Evergreen
Domestic
Growth Funds
March 31, 1998
Semiannual Report
(Evergreen Funds(SM) logo appears here)
<PAGE>
Table of Contents
<TABLE>
<S> <C>
Letter to Shareholders ..................... 1
Evergreen Aggressive Growth Fund
Fund at a Glance ........................ 2
Portfolio Manager Interview ............. 3
Evergreen Fund
Fund at a Glance ........................ 5
Portfolio Manager Interview ............. 6
Evergreen Micro Cap Fund
Fund at a Glance ........................ 9
Portfolio Manager Interview ............. 10
Evergreen Omega Fund
Fund at a Glance ........................ 13
Portfolio Manager Interview ............. 14
Evergreen Small Company Growth Fund
Fund at a Glance ........................ 16
Portfolio Manager Interview ............. 17
Evergreen Strategic Growth Fund
Fund at a Glance ........................ 19
Portfolio Manager Interview ............. 20
</TABLE>
<TABLE>
<S> <C>
Financial Highlights
Evergreen Aggressive Growth Fund ........ 22
Evergreen Fund .......................... 25
Evergreen Micro Cap Fund ................ 28
Evergreen Omega Fund .................... 31
Evergreen Small Company Growth Fund ..... 34
Evergreen Strategic Growth Fund ......... 37
Schedules of Investments
Evergreen Aggressive Growth Fund ........ 40
Evergreen Fund .......................... 41
Evergreen Micro Cap Fund ................ 46
Evergreen Omega Fund .................... 48
Evergreen Small Company Growth Fund ..... 50
Evergreen Strategic Growth Fund ......... 53
Statements of Assets and Liabilities ....... 55
Statements of Operations ................... 56
Statements of Changes in Net Assets ........ 57
Combined Notes to Financial
Statements ................................ 60
Additional Information ..................... 70
</TABLE>
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Evergreen Funds
Evergreen Funds is one of the nation's fastest growing investment companies
with more than $47 billion in assets under management.
With over 80 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 semiannual 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.
<TABLE>
<S> <C>
Mutual Funds: ARE NOT FDIC INSURED May lose value o Are not bank guaranteed
</TABLE>
Evergreen Distributor, Inc.
EvergreenSM is a Service Mark of Evergreen Investment Services, Inc. Copyright
1998.
<PAGE>
Letter to Shareholders
May 1998
Dear Shareholders:
The Evergreen Domestic Growth Funds enjoyed an
exceptional six-month period ending on March
(picture of William M. Ennis) 31, 1998, each delivering healthy returns,
consistent with its specific strategy. Each of
these six funds has been designed for a
William M. Ennis distinct investor need and risk
Managing Director tolerance in pursuing a primary objective of
capital growth.
Strong Markets
Over the six months, the Funds and the financial markets weathered some
significant short-term volatility, including the onset of a currency and
financial crisis in Asia that contributed to a significant stock market
correction in October 1997, near the start of the six-month period. Over the
full six months, however, each of the growth funds overcame short-term worries
to achieve healthy performance.
It is important to keep in mind that not all parts of the domestic stock market
move at a consistent pace with each other. For this six-month period, large
capitalization stocks were the market leaders. For example, the Standard &
Poor's 500 Index, as a measure of large company stocks, had a return of 17.22%,
while the S&P Midcap 400 Index had a return of 11.94% and the Russell 2000
Index, a frequently used measure of small cap stock performance, returned
6.37%. Over the longer term, medium-sized company stocks have tended to
outperform large company stocks, while small company stocks have tended to
outperform mid-sized company stocks. While small company stocks tend to
outperform the mid- and large-company stocks, they do carry additional risk and
price volatility.
Evergreen Funds
Evergreen Domestic Growth Funds offer investors the opportunity to participate
in all parts of the domestic equity markets in a variety of complementary
strategies.
At Evergreen Funds, we are committed to providing a strong array of funds with
complementary objectives and strategies to help investors and their financial
advisors assemble personal portfolios that make sense for their needs and risk
tolerances. We recommend shareholders periodically review their portfolios with
professional investment advisors to make sure their allocations continue to be
in line with their financial plans.
We can assist by providing the information you need about Evergreen Funds. If
you have any questions about the funds in this report or other Evergreen Funds,
we encourage you to consult your financial advisor or call us at 800-343-2898.
Sincerely,
/s/ William M. Ennis
William M. Ennis
Managing Director
Evergreen Funds
1
<PAGE>
EVERGREEN
Aggressive Growth Fund
Fund at a Glance as of March 31, 1998
Having the patience and discipline to stay with the best prospective earnings
growth companies, despite market fashions that have sometimes gone against
them, has been crucial to achieving strong long-term
performance.
Portfolio
Management
--------------
[PHOTO]
Harold J. Ireland, Jr.
Tenure: April 1983
-------------------------
CURRENT INVESTMENT STYLE
[GRAPH]
Morningstar's Style Box is based on a
portfolio date as of 3/31/98.
The Equity Style Box placement is based on a
fund's price-to-earnings and price-to-book
ratio relative to the S&P 500, as well as
the size of the companies in which it
invests, or median market capitalization.
Source: 1998 Morningstar, Inc.
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS*
<TABLE>
<CAPTION>
Class A Class B Class C Class Y
<S> <C> <C> <C> <C>
Inception Date 4/15/83 7/7/95 8/3/95 7/11/95
Average Annual Returns
6 months with sales
charge (2.31%) (2.68%) 1.31% n/a
6 months w/o sales charge 2.56% 2.24% 2.29% 2.68%
One year with sales
charge 24.46% 25.22% 29.31% n/a
One year w/o sales charge 30.66% 30.22% 30.31% 30.96%
3 years 19.73% - - -
5 years 12.92% - - -
10 years 17.42% - - -
Since Inception 13.74% 16.64% 16.34% 18.53%
Maximum Sales Charge 4.75% 5.00% 1.00% n/a
Front End CDSC CDSC
6-month capital gain
distributions per share $ 0.85 $ 0.85 $ 0.85 $ 0.85
</TABLE>
*Adjusted for maximum sales charge.
- ------------------------------------------------------------------------------
LONG TERM GROWTH
3/88 3/90 3/92 3/94 3/96 3/98
Class A Shares 9,525 12,519 21,273 28,511 39,148 49,827
NASDAQ 10,000 11,831 16,899 21,356 32,081 54,069
Russell 2000 10,000 11,923 15,434 19,678 26,791 39,989
CPI 10,000 11,047 11,957 12,635 13,350 13,923
[GRAPH]
Comparison of a $10,000 investment in Evergreen Aggressive Growth Fund, Class A
shares, versus a similar investment in the Russell 2000, the NASDAQ Industrials,
and the Consumer Price Index (CPI).
Past performance is no guarantee of future results. The performance of each
class may vary based on differences in loads and fees paid by the shareholders
investing in each class. 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 and the NASDAQ Industrials
Index are unmanaged indices. These indices do not include transaction costs
associated with buying and selling securities nor any management fees. The
Consumer Price Index, a measure of inflation, is through March 31, 1998.
2
<PAGE>
EVERGREEN
Aggressive Growth Fund
Portfolio Manager Interview
How did the Fund perform during the
past six months and over the past year?
The Fund's Class A shares had a total return of 2.6% and 30.7%, for the
six months and twelve months ended March 31, 1998, respectively. This
compared to the 7.2% and 38.9% total return for the 260-fund Lipper
Capital Appreciation Funds group average. These returns are
unadjusted for any sales charges.
Portfolio Characteristics
Total Net Assets $233,863,734
Number of Holdings 54
Beta 1.14
P/E Ratio 33.8x
Expected 5 yr. Earnings Growth 27%(1)
What was the economic environment like
for the past six months?
The economy was stronger than expected with less-than-expected inflation
during this period. This was generally supportive of a positive stock
market. However, stocks and certain industries in particular, like the
energy industry, were dampened by concerns about deflationary forces from
Asian currency and economic woes. Uncertainty about the degree and timing
of those deflationary forces from Asia hurt stocks and many industries,
including Technology and Energy, from October through January. These same
factors had positive effects on the Retail issues in the Fund, which faced
the prospect of lower costs for imported products.
What helped the portfolio performance during the fiscal period ending
March 31, 1998?
Our heavy weighting of 18.2% in the Retail (Specialty)
sector was very helpful to performance for this period.
(1) Source: BASELINE and First Call.
Office Depot, Central Garden & Pet, Bed, Bath & Beyond, Home Depot, and
Staples showed very strong earnings and price performance for the Fund.
Ethan Allen Interiors and Family Dollar Stores were added to the portfolio
during the past three months and have also contributed positively.
Our over-weighting in the Software and Technology sector at 20.8% was also
very positive for the portfolio. Citrix Systems, Parametric Technology,
Cisco Systems, Microsoft, BMC Software, and Network Associates contributed
strong earnings and price performance to the
portfolio.
Top 5 Industries
Software/Technology 20.8%
Retail (Specialty) 18.2%
Oil/Gas - Drilling 14.0%
Healthcare 12.4%
Oil/Gas - Equipment & Services 11.3%
What hindered portfolio performance
during this period?
Our large positions in the Oil/Gas Drilling and Oil/Gas Equipment &
Services industries had a dramatic negative effect on our six-month
performance. The fifteen stocks held in this energy support sector
declined 17.6% on a dollar-weighted basis for the six months, accounting
for nearly all of the portfolio's under-performance for the period. The
biggest effect on the portfolio to date has been the negative psychology
toward energy stocks. Much warmer weather than normal this winter in both
Europe and North America severely impacted the price of crude oil. Crude
oil dropped from a peak of $23 per barrel to a trough of $13 per barrel
during this period. This affected the psychology, but not the reported
earnings of this group.
3
<PAGE>
EVERGREEN
Aggressive Growth Fund
Portfolio Manager Interview
Why do you continue to hold such a large
position in the energy sector?
Our job is to invest aggressively for the best growth over the long-term.
We have found an extraordinary number of companies in the energy sector
that are selling at a discounted price earnings ratio, and in our opinion
have the potential to provide exceptional earnings growth on a sustainable
basis into the future. The consensus average expected five-year earnings
growth rate for the 15 companies is 29%(2).
How does the valuation of the Fund's portfolio compare to that of the
general market?
The price of growth for the Fund's mainly mid-cap portfolio is approaching
one quarter that of the large company S&P 500 Index(2). Specifically, the
Fund's portfolio on a dollar-weighted basis has a PE on expected earnings
of 25.7 and expected five year future annual earnings growth of 27%. In
comparison, the S&P 500 (large companies) has an expected PE multiple of
23.0 on 1998 earnings and expected five year annual earnings growth of
only 7%. In other words, while the PE's are similar, the Fund's expected
growth rate is almost four times that of the S&P 500's.
Top 10 Holdings
(as a percentage of net assets)
Cisco Systems, Inc. 5.8%
Microsoft Corporation 5.0%
BMC Software, Inc. 3.8%
Home Depot, Inc. 3.3%
Medtronic, Inc. 3.3%
Transocean Offshore, Inc. 3.3%
Petroleum Geo-Services, ADR 3.0%
Office Depot, Inc. 2.9%
Sterling Commerce, Inc. 2.5%
Paychex, Inc. 2.5%
(2) Source: BASELINE and First Call.
What are the most recent additions to
the portfolio?
The mid-cap area is where we are currently finding the most attractive
candidates for the portfolio. Among these recent additions are: SunAmerica
in the Financial Sector; Analysts International, a small-cap, Citrix
Systems and EMC, a large-cap, in Software/Technology; Action Performance,
a small cap, Family Dollar Stores and Ethan Allen Interiors in Retail
(Specialty); and Oakwood Homes in Building.
Why have you not changed your approach with changing fashions in the
market?
In managing this Fund since its inception in 1983, we have found that the
most important thing we have done is stick to our stock selection
disciplines. On a ten-year, cumulative basis, the Fund has outperformed its
Lipper Capital Appreciation Fund Group average (423.12% versus 328.27%).
Having the patience and discipline to stay with the best prospective
earnings growth companies, despite market fashions that have sometimes gone
against them, has been crucial to achieving strong long- term performance.
What is your outlook for the period
ahead?
If inflation and interest rates continue to moderate as has been the
trend, the implications are very positive for the stock market in general
and for aggressive growth stock investing in particular. Higher future
earnings have greater present value in a lower interest rate environment.
Reported and expected earnings for the S&P 500 stocks have been slowing
dramatically during the past six months. In contrast, the earnings growth
expectations for mid-sized companies have been increasing. These are good
reasons to expect future outperformance for small- and mid-sized
companies. We believe that the conditions for investing are the most
favorable we have seen in a long time.
4
<PAGE>
EVERGREEN
Evergreen Fund
Fund at a Glance as of March 31, 1998
We focus on undervalued and underappreciated entrepreneurial situations,
characterized by strong business franchises or leadership products.
Portfolio
Management
----------------------------------------
[PHOTO]
Stephen A. Lieber
Tenure: October 1971
-------------------------------------------------------
CURRENT INVESTMENT STYLE
Morningstar's Style Box is based on a
portfolio date as of 3/31/98.
[GRAPHIC OF STYLE BOX]
The Equity Style Box placement is based on a
fund's price-to-earnings and price-to-book
ratio relative to the S&P 500, as well as
the size of the companies in which it
invests, or median market capitalization.
Source: 1998 Morningstar, Inc.
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS*
Class A Class B Class C Class Y
Inception Date 1/3/95 1/3/95 1/3/95 10/15/71
Average Annual Returns
6 months with sales charge 7.01% 6.98% 10.91% n/a
6 months w/o sales charge 12.35% 11.98% 11.91% 12.54%
One year with sales charge 36.57% 37.34% 41.30% n/a
One year w/o sales charge 43.38% 42.34% 42.30% 43.84%
3 years 25.13% 25.67% 26.27% 27.57%
5 years - - - 19.62%
10 years - - - 14.87%
Since Inception 27.42% 27.94% 28.44% 17.12%
Maximum Sales Charge 4.75% 5.00% 1.00% n/a
Front End CDSC CDSC
6-month income dividends
per share $ 0.10 - - $ 0.14
6-month capital gain
distributions per share $ 0.50 $ 0.50 $ 0.50 $ 0.50
*Adjusted for maximum sales charge.
- --------------------------------------------------------------------------------
LONG TERM GROWTH
[GRAPH]
1/95 3/95 9/95 3/96 9/96 3/97 9/97 3/98
Class A Shares 9,525 9,913 11,128 10,424 10,805 11,572 16,659 21,948
NASDAQ 10,000 10,883 13,932 14,740 16,456 16,456 22,735 24,844
Russell 2000 10,000 10,451 12,571 13,499 14,222 14,222 18,942 20,149
CPI 10,000 10,113 10,234 10,389 10,541 10,541 10,758 10.835
Comparison of a $10,000 investment in Evergreen Fund, Class A shares, versus a
similar investment in the Russell 2000, the NASDAQ Industrials, and the
Consumer Price Index (CPI).
Past performance is no guarantee of future results. The performance of each
class may vary based on differences in loads and fees paid by the shareholders
investing in each class. 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 and the NASDAQ Industrials Index are
unmanaged indices. These indices do not include transaction costs associated
with buying and selling securities nor any management fees. The Consumer Price
Index, a measure of inflation, is through March 31, 1998.
5
<PAGE>
EVERGREEN
Evergreen Fund
Portfolio Manager Interview
How did the Fund perform during the
six months?
The Evergreen Fund had very strong performance. For the six months ended
March 31, 1998, the Fund's original Class Y shares had a total return of
12.54%. During the same six months, the Fund's Class A shares had a total
return of 12.35%, while the Class B and C shares had total returns of
11.98% and 11.91%, respectively. These returns are unadjusted for any
applicable sales charges. For the twelve months ended on March 31, 1998,
the Class Y shares had a return of 43.84%.
These returns were achieved following the consistent long-term strategies
which provided a 6,461.3% return for the Fund's original Class Y shares
since inception on October 15, 1971, equal to 17.1% per annum
compounded.
Portfolio Characteristics
Total Net Assets $2,155,250,723
Number of Holdings 339
Beta 1.12
P/E Ratio 18.8x
How do you describe the Evergreen Fund in relation to performance during
the past year?
One of the highlights of the Evergreen Fund's year has been the extent to
which long-held investments in small companies have grown into sizable
investments in large companies. Evergreen is predominantly, in terms of
number of issues held, a small company fund, with 186 companies with
market capitalizations under $1 billion, and another 50 with market
capitalizations between $1 billion and $2 billion. In contrast, the top
ten companies in the portfolio have market capitalizations in excess of $3
billion. Most of those companies entered the portfolio as small companies
which have either grown, or in several cases, been acquired and (in a few)
have even had the acquiring companies acquired until we now own shares in
very large companies. So long as the initial dynamics and exceptional
opportunities appear present, the Fund has continued to hold such issues
notwithstanding the transition of the companies into large capitalization
issues. Our guiding principal for holding any company is that it must have
evidence of entrepreneurial policies and performance. A review of the 30
new commitments made for the portfolio thus far in this fiscal year will
show that more than 90% of our new holdings are smaller companies intended
to benefit from the entrepreneurial opportunity.
What is the strategic focus of the
Evergreen Fund?
We focus on undervalued and underappreciated entrepreneurial situations,
characterized by strong business franchises or leadership products. Our
goals for capital appreciation are usually long-term, intended to benefit
by the significant achievement of well-conceived and executed long-term
business policies. We look for the inflection points which mark the
prospective acceleration of business growth, as often as possible buying
the acceleration of that growth before it becomes evident and
fully-priced. Such selection is provided by careful research, supported by
detailed industry knowledge, and the macro-perspective of our research
group.
Our search for undervalued growth opportunities is intended to both help
reduce risk and achieve well-above average gains. One example of such
gains is the acquisition of the companies in which we invest by other
companies. Since the Fund's inception in 1971, 351 of its holdings have
been acquired by, or have merged into other companies. The Fund's average
gains on such transactions have been 72.6%.
In fiscal 1998, the trend toward mergers and acquisitions in corporate
America continues at a strong pace, and is benefiting the Fund. Thus far
in the fiscal year, 32 of the
6
<PAGE>
EVERGREEN
Evergreen Fund
Portfolio Manager Interview
Fund's holdings have received offers or have been acquired for an average
gain of 167.3%. In the first three months of calendar 1998 alone, there
were 17 such acquisitions among companies held in the Fund's portfolio,
providing an average gain of 272.8% on the com
pleted acquisitions.
Top 10 Holdings
(as a percentage of net assets)
Clear Channel Communications, Inc. 3.9%
Merck & Co., Inc. 3.0%
First Empire State Corp. 2.9%
BankBoston Corp. 2.7%
Intel Corp. 2.2%
NationsBank Corp. 2.1%
Federal National Mortgage Association 1.8%
MGIC Investment Corp. 1.5%
Cendant Corp. 1.3%
Johnson & Johnson 1.3%
What are some examples of long-term holdings which have performed well in
the current fiscal year, and illustrate the Evergreen Fund's strategy of
investing in entrepreneurial, small companies?
The Fund's largest holding at the end of the six-month period was Clear
Channel Communications, Inc. We first purchased the stock in 1986 at $0.98
per share, when the company was a small capitalization issue. The stock
ended the quarter at $98 per share, with our original $846,833 investment
now worth $84.0 million. Another Evergreen top ten holding is BankBoston
Corp. This commitment was originally made as a purchase of shares in
Baybanks, Inc., a quality suburban bank in the Boston area, at $6 per
share. Baybanks, Inc. prospered, and was acquired by BankBoston Corp. The
original shares in Baybanks are now worth $110.25 per share. HBO & Co. is
a third example. We believed in 1992 and 1993 that the health care
industry structure in this country had to be changed. We found this little
company that was powerful in its technological resources, and its ability
to provide data processing services to the health care industry. We
thought HBO would grow and participate in the growth of managed care in
the United States. It has gone from $1.63 per share to $60.38 per share.
Again, a small cap company became a big cap company.
Where was the investment performance leadership in the Fund during the six
months?
The leadership came from a highly varied group of companies and
industries. The top performing stock was Analytical Surveys, Inc., a
provider of global positioning satellite mapping equipment and services,
with a return of 127.2% in the six months. Its performance was followed by
Delta & Pine Land Co. (+115.4%), a leading producer of agricultural seeds;
by Lennar Corp. (+97.5%), a fast growing residential homebuilder in
southern and western states; by SkyWest, Inc. (+96.3%), a regional airline;
and by Obie Media Corp. (+87.6%), a provider of outdoor advertising
displays and facilities.
Top 5 Industries
Banks 15.8%
Healthcare Products & Services 10.3%
Finance & Insurance 9.7%
Information Services & Technology 7.7%
Publishing, Broadcasting & Entertainment 6.1%
The strongest industry group among the Fund's holdings during the six
months was the financial industry. Banks benefited from strong earnings,
widespread merger and acquisition activity, and an upward revaluation
relative to the general market. With the Fund's holdings of 57 banks and
thrifts, this provided significant strength, as well as the opportunity to
benefit by a number of merger and acquisition transactions, initiated and
consummated. Other financial sectors were also significant, especially the
investment brokerage business where the Fund enjoyed strong performance
from such issues as
7
<PAGE>
EVERGREEN
Evergreen Fund
Portfolio Manager Interview
Edwards (A.G.), Inc. and Legg Mason, Inc. The Fund's significant holdings
in MGIC Investment Corp. was an important contributor, as were several
other housing-related companies, including the title insurer, First
American Financial Corp. Homebuilding companies provided significant
gains, including: D.R. Horton, Inc., Toll Brothers, Inc., and U.S. Home
Corp. While issues of companies in technology businesses were often under
pressure during the second part of the first half year, many made
continuous, significant contributions to the Fund's performance, including
Coherent Communications Systems Corp., Orbital Sciences Corp., and
Analytical Surveys, Inc. These holdings are illustrative of leading edge
technological opportunities which can be selectively held in a large
diversified portfolio.
What is your current strategy?
The remarkable dynamics of the American economy, the variety, brilliance
and diligence of entrepreneurial leadership continues to amaze us with the
number of excellent investment opportunities. However, our policy is
highly selective with regard to valuation, as well as to analysis of
competitive conditions for companies and their chances for long-term
success. Therefore, through this current fiscal year, as in the preceding
fiscal year, we have followed a policy of maintaining a fairly sizable
cash position (14.9% at the end of the fiscal first half) with the goal of
buying at times of undervaluation. The highly volatile markets in this
period have provided several occasions where we were able to aggressively
buy excellent stocks which we had previously selected when there were
general selling waves. Additionally, at times of hesitation about economic
or external conditions, and sometimes internal corporate situations,
buying opportunities have been provided on a very attractive basis, as
compared with the general level of the market. This was particularly
evident in the fall of 1997, and early in 1998, when there were great
apprehensions about the impact of the Asian financial crisis on many
American companies. As investors either hesitated to commit to these
companies, or fearfully disposed of the shares, we were able to make
highly advantageous purchases for the Evergreen Fund. We plan to continue
to maintain a fairly sizable liquidity as long as the market remains
highly volatile, with the goal of committing funds as special
opportunities occur.
What are your expectations for the
balance of fiscal 1998?
We expect that the American economy will continue to show strong growth,
but not so much acceleration as to rekindle inflation. A cautious posture
by the Federal Reserve will serve as a warning to many economic
participants not to provide excessive credit or to engage in overly
optimistic capital spending programs. Continuing competitive pressures
from abroad, especially the Far East, together with some likely reduction
in our exports, may well moderate the economy. All of these factors should
not hinder the development of outstanding entrepreneurial businesses. We
look forward to continuing to reinvigorate the Fund's portfolio and
seeking to achieve significant returns.
8
<PAGE>
EVERGREEN
Micro Cap Fund
Fund at a Glance as of March 31, 1998
The Fund benefited from an emphasis on careful stock selection, which is
paramount to successful small capitalization investing.
Portfolio
Management
----------------------------------------
[PHOTO]
Stephen A. Lieber
Tenure: January 1996
[PHOTO]
Edwin D. Miska
Tenure: January 1996
-------------------------------------------------------
CURRENT INVESTMENT STYLE
Morningstar's Style Box is based on a
portfolio date as of 3/31/98.
[GRAPHIC OF STYLE BOX]
The Equity Style Box placement is based on a
fund's price-to-earnings and price-to-book
ratio relative to the S&P 500, as well as
the size of the companies in which it
invests, or median market capitalization.
Source: 1998 Morningstar, Inc.
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS*
Class A Class B Class C Class Y
Inception Date 1/3/95 1/3/95 1/3/95 6/1/83
Average Annual Returns
6 months with sales charge 3.86% 3.64% 7.63% n/a
6 months w/o sales charge 9.04% 8.64% 8.63% 9.18%
One year with sales charge 49.52% 50.84% 54.86% n/a
One year w/o sales charge 56.97% 55.84% 55.86% 57.38%
3 years 20.41% 20.80% 21.51% 22.66%
5 years - - - 13.00%
10 years - - - 13.87%
Since Inception 20.20% 20.52% 21.15% 15.35%
Maximum Sales Charge 4.75% 5.00% 1.00% n/a
Front End CDSC CDSC
6-month capital gain
distributions per share $ 1.39 $ 1.39 $ 1.39 $ 1.39
*Adjusted for maximum sales charge.
- --------------------------------------------------------------------------------
LONG TERM GROWTH
[GRAPH]
1/95 3/95 9/95 3/96 9/96 3/97 9/97 3/98
Class A Shares 9,525 10,672 12,375 13,484 14,611 15,309 19,537 20,149
NASDAQ 10,000 10,883 13,932 14,740 16,456 16,426 22,735 24,844
Russell 2000 10,000 10,461 12,571 13,499 14,222 14,188 18,942 20,149
CPI 10,000 10,113 10.234 10,389 10,541 10,688 10,768 10,835
Comparison of a $10,000 investment in Evergreen Micro Cap Fund, Class A shares,
versus a similar investment in the Russell 2000 Index, the NASDAQ Industrials
Index, and the Consumer Price Index (CPI).
Past performance is no guarantee of future results. The performance of each
class may vary based on differences in loads and fees paid by the shareholders
investing in each class. 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 and the NASDAQ Industrials
Index are unmanaged indices. These indices do not include transaction costs
associated with buying and selling securities nor any management fees. The
Consumer Price Index, a measure of inflation, is through March 31, 1998.
9
<PAGE>
EVERGREEN
Micro Cap Fund
Portfolio Manager Interview
How did the Fund perform during the
six months?
The Fund had very good performance in pursuit of its goal of capital
growth from investments in small company stocks. The Fund's original Class
Y shares had a total return of 9.18% for the six months ending March 31,
1998. During the same period, Class A shares had a return of 9.04%, and
Class B and C shares had returns of 8.64% and 8.63% for the same period.
These returns are unadjusted for any applicable sales charges.
From the 12-month period ending March 31, the Fund's Class Y shares had a
total return of 57.38%. The Fund clearly outperformed industry benchmarks
for both the six- and 12-month periods. As an example, the Russell 2000
Index, a commonly used benchmark for small company stock performance, had a
return of 6.37% for six months and 42.02% for 12 months.
Portfolio Characteristics
Total Net Assets $69,082,695
Number of Holdings 118
Beta 1.03
P/E Ratio 18.2x
What contributed to this strong
performance?
The Fund benefited from an emphasis on careful stock selection, which is
paramount to successful small capitalization investing. We use a strong
quantitative, fundamental and valuation review, coupled with a discipline
to quickly sell stocks of companies that are beginning to disappoint us.
While a focus on industry and sector weightings remains secondary in
importance, the Fund continued to emphasize select areas that we believe
will benefit from ongoing economic trends, including industry
consolidation. As a result of this emphasis, four of the Fund's holdings
received acquisition proposals during the period.
What was the investment environment
like, and how did this affect strategy?
The Fund's holdings showed strength during a difficult period for small
capitalization stocks. Our emphasis on strong earnings and revenue trends
and the search for undervalued stocks helped in an environment that, in
general, favored a relatively narrow band of highly liquid, larger
capitalization stocks, especially those found in market indexes. Despite
this market bias, 25 of the Fund's holdings appreciated by more than 20%
during the six months.
Top 10 Holdings
(as a percentage of net assets)
Alcide Corp. 3.1%
First Years, Inc. 2.4%
Badger Meter, Inc. 2.3%
Play by Play Toys & Novelties, Inc. 2.2%
Del Laboratories, Inc. 2.1%
SBS Technologies, Inc. 1.7%
General Employment Enterprises, Inc. 1.6%
BT Financial Corp. 1.6%
Washington Trust Bancorp, Inc. 1.6%
West Coast Bancorp, Inc. (Ore.) 1.5%
What characterized the top-performing
stocks in the portfolio for the six months?
Nine portfolio companies had better than 50% performance during the
period. These nine companies were from a diverse group of industries and
sectors, but shared common characteristics: they were highly profitable,
successful enterprises, with leading or niche positions in their
industries, and they were purchased at attractive valuations. They also
each possessed a current operating or demographic catalyst that made
investment both timely and compelling.
10
<PAGE>
EVERGREEN
Micro Cap Fund
Portfolio Manager Interview
The best-performing company was Analytical Surveys, Inc., which gained
129.3% during the six-month period and 393.6% for the 12-month period
ending March 31, 1998. This company's earnings leapt as it won a record
number of new contracts during a period of continued strength in the
digital mapping business. General Magnaplate Corp., a manufacturer of
specialty coatings used in metal preservation and household appliances,
rose by 102.6% in the six months, propelled largely by the company's
winning of a multi-year contract to supply a super glide coating product
for Black & Decker irons. Bowlin Outdoor Advertising & Travel Centers,
Inc., also performed well, returning 82.0% for the six months. This
company has been actively expanding market share in the outdoor
advertising industry in the Southwestern U.S.
Washington Trust Bancorp, a small regional bank holding company in western
Rhode Island, had a 64.6% return for the period, while Northern States
Financial Corp., a small bank holding company in the northern Chicago
suburbs, rose 63.6%. Sterilization specialist Sterigenics Corp., a leading
company providing irradiation services to the medical, packaging and spice
industries, had a return of 57.2%. Chase Corp., a Massachusetts firm
involved in the manufacture of wire coatings and tape products, rose by
56.4% during the period. Other strong performers were Equinox Corp., a
technology company providing input-output devices to the networking
industry, which had a 54.1% return, and CNB Financial Corp., a New York
State bank holding com pany, with a 50.6% performance.
Top 5 Industries
Industrial Specialty Products & Services 15.3%
Banks 11.6%
Information Services & Technology 11.5%
Healthcare Products & Services 10.2%
Consumer Products & Services 7.7%
Did any industries or sectors stand out
in performance?
Banks, as a group, were up 34.6% and thrift institutions rose 14.6% during
the six months. Good earnings for financial institutions and continued
consolidation among banks marked the period. Pinnacle Financial Services,
Inc., a Fund holding, had a 37.0% return as it received a takeover offer
from CNB Bancshares. Retailing and wholesaling companies returned 36.6%
for the Fund, while chemical and agricultural product companies had a
21.9% return and business equipment and service companies had a return of
21.0%.
What other companies were helped by
consolidation?
MTL, Inc., a provider of stainless steel tank trucking services, was up
40.1% during the six months as it received a takeover offer from the
investment group Apollo Management. Laser Industries, Inc., a manufacturer
of laser-based hair removal systems, rose 59.1% on the news of a merger
offer from ECS Medical Systems. The investment in Union Corp., sold
subsequent to a takeover offer from Outsourcing Solutions, Inc., realized
45.8% from our original purchase price in February 1996.
Since the Fund's inception in June 1983, 94 companies in the portfolio
have been either merged or acquired. The average gain to the Fund was
62.5%.
What areas lagged in performance?
The Fund attempts to weed out underperforming companies at the first sign
of a deteriorating trend, so this minimizes disappointments. Electrical
equipment and services companies and industrial specialty products were
the two worst performing industries, with negative returns of 17.1% and
3.3% respectively. Their market performance was largely tied to concerns
about the impact of the Asian crisis on their industries. Oil and energy
stocks also underperformed, with an average loss
11
<PAGE>
EVERGREEN
Micro Cap Fund
Portfolio Manager Interview
of 33.0%, as the price of crude oil fell during the six months. We believe
these short-term disappointments may provide a window for the Fund to
invest in sound companies at undervalued opportunities.
What is your outlook?
The Fund will continue to position itself to outperform in any economic
environment by investing in micro cap companies that have proven their
ability to excel over a period of time. We will pay careful attention to
undervalued opportunities and well-managed companies with attractive
franchises that could be acquisition candidates. We believe as the current
economic cycle slows and internal profit becomes harder to achieve, larger
companies will continue to look for acquisition and takeover candidates as
a way to improve their competitive positions. The micro-cap sector offers
a compelling opportunity for continued strong performance, and we believe
the Fund is well-positioned to take advantage of this opportunity.
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.
12
<PAGE>
EVERGREEN
Omega Fund
Fund at a Glance as of March 31, 1998
Our strategy is to focus on a core group of companies that have consistent
records of earnings growth.
Portfolio
Management
----------------------------------------
[PHOTO]
Maureen Cullinane, CFA
Tenure: April 1989
-------------------------------------------------------
CURRENT INVESTMENT STYLE
Morningstar's Style Box is based on a
portfolio date as of 3/31/98.
[GRAPHIC OF STYLE BOX]
The Equity Style Box placement is based on a
fund's price-to-earnings and price-to-book
ratio relative to the S&P 500, as well as
the size of the companies in which it
invests, or median market capitalization.
Source: 1998 Morningstar, Inc.
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS*
Class A Class B Class C Class Y
Inception Date 4/29/68 8/2/93 8/2/93 1/13/97
Average Annual Returns
6 months with sales charge 10.85% 10.94% 14.96% n/a
6 months w/o sales charge 16.37% 15.94% 15.96% 16.47%
One year with sales charge 42.82% 43.69% 47.64% n/a
One year w/o sales charge 49.94% 48.69% 48.64% 49.76%
3 years 24.69% 24.95% 25.58% -
5 years 17.00% - - -
10 years 17.67% - - -
Since Inception 13.58% 17.38% 17.65% 30.50%
Maximum Sales Charge 4.75% 5.00% 1.00% n/a
Front End CDSC CDSC
6-month capital gain
distributions per share $ 2.13 $ 2.13 $ 2.13 $ 2.13
*Adjusted for maximum sales charge.
- --------------------------------------------------------------------------------
LONG TERM GROWTH
[GRAPH]
3/88 3/90 3/92 3/94 3/96 3/98
Class A Shares 10,710 16,458 22,111 25,007 33,244 50,893
S&P 500 10,000 16,122 20,629 24,192 31,957 56,672
CPI 10,000 11,588 12,325 12,996 13,350 13,923
Comparison of a $10,000 investment in Evergreen Omega Fund, Class A shares,
versus a similar investment in the S & P 500 Index and the Consumer Price Index
(CPI).
Past performance is no guarantee of future results. The performance of each
class may vary based on differences in loads and fees paid by the shareholders
investing in each class. 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 S & P 500 Index is an unmanaged index and does not
include transaction costs associated with buying and selling securities nor any
management fees. The Consumer Price Index, a measure of inflation, is through
March 31, 1998.
13
<PAGE>
EVERGREEN
Omega Fund
Portfolio Manager Interview
How did the fund perform for the six-
month period ended March 31, 1998?
For the six-month period ended March 31, 1998, the Fund's Class A shares
returned 16.37% and the Standard & Poor's 500 Stock Index (S&P 500) rose
17.22%. For the twelve-month period ended March 31, 1998, the total return
on Class A shares was 49.94%, and the return on the S&P 500 was 48.00%.
These returns are unadjusted for any applicable sales charges.
Portfolio Characteristics
Total Net Assets $320,565,064
Number of Holdings 63
Beta 0.95
P/E Ratio 29.2x
What was the investment environment
like during the period?
The investment environment was positive for stocks. Economic growth
continued at a steady pace. Despite full employment and a tight labor
market, wages remained relatively stable and inflation and interest rates
were relatively low. It was a good time to be a stock investor. While
stocks experienced a brief downturn in October in reaction to a financial
crisis in the ASEAN (Association of Southeast Asian Nations) countries,1
stock prices rose significantly during the period.
Did the financial crisis in the ASEAN
countries have an impact on the Fund?
The problems in the ASEAN countries had little impact on the Fund. Our
strategy is to focus on a core group of companies that have consistent
records of earnings growth. Many of these companies are larger-capitalized
multinationals that depend on markets all over the world for their profits.
(1) Includes Brunei, Indonesia, Laos, Malaysia, Philippines, Singapore,
Thailand, Vietnam and Burma.
Top 5 Industries
(as a percentage of net assets)
Information Services & Technology 11.9%
Pharmaceuticals 11.5%
Banks 11.1%
Finance & Insurance 8.9%
Publishing, Broadcasting & Entertainment 7.6%
Pharmaceutical companies have been a theme in the portfolio for more than
a year. Why were these companies attractive?
At 11.5% of assets on March 31, 1998, pharmaceutical companies were the
second largest portion of the portfolio. Pfizer was the top holding in the
Fund, and Warner Lambert was among the top 10 holdings. Both of these
companies are doing well because they have introduced major new drugs in
the past year and more drugs are likely to be approved in the next year.
Over the past few years, Pfizer has made significant investments in
research and development; these investments will contribute to earnings
growth over the next few years. The company recently launched Viagra, the
new male impotence drug, and we expect Pfizer will receive FDA approval in
the near future for other drugs in five therapeutic areas: infectious
diseases, cardiovascular, central nervous system, diabetes, and women's
health. We believe the company will dominate the pharmaceutical industry.
Warner Lambert's cholesterol-lowering drug, Lipitor, has been very
successful. The company has gained share against its competitors and now
controls about 35% of the cholesterol-lowering sector of the market.
Within the drug industry, we believe Warner Lambert should produce one of
the best growth rates in earnings over the next two years.
14
<PAGE>
EVERGREEN
Omega Fund
Portfolio Manager Interview
Top 10 Holdings
(as a percentage of net assets)
Pfizer, Inc. 4.9%
General Electric Co. 3.4%
Warner-Lambert Co. 3.2%
Cendant Corp. 3.0%
EMC Corp. 2.5%
Tyco International Ltd. 2.2%
Furniture Brands International, Inc. 2.2%
Microsoft Corp. 2.2%
CBS Corp. 2.1%
Fleet Financial Group, Inc. 2.0%
Where did you find new opportunities?
We found new opportunities in broadcasting. At CBS, for example, revenues
and profits improved under new management and with a new focus on radio
and television broadcasting operations.
We also invested in Viacom, which dominates the cable television industry
with its MTV, Nickelodeon and Showtime networks. One division, Blockbuster
Video (a video rental company) has been a major earnings disappointment and
held back the stock's gains. Management's efforts are paying off in this
area, however. Sales have rebounded and investors are now focused on the
many positives at Viacom.
Did you eliminate stocks from the
portfolio?
We eliminated oil service stocks from the portfolio. Oil company stocks
made strong gains over the two to three years that we owned them. During
the six-month period, however, oil prices declined triggering concerns
that drilling activity and exploration and production would also decline.
While we haven't seen cutbacks in existing drilling programs, we believe
oil companies will be reluctant to commit to higher levels of drilling
activity in the near future. One of the stocks we sold was ENSCO
International, a company that had been among the Fund's top 10 holdings
for more than a year.
What is your outlook?
We are cautiously optimistic about the next six to twelve months. There
appears to be nothing on the horizon that should derail the market or the
economy. We expect economic growth to continue to be relatively strong and
interest rates and inflation to remain at relatively low levels. The stock
market made strong gains in the first quarter of 1998 and valuations on
stocks are relatively high. While there have been times when stocks have
been highly valued for sustainable periods, they don't remain that way
indefinitely. A market correction usually occurs. We believe the Fund has
invested in good companies with strong franchises, excellent managements
and the ability to sustain or increase earnings growth. We remain positive
on the long-term outlook of the market.
15
<PAGE>
EVERGREEN
Small Company Growth Fund
Fund at a Glance as of March 31, 1998
We maintained the strategy that we've had in place for about two years:
reducing the volatility of the portfolio and emphasizing higher quality
companies.
Portfolio
Management
----------------------------------------
[PHOTO]
J. Gary Craven
Tenure: November 1996
-------------------------------------------------------
CURRENT INVESTMENT STYLE
Morningstar's Style Box is based on a
portfolio date as of 3/31/98.
[GRAPHIC OF STYLE BOX]
The Equity Style Box placement is based on a
fund's price- to-earnings and price-to-book
ratio relative to the S&P 500, as well as
the size of the companies in which it
invests, or median market capitalization.
Source: 1998 Morningstar, Inc.
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS*
Class A Class B Class C Class Y
Inception Date 1/20/98 9/11/35 1/26/98 1/26/98
Average Annual Returns
6 months with sales charge - (3.00%) - -
6 months w/o sales charge - 1.64% - -
One year with sales charge - 34.45% - -
One year w/o sales charge - 39.45% - -
3 years - 16.49% - -
5 years - 16.31% - -
10 years - 17.17% - -
Since Inception 7.66% 10.36% 12.20% 13.45%
Maximum Sales Charge 4.75% 5.00% 1.00% n/a
Front End CDSC CDSC
6-month capital gain
distributions per share - $ 0.78 - -
* Adjusted for maximum sales charge.
- --------------------------------------------------------------------------------
LONG TERM GROWTH
[GRAPH]
3/88 3/90 3/92 3/94 3/96 3/98
Class B Shares 9,525 12,519 21,273 28,511 39,148 48,774
NASDAQ 10,000 11,831 16,899 21,256 32,081 54,069
Russell 2000 10,000 11,923 15,434 19,678 26,791 39,989
CPI 10,000 11,047 11,957 12,635 13,350 13,923
Comparison of a $10,000 investment in Evergreen Small Company Growth Fund,
Class B shares, versus a similar investment in the Russell 2000 Index, the
NASDAQ Industrials Index, and the Consumer Price Index (CPI).
Past performance is no guarantee of future results. The performance of each
class may vary based on differences in loads and fees paid by the shareholders
investing in each class. 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 and the NASDAQ Industrials
Index are unmanaged indices. These indices do not include transaction costs
associated with buying and selling securities nor any management fees. The
Consumer Price Index, a measure of inflation, is through March 31, 1998.
16
<PAGE>
EVERGREEN
Small Company Growth Fund
Portfolio Manager Interview
How did the fund perform in the six-
month period ended March 31, 1998?
For the six-month period ended March 31, 1998, Class B shares produced a
total return of 1.64%. The Russell 2000 Index rose 6.37% for the same
period. For the twelve-month period ended March 31, 1998, the total return
on Class B shares was 39.45% and the return for the Russell 2000 Index was
42.02%. These returns are unadjusted for any sales charges.
Portfolio Characteristics
Total Net Assets $1,448,262,102
Number of Holdings 222
Beta 1.17
P/E Ratio 30.6x
What was the economic environment like
during the period?
The domestic economy was very healthy. Economic growth was strong, and
inflation and interest rates remained relatively low. In addition, there
was good disposable income, consumer confidence was high, and corporate
earnings were strong. Stocks were generally on an upward course. Their
climb was interrupted in October, however, when several Asian economies
collapsed.
How did the U.S. market react to the
Asian crisis?
At first there was massive selling with increased volatility until the end
of 1997. Once investors got a better sense that the Asian markets account
for a relatively small part of U.S. corporate profits, they began focusing
on the more positive characteristics of the U.S. economy and the upward
potential for U.S. stocks. For the first three months of 1998, U.S. stock
prices rose significantly.
Did you make any strategic changes to
the portfolio?
We maintained the strategy that we've had in place for about two years.
During that time, one of our goals has been to reduce the volatility of
the portfolio and to emphasize higher quality companies that we believe
have the potential for more sustainable long-term earnings growth. At the
end of the six-month period, the portfolio had a more domestic bias. It
was composed primarily of companies that rely less on foreign markets for
their profits.
Top 10 Holdings
(as a percentage of net assets)
Roper Industries, Inc. 2.1%
Astoria Financial Corp. 1.8%
Health Management Associates, Inc. 1.7%
Newpark Resources, Inc. 1.6%
Comdisco, Inc. 1.5%
TCF Financial Corp. 1.5%
Safeguard Scientifics, Inc. 1.3%
Parametric Technology Corp. 1.2%
Devry, Inc. 1.2%
Suiza Foods Corp. 1.1%
Where did you find new opportunities?
We found new opportunities in telecommunications companies. This is the
biggest change we made over the period. Telecommunications businesses are
benefiting from deregulation, the advent of increased fiber optics
networks, and accelerating demand for all types of communications - wire,
wireless, voice and data. Two telecommunications companies that we added
to the portfolio are Intermedia and ICG Communications. We also built up
exposure to international long-distance telephone companies such as
Telegroup, Star Communications, and Pacific Gateway Exchange.
Consumer products was another new area of investment. We favored
vitamin-related companies such as
17
<PAGE>
EVERGREEN
Small Company Growth Fund
Portfolio Manager Interview
Nature's Bounty and Weider Nutrition. These companies are benefiting from
a demographic trend. The aging population has increased interest in health
products that are perceived to be natural.
Top 5 Industries
(as a percentage of net assets)
Information Services & Technology 17.8%
Healthcare Products & Services 9.2%
Electrical Equipment & Services 8.1%
Banks 7.8%
Finance & Insurance 4.5%
Technology companies have been an important part of the portfolio. Did you
make changes in this area?
At 25.9% of assets on March 31, 1998, technology stocks continued to be
the largest portion of the portfolio. Technology stocks include a broad
range of businesses - software, hardware, telecommunications, and
electronics companies. The Asian crisis affected the technology companies
in the portfolio that produce in Asia and that have Asia as their end
market, so we reduced the Fund's exposure to technology stocks. In some
cases, however, the prices of the stocks we sold declined so steeply they
became buying opportunities. We bought some of them back at substantially
lower prices and they were solid contributors to performance. Even though
the percentage of assets in the technology portion of the portfolio
remained relatively constant, we changed our emphasis in this sector. We
decreased the Fund's exposure to hardware and semiconductor-related
companies in favor of technology service companies. These are companies
that implement new technologies for other businesses. Two such companies
in this area are FileNet and Documentum.
What changes did you make to the
energy portion of the portfolio?
We substantially reduced the number of energy and oil service stocks in
the portfolio. A decline in worldwide demand and overproduction by some
oil-producing countries triggered a downturn in oil prices and profits to
energy companies. When it appeared that oil stocks were oversold, that is,
that the markets had over-reacted to the decline in energy prices, we
began buying energy stocks. However, we repositioned the energy portion of
the portfolio to a new area of energy service - offshore boat building
companies.
Insurance companies were an area of emphasis. What was attractive about
these companies?
We added insurance companies and insurance-related companies, such as
insurance brokers, to the portfolio. We believe over the next several
years, selected insurance companies have the potential to perform as well
as some of the banks in which we have invested. Insurance companies
continue to benefit from the increased productivity that comes from the
use of technology. By using high technology products, companies run more
efficiently, and this should result in stronger earnings growth. We are
beginning to see mergers of all types of financial companies, and we
believe this may be the beginning of a trend.
What is your outlook?
During the first quarter of 1998, the stock market produced double-digit
returns. We believe it is unlikely, when looking at earnings forecasts,
that these high returns could continue without some pullback. We believe
there could be one or more short-term downturns in the market during the
year. Nevertheless, we think the underlying trends for the Fund and the
stock market are healthy. Earnings projections for the companies we hold
in the portfolio are strong. And the overall environment for the stock
market, which includes relatively strong economic growth, and relatively
low interest rates and inflation, still provides a very positive backdrop
for small-company stocks.
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.
18
<PAGE>
EVERGREEN
Strategic Growth Fund
Fund at a Glance as of March 31, 1998
Our strategy has been to retain a nucleus of stocks that have consistent
earnings growth over the long term.
Portfolio
Management
----------------------------------------
[PHOTO]
Maureen Cullinane, CFA
Tenure: April 1995
-------------------------------------------------------
CURRENT INVESTMENT STYLE
Morningstar's Style Box is based on a
portfolio date as of 3/31/98.
[GRAPHIC OF STYLE BOX]
The Equity Style Box placement is based on a
fund's price-to-earnings and price-to-book
ratio relative to the S&P 500, as well as
the size of the companies in which it
invests, or median market capitalization.
Source: 1998 Morningstar, Inc.
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS*
Class A Class B Class C
Inception Date 1/20/98 9/11/35 1/22/98
Average Annual Returns
6 months with sales charge - 8.51% -
6 months w/o sales charge - 13.46% -
One year with sales charge - 42.94% -
One year w/o sales charge - 47.94% -
3 years - 26.87% -
5 years - 18.59% -
10 years - 16.13% -
Since Inception 9.98% 11.70% 12.73%
Maximum Sales Charge 4.75% 5.00% 1.00%
Front End CDSC CDSC
6-month capital gain
distributions per share - $ 1.33 -
*Adjusted for maximum sales charge.
- --------------------------------------------------------------------------------
LONG TERM GROWTH
[GRAPH]
3/88 3/90 3/92 3/94 3/96 3/98
Class B Shares 10,000 12,748 16,903 20,916 26,928 44,605
S&P 500 10,000 16,091 17,903 20,933 31,957 56,672
CPI 10,000 11,047 11,957 12,635 13,350 13,923
Comparison of a $10,000 investment in Evergreen Strategic Growth Fund, Class B
shares, versus a similar investment in the S & P 500 Index and the Consumer
Price Index (CPI).
Past performance is no guarantee of future results. The performance of each
class may vary based on differences in loads and fees paid by the shareholders
investing in each class. 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 S & P 500 Index is an unmanaged index and does not
include transaction costs associated with buying and selling securities nor any
management fees. The Consumer Price Index, a measure of inflation, is through
March 31, 1998.
19
<PAGE>
EVERGREEN
Strategic Growth Fund
Portfolio Manager Interview
How did the fund perform for the six-
month period ended March 31, 1998?
For the six-month period ended March 31, 1998, Class B shares produced a
13.46% total return. In comparison, the Standard & Poor's 500 Index (S&P
500) rose 17.22%. For the twelve-month period ended March 31, 1998, Class B
shares gained 47.94% and the S&P Index rose 48.00%. These returns are
unadjusted for any sales charges.
Portfolio Characteristics
Total Net Assets $982,121,418
Number of Holdings 70
Beta 0.97
P/E Ratio 29.1x
What was the investment environment
like during the period?
The investment environment exceeded virtually everyone's expectations.
After three years of solid growth, the economy continued on an upward
course and interest rates and inflation remained in check. Added to these
solid economic fundamentals were large dollar inflows into the stock
market from individual investors. While stocks experienced a temporary
setback in reaction to the financial crisis in the ASEAN* countries
(Association of Southeast Asian Nations) in October, they made significant
gains over the period.
Did the ASEAN crisis affect the Fund?
The crisis had virtually no impact on the Fund's performance. However,
because we were concerned that all emerging markets would be affected by
the problems in the emerging markets in Asia, we sold holdings in Brazil
and Mexico. The Fund's combined position in both of these markets was
approximately 5% of assets.
*Includes Brunei, Indonesia, Laos, Malaysia, Philippines, Singapore,
Thailand, Vietnam and Burma.
How did you manage the Fund during
the period?
Our strategy has been to retain a nucleus of stocks that have demonstrated
consistent earnings growth over the long term. Many of the stocks in which
we invested are multinational companies that conduct business all over the
world. Therefore, a crisis in one part of the world, such as in the ASEAN
countries, could be offset by stronger growth elsewhere. At the end of the
period, some of the well-known companies in the portfolio were General
Electric, CBS, Microsoft, Exxon, Coca Cola, Pfizer and Disney.
Approximately two-thirds of the Fund's assets were invested in
large-company stocks. The rest of the assets were in midsized and small-
company stocks.
Top 5 Industries
(as a percentage of net assets)
Healthcare /Pharmaceuticals 18.9%
Information Services & Technology 11.4%
Banks 9.7%
Oil/Energy 8.3%
Publishing, Broadcasting & Entertainment 7.6%
What were some of the strongest
contributors to performance?
Pharmaceutical companies were strong contributors. On March 31, 1998,
Pfizer was the Fund's largest holding at 5.0% of assets. Warner-Lambert
Company was the Fund's third largest position at 2.9% of assets. Pfizer's
significant investment in research and development should begin to
contribute to earnings growth. The company recently launched Viagra, the
new male impotence drug, and we expect Pfizer will receive FDA approval
over the next
20
<PAGE>
EVERGREEN
Strategic Growth Fund
Portfolio Manager Interview
few years for other drugs in five therapeutic areas: infectious diseases,
cardiovascular, central nervous systems, diabetes and women's health.
Warner Lambert continues to benefit from the sale of Lipitor, a
cholesterol-lowering drug and now controls approximately 35% of that
market. Relative to other drug companies, we believe Warner Lambert should
produce one of the best growth rates in earnings over the next two years.
Top 10 Holdings
(as a percentage of net assets)
Pfizer, Inc. 5.0%
General Electric 3.9%
Warner-Lambert Co. 2.9%
Cendant Corp. 2.7%
CBS Corp. 2.2%
Microsoft Corp. 2.2%
EMC Corp. 2.2%
Fleet Financial Group, Inc. 2.0%
Disney (Walt) Co. 2.0%
Penzoil Co. 2.0%
Media companies (publishing, broadcasting and entertainment firms) are a
new addition to the Fund's Top 5 industry allocations. Why were these
companies attractive?
Within the media industry, we focused on broadcasting companies. In a
stronger economy, many companies increase their advertising budgets in
order to differentiate their products. Because radio and TV broadcasters
can target the mass market very efficiently, they capture much of the
higher spending on advertising. CBS, which was "spun out" from
Westinghouse, is a prime beneficiary. New management and more intense
focus on radio and television broadcasting operations have contributed to
improved revenues and profits.
We also invested in Viacom - a dominant company in cable television.
Viacom owns the Showtime, MTV and Nickelodeon networks and has an interest
in Paramount Studios, which produced Titanic. A turnaround at the
Blockbuster Video division of Viacom has resulted in a much improved
balance sheet and stronger cash flows.
Were there any disappointments?
As a group, food and beverage stocks, which accounted for 3.6% of assets,
lagged the general market and other economic sectors. Food and beverage
stocks rose approximately 15% during the period. While that performance is
good, it pales in comparison to pharmaceutical stocks that gained 31%,
broadcasting stocks that advanced 35%, or amusement stocks that rose 23%.
It appeared that investors were less interested in the food and beverage
area and preferred stocks in industries that produced more rapid earnings
growth. This often happens when the stock market and the economy are very
strong.
What is your outlook?
Our analysis indicates that over the long term the economy should continue
to grow at a moderate rate and interest rates and inflation should remain
at relatively low levels. We also believe that inflows into the market
should be strong, as baby boomers continue to invest for retirement. For
more than three years, the stock market has produced superior gains, and
we believe it is unrealistic to think that such exceptional returns could
continue without some pullback. We believe the Fund has invested in good
companies, with strong franchises, excellent managements and the ability
to sustain or increase earnings growth. We remain positive on the
long-term outlook of the market. Because no one can predict the direction
of the market, we encourage you to stick with your long-term goals,
diversify your investments among different types of assets, and take a
long-term view in analyzing your investment returns.
21
<PAGE>
EVERGREEN
Aggressive Growth Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months Ended Year Ended September 30,
March 31, 1998 -----------------------------------------------
(Unaudited) 1997# 1996 1995*(a)
<S> <C> <C> <C> <C>
CLASS A SHARES
Net asset value beginning of period $ 23.48 $ 21.04 $ 17.37 $ 13.85
=========== ========= ========= ==========
Income (loss) from investment
operations
Net investment loss ( 0.12) ( 0.21) ( 0.15) ( 0.16)
Net realized and unrealized gain (loss) on
investments 0.67 2.65 4.46 3.68
----------- --------- --------- ----------
Total from investment operations 0.55 2.44 4.31 3.52
----------- --------- --------- ----------
Less distributions
From net realized gain on investments ( 0.85) 0 ( 0.64) 0
----------- --------- --------- ----------
Total distributions ( 0.85) 0 ( 0.64) 0
----------- --------- --------- ----------
Net asset value end of period $ 23.18 $ 23.48 $ 21.04 $ 17.37
=========== ========= ========= ==========
Total return + 2.56% 11.60% 25.62% 25.42%
Ratios/supplemental data
Ratios to average net assets:
Total expenses 1.27%++ 1.26% 1.22% 1.47%++
Total expenses, excluding indirectly paid
expenses 1.27%++ 1.25% N/A N/A
Net investment loss ( 1.11%)++ ( 1.05%) ( 0.86%) ( 1.12%)++
Portfolio turnover rate 28% 56% 33% 31%
Average commission rate paid per share $ 0.0598 $ 0.0531 $ 0.0582 N/A
Net assets end of period (thousands) $ 157,749 $ 173,982 $ 96,608 $ 70,858
<CAPTION>
Year Ended October 31,
----------------------------
1994#(a) 1993#(a)
<S> <C> <C>
CLASS A SHARES
Net asset value beginning of period $ 14.44 $ 11.76
========== ==========
Income (loss) from investment
operations
Net investment loss ( 0.13) ( 0.12)
Net realized and unrealized gain (loss) on
investments ( 0.22) 3.06
---------- ----------
Total from investment operations ( 0.35) 2.94
---------- ----------
Less distributions
From net realized gain on investments ( 0.24) ( 0.26)
---------- ----------
Total distributions ( 0.24) ( 0.26)
---------- ----------
Net asset value end of period $ 13.85 $ 14.44
========== ==========
Total return + ( 2.42%) 25.31%
Ratios/supplemental data
Ratios to average net assets:
Total expenses 1.25% 1.31%
Total expenses, excluding indirectly paid
expenses N/A N/A
Net investment loss ( 0.92%) ( 0.92%)
Portfolio turnover rate 59% 48%
Average commission rate paid per share N/A N/A
Net assets end of period (thousands) $ 64,635 $ 58,053
</TABLE>
<TABLE>
<CAPTION>
Year Ended October 31,
-------------------------------------------------------------------------
1992#(a) 1991#(a) 1990#(a) 1989#(a) 1988**#(a)
<S> <C> <C> <C> <C> <C>
CLASS A SHARES
Net asset value beginning of period $ 12.22 $ 7.37 $ 11.06 $ 7.62 $ 7.07
========== ========= ========== ========= ==========
Income (loss) from investment operations
Net investment loss ( 0.10) ( 0.08) ( 0.04) ( 0.11) ( 0.21)
Net realized and unrealized gain (loss) on investments 1.84 5.59 ( 2.02) 3.55 0.76
----------- --------- ---------- --------- ----------
Total from investment operations 1.74 5.51 ( 2.06) 3.44 0.55
----------- --------- ---------- --------- ----------
Less distributions
From net realized gain on investments ( 2.20) ( 0.66) ( 1.63) 0 0
----------- --------- ---------- --------- ----------
Total distributions (2.20) ( 0.66) ( 1.63) 0 0
----------- --------- ---------- --------- ----------
Net asset value end of period $ 11.76 $ 12.22 $ 7.37 $ 11.06 $ 7.62
=========== ========= ========== ========= ==========
Total return + 17.43% 79.80% ( 20.45%) 45.14% 7.78%
Ratios/supplemental data
Ratios to average net assets:
Total expenses 1.44% 1.59% 1.86% 1.78% 2.02%++
Net investment loss ( 0.93%) ( 0.71%) ( 0.49%) ( 1.19%) ( 1.36%)++
Portfolio turnover rate 46% 108% 100% 120% 45%
Net assets end of period (thousands) $ 29,302 $ 23,509 $ 14,325 $ 21,241 $ 19,900
</TABLE>
# Net investment income is based on average shares outstanding during the
period.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the eleven months ended September 30, 1995. The Fund changed its fiscal
year end from October 31 to September 30, effective September 30, 1995.
** For the ten months ended October 31, 1988. The Fund changed its fiscal year
end from December 31 to October 31, effective October 31, 1988.
(a) Effective June 30, 1995, Evergreen Aggressive Growth Fund, a new series of
Evergreen Trust, acquired substantially all of the net assets of ABT
Emerging Growth Fund. ABT Emerging Growth Fund, which had a fiscal year that
ended on October 31 was the accounting survivor in the combination.
Accordingly, the information above includes the results of operations of ABT
Emerging Growth Fund prior to June 30, 1995.
See Combined Notes to Financial Statements.
22
<PAGE>
EVERGREEN
Aggressive Growth Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months Ended Year Ended September 30,
March 31, 1998# --------------------------------------------------
(Unaudited) 1997# 1996 1995*
<S> <C> <C> <C> <C>
CLASS B SHARES
Net asset value beginning of period $ 23.18 $ 20.89 $ 17.35 $ 15.82
============ ========== ========== ==========
Income (loss) from investment operations
Net investment loss ( 0.20) ( 0.37) ( 0.16) ( 0.03)
Net realized and unrealized gain on investments 0.67 2.66 4.34 1.56
------------ ---------- ---------- ----------
Total from investment operations 0.47 2.29 4.18 1.53
------------ ---------- ---------- ----------
Less distributions
From net realized gain on investments ( 0.85) 0 ( 0.64) 0
------------ ---------- ---------- ----------
Total distributions ( 0.85) 0 ( 0.64) 0
------------ ---------- ---------- ----------
Net asset value end of period $ 22.80 $ 23.18 $ 20.89 $ 17.35
============ ========== ========== ==========
Total return + 2.24% 10.96% 24.88% 9.67%
Ratios/supplemental data
Ratios to average net assets:
Total expenses 2.04%++ 2.02% 1.98% 2.09%++
Total expenses, excluding indirectly paid expenses 2.04%++ 2.01% N/A N/A
Net investment loss ( 1.87%)++ ( 1.80%) ( 1.60%) ( 1.71%)++
Portfolio turnover rate 28% 56% 33% 31%
Average commission rate paid per share $ 0.0598 $ 0.0531 $ 0.0582 N/A
Net assets end of period (thousands) $ 40,305 $ 41,167 $ 21,644 $ 2,858
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended Year Ended September 30,
March 31, 1998# --------------------------------------------------
(Unaudited) 1997# 1996 1995**
<S> <C> <C> <C> <C>
CLASS C SHARES
Net asset value beginning of period $ 23.16 $ 20.88 $ 17.31 $ 16.42
============ ========== ========== ==========
Income (loss) from investment operations
Net investment loss ( 0.20) ( 0.36) ( 0.15) ( 0.01)
Net realized and unrealized gain on investments 0.68 2.64 4.36 0.90
------------ ---------- ---------- ----------
Total from investment operations 0.48 2.28 4.21 0.89
------------ ---------- ---------- ----------
Less distributions
From net realized gain on investments ( 0.85) 0 ( 0.64) 0
------------ ---------- ---------- ----------
Total distributions ( 0.85) 0 ( 0.64) 0
------------ ---------- ---------- ----------
Net asset value end of period $ 22.79 $ 23.16 $ 20.88 $ 17.31
============ ========== ========== ==========
Total return + 2.29% 10.92% 25.11% 5.42%
Ratios/supplemental data
Ratios to average net assets:
Total expenses 2.04%++ 2.02% 1.96% 2.09%++
Total expenses, excluding indirectly paid expenses 2.04%++ 2.01% N/A N/A
Net investment loss ( 1.87%)++ ( 1.80%) ( 1.57%) ( 1.51%)++
Portfolio turnover rate 28% 56% 33% 31%
Average commission rate paid per share $ 0.0598 $ 0.0531 $ 0.0582 N/A
Net assets end of period (thousands) $ 3,767 $ 3,992 $ 991 $ 416
</TABLE>
# Net investment income is based on average shares outstanding during the
period.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from July 7, 1995 (commencement of class operations) to
September 30, 1995.
** For the period from August 3, 1995 (commencement of class operations) to
September 30, 1995.
See Combined Notes to Financial Statements.
23
<PAGE>
EVERGREEN
Aggressive Growth Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months Ended Year Ended September 30,
March 31, 1998# ------------------------------------------------
(Unaudited) 1997# 1996 1995*
<S> <C> <C> <C> <C>
CLASS Y SHARES
Net asset value beginning of period $ 23.57 $ 21.09 $ 17.38 $ 15.79
=========== ========== ========== ==========
Income (loss) from investment operations
Net investment loss ( 0.09) ( 0.17) ( 0.06) ( 0.01)
Net realized and unrealized gain on investments 0.67 2.65 4.41 1.60
----------- ---------- ---------- ----------
Total from investment operations 0.58 2.48 4.35 1.59
----------- ---------- ---------- ----------
Less distributions
From net realized gain on investments ( 0.85) 0 ( 0.64) 0
----------- ---------- ---------- ----------
Total distributions ( 0.85) 0 ( 0.64) 0
----------- ---------- ---------- ----------
Net asset value end of period $ 23.30 $ 23.57 $ 21.09 $ 17.38
=========== ========== ========== ==========
Total return 2.68% 11.76% 25.84% 10.07%
Ratios/supplemental data
Ratios to average net assets:
Total expenses 1.01%+ 1.01% 0.97% 1.08%+
Total expenses, excluding indirectly paid expenses 1.01%+ 1.00% N/A N/A
Net investment loss ( 0.86%)+ ( 0.78%) ( 0.60%) ( 0.71%)+
Portfolio turnover rate 28% 56% 33% 31%
Average commission rate paid per share $ 0.0598 $ 0.0531 $ 0.0582 N/A
Net assets end of period (thousands) $ 32,043 $ 44,384 $ 25,918 $ 1,889
</TABLE>
# Net investment income is based on average shares outstanding during the
period.
+ Annualized.
* For the period from July 11, 1995 (commencement of class operations) to
September 30, 1995.
See Combined Notes to Financial Statements.
24
<PAGE>
EVERGREEN
Evergreen Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months Ended Year Ended September 30,
March 31, 1998# ------------------------------------------------
(Unaudited) 1997# 1996 1995*
<S> <C> <C> <C> <C>
CLASS A SHARES
Net asset value beginning of period $ 22.96 $ 17.64 $ 15.55 $ 11.97
=========== ============ ============ ==========
Income from investment operations
Net investment income 0.03 0.11 0.12 0.01
Net realized and unrealized gain on investments 2.73 5.71 2.61 3.57
----------- ------------ ------------ ----------
Total from investment operations 2.76 5.82 2.73 3.58
----------- ------------ ------------ ----------
Less distributions
From net investment income ( 0.10) ( 0.09) ( 0.06) 0
From net realized gain on investments ( 0.50) ( 0.41) ( 0.58) 0
----------- ------------ ------------ ----------
Total distributions ( 0.60) ( 0.50) ( 0.64) 0
----------- ------------ ------------ ----------
Net asset value end of period $ 25.12 $ 22.96 $ 17.64 $ 15.55
=========== ============ ============ ==========
Total return + 12.35% 33.72% 18.07% 29.91%
Ratios/supplemental data
Ratios to average net assets:
Total expenses 1.44%++ 1.40% 1.45% 1.70%++
Total expenses, excluding indirectly paid expenses 1.44%++ 1.40% N/A N/A
Total expenses, excluding fee waivers & expense
reimbursements N/A N/A N/A 1.75%++
Net investment income 0.23%++ 0.58% 0.63% 0.13%++
Portfolio turnover rate 4% 12% 15% 19%
Average commission rate paid per share $ 0.0571 $ 0.0577 $ 0.0603 N/A
Net assets end of period (millions) $ 219 $ 161 $ 87 $ 29
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended Year Ended September 30,
March 31, 1998# -----------------------------------------------
(Unaudited) 1997# 1996 1995*
<S> <C> <C> <C> <C>
CLASS B SHARES
Net asset value beginning of period $ 22.69 $ 17.49 $ 15.48 $ 11.97
============ ========== ========== ==========
Income (loss) from investment operations
Net investment loss ( 0.05) ( 0.03) ( 0.03) ( 0.02)
Net realized and unrealized gain on investments 2.71 5.64 2.64 3.53
------------ ---------- ---------- ----------
Total from investment operations 2.66 5.61 2.61 3.51
------------ ---------- ---------- ----------
Less distributions
From net investment income 0 0 ( 0.02) 0
From net realized gain on investments ( 0.50) ( 0.41) ( 0.58) 0
------------ ---------- ---------- ----------
Total distributions ( 0.50) ( 0.41) ( 0.60) 0
------------ ---------- ---------- ----------
Net asset value end of period $ 24.85 $ 22.69 $ 17.49 $ 15.48
============ ========== ========== ==========
Total return + 11.98% 32.69% 17.29% 29.32%
Ratios/supplemental data
Ratios to average net assets:
Total expenses 2.19%++ 2.15% 2.18% 2.32%++
Total expenses, excluding indirectly paid expenses 2.19%++ 2.15% N/A N/A
Total expenses, excluding fee waivers & expense
reimbursements N/A N/A N/A 2.34%++
Net investment loss ( 0.52%)++ ( 0.16%) ( 0.10%) ( 0.48%)++
Portfolio turnover rate 4% 12% 15% 19%
Average commission rate paid per share $ 0.0571 $ 0.0577 $ 0.0603 N/A
Net assets end of period (millions) $ 664 $ 503 $ 254 $ 74
</TABLE>
# Net investment income is based on average shares outstanding during the
period.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from January 3, 1995 (commencement of class operations) to
September 30, 1995.
See Combined Notes to Financial Statements.
25
<PAGE>
EVERGREEN
Evergreen Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months Ended Year Ended September 30,
March 31, 1998# --------------------------------------------------
(Unaudited) 1997# 1996 1995*
<S> <C> <C> <C> <C>
CLASS C SHARES
Net asset value beginning of period $ 22.66 $ 17.47 $ 15.48 $ 11.97
============ ========== ========== ==========
Income (loss) from investment operations
Net investment income (loss) ( 0.03) ( 0.04) 0 ( 0.01)
Net realized and unrealized gain on investments 2.67 5.64 2.61 3.52
------------ ---------- ---------- ----------
Total from investment operations 2.64 5.60 2.61 3.51
------------ ---------- ---------- ----------
Less distributions
From net investment income 0 0 ( 0.04) 0
From net realized gain on investments ( 0.50) ( 0.41) ( 0.58) 0
------------ ---------- ---------- ----------
Total distributions ( 0.50) ( 0.41) ( 0.62) 0
------------ ---------- ---------- ----------
Net asset value end of period $ 24.80 $ 22.66 $ 17.47 $ 15.48
============ ========== ========== ==========
Total return + 11.91% 32.67% 17.29% 29.32%
Ratios/supplemental data
Ratios to average net assets:
Total expenses 2.19%++ 2.16% 2.14% 2.12%++
Total expenses, excluding indirectly paid expenses 2.19%++ 2.16% N/A N/A
Total expenses, excluding fee waivers & expense
reimbursements N/A N/A 2.38% 5.31%++
Net investment loss ( 0.51%)++ ( 0.18%) ( 0.07%) ( 0.31%)++
Portfolio turnover rate 4% 12% 15% 19%
Average commission rate paid per share $ 0.0571 $ 0.0577 $ 0.0603 N/A
Net assets end of period (millions) $ 13 $ 9 $ 6 $ 2
</TABLE>
# Net investment income is based on average shares outstanding during the
period.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from January 3, 1995 (commencement of class operations) to
September 30, 1995.
See Combined Notes to Financial Statements.
26
<PAGE>
EVERGREEN
Evergreen Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months Ended
March 31, 1998#
(Unaudited)
<S> <C>
CLASS Y SHARES
Net asset value beginning of period $ 23.07
==========
Income from investment operations
Net investment income 0.05
Net realized and unrealized gain on
investments 2.76
----------
Total from investment operations 2.81
----------
Less distributions
From net investment income ( 0.14)
From net realized gain on investments ( 0.50)
-----------
Total distributions ( 0.64)
-----------
Net asset value end of period $ 25.24
===========
Total return 12.54%
Ratios/supplemental data
Ratios to average net assets:
Total expenses 1.18%+
Total expenses, excluding indirectly paid
expenses 1.18%+
Interest expense N/A
Net investment income 0.48%
Portfolio turnover rate 4%
Average commission rate paid per share $ 0.0571
Net assets end of period (millions) $ 1,258
<CAPTION>
Year Ended September 30,
-------------------------------------------------------------------------
1997# 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
CLASS Y SHARES
Net asset value beginning of period $ 17.71 $ 15.59 $ 14.62 $ 14.46 $ 13.10
============ ============ ========= ========= =========
Income from investment operations
Net investment income 0.16 0.24 0.10 0.07 0.09
Net realized and unrealized gain on
investments 5.73 2.55 3.10 0.79 1.96
------------ ------------ --------- --------- ---------
Total from investment operations 5.89 2.79 3.20 0.86 2.05
------------ ------------ --------- --------- ---------
Less distributions
From net investment income ( 0.12) ( 0.09) ( 0.07) ( 0.09) ( 0.07)
From net realized gain on investments ( 0.41) ( 0.58) ( 2.16) ( 0.61) ( 0.62)
------------ ------------ ---------- ---------- ----------
Total distributions ( 0.53) ( 0.67) ( 2.23) ( 0.70) ( 0.69)
------------ ------------ ---------- ---------- ----------
Net asset value end of period $ 23.07 $ 17.71 $ 15.59 $ 14.62 $ 14.46
============ ============ ========== ========== ==========
Total return 34.08% 18.43% 26.79% 6.16% 15.83%
Ratios/supplemental data
Ratios to average net assets:
Total expenses 1.15% 1.15% 1.16% 1.13% 1.11%
Total expenses, excluding indirectly paid
expenses 1.15% N/A N/A N/A N/A
Interest expense N/A N/A 0.06% 0.09% 0.01%
Net investment income 0.80% 0.93% 0.53% 0.40% 0.60%
Portfolio turnover rate 12% 15% 19% 19% 21%
Average commission rate paid per share $ 0.0577 $ 0.0603 N/A N/A N/A
Net assets end of period (millions) $ 1,104 $ 841 $ 612 $ 526 $ 657
</TABLE>
<TABLE>
<CAPTION>
Year Ended September 30,
--------------------------------------------------------------------
1992 1991 1990 1989 1988*
<S> <C> <C> <C> <C> <C>
CLASS Y SHARES
Net asset value beginning of period $ 13.32 $ 9.66 $ 14.01 $ 12.47 $ 15.12
========= ======== ========= ========= =========
Income (loss) from investment operations
Net investment income 0.09 0.17 0.24 0.32 0.21
Net realized and unrealized gain (loss) on investments 0.55 3.93 ( 3.62) 1.99 ( 1.05)
--------- -------- --------- --------- ---------
Total from investment operations 0.64 4.10 ( 3.38) 2.31 ( 0.84)
--------- -------- --------- --------- ---------
Less distributions
From net investment income ( 0.17) ( 0.18) ( 0.36) ( 0.21) ( 0.25)
From net realized gain on investments ( 0.69) ( 0.26) ( 0.61) ( 0.56) ( 1.56)
---------- --------- --------- ---------- ---------
Total distributions ( 0.86) ( 0.44) ( 0.97) ( 0.77) ( 1.81)
---------- --------- --------- ---------- ---------
Net asset value end of period $ 13.10 $ 13.32 $ 9.66 $ 14.01 $ 12.47
========== ========= ========= ========== =========
Total return 5.19% 43.74% ( 25.38%) 19.99% ( 1.87%)
Ratios/supplemental data
Ratios to average net assets:
Total expenses 1.13% 1.15% 1.15% 1.11% 1.03%
Net investment income 0.56% 1.45% 1.83% 2.46% 1.70%
Portfolio turnover rate 32% 35% 39% 40% 42%
Net assets end of period (millions) $ 772 $ 755 $ 525 $ 867 $ 751
</TABLE>
# Net investment income is based on average shares outstanding during the
period.
+ Annualized.
* Net of expense limitation in fiscal year 1988.
See Combined Notes to Financial Statements.
27
<PAGE>
EVERGREEN
Micro Cap Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months Ended
March 31, 1998#
(Unaudited)
<S> <C>
CLASS A SHARES
Net asset value beginning of period $ 26.68
=============
Income (loss) from investment operations
Net investment loss ( 0.15)
Net realized and unrealized gain (loss) on investments 2.47
-------------
Total from investment operations 2.32
-------------
Less distributions
From net realized gain on investments ( 1.39)
-------------
Total distributions ( 1.39)
-------------
Net asset value end of period $ 27.61
=============
Total return + 9.04%
Ratios/supplemental data
Ratios to average net assets:
Total expenses 1.79%++
Interest expense 0.06%++
Total expenses, excluding indirectly paid expenses 1.78%++
Total expenses, excluding fee waivers & expense reimbursements N/A
Net investment loss ( 1.14%)++
Portfolio turnover rate 24%
Average commission rate paid per share $ 0.0523
Net assets end of period (thousands) $ 5,922
<CAPTION>
Year Ended September 30,
--------------------------------------------------
1997# 1996 1995*
<S> <C> <C> <C>
CLASS A SHARES
Net asset value beginning of period $ 17.31 $ 18.41 $ 15.76
========== ========== ===========
Income (loss) from investment operations
Net investment loss ( 0.15) ( 0.10) ( 0.10)
Net realized and unrealized gain (loss) on investments 9.52 ( 0.44) 2.75
---------- ---------- -----------
Total from investment operations 9.37 ( 0.54) 2.65
---------- ---------- -----------
Less distributions
From net realized gain on investments 0 ( 0.56) 0
---------- ---------- -----------
Total distributions 0 ( 0.56) 0
---------- ---------- -----------
Net asset value end of period $ 26.68 $ 17.31 $ 18.41
========== ========== ===========
Total return + 54.13% ( 2.90%) 16.81%
Ratios/supplemental data
Ratios to average net assets:
Total expenses 1.79% 1.73% 1.51%++
Interest expense 0.02% 0.02% N/A
Total expenses, excluding indirectly paid expenses 1.78% N/A N/A
Total expenses, excluding fee waivers & expense reimbursements N/A 3.08% 4.33%++
Net investment loss ( 0.73%) ( 0.52%) ( 1.03%)++
Portfolio turnover rate 59% 160% 84%
Average commission rate paid per share $ 0.0543 $ 0.0465 N/A
Net assets end of period (thousands) $ 2,438 $ 903 $ 1,089
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended
March 31, 1998#
(Unaudited)
<S> <C>
CLASS B SHARES
Net asset value beginning of period $ 26.14
=============
Income (loss) from investment operations
Net investment loss ( 0.24)
Net realized and unrealized gain (loss) on investments 2.41
-------------
Total from investment operations 2.17
-------------
Less distributions
From net realized gain on investments ( 1.39)
-------------
Total distributions ( 1.39)
-------------
Net asset value end of period $ 26.92
=============
Total return + 8.64%
Ratios/supplemental data
Ratios to average net assets:
Total expenses 2.54%++
Interest expense 0.06%++
Total expenses, excluding indirectly paid expenses 2.53%++
Total expenses, excluding fee waivers & expense reimbursements N/A
Net investment loss ( 1.89%)++
Portfolio turnover rate 24%
Average commission rate paid per share $ 0.0523
Net assets end of period (thousands) $ 4,719
<CAPTION>
Year Ended September 30,
--------------------------------------------------
1997# 1996 1995*
<S> <C> <C> <C>
CLASS B SHARES
Net asset value beginning of period $ 17.07 $ 18.30 $ 15.76
========== ========== ===========
Income (loss) from investment operations
Net investment loss ( 0.28) ( 0.25) ( 0.20)
Net realized and unrealized gain (loss) on investments 9.35 ( 0.42) 2.74
---------- ---------- -----------
Total from investment operations 9.07 ( 0.67) 2.54
---------- ---------- -----------
Less distributions
From net realized gain on investments 0 ( 0.56) 0
---------- ---------- -----------
Total distributions 0 ( 0.56) 0
---------- ---------- -----------
Net asset value end of period $ 26.14 $ 17.07 $ 18.30
========== ========== ===========
Total return + 53.13% ( 3.64%) 16.12%
Ratios/supplemental data
Ratios to average net assets:
Total expenses 2.59% 2.47% 2.26%++
Interest expense 0.02% 0.02% N/A
Total expenses, excluding indirectly paid expenses 2.58% N/A N/A
Total expenses, excluding fee waivers & expense reimbursements N/A 3.26% 3.66%++
Net investment loss ( 1.44%) ( 1.28%) ( 1.77%)++
Portfolio turnover rate 59% 160% 84%
Average commission rate paid per share $ 0.0543 $ 0.0465 N/A
Net assets end of period (thousands) $ 1,713 $ 1,461 $ 2,020
</TABLE>
# Net investment income is based on average shares outstanding during the
period.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from January 3, 1995 (commencement of class operations) to
September 30, 1995.
See Combined Notes to Financial Statements.
28
<PAGE>
EVERGREEN
Micro Cap Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months Ended
March 31, 1998#
(Unaudited)
<S> <C>
CLASS C SHARES
Net asset value beginning of period $ 26.16
=============
Income (loss) from investment operations
Net investment loss ( 0.25)
Net realized and unrealized gain (loss) on investments 2.42
-------------
Total from investment operations 2.17
-------------
Less distributions
From net realized gain on investments ( 1.39)
-------------
Total distributions ( 1.39)
-------------
Net asset value end of period $ 26.94
=============
Total return + 8.63%
Ratios/supplemental data
Ratios to average net assets:
Total expenses 2.54%++
Interest expense 0.06%++
Total expenses, excluding indirectly paid expenses 2.53%++
Total expenses, excluding fee waivers & expense reimbursements N/A
Net investment loss ( 1.93%)++
Portfolio turnover rate 24%
Average commission rate paid per share $ 0.0523
Net assets end of period (thousands) $ 3,721
<CAPTION>
Year Ended September 30,
--------------------------------------------------
1997# 1996 1995*
<S> <C> <C> <C>
CLASS C SHARES
Net asset value beginning of period $ 17.09 $ 18.31 $ 15.76
========== ========== ===========
Income (loss) from investment operations
Net investment loss ( 0.25) ( 0.35) ( 0.20)
Net realized and unrealized gain (loss) on investments 9.32 ( 0.31) 2.75
---------- ---------- -----------
Total from investment operations 9.07 ( 0.66) 2.55
---------- ---------- -----------
Less distributions
From net realized gain on investments 0 ( 0.56) 0
---------- ---------- -----------
Total distributions 0 ( 0.56) 0
---------- ---------- -----------
Net asset value end of period $ 26.16 $ 17.09 $ 18.31
========== ========== ===========
Total return + 53.07% ( 3.58%) 16.18%
Ratios/supplemental data
Ratios to average net assets:
Total expenses 2.56% 2.44% 2.25%++
Interest expense 0.02% 0.02% N/A
Total expenses, excluding indirectly paid expenses 2.55% N/A N/A
Total expenses, excluding fee waivers & expense reimbursements N/A 32.28% 41.34%++
Net investment loss ( 1.50%) ( 1.35%) ( 1.76%)++
Portfolio turnover rate 59% 160% 84%
Average commission rate paid per share $ 0.0543 $ 0.0465 N/A
Net assets end of period (thousands) $ 261 $ 27 $ 62
</TABLE>
# Net investment income is based on average shares outstanding during the
period.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from January 3, 1995 (commencement of class operations) to
September 30, 1995.
See Combined Notes to Financial Statements.
29
<PAGE>
EVERGREEN
Micro Cap Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended September 30,
Six Months Ended ----------------------------------------------------------
March 31, 1998#
(Unaudited) 1997# 1996 1995 1994*
<S> <C> <C> <C> <C> <C>
CLASS Y SHARES
Net asset value beginning of period $ 26.83 $ 17.35 $ 18.42 $ 21.74 $ 21.20
=========== ========= ========= ========= ==========
Income (loss) from investment
operations
Net investment loss ( 0.11) ( 0.09) ( 0.08) ( 0.23) ( 0.05)
Net realized and unrealized gain (loss) on
investments 2.48 9.57 ( 0.43) 0.59 0.59
----------- --------- --------- --------- ----------
Total from investment operations 2.37 9.48 ( 0.51) 0.36 0.54
----------- --------- --------- --------- ----------
Less distributions
From net investment income 0 0 0 0 0
From net realized gain on investments ( 1.39) 0 ( 0.56) ( 3.68) 0
----------- --------- --------- --------- ----------
Total distributions ( 1.39) 0 ( 0.56) ( 3.68) 0
----------- --------- --------- --------- ----------
Net asset value end of period $ 27.81 $ 26.83 $ 17.35 $ 18.42 $ 21.74
=========== ========= ========= ========= ==========
Total return 9.18% 54.64% ( 2.73%) 4.76% 2.55%
Ratios/supplemental data
Ratios to average net assets:
Total expenses 1.54%+ 1.59% 1.55% 1.36% 1.37%+
Interest expense 0.06%+ 0.02% 0.02% N/A N/A
Total expenses, excluding indirectly paid
expenses 1.53%+ 1.58% N/A N/A N/A
Total expenses, excluding fee waivers &
expense reimbursements N/A N/A 1.60% N/A N/A
Net investment loss ( 0.80%)+ ( 0.45%) ( 0.38%) ( 0.87%) ( 0.70%)+
Portfolio turnover rate 24% 59% 160% 84% 36%
Average commission rate paid per share $ 0.0523 $ 0.0543 $ 0.0465 N/A N/A
Net assets end of period (thousands) $ 54,721 $ 50,732 $ 39,622 $ 64,721 $ 99,340
<CAPTION>
Year Ended
May 31, 1994
<S> <C>
CLASS Y SHARES
Net asset value beginning of period $ 20.87
==========
Income (loss) from investment
operations
Net investment loss ( 0.07)
Net realized and unrealized gain (loss) on
investments 1.67
----------
Total from investment operations 1.60
----------
Less distributions
From net investment income 0
From net realized gain on investments ( 1.27)
----------
Total distributions ( 1.27)
----------
Net asset value end of period $ 21.20
==========
Total return 7.64%
Ratios/supplemental data
Ratios to average net assets:
Total expenses 1.26%
Interest expense N/A
Total expenses, excluding indirectly paid
expenses N/A
Total expenses, excluding fee waivers &
expense reimbursements N/A
Net investment loss ( 0.33%)
Portfolio turnover rate 89%
Average commission rate paid per share N/A
Net assets end of period (thousands) $ 96,357
</TABLE>
<TABLE>
<CAPTION>
Year Ended May 31,
-----------------------------------------------------------------------------------
1993 1992 1991 1990 1989# 1988
<S> <C> <C> <C> <C> <C> <C>
CLASS Y SHARES
Net asset value beginning of period $ 21.02 $ 18.81 $ 17.69 $ 21.02 $ 16.82 $ 18.55
========= ========= ========= ========= ========= =========
Income from investment operations
Net investment income (loss) ( 0.03) 0.02 0.56 0.45 0.16 0
Net realized and unrealized gain (loss) on
investments 1.57 3.33 1.67 0.25 4.37 ( 0.78)
--------- --------- --------- --------- --------- ---------
Total from investment operations 1.54 3.35 2.23 0.70 4.53 ( 0.78)
--------- --------- --------- --------- --------- ---------
Less distributions
From net investment income 0 ( 0.14) ( 0.53) ( 0.36) ( 0.05) 0
From net realized gain on investments ( 1.69) ( 1.00) ( 0.58) ( 3.67) ( 0.28) ( 0.95)
--------- ---------- ---------- ---------- ---------- ---------
Total distributions ( 1.69) ( 1.14) ( 1.11) ( 4.03) ( 0.33) ( 0.95)
--------- ---------- ---------- ---------- ---------- ---------
Net asset value end of period $ 20.87 $ 21.02 $ 18.81 $ 17.69 $ 21.02 $ 16.82
========= ========== ========== ========== ========== =========
Total return 7.47% 18.33% 14.42% 4.20% 27.35% ( 4.01%)
Ratios/supplemental data
Ratios to average net assets:
Total expenses 1.24% 1.25% 1.32% 1.33% 1.30% 1.47%
Net investment income (loss) ( 0.07%) 0.22% 3.32% 2.25% 0.86% 0.01%
Portfolio turnover rate 29% 55% 59% 46% 45% 47%
Net assets end of period (thousands) $ 80,605 $ 62,172 $ 45,687 $ 37,838 $ 37,292 $ 23,007
</TABLE>
# Net investment income is based on average shares outstanding during the
period.
* For the four months ended September 30, 1994. The Fund changed its fiscal
year end from May 31 to September 30, effective September 30, 1994.
+ Annualized.
See Combined Notes to Financial Statements.
30
<PAGE>
EVERGREEN
Omega Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months Ended
March 31, 1998# Nine Months Ended
(Unaudited) September 30, 1997#*
<S> <C> <C>
CLASS A SHARES
Net asset value beginning of period $ 22.69 $ 19.52
=========== ==========
Income (loss) from investment
operations
Net investment income (loss) ( 0.04) ( 0.03)
Net realized and unrealized gain (loss) on
investments 3.44 4.05
----------- ------------
Total from investment operations 3.40 4.02
----------- ------------
Less distributions
From net realized gain on investments ( 2.13) ( 0.85)
----------- ------------
Total distributions ( 2.13) ( 0.85)
----------- ------------
Net asset value end of period $ 23.96 $ 22.69
=========== ============
Total return + 16.37% 21.45%
Ratios/supplemental data
Ratios to average net assets:
Total expenses 1.31%++ 1.32%++
Total expenses, excluding indirectly
paid expenses 1.31%++ 1.31%++
Net investment income (loss) ( 0.39%)++ ( 0.20%)++
Portfolio turnover rate 108% 76%
Average commission rate paid per
share $ 0.0587 $ 0.0580
Net assets end of period (thousands) $ 179,362 $ 162,847
<CAPTION>
Year Ended December 31,
------------------------------------------------------
1996 1995 1994 1993
<S> <C> <C> <C> <C>
CLASS A SHARES
Net asset value beginning of period $ 19.56 $ 15.54 $ 17.11 $ 15.84
========== ======== ========= =========
Income (loss) from investment
operations
Net investment income (loss) ( 0.06) 0 0.04 ( 0.07)
Net realized and unrealized gain (loss) on
investments 2.15 5.58 ( 1.00) 3.07
---------- -------- --------- ---------
Total from investment operations 2.09 5.58 ( 0.96) 3.00
---------- -------- --------- ---------
Less distributions
From net realized gain on investments ( 2.13) ( 1.56) ( 0.61) ( 1.73)
---------- -------- --------- ---------
Total distributions ( 2.13) ( 1.56) ( 0.61) ( 1.73)
---------- -------- --------- ---------
Net asset value end of period $ 19.52 $ 19.56 $ 15.54 $ 17.11
========== ======== ========= =========
Total return + 11.31% 36.94% ( 5.66%) 19.33%
Ratios/supplemental data
Ratios to average net assets:
Total expenses 1.33% 1.38% 1.41% 1.51%
Total expenses, excluding indirectly
paid expenses 1.32% 1.37% N/A N/A
Net investment income (loss) ( 0.29%) 0.00% 0.27% ( 0.48%)
Portfolio turnover rate 173% 159% 137% 162%
Average commission rate paid per
share $ 0.0621 N/A N/A N/A
Net assets end of period (thousands) $ 154,825 $135,079 $ 99,569 $ 90,404
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------
1992# 1991
<S> <C> <C>
CLASS A SHARES
Net asset value beginning of period $ 17.68 $ 13.37
========== ==========
Income (loss) from investment operations
Net investment income (loss) 0 ( 0.04)
Net realized and unrealized gain (loss) on investments 0.39 6.92
---------- ----------
Total from investment operations 0.39 6.88
---------- ----------
Less distributions
From net investment income 0 ( 0.02)
In excess of net investment income 0 ( 0.05)
From net realized gain on investments ( 2.23) ( 2.50)
---------- ----------
Total distributions ( 2.23) ( 2.57)
---------- ----------
Net asset value end of period $ 15.84 $ 17.68
========== ==========
Total return + 4.00% 54.49%
Ratios/supplemental data
Ratios to average net assets:
Total expenses 1.52% 1.57%
Net investment income (loss) ( 0.01%) ( 0.31%)
Portfolio turnover rate 176% 115%
Net assets end of period (thousands) $ 73,144 $ 58,671
<CAPTION>
Year Ended December 31,
----------------------------------------------
1990 1989 1988
<S> <C> <C> <C>
CLASS A SHARES
Net asset value beginning of period $ 16.03 $ 13.66 $ 12.08
========== ========= ===========
Income (loss) from investment operations
Net investment income (loss) 0.11 0.17 0.30 (a)
Net realized and unrealized gain (loss) on investments ( 0.39) 4.30 1.40
---------- --------- -----------
Total from investment operations ( 0.28) 4.47 1.70
---------- --------- -----------
Less distributions
From net investment income ( 0.25) ( 0.20) ( 0.12)
In excess of net investment income ( 0.04) 0 0
From net realized gain on investments ( 2.09) ( 1.90) 0
---------- ---------- -----------
Total distributions ( 2.38) ( 2.10) ( 0.12)
---------- ---------- -----------
Net asset value end of period $ 13.37 $ 16.03 $ 13.66
========== ========== ===========
Total return + ( 2.38%) 33.05% 14.05%
Ratios/supplemental data
Ratios to average net assets:
Total expenses 1.73% 1.84% 1.78%
Net investment income (loss) 0.70% 1.03% 2.22%
Portfolio turnover rate 108% 77% 84%
Net assets end of period (thousands) $ 38,531 $ 39,682 $ 33,951
</TABLE>
# Net investment income is based on average shares outstanding during the
period.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* The Fund changed its fiscal year end from December 31 to September 30,
effective September 30, 1997.
(a) Includes a $0.17 per share relating to a special non-recurring
distribution from Inco Limited.
See Combined Notes to Financial Statements.
31
<PAGE>
EVERGREEN
Omega Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months Ended
March 31, 1998# Nine Months Ended
(Unaudited) September 30, 1997#**
<S> <C> <C>
CLASS B SHARES
Net asset value beginning of
period $ 21.71 $ 18.83
=========== ==========
Income (loss) from investment
operations
Net investment loss ( 0.12) ( 0.15)
Net realized and unrealized gain
(loss) on investments 3.26 3.88
----------- ------------
Total from investment operations 3.14 3.73
----------- ------------
Less distributions
From net realized gain on
investments ( 2.13) ( 0.85)
----------- ------------
Total distributions ( 2.13) ( 0.85)
----------- ------------
Net asset value end of period $ 22.72 $ 21.71
=========== ============
Total return + 15.94% 20.68%
Ratios/supplemental data
Ratios to average net assets:
Total expenses 2.12%++ 2.18%++
Total expenses, excluding
indirectly paid expenses 2.12%++ 2.17%++
Net investment loss ( 1.20%)++ ( 1.06%)++
Portfolio turnover rate 108% 76%
Average commission rate paid
per share $ 0.0587 $ 0.0580
Net assets end of period
(thousands) $ 124,631 $ 110,349
<CAPTION>
Year Ended December 31,
--------------------------------------------------------
1996 1995 1994 1993*
<S> <C> <C> <C> <C>
CLASS B SHARES
Net asset value beginning of
period $ 19.10 $ 15.34 $ 17.06 $ 17.29
========= ========= ========= ===========
Income (loss) from investment
operations
Net investment loss ( 0.17) ( 0.09) ( 0.06) ( 0.05)
Net realized and unrealized gain
(loss) on investments 2.03 5.41 ( 1.60) 1.55
--------- --------- --------- -----------
Total from investment operations 1.86 5.32 ( 1.66) 1.50
--------- --------- --------- -----------
Less distributions
From net realized gain on
investments ( 2.13) ( 1.56) ( 0.06) ( 1.73)
--------- --------- --------- -----------
Total distributions ( 2.13) ( 1.56) ( 0.06) ( 1.73)
--------- --------- --------- -----------
Net asset value end of period $ 18.83 $ 19.10 $ 15.34 $ 17.06
========= ========= ========= ===========
Total return + 10.31% 35.70% ( 6.57%) 9.02%
Ratios/supplemental data
Ratios to average net assets:
Total expenses 2.20% 2.29% 2.30% 2.57%++
Total expenses, excluding
indirectly paid expenses 2.18% 2.27% N/A N/A
Net investment loss ( 1.15%) ( 0.94%) ( 0.58%) ( 1.73%)++
Portfolio turnover rate 173% 159% 137% 162%
Average commission rate paid
per share $ 0.0621 N/A N/A N/A
Net assets end of period
(thousands) $ 89,921 $ 71,636 $ 32,266 $ 7,423
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended
March 31, 1998# Nine Months Ended
(Unaudited) September 30, 1997#**
<S> <C> <C>
CLASS C SHARES
Net asset value beginning of
period $ 21.74 $ 18.86
=========== ==========
Income (loss) from investment
operations
Net investment loss ( 0.13) ( 0.15)
Net realized and unrealized gain
(loss) on investments 3.29 3.88
----------- ------------
Total from investment operations 3.16 3.73
----------- ------------
Less distributions
From net realized gain on
investments ( 2.13) ( 0.85)
----------- ------------
Total distributions ( 2.13) ( 0.85)
----------- ------------
Net asset value end of period $ 22.77 $ 21.74
=========== ============
Total return + 15.96% 20.65%
Ratios/supplemental data
Ratios to average net assets:
Total expenses 2.12%++ 2.18%++
Total expenses, excluding
indirectly paid expenses 2.12%++ 2.17%++
Net investment loss ( 1.20%)++ ( 1.05%)++
Portfolio turnover rate 108% 76%
Average commission rate paid
per share $ 0.0587 $ 0.0580
Net assets end of period
(thousands) $ 16,566 $ 16,067
<CAPTION>
Year Ended December 31,
-----------------------------------------------------------
1996 1995 1994 1993*
<S> <C> <C> <C> <C>
CLASS C SHARES
Net asset value beginning of
period $ 19.13 $ 15.37 $ 17.09 $ 17.29
========= ========= ========= ===========
Income (loss) from investment
operations
Net investment loss ( 0.18) ( 0.13) ( 0.07) ( 0.06)
Net realized and unrealized gain
(loss) on investments 2.04 5.45 ( 1.04) 1.59
--------- --------- --------- -----------
Total from investment operations 1.86 5.32 ( 1.11) 1.53
--------- --------- --------- -----------
Less distributions
From net realized gain on
investments ( 2.13) ( 1.56) ( 0.61) ( 1.73)
--------- --------- --------- -----------
Total distributions ( 2.13) ( 1.56) ( 0.61) ( 1.73)
--------- --------- --------- -----------
Net asset value end of period $ 18.86 $ 19.13 $ 15.37 $ 17.09
========= ========= ========= ===========
Total return + 10.29% 35.62% ( 6.56%) 9.20%
Ratios/supplemental data
Ratios to average net assets:
Total expenses 2.21% 2.30% 2.30% 2.48%++
Total expenses, excluding
indirectly paid expenses N/A N/A N/A N/A
Net investment loss ( 1.17%) ( 0.91%) ( 0.63%) ( 1.64%)++
Portfolio turnover rate 173% 159% 137% 162%
Average commission rate paid
per share $ 0.0621 N/A N/A N/A
Net assets end of period
(thousands) $ 17,628 $ 13,963 $ 9,900 $ 3,620
</TABLE>
# Net investment income is based on average shares outstanding during the
period.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from August 2, 1993 (commencement of class operations) to
December 31, 1993.
** The Fund changed its fiscal year end from December 31 to September 30,
effective September 30, 1997.
See Combined Notes to Financial Statements.
32
<PAGE>
EVERGREEN
Omega Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months Ended
March 31, 1998# Period Ended
(Unaudited) September 30, 1997#*
<S> <C> <C>
CLASS Y SHARES
Net asset value beginning of period $ 22.68 $ 19.98
========= ==========
Income (loss) from investment operations
Net investment loss ( 0.02) ( 0.01)
Net realized and unrealized gain on investments 3.44 3.56
---------- -----------
Total from investment operations 3.42 3.55
---------- -----------
Less distributions
From net realized gain on investments ( 2.13) ( 0.85)
---------- -----------
Total distributions ( 2.13) ( 0.85)
---------- -----------
Net asset value end of period $ 23.97 $ 22.68
========== ===========
Total return 16.47% 18.60%
Ratios/supplemental data
Ratios to average net assets:
Total expenses 1.07%+ 1.24%+
Total expenses, excluding indirectly paid expenses 1.07%+ 1.24%+
Net investment loss ( 0.17%)+ ( 0.21%)+
Portfolio turnover rate 108% 76%
Average commission rate paid per share $ 0.0587 $ 0.0580
Net assets end of period (thousands) $ 6 $ 5
</TABLE>
# Net investment income is based on average shares outstanding during the
period.
* For the period from January 13, 1997 (commencement of class operations) to
September 30, 1997.
+ Annualized.
See Combined Notes to Financial Statements.
33
<PAGE>
EVERGREEN
Small Company Growth Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Period Ended
March 31, 1998#*
(Unaudited)
<S> <C>
CLASS A SHARES
Net asset value beginning of period $ 7.75
==========
Income from investment operations
Net investment income 0
Net realized and unrealized gain on investments and foreign currency related transactions 1.01
----------
Total from investment operations 1.01
----------
Net asset value end of period $ 8.76
==========
Total return + 13.03%
Ratios/supplemental data
Ratios to average net assets:
Total expenses 1.06%++
Total expenses, excluding indirectly paid expenses 1.06%++
Net investment loss ( 0.21%)++
Portfolio turnover rate 41%
Average commission rate paid per share $ 0.0507
Net assets end of period (millions) $ 1,035
</TABLE>
# Net investment income is based on average shares outstanding during the
period.
* For the period from January 20, 1998 (commencement of class operations) to
March 31, 1998.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
See Combined Notes to Financial Statements.
34
<PAGE>
EVERGREEN
Small Company Growth Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months Ended Four-Month
March 31, 1998# Period Ended
(Unaudited) September 30, 1997#*
<S> <C> <C>
CLASS B SHARES
Net asset value beginning of period $ 9.44 $ 8.44
=========== =========
Income (loss) from investment
operations
Net investment loss ( 0.06) ( 0.04)
Net realized and unrealized gain (loss)
on investments and foreign currency
related transactions 0.15 1.74
----------- -----------
Total from investment operations 0.09 1.70
----------- -----------
Less distributions
From net realized gain on investments
and foreign currency related
transactions ( 0.78) ( 0.70)
----------- -----------
Total distributions ( 0.78) ( 0.70)
----------- -----------
Net asset value end of period $ 8.75 $ 9.44
=========== ===========
Total return + 1.64% 21.43%
Ratios/supplemental data
Ratios to average net assets:
Total expenses 1.19%++ 1.77%++
Total expenses, excluding indirectly
paid expenses 1.19%++ 1.77%++
Net investment loss ( 0.81%)++ ( 1.43%)++
Portfolio turnover rate 41% 28%
Average commission rate paid per
share $ 0.0507 $ 0.0525
Net assets end of period (millions) $ 407 $ 1,546
<CAPTION>
Year Ended May 31,
----------------------------------------------------
1997 1996 1995 1994
<S> <C> <C> <C> <C>
CLASS B SHARES
Net asset value beginning of period $ 10.35 $ 8.62 $ 7.64 $ 7.95
========= ======== ======== ========
Income (loss) from investment
operations
Net investment loss ( 0.11) ( 0.13) ( 0.07) ( 0.12)
Net realized and unrealized gain (loss)
on investments and foreign currency
related transactions ( 0.78) 2.87 1.68 0.63
--------- -------- -------- --------
Total from investment operations ( 0.89) 2.74 1.61 0.51
--------- -------- -------- --------
Less distributions
From net realized gain on investments
and foreign currency related
transactions ( 1.02) ( 1.01) ( 0.63) ( 0.82)
--------- -------- -------- --------
Total distributions ( 1.02) ( 1.01) ( 0.63) ( 0.82)
--------- -------- -------- --------
Net asset value end of period $ 8.44 $ 10.35 $ 8.62 $ 7.64
========= ======== ======== ========
Total return + ( 8.61%) 33.03% 23.58% 6.84%
Ratios/supplemental data
Ratios to average net assets:
Total expenses 1.75% 1.73% 1.78% 1.73%
Total expenses, excluding indirectly
paid expenses 1.73% 1.72% N/A N/A
Net investment loss ( 1.32%) ( 1.34%) ( 1.10%) ( 1.49%)
Portfolio turnover rate 48% 94% 38% 60%
Average commission rate paid per
share $ 0.0551 $ 0.0563 N/A N/A
Net assets end of period (millions) $ 1,407 $ 2,006 $ 1,460 $ 1,006
</TABLE>
<TABLE>
<CAPTION>
Year Ended May 31,
----------------------------------------------------------------
1993# 1992# 1991# 1990# 1989#
<S> <C> <C> <C> <C> <C>
CLASS B SHARES
Net asset value beginning of period $ 7.61 $ 7.17 $ 6.24 $ 5.66 $ 4.48
======== ======== ======== ======== ========
Income (loss) from investment operations
Net investment income (loss) ( 0.12) ( 0.08) ( 0.04) 0 0.02
Net realized and unrealized gain (loss) on investments
and foreign currency related transactions 1.82 0.98 1.17 0.63 1.20
-------- -------- -------- --------- --------
Total from investment operations 1.70 0.90 1.13 0.63 1.22
-------- -------- -------- --------- --------
Less distributions
From net investment income 0 0 0 ( 0.05) ( 0.01)
From net realized gain on investments and foreign
currency related transactions ( 1.36) ( 0.46) ( 0.20) 0 ( 0.03)
-------- -------- -------- --------- ---------
Total distributions ( 1.36) ( 0.46) ( 0.20) ( 0.05) ( 0.04)
-------- -------- -------- --------- ---------
Net asset value end of period $ 7.95 $ 7.61 $ 7.17 $ 6.24 $ 5.66
======== ======== ======== ========= =========
Total return + 28.76% 13.45% 19.42% 11.24% 27.45%
Ratios/supplemental data
Ratios to average net assets:
Total expenses 2.04% 1.47% 1.48% 1.40% 1.27%
Net investment income (loss) ( 1.68%) ( 1.09%) ( 0.68%) 0.02% 0.47%
Portfolio turnover rate 78% 81% 73% 77% 57%
Net assets end of period (millions) $ 966 $ 702 $ 623 $ 538 $ 504
</TABLE>
# Net investment income is based on average shares outstanding during the
period.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* The Fund changed its fiscal year end from May 31 to September 30, effective
September 30, 1997.
See Combined Notes to Financial Statements.
35
<PAGE>
EVERGREEN
Small Company Growth Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Period Ended
March 31, 1998#*
(Unaudited)
<S> <C>
CLASS C SHARES
Net asset value beginning of period $ 7.73
==========
Income (loss) from investment operations
Net investment loss ( 0.02)
Net realized and unrealized gain on investments and foreign currency related transactions 1.04
----------
Total from investment operations 1.02
----------
Net asset value end of period $ 8.75
==========
Total return + 13.20%
Ratios/supplemental data
Ratios to average net assets:
Total expenses 1.81%++
Total expenses, excluding indirectly paid expenses 1.81%++
Net investment loss ( 1.13%)++
Portfolio turnover rate 41%
Average commission rate paid per share $ 0.0507
Net assets end of period (millions) $ 6
</TABLE>
<TABLE>
<CAPTION>
Period Ended
March 31, 1998#*
(Unaudited)
<S> <C>
CLASS Y SHARES
Net asset value beginning of period $ 7.73
==========
Income from investment operations
Net investment income 0
Net realized and unrealized gain on investments and foreign currency related transactions 1.04
----------
Total from investment operations 1.04
----------
Net asset value end of period $ 8.77
==========
Total return 13.45%
Ratios/supplemental data
Ratios to average net assets:
Total expenses 0.82%++
Total expenses, excluding indirectly paid expenses 0.82%++
Net investment loss ( 0.15%)++
Portfolio turnover rate 41%
Average commission rate paid per share $ 0.0507
Net assets end of period (millions) $ 1
</TABLE>
# Net investment income is based on average shares outstanding during the
period.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from January 26, 1998 (commencement of class operations) to
March 31, 1998.
See Combined Notes to Financial Statements.
36
<PAGE>
EVERGREEN
Strategic Growth Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Period Ended
March 31, 1998#*
(Unaudited)
<S> <C>
CLASS A SHARES
Net asset value beginning of period $ 9.12
===========
Income from investment operations
Net investment income 0.01
Net realized and unrealized gain on investments and foreign currency related transactions 1.40
-----------
Total from investment operations 1.41
-----------
Net asset value end of period $ 10.53
===========
Total return + 15.46%
Ratios/supplemental data
Ratios to average net assets:
Total expenses 1.10%++
Total expenses, excluding indirectly paid expenses 1.10%++
Net investment income 0.38%++
Portfolio turnover rate 70%
Average commission rate paid per share $ 0.0020
Net assets end of period (millions) $ 825
</TABLE>
# Net investment income is based on average shares outstanding during the
period.
* For the period from January 20, 1998 (commencement of class operations) to
March 31, 1998.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
See Combined Notes to Financial Statements.
37
<PAGE>
EVERGREEN
Strategic Growth Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Eleven-Month
Six Months Ended Period Ended
March 31, 1998# September 30,
(Unaudited) 1997#*
<S> <C> <C>
CLASS B SHARES
Net asset value beginning of period $ 10.61 $8.68
=========== ==========
Income (loss) from investment operations
Net investment income (loss) ( 0.01) 0.01
Net realized and unrealized gain on investments and
foreign currency related transactions 1.24 2.96
----------- ----------
Total from investment operations 1.23 2.97
----------- ----------
Less distributions
From net investment income 0 0
In excess of net investment income 0 0
From net realized gain on investments and foreign
currency related transactions ( 1.33) ( 1.04)
In excess of net realized gain on investments and
foreign currency related transactions 0 0
----------- ----------
Total distributions ( 1.33) ( 1.04)
----------- ----------
Net asset value end of period $ 10.51 $ 10.61
=========== ==========
Total return + 13.46% 37.74%
Ratios/supplemental data
Ratios to average net assets:
Total expenses 1.17%++ 1.19%++
Total expenses, excluding indirectly paid expenses 1.17%++ 1.18%++
Net investment income (loss) ( 0.14%)++ 0.12%++
Portfolio turnover rate 70% 71%
Average commission rate paid per share $ 0.0020 $ 0.0222
Net assets end of period (millions) $ 157 $ 920
<CAPTION>
Year Ended October 31,
-------------------------------------------------
1996 1995 1994 1993
<S> <C> <C> <C> <C>
CLASS B SHARES
Net asset value beginning of period $ 8.05 $ 7.54 $ 9.00 $ 7.60
======== ======== ======== ========
Income (loss) from investment operations
Net investment income (loss) ( 0.04) ( 0.02) 0 ( 0.06)
Net realized and unrealized gain on investments and
foreign currency related transactions 1.04 1.13 0.23 1.89
-------- -------- -------- --------
Total from investment operations 1.00 1.11 0.23 1.83
-------- -------- -------- --------
Less distributions
From net investment income ( 0.01) 0.00 0 0
In excess of net investment income 0 0 0 ( 0.03)
From net realized gain on investments and foreign
currency related transactions ( 0.36) ( 0.60) ( 1.66) ( 0.40)
In excess of net realized gain on investments and
foreign currency related transactions 0 0 ( 0.03) 0
-------- -------- -------- --------
Total distributions ( 0.37) ( 0.60) ( 1.69) ( 0.43)
-------- -------- -------- --------
Net asset value end of period $ 8.68 $ 8.05 $ 7.54 $ 9.00
======== ======== ======== ========
Total return + 12.95% 15.05% 3.55% 24.97%
Ratios/supplemental data
Ratios to average net assets:
Total expenses 1.91% 2.01% 1.73% 1.83%
Total expenses, excluding indirectly paid expenses 1.90% 2.00% N/A N/A
Net investment income (loss) ( 0.48%) ( 0.25%) ( 0.17%) ( 0.57%)
Portfolio turnover rate 156% 140% 68% 65%
Average commission rate paid per share $ 0.0042 N/A N/A N/A
Net assets end of period (millions) $ 497 $ 492 $ 417 $ 404
</TABLE>
<TABLE>
<CAPTION>
Year Ended October 31,
------------------------------------------------------------------------
1992 1991 1990 1989 1988
<S> <C> <C> <C> <C> <C>
CLASS B SHARES
Net asset value beginning of period $ 8.18 $ 6.52 $ 7.67 $ 6.53 $ 7.55
======== ======== ======== ======== ========
Income (loss) from investment operations
Net investment income (loss) ( 0.01) 0.08 0.08 0.16 0.18
Net realized and unrealized gain (loss) on
investments and foreign currency related
transactions 0.42 2.24 ( 0.80) 1.21 0.19
-------- -------- -------- -------- --------
Total from investment operations 0.41 2.32 ( 0.72) 1.37 0.37
-------- -------- -------- -------- --------
Less distributions
From net investment income ( 0.01) ( 0.16) ( 0.18) ( 0.18) ( 0.14)
In excess of net investment income ( 0.05) 0 0 0 0
From net realized gain on investments and foreign
currency related transactions ( 0.93) ( 0.50) ( 0.25) ( 0.05) ( 1.25)
-------- --------- -------- --------- ---------
Total distributions ( 0.99) ( 0.66) ( 0.43) ( 0.23) ( 1.39)
-------- --------- -------- --------- ---------
Net asset value end of period $ 7.60 $ 8.18 $ 6.52 $ 7.67 $ 6.53
======== ========= ======== ========= =========
Total return + 6.38% 38.77% ( 10.05%) 21.74% 7.73%
Ratios/supplemental data
Ratios to average net assets:
Total expenses 1.58% 1.52% 1.65% 1.59% 1.69%
Net investment income (loss) ( 0.15%) 0.99% 1.64% 2.06% 2.14%
Portfolio turnover rate 62% 86% 30% 40% 89%
Net assets end of period (millions) $ 322 $ 339 $ 234 $ 330 $ 328
</TABLE>
# Net investment income is based on average shares outstanding during the
period.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* The Fund changed its fiscal year end from October 31 to September 30,
effective September 30, 1997.
See Combined Notes to Financial Statements.
38
<PAGE>
EVERGREEN
Strategic Growth Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Period Ended
March 31, 1998#*
(Unaudited)
<S> <C>
CLASS C SHARES
Net asset value beginning of period $ 9.25
============
Income (loss) from investment operations
Net investment loss ( 0.02)
Net realized and unrealized gain on investments and foreign currency related transactions 1.29
------------
Total from investment operations 1.27
------------
Net asset value end of period $ 10.52
============
Total return + 13.73%
Ratios/supplemental data
Ratios to average net assets:
Total expenses 1.90%++
Total expenses, excluding indirectly paid expenses 1.90%++
Net investment loss ( 0.37%)++
Portfolio turnover rate 70%
Average commission rate paid per share $ 0.0020
Net assets end of period (thousands) $ 133
</TABLE>
# Net investment income is based on average shares outstanding during the
period.
* For the period from January 22, 1998 (commencement of class operations) to
March 31, 1998.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
See Combined Notes to Financial Statements.
39
<PAGE>
EVERGREEN
Aggressive Growth Fund
Schedule of Investments
March 31, 1998 (unaudited)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C> <C>
COMMON STOCKS - 99.0%
Building - 1.2%
80,000 Oakwood Homes Corp. ............ $ 2,930,000
------------
Business Services - 9.2%
100,000 * APAC TeleServices, Inc. ........ 1,293,750
75,000 * Fiserv, Inc. ................... 4,753,125
100,000 Paychex, Inc. .................. 5,768,750
50,000 * Saville Systems Plc, ADR ....... 2,562,500
100,000 * Sitel Corporation .............. 1,275,000
125,000 * Sterling Commerce, Inc. ........ 5,796,875
------------
21,450,000
------------
Communication Systems &
Services - 7.7%
200,000 * Cisco Systems, Inc. ............ 13,675,000
100,000 * WorldCom, Inc. ................. 4,306,250
------------
17,981,250
------------
Consumer/Diversified - 1.4%
125,000 * Republic Industries, Inc. ...... 3,226,563
------------
Educational Services - 0.8%
40,000 * Sylvan Learning Systems, Inc. .. 1,885,000
------------
Financial - 2.0%
100,000 SunAmerica, Inc. ............... 4,787,500
------------
Healthcare - 12.4%
50,000 HBO & Company .................. 3,018,750
150,000 * Health Management Associates, Inc. 4,293,750
60,000 * HEALTHSOUTH Corporation ........ 1,683,750
70,000 * Medicis Pharmaceutical Corporation 3,053,750
108,750 * MedQuest, Inc. ................. 4,003,359
150,000 Medtronic, Inc. ................ 7,781,250
135,000 * Renal Care Group, Inc. ......... 5,130,000
85+ * Surgical Laser Technologies .... 0
------------
28,964,609
------------
Oil/Gas-Drilling - 14.0%
70,000 * Cliffs Drilling Company ........ 2,891,875
80,000 Diamond Offshore Drilling, Inc. 3,630,000
116,000 ENSCO International, Inc. ...... 3,219,000
115,000 * Global Marine, Inc. ............ 2,846,250
140,000 Marine Drilling Companies, Inc. 3,027,500
140,000 * Noble Drilling Corporation ..... 4,278,750
180,000 * Patterson Energy, Inc. ......... 2,070,000
100,000 * R & B Falcon Corporation ....... 2,962,500
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C> <C>
COMMON STOCKS - continued
Oil/Gas-Drilling - continued
150,000 Transocean Offshore, Inc. ...... $ 7,715,625
------------
32,641,500
------------
Oil/Gas-Equipment & Services -
11.3%
120,000 * EVI, Inc. ...................... 5,557,500
256,000 * Global Industries Ltd. ......... 5,216,000
63,000 * Halliburton Company ............ 3,161,812
120,000 * Petroleum Geo-Services, ADR .... 7,125,000
48,000 Schlumberger Ltd. .............. 3,636,000
31,000 * SEACOR SMIT, Inc. .............. 1,803,813
------------
26,500,125
------------
Retail (Specialty) - 18.2%
115,000 * Action Performance Companies, Inc. 4,046,563
75,000 * Bed Bath & Beyond, Inc. ........ 3,464,063
120,000 * Central Garden & Pet Company ... 4,687,500
85,000 * Ethan Allen Interiors, Inc. .... 5,078,750
80,000 Family Dollar Stores, Inc. ..... 3,040,000
60,000 * Fastenal Company ............... 2,602,500
115,000 Home Depot, Inc. ............... 7,755,312
215,000 * Office Depot, Inc. ............. 6,691,875
806+ * Sound Advice, Inc.
Warrants, Expiring 6/14/99 ..... 0
225,000 * Staples, Inc. .................. 5,217,187
------------
42,583,750
------------
Software/Technology - 20.8%
125,000 * American Power Conversion Corp. 3,585,938
110,000 Analysts International Corporation 3,217,500
106,000 * BMC Software, Inc. ............. 8,884,125
49,500 * Citrix Systems, Inc. ........... 2,682,281
125,000 * EMC Corp. ...................... 4,726,563
52,500 * Etec Systems, Inc. ............. 3,097,500
130,000 Microsoft Corporation .......... 11,635,000
86,250 * Networks Associates, Inc. ...... 5,714,062
150,000 * Parametric Technology Corporation 4,996,875
------------
48,539,844
------------
Total Investments -
(cost $137,403,145) .. 99.0% 231,490,141
Other Assets and
Liabilities - net .... 1.0 2,373,593
----- ------------
Net Assets ............ 100.0% $233,863,734
===== ============
</TABLE>
* Non-income producing securities.
+ No market quotation available. Valued at fair value as determined in good
faith under procedures established by the Fund's Board of Trustees.
Summary of Abbreviations:
ADR American Depository Receipts
See Combined Notes to Financial Statements.
40
<PAGE>
EVERGREEN
Evergreen Fund
Schedule of Investments
March 31, 1998 (unaudited)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - 82.1%
Aerospace & Defense - 0.2%
85,000 Orbital Sciences Corp. .............. $ 3,814,375
-----------
Automotive Equipment &
Manufacturing - 0.2%
92,900 * Lear Corp. .......................... 5,237,238
-----------
Banks - 15.8%
435,624 1st Source Corp. .................... 15,845,823
90,450 Amcore Financial, Inc. .............. 2,442,150
100,000 * American Bancshares, Inc. ........... 1,200,000
116,650 AmSouth Bancorp ..................... 6,889,641
1,500 Anchor Financial Corp. .............. 61,875
121,555 Arrow Financial Corp. ............... 3,798,594
121,495 Banc One Corp. ...................... 7,684,559
45,000 Bank of Commerce .................... 787,500
532,240 BankBoston Corp. .................... 58,679,460
242,437 BSB Bancorp, Inc. ................... 7,515,547
85,000 Cape Cod Bank & Trust Co. ........... 3,740,000
44,500 CCB Financial Corp. ................. 4,920,031
35,000 * Century Bancshares, Inc. ............ 385,000
140,018 Chittenden Corp. .................... 5,233,173
45,000 * Columbia Banking Systems, Inc. ...... 1,434,375
77,000 Comerica, Inc. ...................... 8,147,562
65,000 Compass Bancshares, Inc. ............ 3,266,250
5,000 CoreStates Financial Corp. ++ ....... 448,750
99,380 Cornerstone Bank ** ................. 2,037,290
70,000 Corus Bankshares, Inc. .............. 3,071,250
70,000 Crestar Financial Corp. ............. 4,138,750
14,800 Cullen/Frost Bankers, Inc. .......... 874,125
127,000 First Empire State Corp. ............ 63,484,125
62,500 First State Bancorp ................. 1,593,750
30,013 FNB Corp. ........................... 1,163,004
54,903 Glacier Bancorp, Inc. ............... 1,537,284
105,000 Gold Banc Corp., Inc. ............... 2,657,813
889,540 Hibernia Corp. Cl. A ................ 18,291,166
36,300 Hudson Chartered Bancorp, Inc. ...... 857,588
37,500 Independent Bancshares, Inc. ........ 646,875
5,942 ING Groep NV, ADR ................... 338,323
17,000 Letchworth Independent Bancshares
Corp. ............................... 973,250
67,779 Magna Group, Inc. ................... 3,935,418
22,000 Merchants Bancorp, Inc. ............. 717,750
169,143 National City Corp. ................. 12,400,296
613,510 NationsBank Corp. ................... 44,747,886
100,000 North Fork Bancorp, Inc. ............ 3,862,500
179,846 Old Kent Financial Corp. ............ 6,901,590
49,900 ONBANCorp, Inc. ..................... 3,455,575
33,593 One Valley Bancorp of West Virginia,
Inc. ................................ 1,270,235
90,000 Reliance Acceptance Group, Inc. ..... 22,500
66,000 Sandwich Bancorp, Inc. .............. 4,174,500
50,000 Seacoast Banking Corp. of Florida Cl. A 1,850,000
136,512 State Financial Services Corp. Cl. A 3,515,184
73,975 Summit Bancorp ...................... 3,703,373
410,000 * Surety Capital Corp. ** ............. 2,357,500
107,145 * United Security Bancorp ............. 2,330,404
39,285 Univest Corp. of Pennsylvania ....... 2,730,307
10,000 USBancorp, Inc. ..................... 771,250
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
Banks - continued
43,350 Wachovia Corp. ...................... $ 3,676,622
17,000 Webster Financial Corp. ............. 1,181,500
53,137 West Coast Bancorp, Inc. (Ore.) ..... 1,348,351
45,560 Western Bancorp. .................... 1,981,860
-----------
341,079,484
-----------
Building, Construction &
Furnishings - 4.8%
70,000 * Burcon Properties Ltd. .............. 750,962
30,000 * Castle & Cooke, Inc. ................ 504,375
171,250 Cavalier Homes, Inc. ................ 1,958,672
288,100 * Champion Enterprises, Inc. .......... 7,688,669
421,625 Clayton Homes, Inc. ................. 8,537,906
105,000 * Crossmann Communities, Inc. ......... 3,117,188
242,360 D.R. Horton, Inc. ................... 5,150,150
80,000 * Furniture Brands International, Inc. 2,575,000
70,800 Juno Lighting, Inc. ................. 1,495,650
70,000 * Knoll, Inc. ......................... 2,699,375
106,800 La-Z-Boy Chair Co. .................. 5,333,325
281,740 Lennar Corp. ........................ 9,702,421
131,000 Lowe's Companies, Inc. .............. 9,194,562
159,700 * M/I Schottenstein Homes, Inc. ....... 3,493,438
61,900 Medusa Corp. ........................ 3,783,637
60,000 Miller (Herman), Inc. ............... 2,011,875
73,500 * Monaco Coach Corp. .................. 2,884,875
22,600 * Palm Harbor Homes, Inc. ............. 833,375
78,000 * Royal Group Technologies Ltd. ....... 2,554,500
100,000 * Southern Energy Homes, Inc. ......... 1,212,500
40,600 * Stanley Furniture Co., Inc. ......... 1,618,925
90,000 * Sundance Homes, Inc. ................ 202,500
119,400 TJ International, Inc. .............. 3,820,800
558,600 * Toll Brothers, Inc. ................. 15,710,625
158,500 * US Home Corp. ....................... 7,261,281
-----------
104,096,586
-----------
Business Equipment & Services -
1.0%
297,130 First Data Corp. .................... 9,656,725
84,800 * Gradco Systems, Inc. ................ 604,200
160,000 * In Focus Systems, Inc. .............. 1,440,000
100,000 * Macromedia, Inc. .................... 1,487,500
57,000 * Metromail Corp. ..................... 1,973,625
164,700 * Zebra Technologies Corp. ............ 6,340,950
-----------
21,503,000
-----------
Chemical & Agricultural Products -
1.7%
62,221 Delta & Pine Land Co. ............... 3,235,492
150,000 H.B. Fuller Co. ..................... 8,981,250
40,000 Nalco Chemical Co. .................. 1,622,500
16,500 OM Group, Inc. ...................... 695,062
359,568 Schulman (A.), Inc. ................. 9,079,092
335,000 Sigma-Aldrich Corp. ................. 12,478,750
18,900 Tredegar Industries, Inc. ........... 1,369,069
-----------
37,461,215
-----------
</TABLE>
41
<PAGE>
EVERGREEN
Evergreen Fund
Schedule of Investments (continued)
March 31, 1998 (unaudited)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
Communication Systems &
Services - 1.9%
329,250 * Andrew Corp. ....................... $ 6,523,265
165,000 * Cisco Systems, Inc. ................ 11,281,875
50,000 * Coherent Communications System
Corp. .............................. 2,306,250
232,000 * Coherent, Inc. ..................... 5,611,500
50,000 * DSP Group, Inc. .................... 956,250
120,000 * Inter-Tel, Inc. .................... 3,232,500
185,000 * Powertel, Inc. ..................... 3,994,844
60,000 * Tellabs, Inc. ...................... 4,027,500
155,000 * Vertex Communications Corp. ........ 3,952,500
-----------
41,886,484
-----------
Consumer Products & Services -
3.9%
140,000 Aaron Rents, Inc. Cl. B ............ 3,403,750
732,298 * Cendant Corp. ...................... 29,017,308
105,000 Commonwealth Industries, Inc. ...... 1,830,937
151,300 Crown Crafts, Inc. ................. 3,167,844
20,000 * Deckers Outdoor Corp. .............. 145,000
341,700 * Gaylord Container Corp. Cl. A ...... 2,541,394
53,000 Gucci Group ........................ 2,517,500
182,300 Heilig-Meyers Co. .................. 2,563,594
201,030 K2, Inc. ........................... 4,485,482
326,815 Lancaster Colony Corp. ............. 13,869,212
140,000 * LoJack Corp. ....................... 2,012,500
155,000 * Nautica Enterprises, Inc. .......... 4,766,250
54,400 Nike, Inc. Cl. B ................... 2,407,200
70,000 Noble Affiliates, Inc. ............. 2,913,750
75,000 * North Face, Inc. ................... 1,818,750
45,000 * Recovery Engineering, Inc. ......... 1,327,500
53,800 Toro Co. ........................... 2,061,212
79,000 Valspar Corp. ...................... 3,100,750
-----------
83,949,933
-----------
Electrical Equipment & Services -
2.8%
90,000 * ADFlex Solutions, Inc. ............. 1,541,250
285,400 * Atmel Corp. ........................ 4,298,837
388,933 Baldor Electric Co. ................ 10,476,883
82,500 * Brooks Automation, Inc. ............ 1,299,375
75,000 * Electro Scientific Industries, Inc. 2,896,875
163,900 Fair Issac & Co., Inc. ............. 6,187,225
27,000 * Franklin Electric Co., Inc. ........ 1,849,500
130,400 * Hadco Corp. ........................ 5,167,100
364,150 Harman International Industries, Inc. 16,022,600
63,000 Jabil Circuit, Inc. ................ 2,098,687
266,697 * Paxar Corp. ........................ 3,783,764
45,000 * Reliability, Inc. .................. 540,000
226,400 * SMART Modular Technologies, Inc. ... 5,164,750
-----------
61,326,846
-----------
Finance & Insurance - 9.7%
23,969 Aegon NV ........................... 2,907,739
71,228 Allmerica Financial Corp. .......... 4,549,688
368,800 Ambac Financial Group, Inc. ........ 21,551,750
111,900 Countrywide Credit Industries, Inc. 5,951,681
108,900 Dain Rauscher Corp. ................ 6,268,556
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
Finance & Insurance - continued
330,000 Edwards (A.G.), Inc. ............... $14,437,500
29,100 Enhance Financial Services Group, Inc. 2,020,631
70,000 Executive Risk, Inc. ............... 4,987,500
15,700 Farm Family Holdings, Inc. ......... 608,375
507,600 Federal Home Loan Mortgage Corp. ... 24,079,275
618,000 Federal National Mortgage Association. 39,088,500
37,700 Fidelity National Financial, Inc. .. 1,385,475
114,000 First American Financial Corp. ..... 7,296,000
50,000 * First Enterprise Financial Group ... 6,250
85,000 * FPIC Insurance Group, Inc. ......... 2,741,250
50,000 * Itla Capital Corp. ................. 1,062,500
113,100 John Nuveen Co. Cl. A .............. 4,142,287
6,000 Landamerica Financial Group, Inc. .. 271,500
27,333 Legg Mason, Inc. ................... 1,621,189
83,000 * Life USA Holdings, Inc. ............ 1,270,938
91,515 MBIA, Inc. ......................... 7,092,412
75,000 * Mego Mortgage Corp. ................ 154,688
507,600 MGIC Investment Corp. .............. 33,342,975
38,200 Mutual Risk Mgmt Ltd. .............. 1,294,025
15,000 Ohio Casualty Corp. ................ 720,000
100,000 Penn-America Group, Inc. ........... 2,181,250
16,600 PennCorp Financial Group, Inc. ..... 479,325
20,000 Price (T.) Rowe & Associates, Inc. . 1,407,500
54,692 Providian Financial Corp. .......... 3,141,372
86,000 ReliaStar Financial Corp. .......... 3,961,375
75,107 Resource Bancshares Mortgage Group,
Inc. ............................... 1,192,324
30,000 State Auto Financial Corp. ......... 1,192,500
52,500 SunAmerica, Inc. ................... 2,513,437
89,250 Trenwick Group, Inc. ............... 3,346,875
14,100 Vesta Insurance Group, Inc. ........ 756,113
-----------
209,024,755
-----------
Food & Beverage Products - 0.1%
16,500 Coca Cola Bottling Co. ............. 952,875
40,000 Wendy's International, Inc. ........ 892,500
-----------
1,845,375
-----------
Healthcare Products & Services -
10.3%
24,000 * Abiomed, Inc. ...................... 363,000
165,000 ADAC Laboratories .................. 3,815,625
75,000 Arbor Drugs, Inc. .................. 1,767,188
60,000 Arrow International, Inc. .......... 2,062,500
40,000 * Arterial Vascular Engineering, Inc. 1,465,000
110,000 Beckman Instruments, Inc. .......... 6,304,375
130,000 Beverly Enterprises Inc. ........... 1,730,625
18,750 * Bio-Rad Laboratories, Inc. Cl. A ... 503,906
190,000 Biomet, Inc. ....................... 5,700,000
98,298 * Boston Scientific Corp. ............ 6,635,115
148,900 * Chad Therapeutics, Inc. ............ 1,135,363
205,300 Columbia / HCA Healthcare Corp. .... 6,620,925
8,025 * Coram Healthcare Corp. Warrants -
$22.125 Expiring 7/11/99+........... 0
51,825 ESC Medical Systems Ltd. ........... 1,820,353
112,800 * Exactech, Inc. ..................... 740,250
40,000 * Express Scripts, Inc. Cl. A ........ 3,391,250
</TABLE>
42
<PAGE>
EVERGREEN
Evergreen Fund
Schedule of Investments (continued)
March 31, 1998 (unaudited)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
Healthcare Products & Services -
continued
50,000 First Health Group Corp. ............ $ 2,712,500
67,666 * Foundation Health Systems, Inc. ..... 1,865,044
220,000 HBO & Co. ........................... 13,282,500
70,575 * Health Management Associates, Inc.
Cl. A ............................... 2,020,209
23,600 * HEALTHSOUTH Corp. ................... 662,275
215,000 * Hologic, Inc. ....................... 5,966,250
300,000 * Idexx Laboratories, Inc. ............ 5,400,000
30,000 Invacare Corp. ...................... 780,000
390,000 Johnson & Johnson ................... 28,591,875
13,400 * Lincare Holdings, Inc. .............. 946,375
43,100 * Maxxim Medical, Inc. ................ 1,236,431
235,800 McKesson Corp. ...................... 13,617,450
144,361 * MedPartners, Inc. ................... 1,479,700
500,000 Merck & Co., Inc. ................... 64,187,500
35,000 Meridian Diagnostics, Inc. .......... 446,250
1,446 Pacificare Health Systems, Inc. Cl. A . 107,004
4,545 * Pacificare Health Systems, Inc. Cl. B . 342,011
59,163 Pharmerica Inc. ..................... 880,050
127,500 * St. Jude Medical, Inc. .............. 4,263,281
468,000 Stryker Corp. ....................... 21,937,500
90,000 * Sun Healthcare Group, Inc. .......... 1,676,250
72,950 Tenet Healthcare Corp. .............. 2,648,997
46,500 U.S. Surgical Corp. ................. 1,534,500
45,600 West Co., Inc. ...................... 1,373,700
-----------
222,013,127
-----------
Industrial Specialty Products &
Service - 5.4%
121,000 AptarGroup, Inc. .................... 7,267,562
33,000 BHA Group Holdings, Inc. Cl. A ...... 589,875
40,500 * Chemfab Corp. ....................... 992,250
145,000 * Dionex Corp. ........................ 8,083,750
122,000 Dover Corp. ......................... 4,636,000
191,400 Furon Co. ........................... 4,509,863
43,200 * Global Industrial Technologies, Inc. 712,800
198,000 * Input/Output, Inc. .................. 4,628,250
160,000 Kaydon Corp. ........................ 6,540,000
180,800 Leggett & Platt, Inc. ............... 9,299,900
18,400 Nacco Industries, Inc. Cl. A ........ 2,465,600
66,000 * Osmonics, Inc. ...................... 1,093,125
247,900 Pall Corp. .......................... 5,329,850
140,700 Park Electrochemical Corp. .......... 3,631,819
133,200 Robbins & Myers, Inc. ............... 5,078,250
30,000 * Simula, Inc. ........................ 478,125
241,500 Snap-on, Inc. ....................... 11,018,437
185,000 Spartech Corp. ...................... 4,058,438
20,000 * Special Devices, Inc. ............... 570,000
147,200 Tecumseh Products Co. Cl. A ......... 7,912,000
57,800 Tecumseh Products Co. Cl. B ......... 3,258,475
230,000 Teleflex, Inc. ...................... 9,660,000
20,000 * U.S. Rentals, Inc. .................. 552,500
202,400 * UCAR International, Inc. ............ 6,350,300
50,000 Wescast Industries, Inc. ............ 1,468,750
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
Industrial Specialty Products &
Service - continued
104,000 Woodward Governor Co. ............... $ 2,899,000
90,000 Zero Corp. .......................... 2,542,500
-----------
115,627,419
-----------
Information Services &
Technology - 7.7%
60,000 * Adaptec, Inc. ....................... 1,177,500
150,000 * American Business Information, Inc. . 2,137,500
150,000 American Business Information, Inc.
Cl. A ............................... 1,968,750
54,850 * Analytical Surveys, Inc. ............ 2,811,063
120,000 Autodesk, Inc. ...................... 5,175,000
40,000 Compaq Computer Corp. ............... 1,035,000
75,000 Computer Associates International, Inc. 4,331,250
50,000 * Computer Products, Inc. ............. 1,165,625
52,000 Comverse Technology, Inc. ........... 2,541,500
120,000 * Dialogic Corp. ...................... 5,122,500
101,400 * Dupont Photomasks, Inc. ............. 4,385,550
335,000 * Gateway 2000, Inc. .................. 15,724,062
405,468 Hewlett-Packard Co. ................. 25,696,534
156,250 * IFR Systems, Inc. ................... 3,476,563
598,000 Intel Corp. ......................... 46,681,375
75,000 * KLA-Tencor Corp. .................... 2,868,750
96,000 Micros Systems Inc. ................. 5,772,000
140,995 Molex, Inc. ......................... 3,877,363
33,750 * National Instruments Corp. .......... 1,151,719
380,000 * Parametric Technology Corp. ......... 12,658,750
406,000 * Sun Microsystems, Inc. .............. 16,937,812
-----------
166,696,166
-----------
Leisure & Tourism - 0.1%
75,000 American Skiing Co. ................. 1,256,250
-----------
Oil/Energy - 0.8%
25,000 * Barrett Resources Corp. ............. 873,438
100,000 * COHO Energy, Inc. ................... 781,250
60,000 * Global Marine, Inc. ................. 1,485,000
30,000 KN Energy, Inc. ..................... 1,771,875
50,000 * Noble Drilling Corp. ................ 1,528,125
20,000 Penn Virginia Corp. ................. 582,500
187,600 Precision Drilling Corp. ............ 3,963,050
80,000 Ranger Oil Ltd. ..................... 520,000
60,000 * Stolt Comex Seaway, SA .............. 1,511,250
118,590 Tosco Corp. ......................... 4,180,297
-----------
17,196,785
-----------
Oil Field Services - 0.6%
140,000 Global Industries Ltd. .............. 2,852,500
170,000 * Hvide Marine, Inc. Cl. A ............ 2,996,250
61,500 Lufkin Industries, Inc. ............. 1,998,750
100,000 * Offshore Logistics, Inc. ............ 1,987,500
118,000 R & B Falcon Corp. .................. 3,495,750
-----------
13,330,750
-----------
Paper & Packaging - 0.5%
15,400 Avery Dennison Corp. ................ 821,975
31,815 Kimberly-Clark Corp. ................ 1,594,727
</TABLE>
43
<PAGE>
EVERGREEN
Evergreen Fund
Schedule of Investments (continued)
March 31, 1998 (unaudited)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
Paper & Packaging - continued
87,000 St. Joe Corp. ......................... $ 2,925,375
186,662 Wausau Mosinee Paper Corp. ............ 4,304,892
-------------
9,646,969
-------------
Pharmaceuticals - 0.1%
75,000 Dura Pharmaceuticals, Inc. ............ 1,846,875
-------------
Publishing, Broadcasting &
Entertainment - 6.1%
45,000 * American Radio Systems Corp. Cl. A .... 2,854,687
252,000 Belo (A.H.) Corp.
Ser. A ................................ 13,860,000
150,000 Cadmus Communications Corp. ........... 3,562,500
18,180 CBS Corp. ............................. 616,984
30,000 * CellularVision USA, Inc. .............. 150,000
45,000 * Chancellor Media Corp. ................ 2,064,375
857,000 * Clear Channel Communications, Inc. .... 83,986,000
10,000 Gaylord Entertainment Co. ............. 357,500
205,800 * Jacor Communications, Inc. ............ 12,142,200
137,500 * Obie Media Corp. ...................... 1,615,625
190,000 Wiley (John) & Sons, Inc. Cl. A ....... 10,461,875
-------------
131,671,746
-------------
Real Estate - 2.2%
139,460 * Alexander's, Inc. REIT ................ 13,065,659
46,200 Apartment Investment & Management
Co. Cl. A REIT ........................ 1,778,700
28,900 Arden Realty Group, Inc. REIT ......... 823,650
172,500 * Candlewood Hotel Co., Inc. ............ 1,401,562
54,000 Chelsea GCA Realty, Inc. REIT ......... 1,998,000
148,600 Continental Homes Holding Corp. ....... 6,909,900
78,000 Del Webb Corp. ........................ 2,379,000
75,000 * Entertainment Properties Trust REIT ... 1,471,875
19,062 Equity Residential Properties Trust REIT 957,866
10,000 Forest City Enterprises, Inc. ......... 564,375
47,400 * FRP Properties, Inc. .................. 1,540,500
44,000 * Grubb & Ellis Co. ..................... 445,500
50,000 Horizon Group, Inc. REIT .............. 615,625
120,000 * Host Marriott Corp. ................... 2,272,500
20,000 * Irvine Apartment Communities, Inc.
REIT .................................. 630,000
33,000 * John Q. Hammons Hotels, Inc. Cl. A .... 259,875
40,000 LNR Property Corp. .................... 1,070,000
321,661 * Prime Hospitality Corp. ............... 6,272,389
115,000 * Servico, Inc. ......................... 2,429,375
7,625 * Wellsford Real Properties, Inc. 144A .. 110,563
-------------
46,996,914
-------------
Retailing & Wholesale - 3.0%
145,000 Avnet, Inc. ........................... 8,346,562
219,000 * Cole National Corp. Cl. A ............. 8,458,875
120,000 * Costco Companies, Inc. ................ 6,405,000
98,200 Dillards, Inc. ........................ 3,627,262
256,800 Fingerhut Companies, Inc. ............. 6,660,750
100,000 Finish Line, Inc. Cl. A ............... 2,375,000
50,000 * Footstar, Inc. ........................ 1,800,000
80,000 * Home Products International, Inc. ..... 1,290,000
34,800 IMC Global, Inc. ...................... 1,324,575
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
Retailing & Wholesale - continued
60,800 * Jones Apparel Group, Inc. ............. $ 3,347,800
122,900 Mercantile Stores Co., Inc. ........... 8,257,344
29,500 * Payless Shoesource, Inc. .............. 2,219,875
43,750 Proffitts, Inc. ....................... 1,585,938
268,000 Seaway Food Town, Inc. ** ............. 7,504,000
50,000 SED International Holdings, Inc. ...... 568,750
35,000 St. John Knits, Inc. .................. 1,653,750
-------------
65,425,481
-------------
Telecommunication Services &
Equipment - 0.3%
40,000 ADC Telecommunications Inc. ........... 1,102,500
158,000 * Aspect Telecommunications Corp. ....... 4,236,375
-------------
5,338,875
-------------
Thrift Institutions - 1.2%
295,000 Dime Financial Corp. ** ............... 10,620,000
185,100 First Palm Beach Bancorp, Inc. ........ 7,450,275
73,500 * Hawthorne Financial Corp. ............. 1,451,625
148,500 Maryland Federal Bancorp, Inc. ........ 5,810,063
-------------
25,331,963
-------------
Transportation - 1.7%
125,000 ASA Holdings, Inc. .................... 4,601,562
58,000 Delta Air Lines, Inc. ................. 6,858,500
25,700 GATX Corp. ............................ 2,004,600
217,465 * Heartland Express, Inc. ............... 6,034,654
25,000 Skywest, Inc. ......................... 912,500
423,500 SouthWest Airlines Co. ................ 12,519,719
120,000 U.S. Freightways Corp. ................ 4,320,000
-------------
37,251,535
-------------
Total Common Stocks
(cost $764,681,273).................... 1,770,856,146
-------------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount
<S> <C> <C>
SHORT-TERM INVESTMENTS - 14.9%
Commercial Paper - 13.8%
$19,600,000 Allianz Of America Finance Corp.
5.53%, 5/5/98 ................ 19,497,634
1,495,000 Asset Portfolio Funding
5.50%, 4/7/98 ................ 1,493,630
8,450,000 Banc One Funding Corp
5.53%, 4/22/98 ............... 8,422,742
11,000,000 BMW U.S. Capital Corp.
5.51%, 5/13/98 ............... 10,929,288
19,350,000 Daimler-Benz North America Corp.
5.52%, 5/19/98 ............... 19,207,584
2,380,000 Delaware Funding Corp.
5.53%, 5/20/98 ............... 2,362,086
5,530,000 Dominion Semiconductor
5.52%, 5/4/98 ................ 5,502,018
Duke Capital Corp.
7,000,000 5.51%, 4/13/98 .............. 6,987,143
11,750,000 5.52%, 4/13/98 .............. 11,728,380
350,000 Duke University
5.48%, 4/3/98 ................ 349,893
</TABLE>
44
<PAGE>
EVERGREEN
Evergreen Fund
Schedule of Investments (continued)
March 31, 1998 (unaudited)
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C> <C>
SHORT-TERM INVESTMENTS - 14.9%
Commercial Paper - 13.8%
$19,000,000 Eiger Capital Corp.
5.52%, 5/8/98 ..................... $ 18,892,207
Fina Oil & Chemical Co.
2,200,000 5.54%, 5/12/98 ................... 2,186,119
15,750,000 5.54%, 5/18/98 ................... 15,636,084
1,075,000 Finova Capital Corp.
5.54%, 5/22/98 .................... 1,066,563
15,000,000 Four Winds Funding Corp.
5.50%, 4/14/98 .................... 14,970,208
4,750,000 Great Lakes Chemical Corp.
5.52%, 4/8/98 ..................... 4,744,902
27,650,000 Market Street Funding Corp.
5.52%, 4/17/98 .................... 27,582,165
3,650,000 Massachusetts College of Pharmacy
and Allied Health Services
5.58%, 5/11/98 .................... 3,627,370
3,880,000 Park Avenue Recreation Corp.
5.53%, 5/21/98 .................... 3,850,199
26,100,000 Pfizer, Inc.
5.50%, 4/30/98 .................... 25,984,363
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C> <C>
SHORT-TERM INVESTMENTS - continued
Commercial Paper - continued
$27,150,000 Republic Industries Funding Corp.
5.52%, 4/24/98 .................... $ 27,054,251
25,000,000 Safeco Corp.
5.50%, 4/20/98 .................... 24,927,431
12,850,000 Southland Corp. 5.53%, 5/6/98 ..... 12,780,913
20,625,000 Trident Capital Finance, Inc.
5.54%, 4/30/98 .................... 20,532,955
7,250,000 Wood Street Funding Corp. 5.50%,
4/9/98 ............................ 7,241,139
--------------
297,557,267
--------------
U.S. Government Agency
Obligations - 1.1%
23,175,000 Federal Home Loan Mortgage Corp.
5.44%, 4/3/98 ..................... 23,167,996
--------------
Total Short-Term Investments
(cost $320,725,263)................ 320,725,263
--------------
Total Investments -
(cost $1,085,406,536)..... 97.0% 2,091,581,409
Other Assets and
Liabilities - net ........ 3.0 63,669,314
----- --------------
Net Assets ............... 100.0% $2,155,250,723
===== ==============
</TABLE>
Summary of Portfolio Abbreviations:
ADR American Depository Receipt
NV Naamloze Veunootschap (Dutch Corporation)
REIT Real Estate Investment Trust
SA Sociedad Anonyme (Spanish Corporation)
* Non-income producing securities.
** Investment in non-controlled affiliate holding over 5% of outstanding voting
shares. At March 31, 1998, the Fund held investments in the following
securities:
<TABLE>
<S> <C> <C> <C> <C>
Dividends
Security Name Shares Cost Value Earned
- ------------------------ ----- ----- ------ ------
Cornerstone Bank 99,380 $1,089,310 $ 2,037,290 $ 18,900
Dime Financial Corp. 295,000 3,573,760 10,620,000 67,850
Seaway Food Town, Inc. 268,000 1,563,474 7,504,000 32,160
Surety Capital Corp. 410,000 1,559,388 2,357,500 -
</TABLE>
+ No market quotation available. Valued at fair value as determined in good
faith under procedures established by the Fund's Board of Trustees.
++ At March 31, 1998 the Fund owned 5,000 shares of common stock of CoreStates
Financial Corp., at a cost of $364,090. During the six month period ended
March 31, 1998, the Fund earned $5,000 in dividend income from this
investment. These shares were purchased prior to the acquisition of
CoreStates Financial Corp. by First Union.
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.
See Combined Notes to Financial Statements.
45
<PAGE>
EVERGREEN
Micro Cap Fund
Schedule of Investments
March 31, 1998 (unaudited)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - 99.0%
Aerospace &
Defense - 0.4%
9,900 * Ducommun, Inc. ...... $ 289,575
----------
Automotive Equipment &
Manufacturing - 0.7%
45,000 * Noble International
Ltd.................. 472,500
----------
Banks - 11.6%
19,360 BT Financial Corp.... 1,079,320
10,000 CNB Financial Corp... 370,000
2,500 First Keystone
Financial, Inc....... 45,625
20,000 First Oak Brook
Bancshares,
Inc. Cl. A .......... 1,000,000
2,850 First West Virginia
Bancorp, Inc......... 80,156
26,997 Independent Bank
Corp................. 1,052,883
2,900 Northern States
Financial Corp....... 464,000
5,000 Peoples Bancorp, Inc. 241,250
12,500 Pinnacle Financial
Services, Inc........ 621,094
20,000 Second Bancorp, Inc.. 641,250
15,000 * Six Rivers National
Bank................. 288,750
31,725 Washington Trust
Bancorp, Inc......... 1,070,719
41,875 West Coast Bancorp,
Inc. (Ore.).......... 1,062,578
----------
8,017,625
----------
Building, Construction
& Furnishings - 4.4%
23,750 Cavalier Homes, Inc. 271,641
15,000 * Crossmann Communities,
Inc.................. 445,313
32,000 * Mity Lite, Inc. ..... 624,000
45,000 * Modtech, Inc. ....... 925,312
20,000 * Stanley Furniture Co.,
Inc.................. 797,500
----------
3,063,766
----------
Business Equipment &
Services - 4.5%
50,000 * Equitrac Corp. ...... 1,012,500
94,750 General Employment
Enterprises, Inc..... 1,113,313
20,000 * Personnel Managment,
Inc.................. 280,000
37,300 * TEAM America Corp.... 515,206
32,000 * Uniflex, Inc......... 192,000
==========
3,113,019
==========
Chemical & Agricultural
Products - 3.1%
44,000 Balchem Corp. ....... 748,000
42,600 Chase Corp. ......... 788,100
51,318 Hawkins Chemical,
Inc.................. 577,328
----------
2,113,428
----------
Consumer Products &
Services - 7.7%
22,000 Bush Industries, Inc.
Cl. A................ 624,250
35,000 Cooker Restaurant
Corp................. 352,187
47,000 First Years, Inc..... 1,650,875
55,000 * Fountain Power Boat
Industries, Inc...... 577,500
110,000 * Gotham Apparel Corp.**+ 5,500
15,000 * Meadowcraft, Inc..... 219,375
80,000 * Play By Play Toys &
Novelties, Inc....... 1,510,000
31,600 Stephan Co. ......... 398,950
----------
5,338,637
----------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
Electrical Equipment &
Services - 5.4%
50,000 * Ault, Inc. .......... $ 393,750
63,270 * Del Global Technologies
Corp................. 719,696
20,000 * Graham Corp. ........ 326,250
8,400 L.S. Starrett, Co.
Cl. A................ 326,550
52,000 * OSI Systems, Inc. ... 604,500
60,000 * Powell Industries,
Inc.................. 641,250
20,000 * Reliability, Inc..... 240,000
21,000 Todd-AO Corp. Cl. A . 221,813
20,000 * Vicon Industries, Inc. 232,500
----------
3,706,309
----------
Finance &
Insurance - 3.1%
70,500 * ACE Cash Express,
Inc.................. 1,026,657
21,600 * CorVel Corp. ........ 858,600
----------
11,804 * Grand Premier
Financial, Inc....... 223,538
----------
2,108,795
----------
Food & Beverage
Products - 1.0%
43,333 Worthington Foods,
Inc.................. 720,411
----------
Healthcare Products &
Services - 10.2%
40,000 * Alcide Corp.......... 2,160,000
120,500 * Biosource
International, Inc... 775,719
44,888 Del Laboratories, Inc. 1,436,416
25,000 * Empi, Inc. .......... 404,687
25,000 Kewaunee Scientific
Corp................. 287,500
62,100 Meridian Diagnostics,
Inc.................. 791,775
60,000 * Mesa Laboratories, Inc. 348,750
70,300 * Neogen Corp. .......... 812,844
==========
7,017,691
==========
Industrial Specialty
Products & Services - 15.3%
27,500 * AG Services of America,
Inc.................. 493,281
25,000 * American Eco Corp.... 242,188
19,900 American Precision
Industries, Inc...... 376,856
44,100 Badger Meter, Inc.... 1,582,087
23,050 * Benthos, Inc......... 322,700
20,000 * Chemfab Corp......... 490,000
20,000 * Fibermark, Inc....... 466,250
40,000 * General Bearing Corp. 515,000
14,000 General Magnaplate
Corp................. 106,750
30,000 * Genlyte Group, Inc... 577,500
35,000 Gorman Rupp Co....... 682,500
60,000 * Hitox Corp. of
America.............. 108,750
40,000 * Meade Instruments
Corp................. 387,500
53,250 Met-Pro Corp. ....... 828,703
22,500 Modern Controls, Inc. 202,500
71,000 RPC, Inc. ........... 869,750
17,500 * Special Devices, Inc. 498,750
26,500 * Steel of West Virginia,
Inc.................. 274,938
25,000 * Sterignics
International, Inc... 550,000
46,350 World Fuel Services
Corp................. 1,019,700
----------
10,595,703
----------
</TABLE>
46
<PAGE>
EVERGREEN
Micro Cap Fund
Schedule of Investments (continued)
March 31, 1998 (unaudited)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C> <C>
COMMON STOCKS - continued
Information Services &
Technology - 11.5%
25,000 *Advanced Communications Systems,
Inc. ............................ $ 289,063
72,500 *American Science & Engineering,
Inc.............................. 987,812
15,000 *Analytical Surveys, Inc. ........ 768,750
12,500 *Comarco, Inc. ................... 269,531
29,600 *Diversified Corporate Resources,
Inc.............................. 414,400
23,000 *Equinox Systems, Inc. ........... 491,625
33,750 IFR Systems, Inc. ............... 750,937
27,000 *Norstan, Inc. ................... 668,250
37,750 *Optelecom, Inc. ................. 268,969
25,000 *Percon Acquisition, Inc. ........ 277,344
40,000 *SBS Technologies, Inc. .......... 1,150,000
51,000 *Viagrafix Corp. ................. 771,375
80,000 *WPI Group, Inc. ................. 660,000
10,000 *Zygo Corp. ...................... 145,000
-----------
7,913,056
-----------
Machinery-Diversified - 0.6%
50,000 *Plasma Therm, Inc. .............. 378,125
-----------
Manufacturing-Distributing - 1.1%
40,000 *Koala Corp. ..................... 720,000
21,600 *Top Air Manufacturing, Inc. ..... 55,350
-----------
775,350
-----------
Oil/Energy - 0.7%
20,000 *Mitcham Industries, Inc. ........ 250,000
14,500 *Prima Energy Corp. .............. 261,000
-----------
511,000
-----------
Oil Field Services - 3.5%
48,500 *Dawson Geophysical Co. .......... 769,937
42,600 *Eagle Geophysical, Inc. ......... 686,925
80,000 *Omni Energy Services Corp. ...... 950,000
-----------
2,406,862
-----------
Publishing, Broadcasting &
Entertainment - 0.2%
10,400 *Clark (Dick) Productions, Inc. .. 139,100
-----------
Real Estate - 0.4%
20,000 *Execustay Corp. ................. 255,000
-----------
Retailing & Wholesale - 4.5%
59,000 *Bowlin Outdoor Advertising &
Travel Centers, Inc. ............ 516,250
60,000 Craftmade International Inc. .... 885,000
27,000 *Kenneth Cole Productions, Inc.
Cl. A............................ 543,375
34,500 Lacrosse Footwear, Inc. ......... 405,375
35,000 *Rocky Shoes & Boots, Inc. ....... 562,187
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C> <C>
COMMON STOCKS - continued
Retailing & Wholesale - continued
20,000 *Shoe Pavilion, Inc. ............. $ 198,750
-----------
3,110,937
-----------
Telecommunication Services &
Equipment - 0.9%
40,000 *Cognitronics Corp. .............. 652,500
-----------
Textile & Apparel - 1.2%
30,000 Culp, Inc. ...................... 615,000
20,000 Decorator Industries, Inc. ...... 210,000
-----------
825,000
-----------
Thrift Institutions - 4.4%
30,000 Horizon Financial Corp. ......... 562,500
14,600 Iroquois Bancorp, Inc. .......... 365,000
30,710 Parkvale Financial Corp. ........ 959,687
25,000 *WSFS Financial Corp. ............ 537,500
25,000 York Financial Corp. ............ 643,750
-----------
3,068,437
-----------
Transportation - 1.3%
23,000 *MTL, Inc. ....................... 885,500
-----------
Utilities-Electric - 0.1%
1,591 Eselco, Inc. .................... 64,237
-----------
Utilities-Telephone - 1.2%
22,800 Hickory Tech Corp. .............. 843,600
-----------
Total Common Stocks
(cost $49,929,588) .............. 68,386,163
-----------
Principal
Amount
SHORT-TERM INVESTMENTS - 0.6%
Government Agency Notes &
Bonds - 0.6%
Federal Home Loan Mortgage
Corp.
$ 25,000 5.41%, 4/3/98 .................. 24,992
310,000 5.46%, 4/20/98 ................. 309,107
120,000 5.50%, 4/20/98 ................. 119,652
-----------
453,751
-----------
Total Short-Term Investments
(cost $453,751) ................. 453,751
-----------
Total Investments -
(cost $50,383,339) ..... 99.6% 68,839,914
Other Assets and
Liabilities - net ...... 0.4 242,781
----- -----------
Net Assets ............. 100.0% $69,082,695
===== ===========
</TABLE>
* Non-income producing securities.
** Investment in non-controlled affiliate-holding over 5% of outstanding voting
securities. This investment was acquired by the Fund at a cost of $665,880.
During the six months ended March 31, 1998, the Fund recognized no dividend
income from this security.
+ No market quotation available. Valued at fair value as determined in good
faith under procedures establised by the Fund's Board of Trustees.
See Combined Notes to Financial Statements.
47
<PAGE>
EVERGREEN
Omega Fund
Schedule of Investments
March 31, 1998 (unaudited)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - 98.0%
Automotive Equipment &
Manufacturing - 1.8
90,000 Ford Motor Co. ...... $5,833,125
----------
Banks - 11.1
40,000 Astoria Financial
Corp................. 2,472,500
54,700 BankBoston Corp. .... 6,030,675
100,000 First American Corp.. 4,887,500
75,000 Fleet Financial Group,
Inc.................. 6,379,687
101,200 * Golden St. Bancorp,
Inc.................. 3,864,575
100,000 North Fork Bancorp,
Inc.................. 3,862,500
155,000 TCF Financial Corp... 5,260,313
83,800 Westamerica Bancorp.. 2,799,444
----------
35,557,194
----------
Building, Construction
& Furnishings - 2.2%
217,900 * Furniture Brands..... 7,013,656
----------
International, Inc.
Business Equipment &
Services - 1.4%
80,000 Paychex, Inc......... 4,612,500
----------
Chemical & Agricultural
Products - 1.6%
100,000 Monsanto Co.......... 5,200,000
----------
Communication Systems &
Services - 3.4
77,500 * Cisco Systems, Inc... 5,301,484
200,000 * Loral Space &
Communications....... 5,587,500
----------
10,888,984
----------
Consumer Products &
Services - 3.9%
85,000 * Action Performance
Companies, Inc....... 2,982,969
240,333 * Cendant Corp. ....... 9,523,206
----------
12,506,175
----------
Diversified
Companies - 3.8%
90,000 Trinity Industries, 4,938,750
Inc.
130,000 Tyco International Ltd. 7,101,250
----------
12,040,000
----------
Electrical Equipment &
Services - 3.4%
125,000 General Electric Co. 10,773,438
----------
Finance &
Insurance - 8.9%
40,000 American International 5,037,500
Group, Inc.
43,500 CMAC Investment Corp. 2,903,625
140,000 Greenpoint Financial
Corp. ............... 5,031,250
45,000 PMI Group, Inc. ..... 3,633,750
47,700 SLM Holding Corp. ... 2,080,912
102,499 Travelers Group, Inc. 6,149,940
85,000 Travelers Property
Casualty Corp.Cl. A . 3,740,000
----------
28,576,977
----------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
Food & Beverage
Products - 4.4%
95,000 * International Home
Foods, Inc. ......... $3,158,750
90,000 Pepsico, Inc. ....... 3,841,875
65,000 * Philip Morris
Companies, Inc. ..... 2,709,688
70,000 Suiza Foods Corp. ... 4,305,000
----------
14,015,313
----------
Healthcare Products &
Services - 7.1%
49,250 Cardinal Health,
Inc.................. 4,343,234
80,000 HBO & Co. ........... 4,827,500
187,500 * Health Management
Associates, Inc...... 5,367,187
200,000 * HEALTHSOUTH Corp. ... 5,612,500
64,100 * Omnicare, Inc. ...... 2,539,963
----------
22,690,384
----------
Information Services &
Technology - 11.9%
146,666 * Analog Devices, Inc.. 4,876,645
209,600 * EMC Corp. ........... 7,925,500
50,000 Gateway 2000, Inc. .. 2,346,875
40,000 Intel Corp. ......... 3,121,250
35,000 International Business
Machines Corp. ...... 3,635,625
78,000 * Microsoft Corp. ..... 6,978,562
120,000 * Parametric Technology
Corp................. 3,993,750
100,000 * PeopleSoft, Inc. .... 5,265,625
----------
38,143,832
----------
Leisure &
Tourism - 3.0%
55,000 Disney (Walt) Co..... 5,871,250
65,000 * Premier Parks, Inc... 3,770,000
----------
9,641,250
----------
Oil/Energy - 4.9%
50,000 Anadarko Petroleum
Corp................. 3,450,000
70,000 Burlington Resources,
Inc.................. 3,355,625
95,000 Pennzoil Co. ........ 6,139,375
75,000 Unocal Corp. ........ 2,901,563
----------
15,846,563
----------
Pharmaceuticals - 11.5%
65,000 American Home Products
Corp................. 6,199,375
157,200 Pfizer, Inc. ........ 15,670,875
60,000 Schering-Plough Corp. 4,901,250
60,000 Warner-Lambert Co.... 10,218,750
----------
36,990,250
----------
Publishing,
Broadcasting &
Entertainment - 7.6%
200,000 CBS Corp. ........... 6,787,500
50,000 Central Newspapers,
Inc.................. 3,553,125
90,000 Dow Jones & Co.,
Inc.................. 4,764,375
110,000 * Viacom, Inc. Cl. B... 5,912,500
100,000 * World Color Press,
Inc.................. 3,475,000
----------
24,492,500
----------
</TABLE>
48
<PAGE>
EVERGREEN
Omega Fund
Schedule of Investments (continued)
March 31, 1998 (unaudited)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
Retailing & Wholesale - 6.1%
82,813 Dollar General Corp. ........... $ 3,203,809
65,000 Ethan Allen Interiors, Inc. .... 3,883,750
100,000 General Nutrition Companies, Inc. 3,968,750
232,500 Staples, Inc. .................. 5,376,562
52,200 Williams Sonoma, Inc. .......... 3,021,075
------------
19,453,946
------------
Total Common Stocks
(cost $236,989,692) ............ 314,276,087
------------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C> <C>
REPURCHASE AGREEMENT - 2.9%
$ 9,138,000 Keystone Joint Repurchase
Agreement, investment in
repurchase agreements in a joint
trading account, purchased 3/31/98,
5.67%, maturing 4/1/98, maturity
value $9,139,439.
(cost $9,138,000) (a) ................... $ 9,138,000
------------
Total Investments -
(cost $246,127,692) .......... 100.9% 323,414,087
Other Assets and
Liabilities - net ............ ( 0.9) (2,849,023)
----- ------------
Net Assets ................... 100.0% $320,565,064
===== ============
</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 interest at
March 31, 1998.
See Combined Notes to Financial Statements.
49
<PAGE>
EVERGREEN
Small Company Growth Fund
Schedule of Investments
March 31, 1998 (unaudited)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - 94.5%
Advertising & Related
Services - 0.5%
250,000 ADVO, Inc. ........... $ 6,906,250
-----------
Automotive Equipment &
Manufacturing - 0.8%
256,860 Tower Automotive,
Inc................. 11,558,700
-----------
Banks - 7.8%
414,862 * Astoria Financial
Corp................ 25,643,657
318,240 Bostonfed Bancorp,
Inc................. 7,319,520
30,200 Dime Community Bancorp,
Inc................. 736,125
196,334 * Hubco, Inc. .......... 7,515,911
171,370 * Long Island Bancorp,
Inc................. 10,828,442
385,080 * North Fork Bancorp,
Inc................. 14,873,715
5,000 Prime Bancshares,
Inc................. 127,500
148,196 Queens County Bancorp,
Inc................. 6,539,148
718,536 * Sovereign Bancorp,
Inc................. 13,068,373
621,960 * TCF Financial Corp.. 21,107,767
154,938 * Westamerica Bancorp. 5,175,898
-----------
112,936,056
-----------
Building, Construction &
Furnishings - 2.8%
126,500 Cable Design
Technologies Corp... 3,810,812
145,000 Essex International,
Inc................. 5,727,500
165,500 General Cable Corp.. 7,509,562
141,491 Oakwood Homes Corp.. 5,182,108
150,000 Texas Industries,
Inc................. 8,671,875
119,420 Toll Brothers, Inc.. 3,358,688
253,200 Wackenhut Corrections
Corp................ 6,345,825
-----------
40,606,370
-----------
Business Equipment &
Services - 4.1%
197,956 Billing Information
Concepts Corp....... 5,128,298
175,855 BISYS Group, Inc.
(a)................. 6,182,402
504,670 * Comdisco, Inc....... 22,016,229
90,521 * G & K Services, Inc.
Cl. A............... 3,943,321
279,000 GTS Duratek, Inc.... 3,470,062
28,200 International Telecomm
Systems, Inc........ 735,844
111,996 * Norrell Corp. ........ 2,526,910
104,000 Outsource International,
Inc................. 2,509,000
7,000 Rental Service Corp. 162,750
150,000 Superior Consultant,
Inc................. 5,428,125
256,317 Vincam Group, Inc... 7,385,133
-----------
59,488,074
-----------
Chemical & Agricultural
Products - 0.6%
220,940 * OM Group, Inc. ..... 9,307,098
-----------
Consumer Products &
Services - 4.0%
343,517 * Action Performance
Companies, Inc...... 12,055,300
381,800 Coleman Co., Inc.... 11,764,212
396,869 Equity Corp.
International....... 9,500,052
342,100 Helen of Troy Ltd... 6,318,159
95,600 Oneida Ltd.......... 2,915,800
200,000 Oregon Steel Mills,
Inc................. 4,400,000
101,700 Rock Of Ages Corp.
Cl. A............... 1,798,819
124,000 * Russ Berrie & Co.,
Inc................. 3,758,750
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
Consumer Products &
Services - continued
51,900 Universal Corp...... $ 2,286,844
200,000 * Weider Nutrition
International, Inc.
Cl. A .............. 3,100,000
-----------
57,897,936
-----------
Education - 1.5%
250,000 Computer Learning
Centers, Inc........ 4,195,312
1,500 CorporateFamily
Solutions, Inc...... 39,469
512,484 Devry, Inc. .......... 17,520,547
-----------
21,755,328
-----------
Electrical Equipment &
Services - 8.1%
215,200 Applied Power, Inc.
Cl. A............... 8,285,200
261,200 Asyst Technologies,
Inc................. 6,015,763
662,600 Cypress Semiconductor
Corp................ 6,708,825
611,080 DII Group, Inc...... 13,176,412
230,000 Integrated Device
Technology.......... 3,241,563
42,800 Jabil Circuit, Inc.. 1,425,775
75,500 Lattice Semiconductor
Corp................ 3,883,531
147,000 Lexmark International
Group, Inc. Cl. A .. 6,633,375
15,000 * Linear Technology
Corp................ 1,034,531
30,000 Mattson Technology,
Inc................. 187,500
300,778 Maxim Integrated
Products, Inc....... 10,959,598
200,000 Microchip Technology,
Inc................. 4,212,500
344,186 Natural Microsystems
Corp................ 13,649,126
322,400 Ortel Corp. ........ 4,291,950
200,000 Parlex Corp. ....... 3,575,000
436,200 Pri Automation, Inc. 11,422,988
25,200 QLogic Corp. ....... 904,050
100,000 Radisys Corp. ...... 2,503,125
392,514 Sipex Corp. ........ 13,002,026
50,000 Vitesse Semiconductor
Corp................ 2,357,813
-----------
117,470,651
-----------
Finance &
Insurance - 4.5%
292,500 Allied Group, Inc... 9,433,125
150,000 Arthur J. Gallagher &
Co.................. 6,496,875
100,000 Berkley W R Corp.... 4,762,500
50,000 Blanch E W Holdings,
Inc................. 1,918,750
11,900 * CMAC Investment
Corp................ 794,325
108,500 Delphi Financial Group,
Inc................. 5,777,625
218,922 First Alliance Co... 3,413,815
221,180 Firstplus Financial
Group, Inc. ........ 9,289,560
186,023 * HCC Insurance Holdings,
Inc................. 4,278,529
267,000 Highlands Insurance
Group, Inc. ........ 7,175,625
62,800 Horace Mann Educators
Corp................ 2,205,850
150,000 Leucadia National
Corp................ 5,906,250
58,200 * Penn-America Group,
Inc................. 1,265,850
50,000 Reinsurance Group
America, Inc........ 2,500,000
-----------
10,000 State Auto Financial
Corp................ 395,000
-----------
65,613,679
-----------
Food & Beverage
Products - 1.3%
259,000 Suiza Foods Corp.... 15,928,500
171,866 Worthington Foods,
Inc................. 2,868,010
-----------
18,796,510
-----------
</TABLE>
50
<PAGE>
EVERGREEN
Small Company Growth Fund
Schedule of Investments (continued)
March 31, 1998 (unaudited)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
Healthcare Products &
Services - 9.2%
20,500 Chirex, Inc. ....... $ 387,578
7,501 Concentra Managed
Care, Inc........... 230,890
296,000 Cyberonics, Inc. ... 9,416,500
437,444 * Cytyc Corp. ........ 10,826,739
150,000 Genesis Health
Ventures, Inc....... 4,218,750
335,700 Graham Field Health
Products, Inc....... 2,685,600
860,839 Health Management
Associates, Inc.
Cl. A .............. 24,641,516
277,585 Idexx Laboratories,
Inc................. 5,005,205
300,000 Mariner Health Group,
Inc................. 5,100,000
50,000 Megabios Corp. ..... 450,000
101,000 Norland Medical
Systems, Inc........ 369,281
516,000 Novacare, Inc. ..... 7,675,500
363,000 * Oxford Health Plans,
Inc................. 5,410,969
218,684 Parexel International
Corp................ 6,806,540
135,620 Pediatrix Medical
Group, Inc.......... 6,306,330
242,320 Perclose, Inc. ..... 6,830,395
19,000 Renal Care Group,
Inc................. 720,219
111,100 Respironics, Inc.... 3,218,428
376,180 Thermo Cardiosystems,
Inc................. 10,180,371
389,351 Total Renal Care
Holdings, Inc....... 12,970,255
235,800 Vivus, Inc. ........ 2,785,388
215,300 Wesley Jessen
Visioncare, Inc..... 7,172,181
-----------
133,408,635
===========
Industrial Specialty
Products & Services - 4.2%
259,260 BMC Industries,
Inc................. 5,039,366
200,400 Cognex Corp. ....... 4,296,075
1 Docucorp International
Inc................. 5
500,000 Halter Marine Group,
Inc................. 7,937,500
195,000 * Kaydon Corp. ....... 7,970,625
1,000,000 Roper Industries,
Inc................. 29,687,500
157,737 * United States Filter
Corp................ 5,540,512
25,000 White Capital
Industries Corp..... 568,750
-----------
61,040,333
===========
Information Services &
Technology - 17.8%
151,640 Analog Devices,
Inc................. 5,042,030
243,600 Avid Technology,
Inc................. 9,987,600
200,000 Axent Technologies,
Inc................. 6,087,500
183,095 BMC Software, Inc... 15,351,371
315,380 Cambridge Technology
Partners............ 15,621,166
35,500 CMG Information
Services Inc........ 2,054,563
243,000 Cognicase, Inc...... 4,480,313
238,900 * Discreet Logic,
Inc................. 3,904,522
180,900 Documentum, Inc..... 9,774,253
380,000 Eletronics for
Imaging, Inc........ 9,891,875
89,400 FileNet Corp. ...... 4,363,838
386,000 Geoworks ........... 2,895,000
214,100 JDA Software Group,
Inc................. 11,360,681
5,200 Lycos, Inc. ........ 230,425
416,000 Mapics, Inc. ....... 7,345,000
200,000 Maximus, Inc. ...... 5,987,500
40,600 Metacreations Corp.. 294,984
132,054 National Data Corp.. 5,488,494
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
Information Services & Technology -
continued
50,290 * Networks Associates,
Inc................. $ 3,334,856
292,800 Objective Systems
Integrators, Inc.... 4,007,700
542,480 Parametric Technology
Corp................ 18,054,412
50,000 Platinum Software
Corp................ 1,159,375
539,281 Project Software &
Development, Inc.... 12,875,334
200,000 PSW Technologies,
Inc................. 1,437,500
286,000 QAD, Inc. .......... 4,182,750
146,000 Quadramed Corp. .... 4,863,625
150,000 Radiant Systems,
Inc................. 3,731,250
1,134,800 Rational Software
Corp................ 14,716,937
515,816 Safeguard Scientifics,
Inc................. 19,407,577
338,323 Security Dynamics
Technology.......... 13,892,388
367,279 * Synopsys, Inc. ..... 12,039,865
150,000 Transition Systems,
Inc................. 3,084,375
290,000 Unisys Corp. ....... 5,510,000
252,000 USweb Corp. ........ 5,567,625
150,000 Veritas DGC, Inc.... 7,584,375
51,997 Wind River Systems,
Inc................. 2,073,380
-----------
257,684,439
-----------
Leisure &
Tourism - 2.4%
49,395 Casino America, Inc.
Warrants Expires
5/3/2001............ 494
479,589 Colorado Gaming &
Entertainment
Co. (b) ............ 2,997,431
240,000 Gametech
International, Inc.. 1,687,500
18,000 Pegasus Systems,
Inc................. 462,938
525,000 Regal Cinemas, Inc.. 15,717,187
400,000 Rio Hotel & Casino,
Inc................. 10,375,000
385,900 Sodak Gaming, Inc... 2,749,538
-----------
33,990,088
-----------
Manufacturing-Distributing - 0.8%
200,000 NBTY, Inc. ......... 12,143,750
-----------
Metal Products &
Services - 0.7%
366,300 Maverick Tube Corp.. 6,456,037
116,496 Special Metals Corp. 1,893,060
40,000 Steel Dynamics, Inc. 851,250
30,900 Wolverine Tube, Inc. 1,239,863
-----------
10,440,210
-----------
Oil/Energy - 4.0%
204,500 Basin Exploration,
Inc................. 4,224,203
242,700 Forcenergy, Inc..... 6,431,550
133,000 Newfield Exploration
Co.................. 3,466,313
1,307,656 Newpark Resources,
Inc................. 23,864,722
100,000 Nuevo Energy Co..... 3,581,250
234,000 Ocean Energy, Inc... 5,513,625
300,000 * Santa Fe Energy
Resources, Inc...... 3,300,000
100,000 * Seven Seas Petroleum,
Inc................. 2,593,750
83,586 * St. Mary Land &
Exploration Co...... 3,194,552
100,000 Vintage Petroleum,
Inc................. 2,100,000
-----------
58,269,965
-----------
Oil Field
Services - 2.2%
56,742 Carbo Ceramics, Inc. . 2,198,753
187,400 Core Laboratories NV . 4,579,587
200,300 Friede Goldman
International, Inc. . 5,771,144
</TABLE>
51
<PAGE>
EVERGREEN
Small Company Growth Fund
Schedule of Investments (continued)
March 31, 1998 (unaudited)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
Oil Field Services - continued
250,000 * Hvide Marine, Inc. Cl. A ............ $ 4,390,625
500,100 R & B Falcon Corp. .................. 14,815,462
--------------
31,755,571
--------------
Pharmaceuticals - 1.2%
415,500 Dura Pharmaceuticals, Inc. .......... 10,218,703
100,000 Incyte Pharmacuticals, Inc. ......... 4,637,500
435,000 Magainin Pharmaceuticals ............ 2,406,094
--------------
17,262,297
--------------
Publishing, Broadcasting &
Entertainment - 2.0%
56,200 Big Flower Holdings, Inc. ........... 1,707,075
13,200 Cox Radio, Inc. ..................... 640,200
108,700 Hearst-Argyle Television, Inc. ...... 3,858,850
259,000 Jacor Communications, Inc. .......... 15,321,469
130,000 Sinclair Broadcast Group, Inc. Cl. A 7,487,187
--------------
29,014,781
--------------
Real Estate - 0.1%
60,300 Capital Automotive REIT ............. 1,143,815
4,900 *Host Marriott Corp. ................. 92,794
--------------
1,236,609
--------------
Retailing & Wholesale - 3.7%
156,600 *Brylane, Inc. ....................... 8,779,388
363,100 *Central Garden & Pet Co. ............ 14,172,247
1,282,480 Corporate Express, Inc. ............. 12,804,761
138,000 Cutter & Buck, Inc. ................. 3,570,750
121,100 Good Guys, Inc. ..................... 1,271,550
23,000 REX Stores Corp. .................... 339,250
150,000 Shopko Stores, Inc. ................. 4,753,125
70,100 Stage Stores, Inc. .................. 3,607,959
145,400 Tefron Ltd. ......................... 3,544,125
--------------
52,843,155
--------------
Telecommunication Services &
Equipment - 3.8%
199,000 *ACC Corp. ........................... 10,571,875
88,300 Boston Communications Group ......... 860,925
200,000 Global TeleSystems Group, Inc. ...... 9,387,500
250,000 LCC International, Inc. ............. 4,953,125
78,300 Metronet Communications Corp. ....... 1,957,500
100,000 Pacific Gateway Exchange, Inc. ...... 5,706,250
600,000 Pairgain Technologies, Inc. ......... 14,381,250
29,700 Spectrian Corp. ..................... 494,691
101,800 Univision Communications, Inc. Cl. A 3,792,050
160,000 Viatel, Inc. ........................ 2,185,000
--------------
54,290,166
--------------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
Transportation - 2.1%
112,700 *ASA Holdings, Inc. .................. $ 4,145,247
136,399 Coach USA, Inc. ..................... 5,933,357
62,900 Eagle USA Airfreight, Inc. .......... 1,717,956
200,000 Expeditores International Washington,
Inc. ................................ 8,525,000
340,900 Fritz Companies, Inc. ............... 5,443,747
200,000 Overseas Shipholding Group, Inc. .... 4,275,000
--------------
30,040,307
--------------
Utilities-Telephone - 4.3%
300,000 American Communications Services,
Inc. ................................ 5,446,875
9,000 Associated Group, Inc. Cl. A ........ 344,250
311,000 Associated Group, Inc. Cl. B ........ 11,468,125
50,000 Centennial Cellular Corp. Cl. A ..... 1,314,062
266,000 McLeod USA, Inc., Cl. A ............. 11,205,250
150,000 Primus Telecomm Group, Inc. ......... 4,350,000
39,500 Rural Celluar Corp. Cl. A ........... 681,375
125,000 Star Telecommunications, Inc. ....... 6,937,500
39,600 Superior Telecom, Inc. .............. 1,653,300
258,500 Telegroup, Inc. ..................... 5,226,547
395,000 United States Cellular Corp. ........ 13,405,312
50,000 Vanguard Cellular Systems, Inc. Cl. A 914,063
--------------
62,946,659
--------------
Total Common Stocks
(cost $1,004,017,151)................ 1,368,703,617
--------------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount
<S> <C> <C> <C>
REPURCHASE AGREEMENTS - 5.1%
$69,423,000 Goldman Sachs Repurchase
Agreement, purchased 3/31/98,
5.95%, maturing 4/1/98, maturity
value $69,434,474
(cost $69,423,000) (c).............. 69,423,000
----------
4,858,000 Keystone Joint Repurc hase
Agreement, investment in repurchase
agreements, in a joint trading
account, purchased 3/31/98, 5.99%,
maturing 4/1/98, maturity value
$4,858,808
(cost $4,858,000) (d)............... 4,858,000
----------
Total Investments -
(cost $1,078,298,151) ..... 99.6% 1,442,984,617
Other Assets and
Liabilities - net ......... 0.4 5,277,485
----- --------------
Net Assets ................ 100.0% $1,448,262,102
===== ==============
</TABLE>
* Non-income producing securities.
(a) At March 31, 1998, the Fund owned 175,855 shares of common stock of The
BISYS Group, Inc. at a cost of $4,437,038. During the six months ended
March 31, 1998 the Fund earned no dividend income from this investment.
These shares were purchased prior to Evergreen Distributors Inc., a wholly
owned subsidiary of The BISYS Group, Inc. becoming the Fund's principal
underwriter and BISYS Fund Services, Inc. becoming the Fund's
sub-administrator.
(b) Investment in non-controlled affiliate holding over 5% of outstanding
shares. At March 31, 1998, the Fund held 479,589 shares of Colorado Gaming
& Entertainment company with a value of $2,997,431 and acquisition cost of
$2,766,251. The Fund has not earned any income from this investment.
(c) At March 31, 1998, the repurchase agreement was fully collateralized by:
$69,423,000 Federal Home Loan Mortgage Corp., 7.00%, 8/1/27, value
including accrued interest - $69,436,314.
(d) The repurchase agreements are fully collateralized by U.S. Government
and/or agency obligations based on market prices plus accrued interest at
March 31, 1998.
Summary of Abbreviations:
REIT Real Estate Investment Trust
See Combined Notes to Financial Statements.
52
<PAGE>
EVERGREEN
Strategic Growth Fund
Schedule of Investments
March 31, 1998 (unaudited)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - 96.6%
Automotive Equipment &
Manufacturing - 1.8%
275,000 Ford Motor Co. ..................... $ 17,823,438
------------
Banks - 9.7%
160,000 Astoria Financial Corp. ............ 9,890,000
156,700 BankBoston Corp. ................... 17,276,175
170,000 * First American Corp. ............... 8,308,750
235,000 Fleet Financial Group, Inc. ........ 19,989,687
303,200 * Golden St. Bancorp, Inc. ........... 11,578,450
220,000 North Fork Bancorp, Inc. ........... 8,497,500
320,000 TCF Financial Corp. ................ 10,860,000
271,300 Westamerica Bancorp ................ 9,063,116
------------
95,463,678
------------
Building, Construction &
Furnishings - 1.2%
375,000 * Furniture Brands International, Inc. . 12,070,313
------------
Business Equipment & Services -
2.2%
150,000 G & K Services, Inc. Cl. A ......... 6,534,375
265,000 Paychex, Inc. ...................... 15,278,906
------------
21,813,281
------------
Chemical & Agricultural Products -
1.5%
280,000 Monsanto Co. ....................... 14,560,000
------------
Communication Systems &
Services - 3.4%
230,000 * Cisco Systems, Inc. ................ 15,733,437
65,000 * Iridium World Communications, Inc.
Cl. A .............................. 4,050,313
500,000 * Loral Space & Communications ....... 13,968,750
------------
33,752,500
------------
Consumer Products & Services -
2.7%
668,681 Cendant Corp. ...................... 26,496,485
------------
Diversified Companies - 1.7%
301,600 Tyco International Ltd. ............ 16,474,900
------------
Electrical Equipment & Services -
3.9%
440,000 General Electric Co. ............... 37,922,500
------------
Finance & Insurance - 7.6%
105,000 American International Group, Inc. . 13,223,437
430,000 Greenpoint Financial Corp. ......... 15,453,125
135,000 PMI Group, Inc. .................... 10,901,250
152,600 SLM Holding Corp. .................. 6,657,175
277,500 Travelers Group, Inc. .............. 16,650,000
255,000 Travelers Property Casualty
Corp. Cl. A ........................ 11,220,000
------------
74,104,987
------------
Food & Beverage Products - 3.6%
215,000 Coca Cola Co. ...................... 16,649,062
250,000 Pepsico, Inc. ...................... 10,671,875
200,000 Philip Morris Companies, Inc. ...... 8,337,500
------------
35,658,437
------------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
Healthcare Products & Services - 7.1%
141,200 Cardinal Health, Inc. .............. $ 12,452,075
250,000 HBO & Co. .......................... 15,085,937
310,000 * Health Care & Retirement Corp. ..... 13,310,625
280,000 * Health Management Associates, Inc.
Cl. A .............................. 8,015,000
490,000 * HEALTHSOUTH Corp. .................. 13,750,625
173,700 Omnicare, Inc. ..................... 6,882,863
------------
69,497,125
------------
Industrial Specialty Products &
Services - 1.2%
220,000 Trinity Industries, Inc. ........... 12,072,500
------------
Information Services &
Technology - 11.4%
450,000 * Analog Devices, Inc. ............... 14,962,500
130,000 * BMC Software, Inc. ................. 10,899,688
100,000 Electronic Data Systems Corp. ...... 4,587,500
560,600 * EMC Corp. .......................... 21,197,687
150,000 * Gateway 2000, Inc. ................. 7,040,625
125,000 Intel Corp. ........................ 9,753,906
130,000 International Business Machines Corp. 13,503,750
240,000 * Microsoft Corp. .................... 21,472,500
240,000 * Parametric Technology Corp. ........ 7,987,500
------------
111,405,656
------------
Leisure & Tourism - 2.7%
182,500 Disney (Walt) Co. .................. 19,481,875
125,000 * Premier Parks, Inc. ................ 7,250,000
------------
26,731,875
------------
Oil/Energy - 8.3%
200,000 Anadarko Petroleum Corp. ........... 13,800,000
80,000 British Petroleum Plc, ADR ......... 6,885,000
220,000 Burlington Resources, Inc. ......... 10,546,250
215,000 Exxon Corp. ........................ 14,539,375
300,000 Pennzoil Co. ....................... 19,387,500
120,000 Texaco, Inc. ....................... 7,230,000
225,000 Unocal Corp. ....................... 8,704,687
------------
81,092,812
------------
Pharmaceuticals - 11.8%
200,000 American Home Products Corp. ....... 19,075,000
487,800 Pfizer, Inc. ....................... 48,627,562
180,000 Schering-Plough Corp. .............. 14,703,750
236,000 Shire Pharmaceuticals Group Plc. ... 5,029,750
165,000 Warner-Lambert Co. ................. 28,101,563
------------
115,537,625
------------
Publishing, Broadcasting &
Entertainment - 7.6%
650,000 CBS Corp. .......................... 22,059,375
135,000 Central Newspapers, Inc. Cl. A ..... 9,593,438
285,000 Dow Jones & Co., Inc. ................... 15,087,187
350,000 * Viacom, Inc. Cl. B ................. 18,812,500
64,719 Wolters Kluwer NV .................. 9,250,228
------------
74,802,728
------------
</TABLE>
53
<PAGE>
EVERGREEN
Strategic Growth Fund
Schedule of Investments (continued)
March 31, 1998 (unaudited)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
Retailing & Wholesale - 5.9%
259,375 Dollar General Corp. ........... $ 10,034,570
115,000 Ethan Allen Interiors, Inc. .... 6,871,250
250,000 *General Nutrition Companies, Inc. 9,921,875
697,500 *Staples, Inc. .................. 16,129,688
300,000 Wal-Mart Stores, Inc. .......... 15,243,750
------------
58,201,133
------------
Utilities-Telephone - 1.3%
200,000 AT&T Corp. ..................... 13,125,000
------------
Total Common Stocks
(cost $704,540,922) ............ 948,606,973
------------
PREFERRED STOCKS - 0.0%
Iron & Steel - 0.0%
180,000 Compania Vale do Rio Doce
Navegacao SA ................... 16
------------
Total Preferred Stocks
(cost $0) ...................... 16
------------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C> <C>
REPURCHASE AGREEMENT - 4.9%
$ 47,854,000 Keystone Joint Repurchase
Agreement, investment in
repurchase agreements, in a joint
trading account, purchased 3/31/98,
5.99%, maturing 4/1/98, maturity
value $47,861,962
(cost-$47,854,000)(a)............ $ 47,854,000
-------------
Total Investments -
(cost $752,394,922) ... 101.5% 996,460,989
Other Assets and
Liabilities - net ..... ( 1.5) (14,339,571)
----- -------------
Net Assets ............ 100.0% $ 982,121,418
===== =============
</TABLE>
Summary of Portfolio Abbreviations:
ADR American Depository Receipts
NV Naamloze Veunootschap (Dutch Corporation)
SA Sociedad Anonyme (Spanish Corporation)
* 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 interest at
March 31, 1998.
See Combined Notes to Financial Statements.
54
<PAGE>
EVERGREEN
Domestic Growth Funds
Statements of Assets and Liabilities
March 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
Aggressive
Growth Evergreen
Fund Fund
--------------- -------------------
<S> <C> <C>
Assets
Investments at value (identified
cost - $137,403,145,
$1,085,406,536, $50,383,339
$246,127,692, $1,078,298,151 and
$752,394,922, respectively)................ $231,490,141 $ 2,091,581,409
Cash ....................................... 1,015 65,863
Receivable for investments sold ............ 4,659,933 1,917,480
Receivable for Fund shares sold ............ 173,900 70,910,894
Dividends and interest receivable .......... 17,605 856,096
Unamortized organization expenses .......... 12,014 0
Prepaid expenses and other assets .......... 172,020 563,738
- --------------------------------------------- ------------ ---------------
Total assets .............................. 236,526,628 2,165,895,480
- --------------------------------------------- ------------ ---------------
Liabilities
Payable for investments purchased .......... 1,895,000 6,650,393
Payable for Fund shares repurchased ........ 572,330 1,687,001
Advisory fee payable ....................... 119,483 1,577,913
Distribution Plan expenses payable ......... 53,839 527,484
Due to related parties ..................... 5,572 0
Accrued expenses and other liabilities ..... 16,670 201,966
- --------------------------------------------- ------------ ---------------
Total liabilities ......................... 2,662,894 10,644,757
- --------------------------------------------- ------------ ---------------
Net assets .................................. $233,863,734 $ 2,155,250,723
============================================= ============ ===============
Net assets represented by
Paid-in capital ............................ $126,475,191 $ 1,127,748,366
Undistributed net investment income
(accumulated net investment loss) ......... (1,444,884) 567,538
Accumulated net realized gain on
investments and foreign currency
related transactions ...................... 14,746,431 20,759,946
Net unrealized appreciation of
investments and foreign currency
related transactions ...................... 94,086,996 1,006,174,873
- --------------------------------------------- ------------ ---------------
Total net assets .......................... $233,863,734 $ 2,155,250,723
============================================= ============ ===============
Net assets consists of
Class A .................................... $157,748,820 $ 219,050,597
Class B .................................... 40,305,416 664,461,486
Class C .................................... 3,766,890 13,368,612
Class Y .................................... 32,042,608 1,258,370,028
- --------------------------------------------- ------------ ---------------
$233,863,734 $ 2,155,250,723
============ ===============
Shares outstanding
Class A .................................... 6,803,939 8,719,430
Class B .................................... 1,767,420 26,743,936
Class C .................................... 165,290 538,996
Class Y .................................... 1,375,233 49,865,265
- --------------------------------------------- ------------ ---------------
Net asset value per share
Class A .................................... $ 23.18 $ 25.12
============================================= ============ ===============
Class A - Offering price (based on
sales charge of 4.75%) .................... $ 24.34 $ 26.37
============================================= ============ ===============
Class B .................................... $ 22.80 $ 24.85
============================================= ============ ===============
Class C .................................... $ 22.79 $ 24.80
============================================= ============ ===============
Class Y .................................... $ 23.30 $ 25.24
============================================= ============ ===============
<CAPTION>
Micro Small Strategic
Cap Omega Company Growth
Fund Fund Growth Fund Fund
-------------- --------------- ----------------- ---------------
<S> <C> <C> <C> <C>
Assets
Investments at value (identified
cost - $137,403,145,
$1,085,406,536, $50,383,339
$246,127,692, $1,078,298,151 and
$752,394,922, respectively)................ $68,839,914 $323,414,087 $1,442,984,617 $996,460,989
Cash ....................................... 2,764 720 231 1,013
Receivable for investments sold ............ 198,656 886,308 22,440,620 333,007
Receivable for Fund shares sold ............ 183,025 1,277,065 3,496,793 319,551
Dividends and interest receivable .......... 24,309 117,510 116,222 641,847
Unamortized organization expenses .......... 0 0 0 0
Prepaid expenses and other assets .......... 53,908 162,126 625,077 218,443
- ---------------------------------------------- ----------- ------------ -------------- ------------
Total assets .............................. 69,302,576 325,857,816 1,469,663,560 997,974,850
- ---------------------------------------------- ----------- ------------ -------------- ------------
Liabilities
Payable for investments purchased .......... 40,324 4,625,375 13,498,618 14,441,274
Payable for Fund shares repurchased ........ 32,580 342,922 6,475,223 569,637
Advisory fee payable ....................... 56,913 194,282 598,807 415,731
Distribution Plan expenses payable ......... 10,479 129,184 469,197 233,851
Due to related parties ..................... 42 0 22,000 12,000
Accrued expenses and other liabilities ..... 79,543 989 337,613 180,939
- ---------------------------------------------- ----------- ------------ -------------- ------------
Total liabilities ......................... 219,881 5,292,752 21,401,458 15,853,432
- ---------------------------------------------- ----------- ------------ -------------- ------------
Net assets .................................. $69,082,695 $320,565,064 $1,448,262,102 $982,121,418
============================================== =========== ============ ============== ============
Net assets represented by
Paid-in capital ............................ $46,291,829 $212,852,976 $ 950,277,740 $652,159,526
Undistributed net investment income
(accumulated net investment loss) ......... (281,639) (1,086,240) (4,553,025) (158,699)
Accumulated net realized gain on
investments and foreign currency
related transactions ...................... 4,615,930 31,511,933 137,850,921 86,054,898
Net unrealized appreciation of
investments and foreign currency
related transactions ...................... 18,456,575 77,286,395 364,686,466 244,065,693
- ---------------------------------------------- ----------- ------------ -------------- ------------
Total net assets .......................... $69,082,695 $320,565,064 $1,448,262,102 $982,121,418
============================================== =========== ============ ============== ============
Net assets consists of
Class A .................................... $ 5,921,809 $179,361,601 $1,034,801,326 $824,652,814
Class B .................................... 4,718,936 124,631,115 407,011,561 157,335,328
Class C .................................... 3,721,119 16,566,218 5,653,585 133,276
Class Y .................................... 54,720,831 6,130 795,630 -
- ---------------------------------------------- ----------- ------------ -------------- ------------
$69,082,695 $320,565,064 $1,448,262,102 $982,121,418
============================================== =========== ============ ============== ============
Shares outstanding
Class A .................................... 214,490 7,486,922 118,095,911 78,345,704
Class B .................................... 175,297 5,486,066 46,522,202 14,966,162
Class C .................................... 138,127 727,547 646,071 12,674
Class Y .................................... 1,967,698 256 90,759 -
- ---------------------------------------------- ----------- ------------ -------------- ------------
Net asset value per share
Class A .................................... $ 27.61 $ 23.96 $ 8.76 $ 10.53
============================================== =========== ============ ============== ============
Class A - Offering price (based on
sales charge of 4.75%) .................... $ 28.99 $ 25.15 $ 9.20 $ 11.06
============================================== =========== ============ ============== ============
Class B .................................... $ 26.92 $ 22.72 $ 8.75 $ 10.51
============================================== =========== ============ ============== ============
Class C .................................... $ 26.94 $ 22.77 $ 8.75 $ 10.52
============================================== =========== ============ ============== ============
Class Y .................................... $ 27.81 $ 23.97 $ 8.77 -
============================================== =========== ============ ============== ============
</TABLE>
See Combined Notes to Financial Statements.
55
<PAGE>
EVERGREEN
Domestic Growth Funds
Statements of Operations
Six Months Ended March 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
Aggressive Micro
Growth Evergreen Cap
Fund Fund Fund
--------------- ---------------- -------------
<S> <C> <C> <C>
Investment income
Dividends (net of foreign withholding taxes of
$1,509, $648, $0, $0, $0 and $47,834,
respectively) ................................... $ 165,077 $ 6,770,606 $ 204,532
Interest ......................................... 23,728 8,781,061 8,612
- --------------------------------------------------- ------------- ------------ ----------
Total income ...................................... 188,805 15,551,667 213,144
Expenses
Advisory fee ..................................... 713,403 8,340,563 296,776
Distribution Plan expenses ....................... 408,914 3,055,171 27,834
Transfer agent fees .............................. 344,724 1,797,699 41,806
Trustees fees .................................... 15,266 44,631 1,588
Custodian fees ................................... 26,200 266,252 10,354
Administrative service fees ...................... 38,075 0 0
Professional fees ................................ 16,264 45,114 23,049
Printing ......................................... 44,100 499,457 30,953
Registration fees ................................ 4,785 55,796 33,844
Amortization of organization expense ............. 2,548 0 0
Other ............................................ 8,545 15,513 19,856
- --------------------------------------------------- ------------- ------------ ----------
Total expenses .................................. 1,622,824 14,120,196 486,060
Less: Indirectly paid expenses ................... (176) (2,559) (2,935)
- --------------------------------------------------- ------------- ------------ ----------
Net expenses .................................... 1,622,648 14,117,637 483,125
- --------------------------------------------------- ------------- ------------ ----------
Net investment income (loss) ..................... (1,433,843) 1,434,030 (269,981)
- --------------------------------------------------- ------------- ------------ ----------
Net realized and unrealized gain (loss) on
investments and foreign currency related
transactions
Net realized gain (loss) on:
Investments ..................................... 14,914,609 25,690,208 4,692,805
Foreign currency related transactions ........... 0 0 0
- --------------------------------------------------- ------------- ------------ ----------
Net realized gain on investments and foreign
currency related transactions ................... 14,914,609 25,690,208 4,692,805
- --------------------------------------------------- ------------- ------------ ----------
Net change in unrealized appreciation
(depreciation) of investments and foreign
currency related transactions ................... (9,057,990) 204,130,251 1,111,468
- --------------------------------------------------- ------------- ------------ ----------
Net realized and unrealized gain on
investments and foreign currency related
transactions .................................... 5,856,619 229,820,459 5,804,273
- --------------------------------------------------- ------------- ------------ ----------
Net increase in net assets resulting from
operations ...................................... $ 4,422,776 $231,254,489 $5,534,292
=================================================== ============= ============ ==========
<CAPTION>
Small Strategic
Omega Company Growth
Fund Growth Fund Fund
--------------- ----------------- ---------------
<S> <C> <C> <C>
Investment income
Dividends (net of foreign withholding taxes of
$1,509, $648, $0, $0, $0 and $47,834,
respectively) ................................... $ 1,027,982 $ 1,694,510 $ 3,842,430
Interest ......................................... 298,038 1,938,506 1,477,826
- ---------------------------------------------------- ------------ --------------- ------------
Total income ...................................... 1,326,020 3,633,016 5,320,256
Expenses
Advisory fee ..................................... 1,071,249 3,442,352 2,409,615
Distribution Plan expenses ....................... 791,749 2,587,617 1,418,980
Transfer agent fees .............................. 325,376 1,440,061 848,270
Trustees fees .................................... 4,120 26,358 17,412
Custodian fees ................................... 43,818 240,599 178,512
Administrative service fees ...................... 27,517 142,018 88,451
Professional fees ................................ 12,945 51,727 25,973
Printing ......................................... 105,183 131,407 134,729
Registration fees ................................ 19,180 62,664 23,089
Amortization of organization expense ............. 0 0 0
Other ............................................ 9,030 52,311 36,363
- ---------------------------------------------------- ------------ --------------- ------------
Total expenses .................................. 2,410,167 8,177,114 5,181,394
Less: Indirectly paid expenses ................... (796) (7,721) (6,557)
- ---------------------------------------------------- ------------ --------------- ------------
Net expenses .................................... 2,409,371 8,169,393 5,174,837
- ---------------------------------------------------- ------------ --------------- ------------
Net investment income (loss) ..................... (1,083,351) (4,536,377) 145,419
- ---------------------------------------------------- ------------ --------------- ------------
Net realized and unrealized gain (loss) on
investments and foreign currency related
transactions
Net realized gain (loss) on:
Investments ..................................... 41,833,216 158,575,256 118,433,855
Foreign currency related transactions ........... 0 (493) 228,151
- ---------------------------------------------------- ------------ --------------- ------------
Net realized gain on investments and foreign
currency related transactions ................... 41,833,216 158,574,763 118,662,006
- ---------------------------------------------------- ------------ --------------- ------------
Net change in unrealized appreciation
(depreciation) of investments and foreign
currency related transactions ................... 4,055,324 (131,342,345) (605,792)
- ---------------------------------------------------- ------------ --------------- ------------
Net realized and unrealized gain on
investments and foreign currency related
transactions .................................... 45,888,540 27,232,418 118,056,214
- ---------------------------------------------------- ------------ --------------- ------------
Net increase in net assets resulting from
operations ...................................... $ 44,805,189 $ 22,696,041 $118,201,633
==================================================== ============ =============== ============
</TABLE>
See Combined Notes to Financial Statements.
56
<PAGE>
EVERGREEN
Domestic Growth Funds
Statements of Changes in Net Assets
Six Months Ended March 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
Aggressive Micro
Growth Evergreen Cap
Fund Fund Fund
---------------- ------------------- ---------------
<S> <C> <C> <C>
Operations
Net investment income (loss) ............. $ (1,433,843) $ 1,434,030 $ (269,981)
Net realized gain on investments and
foreign currency related
transactions ............................ 14,914,609 25,690,208 4,692,805
Net change in unrealized appreciation
(depreciation) of investments and
foreign currency related
transactions ............................ (9,057,990) 204,130,251 1,111,468
- ------------------------------------------- ------------- ----------------- ------------
Net increase in net assets resulting
from operations ........................ 4,422,776 231,254,489 5,534,292
- ------------------------------------------- ------------- ----------------- ------------
Distributions to shareholders
From net investment income
Class A ................................. 0 (756,350) 0
Class B ................................. 0 0 0
Class Y ................................. 0 (6,894,400) 0
From net realized gain on investments
and foreign currency related
transactions
Class A ................................. (6,090,321) (3,670,523) (142,183)
Class B ................................. (1,515,887) (11,529,535) (114,702)
Class C ................................. (134,112) (199,185) (57,650)
Class Y ................................. (1,606,606) (23,699,502) (2,593,995)
- ------------------------------------------- ------------- ----------------- ------------
Total distributions to shareholders ..... (9,346,926) (46,749,495) (2,908,530)
- ------------------------------------------- ------------- ----------------- ------------
Capital share transactions
Proceeds from shares sold ................ 29,456,167 1,185,754,807 18,839,496
Payment for shares redeemed .............. (62,333,251) (1,033,937,663) (9,651,827)
Net asset value of shares issued in
reinvestment of distributions ........... 8,139,251 40,832,191 2,124,920
Shares issued in acquisition of
Keystone Small Company Growth
Fund II ................................. 0 0 0
- ------------------------------------------- ------------- ----------------- ------------
Net increase (decrease) in net
assets resulting from capital share
transactions ........................... (24,737,833) 192,649,335 11,312,589
- ------------------------------------------- ------------- ----------------- ------------
Total increase (decrease) in net
assets ................................ (29,661,983) 377,154,329 13,938,351
Net assets
Beginning of period ...................... 263,525,717 1,778,096,394 55,144,344
- ------------------------------------------- ------------- ----------------- ------------
End of period ............................ $ 233,863,734 $ 2,155,250,723 $ 69,082,695
=========================================== ============= ================= ============
Undistributed net investment income
(accumulated net investment loss) ........ $ (1,444,884) $ 567,538 $ (281,639)
=========================================== ============= ================= ============
<CAPTION>
Small Strategic
Omega Company Growth
Fund Growth Fund Fund
---------------- ------------------ -----------------
<S> <C> <C> <C>
Operations
Net investment income (loss) ............. $ (1,083,351) $ (4,536,377) $ 145,419
Net realized gain on investments and
foreign currency related
transactions ............................ 41,833,216 158,574,763 118,662,006
Net change in unrealized appreciation
(depreciation) of investments and
foreign currency related
transactions ............................ 4,055,324 (131,342,345) (605,792)
- -------------------------------------------- ------------- -------------- ---------------
Net increase in net assets resulting
from operations ........................ 44,805,189 22,696,041 118,201,633
- -------------------------------------------- ------------- -------------- ---------------
Distributions to shareholders
From net investment income
Class A ................................. 0 0 0
Class B ................................. 0 0 (1,289,169)
Class Y ................................. 0 0 0
From net realized gain on investments
and foreign currency related
transactions
Class A ................................. (14,940,773) 0 0
Class B ................................. (10,805,705) (124,537,167) (113,103,093)
Class C ................................. (1,549,758) 0 0
Class Y ................................. (493) 0 0
- -------------------------------------------- ------------- -------------- ---------------
Total distributions to shareholders ..... (27,296,729) (124,537,167) (114,392,262)
- -------------------------------------------- ------------- -------------- ---------------
Capital share transactions
Proceeds from shares sold ................ 20,153,834 292,899,083 32,907,571
Payment for shares redeemed .............. (31,661,208) (427,194,274) (76,128,595)
Net asset value of shares issued in
reinvestment of distributions ........... 25,295,380 105,065,592 101,552,338
Shares issued in acquisition of
Keystone Small Company Growth
Fund II ................................. 0 33,587,309 0
- -------------------------------------------- ------------- -------------- ---------------
Net increase (decrease) in net
assets resulting from capital share
transactions ........................... 13,788,006 4,357,710 58,331,314
- -------------------------------------------- ------------- -------------- ---------------
Total increase (decrease) in net
assets ................................ 31,296,466 (97,483,416) 62,140,685
Net assets
Beginning of period ...................... 289,268,598 1,545,745,518 919,980,733
- -------------------------------------------- ------------- -------------- ---------------
End of period ............................ $ 320,565,064 $1,448,262,102 $ 982,121,418
============================================ ============= ============== ===============
Undistributed net investment income
(accumulated net investment loss) ........ $ (1,086,240) $ (4,553,025) $ (158,699)
============================================ ============= ============== ===============
</TABLE>
See Combined Notes to Financial Statements.
57
<PAGE>
EVERGREEN
Domestic Growth Funds
Statements of Changes in Net Assets
Year Ended September 30, 1997
<TABLE>
<CAPTION>
Aggressive Micro
Growth Evergreen Cap
Fund Fund Fund
---------------- ------------------- ----------------
<S> <C> <C> <C>
Operations
Net investment income (loss) .......... $ (1,900,304) $ 7,514,387 $ (209,402)
Net realized gain on investments
and foreign currency related
transactions ......................... 12,171,177 36,805,817 3,640,708
Net change in unrealized
appreciation of investments and
foreign currency related
transactions ......................... 16,257,433 388,053,134 16,316,906
- ---------------------------------------- ------------- ----------------- --------------
Net increase in net assets
resulting from operations ........... 26,528,306 432,373,338 19,748,212
- ---------------------------------------- ------------- ----------------- --------------
Distributions to shareholders
From net investment income
Class A .............................. 0 (454,970) 0
Class Y .............................. 0 (5,485,239) 0
From net realized gain on
investments and foreign currency
related transactions
Class A .............................. 0 (2,174,311) 0
Class B .............................. 0 (6,498,011) 0
Class C .............................. 0 (143,970) 0
Class Y .............................. 0 (18,647,833) 0
- ---------------------------------------- ------------- ----------------- --------------
Total distributions to
shareholders ........................ 0 (33,404,334) 0
- ---------------------------------------- ------------- ----------------- --------------
Capital share transactions
Proceeds from shares sold ............. 109,161,502 1,988,694,819 7,828,678
Payment for shares redeemed ........... (99,552,842) (1,825,979,211) (14,445,981)
Net asset value of shares issued in
reinvestment of distributions ........ 0 28,705,464 0
Shares issued in acquisition of
Keystone Mid-Cap Growth Fund
(S-3) ................................ 0 0 0
Shares issued in acquisition of
Keystone America Hartwell
Emerging Growth Fund ................. 82,227,499 0 0
- ---------------------------------------- ------------- ----------------- --------------
Net increase (decrease) in net
assets resulting from capital
share transactions .................. 91,836,159 191,421,072 (6,617,303)
- ---------------------------------------- ------------- ----------------- --------------
Total increase in net assets ........ 118,364,465 590,390,076 13,130,909
Net assets
Beginning of year ..................... 145,161,252 1,187,706,318 42,013,435
- ---------------------------------------- ------------- ----------------- --------------
End of year ........................... $ 263,525,717 $ 1,778,096,394 $ 55,144,344
======================================== ============= ================= ==============
Undistributed net investment income
(accumulated net investment loss) ..... $ (11,041) $ 6,784,258 $ (11,658)
======================================== ============= ================= ==============
<CAPTION>
Small
Omega Company Strategic
Fund*** Growth Fund** Growth Fund*
------------------ ------------------ -----------------
<S> <C> <C> <C>
Operations
Net investment income (loss) .......... $ (1,130,464) $ (7,065,364) $ 655,106
Net realized gain on investments
and foreign currency related
transactions ......................... 17,255,823 110,149,243 80,803,578
Net change in unrealized
appreciation of investments and
foreign currency related
transactions ......................... 35,276,768 184,561,753 105,055,036
- ----------------------------------------- ------------- -------------- ---------------
Net increase in net assets
resulting from operations ........... 51,402,127 287,645,632 186,513,720
- ----------------------------------------- ------------- -------------- ---------------
Distributions to shareholders
From net investment income
Class A .............................. 0 0 0
Class Y .............................. 0 0 0
From net realized gain on
investments and foreign currency
related transactions
Class A .............................. (6,112,342) 0 0
Class B .............................. (4,386,128) (114,171,454) (59,854,176)
Class C .............................. (657,041) 0 0
Class Y .............................. (1) 0 0
- ----------------------------------------- --------------- -------------- ---------------
Total distributions to
shareholders ........................ (11,155,512) (114,171,454) (59,854,176)
- ----------------------------------------- -------------- -------------- ---------------
Capital share transactions
Proceeds from shares sold ............. 43,285,351 243,488,031 120,935,075
Payment for shares redeemed ........... (66,967,170) (369,839,740) (165,997,292)
Net asset value of shares issued in
reinvestment of distributions ........ 10,330,073 91,854,430 53,539,767
Shares issued in acquisition of
Keystone Mid-Cap Growth Fund
(S-3) ................................ 0 0 287,967,178
Shares issued in acquisition of
Keystone America Hartwell
Emerging Growth Fund ................. 0 0 0
- ----------------------------------------- -------------- -------------- ---------------
Net increase (decrease) in net
assets resulting from capital
share transactions .................. (13,351,746) (34,497,279) 296,444,728
- ----------------------------------------- -------------- -------------- ---------------
Total increase in net assets ........ 26,894,869 138,976,899 423,104,272
Net assets
Beginning of year ..................... 262,373,729 1,406,768,619 496,876,461
- ----------------------------------------- -------------- -------------- ---------------
End of year ........................... $289,268,598 $1,545,745,518 $ 919,980,733
========================================= ============== ============== ===============
Undistributed net investment income
(accumulated net investment loss) ..... $ (2,889) $ (16,648) $ 985,051
========================================= ============== ============== ===============
</TABLE>
* For the eleven-month period ended September 30, 1997. Effective September
30, 1997, the Fund changed its fiscal year end from October 31 to September
30.
** For the four-month period ended September 30, 1997. Effective September 30,
1997, the Fund changed its fiscal year end from May 31 to September 30.
*** For the nine-month period ended September 30, 1997. Effective September 30,
1997, the Fund changed its fiscal year end from December 31 to September 30.
See Combined Notes to Financial Statements.
58
<PAGE>
EVERGREEN
Domestic Growth Funds
Statements of Changes in Net Assets
Prior Periods
<TABLE>
<CAPTION>
Omega
Fund***
----------------
<S> <C>
Operations
Net investment loss .................................................................. $ (1,563,271)
Net realized gain on investments and foreign currency related transactions ........... 35,051,903
Net change in unrealized depreciation of investments and foreign currency related
transactions ........................................................................ (8,092,996)
- --------------------------------------------------------------------------------------- -------------
Net increase (decrease) in net assets resulting from operations ..................... 25,395,636
- --------------------------------------------------------------------------------------- -------------
Distributions to shareholders
From net investment income
Class B ............................................................................. 0
From net realized gain on investments and foreign currency related transactions
Class A ............................................................................. (15,011,932)
Class B ............................................................................. (9,027,710)
Class C ............................................................................. (1,879,136)
- --------------------------------------------------------------------------------------- -------------
Total distributions to shareholders ................................................. (25,918,778)
- --------------------------------------------------------------------------------------- -------------
Capital share transactions
Proceeds from shares sold ............................................................ 68,666,813
Payment for shares redeemed .......................................................... (69,108,584)
Net asset value of shares issued in reinvestment of distributions .................... 24,060,522
Shares issued in acquisition of Keystone Hartwell Growth Fund ........................ 18,599,730
- --------------------------------------------------------------------------------------- -------------
Net increase (decrease) in net assets resulting from capital share transactions ..... 42,218,481
- --------------------------------------------------------------------------------------- -------------
Total increase (decrease) in net assets ............................................ 41,695,339
Net assets
Beginning of year .................................................................... 220,678,390
- --------------------------------------------------------------------------------------- -------------
End of year .......................................................................... $ 262,373,729
======================================================================================= =============
Undistributed net investment income (accumulated net investment loss) ................. $ 0
======================================================================================= =============
<CAPTION>
Small
Company Strategic
Growth Fund** Growth Fund*
------------------- -----------------
<S> <C> <C>
Operations
Net investment loss .................................................................. $ (22,139,802) $ (2,412,617)
Net realized gain on investments and foreign currency related transactions ........... 117,982,561 70,337,618
Net change in unrealized depreciation of investments and foreign currency related
transactions ........................................................................ (279,047,661) (7,283,970)
- ---------------------------------------------------------------------------------------- ----------------- ---------------
Net increase (decrease) in net assets resulting from operations ..................... (183,204,902) 60,641,031
- ---------------------------------------------------------------------------------------- ----------------- ---------------
Distributions to shareholders
From net investment income
Class B ............................................................................. 0 (478,981)
From net realized gain on investments and foreign currency related transactions
Class A ............................................................................. 0 0
Class B ............................................................................. (200,508,632) (22,079,862)
Class C ............................................................................. 0 0
- ---------------------------------------------------------------------------------------- ----------------- ---------------
Total distributions to shareholders ................................................. (200,508,632) (22,558,843)
- ---------------------------------------------------------------------------------------- ----------------- ---------------
Capital share transactions
Proceeds from shares sold ............................................................ 1,018,919,437 65,085,209
Payment for shares redeemed .......................................................... (1,402,606,782) (118,085,204)
Net asset value of shares issued in reinvestment of distributions .................... 168,366,921 20,184,450
Shares issued in acquisition of Keystone Hartwell Growth Fund ........................ 0 0
- ---------------------------------------------------------------------------------------- ----------------- ---------------
Net increase (decrease) in net assets resulting from capital share transactions ..... (215,320,424) (32,815,545)
- ---------------------------------------------------------------------------------------- ----------------- ---------------
Total increase (decrease) in net assets ............................................ (599,033,958) 5,266,643
Net assets
Beginning of year .................................................................... 2,005,802,577 491,609,818
- ---------------------------------------------------------------------------------------- ----------------- ---------------
End of year .......................................................................... $ 1,406,768,619 $ 496,876,461
======================================================================================== ================= ===============
Undistributed net investment income (accumulated net investment loss) ................. $ (7,516) $ 85,978
======================================================================================== ================= ===============
</TABLE>
* For the year ended October 31, 1996.
** For the year ended May 31, 1997.
*** For the year ended December 31, 1996.
See Combined Notes to Financial Statements.
59
<PAGE>
Combined Notes to Financial Statements (Unaudited)
1. ORGANIZATION
The Evergreen Domestic Growth Funds consist of Evergreen Aggressive Growth Fund
("Aggressive Growth"), Evergreen Fund ("Evergreen"), Evergreen Micro Cap Fund
("Micro Cap"), Evergreen Omega Fund ("Omega"), Evergreen Small Company Growth
Fund (formerly, Keystone Small Company Growth Fund (S-4)) ("Small Company
Growth") and Evergreen Strategic Growth (formerly, Keystone Strategic Growth
Fund (K-2)) ("Strategic Growth"), 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 Fund is a series of the
Evergreen Equity Trust, a Delaware business Trust organized on September 18,
1997. Formerly, Aggressive Growth, Evergreen, Omega, Small Company Growth and
Strategic Growth were organized as either a Massachusetts Business Trust or a
series of a Massachusetts Business Trust. Micro Cap was a Maryland Corporation
organized in 1983. Aggressive Growth, Evergreen, Micro Cap, Omega, Small
Company Growth and Strategic Growth are collectively referred to herein as the
"Funds".
The Funds offer Class A, Class B, Class C and Class Y shares. Class A shares
are sold with a maximum front-end sales charge of 4.75%. Class B and Class C
shares are sold without a front-end sales charge, but pay a higher ongoing
distribution fee than Class A. Class B shares are sold subject to a contingent
deferred sales charge that is payable upon redemption and decreases depending
on how long the shares have been held. Class C shares are sold subject to a
contingent deferred sales charge payable on shares redeemed within one year
after the month of purchase. Class B shares purchased after January 1, 1997
will automatically convert to Class A shares after seven years. Class B shares
purchased prior to January 1, 1997 retain their existing conversion rights.
Class Y shares are sold at net asset value and are not subject to contingent
deferred sales charges or distribution fees. Class Y shares are sold only to
investment advisory clients of First Union and its affiliates, certain
institutional investors or Class Y shareholders of record of certain other
funds managed by First Union and its affiliates. Currently, Strategic Growth
does not offer Class Y shares.
2. ACQUISITION INFORMATION
Effective on the close of business on August 14, 1997, Aggressive Growth
acquired the net assets of Keystone America Hartwell Emerging Growth Fund, an
open-end management investment company registered under the 1940 Act in an
exchange of shares. The net assets were exchanged through a non-taxable
exchange for 3,462,126, 287,735, and 87,678 Class A, Class B and Class C
shares, respectively, of Aggressive Growth. The acquired net assets consisted
primarily of portfolio securities with unrealized appreciation of $26,393,360.
The aggregate net assets of Aggressive Growth immediately after the acquisition
were $245,798,619.
On April 25, 1996, Omega acquired the net assets of Keystone Hartwell Growth
Fund, an open-end management investment company registered under the 1940 Act
in an exchange of Class A, Class B and Class C shares. The net assets of
Keystone Hartwell Growth Fund were exchanged through a nontaxable exchange for
910,037, 66,754 and 25,665 Class A, Class B and Class C shares, respectively,
of Omega. The acquired net assets consisted primarily of portfolio securities
with unrealized appreciation of $7,665,038. The aggregate net assets of Omega
immediately after the acquisition were $255,527,188.
Effective at the close of business on January 2, 1998, Small Company Growth
acquired the net assets of Keystone Small Company Growth Fund II, an open-end
management investment company registered under the 1940 Act in an exchange of
shares. The net assets were exchanged through a non-taxable exchange for
825,086, 1,836,073, 504,702 and 63,994 Class A, Class B, Class C and Class Y
shares, respectively, of Small Company Growth. The acquired net assets
consisted primarily of portfolio securities with unrealized appreciation of
$490,029. The aggregate net assets of Small Company Growth immediately after
the acquisition were $1,340,337,418.
3. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. The
policies are in conformity with generally accepted accounting principles, which
require management to make estimates and assumptions that affect amounts
reported herein. Actual results could differ from these estimates.
A. Valuation of Securities
The Funds value securities traded on a national securities exchange or included
on the NASDAQ National Market System ("NMS") at the last reported sales price
on the exchange where primarily traded. The Funds value securities traded on an
exchange or NMS for which there has been no sale and other securities traded in
the over-the-counter market at the mean between the last reported bid and asked
price. U.S. government obligations held by the Funds are valued at the mean
between 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
60
<PAGE>
Combined Notes to Financial Statements (Unaudited) (continued)
based on market transactions for comparable securities and analysis of various
relationships between similar securities which are generally recognized by
institutional traders. Securities for which valuations are not available from
an independent pricing service ,including restricted securities, are valued at
fair value as determined in good faith according to procedures established 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
securities pledged falls below the carrying value of the repurchase agreement,
including accrued interest. Each Fund will only enter into repurchase
agreements with banks and other financial institutions which are deemed by the
investment advisor to be creditworthy pursuant to guidelines established by the
Board of Trustees.
Pursuant to an exemptive order issued by the Securities and Exchange
Commission, Omega, Small Company Growth and Strategic Growth, along with
certain other funds managed by Keystone Investment Management Company
("Keystone"), may transfer 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. Foreign Currency
The books and records of the Funds are maintained in United States (U.S.)
dollars. Foreign currency amounts are translated into U.S. dollars as follows:
market value of investments, assets and liabilities at the daily rate of
exchange; 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
currency exchange rates is a component of net unrealized appreciation
(depreciation) on investments and foreign currency related transactions. Net
realized foreign currency gains and losses resulting from changes in exchange
rates include: foreign currency gains and losses between 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 actually 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 purchase trade date and
subsequent sale trade date is included in realized gain (loss) on foreign
currency related transactions.
D. Forward Foreign Currency Exchange Contracts
The Funds may enter into forward foreign currency exchange contracts ("forward
contracts") to settle portfolio purchases and sales of securities denominated
in a foreign currency and to hedge certain foreign currency assets or
liabilities. Forward contracts are recorded at the forward rate and
marked-to-market daily. Realized gains and losses arising from such
transactions are included in net realized gain (loss) on foreign currency
related transactions. The Fund bears the risk of an unfavorable change in the
foreign currency exchange rate underlying the forward contract and is subject
to the credit risk that the other party will not fulfill their obligations
under the contract. Forward contracts involve elements of market risk in excess
of the amount reflected in the statement of assets and liabilities.
E. 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 or in the case of some foreign securities, on the date
thereafter when the Fund is made aware of the dividend. Foreign income may be
subject to foreign withholding taxes which are accrued as applicable. Capital
gains realized on some foreign securities may be subject to foreign taxes and
are accrued as applicable.
F. Federal Taxes
The Funds have qualified and 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 distribute all of their net investment company taxable
income and net capital gains, if any, to their shareholders. The Funds also
intend to avoid any excise tax liability by making the required distributions
under the Code. Accordingly, no provision for federal income 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
quarterly. 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.
61
<PAGE>
Combined Notes to Financial Statements (Unaudited) (continued)
Income and capital gains distributions to shareholders are determined in
accordance with income tax regulations, which may differ from generally
accepted accounting principles. The significant differences between financial
statement amounts available for distributions and distributions made in
accordance with income tax regulations are primarily due to differing
treatments for realized gains from foreign currency related transactions and
certain distributions received from real estate investment trusts.
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
relative net assets of each class. Currently, class specific expenses are
limited to expenses incurred under the Distribution Plans for each class.
I. Organization Expenses
Organization expenses are amortized to operations over a five-year period on a
straight-line basis. In the event any of the initial shares of the Funds are
redeemed by any holder during the five-year amortization period, redemption
proceeds will be reduced by any unamortized organization expenses in the same
proportion as the number of initial shares being redeemed bears to the number
of initial shares outstanding at the time of the redemption.
4. 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
divided into Class A, Class B, Class C and Class Y, except for Strategic
Growth, which does not currently offer Class Y shares. Transactions in shares
of the Funds were as follows:
62
<PAGE>
Combined Notes to Financial Statements (Unaudited) (continued)
- --------------------------------------------------------------------------------
AGGRESSIVE GROWTH
<TABLE>
<CAPTION>
Six Months Ended Year Ended
March 31, 1998 September 30, 1997
-------------------------------- --------------------------------
Shares Amount Shares Amount
--------------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C>
Class A
Shares sold ............................................ 590,957 $ 12,972,905 2,422,549 $ 47,560,544
Shares redeemed ........................................ (1,453,165) (31,917,265) (3,066,636) (61,339,895)
Shares issued on reinvestment of distributions ......... 256,170 5,566,568 0 0
Shares issued in acquisition of Hartwell
Emerging Growth Fund .................................. 0 0 3,462,126 74,280,008
- -------------------------------------------------------- ------------- -------------- ------------- --------------
Net increase (decrease) ................................ (606,038) (13,377,792) 2,818,039 60,500,657
- -------------------------------------------------------- ------------- -------------- ------------- --------------
Class B
Shares sold ............................................ 189,526 4,095,824 816,050 16,534,301
Shares redeemed ........................................ (267,383) (5,665,037) (363,564) (7,410,013)
Shares issued on reinvestment of distributions ......... 69,204 1,481,660
Shares issued in acquisition of Hartwell
Emerging Growth Fund .................................. 0 0 287,735 6,092,951
- -------------------------------------------------------- ------------- -------------- ------------- --------------
Net increase (decrease) ................................ (8,653) (87,553) 740,221 15,217,239
- -------------------------------------------------------- ------------- -------------- ------------- --------------
Class C
Shares sold ............................................ 123,286 2,583,846 147,478 2,974,904
Shares redeemed ........................................ (136,462) (2,913,533) (110,246) (2,231,375)
Shares issued on reinvestment of distributions ......... 6,094 130,354
Shares issued in acquisition of Hartwell
Emerging Growth Fund .................................. 0 0 87,678 1,854,540
- -------------------------------------------------------- ------------- -------------- ------------- --------------
Net increase (decrease) ................................ (7,082) (199,333) 124,910 2,598,069
- -------------------------------------------------------- ------------- -------------- ------------- --------------
Class Y
Shares sold ............................................ 455,957 9,803,592 2,044,325 42,091,753
Shares redeemed ........................................ (1,007,725) (21,837,416) (1,390,494) (28,571,559)
Shares issued on reinvestment of distributions ......... 44,007 960,669 0 0
- -------------------------------------------------------- ------------- -------------- ------------- --------------
Net increase (decrease) ................................ (507,761) (11,073,155) 653,831 13,520,194
======================================================== ============= ============== ============= ==============
Net increase (decrease) ................................ (1,129,534) $ (24,737,833) 4,337,001 $ 91,836,159
======================================================== ============= ============== ============= ==============
</TABLE>
- --------------------------------------------------------------------------------
EVERGREEN FUND
<TABLE>
<CAPTION>
Six Months Ended Year Ended
March 31, 1998 September 30, 1997
--------------------------------- -----------------------------------
Shares Amount Shares Amount
--------------- ----------------- --------------- -------------------
<S> <C> <C> <C> <C>
Class A
Shares sold ............................................ 8,793,444 $ 205,138,298 10,240,806 $ 201,289,910
Shares redeemed ........................................ (7,302,378) (170,138,469) (8,297,731) (163,949,566)
Shares issued on reinvestment of distributions ......... 197,283 4,385,608 141,874 2,555,157
- -------------------------------------------------------- ------------- -------------- ------------- -----------------
Net increase ........................................... 1,688,349 39,385,437 2,084,949 39,895,501
- -------------------------------------------------------- ------------- -------------- ------------- -----------------
Class B
Shares sold ............................................ 5,791,196 134,053,635 9,332,781 179,140,600
Shares redeemed ........................................ (1,745,783) (40,283,192) (2,027,269) (39,748,674)
Shares issued on reinvestment of distributions ......... 516,492 11,383,489 359,029 6,426,786
- -------------------------------------------------------- ------------- -------------- ------------- -----------------
Net increase ........................................... 4,561,905 105,153,932 7,664,541 145,818,712
- -------------------------------------------------------- ------------- -------------- ------------- -----------------
Class C
Shares sold ............................................ 175,464 4.055,320 166,021 3,177,817
Shares redeemed ........................................ (37,092) (850,601) (123,428) (2,398,358)
Shares issued on reinvestment of distributions ......... 8,349 183,677 7,595 135,795
- -------------------------------------------------------- ------------- --------------- ------------- -----------------
Net increase ........................................... 146,721 3,388,396 50,188 915,254
- -------------------------------------------------------- ------------- --------------- ------------- -----------------
Class Y
Shares sold ............................................ 36,298,302 842,507,555 82,859,843 1,605,086,492
Shares redeemed ........................................ (35,418,726) (822,665,401) (83,538,658) (1,619,882,613)
Shares issued on reinvestment of distributions ......... 1,115,169 24,879,416 1,085,192 19,587,726
- -------------------------------------------------------- ------------- --------------- ------------- -----------------
Net increase ........................................... 1,994,745 44,721,570 406,377 4,791,605
======================================================== ============= =============== ============= =================
Net increase ........................................... 8,391,720 $ 192,649,335 10,206,055 $ 191,421,072
======================================================== ============= =============== ============= =================
</TABLE>
63
<PAGE>
Combined Notes to Financial Statements (Unaudited) (continued)
- --------------------------------------------------------------------------------
MICRO CAP
<TABLE>
<CAPTION>
Six Months Ended Year Ended
March 31, 1998 September 30, 1997
------------------------------- ------------------------------
Shares Amount Shares Amount
------------- --------------- ------------ ---------------
<S> <C> <C> <C> <C>
Class A
Shares sold ............................................ 281,173 $ 7,456,988 115,021 $ 2,520,780
Shares redeemed ........................................ (163,462) (4,335,246) (75,840) (1,765,373)
Shares issued on reinvestment of distributions ......... 5,408 138,923 0 0
- --------------------------------------------------------- ----------- ------------- ---------- --------------
Net increase ........................................... 123,119 3,260,665 39,181 755,407
- --------------------------------------------------------- ----------- ------------- ---------- --------------
Class B
Shares sold ............................................ 113,015 2,902,230 16,193 358,523
Shares redeemed ........................................ (7,708) (200,067) (36,249) (699,297)
Shares issued on reinvestment of distributions ......... 4,452 111,788 0 0
- --------------------------------------------------------- ----------- ------------- ---------- --------------
Net increase (decrease) ................................ 109,759 2,813,951 (20,056) (340,774)
- --------------------------------------------------------- ----------- ------------- ---------- --------------
Class C
Shares sold ............................................ 139,168 3,594,481 8,543 214,527
Shares redeemed ........................................ (13,224) (345,702) (152) (3,237)
Shares issued on reinvestment of distributions ......... 2,222 55,851 0 0
- --------------------------------------------------------- ----------- ------------- ---------- --------------
Net increase ........................................... 128,166 3,304,630 8,391 211,290
- --------------------------------------------------------- ----------- ------------- ---------- --------------
Class Y
Shares sold ............................................ 184,825 4,885,797 216,277 4,734,848
Shares redeemed ........................................ (178,344) (4,770,812) (609,034) (11,978,074)
Shares issued on reinvestment of distributions ......... 70,343 1,818,358 0 0
- --------------------------------------------------------- ----------- ------------- ---------- --------------
Net increase (decrease) ................................ 76,824 1,933,343 (392,757) (7,243,226)
========================================================= =========== ============= ========== ==============
Net increase (decrease) ................................ 437,868 $ 11,312,589 (365,241) $ (6,617,303)
========================================================= =========== ============= ========== ==============
</TABLE>
64
<PAGE>
Combined Notes to Financial Statements (Unaudited) (continued)
- --------------------------------------------------------------------------------
OMEGA
<TABLE>
<CAPTION>
Six Months Ended Nine Months Ended
March 31,1998 September 30, 1997*
------------------------------ --------------------------------
Shares Amount Shares Amount
------------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C>
Class A
Shares sold ............................ 518,105 $ 11,513,312 764,570 $ 14,997,288
Shares redeemed ........................ (860,994) (18,993,514) (1,812,460) (35,414,920)
Shares issued on reinvestment of
distributions ......................... 652,599 13,593,635 292,502 5,545,839
Shares issued in acquisition of Hartwell
Growth Fund ........................... 0 0 0 0
- ---------------------------------------- ----------- --------------- ------------- --------------
Net increase (decrease) ................ 309,710 6,113,433 (755,388) (14,871,793)
- ---------------------------------------- ----------- --------------- ------------- --------------
Class B
Shares sold ............................ 353,738 7,406,039 1,361,525 25,967,636
Shares redeemed ........................ (466,961) (9,674,282) (1,280,735) (24,835,178)
Shares issued on reinvestment of
distributions ......................... 515,277 10,207,810 227,976 4,149,157
Shares issued in acquisition of Hartwell
Growth Fund ........................... 0 0 0 0
- ---------------------------------------- ----------- --------------- ------------- --------------
Net increase ........................... 402,054 7,939,357 308,766 5,281,615
- ---------------------------------------- ----------- --------------- ------------- --------------
Class C
Shares sold ............................ 59,792 1,234,483 121,875 2,315,406
Shares redeemed ........................ (146,402) (2,993,402) (352,354) (6,717,072)
Shares issued on reinvestment of
distributions ......................... 75,246 1,493,641 34,837 635,076
Shares issued in acquisition of Hartwell
Growth Fund ........................... 0 0 0 0
- ---------------------------------------- ----------- --------------- ------------- --------------
Net increase (decrease) ................ (11,364) (265,278) (195,642) (3,766,590)
- ---------------------------------------- ----------- --------------- ------------- --------------
Class Y**
Shares sold ............................ 0 0 232 5,021
Shares issued on reinvestment of
distributions ......................... 24 494 0 1
- ---------------------------------------- ----------- --------------- ------------- --------------
Net increase ........................... 24 494 232 5,022
======================================== =========== =============== ============= ==============
Net increase (decrease) ................ 700,424 $ 13,788,006 (642,032) $ (13,351,746)
======================================== =========== =============== ============= ==============
<CAPTION>
Year Ended
December 31, 1996
--------------------------------
Shares Account
--------------- ----------------
<S> <C> <C>
Class A
Shares sold ............................ 1,759,793 $ 33,571,953
Shares redeemed ........................ (2,381,626) (44,999,521)
Shares issued on reinvestment of
distributions ......................... 736,752 13,822,516
Shares issued in acquisition of Hartwell
Growth Fund ........................... 910,037 16,929,242
- ------------------------------------------------------ ---------------
Net increase (decrease) ................ 1,024,956 19,324,190
- ------------------------------------------------------ ---------------
Class B
Shares sold ............................ 1,552,928 28,806,348
Shares redeemed ........................ (1,062,059) (19,500,081)
Shares issued on reinvestment of
distributions ......................... 466,572 8,494,665
Shares issued in acquisition of Hartwell
Growth Fund ........................... 66,754 1,206,044
- ------------------------------------------------------ ---------------
Net increase ........................... 1,024,195 19,006,976
- ------------------------------------------------------ ---------------
Class C
Shares sold ............................ 336,661 6,288,512
Shares redeemed ........................ (253,439) (4,608,982)
Shares issued on reinvestment of
distributions ......................... 95,593 1,743,341
Shares issued in acquisition of Hartwell
Growth Fund ........................... 25,665 464,444
- ------------------------------------------------------ ---------------
Net increase (decrease) ................ 204,480 3,887,315
- ------------------------------------------------------ ---------------
Class Y**
Shares sold ............................ 0 0
Shares issued on reinvestment of
distributions ......................... 0 0
- ------------------------------------------------------ ---------------
Net increase ........................... 0 0
====================================================== ===============
Net increase (decrease) ................ 2,253,631 $ 42,218,481
====================================================== ===============
</TABLE>
* The Fund changed its fiscal year end from December 31 to September 30,
effective September 30, 1997.
** Omega Fund, Class Y commenced operations on July 23, 1997.
65
<PAGE>
Combined Notes to Financial Statements (Unaudited) (continued)
- --------------------------------------------------------------------------------
SMALL COMPANY GROWTH
<TABLE>
<CAPTION>
Six Months Ended Four Months Ended
March 31, 1998 September 30, 1997*
---------------------------------- ----------------------------------
Shares Amount Shares Amount
---------------- ----------------- ---------------- -----------------
<S> <C> <C> <C> <C>
Class A
Shares sold ................................ 9,162,634 $ 76,064,503 0 0
Automatic conversion of Class B
shares to Class A shares .................. 124,181,726 962,424,518 0 0
Shares redeemed ............................ (16,371,535) (136,786,094) 0 0
Shares issued in acquisition of Keystone
Small Company Growth Fund II .............. 1,123,086 8,684,926 0 0
- -------------------------------------------- -------------- ---------------- -------------- ---------------
Net increase ............................... 118,095,911 910,387,853 0 0
- -------------------------------------------- -------------- ---------------- -------------- ---------------
Class B
Shares sold ................................ 25,656,880 216,420,010 27,990,885 $ 243,488,031
Automatic conversion of Class B shares to
Class A shares ............................ (124,181,726) (962,424,518) 0 0
Shares redeemed ............................ (34,169,410) (289,770,962) (42,215,378) (369,839,740)
Shares issued on reinvestment of
distributions ............................. 13,003,167 105,065,592 11,242,892 91,854,430
Shares issued in acquisition of Keystone
Small Company Growth Fund II .............. 2,456,961 18,998,994 0 0
- -------------------------------------------- -------------- ---------------- -------------- ---------------
Net decrease ............................... (117,234,128) (911,710,884) (2,981,601) (34,497,279)
- -------------------------------------------- -------------- ---------------- -------------- ---------------
Class C
Shares sold ................................ 26,425 221,257 0 0
Shares redeemed ............................ (56,070) (469,194) 0 0
Shares issued in acquisition of Keystone
Small Company Growth Fund II .............. 675,716 5,225,388 0 0
- -------------------------------------------- -------------- ---------------- -------------- ---------------
Net increase ............................... 646,071 4,977,451 0 0
- -------------------------------------------- -------------- ---------------- -------------- ---------------
Class Y
Shares sold ................................ 23,290 193,313 0 0
Shares redeemed ............................ (20,207) (168,024) 0 0
Shares issued in acquisition of Keystone
Small Company Growth Fund II .............. 87,676 678,001 0 0
- -------------------------------------------- -------------- ---------------- -------------- ---------------
Net increase ............................... 90,759 703,290 0 0
============================================ ============== ================ ============== ===============
Net increase (decrease) .................... 1,598,613 $ 4,357,710 (2,981,601) $ (34,497,279)
============================================ ============== ================ ============== ===============
<CAPTION>
Year Ended
May 31, 1997
-------------------------------------
Shares Amount
----------------- -------------------
<S> <C> <C>
Class A
Shares sold ................................ 0 0
Automatic conversion of Class B
shares to Class A shares .................. 0 0
Shares redeemed ............................ 0 0
Shares issued in acquisition of Keystone
Small Company Growth Fund II .............. 0 0
- ------------------------------------------------------------ ------------------
Net increase ............................... 0 0
- ------------------------------------------------------------ ------------------
Class B
Shares sold ................................ 121,645,715 $ 1,018,919,437
Automatic conversion of Class B shares to
Class A shares ............................ 0 0
Shares redeemed ............................ (168,659,715) (1,402,606,782)
Shares issued on reinvestment of
distributions ............................. 19,925,079 168,366,921
Shares issued in acquisition of Keystone
Small Company Growth Fund II .............. 0 0
- ------------------------------------------------------------ ------------------
Net decrease ............................... (27,088,921) (215,320,424)
- ------------------------------------------------------------ ------------------
Class C
Shares sold ................................ 0 0
Shares redeemed ............................ 0 0
Shares issued in acquisition of Keystone
Small Company Growth Fund II .............. 0 0
- ------------------------------------------------------------ ------------------
Net increase ............................... 0 0
- ------------------------------------------------------------ ------------------
Class Y
Shares sold ................................ 0 0
Shares redeemed ............................ 0 0
Shares issued in acquisition of Keystone
Small Company Growth Fund II .............. 0 0
- ------------------------------------------------------------ ------------------
Net increase ............................... 0 0
============================================================ ==================
Net increase (decrease) .................... (27,088,921) $ (215,320,424)
============================================================ ==================
</TABLE>
* The Fund changed its fiscal year end from May 31 to September 30, effective
September 30, 1997.
66
<PAGE>
Combined Notes to Financial Statements (Unaudited) (continued)
- --------------------------------------------------------------------------------
STRATEGIC GROWTH
<TABLE>
<CAPTION>
Six Months Ended Eleven Months Ended
March 31, 1998 September 30, 1997*
--------------------------------- ----------------------------------
Shares Amount Shares Amount
--------------- ----------------- ---------------- -----------------
<S> <C> <C> <C> <C>
Class A
Shares sold ................................ 434,781 $ 4,202,496 0 0
Automatic conversion of Class B shares to
Class A shares ............................ 80,710,264 735,774,137 0 0
Shares redeemed ............................ (2,799,341) (27,414,462) 0 0
- -------------------------------------------- ------------- ---------------- -------------- ----------------
Net increase ............................... 78,345,704 712,562,171 0 0
- -------------------------------------------- ------------- ---------------- -------------- ----------------
Class B
Shares sold ................................ 2,942,672 28,577,953 13,375,436 $ 120,935,075
Automatic conversion of Class B shares to
Class A shares ............................ (80,710,264) (735,774,137) 0 0
Shares redeemed ............................ (5,027,261) (48,713,833) (18,734,530) (165,997,292)
Shares issued on reinvestment of
distributions ............................. 11,014,353 101,552,338 6,585,457 53,539,767
Shares issued in acquisition of Keystone Mid
Cap Growth Fund (S-3) ..................... 0 0 28,278,170 287,967,178
- -------------------------------------------- ------------- ---------------- -------------- ----------------
Net increase (decrease) .................... (71,780,500) (654,357,679) 29,504,533 296,444,728
- -------------------------------------------- ------------- ---------------- -------------- ----------------
Class C
Shares sold ................................ 12,703 127,122 0 0
Shares redeemed ............................ (29) (300) 0 0
- -------------------------------------------- ------------- ---------------- -------------- ----------------
Net increase ............................... 12,674 126,822 0 0
============================================ ============= ================ ============== ================
Net increase (decrease) .................... 6,577,878 $ 58,331,314 29,504,533 $ 296,444,728
============================================ ============= ================ ============== ================
<CAPTION>
Year Ended
October 31, 1996
----------------------------------
Shares Amount
---------------- -----------------
<S> <C> <C>
Class A
Shares sold ................................ 0 0
Automatic conversion of Class B shares to
Class A shares ............................ 0 0
Shares redeemed ............................ 0 0
- ----------------------------------------------------------- ---------------
Net increase ............................... 0 0
- ----------------------------------------------------------- ---------------
Class B
Shares sold ................................ 8,012,349 $ 65,085,209
Automatic conversion of Class B shares to
Class A shares ............................ 0 0
Shares redeemed ............................ (14,456,998) (118,085,204)
Shares issued on reinvestment of
distributions ............................. 2,591,072 20,184,450
Shares issued in acquisition of Keystone Mid
Cap Growth Fund (S-3) ..................... 0 0
- ----------------------------------------------------------- ---------------
Net increase (decrease) .................... (3,853,577) (32,815,545)
- ----------------------------------------------------------- ---------------
Class C
Shares sold ................................ 0 0
Shares redeemed ............................ 0 0
- ----------------------------------------------------------- ---------------
Net increase ............................... 0 0
=========================================================== ===============
Net increase (decrease) .................... (3,853,577) $ (32,815,545)
=========================================================== ===============
</TABLE>
* The Fund changed its fiscal year end from October 31 to September 30,
effective September 30, 1997.
5. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of investment securities, excluding
short-term investments, were as follows for the six-months ended March 31,
1998:
<TABLE>
<CAPTION>
Cost of Proceeds
Purchases from Sales
-------------- --------------
<S> <C> <C>
Aggressive Growth ............ $ 36,206,776 $ 73,205,971
Evergreen .................... 126,237,589 66,728,721
Micro Cap .................... 21,230,649 14,273,823
Omega ........................ 212,874,633 222,221,877
Small Company Growth ......... 558,310,578 787,905,083
Strategic Growth ............. 592,544,947 644,980,004
</TABLE>
6. DISTRIBUTION PLANS
Evergreen Distributor, Inc. (formerly, Evergreen Keystone Distributor, Inc.)
("EDI"), a wholly-owned subsidiary of The BISYS Group Inc. ("BISYS") serves as
principal underwriter to the Funds.
Each Fund has adopted Distribution Plans for each class of shares, except Class
Y, as allowed by Rule 12b-1 of the 1940 Act. Distribution plans permit the 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 services fees to broker-dealers who sell shares of the fund,
are paid by shareholders through expenses called "Distribution Plan expenses".
Each class, except Class Y, currently pays a service fee equal to 0.25% of the
average daily net asset of the Class. Class B and Class C also presently pay
distribution fees equal to 0.75% of the average daily net assets of the Class.
Distribution Plan expenses are calculated daily and paid monthly.
With respect to Class B and Class C shares, the principal underwriter may pay
12b-1 fees greater than the allowable annual amounts the Fund is permitted to
pay. The Fund may reimburse the principal underwriter for such excess amounts
in later years with annual interest at the prime rate plus 1.00%.
67
<PAGE>
Combined Notes to Financial Statements (Unaudited) (continued)
During the six-months ended March 31, 1998, amounts paid to EDI and/or
predecessor pursuant to each Fund's Class A, Class B and Class C Distribution
Plans were as follows:
<TABLE>
<CAPTION>
Class A Class B Class C
----------- ------------ ----------
<S> <C> <C> <C>
Aggressive Growth ............ $196,590 $ 194,414 $17,910
Evergreen .................... 221,536 2,782,731 50,904
Micro Cap .................... 4,149 14,103 9,582
Omega ........................ 153,598 560,048 78,103
Small Company Growth ......... 494,175 2,083,610 9,832
Strategic Growth ............. 379,865 1,039,028 87
</TABLE>
Each of the Distribution Plans may be terminated at any time by vote of the
Independent Trustees or by vote of a majority of the outstanding voting shares
of the respective class. However, for Omega, Small Company Growth and Strategic
Growth, after the termination of any Distribution Plan, and subject to the
discretion of the Independent Trustees, payments to EDI and/or its predecessor
may continue as compensation for services that had been provided while the
Distribution Plan was in effect.
Contingent deferred sales charges paid by redeeming shareholders are paid to
EDI or its predecessor.
7. INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT AND OTHER AFFILIATED
TRANSACTIONS
The Capital Management Group of First Union ("CMG"), the investment advisor for
Aggressive Growth, is entitled to an annual fee of .60 of 1% of the average
daily net assets, pursuant to the Fund's investment advisory agreement.
Evergreen Asset Management Corp. ("Evergreen Asset"), a wholly owned subsidiary
of First Union, is the investment advisor for Evergreen and Micro Cap. The
management fee paid to Evergreen Asset is determined by applying percentage
rates starting at 1.00% and declining to 0.80% per annum as net assets
increase, to the average daily net assets, pursuant to the Fund's investment
advisory agreement.
Keystone, a subsidiary of First Union, is the investment advisor for Omega,
Small Company Growth and Strategic Growth. For Omega, the management fee paid
to Keystone is determined by applying percentage rates starting at 0.75% and
declining to 0.50% per annum as net assets increase, to the average daily net
asset value of the Fund. For Small Company Growth and Strategic Growth, the
management fee paid to Keystone is determined by applying percentage rates
starting at 0.70% and declining to 0.35% per annum as net assets increase, to
the average daily net asset value of the Fund.
Evergreen Investment Services ("EIS")(formerly Evergreen Keystone Investment
Services, Inc.), a subsidiary of First Union, is the administrator and BISYS
Fund Services is sub-administrator to the Funds. As administrator, 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 administered 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 the Fund. The
sub-administration 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 the Fund. For Evergreen, Micro Cap, Omega, Small
Company Growth and Strategic Growth the administration and sub-administration
fee is paid by their respective investment advisor and is not a Fund expense.
For the six months ended March 31, 1998, Aggressive Growth paid administrative
fees of $31,202.
Lieber & Company, an affiliate of First Union, is the investment sub-adviser to
Evergreen, and Micro Cap and also provides brokerage services with respect to
substantially all security transactions of these Funds effected on the New York
or American Stock Exchanges. For the six-months ended March 31, 1998, Evergreen
and Micro Cap incurred $138,943 and $26,123 respectively, in brokerage
commissions with Lieber & Company. Lieber & Company is reimbursed by Evergreen
Asset, at no additional expense to the Fund, for its cost of providing
investment advisory services.
68
<PAGE>
Combined Notes to Financial Statements (Unaudited) (continued)
Evergreen Service Company ("ESC") (formerly, Evergreen Keystone Service
Company, Inc.), a wholly-owned subsidiary of Keystone, 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.
8. 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.
9. DEFERRED TRUSTEES' FEES
Each Independent Trustee of the Funds may defer any or all compensation related
to performance of duties as a Trustee. Each Trustee's 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
installments for up to ten years at their election, not earlier than either the
year in which the Trustee ceases to be a member of the Board of Trustees or
January 1, 2000. As of March 31, 1998, the value of the Trustees deferral
account for Aggressive Growth, Evergreen, Micro Cap, Omega, Small Company
Growth and Strategic Growth were $13,186, $82,575, $12,231, $4,712, $30,402 and
$19,075, respectively.
10. FINANCING AGREEMENT
On October 31, 1996, a financing agreement among certain of the Evergreen
Funds, State Street Bank & Trust ("State Street") and a group of Banks (the
"Banks") became effective. Under this agreement, the Banks provided an
unsecured credit facility in the aggregate amount of $225 million ($112.5
million committed and $112.5 million uncommitted) allocated evenly among the
Banks. Borrowings under this facility bore interest at 0.75% per annum above
the Federal Funds rate. A commitment fee of 0.10% per annum was incurred on the
unused portion of the committed facility, which was allocated to all
participating funds. State Street served as agent for the Banks, and as agent
was entitled to a fee of $15,000 which was allocated to all of the
participating Funds. This agreement was terminated on October 31, 1997.
On October 31, 1997, a temporary financing agreement between the participating
Funds and First Union became effective. Under this agreement, First Union
provided a fully committed unsecured credit facility in the aggregate amount of
$300 million. Borrowings under this facility bore interest at 1.00% per annum
above the Federal Funds rate. State Street served as administrative agent under
this agreement, but received no compensation for its services. This agreement
was terminated on December 22, 1997.
On December 22, 1997, a financing agreement among all of the Evergreen Funds,
State Street and a group of Banks became effective. Under this agreement, the
Banks provide an unsecured credit facility in the aggregate amount of $400
million ($275 million committed and $125 million uncommitted). The credit
facility is allocated, under the terms of the financing agreement, among the
Banks. 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. For its assistance in arranging this financing agreement, the Capital
Market Group of First Union was paid a one time arrangement fee of $27,500.
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.
During the six months ended March 31, 1998, Aggressive Growth, Evergreen,
Omega, Small Company Growth and Strategic Growth had no significant borrowings
under these agreements. Micro Cap had borrowings outstanding for 79 days under
its line of credit and incurred $16,725 in interest charges related to these
borrowings which is included in other expenses. Micro Cap's average amount of
debt outstanding during the six months was $515,027 at a weighted average
interest rate of 6.513%.
69
<PAGE>
ADDITIONAL INFORMATION (Unaudited)
On December 15, 1997, a special meeting of shareholders for Aggressive Growth,
Evergreen, Micro Cap, Omega, and Strategic Growth was held to consider a number
of proposals and had the following shares represented at the meeting. On
October 16, 1997, the record date for the meeting the Funds had the following
shares outstanding:
<TABLE>
<CAPTION>
Aggressive
Growth Evergreen
-------------- --------------
<S> <C> <C>
Record date shares outstanding ............................................. 11,078,025 75,531,877
Shares represented at meeting .............................................. 5,966,387 46,177,059
Percentage of record date shares represented at meeting .................... 53.9% 61.1%
The votes recorded at the meeting, by proposal, were as follows:
Proposal 1 - The proposed reorganization of each Fund as a series
of the Evergreen Equity Trust, a Delaware business trust:
Shares voted "For" ..................................................... 5,538,713 43,274,638
Shares voted "Against" ................................................. 134,393 845,072
Shares voted "Abstain" ................................................. 293,281 2,057,349
Proposal 2 - Reclassification as non-fundamental of the
investment objective currently classified as fundamental:
Shares voted "For" ..................................................... 5,446,135 42,449,481
Shares voted "Against" ................................................. 197,999 1,557,400
Shares voted "Abstain" ................................................. 322,253 2,170,178
Proposal 3 - Changes to Fundamental investment restrictions:
Proposal 3A - To amend the Fundamental restriction concerning diversi-
fication of investments:
Shares voted "For" ..................................................... 5,448,919 42,566,787
Shares voted "Against" ................................................. 165,629 1,374,856
Shares voted "Abstain" ................................................. 351,839 2,235,416
Proposal 3B - To amend the Fundamental restriction concerning
concentration of a Fund's assets in a particular industry:
Shares voted "For" ..................................................... 5,448,984 42,604,245
Shares voted "Against" ................................................. 165,564 1,337,398
Shares voted "Abstain" ................................................. 351,839 2,235,416
Proposal 3C - To amend the Fundamental restriction concerning the
issuance of senior securities:
Shares voted "For" ..................................................... 5,449,332 42,563,194
Shares voted "Against" ................................................. 165,216 1,378,449
Shares voted "Abstain" ................................................. 351,839 2,235,416
Proposal 3D - To amend the Fundamental restriction concerning
borrowing:
Shares voted "For" ..................................................... 5,448,636 42,585,625
Shares voted "Against" ................................................. 165,912 1,356,018
Shares voted "Abstain" ................................................. 351,839 2,235,416
Proposal 3E - To amend the Fundamental restriction concerning
underwriting:
Shares voted "For" ..................................................... 5,449,185 42,603,388
Shares voted "Against" ................................................. 165,363 1,338,255
Shares voted "Abstain" ................................................. 351,839 2,235,416
Proposal 3F - To amend the Fundamental restriction concerning
investments in Real Estate:
Shares voted "For" ..................................................... 5,448,795 42,595,886
Shares voted "Against" ................................................. 165,753 1,345,757
Shares voted "Abstain" ................................................. 351,839 2,235,416
Proposal 3G - To amend the Fundamental restriction concerning
commodities:
Shares voted "For" ..................................................... 5,447,889 42,580,722
Shares voted "Against" ................................................. 166,173 1,360,921
Shares voted "Abstain" ................................................. 352,325 2,235,416
Proposal 3H - To amend the Fundamental restriction concerning
lending:
Shares voted "For" ..................................................... 5,449,124 42,549,411
Shares voted "Against" ................................................. 165,424 1,392,232
Shares voted "Abstain" ................................................. 351,839 2,235,416
<CAPTION>
Micro Strategic
Cap Omega Growth
------------- -------------- --------------
<S> <C> <C> <C>
Record date shares outstanding ............................................. 2,056,502 12,949,287 86,442,786
Shares represented at meeting .............................................. 1,464,068 7,506,720 53,965,593
Percentage of record date shares represented at meeting .................... 71.2% 58.0% 62.4%
The votes recorded at the meeting, by proposal, were as follows:
Proposal 1 - The proposed reorganization of each Fund as a series
of the Evergreen Equity Trust, a Delaware business trust:
Shares voted "For" ..................................................... 1,424,176 6,849,189 49,891,028
Shares voted "Against" ................................................. 12,525 169,195 1,127,011
Shares voted "Abstain" ................................................. 27,367 488,336 2,947,554
Proposal 2 - Reclassification as non-fundamental of the
investment objective currently classified as fundamental:
Shares voted "For" ..................................................... 1,413,698 - 48,772,836
Shares voted "Against" ................................................. 23,885 - 1,842,439
Shares voted "Abstain" ................................................. 26,485 - 3,350,318
Proposal 3 - Changes to Fundamental investment restrictions:
Proposal 3A - To amend the Fundamental restriction concerning diversi-
fication of investments:
Shares voted "For" ..................................................... 1,413,357 6,702,160 48,505,851
Shares voted "Against" ................................................. 23,898 199,854 1,575,545
Shares voted "Abstain" ................................................. 26,813 604,706 3,884,197
Proposal 3B - To amend the Fundamental restriction concerning
concentration of a Fund's assets in a particular industry:
Shares voted "For" ..................................................... 1,412,945 6,706,423 48,502,849
Shares voted "Against" ................................................. 24,310 198,696 1,589,100
Shares voted "Abstain" ................................................. 26,813 601,601 3,873,644
Proposal 3C - To amend the Fundamental restriction concerning the
issuance of senior securities:
Shares voted "For" ..................................................... 1,412,905 6,704,874 48,490,761
Shares voted "Against" ................................................. 24,350 200,245 1,589,842
Shares voted "Abstain" ................................................. 26,813 601,601 3,884,990
Proposal 3D - To amend the Fundamental restriction concerning
borrowing:
Shares voted "For" ..................................................... 1,412,317 6,703,809 48,477,894
Shares voted "Against" ................................................. 24,938 201,310 1,602,709
Shares voted "Abstain" ................................................. 26,813 601,601 3,884,990
Proposal 3E - To amend the Fundamental restriction concerning
underwriting:
Shares voted "For" ..................................................... 1,412,768 6,705,626 48,480,533
Shares voted "Against" ................................................. 24,487 199,493 1,600,070
Shares voted "Abstain" ................................................. 26,813 601,601 3,884,990
Proposal 3F - To amend the Fundamental restriction concerning
investments in Real Estate:
Shares voted "For" ..................................................... 1,412,768 6,702,717 48,484,385
Shares voted "Against" ................................................. 24,487 202,402 1,596,218
Shares voted "Abstain" ................................................. 26,813 601,601 3,884,990
Proposal 3G - To amend the Fundamental restriction concerning
commodities:
Shares voted "For" ..................................................... 1,412,768 6,704,954 48,471,907
Shares voted "Against" ................................................. 24,487 200,695 1,608,696
Shares voted "Abstain" ................................................. 26,813 601,071 3,884,990
Proposal 3H - To amend the Fundamental restriction concerning
lending:
Shares voted "For" ..................................................... 1,412,768 6,704,984 48,450,709
Shares voted "Against" ................................................. 24,487 200,135 1,627,694
Shares voted "Abstain" ................................................. 26,813 601,601 3,887,190
</TABLE>
70
<PAGE>
ADDITIONAL INFORMATION (Unaudited) (continued)
<TABLE>
<CAPTION>
Aggressive
Growth Evergreen
------------ ------------
<S> <C> <C>
Proposal 3J9 - Reclassification as nonfundamental of current
fundamental restriction: Unseasoned Issuers
Shares voted "For" ............................................. 5,446,264 42,568,910
Shares voted "Against" ......................................... 169,267 1,372,327
Shares voted "Abstain" ......................................... 350,856 2,235,822
Proposal 3J10 - Reclassification as nonfundamental of current
fundamental restriction: Control or Management
Shares voted "For" ............................................. - 42,593,101
Shares voted "Against" ......................................... - 1,348,135
Shares voted "Abstain" ......................................... - 2,235,823
Proposal 3J11 - Reclassification as nonfundamental of current
fundamental restriction: Short Sales
Shares voted "For" ............................................. - 42,600,540
Shares voted "Against" ......................................... - 1,340,696
Shares voted "Abstain" ......................................... - 2,235,823
Proposal 3J12 - Reclassification as nonfundamental of current
fundamental restriction: Margin Purchases
Shares voted "For" ............................................. - 42,601,965
Shares voted "Against" ......................................... - 1,339,272
Shares voted "Abstain" ......................................... - 2,235,822
Proposal 3J13 - Reclassification as nonfundamental of current
fundamental restriction: Other Investment Companies
Shares voted "For" ............................................. - 42,613,808
Shares voted "Against" ......................................... - 1,336,108
Shares voted "Abstain" ......................................... - 2,227,143
Proposal 3J14 - Reclassification as nonfundamental of current
fundamental restriction: Officers' and Director's Ownership of
Shares ........................................................
Shares voted "For" ............................................. - 42,616,593
Shares voted "Against" ......................................... - 1,333,323
Shares voted "Abstain" ......................................... - 2,227,143
Proposal 3J15 - Reclassification as nonfundamental of current
fundamental restriction: Warrants
Shares voted "For" ............................................. - 42,615,203
Shares voted "Against" ......................................... - 1,334,182
Shares voted "Abstain" ......................................... - 2,227,674
Proposal 3J16 - Reclassification as nonfundamental of current
fundamental restriction: Interests in Oil, Gas,or Other Mineral
Explorations or Development Programs
Shares voted "For" ............................................. - 42,612,122
Shares voted "Against" ......................................... - 1,336,578
Shares voted "Abstain" ......................................... - 2,228,359
Proposal 3J17 - Reclassification as nonfundamental of current
fundamental restriction: Joint Trading
Shares voted "For" ............................................. - 42,611,250
Shares voted "Against" ......................................... - 1,337,450
Shares voted "Abstain" ......................................... - 2,228,359
<CAPTION>
Micro Strategic
Cap Omega Growth
----------- ----------- -------------
<S> <C> <C> <C>
Proposal 3J9 - Reclassification as nonfundamental of current
fundamental restriction: Unseasoned Issuers
Shares voted "For" ............................................. 1,411,309 6,698,292 48,482,003
Shares voted "Against" ......................................... 25,946 206,069 1,598,923
Shares voted "Abstain" ......................................... 26,813 602,359 3,884,667
Proposal 3J10 - Reclassification as nonfundamental of current
fundamental restriction: Control or Management
Shares voted "For" ............................................. 1,411,309 6,699,084 48,475,822
Shares voted "Against" ......................................... 25,946 205,277 1,601,284
Shares voted "Abstain" ......................................... 26,813 602,359 3,888,487
Proposal 3J11 - Reclassification as nonfundamental of current
fundamental restriction: Short Sales
Shares voted "For" ............................................. 1,411,309 6,697,957 48,458,811
Shares voted "Against" ......................................... 25,946 206,159 1,603,812
Shares voted "Abstain" ......................................... 26,813 602,604 3,902,970
Proposal 3J12 - Reclassification as nonfundamental of current
fundamental restriction: Margin Purchases
Shares voted "For" ............................................. 1,411,309 6,697,555 48,434,512
Shares voted "Against" ......................................... 25,946 206,562 1,627,437
Shares voted "Abstain" ......................................... 26,813 602,603 3,903,644
Proposal 3J13 - Reclassification as nonfundamental of current
fundamental restriction: Other Investment Companies
Shares voted "For" ............................................. 1,411,309 6,701,383 48,491,915
Shares voted "Against" ......................................... 25,946 206,562 1,598,557
Shares voted "Abstain" ......................................... 26,813 598,775 3,875,121
Proposal 3J14 - Reclassification as nonfundamental of current
fundamental restriction: Officers' and Director's Ownership of
Shares ........................................................
Shares voted "For" ............................................. 1,411,309 - -
Shares voted "Against" ......................................... 25,946 - -
Shares voted "Abstain" ......................................... 26,813 - -
Proposal 3J15 - Reclassification as nonfundamental of current
fundamental restriction: Warrants
Shares voted "For" ............................................. 1,411,309 - -
Shares voted "Against" ......................................... 25,946 - -
Shares voted "Abstain" ......................................... 26,813 - -
Proposal 3J16 - Reclassification as nonfundamental of current
fundamental restriction: Interests in Oil, Gas,or Other Mineral
Explorations or Development Programs
Shares voted "For" ............................................. - - -
Shares voted "Against" ......................................... - - -
Shares voted "Abstain" ......................................... - - -
Proposal 3J17 - Reclassification as nonfundamental of current
fundamental restriction: Joint Trading
Shares voted "For" ............................................. - - -
Shares voted "Against" ......................................... - - -
Shares voted "Abstain" ......................................... - - -
</TABLE>
71
<PAGE>
ADDITIONAL INFORMATION (Unaudited) (continued)
On January 6, 1998, a special meeting of shareholders for Evergreen Small
Company Growth Fund II (formerly, Keystone Small Company Growth Fund II) and
Small Company Growth was held to consider a proposal for reorganization of the
Funds and had the following shares represented at the meeting. On November 10,
1997, the record date for the meeting, the Funds had the following shares
outstanding:
<TABLE>
<CAPTION>
Small Company Small Company
Growth Fund II Growth
---------------- --------------
<S> <C> <C>
Record date shares outstanding ........................................................ 3,338,223 159,674,283
Shares represented at meeting ......................................................... 1,534,715 87,264,642
Percentage of record date shares represented at meeting ............................... 46.0% 54.7%
Proposal - The proposed reorganization of each Fund as a series of the Evergreen
Equity Trust,
a Delaware business trust:
Shares voted For ................................................................... 1,432,842 79,649,671
Shares voted Against ............................................................... 16,858 3,134,320
Shares voted Abstain ............................................................... 85,015 4,480,651
</TABLE>
72
<PAGE>
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<PAGE>
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