<PAGE>
Semiannual Report
as of March 31, 1999
Evergreen
Domestic Growth Funds
[LOGO OF EVERGREEN FUNDS/SM/ APPEARS HERE]
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Table of Contents
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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 .................................. 17
Portfolio Manager Interview ....................... 18
Evergreen Stock Selector Fund
Fund at a Glance .................................. 21
Portfolio Manager Interview ....................... 22
Evergreen Strategic Growth Fund
Fund at a Glance .................................. 24
Portfolio Manager Interview ....................... 25
Evergreen Tax Strategic Equity Fund
Fund at a Glance .................................. 28
Portfolio Manager Interview ....................... 29
Financial Highlights
Evergreen Aggressive Growth Fund................... 31
Evergreen Fund..................................... 33
Evergreen Micro Cap Fund........................... 35
Evergreen Omega Fund............................... 37
Evergreen Small Company Growth Fund................ 39
Evergreen Stock Selector Fund...................... 41
Evergreen Strategic Growth Fund.................... 43
Evergreen Tax Strategic Equity Fund................ 45
Schedule of Investments
Evergreen Aggressive Growth Fund................... 47
Evergreen Fund..................................... 48
Evergreen Micro Cap Fund........................... 53
Evergreen Omega Fund............................... 55
Evergreen Small Company Growth Fund................ 57
Evergreen Stock Selector Fund...................... 60
Evergreen Strategic Growth Fund.................... 62
Evergreen Tax Strategic Equity Fund................ 64
Statements of Assets and Liabilities.................. 66
Statements of Operations ............................. 68
Statements of Changes in Net Assets................... 70
Combined Notes to Financial
Statements ........................................... 75
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Evergreen Funds
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Evergreen Funds is one of the nation's fastest growing investment companies with
over $50 billion in assets under management.
With over 70 mutual funds to choose among and acclaimed service and operations
capabilities, investors enjoy a broad 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, charges and other ongoing expenses, and should be
read carefully before investing or sending money.
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Mutual Funds: ARE NOT FDIC INSURED May lose value * Are not bank guaranteed
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Evergreen Distributor, Inc.
Evergreen/SM/ is a Service Mark of Evergreen Investment Services, Inc.
<PAGE>
Letter to Shareholders
----------------------
May 1999
[PHOTO OF WILLIAM M. ENNIS APPEARS HERE]
William M. Ennis
Managing Director
Dear Shareholders:
We are pleased to provide the Evergreen Domestic Growth Funds semiannual report,
which covers the six-month period ended March 31, 1999.
Continued Strength in the Domestic Economy
After stock markets around the world, including the United States, declined
dramatically last summer and into the early fall, the Federal Reserve's actions
to lower interest rates in late 1998 helped restore investor confidence. The
U.S. stock market rallied strongly during the final quarter of 1998 and into the
first quarter of 1999.
Throughout the period, the strong performance of large capitalization growth
stocks continued. Investors who focused on this small group of stocks,
particularly technology stocks, fared well. Currently, the stock market is
responding positively to the combination of low inflation, low interest rates
and low unemployment. The economy appears strong and investor confidence seems
high. We remain cautiously optimistic about the stock market.
Year 2000 Preparation/1/
At Evergreen, we continue to prepare ourselves to provide uninterrupted service
and communication with all our shareholders throughout the end of 1999 and right
through the date change into the Year 2000 and beyond. As of the end of April,
when this report was finalized, we have completed 75% of the testing of internal
systems and are rapidly moving through the remaining systems. In March, we
successfully participated in industry-wide testing with the Securities Industry
Association. We are confident that our efforts will enable our shareholders to
receive the same Evergreen products and services we deliver today.
As always, we encourage all shareholders to diversify their mutual fund
portfolios and we suggest you consult with your financial advisor for an
allocation strategy that helps you meet your investment goals and objectives.
Evergreen Funds offers a wide range of funds that includes multiple investment
styles to help you find one that is appropriate in your portfolio.
Thank you for your continued investment in Evergreen Funds.
Sincerely,
/s/ William M. Ennis
William M. Ennis
Managing Director
Evergreen Funds
/1/The information above constitutes Year 2000 readiness disclosure.
1
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E V E R G R E E N
Aggressive Growth Fund
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Fund at a Glance as of March 31, 1999
The Fund will remain highly focused, typically with 35 to 40 stocks in the
portfolio, and will invest in companies with consistent earnings growth.
Portfolio
Management
----------------
[PHOTO OF MAUREEN E. CULLINANE APPEARS HERE]
Maureen E. Cullinane, CFA
Tenure: April 1999
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CURRENT INVESTMENT STYLE/1/
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[STYLE BOX APPEARS HERE]
Morningstar's Style Box is based on a portfolio date as of 3/31/99.
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.
/1/Source: 1999 Morningstar, Inc.
/2/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. Historical performance shown for Classes B, C, and Y prior
to their inception is based on the performance of Class A, the original class
offered. These historical returns for Classes B, C, and Y have not been adjusted
to reflect the effect of each Class' 12b-1 fees. These fees for Classes A, B,
and C are 0.25%, 1.00%, 1.00%, respectively. Class Y does not pay a 12b-1 fee.
If these fees had been reflected, returns for Classes B and C would have been
lower while returns for Class Y would have been higher.
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PERFORMANCE AND RETURNS/2/
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Portfolio Inception Date: 4/15/83 Class A Class B Class C Class Y
Class Inception Date 4/15/83 7/7/95 8/3/95 7/11/95
................................................................................
Average Annual Returns*
................................................................................
6 months with sales charge 31.73% 32.84% 36.75% n/a
................................................................................
6 months w/o sales charge 38.30% 37.84% 37.75% 38.51%
................................................................................
1 year with sales charge 20.80% 20.63% 24.42% n/a
................................................................................
1 year w/o sales charge 26.84% 25.63% 25.42% 27.57%
................................................................................
3 years 15.43% 15.74% 16.48% 17.65%
................................................................................
5 years 16.13% 16.45% 16.61% 17.51%
................................................................................
10 years 18.63% 18.91% 18.89% 19.34%
................................................................................
Since Portfolio Inception 14.53% 14.70% 14.69% 14.96%
................................................................................
Maximum Sales Charge 4.75% 5.00% 1.00% n/a
Front End CDSC CDSC
................................................................................
6-month capital gain distributions
per share $2.63 $2.63 $2.63 $2.63
................................................................................
*Adjusted for maximum sales charge.
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LONG TERM GROWTH
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[LINE GRAPH APPEARS HERE]
Evergreen
Aggressive Russell S & P NASDAQ Consumer Price
Date Growth A 2000 400 Midcap Composite Index - US
---- -------- ---- ---------- --------- ----------
3/31/89 $ 9,522 $ 10,000 $ 10,000 $ 10,000 $ 10,000
3/31/90 $ 10,936 $ 10,554 $ 12,778 $ 10,801 $ 10,523
3/31/91 $ 13,193 $ 11,271 $ 14,435 $ 12,110 $ 11,038
3/31/92 $ 18,583 $ 13,662 $ 17,533 $ 15,429 $ 11,390
3/31/93 $ 22,580 $ 15,692 $ 20,376 $ 17,890 $ 11,742
3/31/94 $ 24,907 $ 17,419 $ 21,617 $ 19,497 $ 12,036
3/31/95 $ 24,157 $ 18,378 $ 23,416 $ 21,625 $ 12,379
3/31/96 $ 34,199 $ 23,715 $ 30,094 $ 29,289 $ 12,717
3/31/97 $ 33,313 $ 24,926 $ 33,280 $ 32,637 $ 13,083
3/31/98 $ 43,528 $ 35,399 $ 49,525 $ 49,364 $ 13,262
3/31/99 $ 55,213 $ 29,644 $ 52,933 $ 66,427 $ 13,491
Comparison of a $10,000 investment in Evergreen Aggressive Growth Fund, Class A
shares/2/, versus a similar investment in the Russell 2000, the Nasdaq
Industrials, the S&P 400 Index, and the Consumer Price Index (CPI).
The Russell 2000 Index, the S&P 400 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 is a commonly used measure of inflation and does not represent an
investment. It is not possible to invest directly in an index.
2
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E V E R G R E E N
Aggressive Growth Fund
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Portfolio Manager Interview
How did the Fund perform in the six months ended March 31, 1999?
The Evergreen Aggressive Growth Fund had very strong performance. For the
six-month period, the Fund's Class A shares had a total return of 38.30%, while
Class B and Class C shares had returns of 37.84% and 37.75%, respectively, and
Class Y shares had a return of 38.51%. During the same six-month period, the
average capital appreciation fund had a return of 28.06%, as measured by Lipper
Inc., an independent monitor of mutual fund performance. The returns are before
the deduction of any applicable sales charges.
Harold J. Ireland, Jr., was the Fund's portfolio manager when these results were
achieved.
Portfolio
Characteristics
---------------
Total Net Assets $268,665,690
...........................................................................
Number of Holdings 41
...........................................................................
Beta 1.31
...........................................................................
P/E Ratio 36.0x
...........................................................................
What was the investment environment like during the period?
It was a good period for stock investing, particularly in large-cap stocks, and
especially in technology.
The period started out in early October 1998 amid continued worries about the
potential effect of overseas economic problems on the U.S. The stock market was
well into a deep correction that had started in August when the Russian
government defaulted on part of its external debt. In addition to the foreign
problems, a prominent hedge fund--Long-Term Capital--came close to failing.
Investors were very concerned that the confluence of a number of global problems
eventually would slow the economy in the U.S. and erode corporate profits.
The U.S. Federal Reserve Board stepped in by lowering short-term interest rates
three successive times in the fall, restoring liquidity and confidence to the
market. At the same time, investors took encouragement from high consumer
confidence, low inflation, and favorable earnings reports from a number of
technology companies.
Led by large-cap stocks, the market took off to a succession of new highs during
the fourth quarter of 1998 and the first quarter of 1999. Large-company
technology stocks were the performance leaders. Demand for technology products
continued to grow, as corporations used technology to improve their earnings and
enhance their productivity. The well publicized "Y2K" problem--the question of
whether data processing systems could deal with calendar dates after December
31, 1999--only added to the demand for technology products and services.
Although the major stock market averages climbed to record heights during the
six-month period, the best performance was concentrated in large-cap companies,
most notably in the technology industry. Opportunities also appeared
periodically in other sectors, including financial services, consumer cyclicals
and even the energy sector late in the period.
Top 5 Industries
-------------------------------
(as a percentage of net assets)
Healthcare Products & Services 24.6%
...........................................................................
Information Services & Technology 21.4%
...........................................................................
Retailing & Wholesale 15.7%
...........................................................................
Communication Systems & Services 12.7%
...........................................................................
Oil Field Services 8.8%
...........................................................................
3
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E V E R G R E E N
Aggressive Growth Fund
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Portfolio Manager Interview
As the new portfolio manager for the Aggressive Growth Fund, how would you
describe your investment approach?
The Fund will remain highly focused, typically with 35 to 40 stocks in the
portfolio, and will invest in companies with consistent earnings growth. We will
concentrate on companies with earnings growth rates of 20% or higher or with the
potential for accelerating earnings. Citigroup--a recent addition to the
portfolio since the March 31, 1999 date of this report--is a good example. While
it does not have an earnings growth rate of 20%, we believe there is the
opportunity for accelerating earnings in this company, which is the result of
the merger of Citicorp and Travelers.
We like to see companies that are growing through top-line revenue growth, and
prefer companies with characteristics that set them apart, such as a new product
or a niche in the market. Because of the emphasis on earnings growth, we would
expect that the technology and pharmaceutical industries typically would be well
represented in the portfolio. The Fund will be managing flexibly with respect to
company size, and will have the ability to invest in companies of all sizes.
The key to stock selection will be consistency of earnings growth.
Top 10 Holdings
-------------------------------
(as a percentage of net assets)
VISX, Inc. 12.0%
............................................................................
EMC Corp. 8.1%
............................................................................
Cisco Systems, Inc. 7.1%
............................................................................
Microsoft Corp. 6.7%
............................................................................
MCI WorldCom, Inc. 5.6%
............................................................................
Home Depot, Inc. 5.3%
............................................................................
Office Depot, Inc. 4.9%
............................................................................
American International Group, Inc. 4.0%
............................................................................
Rexall Sundown, Inc. 3.6%
............................................................................
Medtronic, Inc. 3.5%
............................................................................
What is your outlook for the market?
We may see some choppiness in the market over the next six months, with
different industries moving in and out of favor. Technology stocks--which have
had such tremendous performance--may start to cool a bit and we already have
reduced our holdings somewhat. Nevertheless, because technology generally offers
the fastest growth rates in earnings, it will continue to play a prominent role
in the portfolio. We believe we can continue to find opportunities in the
healthcare industry, where the earnings outlook also is quite positive. The
healthcare industry is similar to technology; investment in research and
development eventually leads to new products that in turn fuel an acceleration
in earnings growth.
The consumer is in great shape; ready, willing and able to spend, and that bodes
well for the consumer-related industries, including retail and consumer
cyclicals. It would not surprise us if cyclical companies, whose fortunes rise
and fall with movements in the business cycle, were to come back after
relatively poor performance over the past two years. We have already seen some
signs of a revival in cyclicals.
Although there still are issues to worry about, such as Y2K or global economic
growth and inflation, we remain cautiously optimistic.
4
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E V E R G R E E N
Evergreen Fund
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Fund at a Glance as of March 31, 1999
This was a period of exceptional opportunity because the Fund had maintained a
large, cash-equivalent position well into the summer of 1998 in the expectation
that market volatility and speculative overpricing would lead to a correction,
which we could use to purchase exceptional growth values in stocks.
Portfolio
Management
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[PHOTO OF STEPHEN A. LIEBER APPEARS HERE]
Stephen A. Lieber
Tenure: October 1971
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CURRENT INVESTMENT STYLE/1/
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[STYLE BOX APPEARS HERE]
Morningstar's Style Box is based on a portfolio date as of 3/31/99.
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.
/1/Source: 1999 Morningstar, Inc.
/2/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. Historical performance shown for Classes A, B, and C prior
to their inception is based on the performance of Class Y, the original class
offered. These historical returns for Classes A, B, and C have not been adjusted
to reflect the effect of each class' 12b-1 fees. These fees for Classes A, B,
and C are 0.25%, 1.00%, and 1.00%, respectively. Class Y does not pay a 12b-1
fee. If these fees had been reflected, returns would have been lower.
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS/2/
- --------------------------------------------------------------------------------
Portfolio Inception Date: 10/15/71 Class A Class B Class C Class Y
Class Inception Date 1/3/95 1/3/95 1/3/95 10/15/71
................................................................................
Average Annual Returns*
................................................................................
6 months with sales charge 9.29% 9.41% 13.38% n/a
................................................................................
6 months w/o sales charge 14.73% 14.41% 14.38% 14.99%
................................................................................
1 year with sales charge -8.16% -8.92% -5.07% n/a
................................................................................
1 year with w/o sales charge -3.59% -4.15% -4.11% -3.19%
................................................................................
3 years 14.34% 14.67% 15.41% 16.57%
................................................................................
5 years 16.73% 17.00% 17.20% 18.20%
................................................................................
10 years 12.55% 12.78% 12.77% 13.25%
................................................................................
Since Portfolio Inception 16.05% 16.14% 16.14% 16.32%
................................................................................
Maximum Sales Charge 4.75% 5.00% 1.00% n/a
Front End CDSC CDSC
................................................................................
6-month income distributions
per share $0.04 -- -- $0.05
................................................................................
6-month capital gain distributions
per share $0.07 $0.07 $0.07 $0.07
................................................................................
*Adjusted for maximum sales charge.
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LONG TERM GROWTH
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[LINE GRAPH APPEARS HERE]
Date Evergreen Fund A Russell 2000 Consumer Price Index - US
---- ---------------- ------------ -------------------------
3/31/89 $ 9,527 $ 10,000 $ 10,000
3/31/90 $ 9,655 $ 10,554 $ 10,523
3/31/91 $ 10,827 $ 11,271 $ 11,038
3/31/92 $ 12,937 $ 13,662 $ 11,390
3/31/93 $ 13,949 $ 15,692 $ 11,742
3/31/94 $ 14,347 $ 17,419 $ 12,036
3/31/95 $ 16,445 $ 18,378 $ 12,379
3/31/96 $ 20,780 $ 23,715 $ 12,717
3/31/97 $ 23,591 $ 24,926 $ 13,083
3/31/98 $ 33,825 $ 35,399 $ 13,262
3/31/99 $ 32,612 $ 29,644 $ 13,491
Comparison of a $10,000 investment in Evergreen Fund, Class A shares/2/, versus
a similar investment in the Russell 2000 and the Consumer Price Index (CPI).
The Russell 2000 Index is an unmanaged index. This index does not include
transaction costs associated with buying and selling securities nor any
management fees. The Consumer Price Index is a commonly used measure of
inflation and does not represent an investment. It is not possible to invest
directly in an index.
5
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E V E R G R E E N
Evergreen Fund
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Portfolio Manager Interview
How did the Fund perform during the half-year?
Evergreen Fund provided a 14.99% return for the six months ended March 31, 1999.
With the largest portion of the Fund's holdings among smaller companies, we find
it appropriate to compare this result with that of the major small company
index, the Russell 2000, which provided a 10.0% return in the same period. The
Fund's average annual performance since inception in 1971 is now 16.32% per
annum, with an overall gain of 6,252.07%. These current and historical figures
are for the Class Y shares. In the six months, the Fund's Class A shares had a
total return of 14.73%, and the B and C shares had returns of 14.41% and 14.38%,
respectively. The returns are before the deduction of any applicable sales
charges.
Portfolio
Characteristics
---------------------------
Total Net Assets $2,040,573,356
.............................................................................
Number of Holdings 334
.............................................................................
Beta 0.88
.............................................................................
P/E Ratio 19.0x
.............................................................................
What was the investment environment like during the six months, and how did that
affect the strategy?
The period from September 30, 1998 to March 31, 1999, began with turbulence in
the equity and fixed-income markets in the midst of a sharp decline in the stock
prices, and ended with an optimistic and even speculative market centering
attention on larger growth companies, especially internet-related technology and
service providers. It literally began as a period where steady nerves and a
careful eye for values were well rewarded, and ended in an environment where
historical valuation standards were being ignored or greatly inflated in surges
of optimism.
For the Evergreen Fund, this was a period of exceptional opportunity because the
Fund had maintained a large, cash-equivalent position well into the summer of
1998 in the expectation that market volatility and speculative overpricing would
lead to a correction, which we could use to purchase exceptional growth values
in stocks. The fulfillment of this expectation and the use of our cash reserves
have provided some exceptional gains. The greatest gain was in the shares of
VISX, Inc., which were purchased at the very low day of the market, October 8,
1998, at a price of $24, and closed on March 31 at $107.56 (and have since risen
to $141 on April 9). Eagle Hardware & Garden, Inc., a home remodeling and
maintenance chain, rose 103.4% from purchase on October 9, benefited by an
acquisition offer from Lowe's Companies, Inc.; Costco Companies Inc., a
membership discount retailer, rose 101.4% from purchase on October 1; Boston
Scientific Corp., a medical supplier specializing in materials for angioplasty,
rose 68.8% from purchase on November 13; Paine Webber Group, Inc., the brokerage
firm, rose 53.0% from purchase on October 13; and Ethan Allen Interiors, Inc.
rose 52.2% from purchase on October 1.
Those weeks at the beginning of the Fund's fiscal year were indeed a period of
exceptional opportunity, and we used them to make purchases in a broad variety
of issues across industry spectrums, as these few leading performers suggest. We
continued this same focus on undervalued growth opportunities, primarily in the
shares of smaller companies with unique business franchises throughout the first
half of the year. Our aim is to seize long-term growth opportunities at
attractive prices. We were able to do this with the general market weakness, and
we have continued where company-specific, negative developments provided a
window of opportunity to invest; whether it be Precision Drilling Corp.,
plunging because of new lows in oil prices, or Jones Apparel Group, Inc., driven
down by fears of a dilutive acquisition, or Fair, Isaac & Co., Inc., pushed down
because of a decision to expense the development of new computer programs; we
have acted to seek long-range growth opportunities at depressed prices.
6
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E V E R G R E E N
Evergreen Fund
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Portfolio Manager Interview
What were some of the top performing investments?
In the first half of the fiscal year, thirteen of the Fund's investments
produced returns of 100% or more. This group was led by EchoStar Communications
Corp., with a 244.6% increase in value; VISX, Inc., up 242.1%; Electro
Scientific Industries, Inc., up 192.5%; Macromedia, Inc., up 178.3%; Sun
Microsystems, Inc., up 150.5%; Tellabs, Inc., up 145.2%; Jabil Circuit, Inc., up
136.3%; Sanmina Corp., up 135.7%; Gaylord Container Corp., up 130.6%; ADC
Telecommunications, Inc., up 125.2%; Gucci Group N.V., up 122.5%; Comverse
Technology, Inc., up 107.6%; and Express Scripts, Inc. Cl A, up 106.8%.
The most striking aspect of this group of companies is its diversification. It
amply demonstrates that undervalued growth companies with excellent business
franchises can be rewarded in a variety of industries and do not depend only on
the dynamic leadership of technology. It also includes a manufacturer of
commodity containers (Gaylord Container Corp.), a unique high-end fashion goods
producer (Gucci Group N.V.), and a healthcare distribution company (Express
Scripts, Inc. Cl A). While there has been severe under-performance, generally in
the small- to mid-cap market, most of these companies fall into the category of
small-to-mid cap, amply demonstrating that exceptional performance and
exceptional business franchises are being rewarded notwithstanding the market's
more recent concentration on the very largest capitalization issues. We regard
this as a hopeful indication that prospects are good for the Evergreen diverse
portfolio of outstanding business growth franchises.
Top 5 Industries
-------------------------------
(as a percentage of net assets)
Banks 15.9%
............................................................................
Healthcare Products & Services 12.3%
............................................................................
Finance & Insurance 11.6%
............................................................................
Information Services & Technology 11.3%
............................................................................
Printing, Publishing, Broadcasting
& Entertainment 8.1%
............................................................................
Did corporate consolidations continue to be an important theme?
Mergers and acquisitions have been an important source of capital appreciation
for the Evergreen Fund since its inception. Twenty-two transactions involving
Fund holdings were announced in the six months, bringing the total of Evergreen
companies with merger and acquisition benefits to 374 since inception in 1971.
Several of these marked extraordinary gains: the largest was in the shares of
HBO & Co. which was acquired by McKesson Corp., providing a 3,699.1% gain to the
Fund in seven years. Sandwich Bancorp, Inc. was acquired with a 470.8% gain to
the Fund in 5 1/4 years. Other large gains were the acquisition of Fingerhut
Companies, Inc., with a 372.9% gain; and several which are pending, including:
Bank of Commerce (San Diego, CA), with a 538.9% gain since its purchase in 1996,
and Jacor Communications, Inc., with a 272.9% gain since its purchase in 1995.
Once again, financials were the largest single group with 8 out of the 22
holdings in this field. The shortest holding period in the group was in the
shares of American Bankers Insurance Group, Inc., purchased in October, 1998, at
an average of 42.52%. The company received a $55 acquisition offer from Fortis
Securities, Inc. five months after purchase. We see these transactions, and
others like them which have occurred in the past, as confirmation of our view
that we buy companies with unique growth opportunities or outstanding business
franchises on a comparatively undervalued basis.
7
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E V E R G R E E N
Evergreen Fund
- --------------------------------------------------------------------------------
Portfolio Manager Interview
What size companies does the Evergreen Fund favor?
From its inception, Evergreen Fund was predominantly focused on the opportunity
of entrepreneurially managed companies. We interpret this as centered on smaller
companies. Yet, we also recognize that many larger companies are led by strong
entrepreneurial drives, especially in the healthcare and technology industries.
Therefore, Evergreen has been positioned in outstanding major healthcare
companies whose growth is driven by evergrowing research programs intended to
develop new products before the risks of patent expirations drive down the
profits of existing medicines.
In the technology area, we have concentrated on companies whose research and
financial strength allows them to stay ahead of competition by constant
innovation. It is for this reason that the Fund's largest holdings include:
Merck & Co., Inc., Johnson & Johnson, Intel Corp., and Sun Microsystems, Inc.
There is yet another class of large holdings in the Fund, companies whose shares
were bought when they were comparatively small, and whose success has now made
them large companies. Outstanding in this regard is Clear Channel
Communications, Inc., which was bought for the Fund in 1986 at an average price
of $0.49 per share, and at March 31, was $67 per share, bringing an investment
of $846,833 to $114,945,125. There are others in this category as well. We would
like to think of Evergreen Fund as a long-term investor with a portfolio where
small companies can become large companies, and where the selection of stocks is
made because of the probabilities of such successes.
During the first half of the fiscal year, the bulk of purchases were of small to
mid-size companies. Exceptions were companies, which we believed to be important
franchises likely to be acquired. Two of these, Atlantic Richfield Co. and
SunAmerica Inc., have already received acquisition bids. Structured, yet
flexible, we believe the Evergreen Fund's entrepreneurial, growth-driven
strategies will continue to produce results at least comparable with those
achieved over the last twenty-seven fiscal years.
Top 10 Holdings
-------------------------------
(as a percentage of net assets)
Clear Channel Communications, Inc. 5.6%
.............................................................................
Merck & Co., Inc. 3.9%
.............................................................................
Intel Corp. 3.5%
.............................................................................
M&T Bank Corp. 3.1%
.............................................................................
Sun Microsystems, Inc. 2.5%
.............................................................................
BankBoston Corp. 2.3%
.............................................................................
Federal National Mortgage Assoc. 2.3%
.............................................................................
BankAmerica Corp. 2.1%
.............................................................................
Johnson & Johnson 1.8%
.............................................................................
Federal Home Loan Mortgage Corp. 1.4%
.............................................................................
What is your outlook?
As noted in our last annual report, we stated: "At the beginning of the new
fiscal year, the Fund is positioned for an outlook of sustained growth in the
United States, with still minimal inflation." This remains the case. This is an
extraordinary period in American economic history, where sizable growth is being
achieved with minimal inflation. Three major factors seem to be at work: the
evidence of a sustained rise in productivity in major sectors of our economy;
the declines in economic activity and slowing trends in other major trading
countries, leading to continual price pressure for commodities and broadly
available manufactured goods; and a growing availability of financial liquidity
as the United States expands, Europe improves the flow of funds with the new
Eurocurrency, and Asia slowly begins its recovery.
We expect a continuing environment supporting a strong bond market, particularly
as the real interest rate remains at historically high levels, and the
perception remains that the U.S. Federal Reserve will be watchful over the need
to act in a restricted fashion if the economy accelerates too rapidly, or prices
suggest new inflation. Once again, we anticipate that equity markets will find
support from in-creased savings. The focus will continue on the search for
corporations with exceptional profit growth. The goal of our investment
management will again be to concentrate on the search for growth purchased
reasonably, on a basis, which minimizes risk and maximizes long-term capital
appreciation.
8
<PAGE>
- --------------------------------------------------------------------------------
E V E R G R E E N
Micro Cap Fund
- --------------------------------------------------------------------------------
Fund at a Glance as of March 31, 1999
It was a very difficult period for investing in the size of companies we
emphasize, those with a market capitalization of $200 million or less.
Portfolio
Management
----------------
[PHOTO OF STEPHEN A. LIEBER [PHOTO OF EDWIN D. MISKA
APPEARS HERE] APPEARS HERE]
Stephen A. Lieber Edwin D. Miska
Tenure: January 1996 Tenure: January 1996
- --------------------------------------------------------------------------------
CURRENT INVESTMENT STYLE/1/
- --------------------------------------------------------------------------------
[STYLE BOX APPEARS HERE]
Morningstar's Style Box is based on a portfolio date as of 3/31/99.
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.
/1/Source: 1999 Morningstar, Inc.
/2/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. Historical performance shown for Classes A, B, and C prior
to their inception is based on the performance of Class Y, the original class
offered. These historical returns for Classes A, B, and C have not been adjusted
to reflect the effect of each class' 12b-1 fees. These fees for Classes A, B,
and C are 0.25%, 1.00%, and 1.00%, respectively. Class Y does not pay a 12b-1
fee. If these fees had been reflected, returns would have been lower.
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS/2/
- --------------------------------------------------------------------------------
Portfolio Inception Date: 6/1/83 Class A Class B Class C Class Y
Class Inception Date 1/3/95 1/3/95 1/3/95 6/1/83
................................................................................
Average Annual Returns*
................................................................................
6 months with sales charge -11.22% -11.65% -7.96% n/a
................................................................................
6 months w/o sales charge -6.80% -7.11% -7.05% -6.64%
................................................................................
1 year with sales charge -36.09% -36.62% -33.96% n/a
................................................................................
1 year with w/o sales charge -32.89% -33.37% -33.30% -32.69%
................................................................................
3 years 3.67% 3.70% 4.64% 5.66%
................................................................................
5 years 2.33% 2.40% 2.74% 3.54%
................................................................................
10 years 7.31% 7.50% 7.52% 7.94%
................................................................................
Since Portfolio Inception 11.09% 11.22% 11.23% 11.51%
................................................................................
Maximum Sales Charge 4.75% 5.00% 1.00% n/a
Front End CDSC CDSC
................................................................................
6-month capital gain distributions
per share $0.46 $0.46 $0.46 $0.46
................................................................................
*Adjusted for maximum sales charge.
- --------------------------------------------------------------------------------
LONG TERM GROWTH
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
Date Evergreen Micro Cap A Russell 2000 Consumer Price Index - US
---- --------------------- ------------ -------------------------
3/31/89 $ 9,525 $ 10,000 $ 10,000
3/31/90 $ 10,682 $ 10,554 $ 10,523
3/31/91 $ 12,241 $ 11,271 $ 11,038
3/31/92 $ 16,038 $ 13,662 $ 11,390
3/31/93 $ 16,589 $ 15,692 $ 11,742
3/31/94 $ 17,284 $ 17,419 $ 12,036
3/31/95 $ 16,563 $ 18,378 $ 12,379
3/31/96 $ 17,418 $ 23,715 $ 12,717
3/31/97 $ 19,337 $ 24,926 $ 13,083
3/31/98 $ 30,355 $ 35,399 $ 13,262
3/31/99 $ 20,372 $ 29,644 $ 13,491
Comparison of a $10,000 investment in Evergreen Micro Cap Fund, Class A
shares/2/, versus a similar investment in the Russell 2000 Index and the
Consumer Price Index (CPI).
The Russell 2000 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 is a commonly used measure of inflation and does not
represent an investment. It is not possible to invest directly in an index.
9
<PAGE>
- --------------------------------------------------------------------------------
E V E R G R E E N
Micro Cap Fund
- --------------------------------------------------------------------------------
Portfolio Manager Interview
How did the Fund perform during the six months ended March 31,1999?
For the six months ended March 31, 1999, the Micro Cap Fund's Class A shares had
a total return of -6.80%, while Classes B and C shares had returns of -7.11% and
- -7.05%, respectively, and Class Y shares had a return of -6.64%. The returns,
which are before deduction of any applicable sales charges, reflected the
continued difficulties of investing in very small companies at a time when the
stock market favored very large companies.
Portfolio
Characteristics
---------------
Total Net Assets $41,975,403
...........................................................................
Number of Holdings 71
...........................................................................
Beta 0.81
...........................................................................
P/E Ratio 11.6x
...........................................................................
What was the investment environment like during the period?
It was a very difficult period for investing in the size of companies we
emphasize, those with a market capitalization of $200 million or less. While
liquidity--or ease of trading--did return to the stock market as a whole during
the six months, small company stocks did not benefit. The superior performance
was concentrated in a very limited number of large companies, whose stock prices
rose to new heights. The balance of the market continued to go down. As an
illustration, the average company's stock fell by 10% in value during the 12
months ending March 31, 1999, among 7,000 companies listed on the major U.S.
exchanges.
It was a challenging period.
How did you manage the Fund?
In light of this environment, we became very sensitive to liquidity. We began to
shift the Fund to the somewhat larger companies within the micro-cap universe.
In addition, given that the market was not valuing earnings for small- and
micro-cap companies beyond the immediate future, we became more sensitive to
near-term earnings growth. By that, we mean that we concentrated on companies
that had good earnings expectations for the next quarter, and we put less
emphasis on companies whose earnings growth prospects were stretched out over
longer periods. We focused on companies that had near-term earnings catalysts.
These catalysts might be the launch of a new product or the completion of a
merger that was expected to contribute quickly to profitability.
As a result of this orientation, we reduced the number of securities in the Fund
from 96 at the end of September 1998 to 71 on March 31, 1999. Consistent with
our long-term discipline, we focused on companies with solid earnings visibility
and on those that were attractively valued. We also focused on companies already
in the portfolio with which we were very familiar. We added very few new
companies.
While this rigorous review process was conducted primarily on a stock-by-stock
basis, we did highlight areas we thought would benefit from the lower interest
rate environment. These included building and home furnishings companies and
financial services firms.
In the building construction and furnishings area, we added to our positions in
a number of holdings, including; Cavalier Homes, a mobile home manufacturer and
distributor; Crossman Communities, a homebuilder; Genlyte Group, a lighting
fixtures manufacturer; and Craftmade International, manufacturer of ceiling fans
and lighting fixtures for the home.
In financial services, we added to the Fund's position in AG Services of
America, a specialty finance company that lends to farmers.
10
<PAGE>
- --------------------------------------------------------------------------------
E V E R G R E E N
Micro Cap Fund
- --------------------------------------------------------------------------------
Portfolio Manager Interview
Top 5 Industries
-------------------------------
(as a percentage of net assets)
Building, Construction & Furnishings 17.4%
............................................................................
Industrial Specialty Products & Services 11.8%
............................................................................
Banks 11.4%
............................................................................
Consumer Products & Services 10.2%
............................................................................
Business Equipment & Services 6.2%
............................................................................
Which companies helped the Fund's performance, despite the difficult
environment?
Two investments involved in mergers and acquisitions--a traditional source of
opportunity for the Fund--helped performance. The first was Execustay Corp.,
which provides temporary housing for corporate executives for extended periods.
Marriott Corp. acquired the company in February 1999, resulting in a 40% return
to the Fund since the initial investment in Execustay in August 1997. The second
is Equitrac Corp., which makes systems to track the use of copying machines.
This company is the subject of a pending buyout by management and its stock rose
by 23% during the six-month period on news of the buyout.
In addition, several other investments had strong performance during the period,
including:
. Koala Corp., manufacturer of children's safety and play equipment, whose
stock rose 58% during the six-month period. Koala was the Fund's largest
holding as of March 31, 1999.
. Craftmade International, the ceiling fan and lighting fixture manufacturer,
which had a 56% return during the period.
. Obie Media, an outdoor advertising company, which rose by 51%.
. Kenneth Cole Productions, the shoe, leather products and clothing
manufacturer and marketer, had a 47.2% return during the six months.
. Biosource International, a bio-tech supply and diagnostic company, had a
38.7% return during the period.
Top 10 Holdings
-------------------------------
(as a percentage of net assets)
Koala Corp. 3.7%
...........................................................................
Equitrac Corp. 3.4%
...........................................................................
Badger Meter, Inc. 2.9%
...........................................................................
First Years, Inc. 2.9%
...........................................................................
Hickory Tech Corp. 2.6%
...........................................................................
SBS Technologies, Inc. 2.6%
...........................................................................
Crossmann Communities, Inc. 2.5%
...........................................................................
BT Financial Corp. 2.4%
...........................................................................
AG Services of America, Inc. 2.4%
...........................................................................
Genlyte Group, Inc. 2.3%
...........................................................................
11
<PAGE>
- --------------------------------------------------------------------------------
E V E R G R E E N
Micro Cap Fund
- --------------------------------------------------------------------------------
Portfolio Manager Interview
What is your outlook?
We continue to have a very favorable view of the opportunities in investments in
small- and micro-cap companies. Despite recent market activity, which has not
recognized the importance of profits, we believe corporate earnings are the
prime determinant of future stock valuations. Our approach at Evergreen is to
focus on the most profitable and consistently successful small companies. Over
time, we believe the stock prices of these companies will reflect their
profitability and their fundamental strengths.
We think that the historic, long-term advantage of small cap stock investing
will return and smaller company stocks will again outperform larger company
stocks. Small companies have several inherent advantages, including a primarily
domestic orientation, higher productivity and operational efficiency, and a
specialty focus.
Small- and micro-cap stocks now are at historically low valuations, when
compared with large-cap stock prices. These attractive prices should encourage
consolidation of smaller companies into larger companies at a brisk pace.
We believe interest in small company stocks will be revived because of the
strong fundamentals of many smaller companies and the presence of attractive
stock price catalysts, including mergers and acquisitions.
12
<PAGE>
- --------------------------------------------------------------------------------
E V E R G R E E N
Omega Fund
- --------------------------------------------------------------------------------
Fund at a Glance as of March 31, 1999
Although the major stock market averages climbed to record heights during the
six-month period, the best performance was concentrated in large-cap technology
companies.
Portfolio Management
-------------------------
[PHOTO OF MAUREEN E. CULLINANE, CFA APPEARS HERE]
Maureen E. Cullinane, CFA
Tenure: April 1989
- --------------------------------------------------------------------------------
CURRENT INVESTMENT STYLE/3/
- --------------------------------------------------------------------------------
[GRAPHIC APPEARS HERE]
Morningstar's Style Box is based on a portfolio date as of 3/31/99.
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.
/3/ Source: 1999 Morningstar, Inc.
/2/ 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. Historical performance shown for Classes B, C, and Y prior
to their inception is based on the performance of Class A, the original class
offered. These historical returns for Classes B, C, and Y have not been adjusted
to reflect the effect of each Class' 12b-1 fees. These fees for Classes A, B,
and C are 0.25%, 1.00%, 1.00%, respectively. Class Y does not pay a 12b-1 fee.
If these fees had been reflected, returns for Classes B and C would have been
lower while returns for Class Y would have been higher.
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS/2/
- --------------------------------------------------------------------------------
Portfolio Inception Date: 4/29/68 Class A Class B Class C Class Y
Class Inception Date 4/29/68 8/2/93 8/2/93 1/13/97
- --------------------------------------------------------------------------------
Average Annual Returns*
- --------------------------------------------------------------------------------
6 months with sales charge 28.34% 29.24% 33.21% n/a
- --------------------------------------------------------------------------------
6 months w/o sales charge 34.73% 34.24% 34.21% 34.90%
- --------------------------------------------------------------------------------
1 year with sales charge 15.17% 15.06% 19.06% n/a
- --------------------------------------------------------------------------------
1 year w/o sales charge 20.89% 20.06% 20.06% 21.23%
- --------------------------------------------------------------------------------
3 years 20.81% 21.10% 21.78% 22.91%
- --------------------------------------------------------------------------------
5 years 19.54% 19.51% 19.70% 20.79%
- --------------------------------------------------------------------------------
10 years 18.52% 18.53% 18.55% 19.14%
- --------------------------------------------------------------------------------
Since Portfolio Inception 13.82% 13.82% 13.83% 14.01%
- --------------------------------------------------------------------------------
Maximum Sales Charge 4.75% 5.00% 1.00% n/a
Front End CDSC CDSC
- --------------------------------------------------------------------------------
6-month capital gain distributions
per share $2.61 $2.61 $2.61 $2.61
- --------------------------------------------------------------------------------
*Adjusted for maximum sales charge.
- --------------------------------------------------------------------------------
Long Term Growth
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
Evergreen Russell S & P 500 Consumer Price
Date Omega A 1000 Growth Composite Index - US
---- ------- ----------- --------- ----------
3/31/89 $ 9,522 $ 10,000 $ 10,000 $ 10,000
3/31/90 $ 11,820 $ 12,239 $ 11,927 $ 10,523
3/31/91 $ 14,633 $ 14,951 $ 13,646 $ 11,038
3/31/92 $ 17,776 $ 17,011 $ 15,153 $ 11,390
3/31/93 $ 19,658 $ 18,632 $ 17,460 $ 11,742
3/31/94 $ 21,339 $ 18,482 $ 17,717 $ 12,036
3/31/95 $ 22,232 $ 21,738 $ 20,476 $ 12,379
3/31/96 $ 29,555 $ 28,691 $ 27,048 $ 12,717
3/31/97 $ 30,176 $ 33,704 $ 32,411 $ 13,083
3/31/98 $ 45,247 $ 50,373 $ 47,967 $ 13,262
3/31/99 $ 54,700 $ 64,533 $ 56,774 $ 13,491
Comparison of a $10,000 investment in Evergreen Omega Fund, Class A shares2,
versus a similar investment in the S&P 500 Index, the Russell 1000 Growth Index
and the Consumer Price Index (CPI).
The S&P 500 Index and the Russell 1000 Growth Index are unmanaged indices and do
not include transaction costs associated with buying and selling securities nor
any management fees. The Consumer Price Index is a commonly used measure of
inflation and does not represent an investment. It is not possible to invest
directly in an index.
13
<PAGE>
- --------------------------------------------------------------------------------
E V E R G R E E N
Omega Fund
- --------------------------------------------------------------------------------
Portfolio Manager Interview
How did the Fund perform in the six months ended March 31, 1999?
The Omega Fund did quite well. For the six-month period, the Fund's Class A
shares had a total return of 34.73%, while Class B and Class C shares had
returns of 34.24% and 34.21%, respectively, and Class Y shares had a return of
34.90%. During the same six-month period, the average capital appreciation fund
had a return of 28.06%, as measured by Lipper Inc., an independent monitor of
mutual fund performance. The returns are before deduction of any applicable
sales charges.
Portfolio Characteristics
-------------------------
Total Net Assets $434,055,542
- --------------------------------------------------
Number of Holdings 65
- --------------------------------------------------
Beta 1.09
- --------------------------------------------------
P/E Ratio 42.1x
- --------------------------------------------------
What was the investment environment like during the period?
It was a good period for stock investing, particularly in large-cap stocks, and
especially in technology.
The period started out in early October 1998 amid continued worries about the
potential effect of overseas economic problems on the U.S. The stock market was
well into a deep correction that had started in August when the Russian
government defaulted on part of its external debt. In addition to the foreign
problems, a prominent hedge fund--Long-Term Capital--came close to failing.
Investors were very concerned that the confluence of a number of global problems
eventually would slow the economy in the U.S. and erode corporate profits.
The U.S. Federal Reserve Board stepped in by lowering short-term interest rates
three successive times in the fall, restoring liquidity and confidence to the
market. At the same time, investors took encouragement from high consumer
confidence, low inflation, and favorable earnings reports from a number of
technology companies.
Led by large-cap stocks, the market took off to a succession of new highs during
the fourth quarter of 1998 and the first quarter of 1999. Large-company
technology stocks were the performance leaders. Demand for technology products
continued to grow, as corporations used technology to improve their earnings and
enhance their productivity. The well publicized "Y2K" problem--the question of
whether data processing systems could deal with calendar dates after December
31, 1999--only added to the demand for technology products and services.
Although the major stock market averages climbed to record heights during the
six-month period, the best performance was concentrated in large-cap technology
companies, with period of out-performance in financial services, consumer
cyclicals and even energy stocks late in the period.
Top 5 Industries
----------------
(as a percentage of net assets)
Information Services & Technology 19.8%
- ----------------------------------------------------------
Pharmaceuticals 13.4%
- ----------------------------------------------------------
Finance & Insurance 11.7%
- ----------------------------------------------------------
Printing, Publishing, Broadcasting & Entertainment 10.5%
- ----------------------------------------------------------
Retailing & Wholesale 7.9%
- ----------------------------------------------------------
14
<PAGE>
- --------------------------------------------------------------------------------
E V E R G R E E N
Omega Fund
- --------------------------------------------------------------------------------
Portfolio Manager Interview
What is your strategy in managing the Omega Fund?
We are looking for consistency of earnings growth in good companies.
Omega Fund is a growth fund that can invest in companies of all sizes, or market
capitalizations. During the past six months, we have emphasized technology,
finance and consumer-related industries where we have found the greatest
consistency of earnings growth. All three areas have helped performance. We
emphasized the larger-sized companies, although we also have had some mid-cap
and small-cap investments.
In managing the Omega Fund, we place the greatest emphasis on consistency of
earnings growth. In our stock selection process, we use mathematical tools and
trend line analysis to measure earnings records; then we do fundamental analysis
to examine each stock. We want at least 60% of the Fund to be invested in
companies that are in the top-third of all companies in consistency of earnings.
The Fund tends to be focused, with relatively large concentrations in those
stocks that we believe offer the greatest potential.
Top 10 Holdings
---------------
(as a percentage of net assets)
Monsanto Co. 3.3%
- --------------------------------------------------------------------------
Pfizer, Inc. 2.9%
- --------------------------------------------------------------------------
America Online, Inc. 2.7%
- --------------------------------------------------------------------------
Microsoft Corp. 2.6%
- --------------------------------------------------------------------------
Forest Laboratories, Inc. 2.5%
- --------------------------------------------------------------------------
Citigroup, Inc. 2.5%
- --------------------------------------------------------------------------
Cisco Systems, Inc. 2.5%
- --------------------------------------------------------------------------
Safeguard Scientifics, Inc. 2.3%
- --------------------------------------------------------------------------
Time Warner, Inc. 2.3%
- --------------------------------------------------------------------------
Tyco International Ltd. 2.2%
- --------------------------------------------------------------------------
What factors contributed to the Omega Fund's strong performance?
The Fund's emphasis on technology certainly was a major factor. In the
December-January period, when technology stocks were performing exceptionally
well, almost 35% of Fund assets were in this sector. By March 31, the technology
weighting had been reduced to 28% of net assets as we took profits in several
stocks that had appreciated sharply during the period. Major holdings that
contributed to performance included America Online, Microsoft, Cisco Systems,
EMC and Veritas Software.
Finance was not a major area of emphasis through the entire period, but our
financial service company investments helped. We moved in and out of this sector
as we saw opportunities, with the Fund's weightings varying between 2% and 10%
of net assets during the six months. Contributors to performance included
American Express, Citigroup, Morgan Stanley-Dean Witter, Merrill Lynch and
Lehman Brothers. We also had a successful investment in Capital One, a mid-sized
credit card company.
We emphasized the healthcare industries during the period, with a weighting as
high as 20% of assets. We focused primarily on pharmaceutical companies and
avoided hospital management companies and HMOs, which have been having problems.
Our investments include Forest Labs, a mid-sized drug company which produces
Celexa, a successful new anti-depressant drug, and Osteotech, whose products
include bone grafts for spinal fusion procedures.
We also had a successful emphasis on consumer cyclicals, including broadcasters
and entertainment companies, with holdings in companies such as CBS, Clear
Channel and Univision, which produces Spanish-language television programming.
Staples, the office supply retailer, was another good performer.
15
<PAGE>
- --------------------------------------------------------------------------------
E V E R G R E E N
Omega Fund
- --------------------------------------------------------------------------------
Portfolio Manager Interview
What is your outlook?
I think we may see some choppiness in the market over the next six months, with
different industries moving in and out of favor. The technology stocks, which
have had such tremendous performance, may start to cool a bit. We have already
pulled back from technology somewhat. We believe we can continue to find
opportunities in the healthcare industry, where the earnings outlook is
positive.
The consumer is in great shape; ready, willing and able to spend, and that bodes
well for the consumer-related industries, including retail and consumer
cyclicals. It would not surprise us if cyclical companies, whose fortunes rise
and fall with movements in the business cycle, were to come back after
relatively poor performance over the past two years. We have already seen some
signs of a revival in cyclicals.
Although there still are issues to worry about, such as Y2K or global economic
growth and inflation, we remain cautiously optimistic.
16
<PAGE>
- --------------------------------------------------------------------------------
E V E R G R E E N
Small Company Growth Fund
- --------------------------------------------------------------------------------
Fund at a Glance as of March 31, 1999
In managing the Fund, we have tried to take advantage of the growing
opportunities in telecommunications and the internet by emphasizing
infrastructure-related companies.
Portfolio
Management
----------
[PHOTO OF J. GARY CRAVEN, CFA APPEARS HERE]
J. Gary Craven, CFA
Tenure: November 1996
- --------------------------------------------------------------------------------
CURRENT INVESTMENT STYLE/1/
- --------------------------------------------------------------------------------
[STYLE BOX APPEARS HERE]
Morningstar's Style Box is based on a portfolio date as of 3/31/99.
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.
/1/ Source: 1999 Morningstar, Inc.
/2/ 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. Historical performance shown for Classes A, C, and Y prior
to their inception is based on the performance of Class B, the original class
offered. These historical returns for Classes A and Y have been adjusted to
eliminate the effect of the higher 12b-1 fees applicable to Class B. The 12b-1
fees for Classes A, B, and C are 0.25%, 1.00%, and 1.00%, respectively. Class Y
does not pay a 12b-1 fee. If these fees had not been eliminated, returns would
have been lower.
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS/2/
- --------------------------------------------------------------------------------
Portfolio Inception Date: 9/11/35 Class A Class B Class C Class Y
Class Inception Date 1/20/98 9/11/35 1/26/98 1/26/98
................................................................................
Average Annual Returns*
................................................................................
6 months with sales charge 11.41% 12.05% 15.58% n/a
................................................................................
6 months w/o sales charge 17.06% 16.77% 16.52% 16.99%
................................................................................
1 year with sales charge -27.22% -27.14% -24.71% n/a
................................................................................
1 year w/o sales charge -23.56% -24.07% -24.10% -23.43%
................................................................................
3 years -3.54% -3.18% -2.65% -1.72%
................................................................................
5 years 5.72% 5.81% 5.98% 7.01%
................................................................................
10 years 12.82% 12.70% 12.44% 13.65%
................................................................................
Since Portfolio Inception 9.76% 9.72% 9.61% 9.91%
................................................................................
Maximum Sales Charge 4.75% 5.00% 1.00% n/a
Front End CDSC CDSC
................................................................................
6-month capital gain distributions
per share $1.18 $1.18 $1.18 $1.18
................................................................................
*Adjusted for maximum sales charge.
- --------------------------------------------------------------------------------
LONG TERM GROWTH
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
Evergreen Small Consumer Price
Date Co Growth B Russell 2000 Index - US
---- ----------- ------------ ----------
3/31/89 $ 10,000 $ 10,000 $ 10,000
3/31/90 $ 11,442 $ 10,554 $ 10,523
3/31/91 $ 14,366 $ 11,271 $ 11,038
3/31/92 $ 18,113 $ 13,662 $ 11,390
3/31/93 $ 20,253 $ 15,692 $ 11,742
3/31/94 $ 24,666 $ 17,419 $ 12,036
3/31/95 $ 27,016 $ 18,378 $ 12,379
3/31/96 $ 35,747 $ 23,715 $ 12,717
3/31/97 $ 31,206 $ 24,926 $ 13,083
3/31/98 $ 43,516 $ 35,399 $ 13,262
3/31/99 $ 33,043 $ 29,644 $ 13,491
Comparison of a $10,000 investment in Evergreen Small Company Growth Fund, Class
B shares/2/, versus a similar investment in the Russell 2000 Index and the
Consumer Price Index (CPI).
The Russell 2000 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 is a commonly used measure of inflation and does not
represent an investment. It is not possible to invest directly in an index.
17
<PAGE>
- --------------------------------------------------------------------------------
E V E R G R E E N
Small Company Growth Fund
- --------------------------------------------------------------------------------
Portfolio Manager Interview
How did the Fund perform?
The Evergreen Small Company Growth Fund's performance turned around sharply
during the six-month period ending March 31, 1999, as it took advantage of a
rally in small company stocks, particularly in the technology sector. For the
six-month period, the Fund's Class A shares had a total return of 17.06%. The
Fund's Class B and C shares had total returns of 16.77% and 16.52%,
respectively, and Class Y shares had a return of 16.99%. During the same
six-month period, the Russell 2000 Index, a commonly used benchmark for
small-company stocks, had a return of 10.00% and the average small company stock
fund had a return of 12.52%, according to Lipper Inc., an independent monitor of
mutual fund performance. Fund returns are before deduction of any sales charges,
if applicable.
Portfolio
Characteristics
---------------
Total Net Assets $788,518,665
- --------------------------------------------------------------------------------
Number of Holdings 156
- --------------------------------------------------------------------------------
Beta 1.30
- --------------------------------------------------------------------------------
P/E Ratio 29.2x
- --------------------------------------------------------------------------------
Would you describe the investment environment and the factors that affected
performance?
The stock market recovered strongly during the period, which began on October 1,
1998. Widespread fears that the economic problems in Asia and Latin America
would spread to the rest of the world depressed the market during the late
summer and early fall of 1998. The market actually hit its low point on October
8, 1998, shortly after the Fund's new fiscal year began. As it turned out, the
worst fears about the secondary effects of the Asian crisis turned out to be
exaggerated, and investors regained confidence in the markets.
This return of confidence was helped by the actions of the U.S. Federal Reserve
Board, which reduced short-term interest rates three successive times in the
fall of 1998.
As a general rule, small company stocks perform well when needs emerge for new
products and services. These growing needs create opportunities for emerging
businesses. During the period, the most visible opportunities were created in
the telecommunications and Internet areas, both of which have been driven by the
enormous demand for more information and for faster communication of this
information.
What were your principal strategies that supported the Fund's performance?
In managing the Fund, we have tried to take advantage of the growing
opportunities in telecommunications and the Internet by emphasizing
infrastructure-related companies. We have invested in semi-conductor
manufacturers, in telecommunications equipment companies, in local phone
companies that are improving their services by expanding their fiber-optic
capacities, and in international long-distance providers.
We also have invested in a number of hotel and casino companies and in the
energy industry. We believe stocks of hotel and casino companies had been very
depressed in price, and we saw opportunities as several new casinos were opened
in Las Vegas, which stimulated demand. These stocks were selling for prices far
below the underlying value of their businesses. Energy stocks were a more recent
addition. We believe that oil prices had declined so much that they had driven
the prices of energy-related stocks to very attractive valuation levels. We see
signs of an improving outlook for energy stocks. The Organization of Petroleum
Exporting Nations (OPEC) has taken steps to limit new supply of oil while we see
continued demand for energy products and services. The growth opportunities in
this sector have become extremely attractive.
18
<PAGE>
- --------------------------------------------------------------------------------
E V E R G R E E N
Small Company Growth Fund
- --------------------------------------------------------------------------------
Portfolio Manager Interview
We also have had strong performance from some of our investments in broadcasting
and radio, including Univision, the nation's largest Spanish-language television
programming company, and Jacor Communications, owner of a chain of radio
stations.
Top 5 Industries
----------------
(as a percentage of net assets)
Information Services & Technology 15.3%
- --------------------------------------------------------------------------------
Electrical Equipment & Services 13.0%
- --------------------------------------------------------------------------------
Retailing & Wholesale 6.9%
- --------------------------------------------------------------------------------
Healthcare Products & Services 6.6%
- --------------------------------------------------------------------------------
Telecommunication Services & Equipment 6.1%
- --------------------------------------------------------------------------------
Which other stocks were major contributors to performance?
Safeguard Scientific, a company that invests in start-up software and technology
companies, was the largest single contributor. Its stock was up 179% during the
six-month period. Uniphase Corp., which produces fiber-optic equipment, was
another very strong performer, as was Univision, mentioned earlier.
The list of top-performers also includes a number of internet infrastructure
companies and telecommunications-related firms, including CMGI, Exodus
Communications and Conexant Systems Inc. Outside the internet area, we had very
successful investments in Roper Industries, an industrial manufacturer, and in
the electronics retailer Best Buy, which we saw as an opportunity to take
advantage of the new DVD products, including digital television.
Top 10 Holdings
---------------
(as a percentage of net assets)
Safeguard Scientifics, Inc. 4.4%
- --------------------------------------------------------------------------------
Roper Industries, Inc. 2.7%
- --------------------------------------------------------------------------------
Univision Communications, Inc. Cl. A 2.6%
- --------------------------------------------------------------------------------
Devry, Inc. 2.5%
- --------------------------------------------------------------------------------
Uniphase Corp. 2.5%
- --------------------------------------------------------------------------------
Astoria Financial Corp. 2.0%
- --------------------------------------------------------------------------------
United States Cellular Corp. 1.9%
- --------------------------------------------------------------------------------
McLeod USA, Inc., Cl. A 1.7%
- --------------------------------------------------------------------------------
Outdoor Systems, Inc. 1.5%
- --------------------------------------------------------------------------------
Intermedia Communications, Inc. 1.4%
- --------------------------------------------------------------------------------
In light of the performance over the past six months, why wouldn't an investor
looking for significant growth just invest in Internet stocks rather than a
small company mutual fund?
Clearly, a lot of the performance has come from the expansion of the Internet,
and it is easy to see how an investor might think there was easy money to be
made by investing in the Internet, but many of these stocks are over-priced,
especially in the direct Internet companies. The potential of these companies is
huge, but the uncertainties and risks also are very high. That is why we have
chosen not to invest significantly in companies directly involved in the
Internet. We have focused on the companies that provide the infrastructure to
make the Internet go. We believe these companies have significant opportunities
that don't depend on the success or failure of particular web sites.
19
<PAGE>
- --------------------------------------------------------------------------------
E V E R G R E E N
Small Company Growth Fund
- --------------------------------------------------------------------------------
Portfolio Manager Interview
Beyond that strategy, we continue to believe that investors need to be
diversified beyond one sector of the market, and need to have independent,
professional research to stay on top of changes in a very dynamic market. This
is why we believe a diversified mutual fund makes sense. We believe much of our
success comes from our independent research that enables us to identify stocks
that may have problems, before the overall stock market identifies those
companies. This has allowed us to sell the stocks before they suffer
corrections.
What is your outlook for small company investing?
We see opportunity. Small company stocks still are trading at very attractive
valuations, especially in relation to large company stock prices. We are seeing
some very compelling companies whose stocks are trading at price-to-earnings
ratios of just 10 or 11, while the typical large company stock is much more
expensive. At a time when the 30-year Treasury bond has a yield of about 5.5%,
small company stock valuations look extremely attractive by most historical
standards.
We also believe there will be a lot of volatility in the markets. Many of the
stocks of companies with the best outlooks already have had substantial price
appreciation over the past several months, and this can cause some dramatic
price swings. Stock prices, after all, don't go up all the time. The risks are
that many stocks are exposed to the ups and downs of the economy, and the market
severely punishes the stock of any company that reports disappointing earnings.
We have built a team and a process that applies a rigorous discipline to our
analysis of small company stocks. We believe we will continue to find some very
attractive--even compelling--opportunities in a dynamic market.
20
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
Stock Selector Fund
- --------------------------------------------------------------------------------
Fund at a Glance as of March 31, 1999
We continued to maintain a portfolio composed of the best stocks we could find,
diversified across all economic sectors and industries.
Portfolio Management
- --------------------------------------------------------------------------------
[PHOTO OF JOSEPH E. STOCKE APPEARS HERE]
Joseph E. Stocke, CFA
Tenure: February 1990
CURRENT INVESTMENT STYLE/1/
[STYLE BLOCK APPEARS HERE]
Morningstar's Style Box is based on a portfolio date as of 3/31/99.
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.
/1/ Source: 1999 Morningstar, Inc.
/2/ 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. Historical performance shown for Classes B and Y prior to
their inception is based on the performance of Class A, the original class
offered. These historical returns for Classes B and Y have not been adjusted to
reflect the effect of each Class' 12b-1 fees. These fees for Classes A and B are
0.25% and 1.00%, respectively. Class Y does not pay a 12b-1 fee. If these fees
had been reflected, returns for Class B would have been lower while returns for
Class Y would have been higher.
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS/2/
- --------------------------------------------------------------------------------
Portfolio Inception Date: 2/28/90 Class A Class B Class Y
Class Inception Date 2/28/90 11/7/97 2/21/95
................................................................................
Average Annual Returns*
................................................................................
6 month with sales charge 29.66% 30.61% n/a
................................................................................
6 months w/o sales charge 36.10% 35.61% 36.30%
................................................................................
1 year with sales charge 3.94% 3.50% n/a
................................................................................
1 year w/o sales charge 9.13% 8.37% 9.45%
................................................................................
3 years 20.85% 18.20% 23.10%
................................................................................
5 years 21.21% 19.83% 22.60%
................................................................................
Since Portfolio Inception 17.49% 16.87% 18.24%
................................................................................
Maximum Sales Charge 4.75% 5.00% n/a
Front End CDSC
................................................................................
6-month income distributions
per share $0.01 -- $0.01
................................................................................
6-month capital gain distributions
per share $4.11 $4.11 $4.11
................................................................................
* Adjusted for maximum sales charge.
- --------------------------------------------------------------------------------
LONG TERM GROWTH
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
Evergreen
Date Stock Selector A S & P 500 Composite Consumer Price Index - US
---- ---------------- ------------------- -------------------------
2/28/90 $ 9,452 $ 10,000 $ 10,000
3/31/90 $ 9,811 $ 10,265 $ 10,055
3/31/91 $ 11,447 $ 11,744 $ 10,547
3/31/92 $ 13,674 $ 13,041 $ 10,883
3/31/93 $ 15,200 $ 15,027 $ 11,219
3/31/94 $ 15,613 $ 15,249 $ 11,500
3/31/95 $ 17,129 $ 17,623 $ 11,828
3/31/96 $ 23,128 $ 23,280 $ 12,150
3/31/97 $ 27,053 $ 27,895 $ 12,500
3/31/98 $ 39,273 $ 41,284 $ 12,672
3/31/99 $ 42,693 $ 48,863 $ 12,890
Comparison of a $10,000 investment in Evergreen Stock Selector Fund, Class A
shares/2/, versus a similar investment in the S&P 500 and the Consumer Price
Index (CPI).
The S&P 500 is an unmanaged index and does not include transaction costs
associated with buying and selling securities nor any management fees. The
Consumer Price Index is a commonly used measure of inflation and does not
represent an investment. It is not possible to invest directly in an index.
21
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
Stock Selector Fund
- --------------------------------------------------------------------------------
Portfolio Manager Interview
How did the fund perform?
For the six months ended March 31, 1999, Class A shares produced a total return
of 36.10%, Class B shares returned 35.61% and Class Y shares returned 36.30%.
For the same period, the Standard & Poor's 500 Stock Index (S&P 500) returned
4.86%. The returns are before the deduction of any applicable sales charges.
Portfolio Characteristics
-------------------------
Total Net Assets $425,971,721
....................................
Number of Holdings 86
....................................
Beta 1.15
....................................
P/E Ratio 21.2x
....................................
What was the investment environment like during the period?
The investment environment for stocks was positive during the six months. First
quarter returns on stocks were aided primarily by corporate earnings, which
showed their best growth since the beginning of the Asian financial crisis in
1997. Signs of a nascent Asian recovery and greater confidence in the strength
of Latin American economies following Brazil's currency devaluation also helped
buoy U.S. stocks. Seasonal cash flows from year-end bonuses and contributions to
Individual Retirement Accounts (IRAs) and pension plans were positive, as were
low inflation and continuing productivity enhancements by U.S. businesses.
What accounted for the Fund's strong performance?
Stock selection was key to performance. We continued to maintain a portfolio
composed of the best stocks we could find. As is always the case, the
portfolio's holdings were diversified across all economic sectors and
industries. In managing the Fund, we continued to use a strategy that combines
quantitative analysis with qualitative research. The portfolio was fully
invested among large-cap, mid-cap and small-cap stocks.
Top 5 Industries
----------------
(as a percentage of net assets)
Information Services & Technology 13.3%
.....................................................
Finance & Insurance 11.6%
.....................................................
Retailing & Wholesale 8.1%
.....................................................
Communication Systems & Services 7.7%
.....................................................
Healthcare Products & Services 6.5%
.....................................................
What were some of the major themes in the portfolio?
Internet, communications and media were important portfolio themes. For example,
in the broad area of technology, we emphasized companies that we believe should
continue to benefit from the growth of the Internet. In this area, America
Online (AOL) and Microsoft were exceptional performers. AOL was the largest
contributor to performance. We believe the continued rapid adoption of Internet
services, coupled with growing market share of corporate advertising dollars and
fees from electronic commerce, provide AOL with the potential for tremendous
future earnings growth. Microsoft continues to be the dominant player in desktop
software and a growing presence in network-related software. The company is also
profiting from the unit growth of personal computers.
22
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
Stock Selector Fund
- --------------------------------------------------------------------------------
Portfolio Manager Interview
The portfolio's communications holdings also helped boost performance. In this
area we focused on aggressive, leading-edge companies, such as MCI WorldCom and
Qwest Communications. Both of these companies are benefiting from at least two
strong trends--the growth of the Internet and the increase of data
communications services. We sold holdings in Airtouch, a cellular communications
company, after the company's stock price rose significantly. Airtouch is being
acquired by Vodaphone.
In the consumer cyclicals area, we emphasized companies for which strong
consumer spending is a factor in earnings growth. These included media-related
companies, such as Gemstar, News Corp, Fox, Emmis Broadcasting, MediaOne and USA
Networks. We also considered consumer spending when choosing retail companies
for the portfolio. We favored growth retailers that we believe are leading-edge
businesses, such as Abercrombie and Fitch, Dayton Hudson and Lowes.
Top 10 Holdings
---------------
(as a percentage of net assets)
Microsoft Corp. 4.9%
- ------------------------------------------------------------
MCI WorldCom, Inc. 4.8%
- ------------------------------------------------------------
America Online, Inc. 4.7%
- ------------------------------------------------------------
General Electric Co. 3.1%
- ------------------------------------------------------------
Lucent Technologies, Inc. 2.9%
- ------------------------------------------------------------
Mediaone Group, Inc. 2.8%
- ------------------------------------------------------------
Conseco, Inc. 2.8%
- ------------------------------------------------------------
Fred Meyer, Inc. 2.4%
- ------------------------------------------------------------
Texas Instruments, Inc. 2.3%
- ------------------------------------------------------------
BankAmerica Corp. 2.3%
- ------------------------------------------------------------
What other areas performed well?
The portfolio's transportation holdings produced robust returns. In particular,
Delta Airlines was one of the top five contributors to performance. Improved
travel from Southeast Asia, low fuel prices and the use of the Internet in
booking reservations were all factors in Delta's strong showing. Canadian
National Railway also outperformed mainly because of increased auto shipments in
the aftermath of the General Motors strike.
The portfolio's financial stocks produced mixed results. Many financial stocks
bounced back from a generally poor 1998. The frenzy surrounding the Dow's climb
to 10,000 and robust initial public offering and merger activity helped
brokerage stocks lead the financial sector's advance. Lehman Brothers was among
the Fund's top five contributors to performance. Large capitalization banks and
insurers also did well despite rising interest rates. Everest Reinsurance, a
specialty reinsurance company, held back the Fund's returns in this area,
because investors were unwilling to pay a premium for this value-oriented
company.
Which sectors or industries did not perform well?
Two of the portfolio's healthcare stocks under-performed: Mylan Labs, which is
under government investigation because of price increases on a couple of its
products; and Warner Lambert, which has had continued negative developments with
Rezulin, its diabetes product.
In the consumer staples area, tobacco litigation dampened the performance of RJR
Nabisco. In addition, returns on Canadaigua Brands, a beverage company, were
poor because of a new competing product introduction.
What is your outlook?
We are confident about the long-term prospects for the stocks in the portfolio.
Although we are certainly aware of the macroeconomic issues facing the stock
market, such as high valuations, rising interest rates, the possibility of
higher inflation brought about by tight labor markets and rising oil prices, we
will continue to maintain our strategy of being fully invested and of selecting
the best stocks in all economic sectors.
23
<PAGE>
- --------------------------------------------------------------------------------
E V E R G R E E N
Strategic Growth Fund
- --------------------------------------------------------------------------------
Fund at a Glance as of March 31, 1999
It was a good period for stock investing, particularly in large-cap stocks, and
especially in technology.
Portfolio Management
- --------------------
[PHOTO OF MAUREEN E. CULLINANE APPEARS HERE]
Maureen E. Cullinane, CFA
Tenure: April 1995
- -------------------------------------
CURRENT INVESTMENT STYLE1
- -------------------------------------
[GRAPHIC OF STYLE BOX APPEARS HERE]
Morningstar's Style Box is based on a portfolio date as of 3/31/99.
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.
1 Source: 1999 Morningstar, Inc.
2 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. Historical performance shown for Classes A and C prior to
their inception is based on the performance of Class B, the original class
offered. The historical returns for Class A have been adjusted to eliminate the
effect of the higher 12b-1 fees applicable to Class B. The 12b-1 fees for
Classes A, B, and C are 0.25%, 1.00%, and 1.00%, respectively. If these fees had
not been eliminated, returns would have been lower.
- --------------------------------------------------------------------------------
Performance and Returns2
- --------------------------------------------------------------------------------
Portfolio Inception Date: 9/11/35 Class A Class B Class C
Class Inception Date 1/20/98 9/11/35 1/22/98
- --------------------------------------------------------------------------------
Average Annual Returns*
- --------------------------------------------------------------------------------
6 month with sales charge 23.44% 24.03% 28.03%
- --------------------------------------------------------------------------------
6 months w/o sales charge 29.56% 29.03% 29.03%
- --------------------------------------------------------------------------------
1 year with sales charge 13.28% 13.23% 17.12%
- --------------------------------------------------------------------------------
1 year w/o sales charge 18.98% 18.23% 18.12%
- --------------------------------------------------------------------------------
3 years 23.65% 24.47% 24.78%
- --------------------------------------------------------------------------------
5 years 19.80% 20.12% 20.10%
- --------------------------------------------------------------------------------
10 years 16.72% 16.76% 16.34%
- --------------------------------------------------------------------------------
Since Portfolio Inception 11.85% 11.80% 11.69%
- --------------------------------------------------------------------------------
Maximum Sales Charge 4.75% 5.00% 1.00%
Front End CDSC CDSC
- --------------------------------------------------------------------------------
6-month capital gain distributions
per share $1.34 $1.34 $1.34
- --------------------------------------------------------------------------------
* Adjusted for maximum sales charge.
- --------------------------------------------------------------------------------
Long Term Growth
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
Evergreen Strategic Consumer Price
Date Growth B S & P 500 Composite Index - US
---- -------- ------------------- ----------
3/31/89 $ 10,000 $ 10,000 $ 10,000
3/31/90 $ 11,385 $ 11,927 $ 10,523
3/31/91 $ 12,959 $ 13,646 $ 11,038
3/31/92 $ 15,096 $ 15,153 $ 11,390
3/31/93 $ 16,837 $ 17,460 $ 11,742
3/31/94 $ 18,681 $ 17,717 $ 12,036
3/31/95 $ 19,224 $ 20,476 $ 12,379
3/31/96 $ 24,049 $ 27,048 $ 12,717
3/31/97 $ 26,927 $ 32,411 $ 13,083
3/31/98 $ 39,834 $ 47,967 $ 13,262
3/31/99 $ 47,096 $ 56,774 $ 13,491
Comparison of a $10,000 investment in Evergreen Strategic Growth Fund, Class B
shares2, versus a similar investment in the S&P 500 Index and the Consumer Price
Index (CPI).
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 is a commonly used measure of inflation and does not
represent an investment. It is not possible to invest directly in an index.
24
<PAGE>
- --------------------------------------------------------------------------------
E V E R G R E E N
Strategic Growth Fund
- --------------------------------------------------------------------------------
Portfolio Manager Interview
How did the Fund perform in the six months ended March 31, 1999?
The Strategic Growth Fund had very strong performance. For the six-month period,
the Fund's Class A shares had a total return of 29.56%, while Class B and Class
C shares each had returns of 29.03%. During the same six-month period, the
average growth fund had a return of 29.09%, as measured by Lipper Inc., an
independent monitor of mutual fund performance. The returns are before deduction
of any applicable sales charges.
Portfolio Characteristics
-------------------------
Total Net Assets $1,014,859,807
- --------------------------------------------------
Number of Holdings 63
- --------------------------------------------------
Beta 1.09
- --------------------------------------------------
P/E Ratio 35.2x
- --------------------------------------------------
What was the investment environment like during the period?
It was a good period for stock investing, particularly in large-cap stocks, and
especially in technology.
The period started out in early October 1998 amid continued worries about the
potential effect of overseas economic problems on the U.S. The stock market was
well into a deep correction that had started in August when the Russian
government defaulted on part of its external debt. In addition to the foreign
problems, a prominent hedge fund--Long-Term Capital--came close to failing.
Investors were very concerned that the confluence of a number of global problems
eventually would slow the economy in the U.S. and erode corporate profits.
The U.S. Federal Reserve Board stepped in by lowering short-term interest rates
three successive times in the fall, restoring liquidity and confidence to the
market. At the same time, investors took encouragement from high consumer
confidence, low inflation, and favorable earnings reports from a number of
technology companies.
Led by large-cap stocks, the market took off to a succession of new highs during
the fourth quarter of 1998 and the first quarter of 1999. Large-company
technology stocks were the performance leaders. Demand for technology products
continued to grow, as corporations used technology to improve their earnings and
enhance their productivity. The well publicized "Y2K" problem--the question of
whether data processing systems could deal with calendar dates after December
31, 1999--only added to the demand for technology products and services.
Although the major stock market averages climbed to record heights during the
six-month period, the best performance was concentrated in large-cap technology
companies, with periods of outperformance in financial services, consumer
cyclicals and even energy stocks.
What is your strategy in managing the Strategic Growth Fund?
We are looking for consistency of earnings growth in good companies.
The Strategic Growth Fund is a well-diversified growth fund that traditionally
tends to emphasize large-capitalization companies. During the past six months,
we have emphasized large-cap technology, finance and consumer-related companies,
where we have found the greatest consistency of earnings growth. All three areas
have helped performance. Although we have emphasized the larger-sized companies,
we also have invested in mid-cap stocks and, to a modest degree, in small-cap
stocks.
25
<PAGE>
- --------------------------------------------------------------------------------
E V E R G R E E N
Strategic Growth Fund
- --------------------------------------------------------------------------------
Portfolio Manager Interview
In managing the Strategic Growth Fund, we place the greatest emphasis on
consistency of earnings growth. In our stock selection process, we use
mathematical tools and trend line analysis to measure earnings records; then we
do fundamental analysis to examine each stock. We want at least 60% of the Fund
to be invested in companies that are in the top-third of all companies in
consistency of earnings.
Top 5 Industries
----------------
(as a percentage of net assets)
Information Services & Technology 18.4%
- -------------------------------------------------------------------
Finance & Insurance 11.9%
- -------------------------------------------------------------------
Pharmaceuticals 11.1%
- -------------------------------------------------------------------
Retailing & Wholesale 10.4%
- -------------------------------------------------------------------
Printing, Publishing, Broadcasting & Entertainment 8.7%
- -------------------------------------------------------------------
What factors contributed to the Strategic Growth Fund's strong performance?
The Fund's focus on large-company technology stocks was a major factor. In the
December-January period, when technology stocks were performing exceptionally
well, almost 35% of Fund assets were in this sector. We took profits in several
stocks that had appreciated sharply during the period. By March 31, the
technology weighting still was 29% of net assets. Major holdings that
contributed to performance included Microsoft, Cisco Systems, EMC and America
Online.
Finance was not a major area of emphasis, but our investments helped
performance. We moved in and out of the finance sector as opportunities
appeared, with the Fund's weightings varying between 2% and 10% of net assets
during the six months. Contributors to performance included American Express,
Citigroup, Morgan Stanley-Dean Witter, Merrill Lynch and Lehman Brothers.
We emphasized the healthcare industries during the period, with weightings as
high as 15% of assets. We focused primarily on pharmaceutical companies and
avoided hospital management companies and HMOs, which have been having problems.
Our investments include Pfizer, a major pharmaceutical company, and Medtronic, a
medical products firm that produces implantable devices such as pacemakers.
We also had a successful emphasis on consumer cyclicals, including broadcasters
and entertainment companies, with holdings in companies such as Time-Warner, CBS
and Clear Channel Communications, operator of a group of radio stations.
Top 10 Holdings
---------------
(as a percentage of net assets)
Microsoft Corp. 3.8%
- ----------------------------------------------------------------------
General Electric Co. 3.8%
- ----------------------------------------------------------------------
Pfizer, Inc. 3.7%
- ----------------------------------------------------------------------
Monsanto Co. 3.4%
- ----------------------------------------------------------------------
Cisco Systems, Inc. 3.0%
- ----------------------------------------------------------------------
Time Warner, Inc. 2.9%
- ----------------------------------------------------------------------
Intel Corp. 2.7%
- ----------------------------------------------------------------------
Staples, Inc. 2.4%
- ----------------------------------------------------------------------
American Express Co. 2.3%
- ----------------------------------------------------------------------
America Online, Inc. 2.3%
- ----------------------------------------------------------------------
26
<PAGE>
- --------------------------------------------------------------------------------
E V E R G R E E N
Strategic Growth Fund
- --------------------------------------------------------------------------------
Portfolio Manager Interview
What is your outlook?
We may see some choppiness in the market over the next six months, with
different industries moving in and out of favor. The technology stocks, which
have had such tremendous performance, may start to cool a bit. We have already
pulled back from technology somewhat. We believe we can continue to find
opportunities in the healthcare industry, where the earnings outlook is
positive.
The consumer is in great shape; ready, willing and able to spend, and that bodes
well for the consumer-related industries, including retail and consumer
cyclicals. It would not be a surprise to us if cyclical companies, whose
fortunes rise and fall with movements in the business cycle, were to come back
after relatively poor performance over the past two years. We have already seen
some signs of a revival in cyclicals.
Although there still are issues to worry about, such as Y2K or global economic
growth and inflation, we remain cautiously optimistic.
27
<PAGE>
- --------------------------------------------------------------------------------
E V E R G R E E N
Tax Strategic Equity Fund
- --------------------------------------------------------------------------------
Fund at a Glance as of March 31, 1999
The investment strategy of this Fund is to achieve long-term growth in a
tax-efficient manner, minimizing the payout of taxable income and capital
gains.
Portfolio
Management
------------
[PHOTO OF STEPHEN A. LIEBER APPEARS HERE]
Stephen A. Lieber
Tenure: September, 1998
/1/ 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. Historical performance shown for Classes A, B, and C prior
to their inception is based on the performance of Class Y, the original class
offered. These historical returns for Classes A, B, and C have not been adjusted
to reflect the effect of each class' 12b-1 fees. These fees for Classes A, B,
and C are 0.25%, 1.00%, and 1.00%, respectively. Class Y does not pay a 12b-1
fee. If these fees had been reflected, returns would have been lower.
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS/1/
- --------------------------------------------------------------------------------
Portfolio Inception Date: 9/1/98 Class A Class B Class C Class Y
Class Inception Date 9/4/98 10/14/98 11/4/98 9/1/98
- --------------------------------------------------------------------------------
Average Annual Returns*
- --------------------------------------------------------------------------------
6 months with sales charge 21.82% 22.61% 26.79% n/a
- --------------------------------------------------------------------------------
6 months w/o sales charge 27.89% 27.61% 27.79% 28.26%
- --------------------------------------------------------------------------------
Cumulative Since Portfolio
Inception with sales charge 29.71% 30.90% 35.10% n/a
- --------------------------------------------------------------------------------
Cumulative Since Portfolio
Inception w/o sales charge 36.20% 35.90% 36.10% 36.60%
- --------------------------------------------------------------------------------
Maximum Sales Charge 4.75% 5.00% 1.00% n/a
Front End CDSC CDSC
- --------------------------------------------------------------------------------
*Adjusted for maximum sales charge.
- --------------------------------------------------------------------------------
LONG TERM GROWTH
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
Evergreen Tax Consumer Price
Date Strat Foundation A S&P 500 Index - US
---- ------------------ ------- ----------
8/31/98 $ 9,524 $ 10,000 $ 10,000
9/30/98 $ 10,143 $ 10,641 $ 10,012
10/31/98 $ 11,714 $ 11,506 $ 10,024
11/30/98 $ 12,533 $ 12,203 $ 10,049
12/31/98 $ 12,981 $ 12,906 $ 10,049
1/31/99 $ 12,638 $ 13,436 $ 10,073
2/28/99 $ 12,400 $ 13,018 $ 10,085
3/31/99 $ 12,971 $ 13,538 $ 10,097
Comparison of a $10,000 investment in Evergreen Tax Strategic Equity Fund, Class
A shares1, versus a similar investment in the S&P 500 Index and the Consumer
Price Index (CPI).
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 is a commonly used measure of inflation and does not
represent an investment. It is not possible to invest directly in an index.
28
<PAGE>
- --------------------------------------------------------------------------------
E V E R G R E E N
Tax Strategic Equity Fund
- --------------------------------------------------------------------------------
Portfolio Manager Interview
How did the Fund perform during the six-month period?
Evergreen Tax Strategic Equity Fund Class A provided a return of 27.89% for the
six months ended March 31, 1999. Class B returned 27.61%, Class C returned
27.79% and Class Y returned 28.26% for the same period. The Fund had a total
return of +36.60%, Class Y, since its inception on September 1, 1998. These
returns are before deduction of any applicable sales charges.
Portfolio
Characteristics
---------------
Total Net Assets $16,435,727
- --------------------------------------------------------------------------------
Number of Holdings 84
- --------------------------------------------------------------------------------
Beta n/a
- --------------------------------------------------------------------------------
P/E Ratio 21.6x
- --------------------------------------------------------------------------------
What is the Fund's investment strategy?
The investment strategy of this Fund is to achieve long-term growth in a
tax-efficient manner, minimizing the payout of taxable income and capital gains.
The Fund will substantially follow the strategies which have been operative in
the Evergreen Tax Strategic Foundation Fund, limited, however, to equities only
in this Fund. These strategies include concentration on the use of common stocks
whose payout policies allow for significant stock buybacks as the most
tax-efficient means of utilizing retained earnings and facilitating increased
capital values for shareholders. The Fund will also favor non-dividend paying
common stocks, or those with a favorable tax treatment of dividend payouts which
include dividends which will receive capital gains treatment to be realized only
on the disposition of shares. Further, the Fund will employ investment
strategies aimed at offsetting gains when realized. In selecting securities, the
aim will be for long-term holding growth opportunities necessitating limited
turnover.
Which were the Fund's top performers?
The top ten equity performers during the quarter were: Sprint Corp. (PCS Group),
+91.3%; Frontier Corp., +54.4%; Boston Scientific Corp., +51.3%; Merrill Lynch &
Co., Inc., +36.3%; Schlumberger Ltd., +30.3%; Citigroup, Inc., +28.8%; American
International Group, Inc., +26.4%; AFLAC, Inc., +23.7%; Coca-Cola FEMSA S.A. de
C.V., +23.1%; and Williams Companies, Inc. (The), +21.2%.
Top 5 Industries
----------------
(as a percentage of net assets)
Finance & Insurance 21.5%
- --------------------------------------------------------------------------------
Banks 8.9%
- --------------------------------------------------------------------------------
Information Services & Technology 8.8%
- --------------------------------------------------------------------------------
Retailing & Wholesale 6.8%
- --------------------------------------------------------------------------------
Building, Construction & Furnishings 6.1%
- --------------------------------------------------------------------------------
Thirty-two securities were purchased for the Fund's portfolio during the
quarter. The largest purchases included: Orbital Sciences Corp., Donna Karan
International Inc., Health Management Associates, Inc., Frontier Corp., and
Enhance Financial Services Group, Inc. These selections come as the balance of
the portfolio represent a mix between large and medium capitalization companies.
We anticipate that these two segments of the market spectrum will provide the
bulk of the Fund's holdings. Our aim is to build a liquid, high-quality equity
portfolio. There was only one sale during the quarter, State Street Corp., for a
gain of 40.5%.
29
<PAGE>
- --------------------------------------------------------------------------------
E V E R G R E E N
Tax Strategic Equity Fund
- --------------------------------------------------------------------------------
Portfolio Manager Interview
Top 10 Holdings
---------------
(as a percentage of net assets)
International Business Machines Corp. 5.0%
- --------------------------------------------------------------------------------
Frontier Corp. 3.5%
- --------------------------------------------------------------------------------
Orbital Sciences Corp. 3.3%
- --------------------------------------------------------------------------------
American Bankers Insurance Group, Inc. 3.2%
- --------------------------------------------------------------------------------
Newell Rubbermaid, Inc. 2.9%
- --------------------------------------------------------------------------------
Donna Karan International, Inc. 2.5%
- --------------------------------------------------------------------------------
Fair Issac & Co., Inc. 2.3%
- --------------------------------------------------------------------------------
BankBoston Corp. 2.2%
- --------------------------------------------------------------------------------
Time Warner, Inc. 2.2%
- --------------------------------------------------------------------------------
Merrill Lynch & Co., Inc. 2.2%
- --------------------------------------------------------------------------------
How did mergers and acquisitions help the Fund?
Two companies received acquisition offers during the quarter: BankBoston Corp.
received an offer from Fleet Financial Group, Inc.; and Frontier Corp. from
Global Crossing Ltd. These transactions reflect the Fund's continuing search for
growth opportunities considered so significantly undervalued that peers or
competitors will buy the company at prices higher than they were originally
purchased for the Fund.
30
<PAGE>
- --------------------------------------------------------------------------------
E V E R G R E E N
Agressive Growth Fund
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months Ended Year Ended September 30,
March 31, 1999 # ------------------------------------------- Year Ended
(Unaudited) 1998 # 1997 # 1996 1995 (a)(b) October 31, 1994 (b)#
.............................................................................................................
<S> <C> <C> <C> <C> <C> <C>
CLASS A SHARES
.............................................................................................................
Net asset value,
beginning of period $ 21.26 $ 23.48 $ 21.04 $ 17.37 $ 13.85 $ 14.44
-------- -------- -------- ------- ------- -------
.............................................................................................................
Income from investment
operations
.............................................................................................................
Net investment income (0.11) (0.25) (0.21) (0.15) (0.16) (0.13)
.............................................................................................................
Net realized and
unrealized gains or
losses on securities 7.61 (1.12) 2.65 4.46 3.68 (0.22)
-------- -------- -------- ------- ------- -------
.............................................................................................................
Total from investment
operations 7.50 (1.37) 2.44 4.31 3.52 (0.35)
-------- -------- -------- ------- ------- -------
.............................................................................................................
Distributions to
shareholders from
.............................................................................................................
Net realized gains (2.63) (0.85) 0 (0.64) 0 (0.24)
-------- -------- -------- ------- ------- -------
.............................................................................................................
Total distributions to
shareholders (2.63) (0.85) 0 (0.64) 0 (0.24)
-------- -------- -------- ------- ------- -------
.............................................................................................................
Net asset value, end of
period $ 26.13 $ 21.26 $ 23.48 $ 21.04 $ 17.37 $ 13.85
-------- -------- -------- ------- ------- -------
.............................................................................................................
Total return* 38.30% (5.93%) 11.60% 25.62% 25.42% (2.42%)
.............................................................................................................
Ratios and supplemental
data
.............................................................................................................
Net assets, end of
period (thousands) $177,732 $137,776 $173,982 $96,608 $70,858 $64,635
.............................................................................................................
Ratios to average net
assets
Expenses 1.23%+ 1.33% 1.26% 1.22% 1.47%+ 1.25%
.............................................................................................................
Net investment income (1.00%)+ (1.14%) (1.05%) (0.86%) (1.12%)+ (0.92%)
.............................................................................................................
Portfolio turnover rate 10% 22% 56% 33% 31% 59%
.............................................................................................................
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended Year Ended September 30,
March 31, 1999 # --------------------------------------
(Unaudited) 1998 # 1997 # 1996 1995 (c)
..................................................................................
<S> <C> <C> <C> <C> <C>
CLASS B SHARES
..................................................................................
Net asset value,
beginning of period $ 20.78 $ 23.18 $ 20.89 $ 17.35 $15.82
------- ------- ------- ------- ------
..................................................................................
Income from investment
operations
..................................................................................
Net investment income (0.18) (0.41) (0.37) (0.16) (0.03)
..................................................................................
Net realized and
unrealized gains or
losses on securities 7.41 (1.14) 2.66 4.34 1.56
------- ------- ------- ------- ------
..................................................................................
Total from investment
operations 7.23 (1.55) 2.29 4.18 1.53
------- ------- ------- ------- ------
..................................................................................
Distributions to
shareholders from
..................................................................................
Net realized gains (2.63) (0.85) 0 (0.64) 0
------- ------- ------- ------- ------
..................................................................................
Total distributions to
shareholders (2.63) (0.85) 0 (0.64) 0
------- ------- ------- ------- ------
..................................................................................
Net asset value, end of
period $ 25.38 $ 20.78 $ 23.18 $ 20.89 $17.35
------- ------- ------- ------- ------
..................................................................................
Total return* 37.84% (6.82%) 10.96% 24.88% 9.67%
..................................................................................
Ratios and supplemental
data
..................................................................................
Net assets, end of
period (thousands) $51,943 $36,301 $41,167 $21,644 $2,858
..................................................................................
Ratios to average net
assets
Expenses 1.98%+ 2.08% 2.02% 1.98% 2.09%+
..................................................................................
Net investment income (1.74%)+ (1.88%) (1.80%) (1.60%) (1.71%)+
..................................................................................
Portfolio turnover rate 10% 22% 56% 33% 31%
..................................................................................
</TABLE>
(a) 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.
(b) Effective June 30, 1995, Evergreen Aggressive Growth Fund, a new series of
Evergreen Trust, acquired substantially all of the net assets of ABT Emerg-
ing Growth Fund. ABT Emerging Growth Fund, which had a fiscal year that
ended on October 31 was the accounting survivor in the combination. Accord-
ingly, the information above includes the result of operations of ABT
Emerging Growth Fund prior to June 30, 1995.
(c) For the period from July 7, 1995 (commencement of class operations) to Sep-
tember 30, 1995.
* Excluding applicable sales charges.
+ Annualized.
# Net investment income is based on average shares outstanding during the
period.
See Combined Notes to Financial Statements.
31
<PAGE>
- --------------------------------------------------------------------------------
E V E R G R E E N
Agrressive Growth Fund
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months Ended Year Ended September 30,
March 31, 1999 # -----------------------------------
(Unaudited) 1998 # 1997 # 1996 1995 (a)
................................................................................
<S> <C> <C> <C> <C> <C>
CLASS C SHARES
................................................................................
Net asset value,
beginning of period $20.75 $23.16 $20.88 $17.31 $16.42
------ ------ ------ ------ ------
................................................................................
Income from investment
operations
................................................................................
Net investment income (0.18) (0.41) (0.36) (0.15) (0.01)
................................................................................
Net realized and
unrealized gains or
losses on securities 7.38 (1.15) 2.64 4.36 0.90
------ ------ ------ ------ ------
................................................................................
Total from investment
operations 7.20 (1.56) 2.28 4.21 0.89
------ ------ ------ ------ ------
................................................................................
Distributions to
shareholders from
................................................................................
Net realized gains (2.63) (0.85) 0 (0.64) 0
------ ------ ------ ------ ------
................................................................................
Total distributions to
shareholders (2.63) (0.85) 0 (0.64) 0
------ ------ ------ ------ ------
................................................................................
Net asset value, end of
period $25.32 $20.75 $23.16 $20.88 $17.31
------ ------ ------ ------ ------
................................................................................
Total return* 37.75% (6.87%) 10.92% 25.11% 5.42%
................................................................................
Ratios and supplemental
data
................................................................................
Net assets, end of
period (thousands) $4,489 $2,570 $3,992 $ 991 $ 416
................................................................................
Ratios to average net
assets
Expenses 1.98%+ 2.08% 2.02% 1.96% 2.09%+
................................................................................
Net investment income (1.74%)+ (1.88%) (1.80%) (1.57%) (1.51%)+
................................................................................
Portfolio turnover rate 10% 22% 56% 33% 31%
................................................................................
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended Year Ended September 30,
March 31, 1999 # --------------------------------------
(Unaudited) 1998 # 1997 # 1996 1995 (b)
....................................................................................
<S> <C> <C> <C> <C> <C>
CLASS Y SHARES
....................................................................................
Net asset value,
beginning of period $ 21.46 $ 23.57 $ 21.09 $ 17.38 $15.79
------- ------- ------- ------- ------
....................................................................................
Income from investment
operations
....................................................................................
Net investment income (0.08) (0.20) (0.17) (0.06) (0.01)
....................................................................................
Net realized and
unrealized gains or
losses on securities 7.70 (1.06) 2.65 4.41 1.60
------- ------- ------- ------- ------
....................................................................................
Total from investment
operations 7.62 (1.26) 2.48 4.35 1.59
------- ------- ------- ------- ------
....................................................................................
Distributions to
shareholders from
....................................................................................
Net realized gains (2.63) (0.85) 0 (0.64) 0
------- ------- ------- ------- ------
....................................................................................
Total distributions to
shareholders (2.63) (0.85) 0 (0.64) 0
------- ------- ------- ------- ------
....................................................................................
Net asset value, end of
period $ 26.45 $ 21.46 $ 23.57 $ 21.09 $17.38
------- ------- ------- ------- ------
....................................................................................
Total return 38.51% (5.43%) 11.76% 25.84% 10.07%
....................................................................................
Ratios and supplemental
data
....................................................................................
Net assets, end of
period (thousands) $34,501 $28,314 $44,384 $25,918 $1,889
....................................................................................
Ratios to average net
assets
Expenses 0.98%+ 1.08% 1.01% 0.97% 1.08%+
....................................................................................
Net investment income (0.74%)+ (0.89%) (0.78%) (0.60%) (0.71%)+
....................................................................................
Portfolio turnover rate 10% 22% 56% 33% 31%
....................................................................................
</TABLE>
(a) For the period from August 3, 1995 (commencement of class operations) to
September 30, 1995.
(b) For the period from July 11, 1995 (commencement of class operations) to
September 30, 1995.
* Excluding applicable sales charges.
+ Annualized.
# Net investment income is based on average shares outstanding during the
period .
See Combined Notes to Financial Statements.
32
<PAGE>
- --------------------------------------------------------------------------------
E V E R G R E E N
Evergreen Fund
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months Ended Year Ended September 30,
March 31, 1999 ---------------------------------
(Unaudited) 1998 # 1997 # 1996 1995 (a)
................................................................................
<S> <C> <C> <C> <C> <C>
CLASS A SHARES
................................................................................
Net asset value,
beginning of period $21.11 $22.96 $17.64 $15.55 $11.97
------ ------ ------ ------ ------
................................................................................
Income from investment
operations
................................................................................
Net investment income 0.03 0.06 0.11 0.12 0.01
................................................................................
Net realized and
unrealized gains or
losses on securities 3.08 (1.31) 5.71 2.61 3.57
------ ------ ------ ------ ------
................................................................................
Total from investment
operations 3.11 (1.25) 5.82 2.73 3.58
------ ------ ------ ------ ------
................................................................................
Distributions to
shareholders from
................................................................................
Net investment income (0.04) (0.10) (0.09) (0.06) 0
................................................................................
Net realized gains (0.07) (0.50) (0.41) (0.58) 0
------ ------ ------ ------ ------
................................................................................
Total distributions to
shareholders (0.11) (0.60) (0.50) (0.64) 0
------ ------ ------ ------ ------
................................................................................
Net asset value, end of
period $24.11 $21.11 $22.96 $17.64 $15.55
------ ------ ------ ------ ------
................................................................................
Total return* 14.73% (5.59%) 33.72% 18.07% 29.91%
................................................................................
Ratios and supplemental
data
................................................................................
Net assets, end of period
(millions) $ 200 $ 183 $ 161 $ 87 $ 29
................................................................................
Ratios to average net
assets
Expenses 1.42%+ 1.44% 1.40% 1.45% 1.70%+
................................................................................
Net investment income 0.25%+ 0.24% 0.58% 0.63% 0.13%+
................................................................................
Portfolio turnover rate 4% 7% 12% 15% 19%
................................................................................
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended Year Ended September 30,
March 31, 1999 -----------------------------------
(Unaudited) 1998 # 1997 # 1996 1995 (a)
................................................................................
<S> <C> <C> <C> <C> <C>
CLASS B SHARES
................................................................................
Net asset value,
beginning of period $20.82 $22.69 $17.49 $15.48 $11.97
------ ------ ------ ------ ------
................................................................................
Income from investment
operations
................................................................................
Net investment income (0.06) (0.12) (0.03) (0.03) (0.02)
................................................................................
Net realized and
unrealized gains or
losses on securities 3.06 (1.25) 5.64 2.64 3.53
------ ------ ------ ------ ------
................................................................................
Total from investment
operations 3.00 (1.37) 5.61 2.61 3.51
------ ------ ------ ------ ------
................................................................................
Distributions to
shareholders from
................................................................................
Net investment income 0 0 0 (0.02) 0
................................................................................
Net realized gains (0.07) (0.50) (0.41) (0.58) 0
------ ------ ------ ------ ------
................................................................................
Total distributions to
shareholders (0.07) (0.50) (0.41) (0.60) 0
------ ------ ------ ------ ------
................................................................................
Net asset value, end of
period $23.75 $20.82 $22.69 $17.49 $15.48
------ ------ ------ ------ ------
................................................................................
Total return* 14.41% (6.18%) 32.69% 17.29% 29.32%
................................................................................
Ratios and supplemental
data
................................................................................
Net assets, end of
period (millions) $ 692 $ 624 $ 503 $ 254 $ 74
................................................................................
Ratios to average net
assets
Expenses 2.16%+ 2.19% 2.15% 2.18% 2.32%+
................................................................................
Net investment income (0.51%)+ (0.50%) (0.16%) (0.10%) (0.48%)+
................................................................................
Portfolio turnover rate 4% 7% 12% 15% 19%
................................................................................
</TABLE>
(a) For the period from January 3, 1995 (commencement of class operations) to
September 30, 1995.
* Excluding applicable sales charges.
+ Annualized.
# Net investment income is based on average shares outstanding during the
period.
See Combined Notes to Financial Statements.
33
<PAGE>
- --------------------------------------------------------------------------------
E V E R G R E E N
Evergreen Fund
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months Ended Year Ended September 30,
March 31, 1999 -----------------------------------
(Unaudited) 1998 # 1997 # 1996 1995 (a)
................................................................................
<S> <C> <C> <C> <C> <C>
CLASS C SHARES
................................................................................
Net asset value,
beginning of period $20.79 $22.66 $17.47 $15.48 $11.97
------ ------ ------ ------ ------
................................................................................
Income from investment
operations
................................................................................
Net investment income (0.06) (0.11) (0.04) 0 (0.01)
................................................................................
Net realized and
unrealized gains or
losses on securities 3.05 (1.26) 5.64 2.61 3.52
------ ------ ------ ------ ------
................................................................................
Total from investment
operations 2.99 (1.37) 5.60 2.61 3.51
------ ------ ------ ------ ------
................................................................................
Distributions to
shareholders from
................................................................................
Net investment income 0 0 0 (0.04) 0
................................................................................
Net realized gains (0.07) (0.50) (0.41) (0.58) 0
------ ------ ------ ------ ------
................................................................................
Total distributions to
shareholders (0.07) (0.50) (0.41) (0.62) 0
------ ------ ------ ------ ------
................................................................................
Net asset value, end of
period $23.71 $20.79 $22.66 $17.47 $15.48
------ ------ ------ ------ ------
................................................................................
Total return* 14.38% (6.19%) 32.67% 17.29% 29.32%
................................................................................
Ratios and supplemental
data
................................................................................
Net assets, end of
period (millions) $ 13 $ 13 $ 9 $ 6 $ 2
................................................................................
Ratios to average net
assets
Expenses 2.16%+ 2.19% 2.16% 2.14% 2.12%+
................................................................................
Net investment income (0.51%)+ (0.50%) (0.18%) (0.07%) (0.31%)+
................................................................................
Portfolio turnover rate 4% 7% 12% 15% 19%
................................................................................
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended Year Ended September 30,
March 31, 1999 ---------------------------------------
(Unaudited) 1998 # 1997 # 1996 1995 1994
...................................................................................
<S> <C> <C> <C> <C> <C> <C>
CLASS Y SHARES
...................................................................................
Net asset value,
beginning of period $21.25 $23.07 $17.71 $15.59 $14.62 $14.46
------ ------ ------ ------ ------ ------
...................................................................................
Income from investment
operations
...................................................................................
Net investment income 0.06 0.12 0.16 0.24 0.10 0.07
...................................................................................
Net realized and
unrealized gains or
losses on securities 3.12 (1.30) 5.73 2.55 3.10 0.79
------ ------ ------ ------ ------ ------
...................................................................................
Total from investment
operations 3.18 (1.18) 5.89 2.79 3.20 0.86
------ ------ ------ ------ ------ ------
...................................................................................
Distributions to
shareholders from
...................................................................................
Net realized gains (0.07) (0.50) (0.41) (0.58) (2.16) (0.61)
------ ------ ------ ------ ------ ------
...................................................................................
Net investment income (0.05) (0.14) (0.12) (0.09) (0.07) (0.09)
...................................................................................
Total distributions to
shareholders (0.12) (0.64) (0.53) (0.67) (2.23) (0.70)
------ ------ ------ ------ ------ ------
...................................................................................
Net asset value, end of
period $24.31 $21.25 $23.07 $17.71 $15.59 $14.62
------ ------ ------ ------ ------ ------
...................................................................................
Total return 14.99% (5.25%) 34.08% 18.43% 26.79% 6.16%
...................................................................................
Ratios and supplemental
data
...................................................................................
Net assets, end of
period (millions) $1,135 $1,028 $1,104 $ 841 $ 612 $ 526
...................................................................................
Ratios to average net
assets
Expenses 1.16%+ 1.18% 1.15% 1.15% 1.16% 1.13%
...................................................................................
Interest expense N/A N/A N/A N/A 0.06% 0.09%
...................................................................................
Net investment income 0.49%+ 0.49% 0.80% 0.93% 0.53% 0.40%
...................................................................................
Portfolio turnover rate 4% 7% 12% 15% 19% 19%
...................................................................................
</TABLE>
(a) For the period from January 3, 1995 (commencement of class operations) to
September 30, 1995.
* Excluding applicable sales charges.
+ Annualized.
# Net investment income is based on average shares outstanding during the
period.
See Combined Notes to Financial Statements.
34
<PAGE>
- --------------------------------------------------------------------------------
E V E R G R E E N
Micro Cap Fund
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months Ended Year Ended September 30,
March 31, 1999 # ------------------------------------
(Unaudited) 1998 # 1997 # 1996 1995 (a)
.................................................................................
<S> <C> <C> <C> <C> <C>
CLASS A SHARES
.................................................................................
Net asset value,
beginning of period $19.88 $ 26.68 $17.31 $18.41 $15.76
------ ------- ------ ------ ------
.................................................................................
Income from investment
operations
.................................................................................
Net investment income (0.05) (0.24) (0.15) (0.10) (0.10)
.................................................................................
Net realized and
unrealized gains or
losses on securities (1.25) (5.17) 9.52 (0.44) 2.75
------ ------- ------ ------ ------
.................................................................................
Total from investment
operations (1.30) (5.41) 9.37 (0.54) 2.65
------ ------- ------ ------ ------
.................................................................................
Distributions to
shareholders from
.................................................................................
Net realized gains (0.46) (1.39) 0 (0.56) 0
------ ------- ------ ------ ------
.................................................................................
Total distributions to
shareholders (0.46) (1.39) 0 (0.56) 0
------ ------- ------ ------ ------
.................................................................................
Net asset value, end of
period $18.12 $ 19.88 $26.68 $17.31 $18.41
------ ------- ------ ------ ------
.................................................................................
Total return* (6.80%) (21.49%) 54.13% (2.90%) 16.81%
.................................................................................
Ratios and supplemental
data
.................................................................................
Net assets, end of
period (thousands) $3,428 $ 4,741 $2,438 $ 903 $1,089
.................................................................................
Ratios to average net
assets
Expenses 1.69%+ 1.64% 1.79% 1.73% 1.51%+
.................................................................................
Interest expense N/A 0.03% 0.02% 0.02% N/A
.................................................................................
Net investment income (0.53%)+ (0.95%) (0.73%) (0.52%) (1.03%)+
.................................................................................
Portfolio turnover rate 21% 47% 59% 160% 84%
.................................................................................
<CAPTION>
Six Months Ended Year Ended September 30,
March 31, 1999 # ------------------------------------
(Unaudited) 1998 # 1997 # 1996 1995 (a)
.................................................................................
<S> <C> <C> <C> <C> <C>
CLASS B SHARES
.................................................................................
Net asset value,
beginning of period $19.31 $ 26.14 $17.07 $18.30 $15.76
------ ------- ------ ------ ------
.................................................................................
Income from investment
operations
.................................................................................
Net investment income (0.12) (0.42) (0.28) (0.25) (0.20)
.................................................................................
Net realized and
unrealized gains or
losses on securities (1.20) (5.02) 9.35 (0.42) 2.74
------ ------- ------ ------ ------
.................................................................................
Total from investment
operations (1.32) (5.44) 9.07 (0.67) 2.54
------ ------- ------ ------ ------
.................................................................................
Distributions to
shareholders from
.................................................................................
Net realized gains (0.46) (1.39) 0 (0.56) 0
------ ------- ------ ------ ------
.................................................................................
Total distributions to
shareholders (0.46) (1.39) 0 (0.56) 0
------ ------- ------ ------ ------
.................................................................................
Net asset value, end of
period $17.53 $ 19.31 $26.14 $17.07 $18.30
------ ------- ------ ------ ------
.................................................................................
Total return* (7.11%) (22.07%) 53.13% (3.64%) 16.12%
.................................................................................
Ratios and supplemental
data
.................................................................................
Net assets, end of
period (thousands) $3,447 $ 4,236 $1,713 $1,461 $2,020
.................................................................................
Ratios to average net
assets
Expenses 2.44%+ 2.38% 2.59% 2.47% 2.26%+
.................................................................................
Interest expense N/A 0.03% 0.02% 0.02% N/A
.................................................................................
Net investment income (1.29%)+ (1.70%) (1.44%) (1.28%) (1.77%)+
.................................................................................
Portfolio turnover rate 21% 47% 59% 160% 84%
.................................................................................
</TABLE>
(a) For the period from January 3, 1995 (commencement of class operations) to
September 30, 1995.
* Excluding applicable sales charges.
+ Annualized.
# Net investment income is based on average shares outstanding during the
period.
See Combined Notes to Financial Statements.
35
<PAGE>
- --------------------------------------------------------------------------------
E V E R G R E E N
Micro Cap Fund
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months Ended Year Ended September 30,
March 31, 1999 # ------------------------------------
(Unaudited) 1998 # 1997 # 1996 1995 (a)
.................................................................................
<S> <C> <C> <C> <C> <C>
CLASS C SHARES
.................................................................................
Net asset value,
beginning of period $19.33 $ 26.16 $17.09 $18.31 $15.76
------ ------- ------ ------ ------
.................................................................................
Income from investment
operations
.................................................................................
Net investment income (0.12) (0.43) (0.25) (0.35) (0.20)
.................................................................................
Net realized and
unrealized gains or
losses on securities (1.19) (5.01) 9.32 (0.31) 2.75
------ ------- ------ ------ ------
.................................................................................
Total from investment
operations (1.31) (5.44) 9.07 (0.66) 2.55
------ ------- ------ ------ ------
.................................................................................
Distributions to
shareholders from
.................................................................................
Net realized gains (0.46) (1.39) 0 (0.56) 0
------ ------- ------ ------ ------
.................................................................................
Total distributions to
shareholders (0.46) (1.39) 0 (0.56) 0
------ ------- ------ ------ ------
.................................................................................
Net asset value, end of
period $17.56 $ 19.33 $26.16 $17.09 $18.31
------ ------- ------ ------ ------
.................................................................................
Total return* (7.05%) (22.05%) 53.07% (3.58%) 16.18%
.................................................................................
Ratios and supplemental
data
.................................................................................
Net assets, end of
period (thousands) $2,465 $ 3,093 $ 261 $ 27 $ 62
.................................................................................
Ratios to average net
assets
Expenses 2.44%+ 2.39% 2.56% 2.44% 2.25%+
.................................................................................
Interest expense N/A 0.03% 0.02% 0.02% N/A
.................................................................................
Net investment income (1.29%)+ (1.71%) (1.50%) (1.35%) (1.76%)+
.................................................................................
Portfolio turnover rate 21% 47% 59% 160% 84%
.................................................................................
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended Year Ended September 30,
March 31, 1999 # ------------------------------------------------ Year Ended
(Unaudited) 1998 # 1997 # 1996 1995 1994 (b) May 31, 1994
...........................................................................................................
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS Y SHARES
...........................................................................................................
Net asset value,
beginning of period $ 20.05 $ 26.83 $ 17.35 $ 18.42 $ 21.74 $ 21.20 $ 20.87
------- ------- ------- ------- ------- ------- -------
...........................................................................................................
Income from investment
operations
...........................................................................................................
Net investment income (0.03) (0.18) (0.09) (0.08) (0.23) (0.05) (0.07)
...........................................................................................................
Net realized and
unrealized gains or
losses on securities (1.25) (5.21) 9.57 (0.43) 0.59 0.59 1.67
------- ------- ------- ------- ------- ------- -------
...........................................................................................................
Total from investment
operations (1.28) (5.39) 9.48 (0.51) 0.36 0.54 1.60
------- ------- ------- ------- ------- ------- -------
...........................................................................................................
Distributions to
shareholders from
...........................................................................................................
Net realized gains (0.46) (1.39) 0 (0.56) (3.68) 0 (1.27)
------- ------- ------- ------- ------- ------- -------
...........................................................................................................
Total distributions to
shareholders (0.46) (1.39) 0 (0.56) (3.68) 0 (1.27)
------- ------- ------- ------- ------- ------- -------
...........................................................................................................
Net asset value, end of
period $ 18.31 $ 20.05 $ 26.83 $ 17.35 $ 18.42 $ 21.74 $ 21.20
------- ------- ------- ------- ------- ------- -------
...........................................................................................................
Total return (6.64%) (21.28%) 54.64% (2.73%) 4.76% 2.55% 7.64%
...........................................................................................................
Ratios and supplemental
data
...........................................................................................................
Net assets, end of
period (thousands) $32,635 $39,112 $50,732 $39,622 $64,721 $99,340 $96,357
...........................................................................................................
Ratios to average net
assets
Expenses 1.44%+ 1.40% 1.59% 1.55% 1.36% 1.37%+ 1.26%
...........................................................................................................
Interest expense N/A 0.03% 0.02% 0.02% N/A N/A N/A
...........................................................................................................
Net investment income (0.29%)+ (0.70%) (0.45%) (0.38%) (0.87%) (0.70%)+ (0.33%)
...........................................................................................................
Portfolio turnover rate 21% 47% 59% 160% 84% 36% 89%
...........................................................................................................
</TABLE>
(a) For the period from January 3, 1995 (commencement of class operations) to
September 30, 1995.
(b) 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.
* Excluding applicable sales charges.
+ Annualized.
# Net investment income is based on average shares outstanding during the
period.
See Combined Notes to Financial Statements.
36
<PAGE>
- --------------------------------------------------------------------------------
E V E R G R E E N
Omega Fund
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended
September 30, Year Ended December 31,
Six Months Ended ------------------- ----------------------------
March 31, 1999 # 1997 (a)
(Unaudited) 1998 # # 1996 1995 1994
...............................................................................................
<S> <C> <C> <C> <C> <C> <C>
CLASS A SHARES
...............................................................................................
Net asset value,
beginning of period $ 21.50 $ 22.69 $ 19.52 $ 19.56 $ 15.54 $ 17.11
-------- -------- -------- -------- -------- -------
...............................................................................................
Income from investment
operations
...............................................................................................
Net investment income (0.07) (0.09) (0.03) (0.06) 0 0.04
...............................................................................................
Net realized and
unrealized gains or
losses on securities 7.07 1.03 4.05 2.15 5.58 (1.00)
-------- -------- -------- -------- -------- -------
...............................................................................................
Total from investment
operations 7.00 0.94 4.02 2.09 5.58 (0.96)
-------- -------- -------- -------- -------- -------
...............................................................................................
Distributions to
shareholders from
...............................................................................................
Net realized gains (2.61) (2.13) (0.85) (2.13) (1.56) (0.61)
-------- -------- -------- -------- -------- -------
...............................................................................................
Total distributions to
shareholders (2.61) (2.13) (0.85) (2.13) (1.56) (0.61)
-------- -------- -------- -------- -------- -------
...............................................................................................
Net asset value, end of
period $ 25.89 $ 21.50 $ 22.69 $ 19.52 $ 19.56 $ 15.54
-------- -------- -------- -------- -------- -------
...............................................................................................
Total return* 34.73% 4.43% 21.45% 11.31% 36.94% (5.66%)
...............................................................................................
Ratios and supplemental
data
...............................................................................................
Net assets, end of
period (thousands) $217,138 $156,220 $162,847 $154,825 $135,079 $99,569
...............................................................................................
Ratios to average net
assets
Expenses 1.29%+ 1.32% 1.32%+ 1.33% 1.38% 1.41%
...............................................................................................
Net investment income (0.62%)+ (0.38%) (0.20%)+ (0.29%) 0.00% 0.27%
...............................................................................................
Portfolio turnover rate 70% 159% 76% 173% 159% 137%
...............................................................................................
</TABLE>
<TABLE>
<CAPTION>
Year Ended
September 30, Year Ended December 31,
Six Months Ended ------------------- ---------------------------
March 31, 1999 # 1997 (a)
(Unaudited) 1998 # # 1996 1995 1994
...............................................................................................
<S> <C> <C> <C> <C> <C> <C>
CLASS B SHARES
...............................................................................................
Net asset value,
beginning of period $ 20.32 $ 21.71 $ 18.83 $ 19.10 $ 15.34 $ 17.06
-------- -------- -------- ------- ------- -------
...............................................................................................
Income from investment
operations
...............................................................................................
Net investment income (0.15) (0.25) (0.15) (0.17) (0.09) (0.06)
...............................................................................................
Net realized and
unrealized gains or
losses on securities 6.65 0.99 3.88 2.03 5.41 (1.60)
-------- -------- -------- ------- ------- -------
...............................................................................................
Total from investment
operations 6.50 0.74 3.73 1.86 5.32 (1.66)
-------- -------- -------- ------- ------- -------
...............................................................................................
Distributions to
shareholders from
...............................................................................................
Net realized gains (2.61) (2.13) (0.85) (2.13) (1.56) (0.06)
-------- -------- -------- ------- ------- -------
...............................................................................................
Total distributions to
shareholders (2.61) (2.13) (0.85) (2.13) (1.56) (0.06)
-------- -------- -------- ------- ------- -------
...............................................................................................
Net asset value, end of
period $ 24.21 $ 20.32 $ 21.71 $ 18.83 $ 19.10 $ 15.34
-------- -------- -------- ------- ------- -------
...............................................................................................
Total return* 34.24% 3.64% 20.68% 10.31% 35.70% (6.57%)
...............................................................................................
Ratios and supplemental
data
...............................................................................................
Net assets, end of
period (thousands) $195,055 $114,068 $110,349 $89,921 $71,636 $32,266
...............................................................................................
Ratios to average net
assets
Expenses 2.04%+ 2.10% 2.18%+ 2.20% 2.29% 2.30%
...............................................................................................
Net investment income (1.37%)+ (1.16%) (1.06%)+ (1.15%) (0.94%) (0.58%)
...............................................................................................
Portfolio turnover rate 70% 159% 76% 173% 159% 137%
...............................................................................................
</TABLE>
(a) For the nine months ended September 30, 1997. The Fund changed its fiscal
year end from December 31 to September 30, effective September 30, 1997.
* Excluding applicable sales charges.
+ Annualized.
# Net investment income is based on average shares outstanding during the
period.
See Combined Notes to Financial Statements.
37
<PAGE>
- --------------------------------------------------------------------------------
E V E R G R E E N
Omega Fund
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended Year Ended December
Six Months Ended September 30, 31,
March 31, 1999 # -------------------- --------------------------
(Unaudited) 1998 # 1997 (a) # 1996 1995 1994
..............................................................................................
<S> <C> <C> <C> <C> <C> <C>
CLASS C SHARES
..............................................................................................
Net asset value,
beginning of period $ 20.37 $ 21.74 $ 18.86 $ 19.13 $ 15.37 $17.09
------- ------- ------- ------- ------- ------
..............................................................................................
Income from investment
operations
..............................................................................................
Net investment income (0.15) (0.25) (0.15) (0.18) (0.13) (0.07)
..............................................................................................
Net realized and
unrealized gains or
losses on securities 6.66 1.01 3.88 2.04 5.45 (1.04)
------- ------- ------- ------- ------- ------
..............................................................................................
Total from investment
operations 6.51 0.76 3.73 1.86 5.32 (1.11)
------- ------- ------- ------- ------- ------
..............................................................................................
Distributions to
shareholders from
..............................................................................................
Net realized gains (2.61) (2.13) (0.85) (2.13) (1.56) (0.61)
------- ------- ------- ------- ------- ------
..............................................................................................
Total distributions to
shareholders (2.61) (2.13) (0.85) (2.13) (1.56) (0.61)
------- ------- ------- ------- ------- ------
..............................................................................................
Net asset value, end of
period $ 24.27 $ 20.37 $ 21.74 $ 18.86 $ 19.13 $15.37
------- ------- ------- ------- ------- ------
..............................................................................................
Total return* 34.21% 3.73% 20.65% 10.29% 35.62% (6.56%)
..............................................................................................
Ratios and supplemental
data
..............................................................................................
Net assets, end of
period (thousands) $19,716 $13,752 $16,067 $17,628 $13,963 $9,900
..............................................................................................
Ratios to average net
assets
Expenses 2.04%+ 2.11% 2.18%+ 2.21% 2.30% 2.30%
..............................................................................................
Net investment income (1.37%)+ (1.16%) (1.05%)+ (1.17%) (0.91%) (0.63%)
..............................................................................................
Portfolio turnover rate 70% 159% 76% 173% 159% 137%
..............................................................................................
</TABLE>
<TABLE>
<CAPTION>
Year Ended
Six Months Ended September 30,
March 31, 1999 # -------------------
(Unaudited) 1998 # 1997 (b) #
.............................................................................
<S> <C> <C> <C>
CLASS Y SHARES
.............................................................................
Net asset value, beginning of period $21.54 $22.68 $19.98
------ ------ ------
.............................................................................
Income from investment operations
.............................................................................
Net investment income (0.05) (0.02) (0.01)
.............................................................................
Net realized and unrealized gains or
losses on securities 7.10 1.01 3.56
------ ------ ------
.............................................................................
Total from investment operations 7.05 0.99 3.55
------ ------ ------
.............................................................................
Distributions to shareholders from
.............................................................................
Net realized gains (2.61) (2.13) (0.85)
------ ------ ------
.............................................................................
Total distributions to shareholders (2.61) (2.13) (0.85)
------ ------ ------
.............................................................................
Net asset value, end of period $25.98 $21.54 $22.68
------ ------ ------
.............................................................................
Total return 34.90% 4.67% 18.60%
.............................................................................
Ratios and supplemental data
.............................................................................
Net assets, end of period (thousands) $2,147 $ 571 $ 5
.............................................................................
Ratios to average net assets
Expenses 1.04%+ 1.11% 1.24%+
.............................................................................
Net investment income (0.41%)+ (0.09%) (0.21%)+
.............................................................................
Portfolio turnover rate 70% 159% 76%
.............................................................................
</TABLE>
(a) For the nine months ended September 30, 1997. The Fund changed its fiscal
year end from December 31 to September 30, effective September 30, 1997.
(b) For the period from January 13, 1997 (commencement of class operations) to
September 30, 1997.
* Excluding applicable sales charges.
+ Annualized.
# Net investment income is based on average shares outstanding during the
period.
See Combined Notes to Financial Statements.
38
<PAGE>
- --------------------------------------------------------------------------------
E V E R G R E E N
Small Company Growth Fund
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months Ended
March 31, 1999 # Period Ended
(Unaudited) September 30, 1998 (a) #
................................................................................
<S> <C> <C>
CLASS A SHARES
................................................................................
Net asset value, beginning of
period $ 5.72 $ 7.75
------ ------
................................................................................
Income from investment operations
................................................................................
Net investment income (0.02) (0.04)
................................................................................
Net realized and unrealized gains
or losses on securities 0.90 (1.99)
------ ------
................................................................................
Total from investment operations 0.88 (2.03)
------ ------
................................................................................
Distributions to shareholders from
................................................................................
Net realized gains (1.18) 0
------ ------
................................................................................
Total distributions to shareholders (1.18) 0
------ ------
................................................................................
Net asset value, end of period $ 5.42 $ 5.72
------ ------
................................................................................
Total return* 17.06% (26.19%)
................................................................................
Ratios and supplemental data
................................................................................
Net assets, end of period
(millions) $ 681 $ 589
................................................................................
Ratios to average net assets
Expenses 1.22%+ 1.15%+
................................................................................
Net investment income (0.59%)+ (0.50%)+
................................................................................
Portfolio turnover rate 68% 97%
................................................................................
</TABLE>
<TABLE>
<CAPTION>
Year Ended
Six Months Ended September 30, Year Ended May 31,
March 31, 1999 # ------------------- ---------------------------------
(Unaudited) 1998 # 1997 (b) # 1997 1996 1995 1994
....................................................................................................
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS B SHARES
....................................................................................................
Net asset value,
beginning of period $ 5.69 $ 9.44 $ 8.44 $10.35 $ 8.62 $ 7.64 $ 7.95
------ ------ ------ ------ ------ ------ ------
....................................................................................................
Income from investment
operations
....................................................................................................
Net investment income (0.04) (0.07) (0.04) (0.11) (0.13) (0.07) (0.12)
....................................................................................................
Net realized and
unrealized gains or
losses on securities 0.90 (2.90) 1.74 (0.78) 2.87 1.68 0.63
------ ------ ------ ------ ------ ------ ------
....................................................................................................
Total from investment
operations 0.86 (2.97) 1.70 (0.89) 2.74 1.61 0.51
------ ------ ------ ------ ------ ------ ------
....................................................................................................
Distributions to
shareholders from
....................................................................................................
Net realized gains (1.18) (0.78) (0.70) (1.02) (1.01) (0.63) (0.82)
------ ------ ------ ------ ------ ------ ------
....................................................................................................
Total distributions to
shareholders (1.18) (0.78) (0.70) (1.02) (1.01) (0.63) (0.82)
------ ------ ------ ------ ------ ------ ------
....................................................................................................
Net asset value, end of
period $ 5.37 $ 5.69 $ 9.44 $ 8.44 $10.35 $ 8.62 $ 7.64
------ ------ ------ ------ ------ ------ ------
....................................................................................................
Total return* 16.77% (33.91%) 21.43% (8.61%) 33.03% 23.58% 6.84%
....................................................................................................
Ratios and supplemental
data
....................................................................................................
Net assets, end of
period (millions) $ 103 $ 200 $1,546 $1,407 $2,006 $1,460 $1,006
....................................................................................................
Ratios to average net
assets
Expenses 1.99%+ 1.36% 1.77%+ 1.75% 1.73% 1.78% 1.73%
....................................................................................................
Net investment income (1.33%)+ (0.89%) (1.43%)+ (1.32%) (1.34%) (1.10%) (1.49%)
....................................................................................................
Portfolio turnover rate 68% 97% 28% 48% 94% 38% 60%
....................................................................................................
</TABLE>
(a) For the period from January 20, 1998 (commencement of class operations) to
September 30, 1998.
(b) For the four months ended September 30, 1997. The Fund changed its fiscal
year end from May 31 to September 30, effective September 30, 1997.
* Excluding applicable sales charges.
+ Annualized.
# Net investment income is based on average shares outstanding during the
period.
See Combined Notes to Financial Statements.
39
<PAGE>
- --------------------------------------------------------------------------------
E V E R G R E E N
Small Company Growth Fund
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months Ended
March 31, 1999 # Period Ended
(Unaudited) September 30, 1998 (a) #
................................................................................
<S> <C> <C>
CLASS C SHARES
................................................................................
Net asset value, beginning of period $ 5.70 $ 7.73
------ -------
................................................................................
Income from investment operations
................................................................................
Net investment income (0.04) (0.10)
................................................................................
Net realized and unrealized gains or
losses on securities 0.89 (1.93)
------ -------
................................................................................
Total from investment operations 0.85 (2.03)
------ -------
................................................................................
Distributions to shareholders from
................................................................................
Net realized gains (1.18) 0
------ -------
................................................................................
Total distributions to shareholders (1.18) 0
------ -------
................................................................................
Net asset value, end of period $ 5.37 $ 5.70
------ -------
................................................................................
Total return* 16.52% (26.26%)
................................................................................
Ratios and supplemental data
................................................................................
Net assets, end of period (millions) $ 3 $ 4
................................................................................
Ratios to average net assets
Expenses 1.99%+ 1.90%+
................................................................................
Net investment income (1.32%)+ (1.32%)+
................................................................................
Portfolio turnover rate 68% 97%
................................................................................
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended
March 31, 1999 # Period Ended
(Unaudited) September 30, 1998 (a) #
................................................................................
<S> <C> <C>
CLASS Y SHARES
................................................................................
Net asset value, beginning of period $ 5.74 $ 7.73
------ -------
................................................................................
Income from investment operations
................................................................................
Net investment income (0.01) (0.02)
................................................................................
Net realized and unrealized gains or
losses on securities 0.89 (1.97)
------ -------
................................................................................
Total from investment operations 0.88 (1.99)
------ -------
................................................................................
Distributions to shareholders from
................................................................................
Net realized gains (1.18) 0
------ -------
................................................................................
Total distributions to shareholders (1.18) 0
------ -------
................................................................................
Net asset value, end of period $ 5.44 $ 5.74
------ -------
................................................................................
Total return 16.99% (25.74%)
................................................................................
Ratios and supplemental data
................................................................................
Net assets, end of period (millions) $ 2 $ 1
................................................................................
Ratios to average net assets
Expenses 1.01%+ 0.91%+
................................................................................
Net investment income (0.41%)+ (0.33%)+
................................................................................
Portfolio turnover rate 68% 97%
................................................................................
</TABLE>
(a) For the period from January 26, 1998 (commencement of class operations) to
September 30, 1998.
* Excluding applicable sales charges.
+ Annualized.
# Net investment income is based on average shares outstanding during the
period.
See Combined Notes to Financial Statements.
40
<PAGE>
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Period Ended
Year Ended June 30, October 31,
Six Months Ended ------------------------------ ------------------------
March 31, 1999 # Period Ended Retail Class Prior Class
(Unaudited) September 30, 1998 (d) 1998 1997 1996 (b)(c) 1995 (a) 1994
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A SHARES
Net asset value,
beginning of period $ 18.34 $ 22.43 $ 21.13 $ 17.28 $ 17.08 $15.00 $ 15.39
------- ------- ------- ------- ------- ------ -------
.........................................................................
Income from investment
operations
.........................................................................
Net investment income (0.01) 0 (0.02) 0.07 0.12 0.18 0.11
.........................................................................
Net realized and
unrealized gains or
losses on securities 5.98 (4.09) 4.24 5.32 1.49 2.87 0.22
------- ------- ------- ------- ------- ------ -------
.........................................................................
Total from investment
operations 5.97 (4.09) 4.22 5.39 1.61 3.05 0.33
------- ------- ------- ------- ------- ------ -------
.........................................................................
Distributions to
shareholders from
.........................................................................
Net investment income (0.01) 0 0 (0.07) (0.11) (0.17) (0.11)
.........................................................................
Net realized gains (4.11) 0 (2.92) (1.47) (1.30) (0.80) (0.61)
------- ------- ------- ------- ------- ------ -------
.........................................................................
Total distributions to
shareholders (4.12) 0 (2.92) (1.54) (1.41) (0.97) (0.72)
------- ------- ------- ------- ------- ------ -------
.........................................................................
Net asset value, end of
period $ 20.19 $ 18.34 $ 22.43 $ 21.13 $ 17.28 $17.08 $ 15.00
------- ------- ------- ------- ------- ------ -------
.........................................................................
Total return * 36.10% (18.23%) 21.54% 32.74% 19.11% 21.94% 2.21%
.........................................................................
Ratios and supplemental
data
.........................................................................
Net assets, end of
period (thousands) $20,434 $15,910 $20,509 $16,043 $11,178 $6,591 $50,128
.........................................................................
Ratios to average net
assets
Expenses 1.06%+ 1.18%+ 1.25% 1.23% 1.22%+ 1.34% 1.49%+
.........................................................................
Net investment income (0.09%)+ (0.06%)+ (0.10%) 0.38% 0.89%+ 1.23% 0.75%+
.........................................................................
Portfolio turnover rate 37% 28% 61% 79% 114% 119% 35%
.........................................................................
</TABLE>
(a) On February 21, 1995, the Shares of the Fund were redesignated as either
Retail or Institutional Shares. On that date, the Fund's net investment in-
come, expenses and distributions for the period November 1, 1994 through
February 20, 1995 were allocated to each class of Shares. The basis for the
allocation was the relative net assets of each class of Shares as of Febru-
ary 21, 1995. The results were combined with the results of operations and
distributions for each applicable class for the period February 21, 1995
through October 31, 1995. For the year ended October 31, 1995, the Finan-
cial Highlights' ratio of expenses, net investment income, total return,
and the per share investment activities and distributions reflect this al-
location.
(b) For the eight months ended June 30, 1996. The Fund changed its fiscal year
end from October 31 to June 30, effective June 30, 1996.
(c) On April 15,1996, the Conestoga Equity Fund was acquired by CoreFunds, Inc.
At that time, the Retail Class Shares of the Fund were exchanged for Class
A Shares.
(d) For the three months ended September 30, 1998. The Fund changed its fiscal
year end from June 30 to September 30, effective September 30, 1998.
* Excluding applicable sales charges.
+ Annualized.
# Net investment income is based on average shares outstanding during the pe-
riod.
See Combined Notes to Financial Statements.
41
<PAGE>
- --------------------------------------------------------------------------------
E V E R G R E E N
Stock Selector Fund
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months Ended
March 31, 1999 # Period Ended Year Ended
(Unaudited) September 30, 1998 (b) June 30, 1998 (a)
...................................................................................
<S> <C> <C> <C>
CLASS B SHARES
...................................................................................
Net asset value,
beginning of period $18.23 $ 22.33 $22.76(c)
------ ------- ------
...................................................................................
Income from investment
operations
...................................................................................
Net investment income (0.08) (0.03) (0.09)
...................................................................................
Net realized and
unrealized gains or
losses on securities 5.93 (4.07) 2.90
------ ------- ------
...................................................................................
Total from investment
operations 5.85 (4.10) 2.81
------ ------- ------
...................................................................................
Distributions to
shareholders from
...................................................................................
Net realized gains (4.11) 0 (3.24)(c)
------ ------- ------
...................................................................................
Net investment income 0 0 0
...................................................................................
Total distributions to
shareholders (4.11) 0 (3.24)
------ ------- ------
...................................................................................
Net asset value, end of
period $19.97 $ 18.23 $22.33
------ ------- ------
...................................................................................
Total return* 35.61% (18.36%) 14.38%
...................................................................................
Ratios and supplemental
data
...................................................................................
Net assets, end of
period (thousands) $ 991 $ 413 $ 349
...................................................................................
Ratios to average net
assets
Expenses 1.81%+ 1.94%+ 2.00%+
...................................................................................
Net investment income (0.81%)+ (0.76%)+ (0.85%)+
...................................................................................
Portfolio turnover rate 37% 28% 61%
...................................................................................
</TABLE>
<TABLE>
<CAPTION>
Institutional
Year Ended June 30, Class
Six Months Ended -------------------------------- --------------------
March 31, 1999 # Period Ended Year Ended
(Unaudited) September 30, 1998 (b) 1998 1997 1996 (e) (f) October 31, 1995 (d)
.......................................................................................................................
<S> <C> <C> <C> <C> <C> <C>
CLASS Y SHARES
.......................................................................................................................
Net asset value,
beginning of period $ 18.35 $ 22.43 $ 21.11 $ 17.26 $ 17.07 $ 15.00
-------- -------- -------- -------- -------- --------
.......................................................................................................................
Income from investment
operations
.......................................................................................................................
Net investment income 0.01 0.01 0.04 0.12 0.14 0.19
.......................................................................................................................
Net realized and
unrealized gains or
losses on securities 5.98 (4.09) 4.24 5.32 1.49 2.87
-------- -------- -------- -------- -------- --------
.......................................................................................................................
Total from investment
operations 5.99 (4.08) 4.28 5.44 1.63 3.06
-------- -------- -------- -------- -------- --------
.......................................................................................................................
Distributions to
shareholders from
.......................................................................................................................
Net investment income (0.01) 0 (0.04) (0.12) (0.14) (0.19)
.......................................................................................................................
Net realized gains (4.11) 0 (2.92) (1.47) (1.30) (0.80)
-------- -------- -------- -------- -------- --------
.......................................................................................................................
Total distributions to
shareholders (4.12) 0 (2.96) (1.59) (1.44) (0.99)
-------- -------- -------- -------- -------- --------
.......................................................................................................................
Net asset value, end of
period $ 20.22 $ 18.35 $ 22.43 $ 21.11 $ 17.26 $ 17.07
-------- -------- -------- -------- -------- --------
.......................................................................................................................
Total return 36.30% (18.19%) 21.90% 33.10% 19.24% 22.00%
.......................................................................................................................
Ratios and supplemental
data
.......................................................................................................................
Net assets, end of
period (thousands) $404,547 $424,992 $563,987 $515,015 $414,824 $378,352
.......................................................................................................................
Ratios to average net
assets
Expenses 0.82%+ 0.93%+ 1.00% 0.98% 0.97% 1.05%+
.......................................................................................................................
Net investment income 0.14%+ 0.19%+ 0.15% 0.63% 1.15% 1.44%+
.......................................................................................................................
Portfolio turnover rate 37% 28% 61% 79% 114% 119%
.......................................................................................................................
</TABLE>
(a) For the period from November 7, 1997 (commencement of class operations) to
June 30, 1998.
(b) For the three months ended September 30, 1998. The Fund changed its fiscal
year end from June 30 to September 30, effective September 30, 1998.
(c) Amounts adjusted to reflect a reverse stock split which occurred on June
24, 1998.
(d) On February 21, 1995, the Shares of the Fund were redesignated as either
Retail or Institutional Shares. On that date, the Fund's net investment in-
come, expenses and distributions for the period November 1, 1994 through
February 20, 1995 were allocated to each class of Shares. The basis for the
allocation was the relative net assets of each class of Shares as of Febru-
ary 21, 1995. The results were combined with the results of operations and
distributions for each applicable class for the period February 21, 1995
through October 31, 1995. For the year ended October 31, 1995, the Finan-
cial Highlights' ratio of expenses, net investment income, total return,
and the per share investment activities and distributions reflect this al-
location.
(e) For the eight months ended June 30, 1996. The Fund changed its fiscal year
end from October 31 to June 30, effective June 30, 1996.
(f) On April 15, 1996, the Conestoga Equity Fund was acquired by CoreFunds,
Inc. At that time the Institutional Class Shares of the fund were exchanged
for Class Y Shares.
* Excluding applicable sales charges.
+ Annualized.
# Net investment income is based on average shares outstanding during the pe-
riod.
See Combined Notes to Financial Statements.
42
<PAGE>
- --------------------------------------------------------------------------------
E V E R G R E E N
Strategic Growth Fund
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months Ended
March 31, 1999 # Period Ended
(Unaudited) September 30, 1998 (a) #
- --------------------------------------------------------------------------------
<S> <C> <C>
CLASS A SHARES
- --------------------------------------------------------------------------------
Net asset value, beginning of
period $ 9.67 $9.12
------ -----
................................................................................
Income from investment operations
................................................................................
Net investment income (0.01) 0.01
................................................................................
Net realized and unrealized gains
or losses on securities 2.66 0.54
------ -----
................................................................................
Total from investment operations 2.65 0.55
------ -----
................................................................................
Distributions to shareholders from
................................................................................
Net realized gains (1.34) 0
------ -----
................................................................................
Total distributions to shareholders (1.34) 0
------ -----
................................................................................
Net asset value, end of period $10.98 $9.67
------ -----
................................................................................
Total return* 29.56% 6.03%
................................................................................
Ratios and supplemental data
................................................................................
Net assets, end of period
(millions) $ 905 $ 706
................................................................................
Ratios to average net assets
Expenses 1.03%+ 1.10%+
................................................................................
Net investment income (0.22%)+ 0.08%+
................................................................................
Portfolio turnover rate 70% 141%
................................................................................
</TABLE>
<TABLE>
<CAPTION>
Year Ended
Six Months Ended September 30, Year Ended October 31,
March 31, 1999 # ------------------- ---------------------------------
(Unaudited) 1998 # 1997 (b) # 1996 1995 1994 1993
...................................................................................................
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS B SHARES
...................................................................................................
Net asset value,
beginning of period $ 9.63 $10.61 $ 8.68 $ 8.05 $ 7.54 $ 9.00 $ 7.60
------ ------ ------ ------ ------ ------ ------
...................................................................................................
Income from investment
operations
...................................................................................................
Net investment income (0.05) (0.03) 0.01 (0.04) (0.02) 0 (0.06)
...................................................................................................
Net realized and
unrealized gains or
losses on securities 2.64 0.39 2.96 1.04 1.13 0.23 1.89
------ ------ ------ ------ ------ ------ ------
...................................................................................................
Total from investment
operations 2.59 0.36 2.97 1.00 1.11 0.23 1.83
------ ------ ------ ------ ------ ------ ------
...................................................................................................
Distributions to
shareholders from
...................................................................................................
Net realized gains (1.34) (1.32) (1.04) (0.36) (0.60) (1.69) (0.40)
------ ------ ------ ------ ------ ------ ------
...................................................................................................
Net investment income 0 (0.02) 0 (0.01) 0 0 (0.03)
...................................................................................................
Total distributions to
shareholders (1.34) (1.34) (1.04) (0.37) (0.60) (1.69) (0.43)
------ ------ ------ ------ ------ ------ ------
...................................................................................................
Net asset value, end of
period $10.88 $ 9.63 $10.61 $ 8.68 $ 8.05 $ 7.54 $ 9.00
------ ------ ------ ------ ------ ------ ------
...................................................................................................
Total return* 29.03% 3.87% 37.74% 12.95% 15.05% 3.55% 24.97%
...................................................................................................
Ratios and supplemental
data
...................................................................................................
Net assets, end of
period (millions) $ 108 $ 130 $ 920 $ 497 $ 492 $ 417 $ 404
...................................................................................................
Ratios to average net
assets
Expenses 1.78%+ 1.36% 1.19%+ 1.91% 2.01% 1.73% 1.83%
...................................................................................................
Net investment income (0.96%)+ (0.26%) 0.12%+ (0.48%) (0.25%) (0.17%) (0.57%)
...................................................................................................
Portfolio turnover rate 70% 141% 71% 156% 140% 68% 65%
...................................................................................................
</TABLE>
(a) For the period from January 22, 1998 (commencement of class operations) to
September 30, 1998.
(b) For the eleven months ended September 30, 1997. The Fund changed its fiscal
year end from October 31 to September 30, effective September 30, 1997.
* Excluding applicable sales charges.
+ Annualized.
# Net investment income is based on average shares outstanding during the
period.
See Combined Notes to Financial Statements.
43
<PAGE>
- --------------------------------------------------------------------------------
E V E R G R E E N
Strategic Growth Fund
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months Ended
March 31, 1999 # Period Ended
(Unaudited) September 30, 1998 (a) #
- --------------------------------------------------------------------------------
<S> <C> <C>
CLASS C SHARES
- --------------------------------------------------------------------------------
Net asset value, beginning of
period $ 9.63 $9.25
------ -----
................................................................................
Income from investment operations
................................................................................
Net investment income (0.05) (0.07)
................................................................................
Net realized and unrealized gains
or losses on securities 2.64 0.45
------ -----
................................................................................
Total from investment operations 2.59 0.38
------ -----
................................................................................
Distributions to shareholders from
................................................................................
Net realized gains (1.34) 0
------ -----
................................................................................
Total distributions to shareholders (1.34) 0
------ -----
................................................................................
Net asset value, end of period $10.88 $9.63
------ -----
................................................................................
Total return* 29.03% 4.11%
................................................................................
Ratios and supplemental data
................................................................................
Net assets, end of period
(millions) $ 2 $ 1
................................................................................
Ratios to average net assets
Expenses 1.78%+ 1.84%+
................................................................................
Net investment income (1.01%)+ (0.80%)+
................................................................................
Portfolio turnover rate 70% 141%
................................................................................
</TABLE>
(a) For the period from January 20, 1998 (commencement of class operations) to
September 30, 1998.
* Excluding applicable sales charges.
+ Annualized.
# Net investment income is based on average shares outstanding during the
period.
See Combined Notes to Financial Statements.
44
<PAGE>
- --------------------------------------------------------------------------------
E V E R G R E E N
Tax Strategic Equity Fund
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months Ended
March 31, 1999 # Period Ended
(Unaudited) September 30, 1998 (a)
................................................................................
<S> <C> <C>
CLASS A SHARES
................................................................................
Net asset value, beginning of period $10.65 $10.11
------ ------
................................................................................
Income from investment operations
................................................................................
Net investment income (0.01) 0
................................................................................
Net realized and unrealized gains or
losses on securities 2.98 0.54
------ ------
................................................................................
Total from investment operations 2.97 0.54
------ ------
................................................................................
Net asset value, end of period $13.62 $10.65
------ ------
................................................................................
Total return* 27.89% 5.34%
................................................................................
Ratios and supplemental data
................................................................................
Net assets, end of period (thousands) $3,963 $ 10
................................................................................
Ratios to average net assets
Expenses 2.83%+ 1.54%+
................................................................................
Net investment income (0.13%)+ 9.12%+
................................................................................
Portfolio turnover rate 4% 0%
................................................................................
</TABLE>
<TABLE>
<CAPTION>
Period Ended
March 31, 1999 (b) #
(Unaudited)
................................................................................
<S> <C>
CLASS B SHARES
................................................................................
Net asset value,
beginning of period $10.41
------
................................................................................
Income from investment
operations
................................................................................
Net investment income (0.06)
................................................................................
Net realized and
unrealized gains or
losses on securities 3.24
------
................................................................................
Total from investment
operations 3.18
------
................................................................................
Net asset value, end of
period $13.59
------
................................................................................
Total return* 30.55%
................................................................................
Ratios and supplemental
data
................................................................................
Net assets, end of
period (thousands) $5,583
................................................................................
Ratios to average net
assets
Expenses 3.58%+
................................................................................
Net investment income (0.84%)+
................................................................................
Portfolio turnover rate 4%
................................................................................
</TABLE>
(a) For the period from September 4, 1998 (commencement of class operations) to
September 30, 1998.
(b) For the period from October 14, 1998 (commencement of class operations) to
March 31, 1999.
* Excluding applicable sales charges.
+ Annualized.
# Net investment income is based on average shares outstanding during the
period.
See Combined Notes to Financial Statements.
45
<PAGE>
- --------------------------------------------------------------------------------
E V E R G R E E N
Tax Strategic Equity Fund
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Period Ended
March 31, 1999 (a) #
(Unaudited)
<S> <C>
................................................................................
CLASS C SHARES
................................................................................
Net asset value,
beginning of period $12.77
------
................................................................................
Income from investment
operations
................................................................................
Net investment income (0.06)
................................................................................
Net realized and
unrealized gains or
losses on securities 0.90
------
................................................................................
Total from investment
operations 0.84
------
................................................................................
Net asset value, end of
period $13.61
------
................................................................................
Total return* 6.58%
................................................................................
Ratios and supplemental
data
................................................................................
Net assets, end of
period (thousands) $1,334
................................................................................
Ratios to average net
assets
Expenses 3.58%+
................................................................................
Net investment income (0.83%)+
................................................................................
Portfolio turnover rate 4%
................................................................................
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended
March 31, 1999 # Period Ended
(Unaudited) September 30, 1998 (b)
................................................................................
<S> <C> <C>
CLASS Y SHARES
................................................................................
Net asset value, beginning of period $10.65 $10.00
------ ------
................................................................................
Income from investment operations
................................................................................
Net investment income 0.01 0
................................................................................
Net realized and unrealized gains or
losses on securities 3.00 0.65
------ ------
................................................................................
Total from investment operations 3.01 0.65
------ ------
................................................................................
Net asset value, end of period $13.66 $10.65
------ ------
................................................................................
Total return 28.26% 6.50%
................................................................................
Ratios and supplemental data
................................................................................
Net assets, end of period (thousands) $5,556 $3,629
................................................................................
Ratios to average net assets
................................................................................
Expenses 2.58%+ 1.30%+
................................................................................
Net investment income 0.11%+ 8.87%+
................................................................................
Portfolio turnover rate 4% 0%
................................................................................
</TABLE>
(a) For the period from November 4, 1998 (commencement of class operations) to
March 31, 1999.
(b) For the period from September 1, 1998 (commencement of class operations) to
September 30, 1998.
* Excluding applicable sales charges.
+ Annualized.
# Net investment income is based on average shares outstanding during the
period.
See Combined Notes to Financial Statements.
46
<PAGE>
- --------------------------------------------------------------------------------
E V E R G R E E N
Aggressive Growth Fund
- --------------------------------------------------------------------------------
Schedule of Investments
March 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCKS - 95.9%
Business Equipment & Services - 6.8%
100,000 Analysts International Corp. ....................... $ 1,150,000
112,500 *Fiserv, Inc. ...................................... 6,032,813
150,000 Paychex, Inc. ...................................... 7,115,625
125,000 *Sterling Commerce, Inc. ........................... 3,843,750
------------
18,142,188
------------
Communication Systems & Services - 12.7%
175,000 *Cisco Systems, Inc. ............................... 19,173,437
170,000 *MCI WorldCom, Inc. ................................ 15,055,625
------------
34,229,062
------------
Consumer Products & Services - 1.3%
115,000 *Action Performance Co., Inc. ...................... 3,464,375
------------
Education - 0.6%
60,000 *Sylvan Learning Systems, Inc. ..................... 1,642,500
------------
Finance & Insurance - 4.0%
90,000 American International Group, Inc. ................. 10,856,250
------------
Healthcare Products & Services - 24.6%
100,000 *Health Management Associates, Inc. Cl. A........... 1,218,750
100,000 *MedQuist, Inc. .................................... 3,000,000
130,000 Medtronic, Inc. .................................... 9,327,500
150,000 *Renal Care Group, Inc. ............................ 2,943,750
500,000 *Rexall Sundown, Inc. .............................. 9,593,750
700,000 *Sunrise Technologies International................. 7,700,000
300,000 *VISX, Inc. ........................................ 32,268,750
------------
66,052,500
------------
Information Services & Technology - 21.4%
125,000 *American Power Conversion Corp. ................... 3,375,000
180,000 *BMC Software, Inc. ................................ 6,671,250
99,000 *Citrix Systems, Inc. .............................. 3,774,375
170,000 *EMC Corp. ......................................... 21,717,500
200,000 *Microsoft Corp. ................................... 17,925,000
129,375 *Network Associates, Inc. .......................... 3,970,195
------------
57,433,320
------------
Oil Field Services - 8.8%
45,000 Diamond Offshore Drilling, Inc. .................... 1,423,125
116,000 ENSCO International, Inc. .......................... 1,544,250
Oil Field Services - continued
150,000 *Global Industries Ltd. ........................... 1,518,750
115,000 *Global Marine, Inc. .............................. 1,351,250
63,000 Halliburton Co. ................................... 2,425,500
140,000 *Marine Drilling Co., Inc. ........................ 1,540,000
70,000 *Noble Drilling Corp. ............................. 1,211,875
180,000 *Patterson Energy, Inc. ........................... 1,001,250
200,000 *Petroleum Geo-Services ADR........................ 3,050,000
150,000 *R&B Falcon Corp. ................................. 1,321,875
48,000 Schlumberger Ltd. ................................. 2,889,000
100,000 Transocean Offshore, Inc. ......................... 2,881,250
55,000 *Weatherford International, Inc. .................. 1,436,875
------------
23,595,000
------------
Retailing & Wholesale - 15.7%
150,000 *Bed Bath & Beyond, Inc. .......................... 5,475,000
160,000 Family Dollar Stores, Inc. ........................ 3,680,000
60,000 Fastenal Co. ...................................... 2,103,750
230,000 Home Depot, Inc. .................................. 14,317,500
360,000 *Office Depot, Inc. ............................... 13,252,500
102,000 *Staples, Inc. .................................... 3,353,250
------------
42,182,000
------------
Total Common Stocks (cost $126,847,527)............ 257,597,195
------------
- --------------------------------------------------------------------------------
Principal
Amount
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 4.2%
Repurchase Agreement - 4.2%
$11,431,000 State Street Bank & Trust Company, Investments in
repurchase agreements, purchased 3/31/1999, 4.00%,
maturing 4/1/1999, maturity value $11,432,270
(cost $11,431,000) (a)............................ $ 11,431,000
------------
Total Investments -(cost $138,278,527)...... 100.1% 269,028,195
Other Assets and Liabilities - net.......... (0.1) (362,505)
----- ------------
Net Assets.................................. 100.0% $268,665,690
===== ============
(a) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices plus accrued interest at
March 31, 1999.
* Non-income producing security.
Summary of Abbreviations:
ADR American Depository Receipts
See Combined Notes to Financial Statements.
47
<PAGE>
- --------------------------------------------------------------------------------
E V E R G R E E N
Evergreen Fund
- --------------------------------------------------------------------------------
Schedule of Investments
March 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCKS - 89.8%
Banks - 15.9%
479,186 1st Source Corp. .................................. $ 14,255,783
90,450 Amcore Financial, Inc. ............................ 1,871,184
100,000 *American Bancshares, Inc. ........................ 875,000
90,075 AmSouth Bancorp.................................... 4,098,412
1,500 Anchor Financial Corp. ............................ 42,000
160,660 Arrow Financial Corp. ............................. 4,377,985
293,100 Associated Banc Corp. ............................. 9,360,881
45,000 Bank of Commerce................................... 905,625
121,495 Bank One Corp. .................................... 6,689,818
613,510 BankAmerica Corp. ................................. 43,329,144
1,080,480 BankBoston Corp. .................................. 46,798,290
179,358 BB&T Corp. ........................................ 6,490,518
242,437 BSB Bancorp, Inc. ................................. 5,905,614
50,000 *Cardinal Financial Corp. ......................... 350,000
110,000 CCB Financial Corp. ............................... 5,946,875
170,000 CCBT Bancorp, Inc. ................................ 2,741,250
36,750 Century Bancshares, Inc. .......................... 220,500
140,018 Chittenden Corp. .................................. 3,727,979
67,500 *Columbia Banking Systems, Inc. ................... 1,012,500
125,500 Comerica, Inc. .................................... 7,835,906
65,000 Compass Bancshares, Inc. .......................... 2,242,500
109,318 Cornerstone Bancorp Inc.**......................... 1,790,082
70,000 Corus Bankshares, Inc. ............................ 2,248,750
14,800 Cullen/Frost Bankers, Inc. ........................ 709,475
62,500 First State Bancorp................................ 1,195,313
31,513 FNB Corp. ......................................... 724,799
60,393 Glacier Bancorp Inc. .............................. 1,170,114
210,000 Gold Banc Corp., Inc. ............................. 3,123,750
889,540 Hibernia Corp. Cl. A............................... 11,675,212
235,042 Hubco, Inc. ....................................... 7,888,597
37,500 Independent Bankshares, Inc. ...................... 398,438
3,029 ING Groep N V, ADR................................. 166,406
51,000 Letchworth Independent Bancshares Corp. ........... 691,688
133,187 M&T Bank Corp. .................................... 63,796,573
22,000 Merchants Bancorp, Inc. ........................... 547,250
169,143 National City Corp. ............................... 11,226,867
150,000 North Fork Bancorp, Inc. .......................... 3,168,750
188,838 Old Kent Financial Corp. .......................... 7,978,405
33,593 One Valley Bancorp of West Virginia, Inc. ......... 1,171,556
39,930 Premier National Bancorp, Inc. .................... 598,950
776,309 Republic Security Financial Corp. ................. 7,180,858
50,000 Seacoast Banking Corp. of Florida Cl. A............ 1,337,500
65,000 Southwest Bancorp Inc. ............................ 1,499,063
136,512 State Financial Services Corp. Cl. A............... 1,638,144
83,975 Summit Bancorp..................................... 3,275,025
67,200 Suntrust Banks, Inc. .............................. 4,183,200
410,000 *Surety Capital Corp.**............................ 691,875
65,650 Union Planters Corp. .............................. 2,884,497
130,399 United Security Bancorp............................ 1,483,289
78,570 Univest Corp. of Pennsylvania...................... 2,474,955
30,000 USBancorp, Inc. ................................... 438,750
14,000 Webster Financial Corp. ........................... 404,250
Banks - continued
58,450 West Coast Bancorp, Inc. ......................... 1,092,284
145,000 Westamerica Bancorp............................... 4,585,625
45,560 Western Bancorp................................... 1,409,513
--------------
323,927,567
--------------
Building, Construction & Furnishings - 5.4%
20,000 American Woodmark Corp. .......................... 632,500
11,200 Carlisle Companies, Inc. ......................... 523,600
136,250 Cavalier Homes, Inc. ............................. 1,311,406
288,100 *Champion Enterprises, Inc. ...................... 5,581,938
527,031 Clayton Homes, Inc. .............................. 5,830,280
220,900 *Crossmann Communities, Inc. ..................... 4,404,194
661,710 D.R. Horton, Inc. ................................ 11,083,642
220,000 *Eagle Hardware & Garden, Inc. ................... 8,401,250
80,000 *Furniture Brands International, Inc. ............ 1,770,000
260,600 *Genlyte Group, Inc. ............................. 4,169,600
50,000 Hon Industries, Inc. ............................. 1,096,875
70,800 Juno Lighting, Inc. .............................. 1,588,575
123,900 *Knoll, Inc. ..................................... 3,051,038
460,200 La-Z-Boy Chair Co. ............................... 8,743,800
351,740 Lennar Corp. ..................................... 7,870,182
235,600 M/I Schottenstein Homes, Inc. .................... 4,181,900
177,500 Miller (Herman), Inc. ............................ 3,239,375
149,575 *Monaco Coach Corp. .............................. 3,449,573
134,300 Oakwood Homes Corp. .............................. 1,888,594
28,250 *Palm Harbor Homes, Inc. ......................... 614,438
64,000 Pillowtex Corp. .................................. 908,000
93,500 *Royal Group Technologies Ltd. ................... 2,308,281
54,472 Southdown, Inc. .................................. 2,924,466
119,000 *Southern Energy Homes, Inc. ..................... 639,625
87,000 Standard Pacific Corp. ........................... 1,120,125
81,200 *Stanley Furniture Co., Inc. ..................... 1,583,400
90,000 *Sundance Homes, Inc. ............................ 56,250
129,400 TJ International, Inc. ........................... 3,121,775
612,200 *Toll Brothers, Inc. ............................. 11,096,125
211,500 *US Home Corp. ................................... 6,900,187
--------------
110,090,994
--------------
Business Equipment &
Services - 0.8%
50,000 *Artesyn Technologies Inc. ....................... 618,750
177,130 First Data Corp. ................................. 7,572,307
160,000 *In Focus Systems, Inc. .......................... 1,400,000
266,697 *Paxar Corp. ..................................... 1,983,559
164,700 *Zebra Technologies Corp. Cl. A................... 3,911,625
--------------
15,486,241
--------------
Chemical & Agricultural Products - 1.4%
62,221 Delta & Pine Land Co. ............................ 1,913,296
150,000 H.B. Fuller Co. .................................. 8,840,625
16,500 OM Group, Inc. ................................... 544,500
359,568 Schulman (A.), Inc. .............................. 4,899,114
361,200 Sigma-Aldrich Corp. .............................. 10,565,100
92,700 Tredegar Industries, Inc. ........................ 2,867,906
--------------
29,630,541
--------------
48
<PAGE>
- --------------------------------------------------------------------------------
E V E R G R E E N
Evergreen Fund
- --------------------------------------------------------------------------------
Schedule of Investments(continued)
March 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS - continued
Communication Systems & Services - 3.3%
45,000 *American Tower Systems Corp. .................... $ 1,102,500
299,250 *Andrew Corp. .................................... 3,684,516
247,500 *Cisco Systems, Inc. ............................. 27,116,719
232,000 Coherent Communications Systems Corp., Inc. ...... 3,190,000
50,000 *DSP Group, Inc. ................................. 734,375
49,800 *Echostar Communications Corp. ................... 4,064,925
76,000 Inter-Tel, Inc. .................................. 1,182,750
50,000 *Loral Space & Communications..................... 721,875
260,000 *Orbital Sciences Corp. .......................... 7,361,250
185,000 *Powertel, Inc. .................................. 2,636,250
126,000 Tellabs, Inc. .................................... 12,316,500
155,000 *Vertex Communications Corp. ..................... 2,470,312
--------------
66,581,972
--------------
Consumer Products & Services - 3.8%
140,000 Aaron Rents, Inc. Cl. B........................... 2,187,500
767,298 *Cendant Corp. ................................... 12,084,944
145,800 Commonwealth Industries, Inc. .................... 1,312,200
149,300 Crown Crafts, Inc. ............................... 746,500
63,300 Gucci Group....................................... 5,095,650
374,150 Harman International Industries, Inc. ............ 13,750,012
201,030 K2, Inc. ......................................... 1,583,111
345,115 Lancaster Colony Corp. ........................... 9,188,687
140,000 *Lo-Jack Corp. ................................... 1,076,250
180,000 *Nautica Enterprises, Inc. ....................... 2,036,250
232,800 Newell Rubbermaid, Inc. .......................... 11,058,000
60,000 Noble Affiliates, Inc. ........................... 1,740,000
252,600 *North Face, Inc. ................................ 3,157,500
100,000 St. John Knits, Inc. ............................. 2,637,500
50,000 *Tommy Hilfiger Corp. ............................ 3,443,750
53,800 Toro Co. ......................................... 1,687,975
129,000 Valspar Corp. .................................... 4,071,563
--------------
76,857,392
--------------
Electrical Equipment & Services - 0.6%
76,500 Applied Power, Inc. Cl. A......................... 2,084,625
388,933 Baldor Electric Co. .............................. 7,827,277
27,000 *Franklin Electric Co., Inc. ..................... 1,755,000
--------------
11,666,902
--------------
Electronic Equipment & Services - 1.3%
96,400 *Dupont Photomasks, Inc. ......................... 3,819,850
50,000 *Electro Scientific Industries, Inc. ............. 2,325,000
130,100 *Hadco Corp. ..................................... 4,098,150
159,600 Harmon Industries, Inc. .......................... 3,201,975
166,000 Jabil Circuit, Inc. .............................. 6,723,000
31,500 *Sanmina Corp. ................................... 2,008,125
226,400 *SMART Modular Technologies, Inc. ................ 3,381,850
50,000 *Vicon Industries, Inc. .......................... 350,000
--------------
25,907,950
--------------
Finance & Insurance - 11.6%
48,528 Aegon N.V. ....................................... 4,361,454
71,228 Allmerica Financial Corp. ........................ 3,921,992
368,800 AMBAC Financial Group, Inc. ...................... 19,915,200
190,000 American Bankers Insurance Group, Inc. ........... 9,880,000
59,552 American International Group, Inc. ............... 7,183,460
57,629 *Concord Pacific Group, Inc. ..................... 25,197
121,900 Countrywide Credit Industries, Inc. .............. 4,571,250
131,600 Dain Rauscher Corp. .............................. 4,474,400
380,000 Edwards (A.G.), Inc. ............................. 12,421,250
68,200 Enhance Financial Services Group, Inc. ........... 1,551,550
70,000 Executive Risk, Inc. ............................. 4,970,000
23,700 *Farm Family Holdings, Inc. ...................... 752,475
507,600 Federal Home Loan Mortgage Corp. ................. 28,996,650
668,000 Federal National Mortgage Assoc. ................. 46,259,000
41,470 Fidelity National Financial, Inc. ................ 622,050
387,000 First American Financial Corp. ................... 6,119,437
65,000 *FPIC Insurance Group, Inc. ...................... 2,697,500
50,000 *Itla Capital Corp. .............................. 725,000
113,100 John Nuveen Co. Cl. A............................. 4,736,062
36,700 Landamerica Financial Group, Inc. ................ 1,064,300
148,266 Legg Mason, Inc. ................................. 4,994,711
93,000 Life USA Holdings, Inc. .......................... 993,938
91,515 MBIA, Inc. ....................................... 5,307,870
75,385 Metris Companies, Inc. ........................... 3,043,669
507,600 MGIC Investment Corp. ............................ 17,797,725
38,200 Mutual Risk Management Ltd. ...................... 1,461,150
15,000 Ohio Casualty Corp. .............................. 585,000
328,400 Paine Webber Group, Inc. ......................... 13,094,950
100,000 Penn-America Group, Inc. ......................... 1,100,000
75,988 Providian Financial Corp. ........................ 8,358,680
49,800 Reinsurance Group Of America...................... 1,686,975
86,000 ReliaStar Financial Corp. ........................ 3,665,750
75,107 Resource Bancshares Mortgage Group, Inc. ......... 967,003
421,410 *Seacoast Financial Services Corp. ............... 4,161,424
65,000 State Auto Financial Corp. ....................... 702,813
89,250 Trenwick Group, Inc. ............................. 2,510,156
39,300 Waddell & Reed Financial, Inc. Cl. A.............. 805,650
--------------
236,485,691
--------------
Food & Beverage Products - 0.1%
16,500 Coca Cola Bottling Co. ........................... 911,625
50,000 Michael Foods, Inc. .............................. 953,125
--------------
1,864,750
--------------
Healthcare Products & Services - 12.3%
22,700 *Abiomed, Inc. ................................... 283,750
300,000 *ADAC Laboratories................................ 4,087,500
35,000 Arrow International, Inc. ........................ 754,688
25,000 *Arthrocare Corp. ................................ 412,500
143,000 Beckman Coulter, Inc. ............................ 6,292,000
</TABLE>
49
<PAGE>
- --------------------------------------------------------------------------------
E V E R G R E E N
Evergreen Fund
- --------------------------------------------------------------------------------
Schedule of Investments(continued)
March 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCKS - continued
Healthcare Products & Services - continued
190,000 Biomet, Inc. ..................................... $ 7,968,125
266,596 *Boston Scientific Corp. ......................... 10,813,800
140,200 *Carematrix Corp. ................................ 2,663,800
146,200 *Chad Therapeutics, Inc. ......................... 328,950
205,300 Columbia/HCA Healthcare Corp. .................... 3,887,869
185,000 *Dura Pharmaceuticals, Inc. ...................... 2,613,125
50,400 Elan Corp Plc, ADR................................ 3,515,400
112,800 *Exactech, Inc. .................................. 1,170,300
87,000 *Express Scripts, Inc. Cl. A...................... 7,476,562
100,000 First Health Group Corp. ......................... 1,606,250
47,666 *Foundation Health Systems, Inc. ................. 580,929
155,862 Health Management Associates, Inc. Cl. A.......... 1,899,568
235,000 *Hologic, Inc. ................................... 2,129,688
265,000 *Idexx Laboratories, Inc. ........................ 6,343,438
30,000 Invacare Corp. ................................... 729,375
390,000 Johnson & Johnson................................. 36,538,125
53,100 *Maxxim Medical, Inc. ............................ 1,002,263
398,600 Mckesson HBOC, Inc. .............................. 26,307,600
1,000,000 Merck & Co., Inc. ................................ 80,187,500
35,000 Meridian Diagnostics, Inc. ....................... 218,750
1,446 *Pacificare Health Systems, Inc. Cl. A............ 87,031
4,545 *Pacificare Health Systems, Inc. Cl. B............ 310,196
209,163 *Pharmeric, Inc. ................................. 1,045,815
100,000 *Somanetics Corp. ................................ 181,250
468,000 Stryker Corp. .................................... 23,604,750
70,000 *Sun Healthcare Group, Inc. ...................... 70,000
72,950 *Tenet Healthcare Corp. .......................... 1,381,491
58,800 *U.S. Physical Therapy, Inc. ..................... 455,700
131,800 VISX, Inc. ....................................... 14,176,737
--------------
251,124,825
--------------
Industrial Specialty Products & Services - 4.7%
242,000 AptarGroup, Inc. ................................. 6,292,000
36,300 BHA Group Holdings, Inc. Cl. A.................... 331,238
40,500 *Chemfab Corp. ................................... 668,250
290,000 *Dionex Corp. .................................... 10,947,500
167,000 Donaldson, Inc. .................................. 3,006,000
122,000 Dover Corp. ...................................... 4,010,750
202,900 Furon Co. ........................................ 2,561,612
481,700 Gaylord Container Corp. Cl. A..................... 3,612,750
105,000 *Input/Output, Inc. .............................. 662,813
324,200 Kaydon Corp. ..................................... 9,381,537
421,600 Leggett & Platt, Inc. ............................ 8,432,000
18,400 Nacco Industries, Inc. Cl. A...................... 1,362,750
59,600 *Osmonics, Inc. .................................. 476,800
233,200 Pall Corp. ....................................... 3,862,375
185,200 Park Electrochemical Corp. ....................... 4,352,200
133,200 Robbins & Myers, Inc. ............................ 2,297,700
241,500 Snap-on, Inc. .................................... 7,003,500
185,000 Spartech Corp. ................................... 3,815,625
147,200 Tecumseh Products Co. Cl. A....................... 7,498,000
Industrial Specialty Products & Services -
continued
57,800 Tecumseh Products Co. Cl. B...................... 2,622,675
256,000 Teleflex, Inc. .................................. 8,720,000
10,250 *United Rental, Inc. ............................ 292,125
50,000 Wescast Industries, Inc. ........................ 1,440,625
104,000 Woodward Governor Co. ........................... 2,600,000
--------------
96,250,825
--------------
Information Services & Technology - 11.3%
100,000 *Advanced Communications Systems, Inc. .......... 1,162,500
172,550 *Analytical Surveys, Inc. ....................... 4,486,300
120,000 Autodesk, Inc. .................................. 4,852,500
125,000 *Axent Technologies, Inc. ....................... 3,007,812
40,000 Compaq Computer Corp. ........................... 1,267,500
75,000 Computer Associates International, Inc. ......... 2,667,188
52,000 Comverse Technology, Inc. ....................... 4,420,000
120,000 *Dialogic Corp. ................................. 3,660,000
222,900 Fair Issac & Co., Inc. .......................... 8,261,231
295,000 *Gateway 2000, Inc. ............................. 20,225,937
387,468 Hewlett-Packard Co. ............................. 26,275,174
150,000 *InfoUSA, Inc. Cl. A............................. 637,500
150,000 *InfoUSA, Inc. Cl. B............................. 675,000
598,000 Intel Corp. ..................................... 71,087,250
100,000 *Macromedia, Inc. ............................... 4,531,250
249,000 *Micros Systems, Inc. ........................... 8,217,000
120,995 Molex, Inc. ..................................... 3,554,228
28,750 *National Instruments Corp. ..................... 819,375
65,000 *Network Associates, Inc. ....................... 1,994,688
430,000 *Parametric Technology Corp. .................... 8,492,500
406,000 Sun Microsystems, Inc. .......................... 50,775,375
--------------
231,070,308
--------------
Leisure & Tourism - 0.0%
100,000 *American Skiing Co. ............................ 418,750
--------------
Oil/Energy - 0.5%
50,000 Atlantic Richfield Co. .......................... 3,650,000
35,000 *Barrett Resources Corp. ........................ 877,187
19,000 Penn Virginia Corp. ............................. 333,688
267,600 *Precision Drilling Corp. ....................... 3,478,800
118,590 Tosco Corp. ..................................... 2,942,514
--------------
11,282,189
--------------
Oil Field Services - 0.3%
140,000 *Global Industries Ltd. ......................... 1,417,500
170,000 *Hvide Marine, Inc. Cl. A........................ 733,125
61,500 Lufkin Industries, Inc. ......................... 1,018,594
34,000 *Oceaneering International, Inc. ................ 514,250
100,000 *Offshore Logistics, Inc. ....................... 1,162,500
118,000 *R&B Falcon Corp. ............................... 1,039,875
30,000 *Stolt Comex Seaway SA ADR....................... 251,250
60,000 *Stolt Comex Seaway, SA.......................... 577,500
--------------
6,714,594
--------------
50
<PAGE>
- --------------------------------------------------------------------------------
E V E R G R E E N
Evergreen Fund
- --------------------------------------------------------------------------------
Schedule of Investments(continued)
March 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCKS - continued
Paper & Packaging - 0.3%
107,000 St. Joe Corp. ................................... $ 2,594,750
186,662 Wausau Mosinee Paper Corp. ...................... 2,613,268
--------------
5,208,018
--------------
Printing, Publishing, Broadcasting &
Entertainment - 8.1%
89,500 Banta Corp. ..................................... 1,700,500
504,000 Belo (A.H.) Corp. Ser. A......................... 9,198,000
97,100 Bowne & Co., Inc. ............................... 1,134,856
152,500 Cadmus Communications Corp. ..................... 2,192,188
45,000 Chancellor Media Corp. .......................... 2,120,625
1,714,000 *Clear Channel Communications, Inc. ............. 114,945,125
205,800 *Jacor Communications, Inc. ..................... 15,640,800
151,250 Obie Media Corp. ................................ 2,438,906
380,000 Wiley (John) & Sons, Inc. Cl. A.................. 15,960,000
--------------
165,331,000
--------------
Real Estate - 1.6%
141,460 *Alexander's, Inc. REIT.......................... 9,583,915
46,200 Apartment Investment & Management Co. Cl. A
REIT............................................ 1,674,750
172,500 *Candlewood Hotel Co., Inc. ..................... 690,000
54,000 Chelsea GCA Realty, Inc. REIT.................... 1,505,250
12,000 Crestline Capital Corp. ......................... 184,500
85,500 Del Webb Corp. .................................. 1,854,281
75,000 Entertainment Properties Trust REIT.............. 1,293,750
19,062 Equity Residential Properties Trust REIT......... 786,307
20,000 Forest City Enterprises, Inc. ................... 483,750
47,400 FRP Properties, Inc. ............................ 1,090,200
73,900 *Grubb & Ellis Co. .............................. 489,588
2,090 *Horizon Group Properties, Inc. REIT............. 9,144
130,440 Host Marriott Corp. ............................. 1,451,145
20,000 Irvine Apartment Communities, Inc. REIT.......... 657,500
32,600 *John Q. Hammons Hotels, Inc. Cl. A.............. 118,175
179,700 Konover Property Trust, Inc. REIT................ 1,066,969
70,000 LNR Property Corp. .............................. 1,382,500
140,000 Lodgian, Inc. ................................... 621,250
130,900 Newhall Land & Farming Co. ...................... 3,125,237
51,783 *Oxford Properties Group Inc. ................... 536,869
441,661 *Prime Hospitality Corp. ........................ 4,389,006
29,850 Prime Retail, Inc. REIT.......................... 261,188
--------------
33,255,274
--------------
Retailing & Wholesale - 3.8%
144,500 Avnet, Inc. ..................................... 5,292,312
90,000 *Borders Group, Inc. ............................ 1,265,625
199,000 *Cole National Corp. Cl. A....................... 3,631,750
160,000 *Costco Companies, Inc. ......................... 14,650,000
32,730 CVS Corp. ....................................... 1,554,675
78,200 Dillards, Inc. .................................. 1,984,325
100,000 Ethan Allen Interiors, Inc. ..................... 4,156,250
Retailing & Wholesale - continued
100,000 *Finish Line, Inc. Cl. A.......................... 1,287,500
50,000 Footstar, Inc. ................................... 1,600,000
132,300 Heilig-Meyers Co. ................................ 686,306
80,000 *Home Products International, Inc. ............... 730,000
181,600 *Jones Apparel Group, Inc. ....................... 5,073,450
262,000 Lowe's Companies, Inc. ........................... 15,851,000
35,000 *Nine West Group, Inc. ........................... 864,063
29,500 *Payless Shoesource, Inc. ........................ 1,371,750
34,000 Rite Aid Corp. ................................... 850,000
322,078 *Saks, Inc. ...................................... 8,374,028
402,000 Seaway Food Town, Inc.**.......................... 5,829,000
35,000 *Shopko Stores, Inc. ............................. 1,045,625
30,000 Tandy Corp. ...................................... 1,914,375
--------------
78,012,034
--------------
Telecommunication Services & Equipment - 0.1%
40,000 *ADC Telecommunications, Inc. .................... 1,907,500
158,000 *Aspect Telecommunications Corp. ................. 1,046,750
--------------
2,954,250
--------------
Thrift Institutions - 0.1%
73,500 *Hawthorne Financial Corp. ....................... 1,102,500
--------------
Transportation - 2.1%
340,800 Comair Holdings, Inc. ............................ 8,051,400
120,000 Delta Air Lines, Inc. ............................ 8,340,000
217,465 *Heartland Express, Inc. ......................... 3,302,750
645,250 Southwest Airlines Co. ........................... 19,518,813
120,000 U.S. Freightways Corp. ........................... 3,945,000
--------------
43,157,963
--------------
Utilities - Gas - 0.3%
140,000 Williams Companies, Inc. ......................... 5,530,000
--------------
Utilities - Telephone - 0.1%
50,000 *Nextel Communications, Inc. ..................... 1,831,250
--------------
Total Common Stocks (cost $900,080,774)........... 1,831,743,780
--------------
CONVERTIBLE PREFERRED - 0.0%
Real Estate - 0.0%
10,000 Prime Retail, Inc.
8.50%, Series B (cost $381,196) ................. 160,000
--------------
WARRANTS - 0.0%
Healthcare Products & Services - 0.0%
8,025 *Coram Healthcare Corp.,
$22.125 expiring 7/11/1999+ (cost $0) ........... 0
--------------
UNIT INVESTMENT TRUST - 0.2%
40,000 S&P 500 Depositary Receipt (Spiders)
(cost $4,696,783) ............................... 5,132,500
--------------
51
<PAGE>
- --------------------------------------------------------------------------------
E V E R G R E E N
Evergreen Fund
- --------------------------------------------------------------------------------
Schedule of Investments(continued)
March 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Principal
Amount Value
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 12.5%
Commercial Paper - 9.7%
$14,200,000 Bank Austria Inc. 4.82%, 4/29/1999................ $ 14,146,766
BMW U.S. Capital Corp.:
35,000,000 4.82%, 4/27/1999.................................. 34,878,161
12,935,000 4.83%, 4/9/1999................................... 12,921,117
40,200,000 Four Winds Funding Corp. 4.86%, 4/30/1999......... 40,042,617
31,450,000 Gannett Co.
4.82%, 4/8/1999.................................. 31,420,524
795,000 Goldman Sachs Group 4.86%, 4/5/1999............... 794,571
25,000,000 Park Avenue Recreation Corp. 4.89%, 4/21/1999..... 24,932,083
13,150,000 Sigma Finance Inc. 4.86%, 4/22/1999............... 13,112,720
25,000,000 Wood Street Funding Corp. 4.88%, 4/23/1999........ 24,925,444
--------------
197,174,003
--------------
U.S. Government Agency Obligations - 2.8%
Federal Home Loan Bank Discount Notes:
$45,700,000 4.72%, 4/16/1999................................. 45,610,123
11,500,000 4.74%, 4/14/1999................................. 11,480,316
--------------
57,090,439
Total Short-Term Investments (cost
$254,264,442)................................... 254,264,442
--------------
Total Investments -
(cost $1,159,423,195).................... 102.5% 2,091,300,722
Other Assets and Liabilities - net........ (2.5) (50,727,366)
----- --------------
Net Assets................................ 100.0% $2,040,573,356
===== ==============
* Non-income producing security.
** Investment in non-controlled affiliate holding over 5% of outstanding voting
shares. At March 31, 1999, the Fund held investments in the following secu-
rities:
<TABLE>
<CAPTION>
Dividends
Security Name Shares Cost Value Earned
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cornerstone Bank 109,318 $1,089,310 $1,790,082 $26,236
Seaway Food Town, Inc. 402,000 1,563,474 5,829,000 36,180
Surety Capital Corp. 410,000 1,559,388 691,875 --
</TABLE>
+ No market quotation available. Valued at fair value as determined in good
faith under procedures established by the Funds' Board of Trustees.
144A Security that may be resold to "qualified institutional buyers" under Rule
144A of the Securities Act of 1933. This security has been determined to
be liquid under guidelines established by the Board of Trustees.
Summary of Abbreviations:
ADR American Depository Receipt
REIT Real Estate Investment Trust
See Combined Notes to Financial Statements.
52
<PAGE>
- --------------------------------------------------------------------------------
E V E R G R E E N
Micro Cap Fund
- --------------------------------------------------------------------------------
Schedule of Investments
March 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCKS - 97.3%
Automotive Equipment & Manufacturing - 1.0%
55,000 *R&B, Inc. ........................................... $ 440,000
-----------
Banks - 11.4%
38,720 BT Financial Corp. ................................... 1,026,080
10,000 CNB Financial Corp. .................................. 171,250
2,500 First Keystone Financial, Inc. ....................... 35,156
40,000 First Oak Brook Bancshares, Inc. Cl. A................ 697,500
2,964 First West Virginia Bancorp, Inc. .................... 67,616
37,519 Independent Bank Corp. ............................... 597,959
14,500 Northern States Financial Corp. ...................... 348,000
7,500 Peoples Bancorp, Inc. ................................ 165,938
47,587 Washington Trust Bancorp, Inc. ....................... 814,927
46,062 West Coast Bancorp, Inc. ............................. 860,784
-----------
4,785,210
-----------
Building, Construction & Furnishings - 17.4%
53,750 Cavalier Homes, Inc. ................................. 517,344
61,000 Craftmade International, Inc. ........................ 915,000
52,000 *Crossmann Communities, Inc. ......................... 1,036,750
60,000 *Genlyte Group, Inc. ................................. 960,000
74,600 *Koala Corp. ......................................... 1,547,950
52,000 *Mity Lite, Inc. ..................................... 793,000
82,540 *Modtech Holdings, Inc. .............................. 742,860
40,000 *Stanley Furniture Co., Inc. ......................... 780,000
-----------
7,292,904
-----------
Business Equipment & Services - 6.2%
62,500 *Equitrac Corp. ...................................... 1,414,063
112,325 General Employment Enterprises, Inc. ................. 540,564
36,300 McGrath Rentcorp...................................... 662,475
-----------
2,617,102
-----------
Chemical & Agricultural Products - 2.9%
66,000 Balchem Corp. ........................................ 379,500
52,100 Chase Corp. .......................................... 540,537
30,000 Hawkins Chemical, Inc. ............................... 292,500
-----------
1,212,537
-----------
Consumer Products & Services - 10.2%
57,500 Advanced Marketing Services, Inc. .................... 747,500
25,000 CPI Corp. ............................................ 559,375
36,000 *Escalade, Inc. ...................................... 627,750
86,500 First Years, Inc. .................................... 1,205,594
72,400 *Fountain Power Boat Industries, Inc. ................ 325,800
40,000 *Maxwell Shoe, Inc. Cl. A............................. 345,000
72,500 *Play By Play Toys & Novelties, Inc. ................. 453,125
-----------
4,264,144
-----------
Electrical Equipment & Services - 2.9%
63,270 *Del Global Technologies Corp. ....................... 545,704
88,900 *Measurement Specialties, Inc. ....................... 666,750
2,800 *OSI Systems, Inc. ................................... 14,525
-----------
1,226,979
-----------
Electronic Equipment & Services - 1.8%
110,000 *Vicon Industries, Inc. ............................. $ 770,000
-----------
Finance & Insurance - 3.7%
63,500 *ACE Cash Express, Inc. ............................. 809,625
16,600 *CorVel Corp. ....................................... 593,450
12,984 Grand Premier Financial, Inc. ....................... 146,881
-----------
1,549,956
-----------
Food & Beverage Products - 0.7%
130,000 *Monterey Pasta Co. ................................. 296,563
-----------
Healthcare Products & Services - 6.1%
58,000 *Alcide Corp. ....................................... 906,250
95,500 *Biosource International, Inc. ...................... 405,875
45,288 Del Laboratories, Inc. .............................. 803,862
45,000 Kewaunee Scientific Corp. ........................... 435,937
-----------
2,551,924
-----------
Industrial Specialty Products & Services - 11.8%
67,500 *AG Services of America, Inc. ....................... 991,406
39,600 Badger Meter, Inc. .................................. 1,215,225
9,000 *Benthos, Inc. ...................................... 57,656
60,000 *General Bearing Corp. .............................. 435,000
6,000 General Magnaplate Corp. ............................ 27,750
70,000 *Meade Instruments Corp. ............................ 743,750
53,250 Met-Pro Corp. ....................................... 585,750
34,500 RPC, Inc. ........................................... 222,094
56,350 World Fuel Services Corp. ........................... 655,069
-----------
4,933,700
-----------
Information Services & Technology - 6.2%
65,000 *Advanced Communications Systems, Inc. .............. 755,625
8,100 *American Science & Engineering, Inc. ............... 57,713
15,000 *Analytical Surveys, Inc. ........................... 390,000
34,500 *Equinox Systems, Inc. .............................. 323,437
60,000 *SBS Technologies, Inc. ............................. 1,080,000
-----------
2,606,775
-----------
Manufacturing - Distributing - 1.0%
54,100 Ballantyne Omaha, Inc. .............................. 405,750
-----------
Printing, Publishing, Broadcasting & Entertainment -
1.2%
29,420 *Clark (Dick) Productions, Inc. ..................... 338,330
11,000 *Obie Media Corp. ................................... 177,375
-----------
515,705
-----------
Retailing & Wholesale - 1.8%
20,600 *Kenneth Cole Productions, Inc. Cl. A................ 543,325
45,000 *Shoe Pavilion, Inc. ................................ 227,813
-----------
771,138
-----------
53
<PAGE>
- --------------------------------------------------------------------------------
E V E R G R E E N
Micro Cap Fund
- --------------------------------------------------------------------------------
Schedule of Investments(continued)
March 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCKS - continued
Telecommunication Services & Equipment - 6.0%
80,000 *Cognitronics Corp. .................................. $ 680,000
98,400 Hickory Tech Corp. ................................... 1,107,000
120,000 *Vari L, Inc. ........................................ 725,625
-----------
2,512,625
-----------
Textile & Apparel - 0.5%
45,000 *Lakeland Industries, Inc. ........................... 202,500
-----------
Thrift Institutions - 4.5%
30,000 Horizon Financial Corp. .............................. 401,250
14,600 Iroquois Bancorp, Inc. ............................... 304,775
38,387 Parkvale Financial Corp. ............................. 810,925
25,000 *WSFS Financial Corp. ................................ 365,625
-----------
1,882,575
-----------
Total Common Stocks (cost $38,435,858)................ 40,838,087
-----------
- --------------------------------------------------------------------------------
Principal
Amount Value
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 3.3%
U.S. Government Agency Obligations - 3.3%
$1,400,000 Federal Home Loan Bank Discount Notes
4.75%, 4/21/1999 (cost $1,396,305)............... $ 1,396,305
-----------
Total Investments -(cost $39,832,163)......... 100.6% 42,234,392
Other Assets and Liabilities - net............ (0.6) (258,989)
----- -----------
Net Assets.................................... 100.0% $41,975,403
===== ===========
* Non-income producing security.
See Combined Notes to Financial Statements.
54
<PAGE>
Schedule of Investments
March 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - 97.0%
Advertising & Related Services - 1.6%
235,000 *Outdoor Systems, Inc. .............................. $ 7,050,000
------------
Banks - 1.4%
85,000 BankAmerica Corp. ................................... 6,003,125
------------
Business Equipment & Services - 1.8%
160,000 Paychex, Inc. (b).................................... 7,595,000
------------
Chemical & Agricultural Products - 3.3%
307,900 Monsanto Co. ........................................ 14,144,156
------------
Communication Systems & Services - 4.1%
98,750 *Cisco Systems, Inc. ................................ 10,822,383
70,000 *Tellabs, Inc. ...................................... 6,842,500
------------
17,664,883
------------
Consumer Products & Services - 0.9%
82,500 Newell Rubbermaid, Inc. (b).......................... 3,918,750
------------
Diversified Companies - 2.2%
135,000 Tyco International Ltd. (b).......................... 9,686,250
------------
Electrical Equipment & Services - 1.8%
70,000 General Electric Co. ................................ 7,743,750
------------
Environmental Services - 1.2%
120,000 Waste Management, Inc. (b)........................... 5,325,000
------------
Finance & Insurance - 11.7%
50,000 American Express Co. ................................ 5,875,000
60,000 American International Group, Inc. .................. 7,237,500
160,000 Associates First Capital Corp. Cl. A ................ 7,200,000
40,000 Capital One Financial Corp. (b)...................... 6,040,000
170,000 Citigroup, Inc. ..................................... 10,858,750
9,000 J.P. Morgan & Co., Inc. (b).......................... 1,110,375
70,000 Lehman Brothers Holdings, Inc. ...................... 4,182,500
50,000 Merrill Lynch & Co., Inc. ........................... 4,421,875
40,000 Morgan Stanley, Dean Witter & Co. ................... 3,997,500
------------
50,923,500
------------
Healthcare Products & Services - 7.2%
121,375 Cardinal Health, Inc. ............................... 8,010,750
230,000 IMS Health, Inc. (b)................................. 7,618,750
91,700 Medtronic, Inc. (b).................................. 6,579,475
262,500 *Osteotech, Inc. (b)................................. 9,039,844
------------
31,248,819
------------
Information Services & Technology - 19.8%
80,000 *America Online, Inc. (b)............................ 11,680,000
47,700 *Applied Materials, Inc. (b)......................... 2,943,984
55,000 *EMC Corp. (b)....................................... 7,026,250
60,000 *Gateway 2000, Inc. (b).............................. 4,113,750
60,000 Hewlett-Packard Co. ................................. 4,068,750
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Information Services & Technology - continued
75,000 Intel Corp. (b)..................................... $ 8,915,625
30,000 International Business Machines Corp. .............. 5,317,500
160,000 *Microchip Technology, Inc. (b)..................... 5,530,000
126,000 *Microsoft Corp. ................................... 11,288,812
150,000 *Safeguard Scientifics, Inc. (b).................... 10,171,875
38,300 *Sun Microsystems, Inc. (b)......................... 4,788,697
75,000 *Teradyne, Inc. .................................... 4,092,188
75,000 *Veritas Software Corp. (b)......................... 6,046,875
------------
85,984,306
------------
Oil/Energy - 1.6%
185,000 Anadarko Petroleum Corp. ........................... 6,983,750
------------
Oil Field Services - 2.0%
95,000 *BJ Services Co., Inc. (b).......................... 2,226,562
169,900 ENSCO International, Inc. .......................... 2,261,794
56,000 Halliburton Co. (b)................................. 2,156,000
80,000 *Weatherford International, Inc. (b)................ 2,090,000
------------
8,734,356
------------
Pharmaceuticals - 13.4%
100,000 American Home Products Corp. ....................... 6,525,000
195,000 *Forest Laboratories, Inc. ......................... 10,993,125
110,000 *Millennium Pharmaceuticals, Inc. .................. 3,420,313
200,000 Mylan Laboratories, Inc. (b)........................ 5,487,500
90,200 Pfizer, Inc. ....................................... 12,515,250
100,000 Pharmacia & Upjohn, Inc. ........................... 6,237,500
135,000 Schering-Plough Corp. (b)........................... 7,467,187
80,000 Warner-Lambert Co. (b).............................. 5,295,000
------------
57,940,875
------------
Printing, Publishing, Broadcasting & Entertainment -
10.5%
110,000 *CBS Corp. (b)...................................... 4,503,125
100,000 *Clear Channel Communications, Inc. ................ 6,706,250
180,000 *Infinity Broadcasting Corp. ....................... 4,635,000
160,000 Meredith Corp. ..................................... 5,030,000
140,000 Time Warner, Inc. (b)............................... 9,948,750
150,000 *Univision Communications, Inc. Cl. A (b)........... 7,500,000
85,000 *Viacom, Inc. Cl. B (b)............................. 7,134,687
------------
45,457,812
------------
Retailing & Wholesale - 7.9%
115,000 *Kohl's Corp. ...................................... 8,150,625
243,750 *Staples, Inc. ..................................... 8,013,281
140,000 Tandy Corp. (b)..................................... 8,933,750
106,000 *Tweeter Home Entertainment Group, Inc. ............ 3,385,375
65,000 Wal-Mart Stores, Inc. .............................. 5,992,188
------------
34,475,219
------------
Telecommunication Services & Equipment - 3.1%
95,000 *ADC Telecommunications, Inc. (b)................... 4,530,313
250,000 *Antec Corp. (b).................................... 5,421,875
</TABLE>
55
<PAGE>
- --------------------------------------------------------------------------------
E V E R G R E E N
Omega Fund
- --------------------------------------------------------------------------------
Schedule of Investments(continued)
March 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCKS - continued
Telecommunication Services & Equipment - continued
100,000 *Winstar Communications, Inc. (b).................... $ 3,634,375
------------
13,586,563
------------
Transportation - 1.5%
175,000 CNF Transportation, Inc. ............................ 6,617,188
------------
Total Common Stocks (cost $311,362,250).............. 421,083,302
------------
- --------------------------------------------------------------------------------
Principal
Amount Value
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 24.0%
Money Market Shares - 21.7%
$94,436,845 Navigator Prime Portfolio (c)...................... $ 94,436,845
------------
Repurchase Agreement - 2.3%
9,830,000 Evergreen Joint Repurchase Agreement, Investments
in repurchase agreements, in a joint trading
account purchased 3/31/1999, 5.00%, maturing
4/1/1999, maturity value $9,831,365 (cost
$9,830,000) (a)................................... 9,830,000
------------
Total Short-Term Investments (cost $104,266,845)... 104,266,845
------------
Total Investments -(cost $415,629,095)...... 121.0% 525,350,147
Other Assets and Liabilities - net.......... (21.0) (91,294,605)
----- ------------
Net Assets.................................. 100.0% $434,055,542
===== ============
(a) The repurchase agreement is fully collateralized by U.S. government
and/or agency obligations based on market prices plus accrued interest
at March 31, 1999.
(b) All or a portion of this security is on loan (See Note 8).
(c) Represents investment in cash collateral received for securities on
loan.
* Non-income producing security.
See Combined Notes to Financial Statements.
56
<PAGE>
- --------------------------------------------------------------------------------
E V E R G R E E N
Small Company Growth Fund
- --------------------------------------------------------------------------------
Schedule of Investments
March 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS - 98.8%
Advertising & Related Services - 2.4%
230,000 *ADVO, Inc. ........................... $ 4,441,875
74,000 *Lamar Advertising Co. ................ 2,513,687
395,200 *Outdoor Systems, Inc. ................ 11,856,000
------------
18,811,562
------------
Aerospace & Defense - 0.7%
132,900 *Gulfstream Aerospace Corp. ........... 5,764,538
------------
Automotive Equipment & Manufacturing -
1.3%
184,100 *Dura Automotive Systems, Inc. (b)..... 5,200,825
66,200 *Gentex Corp. ......................... 1,427,437
203,720 *Tower Automotive, Inc. (b)............ 3,794,285
------------
10,422,547
------------
Banks - 6.0%
314,337 *Astoria Financial Corp. .............. 15,697,204
318,240 BostonFed Bancorp, Inc. ............... 5,728,320
135,000 Charter One Financial, Inc. ........... 3,906,563
133,300 First Tennessee National Corp. (b)..... 4,894,609
477,620 *North Fork Bancorp, Inc. ............. 10,089,722
94,593 Queens County Bancorp, Inc. ........... 2,539,231
93,660 *TCF Financial Corp. .................. 2,435,160
54,938 *Westamerica Bancorp .................. 1,740,848
------------
47,031,657
------------
Building, Construction & Furnishings -
1.9%
26,100 Carlisle Companies, Inc. .............. 1,220,175
103,600 Furniture Brands International, Inc. .. 2,292,150
100,000 Martin Marietta Materials, Inc. (b).... 5,706,250
155,800 Texas Industries, Inc. (b)............. 3,865,788
81,700 *Wackenhut Corrections Corp. (b)....... 1,577,831
------------
14,662,194
------------
Business Equipment & Services - 5.4%
100,000 *Abacus Direct Corp. .................. 8,200,000
122,855 *BISYS Group, Inc. (b)(c).............. 6,925,951
287,540 *Comdisco, Inc. ....................... 5,139,777
78,700 *Consolidated Graphics, Inc. .......... 4,544,925
120,000 *Convergys Corp. (b)................... 2,055,000
74,000 *CSG System International, Inc. ....... 2,925,313
341,400 *GTS Duratek, Inc. .................... 1,733,672
244,600 *Metzler Group, Inc. (b)............... 7,659,037
88,300 *Superior Consultant, Inc. (b)......... 3,024,275
------------
42,207,950
------------
Communication Systems & Services - 2.1%
200,000 *Capstar Broadcasting Corp. ........... 4,587,500
258,500 *Conexant Systems, Inc. ............... 7,149,141
30,500 *Exodus Communications, Inc. (b)....... 4,092,719
15,000 Western Wireless Corp. ................ 543,281
------------
16,372,641
------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS - continued
Consumer Products & Services - 2.0%
100,000 *Action Performance Co., Inc. (b)...... $ 3,000,000
124,000 *Russ Berrie & Co., Inc. .............. 3,239,500
172,500 *Scotts Co. Cl. A...................... 6,447,188
122,900 Universal Corp. ....................... 3,141,631
------------
15,828,319
------------
Diversified Companies - 0.3%
103,500 Ogden Corp. ........................... 2,490,469
------------
Education - 5.4%
149,100 *Bright Horizons Family
Solutions, Inc. ...................... 3,261,563
400,000 *CBT Group Public Ltd. ................ 4,587,500
354,200 *Computer Learning Centers, Inc. ...... 1,848,481
692,268 *Devry, Inc. .......................... 20,075,772
74,200 *Education Management Corp. ........... 2,279,331
223,800 *ITT Educational Services, Inc. ....... 8,406,487
50,000 Strayer Education, Inc. ............... 1,853,125
------------
42,312,259
------------
Electrical Equipment & Services - 13.0%
100,000 *Applied Micro Circuits Corp. ......... 4,268,750
361,200 *Atmel Corp. (b)....................... 5,474,438
256,180 *DII Group, Inc. ...................... 7,509,276
125,400 *Lattice Semiconductor Corp. .......... 5,713,537
103,578 *Maxim Integrated Products, Inc. ...... 5,606,159
200,000 *Microchip Technology, Inc. (b)........ 6,912,500
156,900 *Novellus Systems, Inc. ............... 8,639,306
140,000 *PMC-Sierra, Inc. ..................... 9,961,875
142,100 *QLogic Corp. ......................... 9,551,784
192,900 *Sandisk Corp. (b)..................... 5,093,766
413,514 *Sipex Corp. .......................... 5,362,760
172,400 *Uniphase Corp. (b).................... 19,815,225
101,200 *Vitesse Semiconductor Corp. .......... 5,120,088
79,800 *Xilinx, Inc. ......................... 3,234,394
------------
102,263,858
------------
Finance & Insurance - 4.0%
167,300 American Bankers Insurance Group, Inc.
(b)................................... 8,699,600
100,000 Arthur J. Gallagher & Co. ............. 4,600,000
360,000 Federated Investors, Inc. Cl. B ....... 6,547,500
100,000 Horace Mann Educators Corp. (b)........ 2,318,750
53,100 *Jefferies Group, Inc. ................ 2,518,931
58,200 *Penn-America Group, Inc. ............. 640,200
150,000 Reinsurance Group America, Inc. (b).... 6,384,375
------------
31,709,356
------------
Food & Beverage Products - 0.3%
248,000 *Buffets, Inc. ........................ 2,464,500
------------
Healthcare Products & Services - 6.6%
93,300 *Alkermes, Inc. (b).................... 2,524,931
300,000 *Apria Healthcare Group, Inc. (b)...... 3,562,500
</TABLE>
57
<PAGE>
- --------------------------------------------------------------------------------
E V E R G R E E N
Small Company Growth Fund
- --------------------------------------------------------------------------------
Schedule of Investments (continued)
March 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS - continued
Healthcare Products &
Services - continued
56,600 *Biogen, Inc. .......................... $ 6,468,319
306,000 *Cyberonics, Inc. (b)................... 2,945,250
66,500 *Express Scripts, Inc. Cl. A ........... 5,716,922
107,085 Idexx Laboratories, Inc. ............... 2,573,386
132,500 Mylan Laboratories, Inc. (b)............ 3,635,469
60,600 *Pathogensis Corp. (b).................. 808,631
260,720 *Pediatrix Medical Group, Inc. (b)...... 7,332,750
106,000 *Renal Care Group, Inc. ................ 2,076,938
150,000 *Steris Corp. (b)....................... 3,993,750
230,600 *Sunrise Assisted Living, Inc. (b)...... 10,485,094
------------
52,123,940
------------
Industrial Specialty Products &
Services - 3.7%
150,000 *Cognex Corp. (b)....................... 3,534,375
159,500 *Kaydon Corp. .......................... 4,615,531
879,800 Roper Industries, Inc. (b).............. 21,005,225
------------
29,155,131
------------
Information Services & Technology -
15.3%
345,100 *Acxiom Corp. (b)....................... 9,188,287
56,500 BMC Software, Inc. ..................... 2,095,797
81,000 *Broadvision, Inc. (b).................. 4,847,344
77,600 *Citrix Systems, Inc. .................. 2,953,650
41,000 *Comverse Technology, Inc. ............. 3,482,437
56,600 *Electronics for Imaging, Inc. ......... 2,228,625
100,000 *Entrust Technologies, Inc. (b)......... 3,371,875
50,000 *Forrester Research, Inc. .............. 1,507,813
168,500 *Learning Co., Inc. .................... 4,886,500
258,200 *Mapics, Inc. .......................... 1,984,913
132,300 *Mastech Corp. ......................... 1,711,631
275,000 *Maximus, Inc. ......................... 8,009,375
274,100 *Maxtor Corp. .......................... 1,948,680
98,400 *Network Appliance, Inc. ............... 4,987,650
143,800 *Pegrine Systems, Inc. ................. 4,817,300
581,500 *Radiant Systems, Inc. ................. 5,506,078
193,100 *Rational Software Corp. ............... 5,129,219
515,816 *Safeguard Scientifics, Inc. (b)........ 34,978,772
65,300 *Sapient Corp. (b)...................... 4,689,356
326,300 *Silicon Graphics, Inc. (b)............. 5,445,131
47,800 *Unisys Corp. .......................... 1,323,463
294,896 *Wind River Systems, Inc. (b)........... 5,243,611
------------
120,337,507
------------
Leisure & Tourism - 1.8%
100,000 Circus Circus Enterprises, Inc. ........ 1,756,250
234,500 *Gametech International, Inc. .......... 560,602
75,000 *Global Vacation Group, Inc. ........... 890,625
200,000 *Mirage Resorts, Inc. (b)............... 4,250,000
208,000 *Steiner Leisure Ltd. .................. 6,363,500
------------
13,820,977
------------
Machinery - Diversified - 0.2%
78,600 *Rental Service Corp. .................. 1,375,500
------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------
Shares Value
- -------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS - continued
Manufacturing - Distributing - 1.1%
160,200 *Teradyne, Inc. ....................... $ 8,740,912
------------
Oil/Energy - 0.8%
84,400 *Nuevo Energy Co. ..................... 1,139,400
131,100 *Ocean Energy, Inc. ................... 893,119
179,000 *Santa Fe Energy Resources, Inc. (b)... 1,308,937
203,900 *Seven Seas Petroleum, Inc. (b)........ 1,019,500
30,600 *Stone Energy Corp. (b)................ 979,200
141,800 Vintage Petroleum, Inc. ............... 1,276,200
------------
6,616,356
------------
Oil Field Services - 0.9%
42,300 *Core Laboratories N.V. (b)............ 742,894
207,500 Diamond Offshore Drilling, Inc. (b).... 6,562,187
------------
7,305,081
------------
Paper & Packaging - 1.2%
500,000 *Smurfit Container Corp. .............. 9,640,625
------------
Pharmaceuticals - 0.5%
139,500 *Millennium Pharmaceuticals, Inc. ..... 4,337,578
------------
Printing, Publishing,
Broadcasting &
Entertainment - 3.0%
273,000 *Big Flower Holdings, Inc. (b)......... 8,497,125
298,200 *Harrahs Entertainment, Inc. (b)....... 5,684,437
53,200 Jacor Communications, Inc. (b)......... 4,041,538
100,000 *Valassis Communications, Inc. ........ 5,175,000
------------
23,398,100
------------
Real Estate - 0.3%
200,000 *Catellus Development Corp. ........... 2,675,000
490 *Crestline Capital Corp. .............. 7,534
------------
2,682,534
------------
Retailing & Wholesale - 6.9%
79,200 *Abercrombie & Fitch Co. (b)........... 7,286,400
133,800 *Ann Taylor Stores Corp. (b)........... 5,912,287
67,400 *Best Buy Co., Inc. ................... 3,504,800
92,300 *Cutter & Buck, Inc. .................. 2,959,369
41,100 *Duane Reade, Inc. (b)................. 1,145,663
100,000 Ethan Allen Interiors, Inc. ........... 4,156,250
300,000 *Gadzooks, Inc. (b).................... 2,221,875
130,900 *Goody's Family Clothing, Inc. (b)..... 1,828,509
224,500 *Jones Apparel Group, Inc. ............ 6,271,969
317,900 *Nine West Group, Inc. ................ 7,848,156
59,600 *REX Stores Corp. ..................... 689,125
400,000 *Stage Stores, Inc. (b)................ 2,900,000
100,000 Talbots Inc. .......................... 2,437,500
200,000 *Williams Sonoma, Inc. ................ 5,650,000
------------
54,811,903
------------
Telecommunication Services &
Equipment - 6.1%
45,700 *Advanced Fibre Communications......... 437,720
205,000 *Amdocs Ltd. .......................... 4,433,125
52,000 *Global TeleSystems Group, Inc. (b).... 2,907,125
</TABLE>
58
<PAGE>
- -------------------------------------------------------------------------------
E V E R G R E E N
Small Company Growth Fund
- -------------------------------------------------------------------------------
Schedule of Investments(continued)
March 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS - continued
Telecommunication Services &
Equipment - continued
422,500 Intermedia Communications, Inc. (b).... $ 11,301,875
800,000 *Premiere Technologies, Inc. (b)....... 9,050,000
403,100 Univision Communications, Inc. Cl. A .. 20,155,000
------------
48,284,845
------------
Transportation - 1.9%
150,000 *Atlantic Coast Airlines Holdings...... 4,228,125
141,900 *Covenant Transport, Inc. Cl. A ....... 2,084,156
203,200 *Eagle USA Airfreight, Inc. (b)........ 6,578,600
50,000 *United States Xpress
Enterprises, Inc. .................... 585,938
80,000 Werner Enterprises, Inc. .............. 1,265,000
------------
14,741,819
------------
Utilities - Telephone - 3.7%
312,100 *McLeod USA, Inc., Cl. A (b)........... 13,117,953
50,000 *Rural Celluar Corp. Cl. A ............ 662,500
345,000 *United States Cellular Corp. (b)...... 15,180,000
------------
28,960,453
------------
Total Common Stocks
(cost $630,498,795)................... 778,675,111
------------
WARRANTS - 0.0%
Leisure & Tourism - 0.0%
49,395 *Isle Capri Casinos, Inc. expiring
6/26/2001+ (cost $284,412) ........... 494
------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal
Amount Value
- --------------------------------------------------------------------------------
<C> <S> <C>
SHORT-TERM INVESTMENTS - 30.6%
Money Market Shares - 29.2%
$230,113,043 Navigator Prime Portfolio (d)................. $230,113,043
------------
Repurchase Agreement - 1.4%
11,243,000 Evergreen Joint Repurchase Agreement,
Investments in repurchase agreements, in a
joint trading account, purchased 3/31/1999,
5.00%, maturing 4/1/1999, maturity
value $11,244,562. (cost $11,243,000) (a).... 11,243,000
------------
Total Short-Term Investments
(cost $244,356,043).......................... $241,356,043
------------
</TABLE>
<TABLE>
<C> <S> <C> <C>
Total Investments -(cost $872,139,250)... 129.4% 1,020,031,648
Other Assets and Liabilities - net....... (29.4) (231,512,983)
----- --------------
Net Assets............................... 100.0% $ 788,518,665
===== ==============
</TABLE>
(a) The repurchase agreement is fully collateralized by U.S. government
and/or agency obligations based on market prices plus accrued inter-
est at March 31, 1999.
(b) All or a portion of this security is on loan (See Note 8).
(c) At March 31, 1999, the Fund owned 122,855 shares of common stock of
The BISYS Group, Inc. at a cost of $3,085,538. During the six months
ended March 31, 1999 the Fund earned no dividend income from this in-
vestment. 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.
(d) Represents investment of cash collateral received for securities on loan.
* Non-income producing security.
+ No market quotation available. Valued at fair value as determined in
good faith under procedures established by the Funds' Board of Trust-
ees.
See Combined Notes to Financial Statements.
59
<PAGE>
- --------------------------------------------------------------------------------
E V E R G R E E N
Stock Selector Fund
- --------------------------------------------------------------------------------
Schedule of Investments
March 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS - 96.7%
Banks - 5.3%
139,900 BankAmerica Corp. ............................... $ 9,880,437
64,300 BankBoston Corp. ................................ 2,784,994
50,000 Chase Manhattan Corp. ........................... 4,065,625
82,500 Mellon Bank Corp. ............................... 5,805,938
------------
22,536,994
------------
Building, Construction & Furnishings - 0.7%
179,000 Clayton Homes, Inc. ............................. 1,980,187
35,700 Lennar Corp. .................................... 798,788
------------
2,778,975
------------
Business Equipment & Services - 1.2%
120,500 *Seagate Technology.............................. 3,562,282
114,900 *Thermo Electron Corp. .......................... 1,558,331
------------
5,120,613
------------
Chemical & Agricultural Products - 1.8%
73,600 IMC Global, Inc. ................................ 1,504,200
44,200 Monsanto Co. .................................... 2,030,438
17,000 Potash Corp. of Saskatchewan, Inc. .............. 909,500
92,900 Praxair, Inc. ................................... 3,350,206
------------
7,794,344
------------
Communication Systems & Services - 7.7%
115,600 Lucent Technologies, Inc. ....................... 12,455,900
230,000 *MCI WorldCom, Inc. ............................. 20,369,375
------------
32,825,275
------------
Consumer Products & Services - 1.9%
502,300 Cendant Corp. ................................... 7,911,225
------------
Diversified Companies - 1.5%
71,500 AlliedSignal, Inc. .............................. 3,516,906
42,200 Tyco International Ltd. ......................... 3,027,850
------------
6,544,756
------------
Electrical Equipment & Services - 3.1%
120,700 General Electric Co. ............................ 13,352,438
------------
Electronic Equipment & Services - 2.3%
100,800 Texas Instruments, Inc. ......................... 10,004,400
------------
Environmental Services - 0.9%
87,000 Waste Management, Inc. .......................... 3,860,625
------------
Finance & Insurance - 11.6%
210,000 Allstate Corp. .................................. 7,783,125
26,000 American Express Co. ............................ 3,055,000
45,300 American International Group, Inc. .............. 5,464,313
126,600 Citigroup, Inc. ................................. 8,086,575
381,500 Conseco, Inc. ................................... 11,778,812
274,700 Everest Reinsurance Holdings, Inc. .............. 8,567,206
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS - continued
Finance & Insurance - continued
44,000 Lehman Brothers Holdings, Inc. .................. $ 2,629,000
46,800 Nationwide Financial Services, Inc. Cl. A........ 1,965,600
------------
49,329,631
------------
Food & Beverage Products - 6.3%
6,000 Anheuser Busch Companies, Inc. .................. 456,185
98,900 *Canandaigua Wine Co., Inc. ..................... 4,982,087
293,850 Chiquita Brands International, Inc. ............. 2,993,597
106,500 Food Lion, Inc. ................................. 958,500
223,300 Nabisco Holdings Corp. Cl. A..................... 9,280,906
46,500 *Pepsi Bottling Group, Inc. ..................... 1,008,469
55,000 Pepsico, Inc. ................................... 2,155,313
196,600 RJR Nabisco Holdings Corp. ...................... 4,915,000
------------
26,750,057
------------
Healthcare Products & Services - 6.5%
49,400 American Home Products Corp. .................... 3,223,350
43,200 Bristol-Myers Squibb Co. ........................ 2,778,300
15,017 Mckesson HBOC, Inc. ............................. 991,122
393,800 *MedPartners, Inc. .............................. 1,870,550
337,500 Mylan Laboratories, Inc. ........................ 9,260,156
29,000 Pfizer, Inc. .................................... 4,023,750
65,000 Warner-Lambert Co. .............................. 4,302,187
29,550 *Watson Pharmaceuticals, Inc. ................... 1,303,894
------------
27,753,309
------------
Industrial Specialty Products & Services - 3.7%
115,700 Magna International, Inc. Cl. A.................. 6,638,288
298,900 *United States Filter Corp. ..................... 9,153,812
------------
15,792,100
------------
Information Services & Technology - 13.3%
136,500 *America Online, Inc. ........................... 19,929,000
260,200 *Apple Computer.................................. 9,350,937
205,000 Compaq Computer Corp. ........................... 6,495,938
233,000 *Microsoft Corp. ................................ 20,882,625
------------
56,658,500
------------
Metal Products & Services - 0.8%
91,270 Crown Cork & Seal Co., Inc. ..................... 2,606,899
81,800 Freeport McMoran Copper & Gold, Inc., Cl. B...... 889,575
------------
3,496,474
------------
Oil/Energy - 4.6%
51,500 Apache Corp. .................................... 1,342,219
101,800 Midamerica Energy Holdings Co. .................. 2,850,400
95,100 Mobil Corp. ..................................... 8,368,800
55,500 Sunoco, Inc. .................................... 2,001,469
176,100 USX Marathon Group............................... 4,842,750
------------
19,405,638
------------
</TABLE>
60
<PAGE>
- --------------------------------------------------------------------------------
E V E R G R E E N
Stock Selector Fund
- --------------------------------------------------------------------------------
Schedule of Investments(continued)
March 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS - continued
Oil Field Services - 1.9%
60,241 BP Amoco Plc.................................... $ 6,080,576
74,600 *R&B Falcon Corp. .............................. 657,412
48,000 Tidewater, Inc. ................................ 1,242,000
------------
7,979,988
------------
Pharmaceuticals - 0.8%
55,100 *Human Genome Sciences, Inc. ................... 1,911,281
64,800 *ICN Pharmaceuticals, Inc. ..................... 1,632,150
------------
3,543,431
------------
Printing, Publishing, Broadcasting &
Entertainment - 3.7%
52,600 *Emmis Broadcasting Corp. Cl. A................. 2,630,000
117,700 *Fox Entertainment Group, Inc. ................. 3,192,613
18,500 *Gemstar International Group Ltd. .............. 1,392,125
87,000 *Infinity Broadcasting Corp. ................... 2,240,250
175,000 *USA Networks, Inc. ............................ 6,267,187
------------
15,722,175
------------
Retailing & Wholesale - 8.1%
59,300 *Abercrombie & Fitch Co. ....................... 5,455,600
76,600 Dayton Hudson Corp. ............................ 5,103,475
172,000 *Fred Meyer, Inc. .............................. 10,126,500
222,400 *General Nutrition Companies, Inc. ............. 3,113,600
110,600 Lowe's Companies, Inc. ......................... 6,691,300
154,840 *Saks, Inc. .................................... 4,025,840
------------
34,516,315
------------
Telecommunication Services & Equipment - 3.5%
186,080 *MediaOne Group, Inc. .......................... 11,816,080
176,200 *Metromedia International Group, Inc. .......... 858,975
31,800 *Qwest Communications International, Inc. ...... 2,292,581
------------
14,967,636
------------
Transportation - 1.0%
26,900 Burlington Northern Santa Fe Corp. ............. 884,338
18,700 *Canadian National Railway Co. ................. 1,040,187
27,100 CNF Transportation, Inc. ....................... 1,024,719
17,300 Delta Air Lines, Inc. .......................... 1,202,350
------------
4,151,594
------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS - continued
Utilities - Electric - 1.9%
167,800 *AES Corp. ..................................... $ 6,250,550
33,600 FPL Group, Inc. ................................ 1,789,200
------------
8,039,750
------------
Utilities - Telephone - 2.6%
143,000 GTE Corp. ...................................... 8,651,500
36,900 *McLeod USA, Inc., Cl. A........................ 1,549,800
110,000 *Star Telecommunications, Inc................... 1,058,750
------------
11,260,050
------------
Total Common Stocks (cost $302,626,459)......... 412,096,293
------------
PREFERRED STOCKS - 1.7%
Printing, Publishing, Broadcasting &
Entertainment - 1.7%
266,500 News Corp. Ltd.
(cost $5,580,787).............................. 7,328,750
------------
<CAPTION>
- --------------------------------------------------------------------------------
Principal
Amount
- --------------------------------------------------------------------------------
<C> <S> <C>
SHORT-TERM INVESTMENTS - 2.1%
Repurchase Agreement - 2.1%
$8,728,573 Dresdner Bank AG
4.85%, purchased 3/31/1999, maturing 4/1/1999,
maturity value $8,729,749
(cost $8,728,573) (a).......................... 8,728,573
------------
</TABLE>
<TABLE>
<C> <S> <C> <C>
Total Investments -
(cost $316,935,819)......................... 100.5% 428,153,616
Other Assets and Liabilities - net........... (0.5) (2,181,895)
----- ------------
Net Assets................................... 100.0% $425,971,721
===== ============
</TABLE>
(a) At March 31, 1999, the repurchase agreement was collateralized by:
$8,770,000 U.S. Treasury Notes 5.87%, 2/15/2000; value including ac-
crued interest -$8,906,644.
* Non-income producing security.
See Combined Notes to Financial Statements.
61
<PAGE>
- --------------------------------------------------------------------------------
E V E R G R E E N
Strategic Growth Fund
- --------------------------------------------------------------------------------
Schedule of Investments
March 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS - 99.1%
Automotive Equipment & Manufacturing - 1.0%
170,000 Ford Motor Co. .................................... $ 9,647,500
--------------
Banks - 2.4%
190,000 BankAmerica Corp. ................................. 13,418,750
310,000 US Bancorp......................................... 10,559,375
--------------
23,978,125
--------------
Business Equipment &
Services - 1.4%
310,000 Paychex, Inc. (b).................................. 14,715,313
--------------
Chemical & Agricultural
Products - 3.4%
747,600 Monsanto Co. ...................................... 34,342,875
--------------
Communication Systems & Services - 6.2%
277,500 *Cisco Systems, Inc. .............................. 30,412,266
150,000 *MCI WorldCom, Inc. ............................... 13,279,687
200,000 *Tellabs, Inc. .................................... 19,550,000
--------------
63,241,953
--------------
Consumer Products &
Services - 1.6%
135,000 Gillette Co. ...................................... 8,024,063
172,500 Newell Rubbermaid, Inc. (b)........................ 8,193,750
--------------
16,217,813
--------------
Diversified Companies - 1.8%
256,600 Tyco International Ltd. ........................... 18,411,050
--------------
Electrical Equipment &
Services - 3.8%
345,000 General Electric Co. .............................. 38,165,625
--------------
Finance & Insurance - 11.9%
200,000 American Express Co. .............................. 23,500,000
157,500 American International Group, Inc. ................ 18,998,437
310,000 Associates First Capital Corp. Cl. A............... 13,950,000
365,000 Citigroup, Inc. ................................... 23,314,375
180,000 Federal Home Loan Mortgage Corp. .................. 10,282,500
165,000 Lehman Brothers Holdings, Inc. .................... 9,858,750
125,000 Merrill Lynch & Co., Inc. ......................... 11,054,688
100,000 Morgan Stanley, Dean Witter & Co. ................. 9,993,750
--------------
120,952,500
--------------
Food & Beverage Products - 2.5%
190,000 Coca Cola Co. ..................................... 11,661,250
225,000 *Pepsi Bottling Group, Inc. ....................... 4,879,687
230,000 Pepsico, Inc. ..................................... 9,013,125
--------------
25,554,062
--------------
Healthcare Products &
Services - 5.0%
249,300 Cardinal Health, Inc. ............................. 16,453,800
500,000 IMS Health, Inc. (b)............................... 16,562,500
248,300 Medtronic, Inc. ................................... 17,815,525
--------------
50,831,825
--------------
Information Services &
Technology - 18.4%
160,000 *America Online, Inc. (b)......................... 23,360,000
113,300 *Applied Materials, Inc. ......................... 6,992,734
145,600 *EMC Corp. ....................................... 18,600,400
155,000 *Gateway 2000, Inc. (b)........................... 10,627,187
135,000 Hewlett-Packard Co. .............................. 9,154,688
230,000 Intel Corp. ...................................... 27,341,250
100,000 International Business Machines Corp. ............ 17,725,000
380,000 *Microchip Technology, Inc. ...................... 13,133,750
430,000 *Microsoft Corp. ................................. 38,525,312
95,000 *Sun Microsystems, Inc. .......................... 11,877,969
165,000 *Teradyne, Inc. .................................. 9,002,813
--------------
186,341,103
--------------
Oil/Energy - 1.3%
350,000 Anadarko Petroleum Corp. ......................... 13,212,500
--------------
Oil Field Services - 1.6%
220,000 *BJ Services Co., Inc. ........................... 5,156,250
399,800 ENSCO International, Inc. ........................ 5,322,338
140,000 Halliburton Co. .................................. 5,390,000
--------------
15,868,588
--------------
Pharmaceuticals - 11.1%
300,000 *Forest Laboratories, Inc. ....................... 16,912,500
267,800 Pfizer, Inc. ..................................... 37,157,250
275,000 Pharmacia & Upjohn, Inc. ......................... 17,153,125
330,000 Schering-Plough Corp. (b)......................... 18,253,125
400,000 *Shire Pharmaceuticals Group Plc. ................ 9,112,500
215,000 Warner-Lambert Co. ............................... 14,230,312
--------------
112,818,812
--------------
Printing, Publishing, Broadcasting &
Entertainment - 8.7%
485,000 *CBS Corp. ....................................... 19,854,687
200,000 *Clear Channel Communications, Inc. .............. 13,412,500
257,500 Disney (Walt) Co. ................................ 8,014,688
420,000 Time Warner, Inc. ................................ 29,846,250
210,000 *Viacom, Inc. Cl. B (b)........................... 17,626,875
--------------
88,755,000
--------------
Retailing & Wholesale - 10.4%
280,000 Home Depot, Inc. (b).............................. 17,430,000
290,000 *Kohl's Corp. (b)................................. 20,553,750
739,650 *Staples, Inc. ................................... 24,315,994
325,000 Tandy Corp. (b)................................... 20,739,062
240,000 Wal-Mart Stores, Inc. ............................ 22,125,000
--------------
105,163,806
--------------
Telecommunication Services & Equipment - 3.7%
200,000 *ADC Telecommunications, Inc. .................... 9,537,500
220,000 Motorola, Inc. ................................... 16,115,000
75,000 Nokia Corp. ADR................................... 11,681,250
--------------
37,333,750
--------------
</TABLE>
62
<PAGE>
- --------------------------------------------------------------------------------
E V E R G R E E N
Strategic Growth Fund
- --------------------------------------------------------------------------------
Schedule of Investments(continued)
March 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS - continued
Transportation - 1.3%
345,000 CNF Transportation, Inc. ......................... $ 13,045,313
--------------
Utilities - Telephone - 1.6%
209,438 AT&T Corp. ....................................... 16,715,770
--------------
Total Common Stocks
(cost $711,860,011).............................. 1,005,313,283
--------------
CONVERTIBLE DEBENTURES - 0.0%
Iron & Steel - 0.0%
180,000 Compania Vale do Rio Doce Navegacao SA
1.00%, 12/31/1999
(cost $0)........................................ 10
--------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal
Amount Value
- --------------------------------------------------------------------------------
<C> <S> <C>
SHORT-TERM INVESTMENTS - 5.3%
Money Market Shares - 3.8%
$38,879,083 Navigator Prime Portfolio (c).................... $ 38,879,083
--------------
Repurchase Agreement - 1.5%
15,700,000 Evergreen Joint Repurchase Agreement, Investments
in repurchase agreements, in a joint trading
account purchased 3/31/1999, 5.00%, maturing
4/1/1999, maturity value $15,702,181
(cost $15,700,000) (a).......................... 15,700,000
--------------
Total Short-Term Investments
(cost $54,579,083).............................. 54,579,083
--------------
</TABLE>
<TABLE>
<C> <S> <C> <C>
Total Investments -
(cost $766,439,094)...................... 104.4% 1,059,892,376
Other Assets and Liabilities - net........ (4.4) (45,032,569)
----- --------------
Net Assets................................ 100.0% $1,014,859,807
===== ==============
</TABLE>
(a) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices plus accrued interest at March
31, 1999.
(b) All or a portion of this security is on loan (See Note 8).
(c) Represents investment of cash collateral received for securities on loan.
* Non-income producing security.
Summary of Abbreviations:
ADR American Depository Receipts
See Combined Notes to Financial Statements.
63
<PAGE>
- --------------------------------------------------------------------------------
E V E R G R E E N
Tax Strategic Equity Fund
- --------------------------------------------------------------------------------
Schedule of Investments
March 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS - 93.0%
Banks - 8.9%
8,500 BankBoston Corp. ....................................... $ 368,156
5,000 Huntington Bancshares, Inc. ............................ 154,688
500 M&T Bank Corp. ......................................... 239,500
10,000 Prosperity Bancshares, Inc. ............................ 123,750
2,000 Republic New York Corp. ................................ 92,250
5,000 SouthTrust Corp. ....................................... 186,562
1,920 Suntrust Banks, Inc. ................................... 119,520
2,000 Westamerica Bancorp..................................... 63,250
2,000 Wilmington Trust Corp. ................................. 114,250
-----------
1,461,926
-----------
Building, Construction &
Furnishings - 6.1%
2,000 Armstrong World Industries, Inc. ....................... 90,375
1,200 Carlisle Companies, Inc. ............................... 56,100
3,000 *Crossmann Communities, Inc. ........................... 59,813
15,000 D.R. Horton, Inc. ...................................... 251,250
3,000 *Genlyte Group, Inc. ................................... 48,000
9,000 Kaufman & Broad Home Corp. ............................. 203,062
4,500 Lennar Corp. ........................................... 100,688
5,000 *Royal Group Technologies Ltd. ......................... 123,437
4,000 *Toll Brothers, Inc. ................................... 72,500
-----------
1,005,225
-----------
Business Equipment & Services - 0.7%
2,000 *Computer Sciences Corp. ............................... 110,375
-----------
Capital Goods - 0.5%
2,000 Caterpillar, Inc. ...................................... 91,875
-----------
Chemical & Agricultural
Products - 0.7%
2,000 Du Pont (E. I.) De Nemours & Co. ....................... 116,125
-----------
Communication Systems &
Services - 3.3%
19,000 *Orbital Sciences Corp. ................................ 537,938
-----------
Consumer Products & Services - 2.9%
10,153 Newell Rubbermaid, Inc. ................................ 482,268
-----------
Electrical Equipment &
Services - 4.2%
6,000 Emerson Electric Co. ................................... 317,625
2,000 General Electric Co. ................................... 221,250
4,000 Thomas & Betts Corp. ................................... 150,250
-----------
689,125
-----------
Finance & Insurance - 21.5%
5,000 AFLAC, Inc. ............................................ 272,187
10,000 American Bankers Insurance Group, Inc. ................. 520,000
2,000 American Express Co. ................................... 235,000
2,210 American International Group, Inc. ..................... 266,581
4,000 Chubb Corp. ............................................ 234,250
2,500 Citigroup, Inc. ........................................ 159,688
2,000 Edwards (A.G.), Inc. ................................... 65,375
14,400 Enhance Financial Services Group, Inc. ................. 327,600
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS - continued
Finance & Insurance - continued
1,000 Federal National Mortgage Assoc. ...................... $ 69,250
800 First American Financial Corp. ........................ 12,650
2,000 MBIA, Inc. ............................................ 116,000
4,000 Merrill Lynch & Co., Inc. ............................. 353,750
1,500 MGIC Investment Corp. ................................. 52,594
10,000 Mony Group, Inc. ...................................... 248,750
2,000 Morgan Keegan, Inc. ................................... 33,125
1,000 Progressive Corp. .................................... 143,500
8,000 Raymond James Financial, Inc. ......................... 158,000
4,000 Torchmark Corp. ....................................... 126,500
7,000 Waddell & Reed Financial, Inc. Cl. A................... 143,500
-----------
3,538,300
-----------
Food & Beverage Products - 1.0%
10,000 Coca-Cola Co. FEMSA SA, ADR............................ 163,125
-----------
Healthcare Products &
Services - 5.0%
2,000 *Alza Corp. ........................................... 76,500
3,100 Beckman Coulter, Inc. ................................. 136,400
4,000 *Boston Scientific Corp. .............................. 162,250
4,800 *Carematrix Corp. ..................................... 91,200
10,000 *Health Management Associates, Inc. Cl. A.............. 121,875
2,000 Medtronic, Inc. ....................................... 143,500
1,000 Perkin Elmer Corp. .................................... 97,062
-----------
828,787
-----------
Industrial Specialty Products & Services - 3.3%
1,100 Barnes Group, Inc. .................................... 20,562
3,000 Honeywell, Inc. ....................................... 227,438
10,000 Kaydon Corp. .......................................... 289,375
-----------
537,375
-----------
Information Services &
Technology - 8.8%
6,000 *Axent Technologies, Inc. ............................. 138,000
10,000 Fair Issac & Co., Inc. ................................ 370,625
1,000 Intel Corp. ........................................... 118,875
4,600 International Business Machines Corp. ................. 815,350
-----------
1,442,850
-----------
Oil/Energy - 1.1%
2,000 Chevron Corp. ......................................... 176,875
-----------
Oil Field Services - 2.3%
10,000 Diamond Offshore Drilling, Inc. ....................... 316,250
1,000 Schlumberger Ltd. ..................................... 60,188
-----------
376,438
-----------
Printing, Publishing, Broadcasting & Entertainment -
4.1%
17,000 Bowne & Co., Inc. ..................................... 198,688
4,000 New York Times Co. .................................... 114,000
5,000 Time Warner, Inc. ..................................... 355,312
-----------
668,000
-----------
</TABLE>
64
<PAGE>
- --------------------------------------------------------------------------------
E V E R G R E E N
Tax Strategic Equity Fund
- --------------------------------------------------------------------------------
Schedule of Investments(continued)
March 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS - continued
Real Estate - 1.5%
1,700 *Alexander's, Inc. REIT................................. $ 115,175
5,089 Inversiones y Representaciones SA, GDR.................. 134,222
-----------
249,397
-----------
Retailing & Wholesale - 6.8%
5,000 *Barnes & Noble, Inc. .................................. 160,625
7,000 *Borders Group Inc. .................................... 98,437
2,000 Ethan Allen Interiors, Inc. ............................ 83,125
11,000 Rite Aid Corp. ......................................... 275,000
4,460 *Saks, Inc. ............................................ 115,960
1,000 Tandy Corp. ............................................ 63,812
1,000 W.W. Grainger, Inc. .................................... 43,063
10,000 *Williams Sonoma, Inc. ................................. 282,500
-----------
1,122,522
-----------
Textile & Apparel - 2.5%
53,600 *Donna Karan International, Inc. ....................... 408,700
-----------
Transportation - 1.7%
3,000 *UAL Corp. ............................................. 233,250
1,000 *US Airways Group, Inc. ................................ 48,813
-----------
282,063
-----------
Utilities - Gas - 0.4%
1,500 Williams Companies, Inc. ............................... 59,250
-----------
Utilities - Telephone - 5.7%
11,000 Frontier Corp. ......................................... 570,625
5,000 Nextel Communications, Inc. ............................ 185,000
1,000 Sprint Corp. ........................................... 98,125
2,000 *Sprint Corp. (PCS Group)............................... 88,625
-----------
942,375
-----------
Total Common Stocks (cost $13,839,099).................. 15,290,914
-----------
- --------------------------------------------------------------------------------
Principal
Amount Value
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 9.6%
U.S. Government Agency
Obligations - 9.6%
Federal Home Loan Bank
Discount Notes:
$130,000 4.72%, 4/16/1999................................... $ 129,744
190,000 4.73%, 4/16/1999................................... 189,626
650,000 4.76%, 4/23/1999................................... 648,109
110,000 4.77%, 4/16/1999................................... 109,781
495,000 Federal Home Loan Mortgage Discount Notes
4.75%, 4/14/1999.................................. 494,151
-----------
Total Short-Term Investments
(cost $1,571,411)................................. 1,571,411
-----------
</TABLE>
<TABLE>
<C> <S> <C> <C>
Total Investments -(cost $15,410,510).............. 102.6% 16,862,325
Other Assets and
Liabilities - net................................. (2.6) (426,598)
----- -----------
Net Assets......................................... 100.0% $16,435,727
===== ===========
</TABLE>
*Non-income producing security.
Summary of Abbreviations:
ADR American Depository Receipts
GDR Global Depository Receipts
REIT Real Estate Investment Trust
See Combined Notes to Financial Statements.
65
<PAGE>
- --------------------------------------------------------------------------------
E V E R G R E E N
Domestic Growth Funds
- --------------------------------------------------------------------------------
Statements of Assets and Liabilities
March 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
Aggressive
Growth Evergreen Micro Cap Omega
Fund Fund Fund Fund
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets
Identified cost of
securities............. $138,278,527 $1,159,423,195 $39,832,163 $415,629,095
Net unrealized gains on
securities............. 130,749,668 931,877,527 2,402,229 109,721,052
- ----------------------------------------------------------------------------------
Market value of
securities............. 269,028,195 2,091,300,722 42,234,392 525,350,147
Cash.................... 975 480,076 74,226 642
Receivable for
securities sold........ 0 8,844,579 144,731 0
Receivable for Fund
shares sold............ 400,317 9,995,755 6,008 4,440,545
Dividends and interest
receivable............. 18,674 1,081,032 25,983 81,124
Deferred organization
expenses............... 6,897 0 0 0
Prepaid expenses and
other assets........... 12,852 47,925 34,787 57,614
- ----------------------------------------------------------------------------------
Total assets.......... 269,467,910 2,111,750,089 42,520,127 529,930,072
- ----------------------------------------------------------------------------------
Liabilities
Payable for securities
purchased.............. 0 3,896,354 320,625 180,680
Payable for Fund shares
redeemed............... 553,435 65,132,758 146,572 807,527
Payable for securities
on loan................ 0 0 0 94,436,845
Advisory fee payable.... 127,872 1,563,952 37,219 249,282
Distribution Plan
expenses payable....... 34,543 210,961 6,499 127,495
Due to other related
parties................ 4,522 0 0 21,657
Accrued expenses and
other liabilities...... 81,848 372,708 33,809 51,044
- ----------------------------------------------------------------------------------
Total liabilities..... 802,220 71,176,733 544,724 95,874,530
- ----------------------------------------------------------------------------------
Net assets.............. $268,665,690 $2,040,573,356 $41,975,403 $434,055,542
- ----------------------------------------------------------------------------------
Net assets represented
by
Paid-in capital......... $128,840,916 $1,087,572,814 $42,589,237 $296,042,019
Undistributed
(overdistributed) net
investment income...... (1,261,050) 215,354 (124,227) (1,645,362)
Accumulated net
realized gains or
losses on securities
and foreign currency
related transactions... 10,336,156 20,907,661 (2,891,836) 29,937,833
Net unrealized gains on
securities and foreign
currency related
transactions........... 130,749,668 931,877,527 2,402,229 109,721,052
- ----------------------------------------------------------------------------------
Total net assets........ $268,665,690 $2,040,573,356 $41,975,403 $434,055,542
- ----------------------------------------------------------------------------------
Net assets consists of
Class A................. $177,731,895 $ 199,996,103 $ 3,428,197 $217,137,574
Class B................. 51,943,356 692,295,668 3,447,157 195,054,761
Class C................. 4,489,305 13,249,953 2,465,180 19,716,497
Class Y................. 34,501,134 1,135,031,632 32,634,869 2,146,710
- ----------------------------------------------------------------------------------
Total net assets........ $268,665,690 $2,040,573,356 $41,975,403 $434,055,542
- ----------------------------------------------------------------------------------
Shares outstanding
Class A................. 6,801,272 8,294,726 189,146 8,385,587
Class B................. 2,046,354 29,147,309 196,642 8,056,003
Class C................. 177,297 558,858 140,416 812,287
Class Y................. 1,304,166 46,696,001 1,782,134 82,627
- ----------------------------------------------------------------------------------
Net asset value per
share
Class A................. $ 26.13 $ 24.11 $ 18.12 $ 25.89
- ----------------------------------------------------------------------------------
Class A--Offering price
(based on sales charge
of 4.75%).............. $ 27.43 $ 25.31 $ 19.02 $ 27.18
- ----------------------------------------------------------------------------------
Class B................. $ 25.38 $ 23.75 $ 17.53 $ 24.21
- ----------------------------------------------------------------------------------
Class C................. $ 25.32 $ 23.71 $ 17.56 $ 24.27
- ----------------------------------------------------------------------------------
Class Y................. $ 26.45 $ 24.31 $ 18.31 $ 25.98
- ----------------------------------------------------------------------------------
</TABLE>
See Combined Notes to Financial Statements.
66
<PAGE>
- --------------------------------------------------------------------------------
E V E R G R E E N
Domestic Growth Funds
- --------------------------------------------------------------------------------
Statements of Assets and Liabilities
March 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
Small Company Stock Strategic Tax Strategic
Growth Selector Growth Equity
Fund Fund Fund Fund
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets
Identified cost of
securities............. $ 872,139,250 $316,935,819 $ 766,439,094 $15,410,510
Net unrealized gains on
securities............. 147,892,398 111,217,797 293,453,282 1,451,815
- -------------------------------------------------------------------------------------
Market value of
securities............. 1,020,031,648 428,153,616 1,059,892,376 16,862,325
Cash.................... 601 0 862 46,777
Receivable for
securities sold........ 12,707,991 1,519,896 0 0
Receivable for Fund
shares sold............ 858,361 151,799 208,423 342,298
Dividends and interest
receivable............. 139,329 369,320 481,547 10,449
Receivable from
investment advisor..... 0 0 0 12,462
Prepaid expenses and
other assets........... 116,269 49,684 95,649 68,606
- -------------------------------------------------------------------------------------
Total assets.......... 1,033,854,199 430,244,315 1,060,678,857 17,342,917
- -------------------------------------------------------------------------------------
Liabilities
Payable for securities
purchased.............. 9,527,760 1,545,344 5,599,565 661,151
Payable for Fund shares
redeemed............... 4,896,336 2,244,492 668,661 239,618
Payable for securities
on loan................ 230,113,043 0 38,879,083 0
Advisory fee payable.... 410,296 265,044 445,593 0
Distribution Plan
expenses payable....... 149,557 3,973 16,486 3,920
Due to other related
parties................ 16,969 85,784 16,885 285
Accrued expenses and
other liabilities...... 221,573 127,957 192,777 2,216
- -------------------------------------------------------------------------------------
Total liabilities..... 245,335,534 4,272,594 45,819,050 907,190
- -------------------------------------------------------------------------------------
Net assets.............. $ 788,518,665 $425,971,721 $1,014,859,807 $16,435,727
- -------------------------------------------------------------------------------------
Net assets represented
by
Paid-in capital......... $ 764,986,855 $285,358,903 $ 633,575,345 $14,861,549
Undistributed
(overdistributed) net
investment income...... (3,142,857) 30,660 (1,534,257) 5,917
Accumulated net
realized gains or
losses on securities,
futures contracts and
foreign currency
related transactions... (121,217,731) 29,364,361 89,365,982 116,446
Net unrealized gains on
securities and foreign
currency related
transactions........... 147,892,398 111,217,797 293,452,737 1,451,815
- -------------------------------------------------------------------------------------
Total net assets........ $ 788,518,665 $425,971,721 $1,014,859,807 $16,435,727
- -------------------------------------------------------------------------------------
Net assets consists of
Class A................. $ 680,596,030 $ 20,433,609 $ 904,690,554 $ 3,963,030
Class B................. 102,872,710 990,870 107,701,654 5,582,650
Class C................. 3,461,832 -- 2,467,599 1,334,434
Class Y................. 1,588,093 404,547,242 -- 5,555,613
- -------------------------------------------------------------------------------------
Total net assets........ $ 788,518,665 $425,971,721 $1,014,859,807 $16,435,727
- -------------------------------------------------------------------------------------
Shares outstanding
Class A................. 125,458,516 1,011,936 82,372,920 291,020
Class B................. 19,160,289 49,606 9,902,064 410,676
Class C................. 644,188 -- 226,780 98,037
Class Y................. 291,706 20,010,669 -- 406,729
- -------------------------------------------------------------------------------------
Net asset value per
share
Class A................. $ 5.42 $ 20.19 $ 10.98 $ 13.62
- -------------------------------------------------------------------------------------
Class A--Offering price
(based on sales charge
of 4.75%).............. $ 5.69 $ 21.20 $ 11.53 $ 14.30
- -------------------------------------------------------------------------------------
Class B................. $ 5.37 $ 19.97 $ 10.88 $ 13.59
- -------------------------------------------------------------------------------------
Class C................. $ 5.37 -- $ 10.88 $ 13.61
- -------------------------------------------------------------------------------------
Class Y................. $ 5.44 $ 20.22 -- $ 13.66
- -------------------------------------------------------------------------------------
</TABLE>
See Combined Notes to Financial Statements.
67
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
Domestic Growth Funds
- --------------------------------------------------------------------------------
Statements of Operations
Six Months Ended March 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
Aggressive
Growth Evergreen Micro Cap Omega
Fund Fund Fund Fund
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment income
Dividends............... $ 183,465 $ 8,901,139 $ 279,179 $ 628,970
Interest................ 66,712 7,981,429 0 470,069
Securities lending
income................. 0 0 0 27,562
- ---------------------------------------------------------------------------------
Total investment
income................. 250,177 16,882,568 279,179 1,126,601
- ---------------------------------------------------------------------------------
Expenses
Advisory fee............ 673,418 9,066,552 244,273 1,244,872
Distribution Plan
expenses............... 411,760 3,739,769 41,385 1,006,039
Transfer agent fee...... 257,921 2,257,023 56,657 357,816
Administrative services
fees................... 29,007 0 0 39,670
Trustees' fees and
expenses............... 3,176 21,098 569 2,466
Other................... 131,321 553,591 50,723 127,059
- ---------------------------------------------------------------------------------
Total expenses......... 1,506,603 15,638,033 393,607 2,777,922
Less: Fee credits...... (9,027) (57,205) (2,487) (10,899)
- ---------------------------------------------------------------------------------
Net expenses........... 1,497,576 15,580,828 391,120 2,767,023
- ---------------------------------------------------------------------------------
Net investment income... (1,247,399) 1,301,740 (111,941) (1,640,422)
=================================================================================
Net realized and
unrealized gains or
losses on securities
Net realized gains or
losses on securities... 14,856,883 20,893,439 (2,878,887) 30,203,802
- ---------------------------------------------------------------------------------
Net change in unrealized
gains on securities.... 60,486,940 261,088,929 31,746 70,151,595
- ---------------------------------------------------------------------------------
Net realized and
unrealized gains or
losses on securities... 75,343,823 281,982,368 (2,847,141) 100,355,397
- ---------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from operations........ $74,096,424 $283,284,108 $(2,959,082) $ 98,714,975
=================================================================================
</TABLE>
See Combined Notes to Financial Statements.
68
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
Domestic Growth Funds
- --------------------------------------------------------------------------------
Statements of Operations
Six Months Ended March 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
Small Company Stock Strategic Tax Strategic
Growth Selector Growth Equity
Fund Fund Fund Fund
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment income
Dividends (net of
foreign withholding
taxes of $0, $17,925,
$12,191, $0,
respectively).......... $ 1,709,820 $ 1,983,145 $ 2,908,774 $ 49,299
Interest................ 595,688 159,604 756,127 17,949
Securities lending
income................. 363,498 0 108,231 0
- ------------------------------------------------------------------------------------
Total investment
income................. 2,669,006 2,142,749 3,773,132 67,248
- ------------------------------------------------------------------------------------
Expenses
Advisory fee............ 2,267,121 1,663,789 2,490,181 44,626
Distribution Plan
expenses............... 1,699,495 26,659 1,667,065 17,293
Transfer agent fee...... 1,471,764 31,402 817,612 3,720
Administrative services
fees................... 60,672 58,186 76,963 1,207
Trustees' fees and
expenses............... 8,437 5,151 13,802 83
Other................... 305,962 76,096 247,130 71,548
- ------------------------------------------------------------------------------------
Total expenses......... 5,813,451 1,861,283 5,312,753 138,477
Less: Fee credits...... (33,395) (13,804) (25,960) (1,197)
Fee waivers and expense
reimbursements........ 0 0 0 (58,868)
- ------------------------------------------------------------------------------------
Net expenses........... 5,780,056 1,847,479 5,286,793 78,412
- ------------------------------------------------------------------------------------
Net investment income... (3,111,050) 295,270 (1,513,661) (11,164)
====================================================================================
Net realized and
unrealized gains or
losses on securities
and futures contracts
Net realized gains or
losses on:
Securities............. (2,074,704) 32,107,154 89,736,156 116,424
Futures contracts...... (14,406,511) 0 0 0
- ------------------------------------------------------------------------------------
Net realized gains or
losses on securities
and futures contracts.. (16,481,215) 32,107,154 89,736,156 116,424
- ------------------------------------------------------------------------------------
Net change in unrealized
gains on securities.... 158,968,781 109,356,317 154,633,163 1,317,189
- ------------------------------------------------------------------------------------
Net realized and
unrealized gains on
securities and futures
contracts.............. 142,487,566 141,463,471 244,369,319 1,433,613
- ------------------------------------------------------------------------------------
Net increase in net
assets resulting from
operations............. $139,376,516 $141,758,741 $242,855,658 $1,422,449
====================================================================================
</TABLE>
See Combined Notes to Financial Statements.
69
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
Domestic Growth Funds
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
Six Months Ended March 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
Aggressive
Growth Evergreen Micro Cap Omega
Fund Fund Fund Fund
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operations
Net investment income... $ (1,247,399) $ 1,301,740 $ (111,941) $ (1,640,422)
Net realized gains or
losses on securities... 14,856,883 20,893,439 (2,878,887) 30,203,802
Net change in unrealized
gains on securities.... 60,486,940 261,088,929 31,746 70,151,595
- --------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
resulting from
operations............ 74,096,424 283,284,108 (2,959,082) 98,714,975
- --------------------------------------------------------------------------------------
Distributions to
shareholders from
Net investment income
Class A................ 0 (344,730) 0 0
Class Y................ 0 (2,733,186) 0 0
Net realized gains
Class A................ (16,084,131) (652,481) (109,322) (18,881,795)
Class B................ (4,545,584) (2,054,332) (101,998) (14,406,403)
Class C................ (384,219) (41,149) (70,867) (1,728,482)
Class Y................ (3,420,978) (3,449,493) (880,866) (112,388)
- --------------------------------------------------------------------------------------
Total distributions to
shareholders.......... (24,434,912) (9,275,371) (1,163,053) (35,129,068)
- --------------------------------------------------------------------------------------
Capital share
transactions
Proceeds from shares
sold................... 80,904,675 1,732,018,436 4,330,137 142,269,698
Payment for shares
redeemed............... (89,092,293) (1,821,041,407) (10,352,352) (88,841,192)
Net asset value of
shares issued in
reinvestment of
distributions.......... 22,229,051 8,257,572 937,107 32,429,926
- --------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
resulting from capital
share transactions.... 14,041,433 (80,765,399) (5,085,108) 85,858,432
- --------------------------------------------------------------------------------------
Total increase
(decrease) in net
assets............... 63,702,945 193,243,338 (9,207,243) 149,444,339
Net assets
Beginning of period..... 204,962,745 1,847,330,018 51,182,646 284,611,203
- --------------------------------------------------------------------------------------
End of period........... $268,665,690 $ 2,040,573,356 $ 41,975,403 $434,055,542
======================================================================================
Undistributed
(overdistributed) net
investment income...... $ (1,261,050) $ 215,354 $ (124,227) $ (1,645,362)
======================================================================================
</TABLE>
See Combined Notes to Financial Statements.
70
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
Domestic Growth Funds
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
Six Months Ended March 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
Small Company Stock Strategic Tax Strategic
Growth Selector Growth Equity
Fund Fund Fund Fund
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operations
Net investment income... $ (3,111,050) $ 295,270 $ (1,513,661) $ (11,164)
Net realized gains or
losses on securities
and futures contracts.. (16,481,215) 32,107,154 89,736,156 116,424
Net change in unrealized
gains on securities.... 158,968,781 109,356,317 154,633,163 1,317,189
- --------------------------------------------------------------------------------------
Net increase in net
assets resulting from
operations............ 139,376,516 141,758,741 242,855,658 1,422,449
- --------------------------------------------------------------------------------------
Distributions to
shareholders from
Net investment income
Class A................ 0 (5,558) 0 0
Class Y................ 0 (490,628) 0 0
Net realized gains
Class A................ (129,434,483) (3,569,299) (97,518,215) 0
Class B................ (42,194,482) (120,260) (19,003,185) 0
Class C................ (829,079) 0 (92,547) 0
Class Y................ (222,576) (90,604,377) 0 0
- --------------------------------------------------------------------------------------
Total distributions to
shareholders.......... (172,680,620) (94,790,122) (116,613,947) 0
- --------------------------------------------------------------------------------------
Capital share
transactions
Proceeds from shares
sold................... 327,504,646 48,252,176 138,423,841 12,964,738
Payment for shares
redeemed............... (441,737,344) (205,054,535) (189,429,122) (1,591,127)
Net asset value of
shares issued in
reinvestment of
distributions.......... 142,159,649 94,489,967 102,856,980 0
- --------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
resulting from capital
share transactions.... 27,926,951 (62,312,392) 51,851,699 11,373,611
- --------------------------------------------------------------------------------------
Total increase
(decrease) in net
assets............... (5,377,153) (15,343,773) 178,093,410 12,796,060
Net assets
Beginning of period..... 793,895,818 441,315,494 836,766,397 3,639,667
- --------------------------------------------------------------------------------------
End of period........... $788,518,665 $425,971,721 $1,014,859,807 $16,435,727
======================================================================================
Undistributed
(overdistributed) net
investment income...... $ (3,142,857) $ 30,660 $ (1,534,257) $ 5,917
======================================================================================
</TABLE>
See Combined Notes to Financial Statements.
71
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
Domestic Growth Funds
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
Year Ended September 30, 1998
<TABLE>
<CAPTION>
Aggressive
Growth Evergreen Micro Cap Omega
Fund Fund Fund Fund
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operations
Net investment income... $ (2,863,381) $ 2,949,364 $ (512,138) $ (2,166,229)
Net realized gains on
securities and foreign
currency related
transactions........... 21,129,001 11,080,737 1,277,329 47,348,560
Net change in unrealized
losses on securities
and foreign currency
related transactions... (32,882,258) (131,256,024) (14,974,624) (33,661,614)
- ---------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
resulting from
operations............ (14,616,638) (117,225,923) (14,209,433) 11,520,717
- ---------------------------------------------------------------------------------------
Distributions to
shareholders from
Net investment income
Class A................ 0 (756,350) 0 0
Class C................ 0 (6,894,401) 0 0
Net realized gains
Class A................ (6,090,321) (3,670,523) (142,183) (14,940,773)
Class B................ (1,515,887) (11,529,535) (114,702) (10,805,705)
Class C................ (134,112) (199,185) (57,650) (1,549,758)
Class Y................ (1,606,606) (23,699,502) (2,593,995) (493)
- ---------------------------------------------------------------------------------------
Total distributions to
shareholders.......... (9,346,926) (46,749,496) (2,908,530) (27,296,729)
- ---------------------------------------------------------------------------------------
Capital share
transactions
Proceeds from shares
sold................... 68,811,650 2,735,869,664 28,365,456 56,200,250
Payment for shares
redeemed............... (111,550,305) (2,543,496,256) (17,334,111) (70,377,012)
Net asset value of
shares issued in
reinvestment of
distributions.......... 8,139,247 40,835,635 2,124,920 25,295,379
- ---------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
resulting from capital
share transactions.... (34,599,408) 233,209,043 13,156,265 11,118,617
- ---------------------------------------------------------------------------------------
Total increase
(decrease) in net
assets............... (58,562,972) 69,233,624 (3,961,698) (4,657,395)
Net assets
Beginning of period..... 263,525,717 1,778,096,394 55,144,344 289,268,598
- ---------------------------------------------------------------------------------------
End of period........... $ 204,962,745 $ 1,847,330,018 $ 51,182,646 $284,611,203
=======================================================================================
Undistributed
(overdistributed) net
investment income...... $ (13,651) $ 1,991,530 $ (12,286) $ (4,940)
=======================================================================================
</TABLE>
See Combined Notes to Financial Statements.
72
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
Domestic Growth Funds
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
Period Ended September 30, 1998
<TABLE>
<CAPTION>
Small Company Stock Strategic Tax Strategic
Growth Selector Growth Equity
Fund Fund (b) Fund Fund (a)
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operations
Net investment income... $ (9,053,309) $ 231,781 $ (547,355) $ 1,336
Net realized gains on
securities and foreign
currency related
transactions........... 95,583,444 17,941,229 149,548,329 22
Net change in unrealized
gains or losses on
securities and foreign
currency related
transactions........... (507,105,194) (120,015,197) (105,851,911) 134,626
- --------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
resulting from
operations............ (420,575,059) (101,842,187) 43,149,063 135,984
- --------------------------------------------------------------------------------------
Distributions to
shareholders from
Net investment income
Class B................ 0 0 (1,289,169) 0
Net realized gains
Class B................ (124,537,167) 0 (113,103,093) 0
- --------------------------------------------------------------------------------------
Total distributions to
shareholders.......... (124,537,167) 0 (114,392,262) 0
- --------------------------------------------------------------------------------------
Capital share
transactions
Proceeds from shares
sold................... 489,047,720 34,074,181 74,908,829 3,503,683
Payment for shares
redeemed............... (834,438,095) (75,761,134) (188,432,304) 0
Net asset value of
shares issued in
reinvestment of
distributions.......... 105,065,592 0 101,552,338 0
Net asset value of
shares issued in
acquisition............ 33,587,309 0 0 0
- --------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
resulting from capital
share transactions.... (206,737,474) (41,686,953) (11,971,137) 3,503,683
- --------------------------------------------------------------------------------------
Total increase
(decrease) in net
assets............... (751,849,700) (143,529,140) (83,214,336) 3,639,667
Net assets
Beginning of period..... 1,545,745,518 584,844,634 919,980,733 0
- --------------------------------------------------------------------------------------
End of period........... $ 793,895,818 $ 441,315,494 $836,766,397 $3,639,667
======================================================================================
Undistributed
(overdistributed) net
investment income...... $ (31,807) $ 231,576 $ (20,596) $ 17,081
======================================================================================
- --------------------------------------------------------------------------------------
</TABLE>
(a) For the period from September 1, 1998 (commencement of class operations) to
September 30, 1998.
(b) For the three months ended September 30, 1998. The Fund changed its fiscal
year end from June 30 to September 30, effective September 30, 1998.
See Combined Notes to Financial Statements.
73
<PAGE>
- --------------------------------------------------------------------------------
E V E R G R E E N
Domestic Growth Funds
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
Year Ended June 30, 1998
<TABLE>
<CAPTION>
Stock
Selector
Fund
- -------------------------------------------------------------------------------
<S> <C>
Operations
Net investment income........................................... $ 788,698
Net realized gains on securities and foreign currency related
transactions................................................... 99,737,743
Net change in unrealized gains on securities and foreign
currency related transactions.................................. 10,477,319
- -------------------------------------------------------------------------------
Net increase in net assets resulting from operations........... 111,003,760
- -------------------------------------------------------------------------------
Distributions to shareholders
From net investment income
Class B........................................................ (3,827)
Class Y........................................................ (1,044,935)
From net realized gains
Class A........................................................ (2,420,586)
Class B........................................................ (16,877)
Class Y........................................................ (69,731,105)
- -------------------------------------------------------------------------------
Total distributions to shareholders............................ (73,217,330)
- -------------------------------------------------------------------------------
Capital share transactions
Proceeds from shares sold....................................... 86,624,977
Payment for shares redeemed..................................... (137,373,206)
Net asset value of shares issued in reinvestment of
distributions.................................................. 66,747,336
- -------------------------------------------------------------------------------
Net increase in net assets resulting from capital share
transactions.................................................. 15,999,107
- -------------------------------------------------------------------------------
Total increase in net assets.................................. 53,785,537
Net assets
Beginning of period............................................. 531,059,097
- -------------------------------------------------------------------------------
End of period................................................... $584,844,634
- -------------------------------------------------------------------------------
Undistributed net investment income............................. $ 28,200
- -------------------------------------------------------------------------------
</TABLE>
See Combined Notes to Financial Statements.
74
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Combined Notes to Financial Statements(Unaudited)
1. ORGANIZATION
The Evergreen Domestic Growth Funds consist of Evergreen Aggressive Growth Fund
("Aggressive Growth Fund"), Evergreen Fund ("Evergreen Fund"), Evergreen Micro
Cap Fund ("Micro Cap Fund"), Evergreen Omega Fund ("Omega Fund"), Evergreen
Small Company Growth Fund ("Small Company Growth Fund"), Evergreen Stock Selec-
tor Fund ("Stock Selector Fund"), Evergreen Strategic Growth Fund ("Strategic
Growth Fund") and Evergreen Tax Strategic Equity Fund ("Tax Strategic Equity
Fund"), (collectively, the "Funds"). Each Fund is a diversified series of Ever-
green Equity Trust (the "Trust"), a Delaware business trust organized on Sep-
tember 18, 1997. The Trust is an open-end management investment company regis-
tered under the Investment Company Act of 1940, as amended (the "1940 Act").
The Funds offer Class A, Class B, Class C, and/or Class Y shares, except for
Stock Selector Fund, which currently does not offer Class C 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 on-
going distribution fee than Class A. Class B shares are sold subject to a con-
tingent deferred sales charge that is payable upon redemption and decreases de-
pending on how long the shares have been held. 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 conver-
sion rights. 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 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 Corporation ("First Union") and its
affiliates, certain institutional investors or Class Y shareholders of record
of certain other funds managed by First Union and its affiliates as of December
30, 1994.
2. REORGANIZATION OF EVERGREEN STOCK SELECTOR FUND
Effective on the close of business on July 24, 1998, Stock Selector Fund ac-
quired all of the net assets and certain liabilities of the CoreFund Core Eq-
uity Fund (the "CoreFund") through a tax-free exchange of shares. Shareholders
of Class A, Class B and Class Y shares of the CoreFund became owners of that
number of full and fractional shares of Class A, Class B and Class Y, respec-
tively, of Stock Selector Fund having an aggregate net asset value equal to the
aggregate net asset value of their shares of the CoreFund immediately prior to
the close of business on July 24, 1998. The operating results of the CoreFund
have been carried forward for prior periods.
3. ACQUISITION INFORMATION
Effective on the close of business on January 2, 1998, Small Company Growth
Fund acquired substantially all the assets and assumed certain liabilities of
Keystone Small Company Growth Fund II, an open-end management investment com-
pany registered under the 1940 Act, in an exchange of shares. The net assets
were exchanged through a tax-free exchange for 1,123,086, 2,546,961, 675,716
and 87,676 shares of Class A, Class B, Class C and Class Y of Small Company
Growth Fund, respectively. The acquired net assets consisted primarily of port-
folio securities with unrealized appreciation of $490,029. The aggregate net
assets of Small Company Growth Fund immediately after the acquisition were
$1,340,337,418.
4. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently fol-
lowed by the Funds in the preparation of their financial statements. The poli-
cies are in conformity with generally accepted accounting principles, which re-
quire management to make estimates and assumptions that affect amounts reported
herein. Actual results could differ from these estimates.
A. Valuation of Securities
Securities traded on a national securities exchange or included on the Nasdaq
National Market System ("NMS") are valued at the last reported sales price on
the exchange where the security is primarily traded.
75
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Combined Notes to Financial Statements(Unaudited) (continued)
Securities traded on an exchange or NMS for which there has been no sale and
other securities traded in the over-the-counter market are valued at the mean
between the last reported bid and asked price. Securities for which market quo-
tations are not readily available, including restricted securities, are valued
at fair value as determined in good faith according to procedures approved by
the Board of Trustees. Short-term investments with remaining maturities of 60
days or less are carried at amortized cost, which approximates market value.
B. Repurchase Agreements
Each Fund may invest in repurchase agreements. Securities pledged as collateral
for repurchase agreements are held in a segregated account 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 mar-
ket value of the securities pledged falls below the carrying value of the re-
purchase 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 es-
tablished by the Board of Trustees.
Pursuant to an exemptive order issued by the Securities and Exchange Commis-
sion, Omega Fund, Small Company Growth Fund and Strategic Growth Fund, along
with certain other funds managed by Evergreen Investment Management Company
("EIMC"), a subsidiary of First Union, may transfer uninvested cash balances
into a joint trading account. These balances are invested in one or more repur-
chase 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.) dol-
lars. Foreign currency amounts are translated into U.S. dollars as follows:
market value of investment securities, other assets and liabilities at the
daily rate of exchange; purchases and sales of investment securities and income
and expenses at the rate of exchange prevailing on the respective dates of such
transactions. Net unrealized foreign exchange gains or losses resulting from
changes in foreign currency exchange rates are a component of net unrealized
gains or losses on securities and foreign currency related transactions. Net
realized foreign currency gains or losses on foreign currency related transac-
tions include foreign currency gains or losses between trade date and settle-
ment 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. The portion
of foreign currency gains or losses related to fluctuations in exchange rates
between the initial purchase trade date and subsequent sale trade date is in-
cluded in realized gain or loss on securities.
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 liabili-
ties. Forward contracts are recorded at the forward rate and marked-to-market
daily. Realized gains or losses arising from such transactions are included in
net realized gains or losses 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 con-
tracts involve elements of market risk in excess of the amount reflected in the
Statements of Assets and Liabilities.
E. Securities Lending
In order to generate income and to offset expenses, the Funds may lend portfo-
lio securities to brokers, dealers and other financial organizations. The
Funds' investment advisor will monitor the creditworthiness of such borrowers.
Loans of securities may not exceed 33 1/3% of a Fund's total assets and will be
collateralized by cash, letters of credit or U.S. Government securities that
are maintained at all times in an amount equal to at least 100% of the current
market value of the loaned securities, including accrued interest. The Fund
monitors the adequacy of the collateral daily and will require the borrower to
provide additional collateral in the event
76
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Combined Notes to Financial Statements(Unaudited) (continued)
the value of the collateral falls below 100% of the market value of the securi-
ties on loan. While such securities are on loan, the borrower will pay a Fund
any income accruing thereon, and the Fund may invest any cash collateral re-
ceived in portfolio securities, thereby increasing its return. A Fund will have
the right to call any such loan and obtain the securities loaned at any time on
five days' notice. Any gain or loss in the market price of the loaned securi-
ties, which occurs during the term of the loan, would affect a Fund and its in-
vestors. A Fund may pay fees in connection with such loans.
F. 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 there-
after when the Fund is made aware of the dividend. Foreign income may be sub-
ject to foreign withholding taxes, which are accrued as applicable. Capital
gains realized on some foreign securities are subject to foreign taxes, which
are accrued as applicable.
G. Federal Taxes
The Funds have qualified and intend to continue to qualify as regulated invest-
ment 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 in-
come and net capital gains, if any, to their shareholders. The Funds also in-
tend to avoid any excise tax liability by making the required distributions un-
der the Code. Accordingly, no provision for federal taxes is required. To the
extent that realized capital gains can be offset by capital loss carryforwards,
it is each Fund's policy not to distribute such gains.
H. Distributions
Distributions from net investment income and/or net realized capital gains for
the Funds are declared and paid at least annually. Distributions to sharehold-
ers are recorded at the close of business on the ex-dividend date.
Income and capital gains distributions to shareholders are determined in accor-
dance with income tax regulations, which may differ from generally accepted ac-
counting principles.
Certain distributions paid during previous years have been reclassified to con-
form to current year presentation.
I. Class Allocations
Income, expenses (other than class specific expenses) and realized and
unrealized gains and losses are prorated among the classes based on the rela-
tive net assets of each class. Currently, class specific expenses are limited
to expenses incurred under the Distribution Plans for each class.
J. Organization Expenses
Organization expenses for Aggressive Growth Fund are amortized to operations
over a five-year period on a straight-line basis. In the event any of the ini-
tial shares of the Funds are redeemed by any holder during the five-year amor-
tization period, redemption proceeds will be reduced by any unamortized organi-
zation 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.
5. INVESTMENT ADVISORY AGREEMENT AND OTHER AFFILIATED TRANSACTIONS
Evergreen Investment Management ("EIM"), formerly Capital Management Group, a
division of First Union National Bank, serves as the investment advisor to the
Aggressive Growth Fund and is paid an advisory fee that is computed daily and
paid monthly at an annual rate of 0.60% of the Fund's average daily net assets.
Evergreen Asset Management Corp. ("EAMC"), a wholly-owned subsidiary of First
Union, serves as the investment advisor to the Evergreen Fund, Micro Cap Fund
and Tax Strategic Equity fund. For the Evergreen Fund
77
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Combined Notes to Financial Statements(Unaudited) (continued)
and Micro Cap Fund the advisory fee is paid to EAMC based on average daily net
assets that is computed daily and paid monthly according to the following
schedule:
<TABLE>
<S> <C>
First $750 million......................................... 1.00%
Next $250 million.......................................... 0.90%
Over $1 billion............................................ 0.80%
</TABLE>
For the Tax Strategic Equity Fund, EAMC is entitled to an annual fee equal to
0.95% of average daily net assets of the Fund.
During the six months ended March 31, 1999, the investment advisor for Tax
Strategic Equity Fund waived its advisory fee and reimbursed expenses of
$44,626 and $14,242, respectively. The impact on the expense ratio represented
as a percentage of the Fund's average net assets was 1.25%.
Lieber & Company, an affiliate of First Union, is the investment sub-advisor to
Evergreen Fund, Micro Cap Fund and Tax Strategic Equity Fund and also provides
brokerage services with respect to substantially all security transactions of
the Funds effected on the New York or American Stock Exchanges. For the six
months ended March 31, 1999, Evergreen Fund, Micro Cap Fund and Tax Strategic
Equity Fund incurred brokerage commissions of $233,618, $31,889 and $20,928,
respectively, with Lieber & Company. Lieber & Company is reimbursed by EAMC for
providing investment sub-advisory services at no additional expense to the
Funds.
EIMC is the investment advisor for Omega Fund, Small Company Growth Fund and
Strategic Growth Fund. In return for providing investment management and admin-
istrative services to the Funds, EIMC is paid an advisory fee that is computed
daily and paid monthly. For Omega Fund, the advisory fee is determined by ap-
plying 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 Fund and Strategic Growth Fund, the advisory fee is deter-
mined 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 each
Fund.
Meridian Investment Company ("Meridian"), an indirect subsidiary of First
Union, serves as the investment advisor to the Stock Selector Fund and is paid
an advisory fee that is computed daily and paid monthly at an annual rate of
0.74% of the Fund's average daily net assets.
Evergreen Investment Services ("EIS"), a subsidiary of First Union, serves as
the administrator and The BISYS Group, Inc. ("BISYS") serves as the sub-admin-
istrator to the Funds. As administrator, EIS provides the Funds with facili-
ties, equipment and personnel. As sub-administrator to the Funds, BISYS pro-
vides the officers of the Funds. Officers of the Funds and affiliated Trustees
receive no compensation directly from the Funds.
The administrator and sub-administrator for the Funds 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 invest-
ment advisors. The administration fee is calculated by applying percentage
rates, which start at 0.05% and decline to 0.01% per annum as net assets in-
crease, to the average daily net asset value of the Fund. The sub-administra-
tion fee is calculated by applying percentage rates, which start at 0.01% and
decline to 0.004% per annum as net assets increase, to the average daily net
asset value of each Fund.
During the six months ended March 31, 1999, Aggressive Growth Fund, Stock Se-
lector Fund and Tax Strategic Equity Fund paid or accrued to EIS and BISYS the
following amounts for administrative and sub-administrative services:
<TABLE>
<CAPTION>
Administration Sub-administration
Fee Fee
---------------------------------
<S> <C> <C>
Aggressive Growth Fund........ $23,134 $ 5,873
Stock Selector Fund........... 46,422 11,764
Tax Strategic Equity Fund..... 962 245
</TABLE>
78
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Combined Notes to Financial Statements(Unaudited) (continued)
For Evergreen Fund and Micro Cap Fund, the administration and sub-administra-
tion fee is paid by the investment advisor and is not a Fund expense. During
the six months ended March 31, 1999, Omega Fund, Small Company Growth Fund and
Strategic Growth Fund reimbursed EIMC for certain accounting and administrative
expenses amounting to $39,670, $60,672 and $76,963, respectively.
Evergreen Service Company ("ESC"), an indirectly, wholly owned subsidiary of
First Union, serves as the transfer and dividend disbursing agent for the
Funds.
6. DISTRIBUTION PLANS
Evergreen Distributor, Inc. ("EDI"), a wholly owned subsidiary of BISYS, serves
as principal underwriter to the Funds.
Each Fund has adopted Distribution Plans, as allowed by Rule 12b-1 of the 1940
Act, for each class of shares, except Class Y. Distribution plans permit a Fund
to compensate its principal underwriter for costs related to selling shares of
the Fund and for various other services. These costs, which consist primarily
of commissions and service fees to broker-dealers who sell shares of the Fund,
are paid by the Fund through "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 pay distribution fees equal to
0.75% of the average daily net assets of the class. Distribution Plan expenses
are calculated daily and paid at least quarterly.
During the six months ended March 31, 1999, amounts paid or accrued to EDI pur-
suant 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 Fund............. $ 186,168 $ 207,872 $17,720
Evergreen Fund..................... 260,751 3,411,283 67,735
Micro Cap Fund..................... 5,635 21,029 14,721
Omega Fund......................... 230,288 695,992 79,759
Small Company Growth Fund.......... 833,627 847,040 18,828
Stock Selector Fund................ 23,302 3,357 n/a
Strategic Growth Fund.............. 1,012,760 647,340 6,965
Tax Strategic Equity Fund.......... 2,291 11,883 3,119
</TABLE>
With respect to Class B and Class C shares, the principal underwriter may pay
distribution fees greater than the allowable annual amounts each Fund is per-
mitted to pay under the Distribution Plans.
Each of the Distribution Plans may be terminated at any time by vote of the In-
dependent Trustees or by vote of a majority of the outstanding voting shares of
the respective class.
79
<PAGE>
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Combined Notes to Financial Statements (Unaudited) (continued)
7. CAPITAL SHARE TRANSACTIONS
The Funds have an unlimited number of shares of beneficial interest with $0.001
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 Stock Selector
Fund, which currently does not offer Class C shares. Transactions in shares of
the Funds were as follows:
- --------------------------------------------------------------------------------
Aggressive Growth Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended
March 31, 1999 September 30, 1998
------------------------ ------------------------
Shares Amount Shares Amount
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A
Shares sold............... 2,000,888 $ 46,075,063 1,458,678 $ 32,751,533
Shares redeemed........... (2,370,957) (53,707,804) (2,644,186) (58,974,321)
Shares issued in
reinvestment of
distributions............ 690,702 14,484,012 256,170 5,566,568
- ------------------------------------------------------------------------------
Net increase (decrease)... 320,633 6,851,271 (929,338) (20,656,220)
- ------------------------------------------------------------------------------
Class B
Shares sold............... 492,699 11,247,832 438,746 9,743,538
Shares redeemed........... (407,533) (9,121,195) (537,072) (11,598,031)
Shares issued in
reinvestment of
distributions............ 214,237 4,374,725 69,204 1,481,656
- ------------------------------------------------------------------------------
Net increase (decrease)... 299,403 6,501,362 (29,122) (372,837)
- ------------------------------------------------------------------------------
Class C
Shares sold............... 445,986 9,821,281 257,084 5,525,299
Shares redeemed........... (410,873) (9,036,449) (311,675) (6,765,435)
Shares issued in
reinvestment of
distributions............ 18,309 373,139 6,094 130,354
- ------------------------------------------------------------------------------
Net increase (decrease)... 53,422 1,157,971 (48,497) (1,109,782)
- ------------------------------------------------------------------------------
Class Y
Shares sold............... 593,718 13,760,499 948,746 20,791,280
Shares redeemed........... (750,128) (17,226,845) (1,556,481) (34,212,518)
Shares issued in
reinvestment of
distributions............ 141,310 2,997,175 44,007 960,669
- ------------------------------------------------------------------------------
Net increase (decrease)... (15,100) (469,171) (563,728) (12,460,569)
- ------------------------------------------------------------------------------
Net increase (decrease)... $ 14,041,433 $(34,599,408)
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Evergreen Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended
March 31, 1999 September 30, 1998
---------------------------- ----------------------------
Shares Amount Shares Amount
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A
Shares sold............. 26,365,333 $ 616,883,627 26,892,204 $ 635,409,399
Shares redeemed......... (26,760,707) (629,887,878) (25,471,595) (602,607,887)
Shares issued in
reinvestment of
distributions.......... 41,108 967,116 197,302 4,386,012
- ------------------------------------------------------------------------------------
Net increase
(decrease)............. (354,266) (12,037,135) 1,617,911 37,187,524
- ------------------------------------------------------------------------------------
Class B
Shares sold............. 3,578,137 81,775,412 11,537,318 271,151,787
Shares redeemed......... (4,465,885) (103,283,728) (4,288,369) (99,320,748)
Shares issued in
reinvestment of
distributions.......... 87,579 2,024,810 516,498 11,383,615
- ------------------------------------------------------------------------------------
Net increase
(decrease)............. (800,169) (19,483,506) 7,765,447 183,214,654
- ------------------------------------------------------------------------------------
Class C
Shares sold............. 74,908 1,709,594 311,900 7,316,782
Shares redeemed......... (124,820) (2,875,553) (105,425) (2,443,473)
Shares issued in
reinvestment of
distributions.......... 1,671 38,547 8,349 183,677
- ------------------------------------------------------------------------------------
Net increase
(decrease)............. (48,241) (1,127,412) 214,824 5,056,986
- ------------------------------------------------------------------------------------
Class Y
Shares sold............. 43,808,489 1,031,649,803 77,736,786 1,821,991,696
Shares redeemed......... (45,723,443) (1,084,994,248) (78,332,089) (1,839,124,148)
Shares issued in
reinvestment of
distributions.......... 220,439 5,227,099 1,115,299 24,882,331
- ------------------------------------------------------------------------------------
Net increase
(decrease)............. (1,694,515) (48,117,346) 519,996 7,749,879
- ------------------------------------------------------------------------------------
Net increase
(decrease)............. $ (80,765,399) $ 233,209,043
====================================================================================
</TABLE>
80
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Combined Notes to Financial Statements (Unaudited) (continued)
- --------------------------------------------------------------------------------
Micro Cap Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended
March 31, 1999 September 30, 1998
--------------------- ---------------------
Shares Amount Shares Amount
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A
Shares sold..................... 69,595 $ 1,377,092 359,192 $ 9,478,268
Shares redeemed................. (124,387) (2,438,953) (217,436) (5,670,641)
Shares issued in reinvestment of
distributions.................. 5,403 109,025 5,408 138,923
- -------------------------------------------------------------------------------
Net increase (decrease)......... (49,389) (952,836) 147,164 3,946,550
- -------------------------------------------------------------------------------
Class B
Shares sold..................... 44,534 850,331 195,624 5,003,162
Shares redeemed................. (72,333) (1,368,932) (46,210) (1,107,294)
Shares issued in reinvestment of
distributions.................. 5,037 98,531 4,452 111,788
- -------------------------------------------------------------------------------
Net increase (decrease)......... (22,762) (420,070) 153,866 4,007,656
- -------------------------------------------------------------------------------
Class C
Shares sold..................... 31,938 606,859 219,122 5,600,712
Shares redeemed................. (55,095) (1,035,022) (71,292) (1,779,947)
Shares issued in reinvestment of
distributions.................. 3,560 69,743 2,222 55,851
- -------------------------------------------------------------------------------
Net increase (decrease)......... (19,597) (358,420) 150,052 3,876,616
- -------------------------------------------------------------------------------
Class Y
Shares sold..................... 75,511 1,495,855 325,348 8,283,314
Shares redeemed................. (276,771) (5,509,445) (335,562) (8,776,229)
Shares issued in reinvestment of
distributions.................. 32,391 659,808 70,343 1,818,358
- -------------------------------------------------------------------------------
Net increase (decrease)......... (168,869) (3,353,782) 60,129 1,325,443
- -------------------------------------------------------------------------------
Net increase (decrease)......... $(5,085,108) $13,156,265
===============================================================================
</TABLE>
- --------------------------------------------------------------------------------
Omega Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended
March 31, 1999 September 30, 1998
------------------------ ------------------------
Shares Amount Shares Amount
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A
Shares sold............... 2,691,871 $ 65,704,395 1,365,259 $ 31,279,961
Shares redeemed........... (2,349,076) (56,590,611) (1,928,567) (43,773,765)
Shares issued in
reinvestment of
distributions............ 776,289 17,047,306 652,599 13,593,635
- ------------------------------------------------------------------------------
Net increase.............. 1,119,084 26,161,090 89,291 1,099,831
- ------------------------------------------------------------------------------
Class B
Shares sold............... 2,675,795 61,426,586 1,005,764 21,758,490
Shares redeemed........... (893,605) (19,727,745) (992,163) (21,153,692)
Shares issued in
reinvestment of
distributions............ 660,924 13,608,425 515,276 10,207,610
- ------------------------------------------------------------------------------
Net increase.............. 2,443,114 55,307,266 528,877 10,812,408
- ------------------------------------------------------------------------------
Class C
Shares sold............... 156,280 3,580,941 105,783 2,255,994
Shares redeemed........... (99,626) (2,187,576) (244,821) (5,151,403)
Shares issued in
reinvestment of
distributions............ 80,514 1,661,807 75,246 1,493,641
- ------------------------------------------------------------------------------
Net increase (decrease)... 137,168 3,055,172 (63,792) (1,401,768)
- ------------------------------------------------------------------------------
Class Y
Shares sold............... 474,266 11,557,776 38,657 905,805
Shares redeemed........... (423,235) (10,335,260) (12,421) (298,152)
Shares issued in
reinvestment of
distributions............ 5,104 112,388 24 493
- ------------------------------------------------------------------------------
Net increase.............. 56,135 1,334,904 26,260 608,146
- ------------------------------------------------------------------------------
Net increase.............. $ 85,858,432 $ 11,118,617
==============================================================================
</TABLE>
81
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Combined Notes to Financial Statements(Unaudited) (continued)
- --------------------------------------------------------------------------------
Small Company Growth Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended
March 31, 1999 September 30, 1998
-------------------------- -----------------------------
Shares Amount Shares Amount
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A
Shares sold............. 45,745,429 $ 253,833,928 27,641,238 $ 212,158,414
Automatic conversion of
Class B shares to Class
A shares............... 0 0 124,181,726 962,424,518
Shares redeemed......... (43,502,109) (238,480,451) (49,990,672) (395,810,407)
Shares issued in
reinvestment of
distributions.......... 20,259,818 101,907,007 0 0
Shares issued in
acquisition of Keystone
Small Company Growth
Fund II................ -- -- 1,123,086 8,684,926
- ------------------------------------------------------------------------------------
22,503,138 117,260,484 102,955,378 787,457,451
- ------------------------------------------------------------------------------------
Class B
Shares sold............. 9,153,229 50,170,918 32,457,309 268,266,006
Automatic conversion of
Class B shares to Class
A shares............... 0 0 (124,181,726) (962,424,518)
Shares redeemed......... (32,955,885) (179,101,535) (52,395,091) (430,471,220)
Shares issued in
reinvestment of
distributions.......... 7,865,995 39,251,317 13,003,167 105,065,592
Shares issued in
acquisition of Keystone
Small Company Growth
Fund II................ -- -- 2,456,961 18,998,994
- ------------------------------------------------------------------------------------
Net increase
(decrease)............. (15,936,661) (89,679,300) (128,659,380) (1,000,565,146)
- ------------------------------------------------------------------------------------
Class C
Shares sold............. 1,930,703 10,347,413 1,067,525 7,292,107
Shares redeemed......... (2,159,656) (11,621,414) (1,025,850) (7,103,508)
Shares issued in
reinvestment of
distributions.......... 155,750 778,749 0 0
Shares issued in
acquisition of Keystone
Small Company Growth
Fund II................ -- -- 675,716 5,225,388
- ------------------------------------------------------------------------------------
Net increase
(decrease)............. (73,203) (495,252) 717,391 5,413,987
- ------------------------------------------------------------------------------------
Class Y
Shares sold............. 2,445,156 13,152,387 174,175 1,331,193
Shares redeemed......... (2,319,337) (12,533,944) (140,039) (1,052,960)
Shares issued in
reinvestment of
distributions.......... 44,075 222,576 0 0
Shares issued in
acquisition of Keystone
Small Company Growth
Fund II................ -- -- 87,676 678,001
- ------------------------------------------------------------------------------------
Net increase............ 169,894 841,019 121,812 956,234
- ------------------------------------------------------------------------------------
Net increase
(decrease)............. $ 27,926,951 $ (206,737,474)
====================================================================================
</TABLE>
- --------------------------------------------------------------------------------
Stock Selector Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended
March 31, 1999 September 30, 1998 (a) Year Ended June 30, 1998
-------------------------- ------------------------ -------------------------
Shares Amount Shares Amount Shares Amount
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A
Shares sold............. 359,976 $ 6,851,631 9,092 $ 185,580 179,299 $ 4,004,438
Shares redeemed......... (413,482) (7,838,156) (56,116) (1,183,750) (144,091) (3,155,375)
Shares issued in
reinvestment of
distributions.......... 197,997 3,461,192 0 0 119,866 2,407,663
- ---------------------------------------------------------------------------------------------------------
Net increase
(decrease)............. 144,491 2,474,667 (47,024) (998,170) 155,074 3,256,726
- ---------------------------------------------------------------------------------------------------------
Class B
Shares sold............. 76,525 1,442,175 8,269 159,003 17,128 335,684
Shares redeemed......... (56,323) (1,047,507) (1,244) (22,379) (2,484) (15,011)
Shares issued in
reinvestment of
distributions.......... 6,740 116,802 0 0 995 17,497
- ---------------------------------------------------------------------------------------------------------
Net increase............ 26,942 511,470 7,025 136,624 15,639 338,170
- ---------------------------------------------------------------------------------------------------------
Class Y
Shares sold............. 2,087,821 39,958,370 1,552,973 33,729,598 3,703,125 82,284,855
Shares redeemed......... (10,437,134) (196,168,872) (3,531,924) (74,555,005) (6,152,133) (134,202,820)
Shares issued in
reinvestment of
distributions.......... 5,193,569 90,911,973 0 0 3,198,533 64,322,176
- ---------------------------------------------------------------------------------------------------------
Net increase
(decrease)............. (3,155,744) (65,298,529) (1,978,951) (40,825,407) 749,525 12,404,211
- ---------------------------------------------------------------------------------------------------------
Net increase
(decrease)............. (62,312,392) (41,686,953) 15,999,107
=========================================================================================================
</TABLE>
(a) For the three months ended September 30, 1998. The Fund changed its fiscal
year end from June 30 to September 30, effective September 30, 1998.
82
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Combined Notes to Financial Statements(Unaudited) (continued)
- --------------------------------------------------------------------------------
Strategic Growth Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended
March 31, 1999 September 30, 1998
------------------------- --------------------------
Shares Amount Shares Amount
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A
Shares sold............. 10,197,522 $ 104,582,504 2,441,784 $ 24,888,096
Automatic conversion of
Class B shares to Class
A shares............... 0 0 80,710,264 735,774,137
Shares redeemed......... (9,802,298) (100,881,039) (10,150,776) (103,841,488)
Shares issued in
reinvestment of
distributions.......... 8,976,424 85,277,027 0 0
- --------------------------------------------------------------------------------
Net increase............ 9,371,648 88,978,492 73,001,272 656,820,745
- --------------------------------------------------------------------------------
Class B
Shares sold............. 3,143,306 31,487,405 4,930,584 49,374,717
Automatic conversion of
Class B shares to Class
A shares............... 0 0 (80,710,264) (735,774,137)
Shares redeemed......... (8,603,440) (87,886,353) (8,473,644) (84,439,886)
Shares issued in
reinvestment of
distributions.......... 1,854,507 17,488,073 11,014,353 101,552,338
- --------------------------------------------------------------------------------
Net increase
(decrease)............. (3,605,627) (38,910,875) (73,238,971) (669,286,968)
- --------------------------------------------------------------------------------
Class C
Shares sold............. 234,607 2,353,932 62,655 646,015
Shares redeemed......... (64,660) (661,730) (15,565) (150,929)
Shares issued in
reinvestment of
distributions.......... 9,743 91,880 0 0
- --------------------------------------------------------------------------------
Net increase............ 179,690 1,784,082 47,090 495,086
- --------------------------------------------------------------------------------
Net increase
(decrease)............. $ 51,851,699 $ (11,971,137)
================================================================================
</TABLE>
- --------------------------------------------------------------------------------
Tax Strategic Equity Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Period Ended
March 31, 1999 September 30, 1998
-------------------- ------------------
Shares Amount Shares Amount
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A (a)
Shares sold............................ 335,807 $ 4,424,289 964 $ 9,623
Shares redeemed........................ (45,751) (602,859) 0 0
- --------------------------------------------------------------------------------
Net increase........................... 290,056 3,821,430 964 9,623
- --------------------------------------------------------------------------------
Class B
Shares sold............................ 476,670 6,287,271 0 0
Shares redeemed........................ (65,994) (886,947) 0 0
- --------------------------------------------------------------------------------
Net increase........................... 410,676 5,400,324 0 0
- --------------------------------------------------------------------------------
Class C
Shares sold............................ 101,725 1,340,210 0 0
Shares redeemed........................ (3,688) (48,864) 0 0
- --------------------------------------------------------------------------------
Net increase........................... 98,037 1,291,346 0 0
- --------------------------------------------------------------------------------
Class Y (b)
Shares sold............................ 69,881 912,968 340,703 3,494,060
Shares redeemed........................ (3,855) (52,457) 0 0
- --------------------------------------------------------------------------------
Net increase........................... 66,026 860,511 340,703 3,494,060
- --------------------------------------------------------------------------------
Net increase........................... $11,373,611 $3,503,683
================================================================================
</TABLE>
(a) For the period from September 4, 1998 (commencement of operations) to Sep-
tember 30, 1998.
(b) For the period from September 1, 1998 (commencement of operations) to Sep-
tember 30, 1998.
83
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Combined Notes to Financial Statements(Unaudited) (continued)
8. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of investment securities (excluding
short-term securities) were as follows for the six months ended March 31, 1999:
<TABLE>
<CAPTION>
Cost of Purchases Proceeds from Sales
---------------------------------
<S> <C> <C>
Aggressive Growth Fund.... $ 22,721,222 $ 43,553,974
Evergreen Fund............ 107,382,745 74,590,402
Micro Cap Fund............ 10,257,782 14,904,879
Omega Fund................ 296,533,746 231,714,154
Small Company Growth
Fund..................... 565,764,768 671,370,016
Stock Selector Fund....... 164,176,818 314,484,317
Strategic Growth Fund..... 645,090,322 655,486,668
Tax Strategic Equity
Fund..................... 10,957,961 312,493
</TABLE>
During the six months ended March 31, 1999, Omega Fund, Small Company Growth
Fund and Strategic Growth Fund loaned securities to certain brokers who paid
the Funds a negotiated lenders' fee. These fees are included in interest in-
come. At March 31, 1999, the value of securities on loan and the value of col-
lateral were as follows:
<TABLE>
<CAPTION>
Value of Securities Value of
on Loan Collateral
------------------------------
<S> <C> <C>
Omega Fund..................... $ 90,486,165 $ 94,436,845
Small Company Growth Fund...... 223,146,089 230,113,043
Strategic Growth Fund.......... 38,324,958 38,879,083
</TABLE>
9. EXPENSE OFFSET ARRANGEMENTS
The Funds have entered into expense offset arrangements with ESC and their cus-
todian whereby credits realized as a result of uninvested cash balances were
used to reduce a portion of each Fund's related expenses. The assets deposited
with ESC and the custodian under these expense offset arrangements could have
been invested in income-producing assets. The amount of fee credits received by
each Fund and the impact on each Fund's expense ratio represented as a percent-
age of its average net assets were as follows:
<TABLE>
<CAPTION>
Total
Fee Credits % of Average
Received Net Assets
------------------------
<S> <C> <C>
Aggressive Growth Fund................. $ 9,027 0.01%
Evergreen Fund......................... 57,205 0.01
Micro Cap Fund......................... 2,487 0.01
Omega Fund............................. 10,899 0.01
Small Company Growth Fund.............. 33,395 0.00
Stock Selector Fund.................... 13,804 0.00
Strategic Growth Fund.................. 25,960 0.01
Tax Strategic Equity Fund.............. 1,197 0.01
</TABLE>
10. DEFERRED TRUSTEES' FEES
Each Independent Trustee of each Fund may defer any or all compensation related
to performance of their duties as Trustees. The Trustees' deferred balances are
allocated to deferral accounts, which are included in the accrued expenses for
the Fund. The investment performance of the deferral accounts are based on the
investment performance of certain Evergreen Funds. Any gains earned or losses
incurred in the deferral accounts are reported in the Fund's Trustees' fees and
expenses. Trustees will be paid either in one lump sum or in quarterly
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.
11. FINANCING AGREEMENTS
Certain Evergreen Funds and State Street Bank and Trust Company ("State
Street") and a group of banks (collectively, the "Banks") entered into a fi-
nancing agreement dated December 22, 1997, as amended on November 20, 1998. Un-
der this agreement, the Banks provided an unsecured credit facility in the ag-
gregate amount of $400 million ($275 million committed and $125 million uncom-
mitted). The credit facility was allocated, under the terms of the financing
agreement, among the Banks. The credit facility was accessed by the
84
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Combined Notes to Financial Statements(Unaudited) (continued)
Funds for temporary or emergency purposes only and was 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 was al-
located 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 ad-
ministrative agent is entitled to a fee of $20,000 per annum which is allocated
to all of the funds.
This agreement was amended and renewed on December 22, 1998. The amended fi-
nancing agreement became effective on December 22, 1998 among all of the Ever-
green Funds, State Street and The Bank of New York ("BONY"). Under this agree-
ment, State Street and BONY provide an unsecured credit facility in the aggre-
gate amount of $150 million ($125 million committed and $25 million uncommit-
ted). The remaining terms and conditions of the agreement are unaffected. Dur-
ing the six months ended March 31, 1999, the Funds had no borrowings under
these agreements.
12. YEAR 2000
Like other investment companies, the Funds could be adversely affected if the
computer systems used by the Funds' investment advisors and the Funds' other
service providers are not able to perform their intended functions effectively
after 1999 because of the inability of computer software to distinguish the
year 2000 from the year 1900. The Funds' investment advisors are taking steps
to address this potential year 2000 problem with respect to the computer sys-
tems that they use and to obtain satisfactory assurances that comparable steps
are being taken by the Funds' other major service providers. At this time, how-
ever, there can be no assurance that these steps will be sufficient to avoid
any adverse impact on the Funds from this problem.
85
<PAGE>
Evergreen Funds
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Balanced
American Retirement Fund
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Tax Strategic Foundation Fund
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Utility Fund
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Tax Strategic Equity Fund
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Stock Selector Fund
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Omega Fund
Small Company Growth Fund
Aggressive Growth Fund
Micro Cap Fund
Global International
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Precious Metals Fund
Emerging Markets Growth Fund
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800.346.3858
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