EVERGREEN SELECT EQUITY TRUST, N-30D, 1998-09-01

EVERGREEN SELECT EQUITY TRUST
N-30D, 1998-09-01

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[PICTURE APPEARS HERE] JUNE 30, 1998

EVERGREEN SELECT

EQUITY FUNDS
------------
ANNUAL REPORT

[LOGO OF APPEARS EVERGREEN FUNDS HERE]
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Table of Contents
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LETTER TO SHAREHOLDERS................................................. 1
EVERGREEN SELECT BALANCED FUND
Fund at a Glance....................................................... 2
Portfolio Manager Commentary........................................... 3
EVERGREEN SELECT COMMON STOCK FUND
Fund at a Glance....................................................... 5
Portfolio Manager Commentary........................................... 6
EVERGREEN SELECT DIVERSIFIED VALUE FUND..
Fund at a Glance....................................................... 8
Portfolio Manager Commentary........................................... 9
EVERGREEN SELECT EQUITY INCOME FUND
Fund at a Glance....................................................... 11
Portfolio Manager Commentary........................................... 12
EVERGREEN SELECT LARGE CAP BLEND FUND
Fund at a Glance....................................................... 14
Portfolio Manager Commentary........................................... 15
EVERGREEN SELECT SMALL CAP GROWTH FUND
Fund at a Glance....................................................... 17
Portfolio Manager Commentary........................................... 18
EVERGREEN SELECT SMALL COMPANY VALUE FUND
Fund at a Glance....................................................... 22
Portfolio Manager Commentary........................................... 23
EVERGREEN SELECT SOCIAL PRINCIPLES FUND
Fund at a Glance....................................................... 27
Portfolio Manager Commentary........................................... 28
EVERGREEN SELECT STRATEGIC GROWTH FUND
Fund at a Glance....................................................... 30
Portfolio Manager Commentary........................................... 31
EVERGREEN SELECT STRATEGIC VALUE FUND
Fund at a Glance....................................................... 33
Portfolio Manager Commentary........................................... 34
FINANCIAL HIGHLIGHTS
Evergreen Select Balanced Fund......................................... 36
Evergreen Select Common Stock Fund..................................... 37
Evergreen Select Diversified Value Fund................................ 38
Evergreen Select Equity Income Fund.................................... 39
Evergreen Select Large Cap Blend Fund.................................. 40
Evergreen Select Small Cap Growth Fund................................. 41
Evergreen Select Small Company Value Fund.............................. 42
Evergreen Select Social Principles Fund................................ 43
Evergreen Select Strategic Growth Fund................................. 44
Evergreen Select Strategic Value Fund.................................. 45
SCHEDULES OF INVESTMENTS
Evergreen Select Balanced Fund......................................... 46
Evergreen Select Common Stock Fund..................................... 48
Evergreen Select Diversified Value Fund................................ 50
Evergreen Select Equity Income Fund.................................... 52
Evergreen Select Large Cap Blend Fund.................................. 54
Evergreen Select Small Cap Growth Fund................................. 56
Evergreen Select Small Company Value Fund.............................. 58
Evergreen Select Social Principles Fund................................ 60
Evergreen Select Strategic Growth Fund................................. 62
Evergreen Select Strategic Value Fund.................................. 64
STATEMENTS OF ASSETS AND LIABILITIES................................... 66
STATEMENTS OF OPERATIONS............................................... 68
STATEMENTS OF CHANGES IN NET ASSETS.................................... 71
COMBINED NOTES TO FINANCIAL STATEMENTS................................. 74
INDEPENDENT AUDITORS' REPORT........................................... 84
ADDITIONAL INFORMATION (UNAUDITED)..................................... 85
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Evergreen Funds
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Evergreen Funds is one of the nation's fastest growing investment companies with
approximately $52 billion in assets under management.

With over 70 mutual funds to choose among and acclaimed service and operations
capabilities, investors enjoy a broader range of quality investment products and
services designed to meet their needs.

The Evergreen Funds employ intensive, research-driven investment strategies
executed by over 90 research analysts and portfolio managers. The fund company
remains dedicated to meeting the needs of investors and their advisors in a
global economy. Look to the Evergreen Funds to provide a distinctive level of
service and excellence in investment management.

This annual report must be preceded or accompanied by a prospectus of an
Evergreen fund contained herein. The prospectus contains more complete
information, including fees and expenses, and should be read carefully before
investing or sending money.

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MUTUAL FUNDS: ARE NOT FDIC INSURED MAY LOSE VALUE . ARE NOT BANK GUARANTEED
--------------------------------------------------------------

Evergreen Distributor, Inc.
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Letter to Shareholders
----------------------

August 1998

Dear Shareholders:

The fiscal year that ended on June 30, 1998, was an excellent period for U.S.
stock investing, particularly for those portfolios that focused on the largest
of the large-cap stocks.

[PHOTO OF WILLIAM M. ENNIS]

A healthy, but not overheated, domestic economy, declining rates and virtually
invisible inflation all combined to create a benign economic backdrop for equity
investors. Corporate earnings continued to increase, propelled by an optimistic
consumer and the continued trend for companies to help grow their earnings by
cutting costs and improving productivity.

[PHOTO OF DAVID C FRANCIS]

The principal dark cloud on the horizon resulted from the pressure created by
the deepening economic and currency crisis in Asia. The first effects in the
United States were, if anything, benign. The problems in Asia were perceived as
helping to slow the strong growth in the U.S. economy, while helping to control
inflation and keep interest rates low. The Asian influence, however, also has
contributed to a slowdown in the growth in U.S. manufacturing sectors.
Technology and capital goods companies dependent on sales to Asia have begun to
experience earnings disappointments.

Following the pattern of the past three years, the largest U.S. companies seemed
to be the most resilient to any uncertainty and doubts in the market. The S&P
500 Composite Index, for example, had a 30.15% return for the 12 months,
including a 17.71% return in the first six months of 1998. The largest 50
companies in the S&P 500 had even greater performance, outperforming the overall
index by almost 600 basis points in the past six months alone.

Meanwhile, the small-cap and mid-cap sectors lagged noticeably in performance,
even if many smaller companies offered more attractive earnings growth. The
small-cap Russell 2000 Index, for example, had a 12-month return of 16.51%, and
just a 4.93% return during the first six months of 1998.

One of the results of this trend, which has been compounding for three years,
has been historically high valuations in the large-cap area. Indeed, on June 30,
1998, S&P 500 stocks were trading at a price/earnings ratio of 26 times 1998
earnings, compared to the long-term historical average of about 15 times
earnings.

Given this recent outperformance, the relative valuations of the small- and
mid-cap sectors look increasingly compelling to many consultants, especially
considering the very impressive growth rates in many industries not overly
reliant on Asia. The other side of this argument, however, is that the small-
and mid-cap sectors historically also have suffered greater volatility in market
downturns. At this writing, market concerns about the effects of the Asian
crisis were increasing, with analysts taking particularly sharp looks at new
earnings announcements.

Within this environment, the 10 different portfolios of the Evergreen Select
Equity Funds have pursued their distinct strategies to take advantage of
different investment opportunities and to respond to different investor risk
control needs. In the following pages, we present specific reports for the 10
portfolios for the fiscal year ended on June 30. At Evergreen Funds, we provide
the Select Funds to give institutional investors the opportunity to choose among
a range of investment alternatives, each with its distinct objectives and risk
parameters.

Thank you for your continued investment in Evergreen Select Funds.

Sincerely,

/s/ William M. Ennis
William M. Ennis
Managing Director
Evergreen Funds

/s/ Davis C. Francis
David C. Francis, C.F.A.
Managing Director
Chief Investment Officer
First Capital Group

1
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EVERGREEN
Select Balanced Fund
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Fund at a Glance as of June 30, 1998

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PORTFOLIO PROFILE
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PHILOSOPHY

The Evergreen Select Balanced Fund uses a systematic and disciplined investment
approach which provides exposure to both the equity and fixed income markets.
The basis of this approach is founded in the belief that stocks offer the
greatest long-term growth opportunities while bonds provide income and less risk
to principal.

PROCESS

The Fund employs a blended approach to equity investing, utilizing companies
with both value and growth-oriented characteristics. Within the fixed income
component, portfolio performance is enhanced while seeking to control risk by
managing duration, sector allocation and security selection.

BENCHMARK

S & P 500 and the Lehman Brothers
Government/Corporate Bond Index

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PERFORMANCE AND RETURNS
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Class I Class IS
Average Annual Returns
1 year 18.93% 18.88%
5 years 13.75% 13.73%
Since Inception 13.29% 13.26
Fiscal YTD income dividends per share $0.16 $0.08

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LONG TERM GROWTH
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Date S&P 500 LB Gov't/Corp Class I
3/1/91 $10,000 $10,000 $ 9,675
6/31/91 9,977 10,151 10,070
6/30/92 11,315 11,589 11,500
6/30/93 12,857 13,113 12,981
6/30/94 13,038 12,921 13,228
6/30/95 16,438 14,570 15,303
6/30/96 20,711 15,249 17,525
6/30/97 27,898 16,430 20,787
6/30/98 36,312 18,274 24,722

Comparison of change in value of a $10,000 investment in Evergreen Select
Balanced Fund, Class I, the S & P 500 Index, and the Lehman Brothers Government
/ Corporate Bond Index.

Past performance is no guarantee of future results. The investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than original cost. Class I and IS performance information
includes the performance of the Fund's predecessor fund, Evergreen Balanced Fund
Class Y, for periods before the Fund's registration statement became effective
on November 21, 1997. The inception date of the predecessor fund was April 1,
1991. Performance for the predecessor fund has been adjusted to include the
effect of estimated expenses based upon the Select Balanced Fund expense ratios
as stated in the Fund's current prospectus. Performance information for Class IS
also includes performance of the Fund's Class I for the period from November 24,
1997 to April 9, 1998 (commencement of Class IS operations), adjusted for
differences between class expenses. Returns of Class I and IS since their
respective commencement of class operations were 7.76% and 1.23%, respectively.
Index returns do not reflect expenses, which have been deducted from the Fund's
return.

2
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PORTFOLIO MANAGEMENT TEAM

[PHOTO OF DEAN HAWES] [PHOTO OF ROLLIN C. WILLIAMS]

PERFORMANCE AND PORTFOLIO COMPOSITION

For the fiscal year ended June 30, 1998, the Evergreen Select Balanced Fund
Class I shares' 18.9% total return lagged the 30.2% return of the S&P 500 Index
but outperformed the 11.3% return of the Lehman Brothers Government/Corporate
Bond Index. The Fund's performance outpaced the 17.6% average return of the 373
Balanced funds tracked by Lipper Analytical Services, Inc., an independent
mutual fund performance monitoring company.

During the second half of the fiscal year, as valuation levels in the equity
market soared to all-time highs, the Fund's equity exposure was modestly reduced
while the fixed-income weighting was increased. As of June 30, the Fund was
comprised of 56.3% equities, 43.5% fixed income investments, with the remainder
in cash.

Portfolio Characteristics

Total Net Assets $724,065,088
Number of Issues 91
P/E Ratio 28.4x
Beta 1.01

EQUITY EXPOSURE

As the period progressed and expectations for slower economic growth surfaced,
we modified our strategy to focus on industry-dominant companies able to
generate visible and predictable earnings growth. As the economy and consumer
spending slow, we believe these companies will be best equipped to withstand a
temporary weakening in demand and have the resources to maintain market share as
well as earnings stability. The portfolio's top three equity holdings as of June
30, Microsoft, General Electric and Johnson & Johnson, are representative of our
"bigger is better" strategy.

From a sector standpoint, technology and healthcare remain our current focus.
The secular trend underlying technology stocks bodes well for future growth as
companies continue to rely on computers and software to increase efficiency and
cut costs. For the final three months of the fiscal period, the three best
performing stocks were all technology issues; Cisco Systems, Sanmina Corp. and
Microsoft posted price-only returns of 32%, 21% and 18%, respectively.

The outlook for the healthcare sector also remains favorable as a result of
positive demographic trends, good cost controls and the FDA's increased
efficiency in the new drug approval process. At 10.1%, this sector is buoyed by
companies such as Bristol-Myers, HEALTHSOUTH and Pfizer, Inc.

3
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Top 5 Industries - Equity

(as a percentage of net assets)

Healthcare Products & Services 10.1%
Banks 6.7%
Information Services & Technology 5.8%
Finance & Insurance 4.1%
Consumer Products & Services 4.0%

Top 10 Equity Holdings

(as a percentage of net assets)

Microsof Corp. 2.3%
General Electric Co. 1.6%
Johnson & Johnson 1.6%
HBO & Co. 1.6%
Cisco Systems, Inc. 1.5%
Procter & Gamble Co. 1.5%
Allstate Corp. 1.5%
Tyco International Ltd. 1.5%
Bristol-Myers Squibb Co. 1.5%
Coca Cola Co. 1.5%

FIXED INCOME ALLOCATION

During the final three months of the fiscal year, the Fund's fixed-income
weighting increased to nearly 44%. Our fixed-income exposure has helped
performance due to a duration stance that remained longer than our benchmark for
most of the period, a strategy which was successful as interest rates declined.
As of June 30, 1998, the Fund's duration was 5.8 years versus 5.4 years for the
Lehman Brothers Government/Corporate Bond Index. In keeping with our philosophy
of being a low turnover fund, trades were undertaken primarily in Treasuries
during the period to either shift duration or finely tune the duration process.

Top 5 Industries - Bond

(as a percentage of net assets)

Treasury Notes & Bonds 31.2%
Finance & Insurance 3.8%
Banks 1.7%
U.S. Government Agency Obligations 1.2%
Industrial Specialty Products & Services 1.1%

Top 5 Bond Holdings

(as a percentage of net assets)

U.S. Treasury Notes 15.6%
U.S. Treasury Bonds 15.6%
GNMA 1.2%
NationsBank Corp. 1.1%
Loews Corp. 1.1%

MARKET OUTLOOK

Although long-term market fundamentals remain favorable and support lower
interest rates, many troubled foreign economies are showing signs of worsening
and could negatively impact U.S. financial markets. As a positive side effect,
however, softer foreign economies and declining import prices would likely
reward investors with low inflation and stable interest rates.

Despite any short-term volatility, our long-term outlook remains very favorable
as an increasingly competitive global economy and low worldwide inflation bode
well for both the U.S. equity and fixed income markets. Within our fixed-income
weighting, we expect to maintain a duration longer than that of our benchmark in
the coming months to capitalize on steady-to-declining interest rates. From an
equity perspective, we will continue to emphasize sectors currently enjoying
positive trends as well as companies that demonstrate the ability to meet and
exceed earnings expectations.

4
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EVERGREEN
Select Common Stock Fund
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Fund at a Glance as of June 30, 1998

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PORTFOLIO PROFILE
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PHILOSOPHY

Evergreen Select Common Stock Fund utilizes a diversified style of equity
management which capitalizes on opportunities in both value- and growth-oriented
stocks. In serving the investment needs of individual investors, the Fund
remains sensitive to tax Implications.

PROCESS

The Fund uses a bottom-up stock selection process, focusing on security
fundamentals rather than broad economic forecasts. The Fund is managed using a
team approach; investment managers locate attractive holdings using a unique
blend of quantitative and traditional fundamental analysis skills.

BENCHMARK

S & P 500 Index

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PERFORMANCE AND RETURNS
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Class I Class IS
Average Annual Returns
1 year 24.37% 24.16%
5 years 18.98% 18.71%
10 years 15.28% 15.00%
Since Inception 16.16% 15.87%
Fiscal YTD income dividends per share $0.51 $0.31

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LONG TERM GROWTH
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Date S&P 500 Class I

6/30/88 $10,000 $10,000
6/30/89 12,055 11,267
6/30/90 14,042 13,404
6/30/91 15,081 13,998
6/30/92 17,104 15,609
6/30/93 19,435 17,376
6/30/94 19,708 16,610
6/30/95 24,846 20,336
6/30/96 31,306 25,466
6/30/97 42,169 33,318
6/30/98 54,888 41,437

Comparison of change in value of a $10,000 investment in Evergreen Select Common
Stock Fund, Class I, and the S&P 500 Index.

Past performance is no guarantee of future results. The investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than original cost. Class I and IS performance information
includes the performance of the Fund's predecessor common trust fund for periods
before the Fund's registration statement became effective on November 21, 1997.
The inception date of the predecessor common trust fund was December 31, 1981.
Performance for the common trust fund has been adjusted to include the effect of
estimated expenses based upon the mutual fund expense ratios as stated in the
Fund's current prospectus. Performance information for Class IS also includes
performance of the Fund's Class I for the period from November 24, 1997 to
February 4, 1998 (commencement of Class IS operations), adjusted for differences
between class expenses. Returns of Class I and IS since their respective
commencement of class operations were 12.23% and 9.27%, respectively. The common
trust fund was not registered under the Investment Company Act of 1940 (the
"1940 Act") or subject to certain investment restrictions that are imposed by
the 1940 Act. If the common trust fund had been registered under the 1940 Act,
its performance may have been adversely affected. Index returns do not reflect
expenses, which have been deducted from the Fund's return.

5
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EVERGREEN
Select Common Stock Fund
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PORTFOLIO MANAGER COMMENTARY

PORTFOLIO MANAGEMENT TEAM

The Fund is managed by Mark C. Sipe and Hanspeter Giger who have over 31 years
of combined investment experience. Their disciplined approach assures
consistency of results and superior service.

[PHOTO OF MARK C. SIPE] [PHOTO OF HANSPETER GIGER]

MARKET UPDATE AND FUND PERFORMANCE

The stock market's resilience over the past 12 months has been matched only by
its steadfast narrowness. Replaying, yet again, the record of the prior three
years, a select number of very large capitalization stocks accounted for most of
the market's first half advance: the ten largest stocks in the S&P 500 rose
31.7%, while the equally weighted average of all 500 stocks rose just 8.6%;
amazingly, nearly a third actually declined.

Against this backdrop, the Evergreen Select Common Stock Fund Class I shares'
24.4% 12-month return, as of June 30, 1998, trailed the 30.2% return for the S&P
500 Index. The Fund outperformed the 15.2% average return, of all equity mutual
funds tracked by Lipper Analytical Services, Inc. a mutual fund performance
monitoring company.

Portfolio
Characteristics
-----------------

Total Net Assets $1,970,659,937
Number of Issues 118
P/E Ratio 26.7x
Beta 1.0

VICTIMS OF THE ASIAN CRISIS

The stock market's seemingly split personality disorder is clearly reflected in
disparate performance between various sectors of the market so far this year.
After leading the market in the first quarter, industrial cyclicals such as
paper, chemical and machinery stocks rolled over from a relapse of Asian fears.

Another major casualty of the Asian fallout, energy, appears to offer tremendous
long-term opportunity. Similar to the experience in other sectors, however,
those segments that appear to present the best fundamentals or opportunity for
improvement have tended to be laggards relative to the larger names. For
example, large cap stocks such as Texaco held up well versus smaller names such
as Diamond Offshore and R&B Falcon. Despite weak oil prices and negative
near-term sentiment, for the long haul we continue to find the best values in
some drillers such as the latter two stocks above, refiners such as Tosco, and
exploration and production companies such as Anadarko Petroleum. This is due to
a combination of valuation, restructuring opportunities, management strengths,
and/or industry positioning.

6
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E V E R G R E E N
Select Common Stock Fund
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PORTFOLIO MANAGER COMMENTARY

TOP 5 INDUSTRIES
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(as a percentage of net assets)

Information Services & Technology 12.2%
Healthcare Products & Services 11.1%
Banks 10.2%
Oil/Energy 8.5%
Food & Beverage Products 7.4%

AREAS OF STRENGTH

On the other hand, the better performing sectors, primarily those more closely
linked to the domestic consumer, surged ahead. The share prices of stocks
related to retailing, autos, and housing all echoed the enthusiasm in reaching a
30-year high in consumer confidence. In the Fund, names such as Black & Decker,
Dayton Hudson and Sears led the group's performance.

Another strong segment, but more tied to technology than to the consumer, was
telecommunications, where strong performances by LCI International, prior to its
takeover by Qwest Communications, and Century Telephone, contributed to the
overall Fund's returns. And all along, the health care and technology sectors or
more precisely the very large stocks in those sectors charged ahead; 25% or more
during the past twelve months alone.

TOP 10 HOLDINGS
---------------
(as a percentage of net assets)

General Electric Co. 2.3%
Ford Motor Co. 2.2%
CiscoSystems, Inc. 1.8%
International Business Machines Corp. 1.7%
Du Pont (E.I.) De Nemours & Co. 1.7%
Coca Cola Co. (The) 1.7%
GTE Corp. 1.6%
Smith Kline Beecham Plc, ADR 1.6%
Texaco, Inc. 1.6%
Chase Manhattan Corp. 1.6%

PERFORMANCE EVALUATION

It is this last distinction that is perhaps most important in dissecting the
performance of the Evergreen Select Common Stock Fund this year. While the
Fund's comparatively modest sector "bets" versus the S&P 500 netted out to have
a slight positive impact, it was participation in stocks beyond the very largest
within primarily the technology and healthcare sectors that accounted for much
of the Fund's underperformance relative to the S&P 500. Forays into smaller
stocks such as MedPartners, Varian Associates and Adaptec diminished the
positive contributions from participation in larger stocks such as Schering-
Plough, Abbott Labs, Dell Computer and Microsoft. While the current drag by some
of these smaller positions is disappointing, we believe many still represent
uncommon values relative to their strong fundamental outlooks and represent the
best potential for strong comparative returns in subsequent periods.

7
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EVERGREEN
Select Diversified Value Fund
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FUND AT A GLANCE AS OF JUNE 30, 1998

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PORTFOLIO PROFILE
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PHILOSOPHY

The Evergreen Select Diversified Value fund is a core fund with an emphasis on
traditional value, utilizing fundamental analysis to determine if a stock is
selling at a reasonable valuation level. The Fund seeks to capture the best
opportunities in a value universe by emphasizing securities with perceived
intrinsic value above current market levels due to temporary or anticipated
problems.

PROCESS

Primarily, the Fund invests in undervalued companies using a "bottom-up"
approach that concentrates on analyzing security fundamentals rather than broad
economic forecasts. The Diversified Value team strives to produce a portfolio
that best controls risk and balances a risk/reward relationship.

BENCHMARK

S & P 500 Index

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PERFORMANCE AND RETURNS
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Class I Class IS
AVERAGE ANNUAL RETURNS

1 year 21.44% 21.66%
5 years 18.36% 18.64%
Since Inception 17.57% 17.86%
FISCAL YTD INCOME DIVIDENDS PER SHARE $0.14 $0.05

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LONG TERM GROWTH
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Date S&P 500 Class I
12/1/90 $10,000 $10,000
6/30/91 11,426 11,648
6/30/92 12,959 12,925
6/30/93 14,725 14,482
6/30/94 14,932 15,044
6/30/95 18,825 18,322
6/30/96 23,720 21,701
6/30/97 31,951 27,701
6/30/98 41,857 33,640

Comparison of change in value of a $10,000 investment in Evergreen Select
Diversified Value Fund, Class I, and the S&P 500 Index.

Past performance is no guarantee of future results. The investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than original cost. Class I and IS performance information
includes the performance of the Fund's predecessor fund, Evergreen Value Fund
Class Y, for periods before the Fund's registration statement became effective
on November 21, 1997. The inception date of the predecessor fund was January 3,
1991. Performance for the predecessor fund has been adjusted to include the
effect of estimated expenses based upon the Select Diversified Value Fund
expense ratios as stated in the Fund's current prospectus. Performance
information for Class IS also includes performance of the Fund's Class I for the
period from November 24, 1997 to March 31, 1998 (commencement of Class IS
operations), adjusted for differences between class expenses. Returns of Class I
and IS since their respective commencement of class operations were 10.72% and
(2.19%), respectively. Index returns do not reflect expenses, which have been
deducted from the Fund's return.

8
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PORTFOLIO MANAGEMENT TEAM

Jack Gray, Steve Hoeft, and Eric Teal, who have a combined 49 years of
investment experience, manage the Evergreen Select Diversified Value Fund. The
team employs rigorous fundamental analysis combined with a disciplined
quantitative approach to seek superior results and adherence to risk/reward
objectives.

[PHOTO OF JACK GRAY]

[PHOTO OF STEVE HOEFT]

[PHOTO OF ERIC TEAL]

PERFORMANCE

When combined with the performance results from the Evergreen Value Fund prior
to the conversion, the Evergreen Select Diversified Value Fund Class I shares
posted a 12-month return of 21.44%. The Fund has been broadly diversified and
historically approached the market in a conservative manner, traditionally
demonstrating less risk than the overall market.

PORTFOLIO
CHARACTERISTICS
---------------
Total Net Assets $797,562,096
Number of Issues 68
P/E Ratio 25.8x
Beta 0.97

SECTOR ACTIVITY AND SECURITY SELECTION

The Fund's performance was enhanced particularly by the communication service
company, Cisco Systems; the fire and safety goods producer, Tyco International;
and the drug-maker, Bristol-Myers, which returned 80%, 53%, and 48%,
respectively. Underperformance relative to the S&P 500 can be attributed to a
cautious approach to the market. Overweightings in more defensive industries and
industries impacted by global economic events negatively impacted the Fund. Our
relative positive exposure in electric and gas utilities allowed participation
in equities without the high degree of downside risk or volatility.

Portfolio exposure to tobacco manufacturers negatively impacted performance as
the industry prepares for a sweeping national settlement. The Fund was also
affected by the decline in crude oil prices and its impact on our oil drilling
companies. Overall, the flight to the largest-cap companies continued in the
first half of 1998 and diversified portfolios struggled to keep pace with market
averages.

9
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Top 5 Industries
-------------------------------
(as a percentage of net assets)

Healthcare Products & Services 14.4%
Banks 12.7%
Food & Beverage Products 10.1%
Communication Systems & Services 5.8%
Information Services & Technology 5.5%

PORTFOLIO ADJUSTMENTS

The Fund does not find market timing to be beneficial, but was recently
successful in selling several high profile stocks prior to their significant
declines in late June (Sunbeam and Cendant were down approximately 50% due to
'fictitious' revenues and accounting irregularities). Positions in several
stocks were also increased prior to their take-off in June, including Microsoft,
up approximately 40%. Significant additions include retailers: Federated
Department Stores and Dayton Hudson; grocer: Safeway; and telephone giant:
Worldcom.

Top 10 Holdings
-------------------------------
(as a percentage of net assets)

Chase Manhattan Corp. 3.6%
General Electric Co. 3.5%
Bristol-Myers Squibb Co. 3.4%
NationsBank Corp. 3.4%
Pfizer, Inc. 3.1%
Tyco International Ltd. 3.0%
News Corp. Ltd. 2.7%
Bestfoods 2.6%
Federated Department Stores, Inc. 2.5%
Cisco Systems, Inc. 2.4%

OUTLOOK

Looking ahead, we feel that the fund is well positioned with larger
capitalization and higher earnings' quality stocks, two themes we believe will
triumph in a late cycle bull market. The fund still maintains a cautious
approach to the market since a market correction or downturn is not unlikely.
Our goal is to not take significant market, industry, or style bets but to
emphasize our greatest strength stock-picking.

Our process controls for risk relative to the market, but efficiently captures
value investment opportunities. In summary, our strategy is more than
identifying stocks which we believe will appreciate; it is a rigorous process
that carefully balances each unit of return with each unit of risk.

10
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EVERGREEN
Select Equity Income Fund
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FUND AT A GLANCE AS OF JUNE 30, 1998

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PORTFOLIO PROFILE
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PHILOSOPHY

Evergreen Select Equity Income Fund utilizes both value-and-growth oriented
stocks in pursuit of its objective: high current income and long-term capital
appreciation. The Fund provides investors a degree of safety by emphasizing
companies with below average price-to-earnings ratios and higher dividend yields
relative to their industry groups.

PROCESS

The Fund uses a bottom-up stock selection process, focusing on security
fundamentals rather than broad economic forecasts. The portfolio construction
process consists of a unique blend of quantitative and traditional fundamental
analysis skills.

BENCHMARK

S & P 500 Index

- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS
- --------------------------------------------------------------------------------

Class I Class IS
AVERAGE ANNUAL RETURNS
1 year 14.45% 14.30%
5 years 14.80% 14.54%
10 years 13.64% 13.37%
Since Inception 14.69% 14.41%
FISCAL YTD INCOME DIVIDENDS PER SHARE $ 1.51 $ 0.74

- --------------------------------------------------------------------------------
LONG TERM GROWTH
- --------------------------------------------------------------------------------

Date S&P 500 Class I
6/30/88 $10,000 $10,000
6/30/89 12,055 12,076
6/30/90 14,042 13,870
6/30/91 15,081 15,018
6/30/92 17,104 16,558
6/30/93 19,435 18,019
6/30/94 19,708 17,904
6/30/95 24,846 21,101
6/30/96 31,306 25,178
6/30/97 42,169 31,384
6/30/98 54,888 35,992

Comparison of change in value of a $10,000 investment in Evergreen Select Equity
Income Fund, Class I, and the S&P 500 Index.

Past performance is no guarantee of future results. The investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than original cost. Class I and IS performance information
includes the performance of the Fund's predecessor common trust fund for periods
before the Fund's registration statement became effective on November 21, 1997.
The inception date of the predecessor common trust fund was December 31, 1978.
Performance for the common trust fund has been adjusted to include the effect of
estimated expenses based upon the mutual fund expense ratios as stated in the
Fund's current prospectus. Performance information for Class IS also includes
performance of the Fund's Class I for the period from November 24, 1997 to March
11, 1998 (commencement of Class IS operations), adjusted for differences between
class expenses. Returns of Class I and IS since their respective commencement of
class operations were 3.70% and (1.16%), respectively. The common trust fund was
not registered under the Investment Company Act of 1940 (the "1940 Act") or
subject to certain investment restrictions that are imposed by the 1940 Act. If
the common trust fund had been registered under the 1940 Act, its performance
may have been adversely affected. Index returns do not reflect expenses, which
have been deducted from the Fund's return.

11
<PAGE>

PORTFOLIO MANAGER COMMENTARY

PORTFOLIO MANAGEMENT

Paul A. DiLella who has 16 years of investment experience manages the Evergreen
Select Equity Income Fund. In addition to managing Evergreen Select Equity
Income Fund, Mr. DiLella is also responsible for the co-management of the
Evergreen Utility Fund. He also has research responsibility for the electric
utility, natural gas distribution, and REIT areas.

[PHOTO OF PAUL A. DILELLA]

PERFORMANCE

For the fiscal year ending June 30, 1998, the Evergreen Select Equity Income
Fund Class I share's 14.5% total return trailed the 30.2% return for the S&P 500
Index. Underlying the Fund's fiscal year return were two dramatically different
performance periods. The portfolio's strong and almost magical 14.8% total
return during the first six months substantially outpaced the S&P 500 by 4.2%.
Conversely, during the final half of the fiscal year as investors shifted their
focus away from income-oriented companies toward more growth-oriented areas, the
Fund's performance relative to the index suffered.

Portfolio
Characteristics
---------------
Total Net Assets $205,745,201
Number of Issues 48
P/E Ratio 18.0x
Beta 0.63

UNDERLYING MARKET INFLUENCES

As our philosophy states, "the Fund provides investors a relative degree of
safety by emphasizing companies with below-average price-to-earnings ratios and
higher dividend yields relative to their industry groups." Unfortunately, this
strategy has been severely penalized in the equity market over the past six
months due to a market rotation toward growth-oriented sectors such as
technology.

As an "equity income" fund, the majority of the portfolio is invested in
traditional dividend-paying sectors with relatively low valuation levels. For
example, as of fiscal year end, over 40% of the portfolio was invested in the
energy and utility sectors. Although defensive sectors, including these two
areas performed very well during the first six months of the period, they
dramatically underperformed during the final six months. Investors' strong
appetite for growth-oriented stocks penalized the performance of utility
companies while plummeting oil prices had a negative impact on energy stocks.

Another factor which penalized Fund returns was our exposure to tobacco stocks.
Recent publicity surrounding the tobacco industry and the potentially negative
effects of upcoming tobacco legislation caused a sharp pullback among tobacco
stocks. Two of our current holdings, RJR Nabisco and Philip Morris, declined 23%
and 7%, respectively, during the 12 months.

Top 5 Industries - Equity
-------------------------------
(as a percentage of net assets)

Utilities -- Electric 21.5%
Oil/Energy 13.5%
Banks 10.6%
Food & Beverage Products 6.5%
Real Estate 6.2%

12
<PAGE>

PORTFOLIO MANAGER COMMENTARY

ACTIVITY WITHIN THE FUND

Offsetting some negative market factors were a few timely decisions which
enhanced the Fund's performance in the final months of the fiscal period. Our
decision to sell Keycorp, a Cleveland-based bank, proved timely as its share
price declined following its sale. WorldCom, a global provider of local, long
distance and internet services, was added to the portfolio and proceeded to
appreciate 12% following its purchase in early May.

We felt that the correction which took place in the energy sector was an
overreaction among investors, and viewed it as an opportunity to strengthen the
portfolio. Consequently, we added Ultramar Diamond Shamrock and Newpark
Resources, two energy-related companies which were purchased following a sharp
pullback in their share prices. Because their price decline was primarily a
result of plunging oil prices, not deteriorating fundamentals, we feel both
companies represent solid long-term investments.

Top 10 Equity Holdings
-------------------------------
(as a percentage of net assets)
Cinergy Corp. 3.8%
Houston Industries, Inc. 3.3%
Fleet Financial Group, Inc. 3.2%
GPU, Inc. 3.2%
Simon DeBartolo Group, Inc. 3.2%
General Electric Co. 3.1%
Ralston Purina Co. 3.1%
Ultramar Diamond Shamrock Corp. 3.1%
GTE Corp. 3.0%
BankBoston Corp. 3.0%

A CONSISTENT, STRONG CURRENT YIELD

The Fund's 2.70% 30-day SEC current yield, nearly twice the dividend yield of
the S&P 500 Index, underscores our income-oriented investment strategy. We think
the portfolio's current yield will provide investors a degree of stability
within this uncertain market environment afflicted with soaring valuation
levels.

OUTLOOK

Although we are disappointed with the Fund's recent fiscal-year performance, we
are confident that the adjustments made to the portfolio have positioned it well
for the final half of 1998. We recognize that the market's current preference
toward growth-style companies is a cyclical event and once this cycle has run
its course, the portfolio's emphasis on well-managed, attractively-valued,
above-average-yielding stocks will continue to reward our shareholders with
favorable long-term results.

As we have stated in previous commentaries, we feel the best way to protect our
shareholders' interests is to remain focused on the Fund's income-oriented
strategy. This strategy has served us well over time as evidenced by the Fund's
solid performance, relative to its peers, over 1-, 3-, 5-, and 10-year time
periods.

13
<PAGE>

- --------------------------------------------------------------------------------
EVERGREEN
Select Large Cap Blend Fund
- --------------------------------------------------------------------------------
FUND AT A GLANCE AS OF JUNE 30, 1998

- --------------------------------------------------------------------------------
PORTFOLIO PROFILE
- --------------------------------------------------------------------------------

PHILOSOPHY

Evergreen Select Large Cap Blend Fund invests in large and mid-sized U.S.
companies, blending those that display both value and growth-oriented
characteristics. This philosophy holds that value and growth stocks tend to be
countercyclical, outperforming the broad market at different times.
Diversification between the two approaches tends to provide less volatile
investment results over time.

PROCESS

Research and stock selection focus on companies of sound financial quality which
have strong management teams and maintain competitive leadership positions
within their respective industries. These companies are identified using a
fundamental, bottom-up stock selection process which is research-intensive.

BENCHMARK

S & P 500 Index

- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS
- --------------------------------------------------------------------------------

Class IS Class IC Class I
AVERAGE ANNUAL RETURNS
1 year 27.46% 27.26% 27.46%
3 years 27.17% 26.89% 27.17%
Since Inception 22.90% 22.62% 22.90%
FISCAL YTD INCOME DIVIDENDS PER SHARE $0.22 $0.09 $0.24

- --------------------------------------------------------------------------------
LONG TERM GROWTH
- --------------------------------------------------------------------------------

Date S&P 500 Class IC
Dec-93 $10,000 $10,000
6/30/94 9,661 9,355
6/30/95 12,180 12,297
6/30/96 15,347 14,732
6/30/97 20,672 19,841
6/30/98 26,907 25,289

Comparison of change in value of a $10,000 investment in Evergreen Select Large
Cap Fund, Class IC, and the S&P 500 Index.

Past performance is no guarantee of future results. The investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than original cost. Class I, IS and IC performance
information includes the performance of the Fund's predecessor common trust fund
for periods before the Fund's registration statement became effective on
November 21, 1997. The inception date of the predecessor common trust fund was
December 31, 1993. Performance for the common trust fund has been adjusted to
include the effect of estimated expenses based upon the mutual fund expense
ratios as stated in the Fund's current prospectus. Performance information for
Class I and IS also includes performance of the Fund's Class IC for the period
from November 24, 1997 to December 19, 1997 (commencement of Class I operations)
and March 12, 1998 (commencement of Class IS operations), respectively, adjusted
for differences between class expenses. Returns of Class I, IS and IC since
their respective commencement of class operations were 14.31%, 2.17% and 13.18%,
respectively. The common trust fund was not registered under the Investment
Company Act of 1940 (the "1940 Act") or subject to certain investment
restrictions that are imposed by the 1940 Act. If the common trust fund had been
registered under the 1940 Act, its performance may have been adversely affected.
Index returns do not reflect expenses, which have been deducted from the Fund's
return.

14
<PAGE>

- ------------------------------------------------------------------------------
E V E R G R E E N
Select Large Cap Blend Fund
- ------------------------------------------------------------------------------

PORTFOLIO MANAGER COMMENTARY

PORTFOLIO MANAGEMENT TEAM

The Evergreen Select Large Cap Blend Fund is managed by a team of 4 portfolio
managers with over 90 years of combined investment experience. The team-oriented
approach incorporates multiple perspectives to identify the most attractive
opportunities in the market and ensures adherence to the style-specific
objectives.

[PHOTO OF DARRYL BROWN] [PHOTO OF ERIC WLEGAND]

[PHOTO OF STEVE HOEFT] [PHOTO OF DEAN HAWES]

PERFORMANCE

For the fiscal year ended June 30, 1998, the Evergreen Select Large Cap Blend
Fund Class I shares' 27.5% total return trailed the 30.2% return for the S&P 500
Index. According to data from Lipper Analytical Services, Inc., however, the
Fund did outperform the 15.2% average return of all equity mutual funds during
the twelve-month period ended June 30, 1998.

PORTFOLIO
CHARACTERISTICS
----------------

Total Net Assets $69,283,488
Number of Issues 71
P/E Ratios 27.6x
Beta 1.19

STRATEGIC SECTOR WEIGHTINGS

At 17.3%, Healthcare Products & Services represents the portfolio's largest
sector and is buoyed by names such as Bristol-Myers, HEALTHSOUTH Corp. and
Pfizer. The outlook for this area remains extremely favorable as a result of
positive demographic trends, good cost controls and the FDA's increased
efficiency in the new drug approval process.

The portfolio's solid weighting in technology stocks reflects our favorable
outlook for this sector as well. The secular trend underlying technology stocks
bodes well for future growth as companies continue to rely on computers and
software to increase efficiency and cut costs. For the final three months of the
fiscal period, the three best performing stocks were all technology issues as
Cisco Systems, Sanmina Corp. and Microsoft posted price-only returns of 32%,
21% and 18%, respectively.

15
<PAGE>

PORTFOLIO MANAGER COMMENTARY

Conversely, our decision to maintain an underweighted position in the energy
sector helped performance as this area languished due to plummeting oil prices.
Consistent with this strategy, CMS Energy was eliminated as a portfolio holding.
Consumer cyclicals represent the most significant underweight -- 9.3% versus
15.3% for the benchmark -- due to increasing competition, stretched valuations
and a slowdown in global demand facing this sector.

TOP 5 INDUSTRIES
----------------
(as a percentage of net assets)

Healthcare Products & Services 17.3%
Banks 11.7%
Information Services & Technology 9.4%
Finance & Insurance 7.7%
Consumer Products & Services 6.6%

INVESTMENT STRATEGY

In the earlier part of the fiscal year, we were concerned by the potential
negative impact from the Asian financial crisis and soaring valuations in the
equity market. In response, we shifted the Fund toward a lower valuation
structure by reducing typically larger companies with high price-to-earnings
ratios, specifically, companies which have experienced significant run-ups in
price such as Colgate. As the period progressed and expectations for slower
economic growth surfaced, we modified our strategy to focus on industry-dominant
companies able to generate visible and predictable earnings growth. As the
economy and consumer spending slow, we feel these companies will be best
equipped to withstand a temporary weakening in demand and have the resources to
maintain market share and earnings stability through pricing flexibility. The
portfolio's top three holdings as of June 30 -- General Electric, Microsoft and
Bristol Myers -- are representative of our "bigger is better" strategy.

TOP 10 HOLDINGS
---------------
(as a percentage of net assets)

General Electric Co. 3.1%
Microsoft Corp. 2.9%
Bristol-Myers Squibb Co. 2.8%
Tyco International Ltd. 2.8%
Coca Cola Co. 2.7%
BankBoston Corp. 2.7%
HEALTHSOUTH Corp. 2.7%
Travelers Group, Inc. 2.7%
Cisco Systems, Inc. 2.7%
Procter & Gamble Co. 2.6%

OUTLOOK

Although long-term market fundamentals remain favorable, there are several
factors, such as soaring valuations and deteriorating foreign economies, which
could hurt the market in the short term. We feel that investors have
underestimated the negative impact facing corporate earnings from the weakening
Asian economy and, as a result, we will maintain an emphasis on domestically
oriented companies which have less exposure to troubled foreign markets.

From a sector standpoint, we anticipate strong weightings in technology,
healthcare and banks as a result of extremely positive trends within each area.
Individual stock selection will continue to emphasize well-managed, dominant
companies with reasonable valuation levels which demonstrate the ability to
meet, and exceed, earnings expectations.

16
<PAGE>

- ------------------------------------------------------------------------------
EVERGREEN
Select Small Cap Growth Fund
- ------------------------------------------------------------------------------
FUND AT A GLANCE AS OF JUNE 30, 1998

- --------------------------------------------------------------------------------
PORTFOLIO PROFILE
- --------------------------------------------------------------------------------

PHILOSOPHY

The Fund seeks to provide shareholders with long-term growth of capital by
investing in small company stocks. We believe that the risk associated with
smaller company stocks can be managed effectively by diversification and careful
attention to valuation.

PROCESS

The Fund manager uses a fundamental, bottom-up stock selection procss which is
research-intensive. The Fund generally invests in stocks of companies which have
market capitalization of $1 billion or less and above-average long-term growth
rates. Our research process identifies buying opportunities in high-quality
small companies which are growth-oriented, have a competitive advantage and
reasonable valuations.

BENCHMARK

RUSSELL 2000 GROWTH INDEX

- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS
- --------------------------------------------------------------------------------

CLASS 1
Inception Date 12/31/95
AVERAGE ANNUAL RETURNS
1 year 12.11%
Since Inception 13.76%

- --------------------------------------------------------------------------------
LONG TERM GROWTH
- --------------------------------------------------------------------------------

Date S&P 500 Class IC
Dec-93 $10,000 $10,000
6/30/94 9,661 9,355
6/30/95 12,180 12,297
6/30/96 15,347 14,732
6/30/97 20,672 19,841
6/30/98 26,907 25,289

Comparison of change in value of a $10,000 investment in Evergreen Select Small
Cap Growth Fund, Class I, and the Russell 2000 Growth Index.

Past performance is no guarantee of future results. The investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than original cost. The Russell 2000 Growth Index is an
unmanaged index and does not include transaction costs associated with buying
and selling securities nor any management fees.

17
<PAGE>

- --------------------------------------------------------------------------------
EVERGREEN
Select Small Cap Growth Fund
- --------------------------------------------------------------------------------

PORTFOLIO MANAGER COMMENTARY

PORTFOLIO MANAGEMENT

The Evergreen Select Small Cap Growth Fund is managed by Thomas L. Holman. Mr.
Holman is a member of the Small Cap Growth Team at Keystone Investment
Management Co., where he manages the Fund and separately managed, small-cap
growth accounts. His research responsibilities are focused on telecommunication
service companies. Prior to joining Keystone in 1997, Mr. Holman was a portfolio
manager and securities analyst at Invista Capital Management. He developed
quantitative models and had co-management responsibility for several small- and
mid-cap portfolios. As an analyst, he was a generalist, covering a wide variety
of industries, including technology, telecommunications equipment, media
services, basic industry, consumer staples and retail. Mr. Holman received both
his B.S. and M.B.A degrees from Iowa State University.

[PHOTO OF THOMAS L. HOLMAN APPEARS HERE]

PERFORMANCE

The Evergreen Select Small Cap Growth Fund Class I shares produced a return of
12.11% for the 12-month period that ended on June 30, 1998. This return somewhat
lagged the return of the Fund's benchmark, the Russell 2000 Growth Index, which
had a return of 13.19%. Relative performance improved substantially during the
second half of the fiscal year, the Jan.1-June 30, 1998 period, when portfolio
management and process changes in the Small Cap Growth Team at Keystone were
fully in place. During this period, the Fund at a Glance as of June 30, 1998
Fund's total return was 6.49%, compared to 5.46% for the Russell 2000 Growth
Index.

PORTFOLIO
CHARACTERISTICS
---------------

Total Net Assets $69,283,488
Number of Issues 71
P/E Ratios 27.6x
Beta 1.19

ENVIRONMENT

For a period approaching two years, the gap between the relative values of large
capitalization and small capitalization stocks has been narrowing, and large cap
stocks have generated better returns. This is primarily because large cap
companies have offered the growth opportunities normally associated with small
caps, but with the advantages of more stability, more diversified products and
longer operating histories. Investors in large company stocks received strong,
above-historical-average growth, primarily because of productivity gains and the
growth of the world economy. We have reached the point, however, where we
believe the valuations between large cap and small cap stocks are at a historic
low seen only twice in the past 15 years. These valuation relationships indicate
that small cap stocks are the place in which to be invested, particularly in
light of the growth opportunities they have. In contrast, large company stocks
are likely to have a harder time achieving earnings growth through further
productivity gains, and they are more likely to be adversely affected by the
strength of the U.S. dollar, which hurts their ability to compete in
international markets.

18
<PAGE>

- ------------------------------------------------------------------------------
E V E R G R E E N
Select Small Cap Growth Fund
- ------------------------------------------------------------------------------
PORTFOLIO MANAGER COMMENTARY

Small cap stocks did have a period, from the end of April through October 1997,
when they substantially outperformed the big caps. But the Asian financial and
currency crisis hit small cap stocks hard, especially those involved in the
technology hardware (-31.79%) and energy-related (-31.91%) industries. Those
sectors make up a significant part of the small stock indexes, 11.6% and 4.4%,
respectively. Even though small caps as a whole were weak, domestically oriented
services continued their strong performance through the first half of 1998:
commercial services (+10.49%), consumer services (+11.8%), retail (+17.34%), and
telecommunications services (+18.61%).

INVESTMENT STRATEGY

The Fund is managed with a very consistent strategy. The management team looks
for companies that have well-defined, defendable competitive advantages and
sustainable, above-average growth prospects. With these characteristics, the
companies have the ability to earn higher returns than their peers do, and
ultimately those high returns have the potential to be reflected in the
performance of the Fund.

Once we identify these companies, the key is to make sure the Fund is able to
acquire stock at reasonable valuations. The investment team spends a major
portion of its time in valuation analysis, making sure that we are not
overpaying for the opportunity to participate in the firm's growth. We are
trying to achieve growth at a reasonable price.

This discipline is maintained in making decisions to sell as well as to buy
stocks. The investment team regularly updates valuations and uses this valuation
analysis in deciding whether to maintain, reduce or even completely eliminate
the Fund's position in a company's stock.

TOP 5 INDUSTRIES
----------------

Information Services & Technology 14.1%
Telecommunication Services & Equipment 8.5%
Electrical Equipment & Services 7.9%
Consumer Products & Services 7.8%
Education 7.0%

SECTOR ALLOCATION ADJUSTMENTS

We have reduced investments in companies potentially affected by the problems in
Asia. This includes many areas in the technology hardware and energy-related
industries.

In addition to reducing the Fund's exposure to technology, we have repositioned
the technology investments to favor companies not heavily influenced by Asia.
Two new investments illustrate this emphasis: the first is Antec, a leading
cable equipment supplier to TCI, the cable company that AT&T intends to acquire.
Antec should be a direct beneficiary as more capital is spent in upgrading TCI's
cable operations. The second technology company is Forrester Research, an
Internet information consulting company that is a leader in the business of
providing information to companies planning to do business on the Internet.

We have been allocating an increasing part of the Fund's assets to domestically
oriented commercial services companies and consumer goods companies.

19
<PAGE>

In commercial services, we have recently added two advertising companies: ADVO
is the number-one, full-service direct mailer, and Big Flower Holdings is the
largest U.S. producer of advertising circulars. Both companies dominate their
competitive groups, are competitively well positioned and are growing at good
paces.

On the consumer side, we have added three new investments.

The first is National R.V. Holdings, which makes the large recreational vehicles
(RVs) that have become extremely popular among baby boomers. This company has
introduced an RV with a slide-out room. This hydraulically moving room extends
out the side of the vehicle, adding a room and increasing the available living
space. The second company is Scotts, the well known fertilizer and grass seed
company. This company has been acquiring other parts of its industry, and
recently announced plans to buy the Ortho division of Monsanto Chemical. With
this and other acquisitions, Scotts is emerging as the dominant player in the
home lawn and garden products market, with strong profits and excellent growth
potential. The third consumer company is Steiner Leisure, which is the largest
operator of spas on cruise ships. This is an extremely profitable company in an
industry where there is no real competition. Also consumer-related is the Fund's
investment in these education companies: Bright Horizons, Career Education,
Strayer Education and Computer Learning Centers.

Computer Learning, an operator of schools offering associates' degree programs
in computer-related fields, provides a good example of our investment strategy.

The types of programs offered are in high demand throughout the nation, and the
company's business model has above-average profitability. Following our first
analysis of the company, we felt the stock was fairly priced, given its
prospects. Subsequently, the price of the stock sold off sharply due to a
controversy surrounding a complaint filed by a student in Illinois. We then
determined that the market had over-reacted to this controversy and that the
company and its business were fundamentally solid. We were able to buy the stock
"on the dip" in its price with a very favorable risk/reward ratio. As the market
began to realize the Illinois controversy was an isolated incident, the stock
rebounded and the investment has worked out very well.

The Fund also continues to have a major emphasis on international long distance.
This area offers significant investment opportunities as industrialized nations
throughout the world go through deregulation similar to that experienced in 1984
when AT&T was broken up. The difference is that with the deregulation that is
occurring around the world, both long-distance and local service is being opened
up to increased competition. In the past, telephone monopolies typically had
been state-owned and had very little incentive to invest in capital equipment to
improve service. Now, there are huge opportunities for the small, start-up
companies to deploy state-of-the-art networks and capture a significant share of
the market. The Fund has been looking for attractive service providers. Two
small cap companies in the Fund are involved in installing long-distance fiber
loops throughout Europe. They are Esprit, which is focusing principally on
Southern Europe, and Viatel, which is concentrating on Northern Europe.

20
<PAGE>

- ------------------------------------------------------------------------------
E V E R G R E E N
Select Small Cap Growth Fund
- ------------------------------------------------------------------------------
PORTFOLIO MANAGER COMMENTARY

TOP 10 EQUITY HOLDINGS
----------------------

General Cable Corp. 2.9%
Computer Learning Centers, Inc. 2.8%
Hearst-Argyle Television, Inc. 2.4%
Chattem, Inc. 2.3%
Market Facts, Inc. 2.3%
Equity Corp. International 2.2%
Helen of Troy Ltd. 2.1%
FileNet Corp. 2.1%
ADVO, Inc. 2.1%
OM Group, Inc. 2.0%

OUTLOOK

The outlook is bright for small cap stocks. We believe if the Asian financial
crisis had not occurred, the strong performance by small company stocks in April
through October of 1997 would have been sustained. We also believe that it will
become increasingly difficult for large cap companies to maintain the level of
growth they have enjoyed. As investors continue to seek out growth, they should
again be focusing on small- and mid-cap companies, which offer faster growth and
currently are trading at very attractive valuation levels.

We now are in the late stages of the current economic cycle. Usually, this means
an increase in inflationary pressures both in labor and commodity materials, and
inflationary pressures lead to higher interest rates. The Asian financial crisis
has had a deflationary effect, however, and companies continue to realize
sufficient gains in productivity to offset any increases in labor costs. This
combination of deflationary commodity prices and increased productivity has led
to a rather benign economic environment of slow-to-moderate growth with
flat-to-slightly-declining interest rates. With this favorable economic
backdrop, small cap companies offer strong growth potential and especially
attractive valuations. Ultimately, we believe these companies offer very
attractive return opportunities that have the potential to be reflected in their
stock performance.

Funds that invest in stocks of small companies, also called small-cap stocks,
involve certain risks and, therefore, may not be appropriate for all investors.
Although they may offer the potential for greater long-term returns, they also
may experience greater price volatility due to their limited focus on a
particular industry, market, product, or service, or because they invest in
smaller, less established companies.

21
<PAGE>

- --------------------------------------------------------------------------------
EVERGREEN
Select Small Company Value Fund
- --------------------------------------------------------------------------------

FUND AT A GLANCE AS OF JUNE 30, 1998

- --------------------------------------------------------------------------------
PORTFOLIO PROFILE
- --------------------------------------------------------------------------------

PHILOSOPHY

The Evergreen Select Small Company Value Fund seeks capital appreciation by
investing in little-known and relatively small companies. This requires a
significant commitment to independent research by Evergreen's team of 18
analysts, who have an average 16 years' professional experience. The management
team seeks to identify small companies that are favorably priced and have both
entrepreneurial managements and catalysts for growth. The investment discipline
pays special attention to valuations and diversification by industry and company
to reduce the volatility associated with small cap stocks.

PROCESS

The Fund's management team uses an intensive research process to assemble a
diversified stock portfolio of small companies that:

. Are potential merger and acquisition candidates;

. Have promising new products that can cause a dramatic change in earnings;

. Are "value-timing" candidates because, while their stock may be temporarily
out of favor, they offer the potential of good, long-term appreciation; and

. Can benefit from re-structuring programs of management.

BENCHMARK

Russell 2000 Value Index

- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS
- --------------------------------------------------------------------------------

The Fund's inception was December 22, 1997 and has no annual returns to report
yet. Fiscal YTD income dividends per share are $0.04.

- --------------------------------------------------------------------------------
LONG TERM GROWTH
- --------------------------------------------------------------------------------

Date Russell 2000 Class I
Dec-97 $10,000 $10,000
Mar-98 9,819 9,979
Feb-98 10,413 10,498
Mar-98 10,835 10,879
Apr-98 10,889 11,006
May-98 10,503 10,337
Jun-98 10,444 10,128

Comparison of change in value of a $10,000 investment in Evergreen Select Small
Company Value Fund, Class I, and the Russell 2000 Value Index.

Past performance is no guarantee of future results. The investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than original cost. The Russell 2000 Index is an unmanaged
index and does not include transaction costs associated with buying and selling
securities, nor any management fees.

22
<PAGE>

EVERGREEN
SELECT SMALL COMPANY VALUE FUND

PORTFOLIO MANAGER COMMENTARY

PORTFOLIO MANAGEMENT TEAM

Nola Maddox Falcone heads the team that manages the Evergreen Select Small
Company Value Fund. The team also includes Stephen A. Lieber, Peter J. Kovalski
and Constance Unger (not pictured). Nola M. Falcone, CFA, is President and Co-
Chief Executive Officer of Lieber & Co. and Evergreen Asset Management Corp.
Stephen A. Lieber is Chairman and Co-Chief Executive Officer of Lieber & Co. and
Evergreen Asset Management Corp. Peter J. Kovalski, CFA, joined Lieber & Co. as
an analyst in 1992. Previously, he was an analyst with International Assets
Advisory Corp., Williams Securities Group, Inc., Ryan Beck & Co., and
Ayco/American Express. Constance Unger joined Lieber & Co. as an analyst in 1998
with a total of 11 years' experience in value investing. Previously, she served
at Segall Bryant & Hamill Investment Counselors, Society Asset Management and
Bankers Trust Co.

[PHOTO OF NOLA FALCONE APPEARS HERE]

[PHOTO OF STEPHEN A. LIEBER APPEARS HERE]

[PHOTO OF PETER J. KOVALSKI APPEARS HERE]

PORTFOLIO STRUCTURE

The Fund's management team has assembled a diversified stock portfolio of 113
different companies. During the period since the Fund's inception, the team has
found a number of attractive opportunities among companies that fit one or more
of these categories. This has resulted in a portfolio of companies that, in the
aggregate, have lower valuations, as measured by traditional price measures such
as price-to-earnings and price-to-book ratios, than the overall stock market,
yet higher earnings growth rates. Opportunities were particularly evident among
consumer-sensitive companies whose businesses rely principally on the U.S. Many
of the best-performing companies have found ways to take advantage of the
growing needs of the large, baby-boomer generation that is approaching late
middle age. Those companies that have products or services appealing to this
market have benefited from an environment of low unemployment and strong
consumer demand.

Portfolio
Characteristics
---------------
Total Net Assets $179,797,740
Number of Issues 63
P/E Ratio 31.4x
Beta 1.08

Among the prime examples of these small-cap companies that appeal to home-owning
baby-boomers is Eagle Hardware, a regional retail chain based in the Western
United States. The Fund's investment in this company, made at the Fund
inception on December 22, 1997, had appreciated by 27.7% by the end of the
fiscal year on June 30. Another strong example is

23
<PAGE>

PORTFOLIO MANAGER COMMENTARY

La-Z-Boy, Inc., which has benefited from strong, baby-boomer demand. The Fund
made 23.8% on its investment in this company in the five months in which the
stock was held. A third consumer-related stock was that of Gerber Children's
Wear Inc. After the Fund purchased this stock at its initial public offering on
June 10, the stock appreciated by 18.7% by June 30.

The popularity of home ownership helped the performance of two title insurance
companies that benefited from the wave of new and refinanced mortgages. The
Fund's investment in Fidelity National Financial, Inc., appreciated by 25.15%
since the original purchase on March 9, while the investment in LandAmerica
Financial Group rose by 27.88% since the purchase on March 10.

The same theme of home ownership helped the stocks of two homebuilders. Lennar
Corp. rose by 38.5% during the brief period that its stock was owned by the
Fund, from January 5 through March 23, while the stock of D.R. Horton Inc. rose
by 13.27% since its purchase on April 27. The home-building trend also had a
favorable impact on Genlyte Group, Inc., a manufacturer of light fixtures. The
stock of this company rose by 21% since its purchase on April 23.

Top 5 Industries
----------------
(as a percentage of net assets)

Banks 12.4%
Oil Field Services 6.8%
Finance & Insurance 6.6%
Healthcare Products & Services 6.5%
Consumer Products & Services 6.0%

The Fund's performance was helped by consumer-oriented regional brokerage firms,
most notably Morgan Keegan, Inc., a firm based in Memphis, Tenn., and
Interstate/Johnson Lane, Inc., of Charlotte, N.C. The stocks of both these
companies benefited both from strong demand by consumers for brokerage services
and from the possibility that they may be candidates for acquisitions by larger
financial service companies.

While energy-related stocks were, in general, relatively poor performers during
the period, the Fund sought to take advantage of temporary weakness in the
energy sector to build up its position. We believe that the price of oil
ultimately should stabilize and that values can be found among companies whose
stocks had suffered unfairly in the general industry slump.

One particularly strong performer within the energy group was Barrett Resources
Corp., a gas and exploration company whose stock was purchased at the Fund's
inception. This stock had appreciated 35.46% by June 30. Another contributor was
Camco International Inc., an oil services company purchased by the Fund on April
1. It later was the subject of an acquisition announcement by Schlumberger Ltd.
for a potential gain of 32% by the end of June.

A third company that helped performance was Quaker State. This company has been
re-structuring itself for several years and is moving toward being a consumer-
oriented retail company offering a variety of car maintenance products.
Management is focused on stockholder interests by emphasizing improvements in
margins and earnings.

24
<PAGE>

PORTFOLIO MANAGER COMMENTARY

A very different consumer company that also is benefiting from a corporate
restructuring is Ann Taylor Stores Corp., the specialty retailer of women's
clothing. The stock of this company, purchased in December, appreciated by 39.9%
before the Fund sold it on May 12.

The stocks of smaller bank and thrift companies lagged during the period as the
market's attention was captured by news of mergers among very large financial
companies. We believe, however, that the consolidation trend will resume among
the smaller companies, to the benefit of the Fund.

Three small, banking-related stocks had good performance, however, due in large
part to merger-and-acquisition announcements. The stock of Maryland Federal
Bancorp, purchased at the Fund's inception, had a pending appreciation of 25.7%
by June 30, because of the announcement that BB&T CORP would acquire it.
Similarly, the stock of Beverly Bancorporation, Inc., purchased on December 31,
had a pending appreciation of 9.83% on June 30 following the announcement it
would be acquired by St. Paul Bancorp, Inc. Dime Financial Corp., whose stock
was purchased by the Fund in February, had a pending appreciation of 30.12% on
June 30 after Hubco announced that it would buy the company.

The general business trend toward consolidation continued in other industries,
as witnessed by the Fund's experience with BGS Systems Inc., a software company
whose stock was purchased by the Fund on December 31, 1998. BMC Software Inc.
took over this company in May, for a gain of 43.8% for the Fund by June 30. We
believe there will be further consolidation in the software industry due to the
strong demand for, and limited supply of, proven teams of software designers and
engineers. In addition, the makers of mainframe computers are exploring
opportunities in the acquisition of software companies.

The new-product theme is well illustrated by the Fund's investment on April 17
in Aspect Telecommunications, a developer of equipment and software for phone
calling systems. Another technology-related company with an attractive, new
product was ADAC Laboratories, whose stock rose by 9.7% from December 22 through
June 30. This company has introduced a new imaging product that helps detect the
spread of cancer.

The value-timing theme was carried through in the investment in Seaway Food
Town, Inc., a chain of groceries and discount pharmacies located primarily in
Ohio and Michigan. The stock of this company had a 45.4% appreciation from
December 29 through June 30, helped both by strong cash flow and the
consolidation trend in the grocery industry.

Re-structuring helped the performance of Knoll International, a manufacturer of
office and workplace furniture. This company, formerly a division of
Westinghouse, which has undergone a restructuring, is gaining market support as
investors begin to understand the true value of Knoll's premium position in the
marketplace.

Top 10 Equity Holdings
-------------------------------
(as a percentage of net assets)

Aspect Telecommunications Corp. 2.1%
S & K Famous Brands, Inc. 1.8%
Micros Systems, Inc. 1.7%
Commercial Bankshares, Inc. 1.7%
Morgan Keegan, Inc. 1.7%
Civic Bancorp 1.6%
Seacoast Banking Corp of Florida Cl. A 1.5%
Interstate/Johnson Lane, Inc. 1.5%
Fair Issac & Co., Inc. 1.5%
ADAC Laboratories 1.4%

25
<PAGE>

PORTFOLIO MANAGER COMMENTARY

PERFORMANCE

This report covers the Evergreen Select Small Company Value Fund's start-up
period, during which the initial portfolio was assembled. Typically, performance
during such start-up periods is not an indication of long-term performance. The
Fund produced a total return of 1.28% since its inception on December 22, 1997,
versus the 8.43% return of the Russell 2000 Index; however, as the period
progressed, the Fund's relative performance improved markedly. The period also
was one in which the stock market favored the stocks of very large companies,
usually trading at high price/earnings ratios. During the first six months of
1998, these "large-cap, high p/e" stocks substantially outperformed the "small-
cap, low p/e" stocks emphasized by the Fund. Fund management believes, however,
that the portfolio is well positioned for opportunities in the small cap sector
during the latter part of 1998.

OUTLOOK

We have a positive outlook for the Select Small Company Value Fund for the
remainder of 1998 because of several trends we see, including:

. A continuation of the general consolidation trend in American industry;

. Signs of a growing recognition of the attractive values to be found among
small company stocks; and

. Positive earnings reports from many small companies.

The general merger-and-acquisition trend is not losing steam. Deals totaling
$900 billion were announced during the first half of the year, and the U.S.
Department of Justice's Anti-Trust Division has estimated the total should reach
$1.75 trillion by the end of the year. The strong stock market that has been
favoring large company stocks has given the big companies high stock valuations
that they can use as the currency to buy smaller companies that have been
reporting stronger growth. Often, larger companies can buy fast-growing small
companies at prices that result in improved earnings-per-share performance for
the larger companies.

Moreover, investment and pension fund consulting companies increasingly are
recommending that their clients enlarge small company stock allocations in their
overall portfolios because of the attractive valuations. Any growth in
institutional investors' purchases of small company stocks should have a
significant effect on cash flow, and therefore stock prices, in the small stock
sector.

Finally, a large portion of the Fund's holdings have been issuing positive
earnings reports, validating the value of the independent research by the
Evergreen investment team and supporting our view that small company value
investments have strong potential for the remainder of 1998.

26
<PAGE>

- --------------------------------------------------------------------------------
EVERGREEN
Select Social Principles Fund
- --------------------------------------------------------------------------------

FUND AT A GLANCE AS OF JUNE 30, 1998

- --------------------------------------------------------------------------------
PORTFOLIO PROFILE
- --------------------------------------------------------------------------------

PHILOSOPHY

Evergreen Select Social Principles Fund invests in the stocks of mid-sized U.S.
companies, average market capitalization of $3 billion. The Fund emphasizes
companies that generally respect human rights, play a role in local communities,
and produce useful products in an environmentally sound way. This philosophy
holds that socially conscious investing promotes responsible values without
impairing long-term performance.

PROCESS

The Fund utilizes a fundamental, bottom-up stock selection process which is
research intensive. In addition, the Fund utilizes an external Advisory Board
whose role is to develop and continually review guiding policies and principles
of social investing. All holdings are periodically reviewed to assure adherence
to the Advisory Board Standards.

BENCHMARK

S & P 400 Mid Cap Index

- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class I ClassIS Class IC
<S> <C> <C> <C>
AVERAGE ANNUAL RETURNS
1 year 20.62% 20.41% 20.54%
5 years 17.78% 17.51% 17.77%
10 years 15.19% 14.91% 15.18%
Since Inception 15.38% 15.10% 15.37%
Fiscal YTD income dividends per share $0.04 $0.01 $0.04
</TABLE>

- --------------------------------------------------------------------------------
LONG TERM GROWTH
- --------------------------------------------------------------------------------

Date S&P 500 Midcap Class IC
6/30/88 $10,000 $10,000
6/30/89 12,215 11,283
6/30/90 14,100 12,020
6/30/91 15,911 12,868
6/30/92 18,863 14,492
6/30/93 23,143 18,147
6/30/94 23,126 17,218
6/30/95 28,271 24,066
6/30/96 34,364 28,971
6/30/97 42,379 34,101
6/30/98 53,779 41,106

Comparison of change in value of a $10,000 investment in Evergreen Select Social
Principles Fund, Class IC, and the S & P 400 Midcap Index.

Past performance is no guarantee of future results. The investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than original cost. Class I, IS and IC performance
information includes the performance of the Fund's predecessor common trust fund
for periods before the Fund's registration statement became effective on
November 21, 1997. The inception date of the predecessor common trust fund was
May 31, 1988. Performance for the common trust fund has been adjusted to include
the effect of estimated expenses based upon the mutual fund expense ratios as
stated in the Fund's current prospectus. Performance information for Class IS
also includes performance of the Fund's Class IC for the period from November
24, 1997 to March 12, 1998 (commencement of Class IS operations), adjusted for
differences between class expenses. Returns of Class I, IS and IC since their
respective commencement of class operations were 6.41%, 1.32% and 6.38%,
respectively. The common trust fund was not registered under the Investment
Company Act of 1940 (the "1940 Act") or subject to certain investment
restrictions that are imposed by the 1940 Act. If the common trust fund had been
registered under the 1940 Act, its performance may have been adversely affected.
Index returns do not reflect expenses, which have been deducted from the Fund's
return.

27
<PAGE>

PORTFOLIO MANAGER COMMENTARY

PORTFOLIO MANAGEMENT TEAM

The Evergreen Select Social Principles Fund is managed by Eric M. Wiegand and
assistant manager A. Jay Zelko who have over 22 years of combined investment
experience. The team-oriented approach identifies the most attractive
opportunities in the market and ensures adherence to the style-specific
objectives.

[PHOTO OF ERIC M. WIEGAND APPEARS HERE] [PHOTO OF A. JAY ZELKO APPEARS HERE]

PERFORMANCE AND MARKET ACTIVITY

For the fiscal year ending June 30, 1998, the Evergreen Select Social Principles
Fund Class I shares posted a 20.6% total return compared to the 27.2% return for
the S&P Mid Cap 400 Index and 30.2% return for the S&P 500 Index.

Underlying the indices' positive returns was a widening gap between a select
handful of large cap stocks with stellar gains and the majority of companies
which lagged the narrow bull market. Large cap indices surged ahead while mid-
and small-cap indices trailed, but still posted positive returns. The last three
months of the fiscal period reflect the market's narrow advance as the ten
largest stocks in the S&P 500 Index rose 31.7%, while the equally weighted
average of all 500 stocks rose just 8.6%; and, nearly a third actually declined.

Portfolio
Characteristics
---------------
Total Net Assets $179,797,740
Number of Issues 63
P/E Ratio 31.4x
Beta 1.08

INVESTMENT STRATEGY

As the period progressed and the Asian financial crisis emerged as the primary
threat to U.S. equities, we adjusted the portfolio to emphasize companies with
reduced exposure to this region. Even now, Asian concerns continue to weigh
heavily on mid-cap stocks. Consistent with our strategy, exposure to AGCO Corp.,
the leading manufacturer of agricultural equipment throughout the world, was
scaled back due to its reliance on foreign markets for earnings growth. We
eliminated our holdings in Calloway Golf, a manufacturer of golf-related
products, which experienced a dramatic reduction in demand for its equipment
within crippled Asian economies.

In addition to reducing exposure to international markets, we continue to favor
companies which are in a position to exploit a particular market niche.
Companies that enjoy a distinctive product or service are poised for growth and
better able to maintain -- and even expand --their market share with pricing
flexibility, regardless of negative external factors. An example of such a firm
is HBO & Company, a provider of integrated patient, clinical, financial and
strategic management software solutions for the healthcare industry. HBO is well
positioned to expand its client base within the healthcare community due to its
unique specialization and lack of quality competition.

28
<PAGE>

PORTFOLIO MANAGER COMMENTARY

TOP 5 INDUSTRY ALLOCATION
- -------------------------------
(as a percentage of net assets)

Healthcare Products & Services 18.3%
Information Services & Technology 11.4%
Finance & Insurance 8.5%
Retailing & Wholesale 6.8%
Banks 6.3%

AREAS OF PREFERENCE

Technology is currently the portfolio's second largest sector weighting at
11.4%, versus 18% for the S&P Midcap 400 Index, which has been positive to the
Fund's performance over the past six months. Although Asia has been a problem
for a number of technology companies, we remain committed to this sector due to
Corporate America's increasing reliance on technological solutions to increase
productivity and cut costs. Our strategy in this sector has been to invest in
industry leaders with proprietary, cost effective solutions. In an effort to
strengthen the portfolio, we sold two peripheral companies, 3Com and Adaptec,
which were experiencing execution issues and maintained our sector overweighting
by increasing our exposure to business software with the purchase of Compuware,
a solution provider for the year 2000 problems.

The portfolio's most substantial overweight -- nearly double the index -- is in
the healthcare sector which is poised to benefit from positive demographic
trends as well as increasing demand for healthcare-related products and
services. Underlying this exposure is a focus on emerging industry leaders that
offer quality services at lower costs than traditional providers. Representative
of this strategy is Safeskin, the leading manufacturer of latex medical
examination gloves. In addition to a strong industry position, Safeskin has
actually benefited from the Asian crisis as the company's Asian manufacturing
facilities have experienced plummeting operating expenses as a result of
currency devaluations, and a strong U.S. economy continues to drive revenue
growth.

TOP 10 HOLDINGS
- ------------------------------
(as a percentage of net assets)

EMC. Corp. 3.1%
HBO & Co. 3.1%
Networks Associates, Inc. 3.0%
Comair Holdings, Inc. 3.0%
HEALTHSOUTH Corp. 2.7%
Biochem Pharmaceuticals, Inc. 2.5%
Partnerre Ltd. 2.3%
General Nutrition Companies, Inc. 2.1%
Century Telephone Enterprises, Inc. 2.1%
Conseco, Inc. 2.0%

OUTLOOK

Although long-term market fundamentals remain favorable, there are several
factors that could challenge equity returns in the short term. Our primary
concern is the Asian financial crisis and, more specifically, the degree to
which it will negatively impact U.S. corporate earnings.

Consequently, we will maintain an emphasis on domestically oriented companies
which don't rely heavily on overseas markets for earnings growth. This strategy
is designed to cushion the portfolio should the Asian crisis continue to spread
and possibly worsen. Individual stock selection will continue to emphasize well-
managed, dominant companies with reasonable valuation levels which demonstrate
the ability to meet and exceed earnings expectations.

29
<PAGE>

- --------------------------------------------------------------------------------
EVERGREEN
Select Strategic Growth Fund
- --------------------------------------------------------------------------------

FUND AT A GLANCE AS OF JUNE 30, 1998

- --------------------------------------------------------------------------------
PORTFOLIO PROFILE
- --------------------------------------------------------------------------------

PHILOSOPHY

Evergreen Select Strategic Growth Fund is a growth-style equity product that
emphasizes large and mid-sized U.S. companies. We believe that superior long-
term returns can be achieved through a disciplined approach of investing in
stocks with excellent historical and future earnings growth.

PROCESS

The Fund is managed by two investment professionals who utilize a unique blend
of quantitative and qualitative fundamental analysis. This bottom-up stock
selection process is research-intensive and identifies companies which exhibit
strong current fundamentals, histories of superior earnings/dividend growth and
rising earnings expectations.

BENCHMARK

Russell 1000 Growth Index

- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Class I Class IS
<S> <C> <C>
AVERAGE ANNUAL RETURNS
1 year 30.87% 30.52%
3 years 28.45% 29.12%
Since Inception 31.74% 37.41%
FISCAL YTD INCOME DIVIDENDS PER SHARE $0.04 --
</TABLE>

- --------------------------------------------------------------------------------
LONG TERM GROWTH
- --------------------------------------------------------------------------------

Date Russell 1000 Class I
12/31/94 $10,000 $10,000
6/30/95 12,029 12,099
6/30/96 15,375 15,167
6/30/97 20,193 20,053
6/30/98 26,530 26,243

Comparison of change in value of a $10,000 investment in Evergreen Select
Strategic Growth Fund, Class I, and the Russell 1000 Growth Index.

Past performance is no guarantee of future results. The investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than original cost. Class I and IS performance information
includes the performance of the Fund's predecessor common trust fund for periods
before the Fund's registration statement became effective on November 21, 1997.
The inception date of the predecessor common trust fund was December 31, 1994.
Performance for the common trust fund has been adjusted to include the effect of
estimated expenses based upon the mutual fund expense ratios as stated in the
Fund's current prospectus. Performance information for Class IS also includes
performance of the Fund's Class I for the period from November 24, 1997 to
February 27, 1998 (commencement of Class IS operations), adjusted for
differences between class expenses. Returns of Class I and IS since their
respective commencement of class operations were 18.53% and 6.29%, respectively.
The common trust fund was not registered under the Investment Company Act of
1940 (the "1940 Act") or subject to certain investment restrictions that are
imposed by the 1940 Act. If the common trust fund had been registered under the
1940 Act, its performance may have been adversely affected. Index returns do not
reflect expenses, which have been deducted from the Fund's return.

30
<PAGE>

- --------------------------------------------------------------------------------
EVERGREEN
SELECT STRATEGIC GROWTH FUND
- --------------------------------------------------------------------------------
PORTFOLIO MANAGER COMMENTARY

PORTFOLIO MANAGEMENT TEAM

Timothy M. Stevenson and W. Shannon Reid manage the Evergreen Select Strategic
Growth Fund. They have over 29 years combined investment experience and boast a
unique blend of quantitative and traditional fundamental analysis skills.
Their disciplined approach assures consistency of results and superior service.

[PHOTO OF TIMOTHY M. STEVENSON] [PHOTO OF W.SHANNON REID]

PERFORMANCE

For the fiscal year ended June 30, 1998, the Evergreen Select Strategic Growth
Fund Class I shares had a 30.9% total return which compares favorably to the
31.4% return of the Russell 1000 Growth Index and the 30.9% average return among
large cap growth funds tracked by Morningstar Inc., a mutual fund rating
company.

PORTFOLIO
CHARACTERISTICS
---------------

Total Net Assets $323,905,332
Number of Issues 55
P/E Ratio 34.4x
Beta 1.18

LARGE CAPS CONTINUE TO DOMINATE

Underlying the broad market's strong returns was a relatively narrow market
advance in which a select handful of the largest companies surged ahead while
mid- and small-cap issues lagged. We believe the factors driving the
outperformance of large cap stocks are fourfold.

First, as active managers fail to outperform the indices, index funds gain in
popularity, thus attracting more investor money and driving the prices of their
holdings ever higher. Second, as equity mutual funds continue to experience
strong money flows many portfolio managers, who under the terms of their funds
must be fully invested, feel the safest place to be invested within an expensive
market is in the largest, liquid stocks.

The third factor in the success of large caps is the increasing flow of foreign
money because of the strong dollar, a healthy domestic economy and international
turmoil all increase the attractiveness of U.S. stocks. The fourth and final
factor -- and perhaps the most fundamentally grounded -- is the concern over an
earnings slowdown and the possibility of an earnings recession. As we reach the
latter stages of the business cycle, investors tend to value earnings
predictability more than earnings growth.

TOP 5 INDUSTRIES
----------------
(as a percentage of net assets)

Healthcare Products & Services 19.6%
Information Services & Technology 15.2%
Financial & Insurance 9.0%
Business Equipment & Services 7.8%
Consumer Products & Services 6.5%

31
<PAGE>

INVESTMENT STRATEGY AND MARKET CAP

The Fund's lower exposure to large capitalization stocks relative to our
benchmark was the most significant factor in explaining underperformance,
especially in the second half of the fiscal period. Going forward, we will look
for opportunities to increase the market-cap of the Fund; however, we will not
buy a stock simply because of its size, but rather will rely on the disciplined
stock selection process which is responsible for the Fund's past success.

SECTOR WEIGHTINGS

As a policy, we do not make big sector bets. Generally, portfolio positions are
limited to 80% to 120% of the sector weightings for the benchmark Russell 1000
Growth Index.

As of June 30, the greatest sector weighting was 19.6% in healthcare. This
sector continues to be influenced by favorable demographic trends which continue
to drive demand for healthcare-related products and services. Three of the
Fund's top five holdings fall within this category.

Technology is the Fund's second largest sector weighting. Underlying this
exposure is an emphasis on software and information technology issues. In fact,
for the final six months of the fiscal year, the Fund's three top performers
were all technology companies such as Dell Computer, Microsoft and Cisco
Systems, which posted returns of 121%, 68% and 66%, respectively.

TOP 10 EQUITY HOLDINGS
----------------------
(as a percentage of net assets)

General Electric Co. 5.4%
Microsoft Corp. 4.1%
Merck & Co., Inc. 3.5%
Pfizer, Inc. 3.0%
Bristol-Myers Squibb Co. 3.0%
Tyco International Ltd. 2.9%
Schering-Plough Corp. 2.8%
Procter & Gamble Co. 2.6%
Dell Companies, Corp. 2.4%
Costco Companies, Inc. 2.2%

OUTLOOK

Looking ahead, we anticipate a challenging equity environment as companies
encounter slower revenue growth and reduced pricing power. Our primary concern
continues to be the Asian financial crisis and, more specifically, the degree to
which it will negatively impact U.S. corporate earnings.

Consequently, we will maintain an emphasis on market-leading companies with
histories of stable, predictable earnings growth. The Fund will continue to
overweight sectors such as technology and healthcare that are positioned to
benefit from positive secular trends.

32
<PAGE>

- --------------------------------------------------------------------------------
PORTFOLIO PROFILE
- --------------------------------------------------------------------------------

PHILOSOPHY

Evergreen Select Strategic Value Fund is a value-style equity product which
emphasizes large and mid-capitalization U.S. companies. This philosophy holds
that stocks, over time, can become mispriced relative to their true value and
that attractive opportunities can be identified through a combination of
quantitative analysis and rigorous fundamental research.

PROCESS

Following the initial screen by our proprietary model which determines that
a stock is selling at a reasonable valuation level, the Strategic Value team
employs a labor intensive research effort in order to dig deep for clues to
uncover value. Qualitative factors which are analyzed include industry
leadership, quality of management, the company's current competitive position
and future earnings prospects.

BENCHMARK

Russell 1000 Value Index

- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS
- --------------------------------------------------------------------------------
CLASS I CLASS IS
AVERAGE ANNUAL RETURNS
1 Year 24.43% 24.05%
5 Years 21.14% 20.82%
10 Years 15.58% 15.29%
Since Inception 18.07% 17.78%
FISCAL YTD INCOME DIVIDENDS PER SHARE $1.60 $0.78

- --------------------------------------------------------------------------------
LONG TERM GROWTH
- --------------------------------------------------------------------------------

Class I Shares Russell 1000 Value Index

6/30/88 $10,000 $10,000
6/30/89 $11,459 $11,999
6/30/90 $12,167 $12,803
6/30/91 $11,934 $13,486
6/30/92 $13,295 $15,637
6/30/93 $16,317 $19,069
6/30/94 $16,949 $19,378
6/30/95 $21,720 $23,336
6/30/96 $25,249 $29,084
6/30/97 $34,205 $38,735
6/30/98 $42,561 $49,910

Comparison of change in value of a $10,000 investment in Evergreen Select
Strategic Value Fund, Class I, and the Russell 1000 Value Index.

Past performance is no guarantee of future results. The investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than original cost. Class I and IS performance information
includes the performance of the Fund's predecessor common trust fund for periods
before the Fund's registration statement became effective on November 21, 1997.
The inception date of the predecessor common trust fund was December 31, 1981.
Performance for the common trust fund has been adjusted to include the effect of
estimated expenses based upon the mutual fund expense ratios as stated in the
Fund's current prospectus. Performance information for Class IS also includes
performance of the Fund's Class I for the period from November 24, 1997 to March
11, 1998 (commencement of Class IS operations), adjusted for differences between
class expenses. Returns of Class I and IS since their respective commencement of
class operations were 11.95% and 1.68%, respectively. The common trust fund was
not registered under the Investment Company Act of 1940 (the "1940 Act") or
subject to certain investment restrictions that are imposed by the 1940 Act. If
the common trust fund had been registered under the 1940 Act, its performance
may have been adversely affected. Index returns do not reflect expenses, which
have been deducted from the Fund's return.

33
<PAGE>

- --------------------------------------------------------------------------------
EVERGREEN
Select Strategic Value Fund
- --------------------------------------------------------------------------------
PORTFOLIO MANAGER COMMENTARY

PORTFOLIO MANAGEMENT TEAM

The Evergreen Select Strategic Value Fund is managed by a team of 3 portfolio
managers with over 61 years of combined investment experience and expertise in
value equity analysis and management. The team-oriented approach incorporates
multiple perspectives to identify the most attractive opportunities in the
market and ensures adherence to the style specific objectives.

[PHOTO OF ELIZABETH SMITH]

[PHOTO OF JACK GRAY] [PHOTO OF TIM O'GRADY]

PERFORMANCE

The Evergreen Select Strategic Value Fund Class I shares posted a 24.4% total
return for the fiscal year ended June 30, 1998, slightly below the 28.8% return
for the Russell 1000 Value Index.

Underperformance in a few key sectors penalized performance, as did an extremely
narrow market advance in which a select handful of the largest stocks drove the
indices higher, while many stocks lagged.

Portfolio
Characteristics
---------------

Total Net Assets $288,520.393
Number of Issues 54
P/E Ratio 14.9x
Beta 0.93

INVESTING ENVIRONMENT

As previously stated, strong equity returns masked a very narrow market advance
in which investors' demand for large stocks with visible earnings drove their
prices higher and left a large number of smaller issues in their dust. For
example, over the past six months the ten largest stocks in the S&P 500 rose
31.7%, while the equally weighted average of all 500 stocks rose just 8.6%; and,
nearly a third actually declined. Investors' growing appetite for large cap
stocks explains why the majority of fund managers continue to struggle versus
the strong returns of the S&P 500 Index.

TOP 5 INDUSTRIES
----------------
(as a percentage of net assets)

Banks 23.9%
Oil/Energy 11.9%
Finance & Insurance 10.9%
Information Services & Technology 9.4%
Utilities -- Electric 5.0%

34
<PAGE>

SECTOR ACTIVITY

Within the portfolio, energy stocks have lagged in terms of absolute and
relative performance. A number of factors have contributed to this, most notably
the sharp decline in oil prices. Although we maintain a neutral weight in the
sector, our industry weightings are markedly different from those of the Russell
1000 Value Index. Our heavy emphasis on offshore drilling companies and
refiners, and away from the large international oil companies that dominate the
Index's sector composition, essentially explains the entire performance
differential.

Our performance shortfall relative to the benchmark in the utility sector is
traceable to our significant underweighting in telephone utilities. We feel that
the utility sector currently holds relatively high value, especially if the
equity market is perceived to be late in its cycle.

Although the financial sector has been the equity market's best performer for
the past several years, the past 12 months have witnessed some unwinding in the
banking industry. On the positive front, we participated to the fullest extent
in the "merger-mania" sweeping this sector. We benefited from owning both
Citicorp and Travelers, two companies that agreed to merge in a landmark deal
which signaled the era of convergence in financial services. Two other portfolio
holdings, Nationsbank and First Chicago partnered with Bank America and Banc
One, respectively, also as mergers of equals. On the other hand, we have
witnessed a deterioration in the valuation of our regional bank franchises which
has caused recent declines in holdings such as Union Planters, Summit Bancorp,
and PNC Bank Corp.

TOP 10 EQUITY HOLDINGS
----------------------
(as a percentage of net assets)

Chase Manhattan Corp. 3.1%
Philip Morris Companies, Inc. 3.0%
NationsBank Corp. 2.9%
Fleet Financial Group, Inc. 2.9%
BankBoston Corp. 2.9%
Citicorp 2.8%
Bristol-Myers Squibb Co. 2.7%
Union Planters Corp. 2.6%
Merrill Lynch & Co., Inc. 2.6%
Williams Companies, Inc. 2.6%

A DETACHED, LONG-TERM PERSPECTIVE

Despite ever-stretching valuation levels for stocks, the underlying forces
continue to support a favorable equity investing environment going forward.
While equities are clearly trading at the high end of an acceptable range, it is
important to recognize that they can stay within this band for a long time. We
remain constructive on the intermediate- to long-term outlook for the equity
market and would characterize our forecast as "cautiously bullish." In our
opinion, further significant advances in the equity market require evidence of
earnings improvement in order to sustain and justify higher prices.

Although the Fund's performance has trailed the benchmark over the past twelve
months, our Select Value investment disciplines remain intact and valid. Our
equity philosophy is one of maintaining our Select Value approach through both
favorable and unfavorable equity market environments, independent of short-term
market and performance trends. While the merits of this approach can not always
be demonstrated in a short-term time period, the long-term soundness and
validity of this approach is confirmed by our solid performance over time.

35
<PAGE>

[LOGO OF EVERGREEN SELECT BALANCED FUND APPEARS HERE]

FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)

<TABLE>
<CAPTION>
Period Ended June 30, 1998
CLASS I* CLASS IS**
<S> <C> <C>
NET ASSET VALUE BEGINNING OF PERIOD $ 12.58 $ 13.34
------------- ------------
.........................................................................
INCOME FROM INVESTMENT OPERATIONS
.........................................................................
Net investment income 0.16 0.07
.........................................................................
Net realized and unrealized gain on investments 0.81 0.09
------------- ------------
.........................................................................
Total from investment operations 0.97 0.16
------------- ------------
.........................................................................
DISTRIBUTIONS TO SHAREHOLDERS
.........................................................................
From net investment income (0.16) (0.08)
------------- ------------
.........................................................................
.........................................................................
Total distributions (0.16) (0.08)
------------- ------------
.........................................................................
NET ASSET VALUE END OF PERIOD $ 13.39 $ 13.42
------------- ------------
.........................................................................
TOTAL RETURN 7.76% 1.23%
.........................................................................
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses 0.70%+ 0.95%+
.........................................................................
Total expenses, excluding indirectly paid
expenses 0.70%+ 0.95%+
.........................................................................
Total expenses, excluding fee waiver and
expense reimbursements 0.80%+ 1.05%+
.........................................................................
Net investment income 2.80%+ 2.58%+
.........................................................................
PORTFOLIO TURNOVER RATE 37% 37%
.........................................................................
AVERAGE COMMISSION RATE PER SHARE $ 0.0597 $ 0.0597
.........................................................................
NET ASSETS END OF PERIOD (THOUSANDS) $ 723,850 $ 215
.........................................................................
</TABLE>
+ Annualized.
* For the period from January 22, 1998 (commencement of class operations) to
June 30, 1998.
** For the period from April 9, 1998 (commencement of class operations) to June
30, 1998.

See Combined Notes to Financial Statements.

36
<PAGE>

[LOGO OF EVERGREEN SELECT COMMON STOCK FUND APPEARS HERE]

FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)

<TABLE>
<CAPTION>
Period Ended June 30, 1998
CLASS I* CLASS IS**
<S> <C> <C>
NET ASSET VALUE BEGINNING OF PERIOD $ 82.97 $ 80.21
------------- -------------
.........................................................................
INCOME FROM INVESTMENT OPERATIONS
.........................................................................
Net investment income 0.51 0.27
.........................................................................
Net realized and unrealized gain on
investments 9.62 7.16
------------- -------------
.........................................................................
Total from investment operations 10.13 7.43
------------- -------------
.........................................................................
DISTRIBUTIONS TO SHAREHOLDERS
.........................................................................
From net investment income (0.51) (0.31)
------------- -------------
.........................................................................
Total distributions (0.51) (0.31)
------------- -------------
.........................................................................
NET ASSET VALUE END OF PERIOD $ 92.59 $ 87.33
------------- -------------
.........................................................................
TOTAL RETURN 12.23% 9.27%
.........................................................................
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses 0.70%+ 0.95%+
.........................................................................
Total expenses, excluding indirectly paid
expenses 0.70%+ 0.95%+
.........................................................................
Total expenses, excluding fee waiver and
expense reimbursement 0.82%+ 1.12%+
.........................................................................
Net investment income 0.96%+ 0.60%+
.........................................................................
PORTFOLIO TURNOVER RATE 22% 22%
.........................................................................
AVERAGE COMMISSION RATE PER SHARE $ 0.0573 $ 0.0573
.........................................................................
NET ASSETS END OF PERIOD (MILLIONS) $ 1,952 $ 18
.........................................................................
</TABLE>
+ Annualized.
* For the period from November 24, 1997 (commencement of class operations) to
June 30, 1998.
** For the period from February 4, 1998 (commencement of class operations) to
June 30, 1998.

See Combined Notes to Financial Statements.

37
<PAGE>

[LOGO OF EVERGREEN SELECT DIVERSIFIED VALUE FUND APPEARS HERE]

FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)

<TABLE>
<CAPTION>
Period Ended June 30, 1998
CLASS I* CLASS IS**
<S> <C> <C>
NET ASSET VALUE BEGINNING OF PERIOD $ 23.81 $ 26.56
------------- ------------
.........................................................................
INCOME FROM INVESTMENT OPERATIONS
.........................................................................
Net investment income 0.14 0.06
.........................................................................
Net realized and unrealized gain on investments 2.41 (0.64)
------------- ------------
.........................................................................
Total from investment operations 2.55 (0.58)
------------- ------------
.........................................................................
DISTRIBUTIONS TO SHAREHOLDERS
.........................................................................
From net investment income (0.14) (0.05)
------------- ------------
.........................................................................
Total distributions (0.14) (0.05)
------------- ------------
.........................................................................
NET ASSET VALUE END OF PERIOD $ 26.22 $ 25.93
------------- ------------
.........................................................................
TOTAL RETURN 10.72% (2.19%)
.........................................................................
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses 0.68%+ 0.93%+
.........................................................................
Total expenses, excluding indirectly paid
expenses 0.68%+ 0.93%+
.........................................................................
Total expenses, excluding fee waiver and
expense reimbursement 0.78%+ 1.03%+
.........................................................................
Net investment income 1.24%+ 0.80%+
.........................................................................
PORTFOLIO TURNOVER RATE 56% 56%
.........................................................................
AVERAGE COMMISSION RATE PER SHARE $ 0.0567 $ 0.0567
.........................................................................
NET ASSETS END OF PERIOD (THOUSANDS) $ 797,352 $ 210
.........................................................................
</TABLE>
+ Annualized.
* For the period from January 22, 1998 (commencement of class operations) to
June 30, 1998.
** For the period from March 31, 1998 (commencement of class operations) to
June 30, 1998.

See Combined Notes to Financial Statements.

38
<PAGE>

[LOGO OF EVERGREEN SELECT EQUITY INCOME FUND APPEARS HERE]

FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)

<TABLE>
<CAPTION>
Period Ended June 30, 1998
CLASS I* CLASS IS**
<S> <C> <C>
NET ASSET VALUE BEGINNING OF PERIOD $ 87.31 $ 90.83
------------- ------------
.........................................................................
INCOME FROM INVESTMENT OPERATIONS
.........................................................................
Net investment income 1.50 0.65
.........................................................................
Net realized and unrealized gain on investments 1.73 (1.69)
------------- ------------
.........................................................................
Total from investment operations 3.23 (1.04)
------------- ------------
.........................................................................
DISTRIBUTIONS TO SHAREHOLDERS
.........................................................................
From net investment income (1.50) (0.63)
.........................................................................
In excess of net investment income (0.01) (0.11)
------------- ------------
.........................................................................
Total distributions (1.51) (0.74)
------------- ------------
.........................................................................
NET ASSET VALUE END OF PERIOD $ 89.03 $ 89.05
------------- ------------
.........................................................................
TOTAL RETURN 3.70% (1.16%)
.........................................................................
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses 0.78%+ 1.04%+
.........................................................................
Total expenses, excluding indirectly paid
expenses 0.77%+ 1.03%+
.........................................................................
Total expenses, excluding fee waiver and
expense reimbursement 0.88%+ 1.13%+
.........................................................................
Net investment income 2.80%+ 2.46%+
.........................................................................
PORTFOLIO TURNOVER RATE 51% 51%
.........................................................................
AVERAGE COMMISSION RATE PER SHARE $ 0.0594 $ 0.0594
.........................................................................
NET ASSETS END OF PERIOD (THOUSANDS) $ 204,248 $ 1,497
.........................................................................
</TABLE>
+ Annualized.
* For the period from November 24, 1997 (commencement of class operations) to
June 30, 1998.
** For the period from March 11, 1998 (commencement of class operations) to
June 30, 1998.

See Combined Notes to Financial Statements.

39
<PAGE>

[LOGO OF EVERGREEN SELECT LARGE CAP BLEND FUND APPEARS HERE]

FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)

<TABLE>
<CAPTION>
Period Ended June 30, 1998
CLASS I*** CLASS IS** CLASS IC*
<S> <C> <C> <C>
NET ASSET VALUE BEGINNING OF PERIOD $ 44.59 $ 49.75 $ 45.05
------- ------- --------
.........................................................................
INCOME FROM INVESTMENT OPERATIONS
.........................................................................
Net investment income 0.19 0.08 0.23
.........................................................................
Net realized and unrealized gain on
investments 6.18 1.00 5.70
------- ------- --------
.........................................................................
Total from investment operations 6.37 1.08 5.93
------- ------- --------
.........................................................................
DISTRIBUTIONS TO SHAREHOLDERS
.........................................................................
From net investment income (0.19) (0.08) (0.23)
.........................................................................
In excess of net invtment income (0.03) (0.01) (0.01)
------- ------- --------
.........................................................................
Total distributions (0.22) (0.09) (0.24)
------- ------- --------
.........................................................................
NET ASSET VALUE END OF PERIOD $ 50.74 $ 50.74 $ 50.74
------- ------- --------
.........................................................................
TOTAL RETURN 14.31% 2.17% 13.18%
.........................................................................
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses 0.71%+ 0.96%+ 0.71%+
.........................................................................
Total expenses, excluding indirectly paid
expenses 0.71%+ 0.96%+ 0.71%+
.........................................................................
Total expenses, excluding fee waiver and
expense reimbursement 0.83%+ 1.08%+ 0.83%+
.........................................................................
Net investment income 0.78%+ 0.57%+ 0.80%+
.........................................................................
PORTFOLIO TURNOVER RATE 42% 42% 42%
.........................................................................
AVERAGE COMMISSION RATE PER SHARE $0.0591 $0.0591 $ 0.0591
.........................................................................
NET ASSETS END OF PERIOD (THOUSANDS) $14,032 $ 301 $497,534
.........................................................................
</TABLE>
+ Annualized.
* For the period from November 24, 1997 (commencement of class operations) to
June 30, 1998.
** For the period from March 12, 1998 (commencement of class operations) to
June 30, 1998.
*** For the period from December 19, 1997 (commencement of class operations) to
June 30, 1998.

See Combined Notes to Financial Statements.

40
<PAGE>

[LOGO PF EVERGREEN SELECT SMALL CAP GROWTH FUND APPEARS HERE]

FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)

<TABLE>
<CAPTION>
Year Ended February 28,
Period Ended -------------------------- Period ended
June 30, 1998*** 1998 1997** June 30, 1996*
CLASS I
<S> <C> <C> <C> <C>
NET ASSET VALUE
BEGINNING OF PERIOD $ 13.23 $ 11.28 $ 11.65 $ 10.00
------- ----------- ----------- -------
.........................................................................
INCOME (LOSS) FROM
INVESTMENT OPERATIONS
.........................................................................
Net investment loss (0.03) (0.06)# (0.04)# (0.03)
.........................................................................
Net realized and
unrealized gain (loss)
on investments (0.08) 2.48 (0.16) 1.68
------- ----------- ----------- -------
.........................................................................
Total from investment
operations (0.11) 2.42 (0.20) 1.65
------- ----------- ----------- -------
.........................................................................
From net realized gain
on investments 0 (0.47) (0.17) 0
------- ----------- ----------- -------
DISTRIBUTIONS TO
SHAREHOLDERS
.........................................................................
Total distributions 0 (0.47) (0.17) 0
------- ----------- ----------- -------
.........................................................................
NET ASSET VALUE END OF
PERIOD $ 13.12 $ 13.23 $ 11.28 $ 11.65
------- ----------- ----------- -------
.........................................................................
.........................................................................
TOTAL RETURN (0.83%) 21.67% (1.75%) 16.50%
.........................................................................
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET
ASSETS:
Total expenses 1.01%+ 0.92% 1.00%+ 1.00%+
.........................................................................
Total expenses,
excluding indirectly
paid expenses 1.01%+ N/A N/A N/A
.........................................................................
Total expenses,
excluding fee waiver
and expense
reimbursement N/A 0.95% 2.53%+ 2.81%+
.........................................................................
Net investment loss (0.62%)+ (0.48%) (0.57%)+ (0.45%)+
.........................................................................
PORTFOLIO TURNOVER RATE 54% 166% 123% 57%
.........................................................................
AVERAGE COMMISSION RATE
PER SHARE $0.0406 $ 0.0493 $ 0.0509 $0.0847
.........................................................................
NET ASSETS END OF PERIOD
(THOUSANDS) $69,283 $ 47,524 $ 2,888 $ 2,446
.........................................................................
</TABLE>
+ Annualized.
* For the period from December 28, 1995 (commencement of class operations) to
June 30, 1996.
** For the eight-month period ended February 28,1997. The fund changed its fis-
cal year end from June 30 to February 28, effective February 28, 1997.
*** For the period from March 1, 1998 to June 30, 1998. The fund changed its
fiscal year end from February 28 to June 30, effective June 30, 1998.
# Net investment income (loss) is based on average shares outstanding during
the period.

See Combined Notes to Financial Statements.

41
<PAGE>

[LOGO OF EVERGREEN SELECT SMALL COMPANY VALUE FUND APPEARS HERE]

FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)

<TABLE>
<CAPTION>
Period Ended
June 30, 1998*
CLASS I*
<S> <C>
NET ASSET VALUE
BEGINNING OF PERIOD $ 10.00
-------
.........................................................................
INCOME FROM INVESTMENT
OPERATIONS
.........................................................................
Net investment income 0.04
.........................................................................
Net realized and
unrealized gain on
investments 0.09
-------
.........................................................................
Total from investment
operations 0.13
-------
.........................................................................
From net investment
income (0.04)
-------
DISTRIBUTIONS TO
SHAREHOLDERS
.........................................................................
Total distributions (0.04)
-------
.........................................................................
NET ASSET VALUE END OF
PERIOD $ 10.09
-------
.........................................................................
.........................................................................
TOTAL RETURN 1.28%
.........................................................................
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET
ASSETS:
Total expenses 1.01%+
.........................................................................
Total expenses,
excluding indirectly
paid expenses 1.00%+
.........................................................................
Total expenses,
excluding fee waiver
and expense
reimbursement 1.26%+
.........................................................................
Net investment income 0.68%+
.........................................................................
PORTFOLIO TURNOVER RATE 23%
.........................................................................
AVERAGE COMMISSION RATE
PER SHARE $0.0583
.........................................................................
NET ASSETS END OF PERIOD
(THOUSANDS) $77,647
.........................................................................
</TABLE>

+Annualized.
*For the period from December 23, 1997 (commencement of class operations) to
June 30, 1998.

See Combined Notes to Financial Statements.

42
<PAGE>

[LOGO OF EVERGREEN SELECT SOCIAL PRINCIPLES FUND APPEARS HERE]

FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)

<TABLE>
<CAPTION>
Period Ended June 30, 1998
CLASS I* CLASS IS** CLASS IC*
<S> <C> <C> <C>
NET ASSET VALUE BEGINNING OF PERIOD $ 36.65 $ 38.44 $ 36.65
------- ------- --------
.........................................................................
INCOME (LOSS) FROM INVESTMENT OPERATIONS
.........................................................................
Net investment income (loss) 0.03 (0.01) 0.03
.........................................................................
Net realized and unrealized gain on
investments 2.32 0.52 2.31
------- ------- --------
.........................................................................
Total from investment operations 2.35 0.51 2.34
------- ------- --------
.........................................................................
DISTRIBUTIONS TO SHAREHOLDERS
.........................................................................
From net investment income (0.03) (0.01) (0.03)
.........................................................................
In excess of net investment income (0.01) 0 (0.01)
------- ------- --------
.........................................................................
Total distributions (0.04) (0.01) (0.04)
------- ------- --------
.........................................................................
NET ASSET VALUE END OF PERIOD $ 38.96 $ 38.94 $ 38.95
------- ------- --------
.........................................................................
TOTAL RETURN 6.41% 1.32% 6.38%
.........................................................................
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses 0.86%+ 1.11%+ 0.86%+
.........................................................................
Total expenses, excluding indirectly paid
expenses 0.86%+ 1.11%+ 0.86%+
.........................................................................
Total expenses, excluding fee waiver and
expense reimbursement 0.99%+ 1.24%+ 0.99%+
.........................................................................
Net investment income (loss) 0.19%+ (0.12%)+ 0.12%+
.........................................................................
PORTFOLIO TURNOVER RATE 24% 24% 24%
.........................................................................
AVERAGE COMMISSION RATE PER SHARE $0.0585 $0.0585 $ 0.0585
.........................................................................
NET ASSETS END OF PERIOD (THOUSANDS) $ 2,405 $ 205 $177,187
.........................................................................
</TABLE>
+ Annualized.
* For the period from November 24, 1997 (commencement of class operations) to
June 30, 1998.
** For the period from March 12, 1998 (commencement of class operations) to
June 30, 1998.

See Combined Notes to Financial Statements.

43
<PAGE>

[LOGO OF EVERGREEN SELECT STRATEGIC GROWTH FUND APPEARS HERE]

FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)

<TABLE>
<CAPTION>
Period Ended June 30, 1998
CLASS I** CLASS IS*
<S> <C> <C>
NET ASSET VALUE BEGINNING OF PERIOD $ 32.45 $ 36.10
------------- ------------
.........................................................................
INCOME (LOSS) FROM INVESTMENT OPERATIONS
.........................................................................
Net investment income (loss) 0.04 (0.08)
.........................................................................
Net realized and unrealized gain on
investments 5.96 2.34
------------- ------------
.........................................................................
Total from investment operations 6.00 2.26
------------- ------------
.........................................................................
DISTRIBUTIONS TO SHAREHOLDERS
.........................................................................
From net investment income (0.04) 0
------------- ------------
.........................................................................
Total distributions (0.04) 0
------------- ------------
.........................................................................
NET ASSET VALUE END OF PERIOD $ 38.41 $ 38.36
------------- ------------
.........................................................................
TOTAL RETURN 18.53% 6.29%
.........................................................................
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses 0.72%+ 0.97%+
.........................................................................
Total expenses, excluding indirectly paid
expenses 0.72%+ 0.97%+
.........................................................................
Total expenses, excluding fee waiver and
expense reimbursement 0.84%+ 1.09%+
.........................................................................
Net investment income (loss) 0.19%+ (0.27%)+
.........................................................................
PORTFOLIO TURNOVER RATE 80% 80%
.........................................................................
AVERAGE COMMISSION RATE PER SHARE $ 0.0595 $ 0.0595
.........................................................................
NET ASSETS END OF PERIOD (THOUSANDS) $ 321,532 $ 2,373
.........................................................................
</TABLE>
+ Annualized.
* For the period from February 27, 1998 (commencement of class operations) to
June 30, 1998.
** For the period from November 24, 1997 (commencement of class operations) to
June 30, 1998.

See Combined Notes to Financial Statements.

44
<PAGE>

[LOGO OF EVERGREEN SELECT STRATEGIC VALUE FUND APPEARS HERE]

FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)

<TABLE>
<CAPTION>
Period Ended June 30, 1998
CLASS I* CLASS IS**
<S> <C> <C>
NET ASSET VALUE BEGINNING OF PERIOD $ 203.35 $ 223.08
------------- ------------
.........................................................................
INCOME FROM INVESTMENT OPERATIONS
.........................................................................
Net investment income 1.60 0.61
.........................................................................
Net realized and unrealized gain on investments 22.67 3.13
------------- ------------
.........................................................................
Total from investment operations 24.27 3.74
------------- ------------
.........................................................................
DISTRIBUTIONS TO SHAREHOLDERS
.........................................................................
From net investment income (1.60) (0.78)
------------- ------------
.........................................................................
.........................................................................
Total distributions (1.60) (0.78)
------------- ------------
.........................................................................
NET ASSET VALUE END OF PERIOD $ 226.02 $ 226.04
------------- ------------
.........................................................................
TOTAL RETURN 11.95% 1.68%
.........................................................................
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses 0.75%+ 1.00%+
.........................................................................
Total expenses, excluding indirectly paid
expenses 0.75%+ 1.00%+
.........................................................................
Total expenses, excluding fee waiver and
expense reimbursement 0.85%+ 1.10%+
.........................................................................
Net investment income 1.26%+ 0.93%+
.........................................................................
PORTFOLIO TURNOVER RATE 12% 12%
.........................................................................
AVERAGE COMMISSION RATE PER SHARE $ 0.0619 $ 0.0619
.........................................................................
NET ASSETS END OF PERIOD (THOUSANDS) $ 287,194 $ 1,327
.........................................................................
</TABLE>
+ Annualized.
* For the period from November 24, 1997 (commencement of class operations) to
June 30, 1998.
** For the period from March 11, 1998 (commencement of class operations) to
June 30, 1998.

See Combined Notes to Financial Statements.

45
<PAGE>

[LOGO OF EVERGREEN SELECT BALANCED FUND APPEARS HERE]

SCHEDULE OF INVESTMENTS
June 30, 1998

<TABLE>
<CAPTION>
Shares Value
<S> <C>

COMMON STOCKS - 56.3%
BANKS - 6.7%
90,000 Banc One Corp. ...................................... $ 5,023,125
195,600 BankBoston Corp. .................................... 10,880,250
46,000 Bankers Trust Corp. ................................. 5,338,875
75,000 First Chicago NBD Corp. ............................. 6,646,875
66,000 Fleet Financial Group, Inc. ......................... 5,511,000
135,000 NationsBank Corp. ................................... 10,327,500
85,900 Union Planters Corp. ................................ 5,051,994
------------
48,779,619
------------
BUILDING, CONSTRUCTION &
FURNISHINGS - 0.8%
95,000 Masco Corp. ......................................... 5,747,500
------------
BUSINESS EQUIPMENT &
SERVICES - 0.8%
110,000 *Compuware Corp. .................................... 5,623,750
------------
CHEMICAL & AGRICULTURAL
PRODUCTS - 1.3%
129,000 Du Pont (E. I.) De Nemours & Co. .................... 9,626,625
------------
COMMUNICATION SYSTEMS &
SERVICES - 3.0%
120,000 *Cisco Systems, Inc. ................................ 11,047,500
77,500 *Tellabs, Inc. ...................................... 5,550,937
111,000 *WorldCom, Inc. ..................................... 5,376,563
------------
21,975,000
------------
CONSUMER PRODUCTS &
SERVICES - 4.0%
349,100 *Cendant Corp. ...................................... 7,287,463
121,000 Procter & Gamble Co. ................................ 11,018,562
115,100 Stanley Works........................................ 4,783,844
80,000 Whirlpool Corp. ..................................... 5,500,000
------------
28,589,869
------------
DIVERSIFIED COMPANIES - 1.5%
174,000 Tyco International Ltd. ............................. 10,962,000
------------
ELECTRICAL EQUIPMENT &
SERVICES - 1.6%
128,000 General Electric Co. ................................ 11,648,000
------------
FINANCE & INSURANCE - 4.1%
120,000 Allstate Corp. ...................................... 10,987,500
52,000 Merrill Lynch & Co., Inc. ........................... 4,797,000
143,000 Travelers Group, Inc. ............................... 8,669,375
100,000 UNUM Corp. .......................................... 5,550,000
------------
30,003,875
------------
FOOD & BEVERAGE PRODUCTS - 3.6%
85,000 Bestfoods............................................ 4,935,313
127,275 Coca Cola Co. ....................................... 10,882,012
142,000 *Safeway, Inc. ...................................... 5,777,625
82,300 Sara Lee Corp. ...................................... 4,603,656
------------
26,198,606
------------
HEALTHCARE PRODUCTS &
SERVICES - 10.1%
95,000 Bristol-Myers Squibb Co. ............................ 10,919,062
320,000 HBO & Co. ........................................... 11,280,000

HEALTHCARE PRODUCTS &
SERVICES - CONTINUED
390,000 *HEALTHSOUTH Corp. .................................. $ 10,408,125
155,800 Johnson & Johnson.................................... 11,490,250
170,000 *Lincare Holdings, Inc. ............................. 7,150,625
80,000 Pfizer, Inc. ........................................ 8,695,000
100,000 *Quintiles Transnational Corp. ...................... 4,918,750
84,000 SmithKline Beecham Plc, ADR.......................... 5,082,000
50,000 *Universal Health Services, Inc. Cl. B............... 2,918,750
------------
72,862,562
------------
INDUSTRIAL SPECIALTY PRODUCTS &
SERVICES - 0.7%
102,000 *USA Waste Services, Inc. ........................... 5,036,250
------------
INFORMATION SERVICES &
TECHNOLOGY - 5.8%
346,900 Compaq Computer Corp. ............................... 9,843,288
54,000 Intel Corp. ......................................... 4,002,750
153,500 *Microsoft Corp. .................................... 16,635,562
160,050 *Network Associates, Inc. ........................... 7,662,394
92,000 *Sanmina Corp. ...................................... 3,990,500
------------
42,134,494
------------
METAL PRODUCTS & SERVICES - 0.6%
70,000 Aluminum Co. of America.............................. 4,615,625
------------
OIL/ENERGY - 3.6%
72,900 Mobil Corp. ......................................... 5,585,962
178,900 Texaco, Inc. ........................................ 10,678,094
171,600 Tosco Corp. ......................................... 5,040,750
157,300 YPF SA, ADR.......................................... 4,728,831
------------
26,033,637
------------
PUBLISHING, BROADCASTING & ENTERTAINMENT - 0.9%
196,000 News Corp, Ltd. ..................................... 6,296,500
------------
REAL ESTATE - 0.6%
129,000 FelCor Suite Hotels, Inc. REIT....................... 4,047,375
------------
RETAILING & WHOLESALE - 1.5%
109,000 Dayton Hudson Corp. ................................. 5,286,500
100,000 *Federated Department Stores, Inc. .................. 5,381,250
------------
10,667,750
------------
TRANSPORTATION - 0.7%
52,200 Burlington Northern Santa Fe......................... 5,125,388
------------
UTILITIES - ELECTRIC - 2.1%
287,700 Cinergy Corp. ....................................... 10,069,500
214,800 PacifiCorp........................................... 4,859,850
------------
14,929,350
------------
UTILITIES - TELEPHONE - 2.3%
155,000 Century Telephone Enterprises, Inc. ................. 7,110,625
170,000 GTE Corp. ........................................... 9,456,250
------------
16,566,875
------------
Total Common Stocks
(cost $368,785,743)................................. 407,470,650
------------
</TABLE>

46
<PAGE>

[LOGO EVERGREEN SELECT BALANCED FUND APPEARS HERE]

SCHEDULE OF INVESTMENTS(continued)
June 30, 1998

<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C>

CORPORATE BONDS - 11.1%
BANKS - 2.0%
$ 2,302,000 Boatmen's Bancshares, Inc.
6.75%, 3/15/03.................................... $ 2,365,641
3,836,000 First Chicago Corp.
9.875%, 8/15/00................................... 4,129,170
7,673,000 NationsBank Corp.
7.625%, 4/15/05................................... 8,298,741
------------
14,793,552
------------
CHEMICAL & AGRICULTURAL
PRODUCTS - 0.6%
3,836,000 Dow Chemical Co.
8.625%, 4/1/06.................................... 4,380,827
------------
CONSUMER PRODUCTS &
SERVICES - 0.5%
3,299,000 Stanley Works
7.375%, 12/15/02.................................. 3,476,631
------------
FINANCE & INSURANCE - 3.8%
4,220,000 Dean Witter, Discover & Co.
6.75%, 10/15/13................................... 4,367,983
4,220,000 General Electric Capital Corp.
8.75%, 3/14/03.................................... 4,676,722
2,110,000 International Bank For Reconstruction &
Development COLTS
7.95%, 5/15/16.................................... 2,564,905
7,673,000 Loews Corp.
6.75%, 12/15/06................................... 7,859,707
3,836,000 Merrill Lynch, Pierce, Fenner & Smith, Inc.
7.00%, 4/27/08.................................... 4,066,195
3,836,000 Salomon, Inc.
5.50%, 1/15/99.................................... 3,826,955
------------
27,362,467
------------
FOOD & BEVERAGE PRODUCTS - 1.0%
3,836,000 General Mills, Inc.
9.00%, 12/20/02................................... 4,299,481
3,261,000 PepsiCo, Inc.
7.625%, 11/1/98................................... 3,278,521
------------
7,578,002
------------
HEALTHCARE PRODUCTS &
SERVICES - 0.6%
3,836,000 Baxter International
7.25%, 2/15/08.................................... 4,137,421
------------
INDUSTRIAL SPECIALTY PRODUCTS & SERVICES - 1.1%
5,371,000 Jet Equipment Trust 144A
9.41%, 6/15/10.................................... 6,544,231
1,074,000 Waste Management, Inc.
8.75%, 5/1/18..................................... 1,212,720
------------
7,756,951
------------
</TABLE>

*Non-income producing securities.
144A Securities that may be resold to "qualified institutional buyers"
under Rule 144A of the Securities Act of 1933. These securities have
been determined to be liquid under guidelines established by the
Fund's Board of Trustees.

SUMMARY OF ABBREVIATIONS:
ADR American Depository Receipt
COLTS Continuously Offered Longer Term Securities
REIT Real Estate Investment Trust

<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C>

CORPORATE BONDS - CONTINUED
OIL FIELD SERVICES - 0.5%
$ 3,069,000 Atlantic Richfield Co.
9.00%, 4/1/21..................................... $ 4,011,950
------------
SOVEREIGN GOVERNMENT - 0.6%
3,836,000 Ontario Province Canada
7.75%, 6/4/02..................................... 4,073,640
------------
UTILITIES - ELECTRIC - 0.4%
2,762,000 Union Electric Co.
8.00%, 12/15/22................................... 2,969,744
------------
Total Corporate Bonds
(cost $80,331,899)................................ 80,541,185
------------
U.S. GOVERNMENT & AGENCYOBLIGATIONS - 32.4%
TREASURY NOTES & BONDS - 31.2%
U.S. Treasury Bonds:
27,423,000 6.125%, 11/15/27................................... 29,394,056
15,346,000 7.625%, 2/15/07.................................... 16,314,732
15,346,000 8.75%, 5/15/17..................................... 20,673,947
16,113,000 8.875%, 8/15/17.................................... 21,979,147
17,428,000 9.125%, 5/15/18.................................... 24,415,547
U.S. Treasury Notes:
5,138,000 6.375%, 7/15/99.................................... 5,182,963
14,500,000 6.625%, 4/30/02.................................... 15,034,702
14,579,000 7.75%, 11/30/99.................................... 15,016,384
47,173,000 7.75%, 2/15/01..................................... 49,708,596
27,091,000 9.125%, 5/15/99.................................... 27,920,689
------------
225,640,763
------------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 1.2%
Government National Mortgage Association:
1,618,610 8.50%, 5/15/21..................................... 1,708,645
975,293 8.50%, 7/15/21..................................... 1,029,544
2,055,534 8.50%, 6/15/22..................................... 2,169,874
1,097,955 9.00%, 9/15/21..................................... 1,176,184
1,730,951 9.00%, 10/15/21.................................... 1,854,281
977,916 9.50%, 2/15/21..................................... 1,057,066
------------
8,995,594
------------
Total U.S. Government & Agency Obligations (cost
$233,066,452)..................................... 234,636,357
------------
</TABLE>

<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS -
(COST $682,184,094).......................... 99.8% 722,648,192
OTHER ASSETS AND
LIABILITIES - NET............................ 0.2 1,416,896
----- ------------
NET ASSETS.................................... 100.0% $724,065,088
===== ============
</TABLE>

See Combined Notes to Financial Statements.

47
<PAGE>

[LOGO OF EVERGREEN SELECT COMMON STOCK FUND APPEARS HERE]

SCHEDULE OF INVESTMENTS
June 30, 1998

<TABLE>
<CAPTION>
Shares Value
<S> <C>

COMMON STOCKS - 97.5%
AUTOMOTIVE EQUIPMENT & MANUFACTURING - 2.7%
275,000 Arvin Industries, Inc. ........................... $ 9,985,937
725,000 Ford Motor Co. ................................... 42,775,000
--------------
52,760,937
--------------
BANKS - 10.2%
478,500 Banc One Corp. ................................... 26,706,281
350,000 BankBoston Corp. ................................. 19,468,750
155,000 Bankers Trust Corp. .............................. 17,989,688
410,000 Chase Manhattan Corp. ............................ 30,955,000
260,000 First Chicago NBD Corp. .......................... 23,042,500
225,000 Fleet Financial Group, Inc. ...................... 18,787,500
550,000 KeyCorp........................................... 19,593,750
375,000 NationsBank Corp. ................................ 28,687,500
375,000 SouthTrust Corp. ................................. 16,312,500
--------------
201,543,469
--------------
BUILDING, CONSTRUCTION & FURNISHINGS - 1.6%
235,000 *American Standard Companies, Inc................. 10,501,563
360,000 Masco Corp. ...................................... 21,780,000
--------------
32,281,563
--------------
BUSINESS EQUIPMENT &
SERVICES - 0.5%
200,000 *Compuware Corp. ................................. 10,225,000
--------------
CAPITAL GOODS - 1.3%
200,000 Case Corp. ....................................... 9,650,000
100,000 Deere & Co. ...................................... 5,287,500
285,000 LucasVarity Plc, ADR.............................. 11,346,563
--------------
26,284,063
--------------
CHEMICAL & AGRICULTURAL
PRODUCTS - 3.6%
200,000 *Cytec Industries, Inc. .......................... 8,850,000
120,000 Dow Chemical Co. ................................. 11,602,500
460,000 Du Pont (E. I.) De Nemours & Co. ................. 34,327,500
175,000 Pioneer Hi-Bred International, Inc. .............. 7,240,625
165,000 Union Carbide Corp. .............................. 8,806,875
--------------
70,827,500
--------------
COMMUNICATION SYSTEMS & SERVICES - 2.8%
390,000 *Cisco Systems, Inc. ............................. 35,904,375
400,000 *WorldCom, Inc. .................................. 19,375,000
--------------
55,279,375
--------------
CONSUMER PRODUCTS &
SERVICES - 4.3%
300,000 Black & Decker Corp. ............................. 18,300,000
425,000 *Fruit Of The Loom, Inc. Cl. A.................... 14,104,688
150,000 Gillette Co. ..................................... 8,503,125
375,000 Premark International, Inc. ...................... 12,093,750
355,000 Stanley Works..................................... 14,754,687
250,000 Whirlpool Corp. .................................. 17,187,500
--------------
84,943,750
--------------
DIVERSIFIED COMPANIES - 1.1%
335,000 Tyco International Ltd. .......................... 21,105,000
--------------

ELECTRICAL EQUIPMENT &
SERVICES - 2.3%
490,000 General Electric Co. ............................. $ 44,590,000
--------------
ENVIRONMENTAL SERVICES - 1.6%
400,000 *Allied Waste Industries, Inc. ................... 9,587,500
460,000 *USA Waste Services, Inc. ........................ 22,712,500
--------------
32,300,000
--------------
FINANCE & INSURANCE - 6.4%
215,000 Allmerica Financial Corp. ........................ 13,975,000
150,000 Allstate Corp. ................................... 13,734,375
235,000 *Amerin Corp. .................................... 6,859,063
290,000 Franklin Resources, Inc. ......................... 15,660,000
100,000 Loews Corp. ...................................... 8,712,500
280,000 Morgan Stanley, Dean Witter,
Discover & Co. .................................. 25,585,000
135,000 PMI Group, Inc. .................................. 9,905,625
215,000 Providian Financial Corp. ........................ 16,890,937
280,000 UNUM Corp. ....................................... 15,540,000
--------------
126,862,500
--------------
FOOD & BEVERAGE PRODUCTS - 7.4%
250,000 Bestfoods......................................... 14,515,625
400,000 Coca Cola Co. .................................... 34,200,000
460,000 Conagra, Inc. .................................... 14,576,250
280,000 Fortune Brands, Inc. ............................. 10,762,500
625,000 Philip Morris Companies, Inc. .................... 24,609,375
520,000 RJR Nabisco Holdings Corp. ....................... 12,350,000
430,000 *Safeway, Inc. ................................... 17,495,625
305,000 Sara Lee Corp. ................................... 17,060,937
--------------
145,570,312
--------------
HEALTHCARE PRODUCTS &
SERVICES - 11.1%
460,000 Abbott Laboratories............................... 18,802,500
305,000 *Amgen, Inc. ..................................... 19,939,375
300,000 *Boston Scientific Corp. ......................... 21,487,500
270,000 *Covance, Inc. ................................... 6,075,000
460,000 HBO & Co. ........................................ 16,215,000
450,000 *Health Management Associates, Inc. Cl. A......... 15,046,875
620,000 *HEALTHSOUTH Corp. ............................... 16,546,250
300,000 *Lincare Holdings, Inc. .......................... 12,618,750
970,000 *MedPartners, Inc. ............................... 7,760,000
100,000 Pfizer, Inc. ..................................... 10,868,750
200,000 Schering-Plough Corp. ............................ 18,325,000
525,000 SmithKline Beecham Plc, ADR....................... 31,762,500
540,000 *Tenet Healthcare Corp. .......................... 16,875,000
190,000 Teva Pharmaceutical Industries Ltd., ADR.......... 6,685,625
--------------
219,008,125
--------------
INFORMATION SERVICES & TECHNOLOGY - 12.2%
280,000 *3Com Corp. ...................................... 8,592,500
350,000 *Adaptec, Inc. ................................... 5,009,375
270,000 *Altera Corp. .................................... 7,981,875
325,000 *Applied Materials, Inc. ......................... 9,587,500
400,000 *Cadence Design Systems, Inc. .................... 12,500,000
765,000 Compaq Computer Corp. ............................ 21,706,875
</TABLE>

48
<PAGE>

[LOGO OF EVERGREEN SELECT COMMON STOCK FUND APPEARS HERE]

SCHEDULE OF INVESTMENTS(continued)
June 30, 1998
See Combined Notes to Financial Statements.

<TABLE>
<CAPTION>
Shares Value
<S> <C>

COMMON STOCKS - CONTINUED
INFORMATION SERVICES &
TECHNOLOGY - CONTINUED
275,000 Computer Associates International, Inc. .......... $ 15,279,687
180,000 *Dell Computer Corp. ............................. 16,706,250
270,000 Intel Corp. ...................................... 20,013,750
300,000 International Business Machines Corp. ............ 34,443,750
245,000 *Microsoft Corp. ................................. 26,551,875
210,000 *Network Associates, Inc. ........................ 10,053,750
500,000 *Oracle Systems Corp. ............................ 12,281,250
390,000 *Quantum Corp. ................................... 8,092,500
210,000 *Sanmina Corp. ................................... 9,108,750
200,000 *SCI Systems, Inc. ............................... 7,525,000
200,000 *Synopsys, Inc. .................................. 9,150,000
175,000 Varian Associates, Inc. .......................... 6,825,000
--------------
241,409,687
--------------
METAL PRODUCTS & SERVICES - 1.1%
110,000 Aluminum Co. of America........................... 7,253,125
285,000 Crown Cork & Seal Co., Inc. ...................... 13,537,500
--------------
20,790,625
--------------
OIL/ENERGY - 8.5%
140,000 Anadarko Petroleum Corp. ......................... 9,406,250
145,000 Ashland, Inc. .................................... 7,485,625
465,000 Enron Corp. ...................................... 25,139,062
530,000 *Newpark Resources, Inc. ......................... 5,896,250
339,300 *Ocean Energy, Inc. .............................. 6,637,556
435,000 Phillips Petroleum Co. ........................... 20,961,563
300,000 Sonat, Inc. ...................................... 11,587,500
520,000 Texaco, Inc. ..................................... 31,037,500
460,000 Tosco Corp. ...................................... 13,512,500
460,000 Ultramar Diamond Shamrock Corp. .................. 14,518,750
680,000 YPF SA, ADR....................................... 20,442,500
--------------
166,625,056
--------------
OIL FIELD SERVICES - 1.8%
380,000 Diamond Offshore Drilling, Inc. .................. 15,200,000
270,000 *EVI Weatherford Inc. ............................ 10,023,750
478,000 *R & B Falcon Corp. .............................. 10,814,750
--------------
36,038,500
--------------
REAL ESTATE - 1.6%
460,000 FelCor Suite Hotels, Inc. REIT.................... 14,432,500
500,000 Simon DeBartolo Group, Inc. REIT.................. 16,250,000
--------------
30,682,500
--------------
RETAILING & WHOLESALE - 6.5%
530,000 Dayton Hudson Corp. .............................. 25,705,000
890,000 Family Dollar Stores, Inc. ....................... 16,465,000
425,000 *Federated Department Stores, Inc. ............... 22,870,313
200,000 Liz Claiborne, Inc. .............................. 10,450,000
</TABLE>

* Non-income producing securities.
(a) At June 30, 1998, the repurchase agreement was collateralized by:
$14,505,000 U.S. Treasury Notes, 4.75%, 8/31/98; value including ac-
crued interest --$14,719,779.

SUMMARY OF ABBREVIATIONS:
ADR American Depository Receipt
REIT Real Estate Investment Trust

<TABLE>
<CAPTION>
Shares Value
<S> <C>
COMMON STOCKS - CONTINUED
RETAILING & WHOLESALE - CONTINUED
400,000 *Reebok International Ltd. ...................... $ 11,075,000
475,000 Sears, Roebuck & Co. ............................ 29,004,687
520,000 *Toys R Us, Inc. ................................ 12,252,500
--------------
127,822,500
--------------
TELECOMMUNICATION SERVICES & EQUIPMENT - 1.3%
130,000 Nokia Corp. ADR.................................. 9,433,125
437,287 *Qwest Communications International Inc. ........ 15,250,384
--------------
24,683,509
--------------
TRANSPORTATION - 1.5%
210,000 Burlington Northern Santa Fe..................... 20,619,375
295,000 Norfolk Southern Corp. .......................... 8,794,688
--------------
29,414,063
--------------
UTILITIES - ELECTRIC - 3.7%
585,000 Cinergy Corp. ................................... 20,475,000
370,000 CMS Energy Corp. ................................ 16,280,000
510,000 GPU, Inc. ....................................... 19,284,375
465,000 UtiliCorp United, Inc. .......................... 17,524,687
--------------
73,564,062
--------------
UTILITIES - TELEPHONE - 2.4%
312,500 Century Telephone Enterprises, Inc. ............. 14,335,938
575,000 GTE Corp. ....................................... 31,984,375
--------------
46,320,313
--------------
Total Common Stocks
(cost $1,309,844,291)........................... 1,920,932,409
--------------
SHORT-TERM INVESTMENTS - 2.5%
MONEY MARKET SHARES - 1.8%
35,709,596 Valiant General Fund
5.44%, 7/1/98
(cost $35,709,596).............................. 35,709,596
--------------

<CAPTION>
Principal
Amount
<S> <C> <C>
REPURCHASE AGREEMENT - 0.7%
$14,430,904 Dresdner Bank AG
5.70%, purchased 6/30/98, maturing 7/1/98,
maturity value $14,433,189 (cost
$14,430,904) (a) ............................... 14,430,904
--------------
Total Short-Term Investments
(cost $50,140,500).............................. 50,140,500
--------------
TOTAL INVESTMENTS -
(COST $1,359,984,791)..................... 100.0% 1,971,072,909
OTHER ASSETS AND
LIABILITIES - NET......................... 0.0 (412,972)
----- --------------
NET ASSETS................................. 100.0% $1,970,659,937
===== ==============
</TABLE>

49
<PAGE>

[LOGO OF EVERGREEN SELECT DIVERSIFIED VALUE FUND APPEARS HERE]

SCHEDULE OF INVESTMENTS
June 30, 1998

<TABLE>
<CAPTION>
Shares Value
<S> <C>
COMMON STOCKS - 98.3%
AUTOMOTIVE EQUIPMENT & MANUFACTURING -
1.0%
125,000 Goodyear Tire & Rubber Co................ $ 8,054,688
------------
BANKS - 12.7%
108,800 Bankers Trust Corp....................... 12,627,600
376,800 Chase Manhattan Corp..................... 28,448,400
92,300 Citicorp................................. 13,775,775
135,800 First Chicago NBD Corp................... 12,035,275
49,200 Fleet Financial Group, Inc............... 4,108,200
350,800 NationsBank Corp......................... 26,836,200
58,400 PNC Bank Corp............................ 3,142,650
------------
100,974,100
------------
BUSINESS EQUIPMENT & SERVICES - 1.4%
116,500 *Compuware Corp.......................... 5,956,063
219,700 *Stratus Computer, Inc................... 5,561,156
------------
11,517,219
------------
CAPITAL GOODS - 0.6%
97,400 Case Corp................................ 4,699,550
------------
CHEMICAL & AGRICULTURAL PRODUCTS - 1.9%
205,400 Du Pont (E. I.) De Nemours & Co.......... 15,327,975
------------
COMMUNICATION SYSTEMS & SERVICES - 5.8%
210,200 *Cisco Systems, Inc...................... 19,351,537
149,700 *Tellabs, Inc............................ 10,722,263
341,000 *WorldCom, Inc........................... 16,517,187
------------
46,590,987
------------
CONSUMER PRODUCTS & SERVICES - 3.7%
200,000 Procter & Gamble Co...................... 18,212,500
56,300 Stanley Works............................ 2,339,969
132,600 Whirlpool Corp........................... 9,116,250
------------
29,668,719
------------
DIVERSIFIED COMPANIES - 3.1%
385,800 Tyco International Ltd................... 24,305,400
------------
ELECTRICAL EQUIPMENT & SERVICES - 3.6%
310,900 General Electric Co...................... 28,291,900
------------
FINANCE & INSURANCE - 5.4%
151,800 Allstate Corp............................ 13,899,187
137,500 Countrywide Credit Industries, Inc....... 6,978,125
102,400 Lehman Brothers Holdings, Inc............ 7,942,400
130,000 Loews Corp............................... 11,326,250
46,200 Travelers Group, Inc..................... 2,800,875
------------
42,946,837
------------
FOOD & BEVERAGE PRODUCTS - 10.1%
363,300 Bestfoods................................ 21,094,106
224,800 Coca Cola Co............................. 19,220,400
141,700 Fortune Brands, Inc...................... 5,446,594
472,300 Philip Morris Companies, Inc............. 18,596,812
390,000 *Safeway, Inc............................ 15,868,125
------------
80,226,037
------------
HEALTHCARE PRODUCTS & SERVICES - 14.4%
236,300 Bristol-Myers Squibb Co................. $ 27,159,731
526,400 HBO & Co................................ 18,555,600
419,800 *HEALTHSOUTH Corp....................... 11,203,412
88,700 *Lincare Holdings, Inc.................. 3,730,944
228,500 Pfizer, Inc............................. 24,835,094
82,300 *Quintiles Transnational Corp........... 4,048,131
255,000 SmithKline Beecham Plc, ADR............. 15,427,500
322,600 *Tenet Healthcare Corp.................. 10,081,250
------------
115,041,662
------------
INDUSTRIAL SPECIALTY PRODUCTS &
SERVICES - 0.3%
50,000 *USA Waste Services, Inc................ 2,468,750
------------
INFORMATION SERVICES & TECHNOLOGY - 5.5%
78,200 Intel Corp.............................. 5,796,575
103,900 International Business Machines Corp.... 11,929,019
131,000 *Microsoft Corp......................... 14,197,125
190,300 *Network Associates, Inc................ 9,110,612
69,300 *Sun Microsystems, Inc.................. 3,010,219
------------
44,043,550
------------
MANUFACTURING - DISTRIBUTING - 1.8%
167,400 Philips Electronics NV.................. 14,229,000
------------
METAL PRODUCTS & SERVICES - 1.1%
22,875 Alumax, Inc............................. 1,060,828
238,000 USX United States Steel Group........... 7,854,000
------------
8,914,828
------------
OIL/ENERGY - 5.5%
170,000 Cabot Corp.............................. 5,493,125
220,400 Mobil Corp.............................. 16,888,150
192,700 Tosco Corp.............................. 5,660,562
315,500 Ultramar Diamond Shamrock Corp.......... 9,957,969
200,000 YPF SA, ADR............................. 6,012,500
------------
44,012,306
------------
OIL FIELD SERVICES - 1.2%
79,800 Diamond Offshore Drilling, Inc.......... 3,192,000
280,300 *R & B Falcon Corp...................... 6,341,788
------------
9,533,788
------------
PUBLISHING, BROADCASTING &
ENTERTAINMENT - 2.7%
760,000 News Corp. Ltd.......................... 21,470,000
------------
REAL ESTATE - 1.8%
457,800 FelCor Suite Hotels, Inc. REIT.......... 14,363,475
------------
RETAILING & WHOLESALE - 4.7%
99,000 Dayton Hudson Corp...................... 4,801,500
375,000 *Federated Department Stores, Inc....... 20,179,688
206,900 Sears, Roebuck & Co..................... 12,633,831
------------
37,615,019
------------
</TABLE>

50
<PAGE>

[LOGO OF EVERGREEN SELECT DIVERSIFIED VALUE FUND APPEARS HERE]

SCHEDULE OF INVESTMENTS(continued)
June 30, 1998

<TABLE>
<CAPTION>
Shares Value
<S> <C>
COMMON STOCKS - CONTINUED
TELECOMMUNICATION SERVICES & EQUIPMENT -
0.7%
74,300 Nokia Corp., ADR........................ $ 5,391,394
------------
TEXTILE & APPAREL - 0.8%
129,300 V. F. Corp.............................. 6,658,950
------------
TRANSPORTATION - 1.2%
100,000 Burlington Northern Santa Fe............ 9,818,750
------------
UTILITIES - ELECTRIC - 5.2%
367,900 Cinergy Corp............................ 12,876,500
554,300 Houston Industries, Inc................. 17,114,012
129,000 Pinnacle West Capital Corp.............. 5,805,000
143,000 UtiliCorp United, Inc................... 5,389,313
------------
41,184,825
------------
UTILITIES - TELEPHONE - 2.1%
300,000 GTE Corp................................ 16,687,500
------------
Total Common Stocks
(cost $719,320,111).................... $784,037,209
------------
</TABLE>

* Non-income producing securities.
(a) At June 30, 1998, the repurchase agreement was collateralized by:
$8,922,000 U.S. Treasury Notes, 4.75%, 8/31/98; value including ac-
crued interest - $9,054,110 and $13,315,000 U.S. Treasury Notes,
5.625%, 12/31/99, value including accrued interest - $13,327,516.
144A Securities that may be resold to "qualified institutional buyers"
under Rule 144A of the Securities Act of 1933. These securities have
been determined to be liquid under guidelines established by the
Fund's Board of Trustees.

SUMMARY OF ABBREVIATIONS:
ADR American Depository Receipt
REIT Real Estate Investment Trust

<TABLE>
<CAPTION>
Shares Value
<S> <C>
CONVERTIBLE PREFERRED - 0.6%
CAPITAL GOODS - 0.6%
45,400 Case Corp.
4.50%, Series A, 144A............................. $ 5,079,125
------------
Total Convertible Preferred (cost $6,310,600)...... $ 5,079,125
------------
SHORT-TERM INVESTMENTS - 2.8%
REPURCHASE AGREEMENT - 2.8%
$21,939,066 Dresdner Bank AG 5.70%, purchased 6/30/98, maturing
7/1/98, maturity value $21,942,540
(cost $21,939,066) (a)............................ $ 21,939,066
------------
</TABLE>

<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS -(COST $747,569,777)....... 101.7% 811,055,400
OTHER ASSETS AND LIABILITIES - NET........... (1.7) (13,493,304)
----- ------------
NET ASSETS................................... 100.0% $797,562,096
===== ============
</TABLE>

See Combined Notes to Financial Statements.

51
<PAGE>

[LOGO PF EVERGREEN SELECT EQUITY INCOME FUND APPEARS HERE]

SCHEDULE OF INVESTMENTS
June 30, 1998

<TABLE>
<CAPTION>
Shares Value
<S> <C>
COMMON STOCKS - 74.9%
AEROSPACE & DEFENSE - 0.9%
20,000 United Technologies Corp.................. $ 1,850,000
------------
BANKS - 10.6%
110,000 BankBoston Corp........................... 6,118,750
80,000 Fleet Financial Group, Inc................ 6,680,000
80,000 PNC Bank Corp............................. 4,305,000
80,000 Union Planters Corp. Rts.................. 4,705,000
------------
21,808,750
------------
CHEMICAL & AGRICULTURAL PRODUCTS - 2.8%
60,000 Dow Chemical Co........................... 5,801,250
------------
COMMUNICATION SYSTEMS & SERVICES - 2.4%
100,000 *WorldCom, Inc............................ 4,843,750
------------
ELECTRICAL EQUIPMENT & SERVICES - 3.1%
70,000 General Electric Co....................... 6,370,000
------------
FOOD & BEVERAGE PRODUCTS - 3.4%
100,000 Philip Morris Companies, Inc.............. 3,937,500
130,000 RJR Nabisco Holdings Corp................. 3,087,500
------------
7,025,000
------------
HEALTHCARE PRODUCTS & SERVICES - 2.8%
50,000 Bristol-Myers Squibb Co................... 5,746,875
------------
INFORMATION SERVICES & TECHNOLOGY - 5.4%
100,000 *Altera Corp.............................. 2,953,125
40,000 International Business Machines Corp...... 4,592,500
75,000 *Network Associates, Inc.................. 3,588,281
------------
11,133,906
------------
OIL/ENERGY - 11.3%
100,000 Enron Corp................................ 5,406,250
250,000 *Newpark Resources, Inc................... 2,781,250
70,000 Texaco, Inc............................... 4,178,125
200,000 Ultramar Diamond Shamrock Corp............ 6,312,500
155,000 YPF SA, ADR............................... 4,659,688
------------
23,337,813
------------
OIL FIELD SERVICES - 1.1%
100,000 *R & B Falcon Corp........................ 2,262,500
------------
REAL ESTATE - 4.7%
100,000 FelCor Suite Hotels, Inc. REIT............ 3,137,500
200,000 Simon DeBartolo Group, Inc. REIT.......... 6,500,000
------------
9,637,500
------------
TRANSPORTATION - 1.9%
40,280 Burlington Northern Santa Fe.............. 3,954,993
------------
UTILITIES - ELECTRIC - 21.5%
225,000 Cinergy Corp.............................. 7,875,000
130,000 CMS Energy Corp........................... 5,720,000
175,000 GPU, Inc.................................. 6,617,187
220,000 Houston Industries, Inc................... 6,792,500
</TABLE>

<TABLE>
<CAPTION>
Shares Value
<S> <C>
COMMON STOCKS - CONTINUED
UTILITIES - ELECTRIC - (CONTINUED)
250,000 PacifiCorp.......................... $ 5,656,250
125,000 Pinnacle West Capital Corp.......... 5,625,000
160,000 UtiliCorp United, Inc............... 6,030,000
------------
44,315,937
------------
UTILITIES - TELEPHONE - 3.0%
110,000 GTE Corp............................ 6,118,750
------------
Total Common Stocks
(cost $120,529,688)................ $154,207,024
------------
CONVERTIBLE PREFERRED - 13.6%
CAPITAL GOODS - 2.2%
40,000 Case Corp. 4.50%, Series A.......... 4,475,000
------------
FOOD & BEVERAGE PRODUCTS - 3.1%
100,000 Ralston Purina Co. 7.00%, SAILS
(exchangeable for Interstate
Bakeries Common Stock)............. 6,350,000
------------
OIL/ENERGY - 2.2%
65,000 Tosco Financing Trust 5.75%, 144A... 3,640,000
15,000 Tosco Financing Trust 5.75%......... 840,000
------------
4,480,000
------------
OIL FIELD SERVICES - 2.2%
110,000 EVI, Inc. 5.00%, 144A............... 4,661,800
------------
PAPER & PACKAGING - 2.4%
110,000 Crown Cork & Seal Co., Inc.
4.50%, MIPS........................ 4,922,500
------------
REAL ESTATE - 1.5%
125,000 Felcor Suite Hotels, Inc.
$1.95, Series A.................... 3,031,250
------------
Total Convertible Preferred
(cost $30,188,834)................. $ 27,920,550
------------

<CAPTION>
Principal
Amount
<S> <C>
CONVERTIBLE DEBENTURES - 2.4%
ENVIRONMENTAL SERVICES - 2.4%
$4,000,000 *USA Waste Services, Inc.
4.00%, 2/1/02...................... 4,970,000
------------
Total Convertible Debentures
(cost $4,281,453).................. $ 4,970,000
------------
U.S. GOVERNMENT OBLIGATIONS - 6.7%
U.S. Treasury Notes
2,000,000 6.125%, 7/31/00..................... 2,024,376
2,000,000 6.125%, 9/30/00..................... 2,025,626
2,000,000 6.125%, 12/31/01.................... 2,036,252
1,500,000 6.50%, 4/30/99...................... 1,512,189
2,000,000 6.50%, 8/31/01...................... 2,054,376
500,000 6.625%, 6/30/01..................... 514,688
1,940,000 6.875%, 7/31/99..................... 1,967,282
500,000 7.25%, 5/15/04...................... 542,656
1,000,000 7.75%, 11/30/99..................... 1,030,001
------------
Total U.S. Government Obligations
(cost $13,440,446)................. $ 13,707,446
------------
</TABLE>

52
<PAGE>

[LOGO OF EVERGREEN SELECT EQUITY INCOME FUND APPEARS HERE]

SCHEDULE OF INVESTMENTS(continued)
June 30, 1998

<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C>
SHORT-TERM INVESTMENTS - 2.4%
REPURCHASE AGREEMENT -
1.9%
$3,928,059 Dresdner Bank AG
5.70%, purchased
6/30/98, maturing
7/1/98, maturity value
$3,928,681
(cost $3,928,059) (a).. $ 3,928,059
------------
</TABLE>

Shares Value
<S> <C>
SHORT-TERM INVESTMENTS - CONTINUED
MONEY MARKET SHARES - 0.5%
1,047,329 Valiant General Fund 5.44%, 7/1/98 (cost
1,047,329).............................. $ 1,047,329
------------
Total Short-Term Investments
(cost $4,975,388)....................... $ 4,975,388
------------
</TABLE>

<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS -(COST $173,415,809)........ 100.0% 205,780,408
OTHER ASSETS AND LIABILITIES - NET............ 0.0 (35,207)
----- ------------
NET ASSETS.................................... 100.0% $205,745,201
===== ============
</TABLE>

* Non-income producing securities.
(a) At June 30, 1998, the repurchase agreement was collateralized by:
$3,950,000 U.S. Treasury Notes, 4.75%, 8/31/98; value including accrued in-
terest - $4,008,489.
144A Securities that may be resold to "qualified institutional buyers" under
Rule 144A of the Securities Act of 1933. These securities have been deter-
mined to be liquid under guidelines established by the Fund's Board of
Trustees.

SUMMARY OF ABBREVIATIONS:
ADR American Depository Receipt
MIPS Monthly Income Producing Securities
REIT Real Estate Investment Trust

See Combined Notes to Financial Statements.

53
<PAGE>

[LOGO OF EVERGREEN SELECT LARGE CAP BLEND FUND APPEARS HERE]

SCHEDULE OF INVESTMENTS
June 30, 1998

<TABLE>
<CAPTION>
Shares Value
<S> <C>
COMMON STOCKS - 98.5%
BANKS - 11.7%
125,000 Banc One Corp......................................... $ 6,976,563
248,400 BankBoston Corp....................................... 13,817,250
60,070 Bankers Trust Corp.................................... 6,971,874
69,000 First Chicago NBD Corp................................ 6,115,125
82,000 Fleet Financial Group, Inc............................ 6,847,000
171,000 NationsBank Corp...................................... 13,081,500
98,900 Union Planters Corp................................... 5,816,556
------------
59,625,868
------------
BUILDING, CONSTRUCTION & FURNISHINGS - 2.6%
217,200 Masco Corp............................................ 13,140,600
------------
BUSINESS EQUIPMENT & SERVICES - 1.4%
141,000 *Compuware Corp....................................... 7,208,625
------------
CHEMICAL & AGRICULTURAL PRODUCTS - 2.3%
158,300 Du Pont (E. I.) De Nemours & Co....................... 11,813,137
------------
COMMUNICATION SYSTEMS & SERVICES - 5.3%
147,700 *Cisco Systems, Inc................................... 13,597,631
96,000 *Tellabs, Inc......................................... 6,876,000
133,000 *WorldCom, Inc........................................ 6,442,188
------------
26,915,819
------------
CONSUMER PRODUCTS & SERVICES - 6.6%
413,800 *Cendant Corp......................................... 8,638,075
145,900 Procter & Gamble Co................................... 13,286,019
125,350 Stanley Works......................................... 5,209,859
97,600 Whirlpool Corp........................................ 6,710,000
------------
33,843,953
------------
DIVERSIFIED COMPANIES - 2.8%
226,000 Tyco International Ltd................................ 14,238,000
------------
ELECTRICAL EQUIPMENT & SERVICES - 3.1%
172,560 General Electric Co................................... 15,702,960
------------
FINANCE & INSURANCE - 7.7%
139,800 Allstate Corp......................................... 12,800,438
68,500 Merrill Lynch & Co., Inc.............................. 6,319,125
224,500 Travelers Group, Inc.................................. 13,610,312
119,000 UNUM Corp............................................. 6,604,500
------------
39,334,375
------------
FOOD & BEVERAGE PRODUCTS - 6.5%
113,500 Bestfoods............................................. 6,590,094
162,850 Coca Cola Co.......................................... 13,923,675
173,600 *Safeway, Inc......................................... 7,063,350
105,500 Sara Lee Corp......................................... 5,901,406
------------
33,478,525
------------
HEALTHCARE PRODUCTS & SERVICES - 17.3%
124,000 Bristol-Myers Squibb Co............................... 14,252,250
361,400 HBO & Co.............................................. 12,739,350
</TABLE>

<TABLE>
<CAPTION>
Shares Value
<S> <C>
COMMON STOCKS - CONTINUED
HEALTHCARE PRODUCTS & SERVICES - CONTINUED
515,000 *HEALTHSOUTH Corp........................ $ 13,744,062
172,885 Johnson & Johnson........................ 12,750,269
187,180 *Lincare Holdings, Inc................... 7,873,259
98,870 Pfizer, Inc.............................. 10,745,933
131,000 *Quintiles Transnational Corp............ 6,443,563
103,500 SmithKline Beecham Plc, ADR.............. 6,261,750
65,000 *Universal Health Services, Inc. Cl. B... 3,794,375
------------
88,604,811
------------
INDUSTRIAL SPECIALTY PRODUCTS &
SERVICES - 1.2%
129,300 *USA Waste Services, Inc................. 6,384,188
------------
INFORMATION SERVICES & TECHNOLOGY - 9.4%
417,800 Compaq Computer Corp..................... 11,855,075
64,200 Intel Corp............................... 4,758,825
138,000 *Microsoft Corp.......................... 14,955,750
186,000 *Network Associates, Inc................. 8,904,750
180,960 *Sanmina Corp............................ 7,849,140
------------
48,323,540
------------
METAL PRODUCTS & SERVICES - 1.2%
92,400 Aluminum Co. of America.................. 6,092,625
------------
OIL/ENERGY - 5.8%
78,000 Mobil Corp............................... 5,976,750
197,400 Texaco, Inc.............................. 11,782,313
217,825 Tosco Corp............................... 6,398,609
183,700 YPF SA, ADR.............................. 5,522,481
------------
29,680,153
------------
PUBLISHING, BROADCASTING &
ENTERTAINMENT - 1.6%
247,200 News Corp, Ltd........................... 7,941,300
------------
REAL ESTATE - 0.9%
153,800 FelCor Suite Hotels, Inc. REIT........... 4,825,475
------------
RETAILING & WHOLESALE - 2.9%
157,200 Dayton Hudson Corp....................... 7,624,200
138,415 *Federated Department Stores, Inc........ 7,448,457
------------
15,072,657
------------
TRANSPORTATION - 1.2%
63,000 Burlington Northern Santa Fe............. 6,185,813
------------
UTILITIES - ELECTRIC - 3.2%
323,700 Cinergy Corp............................. 11,329,500
220,000 PacifiCorp............................... 4,977,500
------------
16,307,000
------------
UTILITIES - TELEPHONE - 3.8%
172,500 Century Telephone Enterprises, Inc....... 7,913,438
207,700 GTE Corp................................. 11,553,312
------------
19,466,750
------------
Total Common Stocks (cost $383,644,524).. $504,186,174
------------
</TABLE>

54
<PAGE>

[LOGO OF EVERGREEN SELECT LARGE CAP BLEND FUND APPEARS HERE]

SCHEDULE OF INVESTMENTS(continued)
June 30, 1998

<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C>
SHORT-TERM INVESTMENTS - 1.3%
REPURCHASE AGREEMENT - 1.3%
$6,563,308 Dresdner Bank AG
5.70%, purchased 6/30/98, maturing 7/1/98, maturity
value $6,564,347 (cost $6,563,308) (b)............. $ 6,563,308
------------
</TABLE>

* Non-income producing securities.
(a) Less than one-tenth percent.
(b) At June 30, 1998, the repurchase agreement was collateralized by:
$6,600,000 U.S. Treasury Notes, 4.75%, 8/31/98; value including ac-
crued interest -$6,697,728.

SUMMARY OF ABBREVIATIONS:
ADR American Depository Receipt
REIT Real Estate Investment Trust

<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
SHORT-TERM INVESTMENTS - CONTINUED
MONEY MARKET SHARES - 0.0% (A)
317,568 Valiant General Fund
5.44%, 7/1/98 (cost $317,568)........... $ 317,568
------------
Total Short-Term Investments
(cost $6,880,876)....................... $ 6,880,876
------------
TOTAL INVESTMENTS -(COST $390,525,400)......... 99.8% 511,067,050
OTHER ASSETS AND
LIABILITIES - NET............................. 0.2 799,527
----- ------------
NET ASSETS..................................... 100.0% $511,866,577
===== ============
</TABLE>

See Combined Notes to Financial Statements.

55
<PAGE>

[LOGO OF EVERGREEN SELECT SMALL CAP GROWTH FUND APPEARS HERE]

SCHEDULE OF INVESTMENTS
June 30, 1998

<TABLE>
<CAPTION>
Shares Value
<S> <C>
COMMON STOCKS - 98.4%
ADVERTISING & RELATED SERVICES - 2.1%
51,100 *ADVO, Inc............................................. $ 1,440,381
-----------
BANKS - 3.4%
35,900 Dime Community Bancorp, Inc. .......................... 1,000,713
34,300 SIS Bancorp, Inc. ..................................... 1,326,981
-----------
2,327,694
-----------
BUILDING, CONSTRUCTION & FURNISHINGS - 5.3%
22,100 *CompX International, Inc. Cl. A....................... 477,912
69,000 General Cable Corp..................................... 1,992,375
40,500 Oakwood Homes Corp. ................................... 1,215,000
-----------
3,685,287
-----------
BUSINESS EQUIPMENT & SERVICES - 2.3%
73,500 *Market Facts, Inc. ................................... 1,571,062
-----------
CHEMICAL & AGRICULTURAL PRODUCTS - 2.0%
33,800 OM Group, Inc.......................................... 1,394,250
-----------
CONSUMER PRODUCTS & SERVICES - 7.8%
59,300 *Chattem, Inc.......................................... 1,578,863
64,450 *Equity Corp. International............................ 1,546,800
67,700 *Helen of Troy Ltd. ................................... 1,476,706
21,800 *Scotts Co. Cl. A ..................................... 812,050
-----------
5,414,419
-----------
EDUCATION - 7.0%
27,200 *Bright Horizons Childrens, Inc. ...................... 768,400
33,800 *Career Education Corp................................. 836,550
76,500 *Computer Learning Centers, Inc. ...................... 1,905,328
37,300 Strayer Education, Inc. ............................... 1,346,297
-----------
4,856,575
-----------
ELECTRICAL EQUIPMENT & SERVICES - 7.9%
22,300 Applied Power, Inc. Cl. A.............................. 766,563
43,300 *Artisan Components, Inc............................... 573,725
55,200 *DII Group, Inc........................................ 943,575
40,500 *Parlex Corp........................................... 556,875
31,300 *Pri Automation, Inc................................... 534,056
24,400 *QLogic Corp........................................... 870,012
57,700 *Sipex Corp. .......................................... 1,238,747
-----------
5,483,553
-----------
FINANCE & INSURANCE - 5.3%
33,200 *Annuity & Life Re (Holdings), Ltd. ................... 740,775
12,900 Arthur J. Gallagher & Co............................... 577,275
34,400 Blanch E W Holdings, Inc. ............................. 1,264,200
14,890 *Delphi Financial Group, Inc. ......................... 838,493
14,600 *Freedom Securities Corp............................... 264,625
-----------
3,685,368
-----------
FOOD & BEVERAGE PRODUCTS - 1.8%
51,000 Smucker (J. M.) Co. Cl. A.............................. 1,265,438
-----------

HEALTHCARE PRODUCTS & SERVICES - 5.5%
28,800 *Curative Health Services, Inc. .......... $ 824,400
51,100 *Healthcare Recoveries, Inc............... 1,015,612
42,400 *ProMedCo Management Co................... 429,300
22,900 *Renal Care Group, Inc.................... 1,010,463
23,700 *Wesley Jessen Visioncare, Inc............ 547,322
-----------
3,827,097
-----------
INDUSTRIAL SPECIALTY PRODUCTS & SERVICES -
2.7%
59,400 *Halter Marine Group, Inc................. 894,712
37,200 Roper Industries, Inc. ................... 971,850
-----------
1,866,562
-----------
INFORMATION SERVICES & TECHNOLOGY - 14.1%
38,700 *CCC Information Services Group, Inc...... 660,319
50,600 *Cognicase, Inc........................... 749,512
52,900 *DA Consulting Group, Inc. ............... 767,050
47,300 *Electronics for Imaging, Inc. ........... 996,256
29,100 *Evolving Systems, Inc. .................. 324,647
51,000 *FileNet Corp............................. 1,466,250
25,100 *International Integration, Inc........... 436,112
23,100 *JDA Software Group, Inc. ................ 1,012,069
13,900 *Lycos, Inc............................... 1,047,278
52,100 *Platinum Software Corp................... 1,271,566
50,300 *Project Software & Development, Inc. .... 1,020,147
-----------
9,751,206
-----------
LEISURE & TOURISM - 1.2%
28,700 *Steiner Leisure Ltd...................... 871,763
-----------
MANUFACTURING - DISTRIBUTING - 1.5%
23,000 *National R. V. Holdings, Inc............. 1,035,000
-----------
OIL/ENERGY - 2.1%
72,500 *Newpark Resources, Inc................... 806,563
32,400 *Seven Seas Petroleum, Inc................ 656,100
-----------
1,462,663
-----------
OIL FIELD SERVICES - 3.1%
24,600 *Cal Dive International, Inc. ............ 678,038
25,700 Core Laboratories N.V. ................... 554,156
31,300 *Friede Goldman International, Inc. ...... 902,809
-----------
2,135,003
-----------
PUBLISHING, BROADCASTING & ENTERTAINMENT -
5.7%
42,900 *Big Flower Holdings, Inc................. 1,287,000
25,900 *Forrester Research, Inc.................. 1,036,000
40,700 *Hearst-Argyle Television, Inc. .......... 1,633,087
-----------
3,956,087
-----------
RETAILING & WHOLESALE - 6.0%
28,400 *Brylane, Inc............................. 1,306,400
53,600 *Good Guys (The), Inc..................... 725,275
32,000 *K & G Men's Center, Inc.................. 726,000
39,000 *Michaels Stores, Inc..................... 1,375,969
-----------
4,133,644
-----------
</TABLE>

56
<PAGE>

[LOGO OF EVERGREEN SELECT SMALL CAP GROWTH FUND APPEARS HERE]

SCHEDULE OF INVESTMENTS(continued)
June 30, 1998
See Combined Notes to Financial Statements.

<TABLE>
<CAPTION>
Shares Value
<S> <C>
COMMON STOCKS - CONTINUED
TELECOMMUNICATION SERVICES & EQUIPMENT -
8.5%
45,100 *Antec Corp................................ $ 1,049,984
55,000 *Esprit Telecom Group, Plc-ADR............. 1,007,188
36,800 *Hyperion Telecommunications Cl. A......... 580,750
30,400 *IDT Corp.................................. 914,850
50,600 *LCC International, Inc.................... 931,356
24,700 *MGC Communications, Inc................... 380,534
61,200 *Viatel, Inc. ............................. 1,034,663
-----------
5,899,325
-----------
TRANSPORTATION - 2.5%
85,700 *Fritz Companies, Inc...................... 1,146,238
29,700 *United Road Services, Inc................. 566,156
-----------
1,712,394
-----------
UTILITIES - TELEPHONE - 0.6%
45,500 *Telegroup, Inc. .......................... 422,297
-----------
Total Common Stocks (cost $64,788,097)..... $68,197,068
-----------
<CAPTION>
<S> <C>
SHORT-TERM INVESTMENTS - 3.0%
REPURCHASE AGREEMENT - 3.0%
$2,053,000 Keystone Joint Repurchase Agreement, Investments in
repurchase agreements, in a joint trading account,
purchased 6/30/98,
6.06%, maturing 7/1/98, maturity value $2,053,346
(cost $2,053,000) (a).............................. $ 2,053,000
-----------
TOTAL INVESTMENTS -(COST $66,841,097).......... 101.4% 70,250,068
OTHER ASSETS AND
LIABILITIES - NET............................. (1.4) (966,580)
----- -----------
NET ASSETS..................................... 100.0% $69,283,488
===== ===========
</TABLE>

* Non-income producing securities.
(a) The repurchase agreements are fully collateralized by U.S. government
and/or agency obligations based on market prices plus accrued inter-
est at June 30, 1998.

SUMMARY OF ABBREVIATIONS:
ADR American Depository Receipt

57
<PAGE>

[LOGO OF EVERGREEN SELECT SMALL COMPANY VALUE FUND APPEARS HERE]

SCHEDULE OF INVESTMENTS
June 30, 1998

<TABLE>
<CAPTION>
Shares Value
<S> <C>
COMMON STOCKS - 83.2%
AUTOMOTIVE EQUIPMENT & MANUFACTURING - 0.6%
30,000 *Sonic Automotive, Inc................................. $ 493,125
-----------
BANKS - 12.4%
10,000 ABC Bancorp............................................ 162,500
5,000 Bank of Commerce....................................... 93,750
7,875 Beverly Bancorp, Inc................................... 188,016
14,500 *Britton & Koontz Capital Corp......................... 320,812
27,500 BSB Bancorp, Inc....................................... 831,875
67,400 *Civic Bancorp......................................... 1,204,775
54,200 Commercial Bankshares, Inc............................. 1,314,350
50,000 Cowlitz Bancorp........................................ 603,125
15,000 First Liberty Financial Corp........................... 367,500
20,000 First State Bancorp.................................... 482,500
30,000 Granite State Bankshares, Inc.......................... 836,250
14,000 Hancock Holding Co..................................... 742,000
25,000 Independent Bankshares, Inc............................ 387,500
5,000 Pointe Financial Corp.................................. 75,625
29,800 Seacoast Banking Corp. of Florida Cl. A................ 1,147,300
40,000 St. Paul Bancorp, Inc.................................. 903,750
-----------
9,661,628
-----------
BUILDING, CONSTRUCTION & FURNISHINGS - 5.2%
47,000 *CompX International, Inc. Cl. A....................... 1,016,375
20,000 *D.R. Horton, Inc...................................... 417,500
20,000 *Eagle Hardware & Garden, Inc.......................... 462,500
10,000 Knoll, Inc............................................. 295,000
15,000 *Monaco Coach Corp..................................... 438,750
75,000 Shelby Williams Industries, Inc........................ 1,125,000
10,000 *Toll Brothers, Inc.................................... 286,875
-----------
4,042,000
-----------
BUSINESS EQUIPMENT & SERVICES - 0.5%
9,000 *Zebra Technologies Corp. Cl. A........................ 384,750
-----------
CONSUMER PRODUCTS & SERVICES - 6.0%
27,000 Bush Industries, Inc. Cl. A............................ 587,250
25,000 CPI Corp............................................... 595,312
50,000 Maxwell Shoe, Inc. Cl. A............................... 993,750
20,000 North Face, Inc. (The)................................. 480,000
40,000 *Play By Play Toys & Novelties, Inc.................... 412,500
20,000 Russ Berrie & Co., Inc................................. 500,000
30,000 Stride Rite Corp....................................... 451,875
35,000 York Group, Inc........................................ 665,000
-----------
4,685,687
-----------
DIVERSIFIED COMPANIES - 1.1%
35,000 Matthews International Corp. Cl. A..................... 859,688
-----------
ELECTRICAL EQUIPMENT & SERVICES - 5.2%
50,000 *ADFlex Solutions, Inc................................. 443,750
5,000 *Electro Scientific Industries, Inc.................... 157,813
30,000 Fair Issac & Co., Inc.................................. 1,140,000
27,000 *Hadco Corp............................................ 629,437

ELECTRICAL EQUIPMENT &
SERVICES - (CONTINUED)
10,000 Harman International Industries, Inc...... $ 385,000
22,000 *Photronic, Inc........................... 485,375
55,000 *SMART Modular Technologies, Inc.......... 804,375
-----------
4,045,750
-----------
FINANCE & INSURANCE - 6.6%
5,000 *Farm Family Holdings, Inc................ 194,687
10,000 Fidelity National Financial, Inc.......... 398,125
22,000 Frontier Insurance Group, Inc............. 496,375
35,000 Grand Premier Financial, Inc.............. 560,000
36,400 Interstate/Johnson Lane, Inc.............. 1,146,600
10,000 LandAmerica Financial Group, Inc.......... 572,500
17,300 Meadowbrook Insurance Group, Inc.......... 470,344
50,000 Morgan Keegan, Inc........................ 1,293,750
-----------
5,132,381
-----------
HEALTHCARE PRODUCTS & SERVICES - 6.5%
50,000 *ADAC Laboratories........................ 1,125,000
95,000 Air Methods Corp.......................... 430,469
5,000 *Alcide Corp.............................. 211,875
20,000 Depuy, Inc................................ 565,000
50,000 *Empi, Inc................................ 828,125
140,000 Encore Medical Corp....................... 630,000
90,000 *Exactech, Inc............................ 697,500
20,000 Hologic, Inc.............................. 363,750
7,000 *Maxxim Medical, Inc...................... 203,000
-----------
5,054,719
-----------
INDUSTRIAL SPECIALTY PRODUCTS & SERVICES -
3.9%
30,000 *Genlyte Group, Inc....................... 795,000
15,000 Graco, Inc................................ 523,125
20,000 Halter Marine Group, Inc.................. 301,250
55,000 Met-Pro Corp.............................. 821,562
20,000 Robbins & Myers, Inc...................... 581,250
-----------
3,022,187
-----------
INFORMATION SERVICES & TECHNOLOGY - 3.7%
40,800 Alphanet Solutions, Inc................... 464,100
20,000 *Dupont Photomasks, Inc................... 690,000
40,000 Micros Systems, Inc....................... 1,323,750
20,000 Tecnomatix Technologies Ltd............... 400,000
-----------
2,877,850
-----------
MACHINERY - DIVERSIFIED - 1.3%
41,250 Hardinge Brothers, Inc.................... 1,005,469
-----------
METAL PRODUCTS & SERVICES - 0.4%
20,000 *Steel Dynamics, Inc...................... 277,500
-----------
OIL/ENERGY - 4.7%
20,000 *Barrett Resources Corp................... 748,750
30,000 Berry Petroleum Co. Cl. A................. 390,000
32,000 Cabot Oil & Gas Corp. Cl. A............... 640,000
50,000 *COHO Energy, Inc......................... 337,500
9,900 *Forcenergy, Inc.......................... 176,344
</TABLE>

58
<PAGE>

[LOGO OF EVERGREEN SELECT SMALL COMPANY VALUE FUND APPEARS HERE]

SCHEDULE OF INVESTMENTS(continued)
June 30, 1998

<TABLE>
<CAPTION>
Shares Value
<S> <C>
COMMON STOCKS - CONTINUED
OIL/ENERGY - (CONTINUED)
28,000 *Nuevo Energy Co............................ $ 899,500
15,000 Quaker State Corp........................... 245,625
20,000 Southwestern Energy Co...................... 183,750
----------
3,621,469
----------
OIL FIELD SERVICES - 6.8%
13,000 *Atwood Oceanics, Inc....................... 517,562
10,000 Camco International, Inc.................... 778,750
16,000 *Cliffs Drilling Co......................... 525,000
20,000 *Hvide Marine, Inc. Cl. A................... 271,250
50,000 Louis Dreyfus Natural Gas Corp.............. 946,875
10,300 Lufkin Industries, Inc...................... 339,900
20,000 *Oceaneering International, Inc............. 355,000
20,000 *Offshore Logistics, Inc.................... 355,000
10,000 *SEACOR SMIT, Inc........................... 613,125
30,000 Tuboscope, Inc.............................. 592,500
----------
5,294,962
----------
REAL ESTATE - 1.1%
6,700 *Beazer Homes USA, Inc...................... 173,781
15,000 Eastgroup Properties, Inc. REIT............. 300,938
20,000 *Servico, Inc............................... 300,000
4,100 Sunstone Hotel Investors, Inc. REIT......... 54,581
----------
829,300
----------
RETAILING & WHOLESALE - 5.4%
22,000 *Cole National Corp. Cl. A.................. 880,000
50,000 Duckwall-ALCO Stores, Inc................... 875,000
10,000 *Petco Animal Supplies, Inc................. 199,375
80,000 S & K Famous Brands, Inc.................... 1,420,000
30,000 Seaway Food Town, Inc....................... 581,250
25,000 *SED International Holdings, Inc............ 203,125
----------
4,158,750
----------
TELECOMMUNICATION SERVICES & EQUIPMENT -
2.1%
60,000 *Aspect Telecommunications Corp............. 1,642,500
----------
TEXTILE & APPAREL - 1.8%
70,000 Gerber Childrenswear, Inc................... 1,080,625
18,100 Superior Surgical Manufacturing Co., Inc.... 294,125
----------
1,374,750
----------
</TABLE>

* Non-income producing securities.

SUMMARY OF ABBREVIATIONS:

REIT Real Estate Investment Trust

<TABLE>
<CAPTION>
Shares Value
<S> <C>
COMMON STOCKS - CONTINUED
THRIFT INSTITUTIONS - 5.5%
10,000 Dime Financial Corp........................ $ 356,250
8,000 *Highland Bancorp, Inc..................... 331,000
65,400 Horizon Financial Corp..................... 1,046,400
20,000 Maryland Federal Bancorp, Inc.............. 792,500
14,200 *Mech Financial, Inc....................... 411,800
20,000 Monterey Bay Bancorp, Inc.................. 370,000
18,000 *Quaker City Bancorp, Inc.................. 414,000
29,000 Teche Holding Co........................... 569,125
-----------
4,291,075
-----------
TRANSPORTATION - 0.3%
13,000 *Airnet Systems, Inc....................... 209,625
-----------
UTILITIES - ELECTRIC - 1.3%
20,000 Madison Gas & Electric Co.................. 457,500
15,000 MDU Resources Group, Inc................... 535,313
-----------
992,813
-----------
UTILITIES - GAS - 0.8%
10,000 South Jersey Industries, Inc............... 276,250
15,000 UGI Corp................................... 373,125
-----------
649,375
-----------
Total Common Stocks (cost $67,221,566)..... $64,607,353
-----------
</TABLE>

<TABLE>
<CAPTION>
Principal
Amount
<S> <C>
SHORT-TERM INVESTMENTS - 3.5%
GOVERNMENT AGENCY NOTES & BONDS - 3.5%
Federal Home Loan Mortgage Discount Notes
$1,000,000 5.46%, 7/16/98......................................... 997,725
485,000 5.50%, 7/20/98......................................... 483,592
Federal National Mortgage Association Discount Notes
1,265,000 5.47%, 7/10/98........................................ 1,263,270
----------
Total Short-Term Investments (cost $2,744,587)......... $2,744,587
----------
</TABLE>

<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS -(COST $69,966,153)........... 86.7% 67,351,940
OTHER ASSETS AND
LIABILITIES - NET.............................. 13.3 10,294,861
----- -----------
NET ASSETS...................................... 100.0% $77,646,801
===== ===========
</TABLE>

See Combined Notes to Financial Statements.

59
<PAGE>

[LOGO OF EVERGREEN SELECT SOCIAL PRINCIPLES FUND APPEARS HERE]

SCHEDULE OF INVESTMENTS
June 30, 1998

<TABLE>
<CAPTION>
Shares Value
<S> <C>
COMMON STOCKS - 94.3%
ADVERTISING & RELATED
SERVICES - 1.1%
64,000 *Ha Lo Industries Inc................................. $ 1,992,000
------------
AEROSPACE & DEFENSE - 1.1%
70,000 *BE Aerospace, Inc. .................................. 2,038,750
------------
BANKS - 6.3%
50,000 BankBoston Corp. ..................................... 2,781,250
81,000 SouthTrust Corp. ..................................... 3,523,500
43,000 Summit Bancorp ....................................... 2,042,500
50,000 Union Planters Corp................................... 2,940,625
------------
11,287,875
------------
BUILDING, CONSTRUCTION & FURNISHINGS - 4.8%
50,000 Masco Corp............................................ 3,025,000
38,000 Medusa Corp........................................... 2,384,500
55,000 *NCI Building Systems, Inc............................ 3,176,250
------------
8,585,750
------------
BUSINESS EQUIPMENT &
SERVICES - 3.7%
56,700 *Compuware Corp....................................... 2,898,787
32,000 *Consolidated Graphics Inc............................ 1,888,000
34,000 *Robert Half International, Inc. ..................... 1,899,750
------------
6,686,537
------------
CHEMICAL & AGRICULTURAL
PRODUCTS - 0.8%
70,000 AGCO Corp. ........................................... 1,439,375
------------
COMMUNICATION SYSTEMS & SERVICES - 1.5%
36,500 *Tellabs, Inc......................................... 2,614,313
------------
CONSUMER PRODUCTS &
SERVICES - 1.1%
29,100 Whirlpool Corp........................................ 2,000,625
------------
ENVIRONMENTAL SERVICES - 2.8%
112,000 *Allied Waste Industries, Inc. ....................... 2,688,000
50,000 *American Disposal Services, Inc. .................... 2,343,750
------------
5,031,750
------------
FINANCE & INSURANCE - 8.5%
80,000 AFLAC, Inc............................................ 2,425,000
41,000 *Annuity & Life Re (Holdings), Ltd. .................. 907,125
78,000 Conseco, Inc. ........................................ 3,646,500
80,000 Partnerre Ltd. ....................................... 4,080,000
50,000 Price (T.) Rowe & Associates, Inc..................... 1,878,125
50,000 ReliaStar Financial Corp.............................. 2,400,000
------------
15,336,750
------------
FOOD & BEVERAGE PRODUCTS - 2.3%
42,000 Dean Foods Co......................................... 2,307,375
85,000 Richfood Holdings, Inc................................ 1,758,438
------------
4,065,813
------------
</TABLE>

<TABLE>
<CAPTION>
Shares Value
<S> <C>
COMMON STOCKS - CONTINUED
HEALTHCARE PRODUCTS &
SERVICES - 18.3%
33,000 *Boston Scientific Corp.................. $ 2,363,625
4,250 *Clinichem Development Inc. ............. 24,438
56,000 *Elan Corp Plc, ADR...................... 3,601,500
52,000 *First Health Group Corp................. 1,482,000
90,000 *Genesis Health Ventures, Inc............ 2,250,000
156,000 HBO & Co................................. 5,499,000
182,300 *HEALTHSOUTH Corp........................ 4,865,131
56,000 *Lincare Holdings, Inc. ................. 2,355,500
120,000 *Orthodontic Centers of America, Inc..... 2,512,500
70,000 *Pediatrix Medical Group, Inc............ 2,603,125
60,000 *Quintiles Transnational Corp............ 2,951,250
60,000 *Safeskin Corp........................... 2,467,500
------------
32,975,569
------------
INDUSTRIAL SPECIALTY PRODUCTS &
SERVICES - 2.6%
35,000 Magna International, Inc. Cl. A ......... 2,401,875
88,500 Roper Industries, Inc.................... 2,312,062
------------
4,713,937
------------
INFORMATION SERVICES &
TECHNOLOGY - 11.4%
44,000 *Edwards (J.D.) & Co..................... 1,889,250
124,000 *EMC Corp................................ 5,556,750
114,000 *Network Associates, Inc................. 5,457,750
65,000 *PMC-Sierra, Inc......................... 3,046,875
47,800 *Sanmina Corp............................ 2,073,325
40,000 *Uniphase Corp........................... 2,511,250
------------
20,535,200
------------
LEISURE & TOURISM - 0.5%
35,000 Brunswick Corp........................... 866,250
------------
MANUFACTURING - DISTRIBUTING - 0.7%
45,000 *Teradyne, Inc........................... 1,203,750
------------
OIL/ENERGY - 4.0%
250,000 *Newpark Resources, Inc.................. 2,781,250
51,000 Sonat, Inc............................... 1,969,875
75,000 Ultramar Diamond Shamrock Corp........... 2,367,187
------------
7,118,312
------------
PAPER & PACKAGING - 0.7%
106,000 Rock Tennessee Co. Cl. A................. 1,331,625
------------
PHARMACEUTICALS - 2.5%
170,000 *Biochem Pharmaceuticals, Inc............ 4,505,000
------------
REAL ESTATE - 1.7%
98,000 FelCor Suite Hotels, Inc. REIT........... 3,074,750
------------
RETAILING & WHOLESALE - 6.8%
62,500 Dollar General Corp. .................... 2,472,656
156,000 Family Dollar Stores, Inc. .............. 2,886,000
120,000 *General Nutrition Companies, Inc. ...... 3,735,000
58,000 *Starbucks Corp. ........................ 3,099,375
------------
12,193,031
------------
</TABLE>

60
<PAGE>

[LOGO OF EVERGREEN SELECT SOCIAL PRINCIPLES FUND APPEARS HERE]

SCHEDULE OF INVESTMENTS(continued)
June 30, 1998

<TABLE>
<CAPTION>
Shares Value
<S> <C>
COMMON STOCKS - CONTINUED
TELECOMMUNICATION SERVICES & EQUIPMENT -
1.0%
52,474 *Qwest Communications International
Inc. ................................... $ 1,830,031
------------
TRANSPORTATION - 3.0%
175,000 Comair Holdings, Inc. ................... 5,403,125
------------
UTILITIES - ELECTRIC - 5.0%
100,000 Cinergy Corp. ........................... 3,500,000
68,000 Sierra Pacific Resources................. 2,469,250
80,000 UtiliCorp United, Inc.................... 3,015,000
------------
8,984,250
------------
UTILITIES - TELEPHONE - 2.1%
81,000 Century Telephone Enterprises, Inc. ..... 3,715,875
------------
Total Common Stocks (cost $115,876,575).. $169,530,243
------------
</TABLE>

* Non-income producing securities.
(a) At June 30, 1998, the repurchase agreement was collateralized by:
$2,345,000 U.S. Treasury Notes, 4.75%, 8/31/98; value including ac-
crued interest -$2,379,723.
(b) Less than one-tenth percent.

SUMMARY OF ABBREVIATIONS:
ADR American Depository Receipt
REIT Real Estate Investment Trust

<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C>
SHORT-TERM INVESTMENTS - 1.3%
REPURCHASE AGREEMENT-1.3%
$2,331,615 Dresdner Bank AG, 5.70%, purchased 6/30/98, maturing
7/1/98, maturity value $2,331,984
(cost $2,331,615) (a).............................. $ 2,331,615
------------
</TABLE>

<TABLE>
<CAPTION>
Shares
<S> <C> <C>
MONEY MARKET SHARES - 0.0% (B)
61,204 Valiant General Fund 5.44%, 7/1/98
(cost $61,204)......................................... 61,204
----------
Total Short-Term Investments (cost $2,392,819).......... $2,392,819
----------

TOTAL INVESTMENTS -(COST $118,269,394)......... 95.6% 171,923,062
OTHER ASSETS AND
LIABILITIES - NET............................. 4.4 7,874,678
----- ------------
NET ASSETS..................................... 100.0% $179,797,740
===== ============
</TABLE>

See Combined Notes to Financial Statements.

61
<PAGE>

[LOGO OF EVERGREEN SELECT STRATEGIC GROWTH FUND APPEARS HERE]

SCHEDULE OF INVESTMENTS
June 30, 1998

<TABLE>
<CAPTION>
Shares Value
<S> <C>
COMMON STOCKS - 97.4%
AEROSPACE & DEFENSE - 3.3%
116,425 Cordant Technologies, Inc............................ $ 5,370,103
58,515 United Technologies Corp............................. 5,412,638
------------
10,782,741
------------
BUILDING, CONSTRUCTION & FURNISHINGS - 4.7%
139,720 Centex Corp.......................................... 5,274,430
175,870 Mohawk Inds Inc. .................................... 5,572,881
59,725 Southdown, Inc....................................... 4,262,872
------------
15,110,183
------------
BUSINESS EQUIPMENT &
SERVICES - 7.8%
150,615 *AccuStaff, Inc. .................................... 4,706,719
86,400 Computer Task Group, Inc............................. 2,894,400
119,720 *Compuware Corp...................................... 6,120,685
115,410 *Robert Half International, Inc. .................... 6,448,534
98,045 Saville System, Plc, ADR............................. 4,914,505
------------
25,084,843
------------
COMMUNICATION SYSTEMS &
SERVICES - 1.6%
15,060 *Cisco Systems, Inc.................................. 1,386,461
53,490 *Tellabs, Inc........................................ 3,831,221
------------
5,217,682
------------
CONSUMER PRODUCTS &
SERVICES - 6.5%
169,295 *Cendant Corp. ...................................... 3,534,033
281,280 *Foodmaker, Inc...................................... 4,746,600
93,470 Procter & Gamble Co.................................. 8,511,612
111,385 Universal Corp....................................... 4,163,014
------------
20,955,259
------------
DIVERSIFIED COMPANIES - 2.9%
148,970 Tyco International Ltd............................... 9,385,110
------------
ELECTRICAL EQUIPMENT &
SERVICES - 5.4%
191,765 General Electric Co.................................. 17,450,615
------------
FINANCE & INSURANCE - 9.0%
55,010 American Express Co.................................. 6,271,140
71,365 EXEL Ltd............................................. 5,553,089
85,950 MGIC Investment Corp................................. 4,904,522
176,465 Price (T.) Rowe & Associates, Inc.................... 6,628,466
101,855 SunAmerica, Inc. .................................... 5,850,297
------------
29,207,514
------------
FOOD & BEVERAGE PRODUCTS - 5.7%
12,560 Coca Cola Co......................................... 1,073,880
138,780 Interstate Bakeries Corp............................. 4,605,761
173,160 Philip Morris Companies, Inc......................... 6,818,175
145,630 *Safeway, Inc. ...................................... 5,925,321
------------
18,423,137
------------
<CAPTION>
Shares Value
<S> <C>
COMMON STOCKS - CONTINUED
HEALTHCARE PRODUCTS &
SERVICES - 19.6%
25,790 Abbott Laboratories..................... $ 1,054,166
84,450 Bristol-Myers Squibb Co................. 9,706,472
203,105 HBO & Co. .............................. 7,159,451
116,210 *Health Care & Retirement Corp.......... 4,583,032
212,550 *Health Management Associates, Inc.
Cl. A.................................. 7,107,141
13,215 Johnson & Johnson....................... 974,606
85,175 Merck & Co., Inc........................ 11,392,156
250,325 *Orthodontic Centers of America, Inc.... 5,241,180
109,855 *Quintiles Transnational Corp........... 5,403,493
182,535 *Quorum Health Group, Inc............... 4,831,473
105,435 *Universal Health Services, Inc. Cl. B.. 6,154,768
------------
63,607,938
------------
INFORMATION SERVICES & TECHNOLOGY -
15.2%
122,695 *BMC Software, Inc...................... 6,372,472
108,640 *Computer Horizons Corp................. 4,026,470
83,310 *Dell Computer Corp..................... 7,732,209
11,105 Intel Corp.............................. 823,158
121,525 *Microsoft Corp. ....................... 13,170,272
118,405 *Peoplesoft, Inc. ...................... 5,565,035
153,810 *PMC-Sierra, Inc........................ 7,209,844
115,865 *Transaction Systems Architects, Inc.
Cl. A.................................. 4,460,802
------------
49,360,262
------------
METAL PRODUCTS & SERVICES - 0.7%
69,420 USX United States Steel Group........... 2,290,860
------------
OIL FIELD SERVICES - 1.8%
124,860 *BJ Services Co., Inc................... 3,628,744
130,680 ENSCO International, Inc................ 2,270,565
------------
5,899,309
------------
PHARMACEUTICALS - 5.8%
90,215 Pfizer, Inc............................. 9,805,243
99,000 Schering-Plough Corp.................... 9,070,875
------------
18,876,118
------------
PUBLISHING, BROADCASTING &
ENTERTAINMENT - 1.8%
116,945 Omnicom Group, Inc...................... 5,832,632
------------
RETAILING & WHOLESALE - 5.6%
114,910 *Costco Companies, Inc.................. 7,246,512
100,480 Ethan Allen Interiors, Inc.............. 5,017,720
239,640 TJX Co., Inc............................ 5,781,315
------------
18,045,547
------------
Total Common Stocks
(cost $245,145,175).................... $315,529,750
------------
</TABLE>

62
<PAGE>

[LOGO OF EVERGREEN SELECT STRATEGIC GROWTH FUND APPEARS HERE]

SCHEDULE OF INVESTMENTS(continued)
June 30, 1998
See Combined Notes to Financial Statements.

<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C>
SHORT-TERM INVESTMENTS - 7.3%
REPURCHASE AGREEMENT - 6.8%
$22,111,838 Dresdner Bank AG 5.70%, purchased 6/30/98, maturing
7/1/98, maturity value $22,115,339
(cost $22,111,838) (a)............................ $ 22,111,838
------------
</TABLE>

<TABLE>
<CAPTION>
Shares Value
<S> <C>
SHORT-TERM INVESTMENTS - CONTINUED
MONEY MARKET SHARES - 0.5%
1,526,516 Valiant General Fund 5.44%, 7/1/98 (cost
$1,526,516)........................................ $ 1,526,516
------------
Total Short-Term Investments (cost $23,638,354)..... $ 23,638,354
------------
TOTAL INVESTMENTS -
(COST $268,783,529)......................... 104.7% 339,168,104
OTHER ASSETS AND LIABILITIES - NET........... (4.7) (15,262,772)
----- ------------
NET ASSETS................................... 100.0% $323,905,332
===== ============
</TABLE>

* Non-income producing securities.
(a) At June 30, 1998, the repurchase agreement was collateralized by:
$22,225,000 U.S. Treasury Notes, 4.75%, 8/31/98; value including ac-
crued interest - $22,554,091.

SUMMARY OF ABBREVIATIONS:
ADR American Depository Receipt

63
<PAGE>

[LOGO OF EVERGREEN SELECT STRATEGIC VALUE FUND APPEARS HERE]

SCHEDULE OF INVESTMENTS
June 30, 1998

<TABLE>
<CAPTION>
Shares Value
<S> <C>
COMMON STOCKS - 92.2%
AUTOMOTIVE EQUIPMENT & MANUFACTURING - 1.3%
58,500 Goodyear Tire & Rubber Co. .......................... $ 3,769,594
------------
BANKS - 23.9%
150,000 BankBoston Corp. .................................... 8,343,750
27,000 Bankers Trust Corp. ................................. 3,133,687
120,000 Chase Manhattan Corp. ............................... 9,060,000
55,000 Citicorp............................................. 8,208,750
39,750 First Chicago NBD Corp. ............................. 3,522,844
100,000 Fleet Financial Group, Inc. ......................... 8,350,000
110,000 NationsBank Corp. ................................... 8,415,000
70,000 PNC Bank Corp. ...................................... 3,766,875
65,000 SouthTrust Corp. .................................... 2,827,500
120,000 Summit Bancorp....................................... 5,700,000
130,000 Union Planters Corp. ................................ 7,645,625
------------
68,974,031
------------
BUSINESS EQUIPMENT &
SERVICES - 0.4%
51,000 *Stratus Computer, Inc. ............................. 1,290,938
------------
CAPITAL GOODS - 1.4%
84,500 Case Corp. .......................................... 4,077,125
------------
ELECTRICAL EQUIPMENT &
SERVICES - 0.6%
105,000 *Silicon Valley Group, Inc. ......................... 1,686,563
------------
FINANCE & INSURANCE - 10.9%
35,000 Allstate Corp. ...................................... 3,204,687
85,000 Countrywide Credit Industries, Inc. ................. 4,313,750
40,000 Lehman Brothers Holdings, Inc. ...................... 3,102,500
60,000 Loews Corp. ......................................... 5,227,500
82,000 Merrill Lynch & Co., Inc. ........................... 7,564,500
60,000 Nationwide Financial Services, Inc. Cl. A............ 3,060,000
103,600 ReliaStar Financial Corp. ........................... 4,972,800
------------
31,445,737
------------
FOOD & BEVERAGE PRODUCTS - 3.6%
40,000 Fortune Brands, Inc. ................................ 1,537,500
221,000 Philip Morris Companies, Inc. ....................... 8,701,875
------------
10,239,375
------------
HEALTHCARE PRODUCTS &
SERVICES - 4.3%
68,000 Bristol-Myers Squibb Co. ............................ 7,815,750
145,000 *Tenet Healthcare Corp. ............................. 4,531,250
------------
12,347,000
------------
INFORMATION SERVICES & TECHNOLOGY - 6.4%
80,000 Intel Corp. ......................................... 5,930,000
62,800 International Business Machines Corp. ............... 7,210,225
124,000 *Sun Microsystems, Inc. ............................. 5,386,250
------------
18,526,475
------------
</TABLE>

<TABLE>
<CAPTION>
Shares Value
<S> <C>
COMMON STOCKS - CONTINUED
MANUFACTURING - DISTRIBUTING - 2.3%
78,500 Philips Electronics NV.................. $ 6,672,500
------------
METAL PRODUCTS & SERVICES - 2.6%
30,442 Alumax, Inc. ........................... 1,411,748
62,100 Aluminum Co. of America................. 4,094,718
60,000 *USX United States Steel Group.......... 1,980,000
------------
7,486,466
------------
OIL/ENERGY - 11.9%
56,000 Atlantic Richfield Co. ................. 4,375,000
125,500 Cabot Corp. ............................ 4,055,219
95,000 Mobil Corp. ............................ 7,279,375
55,000 Texaco, Inc. ........................... 3,282,812
170,000 Tosco Corp. ............................ 4,993,750
96,000 Ultramar Diamond Shamrock Corp. ........ 3,030,000
220,000 Williams Companies, Inc. ............... 7,425,000
------------
34,441,156
------------
OIL FIELD SERVICES - 2.5%
65,600 Diamond Offshore Drilling, Inc. ........ 2,624,000
200,000 *R & B Falcon Corp. .................... 4,525,000
------------
7,149,000
------------
PUBLISHING, BROADCASTING &
ENTERTAINMENT - 2.4%
240,000 *News Corp. Ltd......................... 6,780,000
------------
REAL ESTATE - 1.0%
90,000 FelCor Suite Hotels, Inc. REIT.......... 2,823,750
------------
RETAILING & WHOLESALE - 1.9%
90,000 Sears, Roebuck & Co. ................... 5,495,625
------------
TELECOMMUNICATION SERVICES & EQUIPMENT -
2.4%
94,500 *Nokia Corp. ADR........................ 6,857,156
------------
TEXTILE & APPAREL - 1.8%
100,000 V. F. Corp. ............................ 5,150,000
------------
TRANSPORTATION - 1.7%
51,000 Burlington Northern Santa Fe............ 5,007,563
------------
UTILITIES - ELECTRIC - 5.0%
138,000 Houston Industries, Inc. ............... 4,260,750
216,000 PacifiCorp.............................. 4,887,000
60,000 Pinnacle West Capital Corp. ............ 2,700,000
70,000 UtiliCorp United, Inc. ................. 2,638,125
------------
14,485,875
------------
UTILITIES - GAS - 1.4%
104,000 NICOR Inc. ............................. 4,173,000
------------
UTILITIES - TELEPHONE - 2.5%
158,250 Century Telephone Enterprises, Inc. .... 7,259,719
------------
Total Common Stocks
(cost $205,372,775).................... 266,138,648
------------
</TABLE>

64
<PAGE>

[LOGO OF EVERGREEN SELECT STRATEGIC VALUE FUND APPEARS HERE]

SCHEDULE OF INVESTMENTS(continued)
June 30, 1998

<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C>
SHORT-TERM INVESTMENTS - 6.7%
REPURCHASE AGREEMENT - 5.5%
$15,745,810 Dresdner Bank AG 5.70%,
purchased 6/30/98, maturing 7/1/98, maturity value
$15,748,303
(cost $15,745,810) (a)............................ $ 15,745,810
------------
</TABLE>

* Non-income producing securities.
(a) At June 30, 1998, the repurchase agreement was collateralized by:
$1,585,000 U.S. Treasury Notes, 4.75%, 8/31/98; value including ac-
crued interest -$1.508,469 and $12,746,000 U.S. Treasury Notes,
7.50%, 2/15/05; value including accrued interest - $14,456,764.

SUMMARY OF ABBREVIATIONS:
ADR American Depository Receipt
REIT Real Estate Investment Trust

<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C>
SHORT-TERM INVESTMENTS - CONTINUED
MONEY MARKET SHARES - 1.2%
3,448,384 Valiant General Fund
5.44%, 7/1/98
(cost $3,448,384) .................................. $ 3,448,384
------------
Total Short-Term Investments
(cost $19,194,194).................................. $ 19,194,194
------------
TOTAL INVESTMENTS -
(COST $224,566,969)............................ 98.9% 285,332,842
OTHER ASSETS AND
LIABILITIES - NET.............................. 1.1 3,187,551
----- ------------
NET ASSETS...................................... 100.0% $288,520,393
===== ============
</TABLE>

See Combined Notes to Financial Statements.

65
<PAGE>

[LOGO OF EVERGREEN SELECT EQUITY FUNDS APPEARS HERE]

STATEMENTS OF ASSETS AND LIABILITIES
June 30, 1998

<TABLE>
<CAPTION>
COMMON DIVERSIFIED EQUITY LARGE CAP
BALANCED STOCK VALUE INCOME BLEND
FUND FUND FUND FUND FUND
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments at value
(identified cost,
$682,184,094,
$1,359,984,791,
$747,569,777,
$173,415,809 and
$390,525,400,
respectively)......... $722,648,192 $1,971,072,909 $811,055,400 $205,780,408 $511,067,050
Cash................... 4,968 740 0 49 52
Receivable for
investments sold...... 577,692 0 938,391 0 536,152
Receivable for Fund
shares sold........... 50,034 1,021,781 82,349 4,199 392,719
Dividends and interest
receivable............ 5,305,995 2,461,068 902,254 562,665 485,646
Prepaid expenses and
other assets.......... 50,296 50,608 49,831 40,946 59,434
- --------------------------------------------------------------------------------------------
Total assets........... 728,637,177 1,974,607,106 813,028,225 206,388,267 512,541,053
- --------------------------------------------------------------------------------------------
LIABILITIES
Payable for investments
purchased............. 0 0 9,262,180 0 0
Payable for Fund shares
redeemed.............. 3,239,849 1,193,328 5,349,622 178,433 23,583
Distributions payable.. 734,539 1,070,163 107,785 259,692 238,113
Advisory fee payable... 296,196 920,719 323,933 105,757 236,566
Distribution Plan
expenses payable...... 41 2,833 106 585 28
Due to related
parties............... 16,454 45,413 15,380 4,593 11,254
Accrued expenses and
other liabilities..... 285,010 714,713 407,123 94,006 164,932
- --------------------------------------------------------------------------------------------
Total liabilities...... 4,572,089 3,947,169 15,466,129 643,066 674,476
- --------------------------------------------------------------------------------------------
NET ASSETS.............. $724,065,088 $1,970,659,937 $797,562,096 $205,745,201 $511,866,577
- --------------------------------------------------------------------------------------------
NET ASSETS REPRESENTED
BY
Paid-in capital........ $676,887,742 $1,198,233,538 $716,619,504 $159,813,673 $339,345,988
Undistributed net
investment income..... 76,045 15,911 84,835 46,652 48,469
Accumulated net
realized gain on
investments and
written options....... 6,637,203 161,322,370 17,372,134 13,520,277 51,930,470
Net unrealized
appreciation of
investments........... 40,464,098 611,088,118 63,485,623 32,364,599 120,541,650
- --------------------------------------------------------------------------------------------
TOTAL NET ASSETS....... $724,065,088 $1,970,659,937 $797,562,096 $205,745,201 $511,866,577
- --------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF
Class I................ $723,849,913 $1,952,435,832 $797,352,128 $204,247,804 $ 14,031,957
Class IS............... 215,175 18,224,105 209,968 1,497,397 300,748
Class IC............... -- -- -- -- 497,533,872
- --------------------------------------------------------------------------------------------
TOTAL NET ASSETS....... $724,065,088 $1,970,659,937 $797,562,096 $205,745,201 $511,866,577
- --------------------------------------------------------------------------------------------
SHARES OUTSTANDING
Class I................ 54,054,313 21,087,281 30,406,454 2,294,102 276,555
Class IS............... 16,038 208,674 8,099 16,815 5,927
Class IC............... -- -- -- -- 9,805,599
- --------------------------------------------------------------------------------------------
NET ASSET VALUE PER
SHARE
Class I................ $ 13.39 $ 92.59 $ 26.22 $ 89.03 $ 50.74
Class IS............... $ 13.42 $ 87.33 $ 25.93 $ 89.05 $ 50.74
Class IC............... -- -- -- -- $ 50.74
- --------------------------------------------------------------------------------------------
</TABLE>

See Combined Notes to Financial Statements.

66
<PAGE>

[LOGO OF EVERGREEN SELECT EQUITY FUNDS APPEARS HERE]

STATEMENTS OF ASSETS AND LIABILITIES
June 30, 1998

<TABLE>
<CAPTION>
SMALL CAP SMALL SOCIAL STRATEGIC STRATEGIC
GROWTH COMPANY VALUE PRINCIPLES GROWTH VALUE
FUND FUND FUND FUND FUND
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments at value
(identified cost,
$66,841,097,
$69,966,153,
$118,269,394,
$268,783,529, and
$224,566,969,
respectively).......... $70,250,068 $67,351,940 $171,923,062 $339,168,104 $285,332,842
Cash................... 807 1,871 709 1,832 138
Receivable for
investments sold...... 568,417 0 0 0 0
Receivable for Fund
shares sold........... 139,000 10,331,666 9,440,000 10,003,014 11,402,108
Dividends and interest
receivable............ 3,391 42,655 46,782 193,998 334,274
Prepaid expenses and
other assets.......... 12,890 43,330 58,379 144,969 54,819
- --------------------------------------------------------------------------------------------
Total assets........... 70,974,573 77,771,462 181,468,932 349,511,917 297,124,181
- --------------------------------------------------------------------------------------------
LIABILITIES
Payable for investments
purchased............. 1,651,726 75,625 1,507,448 22,457,652 5,821,932
Payable for Fund shares
redeemed.............. 0 200 0 2,864,459 2,372,729
Distributions payable.. 0 472 0 50,207 206,136
Advisory fee payable... 37,388 24,681 92,232 141,078 131,023
Distribution Plan
expenses payable...... 0 0 19 502 231
Due to related
parties............... 850 1,284 2,992 6,519 12,104
Accrued expenses and
other liabilities..... 1,121 22,399 68,501 86,168 59,633
- --------------------------------------------------------------------------------------------
Total liabilities...... 1,691,085 124,661 1,671,192 25,606,585 8,603,788
- --------------------------------------------------------------------------------------------
NET ASSETS.............. $69,283,488 $77,646,801 $179,797,740 $323,905,332 $288,520,393
- --------------------------------------------------------------------------------------------
NET ASSETS REPRESENTED
BY
Paid-in capital........ $67,292,547 $79,879,678 $119,998,383 $220,817,878 $219,916,585
Undistributed net
investment income..... (334) 69,313 60,566 85,171 75,764
Accumulated net
realized gain (loss)
on investments and
written options....... (1,417,696) 312,023 6,085,130 32,617,708 7,762,171
Net unrealized
appreciation
(depreciation) of
investments........... 3,408,971 (2,614,213) 53,653,661 70,384,575 60,765,873
- --------------------------------------------------------------------------------------------
TOTAL NET ASSETS....... $69,283,488 $77,646,801 $179,797,740 $323,905,332 $288,520,393
- --------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF
Class I................ $69,283,488 $77,646,801 $ 2,405,115 $321,531,944 $287,193,535
Class IS............... -- -- 205,357 2,373,388 1,326,858
Class IC............... -- -- 177,187,268 -- --
- --------------------------------------------------------------------------------------------
TOTAL NET ASSETS....... $69,283,488 $77,646,801 $179,797,740 $323,905,332 $288,520,393
- --------------------------------------------------------------------------------------------
SHARES OUTSTANDING
Class I................ 5,279,958 7,697,902 61,734 8,371,272 1,270,663
Class IS............... -- -- 5,274 61,872 5,870
Class IC............... -- -- 4,548,815 -- --
- --------------------------------------------------------------------------------------------
NET ASSET VALUE PER
SHARE
Class I................ $ 13.12 $ 10.09 $ 38.96 $ 38.41 $ 226.02
Class IS............... -- -- $ 38.94 $ 38.36 $ 226.04
Class IC............... -- -- $ 38.95 -- --
- --------------------------------------------------------------------------------------------
</TABLE>

See Combined Notes to Financial Statements.

67
<PAGE>

[LOGO OF EVERGREEN SELECT EQUITY FUNDS APPEARS HERE]

STATEMENTS OF OPERATIONS
Period Ended June 30, 1998

<TABLE>
<CAPTION>
COMMON DIVERSIFIED EQUITY LARGE CAP
BALANCED STOCK VALUE INCOME BLEND
FUND** FUND* FUND** FUND* FUND*
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends (net of
foreign withholding
taxes of $9,552,
$121,941, $29,018, $0
and $8,863,
respectively).......... $ 2,692,823 $ 17,408,809 $ 6,339,698 $ 3,492,953 $ 3,931,410
Interest................ 8,687,526 1,987,284 666,341 911,449 458,775
- ---------------------------------------------------------------------------------------------
Total income........... 11,380,349 19,396,093 7,006,039 4,404,402 4,390,185
- ---------------------------------------------------------------------------------------------
EXPENSES
Advisory fee............ 1,954,563 8,171,550 2,181,562 862,925 2,031,616
Administrative service
fees................... 91,334 340,218 99,311 35,771 84,104
Distribution Plan
expenses............... 114 8,623 435 815 186
Transfer agent fees..... 195,483 2,405 93,370 171 184
Trustees fees........... 7,837 35,403 6,185 2,956 6,873
Registration fees....... 238,593 560,215 244,460 105,173 167,766
Custodian fees.......... 82,011 311,190 156,469 33,350 75,457
Professional fees....... 20,417 33,356 20,747 17,349 20,122
Printing................ 5,753 26,591 43,582 11,257 11,797
Organization expense.... 0 0 0 0 0
Other................... 4,229 45,240 5,318 10,707 13,698
- ---------------------------------------------------------------------------------------------
Total expenses......... 2,600,334 9,534,791 2,851,439 1,080,474 2,411,803
Less:Indirectly paid
expenses............... (571) (4,059) (439) (5,833) (4,131)
Fee waivers and/or
reimbursement from
investment adviser... (325,761) (1,350,561) (363,594) (124,620) (346,847)
- ---------------------------------------------------------------------------------------------
Net expenses........... 2,274,002 8,180,171 2,487,406 950,021 2,060,825
- ---------------------------------------------------------------------------------------------
NET INVESTMENT INCOME... 9,106,347 11,215,922 4,518,633 3,454,381 2,329,360
- ---------------------------------------------------------------------------------------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain on:
Investments............ 6,632,946 161,218,815 17,369,461 13,274,016 51,925,395
Written options........ 0 0 0 233,192 0
- ---------------------------------------------------------------------------------------------
Net realized gain on
investments and written
options................ 6,632,946 161,218,815 17,369,461 13,507,208 51,925,395
- ---------------------------------------------------------------------------------------------
Net change in unrealized
appreciation
(depreciation) of
investments............ 40,464,098 53,230,680 63,485,623 (9,422,160) 5,211,744
- ---------------------------------------------------------------------------------------------
Net realized and
unrealized gain on
investments and written
options................ 47,097,044 214,449,495 80,855,084 4,085,048 57,137,139
- ---------------------------------------------------------------------------------------------
NET INCREASE IN NET
ASSETS RESULTING FROM
OPERATIONS............. $56,203,391 $225,665,417 $85,373,717 $ 7,539,429 $59,466,499
- ---------------------------------------------------------------------------------------------
</TABLE>

* For the period from November 24, 1997 (commencement of operations) to June
30, 1998.
** For the period from January 22, 1998 (commencement of operations) to June
30, 1998.

See Combined Notes to Financial Statements.

68
<PAGE>

[LOGO OF EVERGREEN SELECT EQUITY FUNDS APPEARS HERE]

STATEMENTS OF OPERATIONS
Period Ended June 30, 1998

<TABLE>
<CAPTION>
SMALL CAP SMALL SOCIAL STRATEGIC STRATEGIC
GROWTH COMPANY VALUE PRINCIPLES GROWTH VALUE
FUND*** FUND** FUND* FUND* FUND*
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends (net of
foreign withholding
taxes of $0, $0,
$7,987, $0 and $21,024,
respectively).......... $ 34,625 $ 259,140 $ 823,054 $ 1,165,952 $ 2,293,823
Interest................ 46,145 130,522 137,705 443,574 375,250
- ---------------------------------------------------------------------------------------------
Total income........... 80,770 389,662 960,759 1,609,526 2,669,073
- ---------------------------------------------------------------------------------------------
EXPENSES
Advisory fee............ 166,954 208,402 782,703 1,235,649 930,128
Administrative service
fees................... 2,997 6,312 28,339 51,570 38,249
Distribution Plan
expenses............... 0 0 102 4,792 334
Transfer agent fees..... 283 62 120 8,516 312
Trustees fees........... 124 233 1,926 4,117 2,999
Registration fees....... 7,850 44,538 98,598 96,431 85,102
Custodian fees.......... 1,836 2,776 25,537 49,947 35,049
Professional fees....... 15,959 15,306 16,708 18,186 14,946
Printing................ 8,297 11,599 11,451 11,184 9,240
Organization expense.... 1,333 0 0 0 0
Other................... 5,696 2,210 6,978 6,185 8,590
- ---------------------------------------------------------------------------------------------
Total expenses......... 211,329 291,438 972,462 1,486,577 1,124,949
Less: Indirectly paid
expenses............... (410) (1,719) (984) (300) (1,953)
Fee waivers and/or
reimbursement from
investment adviser... 0 (58,160) (129,970) (210,851) (132,876)
- ---------------------------------------------------------------------------------------------
Net expenses............ 210,919 231,559 841,508 1,275,426 990,120
- ---------------------------------------------------------------------------------------------
NET INVESTMENT INCOME
(LOSS)................. (130,149) 158,103 119,251 334,100 1,678,953
- ---------------------------------------------------------------------------------------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain on:
Investments............ 407,197 302,967 6,082,094 32,617,708 7,762,171
Written options........ 0 0 0 0 0
- ---------------------------------------------------------------------------------------------
Net realized gain on
investments and written
options................ 407,197 302,967 6,082,094 32,617,708 7,762,171
- ---------------------------------------------------------------------------------------------
Net change in unrealized
appreciation
(depreciation) of
investments............ (1,425,687) (2,614,213) 4,046,653 17,033,702 12,371,066
- ---------------------------------------------------------------------------------------------
Net realized and
unrealized gain (loss)
on investments and
written options........ (1,018,490) (2,311,246) 10,128,747 49,651,410 20,133,237
- ---------------------------------------------------------------------------------------------
NET INCREASE (DECREASE)
IN NET ASSETS RESULTING
FROM OPERATIONS........ $(1,148,639) $(2,153,143) $10,247,998 $49,985,510 $21,812,190
- ---------------------------------------------------------------------------------------------
</TABLE>
* For the period from November 24, 1997 (commencement of operations) to June
30, 1998.
** For the period from December 23, 1997 (commencement of operations) to June
30, 1998.
*** For the period from March 1, 1998 to June 30, 1998. The Fund changed its
fiscal year end from February 28 to June 30, effective June 30, 1998.

See Combined Notes to Financial Statements.

69
<PAGE>

[LOGO OF EVERGREEN SELECT EQUITY FUNDS APPEARS HERE]

STATEMENT OF OPERATIONS
Year Ended February 28, 1998

<TABLE>
<CAPTION>
SMALL CAP
GROWTH
FUND
- ---------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME
Dividends.......................................................... $ 64,120
Interest........................................................... 60,628
- ---------------------------------------------------------------------------------
Total income...................................................... 124,748
- ---------------------------------------------------------------------------------
EXPENSES
Advisory fee....................................................... 223,252
Administrative service fees........................................ 4,949
Organization expenses.............................................. 3,990
Trustees fees...................................................... 1,407
Transfer agent fees................................................ 130
Other.............................................................. 32,975
- ---------------------------------------------------------------------------------
Total expenses.................................................... 266,703
- ---------------------------------------------------------------------------------
Less: Indirectly paid expenses..................................... (856)
Fee waiver and/or reimbursement from Investment Advisor.......... (6,907)
- ---------------------------------------------------------------------------------
Net expenses...................................................... 258,940
- ---------------------------------------------------------------------------------
NET INVESTMENT LOSS................................................ (134,192)
- ---------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Realized loss on investments ...................................... (415,947)
Net change in unrealized appreciation of investments............... 4,981,029
- ---------------------------------------------------------------------------------
Net realized and unrealized gain on investments.................... 4,565,082
- ---------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............... $4,430,890
- ---------------------------------------------------------------------------------
</TABLE>

See Combined Notes to Financial Statements.

70
<PAGE>

[LOGO OF EVERGREEN SELECT EQUITY FUNDS APPEARS HERE]

STATEMENTS OF CHANGES IN NET ASSETS
Period Ended June 30, 1998

<TABLE>
<CAPTION>
COMMON DIVERSIFIED EQUITY LARGE CAP
BALANCED STOCK VALUE INCOME BLEND
FUND** FUND* FUND** FUND* FUND*
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATIONS
Net investment income... $ 9,106,347 $ 11,215,922 $ 4,518,633 $ 3,454,381 $ 2,329,360
Net realized gain on
investments and
written options........ 6,632,946 161,218,815 17,369,461 13,507,208 51,925,395
Net change in
unrealized
appreciation
(depreciation) of
investments............ 40,464,098 53,230,680 63,485,623 (9,422,160) 5,211,744
- ----------------------------------------------------------------------------------------------------
Net increase in net
assets resulting from
operations............ 56,203,391 225,665,417 85,373,717 7,539,429 59,466,499
- ----------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO
SHAREHOLDERS
From net investment
income
Class I................. (9,096,812) (11,166,520) (4,502,185) (3,446,367) (22,658)
Class IS................ (1,320) (29,555) (1,220) (8,014) (399)
Class IC................ 0 0 0 0 (2,306,303)
In excess of net
investment income
Class I................. 0 0 0 (20,379) (7,310)
Class IS................ 0 0 0 (1,453) (76)
Class IC................ 0 0 0 0 (50,974)
- ----------------------------------------------------------------------------------------------------
Total distributions to
shareholders........... (9,098,132) (11,196,075) (4,503,405) (3,476,213) (2,387,720)
- ----------------------------------------------------------------------------------------------------
CAPITAL SHARE
TRANSACTIONS
Proceeds from shares
sold................... 794,145,003 1,978,861,338 844,178,135 224,077,449 502,787,135
Payment of shares
redeemed............... (121,943,214) (222,735,836) (130,961,973) (22,411,624) (48,017,312)
Proceeds from
reinvestment of
distributions.......... 4,758,040 65,093 3,475,622 16,160 17,975
- ----------------------------------------------------------------------------------------------------
Net increase in net
assets resulting from
capital share
transactions.......... 676,959,829 1,756,190,595 716,691,784 201,681,985 454,787,798
- ----------------------------------------------------------------------------------------------------
Total increase in net
assets............... 724,065,088 1,970,659,937 797,562,096 205,745,201 511,866,577
NET ASSETS
Beginning of period..... 0 0 0 0 0
- ----------------------------------------------------------------------------------------------------
End of period........... $ 724,065,088 $1,970,659,937 $ 797,562,096 $205,745,201 $511,866,577
- ----------------------------------------------------------------------------------------------------
Undistributed net
investment income...... $ 76,045 $ 15,911 $ 84,835 $ 46,652 $ 48,469
- ----------------------------------------------------------------------------------------------------
</TABLE>
* For the period from November 24, 1997 (commencement of operations) to June
30, 1998.
** For the period from January 22, 1998 (commencement of operations) to June
30, 1998.

See Combined Notes to Financial Statements.

71
<PAGE>

[LOGO OF EVERGREEN SELECT EQUITY FUNDS APPEARS HERE]

STATEMENTS OF CHANGES IN NET ASSETS
Period Ended June 30, 1998

<TABLE>
<CAPTION>
SMALL CAP SMALL SOCIAL STRATEGIC STRATEGIC
GROWTH COMPANY VALUE PRINCIPLES GROWTH VALUE
FUND*** FUND** FUND* FUND* FUND*
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATIONS
Net investment income
(loss)................. $ (130,149) $ 158,103 $ 119,251 $ 334,100 $ 1,678,953
Net realized gain on
investments and
written options........ 407,197 302,967 6,082,094 32,617,708 7,762,171
Net change in
unrealized
appreciation
(depreciation) of
investments............ (1,425,687) (2,614,213) 4,046,653 17,033,702 12,371,066
- -----------------------------------------------------------------------------------------------
Net increase
(decrease) in net
assets resulting from
operations............ (1,148,639) (2,153,143) 10,247,998 49,985,510 21,812,190
- -----------------------------------------------------------------------------------------------
DISTRIBUTIONS TO
SHAREHOLDERS
From net investment
income
Class I................. 0 (152,163) (1,626) (325,046) (1,676,451)
Class IS................ 0 0 0 0 (2,273)
Class IC................ 0 0 (117,625) 0 0
In excess of net
investment income
Class I................. 0 0 0 0 0
Class IS................ 0 0 (42) 0 0
Class IC................ 0 0 (43,272) 0 0
- -----------------------------------------------------------------------------------------------
Total distributions to
shareholders........... 0 (152,163) (162,565) (325,046) (1,678,724)
- -----------------------------------------------------------------------------------------------
CAPITAL SHARE
TRANSACTIONS
Proceeds from shares
sold................... 24,034,367 86,504,946 181,779,780 341,558,248 284,680,865
Payment of shares
redeemed............... (1,126,600) (6,702,683) (12,070,972) (67,348,327) (16,580,621)
Proceeds from
reinvestment of
distributions.......... 0 149,844 3,499 34,947 286,683
- -----------------------------------------------------------------------------------------------
Net increase in net
assets resulting from
capital share
transactions.......... 22,907,767 79,952,107 169,712,307 274,244,868 268,386,927
- -----------------------------------------------------------------------------------------------
Total increase in net
assets............... 21,759,128 77,646,801 179,797,740 323,905,332 288,520,393
NET ASSETS
Beginning of period..... 47,524,360 0 0 0 0
- -----------------------------------------------------------------------------------------------
End of period........... $69,283,488 $77,646,801 $179,797,740 $323,905,332 $288,520,393
- -----------------------------------------------------------------------------------------------
Undistributed net
investment income...... $ (334) $ 69,313 $ 60,566 $ 85,171 $ 75,764
- -----------------------------------------------------------------------------------------------
</TABLE>

* For the period from November 24, 1997 (commencement of operations) to June
30, 1998.
** For the period from December 23, 1997 (commencement of operations) to June
30, 1998.
*** For the period from March 1, 1998 to June 30, 1998. The Fund changed its
fiscal year end from February 28 to June 30, effective June 30, 1998.

See Combined Notes to Financial Statements.

72
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[LOGO OF EVERGREEN SELECT EQUITY FUNDS APPEARS HERE]

STATEMENTS OF CHANGES IN NET ASSETS
Periods Ended February 28, 1998 and 1997

<TABLE>
<CAPTION>
SMALL CAP
GROWTH FUND
-----------------------
1998 1997*
- -------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS
Net investment loss.................................. $ (134,192) $ (9,482)
Net realized loss on investments..................... (415,947) 398,376
Net change in unrealized appreciation on
investments......................................... 4,981,029 (462,663)
- -------------------------------------------------------------------------------
Net increase in net assets resulting from
operations......................................... 4,430,890 (73,769)
- -------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
From net realized gain on investments................ (1,657,057) (35,700)
- -------------------------------------------------------------------------------
Total distributions to shareholders.................. (1,657,057) (35,700)
- -------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold............................ 42,857,020 517,700
Proceeds from reinvestment of distributions.......... (2,634,970) 0
Payment for shares redeemed.......................... 1,640,345 34,000
- -------------------------------------------------------------------------------
Net increase in net assets resulting from capital
share transactions................................. 41,862,395 551,700
- -------------------------------------------------------------------------------
Total increase in net assets....................... 44,636,228 442,231
NET ASSETS
Beginning of year.................................... 2,888,132 2,445,901
- -------------------------------------------------------------------------------
End of year, including accumulated net investment
loss of $320 and $0, respectively................... $47,524,360 $2,888,132
- -------------------------------------------------------------------------------
</TABLE>

* For the eight-month period ended February 28, 1997. The Fund changed its
fiscal year end from June 30 to the last day of February effective February
28, 1997.

See Combined Notes to Financial Statements.

73
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[LOGO OF EVERGREEN APPEARS HERE]

COMBINED NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION

The Evergreen Select Equity Funds (the "Funds") consist of Evergreen Select
Balanced Fund ("Balanced"), Evergreen Select Common Stock Fund ("Common
Stock"), Evergreen Select Diversified Value Fund ("Diversified Value"), Ever-
green Select Equity Income Fund ("Equity Income"), Evergreen Select Large Cap
Blend Fund ("Large Cap"), Evergreen Select Small Cap Growth Fund ("Small Cap"),
Evergreen Select Small Company Value Fund ("Small Company"), Evergreen Select
Social Principles Fund ("Social Principles"), Evergreen Select Strategic Growth
Fund ("Strategic Growth") and Evergreen Select Strategic Value Fund ("Strategic
Value"), each of which is registered under the Investment Company Act of 1940,
as amended (the "1940 Act"), as diversified, open-end management investment
companies. Each of the Funds is a separate series of Evergreen Select Equity
Trust (the "Trust"), a Delaware business trust organized on September 17, 1997.

The Funds offer an Institutional Class of shares ("Class I") and an Institu-
tional Service Class of shares ("Class IS"). Additionally, Large Cap and Social
Principles offer an Institutional Charitable Class of shares ("Class IC"). Each
Class of shares is sold without a front-end sales charge or contingent deferred
sales charge. Class IS shares pay an ongoing service fee. Class I and Class IS
shares are available to institutional investors through broker dealers, banks
and other financial intermediaries. Class IC shares are available only to those
investors that qualify as a non-profit organization under the Internal Revenue
Code. Such organizations would include charitable trusts, non-profit hospitals,
private foundations, private schools and colleges, public charities, religious
entities and charitable remainder trusts.

The investment adviser to all the Funds, except Small Cap and Small Company, is
First Union National Bank ("FUNB"), a subsidiary of First Union Corporation
("First Union"). Keystone Investment Management Company ("Keystone"), a wholly-
owned subsidiary of First Union Corporation ("First Union"), is the investment
adviser to Small Cap. The investment adviser to Small Company is Evergreen As-
set Management Corp. ("Evergreen Asset"), a wholly-owned subsidiary of First
Union. Lieber & Company, a wholly-owned subsidiary of First Union, provides
certain sub-advisory services to Evergreen Asset in connection with its duties
as investment advisor to Small Cap.

2. CONVERSION INFORMATION

On November 24, 1997, the Common Stock, Equity Income, Strategic Growth and
Strategic Value Funds commenced operations of their respective Class I shares
as a result of a conversion of common trust funds managed by FUNB. Also, on
that date, the Large Cap and Social Principles Funds commenced operations of
their respective Class IC shares as a result of similar common trust fund con-
versions. The following chart summarizes pertinent data related to each Fund on
the date of conversion:

<TABLE>
<CAPTION>
Common Equity Large
Stock Income Cap
---------------------------------------
<S> <C> <C> <C>
Shares issued................. 22,828,425 2,271,990 10,264,770
Net assets.................... $1,894,078,143 $198,356,197 $462,393,873
Net asset value per share..... $ 82.97 $ 87.31 $ 45.05
Unrealized appreciation of
Investments.................. $ 557,857,438 $ 41,786,759 $115,329,906
<CAPTION>
Social Strategic Strategic
Principles Growth Value
---------------------------------------
<S> <C> <C> <C>
Shares issued................. 4,293,581 5,750,026 831,617
Net assets.................... $ 157,379,236 $186,600,811 $169,109,520
Net asset value per share..... $ 36.65 $ 32.45 $ 203.35
Unrealized appreciation of
Investments.................. $ 49,607,008 $ 53,350,873 $ 48,394,807
</TABLE>

The forgoing amounts are reflected in proceeds from shares sold in the state-
ments of changes in net assets.

3. ACQUISITION INFORMATION

Immediately following the common trust fund conversion, on November 24, 1997,
Strategic Growth acquired substantially all of the net assets of Equity Growth
Fund, a common trust fund managed by FUNB. The net assets were acquired through
a taxable exchange for 2,517,542 Class I shares of Strategic Growth, valued at
$32.45 per share. The acquired net assets consisted primarily of portfolio se-
curities with unrealized apprecia-

74
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COMBINED NOTES TO FINANCIAL STATEMENTS(continued)

tion of $25,897,713. The aggregate net assets of Equity Growth and Strategic
Growth immediately prior to the acquisition were $81,699,736 and $186,600,811,
respectively. The aggregate net assets and shares outstanding of Strategic
Growth immediately after the acquisition were $268,300,547 and 8,267,568, re-
spectively.

4. IN-KIND PURCHASE TRANSACTIONS

On January 21, 1998, the Evergreen Balanced Fund, Class Y, and Evergreen Value
Fund, Class Y, executed redemption in-kind transactions of $737,248,788 and
$793,367,277, respectively. These transactions resulted in the liquidation of
substantially all of the net assets of each Fund's Class Y shares. In turn, the
assets were transferred to Evergreen Select Balanced Fund Class I shares and
Evergreen Select Diversified Value Fund Class I shares.

On January 22, 1998, Balanced and Diversified Value commenced operations of
their respective Class I shares through in-kind purchases of shares in the fol-
lowing amounts:

<TABLE>
<CAPTION>
Diversified
Balanced Value
---------------------------
<S> <C> <C>
In-kind purchase amount....................... $737,248,788 $798,367,277
Shares issued................................. 58,643,231 33,532,392
</TABLE>

These amounts are reflected in proceeds from shares sold in the statements of
changes in net assets. In exchange for these shares, investment securities, ex-
cluding cash and cash equivalents, with a cost and market value of $708,705,595
and $774,879,156 were contributed to Balanced and Diversified Value, respec-
tively. Additionally, Balanced and Diversified Value received cash and cash
equivalents of $28,543,193 and $23,488,121, respectively, to complete the
transactions.

5. SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies followed by the
Funds in the preparation of their financial statements. The policies are in
conformity with generally accepted accounting principles, which require manage-
ment to make estimates and assumptions that affect amounts reported herein. Ac-
tual results could differ from these estimates.

A. VALUATION OF SECURITIES
Securities traded on a national securities exchange or included on the NASDAQ
National Market System ("NMS") are valued at the last reported sales price on
the exchange where primarily traded. Securities traded on an exchange or NMS
for which there has been no sale and other securities traded in the over-the-
counter market are valued at the mean between the last reported bid and asked
price. U.S. government obligations held by the Funds are valued at the mean be-
tween the over-the-counter bid and asked prices. Corporate bonds, other fixed-
income securities, and mortgage and other asset-backed securities are valued at
prices provided by an independent pricing service. In determining value for
normal institutional-size transactions, the pricing service uses methods based
on market transactions for comparable securities and analysis of various rela-
tionships between similar securities which are generally recognized by institu-
tional traders. Securities for which market quotations are not readily avail-
able, including restricted securities, are valued at fair value as determined
in good faith according to procedures approved by the Board of Trustees.

Short-term investments with remaining maturities of 60 days or less are carried
at amortized cost, which approximates market value.

B. REPURCHASE AGREEMENTS
Each Fund may invest in repurchase agreements. Securities pledged as collateral
for repurchase agreements are held by the custodian on the Fund's behalf. Each
Fund monitors the adequacy of the collateral daily and will require the seller
to provide additional collateral in the event the market value of the securi-
ties pledged falls below the carrying value of the repurchase agreement, in-
cluding accrued interest. Each Fund will only enter into repurchase agreements
with banks and other financial institutions which are deemed by the investment
adviser to be creditworthy pursuant to guidelines established by the Board of
Trustees.

75
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COMBINED NOTES TO FINANCIAL STATEMENTS(continued)

Pursuant to an exemptive order issued by the Securities and Exchange Commis-
sion, Small Cap, along with certain other funds managed by Keystone, may trans-
fer uninvested cash balances into a joint trading account. These balances are
invested in one or more repurchase agreements that are fully collateralized by
U.S. Treasury and/or federal agency obligations.

C. SECURITY TRANSACTIONS AND INVESTMENT INCOME
Securities transactions are accounted for no later than one business day after
the trade date. Realized gains and losses are computed on the identified cost
basis. Interest income is recorded on the accrual basis and includes accretion
of discounts and amortization of premiums. Dividend income is recorded on the
ex-dividend date.

D. OPTIONS WRITTEN
Equity Income is authorized to write covered call options. When the Fund writes
an option, an amount equal to the premium received is recorded as a liability
and is subsequently adjusted to the current market value of the written option.
Premiums received from writing options, which expire unexercised, are treated
by the Fund on the expiration date as realized gains from investments. The dif-
ference between the premium and the amount paid on effecting a closing purchase
transaction, including brokerage commissions, is treated as a realized gain or
loss. If a call option is exercised, the premium is added to the proceeds from
the sale of the underlying security in calculating the realized gain or loss on
the sale. The Fund as writer of an option bears the market risk of an unfavor-
able change in the price of the security underlying the written option.

E. FOREIGN CURRENCY
The books and records of the Funds are maintained in United States (U.S.) dol-
lars. Foreign currency amounts are translated into U.S. dollars as follows:
market value of investments, assets and liabilities at the daily rate of ex-
change; purchases and sales of investments, income and expenses at the rate of
exchange prevailing on the respective dates of such transactions. Net
unrealized foreign exchange gain (loss) resulting from changes in foreign cur-
rency exchange rates is a component of net unrealized appreciation (deprecia-
tion) on investments. Net realized foreign currency gains and losses resulting
from changes in exchange rates include: foreign currency gains and losses be-
tween trade date and settlement date on investment securities transactions,
foreign currency related transactions and the difference between the amounts of
interest and dividends recorded on the books of the Fund and the amount actu-
ally received. Such gains and losses are included in realized gain (loss) on
foreign currency related transactions. The portion of foreign currency gains
and losses related to fluctuations in exchange rates between the initial pur-
chase trade date and subsequent sale trade date is included in realized gain
(loss) on investments.

F. FEDERAL TAXES
The Funds intend to continue to qualify as regulated investment companies under
the Internal Revenue Code of 1986, as amended (the "Code"). Thus, the Funds
will not incur any federal income tax liability since they are expected to dis-
tribute all of their net investment company taxable income, net tax-exempt in-
come and net capital gains, if any, to their shareholders. The Funds also in-
tend to avoid any excise tax liability by making the required distributions un-
der the Code. Accordingly, no provision for federal taxes is required. To the
extent that realized capital gains can be offset by capital loss carryforwards,
it is each Fund's policy not to distribute such gains.

G. DISTRIBUTIONS
Distributions from net investment income for the Funds are declared and paid
monthly. Distributions from net realized capital gains, if any, are paid at
least annually. Distributions to shareholders are recorded at the close of
business on the ex-dividend date.

Income and capital gains distributions to shareholders are determined in accor-
dance with income tax regulations, which may differ from generally accepted ac-
counting principles. The significant differences between financial statement
amounts available for distribution and distributions made in accordance with
income tax

76
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COMBINED NOTES TO FINANCIAL STATEMENTS(continued)

regulations are primarily due to differing treatment for certain distributions
received from real estate investment trusts and certain operating expenses.

H. CLASS ALLOCATIONS
Income, expenses (other than class specific expenses) and realized and
unrealized gains and losses are prorated among the classes based on the rela-
tive net assets of each class. Currently, class specific expenses are limited
to expenses incurred under the Distribution Plans for Class IS.

77
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COMBINED NOTES TO FINANCIAL STATEMENTS(continued)

6. CAPITAL SHARE TRANSACTIONS

The Funds have an unlimited number of shares of beneficial interest with no par
value authorized. Shares of beneficial interest of the Funds are currently di-
vided into Class I, Class IS and Class IC. Transactions in shares of the Funds
were as follows:

Balanced

<TABLE>
<CAPTION>
Period Ended
June 30, 1998
------------------------
Shares Amount
- --------------------------------------------------------------------------------
<S> <C> <C>
CLASS I*
Shares sold........................................... 62,963,666 $793,932,091
Shares redeemed....................................... (9,271,066) (121,943,214)
Shares issued in reinvestment of distributions........ 361,713 4,756,721
- --------------------------------------------------------------------------------
Class I--net increase................................. 54,054,313 $676,745,598
- --------------------------------------------------------------------------------
CLASS IS**
Shares sold........................................... 15,938 212,912
Shares issued in reinvestment of distributions........ 100 1,319
- --------------------------------------------------------------------------------
Class IS--net increase................................ 16,038 214,231
- --------------------------------------------------------------------------------
Balanced--net increase................................ $676,959,829
- --------------------------------------------------------------------------------
</TABLE>

* For the period from January 22, 1998 (commencement of class operations) to
June 30,1998.
** For the period from April 9, 1998 (commencement of class operations) to June
30, 1998

Common Stock

<TABLE>
<CAPTION>
Period Ended
June 30, 1998
--------------------------
Shares Amount
- -------------------------------------------------------------------------------
<S> <C> <C>
CLASS I*
Shares sold........................................ 23,538,750 $1,957,108,914
Shares redeemed.................................... (2,451,922) (219,096,830)
Shares issued in reinvestment of distributions..... 453 40,719
- -------------------------------------------------------------------------------
Class I--net increase.............................. 21,087,281 1,738,052,803
- -------------------------------------------------------------------------------
CLASS IS**
Shares sold........................................ 250,305 21,752,424
Shares redeemed.................................... (41,914) (3,639,006)
Shares issued in reinvestment of distributions..... 283 24,374
- -------------------------------------------------------------------------------
Class IS--net increase............................. 208,674 18,137,792
- -------------------------------------------------------------------------------
Common Stock--net increase......................... $1,756,190,595
- -------------------------------------------------------------------------------
</TABLE>

* For the period from November 24, 1997 (commencement of class operations) to
June 30, 1998.
** For the period from February 4, 1998 (commencement of class operations) to
June 30, 1998.

Diversified Value

<TABLE>
<CAPTION>
Period Ended
June 30, 1998
-------------------------
Shares Amount
- --------------------------------------------------------------------------------
<S> <C> <C>
CLASS I*
Shares sold.......................................... 35,285,849 $ 843,364,554
Shares redeemed...................................... (5,013,312) (130,385,842)
Shares issued in reinvestment of distributions....... 133,917 3,474,402
- --------------------------------------------------------------------------------
Class I--net increase................................ 30,406,454 716,453,114
- --------------------------------------------------------------------------------
CLASS IS**
Shares sold.......................................... 30,796 $ 813,581
Shares redeemed...................................... (22,745) (576,131)
Shares issued in reinvestment of distributions....... 48 1,220
- --------------------------------------------------------------------------------
Class IS--net increase............................... 8,099 238,670
- --------------------------------------------------------------------------------
Diversified Value--net increase...................... $ 716,691,784
- --------------------------------------------------------------------------------
</TABLE>

* For the period from March 31, 1998 (commencement of class operations) to
June 30, 1998.
** For the period from April 1, 1998 (commencement of class operations) to June
30, 1998.

78
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COMBINED NOTES TO FINANCIAL STATEMENTS(continued)

Equity Income

<TABLE>
<CAPTION>
Period Ended
June 30, 1998
-----------------------
Shares Amount
- --------------------------------------------------------------------------------
<S> <C> <C>
CLASS I*
Shares sold............................................ 2,538,811 $222,155,844
Shares redeemed........................................ (244,829) (22,042,302)
Shares issued in reinvestment of distributions......... 120 10,787
- --------------------------------------------------------------------------------
Class I--net increase.................................. 2,294,102 200,124,329
- --------------------------------------------------------------------------------
CLASS IS**
Shares sold............................................ 20,878 1,921,605
Shares redeemed........................................ (4,122) (369,322)
Shares issued in reinvestment of distributions......... 59 5,373
- --------------------------------------------------------------------------------
Class IS--net increase................................. 16,815 1,557,656
- --------------------------------------------------------------------------------
Equity Income--net increase............................ $201,681,985
- --------------------------------------------------------------------------------
</TABLE>

* For the period from November 24, 1997 (commencement of class operations) to
June 30, 1998.
** For the period from March 11, 1998 (commencement of class operations) to
June 30, 1998.

Large Cap

<TABLE>
<CAPTION>
Period Ended
June 30, 1998
------------------------
Shares Amount
- --------------------------------------------------------------------------------
<S> <C> <C>
CLASS I*
Shares sold........................................... 281,458 $ 13,881,808
Shares redeemed....................................... (5,242) (257,909)
Shares issued in reinvestment of distributions........ 339 16,702
- --------------------------------------------------------------------------------
Class I--net increase................................. 276,555 13,640,601
- --------------------------------------------------------------------------------
CLASS IS**
Shares sold........................................... 5,917 297,598
Shares issued in reinvestment of distributions........ 10 475
- --------------------------------------------------------------------------------
Class IS--net increase................................ 5,927 298,073
- --------------------------------------------------------------------------------
CLASS IC***
Shares sold........................................... 10,802,599 488,607,729
Shares redeemed....................................... (997,016) (47,759,403)
Shares issued in reinvestment of distributions........ 16 798
- --------------------------------------------------------------------------------
Class IC--net increase................................ 9,805,599 440,849,124
- --------------------------------------------------------------------------------
Large Cap--net increase............................... $454,787,798
- --------------------------------------------------------------------------------
</TABLE>

* For the period from December 19, 1997 (commencement of class operations) to
June 30, 1998.
** For the period from March 12, 1998 (commencement of class operations) to
June 30, 1998.
*** For the period from November 24, 1997 (commencement of class operations) to
June 30, 1998.

Small Cap

<TABLE>
<CAPTION>
Period Ended Year Ended
June 30, 1998* February 28,
---------------------- ---------------------------------------
1998 1997**
---------------------- ---------------
Shares Amount Shares Amount Shares Amount
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CLASS I
Shares sold............. 1,770,376 $22,034,367 3,414,877 $42,857,020 43,108 $517,700
Shares redeemed......... (82,127) (1,126,600) (209,509) (2,634,970) 0 0
Shares issued in
reinvestment of
distributions.......... 0 0 130,289 1,640,345 2,944 34,000
- ----------------------------------------------------------------------------------------
Small Cap--net
increase............... 1,688,249 $20,907,767 3,335,657 $41,862,395 46,052 $551,700
- ----------------------------------------------------------------------------------------
</TABLE>

* For the period from March 1, 1998 to June 30, 1998 the fund changed its fis-
cal year end from February 28 to June 30, effective June 30, 1998.
** For the eight-month period ended February 28, 1997. The Fund changed its
fiscal year end from June 30 to the last day of February, effective February
28, 1997.

Small Company

<TABLE>
<CAPTION>
Period Ended
June 30, 1998
----------------------
Shares Amount
- --------------------------------------------------------------------------------
<S> <C> <C>
CLASS I*
Shares sold............................................. 8,353,679 $86,504,946
Shares redeemed......................................... (669,991) (6,702,683)
Shares issued in reinvestment of distributions.......... 14,214 149,844
- --------------------------------------------------------------------------------
Small Company--net increase............................. 7,697,902 $79,952,107
- --------------------------------------------------------------------------------
</TABLE>

* For the period from December 23, 1997 (commencement of class operations) to
June 30, 1998.

79
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COMBINED NOTES TO FINANCIAL STATEMENTS(continued)

Social Principles

<TABLE>
<CAPTION>
Period Ended
June 30, 1998
-----------------------
Shares Amount
- --------------------------------------------------------------------------------
<S> <C> <C>
CLASS I*
Shares sold............................................ 61,760 $ 2,208,624
Shares redeemed........................................ (59) (2,272)
Shares issued in reinvestment of distributions......... 33 1,243
- --------------------------------------------------------------------------------
Class I--net increase.................................. 61,734 2,207,595
- --------------------------------------------------------------------------------
CLASS IS**
Shares sold............................................ 5,274 207,409
- --------------------------------------------------------------------------------
Class IS---net increase................................ 5,274 207,409
- --------------------------------------------------------------------------------
CLASS IC*
Shares sold............................................ 4,876,095 179,363,747
Shares redeemed........................................ (327,340) (12,068,700)
Shares issued in reinvestment of distributions......... 60 2,256
- --------------------------------------------------------------------------------
Class IC--net increase................................. 4,548,815 167,297,303
- --------------------------------------------------------------------------------
Social Principles--net increase........................ $169,712,307
- --------------------------------------------------------------------------------
</TABLE>

* For the period from November 24, 1997 (commencement of class operations) to
June 30, 1998.
** For the period from March 12, 1998 (commencement of class operations) to
June 30, 1998.

Strategic Growth

<TABLE>
<CAPTION>
Period Ended
June 30, 1998
------------------------
Shares Amount
- --------------------------------------------------------------------------------
<S> <C> <C>
CLASS I*
Shares sold........................................... 9,834,675 $324,746,855
Shares redeemed....................................... (1,464,385) (53,203,209)
Shares issued in reinvestment of distributions........ 982 34,947
- --------------------------------------------------------------------------------
Class I--net increase................................. 8,371,272 271,578,593
- --------------------------------------------------------------------------------
CLASS IS**
Shares sold........................................... 447,254 16,811,393
Shares redeemed....................................... (385,382) (14,145,118)
- --------------------------------------------------------------------------------
Class IS--net increase................................ 61,872 2,666,275
- --------------------------------------------------------------------------------
Strategic Growth--net increase........................ $274,244,868
- --------------------------------------------------------------------------------
</TABLE>

* For the period from November 24, 1997 (commencement of class operations) to
June 30, 1998.
** For the period from February 27, 1998 (commencement of class operations) to
June 30, 1998.

Strategic Value

<TABLE>
<CAPTION>
Period Ended
June 30, 1998
-----------------------
Shares Amount
- --------------------------------------------------------------------------------
<S> <C> <C>
CLASS I*
Shares sold............................................ 1,344,196 $283,217,426
Shares redeemed........................................ (74,798) (16,435,232)
Shares issued in reinvestment of distributions......... 1,265 284,542
- --------------------------------------------------------------------------------
Class I--net increase.................................. 1,270,663 267,066,736
- --------------------------------------------------------------------------------
CLASS IS**
Shares sold............................................ 6,502 1,463,439
Shares redeemed........................................ (641) (145,389)
Shares issued in reinvestment of distributions......... 9 2,141
- --------------------------------------------------------------------------------
Class IS--net increase................................. 5,870 1,320,191
- --------------------------------------------------------------------------------
Strategic Value--net increase.......................... $268,386,927
- --------------------------------------------------------------------------------
</TABLE>

* For the period from November 24, 1997 (commencement of class operations) to
June 30, 1998.
** For the period from March 11, 1998 (commencement of class operations) to
June 30, 1998.

80
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COMBINED NOTES TO FINANCIAL STATEMENTS(continued)

7. SECURITIES TRANSACTIONS

Cost of purchases and proceeds from sales of investment securities (excluding
short-term investments) were as follows for the period ended June 30, 1998:

<TABLE>
<CAPTION>
Cost of Proceeds
Purchases from Sales
-----------------------------
<S> <C> <C>
Balanced***
U.S. Government..................... $141,630,295 $142,509,357
Non-U.S. Government................. 125,697,639 156,253,885
Common Stock*........................ 416,524,098 545,518,319
Diversified Value***................. 458,312,202 514,946,171
Equity Income*
U.S. Government..................... 5,175,570 7,128,125
Non-U.S. Government................. 99,299,866 94,509,704
Large Cap*........................... 200,633,227 210,148,512
Small Cap****........................ 55,479,697 32,347,519
Small Company**...................... 76,824,803 9,905,317
Social Principles*................... 46,254,245 38,293,955
Strategic Growth*.................... 239,655,519 228,692,749
Strategic Value *.................... 104,259,737 24,885,431
</TABLE>
* For the period from November 24, 1997 (com-
mencement of operations) to June 30, 1998.
** For the period from December 23, 1997 (com-
mencement of operations) to June 30, 1998.
*** For the period from January 22, 1998 (com-
mencement of operations) to June 30, 1998.
**** For the period from March 1, 1998 to June
30, 1998.

On June 30, 1998, the composition of unrealized appreciation and depreciation
of investment securities based on the aggregate cost of investments for federal
income tax purposes was as follows:

<TABLE>
<CAPTION>
Net
Gross Gross Unrealized
Unrealized Unrealized Appreciation /
Tax Cost Appreciation Depreciation (Depreciation)
-----------------------------------------------------
<S> <C> <C> <C> <C>
Balanced....... $ 684,681,999 $ 49,865,941 $11,899,748 $ 37,966,193
Common Stock... 1,361,779,517 663,870,247 54,576,855 609,293,392
Diversified
Value......... 747,567,104 77,580,983 14,092,687 63,488,296
Equity Income.. 173,380,815 38,524,420 6,124,827 32,399,593
Large Cap...... 390,520,325 127,746,380 7,199,655 120,546,725
Small Cap...... 66,973,201 6,981,282 3,704,415 3,276,867
Small Company.. 70,009,852 3,244,591 5,902,503 (2,657,912)
Social
Principles.... 118,266,424 56,039,436 2,382,798 53,656,638
Strategic
Growth........ 269,000,342 78,210,137 8,042,375 70,167,762
Strategic
Value......... 224,566,969 64,994,248 4,228,375 60,765,873
</TABLE>

As of June 30, 1998, Small Cap had a capital loss carryover for federal income
tax purposes of $1,349,000, expiring in 2006.

During the period ended June 30, 1998, the Equity Income Fund had the following
written call option activity:

<TABLE>
<CAPTION>
Number of
Contracts Premium
---------------------
<S> <C> <C>
Open written call options, beginning of
period...................................... 600 $233,192
Options written.............................. -- --
Options exercised............................ -- --
Options expired.............................. 600 233,192
---- --------
Open written call options, end of period..... 0 0
==== ========
</TABLE>

8. DISTRIBUTION PLANS

Evergreen Distributor, Inc. ("EDI"), a wholly owned subsidiary of The BISYS
Group Inc. ("BISYS") serves as principal underwriter to the Funds. Each Fund
has adopted a Distribution Plan for Class IS shares, as allowed by Rule 12b-1
of the 1940 Act. Distribution plans permit a fund to reimburse its principal
underwriter for costs related to selling shares of the fund and for various
other services. These costs, which consist primarily of commissions and service
fees to broker-dealers who sell shares of the fund, are paid by the fund
through expenses called "Distribution Plan expenses". Class IS, currently pays
a service fee equal to 0.25% of the average daily net asset of the class. Dis-
tribution Plan expenses are calculated daily and paid monthly.

81
<PAGE>

[LOGO OF EVERGREEN APPEARS HERE]

COMBINED NOTES TO FINANCIAL STATEMENTS(continued)

Each of the Distribution Plans may be terminated at any time by vote of the In-
dependent Trustees or by vote of a majority of the outstanding voting shares of
the respective class.

9. INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT AND OTHER AFFILIATED
TRANSACTIONS

The investment adviser to each Fund, other than Small Cap and Small Company, is
FUNB. Each Fund, other than Small Cap and Small Company, pays FUNB a fee for
its services as set forth below. The annual advisory fees are calculated daily
and paid monthly and are based on a percentage of average daily net assets.

<TABLE>
<CAPTION>
Annual
Advisory fee
------------
<S> <C>
Balanced............................................ 0.60%
Common Stock........................................ 0.70%
Diversified Value................................... 0.60%
Equity Income....................................... 0.70%
Large Cap........................................... 0.70%
Social Principles................................... 0.80%
Strategic Growth.................................... 0.70%
Strategic Value..................................... 0.70%
</TABLE>

Keystone is the investment adviser to Small Cap. In return for its Services,
Keystone is paid an annual advisory fee equal to 0.80% of the Funds first $100
million of average daily net assets and at reduced rates thereafter.

Evergreen Asset is the investment adviser to Small Company. Small Company pays
Evergreen Asset an annual fee of 0.90% of average daily net assets.

Leiber & Company is the investment sub-adviser to Small Company and also pro-
vides brokerage services with respect to substantially all security transac-
tions effected on either the New York or American Stock Exchanges. For the pe-
riod ended June 30, 1998, Small Company incurred $96,640, in brokerage commis-
sions with Leiber & Company. Leiber & Company is reimbursed by Evergreen Asset,
at no additional cost to the Fund, for its cost of providing investment advi-
sory services.

Each investment adviser, except Keystone, has voluntarily agreed to reduce the
investment advisory fee on each Fund by 0.10% and to reimburse a portion of
each Fund's annual operating expenses (excluding interest, taxes, brokerage
commissions and extraordinary expenses). For the period ended June 30, 1998,
the investment advisers voluntarily reduced their fees by the following
amounts:

<TABLE>
<CAPTION>
Fee
Reduction
----------
<S> <C>
Balanced.............................................. $ 325,761
Common Stock.......................................... 1,350,561
Diversified Value..................................... 363,594
Equity Income......................................... 124,620
Large Cap............................................. 346,847
Small Company......................................... 58,160
Social Principles..................................... 129,970
Strategic Growth...................................... 210,851
Strategic Value....................................... 132,876
</TABLE>

Evergreen Investment Services ("EIS"), a subsidiary of First Union, is the ad-
ministrator and BISYS Fund Services is sub-administrator to the Funds. As ad-
ministrator, EIS provides the Funds with facilities, equipment and personnel.
As sub-administrator to the Funds, BISYS Fund Services provides the officers of
the Funds. The administrator and sub-administrator for each Fund are entitled
to an annual fee based on the average daily net assets of the funds adminis-
tered by EIS for which First Union or its investment advisory subsidiaries are
also the investment advisers. The administration fee is calculated by applying
percentage rates, which start at 0.05% and decline to 0.01% per annum as net
assets increase, to the average daily net asset value of each Fund. The sub-ad-
ministration fee is calculated by applying percentage rates, which start at
0.01% and decline to .004% per annum as net assets increase, to the average
daily net asset value of each Fund.

82
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[LOGO OF EVERGREEN APPEARS HERE]

COMBINED NOTES TO FINANCIAL STATEMENTS(continued)

The following amounts were paid by each Fund to EIS during the period ended
June 30, 1998:

<TABLE>
<S> <C>
Balanced................................................ $ 74,090
Common Stock............................................ 275,702
Diversified Value....................................... 82,685
Equity Income........................................... 29,143
Large Cap............................................... 68,507
Small Cap............................................... 2,069
Small Company........................................... 5,285
Social Principles....................................... 23,040
Strategic Growth........................................ 41,643
Strategic Value......................................... 26,195
</TABLE>

Evergreen Service Company ("ESC"), a subsidiary of First Union, serves as the
transfer and dividend disbursing agent for the Funds.

Officers of the Funds and affiliated Trustees receive no compensation directly
from the Funds.

10. EXPENSE OFFSET ARRANGEMENT

The Funds have entered into an expense offset arrangement with their custodian.
The assets deposited with the custodian under this expense offset arrangement
could have been invested in income-producing assets.

11. DEFERRED TRUSTEES' FEES

Each Independent Trustee of the Funds may defer any or all compensation related
to performance of their duties as Trustees. The Trustees' deferred balances are
allocated to deferral accounts, which are included in the accrued expenses for
the Fund. The investment performance of the deferral accounts are based on the
investment performance of certain Evergreen Funds. Any gains earned or losses
incurred in the deferral accounts are reported in the Fund's Trustees' fees and
expenses. Trustees will be paid either in one lump sum or in quarterly install-
ments 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 December 31, 1997, the value of the Trustees deferral account
for Balanced, Common Stock, Diversified Value, Equity Income, Large Cap, Small
Cap, Small Company, Social Principles, Strategic Growth and Strategic Value was
$2,014, $14,696, $2,244, $975, $2,977, $334, $89, $766, $1,742 and $978, re-
spectively.

12. FINANCING AGREEMENT

Small Cap is currently a party to a financing agreement among certain Evergreen
Funds, State Street Bank and Trust ("State Street") and a group of Banks (the
"Banks"). Under this agreement, the Banks provide an unsecured credit facility
in the aggregate amount of $400 million ($275 million committed and $125 mil-
lion uncommitted). The credit facility is allocated among the Banks, under the
terms of the financing agreement. The credit facility is to be accessed by the
Funds for temporary or emergency purposes only and is subject to each Fund's
borrowing restrictions. Borrowings under this facility bear interest at 0.50%
per annum above the Federal Funds rate. A commitment fee of 0.065% per annum
will be incurred on the unused portion of the committed facility, which will be
allocated to all Funds. State Street serves as administrative agent for the
Banks, and as administrative agent is entitled to a fee of $20,000 per annum
which is allocated to all of the Funds. Small Cap did not borrow under this
agreement during the period ended June 30, 1998.

83
<PAGE>

[LOGO OF EVERGREEN APPEARS HERE]

INDEPENDENT AUDITORS' REPORT

The Trustees and Shareholders
Evergreen Select Equity Trust

We have audited the accompanying statements of assets and liabilities, includ-
ing the portfolios of investments, of the Evergreen Select Balanced Fund, Ever-
green Select Common Stock Fund, Evergreen Select Diversified Value Fund, Ever-
green Select Equity Income Fund, Evergreen Select Large Cap Blend Fund, Ever-
green Select Small Cap Growth Fund, Evergreen Select Small Company Value Fund,
Evergreen Select Social Principles Fund, Evergreen Select Strategic Growth Fund
and Evergreen Select Strategic Value Fund of Evergreen Select Equity Trust (the
Trust) as of June 30, 1998, and the related statements of operations, state-
ments of changes in net assets and financial highlights for each of the years
or periods presented below:

Evergreen Select Balanced Fund -- statements of operations and changes in
net assets for the period from January 22, 1998 (commencement of opera-
tions) to June 30, 1998 and financial highlights for the periods presented
on page 36.

Evergreen Select Common Stock Fund -- statements of operations and changes
in net assets for the period from November 24, 1997 (commencement of opera-
tions) to June 30, 1998 and financial highlights for the periods presented
on page 37.

Evergreen Select Diversified Value Fund -- statements of operations and
changes in net assets for the period from January 22, 1998 (commencement of
operations) to June 30, 1998 and financial highlights for the periods pre-
sented on page 38.

Evergreen Select Equity Income Fund -- statements of operations and changes
in net assets for the period from November 24, 1997 (commencement of opera-
tions) to June 30, 1998 and financial highlights for the periods presented
on page 39.

Evergreen Select Large Cap Blend Fund -- statements of operations and
changes in net assets for the period from November 24, 1997 (commencement
of operations) to June 30, 1998 and financial highlights for the periods
presented on page 40.

Evergreen Select Small Cap Growth Fund -- statements of operations for the
period from March 1, 1998 to June 30, 1998 and for the year ended February
28, 1998, statements of changes in net assets for the period from March 1,
1998 to June 30, 1998, the year ended February 28, 1998 and the eight
months ended February 28, 1997 and financial highlights for the periods
presented on page 41.

Evergreen Select Small Company Value Fund -- statements of operations and
changes in net assets for the period from December 23, 1997 (commencement
of operations) to June 30, 1998 and financial highlights for the periods
presented on page 42.

Evergreen Select Social Principles Fund -- statements of operations and
changes in net assets for the period from November 24, 1997 (commencement
of operations) to June 30, 1998 and financial highlights for the periods
presented on page 43.

Evergreen Select Strategic Growth Fund -- statements of operations and
changes in net assets for the period from November 24, 1997 (commencement
of operations) to June 30, 1998 and financial highlights for the periods
presented on page 44.

Evergreen Select Strategic Value Fund -- statements of operations and
changes in net assets for the period from November 24, 1997 (commencement
of operations) to June 30, 1998 and financial highlights for the periods
presented on page 45.

These financial statements and financial highlights are the responsibility of
the Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.

We conducted our audits in accordance with generally accepted auditing stan-
dards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial high-
lights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of June 30, 1998 by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall fi-
nancial statement presentation. We believe that our audits provide a reasonable
basis for our opinion.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Evergreen Select Balanced Fund, Evergreen Select Common Stock Fund, Evergreen
Select Diversified Value Fund, Evergreen Select Equity Income Fund, Evergreen
Select Large Cap Blend Fund, Evergreen Select Small Cap Growth Fund, Evergreen
Select Small Company Value Fund, Evergreen Select Social Principles Fund, Ever-
green Select Strategic Growth Fund and Evergreen Select Strategic Value Fund,
as of June 30, 1998 and the results of their operations, changes in their net
assets and financial highlights for the periods specified in the first para-
graph above in conformity with generally accepted accounting principles.

KPMG Peat Marwick LLP

Boston, Massachusetts
July 31, 1998

84
<PAGE>

[LOGO OF EVERGREEN APPEARS HERE]

ADDITIONAL INFORMATION (UNAUDITED)

DIVIDENDS RECEIVED DEDUCTION (UNAUDITED)

For corporate shareholders, the following percentages of the dividends paid
during the fiscal year ended June 30, 1998 qualified for the dividends received
deduction.

<TABLE>
<S> <C>
Balanced.................................................. 11.26%
Common Stock.............................................. 100.00
Diversified Value......................................... 23.30
Equity Income............................................. 50.12
Large Cap................................................. 32.19
Small Cap................................................. 0.00
Small Company............................................. 25.86
Social Principles......................................... 100.00
Strategic Growth.......................................... 12.20
Strategic Value........................................... 57.40
</TABLE>

85
<PAGE>

EVERGREEN SELECT FUNDS

MONEY MARKET
Money Market Fund
Treasury Money Market Fund
100% Treasury Money Market Fund
Municipal Money Market Fund

MUNICIPAL FIXED
INCOME
Intermediate Tax Exempt Bond Fund

TAXABLE FIXED
INCOME
International Bond Fund
Total Return Bond Fund
Income Plus Fund
Core Bond Fund
Fixed Income Fund
Adjustable Rate Fund
Limited Duration Fund

GROWTH AND INCOME/BALANCED
Equity Income Fund
Balanced Fund

GROWTH
Small Company Growth Fund
Small CompanyValue Fund
Strategic Growth Fund
Common Stock Fund
Large Cap Blend Fund
Strategic Value Fund
Diversified Value Fund
Social Principles Fund

-------------------
BULK RATE
U.S. POSTAGE
PAID
PERMIT NO. 19
HUDSON, MA
-------------------

[LOGO OF EVERGREEN FUNDS APPEARS HERE]

200 BERKELEY STREET
BOSTON, MA 02116