent
deferred sales charge was deducted from the value of the investment in Class B
and Class C Shares, assuming full redemption on October 31, 1996; (c) all
recurring fees (including investment advisory fees) were deducted; and (d) all
dividends and distributions were reinvested.
The Index is unmanaged and includes the reinvestment of income, but does
not reflect the payment of transaction costs and advisory fees associated with
an investment in the Fund.
38
<PAGE>
EVERGREEN INTERNATIONAL EQUITY FUND
(Photo of European Flags appears here)
STATEMENT OF INVESTMENTS
OCTOBER 31, 1996
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
LONG-TERM INVESTMENTS -- 87.3%
COMMON STOCKS -- 85.5%
ARGENTINA -- 2.7%
10,517 Banco de Galicia Buenos Aires..... $ 48,278
5,300 Banco Frances del Rio de
la Plata SA....................... 46,379
33,700* Disco SA, ADR..................... 758,250
15,000 Telecom Argentina, Cl. B.......... 56,631
5,100 Telefonica de Argentina, ADR,
Cl. B............................. 118,575
120,500 YPF SA, ADR....................... 2,741,375
4,000 YPF SA, Cl. D..................... 91,609
3,861,097
AUSTRALIA -- 3.6%
99,000 Australian & New Zealand
Banking Group Ltd................. 578,337
64,300 Commonwealth Bank
of Australia...................... 603,959
304,100 General Property Trust............ 571,272
41,700 National Australia Bank Ltd....... 457,788
124,500 News Corp., Ltd................... 708,552
582,100 Quantas Airways................... 848,973
312,600 Westfield Trust................... 587,240
165,900 Westpac Bank Corp., Ltd........... 946,798
5,302,919
CHILE -- .9%
45,100 Enersis SA, ADR................... 1,324,813
DENMARK -- 1.9%
12,330 Den Danske Bank AS................ 884,609
1,850 FLS Industries AS................. 236,216
3,250 Jyske Bank AS..................... 234,288
2,400 Novo Nordisk AS................... 399,704
8,640 Tele Danmark AS, Ser. B........... 435,545
13,000 Unidanmark AS,
Registered Shares................. 599,418
2,789,780
FRANCE -- 7.2%
1,550 Accor SA.......................... 194,641
17,900 Assurances Generales de France.... 527,984
15,500* Axime SA Ex Segin................. 1,658,386
16,300 Banque Nationale de Paris......... 609,915
9,100* Cerus Compagnies Europeenes
Reunies SA........................ 234,776
1,650 Christian Dior SA................. 219,462
2,360 Cie de Saint Gobain............... 318,513
3,400 Cie Fin de Paribas, Cl. A......... 218,797
2,626 Compagnie Bancaire SA............. 261,958
<CAPTION>
SHARES VALUE
<C> <S> <C>
</TABLE>
FRANCE -- 7.2% -- CONTINUED
<TABLE>
<C> <S> <C>
3,850 Credit National SA................ $ 203,325
2,000 Eridania Beghin-Say SA............ 318,435
905 EuraFrance........................ 395,633
5,300 Groupe Danone..................... 725,672
6,000 Pechiney SA....................... 257,604
5,125 Peugeot SA........................ 534,303
16,050 Renault Regie Nationale........... 342,191
18,450 Rhone Poulenc SA.................. 546,734
4,750 Schneider SA...................... 232,274
13,750 Elf Aquitaine..................... 1,099,462
2,000 Societe Generale.................. 215,550
12,200 Thomson-CSF SA.................... 380,616
4,760 Total SA, Cl. B................... 372,327
9,550 Uap Cie Uap....................... 198,379
12,100 Usinor Sacilor.................... 179,518
5,550 Worms & Cie....................... 284,421
10,530,876
GERMANY -- 7.8%
540 AMB Aachener & Muenchener
Beteiligungs AG, Bearer Shares.... 395,800
350 AMB Aachener & Muenchener
Beteiligungs AG,
Registered Shares................. 316,627
21,700 Bankgesellshaft Berlin AG......... 368,975
32,600 BASF AG........................... 1,041,891
18,650 Bayer AG.......................... 704,670
28,930 Bayerische Hypotheken - und
Wechsel-Bank AG................... 847,230
25,570 Bayerische Vereinsbank AG......... 961,577
1,920 Berl Kraft & Licht................ 567,987
18,830 BHF-Bank International AG......... 466,274
26,000 Commerzbank AG.................... 582,013
23,970 Continental AG.................... 419,443
32,820 Dresdner Bank AG.................. 877,714
1,710 Ikb Deutsche Industriebank AG..... 310,519
13,300 Phoenix AG........................ 171,256
26,700 Siemens AG........................ 1,379,606
20,670 Veba AG........................... 1,102,427
1,070 Viag AG........................... 395,668
1,110 Volkswagen AG..................... 437,030
11,346,707
HONG KONG -- 4.0%
160,000 Harbour Centre
Development Ltd................... 217,273
25,000 Henderson Land Development
Co., Ltd.......................... 222,285
</TABLE>
39
<PAGE>
EVERGREEN INTERNATIONAL EQUITY FUND
(Photo of European Flags appears here)
STATEMENT OF INVESTMENTS -- (CONTINUED)
OCTOBER 31, 1996
<TABLE>
<CAPTION>
<C> <S>
SHARES VALUE
</TABLE>
COMMON STOCKS -- 85.5% -- CONTINUED
HONG KONG -- 4.0% -- CONTINUED
<TABLE>
<C> <S> <C>
278,281 Hongkong Land Holdings Ltd.,
ADR............................... $ 620,567
32,700 HSBC Holdings Plc................. 687,105
9,800* Hysan Development Co., Warrants
25 HKD, expire 4/30/98............ 4,721
254,000* Jardine Matheson Holdings Ltd.,
ADR............................... 1,435,100
164,000* Jardine Strategic Holdings Ltd.,
ADR............................... 534,640
58,000 New World Development
Co., Ltd.......................... 337,549
42,000 Sun Hung Kai Properties Ltd....... 478,001
72,500 Swire Pacific Ltd................. 639,938
228,000 Wheelock & Co..................... 513,075
632,000 Yue Yuen Industrial............... 187,993
5,878,247
INDIA -- 1.5%
42,225 Hindalco Industries Ltd., GDR..... 697,418
1,700 Reliance Industries Ltd., GDS..... 19,346
100,200 State Bank of India, GDR.......... 1,513,020
2,229,784
INDONESIA -- 1.4%
40,500 Astra International............... 84,328
81,030 Bank International Indonesia...... 94,656
41,500 Gudang Garam Perus................ 63,249
8,000 HM Sampoerna...................... 74,529
120,683 Indah Kiat Pulp & Paper........... 148,801
35,000 Indocement Tunggal Prakarsa....... 67,617
29,000 Indofood Sukses Makmur............ 51,045
17,500 Indosat........................... 53,154
32,900 Perusahaan Perseroan PE, ADR...... 991,113
23,500 Semen Gresek...................... 121,066
161,500 Telekomunikasi Indonesia.......... 239,203
1,988,761
ITALY -- .0% (A)
12,200* Grassetto SpA..................... 817
JAPAN -- 24.7%
84,000 Canon, Inc........................ 1,608,362
150* DDI Corp.......................... 1,126,433
40,400 Fujitsu Denso..................... 1,330,640
92,000 Fujitsu Ltd....................... 808,045
45,000 Hankyu Realty Co.................. 407,097
108,000 Hitachi Ltd....................... 958,061
65,000 Honda Motor Co., Ltd.............. 1,552,852
35,000 Inabata & Co...................... 236,705
<CAPTION>
SHARES VALUE
<C> <S> <C>
</TABLE>
JAPAN -- 24.7% -- CONTINUED
<TABLE>
<C> <S> <C>
200,000 Isuzu Motors Ltd.................. $ 988,977
80,000* Japan Asia Investment Co., Ltd.
.................................. 779,939
70,000 Japan Radio Co.................... 934,522
53,000 Jusco Co.......................... 1,573,405
225,000 Kawasaki Heavy Industries......... 1,029,599
71,000 Long-Term Credit Bank
of Japan Ltd...................... 470,818
59,000 Matsushita Electric Works Ltd. ... 570,023
35,000* Meiwa Estate Co., Ltd............. 1,079,004
108,000 Mitsubishi Estate Co., Ltd........ 1,346,976
100,000 Mitsubishi Heavy Industries
Ltd............................... 768,521
43,000 Mitsui Fudosan Co................. 532,519
75,000 Mycal Corp........................ 1,152,782
102,000 NEC Corp.......................... 1,110,887
84,000 Nippon Credit Bank Co............. 253,059
40,100 Orix Corp......................... 1,493,338
71,000 Pioneer Electronic Co............. 1,403,100
25,000 Rohm Co........................... 1,482,148
90,000 Sharp Corp........................ 1,367,529
6,500 Shohkoh Fund...................... 1,364,455
25,000 Sony Corp......................... 1,499,715
70,000 Sumitomo Electric Industries...... 922,226
30,000 Sumitomo Realty & Development
Co., Ltd.......................... 218,172
21,000 Takeda Chemical Industries Ltd.
.................................. 359,668
30,000 TDK Corp.......................... 1,760,134
250,000 Toray Industries, Inc............. 1,508,498
67,000 Toshiba Corp...................... 418,989
450 West Japan Railway................ 1,470,291
25,000 Yokogawa Electric Corp............ 221,773
36,109,262
KOREA -- .3%
28,000 Korea Fund, Inc................... 472,500
840 Pohang Iron & Steel Ltd., ADR..... 17,430
489,930
LUXEMBOURG -- .0% (A)
2,900* Raymond Woolen Mil Ltd., GDR...... 28,275
1,500 Tata Engineering &
Locomotive Co., Ltd., GDR......... 18,570
46,845
NETHERLANDS -- 2.5%
14,860 ABN-AMRO Holdings NV.............. 839,909
3,950 DSM NV............................ 378,308
1,750 Hollandsche Beton Groep NV........ 324,792
</TABLE>
40
<PAGE>
EVERGREEN INTERNATIONAL EQUITY FUND
(Photo of European Flags appears here)
STATEMENT OF INVESTMENTS -- (CONTINUED)
OCTOBER 31, 1996
<TABLE>
<CAPTION>
<C> <S>
SHARES VALUE
</TABLE>
COMMON STOCKS -- 85.5% -- CONTINUED
NETHERLANDS -- 2.5% -- CONTINUED
<TABLE>
<C> <S> <C>
23,375 ING Groep NV...................... $ 728,790
8,700 Koninklijke Van Ommeren NV........ 361,496
9,950 Philips Electronics NV............ 350,687
3,700 Royal Dutch Petroleum Co.......... 611,033
3,595,015
NEW ZEALAND -- 3.6%
1,510,300 Brierley Investment Ltd........... 1,378,342
345,350 Carter Holt Harvey Ltd............ 776,946
570,200 Fletcher Challenge,
Building Shares................... 1,545,006
27,975 Fletcher Challenge,
Energy Shares..................... 79,759
474,100 Fletcher Challenge, Forest
Shares............................ 791,564
55,950 Fletcher Challenge, Paper
Shares............................ 101,331
242,400 Lion Nathan Ltd................... 625,936
5,298,884
NORWAY -- 2.9%
12,400 Aker AS, Series A................. 259,435
446,750 Den Norske Bank AS................ 1,484,312
12,600 Elkem AS.......................... 167,847
9,780 Kvaerner AS, Ser. A............... 369,386
7,040 Kvaerner AS, Ser. B............... 244,935
13,840 Norsk Hydro AS.................... 637,688
12,120 Norske Skogindustrier AS, Cl. A... 345,700
9,560 Norske Skogindustrier AS, Cl. B... 245,712
7,000 Orkla AS.......................... 447,593
4,202,608
PAKISTAN -- .2%
6,500* Al-Faysal Investment Bank Ltd. ... 1,622
6,500* Askari Commercial Bank............ 3,608
4,000* Bank of Punjab.................... 1,532
4,000* Cherat Cement Co., Ltd............ 2,071
10,000* Dewan Salman Fibre Ltd............ 8,259
11,500* DG Khan Cement.................... 2,511
25,000* Dhan Fibres Ltd................... 2,526
5,900 Engro Chemical.................... 20,167
21,500* Fauji Fertilizer Co., Ltd......... 42,110
10,000* Faysal Bank Ltd................... 5,664
76,000* Hub Power Co., Ltd................ 64,661
16,500* Ibrahim Fibres Ltd................ 2,779
15,700 ICI Pakistan...................... 7,149
51,025* ICI Pakistan, Rights
10 PKR, expire 12/4/96............ 8,912
15,000* Karachi Electric Supply Ltd....... 7,953
20,500* Lucky Cement...................... 4,910
<CAPTION>
SHARES VALUE
<C> <S> <C>
</TABLE>
PAKISTAN -- .2% -- CONTINUED
<TABLE>
<C> <S> <C>
12,500* Muslim Commercial Bank............ $ 11,851
1,000* National Developement............. 182
7,000* Nishat Textile Mills.............. 1,921
2,400* Packages Ltd...................... 2,994
5,400* Pakistan State Oil Co., Ltd....... 46,617
4,500 Pakistan Synthetic Ltd............ 1,448
44,500* Pakistan Telecom Corp............. 35,973
7,000* Pakland Cement Ltd................ 2,139
21,000* Sui Northern Gas Pipelines........ 21,875
29,500* Sui Southern Gas Co., Ltd......... 24,657
336,091
PHILIPPINES -- .5%
18,500* Millicom International Cellular
SA, GDR........................... 735,375
POLAND -- .2%
1,000 Bank Przemyslowo-
Handlowy SA....................... 69,353
1,200 Bank Rozwoju Eksportu SA.......... 35,637
900 Bank Slaski SA.................... 83,223
1,300* Debica SA, Ser. A................. 26,354
6,400 Elektrim.......................... 53,491
2,000 Rolimpex SA, Ser. A............... 15,649
6,500 Wielkopolski Bank
Kredytowy SA...................... 40,456
300 Zaklady Piwowarskiew
Zywcu SA.......................... 13,337
337,500
PORTUGAL -- 1.0%
300 Banco Internacional do Funchal.... 2,509
42 Banco Internacional do Funchal,
New Shares........................ 351
700 BCO Chemical Portugal............. 7,226
3,200 BCO Commerce Portugal............. 39,726
2,200 BCO Espir Santo................... 38,667
1,400 BCO Totta E Acores................ 25,420
1,700 BPI Society Gestora,
Registered Shares................. 20,238
56,300 Cimpor Cimentos
de Portugal SA.................... 1,183,385
400 Jeronimo Martins Sgps............. 36,485
1,100 Modelo Contin Sgps................ 34,168
1,800 Portucel Industria................ 11,090
1,200 Portugal Telecom SA............... 31,206
500 Seguros Tranquilid,
Registered Shares................. 10,291
1,400 Sonae Investimentos SA............ 41,035
</TABLE>
41
<PAGE>
EVERGREEN INTERNATIONAL EQUITY FUND
(Photo of European Flags appears here)
STATEMENT OF INVESTMENTS -- (CONTINUED)
OCTOBER 31, 1996
<TABLE>
<CAPTION>
<C> <S>
SHARES VALUE
</TABLE>
COMMON STOCKS -- 85.5% -- CONTINUED
PORTUGAL -- 1.0% -- CONTINUED
<TABLE>
<C> <S> <C>
1,000* Soporcel Sociedad Porteguesa de
Celulose SA....................... $ 24,175
600 Unicer Uniao Cervjeira SA......... 10,820
1,516,792
SINGAPORE -- 1.2%
237,600 DBS Land Ltd...................... 748,984
64,000* Development Bank of Singapore..... 767,909
61,000 Prima Ltd......................... 216,543
1,733,436
SPAIN -- 3.6%
8,400* Corporacion Bancaria
de Espana SA...................... 329,166
3,300 Cristaleria Espanola SA........... 215,957
32,800 Europistas Concesionaria
Espanola SA....................... 278,914
58,800 Fuerzas Electricia Catal.......... 470,050
149,200 Iberdrola SA...................... 1,584,435
30,000 Repsol SA, ADR.................... 978,750
18,400 Sevillana de Electridad........... 175,932
34,500 Telefonica de Espana SA........... 692,190
82,400 Union Electrica Fenosa SA......... 534,717
5,260,111
SWEDEN -- 2.3%
2,870* Diligentia AB..................... 36,880
3,850 Electrolux AB, Ser. B............. 214,289
28,700 Skandinaviska Enskilda Banken,
Ser. B............................ 240,050
25,050 Sparbanken Sverige AB, Ser. A..... 396,186
16,900 Stadshypotek AB, Ser. A........... 443,337
36,500 Stora Kopparbergs Besgslogs,
Ser. A............................ 477,364
27,100 Stora Kopparbergs Besgslogs,
Ser. B............................ 348,244
29,150 Svenska Cellulosa AB (SCA)........ 611,752
15,450 Svenska Handelsbanken, Ser. A..... 380,629
8,550 Svenska Handelsbanken, Ser. B..... 204,138
4,500* Swedish Match Co.................. 13,413
2,735* Tornet Fastighet.................. 34,730
3,401,012
SWITZERLAND -- 2.7%
180 Ascom Holding AG,
Bearer Shares..................... 175,158
235 Baloise Holdings,
Registered Shares................. 490,823
1,930 Banque Cant Vaudoise.............. 522,199
<CAPTION>
SHARES VALUE
<C> <S> <C>
</TABLE>
SWITZERLAND -- 2.7% -- CONTINUED
<TABLE>
<C> <S> <C>
170 Pargesa Holding SA................ $ 196,361
500* Saurer Arbon AG................... 210,047
380* Schweizerische
Rueckversicherungs-Gesellschaft... 407,658
260 Schweizerische Bankgesellsch...... 247,658
3,340 Schweizerischer Bankverein........ 643,426
410* Swissair AG....................... 319,502
370 Winterthur Schweizerische
Versicherungs-Gesellschaft........ 220,419
1,890 Zurich Versicherun, Bearer
Shares............................ 517,358
3,950,609
TAIWAN -- .2%
25,900* ROC Taiwan Fund................... 252,525
THAILAND -- 1.6%
5,500 Advanced Information
Services Plc...................... 74,642
16,900 Bangchak Petroleum
Public Co., Ltd................... 34,801
2,700 Bangkok Bank Public Co., Ltd. .... 20,333
13,400 Bangkok Bank Public Co.,
Ltd. Foreign Shares............... 142,961
5,300 Dhana Siam Finance & Securities... 14,032
4,900 Finance One Public Co., Ltd....... 11,339
2,000 Finance One Public Co., Ltd.
Foreign Shares.................... 5,648
23,800 IND Finance Thailand.............. 70,014
2,600 Italian Thailand Development...... 18,357
68,400 Jasmine International
Public Co., Ltd................... 217,313
13,400 Krung Thailand Bank Plc........... 36,266
2,000 Land & House Public Co., Ltd. .... 13,258
59,900 Land & House Public Co.,
Ltd. Foreign Shares............... 498,090
4,600 National Finance & Securities Co.
Ltd............................... 8,751
3,300 National Finance & Securities
Co., Ltd. Foreign Shares.......... 6,245
7,100 One Holding Co., Ltd.............. 6,962
1,420 One Holding Public Co., Ltd.,
Warrants 44 THB, expire 11/2001... --
2,600 PTT Exploration & Production
Public Co., Ltd................... 37,325
1,200 Shinawatra Computer Co., Plc...... 17,227
700 Siam Cement Public Co., Ltd....... 23,063
12,700 Siam Cement Public Co., Ltd.
Foreign Shares.................... 434,375
1,600 Siam City Cement
Public Co., Ltd................... 9,414
</TABLE>
42
<PAGE>
EVERGREEN INTERNATIONAL EQUITY FUND
(Photo of European Flags appears here)
STATEMENT OF INVESTMENTS -- (CONTINUED)
OCTOBER 31, 1996
<TABLE>
<CAPTION>
<C> <S>
SHARES VALUE
</TABLE>
COMMON STOCKS -- 85.5% -- CONTINUED
THAILAND -- 1.6% -- CONTINUED
<TABLE>
<C> <S> <C>
16,200* Telecomasia....................... $ 30,818
14,100 Thai Airways International
Public Co., Ltd................... 27,653
200,100 Thai Military Bank
Public Co., Ltd................... 463,067
19,800 Thai Petrochemical Industry
Public Co., Ltd................... 19,416
6,900 Thai Telephone & Communication
Public Co., Ltd. ................. 11,908
8,000 Thailand Farmers Bank
Public Co., Ltd................... 61,188
1,700 UTD Communications................ 15,070
2,329,536
UNITED KINGDOM -- 7.0%
32,500 Anglian Water Plc................. 287,760
40,200 Associated British Foods Plc...... 276,113
13,800 Barclays Bank Plc................. 216,636
15,400 Bass British Plc.................. 197,513
30,600 British Airways Plc............... 275,420
155,800 British Gas....................... 484,339
83,900 British Petroleum Co., Plc........ 901,611
103,800 British Steel Plc................. 288,474
148,800 British Telecommunications Plc.... 845,234
36,000 Commercial Union Plc.............. 380,859
259,900 Cookson Group Plc................. 956,012
15,600 GKN Plc........................... 293,262
22,200 HSBC Holdings Plc................. 454,912
31,100 Imperial Chemical Industries
Plc............................... 399,380
69,500 National Power Plc................ 458,130
17,600 National Westminster Bank......... 200,951
13,375 Pilkington Plc.................... 37,225
29,342 Royal & Sun Alliance Insurance
Group Plc......................... 201,297
58,000 Severn Trent Water Plc............ 581,511
69,500 Thames Water Plc.................. 626,677
72,800 3I Group.......................... 572,897
65,500 United Utilities Plc.............. 607,666
23,700 Whitbread Plc..................... 277,734
36,700 Yorkshire Water Plc............... 369,150
10,190,763
TOTAL COMMON STOCKS
(COST $119,228,695).......... 125,040,095
<CAPTION>
SHARES VALUE
<C> <S> <C>
PREFERRED STOCKS -- 1.0%
AUSTRALIA -- .5%
148,050 News Corp., Ltd................... $ 652,472
GERMANY -- .5%
1,870 Rheinmetall Berlin................ 190,161
1,960 Volkswagen AG..................... 594,704
784,865
TOTAL PREFERRED STOCKS
(COST $1,384,054)............ 1,437,337
<CAPTION>
PRINCIPAL
AMOUNT
<C> <S> <C>
CORPORATE BOND -- .8%
KOREA -- .8%
$ 1,160,000 Samsung Electronics
.25%, 12/31/06
(COST $1,319,191)................. 1,249,900
TOTAL LONG-TERM INVESTMENTS
(COST $121,931,940).......... 127,727,332
REPURCHASE AGREEMENT -- 13.3%
19,400,000 State Street Bank & Trust Co.,
5.51% dated 10/31/96, due
11/1/96 -- collateralized by
$19,220,000 U.S. Treasury Notes,
6.00%, due 5/31/98; value,
including accrued
interest -- $19,789,143,
(COST $19,400,000).............. 19,400,000
</TABLE>
<TABLE>
<C> <S> <C> <C>
TOTAL INVESTMENTS
(COST
$141,331,940)........ 100.6% 147,127,332
OTHER ASSETS AND
LIABILITIES -- NET... (.6) (901,069)
NET ASSETS --.......... 100.0% $146,226,263
</TABLE>
* Non-income producing securities
ADR -- American Depositary Receipts
GDR -- Global Depositary Receipts
GDS -- Global Depositary Shares
(a) Less than one tenth of one percent.
43
<PAGE>
EVERGREEN INTERNATIONAL EQUITY FUND
(Photo of European Flags appears here)
STATEMENT OF INVESTMENTS -- (CONTINUED)
OCTOBER 31, 1996
<TABLE>
<CAPTION>
FORWARD CONTRACTS
FOREIGN CURRENCY CURRENCY AMOUNT VALUE ON UNREALIZED
BUY CONTRACTS PURCHASED TRADE DATE CURRENT VALUE APPRECIATION
<S> <C> <C> <C> <C>
Deutsche Mark due 11/1/96 DM2,110,520 $1,389,506 $ 1,394,003 $ 4,497
New Zealand Dollar due 11/1/96 NZ$ 1,794,189 1,263,647 1,271,122 7,475
11,972
</TABLE>
<TABLE>
<CAPTION>
FOREIGN CURRENCY CURRENCY AMOUNT
SELL CONTRACTS SOLD
<S> <C> <C> <C> <C>
Japanese Yen due 10/24/97 (Yen) 2,368,740,000 22,000,000 21,865,735 134,265
$146,237
</TABLE>
<TABLE>
<CAPTION>
FOREIGN CURRENCIES
QUANTITY VALUE
DM 22,203 German Deutsche Mark $ 14,661
<S> <C> <C> <C>
HKD 1,392,385 Hong Kong Dollar 180,076
HJF 64,185,151 Hungarian Forint 413,072
IOR 5,247,542 Indonesian Rupiah 2,253
IEP 1,428 Irish Pound 2,325
YEN 1,023,417,444 Japanese Yen 8,988,779
MYR 3,991,349 Malaysian Ringgit 1,579,794
PEN 4,888 Peruvian Nouveau Sol 1,894
PHP 5,390,010 Philippine Peso 205,099
PKR 46,556 Pakistan Rupee 1,162
PLN 12,668 Polish Zolty 4,506
SGD 2,942,211 Singapore Dollar 2,088,897
THB 18,693 Thailand Baht 733
ZAR 2,057 South African Rand 438
TOTAL FOREIGN CURRENCIES
(COST $13,468,713)...... $13,483,689
</TABLE>
See accompanying notes to financial statements.
44
<PAGE>
EVERGREEN INTERNATIONAL EQUITY FUND
(Photo of European Flags appears here)
INDUSTRY DIVERSIFICATION
OCTOBER 31, 1996
<TABLE>
<CAPTION>
PERCENTAGE OF
NET ASSETS
<S> <C>
Aerospace & Defense........................................................................ .3%
Automotive Equipment & Manufacturing....................................................... 3.2
Banks...................................................................................... 14.6
Building, Construction & Furnishings....................................................... 2.8
Business Equipment & Services.............................................................. .5
Chemical & Agricultural Products........................................................... 3.5
Communication Systems & Services........................................................... 1.1
Consumer Products and Services............................................................. 1.4
Diversified Companies...................................................................... 2.6
Electrical Equipment & Services............................................................ 7.5
Energy..................................................................................... 4.9
Finance & Insurance........................................................................ 8.6
Food & Beverage Products................................................................... .9
Food Retailing & Distribution.............................................................. 2.0
Forest Products & Paper.................................................................... 2.1
Health Care Products & Services............................................................ .8
Holding Companies.......................................................................... 2.3
Industrial Commercial Goods & Services..................................................... .8
Information Services & Technology.......................................................... .1
Leisure & Tourism.......................................................................... .4
Machinery -- Diversified................................................................... 1.4
Manufacturing -- Distributing.............................................................. 1.2
Metal Products & Services.................................................................. 1.1
Office Equipment & Supplies................................................................ 1.7
Publishing, Broadcasting & Entertainment................................................... .9
Real Estate................................................................................ 5.3
Retailing & Wholesale...................................................................... 1.1
Telecommunication Services & Equipment..................................................... 4.1
Textile & Apparel.......................................................................... .2
Tobacco.................................................................................... .0(a)
Transportation............................................................................. 2.3
Utilities.................................................................................. 7.6
Total Long-Term Investments.......................................................... 87.3
Short-Term Investment...................................................................... 13.3
Other Assets and Liabilities -- net........................................................ (.6)
Net Assets........................................................................... 100.0%
</TABLE>
(a) Less than one tenth of one percent.
45
<PAGE>
EVERGREEN INTERNATIONAL EQUITY FUND
(Photo of European Flags appears here)
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1996
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments in securities (identified cost $121,931,940)...................................................... $127,727,332
Repurchase agreements at value (identified cost $19,400,000).................................................. 19,400,000
Investments at value (identified cost $141,331,940)........................................................ 147,127,332
Foreign currency at value (identified cost $13,468,713)....................................................... 13,483,689
Receivable for forward currency contracts held at value....................................................... 24,665,125
Dividends and interest receivable............................................................................. 514,752
Receivable for Fund shares sold............................................................................... 415,745
Receivable for investments sold............................................................................... 160,900
Unamortized organization expense.............................................................................. 28,200
Prepaid expenses and other assets............................................................................. 6,941
Total assets............................................................................................ 186,402,684
LIABILITIES:
Due to custodian bank......................................................................................... 15,751
Payable for forward currency contracts held at value.......................................................... 24,518,888
Payable for investments purchased............................................................................. 15,367,358
Accrued expenses.............................................................................................. 82,178
Payable for Fund shares repurchased........................................................................... 68,342
Advisory fee payable.......................................................................................... 62,563
Withholding tax liability..................................................................................... 47,498
Distribution fee payable...................................................................................... 13,843
Total liabilities....................................................................................... 40,176,421
NET ASSETS....................................................................................................... $146,226,263
NET ASSETS CONSIST OF:
Paid-in capital............................................................................................... $139,374,985
Undistributed net investment income........................................................................... 1,837,370
Accumulated net realized loss on investment transactions...................................................... (933,828)
Net unrealized appreciation of investments and foreign currencies............................................. 5,947,736
Net assets................................................................................................. $146,226,263
CALCULATION OF NET ASSET VALUE AND MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares ($7,233,789 693,441 shares of beneficial interest outstanding)................................. $ 10.43
Sales charge -- 4.75% of offering price....................................................................... .52
Maximum offering price.................................................................................. $ 10.95
Class B Shares ($14,109,632 / 1,360,422 shares of beneficial interest outstanding)............................ $ 10.37
Class C Shares ($187,817 / 18,039 shares of beneficial interest outstanding).................................. $ 10.41
Class Y Shares ($124,695,025 / 11,916,010 shares of beneficial interest outstanding).......................... $ 10.46
</TABLE>
See accompanying notes to financial statements.
46
<PAGE>
EVERGREEN INTERNATIONAL EQUITY FUND
(Photo of European Flags appears here)
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1996
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding taxes of $526,363)........................................ $ 3,224,040
Interest........................................................................................ 170,860
Total investment income................................................................... 3,394,900
EXPENSES:
Advisory fee.................................................................................... $ 891,137
Administrative personnel and service fees....................................................... 55,875
Distribution fee -- Class A Shares.............................................................. 14,674
Distribution fee -- Class B Shares.............................................................. 86,432
Shareholder services fee -- Class B Shares...................................................... 28,811
Distribution fee -- Class C Shares.............................................................. 1,589
Shareholder services fee -- Class C Shares...................................................... 530
Custodian fee................................................................................... 356,622
Registration and filing fees.................................................................... 114,534
Transfer agent fee.............................................................................. 100,473
Reports and notices to shareholders............................................................. 42,391
Professional fees............................................................................... 35,454
Amortization of organization expense............................................................ 14,441
Insurance expense............................................................................... 8,493
Trustees' fees and expenses..................................................................... 6,084
Miscellaneous................................................................................... 1,305
Total expenses............................................................................ 1,758,845
Less: Fee waivers............................................................................... (483,599)
Net expenses.............................................................................. 1,275,246
Net investment income.............................................................................. 2,119,654
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES:
Net realized loss on investment transactions.................................................... (551,600)
Net realized loss on foreign currency transactions.............................................. (272,087)
Net change in unrealized appreciation of investments and foreign currencies..................... 5,669,016
Net gain on investments and foreign currencies..................................................... 4,845,329
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............................................... $ 6,964,983
</TABLE>
See accompanying notes to financial statements.
47
<PAGE>
EVERGREEN INTERNATIONAL EQUITY FUND
(Photo of European Flags appears here)
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<S> <C> <C>
TEN MONTHS*
YEAR ENDED ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income.................................................................. $ 2,119,654 $ 524,164
Net realized gain (loss) on investment transactions.................................... (551,600) (255,993)
Net realized gain (loss) on foreign currency transactions.............................. (272,087) 107,669
Net change in unrealized appreciation (depreciation) of investments and foreign
currencies........................................................................... 5,669,016 (462,577)
Net increase (decrease) in net assets resulting from operations..................... 6,964,983 (86,737)
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME:
Class A Shares......................................................................... (39,834) (3,090)
Class B Shares......................................................................... (23,543) --
Class C Shares......................................................................... (59) --
Class Y Shares......................................................................... (645,172) (30,566)
Total distributions to shareholders from net investment income...................... (708,608) (33,656)
FUND SHARE TRANSACTIONS:
Proceeds from shares sold.............................................................. 63,370,539 33,765,660
Proceeds from shares issued from acquisition of FFB Diversified International Growth
Fund................................................................................. 29,658,717 --
Proceeds from reinvestment of distributions............................................ 365,798 19,562
Payment for shares redeemed............................................................ (14,067,718) (5,161,804)
Net increase resulting from Fund share transactions................................. 79,327,336 28,623,418
Net increase in net assets.......................................................... 85,583,711 28,503,025
NET ASSETS:
Beginning of period.................................................................... 60,642,552 32,139,527
End of period (including undistributed net investment income of $1,837,370 and
$616,692, respectively).............................................................. $146,226,263 $ 60,642,552
</TABLE>
* The Fund changed its fiscal year end from December 31 to October 31.
See accompanying notes to financial statements.
48
<PAGE>
EVERGREEN INTERNATIONAL EQUITY FUND
(Photo of European Flags appears here)
FINANCIAL HIGHLIGHTS
<TABLE>
<S> <C> <C> <C> <C> <C>
CLASS A SHARES CLASS B SHARES
SEPTEMBER 2,
YEAR TEN MONTHS 1994* YEAR TEN MONTHS
ENDED ENDED THROUGH ENDED ENDED
OCTOBER 31, OCTOBER 31, DECEMBER 31, OCTOBER 31, OCTOBER 31,
1996++ 1995# 1994 1996++ 1995#
PER SHARE DATA:
Net asset value, beginning of period............. $9.58 $9.50 $10.00 $9.53 $9.50
Income (loss) from investment operations:
Net investment income.......................... .17 .09 .02 .11 .06
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions................................. .78 -- (.52 ) .76 (.03 )
Total from investment operations............. .95 .09 (.50 ) .87 .03
Less distributions to shareholders from
net investment income.......................... (.10 ) (.01 ) -- (.03 ) --
Net asset value, end of period................... $10.43 $9.58 $9.50 $10.37 $9.53
TOTAL RETURN+.................................... 9.9% 1.1% (5.1% ) 9.2% .5%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted)........ $7,234 $3,594 $2,545 $14,110 $7,278
Ratios to average net assets:
Expenses**..................................... 1.24% 1.19% ++ 1.26% ++ 2.00% 1.94% ++
Net investment income**........................ 1.65% 1.38% ++ .91% ++ 1.05% .66% ++
Portfolio turnover rate.......................... 113% 4% 1% 113% 4%
Average commission rate paid..................... $.0068 N/A N/A $.0068 N/A
<CAPTION>
CLASS B SHARES
SEPTEMBER 2,
1994*
THROUGH
DECEMBER 31,
1994
PER SHARE DATA:
Net asset value, beginning of period............. $10.00
Income (loss) from investment operations:
Net investment income.......................... --
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions................................. (.50 )
Total from investment operations............. (.50 )
Less distributions to shareholders from
net investment income.......................... --
Net asset value, end of period................... $9.50
TOTAL RETURN+.................................... (5.2% )
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted)........ $5,602
Ratios to average net assets:
Expenses**..................................... 2.02% ++
Net investment income**........................ .10% ++
Portfolio turnover rate.......................... 1%
Average commission rate paid..................... N/A
</TABLE>
* Commencement of operations.
# The Fund changed its year end from December 31 to October 31.
++ Per share data is calculated based on average shares outstanding during the
period.
+ Total return is calculated on net asset value per share for the periods
indicated and is not annualized. Initial sales charge or contingent deferred
sales charge is not reflected.
++ Annualized.
** Net of expense waivers and reimbursements. If the Fund had borne all expenses
that were assumed or waived by the investment adviser, the annualized ratios
of expenses and net investment income (loss) to average net assets, exclusive
of any applicable state expense limitations, would have been the following:
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES
SEPTEMBER 2,
YEAR TEN MONTHS 1994* YEAR TEN MONTHS
ENDED ENDED THROUGH ENDED ENDED
OCTOBER 31, OCTOBER 31, DECEMBER 31, OCTOBER 31, OCTOBER 31,
1996 1995# 1994 1996 1995#
<S> <C> <C> <C> <C> <C>
Expenses....................................... 1.66% 1.84% 2.09% 2.42% 2.59%
Net investment income (loss)................... 1.23% .73% .08% .63% .01%
<CAPTION>
CLASS B SHARES
SEPTEMBER 2,
1994*
THROUGH
DECEMBER 31,
1994
<S> <C>
Expenses....................................... 2.85%
Net investment income (loss)................... (.73%)
</TABLE>
See accompanying notes to financial statements.
49
<PAGE>
EVERGREEN INTERNATIONAL EQUITY FUND
(Photo of European Flags appears here)
FINANCIAL HIGHLIGHTS
<TABLE>
<S> <C> <C> <C> <C> <C>
CLASS C SHARES CLASS Y SHARES
SEPTEMBER 2,
YEAR TEN MONTHS 1994* YEAR TEN MONTHS
ENDED ENDED THROUGH ENDED ENDED
OCTOBER 31, OCTOBER 31, DECEMBER 31, OCTOBER 31, OCTOBER 31,
1996++ 1995# 1994 1996++ 1995#
PER SHARE DATA:
Net asset value, beginning of period............. $9.53 $ 9.49 $10.00 $9.60 $9.50
Income (loss) from investment operations:
Net investment income.......................... .12 .08 .03 .20 .08
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions................................. .76 (.04 ) (.54 ) .78 .03
Total from investment operations............. .88 .04 (.51 ) .98 .11
Less distributions to shareholders from
net investment income.......................... (.0 )(a) -- -- (.12 ) (.01 )
Net asset value, end of period................... $10.41 $9.53 $9.49 $10.46 $9.60
TOTAL RETURN+.................................... 9.3% .5% (5.2% ) 10.3% 1.3%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted)........ $188 $196 $163 $124,695 $49,575
Ratios to average net assets:
Expenses**..................................... 1.99% 1.94% ++ 2.01% ++ .99% .94% ++
Net investment income**........................ 1.16% .79% ++ .85% ++ 1.95% 1.58% ++
Portfolio turnover rate.......................... 113% 4% 1% 113% 4%
Average commission rate paid..................... $.0068 N/A N/A $.0068 N/A
<CAPTION>
CLASS Y SHARES
SEPTEMBER 2,
1994*
THROUGH
DECEMBER 31,
1994
PER SHARE DATA:
Net asset value, beginning of period............. $10.00
Income (loss) from investment operations:
Net investment income.......................... .02
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions................................. (.51 )
Total from investment operations............. (.49 )
Less distributions to shareholders from
net investment income.......................... (.01 )
Net asset value, end of period................... $9.50
TOTAL RETURN+.................................... (5.0% )
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted)........ $23,830
Ratios to average net assets:
Expenses**..................................... 1.06% ++
Net investment income**........................ 1.03% ++
Portfolio turnover rate.......................... 1%
Average commission rate paid..................... N/A
</TABLE>
(a) Less than one cent per share.
* Commencement of operations.
# The Fund changed its year end from December 31 to October 31.
++ Per share data is calculated based on average shares outstanding during the
period.
+ Total return is calculated on net asset value per share for the periods
indicated and is not annualized. Contingent deferred sales charge is not
reflected.
++ Annualized.
** Net of expense waivers and reimbursements. If the Fund had borne all expenses
that were assumed or waived by the investment adviser, the annualized ratios
of expenses and net investment income to average net assets, exclusive of any
applicable state expense limitations, would have been the following:
<TABLE>
<CAPTION>
CLASS C SHARES CLASS Y SHARES
SEPTEMBER 2,
YEAR TEN MONTHS 1994* YEAR TEN MONTHS
ENDED ENDED THROUGH ENDED ENDED
OCTOBER 31, OCTOBER 31, DECEMBER 31, OCTOBER 31, OCTOBER 31,
1996 1995# 1994 1996 1995#
<S> <C> <C> <C> <C> <C>
Expenses....................................... 2.43% 2.59% 2.84% 1.41% 1.59%
Net investment income.......................... .72% .14% .02% 1.53% .93%
<CAPTION>
CLASS Y SHARES
SEPTEMBER 2,
1994*
THROUGH
DECEMBER 31,
1994
<S> <C>
Expenses....................................... 1.89%
Net investment income.......................... .20%
</TABLE>
See accompanying notes to financial statements.
50
<PAGE>
COMBINED NOTES TO FINANCIAL STATEMENTS
NOTE 1 -- ORGANIZATION AND NATURE OF OPERATIONS
The Evergreen International/Global Growth Funds (the "Funds") are separate
series of open-end management investment companies registered under the
Investment Company Act of 1940, as amended (the "Act"). The Funds consist of
Evergreen Emerging Markets Growth Fund ("Emerging Markets"), Evergreen Global
Leaders Fund ("Global Leaders"), Evergreen Global Real Estate Equity Fund
("Global Real Estate"), and Evergreen International Equity Fund
("International"), collectively referred to as the "Funds".
Emerging Market's investment objective is long-term appreciation through
investment in equity securities of issuers located in emerging markets. Global
Leaders' investment objective is to provide long-term capital growth by
investing in a diversified portfolio of U.S. and non-U.S. equity securities of
companies located in the world's major industrialized countries. Global Real
Estate's investment objective is long-term capital growth through investment
primarily in equity securities of domestic and foreign companies which are
principally engaged in the real estate industry or which own significant real
estate assets. International's investment objective is long-term capital
appreciation through investment in equity securities of non-U.S. issuers.
Effective January 1, 1996, First Fidelity Bancorporation ("First Fidelity")
merged with First Union National Bank of North Carolina ("First Union").
Effective at the close of business on January 19, 1996, International acquired
substantially all of the net assets of FFB Diversified International Growth
Fund, an open-end management investment company managed by a subsidiary of First
Fidelity registered under the Act, valued at $29,658,717. The net assets were
exchanged through a non-taxable transaction for 2,898,154 Class Y shares of
International valued at $10.23 per share. The acquired net assets consisted
primarily of portfolio securities with unrealized appreciation of $1,835,426.
The aggregate net assets of International after the acquisition were
$104,471,175.
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by
the Funds in the preparation of their financial statements. These policies are
in conformity with generally accepted accounting principles.
SECURITY VALUATIONS -- Portfolio securities that are listed on a securities
exchange are valued at the last quoted sales price taken from the exchange where
the security is primarily traded. Securities listed on an exchange that are not
traded on the valuation date are valued at the mean between the bid and asked
price. Unlisted securities for which market quotations are readily available are
valued at a price quoted by one or more brokers. Other securities for which no
quotations are readily available are valued at fair value as determined in good
faith by the Trustees. Short-term obligations are stated at amortized cost which
approximates market value.
SECURITY TRANSACTIONS -- Security transactions are accounted for on the
date purchased or sold. Net realized gains or losses are determined on the
identified cost basis.
FOREIGN CURRENCY TRANSLATION -- The Funds' accounting records are
maintained in U.S. dollars. Assets and liabilities denominated in foreign
currencies are translated daily into U.S. dollars at the prevailing exchange
rates. Purchases and sales of securities and income and expenses are translated
into U.S. dollars at the prevailing exchange rates on the dates of such
transactions. The effect of changes in foreign exchange rates on realized and
unrealized security gains and losses are reflected as a component of such gains
and losses.
FORWARD FOREIGN CURRENCY CONTRACTS -- The Funds may enter into forward
foreign currency contracts for the purchase or sale of a specific foreign
currency at a fixed price on a future date in order to hedge its exposure to
changes in foreign
51
<PAGE>
COMBINED NOTES TO FINANCIAL STATEMENTS
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES -- continued
currency exchange rates. Forward currency contracts are revalued daily at the
prevailing rates of contracts of the same maturity. Gains and losses on forward
currency contracts are reported as realized or unrealized losses on foreign
currency transactions. Risks may arise upon entering into these contracts from
the potential inability of the counterparties to meet the terms of their
contracts and from unanticipated movements in the value of a foreign currency
relative to the U.S. dollar.
REPURCHASE AGREEMENTS -- Securities pledged as collateral for repurchase
agreements are held by the Federal Reserve Bank and are designated as being held
on the Funds' behalf by its custodian under a book-entry system. The Funds
monitor the adequacy of the collateral on a daily basis, and can require the
seller to provide additional collateral in the event the market value of the
securities pledged falls below the carrying value of the repurchase agreement,
including accrued interest. The Funds will only enter into repurchase agreements
with banks and other financial institutions which are deemed by the Funds'
investment adviser to be creditworthy pursuant to guidelines established by the
Trustees.
INVESTMENT INCOME AND EXPENSES -- Dividend income is recorded on the
ex-dividend date, except certain dividends from foreign securities are recorded
as soon as the Fund is informed after the ex-dividend date. Interest income and
expenses are accrued daily.
DISTRIBUTIONS TO SHAREHOLDERS -- Distributions from net investment income
and from net capital gains on investments for the Funds are declared and paid
annually or more frequently as required. Income distributions and capital gain
distributions are determined in accordance with income tax regulations, which
may differ from the amounts available under generally accepted accounting
principles. To the extent these differences are permanent in nature, such
amounts are reclassified within the components of net assets.
As of October 31, 1996, the following reclassifications have been made to
increase (decrease) such accounts with offsetting adjustments made to paid-in
capital:
<TABLE>
<CAPTION>
UNDISTRIBUTED NET ACCUMULATED REALIZED
INVESTMENT INCOME GAIN/LOSS ON INVESTMENTS
<S> <C> <C>
Emerging Markets $ (7,591) $ 24,761
Global Leaders 14,948 (14,948)
Global Real Estate (20,261) 43,574
International (190,368) 145,852
</TABLE>
INCOME TAXES -- It is each Fund's policy to meet the requirements of the
Internal Revenue Code (the "Code") applicable to regulated investment companies
and to distribute substantially all of its taxable net income to its
shareholders. Accordingly, no provisions for federal income or excise taxes are
necessary. To the extent that realized capital gains can be offset by capital
loss carryforwards, it is the Funds' policy not to distribute such gains. During
the year, Global Real Estate utilized $402,699 of its available capital loss
carryforward to offset realized capital gains for Federal income tax purposes.
As of October 31, 1996, Emerging Markets, Global Real Estate and International
had capital loss carryforwards of $1,796,534, $6,947,906 and $895,418,
respectively. Pursuant to the Code, these capital loss carryforwards will expire
as follows:
<TABLE>
<CAPTION>
2002 2003 2004
<S> <C> <C> <C>
Emerging Markets $69,824 $1,625,952 $100,758
Global Real Estate -- 6,947,906 --
International -- 255,531 639,887
</TABLE>
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.
52
<PAGE>
COMBINED NOTES TO FINANCIAL STATEMENTS
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES -- continued
DEFERRED ORGANIZATIONAL EXPENSES -- The costs incurred by Emerging Markets,
Global Leaders and International with respect to their organization have been
deferred and are being amortized using the straight-line method not to exceed a
period of five years from each Fund's commencement.
ALLOCATION OF EXPENSES -- Expenses specifically identifiable to a class of
shares or to a specific fund in a trust are charged to that class or trust.
Expenses common to the Trust as a whole are allocated to the funds in that
Trust. Investment income, net of expenses (other than class specific expenses)
and realized and unrealized gains and losses are allocated daily to each class
of shares based upon the relative proportion of net assets of each class.
REAL ESTATE INVESTMENT TRUSTS -- Global Real Estate owns shares of real
estate investment trusts which report information on the source of their
distributions annually. A portion of their distributions received during the
year is estimated to be a return of capital and is recorded as a reduction of
their cost.
USE OF ESTIMATES -- The preparation of the financial statements is in
accordance with generally accepted accounting principles which requires
management to make estimates and assumptions that affect the reported amounts
and disclosures. Actual results could differ from those estimates.
NOTE 3 -- INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY AGREEMENTS -- First Union is Emerging Markets' and
International's investment adviser, and is entitled to a fee based on a
percentage of each Fund's average daily net assets as shown in the table below.
For Emerging Markets and International, First Union voluntary waived $326,122
and $479,316 respectively, of its advisory fee for the year ended October 31,
1996. In addition, First Union voluntarily reimbursed $75,341 in operating
expenses for Emerging Markets for the year ended October 31, 1996. First Union
can modify or terminate these voluntary waivers at any time.
<TABLE>
<CAPTION>
AVERAGE DAILY
ADVISORY FEE NET ASSETS
<S> <C> <C>
EMERGING MARKETS
on the first $100
1.50% million
1.45% on the next $100 million
1.40% on the next $100 million
in excess of $300
1.35% million
</TABLE>
<TABLE>
<CAPTION>
AVERAGE DAILY
ADVISORY FEE NET ASSETS
<S> <C> <C>
INTERNATIONAL
0.82% on the first $20 million
0.79% on the next $30 million
0.76% on the next $50 million
in excess of $100
0.73% million
</TABLE>
Under terms of a sub-advisory agreement with First Union, Marvin & Palmer
Associates, Inc. ("Marvin & Palmer") is entitled to the following annual fee
from First Union based on Emerging Markets' average daily net assets:
<TABLE>
<CAPTION>
AVERAGE DAILY
SUB-ADVISORY FEE NET ASSETS
<S> <C> <C>
on the first $100
1.00% million
0.95% on the next $100 million
0.90% on the next $100 million
in excess of $300
0.85% million
</TABLE>
53
<PAGE>
COMBINED NOTES TO FINANCIAL STATEMENTS
NOTE 3 -- INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH
AFFILIATES -- continued
Through September 30, 1996, Boston International Advisers, Inc. ("BIA") was
the sub-advisor for International. Under terms of a sub-advisory agreement with
First Union, BIA was entitled to the following annual fee from First Union based
on International's average daily net assets:
<TABLE>
<CAPTION>
AVERAGE DAILY
SUB-ADVISORY FEE NET ASSETS
<S> <C> <C>
0.32% on the first $20 million
0.29% on the next $30 million
0.26% on the next $50 million
0.23% in excess of $100 million
</TABLE>
Effective October 1, 1996, Warburg, Pincus Counsellors, Inc. ("Warburg")
became International's sub-advisor. Under the terms of the new sub-advisory
agreement, Warburg is entitled to an annual fee from First Union of .55 of 1% of
International's average daily net assets.
Under the terms of Emerging Markets' and International's sub-advisory
agreements, Marvin & Palmer and Warburg are responsible for the investment
decisions for their respective funds.
Pursuant to an agreement with Global Leaders' and Global Real Estate's
investment adviser, Evergreen Asset Management Corp. ("Evergreen Asset"), a
wholly owned subsidiary of First Union, is entitled to an annual fee of .95 of
1% and 1% 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 for the
forseeable future. For the year ended October 31, 1996, Evergreen Asset waived
$138,323 of its advisory fee. In addition, for Global Real Estate, Evergreen
Asset voluntarily waived $37,319 of its advisory fee and reimbursed $27,960 in
expenses. Evergreen Asset may revise or cease these voluntary expense waivers
and expense reimbursements at any time.
Lieber & Company, an affiliate of First Union, is the investment
sub-adviser to Global Leaders and Global Real Estate and also provides brokerage
services with respect to substantially all security transactions executed on the
New York or American Stock Exchanges. For transactions executed during the year
ended October 31, 1996, Global Leaders and Global Real Estate incurred brokerage
commissions of $54,074 and $40,808, respectively, with Lieber & Company. Lieber
& Company is reimbursed by Evergreen Asset at no additional expense to the funds
for its cost of providing investment advisory services.
At October 31, 1996, Stephen A. Lieber, Chairman of Evergreen Asset owned,
directly or beneficially, 30% of the outstanding shares of Global Real Estate.
ADMINISTRATIVE AGREEMENT -- Evergreen Asset furnishes Global Real Estate
with administrative services as part of its advisory agreement and accordingly,
Global Real Estate does not pay a separate administration fee. Furman Selz LLC
("Furman Selz") is the Fund's sub-administrator. As sub-administrator, Furman
Selz provides the officers of the Funds. For Global Real Estate, Furman Selz'
fee is paid by Evergreen Asset and is not a fund expense.
Evergreen Asset is also Emerging Markets', Global Leaders' and
International's administrator and Furman Selz is sub-administrator. Evergreen
Asset's and Furman Selz' fees for these funds are based on the average daily net
assets of all of the funds administered by Evergreen Asset for which either
First Union or Evergreen Asset is also the investment adviser. These fees are
calculated at the following annual rates:
54
<PAGE>
COMBINED NOTES TO FINANCIAL STATEMENTS
NOTE 3 -- INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH
AFFILIATES -- continued
<TABLE>
<CAPTION>
AVERAGE DAILY
ADMINISTRATION FEE NET ASSETS
<S> <C>
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
in excess of $30
0.010% billion
</TABLE>
<TABLE>
<CAPTION>
AVERAGE DAILY
SUB-ADMINISTRATION FEE NET ASSETS
<S> <C>
0.0100% on the first $7 billion
0.0075% on the next $3 billion
0.0050% on the next $15 billion
in excess of $25
0.0040% billion
</TABLE>
At October 31, 1996, assets for which Evergreen Asset was the administrator
for which either Evergreen Asset or First Union was the investment adviser
totaled approximately $16.3 billion.
Evergreen Asset voluntarily waived $4,405, $8,409 and $4,283 in
administration fees for Emerging Markets, Global Leaders and International,
respectively.
PLAN OF DISTRIBUTION AND SHAREHOLDER SERVICING -- The Funds have adopted
for each of their Class A, Class B and Class C shares, Distribution Plans (the
"Plans") pursuant to Rule 12b-1 under the Act. Under the terms of the Plans, the
Funds may incur distribution-related and shareholder servicing expenses which
may not exceed an annual fee of .75 of 1% for Class A shares and an annual fee
of 1% for Class B and Class C shares. For each of these Funds, the payments for
Class A shares were voluntarily limited to .25 of 1% of average daily net
assets.
In connection with its Plan, Global Leaders and Global Real Estate have
entered into a distribution agreement with Evergreen Funds Distributor, Inc.
("EFD"), a subsidiary of Furman Selz, whereby they will compensate EFD for its
services at a rate which may not exceed an annual fee of .25 of 1% of Class A
shares average daily net assets and annual fee of 1% of Class B and Class C
shares average daily net assets. A portion of the payments of Class B and Class
C shares, up to .25 of 1% may constitute a shareholder services fee. In
connection with their Plans, Emerging Markets and International have entered
into a distribution agreement with EFD they will compensate EFD for its services
at a rate which may not exceed an annual fee of .25 of 1% of Class A shares
average daily net assets and annual fee of .75 of 1% of Class B and Class C
shares average daily net assets. Emerging and International have entered into a
shareholder services agreement with First Union Brokerage ("FUBS"), an affiliate
of First Union, whereby they will compensate FUBS up to .25 of 1% for certain
services provided to shareholders and or maintenance of shareholder accounts
relating to these Funds' Class B and Class C Shares.
SALES CHARGES -- EFD has advised the Funds that it has retained the
following amounts from front-end sales charges resulting from sales of Class A
shares during the year ended October 31, 1996:
<TABLE>
<S> <C> <C>
Emerging Markets $ 1,307
Global Leaders 23,499
Global Real Estate 117
International 6,190
</TABLE>
55
<PAGE>
COMBINED NOTES TO FINANCIAL STATEMENTS
NOTE 4 -- INVESTMENT TRANSACTIONS
The cost of purchases and proceeds from sales of investments, excluding
short-term securities, for the year ended October 31, 1996 were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
<S> <C> <C>
Emerging Markets $ 42,280,735 $ 21,900,266
Global Leaders 70,764,667 4,136,827
Global Real Estate 14,068,987 33,425,935
International 182,042,212 121,969,888
</TABLE>
On October 31, 1996, the composition of unrealized appreciation and
depreciation of investment securities based on the aggregate cost of investments
for federal tax purposes was as follows:
<TABLE>
<CAPTION>
FEDERAL TAX
APPRECIATION DEPRECIATION NET COST
<S> <C> <C> <C> <C>
Emerging Markets $1,481,985 $1,567,243 $ (85,258) $ 33,158,868
Global Leaders 5,080,021 1,571,851 3,508,170 71,235,050
Global Real Estate 6,929,126 7,232,330 (303,204) 47,330,355
International 9,137,427 3,621,380 5,516,047 141,611,285
</TABLE>
NOTE 5 -- SHARES OF BENEFICIAL INTEREST
The Funds have an unlimited number of $0.0001 par value shares of
beneficial interest authorized. 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 up to 4.75%. Class B shares are offered
with a contingent deferred sales charge payable when shares are redeemed which
declines from 5% to zero depending on the period of time the shares were held
(after which they will convert to Class A shares). Class C shares are offered
with a 1% contingent deferred sales charge on shares redeemed within the first
year of purchase. Class Y shares are sold without a sales charge and are
available only to investment advisory clients of 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.
All classes have identical voting, dividend, liquidation and other rights,
except that certain classes bear different distribution expenses (see Note 3)
and have exclusive voting rights with respect to their distribution plans.
56
<PAGE>
COMBINED NOTES TO FINANCIAL STATEMENTS
NOTE 5 -- SHARES OF BENEFICIAL INTEREST -- continued
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
YEAR ENDED TEN MONTHS ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
EMERGING MARKETS SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
CLASS A
Shares sold.............................................................. 108,210 $ 958,874 64,702 $ 496,478
Shares issued on reinvestment of distributions........................... 817 6,713 -- --
Shares redeemed.......................................................... (55,942) (493,377) (29,531) (228,199)
Net increase..................................................... 53,085 472,210 35,171 268,279
CLASS B
Shares sold.............................................................. 147,629 1,317,529 95,843 737,910
Shares redeemed.......................................................... (51,462) (443,501) (43,408) (335,151)
Net increase..................................................... 96,167 874,028 52,435 402,759
CLASS C
Shares sold.............................................................. 8,040 72,696 5,116 41,284
Shares redeemed.......................................................... (5,067) (43,102) (8,933) (64,678)
Net increase (decrease).......................................... 2,973 29,594 (3,817) (23,394)
CLASS Y
Shares sold.............................................................. 2,531,857 22,621,852 566,623 4,319,138
Shares issued on reinvestment of distributions........................... 1,942 15,980 -- --
Shares redeemed.......................................................... (301,830) (2,683,970) (105,109) (816,292)
Net increase..................................................... 2,231,969 19,953,862 461,514 3,502,846
Total net increase resulting from Fund share
transactions........................................................... 2,384,194 $21,329,694 545,303 $4,150,490
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31, 1996
GLOBAL LEADERS SHARES AMOUNT
<S> <C> <C>
CLASS A
Shares sold........................................................................................... 1,128,476 $12,914,033
Shares redeemed....................................................................................... (38,955) (450,952)
Net increase.................................................................................. 1,089,521 12,463,081
CLASS B
Shares sold........................................................................................... 3,561,481 40,763,569
Shares redeemed....................................................................................... (26,709) (307,417)
Net increase.................................................................................. 3,534,772 40,456,152
CLASS C
Shares sold........................................................................................... 48,546 557,221
Shares redeemed....................................................................................... (1,852) (21,683)
Net increase.................................................................................. 46,694 535,538
CLASS Y
Shares sold........................................................................................... 1,680,883 18,367,195
Shares issued on reinvestment of distributions........................................................ 1,378 14,211
Shares redeemed....................................................................................... (120,293) (1,342,441)
Net increase.................................................................................. 1,561,968 17,038,965
Total net increase resulting from Fund share transactions............................................. 6,232,955 $70,493,736
</TABLE>
57
<PAGE>
COMBINED NOTES TO FINANCIAL STATEMENTS
NOTE 5 -- SHARES OF BENEFICIAL INTEREST -- continued
<TABLE>
<CAPTION>
YEAR ENDED ONE MONTH ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
GLOBAL REAL ESTATE SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
CLASS A
Shares sold............................................................ 208,609 $ 2,645,216 956 $ 11,527
Shares redeemed........................................................ (156,309) (2,008,136) -- --
Net increase................................................... 52,300 637,080 956 11,527
CLASS B
Shares sold............................................................ 7,284 91,539 197 2,360
Shares redeemed........................................................ (4,878) (59,333) (2,136) (25,616)
Net increase (decrease)........................................ 2,406 32,206 (1,939) (23,256)
CLASS C
Shares sold............................................................ 2,142 27,504 -- --
Shares redeemed........................................................ (1,782) (22,492) (248) (2,941)
Net increase (decrease)........................................ 360 5,012 (248) (2,941)
CLASS Y
Shares sold............................................................ 1,060,595 13,278,484 52,172 626,578
Shares redeemed........................................................ (2,500,751) (31,249,121) (329,743) (3,928,556)
Net decrease................................................... (1,440,156) (17,970,637) (277,571) (3,301,978)
Total net decrease resulting from Fund share transactions.............. (1,385,090) ($17,296,339) (278,802) ($3,316,648)
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED TEN MONTHS ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
INTERNATIONAL SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
CLASS A
Shares sold............................................................ 459,233 $ 4,772,348 178,686 $ 1,741,458
Shares issued on reinvestment of distributions......................... 3,882 39,171 314 3,081
Shares redeemed........................................................ (144,771) (1,513,977) (71,833) (698,595)
Net increase................................................... 318,344 3,297,542 107,167 1,045,944
CLASS B
Shares sold............................................................ 802,691 8,346,658 339,054 3,280,684
Shares issued on reinvestment of distributions......................... 2,297 23,175 180 1,652
Shares redeemed........................................................ (208,561) (2,169,847) (165,193) (1,606,194)
Net increase................................................... 596,427 6,199,986 174,041 1,676,142
CLASS C
Shares sold............................................................ 11,595 120,774 12,504 116,208
Shares issued on reinvestment of distributions......................... 5 55 -- --
Shares redeemed........................................................ (14,095) (148,202) (9,102) (89,151)
Net increase (decrease)........................................ (2,495) (27,373) 3,402 27,057
CLASS Y
Shares sold............................................................ 4,796,183 50,130,759 2,935,478 28,627,310
Shares issued from acquisition of FFB Diversified International Growth
Fund................................................................. 2,898,154 29,658,717 -- --
Shares issued on reinvestment of distributions......................... 30,069 303,397 1,510 14,829
Shares redeemed........................................................ (972,043) (10,235,692) (282,738) (2,767,864)
Net increase................................................... 6,752,363 69,857,181 2,654,250 25,874,275
Total net increase resulting from Fund share transactions.............. 7,664,639 $79,327,336 2,938,860 $28,623,418
</TABLE>
58
<PAGE>
COMBINED NOTES TO FINANCIAL STATEMENTS
NOTE 6 -- FINANCING AGREEMENT
Effective July 3, 1996, a financing agreement was put in place with all of
the Evergreen Funds and their custodian, State Street Bank and Trust Company
(the "Bank"). Under the agreement, the Bank is providing an unsecured line of
credit facility, in the aggregate amount of $100 million ($50 million committed
and $50 million uncommitted), to be accessed by the Funds for temporary or
emergency purposes only and is subject to each participating Fund's borrowing
restrictions. Borrowings under this facility bear interest at .75% per annum
above the Bank's cost of funds as set periodically by the Bank. A commitment fee
of .10% per annum will be incurred on the unused portion of the committed
facility which will be allocated to all participating funds.
Prior to July 3, 1996, Global Real Estate had a financing agreement with
the Bank, which provided the Fund with a line of credit, in the aggregate amount
of the lesser of $5,000,000 or 5% of the value of the Fund's net assets, to be
accessed for temporary or emergency purposes. Borrowings under the line of
credit bore interest at 1% above the Bank's cost of funds as set periodically by
the Bank and were secured by securities pledged by the Fund.
During the year ended October 31, 1996, Global Real Estate had borrowings
outstanding for 162 days under the lines of credit and incurred interest charges
amounting to $16,803. Global Real Estate's average debt outstanding during the
year aggregated $583,642 at a weighted average interest rate of 6.4%. Global
Real Estate had no outstanding borrowings at October 31, 1996.
NOTE 7 -- CONCENTRATION OF CREDIT RISK
Since Global Real Estate invests a substantial portion of its assets in
REITs, it may be more affected by economic developments in the real estate
industry than would a general equity fund.
NOTE 8 -- DEFERRED TRUSTEES' FEES
Each Trustee may defer any or all of his compensation related to
performance of his duties as a Trustee of the Funds. Deferred balances are
allocated to a "Deferral Account", which is included in the accrued expenses for
each Fund at October 31, 1996, in its Statement of Assets and Liabilities. Any
gains earned or losses incurred in the Deferral Accounts are reported in each
Fund's Trustees' fees and expenses on the Statement of Operations. 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,
1996, Trustees had deferred $328, $2,299, $5,041 and $1,769 for Emerging
Markets, Global Leaders, Global Real Estate and International, respectively.
59
<PAGE>
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 Statements 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 (one of the Evergreen Investment Trust Portfolios),
Evergreen Global Leaders Fund and Evergreen Global Real Estate Equity Fund (two
of the Evergreen Equity Trust Portfolios), and Evergreen International Equity
Fund (one of the Evergreen Investment Trust Portfolios) (collectively, the
"Funds"), at October 31, 1996, the results of each of their operations for the
year then ended, the changes in net assets of Evergreen Emerging Markets Growth
Fund and of Evergreen Global Leaders Fund for the year ended October 31, 1996,
of Evergreen Global Real Estate Equity Fund for the year then ended and for the
one month period ended October 31, 1995, and of Evergreen International Equity
for the year ended October 31, 1996, and the financial highlights of Evergreen
Emerging Markets Growth Fund and of Evergreen Global Leaders Fund for the year
ended October 31, 1996, of Evergreen Global Real Estate Equity Fund for the
periods indicated, and of Evergreen International Equity Fund for the year ended
October 31, 1996, 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, 1996 by correspondence with the custodian and brokers and the application of
alternative auditing procedures where confirmations from brokers were not
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, and the statements of changes in net assets
for the ten month period ended October 31, 1995 were audited by other
independent accountants, whose opinion, dated December 8, 1995, was unqualified.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, NY 10036
December 19, 1996
60
<PAGE>
TRUSTEES AND OFFICERS
TRUSTEES:
Laurence B. Ashkin*
Foster Bam*
James S. Howell, Chairman
Robert J. Jeffries*+
Gerald M. McDonnell
Thomas L. McVerry
William W. Pettit
Russell A. Salton, III M.D.
Michael S. Scofield
OFFICERS:
John J. Pileggi
President and Treasurer
Joan V. Fiore
Secretary
Sheryl Hirschfeld
Assistant Secretary
Donald E. Brostrom
Assistant Treasurer
Stephen W. St. Clair
Assistant Treasurer
* These individuals are not Trustees for Emerging
Markets or International.
+ Trustee Emeritus.
PROXY VOTING RESULTS
A special meeting of shareholders of International
was held on October 1, 1996, to vote on the
selection of Warburg, Pincus Counsellors, Inc.
("Warburg") as the sub-advisor for the Fund, and
to approve the new sub-advisory agreement relating
to the Fund between Warburg and First Union
National Bank of North Carolina, the Fund's
investment advisor. The proposal was approved, as
follows:
For: 10,607,945
Against: 40,995
Abstain: 234,383
<PAGE>
This brochure must be preceeded 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.
NOT May lose value
FDIC No bank guarantee
INSURED
Evergreen Funds Distributor, Inc.
EvergreenSM is a Service Mark of Evergreen Asset Management Corp. Copyright
1996, Evergreen Asset Management Corp.
539749
46126 12/96
