<PAGE>
Semiannual Report
as of January 31, 1999
Evergreen
Growth and Income Funds
[EVERGREEN LOGO Evergreen Funds(SM)
APPEARS HERE] SINCE 1932
<PAGE>
Table of Contents
Letter to Shareholders.............................. 1
For Your Information................................ 2
Evergreen Blue Chip Fund
Fund at a Glance................................... 3
Portfolio Manager Interview........................ 4
Evergreen Equity Income Fund
(formerly Evergreen Fund for Total Return)
Fund at a Glance................................... 7
Portfolio Manager Interview........................ 8
Evergreen Growth and Income Fund
Fund at a Glance................................... 11
Portfolio Manager Interview........................ 12
Evergreen Income and Growth Fund
Fund at a Glance................................... 15
Portfolio Manager Interview........................ 16
Evergreen Small Cap Value Fund
(formerly Evergreen Small Cap Equity Income Fund)
Fund at a Glance................................... 19
Portfolio Manager Interview........................ 20
Evergreen Utility Fund
Fund at a Glance................................... 23
Portfolio Manager Interview........................ 24
Evergreen Value Fund
Fund at a Glance................................... 26
Portfolio Manager Interview........................ 27
Financial Highlights
Evergreen Blue Chip Fund........................... 30
Evergreen Equity Income Fund....................... 32
Evergreen Growth and Income Fund................... 34
Evergreen Income and Growth Fund................... 36
Evergreen Small Cap Value Fund..................... 38
Evergreen Utility Fund............................. 40
Evergreen Value Fund 42
Schedule of Investments
Evergreen Blue Chip Fund........................... 44
Evergreen Equity Income Fund....................... 46
Evergreen Growth and Income Fund................... 48
Evergreen Income and Growth Fund................... 53
Evergreen Small Cap Value Fund..................... 56
Evergreen Utility Fund............................. 59
Evergreen Value Fund............................... 61
Statements of Assets and Liabilities................ 63
Statements of Operations............................ 64
Statements of Changes in Net Assets................. 65
Combined Notes to Financial Statements.............. 68
Evergreen Funds
Evergreen Funds is one of the nation's fastest growing investment companies with
over $50 billion in assets under management.
With over 70 mutual funds to choose among and acclaimed service and operations
capabilities, investors enjoy a broad range of quality investment products and
services designed to meet their needs.
The Evergreen Funds employ intensive, research-driven investment strategies
executed by over 90 research analysts and portfolio managers. The fund company
remains dedicated to meeting the needs of investors and their advisors in a
global economy. Look to the Evergreen Funds to provide a distinctive level of
service and excellence in investment management.
This semiannual report must be preceded or accompanied by a prospectus of an
Evergreen fund contained herein. The prospectus contains more complete
information, including fees 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
----------------------
March 1999
Dear Shareholders:
[PHOTO OF WILLIAM M. ENNIS
MANAGING DIRECTOR
APPEARS HERE]
We are pleased to provide you the Evergreen Growth and Income Funds semiannual
report covering the six months ended January 31, 1999.
As we move ahead into 1999, we feel very positive about the overall economy. For
nearly the past seven years, it has sustained a low inflation level along with
low unemployment and solid economic growth. While we acknowledge the increased
volatility we saw emerge in mid-1998 will certainly be present in 1999, we are
still optimistic about the economy. We strongly recommend the value of having a
financial representative who can help you manage your investments and ensure
they match your long-term goals.
Evergreen Web site Enhancements
We've expanded and redesigned our Web site to provide you with quick and easy
access to the information that matters most to you. Come visit us at
www.evergreen-funds.com and experience for yourself the many enhancements and
user-friendly features we've added. You can learn more about Evergreen's history
and investment philosophy, access expanded fund profiles and performance data--
including daily net asset values (NAVs)--or visit the Investor Education section
to gain new insights and knowledge to help you make more informed investment
decisions.
Introduction of the Euro
On January 1, 1999, eleven European countries adopted the euro as their
currency. Currently, the wholesale markets and government and financial sectors
have converted to the euro, and new securities will be issued in euro
denomination only. Full conversion to the new currency will not be completed
until 2002.
At this point it is still unclear how the euro conversion will affect foreign
exchange rates, interest rates and the value of European securities, but we
believe the potential benefits to globally oriented investors are significant.
They include changes in currency risk, increased competition, and a central
bank. Foreign exchange risk may decrease for the countries participating in the
European Union; however, currency risk associated with rises and declines of the
value of the euro versus the dollar will still exist. Most noticeable for
investors will be the ability to compare the value of companies across the
European Union member countries without having to factor in the effect of
fluctuating currencies. Increased competition resulting from deregulation and
economic unification may produce a wave of merger and acquisition activity,
which could present attractive investment opportunities for those able to
identify the companies most inclined to benefit from restructuring. Finally, the
European Central Bank, comparable to the U.S. Federal Reserve, will provide
European Union countries with a unified monetary policy for the first time.
As always, if you have any questions about the funds in this report or any other
Evergreen Funds, please contact your financial representative or call us at
800.343.2898, and we will be happy to assist you.
Sincerely,
/s/ William M. Ennis
William M. Ennis
Managing Director
Evergreen Funds
1
<PAGE>
For Your Information
--------------------
New Evergreen Funds
Evergreen introduces three new funds:
Evergreen Tax Strategic Equity Fund: seeks to maximize the after-tax total
return on its portfolio of investments by using a combination of stock selection
strategies and trading techniques.
Evergreen Select Equity Index Fund: seeks investment results that achieve price
and yield performance similar to the S&P 500 Index.
Evergreen Masters Fund: blends growth and value, large- and mid-cap stocks into
one convenient portfolio. Diversification is taken one step further by employing
four management teams, Evergreen, MFS, Oppenheimer and Putnam.
Talk to your financial representative or call us at 800.343.2898 for a
prospectus and more information.
Fund Name Changes--Effective April 6, 1999
Evergreen Fund for Total Return is changing its name to Evergreen Equity Income
Fund to better reflect its investment objective. The Fund's primary objective
will change from "to seek total return from a combination of capital growth and
income" to "to seek primarily current income and secondarily capital growth."
The Fund's investment policy will change to ensure that at least 65% of assets
are in dividend-paying equity securities. Formerly, the prospectus required 65%
of assets be invested in equity securities. This will help ensure the Fund will
meet its primary investment objective of income.
Evergreen Small Cap Equity Income Fund is changing its name to Evergreen Small
Cap Value Fund which means that the Fund will de-emphasize income-producing
securities and broaden its investment universe to enable it to focus on capital
growth.
Good News!
Effective for the 1998 Tax Year, long-term capital gains taxes are reduced to
20%.
Year 2000/1/
We have been addressing the Year 2000 issue since February 1996, and have
adopted an industry best practices methodology for the project. Our team is on
schedule to complete the following milestones: Inventory and Assessment,
Remediation, Testing and Contingency. Although Evergreen Funds is striving to
identify and correct every issue under our control related to the Year 2000, it
would be impossible to guarantee a problem-free transition into the next
millennium. Our goal, however, is that our shareholders experience virtually no
impact on the products and services we deliver.
Visit us at
www.evergreen-funds.com
You may have noticed our recent reconstruction on our web site. We have
redesigned the site to make it easier to use, as well as added more fund
information. We invite you to check it out and we welcome any feedback.
/1/ The information above constitutes Year 2000 readiness disclosure.
2
<PAGE>
E V E R G R E E N
Blue Chip Fund
Fund at a Glance as of January 31, 1999
Portfolio
Management
-------------------------
[PHOTO OF JUDITH A. WARNERS APPEARS HERE]
Judith A. Warners
Tenure: January 1995
- --------------------------------------------------------------------------------
CURRENT INVESTMENT STYLE/1/
- --------------------------------------------------------------------------------
Morningstar's Style Box is based on a portfolio date as of
1/31/99.
[MORNINGSTAR'S
STYLE BOX The Equity Style Box placement is based on a fund's price-to-
APPEARS HERE] 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: 1998 Morningstar, Inc.
/2/Past performance is no guarantee of future results. The performance of each
class may vary based on differences in loads and fees paid by the shareholders
investing in each class. Historical performance for Classes A and C prior to
inception reflects that of Class B, the original class offered, the inception
date of which is 9/11/35, and has been adjusted for appropriate 12b-1 fees for
each class.
The investment return and principal value will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than original cost. The S&P 500
Index is an unmanaged 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.
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS/2/
- --------------------------------------------------------------------------------
Portfolio Inception Date: 9/11/35 Class A Class B Class C
Class Inception Date 1/20/98 9/11/35 1/22/98
................................................................................
Average Annual Returns*
................................................................................
6 months with sales charge 7.22% 7.01% 11.09%
................................................................................
6 months w/o sales charge 12.58% 12.01% 12.09%
................................................................................
1 year with sales charge 17.97% 17.74% 21.99%
................................................................................
1 year w/o sales charge 23.84% 22.74% 22.99%
................................................................................
3 years 22.08% 22.76% 23.22%
................................................................................
5 years 20.42% 18.31% 18.39%
................................................................................
10 years 14.61% 14.33% 14.23%
................................................................................
Since Inception 9.29% 9.17% 9.14%
................................................................................
Maximum Sales Charge 4.75% 5.00% 1.00%
Front End CDSC CDSC
................................................................................
30-day SEC Yield 0.10% -0.62% -0.62%
................................................................................
6-month income distributions per share $0.03 -- --
................................................................................
6-month capital gain distributions per share $2.38 $2.38 $2.38
................................................................................
* Adjusted for maximum applicable sales charge unless noted.
- --------------------------------------------------------------------------------
LONG TERM GROWTH
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
Date Evergreen Blue Chip S&P 500 Consumer Price Index - US
---- ------------------- ------- -------------------------
1/31/89 $ 10,000 $ 10,000 $ 10,000
12/31/90 $ 11,465 $ 11,889 $ 11,049
12/31/92 $ 14,779 $ 16,693 $ 11,714
12/31/94 $ 15,271 $ 18,618 $ 12,362
12/31/96 $ 24,388 $ 31,496 $ 13,097
1/31/99 $ 39,229 $ 56,220 $ 13,526
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).
3
<PAGE>
E V E R G R E E N
Blue Chip Fund
Portfolio Manager Interview
How did the Fund perform during the six-month period?
The Fund did well against mutual funds with similar objectives, while trailing
the overall market, as reflected by the Standard & Poor's 500 Index. For the six
months ended January 31, 1999, the Fund's Class A shares had a total return of
12.58%, while Class B shares had a return of 12.01% and Class C shares returned
12.09%. These returns are unadjusted for any applicable sales charges. During
the same period, the average growth and income fund had a return of 7.88%,
according to Lipper Inc., an independent monitor of mutual fund performance,
while the S&P 500 had a return of 15.02%.
Portfolio
Characteristics
---------------
(as of 1/31/99)
Total Net Assets $481,408,984
................................................................................
Number of Holdings 101
................................................................................
P/E Ratio* 32.9x
................................................................................
Beta* 1.04
................................................................................
*as of 12/31/98
What was the investment environment like during the six months?
It began with a great deal of turmoil following the Russian government's default
of part of its external debt in early August, an event that reverberated
throughout the world's financial markets, causing a liquidity crisis. This
volatility pulled down every emerging market as well as the U.S. stock market.
To illustrate, the Standard & Poor's 500 Index, an index of large company stocks
in the United States, fell by 14.4% from August 1 through October 8, 1998. It
was then that the U.S. Federal Reserve started lowering short-term interest
rates to restore liquidity to the markets. The Federal Reserve cut rates three
successive times in October and November, encouraging confidence among
investors. From October 8 through the end of the fiscal period on January 31,
1999, the S&P 500 rose by 33.4%. In the August through October 8 decline, the
biggest losers were the financial stocks, while in the October 8 through January
31 rally, the biggest gainers were technology stocks. Throughout the period,
energy stocks suffered, as global deflation undermined the prices of
commodities, including oil.
Top 5 Industries
-----------------------------
(based on 1/31/99 net assets)
Information Services & Technology 17.6%
................................................................................
Healthcare Products & Services 15.3%
................................................................................
Retailing & Wholesale 8.5%
................................................................................
Printing, Publishing, Broadcasting & Entertainment 6.6%
................................................................................
Banks 6.2%
................................................................................
4
<PAGE>
E V E R G R E E N
Blue Chip Fund
Portfolio Manager Interview
Within this changing environment, what strategies did you pursue?
Early in the period, we continued lightening our holdings in the finance sector,
a strategy we began in July when Federal Reserve Board Chairman Alan Greenspan
started sending out conflicting signals about the direction of interest rates.
We believed financial service stocks might have peaked. This helped the Fund's
performance, because we had reduced our exposure before the market started
sliding. Within finance, we continued to focus on money center banks, super-
regional banks and insurance companies. Two core holdings throughout the period
were Associates First Capital, a consumer lending company, and American
International Group, an insurance company. Both were strong performers. The
Fund's emphasis on finance stocks declined during the period from about 19.5% of
net assets on August 1 to about 11% on January 31.
We also lightened our emphasis on healthcare companies somewhat during the fall.
We saw some disappointments in the sales of new drugs and we felt the stock
prices of some pharmaceutical prices may have become excessive. This industry,
however, remains an area of emphasis, at 15.3% of net assets on January 31,
because of its long-term outlook. This is a good example of our strategy of
alternately increasing and decreasing our commitment to an area, depending on
whether we see relative value in the stocks.
We added to our technology holdings, which rose from 12.8% of net assets at the
start of the period to about 22% on January 31. We emphasized the large, high-
quality names like IBM, Microsoft, Intel, Compaq Computer, Gateway 2000, Hewlett
Packard, Motorola, Cisco Systems and EMC. We also added several technology
companies, including America Online and Sun Microsystems.
We also added to our consumer staples holdings with companies, such as Gillette
and Proctor & Gamble, trading at what we believe to be attractive values after
the stock prices fell following the announcement of earnings disappointments.
This industry rose from 11.7% of the Fund's net assets to about 15% at the end
of the period.
We also added several retailers and automobile companies during the six months.
Two retailers that were very good performers were Safeway and CVS.
The most noteworthy area of de-emphasis was in energy, where our weighting was
cut in half, from about 8% to about 4% of net assets.
We started the six-month period with a relatively high cash position of about
13.3%, which helped protect the Fund during the market slide early in the
period. As we found buying opportunities, we put the money to work. At the end
of the period, the Fund's cash position had declined to about 5% of net assets.
In all areas, we continued to emphasize large, high-quality, multi-national
companies. In fact, we had a greater emphasis on the very big companies at the
end of the period than we did at the beginning of the period.
5
<PAGE>
E V E R G R E E N
Blue Chip Fund
Portfolio Manager Interview
Top 10 Equity Holdings
-----------------------------
(based on 1/31/99 net assets)
Microsoft Corp. 4.2%
................................................................................
General Electric Co. 3.6%
................................................................................
Merck & Co., Inc. 2.2%
................................................................................
International Business Machines Corp. 2.0%
................................................................................
Intel Corp. 1.9%
................................................................................
American Home Products Corp. 1.8%
................................................................................
Wal-Mart Stores, Inc. 1.8%
................................................................................
Time Warner, Inc. 1.7%
................................................................................
Tyco International Ltd. 1.6%
................................................................................
Medtronic, Inc. 1.6%
................................................................................
What areas were the biggest contributors to performance?
The technology stocks were very strong factors in the performance. The best
performers during the period included America Online, Microsoft, Intel, EMC, Sun
Microsystems and Ascend Communications. Ascend was helped by the announcement it
will be acquired by Lucent Technologies.
Telephone and telecommunications stocks also helped performance. Contributors
included AT&T, MCI WorldCom, U.S. West and TCI Group, which is the subject of a
pending takeover by AT&T.
What is your outlook?
We don't think the volatility will end. We expect to continue to emphasize
large-capitalization global leaders. Many companies with dominant positions in
their markets and strong pricing power have been able to sustain their strong
stock performance, even in the face of some expectations that earnings will
slow. We will be sticking to our fundamental analysis, looking for companies
that demonstrate they can execute their strategies and can manage their
businesses in a period of volatility. We also will tend to be opportunistic when
out-of-favor companies show evidence that they can improve their earnings. This
happened during the period with technology companies, which were coming out of a
depressed earnings situation in early 1998 and showed good growth potential. On
the margin, we may begin to take some profits from our technology holdings and
add to our positions in basic industries, where we see some interesting values
among companies with the potential to increase their earnings at a healthy rate.
We also may increase our weightings in consumer goods companies with depressed
stock valuations.
We expect the Fund will continue to find opportunities among world market
leaders and among firms that dominate their specific market niches.
6
<PAGE>
E V E R G R E E N
Equity Income Fund
Fund at a Glance as of January 31, 1999
Portfolio
Management
----------------
[PHOTO OF HARLAN R. SONDERLING APPEARS HERE]
Harlan R. Sonderling,
CPA, CFA
Tenure: June 1998
- --------------------------------------------------------------------------------
CURRENT INVESTMENT STYLE/1/
- --------------------------------------------------------------------------------
Morningstar's Style Box is based on a portfolio date as of
[MORNINGSTAR'S 1/31/99.
STYLE BOX
APPEARS HERE] 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: 1998 Morningstar, Inc.
/2/Past performance is no guarantee of future results. The performance of each
class may vary based on differences in loads and fees paid by the shareholders
investing in each class. Historical performance for Classes B, C, and Y prior to
inception reflects that of Class A, the original class offered, the inception
date of which is 4/14/87, and includes appropriate 12b-1 fees for Class A. If
appropriate fees for Classes B and C were reflected, returns for these classes
would have been lower. For Class Y, if 12b-1 fees were not reflected, returns
would have been higher. Returns reflect expense limits previously in effect,
without which returns would have been lower.
The investment return and principal value will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than original cost. The S&P 500
Index is an unmanaged 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.
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS/2/
- --------------------------------------------------------------------------------
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
................................................................................
6 months with sales charge -2.39% -2.36% 1.19% n/a
................................................................................
6 months w/o sales charge 2.47% 2.08% 2.08% 2.56%
................................................................................
1 year with sales charge 7.27% 6.91% 10.78% n/a
................................................................................
1 year w/o sales charge 12.64% 11.77% 11.76% 12.84%
................................................................................
3 years 18.44% 18.69% 19.41% 20.43%
................................................................................
5 years 15.07% 15.06% 15.28% 16.22%
................................................................................
10 years 13.86% 13.87% 13.88% 14.43%
................................................................................
Since Inception 12.48% 12.49% 12.50% 12.96%
................................................................................
Maximum Sales Charge 4.75% 5.00% 1.00% n/a
Front End CDSC CDSC
................................................................................
30-day SEC Yield 1.07% 0.38% 0.39% 1.37%
................................................................................
6-month income dividends per share $0.12 $0.06 $0.06 $0.15
................................................................................
6-month capital gain dividends
per share $2.74 $2.74 $2.74 $2.74
................................................................................
* Adjusted for maximum applicable sales charge unless noted.
- --------------------------------------------------------------------------------
LONG TERM GROWTH
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
Date Evergreen Equity Income S&P 500 Consumer Price Index - US
---- ----------------------- ------- -------------------------
1/31/89 $ 10,000 $ 10,000 $ 10,000
12/31/90 $ 11,718 $ 11,889 $ 11,049
12/31/92 $ 15,361 $ 16,693 $ 11,714
12/31/94 $ 16,640 $ 18,618 $ 12,362
12/31/96 $ 27,368 $ 31,496 $ 13,097
1/31/99 $ 38,441 $ 56,220 $ 13,526
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) and the Consumer Price
Index (CPI).
7
<PAGE>
E V E R G R E E N
Equity Income Fund
Portfolio Manager Interview
How did the Evergreen Equity Income Fund (formerly Evergreen Fund for Total
Return) perform?
The Fund's performance lagged its peer group for the six months of this period,
although it remained above the median for the past 12 months. For the six months
ended January 31, 1999, the Fund's Class A shares had a total return of 2.47%.
During the same six months, Class B and Class C shares each had a return of
2.08% and Class Y shares had a return of 2.56%. These returns are unadjusted for
any applicable sales charges. During the same six months, the median return of
equity income funds was 4.58%, according to Lipper Inc., an independent monitor
of mutual fund performance.
Portfolio
Characteristics
---------------
(as of 1/31/99)
Total Net Assets $163,036,522
................................................................................
Number of Holdings 63
................................................................................
P/E Ratio* 32.9x
................................................................................
Beta* 0.90
................................................................................
*as of 12/31/98
What factors affected performance?
The Fund's performance was held back by its emphasis on dividend-paying, value
stocks across a range of market capitalizations during a time when the stock
market was rewarding high-growth, highly valued, large-capitalization companies.
In the past six months, performance suffered from over-weightings in financial
services companies, which were hit very hard in the market decline of the third
calendar quarter of 1998, and from holdings in real estate investment trusts and
utilities. The Fund held both types of securities because of their historical
above-average yields and prospects for modest dividend growth.
Financial services company stocks performed poorly in the third quarter. The
devaluation and default in Russia, combined with problems in Latin America and
Asia, put great pressure on financial stocks, contributing to investors' worries
that loan quality would deteriorate if the problems of emerging markets were to
spread and slow down global economic growth. These stocks did not fully
participate in the fourth calendar quarter's market surge, which was led by
technology stocks and large-company growth stocks. Because of the Fund's
conservative, value orientation, it tends not to emphasize technology and growth
stocks.
Yield-oriented investments, such as real estate investment trusts, utilities and
energy, underperformed during the fourth quarter rally. In general, the six-
month period did not favor value- or yield-oriented investments.
Top 5 Industries
-----------------------------
(based on 1/31/99 net assets)
Banks 12.5%
................................................................................
Finance & Insurance 10.9%
................................................................................
Healthcare Products & Services 8.7%
................................................................................
Utilities--Electric 7.9%
................................................................................
Utilities--Telephone 7.2%
................................................................................
8
<PAGE>
E V E R G R E E N
Equity Income Fund
Portfolio Manager Interview
What were your primary strategies during the six months?
We emphasized our long-term strategy of investing in value-oriented, dividend-
paying common stocks. This led us to emphasize financial services, utilities,
capital goods, healthcare, and real estate investment trusts. We also continued
to underweight technology and consumer staples. We de-emphasized technology
stocks because of their relatively high valuations and poor dividend yields. We
tended to avoid consumer staples--companies that produce consumer goods--because
of their deteriorating earnings growth outlooks.
The largest weighting, at about 23% of net assets on January 31, 1999, was in
financial services. We were attracted by a combination of earnings growth,
attractive stock valuations, and healthy dividend yields. Fleet Financial, a New
England-based regional banking company, is a good example of our investments.
This is a well-capitalized bank that continues to increase both its earnings and
dividends. It has a sound growth strategy and a strong competitive position.
Electric utilities may offer the Fund sustainable dividend yields as well as
defensive price protection if economic growth were to slow. A good example of a
strong utility is the Southern Company. It offers a healthy earnings record, a
modestly growing dividend and attractive, long-term prospects in its core
Southeastern markets.
We also have invested in real estate investment trusts (REITs) because of their
attractive dividends.
Healthcare, more precisely pharmaceutical companies, accounted for more than 8%
of net assets on January 31. We were attracted to this industry because of its
historical consistent earnings growth and its underlying fundamental strength.
One of the Fund's core holdings is Merck, the nation's largest pharmaceutical
company. Rising sales, including strong unit growth in a period of fairly stable
pricing, has helped sustain its earnings growth.
We recently have added to our energy position to take advantage of the extremely
low stock prices. We believe energy stocks already discounted a very poor
outlook for energy prices and so may offer growth potential when the environment
changes. One of our major energy holdings is Texaco, which offers a high and
safe dividend. In an era of industry consolidation, Texaco also remains a
potentially valuable acquisition candidate. Energy stocks accounted for 6.2% of
net assets on January 31.
We also have recently added to our holdings among both long-distance and
regional Bell telephone companies. Their appeal included strong business growth
and the prospect of new business opportunities in an era of deregulation.
Top 10 Equity Holdings
-----------------------------
(based on 1/31/99 net assets)
Tyco International Ltd. 3.3%
................................................................................
General Electric Co. 2.6%
................................................................................
Merck & Co., Inc. 2.6%
................................................................................
Costco Companies, Inc. 2.5%
................................................................................
Greenpoint Financial Corp. 2.5%
................................................................................
Fleet Financial Group, Inc. 2.2%
................................................................................
Philip Morris Companies, Inc. 2.2%
................................................................................
U.S. West, Inc. 2.2%
................................................................................
BankAmerica Corp. 2.1%
................................................................................
EMC Corp. 2.0%
................................................................................
9
<PAGE>
E V E R G R E E N
Equity Income Fund
Portfolio Manager Interview
What are some other examples of companies in which you have invested?
General Motors is a company we like. GM may be poised to exceed Wall Street's
earnings expectation because of rising operating income margins and recovery of
lost market share.
Another example is Tyco International, a manufacturing conglomerate. While its
dividend yield is lower than those of many of our other investments, this
company continues to post better earnings than expected, driven by both revenue
growth and cost reductions in acquired companies.
While we have tended to de-emphasize technology, EMC has remained a core
technology holding in the Fund, despite the fact it pays no dividends. This
company has achieved consistent earnings growth because of strong demand for its
data storage products.
What is your outlook?
By historical measures, stock valuations are high in terms of earnings
multiples, dividend yields and book value. Inflation and interest rates remain
low however, and productivity gains in industry suggest that corporations
continue to offer the opportunity for long-term growth of both income and
capital. Historically, investors have been willing to pay more for future
earnings when interest rates are low, as they are now.
The U.S. economy keeps growing, and it appears unlikely to falter in its growth
despite international turmoil and some political uncertainty. The confidence of
the American consumer remains high, and corporate management has become adept at
controlling costs by managing inventories and production capacity.
In this environment, we believe our value-oriented and dividend-paying stocks
will do well. We think we will continue to find opportunities, keeping in mind
that dividends are a critical component of investing for total return.
Please note the Fund's name change:
Effective April 6, 1999, Evergreen Fund for Total Return will be re-named the
Evergreen Equity Income Fund. The Fund's primary objective will change from "to
seek total return from a combination of capital growth and income" to "to seek
primarily current income and secondarily capital growth." The Fund's investment
policy will change to ensure that at least 65% of assets are in dividend-paying
equity securities. Formerly, the prospectus required 65% of assets be invested
in equity securities. This will help ensure the Fund will meet its primary
investment objective of income.
10
<PAGE>
E V E R G R E E N
Growth and Income Fund
Fund at a Glance as of January 31, 1999
Portfolio
Management
--------------
[PHOTO OF STEPHEN A. LIEBER APPEARS HERE]
Stephen A. Lieber
Tenure: July 1997 - January 1999
[PHOTO OF PHILIP M. FOREMAN APPEARS HERE]
Philip M. Foreman
Tenure: January 1999
- --------------------------------------------------------------------------------
CURRENT INVESTMENT STYLE/1/
- --------------------------------------------------------------------------------
Morningstar's Style Box is based on a portfolio date as of
[MORNINGSTAR'S 1/31/99.
STYLE BOX
APPEARS HERE] 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: 1998 Morningstar, Inc.
/2/Past performance is no guarantee of future results. The performance of each
class may vary based on differences in loads and fees paid by the shareholders
investing in each class. Historical performance for Classes A, B, and C prior
to inception reflects that of Class Y, the original class offered, the inception
date of which is 10/15/86, and does not reflect 12b-1 fees. If such fees were
reflected, returns would have been lower. Returns reflect expense limits
previously in effect, without which returns would have been lower.
The investment return and principal value will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than original cost. The S&P
Mid-Cap 400 Index 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.
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS/2/
- --------------------------------------------------------------------------------
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*
................................................................................
6 months with sales charge -4.24% -4.70% -0.77% n/a
................................................................................
6 months w/o sales charge 0.53% 0.17% 0.20% 0.67%
................................................................................
1 year with sales charge -0.12% -0.90% 3.13% n/a
................................................................................
1 year w/o sales charge 4.87% 4.10% 4.13% 5.14%
................................................................................
3 years 15.87% 16.15% 16.90% 18.07%
................................................................................
5 years 15.95% 16.18% 16.42% 17.32%
................................................................................
10 years 14.88% 15.10% 15.12% 15.56%
................................................................................
Since Inception 14.10% 14.29% 14.30% 14.65%
................................................................................
Maximum Sales Charge 4.75% 5.00% 1.00% n/a
Front End CDSC CDSC
................................................................................
30-day SEC Yield 0.25% -0.48% -0.48% 0.51%
................................................................................
6-month income dividends
per share $0.06 -- -- $0.09
................................................................................
6-month capital gain distributions
per share $0.78 $0.78 $0.78 $0.78
................................................................................
* Adjusted for maximum applicable sales charge unless noted.
- --------------------------------------------------------------------------------
LONG TERM GROWTH
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
Evergreen
Date GROWTH & INCOME FUND S&P 400 Consumer Price Index - US
---- -------------------- ------- -------------------------
1/31/95 $ 10,000 $ 10,000 $ 10,000
12/31/95 $ 13,078 $ 12,959 $ 10,206
12/31/96 $ 16,153 $ 15,448 $ 10,552
12/31/97 $ 21,148 $ 20,430 $ 10,732
1/31/99 $ 21,920 $ 23,387 $ 10,898
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).
11
<PAGE>
E V E R G R E E N
Growth and Income Fund
Portfolio Manager Interview
How did the Evergreen Growth and Income Fund perform during the last six months?
In the first half of the 1999 fiscal year, the period ended January 31, 1999,
the Fund's Class Y shares showed a gain of 0.67%. Classes A, B, and C returned
0.53%, 0.17%, and 0.20%, respectively, unadjusted for applicable sales charges.
This compared with a gain of 9.6% by the Standard & Poor's 400, a mid-cap index.
Portfolio
Characteristics
---------------
(as of 1/31/99)
Total Net Assets $2,069,644,958
................................................................................
Number of Holdings 294
................................................................................
P/E Ratio* 18.8x
................................................................................
Beta* 0.92
................................................................................
*as of 12/31/98
How did the overall market and economic environment impact the Fund's
investments and performance?
The Fund's comparatively heavy weighting in banks and other financial stocks, as
well as in energy-related issues, had a significantly negative impact on overall
performance. These were offset by excellent performance in communication
systems, electronic equipment and information technology. The Fund has had a
highly rewarding, long-term emphasis in all of these sectors, but the changed
economic and subsequent market environment in the third and fourth quarters
emphasized uncertainties in the financial and energy sectors of the investment
market.
The Fund started the fiscal year with a comparatively large cash equivalent
reserve position, did this help or hinder performance?
The cash equivalent reserve position definitely helped the Fund's performance
during this period to establish new and increased positions, which, we believe,
will prove highly rewarding over the longer term. On August 1, 1998, the Fund
had a cash equivalent position of 18.3% of net assets, and by January 31, 1999,
that position was down to 7.7%. We built this cash position in anticipation of a
highly volatile market, expecting opportunities to buy comparatively undervalued
growth stocks, following the Fund's long-term "value-timing" strategy.
The substantial and aggressive purchasing during the market sell-off has proven
highly rewarding. For example, the Fund's purchase of 120,000 shares of Sanmina
Corp. at $24 1/2 early in September provided a 168.3% gain by January 31, 1999,
as the shares rose to $66 1/4. Other purchases with gains of between 50% and
100% included shares of Lowe's Companies, Inc., Carnival Corp., Harley-Davidson,
Inc., Scientific Atlanta Inc., Home Depot, Inc. , Perkin-Elmer Corp., Gucci
Group N.V., Southwest Airlines Co., Tommy Hilfiger Corp., AFLAC, Inc., and Saks,
Inc. Significantly, these sizable gains came from a highly diverse group of
companies in which the Fund earlier held positions, and from others which are
new positions.
While the financial group was under pressure, we took advantage of this weakness
to make some highly rewarding purchases. Examples include new positions in
Household International, Inc., which has risen 40.2% since the October 8th
purchase; and MBIA Inc., up 30.7%; additions to the position of State Street
Corp., up 39.3%; BankAmerica Corp., up 38.6%; Citigroup, Inc., up 19.6%; and the
aforementioned AFLAC, Inc.,
12
<PAGE>
E V E R G R E E N
Growth and Income Fund
Portfolio Manager Interview
which was up 52.1%. A major new holding was established in Mellon Bank Corp.
with purchases made throughout the period. The only financial issue purchased
with a significant decline were the shares of MGIC Investment Corp., which were
down 12.3% from a purchase in August, reflecting possible legislative changes in
the mortgage insurance business.
Top 5 Industries
-----------------------------
(based on 1/31/99 net assets)
Banks 10.5%
................................................................................
Healthcare Products & Services 10.3%
................................................................................
Finance & Insurance 9.1%
................................................................................
Industrial Specialty Products & Services 6.1%
................................................................................
Printing, Publishing, Broadcasting & Entertainment 5.5%
................................................................................
Many issues had dramatic recoveries during the six months. Which were the Fund's
top performers?
The top performers were in electronic technology and communications. The leader
was Jabil Circuit, Inc., up 105.3%; followed by KLA-Tencor Corp., up 94.5%;
Cisco Systems, Inc., up 78.1%; Intel Corp., up 66.7%; AirTouch Communications,
Inc., up 64.2%; MCI WorldCom, Inc., up 52.4%; Lowe's Companies, Inc., up 51.7%;
and AT&T Corp., up 49.6%.
How did mergers and acquisitions help the Fund?
Mergers and acquisitions again demonstrated that the Fund held many issues which
other companies considered undervalued and attractive for acquisition. Eleven
companies in the portfolio were either acquired, merged, or received offers
which are now pending, with an average gain of 77.2% on the completed
acquisitions. The largest gain was in the shares of Crestar Financial Corp.
(acquired by Sun Trust Banks, Inc.), providing a 247.9% gain since purchased in
September, 1996. Another regional bank acquired was Firstar Corp. (acquired by
Star Banc Corp.), with a 42.3% gain just seven months after its purchase for the
Fund. A lesser known holding, Dominick's Supermarkets, Inc., was purchased by
Safeway Inc., with a gain of 159.3% for the Fund in a one-year holding period.
AirTouch Communications, Inc. has received an acquisition bid from Vodafone
Group Plc, which will provide a 290.1% gain upon completion since our original
purchase in May, 1992, and MCI Communications Corp. was acquired by WorldCom,
Inc., with a 138.0% gain in three and a half years. Still pending is the
acquisition of Jacor Communications, Inc. by Clear Channel Communications, Inc.,
with a projected gain of 159.3% as of January 31, 1999. Other holdings which
were acquired or had offers included: Mercantile Stores Co., Inc., Camco
International, Inc., Life Re Corp., Commonwealth Energy System, and UNUM Corp.
Top 10 Equity Holdings
-----------------------------
(based on 1/31/99 net assets)
Time Warner, Inc. 1.5%
................................................................................
Webster Financial Corp. 1.5%
................................................................................
Kansas City Southern Industries, Inc. 1.4%
................................................................................
Policy Management Systems Corp. 1.2%
................................................................................
Federal National Mortgage Association 1.2%
................................................................................
Jacor Communications, Inc. 1.2%
................................................................................
McKesson HBOC, Inc. 1.2%
................................................................................
Mellon Bank Corp. 1.1%
................................................................................
Lincare Holdings, Inc. 1.1%
................................................................................
Union Pacific Corp. 1.0%
................................................................................
13
<PAGE>
E V E R G R E E N
Growth and Income Fund
Portfolio Manager Interview
What is the outlook for the weaker-performing sectors and companies in the Fund?
The weakest-performing sector in the Fund during the six months was related to
energy, with the Fund's oil field services stocks down 42.8%, and oil production
issues down 24.8%. The oil and gas business is clearly in its own recession;
crude oil prices have fallen from just under $20 per barrel at the beginning of
1998, to about $11 per barrel in early 1999. This price weakness is largely
attributed to declines in demand stemming from the broad-based Asian recession,
together with sustained production from exporting nations under pressure to earn
dollars. In the U.S., the situation is further aggravated by mild weather
conditions, bringing less than normal consumption and, thus, increased
inventories. Our expectation is that oil prices will only gradually recover in
line with improved economies in Asia and Europe, bringing demand back to trend
line. This situation will sustain economic pressure on all facets of the
industry, and will bring increased pressure for efficiencies to be gained
through mergers. With what we believe to be a number of severely undervalued
companies in the portfolio (based on previous and projected earning power and
assets), we believe that some reasonable degree of recovery can be expected for
these holdings.
The financial holdings of the Fund, especially its bank position, appear to us
to offer sound opportunities for growth, and will benefit from the industry's
continuing trend toward consolidation. Even during the weakness last fall, we
still saw merger and acquisition opportunities in the Fund's holdings including:
Citicorp (now Citigroup, Inc.), Firstar Corp., and Crestar Financial Corp. The
Fund is carefully positioned in shares of a number of bank holding companies,
most of which have strong regional or specialty franchises. We anticipate that
their growth and financial strength, at well below typical market valuations,
will provide continuing opportunities for sizable capital appreciation. Finance
and insurance holdings, which range from AFLAC, Inc. to UNUM Corp., should
benefit by similar forces. New names added to the group during the six months
included: Household International, Inc., MBIA Inc., and Progressive Corp. In
each case, our purchases were made during periods of market weakness.
What is the Fund's strategy for the second half of fiscal 1999?
The Fund's strategy will be to concentrate intensely on undervalued growth
opportunities. We have appointed a new portfolio manager for the Fund, Philip M.
Foreman. Mr. Foreman has demonstrated, through his last several years as manager
of the W-M Growth & Income Fund, a highly successful utilization of strategies
very similar to the "value-timing" strategies of this Fund. He has already
initiated increasing the concentration in a number of the Fund's very successful
holdings, and adding new ones characterized by consecutive years of earnings
growth, well-defined management strategies in place, and, yet, current
opportunities to buy these shares at below normal valuation. With Mr. Foreman's
leadership and the support of our strong research group, we anticipate a return
to the Fund's historical outperformance of its benchmark, the S&P 400
Index.
14
<PAGE>
E V E R G R E E N
Income and Growth Fund
Fund at a Glance as of January 31, 1999
Portfolio
Management
--------------
[PHOTO OF NOLA MADDOX FALCONE APPEARS HERE]
Nola Maddox Falcone, CFA
Tenure: August 1978
[PHOTO OF IRENE D. O'NEILL APPEARS HERE]
Irene D. O'Neill
Tenure: December 1997
- --------------------------------------------------------------------------------
CURRENT INVESTMENT STYLE/1/
- --------------------------------------------------------------------------------
Morningstar's Style Box is based on a portfolio date as of
[MORNINGSTAR'S 1/31/99.
STYLE BOX
APPEARS HERE] The Equity Style Box placement is based on a fund's price-
to-earnings and price-to-book ratio relative to the S&P 500,
as well as the size of the companies in which it invests, or
median market capitalization.
Source: 1998 Morningstar, Inc.
/2/Past performance is no guarantee of future results. The performance of each
class may vary based on differences in loads and fees paid by the shareholders
investing in each class. Historical performance for Classes A, B, and C prior to
inception reflects that of Class Y, the original class offered, the inception
date of which is 8/31/78, and does not include 12b-1 fees. If such fees were
reflected, returns would have been lower. Returns reflect expense limits
previously in effect, without which returns would have been lower.
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
Wilshire 5000 Index 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.
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS/2/
- --------------------------------------------------------------------------------
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*
................................................................................
6 months with sales charge -4.87% -4.91% -1.37% n/a
................................................................................
6 months w/o sales charge -0.11% -0.48% -0.48% 0.05%
................................................................................
1 year with sales charge -4.79% -5.08% -1.65% n/a
................................................................................
1 year w/o sales charge -0.04% -0.74% -0.78% 0.26%
................................................................................
3 years 9.53% 9.69% 10.50% 11.61%
................................................................................
5 years 8.95% 9.08% 9.35% 10.22%
................................................................................
10 years 9.52% 9.73% 9.72% 10.16%
................................................................................
Since Inception 13.57% 13.67% 13.67% 13.89%
................................................................................
Maximum Sales Charge 4.75% 5.00% 1.00% n/a
Front End CDSC CDSC
................................................................................
30-day SEC Yield 2.00% 1.36% 1.36% 2.35%
................................................................................
6-month income dividends
per share $ 0.42 $ 0.37 $ 0.37 $ 0.48
................................................................................
6-month capital gain distributions
per share $ 2.13 $ 2.13 $ 2.13 $ 2.13
................................................................................
* Adjusted for maximum applicable sales charge unless noted.
- --------------------------------------------------------------------------------
LONG TERM GROWTH
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
Evergreen
Date INCOME & GROWTH FUND Wilshire 5000 Consumer Price Index - US
---- -------------------- ------------- -------------------------
12/31/94 $ 10,000 $ 10,000 $ 10,000
12/31/95 $ 12,371 $ 13,341 $ 10,247
12/31/96 $ 13,932 $ 15,853 $ 10,595
12/31/97 $ 17,452 $ 20,477 $ 10,775
1/31/99 $ 17,269 $ 25,824 $ 10,942
Comparison of change in value of a $10,000 investment in Evergreen Income and
Growth Fund Class A, the Wilshire 5000 Index and the Consumer Price Index (CPI).
15
<PAGE>
E V E R G R E E N
Income and Growth Fund
Portfolio Manager Interview
How did the Fund perform?
For the six months ended January 31, 1999, the Evergreen Income and Growth Fund
continued to pursue its historic commitment to provide substantial current
income, as well as an objective of competitive, long-term growth. The Fund
finished 1998 with a current yield in the top quartile of funds in the Income
category, as measured by Lipper Inc., an independent monitor of mutual fund
performance. For the six months, it also outperformed the highest-yielding (top
20%) subset of the S&P 500 Index although it did underperform the S&P 500 Index.
During the six months ended January 31, 1999, the Fund's original Class Y shares
had a total return of 0.05%, while Classes A, B and C shares had returns of -
0.11%, -0.48% and -0.48%, respectively. These returns are before deduction of
any sales charges, if applicable.
During 1998, the Fund continued its long-term record of providing generous
current income. The Fund's Class Y shares, for example, paid out $1.015 per
share in ordinary dividends during the 1998 calendar year, $.902 per share in
short-term capital gains (which are treated as income for tax purposes) and
$1.223 per share in long-term capital gains.
Portfolio
Characteristics
---------------
(as of 1/31/99)
Total Net Assets $872,333,002
................................................................................
Number of Holdings 135
................................................................................
P/E Ratio* 15.0x
................................................................................
Beta* 0.67
................................................................................
*as of 12/31/98
What were your principal themes during the six-month period?
We looked for opportunities created by:
. Evergreen's value-timing strategy, which entails finding companies that are
temporarily out of favor in the stock market, but nevertheless have attractive
underlying value.
. The continued merger-and-acquisition trend in American industry, which in 1998
alone resulted in transactions valued at more than $1 trillion.
. Corporate re-structuring programs that can improve long-term earnings
performance.
Top 5 Industries
-----------------------------
(based on 1/31/99 net assets)
Banks 14.6%
................................................................................
Finance & Insurance 8.8%
................................................................................
Electrical Equipment & Services 6.7%
................................................................................
Oil / Energy 6.7%
................................................................................
Utilities--Gas 6.4%
................................................................................
16
<PAGE>
E V E R G R E E N
Income and Growth Fund
Portfolio Manager Interview
What were some examples of the value-timing strategy?
Several companies involved in the telecommunications industry presented
excellent opportunities for the Fund. The investment in convertible bonds issued
by Houston Industries was a good example, as it allowed us to participate in the
growth of Time-Warner, which had purchased the cable television business of
Houston Industries. The convertible bonds, which were issued for tax reasons to
enable Houston Industries to sell Time-Warner stock it had received in the
original transaction, rose by 26% during the six months under review. This
investment allowed the Fund to successfully gain access to Time-Warner's growth
through Houston's convertible bond.
Air Touch Communications convertible bonds were another successful
telecommunications-related investment for the Fund. These bonds had an
attractive yield of 6% when first purchased. With the benefit of a pending
acquisition by Vodafone Group, Plc, the value of the bonds rose by 34.4% during
the six months under review.
Two other notable telecommunications-related investments were in Frontier Corp.
and Williams Companies, Inc. Frontier Corp. had a 17% return for the Fund during
the six months. This company, in addition to offering a traditional telephone
business based in Rochester, N.Y., has the technology to help companies design
web sites for the Internet. Williams Companies, whose traditional business had
been transportation of natural gas and other energy services, suffered as warm
weather and low energy prices created an environment which hurt its stock. We
thought the low stock price did not reflect the growth potential on its
Internet, wireless and fiber-optic transmission businesses. The stock, purchased
by the Fund in September, rose by 26.6% by January 31.
Other value-timing contributors included GTE, which rose by 24%, partly on news
of its potential from the pending merger with Bell Atlantic; General Motors,
which also rose by 24% during six months; and Bank West, a Hawaii-based banking
company. We purchased this stock as a value-timing opportunity when investors
were concerned about the secondary impact from financial problems in Japan which
has been a big tourist support for Hawaii.
Top 10 Equity Holdings
-----------------------------
(based on 1/31/99 net assets)
Qualcomm Financial Trust I 4.2%
................................................................................
Telecom Corp. New Zealand Ltd. 3.6%
................................................................................
Keyspan Energy 3.2%
................................................................................
Paine Webber Group, Inc. 3.2%
................................................................................
Dana Corp. 2.5%
................................................................................
Mercantile Bancorp, Inc. 2.5%
................................................................................
Wendys Financing I 2.5%
................................................................................
Thomas & Betts Corp. 2.3%
................................................................................
Atlantic Richfield Co. 2.2%
................................................................................
Williams Companies, Inc. 2.1%
................................................................................
17
<PAGE>
E V E R G R E E N
Income and Growth Fund
Portfolio Manager Interview
How did the Fund benefit from the merger-and-acquisition trend?
During the six-month period, one acquisition involving a Fund holding was
completed, and four others were announced.
Mercantile Stores was purchased by Dillard's Department Stores, for a 92.5% gain
for the Fund since the original investment in Mercantile in October, 1994. Among
the four pending acquisitions, MidAmerican Energy Holdings Co. had a 41% gain
during the six months. Mid-American is expected to be acquired by CalEnergy Co.
Provident Companies Inc., which has a pending merger with Unum Corp., had a
16.6% gain during the six months.
What were some examples of the restructuring theme?
Union Pacific Railroad was a company that began restructuring itself after
operational difficulties arose from its merger with Southern Pacific. We
believed, however, that the company had great asset value and rebound potential.
We began to invest in March, 1998. During the six months under review, the
restructuring began to take effect, and the Fund had a gain of 22.2%.
Baxter International, a provider of healthcare products and services, is
benefitting from its restructuring efforts. Its stock rose by 18.6% during the
six months.
What industries helped performance, and what industries held back performance?
In general, consumer companies, health-related companies and telecommunications
firms supported the performance during the six months. The poorest-performing
groups included the electric and gas utilities and the real estate investment
trusts. The Fund reduced its emphasis in both those areas during the six months.
Financial services stocks also held back performance, but we think this may be a
temporary situation. We believe this industry should be a strong performer
again, helped by continued merger-and-acquisition activity.
What is your outlook?
We believe the American consumer will continue to be a strong force in the
domestic economy, helping propel growth in Gross Domestic Product. In addition,
we think inflation will remain under control at relatively low levels. Both
these factors--strong consumer spending and low inflation--tend to support the
performance of the stock market.
The risk could be market volatility because of surprises related to
international financial problems. We will continue to invest in companies
offering growth rooted in value, an approach which may give us some downside
protection in the event of a market downturn. This strategy should allow us to
benefit from long-term growth trends, such as we see in the telecommunications
and computer industries and the healthcare sector. Continued consolidation
should help our financial services investment sector.
18
<PAGE>
E V E R G R E E N
Small Cap Value Fund
Fund at a Glance as of January 31, 1999
Portfolio
Management
--------------
[PHOTO OF NOLA MADDOX FALCONE APPEARS HERE]
Nola Maddox Falcone, CFA
Tenure: October 1993
[PHOTO OF JORDAN ALEXANDER APPEARS HERE]
Jordan Alexander, CFA
Tenure: January 1999
- --------------------------------------------------------------------------------
CURRENT INVESTMENT STYLE/1/
- --------------------------------------------------------------------------------
Morningstar's Style Box is based on a portfolio date as of
[MORNINGSTAR'S 1/31/99.
STYLE BOX
APPEARS HERE] 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: 1998 Morningstar, Inc.
/2/Past performance is no guarantee of future results. The performance of each
class may vary based on differences in loads and fees paid by the shareholders
investing in each class. Historical performance for Classes A, B, and C prior to
inception reflects that of Class Y, the original class offered, the inception
date of which is 10/1/93, and does not include 12b-1 fees. If such fees were
reflected, returns would have been lower. Returns reflect expense limits
previously in effect, without which returns would have been lower.
The investment return and principal value will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than original cost. The Russell
2000 Index and the Wilshire Small Cap Value Index are unmanaged market indexes
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.
Smaller 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/
- --------------------------------------------------------------------------------
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
................................................................................
Average Annual Returns*
6 months with sales charge -9.50% -9.98% -6.27% n/a
................................................................................
6 months w/o sales charge -4.96% -5.34% -5.35% -4.90%
................................................................................
1 year with sales charge -12.36% -13.12% -9.57% n/a
................................................................................
1 year w/o sales charge -7.98% -8.67% -8.68% -7.74%
................................................................................
3 years 11.23% 11.38% 12.16% 13.34%
................................................................................
5 years 11.52% 11.67% 11.90% 12.86%
................................................................................
Since Inception 11.74% 12.01% 12.10% 12.99%
................................................................................
Maximum Sales Charge 4.75% 5.00% 1.00% n/a
Front End CDSC CDSC
................................................................................
30-day SEC Yield 1.34% 0.66% 0.66% 1.66%
................................................................................
6-month income dividends
per share $ 0.18 $ 0.12 $ 0.12 $ 0.19
................................................................................
6-month capital gain distributions
per share $ 0.18 $ 0.18 $ 0.18 $ 0.18
................................................................................
* Adjusted for maximum applicable sales charge unless noted.
- --------------------------------------------------------------------------------
LONG TERM GROWTH
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
Evergreen Wilshire Consumer Price
Date Small Cap Value Russell 2000 Sm Cp Val Index - US
---- --------------- ------------ --------- ----------
1/31/95 $ 10,000 $ 10,000 $ 10,000 $ 10,000
12/31/95 $ 12,820 $ 13,008 $ 12,284 $ 10,206
12/31/96 $ 15,642 $ 15,154 $ 14,180 $ 10,552
12/31/97 $ 20,857 $ 18,542 $ 18,781 $ 10,732
1/31/99 $ 18,571 $ 18,310 $ 17,724 $ 10,898
Comparison of Change in value of a $10,000 investment in Evergreen Small Cap
Value Fund Class A, the Russell 2000 Index, Wilshire Small Cap Value Index and
the Consumer Price Index (CPI).
19
<PAGE>
E V E R G R E E N
Small Cap Value Fund
Portfolio Manager Interview
How did the Fund perform during the period?
The Fund continued its strong, long-term record of outperforming its benchmark.
For the six months ended January 31, 1999, the Evergreen Small Cap Value Fund's
Class A shares, unadjusted for sales charges, declined 4.96%, outperforming its
benchmark, the Wilshire Small Cap Value Index, which declined 5.22% during the
same period. The Russell 2000 Index had a positive return of 2.41%, primarily
because it had a higher market capitalization weighting and higher technology
and healthcare stock weightings, all of which performed well. Since its
inception on October 1, 1993, the Fund's original Class Y shares have had a
cumulative total return of 91.86%, well ahead of the 73.18% return of the
Wilshire Small Cap Value Index and the 81.91% return of the Russell 2000 Index.
Portfolio
Characteristics
---------------
(as of 1/31/99)
Total Net Assets $301,240,712
................................................................................
Number of Holdings 159
................................................................................
P/E Ratio* 13.6x
................................................................................
Beta* 0.62
................................................................................
*as of 12/31/98
What were some of the companies that helped performance during the six months?
The strongest performers during the period included many new issues that were
added to the Fund in recent months. The top performers during the six months
were: Craftmade International, up 67.4%; Helix Technology, which rose 65.4%;
Scientific Atlanta, up 56.3%; International Multifoods, up 51.3%; American
Woodmark, which appreciated 50.7%; First Coastal Bankshares, up 46.8%; Standard
Pacific, up 44.6%; Long Drug Stores Corp., up 36.5%; General Housewares Corp.,
which rose 32.7%; Matthews International, which gained 30.2%; and Spartech
Corp., up 25.5%.
Many of the new issues added to the Fund are benefiting from the continued
strength of the U.S. economy. For example, American Woodmark, a manufacturer and
distributor of kitchen and bathroom cabinets, has been helped by the strength of
the remodeling and new home construction markets in the U.S. The company
reported a 22% increase in earnings during the 1998 fiscal year and is expected
to see earnings growth accelerate to an average of 30% annually over the next
two years. Despite the stock's recent strong performance, we believe the stock
remains undervalued. Standard Pacific, a homebuilder focused on markets in
California, Arizona and Texas, is another good example of this theme. The
company recently reported record earnings and a strong order backlog, with year-
over-year fourth quarter 1998 earnings up 125.8% and new home orders up 14%. The
California housing market appears to be in the early stages of a housing
recovery and we expect the company to continue to do well.
20
<PAGE>
E V E R G R E E N
Small Cap Value Fund
Portfolio Manager Interview
In general, stocks in the consumer-related and electrical and electronic
equipment/communication services industry sectors were the best performers for
the Fund. The financial services sector, including banks, thrifts and insurance
stocks, underperformed during the period, but we expect this to be temporary
because of the favorable outlook for continued consolidation in the industry.
Energy also lagged in performance, although the impact to the Fund was less
significant because we have reduced the weighting in this area.
Top 5 Industries
-----------------------------
(based on 1/31/99 net assets)
Banks 11.0%
................................................................................
Consumer Products & Services 10.6%
................................................................................
Building, Construction & Furnishings 6.4%
................................................................................
Telecommunication Services & Equipment 6.2%
................................................................................
Utilities--Gas 5.9%
................................................................................
What were some of the themes that guided the Fund's investment strategy?
During the period, the Fund invested in stocks of undervalued companies with a
positive outlook for improving performance through restructuring. It also
invested in companies in consolidating industries that may be merger and
acquisition candidates. International Multifoods Corp. is a good example of the
restructuring theme. The company, which operates a food service distribution
business in the United States and a food processing business in the United
States and Canada, is restructuring under new management. We expect the
company's restructuring to position it for consistent and strong earnings growth
over the next several years. The stock has been one of the best performers since
we added it to the Fund in early October, and we expect continued success with
the restructuring to provide a strong catalyst for the stock during the next 12
months.
Merger and acquisition activity also continued to help the performance of the
Fund. During the six-month period, six of the Fund's holdings were involved in
completed mergers and a seventh transaction was pending. The average return to
the Fund from the completed transactions was 35.2%. Maryland Federal Bancorp,
the issue which provided the highest return to the Fund, was acquired by BB&T
and generated a total return of 107.3%, since the initial investment in January
1997. First Palm Beach Bancorp was acquired by Republic Security Financial, for
a 58.3% gain to the Fund since its initial investment in December 1996.
Learonal, Inc. was acquired by Rohm & Haas for a gain of 49.7% to the Fund since
its initial investment in July 1997. A pending transaction involves the
acquisition of First Coastal Bancshares by Centura Banks. As we look at the
financial markets and the relative disparities between the valuations of large
companies and small companies, we believe the pace of merger and acquisition
activity will remain strong.
21
<PAGE>
E V E R G R E E N
Small Cap Value Fund
Portfolio Manager Interview
What is the outlook for the Fund?
We are very positive about the potential for strong, small-cap stock performance
for three main reasons. First, the valuations of small cap companies relative to
the stocks of larger companies are at 20-year lows. This disparity has prompted
many small cap companies to announce stock buyback programs in recent months, an
indication that management is confident about their company's prospects. Second,
we believe the attractive valuations of many small cap companies should lead to
an acceleration of merger and acquisition activity, as larger companies can use
their cash or stock to buy undervalued small companies. Third, the action of the
Federal Reserve late last year to reduce the discount rate three times should be
very positive for small cap stocks. Historically, small cap stocks have tended
to outperform large caps following such action by the Federal Reserve.
Looking forward, we continue to see opportunities to invest in undervalued,
entrepreneurial companies with strong growth prospects. The disparity of small
cap stock prices in relation to large company stocks has drawn the attention of
a number of well-known strategists and investors, suggesting a growing market
belief in the compelling value to be found in small cap companies. As we have
seen several times in the past, the current value disparity of small cap
companies could set the stage for a small cap stock rally similar to those
experienced in 1967-68, 1975-76 and 1991-92. Small cap stocks were similarly out
of favor before each of those rallies.
Top 10 Equity Holdings
-----------------------------
(based on 1/31/99 net assets)
CPI Corp. 2.7%
................................................................................
Curtiss Wright Corp. 2.7%
................................................................................
Boston Acoustics, Inc. 2.6%
................................................................................
Semco Energy, Inc. 2.4%
................................................................................
Alpharma, Inc. 5.75%, 4/01/05, 144A 2.3%
................................................................................
Scientific Atlanta, Inc. 2.1%
................................................................................
Helix Technology Corp. 2.0%
................................................................................
Matthews International Corp. Cl. A 1.8%
................................................................................
SierraWest Bancorp 1.8%
................................................................................
Antec Corp. 4.50%, 5/15/03 1.7%
................................................................................
Name Change
Please note: effective April 6, 1999, the Evergreen Small Cap Equity Income Fund
will change its name to Evergreen Small Cap Value Fund, which means that the
Fund will de-emphasize income-producing securities and broaden its investment
universe to enable it to focus on capital growth.
22
<PAGE>
E V E R G R E E N
Utility Fund
Fund at a Glance as of January 31, 1999
Portfolio
Management
--------------
[PHOTO OF PAUL A.DILELLA APPEARS HERE]
Paul A.DiLella
Tenure: July 1996
[PHOTO OF DORIS A. KELLEY-WATKINS APPEARS HERE]
Doris A. Kelley-Watkins
Tenure: February 1997
- --------------------------------------------------------------------------------
CURRENT INVESTMENT STYLE/1/
- --------------------------------------------------------------------------------
Morningstar's Style Box is based on a portfolio date as of
[MORNINGSTAR'S 1/31/99.
STYLE BOX
APPEARS HERE] 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: 1998 Morningstar, Inc.
/2/Past performance is no guarantee of future results. The performance of each
class may vary based on differences in loads and fees paid by the shareholders
investing in each class. Historical performance for Classes C and Y reflects
that of Class A, the original class offered, the inception date of which is
1/4/94, and includes appropriate 12b-1 fees for Class A. If appropriate fees for
Class C were reflected, returns would have been lower. For Class Y, if 12b-1
fees were not reflected, returns would have been higher. Returns reflect expense
limits previously in effect, without which returns would have been lower.
The investment return and principal value will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than original cost. The S&P
Utility Index and the S&P 500 Index 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.
Funds that concentrate their investments in a single industry may face increased
risk of price fluctuation over more diversified funds due to adverse
developments within that industry.
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS/2/
- --------------------------------------------------------------------------------
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*
................................................................................
6 months with sales charge 0.22% 0.21% 3.92% n/a
................................................................................
6 months w/o sales charge 5.24% 4.84% 4.84% 5.27%
................................................................................
1 year with sales charge 2.79% 2.42% 6.15% n/a
................................................................................
1 year w/o sales charge 7.89% 7.08% 7.08% 8.16%
................................................................................
3 years 10.06% 10.18% 10.96% 12.07%
................................................................................
5 years 10.83% 10.83% 11.16% 12.17%
................................................................................
Since Inception 10.73% 10.85% 11.06% 12.05%
................................................................................
Maximum Sales Charge 4.75% 5.00% 1.00% n/a
Front End CDSC CDSC
................................................................................
30-day SEC Yield 2.47% 1.82% 1.84% 2.85%
................................................................................
6-month income distributions
per share $ 0.23 $ 0.19 $ 0.19 $ 0.26
................................................................................
6-month capital gain distributions
per share $ 1.28 $ 1.28 $ 1.28 $ 1.28
................................................................................
* Adjusted for maximum applicable sales charge unless noted.
- --------------------------------------------------------------------------------
LONG TERM GROWTH
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
Consumer Price
Date Evergreen Utility S&P 500 S&P Utility Index - US
---- ----------------- ------- ----------- ----------
1/31/94 $ 10,000 $ 10,000 $ 10,000 $ 10,000
12/31/94 $ 9,405 $ 9,799 $ 9,696 $ 10,239
12/31/95 $ 12,298 $ 13,482 $ 13,684 $ 10,492
12/31/96 $ 12,839 $ 16,576 $ 14,110 $ 10,848
12/31/97 $ 16,607 $ 22,107 $ 17,590 $ 11,033
1/31/99 $ 17,516 $ 29,589 $ 19,257 $ 11,204
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 Utility), the Standard and
Poor's 500 Index (S&P 500) and the Consumer Price Index (CPI).
23
<PAGE>
E V E R G R E E N
Utility Fund
Portfolio Manager Interview
How did the Fund perform during the fiscal period?
For the six months ended January 31, 1999, the Evergreen Utility Fund Class A
shares returned 5.24%, compared to the 7.89% return of the S&P Utilities Index.
Classes B, C, and Y returned, 4.84%, 4.84%, and 5.27%, respectively. These
returns are unadjusted for any applicable sales charges.
Portfolio
Characteristics
---------------
(as of 1/31/99)
Total Net Assets $144,849,912
................................................................................
Number of Holdings 38
................................................................................
P/E Ratio* 21.5x
................................................................................
Beta* 0.70
................................................................................
*as of 12/31/98
What was the investment environment like during the fiscal period?
The past six months consisted of two distinctly different periods. Equity
investors witnessed sharp declines during the first two months, before stocks
rebounded sharply in the final four months of the period. The market's initial
decline was a result of international volatility filtering back to U.S. markets,
while its subsequent four-month comeback was spurred by resilient U.S. economic
growth, emerging market stability and support by the Federal Reserve Board, in
the form of three interest rate cuts.
How has the Fund's investment objective fared in the recent environment?
The Evergreen Utility Fund's primary objective of high current income may be
achieved by investing the majority of its assets in income-oriented sectors and,
specifically, maintaining a 65% minimum weighting in utility companies. Over the
past several quarters, investors' appetite for visible and predictable earnings
growth has propelled growth-oriented sectors such as technology, while causing
income-oriented sectors, such as utilities, to lag. As a result, our Fund has
trailed the exceptional returns of the S&P 500 Index. Careful navigation through
a volatile investing environment, and strong stock selection amid dynamic
changes within the utility industry itself, however, have allowed the Fund to
outpace its benchmark, the S&P Utilities Index.
Top 5 Industries
-----------------------------
(based on 1/31/99 net assets)
Utilities--Electric 48.0%
................................................................................
Utilities--Telephone 21.8%
................................................................................
Communication Systems & Services 6.6%
................................................................................
Utilities--Gas 5.8%
................................................................................
Oil / Energy 3.2%
................................................................................
24
<PAGE>
E V E R G R E E N
Utility Fund
Portfolio Manager Interview
What areas of the portfolio allowed you to outperform your benchmark?
The Fund's weighting in the telecommunications sector had an especially positive
impact on performance. Within this area Sprint Corp., GTE Corp. and BellSouth
all posted six-month returns over 26%.
The energy sector's performance can be pinpointed as one of the Fund's biggest
negative influences, especially during the last few months. Plummeting oil
prices and the global economic slowdown had a punishing effect on energy stocks.
For example, R&B Falcon, a contract driller of oil wells, declined -21% in the
six-month period.
Looking ahead, do you foresee any changes within the utility industry?
Going forward, we believe the effects of deregulation will continue to intensify
competition and change the operating environment for utility companies. Stock
selection will be even more critical as we navigate through this evolving
industry landscape.
Furthermore, we anticipate increasing consolidation as foreign investors step in
and aggressively pursue U.S. utility companies. This increasing merger activity
is similar to recent activity among financial companies, and we intend to
capitalize upon this evolving industry landscape. Within this environment, stock
selection will be even more critical; however, we expect this activity to fuel
the performance of utility companies, as well as our Fund, in 1999.
Top 10 Equity Holdings
-----------------------------
(based on 1/31/99 net assets)
BellSouth Corp. 4.6%
................................................................................
AirTouch Communications, Inc. 3.8%
................................................................................
Houston Industries, Inc. 3.6%
................................................................................
Energy East Corp. 3.5%
................................................................................
Sprint Corp. (Common Stock) 3.5%
................................................................................
Sprint Corp. (8.25%, DECS) 3.5%
................................................................................
U.S. West, Inc. 3.4%
................................................................................
Keyspan Energy 3.4%
................................................................................
GTE Corp. 3.3%
................................................................................
PacifiCorp 3.2%
................................................................................
25
<PAGE>
E V E R G R E E N
Value Fund
Fund at a Glance as of January 31, 1999
Portfolio
Management
--------------
[PHOTO OF MATTHEW D. FINN APPEARS HERE]
Matthew D. Finn, CFA
Tenure: March 1998
- --------------------------------------------------------------------------------
CURRENT INVESTMENT STYLE/1/
- --------------------------------------------------------------------------------
Morningstar's Style Box is based on a portfolio date as of
[MORNINGSTAR'S 1/31/99.
STYLE BOX
APPEARS HERE] 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: 1998 Morningstar, Inc.
/2/Past performance is no guarantee of future results. The performance of each
class may vary based on differences in loads and fees paid by the shareholders
investing in each class. Historical performance for Class B, C, and Y prior to
inception reflects that of Class A, the original class offered, the inception
date of which is 4/12/85, and includes appropriate 12b-1 fees for Class A. If
appropriate fees for Classes B and C were reflected, returns for these classes
would have been lower. For Class Y, if 12b-1 fees were not reflected, returns
would have been higher. Returns reflect expense limits previously in effect,
without which returns would have been lower.
The investment return and principal value will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than original cost. The S&P 500
Index is an unmanaged 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.
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS/2/
- --------------------------------------------------------------------------------
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 1/31/91
................................................................................
Average Annual Returns*
................................................................................
6 months with sales charge 3.09% 2.83% 6.84% n/a
................................................................................
6 months w/o sales charge 8.24% 7.83% 7.84% 8.41%
................................................................................
1 year with sales charge 10.05% 9.69% 13.67% n/a
................................................................................
1 year w/o sales charge 15.53% 14.66% 14.67% 15.81%
................................................................................
3 years 16.58% 16.89% 17.63% 18.78%
................................................................................
5 years 16.22% 16.32% 16.62% 17.65%
................................................................................
10 years 13.99% 14.08% 14.18% 14.79%
................................................................................
Since Inception 14.20% 14.27% 14.34% 14.78%
................................................................................
Maximum Sales Charge 4.75% 5.00% 1.00% n/a
Front End CDSC CDSC
................................................................................
30-day SEC Yield 0.58% -0.11% -0.11% 0.86%
................................................................................
6-month income dividends
per share $0.11 $0.05 $0.05 $0.14
................................................................................
6-month capital gain distributions
per share $0.13 $0.13 $0.13 $0.13
................................................................................
* Adjusted for maximum applicable sales charge unless noted.
- --------------------------------------------------------------------------------
LONG TERM GROWTH
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
Date Evergreen Value S&P 500 Consumer Price Index - US
---- --------------- ------- -------------------------
1/31/89 $ 10,000 $ 10,000 $ 10,000
12/31/89 $ 11,921 $ 12,270 $ 10,413
12/31/90 $ 11,512 $ 11,889 $ 11,049
12/31/91 $ 14,409 $ 15,511 $ 11,387
12/31/92 $ 15,518 $ 16,693 $ 11,714
12/31/93 $ 16,962 $ 18,376 $ 12,040
12/31/94 $ 17,278 $ 18,618 $ 12,362
12/31/95 $ 22,771 $ 25,616 $ 12,667
12/31/96 $ 27,079 $ 31,496 $ 13,097
12/31/97 $ 34,045 $ 42,004 $ 13,320
1/31/99 $ 38,781 $ 56,220 $ 13,526
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).
26
<PAGE>
E V E R G R E E N
Value Fund
Portfolio Manager Interview
How did the Fund perform?
The Evergreen Value Fund had very good performance for a value-oriented fund in
a period in which the growth style of investing was more in favor. For the six
months ended on January 31, 1999, the Fund's Class A shares had a total return
of 8.24%, while Class B and C shares had returns, of 7.83% and 7.84%,
respectively, unadjusted for applicable sales charges. Class Y shares had a
return of 8.41%. During the same six-month period, the average return of growth
and income funds was 7.88%, as measured by Lipper Inc., an independent monitor
of mutual funds; while the Russell 1000 Value Index had a return of 5.79%; and
the S&P Barra Value Index, composed of the value stocks in the S&P 500, had a
return of 6.65%.
Portfolio
Characteristics
---------------
(as of 1/31/99)
Total Net Assets $979,915,942
................................................................................
Number of Holdings 95
................................................................................
P/E Ratio* 21.7x
................................................................................
Beta* 0.97
................................................................................
*as of 12/31/98
What were the factors affecting performance during the six months?
The Fund was defensively positioned at the start of the period in August, and
this helped performance during the down market in August and September. However,
this defensive tilt that helped us in those two months hurt relative performance
when the market came roaring back in October through December. The high-
volatility, technology stocks that value investors tend to de-emphasize led the
market rally during those months. We did begin to make changes in December,
however, and that helped us finish the period with a strong January.
What were your principal decisions during the period?
We made reductions in our weightings in financial services, healthcare and
oil/energy. The net reduction in financial services, which has been an area of
emphasis, was relatively minor, as banks were reduced, but finance and insurance
holdings were increased. I would ascribe this to the effects of normal portfolio
management and the fact that we found potentially better opportunities
elsewhere.
The Fund had been over-weighted versus the value indexes in pharmaceuticals
since March because we thought there was good potential in the industry. That
decision helped performance, but by December we thought the industry's move had
run its course and we cut the Fund's exposure. During the six months, the Fund's
allocation in healthcare fell from 13% to 3.2% of net assets.
27
<PAGE>
E V E R G R E E N
Value Fund
Portfolio Manager Interview
Top 5 Industries
-----------------------------
(based on 1/31/99 net assets)
Finance & Insurance 14.1%
................................................................................
Banks 13.5%
................................................................................
Information Services & Technology 12.8%
................................................................................
Utilities--Telephone 7.1%
................................................................................
Electrical Equipment & Services 5.3%
................................................................................
As investors became more concerned that economic growth would slow, we started
seeing some attractive values in cyclical industries, such as auto
manufacturing, retailing, basic materials, chemicals and transportation.
Cyclical industries are those whose earnings tend to be closely tied to the
business cycle. Companies in these industries tend to do well when the economy
is expanding. Because their stocks run in and out of favor, they sometimes
represent opportunities for value investors.
We added to the Fund's position in General Motors after its stock price fell in
last summer's strike. That has been a good investment for us. Other consumer
cyclicals added to the portfolio included Federated Department Stores and Tommy
Hilfiger, the clothing company. Both have done well for the Fund.
In basic materials we added Louisiana Pacific, a lumber and buildings materials
company; Morton International, a specialty chemicals company; Stone Smurfit
Container; and British Steel and A.K. Steel. In transportation, we added C.N.F.
Transportation, a truck and air freight company.
The Fund's weighting in communications services rose from 1.8% to 7.4% during
the period. The most significant move was adding to the investment in AT&T,
which has been a strong performer for the Fund.
Large-company, growth stocks have been market leaders for more than two years.
How has this affected your strategy as a value manager?
At the beginning of 1999, we were seeing some strength in companies with
sensitivity to the economic cycle, which often are value stocks. At the same
time, I would have to say that large company growth stocks still appear to be
leading the market.
We have not changed our investment approach. We still focus on the value of a
company, which we define as the present value of future cash flow. We take
growth rates into account when we do a valuation. We try to find rapidly growing
companies that are at attractive prices. Value and growth are opposite sides of
the same coin. We are not bogged down in buying broken companies, i.e.,
companies that are in poor businesses, have a poor competitive position or bad
management. The overall characteristics of the Fund are of value, however, with
a lower portfolio price/earnings ratio than the overall market.
Our outlook for value stocks is very positive. Typically, when investors are
optimistic about the economy--as they seem to be--value does better.
A good illustration of our investment style is the Fund's position in Oracle
Corp, a large, database software company. This is the type of company many
people would not associate with the value style; however, it showed up on our
screen when its earnings became depressed as it was rolling out new products. It
was a fallen growth stock that had underperformed for a couple of years. The
stock price had declined from more than $40 a share to between $20 and $30 when
we started buying it. The stock then turned around and rose to $60 a share, when
we started cutting back to take profits. This is an example of how we can remain
true to the value style, with a low portfolio price/earnings ratio, and still
invest in rapidly growing areas from time to time if valuations allow it. We
keep our discipline because we believe it will work in the long run.
28
<PAGE>
E V E R G R E E N
Value Fund
Portfolio Manager Interview
Top 10 Equity Holdings
-----------------------------
(based on 1/31/99 net assets)
Oracle Systems Corp. 3.2%
................................................................................
Bankamerica Corp. 2.7%
................................................................................
Pharmacia & Upjohn, Inc. 2.4%
................................................................................
Waste Management, Inc. 2.2%
................................................................................
Fleet Financial Group, Inc. 2.2%
................................................................................
Tommy Hilfiger Corp. 2.2%
................................................................................
AT&T Corp. 2.1%
................................................................................
Chase Manhattan Corp. 2.1%
................................................................................
Citigroup, Inc. 2.0%
................................................................................
Louisiana Pacific Corp. 2.0%
................................................................................
What is your general outlook?
Lots of people look at current valuations in the market and say they are high.
It is true that valuations are high when you look at historical averages;
however, they are not high when compared to other periods in which inflation was
very low.
We think the market's current valuations make sense, given the very low
inflation and interest rates. Investors will pay higher values for any given
level of earnings when interest rates are low. That's a fundamental tenet of
Finance 101. While others say earnings are cyclically above normal, we see many
cyclical companies that already have earnings at depressed levels. They
represent opportunities for value investors.
We also believe there is another, secular component to the economy that gives us
reason for encouragement. This is the trend of corporate management to use
technology to improve productivity and to be more judicious in the use of
capital. Management today is not just building headquarters and facilities
willy-nilly. They are investing to earn a return, which is positive for
profitability. We believe management today is smarter.
While we think a lot of the easy money has been made in the stock market, we
think there will be opportunities for disciplined value investors. We will view
market setbacks as buying opportunities. We think the economy will grow over the
long run, and expect the earnings of companies in our portfolio will
grow.
29
<PAGE>
E V E R G R E E N
Blue Chip Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months Ended
January 31, 1999 Period Ended
(Unaudited) # July 31, 1998 (a)
<S> <C> <C>
CLASS A SHARES
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 or losses
on securities and foreign currency related
transactions 3.50 3.01
-------- --------
...............................................................................
Total from investment operations 3.55 3.09
-------- --------
...............................................................................
Less distributions to shareholders from
...............................................................................
Net investment income (0.03) (0.06)
...............................................................................
Net realized gains (2.38) 0
-------- --------
...............................................................................
Total distributions to shareholders (2.41) (0.06)
-------- --------
...............................................................................
Net asset value, end of period $ 31.56 $ 30.42
-------- --------
...............................................................................
Total return* 12.58% 11.29%
...............................................................................
Ratios and supplemental data
...............................................................................
Net assets, end of period (thousands) $340,293 $284,735
...............................................................................
Ratios to average net assets
Expenses 1.22%+ 1.20%+
...............................................................................
Net investment income 0.42%+ 0.49%+
...............................................................................
Portfolio turnover rate 73% 112%
...............................................................................
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended Year Ended August 31,
January 31, 1999 Period Ended --------------------------------------
(Unaudited) # July 31, 1998 (b) 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
CLASS B SHARES
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
and foreign currency
related transactions 3.43 5.72 7.97 3.69 2.66 (0.35)
-------- -------- -------- -------- -------- --------
Total from investment
operations 3.38 5.60 8.12 3.81 2.91 (0.19)
-------- -------- -------- -------- -------- --------
.....................................................................................................
Less 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 to
shareholders (2.38) (5.04) (3.38) (1.74) (3.14) (2.02)
-------- -------- -------- -------- -------- --------
.....................................................................................................
Net asset value, end of
period $ 31.35 $ 30.35 $ 29.79 $ 25.05 $ 22.98 $ 23.21
-------- -------- -------- -------- -------- --------
.....................................................................................................
Total return* 12.01% 20.89% 34.76% 17.31% 13.87% (0.72%)
.....................................................................................................
Ratios and supplemental
data
.....................................................................................................
Net assets, end of
period (thousands) $140,231 $117,893 $312,935 $224,819 $199,456 $208,532
.....................................................................................................
Ratios to average net
assets
Expenses 1.97%+ 1.68%+ 1.57% 1.85% 1.75% 2.07%
.....................................................................................................
Net investment income (0.34%)+ (0.02%)+ 0.55% 0.52% 1.09% 0.67%
.....................................................................................................
Portfolio turnover rate 73% 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.
+ Annualized.
# Net investment income is based on average shares outstanding throughout the
period.
See Combined Notes to Financial Statements.
30
<PAGE>
E V E R G R E E N
Blue Chip Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months Ended
January 31, 1999 Period Ended
(Unaudited) # July 31, 1998 (a)
<S> <C> <C>
CLASS C SHARES
Net asset value, beginning of period $30.40 $27.70
------ ------
.................................................................................
Income from investment operations
.................................................................................
Net investment income (0.05) 0
.................................................................................
Net realized and unrealized gains or
losses on securities and foreign currency
related transactions 3.46 2.72
------ ------
.................................................................................
Total from investment operations 3.41 2.72
------ ------
.................................................................................
Less distributions to shareholders from
.................................................................................
Net investment income 0 (0.02)
.................................................................................
Net realized gains (2.38) 0
.................................................................................
Total distributions to shareholders (2.38) (0.02)
------ ------
.................................................................................
Net asset value, end of period $31.43 $30.40
------ ------
.................................................................................
Total return* 12.09% 9.80%
.................................................................................
Ratios and supplemental data
.................................................................................
Net assets, end of period (thousands) $ 885 $ 780
.................................................................................
Ratios to average net assets
Expenses 1.98%+ 2.02%+
.................................................................................
Net investment income (0.38%)+ (0.27%)+
.................................................................................
Portfolio turnover rate 73% 112%
.................................................................................
</TABLE>
(a) For the period from January 22, 1998 (commencement of class operations) to
July 31, 1998.
* Excluding applicable sales charges.
+ Annualized.
# Net investment income is based on average shares outstanding throughout the
period.
See Combined Notes to Financial Statements.
31
<PAGE>
E V E R G R E E N
Equity Income Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended July
31, Year Ended November 30,
Six Months Ended ---------------- -------------------------
January 31, 1999 1997
(Unaudited) 1998 (a) 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
CLASS A SHARES
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 0.14 0.21 0.18 0.26 0.25 0.24
...........................................................................................
Net realized and
unrealized gains or
losses on securities
and foreign currency
related transactions 0.33 2.46 3.34 3.83 2.80 (0.56)
------- ------- ------- ------- ------- -------
Total from investment
operations 0.47 2.67 3.52 4.09 3.05 (0.32)
------- ------- ------- ------- ------- -------
...........................................................................................
Less distributions to
shareholders from
Net realized gains (2.74) (1.52) 0 (0.33) (0.65) 0
------- ------- ------- ------- ------- -------
...........................................................................................
Net investment income (0.12) (0.19) (0.16) (0.26) (0.32) (0.24)
...........................................................................................
Total distributions to
shareholders (2.86) (1.71) (0.16) (0.59) (0.97) (0.24)
------- ------- ------- ------- ------- -------
...........................................................................................
Net asset value, end of
period $ 19.26 $ 21.65 $ 20.69 $ 17.33 $ 13.83 $ 11.75
------- ------- ------- ------- ------- -------
...........................................................................................
Total return* 2.47% 13.85% 20.40% 29.83% 26.57% (2.65%)
...........................................................................................
Ratios and supplemental
data
...........................................................................................
Net assets, end of
period (thousands) $52,669 $52,667 $47,812 $40,487 $27,037 $23,162
...........................................................................................
Ratios to average net
assets
Expenses 1.24%+ 1.21% 1.24%+ 1.41% 1.69% 1.59%
...........................................................................................
Net investment income 1.55%+ 1.01% 1.46%+ 1.66% 1.94% 1.93%
...........................................................................................
Portfolio turnover rate 65% 66% 41% 41% 77% 57%
...........................................................................................
</TABLE>
<TABLE>
<CAPTION>
Year Ended July Year Ended November
Six Months Ended 31, 30,
January 31, 1999 ------------------ ------------------------
(Unaudited) 1998 1997 (a) 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
CLASS B SHARES
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 0.08 0.06 0.09 0.15 0.15 0.15
...........................................................................................
Net realized and
unrealized gains or
losses on securities
and foreign currency
related transactions 0.31 2.45 3.31 3.80 2.82 (0.56)
------- -------- ------- ------- ------- ------
...........................................................................................
Total from investment
operations 0.39 2.51 3.40 3.95 2.97 (0.41)
------- -------- ------- ------- ------- ------
...........................................................................................
Less distributions to
shareholders from
Net realized gains (2.74) (1.52) 0 (0.33) (0.65) 0
------- -------- ------- ------- ------- ------
...........................................................................................
Net investment income (0.06) (0.06) (0.08) (0.15) (0.25) (0.14)
...........................................................................................
Total distributions to
shareholders (2.80) (1.58) (0.08) (0.48) (0.90) (0.14)
------- -------- ------- ------- ------- ------
...........................................................................................
Net asset value, end of
period $ 19.15 $ 21.56 $ 20.63 $ 17.31 $ 13.84 $11.77
------- -------- ------- ------- ------- ------
...........................................................................................
Total return* 2.08% 13.01% 19.68% 28.73% 25.59% (3.36%)
...........................................................................................
Ratios and supplemental
data
...........................................................................................
Net assets, end of
period (thousands) $90,736 $105,748 $94,309 $43,526 $20,605 $7,314
...........................................................................................
Ratios to average net
assets
Expenses 1.99%+ 1.97% 2.02%+ 2.18% 2.47% 2.31%
...........................................................................................
Net investment income 0.79%+ 0.25% 0.58%+ 0.88% 1.06% 1.27%
...........................................................................................
Portfolio turnover rate 65% 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.
+ Annualized.
See Combined Notes to Financial Statements.
32
<PAGE>
E V E R G R E E N
Equity Income Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended July Year Ended November
31, 30,
Six Months Ended ---------------- -----------------------
January 31, 1999 1997
(Unaudited) # 1998 (a) 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
CLASS C SHARES
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 0.08 0.05 0.09 0.14 0.16 0.15
...........................................................................................
Net realized and
unrealized gains or
losses on securities
and foreign currency
related transactions 0.31 2.46 3.32 3.81 2.81 (0.56)
------- ------- ------- ------- ------ ------
...........................................................................................
Total from investment
operations 0.39 2.51 3.41 3.95 2.97 (0.41)
------- ------- ------- ------- ------ ------
...........................................................................................
Less distributions to
shareholders from
Net realized gains (2.74) (1.52) 0 (0.33) (0.65) 0
------- ------- ------- ------- ------ ------
...........................................................................................
Net investment income (0.06) (0.06) (0.08) (0.15) (0.25) (0.14)
...........................................................................................
Total distributions to
shareholders (2.80) (1.58) (0.08) (0.48) (0.90) (0.14)
------- ------- ------- ------- ------ ------
...........................................................................................
Net asset value, end of
period $ 19.17 $ 21.58 $ 20.65 $ 17.32 $13.85 $11.78
------- ------- ------- ------- ------ ------
...........................................................................................
Total return* 2.08% 12.99% 19.73% 28.71% 25.57% (3.36%)
...........................................................................................
Ratios and supplemental
data
...........................................................................................
Net assets, end of
period (thousands) $19,383 $20,851 $21,125 $14,562 $9,503 $5,968
...........................................................................................
Ratios to average net
assets
Expenses 1.99%+ 1.97% 2.01%+ 2.17% 2.47% 2.34%
...........................................................................................
Net investment income 0.80%+ 0.25% 0.66%+ 0.89% 1.16% 1.21%
...........................................................................................
Portfolio turnover rate 65% 66% 41% 41% 77% 57%
...........................................................................................
</TABLE>
<TABLE>
<CAPTION>
Year Ended July
Six Months Ended 31,
January 31, 1999 ----------------
(Unaudited) # 1998 1997 (b)
<S> <C> <C> <C>
CLASS Y SHARES
Net asset value, beginning of period $21.61 $20.62 $17.74
------ ------ ------
...........................................................................................
Income from investment operations
...........................................................................................
Net investment income 0.17 0.24 0.18
...........................................................................................
Net realized and unrealized gains or losses
on securities and foreign currency related
transactions 0.32 2.51 2.86
------ ------ ------
...........................................................................................
Total from investment operations 0.49 2.75 3.04
------ ------ ------
...........................................................................................
Less distributions to shareholders from
...........................................................................................
Net investment income (0.15) (0.24) (0.16)
...........................................................................................
Net realized gains (2.74) (1.52) 0
------ ------ ------
...........................................................................................
Total distributions to shareholders (2.89) (1.76) (0.16)
------ ------ ------
...........................................................................................
Net asset value, end of period $19.21 $21.61 $20.62
------ ------ ------
...........................................................................................
Total return 2.56% 14.29% 17.22%
...........................................................................................
Ratios and supplemental data
...........................................................................................
Net assets, end of period (thousands) $ 249 $ 111 $ 93
...........................................................................................
Ratios to average net assets
Total expenses 0.99%+ 0.93% 1.34%+
...........................................................................................
Net investment income 1.79%+ 1.31% 0.79%+
...........................................................................................
Portfolio turnover rate 65% 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.
+ Annualized.
# Net investment income is based on average shares outstanding throughout the
period.
See Combined Notes to Financial Statements.
33
<PAGE>
E V E R G R E E N
Growth and Income Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended July Year Ended
Six Months Ended 31, December 31,
January 31, 1999 ---------------- ----------------
(Unaudited) 1998 1997 (b) 1996 1995 (a)
<S> <C> <C> <C> <C> <C>
CLASS A SHARES
Net asset value,
beginning of period $29.14 $27.26 $22.53 $18.63 $14.48
------ ------ ------ ------ ------
.................................................................................
Income from investment
operations
.................................................................................
Net investment income 0.07 0.16 0.08 0.12 0.13
.................................................................................
Net realized and
unrealized gains or
losses on securities
and foreign currency
related transactions 0.07 2.86 4.72 4.26 4.64
------ ------ ------ ------ ------
.................................................................................
Total from investment
operations 0.14 3.02 4.80 4.38 4.77
------ ------ ------ ------ ------
.................................................................................
Less distributions to
shareholders from
Net realized gains (0.78) (1.01) 0 (0.35) (0.48)
------ ------ ------ ------ ------
.................................................................................
Net investment income (0.06) (0.13) (0.07) (0.13) (0.14)
.................................................................................
Total distributions to
shareholders (0.84) (1.14) (0.07) (0.48) (0.62)
------ ------ ------ ------ ------
.................................................................................
Net asset value, end of
period $28.44 $29.14 $27.26 $22.53 $18.63
------ ------ ------ ------ ------
.................................................................................
Total return* 0.53% 11.26% 21.33% 23.50% 33.00%
.................................................................................
Ratios and supplemental
data
.................................................................................
Net assets, end of
period (millions) $ 286 $ 296 $ 166 $ 85 $ 19
.................................................................................
Ratios to average net
assets
Expenses 1.46%+ 1.46% 1.47%+ 1.41% 1.55%+
.................................................................................
Net investment income 0.53%+ 0.61% 0.57%+ 0.70% 0.99%+
.................................................................................
Portfolio turnover rate 7% 20% 6% 14% 17%
.................................................................................
</TABLE>
<TABLE>
<CAPTION>
Year Ended July Year Ended
Six Months Ended 31, December 31,
January 31, 1999 ----------------- -----------------
(Unaudited) 1998 1997 (b) 1996 1995 (a)
<S> <C> <C> <C> <C> <C>
CLASS B SHARES
Net asset value,
beginning of period $28.88 $27.10 $22.43 $18.59 $14.48
------ ------ ------ ------ ------
.................................................................................
Income from investment
operations
.................................................................................
Net investment income (0.03) (0.02) (0.02) 0 0.05
.................................................................................
Net realized and
unrealized gains or
losses on securities
and foreign currency
related transactions 0.07 2.81 4.69 4.20 4.61
------ ------ ------ ------ ------
.................................................................................
Total from investment
operations 0.04 2.79 4.67 4.20 4.66
------ ------ ------ ------ ------
.................................................................................
Less distributions to
shareholders from
Net realized gains (0.78) (1.01) 0 (0.35) (0.48)
------ ------ ------ ------ ------
.................................................................................
Net investment income 0 0 0 (0.01) (0.07)
.................................................................................
Total distributions to
shareholders (0.78) (1.01) 0 (0.36) (0.55)
------ ------ ------ ------ ------
.................................................................................
Net asset value, end of
period $28.14 $28.88 $27.10 $22.43 $18.59
------ ------ ------ ------ ------
.................................................................................
Total return* 0.17% 10.44% 20.82% 22.60% 32.20%
.................................................................................
Ratios and supplemental
data
.................................................................................
Net assets, end of
period (millions) $ 985 $1,000 $ 542 $ 245 $ 46
.................................................................................
Ratios to average net
assets
Expenses 2.21%+ 2.21% 2.25%+ 2.17% 2.24%+
.................................................................................
Net investment income (0.22%)+ (0.14%) (0.19%)+ (0.06%) 0.30%+
.................................................................................
Portfolio turnover rate 7% 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.
+ Annualized.
See Combined Notes to Financial Statements.
34
<PAGE>
E V E R G R E E N
Growth and Income Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months Ended Year Ended July 31, Year Ended December 31,
January 31, 1999 ----------------------- ---------------------------
(Unaudited) 1998 1997 (b) 1996 1995 (a)
<S> <C> <C> <C> <C> <C>
CLASS C SHARES
Net asset value,
beginning of period $28.89 $ 27.10 $ 22.43 $ 18.58 $ 14.48
------ --------- --------- ----------- -----------
...................................................................................................
Income from investment
operations
...................................................................................................
Net investment income (0.03) (0.02) (0.02) 0 0.06
...................................................................................................
Net realized and
unrealized gains or
losses on securities
and foreign currency
related transactions 0.07 2.82 4.69 4.21 4.60
------ --------- --------- ----------- -----------
...................................................................................................
Total from investment
operations 0.04 2.80 4.67 4.21 4.66
------ --------- --------- ----------- -----------
...................................................................................................
Less 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 to
shareholders (0.78) (1.01) 0 (0.36) (0.56)
------ --------- --------- ----------- -----------
...................................................................................................
Net asset value, end of
period $28.15 $ 28.89 $ 27.10 $ 22.43 $ 18.58
------ --------- --------- ----------- -----------
...................................................................................................
Total return* 0.20% 10.47% 20.82% 22.60% 32.20%
...................................................................................................
Ratios and supplemental
data
...................................................................................................
Net assets, end of
period (millions) $ 46 $ 50 $ 24 $ 10 $ 20
...................................................................................................
Ratios to average net
assets
Expenses 2.21%+ 2.21% 2.25%+ 2.17% 2.15%+
...................................................................................................
Net investment income (0.22%)+ (0.13%) (0.19%)+ (0.06%) 0.35%+
...................................................................................................
Portfolio turnover rate 7% 20% 6% 14% 17%
...................................................................................................
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended Year Ended July 31, Year Ended December 31,
January 31, 1999 ---------------------- -------------------------
(Unaudited) 1998 1997 (b) 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
CLASS Y SHARES
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 0.11 0.24 0.11 0.18 0.18 0.14
...................................................................................................
Net realized and
unrealized gains or
losses on securities
and foreign currency
related transactions 0.07 2.87 4.73 4.25 4.59 0.12
------ --------- --------- ------- ------- -------
...................................................................................................
Total from investment
operations 0.18 3.11 4.84 4.43 4.77 0.26
------ --------- --------- ------- ------- -------
...................................................................................................
Less distributions to
shareholders from
Net realized gains (0.78) (1.01) 0 (0.35) (0.48) (1.01)
------ --------- --------- ------- ------- -------
...................................................................................................
Net investment income (0.09) (0.20) (0.10) (0.17) (0.17) (0.14)
...................................................................................................
Total distributions to
shareholders (0.87) (1.21) (0) (0.52) (0.65) (1.15)
------ --------- --------- ------- ------- -------
...................................................................................................
Net asset value, end of
period $28.50 $ 29.19 $ 27.29 $ 22.55 $ 18.64 $ 14.52
------ --------- --------- ------- ------- -------
...................................................................................................
Total return 0.67% 11.56% 21.52% 23.80% 32.90% 1.70%
...................................................................................................
Ratios and supplemental
data
...................................................................................................
Net assets, end of
period (millions) $ 752 $ 801 $ 616 $ 442 $ 141 $ 73
...................................................................................................
Ratios to average net
assets
Expenses 1.21%+ 1.20% 1.21%+ 1.16% 1.27% 1.33%
...................................................................................................
Net investment income 0.78%+ 0.86% 0.82%+ 0.93% 1.11% 0.96%
...................................................................................................
Portfolio turnover rate 7% 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.
+ Annualized.
See Combined Notes to Financial Statements.
35
<PAGE>
E V E R G R E E N
Income and Growth Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months Ended Year Ended July 31, Year Ended January 31,
January 31, 1999 ----------------------- --------------------------
(Unaudited) 1998 1997 (b) # 1997 1996 1995 (a)
<S> <C> <C> <C> <C> <C> <C>
CLASS A SHARES
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 0.44 1.05 0.52 1.02 1.01 0.02
..................................................................................................
Net realized and
unrealized gains or
losses on securities
and foreign currency
related transactions (0.49) 0.81 2.15 1.67 2.94 0.17
------- --------- --------- ------ ------ ------
..................................................................................................
Total from investment
operations (0.05) 1.86 2.67 2.69 3.95 0.19
------- --------- --------- ------ ------ ------
..................................................................................................
Less distributions to
shareholders from
Net realized gains (2.13) (1.59) 0 0 0 0
------- --------- --------- ------ ------ ------
..................................................................................................
Net investment income (0.42) (1.02) (0.52) (1.05) (1.08) 0
..................................................................................................
Total distributions to
shareholders (2.55) (2.61) (0.52) (1.05) (1.08) 0
------- --------- --------- ------ ------ ------
..................................................................................................
Net asset value, end of
period $ 20.59 $ 23.19 $ 23.94 $21.79 $20.15 $17.28
------- --------- --------- ------ ------ ------
..................................................................................................
Total return* (0.11%) 7.93% 12.45% 13.80% 23.40% 1.10%
..................................................................................................
Ratios and supplemental
data
..................................................................................................
Net assets, end of
period (thousands) $13,379 $ 15,005 $ 11,955 $9,678 $4,412 $ 119
..................................................................................................
Ratios to average net
assets
..................................................................................................
Expenses 1.50%+ 1.50% 1.45%+ 1.44% 1.36% 1.45%+
..................................................................................................
Net investment income 4.15%+ 4.20% 4.69%+ 4.93% 5.39% 4.09%+
..................................................................................................
Portfolio turnover rate 43% 133% 72% 168% 138% 151%
..................................................................................................
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended Year Ended July 31, Year Ended January 31,
January 31, 1999 ----------------------- --------------------------
(Unaudited) 1998 1997 (b) # 1997 1996 1995 (a)
<S> <C> <C> <C> <C> <C> <C>
CLASS B SHARES
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 0.34 0.86 0.43 0.89 0.91 0.02
..................................................................................................
Net realized and
unrealized gains or
losses on securities
and foreign currency
related transactions (0.47) 0.81 2.15 1.64 2.87 0.17
------- --------- --------- ------- ------- ------
..................................................................................................
Total from investment
operations (0.13) 1.67 2.58 2.53 3.78 0.19
------- --------- --------- ------- ------- ------
..................................................................................................
Less distributions to
shareholders from
Net realized gains (2.13) (1.59) 0 0 0 0
------- --------- --------- ------- ------- ------
..................................................................................................
Net investment income (0.37) (0.85) (0.46) (0.92) (0.98) 0
..................................................................................................
Total distributions to
shareholders (2.50) (2.44) (0.46) (0.92) (0.98) 0
------- --------- --------- ------- ------- ------
..................................................................................................
Net asset value, end of
period $ 20.41 $ 23.04 $ 23.81 $ 21.69 $ 20.08 $17.28
------- --------- --------- ------- ------- ------
..................................................................................................
Total return* (0.48%) 7.13% 12.06% 13.00% 22.40% 1.10%
..................................................................................................
Ratios and supplemental
data
..................................................................................................
Net assets, end of
period (thousands) $51,033 $ 54,544 $ 43,977 $35,323 $14,750 $ 599
..................................................................................................
Ratios to average net
assets
..................................................................................................
Expenses 2.25%+ 2.25% 2.20%+ 2.19% 2.11% 2.23%+
..................................................................................................
Net investment income 3.39%+ 3.46% 3.94%+ 4.17% 4.69% 3.23%+
..................................................................................................
Portfolio turnover rate 43% 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.
# Net investment income is based on average shares outstanding throughout the
period.
+ Annualized.
See Combined Notes to Financial Statements.
36
<PAGE>
E V E R G R E E N
Income and Growth Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months Ended Year Ended July 31, Year Ended January 31,
January 31, 1999 ----------------------- ------------------------
(Unaudited) 1998 1997 (b) # 1997 1996 1995 (a)
<S> <C> <C> <C> <C> <C> <C>
CLASS C SHARES
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 0.36 0.87 0.44 0.87 0.90 0.01
...............................................................................................
Net realized and
unrealized gains or
losses on securities
and foreign currency
related transactions (0.49) 0.80 2.14 1.66 2.89 0.17
------ --------- --------- ------ ------ ------
...............................................................................................
Total from investment
operations (0.13) 1.67 2.58 2.53 3.79 0.18
------ --------- --------- ------ ------ ------
...............................................................................................
Less distributions to
shareholders from
...............................................................................................
Net investment income (0.37) (0.85) (0.46) (0.92) (0.98) 0
...............................................................................................
Net realized gains (2.13) (1.59) 0 0 0 0
------ --------- --------- ------ ------ ------
...............................................................................................
Total distributions to
shareholders (2.50) (2.44) (0.46) (0.92) (0.98) 0
------ --------- --------- ------ ------ ------
...............................................................................................
Net asset value, end of
period $20.41 $ 23.04 $ 23.81 $21.69 $20.08 $17.27
------ --------- --------- ------ ------ ------
...............................................................................................
Total return* (0.48%) 7.13% 12.06% 12.90% 22.40% 1.10%
...............................................................................................
Ratios and supplemental
data
...............................................................................................
Net assets, end of
period (thousands) $1,074 $ 1,259 $ 950 $ 982 $ 523 $ 24
...............................................................................................
Ratios to average net
assets
Expenses 2.25%+ 2.25% 2.20%+ 2.19% 2.11% 2.22%+
...............................................................................................
Net investment income 3.36%+ 3.48% 4.06%+ 4.15% 4.67% 2.68%+
...............................................................................................
Portfolio turnover rate 43% 133% 72% 168% 138% 151%
...............................................................................................
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended Year Ended July 31, Year Ended January 31,
January 31, 1999 ---------------------- ------------------------ Year Ended
(Unaudited) 1998 1997 (b) 1997 1996 1995 (c) March 31, 1994
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS Y SHARES
Net asset value,
beginning of period $23.22 $ 23.98 $ 21.81 $20.16 $17.28 $18.29 $20.90
------ --------- --------- ------ ------ ------ ------
................................................................................................................
Income from investment
operations
................................................................................................................
Net investment income 0.46 1.02 0.55 1.08 1.10 0.87 1.08
................................................................................................................
Net realized and
unrealized gains or
losses on securities
and foreign currency
related transactions (0.47) 0.89 2.16 1.66 2.87 (0.55) (1.41)
------ --------- --------- ------ ------ ------ ------
................................................................................................................
Total from investment
operations (0.01) 1.91 2.71 2.74 3.97 0.32 (0.33)
------ --------- --------- ------ ------ ------ ------
................................................................................................................
Less distributions to
shareholders from
Net realized gains (2.13) (1.59) 0 0 0 (0.25) (1.20)
------ --------- --------- ------ ------ ------ ------
................................................................................................................
Net investment income (0.48) (1.08) (0.54) (1.09) (1.09) (1.08) (1.08)
................................................................................................................
Total distributions to
shareholders (2.61) (2.67) (0.54) (1.09) (1.09) (1.33) (2.28)
------ --------- --------- ------ ------ ------ ------
................................................................................................................
Net asset value, end of
period $20.60 $ 23.22 $ 23.98 $21.81 $20.16 $17.28 $18.29
------ --------- --------- ------ ------ ------ ------
................................................................................................................
Total return 0.05% 8.16% 12.65% 14.10% 23.50% 1.90% (2.10%)
................................................................................................................
Ratios and supplemental
data
................................................................................................................
Net assets, end of
period (millions) $ 807 $ 880 $ 900 $ 858 $ 914 $ 942 $1,065
................................................................................................................
Ratios to average net
assets
Expenses 1.25%+ 1.25% 1.20%+ 1.18% 1.19% 1.24%+ 1.18%
................................................................................................................
Net investment income 4.39%+ 4.46% 4.97%+ 5.14% 5.70% 5.70%+ 5.29%
................................................................................................................
Portfolio turnover rate 43% 133% 72% 168% 138% 151% 106%
................................................................................................................
</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.
(c) For the ten months ended January 31, 1995. The Fund changed its fiscal year
end from March 31 to January 31, effective January 31, 1995.
* Excluding applicable sales charges.
# Net investment income is based on average shares outstanding throughout the
period.
+ Annualized.
See Combined Notes to Financial Statements.
37
<PAGE>
E V E R G R E E N
Small Cap Value Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended July Year Ended
Six Months Ended 31, December 31,
January 31, 1999 ------------------- ----------------
(Unaudited) 1998 1997 (b) # 1996 1995 (a)
<S> <C> <C> <C> <C> <C>
CLASS A SHARES
Net asset value,
beginning of period $ 15.75 $ 15.69 $13.10 $11.57 $ 9.64
------- ------- ------ ------ ------
..................................................................................
Income from investment
operations
..................................................................................
Net investment income 0.16 0.29 0.14 0.34 0.34
..................................................................................
Net realized and
unrealized gains or
losses on securities
and foreign currency
related transactions (0.94) 0.24 2.59 2.13 2.45
------- ------- ------ ------ ------
..................................................................................
Total from investment
operations (0.78) 0.53 2.73 2.47 2.79
------- ------- ------ ------ ------
..................................................................................
Less distributions to
shareholders from
Net realized gains (0.18) (0.19) (0.01) (0.60) (0.49)
------- ------- ------ ------ ------
..................................................................................
Net investment income (0.18) (0.28) (0.13) (0.34) (0.37)
..................................................................................
Total distributions to
shareholders (0.36) (0.47) (0.14) (0.94) (0.86)
------- ------- ------ ------ ------
..................................................................................
Net asset value, end of
period $ 14.61 $ 15.75 $15.69 $13.10 $11.57
------- ------- ------ ------ ------
..................................................................................
Total return* (4.96%) 3.24% 20.99% 22.00% 29.50%
..................................................................................
Ratios and supplemental
data
..................................................................................
Net assets, end of
period (thousands) $74,510 $54,142 $4,239 $ 336 $ 216
..................................................................................
Ratios to average net
assets
Expenses 1.61%+ 1.68% 1.71%+ 1.75% 1.75%+
..................................................................................
Net investment income 2.32%+ 1.95% 1.88%+ 3.08% 3.39%+
..................................................................................
Portfolio turnover rate 28% 18% 13% 50% 48%
..................................................................................
</TABLE>
<TABLE>
<CAPTION>
Year Ended
Six Months Ended Year Ended July 31, December 31,
January 31, 1999 -------------------- ----------------
(Unaudited) 1998 1997 (b) # 1996 1995 (a)
<S> <C> <C> <C> <C> <C>
CLASS B SHARES
Net asset value,
beginning of period $ 15.67 $ 15.64 $13.09 $11.57 $ 9.64
-------- -------- ------ ------ ------
..................................................................................
Income from investment
operations
..................................................................................
Net investment income 0.12 0.19 0.08 0.27 0.28
..................................................................................
Net realized and
unrealized gains or
losses on securities
and foreign currency
related transactions (0.96) 0.22 2.57 2.11 2.43
-------- -------- ------ ------ ------
..................................................................................
Total from investment
operations (0.84) 0.41 2.65 2.38 2.71
-------- -------- ------ ------ ------
..................................................................................
Less distributions to
shareholders from
Net realized gains (0.18) (0.19) (0.01) (0.60) (0.49)
-------- -------- ------ ------ ------
..................................................................................
Net investment income (0.12) (0.19) (0.09) (0.26) (0.29)
..................................................................................
Total distributions to
shareholders (0.30) (0.38) (0.10) (0.86) (0.78)
-------- -------- ------ ------ ------
..................................................................................
Net asset value, end of
period $ 14.53 $ 15.67 $15.64 $13.09 $11.57
-------- -------- ------ ------ ------
..................................................................................
Total return* (5.34%) 2.49% 20.37% 21.10% 28.70%
..................................................................................
Ratios and supplemental
data
..................................................................................
Net assets, end of
period (thousands) $125,717 $130,191 $9,462 $ 692 $ 266
..................................................................................
Ratios to average net
assets
..................................................................................
Expenses 2.38%+ 2.43% 2.46%+ 2.50% 2.50%+
..................................................................................
Net investment income 1.60%+ 1.20% 1.12%+ 2.39% 2.67%+
..................................................................................
Portfolio turnover rate 28% 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.
# Net investment income is based on average shares outstanding throughout the
period.
+ Annualized.
See Combined Notes to Financial Statements.
38
<PAGE>
E V E R G R E E N
Small Cap Value Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended July Year Ended December
Six Months Ended 31, 31,
January 31, 1999 ------------------- ---------------------
(Unaudited) 1998 1997 (b) # 1996 1995 (a)
<S> <C> <C> <C> <C> <C>
CLASS C SHARES
Net asset value,
beginning of period $ 15.66 $ 15.63 $13.09 $11.56 $ 9.74
------- ------- ------ ------ ------
....................................................................................
Income from investment
operations
....................................................................................
Net investment income 0.12 0.19 0.10 0.28 0.28
....................................................................................
Net realized and
unrealized gains or
losses on securities
and foreign currency
related transactions (0.96) 0.22 2.54 2.10 2.33
------- ------- ------ ------ ------
....................................................................................
Total from investment
operations (0.84) 0.41 2.64 2.38 2.61
------- ------- ------ ------ ------
....................................................................................
Less distributions to
shareholders from
Net realized gains (0.18) (0.19) (0.01) (0.60) (0.49)
------- ------- ------ ------ ------
....................................................................................
Net investment income (0.12) (0.19) (0.09) (0.25) (0.30)
....................................................................................
Total distributions to
shareholders (0.30) (0.38) (0.10) (0.85) (0.79)
------- ------- ------ ------ ------
....................................................................................
Net asset value, end of
period $ 14.52 $ 15.66 $15.63 $13.09 $11.56
------- ------- ------ ------ ------
....................................................................................
Total return* (5.35%) 2.49% 20.30% 21.10% 27.30%
....................................................................................
Ratios and supplemental
data
....................................................................................
Net assets, end of
period (thousands) $25,770 $26,197 $2,770 $ 56 $ 24
....................................................................................
Ratios to average net
assets
Expenses 2.38%+ 2.43% 2.45%+ 2.50% 2.50%+
....................................................................................
Net investment income 1.60%+ 1.20% 1.20%+ 2.33% 2.63%+
....................................................................................
Portfolio turnover rate 28% 18% 13% 50% 48%
....................................................................................
</TABLE>
<TABLE>
<CAPTION>
Year Ended July
Six Months Ended 31, Year Ended December 31,
January 31, 1999 ------------------- ----------------------------------
(Unaudited) 1998 1997 (b) # 1996 1995 1994 1993 [c]
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS Y SHARES
Net asset value,
beginning of period $ 15.77 $ 15.71 $ 13.12 $11.58 $ 9.70 $10.15 $10.00
------- ------- ------- ------ ------ ------ ------
....................................................................................................
Income from investment
operations
....................................................................................................
Net investment income 0.20 0.34 0.19 0.38 0.38 0.34 0.10
....................................................................................................
Net realized and
unrealized gains or
losses on securities
and foreign currency
related transactions (0.98) 0.24 2.56 2.13 2.38 (0.41) 0.15
------- ------- ------- ------ ------ ------ ------
....................................................................................................
Total from investment
operations (0.78) 0.58 2.75 2.51 2.76 (0.07) 0.25
------- ------- ------- ------ ------ ------ ------
....................................................................................................
Less distributions to
shareholders from
Net realized gains (0.18) (0.19) (0.01) (0.60) (0.50) (0.05) 0
------- ------- ------- ------ ------ ------ ------
....................................................................................................
Net investment income (0.19) (0.33) (0.15) (0.37) (0.38) (0.33) (0.10)
....................................................................................................
Total distributions to
shareholders (0.37) (0.52) (0.16) (0.97) (0.88) (0.38) (0.10)
------- ------- ------- ------ ------ ------ ------
....................................................................................................
Net asset value, end of
period $ 14.62 $ 15.77 $ 15.71 $13.12 $11.58 $ 9.70 $10.15
------- ------- ------- ------ ------ ------ ------
....................................................................................................
Total return (4.90%) 3.57% 21.09% 22.40% 29.10% (0.70%) 2.50%
....................................................................................................
Ratios and supplemental
data
....................................................................................................
Net assets, end of
period (thousands) $75,244 $96,556 $42,374 $8,592 $4,806 $3,613 $2,236
....................................................................................................
Ratios to average net
assets
Expenses 1.39%+ 1.39% 1.39%+ 1.50% 1.50%+ 1.48% 0.00%+
....................................................................................................
Net investment income 2.61%+ 2.23% 2.39%+ 3.36% 3.56% 3.72% 4.07%+
....................................................................................................
Portfolio turnover rate 28% 18% 13% 50% 48% 9% 15%
....................................................................................................
</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.
(c) For the period from October 1, 1993 (commencement of class operations) to
December 31, 1993.
* Excluding applicable sales charges.
# Net investment income is based on average shares outstanding throughout the
period.
+ Annualized.
See Combined Notes to Financial Statements.
39
<PAGE>
E V E R G R E E N
Utility Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended July
Six Months Ended 31, Year Ended December 31,
January 31, 1999 ----------------- ---------------------------
(Unaudited) 1998 1997 (b) 1996 1995 1994 (a)
<S> <C> <C> <C> <C> <C> <C>
CLASS A SHARES
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 0.23 0.43 0.25 0.41 0.44 0.45
..............................................................................................
Net realized and
unrealized gains or
losses on securities
and foreign currency
related transactions 0.42 1.44 0.87 0.05 2.25 (1.01)
------- ------- ------- ------- -------- ------
..............................................................................................
Total from investment
operations 0.65 1.87 1.12 0.46 2.69 (0.56)
------- ------- ------- ------- -------- ------
..............................................................................................
Less distributions to
shareholders from
Net realized gains (1.28) (1.12) 0 (0.28) (0.45) 0
------- ------- ------- ------- -------- ------
..............................................................................................
Net investment income (0.23) (0.44) (0.24) (0.41) (0.44) (0.44)
..............................................................................................
Total distributions to
shareholders (1.51) (1.56) (0.24) (0.69) (0.89) (0.44)
------- ------- ------- ------- -------- ------
..............................................................................................
Net asset value, end of
period $ 10.90 $ 11.76 $ 11.45 $ 10.57 $ 10.80 $ 9.00
------- ------- ------- ------- -------- ------
..............................................................................................
Total return* 5.24% 17.30% 10.72% 4.40% 30.70% (5.60%)
..............................................................................................
Ratios and supplemental
data
..............................................................................................
Net assets, end of
period (thousands) $94,954 $95,300 $91,638 $96,243 $107,872 $4,190
..............................................................................................
Ratios to average net
assets
Expenses 1.02%+ 0.99% 1.00%+ 0.87% 0.79% 0.53%+
..............................................................................................
Net investment income 4.03%+ 3.58% 3.85%+ 3.87% 4.51% 5.07%+
..............................................................................................
Portfolio turnover rate 34% 62% 50% 59% 88% 23%
..............................................................................................
</TABLE>
<TABLE>
<CAPTION>
Year Ended July
Six Months Ended 31, Year Ended December 31,
January 31, 1999 ----------------- --------------------------
(Unaudited) 1998 1997 (b) 1996 1995 1994 (a)
<S> <C> <C> <C> <C> <C> <C>
CLASS B SHARES
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 0.19 0.34 0.20 0.33 0.37 0.39
..............................................................................................
Net realized and
unrealized gains or
losses on securities
and foreign currency
related transactions 0.42 1.44 0.87 0.05 2.26 (1.01)
------- ------- ------- ------- ------- -------
..............................................................................................
Total from investment
operations 0.61 1.78 1.07 0.38 2.63 (0.62)
------- ------- ------- ------- ------- -------
..............................................................................................
Less distributions to
shareholders from
Net realized gains (1.28) (1.12) 0 (0.28) (0.45) 0
------- ------- ------- ------- ------- -------
..............................................................................................
Net investment income (0.19) (0.36) (0.19) (0.33) (0.37) (0.38)
..............................................................................................
Total distributions to
shareholders (1.47) (1.48) (0.19) (0.61) (0.82) (0.38)
------- ------- ------- ------- ------- -------
..............................................................................................
Net asset value, end of
period $ 10.90 $ 11.76 $ 11.46 $ 10.58 $ 10.81 $ 9.00
------- ------- ------- ------- ------- -------
..............................................................................................
Total return* 4.84% 16.31% 10.21% 3.60% 29.90% (6.20%)
..............................................................................................
Ratios and supplemental
data
..............................................................................................
Net assets, end of
period (thousands) $46,419 $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 3.30%+ 2.82% 3.10%+ 3.12% 3.78% 4.19%+
..............................................................................................
Portfolio turnover rate 34% 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.
+ Annualized.
See Combined Notes to Financial Statements.
40
<PAGE>
E V E R G R E E N
Utility Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended July Year Ended December
Six Months Ended 31, 31,
January 31, 1999 ---------------- ------------------------
(Unaudited) 1998 1997 (b) 1996 1995 1994 (a)
<S> <C> <C> <C> <C> <C> <C>
CLASS C SHARES
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 0.19 0.34 0.20 0.33 0.37 0.12
..........................................................................................
Net realized and
unrealized gains or
losses on securities
and foreign currency
related transactions 0.42 1.44 0.87 0.04 2.26 (0.33)
------ ------ ------ ------ ------ -----
..........................................................................................
Total from investment
operations 0.61 1.78 1.07 0.37 2.63 (0.21)
------ ------ ------ ------ ------ -----
..........................................................................................
Less distributions to
shareholders from
Net realized gains (1.28) (1.12) 0 (0.28) (0.45) 0
------ ------ ------ ------ ------ -----
..........................................................................................
Net investment income (0.19) (0.36) (0.19) (0.33) (0.37) (0.11)
..........................................................................................
Total distributions to
shareholders (1.47) (1.48) (0.19) (0.61) (0.82) (0.11)
------ ------ ------ ------ ------ -----
..........................................................................................
Net asset value, end of
period $10.90 $11.76 $11.46 $10.58 $10.82 $9.01
------ ------ ------ ------ ------ -----
..........................................................................................
Total return* 4.84% 16.31% 10.21% 3.50% 29.80% (2.20%)
..........................................................................................
Ratios and supplemental
data
..........................................................................................
Net assets, end of
period (thousands) $ 630 $ 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 3.34%+ 2.82% 3.10%+ 3.13% 3.76% 3.96%+
..........................................................................................
Portfolio turnover rate 34% 62% 50% 59% 88% 23%
..........................................................................................
</TABLE>
<TABLE>
<CAPTION>
Year Ended July Year Ended December
Six Months Ended 31, 31,
January 31, 1999 ---------------- ------------------------
(Unaudited) 1998 1997 (b) 1996 1995 1994 (c)
<S> <C> <C> <C> <C> <C> <C>
CLASS Y SHARES
Net asset value,
beginning of period $11.77 $11.46 $10.58 $10.82 $ 9.00 $ 9.51
------ ------ ------ ------ ------ ------
..........................................................................................
Income from investment
operations
..........................................................................................
Net investment income 0.24 0.46 0.25 0.44 0.47 0.37
..........................................................................................
Net realized and
unrealized gains or
losses on securities
and foreign currency
related transactions 0.43 1.45 0.88 0.03 2.27 (0.50)
------ ------ ------ ------ ------ ------
..........................................................................................
Total from investment
operations 0.67 1.91 1.13 0.47 2.74 (0.13)
------ ------ ------ ------ ------ ------
..........................................................................................
Less distributions to
shareholders from
Net realized gains (1.28) (1.12) 0 (0.28) (0.45) 0
------ ------ ------ ------ ------ ------
..........................................................................................
Net investment income (0.26) (0.48) (0.25) (0.43) (0.47) (0.38)
..........................................................................................
Total distributions to
shareholders (1.54) (1.60) (0.25) (0.71) (0.92) (0.38)
------ ------ ------ ------ ------ ------
..........................................................................................
Net asset value, end of
period $10.90 $11.77 $11.46 $10.58 $10.82 $ 9.00
------ ------ ------ ------ ------ ------
..........................................................................................
Total return 5.27% 17.60% 10.85% 4.50% 31.30% (1.60%)
..........................................................................................
Ratios and supplemental
data
..........................................................................................
Net assets, end of
period (thousands) $2,848 $1,695 $1,627 $2,000 $7,791 $5,201
..........................................................................................
Ratios to average net
assets
Expenses 0.76%+ 0.74% 0.74%+ 0.61% 0.54% 0.40%+
..........................................................................................
Net investment income 4.30% 3.82% 4.06%+ 4.01% 4.76% 4.93%+
..........................................................................................
Portfolio turnover rate 34% 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.
+ Annualized
See Combined Notes to Financial Statements.
41
<PAGE>
E V E R G R E E N
Value Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended July Year Ended December
Six Months Ended 31, 31,
January 31, 1999 ---------------- ----------------------
(Unaudited) 1998 1997 (a) 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
CLASS A SHARES
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 0.11 0.26 0.21 0.38 0.55 0.52
.......................................................................................
Net realized and
unrealized gains or
losses on securities
and foreign currency
related transactions 1.70 2.00 4.05 3.49 4.69 (0.20)
------ ------ ------ ------ ------ ------
.......................................................................................
Total from investment
operations 1.81 2.26 4.26 3.87 5.24 0.32
------ ------ ------ ------ ------ ------
.......................................................................................
Less distributions to
shareholders from
Net realized gains (0.13) (4.38) 0 (3.34) (0.90) (0.82)
------ ------ ------ ------ ------ ------
.......................................................................................
Net investment income (0.11) (0.29) (0.19) (0.41) (0.51) (0.51)
.......................................................................................
Total distributions to
shareholders (0.24) (4.67) (0.19) (3.75) (1.41) (1.33)
------ ------ ------ ------ ------ ------
.......................................................................................
Net asset value, end of
period $23.80 $22.23 $24.64 $20.57 $20.45 $16.62
------ ------ ------ ------ ------ ------
.......................................................................................
Total return* 8.24% 9.55% 20.78% 18.90% 31.80% 1.90%
.......................................................................................
Ratios and supplemental
data
.......................................................................................
Net assets, end of
period (millions) $ 480 $ 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 1.06%+ 1.04% 1.66%+ 1.77% 2.78% 2.96%
.......................................................................................
Portfolio turnover rate 75% 69% 6% 91% 53% 70%
.......................................................................................
</TABLE>
<TABLE>
<CAPTION>
Year Ended July
Six Months Ended 31, Year Ended December 31,
January 31, 1999 ------------------ ----------------------------
(Unaudited) 1998 1997 (a) 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
CLASS B SHARES
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
and foreign currency
related transactions 1.69 1.99 4.03 3.50 4.70 (0.20)
-------- -------- -------- -------- -------- --------
...............................................................................................
Total from investment
operations 1.73 2.07 4.15 3.72 5.09 0.22
-------- -------- -------- -------- -------- --------
...............................................................................................
Less distributions to
shareholders from
Net realized gains (0.13) (4.38) 0 (3.34) (0.90) (0.82)
-------- -------- -------- -------- -------- --------
...............................................................................................
Net investment income (0.05) (0.12) (0.10) (0.25) (0.36) (0.41)
...............................................................................................
Total distributions to
shareholders (0.18) (4.50) (0.10) (3.59) (1.26) (1.23)
-------- -------- -------- -------- -------- --------
...............................................................................................
Net asset value, end of
period $ 23.75 $ 22.20 $ 24.63 $ 20.58 $ 20.45 $ 16.62
-------- -------- -------- -------- -------- --------
...............................................................................................
Total return* 7.83% 8.73% 20.23% 18.10% 30.90% 1.30%
...............................................................................................
Ratios and supplemental
data
...............................................................................................
Net assets, end of
period (thousands) $337,559 $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 0.31%+ 0.30% 0.92%+ 1.01% 2.04% 2.36%
...............................................................................................
Portfolio turnover rate 75% 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.
+ Annualized.
See Combined Notes to Financial Statements.
42
<PAGE>
E V E R G R E E N
Value Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended July Year Ended December
Six Months Ended 31, 31,
January 31, 1999 ---------------- ------------------------
(Unaudited) 1998 1997 (b) 1996 1995 1994 (a)
<S> <C> <C> <C> <C> <C> <C>
CLASS C SHARES
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 0.03 0.10 0.12 0.22 0.39 0.19
........................................................................................
Net realized and
unrealized gains or
losses on securities
and foreign currency
related transactions 1.70 1.97 4.03 3.50 4.70 (0.81)
------ ------ ------ ------ ------ ------
........................................................................................
Total from investment
operations 1.73 2.07 4.15 3.72 5.09 (0.62)
------ ------ ------ ------ ------ ------
........................................................................................
Less distributions to
shareholders from
From net realized gains (0.13) (4.38) 0 (3.34) (0.90) (0.82)
------ ------ ------ ------ ------ ------
........................................................................................
Net investment income (0.05) (0.12) (0.10) (0.26) (0.36) (0.23)
........................................................................................
Total distributions to
shareholders (0.18) (4.50) (0.10) (3.60) (1.26) (1.05)
------ ------ ------ ------ ------ ------
........................................................................................
Net asset value, end of
period $23.73 $22.18 $24.61 $20.56 $20.44 $16.61
------ ------ ------ ------ ------ ------
........................................................................................
Total return* 7.84% 8.74% 20.25% 18.10% 30.90% (3.40%)
........................................................................................
Ratios and supplemental
data
........................................................................................
Net assets, end of
period (thousands) $4,492 $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 0.33%+ 0.29% 0.94%+ 1.00% 2.03% 2.16%+
........................................................................................
Portfolio turnover rate 75% 69% 6% 91% 53% 70%
........................................................................................
</TABLE>
<TABLE>
<CAPTION>
Year Ended July Year Ended December
Six Months Ended 31, 31,
January 31, 1999 ---------------- ----------------------
(Unaudited) 1998 1997 (b) 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
CLASS Y SHARES
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 0.15 0.35 0.25 0.44 0.57 0.56
........................................................................................
Net realized and
unrealized gains or
losses on securities
and foreign currency
related transactions 1.70 1.97 4.03 3.49 4.72 (0.20)
------ ------ ------ ------ ------ ------
........................................................................................
Total from investment
operations 1.85 2.32 4.28 3.93 5.29 0.36
------ ------ ------ ------ ------ ------
........................................................................................
Less distributions to
shareholders from
Net realized gains (0.13) (4.38) 0 (3.34) (0.90) (0.82)
------ ------ ------ ------ ------ ------
........................................................................................
Net investment income (0.14) (0.35) (0.21) (0.47) (0.55) (0.56)
........................................................................................
Total distributions to
shareholders (0.27) (4.73) (0.21) (3.81) (1.45) (1.38)
------ ------ ------ ------ ------ ------
........................................................................................
Net asset value, end of
period $23.81 $22.23 $24.64 $20.57 $20.45 $16.61
------ ------ ------ ------ ------ ------
........................................................................................
Total return 8.41% 9.79% 20.93% 19.20% 32.20% 2.10%
........................................................................................
Ratios and supplemental
data
........................................................................................
Net assets, end of
period (millions) $ 158 $ 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 1.33%+ 1.47% 1.91%+ 2.02% 3.02% 3.21%
........................................................................................
Portfolio turnover rate 75% 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.
+ Annualized.
See Combined Notes to Financial Statements.
43
<PAGE>
E V E R G R E E N
Blue Chip Fund
Schedule of Investments
January 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - 94.5%
Automotive Equipment &
Manufacturing - 1.2%
30,000 Daimler Chrysler AG................................ $ 3,106,875
45,000 Ford Motor Co. .................................... 2,764,687
------------
5,871,562
------------
Banks - 6.2%
120,000 AmSouth Bancorp.................................... 5,287,500
60,000 BankAmerica Corp. ................................. 4,012,500
50,000 Chase Manhattan Corp. ............................. 3,846,875
85,000 Dime Bancorp, Inc. ................................ 2,061,250
90,000 Fleet Financial Group, Inc. ....................... 3,988,125
65,000 Mellon Bank Corp. ................................. 4,355,000
37,000 National City Corp. ............................... 2,629,312
90,000 North Fork Bancorp, Inc. .......................... 1,890,000
50,000 US Bancorp......................................... 1,684,375
------------
29,754,937
------------
Business Equipment &
Services - 1.7%
120,000 Modis Professional Services, Inc. ................. 1,747,500
79,000 Paychex, Inc. ..................................... 3,843,844
20,000 Xerox Corp. ....................................... 2,480,000
------------
8,071,344
------------
Chemical & Agricultural
Products - 0.7%
45,000 Monsanto Co. ...................................... 2,140,313
55,000 Morton International, Inc. ........................ 1,423,125
------------
3,563,438
------------
Communication Systems & Services - 0.9%
50,000 * Tellabs, Inc. ................................... 4,289,063
------------
Consumer Products &
Services - 2.3%
67,000 Gillette Co. ...................................... 3,936,250
60,000 Procter & Gamble Co. .............................. 5,452,500
100,800 Stewart Enterprises, Inc. Cl. A.................... 1,748,250
------------
11,137,000
------------
Diversified Companies - 1.6%
102,500 Tyco International Ltd. ........................... 7,898,906
------------
Electrical Equipment &
Services - 5.1%
75,000 Emerson Electric Co. .............................. 4,364,063
166,700 General Electric Co. .............................. 17,482,662
40,000 Honeywell, Inc. ................................... 2,607,500
------------
24,454,225
------------
Finance & Insurance - 4.8%
62,500 American International Group, Inc. ................ 6,433,594
100,028 Associates First Capital Corp. Cl. A............... 4,057,386
85,000 Federal National Mortgage Association.............. 6,194,375
90,000 Franklin Resources, Inc. .......................... 3,015,000
45,000 Greenpoint Financial Corp. ........................ 1,473,750
35,000 Hartford Financial Services Group, Inc. ........... 1,817,812
------------
22,991,917
------------
Food & Beverage Products - 2.8%
72,700 Coca Cola Co. ..................................... 4,757,306
200,000 Flowers Industries, Inc. .......................... 4,812,500
50,000 McDonald's Corp. .................................. 3,940,625
------------
13,510,431
------------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Healthcare Products &
Services - 15.3%
145,000 American Home Products Corp. ...................... $ 8,509,688
57,500 Biogen, Inc. ...................................... 5,631,406
52,000 Bristol-Myers Squibb Co. .......................... 6,665,750
93,750 Cardinal Health, Inc. ............................. 6,931,641
220,000 *Health Management Associates, Inc. Cl. A.......... 2,763,750
51,000 Johnson & Johnson.................................. 4,335,000
48,000 Lilly (Eli) & Co. ................................. 4,497,000
97,900 Medtronic, Inc. ................................... 7,801,406
73,500 Merck & Co., Inc. ................................. 10,786,125
43,000 Pfizer, Inc. ...................................... 5,530,875
117,000 Pharmacia & Upjohn, Inc. .......................... 6,727,500
60,000 Schering-Plough Corp. ............................. 3,270,000
------------
73,450,141
------------
Industrial Specialty Products & Services - 0.8%
100,000 Ecolab, Inc. ...................................... 3,875,000
------------
Information Services & Technology - 17.6%
20,000 America Online, Inc. .............................. 3,513,750
55,000 *American Power Conversion Corp. .................. 2,810,156
51,100 *Applied Materials, Inc. .......................... 3,227,284
140,000 Compaq Computer Corp. ............................. 6,667,500
50,500 *EMC Corp. ........................................ 5,498,188
75,000 *Gateway 2000, Inc. ............................... 5,793,750
90,000 Hewlett-Packard Co. ............................... 7,053,750
66,300 Intel Corp. ....................................... 9,337,941
53,000 International Business Machines Corp. ............. 9,712,250
115,400 *Microsoft Corp. .................................. 20,191,394
95,000 *Oracle Systems Corp. ............................. 5,257,656
28,400 *Solectron Corp. .................................. 2,529,375
27,500 *Sun Microsystems, Inc. ........................... 3,073,984
------------
84,666,978
------------
Leisure & Tourism - 0.7%
80,000 Royal Caribbean Cruises Ltd. ...................... 3,180,000
------------
Oil/Energy - 3.9%
31,500 Anadarko Petroleum Corp. .......................... 852,469
24,000 BP Amoco Plc....................................... 1,947,000
100,000 Burlington Resources, Inc. ........................ 3,025,000
71,100 Exxon Corp. ....................................... 5,008,106
8,000 Mobil Corp. ....................................... 701,500
50,000 Royal Dutch Petroleum Co. ......................... 2,003,125
52,100 Texaco, Inc. ...................................... 2,468,237
92,500 Unocal Corp. ...................................... 2,636,250
------------
18,641,687
------------
Printing, Publishing, Broadcasting &
Entertainment - 6.6%
117,500 CBS Corp. ......................................... 3,995,000
70,000 *Clear Channel Communications, Inc. ............... 4,331,250
90,000 Disney (Walt) Co. ................................. 2,970,000
73,100 *Tele Communications, Inc. ........................ 5,014,203
130,000 Time Warner, Inc. ................................. 8,125,000
40,000 *Univision Communications, Inc. Cl. A.............. 1,795,000
63,000 *Viacom, Inc. Cl. B................................ 5,355,000
------------
31,585,453
------------
</TABLE>
44
<PAGE>
E V E R G R E E N
Blue Chip Fund
Schedule of Investments (continued)
January 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Real Estate - 1.0%
112,504 Equity Office Properties Trust REIT................. $ 2,868,852
80,000 First Industrial Realty Trust, Inc. REIT............ 2,055,000
------------
4,923,852
------------
Retailing & Wholesale - 8.5%
59,500 *Costco Companies, Inc. ............................ 4,929,203
136,600 CVS Corp. .......................................... 7,478,850
59,600 Dayton Hudson Corp. ................................ 3,799,500
118,200 Home Depot, Inc. ................................... 7,136,325
100,000 * Office Depot, Inc. ............................... 3,475,000
100,000 * Safeway, Inc. .................................... 5,612,500
98,000 Wal-Mart Stores, Inc. .............................. 8,428,000
------------
40,859,378
------------
Telecommunication Services & Equipment - 4.7%
80,000 *Ciena Corp......................................... 1,602,500
50,000 *Cisco Systems, Inc................................. 5,585,937
85,000 *MCI WorldCom, Inc.................................. 6,776,094
77,500 Motorola, Inc....................................... 5,599,375
23,000 Nokia Corp. ADR..................................... 3,312,000
------------
22,875,906
------------
Transportation - 0.7%
78,100 CNF Transportation, Inc............................. 3,465,688
------------
Utilities - Electric - 2.2%
45,000 Consolidated Edison, Inc............................ 2,224,687
50,000 Dominion Resources, Inc............................. 2,237,500
30,000 Duke Power Co....................................... 1,854,375
55,000 Florida Progress Corp............................... 2,289,375
45,000 Texas Utilities Co. ................................ 1,977,188
------------
10,583,125
------------
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Utilities - Telephone - 5.2%
115,000 Ameritech Corp. ................................... $ 7,489,375
81,100 AT&T Corp. ........................................ 7,359,825
52,500 Bell Atlantic Corp. ............................... 3,150,000
35,000 GTE Corp. ......................................... 2,362,500
80,000 U.S. West, Inc. ................................... 4,935,000
------------
25,296,700
------------
Total Common Stocks (cost $341,036,441)............ 454,946,731
------------
<CAPTION>
Principal
Amount Value
<C> <S> <C>
CONVERTIBLE DEBENTURES - 0.0%
Iron & Steel - 0.0%
$ 110,000 Compania Vale do Rio Doce Navegacao SA 1.00%,
12/31/1999 (cost $0).............................. $ 6
------------
SHORT-TERM INVESTMENTS - 7.0%
Repurchase Agreement - 7.0%
33,820,000 Evergreen Joint Repurchase Agreement, Investments
in repurchase agreements, in a joint trading
account purchased 1/29/1999, 4.77%, maturing
2/1/1999, maturity value
$33,833,443 (cost $33,820,000)(a)................. 33,820,000
------------
</TABLE>
<TABLE>
<C> <S> <C> <C>
Total Investments -
(cost $374,856,441)........................ 101.5% 488,766,737
Other Assets and Liabilities - net.......... (1.5) (7,357,753)
----- ------------
Net Assets.................................. 100.0% $481,408,984
===== ============
</TABLE>
* Non-income producing securities.
(a) The repurchase agreements are fully collaterized by U.S. government
and/or agency obligations based on market prices plus accrued
interest at January 29, 1999.
Summary of Abbreviations:
ADR American Depository Receipts
REIT Real Estate Investment Trust
See Combined Notes to Financial Statements.
45
<PAGE>
E V E R G R E E N
Equity Income Fund
Schedule of Investments
January 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - 88.6%
Automotive Equipment & Manufacturing - 1.4%
25,000 General Motors Corp. ............................... $ 2,243,750
------------
Banks - 12.5%
90,000 Associated Banc Corp. .............................. 2,804,062
50,000 BankAmerica Corp. .................................. 3,343,750
100,000 Charter One Financial, Inc. ........................ 2,803,125
80,000 Fleet Financial Group, Inc. ........................ 3,545,000
30,000 Mellon Bank Corp. .................................. 2,010,000
150,000 North Fork Bancorp, Inc. ........................... 3,150,000
80,000 US Bancorp.......................................... 2,695,000
------------
20,350,937
------------
Business Equipment &
Services - 1.7%
90,000 Dun & Bradstreet Corp. ............................. 2,745,000
------------
Chemical & Agricultural
Products - 3.0%
76,000 Morton International, Inc. ......................... 1,966,500
96,000 Rohm & Haas Co. .................................... 2,976,000
------------
4,942,500
------------
Diversified Companies - 3.3%
70,000 Tyco International Ltd. ............................ 5,394,375
------------
Electrical Equipment &
Services - 3.7%
40,000 General Electric Co. ............................... 4,195,000
20,000 *Solectron Corp. ................................... 1,781,250
------------
5,976,250
------------
Finance & Insurance - 10.9%
38,000 Citigroup, Inc. .................................... 2,130,375
125,000 Greenpoint Financial Corp. ......................... 4,093,750
86,000 HSB Group, Inc. .................................... 3,246,500
20,000 Lehman Brothers Holdings, Inc. ..................... 1,093,750
20,000 Lincoln National Corp. ............................. 1,666,250
60,000 Nationwide Financial Services, Inc. Cl. A........... 2,876,250
45,000 UNUM Corp. ......................................... 2,719,687
------------
17,826,562
------------
Food & Beverage Products - 3.4%
35,000 H.J. Heinz Co. ..................................... 1,970,938
75,000 Philip Morris Companies, Inc. ...................... 3,525,000
------------
5,495,938
------------
Healthcare Products &
Services - 8.7%
40,000 American Home Products Corp. ....................... 2,347,500
3,100 Biogen, Inc. ....................................... 303,606
20,000 Johnson & Johnson................................... 1,700,000
80,000 Mallinckrodt, Inc. ................................. 2,795,000
28,500 Merck & Co., Inc. .................................. 4,182,375
50,000 Pharmacia & Upjohn, Inc. ........................... 2,875,000
------------
14,203,481
------------
Industrial Specialty Products & Services - 0.9%
40,000 Trinity Industries, Inc. ........................... 1,430,000
------------
Information Services & Technology - 5.4%
57,000 *BMC Software, Inc. ................................ 2,659,406
30,000 *EMC Corp. ......................................... 3,266,250
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Information Services & Technology - continued
15,800 International Business Machines Corp. ............. $ 2,895,350
------------
8,821,006
------------
Oil/Energy - 6.2%
94,000 Anadarko Petroleum Corp. .......................... 2,543,875
18,000 Mobil Corp. ....................................... 1,578,375
60,000 Texaco, Inc. ...................................... 2,842,500
110,000 Unocal Corp. ...................................... 3,135,000
------------
10,099,750
------------
Paper & Packaging - 1.5%
105,000 Consolidated Papers, Inc. ......................... 2,434,688
------------
Printing, Publishing, Broadcasting &
Entertainment - 1.0%
50,000 CBS Corp. ......................................... 1,700,000
------------
Real Estate - 4.6%
40,000 Boston Properties, Inc. REIT....................... 1,300,000
55,000 Equity Office Properties Trust REIT................ 1,402,500
31,000 Equity Residential Properties Trust REIT........... 1,261,312
50,000 First Industrial Realty Trust, Inc. REIT........... 1,284,375
55,000 Prentiss Properties Trust REIT..................... 1,165,313
30,000 Spieker Properties, Inc. REIT...................... 1,020,000
------------
7,433,500
------------
Retailing & Wholesale - 3.9%
50,000 *Costco Companies, Inc. ........................... 4,142,188
76,686 *Staples, Inc. .................................... 2,197,533
------------
6,339,721
------------
Transportation - 1.4%
45,000 Union Pacific Corp. ............................... 2,314,688
------------
Utilities - Electric - 7.9%
50,000 Dominion Resources, Inc. .......................... 2,237,500
75,000 Edison International............................... 2,085,937
50,000 Houston Industries, Inc. .......................... 1,518,750
114,000 Southern Co. ...................................... 3,070,875
80,000 Teco Energy, Inc. ................................. 1,860,000
50,000 Texas Utilities Co. ............................... 2,196,875
------------
12,969,937
------------
Utilities - Telephone - 7.2%
40,000 Ameritech Corp. ................................... 2,605,000
18,000 AT&T Corp. ........................................ 1,633,500
50,000 Bell Atlantic Corp. ............................... 3,000,000
15,000 GTE Corp. ......................................... 1,012,500
57,000 U.S. West, Inc. ................................... 3,516,188
------------
11,767,188
------------
Total Common Stocks (cost $115,606,743)............ 144,489,271
------------
PREFERRED STOCKS - 1.0%
Consumer Products &
Services - 1.0%
30,000 Newell Financial Trust I, 5.25%, 144A
(cost $1,500,000)................................. 1,597,500
------------
</TABLE>
46
<PAGE>
E V E R G R E E N
Equity Income Fund
Schedule of Investments (continued)
January 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
CONVERTIBLE PREFERRED - 2.7%
Building, Construction & Furnishings - 0.8%
150,000 Kaufman & Broad Home Corp. PRIDES, 8.25%............ $ 1,350,000
------------
Retailing & Wholesale - 1.9%
50,000 Kmart Financing I, 7.75%............................ 3,137,500
------------
Total Convertible Preferred (cost $4,110,665)....... 4,487,500
------------
<CAPTION>
Principal
Amount Value
<C> <S> <C>
CONVERTIBLE DEBENTURES - 0.8%
Consumer Products &
Services - 0.8%
$ 1,000,000 Sunrise Assisted Living, Inc.
5.50%, 6/15/2002, 144A
(cost $1,000,000) ................................. 1,243,480
------------
<CAPTION>
Principal
Amount Value
<C> <S> <C>
SHORT-TERM INVESTMENTS - 6.5%
Repurchase Agreement - 6.5%
$10,625,000 Evergreen Joint Repurchase Agreement, Investments
in repurchase agreements, in a joint trading
account, purchased 1/29/1999, 4.77% maturing
2/1/1999, maturity value
$10,629,223 (cost $10,625,000) (a)............... $ 10,625,000
------------
</TABLE>
<TABLE>
<C> <S> <C> <C>
Total Investments -(cost $132,842,408)...... 99.6% 162,442,751
Other Assets and Liabilities - net.......... 0.4 593,771
----- ------------
Net Assets.................................. 100.0% $163,036,522
===== ============
</TABLE>
* Non-income producing securities.
(a) The repurchase agreements are fully collateralized by U.S. government
and/or agency obligations based on market prices plus accrued
interest at January 29, 1999.
144A Security that may be resold to "qualified institutional buyers"
under Rule 144A of the Securities Act of 1933. This security has
been determined to be liquid under guidelines established by the
Board of Trustees.
Summary of Abbreviations:
PRIDES Preferred Redeemable Increased Dividend Equity Securities
REIT Real Estate Investment Trust
See Combined Notes to Financial Statements.
47
<PAGE>
E V E R G R E E N
Growth and Income Fund
Schedule of Investments
January 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - 92.1%
Aerospace & Defense - 1.6%
232,000 Boeing Co....................................... $ 8,018,500
780,000 Bombardier, Inc., Cl. B......................... 11,641,791
280,000 Sundstrand Corp................................. 12,460,000
------------
32,120,291
------------
Automotive Equipment & Manufacturing - 1.2%
105,875 Daimler Chrysler AG............................. 10,964,680
110,000 Ford Motor Co................................... 6,758,125
427,800 Meritor Automotive, Inc......................... 7,459,762
------------
25,182,567
------------
Banks - 10.5%
131,850 AmSouth Bancorp................................. 5,809,641
15,600 Astoria Financial Corp.......................... 713,700
160,000 Bank of New York Co., Inc....................... 5,680,000
130,284 Bank One Corp................................... 6,823,624
103,125 BankAmerica Corp................................ 6,896,484
70,000 BankBoston Corp................................. 2,585,625
33,640 BB & T Corp..................................... 1,286,730
286,500 BSB Bancorp, Inc................................ 7,663,875
135,000 Carolina First Corp............................. 2,961,563
14,300 Centura Banks, Inc.............................. 1,008,150
40,779 Charter One Financial, Inc...................... 1,141,812
13,521 Commerce Bancorp, Inc........................... 610,128
55,600 Cullen/Frost Bankers, Inc....................... 2,887,725
71,824 First American Corp............................. 2,998,652
236,250 First Security Corp............................. 4,813,594
114,550 First Virginia Banks, Inc....................... 5,412,488
96,476 Firstar Corp.................................... 8,507,977
23,600 FirstMerit Corp................................. 625,400
100,000 Fleet Financial Group, Inc...................... 4,431,250
210,000 Hibernia Corp. Cl. A............................ 3,517,500
10,000 Huntington Bancshares, Inc...................... 311,250
15,100 JSB Financial, Inc.............................. 838,050
221,200 KeyCorp......................................... 7,050,750
22,650 Keystone Financial, Inc......................... 801,244
250,000 Marshall & Ilsley Corp.......................... 14,812,500
341,000 Mellon Bank Corp................................ 22,847,000
747,100 Pacific Century Financial Corp.................. 16,436,200
130,000 Peoples Heritage Financial Group................ 2,340,000
42,600 PNC Bank Corp................................... 2,180,588
230,000 SouthTrust Corp................................. 8,538,750
140,300 State Street Corp............................... 10,031,450
113,475 Summit Bancorp.................................. 4,631,198
43,920 Suntrust Banks, Inc............................. 3,093,615
180,000 Susquehanna Bancshares, Inc..................... 3,498,750
12,785 Union Planters Corp............................. 581,718
1,030,000 Webster Financial Corp.......................... 30,771,250
225,400 Wells Fargo Co.................................. 7,874,912
62,000 Wilmington Trust Corp........................... 3,704,500
------------
216,719,643
------------
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Building, Construction & Furnishings - 3.1%
64,700 Armstrong World Industries, Inc. ............... $ 3,809,213
360,000 * Furniture Brands International, Inc. ......... 8,460,000
349,100 * Jacobs Engineering Group, Inc................. 14,640,381
218,600 Lennar Corp..................................... 5,984,175
226,000 Lone Star Industries, Inc....................... 8,305,500
40,000 Sherwin Williams Co............................. 1,025,000
70,400 Southdown, Inc.................................. 3,911,600
182,500 * Toll Brothers, Inc............................ 4,197,500
393,200 * US Home Corp.................................. 13,958,600
------------
64,291,969
------------
Business Equipment & Services - 4.7%
354,000 Air Express International Corp.................. 6,681,750
259,600 * Atlas Air, Inc................................ 13,353,175
794,300 Circle International Group, Inc................. 13,652,031
180,000 * Compuware Corp................................ 11,925,000
143,000 Convergys Corp.................................. 2,574,000
133,000 Equifax, Inc.................................... 5,261,812
33,436 First Data Corp................................. 1,281,017
140,000 Petroleum Helicopters, Inc...................... 2,310,000
537,700 Pittston Burlington Group....................... 6,149,944
224,700 * Platinum Technology Corp...................... 2,977,275
470,000 * Policy Management Systems Corp................ 25,233,125
337,000 Reynolds & Reynolds Co., Cl. A.................. 6,740,000
------------
98,139,129
------------
Capital Goods - 0.4%
177,200 Caterpillar, Inc................................ 7,674,975
------------
Chemical & Agricultural Products - 2.9%
130,000 Air Products & Chemicals, Inc................... 4,371,250
44,000 Albemarle Corp.................................. 1,020,250
200,000 Du Pont (E. I.) De Nemours & Co. ............... 10,237,500
265,000 Engelhard Corp.................................. 5,184,062
165,000 * Grace (W.R.) & Co............................. 2,258,438
64,300 H.B. Fuller Co.................................. 2,764,900
255,000 Morton International, Inc....................... 6,598,125
180,000 Nalco Chemical Co............................... 4,950,000
237,000 Pioneer Hi-Bred International, Inc. ............ 6,710,062
260,000 Praxair, Inc.................................... 8,401,250
160,200 Sigma-Aldrich Corp.............................. 4,565,700
175,000 Solutia, Inc.................................... 3,346,875
------------
60,408,412
------------
Communication Systems & Services - 2.2%
160,000 * AirTouch Communications, Inc.................. 15,450,000
248,820 * American Tower Systems Corp................... 6,407,115
93,000 * Cisco Systems, Inc............................ 10,375,312
153,292 * MCI WorldCom, Inc............................. 12,225,037
------------
44,457,464
------------
</TABLE>
48
<PAGE>
E V E R G R E E N
Growth and Income Fund
Schedule of Investments (continued)
January 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Consumer Products & Services - 4.4%
295,200 Black & Decker Corp............................. $ 15,645,600
90,000 Colgate-Palmolive Co............................ 7,239,375
9,800 GC Companies, Inc............................... 370,563
187,000 Gucci Group..................................... 12,867,937
60,700 Harley-Davidson, Inc............................ 3,156,400
175,100 Harman International Industries, Inc............ 7,354,200
185,000 Hillenbrand Industries, Inc..................... 8,695,000
177,000 Lancaster Colony Corp........................... 5,033,437
192,000 Newell Co....................................... 7,980,000
500,000 Premark International, Inc...................... 17,125,000
368,000 Service Corp.................................... 5,842,000
9,100 Toro Co......................................... 316,225
------------
91,625,737
------------
Diversified Companies - 0.7%
135,000 Harnischfeger Industries, Inc................... 1,139,062
310,000 ITT Industries, Inc............................. 12,419,375
------------
13,558,437
------------
Electronic Equipment & Services - 1.9%
220,000 Baldor Electric Co.............................. 4,358,750
110,000 * Dupont Photomasks, Inc........................ 5,610,000
106,000 * Jabil Circuit, Inc............................ 7,572,375
259,800 * KLA-Tencor Corp............................... 15,003,450
115,000 * Sanmina Corp.................................. 7,618,750
------------
40,163,325
------------
Electrical Equipment & Services - 2.5%
159,300 Applied Power, Inc. Cl. A....................... 5,894,100
143,000 Belden, Inc..................................... 2,868,938
65,000 Diebold, Inc.................................... 2,210,000
10,000 Emerson Electric Co............................. 581,875
100,000 General Electric Co............................. 10,487,500
209,000 Honeywell, Inc.................................. 13,624,187
175,100 Perkin Elmer Corp............................... 16,645,444
18,648 Zilog, Inc...................................... 9,324
------------
52,321,368
------------
Finance & Insurance - 9.1%
145,000 AFLAC, Inc...................................... 6,216,875
253,300 American Bankers Insurance Group, Inc........... 11,651,800
107,000 Chubb Corp...................................... 6,286,250
193,750 Citigroup, Inc.................................. 10,862,109
314,750 Edwards (A.G.), Inc............................. 10,662,156
60,268 Exel Limited Hamilton........................... 3,845,852
305,000 Federal Home Loan Mortgage Corp................. 18,910,000
345,000 Federal National Mortgage Association........... 25,141,875
42,750 First American Financial Corp................... 1,306,547
448,740 Frontier Insurance Group, Inc................... 6,759,146
200,000 Hartford Financial Services Group, Inc. ........ 10,387,500
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Finance & Insurance - continued
75,000 Household International, Inc.................... $ 3,295,313
117,500 LaSalle Re Holdings Ltd. ....................... 2,173,750
180,132 Legg Mason, Inc. ............................... 5,358,927
218,500 Lehman Brothers Holdings, Inc. ................. 11,949,219
105,400 MBIA, Inc. ..................................... 6,910,288
67,500 Meadowbrook Insurance Group, Inc. .............. 1,139,063
52,300 Mercury General Corp. .......................... 1,987,400
114,200 MGIC Investment Corp. .......................... 4,182,575
272,100 Paine Webber Group, Inc. ....................... 10,118,719
208,200 Price (T.) Rowe & Associates, Inc. ............. 7,612,312
85,000 Progressive Corp. .............................. 10,619,687
18,300 Reinsurance Group Of America.................... 1,043,100
153,000 UNUM Corp. ..................................... 9,246,937
------------
187,667,400
------------
Food & Beverage Products - 1.4%
90,000 Bestfoods ...................................... 4,528,125
350,000 Darden Restaurants, Inc. ....................... 6,562,500
20,000 International Home Foods, Inc. ................. 352,500
365,000 Sara Lee Corp. ................................. 9,307,500
416,500 * Vlasic Foods International, Inc. ............. 8,434,125
------------
29,184,750
------------
Forest Products - 0.1%
120,000 Deltic Timber Corp. ............................ 2,865,000
------------
Healthcare Products &
Services - 10.3%
235,000 Abbott Laboratories............................. 10,912,812
592,200 * Acuson Corp. ................................. 7,920,675
300,000 American Home Products Corp. ................... 17,606,250
50,000 Amerisource Health Corp. ....................... 3,875,000
65,000 Baxter International, Inc. ..................... 4,610,938
160,800 Beckman Coulter, Inc. .......................... 8,019,900
160,000 Dura Pharmaceuticals, Inc. ..................... 2,310,000
110,000 * Elan Corp Plc, ADR ........................... 7,425,000
362,000 First Health Group Corp. ....................... 6,108,750
185,000 * Foundation Health Systems, Inc. .............. 1,699,688
60,000 HCR Manor Care, Inc. ........................... 1,605,000
421,625 * Health Management Associates, Inc. Cl. A ..... 5,296,664
246,000 * HEALTHSOUTH Corp. ............................ 3,336,375
45,100 Johnson & Johnson............................... 3,833,500
63,000 Lilly (Eli) & Co. .............................. 5,902,312
650,000 * Lincare Holdings, Inc. ....................... 22,750,000
330,000 McKesson HBOC, Inc. ............................ 24,791,250
20,000 Merck & Co., Inc. .............................. 2,935,000
283,800 Owens & Minor, Inc. ............................ 3,724,875
84,200 Pfizer, Inc. ................................... 10,830,225
531,500 * Quorum Health Group, Inc. .................... 4,517,750
382,000 Schering-Plough Corp. .......................... 20,819,000
225,000 Shared Medical System Corp. .................... 10,575,000
</TABLE>
49
<PAGE>
E V E R G R E E N
Growth and Income Fund
Schedule of Investments (continued)
January 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Healthcare Products &
Services - continued
256,000 * Sybron International Corp. ................... $ 6,912,000
120,000 * Tenet Healthcare Corp. ....................... 2,490,000
162,000 Warner-Lambert Co. ............................. 11,694,375
39,558 West Co., Inc. ................................. 1,389,475
------------
213,891,814
------------
Industrial Specialty Products & Services - 6.1%
527,400 AptarGroup, Inc. ............................... 14,404,613
164,625 Autoliv, Inc. .................................. 6,595,289
400,000 Bemis Co., Inc. ................................ 13,600,000
150,000 Borg-Warner Automotive, Inc. ................... 7,218,750
42,000 Carpenter Technology Corp. ..................... 1,249,500
71,800 Danaher Corp. .................................. 3,841,300
52,500 Donaldson, Inc. ................................ 961,406
244,000 Dover Corp. .................................... 7,579,250
137,118 Flowserve Corp. ................................ 2,305,296
21,900 * Halter Marine Group, Inc. .................... 112,238
235,300 JLG Industries, Inc. ........................... 3,705,975
33,500 Magna International, Inc. Cl. A ................ 1,989,063
250,000 Parker Hannifin Corp. .......................... 7,687,500
604,100 Pittston Brink's Group.......................... 17,443,387
260,000 Snap-on, Inc. .................................. 8,840,000
280,000 * Strattec Security Corp. ...................... 8,995,000
216,300 * UCAR International, Inc. ..................... 3,988,031
680,300 * Unova, Inc. .................................. 12,883,181
25,000 Vulcan Materials Co. ........................... 3,439,063
------------
126,838,842
------------
Information Services & Technology - 2.1%
183,800 * Adaptec, Inc. ................................ 4,250,375
80,000 * Applied Materials, Inc. ...................... 5,055,000
13,300 * Choicepoint, Inc. ............................ 724,850
400,000 Computer Associates International, Inc. ........ 20,250,000
40,000 Hewlett-Packard Co. ............................ 3,135,000
72,000 Intel Corp. .................................... 10,147,500
------------
43,562,725
------------
Leisure & Tourism - 0.8%
100,000 Carnival, Corp. Cl. A........................... 4,906,250
273,800 Gaylord Entertainment Co. ...................... 8,248,225
166,351 Starwood Hotels & Resorts....................... 4,158,775
------------
17,313,250
------------
Manufacturing - Distributing - 0.3%
301,400 Hussmann International, Inc. ................... 5,048,450
------------
Metal Products & Services - 0.3%
356,700 * Steel Dynamics, Inc. ......................... 5,930,137
------------
Oil/Energy - 3.9%
20,000 Amerada Hess Corp. ............................. 950,000
50,000 Anadarko Petroleum Corp. ....................... 1,353,125
38,000 Atlantic Richfield Co. ......................... 2,180,250
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Oil/Energy - continued
320,000 Berry Petroleum Co. Cl. A...................... $ 4,060,000
507,400 Cabot Oil & Gas Corp. Cl. A.................... 6,659,625
70,000 Chevron Corp. ................................. 5,232,500
90,000 Coastal Corp. ................................. 2,683,125
164,300 * Denbury Resources, Inc. ..................... 852,306
160,000 * Houston Exploration Co. ..................... 2,280,000
110,300 Kerr-McGee Corp. .............................. 3,743,306
209,500 Murphy Oil Corp. .............................. 7,646,750
203,900 National Fuel Gas Co. ......................... 8,627,519
221,200 * Nuevo Energy Co. ............................ 1,880,200
495,000 * Oryx Energy Co. ............................. 6,032,813
400,000 * Santa Fe Energy Resources, Inc. ............. 2,325,000
321,600 Southwestern Energy Co. ....................... 2,251,200
50,000 Texaco, Inc. .................................. 2,368,750
100,000 Tosco Corp. ................................... 2,175,000
305,000 Transocean Offshore, Inc. ..................... 7,796,562
113,520 Union Pacific Resource Group, Inc. ............ 915,255
274,000 Williams Companies, Inc. ...................... 9,042,000
------------
81,055,286
------------
Oil Field Services - 1.1%
260,300 * Atwood Oceanics, Inc. ....................... 5,173,463
113,140 Halliburton Co. ............................... 3,358,844
96,500 Helmerich & Payne, Inc. ....................... 1,694,781
824,500 * R & B Falcon Corp. .......................... 5,823,031
61,714 Schlumberger Ltd. ............................. 2,939,129
535,500 * Varco International, Inc. ................... 3,915,844
------------
22,905,092
------------
Paper & Packaging - 0.3%
88,440 * Sealed Air Corp. ............................ 4,692,847
75,000 Westvaco Corp. ................................ 1,654,688
------------
6,347,535
------------
Printing, Publishing, Broadcasting &
Entertainment - 5.5%
84,000 * Chancellor Media Corp. ...................... 4,830,000
49,805 Comcast Corp. ................................. 3,385,962
255,000 * Emmis Broadcasting Corp. Cl. A............... 13,068,750
360,000 * Jacor Communications, Inc. .................. 25,065,000
40,000 Knight-Ridder, Inc. ........................... 1,910,000
15,000 McGraw-Hill Companies, Inc. ................... 1,621,875
305,700 New York Times Co. ............................ 10,489,331
43,000 Scripps (E.W.) Co. Cl. A....................... 1,905,438
370,000 TCA Cable TV, Inc. ............................ 14,268,125
500,000 Time Warner, Inc. ............................. 31,250,000
2,800 Washington Post Co., Cl. B..................... 1,593,200
95,000 * Young Broadcasting, Inc. Cl. A............... 4,298,750
------------
113,686,431
------------
Real Estate - 2.1%
40,000 AMB Property Corp. REIT........................ 885,000
20,000 Apartment Investment & Management Co. Cl. A
REIT.......................................... 747,500
60,000 Arden Realty Group, Inc. REIT.................. 1,350,000
</TABLE>
50
<PAGE>
E V E R G R E E N
Growth and Income Fund
Schedule of Investments (continued)
January 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Real Estate - continued
71,200 Berkshire Realty Co., Inc. REIT................. $ 694,200
158,000 Brandywine Realty Trust REIT.................... 2,607,000
145,000 CarrAmerica Realty Corp. REIT................... 3,190,000
20,000 CBL & Associates Properties, Inc. REIT.......... 492,500
98,000 Crescent Real Estate Equities, Inc. REIT ....... 2,076,375
75,000 Entertainment Properties Trust REIT............. 1,237,500
66,100 Gables Residential Trust REIT................... 1,516,169
125,000 Kilroy Realty Corp. REIT........................ 2,726,562
64,000 Kimco Realty Corp. REIT......................... 2,496,000
85,000 Liberty Property Trust REIT..................... 2,008,125
160,000 *Lodgian, Inc. ................................. 720,000
260,000 Mack-Cali Realty Corp. REIT..................... 7,767,500
195,000 Meditrust Co. REIT.............................. 3,059,062
150,695 Patriot American Hospitality, Inc. REIT......... 809,986
132,600 Sunstone Hotel Investors, Inc. REIT............. 1,102,238
255,300 Weeks Corp. REIT................................ 7,020,750
------------
42,506,467
------------
Retailing & Wholesale - 4.0%
211,600 *Autozone, Inc. ................................ 7,167,950
169,000 Avnet, Inc. .................................... 7,594,437
267,000 *Cole National Corp. Cl. A...................... 4,438,875
70,000 Home Depot, Inc. ............................... 4,226,250
215,000 J. C. Penney Co., Inc. ......................... 8,425,312
92,600 Longs Drug Stores Corp. ........................ 3,547,738
290,000 Lowe's Companies, Inc. ......................... 16,910,625
222,000 Rite Aid Corp. ................................. 10,905,750
456,685 *Saks, Inc. .................................... 16,811,717
20,400 Shopko Stores, Inc. ............................ 647,700
8,200 Timberland Co. Cl. A............................ 369,000
34,500 *Tommy Hilfiger Corp. .......................... 2,432,250
------------
83,477,604
------------
Telecommunication Services & Equipment - 0.5%
168,000 *Aspect Telecommunications Corp. ............... 1,512,000
50,000 Mediaone Group, Inc. ........................... 2,803,125
110,000 Scientific Atlanta, Inc. ....................... 3,423,750
70,000 *Univision Communications, Inc. Cl. A........... 3,141,250
------------
10,880,125
------------
Thrift Institutions - 0.0%
27,900 St. Paul Bancorp, Inc. ......................... 645,188
------------
Transportation - 4.0%
65,000 AMR Corp. ...................................... 3,818,750
570,000 Burlington Northern Santa Fe Corp. ............. 19,736,250
612,600 Kansas City Southern Industries, Inc. .......... 29,098,500
227,750 Southwest Airlines Co. ......................... 6,120,781
30,000 UAL Corp. ...................................... 1,867,500
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Transportation - continued
413,000 Union Pacific Corp. .......................... $ 21,243,688
25,000 US Airways Group, Inc. ....................... 1,243,750
-------------
83,129,219
-------------
Utilities - Electric - 1.4%
64,000 Commonwealth Energy System.................... 2,512,000
140,900 Energy East Corp. ............................ 7,212,319
70,000 Houston Industries, Inc. ..................... 2,126,250
40,000 Texas Utilities Co. .......................... 1,757,500
400,000 TNP Enterprises, Inc. ........................ 14,225,000
-------------
27,833,069
-------------
Utilities - Gas - 1.0%
265,800 Keyspan Energy................................ 7,193,212
288,100 Northwest Natural Gas Co. .................... 6,770,350
220,300 Piedmont Natural Gas Co., Inc. ............... 6,801,763
-------------
20,765,325
-------------
Utilities - Telephone - 1.7%
101,200 AT&T Corp. ................................... 9,183,900
150,000 Century Telephone Enterprises, Inc. .......... 10,200,000
143,000 Cincinnati Bell, Inc. ........................ 2,904,687
175,000 GTE Corp. .................................... 11,812,500
-------------
34,101,087
-------------
Total Common Stocks (cost $1,480,847,819)..... 1,906,298,113
-------------
PREFERRED STOCKS - 0.0%
Healthcare Products &
Services - 0.0%
130,000 *Fresenius National Med Care, Inc. Series D
(cost $22,740)............................... 3,250
-------------
CONVERTIBLE PREFERRED - 0.2%
Paper & Packaging - 0.2%
78,375 *Sealed Air Corp., $2.00, Series A
(cost $2,426,965)............................ 4,163,672
-------------
<CAPTION>
Principal
Amount Value
<C> <S> <C>
SHORT-TERM INVESTMENTS - 8.9%
Commercial Paper - 7.3%
$16,290,000 Bank Austria Inc.
5.13%, 2/22/1999............................. 16,241,252
28,020,000 Four Winds Funding Corp. 4.85%, 2/26/1999..... 27,925,627
FPL Fuels, Inc.
18,660,000 5.25%, 2/1/1999............................... 18,660,000
9,692,000 5.35%, 2/12/1999.............................. 9,676,156
45,700,000 General Electric Capital Corp. 5.43%,
2/3/1999..................................... 45,686,214
880,000 GTE Corp.
4.85%, 2/24/1999............................. 877,273
29,350,000 Martin Marietta Materials 5.30%, 2/12/1999.... 29,302,470
</TABLE>
51
<PAGE>
E V E R G R E E N
Growth and Income Fund
Schedule of Investments (continued)
January 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
SHORT-TERM INVESTMENTS - continued
Commercial Paper - continued
$ 285,000 Michigan Consolidated Gas Co. 5.45%, 2/9/1999..... $ 284,655
2,040,000 Morgan (J.P.) & Co., Inc. 5.40%, 2/8/1999......... 2,037,858
--------------
150,691,505
--------------
<CAPTION>
Principal
Amount Value
<C> <S> <C>
U.S. Government Agency Obligations - 1.6%
Federal Home Loan Mortgage Discount Notes
$ 8,430,000 4.69%, 2/18/1999................................. $ 8,411,330
800,000 4.72%, 2/18/1999................................. 798,217
25,000,000 4.73%, 2/19/1999................................. 24,940,875
--------------
34,150,422
--------------
Total Short-Term Investments
(cost $184,841,927)............................. 184,841,927
--------------
</TABLE>
<TABLE>
<S> <C> <C>
Total Investments -(cost $1,668,139,451)........... 101.2% 2,095,306,962
Other Assets and Liabilities - net................. (1.2) (25,662,004)
----- --------------
Net Assets......................................... 100.0% $2,069,644,958
===== ==============
</TABLE>
* Non-income producing securities.
Summary of Abbreviations:
ADR American Depository Receipts
REIT Real Estate Investment Trust
See Combined Notes to Financial Statements.
52
<PAGE>
E V E R G R E E N
Income and Growth Fund
Schedule of Investments
January 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - 75.6%
Automotive Equipment & Manufacturing - 3.0%
525,900 Dana Corp.............................................. $21,627,637
50,000 General Motors Corp. .................................. 4,487,500
-----------
26,115,137
-----------
Banks - 13.9%
11,775 AmSouth Bancorp........................................ 518,836
100,000 Associated Banc Corp. ................................. 3,137,500
284,000 BancorpSouth, Inc. .................................... 4,881,250
300,300 BancWest Corp. ........................................ 13,475,962
170,100 Bankers Trust Corp. ................................... 14,798,700
192,500 + CB Bancshares, Inc. ................................. 6,160,000
49,700 CCB Financial Corp. ................................... 2,702,437
77,606 F&M National Corp...................................... 2,269,976
35,100 First American Corp. .................................. 1,465,425
40,000 First Tennessee National Corp. ........................ 1,462,500
20,750 First Virginia Banks, Inc. ............................ 980,438
8,200 FirstMerit Corp. ...................................... 217,300
30,000 Fleet Financial Group, Inc. ........................... 1,329,375
319,410 Interchange Financial Services Corp. .................. 5,350,117
100,000 KeyCorp ............................................... 3,187,500
18,271 M & T Bank Corp. ...................................... 9,135,500
100,000 Marshall & Ilsley Corp. ............................... 5,925,000
477,346 Mercantile Bancorp, Inc. .............................. 21,450,736
15,625 One Valley Bancorp of West Virginia, Inc. ............. 492,188
116,500 Pacific Century Financial Corp. ....................... 2,563,000
173,500 PNC Bank Corp. ........................................ 8,881,031
37,840 Premier National Bancorp, Inc. ........................ 662,200
79,254 Second Bancorp, Inc. .................................. 1,758,448
10,000 Summit Bancorp ........................................ 408,125
111,375 Susquehanna Bancshares, Inc. .......................... 2,164,852
7,000 United Bankshares, Inc. ............................... 169,750
321,960 USBancorp, Inc. ....................................... 5,795,280
-----------
121,343,426
-----------
Building, Construction &
Furnishings - 2.1%
304,500 Armstrong World Industries, Inc. ...................... 17,927,437
44,400 La-Z-Boy Chair Co. .................................... 799,200
-----------
18,726,637
-----------
Capital Goods - 1.3%
271,500 Caterpillar, Inc. ..................................... 11,759,344
-----------
Chemical & Agricultural
Products - 0.6%
100,000 Du Pont (E. I.) De Nemours & Co. ...................... 5,118,750
-----------
Consumer Products &
Services - 1.2%
120,000 Newell Co. ............................................ 4,987,500
200,000 Service Corp. International............................ 3,175,000
115,000 Tupperware Corp. ...................................... 2,364,688
-----------
10,527,188
-----------
Diversified Companies - 0.4%
225,000 Tomkins Plc, ADR....................................... 3,346,875
-----------
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Electrical Equipment &
Services - 3.8%
78,000 Emerson Electric Co. .................................. $4,538,625
5,000 Hubbell, Inc. Cl. A.................................... 175,000
230,000 Hubbell, Inc. Cl. B.................................... 8,423,750
448,900 Thomas & Betts Corp. .................................. 19,835,769
----------
32,973,144
----------
Finance & Insurance - 6.8%
50,000 Edwards (A.G.), Inc. .................................. 1,693,750
79,000 Exel Limited Hamilton.................................. 5,041,188
100,000 LaSalle Re Holdings Ltd................................ 1,850,000
195,800 Ohio Casualty Corp..................................... 7,783,050
743,000 Paine Webber Group, Inc................................ 27,630,312
143,200 Provident Co., Inc. ................................... 6,139,700
290,000 Torchmark Corp......................................... 9,515,625
----------
59,653,625
----------
Food & Beverage Products - 0.2%
2,000 Sara Lee Corp. ........................................ 51,000
62,400 Sbarro, Inc............................................ 1,673,100
----------
1,724,100
----------
Healthcare Products &
Services - 6.1%
270,000 American Home Products Corp. .......................... 15,845,625
175,000 Baxter International, Inc. ............................ 12,414,062
200,200 Beckman Coulter, Inc. ................................. 9,984,975
59,400 Bristol-Myers Squibb Co................................ 7,614,338
152,500 Shared Medical System Corp. ........................... 7,167,500
----------
53,026,500
----------
Industrial Specialty Products & Services - 0.0%
20,000 Timken Co.............................................. 433,750
----------
Information Services &
Technology - 2.1%
100,000 Hewlett-Packard Co..................................... 7,837,500
200,000 *Network Associates, Inc. ............................. 10,475,000
----------
18,312,500
----------
Oil/Energy - 6.1%
50,000 Amerada Hess Corp. .................................... 2,375,000
337,000 Atlantic Richfield Co. ................................ 19,335,375
6,100 Consolidated Natural Gas Co. .......................... 313,006
293,100 Equitable Resources, Inc. ............................. 7,638,919
548,200 Williams Companies, Inc. .............................. 18,090,600
158,000 YPF SA, ADR............................................ 5,036,250
----------
52,789,150
----------
Printing, Publishing, Broadcasting
& Entertainment - 0.2%
50,000 Reader's Digest Association, Inc. ..................... 1,437,500
----------
Real Estate - 4.5%
23,800 Burnham Pacific Properties, Inc. REIT.................. 282,625
838,300 Canadian Hotel Properties REIT......................... 4,337,473
124,900 Equity Residential Properties Trust REIT............... 5,081,869
312,700 Gables Residential Trust REIT.......................... 7,172,556
</TABLE>
53
<PAGE>
E V E R G R E E N
Income and Growth Fund
Schedule of Investments (continued)
January 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Real Estate - continued
462,000 Kranzco Realty Trust REIT........................... $ 6,525,750
850,000 Meditrust Co. REIT.................................. 13,334,375
75,000 Post Property, Inc. REIT............................ 2,793,750
--------------
39,528,398
--------------
Thrift Institutions - 0.4%
56,000 First Essex Bancorp, Inc............................ 997,500
122,000 Jacksonville Bancorp, Inc........................... 1,952,000
10,430 Peoples Heritage Financial Group.................... 187,740
--------------
3,137,240
--------------
Transportation - 2.6%
150,000 * UAL Corp.......................................... 9,337,500
260,000 Union Pacific Corp.................................. 13,373,750
--------------
22,711,250
--------------
Utilities - Electric - 4.2%
10,650 Black Hills Corp.................................... 264,253
6,500 Central Hudson Gas & Electric Corp. 262,031
239,000 FPL Group, Inc...................................... 13,115,125
123,826 Interstate Energy Corp.............................. 3,559,998
65,524 LG & E Energy Corp.................................. 1,728,196
180,000 MDU Resources Group, Inc............................ 4,140,000
125,000 Midamerican Energy Holdings Co...................... 3,351,563
146,500 Potomac Electric Power Co........................... 3,415,281
51,500 PP&L Resources, Inc................................. 1,374,406
150,200 TNP Enterprises, Inc................................ 5,341,487
--------------
36,552,340
--------------
Utilities - Gas - 5.6%
78,300 Chesapeake Utilities Corp........................... 1,380,038
1,035,848 Keyspan Energy...................................... 28,032,636
336,300 Peoples Energy Corp................................. 11,602,350
98,100 Piedmont Natural Gas Co., Inc....................... 3,028,837
10,000 South Jersey Industries, Inc........................ 256,250
190,381 UGI Corp............................................ 4,176,483
8,300 Yankee Energy System, Inc........................... 229,288
--------------
48,705,882
--------------
Utilities - Telephone - 7.4%
305,100 Frontier Corp....................................... 11,021,738
250,000 GTE Corp............................................ 16,875,000
100,000 * Nortel Inversora SA MEDS.......................... 4,462,500
1,503,000 Telecom Corp. New Zealand Ltd....................... 31,093,312
20,000 U.S. West, Inc...................................... 1,233,750
--------------
64,686,300
--------------
Other Securities - 3.1%............................. 26,944,981
--------------
Total Common Stocks (cost $633,982,081)............. 659,554,017
--------------
CONVERTIBLE PREFERRED - 20.2%
Aerospace & Defense - 1.4%
200,000 * Loral Space & Communications...................... 12,050,000
--------------
Banks - 0.7%
210,000 National Australia Bank, Ltd. 7.875%, Series UNIT... 6,378,750
--------------
<CAPTION>
Shares Value
<C> <S> <C>
CONVERTIBLE PREFERRED - continued
Communication Systems &
Services - 2.1%
200,000 AirTouch Communications, Inc. 6.00%, Series B......... $15,675,000
50,000 Qwest Trends Trust
5.75%, 144A.......................................... 2,668,750
-----------
18,343,750
-----------
Electrical Equipment &
Services - 0.8%
165,000 Pioneer Standard Financial Trust 6.75%, 144A.......... 6,930,000
-----------
Finance & Insurance - 2.0%
270,000 Frontier Financing Trust 6.25%, TOPRS................. 12,050,100
100,000 St. Paul Capital
6.00%, MIPS.......................................... 5,800,000
-----------
17,850,100
-----------
Food & Beverage Products - 3.2%
200,000 Dole Food Co.
7.00%, TRACES........................................ 6,100,000
400,000 Wendys Financing I
5.00%, Series A, TECONS.............................. 21,450,000
-----------
27,550,000
-----------
Leisure & Tourism - 0.4%
170,000 Lodgian Capital Trust I
7.00%, CRESTS, 144A.................................. 3,655,000
-----------
Metal Products & Services - 0.3%
100,000 Timet Capital Trust I
6.625%, BUCS, 144A................................... 2,512,500
-----------
Oil/Energy - 0.5%
95,000 Callon Petroleum Co.
8.50%, Series A...................................... 2,565,000
48,000 Nuevo Energy Co.
5.75%, Series A, TECONS.............................. 1,581,000
-----------
4,146,000
-----------
Oil Field Services - 0.4%
100,000 Evi, Inc.
5.00%................................................ 3,062,500
-----------
Printing, Publishing, Broadcasting & Entertainment -
1.0%
85,000 Houston Industries, Inc.
7.00%, ACES (exchangeable for Time Warner, Inc.
common stock)........................................ 9,041,875
-----------
Telecommunication Services & Equipment - 4.2%
700,000 Qualcomm Financial Trust I
5.75%, 3/01/12....................................... 36,841,000
-----------
Transportation - 2.1%
68,700 CNF Trust I
5.00%, Series A, TECONS (exchangeable for CNF
Transportation, Inc. common stock)................... 4,199,288
280,000 Union Pacific Capital Trust 6.25%, 144A............... 14,000,000
-----------
18,199,288
-----------
</TABLE>
54
<PAGE>
E V E R G R E E N
Income and Growth Fund
Schedule of Investments (continued)
January 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
CONVERTIBLE PREFERRED - continued
Utilities - Electric - 0.3%
168,000 BNDES Participacoes S.A. 10.50%, DECS............. $ 2,604,000
--------------
Utilities - Gas - 0.8%
394,500 MCN Corp.
8.75%, PRIDES.................................... 7,199,625
--------------
Total Convertible Preferred
(cost $187,792,487).............................. 176,364,388
--------------
<CAPTION>
Principal
Amount Value
<C> <S> <C>
CONVERTIBLE DEBENTURES - 2.9%
Electrical Equipment &
Services - 2.1%
$ 9,700,000 * Photronics, Inc.
6.00%, 6/1/2004.................................. 10,815,500
16,000,000 * Solectron Corp.
0.00%, 1/27/2019, 144A........................... 7,640,000
--------------
18,455,500
--------------
Oil/Energy - 0.1%
820,000 Swift Energy Co.
6.25%, 11/15/2006................................ 596,550
--------------
<CAPTION>
Principal
Amount Value
<C> <S> <C>
CONVERTIBLE DEBENTURES - continued
Transportation - 0.7%
$ 5,000,000 Continental Airlines Inc.
6.75%, 4/15/2006................................. $ 6,093,750
--------------
Total Convertible Debentures
(cost $24,356,034)............................... 25,145,800
--------------
SHORT-TERM INVESTMENTS - 1.6%
U.S. Government Agency Obligations - 1.6%
1,720,000 Federal Farm Credit Bank
Discount Notes
4.725%, 2/24/1999................................ 1,714,808
Federal Home Loan Mortgage Discount Notes
1,600,000 4.74%, 2/8/1999.................................. 1,598,525
790,000 4.72%, 2/16/1999................................. 788,446
9,690,000 4.72%, 2/18/1999................................. 9,668,402
--------------
Total Short-Term Investments
(cost $13,770,181)............................... 13,770,181
--------------
</TABLE>
<TABLE>
<S> <C> <C>
Total Investments -
(cost $859,900,783).................................. 100.3% 874,834,386
Other Assets and
Liabilities - net.................................... (0.3) (2,501,384)
----- ------------
Net Assets .......................................... 100.0% $872,333,002
===== ============
</TABLE>
* Non-income producing securities.
+ Investment in a non-controlled affiliate. The Fund owns over 5% of the out-
standing voting shares of CB Bancshares, Inc. The Fund has a cost basis of
$6,024,625 in the issue at January 31, 1999. The Fund earned $3,240 of in-
come from this investment during the six months ending January 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
ADR American Depository Receipts
BUCS Beneficial Unsecured Convertible Securities
CRESTS Convertible Redeemable Equity Structured Trust Securities
DECS Dividend Enhanced Convertible Stock
MEDS Mandatorially Exchangeable Debt Securities
MIPS Monthly Income Preferred Shares
PRIDES Preferred Redeemable Increased Dividend Equity Securities
REIT Real Estate Investment Trust
TECONS Term Convertible Shares
TOPRS Trust Originated Preferred Securities
TRACES Trust Automatic Common Exchangeable Securities
See Combined Notes to Financial Statements.
55
<PAGE>
E V E R G R E E N
Small Cap Value Fund
Schedule of Investments
January 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - 81.0%
Aerospace & Defense - 2.7%
214,300 Curtiss Wright Corp. ................................... $ 8,009,462
------------
Automotive Equipment & Manufacturing - 0.6%
15,000 Arvin Industries, Inc. ................................. 593,438
103,200 Simpson Industries, Inc. ............................... 1,083,600
------------
1,677,038
------------
Banks - 10.5%
108,750 ABC Bancorp............................................. 1,318,594
31,500 Amcore Financial, Inc. ................................. 724,500
6,000 Bancorp South, Inc. .................................... 103,125
20,000 Bank of Essex........................................... 340,000
61,700 Britton & Koontz Capital Corp. ......................... 1,203,150
28,800 BSB Bancorp, Inc. ...................................... 770,400
2,625 Carrollton Bancorp ..................................... 85,313
25,000 CB Bancshares, Inc. .................................... 800,000
34,177 Commercial Bankshares, Inc. ............................ 743,350
8,200 Community Bancshares, Inc. ............................. 211,150
60,000 Cowlitz Bancorp......................................... 465,000
2,500 First Midwest Bancorp, Inc. ............................ 90,938
60,000 First Oak Brook Bancshares, Inc. Cl. A.................. 1,102,500
95,552 First State Bancorp..................................... 1,815,488
221,900 Granite State Bankshares, Inc. ......................... 4,798,587
77,868 Hubco, Inc. ............................................ 2,520,976
32,000 Independent Bankshares, Inc. ........................... 344,000
20,943 Interchange Financial Services Corp. ................... 350,795
15,000 James River Bankshares, Inc. ........................... 255,000
30,000 New England Community Bancorp, Inc...................... 616,875
4,000 Northern States Financial Corp.......................... 96,000
87,125 One Valley Bancorp of West Virginia, Inc................ 2,744,437
40,000 Pacific Bank, N.A. ..................................... 810,000
4,668 Pacific Century Financial Corp. ........................ 102,696
16,082 Premier National Bancorp, Inc. ......................... 281,435
90,000 Prosperity Bancshares, Inc. ............................ 1,136,250
67,104 Republic Security Financial Corp. ...................... 616,518
214,000 SierraWest Bancorp ..................................... 5,403,500
24,000 South Alabama Bancorp, Inc. ............................ 372,000
60,000 Southside Bancshares Corp. ............................. 757,500
11,250 Susquehanna Bancshares, Inc. ........................... 218,672
23,200 Union Bankshares Corp. ................................. 382,800
------------
31,581,549
------------
Building, Construction &
Furnishings - 6.4%
50,000 American Woodmark Corp. ................................ 1,893,750
3,000 Craftmade International, Inc. .......................... 49,500
150,000 D.R. Horton, Inc. ...................................... 3,168,750
76,714 Knape & Vogt Manufacturing Co. ......................... 1,332,906
80,000 La-Z-Boy Chair Co. ..................................... 1,440,000
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Building, Construction &
Furnishings - continued
100,000 Pillowtex Corp. ........................................ $ 2,193,750
280,000 Shelby Williams Industries, Inc. ....................... 3,710,000
210,500 Standard Pacific Corp. ................................. 2,947,000
65,100 TJ International, Inc. ................................. 1,570,537
42,413 *Toll Brothers, Inc. ................................... 975,499
------------
19,281,692
------------
Business Equipment &
Services - 0.9%
165,400 Tab Products Co. ....................................... 951,050
60,000 *Zebra Technologies Corp. Cl. A......................... 1,811,250
------------
2,762,300
------------
Consumer Products &
Services - 9.1%
311,500 CPI Corp. .............................................. 8,235,281
93,500 General Housewares Corp. ............................... 1,273,938
110,000 Lancaster Colony Corp. ................................. 3,128,125
196,500 Matthews International Corp. Cl. A...................... 5,551,125
114,100 Mikasa, Inc. ........................................... 1,297,888
100,500 Polaris Industries, Inc. ............................... 3,303,937
146,100 Stride Rite Corp. ...................................... 1,442,738
328,600 York Group, Inc. ....................................... 3,306,537
------------
27,539,569
------------
Electronic Equipment &
Services - 3.1%
338,700 Boston Acoustics, Inc. ................................. 7,959,450
50,000 *Hadco Corp. ........................................... 1,500,000
------------
9,459,450
------------
Electrical Equipment &
Services - 2.3%
292,800 Helix Technology Corp. ................................. 6,002,400
80,000 Kent Electronics Corp. ................................. 1,025,000
------------
7,027,400
------------
Finance & Insurance - 2.2%
15,000 Enhance Financial Services Group, Inc. ................. 375,000
5,000 LaSalle Re Holdings Ltd. ............................... 92,500
164,900 Morgan Keegan, Inc. .................................... 2,978,506
122,500 Pxre Corp. ............................................. 2,503,594
16,000 Trenwick Group, Inc. ................................... 528,000
------------
6,477,600
------------
Food & Beverage Products - 3.5%
121,220 Bridgford Foods Corp. .................................. 1,515,250
200,000 International Multifoods Corp. ......................... 4,825,000
20,000 Lance, Inc. ............................................ 372,500
93,000 Michael Foods, Inc. .................................... 2,080,875
77,300 Smithfield Companies, Inc. ............................. 589,412
15,000 Smucker (J. M.) Co. .................................... 337,500
35,000 Smucker (J. M.) Co. Cl. A............................... 875,000
------------
10,595,537
------------
</TABLE>
56
<PAGE>
E V E R G R E E N
Small Cap Value Fund
Schedule of Investments (continued)
January 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Healthcare Products &
Services - 1.6%
130,000 *ADAC Laboratories..................................... $ 2,868,125
50,000 Jones Pharma, Inc. .................................... 1,593,750
18,700 Kewaunee Scientific Corp. ............................. 212,713
------------
4,674,588
------------
Industrial Specialty Products &
Services - 3.7%
50,000 Badger Meter, Inc. .................................... 1,831,250
100,000 Federal Signal Corp. .................................. 2,656,250
64,100 Gorman Rupp Co. ....................................... 1,065,663
15,500 Graco, Inc. ........................................... 379,750
116,374 Hach Co. .............................................. 1,367,394
254,474 Hach Co. Cl. A......................................... 2,481,121
18,700 Met-Pro Corp. ......................................... 216,219
46,400 Spartech Corp. ........................................ 1,107,800
2,200 Superior Telecom, Inc. ................................ 97,350
------------
11,202,797
------------
Information Services &
Technology - 0.2%
32,500 Timberline Software Corp. ............................. 546,406
------------
Machinery - Diversified - 1.3%
235,250 Hardinge, Inc. ........................................ 3,778,703
------------
Oil/Energy - 4.3%
201,900 Berry Petroleum Co. Cl. A.............................. 2,561,606
235,500 Cabot Oil & Gas Corp. Cl. A............................ 3,090,938
155,600 Penn Virginia Corp. ................................... 3,189,800
100,909 Pennzoil-Quaker State Co. ............................. 1,551,476
370,000 Southwestern Energy Co. ............................... 2,590,000
------------
12,983,820
------------
Oil Field Services - 0.9%
146,200 Lufkin Industries, Inc. ............................... 2,722,975
------------
Paper & Packaging - 0.7%
154,050 Tuscarora, Inc. ....................................... 2,147,072
------------
Printing, Publishing, Broadcasting & Entertainment -
0.9%
41,300 Banta Corp. ........................................... 986,038
116,300 Bowne & Co., Inc. ..................................... 1,788,112
------------
2,774,150
------------
Real Estate - 3.2%
6,291 Bradley Real Estate, Inc. REIT......................... 126,606
230,000 Eastgroup Properties, Inc. REIT........................ 4,211,875
60,000 Innkeepers USA Trust REIT.............................. 697,500
95,000 Parkway Properties, Inc. REIT.......................... 3,010,313
100,000 RFS Hotel Investors, Inc. REIT......................... 1,268,750
50,000 Sunstone Hotel Investors, Inc.REIT..................... 415,625
------------
9,730,669
------------
Retailing & Wholesale - 2.2%
48,200 Ethan Allen Interiors, Inc. ........................... 2,301,550
75,000 Freds, Inc. ........................................... 970,313
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Retailing & Wholesale - continued
36,900 Longs Drug Stores Corp. ................................. $ 1,413,731
200,000 Pier 1 Imports, Inc. .................................... 1,900,000
-----------
6,585,594
-----------
Telecommunication Services & Equipment - 4.5%
250,000 Communications Systems, Inc. ............................ 2,656,250
349,695 Hickory Tech Corp. ...................................... 4,633,459
200,000 Scientific Atlanta, Inc. ................................ 6,225,000
-----------
13,514,709
-----------
Textile & Apparel - 0.5%
53,900 Oxford Industries, Inc. ................................. 1,411,506
-----------
Thrift Institutions - 4.7%
32,500 Abington Bancorp, Inc. .................................. 491,563
16,800 Bancorp Connecticut, Inc. ............................... 259,350
228,394 Community Savings Bankshares, Inc. ...................... 2,797,826
92,000 First Coastal Bankshares, Inc. .......................... 2,162,000
6,000 First Essex Bancorp, Inc. ............................... 106,875
16,800 *Golden St. Bancorp, Inc. ............................... 313,950
50,000 Harbor Florida Bancshares, Inc. ......................... 556,250
312,900 Horizon Financial Corp. ................................. 4,238,817
38,000 Jacksonville Bancorp, Inc. .............................. 608,000
69,200 Metrowest Bank........................................... 441,150
100,000 St. Paul Bancorp, Inc. .................................. 2,312,500
-----------
14,288,281
-----------
Transportation - 0.5%
50,000 ASA Holdings, Inc. ...................................... 1,562,500
-----------
Utilities - Electric - 2.6%
136,800 Madison Gas & Electric Co. .............................. 2,907,000
135,000 MDU Resources Group, Inc. ............................... 3,105,000
100,300 Public Service Co. of New Mexico......................... 1,886,894
-----------
7,898,894
-----------
Utilities - Gas - 5.9%
82,200 Chesapeake Utilities Corp. .............................. 1,448,775
15,000 Connecticut Energy Corp. ................................ 405,938
80,000 CTG Resources, Inc. ..................................... 1,810,000
64,800 Delta Natural Gas Co., Inc. ............................. 1,166,400
20,000 Eastern Enterprises...................................... 805,000
27,400 NUI Corp. ............................................... 623,350
36,600 Public Service Co. of North Carolina, Inc. .............. 848,663
450,100 Semco Energy, Inc. ...................................... 7,314,125
85,500 UGI Corp. ............................................... 1,875,656
48,100 Yankee Energy System, Inc. .............................. 1,328,762
-----------
17,626,669
-----------
Other Securities - 2.0%.................................. 6,016,424
-----------
Total Common Stocks
(cost $251,927,418)..................................... 243,877,354
-----------
</TABLE>
57
<PAGE>
E V E R G R E E N
Small Cap Value Fund
Schedule of Investments (continued)
January 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
CONVERTIBLE PREFERRED - 4.6%
Electrical Equipment &
Services - 1.6%
110,000 Pioneer Standard Financial Trust
6.75%, 144A............................................. $ 4,620,000
-----------
Finance & Insurance - 1.9%
12,000 American Heritage Life Investment Corp. 8.50%, PRIDES.... 798,000
80,000 Frontier Financing Trust
6.25%, TOPRS............................................ 3,570,400
125,000 Philadelphia Consolidated Holdings, Inc. 7.00%, PRIDES... 1,250,000
-----------
5,618,400
-----------
Leisure & Tourism - 0.9%
130,000 Lodgian Capital Trust I
7.00%, CRESTS, 144A..................................... 2,795,000
-----------
Oil/Energy - 0.2%
26,000 Callon Petroleum Co.
8.50%, Series A......................................... 702,000
-----------
Total Convertible Preferred
(cost $19,358,375)...................................... 13,735,400
-----------
<CAPTION>
Principal
Amount Value
<C> <S> <C>
CONVERTIBLE DEBENTURES - 11.0%
Banks - 0.5%
$1,350,000 Surety Capital Corp.
9.00%, 3/31/2008...................................... 1,350,000
---------
Business Equipment &
Services - 1.0%
1,250,000 Interim Services, Inc.
4.50%, 6/1/2005....................................... 1,104,687
200,000 Personnel Group Of America, Inc.
5.75%, 7/1/2004....................................... 203,250
Tecnomatix Technologies Ltd.
500,000 5.25%, 8/15/2004, 144A................................. 369,375
2,000,000 5.25%, 8/15/2004....................................... 1,477,500
---------
3,154,812
---------
Consumer Products &
Services - 1.5%
4,000,000 Action Performance Companies, Inc. 4.75%, 4/1/2005,
144A.................................................. 4,540,000
---------
<CAPTION>
Principal
Amount Value
<C> <S> <C>
CONVERTIBLE DEBENTURES - continued
Healthcare Products &
Services - 3.7%
$5,000,000 Alpharma, Inc.
5.75%, 4/1/2005, 144A................................. $6,825,000
4,300,000 Carematrix
6.25%, 8/15/2004...................................... 4,412,875
----------
11,237,875
----------
Leisure & Tourism - 1.9%
2,400,000 Family Golf Centers, Inc.
5.75%, 10/15/2004, 144A............................... 1,977,000
3,370,000 Speedway Motorsports, Inc.
5.75%, 9/30/2003...................................... 3,631,175
----------
5,608,175
----------
Retailing & Wholesale - 0.7%
Central Garden & Pet Co.
500,000 6.00%, 11/15/2003, 144A................................ 437,500
2,000,000 6.00%, 11/15/2003...................................... 1,750,000
----------
2,187,500
----------
Telecommunication Services & Equipment - 1.7%
Antec Corp.
500,000 4.50%, 5/15/2003, 144A................................. 563,750
4,000,000 4.50%, 5/15/2003....................................... 4,510,000
----------
5,073,750
----------
Total Convertible Debentures
(cost $31,298,620).................................... 33,152,112
----------
SHORT-TERM INVESTMENTS - 2.6%
U.S. Government Agency Obligations - 2.6%
Federal Home Loan Mortgage
Discount Notes
6,000,000 4.72%, 2/11/1999....................................... 5,992,134
2,000,000 4.72%, 2/18/1999....................................... 1,995,542
----------
Total Short-Term Investments
(cost $7,987,676)..................................... 7,987,676
----------
</TABLE>
<TABLE>
<S> <C> <C>
Total Investments -
(cost $310,572,089)................................... 99.2% 298,752,542
Other Assets and
Liabilities - net..................................... 0.8 2,488,170
----- ------------
Net Assets............................................. 100.0% $301,240,712
===== ============
</TABLE>
* Non-income producing securities.
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:
CRESTS Convertible Redeemable Equity Structured Trust Securities
PRIDES Preferred Redeemable Increased Dividend Equity Securities
REIT Real Estate Investment Trust
TOPRS Trust Originated Preferred Securities
See Combined Notes to Financial Statements.
58
<PAGE>
E V E R G R E E N
Utility Fund
Schedule of Investments (continued)
January 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - 76.4%
Communication Systems &
Services - 2.8%
50,000 *MCI WorldCom, Inc. .................................. $ 3,987,500
------------
Healthcare Products & Services - 2.1%
100,000 Mylan Laboratories, Inc. ............................. 3,050,000
------------
Oil/Energy - 3.2%
70,000 Enron Corp. .......................................... 4,620,000
------------
Real Estate - 2.9%
190,000 FelCor Lodging Trust Inc. REIT........................ 4,144,375
------------
Utilities - Electric - 41.3%
100,000 Central Hudson Gas & Electric Corp. .................. 4,031,250
100,000 Cinergy Corp. ........................................ 3,131,250
1,000,000 Companhia Paranaense de
Energia-Copel, Plc, ADR.............................. 4,000,000
70,000 Duke Power Co. ....................................... 4,326,875
100,000 Energy East Corp. .................................... 5,118,750
170,000 Houston Industries, Inc. ............................. 5,163,750
125,000 Interstate Energy Corp. .............................. 3,593,750
165,000 MDU Resources Group, Inc. ............................ 3,795,000
225,000 PacifiCorp............................................ 4,626,562
150,000 PP&L Resources, Inc. ................................. 4,003,125
175,000 Public Service Co. of New Mexico...................... 3,292,188
100,000 Public Service Enterprise Group, Inc. ................ 3,968,750
175,000 Sempra Energy......................................... 4,025,000
140,000 Teco Energy, Inc. .................................... 3,255,000
135,000 Wisconsin Energy Corp. ............................... 3,510,000
------------
59,841,250
------------
Utilities - Gas - 5.8%
180,000 Keyspan Energy........................................ 4,871,250
45,000 Northwest Natural Gas Co. ............................ 1,057,500
60,000 Peoples Energy Corp. ................................. 2,070,000
25,000 Semco Energy, Inc. ................................... 406,250
------------
8,405,000
------------
Utilities - Telephone - 18.3%
25,000 AT&T Corp. ........................................... 2,248,438
150,000 BellSouth Corp. ...................................... 6,693,750
55,000 Frontier Corp. ....................................... 1,986,875
70,000 GTE Corp. ............................................ 4,725,000
60,000 Sprint Corp. ......................................... 5,032,500
30,000 *Sprint Corp. (PCS Group)............................. 956,250
80,000 U.S. West, Inc. ...................................... 4,935,000
------------
26,577,813
------------
Total Common Stocks
(cost $93,671,648)................................... 110,625,938
------------
<CAPTION>
Shares Value
<C> <S> <C>
CONVERTIBLE PREFERRED - 19.5%
Communication Systems &
Services - 3.8%
70,000 AirTouch Communications, Inc.
6.00%, Series B..................................... $ 5,486,250
------------
Printing, Publishing, Broadcasting & Entertainment -
2.9%
40,000 Houston Industries, Inc.
7.00%, ACES (exchangeable for Time Warner, Inc.
common stock)....................................... 4,255,000
------------
Telecommunication Services &
Equipment - 2.6%
70,000 Qualcomm Financial Trust I
5.75%, 3/01/2012.................................... 3,718,750
------------
Utilities - Electric - 6.7%
70,000 AES Trust I
5.375%, Series A, TECONS............................ 3,797,500
135,000 BNDES Participacoes S.A.
10.50%, DECS........................................ 2,092,500
70,000 Texas Utilities Co.
9.25%, PRIDES....................................... 3,876,250
------------
9,766,250
------------
Utilities - Telephone - 3.5%
60,000 Sprint Corp.
8.25%, DECS
(exchangeable for Southern N.E. Telephone common
stock).............................................. 4,998,750
------------
Total Convertible Preferred
(cost $22,835,090).................................. 28,225,000
------------
</TABLE>
59
<PAGE>
E V E R G R E E N
Utility Fund
Schedule of Investments (continued)
January 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
CONVERTIBLE DEBENTURES - 2.3%
Information Services &
Technology - 2.3%
$4,000,000 Adaptec, Inc. 4.75%, 2/1/2004
(cost $3,530,000)................................... $ 3,330,000
------------
<CAPTION>
Principal
Amount Value
<C> <S> <C>
SHORT-TERM INVESTMENTS - 1.7%
Repurchase Agreement - 1.7%
$2,512,390 Dresdner Bank AG
4.70%, dated 1/31/1999,
due 2/1/1999, maturity value $2,512,718 (cost
$2,512,390)(a).................................... $ 2,512,390
------------
</TABLE>
<TABLE>
<S> <C> <C>
Total Investments -
(cost $122,549,128)................................. 99.9% 144,693,328
Other Assets and
Liabilities - net................................... 0.1 156,584
----- ------------
Net Assets........................................... 100.0% $144,849,912
===== ============
</TABLE>
* Non-income producing securities.
(a) At January 29, 1999, the repurchase agreement was collateralized by:
$2,460,000 U.S. Treasury Notes, 5.50%, 5/31/03; value including ac-
crued interest-- $2,563,015.
Summary of Abbreviations:
ACES Automatically Convertible Equity Securities
ADR American Depository Receipt
DECS Dividend Enhanced Convertible Stock
PRIDES Preferred Redeemable Increased Dividend Equity Securities
REIT Real Estate Investment Trust
TECONS Term Convertible Shares
See Combined Notes to Financial Statements.
60
<PAGE>
E V E R G R E E N
Value Fund
Schedule of Investments (continued)
January 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - 97.8%
Automotive Equipment & Manufacturing - 1.9%
115,200 Ford Motor Co. ......................................... $ 7,077,600
131,950 General Motors Corp. ................................... 11,842,513
------------
18,920,113
------------
Banks - 13.5%
366,300 Bank One Corp. ......................................... 19,184,962
392,000 BankAmerica Corp. ...................................... 26,215,000
85,600 BankBoston Corp. ....................................... 3,161,850
263,300 Chase Manhattan Corp. .................................. 20,257,644
481,450 Fleet Financial Group, Inc. ............................ 21,334,253
305,000 Republic New York Corp. ................................ 11,170,625
185,700 SouthTrust Corp. ....................................... 6,894,112
748,750 Sovereign Bancorp, Inc. ................................ 9,499,766
55,800 TCF Financial Corp. .................................... 1,245,038
107,600 Union Planters Corp. ................................... 4,895,800
260,300 US Bancorp Delaware..................................... 8,768,856
------------
132,627,906
------------
Business Equipment & Services - 1.0%
326,850 Dun & Bradstreet Corp. ................................. 9,968,925
------------
Chemical & Agricultural
Products - 2.8%
173,600 Du Pont (E. I.) De Nemours & Co. ....................... 8,886,150
246,800 Great Lakes Chemical Corp. ............................. 9,347,550
370,850 Morton International, Inc. ............................. 9,595,744
------------
27,829,444
------------
Communication Systems &
Services - 0.4%
10,000 Lucent Technologies, Inc. .............................. 1,125,625
34,200 *MCI WorldCom, Inc. .................................... 2,727,450
------------
3,853,075
------------
Consumer Products & Services - 1.1%
235,450 Fort James Corp. ....................................... 8,446,769
19,600 Gillette Co. ........................................... 1,151,500
16,800 Procter & Gamble Co. ................................... 1,526,700
------------
11,124,969
------------
Diversified Companies - 2.6%
267,150 Tenneco, Inc. .......................................... 8,248,256
228,500 Tyco International Ltd. ................................ 17,608,782
------------
25,857,038
------------
Electrical Equipment &
Services - 5.3%
145,100 General Electric Co. ................................... 15,217,363
158,600 Motorola, Inc. ......................................... 11,458,850
282,500 Tandy Corp. ............................................ 15,255,000
216,150 Thomas & Betts Corp. ................................... 9,551,128
------------
51,482,341
------------
Environmental Services - 2.2%
429,600 Waste Management, Inc. ................................. 21,453,150
------------
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Finance & Insurance - 14.1%
114,500 American International Group, Inc. ..................... $ 11,786,344
203,800 Associates First Capital Corp. Cl. A.................... 8,266,638
352,450 Citigroup, Inc. ........................................ 19,759,228
32,600 Federal Home Loan Mortgage Corp. ....................... 2,021,200
171,000 Federal National Mortgage Association................... 12,461,625
211,300 Greenpoint Financial Corp. ............................. 6,920,075
259,800 Hartford Financial Services Group, Inc. ................ 13,493,362
374,100 Household International, Inc. .......................... 16,437,019
2,600 Lincoln National Corp. ................................. 216,613
291,700 MBIA, Inc. ............................................. 19,124,581
118,200 Morgan Stanley, Dean Witter,
Discover & Co. ........................................ 10,261,237
171,000 Provident Co., Inc. .................................... 7,331,625
238,800 Washington Mutual, Inc. ................................ 10,029,600
------------
138,109,147
------------
Food & Beverage Products - 3.6%
406,600 American Stores Co. .................................... 14,739,250
622,700 Archer Daniels Midland Co. ............................. 9,418,337
23,700 Coca Cola Co. .......................................... 1,550,869
283,300 Fortune Brands, Inc. ................................... 9,419,725
------------
35,128,181
------------
Healthcare Products & Services - 3.2%
20,000 Abbott Laboratories .................................... 928,750
18,000 Bristol-Myers Squibb Co. ............................... 2,307,375
18,200 Johnson & Johnson....................................... 1,547,000
27,800 Lilly (Eli) & Co. ...................................... 2,604,512
415,200 Pharmacia & Upjohn, Inc. ............................... 23,874,000
------------
31,261,637
------------
Information Services &
Technology - 12.8%
352,100 *American Power Conversion Corp. ....................... 18,001,112
157,350 *Gateway 2000, Inc. .................................... 12,155,288
219,400 Hewlett-Packard Co. .................................... 17,195,475
18,000 Intel Corp. ............................................ 2,536,875
53,850 International Business Machines Corp. .................. 9,868,013
566,900 *Oracle Systems Corp. .................................. 31,392,087
310,850 *SCI Systems, Inc. ..................................... 17,096,750
127,800 *Sun Microsystems, Inc. ................................ 14,281,650
52,650 *Synopsys, Inc. ........................................ 3,056,991
------------
125,584,241
------------
Iron & Steel - 1.8%
245,100 AK Steel Holding Corp. ................................. 5,101,144
130,400 Bethlehem Steel Corp. .................................. 1,124,700
517,400 British Steel Plc ...................................... 11,382,800
------------
17,608,644
------------
Oil/Energy - 5.1%
66,400 Anadarko Petroleum Corp. ............................... 1,796,950
9,900 Chevron Corp. .......................................... 740,025
124,300 Exxon Corp. ............................................ 8,755,381
</TABLE>
61
<PAGE>
E V E R G R E E N
Value Fund
Schedule of Investments (continued)
January 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Oil/Energy - continued
110,800 Mobil Corp. ............................................ $ 9,715,775
49,300 Royal Dutch Petroleum Co. .............................. 1,975,081
381,400 Texaco, Inc. ........................................... 18,068,825
320,100 Unocal Corp. ........................................... 9,122,850
------------
50,174,887
------------
Paper & Packaging - 2.8%
970,800 Louisiana Pacific Corp. ................................ 19,476,675
458,518 Smurfit Container Corp. ................................ 7,393,603
------------
26,870,278
------------
Printing, Publishing, Broadcasting &
Entertainment - 2.8%
163,100 CBS Corp. .............................................. 5,545,400
33,000 Disney (Walt) Co. ...................................... 1,089,000
274,000 Tele Communications, Inc. .............................. 18,786,125
18,500 *Viacom, Inc. Cl. B..................................... 1,572,500
------------
26,993,025
------------
Retailing & Wholesale - 2.7%
116,500 *Federated Department Stores, Inc. ..................... 4,871,156
300,450 *Tommy Hilfiger Corp. .................................. 21,181,725
------------
26,052,881
------------
Telecommunication Services & Equipment - 2.1%
116,250 Mediaone Group, Inc. ................................... 6,517,265
304,050 *Univision Communications, Inc. Cl. A................... 13,644,244
------------
20,161,509
------------
Transportation - 4.5%
277,500 Burlington Northern Santa Fe Corp. ..................... 9,608,437
429,800 Canadian Pacific Ltd. .................................. 8,730,313
206,500 CNF Transportation, Inc. ............................... 9,163,438
186,200 Northwest Airlines Corp. ............................... 4,972,620
227,900 Union Pacific Corp. .................................... 11,722,606
------------
44,197,414
------------
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Utilities - Electric - 2.9%
290,000 CMS Energy Corp. ....................................... $ 12,415,625
62,900 GPU, Inc. .............................................. 2,681,112
444,800 Houston Industries, Inc. ............................... 13,510,800
------------
28,607,537
------------
Utilities - Gas - 1.5%
389,700 NICOR, Inc. ............................................ 15,027,806
------------
Utilities - Telephone - 7.1%
173,750 Ameritech Corp. ........................................ 11,315,469
228,400 AT&T Corp. ............................................. 20,727,300
164,500 Bell Atlantic Corp. .................................... 9,870,000
65,400 BellSouth Corp. ........................................ 2,918,475
145,450 GTE Corp. .............................................. 9,817,875
244,450 U.S. West, Inc. ........................................ 15,079,509
------------
69,728,628
------------
Total Common Stocks
(cost $773,762,829).................................... 958,622,776
------------
<CAPTION>
Principal
Amount Value
<C> <S> <C>
SHORT-TERM INVESTMENTS - 2.4%
U.S. Government Agency Obligations - 2.4%
$22,856,000 Federal Agricultural Mortgage
Corp. 4.62%, 2/1/1999 (cost $22,856,000)........... 22,856,000
------------
</TABLE>
<TABLE>
<S> <C> <C>
Total Investments -
(cost $796,618,829).................................. 100.2% 981,478,776
Other Assets and
Liabilities - net.................................... (0.2) (1,562,834)
----- ------------
Net Assets............................................ 100.0% $979,915,942
===== ============
</TABLE>
* Non-income producing securities.
See Combined Notes to Financial Statements.
62
<PAGE>
E V E R G R E E N
Growth and Income Funds
Statements of Assets and Liabilities
January 31, 1999 (Unaudited)
<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............. $374,856,441 $132,842,408 $1,668,139,451 $859,900,783 $310,572,089 $122,549,128 $796,618,829
Net unrealized gains or
losses on securities... 113,910,296 29,600,343 427,167,511 14,933,603 (11,819,547) 22,144,200 184,859,947
- -----------------------------------------------------------------------------------------------------------------------------
Market value of
securities............. 488,766,737 162,442,751 2,095,306,962 874,834,386 298,752,542 144,693,328 981,478,776
Cash.................... 713 1,284 106,561 66,693 56,959 0 42,976
Foreign currency (cost
$0, $0, $0, $3,885,728,
$0, $0, and $0,
respectively).......... 0 0 0 3,886,789 0 0 0
Receivable for
securities sold........ 3,760,330 1,935,019 10,215,042 4,305,568 233,470 8,568,101 13,972,497
Receivable for Fund
shares sold............ 2,263,061 80,301 1,708,330 84,602 4,321,782 144,734 425,568
Dividends and interest
receivable............. 379,229 284,014 1,311,643 2,198,210 802,081 882,195 1,177,810
Prepaid expenses and
other assets........... 112,559 22,344 95,009 66,267 41,690 28,661 57,557
- -----------------------------------------------------------------------------------------------------------------------------
Total assets........... 495,282,629 164,765,713 2,108,743,547 885,442,515 304,208,524 154,317,019 997,155,184
- -----------------------------------------------------------------------------------------------------------------------------
Liabilities
Payable for securities
purchased.............. 12,568,757 1,311,238 30,217,159 10,490,744 1,618,750 9,221,035 14,764,125
Payable for Fund shares
redeemed............... 882,534 236,904 6,322,800 1,460,048 964,395 116,572 1,668,281
Advisory fee payable.... 238,219 85,677 1,577,750 740,574 259,917 63,392 410,915
Distribution Plan
expenses payable....... 114,892 73,731 436,948 21,135 81,553 36,893 215,700
Due to other related
parties................ 6,317 2,955 0 0 0 3,403 25,958
Accrued expenses and
other liabilities...... 62,926 18,686 543,932 397,012 43,197 25,812 154,263
- -----------------------------------------------------------------------------------------------------------------------------
Total liabilities...... 13,873,645 1,729,191 39,098,589 13,109,513 2,967,812 9,467,107 17,239,242
- -----------------------------------------------------------------------------------------------------------------------------
Net assets.............. $481,408,984 $163,036,522 $2,069,644,958 $872,333,002 $301,240,712 $144,849,912 $979,915,942
- -----------------------------------------------------------------------------------------------------------------------------
Net assets represented
by
Paid-in capital......... $345,079,983 $121,828,719 $1,637,043,445 $862,334,333 $330,048,009 $123,228,198 $702,091,992
Undistributed
(overdistributed) net
investment income...... 39,183 575,864 (150,813) 13,093,058 67,241 32,678 (155,681)
Accumulated net realized
gains or losses on
securities and foreign
currency related
transactions........... 22,379,522 11,031,596 5,584,548 (18,029,939) (17,054,991) (555,164) 93,119,684
Net unrealized gains or
losses on securities
and foreign currency
related transactions... 113,910,296 29,600,343 427,167,778 14,935,550 (11,819,547) 22,144,200 184,859,947
- -----------------------------------------------------------------------------------------------------------------------------
Total net assets........ $481,408,984 $163,036,522 $2,069,644,958 $872,333,002 $301,240,712 $144,849,912 $979,915,942
- -----------------------------------------------------------------------------------------------------------------------------
Net assets consist of
Class A................. $340,292,978 $ 52,668,635 $ 286,027,701 $ 13,379,023 $ 74,509,741 $ 94,953,830 $479,970,015
Class B................. 140,231,442 90,736,212 985,367,391 51,033,169 125,716,900 46,418,758 337,559,484
Class C................. 884,564 19,382,507 45,820,338 1,074,297 25,769,887 629,717 4,492,085
Class Y................. -- 249,168 752,429,528 806,846,513 75,244,184 2,847,607 157,894,358
- -----------------------------------------------------------------------------------------------------------------------------
$481,408,984 $163,036,522 $2,069,644,958 $872,333,002 $301,240,712 $144,849,912 $979,915,942
- -----------------------------------------------------------------------------------------------------------------------------
Shares outstanding
Class A................. 10,782,409 2,734,450 10,055,806 649,836 5,099,381 8,714,406 20,163,970
Class B................. 4,473,639 4,738,484 35,015,037 2,500,100 8,652,109 4,258,428 14,212,581
Class C................. 28,142 1,011,011 1,627,989 52,629 1,775,316 57,786 189,291
Class Y................. -- 12,969 26,396,915 39,171,763 5,146,616 261,270 6,631,694
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value per
share
Class A................. $ 31.56 $ 19.26 $ 28.44 $ 20.59 $ 14.61 $ 10.90 $ 23.80
- -----------------------------------------------------------------------------------------------------------------------------
Class A--Offering price
(based on sales charge
of 4.75%).............. $ 33.13 $ 20.22 $ 29.86 $ 21.62 $ 15.34 $ 11.44 $ 24.99
- -----------------------------------------------------------------------------------------------------------------------------
Class B................. $ 31.35 $ 19.15 $ 28.14 $ 20.41 $ 14.53 $ 10.90 $ 23.75
- -----------------------------------------------------------------------------------------------------------------------------
Class C................. $ 31.43 $ 19.17 $ 28.15 $ 20.41 $ 14.52 $ 10.90 $ 23.73
- -----------------------------------------------------------------------------------------------------------------------------
Class Y................. -- $ 19.21 $ 28.50 $ 20.60 $ 14.62 $ 10.90 $ 23.81
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Combined Notes to Financial Statements.
63
<PAGE>
E V E R G R E E N
Growth and Income Funds
Statements of Operations
Six Months Ended January 31, 1999 (Unaudited)
<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 $19,622,
$4,315, $282,295, $0,
$0, $63,834 and $0,
respectively).......... $ 2,331,345 $ 1,681,404 $12,284,469 $ 23,388,813 $ 4,448,140 $3,481,061 $ 8,416,391
Interest................ 978,397 581,620 7,845,816 1,473,140 1,463,069 187,179 1,223,985
- -------------------------------------------------------------------------------------------------------------------------
Total investment
income................. 3,309,742 2,263,024 20,130,285 24,861,953 5,911,209 3,668,240 9,640,376
- -------------------------------------------------------------------------------------------------------------------------
Expenses
Advisory fee............ 1,263,145 507,662 8,999,624 4,347,516 1,492,844 362,777 2,334,043
Distribution Plan
expenses............... 989,226 628,361 5,354,259 278,223 841,126 351,193 2,170,124
Transfer agent fee...... 546,967 164,782 2,627,334 837,156 472,564 127,540 865,512
Administrative services
fees................... 31,144 13,351 0 0 0 19,078 122,756
Trustees' fees and
expenses............... 5,678 2,018 22,072 12,040 3,081 1,505 17,300
Other................... 125,119 114,838 589,616 325,787 86,187 47,634 180,192
- -------------------------------------------------------------------------------------------------------------------------
Total expenses......... 2,961,279 1,431,012 17,592,905 5,800,722 2,895,802 909,727 5,689,927
Less: Fee credits...... (7,577) (3,644) (39,394) (20,572) (17,071) (2,956) (16,320)
- -------------------------------------------------------------------------------------------------------------------------
Net expenses........... 2,953,702 1,427,368 17,553,511 5,780,150 2,878,731 906,771 5,673,607
- -------------------------------------------------------------------------------------------------------------------------
Net investment income... 356,040 835,656 2,576,774 19,081,803 3,032,478 2,761,469 3,966,769
- -------------------------------------------------------------------------------------------------------------------------
Net realized and
unrealized gains or
losses on securities
and foreign currency
related transactions
Net realized gains or
losses on:
Securities............. 23,876,928 14,577,533 5,460,482 11,230,833 (17,096,277) (546,693) 98,276,360
Foreign currency
related transactions.. 0 0 0 (190,424) 0 0 558
- -------------------------------------------------------------------------------------------------------------------------
Net realized gains or
losses on securities
and foreign currency
related transactions... 23,876,928 14,577,533 5,460,482 11,040,409 (17,096,277) (546,693) 98,276,918
- -------------------------------------------------------------------------------------------------------------------------
Net change in unrealized
gains or losses on
securities and foreign
currency related
transactions........... 28,781,626 (12,802,526) (2,919,804) (32,724,672) (1,477,616) 4,971,291 (30,794,617)
- -------------------------------------------------------------------------------------------------------------------------
Net realized and
unrealized gains or
losses on securities
and foreign currency
related transactions... 52,658,554 1,775,007 2,540,678 (21,684,263) (18,573,893) 4,424,598 67,482,301
- -------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from operations........ $53,014,594 $ 2,610,663 $ 5,117,452 $ (2,602,460) $(15,541,415) $7,186,067 $ 71,449,070
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Combined Notes to Financial Statements.
64
<PAGE>
E V E R G R E E N
Growth and Income Funds
Statements of Changes in Net Assets
Six Months Ended January 31, 1999 (Unaudited)
<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........... $ 356,040 $ 835,656 $ 2,576,774 $ 19,081,803 $ 3,032,478 $ 2,761,469 $ 3,966,769
Net realized gains
or losses on
securities and
foreign currency
related
transactions..... 23,876,928 14,577,533 5,460,482 11,040,409 (17,096,277) (546,693) 98,276,918
Net change in
unrealized gains
or losses on
securities and
foreign currency
related
transactions..... 28,781,626 (12,802,526) (2,919,804) (32,724,672) (1,477,616) 4,971,291 (30,794,617)
- -----------------------------------------------------------------------------------------------------------------------------
Net increase
(decrease) in
net assets
resulting from
operations...... 53,014,594 2,610,663 5,117,452 (2,602,460) (15,541,415) 7,186,067 71,449,070
- -----------------------------------------------------------------------------------------------------------------------------
Distributions to
shareholders from
Net investment
income
Class A.......... (301,891) (322,926) (618,275) (270,374) (755,525) (1,918,706) (2,354,330)
Class B.......... 0 (302,935) 0 (911,505) (1,072,671) (741,748) (679,263)
Class C.......... 0 (63,972) 0 (19,723) (212,803) (8,070) (9,129)
Class Y.......... 0 (928) (2,470,200) (18,246,900) (1,097,600) (52,399) (996,936)
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.... (33,109,549) (22,119,082) (60,209,267) (104,950,125) (6,846,742) (18,111,130) (9,592,601)
- -----------------------------------------------------------------------------------------------------------------------------
Capital share
transactions
Proceeds from
shares sold...... 189,275,854 23,884,142 223,145,876 10,894,748 132,564,757 8,382,531 31,073,041
Payment for shares
redeemed......... (160,647,806) (41,400,459) (302,663,731) (77,088,435) (121,856,536) (9,337,129) (112,348,121)
Net asset value of
shares issued in
reinvestment of
distributions.... 29,467,826 20,684,226 56,933,750 95,425,447 5,834,565 15,473,260 8,512,187
- -----------------------------------------------------------------------------------------------------------------------------
Net increase
(decrease) in
net assets
resulting from
capital share
transactions.... 58,095,874 3,167,909 (22,584,105) 29,231,760 16,542,786 14,518,662 (72,762,893)
- -----------------------------------------------------------------------------------------------------------------------------
Total increase
(decrease) in
net assets..... 78,000,919 (16,340,510) (77,675,920) (78,320,825) (5,845,371) 3,593,599 (10,906,424)
Net assets
Beginning of
period........... 403,408,065 179,377,032 2,147,320,878 950,653,827 307,086,083 141,256,313 990,822,366
- -----------------------------------------------------------------------------------------------------------------------------
End of period..... $ 481,408,984 $163,036,522 $2,069,644,958 $ 872,333,002 $ 301,240,712 $144,849,912 $ 979,915,942
- -----------------------------------------------------------------------------------------------------------------------------
Undistributed
(overdistributed)
net investment
income........... $ 39,183 $ 575,864 $ (150,813) $ 13,093,058 $ 67,241 $ 32,678 $ (155,681)
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Combined Notes to Financial Statements.
65
<PAGE>
E V E R G R E E N
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
or losses 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 of:
Blanchard Growth &
Income Fund...... 17,510,672 0 0 0 0 0 0
Virtus Style
Manager Fund..... 0 0 75,922,310 0 0 0 0
Virtus Style
Manager; Large
Cap Fund......... 0 0 0 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 to July, effective July 31, 1998.
See Combined Notes to Financial Statements.
66
<PAGE>
E V E R G R E E N
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.
67
<PAGE>
Combined Notes to Financial Statements (Unaudited)
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 the 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/or 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 only to investment advisory clients of First
Union Corporation ("First Union") and its affiliates, certain institutional in-
vestors 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 for which there
has been no sale and other securities traded in the over-the-counter market are
valued at the mean between the last reported bid and asked price. 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 value for normal institutional-size trans-
actions, the pricing service uses methods based on market transactions for com-
parable securities and analysis of various relationships between similar secu-
rities, which are generally recognized by institutional traders. Securities for
which valuations are not available from an independent pricing service, includ-
ing restricted securities, are valued at fair value as determined in good faith
according to procedures established by the Board of Trustees. Short-term in-
vestments with remaining maturities of 60 days or less are carried at amortized
cost, which approximates market value.
B. Repurchase Agreements
Each Fund may invest in repurchase agreements. Securities pledged as collateral
for repurchase agreements are held in a segregated account by the custodian on
the Fund's behalf. Each Fund monitors the adequacy of the collateral daily and
will require the seller to provide additional collateral in the event the mar-
ket value of the securities pledged falls below the carrying value of the re-
purchase agreement, including accrued interest. Each Fund will only enter into
repurchase agreements with banks and other financial institutions, which are
deemed by the investment advisor to be creditworthy pursuant to guidelines es-
tablished by the Board of Trustees.
Pursuant to an exemptive order issued by the Securities and Exchange Commis-
sion, Blue Chip Fund and Equity Income Fund, along with certain other funds
managed by Evergreen Investment Management Company
68
<PAGE>
Combined Notes to Financial Statements (Unaudited) (continued)
("EIMC") (formerly Keystone Investment Management Company), a subsidiary of
First Union, may transfer uninvested cash balances into a joint trading ac-
count. 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 investments, assets and liabilities at the daily rate of ex-
change; purchases and sales of investments, income and expenses at the rate of
exchange prevailing on the respective dates of such transactions. Net
unrealized foreign exchange gains or losses resulting from changes in foreign
currency exchange rates is a component of net unrealized gains or losses on se-
curities and foreign currency related transactions. Net realized foreign cur-
rency gains or losses on foreign currency related transactions includes foreign
currency gains and losses between trade date and settlement date on investment
securities transactions, foreign currency related transactions and the differ-
ence between the amounts of interest and dividends recorded on the books of the
Fund and the amount actually received. The portion of foreign currency gains or
losses related to fluctuations in exchange rates between the initial purchase
trade date and subsequent sale trade date is 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 Fund
bears the risk of an unfavorable change in the foreign currency exchange rate
underlying the forward contract and is subject to the credit risk that the
other party will not fulfill their obligations under the contract. Forward con-
tracts involve elements of market risk in excess of the amount reflected in the
statement of assets and liabilities.
E. Security Transactions and Investment Income
Securities transactions are accounted for no later than one business day after
the trade date. Realized gains and losses are computed on the identified cost
basis. Interest income is recorded on the accrual basis and includes accretion
of discounts and amortization of premiums. Dividend income is recorded on the
ex-dividend date or in the case of some foreign securities, on the date there-
after when the Fund is made aware of the dividend. Foreign income may be sub-
ject to foreign withholding taxes, which are accrued as applicable. Capital
gains realized on some foreign securities are subject to foreign taxes, which
are accrued as applicable.
F. 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.
G. Distributions
Distributions from net investment income for the Funds, except 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
69
<PAGE>
Combined Notes to Financial Statements (Unaudited) (continued)
regulations are primarily due to differing treatment for certain distributions
received from real estate investment trusts and certain operating expenses.
Certain distributions paid during previous years have been reclassified to con-
form to current year presentation.
H. Class Allocations
Income, expenses (other than class specific expenses) and realized and
unrealized gains and losses are prorated among the classes based on the rela-
tive net assets of each class. Currently, class specific expenses are limited
to expenses incurred under the Distribution Plans for each class.
I. 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 Janu-
ary 31, 1999 all organization expenses for Small Cap Value Fund have been fully
amortized.
3. REORGANIZATION OF EVERGREEN VALUE FUND
On January 21, 1998, Value Fund, Class Y, executed a redemption in-kind trans-
action of $793,367,277. This transaction resulted in the liquidation of sub-
stantially all of the net assets of Value Fund, Class Y shares. In turn, the
assets were transferred to Evergreen Select Diversified Value Fund ("Select Di-
versified Value Fund"), Class I, 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 Fund used cash and cash
equivalents of $23,488,121 to complete the transaction. The gains from this
sale of securities are not taxable to the Value Fund and are not required to be
distributed for federal income tax purposes.
4. INVESTMENT ADVISORY AGREEMENT AND OTHER AFFILIATED TRANSACTIONS
EIMC serves as the investment advisor to Blue Chip Fund and Equity Income Fund.
In return for providing investment advisory services to Blue Chip Fund and Eq-
uity 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 as assets increase to 0.35%
per annum, to the average daily net asset value of the Fund. The advisory fee
for Equity Income Fund is computed at an annual rate of 1.50% of Equity Income
Fund's gross dividend and interest income plus an amount determined by applying
percentage rates, starting at 0.60% and declining to 0.30% per annum as net as-
sets increase, to the average daily net asset value of the Fund.
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 computed
and paid monthly at an annual rate of 0.50% of each Fund's average daily net
assets.
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 com-
puted daily and paid monthly based on each 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. Expenses associated with these services are a cost of EAMC and are not a
fund expense.
70
<PAGE>
Combined Notes to Financial Statements (Unaudited) (continued)
Lieber & Company also provides brokerage services to Growth and Income Fund,
Income and Growth Fund and Small Cap Value Fund with respect to substantially
all security transactions of the Funds effected on the New York or American
Stock Exchanges. For the six months ended January 31, 1999, Income and Growth,
Growth and Income and Small Cap Value Fund incurred broker commissions of
$543,687, $688,394 and $167,765, respectively, with Lieber & Company.
Evergreen Investment Services ("EIS"), a subsidiary of First Union, is the ad-
ministrator and The BISYS Group, Inc. ("BISYS") serves as the sub-administrator
to the Funds. As administrator, EIS provides the Funds with facilities, equip-
ment and personnel. As sub-administrator to the Funds, BISYS provides the offi-
cers of the Funds. Officers of the Funds and affiliated Trustees receive no
compensation directly from the Funds.
The administrator and sub-administrator for each Fund are entitled to an annual
fee based on the average daily net assets of the funds administered by EIS for
which First Union or its investment advisory subsidiaries are also the invest-
ment advisors. The administration fee is calculated by applying percentage
rates, which start at 0.05% and decline to 0.01% per annum as net assets in-
crease, to the average daily net asset value of the Fund. The sub-administra-
tion fee is calculated by applying percentage rates, which start at 0.01% and
decline to .004% per annum as net assets increase, to the average daily net as-
set value of the Fund.
For the six months ended January 31, 1999, Utility Fund and Value Fund paid or
accrued to EIS and BISYS the following amounts for administrative and sub-ad-
ministrative services:
<TABLE>
<CAPTION>
Administration Sub-administration
Fee Fee
-----------------------------------------
<S> <C> <C>
Utility Fund.................. $15,246 $ 3,832
Value Fund.................... 98,099 24,657
</TABLE>
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 six months ended January 31, 1999, Blue Chip
Fund and Equity Income Fund reimbursed EIMC for certain accounting and adminis-
trative expenses amounting to $31,144 and $13,351, respectively.
Evergreen Service Company ("ESC"), an indirect, wholly owned subsidiary of
First Union, serves as the transfer and dividend disbursing agent for the
Funds.
5. DISTRIBUTION PLANS
Evergreen Distributor, Inc., a wholly-owned subsidiary of BISYS, serves as
principal underwriter to the Funds.
Each Fund has adopted Distribution Plans, as allowed by Rule 12b-1 of the 1940
Act, for each class of shares, except Class Y. Distribution plans permit a Fund
to compensate its principal underwriter for costs related to selling shares of
the Fund and for various other services. These costs, which consist primarily
of commissions and services fees to broker-dealers who sell shares of the Fund,
are paid by the Fund through "Distribution Plan expenses". Each class, except
Class Y, currently pays a service fee equal to 0.25% of the average daily net
asset of the class. Class B and Class C also pay distribution fees equal to
0.75% of the average daily net assets of the class. Distribution Plan expenses
are calculated daily and paid monthly.
For the six months ended January 31, 1999, amounts 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.................... $346,630 $ 639,119 $ 3,477
Equity Income Fund................ 63,273 467,317 97,771
Growth and Income Fund............ 353,842 4,764,678 235,739
Income and Growth Fund............ 16,975 255,701 5,547
Small Cap Value Fund.............. 75,424 637,676 128,026
Utility Fund...................... 120,749 227,949 2,495
Value Fund........................ 568,397 1,580,189 21,538
</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.
71
<PAGE>
Combined Notes to Financial Statements (Unaudited) (continued)
Each of the Distribution Plans may be terminated at any time by vote of the In-
dependent Trustees or by vote of a majority of the outstanding voting shares of
the respective class.
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 exchange of shares. The net assets were ex-
changed through a tax-free exchange for 596,231 shares of Class A of Blue Chip
Fund. The acquired net assets consisted primarily of portfolio securities with
unrealized appreciation of $5,643,636. The net assets of Blue Chip Fund and
Blanchard Growth & Income Fund immediately prior to the acquisition were
$347,931,473 and $17,510,672, respectively. The aggregate net assets of Blue
Chip Fund immediately after the acquisition were $365,442,145.
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 exchange of shares. The net assets were exchanged
through a tax-free exchange for 2,555,807 shares of Class Y of Growth and In-
come Fund. The acquired net assets consisted primarily of portfolio securities
with unrealized appreciation of $10,049,313. The net assets of Growth and In-
come Fund and Virtus Style Manager Fund immediately prior to the acquisition
were $1,869,405,194 and $75,922,310, respectively. The aggregate net assets of
Growth and Income Fund immediately after the acquisition were $1,945,327,504.
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 shares. The net assets were exchanged
through a tax-free exchange for 3,109,878 and 924,632 shares of Class A and
Class Y of Value Fund. The acquired net assets consisted primarily of portfolio
securities with unrealized appreciation of $28,824,982. The net assets of Value
Fund and Virtus Style Manager; Large Cap Fund immediately prior to the acquisi-
tion were $993,264,782 and $104,172,577, respectively. The aggregate net assets
of Value Fund immediately after the acquisition were $1,097,437,360.
72
<PAGE>
Combined Notes to Financial Statements (Unaudited) (continued)
7. CAPITAL SHARE TRANSACTIONS
The Funds have an unlimited number of shares of beneficial interest with $0.001
par value authorized. Shares of beneficial interest of the Funds are currently
divided into Class A, Class B, Class C and/or Class Y. Blue Chip currently does
not have any Class Y shares. Transactions in shares of the Funds were as fol-
lows:
Blue Chip Fund
<TABLE>
<CAPTION>
Six Months Ended Year Ended Year Ended
January 31, 1999 July 31, 1998 (a) August 31, 1997
------------------------- ------------------------- ------------------------
Shares Amount Shares Amount Shares Amount
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A
Shares sold............. 4,326,992 $ 124,839,750 812,276 $ 24,596,278 0 0
Automatic conversion of
Class B shares to Class
A shares............... 899,942 27,236,701 9,140,449 250,374,069 0 0
Shares redeemed......... (3,587,049) (101,890,425) (1,203,287) (36,027,532) 0 0
Shares issued on
reinvestment of
distribution........... 682,100 19,381,644 14,697 447,340 0 0
Shares issued in
acquisition of
Blanchard Growth and
Income Fund............ 0 0 596,231 17,510,672 0 0
- ---------------------------------------------------------------------------------------------------------
Net increase............ 2,321,985 69,567,670 9,360,366 256,900,827 0 0
- ---------------------------------------------------------------------------------------------------------
Class B
Shares sold............. 2,161,876 62,310,801 3,020,854 89,396,767 3,800,615 $103,353,377
Automatic conversion of
Class B shares to Class
A shares............... (899,942) (27,236,701) (9,140,449) (250,374,069) 0 0
Shares redeemed......... (1,928,261) (56,679,724) (2,178,914) (63,756,605) (3,349,695) (89,890,447)
Shares issued on
reinvestment of
distribution........... 355,115 10,035,608 1,678,649 45,485,085 1,079,325 27,593,101
- ---------------------------------------------------------------------------------------------------------
Net increase
(decrease)............. (311,212) (11,570,016) (6,619,860) (179,248,822) 1,530,245 41,056,031
- ---------------------------------------------------------------------------------------------------------
Class C
Shares sold............. 71,071 2,125,303 26,608 818,732 0 0
Shares redeemed......... (70,373) (2,077,657) (949) (28,410) 0 0
Shares issued on
reinvestment of
distribution........... 1,785 50,574 0 10 0 0
- ---------------------------------------------------------------------------------------------------------
Net increase............ 2,483 98,220 25,659 790,332 0 0
- ---------------------------------------------------------------------------------------------------------
Net increase in net
assets resulting from
capital share
transactions........... $ 58,095,874 $ 78,442,337 $ 41,056,031
- ---------------------------------------------------------------------------------------------------------
</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.
Equity Income Fund
<TABLE>
<CAPTION>
Six Months Ended Year Ended
January 31, 1999 July 31, 1998
------------------------ ------------------------
Shares Amount Shares Amount
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A
Shares sold............... 370,486 $ 7,284,373 405,327 $ 8,477,777
Shares redeemed........... (412,833) (8,112,134) (476,275) (9,979,937)
Shares issued on
reinvestment of
distribution............. 343,876 6,512,096 192,513 3,761,047
- -------------------------------------------------------------------------------
Net increase.............. 301,529 5,684,335 121,565 2,258,887
- -------------------------------------------------------------------------------
Class B
Shares sold............... 683,888 13,688,515 1,312,799 27,194,053
Shares redeemed........... (1,471,602) (28,845,823) (1,328,176) (27,515,826)
Shares issued on
reinvestment of
distribution............. 621,368 11,690,630 348,818 6,752,535
- -------------------------------------------------------------------------------
Net increase (decrease)... (166,346) (3,466,678) 333,441 6,430,762
- -------------------------------------------------------------------------------
Class C
Shares sold............... 131,514 2,642,632 212,115 4,372,780
Shares redeemed........... (217,311) (4,302,891) (349,166) (7,245,174)
Shares issued on
reinvestment of
distribution............. 130,654 2,460,894 80,168 1,557,317
- -------------------------------------------------------------------------------
Net increase (decrease)... 44,857 800,635 (56,883) (1,315,077)
- -------------------------------------------------------------------------------
Class Y*
Shares sold............... 13,689 268,622 5,560 116,322
Shares redeemed........... (6,948) (139,611) (5,138) (105,758)
Shares issued on
reinvestment of
distribution............. 1,091 20,606 228 4,458
- -------------------------------------------------------------------------------
Net increase.............. 7,832 149,617 650 15,022
- -------------------------------------------------------------------------------
Net increase in net assets
resulting from capital
share transactions....... $ 3,167,909 $ 7,389,594
- --------------------------------------------------------------------------------
</TABLE>
73
<PAGE>
Combined Notes to Financial Statements (Unaudited) (continued)
Growth and Income Fund
<TABLE>
<CAPTION>
Six Months Ended Year Ended
January 31, 1999 July 31, 1998
------------------------- -------------------------
Shares Amount Shares Amount
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A
Shares sold.............. 2,717,801 $ 74,944,584 7,300,804 $ 214,673,895
Shares redeemed.......... (3,130,970) (86,422,362) (3,520,816) (103,702,934)
Shares issued on
reinvestment of
distribution............ 300,474 8,411,837 287,118 8,071,240
- --------------------------------------------------------------------------------
Net increase (decrease).. (112,695) (3,065,941) 4,067,106 119,042,201
- --------------------------------------------------------------------------------
Class B
Shares sold.............. 3,242,125 87,661,203 16,476,196 481,475,327
Shares redeemed.......... (3,777,880) (101,929,718) (2,725,060) (79,579,083)
Shares issued on
reinvestment of
distribution............ 944,997 26,223,708 837,176 23,198,143
- --------------------------------------------------------------------------------
Net increase............. 409,242 11,955,193 14,588,312 425,094,387
- --------------------------------------------------------------------------------
Class C
Shares sold.............. 305,638 8,273,924 1,131,563 32,986,181
Shares redeemed.......... (459,504) (12,491,296) (317,773) (9,241,480)
Shares issued on
reinvestment of
distribution............ 45,433 1,261,217 38,010 1,053,643
- --------------------------------------------------------------------------------
Net increase (decrease).. (108,433) (2,956,155) 851,800 24,798,344
- --------------------------------------------------------------------------------
Class Y
Shares sold.............. 1,908,120 52,266,165 8,658,868 253,053,137
Shares redeemed.......... (3,709,933) (101,820,355) (7,135,642) (210,408,060)
Shares issued on
reinvestment of
distribution............ 749,966 21,036,988 797,581 22,424,991
Shares issued in
acquisition of Virtus
Style Manager Fund...... 0 0 2,555,807 75,922,310
- --------------------------------------------------------------------------------
Net increase (decrease).. (1,051,847) (28,517,202) 4,876,614 140,992,378
- --------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from capital share
transactions............ $ (22,584,105) $ 709,927,310
</TABLE>
- --------------------------------------------------------------------------------
Income and Growth Fund
<TABLE>
<CAPTION>
Six Months Ended Year Ended
January 31, 1999 July 30, 1998
------------------------ ------------------------
Shares Amount Shares Amount
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A
Shares sold............... 58,129 $ 1,222,305 204,121 $ 4,959,183
Shares redeemed........... (125,770) (2,643,188) (112,612) (2,739,976)
Shares issued on
reinvestment of
distribution............. 70,356 1,471,407 56,318 1,325,926
- -------------------------------------------------------------------------------
Net increase.............. 2,715 50,524 147,827 3,545,133
- -------------------------------------------------------------------------------
Class B
Shares sold............... 152,440 3,204,175 633,299 15,295,755
Shares redeemed........... (284,853) (5,964,912) (310,711) (7,455,874)
Shares issued on
reinvestment of
distribution............. 264,999 5,499,804 198,183 4,626,554
- -------------------------------------------------------------------------------
Net increase.............. 132,586 2,739,067 520,771 12,466,435
- -------------------------------------------------------------------------------
Class C
Shares sold............... 5,957 126,523 27,805 674,067
Shares redeemed........... (13,238) (272,856) (16,763) (402,792)
Shares issued on
reinvestment of
distribution............. 5,267 109,309 3,708 86,620
- -------------------------------------------------------------------------------
Net increase (decrease)... (2,014) (37,024) 14,750 357,895
- -------------------------------------------------------------------------------
Class Y
Shares sold............... 300,883 6,341,745 641,797 15,892,124
Shares redeemed........... (3,240,570) (68,207,479) (4,066,667) (99,134,986)
Shares issued on
reinvestment of
distribution............. 4,220,269 88,344,927 3,795,361 89,483,682
- -------------------------------------------------------------------------------
Net increase.............. 1,280,582 26,479,193 370,491 6,240,820
- -------------------------------------------------------------------------------
Net increase in net assets
resulting from capital
share transactions....... $ 29,231,760 $ 22,610,283
- -------------------------------------------------------------------------------
</TABLE>
74
<PAGE>
Combined Notes to Financial Statements (Unaudited) (continued)
Small Cap Value Fund
<TABLE>
<CAPTION>
Six Months Ended Year Ended
January 31, 1999 July 31, 1998
------------------------ ------------------------
Shares Amount Shares Amount
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A
Shares sold............... 6,045,592 $ 88,589,723 4,328,382 $ 72,341,164
Shares redeemed........... (4,485,999) (65,838,837) (1,207,491) (20,046,565)
Shares issued on
reinvestment of
distribution............. 102,911 1,496,736 45,725 753,748
- -------------------------------------------------------------------------------
Net increase.............. 1,662,504 24,247,622 3,166,616 53,048,347
- -------------------------------------------------------------------------------
Class B
Shares sold............... 1,799,514 26,238,034 8,426,642 140,304,860
Shares redeemed........... (1,631,929) (23,632,815) (803,676) (13,366,175)
Shares issued on
reinvestment of
distribution............. 176,678 2,559,231 79,883 1,323,369
- -------------------------------------------------------------------------------
Net increase.............. 344,263 5,164,450 7,702,849 128,262,054
- -------------------------------------------------------------------------------
Class C
Shares sold............... 511,050 7,438,068 1,760,785 29,361,569
Shares redeemed........... (443,266) (6,377,682) (281,072) (4,699,621)
Shares issued on
reinvestment of
distribution............. 34,456 498,714 16,111 266,637
- -------------------------------------------------------------------------------
Net increase.............. 102,240 1,559,100 1,495,824 24,928,585
- -------------------------------------------------------------------------------
Class Y
Shares sold............... 709,150 10,298,932 4,923,790 82,090,579
Shares redeemed........... (1,774,325) (26,007,202) (1,558,339) (25,982,474)
Shares issued on
reinvestment of
distribution............. 87,654 1,279,884 61,107 1,017,152
- -------------------------------------------------------------------------------
Net increase (decrease)... (977,521) (14,428,386) 3,426,558 57,125,257
- -------------------------------------------------------------------------------
Net increase in net assets
resulting from capital
share transactions....... $ 16,542,786 $263,364,243
- --------------------------------------------------------------------------------
</TABLE>
Utility Fund
<TABLE>
<CAPTION>
Six Months Ended Year Ended
January 31, 1999 July 31, 1998
--------------------- ------------------------
Shares Amount Shares Amount
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A
Shares sold.................. 172,864 $ 1,997,120 1,266,778 $ 14,554,039
Shares redeemed.............. (462,547) (5,355,001) (1,407,032) (16,718,124)
Shares issued on reinvestment
of distribution............. 899,379 10,185,940 243,720 2,889,027
- -------------------------------------------------------------------------------
Net increase................. 609,696 6,828,059 103,466 724,942
- -------------------------------------------------------------------------------
Class B
Shares sold.................. 368,834 4,244,744 974,483 11,445,916
Shares redeemed.............. (286,484) (3,289,676) (551,773) (6,555,500)
Shares issued on reinvestment
of distribution............. 455,010 5,155,127 93,247 1,107,337
- -------------------------------------------------------------------------------
Net increase................. 537,360 6,110,195 515,957 5,997,753
- -------------------------------------------------------------------------------
Class C
Shares sold.................. 24,825 286,912 13,355 157,299
Shares redeemed.............. (13,232) (151,924) (6,139) (72,067)
Shares issued on reinvestment
of distribution............. 4,902 55,528 980 11,662
- -------------------------------------------------------------------------------
Net increase................. 16,495 190,516 8,196 96,894
- -------------------------------------------------------------------------------
Class Y
Shares sold.................. 156,453 1,853,755 100,754 1,197,639
Shares redeemed.............. (45,967) (540,528) (100,753) (1,214,182)
Shares issued on reinvestment
of distribution............. 6,764 76,665 2,014 23,760
- -------------------------------------------------------------------------------
Net increase................. 117,250 1,389,892 2,015 7,217
- -------------------------------------------------------------------------------
Net increase in net assets
resulting from capital share
transactions................ $14,518,662 $ 6,826,806
- --------------------------------------------------------------------------------
</TABLE>
75
<PAGE>
Combined Notes to Financial Statements (Unaudited) (continued)
Value Fund
<TABLE>
<CAPTION>
Six Months Ended Year Ended
January 31, 1999 July 31, 1998
------------------------ ----------------------------
Shares Amount Shares Amount
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A
Shares sold............. 535,158 $ 11,768,462 1,587,252 $ 40,192,765
Shares redeemed......... (2,011,180) (43,621,283) (2,758,581) (68,967,117)
Shares issued on
reinvestment of
distribution........... 217,141 4,878,786 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)............. (1,258,881) (26,974,035) 5,502,036 132,586,168
- --------------------------------------------------------------------------------
Class B
Shares sold............. 542,771 11,777,878 2,346,146 58,297,020
Shares redeemed......... (1,149,184) (24,857,895) (1,290,986) (31,809,835)
Shares issued on
reinvestment of
distribution........... 111,926 2,520,096 2,433,973 55,281,719
- --------------------------------------------------------------------------------
Net increase
(decrease)............. (494,487) (10,559,921) 3,489,133 81,768,904
- --------------------------------------------------------------------------------
Class C
Shares sold............. 21,724 473,607 170,261 4,223,998
Shares redeemed......... (65,000) (1,403,028) (72,103) (1,793,135)
Shares issued on
reinvestment of
distribution........... 1,529 34,419 31,015 701,653
- --------------------------------------------------------------------------------
Net increase
(decrease)............. (41,747) (895,002) 129,173 3,132,516
- --------------------------------------------------------------------------------
Class Y
Shares sold............. 322,956 7,053,094 4,385,718 107,270,971
Shares redeemed......... (1,973,281) (42,465,915) (46,491,232) (1,113,847,392)
Shares issued on
reinvestment of
distribution........... 47,810 1,078,886 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............ (1,602,515) (34,333,935) (38,409,652) (917,501,520)
- --------------------------------------------------------------------------------
Net decrease in net
assets resulting from
capital share
transactions........... $(72,762,893) $ (700,013,932)
</TABLE>
- --------------------------------------------------------------------------------
8. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of investment securities (excluding
short-term securities) were as follows for the six months ended January 31,
1998:
<TABLE>
<CAPTION>
Cost of Purchases Proceeds from Sales
--------------------------------
<S> <C> <C>
Blue Chip Fund............ $324,179,259 $270,872,888
Equity Income Fund........ 93,521,714 101,729,832
Growth and Income Fund.... 269,427,398 116,477,061
Income and Growth Fund.... 365,028,236 424,129,096
Small Cap Value Fund...... 98,085,282 80,790,261
Utility Fund.............. 25,789,727 26,822,918
Value Fund................ 654,841,866 662,610,832
</TABLE>
9. EXPENSE OFFSET ARRANGEMENTS
The Funds have entered into expense offset arrangements with ESC and their cus-
todian whereby credits realized as a result of uninvested cash balances were
used to reduce a portion of each Fund's related expenses. The assets deposited
with ESC and the custodian under these expense offset arrangements could have
been invested in income-producing assets. The amount of fee credits received by
each Fund and the impact on each Fund's expense ratio represented as a percent-
age of its average daily net assets were as follows:
<TABLE>
<CAPTION>
Total
Fee Credits % of Average
Received Daily Net Assets
-------------------------
<S> <C> <C>
Blue Chip Fund..................... $ 7,577 0.00%
Equity Income Fund................. 3,644 0.00
Growth and Income Fund............. 39,394 0.00
Income and Growth Fund............. 20,572 0.01
Small Cap Value Fund............... 17,071 0.01
Utility Fund....................... 2,956 0.00
Value Fund......................... 16,320 0.00
</TABLE>
76
<PAGE>
Combined Notes to Financial Statements (Unaudited) (continued)
10. DEFERRED TRUSTEES' FEES
Each Independent Trustee of each Fund may defer any or all compensation related
to performance of duties as a Trustee. The Trustees' deferred balances are al-
located to deferral accounts, which are included in the accrued expenses for
the Fund. The investment performance of the deferral accounts are based on the
investment performance of certain Evergreen Funds. Any gains earned or losses
incurred in the deferral accounts are reported in the Fund's Trustees' fees and
expenses. Trustees will be paid either in one lump sum or in quarterly install-
ments for up to ten years at their election, not earlier than either the year
in which the Trustee ceases to be a member of the Board of Trustees or January
1, 2000.
11. FINANCING AGREEMENT
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 provide an unsecured credit facility in the ag-
gregate amount of $400 million ($275 million committed and $125 million uncom-
mitted). The credit facility is allocated among the Banks, under the terms of
the financing agreement. The credit facility is to be accessed by the Funds for
temporary or emergency purposes only and is subject to each Fund's borrowing
restrictions. Borrowings under this facility bear interest at 0.50% per annum
above the Federal Funds rate. A commitment fee of 0.065% per annum will be in-
curred on the unused portion of the committed facility, which will be allocated
to all funds. State Street serves as administrative agent for the Banks, and as
administrative agent is entitled to a fee of $20,000 per annum which is allo-
cated to all of the Funds.
This agreement was amended and renewed on December 22, 1998. The amended fi-
nancing agreement became effective on December 22, 1998 among all of the Ever-
green Funds, State Street and The Bank of New York ("BONY"). Under this agree-
ment, State Street and BONY provide an unsecured credit facility in the aggre-
gate amount of $150 million ($125 million committed and $25 million uncommit-
ted). The remaining terms and conditions of the agreement are unaffected.
During the six months ended January 31, 1999, the Funds had no significant
borrowings under these agreement.
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.
13. DISTRIBUTIONS TO SHAREHOLDERS
During the period from January 31, 1999 to March 31, 1999, the Utility Fund de-
clared 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>
February 12, 1999 February 17, 1999 $0.031 $0.025 $0.025 $0.033
March 12, 1999 March 16, 1999 $0.030 $0.023 $0.023 $0.032
</TABLE>
On March 23, 1999 the following Fund's declared distributions from net invest-
ment income. These distributions were payable on March 24, 1999 to shareholders
of record March 22, 1999.
<TABLE>
<CAPTION>
Class A Class B Class C Class Y
------------------------------
<S> <C> <C> <C> <C>
Equity Income Fund............ $0.079 $0.041 $0.041 $0.091
Growth and Income Fund........ -- -- -- $0.005
Income and Growth Fund........ $0.257 $0.216 $0.216 $0.270
Small Cap Value Fund.......... $0.069 $0.043 $0.043 $0.078
Value Fund.................... $0.034 -- -- $0.049
</TABLE>
These distributions are not reflected in these financial statements.
77
<PAGE>
Combined Notes to Financial Statements (Unaudited) (continued)
14. NAME CHANGES
Effective April 6, 1999, Evergreen Small Cap Equity Income Fund and Evergreen
Fund for Total Return will change their names to Evergreen Small Cap Value Fund
and Evergreen Equity Income Fund, respectively.
In connection with this name change, the investment objective of the Evergreen
Equity Income Fund has been revised to seek primarily current income and sec-
ondarily capital growth. Additionally, the investment strategy of the Evergreen
Equity Income Fund has been clarified so that the Fund invests at least 65% in
common stocks of large, established companies (above $5 billion in market capi-
talization) with a history of paying dividends.
ADDITIONAL INFORMATION - 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.
78
<PAGE>
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Balanced
American Retirement Fund
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Tax Strategic Foundation Fund
Foundation Fund
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Income and Growth Fund
Equity Income Fund
Value Fund
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Growth and Income Fund
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Domestic Growth
Tax Strategic Equity Fund
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