EVERGREEN
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GLOBAL REAL ESTATE
EQUITY FUND
SEMI-ANNUAL REPORT [Logo]
MARCH 31, 1995
<PAGE>
DEAR FELLOW SHAREHOLDER: May 9, 1995
We are pleased to bring you the Semi-Annual Report for Evergreen Global
Real Estate Equity Fund. The past fifteen months was a difficult time for
international bond and equity market investors, and it has been an even more
difficult environment for real estate stock investors. During the six months
since our Annual Report, only one of twelve countries whose stock exchanges list
a separate real estate sector index posted a positive return. The Australian
"Property Trust Index"* rose only 2% (the Australian "Developers Index", in
fact, was down 5% for this period). Major property sector indices have fallen
over the last six months by typically 10% to 15%, and some as much as 32%.
GLOBAL PROPERTY INDEX PERFORMANCE*
6 Months
Country Ended 3/31/95
------- -------------
Australia: Property Trusts +2%
U.S. Wilshire Real Estate Securities -3%
Great Britain -4%
Australia: Property Developers -5%
Singapore -9%
France -13%
Hong Kong -14%
South Africa: Property Trusts -15%
New Zealand -16%
Japan -17%
Malaysia -19%
Canada -24%
Thailand -32%
During the past two weeks, however, the U.S. bond market has enjoyed a
significant rally. Yields on 30-year U.S. Treasury bonds have fallen from 8.16%
in November to 7.43% on March 31, to 6.94%, currently. This in turn has sparked
a notable recovery in many of the Fund's investments. Foreign stock markets have
started to rebound as their own domestic bond markets are following that of the
U.S. The Fund's NAV per share has increased significantly, reflecting not only
growth in the Fund's U.S. investments, but also, in the last few days, a number
of the Fund's foreign holdings. While the second calendar quarter may still be a
bit volatile in the stock and bond markets, we believe that the rebound in most
real estate markets is in place. Since most real estate cycles last between 7
and 10 years or more, we believe that the Fund is at a relatively early point in
the real estate securities cycle. While we do not think that the pace of returns
during the past two weeks is sustainable, we do believe that a positive change
in the trend has taken hold.
WHAT ARE THE PROSPECTS FOR PROPERTY STOCKS?
The six months through March 31, in particular, can be characterized as
not providing any safe haven for property stocks. However, we believe that
opportunities have been created as a result. Rising interest rates, the major
catalyst for this difficult investing environment, appear to have peaked and
have begun to inch down. This decline, especially in the long-term mortgage rate
from a high of 9.3%** to 8.0% currently, sparked a rally in homebuilders and
real estate investment trusts (REITs). In addition, we have seen moderate
rebounds in several of the world's most oversold property share markets,
specifically Hong Kong, Malaysia and the Philippines. These rebounds spread to
Europe and Latin America at the end of April.
In Southeast Asia, economic growth rates of 5% to 9% are still
achievable for this year, so we believe that the recent interest rate decline
has already begun to provide a more significant stimulus for bargain hunters.
Europe will continue its uneven recovery, but there rates have also fallen
recently.
We believe that there are many excellent bargains now that many quality
stocks are trading at levels not seen since early 1993, despite gains made
during the underlying economic and real estate property cycles. Our view is that
the current level of interest rates does not threaten the general upward trend
that began a few years ago for most of the world's property markets. Barring an
unlikely collapse of world financial markets, we believe this recovery may well
last through the end of the decade. Even though the shorter-term cycles of the
stock and bond markets have taken a heavy toll on property securities, we
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FIGURES REPRESENT PAST PERFORMANCE WHICH DOES NOT GUARANTEE FUTURE RESULTS.
This Fund may not be appropriate for all investors due to certain risks inherent
in international investing, such as currency fluctuations and political
instability.
*Unmanaged indices of selected real estate securities.
**Source: Fannie Mae commitment rate for 30-year fixed rate mortgages. 5/95
<PAGE>
believe that an opportunity has been created in which investors can buy quality
real estate assets throughout the world at significant discounts to their
existing private market values or replacement costs, as the long-term cyclical
uptrend in real estate remains intact.
WHAT REAL ESTATE IS UNDERLYING THE FUND'S STOCKS?
Some of the most interesting real estate represented by stocks in the
Fund's portfolio is located at home in the U.S. This includes an entire block of
midtown Manhattan owned by Alexander's, and several blocks of Chicago
waterfront, owned by Chicago Dock and Canal Trust. Dominant properties such as
New York's Marriott Marquis or the San Francisco Marriott Hotel are owned
through Host Marriott. What may be considered America's most prestigious hotel,
The Plaza, in New York, was recently acquired by a group which includes CDL
Hotels from Singapore. Notable properties abroad include Hong Kong's top
"Central" district office buildings, "Exchange Square" and "Jardine House",
owned by Hong Kong Land, and "The Peak", a retail and entertainment complex
owned by Amoy Properties, which crowns the top of Hong Kong Island. Through
Greycoat, the Fund has an interest in several of West London's best modern
office buildings atop the train tracks at Victoria Station and Embankment Place.
Societe du Louvre owns the world famous Le Crillon hotel facing the Place de La
Concorde in Paris. Sotogrande continues to develop the 4,000 acre luxury golf,
polo and yachting resort community of the same name on the coast near Cadiz,
Spain. S.M. Prime Holdings owns Manila's megamall, the largest shopping mall in
Southeast Asia, which at two million square feet is double the size of the
typical super regional mall in the U.S. In addition to these illustrations,
there are many interesting asset plays and well run companies which make
Evergreen Global Real Estate Equity Fund a unique and truly international medium
for investing in property companies and, indirectly, property itself throughout
the world.
WHAT WERE NOTABLE STOCK PERFORMANCES?
Considering the negative tone of the whole six months, it was clearly
difficult to make money in many places. The major losses came in Mexico, where
share prices declined anywhere from 30% to 60%, but then were compounded by
currency losses of approximately 42%. Most of the damage was incurred within the
first two days of the currency's devaluation, which began on December 20.
Fortunately, the Fund sold its position in Mexican homebuilder Corporacion GEO
(held for approximately 8 months) in October, for a gain of 62.5%. While losses
were evenly spread throughout the portfolio, Thailand was clearly the biggest
loser for the Fund, with the local index down 32% for the six months under
review. Since the market peaked back in January of 1994, the Thai property
sector index lost over 50%. A number of the Fund's positions were not spared as
we chose to realize losses in a number of stocks which had particularly high
leverage, including Krisda Mahanakorn and First Pacific Land. A smaller loss,
20%, was incurred in selling some of the shares of Raimon Land.
We were more fortunate in selling some of our other longer-term holdings
however, particularly in Singapore and Malaysia. In Singapore, the Fund realized
gains in Hong Fok Corporation and United Overseas Land (held approximately 1 1/2
years each), of 33.7% and 41.6%, respectively. In Malaysia, the Fund realized a
46% gain on the balance of its holdings in Bandar Raya (held approximately 1
year) and 70% in its remaining Sri Hartamas shares (held approximately 1 1/2
years). The Fund also sold its long-term holding in Fletcher Challenge, the New
Zealand based timber land owner for a 71% gain (held approximately 2 1/2 years).
The land-rich South Korean brewery, Chosun Breweries, was partly sold garnering
an 81% gain after a 1-year, 8-month holding period. Many of the long-term gains
in the portfolio were realized near the beginning of the fourth quarter of 1994.
The Fund's most spectacular performer of 1994, however, was only partially
reduced, when some of the initial share purchases in Philippine developer,
Megaworld, were sold for a 291% gain after an average seven-month holding
period. Even in the U.S. the Fund was able to recognize a significant gain in
the shares of retirement homebuilder, Del Webb, garnering a 37.4% gain after a
holding period of approximately 1 year and 8 months.
PORTFOLIO HIGHLIGHT: MEGAWORLD
Given the dramatic gains in the Fund's holdings in Megaworld and the
outstanding prospects which we believe lie in the future of this company, we
have chosen to make it the highlight of this report. As of March 31, 1995,
Megaworld comprised 2.6% of the Fund's total net assets. Megaworld is a
five-year old Philippine development company, which can be characterized by its
ambitious President, Andrew Tan. Tan's background, before becoming involved in
real estate, included running Philip Morris' distribution operations in the
Philippines, which explains the company's success at marketing many of its
<PAGE>
development projects to both individuals and major corporations. The projects
have been so well received that they are generally sold-out or pre-leased before
development commences, thereby eliminating much of the risk in putting together
development projects. Megaworld has focused on prime locations in the best
districts of Manila for its high-rise condominium and office towers, and has
utilized the design expertise of top international firms, such as Kohn,
Pedderson and Fox, Owings and Merrill, and Skidmore. This, combined with Mr.
Tan's skillfulness, has brought the company anchor tenants such as Petron, the
Philippines government state owned oil and gas company, and McDonald's from the
U.S. The company has also embarked on low cost residential development projects
which should benefit from a huge backlog of pent-up demand for government
subsidized housing.
In summary, we have been greatly impressed by management's ability to
identify opportunities and avoid potentially negative situations. Add to this
the company's marketing savvy and creativeness, Megaworld has been able to
rapidly rise above the competition to the rank of the nation's second largest
property developer. So long as our assessment of the Philippine economic
rejuvenation remains positive, we expect great growth from this company.
WHAT PORTFOLIO ADJUSTMENTS HAVE BEEN MADE TO ADAPT TO MARKET CHANGES?
Since our Annual Report on September 30, 1994, management has been
actively adjusting to the constantly changing environment. Falling market prices
created new opportunities, so we focused on realizing profits where performance
appeared to have peaked and concentrated investments most heavily in stocks that
offer the greatest values. Thus, in six months, the Fund's portfolio has shrunk
from 134 companies in 24 countries to 85 in 22 countries. The Fund's weighting
in North and South America has declined from 45.3% to under 38% of net assets,
while the Fund's exposure to Asia increased from just under 30% to 32.7%.
European investments increased from 19.6% to 28.6%. On a country basis, the most
significant change was in Mexico which was reduced from 6.6% to 1.5%, though
only partly from sales both before and after the Peso crisis. This crisis
unfortunately had a significant one-time hit on the Fund's net asset value per
share. In Southeast Asia, the Fund's position in Malaysia was lowered from 6% to
2.4%, while the Philippines was increased from 3.5% to 6.1%. Singapore and Hong
Kong were increased from roughly 2.5% each, to 2.9% and 4.6%, respectively. In
Europe, German and French holdings increased from 5% to 7.5%, and 4.3% to 7.2%,
respectively. The Fund's Austrian holdings were sold, although subsequent steep
declines in their local share prices have us looking at that market once again.
A new initial investment in Australia was made after we took profits in our
prior holdings there. We also made a new initial investment in Indonesia.
Underlying these changes in portfolio weightings is a modest shift in the Fund's
increased focus on undervalued stocks. This reflects our view that many property
stocks throughout the world are now trading at larger discounts to their
underlying values than in recent history. Growth stocks, on the other hand,
generally do not appear to be quite as cheap relative to their historic norms.
While this shift is strategic, it also reflects where the greatest opportunities
in the market may be found from our perspective.
Adjusting for aggregate dividends of $.80 over the last two years, the
Fund's N.A.V. is at levels not seen since April, 1993, which reflects the
pattern of prices for many property shares around the world. This has occurred
despite gains in the underlying economies and real estate markets of most
countries. Given our perception that the bulk of rising interest rates, the
Mexican crisis, and much of the dollar crisis are behind us, we believe the
stock markets have stabilized and interest rates will continue to fall.
International real estate stocks may well shift from being one of the most
depressed sectors to among the top performers. In the interim, we appreciate
your continued support and interest in participating in this dynamic asset class
via Evergreen Global Real Estate Equity Fund.
As management are also investors in this Fund, we certainly appreciate your
concerns and questions regarding the outlook for the Fund. We look forward to
reporting on our progress in the next shareholder report.
Very truly yours,
/S/Stephen A. Lieber /S/Samuel A. Lieber
Stephen A. Lieber Samuel A. Lieber
Chairman Portfolio Manager
Evergreen Asset
Management Corp.
<PAGE>
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PERFORMANCE AT A GLANCE
AVERAGE ANNUAL COMPOUNDED RATES OF RETURN
FOR PERIODS ENDED MARCH 31, 1995*
---------------------------------------------
CLASS Y CLASS A CLASS B CLASS C
SHARES SHARES SHARES SHARES
------- ------- ------- -------
6-month Total Return -18.4% -22.3% -22.3% -19.3%
One-year -19.2% -23.1% -23.1% -20.1%
Five-year 3.6% 2.6% 3.2% 3.5%
Since inception (2/1/89) 2.8% 2.0% 2.7% 2.8%
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FIGURES REPRESENT PAST PERFORMANCE WHICH DOES NOT GUARANTEE FUTURE RESULTS.
* Performance figures include reinvestment of income dividends and capital gain
distributions. Investment return and principal value will fluctuate. Investors'
shares, when redeemed, may be worth more or less than their original cost.
Effective 1/3/95, the Fund adopted a multi-class distribution arrangement to
issue additional classes of shares, designated as Class A, Class B and Class C.
The Fund's performance for its Class A shares (subject to a maximum front-end
sales charge of 4.75%), its Class B shares (subject to a maximum contingent
deferred sales charge of 5%) and its Class C shares (subject to a 1%
contingent deferred sales charge within the first year of purchase) prior to
commencement of class operations on 2/10/95, 2/8/95 and 2/9/95, respectively,
has been calculated based on the performance of the existing no-load (Class Y)
shares as adjusted for any front-end or back-end sales charges. Performance data
prior to commencement of class operations does not reflect any 12b-1 fees, and
if reflected the returns would be lower. Performance data beginning from
commencement of class operations reflects actual performance including 12b-1
fees.
The Fund (except for Class Y shares) may incur 12b-1 expenses up to an annual
maximum of .75 of 1% of its aggregate average daily net assets attributable to
Class A shares, 1% of its aggregate average daily net assets attributable to
Class B shares and 1% of its aggregate average daily net assets attributable
to its Class C shares. For the foreseeable future, however, management intends
to limit such payments on the Class A shares to .25 of 1% of the Fund's
aggregate average daily net assets.
The Adviser is currently absorbing a portion of the Fund's expenses for Class A,
B, and C shares. Had expenses not been absorbed, returns would have been lower
for Class A, B, and C shares.
<PAGE>
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EVERGREEN GLOBAL REAL ESTATE EQUITY FUND
STATEMENT OF INVESTMENTS
MARCH 31, 1995 (UNAUDITED)
EQUITY SECURITIES##--96.7% SHARES VALUE
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UNITED STATES--33.7%
*Alexander's, Inc.++ 46,900 $ 2,462,250
Arbor Property Trust 32,600 281,175
Associated Estates Realty Corp.# 26,800 502,500
Capstead Mortgage Corp.# 28,000 630,000
Chelsea GCA Realty, Inc.# 48,000 1,242,000
Chicago Dock & Canal Trust# 30,000 324,375
Columbus Realty Trust# 20,000 375,000
Continental Homes Holding Corp.++ 199,700 2,446,325
Engle Homes, Inc.# 54,700 403,413
Evans Withycombe
Residential, Inc.#40,000 800,000
Gables Residential Trust++ 64,000 1,192,000
Horizon Outlet Centers, Inc.++ 170,000 3,782,500
*Host Marriott Corp.# 80,000 950,000
Kahler Corp.# 45,000 348,750
Kranzco Realty Trust++ 52,100 924,775
Lexington Corporate
Properties, Inc. 7,100 65,675
*M/I Schottenstein Homes, Inc.# 118,000 796,500
McArthur/Glen Realty Corp.# 104,400 1,461,600
*Presley Companies# 258,100 516,200
*Southern Energy Homes, Inc.# 50,000 575,000
Standard Pacific Corp.# 90,000 585,000
*Sundance Homes, Inc. 48,100 150,313
Tanger Factory Outlet
Centers, Inc.# 62,300 1,479,625
*Toll Brothers, Inc.++ 75,000 871,875
Tucker Properties Corp.# 43,100 517,200
*U.S. Home Corp.# 25,800 448,275
*U.S. Home Corp. Warrants
expiring 6/21/98 30,000 183,750
Washington Homes, Inc.# 180,200 630,700
----------
24,946,776
----------
JAPAN--8.9%
Chubu Sekiwa Real Estate, Ltd. 22,000 200,115
Daibiru Corp. 127,000 1,418,423
Diamond City Co., Ltd. 190,000 1,509,499
Kansai Sekiwa Real
Estate Co., Ltd. 121,000 1,811,169
Tachihi Enterprise Co., Ltd. 47,000 1,623,491
----------
6,562,697
----------
GERMANY--7.5%
German City Estates N.V. 110,500 1,866,337
*I.G. Farbenindustrie AG. 27,400 80,020
Kampa-Haus AG. 6,966 3,633,555
----------
5,579,912
----------
FRANCE--7.2%
Simco Registered Shares 11,000 978,769
Societe des Immeuble de France 7,045 486,953
Societe Du Louvre 51,078 2,081,782
Unibail 18,450 1,783,999
----------
5,331,503
----------
PHILIPPINES--6.1%
*Filinvest Land, Inc. 2,000,000 509,653
*Megaworld Properties
and Holdings 5,699,590 1,936,540
*Robinson's Land Corp. Class B 2,974,000 378,927
*SM Prime Holdings, Inc. 5,567,500 1,676,699
----------
4,501,819
----------
THAILAND--5.3%
Hemeraj Land and Development
Co., Ltd. 173,700 366,798
M.D.X. Public Co., Ltd. 357,000 663,259
MK Real Estate Ltd. 208,100 578,877
Property Perfect Co., Ltd. 45,400 394,542
Raimon Land Co., Ltd. 300,000 487,310
Sammakorn Co., Ltd. 285,100 822,014
Saha Pathana Inter-Holdings Co. 200,000 381,726
Somprasong Land Development
Co., Ltd. 120,000 270,457
----------
3,964,983
----------
HONG KONG--4.6%
Amoy Properties Ltd. 1,250,000 1,196,327
CDL Hotels International Ltd. 3,008,600 1,264,608
Hongkong Land Holdings Ltd. 200,000 437,144
Hon Kwok Land
Investment Co., Ltd. 2,229,600 521,932
----------
3,420,011
----------
UNITED KINGDOM--3.7%
Capital and Regional
Properties PLC 81,000 179,796
Ex-Lands PLC 701,921 267,258
*Greycoat PLC 500,000 988,334
Hemingway Properties PLC 1,000,000 382,777
*Queens Moat Houses PLC+ 420,000 51,037
Tops Estates PLC 7.5% C.V.
Loan Stock 200,000 348,347
*Tops Estates PLC Warrants 100,000 25,923
Westbury PLC 220,000 506,157
----------
2,749,629
----------
SINGAPORE--2.9%
Hotel Grand Central Ltd. 804,000 945,547
Parkway Holdings Ltd. 200,000 467,588
United Overseas Land Ltd. 400,000 708,466
----------
2,121,601
----------
SPAIN--2.7%
Sotogrande S.A. 439,993 903,976
Vallehermoso S.A. 80,000 1,106,282
----------
2,010,258
----------
DENMARK--2.5%
Thorkild Kristensen 29,550 1,865,859
----------
MALAYSIA--2.4%
Asiatic Development Berhad 672,000 764,662
IOI Properties Berhad 168,300 601,784
*IOI Properties Berhad Warrants
expiring 5/18/98 79,200 186,187
Mulpha International Berhad 333 476
*Larut Consolidated Berhad 150,000 196,760
----------
1,749,869
----------
ARGENTINA--1.8%
Inversiones Y Representaciones 273,437 524,947
Inversiones Y Representaciones
GDS# 41,500 788,500
----------
1,313,447
----------
MEXICO--1.5%
*Grupo Posadas, S.A.
de C.V. A Shares 930,000 245,996
*Grupo Posadas, S.A.
de C.V. L Shares 1,930,000 533,196
*Grupo Sidek S. A. de C.V. ADS 58,800 198,450
*Grupo Situr, S.A. de C.V.
Class B 463,746 163,554
----------
1,141,196
----------
BELGIUM--1.3%
Bernheim-Comofi 7,342 428,196
Immobiliere de Belgique 6,000 515,292
----------
943,488
----------
NETHERLANDS--1.1%
*Wereldhave N.V. 15,000 832,848
----------
SOUTH KOREA--1.0%
Chosun Brewery Co. 18,000 715,710
----------
TAIWAN--0.8%
*Tuntex Distinct Corp. GDS# 51,261 615,132
----------
INDONESIA--0.6%
P.T. Jakarta International
Hotels and Development 500,000 424,486
----------
CANADA--0.5%
Monarch Development Corp. 70,000 350,225
----------
ITALY--0.3%
Attivita Immobiliare S.p.A. 197,000 252,401
----------
AUSTRALIA--0.2%
Walker Corp. 244,000 112,673
----------
OTHER SECURITIES - 0.1% 39,313
----------
TOTAL EQUITY SECURITIES
(COST $83,136,949) 71,545,836
----------
QUANTITY VALUE
-------- -----
FOREIGN CURRENCIES
(INTEREST BEARING)
Australian Dollar AUD 5,361 $ 3,930
Canadian Dollar CAD 3,248 2,321
Other 1,481
----------
TOTAL FOREIGN CURRENCIES
(COST $7,933) 7,732
----------
TOTAL INVESTMENTS AND
FOREIGN CURRENCIES
(COST $83,144,882) 96.7% 71,553,568
OTHER ASSETS AND
LIABILITIES-NET 3.3% 2,454,600
----- -----------
TOTAL NET ASSETS 100.0% $74,008,168
===== ===========
*Non-income producing.
ADS--American Depository Shares.
GDS--Global Depository Shares.
+Valued at fair value as determined in good faith by the Fund's Trustees.
++A portion of these securities are designated as collateral to secure the
outstanding borrowings under the line of credit arrangement. The value of
the securities designated as collateral at March 31, 1995, is $2,514,310.
#A portion of these securities are designated as collateral for the following
forward currency contract open at March 31, 1995. The value of the
securities designated as collateral at March 31, 1995, is $13,941,329.
Contract to In Exchange Delivery Unrealized
Receive For Date Depreciation
--------- ---------- ------- ------------
$13,411,449 DM 19,000,000 06/29/95 ($445,451)
##Represents common stock investments unless otherwise indicated. The
percentage of Total Net Assets in each type of security is as follows:
Common Stock 77.8%
Real Estate Investment Trusts 18.4
Warrants 0.5
-----
Total Equity Securities 96.7%
=====
See accompanying notes to financial statements.
<PAGE>
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EVERGREEN GLOBAL REAL ESTATE EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1995 (UNAUDITED)
ASSETS:
Investments at market value (identified cost $83,136,949) $71,545,836
Foreign currencies (identified cost $7,933) 7,732
Cash 7,583
Receivable for investment securities sold 4,621,263
Receivable for Fund shares sold 29,418
Dividends receivable 478,869
Prepaid expenses 74,470
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Total assets 76,765,171
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LIABILITIES:
Loan payable 1,975,000
Unrealized depreciation of forward foreign exchange contracts 445,451
Payable for Fund shares repurchased 89,380
Payable to Adviser 43,743
Accrued advisory fee 65,452
Accrued expenses 137,977
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Total liabilities 2,757,003
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NET ASSETS:
Paid-in capital 92,236,692
Accumulated net investment loss (869,862)
Accumulated net realized loss on investment and foreign
currency transactions (5,337,117)
Net unrealized depreciation of investments and
foreign currencies (12,021,545)
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Net assets $74,008,168
================================================================================
CALCULATION OF NET ASSET VALUE PER SHARE:
CLASS A SHARES
Net asset value per share
($2,531/236 shares of beneficial interest outstanding) $10.72
Sales charge--4.75% of offering price 0.53
-----
Maximum offering price $11.25
=====
CLASS B SHARES
Net asset value per share
($3,362/314 shares of beneficial interest outstanding) $10.71
=====
CLASS C SHARES
Net asset value per share
($1,146/107 shares of beneficial interest outstanding) $10.71
=====
CLASS Y SHARES
Net asset value per share
($74,001,129/6,902,835 shares of beneficial interest outstanding) $10.72
=====
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See accompanying notes to financial statements.
<PAGE>
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EVERGREEN GLOBAL REAL ESTATE EQUITY FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MARCH 31, 1995 (UNAUDITED)
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<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding taxes of $41,005) $ 930,571
Interest 41,471
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Total income 972,042
EXPENSES:
Advisory fee $492,320
Custodian fee 86,821
Transfer agent fee 56,279
Professional fees 44,308
Registration and filing fees 42,168
Interest 37,522
Reports and notices to shareholders 9,081
Insurance 6,892
Trustees' fees and expenses 6,862
Distribution & services fees 5
Other 2,718
-------
784,976
Less: expense reimbursement (3,648)
-------
Total expenses 781,328
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Net investment income 190,714
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NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS:
Net realized loss on investments (4,393,449)
Net realized loss on foreign currency transactions (114,502)
Net change in unrealized appreciation (depreciaton) of investments and
foreign currencies (16,085,403)
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Net loss on investment and foreign currency transactions (20,593,354)
- --------------------------------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(20,402,640)
========================================================================================================
See accompanying notes to financial statements.
</TABLE>
<PAGE>
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EVERGREEN GLOBAL REAL ESTATE EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED NINE MONTHS
MARCH 31, 1995 ENDED
(UNAUDITED) SEPTEMBER 30, 1994
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INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
<S> <C> <C>
Net investment income $ 190,714 $ 630,304
Net realized loss on investments (4,393,449) (188,620)
Net realized loss on foreign currency transactions (114,502) (871,998)
Net change in unrealized appreciation (depreciation)
of investments and foreign currencies (16,085,403) (11,314,443)
- --------------------------------------------------------------------------------------------------------------------
Net decrease in net assets resulting from operations (20,402,640) (11,744,757)
- --------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income--Class Y shares (756,333) --
Net realized gains on investment transactions--Class Y shares (4,015,583) --
- --------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders (4,771,916) --
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FUND SHARE TRANSACTIONS (NOTE 8):
Net decrease resulting from Fund share transactions (33,110,934) (2,134,324)
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Net decrease in net assets (58,285,490) (13,879,081)
NET ASSETS:
Beginning of year 132,293,658 146,172,739
- --------------------------------------------------------------------------------------------------------------------
End of period (including accumulated net investment
losses of $869,862 and $304,243, respectively) $ 74,008,168 $132,293,658
====================================================================================================================
See accompanying notes to financial statements.
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1995 (UNAUDITED)
NOTE 1--CHANGE IN ACCOUNTING AND TAX YEAR
The Evergreen Global Real Estate Equity Fund (the "Fund") is one of two
portfolios of the Evergreen Real Estate Equity Trust, (the "Trust"). The Trust
was organized as a Massachusetts Business Trust on October 26, 1988. The Fund is
registered under the Investment Company Act of 1940, as amended (the "Act"), as
a diversified, open-end management investment company. The Fund commenced
investment operations on February 1, 1989. On September 21, 1994, the Fund's
Trustees approved a change in the Fund's accounting year-end from December 31 to
September 30 and the tax year-end from November 30 to September 30.
NOTE 2--APPROVAL AND ISSUANCE OF MULTIPLE CLASSES OF SHARES
On December 13, 1994, the Fund's shareholders, among other things, approved
amendments to the Declaration of Trust to permit the issuance of additional
classes of shares. On December 27, 1994, the Securities and Exchange Commission
approved the application to issue additional classes of shares. In connection
with the adoption of the multiple class distribution program, the Trustees have
designated the existing shares of the Fund as Class Y (no-load) shares and have
created three new classes of shares designated Class A, Class B and Class C
shares. Class A shares are offered with a front-end sales charge of 4.75% which
will be reduced on purchases in excess of $100,000. Class B shares are offered
with a contingent deferred sales charge payable when shares are redeemed which
would decline from 5% to zero over a seven year period. Class C shares are
offered with a 1% contingent deferred sales charge on shares redeemed during the
first year of sale. All four classes of shares have identical voting, dividend,
liquidation and other rights, except that certain classes bear different
distribution expenses (see Note 5) and have exclusive voting rights with respect
to their distribution plan.
NOTE 3--SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
SECURITY VALUATION: Portfolio securities that are listed on a securities
exchange are valued at the last quoted sale price taken from the exchange where
the security is primarily traded on the day the valuation is made. Securities
listed on an exchange 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. Debt
securities (other than short-term obligations) are normally valued on the basis
of valuations provided by a pricing service when such prices are believed to
reflect the market value of such securities. Other assets and 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. Cost of securities is determined and gains
and losses are based upon the specific identification method for both financial
statement and Federal income tax purposes.
FOREIGN CURRENCY TRANSLATIONS: The accounting records of the Fund are
maintained in U.S. dollars. All assets and liabilities of the Fund denominated
in foreign currencies are translated into U.S. dollar amounts daily at the mean
of the buying and selling market rates for such currencies. Purchases and sales
of foreign securities and income derived from foreign securities are converted
at the prevailing rates of exchange on the respective dates of such
transactions.
Investment securities of the Fund are presented at the foreign exchange
rates and market values at the close of the period. The Fund does not isolate
that portion of the results of operations arising as a result of changes in the
foreign exchange rates from the fluctuations arising from changes in the market
prices of the securities held at period-end. Net realized foreign exchange gains
of $485,944, resulting from fluctuations in foreign exchange rates on securities
sold, are reported as a component of net realized loss on investments. Foreign
exchange gains or losses from sales of holdings of foreign currencies are
reported as the net realized gain or loss on foreign currency transactions.
Net realized foreign exchange losses of $21,393 and unrealized foreign
exchange gains of $15,220 arising from currency gains or losses realized between
the trade and settlement dates on securities transactions and the difference
between the amounts of dividends, interest and foreign withholding taxes
recorded on the Fund's books and the U.S. dollar equivalent amounts actually
received or paid, are reported as components of net realized and unrealized
gains (losses) on investment and foreign currency transactions.
<PAGE>
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS: The Fund may enter into forward foreign
currency contracts for the purchase or sale of a specific foreign currency at a
fixed price on a future date in order to hedge its exposure to changes in
foreign currency exchange rates. Risks may arise upon entering these contracts
from the potential inability of the counterparties to meet the terms of their
contracts and from unanticipated movements in the value of a foreign currency
relative to the U.S. dollar. Forward currency contracts are revalued daily at
the prevailing rates of contracts of the same maturity. Gains and losses on
forward currency contracts are reported as realized or unrealized gains or
losses on foreign currency transactions.
FEDERAL TAXES: The Fund complied with and intends to continue compliance
with the requirements of the Internal Revenue Code applicable to regulated
investment companies, unless it is disadvantageous to do so, and to distribute
timely all of its taxable income and net capital gains to its shareholders.
Therefore, no federal income or excise tax provision is required.
DISTRIBUTIONS TO SHAREHOLDERS: Distributions to shareholders are recorded
on the ex-distribution date. The amount of distributions from net investment
income and net realized capital gains are determined in accordance with Federal
income tax regulations, which may differ from generally accepted accounting
principles. These "book/tax" differences are either considered temporary or
permanent in nature, and are primarily due to differing treatments for foreign
currency transactions, foreign taxes paid, tax net operating losses and wash
sale transactions. To the extent these differences are permanent in nature, such
amounts are reclassified within the capital accounts based on their Federal
tax-basis treatment; temporary differences do not require reclassification.
Distributions which exceed net investment income and net realized capital gains
for financial reporting purposes but not for tax purposes are reported as
distributions in excess of net investment income or net realized capital gains.
To the extent distributions exceed current and accumulated earnings and profits
for Federal income tax purposes, they are reported as distributions of paid-in
capital. For the six months ended March 31, 1995, there were no such reclasses.
ALLOCATION OF EXPENSES: Expenses specifically identifiable to the Fund or
to a class of shares are charged to the Fund or class. Other expenses common to
the Fund or the Trust as a whole, are primarily allocated to the funds in the
Trust or to the classes in the Fund in proportion to net assets.
OTHER: Security transactions are accounted for on the trade date, the date
the order to buy or sell is executed. Dividend income and other distributions
are 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. The Fund 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. After the information regarding
the source of distributions is received by the Fund, these return of capital
estimates may be adjusted with a corresponding adjustment to dividend income
and/or net realized gains or losses. Interest income is recorded on the accrual
basis. The Fund records distributions to its shareholders on the record date.
NOTE 4--ADVISORY FEE AND RELATED PARTY TRANSACTIONS
Evergreen Asset Management Corp. (the "Adviser"), an affiliate of Lieber &
Company, is the investment adviser to the Fund and also furnishes the Fund with
administrative services. The Adviser, which is an indirect, wholly-owned
subsidiary of First Union Corporation, succeeded on June 30, 1994 to the
advisory business of the same name, but under different ownership. The Adviser
is entitled to a fee, accrued daily and payable monthly, for the performance of
its services at an annual rate of 1% of the daily net assets of the Fund. For
the six months ended March 31, 1995, the Adviser voluntarily reimbursed Class A,
Class B and Class C shares for certain class specific expenses in the amount of
$1,216, for each class. The Adviser may, at its discretion, revise or cease
these voluntary expense reimbursements at any time.
Total operating expenses of the Fund, exclusive of taxes, interest,
brokerage commissions, 12b-1 distribution and shareholder services fees, and
extraordinary expenses are subject to the most restrictive of state expense
limitations, as may be amended from time to time, under the rules and
regulations of states where the Fund is authorized to sell its shares. If in any
fiscal year such operating expenses exceed the most restrictive limitation then
in effect, the Adviser will reimburse the Fund for the amount of such excess.
For the six months ended March 31, 1995, the Fund's expenses did not exceed the
most restrictive state limitation in effect.
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1995 (UNAUDITED) (CONTINUED)
Lieber & Company, is the investment sub-adviser to the Fund and also
provides brokerage services with respect to substantially all security
transactions of the Fund effected on the New York and American Stock Exchanges.
For transactions executed during the six months ended March 31, 1995, the Fund
incurred brokerage commissions of $70,369 with Lieber & Company. Lieber &
Company is reimbursed by the Adviser, at no additional expense to the Fund, for
its cost of providing investment advisory services to the Adviser.
NOTE 5--DISTRIBUTION AND SHAREHOLDER SERVICES FEES
The Fund has adopted for each of its Class A, Class B and Class C shares, a
Distribution Plan (the "Plans") pursuant to Rule 12b-1 under the Act. Under the
terms of the Plans, the Fund may incur distribution-related and shareholder
servicing-related expenses which may not exceed, as a percentage of average
daily net assets on an annual basis, .75 of 1% for Class A shares and 1% for
both Class B and Class C shares. The payments under the Class A Plan will be
voluntarily limited to .25 of 1%.
In connection with the Plans, the Fund has entered into a distribution
agreement with Evergreen Funds Distributor, Inc. ("EFD"), a subsidiary of Furman
Selz Incorporated, whereby the Fund will compensate EFD for its services at a
rate which may not exceed, as a percentage of average daily net assets on an
annual basis, .25 of 1% for Class A shares and .75 of 1% for Class B and Class C
shares. Such fees are accrued daily and paid monthly. The Agreement provides
that EFD will use such fees to finance activities that promote the sale of Class
A, Class B and Class C shares.
A portion of the payments under the Class B and Class C Plans of up to .25
of 1% of average daily net assets may constitute a shareholder service fee. The
Fund has entered into a Shareholder Services Agreement with First Union
Brokerage Services ("FUBS"), an affiliate of the Adviser, whereby the Fund will
compensate FUBS for certain services provided to shareholders and/or for the
maintenance of shareholders accounts relating to the Fund's Class B and Class C
shares. Such fees are accrued daily and paid monthly.
NOTE 6--PORTFOLIO TRANSACTIONS
Cost of purchases and proceeds from sales of investments, other than short-term
obligations, aggregated $16,450,856 and $52,336,651, respectively, for the six
months ended March 31, 1995.
The aggregate cost of investments owned at March 31, 1995 for federal
income tax purposes is $83,394,662 due to sales of certain portfolio securities
on which losses are deferred for Federal income tax purposes. Gross unrealized
appreciation and depreciation of securities was $4,279,209 and $16,128,035,
respectively, resulting in net unrealized depreciation for Federal income tax
purposes of $11,848,826.
NOTE 7--FINANCING AGREEMENT
The Fund has a financing agreement with its custodian State Street Bank and
Trust Company (the "Bank"), which provides the Fund with a line of credit, in
the aggregate amount of the lesser of $5,000,000 or 5% of the value of the
Fund's net assets, to be accessed for temporary or emergency purposes.
Borrowings under the line of credit bear interest at 1% above the Bank's cost of
funds as set periodically by the Bank and are secured by securities pledged by
the Fund. During the six months ended March 31, 1995, the Fund had borrowings
outstanding for 121 days under the line of credit and incurred $37,522 in
interest charges related to these borrowings. The Fund's average amount of debt
outstanding during the period aggregated $1,756,777 at a weighted average
interest rate of 6.36%. The Fund had $1,975,000 in outstanding borrowings at
March 31, 1995 at an interest rate of 7.50%.
<PAGE>
NOTE 8--SHARES OF BENEFICIAL INTEREST
There is an unlimited number of $.001 par value shares of beneficial interest
authorized, divided into four classes, designated Class A, Class B, Class C and
Class Y shares. Transactions in shares of beneficial interest were as follows:
SIX MONTHS ENDED
MARCH 31, 1995
- ----------------------------------------------------------
SHARES AMOUNT
- ----------------------------------------------------------
CLASS A*
Shares sold 236 $2,583
==========================================================
CLASS B*
Shares sold 314 $3,504
==========================================================
CLASS C*
Shares sold 107 $1,212
==========================================================
CLASS Y
Shares sold 1,230,460 $14,964,809
Shares issued on reinvest-
ment of distributions 368,999 4,409,540
Shares redeemed (4,279,095) (52,492,582)
- ----------------------------------------------------------
Net decrease (2,679,636) $(33,118,233)
==========================================================
Total net decrease
resulting from Fund
share transactions (2,678,979) $(33,110,934)
==========================================================
YEAR ENDED
SEPTEMBER 30, 1994
- ----------------------------------------------------------
SHARES AMOUNT
- ----------------------------------------------------------
CLASS Y
Shares sold 8,233,761 $118,617,529
Shares issued on
reinvestment
of distributions -- --
Shares redeemed (8,561,147) (120,751,853)
- ----------------------------------------------------------
Net decrease resulting
from Fund share
transactions (327,386) $ (2,134,324)
==========================================================
* For Class A, Class B and Class C shares, the Fund share transaction activity
reflects the period February 10, 1995, February 8, 1995 and February 9, 1995,
respectively (commencement of class operations) to March 31, 1995.
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND
FINANCIAL HIGHLIGHTS (UNAUDITED)
<TABLE>
<CAPTION>
FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD
FEBRUARY 10, 1995* FEBRUARY 8, 1995* FEBRUARY 9, 1995*
THROUGH THROUGH THROUGH
MARCH 31, 1995 MARCH 31, 1995 MARCH 31, 1995
PER SHARE DATA CLASS A SHARES CLASS B SHARES CLASS C SHARES
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $11.46 $11.44 $11.43
- ----------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .02 .02 .01
Net realized and unrealized loss on
investments (.76) (.75) (.73)
- -----------------------------------------------------------------------------------------------------------------------
Total loss from investment operations (.74) (.73) (.72)
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.72 $10.71 $10.71
=======================================================================================================================
TOTAL RETURN** (6.5)% (6.4)% (6.3)%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period $2,531 $3,362 $1,146
Ratios to average net assets:+
Operating expenses 1.51% 2.27% 2.31%
Interest expense .02% .01% .01%
Net investment income 3.21% 1.53% .87%
Voluntary expense reimbursement++ 1.22% 1.22% 1.18%
Portfolio turnover rate# 17% 17% 17%
=======================================================================================================================
*Commencement of class operations.
**Total return is calculated on net asset value per share for the period
indicated and is not annualized. Initial sales charges or contingent deferred
sales charges are not reflected.
+Annualized. 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.
++This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above. #Portfolio turnover rate is calculated
for the six months ended March 31, 1995.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND
FINANCIAL HIGHLIGHTS
CLASS Y SHARES
<TABLE>
<CAPTION>
SIX MONTHS NINE MONTHS
ENDED ENDED YEAR ENDED DECEMBER 31,
MARCH 31, 1995 SEPTEMBER 30, --------------------------------------------
PER SHARE DATA (UNAUDITED) 1994# 1993 1992 1991 1990
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $13.81 $14.75 $9.86 $9.16 $ 8.10 $10.03
- ----------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .01 .07 -- (.01) (.02) (.03)
Net realized and unrealized gain (loss)
on investments (2.48) (1.01) 5.07 .94 1.08 (1.90)
- ----------------------------------------------------------------------------------------------------------------------
Total income (loss) from investment
operations (2.47) .94 5.07 .93 1.06 (1.93)
- ----------------------------------------------------------------------------------------------------------------------
Less distributions to shareholders from:
Net investment income (.10) -- -- -- -- --
Net realized gains on investments (.52) -- (.18) (.23) -- --
- ----------------------------------------------------------------------------------------------------------------------
Total distributions (.62) -- (.18) (.23) -- --
- ----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.72 $13.81 $14.75 $9.86 $9.16 $8.10
======================================================================================================================
TOTAL RETURN+ (18.4)% (6.4)% 51.4% 10.2% 13.1% (19.2)%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period
(000's omitted) $74,001 $132,294 $146,173 $8,618 $7,557 $6,004
Ratios to average net assets:
Operating expenses 1.51%* 1.46%* 1.56% 2.00% 2.00% 2.00%
Interest expense .08%* .08%* -- -- -- --
Net investment income .39%* .56%* .03% (.10)% (.27)% (.39)%
Expense reimbursement** -- -- .08% 1.72% 1.76% 1.99%
Portfolio turnover rate 17% 63% 88% 245% 207% 325%
======================================================================================================================
*Annualized.
**This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
+Total return is calculated for the periods indicated and is not annualized.
#On September 21, 1994, the Fund's Trustees approved a change in the Fund's
fiscal year end from December 31 to September 30.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
TRUSTEES
Laurence B. Ashkin
Foster Bam
James S. Howell
Robert J. Jeffries
Gerald M. McDonnell
Thomas L. McVerry
William Walt Pettit
Russell A. Salton, III, M.D.
Michael S. Scofield
INVESTMENT ADVISER
Evergreen Asset Management Corp.
2500 Westchester Avenue
Purchase, New York 10577
CUSTODIAN & TRANSFER AGENT
State Street Bank and Trust Company
LEGAL COUNSEL
Shereff, Friedman, Hoffman & Goodman
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
DISTRIBUTOR
Evergreen Funds Distributor, Inc.
The investment adviser to the Evergreen Funds is
Evergreen Asset Management Corp., which is wholly-owned
by First Union National Bank of North Carolina.
Investments in the Evergreen Funds are not endorsed or
guaranteed by First Union, are not deposits or other
obligations of First Union, are not insured or
otherwise protected by the U.S. Government, the FDIC or
any other government agency, and involve investment
risks, including possible loss of principal.
The Evergreen Funds are sponsored and distributed by
Evergreen Funds Distributor, Inc., which is independent
of Evergreen and First Union.
The financial information included herein is taken from
the records of the Fund without examination by the
Fund's independent accountants, who do not express an
opinion thereon.
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND
2500 Westchester Avenue
Purchase, New York 10577 #536052
