<PAGE>
EVERGREEN INTERNATIONAL/GLOBAL GROWTH FUNDS
TABLE OF CONTENTS
<TABLE>
<C> <S> <C>
Economic Overview......................................................... 1
(Art Picture Here) EMERGING MARKETS A Report From Your Portfolio Manager...................................... 2
GROWTH FUND Statement of Investments.................................................. 3
Industry Diversification.................................................. 5
Statement of Assets and Liabilities....................................... 6
Statement of Operations................................................... 7
Statements of Changes in Net Assets....................................... 8
Financial Highlights...................................................... 9
(Art Picture Here) GLOBAL LEADERS A Report From Your Portfolio Managers..................................... 11
FUND Statement of Investments.................................................. 15
Industry Diversification.................................................. 18
Statement of Assets and Liabilities....................................... 19
Statement of Operations................................................... 20
Statements of Changes in Net Assets....................................... 21
Financial Highlights...................................................... 22
(Art Picture Here) GLOBAL REAL A Report From Your Portfolio Manager...................................... 24
ESTATE EQUITY Statement of Investments.................................................. 28
FUND Statement of Assets and Liabilities....................................... 30
Statement of Operations................................................... 31
Statements of Changes in Net Assets....................................... 32
Financial Highlights...................................................... 33
(Art Picture Here) INTERNATIONAL A Report From Your Portfolio Manager...................................... 36
EQUITY FUND Statement of Investments.................................................. 38
Industry Diversification.................................................. 43
Statement of Assets and Liabilities....................................... 44
Statement of Operations................................................... 45
Statements of Changes in Net Assets....................................... 46
Financial Highlights...................................................... 47
Combined Notes to Financial Statements.................................... 49
Trustees and Officers...................................... Inside Back Cover
<PAGE>
EVERGREEN INTERNATIONAL/GLOBAL GROWTH FUNDS
ECONOMIC OVERVIEW
BY STEPHEN A. LIEBER, CHAIRMAN
EVERGREEN ASSET MANAGEMENT CORP.
The U.S. and international markets in 1997 have
increasingly demonstrated a shift in focus from the
avoidance of inflation risk to strategies aimed at
obtaining sustained growth in a low inflation.
At the end of 1996, environment (Photo Here)
economic forecasters generally looked for a slowing growth rate in the United
States economy, with the possibility of reviving inflationary pressures. They
anticipated accelerating growth rates in Europe, with well maintained growth
rates in Southeast Asia, Latin America and other emerging markets; many of which
did not develop as expected. Instead, the United States has sustained rapid
growth, achieving a 5.8% rate of Gross Domestic Product (GDP) growth in the
first quarter of 1997, while inflation has remained at a lower level than seen
in more than a generation. Consumer prices in the U.S. are rising at a less than
2.5% level, even below the inflation rate of 1996. Europe has failed to produce
the projected economic upswing and Asian growth rates are modestly below most
forecasts, while even the Chinese have instituted policies to slow a too rapid
rate of economic growth.
Unexpected changes are causing widespread political and consequent investment
repositioning. The most dramatic shifts occurred in the British and French
political structures. The British elections are leading to a move away from the
Tory government's resistance to economic ties with Europe. The French elections
suggest a move away from economic policies aimed at facilitating a European
currency in 1999, by restricting possible inflationary growth of the economy.
Taking role model leadership, the United States, has become the country which is
negotiating a balanced budget pact aimed at stable growth and suppressed
inflation.
These economic conditions have sustained, and even increased, the willingness
of American savers to put money into the hands of equity mutual funds and to buy
stocks both in the U. S. and in the potentially growing nations abroad. Even the
bond market has, in the second quarter, begun to show sustained gains after more
than a year in which historically high real interest rates (returns above the
extraordinary level of inflation) contributed to a lower rate of inflation in
the United States. While the strength of the dollar began to fade in the early
months of 1997, there was little evidence of a broad retreat out of U.S.
equities from abroad, while there continued to be growth in U.S. investments
into the stocks of other nations.
The consensus view as we approach mid-year is that a continued low level of
inflation can be expected in the months ahead for most of the principal trading
and investing nations. Those which, over the last year, suffered from high rates
of inflation, such as Brazil, Chile, Indonesia, Mexico, Philippines, Thailand,
and Greece are seeing lower inflation rates in 1997. Greater stability should
allow less currency volatility and thereby facilitate investment transfers among
the nations. World economic activity is expected to accelerate only modestly
through the balance of this year. The United States, which has been a powerful
source of international demand and of growing importance in exports, is seen as
having a lower growth rate going into the second half of the year after the
blistering pace of the 5.6% GDP growth of the first quarter. New government
policies in Europe's high unemployment economies are anticipated to stimulate
demand, although it is quite clear that the goal of an integrated currency will
limit radical action. If currency volatility is reduced and interest rates
remain within a narrow band, conditions for the maintenance of profitable world
trade should be sustained.
The leadership of the United States stock market's powerful momentum, with
few interruptions to its upward trend, has encouraged investment participation
around the world. The 26% twelve-month advance of U.S. stock prices in the
period through May was, in fact, eclipsed by such gains (in local currencies) as
the 55% increase in Spain, 44% increase in Denmark, 43% in the Netherlands, and
46% in Switzerland. Even France, with its political uncertainties and high
unemployment, produced a 28% gain in the period. Among major nations, only Japan
had a negative market, with a fall of over 9%.
The evident need for selectivity, and focus on leadership enterprises, which
are the watchwords of our investment policies in the United States, are equally
relevant for investment internationally. The need for a long-term perspective, a
policy of taking advantage of declines in prices of quality stocks, purchasing
bonds during periods of exaggerated apprehensions over inflation, together with
systematic investing, should prove effective ways to capitalize on the
potentials of this investment environment, even after a long, sustained bull
market in stocks.
1
<PAGE>
EVERGREEN EMERGING MARKETS GROWTH FUND
(Art Icon Here)
A REPORT FROM YOUR
PORTFOLIO MANAGER
RICHARD WAGONER
We are pleased to present the Semiannual Report for
Evergreen Emerging Markets Growth Fund for the period ended
April 30, 1997. Evergreen Emerging Markets Growth Fund
completed the first half of its fiscal year with a net asset
value per share (Class Y, no-load shares) of $9.64. The Fund's
13.7%* total return (Class Y shares) for that time outperformed
the 9.8% total return for the MSCI Emerging Markets Global
Index**. The six-month total return for the Fund's Class A
shares at net asset value was 13.6%*.
The last six months were an extremely positive period for
the emerging markets. The combination of a positive interest (Photo Here)
rate environment and signs of economic recovery in many of
the markets attracted investors after two years of moderate performance. The
leading markets were Brazil, Greece, Turkey, Colombia, Israel, Argentina and
Taiwan, each of which was up over 25% during this period, as measured by their
respective MSCI country sub-indexes. The worst performing markets were Thailand, South Korea and the Philippines, which
declined 27%, 14% and 6% respectively.
As compared with the MSCI Emerging Markets Global Index, the Fund's
overweights in Brazil, Hong Kong and Portugal helped performance, as did the
Fund's underweights in Thailand and Korea. Strong stock selection in Brazil,
Chile and Portugal also contributed. Our major sector overweights were in the
financial and services sector, where our combined weighting was approximately
60%.
The near-term outlook remains bullish for the emerging markets. The developed
economies, particularly the U.S., are showing signs of strength, but a major
tightening of monetary policy does not seem imminent. We are particularly
positive on Latin America where the economies of Mexico and Argentina are
emerging from the after-effects of the Mexican peso devaluation of 1994, and
Brazil, the largest economy in the region, seems to finally be embracing market
reforms. The Pacific Rim markets, where we are substantially underweighted,
continue to underperform, but we remain positive on the long-term prospects for
this region. The Eastern European markets are still underdeveloped but are
becoming increasingly attractive.
Thank you for your investment in Evergreen Emerging Markets Fund.
FIGURES REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE RESULTS.
INTERNATIONAL INVESTING INVOLVES INCREASED RISK AND VOLATILITY.
* 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.
8.2% WAS THE 6-MONTH TOTAL RETURN ENDED 4/30/97, FOR THE FUND'S CLASS A SHARES
WITH THE 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 AFTER THE MONTH OF PURCHASE. PERFORMANCE FOR THESE CLASSES
OF SHARES MAY BE DIFFERENT. THE FUND'S CLASS Y SHARES ARE NOT SUBJECT TO SALES
CHARGES AND ARE AVAILABLE TO CERTAIN INSTITUTIONAL INVESTORS AND INVESTMENT
ADVISORY CLIENTS OF EVERGREEN ASSET AND ITS AFFILIATES.
** 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.
2
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EVERGREEN EMERGING MARKETS GROWTH FUND
STATEMENT OF INVESTMENTS
(Art Icon Here)
APRIL 30, 1997
(UNAUDITED)
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
LONG TERM INVESTMENTS (90.9%)
COMMON STOCKS -- 86.9%
ARGENTINA -- 5.9%
20,000 Banco de Galicia y Buenos Aires
SA de CV, ADR....................... $ 486,563
17,000 Banco Frances del Rio de la
Plata SA, ADR....................... 516,375
14,900 Telefonica de Argentina, ADR,
Cl. B............................... 495,425
37,100 YPF SA, ADR......................... 1,024,887
2,523,250
BRAZIL -- 16.0%
10,700 Companhia Energetica de Minas
Gerais, ADR......................... 486,940
1,250,000* Companhia Paulista de Forca e Luz... 193,959
2,322,000 Eletrobras SA....................... 1,050,195
800,000* Light Participacoes SA.............. 255,007
570,000 Light Servicos de Electricidade SA.. 236,897
6,006,000 Petroleo Brasileiro SA.............. 1,262,192
25,200 Telecomunicacoes Brasileiras, ADR... 2,891,700
11,000,000 Unibanco Uniao de Bancos
Brasileiros SA...................... 406,384
6,783,274
CHILE -- 3.9%
51,600 Compania de Telecom de Chile SA..... 1,670,550
CHINA -- 0.5%
8,300* Huaneng Power Intl., Inc., ADR...... 201,275
COLOMBIA -- 0.5%
7,700 Banco Ganadero SA................... 212,712
CZECH REPUBLIC -- 2.6%
6,200 Komercni Banka AS................... 438,005
5,500* Skoda Plzen AS...................... 175,791
4,500* SPT Telekom AS...................... 475,552
1,089,348
HONG KONG -- 10.8%
107,520 Bank of East Asia Ltd............... 369,897
50,000 Cheung Kong Holdings, Ltd........... 438,908
360,000* Cheung Kong Infrastructure
Holdings............................ 1,020,074
1,048,000 China Overseas Land & Investment
Ltd................................. 591,880
18,400 HSBC Holdings Plc................... 465,552
118,000 Lai Sun Development Co., Ltd........ 143,949
23,683* Lai Sun Hotels, Warrants @ 2.20
HKD expiring 4/30/99................ 2,262
528,000 National Mutual Asia Ltd............ 545,279
51,000 Sun Hung Kai Properties Ltd......... 553,024
<CAPTION>
SHARES VALUE
HONG KONG -- 10.8% -- CONTINUED
1,035,000 Vanda Systems & Comm Hldgs.......... $ 434,228
4,565,053
HUNGARY -- 3.3%
10,400 EGIS Gyogyszergyar.................. 660,770
9,900 Richter Gedeon, GDR................. 748,295
1,409,065
INDIA -- 1.4%
7,400* EIH Ltd., GDR, 144A................. 121,138
8,200 Ranbaxy Laboratories Ltd., GDR,
144A................................ 205,000
12,500 Videsh Sanchar Nigam Ltd., GDR,
144A................................ 246,812
572,950
INDONESIA -- 1.6%
467,608 Bank International Indonesia........ 336,755
89,656* Bank International Indonesia,
Warrants @1000 IDR expiring
1/17/2000........................... 28,594
72,000 PT Gudang Garam..................... 302,222
667,571
ISRAEL -- 1.8%
20,800 ECI Telecommunications Ltd.......... 455,000
5,900 Teva Pharmaceutical Inds. Ltd.,
ADR................................. 299,425
754,425
LUXEMBOURG -- 0.8%
7,500* Millicom International Cellular SA 341,250
MALAYSIA -- 4.0%
35,000 AMMB Holdings Berhad................ 232,794
41,000* Arab Malaysian Finance Berhad....... 89,812
82,000* Arab Malaysian Finance Berhad,
Rights expiring 4/30/97............. 163
22,400 Commerce Asset Holding Berhad....... 133,822
70,000 Industrial Oxygen Inc., Berhad...... 86,984
68,000 Malayan Banking Berhad.............. 677,075
84,000 New Straits Times Press, Berhad..... 468,377
1,689,027
MEXICO -- 10.2%
51,000 Alfa SA de CV....................... 279,821
7,200* Bufete Industrial SA................ 137,700
8,080 Desc SA de CV, ADR.................. 208,060
70,000 Grupo Elektra SA de CV.............. 656,264
124,000 Grupo Finance Inbursa............... 424,439
23,100 Grupo Imsa SA De CV, ADR............ 496,650
</TABLE>
3
<PAGE>
EVERGREEN EMERGING MARKETS GROWTH FUND
STATEMENT OF INVESTMENTS -- (CONTINUED)
(Art Icon Here)
APRIL 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
COMMON STOCKS -- 86.9% -- CONTINUED
MEXICO -- 10.2% -- CONTINUED
<C> <S> <C>
97,800 Grupo Modelo SA de CV............... $ 593,212
1,195,000* Grupo Posadas, SA de CV, Class A
Shares.............................. 550,393
17,800 Telefonos de Mexico SA, ADR......... 734,250
14,000* Tubos de Acero de Mexico SA, ADR.... 229,250
4,310,039
PERU -- 1.0%
18,000 Telefonica del Peru SA, ADR......... 432,000
POLAND -- 2.8%
9,700 Agros Holding SA.................... 276,004
11,700 Bank Rozwoju Eksportu SA............ 279,276
3,700 Bank Slaski SA...................... 314,085
36,100 Elektrim............................ 324,135
1,193,500
PORTUGAL -- 4.5%
21,000 Banco Comercial Portugues, ADR...... 322,875
35,000 Portugal Telecom SA, ADR............ 1,295,000
3,400* Telecel-Comunicacaoes Pessoais SA... 292,770
1,910,645
SINGAPORE -- 1.9%
21,000 City Developments Ltd............... 169,741
181,000 Datacraft Asia Ltd.................. 398,200
75,000 Genting International Plc........... 222,000
789,941
SOUTH AFRICA -- 2.3%
6,900 Anglo American Corp. Ltd............ 440,706
15,300 De Beers Centenary AG............... 550,546
991,252
SOUTH KOREA -- 0.6%
26,643 SK Telecom Ltd., ADR................ 253,108
TAIWAN -- 9.1%
480,000* Acer Inc............................ 1,223,427
10,440* Advanced Semiconductor Materials
International NV, GDR............... 223,155
5,000 China Steel Corp.................... 5,351
250,000 Chinatrust Commercial Bank.......... 469,993
200,000* President Enterprises............... 354,302
49,222* President Enterprises Corp.,
GDR, 144A........................... 885,996
125,000* Siliconware Precision Industries.... 451,916
<CAPTION>
SHARES VALUE
<C> <S> <C>
</TABLE>
TAIWAN -- 9.1% -- CONTINUED
<TABLE>
<C> <S> <C>
105,000* United Microelectronics Corp........ $ 254,339
3,868,479
USSR -- 0.9%
7,000 LUKoil Oil Co., ADR................. 397,807
VENEZUELA -- 0.5%
7,600 Compania Anonima Nacional
Telefonos de Venezuela.............. 228,000
TOTAL COMMON STOCKS
(COST $31,640,915)................ 36,854,521
PREFERRED STOCKS -- 4.0%
BRAZIL -- 4.0%
2,518,000* Eletrobras SA, Cl. B Shares......... 1,174,356
1,935,000* Telesp Telefonos Sao Paulo.......... 549,478
1,723,834
TOTAL PREFERRED STOCKS
(COST $1,269,843)................. 1,723,834
TOTAL LONG-TERM INVESTMENTS
(COST $32,910,758)................ 38,578,355
<CAPTION>
PRINCIPAL
AMOUNT
<C> <S> <C>
REPURCHASE AGREEMENT -- 8.2%
$3,468,000 State Street Bank & Trust Co.,
5.00% dated 4/30/97, due
5/1/97 -- collateralized by
$2,860,000 U.S.Treasury Bonds,
9.25%, due 2/15/16; maturity
value -- $3,542,420 (cost
$3,468,000)......................... 3,468,000
</TABLE>
<TABLE>
<C> <S> <C> <C>
TOTAL INVESTMENTS --
(COST $36,378,758)......... 99.1% 42,046,355
OTHER ASSETS AND
LIABILITIES -- NET......... 0.9% 363,963
NET ASSETS --................ 100.0% $42,410,318
</TABLE>
* Non-income producing securities
ADR -- American Depositary Receipts
GDR -- Global Depositary Receipts
144A -- securities are restricted as to resale to qualified institutional
investors.
See accompanying combined notes to financial statements.
4
<PAGE>
EVERGREEN EMERGING MARKETS GROWTH FUND
INDUSTRY DIVERSIFICATION
(Art Icon Here)
APRIL 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
PERCENTAGE OF
NET ASSETS
<S> <C>
Banks.............................................................................................................. 12.8%
Building, Construction & Furnishings............................................................................... 0.7
Business Equipment & Services...................................................................................... 3.9
Chemical & Agricultural Products................................................................................... 0.2
Communication Systems & Services................................................................................... 3.0
Consumer Products & Services....................................................................................... 0.7
Diversified Companies.............................................................................................. 2.3
Electrical Equipment & Services.................................................................................... 3.0
Energy............................................................................................................. 11.7
Finance & Insurance................................................................................................ 3.1
Food & Beverage Products........................................................................................... 5.0
Healthcare Products & Services..................................................................................... 4.5
Metal Products & Services.......................................................................................... 2.9
Leisure & Tourism.................................................................................................. 2.1
Oil................................................................................................................ 0.9
Publishing, Broadcasting & Entertainment........................................................................... 1.1
Real Estate........................................................................................................ 6.9
Retailing & Wholesale.............................................................................................. 1.6
Telecommunication Equipment & Services............................................................................. 22.4
Utilities.......................................................................................................... 2.1
Total Long-Term Investments.................................................................................. 90.9
Short-Term Investments............................................................................................. 8.2
Other Assets and Liabilities -- net................................................................................ 0.9
Net Assets................................................................................................... 100.0%
</TABLE>
5
<PAGE>
EVERGREEN EMERGING MARKETS GROWTH FUND
STATEMENT OF ASSETS & LIABILITIES
(Art Icon Here)
APRIL 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments at value (identified cost $36,378,758)............................................................. $42,046,355
Foreign currencies at value (identified cost $122,141)......................................................... 121,791
Cash........................................................................................................... 314,780
Receivable for investments sold................................................................................ 1,123,775
Dividends and interest receivable.............................................................................. 216,594
Receivable for Fund shares sold................................................................................ 59,431
Unamortized organization expense............................................................................... 23,070
Prepaid expenses and other assets.............................................................................. 39,089
Total assets............................................................................................. 43,944,885
LIABILITIES:
Payable for investments purchased.............................................................................. 1,401,016
Accrued advisory fee........................................................................................... 17,195
Payable for Fund shares repurchased............................................................................ 3,992
Distribution fee payable....................................................................................... 2,358
Accrued expenses............................................................................................... 110,006
Total liabilities........................................................................................ 1,534,567
NET ASSETS........................................................................................................ $42,410,318
NET ASSETS CONSIST OF:
Paid-in capital................................................................................................ $39,812,764
Accumulated net investment income.............................................................................. 104,281
Accumulated net realized loss on investments and foreign currency related transactions......................... (3,173,071)
Net unrealized appreciation on investments and foreign currency related transactions........................... 5,666,344
Net assets.................................................................................................. $42,410,318
CALCULATION OF NET ASSET VALUE AND MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares ($1,939,603/201,935 shares of beneficial interest outstanding).................................. $ 9.61
Sales charge -- 4.75% of offering price........................................................................ .48
Maximum offering price................................................................................... $ 10.09
Class B Shares ($3,290,935/346,153 shares of beneficial interest outstanding).................................. $ 9.51
Class C Shares ($890,005/93,671 shares of beneficial interest outstanding)..................................... $ 9.50
Class Y Shares ($36,289,775/3,763,456 shares of beneficial interest outstanding)............................... $ 9.64
</TABLE>
See accompanying combined notes to financial statements
6
<PAGE>
EVERGREEN EMERGING MARKETS GROWTH FUND
STATEMENT OF OPERATIONS
(Art Icon Here)
SIX MONTHS ENDED APRIL 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding taxes of $47,913)........................................... $ 346,503
Interest.......................................................................................... 65,670
Total investment income........................................................................ 412,173
EXPENSES:
Advisory fee...................................................................................... $ 289,402
Custodian fee..................................................................................... 89,507
Registration and filing fees...................................................................... 45,340
Transfer agent fee................................................................................ 33,174
Distribution fees................................................................................. 19,168
Reports and notices to shareholders............................................................... 14,084
Professional fees................................................................................. 13,656
Administration personnel and service fees......................................................... 7,772
Amortization of organizational expense............................................................ 7,079
Insurance......................................................................................... 5,044
Miscellaneous..................................................................................... 1,157
Trustees' fees and expenses....................................................................... 772
Fee waivers and/or reimbursement from Investment Manager.......................................... (218,402)
Total expenses.............................................................................. 307,753
Less: Indirectly paid expenses.................................................................... (189)
Net expenses................................................................................ 307,564
Net investment income................................................................................ 104,609
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY RELATED TRANSACTIONS:
Net realized loss on investments.................................................................. (1,281,480)
Net realized loss on foreign currency related transactions........................................ (44,570)
Net realized loss on investments and foreign currency related transactions........................ (1,326,050)
Net change in unrealized appreciation (depreciation) on investments and foreign currency related
transactions.................................................................................... 5,703,199
Net realized and unrealized gain on investments and foreign currency related transactions............ 4,377,149
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................................. $4,481,758
</TABLE>
See accompanying combined notes to financial statements.
7
<PAGE>
EVERGREEN EMERGING MARKETS GROWTH FUND
(Art Icon Here)
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS YEAR
ENDED ENDED
APRIL 30, 1997 OCTOBER 31, 1996
<S> <C> <C>
(UNAUDITED)
OPERATIONS:
Net investment income (loss)............................................................. $ 104,609 $ (4,321)
Net realized loss on investments and foreign currency related transactions (1,326,050) (96,636)
Net change in unrealized appreciation (depreciation) on investments and
foreign currency related transactions................................................. 5,703,199 (38,536)
Net increase (decrease) in net assets resulting from operations....................... 4,481,758 (139,493)
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................................................................ 9,042,086 24,970,951
Proceeds from reinvestment of distributions.............................................. -- 22,693
Payment for shares redeemed.............................................................. (4,682,332) (3,663,950)
Net increase resulting from Fund share transactions................................... 4,359,754 21,329,694
Net increase in net assets............................................................ 8,841,512 21,101,531
NET ASSETS:
Beginning of period...................................................................... 33,568,806 12,467,275
End of period (including undistributed net investment income (accumulated net investment
loss) of $104,281 and ($328),
respectively)......................................................................... $ 42,410,318 $ 33,568,806
</TABLE>
See accompanying combined notes to the financial statements.
8
<PAGE>
EVERGREEN EMERGING MARKETS GROWTH FUND
(Art Icon Here)
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES
SIX MONTHS SEPTEMBER 6, SIX MONTHS
ENDED TEN MONTHS 1994* ENDED
APRIL 30, YEAR ENDED ENDED THROUGH APRIL 30, YEAR ENDED
1997+++ OCTOBER 31, OCTOBER 31, DECEMBER 31, 1997+++ OCTOBER 31,
(UNAUDITED) 1996+++ 1995# 1994 (UNAUDITED) 1996+++
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of
period.............................. $8.46 $7.90 $8.17 $10.00 $8.39 $7.85
Income from investment operations:
Net investment income (loss)........ .02 (.01) .05 -- (.02) (.08)
Net realized and unrealized gain
(loss) on investments and foreign
currency related transactions..... 1.13 .62 (.32) (1.83) 1.14 0.62
Total from investment
operations...................... 1.15 .61 (.27) (1.83) 1.12 0.54
Less distributions to shareholders
from net investment income.......... -- (.05) -- -- -- --
Net asset value, end of period........ $9.61 $8.46 $7.90 $8.17 $9.51 $8.39
TOTAL RETURN+......................... 13.6% 7.7% (3.3%) (18.3%) 13.4% 6.9%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands).......................... $1,940 $1,645 $1,117 $867 $3,291 $2,881
Ratios to average net assets:
Expenses**.......................... 1.75%++ 1.74% 1.73%++ 1.78%++ 2.51%++ 2.50%
Net investment income (loss)**...... 0.38%++ (0.09%) 0.76%++ (0.12%)++ (0.38%)++ (0.87%)
Portfolio turnover rate............... 65% 107% 65% 17% 65% 107%
Average commission rate paid per
share............................... $.0059 $.0103 N/A N/A $.0059 $.0103
<CAPTION>
CLASS B SHARES
SEPTEMBER 6,
TEN MONTHS 1994*
ENDED THROUGH
OCTOBER 31, DECEMBER 31,
1995# 1994
<S> <C> <C>
PER SHARE DATA:
Net asset value, beginning of
period.............................. $8.16 $10.00
Income from investment operations:
Net investment income (loss)........ .01 (.02)
Net realized and unrealized gain
(loss) on investments and foreign
currency related transactions..... (.32) (1.82
Total from investment
operations...................... (.31) (1.84)
Less distributions to shareholders
from net investment income.......... -- --
Net asset value, end of period........ $7.85 $8.16
TOTAL RETURN+......................... (3.8%) (18.4%)
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands).......................... $1,940 $1,589
Ratios to average net assets:
Expenses**.......................... 2.48%++ 2.53%++
Net investment income (loss)**...... 0.03%++ (0.84%)++
Portfolio turnover rate............... 65% 17%
Average commission rate paid per
share............................... N/A N/A
</TABLE>
* Commencement of class 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 charges are not reflected.
++ Annualized.
+++ Per share data is calculated based on average shares outstanding during the
period.
** 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
would have been the following:
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES
SIX MONTHS SEPTEMBER 6, SIX MONTHS
ENDED TEN MONTHS 1994* ENDED
APRIL 30, YEAR ENDED ENDED THROUGH APRIL 30, YEAR ENDED
1997 OCTOBER 31, OCTOBER 31, DECEMBER 31, 1997 OCTOBER 31,
(UNAUDITED) 1996 1995# 1994 (UNAUDITED) 1996
<S> <C> <C> <C> <C> <C> <C>
Expenses.............................. 3.03% 3.58% 3.97% 3.96% 3.82% 4.34%
Net investment loss................... (0.91%) (1.93%) (1.48%) (2.30%) (1.69%) (2.71%)
<CAPTION>
CLASS B SHARES
SEPTEMBER 6,
TEN MONTHS 1994*
ENDED THROUGH
OCTOBER 31, DECEMBER 31,
1995# 1994
<S> <C> <C>
Expenses.............................. 4.72% 4.71%
Net investment loss................... (2.21%) (3.02%)
</TABLE>
See accompanying combined notes to financial statements.
9
<PAGE>
EVERGREEN EMERGING MARKETS GROWTH FUND
(Art Icon Here)
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS C SHARES CLASS Y SHARES
SIX MONTHS SEPTEMBER 6, SIX MONTHS
ENDED TEN MONTHS 1994* ENDED
APRIL 30, YEAR ENDED ENDED THROUGH APRIL 30, YEAR ENDED
1997+++ OCTOBER 31, OCTOBER 31, DECEMBER 31, 1997+++ OCTOBER 31,
(UNAUDITED) 1996+++ 1995# 1994 (UNAUDITED) 1996+++
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of
period.............................. $8.38 $7.84 $8.16 $10.00 $8.48 $7.92
Income from investment operations:
Net investment income (loss)........ .06 (.08) .02 (.02) .03 .01
Net realized and unrealized gain
(loss) on investments and foreign
currency related transactions..... 1.06 0.62 (.34) (1.82) 1.13 .62
Total from investment
operations...................... 1.12 0.54 (.32) (1.84) 1.16 .63
Less distributions to shareholders
from net investment income.......... -- -- -- -- -- (.07)
Net asset value, end of period........ $9.50 $8.38 $7.84 $8.16 $9.64 $8.48
TOTAL RETURN+......................... 13.4% 6.9% (3.9%) (18.4%) 13.7% 7.9%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands).......................... $890 $85 $56 $89 $36,290 $28,959
Ratios to average net assets:
Expenses**.......................... 2.54%++ 2.51% 2.50%++ 2.53%++ 1.49%++ 1.50%
Net investment income (loss)**...... 1.32%++ (0.91%) 0.72%++ (0.82%)++ 0.63%++ 0.11%
Portfolio turnover rate............... 65% 107% 65% 17% 65% 107%
Average commission rate paid per
share............................... $.0059 $.0103 N/A N/A $.0059 $.0103
<CAPTION>
CLASS Y SHARES
SEPTEMBER 6,
TEN MONTHS 1994*
ENDED THROUGH
OCTOBER 31, DECEMBER 31,
1995# 1994
<S> <C> <C>
PER SHARE DATA:
Net asset value, beginning of
period.............................. $8.17 $10.00
Income from investment operations:
Net investment income (loss)........ .05 0.01
Net realized and unrealized gain
(loss) on investments and foreign
currency related transactions..... (.30) (1.84)
Total from investment
operations...................... (.25) (1.83)
Less distributions to shareholders
from net investment income.......... -- --
Net asset value, end of period........ $7.92 $8.17
TOTAL RETURN+......................... (3.1%) (18.3%)
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands).......................... $9,355 $5,878
Ratios to average net assets:
Expenses**.......................... 1.48%++ 1.53%++
Net investment income (loss)**...... 0.94%++ 0.43%++
Portfolio turnover rate............... 65% 17%
Average commission rate paid per
share............................... N/A N/A
</TABLE>
* Commencement of class 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 charges are not reflected.
++ Annualized.
+++ Per share data is calculated based on average shares outstanding during the
period.
** 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
would have been the following:
<TABLE>
<CAPTION>
CLASS C SHARES CLASS Y SHARES
SIX MONTHS SEPTEMBER 6, SIX MONTHS
ENDED TEN MONTHS 1994* ENDED
APRIL 30, YEAR ENDED ENDED THROUGH APRIL 30, YEAR ENDED
1997 OCTOBER 31, OCTOBER 31, DECEMBER 31, 1997 OCTOBER 31,
(UNAUDITED) 1996 1995# 1994 (UNAUDITED) 1996
<S> <C> <C> <C> <C> <C> <C>
Expenses.............................. 3.82% 4.31% 4.74% 4.71% 2.79% 3.27%
Net investment income (loss).......... 0.04% (2.71%) (1.52%) (3.00%) (0.67%) (1.66%)
<CAPTION>
CLASS Y SHARES
SEPTEMBER 6,
TEN MONTHS 1994*
ENDED THROUGH
OCTOBER 31, DECEMBER 31,
1995# 1994
<S> <C> <C>
Expenses.............................. 3.72% 3.71%
Net investment income (loss).......... (1.30%) (1.75%)
</TABLE>
See accompanying combined notes to financial statements.
10
<PAGE>
EVERGREEN GLOBAL LEADERS FUND
(Art Icon Here)
A REPORT FROM YOUR
PORTFOLIO MANAGERS
STEPHEN A. LIEBER
EDWIN MISKA
We are pleased to present the Semiannual Report for (Photo Here)
Evergreen Global Leaders Fund for the six months ended
April 30, 1997. The total return for Evergreen Global
Leaders Fund (Class Y, no-load shares) for the period
under review was 5.4%*, slightly below the return for the
MSCI World Index**, 6.8%, and the average total return for
the Lipper Global Funds*** group of the 195 global funds
tracked by Lipper Analytical Services, Inc., during that
time, 6.8%, but comfortably ahead of the MSCI EAFE Index** (Photo Here)
return of 0.8%. For the 12-month period ended April 30, the
Fund (Class Y shares) returned 12.8%, which compares favorably
with the MSCI World Index return of 8.4%, the MSCI EAFE Index
return of 2.5%, and the Lipper Global Funds average return for
the 166 global funds tracked by Lipper during that time, of 8.8%.
The total returns for the Fund's Class A shares for the six-month
period and the period since their inception on June 3, 1996,
through April 30, 1997, were 0.2% and 5.7% respectively.
Despite a generally robust environment for equity investing, with
most major industrialized nations' stock markets at or near record highs, global
investors returns were hampered by the exceedingly strong performance generated
by the U.S. dollar vis-a-vis the world's currencies, which had the effect of
impeding local stock market appreciation. Most representative of this trend was
the decline of the Japanese yen and the German mark versus the U.S. dollar,
10.5% and 12.6%, respectively, for the six months under review. The Fund's
assets were still too low during much of this time to economically benefit from
currency risk management, given its high trading costs and inherent risks.
We maintained the intense focus of Evergreen Global Leaders Fund's investment
strategy on seeking out the "100 best companies in the world", whose synergies
of size and diversity, and strong financial resources made it possible for many
of them to meet or exceed the markets' expectations on consistency of revenue
and earnings growth despite the short-term challenging conditions for
international commerce. Recent growth in assets should permit such "hedging" of
currencies in future periods of extreme volatility.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. INTERNATIONAL INVESTING
INVOLVES INCREASED RISK AND VOLATILITY.
* 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 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 AFTER THE MONTH OF PURCHASE. THE
FUND'S CLASS Y SHARES ARE NOT SUBJECT TO SALES CHARGES AND ARE AVAILABLE TO
CERTAIN INSTITUTIONAL INVESTORS AND INVESTMENT ADVISORY CLIENTS OF EVERGREEN
ASSET AND ITS AFFILIATES. 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
TIME. FOR ADDITIONAL INFORMATION ON FEE WAIVER, PLEASE SEE THE PROSPECTUS.
** 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
INCLUDING THAT OF THE U.S., DIFFER FROM INDEX RETURNS BECAUSE THEY REPRESENT
TOTAL STOCK MARKET RETURNS AS CALCULATED BY MORGAN STANLEY CAPITAL
INTERNATIONAL. MSCI WORLD INDEX IS AN UNMANAGED INDEX OF SELECTED SECURITIES. AN
INVESTMENT CAN NOT BE MADE IN AN INDEX.
*** SOURCE: LANA (LIPPER ANALYTICAL NEW APPLICATIONS) 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. 11
<PAGE>
EVERGREEN GLOBAL LEADERS FUND
(Art Icon Here)
A REPORT FROM YOUR
PORTFOLIO MANAGERS -- (CONTINUED)
ECONOMIC ENVIRONMENT AND PORTFOLIO REVIEW
The last six months were ones of divergent paths for the world's equity
markets, as shown by the strong gains of the U.S. stock market relative to the
dismal returns of many of the international markets. The U.S. economy continued
its strong growth trend from the autumn of 1996. Aided by low unemployment, a
tight labor market, a strong currency worldwide and increasing consumer
confidence supported by the strongest sustained growth in corporate profits
since the 1950's, the U.S. equity markets saw all major market indexes move into
and remain in record territory. This "exuberance" led to a pre-emptive move by
the Federal Reserve on March 25, to raise the Federal Funds rate by 1/4%, in an
attempt to prevent the economy from "overheating" and put a damper on inflation
and the steep rise of the dollar. A subsequent negative revaluation of the bond
and equity markets followed during the concluding days of the calendar quarter.
Surprisingly strong first quarter profit results, though, and an equally
ebullient outlook by many of the market's benchmark companies followed, quickly
changing the negative sentiment which had set in. Governmental progress on
budgetary and taxation issues and continued optimism from strong reports on the
economy during April, helped the Dow Jones Industrials add another 6.5% during
the month, highlighting a 28.5% rise during the 12-month period.
Performance of your Fund's U.S. holdings reflected and even exceeded the
strong run of the Dow Jones Industrial Average, as the U.S. holdings of the
Fund, as a group, returned 8.9% for the month of April. The U.S. segment of the
Fund also performed well for the six- and 12-month periods ended April 30,
returning 17.5% and 37.2%, respectively. The markets' continued focus on
companies which have delivered consistent earnings results coupled with strong
outlooks and fundamental standing, helped your Fund to outperform. Given the
strong trading environment, our broadly diversified U.S. allocation increased to
38 issues and 33.3% of the Fund's net assets, from 36 issues and 31.9% of assets
at 1996 fiscal year-end on October 31. Notable performers were all familiar
names. Microsoft Corp. provided the largest dollar gain for the Fund during the
six-month period, rising 53.8%. Others included Charles Schwab & Co., +46.5%,
Student Loan Marketing Association, +39.8%, Intel Corp., +39.1%, Coca-Cola Co.,
+25.8% and The Walt Disney Co., +25.2%. We were not reluctant to take profits
and register gains in securities which had any negative catalysts or changes in
fundamental status or valuation. One company in particular illustrated our
active strategy. Shares of SunAmerica, Inc., originally purchased in June 1996,
were sold on earnings concerns, for a gain of 45.7%. After the shares had
declined over 20%, and the earnings issues had abated, shares were repurchased,
and now show a 14.2% unrealized gain on our new basis. Other notable sales
included shares of Gillette Co., +33.5%; Monsanto Co., +37.6% and Procter &
Gamble , +25.7%. Small gains or losses resulted from the sales of Dana Corp.,
Interpublic Group Cos., Lucent Technologies, PPG Industries and McDonald's Corp.
New purchases were made in shares of AlliedSignal, Inc., Carnival Corp., Dresser
Industries, EMC Corp., Gannett Co., Mattel Inc., Oracle Corp., and Parametric
Technologies.
Performance of your Fund's holdings in foreign securities was disappointing
both in terms of absolute and relative returns for the six-month period under
review and only marginally better during the trailing 12-month period. The
return for the Fund's international holdings, as a group, was up 0.5% for the
six-month period, reflecting the meager return of the MSCI EAFE Index which was
up only 0.8%. Performance was slightly better when measured relative to the
market benchmark for the 12-month period, returning +1.7% versus the MSCI EAFE
Index return of -2.5%. Currency translation was the main culprit behind these
weak numbers, as declines occurred in nearly every industrialized nations
currency vis-a-vis the U.S. dollar, ranging from a 0.4% drop for the British
pound to the 16.3% loss of the Swedish krone. Of the countries in
12
<PAGE>
EVERGREEN GLOBAL LEADERS FUND
(Art Icon Here)
A REPORT FROM YOUR
PORTFOLIO MANAGERS -- (CONTINUED)
which we invest, only the Malayan ringitt managed a 0.7% gain versus the U.S.
dollar. As we had been totally unhedged during this period, our local gains were
ravaged. Despite this, the local climate for investing and general economic
outlook was fairly strong. Our commitment totaled 75 companies from 16 countries
representing 62.5% of the portfolio, in line with 62.8% at fiscal year-end.
In Europe, economic enthusiasm was the key element to a sustained rally in
stock prices. Germany, fueled by its slow but steady recovery, was aided in part
by the weak U.S. dollar/German mark exchange rate and the ensuing demand for
German products abroad. Government talk of structural reforms in taxation and
the onset of new capital investment after many years of neglect, helped rally
German equities to new highs and set the tone for much of the European markets.
The MSCI Europe Index+ climbed 10.7% for the six-month period under review. Our
largest European exposure was Germany at 9.1% of net assets. Our German
portfolio returned 7.0% for the six-month period, led by the shares of SAP AG,
the process control software giant, which rose 45.5% on strong continued growth.
Indicative of the mood to restructure occurring in German business and most of
continental Europe, was the merger of Rheinelektra AG, a fund holding, into
shares of Lahmeyer AG. Both companies were majority owned subsidiaries of mega
holding company RWE AG (also a Fund holding). They were consistently profitable
but were experiencing difficulties achieving growth in a highly competitive
environment, given their large corporate overheads. As both were involved in
electrical power distribution and engineering, the synergies and operating
benefits of consolidation were obvious. RWE in facilitating the link creates a
more competitive subsidiary, in turn making better use of its own capital, and
unlocking hidden value among its vast holdings. The dawning of a new period
focused on competitiveness and enhancing shareholders value has just begun in
Europe. After a strong run-up in price, from depressed pre-merger levels, we
opted to sell our shares of Lahmeyer for a modest gain, as a prolonged period of
restructuring still lay ahead.
Disappointing results were registered from France (7.0% of net assets), which
returned -3.4%. Despite solid performance from shares of grocery retailer
Promodes (sold during the period) +17.9, and new holdings: Technip S.A, +10%, a
firm involved in global engineering projects; and pharmaceutical firm
Synthelabo, +8.7%, weakness in shares of Television Francais, (sold during
period) -23.3%, Sagem, -19.1%, Castorama DuBois, -13.9% and SEB Group, -11.7%
reflected an underlying softness in the domestic French economy, which these
companies depended on for most of their profits. A weak French franc, -12.5%
versus the dollar, exacerbated the poor performance.
Also hurt by severe currency moves, was our performance in Sweden (period-end
weighting of 2.3%), which returned -8.2%. The move in the local currency, the
krone, versus the U.S. dollar was -16.3%. Surprise poor profit announcements
from two Swedish bellweathers, ABB Ag, the engineering giant and Astra AB, the
worldwide pharmaceutical company, accentuated the negative. Both had poor
returns, ABB, -2.8% (position was sold) and Astra, -14.6%. With these
disappointments notwithstanding, there were some bright spots in Europe. Shares
of Belgian chemical and pharmaceutical firm UCB, SA, rose 22.6%; Dutch systems
integrator Getronics rose 20.6%. In the U.K., shares of Lloyds TSB Group rose
44.3%, SmithKline Beacham rose 30.1%, and insurer Legal and General rose 24.5%.
From Spain, shares of Repsol rose 17.7% and Empresa Nacional de Electricdad rose
15.2%.
In contrast, Asian markets suffered at the hands of continued domestic
weakness in Japan, local interest rate and property price concerns, as well as
regional banking crises in Southeast Asia, all of which reverberated
+ UNMANAGED INDEX OF SELECTED SECURITIES.
13
<PAGE>
EVERGREEN GLOBAL LEADERS FUND
(Art Icon Here)
A REPORT FROM YOUR
PORTFOLIO MANAGERS -- (CONTINUED)
throughout Hong Kong, Singapore and Malaysia. The surging U.S. dollar also
impacted Asian companies as much of its trade is U.S. dollar-denominated. The
MSCI Far East Index+ fell 12.0%. Despite these negatives, our shares in Japan
performed admirably, returning 0.7%. Convenience chain retailer Seven-Eleven
Japan, Ltd., the Fund's largest holding, rose 10.8% on strong-same store sales
gains, and electronic game manufacturer Nintendo, Ltd. rose 12% on continuing
worldwide acceptance of its new platform, the N64. Particularly weak were shares
of our Malaysian holdings, which declined 16.4%. Interest-sensitive issues,
reacting to the Bank Negara's (the Malayan Central Bank) raising of short-term
rates, were re-rated swiftly lower. Shares of AMMB Holdings fell 19.4%; Commerce
Asset Holding fell 24.6%; DCB Holdings fell 7.9% and Malayan Banking fell 6.0%.
Automobile maker Proton, despite robust car sales, fell 11.7% on the weakness of
the Japanese yen versus the Malayan ringitt. Much of its components originate
from Japan.
Finally, Canadian diversified manufacturer Bombardier, Class B shares, rose
24.3% on its continued success in its three main product categories: regional
jets; mass transit; and motorized consumer vehicles, such as snowmobiles and
water jetboats. It successfully launched its new commuter plane during the
quarter, the "Global Express" and garnered several large mass transit orders,
upping its order backlog to new highs.
CONCLUSION
The unwavering of the U.S. economic juggernaut and the continued improvement
in the world's other major economies should, we believe, make for a fertile
global investment climate for at least the immediate future. Companies' focus on
enhancement of competitiveness and profitability through restructurings, mergers
and new product innovations should help sustain strong growth. Our continued
focus for the Fund will be to position it to outperform in any economic
environment, and be proactive with respect to macro-economic, political and
social changes. We will maintain our emphasis on buying companies with the
strongest top and bottom line profit growth, strong financial balance sheets and
high returns on shareholders equity. Continued holdings in these undervalued
well-managed companies, we believe, will help to benefit the Fund handsomely and
generate strong long-term capital appreciation.
We appreciate your support and look forward to providing you with continued
updates on the progress of Evergreen Global Leaders Fund.
+ UNMANAGED INDEX OF SELECTED SECURITIES.
14
<PAGE>
EVERGREEN GLOBAL LEADERS FUND
STATEMENT OF INVESTMENTS
(Art Icon Here)
APRIL 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
LONG-TERM INVESTMENTS (95.8%)
COMMON STOCKS -- 95.8%
AUSTRALIA -- 0.5%
139,924 Incitec, Ltd........................ $ 676,541
BELGIUM -- 2.9%
7,000* Barco NV............................ 1,192,447
2,880 Colruyt SA.......................... 1,192,280
600 UCB SA.............................. 1,646,434
4,031,161
CANADA -- 4.7%
140,000 Bombardier, Inc..................... 2,836,077
75,000* Canadian Natural Resources, Ltd..... 1,787,760
80,000 DuPont Canada, Inc.................. 2,004,295
6,628,132
FRANCE -- 7.0%
3,800 Carrefour SA........................ 2,372,518
7,000 Castorama Dubois Investisse......... 1,035,038
6,500 Hermes Internatonal................. 1,748,479
16,500 LAPEYRE SA.......................... 995,117
641 Sagem Co. SA........................ 326,074
7,700 SEB SA.............................. 1,357,543
12,500 Societe Technip..................... 1,321,426
6,000 Synthelabo.......................... 714,469
9,870,664
GERMANY -- 9.1%
2,500 ALTANA AG........................... 1,934,404
1,450 Hugo Boss AG........................ 1,724,795
106,300 RWE AG.............................. 4,419,448
17,200 SAP AG.............................. 3,131,516
3,500 Suedzucker AG....................... 1,664,309
12,874,472
HONG KONG -- 3.3%
117,000 Cheung Kong Holdings, Ltd........... 1,027,045
600,000 Giordano International, Ltd......... 325,308
52,400 Henderson China Holdings, Ltd....... 90,304
115,000 Henderson Land Development Co.,
Ltd................................. 968,663
60,000 Hong Kong Telecommunications, Ltd.
ADS................................. 1,027,500
700,000 National Mutual Asia Ltd............ 722,907
78,000 Wing Lung Bank...................... 426,928
4,588,655
<CAPTION>
SHARES VALUE
<C> <S> <C>
</TABLE>
<TABLE>
<C> <S> <C>
ITALY -- 4.1%
60,000 Benetton Group SpA ADS.............. $ 1,552,500
25,000 Fila Holding SpA ADS................ 1,081,250
73,200 Industrie Natuzzi SpA ADS........... 1,628,700
25,000 Luxottica Group SpA ADS............. 1,509,375
5,771,825
JAPAN -- 6.7%
150,000 Mitsui Soko Co...................... 722,023
48,000 Nintendo Co., Ltd................... 3,509,198
69,000 Nippon Chemical..................... 385,945
75,400 Seven-Eleven Japan Co., Ltd......... 4,781,739
9,398,905
MALAYSIA -- 3.3%
76,000 AMMB Holdings Berhad................ 505,496
100,000 Commerce Asset Holding Berhad....... 597,419
155,000 DCB Holdings Berhad................. 503,126
100,000 Malayan Banking Berhad.............. 995,699
40,000 Malaysian Oxygen Berhad............. 197,547
61,000 Nestle Berhad....................... 476,183
100,000 Perusahaan Otomobil Nasional
Berhad.............................. 597,419
112,000 United Engineers Ltd. Berhad........ 794,010
4,666,899
NETHERLANDS -- 3.5%
14,000 Elsevier NV......................... 224,195
28,300 Elsevier NV ADS..................... 919,750
24,200 Getronics NV........................ 732,844
7,000 Nutricia Verenigde Bedrijven NV..... 1,062,054
45,000 VNU................................. 930,812
8,500 Wolters Kluwer NV................... 1,007,365
4,877,020
NEW ZEALAND -- 1.0%
40,200 Telecom Corp. of New Zealand Ltd.
ADS................................. 1,447,200
NORWAY -- 0.9%
15,000 Orkla ASA........................... 1,257,513
SINGAPORE -- 0.6%
50,000 Singapore Press Holdings, Ltd....... 925,734
</TABLE>
15
<PAGE>
EVERGREEN GLOBAL LEADERS FUND
STATEMENT OF INVESTMENTS -- (CONTINUED)
(Art Icon Here)
APRIL 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
COMMON STOCKS -- 95.8% -- CONTINUED
<C> <S> <C>
SPAIN -- 4.7%
30,000 Centros Comerciales Pryca, SA....... $ 521,186
36,000 Empresa Nacional de Electricdad
ADS................................. 2,515,500
55,000 Prosegur, CIA de Seguridad SA....... 596,252
70,000 Repsol SA, ADS...................... 2,931,250
6,564,188
SWEDEN -- 2.3%
2,600 Astra AB............................ 106,390
55,500 Astra AB ADS........................ 2,275,500
6,200 Hennes & Mauritz AB Cl. B........... 897,039
3,278,929
UNITED KINGDOM -- 7.9%
34,560 Argos Plc........................... 361,284
30,000 Burmah Castrol Plc.................. 491,086
20,000 Carlton Communications Plc ADS...... 837,500
55,400 Granada Group Plc................... 800,023
57,750 Legal & General Group Plc........... 387,028
95,000 Lloyds TSB Group Plc................ 866,856
65,000 Morgan Crucible Company Plc......... 457,212
40,000 Next Plc............................ 422,366
80,000 Reckitt & Colman Plc................ 1,089,141
95,100 Rentokil Group Plc.................. 622,697
12,500 Reuters Holdings Plc ADS............ 770,312
16,100 SmithKline Beecham Plc ADS.......... 1,298,062
40,000 Smiths Industries Plc............... 488,817
85,000 TI Group Plc........................ 728,768
32,700 United News & Media Plc ADS......... 399,608
12,500 Vodafone Group Plc ADS.............. 553,125
26,000 Williams Holdings Plc............... 139,271
50,300 Wolseley Plc........................ 402,726
11,115,882
UNITED STATES -- 33.3%
19,000 AlliedSignal Inc.................... 1,372,750
14,100* Amgen, Inc.......................... 830,138
33,000 AT & T Corp......................... 1,105,500
10,500 Avon Products, Inc.................. 647,063
26,000 Callaway Golf Co.................... 776,750
<CAPTION>
SHARES VALUE
<C> <S> <C>
</TABLE>
UNITED STATES -- 33.3% -- CONTINUED
<TABLE>
<C> <S> <C>
30,000 Carnival, Corp...................... $ 1,106,250
27,000* Cisco Systems, Inc.................. 1,397,250
20,000 Coca Cola Co. (The)................. 1,272,500
31,750 Computer Associates International,
Inc................................. 1,651,000
43,250* CUC International, Inc.............. 913,656
20,000 Deere & Co.......................... 920,000
13,900 Disney Walt Co. (The)............... 1,139,800
15,000 Dover Corp.......................... 795,000
30,000 Dresser Inds Inc.................... 896,250
5,000* E M C Corp. Mass.................... 181,875
38,000 Federal National Mortgage
Association......................... 1,562,750
15,000 Gannett Inc......................... 1,308,750
25,000 Gap, Inc............................ 796,875
29,500 General Electric Co................. 3,270,812
16,500 Goodyear Tire & Rubber Co. (The).... 868,312
30,000 Home Depot, Inc. (The).............. 1,740,000
15,600 Intel Corp.......................... 2,388,750
26,500 Marriott International, Inc......... 1,464,125
5,700 Marsh & McLennan Co., Inc........... 686,850
35,000 Mattel, Inc......................... 975,625
35,000 MBNA Corp........................... 1,155,000
12,500 McGraw-Hill Cos., Inc............... 635,938
21,500 Merck & Co., Inc.................... 1,945,750
12,500 Merrill Lynch & Co., Inc............ 1,190,625
18,500* Microsoft Corp...................... 2,247,750
22,000 Norwest Corp........................ 1,097,250
35,000* Oracle Systems Corp................. 1,391,250
28,000* Parametric Technology Corp.......... 1,267,000
17,000 Schering-Plough Corp................ 1,360,000
15,000 Schwab (Charles) & Co., Inc......... 549,375
5,000 Student Loan Marketing Association.. 591,250
30,000 SunAmerica, Inc..................... 1,380,000
70,000 Wal-Mart Stores, Inc................ 1,977,500
46,857,319
TOTAL COMMON STOCKS (COST
$127,625,609).................. 134,831,039
</TABLE>
16
<PAGE>
EVERGREEN GLOBAL LEADERS FUND
STATEMENT OF INVESTMENTS -- (CONTINUED)
(Art Icon Here)
APRIL 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM INVESTMENTS -- 3.2%
$300,000 Federal Farm Credit Bank
5.36%, 5/23/97...................... $ 299,017
450,000 Federal Home Loan Mortgage Corp.
5.41%, 5/6/97....................... 449,662
100,000 Federal National Mortgage
Association
5.41%, 5/2/97....................... 99,985
300,000 Federal National Mortgage
Association
5.41%, 5/9/97....................... 299,639
3,000,000 Federal National Mortgage
Association
5.35%, 5/20/97...................... 2,991,529
350,000 Federal National Mortgage
Association
5.35%, 5/28/97...................... 348,596
TOTAL SHORT-TERM INVESTMENTS (COST
$4,488,428).................... 4,488,428
TOTAL INVESTMENTS --
(COST $132,114,037)..... 99.0% 139,319,467
OTHER ASSETS AND
LIABILITIES -- NET...... 1.0% 1,396,240
NET ASSETS --.............. 100.0% $140,715,707
</TABLE>
* Non-income producing securities
ADS -- American Depositary Shares
See accompanying combined notes to financial statements.
17
<PAGE>
EVERGREEN EMERGING MARKETS GROWTH FUND
INDUSTRY DIVERSIFICATION
(Art Icon Here)
APRIL 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
PERCENTAGE OF
PERCENTAGE OF
NET ASSETS
<S> <C>
Automotive Equipment & Manufacturing............................................................................... 0.4%
Banks.............................................................................................................. 3.2
Building, Construction & Furnishings............................................................................... 3.0
Chemical & Agricultural Products................................................................................... 2.7
Consumer Products & Services....................................................................................... 8.4
Diversified Companies.............................................................................................. 4.2
Energy............................................................................................................. 7.1
Finance & Insurance................................................................................................ 6.2
Food & Beverage Products........................................................................................... 4.1
Healthcare Products & Services..................................................................................... 9.7
Industrial Specialty Products & Services........................................................................... 5.6
Information Systems & Technology................................................................................... 10.2
Leisure & Tourism.................................................................................................. 1.8
Publishing, Broadcasting & Entertainment........................................................................... 7.0
Real Estate........................................................................................................ 1.5
Retailing & Wholesale.............................................................................................. 11.7
Telecommunication Equipment & Services............................................................................. 2.1
Textile & Apparel.................................................................................................. 4.3
Utilities.......................................................................................................... 2.6
Total Long-Term Investments.................................................................................. 95.8
Short-Term Investments............................................................................................. 3.2
Other Assets and Liabilities -- net................................................................................ 1.0
Net Assets................................................................................................... 100.0%
</TABLE>
18
<PAGE>
EVERGREEN GLOBAL LEADERS FUND
STATEMENT OF ASSETS AND LIABILITIES
(Art Icon Here)
APRIL 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments at value (identified cost $132,114,037)........................................................... $139,319,467
Foreign currencies at value (identified cost $46,698)......................................................... 46,518
Cash.......................................................................................................... 71,780
Receivable for investments sold............................................................................... 1,922,429
Receivable for Fund shares sold............................................................................... 1,260,866
Dividends and interest receivable............................................................................. 392,717
Unamortized organization expense.............................................................................. 27,741
Prepaid expenses and other assets............................................................................. 47,846
Total assets............................................................................................ 143,089,364
LIABILITIES:
Payable for investments purchased............................................................................. 1,999,266
Payable for Fund shares repurchased........................................................................... 100,056
Accrued advisory fee.......................................................................................... 94,397
Distribution fee payable...................................................................................... 77,792
Accrued expenses.............................................................................................. 102,146
Total liabilities....................................................................................... 2,373,657
NET ASSETS....................................................................................................... $140,715,707
NET ASSETS CONSIST OF:
Paid-in capital............................................................................................... $132,578,745
Accumulated net investment loss............................................................................... (148,148)
Accumulated net realized gain on investments and foreign currency related transactions........................ 1,080,260
Net unrealized appreciation on investments and foreign currency related transactions.......................... 7,204,850
Net assets.............................................................................................. $140,715,707
CALCULATION OF NET ASSET VALUE AND MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares ($26,473,494/2,113,710 shares of beneficial interest outstanding).............................. $ 12.52
Sales charge -- 4.75% of offering price....................................................................... 0.62
Maximum offering price..................................................................................... $ 13.14
Class B Shares ($85,093,962/6,843,415 shares of beneficial interest outstanding).............................. $ 12.43
Class C Shares ($1,580,031/127,182 shares of beneficial interest outstanding)................................. $ 12.42
Class Y Shares ($27,568,220/2,197,831 shares of beneficial interest outstanding).............................. $ 12.54
</TABLE>
See accompanying combined notes to financial statements
19
<PAGE>
EVERGREEN GLOBAL LEADERS FUND
STATEMENT OF OPERATIONS
(Art Icon Here)
SIX MONTHS ENDED APRIL 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding taxes of $93,292)......................................... $ 838,761
Interest........................................................................................ 143,917
Total investment income...................................................................... 982,678
EXPENSES:
Advisory fee.................................................................................... $ 500,177
Distribution fees............................................................................... 260,166
Transfer agent fee.............................................................................. 201,641
Custodian fee................................................................................... 90,430
Registration and filing fees.................................................................... 76,665
Administration personnel and service fees....................................................... 21,033
Professional fees............................................................................... 13,793
Trustees' fees and expenses..................................................................... 5,100
Insurance expense............................................................................... 4,225
Amortization of organizational expense.......................................................... 3,913
Miscellaneous................................................................................... 1,488
Fee waivers and/or reimbursement from Investment Manager........................................ (48,886)
Total expenses............................................................................... 1,129,745
Less: Indirectly paid expenses.................................................................. (1,218)
Net expenses................................................................................. 1,128,527
Net investment loss................................................................................ (145,849)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY RELATED TRANSACTIONS:
Net realized gain on investments................................................................ 1,041,464
Net realized gain on foreign currency related transactions...................................... 60,123
Net realized gain on investments and foreign currency related transactions...................... 1,101,587
Net change in unrealized appreciation (depreciation) on investments and foreign currency related
transactions.................................................................................. 3,676,426
Net realized and unrealized gain on investments and foreign currency related transactions.......... 4,778,013
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............................................... $4,632,164
</TABLE>
See accompanying combined notes to financial statements.
20
<PAGE>
EVERGREEN GLOBAL LEADERS FUND
(Art Icon Here)
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
APRIL 30, 1997 OCTOBER 31, 1996
<S> <C> <C>
(UNAUDITED)
OPERATIONS:
Net investment income (loss)............................................................. $ (145,849) $ 2,343
Net realized gain on investments and
foreign currency related transactions................................................. 1,101,587 77,271
Net change in unrealized appreciation on investments and
foreign currency related transactions................................................. 3,676,426 3,528,424
Net increase in net assets resulting from operations.................................. 4,632,164 3,608,038
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income............................................................... 0 (2,343)
In excess of net investment income....................................................... 0 (17,247)
From capital gains....................................................................... (83,650) 0
Total distributions to shareholders................................................... (83,650) (19,590)
FUND SHARE TRANSACTIONS:
Proceeds from shares sold................................................................ 66,688,481 72,602,018
Proceeds from reinvestment of distributions.............................................. 72,508 14,211
Payment for shares redeemed.............................................................. (4,676,980) (2,122,493)
Net increase resulting from Fund share transactions................................... 62,084,009 70,493,736
Net increase in net assets............................................................ 66,632,523 74,082,184
NET ASSETS:
Beginning of period...................................................................... 74,083,184 1,000
End of period (including undistributed net investment loss of ($148,148) and
distributions in excess of net investment income of ($2,299), respectively)............ $140,715,707 $ 74,083,184
</TABLE>
See accompanying combined notes to the financial statements.
21
<PAGE>
EVERGREEN GLOBAL LEADERS FUND
(Art Icon Here)
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS B
CLASS A SHARES SHARES
SIX MONTHS JUNE 3, SIX MONTHS
ENDED 1996* ENDED
APRIL 30, THROUGH APRIL 30,
1997 OCTOBER 31, 1997
(UNAUDITED) 1996 (UNAUDITED)
<S> <C> <C> <C>
PER SHARE DATA:++
Net asset value, beginning of period............................................. $11.91 $11.29 $11.87
Income from investment operations:
Net investment income (loss)................................................... .01 -- (.04)
Net realized and unrealized gain on investments and foreign currency related
transactions................................................................. .61 .62 .61
Total from investment operations............................................. .62 .62 .57
Less distributions to shareholders from:
Net investment income.......................................................... -- -- --
Net realized gain on investments and foreign currency related transactions..... (.01) -- (.01)
Total distributions.......................................................... (.01) .00 (.01)
Net asset value, end of period................................................... $12.52 $11.91 $12.43
TOTAL RETURN+.................................................................... 5.2% 5.5% 4.8%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $26,473 $12,975 $85,094
Ratios to average net assets:+++
Expenses....................................................................... 1.76%** 1.75%** 2.50%**
Net investment income.......................................................... 0.12%** 0.10%** (0.63%)**
Portfolio turnover rate.......................................................... 8% 20%# 8%
Average commission rate paid per share........................................... $.0572 $.0659 $.0572
<CAPTION>
CLASS B SHARES
JUNE 3,
1996*
THROUGH
OCTOBER 31,
1996
<S> <C>
PER SHARE DATA:++
Net asset value, beginning of period............................................. $11.29
Income from investment operations:
Net investment income (loss)................................................... (.02)
Net realized and unrealized gain on investments and foreign currency related
transactions................................................................. .60
Total from investment operations............................................. .58
Less distributions to shareholders from:
Net investment income.......................................................... --
Net realized gain on investments and foreign currency related transactions..... --
Total distributions.......................................................... .00
Net asset value, end of period................................................... $11.87
TOTAL RETURN+.................................................................... 5.1%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $41,948
Ratios to average net assets:+++
Expenses....................................................................... 2.50%**
Net investment income.......................................................... (0.68%)**
Portfolio turnover rate.......................................................... 20%#
Average commission rate paid per share........................................... $.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.
# Calculated for the twelve months ended October 31, 1996.
+ 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 charges are not reflected.
++ Calculated based on average shares outstanding during the period.
+++ 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 operating expenses and net investment income (loss) to
average net assets would have been the following:
<TABLE>
<CAPTION>
CLASS B
CLASS A SHARES SHARES
SIX MONTHS JUNE 3, SIX MONTHS
ENDED 1996* ENDED
APRIL 30, THROUGH APRIL 30,
1997 OCTOBER 31, 1997
(UNAUDITED) 1996 (UNAUDITED)
<S> <C> <C> <C>
Expenses......................................................................... 1.85% 2.16% 2.60%
Net investment income (loss)..................................................... 0.02% (0.31%) (0.72%)
<CAPTION>
CLASS B SHARES
JUNE 3,
1996*
THROUGH
OCTOBER 31,
1996
<S> <C>
Expenses......................................................................... 2.93%
Net investment income (loss)..................................................... (1.11%)
</TABLE>
See accompanying combined notes to financial statements.
22
<PAGE>
EVERGREEN GLOBAL LEADERS FUND
(Art Icon Here)
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS Y
CLASS C SHARES SHARES
SIX MONTHS JUNE 3, SIX MONTHS
ENDED 1996* ENDED
APRIL 30, THROUGH APRIL 30,
1997 OCTOBER 31, 1997
(UNAUDITED) 1996 (UNAUDITED)
<S> <C> <C> <C>
PER SHARE DATA:++
Net asset value, beginning of period............................................. $11.86 $11.29 $11.91
Income from investment operations:
Net investment income (loss)................................................... (.04) (.02) .02
Net realized and unrealized gain on investments and foreign currency related
transactions................................................................. .61 .59 .62
Total from investment operations............................................. .57 .57 .64
Less distributions to shareholders from:
Net investment income.......................................................... -- -- .00
Net realized gain on investments and foreign currency related transactions..... (.01) -- (.01)
Total distributions.......................................................... (.01) .00 (.01)
Net asset value, end of period................................................... $12.42 $11.86 $12.54
TOTAL RETURN+.................................................................... 4.8% 5.0% 5.4%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (in thousands)......................................... $1,580 $554 $27,568
Ratios to average net assets:+++
Expenses....................................................................... 2.51%** 2.50%** 1.50%**
Net investment income.......................................................... (0.63%)** (0.67%)** 0.35%**
Portfolio turnover rate.......................................................... 8% 20%# 8%
Average commission rate paid per share........................................... $.0572 $.0659 $.0572
<CAPTION>
CLASS Y SHARES
YEAR ENDED
OCTOBER 31,
1996
<S> <C>
PER SHARE DATA:++
Net asset value, beginning of period............................................. $10.00
Income from investment operations:
Net investment income (loss)................................................... .07
Net realized and unrealized gain on investments and foreign currency related
transactions................................................................. 1.88
Total from investment operations............................................. 1.95
Less distributions to shareholders from:
Net investment income.......................................................... (.04)
Net realized gain on investments and foreign currency related transactions..... --
Total distributions.......................................................... (.04)
Net asset value, end of period................................................... $11.91
TOTAL RETURN+.................................................................... 19.6%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (in thousands)......................................... $18,607
Ratios to average net assets:+++
Expenses....................................................................... 1.47%
Net investment income.......................................................... 0.62%
Portfolio turnover rate.......................................................... 20%#
Average commission rate paid per share........................................... $.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.
# Calculated for the twelve months ended October 31, 1996.
+ 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 charges are not reflected.
++ Calculated based on average shares outstanding during the period.
+++ 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 operating expenses and net investment income (loss) to
average net assets would have been the following:
<TABLE>
<CAPTION>
CLASS Y
CLASS C SHARES SHARES
SIX MONTHS SIX MONTHS
ENDED JUNE 3, 1996* ENDED
APRIL 30, THROUGH APRIL 30,
1997 OCTOBER 31, 1997
(UNAUDITED) 1996 (UNAUDITED)
<S> <C> <C> <C>
Expenses....................................................................... 2.61% 2.93% 1.60%
Net investment income (loss)................................................... (0.72%) (1.10%) 0.25%
<CAPTION>
CLASS Y SHARES
YEAR ENDED
OCTOBER 31,
1996
<S> <C>
Expenses....................................................................... 2.51%
Net investment income (loss)................................................... (0.42%)
</TABLE>
See accompanying combined notes to financial statements.
23
<PAGE>
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND
(Art Icon Here)
A REPORT FROM YOUR
PORTFOLIO MANAGER
SAMUEL A. LIEBER
This Semiannual Report for Evergreen Global Real Estate
Equity Fund covers the six-month period ended April 30. The
Fund began the period under review with a net asset value
(NAV) per share (Class Y, no-load shares) of $12.31, declined
to a low of $11.22 on April 22, and ended the period at
$11.37. We believe that the April 22 low was the turning point
for the Fund in this period of underperformance which began
last year on June 28, when the Fund's NAV per share was
$13.51. This period of underperformance marks only the second
time since the Fund's inception in 1989, that it has
underperformed the GPR Global Real Estate Index* for a period
longer than (Photo Here)
three months. Significantly, subsequent to April 30, the Fund
returned to its levels of last October. With this report, we will discuss the
reasons for the Fund's underperformance, why we believe the performance has
recovered and where we believe the Fund will find opportunities over the near
and long-term periods.
PERIOD IN REVIEW
Evergreen Global Real Estate Equity Fund benefited from the excellent
performance of a number of property shares in Europe, but was adversely impacted
by poor performing markets in Asia. The Fund's performance suffered further as a
result of the U.S. dollar's appreciation against the average of all continental
European currencies, and the Japanese yen, of approximately 14% and 11%,
respectively. During this period, the dollar rose against virtually every
currency, and much of this appreciation took place in the first five weeks of
1997.
During the six months under review, the weakest property market was Thailand,
where the local Thai Property Developer Index** declined by 43%. Concerns over a
residential housing glut were exacerbated by an overall slowdown in the economy,
political instability and a decline in consumer and investor confidence. In
aggregate, these concerns have led to a banking crisis. The Fund's two largest
holdings in Thailand, Hemaraj Land & Development Public Co., Ltd. and Saha
Pathana Inter-Holdings Co., declined by only 18.1% and 0.8%, respectively, as
their focus is on industrial property, which has been the only healthy property
sector. The Philippines was the other major negative for the Fund, as two of our
larger holdings, Megaworld Properties and Holdings, Inc., and SM Development
Corp. fell by 41% and 31%, respectively. Philippines securities have been
affected by a scare that the Philippines may be the next Thailand. However, we
believe the country's property market, banking system and overall economy are
much stronger than Thailand's. Nonetheless, the Fund's position in the
Philippines was reduced from 13.3% at the beginning of the period to 5.4% by
April 30. Despite the slide in share prices, the Fund was still able to book
gains as positions were reduced. Among stocks sold, Megaworld and Filinvest Land
provided average gains of 60% and 50%, respectively. Another area of general
weakness in the Fund's portfolio was Japan, where smaller capitalization stocks
have underperformed those in the Nikkei 225 Index, which has only three real
estate stocks.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
INTERNATIONAL INVESTING INVOLVES INCREASED RISKS AND VOLATILITY.
* A GLOBAL MARKET CAPITALIZATION-WEIGHTED PERFORMANCE INDEX (IN U.S. DOLLARS) OF
LISTED PROPERTY/REAL ESTATE SECURITIES MEASURING TOTAL RETURN
** UNMANAGED INDEX OF SELECTED SECURITIES
AN INVESTMENT CAN NOT BE MADE IN AN INDEX
24
<PAGE>
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND
(Art Icon Here)
A REPORT FROM YOUR
PORTFOLIO MANAGER -- (CONTINUED)
In Europe, the Fund enjoyed a number of superb gains, led by two of its
holdings in Spain, Sotogrande and Immobilaria Urbis SA, which rose 76% and 74%,
respectively. On average, the Fund's investments in France rose in line with the
SBF Real Estate Index**. The stellar performer in France was Societe du Louvre
which rose 55% in local currency. The Fund's principal holding in Germany, Kampa
Haus, rose almost 23%, as interest rates have come down and the German economy
is showing signs of improvement. Scandinavia was also a positive area for the
Fund. Notably, Norway's Steen and Strom ASA rose by more than 38% and Denmark's
Thorkild Kristensen rose 14.5%. The Fund also enjoyed a number of similar gains
from its holdings in Great Britain, Argentina and Canada. Currency depreciation
against the dollar, however, reduced much of the Fund's substantial gains in
local currencies.
PORTFOLIO CHANGES
In response to the weakening market sentiment, particularly in Southeast
Asia, a number of changes were made to the Fund with the intent to decrease the
potential volatility of the portfolio. The average market capitalization of the
portfolio was increased to help reduce the Fund's exposure to more volatile
"high beta"*** stocks. In particular, the Fund's weighting in stocks from North
American countries was increased from 22.1% to 27% of net assets, which
increased the Fund's dollar exposure. This was offset by a reduction in holdings
in Asia from 34.9% to 21%. Most of this decrease came from an almost 10%
reduction in the Fund's Southeast Asia holdings to nearly half of its 1996
fiscal year-end weighting. The other major change in country weightings was in
Europe, where holdings were increased from 33.1% to 40.8% of the Fund's net
assets. This included an increase in the exposure to Scandinavian countries from
6.8% to 9.5%, as the Fund initiated two positions in Sweden.
PROSPECTS FOR RECOVERY
A basic premise from which we operate is that real estate demand springs from
economic growth. The supply side of this equation is influenced by specific
market factors, as well as financial liquidity levels. The U.S. and Great
Britain were the first countries to bring liquidity back to the real estate
markets following the "Gulf War" recession. Economic growth started to pick up
at about the same time. The issue in the U.S., is how far along the curve of the
real estate cycle is the property market at present. Clearly, the easy money has
been made, as occupancies and rents are now high enough to make new development
feasible in many markets. Given the broad availability of significant capital to
supply new development, the critical variable will be the sustainability of
economic growth and, hence, demand by potential occupiers. Thus, we are
cautiously optimistic that attractive investments can still be found in the
property share markets of both the U.S. and Great Britain through attention to
share and market fundamentals.
Europe has been something of an enigma, as the effort to achieve
multi-national convergence to the standards of the European Monetary Union (EMU)
has in fact prevented a number of countries from emerging from their prolonged
recessions. Such enforced fiscal austerity has led to unemployment rates
averaging 10.9% for prospective EMU countries and ranging from 12% to 15% in
many neighboring countries. The outcome has been stalled economic recoveries and
anemic gross domestic product (GDP) growth levels. As a result, Continental
Europe is typically three to four years behind the U.S. in both its business and
real estate cycles.
** UNMANAGED INDEX OF SELECTED SECURITIES
***BETA IS A MEASURE OF THE MARKET RISK OF A SECURITY, ILLUSTRATING THE
VOLATILITY OF ITS NET ASSET PER SHARE (NAV) AS COMPARED WITH THE MARKET AS A
WHOLE (AS MEASURED BY S&P 500 REINVESTED INDEX WHICH IS ASSIGNED A BETA OF ONE).
A BETA OF LESS THAN ONE INDICATES THAT THE NAV WOULD FLUCTUATE LESS THAN THE
MARKET AND GREATER THAN ONE INDICATES IT WOULD FLUCTUATE MORE THAN THE MARKET.
25
<PAGE>
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND
(Art Icon Here)
A REPORT FROM YOUR
PORTFOLIO MANAGER -- (CONTINUED)
Thus, while the U.S. and Great Britain have already enjoyed a rebound in rents
and property values, the property markets in Continental Europe are still in the
early stages of recovery. So called "vulture" investors from the U.S. and Great
Britain have made some acquisitions, bringing new investment capital back to
these property markets.
Japan has been plagued by its government's inability and unwillingness to
bail out its financial system as the U.S. did with the Resolution Trust
Corporation in the early 1990's. As a result, the stabilization of Japan's
property and financial markets has taken more than six years. Prime rents have
been increasing as vacancy rates have declined in major cities and new capital
has come into the market predominantly from other Asian investors seeking
premiere buildings and prime development locations. Several periods of solid GDP
growth have been posted over the past year, however, these have been primarily
the result of strong export growth and not domestic consumption. We believe that
domestic consumption will probably pick up within the next twelve months and
will lead to a more balanced recovery in the property sector.
The stock markets of Southeast Asia have followed different economic cycles
based on inter-ASEAN+ trade and the influence of economic patterns from the
major industrialized nations as well as their own domestic economies. The
strongest economic theme during the period under review has been the imminent
takeover of Hong Kong by mainland China on June 30. This has led to significant
cross-border inflows of funds into Hong Kong's stock and real estate markets.
Indeed, this proved very volatile for Hong Kong's residential market which
itself is a strong proxy for the stock market with regard to appreciation
potential and overall liquidity levels. We believe Hong Kong's stock market has
shown signs of speculative volatility and suspect that it has experienced a mini
bubble of "irrational exuberance" which will need time to gradually deflate.
Thailand, on the other hand, has seen its robust economy, which produced 10%
annual GDP growth for much of the last two decades, finally come back to earth
as stretched financial markets reacted to an economy that perhaps grew too
rapidly and with too little control. This will probably take a couple of years
to set right, during which time those companies with strong balance sheets
should have opportunities to reap potentially huge rewards. It is worth noting
that a number of regional investors from Singapore, Malaysia and Hong Kong have
begun to search for bargains in Thailand's property markets. The Philippines
appears to have followed a similar pattern, but we believe that this country,
which suffered a decade of stagnation before seeing its economy take off in
1994, is merely catching its breath as capital markets and economic demand get
realigned. Excesses should be absorbed by the country's expanding middle class,
within a reasonable period. Singapore has also slowed down and this is being
reflected in the flattening out of real estate prices across all sectors.
Malaysia, on the other hand, perhaps saw liquidity grow too quickly and we
believe that secondary locations and specific markets are being overbuilt and
may offer better opportunities next year. Australia and New Zealand have
experienced fairly anemic economic growth, however Sidney is enjoying its own
mini cycle as it prepares for the 2000 Olympics. Latin America, in general, has
recovered from the peso crisis of late 1994/early 1995 and we are beginning to
see new opportunities as domestic demand has gradually re-emerged, as have
foreign investors. While Canada is often seen as tailing the U.S., this time it
took several years to occur. After the rebound in share prices last fall, new
companies have been coming public and, thus, creating more potential investment
opportunities.
+ ASSOCIATION OF SOUTHEAST ASIAN NATIONS
26
<PAGE>
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND
(Art Icon Here)
A REPORT FROM YOUR
PORTFOLIO MANAGER -- (CONTINUED)
FUTURE OPPORTUNITIES
In conclusion, we believe that the growth prospects and the opportunity to
invest at reasonable values is much greater abroad than in the U.S. Financial
markets abroad have stabilized and appear poised to grow with the prospect of
their economies' expanding. This bodes well for revived demand for property
which in turn should hasten the return of investment capital to the property
markets. We believe that the expansion of public equity markets' role in
providing such investment capital will rapidly expand the range of investment
opportunities for stock investors. Just as a ten-fold growth in the stock market
capitalization of publicly traded property shares occurred here from 1993 to the
present, we expect new investment to fuel share price performance.
Over the past three years, property stocks abroad (measured using the GPR
International Index - excluding the U.S.) produced a total return of 13.7% for
the entire 36 months. By comparison, the Wilshire Real Estate Securities Index++
measuring U.S. stocks rose by 51.1% for the same period. We believe that this
relative underperformance has set levels from which foreign property shares in
general appear historically cheaper in relative terms. This reflects our thesis
that many business cycles abroad are only in the early stages of economic
recovery. This is why we are optimistic about the Fund's opportunities for
profitable investment in foreign property shares. The six-month total returns
ended April 30, 1997, for the Fund's Class Y, no-load shares and Class A shares
at net asset value were -7.4%+++ and -7.5%+++, respectively.
We appreciate your support during this recent difficult period and look
forward to updating Evergreen Global Real Estate Equity Fund's progress in its
Annual Report.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
++ UNMANAGED INDEX OF SELECTED SECURITIES
+++ 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.
- -11.9% WAS THE 6-MONTH TOTAL RETURN ENDED 4/30/97 FOR THE FUND'S CLASS A SHARES
WITH THE 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 AFTER THE MONTH 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 THE 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.
27
<PAGE>
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND
STATEMENT OF INVESTMENTS
(Art Icon Here)
APRIL 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
LONG-TERM INVESTMENTS -- (98.0%)
COMMON STOCKS -- 98.0%
ARGENTINA -- 5.6%
281,313 Inversiones y Representaciones SA..... $ 990,321
30,868 Inversiones y Representaciones
SA, GDR............................... 1,080,380
2,070,701
BELGIUM -- 0.9%
7,342 Bernheim-Comofi....................... 347,076
CANADA -- 1.9%
100,000* Gentra, Inc........................... 221,188
70,000 Monarch Development Corp.............. 484,789
705,977
DENMARK -- 4.5%
12,600* Nordicom AS........................... 182,575
20,525 Thorkild Kristensen................... 1,479,263
1,661,838
FRANCE -- 12.4%
6,576 Simco Registered Shares............... 571,238
20,000 Societe des Immeubles................. 1,261,030
51,078 Societe du Louvre..................... 1,916,573
8,450 Unibail............................... 817,999
4,566,840
GERMANY -- 3.6%
35,897 Kampa Haus AG......................... 1,336,965
JAPAN -- 10.2%
220 Chubu Sekiwa Real Estate, Ltd......... 1,889
52,000 Daibiru Corp.......................... 573,522
190,000 Diamond City Co., Ltd................. 1,047,781
133,100 Kansai Sekiwa Real Estate Co.,
Ltd................................... 968,877
47,000 Tachihi Enterprise Co., Ltd........... 1,140,426
3,732,495
MALAYSIA -- 0.9%
108,300 IOI Properties Berhad................. 258,802
39,200* IOI Properties Berhad
Warrants @ 2.75 MR expiring 5/18/98... 60,108
318,910
MEXICO -- 3.6%
930,000* Grupo Posadas, SA de CV, Class A
Shares............................... 428,339
1,930,000* Grupo Posadas, SA de CV, Class L
Shares............................... 888,920
1,317,259
<CAPTION>
SHARES VALUE
<C> <S> <C>
</TABLE>
<TABLE>
<C> <S> <C>
NETHERLANDS -- 4.1%
110,500 German City Estates NV................ $ 1,508,649
NORWAY -- 2.4%
65,000 Steen & Strom ASA..................... 885,385
PHILIPPINES -- 5.4%
2,000,000* Guoco Holdings........................ 291,998
2,576,250* Megaworld Properties and
Holdings, Inc......................... 576,408
3,461,000* Robinson's Land Corp. Class B.......... 498,741
7,125,000* SM Development Corp.................... 621,445
1,988,592
SINGAPORE -- 0.3%
114,200 Hotel Grand Central, Ltd............... 94,674
SPAIN -- 5.3%
40,000 Inmobilaria Urbis SA................... 251,701
239,993 Sotogrande SA.......................... 709,121
40,000 Vallehermoso SA........................ 984,918
1,945,740
SWEDEN -- 2.6%
99,800* Anders Dioes AB........................ 502,518
62,000* NK Cityfastigheter AB.................. 434,688
937,206
THAILAND -- 4.2%
123,700 Hemaraj Land & Development
Public Co., Lt......................... 406,059
22,900 MK Real Estate Development
Corp., Ltd............................. 25,203
400,000 Saha Pathana Inter-Holdings Co......... 964,686
206,200 Sammakorn Public Co., Ltd.............. 153,925
1,549,873
UNITED KINGDOM -- 5.0%
500,000 Greycoat Plc.......................... 1,243,922
1,000,000 Hemingway Properties Plc.............. 607,780
1,851,702
</TABLE>
28
<PAGE>
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND
STATEMENT OF INVESTMENTS -- (CONTINUED)
(Art Icon Here)
APRIL 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
COMMON STOCKS -- 98.0% -- CONTINUED
<C> <S> <C>
UNITED STATES -- 25.1%
36,900* Alexander's, Inc...................... $ 2,453,850
20,000 CarrAmerica Realty Corp............... 557,500
97,600 Continental Homes Holding Corp........ 1,549,400
10,000 Crescent Real Estate Equities, Inc.... 262,500
89,516 Horizon Group, Inc ................... 1,152,518
28,100* Pacific Greystone Corp................ 414,475
15,000 Prentiss Properties Trust............. 354,375
258,100* Presley Companies (The), Class A...... 290,363
20,000 Santa Anita Realty Enterprises, Inc... 587,500
8,000 Starwood Lodging Trust................ 308,000
120,000* US Home Corp.,
Warrants @ $20 expiring 6/22/98....... 750,000
130,700* Washington Homes, Inc................. 522,800
9,203,281
TOTAL COMMON STOCKS
(COST $40,633,628)............... 36,023,163
TOTAL INVESTMENTS --
(COST $40,633,628).......... 98.0% $36,023,163
OTHER ASSETS AND
LIABILITIES -- NET.......... 2.0% 720,797
NET ASSETS --................. 100.0% $36,743,960
</TABLE>
* Non-income producing securities
GDR -- Global Depositary Receipts
See accompanying combined notes to financial statements.
29
<PAGE>
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
(Art Icon Here)
APRIL 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments at value (identified cost $40,633,628)............................................................. $36,023,163
Foreign currencies at value (identified cost $60,565).......................................................... 58,016
Cash........................................................................................................... 1,632
Receivable for investments sold................................................................................ 1,423,820
Dividends and interest receivable.............................................................................. 122,517
Receivable for Fund shares sold................................................................................ 31,703
Prepaid expenses and other assets.............................................................................. 45,191
Total assets............................................................................................. 37,706,042
LIABILITIES:
Payable for investments purchased.............................................................................. 849,315
Accrued advisory fee........................................................................................... 27,840
Payable for Fund shares repurchased............................................................................ 21,478
Distribution fee payable....................................................................................... 336
Payable for line of credit..................................................................................... 311
Accrued expenses............................................................................................... 62,802
Total liabilities........................................................................................ 962,082
NET ASSETS........................................................................................................ $36,743,960
NET ASSETS CONSIST OF:
Paid-in capital................................................................................................ $46,848,544
Accumulated net investment loss................................................................................ (155,960)
Accumulated net realized loss on investments and foreign currency related transactions......................... (5,328,568)
Net unrealized depreciation on investments and foreign currency related transactions........................... (4,620,056)
Net assets............................................................................................... $36,743,960
CALCULATION OF NET ASSET VALUE AND MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares ($850,874/74,895 shares of beneficial interest outstanding)..................................... $ 11.36
Sales charge -- 4.75% of offering price........................................................................ 0.57
Maximum offering price................................................................................... $ 11.93
Class B Shares ($180,529/16,139 shares of beneficial interest outstanding)..................................... $ 11.19
Class C Shares ($89,109/7,968 shares of beneficial interest outstanding)....................................... $ 11.18
Class Y Shares ($35,623,448/3,131,956 shares of beneficial interest outstanding)............................... $ 11.37
</TABLE>
See accompanying combined notes to financial statements.
30
<PAGE>
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND
STATEMENT OF OPERATIONS
(Art Icon Here)
SIX MONTHS ENDED APRIL 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding taxes of $22,054)......................................... $ 289,388
Interest........................................................................................ 6,955
Total investment income................................................................... 296,343
EXPENSES:
Advisory fee.................................................................................... $ 220,299
Custodian fee................................................................................... 92,439
Transfer agent fee.............................................................................. 44,822
Registration and filing fees.................................................................... 33,765
Professional fees............................................................................... 13,165
Reports and notices to shareholders............................................................. 8,600
Trustees' fees and expenses..................................................................... 5,031
Insurance....................................................................................... 4,245
Distribution fees............................................................................... 2,306
Miscellaneous................................................................................... 1,946
Fee waivers and/or reimbursement from Investment Manager........................................ (22,030)
Total operating expenses..................................................................... 404,588
Interest........................................................................................ 4,331
Less: Indirectly paid expenses.................................................................. (407)
Net expenses.............................................................................. 408,512
Net investment loss................................................................................ (112,169)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY RELATED TRANSACTIONS:
Net realized gain on investments................................................................ 1,618,430
Net realized gain on foreign currency related transactions...................................... 908
Net realized gain on investments and foreign currency related transactions...................... 1,619,338
Net change in unrealized appreciation (depreciation) on investments and foreign currency related
transactions.................................................................................. (4,354,145)
Net realized and unrealized loss on investments and foreign currency related transactions.......... (2,734,807)
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS............................................... $(2,846,976)
</TABLE>
See accompanying combined notes to financial statements.
31
<PAGE>
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND
(Art Icon Here)
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS YEAR
ENDED ENDED
APRIL 30, 1997 OCTOBER 31, 1996
<S> <C> <C>
(UNAUDITED)
OPERATIONS:
Net investment income (loss)............................................................... $ (112,169) $ 66,648
Net realized gain on investments and foreign currency related transactions................. 1,619,338 495,328
Net change in unrealized appreciation (depreciation) on investments and foreign currency
related transactions..................................................................... (4,354,145) 3,504,138
Net increase (decrease) in net assets resulting from operations......................... (2,846,976) 4,066,114
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME:
Class Y Shares............................................................................. (76,344) 0
FUND SHARE TRANSACTIONS:
Proceeds from shares sold.................................................................. 1,241,105 16,042,743
Proceeds from reinvestment of distributions................................................ 43,582 0
Payment for shares redeemed................................................................ (9,982,783) (33,339,082)
Net decrease resulting from Fund share transactions..................................... (8,698,096) (17,296,339)
Net decrease in net assets.............................................................. (11,621,416) (13,230,225)
NET ASSETS:
Beginning of period........................................................................ 48,365,376 61,595,601
End of period (including accumulated net investment loss and undistributed net investment
income of ($155,960) and $32,553, respectively).......................................... $ 36,743,960 $ 48,365,376
</TABLE>
See accompanying combined notes to the financial statements.
32
<PAGE>
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND
(Art Icon Here)
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES
SIX MONTHS FEBRUARY 10, SIX MONTHS
ENDED ONE MONTH 1995* ENDED
APRIL 30, YEAR ENDED ENDED THROUGH APRIL 30, YEAR ENDED
1997 OCTOBER 31, OCTOBER 31, SEPTEMBER 30, 1997 OCTOBER 31,
(UNAUDITED) 1996 1995# 1995 (UNAUDITED) 1996
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA+++:
Net asset value, beginning of period..... $12.28 $11.58 $12.12 $11.46 $12.14 $11.53
Income from investment operations:
Net investment income (loss)........... (.06) .06 (.01) .07 (.10) (.13)
Net realized and unrealized gain (loss)
on investments and foreign currency
related transactions................. (.86) .64 (.53) .59 (.85) .74
Total from investment operations..... (.92) .70 (.54) .66 (.95) .61
Net asset value, end of period........... $11.36 $12.28 $11.58 $12.12 $11.19 $12.14
TOTAL RETURN+............................ (7.5%) 6.0% (4.5%) 5.8% (7.8%) 5.3%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $851 $721 $74 $66 $180 $134
Ratios to average net assets:
Expenses**............................. 2.11%++ 1.79% 1.73%++ 1.61%++ 2.86%++ 2.56%
Interest expense....................... 0.02%++ 0.03% 0.03%++ 0.01%++ 0.02%++ 0.03%
Net investment income (loss)**......... 0.74%++ 0.40% (1.26%)++ 0.98%++ 1.48%++ (1.03%)
Portfolio turnover rate.................. 17% 25% 1% 28%## 17% 25%
Average commission rate paid per share... $.0039 $.0037 N/A N/A $.0039 $.0037
<CAPTION>
CLASS B SHARES
FEBRUARY 8,
ONE MONTH 1995*
ENDED THROUGH
OCTOBER 31, SEPTEMBER 30,
1995# 1995
<S> <C> <C>
PER SHARE DATA+++:
Net asset value, beginning of period..... $12.08 $11.44
Income from investment operations:
Net investment income (loss)........... (.02) .08
Net realized and unrealized gain (loss)
on investments and foreign currency
related transactions................. (.53) .56
Total from investment operations..... (.55) .64
Net asset value, end of period........... $11.53 $12.08
TOTAL RETURN+............................ (4.6%) 5.6%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $100 $128
Ratios to average net assets:
Expenses**............................. 2.44%++ 2.42%++
Interest expense....................... 0.03%++ 0.03%++
Net investment income (loss)**......... (1.98%)++ 1.38%++
Portfolio turnover rate.................. 1% 28%##
Average commission rate paid per share... N/A N/A
</TABLE>
* Commencement of class operations.
# The Fund changed its year end from September 30 to October 31.
## Portfolio turnover is calculated for the year ended September 30, 1995.
+ 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 charges are not reflected.
++ Annualized.
+++ Per share data is calculated based on average shares outstanding during the
period.
** 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 would have been the following:
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES
SIX MONTHS FEBRUARY 10, SIX MONTHS
ENDED ONE MONTH 1995* ENDED
APRIL 30, YEAR ENDED ENDED THROUGH APRIL 30, YEAR ENDED
1997 OCTOBER 31, OCTOBER 31, SEPTEMBER 30, 1997 OCTOBER 31,
(UNAUDITED) 1996 1995# 1995 (UNAUDITED) 1996
<S> <C> <C> <C> <C> <C> <C>
Expenses................................. 2.22% 2.97% 46.90% 21.59% 2.97% 14.45%
Net investment loss...................... (0.84%) (0.78%) (46.44%) (19.00%) (1.58%) (12.92%)
<CAPTION>
CLASS B SHARES
FEBRUARY 8,
ONE MONTH 1995*
ENDED THROUGH
OCTOBER 31, SEPTEMBER 30,
1995# 1995
<S> <C> <C>
Expenses................................. 31.39% 82.74%
Net investment loss...................... (30.94%) (79.94%)
</TABLE>
See accompanying combined notes to financial statements.
33
<PAGE>
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND
(Art Icon Here)
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS C SHARES
SIX MONTHS
ENDED ONE MONTH
APRIL 30, YEAR ENDED ENDED
1997 OCTOBER 31, OCTOBER 31,
(UNAUDITED) 1996 1995#
<S> <C> <C> <C>
PER SHARE DATA+++:
Net asset value, beginning of period........................................... $12.14 $11.53 $12.08
Income from investment operations:
Net investment income (loss)................................................. (.10) (.13) (.02)
Net realized and unrealized gain (loss) on investments and foreign currency
related transactions....................................................... (.86) .74 (.53)
Total from investment operations........................................... (.96) .61 (.55)
Less distributions to shareholders from:
Net investment income........................................................ -- -- --
Net realized gain on investments and foreign currency related transactions... -- -- --
Total distributions........................................................ -- -- --
Net asset value, end of period................................................. $11.18 $12.14 $11.53
TOTAL RETURN+.................................................................. (7.8%) 5.3% (4.6%)
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $89 $8 $4
Ratios to average net assets:
Expenses**................................................................... 2.90%++ 2.54% 2.37%++
Interest expense............................................................. 0.02%++ 0.03% 0.02%++
Net investment income (loss)**............................................... (1.43%)++ (1.06%) (1.94%)++
Portfolio turnover rate........................................................ 17% 25% 1%
Average commission rate paid per share......................................... $.0039 $.0037 N/A
<CAPTION>
CLASS C SHARES
FEBRUARY 9,
1995*
THROUGH
SEPTEMBER 30,
1995
<S> <C>
PER SHARE DATA+++:
Net asset value, beginning of period........................................... $11.43
Income from investment operations:
Net investment income (loss)................................................. .06
Net realized and unrealized gain (loss) on investments and foreign currency
related transactions....................................................... .59
Total from investment operations........................................... .65
Less distributions to shareholders from:
Net investment income........................................................ --
Net realized gain on investments and foreign currency related transactions... --
Total distributions........................................................ --
Net asset value, end of period................................................. $12.08
TOTAL RETURN+.................................................................. 5.7%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $7
Ratios to average net assets:
Expenses**................................................................... 1.54%++
Interest expense............................................................. 0.01%++
Net investment income (loss)**............................................... .86%++
Portfolio turnover rate........................................................ 28%++++
Average commission rate paid per share......................................... N/A
</TABLE>
* Commencement of class operations.
# 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. Initial sales charge or contingent
deferred sales charges are not reflected.
++ Annualized.
+++ Per share data is calculated based on average shares outstanding during the
period.
++++ 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 income (loss) to average
net assets would have been the following:
<TABLE>
<CAPTION>
CLASS C SHARES
SIX MONTHS
ENDED ONE MONTH
APRIL 30, YEAR ENDED ENDED
1997 OCTOBER 31, OCTOBER 31,
(UNAUDITED) 1996 1995#
<S> <C> <C> <C>
Expenses....................................................................... 3.00% 118.64% 570.26%
Net investment loss............................................................ (1.53%) (117.16%) (569.83%)
<CAPTION>
CLASS C SHARES
FEBRUARY 9,
1995*
THROUGH
SEPTEMBER 30,
1995
<S> <C>
Expenses....................................................................... 269.60%
Net investment loss............................................................ (266.32%)
</TABLE>
See accompanying combined notes to financial statements.
34
<PAGE>
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND
(Art Icon Here)
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS Y SHARES
SIX MONTHS
ENDED ONE MONTH NINE MONTHS
APRIL 30, YEAR ENDED ENDED YEAR ENDED ENDED
1997+++ OCTOBER 31, OCTOBER 31, SEPTEMBER 30, SEPTEMBER 30,
(UNAUDITED) 1996+++ 1995# 1995 1994##
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period...................... $12.31 $11.59 $12.13 $13.81 $14.75
Income from investment operations:
Net investment income (loss)............................ (.04) .01 (.01) .11 .07
Net realized and unrealized gain (loss) on investments
and foreign currency related transactions............. (.88) .71 (.53) (1.17) (1.01)
Total from investment operations...................... (.92) .72 (.54) (1.06) (.94)
Less distributions to shareholders from:
Net investment income................................... (.02) -- -- (.10) --
Net realized gain on investments and foreign currency
related transactions.................................. -- -- -- (.52) --
Total distributions................................... (.02) -- -- (.62) --
Net asset value, end of period............................ $11.37 $12.31 $11.59 $12.13 $13.81
TOTAL RETURN+............................................. (7.4%) 6.2% (4.5%) (7.7%) (6.4%)
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $35,623 $47,502 $61,418 $67,645 $132,294
Ratios to average net assets:
Expenses................................................ 1.84%++** 1.62%** 1.62%++ 1.54% 1.46%++
Interest expense........................................ 0.02%++ 0.03% 0.03%++ 0.05% 0.08%++
Net investment income (loss)............................ (.50%)++** .11%** (1.14%)++ .92% .56%++
Portfolio turnover rate................................... 17% 25% 1% 28% 63%
Average commission rate paid per share.................... $.0039 $.0037 N/A N/A N/A
<CAPTION>
CLASS Y SHARES
YEAR ENDED
DECEMBER 31,
1993
<S> <C>
PER SHARE DATA:
Net asset value, beginning of period...................... $9.86
Income from investment operations:
Net investment income (loss)............................ --
Net realized and unrealized gain (loss) on investments
and foreign currency related transactions............. 5.07
Total from investment operations...................... 5.07
Less distributions to shareholders from:
Net investment income................................... --
Net realized gain on investments and foreign currency
related transactions.................................. (.18)
Total distributions................................... (.18)
Net asset value, end of period............................ $14.75
TOTAL RETURN+............................................. 51.4%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $146,173
Ratios to average net assets:
Expenses................................................ 1.56%**
Interest expense........................................ --
Net investment income (loss)............................ .03%**
Portfolio turnover rate................................... 88%
Average commission rate paid per share.................... N/A
</TABLE>
* Commencement of class operations.
# 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. Initial sales charge or contingent deferred
sales charges are not reflected.
++ Annualized.
+++ Per share data is calculated based on average shares outstanding during the
period.
** 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 would have been the following:
<TABLE>
<CAPTION>
CLASS Y SHARES
SIX MONTHS
ENDED ONE MONTH NINE MONTHS
APRIL 30, YEAR ENDED ENDED YEAR ENDED ENDED
1997 OCTOBER 31, OCTOBER 31, SEPTEMBER 30, SEPTEMBER 30,
(UNAUDITED) 1996 1995# 1995 1994##
<S> <C> <C> <C> <C> <C>
Expenses.................................................. 1.95% 1.67% -- -- --
Net investment loss....................................... (.60%) .06% -- -- --
<CAPTION>
CLASS Y SHARES
YEAR ENDED
DECEMBER 31,
1993
<S> <C>
Expenses.................................................. 1.64%
Net investment loss....................................... (.05%)
</TABLE>
See accompanying combined notes to financial statements.
35
<PAGE>
EVERGREEN INTERNATIONAL EQUITY FUND
(Art Icon Here)
A REPORT FROM YOUR
PORTFOLIO MANAGER
RICHARD WAGONER
We are pleased to present the Semiannual Report for
Evergreen International Equity Fund for the period ended April
30, 1997. Evergreen International Equity Fund completed the
first half of its fiscal year with a net asset value per share
(Class Y, no-load shares) of $11.06. The Fund's 7.4%* total
return (Class Y shares) for the six months ended April 30,
outperformed the average total return for the 397
International Funds tracked by Lipper Analytical Services,
Inc.,** of 6.2% The Fund also outperformed the 1.6% total
return for the MSCI EAFE Index***. The six-month total return
ended April 30, for the Fund's Class A shares at net asset
value was 7.2%*.
The past six months saw mixed performance for non-U.S.
stock markets. Most European markets advanced in local-currency terms despite
heightened speculation that European monetary union might be postponed. However,
due to the strong U.S. currency, these gains were somewhat tempered in dollar
terms. Asian markets, in general, rose while Latin American markets had mixed
performance. Japan's equity market struggled during the first quarter of 1997,
hurt by ongoing concerns over the banking sector and over the potential impact
that higher taxes might have on Japan's economic recovery (effective in April,
consumption taxes were raised to 5% from 3%). Among emerging markets, the most
noteworthy performance by region belonged to Latin America, led by Brazil, whose
market rose steadily in both local-currency and dollar terms.
During the first three months of 1997, several noteworthy adjustments were
made to the portfolio's country weightings. The Fund's European exposure was
raised through the addition of attractively-valued stocks in Germany, France,
Switzerland, the Netherlands and the United Kingdom. We grow increasingly
positive on the prospects for selected German companies, in particular, and, as
a result, the Fund's allocation to German stocks has grown steadily over the
past several quarters. While the trend is by no means universal, German
companies collectively are paying increasing heed to building shareholder value,
a U.S.-inspired development
FIGURES REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE RESULTS
INTERNATIONAL INVESTING INVOLVES INCREASED RISK AND VOLATILITY.
* 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.
2.1% WAS THE 6-MONTH TOTAL RETURN ENDED 4/30/97, FOR THE FUND'S CLASS A SHARES
WITH THE 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 AFTER THE MONTH OF PURCHASE. THE FUND'S CLASS Y SHARES ARE
NOT SUBJECT TO SALES CHARGES AND ARE AVAILABLE TO CERTAIN INSTITUTIONAL
INVESTORS AND INVESTMENT ADVISORY CLIENTS OF EVERGREEN ASSET AND ITS AFFILIATES.
PERFORMANCE FOR THESE CLASSES OF SHARES MAY BE DIFFERENT.
** SOURCE: LANA (LIPPER ANALYTICAL NEW APPLICATIONS) 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 INCLUDING THAT OF THE U.S., 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
(Art Icon Here)
A REPORT FROM YOUR
PORTFOLIO MANAGER -- (CONTINUED)
that clearly augurs well for the German equity market over the longer term. The
Fund's current holdings include companies whose prospects we view particularly
favorably, and we continue to find attractive opportunities, especially in the
industrial and engineering sector.
Another notable adjustment made to the portfolio was the reduction of its
exposure to Japan. This was achieved largely by profit-taking on stocks that had
met our target prices. Most of these were export-oriented, blue-chip issues,
which have been well-represented in the portfolio in recent months and have
performed strongly, belying the weakness shown by the broad-market averages. The
Fund's remaining stocks represent companies with what we believe to be strong
earnings-growth prospects and share-price-appreciation potential.
Our management team emphasizes a disciplined bottom-up stock-picking approach
which focuses on strong company fundamentals. We believe investment success
results from identifying long-term secular changes and unrecognized growth
opportunities that, based on fundamental intrinsic value, can be bought at
attractive prices.
Thank you for your investment in Evergreen International Equity Fund.
37
<PAGE>
EVERGREEN INTERNATIONAL EQUITY FUND
STATEMENT OF INVESTMENTS
(Art Icon Here)
APRIL 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
LONG-TERM INVESTMENTS -- (92.5%)
COMMON STOCKS -- 90.7%
ARGENTINA -- 3.4%
75,200 Telefonica de Argentina, ADR,
Cl. B............................. $ 2,500,400
138,400 YPF SA, ADR....................... 3,823,300
4,000 YPF SA, Cl. D..................... 111,211
6,434,911
AUSTRALIA -- 5.2%
330,600 Boral Ltd......................... 974,552
89,038 David Jones Limited............... 116,653
173,100 National Australia Bank Ltd....... 2,369,106
124,500 News Corp., Ltd................... 573,809
733,700 Orogen Minerals................... 1,691,349
1,126,200 Qantas Airways.................... 2,340,578
627,600 Woolworths Limited................ 1,850,057
9,916,104
AUSTRIA -- 1.4%
23,600 Boehler-Uddeholm AG............... 1,702,803
10,100 Vae Eisenbahnsysteme AG........... 977,460
2,680,263
BRAZIL -- 3.4%
65,600 Panamerican Beverages, Inc.,
ADR............................... 1,902,400
39,700* Telecomunicacoes Brasileiras,
ADR............................... 4,555,575
6,457,975
CHILE -- 1.0%
58,400 Enersis SA, ADR................... 1,839,600
DENMARK -- 1.0%
63,900* ISS Intl. Service System AS,
Cl. B............................. 1,890,619
FINLAND -- 1.7%
46,900 Huhtamaki Group................... 2,033,680
1,186 Rauma Oy.......................... 24,402
52,100 UPM-Kymmene Corp.................. 1,192,197
3,250,279
<CAPTION>
SHARES VALUE
<C> <S> <C>
</TABLE>
<TABLE>
<C> <S> <C>
FRANCE -- 6.2%
4,339* Axime SA Ex Segin................. $ 521,884
33,850 BERTRAND FAURE.................... 1,621,019
96,900 Bouygues Offshore SA, ADR......... 1,211,250
25,300 Eaux Cie Generale................. 3,524,184
12,900 Marine-Wendel SA.................. 1,337,188
18,450 Rhone Poulenc SA.................. 620,532
23,900 Societe Generale.................. 2,678,078
4,760 Total SA, Cl. B................... 394,730
11,908,865
GERMANY -- 3.9%
4,500* AVA Allg Handels der Verbraucher
AG................................ 1,216,076
4,207 Bayer Motoren Werk AG............. 3,444,697
33,800 Deutsche Bank AG.................. 1,783,878
3,030 GEA AG............................ 1,032,278
7,476,929
HONG KONG -- 2.2%
1,572,000 First Pacific Ltd................. 1,877,105
179,335 Hongkong Land Holdings Ltd.,
ADR............................... 373,017
9,800* Hysan Development Co., Warrants
@ 25 HKD, expiring 4/30/98........ 3,384
352,600* Jardine Matheson Holdings Ltd..... 1,939,300
900 Swire Pacific Ltd................. 6,942
4,199,748
INDIA -- 2.2%
38,025 Hindalco Industries Ltd., GDR..... 1,230,869
91,200 State Bank of India, GDR.......... 2,218,440
1,500 Tata Engineering & Locomotive
Co., Ltd., GDR.................... 18,338
66,717 Tata Engineering & Locomotive
Ltd............................... 815,615
4,283,262
INDONESIA -- 1.9%
114,000 Bank International Indonesia...... 82,099
17,500 Indosat........................... 48,251
105,300 Indosat, ADR...................... 2,895,750
264,500 Semen Gresek...................... 644,923
3,671,023
ITALY -- 0.0%(A)
12,200 Grassetto SpA..................... 724
JAPAN -- 19.0%
69,000 Canon, Inc........................ 1,636,192
150* DDI Corp.......................... 996,179
</TABLE>
38
<PAGE>
EVERGREEN INTERNATIONAL EQUITY FUND
STATEMENT OF INVESTMENTS -- (CONTINUED)
(Art Icon Here)
APRIL 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
COMMON STOCKS -- 90.7% -- CONTINUED
JAPAN -- 19.0% -- CONTINUED
<C> <S> <C>
40,400 Fujitsu Denso..................... $ 1,222,169
185,000 Fujitsu Ltd....................... 1,923,819
45,000 Hankyu Realty Co.................. 313,743
35,000 Inabata & Co...................... 211,762
200,000 Isuzu Motors Ltd.................. 751,566
80,000* Japan Asia Investment Co., Ltd. 507,977
70,000 Japan Radio Co.................... 623,154
53,000 Jusco Co.......................... 1,628,393
225,000 Kawasaki Heavy Industries......... 888,053
189,000 Matsushita Electric Works Ltd..... 1,920,747
45,500* Meiwa Estate Co., Ltd............. 752,747
48,000 Mitsubishi Estate Co., Ltd........ 605,034
80,000 Mitsubishi Heavy Industries Ltd... 528,144
43,000 Mitsui Fudosan Co................. 491,196
55,000 Mycal Corp........................ 675,937
192,000 NEC Corp.......................... 2,344,507
40,100 Orix Corp......................... 2,024,981
41,000 Pioneer Electronic Co............. 733,210
15,000 Rohm Co........................... 1,162,800
75,000 Sankyo Co......................... 2,008,902
90,000 Sharp Corp........................ 1,169,890
9,500 Shohkoh Fund...................... 2,230,275
30,000 Sony Corp......................... 2,183,795
70,000 Sumitomo Electric Industries...... 948,517
30,000 Sumitomo Realty & Development
Co., Ltd.......................... 212,944
21,000 Takeda Chemical Industries Ltd.... 484,736
12,000 TDK Corp.......................... 865,010
250,000 Toray Industries, Inc............. 1,555,914
67,000 Toshiba Corp...................... 375,814
95,000 Yamanouchi Pharmaceutical......... 2,028,203
25,000 Yokogawa Electric Corp............ 175,090
36,181,400
KOREA -- 3.0%
196,100 Hanil Bank........................ 1,077,231
18,800 Korea Electric Power.............. 560,628
161,100 Korea Electric Power Corp., ADR... 2,738,700
62,700 LG Construction Co................ 927,847
56,700 Ssangyong Investments &
Securities Co..................... 362,321
5,666,727
<CAPTION>
SHARES VALUE
<C> <S> <C>
</TABLE>
<TABLE>
<C> <S> <C>
NETHERLANDS -- 3.8%
20,600 ASM Lithography Holding NV, ADR... $ 1,637,700
5,600* ASM Lithography Holding NV........ 418,211
23,375 ING Groep NV...................... 917,819
81,950 Philips Electronics NV............ 4,277,737
7,251,467
NEW ZEALAND -- 3.8%
2,757,400 Brierley Investment Ltd........... 2,427,659
345,350 Carter Holt Harvey Ltd............ 766,114
743,800 Fletcher Challenge, Building
Shares............................ 2,088,312
1,270,400 Fletcher Challenge, Forest
Shares............................ 1,752,580
55,950 Fletcher Challenge, Paper Shares.. 124,118
7,158,783
NORWAY -- 1.8%
171,750 Den Norske Bank AS................ 619,836
7,000 Orkla ASA......................... 586,839
90,000 Smedvig AS........................ 2,116,918
2,300 Smedvig AS, ADR................... 53,763
3,377,356
PAKISTAN -- 0.1%
25,000* Dhan Fibres Ltd................... 3,669
76,000* Hub Power Co., Ltd................ 71,179
7,000* Nishat Textile Mills.............. 4,049
288* Packages Ltd...................... 365
1,230* Pakistan State Oil Co., Ltd....... 9,271
44,500* Pakistan Telecom Corp............. 27,453
33,925* Sui Southern Gas Co., Ltd......... 23,208
139,194
PHILIPPINES -- 1.3%
54,900* Millicom International Cellular
SA, GDR........................... 2,497,950
POLAND -- 0.2%
1,000 Bank Przemyslowo-Handlowy SA...... 51,217
1,200 Bank Rozwoju Eksportu SA.......... 28,644
900 Bank Slaski SA.................... 76,399
1,300* Debica SA, Series A............... 32,469
6,400 Elektrim.......................... 57,465
2,000 Rolimpex SA, Series A............. 11,698
6,500 Wielkopolski Bank Kredytowy SA.... 37,401
300 Zaklady Piwowarskiew Zywcu SA..... 19,633
314,926
</TABLE>
39
<PAGE>
EVERGREEN INTERNATIONAL EQUITY FUND
STATEMENT OF INVESTMENTS -- (CONTINUED)
(Art Icon Here)
APRIL 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
COMMON STOCKS -- 90.7% -- CONTINUED
<C> <S> <C>
PORTUGAL -- 1.6%
139,800 Cimpor Cimentos de Portugal SA.... $ 3,007,489
SINGAPORE -- 2.8%
525,600 DBS Land Ltd...................... 1,699,349
88,000 Development Bank of Singapore..... 1,045,665
320,000 Keppel Bank....................... 835,648
383,000* Keppel Corp., Ltd................. 1,666,943
5,247,605
SPAIN -- 2.5%
95,000 Iberdrola SA...................... 1,072,125
89,100 Repsol SA, ADS.................... 3,731,062
4,803,187
SWEDEN -- 1.5%
49,900 Electrolux AB, Series B........... 2,862,442
SWITZERLAND -- 3.9%
1,050 Julius Baer Holding AG............ 1,314,192
1,267 Novartis AG....................... 1,669,163
1,280 Novartis AG, Registered Shares.... 1,686,290
114 Roche Holding AG.................. 962,825
11,404 Tag Heuer......................... 1,601,403
12,600 Tag Heuer Intl SA, ADR............ 176,400
7,410,273
TAIWAN -- 1.6%
141,688* China Steel Corp., ADR............ 3,032,481
THAILAND -- 0.9%
2,700 Bangkok Bank Public Co., Ltd...... 17,778
68,400 Jasmine International Public Co.,
Ltd............................... 95,57
2,000 Land & House Public Co., Ltd...... 6,125
59,900 Land & House Public Co., Ltd.
Foreign Shares.................... 170,832
1,420* One Holding Public Co., Ltd.,
Warrants @ 44 THB, expire
10/14/01.......................... 92
17,700 PTT Exploration & Production
Public Co., Ltd................... 226,310
30,900 Siam Cement Public Co., Ltd.
Foreign Shares.................... 828,022
200,100 Thai Military Bank Public Co.,
Ltd............................... 291,082
1,635,814
<CAPTION>
SHARES VALUE
<C> <S> <C>
</TABLE>
<TABLE>
<C> <S> <C>
UNITED KINGDOM -- 9.4%
823,400 Cookson Group Plc................. $ 2,895,913
230,660 Energy Group...................... 1,831,822
364,775 Hanson Plc........................ 1,770,666
32,700 HSBC Holdings Plc................. 858,044
184,200 Medeva Plc........................ 898,609
69,500 National Power Plc................ 599,254
297,000* Orange Plc........................ 1,039,741
692,600 Rolls- Royce Plc.................. 2,727,744
616,992 Thistle Hotels Plc................ 1,659,978
825,000 Vodafone Group Plc................ 3,690,438
17,972,209
TOTAL COMMON STOCKS
(COST $166,481,694).......... 172,569,605
PREFERRED STOCKS -- 0.5%
AUSTRALIA -- 0.3%
148,050 News Corp. Ltd.................... 564,583
GERMANY -- 0.2%
1,000 GEA AG............................ 352,234
TOTAL PREFERRED STOCKS
(COST $1,030,155)............ 916,817
PUT OPTIONS PURCHASED -- 0.0%
JAPAN -- 0.0%
61,557* Nikkei 225 Index expires
6/13/1997......................... 27,080
TOTAL PUT OPTIONS PURCHASED
(COST $652,408).............. 27,080
CALL OPTIONS PURCHASED -- 0.0%
SINGAPORE -- 0.0%
387* DBS 50 Index, expires 2/26/98 2,693
THAILAND -- 0.0%
549,019* Set 50 Index expires 1/30/1998 34,596
292,336* Set 50 Index expires 2/20/1998 35,020
69,616
TOTAL CALL OPTIONS PURCHASED
(COST $273,000).............. 72,309
</TABLE>
40
<PAGE>
EVERGREEN INTERNATIONAL EQUITY FUND
STATEMENT OF INVESTMENTS -- (CONTINUED)
(Art Icon Here)
APRIL 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
CORPORATE BONDS -- 1.3%
<C> <S> <C>
KOREA -- 0.7%
$ 1,160,000 Samsung Electronics
.25%, 12/31/2006.................. $ 1,302,100
THAILAND -- 0.6%
1,237,000 Bangkok Bank Public Co., Ltd.
3.25%, 3/3/2004................... 1,142,679
TOTAL CORPORATE BONDS
(COST $2,492,059)............ 2,444,779
TOTAL LONG-TERM INVESTMENTS
(COST $170,929,316).......... 176,030,590
REPURCHASE AGREEMENT -- 6.0%
11,457,000 State Street Bank & Trust Co.,
5.30%, dated 4/30/97, due
5/1/97 -- collateralized by
$11,655,000 U.S. Treasury
Notes, 5.25%, due 7/31/98;
maturity value -- $11,687,063,
(COST $11,457,000)............. 11,457,000
TOTAL INVESTMENTS --
(COST $182,386,316)... 98.5% 187,487,590
OTHER ASSETS AND
LIABILITIES -- NET..... 1.5% 2,847,118
NET ASSETS --............ 100.0% $190,334,708
</TABLE>
*Non-income producing securities
(a) Less than one tenth of one percent
ADR -- American Depositary Receipts
GDR -- Global Depositary Receipts
GDS -- Global Depositary Shares
41
<PAGE>
EVERGREEN INTERNATIONAL EQUITY FUND
STATEMENT OF INVESTMENTS -- (CONTINUED)
(Art Icon Here)
APRIL 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
FORWARD CONTRACTS
UNREALIZED
FOREIGN CURRENCY CURRENCY AMOUNT VALUE ON APPRECIATION
BUY CONTRACTS PURCHASED TRADE DATE CURRENT VALUE (DEPRECIATION)
Deutsche Mark due 7/23/97 DM4,926,141 $ 2,944,275 $ 2,861,696 $ (82,579)
<S> <C> <C> <C> <C>
Japanese Yen due 10/24/97 2,477,045,000 21,994,405 20,036,728 (1,957,677)
Pound Sterling due 5/1/97 GBP 325,814 531,110 528,062 (3,048)
(2,043,304)
</TABLE>
<TABLE>
<CAPTION>
FOREIGN CURRENCY CURRENCY AMOUNT
SELL CONTRACTS SOLD
<S> <C> <C> <C> <C>
Deutsche Mark due 7/23/97 DM4,926,141 3,060,000 2,861,696 198,304
Japanese Yen due 10/24/97 3,845,215,000 35,300,000 31,103,807 4,196,193
4,394,497
$ 2,351,193
</TABLE>
See accompanying combined notes to the financial statements.
42
<PAGE>
EVERGREEN INTERNATIONAL EQUITY FUND
INDUSTRY DIVERSIFICATION
(Art Icon Here)
APRIL 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
PERCENTAGE OF
NET ASSETS
<S> <C>
Automotive Equipment & Manufacturing....................................................... 6.1%
Banks...................................................................................... 8.7
Building, Construction & Furnishings....................................................... 4.9
Chemical & Agricultural Products........................................................... 1.1
Communication Systems & Services........................................................... 1.6
Consumer Products & Services............................................................... 1.4
Diversified Companies...................................................................... 6.4
Electrical Equipment & Services............................................................ 9.4
Electronics................................................................................ 1.3
Energy..................................................................................... 5.4
Energy Equipment........................................................................... 1.1
Engineering................................................................................ 0.5
Finance & Insurance........................................................................ 5.3
Food & Beverage Products................................................................... 2.0
Food Retailing & Distribution.............................................................. 0.4
Forest Products............................................................................ 1.1
Healthcare Products & Services............................................................. 5.3
Holding Companies.......................................................................... 2.5
Industrial Specialty Products & Services................................................... 1.2
Machinery -- Diversified................................................................... 0.3
Manufacturing & Distributing............................................................... 1.0
Metal Products & Services.................................................................. 4.1
Leisure & Tourism.......................................................................... 0.9
Office Equipment & Supplies................................................................ 1.9
Publishing, Broadcasting & Entertainment................................................... 0.6
Real Estate................................................................................ 2.5
Retailing & Wholesale...................................................................... 1.6
Telecommunication Equipment & Services..................................................... 7.8
Transportation............................................................................. 1.2
Utilities.................................................................................. 4.9
Total Long-Term Investments.......................................................... 92.5
Short-Term Investment...................................................................... 6.0
Other Assets & Liabilities................................................................. 1.5
Net Assets........................................................................... 100.0%
</TABLE>
43
<PAGE>
EVERGREEN INTERNATIONAL EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
(Art Icon Here)
APRIL 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments at value (identified cost $182,386,316)........................................................... $187,487,590
Foreign currencies at value (identified cost $1,222,252)...................................................... 1,222,122
Cash.......................................................................................................... 685
Unrealized appreciation on forward foreign currency exchange contracts........................................ 4,394,497
Receivable for investments sold............................................................................... 1,057,702
Dividends and interest receivable............................................................................. 724,034
Receivable for Fund shares sold............................................................................... 144,810
Unamortized organization expense.............................................................................. 20,980
Prepaid expenses and other assets............................................................................. 29,914
Total assets............................................................................................ 195,082,334
LIABILITIES:
Payable for investments purchased............................................................................. 2,284,376
Unrealized depreciation on forward foreign currency exchange contracts........................................ 2,043,304
Advisory fee payable.......................................................................................... 91,478
Payable for Fund shares repurchased........................................................................... 79,921
Accrued expenses.............................................................................................. 248,547
Total liabilities....................................................................................... 4,747,626...
NET ASSETS....................................................................................................... $190,334,708
NET ASSETS CONSIST OF:
Paid-in capital............................................................................................... $174,500,624
Undistributed net investment income........................................................................... 382,893
Accumulated net realized gain on investments and foreign currency related transactions........................ 8,007,157
Net unrealized appreciation on investments and foreign currency related transactions.......................... 7,444,034
Net assets.............................................................................................. $190,334,708
CALCULATION OF NET ASSET VALUE AND MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares ($7,861,326 712,723 shares of beneficial interest outstanding)................................. $ 11.03
Sales charge -- 4.75% of offering price....................................................................... 0.55
Maximum offering price.................................................................................. $ 11.58
Class B Shares ($18,064,855 1,642,521 shares of beneficial interest outstanding).............................. $ 11.00
Class C Shares ($244,143 22,075 shares of beneficial interest outstanding).................................... $ 11.06
Class Y Shares ($164,164,384 14,849,007 shares of beneficial interest outstanding)............................ $ 11.06
</TABLE>
See accompanying combined notes to financial statements.
44
<PAGE>
EVERGREEN INTERNATIONAL EQUITY FUND
STATEMENT OF OPERATIONS
(Art Icon Here)
SIX MONTHS ENDED APRIL 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding taxes of $211,989)........................................ $ 1,517,230
Interest........................................................................................ 350,879
Total investment income................................................................... 1,868,109
EXPENSES:
Advisory fee.................................................................................... $ 640,428
Custodian fee................................................................................... 212,400
Distribution fees............................................................................... 90,571
Transfer agent fee.............................................................................. 83,734
Registration and filing fees.................................................................... 34,664
Administration personnel and service fees....................................................... 34,010
Reports and notices to shareholders............................................................. 25,696
Professional fees............................................................................... 19,167
Amortization of organization expense............................................................ 7,220
Insurance expense............................................................................... 5,799
Trustees' fees and expenses..................................................................... 2,699
Miscellaneous................................................................................... 1,798
Fee waivers and/or reimbursement from Investment Manager........................................ (233,729)
Total expenses............................................................................ 924,457
Less: Indirectly paid expenses.................................................................. (2,930)
Net expenses.............................................................................. 921,527
Net investment income.............................................................................. 946,582
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY RELATED TRANSACTIONS:
Net realized gain on investments................................................................ 9,071,145
Net realized loss on foreign currency related transactions...................................... (130,160)
Net realized gain on investments and foreign currency related transactions...................... 8,940,985
Net change in unrealized appreciation (depreciation) on investments and foreign currency related
transactions.................................................................................. 1,496,298
Net realized and unrealized gain on investments and foreign currency related transactions.......... 10,437,283
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............................................... $11,383,865
</TABLE>
See accompanying combined notes to financial statements.
45
<PAGE>
EVERGREEN INTERNATIONAL EQUITY FUND
(Art Icon Here)
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
APRIL 30, 1997 OCTOBER 31, 1996
<S> <C> <C>
(UNAUDITED)
OPERATIONS:
Net investment income.................................................................... $ 946,582 $ 2,119,654
Net realized gain (loss) on investments and foreign currency related transactions........ 8,940,985 (823,687)
Net change in unrealized appreciation (depreciation) on investments and foreign currency
related transactions................................................................... 1,496,298 5,669,016
Net increase in net assets resulting from operations.................................. 11,383,865 6,964,983
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME:
Class A Shares........................................................................... (107,348) (39,834)
Class B Shares........................................................................... (116,095) (23,543)
Class C Shares........................................................................... (1,194) (59)
Class Y Shares........................................................................... (2,176,422) (645,172)
Total distributions to shareholders from net investment income........................ (2,401,059) (708,608)
FUND SHARE TRANSACTIONS:
Proceeds from shares sold................................................................ 54,387,900 63,370,539
Proceeds from shares issued from acquisition of FFB Diversified International Growth
Fund................................................................................... -- 29,658,717
Proceeds from reinvestment of distributions.............................................. 1,238,781 365,798
Payment for shares redeemed.............................................................. (20,501,042) (14,067,718)
Net increase resulting from Fund share transactions................................... 35,125,639 79,327,336
Net increase in net assets............................................................ 44,108,445 85,583,711
NET ASSETS:
Beginning of period...................................................................... 146,226,263 60,642,552
End of period (including undistributed net investment income of $382,893 and $1,837,370,
respectively).......................................................................... $ 190,334,708 $146,226,263
</TABLE>
See accompanying combined notes to financial statements
46
<PAGE>
<TABLE>
<CAPTION>
EVERGREEN INTERNATIONAL EQUITY FUND
(Art Icon Here)
FINANCIAL HIGHLIGHTS
<S> <C> <C> <C> <C> <C> <C>
CLASS A SHARES CLASS B SHARES
SIX MONTHS SEPTEMBER 2, SIX MONTHS
ENDED TEN MONTHS 1994* ENDED YEAR
APRIL 30, YEAR ENDED ENDED THROUGH APRIL 30, ENDED
1997+++ OCTOBER 31, OCTOBER 31, DECEMBER 31, 1997+++ OCTOBER 31,
(UNAUDITED) 1996 1995# 1994 (UNAUDITED) 1996
PER SHARE DATA:
Net asset value, beginning of period.... $10.43 $9.58 $9.50 $10.00 $10.37 $9.53
Income (loss) from investment
operations:
Net investment income................. .05 .17 .09 .02 .01 .11
Net realized and unrealized gain
(loss) on investments and foreign
currency related transactions....... .70 .78 -- (.52) .68 .76
Total from investment
operations...................... .75 .95 .09 (.50) .69 .87
Less distributions to shareholders from
Net investment income................. (.15) (.10) (.01) -- (.06) (.03)
Net asset value, end of period.......... $11.03 $10.43 $9.58 $9.50 $11.00 $10.37
TOTAL RETURN+........................... 7.2% 9.9% 1.1% (5.1%) 6.9% 9.2%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)............................ $7,861 $7,234 $3,594 $2,545 $18,065 $14,110
Ratios to average net assets:
Expenses**............................ 1.24%++ 1.24% 1.19%++ 1.26%++ 1.99%++ 2.00%
Net investment income**............... 0.95%++ 1.65% 1.38%++ 0.91%++ 0.23%++ 1.05%
Portfolio turnover rate................. 52% 113% 4% 1% 52% 113%
Average commission rate paid per
share................................. $.0296 $.0068 N/A N/A $.0296 $.0068
<CAPTION>
CLASS B SHARES
SEPTEMBER 2,
TEN MONTHS 1994*
ENDED THROUGH
OCTOBER 31, DECEMBER 31,
1995# 1994
PER SHARE DATA:
Net asset value, beginning of period.... $9.50 $10.00
Income (loss) from investment
operations:
Net investment income................. .06 --
Net realized and unrealized gain
(loss) on investments and foreign
currency related transactions....... (.03) (.50)
Total from investment
operations...................... .03 (.50)
Less distributions to shareholders from
Net investment income................. -- --
Net asset value, end of period.......... $9.53 $9.50
TOTAL RETURN+........................... 0.5% (5.2%)
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)............................ $7,728 $5,602
Ratios to average net assets:
Expenses**............................ 1.94%++ 2.02%++
Net investment income**............... 0.66%++ 0.10%++
Portfolio turnover rate................. 4% 1%
Average commission rate paid per
share................................. N/A N/A
<CAPTION>
/Table>
* Commencement of class 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 charges are not reflected.
++ Annualized.
+++ Per share data is calculated based on average shares outstanding during the
period.
** 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 would have been the following:
</TABLE>
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES
SIX MONTHS SEPTEMBER 6, SIX MONTHS
ENDED TEN MONTHS 1994* ENDED YEAR
APRIL 30, YEAR ENDED ENDED THROUGH APRIL 30, ENDED
1997 OCTOBER 31, OCTOBER 31, DECEMBER 31, 1997 OCTOBER 31,
(UNAUDITED) 1996 1995# 1994 (UNAUDITED) 1996
<S> <C> <C> <C> <C> <C> <C>
Expenses............................... 1.58% 1.66% 1.84% 2.09% 2.34% 2.42%
Net investment income (loss)........... 0.61% 1.23% 0.73% 0.08% (0.12%) 0.63%
<CAPTION>
CLASS B SHARES
SEPTEMBER 2,
TEN MONTHS 1994*
ENDED THROUGH
OCTOBER 31, DECEMBER 31,
1995# 1994
<S> <C> <C>
Expenses............................... 2.59% 2.85%
Net investment income (loss)........... 0.01% (0.73%)
</TABLE>
See accompanying combined notes to financial statements.
47
<PAGE>
<TABLE>
<CAPTION>
EVERGREEN INTERNATIONAL EQUITY FUND
(Art Icon Here)
FINANCIAL HIGHLIGHTS
<S> <C> <C> <C> <C> <C> <C>
CLASS C SHARES CLASS Y SHARES
SIX MONTHS SEPTEMBER 2, SIX MONTHS
ENDED TEN MONTHS 1994* ENDED YEAR
APRIL 30, YEAR ENDED ENDED THROUGH APRIL 30, ENDED
1997+++ OCTOBER 31, OCTOBER 31, DECEMBER 31, 1997+++ OCTOBER 31,
(UNAUDITED) 1996 1995# 1994 (UNAUDITED) 1996
PER SHARE DATA:
Net asset value, beginning of
period............................. $10.41 $9.53 $9.49 $10.00 $10.46 $9.60
Income (loss) from investment
operations:
Net investment income.............. .01 .12 .08 .03 .07 .20
Net realized and unrealized gain
(loss) on investments and foreign
currency related transactions.... .70 .76 (.04) (.54) .70 .78
Total from investment
operations................... .71 .88 .04 (.51) .77 .98
Less distributions to shareholders
from
Net investment income.............. (.06) (.0)(a) -- -- (.17) (.12)
Net asset value, end of period....... $11.06 $10.41 $9.53 $9.49 $11.06 $10.46
TOTAL RETURN+........................ 6.9% 9.3% 0.5% (5.2%) 7.4% 10.3%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands)..................... $244 $188 $196 $163 $164,164 $124,695
Ratios to average net assets:
Expenses**......................... 1.99%++ 1.99% 1.94%++ 2.01%++ 0.99%++ 0.99%
Net investment income**............ 0.23%++ 1.16% 0.79%++ 0.85%++ 1.23%++ 1.95%
Portfolio turnover rate.............. 52% 113% 4% 1% 52% 113%
Average commission rate paid per
share.............................. $.0296 $.0068 N/A N/A $.0296 $.0068
<CAPTION> CLASS Y SHARES
SEPTEMBER 2,
TEN MONTHS 1994*
ENDED THROUGH
OCTOBER 31, DECEMBER 31,
1995# 1994
PER SHARE DATA:
Net asset value, beginning of
period............................. $9.50 $10.00
Income (loss) from investment
operations:
Net investment income.............. .08 .02
Net realized and unrealized gain
(loss) on investments and foreign
currency related transactions.... .03 (.51)
Total from investment
operations................... .11 (.49)
Less distributions to shareholders
from
Net investment income.............. (.01) (.01)
Net asset value, end of period....... $9.60 $9.50
TOTAL RETURN+........................ 1.3% (5.0%)
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands)..................... $49,575 $23,830
Ratios to average net assets:
Expenses**......................... 0.94%++ 1.06%++
Net investment income**............ 1.58%++ 1.03%++
Portfolio turnover rate.............. 4% 1%
Average commission rate paid per
share.............................. N/A N/A
<CAPTION>
</TABLE>
(a) Less than one cent per share.
* Commencement of class 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 charges are not reflected.
++ Annualized.
+++ Per share data is calculated based on average shares outstanding during the
period.
** 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 would have been the following:
<TABLE>
<CAPTION>
CLASS C SHARES CLASS Y SHARES
SIX MONTHS SEPTEMBER 2, SIX MONTHS
ENDED TEN MONTHS 1994* ENDED YEAR
APRIL 30, YEAR ENDED ENDED THROUGH APRIL 30, ENDED
1997 OCTOBER 31, OCTOBER 31, DECEMBER 31, 1997 OCTOBER 31,
(UNAUDITED) 1996 1995# 1994 (UNAUDITED) 1996
<S> <C> <C> <C> <C> <C> <C>
EXPENSES............................. 2.33% 2.43% 2.59% 2.84% 1.33% 1.41%
NET INVESTMENT INCOME (LOSS)......... (.12%) .72% .14% .02% .89% 1.53%
<CAPTION>
CLASS Y SHARES
SEPTEMBER 2,
TEN MONTHS 1994*
ENDED THROUGH
OCTOBER 31, DECEMBER 31,
1995# 1994
<S> <C> <C>
EXPENSES............................. 1.59% 1.89%
NET INVESTMENT INCOME (LOSS)......... .93% .20%
</TABLE>
See accompanying notes to financial statements.
48
<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 following procedures approved by the Board of 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 EXCHANGE CONTRACTS -- The Funds may enter into
forward foreign currency exchange 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. Forward currency
contracts are revalued daily at the prevailing rates of contracts of the same
maturity. Gains and losses on forward foreign currency exchange contracts are
reported as realized or unrealized
49
<PAGE>
COMBINED NOTES TO FINANCIAL STATEMENTS
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES -- continued
losses on foreign currency related 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 which 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.
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 and net realized
capital gains 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 ended October 31, 1996, 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.
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 of operations.
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.
50
<PAGE>
COMBINED NOTES TO FINANCIAL STATEMENTS
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES -- continued
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 voluntarily waived $218,402
and $233,729 respectively, of its advisory fee for the six months ended April
30, 1997. 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>
Under terms of a sub-advisory agreement with First Union, Warburg, Pincus
Counsellors, Inc. ("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.
51
<PAGE>
COMBINED NOTES TO FINANCIAL STATEMENTS
NOTE 3 -- INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH
AFFILIATES -- continued
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
foreseeable future. For the six months ended April 30, 1997, Evergreen Asset
waived $31,437 of its advisory fee. In addition, for Global Real Estate,
Evergreen Asset voluntarily waived $22,030 of its advisory fee. 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 of theses Funds
executed on the New York or American Stock Exchanges. For transactions executed
during the six months ended April 30, 1997, Global Leaders and Global Real
Estate incurred brokerage commissions of $55,931 and $13,731, 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 April 30, 1997, Stephen A. Lieber, Chairman of Evergreen Asset owned,
directly or beneficially, 29% of the outstanding shares of Global Real Estate.
ADMINISTRATION AGREEMENT -- For the period through March 10, 1997,
Evergreen Asset furnished Global Real Estate with administrative services as
part of its advisory agreement and accordingly, Global Real Estate did not pay a
separate administration fee. Effective March 11, 1997, Evergreen Keystone
Investment Services (EKIS), a subsidiary of First Union, began providing
administrative services to each of the Funds. For the period through December
31, 1996, Furman Selz LLC ("Furman Selz") was Global Real Estate's
sub-administrator. As sub-administrator, Furman Selz provided the officers of
the Fund. Effective January 1, 1997, The BISYS Group, Inc. ("BISYS") acquired
Furman Selz' mutual fund unit and accordingly, BISYS Fund Services became the
sub-administrator. For Global Real Estate, Furman Selz' or BISYS fee was paid by
Evergreen Asset or EKIS and is not a fund expense.
From November 1, 1996 to March 10, 1997 Evergreen Asset and from March 11,
1997, EKIS were Emerging Markets', Global Leaders' and International's
administrator. Effective January 1, 1997 BISYS became each Funds'
sub-administrator. Evergreen Asset and Furman Selz were Emerging Markets',
Global Leaders', International's administrator and sub-administrator for the
period November 1, 1996 through December 31, 1996. Evergreen Asset's/EKIS's and
Furman Selz'/BISYS' fees for these funds are based on the average daily net
assets of all of the funds administered by Evergreen Asset or EKIS for which
either First Union or Evergreen Asset is also the investment adviser. These fees
are calculated at the following annual rates:
<TABLE>
<CAPTION>
AVERAGE DAILY
ADMINISTRATION FEE NET ASSETS
<C> <S>
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
<C> <S>
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>
52
<PAGE>
COMBINED NOTES TO FINANCIAL STATEMENTS
NOTE 3 -- INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH
AFFILIATES -- continued
At April 30, 1997, assets for which EKIS was the administrator for which
First Union, or its investment advisory subsidiaries, was investment adviser
totaled approximately $29 billion.
Evergreen Asset voluntarily waived $17,449 in administration fees for
Global Leaders.
PLAN OF DISTRIBUTION -- 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 Keystone Distributor, Inc.
("EKD") (formerly Evergreen Funds Distributor, Inc.), a subsidiary of BISYS,
whereby they will compensate EKD 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 EKD whereby they
will compensate EKD 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 Services ("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.
During the six months ended April 30, 1997 amounts paid to EKD pursuant to
each Fund's Class A, Class B, and Class C Plans were as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
<S> <C> <C> <C>
Emerging Markets $ 2,394 $ 15,221 $1,553
Global Leaders 24,345 308,917 5,511
Global Real Estate 1,028 917 361
International 9,354 80,080 1,137
</TABLE>
SALES CHARGES -- EKD 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 six months ended April 30, 1997:
<TABLE>
<S> <C>
Emerging Markets $ 531
Global Leaders 44,397
Global Real Estate 130
International 4,596
</TABLE>
OTHER SERVICES WITH AFFILIATES -- State Street Bank & Trust Company ("State
Street") is the transfer agent, dividend disbursing agent and shareholding
servicing agent for the Funds. For certain accounts in Global Real Estate,
Global Leaders, Emerging Markets, and International Equity, First Union has been
sub-contracted by State Street to maintain shareholder sub-account records, take
fund purchases and redemption orders and answer inquiries. For each account,
First Union is entitled to a monthly fee which totaled $461, $3,411, $217,
$2,603 for Global Real Estate, Global Leaders, Emerging Markets and
International Equity, respectively, for the six months ended April 30, 1997.
53
<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 six months ended April 30, 1997 were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
<S> <C> <C>
Emerging Markets $ 25,894,686 $23,109,829
Global Leaders 74,535,336 8,118,457
Global Real Estate 7,521,157 15,549,422
International 120,027,225 82,098,899
</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.
Class B shares will automatically convert to class A shares seven years after
the date of purchase. Class C shares are sold with a 1% contingent deferred
sales charge for shares redeemed during the first year after the month 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.
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1997 OCTOBER 31, 1996
EMERGING MARKETS SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
CLASS A
Shares sold.............................................................. 89,320 $ 887,854 108,210 $ 958,874
Shares issued on reinvestment of distributions........................... 0 0 817 6,713
Shares redeemed.......................................................... (81,831) (772,514) (55,942) (493,377)
Net increase..................................................... 7,489 115,340 53,085 472,210
CLASS B
Shares sold.............................................................. 52,723 501,693 147,629 1,317,529
Shares redeemed.......................................................... (49,892) (456,990) (51,462) (443,501)
Net increase..................................................... 2,831 44,703 96,167 874,028
CLASS C
Shares sold.............................................................. 83,610 809,672 8,040 72,696
Shares redeemed.......................................................... (28) (261) (5,067) (43,102)
Net increase..................................................... 83,582 809,411 2,973 29,594
CLASS Y
Shares sold.............................................................. 719,335 6,842,867 2,531,857 22,621,852
Shares issued on reinvestment of distributions........................... 0 0 1,942 15,980
Shares redeemed.......................................................... (369,189) (3,452,567) (301,830) (2,683,970)
Net increase..................................................... 350,146 3,390,300 2,231,969 19,953,862
Total net increase resulting from Fund share transactions................ 444,048 $ 4,359,754 2,384,194 $21,329,694
</TABLE>
54
<PAGE>
COMBINED NOTES TO FINANCIAL STATEMENTS
NOTE 5 -- SHARES OF BENEFICIAL INTEREST -- continued
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1997 OCTOBER 31, 1996
GLOBAL LEADERS SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
CLASS A
Shares sold............................................................ 1,141,213 $14,090,361 1,128,476 $12,914,033
Shares issued on reinvestment of distributions......................... 1,245 15,023 0 0
Shares redeemed........................................................ (118,269) (1,452,564) (38,955) (450,952)
Net increase................................................... 1,024,189 12,652,820 1,089,521 12,463,081
CLASS B
Shares sold............................................................ 3,509,985 43,047,717 3,561,481 40,763,569
Shares issued on reinvestment of distributions......................... 4,015 48,224 0 0
Shares redeemed........................................................ (205,357) (2,517,524) (26,709) (307,417)
Net increase................................................... 3,308,643 40,578,417 3,534,772 40,456,152
CLASS C
Shares sold............................................................ 87,937 1,080,862 48,546 557,221
Shares issued on reinvestment of distributions......................... 52 629 0 0
Shares redeemed........................................................ (7,501) (91,607) (1,852) (21,683)
Net increase................................................... 80,488 989,884 46,694 535,538
CLASS Y
Shares sold............................................................ 684,772 8,469,541 1,680,883 18,367,195
Shares issued on reinvestment of distributions......................... 715 8,632 1,378 14,211
Shares redeemed........................................................ (49,724) (615,285) (120,293) (1,342,441)
Net increase................................................... 635,763 7,862,888 1,561,968 17,038,965
Total net increase resulting from Fund share transactions.............. 5,049,083 $62,084,009 6,232,955 $70,493,736
</TABLE>
55
<PAGE>
COMBINED NOTES TO FINANCIAL STATEMENTS
NOTE 5 -- SHARES OF BENEFICIAL INTEREST -- continued
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1997 OCTOBER 31, 1996
GLOBAL REAL ESTATE SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
CLASS A
Shares sold............................................................ 32,879 $ 409,385 208,609 $ 2,645,216
Shares redeemed........................................................ (16,707) (203,574) (156,309) (2,008,136)
Net increase................................................... 16,172 205,811 52,300 637,080
CLASS B
Shares sold............................................................ 8,439 104,212 7,284 91,539
Shares redeemed........................................................ (3,375) (40,952) (4,878) (59,333)
Net increase................................................... 5,064 63,260 2,406 32,206
CLASS C
Shares sold............................................................ 8,103 100,386 2,142 27,504
Shares redeemed........................................................ (811) (10,170) (1,782) (22,492)
Net increase................................................... 7,292 90,216 360 5,012
CLASS Y
Shares sold............................................................ 50,526 627,122 1,060,595 13,278,484
Shares issued on reinvestment of distributions......................... 3,475 43,582 0 0
Shares redeemed........................................................ (781,826) (9,728,087) (2,500,751) (31,249,121)
Net decrease................................................... (727,825) (9,057,383) (1,440,156) (17,970,637)
Total net decrease resulting from Fund share transactions.............. (699,297) $(8,698,096) (1,385,090) $(17,296,339)
</TABLE>
56
<PAGE>
COMBINED NOTES TO FINANCIAL STATEMENTS
NOTE 5 -- SHARES OF BENEFICIAL INTEREST -- continued
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1997 OCTOBER 31, 1996
INTERNATIONAL EQUITY SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
CLASS A
Shares sold.......................................................... 209,094 $ 2,259,362 459,233 $ 4,772,348
Shares issued on reinvestment of distributions....................... 9,990 105,895 3,882 39,171
Shares redeemed...................................................... (199,802) (2,160,212) (144,771) (1,513,977)
Net increase................................................. 19,282 205,045 318,344 3,297,542
CLASS B
Shares sold.......................................................... 393,822 4,244,528 802,691 8,346,658
Shares issued on reinvestment of distributions....................... 11,207 118,865 2,297 23,175
Shares redeemed...................................................... (122,930) (1,325,154) (208,561) (2,169,847)
Net increase................................................. 282,099 3,038,239 596,427 6,199,986
CLASS C
Shares sold.......................................................... 10,008 108,041 11,595 120,774
Shares issued on reinvestment of distributions....................... 103 1,096 5 55
Shares redeemed...................................................... (6,075) (66,461) (14,095) (148,202)
Net increase (decrease)...................................... 4,036 42,676 (2,495) (27,373)
CLASS Y
Shares sold.......................................................... 4,398,577 47,775,969 4,796,183 50,130,759
Shares issued from acquisition of FFB Diversified International
Growth Fund........................................................ 0 0 2,898,154 29,658,717
Shares issued on reinvestment of distributions....................... 95,469 1,012,925 30,069 303,397
Shares redeemed...................................................... (1,561,049) (16,949,215) (972,043) (10,235,692)
Net increase................................................. 2,932,997 31,839,679 6,752,363 69,857,181
Total net increase resulting from Fund share transactions............ 3,238,414 $ 35,125,639 7,664,639 $ 79,327,336
</TABLE>
NOTE 6 -- FINANCING AGREEMENT
A financing agreement was 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.
Effective October 31, 1996, a new financing agreement was put in place
between all of the Evergreen Funds and State Street, Societe Generale and ABN
AMRO Bank N.V. (collectively, the "Banks"). Under this agreement, the Banks
provide and unsecured line of credit facility in the aggregate amount of $225
million ($112.5 million committed and $112.5 million uncommitted) allocated
evenly between the Banks. Borrowings under these facilities bear interest at
.75% per annum above the Federal Funds rate. A commitment fee of .10% per annum
will be incurred on the unused portion of the
57
<PAGE>
COMBINED NOTES TO FINANCIAL STATEMENTS
NOTE 6 -- FINANCING AGREEMENT -- continued
committed facility which would be allocated to all participating funds. State
Street acts as agent for the Banks, and as agent is entiled to a fee of $15,000
which is allocated to all participating funds.
During the six months ended April 30, 1997, Global Real Estate had
borrowings outstanding for 87 days under the lines of credit, and incurred
interest charges amounting to $4,679. Global Real Estate's average debt
outstanding during the year aggregated $311,732 at a weighted average interest
rate of 6.2%. Global Real Estate had an outstanding line of credit of $265,000
as of April 30, 1997.
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 deferral accounts, which are included in the accrued expenses for
each Fund. The investment performance of the deferral accounts are based on the
investment performance of certain Evergreen Keystone Funds. Any gains earned or
losses incurred in the deferral accounts are reported in each Fund's Trustees'
fees and expenses. Trustees will be paid either in one lump sum or in quarterly
installments for up to ten years at their election, not earlier than either the
year in which the Trustee ceases to be a member of the Board of Trustees or
January 1, 2000. As of April 30, 1997, Trustees had deferred $828, $6,362,
$8,725 and $3,961 for Emerging Markets, Global Leaders, Global Real Estate and
International, respectively.
NOTE 9 -- EXPENSE OFFSET ARRANGEMENT
The Funds have entered into an expense offset arrangement with their
custodian. The assets deposited with the custodian under this expense offset
agreement could have been invested in income-producing assets. The custody fees
incurred, credits received and net custody expenses for the Funds are as follows
for the six months ended April 30, 1997:
<TABLE>
<CAPTION>
CUSTODY FEES CREDIT RECEIVED NET FEES
<S> <C> <C> <C>
Emerging Markets $ 89,507 $ 189 $ 89,318
Global Leaders 90,430 1,218 89,212
Global Real Estate 92,439 407 92,032
International 212,400 2,930 209,470
</TABLE>
NOTE 10 -- SUBSEQUENT EVENTS
Effective May 5, 1997, Evergreen Keystone Service Company, an affiliate of
First Union, became the Funds', transfer agent, dividend disbursement agent and
shareholder servicing agent.
58
<PAGE>
COMBINED NOTES TO FINANCIAL STATEMENTS
(This Page Left Blank Intentionally)
<PAGE>
COMBINED NOTES TO FINANCIAL STATEMENTS
(This Page Left Blank Intentionally)
<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
George O. Martinez
Secretary
* These individuals are not Trustees for Emerging
Markets or International.
+ Trustee Emeritus.
<PAGE>
This report was prepared primarily for the information of fund shareholders.
It is authorized for distribution if preceeded or accompanied by each fund's
current prospectus. The prospectus contains important information about
each fund, including fees and expenses. Read it carefully before you invest
or send money. For a free prospectus on other Evergreen Keystone Funds,
contact your financial adviser or call Evergreen Keystone.
BOXED COPY CONTAINING THE BELOW:
NOT FDIC INSURED May lose value
No bank guarantee
Evergreeen Keystone (Service Mark) is a Service Mark of Evergreen Keystone
Investment Services, Inc. Copyright 1997.
59609 541076
6/97
<PAGE>
