<PAGE>
Semiannual Report
as of September 30, 1999
Evergreen
Balanced Funds
[LOGO OF EVERGREEN FUNDS/SM/]
SINCE 1932
<PAGE>
Table of Contents
Letter to Shareholders .................................................... 1
Evergreen Balanced Fund
Fund at a Glance ....................................................... 2
Portfolio Manager Interview ............................................ 3
Evergreen Foundation Fund
Fund at a Glance ....................................................... 7
Portfolio Manager Interview ............................................ 8
Evergreen Tax Strategic Foundation Fund
Fund at a Glance ....................................................... 11
Portfolio Manager Interview ............................................ 12
Financial Highlights
Evergreen Balanced Fund ................................................ 16
Evergreen Foundation Fund .............................................. 18
Evergreen Tax Strategic Foundation Fund ................................ 20
Schedule of Investments
Evergreen Balanced Fund ................................................ 22
Evergreen Foundation Fund .............................................. 28
Evergreen Tax Strategic Foundation Fund ................................ 32
Statements of Assets and Liabilities ...................................... 39
Statements of Operations .................................................. 40
Statements of Changes in Net Assets ....................................... 41
Combined Notes to Financial
Statements ................................................................ 43
Evergreen Funds
Evergreen Funds is one of the nation's fastest growing investment companies with
approximately $70 billion in assets under management.
With over 80 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 and expenses, and should be read carefully before
investing or sending money
Mutual Funds: NOT FDIC INSURED May lose value . Not bank guaranteed
Evergreen Distributor, Inc.
EvergreenSM is a Service Mark of Evergreen Investment Services, Inc.
<PAGE>
Letter to Shareholders
----------------------
November 1999
[PHOTO]
William M. Ennis President
and CEO
Dear Shareholders,
We are pleased to provide the Evergreen Balanced Funds semiannual report, which
covers the six-month period ended September 30, 1999.
Uncertainty over Interest Rates Influences the Markets
Although the U.S. economy is in the ninth year of economic expansion, many
believe that valuation levels in some sectors of the stock market are just not
sustainable. The S&P 500 continued to advance in the first half of 1999,
dominated by the performance of a very small group of large-cap stocks. By the
3rd quarter of 1999, rising interest rates dampened performance of stocks across
the board. Investors' inflation fears and continued doubts about the ability of
U.S. companies to sustain significant growth in earnings prompted an October
sell-off.
The Federal Reserve Bank's "tightening bias" leads many to anticipate further
interest rate increases in order to stem even the slightest inflationary
pressure. Additional interest rate hikes would likely have a negative effect on
stock prices, which could restrain consumer spending; however, many investors
are waiting for just such a scenario to take place, so they can take advantage
of lower stock prices as a buying opportunity. Bonds appear relatively
attractive over the long term compared to other asset classes, particularly
because "real" interest rates are high by historical standards.
We believe that the economy is still fundamentally strong, and that inflation
will stay contained, producing only moderate upward pressure on interest rates.
We remain cautiously optimistic about the prospects for continued growth in the
markets.
Evergreen Funds is Ready for the Year 2000/1/
We have been addressing the Year 2000 challenge since February of 1996 and have
committed the time, resources and people necessary to prepare for any
ramifications from the millennium bug. Today, we are confident that our
preparations will enable us to continue to deliver the high-quality Evergreen
products and services on which our shareholders rely. In addition, Evergreen
portfolio managers have placed great emphasis on monitoring portfolios for Y2K
readiness.
We believe that sound investing is about taking steps to meet your long-term
financial needs and goals. We remind you to take advantage of your financial
advisor's expertise to develop and refine a financial plan that will enable you
to meet your objectives. Evergreen Funds offers a broad mix of stock, bond and
money market funds that should make it simple for you to choose the most
appropriate for your portfolio.
We would like to thank you for your continued investment in Evergreen Funds.
Sincerely,
/s/
--------------------------
William M. Ennis
President and CEO
Evergreen Investment Company
/1/ The information above constitutes Year 2000 readiness disclosure.
1
<PAGE>
EVERGREEN
Balanced Fund
Fund at a Glance as of September 30, 1999
"The Fund performed in line with the markets during a period of rising interest
rates and uncertainty about the pace of economic growth."
Portfolio
Management
--------------------
[PHOTO] [PHOTO]
Gary E.Pzegeo Judith A.Warners
Tenure: January 1999 Tenure: August 1998
CURRENT INVESTMENT STYLE/1/
[GRAPHIC] Morningstar's Style Box is based on a portfolio date as of 9/30/1999.
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.
[GRAPHIC] The Fixed-Income Style Box placement is based on a fund's average
effective maturity or duration and the average credit rating of the
bond portfolio.
/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, fees and expenses 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 Class
A are 0.25%, for Class B are 1.00% and for Class C are 1.00%. 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 9/11/1935 Class A Class B Class C Class Y
Class Inception Date 1/20/1998 9/11/1935 1/22/1998 1/26/1998
Average Annual Returns*
6 months with sales charge -4.93% -5.43% -1.57% n/a
6 months w/o sales charge -0.21% -0.50% -0.59% 0.00%
1 year with sales charge 5.28% 5.14% 8.74% n/a
1 year w/o sales charge 10.50% 9.66% 9.65% 10.79%
3 years 11.70% 12.02% 12.70% 13.83%
5 years 14.12% 14.19% 14.38% 15.53%
10 years 10.62% 10.30% 10.26% 11.43%
Since Portfolio Inception 8.56% 8.45% 8.41% 8.72%
Maximum Sales Charge 4.75% 5.00% 1.00% n/a
Front End CDSC CDSC
30-day SEC yield 2.48% 1.84% 1.84% 2.88%
6-month income dividends
per share $0.15 $0.11 $0.11 $0.16
* Adjusted for maximum applicable sales charge unless noted.
- --------------------------------------------------------------------------------
LONG TERM GROWTH
- --------------------------------------------------------------------------------
CPI LBGCBI S&P 500 Class B
9/30/89 10,000 10,000 10,000 10,000
9/30/90 10,616 10,675 9,060 9,477
9/30/91 10,976 12,368 11,879 11,581
9/30/92 11,304 14,005 13,188 12,468
9/30/93 11,608 15,608 14,897 13,894
9/30/94 11,952 14,961 15,447 13,589
9/30/95 12,256 17,109 20,038 16,039
9/30/96 12,624 17,879 24,115 18,584
9/30/97 12,896 19,593 33,861 22,994
9/30/98 13,088 22,115 36,888 24,309
9/30/99 13,400 21,752 46,652 26,658
Comparison of a $10,000 investment in Evergreen Balanced Fund Class B shares/2/,
versus a similar investment in the Standard & Poor's 500 Index (S&P 500), the
Lehman Brothers Government/Corporate Bond Index (LBGCBI) and the Consumer Price
Index (CPI).
The S&P 500 and the LBGCBI are unmanaged indices and do not include transaction
costs associated with buying and selling securities nor any management fees. The
CPI is a commonly used measure of inflation and does not represent an investment
return. It is not possible to invest directly in an index.
2
<PAGE>
EVERGREEN
Balanced Fund
Portfolio Manager Interview
How did the Fund perform?
The Evergreen Balanced Fund performed in line with the markets during a period
of rising interest rates and uncertainty about the pace of economic growth. For
the six-month period ended September 30, 1999, the Balanced Fund's Class A
shares had a total return of -0.21% compared to -0.56% return for the Lehman
Brothers. Government/Corporate Bond Index and 0.36% for the S&P 500 Index..
During the same six-month period, the average balanced fund had a return of -
0.15%, according to Lipper Inc., an independent monitor of mutual fund
performance. Fund performance is before the deduction of any applicable sales
charges.
Portfolio
Characteristics
---------------
(as of 9/30/1999)
Total Net Assets $1,557,683,144
Number of Holdings 222
Beta 0.56
P/E Ratio 28.7x
What was the investment environment like during the six months that ended
September 30?
It was a time of worry and rising interest rates. Very strong economic growth in
the final quarter of 1998 and first quarter of 1999 led to concern that the U.S.
economy might be overheating and that long-dormant inflationary pressures might
begin to rise. In both June and August, the U.S. Federal Reserve Board responded
to strong growth in the Gross Domestic Product and heavy consumer spending by
raising short-term interest rates as a pre-emptive strike against inflation.
During the six-month period, the yields of the 30-year Treasury rose from 5.62%
to 6.05%, while yields on the 10-year Treasury rose from 5.23% to 5.88%. While
there was not evidence of a strong pickup in inflation, there were pockets of
rising prices, most notably in energy. During the six months, the price of a
barrel of crude oil rose by 50%.
This created uncertainty in the bond market, which was concerned about how far
the Federal Reserve might go to raise interest rates. Corporate bonds,
especially higher-grade securities, were hurt both by this uncertainty and by an
unusually heavy supply of new bonds in the market. During the six months,
Treasuries outperformed both high grade and high yield corporate bonds. However,
high-grade bonds tended to underperform high yield bonds, which were helped by
their yield premiums. Mortgage-backed securities, which tend to have shorter
duration and therefore are less sensitive to interest rate increases,
outperformed both corporate and government bonds.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
(as a percentage of 9/30/1999 net assets)
[PIE CHART] Common Stock -- 60.7%
Corporate Bonds & Notes -- 14.5%
Collateralized Mortgage Obligations -- 5.7%
Treasury Bonds & Notes -- 4.8%
Asset-Backed Securities -- 4.5%
Foreign Bonds (U.S. and Non-U.S. Dollars) -- 3.4%
Mortgage-Backed Securities -- 3.0%
Cash and Short-Term Investments -- 2.3%
Convertible Securities -- 1.1%
3
<PAGE>
EVERGREEN
Balanced Fund
Portfolio Manager Interview
The stock market, after a period of exceptionally strong results in the previous
six months, experienced both short-term rallies and declines as well as changes
in performance-leading sectors. At the start of the period, in April, we saw a
rally in the stocks of companies in basic materials industries and of cyclical
companies, whose fortunes are closely linked to the rises and declines in
economic growth. However, the overall market corrected down in May, July and
September. Over the full six-month period, companies in the technology
industries tended to outperform the overall market and a relatively small group
of large-cap companies turned in relatively stronger performance than the
market. This group included industry-leading technology companies as well as
large-cap, stable growth companies such as General Electric and Wal-Mart.
Top 5 Industries
Equity
------
(as a percentage of 9/30/1999 net assets)
Information Services & Technology 10.9%
Oil/Energy 6.4%
Healthcare Products & Services 5.9%
Communication Systems & Services 4.2%
Retailing & Wholesale 4.2%
What was your overall strategy with respect to allocating assets between stocks
and bonds?
We remained fairly consistent throughout the six-month period. We started the
new fiscal year in April with a target allocation of 63% stocks and 37% bonds.
By the end of the fiscal period on September 30, 1999, the relative weightings
were approximately 62% in stocks and 38% in fixed income.
What were your principal fixed income strategies?
Given the uncertainty about the direction of interest rates and potential
problems created by the "Year 2000 question," we took a lower risk profile in
managing the fixed income portfolio. This meant we shortened the portfolio's
sensitivity to interest rate changes and upgraded the overall credit quality of
the portfolio. During the six months, the portfolio's duration was shortened
from 6 years to 5.75 years, while average maturity declined from 11.2 years to
10.1 years. Average credit quality increased from AA- to AA, as we added 13% to
the weighting of government and AAA-rated securities, and reduced BBB-rated and
high yield securities by 3% each.
This overall strategy helped performance, because the bond market tended to
reward investments in higher quality, more liquid securities.
Top 5 Industries
Bonds
-----
(as a percentage of 9/30/1999 net assets)
Finance & Insurance 6.0%
Collateralized Mortgage Obligations 5.7%
Treasury Bonds & Notes 4.8%
Asset-Backed Securities 4.5%
Mortgage-Backed Securities 3.1%
4
<PAGE>
EVERGREEN
Balanced Fund
Portfolio Manager Interview
What were your principal equity strategies during the period, Judith?
We continued to focus on large company stocks, but we built up our technology
weighting over the period to be slightly over our S&P 500 benchmark, at 24.4% of
equity assets. In technology, we have focused on communication as well as on
companies providing the hardware and software that make up the backbone of the
internet. In communication, we have had major investments in equipment companies
such as Tellabs and Cisco Systems, as well as MCI Worldcom in communications
systems. Our other holdings include market leaders such as IBM, Intel, Sun
Microsystems, EMC and, more recently, Oracle and Veritas Software.
As world economic growth has picked up, we also have made energy an important
theme in our investment strategy. Our investments include a number of
internationally focused energy companies, including Texaco, Royal Dutch
Petroleum, ARCO, BP-Amoco and Apache, which is involved in natural gas
exploration and production.
We have de-emphasized two industries that had been leadership areas for the Fund
in recent years: finance and healthcare. We thought all the favorable factors
that had helped propel both sectors had peaked out. Even though we were
under-weighted in finance, relative to our benchmarks, the remaining financial
stocks still were disappointing to us. Only late in the period has finance shown
improved performance, although we continue to be under-weighted in the group.
While we brought our healthcare weighting down during the six-month period, it
is not significantly under-weighted.
Top 10
Equity Holdings
---------------
(as a percentage of 9/30/1999 net assets)
Microsoft Corp. 2.7%
General Electric Co. 2.4%
Intel Corp. 1.6%
Tyco International Ltd. 1.3%
Cisco Systems, Inc. 1.2%
Texaco, Inc. 1.2%
Wal-Mart Stores, Inc. 1.2%
International Business Machines Corp. 1.2%
CBS Corp. 1.1%
Sun Microsystems, Inc. 1.1%
What were some of the stocks that contributed to performance?
A number of our technology holdings did very well during the period, including
Sun Microsystems, IBM, Honeywell, Veritas Software and Solectron.
Tyco International, a diversified industrial company that we have owned for
several years, turned in very fine performance, as did Tandy Corp., the operator
of the Radio Shack chain.
Our pharmaceutical holdings had disappointing performance. After several years
of strong performance, this industry's high stock valuations began to look less
attractive as the global economy showed signs of revival and more cyclical
stocks started to show improved prospects. In addition, the sector's performance
also was hurt by uncertainty over future government policy on Medicare
reimbursement and the introduction of relatively few new drugs during 1999.
In finance, we sold our positions in Merrill Lynch and Bank America after
disappointing performance.
5
<PAGE>
EVERGREEN
Balanced Fund
Portfolio Manager Interview
Top 5 Bond Holdings
-------------------
(as a percentage of 9/30/1999 net assets)
Coupon Maturity
------ --------
U.S. Treasury Notes 7.25% 5/15/2004 1.6%
U.S. Treasury Bonds 5.25% 2/15/2009 1.1%
Federal Home Loan
Mortgage Corp. 6.63% 9/15/2009 0.9%
Denmark (Kingdom of) 8.00% 5/15/2003 0.9%
FNMA 5.50% 7/1/2009 0.9%
What is your outlook?
In our bond portfolio, we expect to maintain our present strategy with respect
to interest-rate sensitivity, because we think it is possible that the Federal
Reserve may raise short-term rates further to achieve its goal of moderate
growth and low inflation. Over the longer term, however we may increase our
weightings in corporate and mortgage securities. Corporate bond prices, in
relation to Treasury prices, offer an outstanding value.
In equities, we think the leadership companies that dominate our stock portfolio
have favorable prospects in the coming year, although we must get through some
short-term uncertainty first. The market is watching the Federal Reserve Board
very carefully to see if it will raise short-term interest rates and tighten the
money supply further to head off accelerating growth and potential inflationary
pressures. Moreover, the "Year 2000 question" continues to hang over stock
investors, who worry about the ability of computer systems to deal with calendar
dates after December 31, 1999. We believe these short-term issues are
surmountable, and the leading S&P 500 companies in which we invest will continue
to have good earnings growth in the year 2000. These companies are benefiting
from the productivity enhancements made possible by technology, while the
competitive thrust created by the internet and the telecommunications revolution
is creating new earnings opportunities. While inflation is a matter of
short-term concern, we believe consolidation in industries and productivity
enhancements will dampen the effects of rising commodity prices and keep
inflation under control. Although some challenges are present, we believe the
stocks we own will survive and thrive.
6
<PAGE>
EVERGREEN
Foundation Fund
Fund at a Glance as of September 30, 1999
"We believe that by increasing the overall diversification of the portfolio, we
have given the Fund the ability to get through market volatility more smoothly
than it has in the past."
Portfolio
Management
--------------------
[PHOTO] [PHOTO]
Jean C.Ledford,CFA Richard S.Welsh
Tenure: August 1999 Tenure: August 1999
- --------------------------------------------------------------------------------
CURRENT INVESTMENT STYLE/1/
- --------------------------------------------------------------------------------
[GRAPHIC] Morningstar's Style Box is based on a portfolio date as of 9/30/1999.
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.
[GRAPHIC] The Fixed-Income Style Box placement is based on a fund's average
effective maturity or duration and the average credit rating of the
bond portfolio.
/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, fees and expenses 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 Class A are 0.25%, for Class B
are 1.00% and for Class C are 1.00%. 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 1/2/1990 Class A Class B Class C Class Y
Class Inception Date 1/3/1995 1/3/1995 1/3/1995 1/2/1990
Average Annual Returns*
6 months with sales charge -3.81% -4.44% -0.39% n/a
6 months w/o sales charge 1.00% 0.56% 0.61% 1.08%
1 year with sales charge 7.16% 6.62% 10.62% n/a
1 year w/o sales charge 12.53% 11.62% 11.62% 12.76%
3 years 13.51% 13.72% 14.50% 15.62%
5 years 14.37% 14.41% 14.61% 15.74%
Since Portfolio Inception 15.00% 15.14% 15.12% 15.70%
Maximum Sales Charge 4.75% 5.00% 1.00% n/a
Front End CDSC CDSC
30-day SEC Yield 1.61% 0.94% 0.94% 1.94%
6-month income dividends
per share $0.21 $0.13 $0.13 $0.24
*Adjusted for maximum applicable sales charge unless noted.
- --------------------------------------------------------------------------------
LONG TERM GROWTH
- --------------------------------------------------------------------------------
[LINE GRAPH]
CPI LBGCBI S&P 500 Class A
9/30/89 10,000 10,000 10,000 10,000
9/30/90 10,616 10,675 9,060 9,477
9/30/91 10,976 12,368 11,879 11,581
9/30/92 11,304 14,005 13,188 12,468
9/30/93 11,608 15,608 14,897 13,894
9/30/94 11,952 14,961 15,447 13,589
9/30/95 12,256 17,109 20,038 16,039
9/30/96 12,624 17,879 24,115 18,584
9/30/97 12,896 19,593 33,861 22,994
9/30/98 13,088 22,115 36,888 24,309
9/30/99 13,400 21,752 46,652 26,658
Comparison of a $10,000 investment in Evergreen Foundation Fund,Class A
shares/2/,versus a similar investment in the Standard & Poor's 500 Index (S&P
500), the Lehman Brothers Government/Corporate Bond Index (LBGCBI) and the
Consumer Price Index (CPI).
The S&P 500 and the LBGCBI are unmanaged market indices and do not include
transaction costs associated with buying and selling securities nor any
management fees. The CPI is a commonly used measure of inflation and does not
represent an investment return. It is not possible to invest directly in an
index.
7
<PAGE>
EVERGREEN
Foundation Fund
Portfolio Manager Interview
- --------------------------------------------------------------------------------
How did the Evergreen Foundation Fund perform?
- --------------------------------------------------------------------------------
For the six-month period ended September 30, 1999, the Foundation Fund performed
somewhat better than the average balanced fund. During the period, the Fund's
Class A shares had a total return of 1.00% compared to a 0.36% return by the S&P
500 and -0.56% by Lehman Brothers Government/Corporate Bond Index. During the
same period, the average return of balanced funds was -0.15%, according to
Lipper Inc., an independent monitor of mutual fund performance. These returns
were realized during a difficult period in the financial markets, as rising
interest rates undermined the value of bonds and concerns about the possibility
of increasing inflation held back the performance of many stocks. Fund
performance is before deduction of any applicable sales charges.
Portfolio
Characteristics
---------------
(as of 9/30/1999)
Total Net Assets $3,145,869,768
Number of Holdings 177
Beta 0.63
P/E Ratio 53.6x
Tell us about the new portfolio management team that took responsibility for the
Foundation Fund in August.
We have a five member team with a depth of investment experience--almost 50
years total. The lead manager is Jean Ledford, an investment professional with
more than 19 years of experience. For the previous 21/2 years, she was the lead
manager of American Century Select Fund, cited by the Wall Street Journal
(January 7, 1999) as one of the top-performing mutual funds in 1998. Before
joining American Century Investments, she was investment director of the State
of Wisconsin Investment Board. Three of the remaining four members of the team
also came from American Century Investments. They include Richard Welsh,
co-portfolio manager, and analysts Rick Petran and John Anthony. The fifth
member of the team is Caroline Yu, an analyst who had been at Evergreen Asset
Management Corp.
Jean Ledford also is President and Chief Executive Officer of Evergreen Asset
Management Corp. She was appointed to that position following the retirement of
Stephen A. Lieber in August.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
(as a percentage of 9/30/1999 net assets)
[PIE CHART] Common Stock -- 63.5%
U.S. Treasury Bonds & Notes -- 25.1%
Cash Short-Term -- 9.0%
Corporate Bonds & Notes -- 1.6%
Government Agency Bonds & Notes -- 0.6%
Convertibles -- 0.2%
- --------------------------------------------------------------------------------
How would you describe your investment style?
- --------------------------------------------------------------------------------
We build portfolios from the bottom up, emphasizing the selection of individual
stocks of attractive companies with opportunities to improve their earnings. Our
style allows us to find securities in a wide variety of industries. The primary
characteristic of our portfolios is that they are well diversified. We are not
traditional growth or core buyers in the sense that we are not looking for any
absolute figures in terms of earnings growth rates or price-to-growth rates.
While we buy companies with good growth prospects, we are interested in buying
these stocks at reasonable prices.
One consequence of this broader diversification is that we expect the
volatility--or variability--of
8
<PAGE>
EVERGREEN
Foundation Fund
Portfolio Manager Interview
performance will be reduced when compared to the S&P 500. One of our team goals
is to produce very attractive Sharpe Ratios, which measure the amount of risk
taken for the returns obtained. We try to apply this to the Fund by seeking
strong performance while minimizing risk.
We pick stocks one at a time, and our concentrations in industries and sectors
will result from that stock-picking discipline. We are bottom-up stock pickers,
not top-down investors. The key to our style is the search for changes on the
margin that can increase a company's earnings growth rate. We look for factors
such as a new management team, a restructuring, a new product or geographical
expansion. As we construct a portfolio from our stock picks, we are careful to
determine how much risk we are taking.
Our sell discipline is just the reverse of our buy discipline. When a stock
stops exhibiting an upward drift or momentum in earnings, we begin the process
of lightening our position. We look not just at absolute earnings trends, but
also at events on the margin that could affect earnings trends, such as the loss
of a key executive, the failure of a new product or a botched restructuring.
Top 5 Industries
Equity
------
(as a percentage of 9/30/1999 net assets)
---------
Information Services & Technology 13.7%
Finance & Insurance 7.6%
Healthcare Products & Services 6.8%
Utilities-Telephone 4.1%
Communication Systems & Services 3.5%
Top 10
Equity Holdings
---------------
(as a percentage of 9/30/1999 net assets)
---------
Intel Corp. 3.8%
Microsoft Corp. 2.8%
General Electric Co. 2.3%
International Business Machines Corp. 1.9%
Cisco Systems, Inc. 1.8%
Federal National Mortgage Assoc. 1.4%
Lucent Technologies, Inc. 1.3%
Sun Microsystems, Inc. 1.3%
Sprint Corp. 1.2%
Wal-Mart Stores, Inc. 1.2%
What are some of the changes you are making as you implement your strategy in
the Foundation Fund?
On the equity side of the portfolio, we have reduced the total number of company
names from approximately 180 to about 130 and added to the Fund's
diversification. As we have done this, we have increased the weighting in the
technology industry, while decreasing the emphasis on financial service
companies. Newer, technology-related investments in the Fund include Cisco
Systems, Lucent Technologies and Sun Microsystems. Another prominent name that
we have added is Wal-Mart. These four companies now are among the Fund's top-ten
equity holdings, supplanting the prominent positions held by Merrill Lynch,
American International Group, DuPont and Hewlett-Packard, although the latter
four remain Fund holdings.
In the fixed-income portion of the portfolio, we have reduced substantially the
Fund's volatility, or interest rate sensitivity, by shortening duration of the
bonds from about 11 years to about 6 years. In addition to shortening duration,
we recently have added some very high quality corporate bonds to the portfolio
with securities issued by Daimler-Chrysler and Wal-Mart. The Fund's historical
emphasis on very high quality securities remains intact, however. We believe the
fixed-income portfolio should be a stabilizing influence on the overall Fund, as
well as a source of dividend income. We therefore do not try to anticipate or
"bet on" changes in the direction of interest rate movements. Our goal is to
have a fixed income portion that reflects most of the characteristics of a
stable, intermediate-term government bond index, with modest investments in high
quality corporate securities.
9
<PAGE>
EVERGREEN
Foundation Fund
Portfolio Manager Interview
Top 4 Industries
Bonds
-----
(as a percentage of 9/30/1999 net assets)
---------
Treasury Bonds & Notes 25.1%
Automotive Equipment & Manufacturing 0.8%
Retailing & Wholesale 0.8%
U.S. Government Agency Obligations 0.6%
Top 5 Bond Holdings
-------------------
(as a percentage of 9/30/1999 net assets)
---------
Coupon Maturity
------ --------
U.S. Treasury Notes 5.25% 8/15/2003 3.9%
U.S. Treasury Notes 6.50% 8/31/2001 3.2%
U.S. Treasury Notes 5.88% 9/30/2002 2.4%
U.S. Treasury Notes 6.13% 8/15/2007 2.4%
U.S. Treasury Notes 8.13% 8/15/2009 1.9%
What is your outlook?
We believe that by increasing the overall diversification of the portfolio, we
have given the Fund the ability to get through market volatility more smoothly
than it has in the past.
At this point, most investors are wrestling with the question of whether we are
witnessing the start of a strong upturn in inflation, or whether the economy can
sustain the relatively low pace of inflation of the past several years. When
inflationary pressures start to emerge, stocks in industries such as basic
materials, energy and technology start to outperform stocks in other industries.
When there is very little inflation, we see relatively stronger performance in
the traditional areas such as healthcare and the financials.
10
<PAGE>
EVERGREEN
Tax Strategic Foundation Fund
Fund at a Glance as of September 30, 1999
"The key to our style is the search for changes on the margin that can increase
a company's earnings growth rate."
Portfolio
Management
--------------------
[PHOTO] [PHOTO]
Jean C.Ledford,CFA James T.Colby III
Tenure: August 1999 Tenure: November 1999
[PHOTO]
Richard S.Welsh
Tenure: August 1999
- --------------------------------------------------------------------------------
CURRENT INVESTMENT STYLE/1/
- --------------------------------------------------------------------------------
[GRAPHIC] Morningstar's Style Box is based on a portfolio date as of 9/30/1999.
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.
[GRAPHIC] The Fixed-Income Style Box placement is based on a fund's average
effective maturity or duration and the average credit rating of the
bond portfolio.
/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, fees and expenses 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 Class A are 0.25%, for Class B
are 1.00% and for Class C are 1.00%. 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 11/2/1993 Class A Class B Class C Class Y
Class Inception Date 1/17/1995 1/6/1995 3/3/1995 11/2/1993
Average Annual Returns*
6 months with sales charge -5.99% -6.55% -2.64% n/a
6 months w/o sales charge -1.29% -1.66% -1.67% -1.16%
1 year with sales charge 1.85% 1.13% 5.14% n/a
1 year w/o sales charge 6.91% 6.13% 6.14% 7.16%
3 years 8.39% 8.53% 9.37% 10.47%
5 years 12.11% 12.23% 12.46% 13.52%
Since Portfolio Inception 11.20% 11.41% 11.49% 12.38%
Maximum Sales Charge 4.75% 5.00% 1.00% n/a
Front End CDSC CDSC
30-day SEC Yield 2.41% 1.77% 1.77% 2.78%
6-month income dividends
per share $0.18 $0.11 $0.11 $0.20
*Adjusted for maximum applicable sales charge unless noted.
- --------------------------------------------------------------------------------
LONG TERM GROWTH
- --------------------------------------------------------------------------------
[LINE GRAPH]
CPI LBMBI S&P 500 Class A
11/30/93 10,000 10,000 10,000 9,527
9/30/94 10,247 9,824 10,260 10,003
9/30/95 10,508 10,923 13,309 12,243
9/30/96 10,823 11,582 16,017 13,910
9/30/97 11,056 12,627 22,491 17,351
9/30/98 11,221 13,727 24,501 17,400
9/30/99 11,488 13,632 30,986 18,601
Comparison of a $10,000 investment in Evergreen Tax Strategic Foundation
Fund,Class A shares/2/, versus a similar investment in the Standard & Poor's 500
Index (S&P 500), the Lehman Brothers Municipal Bond Index (LBMBI)and
the Consumer Price Index (CPI).
The S&P 500 and the LBMBI are unmanaged market indices which do not include
transaction costs associated with buying or selling securities nor any
management fees. The CPI is a commonly used measure of inflation and does not
represent an investment return. It is not possible to invest directly in an
index.
11
<PAGE>
EVERGREEN
Tax Strategic Foundation Fund
Portfolio Manager Interview
- --------------------------------------------------------------------------------
How did the Evergreen Tax Strategic Foundation Fund perform?
- --------------------------------------------------------------------------------
The Tax Strategic Foundation Fund's Class A shares had a total return of -1.29%
for the six-month period ended September 30, 1999, compared to a 0.36% return
for the S&P 500 and -2.16% for Lehman Brothers Municipal Bond Index. During the
same period, the average return of balanced funds was -0.15%, according to
Lipper Inc., an independent monitor of mutual fund performance. Fund performance
is before deduction of any applicable sales charge.
Portfolio
Characteristics
---------------
(as of 9/30/1999)
Total Net Assets $375,100,564
Number of Holdings 211
Beta 0.46
P/E Ratio 39.7x
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
(as a percentage of 9/30/1999 net assets)
[PIE CHART] Tax-Free Municipal Bonds -- 63.0%
Common Stock -- 36.1%
Short-Term Investments -- 0.9%
- --------------------------------------------------------------------------------
Tell us about the new management team that took responsibility for the equity
portion of the Tax Strategic Foundation Fund in August.
- --------------------------------------------------------------------------------
We have a five-member team with a depth of investment experience--almost 50
years total. The lead equity manager is Jean Ledford, an investment professional
with more than 19 years' experience. For the previous 2 1/2 years, she was the
lead manager of American Century Select Fund, cited by the Wall Street Journal
(January 7, 1999) as one of the top-performing mutual funds in 1998. Before
joining American Century Investments, she was investment director of the State
of Wisconsin Investment Board. Three of the remaining four members of the team
also came from American Century Investments. They include Richard Welsh,
co-portfolio manager, and analysts Rick Petran and John Anthony. The fifth
member of the team is Caroline Yu, an analyst who had been at Evergreen Asset
Management Corp.
Jean Ledford also is President and Chief Executive Officer of
Evergreen Asset Management Corp. She was appointed to that
position following the retirement of Stephen A. Lieber in
August.
Top 5 Industries
Equity
------
(as a percentage of 9/30/1999 net assets)
Healthcare Products & Services 5.8%
Finance & Insurance 5.6%
Banks 4.7%
Information Services & Technology 4.4%
Retailing & Wholesale 2.4%
12
<PAGE>
EVERGREEN
Tax Strategic Foundation Fund
Portfolio Manager Interview
How would you describe your equity investment style?
We build portfolios from the bottom up, emphasizing the selection of individual
stocks of attractive companies with opportunities to improve their earnings. Our
style allows us to find securities in a wide variety of industries. The primary
characteristic of our portfolios is that they are well diversified. We are not
traditional growth or core buyers in the sense that we are not looking for any
absolute figures in terms of earnings growth rates or price-to-growth rates.
While we buy companies with good growth prospects, we are interested in buying
these stocks at reasonable prices.
One consequence of this broader diversification is that we expect the
volatility--or variability--of performance will be reduced when compared to the
S&P 500. One of our team goals is to produce very attractive Sharpe Ratios,
which measure the amount of risk taken for the returns obtained. We try to apply
this to the Fund by seeking strong performance while minimizing risk.
We pick stocks one at a time, and our concentrations in industries and sectors
will result from that stock-picking discipline. We are bottom-up stock pickers,
not top-down investors. The key to our style is the search for changes on the
margin that can increase a company's earnings growth rate. We look for factors
such as a new management team, a restructuring, a new product or geographical
expansion. As we construct a portfolio from our stock picks, we are careful to
determine how much risk we are taking.
Our sell discipline is just the reverse of our buy discipline. When a stock
stops exhibiting an upward drift or momentum in earnings, we begin the process
of lightening our position. We look not just at absolute earnings trends, but
also at events on the margin that could affect earnings trends, such as the loss
of a key executive, the failure of a new product or a botched restructuring.
Top 10
Equity Holdings
---------------
(as a percentage of 9/30/1999 net assets)
PE Corp.-PE Biosystems Group 2.1%
International Business Machines Corp. 1.6%
Intel Corp. 1.4%
Global Crossing Ltd. 1.2%
Merrill Lynch & Co., Inc. 1.1%
Ethan Allen Interiors, Inc. 1.1%
Suntrust Banks, Inc. 1.0%
Citigroup, Inc. 0.9%
Computer Sciences Corp. 0.8%
Union Pacific Corp. 0.8%
13
<PAGE>
EVERGREEN
Tax Strategic Foundation Fund
Portfolio Manager Interview
What are some of the changes you have been making as you implement your strategy
in the equity portfolio of the Tax Strategic Foundation Fund?
We are proceeding very cautiously, consistent with the Fund's objective of
limiting the tax consequences of investment decisions. We expect the Fund will
continue to emphasize large company holdings. We expect to increase the number
of technology-related companies and reduce the number of finance-related
companies, and provide greater overall diversification among industries and
sectors.
While there may be a gradual migration in the portfolio, we stress that we will
be very conscious of the capital gains implications in the sales of any
securities. We want to avoid creating unnecessary capital gains tax obligations
for shareholders.
What were the principal strategies for the fixed-income portfolio during the
past six months?
Jim Colby manages the municipal bond portfolio with three primary objectives in
mind:
1. To generate a high degree of tax-exempt income.
2. To maintain as much price stability as possible to keep the overall
volatility of the Fund low.
3. When appropriate, to take some limited tax losses on the sale of some
securities to enable the Fund to absorb capital gains from the equity
portion of the portfolio and thereby limit the tax consequences to
shareholders.
Given the fact that the six-month period brought a bear market for bonds,
including municipal bonds, we have tried to reduce the interest sensitivity--or
vulnerability to rising interest rates--by keeping the portfolio's duration as
close to nine years as possible. We have done this primarily through swaps that
had the added benefit of creating tax losses to cushion the impact of gains from
the equity portfolio. During the past six months, interest rates rose sharply
across the entire fixed-income spectrum, and bond prices tended to decline.
On September 30, municipal bonds accounted for 63% of the Fund's net assets. The
average maturity of municipal bonds was 16.3 years, the duration was 9.1 years,
and the average credit quality remained AAA.
One of the reasons the Fund slightly underperformed the Lipper balanced fund
group is that the Tax Strategic Foundation Fund has a very unusual investment
charter which requires it to keep more than half of Fund assets invested in
municipal securities. Lipper total return comparisons do not account for the
"taxable equivalent" valuations of the tax-free income earned by this Fund
which, if properly computed, would significantly raise its relative ranking.
More conventional balanced funds usually have most of their assets invested in
equities.
Top 5 Industries
Bonds
-----
(as a percentage of 9/30/1999 net assets)
General Obligation - Local 12.6%
Housing 8.2%
Prerefunded Securities 7.3%
Transportation 6.1%
Water & Sewer 5.8%
14
<PAGE>
EVERGREEN
Tax Strategic Foundation Fund
Portfolio Manager Interview
What is the overall outlook for the municipal bond market?
We believe that this bear market for bonds has created extraordinary value in
municipal securities. Yields on AAA-rated municipal bonds now are better than
90% of the yields on Treasuries, which means that for most investors municipal
bonds offer greater after-tax income.
While the "Y2K" computer issue does hang over the financial markets, we believe
that after we enter a new calendar year a significant cause of uncertainty will
evaporate and investors should begin to recognize the values offered by
municipal securities. The municipal market has an excellent opportunity to
outperform the Treasury market in the next year, while offering relatively
generous tax-exempt income.
Top 5 Bond Holdings
-------------------
(as a percentage of 9/30/1999 net assets)
Coupon Maturity
------ --------
Nebraska Pub. Pwr.
Dist. RB 5.25% 1/1/2028 4.0%
South Carolina St. Pub.
Service Auth. 6.50% 7/1/2024 2.9%
Long Island Pwr. Auth.
New York Elec. 5.50% 12/1/2011 1.4%
Edinburg, TX, Cons.
Independent Sch. Dist. 5.00% 8/15/2019 1.3%
New York St. Urban
Dev. Corp. 5.50% 7/1/2016 1.3%
Jean Ledford, what is your outlook on the equity side?
We believe that by increasing the overall diversification of the portfolio, we
have given the Fund the ability to get through short-term market volatility more
smoothly than it has in the past.
At this point, most investors are wrestling with the question of whether we are
witnessing the start of a strong upturn in inflation, or whether the economy can
sustain the relatively low pace of inflation of the past several years. When
inflationary pressures start to emerge, stocks in industries such as basic
materials, energy and technology start to outperform stocks in other industries.
When there is very little inflation, we see relatively stronger performance in
the traditional areas such as healthcare and the financials.
15
<PAGE>
EVERGREEN
Balanced Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months Ended
September 30, 1999 Year Ended March 31,
---------------------
(Unaudited) 1999 1998 # (a)
<S> <C> <C> <C>
CLASS A SHARES
- ----------------------------------------------------------------------------------------------
Net asset value, beginning Of
period $11.28 $12.87 $12.36
------ ------ ------
- ----------------------------------------------------------------------------------------------
Income from Investment operations
- ----------------------------------------------------------------------------------------------
Net investment income 0.14 0.37 0.08
- ----------------------------------------------------------------------------------------------
Net realized and unrealized gains
or losses on securities, futures
contracts and foreign currency (0.16) 0.48 0.81
related transactions ------ ------ ------
- ----------------------------------------------------------------------------------------------
Total from investment operations (0.02) 0.85 0.89
------ ------ ------
- ----------------------------------------------------------------------------------------------
Distributions to shareholders from
- ----------------------------------------------------------------------------------------------
Net investment income (0.15) (0.41) (0.12)
- ----------------------------------------------------------------------------------------------
Net realized gains 0 (2.03) (0.26)
------ ------ ------
- ----------------------------------------------------------------------------------------------
Total distributions to
shareholders (0.15) (2.44) (0.38)
------ ------ ------
- ----------------------------------------------------------------------------------------------
Net asset value, end of period $11.11 $11.28 $12.87
------ ------ ------
- ----------------------------------------------------------------------------------------------
Total return * (0.21%) 7.52% 7.38%
- ----------------------------------------------------------------------------------------------
Ratios and supplemental data
- ----------------------------------------------------------------------------------------------
Net assets, end of period (millions) $1,122 $1,241 $1,277
- ----------------------------------------------------------------------------------------------
Ratios to average net assets:
- ----------------------------------------------------------------------------------------------
Expenses ** 0.91%+ 0.96% 0.99%+
- ----------------------------------------------------------------------------------------------
Net investment income 2.47%+ 2.97% 3.25%+
- ----------------------------------------------------------------------------------------------
Portfolio turnover rate 43% 102% 76%
- ----------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended
September 30, 1999 Year Ended March 31, Year Ended June 30,
--------------------- ---------------------------
(Unaudited) 1999 1998 # (b) 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
CLASS B SHARES
- ----------------------------------------------------------------------------------------------
Net asset value,
beginning of period $11.29 $12.88 $12.95 $11.33 $10.09 $ 9.26
------ ------ ------ ------ ------ ------
- ----------------------------------------------------------------------------------------------
Income from investment
operations
- ----------------------------------------------------------------------------------------------
Net investment income 0.11 0.28 0.26 0.30 0.29 0.31
- ----------------------------------------------------------------------------------------------
Net realized and
unrealized gains or
losses on securities,
futures contracts and
foreign currency (0.16) 0.48 1.53 2.07 1.42 0.96
related transactions ------ ------ ------ ------ ------ ------
- ----------------------------------------------------------------------------------------------
Total from investment
operations (0.05) 0.76 1.79 2.37 1.71 1.27
------ ------ ------ ------ ------ ------
- ----------------------------------------------------------------------------------------------
Distributions to
shareholders from
- ----------------------------------------------------------------------------------------------
Net investment income (0.11) (0.32) (0.27) (0.30) (0.27) (0.33)
- ----------------------------------------------------------------------------------------------
Net realized gains 0 (2.03) (1.59) (0.45) (0.20) (0.11)
------ ------ ------ ------ ------ ------
- ----------------------------------------------------------------------------------------------
Total distributions to
shareholders (0.11) (2.35) (1.86) (0.75) (0.47) (0.44)
------ ------ ------ ------ ------ ------
- ----------------------------------------------------------------------------------------------
Net asset value, end
of period $11.13 $11.29 $12.88 $12.95 $11.33 $10.09
------ ------ ------ ------ ------ ------
- ----------------------------------------------------------------------------------------------
Total return * (0.50%) 6.71% 14.89% 21.95% 17.35% 14.20%
- ----------------------------------------------------------------------------------------------
Ratios and
supplemental data
- ----------------------------------------------------------------------------------------------
Net assets, end of $ 404 $ 434 $ 580 $1,625 $1,481 $1,345
period (millions)
- ----------------------------------------------------------------------------------------------
Ratios to average net
assets:
- ----------------------------------------------------------------------------------------------
Expenses ** 1.66%+ 1.71% 1.35%+ 1.70% 1.72% 1.77%
- ----------------------------------------------------------------------------------------------
Net investment income 1.72%+ 2.23% 2.66%+ 2.50% 2.71% 3.33%
- ----------------------------------------------------------------------------------------------
Portfolio turnover 43% 102% 76% 89% 96% 88%
rate
- ----------------------------------------------------------------------------------------------
</TABLE>
(a) For the period from January 20, 1998 (commencement of class operations) to
March 31, 1998.
(b) For the nine months ended March 31, 1998. The Fund changed its fiscal year
end from June 30 to March 31, effective March 31, 1998.
* Excluding applicable sales charges.
** Ratio of expenses to average net assets includes fee waivers and excludes
fee credits.
+ Annualized.
# Net investment income is based on average shares outstanding during the
period.
See Combined Notes to Financial Statements.
16
<PAGE>
EVERGREEN
Balanced Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months Ended Year Ended March 31,
September 30, 1999 ---------------------
(Unaudited) 1999 1998 # (a)
<S> <C> <C> <C>
CLASS C SHARES
Net asset value, beginning of
period $11.30 $12.88 $12.43
------ ------ ------
Income from investment operations
Net investment income 0.10 0.26 0.05
Net realized and unrealized losses
on securities, futures contracts
and foreign currency related
transactions (0.16) 0.50 0.75
------ ------ ------
Total from investment operations (0.06) 0.76 0.80
------ ------ ------
Distributions to shareholders from
Net investment income (0.11) (0.32) (0.09)
Net realized gains 0 (2.03) (0.26)
------ ------ ------
Total distributions to
shareholders (0.11) (2.35) (0.35)
------ ------ ------
Net asset value, end of period $11.13 $11.30 $12.88
------ ------ ------
Total return* (0.59%) 6.79% 6.58%
Ratios and supplemental data
Net assets, end of period
(millions) $ 2 $ 2 $ 1
Ratios to average net assets:
Expenses** 1.65%+ 1.71% 1.76%+
Net investment income 1.73%+ 2.21% 2.41%+
Portfolio turnover rate 43% 102% 76%
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended Year Ended March 31,
September 30, 1999 ---------------------
(Unaudited) 1999 1998 # (b)
<S> <C> <C> <C>
CLASS Y SHARES
Net asset value, beginning of
period $11.27 $12.86 $12.01
------ ------ ------
Income from investment operations
Net investment income 0.16 0.39 0.08
Net realized and unrealized gains
or losses on securities, futures
contracts and foreign currency
related transactions (0.16) 0.49 0.86
------ ------ ------
Total from investment operations 0.00 0.88 0.94
------ ------ ------
Distributions to shareholders from
Net investment income (0.16) (0.44) (0.09)
Net realized gains 0 (2.03) 0
------ ------ ------
Total distributions to
shareholders (0.16) (2.47) (0.09)
------ ------ ------
Net asset value, end of period $11.11 $11.27 $12.86
------ ------ ------
Total return 0.00% 7.79% 7.79%
Ratios and supplemental data
Net assets, end of period $ 29 $ 34 $ 39
(millions)
Ratios to average net assets:
Expenses** 0.66%+ 0.71% 0.75%+
Net investment income 2.72%+ 3.22% 3.47%+
Portfolio turnover rate 43% 102% 76%
</TABLE>
(a) For the period from January 22, 1998 (commencement of class operations) to
March 31, 1998.
(b) For the period from January 26, 1998 (commencement of class operations) to
March 31, 1998.
* Excluding applicable sales charges.
** Ratio of expenses to average net assets includes fee waivers and excludes
fee credits.
+ Annualized.
# Net investment income is based on average shares outstanding during the
period.
See Combined Notes to Financial Statements.
17
<PAGE>
EVERGREEN
Foundation Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months Ended Year Ended March 31, Year Ended December 31,
September 30, 1999 -------------------------- ------------------------
(Unaudited) 1999 1998 # 1997 (b) 1996 1995 (a)
<S> <C> <C> <C> <C> <C> <C>
CLASS A SHARES
Net asset value,
beginning of period $20.98 $20.44 $16.00 $16.13 $15.12 $12.24
------ ------ ------ ------ ------ ------
Income from investment
operations
Net investment income 0.21 0.44 0.44 0.12 0.50 0.44
Net realized and
unrealized gains or
losses on securities
and foreign currency
related transactions 0 0.68 4.87 (0.13) 1.16 3.14
------ ------ ------ ------ ------ ------
Total from investment
operations 0.21 1.12 5.31 (0.01) 1.66 3.58
------ ------ ------ ------ ------ ------
Distributions to
shareholders from
Net investment income (0.21) (0.43) (0.44) (0.12) (0.50) (0.47)
Net realized gains 0 (0.15) (0.43) 0 (0.15) (0.23)
------ ------ ------ ------ ------ ------
Total distributions to
shareholders (0.21) (0.58) (0.87) (0.12) (0.65) (0.70)
------ ------ ------ ------ ------ ------
Net asset value, end
of period $20.98 $20.98 $20.44 $16.00 $16.13 $15.12
------ ------ ------ ------ ------ ------
Total return* 1.00% 5.58% 33.88% (0.20%) 11.30% 29.70%
Ratios and supplemental
data
Net assets, end of
period (millions) $ 417 $ 380 $ 350 $ 220 $ 206 $ 107
Ratios to average net
assets:
Expenses ** 1.22%+ 1.26% 1.28% 1.25%+ 1.24% 1.33%+
Net investment income 1.97%+ 2.18% 2.39% 2.83%+ 3.39% 3.73%+
Portfolio turnover rate 36% 10% 9% 2% 10% 28%
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended Year Ended March 31, Year Ended December 31,
September 30, 1999 -------------------------- ------------------------
(Unaudited) 1999 1998 # 1997 (b) 1996 1995 (a)
<S> <C> <C> <C> <C> <C> <C>
CLASS B SHARES
Net asset value,
beginning of period $20.88 $20.34 $15.94 $16.07 $15.07 $12.24
------ ------ ------ ------ ------ ------
Income from investment
operations
Net investment income 0.13 0.29 0.30 0.09 0.40 0.36
Net realized and
unrealized gains or
losses on securities
and foreign currency
related transactions (0.01) 0.67 4.84 (0.13) 1.15 3.09
------ ------ ------ ------ ------ ------
Total from investment
operations 0.12 0.96 5.14 (0.04) 1.55 3.45
------ ------ ------ ------ ------ ------
Distributions to
shareholders from
Net investment income (0.13) (0.27) (0.31) (0.09) (0.40) (0.39)
Net realized gains 0 (0.15) (0.43) 0 (0.15) (0.23)
------ ------ ------ ------ ------ ------
Total distributions to
shareholders (0.13) (0.42) (0.74) (0.09) (0.55) (0.62)
------ ------ ------ ------ ------ ------
Net asset value, end
of period $20.87 $20.88 $20.34 $15.94 $16.07 $15.07
------ ------ ------ ------ ------ ------
Total return* 0.56% 4.81% 32.81% (0.30%) 10.50% 28.70%
Ratios and supplemental
data
Net assets, end of
period (millions) $1,476 $1,432 $1,124 $ 606 $ 570 $ 296
Ratios to average net
assets:
Expenses ** 1.97%+ 2.01% 2.04% 2.00%+ 1.99% 2.07%+
Net investment income 1.22%+ 1.43% 1.63% 2.07%+ 2.64% 2.99%+
Portfolio turnover rate 36% 10% 9% 2% 10% 28%
</TABLE>
(a) For the period from January 3, 1995 (commencement of class operations) to
December 31, 1995.
(b) For the three months ended March 31, 1997. The Fund changed its fiscal year
end from December 31 to March 31, effective March 31, 1997.
* Excluding applicable sales charges.
** Ratio of expenses to average net assets includes fee waivers and excludes
fee credits.
+ Annualized.
# Net investment income is based on average shares outstanding during the
period.
See Combined Notes to Financial Statements.
18
<PAGE>
EVERGREEN
Foundation Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months Ended
September 30, 1999 Year Ended March 31, Year Ended December 31,
-------------------------- ------------------------
(Unaudited) 1999 1998 # 1997 (b) 1996 1995 (a)
<S> <C> <C> <C> <C> <C> <C>
CLASS C SHARES
- ---------------------------------------------------------------------------------------------------
Net asset value,
beginning of period $20.87 $20.34 $15.94 $16.06 $15.07 $12.24
------ ------ ------ ------ ------ ------
- ---------------------------------------------------------------------------------------------------
Income from investment
operations
- ---------------------------------------------------------------------------------------------------
Net investment income 0.13 0.29 0.30 0.09 0.40 0.34
- ---------------------------------------------------------------------------------------------------
Net realized and
unrealized gains or
losses on securities
and foreign currency 0 0.66 4.84 (0.13) 1.14 3.09
related transactions ------ ------ ------ ------ ------ ------
- ---------------------------------------------------------------------------------------------------
Total from investment
operations 0.13 0.95 5.14 (0.04) 1.54 3.43
------ ------ ------ ------ ---- ------
- ---------------------------------------------------------------------------------------------------
Distributions to
shareholders from
- ---------------------------------------------------------------------------------------------------
Net investment income (0.13) (0.27) (0.31) (0.08) (0.40) (0.37)
- ---------------------------------------------------------------------------------------------------
Net realized gains 0 (0.15) (0.43) 0 (0.15) (0.23)
------ ------ ------ ------ ------ ------
- ---------------------------------------------------------------------------------------------------
Total distributions to
shareholders (0.13) (0.42) (0.74) (0.08) (0.55) (0.60)
------ ------ ------ ------ ------ ------
- ---------------------------------------------------------------------------------------------------
Net asset value, end
of period $20.87 $20.87 $20.34 $15.94 $16.06 $15.07
------ ------ ------ ------ ------ ------
- ---------------------------------------------------------------------------------------------------
Total return * 0.61% 4.76% 32.81% (0.30%) 10.40% 28.50%
- ---------------------------------------------------------------------------------------------------
Ratios and
supplemental data
- ---------------------------------------------------------------------------------------------------
Net assets, end of $ 68 $ 68 $ 50 $ 28 $ 27 $ 11
period (millions)
- ---------------------------------------------------------------------------------------------------
Ratios to average net
assets:
- ---------------------------------------------------------------------------------------------------
Expenses ** 1.97%+ 2.01% 2.04% 2.00%+ 1.99% 2.23%+
- ---------------------------------------------------------------------------------------------------
Net investment income 1.22%+ 1.43% 1.63% 2.07%+ 2.64% 2.83%+
- ---------------------------------------------------------------------------------------------------
Portfolio turnover rate 36% 10% 9% 2% 10% 28%
- ---------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended
September 30, 1999 Year Ended March 31, Year Ended December 31,
-------------------------- ------------------------
(Unaudited) 1999 1998 # 1997 (b) 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS Y SHARES
- ----------------------------------------------------------------------------------------------------
Net asset value,
beginning of period $20.99 $20.45 $16.02 $16.14 $15.13 $12.27 $13.12
------ ------ ------ ------ ------ ------ ------
----------------------------------------------------------------------------------------------------
Income from investment
operations
- ----------------------------------------------------------------------------------------------------
Net investment income 0.24 0.49 0.49 0.13 0.54 0.51 0.42
- ----------------------------------------------------------------------------------------------------
Net realized and
unrealized gains or
losses on securities
and foreign currency (0.01) 0.68 4.86 (0.13) 1.16 3.07 (0.57)
related transactions ------ ------ ------ ------ ------ ------ ------
- ----------------------------------------------------------------------------------------------------
Total from investment
operations 0.23 1.17 5.35 0.00 1.70 3.58 (0.15)
------ ------ ------ ------ ------ ------ ------
- ----------------------------------------------------------------------------------------------------
Distributions to
shareholders from
- ----------------------------------------------------------------------------------------------------
Net investment income (0.24) (0.48) (0.49) (0.12) (0.54) (0.49) (0.42)
- ----------------------------------------------------------------------------------------------------
Net realized gains 0 (0.15) (0.43) 0 (0.15) (0.23) (0.28)
------ ------ ------ ------ ------ ------ ------
- ----------------------------------------------------------------------------------------------------
Total distributions to
shareholders (0.24) (0.63) (0.92) (0.12) (0.69) (0.72) (0.70)
------ ------ ------ ------ ------ ------ ------
- ----------------------------------------------------------------------------------------------------
Net asset value, end
of period $20.98 $20.99 $20.45 $16.02 $16.14 $15.13 $12.27
------ ------ ------ ------ ------ ------ ------
- ----------------------------------------------------------------------------------------------------
Total return 1.08% 5.84% 34.12% 0.00% 11.50% 29.70% (1.10%)
- ----------------------------------------------------------------------------------------------------
Ratios and
supplemental data
- ----------------------------------------------------------------------------------------------------
Net assets, end of $1,185 $1,238 $1,117 $ 802 $ 809 $ 623 $ 332
period (millions)
- ----------------------------------------------------------------------------------------------------
Ratios to average net
assets:
- ----------------------------------------------------------------------------------------------------
Expenses ** 0.97%+ 1.01% 1.03% 1.00%+ 0.99% 1.07% 1.14%
- ----------------------------------------------------------------------------------------------------
Net investment income 2.22%+ 2.43% 2.65% 3.07%+ 3.64% 3.89% 3.51%
- ----------------------------------------------------------------------------------------------------
Portfolio turnover rate 36% 10% 9% 2% 10% 28% 33%
- ----------------------------------------------------------------------------------------------------
</TABLE>
(a) For the period from January 3, 1995 (commencement of class operations) to
December 31, 1995.
(b) For the three months ended March 31, 1997. The Fund changed its fiscal year
end from December 31 to March 31, effective March 31, 1997.
* Excluding applicable sales charges.
** Ratio of expenses to average net assets includes fee waivers and excludes
fee credits.
+ Annualized.
# Net investment income is based on average shares outstanding during the
period.
See Combined Notes to Financial Statements.
19
<PAGE>
EVERGREEN
Tax Strategic Foundation Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months Ended Year Ended March 31, Year Ended December 31,
September 30, 1999 ---------------------------- ------------------------
(Unaudited) 1999 1998 1997 (b) 1996 1995 (a)
CLASS A SHARES
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 16.17 $ 16.36 $ 13.57 $ 13.50 $ 12.20 $10.44
------- ------- ------- ------- ------- ------
- -----------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS
- -----------------------------------------------------------------------------------------------------
Net investment income 0.18 0.34 0.31 0.07 0.27 0.29
- -----------------------------------------------------------------------------------------------------
Net realized and
unrealized gains or (0.38) (0.16) 2.96 0.06++ 1.59 2.24
losses on securities ------- ------- ------- ------- ------- ------
- -----------------------------------------------------------------------------------------------------
Total from investment
operations (0.20) 0.18 3.27 0.13 1.86 2.53
------- ------- ------- ------- ------- ------
- -----------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO
SHAREHOLDERS FROM
- -----------------------------------------------------------------------------------------------------
Net investment income (0.18) (0.34) (0.30) (0.06) (0.28) (0.31)
- -----------------------------------------------------------------------------------------------------
Net realized gains 0 (0.03) (0.18) 0 (0.28) (0.46)
------- ------- ------- ------- ------- ------
- -----------------------------------------------------------------------------------------------------
Total distributions to
shareholders (0.18) (0.37) (0.48) (0.06) (0.56) (0.77)
------ ------- ------- ------- ------- ------
- -----------------------------------------------------------------------------------------------------
NET ASSET VALUE, END
OF PERIOD $ 15.79 $ 16.17 $ 16.36 $ 13.57 $ 13.50 $12.20
------- ------- ------- ------- ------- ------
- -----------------------------------------------------------------------------------------------------
TOTAL RETURN * (1.29%) 1.12% 24.40% 1.00% 15.40% 24.80%
- -----------------------------------------------------------------------------------------------------
RATIOS AND
SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------
Net assets, end of
period (thousands) $83,814 $81,566 $69,879 $15,039 $11,166 $2,702
- -----------------------------------------------------------------------------------------------------
Ratios to average net
assets:
- -----------------------------------------------------------------------------------------------------
Expenses ** 1.28%+ 1.33% 1.42% 1.38%+ 1.52% 1.75%+
- -----------------------------------------------------------------------------------------------------
Net investment income 2.14%+ 2.18% 2.21% 2.30%+ 2.39% 2.79%+
- -----------------------------------------------------------------------------------------------------
Portfolio turnover
rate 55% 64% 50% 29% 88% 110%
- -----------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended Year Ended March 31, Year Ended December 31,
September 30, 1999 ------------------------------ ------------------------
(Unaudited) 1999 1998 1997 (b) 1996 1995 (c)
- -------------------------------------------------------------------------------------------------------
CLASS B SHARES
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 16.14 $ 16.33 $ 13.56 $ 13.49 $ 12.19 $10.31
-------- -------- -------- ------- ------- ------
- -------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS
- -------------------------------------------------------------------------------------------------------
Net investment income 0.11 0.22 0.21 0.05 0.19 0.22
- -------------------------------------------------------------------------------------------------------
Net realized and
unrealized gains or (0.38) (0.15) 2.94 0.06++ 1.59 2.37
losses on securities -------- -------- -------- ------- ------- ------
- -------------------------------------------------------------------------------------------------------
Total from investment
operations (0.27) 0.07 3.15 0.11 1.78 2.59
-------- -------- -------- ------- ------- ------
- -------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO
SHAREHOLDERS FROM
- -------------------------------------------------------------------------------------------------------
Net investment income (0.11) (0.23) (0.20) (0.04) (0.20) (0.25)
- -------------------------------------------------------------------------------------------------------
Net realized gains 0 (0.03) (0.18) 0 (0.28) (0.46)
-------- -------- -------- ------- ------- ------
- -------------------------------------------------------------------------------------------------------
Total distributions to
shareholders (0.11) (0.26) (0.38) (0.04) (0.48) (0.71)
-------- -------- -------- ------- ------- ------
- -------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END
OF PERIOD $ 15.76 $ 16.14 $ 16.33 $ 13.56 $ 13.49 $12.19
-------- -------- -------- ------- ------- ------
- -------------------------------------------------------------------------------------------------------
TOTAL RETURN * (1.66%) 0.41% 23.44% 0.08% 14.70% 25.60%
- -------------------------------------------------------------------------------------------------------
RATIOS AND
SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------------------------------
Net assets, end of
period (thousands) $229,406 $244,486 $185,042 $38,838 $28,007 $6,559
- -------------------------------------------------------------------------------------------------------
Ratios to average net
assets:
- -------------------------------------------------------------------------------------------------------
Expenses ** 2.03%+ 2.08% 2.18% 2.14%+ 2.27% 2.50%+
- -------------------------------------------------------------------------------------------------------
Net investment income 1.38%+ 1.42% 1.46% 1.55%+ 1.64% 2.03%+
- -------------------------------------------------------------------------------------------------------
Portfolio turnover
rate 55% 64% 50% 29% 2% 110%
- -------------------------------------------------------------------------------------------------------
</TABLE>
(a) For the period from January 17, 1995 (commencement of class operations) to
December 31, 1995.
(b) For the three months ended March 31, 1997. The Fund changed its fiscal year
end from December 31 to March 31, effective March 31, 1997.
(c) For the period from January 6, 1995 (commencement of class operations) to
December 31, 1995.
* Excluding applicable sales charges.
** Ratio of expenses to average net assets includes fee waivers and excludes
fee credits.
+ Annualized.
++ The per share amount may not agree with the net realized and unrealized
gains or losses for the period due to the timing of sales and repurchases of
Fund shares in relation to fluctuating market values for the portfolio.
See Combined Notes to Financial Statements.
20
<PAGE>
EVERGREEN
Tax Strategic Foundation Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months Ended Year Ended March 31, Year Ended December 31,
September 30, 1999 ---------------------------- ------------------------
(Unaudited) 1999 1998 1997 (b) 1996 1995 (a)
- -----------------------------------------------------------------------------------------------------
CLASS C SHARES
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 16.11 $ 16.30 $ 13.53 $13.47 $12.19 $10.69
------- ------- ------- ------ ------ ------
- -----------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS
- -----------------------------------------------------------------------------------------------------
Net investment income 0.11 0.22 0.21 0.06 0.18 0.22
- -----------------------------------------------------------------------------------------------------
Net realized and
unrealized gains or
losses on securities (0.38) (0.15) 2.94 0.05++ 1.58 1.99
------- ------- ------- ------ ------ ------
- -----------------------------------------------------------------------------------------------------
Total from investment
operations (0.27) 0.07 3.15 0.11 1.76 2.21
------- ------- ------- ------ ------ ------
- -----------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO
SHAREHOLDERS FROM
- -----------------------------------------------------------------------------------------------------
Net investment income (0.11) (0.23) (0.20) (0.05) (0.20) (0.25)
- -----------------------------------------------------------------------------------------------------
Net realized gains 0 (0.03) (0.18) 0 (0.28) (0.46)
------- ------- ------- ------ ------ ------
- -----------------------------------------------------------------------------------------------------
Total distributions to
shareholders (0.11) (0.26) (0.38) (0.05) (0.48) (0.71)
------- ------- ------- ------ ------ ------
- -----------------------------------------------------------------------------------------------------
NET ASSET VALUE, END
OF PERIOD $ 15.73 $ 16.11 $ 16.30 $13.53 $13.47 $12.19
------- ------- ------- ------ ------ ------
- -----------------------------------------------------------------------------------------------------
TOTAL RETURN * (1.67%) 0.41% 23.49% 0.08% 14.50% 21.20%
- -----------------------------------------------------------------------------------------------------
RATIOS AND
SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------
Net assets, end of
period (thousands) $40,737 $45,035 $27,699 $5,086 $4,108 $ 496
- -----------------------------------------------------------------------------------------------------
Ratios to average net
assets:
- -----------------------------------------------------------------------------------------------------
Expenses ** 2.02%+ 2.08% 2.18% 2.13%+ 2.25% 2.50%+
- -----------------------------------------------------------------------------------------------------
Net investment income 1.38%+ 1.42% 1.46% 1.55%+ 1.64% 2.07%+
- -----------------------------------------------------------------------------------------------------
Portfolio turnover
rate 55% 64% 50% 29% 88% 110%
- -----------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended Year Ended March 31, Year Ended December 31,
September 30, 1999 ---------------------------- ---------------------------
(Unaudited) 1999 1998 1997 (b) 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS Y SHARES
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 16.20 $ 16.39 $ 13.61 $ 13.54 $ 12.22 $ 10.27 $ 10.31
------- ------- ------- ------- ------- ------- -------
- ----------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------------------------------------------------------------------
Net investment income 0.21 0.37 0.37 0.09 0.34 0.35 0.27
- ----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gains or losses on
securities (0.39) (0.15) 2.95 0.05++ 1.56 2.39 0.08
------- ------- ------- ------- ------- ------- -------
- ----------------------------------------------------------------------------------------------------------------------------------
Total from investment operations (0.18) 0.22 3.32 0.14 1.90 2.74 0.35
------- ------- ------- ------- ------- ------- -------
- ----------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM
- ----------------------------------------------------------------------------------------------------------------------------------
Net investment income (0.20) (0.38) (0.36) (0.07) (0.30) (0.33) (0.27)
- ----------------------------------------------------------------------------------------------------------------------------------
Net realized gains 0 (0.03) (0.18) 0 (0.28) (0.46) (0.12)
------- ------- ------- ------- ------- ------- -------
- ----------------------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders (0.20) (0.41) (0.54) (0.07) (0.58) (0.79) (0.39)
------- ------- ------- ------- ------- ------- -------
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 15.82 $ 16.20 $ 16.39 $ 13.61 $ 13.54 $ 12.22 $ 10.27
------- ------- ------- ------- ------- ------- -------
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (1.16%) 1.38% 24.73% 1.00% 15.80% 27.30% 3.40%
- ----------------------------------------------------------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (thousands) $21,144 $23,895 $19,881 $15,311 $15,002 $13,485 $10,575
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
- ----------------------------------------------------------------------------------------------------------------------------------
Expenses ** 1.02%+ 1.08% 1.15% 1.13%+ 1.30% 1.50% 1.49%
- ----------------------------------------------------------------------------------------------------------------------------------
Net investment income 2.38%+ 2.42% 2.48% 2.54%+ 2.63% 3.06% 2.87%
- ----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 55% 64% 50% 29% 88% 110% 245%
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) For the period from March 3, 1995 (commencement of class operations) to
December 31, 1995.
(b) For the three months ended March 31, 1997. The Fund changed its fiscal year
end from December 31 to March 31, effective March 31, 1997.
* Excluding applicable sales charges.
** Ratio of expenses to average net assets includes fee waivers and excludes
fee credits.
+ Annualized.
++ The per share amount may not agree with the net realized and unrealized
gains or losses for the period due to the timing of sales and repurchases of
Fund shares in relation to fluctuating market values for the portfolio.
See Combined Notes to Financial Statements.
21
<PAGE>
EVERGREEN
Balanced Fund
Schedule of Investments
September 30, 1999 (Unaudited)
Shares Value
COMMON STOCKS - 60.7%
AEROSPACE & DEFENSE - 0.8%
Loral Space &
Communications * +.............. 200,000 $ 3,437,500
United Technologies Corp......... 160,000 9,490,000
---------------
12,927,500
---------------
AUTOMOTIVE EQUIPMENT &
MANUFACTURING - 0.9%
Ford Motor Co.................... 138,200 6,935,913
General Motors Corp.............. 118,000 7,426,625
---------------
14,362,538
---------------
BANKS - 1.9%
Fleet Boston Corp................ 250,000 9,156,250
Mellon Bank Corp................. 350,000 11,812,500
Wells Fargo Co................... 200,000 7,925,000
---------------
28,893,750
---------------
BUILDING, CONSTRUCTION & FURNISHINGS - 0.7%
Home Depot, Inc.................. 150,000 10,293,750
---------------
BUSINESS EQUIPMENT & SERVICES - 0.7%
Automatic Data Processing, Inc... 240,000 10,710,000
---------------
CAPITAL GOODS - 0.6%
Deere & Co....................... 250,000 9,671,875
---------------
CHEMICAL & AGRICULTURAL PRODUCTS - 0.5%
Monsanto Co...................... 200,000 7,137,500
---------------
COMMUNICATION SYSTEMS & SERVICES - 4.2%
Allegiance Telecom, Inc. *....... 95,000 4,999,375
Cisco Systems, Inc. *............ 280,000 19,197,500
MCI WorldCom, Inc. *............. 185,000 13,296,875
McLeod USA, Inc., Cl. A * +...... 160,000 6,810,000
Newbridge Networks Corp.......... 400,000 10,425,000
Tellabs, Inc. *.................. 75,000 4,270,312
Winstar Communications, Inc. *... 180,000 7,031,250
---------------
66,030,312
---------------
CONSUMER PRODUCTS & SERVICES - 1.0%
Procter & Gamble Co.............. 160,000 15,000,000
---------------
DIVERSIFIED COMPANIES - 1.8%
Allied Signal, Inc............... 142,600 8,547,088
Tyco International Ltd........... 191,260 19,747,595
---------------
28,294,683
---------------
ELECTRICAL EQUIPMENT & SERVICES - 3.3%
General Electric Co.............. 315,000 37,347,187
Microchip Technology, Inc. *..... 120,000 6,165,000
Solectron Corp. *................ 113,000 8,114,813
---------------
51,627,000
---------------
COMMON STOCKS - CONTINUED
FINANCE & INSURANCE - 3.8%
American International
Group, Inc...................... 181,250 15,757,422
Associates First Capital
Corp., Cl. A.................... 198,706 7,153,416
Citigroup, Inc................... 316,400 13,921,600
Federal Home Loan
Mortgage Corp................... 100,000 5,200,000
Lehman Brothers
Holdings, Inc................... 210,000 12,245,625
Nationwide Financial
Services, Inc., Cl. A........... 140,000 4,952,500
---------------
59,230,563
---------------
FOOD & BEVERAGE PRODUCTS - 2.6%
Anheuser Busch
Companies, Inc.................. 210,000 14,713,125
Coca Cola Co..................... 79,100 3,801,744
McDonald's Corp.................. 280,000 12,040,000
Pepsi Bottling Group, Inc........ 245,000 4,180,312
Pepsico, Inc..................... 200,000 6,050,000
---------------
40,785,181
---------------
GOLD MINING - 0.1%
Homestake Mining Co.............. 197,200 1,811,775
---------------
HEALTHCARE PRODUCTS & SERVICES - 5.9%
American Home
Products Corp................... 145,000 6,017,500
Bristol-Myers Squibb Co.......... 185,800 12,541,500
Johnson & Johnson................ 130,000 11,943,750
Lilly (Eli) & Co................. 100,000 6,400,000
Medtronic, Inc................... 358,200 12,716,100
Merck & Co., Inc................. 200,000 12,962,500
Pfizer, Inc...................... 249,000 8,948,437
Pharmacia & Upjohn, Inc.......... 200,000 9,925,000
Schering-Plough Corp............. 124,600 5,435,675
Warner-Lambert Co................ 72,000 4,779,000
---------------
91,669,462
---------------
INDUSTRIAL SPECIALTY PRODUCTS &
SERVICES - 1.0%
Ecolab, Inc...................... 153,400 5,234,775
Honeywell, Inc................... 90,000 10,018,125
---------------
15,252,900
---------------
INFORMATION SERVICES & TECHNOLOGY - 10.9%
American Power
Conversion Corp. *.............. 265,000 5,035,000
Applied Materials, Inc. *........ 122,100 9,508,538
CMG Information
Services, Inc. * +.............. 133,400 13,673,500
EMC Corp. *...................... 217,600 15,544,800
Hewlett-Packard Co............... 100,000 9,200,000
22
<PAGE>
EVERGREEN
Balanced Fund
Schedule of Investments (continued)
September 30, 1999 (Unaudited)
Shares Value
COMMON STOCKS - CONTINUED
INFORMATION SERVICES &
TECHNOLOGY - CONTINUED
Intel Corp....................... 331,000 $ 24,597,437
International Business
Machines Corp................... 152,400 18,497,550
Microsoft Corp. *................ 464,400 42,057,225
Oracle Systems Corp. *........... 175,000 7,962,500
Sun Microsystems, Inc. *......... 177,600 16,516,800
Veritas Software Corp............ 100,000 7,593,750
---------------
170,187,100
---------------
METALS & MINING - 0.1%
Newmont Mining Corp.............. 70,000 1,811,250
---------------
OIL & ENERGY - 6.4%
Apache Corp...................... 162,400 7,013,650
Atlantic Richfield Co............ 60,000 5,317,500
BP Amoco Plc..................... 48,434 5,367,092
Chevron Corp..................... 70,600 6,265,750
Conoco, Inc. Cl. B............... 85,989 2,353,949
Devon Energy Corp. *............. 100,000 4,143,750
Exxon Corp....................... 142,900 10,851,469
Mobil Corp....................... 108,900 10,971,675
Royal Dutch Petroleum Co......... 230,400 13,608,000
Texaco, Inc...................... 300,000 18,937,500
Unocal Corp...................... 387,500 14,361,719
---------------
99,192,054
---------------
PAPER & PACKAGING - 0.6%
Bowater, Inc..................... 170,000 8,925,000
---------------
PRINTING, PUBLISHING,
BROADCASTING & ENTERTAINMENT - 2.9%
CBS Corp. *...................... 370,000 17,112,500
Clear Channel
Communications, Inc. *.......... 111,000 8,866,125
Disney (Walt) Co. *.............. 250,000 6,468,750
Time Warner, Inc................. 140,000 8,505,000
Viacom, Inc., Cl. B *............ 120,000 5,070,000
---------------
46,022,375
---------------
RETAILING & WHOLESALE - 3.6%
Federated Department
Stores, Inc. *.................. 225,000 9,829,687
Safeway, Inc. *.................. 200,000 7,612,500
Staples, Inc. *.................. 200,000 4,362,500
Tandy Corp....................... 300,000 15,506,250
Wal-Mart Stores, Inc............. 390,000 18,549,375
---------------
55,860,312
---------------
TELECOMMUNICATION SERVICES &
EQUIPMENT - 2.4%
ADC Telecommunications, Inc. *... 108,400 4,546,025
Ciena Corp. *.................... 100,000 3,650,000
Global Crossing Ltd. * +......... 230,000 6,095,000
Intermedia Communications,
Inc. * +........................ 76,000 1,653,000
Motorola, Inc.................... 125,000 11,000,000
Nokia Corp., ADR *............... 111,500 10,014,094
---------------
36,958,119
---------------
UTILITIES - ELECTRIC - 0.9%
Dominion Resources, Inc.......... 195,000 8,799,375
Reliant Energy, Inc.............. 200,000 5,412,500
---------------
14,211,875
---------------
UTILITIES - TELEPHONE - 3.1%
AT&T Corp........................ 222,750 9,689,625
Bell Atlantic Corp. *............ 226,202 15,226,222
BellSouth Corp. *................ 150,000 6,750,000
GTE Corp......................... 112,000 8,610,000
Sprint Corp...................... 150,960 8,189,580
---------------
48,465,427
---------------
Total Common Stocks
(Cost $683,114,880)............. 945,332,301
---------------
CONVERTIBLE PREFERRED - 0.6%
RETAILING & WHOLESALE - 0.6%
Kmart Financing I, 7.75%
(Cost $10,894,754).............. 200,000 9,525,000
---------------
Principal
Amount Value
CONVERTIBLE DEBENTURES - 0.5%
HEALTHCARE PRODUCTS & SERVICES -.0.5%
HEALTHSOUTH Corp., 144A
3.25%, 04/01/2003
(Cost $10,000,000).............. $10,000,000 7,725,000
---------------
CORPORATE BONDS & NOTES - 14.5%
AEROSPACE & DEFENSE - 0.9%
Boeing Co.
6.63%, 02/15/2038............... 5,000,000 4,382,300
Lockheed Martin Corp.
7.45%, 06/15/2004............... 8,300,000 8,373,289
Raytheon Co.
6.75%, 08/15/2007............... 2,000,000 1,927,760
---------------
14,683,349
---------------
BANKS - 0.6%
Amsouth Bancorp.
6.75%, 11/01/2025............... 3,465,000 3,362,401
23
<PAGE>
EVERGREEN
Balanced Fund
Schedule of Investments (continued)
September 30, 1999 (Unaudited)
Principal
Amount Value
CORPORATE BONDS & NOTES - CONTINUED
BANKS - CONTINUED
Barnett Capital I
8.06%, 12/01/2026............... $ 5,000,000 $ 4,881,900
Boatmen's Bancshares, Inc.
6.75%, 03/15/2003............... 698,000 695,362
---------------
8,939,663
---------------
CHEMICAL & AGRICULTURAL PRODUCTS.- 0.1%
Rohm & Haas Co.
7.40%, 07/15/2009............... 1,500,000 1,520,105
---------------
COMMUNICATION SYSTEMS & SERVICES.- 0.2%
Comcast Cable Communications I
6.20%, 11/15/2008............... 4,000,000 3,673,200
---------------
CONSUMER PRODUCTS & SERVICES - 0.4%
Mattel, Inc.
6.13%, 07/15/2005............... 5,000,000 4,659,600
Stanley Works
7.38%, 12/15/2002............... 1,001,000 1,020,449
---------------
5,680,049
---------------
ENVIRONMENTAL SERVICES - 0.4%
Allied Waste North America, Inc.
10.00%, 08/01/2009.............. 1,500,000 1,368,750
Republic Services, Inc.
6.63%, 05/15/2004............... 4,000,000 3,810,520
Waste Management, Inc.
8.75%, 05/01/2018............... 1,126,000 1,087,851
---------------
6,267,121
---------------
FINANCE & INSURANCE - 6.0%
AMBAC, Inc.
9.38%, 08/01/2011............... 5,500,000 6,299,260
Associates Corp. North America
8.63%, 11/15/2004............... 6,550,000 7,016,425
Comdisco, Inc.
6.13%, 01/15/2003............... 4,500,000 4,333,230
Commercial Credit Group, Inc.
10.00%, 05/15/2009.............. 6,400,000 7,617,600
Dean Witter, Discover & Co.
6.75%, 10/15/2013............... 1,280,000 1,200,550
FMR Corp.
7.57%, 06/15/2029............... 4,000,000 3,924,200
Ford Motor Credit Co.
5.75%, 02/23/2004............... 4,000,000 3,840,400
5.80%, 01/12/2009............... 4,900,000 4,462,804
General Electric Capital Corp.
8.75%, 03/14/2003............... 1,300,000 1,387,256
GS Escrow Corp.
6.75%, 08/01/2001............... 5,500,000 5,384,830
Principal
Amount Value
CORPORATE BONDS & NOTES - CONTINUED
FINANCE & INSURANCE - CONTINUED
Household Finance Corp.
7.20%, 07/15/2006............... $ 5,800,000 $ 5,798,260
International Lease Finance Corp.
5.75%, 01/15/2003............... 1,750,000 1,705,935
John Hancock Mutual Life Insurance Co.
7.38%, 02/15/2024............... 4,975,000 4,930,076
Lehman Brothers Holdings, Inc.
6.63%, 04/01/2004............... 5,000,000 4,831,500
Massachusetts Mutual Life Insurance
Co., 144A
7.63%, 11/15/2023............... 5,725,000 5,792,498
Nationwide CSN Trust, 144A
9.88%, 02/15/2025............... 6,000,000 6,508,440
Paine Webber Group, Inc.
6.38%, 05/15/2004............... 2,500,000 2,412,683
6.45%, 12/01/2003............... 5,460,000 5,322,572
Sun Life Canada Capital Trust
8.53%, 05/29/2049............... 11,700,000 11,175,138
---------------
93,943,657
---------------
FOOD & BEVERAGE PRODUCTS - 0.2%
Pepsi Bottling Group, Inc.
7.00%, 03/01/2029............... 4,000,000 3,696,284
---------------
HEALTHCARE PRODUCTS & SERVICES - 0.5%
Johnson & Johnson
8.72%, 11/01/2024............... 5,000,000 5,453,600
Merck & Co., Inc.
6.40%, 03/01/2028............... 3,000,000 2,733,810
---------------
8,187,410
---------------
MACHINERY - DIVERSIFIED - 0.1%
Caterpillar, Inc.
9.38%, 07/15/2001............... 2,000,000 2,097,240
---------------
OIL & ENERGY - 0.5%
Atlantic Richfield Co.
9.00%, 04/01/2021............... 931,000 1,097,658
El Paso Energy Corp.
6.75%, 05/15/2009............... 2,000,000 1,892,640
Petroleum Geo-Services
7.50%, 03/31/2007............... 5,000,000 4,937,900
---------------
7,928,198
---------------
PAPER & PACKAGING - 0.3%
Fort James Corp.
6.75%, 10/01/1999............... 5,000,000 5,000,000
---------------
REAL ESTATE - 0.6%
EOP Operating, Ltd.
6.38%, 02/15/2003............... 3,050,000 2,955,084
24
<PAGE>
EVERGREEN
Balanced Fund
Schedule of Investments (continued)
September 30, 1999 (Unaudited)
Principal
Amount Value
CORPORATE BONDS & NOTES - CONTINUED
REAL ESTATE - CONTINUED
Prudential Insurance Co.
7.13%, 07/01/2007............... $ 6,200,000 $ 6,066,638
---------------
9,021,722
---------------
RETAILING & WHOLESALE - 0.2%
CVS Corp.
5.50%, 02/15/2004............... 3,000,000 2,881,170
---------------
TELECOMMUNICATION SERVICES &
EQUIPMENT - 0.2%
LCI International, Inc.
7.25%, 06/15/2007............... 2,500,000 2,457,675
---------------
TRANSPORTATION - 1.2%
American Airline
8.39%, 01/02/2017............... 5,000,000 4,931,000
Burlington Northern Santa Fe Corp.
6.13%, 03/15/2009............... 3,120,000 2,884,783
Continental Airlines, Inc.
6.80%, 02/02/2020............... 5,000,000 4,682,425
FDX Corp.
6.85%, 01/15/2019............... 5,811,309 5,547,738
---------------
18,045,946
---------------
UTILITIES - ELECTRIC - 1.1%
Edison Mission Holdings Co.
8.14%, 10/01/2019............... 2,750,000 2,644,326
LSP Energy LP
7.16%, 06/30/2013............... 3,500,000 3,387,776
National Rural Utilities
Cooperative Finance
5.00%, 10/01/2002............... 6,500,000 6,228,625
8.67%, 09/15/2018............... 4,000,000 4,399,400
Union Electric Co.
8.00%, 12/15/2022............... 838,000 883,252
---------------
17,543,379
---------------
UTILITIES - TELEPHONE - 1.0%
AT&T Corp.
6.50%, 03/15/2029............... 5,000,000 4,425,500
Bellsouth Capital Funding Corp.
7.12%, 07/15/2097............... 3,750,000 3,491,400
MCI Communications Corp.
6.13%, 04/15/2002............... 2,000,000 1,983,820
Sprint Capital Corp.
6.90%, 05/01/2019............... 5,260,000 4,871,549
---------------
14,772,269
---------------
Total Corporate Bonds & Notes
(Cost $238,660,596)............. 226,338,437
---------------
ASSET-BACKED SECURITIES - 4.5%
Carco Automotive Loan Master Trust
Ser. 1997-1, Cl. A,
6.69%, 08/15/2004............... 2,548,260 2,557,255
Contimortgage Home Equity Loan Trust
Ser. 1997-4, Cl. A7,
6.63%, 09/15/2016............... 2,750,000 2,615,058
Ser. 1998-1, Cl. A6,
6.58%, 12/15/2018............... 4,000,000 3,928,900
Corestates Home Equity Loan Trust
Ser. 1996-1, Cl. A4,
7.00%, 06/15/2012............... 6,150,000 6,172,724
Delta Funding Home Equity Loan Trust
Ser. 1997-1, Cl. A5,
7.74%, 04/25/2029............... 4,500,000 4,550,783
Green Tree Financial Corp.
Ser. 1993-4, Cl. A3,
6.25%, 01/15/2019............... 1,037,335 1,037,656
Ser. 1997-3, Cl. A5,
7.14%, 07/15/2028............... 6,000,000 5,977,500
Merrill Lynch Mortgage Investors, Inc.
Ser. 1991-D, Cl. B,
9.85%, 07/15/2011............... 4,247,995 4,249,312
Ser. 1992-D, Cl. B,
8.50%, 06/15/2017............... 2,853,491 2,964,822
Olympic Automobile Receivables Trust
Ser. 1997-A, Cl. A5,
6.80%, 02/15/2005............... 8,000,000 8,065,080
Premier Automotive Trust
Ser. 1997-2, Cl. B,
6.53%, 12/06/2003............... 10,000,000 9,987,500
Railcar Leasing LLC
Cl. A-2, 144A
7.13%, 01/15/2013............... 2,500,000 2,526,118
Southern Pacific Secured Assets.Corp.
Ser. 1996-3, Cl. A4,
7.60%, 10/25/2027............... 7,500,000 7,591,387
Union Acceptance Corp.
Ser. 1995-C, Cl. A,
6.40%, 10/10/2002............... 269,108 268,436
University Support Services, Inc.
Ser. 1992-CD, Cl. D,
8.91%, 11/01/2007............... 395,000 394,408
WFS Financial Owner Trust
Ser. 1997-C,
6.30%, 03/20/2005............... 6,900,000 6,697,312
---------------
Total Asset-Backed Securities
(Cost $69,667,183).............. 69,584,251
---------------
COLLATERALIZED MORTGAGE OBLIGATIONS - 5.7%
Bear Stearns Commercial Mortgage
Securities, Inc.
Ser. 1998-C1, Cl. C,
6.75%, 01/16/2013............... 10,000,000 9,275,000
25
<PAGE>
EVERGREEN
Balanced Funds
Schedule of Investments (continued)
September 30, 1999 (Unaudited)
Principal
Amount Value
COLLATERALIZED MORTGAGE OBLIGATIONS - CONTINUED
Chase Commercial Mortgage Securities Corp.
Ser. 1997-1, Cl. B,
7.37%, 04/19/2007............... $ 2,200,000 $ 2,212,067
Ser. 1997-2, Cl. B,
6.60%, 11/19/2007............... 2,000,000 1,921,410
CNL Funding
Ser. 1998-1LP, Cl. B-1,
6.60%, 04/18/2011............... 2,500,000 2,237,891
Commercial Mortgage Acceptance Corp.
Ser. 1997-ML1, Cl. B,
6.64%, 12/15/2007............... 2,400,000 2,327,940
Criimi Mae Commercial Mortgage Trust
Ser. 1998-C1, Cl. A, 144A,
7.00%, 03/02/2011............... 4,000,000 3,393,750
Criimi Mae Financial Corp.
Ser. 1, Cl. A,
7.00%, 01/01/2033............... 5,242,686 4,936,316
DLJ Commercial Mortgage Corp.
Ser. 1999-CG2, Cl. A2,
7.45%, 06/10/2009............... 3,000,000 3,012,188
Federal National Mortgage Association
Ser. 1993-248, Cl. SA, REMIC,
3.84%, 08/25/2023............... 1,250,000 1,073,700
Ser. 1997-M6, Cl. C,
6.85%, 05/17/2020............... 5,000,000 4,969,625
FFCA Secured Lending Corp.
Ser. 1997-1, Cl. B1,
7.74%, 06/18/2013............... 1,250,000 1,193,750
Financial Asset Securitization
Ser. 1997-NAM 1, Cl. FXA2,
7.75%, 04/25/2027............... 5,433,467 5,474,353
GE Capital Mortgage Services, Inc.
Ser. 1994-27, Cl. A6,
6.50%, 07/25/2024............... 3,745,000 3,372,822
Ser. 1999-15, Cl. A5,
6.75%, 08/25/2029............... 5,000,000 4,820,575
Independent National Mortgage Corp.,
Ser. 1997-A, Cl. A, 144A
7.81%, 12/26/2026............... 7,629,038 6,928,120
Mellon Residential Funding Corp.
Ser. 1999-TBC1, Cl. A3,
6.11%, 01/25/2029............... 6,452,828 6,226,979
Mid State Trust
Ser. 6, Cl. A3,
7.54%, 07/01/2035............... 1,581,122 1,493,164
Morgan Stanley Capital I, Inc.
Ser. 1998-HF2, Cl. B,
6.92%, 11/15/2030............... 2,550,000 2,516,659
Ser. 1999-LIFE, Cl. A2,
7.11%, 07/15/2009............... 2,000,000 1,995,990
Nomura Depositor Trust, 144A
Ser. 1998-ST1, Cl. A1,
5.54%, 01/15/2003............... 9,650,817 9,525,984
PNC Mortgage Securities Corp.
Ser. 1997-4, Cl. 2PP3,
7.25%, 07/25/2027............... 2,443,124 2,356,967
Ser. 1997-4, Cl. 2PP1,
7.50%, 07/25/2027............... 3,790,001 3,812,456
Residental Funding Mortgage Securities I, Inc.
Ser. 1999-S2, Cl. M1,
6.50%, 01/25/2029............... 4,111,011 3,765,501
---------------
Total Collateralized Mortgage Obligations
(Cost $92,798,853).............. 88,843,207
---------------
MORTGAGE-BACKED SECURITIES - 3.0%
Federal Home Loan Mortgage Corp.
6.25%, 07/15/2004............... 8,525,000 8,475,401
6.63%, 09/15/2009............... 14,000,000 13,954,080
Federal National Mortgage Association
5.50%, 07/01/2009............... 13,956,340 13,391,666
6.50%, 10/01/2028............... 5,185,290 4,971,397
6.78%, 09/01/2021............... 2,828,444 2,912,845
7.00%, 05/01/2024............... 2,695,251 2,659,027
Government National Mortgage Association
8.50%, 05/15/2021............... 305,013 319,214
8.50%, 07/15/2021............... 144,938 150,961
8.50%, 06/15/2022............... 370,392 385,786
9.00%, 10/15/2021............... 237,809 249,996
9.50%, 02/15/2021............... 140,881 149,685
---------------
Total Mortgage-Backed Securities
(Cost $47,451,079).............. 47,620,058
---------------
FOREIGN BONDS (U.S. DOLLARS) - 1.8%
BANKS - 0.2%
International Bank For Reconstruction & Development Co.
COLTS
7.95%, 05/15/2016............... 640,000 763,424
Skandinaviska Enskilda
(eff. yield 7.94%) (c)
0.00%, 05/26/2033............... 30,000,000 2,346,000
---------------
3,109,424
---------------
ENVIRONMENTAL SERVICES - 0.2%
Oslo Seismic Services, Inc.
8.28%, 06/01/2011............... 2,441,512 2,533,068
---------------
FINANCE & INSURANCE - 0.3%
TXU Eastern Funding Co.
6.75%, 05/15/2009............... 5,000,000 4,644,145
---------------
GOVERNMENT AGENCY - 0.2%
Quebec (Province of)
7.50%, 09/15/2029............... 2,500,000 2,503,100
---------------
OIL FIELD SERVICES - 0.5%
YPF SA
7.25%, 03/15/2003............... 8,000,000 7,800,879
---------------
26
<PAGE>
EVERGREEN
Balanced Fund
Schedule of Investments (continued)
September 30, 1999 (Unaudited)
Principal
Amount Value
FOREIGN BONDS (U.S. DOLLARS) - CONTINUED
TRANSPORTATION - 0.4%
Golden State Petroleum Transport Corp.
8.04%, 02/01/2019...............
$ 7,600,000 $ 7,116,382
----------------
Total Foreign Bonds (U.S. Dollars)
(Cost $29,259,754).............. 27,706,998
----------------
FOREIGN BONDS (NON-U.S. DOLLARS) - 1.6%
BANKS - 0.7%
Nykredit
6.00%, 10/01/2029............... 40,913,000 5,336,045
DKK
Realkredit Danmark
6.00%, 10/01/2029............... 44,076,000 5,758,043
DKK
----------------
11,094,088
----------------
GOVERNMENT AGENCY - 0.9%
Denmark (Kingdom of)
8.00%, 05/15/2003............... 86,510,000 13,696,890
----------------
DKK
Total Foreign Bonds (Non-U.S. Dollars)
(Cost $25,772,224).............. 24,790,978
----------------
U.S. GOVERNMENT & AGENCY OBLIGATIONS - 4.8%
U.S. TREASURY OBLIGATIONS - 4.8%
U.S. Treasury Bonds
5.25%, 02/15/2029............... 20,255,000 17,726,367
7.88%, 02/15/2021............... 9,200,000 10,699,324
U.S. Treasury Notes
4.75%, 11/15/2008............... 250,000 227,577
5.25%, 05/15/2004............... 5,000,000 4,886,700
5.75%, 06/30/2001............... 11,000,000 11,015,510
6.00%, 08/15/2004............... 4,830,000 4,876,803
7.25%, 05/15/2004............... 23,690,000 24,978,025
Total U.S. Government & Agency Obligations
(Cost $75,153,330).............. 74,410,306
----------------
SHORT-TERM INVESTMENTS - 4.8%
MONEY MARKET PORTFOLIO - 2.3%
Navigator Prime Portfolio (a)
(cost $36,285,571).............. 36,285,571 36,285,571
----------------
REPURCHASE AGREEMENTS - 2.5%
Evergreen Joint Repurchase Agreement
Investments in repurchase agreements,
in a joint trading account, purchased
9/30/1999, 5.30%, maturing 10/1/1999,
maturity value $38,686,695)
(Cost $38,681,000) (b).......... 38,681,000 38,681,000
----------------
Total Short-Term Investments
(Cost $74,966,571).............. 74,966,571
----------------
TOTAL INVESTMENTS-
(COST $1,357,739,224)........... 102.5% 1,596,843,107
OTHER ASSETS AND
LIABILITIES - NET............... (2.5 ) (39,159,963)
----------- ----------------
NET ASSETS -.................... 100.0% $1,557,683,144
=========== ================
(a) Represents investment of cash collateral received for securities on loan.
(b) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligaitons based on market prices plus accrued interest at
September 30, 1999.
(c) Effective yield (calculated at date of purchase) is the annual yield at
which the bond accretes until its maturity date.
* Non-income producing security.
+ All or a portion of this security is on loan (see Note 7).
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 establised by the Board of Trustees.
SUMMARY OF ABBREVIATIONS:
ADR American Depository Receipt
COLTS Continuously Offered Longer Term Securities
DKK Danish Krone
REMIC Real Estate Mortgage Investment Conduit
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
Forward foreign currency exchange contracts to sell:
EXCHANGE U.S. VALUE AT IN EXCHANGE UNREALIZED
DATE CONTRACTS TO DELIVER SEPTEMBER 30, 1999 FOR U.S. $ LOSS
---- -------------------- ------------------ ----------- ----
10/20/1999 19,000,000 Euro $20,248,416 $19,498,750 ($749,666)
See Combined Notes to Financial Statements.
27
<PAGE>
EVERGREEN
Foundation Fund
Schedule of Investments
September 30, 1999 (Unaudited)
Shares Value
COMMON STOCKS - 63.5%
AEROSPACE & DEFENSE - 0.5%
Boeing Co. *............................. 247,600 $ 10,553,950
United Technologies Corp................. 92,530 5,488,186
---------------
16,042,136
---------------
AUTOMOTIVE EQUIPMENT &
MANUFACTURING - 1.0%
Daimler Chrysler AG...................... 344,066 23,891,083
Delphi Automotive
Systems Corp............................ 90,860 1,459,439
General Motors Corp...................... 110,000 6,923,125
---------------
32,273,647
---------------
BANKS - 2.1%
Bank One Corp............................ 117,923 4,105,194
BankAmerica Corp......................... 179,539 9,998,078
BankBoston Corp.......................... 668,600 29,000,525
National City Corp....................... 366,160 9,771,895
Seacoast Banking Corp. of Florida,
Cl. A................................... 70,000 2,060,625
SunTrust Banks, Inc...................... 184,280 12,116,410
---------------
67,052,727
---------------
BUSINESS EQUIPMENT & SERVICES - 0.5%
Automatic Data Processing, Inc........... 98,000 4,373,250
Computer Sciences Corp. *................ 106,200 7,467,188
Xerox Corp............................... 120,000 5,032,500
---------------
16,872,938
---------------
CAPITAL GOODS - 0.3%
Caterpillar, Inc......................... 156,000 8,550,750
---------------
CHEMICAL & AGRICULTURAL PRODUCTS - 2.0%
Air Products & Chemicals, Inc............ 40,000 1,162,500
Du Pont (E.I.) De
Nemours & Co............................ 575,400 35,027,475
Monsanto Co.............................. 280,800 10,021,050
Nalco Chemical Co........................ 45,000 2,272,500
Pioneer Hi-Bred International, Inc....... 174,000 6,927,375
PPG Industries, Inc...................... 105,800 6,348,000
Praxair, Inc............................. 40,000 1,840,000
---------------
63,598,900
---------------
COMMUNICATION SYSTEMS & SERVICES - 3.5%
Cisco Systems, Inc. *.................... 816,200 55,960,712
Lucent Technologies, Inc................. 643,870 41,771,066
MCI WorldCom, Inc. *..................... 170,900 12,283,438
---------------
110,015,216
---------------
CONSUMER PRODUCTS & SERVICES - 1.0%
Gillette Co.............................. 218,000 7,398,375
Procter & Gamble Co...................... 251,451 23,573,531
---------------
30,971,906
---------------
DIVERSIFIED COMPANIES - 1.1%
Tyco International Ltd................... 334,586 34,546,004
---------------
ELECTRICAL EQUIPMENT & SERVICES - 3.3%
Applied Power, Inc., Cl. A............... 130,000 3,948,750
Emerson Electric Co...................... 254,300 16,068,581
General Electric Co...................... 612,400 72,607,675
Motorola, Inc............................ 127,500 11,220,000
---------------
103,845,006
---------------
FINANCE & INSURANCE - 7.6%
AFLAC, Inc............................... 100,000 4,187,500
Allstate Corp............................ 144,000 3,591,000
American Express Co...................... 263,000 35,406,375
American International Group, Inc........ 367,612 31,959,268
Berkshire Hathaway Inc. *................ 4,600 8,537,600
Citigroup, Inc........................... 437,625 19,255,500
Countrywide Credit Industries, Inc....... 158,350 5,106,788
Federal Home Loan Mortgage Corp.......... 84,000 4,368,000
Federal National Mortgage Assoc.......... 718,000 45,009,625
Household International, Inc............. 370,055 14,848,457
Marsh & McLennan Co., Inc................ 354,100 24,255,850
Merrill Lynch & Co., Inc................. 407,400 27,372,187
MGIC Investment Corp..................... 169,800 8,107,950
Raymond James Financial, Inc............. 312,975 6,239,939
---------------
238,246,039
---------------
FOOD & BEVERAGE PRODUCTS - 2.6%
Anheuser Busch Companies, Inc............ 182,000 12,751,375
Bestfoods................................ 240,000 11,640,000
Campbell Soup Co......................... 111,000 4,342,875
Coca Cola Co............................. 439,400 21,118,662
Conagra, Inc............................. 206,900 4,668,181
McDonald's Corp.......................... 242,000 10,406,000
Pepsico, Inc............................. 250,000 7,562,500
Philip Morris Companies, Inc............. 274,000 9,367,375
Tricon Global
Restaurants, Inc. *..................... 3,000 122,813
---------------
81,979,781
---------------
28
<PAGE>
EVERGREEN
Foundation Fund
Schedule of Investments (continued)
September 30, 1999 (Unaudited)
Shares Value
COMMON STOCKS - CONTINUED
FOREST PRODUCTS - 0.1%
Willamette Industries, Inc.............. 90,000 $ 3,881,250
---------------
HEALTHCARE PRODUCTS & SERVICES - 6.8%
Abbott Laboratories..................... 431,400 15,853,950
American Home
Products Corp.......................... 243,600 10,109,400
Baxter International, Inc............... 70,000 4,217,500
Bristol-Myers Squibb Co................. 350,400 23,652,000
Glaxo Wellcome Plc, ADR................. 29,400 1,528,800
Guidant Corp. *......................... 137,100 7,351,988
IMS Health, Inc......................... 40,000 912,500
Johnson & Johnson....................... 205,500 18,880,312
Lilly (Eli) & Co........................ 312,524 20,001,536
McKesson HBOC, Inc...................... 198,680 5,761,720
Medtronic, Inc.......................... 297,200 10,550,600
Merck & Co., Inc........................ 538,516 34,902,568
PE Corp-PE
Biosystems Group *..................... 324,000 23,409,000
Pfizer, Inc............................. 253,500 9,110,156
Schering-Plough Corp.................... 314,000 13,698,250
Warner-Lambert Co....................... 227,400 15,093,675
---------------
215,033,955
---------------
INDUSTRIAL SPECIALTY PRODUCTS &
SERVICES - 0.8%
Corning, Inc............................ 143,000 9,804,438
Honeywell, Inc.......................... 108,000 12,021,750
Illinois Tool Works, Inc................ 63,700 4,749,631
---------------
26,575,819
---------------
INFORMATION SERVICES & TECHNOLOGY - 13.7%
America Online, Inc. *.................. 161,000 16,744,000
Analog Devices, Inc. *.................. 162,566 8,331,507
BMC Software, Inc. *.................... 100,000 7,156,250
Compaq Computer Corp.................... 520,133 11,930,551
Computer Associates International,
Inc.................................... 106,000 6,492,500
Dell Computer Corp. *................... 600,000 25,087,500
EMC Corp. *............................. 216,000 15,430,500
Hewlett-Packard Co...................... 342,800 31,537,600
Intel Corp.............................. 1,619,200 120,326,800
International Business Machines Corp.... 480,000 58,260,000
Microsoft Corp. *....................... 980,000 88,751,250
Sun Microsystems, Inc. *................ 428,000 39,804,000
---------------
429,852,458
---------------
OIL & ENERGY - 2.9%
Atlantic Richfield Co................... 100,000 8,862,500
BP Amoco Plc............................ 105,054 11,641,296
Chevron Corp............................ 153,000 13,578,750
Consolidated Natural
Gas Co................................. 66,000 4,116,750
COMMON STOCKS - CONTINUED
OIL & ENERGY - CONTINUED
Equitable Resources, Inc................ 289,000 10,927,813
Exxon Corp.............................. 246,400 18,711,000
Mobil Corp.............................. 141,800 14,286,350
Texaco, Inc............................. 125,000 7,890,625
---------------
90,015,084
---------------
OIL FIELD SERVICES - 0.7%
Baker Hughes, Inc....................... 83,430 2,419,470
Halliburton Co.......................... 167,600 6,871,600
Schlumberger Ltd........................ 187,800 11,702,288
---------------
20,993,358
---------------
PAPER & PACKAGING - 0.2%
Kimberly-Clark Corp..................... 93,000 4,882,500
---------------
PRINTING, PUBLISHING, BROADCASTING
& ENTERTAINMENT - 1.2%
CBS Corp. *............................. 128,620 5,948,675
Cox Communications, Inc., Cl. A *....... 154,500 6,450,375
Disney (Walt) Co. *..................... 387,479 10,026,019
New York Times Co., Cl. A............... 40,000 1,500,000
Time Warner, Inc........................ 243,800 14,810,850
---------------
38,735,919
---------------
REAL ESTATE - 0.3%
Marriott International, Inc., Cl. A..... 235,000 7,681,563
Sunstone Hotel Investors, Inc. REIT..... 186,700 1,633,625
---------------
9,315,188
---------------
RETAILING & WHOLESALE - 3.3%
Bed Bath & Beyond, Inc. *............... 255,000 8,909,063
Costco Wholesale Corp. *................ 91,000 6,552,000
Dayton Hudson Corp...................... 82,400 4,949,150
Home Depot, Inc......................... 399,000 27,381,375
Lowe's Companies, Inc................... 216,000 10,530,000
Safeway, Inc. *......................... 95,000 3,615,938
W.W. Grainger, Inc...................... 110,100 5,291,681
Wal-Mart Stores, Inc.................... 779,000 37,051,187
---------------
104,280,394
---------------
TELECOMMUNICATION SERVICES &
EQUIPMENT - 1.6%
Global Crossing Ltd. *.................. 1,255,215 33,263,197
Qwest Communications International,
Inc. *................................. 253,000 7,479,313
Univision Communications, Inc., Cl. A
*...................................... 33,165 2,698,802
Vodafone Airtouch Public Ltd., ADR...... 34,000 8,083,500
---------------
51,524,812
---------------
29
<PAGE>
EVERGREEN
Foundation Fund
Schedule of Investments (continued)
September 30, 1999 (Unaudited)
Shares Value
COMMON STOCKS - CONTINUED
TRANSPORTATION - 0.9%
Burlington Northern Santa Fe Corp..... 75,000 $ 2,062,500
Union Pacific Corp.................... 524,000 25,184,750
---------------
27,247,250
---------------
UTILITIES - ELECTRIC - 1.1%
Central Hudson Gas & Electric Corp.... 360,100 14,178,937
Eastern Utilities Associates.......... 104,300 3,115,962
Energy East Corp...................... 276,800 6,574,000
PacifiCorp............................ 200,000 4,025,000
Public Service Enterprise Group, Inc.. 47,500 1,834,688
Southern Co........................... 154,000 3,965,500
---------------
33,694,087
---------------
UTILITIES - GAS - 0.3%
Keyspan Corp.......................... 276,636 7,918,706
---------------
UTILITIES - TELEPHONE - 4.1%
ALLTEL Corp........................... 72,766 5,120,907
AT&T Corp............................. 580,000 25,230,000
Bell Atlantic Corp. *................. 348,080 23,430,135
GTE Corp.............................. 311,400 23,938,875
Sprint Corp........................... 702,000 38,083,500
Sprint Corp. (PCS Group) *............ 175,500 13,085,719
---------------
128,889,136
---------------
Total Common Stocks
(Cost $1,249,337,837)................ 1,996,834,966
---------------
RIGHTS - 0.0%
TELECOMMUNICATION SERVICES &
EQUIPMENT - 0.0%
TALK.com, Inc. *(Cost $0)............. 5,300 0
---------------
Principal
Amount Value
CONVERTIBLE DEBENTURES - 0.2%
BUSINESS EQUIPMENT & SERVICES - 0.0%
Personnel Group of America, Inc.
5.75%, 07/01/2004.................... $ 800,000 596,000
---------------
ENVIRONMENTAL SERVICES - 0.0%
Waste Management, Inc.
4.00%, 02/12/2002.................... 100,000 89,500
---------------
INDUSTRIAL SPECIALTY PRODUCTS &
SERVICES - 0.1%
Robbins & Myers, Inc.
6.50%, 09/01/2003.................... 2,100,000 1,756,125
Simula, Inc.
8.00%, 05/01/2004.................... 750,000 548,438
---------------
2,304,563
---------------
CONVERTIBLE DEBENTURES - CONTINUED
RETAILING & WHOLESALE - 0.1%
Home Depot, Inc.
3.25%, 10/01/2001.................... $ 500,000 $ 1,483,125
Total Convertible Debentures
(Cost $4,280,000).................... 4,473,188
---------------
CORPORATE BONDS & NOTES - 1.6%
AUTOMOTIVE EQUIPMENT &
MANUFACTURING - 0.8%
Daimler Chrysler AG
6.90%, 09/01/2004.................... 25,000,000 25,118,575
---------------
CHEMICAL & AGRICULTURAL PRODUCTS - 0.0%
Arco Chemical Co.
10.25%, 11/01/2010................... 210,000 216,441
---------------
FINANCE & INSURANCE - 0.0%
Chrysler Financial Corp.
6.95%, 03/25/2002.................... 500,000 507,876
---------------
RETAILING & WHOLESALE - 0.8%
Wal-Mart Stores, Inc.
6.88%, 08/10/2009.................... 25,000,000 25,087,025
Total Corporate Bonds & Notes
(Cost $50,792,178)................... 50,929,917
---------------
U.S. GOVERNMENT & AGENCY OBLIGATIONS - 25.7%
U.S. GOVERNMENT AGENCY OBLIGATIONS - 0.6%
Federal Home Loan Mortgage Corp.
6.44%, 01/28/2000.................... 500,000 501,361
Federal National Mortgage Assoc.
5.94%, 12/12/2005.................... 500,000 479,991
6.21%, 08/06/2038.................... 1,250,000 1,137,689
Tennessee Valley Authority
7.25%, 07/15/2043.................... 8,000,000 7,801,728
7.85%, 06/15/2044.................... 10,000,000 9,994,500
---------------
19,915,269
---------------
U.S. TREASURY OBLIGATIONS - 25.1%
U.S. Treasury Bonds
6.00%, 02/15/2026.................... 38,000,000 36,242,500
6.25%, 08/15/2023.................... 40,000,000 39,362,520
7.13%, 02/15/2023.................... 25,000,000 27,140,625
7.25%, 05/15/2016.................... 49,500,000 53,521,875
7.25%, 08/15/2022.................... 23,000,000 25,264,074
8.00%, 11/15/2021.................... 10,000,000 11,818,750
8.13%, 08/15/2019.................... 50,000,000 59,218,750
8.13%, 05/15/2021.................... 25,000,000 29,828,125
8.38%, 08/15/2008.................... 30,000,000 32,353,140
8.50%, 02/15/2020.................... 10,000,000 12,284,380
10.63%, 08/15/2015................... 1,000,000 1,410,625
30
<PAGE>
EVERGREEN
Foundation Fund
Schedule of Investments (continued)
September 30, 1999 (Unaudited)
Principal
Amount Value
U.S. GOVERNMENT & AGENCY OBLIGATIONS - CONTINUED
U.S. TREASURY OBLIGATIONS - CONTINUED
U.S. Treasury Notes
5.25%, 08/15/2003.................... $ 125,000,000 $ 122,578,125
5.50%, 05/15/2009.................... 25,000,000 24,179,700
5.88%, 11/15/1999.................... 2,000,000 2,003,126
5.88%, 02/15/2000.................... 350,000 351,094
5.88%, 09/30/2002.................... 75,000,000 75,304,725
5.88%, 11/15/2005.................... 50,000,000 49,687,500
6.00%, 10/15/1999.................... 500,000 500,469
6.13%, 09/30/2000.................... 1,000,000 1,006,563
6.13%, 08/15/2007.................... 75,000,000 75,117,225
6.38%, 01/15/2000.................... 500,000 501,875
6.50%, 05/31/2001.................... 900,000 912,094
6.50%, 08/31/2001.................... 100,000,000 101,531,300
6.50%, 08/15/2005.................... 1,130,000 1,156,485
6.63%, 03/31/2002.................... 1,000,000 1,021,250
6.88%, 05/15/2006.................... 500,000 521,875
7.50%, 11/15/2001.................... 3,235,000 3,353,281
7.50%, 02/15/2005.................... 600,000 641,438
7.75%, 11/30/1999.................... 700,000 703,719
---------------
789,517,208
---------------
Total U.S. Government & Agency
Obligations
(Cost $803,803,537).................. 809,432,477
---------------
SHORT-TERM INVESTMENTS - 8.6%
REPURCHASE AGREEMENTS - 8.6%
State Street Bank & Trust Co.,
purchased 9/30/1999, 5.22%,
maturing 10/1/1999, maturity
value $271,374,344
(cost $271,335,000)(a)............... 271,335,000 271,335,000
---------------
TOTAL INVESTMENTS-
(COST $2,379,548,552)................ 99.6% 3,133,005,548
OTHER ASSETS AND
LIABILITIES - NET.................... 0.4% 12,864,220
------------- --------------
NET ASSETS -......................... 100.0% $3,145,869,768
------------- --------------
a) The repurchase agreement is fully collateralized by U.S. Government and/or
agency obligations based on market prices plus accrued interest at September
30, 1999.
* Non-income producing security.
SUMMARY OF ABBREVIATIONS:
ADR American Depository Receipt
REIT Real Estate Investment Trust
See Combined Notes to Financial Statements.
31
<PAGE>
EVERGREEN
Tax Strategic Foundation Fund
Schedule of Investments
September 30, 1999 (Unaudited)
Shares Value
COMMON STOCKS - 36.1%
AUTOMOTIVE EQUIPMENT &
MANUFACTURING - 0.7%
Autoliv, Inc.......................... 39,151 $ 1,473,056
Daimler Chrysler AG ................. 18,705 1,298,829
-------------
2,771,885
-------------
BANKS - 4.7%
BankAmerica Corp...................... 5,875 327,164
BankBoston Corp....................... 39,000 1,691,625
Chase Manhattan Corp.................. 25,000 1,884,375
Comerica, Inc......................... 7,500 379,688
First Union Corp. ** ................. 3,000 106,688
Fleet Boston Corp..................... 11,500 421,188
Huntington Bancshares, Inc. ......... 68,200 1,811,562
M&T Bank Corp......................... 4,000 1,836,000
National City Corp. ................. 39,600 1,056,825
Northern Trust Corp................... 10,000 835,000
One Valley Bancorp, Inc............... 15,750 543,375
Republic New York Corp. ............. 41,000 2,518,937
Seacoast Banking Corp. of
Florida, Cl. A ..................... 15,000 441,562
SunTrust Banks, Inc................... 58,880 3,871,360
-------------
17,725,349
-------------
BUILDING, CONSTRUCTION & FURNISHINGS.- 1.3%
Carlisle Companies, Inc............... 46,000 1,817,000
D.R. Horton, Inc...................... 78,950 1,021,415
La-Z-Boy Chair Co..................... 47,100 897,844
Ryland Group, Inc..................... 50,000 1,137,500
-------------
4,873,759
-------------
BUSINESS EQUIPMENT & SERVICES - 0.9%
Computer Sciences Corp. *............. 45,000 3,164,062
Convergys Corp. *..................... 15,000 297,188
-------------
3,461,250
-------------
CHEMICAL & AGRICULTURAL PRODUCTS - 1.0%
Du Pont (E.I.) De
Nemours & Co......................... 20,000 1,217,500
Monsanto Co........................... 25,000 892,187
Sigma-Aldrich Corp. ................. 56,100 1,781,175
-------------
3,890,862
-------------
CONSUMER PRODUCTS & SERVICES - 0.4%
Adidas AG ADS, 144A ................. 10,000 427,059
Gucci Group ......................... 12,000 1,002,000
-------------
1,429,059
-------------
DIVERSIFIED COMPANIES - 0.4%
Tyco International Ltd. ............. 15,710 1,622,058
-------------
ELECTRICAL EQUIPMENT & SERVICES - 0.9%
Emerson Electric Co................... 15,000 947,812
Motorola, Inc......................... 8,100 712,800
Park Electrochemical Corp............. 17,700 581,888
Thomas & Betts Corp................... 18,500 943,500
-------------
3,186,000
-------------
FINANCE & INSURANCE - 5.6%
AFLAC, Inc. ......................... 4,400 184,250
American International
Group, Inc........................... 21,250 1,847,422
Citigroup, Inc. ..................... 75,375 3,316,500
Countrywide Credit
Industries, Inc...................... 20,000 645,000
Enhance Financial Services
Group, Inc........................... 6,000 106,125
FBL Financial Group, Inc.............. 20,000 412,500
Federal National
Mortgage Assoc....................... 21,000 1,316,437
FPIC Insurance Group, Inc. * ......... 20,000 301,250
Horace Mann Educators Corp. ......... 52,000 1,342,250
Legg Mason, Inc....................... 80,866 3,098,179
Lincoln National Corp................. 27,000 1,014,188
Merrill Lynch & Co., Inc.............. 63,500 4,266,406
Mony Group, Inc....................... 35,000 1,010,625
Nationwide Financial Services,
Inc., Cl. A ......................... 28,000 990,500
Paine Webber Group, Inc............... 35,800 1,297,750
-------------
21,149,382
-------------
FOOD & BEVERAGE PRODUCTS - 0.2%
Coca Cola Co. Femsa SA, ADR ......... 40,000 552,500
-------------
HEALTHCARE PRODUCTS & SERVICES - 5.8%
Abbott Laboratories ................. 39,000 1,433,250
Alza Corp. * ......................... 39,000 1,669,687
American Home Products Corp........... 40,000 1,660,000
Celera Genomics Group................. 27,350 1,100,838
Dendrite International, Inc. *........ 30,000 1,417,500
McKesson HBOC, Inc. ................. 66,000 1,914,000
Medtronic, Inc. ..................... 36,000 1,278,000
Merck & Co., Inc...................... 33,800 2,190,662
PE Corp-PE
Biosystems Group * ................. 109,400 7,904,150
Warner-Lambert Co..................... 15,000 995,625
-------------
21,563,712
-------------
INDUSTRIAL SPECIALTY PRODUCTS & SERVICES - 0.4%
Furon Co.............................. 24,000 598,500
Meade Instruments Corp. *............. 37,000 890,313
-------------
1,488,813
-------------
INFORMATION SERVICES & TECHNOLOGY - 4.4%
Hewlett-Packard Co. ................. 4,000 368,000
Intel Corp. ......................... 72,000 5,350,500
International Business
Machines Corp. ..................... 50,000 6,068,750
32
<PAGE>
EVERGREEN
Tax Strategic Foundation Fund
Schedule of Investments (continued)
September 30, 1999 (unaudited)
Shares Value
COMMON STOCKS - CONTINUED
INFORMATION SERVICES &
TECHNOLOGY - CONTINUED
SCI Systems, Inc. * ................. 60,000 $ 2,666,250
Sun Microsystems, Inc. * ............. 20,000 1,860,000
-------------
16,313,500
-------------
LEISURE & TOURISM - 0.3%
Starwood Hotels & Resorts............. 45,000 1,004,063
-------------
OIL & ENERGY - 0.4%
Atlantic Richfield Co................. 15,000 1,329,375
-------------
OIL FIELD SERVICES - 0.6%
Diamond Offshore Drilling, Inc. ..... 43,000 1,435,125
Schlumberger Ltd...................... 15,000 934,687
-------------
2,369,812
-------------
REAL ESTATE - 1.4%
Alexander's, Inc. REIT * ............. 19,300 1,395,631
Archstone Communities Trust ......... 3,485 67,304
Boston Properties, Inc. REIT ......... 39,000 1,196,813
Brandywine Realty Trust REIT ......... 20,000 325,000
Horizon Group Properties,
Inc. REIT * ......................... 1,480 5,180
Indymac Mortgage Holdings,
Inc. REIT............................ 70,000 1,050,000
Prentiss Properties Trust REIT........ 9,900 219,656
Sunstone Hotel Investors,
Inc. REIT............................ 115,000 1,006,250
-------------
5,265,834
-------------
RETAILING & WHOLESALE - 2.4%
Ethan Allen Interiors, Inc. ......... 127,050 4,041,778
Lowe's Companies, Inc................. 32,000 1,560,000
Sonic Automotive, Inc. * ............. 130,000 1,690,000
W.W. Grainger, Inc. ................. 17,000 817,063
Williams Sonoma, Inc. * ............. 20,000 971,250
-------------
9,080,091
-------------
TELECOMMUNICATION SERVICES &
EQUIPMENT - 1.2%
Global Crossing Ltd. *................ 166,050 4,400,325
-------------
THRIFT INSTITUTIONS - 0.6%
Bank United Corp. * ................. 18,000 582,750
BankUnited Financial Corp............. 15,000 119,062
Mech Financial, Inc................... 30,000 990,000
St. Paul Bancorp, Inc................. 29,298 670,192
-------------
2,362,004
-------------
TRANSPORTATION - 1.1%
Midwest Express
Holdings, Inc. *..................... 42,850 1,122,134
Union Pacific Corp. ................. 65,000 3,124,063
-------------
4,246,197
-------------
UTILITIES - GAS - 0.7%
Williams Companies, Inc............... 70,000 2,620,625
-------------
UTILITIES - TELEPHONE - 0.7%
Sprint Corp........................... 36,000 1,953,000
Sprint Corp. (PCS Group) *............ 9,000 671,062
2,624,062
-------------
Total Common Stocks
(Cost $95,977,432) ................. 135,330,517
-------------
Principal
Amount Value
CONVERTIBLE DEBENTURES - 0.0%
BUSINESS EQUIPMENT & SERVICES - 0.0%
Personnel Group of America, Inc.
5.80%, 07/01/2004
(Cost $150,000) ..................... $ 150,000 111,750
-------------
MUNICIPAL OBLIGATIONS - 61.0%
ALABAMA - 2.1%
Alabama HFA SFHRB Home Mtge.,
Ser. B-1, (GNMA),
5.30%, 10/01/2016.................... 5,120,000 4,831,846
Alabama Wtr. Poll. Ctl. Auth. Revolving
Fund Loan,
Ser. B, (AMBAC),
5.50%, 08/15/2016.................... 3,000,000 2,951,250
-------------
7,783,096
-------------
ALASKA - 0.7%
Alaska Hsg. Fin. Corp. Mtge. RB:
Ser. A, (MBIA),
6.05%, 12/01/2017.................... 750,000 760,013
Ser. A-1, (MBIA),
5.30%, 12/01/2012.................... 2,000,000 1,926,080
-------------
2,686,093
-------------
CALIFORNIA - 1.4%
California HFA RB: MFHRB III,
Ser. C, (MBIA),
5.30%, 08/01/2028.................... 1,000,000 910,810
Ser. I, (MBIA),
5.75%, 02/01/2029.................... 700,000 681,471
Campbell, CA Unified Sch. Dist. GO
(FGIC),
5.00%, 08/01/2017.................... 2,500,000 2,340,000
San Francisco, CA Bay Area Rapid Trans. Dist.
Sales Tax RB
5.25%, 07/01/2018.................... 1,000,000 961,840
33
<PAGE>
EVERGREEN
Tax Strategic Foundation Fund
Schedule of Investments (continued)
September 30, 1999 (Unaudited)
Principal
Amount Value
MUNICIPAL OBLIGATIONS - CONTINUED
CALIFORNIA - CONTINUED
Simi Valley, CA Unified Sch. Dist. COP Ref. &
Cap. Impt. Proj.
(AMBAC),
5.25%, 08/01/2002.................... $ 500,000 $ 473,865
-------------
5,367,986
-------------
COLORADO - 0.6%
Denver, CO City & Cnty. Arpt. RB,
Ser. D, (MBIA),
5.50%, 11/15/2025.................... 1,000,000 958,520
Jefferson Cnty., CO Sch. Dist. No.
001 GO, Ser. A,
5.00%, 12/15/2017.................... 1,500,000 1,373,910
-------------
2,332,430
-------------
DELAWARE - 0.3%
Delaware EDA RB Osteopathic Hosp.
Assoc. of DE/Riverside Hosp.
Ser. A,
6.50%, 01/01/2008.................... 1,000,000 1,079,280
-------------
DISTRICT OF COLUMBIA - 1.1%
District of Columbia RB Carnegie
Endowment for Int'l. Peace
5.75%, 11/15/2026.................... 1,900,000 1,827,762
District of Columbia,
Ser. B, (FSA),
5.25%, 06/01/2026.................... 2,500,000 2,261,075
-------------
4,088,837
-------------
FLORIDA - 1.5%
Florida Brd. of Ed. Cap. Outlay GO
Ser. C,
5.50%, 06/01/2015.................... 2,000,000 1,995,680
Florida Hsg. Fin. Corp. RB
Homeowner Mtge., AMT
Ser. 2,
5.35%, 01/01/2021.................... 1,215,000 1,115,273
Gainesville, FL Util. Sys. RB,
Ser. B,
5.50%, 10/01/2013.................... 2,500,000 2,515,200
-------------
5,626,153
-------------
ILLINOIS - 7.0%
Chicago, IL Board of Ed. GO Chicago
Sch. Reform:
(AMBAC),
6.75%, 12/01/2009.................... 1,000,000 1,123,650
Chicago, IL Midway Arpt. RB,
Ser. A, (MBIA),
5.63%, 01/01/2022.................... 5,000,000 4,848,400
Chicago, IL Skyway Toll Bridge RB
(MBIA),
5.38%, 01/01/2011.................... 2,500,000 2,513,350
Cook Cnty., IL GO Capital Impt.,:
Ser. A, (FGIC),
5.00%, 11/15/2028.................... 5,000,000 4,315,250
Ser. A, (FGIC),
5.25%, 11/15/2017.................... 3,000,000 2,806,650
Ser. A, (MBIA),
5.63%, 11/15/2022.................... 3,600,000 3,488,904
Illinois GO:
(FSA),
5.13%, 04/01/2023.................... 3,440,000 3,075,257
(FGIC),
5.38%, 02/01/2016.................... 3,400,000 3,286,780
Will Cnty., IL Community Sch. Dist.
No. 161, Summit Hill GO Cap. Apprec.
(Eff. Yield 5.50%) (b) (FGIC),
0.00%, 01/01/2016.................... 2,000,000 778,560
-------------
26,236,801
-------------
INDIANA - 0.5%
Indiana HFA SFHRB,
Ser. A-2, (FNMA/GNMA),
5.15%, 07/01/2017.................... 2,000,000 1,856,900
-------------
MAINE - 0.4%
Maine Hlth. & Higher Edl. Facs.
Auth..RB, Ser. B, (AMBAC),
5.75%, 07/01/2026.................... 1,000,000 971,980
Maine Hsg. Auth. Mtge. RB,
Ser. F-1, (HUD),
5.50%, 11/15/2029.................... 500,000 468,610
-------------
1,440,590
-------------
MASSACHUSETTS - 4.2%
Massachusetts Bay Trans. Auth. RB
General Trans. Sys.,
Ser. A
7.00%, 03/01/2008.................... 250,000 284,188
(FGIC),
7.00%, 03/01/2014.................... 1,000,000 1,155,540
Massachusetts HFA Hsg. Proj. RB,
Ser. A, (AMBAC),
5.95%, 10/01/2008.................... 250,000 258,995
Massachusetts Hlth. & Edl. Facs.
Auth. RB: Cooley Dickinson Hosp.
Proj., Issue B, (AMBAC),
5.50%, 11/15/2018.................... 2,500,000 2,422,250
Ser. A, (FSA),
5.00%, 07/01/2027.................... 2,220,000 1,921,521
34
<PAGE>
EVERGREEN
Tax Strategic Foundation Fund
Schedule of Investments (continued)
September 30, 1999 (Unaudited)
Principal
Amount Value
MUNICIPAL OBLIGATIONS - CONTINUED
MASSACHUSETTS - CONTINUED
Massachusetts Tpke. Auth. Met. Hwy. Sys. RB,
Ser. A, (MBIA),
5.00%, 01/01/2027.................... $2,500,000 $ 2,190,500
Massachusetts Tpke. Auth. Western
Tpke. RB, Ser. A, (MBIA),
5.55%, 01/01/2017.................... 1,195,000 1,197,987
Massachusetts Wtr. Resources Auth. RB,
Ser. D, (MBIA),
5.00%, 08/01/2024.................... 2,500,000 2,208,425
Worcester, MA GO Muni. Purpose Loan,
Ser. A, (FSA),
5.50%, 04/01/2019.................... 4,000,000 3,892,800
-------------
15,532,206
-------------
MICHIGAN - 2.4%
Detroit, MI City Sch. Dist.
Ser. B, (FGIC),
5.00%, 05/01/2021.................... 5,000,000 4,471,250
Farmington Hills, MI Fin. Hosp. RB
Ser. B, (MBIA),
4.00%, 02/15/2016.................... 1,900,000 1,900,000
Michigan Muni. Bond Auth. RB Local
Govt. Loan Prog.,
Ser. G, (AMBAC),
6.55%, 11/01/2008.................... 300,000 328,998
Southgate, MI Community Sch. Dist. GO
(FGIC),
5.00%, 05/01/2019.................... 2,500,000 2,248,650
-------------
8,948,898
-------------
MINNESOTA - 0.5%
Southern MN Muni. Pwr. Agcy. Pwr.
Supply Sys RB Unref. Bal.,
Ser. A, (MBIA)
5.75%, 01/01/2018.................... 2,000,000 2,004,280
-------------
MISSOURI - 0.9%
Missouri Hsg. Dev. Commission Mtge.
SFHRB: Ser. B, (GMNA/FNMA),
6.25%, 09/01/2015.................... 795,000 808,523
Ser. C-1,
5.50%, 03/01/2029.................... 735,000 698,353
Ser. D, (GNMA/FNMA),
6.00%, 09/01/2017.................... 365,000 367,533
St. Louis, MO Muni. Fin. Corp.
Leasehold RB City Justice Ctr.,
Ser. A, (AMBAC),
5.95%, 02/15/2016.................... 500,000 510,930
St. Louis, MO Regl. Convention
& Sports Complex Auth. RB Convention &
Sports.Fac., Ser. C, (AMBAC),
5.30%, 08/15/2017.................... 1,000,000 953,080
-------------
3,338,419
-------------
NEBRASKA - 4.0%
Nebraska Pub. Pwr. Dist. RB, Elec.
Sys., Ser. A, (MBIA),
5.25%, 01/01/2028.................... 14,300,000 14,840,969
-------------
NEVADA - 1.1%
Nevada CO River Comm. Pwr. Delivery,
Ser. A, (FGIC),
5.63%, 09/15/2024.................... 4,010,000 3,912,758
-------------
NEW HAMPSHIRE - 0.6%
Manchester, NH General Arpt. RB,
Ser. A, (MBIA),
4.50%, 01/01/2028.................... 2,800,000 2,162,664
-------------
NEW JERSEY - 1.1%
New Jersey EDA PCRB Pub. Svc. Elec. &
Gas Co.,
Ser. A, (MBIA),
6.40%, 05/01/2032.................... 2,500,000 2,653,000
New Jersey Tpke. Auth. RB,
Ser. C, (MBIA),
6.50%, 01/01/2016.................... 1,400,000 1,556,604
-------------
4,209,604
-------------
NEW YORK - 9.4%
Long Island Pwr. Auth. NY Elec. Sys..RB:
(MBIA),
5.00%, 04/01/2013.................... 4,395,000 4,195,555
Ser. A, (AMBAC),
5.50%, 12/01/2011.................... 5,000,000 5,129,100
New York Dorm. Auth. RB: City Univ.
Sys. Cons., (FSA),
5.63%, 07/01/2019.................... 2,500,000 2,448,700
Ser. 2, (AMBAC),
5.25%, 07/01/2015.................... 5,000,000 4,772,650
Ser. E, (AMBAC),
5.20%, 02/15/2014.................... 2,500,000 2,384,900
New York Local Govt. Assistance
Corp..RB, Ser. D,
5.38%, 04/01/2014.................... 1,700,000 1,662,345
New York Med. Care Facs. Fin.
Agcy. RB Prerefunded - Mental Hlth.
Ser. B, (AMBAC),
6.25%, 08/15/2010.................... 210,000 223,157
35
<PAGE>
EVERGREEN
Tax Strategic Foundation Fund
Schedule of Investments (continued)
September 30, 1999 (Unaudited)
Principal
Amount Value
MUNICIPAL OBLIGATIONS - CONTINUED
NEW YORK - CONTINUED
New York Med. Care Facs. Fin. Agcy. RB
Unrefunded Bal. - Mental Hlth.
Ser. B, (AMBAC),
6.25%, 08/15/2010.................... $ 35,000 $ 36,936
New York Mtge. Agcy. RB AMT
Homeowner Mtge.:
Ser. 44,
6.60%, 04/01/2003.................... 250,000 257,435
Ser. 56,
5.88%, 10/01/2019.................... 835,000 839,167
Ser. 63,
5.60%, 04/01/2010.................... 500,000 504,250
New York Thruway Auth. RB,
Ser. B, (MBIA),
5.00%, 01/01/2020.................... 1,000,000 902,000
New York Urban Dev. Corp. Sr. Lien
Corp. Purpose
(HUD),
5.50%, 07/01/2016.................... 5,000,000 4,934,950
New York, NY GO:
Ser. D, (MBIA),
5.25%, 08/01/2021.................... 2,250,000 2,100,307
Ser. J, (MBIA),
5.30%, 08/01/2024.................... 2,250,000 2,100,487
New York, NY Trans. Auth. Metro. Trans.
Auth. Triborough,
Ser. A, (AMBAC),
5.40%, 01/01/2019.................... 2,500,000 2,387,475
Port Auth. of NY & NJ RB Cons.,
Ser. 97, (FGIC),
7.00%, 07/15/2005.................... 250,000 277,477
-------------
35,156,891
-------------
NORTH CAROLINA - 0.1%
North Carolina HFA SFHRB
Ser. OO, (FHA),
5.80%, 09/01/2012.................... 500,000 509,045
-------------
NORTH DAKOTA - 0.5%
Mercer Cnty., ND PCRB Basin Elec. Pwr., Coop.-Antelope
Valley
Ser. 2, (AMBAC),
6.05%, 01/01/2019.................... 1,000,000 1,014,520
North Dakota HFA RB Hsg. Fin. Prog.,
Ser. C,
5.55%, 07/01/2029.................... 995,000 918,912
-------------
1,933,432
-------------
OHIO - 0.4%
Akron, OH EDA RB,
(MBIA),
6.00%, 12/01/2012.................... 500,000 533,815
Jefferson Cnty., OH GO Refunding & Impt.
(FSA),
5.70%, 12/01/2013.................... 1,000,000 1,039,420
-------------
1,573,235
-------------
PENNSYLVANIA - 1.6%
Pennsylvania Convention Ctr. Auth. RB,
Ser. A, (FGIC),
6.70%, 09/01/2016.................... 500,000 564,050
Pennsylvania Higher Edl. Facs. Auth..College &
Univ. RB Drexel Univ.
(MBIA),
5.75%, 05/01/2022.................... 2,000,000 1,977,460
Philadelphia, PA Wtr. & Wstwtr. RB,
Ser. 1999, (AMBAC),
5.00%, 12/15/2005.................... 2,500,000 2,537,125
York Cnty., PA Solid Waste & Refuse Auth. Solid
Waste Sys. RB,
(FGIC),
5.50%, 12/01/2011.................... 1,000,000 1,024,910
-------------
6,103,545
-------------
PUERTO RICO - 0.1%
Puerto Rico Hsg. Bank & Fin. Agcy. SFHRB
Affordable Hsg., Portfolio I, AMT,
(GNMA/FNMA/FHLMC),
5.85%, 04/01/2009.................... 385,000 398,063
-------------
SOUTH CAROLINA - 4.1%
South Carolina Pub. Svc. Auth. RB
Ser. D, (AMBAC),
6.50%, 07/01/2024.................... 10,000,000 10,747,900
South Carolina Trans. Infrastructure.Bk. RB,
Ser. A, (AMBAC),
5.38%, 10/01/2024.................... 5,000,000 4,727,600
-------------
15,475,500
-------------
SOUTH DAKOTA - 0.9%
Brookings, SD COP Lease Purchase,
(AMBAC),
5.10%, 12/01/2018.................... 1,455,000 1,312,730
South Dakota Conservancy Dist. RB Drinking Wtr. State
Revolving Fund,
(AMBAC),
5.00%, 08/01/2019.................... 1,000,000 892,290
South Dakota Hsg. Dev. Auth. RB
Homeownership,
Ser. B,
5.25%, 05/01/2017.................... 1,235,000 1,158,084
-------------
3,363,104
-------------
36
<PAGE>
EVERGREEN
Tax Strategic Foundation Fund
Schedule of Investments (continued)
September 30, 1999 (Unaudited)
Principal
Amount Value
MUNICIPAL OBLIGATIONS - CONTINUED
TENNESSEE - 0.1%
Bristol, TN Hlth. & Edl. Facs. Board RB, Bristol
Mem. Hosp.
(FGIC),
6.75%, 09/01/2007.................... $ 300,000 $ 333,555
-------------
TEXAS - 4.6%
Dallas, TX RB Spl. Tax,
Ser. A, (AMBAC),
5.25%, 08/15/2016.................... 2,625,000 2,500,601
Edinburg, TX Cons. Ind. Sch. Dist. Pub. Facilities
Corp. Lease RB,
(AMBAC),
5.00%, 08/15/2019.................... 5,500,000 4,936,635
Harris Cnty., TX Hlth. Facs. Dev. Corp. Hosp. RB
Mem. Hermann Hosp. Sys. Proj.,
(FSA),
5.50%, 06/01/2010.................... 1,000,000 1,016,060
Houston, TX Wtr. & Swr. Sys RB
Ser. A, (FSA),
5.00%, 12/01/2028.................... 3,000,000 2,599,950
Houston, TX Wtr. Conveyance Sys. Contract COP
Ser. H, (AMBAC),
7.50%, 12/15/2010.................... 500,000 593,180
Lubbock, TX Elec. Light & Pwr. Sys. RB
(AMBAC),
4.25%, 04/15/2017.................... 460,000 375,553
San Antonio,TX Elec. & Gas RB Prerefunded
5.25%, 02/01/2010.................... 50,000 51,633
San Antonio,TX Elec. & Gas RB Unrefunded Bal.
5.25%, 02/01/2010.................... 950,000 955,501
Texas Dept. of Hsg. & Community Affairs
Residential Mtge. RB,
Ser. A, (GNMA/FNMA),
5.25%, 07/01/2018.................... 1,500,000 1,375,020
Texas Tpke. Auth. Dallas North Thwy. RB,
(FGIC),
5.50%, 01/01/2015.................... 3,000,000 2,969,220
-------------
17,373,353
-------------
UTAH - 1.0%
Salt Lake City, UT Hosp. RB IHC Hosp., Inc.
6.30%, 02/15/2015.................... 500,000 536,795
Utah HFA SFHRB
Ser. B-1, Cl. 1, (FHA/VA),
6.00%, 07/01/2016.................... 440,000 447,762
Ser. D-2, (FHA/VA),
5.35%, 07/01/2018.................... 2,825,000 2,623,577
-------------
3,608,134
-------------
VIRGINIA - 1.6%
Northern VA Trans. Dist. Comm. Commuter Rail
RB, VA Railway Exp. Proj.,
(FSA),
5.38%, 07/01/2014.................... 3,400,000 3,353,760
Prince William Cnty., VA Wtr. & Swr. Sys. RB,
(FGIC),
5.60%, 07/01/2024.................... 2,500,000 2,457,050
-------------
5,810,810
-------------
WASHINGTON - 4.3%
Clark Cnty., WA Sch. Dist. No. 117
(FSA),
5.50%, 12/01/2016.................... 3,500,000 3,427,410
(FSA),
5.50%, 12/01/2017.................... 2,000,000 1,943,920
Seattle, WA Wtr. Sys. RB:
(FGIC),
5.25%, 03/01/2017.................... 3,000,000 2,836,170
5.50%, 06/01/2018.................... 3,500,000 3,390,205
Snohomish Cnty., WA Sch. Dist. No. 015
Edmonds GO:
(FGIC),
5.25%, 12/01/2015.................... 2,000,000 1,909,640
(FGIC),
5.70%, 12/01/2015.................... 500,000 501,250
Washington Hlth. Care Facs. Auth. RB Swedish
Hlth. Sys.
(AMBAC),
5.13%, 11/15/2018.................... 2,500,000 2,263,475
-------------
16,272,070
-------------
WEST VIRGINIA - 0.5%
West Virginia GO,
Ser. A, (FGIC),
5.75%, 11/01/2021.................... 1,000,000 990,080
West Virginia Hsg. Dev. Fund RB Hsg. Fin.,
Ser. A,
6.05%, 05/01/2027.................... 1,000,000 1,018,110
-------------
2,008,190
-------------
WISCONSIN - 0.9%
Wisconsin Clean Wtr. RB,
Ser. 1,
6.88%, 06/01/2011.................... 1,000,000 1,142,710
Wisconsin Hsg. & EDA Home Ownership
RB AMT:
Ser. B,
5.60%, 03/01/2028.................... 2,000,000 1,860,580
Ser. E,
6.00%, 09/01/2028.................... 500,000 500,310
-------------
3,503,600
-------------
37
<PAGE>
EVERGREEN
Tax Strategic Foundation Fund
Schedule of Investments (continued)
September 30, 1999 (Unaudited)
Principal
Amount Value
MUNICIPAL OBLIGATIONS - CONTINUED
WYOMING - 0.5%
Wyoming CDA Hsg. RB,
Ser. 1,
5.45%, 12/01/2029.................... $ 2,000,000 $ 1,860,420
--------------
Total Municipal Obligations
(Cost $235,522,127).................. 228,730,911
--------------
SHORT-TERM MUNICIPAL OBLIGATIONS - 2.0%
IOWA - 0.6%
Iowa Fin. Auth. RB, Burlington Med. Ctr.,
(FSA),
3.80%, 06/01/2027 (a)................ 2,400,000 2,400,000
--------------
NEW YORK - 1.1%
Long Island Pwr. Auth. NY Elec. Sys. RB:
Ser. 5,
3.15%, 05/01/2033 (a)................ 1,200,000 1,200,000
Port Auth. of NY & NJ Spl. Oblig. RB
3.85%, 05/01/2019 (a)................ 3,000,000 3,000,000
--------------
4,200,000
--------------
TENNESSEE - 0.3%
Wilson Cnty., TN Ind. Dev. Brd. IDRB
Briskin Mfg. Co. Proj.,
3.90%, 07/01/2029 (a)................ 1,000,000 1,000,000
--------------
Total Short-Term Municipal Obligations
(Cost $7,600,000).................... 7,600,000
--------------
Shares Value
MUTUAL FUND SHARES - 0.0%
Federated Tax Free Obligations Fund... 42,387 42,387
(Cost $42,387) --------------
TOTAL INVESTMENTS-
(COST $339,291,946).................. 99.1% 371,815,565
OTHER ASSETS AND
LIABILITIES - NET.................... 0.9 3,284,999
----------- --------------
NET ASSETS -......................... 100.0% $375,100,564
=========== ==============
(a) Security is a variable or floating rate instrument with periodic demand
features. The Fund is entitled to full payment of principal and accrued
interest upon surrendering the security to the issuing agent.
(b) Effective yield (calculated at date of purchase) is the annual yield at
which the bond accretes until its maturity date.
* Non-income producing security.
** At September 30, 1999, the Fund owned 3,000 shares of common stock of First
Union Corp. at a cost of $57,890. During the six months ended September 30,
1999 the Fund earned $2,820 in dividend income from this investment. These
shares were purchased by the Fund prior to the acquisition of the investment
advisor by First Union. 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.
+ Effective Yield (calculated at the date of purchase) is the yield at which
the bond accretes on an annual basis until maturity date.
SUMMARY OF ABBREVIATIONS:
ADR American Depository Receipt
ADS American Depository Shares
AMT Subject to Alternative Minimum Tax
COP Certificate of Participation
CDA Community Development Authority
EDA Economic Development Authority
FHLMC Federal Home Loan Mortgage Corp.
FNMA Federal National Mortgage Association
GNMA Government National Mortgage Association
GO General Obligations
HFA Housing Finance Authority
HUD Housing and Urban Development
IDRB Industrial Development Revenue Bond
MFHRB Multi Family Housing Revenue Bond
PCRB Pollution Control Revenue Bond
RB Revenue Bonds
REIT Real Estate Investment Trust
SFHRB Single Family Housing Revenue Bond
MUNICIPAL BOND INSURANCE COMPANIES:
AMBAC American Municipal Bond Assurance Corp.
FGIC Financial Guaranty Insurance Company
FHA Federal Housing Administration
FSA Financial Security Assurance Company
MBIA Municipal Bond Insurance Association
See Combined Notes to Financial Statements.
38
<PAGE>
EVERGREEN
Balanced Funds
Statements of Assets and Liabilities
September 30, 1999 (Unaudited)
TAX STRATEGIC
BALANCED FOUNDATION FOUNDATION
FUND FUND FUND
- -----------------------------------------------------------------------------
ASSETS
Identified cost of
securities................. $1,357,739,224 $2,379,548,552 $339,291,946
Net unrealized gain on
securities................. 239,103,883 753,456,996 32,523,619
- -----------------------------------------------------------------------------
Market value of securities.. 1,596,843,107 3,133,005,548 371,815,565
Receivable for securities
sold....................... 5,140,223 3,380,663 9,095,797
Receivable for Fund shares
sold....................... 334,972 3,240,685 603,611
Dividends and interest
receivable................. 8,641,069 10,862,920 3,715,759
Prepaid expenses and other
assets..................... 176,406 62,482 42,548
- -----------------------------------------------------------------------------
Total assets.............. 1,611,135,777 3,150,552,298 385,273,280
- -----------------------------------------------------------------------------
LIABILITIES
Payable for securities
purchased.................. 14,134,313 0 9,301,860
Payable for Fund shares
redeemed................... 1,238,706 1,783,726 448,451
Payable for securities on
loan....................... 36,285,571 0 0
Unrealized loss on forward
foreign currency exchange
contracts.................. 749,666 0 0
Due to custodian bank....... 1,304 142,031 0
Advisory fee payable........ 548,835 1,954,077 273,914
Distribution Plan expenses
payable.................... 186,931 352,848 91,263
Accrued expenses and other
liabilities................ 307,307 449,848 57,228
- -----------------------------------------------------------------------------
Total liabilities......... 53,452,633 4,682,530 10,172,716
- -----------------------------------------------------------------------------
NET ASSETS................... $1,557,683,144 $3,145,869,768 $375,100,564
- -----------------------------------------------------------------------------
NET ASSETS REPRESENTED BY
Paid-in capital............. $1,148,643,823 $2,343,245,133 $352,968,028
Undistributed
(overdistributed) net
investment income.......... (158,629) 90,566 7,081
Accumulated net realized
gains or losses on
securities and foreign
currency related
transactions............... 170,838,217 49,077,073 (10,398,164
Net unrealized gains on
securities and foreign
currency related
transactions............... 238,359,733 753,456,996 32,523,619
- -----------------------------------------------------------------------------
TOTAL NET ASSETS............. $1,557,683,144 $3,145,869,768 $375,100,564
- -----------------------------------------------------------------------------
NET ASSETS CONSIST OF
Class A..................... $1,122,298,278 $ 416,795,978 $ 83,813,565
Class B..................... 404,080,471 1,475,686,368 229,406,341
Class C..................... 2,493,044 67,946,045 40,736,657
Class Y..................... 28,811,351 1,185,441,377 21,144,001
- -----------------------------------------------------------------------------
TOTAL NET ASSETS............. $1,557,683,144 $3,145,869,768 $375,100,564
- -----------------------------------------------------------------------------
SHARES OUTSTANDING
Class A..................... 100,976,887 19,870,139 5,308,127
Class B..................... 36,309,093 70,700,136 14,556,422
Class C..................... 223,910 3,255,896 2,589,164
Class Y..................... 2,593,612 56,503,666 1,336,284
- -----------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
Class A..................... $ 11.11 $ 20.98 $ 15.79
- -----------------------------------------------------------------------------
Class A - Offering price
(based on sales charge of
4.75%).................... $ 11.66 $ 22.03 $ 16.58
- -----------------------------------------------------------------------------
Class B..................... $ 11.13 $ 20.87 $ 15.76
- -----------------------------------------------------------------------------
Class C..................... $ 11.13 $ 20.87 $ 15.73
- -----------------------------------------------------------------------------
Class Y..................... $ 11.11 $ 20.98 $ 15.82
- -----------------------------------------------------------------------------
See Combined Notes to Financial Statements.
39
<PAGE>
EVERGREEN
Balanced Funds
Statements of Operations
Six Months Ended September 30, 1999 (Unaudited)
TAX STRATEGIC
BALANCED FOUNDATION FOUNDATION
FUND FUND FUND
- ------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends (net of foreign
withholding taxes of $83,435,
$109,060, and $7,056,
respectively)................ $ 6,704,210 $ 18,381,731 $ 1,225,613
Interest...................... 21,335,304 32,973,179 5,495,217
- ------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME....... 28,039,514 51,354,910 6,720,830
- ------------------------------------------------------------------------------
EXPENSES
Advisory fee.................. 3,540,554 11,999,750 1,728,523
Distribution Plan expenses.... 3,649,270 8,402,074 1,550,379
Transfer agent fee............ 1,366,115 2,812,928 179,794
Administrative services fees.. 98,006 0 0
Trustees' fees and expenses .. 33,345 64,377 7,953
Printing and postage expenses. 69,597 129,965 15,870
Custodian fee................. 261,624 490,201 49,241
Registration and filing fees.. 36,017 37,329 24,532
Professional fees............. 14,538 17,958 12,912
Other......................... 34,234 103,746 5,967
- ------------------------------------------------------------------------------
Total expenses .............. 9,103,300 24,058,328 3,575,171
- ------------------------------------------------------------------------------
Less: Fee credits............ (40,550) (68,053) (9,285)
Net expenses ................ 9,062,750 23,990,275 3,565,886
- ------------------------------------------------------------------------------
NET INVESTMENT INCOME ........ 18,976,764 27,364,635 3,154,944
- ------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED
GAINS OR LOSSES ON SECURITIES
AND FOREIGN CURRENCY RELATED
TRANSACTIONS
Net realized gains or losses
on:
Securities ................... 71,373,738 29,138,585 (10,005,319)
Foreign currency related 1,218,934 (4,322) 0
transactions.................
- ------------------------------------------------------------------------------
Net realized gains or losses
on securities and foreign
currency related
transactions.................. 72,592,672 29,134,263 (10,005,319)
Net change in unrealized gains
or losses on securities and
foreign currency related (92,911,817) (32,489,274) 881,247
transactions..................
- ------------------------------------------------------------------------------
Net realized and unrealized
losses on securities and
foreign currency related
transactions.................. (20,319,145) (3,355,011) (9,124,072)
- ------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS.................... $ (1,342,381) $ 24,009,624 $ (5,969,128)
- ------------------------------------------------------------------------------
See Combined Notes to Financial Statements.
40
<PAGE>
EVERGREEN
Balanced Funds
Statements of Changes in Net Assets
Six Months Ended September 30, 1999 (Unaudited)
TAX STRATEGIC
BALANCED FOUNDATION FOUNDATION
FUND FUND FUND
- -------------------------------------------------------------------------------
OPERATIONS
Net investment income ..... $ 18,976,764 $ 27,364,635 $ 3,154,944
Net realized gains or
losses on securities and
foreign currency related
transactions.............. 72,592,672 29,134,263 (10,005,319)
Net change in unrealized
gains or losses on
securities and foreign
currency related
transactions.............. (92,911,817) (32,489,274) 881,247
- -------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from operations ......... (1,342,381) 24,009,624 (5,969,128)
- -------------------------------------------------------------------------------
DISTRIBUTIONS TO
SHAREHOLDERS FROM
Net investment income
Class A................... (15,228,710) (4,017,373) (888,798)
Class B................... (3,854,785) (9,101,076) (1,682,915)
Class C................... (23,301) (415,380) (300,570)
Class Y................... (439,380) (13,672,596) (264,410)
- -------------------------------------------------------------------------------
Total distributions to
shareholders............. (19,546,176) (27,206,425) (3,136,693)
- -------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold 32,452,550 384,623,696 38,087,096
Payment for shares redeemed (181,026,256) (377,467,085) (51,572,247)
Net asset value of shares
issued in reinvestment of
distributions............. 16,132,539 24,851,718 2,708,239
Net increase (decrease) in
net assets resulting from
capital share
transactions............. (132,441,167) 32,008,329 (10,776,912)
- -------------------------------------------------------------------------------
Total increase (decrease)
in net assets........... (153,329,724) 28,811,528 (19,882,733)
NET ASSETS
Beginning of period........ 1,711,012,868 3,117,058,240 394,983,297
- -------------------------------------------------------------------------------
End of period ............. $1,557,683,144 $3,145,869,768 $375,100,564
- -------------------------------------------------------------------------------
Undistributed
(overdistributed) net
investment income......... $ (158,629) $ 90,566 $ 7,081
- -------------------------------------------------------------------------------
See Combined Notes to Financial Statements.
41
<PAGE>
EVERGREEN
Balanced Funds
Statements of Changes in Net Assets
Year Ended March 31, 1999
TAX STRATEGIC
BALANCED FOUNDATION FOUNDATION
FUND FUND FUND
- -------------------------------------------------------------------------------
OPERATIONS
Net investment income....... $ 48,706,814 $ 55,794,790 $ 6,167,375
Net realized gains or
losses on securities,
futures contracts and
foreign currency
related transactions....... 358,710,888 34,888,892 (145,766)
Net change in unrealized
gains or losses on
securities, futures
contracts and foreign
currency related
transactions............... (286,664,700) 65,223,251 (2,886,895)
- -------------------------------------------------------------------------------
Net increase in net
assets resulting from
operations................ 120,753,002 155,906,933 3,134,714
- -------------------------------------------------------------------------------
DISTRIBUTIONS TO
SHAREHOLDERS FROM
Net investment income
Class A.................... (40,794,518) (7,549,144) (1,787,162)
Class B.................... (14,038,816) (17,590,016) (3,343,831)
Class C.................... (42,716) (829,474) (594,293)
Class Y.................... (1,284,883) (28,290,021) (541,359)
Net realized gains
Class A.................... (184,104,811) (2,672,130) (131,728)
Class B.................... (86,113,414) (9,707,057) (378,359)
Class C.................... (276,654) (461,341) (68,239)
Class Y.................... (5,578,251) (9,222,962) (36,526)
- -------------------------------------------------------------------------------
Total distributions to
shareholders.............. (332,234,063) (76,322,145) (6,881,497)
- -------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold... 223,177,562 728,373,282 166,239,896
Payment for shares redeemed. (493,032,834) (542,736,621) (76,065,961)
Net asset value of shares
issued in reinvestment of
distributions.............. 295,195,460 70,776,628 6,054,905
Net asset value of shares
issued in acquisition of
investment companies....... 0 139,832,551 0
- -------------------------------------------------------------------------------
Net increase in net assets
resulting from capital
share transactions........ 25,340,188 396,245,840 96,228,840
- -------------------------------------------------------------------------------
Total increase (decrease)
in net assets............ (186,140,873) 475,830,628 92,482,057
NET ASSETS
Beginning of period......... 1,897,153,741 2,641,227,612 302,501,240
- -------------------------------------------------------------------------------
End of period............... $1,711,012,868 $3,117,058,240 $394,983,297
- -------------------------------------------------------------------------------
Undistributed
(overdistributed) net
investment income.......... $ 410,783 $ (67,644) $ (11,170)
- -------------------------------------------------------------------------------
See Combined Notes to Financial Statements.
42
<PAGE>
Combined Notes to Financial Statements (Unaudited)
1. ORGANIZATION
The Evergreen Balanced Funds consist of Evergreen Balanced Fund ("Balanced
Fund"), Evergreen Foundation Fund ("Foundation Fund") and Evergreen Tax Strate-
gic Foundation Fund ("Tax Strategic Foundation Fund"), (collectively, the
"Funds"). Each Fund is a diversified series of Evergreen Equity Trust (the
"Trust"), a Delaware business trust organized on September 18, 1997. The Trust
is an open-end management investment company registered under the Investment
Company Act of 1940, as amended (the "1940 Act").
The Funds offer Class A, Class B, Class C and Class Y shares. Class A shares
are sold with a maximum front-end sales charge of 4.75%. Class B and Class C
shares are sold without a front-end sales charge, but pay a higher ongoing dis-
tribution fee than Class A. Class B shares are sold subject to a contingent de-
ferred sales charge that is payable upon redemption and decreases depending 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 follow the conversion rights at the
time the shares were purchased. 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 only to investment advisory clients
of First Union Corporation ("First Union") and its affiliates, certain institu-
tional investors or Class Y shareholders of record of certain other Funds man-
aged by First Union and its affiliates as of December 30, 1994.
2. 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") and other securities traded in the over-the-
counter market are valued at the last reported sales price on the exchange
where primarily traded. Securities traded on an exchange or NMS and other secu-
rities traded in the over-the-counter market for which there has been no sale
are valued at the mean between the last reported bid and asked price.
Corporate bonds, municipal bonds, U.S. government obligations, mortgage and
other asset-backed securities and other fixed-income securities are valued at
prices provided by an independent pricing service. In determining a price for
normal institutional-size transactions, the pricing service uses methods based
on market transactions for comparable securities and analysis of various rela-
tionships between similar securities, which are generally recognized by insti-
tutional traders. In evaluating the fair value of a Fund's municipal bonds an
independent pricing service uses a variety of factors which may include yield,
liquidity, interest rate risk, credit quality, coupon, maturity and type of is-
sue.
Securities for which valuations are not available from an independent pricing
service, including restricted securities, may be valued by brokers which use
prices provided by market makers or estimates of market value obtained from
yield data relating to investments or securities with similar characteristics.
Otherwise, securities are valued at fair value as determined in good faith ac-
cording to procedures established by the Board of Trustees.
Mutual fund shares held as short-term investments are valued at net asset val-
ue. 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. The custodian holds securities
pledged as collateral for repurchase agreements in a segregated account on the
Fund's behalf. Collateral for certain tri-party repurchase agreements is held
at the counterparty's custodian in a segregated account for the benefit of the
Fund and the counterparty. Each Fund monitors the adequacy of the collateral
daily and will require the seller to pro-
43
<PAGE>
Combined Notes to Financial Statements (Unaudited) (continued)
vide additional collateral in the event the market value of the securities
pledged falls below the carrying value of the repurchase agreement, including
accrued interest. Each Fund will only enter into repurchase agreements with
banks and other financial institutions, which are deemed by the investment ad-
visor to be creditworthy pursuant to guidelines established by the Board of
Trustees.
Pursuant to an exemptive order issued by the Securities and Exchange Commis-
sion, Balanced Fund, along with certain other Funds managed by Evergreen In-
vestment Management Company ("EIMC"), a subsidiary of First Union, may transfer
uninvested cash balances into a joint trading account. These balances are in-
vested in one or more repurchase agreements that are fully collateralized by
U.S. Treasury and/or federal agency obligations.
C. Foreign Currency
The books and records of the Funds are maintained in United States (U.S.) dol-
lars. Foreign currency amounts are translated into U.S. dollars as follows:
market value of investments, other assets and liabilities at the daily rate of
exchange, purchases and sales of investments and income and expenses at the
rate of exchange prevailing on the respective dates of such transactions. Net
unrealized foreign exchange gain or loss resulting from changes in foreign cur-
rency exchange rates is a component of net unrealized gains or losses on secu-
rities and foreign currency related transactions. Net realized gain or loss on
foreign currency related transactions includes foreign currency gains and
losses between trade date and settlement date on investment securities transac-
tions, gains and losses on foreign currency related transactions and the dif-
ference 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 of investments denominated
in foreign currencies is included in realized gain or loss on securities.
D. Futures Contracts
In order to gain exposure to or protect against changes in security values, the
Funds may buy and sell futures contracts. The initial margin deposited with a
broker when entering into a futures transaction is subsequently adjusted by
daily payments or receipts ("variation margin") as the value of the contract
changes. Such changes are recorded as unrealized gains or losses. Realized
gains or losses are recognized on closing the contract.
Risks of entering into futures contracts include (i) the possibility of an il-
liquid market for the contract, (ii) the possibility that a change in the value
of the contract may not correlate with changes in the value of the underlying
instrument or index, and (iii) the credit risk that the other party will not
fulfill their obligations under the contract. Futures contracts also involve
elements of market risk in excess of the amount reflected in the statement of
assets and liabilities.
E. 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 and losses arising from such transactions are included in
net realized gain or loss on foreign currency related transactions. The Fund
bears the risk of an unfavorable change in the foreign currency exchange rate
underlying the forward contract and is subject to the credit risk that the
other party will not fulfill their obligations under the contract. Forward con-
tracts involve elements of market risk in excess of the amount reflected in the
statement of assets and liabilities.
F. When-issued and Delayed Delivery Transactions
The Funds record when-issued or delayed delivery transactions no later than one
business day after the trade date and will segregate with the custodian quali-
fying assets having a value sufficient to make payment for the securities pur-
chased. Securities purchased on a when-issued or delayed delivery basis are
marked-to-market daily and the Fund begins earning interest on the settlement
date. Losses may arise due to changes in the market value of the underlying se-
curities or if the counterparty does not perform under the contract.
44
<PAGE>
Combined Notes to Financial Statements(Unaudited) (continued)
G. 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 advisers 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 the value of the collateral falls
below 100% of the market value of the securities 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 received in portfolio securities, thereby
increasing its return. A Fund will have the right to call any such loan and ob-
tain the securities loaned at any time on five days' notice. Any gain or loss
in the market price of the loaned securities, which occurs during the term of
the loan, would affect a Fund and its investors. A Fund may pay fees in connec-
tion with such loans.
H. 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 and capital
gains realized on some foreign securities may be subject to foreign taxes,
which are accrued as applicable.
I. 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 liability since they
are expected to distribute all of their net investment company taxable income,
net tax-exempt income and net capital gains, if any, to their shareholders. The
Funds also intend to avoid any excise tax liability by making the required dis-
tributions under the Code. Accordingly, no provision for federal taxes is re-
quired. 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.
J. Distributions
Distributions from net investment income for the Funds are declared and paid
quarterly. Distributions from net realized capital gains, if any, are paid at
least annually. Distributions to shareholders are recorded at the close of
business on the ex-dividend date.
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.
K. Class Allocations
Income, expenses (other than class specific expenses) and realized and
unrealized gains and losses are pro-rated 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.
3. ACQUISITIONS
Effective at the close of business on July 24, 1998, Foundation Fund acquired
the net assets of CoreFunds, Inc. Balanced Fund, an open-end management invest-
ment company registered under the 1940 Act in an exchange of shares. The net
assets were exchanged through a non-taxable exchange for 321,554 Class A,
49,982 Class B and 6,470,202 Class Y shares of Foundation Fund. The acquired
net assets consisted primarily of portfolio securities with unrealized appreci-
ation of $29,739,766. The net assets of Foundation Fund and CoreFunds, Inc.
Balanced Fund prior to the acquisition were $2,784,240,332 and $139,832,551,
respectively. The aggregate net assets of Foundation Fund immediately after the
acquisition were $2,924,072,883.
45
<PAGE>
Combined Notes to Financial Statements (Unaudited) (continued)
4. INVESTMENT ADVISORY AGREEMENTS AND OTHER AFFILIATED TRANSACTIONS
Evergreen Asset Management Corp. ("EAMC"), a wholly-owned subsidiary of First
Union, serves as the investment advisor to the Foundation Fund and Tax Strate-
gic Fund and is paid an advisory fee that is computed daily and paid monthly
based on each Fund's average daily net assets, in accordance with the following
schedule:
<TABLE>
<CAPTION>
Advisory annual rate
--------------------
<S> <C>
First $750 million.......................... 0.875%
Next $250 million........................... 0.750%
Over $1 billion............................. 0.700%
</TABLE>
Lieber & Company, an affiliate of First Union, is the investment sub-advisor to
Foundation Fund and Tax Strategic Foundation 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
September 30, 1999, Foundation Fund and Tax Strategic Fund incurred brokerage
commissions of $506,197 and $55,460, 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 Balanced Fund. In return for providing in-
vestment advisory and administrative services, the Balanced Fund pays EIMC an
advisory fee that is calculated daily and paid monthly. The advisory fee is
computed at an annual rate of 1.50% of Balanced Fund's gross investment income
plus an amount determined by applying percentage rates starting at 0.60% and
declining to 0.30% per annum, as net assets increase, to the average daily net
assets of the Fund.
Evergreen Investment Services ("EIS"), an indirect, wholly owned subsidiary of
First Union, serves as the administrator and The BISYS Group, Inc. ("BISYS")
serves as the sub-administrator to the Funds. As administrator, EIS provides
the Funds with facilities, equipment and personnel. As sub-administrator to the
Funds, BISYS provides the officers of the Funds. Officers of the Funds and af-
filiated Trustees receive no compensation directly from the Funds. The Funds'
administration and sub-administration fee is paid by their investment advisor
and is not a fund expense.
During the six months ended September 30, 1999, the Balanced Fund reimbursed
EIMC $98,006 for providing certain administration and accounting expenses.
Evergreen Service Company ("ESC"), an indirect, wholly owned subsidiary of
First Union, serves as the transfer and dividend disbursing agent for the
Funds.
5. 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". Under the Distribu-
tion Plans, Class A shares pay distribution fees equal to 0.25% of average net
assets of the class, all of which is used to by the shareholder services fees.
Class B and Class C shares pay distribution fees equal to 1.00% of the average
net assets of the class, of which 0.25% is used to pay for shareholder services
fees and 0.75% is to pay for distribution related expenses. Distribution Plan
expenses are calculated daily and paid at least quarterly.
During the six months ended September 30, 1999, amounts paid or accrued to EDI
pursuant to each Fund's Class A, Class B, and Class C Distribution Plans were
as follows:
<TABLE>
<CAPTION>
Class A Class B Class C
-----------------------------
<S> <C> <C> <C>
Balanced Fund.................... $1,502,065 $2,134,639 $12,566
Foundation Fund.................. 506,781 7,548,156 347,137
Tax Strategic Foundation Fund.... 104,054 1,226,716 219,609
</TABLE>
46
<PAGE>
Combined Notes to Financial Statements (Unaudited) (continued)
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.
6. 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. Transactions in shares of
the Funds were as follows:
Balanced Fund
<TABLE>
<CAPTION>
Six Months Ended Year Ended
September 30, 1999 March 31, 1999
-------------------------- -------------------------
Shares Amount Shares Amount
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A
Shares sold............. 741,046 $ 8,504,926 12,998,481 $147,893,792
Shares redeemed......... (10,901,347) (124,565,700) (20,007,662) (241,408,480)
Shares issued in
reinvestment of
distributions.......... 1,095,715 12,386,270 17,759,884 197,162,184
- --------------------------------------------------------------------------------
Net increase
(decrease)............. (9,064,586) (103,674,504) 10,750,703 103,647,496
- --------------------------------------------------------------------------------
Class B
Shares sold............. 2,002,621 22,929,265 5,776,852 70,031,992
Shares redeemed......... (4,438,801) (50,696,542) (20,690,767) (241,461,335)
Shares issued in
reinvestment of
distributions.......... 315,845 3,574,930 8,339,827 92,447,046
- --------------------------------------------------------------------------------
Net decrease............ (2,120,335) (24,192,347) (6,574,088) (78,982,297)
- --------------------------------------------------------------------------------
Class C
Shares sold............. 37,557 430,648 169,732 2,053,953
Shares redeemed......... (28,065) (321,442) (49,785) (594,203)
Shares issued in
reinvestment of
distributions.......... 1,919 21,737 28,180 311,824
- --------------------------------------------------------------------------------
Net increase............ 11,411 130,943 148,127 1,771,574
- --------------------------------------------------------------------------------
Class Y
Shares sold............. 51,062 587,711 261,048 3,197,825
Shares redeemed......... (476,122) (5,442,572) (784,486) (9,568,816)
Shares issued in
reinvestment of
distributions.......... 13,234 149,602 478,147 5,274,406
- --------------------------------------------------------------------------------
Net decrease............ (411,826) (4,705,259) (45,291) (1,096,585)
- --------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from capital share
transactions........... $(132,441,167) $ 25,340,188
</TABLE>
- --------------------------------------------------------------------------------
47
<PAGE>
Combined Notes to Financial Statements (Unaudited) (continued)
Foundation Fund
<TABLE>
<CAPTION>
Six Months Ended Year Ended
September 30, 1999 March 31, 1999
------------------------- --------------------------
Shares Amount Shares Amount
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A
Shares sold............. 4,935,139 $ 108,177,893 5,707,085 $ 116,332,291
Shares redeemed......... (3,356,899) (72,584,690) (5,528,399) (112,531,601)
Shares issued in
reinvestment of
distributions.......... 181,829 3,879,476 480,589 9,839,057
Shares issued in
acquisition of
CoreFunds, Inc.
Balanced Fund.......... 0 0 321,554 6,566,886
- -------------------------------------------------------------------------------
Net increase............ 1,760,069 39,472,679 980,829 20,206,633
- -------------------------------------------------------------------------------
Class B
Shares sold............. 7,054,157 151,754,125 20,450,695 415,256,001
Shares redeemed......... (5,345,096) (114,950,075) (8,458,046) (170,363,447)
Shares issued in
reinvestment of
distributions.......... 412,858 8,769,070 1,292,568 26,379,301
Shares issued in
acquisition of
CoreFunds, Inc.
Balanced Fund.......... 0 0 49,982 1,015,265
- -------------------------------------------------------------------------------
Net increase............ 2,121,919 45,573,120 13,335,199 272,287,120
- -------------------------------------------------------------------------------
Class C
Shares sold............. 466,044 9,988,599 1,358,670 27,583,261
Shares redeemed......... (469,113) (10,084,515) (646,190) (13,071,227)
Shares issued in
reinvestment of
distributions.......... 18,437 391,491 59,528 1,214,951
- -------------------------------------------------------------------------------
Net increase............ 15,368 295,575 772,008 15,726,985
- -------------------------------------------------------------------------------
Class Y
Shares sold............. 5,292,986 114,703,079 8,320,162 169,201,729
Shares redeemed......... (8,310,820) (179,847,805) (12,069,787) (246,770,346)
Shares issued in
reinvestment of
distributions.......... 553,405 11,811,681 1,628,347 33,343,319
Shares issued in
acquisition of
CoreFunds, Inc.
Balanced Fund.......... 0 0 6,470,202 132,250,400
- -------------------------------------------------------------------------------
Net increase
(decrease)............. (2,464,429) (53,333,045) 4,348,924 88,025,102
- -------------------------------------------------------------------------------
Net increase in net
assets resulting from
capital share
transactions........... $ 32,008,329 $ 396,245,840
</TABLE>
- --------------------------------------------------------------------------------
Tax Strategic Foundation Fund
<TABLE>
<CAPTION>
Six Months Ended Year Ended
September 30, 1999 March 31, 1999
------------------------ ------------------------
Shares Amount Shares Amount
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A
Shares sold................ 1,072,936 $ 17,996,750 2,373,800 $ 38,260,527
Shares redeemed............ (859,307) (14,178,976) (1,712,788) (27,167,670)
Shares issued in
reinvestment of
distributions............. 49,932 807,453 110,933 1,765,631
- -------------------------------------------------------------------------------
Net increase............... 263,561 4,625,227 771,945 12,858,488
- -------------------------------------------------------------------------------
Class B
Shares sold................ 907,116 14,970,572 5,907,847 94,740,617
Shares redeemed............ (1,594,661) (26,251,615) (2,307,135) (36,564,880)
Shares issued in
reinvestment of
distributions............. 94,214 1,522,454 217,074 3,451,970
- -------------------------------------------------------------------------------
Net increase (decrease).... (593,331) (9,758,589) 3,817,786 61,627,707
- -------------------------------------------------------------------------------
Class C
Shares sold................ 290,174 4,783,179 1,684,267 26,890,534
Shares redeemed............ (513,154) (8,427,170) (625,888) (9,938,022)
Shares issued in
reinvestment of
distributions............. 16,967 273,540 37,777 599,814
- -------------------------------------------------------------------------------
Net increase (decrease).... (206,013) (3,370,451) 1,096,156 17,552,326
- -------------------------------------------------------------------------------
Class Y
Shares sold................ 20,061 336,595 395,815 6,348,218
Shares redeemed............ (164,970) (2,714,486) (149,296) (2,395,389)
Shares issued in
reinvestment of
distributions............. 6,460 104,792 14,888 237,490
- -------------------------------------------------------------------------------
Net increase (decrease).... (138,449) (2,273,099) 261,407 4,190,319
- -------------------------------------------------------------------------------
Net increase (decrease) in
net assets resulting from
capital shares
transactions.............. (10,776,912) $ 96,228,840
</TABLE>
- --------------------------------------------------------------------------------
48
<PAGE>
Combined Notes to Financial Statements (Unaudited) (continued)
7. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of investment securities (excluding
short-term securities) were as follows for the six months ended September 30,
1999:
<TABLE>
<CAPTION>
Cost of Purchases Proceeds from Sales
------------------------- -------------------------
U.S. Non-U.S. U.S. Non-U.S.
Government Government Government Government
-----------------------------------------------
<S> <C> <C> <C> <C>
Balanced Fund... $235,028,506 $469,930,416 $192,209,648 $646,343,092
Foundation
Fund........... 448,066,407 636,754,688 498,600,095 675,127,792
Tax Strategic
Foundation
Fund........... 0 215,450,759 0 236,955,712
</TABLE>
During the six months ended September 30, 1999, the Balanced Fund entered into
reverse repurchase agreements. The average daily balance outstanding was
$12,052,676, the weighted average interest rate was 3.44% and the maximum
amount outstanding under these agreements was $14,335,076. The maximum amount
outstanding under reverse repurchase agreements includes accrued interest.
The Balanced Fund loaned securities during the six months ended September 30,
1999 to certain brokers who paid the Fund a negotiated lenders' fee. These fees
are included in interest income. At September 30, 1999, the value of securities
on loan and the value of collateral amounted to $36,203,607 and $36,285,571,
respectively. During the six months ended September 30, 1999, Balanced Fund
earned $17,418 in income from securities lending.
Capital and currency losses incurred after October 31 within a Fund's fiscal
year-end are deemed to arise on the first business day of the Fund's following
fiscal year. For the fiscal year ended March 31, 1999, Tax Strategic Foundation
Fund incurred and elected to defer $320,362 of capital loss, and Foundation
Fund incurred and elected to defer $3,471 of currency loss.
8. 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>
Balanced Fund.......................... $40,550 0.01%
Foundation Fund........................ 68,053 0.00%
Tax Strategic Foundation Fund.......... 9,285 0.01%
</TABLE>
9. 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 is based on the
investment performance of certain Evergreen Funds. Any gains earned or losses
incurred in the deferral accounts are reported in the Fund's Trustees' fees and
expenses. Trustees will be paid either in one lump sum or in quarterly install-
ments for up to ten years at their election, not earlier than either the year
in which the Trustee ceases to be a member of the Board of Trustees or January
1, 2000.
10. FINANCING AGREEMENTS
Certain Evergreen Funds, State Street Bank and Trust Company ("State Street")
and a group of banks (collectively, the "Banks") entered into a financing
agreement dated December 22, 1997, as amended on November 20, 1998. Under this
agreement, the Banks provided an unsecured credit facility in the aggregate
amount of $400 million ($275 million committed and $125 million uncommitted).
The credit facility was allocated, under
49
<PAGE>
Combined Notes to Financial Statements (Unaudited) (continued)
the terms of the financing agreement, among the Banks. The credit facility was
accessed by the Funds for temporary or emergency purposes only and was subject
to each Fund's borrowing restrictions. Borrowings under this facility were as-
sessed interest at 0.50% per annum above the Federal Funds rate. A commitment
fee of 0.065% per annum was incurred on the unused portion of the committed fa-
cility, which was allocated to all Funds. For its assistance in arranging this
financing agreement, the Capital Market Group of First Union was paid a one-
time arrangement fee of $27,500. State Street served as administrative agent
for the Banks, and as administrative agent was entitled to a fee of $20,000 per
annum which was allocated to all of the Evergreen 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 provided an additional unsecured credit facility in
the aggregate amount of $150 million ($125 million committed and $25 million
uncommitted). The remaining terms and conditions of the agreement were unaf-
fected. This agreement was terminated on July 27, 1999.
On July 27, 1999, all of the Evergreen Funds and a group of banks (the "Lend-
ers") entered into a credit agreement. Under this agreement, the Lenders pro-
vide an unsecured revolving credit commitment in the aggregate amount of $1.050
billion. The credit facility is allocated, under the terms of the financing
agreement, among the Lenders. The credit facility is accessed by the Funds for
temporary or emergency purposes to fund the redemption of their shares or as
general working capital as permitted by each Fund's borrowing restrictions.
Borrowings under this facility are assessed interest at 0.75% per annum above
the Federal Funds rate (1.50% per annum above the Federal Funds rate during the
period from and including December 1, 1999 through and including January 31,
2000). A commitment fee of 0.10% per annum is incurred on the average daily un-
used portion of the revolving credit commitment. The commitment fee is allo-
cated to all Funds. For its assistance in arranging this financing agreement,
First Union Capital Markets Corp. was paid a one-time arrangement fee of
$250,000. State Street serves as paying agent for the Funds, and as paying
agent is entitled to a fee of $20,000 per annum which is allocated to all of
the Funds.
During the six months ended September 30, 1999, the Funds had no borrowings un-
der these agreements.
11. YEAR 2000
Like other investment companies, the Funds could be adversely affected if the
computer systems used by the Funds' investment advisers 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 advisers 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.
50
<PAGE>
Evergreen Funds
Money Market
Treasury Money Market Fund
Money Market Fund
Municipal Money Market Fund
Florida Municipal Money Market Fund
New Jersey Municipal Money Market Fund
Pennsylvania Municipal Money Market Fund
Tax Advantaged
Short Intermediate Municipal Fund
High Grade Municipal Bond Fund
Municipal Bond Fund
Municipal Income Fund
Connecticut Municipal Bond Fund
Florida Municipal Bond Fund
Florida High Income Municipal Bond Fund
Georgia Municipal Bond Fund
Maryland Municipal Bond Fund
New Jersey Municipal Bond Fund
North Carolina Municipal Bond Fund
Pennsylvania Municipal Bond Fund
South Carolina Municipal Bond Fund
Virginia Municipal Bond Fund
Income
Capital Preservation and Income Fund
Short Intermediate Bond Fund
Intermediate Term Bond Fund
U.S. Government Fund
Diversified Bond Fund
Strategic Income Fund
High Yield Bond Fund
Quality Income Fund
Short-Duration Income Fund
High Income Fund
Balanced
American Retirement Fund
Balanced Fund
Tax Strategic Foundation Fund
Foundation Fund
Capital Balanced Fund
Capital Income and Growth Fund
Growth & Income
Utility Fund
Income and Growth Fund
Equity Income Fund
Value Fund
Blue Chip Fund
Growth and Income Fund
Small Cap Value Fund
Select Equity Index Fund
Domestic Growth Tax
Strategic Equity Fund
Strategic Growth Fund
Stock Selector Fund
Evergreen Fund
Masters Fund
Omega Fund
Small Company Growth Fund
Aggressive Growth Fund
Growth Fund
Capital Growth Fund
Select Special Equity Fund
Global International
Global Leaders Fund
International Growth Fund
Global Opportunities Fund
Precious Metals Fund
Emerging Markets Growth Fund
Latin America Fund
Perpetual Global Fund
Perpetual International Fund
Express Line
800.346.3858
Investor Services
800.343.2898
www.evergreen-funds.com
28573 540980 11/99
[LOGO OF EVERGREEN FUNDS] BULK RATE
U.S. POSTAGE
PAID
200 Berkeley Street PERMIT NO. 19
Boston, MA 02116 HUDSON, MA