<PAGE>
Annual Report
as of July 31, 1999
Evergreen
Growth and Income Funds
[GRAPHIC APPEARS HERE]
[LOGO OF Evergreen Funds
EVERGREEN
APPEARS HERE] SINCE 1932
<PAGE>
Table of Contents
Letter to Shareholders .................................................. 1
Evergreen Blue Chip Fund
Fund at a Glance ...................................................... 2
Portfolio Manager Interview ........................................... 3
Evergreen Equity Income Fund
Fund at a Glance ...................................................... 6
Portfolio Manager Interview ........................................... 7
Evergreen Growth and Income Fund
Fund at a Glance ...................................................... 10
Portfolio Manager Interview ........................................... 11
Evergreen Income and Growth Fund
Fund at a Glance ...................................................... 14
Portfolio Manager Interview ........................................... 15
Evergreen Small Cap Value Fund
Fund at a Glance ...................................................... 18
Portfolio Manager Interview ........................................... 19
Evergreen Utility Fund
Fund at a Glance ...................................................... 21
Portfolio Manager Interview ........................................... 22
Evergreen Value Fund
Fund at a Glance ...................................................... 25
Portfolio Manager Interview ........................................... 26
Financial Highlights
Evergreen Blue Chip Fund .............................................. 28
Evergreen Equity Income Fund .......................................... 30
Evergreen Growth and Income Fund ...................................... 32
Evergreen Income and Growth Fund ...................................... 34
Evergreen Small Cap Value Fund ........................................ 36
Evergreen Utility Fund ................................................ 38
Evergreen Value Fund .................................................. 40
Schedule of Investments
Evergreen Blue Chip Fund .............................................. 42
Evergreen Equity Income Fund .......................................... 44
Evergreen Growth and Income Fund ...................................... 46
Evergreen Income and Growth Fund ...................................... 50
Evergreen Small Cap Value Fund ........................................ 54
Evergreen Utility Fund ................................................ 57
Evergreen Value Fund .................................................. 58
Statements of Assets and Liabilities ..................................... 60
Statements of Operations ................................................. 61
Statements of Changes in Net Assets ...................................... 62
Combined Notes to Financial Statements ................................... 65
Independent Auditors' Report ............................................. 76
Additional Information ................................................... 77
Evergreen Funds
Evergreen Funds is one of the nation's fastest growing investment companies with
over $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 annual report must be preceded or accompanied by a prospectus of an
Evergreen fund contained herein. The prospectus contains more complete
information, including fees and expenses, and should be read carefully before
investing or sending money.
Mutual Funds: ARE NOT FDIC INSURED May lose value . Are not bank guaranteed
Evergreen Distributor, Inc.
Evergreen(SM) is a Service Mark of Evergreen Investment Services, Inc.
<PAGE>
Letter to Shareholders
----------------------
September 1999
[PHOTO OF WILLIAM M. ENNIS APPEARS HERE]
William M. Ennis
President and CEO
Dear Evergreen Shareholders,
We are pleased to provide the Evergreen Growth and Income Funds annual report,
which covers the fiscal year ended July 31, 1999.
Continued Strength in the Domestic Economy
Early in the fiscal period, stock markets around the world declined dramatically
during the summer and into the early fall of 1998. The Federal Reserve lowered
interest rates three separate times in order to help stabilize global markets
and these actions successfully restored investor confidence. As a result, the
U.S. stock market rallied strongly in the final quarter of 1998 and into the
first half of 1999.
During the first quarter of 1999, a handful of large capitalization growth
stocks, technology stocks in particular, continued to dominate market
performance. During the second quarter, participation broadened to include both
value stocks and small company stocks: two areas that had disappointed investors
for several years. The recent growth in these areas may be a sign that the
record bull market is repositioning itself to continue.
Inflation fears persist, however, and the Federal Reserve increased interest
---------
rates in June and again in late August in an effort to contain stock and bond
prices. Investors will watch carefully to see whether there will be a third rate
increase in October. Despite the anxiety over interest rates, many experts agree
that the economy is still fundamentally strong, and we remain cautiously
optimistic about the prospects for continued growth in the markets.
Year 2000 Preparation/1/
We continue to progress with our preparations for year 2000. Our aim is to
provide uninterrupted service and communication with shareholders through the
end of December 1999 and into January 2000. At the end of September, when this
report was finalized, we completed all the regulatory requirements for testing
and certification of our systems. In March, we participated in the industry's
"Street Test" with the Securities Industry Association, which helped us evaluate
the readiness of one of the industry's critical trading networks. We are
confident that our long-term approach to planning and preparation will enable us
to continue to deliver the high quality products and services that you have come
to expect.
Once again, we remind you to take advantage of your financial
advisor's expertise and work together to develop an asset allocation strategy
that will help you to meet your investment goals and objectives. Evergreen Funds
offers a wide range of funds that includes multiple investment styles to help
you find those that will be appropriate for your portfolio.
Thank you for your continued investment in Evergreen Funds.
Sincerely,
/s/ William M. Ennis
William M. Ennis
President and CEO
Evergreen Investment Company, Inc.
/1/ The information above constitutes Year 2000 readiness disclosure.
1
<PAGE>
EVERGREEN
Blue Chip Fund
Fund at a Glance as of July 31, 1999
Portfolio
Management
- ----------
[PHOTO OF JUDITH A. WARNERS APPEARS HERE]
Judith A. Warners
Tenure: January 1995
- --------------------------------------------------------------------------------
CURRENT INVESTMENT STYLE /1/
- --------------------------------------------------------------------------------
Size Style
Value Blend Growth
Large X
Medium
Small
Morningstar's Style Box is based on a portfolio date as of 7/31/99.
The Equity Style Box placement is based on a fund's price-to-earnings and price-
to-book ratio relative to the S&P 500, as well as the size of the companies in
which it invests, or median market capitalization.
/1/ Source: 1999 Morningstar, Inc.
/2/ Past performance is no guarantee of future results. The investment return
and principal value will fluctuate so that an investor's shares, when redeemed,
may be worth more or less than original cost. The performance of each class may
vary based on differences in loads and fees paid by the shareholders investing
in each class.
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 not 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/
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Portfolio Inception Date:9/11/35 Class A Class B Class C Class Y
Class Inception Date 1/20/98 9/11/35 1/22/98 4/30/99
Average Annual Returns*
<S> <C> <C> <C> <C>
1 year with sales charge 11.71% 11.26% 15.37% n/a
1 year w/o sales charge 17.29% 16.26% 16.37% 17.46%
3 years 23.59% 24.24% 24.74% 25.88%
5 years 20.42% 20.66% 20.74% 21.88%
10 years 13.58% 13.31% 13.21% 14.40%
Since Portfolio Inception 9.28% 9.16% 9.13% 9.43%
Maximum Sales Charge 4.75% 5.00% 1.00% n/a
Front End CDSC CDSC
12-month income dividends per share $0.03 -- -- --
12-month capital gain distributions per share $2.38 $2.38 $2.38 --
</TABLE>
* Adjusted for maximum applicable sales charges unless noted.
- --------------------------------------------------------------------------------
Long Term Growth
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
Evergreen Blue Chip B Consumer Price S & P 500
Period End Market Value Index - US Value Composite Value
7/31/89 10,000 10,000 10,000
7/31/90 10,621 10,482 10,623
7/31/91 11,755 10,949 11,977
7/31/92 12,469 11,294 13,510
7/31/93 13,390 11,608 14,684
7/31/94 13,531 11,929 15,442
7/31/95 15,692 12,259 19,463
7/31/96 17,909 12,617 22,687
7/31/97 26,084 12,902 34,493
7/31/98 29,994 13,119 41,113
7/31/99 34,882 13,360 49,002
Comparison of change in value of a $10,000 investment in Evergreen Blue Chip
Fund, Class B, the Standard and Poor's 500 Index (S & P 500) and the Consumer
Price Index (CPI).
The S&P 500 is an unmanaged market index and does 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
Blue Chip Fund
Portfolio Manager Interview
How did the Fund perform?
The Fund did very well when measured against other growth and income funds. For
the 12 months ended July 31, 1999, the Evergreen Blue Chip Fund's Class B shares
had a return, before deduction of any applicable sales charges, of 16.26%.
During the same 12-month period, the average return of the growth and income
funds was 12.22%, according to Lipper, Inc., an independent monitor of mutual
fund performance. The Standard & Poor's 500 Index, a benchmark for the overall
market, had a return of 20.20%.
Portfolio
Characteristics
---------------
(as of 7/31/1999 unless noted)
Total Net Assets $641,440,091
Number of Holdings 102
P/E Ratio* 35.3x
Beta* 0.97
*as of 6/30/1999
What was the investment environment like during the 12-month period?
It was a period of almost constant change. We began in August 1998 in a time of
great fear that the problems of the emerging markets would spread to developed
economies, including the United States, and lead to a global economic slowdown.
This period of high anxiety came to an end when the U.S. Federal Reserve lowered
short-term interest rates three successive times in the fall of 1998, restoring
confidence and leading to a significant rally in late 1998 and early 1999. As
had been true for the previous two years, this rally was dominated by a narrow
group of large-cap growth companies, especially in the technology industry.
In the first quarter of 1999, investors realized we were not going to have a
global meltdown. Signs of a recovery were evident in Japan and in some emerging
markets. This kicked off a rally in cyclical stocks--or stocks of companies that
do best when the economy is expanding--and in value stocks. Energy stocks, which
had slumped badly during 1998 as world oil prices fell, recovered sharply as the
price of crude oil started climbing.
As the spring of 1999 progressed, however, the repeated signs of stronger
economic growth resulted in rising interest rates. This particularly hurt
financial services stocks and other interest rate sensitive sectors. Late in
June, concern about further increases in interest rates caused a reversal of the
market's direction, with financial, technology and retail stocks particularly
hard hit in July 1999. In fact, late in June, the U.S. Federal Reserve raised
short-term interest rates once.
Top 5 Industries
----------------
(as a percentage of net assets)
Information Services & Technology 17.6%
Retailing & Wholesale 8.7%
Oil / Energy 8.6%
Telecommunication Services &Equipment 8.5%
Finance &Insurance 7.5%
3
<PAGE>
EVERGREEN
Blue Chip Fund
Portfolio Manager Interview
What strategies did you pursue in this environment?
As we ended the first six months of the year, we were de-emphasizing financials
and energy stocks, while emphasizing technology and consumer staples.
As the second six months began, we continued to under-weight financial stocks
versus the indices. We maintained over-weighted positions in technology and
telecommunications, with investments in companies such as IBM, Hewlett-Packard,
Motorola, ADC Telecom, Tellabs and adding to our position in Intel. We also
maintained positions in industry-leading companies such as Microsoft, Sun
Microsystems, EMC, America Online and Cisco Systems.
Increasingly, as we progressed in 1999, we added to our energy position, raising
the industry weighting from about 4% of net assets at the end of January to 9%
at the end of the fiscal year in July. Our investments included shares of
integrated energy companies such as Texaco, international companies such as
Royal Dutch Petroleum and BP Amoco, exploration company Unocal and oil drillers
such as Apache and Anadarko.
We also maintained a very strong emphasis on consumer-related industries,
including retailers and specialty retailers. We invested in companies such as
Tandy and Federated Department Stores, while maintaining positions in Home
Depot, Wal-Mart, Dayton-Hudson and Costco.
What were some of the leading contributors to the Fund's performance?
Some of the better-performing stocks during the year included: IBM; Biogen, a
biotech company; Tyco International, a diversified industrial company;
Univision, the leading Spanish-language broadcaster; and oil company Unocal.
Tandy, which operates the Radio Shack retail chain, was an excellent performer.
The Fund's performance also received lifts from two sub-themes:
telecommunications and basic materials. The entire telecommunications sector
tended to do very well, including regional telephone operating companies,
wireless companies and equipment companies. Among the contributors to
performance were Winstar and Qualcomm. In basic materials, we focused on special
situations, rather than commodities, such as Raychem, a specialty chemical
company that was purchased by Tyco International.
Top 10 Holdings
---------------
(as a percentage of net assets)
Microsoft Corp. 3.5%
General Electric Co. 3.3%
International Business Machines Corp. 2.2%
Intel Corp. 2.0%
Cisco Systems, Inc. 1.9%
Tyco International Ltd. 1.9%
Atlantic Richfield Co. 1.7%
Hewlett-Packard Co. 1.6%
Safeway, Inc. 1.5%
Wal-Mart Stores, Inc. 1.5%
4
<PAGE>
EVERGREEN
Blue Chip Fund
Portfolio Manager Interview
Were there any disappointments?
Yes, Waste Management was a poor performer. The company had management
difficulties after its merger with USA Waste. Fortunately, we sold out of our
position in Waste Management at the first signal of problems. We also sold our
position in Daimler-Chrysler, which has been a poor performer. Coca-Cola also
was a disappointment, although we did not have a major position in the company.
What is your outlook?
We expect to see continued volatility and shifts in market sentiment as
investors watch the rate of economic growth and the direction of interest rates.
One of the big issues to watch will be the sustainability of the global economic
growth we started to see during the past year.
Overall, we have a positive outlook. Corporations have shown they can continue
to generate earnings growth through re-structuring programs and overcoming a
tight labor market through greater efficiencies. During the past few months, we
have seen market leadership broaden beyond the few large-cap, growth companies
that had been the dominant performers over the past two years. We believe
sustained global economic growth can continue to lead to earnings improvements
across a broad array of companies. One of the things we have seen, over the past
year, is that companies have consistently shown earnings improvements.
5
<PAGE>
EVERGREEN
Equity Income Fund
Fund at a Glance as of July 31, 1999
Portfolio
Management
- ----------
[PHOTO OF HARLAN R. SONDERLING APPEARS HERE]
Harlan R. Sonderling,
CPA, CFA
Tenure: June 1998
- --------------------------------------------------------------------------------
CURRENT INVESTMENT STYLE /1/
- --------------------------------------------------------------------------------
Size Style
Value Blend Growth
Large X
Medium
Small
Morningstar's Style Box is based on a portfolio date as of 7/31/99.
The Equity Style Box placement is based on a fund's price-to-earnings and
price-to-book ratio relative to the S&P 500, as well as the size of the
companies in which it invests, or median market capitalization.
/1/ Source: 1999 Morningstar, Inc.
/2/ Past performance is no guarantee of future results. The investment return
and principal value will fluctuate so that an investor's shares, when redeemed,
may be worth more or less than original cost. The performance of each class may
vary based on differences in loads and fees paid by the shareholders investing
in each class.
Historical performance shown for Classes B, C, and Y prior to their inception is
based on the performance of Class A, the original class offered. These
historical returns for Classes B, C, and Y have not been adjusted to reflect the
effect of each Class' 12b-1 fees. These fees for 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 for Classes B and C would have been lower while
returns for Class Y would have been higher. Returns reflect expense limits
previously in effect, without which returns would have been lower.
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS /2/
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Portfolio Inception Date: 4/14/87 Class A Class B Class C Class Y
Class Inception Date 4/14/87 2/1/93 2/1/93 1/13/97
Average Annual Returns*
<S> <C> <C> <C> <C>
1 year with sales charge 3.06% 2.74% 6.45% n/a
1 year w/o sales charge 8.20% 7.39% 7.38% 8.44%
3 years 19.02% 19.32% 20.05% 21.07%
5 years 17.56% 17.56% 17.79% 18.77%
10 years 12.95% 12.92% 12.92% 13.53%
Since Portfolio Inception 12.44% 12.42% 12.43% 12.92%
Maximum Sales Charge 4.75% 5.00% 1.00% n/a
Front End CDSC CDSC
30-day SEC Yield 1.66% 0.97% 0.97% 1.72%
12-month income dividends per share $0.29 $0.15 $0.15 $0.34
12-month capital gain distributions per share $2.74 $2.74 $2.74 $2.74
</TABLE>
* Adjusted for maximum applicable sales charge unless noted. long term growth
- --------------------------------------------------------------------------------
LONG TERM GROWTH
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Evergreen Equity Income A Consumer Price S & P 500 Lehman Brothers
Period End Market Value Index - US Value Composite Value Aggregate Value
<S> <C> <C> <C> <C>
7/31/89 9,527 10,000 10,000 10,000
7/31/90 10,147 10,482 10,623 10,707
7/31/91 11,532 10,949 11,977 11,853
7/31/92 12,273 11,294 13,510 13,604
7/31/93 13,893 11,608 14,684 14,988
7/31/94 14,336 11,929 15,442 15,002
7/31/95 16,329 12,259 19,463 16,518
7/31/96 19,097 12,617 22,687 17,433
7/31/97 27,435 12,902 34,493 19,313
7/31/98 31,233 13,119 41,113 20,828
7/31/99 33,828 13,360 49,002 21,345
</TABLE>
Comparison of change in value of a $10,000 investment in Evergreen Equity Income
Fund, Class A, the Standard and Poor's 500 Index (S&P 500), Lehman Brothers
Aggregate Index (LBAI) and the Consumer Price Index (CPI).
The S&P 500 and LBAI 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.
6
<PAGE>
EVERGREEN
Equity Income Fund
Portfolio Manager Interview
How did the Fund perform?
During the 12 months ended July 31, 1999, the Evergreen Equity Income Fund,
Class A shares had a total return, before deduction of any applicable sales
charges, of 8.20%. For the same 12 months, the average return of equity income
funds was 10.80%, according to Lipper Inc., an independent monitor of mutual
fund performance, and the Standard & Poor's 500 Index returned 20.20%.
Portfolio
Characteristics
---------------
(as of 7/31/1999 unless noted)
Total Net Assets $145,864,030
Number of Holdings 68
P/E Ratio* 18.4x
Beta* 0.78
* as of 6/30/1999
What factors affected performance during the 12 months?
The Fund was over-weighted in small- and medium-sized issues during a period in
which large cap stocks generally performed better. The Fund also was
over-weighted in financial services stocks, which lagged the overall market
because of concerns about credit quality first, and then rising interest rates
and the sustainability of revenue growth rates. Only since April 1999 have small
and medium cap stocks performed well relative to large cap stocks. We continue
to believe these stocks offer compelling valuations, dividend yields and
dividend growth potential when compared to large cap stocks. Relative
performance also was hurt by the Fund's position in REITs (real estate
investment trusts), which performed poorly during the year, and by the Fund's
underweighted position in technology stocks, which performed well. As a general
rule, technology companies pay small dividends, if any.
On the positive side, the Fund's performance was helped by its energy position.
We persisted with our energy holdings during first-half weakness. In the final
six months of the fiscal year, energy stocks rallied sharply when oil prices
rose as a result of OPEC's renewed pricing discipline. Our positions in
telecommunications stocks, primarily regional phone operating companies, also
boosted performance. These companies offered attractive dividend yields and
earnings growth rates. Our largest single position, the industrial conglomerate
Tyco International, performed very well.
Top 5 Industries
----------------
(as a percentage of net assets)
Banks 15.0%
Finance & Insurance 11.2%
Oil/ Energy 10.4%
Utilities - Telephone 8.5%
Utilities - Electric 7.5%
What was the investment environment like for the yield-oriented stocks that the
Fund emphasizes?
Yield-oriented stocks were largely out of favor for much of the fiscal year as
large cap stocks with high price-to-earnings ratios and low dividend yields
drove the market higher. That trend changed in April 1999 when economic growth
exceeded investor expectations and value-oriented, higher-yielding industrial
and commodity stocks began to outperform the market. This was a trend that
persisted through June.
7
<PAGE>
EVERGREEN
Equity Income Fund
Portfolio Manager Interview
Some yield-oriented sectors, such as financial services and utilities, did not
participate in this rally despite their attractive features. The rally was led
by economically sensitive, more cyclical industries, such as commodities and
capital equipment.
What have been your principal strategies?
We have consistently pursued our long-term strategy of owning high-quality
companies with improving fundamental performance and attractive stock prices. In
our stock selection process, we view dividend income as an important component
of total return. We have concentrated on medium and large capitalization stocks,
generally with total market capitalizations of more than $5 billion. We have
kept the Fund well diversified among sectors and fully invested in common stocks
and convertible securities. Our investment process tends to be more bottom-up,
relying on the findings of our team of senior analysts, who emphasize strong
business fundamentals, high current yield and dividend growth in their research
for the Fund.
Throughout the year, this strategy has led us to emphasize these industries:
financial services; energy; consumer cyclicals, including automobile and
retailing companies; communications, including regional phone companies;
electrical utilities; and capital goods. Although financial services and
utilities underperformed the market during the fiscal year, we have maintained
strong representation in these stock sectors. In the case of financial services,
we have emphasized companies with attractive valuations for their consistent
earnings and dividend growth and growing market share. An example is Lincoln
National Corp. In the case of utility stocks, we have emphasized companies with
attractive dividend yields and stock valuations that have the potential to
benefit from industry re-structuring. An example is Duke Power.
We have de-emphasized consumer staples, such as food and beverage company
stocks; healthcare, and technology because of their relatively high
price-to-earnings ratios and generally lower dividend yields. In the case of
healthcare, we have long-term investments in several high-quality pharmaceutical
companies that fit our investment criteria, such as Merck and Pharmacia &
Upjohn.
Throughout the year, we have sought to increase the Fund's dividend yield. This
has led us to emphasize two themes: investing for income and investing for
dividend growth. The overall portfolio structure has changed to reflect these
themes. Income investments include utilities, energy and basic materials
companies that have consistent, above-average dividends. We define dividend
growth stocks as those that may have lower current dividend yields, but that
offer the prospect of sustainable dividend growth at rates well above stock
market averages. These companies are often found in the financial services,
consumer and pharmaceutical industries.
The two broad themes of income stocks and dividend-growth stocks each comprise
more than 40% of the Fund's portfolio. The remaining portion of the portfolio,
about 10% of net assets at the end of the fiscal year, is invested for capital
appreciation potential rather than for current income. These opportunity stocks
typically are in the technology, media and growth retail industries.
Top 10 Holdings
---------------
(as a percentage of net assets)
Tyco International Ltd. 3.5%
Unocal Corp. 3.0%
International Business Machines Corp. 2.7%
Greenpoint Financial Corp. 2.7%
General Electric Co. 2.5%
Bell Atlantic Corp. 2.4%
Philip Morris Companies, Inc. 2.3%
U.S. West, Inc. 2.2%
North Fork Bancorp, Inc. 2.1%
Costco Companies, Inc. 2.0%
8
<PAGE>
EVERGREEN
Equity Income Fund
Portfolio Manager Interview
What are some of the investments that illustrate these themes?
A good example of investing for income is the Fund's investment in Equity Office
Properties, a real estate investment trust that is the nation's largest owner of
high quality, downtown office buildings. This company offers a current dividend
yield of almost 7% and has reported consistent growth in its operating cash
flows, which we believe is sustainable. An excellent example of the dividend
growth theme is the Fund's investment in Greenpoint Financial Corp., a finance
company emphasizing specialty-housing lending. This investment has a current
dividend yield of 2.8% after increasing its dividend in February by 38% to
compensate for the temporary suspension of its long-time share repurchase
program. The company's record of sustained earnings growth gives it the
potential to offer consistent, double-digit dividend growth in the future. Tyco
International, which I mentioned earlier, is a good example of the opportunity,
or capital appreciation, theme. This diversified industrial company has
generated strong earnings growth from both internal operations and strategic
acquisitions, resulting in excellent stock performance.
What is your outlook?
Following more than four years of outstanding returns from the stock market, we
believe investors would be wise to temper their expectations for future gains.
The Federal Reserve Board raised short-term interest rates to thwart any
inflationary pressures. While concerns of economic overheating are probably
exaggerated, this bias suggests that historically high valuations for many
stocks may have peaked, and that future price gains may be driven more by
earnings and dividend growth than by stock price momentum or company size.
Earnings and dividend growth are qualities we emphasize. Within this context, we
plan to continue to practice our investment discipline, buying income-producing
stocks of quality companies and selling those stocks when they have reached
target prices or when their fundamentals start to disappoint us. We expect to
remain fully invested and well diversified.
9
<PAGE>
EVERGREEN
Growth and Income Fund
Fund at a Glance as of July 31, 1999
Portfolio Management
--------------------
[PHOTO OF PHILLIP M. FOREMAN APPEARS HERE]
Phillip M. Foreman,
CFP, CFA
Tenure: January 1999
- --------------------------------------------------------------------------------
CURRENT INVESTMENT STYLE/1/
- --------------------------------------------------------------------------------
[CHART APPEARS HERE]
Size Style
Value Blend Growth
Large
Medium X
Small
Morningstar's Style Box is based on a portfolio date as of 7/31/99.
The Equity Style Box placement is based on a fund's price-to-earnings and
price-to-book ratio relative to the S&P 500, as well as the size of the
companies in which it invests, or median market capitalization.
/1/ Source: 1999 Morningstar, Inc.
/2/ Past performance is no guarantee of future results. The investment return
and principal value will fluctuate so that an investor's shares, when redeemed,
may be worth more or less than original cost. The performance of each class may
vary based on differences in loads and fees paid by the shareholders investing
in each class.
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. Returns reflect expense
limits previously in effect, without which returns would have been lower.
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS/2/
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Portfolio Inception Date: 10/15/86 Class A Class B Class C Class Y
Class Inception Date 1/3/95 1/3/95 1/3/95 10/15/86
Average Annual Returns*
<S> <C> <C> <C> <C>
1 year with sales charge -0.47% -1.27% 2.69% n/a
1 year w/o sales charge 4.48% 3.73% 3.69% 4.75%
3 years 15.83% 16.13% 16.84% 18.02%
5 years 17.31% 17.50% 17.71% 18.74%
10 years 13.60% 13.78% 13.79% 14.29%
Since Portfolio Inception 13.87% 14.01% 14.01% 14.40%
Maximum Sales Charge 4.75% 5.00% 1.00% n/a
Front End CDSC CDSC
12-month income dividends per share $0.06 - - $0.10
12-month capital gain distributions per share $0.78 $0.78 $0.78 $0.78
</TABLE>
* Adjusted for maximum applicable sales charge unless noted.
- --------------------------------------------------------------------------------
LONG TERM GROWTH
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
Evergreen Growth & Income Consumer Price S & P 400
Period End Fund A Market Value Index - US Value Midcap Value
1/31/95 9,528 10,000 10,000
7/31/95 11,590 10,146 12,248
7/31/96 13,303 10,443 13,202
7/31/97 18,674 10,679 19,185
7/31/98 20,776 10,858 21,300
7/31/99 21,700 11,058 25,342
Comparison of change in value of a $10,000 investment in Evergreen Growth and
Income Fund, Class A, the Standard and Poor's 400 Mid-Cap Index (S&P 400) and
the Consumer Price Index (CPI).
The S&P 400 is an unmanaged market index and does 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.
10
<PAGE>
EVERGREEN
Growth and Income Fund
Portfolio Manager Interview
How did the Fund perform?
For the 12 months ended July 31, 1999, the Evergreen Growth and Income Fund
Class A shares had a total return, before deduction of any applicable sales
charges, of 4.48%. During the same 12-month period, the Standard & Poor's Midcap
400 Index, a benchmark for the mid-sized company stocks that the Fund
emphasizes, returned 4.60%.
Portfolio
Characteristics
---------------
(as of 7/31/1999 unless noted)
Total Net Assets $1,812,220,464
Number of Holdings 248
P/E Ratio* 21.1x
Beta* 0.79
* as of 6/30/1999
What factors affected performance during the 12 months?
The fiscal year started in August 1998 with a very poor investment environment,
as investors were concerned that problems in Asia, Russia and Latin America
would lead to a global economic slowdown. That discouraging backdrop changed,
however, beginning in October as the U.S. Federal Reserve started to cut
short-term interest rates. The immediate, primary beneficiaries of the improved
environment were the large-cap growth stocks that had been the market leaders
earlier in 1998. This is consistent with historic trends; large-cap stocks tend
to do relatively better than other classes of stocks when economic growth is
uncertain. Mid-cap stocks tended to lag, but beginning in the spring of 1999,
mid-cap stocks began to improve performance as the effects of the Federal
Reserve's interest rate reductions of several months earlier began to be felt in
the economy.
Starting in January, merger-and-acquisition activity started to increase, and
this helped the performance of many mid-cap companies, including several
portfolio holdings. Portfolio investments involved in completed or pending
merger or acquisition deals included:
.Media One, the cable TV company, was acquired by AT&T.
.AirTouch, a telecommunications firm, was acquired by Vodafone Group, forming
Vodafone AirTouch.
.Pioneer HI-BRED, a bio-technology company involved in seed development, was
acquired by Du Pont (E.I.) De Nemours & Co.
.Honeywell is the subject of a pending acquisition by Allied Signal.
.ARCO is the subject of a pending acquisition by BP Amoco.
The Fund's under-weighting in technology held back performance. The emphasis on
energy stocks tended to hurt performance during the first part of the fiscal
year, although it helped later in the year as energy prices started to rise and
energy stocks began to recover.
Top 5 Industries
----------------
(as a percentage of net assets)
Banks 10.6%
Printing, Publishing, Broadcasting & Entertainment 9.1%
Healthcare Products & Services 8.7%
Finance & Insurance 7.2%
Consumer Products & Services 6.5%
11
<PAGE>
EVERGREEN
Growth and Income Fund
Portfolio Manager Interview
What strategies did you pursue during the period?
Our fundamental, long-term strategy remains the same: to buy outstanding
businesses when they are on sale. We tend to invest at least 75% of net assets
in mid-cap companies.
By "outstanding businesses," we refer to companies with some kind of competitive
advantage, those that operate with barriers to protect against competitors and
those that generate high returns on capital and have significant ownership by
executives and directors. By "on sale" we refer to companies whose stocks are
trading at major discounts to the private market value of the firm, i.e., what
another company is willing to pay in a merger.
A good example of the strategy at work is our investment in Sony Corp. early
this year. The company's stock was trading at an attractive valuation and was
undergoing a major re-structuring. At the same time, signs of an economic
recovery in Japan looked encouraging, and the company was launching a number of
new products, including digital cameras and operating software for cable
television systems. The company has been the Fund's largest position since March
1999, and the stock has performed exceptionally well.
Another good example is Gaylord Entertainment, which recently sold its
television stations to CBS, acquiring a significant block of CBS stock in the
transaction. We think the company's stock has been trading at half the true
value of the remaining businesses--including a hotel, a radio station and a
music company--after the market value of the CBS stock is taken out.
One of the changes we have made during the year is to reduce the number of
portfolio holdings from 282 to 248. As the number of names declined, we focused
more on fewer names that meet our criteria for quality businesses. We expect the
number of names in the Fund's portfolio may continue to go down.
Top 10 Holdings
---------------
(as a percentage of net assets)
Sony Corp., ADR 2.1%
Time Warner, Inc. 1.7%
Kansas City Southern Industries, Inc. 1.7%
Clear Channel Communications, Inc. 1.5%
New York Times Co. Cl. A 1.4%
Webster Financial Corp. 1.3%
TCA Cable TV, Inc. 1.3%
Mellon Bank Corp. 1.2%
Union Pacific Corp. 1.2%
Federal National Mortgage Assoc. 1.2%
12
<PAGE>
EVERGREEN
Growth and Income Fund
Portfolio Manager Interview
What is your outlook?
We are positive. Many of the names in the Fund's portfolio are trading at a
substantial discount, 30% to 40%, to their market values. Although the
investment environment has become uncertain because of the possibility of
further interest rate increases by the U.S. Federal Reserve, mid-cap stocks
haven't reached the high valuations and therefore don't pose as much risk as
many large-cap stocks, in our opinion.
We believe merger-and-acquisition activity will continue as large-cap companies
find they can increase their earnings growth rates by buying the franchises of
smaller companies that they cannot duplicate. In addition, the volatility in the
market creates opportunities for investors hunting for values. On any individual
day, several stocks may lose significant portions of their market value because
of market reaction to bad news. This can create investment opportunity for
investors doing fundamental research on the underlying market value of
companies. We believe we can find enough stocks to remain fully invested and do
well over the long term. As I said earlier, we look for companies in which
insiders have large ownership positions in the businesses they manage. We have
tried to be consistent with that position, and have invested our own money in
this Fund, making our personal interests the same as those of the Fund's
shareholders.
13
<PAGE>
EVERGREEN
Income and Growth Fund
Fund at a Glance as of July 31, 1999
Portfolio Management
--------------------
[PHOTO OF PHILLIP M. FOREMAN APPEARS HERE]
Phillip M. Foreman,
CFP, CFA
Tenure: September 1999
[PHOTO OF IRENE D. O'NEILL APPEARS HERE]
Irene D. O'Neill, CFA
Tenure: December 1997
- --------------------------------------------------------------------------------
CURRENT INVESTMENT STYLE/1/
- --------------------------------------------------------------------------------
[CHART APPEARS HERE]
Size Style
Value Blend Growth
Large
Medium X
Small
Morningstar's Style Box is based on a portfolio date as of 7/31/99.
The Equity Style Box placement is based on a fund's price-to-earnings and
price-to-book ratio relative to the S&P 500, as well as the size of the
companies in which it invests, or median market capitalization.
/1/ Source: 1999 Morningstar, Inc.
/2/ Past performance is no guarantee of future results. The investment return
and principal value will fluctuate so that an investor's shares, when redeemed,
may be worth more or less than original cost. The performance of each class may
vary based on differences in loads and fees paid by the shareholders investing
in each class.
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. Returns reflect expense
limits previously in effect, without which returns would have been lower.
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS/2/
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Portfolio Inception Date: 8/31/78 Class A Class B Class C Class Y
Class Inception Date 1/3/95 1/3/95 1/3/95 8/31/78
Average Annual Returns*
<S> <C> <C> <C> <C>
1 year with sales charge 6.80% 6.48% 10.37% n/a
1 year w/o sales charge 12.14% 11.34% 11.34% 12.46%
3 years 13.94% 14.21% 14.96% 16.11%
5 years 12.68% 12.79% 13.01% 14.02%
10 years 9.42% 9.58% 9.58% 10.07%
Since Portfolio Inception 13.85% 13.94% 13.93% 14.18%
Maximum Sales Charge 4.75% 5.00% 1.00% n/a
Front End CDSC CDSC
30-day SEC Yield 2.02% 1.37% 1.37% 2.38%
12-month income dividends per share $0.93 $0.80 $0.80 $1.02
12-month capital gain distributions per share $2.13 $2.13 $2.13 $2.13
</TABLE>
* Adjusted for maximum applicable sales charge unless noted.
- --------------------------------------------------------------------------------
LONG TERM GROWTH
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
Evergreen Income and Consumer Price Wilshire 5000
Period End Growth A Market Value Index - US Value Value
1/31/95 9,526 10,000 10,000
7/31/95 10,843 10,146 12,149
7/31/96 11,718 10,443 13,933
7/31/97 15,045 10,679 20,510
7/31/98 16,230 10,858 24,005
7/31/99 18,201 11,058 28,314
Comparison of change in value of a $10,000 investment in Evergreen Income and
Growth Fund, Class A, the Wilshire 5000 Index (Wilshire 5000) and the Consumer
Price Index (CPI).
The Wilshire 5000 is an unmanaged market index and does 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.
14
<PAGE>
EVERGREEN
Income and Growth Fund
Portfolio Manager Interview
How did the Fund perform?
The Fund had very strong performance. For the 12 months ended July 31, 1999, the
Evergreen Income and Growth Fund's Class A shares had a total return, before the
deduction of any applicable sales charges, of 12.14%. During the same 12-month
period, the average return among funds in the income fund category was 5.41%,
according to Lipper, Inc., an independent monitor of mutual fund performance.
The Wilshire 5000 Index reported an 18.35% return for this same period.
One of the noteworthy developments during the year was the merger of the former
Evergreen American Retirement Fund into the Evergreen Income and Growth Fund on
July 31, 1999.
Portfolio
Characteristics
---------------
(as of 7/31/1999 unless noted)
Total Net Assets $1,070,659,522
Number of Holdings 193
P/E Ratio* 19.2x
Beta* 0.66
* as of 6/30/1999
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION AS OF JULY 31, 1999
- --------------------------------------------------------------------------------
(as a percentage of net assets)
[PIE CHART APPEARS HERE]
Common Stock - 65.7%
Convertible Preferred Stock - 17.9%
Cash Equivalents and other - 15.0%
Convertible Debentures - 1.4%
What factors affected performance?
The Fund benefited from its emphasis on telecommunications and energy-related
stocks. The rapid growth in telecommunications helped a number of Fund holdings
during the year, while the rise in oil prices early in 1999 led to strong
performance by a number of energy holdings late in the fiscal year. Acquisition
offers for several companies held by the Fund in both the telecommunications and
energy sectors also contributed to performance. In addition, as the 12-month
period progressed, investors began to show renewed interest in value stocks as
market leadership broadened beyond a narrow band of large-cap growth stocks.
During the early months of the fiscal year, value stocks were particularly hard
hit as investors worried that problems in emerging markets would hurt world
economic growth. After interest rates abroad began declining, however, investors
began to regain confidence in foreign markets and in the stocks of many
companies in cyclical industries, i.e., those closely linked to changes in the
economic cycle. This renewed confidence in the direction of the world economy
supported the performance of many value-related stocks in the commodity,
industrial and other cyclical sectors.
What investment themes did you emphasize?
We maintained our long-term, value-oriented focus, looking for opportunities
among consolidating industries where the potential for mergers and acquisitions
would be high, and in companies that were undergoing re-structuring and
cost-cutting programs. We also looked for opportunities in industries undergoing
significant growth, such as in telecommunications. We also took profits from
successful investments in the banking sector and used
15
<PAGE>
EVERGREEN
Income and Growth Fund
Portfolio Manager Interview
them to re-allocate the portfolio into other areas. We believed, especially in
light of rising interest rates, that there were better opportunities outside
banking.
Although the Fund finished the fiscal year with a relatively high cash position
of about 9.5% of net assets, this was more a temporary result of portfolio
re-allocation moves than a decision to become more defensive by raising cash.
Top 5 Industries
----------------
(as a percentage of net assets)
Banks 13.8%
Utilities -- Electric 11.8%
Healthcare Products & Services 6.3%
Oil / Energy 6.0%
Electrical Equipment & Services 5.4%
What were some examples of Fund investments involved in mergers and
acquisitions?
In the energy sector, worthy of note, is the pending acquisition of Atlantic
Richfield by BP Amoco.
In addition, two fund holdings in the banking industry also are the subject of
pending acquisitions by larger banks. Mercantile Bank Corp. is to be taken over
by Firstar Corp, while First American Corp is scheduled to be acquired by
AmSouth Bank Corp.
Finally, two investments in the utility sector also are the subject of pending
takeovers. TNP Enterprises, an electric company, is being acquired by an
investor group, while Frontier Corp. a telecommunications firm, has received an
acquisition offer from Global Crossing.
What Fund holdings have been involved in restructuring?
The Fund has a long-term record of finding interesting opportunities among
undervalued stocks of companies that are undergoing restructuring programs which
have the potential to increase the value of the business. Two recent examples,
one in the energy sector and one in the transportation sector, illustrate that
theme.
New management has taken over at Equitable Resources, an integrated energy
company whose primary focus is in natural gas, predominately in the Appalachian
region. The new management has undertaken an aggressive cost-cutting program
that also involves redeploying assets and share buybacks. As a result, the
company's return on capital and earnings growth rate have increased, and the
stock has started to perform exceptionally well.
In transportation, Union Pacific had been having problems digesting its
acquisition of another railroad company, Southern Pacific. Union Pacific started
an aggressive re-structuring program in the spring of 1998, resulting in a
substantial improvement in earnings and a rebound in its stock price.
How has the Fund taken advantage of the opportunities in telecommunications?
Telecommunications has been a spectacular performer for the Fund. This industry
has been restructuring since 1984 when the old AT&T was broken up and that
process is accelerating. The recent catalyst for growth is the explosion in
telecommunications traffic in wireless, data transmission and over the internet.
This explosion has created the need for equipment with greater capacity, greater
speed and improved security. Companies are scrambling to gain access to
customers. The need for many companies quickly to become full-service providers
also has led to a heightened rate of industry consolidation.
16
<PAGE>
EVERGREEN
Income and Growth Fund
Portfolio Manager Interview
Qualcomm, the best-performing stock for the Fund during the fiscal year, is an
excellent example. Qualcomm has developed a proprietary wireless technology that
is being adopted as a global standard for digital systems because of its ability
to increase capacity, add clarity, and secure transmissions.
Frontier Corp. is another example. It started out as a local telephone company
in the Rochester, N.Y., area, but has developed a long distance business and
made strategic investments in a data transmission fiber optic system. With its
access to a customer base, Frontier was an attractive acquisition target in the
current industry consolidation. It is now the subject of an acquisition offer by
Global Crossing.
Another example is Qwest Communications, a long distance fiber optic system
builder and operator that is a relatively recent investment for the Fund. It has
made an acquisition offer for a regional telephone company, U.S. West. This
transaction will expand Qwest's product offering beyond basic long haul service
and provide a new base of customers, resulting in greater revenue and earnings
growth potential.
In addition, Vodafone, a major British-based company, recently acquired
AirTouch, another Fund holding, to gain entry into the U.S. wireless phone
market as well as to expand its international presence.
Finally, a good example of the Fund's search for unusual opportunities is
Houston Industries, a diversified company that sold its cable TV business to
Time Warner. We bought the convertible security of Houston Industries that is
convertible into shares of Time Warner stock.
Top 10 Holdings
---------------
(as a percentage of net assets)
Williams Companies, Inc. 2.4%
Thomas & Betts Corp. 2.3%
Qualcomm Financial Trust I, convertible preferred 2.2%
Dana Corp. 2.2%
New Holland NV 2.2%
National Australia Bank Ltd. 2.1%
Southern Co. 2.0%
Qwest Trends Trust, convertible preferred 1.8%
Frontier Corp. 1.8%
Murphy Oil Corp. 1.7%
What other Fund investments have been particularly notable?
Shared Medical Systems has done exceptionally well. This company provides
healthcare information systems to hospitals and other large healthcare
institutions. Shared Medical has been in a very strong position as the
healthcare sector needs to reduce costs to offset lower rates of Medicare
reimbursement by the government. This trend is driving expanded use of
information technology by hospitals.
What is your outlook?
We have a favorable outlook because we think stocks with significant dividend
yields should provide protection for investors, even in a market downturn. In
the near-term, the market will be focused on interest rates and will be
concerned about whether rising rates could slow economic growth. Inflation,
however, does not appear to be a threat, and so it does not appear likely the
Federal Reserve Board will raise short-term interest rates significantly. Longer
term, we think the Fund's emphasis on value stocks and higher yielding stocks
should continue to provide good investment opportunities.
17
<PAGE>
EVERGREEN
Small Cap Value Fund
Fund at a Glance as of July 31, 1999
Portfolio Management
--------------------
[PHOTO OF JORDAN ALEXANDER APPEARS HERE]
Jordan Alexander, CFA
Tenure: January 1999
[PHOTO OF EDWIN D. MISKA APPEARS HERE]
Edwin D. Miska
Tenure: September 1996
- --------------------------------------------------------------------------------
CURRENT INVESTMENT STYLE/1/
- --------------------------------------------------------------------------------
Size Style
Value Blend Growth
Large
Medium
Small X
Morningstar's Style Box is based on a portfolio date as of 7/31/99.
The Equity Style Box placement is based on a fund's price-to-earnings and
price-to-book ratio relative to the S&P 500, as well as the size of the
companies in which it invests, or median market capitalization.
/1/ Source: 1999 Morningstar, Inc.
/2/ Past performance is no guarantee of future results. The investment return
and principal value will fluctuate so that an investor's shares, when redeemed,
may be worth more or less than original cost. The performance of each class may
vary based on differences in loads and fees paid by the shareholders investing
in each class.
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.
Small capitalization stock investing may offer the potential for greater long
term results; however, it is also generally associated with greater price
volatility due to the higher risk of failure.
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS/2/
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Portfolio Inception Date: 10/1/93 Class A Class B Class C Class Y
Class Inception Date 1/3/95 1/3/95 1/24/95 10/1/93
<S> <C> <C> <C> <C>
Average Annual Returns*
1 year with sales charge -2.71% -3.59% 0.30% n/a
1 year w/o sales charge 2.17% 1.35% 1.28% 2.31%
3 years 12.81% 12.97% 13.73% 14.92%
5 years 14.11% 14.21% 14.40% 15.50%
Since Portfolio Inception 12.07% 12.25% 12.31% 13.23%
Maximum Sales Charge 4.75% 5.00% 1.00% n/a
Front End CDSC CDSC
30-day SEC Yield 0.76% 0.05% 0.06% 1.05%
12-month income dividends per share $ 0.30 $ 0.19 $ 0.19 $ 0.33
12-month capital gain distributions per share $ 0.18 $ 0.18 $ 0.18 $ 0.18
</TABLE>
* Adjusted for maximum applicable sales charge unless noted.
- --------------------------------------------------------------------------------
LONG TERM GROWTH
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Evergreen Small Cap Consumer Price Wilshire Small Russell 2000
Period End Value A Market Value Index - US Value Cap Value Value Value
<S> <C> <C> <C> <C>
1/31/95 9,521 10,000 10,000 10,000
7/31/95 10,867 10,146 11,501 12,255
7/31/96 12,613 10,443 12,697 13,102
7/31/97 18,019 10,679 17,654 17,476
7/31/98 18,603 10,858 18,584 17,880
7/31/99 19,008 11,058 18,014 19,205
</TABLE>
Comparison of change in value of a $10,000 investment in Evergreen Small Cap
Value Fund, Class A, the Russell 2000 Index (Russell 2000), the Wilshire Small
Cap Value Index (Wilshire Small Cap Value), and the Consumer Price Index (CPI).
The Russell 2000 and the Wilshire Small Cap Value 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.
18
<PAGE>
EVERGREEN
Small Cap Value Fund
Portfolio Manager Interview
How did the Fund perform?
The Evergreen Small Cap Value Fund outperformed the Wilshire Small
Cap Value Index, the Fund's benchmark, for the year ended July 31, 1999. During
the 12-month period, the Fund's Class A shares had a total return, before the
deduction of any applicable sales charges, of 2.17%, while the Wilshire Small
Cap Value Index declined by 4.22%.
Portfolio Characteristics
-------------------------
(as of 7/31/1999 unless noted)
Total Net Assets $250,006,034
Number of Holdings 125
P/E Ratio* 17.2x
Beta* 0.53
*as of 6/30/1999
What factors affected performance?
The performance of the Fund was helped by a strong pace of merger and
acquisition activity and an increased weighting of names in the technology,
healthcare and consumer sectors.
Our strategy of focusing on undervalued small cap companies with good growth
prospects led us to invest in many companies that ultimately became acquisition
candidates. During the twelve-month period, 20 companies in the portfolio were
involved in completed or pending merger or acquisition transactions. The deals
having the most significant impact on the performance of the Fund included CPI
Corp., an operator of photography studios that is the subject of a pending
leveraged buyout, and Hach Co., a manufacturer of water testing equipment for
the industrial, commercial and consumer markets. In the case of CPI, if the
buyout is completed the potential gain to the Fund is 67.8% since the initial
investment in this issue in December 1997. The gain for Hach Co., which was
acquired by Danaher Corp. in July 1999, provided the Fund with an 84.7% gain
since the initial investment in May 1998.
In addition, there were eight transactions in the Fund involving companies in
the banking and thrift sector and four in the utility sector. In the utility
sector, the Fund's performance was most helped by the pending acquisitions of
Yankee Energy System (potential gain upon completion of 91.3% from initial
purchase in October 1997) and Public Service Co. of North Carolina (potential
gain upon completion of 82.4% from initial purchase in March 1995).
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION AS OF JULY 31, 1999
- --------------------------------------------------------------------------------
(as a percentage of net assets)
[PIE CHART APPEARS HERE]
Common Stock - 88.2%
Convertible Debentures - 9.5%
Cash equivalents and Other - 1.2%
Convertible Preferred Stock - 1.1%
What were some examples of the Fund's investments in technology?
The best-performing issues in the Fund's technology sector included Helix
Technology, Scientific-Atlanta and Antec Corp. Helix Technology, a supplier of
vacuum pumps and instrument components for semiconductor equipment
manufacturers, gained 116.4% during the period. The company, which is a leading
supplier with more than 80% share of the market, is benefiting from the
introduction of new services, operating leverage and a strong recovery in the
semiconductor capital equipment market.
Other top performers for the Fund in the technology sector are in the cable
equipment manufacturing business, an industry benefiting from the upgrading of
the cable TV infrastructure. Scientific-Atlanta, a cable equipment manufacturer,
gained 87.5% during the
19
<PAGE>
EVERGREEN
Small Cap Value Fund
Portfolio Manager Interview
period. The company, which manufactures set-top boxes and other communications
equipment, has seen stronger earnings in recent quarters fueled by increased
capital expenditures for two-way digital cable services by cable companies.
Antec Corp., a cable equipment manufacturer and distributor, also is benefiting
from the upgrading of the cable TV infrastructure and increased capital spending
from AT&T. AT&T, which owns 20% of Antec, plans to provide cable telephone
services using equipment developed by an Antec joint venture. The Fund's
investment in Antec convertible bonds appreciated 100.0% during the period.
Top 5 Industries
----------------
(as a percentage of net assets)
Banks 11.1%
Consumer Products & Services 10.6%
Healthcare Products & Services 10.4%
Telecommunication Services & Equipment 6.9%
Oil/Energy 6.3%
What healthcare industry and consumer products investments helped performance?
The best performing issues in the Fund in the healthcare sector included Jones
Pharma and ArthroCare Corp. ArthroCare, a medical device company that is
leveraging its proprietary technology in orthopedic, head and neck, and cosmetic
surgery, gained 75.9% during the period. Jones Pharma, a specialty
pharmaceutical company focused on critical care and thyroid disorders, is seeing
stronger prescription growth in several key areas. The Fund's investment in
Jones Pharma appreciated 44.9% during the period.
In the consumer sector, the Fund's investment in International Multifoods Corp.
gained 28.7% during the period. The company, which has foodservice distribution
and food processing operations in North America, is restructuring its operations
under a new management team. We expect the restructuring to position the company
for consistent and strong earnings growth over the next several years.
Top 10 Holdings
---------------
(as a percentage of net assets)
CPI Corp. 4.2%
Curtiss Wright Corp. 3.1%
Helix Technology Corp. 3.1%
International Multifoods Corp. 2.9%
Semco Energy, Inc. 2.9%
Alpharma, Inc., convertible debenture 2.8%
Antec Corp., convertible debenture 2.1%
Granite State Bankshares, Inc. 2.1%
Carematrix, convertible debenture 1.8%
Cabot Oil & Gas Corp., CI. A 1.7%
What is your outlook?
We continue to see many opportunities to invest in undervalued, small cap
companies with favorable growth prospects. While the small cap market has seen
improved performance in recent months, the disparity of small cap valuations
relative to large caps remains very high. We believe this valuation differential
should continue to fuel stock buyback programs and merger and acquisition
activity among smaller companies, which should have a positive impact on the
future performance of the Fund.
20
<PAGE>
EVERGREEN
Utility Fund
Fund at a Glance as of July 31, 1999
Portfolio Management
--------------------
[PHOTO OF MATTHEW D. FINN APPEARS HERE]
Matthew D. Finn, CFA
Tenure: May 1999
[PHOTO OF DORIS KELLEY-WATKINS APPEARS HERE]
Doris Kelley-Watkins
Tenure: February 1997
- --------------------------------------------------------------------------------
CURRENT INVESTMENT STYLE/1/
- --------------------------------------------------------------------------------
Size Style
Value Blend Growth
Large
Medium X
Small
Morningstar's Style Box is based on a portfolio date as of 7/31/99.
The Equity Style Box placement is based on a fund's price-to-earnings and
price-to-book ratio relative to the S&P 500, as well as the size of the
companies in which it invests, or median market capitalization.
/1/ Source: 1999 Morningstar, Inc.
/2/ Past performance is no guarantee of future results. The investment return
and principal value will fluctuate so that an investor's shares, when redeemed,
may be worth more or less than original cost. The performance of each class may
vary based on differences in loads and fees paid by the shareholders investing
in each class.
Historical performance shown for Class C and Y prior to their inception is based
on the performance of Class A, one of the original classes offered along with
Class B. These historical returns for Classes C and Y 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 for Class C would have been lower
while returns for Class Y would have been higher. Returns reflect expense limits
previously in effect, without which returns would have been lower.
Funds that concentrate their investments in a single industry may face increased
risk of price fluctuation due to adverse developments within that industry
compared with more diversified funds.
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS/2/
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Portfolio Inception Date: 1/4/94 Class A Class B Class C Class Y
Class Inception Date 1/4/94 1/4/94 9/2/94 2/28/94
Average Annual Returns*
<S> <C> <C> <C> <C>
1 year with sales charge 20.03% 20.23% 24.23% n/a
1 year w/o sales charge 26.05% 25.23% 25.23% 26.35%
3 years 19.56% 19.91% 20.60% 21.75%
5 years 15.88% 15.93% 16.17% 17.29%
Since Portfolio Inception 13.34% 13.42% 13.59% 14.61%
Maximum Sales Charge 4.75% 5.00% 1.00% n/a
Front End CDSC CDSC
30-day SEC Yield 1.72% 1.06% 1.06% 2.06%
12-month income dividends per share $0.42 $0.33 $0.33 $0.45
12-month capital gain distributions per share $1.28 $1.28 $1.28 $1.28
</TABLE>
* Adjusted for maximum applicable sales charge unless noted.
- --------------------------------------------------------------------------------
LONG TERM GROWTH
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Evergreen Utility A Consumer Price S & P 500 S & P Utility
Period End Market Value Index - US Value Composite Value Value
<S> <C> <C> <C> <C>
1/31/94 9,523 10,000 10,000 10,000
7/31/94 9,126 10,150 9,656 9,420
7/31/95 10,143 10,431 12,170 10,776
7/31/96 11,158 10,736 14,186 12,081
7/31/97 13,537 10,978 21,568 13,917
7/31/98 15,880 11,163 25,708 16,840
7/31/99 20,016 11,368 30,641 19,035
</TABLE>
Comparison of change in value of a $10,000 investment in Evergreen Utility Fund,
Class A, the Standard and Poor's Utility Index (S&P Utilities), the Standard and
Poor's 500 Index (S&P 500) and the Consumer Price Index (CPI).
The S&P Utilities and the S&P 500 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.
21
<PAGE>
EVERGREEN
Utility Fund
Portfolio Manager Interview
How did the Fund perform?
The Fund had excellent performance. For the 12 months ended July 31,
1999, the Evergreen Utility Fund's Class A shares had a total return, before
deduction of any applicable sales charges, of 26.05%. During the 12 months, the
Fund's benchmark, the S&P Utilities Index, returned 13.04%. For the same period,
the utility fund average return was 16.5%, according to Lipper, Inc., an
independent monitor of mutual fund performance.
Portfolio Characteristics
-------------------------
(as of 7/31/1999 unless noted)
Total Net Assets $166,251,487
Number of Holdings 40
P/E Ratio* 21.4x
Beta* 0.47
* as of 6/30/1999
What factors contributed to the strong performance?
We began 1999 by increasing emphasis on the faster-growing telecommunications
area, particularly wireless communications. Interest rates appeared to have
bottomed late in 1998, which removed the favorable environment for interest-rate
sensitive stocks, such as gas and electric utility companies.
Revenue growth from, and customer demand for, telecommunication products and
services are rising sharply. There has been consolidation within the telecom
industry, which can be profitable for investors. Early this year, we lifted the
Fund's holdings in selected shares of telecommunication companies, including
wireless names, but maintained an investment presence in electric and gas
utilities.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION AS OF JULY 31, 1999
- --------------------------------------------------------------------------------
(as a percentage of net assets)
[PIE CHART APPEARS HERE]
Common Stock--75.2%
Convertible Preferred--21.5%
Convertible Debentures--2.4%
Cash Equivalents and Other--0.9%
Top 5 Industries
----------------
(as a percentage of net assets)
Utilities--Electric 45.1%
Utilities--Telephone 21.7%
Utilities--Gas 10.5%
Telecommunication Services & Equipment 10.4%
Oil/Energy 3.6%
What strategies did you pursue as you increased investments in
telecommunications?
In general, we increased our investments in companies that could offer customers
maximum telecom product choices. We felt those types of companies would be most
successful in the competitive environment. We also added to our wireless
communication names. AT&T and Nextel are examples of our increased interest in
telecommunications investments. We also held a position in MCI WorldCom. We did
not add to our positions in regional operating telephone companies, primarily
because we thought those companies were well represented in the portfolio.
Frontier Corp., a telecommunications company that provides local, long distance,
internet and other services was also added earlier this year.
22
<PAGE>
EVERGREEN
Utility Fund
Portfolio Manager Interview
What is behind the rapid growth in telecommunications?
Growth in telecommunications is global with demand for wireless communications
particularly pronounced. Technology advances continue to drive cost down and
services up, expanding the markets for telecommunications in both developed and
less developed countries. This trend has been apparent for several years.
Spurred by lower costs, expanded product features and greater communications
traffic capacity, growth in wireless communications has been nothing short of
explosive both domestically and globally. A leading wireless equipment company
estimates that there will be 300 million mobile wireless users in the world by
the end of 1999 and 1 billion users by 2005.
One long-held name for the Fund, Qualcomm, developed a proprietary digital
technology, CDMA, that is becoming one of the worldwide standards for wireless
communications. This has resulted in a sharp rise in projected profit growth for
this wireless equipment company. Its convertible preferred shares, which we own,
have risen in concert.
What strategies have you followed for investing in traditional gas and electric
utilities?
We did not abandon traditional gas and electric utilities. We found
opportunities among companies in service territories undergoing deregulation.
While competition is increasing for companies in deregulating markets, greater
earnings opportunities are released as well. Many utilities are investing in
areas outside of their original service territories that offer less restrictive
pricing opportunity.
Top 10 Holdings
---------------
(as a percentage of net assets)
Qualcomm Financial Trust I, convertible preferred 7.0%
Companhia Paranaense de Energia-Copel, Plc, ADR 3.7%
Enron Corp. 3.6%
Nextel Communications, Inc. Cl. A 3.5%
Frontier Corp. 3.3%
BellSouth Corp. 3.2%
Sprint Corp., convertible preferred 3.1%
Niagara Mohawk Holdings, Inc. 3.1%
Sprint Corp. 3.1%
GTE Corp 3.1%
We added Calpine Corp., an independent electric power producer, to the portfolio
and we also purchased shares in two small-cap electric companies, NUI Corp. and
UGI Corp. In addition, we added investments in electric companies PacifiCorp.
and Niagara Mohawk Holdings.
23
<PAGE>
EVERGREEN
Utility Fund
Portfolio Manager Interview
What is your outlook?
Although we have been emphasizing telecommunications, we continue to follow
developments in the gas and electric utility areas. We believe attractive
investment opportunities among gas and electric utilities can be found if we are
selective and opportunistic.
For electric power companies, we expect continued movement toward competition
and less regulation, with opportunities created by mergers, acquisitions and
financial restructuring. Among gas stocks, we expect further consolidation and
convergence between gas and electric companies. Gas companies continue to be
greatly affected by the weather, which depressed last year's results, but we
look for successful business diversification to help reduce this concern and
lift the investment appeal of the stocks.
We believe telecommunications companies will continue to offer greater growth
opportunity. However, we think this sector requires close scrutiny, particularly
as the explosive demand for telecommunications services requires great increases
in capital spending. This could become troublesome if interest rates were to
increase substantially.
Our universe of telecom and utility companies is witnessing unprecedented
fundamental change, much of it being introduced by competition. This is likely
to create tremendous investment opportunity, but also some investment challenges
and problems, which must be studied and understood.
24
<PAGE>
EVERGREEN
Value Fund
Fund at a Glance as of July 31, 1999
Portfolio Management
--------------------
[PHOTO OF MATTHEW D. FINN APPEARS HERE]
Matthew D. Finn, CFA
Tenure: March 1998
- --------------------------------------------------------------------------------
CURRENT INVESTMENT STYLE/1/
- --------------------------------------------------------------------------------
Size Style
Value Blend Growth
Large X
Medium
Small
Morningstar's Style Box is based on a portfolio date as of 7/31/99.
The Equity Style Box placement is based on a fund's price-to-earnings and
price-to-book ratio relative to the S&P 500, as well as the size of the
companies in which it invests, or median market capitalization.
/1/ Source: 1999 Morningstar, Inc.
/2/ Past performance is no guarantee of future results. The investment return
and principal value will fluctuate so that an investor's shares, when redeemed,
may be worth more or less than original cost. The performance of each class may
vary based on differences in loads and fees paid by the shareholders investing
in each class.
Historical performance shown for Classes B, C, and Y prior to their inception is
based on the performance of Class A, the original class offered. These
historical returns for Classes B, C, and Y have not been adjusted to reflect the
effect of each Class' 12b-1 fees. These fees for 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 for Classes B and C would have been lower while
returns for Class Y would have been higher. Returns reflect expense limits
previously in effect, without which returns would have been lower.
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS/2/
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Portfolio Inception Date: 4/12/85 Class A Class B Class C Class Y
Class Inception Date 4/12/85 2/2/93 9/2/94 1/3/91
Average Annual Returns*
<S> <C> <C> <C> <C>
1 year with sales charge 8.08% 7.65% 11.66% n/a
1 year w/o sales charge 13.48% 12.65% 12.66% 13.81%
3 years 18.97% 19.34% 20.05% 21.23%
5 years 17.45% 17.54% 17.77% 18.90%
10 years 12.98% 13.03% 13.13% 13.79%
Since Portfolio Inception 14.05% 14.09% 14.16% 14.63%
Maximum Sales Charge 4.75% 5.00% 1.00% n/a
Front End CDSC CDSC
30-day SEC Yield 0.48% -0.26% -0.26% 0.76%
12-month income dividends per share $0.21 $0.05 $0.05 $0.26
12-month capital gain distributions per share $0.13 $0.13 $0.13 $0.13
</TABLE>
* Adjusted for maximum applicable sales charge unless noted.
- --------------------------------------------------------------------------------
LONG TERM GROWTH
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
Evergreen Value A Consumer Price S & P 500 Composite
Period End Market Value Index - US Value Value
7/31/89 9,526 10,000 10,000
7/31/90 10,088 10,482 10,623
7/31/91 11,238 10,949 11,977
7/31/92 12,444 11,294 13,510
7/31/93 13,408 11,608 14,684
7/31/94 14,412 11,929 15,442
7/31/95 17,325 12,259 19,463
7/31/96 19,126 12,617 22,687
7/31/97 27,202 12,902 34,493
7/31/98 29,799 13,119 41,113
7/31/99 33,817 13,360 49,002
Comparison of change in value of a $10,000 investment in Evergreen Value Fund,
Class A, the Standard and Poor's 500 Index (S&P 500) and the Consumer Price
Index (CPI).
The S&P 500 is an unmanaged market index and does 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.
25
<PAGE>
EVERGREEN
Value Fund
Portfolio Manager Interview
How did the Fund perform?
The Evergreen Value Fund's Class A shares had a return, before deduction of any
applicable sales charges, of 13.48% for the 12 months ended July 31, 1999.
During the same period, the median return of funds in the Multi-Cap Value Fund
Category was 11.03%, while the Russell 1000 Value Index had a return of 14.99%.
Portfolio Characteristics
-------------------------
(as of 7/31/1999 unless noted)
Total Net Assets $932,043,300
Number of Holdings 87
P/E Ratio* 20.5x
Beta* 0.88
(as of 6/30/1999)
What factors affected performance?
The Fund performed well during the market decline early in the fiscal year.
However, the portfolio's defensive posture held back relative performance during
the market rally in October and November 1998. After the portfolio was
repositioned in December by reducing allocations in defensive areas, such as
healthcare, and adding to technology and basic materials, the Fund's performance
improved.
What was the investment like for the period?
After a two-year period in which the growth style of investing outperformed the
value style, the value indices substantially outperformed the S&P 500 Index
during April. Since April, we have not seen a clear trend favoring either
growth- or value-oriented stocks. Value-oriented stocks include many cyclical
companies, whose sales and earnings are sensitive to changes in the economic
cycle. Because of this, the environment for value-oriented stocks has improved
as the economy has improved. Late in the period, concerns arose about a
potential slowing of economic activity as both short-term and long-term interest
rates moved up. At the same time, market leadership broadened out beyond the
large-cap growth companies and has begun to include many mid-cap and small-cap
companies. We believe this is an encouraging sign of a healthy market.
Top 5 Industries
----------------
(as a percentage of net assets)
Finance & Insurance 13.1%
Banks 13.1%
Oil/Energy 10.9%
Information Services & Technology 8.3%
Utilities--Telephone 8.1%
What investments supported performance?
Throughout most of the year, stock selection in the consumer cyclical and
technology sectors helped performance. In the consumer cyclical area, the
portfolio owned significant positions in three retailers that performed very
well: Tandy, Federated Department Stores and Tommy Hilfiger. Among technology
investments, Hewlett-Packard and Motorola were the best performers. The
portfolio continued to own all these stocks at the end of the fiscal period, the
positions in Tandy and Hewlett-Packard had been reduced.
26
<PAGE>
EVERGREEN
Value Fund
Portfolio Manager Interview
The capital goods sector was the area that held back performance the most. The
Fund's investment in Waste Management also hurt performance after the company
announced it would not meet second quarter earnings expectations. The Fund has
sold its position in Waste Management.
Top 10 Holdings
---------------
(as a percentage of net assets)
Tommy Hilfiger Corp. 3.3%
Federated Department Stores, Inc. 3.1%
Exxon Corp. 2.8%
BankAmerica Corp. 2.8%
Texaco Inc. 2.5%
Citigroup, Inc. 2.5%
Hewlett-Packard Co. 2.5%
Pharmacla & Upjohn, Inc. 2.4%
Tyco International Ltd. 2.4%
Chase Manhatten Corp. 2.2%
What is your outlook?
We believe economic growth will slow toward the end of this year to a more
sustainable pace because of both the Federal Reserve Board's actions in raising
short-term interest rates and the increases in mortgage and other interest
rates. We also believe the 4% annual growth rate in Gross Domestic Product
during the first quarter of the calendar year is sustainable. However, we
believe earnings should still grow as previously depressed industries, including
energy and basic materials, recover. In addition, U.S. multinational
corporations should benefit from the emerging economic recovery overseas.
Finally, many U.S. companies should have a relatively easy time exceeding their
earnings of the third and fourth calendar quarters of 1999, supporting their
stock performance.
We believe the primary risk to stock performance is a broad-based, sustained
acceleration in inflation. We do not think this is likely to occur in the short
run.
27
<PAGE>
EVERGREEN
BLUE CHIP FUND
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended July 31,
----------------------
1999 1998 (a)
<S> <C> <C>
CLASS A
Net asset value, beginning of period $ 30.42 $ 27.39
--------- ---------
Income from investment operations
Net investment income 0.05 0.08
Net realized and unrealized gains on securities 4.82 3.01
--------- ---------
Total from investment operations 4.87 3.09
--------- ---------
Distributions to shareholders from
Net investment income (0.03) (0.06)
Net realized gains (2.38) 0
--------- ---------
Total distributions (2.41) (0.06)
--------- ---------
Net asset value, end of period $ 32.88 $ 30.42
--------- ---------
Total return* 17.29% 11.29%
Ratios and supplemental data
Net assets, end of period (thousands) $ 382,499 $ 284,735
Ratios to average net assets:
Expenses** 1.20% 1.20%+
Net investment income 0.19% 0.49%+
Portfolio turnover rate 111% 112%
</TABLE>
<TABLE>
<CAPTION>
Year Ended July 31, Year Ended August 31,
----------------------- --------------------------------------
1999 1998 (b) 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
CLASS B
Net asset value,
beginning of period $ 30.35 $ 29.79 $ 25.05 $ 22.98 $ 23.21 $ 25.42
--------- --------- -------- -------- -------- --------
Income from investment
operations
Net investment income (0.05) (0.12) 0.15 0.12 0.25 0.16
Net realized and
unrealized gains or
losses on securities 4.62 5.72 7.97 3.69 2.66 (0.35)
--------- --------- -------- -------- -------- --------
Total from investment
operations 4.57 5.60 8.12 3.81 2.91 (0.19)
--------- --------- -------- -------- -------- --------
Distributions to
shareholders from
Net realized gains (2.38) (4.96) (3.18) (0.98) (2.78) (1.74)
--------- --------- -------- -------- -------- --------
Net investment income 0 (0.08) (0.20) (0.76) (0.36) (0.28)
Total distributions (2.38) (5.04) (3.38) (1.74) (3.14) (2.02)
--------- --------- -------- -------- -------- --------
Net asset value, end of
period $ 32.54 $ 30.35 $ 29.79 $ 25.05 $ 22.98 $ 23.21
--------- --------- -------- -------- -------- --------
Total return* 16.26% 20.89% 34.76% 17.31% 13.87% (0.72%)
Ratios and supplemental
data
Net assets, end of
period (thousands) $ 255,182 $ 117,893 $312,935 $224,819 $199,456 $208,532
Ratios to average net
assets:
Expenses** 1.95% 1.68%+ 1.57% 1.85% 1.75% 2.07%
Net investment income (0.60%) (0.02%)+ 0.55% 0.52% 1.09% 0.67%
Portfolio turnover rate 111% 112% 109% 139% 115% 73%
</TABLE>
(a) For the period from January 20, 1998 (commencement of class operations) to
July 31, 1998.
(b) For the eleven months ended July 31, 1998. The Fund changed its fiscal year
end from August 31 to July 31, effective July 31, 1998.
* Excluding applicable sales charges.
** Ratio of expenses to average net assets includes fee waivers and excludes
fee credits.
+ Annualized.
See Combined Notes to Financial Statements.
28
<PAGE>
EVERGREEN
BLUE CHIP FUND
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended July 31,
-----------------------
1999 1998 (a)
<S> <C> <C>
CLASS C
Net asset value,
beginning of period $ 30.40 $ 27.70
--------- ---------
Income from investment
operations
Net investment income (0.11) 0
Net realized and
unrealized gains on
securities 4.72 2.72
--------- ---------
Total from investment
operations 4.61 2.72
--------- ---------
Distributions to
shareholders from
Net realized gains (2.38) 0
--------- ---------
Net investment income 0 (0.02)
Total distributions (2.38) (0.02)
--------- ---------
Net asset value, end of
period $ 32.63 $ 30.40
--------- ---------
Total return* 16.37% 9.80%
Ratios and supplemental
data
Net assets, end of
period (thousands) $ 2,969 $ 780
Ratios to average net
assets:
Expenses** 1.95% 2.02%+
Net investment income (0.67%) (0.27%)+
Portfolio turnover rate 111% 112%
</TABLE>
<TABLE>
<CAPTION>
Period Ended
July 31, 1999 (b)
<S> <C>
CLASS Y
Net asset value, beginning of period $32.30
------
Income from investment operations
Net investment income 0
Net realized and unrealized gains on securities 0.32
------
Total from investment operations 0.32
------
Net asset value, end of period $32.62
------
Total return 0.99%
Ratios and supplemental data
Net assets, end of period (thousands) $ 789
Ratios to average net assets:
Expenses** 0.95%+
Net investment income 0.08%+
Portfolio turnover rate 111%
</TABLE>
(a) For the period from January 22, 1998 (commencement of class operations) to
July 31, 1998.
(b) For the period from April 30, 1999 (commencement of class operations) to
July 31, 1999
* Excluding applicable sales charges.
** Ratio of expenses to average net assets includes fee waivers and excludes
fee credits.
+ Annualized.
See Combined Notes to Financial Statements.
29
<PAGE>
EVERGREEN
EQUITY INCOME FUND
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended July 31, Year Ended November 30,
-------------------------- -------------------------
1999 # 1998 1997 (a) 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
CLASS A
Net asset value,
beginning of period $ 21.65 $ 20.69 $ 17.33 $ 13.83 $ 11.75 $ 12.31
------- ------- ------- ------- ------- -------
Income from investment
operations
Net investment income 0.33 0.21 0.18 0.26 0.25 0.24
Net realized and
unrealized gains or
losses on securities 1.22 2.46 3.34 3.83 2.80 (0.56)
------- ------- ------- ------- ------- -------
Total from investment
operations 1.55 2.67 3.52 4.09 3.05 (0.32)
------- ------- ------- ------- ------- -------
Distributions to
shareholders from
Net investment income (0.29) (0.19) (0.16) (0.26) (0.32) (0.24)
Net realized gains (2.74) (1.52) 0 (0.33) (0.65) 0
------- ------- ------- ------- ------- -------
Total distributions (3.03) (1.71) (0.16) (0.59) (0.97) (0.24)
------- ------- ------- ------- ------- -------
Net asset value, end of
period $ 20.17 $ 21.65 $ 20.69 $ 17.33 $ 13.83 $ 11.75
------- ------- ------- ------- ------- -------
Total return* 8.20% 13.85% 20.40% 29.83% 26.57% (2.65%)
Ratios and supplemental
data
Net assets, end of
period (thousands) $50,213 $52,667 $47,812 $40,487 $27,037 $23,162
Ratios to average net
assets:
Expenses** 1.17% 1.21% 1.24%+ 1.41% 1.69% 1.59%
Net investment income 1.68% 1.01% 1.46%+ 1.66% 1.94% 1.93%
Portfolio turnover rate 106% 66% 41% 41% 77% 57%
</TABLE>
<TABLE>
<CAPTION>
Year Ended July 31, Year Ended November 30,
--------------------------- ---------------------------
1999 # 1998 1997 (a) 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
CLASS B
Net asset value,
beginning of period $ 21.56 $ 20.63 $ 17.31 $ 13.84 $ 11.77 $ 12.32
------- -------- ------- -------- -------- -------
Income from investment
operations
Net investment income 0.18 0.06 0.09 0.15 0.15 0.15
Net realized and
unrealized gains or
losses on securities 1.21 2.45 3.31 3.80 2.82 (0.56)
------- -------- ------- -------- -------- -------
Total from investment
operations 1.39 2.51 3.40 3.95 2.97 (0.41)
------- -------- ------- -------- -------- -------
Distributions to
shareholders from
Net investment income (0.15) (0.06) (0.08) (0.15) (0.25) (0.14)
Net realized gains (2.74) (1.52) 0 (0.33) (0.65) 0
------- -------- ------- -------- -------- -------
Total distributions (2.89) (1.58) (0.08) (0.48) (0.90) (0.14)
------- -------- ------- -------- -------- -------
Net asset value, end of
period $ 20.06 $ 21.56 $ 20.63 $ 17.31 $ 13.84 $ 11.77
------- -------- ------- -------- -------- -------
Total return* 7.39% 13.01% 19.68% 28.73% 25.59% (3.36%)
Ratios and supplemental
data
Net assets, end of
period (thousands) $78,049 $105,748 $94,309 $ 43,526 $ 20,605 $ 7,314
Ratios to average net
assets:
Expenses** 1.93% 1.97% 2.02%+ 2.18% 2.47% 2.31%
Net investment income 0.91% 0.25% 0.58%+ 0.88% 1.06% 1.27%
Portfolio turnover rate 106% 66% 41% 41% 77% 57%
</TABLE>
(a) For the eight months ended July 31, 1997. The Fund changed its fiscal year
end from November 30 to July 31, effective July 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.
30
<PAGE>
EVERGREEN
EQUITY INCOME FUND
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended July 31, Year Ended November 30,
-------------------------- --------------------------
1999 # 1998 1997 (a) 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
CLASS C
Net asset value,
beginning of period $ 21.58 $ 20.65 $ 17.32 $ 13.85 $ 11.78 $ 12.33
------- ------- ------- -------- ------- -------
Income from investment
operations
Net investment income 0.18 0.05 0.09 0.14 0.16 0.15
Net realized and
unrealized gains or
losses on securities 1.21 2.46 3.32 3.81 2.81 (0.56)
------- ------- ------- -------- ------- -------
Total from investment
operations 1.39 2.51 3.41 3.95 2.97 (0.41)
------- ------- ------- -------- ------- -------
Distributions to
shareholders from
Net investment income (0.15) (0.06) (0.08) (0.15) (0.25) (0.14)
Net realized gains (2.74) (1.52) 0 (0.33) (0.65) 0
------- ------- ------- -------- ------- -------
Total distributions (2.89) (1.58) (0.08) (0.48) (0.90) (0.14)
------- ------- ------- -------- ------- -------
Net asset value, end of
period $ 20.08 $ 21.58 $ 20.65 $ 17.32 $ 13.85 $ 11.78
------- ------- ------- -------- ------- -------
Total return* 7.38% 12.99% 19.73% 28.71% 25.57% (3.36%)
Ratios and supplemental
data
Net assets, end of
period (thousands) $16,952 $20,851 $21,125 $ 14,562 $ 9,503 $ 5,968
Ratios to average net
assets:
Expenses** 1.93% 1.97% 2.01%+ 2.17% 2.47% 2.34%
Net investment income 0.91% 0.25% 0.66%+ 0.89% 1.16% 1.21%
Portfolio turnover rate 106% 66% 41% 41% 77% 57%
</TABLE>
<TABLE>
<CAPTION>
Year Ended July 31,
------------------------
1999 # 1998 1997 (b)
<S> <C> <C> <C>
CLASS Y
Net asset value, beginning of period $21.61 $20.62 $17.74
------ ------ ------
Income from investment operations
Net investment income 0.37 0.24 0.18
Net realized and unrealized gains on securities 1.22 2.51 2.86
------ ------ ------
Total from investment operations 1.59 2.75 3.04
------ ------ ------
Distributions to shareholders
Net investment income (0.34) (0.24) (0.16)
Net realized gains (2.74) (1.52) 0
------ ------ ------
Total distributions (3.08) (1.76) (0.16)
------ ------ ------
Net asset value, end of period $20.12 $21.61 $20.62
------ ------ ------
Total return 8.44% 14.29% 17.22%
Ratios and supplemental data
Net assets, end of period (thousands) $ 651 $ 111 $ 93
Ratios to average net assets:
Expenses** 0.87% 0.93% 1.34%+
Net investment income 1.98% 1.31% 0.79%+
Portfolio turnover rate 106% 66% 41%
</TABLE>
(a) For the eight months ended July 31, 1997. The Fund changed its fiscal year
end from November 30 to July 31, effective July 31, 1997.
(b) For the period from January 13, 1997 (commencement of class operations) to
July 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.
31
<PAGE>
EVERGREEN
GROWTH AND INCOME FUND
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended
Year Ended July 31, December 31,
-------------------------- -----------------
1999 1998 1997 (b) 1996 1995 (a)
<S> <C> <C> <C> <C> <C>
CLASS A
Net asset value, beginning of
period $29.14 $27.26 $22.53 $18.63 $14.48
------ ------ ------ ------ ------
Income from investment
operations
Net investment income 0.10 0.16 0.08 0.12 0.13
Net realized and unrealized
gains on securities and
foreign currency related
transactions 1.16 2.86 4.72 4.26 4.64
------ ------ ------ ------ ------
Total from investment
operations 1.26 3.02 4.80 4.38 4.77
------ ------ ------ ------ ------
Distributions to shareholders
from
Net investment income (0.06) (0.13) (0.07) (0.13) (0.14)
Net realized gains (0.78) (1.01) 0 (0.35) (0.48)
------ ------ ------ ------ ------
Total distributions (0.84) (1.14) (0.07) (0.48) (0.62)
------ ------ ------ ------ ------
Net asset value, end of period $29.56 $29.14 $27.26 $22.53 $18.63
------ ------ ------ ------ ------
Total return* 4.48% 11.26% 21.33% 23.50% 33.00%
Ratios and supplemental data
Net assets, end of period
(millions) $ 250 $ 296 $ 166 $ 85 $ 19
Ratios to average net assets:
Expenses** 1.43% 1.46% 1.47%+ 1.41% 1.55%+
Net investment income 0.33% 0.61% 0.57%+ 0.70% 0.99%+
Portfolio turnover rate 39% 20% 6% 14% 17%
<CAPTION>
Year Ended
Year Ended July 31, December 31,
-------------------------- -----------------
1999 1998 1997 (b) 1996 1995 (a)
<S> <C> <C> <C> <C> <C>
CLASS B
Net asset value, beginning of
period $28.88 $27.10 $22.43 $18.59 $14.48
------ ------ ------ ------ ------
Income from investment
operations
Net investment income (0.14) (0.02) (0.02) 0 0.05
Net realized and unrealized
gains on securities and
foreign currency related
transactions 1.18 2.81 4.69 4.20 4.61
------ ------ ------ ------ ------
Total from investment
operations 1.04 2.79 4.67 4.20 4.66
------ ------ ------ ------ ------
Distributions to shareholders
from
Net investment income 0 0 0 (0.01) (0.07)
Net realized gains (0.78) (1.01) 0 (0.35) (0.48)
------ ------ ------ ------ ------
Total distributions (0.78) (1.01) 0 (0.36) (0.55)
------ ------ ------ ------ ------
Net asset value, end of period $29.14 $28.88 $27.10 $22.43 $18.59
------ ------ ------ ------ ------
Total return* 3.73% 10.44% 20.82% 22.60% 32.20%
Ratios and supplemental data
Net assets, end of period
(millions) $ 891 $1,000 $ 542 $ 245 $ 46
Ratios to average net assets:
Expenses** 2.18% 2.21% 2.25%+ 2.17% 2.24%+
Net investment income (0.43%) (0.14%) (0.19%)+ (0.06%) 0.30%+
Portfolio turnover rate 39% 20% 6% 14% 17%
</TABLE>
(a) For the period from January 3, 1995 (commencement of class operations) to
December 31, 1995.
(b) For the seven months ended July 31, 1997. The Fund changed its fiscal year
end from December 31 to July 31, effective July 31, 1997.
* Excluding applicable sales charges.
** Ratio of expenses to average net assets includes fee waivers and excludes
fee credits.
+ Annualized.
See Combined Notes to Financial Statements.
32
<PAGE>
EVERGREEN
GROWTH AND INCOME FUND
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended July 31, Year Ended December 31,
-------------------------- ---------------------------
1999 1998 1997 (b) 1996 1995 (a)
<S> <C> <C> <C> <C> <C>
CLASS C
Net asset value,
beginning of period $28.89 $27.10 $22.43 $ 18.58 $ 14.48
------ ------ ------ ----------- -----------
Income from investment
operations
Net investment income (0.16) (0.02) (0.02) 0 0.06
Net realized and
unrealized gains on
securities and foreign
currency related
transactions 1.19 2.82 4.69 4.21 4.60
------ ------ ------ ----------- -----------
Total from investment
operations 1.03 2.80 4.67 4.21 4.66
------ ------ ------ ----------- -----------
Distributions to
shareholders from
Net investment income 0 0 0 (0.01) (0.08)
Net realized gains (0.78) (1.01) 0 (0.35) (0.48)
------ ------ ------ ----------- -----------
Total distributions (0.78) (1.01) 0 (0.36) (0.56)
------ ------ ------ ----------- -----------
Net asset value, end of
period $29.14 $28.89 $27.10 $ 22.43 $ 18.58
------ ------ ------ ----------- -----------
Total return* 3.69% 10.47% 20.82% 22.60% 32.20%
Ratios and supplemental
data
Net assets, end of
period (millions) $ 37 $ 50 $ 24 $ 10 $ 20
Ratios to average net
assets:
Expenses** 2.18% 2.21% 2.25%+ 2.17% 2.15%+
Net investment income (0.42%) (0.13%) (0.19%)+ (0.06%) 0.35%+
Portfolio turnover rate 39% 20% 6% 14% 17%
</TABLE>
<TABLE>
<CAPTION>
Year Ended July 31, Year Ended December 31,
------------------------ -------------------------
1999 1998 1997 (b) 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
CLASS Y
Net asset value,
beginning of period $29.19 $27.29 $22.55 $ 18.64 $ 14.52 $ 15.41
------ ------ ------ ------- ------- -------
Income from investment
operations
Net investment income 0.19 0.24 0.11 0.18 0.18 0.14
Net realized and
unrealized gains on
securities and foreign
currency related
transactions 1.15 2.87 4.73 4.25 4.59 0.12
------ ------ ------ ------- ------- -------
Total from investment
operations 1.34 3.11 4.84 4.43 4.77 0.26
------ ------ ------ ------- ------- -------
Distributions to
shareholders from
Net investment income (0.10) (0.20) (0.10) (0.17) (0.17) (0.14)
Net realized gains (0.78) (1.01) 0 (0.35) (0.48) (1.01)
------ ------ ------ ------- ------- -------
Total distributions (0.88) (1.21) (0.10) (0.52) (0.65) (1.15)
------ ------ ------ ------- ------- -------
Net asset value, end of
period $29.65 $29.19 $27.29 $ 22.55 $ 18.64 $ 14.52
------ ------ ------ ------- ------- -------
Total return 4.75% 11.56% 21.52% 23.80% 32.90% 1.70%
Ratios and supplemental
data
Net assets, end of period
(millions) $ 634 $ 801 $ 616 $ 442 $ 141 $ 73
Ratios to average net
assets:
Expenses** 1.18% 1.20% 1.21%+ 1.16% 1.27% 1.33%
Net investment income 0.57% 0.86% 0.82%+ 0.93% 1.11% 0.96%
Portfolio turnover rate 39% 20% 6% 14% 17% 29%
</TABLE>
(a) For the period from January 3, 1995 (commencement of class operations) to
December 31, 1995.
(b) For the seven months ended July 31, 1997. The Fund changed its fiscal year
end from December 31 to July 31, effective July 31, 1997.
* Excluding applicable sales charges.
** Ratio of expenses to average net assets includes fee waivers and excludes
fee credits.
+ Annualized.
See Combined Notes to Financial Statements.
33
<PAGE>
EVERGREEN
INCOME AND GROWTH FUND
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended July 31, Year Ended January 31,
----------------------------- --------------------------
1999 # 1998 1997 (b) # 1997 1996 1995 (a)
<S> <C> <C> <C> <C> <C> <C>
CLASS A
Net asset value,
beginning of period $ 23.19 $ 23.94 $ 21.79 $ 20.15 $ 17.28 $17.09
-------- ------- ------- ------- ------- ------
Income from investment
operations
Net investment income 0.94 1.05 0.52 1.02 1.01 0.02
Net realized and
unrealized gains on
securities and foreign
currency related
transactions 1.50 0.81 2.15 1.67 2.94 0.17
-------- ------- ------- ------- ------- ------
Total from investment
operations 2.44 1.86 2.67 2.69 3.95 0.19
-------- ------- ------- ------- ------- ------
Distributions to
shareholders from
Net investment income (0.93) (1.02) (0.52) (1.05) (1.08) 0
Net realized gains (2.13) (1.59) 0 0 0 0
-------- ------- ------- ------- ------- ------
Total distributions (3.06) (2.61) (0.52) (1.05) (1.08) 0
-------- ------- ------- ------- ------- ------
Net asset value, end of
period $ 22.57 $ 23.19 $ 23.94 $ 21.79 $ 20.15 $17.28
-------- ------- ------- ------- ------- ------
Total return* 12.14% 7.93% 12.45% 13.80% 23.40% 1.10%
Ratios and supplemental
data
Net assets, end of
period (thousands) $ 35,714 $15,005 $11,955 $ 9,678 $ 4,412 $ 119
Ratios to average net
assets:
Expenses** 1.46% 1.50% 1.45%+ 1.44% 1.36% 1.45%+
Interest expense N/A N/A N/A 0.03% N/A N/A
Net investment income 4.39% 4.20% 4.69%+ 4.93% 5.39% 4.09%+
Portfolio turnover rate 124% 133% 72% 168% 138% 151%
<CAPTION>
Year Ended July 31, Year Ended January 31,
----------------------------- --------------------------
1999 # 1998 1997 (b) # 1997 1996 1995 (a)
<S> <C> <C> <C> <C> <C> <C>
CLASS B
Net asset value,
beginning of period $ 23.04 $ 23.81 $ 21.69 $ 20.08 $ 17.28 $17.09
-------- ------- ------- ------- ------- ------
Income from investment
operations
Net investment income 0.76 0.86 0.43 0.89 0.91 0.02
Net realized and
unrealized gains on
securities and foreign
currency related
transactions 1.51 0.81 2.15 1.64 2.87 0.17
-------- ------- ------- ------- ------- ------
Total from investment
operations 2.27 1.67 2.58 2.53 3.78 0.19
-------- ------- ------- ------- ------- ------
Distributions to
shareholders from
Net investment income (0.80) (0.85) (0.46) (0.92) (0.98) 0
Net realized gains (2.13) (1.59) 0 0 0 0
-------- ------- ------- ------- ------- ------
Total distributions (2.93) (2.44) (0.46) (0.92) (0.98) 0
-------- ------- ------- ------- ------- ------
Net asset value, end of
period $ 22.38 $ 23.04 $ 23.81 $ 21.69 $ 20.08 $17.28
-------- ------- ------- ------- ------- ------
Total return* 11.34% 7.13% 12.06% 13.00% 22.40% 1.10%
Ratios and supplemental
data
Net assets, end of
period (thousands) $185,177 $54,544 $43,977 $35,323 $14,750 $ 599
Ratios to average net
assets:
Expenses** 2.21% 2.25% 2.20%+ 2.19% 2.11% 2.23%+
Interest expense N/A N/A N/A 0.03% N/A N/A
Net investment income 3.61% 3.46% 3.94%+ 4.17% 4.69% 3.23%+
Portfolio turnover rate 124% 133% 72% 168% 138% 151%
</TABLE>
(a) For the period from January 3, 1995 (commencement of class operations) to
January 31, 1995.
(b) For the six months ended July 31, 1997. The Fund changed its fiscal year
end from January 31 to July 31, effective July 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.
34
<PAGE>
EVERGREEN
INCOME AND GROWTH FUND
Financial Highlights
(For a share outstanding throughout each period)
Year Ended July 31, Year Ended January 31,
-------------------------- ------------------------
1999 # 1998 1997 (b) # 1997 1996 1995 (a)
CLASS C
Net asset value,
beginning of period $23.04 $23.81 $21.69 $20.08 $17.27 $17.09
------ ------ ------ ------ ------ ------
Income from investment
operations
Net investment income 0.76 0.87 0.44 0.87 0.90 0.01
Net realized and
unrealized gains on
securities and foreign
currency related
transactions 1.51 0.80 2.14 1.66 2.89 0.17
------ ------ ------ ------ ------ ------
Total from investment
operations 2.27 1.67 2.58 2.53 3.79 0.18
------ ------ ------ ------ ------ ------
Distributions to
shareholders from
Net realized gains (2.13) (1.59) 0 0 0 0
------ ------ ------ ------ ------ ------
Net investment income (0.80) (0.85) (0.46) (0.92) (0.98) 0
Total distributions (2.93) (2.44) (0.46) (0.92) (0.98) 0
------ ------ ------ ------ ------ ------
Net asset value, end of
period $22.38 $23.04 $23.81 $21.69 $20.08 $17.27
------ ------ ------ ------ ------ ------
Total return* 11.34% 7.13% 12.06% 12.90% 22.40% 1.10%
Ratios and supplemental
data
Net assets, end of period
(thousands) $2,502 $1,259 $ 950 $ 982 $ 523 $ 24
Ratios to average net
assets:
Expenses** 2.21% 2.25% 2.20%+ 2.19% 2.11% 2.22%+
Interest expense N/A N/A N/A 0.03% N/A N/A
Net investment income 3.60% 3.48% 4.06%+ 4.15% 4.67% 2.68%+
Portfolio turnover rate 124% 133% 72% 168% 138% 151%
Year Ended July 31, Year Ended January 31,
-------------------------- ------------------------
1999 # 1998 1997 (b) # 1997 1996 1995 (c)
CLASS Y
Net asset value,
beginning of period $23.22 $23.98 $21.81 $20.16 $17.28 $18.29
------ ------ ------ ------ ------ ------
Net investment income 0.99 1.02 0.55 1.08 1.10 0.87
Net realized and
unrealized gains or
losses on securities and
foreign currency related
transactions 1.52 0.89 2.16 1.66 2.87 (0.55)
------ ------ ------ ------ ------ ------
Total from investment
operations 2.51 1.91 2.71 2.74 3.97 0.32
------ ------ ------ ------ ------ ------
Income from investment
operations
Net investment income (1.02) (1.08) (0.54) (1.09) (1.09) (1.08)
Net realized gains (2.13) (1.59) 0 0 0 (0.25)
------ ------ ------ ------ ------ ------
Total distributions (3.15) (2.67) (0.54) (1.09) (1.09) (1.33)
------ ------ ------ ------ ------ ------
Net asset value, end of
period $22.58 $23.22 $23.98 $21.81 $20.16 $17.28
------ ------ ------ ------ ------ ------
Distributions to
shareholders from
Total return 12.46% 8.16% 12.65% 14.10% 23.50% 1.90%
Ratios and supplemental
data
Net assets, end of period
(millions) $ 847 $ 880 $ 900 $ 858 $ 914 $ 942
Ratios to average net
assets:
Expenses** 1.21% 1.25% 1.20%+ 1.18% 1.19% 1.24%+
Interest expense N/A N/A N/A 0.03% N/A N/A
Net investment income 4.61% 4.46% 4.97%+ 5.14% 5.70% 5.70%+
Portfolio turnover rate 124% 133% 72% 168% 138% 151%
(a) For the period from January 3, 1995 (commencement of class operations) to
January 31, 1995.
(b) For the six months ended July 31, 1997. The Fund changed its fiscal year
end from January 31 to July 31, effective July 31, 1997.
(c) For the ten months ended January 31, 1995. The Fund has changed its fiscal
year end from March 31 to January 31, effective January 31, 1995.
* 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.
35
<PAGE>
EVERGREEN
SMALL CAP VALUE FUND
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended July 31 Year Ended December 31,
---------------------------- --------------------------
1999 1998 1997 (b) # 1996 1995 (a)
<S> <C> <C> <C> <C> <C>
CLASS A
Net asset value,
beginning of period $ 15.75 $ 15.69 $13.10 $ 11.57 $ 9.64
------- ------- ------ ----------- -----------
Income from investment
operations
Net investment income 0.26 0.29 0.14 0.34 0.34
Net realized and
unrealized gains on
securities 0.04 0.24 2.59 2.13 2.45
------- ------- ------ ----------- -----------
Total from investment
operations 0.30 0.53 2.73 2.47 2.79
------- ------- ------ ----------- -----------
Distributions to
shareholders from
Net realized gains (0.18) (0.19) (0.01) (0.60) (0.49)
------- ------- ------ ----------- -----------
Net investment income (0.30) (0.28) (0.13) (0.34) (0.37)
Total distributions (0.48) (0.47) (0.14) (0.94) (0.86)
------- ------- ------ ----------- -----------
Net asset value, end of
period $ 15.57 $ 15.75 $15.69 $ 13.10 $ 11.57
------- ------- ------ ----------- -----------
Total return* 2.17% 3.24% 20.99% 22.00% 29.50%
Ratios and supplemental
data
Net assets, end of
period (thousands) $59,451 $54,142 $4,239 $ 336 $ 216
Ratios to average net
assets:
Expenses** 1.67% 1.68% 1.71%+ 1.75% 1.75%+
Net investment income 1.85% 1.95% 1.88%+ 3.08% 3.39%+
Portfolio turnover rate 54% 18% 13% 50% 48%
</TABLE>
<TABLE>
<CAPTION>
Year Ended July 31, Year Ended December 31,
------------------------------ --------------------------
1999 1998 1997 (b) # 1996 1995 (a)
<S> <C> <C> <C> <C> <C>
CLASS B
Net asset value,
beginning of period $ 15.67 $ 15.64 $13.09 $ 11.57 $ 9.64
-------- -------- ------ ----------- -----------
Income from investment
operations
Net investment income 0.16 0.19 0.08 0.27 0.28
Net realized and
unrealized gains on
securities 0.02 0.22 2.57 2.11 2.43
-------- -------- ------ ----------- -----------
Total from investment
operations 0.18 0.41 2.65 2.38 2.71
-------- -------- ------ ----------- -----------
Distributions to
shareholders from
Net realized gains (0.18) (0.19) (0.01) (0.60) (0.49)
-------- -------- ------ ----------- -----------
Net investment income (0.19) (0.19) (0.09) (0.26) (0.29)
Total distributions (0.37) (0.38) (0.10) (0.86) (0.78)
-------- -------- ------ ----------- -----------
Net asset value, end of
period $ 15.48 $ 15.67 $15.64 $ 13.09 $ 11.57
-------- -------- ------ ----------- -----------
Total return* 1.35% 2.49% 20.37% 21.10% 28.70%
Ratios and supplemental
data
Net assets, end of
period (thousands) $110,809 $130,191 $9,462 $ 692 $ 266
Ratios to average net
assets:
Expenses** 2.42% 2.43% 2.46%+ 2.50% 2.50%+
Net investment income 1.15% 1.20% 1.12%+ 2.39% 2.67%+
Portfolio turnover rate 54% 18% 13% 50% 48%
</TABLE>
(a) For the period from January 3, 1995 (commencement of class operations) to
December 31, 1995.
(b) For the seven months ended July 31, 1997. The Fund changed its fiscal year
end from December 31 to July 31, effective July 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.
36
<PAGE>
EVERGREEN
SMALL CAP VALUE FUND
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended July 31, Year Ended December 31,
--------------------------- -----------------------
1999 1998 1997 (b)# 1996 1995 (a)
<S> <C> <C> <C> <C> <C>
CLASS C
Net asset value,
beginning of period $ 15.66 $ 15.63 $13.09 $ 11.56 $ 9.74
------- ------- ------ ----------- -----------
Income from investment
operations
Net investment income 0.16 0.19 0.10 0.28 0.28
Net realized and
unrealized gains on
securities 0.01 0.22 2.54 2.10 2.33
------- ------- ------ ----------- -----------
Total from investment
operations 0.17 0.41 2.64 2.38 2.61
------- ------- ------ ----------- -----------
Distributions to
shareholders from
Net realized gains (0.18) (0.19) (0.01) (0.60) (0.49)
------- ------- ------ ----------- -----------
Net investment income (0.19) (0.19) (0.09) (0.25) (0.30)
Total distributions (0.37) (0.38) (0.10) (0.85) (0.79)
------- ------- ------ ----------- -----------
Net asset value, end of
period $ 15.46 $ 15.66 $15.63 $ 13.09 $ 11.56
------- ------- ------ ----------- -----------
Total return* 1.28% 2.49% 20.30% 21.10% 27.30%
Ratios and supplemental
data
Net assets, end of
period (thousands) $22,842 $26,197 $2,770 $ 56 $ 24
Ratios to average net
assets:
Expenses** 2.42% 2.43% 2.45%+ 2.50% 2.50%+
Net investment income 1.15% 1.20% 1.20%+ 2.33% 2.63%+
Portfolio turnover rate 54% 18% 13% 50% 48%
</TABLE>
<TABLE>
<CAPTION>
Year Ended December
Year Ended July 31, 31,
--------------------------- -----------------------
1999 1998 1997 (b)# 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
CLASS Y
Net asset value,
beginning of period $ 15.77 $ 15.71 $ 13.12 $11.58 $ 9.70 $10.15
------- ------- ------- ------ ------ ------
Income from investment
operations
Net investment income 0.33 0.34 0.19 0.38 0.38 0.34
Net realized and
unrealized gains or
losses on securities (0.02) 0.24 2.56 2.13 2.38 (0.41)
------- ------- ------- ------ ------ ------
Total from investment
operations 0.31 0.58 2.75 2.51 2.76 (0.07)
------- ------- ------- ------ ------ ------
Distributions to
shareholders from
Net realized gains (0.18) (0.19) (0.01) (0.60) (0.50) (0.05)
------- ------- ------- ------ ------ ------
Net investment income (0.33) (0.33) (0.15) (0.37) (0.38) (0.33)
Total distributions (0.51) (0.52) (0.16) (0.97) (0.88) (0.38)
------- ------- ------- ------ ------ ------
Net asset value, end of
period $ 15.57 $ 15.77 $ 15.71 $13.12 $11.58 $ 9.70
------- ------- ------- ------ ------ ------
Total return 2.31% 3.57% 21.09% 22.40% 29.10% (0.70%)
Ratios and supplemental
data
Net assets, end of
period (thousands) $56,903 $96,556 $42,374 $8,592 $4,806 $3,613
Ratios to average net
assets:
Expenses** 1.42% 1.39% 1.39%+ 1.50% 1.50%+ 1.48%
Net investment income 2.19% 2.23% 2.39%+ 3.36% 3.56%+ 3.72%
Portfolio turnover rate 54% 18% 13% 50% 48% 9%
</TABLE>
(a) For the period from January 24, 1995 (commencement of class operations) to
December 31, 1995.
(b) For the seven months ended July 31, 1997. The Fund changed its fiscal year
end from December 31 to July 31, effective July 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.
37
<PAGE>
EVERGREEN
UTILITY FUND
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended July 31, Year Ended December 31,
-------------------------- --------------------------
1999 1998 1997(b) 1996 1995 1994(a)
<S> <C> <C> <C> <C> <C> <C>
CLASS A
Net asset value,
beginning of period $ 11.76 $ 11.45 $ 10.57 $ 10.80 $ 9.00 $ 10.00
-------- ------- ------- ------- -------- -------
Income from investment
operations
Net investment income 0.42 0.43 0.25 0.41 0.44 0.45
Net realized and
unrealized gains or
losses on securities 2.37 1.44 0.87 0.05 2.25 (1.01)
-------- ------- ------- ------- -------- -------
Total from investment
operations 2.79 1.87 1.12 0.46 2.69 (0.56)
-------- ------- ------- ------- -------- -------
Distributions to
shareholders from
Net investment income (0.42) (0.44) (0.24) (0.41) (0.44) (0.44)
Net realized gains (1.28) (1.12) 0 (0.28) (0.45) 0
-------- ------- ------- ------- -------- -------
Total distributions (1.70) (1.56) (0.24) (0.69) (0.89) (0.44)
-------- ------- ------- ------- -------- -------
Net asset value, end of
period $ 12.85 $ 11.76 $ 11.45 $ 10.57 $ 10.80 $ 9.00
-------- ------- ------- ------- -------- -------
Total return* 26.05% 17.30% 10.72% 4.40% 30.70% (5.60%)
Ratios and supplemental
data
Net assets, end of
period (thousands) $108,411 $95,300 $91,638 $96,243 $107,872 $ 4,190
Ratios to average net
assets:
Expenses** 1.03% 0.99% 1.00%+ 0.87% 0.79% 0.53%+
Net investment income 3.60% 3.58% 3.85%+ 3.87% 4.51% 5.07%+
Portfolio turnover rate 46% 62% 50% 59% 88% 23%
<CAPTION>
Year Ended July 31, Year Ended December 31,
-------------------------- --------------------------
1999 1998 1997(b) 1996 1995 1994(a)
<S> <C> <C> <C> <C> <C> <C>
CLASS B
Net asset value,
beginning of period $ 11.76 $ 11.46 $ 10.58 $ 10.81 $ 9.00 $ 10.00
-------- ------- ------- ------- -------- -------
Income from investment
operations
Net investment income 0.34 0.34 0.20 0.33 0.37 0.39
Net realized and
unrealized gains or
losses on securities 2.37 1.44 0.87 0.05 2.26 (1.01)
-------- ------- ------- ------- -------- -------
Total from investment
operations 2.71 1.78 1.07 0.38 2.63 (0.62)
-------- ------- ------- ------- -------- -------
Distributions to
shareholders from
Net investment income (0.33) (0.36) (0.19) (0.33) (0.37) (0.38)
Net realized gains (1.28) (1.12) 0 (0.28) (0.45) 0
-------- ------- ------- ------- -------- -------
Total distributions (1.61) (1.48) (0.19) (0.61) (0.82) (0.38)
-------- ------- ------- ------- -------- -------
Net asset value, end of
period $ 12.86 $ 11.76 $ 11.46 $ 10.58 $ 10.81 $ 9.00
-------- ------- ------- ------- -------- -------
Total return* 25.23% 16.31% 10.21% 3.60% 29.90% (6.20%)
Ratios and supplemental
data
Net assets, end of
period (thousands) $ 54,839 $43,776 $36,738 $38,511 $ 35,662 $28,792
Ratios to average net
assets:
Expenses** 1.77% 1.74% 1.75%+ 1.62% 1.53% 1.27%+
Net investment income 2.85% 2.82% 3.10%+ 3.12% 3.78% 4.19%+
Portfolio turnover rate 46% 62% 50% 59% 88% 23%
</TABLE>
(a) For the period from January 4, 1994 (commencement of class operations) to
December 31, 1994.
(b) For the seven months ended July 31, 1997. The Fund changed its fiscal year
end from December 31 to July 31, effective July 31, 1997.
* Excluding applicable sales charges.
** Ratio of expenses to average net assets includes fee waivers and excludes
fee credits.
+ Annualized.
See Combined Notes to Financial Statements.
38
<PAGE>
EVERGREEN
UTILITY FUND
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended December
Year Ended July 31, 31,
------------------------ ------------------------
1999 1998 1997 (b) 1996 1995 1994 (a)
<S> <C> <C> <C> <C> <C> <C>
CLASS C
Net asset value, beginning
of period $11.76 $11.46 $10.58 $10.82 $ 9.01 $ 9.33
------ ------ ------ ------ ------ ------
Income from investment
operations
Net investment income 0.34 0.34 0.20 0.33 0.37 0.12
Net realized and
unrealized gains or
losses on securities 2.37 1.44 0.87 0.04 2.26 (0.33)
------ ------ ------ ------ ------ ------
Total from investment
operations 2.71 1.78 1.07 0.37 2.63 (0.21)
------ ------ ------ ------ ------ ------
Distributions to
shareholders from
Net realized gains (1.28) (1.12) 0 (0.28) (0.45) 0
------ ------ ------ ------ ------ ------
Net investment income (0.33) (0.36) (0.19) (0.33) (0.37) (0.11)
Total distributions (1.61) (1.48) (0.19) (0.61) (0.82) (0.11)
------ ------ ------ ------ ------ ------
Net asset value, end of
period $12.86 $11.76 $11.46 $10.58 $10.82 $ 9.01
------ ------ ------ ------ ------ ------
Total return* 25.23% 16.31% 10.21% 3.50% 29.80% (2.20%)
Ratios and supplemental
data
Net assets, end of period
(thousands) $ 879 $ 486 $ 379 $ 396 $ 246 $ 128
Ratios to average net
assets:
Expenses** 1.77% 1.74% 1.75%+ 1.63% 1.54% 1.94%+
Net investment income 2.74% 2.82% 3.10%+ 3.13% 3.76% 3.96%+
Portfolio turnover rate 46% 62% 50% 59% 88% 23%
<CAPTION>
Year Ended December
Year Ended July 31, 31,
------------------------ ------------------------
1999 1998 1997 (b) 1996 1995 1994 (c)
<S> <C> <C> <C> <C> <C> <C>
CLASS Y
Net asset value, beginning
of period $11.77 $11.46 $10.58 $10.82 $ 9.00 $ 9.51
------ ------ ------ ------ ------ ------
Net realized and
unrealized gains or
losses on securities 2.33 1.45 0.88 0.03 2.27 (0.50)
------ ------ ------ ------ ------ ------
Total from investment
operations 2.82 1.91 1.13 0.47 2.74 (0.13)
------ ------ ------ ------ ------ ------
Income from investment
operations
Net investment income 0.49 0.46 0.25 0.44 0.47 0.37
Net realized gains (1.28) (1.12) 0 (0.28) (0.45) 0
------ ------ ------ ------ ------ ------
Total distributions (1.73) (1.60) (0.25) (0.71) (0.92) (0.38)
------ ------ ------ ------ ------ ------
Net asset value, end of
period $12.86 $11.77 $11.46 $10.58 $10.82 $ 9.00
------ ------ ------ ------ ------ ------
Distributions to
shareholders from
Net investment income (0.45) (0.48) (0.25) (0.43) (0.47) (0.38)
Total return 26.35% 17.60% 10.85% 4.50% 31.30% (1.60%)
Ratios and supplemental
data
Net assets, end of period
(thousands) $2,123 $1,695 $1,627 $2,000 $7,791 $5,201
Ratios to average net
assets:
Expenses** 0.77% 0.74% 0.74%+ 0.61% 0.54% 0.40%+
Net investment income 3.92% 3.82% 4.06%+ 4.01% 4.76% 4.93%+
Portfolio turnover rate 46% 62% 50% 59% 88% 23%
</TABLE>
(a) For the period from September 2, 1994 (commencement of class operations) to
December 31, 1994.
(b) For the seven months ended July 31, 1997. The Fund changed its fiscal year
end from December 31 to July 31, effective July 31, 1997.
(c) For the period from February 28, 1994 (commencement of class operations) to
December 31, 1994.
* Excluding applicable sales charges.
** Ratio of expenses to average net assets includes fee waivers and excludes
fee credits.
+ Annualized.
See Combined Notes to Financial Statements.
39
<PAGE>
EVERGREEN
VALUE FUND
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended July 31, Year Ended December 31,
---------------------------- ----------------------------
1999 1998 1997 (a) 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
CLASS A
Net asset value,
beginning of period $ 22.23 $ 24.64 $ 20.57 $ 20.45 $ 16.62 $ 17.63
-------- -------- -------- -------- -------- --------
Income from investment
operations
Net investment income 0.21 0.26 0.21 0.38 0.55 0.52
Net realized and
unrealized gains or
losses on securities 2.76 2.00 4.05 3.49 4.69 (0.20)
-------- -------- -------- -------- -------- --------
Total from investment
operations 2.97 2.26 4.26 3.87 5.24 0.32
-------- -------- -------- -------- -------- --------
Distributions to
shareholders from
Net realized gains (0.21) (0.29) (0.19) (0.41) (0.51) (0.51)
Net investment income (0.13) (4.38) 0 (3.34) (0.90) (0.82)
-------- -------- -------- -------- -------- --------
Total distributions (0.34) (4.67) (0.19) (3.75) (1.41) (1.33)
-------- -------- -------- -------- -------- --------
Net asset value, end of
period $ 24.86 $ 22.23 $ 24.64 $ 20.57 $ 20.45 $ 16.62
-------- -------- -------- -------- -------- --------
Total return* 13.48% 9.55% 20.78% 18.90% 31.80% 1.90%
Ratios and supplemental
data
Net assets, end of
period (millions) $ 464 $ 476 $ 392 $ 328 $ 292 $ 189
Ratios to average net
assets:
Expenses** 1.00% 1.01% 0.92%+ 0.91% 0.90% 0.93%
Net investment income 0.93% 1.04% 1.66%+ 1.77% 2.78% 2.96%
Portfolio turnover rate 110% 69% 6% 91% 53% 70%
<CAPTION>
Year Ended July 31, Year Ended December 31,
---------------------------- ----------------------------
1999 1998 1997 (a) 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
CLASS B
Net asset value,
beginning of period $ 22.20 $ 24.63 $ 20.58 $ 20.45 $ 16.62 $ 17.63
-------- -------- -------- -------- -------- --------
Income from investment
operations
Net investment income 0.04 0.08 0.12 0.22 0.39 0.42
Net realized and
unrealized gains or
losses on securities 2.75 1.99 4.03 3.50 4.70 (0.20)
-------- -------- -------- -------- -------- --------
Total from investment
operations 2.79 2.07 4.15 3.72 5.09 0.22
-------- -------- -------- -------- -------- --------
Distributions to
shareholders from
Net investment income (0.05) (0.12) (0.10) (0.25) (0.36) (0.41)
Net realized gains (0.13) (4.38) 0 (3.34) (0.90) (0.82)
-------- -------- -------- -------- -------- --------
Total distributions (0.18) (4.50) (0.10) (3.59) (1.26) (1.23)
-------- -------- -------- -------- -------- --------
Net asset value, end of
period $ 24.81 $ 22.20 $ 24.63 $ 20.58 $ 20.45 $ 16.62
-------- -------- -------- -------- -------- --------
Total return* 12.65% 8.73% 20.23% 18.10% 30.90% 1.30%
Ratios and supplemental
data
Net assets, end of
period (thousands) $331,724 $326,459 $276,256 $197,411 $141,072 $104,297
Ratios to average net
assets:
Expenses** 1.75% 1.76% 1.67%+ 1.66% 1.65% 1.53%
Net investment income 0.18% 0.30% 0.92%+ 1.01% 2.04% 2.36%
Portfolio turnover rate 110% 69% 6% 91% 53% 70%
</TABLE>
(a) For the seven months ended July 31, 1997. The Fund changed its fiscal year
end from December 31 to July 31, effective July 31, 1997.
* Excluding applicable sales charges.
** Ratio of expenses to average net assets includes fee waivers and excludes
fee credits.
+ Annualized.
See Combined Notes to Financial Statements.
40
<PAGE>
EVERGREEN
VALUE FUND
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended December
Year Ended July 31, 31,
------------------------ ------------------------
1999 1998 1997 (b) 1996 1995 1994 (a)
<S> <C> <C> <C> <C> <C> <C>
CLASS C
Net asset value, beginning
of period $22.18 $24.61 $20.56 $20.44 $16.61 $18.28
------ ------ ------ ------ ------ ------
Income from investment
operations
Net investment income 0.04 0.10 0.12 0.22 0.39 0.19
Net realized and
unrealized gains or
losses on securities 2.75 1.97 4.03 3.50 4.70 (0.81)
------ ------ ------ ------ ------ ------
Total from investment
operations 2.79 2.07 4.15 3.72 5.09 (0.62)
------ ------ ------ ------ ------ ------
Distributions to
shareholders from
Net investment income (0.05) (0.12) (0.10) (0.26) (0.36) (0.23)
Net realized gains (0.13) (4.38) 0 (3.34) (0.90) (0.82)
------ ------ ------ ------ ------ ------
Total distributions (0.18) (4.50) (0.10) (3.60) (1.26) (1.05)
------ ------ ------ ------ ------ ------
Net asset value, end of
period $24.79 $22.18 $24.61 $20.56 $20.44 $16.61
------ ------ ------ ------ ------ ------
Total return* 12.66% 8.74% 20.25% 18.10% 30.90% (3.40%)
Ratios and supplemental
data
Net assets, end of period
(thousands) $4,635 $5,125 $2,507 $1,458 $ 811 $ 485
Ratios to average net
assets:
Expenses** 1.75% 1.76% 1.66%+ 1.67% 1.65% 1.68%+
Net investment income 0.18% 0.29% 0.94%+ 1.00% 2.03% 2.16%+
Portfolio turnover rate 110% 69% 6% 91% 53% 70%
<CAPTION>
Year Ended December
Year Ended July 31, 31,
------------------------ ------------------------
1999 1998 1997 (b) 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
CLASS Y
Net asset value, beginning
of period $22.23 $24.64 $20.57 $20.45 $16.61 $17.63
------ ------ ------ ------ ------ ------
Income from investment
operations
Net investment income 0.29 0.35 0.25 0.44 0.57 0.56
Net realized and
unrealized gains or
losses on securities 2.74 1.97 4.03 3.49 4.72 (0.20)
------ ------ ------ ------ ------ ------
Total from investment
operations 3.03 2.32 4.28 3.93 5.29 0.36
------ ------ ------ ------ ------ ------
Distributions to
shareholders from
Net investment income (0.26) (0.35) (0.21) (0.47) (0.55) (0.56)
Net realized gains (0.13) (4.38) 0.00 (3.34) (0.90) (0.82)
------ ------ ------ ------ ------ ------
Total distributions (0.39) (4.73) (0.21) (3.81) (1.45) (1.38)
------ ------ ------ ------ ------ ------
Net asset value, end of
period $24.87 $22.23 $24.64 $20.57 $20.45 $16.61
------ ------ ------ ------ ------ ------
Total return 13.81% 9.79% 20.93% 19.20% 32.20% 2.10%
Ratios and supplemental
data
Net assets, end of period
(millions) $ 132 $ 183 $1,149 $ 996 $ 761 $ 507
Ratios to average net
assets:
Expenses** 0.75% 0.70% 0.67%+ 0.66% 0.65% 0.68%
Net investment income 1.20% 1.47% 1.91%+ 2.02% 3.02% 3.21%
Portfolio turnover rate 110% 69% 6% 91% 53% 70%
</TABLE>
(a) For the period from September 2, 1994 (commencement of class operations) to
December 31, 1994.
(b) For the seven months ended July 31, 1997. The Fund changed its fiscal year
end from December 31 to July 31, effective July 31, 1997.
* Excluding applicable sales charges.
** Ratio of expenses to average net assets includes fee waivers and excludes
fee credits.
+ Annualized.
See Combined Notes to Financial Statements.
41
<PAGE>
EVERGREEN
BLUE CHIP FUND
Schedule of Investments
July 31, 1999
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - 95.9%
Aerospace & Defense - 0.8%
74,800 United Technologies Corp............................. $ 4,988,225
------------
Automotive Equipment & Manufacturing - 1.1%
160,000 Delphi Automotive Systems Corp....................... 2,880,000
85,000 Ford Motor Co........................................ 4,133,125
------------
7,013,125
------------
Banks - 3.0%
75,000 Bank One Corp........................................ 4,092,188
106,100 BankAmerica Corp..................................... 7,042,387
17 Chase Manhattan Corp................................. 1,307
170,000 Mellon Bank Corp..................................... 5,737,500
60,000 Wells Fargo Co....................................... 2,340,000
------------
19,213,382
------------
Business Equipment & Services - 1.0%
131,200 Xerox Corp........................................... 6,396,000
------------
Chemical & Agricultural Products - 2.9%
50,000 Du Pont (E. I.) De Nemours & Co...................... 3,603,125
216,300 Millennium Chemicals Inc............................. 5,083,050
52,500 Monsanto Co.......................................... 2,054,062
89,382 Rohm & Haas Co....................................... 3,809,908
185,000 Solutia, Inc......................................... 3,954,375
------------
18,504,520
------------
Communication Systems & Services - 3.9%
198,300 * Cisco Systems, Inc................................. 12,319,387
104,600 * Intermedia Communications, Inc.+................... 2,883,038
116,100 * MCI WorldCom, Inc.................................. 9,578,250
------------
24,780,675
------------
Consumer Products & Services - 1.2%
85,000 Procter & Gamble Co.................................. 7,692,500
------------
Diversified Companies - 3.4%
51,900 Allied Signal, Inc................................... 3,357,281
175,000 Raychem Corp......................................... 6,671,875
122,500 Tyco International Ltd............................... 11,966,719
------------
21,995,875
------------
Electrical Equipment & Services - 3.3%
193,300 General Electric Co.................................. 21,069,700
------------
Finance & Insurance - 7.5%
130,000 Allstate Corp. ...................................... 4,615,000
77,500 American International Group, Inc.................... 8,999,688
161,328 Associates First Capital Corp., Cl. A................ 6,180,879
200,500 Citigroup, Inc....................................... 8,934,781
70,000 Federal National Mortgage Assoc...................... 4,830,000
150,000 Franklin Resources, Inc.............................. 5,718,750
60,000 Hartford Financial Services Group, Inc............... 3,240,000
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Finance & Insurance - continued
100,800 Lehman Brothers Holdings, Inc........................ $ 5,418,000
------------
47,937,098
------------
Food & Beverage Products - 2.2%
49,500 Coca Cola Co......................................... 2,985,469
135,400 McDonald's Corp. .................................... 5,644,487
105,000 Seagram Co. Ltd...................................... 5,387,813
------------
14,017,769
------------
Healthcare Products & Services - 3.3%
110,000 * Biogen, Inc........................................ 7,569,375
50 Cardinal Health, Inc................................. 3,412
71,000 Johnson & Johnson.................................... 6,540,875
95,900 Medtronic, Inc....................................... 6,910,794
------------
21,024,456
------------
Industrial Specialty Products & Services - 1.9%
190,500 Ecolab, Inc.......................................... 8,120,063
86,600 * Microchip Technology, Inc.......................... 4,340,825
------------
12,460,888
------------
Information Services & Technology - 17.6%
55,800 * America Online, Inc. .............................. 5,307,975
175,000 * American Power Conversion Corp..................... 3,631,250
90,800 * Applied Materials, Inc............................. 6,531,925
41,600 * CMG Information Services, Inc.+.................... 3,835,000
121,800 * EMC Corp........................................... 7,376,513
37,500 * Gateway, Inc.+..................................... 2,857,031
100,000 Hewlett-Packard Co................................... 10,468,750
183,400 Intel Corp........................................... 12,654,600
114,500 International Business Machines Corp................. 14,391,219
261,200 * Microsoft Corp..................................... 22,414,225
104,700 * Oracle Systems Corp................................ 3,985,144
77,100 * Solectron Corp..................................... 4,968,131
132,900 * Sun Microsystems, Inc. ............................ 9,020,587
93,600 * Veritas Software Corp.............................. 5,253,300
------------
112,695,650
------------
Leisure & Tourism - 0.8%
135,000 * Premier Parks, Inc.+............................... 5,222,813
------------
Oil/Energy - 8.6%
105,600 Anadarko Petroleum Corp.............................. 4,032,600
208,800 Apache Corp.......................................... 8,860,950
124,100 Atlantic Richfield Co................................ 11,176,756
34,000 BP Amoco Plc......................................... 3,939,750
111,100 Exxon Corp........................................... 8,818,562
29,400 Mobil Corp........................................... 3,006,150
50,000 Royal Dutch Petroleum Co............................. 3,050,000
94,400 Texaco, Inc.......................................... 5,882,300
170,900 Unocal Corp.......................................... 6,782,594
------------
55,549,662
------------
</TABLE>
42
<PAGE>
EVERGREEN
BLUE CHIP FUND
Schedule of Investments(continued)
July 31, 1999
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Paper & Packaging - 0.8%
100,000 Bowater, Inc........................................ $ 4,975,000
------------
Pharmaceuticals - 5.8%
95,000 American Home Products Corp......................... 4,845,000
124,000 Bristol-Myers Squibb Co............................. 8,246,000
28,000 Lilly (Eli) & Co.................................... 1,837,500
84,500 Merck & Co., Inc.................................... 5,719,594
149,400 Pfizer, Inc......................................... 5,070,263
135,000 Pharmacia & Upjohn, Inc............................. 7,264,687
45,000 Schering-Plough Corp................................ 2,205,000
36,400 Warner-Lambert Co................................... 2,402,400
------------
37,590,444
------------
Printing, Publishing, Broadcasting & Entertainment -
4.8%
152,500 * CBS Corp.......................................... 6,700,469
105,800 * Clear Channel Communications, Inc................. 7,359,712
70,000 Time Warner, Inc.................................... 5,040,000
90,000 * Univision Communications, Inc. Cl. A+............. 6,232,500
126,000 * Viacom, Inc., Cl. B............................... 5,284,125
------------
30,616,806
------------
Retailing & Wholesale - 8.7%
90,800 * Costco Companies, Inc.+........................... 6,787,300
79,600 Dayton Hudson Corp.................................. 5,149,125
105,000 Federated Department Stores, Inc. .................. 5,387,813
97,000 Home Depot, Inc.+................................... 6,189,812
86,700 Lowe's Companies, Inc............................... 4,573,425
183,500 * Safeway, Inc...................................... 9,886,062
160,000 Tandy Corp.......................................... 8,210,000
230,000 Wal-Mart Stores, Inc................................ 9,717,500
------------
55,901,037
------------
Telecommunication Services & Equipment - 8.5%
80,700 * ADC Telecommunications, Inc....................... 3,591,150
60,900 * Allegiance Telecom, Inc........................... 3,064,031
119,100 * Ciena Corp........................................ 4,019,625
79,500 * Global Crossing Ltd............................... 3,299,250
68,200 * McLeod USA, Inc., Cl. A+.......................... 2,033,213
82,500 Motorola, Inc....................................... 7,528,125
74,200 Nokia Corp. ADR..................................... 6,311,637
38,500 * Qualcomm, Inc.+................................... 6,006,000
100,000 * Tellabs, Inc...................................... 6,156,250
160,600 * Time Warner Telecom, Inc.......................... 4,998,675
145,000 * Winstar Communications, Inc.+..................... 7,612,500
------------
54,620,456
------------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Utilities - Telephone - 4.8%
75,000 Ameritech Corp..................................... $ 5,493,750
136,704 AT&T Corp. ........................................ 7,100,064
98,200 Bell Atlantic Corp................................. 6,260,250
140,600 BellSouth Corp..................................... 6,748,800
100,000 Sprint Corp........................................ 5,168,750
------------
30,771,614
------------
Total Common Stocks
(cost $496,079,869)............................... 615,037,695
------------
MONEY MARKET SHARES - 5.9%
37,702,000 Navigator Prime Portfolio
(cost $37,702,000) (b)............................ 37,702,000
------------
<CAPTION>
Principal
Amount
<C> <S> <C>
CONVERTIBLE DEBENTURES - 0.0%
Iron & Steel - 0.0%
$ 110,000 Compahnia Vale do Rio Doce de Navegacao SA 1.00%,
12/31/1999
(cost $0)......................................... 6
------------
SHORT-TERM INVESTMENTS - 3.0%
Repurchase Agreement - 3.0%
19,240,000 Evergreen Joint Repurchase Agreement, Investment in
a joint trading account, purchased 7/30/1999,
5.07%, maturing 8/2/1999, maturity value
$19,248,129
(cost $19,240,000) (a)............................ 19,240,000
------------
</TABLE>
<TABLE>
<C> <S> <C> <C>
Total Investments -
(cost $553,021,869)........................ 104.8% 671,979,701
Other Assets and
Liabilities - net.......................... (4.8) (30,539,610)
----- ------------
Net Assets.................................. 100.0% $641,440,091
===== ============
</TABLE>
(a) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices plus accrued interest at July
31, 1999.
(b) Represents investment in cash collateral received for securities on loan.
* Non-income producing security.
+ All or a portion of this security is on loan (See Note 8).
Summary of Abbreviations:
ADR American Depository Receipts
See Combined Notes to Financial Statements.
43
<PAGE>
EVERGREEN
EQUITY INCOME FUND
Schedule of Investments
July 31, 1999
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - 94.3%
Automotive Equipment & Manufacturing - 2.6%
48,000 Ford Motor Co. ........................................ $ 2,334,000
25,000 General Motors Corp. .................................. 1,523,438
------------
3,857,438
------------
Banks - 15.0%
43,000 BankAmerica Corp. ..................................... 2,854,125
30,000 Charter One Financial, Inc. ........................... 776,250
25,000 Comerica, Inc. ........................................ 1,387,500
99,000 Compass Bancshares, Inc. .............................. 2,852,437
48,000 Fleet Financial Group, Inc. ........................... 1,944,000
50,000 Mercantile Bancorp, Inc. .............................. 2,725,000
150,000 North Fork Bancorp, Inc. .............................. 3,093,750
50,000 Peoples Heritage Financial Group, Inc.................. 903,125
54,000 PNC Bank Corp. ........................................ 2,855,250
80,000 US Bancorp, Inc. ...................................... 2,490,000
------------
21,881,437
------------
Business Equipment & Services - 2.0%
90,000 Dun & Bradstreet Corp.+................................ 2,857,500
------------
Chemical & Agricultural Products - 4.0%
21,000 Du Pont (E. I.) De Nemours & Co. ...................... 1,513,313
50,000 Hercules, Inc. ........................................ 1,743,750
60,000 Millennium Chemicals, Inc. ............................ 1,410,000
28,026 Rohm & Haas Co. ....................................... 1,194,608
------------
5,861,671
------------
Communication Systems & Services - 0.9%
50,000 * Newbridge Networks Corp. ............................ 1,328,125
------------
Diversified Companies - 3.5%
52,000 Tyco International Ltd. ............................... 5,079,750
------------
Electrical Equipment & Services - 2.5%
34,000 General Electric Co. .................................. 3,706,000
------------
Finance & Insurance - 11.2%
48,000 Citigroup, Inc. ....................................... 2,139,000
20,000 Federal National Mortgage Assoc. ...................... 1,380,000
120,000 Greenpoint Financial Corp. ............................ 3,885,000
42,000 HSB Group, Inc. ....................................... 1,708,875
20,000 Lehman Brothers Holdings, Inc. ........................ 1,075,000
40,000 Lincoln National Corp. ................................ 2,000,000
40,000 Nationwide Financial Services, Inc. Cl. A ............. 1,725,000
45,000 XL Capital Ltd. ....................................... 2,362,500
------------
16,275,375
------------
Food & Beverage Products - 3.4%
35,000 H.J. Heinz Co. ........................................ 1,649,375
90,000 Philip Morris Companies, Inc. ......................... 3,352,500
------------
5,001,875
------------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Healthcare Products & Services - 6.0%
20,000 American Home Products Corp. ......................... $ 1,020,000
20,000 Johnson & Johnson..................................... 1,842,500
42,400 Merck & Co., Inc...................................... 2,869,950
55,000 Pharmacia & Upjohn, Inc............................... 2,959,687
------------
8,692,137
------------
Information Services & Technology - 2.7%
31,600 International Business Machines Corp. ................ 3,971,725
------------
Metal Products & Services - 1.1%
25,000 Alcan Aluminum Ltd.................................... 753,125
55,000 Worthington Industries, Inc........................... 804,375
------------
1,557,500
------------
Oil/Energy - 10.4%
57,000 Anadarko Petroleum Corp. ............................. 2,176,688
30,000 Atlantic Richfield Co. ............................... 2,701,875
25,000 Mobil Corp. .......................................... 2,556,250
20,000 Reliant Energy, Inc. ................................. 548,750
45,000 Texaco, Inc. ......................................... 2,804,062
110,000 Unocal Corp. ......................................... 4,365,625
------------
15,153,250
------------
Paper & Packaging - 1.3%
65,000 Consolidated Papers, Inc.............................. 1,852,500
------------
Printing, Publishing, Broadcasting & Entertainment -
1.5%
50,000 * CBS Corp............................................ 2,196,875
------------
Real Estate - 5.3%
40,000 Boston Properties, Inc. REIT+......................... 1,370,000
70,000 Equity Office Properties Trust REIT................... 1,758,750
31,000 Equity Residential Properties Trust REIT.............. 1,280,687
45,000 First Industrial Realty Trust, Inc. REIT.............. 1,164,375
55,000 Prentiss Properties Trust REIT........................ 1,268,438
25,000 Spieker Properties, Inc. REIT......................... 956,250
------------
7,798,500
------------
Retailing & Wholesale - 3.2%
40,000 * Costco Companies, Inc............................... 2,990,000
60,000 * Staples, Inc........................................ 1,732,500
------------
4,722,500
------------
Transportation - 1.7%
45,000 Union Pacific Corp.................................... 2,444,063
------------
Utilities - Electric - 7.5%
42,000 Consolidated Edison, Inc. ............................ 1,827,000
50,000 DTE Energy Co. ....................................... 1,956,250
20,000 Duke Power Co. ....................................... 1,058,750
45,000 GPU, Inc. ............................................ 1,726,875
65,000 PacifiCorp ........................................... 1,186,250
</TABLE>
44
<PAGE>
EVERGREEN
EQUITY INCOME FUND
Schedule of Investments (continued)
July 31, 1999
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Utilities - Electric - continued
74,000 Southern Co. ......................................... $ 1,956,375
60,000 Teco Energy, Inc.+.................................... 1,222,500
------------
10,934,000
------------
Utilities - Telephone - 8.5%
34,000 Ameritech Corp. ...................................... 2,490,500
27,000 AT&T Corp. ........................................... 1,402,313
55,000 Bell Atlantic Corp. .................................. 3,506,250
25,000 GTE Corp. ............................................ 1,842,187
55,000 U.S. West, Inc. ...................................... 3,152,187
------------
12,393,437
------------
Total Common Stocks
(cost $109,905,894).................................. 137,565,658
------------
CONVERTIBLE PREFERRED - 2.9%
Consumer Products & Services - 1.1%
30,000 Newell Financial Trust I
5.25% 12/01/2027..................................... 1,556,250
------------
Retailing & Wholesale - 1.8%
50,000 Kmart Financing I
7.75% 6/15/2016...................................... 2,718,750
------------
Total Convertible Preferred
(cost $4,110,665).................................... 4,275,000
------------
MONEY MARKET SHARES - 2.3%
3,379,400 Navigator Prime Portfolio
(Cost $3,379,400) (b)................................ 3,379,400
------------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
SHORT-TERM INVESTMENTS - 2.1%
Repurchase Agreement - 2.1%
$3,013,000 Evergreen Joint Repurchase Agreement, Investment in
a joint trading account, purchased 7/30/1999,
5.07%, maturing 8/2/1999, maturity value
$3,014,272 (cost $3,013,000) (a).................. $ 3,013,000
------------
</TABLE>
<TABLE>
<S> <C> <C>
Total Investments -
(cost $120,408,959)............................ 101.6% 148,233,058
Other Assets and
Liabilities - net.............................. (1.6) (2,369,028)
----- ------------
Net Assets...................................... 100.0% $145,864,030
===== ============
</TABLE>
(a) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices plus accrued interest at July 31,
1999.
(b) Represents investment in cash collateral received for securities on loan.
* Non-income producing security.
+ All or a portion of this security is on loan (See Note 8).
Summary of Abbreviations:
REIT Real Estate Investment Trust
See Combined Notes to Financial Statements.
45
<PAGE>
EVERGREEN
GROWTH AND INCOME FUND
Schedule of Investments
July 31, 1999
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - 98.0%
Aerospace & Defense - 1.8%
237,600 Boeing Co............................................ $ 10,781,100
780,000 Bombardier, Inc., Cl. B.............................. 11,314,479
156,240 United Technologies Corp............................. 10,419,255
--------------
32,514,834
--------------
Automotive Equipment & Manufacturing - 1.7%
73,725 Autoliv, Inc......................................... 2,617,238
101,000 Borg-Warner Automotive, Inc.......................... 5,132,062
98,000 Ford Motor Co........................................ 4,765,250
260,400 Meritor Automotive, Inc.............................. 6,314,700
280,000 * Strattec Security Corp............................. 9,975,000
35,000 Toyota Motor Co...................................... 2,450,000
--------------
31,254,250
--------------
Banks - 10.6%
97,275 AmSouth Bancorp...................................... 2,225,166
135,800 Bank of New York Co., Inc............................ 5,016,112
80,284 Bank One Corp. ...................................... 4,380,496
53,125 BankAmerica Corp. ................................... 3,526,172
63,000 BankBoston Corp. .................................... 2,957,062
33,640 BB&T Corp............................................ 1,185,810
286,500 BSB Bancorp, Inc..................................... 7,789,219
29,500 Carolina First Corp.................................. 663,750
16,300 Centura Banks, Inc................................... 911,781
40,779 Charter One Financial, Inc........................... 1,055,157
13,520 Commerce Bancorp, Inc................................ 594,880
111,200 Cullen/Frost Bankers, Inc............................ 2,856,450
63,224 First American Corp. ................................ 2,655,408
236,250 First Security Corp. ................................ 5,980,078
106,850 First Virginia Banks, Inc. .......................... 5,122,122
274,428 Firstar Corp......................................... 7,152,280
23,600 FirstMerit Corp...................................... 647,525
102,000 Fleet Financial Group, Inc. ......................... 4,131,000
306,000 Hibernia Corp. Cl. A................................. 4,360,500
215,700 KeyCorp.............................................. 6,794,550
22,650 Keystone Financial, Inc.............................. 661,097
223,000 Marshall & Ilsley Corp. ............................. 14,411,375
670,300 Mellon Bank Corp..................................... 22,622,625
747,100 Pacific Century Financial Corp....................... 14,755,225
130,000 Peoples Heritage Financial
Group, Inc. ........................................ 2,348,125
29,500 PNC Bank Corp........................................ 1,559,813
228,600 SouthTrust Corp. .................................... 8,401,050
56,800 State Street Corp. .................................. 4,025,700
113,475 Summit Bancorp....................................... 4,198,575
51,920 Suntrust Banks, Inc.................................. 3,348,840
180,000 Susquehanna Bancshares, Inc. ........................ 3,228,750
228,300 US Bancorp, Inc...................................... 7,105,837
878,900 Webster Financial Corp. ............................. 23,180,987
218,200 Wells Fargo Co. ..................................... 8,509,800
62,000 Wilmington Trust Corp................................ 3,379,000
--------------
191,742,317
--------------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Building, Construction & Furnishings - 2.6%
170,200 * Furniture Brands International, Inc................ $ 4,595,400
14,800 Hon Industries, Inc. ................................ 344,100
300,500 * Jacobs Engineering Group, Inc...................... 10,329,687
208,600 Lennar Corp.......................................... 4,080,738
226,000 * Lone Star Industries, Inc. ........................ 8,658,625
60,200 Southdown, Inc....................................... 3,551,800
182,500 * Toll Brothers, Inc................................. 3,878,125
343,200 * US Home Corp. ..................................... 11,797,500
--------------
47,235,975
--------------
Business Equipment & Services - 5.8%
478,400 ACNnielsen Corp...................................... 13,843,700
318,500 Air Express International Corp. ..................... 8,519,875
291,800 * Atlas Air, Inc..................................... 9,355,837
476,900 Circle International Group, Inc. .................... 11,445,600
133,000 * Computer Sciences Corp............................. 8,561,875
700,000 * Convergys Corp..................................... 13,650,000
133,000 Equifax, Inc......................................... 4,372,375
33,436 First Data Corp...................................... 1,657,172
141,000 Petroleum Helicopters, Inc. ......................... 1,938,750
604,100 Pittston Brink's Group............................... 16,423,969
311,600 Pittston Burlington Group............................ 3,116,000
405,800 * Policy Management Systems Corp..................... 12,478,350
--------------
105,363,503
--------------
Capital Goods - 0.2%
48,400 Caterpillar, Inc..................................... 2,837,450
--------------
Chemical & Agricultural Products - 3.6%
125,000 Air Products & Chemicals, Inc. ...................... 4,179,688
61,200 Albemarle Corp. ..................................... 1,097,775
190,900 Du Pont (E. I.) De Nemours & Co...................... 13,756,731
781,000 Engelhard Corp. ..................................... 17,426,062
95,000 Monsanto Co.......................................... 3,716,875
237,000 Pioneer Hi-Bred International, Inc. ................. 9,213,375
78,600 Praxair, Inc. ....................................... 3,625,425
296,800 Sigma-Aldrich Corp................................... 9,979,900
138,000 Solutia, Inc. ....................................... 2,949,750
--------------
65,945,581
--------------
Communication Systems & Services - 2.1%
594,120 * American Tower Systems Corp........................ 13,776,157
194,500 * Cisco Systems, Inc................................. 12,083,313
153,292 * MCI WorldCom, Inc. ................................ 12,646,590
--------------
38,506,060
--------------
Consumer Products & Services - 6.5%
157,400 Colgate-Palmolive Co................................. 7,771,625
163,800 Gucci Group.......................................... 12,008,588
52,700 Harley-Davidson, Inc................................. 2,918,263
42,000 Harman International Industries, Inc................. 1,848,000
635,000 Hasbro, Inc.......................................... 16,510,000
</TABLE>
46
<PAGE>
EVERGREEN
GROWTH AND INCOME FUND
Schedule of Investments(continued)
July 31, 1999
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Consumer Products & Services - continued
172,000 Lancaster Colony Corp................................ $ 5,729,750
446,400 Mattel, Inc.......................................... 10,490,400
291,400 Premark International, Inc. ......................... 11,036,775
502,800 Service Corp. International.......................... 7,981,950
303,800 Sony Corp. ADR....................................... 38,031,962
93,500 * Tommy Hilfiger Corp. .............................. 3,453,656
--------------
117,780,969
--------------
Diversified Companies - 1.3%
79,600 Allied Signal, Inc................................... 5,149,125
265,000 ITT Industries, Inc.................................. 9,904,375
96,400 Minnesota Mining & Manufacturing Co.................. 8,477,175
--------------
23,530,675
--------------
Electrical Equipment & Services - 3.0%
112,100 Applied Power, Inc. Cl. A............................ 3,194,850
200,200 Baldor Electric Co. ................................. 3,641,137
88,900 Belden, Inc.......................................... 2,211,388
215,400 Emerson Electric Co.................................. 12,856,687
131,000 General Electric Co.................................. 14,279,000
199,000 Motorola, Inc. ...................................... 18,158,750
18,648 Zilog, Inc........................................... 9,324
--------------
54,351,136
--------------
Electronic Equipment & Services - 2.6%
54,800 * Dupont Photomasks, Inc............................. 2,623,550
119,000 International Business Machines Corp................. 14,956,812
32,700 * Jabil Circuit, Inc................................. 1,375,444
146,200 * KLA-Tencor Corp.................................... 9,905,050
216,400 * Microsoft Corp..................................... 18,569,825
--------------
47,430,681
--------------
Finance & Insurance - 7.2%
62,000 AFLAC, Inc........................................... 2,875,250
268,125 Citigroup, Inc....................................... 11,948,320
276,000 Edwards (A.G.), Inc.................................. 7,624,500
295,000 Federal Home Loan Mortgage Corp...................... 16,925,625
310,000 Federal National Mortgage Assoc. .................... 21,390,000
42,750 First American Financial Corp........................ 710,719
387,840 Frontier Insurance Group, Inc........................ 5,696,400
181,500 Hartford Financial Services Group, Inc............... 9,801,000
173,432 Legg Mason, Inc...................................... 6,070,120
170,500 Lehman Brothers Holdings, Inc. ...................... 9,164,375
105,400 MBIA, Inc............................................ 6,034,150
20,000 Merrill Lynch & Co., Inc............................. 1,361,250
63,200 MGIC Investment Corp................................. 3,116,550
178,900 Price (T.) Rowe & Associates, Inc. .................. 6,261,500
85,000 Progressive Corp. Ohio............................... 10,858,750
27,450 Reinsurance Group Of America......................... 964,181
196,400 UnumProvident Corp. ................................. 10,163,700
--------------
130,966,390
--------------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Food & Beverage Products - 0.7%
90,000 Bestfoods........................................... $ 4,387,500
254,200 Darden Restaurants, Inc. ........................... 5,544,738
90,000 Sara Lee Corp. ..................................... 1,980,000
---------------
11,912,238
---------------
Forest Products - 0.1%
103,000 Deltic Timber Corp.................................. 2,510,625
---------------
Healthcare Products & Services - 8.7%
235,000 Abbott Laboratories................................. 10,090,312
491,100 * Acuson Corp....................................... 8,563,556
28,000 * Alza Corp......................................... 1,361,500
203,100 American Home Products Corp......................... 10,358,100
55,900 Beckman Coulter, Inc................................ 2,686,694
78,500 Celera Genomics Group............................... 2,080,250
34,600 Dendrite International, Inc......................... 1,314,800
50,000 * Dura Pharmaceuticals, Inc......................... 521,875
192,300 * Elan Corp Plc, ADR................................ 5,588,719
162,800 * First Health Group Corp........................... 3,866,500
401,625 * Health Management Associates, Inc. Cl. A ......... 3,313,406
232,500 * HEALTHSOUTH Corp. ................................ 2,848,125
51,100 Johnson & Johnson................................... 4,707,588
63,000 Lilly (Eli) & Co.................................... 4,134,375
334,400 * Lincare Holdings, Inc. ........................... 10,032,000
330,000 McKesson HBOC, Inc. ................................ 10,250,625
241,700 PE Corp-PE Biosystems Group......................... 13,550,306
258,600 Pfizer, Inc. ....................................... 8,776,238
55,000 * Quorum Health Group, Inc. ........................ 553,438
362,000 Schering-Plough Corp................................ 17,738,000
269,500 Shared Medical System Corp.......................... 16,136,312
256,000 * Sybron International Corp. ....................... 7,632,000
162,000 Warner-Lambert Co. ................................. 10,692,000
---------------
156,796,719
---------------
Industrial Specialty Products & Services - 4.5%
392,300 AptarGroup, Inc..................................... 11,352,181
260,000 Bemis Co., Inc...................................... 9,620,000
61,800 Danaher Corp........................................ 3,526,463
316,600 Donaldson, Inc...................................... 7,855,637
227,200 Dover Corp.......................................... 8,974,400
138,000 Honeywell, Inc...................................... 16,534,125
71,800 Illinois Tool Works, Inc............................ 5,335,638
178,300 JLG Industries, Inc. ............................... 3,554,856
53,500 Parker Hannifin Corp................................ 2,524,531
8,600 Teleflex, Inc. ..................................... 433,225
592,800 * Unova, Inc........................................ 7,669,350
75,000 Vulcan Materials Co................................. 3,300,000
---------------
80,680,406
---------------
Information Services & Technology - 3.5%
183,800 * Adaptec, Inc...................................... 7,145,225
72,000 * Applied Materials, Inc............................ 5,179,500
</TABLE>
47
<PAGE>
EVERGREEN
GROWTH AND INCOME FUND
Schedule of Investments(continued)
July 31, 1999
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Information Services &
Technology - continued
232,200 Computer Associates International, Inc. ............. $ 10,652,175
433,000 * Compuware Corp. ................................... 12,015,750
54,000 Hewlett-Packard Co. ................................. 5,653,125
252,000 Intel Corp. ......................................... 17,388,000
304,500 * Network Associates, Inc. .......................... 5,328,750
--------------
63,362,525
--------------
Leisure & Tourism - 1.2%
113,800 Carnival, Corp., Cl. A............................... 5,284,588
536,400 Gaylord Entertainment Co............................. 16,427,250
--------------
21,711,838
--------------
Manufacturing - Distributing - 0.1%
103,800 Hussmann International, Inc.......................... 1,764,600
--------------
Oil/Energy - 4.0%
131,400 Atlantic Richfield Co................................ 11,834,212
287,000 Berry Petroleum Co. Cl. A............................ 4,071,813
16,800 BP Amoco Plc......................................... 1,946,700
87,500 Chevron Corp......................................... 7,984,375
159,000 * Houston Exploration Co............................. 3,189,938
232,955 Kerr-McGee Corp. .................................... 11,997,182
175,500 Murphy Oil Corp. .................................... 8,687,250
88,000 Phillips Petroleum Co................................ 4,515,500
20,000 Shell Transport & Trading Plc, ADR................... 966,250
531,400 Southwestern Energy Co............................... 4,417,263
141,800 Texaco, Inc.......................................... 8,835,912
127,000 Tosco Corp........................................... 3,349,625
--------------
71,796,020
--------------
Oil Field Services - 0.6%
103,400 * Atwood Oceanics, Inc. ............................. 3,095,538
72,740 Halliburton Co. ..................................... 3,355,132
60,714 Schlumberger Ltd..................................... 3,676,992
--------------
10,127,662
--------------
Paper & Packaging - 0.5%
84,500 Kimberly-Clark Corp. ................................ 5,154,500
67,340 * Sealed Air Corp.................................... 4,326,595
--------------
9,481,095
--------------
Printing, Publishing, Broadcasting &
Entertainment - 9.1%
84,000 AMFM, Inc............................................ 4,410,000
392,049 * Clear Channel Communications,Inc................... 27,271,909
99,610 Comcast Corp., Cl. A................................. 3,834,985
340,300 Disney (Walt) Co..................................... 9,400,788
256,700 * Emmis Broadcasting Corp. Cl. A..................... 13,444,662
458,600 * Fox Entertainment Group, Inc. ..................... 11,407,675
45,000 Knight-Ridder, Inc. ................................. 2,413,125
87,500 McGraw-Hill Companies, Inc. ......................... 4,451,563
634,600 New York Times Co. Cl. A............................. 24,947,712
43,000 Scripps (E.W.) Co. Cl. A............................. 2,236,000
391,000 TCA Cable TV, Inc.................................... 22,922,375
439,900 Time Warner, Inc..................................... 31,672,800
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Printing, Publishing, Broadcasting &
Entertainment - continued
4,000 Washington Post Co. Cl. B........................... $ 2,260,000
95,000 * Young Broadcasting, Inc. Cl. A.................... 5,035,000
---------------
165,708,594
---------------
Real Estate - 1.7%
175,000 Brandywine Realty Trust REIT........................ 3,281,250
16,500 CBL & Associates Properties, Inc. REIT.............. 414,563
372,314 Duke Weeks Reality Corp............................. 8,144,369
54,100 Entertainment Properties Trust REIT................. 933,225
158,000 Kilroy Realty Corp. REIT............................ 3,555,000
64,000 Kimco Realty Corp. REIT............................. 2,400,000
85,000 Liberty Property Trust REIT......................... 2,008,125
194,700 Mack-Cali Realty Corp. REIT......................... 5,451,600
70,900 Meditrust Co. REIT.................................. 771,037
74,700 Post Property, Inc. REIT............................ 2,988,000
5,000 Spieker Properties, Inc. REIT....................... 191,250
107,700 Sunstone Hotel Investors, Inc. REIT................. 982,762
---------------
31,121,181
---------------
Retailing & Wholesale - 1.6%
184,000 * Autozone, Inc..................................... 4,542,500
37,700 Home Depot, Inc..................................... 2,405,731
232,300 Lowe's Companies, Inc............................... 12,253,825
32,100 Rite Aid Corp....................................... 680,119
405,785 * Saks, Inc......................................... 9,333,055
10,000 Wal-Mart Stores, Inc. .............................. 422,500
---------------
29,637,730
---------------
Telecommunication Services &
Equipment - 2.4%
225,000 Centurytel, Inc..................................... 9,618,750
130,000 * MediaOne Group, Inc............................... 9,408,750
57,000 * Qwest Communications International, Inc. ......... 1,681,500
73,000 * Univision Communications, Inc. Cl. A.............. 5,055,250
80,000 Vodafone AirTouch Plc, ADR.......................... 16,840,000
---------------
42,604,250
---------------
Thrift Institutions - 0.0%
27,900 St. Paul Bancorp, Inc. ............................. 676,575
---------------
Transportation - 4.5%
533,000 Burlington Northern Santa Fe Corp................... 17,056,000
20,000 Comair Holdings, Inc. .............................. 488,750
545,200 Kansas City Southern Industries, Inc................ 30,122,300
341,625 Southwest Airlines Co............................... 6,320,062
77,000 * UAL Corp. ........................................ 4,884,688
399,200 Union Pacific Corp.................................. 21,681,550
---------------
80,553,350
---------------
Utilities - Electric - 1.9%
64,000 Commonwealth Energy System.......................... 2,792,000
281,800 Energy East Corp. .................................. 7,168,287
620,300 * Niagara Mohawk Holdings, Inc...................... 9,769,725
400,000 TNP Enterprises, Inc. .............................. 15,275,000
---------------
35,005,012
---------------
</TABLE>
48
<PAGE>
EVERGREEN
GROWTH AND INCOME FUND
Schedule of Investments(continued)
July 31, 1999
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Utilities - Gas - 1.7%
218,800 Keyspan Corp......................................... $ 6,071,700
164,700 Northwest Natural Gas Co............................. 4,343,963
280,900 Piedmont Natural Gas Co., Inc........................ 9,568,156
249,200 Williams Companies, Inc.............................. 10,481,975
--------------
30,465,794
--------------
Utilities - Telephone - 2.2%
372,700 AT&T Corp. .......................................... 19,357,106
143,000 Cincinnati Bell, Inc................................. 3,038,750
175,000 GTE Corp. ........................................... 12,895,313
20,000 * Nextel Communications, Inc. Cl. A.................. 1,071,250
62,500 U.S. West, Inc....................................... 3,582,031
--------------
39,944,450
--------------
Total Common Stocks
(cost $1,282,486,646)............................... 1,775,320,485
--------------
PREFERRED STOCKS - 0.0%
Healthcare Products & Services - 0.0%
130,000 * Fresenius National Med Care, Inc. Ser. D........... 1,690
--------------
Total Preferred Stocks
(cost $22,740)...................................... 1,690
--------------
CONVERTIBLE PREFERRED - 0.4%
Aerospace & Defense - 0.1%
50,000 Loral Space & Communications
6.00%, 11/01/2006................................... 2,600,000
--------------
Paper & Packaging - 0.3%
78,375 * Sealed Air Corp.
$2.00, 04/01/2018, Ser. A........................... 4,820,062
--------------
Total Convertible Preferred
(cost $4,817,590)................................... 7,420,062
--------------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
CONVERTIBLE DEBENTURES - 0.2%
Healthcare Products & Services - 0.1%
$ 2,000,000 Carematrix
6.25%, 8/15/2004................................ $ 1,337,500
--------------
Information Services &
Technology - 0.1%
7,000,000 Networks Associates Inc.
6.69%, 2/13/2018................................ 2,257,500
--------------
Total Convertible Debentures
(cost $3,888,078)............................... 3,595,000
--------------
SHORT-TERM INVESTMENTS - 1.1%
Repurchase Agreement - 1.1%
20,515,000 State Street Bank & Trust Co., purchased
7/30/1999, 5.00%, maturing 8/2/1999, maturity
value $20,523,548
(cost $20,515,000) (a).......................... 20,515,000
--------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
Total Investments -
(cost $1,311,730,054).. 99.7% 1,806,852,237
Other Assets and
Liabilities - net...... 0.3 5,368,227
----- --------------
Net Assets.............. 100.0% $1,812,220,464
===== ==============
</TABLE>
(a) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices plus accrued interest at Ju-
ly 31, 1999.
* Non-income producing security.
Summary of Abbreviations:
ADR American Depository Receipts
REIT Real Estate Investment Trust
See Combined Notes to Financial Statements.
49
<PAGE>
EVERGREEN
INCOME AND GROWTH FUND
Schedule of Investments
July 31, 1999
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - 65.7%
Automotive Equipment & Manufacturing - 2.7%
29,000 Arvin Industries, Inc. ........................... $ 1,083,875
24,940 Daimler Chrysler AG............................... 1,801,915
555,900 Dana Corp. ....................................... 23,208,825
19,300 Goodyear Tire & Rubber Co. ....................... 1,020,487
170,100 Simpson Industries, Inc. ......................... 2,041,200
--------------
29,156,302
--------------
Banks - 12.8%
119,000 Amcore Financial, Inc. ........................... 2,737,000
17,662 AmSouth Bancorp................................... 404,018
50,000 Associated Banc Corp. ............................ 1,990,625
40,000 BancorpSouth, Inc. ............................... 660,000
300,300 Bancwest Corp. ................................... 12,518,756
40,000 Bank of New York Co., Inc. ....................... 1,477,500
60,873 BB&T Corp. ....................................... 2,145,773
217,500 ++ CB Bancshares, Inc. ........................... 7,000,781
79,800 CCB Financial Corp. .............................. 4,079,775
86,500 Comerica, Inc. ................................... 4,800,750
93,000 Commerce Bancshares, Inc. ........................ 3,754,875
77,606 F&M National Corp. ............................... 2,454,290
108,100 First American Corp. ............................. 4,540,200
125,000 First Charter Corp. .............................. 2,843,750
47,761 First State Bancorp............................... 1,098,503
8,000 First Union Corp.**............................... 368,000
20,750 First Virginia Banks, Inc. ....................... 994,703
173,000 Hibernia Corp. Cl. A.............................. 2,465,250
33,000 Huntington Bancshares, Inc. ...................... 994,125
340,353 Interchange Financial Services Corp............... 6,551,795
200,000 KeyCorp........................................... 6,300,000
84,000 Keystone Financial, Inc. ......................... 2,451,750
13,271 M&T Bank Corp. ................................... 7,159,705
258,946 Mercantile Bancorp, Inc. ......................... 14,112,557
1,500,000 National Australia Bank Ltd. ..................... 22,908,012
121,168 Pacific Century Financial Corp. .................. 2,393,068
10,430 Peoples Heritage Financial
Group, Inc. ..................................... 188,392
16,000 Premier National Bancorp, Inc. ................... 304,000
201,230 Republic Security Financial Corp. ................ 1,949,416
76,754 Second Bancorp, Inc. ............................. 2,014,793
10,000 Summit Bancorp.................................... 370,000
10,000 Suntrust Banks, Inc. ............................. 645,000
115,375 Susquehanna Bancshares, Inc. ..................... 2,069,539
150,000 U.S. Bancorp...................................... 4,668,750
321,960 USBANCORP, Inc. .................................. 5,030,625
--------------
136,446,076
--------------
Building, Construction & Furnishings - 0.2%
10,000 Armstrong World Industries, Inc. ................. 550,000
17,530 Southdown, Inc. .................................. 1,034,270
--------------
1,584,270
--------------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Business Equipment & Services - 0.3%
25,000 Dun & Bradstreet Corp. ........................... $ 793,750
257,800 Esselte AB........................................ 2,276,498
--------------
3,070,248
--------------
Capital Goods - 2.2%
1,539,900 New Holland NV.................................... 23,098,500
--------------
Chemical & Agricultural Products - 0.7%
100,000 Du Pont (E. I.) De Nemours & Co. ................. 7,206,250
--------------
Consumer Products & Services - 2.2%
48,300 CPI Corp. ........................................ 1,627,106
280,000 Industrie Natuzzi SpA ADR......................... 5,075,000
100,000 Lancaster Colony Corp. ........................... 3,331,250
80,000 Mattel, Inc. ..................................... 1,880,000
174,415 Newell Rubbermaid, Inc. .......................... 7,543,449
60,000 Service Corp. International....................... 952,500
115,000 Tupperware Corp. ................................. 2,716,875
--------------
23,126,180
--------------
Diversified Companies - 0.3%
113,400 Tomkins Plc, ADR.................................. 2,048,288
10,000 Tyco International Ltd. .......................... 976,875
--------------
3,025,163
--------------
Electrical Equipment & Services - 4.1%
100,000 Emerson Electric Co. ............................. 5,968,750
5,000 Hubbell, Inc. Cl. A............................... 196,875
286,656 Hubbell, Inc. Cl. B............................... 11,824,560
16,000 Motorola, Inc. ................................... 1,460,000
550,100 Thomas & Betts Corp. ............................. 24,892,025
--------------
44,342,210
--------------
Electronic Equipment & Services - 0.3%
150,000 Boston Acoustics, Inc. ........................... 2,775,000
--------------
Finance & Insurance - 2.2%
11,000 Dain Rauscher Corp. .............................. 585,063
31,900 Edwards (A.G.), Inc. ............................. 881,237
20,000 Hartford Financial Services
Group, Inc. ..................................... 1,080,000
49,000 LaSalle Re Holdings Ltd. ......................... 799,312
30,000 Lincoln National Corp. ........................... 1,500,000
135,100 Paine Webber Group, Inc. ......................... 5,404,000
104,500 Partnerre Ltd. ................................... 3,971,000
104,536 UnumProvident Corp. .............................. 5,409,738
79,000 XL Capital Ltd. .................................. 4,147,500
--------------
23,777,850
--------------
Food & Beverage Products - 0.1%
30,000 Conagra, Inc...................................... 766,875
--------------
</TABLE>
50
<PAGE>
EVERGREEN
INCOME AND GROWTH FUND
Schedule of Investments(continued)
July 31, 1999
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Healthcare Products & Services - 6.0%
190,000 American Home Products Corp. ..................... $ 9,690,000
210,000 Baxter International, Inc......................... 14,424,375
200,200 Beckman Coulter, Inc.............................. 9,622,112
146,800 Bristol-Myers Squibb Co........................... 9,762,200
40,000 * Elan Corp Plc, ADR.............................. 1,162,500
100,000 McKesson HBOC, Inc................................ 3,106,250
232,600 Shared Medical System Corp........................ 13,926,925
40,000 Warner-Lambert Co................................. 2,640,000
--------------
64,334,362
--------------
Industrial Specialty Products & Services - 0.3%
80,000 Federal Signal Corp............................... 1,715,000
10,000 Honeywell, Inc.................................... 1,198,125
--------------
2,913,125
--------------
Information Services & Technology - 0.3%
193,500 * Network Associates, Inc. ....................... 3,386,250
--------------
Leisure & Tourism - 0.0%
14,000 Gaylord Entertainment Co.......................... 428,750
--------------
Machinery - Diversified - 0.1%
82,650 Hardinge, Inc..................................... 1,363,725
--------------
Oil/Energy - 5.6%
23,000 Atlantic Richfield Co. ........................... 2,071,437
10,586 BP Amoco Plc...................................... 1,226,653
151,900 Equitable Resources, Inc.......................... 5,629,794
15,400 Exxon Corp........................................ 1,222,375
10,000 Mobil Corp. ...................................... 1,022,500
373,400 Murphy Oil Corp................................... 18,483,300
72,000 Texaco, Inc....................................... 4,486,500
608,200 Williams Companies, Inc. ......................... 25,582,412
--------------
59,724,971
--------------
Oil Field Services - 0.2%
110,344 * Nabors Industries Inc. ......................... 2,572,395
--------------
Printing, Publishing, Broadcasting & Entertainment - 0.3%
51,900 Bowne & Co., Inc.................................. 687,675
50,000 New York Times Co. Cl. A.......................... 1,965,625
--------------
2,653,300
--------------
Real Estate - 3.3%
10,000 Brandywine Realty Trust REIT...................... 187,500
23,800 Burnham Pacific Properties, Inc. REIT............. 300,475
124,900 Equity Residential Properties Trust REIT.......... 5,159,931
495,900 Gables Residential Trust REIT..................... 12,025,575
462,000 Kranzco Realty Trust REIT......................... 6,006,000
243,200 Meditrust Co. REIT................................ 2,644,800
235,700 Post Property, Inc. REIT.......................... 9,428,000
--------------
35,752,281
--------------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Retailing & Wholesale - 0.7%
30,000 Longs Drug Stores Corp. ......................... $ 1,033,125
40,000 Lowe's Companies, Inc. .......................... 2,110,000
70,260 * Saks, Inc. .................................... 1,615,980
80,600 Talbots Inc. .................................... 2,836,113
--------------
7,595,218
--------------
Telecommunication Services & Equipment - 1.7%
86,645 Vodafone Airtouch Public Ltd., ADR............... 18,238,773
--------------
Textile & Apparel - 0.0%
10,000 V. F. Corp. ..................................... 395,000
--------------
Thrift Institutions - 0.3%
62,000 First Essex Bancorp, Inc. ....................... 1,023,000
122,000 ++ Jacksonville Bancorp, Inc. ................... 1,967,250
--------------
2,990,250
--------------
Transportation - 1.2%
237,000 Union Pacific Corp. ............................. 12,872,063
--------------
Utilities - Electric - 10.5%
300,000 Companhia Paranaense de Energia-Copel, Plc, ADR.. 2,043,750
410,200 Dominion Resources, Inc. ........................ 18,074,437
83,000 DTE Energy Co. .................................. 3,247,375
239,000 FPL Group, Inc. ................................. 12,891,062
215,524 LG&E Energy Corp. ............................... 4,660,707
230,000 MDU Resources Group, Inc. ....................... 5,606,250
300,000 * Niagara Mohawk Holdings, Inc. ................. 4,725,000
181,700 PP&L Resources, Inc. ............................ 5,257,944
40,000 Public Service Co. of New Mexico................. 797,500
620,000 Scana Corp. ..................................... 15,151,250
93,000 Sempra Energy.................................... 2,063,438
800,000 Southern Co. .................................... 21,150,000
150,200 TNP Enterprises, Inc. ........................... 5,735,762
448,400 Wisconsin Energy Corp. .......................... 11,238,025
--------------
112,642,500
--------------
Utilities - Gas - 3.4%
71,500 Chesapeake Utilities Corp. ...................... 1,313,812
21,800 NICOR, Inc. ..................................... 842,025
391,300 Peoples Energy Corp. ............................ 14,404,731
163,100 Piedmont Natural Gas Co., Inc. .................. 5,555,594
5,000 Semco Energy, Inc. .............................. 79,375
617,281 UGI Corp. ....................................... 14,660,424
--------------
36,855,961
--------------
Utilities - Telephone - 3.7%
29,655 AT&T Corp. ...................................... 1,540,206
50,000 Cincinnati Bell, Inc. ........................... 1,062,500
340,100 Frontier Corp. .................................. 18,854,294
250,000 GTE Corp. ....................................... 18,421,875
--------------
39,878,875
--------------
Total Common Stocks (cost $620,748,509).......... 702,972,723
--------------
</TABLE>
51
<PAGE>
EVERGREEN
INCOME AND GROWTH FUND
Schedule of Investments(continued)
July 31, 1999
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
CONVERTIBLE PREFERRED - 17.9%
Advertising & Related Services - 0.5%
295,000 Snyder Strypes Trust............................. $ 5,605,000
--------------
Aerospace & Defense - 0.9%
186,000 Loral Space & Communications 6.00%, 11/01/2006... 9,672,000
--------------
Banks - 0.9%
210,000 National Australia Bank, Ltd. 7.875%, Series
UNIT............................................ 5,932,500
116,200 WBK Trust 10.00%, STRYPES (exchangeable for
Westpac Banking Corp. Common Stock)............. 3,594,938
--------------
9,527,438
--------------
Chemical & Agricultural Products - 1.6%
15,000 Hercules Trust II 6.50%, 6/30/2029............... 14,887,500
80,200 Merrill Lynch & Co., Inc. 6.25%, Series IGL,
STRYPES (exchangeable for IMC Global, Inc.
common stock)................................... 1,684,200
--------------
16,571,700
--------------
Communication Systems & Services - 1.8%
380,000 Qwest Trends Trust 5.75%, 144A................... 19,239,400
--------------
Consumer Products & Services - 0.5%
100,000 Newell Financial Trust I
5.25% 12/01/2027 ............................... 5,325,000
--------------
Electrical Equipment & Services - 1.0%
205,000 Pioneer Standard Electronics, Inc. 6.75%,
3/31/2028 ...................................... 10,391,450
--------------
Finance & Insurance - 1.9%
20,000 American General Corp. $3.00, Series A, MIPS .... 1,950,000
13,000 American Heritage Life Investment Corp.
8.50%, PRIDES .................................. 1,081,437
270,000 Frontier Financing Trust 6.25%, TOPRS ........... 11,880,000
100,000 St. Paul Capital
6.00%, MIPS .................................... 5,887,500
--------------
20,798,937
--------------
Food & Beverage Products - 1.1%
200,000 Wendys Financing I 5.00%, Series A, TECONS....... 12,050,000
--------------
Healthcare Products & Services - 0.1%
30,000 McKesson Financing Trust 5.00%, 6/01/2027........ 1,507,500
--------------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
CONVERTIBLE PREFERRED - continued
Metal Products & Services - 0.3%
100,000 Timet Capital Trust I 6.63%, 11/01/2026.......... $ 3,125,000
--------------
Oil/Energy - 0.4%
95,000 Callon Petroleum Co. 8.50%, Series A............. 2,612,500
48,000 Nuevo Energy Co. 5.75%, Series A, TECONS......... 1,488,000
--------------
4,100,500
--------------
Printing, Publishing, Broadcasting & Entertainment - 1.0%
92,000 Houston Industries, Inc. 7.00%, ACES
(exchangeable for Time Warner, Inc.
common stock)................................... 11,137,750
--------------
Retailing & Wholesale - 0.3%
7,500 CVS Automatic Common Exchange Security Trust,
6.00%, 5/15/2001, TRACES........................ 670,781
65,000 Merrill Lynch & Co., Inc. (exchangeable for
Dollar General Corp. common stock)
8.50%, 5/15/2001................................ 2,693,438
--------------
3,364,219
--------------
Telecommunication Services & Equipment - 2.8%
20,000 Nextel STRYPES Trust,
7.25%, 5/15/2000, Series NVTL................... 907,500
100,000 Nortel Inversora SA MEDS......................... 4,900,000
108,000 Qualcomm Financial Trust I 5.75%, 3/01/2012...... 23,760,000
--------------
29,567,500
--------------
Transportation - 1.5%
88,700 CNF Trust I 5.00%, Ser. A, TECONS (exchangeable
for CNF Transportation, Inc. common stock)...... 5,211,125
216,800 Union Pacific Capital Trust 4/01/2028............ 10,975,500
--------------
16,186,625
--------------
Utilities - Electric - 1.3%
45,000 BNDES Participacoes SA 7.25%, 2/15/2001.......... 765,000
238,600 Texas Utilities Co. 9.25%, PRIDES................ 12,899,312
--------------
13,664,312
--------------
Total Convertible Preferred (cost $179,488,343).. 191,834,331
--------------
</TABLE>
52
<PAGE>
EVERGREEN
INCOME AND GROWTH FUND
Schedule of Investments(continued)
July 31, 1999
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
CONVERTIBLE DEBENTURES - 1.4%
Consumer Products & Services - 0.2%
$ 2,000,000 Action Performance Companies, Inc.
4.75%, 4/1/2005, 144A........................... $ 1,882,600
--------------
Electrical Equipment & Services - 0.3%
6,000,000 Solectron Corp. 4.00%, 1/27/2019, 144A........... 3,446,400
--------------
Healthcare Products & Services - 0.2%
2,000,000 Carematrix
6.25%, 8/15/2004................................ 1,337,500
2,000,000 Elan Finance Corp. Ltd. 3.25%, 12/14/2018........ 1,057,500
--------------
2,395,000
--------------
Information Services & Technology - 0.5%
5,000,000 Adaptec, Inc.
4.75%, 2/1/2004................................. 4,893,750
--------------
Telecommunication Services &
Equipment - 0.2%
2,500,000 Orbital Sciences Corp. 5.00%, 10/1/2002.......... 2,734,375
--------------
Total Convertible Debentures (cost $15,426,436).. 15,352,125
--------------
CORPORATE BONDS - 0.3%
Banks - 0.1%
1,000,000 NationsBank Corp. 6.50%, 8/15/2003............... 997,024
--------------
Finance & Insurance - 0.1%
1,000,000 American General Finance Corp. 7.13%, 12/1/1999.. 1,005,067
--------------
Telecommunication Services & Equipment - 0.1%
1,000,000 GTE Southwest, Inc. 5.82%, 12/1/1999, Ser. A..... 999,701
--------------
Total Corporate Bonds (cost $3,011,969).......... 3,001,792
--------------
U.S. GOVERNMENT & AGENCY OBLIGATIONS - 4.8%
Government Agency Notes & Bonds - 4.6%
2,000,000 Federal Farm Credit Bank 5.75%, 12/7/2028........ 1,709,172
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
U.S. GOVERNMENT & AGENCY OBLIGATIONS - continued
Government Agency Notes & Bonds - continued
Federal Home Loan Bank
$ 2,000,000 5.375%, 10/6/2003.............................. $ 1,917,512
2,000,000 6.532%, 12/28/2007............................. 1,925,432
Federal Home Loan Mortgage Corp.
2,000,000 6.54%, 12/10/2007.............................. 1,935,468
2,000,000 6.54%, 3/19/2008............................... 1,924,854
2,000,000 7.59%, 9/19/2006............................... 2,022,748
2,000,000 7.87%, 8/8/2011................................ 2,009,946
Federal National Mortgage Association
5,000,000 5.65%, 2/22/2028............................... 4,221,495
1,850,000 6.00%, 1/14/2005............................... 1,785,035
4,000,000 6.08%, 9/1/2028................................ 3,587,048
2,215,000 6.10%, 1/26/2005............................... 2,138,764
3,000,000 6.16%, 1/23/2008............................... 2,835,831
2,000,000 6.24%, 1/14/2008............................... 1,895,136
3,000,000 6.32%, 3/3/2008................................ 2,862,696
1,000,000 6.41%, 3/8/2006................................ 978,818
5,000,000 6.42%, 2/12/2008............................... 4,765,225
2,000,000 6.46%, 1/1/2008................................ 1,915,828
4,000,000 6.52%, 3/5/2008................................ 3,820,776
2,355,000 6.88%, 9/24/2012............................... 2,311,951
3,000,000 7.28%, 5/23/2007............................... 2,965,647
--------------
49,529,382
--------------
Treasury Notes & Bonds - 0.2%
1,500,000 U.S. Treasury Bonds 7.13%, 2/15/2023............ 1,642,500
--------------
Total U.S. Government & Agency Obligations
(cost $53,879,642)............................. 51,171,882
--------------
SHORT-TERM INVESTMENTS - 9.5%
Repurchase Agreement - 9.5%
101,556,000 State Street Bank & Trust Co., purchased
7/30/1999, 5.00%, maturing 8/2/1999, maturity
value $101,598,315 (cost $101,556,000) (a) .... 101,556,000
--------------
</TABLE>
<TABLE>
<C> <S> <C> <C>
Total Investments -
(cost $974,110,899).. 99.6% 1,065,888,853
Other Assets and
Liabilities - net... 0.4 4,770,669
----- --------------
Net Assets........... 100.0% $1,070,659,522
===== ==============
</TABLE>
* Non-income producing security.
** At July 31, 1999 the Fund owned 8,000 shares of common stock of First Union
Corp. at a cost of $106,108. During the year ended July 31, 1999 the Fund
earned $14,240 in dividend income from this investment. These shares were
acquired by the Fund through a merger with another investment company sub-
advised by Lieber & Company. The previous holder acquired these shares prior
to the acquisition of the advisor and Lieber & Company by First Union.
++ Investment in a non-controlled affiliate. The Fund owns over 5% of the out-
standing voting shares of CB Bancshares, Inc. and Jacksonville Bancorp, Inc.
The Fund has a cost basis of $6,707,438 and $1,320,000, respectively, in the
issue at July 31, 1999. The Fund earned $51,375 and $61,000 of income, re-
spectively, from this investment during the period ending July 31, 1999.
(a) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices plus accrued interest at July 31,
1999.
144A Security that may be resold to "qualified institutional buyers" under
Rule 144A of the Securities Act of 1933. This security has been deter-
mined to be liquid under guidelines established by the Board of Trustees.
Summary of Abbreviations:
ACES Automatically Convertible Equity Securities
REIT Real Estate Investment Trust
ADR American Depository Receipts STRYPES Structured Yield Product Ex-
changeable for Stock
MEDS Mandatorially Exchangeable Debt Securities
MIPS Monthly Income Preferred Shares TECONS Term Convertible Shares
TOPRS Trust Originated Preferred Secu-
rities
PRIDES Preferred Redeemable Increased Dividend Equity Securities
TRACES Trust Automatic Common Exchange
Securities
See Combined Notes to Financial Statements.
53
<PAGE>
EVERGREEN
SMALL CAP VALUE FUND
Schedule of Investments
July 31, 1999
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - 88.2%
Aerospace & Defense - 3.1%
211,800 Curtiss Wright Corp. ................................. $ 7,849,837
------------
Automotive Equipment & Manufacturing - 0.6%
8,200 Arvin Industries, Inc. ............................... 306,475
103,200 Simpson Industries, Inc. ............................. 1,238,400
------------
1,544,875
------------
Banks - 10.6%
121,250 ABC Bancorp........................................... 1,667,187
20,000 Bank of Essex......................................... 320,000
61,700 Britton & Koontz Capital Corp......................... 1,241,713
28,800 BSB Bancorp, Inc. .................................... 783,000
5,250 Carrollton Bancorp.................................... 97,125
31,280 Centura Banks, Inc. .................................. 1,749,725
34,177 Commercial Bankshares, Inc............................ 751,894
8,200 Community Bancshares, Inc............................. 196,800
60,000 Cowlitz Bancorp....................................... 375,000
157,186 First Oak Brook Bancshares, Inc. Cl. A................ 3,143,720
95,552 First State Bancorp................................... 2,197,696
221,900 Granite State Bankshares, Inc......................... 5,325,600
32,000 Independent Bankshares, Inc........................... 394,000
15,000 James River Bankshares, Inc. ......................... 228,750
65,500 Mid-State Bancshares.................................. 2,366,187
30,000 New England Community Bancorp, Inc. .................. 819,375
4,000 Northern States Financial Corp........................ 93,750
40,000 Pacific Bank, N.A..................................... 800,000
9,100 Premier National Bancorp, Inc. ....................... 172,900
90,000 Prosperity Bancshares, Inc. .......................... 1,485,000
15,400 * Republic Bancshares, Inc. .......................... 246,400
24,000 South Alabama Bancorp, Inc............................ 336,000
60,000 Southside Bancshares Corp. ........................... 660,000
11,250 Susquehanna Bancshares, Inc. ......................... 201,797
23,200 Union Bankshares Corp................................. 394,400
30,000 West Coast Bancorp, Inc. ............................. 502,500
------------
26,550,519
------------
Building, Construction & Furnishings - 5.7%
57,400 American Woodmark Corp. .............................. 1,887,025
97,500 Apogee Enterprises, Inc............................... 962,813
99,500 Craftmade International, Inc. ........................ 1,243,750
150,000 D.R. Horton, Inc. .................................... 2,437,500
119,100 Industrie Natuzzi SpA ADR............................. 2,158,687
210,500 Standard Pacific Corp................................. 2,723,344
65,100 TJ International, Inc. ............................... 2,018,100
42,413 * Toll Brothers, Inc.................................. 901,276
------------
14,332,495
------------
Business Equipment & Services - 1.1%
60,000 * Zebra Technologies Corp. Cl. A...................... 2,816,250
------------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Communication Systems & Services - 0.9%
90,000 * Orbital Sciences Corp. ............................. $ 2,306,250
------------
Consumer Products & Services - 9.1%
310,600 CPI Corp. ............................................ 10,463,337
93,500 General Housewares Corp. ............................. 1,916,750
110,000 Lancaster Colony Corp................................. 3,664,375
80,500 Polaris Industries, Inc............................... 3,169,688
78,000 Stewart Enterprises, Inc. Cl. A....................... 970,125
328,600 York Group, Inc. ..................................... 2,423,425
------------
22,607,700
------------
Electrical Equipment & Services - 5.4%
100,000 Applied Power, Inc. Cl. A............................. 2,850,000
292,800 Helix Technology Corp................................. 7,832,400
154,500 * Kent Electronics Corp............................... 2,684,437
------------
13,366,837
------------
Electronic Equipment & Services - 1.7%
84,700 Boston Acoustics, Inc. ............................... 1,566,950
67,100 * Hadco Corp. ........................................ 2,679,806
------------
4,246,756
------------
Finance & Insurance - 1.5%
45,000 Enhance Financial Services Group, Inc. ............... 933,750
164,900 Morgan Keegan, Inc. .................................. 2,865,138
------------
3,798,888
------------
Food & Beverage Products - 5.2%
117,920 Bridgford Foods Corp. ................................ 1,267,640
310,400 International Multifoods Corp. ....................... 7,255,600
142,000 Michael Foods, Inc. .................................. 3,292,625
15,000 Smucker (J. M.) Co. .................................. 315,938
35,000 Smucker (J. M.) Co. Cl. A............................. 846,562
------------
12,978,365
------------
Healthcare Products & Services - 5.8%
60,000 Alpharma, Inc. ....................................... 2,227,500
122,300 AmeriSource Health Corp. ............................. 3,424,400
103,600 * ArthroCare Corp. ................................... 2,952,600
143,400 * Carematrix Corp. ................................... 1,559,475
95,000 Jones Pharma, Inc. ................................... 4,123,594
18,700 Kewaunee Scientific Corp. ............................ 195,181
------------
14,482,750
------------
Industrial Specialty Products & Services - 2.5%
50,000 Badger Meter, Inc. ................................... 1,900,000
55,771 Danaher Corp. ........................................ 3,182,433
43,100 Instron Corp. ........................................ 915,875
18,700 Met-Pro Corp. ........................................ 234,919
2,750 Superior Telecom, Inc. ............................... 77,515
------------
6,310,742
------------
</TABLE>
54
<PAGE>
EVERGREEN
SMALL CAP VALUE FUND
Schedule of Investments(continued)
July 31, 1999
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Information Services & Technology - 1.0%
60,000 * Axent Technologies, Inc. .......................... $ 840,000
91,400 Timberline Software Corp. ........................... 1,548,088
------------
2,388,088
------------
Machinery - Diversified - 1.1%
171,550 Hardinge, Inc. ...................................... 2,830,575
------------
Metal Products & Services - 0.6%
109,400 Titanium Metals Corp. ............................... 1,429,038
------------
Oil/Energy - 6.0%
201,900 Berry Petroleum Co. Cl. A ........................... 2,864,456
235,500 Cabot Oil & Gas Corp. Cl. A.......................... 4,253,719
155,600 Penn Virginia Corp. ................................. 3,267,600
100,909 Pennzoil-Quaker State Co. ........................... 1,494,715
370,000 Southwestern Energy Co. ............................. 3,075,625
------------
14,956,115
------------
Oil Field Services - 0.8%
126,200 Lufkin Industries, Inc. ............................. 2,082,300
------------
Paper & Packaging - 0.8%
154,050 Tuscarora, Inc. ..................................... 1,983,394
------------
Printing, Publishing, Broadcasting & Entertainment -
1.6%
41,300 Banta Corp. ......................................... 1,017,013
216,300 Bowne & Co., Inc. ................................... 2,865,975
------------
3,882,988
------------
Real Estate - 3.9%
227,200 Eastgroup Properties, Inc. REIT...................... 4,231,600
25,000 Innkeepers USA Trust REIT............................ 221,875
121,000 Mission West Properties, Inc. REIT................... 975,562
75,000 Parkway Properties, Inc. REIT........................ 2,493,750
100,000 RFS Hotel Investors, Inc. REIT....................... 1,262,500
50,000 Sunstone Hotel Investors, Inc. REIT.................. 456,250
------------
9,641,537
------------
Retailing & Wholesale - 2.2%
10,500 Deb Shops, Inc. ..................................... 221,813
87,150 Ethan Allen Interiors, Inc. ......................... 2,767,012
200,000 Pier 1 Imports, Inc. ................................ 1,875,000
50,000 * Sonic Automotive, Inc. ............................ 656,250
------------
5,520,075
------------
Telecommunication Services & Equipment - 4.5%
250,000 Communications Systems, Inc. ........................ 3,625,000
349,695 Hickory Tech Corp. .................................. 3,671,797
15,000 * ITC DeltaCom, Inc. ................................ 395,625
95,000 Scientific Atlanta, Inc. ............................ 3,467,500
------------
11,159,922
------------
Thrift Institutions - 4.9%
39,500 Abington Bancorp, Inc. .............................. 533,250
21,000 Bancorp Connecticut, Inc. ........................... 351,750
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Thrift Institutions - continued
228,394 Community Savings Bankshares, Inc. ................. $ 2,969,122
16,800 * Golden St. Bancorp, Inc. ......................... 371,700
50,000 Harbor Florida Bancshares, Inc. .................... 640,625
312,900 Horizon Financial Corp. ............................ 3,833,025
38,000 Jacksonville Bancorp, Inc. ......................... 612,750
79,200 Metrowest Bank...................................... 534,600
100,000 St. Paul Bancorp, Inc. ............................. 2,425,000
------------
12,271,822
------------
Utilities - Electric - 1.3%
135,000 MDU Resources Group, Inc. .......................... 3,290,625
------------
Utilities - Gas - 6.1%
38,100 Chesapeake Utilities Corp. ......................... 700,088
15,000 Connecticut Energy Corp. ........................... 573,750
20,000 CTG Resources, Inc. ................................ 733,750
64,800 Delta Natural Gas Co., Inc. ........................ 1,150,200
36,600 Public Service Co. of North Carolina, Inc. ......... 1,095,713
450,100 Semco Energy, Inc. ................................. 7,145,337
85,500 UGI Corp. .......................................... 2,030,625
45,800 Yankee Energy System, Inc. ......................... 1,840,587
------------
15,270,050
------------
Other Securities - 0.2%............................. 495,656
------------
Total Common Stocks (cost $214,186,608)............. 220,394,449
------------
CONVERTIBLE PREFERRED - 1.1%
Electrical Equipment & Services - 0.8%
40,000 Pioneer Standard Electronics, Inc.
6.75%, 3/31/2028................................... 2,027,600
------------
Oil/Energy - 0.3%
26,000 Callon Petroleum Co. 8.50%, Series A................ 715,000
------------
Total Convertible Preferred (cost $2,920,875)....... 2,742,600
------------
<CAPTION>
Principal
Amount Value
<C> <S> <C>
CONVERTIBLE DEBENTURES - 9.5%
Banks - 0.5%
$1,350,000 Surety Capital Corp. 9.00%, 3/31/2008............... 1,350,000
------------
Business Equipment & Services - 0.5%
1,250,000 Interim Services, Inc. 4.50%, 6/1/2005.............. 1,101,563
200,000 Personnel Group Of America, Inc. 5.75%, 7/1/2004.... 165,750
------------
1,267,313
------------
Consumer Products & Services - 1.5%
4,000,000 Action Performance Companies, Inc. 4.75%, 4/1/2005,
144A............................................... 3,765,200
------------
</TABLE>
55
<PAGE>
EVERGREEN
SMALL CAP VALUE FUND
Schedule of Investments(continued)
July 31, 1999
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
CONVERTIBLE DEBENTURES - continued
Healthcare Products & Services - 4.6%
5,000,000 Alpharma, Inc. 5.75%, 4/1/2005, 144A.................. $ 7,081,500
6,600,000 Carematrix
6.25%, 8/15/2004..................................... 4,413,750
------------
11,495,250
------------
Telecommunication Services & Equipment - 2.4%
3,000,000 Antec Corp.
4.50%, 5/15/2003..................................... 5,332,500
600,000 Orbital Sciences Corp. 5.00%, 10/1/2002............... 656,250
------------
5,988,750
------------
Total Convertible Debentures (cost $21,180,175)....... 23,866,513
------------
</TABLE>
<TABLE>
<C> <S> <C> <C>
Total Investments - (cost $238,287,658)....... 98.8% 247,003,562
Other Assets and Liabilities - net............. 1.2 3,002,472
----- ------------
Net Assets..................................... 100.0% $250,006,034
===== ============
</TABLE>
* Non-income producing security.
144A Security that may be resold to "qualified institutional buyers" un-
der Rule 144A of the Securities Act of 1933. This security has been
determined to be liquid under guidelines established by the Board
of Trustees.
Summary of Abbreviations:
ADR American Depository Receipts
REIT Real Estate Investment Trust
See Combined Notes to Financial Statements.
56
<PAGE>
EVERGREEN
UTILITY FUND
Schedule of Investments
July 31, 1999
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - 75.2%
Communication Systems & Services - 0.9%
18,200 * MCI WorldCom, Inc. ................................. $ 1,501,500
------------
Oil/Energy - 3.6%
70,000 Enron Corp. .......................................... 5,963,125
------------
Telecommunication Services & Equipment - 3.4%
46,600 * Time Warner Telecom, Inc. .......................... 1,450,425
20,150 Vodafone AirTouch Public Plc, ADR..................... 4,241,575
------------
5,692,000
------------
Utilities - Electric - 38.2%
125,000 Alliant Corp. ........................................ 3,609,375
31,100 * Calpine Corp. ...................................... 2,338,331
100,000 Central Hudson Gas & Electric Corp. .................. 4,187,500
896,700 Companhia Paranaense de Energia-Copel, Plc, ADR....... 6,108,769
70,000 Duke Power Co. ....................................... 3,705,625
160,000 Energy East Corp. .................................... 4,070,000
187,000 MDU Resources Group, Inc. ............................ 4,558,125
331,400 * Niagara Mohawk Holdings, Inc. ...................... 5,219,550
268,500 PacifiCorp............................................ 4,900,125
150,000 PP&L Resources, Inc. ................................. 4,340,625
200,000 Public Service Co. of New Mexico...................... 3,987,500
100,000 Public Service Enterprise Group, Inc. ................ 4,031,250
64,100 Reliant Energy, Inc. ................................. 1,758,744
175,000 Sempra Energy......................................... 3,882,812
129,200 Southern Co. ......................................... 3,415,725
135,000 Wisconsin Energy Corp. ............................... 3,383,438
------------
63,497,494
------------
Utilities - Gas - 10.5%
48,200 Keyspan Corp. ........................................ 1,337,550
134,000 NUI Corp. ............................................ 3,576,125
120,000 Peoples Energy Corp. ................................. 4,417,500
51,100 Piedmont Natural Gas Co., Inc. ....................... 1,740,594
95,300 Semco Energy, Inc. ................................... 1,512,887
206,000 UGI Corp. ............................................ 4,892,500
------------
17,477,156
------------
Utilities - Telephone - 18.6%
75,000 AT&T Corp. ........................................... 3,895,313
110,000 BellSouth Corp. ...................................... 5,280,000
100,000 Frontier Corp. ....................................... 5,543,750
70,000 GTE Corp. ............................................ 5,158,125
110,000 * Nextel Communications, Inc. Cl. A................... 5,891,875
100,000 Sprint Corp. ......................................... 5,168,750
------------
30,937,813
------------
Total Common Stocks (cost $97,506,987)................ 125,069,088
------------
</TABLE>
* Non-income producing security.
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
CONVERTIBLE PREFERRED - 21.5%
Aerospace & Defense - 2.2%
70,000 Loral Space & Communications 6.00%, 11/01/2006....... $ 3,640,000
------------
Printing, Publishing, Broadcasting & Entertainment -
2.3%
31,700 Houston Industries, Inc. 7.00%, ACES (exchangeable
for Time Warner, Inc. common stock)................. 3,837,681
------------
Telecommunication Services & Equipment - 7.0%
53,000 Qualcomm Financial Trust I 5.75%, 3/01/2012.......... 11,660,000
------------
Utilities - Electric - 6.9%
42,700 AES Trust I 5.375%, Series A, TECONS................. 3,640,175
235,000 BNDES Participacoes S.A. 7.25%, DECS................. 3,995,000
70,000 Texas Utilities Co.
9.25%, PRIDES....................................... 3,784,375
------------
11,419,550
------------
Utilities - Telephone - 3.1%
60,000 Sprint Corp. 8.25%, DECS (exchangeable for Southern
N.E. Telephone common stock)........................ 5,227,500
------------
Total Convertible Preferred (cost $23,339,216)....... 35,784,731
------------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
CONVERTIBLE DEBENTURES - 2.4%
Information Services & Technology - 2.4%
$4,000,000 Adaptec, Inc.
4.75%, 2/1/2004 (cost $3,530,000)................... 3,915,000
------------
SHORT-TERM INVESTMENTS - 0.7%
Government Agency Notes & Bonds - 0.7%
1,137,000 Federal Agricultural Mortgage Corp. Discount Notes
4.97%, 8/2/1999 (cost $1,136,843)................... 1,136,843
------------
</TABLE>
<TABLE>
<C> <S> <C> <C>
Total Investments - (cost $125,513,046)...... 99.8% 165,905,662
Other Assets and Liabilities - net............ 0.2 345,825
----- ------------
Net Assets.................................... 100.0% $166,251,487
===== ============
</TABLE>
Summary of Abbreviations:
ACES Automatically Convertible Equity Securities
ADR American Depository Receipts
DECS Dividend Enhanced Convertible Stock
PRIDES Preferred Redeemable Increased Dividend Equity Securities
TECONS Term Convertible Shares
See Combined Notes to Financial Statements.
57
<PAGE>
EVERGREEN
VALUE FUND
Schedule of Investments
July 31, 1999
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - 97.5%
Automotive Equipment & Manufacturing - 2.1%
342,223 Delphi Automotive Systems Corp. .................... $ 6,160,014
115,200 Ford Motor Co. ..................................... 5,601,600
131,950 General Motors Corp. ............................... 8,040,703
------------
19,802,317
------------
Banks - 13.1%
366,300 Bank One Corp. ..................................... 19,986,244
392,000 BankAmerica Corp. .................................. 26,019,000
85,600 BankBoston Corp. ................................... 4,017,850
263,300 Chase Manhattan Corp. .............................. 20,241,187
84,100 Comerica, Inc. ..................................... 4,667,550
373,050 Compass Bancshares, Inc. ........................... 10,748,503
228,900 National City Corp. ................................ 6,809,775
185,700 SouthTrust Corp. ................................... 6,824,475
748,750 Sovereign Bancorp, Inc. ............................ 9,031,797
341,300 Wells Fargo Co. .................................... 13,310,700
------------
121,657,081
------------
Business Equipment & Services - 1.1%
326,850 Dun & Bradstreet Corp. ............................. 10,377,488
------------
Chemical & Agricultural Products - 2.5%
173,600 Du Pont (E. I.) De Nemours & Co. ................... 12,510,050
200,400 Millennium Chemicals Inc. .......................... 4,709,400
136,759 Rohm & Haas Co. .................................... 5,829,370
------------
23,048,820
------------
Communication Systems & Services - 2.1%
20,000 Lucent Technologies, Inc. .......................... 1,301,250
108,750 * MCI WorldCom, Inc. ............................... 8,971,875
341,700 * Newbridge Networks Corp. ......................... 9,076,406
------------
19,349,531
------------
Consumer Products & Services - 3.4%
16,800 Procter & Gamble Co. ............................... 1,520,400
824,200 * Tommy Hilfiger Corp. ............................. 30,443,888
------------
31,964,288
------------
Diversified Companies - 5.0%
81,150 Allied Signal, Inc. ................................ 5,249,390
69,700 Minnesota Mining & Manufacturing Co. ............... 6,129,244
333,050 Raychem Corp. ...................................... 12,697,531
228,500 Tyco International Ltd. ............................ 22,321,594
------------
46,397,759
------------
Electrical Equipment & Services - 3.3%
145,100 General Electric Co. ............................... 15,815,900
158,600 Motorola, Inc. ..................................... 14,472,250
------------
30,288,150
------------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Finance & Insurance - 13.1%
235,100 Allstate Corp. ..................................... $ 8,346,050
114,500 American International Group, Inc. ................. 13,296,312
203,800 Associates First Capital Corp., Cl. A............... 7,808,087
528,675 Citigroup, Inc. .................................... 23,559,080
32,600 Federal Home Loan Mortgage Corp. ................... 1,870,425
171,000 Federal National Mortgage Assoc..................... 11,799,000
259,800 Hartford Financial Services Group, Inc. ............ 14,029,200
374,100 Household International, Inc. ...................... 16,062,919
5,200 Lincoln National Corp. ............................. 260,000
118,200 Morgan Stanley, Dean Witter & Co. .................. 10,652,775
163,400 Price (T.) Rowe & Associates, Inc. ................. 5,719,000
168,700 XL Capital Ltd. .................................... 8,856,750
------------
122,259,598
------------
Food & Beverage Products - 1.5%
256,158 Albertsons, Inc. ................................... 12,727,851
23,700 Coca Cola Co. ...................................... 1,429,406
------------
14,157,257
------------
Healthcare Products & Services - 2.4%
415,200 Pharmacia & Upjohn, Inc. ........................... 22,342,950
------------
Industrial Specialty Products & Services - 1.4%
105,400 Honeywell, Inc. .................................... 12,628,238
------------
Information Services & Technology - 8.3%
513,000 * American Power Conversion Corp. .................. 10,644,750
232,400 * Cambridge Technology Partners..................... 3,979,850
157,350 * Gateway, Inc. .................................... 11,988,103
219,400 Hewlett-Packard Co. ................................ 22,968,437
82,800 Intel Corp. ........................................ 5,713,200
107,700 International Business Machines Corp. .............. 13,536,544
196,200 * Keane, Inc. ...................................... 4,524,862
262,900 * Mastech Corp. .................................... 4,436,438
------------
77,792,184
------------
Iron & Steel - 0.6%
245,100 AK Steel Holding Corp. ............................. 5,530,069
------------
Metal Products & Services - 0.7%
216,900 Alcan Aluminum Ltd. ................................ 6,534,113
------------
Oil/Energy - 10.9%
303,600 Apache Corp. ....................................... 12,884,025
123,450 Atlantic Richfield Co. ............................. 11,118,216
9,900 Chevron Corp. ...................................... 903,375
330,400 Exxon Corp. ........................................ 26,225,500
110,800 Mobil Corp. ........................................ 11,329,300
444,800 Reliant Energy, Inc. ............................... 12,204,200
49,300 Royal Dutch Petroleum Co. .......................... 3,007,300
381,400 Texaco, Inc. ....................................... 23,765,987
------------
101,437,903
------------
</TABLE>
58
<PAGE>
EVERGREEN
VALUE FUND
Schedule of Investments(continued)
July 31, 1999
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Paper & Packaging - 1.9%
643,250 Abitibi Consolidated, Inc. ........................ $ 7,236,563
458,518 * Smurfit Container Corp. ......................... 10,259,340
------------
17,495,903
------------
Pharmaceuticals - 1.2%
371,100 ICN Pharmaceuticals, Inc. ......................... 11,411,325
------------
Printing, Publishing, Broadcasting &
Entertainment - 1.0%
163,100 * CBS Corp. ....................................... 7,166,206
33,000 Disney (Walt) Co. ................................. 911,625
37,000 * Viacom, Inc., Cl. B.............................. 1,551,688
------------
9,629,519
------------
Retailing & Wholesale - 4.0%
561,000 * Federated Department Stores, Inc. ............... 28,786,312
162,400 Tandy Corp. ....................................... 8,333,150
------------
37,119,462
------------
Telecommunication Services & Equipment - 2.1%
116,250 * MediaOne Group, Inc. ............................ 8,413,594
165,650 * Univision Communications, Inc. Cl. A............. 11,471,262
------------
19,884,856
------------
Transportation - 3.4%
277,500 Burlington Northern Santa Fe Corp.................. 8,880,000
238,000 CNF Transportation, Inc. .......................... 10,115,000
227,900 Union Pacific Corp. ............................... 12,377,819
------------
31,372,819
------------
Utilities - Electric - 2.7%
269,100 CMS Energy Corp. .................................. 10,057,612
80,300 Duke Power Co. .................................... 4,250,881
72,400 FPL Group, Inc. ................................... 3,905,075
62,900 GPU, Inc. ......................................... 2,413,788
182,000 Southern Co. ...................................... 4,811,625
------------
25,438,981
------------
Utilities - Gas - 1.6%
389,700 NICOR, Inc. ....................................... 15,052,163
------------
Utilities - Telephone - 8.1%
173,750 Ameritech Corp. ................................... 12,727,188
334,411 AT&T Corp. ........................................ 17,368,471
164,500 Bell Atlantic Corp. ............................... 10,486,875
65,400 BellSouth Corp. ................................... 3,139,200
237,200 GTE Corp. ......................................... 17,478,675
249,000 SBC Communications, Inc. .......................... 14,239,687
------------
75,440,096
------------
Total Common Stocks (cost $703,022,931)............ 908,412,870
------------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
SHORT-TERM INVESTMENTS - 2.5%
Repurchase Agreement - 2.5%
$23,499,000 Paine Webber Repurchase Agreement, purchased
7/30/1999, 5.07%, maturing 8/2/1999, maturity
value $23,508,928 (cost $23,499,000) (a)......... $ 23,499,000
------------
</TABLE>
<TABLE>
<C> <S> <C> <C>
Total Investments - (cost $726,521,931)..... 100.0% 931,911,870
Other Assets and Liabilities - net........... 0.0 131,430
----- ------------
Net Assets................................... 100.0% $932,043,300
===== ============
</TABLE>
(a) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices plus accrued interest at July 31,
1999.
* Non-income producing security.
See Combined Notes to Financial Statements.
59
<PAGE>
EVERGREEN
Growth and Income Funds
Statements of Assets and Liabilities
July 31, 1999
<TABLE>
<CAPTION>
Growth Income
Equity and and Small Cap
Blue Chip Income Income Growth Value Utility Value
Fund Fund Fund Fund Fund Fund Fund
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Assets
Identified cost of
securities............ $553,021,869 $120,408,959 $1,311,730,054 $ 974,110,899 $238,287,658 $125,513,046 $726,521,931
Net unrealized gains on
securities............ 118,957,832 27,824,099 495,122,183 91,777,954 8,715,904 40,392,616 205,389,939
- -----------------------------------------------------------------------------------------------------------------------------
Market value of
securities............ 671,979,701 148,233,058 1,806,852,237 1,065,888,853 247,003,562 165,905,662 931,911,870
Cash................... 175 670 2,227 989,612 935 1,241 207
Receivable for
securities sold....... 14,172,403 1,314,018 28,959,642 21,447,634 4,242,711 0 0
Receivable for Fund
shares sold........... 2,769,206 50,318 4,442,279 52,549 418,268 65,699 303,373
Dividends and interest
receivable............ 356,856 312,249 1,481,255 2,602,068 606,477 528,112 1,694,984
Prepaid expenses and
other assets.......... 178,965 79,331 47,522 28,200 47,579 24,937 43,098
- -----------------------------------------------------------------------------------------------------------------------------
Total assets.......... 689,457,306 149,989,644 1,841,785,162 1,091,008,916 252,319,532 166,525,651 933,953,532
- -----------------------------------------------------------------------------------------------------------------------------
Liabilities
Payable for securities
purchased............. 9,193,298 325,449 21,257,822 18,228,135 1,132,944 0 0
Payable for Fund shares
redeemed.............. 589,243 238,815 6,288,450 985,009 567,748 67,223 1,019,576
Payable for securities
on loan............... 37,702,000 3,379,400 0 0 0 0 0
Demand note payable.... 0 0 0 0 256,000 0 0
Advisory fee payable... 305,958 81,290 1,431,515 883,617 220,996 71,294 413,539
Distribution Plan
expenses payable...... 159,686 74,683 372,345 71,301 73,279 40,604 209,908
Due to other related
parties............... 0 0 0 0 0 3,298 19,157
Accrued expenses and
other liabilities..... 67,030 25,977 214,566 181,332 62,531 91,745 248,052
- -----------------------------------------------------------------------------------------------------------------------------
Total liabilities..... 48,017,215 4,125,614 29,564,698 20,349,394 2,313,498 274,164 1,910,232
- -----------------------------------------------------------------------------------------------------------------------------
Net assets............. $641,440,091 $145,864,030 $1,812,220,464 $1,070,659,522 $250,006,034 $166,251,487 $932,043,300
- -----------------------------------------------------------------------------------------------------------------------------
Net assets represented
by
Paid-in capital........ $486,229,963 $ 97,671,804 $1,309,827,535 $ 960,412,031 $265,099,265 $119,102,993 $625,377,422
Undistributed
(overdistributed) net
investment income..... (14,545) 416,456 (55,326) 1,979,953 (11,613) (52,336) 70,300
Accumulated net
realized gains or
losses on securities
and foreign currency
related transactions.. 36,266,841 19,951,671 7,326,496 16,489,594 (23,797,522) 6,808,214 101,205,639
Net unrealized gains on
securities and foreign
currency related
transactions.......... 118,957,832 27,824,099 495,121,759 91,777,944 8,715,904 40,392,616 205,389,939
- -----------------------------------------------------------------------------------------------------------------------------
Total net assets....... $641,440,091 $145,864,030 $1,812,220,464 $1,070,659,522 $250,006,034 $166,251,487 $932,043,300
- -----------------------------------------------------------------------------------------------------------------------------
Net assets consists of
Class A................ $382,499,067 $ 50,213,031 $ 250,231,873 $ 35,713,592 $ 59,451,162 $108,410,505 $463,951,741
Class B................ 255,182,482 78,048,613 891,190,695 185,177,214 110,809,138 54,839,112 331,723,681
Class C................ 2,969,397 16,951,602 36,528,749 2,502,360 22,842,478 878,668 4,635,125
Class Y................ 789,145 650,784 634,269,147 847,266,356 56,903,256 2,123,202 131,732,753
- -----------------------------------------------------------------------------------------------------------------------------
Total net assets....... $641,440,091 $145,864,030 $1,812,220,464 $1,070,659,522 $250,006,034 $166,251,487 $932,043,300
- -----------------------------------------------------------------------------------------------------------------------------
Shares outstanding
Class A................ 11,632,072 2,488,965 8,466,218 1,582,162 3,819,118 8,435,019 18,661,243
Class B................ 7,841,482 3,890,815 30,588,148 8,273,187 7,158,242 4,265,948 13,372,134
Class C................ 91,005 844,081 1,253,612 111,795 1,477,150 68,324 186,994
Class Y................ 24,193 32,352 21,390,083 37,516,674 3,653,589 165,161 5,297,625
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value per
share
Class A................ $ 32.88 $ 20.17 $ 29.56 $ 22.57 $ 15.57 $ 12.85 $ 24.86
- -----------------------------------------------------------------------------------------------------------------------------
Class A--Offering price
(based on sales charge
of 4.75%)............. $ 34.52 $ 21.18 $ 31.03 $ 23.70 $ 16.35 $ 13.49 $ 26.10
- -----------------------------------------------------------------------------------------------------------------------------
Class B................ $ 32.54 $ 20.06 $ 29.14 $ 22.38 $ 15.48 $ 12.86 $ 24.81
- -----------------------------------------------------------------------------------------------------------------------------
Class C................ $ 32.63 $ 20.08 $ 29.14 $ 22.38 $ 15.46 $ 12.86 $ 24.79
- -----------------------------------------------------------------------------------------------------------------------------
Class Y................ $ 32.62 $ 20.12 $ 29.65 $ 22.58 $ 15.57 $ 12.86 $ 24.87
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Combined Notes to Financial Statements.
60
<PAGE>
EVERGREEN
Growth and Income Funds
Statements of Operations
Year Ended July 31, 1999
<TABLE>
<CAPTION>
Growth Income
Equity and and Small Cap
Blue Chip Income Income Growth Value Utility Value
Fund Fund Fund Fund Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income
Dividends (net of
foreign withholding
taxes of $46,022, $16,
$54,515, $870,216, $0,
$46,235 and $148,729
respectively).......... $ 4,722,057 $ 3,747,227 $25,381,863 $48,476,128 $ 7,522,522 $ 6,555,653 $ 16,297,198
Interest................ 1,774,574 713,992 9,034,014 2,457,087 2,325,521 338,159 1,892,638
- ------------------------------------------------------------------------------------------------------------------------
Total investment
income................. 6,496,631 4,461,219 34,415,877 50,933,215 9,848,043 6,893,812 18,189,836
- ------------------------------------------------------------------------------------------------------------------------
Expenses
Advisory fee............ 2,858,644 983,976 17,519,113 8,634,036 2,765,667 745,510 4,710,657
Distribution Plan
expenses............... 2,427,382 1,195,267 10,500,768 551,604 1,575,597 728,002 4,445,323
Administrative services
fees................... 70,063 25,962 0 0 0 38,111 241,139
Transfer agent fee...... 1,292,079 313,604 4,708,386 1,548,294 926,290 258,624 1,703,705
Trustees' fees and
expenses............... 9,418 2,573 39,379 16,895 5,604 2,972 18,800
Printing and postage
expenses............... 37,746 25,807 263,976 42,426 48,966 6,416 44,340
Custodian fee........... 143,810 43,949 546,186 257,376 89,582 40,800 260,422
Registration and filing
fees................... 52,225 31,941 93,004 50,096 40,815 44,299 52,152
Professional fees....... 23,873 18,685 43,206 24,213 18,345 17,842 25,252
Other................... 7,723 4,028 48,092 36,942 31,775 3,518 31,597
- ------------------------------------------------------------------------------------------------------------------------
Total expenses......... 6,922,963 2,645,792 33,762,110 11,161,882 5,502,641 1,886,094 11,533,387
Less: Fee credits....... (20,715) (7,002) (86,188) (56,615) (29,582) (8,298) (39,780)
- ------------------------------------------------------------------------------------------------------------------------
Net expenses........... 6,902,248 2,638,790 33,675,922 11,105,267 5,473,059 1,877,796 11,493,607
- ------------------------------------------------------------------------------------------------------------------------
Net investment income
or (loss)............. (405,617) 1,822,429 739,955 39,827,948 4,374,984 5,016,016 6,696,229
- ------------------------------------------------------------------------------------------------------------------------
Net realized and
unrealized gains or
losses on securities
and foreign currency
related transactions
Net realized gains or
losses on:
Securities............. 37,712,909 23,440,204 9,259,355 35,499,606 (23,967,030) 6,752,256 118,989,239
Foreign currency
related transactions.. 0 0 0 (307,874) 0 0 0
- ------------------------------------------------------------------------------------------------------------------------
Net realized gains or
losses on securities
and foreign currency
related transactions.. 37,712,909 23,440,204 9,259,355 35,191,732 (23,967,030) 6,752,256 118,989,239
- ------------------------------------------------------------------------------------------------------------------------
Net change in
unrealized gains or
losses on securities
and foreign currency
related transactions.. 33,829,162 (14,578,770) 65,034,177 23,905,207 19,057,835 23,219,707 (10,264,625)
- ------------------------------------------------------------------------------------------------------------------------
Net realized and
unrealized gains or
losses on securities
and foreign currency
related transactions.. 71,542,071 8,861,434 74,293,532 59,096,939 (4,909,195) 29,971,963 108,724,614
- ------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
resulting from
operations............ $71,136,454 $10,683,863 $75,033,487 $98,924,887 $ (534,211) $34,987,979 $115,420,843
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Combined Notes to Financial Statements.
61
<PAGE>
EVERGREEN
Growth and Income Funds
Statements of Changes in Net Assets
Year Ended July 31, 1999
<TABLE>
<CAPTION>
Equity Growth and Income and Small Cap
Blue Chip Income Income Growth Value Utility Value
Fund Fund Fund Fund Fund Fund Fund
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Operations
Net investment
income.......... $ (405,617) $ 1,822,429 $ 739,955 $ 39,827,948 $ 4,374,984 $ 5,016,016 $ 6,696,229
Net realized
gains or losses
on securities
and foreign
currency related
transactions.... 37,712,909 23,440,204 9,259,355 35,191,732 (23,967,030) 6,752,256 118,989,239
Net change in
unrealized gains
or losses on
securities and
foreign currency
related
transactions.... 33,829,162 (14,578,770) 65,034,177 23,905,207 19,057,835 23,219,707 (10,264,625)
- -----------------------------------------------------------------------------------------------------------------------------
Net increase
(decrease) in
net assets
resulting from
operations..... 71,136,454 10,683,863 75,033,487 98,924,887 (534,211) 34,987,979 115,420,843
- -----------------------------------------------------------------------------------------------------------------------------
Distributions to
shareholders
from
Net investment
income
Class A......... (302,117) (740,343) (618,275) (590,960) (1,241,862) (3,518,061) (4,093,423)
Class B......... 0 (652,879) 0 (1,904,614) (1,599,604) (1,359,833) (679,263)
Class C......... 0 (138,191) 0 (40,664) (319,899) (16,980) (9,129)
Class Y......... 0 (5,052) (2,594,824) (38,238,097) (1,709,875) (101,181) (1,708,800)
Net realized
gains
Class A......... (22,171,083) (6,542,911) (8,009,500) (1,297,466) (792,880) (10,191,078) (2,706,113)
Class B......... (10,585,999) (12,308,775) (27,000,584) (4,982,320) (1,601,327) (4,842,643) (1,893,542)
Class C......... (50,576) (2,556,957) (1,332,807) (108,434) (315,684) (52,067) (26,406)
Class Y......... 0 (19,678) (20,777,901) (79,113,403) (998,252) (304,419) (926,882)
- -----------------------------------------------------------------------------------------------------------------------------
Total
distributions
to
shareholders... (33,109,775) (22,964,786) (60,333,891) (126,275,958) (8,579,383) (20,386,262) (12,043,558)
- -----------------------------------------------------------------------------------------------------------------------------
Capital share
transactions
Proceeds from
shares sold..... 414,184,932 30,188,056 386,163,830 30,217,265 205,428,609 17,451,359 66,555,976
Payment for
shares
redeemed........ (243,648,933) (72,875,118) (792,989,619) (182,203,597) (260,520,742) (24,384,302) (239,124,718)
Net asset value
of shares issued
in reinvestment
of
distributions... 29,469,348 21,454,983 57,025,779 114,061,954 7,125,678 17,326,400 10,412,391
Net asset value
of shares issued
in acquisition.. 0 0 0 185,281,144 0 0 0
- -----------------------------------------------------------------------------------------------------------------------------
Net increase
(decrease) in
net assets
resulting from
capital share
transactions... 200,005,347 (21,232,079) (349,800,010) 147,356,766 (47,966,455) 10,393,457 (162,156,351)
- -----------------------------------------------------------------------------------------------------------------------------
Total increase
(decrease) in
net assets.... 238,032,026 (33,513,002) (335,100,414) 120,005,695 (57,080,049) 24,995,174 (58,779,066)
- -----------------------------------------------------------------------------------------------------------------------------
Net assets
Beginning of
year............ 403,408,065 179,377,032 2,147,320,878 950,653,827 307,086,083 141,256,313 990,822,366
- -----------------------------------------------------------------------------------------------------------------------------
End of year..... $ 641,440,091 $145,864,030 $1,812,220,464 $1,070,659,522 $ 250,006,034 $166,251,487 $ 932,043,300
- -----------------------------------------------------------------------------------------------------------------------------
Undistributed
(overdistributed)
net investment
income.......... $ (14,545) $ 416,456 $ (55,326) $ 1,979,953 $ (11,613) $ (52,336) $ 70,300
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Combined Notes to Financial Statements.
62
<PAGE>
EVERGREEN
Growth and Income Funds
Statements of Changes in Net Assets
Year Ended July 31, 1998
<TABLE>
<CAPTION>
Equity Growth and Income and Small Cap
Blue Chip Income Income Growth Value Utility Value
Fund(a) Fund Fund Fund Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Operations
Net investment
income............ $ 679,874 $ 822,896 $ 6,817,383 $ 43,781,531 $ 3,555,813 $ 4,733,754 $ 15,139,414
Net realized gains
on securities and
foreign currency
related
transactions...... 45,182,166 21,844,245 89,769,570 88,075,454 4,125,256 16,449,359 382,225,398
Net change in
unrealized gains
or losses on
securities and
foreign currency
related
transactions...... 18,537,520 (1,065,798) 54,312,938 (54,214,289) (17,882,408) 197,673 (290,896,507)
- ------------------------------------------------------------------------------------------------------------------------------
Net increase
(decrease) in net
assets resulting
from operations.. 64,399,560 21,601,343 150,899,891 77,642,696 (10,201,339) 21,380,786 106,468,305
- ------------------------------------------------------------------------------------------------------------------------------
Distributions to
shareholders from
Net investment
income............
Class A........... (572,879) (457,652) (1,133,476) (582,857) (585,054) (3,623,474) (4,928,756)
Class B........... (753,205) (258,225) 0 (1,826,984) (875,495) (1,224,827) (1,461,990)
Class C........... (10) (55,586) 0 (40,251) (178,326) (12,408) (15,608)
Class Y........... 0 (895) (5,146,565) (41,136,147) (1,701,966) (71,410) (11,332,854)
Net realized gains
Class A........... 0 (3,551,251) (7,164,362) (827,257) (213,842) (8,654,842) (79,220,878)
Class B........... (51,043,219) (7,082,118) (23,729,561) (3,160,159) (507,582) (3,545,873) (55,199,824)
Class C........... 0 (1,542,452) (1,087,731) (63,045) (100,773) (34,234) (713,832)
Class Y........... 0 (3,495) (23,937,007) (58,431,404) (758,969) (166,884) (82,980,185)
- ------------------------------------------------------------------------------------------------------------------------------
Total
distributions to
shareholders..... (52,369,313) (12,951,674) (62,198,702) (106,068,104) (4,922,007) (17,333,952) (235,853,927)
- ------------------------------------------------------------------------------------------------------------------------------
Capital share
transactions
Proceeds from
shares sold....... 114,811,777 40,160,932 982,241,448 36,821,129 324,098,172 27,354,893 209,984,754
Payment for shares
redeemed.......... (99,812,547) (44,846,695) (402,984,465) (109,733,628) (64,094,835) (24,559,873) (1,216,417,479)
Net asset value of
shares issued in
reinvestment of
distributions..... 45,932,435 12,075,357 54,748,017 95,522,782 3,360,906 4,031,786 202,246,215
Net asset value of
shares issued in
acquisition....... 17,510,672 0 75,922,310 0 0 0 104,172,578
- ------------------------------------------------------------------------------------------------------------------------------
Net increase
(decrease) in net
assets resulting
from capital
share
transactions..... 78,442,337 7,389,594 709,927,310 22,610,283 263,364,243 6,826,806 (700,013,932)
- ------------------------------------------------------------------------------------------------------------------------------
Total increase
(decrease) in
net assets...... 90,472,584 16,039,263 798,628,499 (5,815,125) 248,240,897 10,873,640 (829,399,554)
Net assets
Beginning of
period............ 312,935,481 163,337,769 1,348,692,379 956,468,952 58,845,186 130,382,673 1,820,221,920
- ------------------------------------------------------------------------------------------------------------------------------
End of period...... $403,408,065 $179,377,032 $2,147,320,878 $ 950,653,827 $307,086,083 $141,256,313 $ 990,822,366
- ------------------------------------------------------------------------------------------------------------------------------
Undistributed
(overdistributed)
net investment
income............ $ (14,966) $ 430,969 $ 360,888 $ 13,459,757 $ 173,362 $ (7,868) $ (82,792)
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) For the eleven months ended July 31, 1998. The Fund changed its fiscal year
end from August 31 to July 31, effective July 31, 1998.
See Combined Notes to Financial Statements.
63
<PAGE>
EVERGREEN
Growth and Income Funds
Statement of Changes in Net Assets
Year Ended August 31, 1997
<TABLE>
<CAPTION>
Blue Chip
Fund
- --------------------------------------------------------------------------------
<S> <C>
Operations
Net investment income........................................... $ 1,381,103
Net realized gains or losses on securities and foreign currency
related transactions........................................... 42,377,987
Net change in unrealized gains or losses on securities and
foreign currency related transactions.......................... 35,362,301
- --------------------------------------------------------------------------------
Net increase in net assets resulting from operations........... 79,121,391
- --------------------------------------------------------------------------------
Distributions to shareholders from
Net investment income
Class B........................................................ (2,021,947)
From net realized gain
Class B........................................................ (30,039,258)
- --------------------------------------------------------------------------------
Total distributions to shareholders............................ (32,061,205)
- --------------------------------------------------------------------------------
Capital share transactions
Proceeds from shares sold....................................... 103,353,377
Payment for shares redeemed..................................... (89,890,447)
Net asset value of shares issued in reinvestment of
distributions.................................................. 27,593,101
- --------------------------------------------------------------------------------
Net increase in net assets resulting from capital share
transactions.................................................. 41,056,031
- --------------------------------------------------------------------------------
Total increase in net assets.................................. 88,116,217
Net assets
Beginning of period............................................. 224,819,264
- --------------------------------------------------------------------------------
End of period................................................... $312,935,481
- --------------------------------------------------------------------------------
Undistributed net investment income............................. $ 16,188
</TABLE>
- --------------------------------------------------------------------------------
See Combined Notes to Financial Statements.
64
<PAGE>
Combined Notes to Financial Statements
1. ORGANIZATION
The Evergreen Growth and Income Funds consist of Evergreen Blue Chip Fund
("Blue Chip Fund"), Evergreen Equity Income Fund ("Equity Income Fund") (for-
merly Evergreen Fund for Total Return), Evergreen Growth and Income Fund
("Growth and Income Fund"), Evergreen Income and Growth Fund ("Income and
Growth Fund"), Evergreen Small Cap Value Fund ("Small Cap Value Fund") (for-
merly Evergreen Small Cap Equity Income Fund), Evergreen Utility Fund ("Utility
Fund") and Evergreen Value Fund ("Value 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 retain their existing conversion
rights. Class C shares are sold subject to a contingent deferred sales charge
payable on shares redeemed within one year after the month of purchase. Class Y
shares are sold at net asset value and are not subject to contingent deferred
sales charges or distribution fees. Class Y shares are sold only to investment
advisory clients of First Union Corporation ("First Union") and its affiliates,
certain institutional investors or Class Y shareholders of record of certain
other funds managed by First Union and its affiliates as of December 30, 1994.
2. 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, U.S. government obligations, mortgage and other asset-backed securities
and other fixed-income securities are valued at prices provided by an indepen-
dent 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 relationships between similar se-
curities which are generally recognized by institutional traders. Securities
for which valuations are not readily available from an independent pricing
service (including restricted securities) are valued at fair value as deter-
mined in good faith according to procedures established by the Board of Trust-
ees. Short-term investments with remaining maturities of 60 days or less are
carried at amortized cost, which approximates market value.
B. Repurchase Agreements
Each Fund may invest in repurchase agreements. Securities pledged as collateral
for repurchase agreements are held in a segregated account by the custodian on
the Fund's behalf. Each Fund monitors the adequacy of the collateral daily and
will require the seller to provide additional collateral in the event the mar-
ket value of the securities pledged falls below the carrying value of the re-
purchase agreement, including accrued interest. Each Fund will only enter into
repurchase agreements with banks and other financial institutions, which are
deemed by the investment advisor to be creditworthy pursuant to guidelines es-
tablished by the Board of Trustees.
65
<PAGE>
Combined Notes to Financial Statements(continued)
Pursuant to an exemptive order issued by the Securities and Exchange Commission
Blue Chip Fund and Equity Income Fund, along with certain other funds managed
by Evergreen Investment Management Company ("EIMC"), a subsidiary of First
Union, may transfer uninvested cash balances into a joint trading account.
These balances are invested in one or more 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 investment securities, other assets and liabilities at the
daily rate of exchange; purchases and sales of investment securities and income
and expenses at the rate of exchange prevailing on the respective dates of such
transactions. Net unrealized foreign exchange gains or losses resulting from
changes in foreign currency exchange rates are a component of net unrealized
gains or losses on securities and foreign currency related transactions. Net
realized foreign currency gains or losses on foreign currency related transac-
tions include foreign currency gains and losses between trade date and settle-
ment date on investment securities transactions, foreign currency related
transactions and the difference between the amounts of interest and dividends
recorded on the books of the Funds and the amounts actually received. The por-
tion of foreign currency gains or losses related to fluctuations in exchange
rates between the initial purchase trade date and subsequent sale trade date is
included in realized gains or losses on securities.
D. Forward Foreign Currency Exchange Contracts
The Funds may enter into forward foreign currency exchange contracts ("forward
contracts") to settle portfolio purchases and sales of securities denominated
in a foreign currency and to hedge certain foreign currency assets or liabili-
ties. Forward contracts are recorded at the forward rate and marked-to-market
daily. Realized gains and losses arising from such transactions are included in
net realized gains or losses on foreign currency related transactions. The
Funds bear the risk of an unfavorable change in the foreign currency exchange
rate underlying the forward contract and is subject to the credit risk that the
other party will not fulfill their obligations under the contract. Forward con-
tracts involve elements of market risk in excess of the amount reflected in the
Statements of Assets and Liabilities.
E. Securities Lending
In order to generate income and to offset expenses, the Funds may lend portfo-
lio securities to brokers, dealers and other financial organizations. The
Fund's investment advisor will monitor the creditworthiness of such borrowers.
Loans of securities may not exceed 33 1/3% of a Fund's total assets and will be
collateralized by cash, letters of credit or U.S. Government securities that
are maintained at all times in an amount equal to at least 100% of the current
market value of the loaned securities, including accrued interest. The Fund
monitors the adequacy of the collateral daily and will require the borrower to
provide additional collateral in the event 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.
F. Security Transactions and Investment Income
Securities transactions are accounted for no later than one business day after
the trade date. Realized gains and losses are computed on the identified cost
basis. Interest income is recorded on the accrual basis and includes accretion
of discounts and amortization of premiums. Dividend income is recorded on the
ex-dividend date or in the case of some foreign securities, on the date there-
after when the Fund is made aware of the dividend. Foreign income and capital
gains realized on some foreign securities may be subject to foreign withholding
taxes, which are accrued as applicable.
66
<PAGE>
Combined Notes to Financial Statements(continued)
G. Federal Taxes
The Funds have qualified and intend to continue to qualify as regulated invest-
ment companies under the Internal Revenue Code of 1986, as amended (the
"Code"). Thus, the Funds will not incur any federal income tax liability since
they are expected to distribute all of their net investment company taxable in-
come and net capital gains, if any, to their shareholders. The Funds also in-
tend to avoid any excise tax liability by making the required distributions un-
der the Code. Accordingly, no provision for federal taxes is required. To the
extent that realized capital gains can be offset by capital loss carryforwards,
it is each Fund's policy not to distribute such gains.
H. Distributions
Distributions from net investment income for the Funds, except for the Utility
Fund, are declared and paid quarterly. Distributions from net investment income
for Utility Fund are declared and paid monthly. Distributions from net realized
capital gains, if any, are paid at least annually. Distributions to sharehold-
ers are recorded at the close of business on the ex-dividend date.
Income and capital gains distributions to shareholders are determined in accor-
dance with income tax regulations, which may differ from generally accepted ac-
counting principles. The significant differences between financial statements
amounts available for distribution and distributions made in accordance with
income tax regulations are primarily due to differing treatment for certain
distributions received from real estate investment trusts, net realized foreign
currency gains or losses, certain realized losses on securities re-purchased
and for Value Fund, distributions made in connections with shareholder redemp-
tions.
I. 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.
J. Organization Expenses
Organization expenses for Small Cap Value Fund are amortized over a five-year
period on a straight-line basis. In the event any of the initial shares of the
Fund are redeemed by any holder during the five-year amortization period, re-
demption proceeds will be reduced by any unamortized organization expenses in
the same proportion as the number of initial shares being redeemed bears to the
number of initial shares outstanding at the time of the redemption. As of July
31, 1999 all organization expenses for Small Cap Value Fund have been fully am-
ortized.
3. INVESTMENT ADVISORY AGREEMENT AND OTHER AFFILIATED TRANSACTIONS
EIMC serves as the investment advisor for Blue Chip Fund and Equity Income
Fund. In return for providing investment advisory services to Blue Chip Fund
and Equity Income Fund, the Funds pay EIMC an advisory fee that is calculated
daily and paid monthly. The advisory fee for Blue Chip Fund is determined by
applying percentage rates, starting at 0.70% and declining to 0.35% per annum
as net assets increase, to the average daily net assets of the Fund. The advi-
sory fee for Equity Income Fund is calculated at an annual rate of 1.50% of Eq-
uity Income Fund's gross investment income plus an amount determined by apply-
ing 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.
67
<PAGE>
Combined Notes to Financial Statements(continued)
Evergreen Asset Management Corp. ("EAMC"), a wholly-owned subsidiary of First
Union, serves as the investment advisor to Growth and Income Fund, Income and
Growth Fund and Small Cap Value Fund and is paid an advisory fee that is calcu-
lated daily and paid monthly based on the Fund's average daily net assets, in
accordance with the following schedule:
<TABLE>
<S> <C>
First $750 million......................................... 1.00%
Next $250 million.......................................... 0.90%
Over $1 billion............................................ 0.80%
</TABLE>
Lieber & Company, an affiliate of First Union, provides investment sub-advisory
services to Growth and Income Fund, Income and Growth Fund and Small Cap Value
Fund and also provides brokerage services with respect to substantially all se-
curity transactions of the Funds effected on the New York or American Stock Ex-
changes. For the year ended July 31, 1999, Growth and Income Fund, Income and
Growth Fund and Small Cap Value Fund incurred broker commissions of $2,145,290,
$1,734,853, and $322,591, respectively, with Lieber & Company. Lieber & Company
is reimbursed by EAMC for providing investment sub-advisory services at no ad-
ditional expense to the Funds.
Evergreen Investment Management ("EIM"), formerly Capital Management Group, a
division of First Union National Bank ("FUNB"), serves as the investment advi-
sor to Utility Fund and Value Fund and is paid an advisory fee that is calcu-
lated daily and paid monthly at an annual rate of 0.50% of the Fund's average
daily net assets.
Evergreen Investment Services ("EIS"), a subsidiary of First Union, is the ad-
ministrator and The BISYS Group, Inc. ("BISYS") is 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 affiliated Trustees receive no compensa-
tion directly from the Funds.
The administrator and sub-administrator for Utility Fund and Value Fund are en-
titled to an annual fee based on the average daily net assets of the funds ad-
ministered by EIS for which First Union or its investment advisory subsidiaries
are also the investment advisors. The administration fee is calculated by ap-
plying percentage rates, which start at 0.05% and decline to 0.01% per annum as
net assets increase, to the average daily net assets of the Fund. The sub-ad-
ministration fee is calculated by applying percentage rates, which start at
0.01% and decline to 0.004% per annum as net assets increase, to the average
daily net assets of the Fund.
For the year ended July 31, 1999, Blue Chip Fund and Equity Income Fund reim-
bursed EIMC for certain accounting and administrative expenses amounting to
$70,063 and $25,962, respectively. For Growth and Income Fund, Income and
Growth Fund and Small Cap Value Fund, the administration and sub-administration
fee is paid by the investment advisor and is not a Fund expense. For the year
ended July 31, 1999, Utility Fund and Value Fund paid or accrued to EIS and
BISYS the following amounts for administrative and sub-administrative services:
<TABLE>
<CAPTION>
Administration Sub-administration
Fee Fee
------------------------------
<S> <C> <C>
Utility Fund.................. $ 30,350 $ 7,761
Value Fund.................... 192,070 49,069
</TABLE>
Evergreen Service Company ("ESC"), an indirect, wholly-owned subsidiary of
First Union, serves as the transfer and dividend disbursing agent for the
Funds.
4. 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
68
<PAGE>
Combined Notes to Financial Statements(continued)
and service fees to broker-dealers who sell shares of the Fund, are paid by the
Fund through "Distribution Plan expenses". Each class, except Class Y, cur-
rently pays a service fee equal to 0.25% of the average daily net asset of the
class. Class B and Class C also pay distribution fees equal to 0.75% of the av-
erage daily net assets of each class. Distribution Plan expenses are calculated
daily and paid at least quarterly.
During the year ended July 31, 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>
Blue Chip Fund.................. $ 774,362 $1,637,741 $ 15,279
Equity Income Fund.............. 127,494 882,105 185,668
Growth and Income Fund.......... 676,478 9,384,697 439,593
Income and Growth Fund.......... 34,283 506,538 10,783
Small Cap Value Fund............ 149,687 1,185,976 239,934
Utility Fund.................... 245,543 476,331 6,128
Value Fund...................... 1,154,951 3,244,968 45,404
</TABLE>
With respect to Class B and Class C shares, the principal underwriter may pay
distribution fees greater than the allowable annual amounts each Fund is per-
mitted to pay under the Distribution Plans.
Each of the Distribution Plans may be terminated at any time by vote of the In-
dependent Trustees or by vote of a majority of the outstanding voting shares of
the respective class.
5. REORGANIZATION OF EVERGREEN VALUE FUND
On January 21, 1998, Value Fund, Class Y shares, executed a redemption in-kind
transaction of $793,367,277. This transaction resulted in the liquidation of
substantially all of the net assets of Value Fund, Class Y shares. In turn, the
assets were transferred to Evergreen Select Diversified Value Fund Class I
shares, an institutional balanced fund.
To fund this redemption, investment securities, excluding cash and cash equiva-
lents, with a market value of $774,879,156, including unrealized appreciation
of $221,367,103, were transferred. Additionally, the Value Fund used cash and
cash equivalents of $23,488,121 to complete the transaction. The gains realized
from this sale of securities are not taxable to the Value Fund and are not re-
quired to be distributed for federal income tax purposes.
6. ACQUISITIONS
Effective on the close of business on February 27, 1998, Blue Chip Fund ac-
quired substantially all of the assets and assumed certain liabilities of
Blanchard Growth & Income Fund, an open-end management investment company reg-
istered under the 1940 Act, in a tax-free exchange of Class A shares of Blue
Chip Fund.
Effective on the close of business on February 27, 1998, Growth and Income Fund
acquired substantially all of the assets and assumed certain liabilities of
Virtus Style Manager Fund, an open-end management investment company registered
under the 1940 Act, in an exchange of Class Y shares of Growth and Income.
Effective on the close of business on February 27, 1998, Value Fund acquired
substantially all of the assets and assumed certain liabilities of Virtus Style
Manager; Large Cap Fund, an open-end management investment company registered
under the 1940 Act, in an exchange of Class A and Class Y shares of Value Fund.
Effective July 31, 1999, Income and Growth Fund acquired substantially all of
the assets and assumed certain liabilities of Evergreen American Retirement
Fund, an open-end management investment company registered under the 1940 Act
in an exchange of Class A, Class B, Class C and Class Y shares of Income and
Growth Fund.
69
<PAGE>
Combined Notes to Financial Statements(continued)
These conversions and acquisitions were accomplished by a tax-free exchange of
the respective shares of each Fund. The value of net assets acquired, number of
shares issued, unrealized appreciation acquired and the aggregate net assets of
each Fund immediately after the acquisition were as follows:
<TABLE>
<CAPTION>
Value of Net Number of Unrealized Net Assets
Acquiring Fund Acquired Fund Assets Acquired Shares Issued Appreciation After Acquisition
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Blue Chip Fund.......... Blanchard Growth & Income Fund $ 17,510,672 596,231 $ 5,643,636 $ 365,442,145
Growth and Income Fund.. Virtus Style Manager Fund 75,922,310 2,555,807 10,049,313 1,945,327,504
Value Fund.............. Virtus Style Manager; Large Cap Fund 104,172,578 4,034,510 28,824,982 1,097,437,360
Income and Growth Fund.. Evergreen American Retirement Fund 185,281,144 8,258,910 20,212,515 1,070,659,522
</TABLE>
7. CAPITAL SHARE TRANSACTIONS
The Funds have an unlimited number of shares of beneficial interest with $0.001
par value authorized. Shares of beneficial interest of the Funds are currently
divided into Class A, Class B, Class C and Class Y. Transactions in shares of
the Funds were as follows:
Blue Chip Fund
<TABLE>
<CAPTION>
Year Ended July 31,
----------------------------------------------------
1999 1998 (a)
------------------------- -------------------------
Shares Amount Shares Amount
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A
Shares sold............. 7,069,269 $ 215,936,462 812,276 $ 24,596,278
Automatic conversion of
Class B shares to Class
A shares............... 0 0 9,140,449 250,374,069
Shares redeemed......... (5,479,684) (162,273,843) (1,203,287) (36,027,532)
Shares issued in
reinvestment of
distributions.......... 682,121 19,382,250 14,697 447,340
Shares issued in
acquisition of
Blanchard Growth &
Income Fund............ 0 0 596,231 17,510,672
- -------------------------------------------------------------------------------
Net increase............ 2,271,706 73,044,869 9,360,366 256,900,827
- -------------------------------------------------------------------------------
Class B
Shares sold............. 6,218,762 192,571,481 3,020,854 89,396,767
Automatic conversion of
Class B shares to Class
A shares............... 0 0 (9,140,449) (250,374,069)
Shares redeemed......... (2,617,336) (78,544,225) (2,178,914) (63,756,605)
Shares issued in
reinvestment of
distributions.......... 355,147 10,036,524 1,678,649 45,485,085
- -------------------------------------------------------------------------------
Net increase
(decrease)............. 3,956,573 124,063,780 (6,619,860) (179,248,822)
- -------------------------------------------------------------------------------
Class C
Shares sold............. 157,200 4,882,919 26,608 818,732
Shares redeemed......... (93,639) (2,830,715) (949) (28,410)
Shares issued in
reinvestment of
distributions.......... 1,785 50,574 0 10
- -------------------------------------------------------------------------------
Net increase............ 65,346 2,102,778 25,659 790,332
- -------------------------------------------------------------------------------
Class Y (b)
Shares sold............. 24,198 794,070 0 0
Shares redeemed......... (5) (150) 0 0
- -------------------------------------------------------------------------------
Net increase............ 24,193 793,920 0 0
- -------------------------------------------------------------------------------
Net increase............ $ 200,005,347 $ 78,442,337
</TABLE>
- --------------------------------------------------------------------------------
(a) For the eleven months ended July 31, 1998. The Fund changed its fiscal year
end from August 31 to July 31, effective July 31, 1998.
(b) For the period from April 30, 1999 (commencement of class operations) to
July 31, 1999.
70
<PAGE>
Combined Notes to Financial Statements(continued)
Equity Income Fund
<TABLE>
<CAPTION>
Year Ended July 31,
--------------------------------------------------
1999 1998
------------------------ ------------------------
Shares Amount Shares Amount
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A
Shares sold............... 377,792 $ 7,479,412 405,327 $ 8,477,778
Automatic conversion of
Class B shares to Class A
shares................... 66,574 1,275,463 0 0
Shares redeemed........... (751,644) (14,848,362) (476,275) (9,979,937)
Shares issued in
reinvestment of
distributions............ 363,322 6,893,908 192,513 3,761,047
- -------------------------------------------------------------------------------
Net increase.............. 56,044 800,421 121,565 2,258,888
- -------------------------------------------------------------------------------
Class B
Shares sold............... 906,121 18,055,614 1,312,799 27,194,052
Automatic conversion of
Class B shares to Class A
shares................... (66,948) (1,275,463) 0 0
Shares redeemed........... (2,490,795) (48,904,031) (1,328,176) (27,515,826)
Shares issued in
reinvestment of
distributions............ 637,607 12,007,710 348,818 6,752,535
- -------------------------------------------------------------------------------
Net increase (decrease)... (1,014,015) (20,116,170) 333,441 6,430,761
- -------------------------------------------------------------------------------
Class C
Shares sold............... 191,619 3,838,714 212,115 4,372,780
Shares redeemed........... (447,839) (8,832,781) (349,166) (7,245,174)
Shares issued in
reinvestment of
distributions............ 134,147 2,529,177 80,168 1,557,317
- -------------------------------------------------------------------------------
Net decrease.............. (122,073) (2,464,890) (56,883) (1,315,077)
- -------------------------------------------------------------------------------
Class Y
Shares sold............... 40,395 814,316 5,560 116,322
Shares redeemed........... (14,451) (289,944) (5,138) (105,758)
Shares issued in
reinvestment of
distributions............ 1,271 24,188 228 4,458
- -------------------------------------------------------------------------------
Net increase.............. 27,215 548,560 650 15,022
- -------------------------------------------------------------------------------
Net increase (decrease)... $(21,232,079) $ 7,389,594
</TABLE>
- --------------------------------------------------------------------------------
Growth and Income Fund
<TABLE>
<CAPTION>
Year Ended July 31,
----------------------------------------------------
1999 1998
------------------------- -------------------------
Shares Amount Shares Amount
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A
Shares sold............. 6,356,759 $ 181,231,854 7,300,804 $ 214,673,895
Automatic conversion of
Class B shares to Class
A shares............... 71,639 2,052,789 0 0
Shares redeemed......... (8,431,174) (239,858,978) (3,520,816) (103,702,934)
Shares issued in
reinvestment of
distributions.......... 300,493 8,412,371 287,118 8,071,240
- -------------------------------------------------------------------------------
Net increase
(decrease)............. (1,702,283) (48,161,964) 4,067,106 119,042,201
- -------------------------------------------------------------------------------
Class B
Shares sold............. 4,273,030 116,938,483 16,476,196 481,475,327
Automatic conversion of
Class B shares to Class
A shares............... (72,390) (2,052,789) 0 0
Shares redeemed......... (9,163,377) (254,977,395) (2,725,060) (79,579,083)
Shares issued in
reinvestment of
distributions.......... 945,090 26,226,276 837,176 23,198,143
- -------------------------------------------------------------------------------
Net increase
(decrease)............. (4,017,647) (113,865,425) 14,588,312 425,094,387
- -------------------------------------------------------------------------------
Class C
Shares sold............. 414,303 11,348,877 1,131,563 32,986,181
Shares redeemed......... (942,556) (26,271,690) (317,773) (9,241,480)
Shares issued in
reinvestment of
distributions.......... 45,443 1,261,465 38,010 1,053,643
- -------------------------------------------------------------------------------
Net increase
(decrease)............. (482,810) (13,661,348) 851,800 24,798,344
- -------------------------------------------------------------------------------
Class Y
Shares sold............. 2,753,486 76,644,616 8,658,868 253,053,137
Shares redeemed......... (9,565,395) (271,881,556) (7,135,642) (210,408,060)
Shares issued in
reinvestment of
distributions.......... 753,230 21,125,667 797,581 22,424,991
Shares issued in
acquisition of Virtus
Style Manager Fund..... 0 0 2,555,807 75,922,310
- -------------------------------------------------------------------------------
Net increase
(decrease)............. (6,058,679) (174,111,273) 4,876,614 140,992,378
- -------------------------------------------------------------------------------
Net increase
(decrease)............. $(349,800,010) $ 709,927,310
</TABLE>
- --------------------------------------------------------------------------------
71
<PAGE>
Combined Notes to Financial Statements(continued)
Income and Growth Fund
<TABLE>
<CAPTION>
Year Ended July 31,
---------------------------------------------------
1999 1998
------------------------- ------------------------
Shares Amount Shares Amount
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A
Shares sold.............. 546,531 $ 12,209,031 204,121 $ 4,959,183
Shares redeemed.......... (692,292) (15,388,197) (112,612) (2,739,976)
Shares issued in
reinvestment of
distributions........... 84,216 1,766,406 56,318 1,325,926
Shares issued in
acquisition of Evergreen
American Retirement
Fund.................... 996,586 22,495,315 0 0
- -------------------------------------------------------------------------------
Net increase............. 935,041 21,082,555 147,827 3,545,133
- -------------------------------------------------------------------------------
Class B
Shares sold.............. 267,996 5,756,610 633,299 15,295,755
Shares redeemed.......... (684,457) (14,490,566) (310,711) (7,455,874)
Shares issued in
reinvestment of
distributions........... 307,396 6,393,524 198,183 4,626,554
Shares issued in
acquisition of Evergreen
American Retirement
Fund.................... 6,014,738 134,624,702 0 0
- -------------------------------------------------------------------------------
Net increase............. 5,905,673 132,284,270 520,771 12,466,435
- -------------------------------------------------------------------------------
Class C
Shares sold.............. 8,976 194,095 27,805 674,067
Shares redeemed.......... (24,103) (510,097) (16,763) (402,792)
Shares issued in
reinvestment of
distributions........... 6,072 126,280 3,708 86,620
Shares issued in
acquisition of Evergreen
American Retirement
Fund.................... 66,207 1,481,914 0 0
- -------------------------------------------------------------------------------
Net increase............. 57,152 1,292,192 14,750 357,895
- -------------------------------------------------------------------------------
Class Y
Shares sold.............. 568,224 12,057,529 641,797 15,892,124
Shares redeemed.......... (7,163,498) (151,814,737) (4,066,667) (99,134,986)
Shares issued in
reinvestment of
distributions........... 5,039,388 105,775,744 3,795,361 89,483,682
Shares issued in
acquisition of Evergreen
American Retirement
Fund.................... 1,181,379 26,679,213 0 0
- -------------------------------------------------------------------------------
Net increase (decrease).. (374,507) (7,302,251) 370,491 6,240,820
- -------------------------------------------------------------------------------
Net increase............. $ 147,356,766 $ 22,610,283
</TABLE>
- --------------------------------------------------------------------------------
Small Cap Value Fund
<TABLE>
<CAPTION>
Year Ended July 31,
---------------------------------------------------
1999 1998
------------------------- ------------------------
Shares Amount Shares Amount
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A
Shares sold.............. 10,088,863 $ 146,506,778 4,328,382 $ 72,341,164
Automatic conversion of
Class B shares to Class
A shares................ 122,150 1,811,086 0 0
Shares redeemed.......... (9,965,619) (143,998,401) (1,207,491) (20,046,565)
Shares issued in
reinvestment of
distributions........... 136,847 1,949,647 45,725 753,748
- -------------------------------------------------------------------------------
Net increase............. 382,241 6,269,110 3,166,616 53,048,347
- -------------------------------------------------------------------------------
Class B
Shares sold.............. 2,288,743 33,166,258 8,426,642 140,304,860
Automatic conversion of
Class B shares to Class
A shares................ (122,803) (1,811,086) 0 0
Shares redeemed.......... (3,528,826) (50,084,066) (803,676) (13,366,175)
Shares issued in
reinvestment of
distributions........... 213,282 3,057,499 79,883 1,323,369
- -------------------------------------------------------------------------------
Net increase (decrease).. (1,149,604) (15,671,395) 7,702,849 128,262,054
- -------------------------------------------------------------------------------
Class C
Shares sold.............. 709,408 10,225,143 1,760,785 29,361,569
Shares redeemed.......... (947,075) (13,384,026) (281,072) (4,699,621)
Shares issued in
reinvestment of
distributions........... 41,741 597,766 16,111 266,637
- -------------------------------------------------------------------------------
Net increase (decrease).. (195,926) (2,561,117) 1,495,824 24,928,585
- -------------------------------------------------------------------------------
Class Y
Shares sold.............. 1,069,945 15,530,430 4,923,790 82,090,579
Shares redeemed.......... (3,645,558) (53,054,249) (1,558,339) (25,982,474)
Shares issued in
reinvestment of
distributions........... 105,065 1,520,766 61,107 1,017,152
- -------------------------------------------------------------------------------
Net increase (decrease).. (2,470,548) (36,003,053) 3,426,558 57,125,257
- -------------------------------------------------------------------------------
Net increase (decrease).. $ (47,966,455) $263,364,243
</TABLE>
- --------------------------------------------------------------------------------
72
<PAGE>
Combined Notes to Financial Statements(continued)
Utility Fund
<TABLE>
<CAPTION>
Year Ended July 31,
--------------------------------------------------
1999 1998
------------------------ ------------------------
Shares Amount Shares Amount
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A
Shares sold............... 429,844 $ 5,133,429 1,266,778 $ 14,554,038
Automatic Conversion of
Class B Shares to Class A
Shares................... 11,373 126,409 0 0
Shares redeemed........... (1,117,587) (13,062,066) (1,407,032) (16,718,124)
Shares issued in
reinvestment of
distributions............ 1,006,678 11,457,282 243,720 2,889,027
- -------------------------------------------------------------------------------
Net increase.............. 330,308 3,655,054 103,466 724,941
- -------------------------------------------------------------------------------
Class B
Shares sold............... 704,486 8,209,032 974,483 11,445,917
Automatic Conversion of
Class B Shares to Class A
Shares................... (11,366) (126,409) 0 0
Shares redeemed........... (650,786) (7,545,094) (551,773) (6,555,500)
Shares issued in
reinvestment of
distributions............ 502,546 5,718,575 93,247 1,107,337
- -------------------------------------------------------------------------------
Net increase.............. 544,880 6,256,104 515,957 5,997,754
- -------------------------------------------------------------------------------
Class C
Shares sold............... 162,138 1,808,980 13,355 157,299
Shares redeemed........... (140,732) (1,555,150) (6,139) (72,067)
Shares issued in
reinvestment of
distributions............ 5,627 64,145 980 11,662
- -------------------------------------------------------------------------------
Net increase.............. 27,033 317,975 8,196 96,894
- -------------------------------------------------------------------------------
Class Y
Shares sold............... 182,271 2,173,509 100,754 1,197,639
Shares redeemed........... (168,716) (2,095,583) (100,753) (1,214,182)
Shares issued in
reinvestment of
distributions............ 7,586 86,398 2,014 23,760
- -------------------------------------------------------------------------------
Net increase.............. 21,141 164,324 2,015 7,217
- -------------------------------------------------------------------------------
Net increase.............. $ 10,393,457 $ 6,826,806
</TABLE>
- --------------------------------------------------------------------------------
Value Fund
<TABLE>
<CAPTION>
Year Ended July 31,
-------------------------------------------------------
1999 1998
------------------------- ----------------------------
Shares Amount Shares Amount
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A
Shares sold............. 1,304,364 $ 30,874,288 1,587,252 $ 40,192,765
Shares redeemed......... (4,351,247) (100,747,544) (2,758,581) (68,967,117)
Shares issued in
reinvestment of
distributions.......... 285,275 6,540,493 3,563,487 81,070,016
Shares issued in the
acquisition of Virtus
Style Manager; Large
Cap Fund............... 0 0 3,109,878 80,290,504
- ---------------------------------------------------------------------------------
Net increase
(decrease)............. (2,761,608) (63,332,763) 5,502,036 132,586,168
- ---------------------------------------------------------------------------------
Class B
Shares sold............. 1,041,242 24,036,781 2,346,146 58,297,020
Shares redeemed......... (2,488,104) (57,458,861) (1,290,986) (31,809,835)
Shares issued in
reinvestment of
distributions.......... 111,928 2,520,116 2,433,973 55,281,719
- ---------------------------------------------------------------------------------
Net increase
(decrease)............. (1,334,934) (30,901,964) 3,489,133 81,768,904
- ---------------------------------------------------------------------------------
Class C
Shares sold............. 70,058 1,628,040 170,261 4,223,998
Shares redeemed......... (115,631) (2,643,004) (72,103) (1,793,135)
Shares issued in
reinvestment of
distributions.......... 1,529 34,419 31,015 701,653
- ---------------------------------------------------------------------------------
Net increase
(decrease)............. (44,044) (980,545) 129,173 3,132,516
- ---------------------------------------------------------------------------------
Class Y
Shares sold............. 444,392 10,016,867 4,385,718 107,270,971
Shares redeemed......... (3,438,601) (78,275,309) (46,491,232) (1,113,847,392)
Shares issued in
reinvestment of
distributions.......... 57,625 1,317,363 2,771,230 65,192,827
Shares issued in the
acquisition of Virtus
Style Manager; Large
Cap Fund............... 0 0 924,632 23,882,074
- ---------------------------------------------------------------------------------
Net decrease............ (2,936,584) (66,941,079) (38,409,652) (917,501,520)
- ---------------------------------------------------------------------------------
Net decrease............ $(162,156,351) $ (700,013,932)
</TABLE>
- --------------------------------------------------------------------------------
73
<PAGE>
Combined Notes to Financial Statements(continued)
8. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of investment securities (excluding
short-term securities) were as follows for the year ended July 31, 1999:
<TABLE>
<CAPTION>
Cost of Proceeds
Purchases from Sales
-------------------------------
<S> <C> <C>
Blue Chip Fund.................... $ 691,092,760 $ 496,578,942
Equity Income Fund................ 154,162,061 179,433,699
Growth and Income Fund............ 708,144,201 764,675,175
Income and Growth Fund............ 1,064,329,029 1,287,369,213
Small Cap Value Fund.............. 145,907,884 186,120,686
Utility Fund...................... 66,983,335 72,352,761
Value Fund........................ 987,445,108 1,086,666,293
</TABLE>
During the year ended July 31, 1999 Blue Chip Fund and Equity Income Fund
loaned securities to certain brokers who paid the Funds a negotiated lenders'
fee. These fees are included in interest income. At July 31, 1999, the value of
the securities on loan from Blue Chip Fund and Equity Income Fund were
$37,178,200 and $3,284,650, respectively and the value of collateral was
$37,702,000 and $3,379,400, respectively.
On July 31, 1999, the composition of unrealized appreciation and depreciation
of securities based on the aggregate cost of securities for federal income tax
purposes was as follows:
<TABLE>
<CAPTION>
Gross Gross Net Unrealized
Tax Unrealized Unrealized Appreciation
Cost Appreciation Depreciation (Depreciation)
----------------------------------------------------
<S> <C> <C> <C> <C>
Blue Chip
Fund.......... $ 553,635,767 $126,758,348 $ 8,414,414 $118,343,934
Equity Income
Fund.......... 120,383,433 29,723,219 1,873,594 27,849,625
Growth and
Income Fund... 1,312,954,916 534,160,665 40,263,344 493,897,321
Income and
Growth Fund... 977,437,971 140,962,118 52,511,236 88,450,882
Small Cap Value
Fund.......... 238,331,718 33,218,438 24,546,594 8,671,844
Utility Fund... 125,513,045 46,070,105 5,677,488 40,392,617
Value Fund..... 726,528,589 214,678,014 9,294,733 205,383,281
</TABLE>
As of July 31, 1999, Income and Growth Fund and Small Cap Value Fund had capi-
tal loss carryovers for federal income tax purposes of $102,000 expiring July
31, 2005 and $1,083,259 expiring July 31, 2007, respectively.
Income and Growth Fund's capital loss carryforward was created as a result of
the July 31, 1999 acquisition of substantially all of the assets and assumption
of certain liabilities of Evergreen American Retirement Fund. In accordance
with income tax regulations, certain Income and Growth Fund gains may not be
used to offset this capital loss carryforward. In addition to capital loss car-
ryovers, capital 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 fis-
cal year. For the fiscal year ended July 31, 1999, Small Cap Value Fund has in-
curred and elected to defer $22,670,202 of capital loss.
9. EXPENSE OFFSET ARRANGEMENTS
The Funds have entered into expense offset arrangements with ESC and their cus-
todian whereby credits realized as a result of uninvested cash balances were
used to reduce a portion of each Fund's related expenses. The assets deposited
with ESC and the custodian under these expense offset arrangements could have
been invested in income-producing assets. The amount of fee credits received by
each Fund and the impact on each Fund's expense ratio represented as a percent-
age of its average daily net assets were as follows:
<TABLE>
<CAPTION>
Total Fee % of Average
Credits Received Daily Net Assets
-------------------------------
<S> <C> <C>
Blue Chip Fund................ $20,715 0.00%
Equity Income Fund............ 7,002 0.00%
Growth and Income Fund........ 86,188 0.00%
Income and Growth Fund........ 56,615 0.01%
Small Cap Value Fund.......... 29,582 0.01%
Utility Fund.................. 8,298 0.01%
Value Fund.................... 39,780 0.00%
</TABLE>
74
<PAGE>
Combined Notes to Financial Statements(continued)
10. DEFERRED TRUSTEES' FEES
Each Independent Trustee of each Fund may defer any or all compensation related
to performance of their duties as Trustees. The Trustees' deferred balances are
allocated to deferral accounts, which are included in the accrued expenses for
the Funds. The investment performance of the deferral accounts are based on the
investment performance of certain Evergreen Funds. Any gains earned or losses
incurred in the deferral accounts are reported in the Fund's Trustees' fees and
expenses. Trustees will be paid either in one lump sum or in quarterly install-
ments for up to ten years at their election, not earlier than either the year
in which the Trustee ceases to be a member of the Board of Trustees or January
1, 2000.
11. FINANCING AGREEMENTS
Certain Evergreen Funds and State Street Bank and Trust Company ("State
Street") and a group of banks (collectively, the "Banks") entered into a fi-
nancing agreement dated December 22, 1997, as amended on November 20, 1998. Un-
der this agreement, the Banks provided an unsecured credit facility in the ag-
gregate amount of $400 million ($275 million committed and $125 million uncom-
mitted). The credit facility was allocated, under the terms of the financing
agreement, among the Banks. The credit facility was accessed by the Funds for
temporary or emergency purposes only and was subject to each Fund's borrowing
restrictions. Borrowings under this facility bear interest at 0.50% per annum
above the Federal Funds rate. A commitment fee of 0.065% per annum will be in-
curred on the unused portion of the committed facility, which was allocated to
all funds. For its assistance in arranging this financing agreement, the Capi-
tal Markets Group of First Union was paid a one-time arrangement fee of
$27,500. State Street serves as administrative agent for the Banks, and as ad-
ministrative agent is entitled to a fee of $20,000 per annum which is allocated
to all of the Funds.
This agreement was amended and renewed on December 22, 1998. The amended fi-
nancing agreement became effective on December 22, 1998 among all of the Ever-
green Funds, State Street and The Bank of New York ("BONY"). Under this agree-
ment, State Street and BONY provide an unsecured credit facility in the aggre-
gate amount of $150 million ($125 million committed and $25 million uncommit-
ted). The remaining terms and conditions of the agreement were unaffected. This
agreement terminated on July 27, 1999.
On July 27, 1999, all of the Evergreen Funds and a group of banks (the "Lend-
ers") entered into credit agreement. Under this agreement, the Lenders provide
an unsecured revolving credit commitment in the aggregate amount of $1.050 bil-
lion. The credit facility is allocated, under the terms of the financing agree-
ment, among the Lenders. The credit facility is accessed by the Funds for tem-
porary or emergency purposes to fund the redemption of their shares or as gen-
eral working capital as permitted by each Fund's borrowing restrictions.
Borrowings under this facility bear interest at 0.75% per annum above the Fed-
eral 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 unused por-
tion of the revolving credit commitment. The commitment fee is allocated 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 year ended July 31, 1999, the Small Cap Value Fund had average
borrowings outstanding of $256,000 at a rate of 5.94%.
12. CONCENTRATION OF CREDIT RISK
Utility Fund invests a substantial portion of its assets in issuers in the
utilities industry. Therefore, it may be more affected by economic and politi-
cal developments in that industry than would be a comparable general equity
fund.
75
<PAGE>
Independent Auditors' Report
The Board of Trustees and Shareholders
Evergreen Equity Trust
We have audited the accompanying statements of assets and liabilities, includ-
ing the schedules of investments of the Evergreen Blue Chip Fund, Evergreen Eq-
uity Income Fund (formerly, Evergreen Fund for Total Return), Evergreen Growth
and Income Fund, Evergreen Income and Growth Fund, Evergreen Small Cap Value
Fund (formerly, Evergreen Small Cap Equity Fund), Evergreen Utility Fund, and
Evergreen Value Fund, portfolios of the Evergreen Equity Trust, as of July 31,
1999, and the related statements of operations for the year then ended, the
statements of changes in net assets for each of the years or periods in the two
year period then ended, except the Evergreen Income and Growth Fund for the
year ended July 31, 1998, see below, and financial highlights for each of the
years or periods as described on pages 28 to 41. These financial statements and
financial highlights are the responsibility of the Funds' management. Our re-
sponsibility is to express an opinion on these financial statements and finan-
cial highlights based on our audits. For the Evergreen Income and Growth Fund,
the statement of changes in net assets for the year ended July 31, 1998 and fi-
nancial highlights for each of the years or periods ended prior to the year
ended July 31, 1999 were audited by other auditors, whose report dated Septem-
ber 15, 1998, expressed an unqualified opinion on that financial statement and
financial highlights.
We conducted our audits in accordance with generally accepted auditing stan-
dards. Those standards require that we plan and perform our audits to obtain
reasonable assurance about whether the financial statements and financial high-
lights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of July
31, 1999 by correspondence with the custodian and brokers. An audit also in-
cludes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement presenta-
tion. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Ever-
green Equity Trust as of July 31, 1999, the results of their operations,
changes in their net assets and financial highlights for each of the years or
periods described above in conformity with generally accepted accounting prin-
ciples.
/s/ KPMG LLP
Boston, Massachusetts
September 3, 1999
76
<PAGE>
Additional Information (Unaudited)
YEAR 2000
Like other investment companies, the Funds could be adversely affected if the
computer systems used by the Funds' investment advisors and the Funds' other
service providers are not able to perform their intended functions effectively
after 1999 because of the inability of computer software to distinguish the
year 2000 from the year 1900. The Funds' investment advisors are taking steps
to address this potential year 2000 problem with respect to the computer sys-
tems that they use and to obtain satisfactory assurances that comparable steps
are being taken by the Funds' other major service providers. At this time, how-
ever, there can be no assurance that these steps will be sufficient to avoid
any adverse impact on the Funds from this problem.
DISTRIBUTIONS TO SHAREHOLDERS
During the period from August 1, 1999 to September 3, 1999, the Utility Fund
declared the following distributions from net investment income:
<TABLE>
<CAPTION>
Record Date Payable Date Class A Class B Class C Class Y
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
8/30/1999 8/31/1999 $0.031 $0.023 $0.023 $0.034
</TABLE>
These distributions are not reflected in these financial statements.
FEDERAL TAX STATUS OF DISTRIBUTIONS
Pursuant to section 852 of the Internal Revenue Code, the Funds have
designated the following amounts as long-term capital gain distribu-
tions for the fiscal year ended July 31, 1999.
<TABLE>
<CAPTION>
Distribution Per Share
--------------------
<S> <C> <C>
Blue Chip Fund........................... $25,231,833 $1.833
Equity Income Fund....................... 19,688,984 2.513
Growth and Income Fund................... 43,791,535 0.596
Income and Growth Fund................... 48,834,304 1.223
Small Cap Value Fund..................... 2,069,527 0.100
Utility Fund............................. 15,390,207 1.277
Value Fund............................... 5,552,942 0.132
</TABLE>
For corporate shareholders, the following percentages of ordinary in-
come dividends paid during the fiscal year ended July 31, 1999 quali-
fied for the dividends and received deductions.
<TABLE>
<S> <C>
Blue Chip Fund........................................... 23.65%
Equity Income Fund....................................... 83.22%
Growth and Income Fund................................... 52.35%
Income and Growth Fund................................... 51.37%
Small Cap Value Fund..................................... 94.36%
Utility Fund............................................. 100.00%
Value Fund............................................... 100.00%
</TABLE>
77
<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
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
Balanced
Balanced Fund
Tax Strategic Foundation Fund
Foundation 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
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
Global International
Global Leaders Fund
International Growth Fund
Global Opportunities Fund
Precious Metals Fund
Emerging Markets Growth Fund
Latin America Fund
Express Line
800.346.3858
Investor Services
800.343.2898
www.evergreen-funds.com
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