<PAGE>
Annual Report
as of September 30, 1999
Evergreen Domestic Growth Funds
[LOGO OF EVERGREEN FUNDS]
<PAGE>
Table of Contents
Letter to Shareholders .................................................... 1
Evergreen Aggressive Growth Fund
Fund at a Glance ........................................................ 2
Portfolio Manager Interview ............................................. 3
Evergreen Fund
Fund at a Glance ........................................................ 6
Portfolio Manager Interview ............................................. 7
Evergreen Masters Fund
Fund at a Glance ........................................................ 10
Portfolio Manager Interview ............................................. 12
Evergreen Omega Fund
Fund at a Glance ........................................................ 16
Portfolio Manager Interview ............................................. 17
Evergreen Small Company Growth Fund
Fund at a Glance ........................................................ 20
Portfolio Manager Interview ............................................. 21
Evergreen Stock Selector Fund
Fund at a Glance ........................................................ 23
Portfolio Manager Interview ............................................. 24
Evergreen Strategic Growth Fund
Fund at a Glance ........................................................ 26
Portfolio Manager Interview ............................................. 27
Evergreen Tax Strategic Equity Fund
Fund at a Glance ........................................................ 30
Portfolio Manager Interview ............................................. 31
Financial Highlights
Evergreen Aggressive Growth Fund ........................................ 33
Evergreen Fund .......................................................... 35
Evergreen Masters Fund .................................................. 37
Evergreen Omega Fund .................................................... 39
Evergreen Small Company Growth Fund ..................................... 41
Evergreen Stock Selector Fund ........................................... 43
Evergreen Strategic Growth Fund ......................................... 45
Evergreen Tax Strategic Equity Fund ..................................... 47
Schedule of Investments
Evergreen Aggressive Growth Fund ........................................ 49
Evergreen Fund .......................................................... 50
Evergreen Masters Fund .................................................. 53
Evergreen Omega Fund .................................................... 59
Evergreen Small Company Growth Fund ..................................... 61
Evergreen Stock Selector Fund ........................................... 64
Evergreen Strategic Growth Fund ......................................... 66
Evergreen Tax Strategic Equity Fund ..................................... 68
Statements of Assets and Liabilities ...................................... 70
Statements of Operations .................................................. 72
Statements of Changes in Net Assets ....................................... 74
Combined Notes to Financial Statements .................................... 79
Evergreen Funds
Evergreen Funds is one of the nation's fastest growing investment companies with
over $70 billion in assets under management.
With over 80 mutual funds to choose among and acclaimed service and operations
capabilities, investors enjoy a broad range of quality investment products and
services designed to meet their needs.
The Evergreen Funds employ intensive, research-driven investment strategies
executed by over 90 research analysts and portfolio managers. The fund company
remains dedicated to meeting the needs of investors and their advisors in a
global economy. Look to the Evergreen Funds to provide a distinctive level of
service and excellence in investment management.
This annual report must be preceded or accompanied by a prospectus of an
Evergreen fund contained herein. The prospectus contains more complete
information, including fees, charges and other ongoing expenses, and should be
read carefully before investing or sending money.
Mutual Funds: NOT FDIC INSURED May lose value . Not bank guaranteed
Evergreen Distributor, Inc.
Evergreen(SM) is a Service Mark of Evergreen Investment Services, Inc.
<PAGE>
Letter to Shareholders
----------------------
November 1999
[PHOTO]
William M. Ennis
President and CEO
Dear Shareholders,
We are pleased to provide the Evergreen Domestic Growth Funds annual report,
which covers the twelve-month period ended September 30, 1999.
Uncertainty over Interest Rates Influences the Markets
Although the U.S. economy is in the ninth year of economic expansion, many
believe that valuation levels in some sectors of the stock market are just not
sustainable. During the final quarter of 1998, the S&P 500 index had the highest
return of any quarter since the first quarter of 1987--21.30%. The S&P 500
continued to advance in the first half of 1999, dominated by the performance of
a very small group of large-cap stocks. In April and May, value-oriented funds
briefly outperformed growth funds, but lost ground subsequently as growth stocks
regained the leadership position they had had during earlier months. Technology
has been by far the best-performing industry sector.
By the 3rd quarter of 1999, rising interest rates dampened performance of stocks
across the board, and value stocks suffered particularly as investors sought the
refuge of blue chips. Investors' inflation fears and continued doubts about the
ability of U.S. companies to sustain significant growth in earnings prompted an
October sell-off. The Federal Reserve Bank's "tightening bias" leads many to
anticipate further interest rate increases in order to stem even the slightest
inflationary pressure. Additional interest rate hikes would likely have a
negative effect on stock prices, which could restrain consumer spending;
however, many investors are waiting for just such a scenario to take place, so
they can take advantage of lower stock prices as a buying opportunity.
We believe that the economy is still fundamentally strong, and we remain
cautiously optimistic about the prospects for continued growth in the markets.
Evergreen is Ready for the Year 2000/1/
We have been addressing the Year 2000 challenge since February of 1996 and have
committed the time, resources and people necessary to prepare for any
ramifications from the millennium bug. Today, we are confident that our
preparations will enable us to continue to deliver the high-quality Evergreen
products and services on which our shareholders rely. In addition, Evergreen
portfolio managers have placed great emphasis on monitoring portfolios for Y2K
readiness.
We believe that sound investing is about taking steps to meet your long-term
financial needs and goals. We remind you to take advantage of your financial
advisor's expertise to develop and refine a financial plan that will enable you
to meet your objectives. Evergreen Funds offers a broad mix of stock, bond and
money market funds that should make it simple for you to choose the most
appropriate for your portfolio.
We would like to thank you for your continued investment in Evergreen Funds.
Sincerely,
/s/ William M. Ennis
William M. Ennis
President and CEO
Evergreen Investment Company
/1/ The information above constitutes Year 2000 readiness disclosure.
1
<PAGE>
EVERGREEN
Aggressive Growth Fund
Fund at a Glance as of September 30, 1999
"Our goal has been to keep the Fund aggressive, but to reduce the overall
volatility somewhat by reducing the dependence on a handful of stocks."
Portfolio
Management
----------
[PHOTO]
Maureen E. Cullinane, CFA
Tenure: April 1999
CURRENT INVESTMENT STYLE/1/
[GRAPHIC]
Morningstar's Style Box is based on a portfolio date as of 9/30/1999.
The Equity Style Box placement is based on a fund's price-to-earnings and
price-to-book ratio relative to the S&P 500, as well as the size of the
companies in which it invests, or median market capitalization.
/1/Source: 1999 Morningstar, Inc.
/2/Past performance is no guarantee of future results. The investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than original cost. The performance of each class may vary
based on differences in loads and fees by the shareholders investing in each
class.
Historical performance shown for Classes B, C, and Y prior to their inception is
based on the performance of Class A, the original class offered. These
historical returns for Classes B, C, and Y have not been adjusted to reflect the
effect of each Class' 12b-1 fees. These fees for Class A, B and C are 0.25%,
1.00%, and 1.00%, respectively. Class Y does not pay a 12b-1 fee. If these fees
had been reflected, returns for Classes B and C would have been lower while
returns for Class Y would have been higher.
PERFORMANCE AND RETURNS/2/
Portfolio Inception Date: 4/15/1983 Class A Class B Class C Class Y
Class Inception Date 4/15/1983 7/7/1995 8/3/1995 7/11/1995
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Average Annual Returns*
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1 year with sales charge 30.42% 31.00% 34.90% n/a
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1 year w/o sales charge 36.92% 36.00% 35.90% 37.36%
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3 years 11.04% 11.21% 11.97% 13.23%
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5 years 17.12% 17.38% 17.54% 18.57%
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10 years 15.87% 16.10% 16.08% 16.58%
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Since Portfolio Inception 13.99% 14.13% 14.12% 14.42%
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Maximum Sales Charge 4.75% 5.00% 1.00% n/a
Front End CDSC CDSC
- --------------------------------------------------------------------------------
12-month capital gain
distributions per share $2.63 $2.63 $2.63 $2.63
- --------------------------------------------------------------------------------
*Adjusted for maximum applicable sales charge unless noted.
LONG TERM GROWTH
[GRAPH]
Consumer Evergreen
Price Russell Russell Aggressive
Index - US 1000 S&P 400 2000 Growth A
30-Sep-89 10,000 10,000 10,000 10,000 9,525
30-Sep-90 10,616 9,231 8,557 7,285 7,685
30-Sep-91 10,976 12,800 12,861 10,569 12,902
30-Sep-92 11,304 14,192 14,399 11,532 14,859
30-Sep-93 11,608 15,040 17,940 15,356 19,690
30-Sep-94 11,952 15,918 18,221 15,767 18,850
30-Sep-95 12,256 21,041 22,909 19,450 24,164
30-Sep-96 12,624 25,544 26,106 22,005 30,354
30-Sep-97 12,896 34,816 36,285 29,308 33,874
30-Sep-98 13,088 38,680 33,958 23,733 31,864
30-Sep-99 13,400 52,161 42,601 28,259 43,629
Comparison of a $10,000 investment in Evergreen Aggressive Growth Fund Class A
shares/2/, versus a similar investment in the Standard & Poor's 400 Mid-Cap
Index (S&P 400), the Russell 1000 Index (Russell 1000), the Russell 2000 Index
(Russell 2000) and the Consumer Price Index (CPI).
The Russell 1000, Russell 2000 and S&P 400 are unmanaged market indices which 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.
The Aggressive Growth Fund has the ability to invest in all market cap ranges.
The current manager regards the Russell 1000 Growth Index as the primary fund
benchmark.
2
<PAGE>
EVERGREEN
Aggressive Growth Fund
Portfolio Manager Interview
How did the Fund perform?
For the twelve-month period ended September 30, 1999, the Evergreen Aggressive
Growth Fund's Class A shares had a total return of 36.92%. During the same
twelve-month period, the Russell 1000 Growth Index, a benchmark for growth stock
investing, returned 34.85% and the median return in the new Multi-Cap Growth
Fund category was 37.88%, according to Lipper Inc., an independent monitor of
mutual fund performance. These returns are before the deduction of any
applicable sales charges.
Portfolio
Characteristics
---------------
Total Net Assets $256,541,738
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Number of Holdings 40
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Beta 1.21
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P/E Ratio 39.9x
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What was the investment environment like during the twelve-month period?
The first six months was an excellent period for growth stock investing. During
the second half of the fiscal year, however, shifting investor sentiment and
growing fears about higher interest rates restrained performance.
Over the full twelve months, we saw tremendous swings in the market. Performance
during the first three months of the fiscal year was led by large-company growth
stocks, particularly in the technology industries. During the subsequent six
months we saw steadily increasing interest in mid-cap and small-cap companies
and in cyclical stocks, which tend to do well in a growing economy. In the final
quarter of the fiscal year, however, sentiment turned back in favor of the
larger company stocks.
In the last few months of the fiscal year, investors were concerned that the
strong economic growth earlier in the year would lead to inflation and encourage
the Federal Reserve Board to raise short-term rates as a pre-emptive step to
slow the economy and prevent an increase in inflation. The Federal Reserve did
raise short-term rates twice during the period and warned that it could raise
rates again. The fear that the Federal Reserve might raise short-term rates
further has been an overhang on the market. Investors worried that if interest
rate increases did slow economic growth, then the same would happen to corporate
earnings growth.
Looking at the full year, leadership in the market was concentrated in a
relatively narrow group of stocks, predominantly technology stocks, with a
handful of performers in other industries. Technology was the only sector that
did well for the entire year. Investors recognized that it was the technology
revolution that has allowed our economy to enjoy sustained growth with very
little inflation. When very few businesses have the power to raise their prices
significantly, companies find ways to absorb manufacturing and raw materials
costs. Technology has been the tool.
Top 5 Industries
-------------------------------
(as a percentage of net assets)
Information Services & Technology 35.2%
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Healthcare Products & Services 12.8%
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Communication Systems & Services 8.3%
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Retailing & Wholesale 7.8%
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Printing, Publishing, Broadcasting & Entertainment 6.1%
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3
<PAGE>
EVERGREEN
Aggressive Growth Fund
Portfolio Manager Interview
Within this environment, what strategies did you pursue in managing the Fund?
Since taking over management of Evergreen Aggressive Growth Fund in April, we
have diversified the Fund across different industry sectors, while making
performance less reliant on just a few major holdings. We kept the Fund fairly
focused among approximately 40 different holdings, and maintained a flexible
strategy with respect to company size.
We have concentrated on investments in companies with above-average earnings
growth rates or with the potential for an acceleration in earnings growth. Our
goal has been to keep the Fund aggressive, but to reduce the overall volatility
somewhat by reducing the dependence on a handful of stocks. For example, we
halved our investment in VISX, a stock whose price had tripled in the past year.
The stock appreciated to almost 15% of assets and began to dominate performance
of the Fund. We also reduced the very large investment in the oil service
sector from approximately 15% of assets at the end of March to the current 5% of
assets.
The Fund has maintained and even added to its emphasis on technology stocks,
with the technology weighting rising from approximately 33% of net assets to
about 43% during the past six months. Unlike the oil service industry,
technology accounts for a major portion of market indices, such as the Russell
2000 Growth Index. We have focused on market leaders in telecommunications,
software and electronics, such as Cisco, EMC, Intel and Microsoft. We also added
fast-growing companies such as Veritas Software, Clarify and JDS Uniphase.
Veritas Software provides data storage management systems, which protect the
critical data used by companies to run their businesses. Clarify offers software
solutions for automated telephone call centers, and JDS Uniphase provides fiber
optic components for the telecommunications industry.
We improved the diversification of the Fund by adding several stocks in sectors
that had been under-represented in the portfolio. These sectors included the
broadcasting, financial and natural gas industries.
Top 10 Holdings
-------------------------------
(as a percentage of net assets)
VISX, Inc. 7.1%
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Microsoft Corp. 7.1%
- --------------------------------------------------------------------------------
EMC Corp. 7.0%
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Cisco Systems, Inc. 4.7%
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Home Depot, Inc. 4.0%
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Intel Corp. 3.9%
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American Int'l Group, Inc. 3.8%
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Medtronic, Inc. 3.6%
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Veritas Software Corp. 3.6%
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Devon Energy Corp. 3.2%
- --------------------------------------------------------------------------------
What is your outlook?
The Federal Reserve Board has a great influence on stock market sentiment and is
working to sustain the longest running economic recovery in the nation's
history. The economy has been growing steadily since 1982 and the stock market
has had a strong uninterrupted performance since the early 90s. During this
time, the Federal Reserve has walked a tightrope, lowering rates when it needed
to spur the economy, raising rates and tightening money supply when it needed to
restrain growth and thwart inflation. The Federal Reserve's goal has been to
keep gross domestic product (GDP) growth in the 2 1/2% to 3% range, which it
considers ideal.
4
<PAGE>
EVERGREEN
Aggressive Growth Fund
Portfolio Manager Interview
Right now, we are seeing a pickup in economic growth overseas, both in Asia and
in Europe. If this trend continues, we believe globally oriented companies
should continue to do well even if economic growth in the United States slows.
We are concerned, however, with the relative narrowness of the group of stocks
that has dominated market performance. Large-cap technology stocks and the
biggest companies in the S&P 500 have been the performance leaders. Over the
next twelve months, we anticipate moderate economic growth, moderate interest
rates and moderate inflation. If investors begin to believe, as we do, in
sustainable earnings growth, then the market should broaden beyond the current
"Nifty Fifty" company names and more stocks should participate in the market's
advance.
5
<PAGE>
EVERGREEN
Evergreen Fund
Fund at a Glance as of September 30, 1999
"Going forward, we intend to benchmark the Evergreen Fund against the S&P 500
Index, a broad measure of large-company stocks, rather than the Russell 2000
Growth Index, a small-company stock index."
Portfolio
Management
- --------------------------------------------------------------------------------
[PHOTO] [PHOTO]
Jean C. Ledford, Richard S. Welsh
CFA
Tenure: August 1999 Tenure: August 1999
CURRENT INVESTMENT STYLE/1/
[GRAPHIC]
Morningstar's Style Box is based on a portfolio date as of 9/30/1999.
The Equity Style Box placement is based on a fund's price-to-earnings and
price-to-book ratio relative to the S&P 500, as well as the size of the
companies in which it invests, or median market capitalization.
/1/Source: 1999 Morningstar, Inc.
/2/Past performance is no guarantee of future results. The investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than original cost. The performance of each class may vary
based on differences in loads, fees and expenses paid by the shareholders
investing in each class.
Historical performance shown for Classes A, B and C prior to their inception is
based on the performance of Class Y, the original class offered. These
historical returns for Classes A, B and C have not been adjusted to reflect the
effect of each Class' 12b-1 fees. These fees for Class A, B and C are 0.25%,
1.00% and 1.00%, respectively. Class Y does not pay a 12b-1 fee. If these fees
had been reflected, returns would have been lower.
PERFORMANCE AND RETURNS/2/
Portfolio Inception Date: 10/15/1971 Class A Class B Class C Class Y
Class Inception Date 1/3/1995 1/3/1995 1/3/1995 10/15/1971
- --------------------------------------------------------------------------------
Average Annual Returns*
- --------------------------------------------------------------------------------
1 year with sales charge 9.88% 9.65% 13.67% n/a
- --------------------------------------------------------------------------------
1 year w/o sales charge 15.34% 14.65% 14.67% 15.79%
- --------------------------------------------------------------------------------
3 years 11.52% 11.80% 12.59% 13.73%
- --------------------------------------------------------------------------------
5 years 15.67% 15.90% 16.08% 17.17%
- --------------------------------------------------------------------------------
10 years 11.13% 11.33% 11.32% 11.85%
- --------------------------------------------------------------------------------
Since Portfolio Inception 15.77% 15.84% 15.84% 16.03%
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Maximum Sales Charge 4.75% 5.00% 1.00% n/a
Front End CDSC CDSC
- --------------------------------------------------------------------------------
12-month income dividends per share $0.04 -- -- $0.05
- --------------------------------------------------------------------------------
12-month capital gain distributions
per share $0.07 $0.07 $0.07 $0.07
- --------------------------------------------------------------------------------
*Adjusted for maximum applicable sales charge unless noted.
LONG TERM GROWTH
S & P 500 Consumer Price Russell 1000 Evergreen
Composite Index - US Growth Omega A
30-Sep-89 10,000 10,000 10,000 9,525
30-Sep-90 9,060 10,616 9,231 8,972
30-Sep-91 11,879 10,976 12,800 13,100
30-Sep-92 13,188 11,304 14,192 13,863
30-Sep-93 14,897 11,608 15,040 18,520
30-Sep-94 15,447 11,952 15,918 17,365
30-Sep-95 20,038 12,256 21,041 22,181
30-Sep-96 24,115 12,624 25,544 25,052
30-Sep-97 33,861 12,896 34,816 31,718
30-Sep-98 36,888 13,088 38,680 33,123
30-Sep-99 46,652 13,400 52,161 46,227
Comparison of a $10,000 investment in Evergreen Fund Class A shares/2/, versus a
similar investment in the Russell 2000 Growth Index (Russell 2000), the Standard
& Poor's 500 Index (S&P 500) and the Consumer Price Index (CPI).
The Russell 2000 and the S&P 500 are unmanaged market indices which do not
include transaction costs associated with buying and selling securities nor any
management fees. The CPI is a commonly used measure of inflation and does not
represent an investment return. It is not possible to invest directly in an
index.
6
<PAGE>
EVERGREEN
Evergreen Fund
Portfolio Manager Interview
How did the Evergreen Fund perform?
The Fund's Class A shares had a total return of 15.34% for the twelve-month
period ended September 30, 1999, compared to a 19.07% return for the Russell
2000 Index, the Fund's benchmark. During the same twelve-month period, the
median return of funds in the new Multi-Cap Core Fund category was 22.76%,
according to Lipper Inc, an independent monitor of mutual fund performance. Fund
performance is before deduction of any applicable sales charges.
Portfolio
Characteristics
---------------
Total Net Assets $1,925,539,849
- --------------------------------------------------------------
Number of Holdings 159
- --------------------------------------------------------------
Beta 0.86
- --------------------------------------------------------------
P/E Ratio 48.9x
- --------------------------------------------------------------
Tell us about the new portfolio management team that took responsibility for the
Fund in August.
We have a five-member team with a depth of investment experience--almost 50
years total. The lead manager is Jean Ledford, an investment professional with
more than 19 years experience. For the previous 2 1/2 years, she was the lead
manager of American Century Select Fund. Before joining American Century
Investments, she was investment director of the State of Wisconsin Investment
Board. Three of the remaining four members of the team also came from American
Century Investments. They include Richard Welsh, co-portfolio manager, and
analysts Rick Petran and John Anthony. The fifth member of the team is Caroline
Yu, an analyst who had been at Evergreen Asset Management Corp.
Jean Ledford also is President and Chief Executive Officer of Evergreen Asset
Management Corp. She was appointed to that position following the retirement of
Stephen A. Lieber in August.
How would you describe your investment style?
One of the hallmarks of our team goals is to manage funds that produce
attractive Sharpe Ratios, which measure the amount of risk taken for the returns
obtained. Basically, we seek strong performance for less risk. We build
portfolios from the bottom up, emphasizing the selection of individual stocks of
attractive companies with opportunities to improve their earnings. Our style
allows us to find securities in a wide variety of industries and our portfolios
are well diversified. We are not traditional growth or core buyers in the sense
that we are not looking for any absolute figures in terms of earnings growth
rates or price-to-growth rates. While we buy companies with what we believe are
good growth prospects, we are interested in buying these stocks at reasonable
prices.
One consequence of this broader diversification is that we expect the volatility
or variability of performance will be reduced when compared to the S&P 500. We
pick stocks one at a time, and our concentrations in industries and sectors will
result from that stock-picking discipline. We are bottom-up stock pickers, not
top-down investors who choose industries based on economic forecasts.
7
<PAGE>
EVERGREEN
Evergreen Fund
Portfolio Manager Interview
The key to our style is the search for changes on the margin that can increase a
company's earnings growth rate. We look for factors such as a new management
team, a restructuring, a new product or geographical expansion. As we construct
a portfolio from our stock picks, we are careful to determine how much risk we
are taking.
Our sell discipline is just the reverse of our buy discipline. When a stock
stops exhibiting an upward drift or momentum in earnings, we begin the process
of lightening our position. We look not just at absolute earnings trends, but
also at events on the margin that could affect earnings trends, such as the loss
of a key executive, the failure of a new product or a botched restructuring.
Top 5 Industries
-------------------------------
(as a percentage of net assets)
Information Services & Technology 19.3%
- -------------------------------------------------------------------------------
Banks 11.4%
- -------------------------------------------------------------------------------
Healthcare Products & Services 10.1%
- -------------------------------------------------------------------------------
Printing, Publishing, Broadcasting & Entertainment 8.7%
- -------------------------------------------------------------------------------
Finance & Insurance 8.3%
- -------------------------------------------------------------------------------
What are some of the changes you are making as you implement your investment
strategy in Evergreen Fund?
Going forward, we intend to benchmark the Evergreen Fund against the S&P 500
Index, a broad measure of large-company stocks, rather than the Russell 2000
Growth Index, a small-company stock index. The average market capitalization of
the Fund has been getting bigger and, as a consequence, the total number of
individual stock holdings has been reduced substantially. We have made a
commitment to have sizable positions in large, well-known and successful
corporations, while systematically eliminating a number of very small, almost
insignificant positions in the portfolio. We have, for example, recently added
Wal-mart and General Electric to the portfolio, while eliminating numerous very
small Real Estate Investment Trusts (REITs). We have increased the technology
industry weighting to be consistent with that of the S&P 500, while we have
reduced the weighting in the financial sector.
We also have added to our holdings in healthcare, consumer, consumer staples and
energy industries as a consequence of our stock-selection process. Since our
restructuring began, two financial services companies BankAmerica and Federal
Home Loan Mortgage Association--have dropped out of the top ten holdings list,
although not out of the portfolio. The same is true of Johnson & Johnson.
Meanwhile, General Electric, Microsoft and Cisco Systems all have been added to
the top ten list. While we have reduced the number of stock holdings, we
actually have improved the diversification of the Fund among different
industries and sectors.
8
<PAGE>
EVERGREEN
Evergreen Fund
Portfolio Manager Interview
We stress that, in restructuring the portfolio, we have been very conscious of
the capital gains implications of our sales. We have sought to avoid creating a
significant capital gains tax obligation for shareholders.
Top 10 Holdings
-------------------------------
(as a percentage of net assets)
Clear Channel Communications, Inc. 8.0%
- -------------------------------------------------------------------
Intel Corp. 4.6%
- -------------------------------------------------------------------
Sun Microsystems, Inc. 3.9%
- -------------------------------------------------------------------
Merck & Co., Inc. 3.4%
- -------------------------------------------------------------------
General Electric Co. 3.3%
- -------------------------------------------------------------------
M&T Bank Corp. 3.2%
- -------------------------------------------------------------------
Microsoft Corp. 3.2%
- -------------------------------------------------------------------
BankBoston Corp. 2.4%
- -------------------------------------------------------------------
Federal National Mortgage Assoc. 2.2%
- -------------------------------------------------------------------
Cisco Systems, Inc. 2.0%
- -------------------------------------------------------------------
What is your outlook?
We believe that by increasing the overall diversification of the portfolio, we
have given the Fund the ability to get through short-term market volatility more
smoothly than it has in the past.
At this point, in mid-October, most investors are wrestling with the question of
whether we are witnessing the start of a strong upturn in inflation, versus the
low pace of inflation of the past several years. When inflationary pressures
start to emerge, stocks in industries such as basic materials, energy and
technology start to outperform stocks in other industries. When there is very
little inflation, we see relatively stronger performance in the traditional
areas such as healthcare and the financials.
9
<PAGE>
EVERGREEN
Masters Fund
Fund at a Glance as of September 30, 1999
"As the nine-month period drew to a close, stocks traded in a broad range,as
uncertainty in the market continued to prevail."
CURRENT INVESTMENT STYLE/1/
[GRAPHIC]
Morningstar's Style Box is based on a portfolio date as of 9/30/1999.
The Equity Style Box placement is based on a fund's price-to-earnings and
price-to-book ratio relative to the S&P 500, as well as the size of the
companies in which it invests, or median market capitalization.
/1/Source: 1999 Morningstar, Inc.
/2/Past performance is no guarantee of future results. The investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than original cost. The performance of each class may vary
based on differences in loads and fees paid by the shareholders investing in
each class.
<TABLE>
<CAPTION>
PERFORMANCE AND RETURNS/2/
Portfolio Inception Date: 12/31/1998 Class A Class B Class C Class Y
Class Inception Date 12/31/1998 12/31/1998 12/31/1998 12/31/1998
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Average Annual Returns*
- -----------------------------------------------------------------------------------
Cumulative Since Portfolio Inception 0.50% 0.10% 0.00% 0.70%
- -----------------------------------------------------------------------------------
Maximum Sales Charge 4.75% 5.00% 1.00% n/a
Front End CDSC CDSC
- -----------------------------------------------------------------------------------
</TABLE>
*Adjusted for maximum applicable sales charge unless noted.
LONG TERM GROWTH
[GRAPH]
S & P 500 Consumer Price Evergreen Masters S&P 400
Composite Index - US Fund A Midcap
31-Dec-98 10,000 10,000 9,524 10,000
31-Jan-99 10,410 10,024 9,524 9,611
28-Feb-99 10,074 10,037 9,076 9,107
31-Mar-99 10,465 10,067 9,305 9,361
30-Apr-99 10,861 10,140 9,600 10,100
31-May-99 10,590 10,140 9,467 10,144
30-Jun-99 11,166 10,140 10,133 10,687
31-Jul-99 10,808 10,171 9,733 10,450
31-Aug-99 10,741 10,195 9,562 10,081
30-Sep-99 10,434 10,220 9,571 9,761
Comparison of a $10,000 investment in Evergreen Masters Fund, Class A shares/2/,
versus a similar investment in the Standard & Poor's 500 Stock Index (S&P 500),
the Standard & Poor's 400 Mid-Cap Index (S&P 400), and the Consumer Price Index
(CPI).
The S&P 500 and the S&P 400 are unmanaged market indices which 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.
10
<PAGE>
EVERGREEN
Masters Fund
Fund at a Glance as of September 30, 1999
Market Overview
The Evergreen Masters Fund's performance, since its inception on December 31,
1998, reflects the varied performance of the four separately-managed segments of
the Fund based on its manager of manager's strategy. For the nine-month period
ended, September 30, 1999, Class A shares returned 0.50% unadjusted for any
applicable sales charge. For the same period, the S&P 500 Index returned 5.36%
and the S&P MidCap 400 returned -2.10%.
The period ending September 30, 1999, started out on a strong note, as recovery
in Asian markets, Federal Reserve Board interest rate cuts and strong corporate
profits helped boost the stock market to new highs. Stocks across the board
(small-cap, mid-cap, large-cap, growth and value) participated in the market's
advance. Investors welcomed this "broadening" of the market, because for more
than a year, the performance of most stocks had trailed that of large-cap and
technology stocks.
During the latter part of the period, market sentiment changed, as investors
became concerned about a variety of issues. Investors worried about a flare-up
of inflation, the possibility of higher interest rates, the prospect of weaker
corporate earnings and the declining value of the dollar in relation to the yen.
A weaker dollar makes foreign products more expensive in the U.S. and often
encourages U.S. companies to raise their prices, spurring inflation. The
uncertainty in the market led to broad fluctuations in stock prices. Once again,
technology stocks became market leaders, and most small and mid-cap stocks gave
up the gains they had made earlier. Even though inflation remained at a moderate
level, the Federal Reserve Board adopted a pre-emptive stance against inflation,
and in August raised short-term interest rates 0.25% for the second time in
three months. The previous 0.25% interest-rate hike occurred in June. As the
nine-month period drew to a close, stocks traded in a broad range, as
uncertainty in the market continued to prevail.
Evergreen Masters Fund employs an investment program based on a manager of
manager's strategy which is currently composed of four different investment
advisors. Each investment manager brings a unique investment approach to the
Fund and together they provide for a diversified growth fund. As a result, the
Fund has the potential to benefit from various investment methods and styles.
Portfolio
Characteristics
---------------
Total Net Assets $259,010,890
- --------------------------------------------------------------------------------
Number of Holdings 476
- --------------------------------------------------------------------------------
P/E Ratio 58.6x
- --------------------------------------------------------------------------------
Top 5 Industries
-------------------------------
(as a percentage of net assets)
Information Services & Technology 18.3%
- --------------------------------------------------------------------------------
Healthcare Products & Services 9.5%
- --------------------------------------------------------------------------------
Retailing & Wholesale 9.2%
- --------------------------------------------------------------------------------
Finance & Insurance 5.2%
- --------------------------------------------------------------------------------
Printing, Publishing, Broadcasting & Entertainment 5.2%
- --------------------------------------------------------------------------------
Top 10 Holdings
-------------------------------
(as a percentage of net assets)
Network Solutions, Inc., Cl. A 2.8%
- --------------------------------------------------------------------------------
Microsoft Corp. 1.8%
- --------------------------------------------------------------------------------
Gemstar International Group Ltd. 1.7%
- --------------------------------------------------------------------------------
General Electric Co. 1.6%
- --------------------------------------------------------------------------------
Wal-Mart Stores, Inc. 1.5%
- --------------------------------------------------------------------------------
Intel Corp. 1.5%
- --------------------------------------------------------------------------------
International Business Machines Corp. 1.4%
- --------------------------------------------------------------------------------
Health Management Associates, Inc., Cl. A 1.1%
- --------------------------------------------------------------------------------
Cisco Systems, Inc. 1.0%
- --------------------------------------------------------------------------------
Newfield Exploration Co. 1.0%
- --------------------------------------------------------------------------------
11
<PAGE>
EVERGREEN
Masters Fund
Portfolio Manager Interview
Mid-Cap Value Portfolio
Portfolio
Management
- --------------------------------------------------------------------------------
[PHOTO] [PHOTO]
Jean C.Ledford, Richard S.Welsh
CFA
Tenure: August 1999 Tenure: August 1999
The under-performance of the portfolio relative to its benchmark during the nine
months was primarily due to the portfolio's heavy concentration in financial
stocks and health care stocks. The Federal Reserve's actions to raise interest
rates in June and August had a negative impact on financial stocks, which are
particularly vulnerable to rising interest rates. Banks, finance and insurance,
building construction and furnishings and real estate comprise 27% of the
portfolio and were all negatively impacted during this period. The portfolio's
large concentration in health care stocks (9%) also adversely affected
performance as health stocks sold off due to concerns about reimbursement levels
being cut.
Similarly, the Fund's under-weighting in energy stocks tended to hold back
performance when energy prices started to rise and these stocks began to recover
at the end of the first quarter. The Fund was also underweighted in technology
stocks although these stocks contributed strongly to the benchmark's
performance. Computer Sciences rose 14.2% and is illustrative of the
opportunities available in the technology sector.
Several of the top-performing stocks during the year were consumer products
companies: Williams-Sonoma, Inc., Gucci Group and Jones Apparel Group Inc., all
with gains exceeding 60% during the period ended 9/30/99. We purchased
additional Jones Apparel Group, Inc. shares when they were depressed by the
market's negative reaction to the company's proposed acquisition of Nine West
Group Inc. The portfolio also held Nine West Group Inc., which contributed a
23.1% gain to the portfolio since acquisition. We purchased Gucci Group NV when
the market was apparently preoccupied with the risk to its business from slowed
Asian economies. Williams-Sonoma, Inc. was purchased after the company announced
in March that the CFO was leaving the company and the stock dropped on the news.
We believed this was a temporary price decline for a historically well-run
company with a strong brand name. This conviction was validated when the stock
nearly doubled by the end of September from our average purchase price of
$27.38.
Historically, the earnings growth rate of the mid-cap stocks has exceeded the
larger cap stocks. Mid-caps, however, on average, trade at lower price/earnings
valuations than the larger stocks. While concerns about the rising interest rate
environment have caused mid-caps to under-perform large-caps, we anticipate that
the Federal Reserve's goal is to slow the economy while avoiding recession.
Fears of an economic slowdown cause investors to focus on a narrow group of
companies in which there is a high level of confidence that earnings estimates
will be met. Currently, the market favorites have narrowed to the high P/E,
large-cap stocks, and particularly technology names. If it becomes apparent that
the Federal Reserve is not likely to raise rates further, we expect the market
to broaden to again include mid-cap stocks. We believe this portfolio is well
positioned to take full advantage of this shift in sentiment.
12
<PAGE>
EVERGREEN
Masters Fund
Portfolio Manager Interview
Evergreen Mid-Cap Growth Portfolio
Management
- --------------------------------------------------------------------------------
[PHOTO]
Mark Regan, MFS
Tenure: December 1998
During the nine-month period from the Fund's inception through September 30,
1999, the Evergreen Masters Fund Mid-Cap Growth Portfolio performed relatively
well. For more than a year, large-cap and technology stocks have driven the
surge in stock market prices. Early in the second quarter of 1999, the market
broadened and stocks across the board, including small and mid-cap stocks,
participated in the market's performance. Later in the period, uncertainty about
inflation and increasing interest rates led to widespread fluctuations in stock
prices and most small and mid-cap stocks gave up the gains they had made
earlier.
The Evergreen Masters Fund Mid-Cap Growth Portfolio's performance was assisted
by the technology sector, but recently this sector's weighting has been reduced
due to concerns about Y2K and valuation levels. The business services sector
also helped the portfolio's performance and we have increased the weighting in
this sector by adding internet infrastructure holdings and processing companies
where, we believe, earnings will be more stable in the future.
Aerial Communications, which introduced new and improved roaming coverage;
Network Solutions, which announced intentions to come to an agreement with
another company to expand its domain-name registration services internationally;
and Gemstar International, which received a new key patent, all contributed
substantially to the portfolio.
Total Renal Care, a provider of integrated dialysis services for patients with
chronic kidney failure, detracted the most from the portfolio's performance;
however, we took the opportunity to add to our position because we continue to
believe in the company's fundamentals. We sold a portion of Quintiles
Transnational, the biggest company conducting clinical trials for drug makers,
after it warned that profits will miss estimates both this year and next.
Over the next twelve months, we believe opportunities exist for investors of
small and mid-cap stocks and we are beginning to see signs that the market is
broadening.
13
<PAGE>
EVERGREEN
Masters Fund
Portfolio Manager Interview
Large-Cap Value Portfolio
Portfolio
Management
- --------------------------------------------------------------------------------
[PHOTO]
Charles Albers and
Nikolaos Monoyios,
Oppenheimer
Tenure: December 1998
Portfolio Performance
During the latest quarter, the well-diversified Evergreen Masters Large Cap
Value Portfolio performed relatively well. The portfolio's sector weightings
produced mixed results during the quarter: the portfolio's largest overweight
was Consumer Cyclicals, which performed below average, and the largest
underweight was Financials, which also performed below average. On the positive
side, our quantitative stock selection models, which are a central part of our
portfolio management process, displayed very good predictive power this past
quarter, aiding the portfolio's performance.
Portfolio Actions
Significant purchases and sales included the following stocks:
Purchases Sales
- --------- -----
DuPont Merck
Dow Chemical Microsoft
Biogen Bristol Meyers
Teradyne
Veritas Software
In general, we have continued to lighten up on some of the "Nifty Fifty" type
names, while investing in a broad list of stocks, which appear to offer better
near-term appreciation prospects.
Portfolio Characteristics
The weighted average market cap of the portfolio was lowered during September to
$90.7 billion which is at 85% of the S&P 500 as of September 30, 1999 and the
lowest point of the last twelve months.
Outlook
Our top-down model that attempts to predict the relative performance of
large-cap vs. small-cap stocks suggests that the long period of extraordinary
excess by the very largest stocks may be coming to an end. Indeed, during the
third quarter of 1999, returns on the Russell 2000 Index (-6.32%) were very
close to the S&P 500 Index (-6.25%).
14
<PAGE>
EVERGREEN
Masters Fund
Portfolio Manager Interview
Large-Cap Growth Portfolio
Portfolio
Management
- --------------------------------------------------------------------------------
Putnam Growth Team
Tenure: December 1998
The nine-month period ended September 30, 1999, was marked by rapid, widespread
market rotation. In the first three months, large-cap growth stocks set records
(mid and small-cap stocks did not participate in these gains). Growth stocks
continued to outperform their value counterparts. After a second-quarter
broadening, third-quarter markets again narrowed with large-cap growth stocks in
the lead. By late September, fewer than 240 stocks and only 4 of 11 industry
groups in the S&P 500 showed gains year to date.
Throughout the period, the U.S. economy continued to demonstrate growth with no
visible signs of inflation and minimal interest rate increases. Large-cap
stocks, particularly in the growth area, with the exception of the second
quarter, dominated the market. Markets have remained narrow, with the majority
of growth coming from the energy (higher oil prices) and technology sectors.
Evergreen Masters Fund Large Cap Growth Portfolio's performance was hampered by
weak stock performance in health care and financial services and from the strong
performance of the energy, basic industry, and capital goods sectors; areas in
which the portfolio was underweighted. These sectors are composed of
economically sensitive, cyclical stocks, but lack the type of growth stocks that
meet our large-cap growth investment criteria.
Overall, the portfolio's best-performing sectors were consumer staples,
communications services and conglomerates.
Looking ahead, we believe that in this uncertain economic and interest rate
environment, high-quality growth companies should benefit from persistent demand
and visible earnings growth, particularly within the technology and
communications sectors. Despite high stock price valuations, growth companies
also continue to be helped by low inflation. Market volatility (both sector
rotation and individual stock volatility) are expected to remain high.
The Evergreen Masters Fund Large Cap Growth Portfolio's investment philosophy
remains constant: We believe that a strategy of systematic selection of high
quality growth stocks, combined with rigorous risk management and a disciplined
sell process, will generate attractive risk-adjusted returns over the course of
a market cycle.
15
<PAGE>
EVERGREEN
Omega Fund
Fund at a Glance as of September 30, 1999
"During most of the fiscal year, we emphasized large-cap technology
companies,and we have increased that emphasis since June."
Portfolio
Management
- --------------------------------------------------------------------------------
[PHOTO]
Maureen E. Cullinane, CFA
Tenure: April 1989
CURRENT INVESTMENT STYLE/1/
[GRAPHIC]
Morningstar's Style Box is based on a portfolio date as of 9/30/1999.
The Equity Style Box placement is based on a fund's price-to-earnings and
price-to-book ratio relative to the S&P 500, as well as the size of the
companies in which it invests, or median market capitalization.
/1/Source: 1999 Morningstar, Inc.
/2/Past performance is no guarantee of future results. The investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than original cost. The performance of each class may vary
based on differences in loads, fees and expenses paid by the shareholders
investing in each class.
Historical performance shown for Classes B, C, and Y prior to their inception is
based on the performance of Class A, the original class offered. These
historical returns for Classes B, C, and Y have not been adjusted to reflect the
effect of each Class' 12b-1 fees. These fees for Class A, B and C are 0.25%,
1.00%, and 1.00%, respectively. Class Y does not pay a 12b-1 fee. If these fees
had been reflected, returns for Classes B and C would have been lower while
returns for Class Y would have been higher.
PERFORMANCE AND RETURNS/2/
Portfolio Inception Date: 4/29/1968 Class A Class B Class C Class Y
Class Inception Date 4/29/1968 8/2/1993 8/2/1993 1/13/1997
- --------------------------------------------------------------------------------
Average Annual Returns*
- --------------------------------------------------------------------------------
1 year with sales charge 32.95% 33.57% 37.52% n/a
- --------------------------------------------------------------------------------
1 year w/o sales charge 39.56% 38.57% 38.52% 39.99%
- --------------------------------------------------------------------------------
3 years 20.68% 21.00% 21.69% 22.86%
- --------------------------------------------------------------------------------
5 years 20.45% 20.42% 20.60% 21.75%
- --------------------------------------------------------------------------------
10 years 16.54% 16.51% 16.52% 17.17%
- --------------------------------------------------------------------------------
Since Inception 11.57% 11.56% 11.57% 11.76%
- --------------------------------------------------------------------------------
Maximum Sales Charge 4.75% 5.00% 1.00% n/a
Front End CDSC CDSC
- --------------------------------------------------------------------------------
12-month capital gain distributions
per share $2.61 $2.61 $2.61 $2.61
- --------------------------------------------------------------------------------
*Adjusted for maximum applicable sales charge unless noted.
LONG TERM GROWTH
[GRAPH]
S & P 500 Consumer Price Russell 1000 Evergreen
Composite Index - US Growth Omega A
30-Sep-89 10,000 10,000 10,000 9,525
30-Sep-90 9,060 10,616 9,231 8,972
30-Sep-91 11,879 10,976 12,800 13,100
30-Sep-92 13,188 11,304 14,192 13,863
30-Sep-93 14,897 11,608 15,040 18,520
30-Sep-94 15,447 11,952 15,918 17,365
30-Sep-95 20,038 12,256 21,041 22,181
30-Sep-96 24,115 12,624 25,544 25,052
30-Sep-97 33,861 12,896 34,816 31,718
30-Sep-98 36,888 13,088 38,680 33,123
30-Sep-99 46,652 13,400 52,161 46,227
Comparison of a $10,000 investment in Evergreen Omega Fund, Class A Shares/2/,
versus a similar investment in the Standard & Poor's 500 Index (S&P 500), the
Russell 1000 Growth and the Consumer Price Index (CPI).
The S&P 500 and the Russell 1000 Growth are unmanaged market indices which 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.
16
<PAGE>
EVERGREEN
Omega Fund
Portfolio Manager Interview
How did the Fund perform?
For the twelve-month period ended September 30, 1999, the Evergreen Omega Fund
Class A shares had a total return of 39.56%. During the same twelve-month
period, the Russell 1000 Growth Index, a benchmark for growth stock investing,
returned 34.85% and the median return in the new Multi-Cap Growth Fund category
was 37.88%, according to Lipper Inc., an independent monitor of mutual fund
performance. These returns are before the deduction of any applicable sales
charges.
Portfolio
Characteristics
---------------
Total Net Assets $775,831,970
- --------------------------------------------------------------------
Number of Holdings 64
- --------------------------------------------------------------------
Beta 1.01
- --------------------------------------------------------------------
P/E Ratio 44.3x
- --------------------------------------------------------------------
What was the investment environment like during the twelve-month period?
The first six months were an excellent period for growth stock investing. During
the second half of the fiscal year, however, shifting investor sentiment and
growing fears about higher interest rates restrained performance.
Over the full twelve months, we saw tremendous swings in the market. Performance
during the first three months of the fiscal year was led by large-company growth
stocks, particularly in the technology industries. During the subsequent six
months we saw steadily increasing interest in mid-cap and small-cap companies
and in cyclical stocks, which tend to do well when the economy is growing. In
the final quarter of the fiscal year, however, sentiment turned back in favor of
the larger company stocks.
In the last few months of the fiscal year, investors were concerned that the
strong economic growth earlier in the year would lead to inflation and encourage
the Federal Reserve Board to raise short-term rates as a pre-emptive step to
slow the economy and prevent an increase in inflation. The Federal Reserve did
raise short-term rates twice during the period and warned that it could raise
rates again. The fear that the Federal Reserve might raise short-term rates
further has been an overhang on the market recently. Investors worried that if
interest rate increases did slow economic growth, then the same would happen to
corporate earnings growth.
Looking at the full year, leadership in the market was concentrated in a
relatively narrow group of stocks, predominantly technology stocks, with a
handful of performers in other industries. Technology was the only sector that
did well for the entire year. Investors recognized that it was the technology
revolution that has allowed our economy to enjoy sustained growth with very
little inflation. When very few businesses have the power to raise their prices
significantly, companies find ways to absorb manufacturing and raw materials
costs. Technology has been the tool.
17
<PAGE>
EVERGREEN
Omega Fund
Portfolio Manager Interview
Top 5 Industries
-------------------------------
(as a percentage of net assets)
Information Services & Technology 30.5%
- ----------------------------------------------------------------------
Printing, Publishing, Broadcasting & Entertainment 11.0%
- ----------------------------------------------------------------------
Pharmaceuticals 9.6%
- ----------------------------------------------------------------------
Communication Systems & Services 6.0%
- ----------------------------------------------------------------------
Retailing & Wholesale 5.2%
- ----------------------------------------------------------------------
Within this environment, what strategies did you pursue in managing the Fund?
Evergreen Omega Fund is a growth fund that invests in companies of all sizes, or
market capitalizations. During most of the fiscal year, we emphasized large-cap
technology companies, and we have increased that emphasis since June. The
"Substitution of Technology for Human Labor" has been a major investment theme
in the Fund. Most of our technology investments were concentrated in the
electronics, software and telecommunications industries.
We invested in many large-cap market leaders such as Intel, Microsoft, EMC and
Cisco Systems. We also had some mid-cap technology holdings, such as Antec,
which makes set-top boxes for cable television systems; Veritas Software, an
industry leader in software for data management and data protection; and
Microchip Technology, a manufacturer of programmable chips.
Healthcare is another long-term investment theme in the Fund as we have tried to
take advantage of the "Aging of America" trend. Although the industry did not
perform well during the past twelve months, we have maintained reasonable
weighting in healthcare, between 12% and 15% of net assets. Some of the more
successful holdings included Millennium Pharmaceuticals, a biotechnology
company, and Forest Laboratories, a drug manufacturer. The industry's relatively
weak performance during the fiscal year was related to the national debate about
Medicare reform and government drug reimbursement policy. Healthcare stocks
should show improved performance as the industry's earnings growth begins to
look more attractive in an environment of slowing economic growth.
Broadcasting, entertainment and energy stocks were other successful areas of
investment in the past year. CBS, Time-Warner, Viacom and Univision
Communications contributed to the Fund's performance. Industry consolidation and
strong advertising trends have been the drivers of performance in this sector.
Our energy investments, primarily in the oil field service area, advanced
sharply when crude oil prices started to rise. Exploration should recover over
the next twelve months, which also should benefit our holdings of natural gas
stocks, Apache and Devon Energy.
Top 10 Holdings
-------------------------------
(as a percentage of net assets)
Tyco International Ltd. 3.5%
- ------------------------------------------------------------------
Microsoft Corp. 3.4%
- ------------------------------------------------------------------
EMC Corp. 3.3%
- ------------------------------------------------------------------
Intel Corp. 3.3%
- ------------------------------------------------------------------
General Electric Co. 2.8%
- ------------------------------------------------------------------
Sun Microsystems, Inc. 2.7%
- ------------------------------------------------------------------
Monsanto Co. 2.5%
- ------------------------------------------------------------------
Cisco Systems, Inc. 2.5%
- ------------------------------------------------------------------
Warner-Lambert Co. 2.3%
- ------------------------------------------------------------------
Apache Corp. 2.2%
- ------------------------------------------------------------------
18
<PAGE>
EVERGREEN
Omega Fund
Portfolio Manager Interview
What is your outlook?
The Federal Reserve Board has a great influence on stock market sentiment. The
Fed is working to sustain the longest-running economic recovery in the nation's
history. The economy has been growing steadily since 1982 and the stock market
has had strong uninterrupted performance since the early 90s. During this time,
the Federal Reserve has walked a tightrope, lowering rates when it wanted to
spur the economy, raising rates and tightening money supply when it wanted to
restrain growth and thwart inflation. The Federal Reserve's goal has been to
keep gross domestic product (GDP) growth in the 2 1/2% to 3% range, which it
considers ideal.
Right now, we are seeing a pickup in economic growth overseas, both in Asia and
in Europe. If this trend continues, we believe globally oriented companies
should continue to do well even if economic growth in the United States slows.
We are concerned, however, with the relative narrowness of the group of stocks
that has dominated market performance. Large-cap technology stocks and the
biggest companies in the S&P 500 have been the performance leaders. Over the
next twelve months, we anticipate moderate economic growth, moderate interest
rates and moderate inflation. If investors begin to believe, as we do, in
sustainable earnings growth, then the market should broaden beyond the current
"Nifty Fifty" company names and more stocks should participate in the market's
advance.
19
<PAGE>
EVERGREEN
Small Company Growth Fund
Fund at a Glance as of September 30, 1999
"We maintained a well diversified portfolio that we managed flexibly to shift
industry weightings and take advantage of opportunities that presented
themselves in different industry groups."
Portfolio
Management
----------
[PHOTO]
J. Gary Craven, CFA, CPA
Tenure: November 1996
CURRENT INVESTMENT STYLE/1/
[GRAPHIC]
Morningstar's Style Box is based on a portfolio date as of 9/30/1999.
The Equity Style Box placement is based on a fund's price-to-earnings and
price-to-book ratio relative to the S&P 500, as well as the size of the
companies in which it invests, or median market capitalization.
/1/Source: 1999 Morningstar, Inc.
/2/Past performance is no guarantee of future results. The investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than original cost. The performance of each class may vary
based on differences in loads and fees paid by the shareholders investing in
each class.
Historical performance shown for Classes A, C, and Y prior to their inception is
based on the performance of Class B, the original class offered. These
historical returns for Classes A and Y have been adjusted to eliminate the
effect of the higher 12b-1 fees applicable to Class B. The 12b-1 fees for Class
A, B and C are 0.25%, 1.00%, and 1.00%, respectively. Class Y does not pay a
12b-1 fee. If these fees had not been eliminated, returns would have been lower.
PERFORMANCE AND RETURNS/2/
Portfolio Inception Date: 9/11/1935 Class A Class B Class C Class Y
Class Inception Date 1/20/1998 9/11/1935 1/26/1998 1/26/1998
- --------------------------------------------------------------------------------
Average Annual Returns*
- --------------------------------------------------------------------------------
1 year with sales charge 32.99% 33.95% 37.65% n/a
- --------------------------------------------------------------------------------
1 year w/o sales charge 39.74% 38.95% 38.65% 40.01%
- --------------------------------------------------------------------------------
3 years 1.84% 2.15% 2.79% 3.79%
- --------------------------------------------------------------------------------
5 years 8.65% 8.73% 8.92% 10.00%
- --------------------------------------------------------------------------------
10 years 12.66% 12.51% 12.30% 13.50%
- --------------------------------------------------------------------------------
Since Portfolio Inception 9.99% 9.94% 9.83% 10.14%
- --------------------------------------------------------------------------------
Maximum Sales Charge 4.75% 5.00% 1.00% n/a
Front End CDSC CDSC
- --------------------------------------------------------------------------------
12-month capital gain distributions
per share $1.18 $1.18 $1.18 $1.18
- --------------------------------------------------------------------------------
*Adjusted for maximum applicable sales charge unless noted.
[GRAPH]
LONG TERM GROWTH
Russell 2000 Consumer Price Evergreen Small Co
Index - US Growth B
Sep-89 10,000 10,000 10,000
Sep-90 7,285 10,616 7,755
Sep-91 10,569 10,976 13,099
Sep-92 11,532 11,304 13,896
Sep-93 15,356 11,608 21,447
Sep-94 15,767 11,952 21,154
Sep-95 19,450 12,256 29,311
Sep-96 22,005 12,624 29,864
Sep-97 29,308 12,896 35,384
Sep-98 23,733 13,088 23,387
Sep-99 28,259 13,400 32,495
Comparison of a $10,000 investment in Evergreen Small Company Growth Fund, Class
B shares2, versus a similar investment in the Russell 2000 Index (Russell
2000) and the Consumer Price Index (CPI).
The Russell 2000 is an unmanaged market index which 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.
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.
20
<PAGE>
EVERGREEN
Small Company Growth Fund
Portfolio Manager Interview
How did the Fund perform?
For the twelve-month period ended September 30, 1999, the Evergreen Small
Company Growth Fund Class B shares had a total return of 38.95%. During the same
twelve-month period, the Russell 2000 Index, a commonly used benchmark for
smaller company stocks, had a return of 19.07%, while the median return of funds
in the new Mid-Cap Growth category was 43.84%, according to Lipper, Inc., an
independent monitor of mutual fund performance. These returns are before the
deduction of any applicable sales charges.
Portfolio
Characteristics
---------------
Total Net Assets $822,481,837
- --------------------------------------------------------------------------------
Number of Holdings 138
- --------------------------------------------------------------------------------
Beta 1.14
- --------------------------------------------------------------------------------
P/E Ratio 31.5x
- --------------------------------------------------------------------------------
How would you describe the investment environment and the factors affecting
performance?
The year began at the end of a strong downdraft in the small company stock
market, caused by fears of the possible effects of the Asian financial crisis
and the accompanying liquidity crisis. However, this downdraft was more the
result of perceptions than actual problems, and the market started to recover
after hitting its low point on October 8, 1998. In fact, the Fund's Class B
total return from that date through September 30, 1999 was 69.30%. The Fund
benefited from a powerful rally as investors began to focus on earnings and
growth opportunities, rather than on fears. We took advantage of opportunities
in many industries, especially among companies involved in telecommunications
equipment and internet infrastructure. During the fiscal year, we kept the Fund
over-weighted in technology industries. Technology stocks contributed more than
one-third of the Fund's total return.
What were your principal strategies in this environment?
We maintained a well diversified portfolio that we managed flexibly to shift
industry weightings and take advantage of opportunities that presented
themselves in different industry groups. At the same time, we emphasized
technology companies throughout the year. In the fall of 1998, for example, we
emphasized semi-conductor industries, while in the spring of 1999, we shifted to
internet-related industries. In the spring, we also increased our weightings in
cyclical industries (or industries that tend to prosper as the economy grows) as
it became apparent that the Asian economies were recovering and that economic
growth in the U.S. remained strong.
This summer, we allocated about 10% of the portfolio into energy and oil-related
investments, which experienced strong appreciation. More recently, we have
invested in opportunities in wireless telecommunications. We anticipate that
everyone will soon be able to access the internet, transfer data, and exchange
e-mail with hand-held equipment. The companies that will be enabling these
activities have excellent investment potential. We also have emphasized
companies involved in meeting the tremendous demand of corporations to
interface with their customers and suppliers on the internet.
Top 5 Industries
-------------------------------
(as a percentage of net assets)
Information Services & Technology 27.7%
- --------------------------------------------------------------------------------
Communication Systems & Services 7.9%
- --------------------------------------------------------------------------------
Healthcare Products & Services 6.4%
- --------------------------------------------------------------------------------
Electrical Equipment & Services 5.5%
- --------------------------------------------------------------------------------
Telecommunication Services & Equipment 5.5%
- --------------------------------------------------------------------------------
21
<PAGE>
EVERGREEN
Small Company Growth Fund
Portfolio Manager Interview
What were some of the industries and companies that helped performance?
It was clear to us very early that one of the surest ways to make money was to
invest in small, internet-related companies and then to bring them public
through initial public stock offerings. One of our most successful investments
is CMGI, Inc., a venture capital firm that invests in small, internet-related
companies, incubates them, and then brings them to the public market.
In the semi-conductor area, we had large holdings in two companies meeting the
almost insatiable demand for broadband services. Both PMC-Sierra and Conexant
Systems, Inc., were extremely successful investments.
From the cyclical industries, Roper Industries was the Fund's largest holding
for much of the fiscal year. This diversified manufacturer of industrial
controls and fluid-handling products performed very well. Another successful
cyclical company investment was BJ Services, which is involved in oil services.
Top 10 Holdings
-------------------------------
(as a percentage of net assets)
Roper Industries, Inc. 4.1%
- --------------------------------------------------------------------------------
McLeod USA, Inc., Cl. A 3.2%
- --------------------------------------------------------------------------------
Citrix Systems, Inc. 3.0%
- --------------------------------------------------------------------------------
JDS Uniphase Corp. 2.8%
- --------------------------------------------------------------------------------
Univision Communications, Inc., Cl. A 2.4%
- --------------------------------------------------------------------------------
PMC-Sierra, Inc. 2.1%
- --------------------------------------------------------------------------------
Conexant Systems, Inc. 2.0%
- --------------------------------------------------------------------------------
Navigant Consulting Co. 1.9%
- --------------------------------------------------------------------------------
BJ Services Co., Inc. 1.8%
- --------------------------------------------------------------------------------
Devry, Inc. 1.7%
- --------------------------------------------------------------------------------
Funds that invest in stocks of small companies, also called small-cap stocks,
involve certain risks and, therefore, may not be appropriate for all investors.
Although they may offer the potential for greater long-term returns, they also
may experience greater price volatility due to their limited focus on a
particular industry, market, product, or service, or because they invest in
smaller, less established companies.
What is your outlook for small- and mid-cap companies in light of the strong
performance during the past year?
We think the prospects for smaller company stocks are the best they have been
for several years. After two and one-half years of under performance relative to
large company stocks, small and mid-sized company stocks finally held their own
in 1999. These stocks performed well because of the strong earnings growth of
their companies. We anticipate this stock price performance will attract more
capital to the market, which can have a significant impact. For perspective, the
market cap of Microsoft is $490 billion. This is more than the combined market
capitalizations of 1,000 small-cap stocks added together. As a result, small
shifts in investment dollars into smaller company stocks can have a big impact
on stock prices.
We believe the abundance of new and emerging opportunities justifies an
extremely positive earnings outlook for smaller growth companies. Even after the
strong performance in 1999, most small company stocks remained inexpensive when
compared with large company stocks, using such standards as price/earnings
ratios. As a result, we think there will continue to be excellent investment
opportunities.
22
<PAGE>
EVERGREEN
Stock Selector Fund
Fund at a Glance as of September 30, 1999
"During the twelve months, the Fund was broadly diversified among industry
sectors. Technology stocks were among the most important contributors to
performance."
Portfolio
Management
----------
[PHOTO] [PHOTO]
Timothy M. Stevenson, CFA, CMT Eric M.Teal
Tenure: October 1999 Tenure: October 1999
CURRENT INVESTMENT STYLE/1/
[GRAPHIC]
Morningstar's Style Box is based on a portfolio date as of 9/30/1999.
The Equity Style Box placement is based on a fund's price-to-earnings and
price-to-book ratio relative to the S&P 500, as well as the size of the
companies in which it invests, or median market capitalization.
/1/Source: 1999 Morningstar, Inc.
/2/Past performance is no guarantee of future results. The investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than original cost. The performance of each class may vary
based on differences in loads, fees and expenses paid by the shareholders
investing in each class.
Historical performance shown for Classes B, C, and Y prior to their inception is
based on the performance of Class A, the original class offered. These
historical returns for Classes B, C, and Y have not been adjusted to reflect the
effect of each Class' 12b-1 fees. These fees for Class A, B and C are 0.25%,
1.00% and 1.00% respectively. Class Y does not pay a 12b-1 fee. If these fees
had been reflected, returns for Classes B and C would have been lower while
returns for Class Y would have been higher.
PERFORMANCE AND RETURNS/2/
Portfolio Inception Date: 2/28/1990 Class A Class B Class C Class Y
Class Inception Date 2/28/1990 11/7/1997 6/30/1999 2/21/1995
- --------------------------------------------------------------------------------
Average Annual Returns*
- --------------------------------------------------------------------------------
1 year with sales charge 28.76% 29.18% 33.88% n/a
- --------------------------------------------------------------------------------
1 year w/o sales charge 35.15% 34.18% 34.88% 35.49%
- --------------------------------------------------------------------------------
3 years 17.80% 15.01% 19.64% 20.00%
- --------------------------------------------------------------------------------
5 years 20.01% 18.55% 21.13% 21.41%
- --------------------------------------------------------------------------------
Since Portfolio Inception 16.43% 15.80% 17.00% 17.14%
- --------------------------------------------------------------------------------
Maximum Sales Charge 4.75% 5.00% 1.00% n/a
- --------------------------------------------------------------------------------
Front End CDSC CDSC
12-month dividends per share $0.01 -- -- $0.02
- --------------------------------------------------------------------------------
12-month capital gain distributions
per share $4.11 $4.11 -- $4.11
- --------------------------------------------------------------------------------
*Adjusted for maximum applicable sales charge unless noted.
LONG TERM GROWTH
S & P 500 Consumer Price Evergreen Stock
Composite Index - US Selector A
Feb-90 10,000 10,000 9,452
Sep-90 9,404 10,367 8,714
Sep-91 12,330 10,719 12,471
Sep-92 13,688 11,039 13,918
Sep-93 15,462 11,336 15,755
Sep-94 16,033 11,672 16,300
Sep-95 20,799 11,969 20,362
Sep-96 25,030 12,328 24,818
Sep-97 35,147 12,594 35,698
Sep-98 38,288 12,781 31,490
Sep-99 48,423 13,086 42,581
Comparison of a $10,000 investment in Evergreen Stock Selector Fund Class A
shares2, versus a similar investment in the Standard & Poor's 500 Index (S&P
500) and the Consumer Price Index (CPI).
The S&P 500 is an unmanaged market index which 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.
23
<PAGE>
EVERGREEN
Stock Selector Fund
Portfolio Manager Interview
How did the Fund perform?
The Fund produced strong returns over the fiscal year, significantly outpacing
the performance of its benchmark, the S&P 500 Stock Index. For the twelve-month
period ended September 30, 1999, the Fund's Class A shares produced a total
return of 35.15%. For the same period, the S&P 500 Stock Index returned 27.79%.
All share classes outperformed more than 80% of the funds in the Lipper
Multi-Cap Core Funds Category. The returns are before the deduction of any
applicable sales charges.
Portfolio
Characteristics
---------------
Total Net Assets $500,311,710
- --------------------------------------------------------------------------------
Number of Holdings 95
- --------------------------------------------------------------------------------
P/E Ratio 21.6x
- --------------------------------------------------------------------------------
Beta 1.14
- --------------------------------------------------------------------------------
What was the investment environment like during the twelve months?
The fiscal year started out on a strong note as recovery in Asian markets,
Federal Reserve Board interest-rate cuts and strong corporate profits helped
boost the stock market to new highs. Initially, the stock market's breadth (the
number of stocks participating in the market's advance) was narrow, with most
gains coming from large-cap and technology stocks. As the year progressed,
however, the market broadened, and stocks across the board (small-cap, mid-cap,
large-cap, growth and value) participated in the market's upward momentum.
Investors welcomed this "all inclusive" trend, because for more than a year, the
performance of most stocks had trailed that of large-cap and technology stocks.
Toward the end of the period, market sentiment changed considerably, as
investors became concerned about a variety of issues. Investors worried about a
flare-up of inflation, the possibility of higher interest rates, the prospect of
weaker corporate earnings and the declining value of the dollar in relation to
the yen. The uncertainty in the market led to broad fluctuations in stock
prices. Once again, technology stocks became market leaders, and most small and
mid-cap stocks gave up the gains they had made earlier. Even though inflation
remained at a moderate level, the Federal Reserve Board took a pre-emptive
stance against inflation. From June through August 1999, the Federal Reserve
raised interest rates twice. As the period drew to a close, stocks traded in a
broad range, as uncertainty in the market continued to prevail.
Top 5 Industries
-------------------------------
(as a percentage of net assets)
Information Services & Technology 16.0%
- --------------------------------------------------------------------------------
Finance & Insurance 10.2%
- --------------------------------------------------------------------------------
Communication Systems & Services 9.2%
- --------------------------------------------------------------------------------
Food & Beverage Products 8.8%
- --------------------------------------------------------------------------------
Healthcare Products & Services 7.8%
- --------------------------------------------------------------------------------
24
<PAGE>
EVERGREEN
Stock Selector Fund
Portfolio Manager Interview
What led to the Fund's strong performance?
During the twelve months, the Fund was broadly diversified among industry
sectors. Technology, communications, basic materials, capital goods, consumer
cyclicals, energy, financial and healthcare were some of the areas in which we
invested. Technology stocks were among the most important contributors to
performance. In this area we emphasized software companies and businesses that
we believed would benefit from some of the significant trends developing around
the internet, such as electronic commerce and on-line advertising. Some of the
Fund's biggest holdings in the technology area included well known names, such
as America Online, Microsoft, and Apple Computer. Energy companies, which
benefited from an increase in oil prices, were also strong performers, as were
consumer cyclical stocks, led by specialty retailer Best Buy. Strong demand for
new products helped boost Best Buy's performance.
Top 10 Holdings
-------------------------------
(as a percentage of net assets)
Microsoft Corp. 4.5%
- --------------------------------------------------------------------------------
Texas Instruments, Inc. 4.2%
- --------------------------------------------------------------------------------
Apple Computer 4.0%
- --------------------------------------------------------------------------------
MCI WorldCom, Inc. 3.7%
- --------------------------------------------------------------------------------
Lucent Technologies, Inc. 3.6%
- --------------------------------------------------------------------------------
General Electric Co. 3.5%
- --------------------------------------------------------------------------------
America Online, Inc. 3.1%
- --------------------------------------------------------------------------------
GTE Corp. 2.7%
- --------------------------------------------------------------------------------
MediaOne Group, Inc. 2.6%
- --------------------------------------------------------------------------------
EMC Corp. 2.4%
- --------------------------------------------------------------------------------
What areas did not meet your expectations?
The Fund's over-weighted position in retail stocks and its under-exposure to
telephone companies detracted from performance. Also, the Fund had a relatively
big commitment to property and casualty insurance companies. Stock prices on
such companies declined significantly, in the wake of Hurricane Floyd's
destructive force. Financial stocks also had a tough time, because of
uncertainty over the direction of interest rates.
What is your outlook?
Our long-term outlook for the stock market and for the Fund is positive. In the
short term, however, we believe the market may be hampered by the uncertainty
surrounding the direction of interest rates and inflation. We believe the
underpinnings of the economy are strong and this bodes well for the long-term
prospects of stocks. Should the market experience a significant downturn, we
would view that as an ordinary part of the investment process and likely use it
as an opportunity to purchase more stocks at attractive prices. Going forward
we will maintain our strategy of seeking the best stocks we can find in a
variety of economic sectors and industries across the market capitalization
spectrum.
25
<PAGE>
EVERGREEN
Strategic Growth Fund
Fund at a Glance as of September 30, 1999
"We maintained our focus on large-cap growth companies, while emphasizing
leaders in the technology, information services and communications industries."
Portfolio
Management
----------
[PHOTO]
Maureen E. Cullinane, CFA
Tenure: April 1995
CURRENT INVESTMENT STYLE/1/
[GRAPHIC]
Morningstar's Style Box is based on a portfolio date as of 9/30/1999.
The Equity Style Box placement is based on a fund's price-to-earnings and
price-to-book ratio relative to the S&P 500, as well as the size of the
companies in which it invests, or median market capitalization.
/1/Source: 1999 Morningstar, Inc.
/2/Past performance is no guarantee of future results. The investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than original cost. The performance of each class may vary
based on differences in loads, fees and expenses paid by the shareholders
investing in each class.
Historical performance shown for Classes A, C, and Y prior to their inception is
based on the performance of Class B, the original class offered. These
historical returns for Classes A and Y have been adjusted to eliminate the
effect of the higher 12b-1 fees applicable to Class B. The 12b-1 fees for Class
A, B and C are 0.25%, 1.00% and 1.00%, respectively. Class Y does not pay a
12b-1 fee. If these fees had not been eliminated, returns would have been lower.
PERFORMANCE AND RETURNS/2/
Portfolio Inception Date: 9/11/1935 Class A Class B Class C Class Y
Class Inception Date 1/20/1998 9/11/1935 1/22/1998 6/30/1999
- --------------------------------------------------------------------------------
Average Annual Returns*
- --------------------------------------------------------------------------------
1 year with sales charge 24.00% 24.15% 28.15% n/a
- --------------------------------------------------------------------------------
1 year w/o sales charge 30.15% 29.15% 29.15% 30.48%
- --------------------------------------------------------------------------------
3 years 22.09% 22.85% 23.19% 24.40%
- --------------------------------------------------------------------------------
5 years 19.12% 19.42% 19.42% 20.60%
- --------------------------------------------------------------------------------
10 years 14.87% 14.88% 14.50% 15.72%
- --------------------------------------------------------------------------------
Since Portfolio Inception 11.76% 11.71% 11.60% 11.91%
- --------------------------------------------------------------------------------
Maximum Sales Charge 4.75% 5.00% 1.00% n/a
Front-End CDSC CDSC
- --------------------------------------------------------------------------------
12-month capital gain distributions
per share $1.34 $1.34 $1.34 --
- --------------------------------------------------------------------------------
* Adjusted for maximum applicable sales charge unless noted.
[GRAPH]
LONG TERM GROWTH
S & P 500 Consumer Price Evergreen Strategic Russell 1000
Composite Index - US Growth B Growth
Sep-89 10,000 10,000 10,000 10,000
Sep-90 9,060 10,616 8,762 9,231
Sep-91 11,879 10,976 11,956 12,800
Sep-92 13,188 11,304 12,639 14,192
Sep-93 14,897 11,608 16,289 15,040
Sep-94 15,447 11,952 16,354 15,918
Sep-95 20,038 12,256 19,433 21,041
Sep-96 24,115 12,624 21,254 25,544
Sep-97 33,861 12,896 29,826 34,816
Sep-98 36,888 13,088 31,008 38,680
Sep-99 46,652 13,400 40,048 52,161
Comparison of a $10,000 investment in Evergreen Strategic Growth Fund Class B
shares/2/, versus a similar investment in the Standard & Poor's 500 Index (S&P
500), the Russell 1000 Growth Index (Russell 1000) and the Consumer Price Index
(CPI).
The S&P 500 and the Russell 1000 are unmanaged market indices which 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.
26
<PAGE>
EVERGREEN
Strategic Growth Fund
Portfolio Manager Interview
How did the Fund perform?
For the twelve-month period ended September 30, 1999, the Evergreen Strategic
Growth Fund Class B shares had a total return of 29.15%. During the same
twelve-month period, the Russell 1000 Growth Index, a benchmark for growth stock
investing, returned 34.85% and the median return in the new Large-Cap Growth
Fund category was 34.94%, according to Lipper Inc., an independent monitor of
mutual fund performance. These returns are before the deduction of any
applicable sales charges.
Portfolio
Characteristics
---------------
Total Net Assets $967,655,287
- --------------------------------------------------------------------------------
Number of Holdings 58
- --------------------------------------------------------------------------------
Beta 1.04
- --------------------------------------------------------------------------------
P/E Ratio 36.6x
- --------------------------------------------------------------------------------
What was the investment environment like during the twelve-month period?
The first six months was an excellent period for growth stock investing. During
the second half of the fiscal year, however, shifting investor sentiment and
growing fears about higher interest rates tended to restrain performance.
Over the full twelve months, we saw tremendous swings in the market. Performance
during the first three months of the fiscal year--the last three months of
1998--was led by large-company growth stocks, particularly in the technology
industries. During the subsequent six months--January through June 1998--we saw
steadily increasing interest in mid-cap and small-cap companies and in cyclical
stocks, which tend to do well when the economy is growing. In the final quarter
of the fiscal year, however, sentiment turned back in favor of the larger
company stocks.
In the last few months of the fiscal year, investors increasingly were concerned
that the strong economic growth earlier in the year would lead to inflation and
encourage the Federal Reserve Board to raise short-term rates as a pre-emptive
step to slow the economy and prevent an increase in inflation. The Federal
Reserve did raise short-term rates twice during the period and warned it could
raise rates again. The fear that the Federal Reserve might raise short-term
rates further has been an overhang on the market recently. Investors worried
that if interest rate increases did slow economic growth, corporate earnings
growth also would slow.
Looking at the full year, leadership in the market was concentrated in a
relatively narrow group of stocks, predominantly technology stocks, with a
handful of performers in other industries. Technology was the only sector that
did well for the entire year. Investors recognized that it was the technology
revolution that has allowed our economy to enjoy sustained growth with very
little inflation. When very few businesses have the power to raise their prices
significantly, companies found ways to absorb manufacturing and raw materials
costs. Technology has been the tool.
Top 5 Industries
----------------
(as a percentage of net assets)
Information Services & Technology 27.6%
- --------------------------------------------------------------------------------
Printing, Publishing, Broadcasting
& Entertainment 8.6%
- --------------------------------------------------------------------------------
Pharmaceuticals 7.0%
- --------------------------------------------------------------------------------
Communication Systems & Services 6.3%
- --------------------------------------------------------------------------------
Retailing & Wholesale 6.0%
- --------------------------------------------------------------------------------
27
<PAGE>
EVERGREEN
Strategic Growth Fund
Portfolio Manager Interview
Within this environment, what strategies did you pursue in managing the Fund?
Evergreen Strategic Growth Fund is a well-diversified growth fund that typically
emphasizes large-cap growth companies. We maintained that focus, while
emphasizing leaders in the technology, information services and communications
industries. We had major holdings in companies such as IBM, Intel, Microsoft,
EMC and Cisco Systems.
In the telecommunications area, we had significant holdings in two leading
companies in wireless communications equipment, Motorola and Nokia. We also had
limited exposure to some mid-cap companies, such as Veritas Software, which is a
market leader in providing software for data management and data protection
systems.
Broadcasting, entertainment and energy stocks were other successful areas of
investment in the past year. CBS, Clear Channel Communications, Time-Warner and
Viacom contributed to the Fund's performance. Industry consolidation and strong
advertising trends have been the drivers to performance of this sector. Our
energy investments, primarily in the oil field service area, advanced sharply
when crude oil prices started to rise. Exploration should recover over the next
twelve months, which should benefit our holdings of BJ Services, Diamond
Offshore and Apache.
Healthcare was a drag on performance for much of the past year. Despite stable
earnings growth, pharmaceutical stocks suffered from the uncertainty generated
by the national debate about Medicare reform and government drug reimbursement
policy. We believe healthcare stocks should show improved performance next year
as the industry's earnings growth begins to look more attractive in an
environment of slowing economic growth.
Top 10 Holdings
-------------------------------
(as a percentage of net assets)
Microsoft Corp. 4.5%
- --------------------------------------------------------------------------------
Intel Corp. 4.1%
- --------------------------------------------------------------------------------
Tyco International Ltd. 3.7%
- --------------------------------------------------------------------------------
General Electric Co. 3.7%
- --------------------------------------------------------------------------------
Cisco Systems, Inc. 2.8%
- --------------------------------------------------------------------------------
International Business Machines Corp. 2.5%
- --------------------------------------------------------------------------------
EMC Corp. 2.4%
- --------------------------------------------------------------------------------
Motorola, Inc. 2.4%
- --------------------------------------------------------------------------------
Sun Microsystems, Inc. 2.3%
- --------------------------------------------------------------------------------
Warner-Lambert Co. 2.2%
- --------------------------------------------------------------------------------
28
<PAGE>
EVERGREEN
Strategic Growth Fund
Portfolio Manager Interview
What is your outlook?
The Federal Reserve Board has a great influence on stock market sentiment. The
Federal Reserve working to sustain the longest-running economic recovery in
the nation's history. The economy has been growing steadily since 1982 and the
stock market has had strong uninterrupted performance since the early 1990s.
During this time, the Federal Reserve has walked a tightrope, lowering rates
when it wanted to spur the economy, raising rates and tightening money supply
when it wanted to restrain growth and thwart inflation. The Federal Reserve's
goal has been to keep gross domestic product (GDP) growth in the 2 1/2% to 3%
range, which it considers ideal.
Right now, we are seeing a pickup in economic growth overseas, both in Asia and
in Europe. If this trend continues, we believe globally oriented companies
should continue to do well even if economic growth in the United States slows.
We are concerned, however, with the relative narrowness of the group of stocks
that has dominated market performance. Large-cap technology stocks and the
biggest companies in the S&P 500 have been the performance leaders. Over the
next twelve months, we anticipate moderate economic growth, moderate interest
rates and moderate inflation. If investors begin to believe, as we do, in
sustainable earnings growth, then the market should broaden beyond the current
"Nifty Fifty" company names and more stocks should participate in the market's
advance.
29
<PAGE>
EVERGREEN
Tax Strategic Equity Fund
Fund at a Glance as of September 30, 1999
"While we buy companies with good growth prospects, we are interested in buying
these stocks at reasonable prices."
Portfolio Management
- --------------------------------------------------------------------------------
[PHOTO] [PHOTO]
Jean C. Ledford, Richard S. Welsh
CFA
Tenure: August 1999 Tenure: August 1999
/1/Past performance is no guarantee of future results. The investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than original cost. The performance of each class may vary
based on differences in loads, fees and expenses paid by the shareholders
investing in each class.
Historical performance shown for Classes A, B, and C prior to their inception is
based on the performance of Class Y, the original class offered. These
historical returns for Classes A, B, and C have not been adjusted to reflect the
effect of each class' 12b-1 fees. These fees for Class A, B and C are 0.25%,
1.00%, 1.00%, respectively. Class Y does not pay a 12b-1 fee. If these fees had
been reflected, returns would have been lower.
PERFORMANCE AND RETURNS/1/
Portfolio Inception Date: 9/1/1998 Class A Class B Class C Class Y
Class Inception Date 9/4/1998 10/14/1998 11/4/1998 9/1/1998
- --------------------------------------------------------------------------------
Average Annual Returns*
- --------------------------------------------------------------------------------
1 year with sales charge 25.44% 26.03% 30.22% n/a
- --------------------------------------------------------------------------------
1 year w/o sales charge 31.69% 31.03% 31.22% 32.34%
- --------------------------------------------------------------------------------
Since Portfolio Inception 30.75% 32.54% 36.35% 37.43%
- --------------------------------------------------------------------------------
Maximum Sales Charge 4.75% 5.00% 1.00% n/a
Front End CDSC CDSC
- --------------------------------------------------------------------------------
12-month dividends per share $0.02 $0.02 $0.02 $0.02
- --------------------------------------------------------------------------------
*Adjusted for maximum applicable sales charge unless noted.
LONG TERM GROWTH
[GRAPH]
S & P 500 Consumer Price Evergreen Tax Strat
Composite Index - US Equity A
Sep-98 10,000 10,000 9,526
Oct-98 10,814 10,024 11,002
Nov-98 11,464 10,024 11,771
Dec-98 12,121 10,018 12,191
Jan-99 12,618 10,043 11,869
Feb-99 12,210 10,055 11,646
Mar-99 12,684 10,086 12,182
Apr-99 13,165 10,159 12,970
May-99 12,836 10,159 12,925
Jun-99 13,534 10,159 13,556
Jul-99 13,100 10,189 13,055
Aug-99 13,019 10,214 12,580
Sep-99 12,647 10,238 12,544
Comparison of a $10,000 investment in Evergreen Strategic Equity Fund, Class A
shares/1/, versus a similar investment in the Standard & Poor's 500 Index (S&P
500) and the Consumer Price Index (CPI).
The S&P 500 is an unmanaged market index which 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.
30
<PAGE>
EVERGREEN
Tax Strategic Equity Fund
Portfolio Manager Interview
How did the Evergreen Tax Strategic Equity Fund perform?
The Tax Strategic Equity Fund's Class A shares had a total return of 31.69% for
the twelve-month period ended September 30, 1999. During the same twelve-month
period, the Standard & Poor's 500 Index had a return of 27.80% while the median
return of funds in the new Multi-Cap Value Fund category was 15.17%, according
to Lipper Inc., an independent monitor of mutual fund performance. Fund
performance is before deduction of any applicable sales charges.
Portfolio
Characteristics
---------------
Total Net Assets $ 17,553,180
- -------------------------------------------------------------------------------
Number of Holdings 77
- -------------------------------------------------------------------------------
P/E Ratio 49.9x
- -------------------------------------------------------------------------------
Tell us about the new portfolio management team that took responsibility for the
Fund in August.
We have a five-member team with a depth of investment experience--almost 50
years total. The lead manager is Jean Ledford, an investment professional with
more than 19 years' experience. For the previous 2 1/2 years, she was the lead
manager of American Century Select Fund. Before joining American Century
Investments, she was investment director of the State of Wisconsin Investment
Board. Three of the remaining four members of the team also came from American
Century Investments. They include Richard Welsh, co-portfolio manager, and
analysts Rick Petran and John Anthony. The fifth member of the team is Caroline
Yu, an analyst who had been at Evergreen Asset Management Corp.
Jean Ledford also is President and Chief Executive Officer of Evergreen Asset
Management Corp. She was appointed to that position following the retirement of
Stephen A. Lieber in August.
How would you describe your investment style?
One of the hallmarks of our team goals is to manage funds that produce
attractive Sharpe Ratios, which measure the amount of risk taken for the returns
obtained. Basically, we seek strong performance for less risk. We build
portfolios from the bottom up, emphasizing the selection of individual stocks of
attractive companies with opportunities to improve their earnings. Our style
allows us to find securities in a wide variety of industries and our portfolios
are well diversified. We are not traditional growth or core buyers in the sense
that we are not looking for any absolute figures in terms of earnings growth
rates or price-to-growth rates. While we buy companies with good growth
prospects, we are interested in buying these stocks at reasonable prices.
One consequence of this broader diversification is that we expect the volatility
or variability of performance will be reduced when compared to the S&P 500. We
pick stocks one at a time, and our concentrations in industries and sectors will
result from that stock-picking discipline. We are bottom-up stock pickers, not
top-down investors who choose industries based on economic forecasts.
The key to our style is the search for changes on the margin that can increase a
company's earnings growth rate. We look for factors such as a new management
team, a restructuring, a new product or geographical expansion. As we construct
a portfolio from our stock picks, we are careful to determine how much risk we
are taking.
31
<PAGE>
EVERGREEN
Tax Strategic Equity Fund
Portfolio Manager Interview
Our sell discipline is just the reverse of our buy discipline. When a stock
stops exhibiting an upward drift or momentum in earnings, we begin the process
of lightening our position. We look not just at absolute earnings trends, but
also at events on the margin that could affect earnings trends, such as the loss
of a key executive, the failure of a new product or a botched restructuring.
Top 5 Industries
----------------
(as a percentage of net assets)
Information Services & Technology 14.3%
- -------------------------------------------------------------------------------
Finance & Insurance 9.3%
- -------------------------------------------------------------------------------
Healthcare Products & Services 7.6%
- -------------------------------------------------------------------------------
Retailing & Wholesale 6.9%
- -------------------------------------------------------------------------------
Electrical Equipment & Services 6.6%
- -------------------------------------------------------------------------------
What are some of the changes you are making as you implement your strategy in
the Tax Strategic Equity Fund?
We are proceeding very cautiously, consistent with the Fund's objective of
limiting the tax consequences of investment decisions. We expect the Fund will
continue to emphasize large company holdings. We plan to increase the number of
technology-related companies and reduce the number of finance-related companies,
and provide greater overall diversification among industries and sectors.
While there may be a gradual migration in the portfolio, we stress that we will
be very conscious of the capital gains implications in the sales of any
securities. We want to avoid creating unnecessary capital gains tax obligations
for shareholders.
Top 10 Holdings
---------------
(as a percentage of net assets)
International Business Machines Corp. 4.1%
- -------------------------------------------------------------------------------
Microsoft Corp. 3.9%
- -------------------------------------------------------------------------------
Global Crossing Ltd. 3.4%
- -------------------------------------------------------------------------------
General Electric Co. 3.0%
- -------------------------------------------------------------------------------
Williams Sonoma, Inc. 2.8%
- -------------------------------------------------------------------------------
Meade Instruments Corp. 2.7%
- -------------------------------------------------------------------------------
Intel Corp. 2.3%
- -------------------------------------------------------------------------------
Emerson Electric Co. 2.2%
- -------------------------------------------------------------------------------
Lucent Technologies, Inc. 2.0%
- -------------------------------------------------------------------------------
Cisco Systems, Inc. 2.0%
- -------------------------------------------------------------------------------
What is your outlook?
We believe that by increasing the overall diversification of the portfolio, we
have given the Fund the ability to get through short-term market volatility more
smoothly than it has in the past.
At this point, most investors are wrestling with the question of whether we are
witnessing the start of a strong upturn in inflation, versus the low pace of
inflation of the past several years. When inflationary pressures start to
emerge, stocks in industries such as basic materials, energy and technology
start to outperform stocks in other industries. When there is very little
inflation, we see relatively stronger performance in the traditional areas such
as healthcare and the financials.
32
<PAGE>
[CAPTION]
EVERGREEN
Aggressive Growth Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended September 30,
------------------------------------------------------ Year Ended
1999 # 1998 # 1997 # 1996 1995 (a)(b) October 31, 1994 (a) #
<S> <C> <C> <C> <C> <C> <C>
CLASS A
Net asset value,
beginning of period $ 21.26 $ 23.48 $ 21.04 $ 17.37 $ 13.85 $ 14.44
-------- -------- -------- ------- ------- -------
Income from investment
operations
Net investment loss (0.22) (0.25) (0.21) (0.15) (0.16) (0.13)
Net realized and
unrealized gains or
losses on securities 7.46 (1.12) 2.65 4.46 3.68 (0.22)
-------- -------- -------- ------- ------- -------
Total from investment
operations 7.24 (1.37) 2.44 4.31 3.52 (0.35)
-------- -------- -------- ------- ------- -------
Distributions to
shareholders from
Net realized gains (2.63) (0.85) 0 (0.64) 0 (0.24)
-------- -------- -------- ------- ------- -------
Total distributions to
shareholders (2.63) (0.85) 0 (0.64) 0 (0.24)
-------- -------- -------- ------- ------- -------
Net asset value, end of
period $ 25.87 $ 21.26 $ 23.48 $ 21.04 $ 17.37 $ 13.85
-------- -------- -------- ------- ------- -------
Total return* 36.92% (5.93%) 11.60% 25.62% 25.42% (2.42%)
Ratios and supplemental
data
Net assets, end of
period (thousands) $166,524 $137,776 $173,982 $96,608 $70,858 $64,635
Ratios to average net
assets
Expenses** 1.18% 1.33% 1.26% 1.22% 1.47%+ 1.25%
Net investment income (0.92%) (1.14%) (1.05%) (0.86%) (1.12%)+ (0.92%)
Portfolio turnover rate 86% 22% 56% 33% 31% 59%
</TABLE>
<TABLE>
<CAPTION>
Year Ended September 30,
------------------------------------------------
1999 # 1998 # 1997 # 1996 1995 (c)
<S> <C> <C> <C> <C> <C>
CLASS B
Net asset value, beginning
of period $ 20.78 $ 23.18 $ 20.89 $ 17.35 $15.82
------- ------- ------- ------- ------
Income from investment
operations
Net investment loss (0.40) (0.41) (0.37) (0.16) (0.03)
Net realized and unrealized
gains or losses on
securities 7.29 (1.14) 2.66 4.34 1.56
------- ------- ------- ------- ------
Total from investment
operations 6.89 (1.55) 2.29 4.18 1.53
------- ------- ------- ------- ------
Distributions to
shareholders from
Net realized gains (2.63) (0.85) 0 (0.64) 0
------- ------- ------- ------- ------
Total distributions to
shareholders (2.63) (0.85) 0 (0.64) 0
------- ------- ------- ------- ------
Net asset value, end of
period $ 25.04 $ 20.78 $ 23.18 $ 20.89 $17.35
------- ------- ------- ------- ------
Total return* 36.00% (6.82%) 10.96% 24.88% 9.67%
Ratios and supplemental
data
Net assets, end of period
(thousands) $56,466 $36,301 $41,167 $21,644 $2,858
Ratios to average net
assets
Expenses** 1.93% 2.08% 2.02% 1.98% 2.09%+
Net investment income (1.67%) (1.88%) (1.80%) (1.60%) (1.71%)+
Portfolio turnover rate 86% 22% 56% 33% 31%
</TABLE>
(a) Effective June 30, 1995, Evergreen Aggressive Growth Fund, a new series of
Evergreen Equity Trust, acquired substantially all of the net assets of ABT
Emerging Growth Fund. ABT Emerging Growth Fund, which had a fiscal year
that ended on October 31 was the accounting survivor in the combination.
Accordingly, the information above includes the result of operations of ABT
Emerging Growth Fund prior to June 30, 1995.
(b) For the eleven months ended September 30, 1995. The Fund changed its fiscal
year end from October 31 to September 30, effective September 30, 1995.
(c) For the period from July 7, 1995 (commencement of class operations) to Sep-
tember 30, 1995.
* Excluding applicable sales charges.
** Ratio of expenses to average net assets includes fee waivers and excludes
fee credits.
+ Annualized.
# Net investment income is based on average shares outstanding during the pe-
riod.
See Combined Notes to Financial Statements.
33
<PAGE>
EVERGREEN
Aggressive Growth Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended September 30,
--------------------------------------------
1999 # 1998 # 1997 # 1996 1995 (a)
<S> <C> <C> <C> <C> <C>
CLASS C
Net asset value, beginning of
period $20.75 $23.16 $20.88 $17.31 $16.42
------ ------ ------ ------ ------
Income from investment
operations
Net investment loss (0.39) (0.41) (0.36) (0.15) (0.01)
Net realized and unrealized
gains or losses on securities 7.25 (1.15) 2.64 4.36 0.90
------ ------ ------ ------ ------
Total from investment
operations 6.86 (1.56) 2.28 4.21 0.89
------ ------ ------ ------ ------
Distributions to shareholders
from
Net realized gains (2.63) (0.85) 0 (0.64) 0
------ ------ ------ ------ ------
Total distributions to
shareholders (2.63) (0.85) 0 (0.64) 0
------ ------ ------ ------ ------
Net asset value, end of period $24.98 $20.75 $23.16 $20.88 $17.31
------ ------ ------ ------ ------
Total return* 35.90% (6.87%) 10.92% 25.11% 5.42%
Ratios and supplemental data
Net assets, end of period
(thousands) $4,685 $2,570 $3,992 $ 991 $ 416
Ratios to average net assets
Expenses** 1.92% 2.08% 2.02% 1.96% 2.09%+
Net investment income (1.67%) (1.88%) (1.80%) (1.57%) (1.51%)+
Portfolio turnover rate 86% 22% 56% 33% 31%
</TABLE>
<TABLE>
<CAPTION>
Year Ended September 30,
------------------------------------------------
1999 # 1998 # 1997 # 1996 1995 (b)
<S> <C> <C> <C> <C> <C>
CLASS Y
Net asset value, beginning
of period $ 21.46 $ 23.57 $ 21.09 $ 17.38 $15.79
------- ------- ------- ------- ------
Income from investment
operations
Net investment loss (0.17) (0.20) (0.17) (0.06) (0.01)
Net realized and unrealized
gains or losses on
securities 7.57 (1.06) 2.65 4.41 1.60
------- ------- ------- ------- ------
Total from investment
operations 7.40 (1.26) 2.48 4.35 1.59
------- ------- ------- ------- ------
Distributions to
shareholders from
Net realized gains (2.63) (0.85) 0 (0.64) 0
------- ------- ------- ------- ------
Total distributions to
shareholders (2.63) (0.85) 0 (0.64) 0
------- ------- ------- ------- ------
Net asset value, end of
period $ 26.23 $ 21.46 $ 23.57 $ 21.09 $17.38
------- ------- ------- ------- ------
Total return 37.36% (5.43%) 11.76% 25.84% 10.07%
Ratios and supplemental
data
Net assets, end of period
(thousands) $28,867 $28,314 $44,384 $25,918 $1,889
Ratios to average net
assets
Expenses** 0.93% 1.08% 1.01% 0.97% 1.08%+
Net investment income (0.67%) (0.89%) (0.78%) (0.60%) (0.71%)+
Portfolio turnover rate 86% 22% 56% 33% 31%
</TABLE>
(a) For the period from August 3, 1995 (commencement of class operations) to
September 30, 1995.
(b) For the period from July 11, 1995 (commencement of class operations) to
September 30, 1995.
* Excluding applicable sales charges.
** Ratio of expenses to average net assets includes fee waivers and excludes
fee credits.
+ Annualized.
# Net investment income is based on average shares outstanding during the
period.
See Combined Notes to Financial Statements.
34
<PAGE>
EVERGREEN
Evergreen Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended September 30,
--------------------------------------------
1999 # 1998 # 1997 # 1996 1995 (a)
<S> <C> <C> <C> <C> <C>
CLASS A
Net asset value, beginning of
period $21.11 $22.96 $17.64 $15.55 $11.97
------ ------ ------ ------ ------
Income from investment
operations
Net investment income 0.02 0.06 0.11 0.12 0.01
Net realized and unrealized
gains or losses on securities 3.22 (1.31) 5.71 2.61 3.57
------ ------ ------ ------ ------
Total from investment
operations 3.24 (1.25) 5.82 2.73 3.58
------ ------ ------ ------ ------
Distributions to shareholders
from
Net investment income (0.04) (0.10) (0.09) (0.06) 0
Net realized gains (0.07) (0.50) (0.41) (0.58) 0
------ ------ ------ ------ ------
Total distributions to
shareholders (0.11) (0.60) (0.50) (0.64) 0
------ ------ ------ ------ ------
Net asset value, end of period $24.24 $21.11 $22.96 $17.64 $15.55
------ ------ ------ ------ ------
Total return* 15.34% (5.59%) 33.72% 18.07% 29.91%
Ratios and supplemental data
Net assets, end of period
(millions) $ 180 $ 183 $ 161 $ 87 $ 29
Ratios to average net assets
Expenses** 1.39% 1.44% 1.40% 1.45% 1.70%+
Net investment income 0.06% 0.24% 0.58% 0.63% 0.13%+
Portfolio turnover rate 35% 7% 12% 15% 19%
<CAPTION>
Year Ended September 30,
--------------------------------------------
1999 # 1998 # 1997 # 1996 1995 (a)
<S> <C> <C> <C> <C> <C>
CLASS B
Net asset value, beginning of
period $20.82 $22.69 $17.49 $15.48 $11.97
------ ------ ------ ------ ------
Income from investment
operations
Net investment loss (0.17) (0.12) (0.03) (0.03) (0.02)
Net realized and unrealized
gains or losses on securities 3.22 (1.25) 5.64 2.64 3.53
------ ------ ------ ------ ------
Total from investment
operations 3.05 (1.37) 5.61 2.61 3.51
------ ------ ------ ------ ------
Distributions to shareholders
from
Net investment income 0 0 0 (0.02) 0
Net realized gains (0.07) (0.50) (0.41) (0.58) 0
------ ------ ------ ------ ------
Total distributions to
shareholders (0.07) (0.50) (0.41) (0.60) 0
------ ------ ------ ------ ------
Net asset value, end of period $23.80 $20.82 $22.69 $17.49 $15.48
------ ------ ------ ------ ------
Total return* 14.65% (6.18%) 32.69% 17.29% 29.32%
Ratios and supplemental data
Net assets, end of period
(millions) $ 646 $ 624 $ 503 $ 254 $ 74
Ratios to average net assets
Expenses** 2.14% 2.19% 2.15% 2.18% 2.32%+
Net investment income (0.70%) (0.50%) (0.16%) (0.10%) (0.48%)+
Portfolio turnover rate 35% 7% 12% 15% 19%
</TABLE>
(a) For the period from January 3, 1995 (commencement of class operations) to
September 30, 1995.
* Excluding applicable sales charges.
** Ratio of expenses to average net assets includes fee waivers and excludes
fee credits.
+ Annualized.
# Net investment income is based on average shares outstanding during the
period.
See Combined Notes to Financial Statements.
35
<PAGE>
EVERGREEN
Evergreen Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended September 30,
--------------------------------------------
1999 # 1998 # 1997 # 1996 1995 (a)
<S> <C> <C> <C> <C> <C>
CLASS C
Net asset value, beginning of
period $20.79 $22.66 $17.47 $15.48 $11.97
------ ------ ------ ------ ------
Income from investment
operations
Net investment income (loss) (0.16) (0.11) (0.04) 0 (0.01)
Net realized and unrealized
gains or losses on securities 3.21 (1.26) 5.64 2.61 3.52
------ ------ ------ ------ ------
Total from investment
operations 3.05 (1.37) 5.60 2.61 3.51
------ ------ ------ ------ ------
Distributions to shareholders
from
Net investment income 0 0 0 (0.04) 0
Net realized gains (0.07) (0.50) (0.41) (0.58) 0
------ ------ ------ ------ ------
Total distributions to
shareholders (0.07) (0.50) (0.41) (0.62) 0
------ ------ ------ ------ ------
Net asset value, end of period $23.77 $20.79 $22.66 $17.47 $15.48
------ ------ ------ ------ ------
Total return* 14.67% (6.19%) 32.67% 17.29% 29.32%
Ratios and supplemental data
Net assets, end of period
(millions) $ 14 $ 13 $ 9 $ 6 $ 2
Ratios to average net assets
Expenses** 2.14% 2.19% 2.16% 2.14% 2.12%+
Net investment income (0.70%) (0.50%) (0.18%) (0.07%) (0.31%)+
Portfolio turnover rate 35% 7% 12% 15% 19%
<CAPTION>
Year Ended September 30,
--------------------------------------------
1999 # 1998 # 1997 # 1996 1995
<S> <C> <C> <C> <C> <C>
CLASS Y
Net asset value, beginning of
period $21.25 $23.07 $17.71 $15.59 $14.62
------ ------ ------ ------ ------
Income From investment
operations
Net investment income 0.07 0.12 0.16 0.24 0.10
Net realized and unrealized
gains or losses on securities 3.28 (1.30) 5.73 2.55 3.10
------ ------ ------ ------ ------
Total from investment
operations 3.35 (1.18) 5.89 2.79 3.20
------ ------ ------ ------ ------
Distributions to shareholders
from
Net investment income (0.05) (0.14) (0.12) (0.09) (0.07)
Net realized gains (0.07) (0.50) (0.41) (0.58) (2.16)
------ ------ ------ ------ ------
Total distributions to
shareholders (0.12) (0.64) (0.53) (0.67) (2.23)
------ ------ ------ ------ ------
Net asset value, end of period $24.48 $21.25 $23.07 $17.71 $15.59
------ ------ ------ ------ ------
Total return 15.79% (5.25%) 34.08% 18.43% 26.79%
Ratios and supplemental data
Net assets, end of period
(millions) $1,086 $1,028 $1,104 $ 841 $ 612
Ratios to average net assets
Expenses** 1.14% 1.18% 1.15% 1.15% 1.16%
Interest expense N/A N/A N/A N/A 0.06%
Net investment income 0.30% 0.49% 0.80% 0.93% 0.53%
Portfolio turnover rate 35% 7% 12% 15% 19%
</TABLE>
(a) For the period from January 3, 1995 (commencement of class operations) to
September 30, 1995.
* Excluding applicable sales charges.
** Ratio of expenses to average net assets includes fee waivers and excludes
fee credits.
+ Annualized.
# Net investment income is based on average shares outstanding during the pe-
riod.
See Combined Notes to Financial Statements.
36
<PAGE>
EVERGREEN
Masters Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Period Ended
September 30, 1999 (a)
<S> <C>
CLASS A
Net asset value, beginning of period $10.00
------
Income from investment operations
Net investment loss (0.05)
Net realized and unrealized gains on securities and
foreign currency related transactions 0.10
------
Total from investment operations 0.05
------
Net asset value, end of period $10.05
------
Total return* 0.50%
Ratios and supplemental data
Net assets, end of period (millions) $ 168
Ratios to average net assets
Expenses** 1.72%+
Net investment income (0.70%)+
Portfolio turnover rate 63%
<CAPTION>
Period Ended
September 30, 1999 (a)
<S> <C>
CLASS B
Net asset value, beginning of period $10.00
------
Income from investment operations
Net investment loss (0.09)
Net realized and unrealized gains on securities and
foreign currency related transactions 0.10
------
Total from investment operations 0.01
------
Net asset value, end of period $10.01
------
Total return* 0.10%
Ratios and supplemental data
Net assets, end of period (millions) $ 83
Ratios to average net assets
Expenses** 2.47%+
Net investment income (1.48%)+
Portfolio turnover rate 63%
</TABLE>
(a) For the period from December 31, 1998 (commencement of class operations) to
September 30, 1999.
* Excluding applicable sales charges.
** Ratio of expenses to average net assets includes fee waivers and excludes
fee credits.
+ Annualized.
See Combined Notes to Financial Statements.
37
<PAGE>
EVERGREEN
Masters Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Period Ended
September 30, 1999 (a)
<S> <C>
CLASS C
Net asset value, beginning of period $10.00
------
Income from investment operations
Net investment loss (0.09)
Net realized and unrealized gains on securities and
foreign currency related transactions 0.09
------
Total from investment operations 0.00
------
Net asset value, end of period $10.00
------
Total return* 0.00%
Ratios and supplemental data
Net assets, end of period (millions) $ 5
Ratios to average net assets
Expenses** 2.47%+
Net investment income (1.48%)+
Portfolio turnover rate 63%
<CAPTION>
Period Ended
September 30, 1999 (a)
<S> <C>
CLASS Y
Net asset value, beginning of period $10.00
------
Income from investment operations
Net investment loss (0.01)
Net realized and unrealized gains on securities and
foreign currency related transactions 0.08
------
Total from investment operations 0.07
------
Net asset value, end of period $10.07
------
Total return 0.70%
Ratios and supplemental data
Net assets, end of period (millions) $ 3
Ratios to average net assets
Expenses** 1.50%+
Net investment income (0.43%)+
Portfolio turnover rate 63%
</TABLE>
(a) For the period from December 31, 1998 (commencement of class operations) to
September 30, 1999.
* Excluding applicable sales charges.
** Ratio of expenses to average net assets includes fee waivers and excludes
fee credits.
+ Annualized.
See Combined Notes to Financial Statements.
38
<PAGE>
EVERGREEN
Omega Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended September 30, Year Ended December 31,
------------------------------- ----------------------------
1999 # 1998 # 1997 (a)# 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
CLASS A
Net asset value,
beginning of period $ 21.50 $ 22.69 $ 19.52 $ 19.56 $ 15.54 $ 17.11
-------- -------- -------- -------- -------- -------
Income from investment
operations
Net investment income
(loss) (0.17) (0.09) (0.03) (0.06) 0 0.04
Net realized and
unrealized gains or
losses on securities 8.10 1.03 4.05 2.15 5.58 (1.00)
-------- -------- -------- -------- -------- -------
Total from investment
operations 7.93 0.94 4.02 2.09 5.58 (0.96)
-------- -------- -------- -------- -------- -------
Distributions to
shareholders from
Net realized gains (2.61) (2.13) (0.85) (2.13) (1.56) (0.61)
-------- -------- -------- -------- -------- -------
Total distributions to
shareholders (2.61) (2.13) (0.85) (2.13) (1.56) (0.61)
-------- -------- -------- -------- -------- -------
Net asset value, end of
period $ 26.82 $ 21.50 $ 22.69 $ 19.52 $ 19.56 $ 15.54
-------- -------- -------- -------- -------- -------
Total return* 39.56% 4.43% 21.45% 11.31% 36.94% (5.66%)
Ratios and supplemental
data
Net assets, end of
period (thousands) $371,361 $156,220 $162,847 $154,825 $135,079 $99,569
Ratios to average net
assets
Expenses** 1.30% 1.32% 1.32%+ 1.33% 1.38% 1.41%
Net investment income (0.66%) (0.38%) (0.20%)+ (0.29%) 0.00% 0.27%
Portfolio turnover rate 120% 159% 76% 173% 159% 137%
</TABLE>
<TABLE>
<CAPTION>
Year Ended September 30, Year Ended December 31,
------------------------------- ---------------------------
1999 # 1998 # 1997 (a)# 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
CLASS B
Net asset value,
beginning of period $ 20.32 $ 21.71 $ 18.83 $ 19.10 $ 15.34 $ 17.06
-------- -------- -------- ------- ------- -------
Income from investment
operations
Net investment loss (0.34) (0.25) (0.15) (0.17) (0.09) (0.06)
Net realized and
unrealized gains or
losses on securities 7.62 0.99 3.88 2.03 5.41 (1.60)
-------- -------- -------- ------- ------- -------
Total from investment
operations 7.28 0.74 3.73 1.86 5.32 (1.66)
-------- -------- -------- ------- ------- -------
Distributions to
shareholders from
Net realized gains (2.61) (2.13) (0.85) (2.13) (1.56) (0.06)
-------- -------- -------- ------- ------- -------
Total distributions to
shareholders (2.61) (2.13) (0.85) (2.13) (1.56) (0.06)
-------- -------- -------- ------- ------- -------
Net asset value, end of
period $ 24.99 $ 20.32 $ 21.71 $ 18.83 $ 19.10 $ 15.34
-------- -------- -------- ------- ------- -------
Total return* 38.57% 3.64% 20.68% 10.31% 35.70% (6.57%)
Ratios and supplemental
data
Net assets, end of
period (thousands) $372,956 $114,068 $110,349 $89,921 $71,636 $32,266
Ratios to average net
assets
Expenses** 2.05% 2.10% 2.18%+ 2.20% 2.29% 2.30%
Net investment income (1.41%) (1.16%) (1.06%)+ (1.15%) (0.94%) (0.58%)
Portfolio turnover rate 120% 159% 76% 173% 159% 137%
</TABLE>
(a) For the nine months ended September 30, 1997. The Fund changed its fiscal
year end from December 31 to September 30, effective September 30, 1997.
* Excluding applicable sales charges.
** Ratio of expenses to average net assets includes fee waivers and excludes
fee credits.
+ Annualized.
# Net investment income is based on average shares outstanding during the pe-
riod.
See Combined Notes to Financial Statements.
39
<PAGE>
EVERGREEN
Omega Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended September 30, Year Ended December 31,
----------------------------- --------------------------
1999 # 1998 # 1997 (a)# 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
CLASS C
Net asset value,
beginning of period $ 20.37 $ 21.74 $ 18.86 $ 19.13 $ 15.37 $17.09
------- ------- ------- ------- ------- ------
Income from investment
operations
Net investment loss (0.33) (0.25) (0.15) (0.18) (0.13) (0.07)
Net realized and
unrealized gains or
losses on securities 7.62 1.01 3.88 2.04 5.45 (1.04)
------- ------- ------- ------- ------- ------
Total from investment
operations 7.29 0.76 3.73 1.86 5.32 (1.11)
------- ------- ------- ------- ------- ------
Distributions to
shareholders from
Net realized gains (2.61) (2.13) (0.85) (2.13) (1.56) (0.61)
------- ------- ------- ------- ------- ------
Total distributions to
shareholders (2.61) (2.13) (0.85) (2.13) (1.56) (0.61)
------- ------- ------- ------- ------- ------
Net asset value, end of
period $ 25.05 $ 20.37 $ 21.74 $ 18.86 $ 19.13 $15.37
------- ------- ------- ------- ------- ------
Total return* 38.52% 3.73% 20.65% 10.29% 35.62% (6.56%)
Ratios and supplemental
data
Net assets, end of
period (thousands) $26,929 $13,752 $16,067 $17,628 $13,963 $9,900
Ratios to average net
assets
Expenses** 2.04% 2.11% 2.18%+ 2.21% 2.30% 2.30%
Net investment income (1.40%) (1.16%) (1.05%)+ (1.17%) (0.91%) (0.63%)
Portfolio turnover rate 120% 159% 76% 173% 159% 137%
</TABLE>
<TABLE>
<CAPTION>
Year Ended September 30,
---------------------------
1999 # 1998 # 1997 (b)#
<S> <C> <C> <C>
CLASS Y
Net asset value, beginning of period $21.54 $22.68 $19.98
------ ------ ------
Income from investment operations
Net investment loss (0.11) (0.02) (0.01)
Net realized and unrealized gains on securities 8.14 1.01 3.56
------ ------ ------
Total from investment operations 8.03 0.99 3.55
------ ------ ------
Distributions to shareholders from
Net realized gains (2.61) (2.13) (0.85)
------ ------ ------
Total distributions to shareholders (2.61) (2.13) (0.85)
------ ------ ------
Net asset value, end of period $26.96 $21.54 $22.68
------ ------ ------
Total return 39.99% 4.67% 18.60%
Ratios and supplemental data
Net assets, end of period (thousands) $4,586 $ 571 $ 5
Ratios to average net assets
Expenses** 1.05% 1.11% 1.24%+
Net investment income (0.42%) (0.09%) (0.21%)+
Portfolio turnover rate 120% 159% 76%
</TABLE>
(a) For the nine months ended September 30, 1997. The Fund changed its fiscal
year end from December 31 to September 30, effective September 30, 1997.
(b) For the period from January 13, 1997 (commencement of class operations) to
September 30, 1997.
* Excluding applicable sales charges.
** Ratio of expenses to average net assets includes fee waivers and excludes
fee credits.
+ Annualized.
# Net investment income is based on average shares outstanding during the pe-
riod.
See Combined Notes to Financial Statements.
40
<PAGE>
EVERGREEN
Small Company Growth Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended
September 30,
-------------------
1999 # 1998 (a) #
<S> <C> <C>
CLASS A
Net asset value, beginning of period $ 5.72 $ 7.75
------ ------
Income from investment operations
Net investment loss (0.04) (0.04)
Net realized and unrealized gains or losses on securities
and futures contracts 1.97 (1.99)
------ ------
Total from investment operations 1.93 (2.03)
------ ------
Distributions to shareholders from
Net realized gains (1.18) 0
------ ------
Total distributions to shareholders (1.18) 0
------ ------
Net asset value, end of period $ 6.47 $ 5.72
------ ------
Total return* 39.74% (26.19%)
Ratios and supplemental data
Net assets, end of period (millions) $ 712 $ 589
Ratios to average net assets
Expenses** 1.17% 1.15%+
Net investment income (0.63%) (0.50%)+
Portfolio turnover rate 125% 97%
</TABLE>
<TABLE>
<CAPTION>
Year Ended September 30, Year Ended May 31,
---------------------------- ------------------------
1999 # 1998 # 1997 (b) # 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
CLASS B
Net asset value,
beginning of period $ 5.69 $ 9.44 $ 8.44 $10.35 $ 8.62 $ 7.64
------ ------ ------ ------ ------ ------
Income from investment
operations
Net investment loss (0.07) (0.07) (0.04) (0.11) (0.13) (0.07)
Net realized and
unrealized gains or
losses on securities
and futures contracts 1.95 (2.90) 1.74 (0.78) 2.87 1.68
------ ------ ------ ------ ------ ------
Total from investment
operations 1.88 (2.97) 1.70 (0.89) 2.74 1.61
------ ------ ------ ------ ------ ------
Distributions to
shareholders from
Net realized gains (1.18) (0.78) (0.70) (1.02) (1.01) (0.63)
------ ------ ------ ------ ------ ------
Total distributions to
shareholders (1.18) (0.78) (0.70) (1.02) (1.01) (0.63)
------ ------ ------ ------ ------ ------
Net asset value, end of
period $ 6.39 $ 5.69 $ 9.44 $ 8.44 $10.35 $ 8.62
------ ------ ------ ------ ------ ------
Total return* 38.95% (33.91%) 21.43% (8.61%) 33.03% 23.58%
Ratios and supplemental
data
Net assets, end of
period (millions) $ 107 $ 200 $1,546 $1,407 $2,006 $1,460
Ratios to average net
assets
Expenses** 1.93% 1.36% 1.77%+ 1.75% 1.73% 1.78%
Net investment income (1.35%) (0.89%) (1.43%)+ (1.32%) (1.34%) (1.10%)
Portfolio turnover rate 125% 97% 28% 48% 94% 38%
</TABLE>
(a) For the period from January 20, 1998 (commencement of class operations) to
September 30, 1998.
(b) For the four months ended September 30, 1997. The Fund changed its fiscal
year end from May 31 to September 30, effective September 30, 1997.
* Excluding applicable sales charges.
** Ratio of expenses to average net assets includes fee waivers and excludes
fee credits.
+ Annualized.
# Net investment income is based on average shares outstanding during the pe-
riod.
See Combined Notes to Financial Statements.
41
<PAGE>
EVERGREEN
Small Company Growth Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended
September 30,
-------------------
1999 # 1998 (a) #
<S> <C> <C>
CLASS C
Net asset value, beginning of period $ 5.70 $ 7.73
------ -------
Income from investment operations
Net investment loss (0.07) (0.10)
Net realized and unrealized gains or losses on securities
and futures contracts 1.94 (1.93)
------ -------
Total from investment operations 1.87 (2.03)
------ -------
Distributions to shareholders from
Net realized gains (1.18) 0
------ -------
Total distributions to shareholders (1.18) 0
------ -------
Net asset value, end of period $ 6.39 $ 5.70
------ -------
Total return* 38.65% (26.26%)
Ratios and supplemental data
Net assets, end of period (millions) $ 2 $ 4
Ratios to average net assets
Expenses** 1.93% 1.90%+
Net investment income (1.36%) (1.32%)+
Portfolio turnover rate 125% 97%
<CAPTION>
Year Ended
September 30,
-------------------
1999 # 1998 (a) #
<S> <C> <C>
CLASS Y
Net asset value, beginning of period $ 5.74 $ 7.73
------ -------
Income from investment operations
Net investment loss (0.03) (0.02)
Net realized and unrealized gains or losses on securities
and futures contracts 1.98 (1.97)
------ -------
Total from investment operations 1.95 (1.99)
------ -------
Distributions to shareholders from
Net realized gains (1.18) 0
------ -------
Total distributions to shareholders (1.18) 0
------ -------
Net asset value, end of period $ 6.51 $ 5.74
------ -------
Total return 40.01% (25.74%)
Ratios and supplemental data
Net assets, end of period (millions) $ 2 $ 1
Ratios to average net assets
Expenses** 0.92% 0.91%+
Net investment income (0.42%) (0.33%)+
Portfolio turnover rate 125% 97%
</TABLE>
(a) For the period from January 26, 1998 (commencement of class operations) to
September 30, 1998.
* Excluding applicable sales charges.
** Ratio of expenses to average net assets includes fee waivers and excludes
fee credits.
+ Annualized.
# Net investment income is based on average shares outstanding during the pe-
riod.
See Combined Notes to Financial Statements.
42
<PAGE>
EVERGREEN
Stock Selector Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended Period Ended October 31,
September 30, Year Ended June 30, ------------------------
------------------ ------------------------------ Retail Class Prior Class
1999 1998 (e) 1998 1997 1996 (b)(c) 1995 (a) 1994
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A
Net asset value,
beginning of period $ 18.34 $ 22.43 $ 21.13 $ 17.28 $ 17.08 $15.00 $ 15.39
------- ------- ------- ------- ------- ------ -------
Income from investment
operations
Net investment income
(loss) (0.02) 0 (0.02) 0.07 0.12 0.18 0.11
Net realized and
unrealized gains or
losses on securities 5.86 (4.09) 4.24 5.32 1.49 2.87 0.22
------- ------- ------- ------- ------- ------ -------
Total from investment
operations 5.84 (4.09) 4.22 5.39 1.61 3.05 0.33
------- ------- ------- ------- ------- ------ -------
Distributions to
shareholders from
Net investment income (0.01) 0 0 (0.07) (0.11) (0.17) (0.11)
Net realized gains (4.11) 0 (2.92) (1.47) (1.30) (0.80) (0.61)
------- ------- ------- ------- ------- ------ -------
Total distributions to
shareholders (4.12) 0 (2.92) (1.54) (1.41) (0.97) (0.72)
------- ------- ------- ------- ------- ------ -------
Net asset value, end of
period $ 20.06 $ 18.34 $ 22.43 $ 21.13 $ 17.28 $17.08 $ 15.00
------- ------- ------- ------- ------- ------ -------
Total return* 35.15% (18.23%) 21.54% 32.74% 19.11% 21.94% 2.21%
Ratios and supplemental
data
Net assets, end of
period (thousands) $20,930 $15,910 $20,509 $16,043 $11,178 $6,591 $50,128
Ratios to average net
assets
Expenses** 1.10% 1.18%+ 1.25% 1.23% 1.22%+ 1.34% 1.49%+
Net investment income (0.16%) (0.06%)+ (0.10%) 0.38% 0.89%+ 1.23% 0.75%+
Portfolio turnover rate 85% 28% 61% 79% 114% 119% 35%
</TABLE>
<TABLE>
<CAPTION>
Year Ended September 30,
----------------------------- Year Ended
1999 1998 (d) June 30, 1998 (e)
<S> <C> <C> <C>
CLASS B
Net asset value, beginning
of period $ 18.23 $ 22.33 $22.76 (f)
------------ ------------ ------
Income from investment
operations
Net investment loss (0.06) (0.03) (0.09)
Net realized and unrealized
gains or losses on
securities 5.71 (4.07) 2.90
------------ ------------ ------
Total from investment
operations 5.65 (4.10) 2.81
------------ ------------ ------
Distributions to
shareholders from
Net investment income 0 0 0
Net realized gains (4.11) 0 (3.24)(f)
------------ ------------ ------
Total distributions to
shareholders (4.11) 0 (3.24)
------------ ------------ ------
Net asset value, end of
period $ 19.77 $ 18.23 $22.33
------------ ------------ ------
Total return* 34.18% (18.36%) 14.38%
Ratios and supplemental data
Net assets, end of period
(thousands) $ 2,376 $ 413 $ 349
Ratios to average net assets
Expenses** 1.82% 1.94%+ 2.00%+
Net investment income (0.86%) (0.76%)+ (0.85%)+
Portfolio turnover rate 85% 28% 61%
</TABLE>
(a) On February 21, 1995, the Shares of the Fund were redesignated as either
Retail or Institutional Shares. On that date, the Fund's net investment in-
come, expenses and distributions for the period November 1, 1994 through
February 20, 1995 were allocated to each class of Shares. The basis for the
allocation was the relative net assets of each class of Shares as of Febru-
ary 21, 1995. The results were combined with the results of operations and
distributions for each applicable class for the period February 21, 1995
through October 31, 1995. For the year ended October 31, 1995, the Finan-
cial Highlights' ratio of expenses, net investment income, total return,
and the per share investment activities and distributions reflect this al-
location.
(b) For the eight months ended June 30, 1996. The Fund changed its fiscal year
end from October 31 to June 30, effective June 30, 1996.
(c) On April 15, 1996, the Conestoga Equity Fund was acquired by CoreFunds,
Inc. At that time, the Retail Class Shares of the Fund were exchanged for
Class A Shares.
(d) For the three months ended September 30, 1998. The Fund changed its fiscal
year end from June 30 to September 30, effective September 30, 1998.
(e) For the period from November 7, 1997 (commencement of class operations) to
June 30, 1998.
(f) Amounts adjusted to reflect a reverse stock split which occurred on June
24, 1998.
* Excluding applicable sales charges.
** Ratio of expenses to average net assets includes fee waivers and excludes
fee credits.
+ Annualized.
See Combined Notes to Financial Statements.
43
<PAGE>
EVERGREEN
Stock Selector Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Period Ended
September 30, 1999 (e)
<S> <C>
CLASS C
Net asset value, beginning of period $21.58
------
Income from investment operations
Net investment loss (0.01)
Net realized and unrealized gains on securities (1.55)
------
Total from investment operations (1.56)
------
Distributions to shareholders from
Net investment income 0
Net realized gains 0
------
Total distributions to shareholders 0
------
Net asset value, end of period $20.02
------
Total return* (7.23%)
Ratios and supplemental data
Net assets, end of period (thousands) $ 78
Ratios to average net assets
Expenses** 1.87%+
Net investment income (0.78%)+
Portfolio turnover rate 85%
</TABLE>
<TABLE>
<CAPTION>
Year Ended Institutional Class
September 30, Year Ended June 30, Year Ended
------------------ ------------------------------- --------------------
1999 1998 (d) 1998 1997 1996 (b)(c) October 31, 1995 (a)
<S> <C> <C> <C> <C> <C> <C>
CLASS Y
Net asset value,
beginning of period $ 18.35 $ 22.43 $ 21.11 $ 17.26 $ 17.07 $ 15.00
-------- -------- -------- -------- -------- --------
Income from investment
operations
Net investment income 0.02 0.01 0.04 0.12 0.14 0.19
Net realized and
unrealized gains or
losses on securities 5.87 (4.09) 4.24 5.32 1.49 2.87
-------- -------- -------- -------- -------- --------
Total from investment
operations 5.89 (4.08) 4.28 5.44 1.63 3.06
-------- -------- -------- -------- -------- --------
Distributions to
shareholders from
Net investment income (0.02) 0 (0.04) (0.12) (0.14) (0.19)
Net realized gains (4.11) 0 (2.92) (1.47) (1.30) (0.80)
-------- -------- -------- -------- -------- --------
Total distributions to
shareholders (4.13) 0 (2.96) (1.59) (1.44) (0.99)
-------- -------- -------- -------- -------- --------
Net asset value, end of
period $ 20.11 $ 18.35 $ 22.43 $ 21.11 $ 17.26 $ 17.07
-------- -------- -------- -------- -------- --------
Total return 35.49% (18.19%) 21.90% 33.10% 19.24% 22.00%
Ratios and supplemental
data
Net assets, end of
period (thousands) $476,928 $424,992 $563,987 $515,015 $414,824 $378,352
Ratios to average net
assets
Expenses** 0.85% 0.93%+ 1.00% 0.98% 0.97%+ 1.05%+
Net investment income 0.09% 0.19%+ 0.15% 0.63% 1.15%+ 1.44%+
Portfolio turnover rate 85% 28% 61% 79% 114% 119%
</TABLE>
(a) On February 21, 1995, the Shares of the Fund were redesignated as either
Retail or Institutional Shares. On that date, the Fund's net investment in-
come, expenses and distributions for the period November 1, 1994 through
February 20, 1995 were allocated to each class of Shares. The basis for the
allocation was the relative net assets of each class of Shares as of Febru-
ary 21, 1995. The results were combined with the results of operations and
distributions for each applicable class for the period February 21, 1995
through October 31, 1995. For the year ended October 31, 1995, the Finan-
cial Highlights' ratio of expenses, net investment income, total return,
and the per share investment activities and distributions reflect this al-
location.
(b) For the eight months ended June 30, 1996. The Fund changed its fiscal year
end from October 31 to June 30, effective June 30, 1996.
(c) On April 15, 1996, the Conestoga Equity Fund was acquired by CoreFunds,
Inc. At that time the Institutional Class Shares of the Fund were exchanged
for Class Y Shares.
(d) For the three months ended September 30, 1998. The Fund changed its fiscal
year end from June 30 to September 30, effective September 30, 1998.
(e) For the period from June 30, 1999 (commencement of class operations) to
September 30, 1999.
* Excluding applicable sales charges.
** Ratio of expenses to average net assets includes fee waivers and excludes
fee credits.
+ Annualized.
See Combined Notes to Financial Statements.
44
<PAGE>
EVERGREEN
Strategic Growth Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended
September 30,
-------------------
1999 # 1998 (a) #
<S> <C> <C>
CLASS A
Net asset value, beginning of period $ 9.67 $9.12
------ -----
Income from investment operations
Net investment income (loss) (0.03) 0.01
Net realized and unrealized gains on securities and
foreign currency related transactions 2.73 0.54
------ -----
Total from investment operations 2.70 0.55
------ -----
Distributions to shareholders from
Net realized gains (1.34) 0
------ -----
Total distributions to shareholders (1.34) 0
------ -----
Net asset value, end of period $11.03 $9.67
------ -----
Total return* 30.15% 6.03%
Ratios and supplemental data
Net assets, end of period (millions) $ 862 $ 706
Ratios to average net assets
Expenses** 1.00% 1.10%+
Net investment income (0.29%) 0.08%+
Portfolio turnover rate 132% 141%
</TABLE>
<TABLE>
<CAPTION>
Year Ended September 30, Year Ended October 31,
---------------------------- ---------------------
1999 # 1998 # 1997 (b) # 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
CLASS B
Net asset value,
beginning of period $ 9.63 $10.61 $ 8.68 $8.05 $7.54 $9.00
------ ------ ------ ----- ----- -----
Income from investment
operations
Net investment income
(loss) (0.11) (0.03) 0.01 (0.04) (0.02) 0
Net realized and
unrealized gains on
securities and foreign
currency related
transactions 2.71 0.39 2.96 1.04 1.13 0.23
------ ------ ------ ----- ----- -----
Total from investment
operations 2.60 0.36 2.97 1.00 1.11 0.23
------ ------ ------ ----- ----- -----
Distributions to
shareholders from
Net investment income 0 (0.02) 0 (0.01) 0 0
Net realized gains (1.34) (1.32) (1.04) (0.36) (0.60) (1.69)
------ ------ ------ ----- ----- -----
Total distributions to
shareholders (1.34) (1.34) (1.04) (0.37) (0.60) (1.69)
------ ------ ------ ----- ----- -----
Net asset value, end of
period $10.89 $ 9.63 $10.61 $8.68 $8.05 $7.54
------ ------ ------ ----- ----- -----
Total return* 29.15% 3.87% 37.74% 12.95% 15.05% 3.55%
Ratios and supplemental
data
Net assets, end of period
(millions) $ 103 $ 130 $ 920 $ 497 $ 492 $ 417
Ratios to average net
assets
Expenses** 1.75% 1.36% 1.19%+ 1.91% 2.01% 1.73%
Net investment income (1.03%) (0.26%) 0.12%+ (0.48%) (0.25%) (0.17%)
Portfolio turnover rate 132% 141% 71% 156% 140% 68%
</TABLE>
(a) For the period from January 20, 1998 (commencement of class operations) to
September 30, 1998.
(b) For the eleven months ended September 30, 1997. The Fund changed its fiscal
year end from October 31 to September 30, effective September 30, 1997.
* Excluding applicable sales charges.
** Ratio of expenses to average net assets includes fee waivers and excludes
fee credits.
+ Annualized.
# Net investment income is based on average shares outstanding during the pe-
riod.
See Combined Notes to Financial Statements.
45
<PAGE>
EVERGREEN
Strategic Growth Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended
September 30,
-------------------
1999 # 1998 (a) #
<S> <C> <C>
CLASS C
Net asset value, beginning of period $ 9.63 $9.25
------ -----
Income from investment operations
Net investment loss (0.12) (0.07)
Net realized and unrealized gains on securities and
foreign currency related transactions 2.72 0.45
------ -----
Total from investment operations 2.60 0.38
------ -----
Distributions to shareholders from
Net realized gains (1.34) 0
------ -----
Total distributions to shareholders (1.34) 0
------ -----
Net asset value, end of period $10.89 $9.63
------ -----
Total return* 29.15% 4.11%
Ratios and supplemental data
Net assets, end of period (thousands) $2,452 $ 453
Ratios to average net assets
Expenses** 1.75% 1.84%+
Net investment income (1.08%) (0.80%)+
Portfolio turnover rate 132% 141%
</TABLE>
<TABLE>
<CAPTION>
Period Ended
September 30, 1999 (b) #
<S> <C>
CLASS Y
Net asset value, beginning of period $ 11.28
-------
Income from investment operations
Net investment income 0
Net realized and unrealized losses on securities and
foreign currency related transactions (0.36)
-------
Total from investment operations (0.36)
-------
Net asset value, end of period $ 10.92
-------
Total return (3.19%)
Ratios and supplemental data
Net assets, end of period (thousands) $ 238
Ratios to average net assets
Expenses** 0.75%+
Net investment income (0.10%)+
Portfolio turnover rate 132%
</TABLE>
(a) For the period from January 22, 1998 (commencement of class operations) to
September 30, 1998.
(b) For the period from June 30, 1999 (commencement of class operations) to
September 30, 1999.
* Excluding applicable sales charges.
** Ratio of expenses to average net assets includes fee waivers and excludes
fee credits.
+ Annualized.
# Net investment income is based on average shares outstanding during the pe-
riod.
See Combined Notes to Financial Statements.
46
<PAGE>
EVERGREEN
Tax Strategic Equity Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended September 30,
----------------------------
1999 # 1998 (a)#
<S> <C> <C>
CLASS A
Net asset value, beginning of period $ 10.65 $ 10.11
------------ ------------
Income from investment operations
Net investment income (loss) (0.03) 0
Net realized and unrealized gains or losses on
securities 3.41 0.54
------------ ------------
Total from investment operations 3.38 0.54
------------ ------------
Distributions to shareholders from
Net investment income (0.02) 0
------------ ------------
Total distributions to shareholders (0.02) 0
------------ ------------
Net asset value, end of period $ 14.01 $ 10.65
------------ ------------
Total return* 31.69% 5.34%
Ratios and supplemental data
Net assets, end of period (thousands) $ 5,055 $ 10
Ratios to average net assets
Expenses** 1.58% 1.54%+
Net investment income (0.25%) 9.12%+
Portfolio turnover rate 90% 0%
</TABLE>
<TABLE>
<CAPTION>
Period Ended
September 30, 1999 (b)#
<S> <C>
CLASS B
Net asset value, beginning of period $10.26
------
Income from investment operations
Net investment income (0.13)
Net realized and unrealized gains on securities 3.83
------
Total from investment operations 3.70
------
Distributions to shareholders from
Net investment income (0.02)
------
Total distributions to shareholders (0.02)
------
Net asset value, end of period $13.94
------
Total return* 36.01%
Ratios and supplemental data
Net assets, end of period (thousands) $7,882
Ratios to average net assets
Expenses** 2.33%+
Net investment income (1.03%)+
Portfolio turnover rate 90%
</TABLE>
(a) For the period from September 4, 1998 (commencement of class operations) to
September 30, 1998.
(b) For the period from October 14, 1998 (commencement of class operations) to
September 30, 1999.
* Excluding applicable sales charges.
** Ratio of expenses to average net assets includes fee waivers and excludes
fee credits.
+ Annualized.
# Net investment income is based on average shares outstanding during the pe-
riod.
See Combined Notes to Financial Statements.
47
<PAGE>
EVERGREEN
Tax Strategic Equity Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Period Ended
September 30, 1999 (a)#
<S> <C>
CLASS C
Net asset value, beginning of period $12.51
------
Income from investment operations
Net investment income (0.14)
Net realized and unrealized gains on securities 1.61
------
Total from investment operations 1.47
------
Distributions to shareholders from
Net investment income (0.02)
------
Total distributions to shareholders (0.02)
------
Net asset value, end of period $13.96
------
Total return* 11.71%
Ratios and supplemental data
Net assets, end of period (thousands) $2,162
Ratios to average net assets
Expenses** 2.33%+
Net investment income (0.98%)+
Portfolio turnover rate 90%
</TABLE>
<TABLE>
<CAPTION>
Year Ended
September 30,
------------------
1999 # 1998 (b)#
<S> <C> <C>
CLASS Y
Net asset value, beginning of period $10.65 $10.00
------ ------
Income from investment operations
Net investment income 0 0
Net realized and unrealized gains on securities 3.45 0.65
------ ------
Total from investment operations 3.45 0.65
------ ------
Distributions to shareholders from
Net investment income (0.02) 0
------ ------
Total distributions to shareholders (0.02) 0
------ ------
Net asset value, end of period $14.08 $10.65
------ ------
Total return 32.34% 6.50%
Ratios and supplemental data
Net assets, end of period (thousands) $2,454 $3,629
Ratios to average net assets
Expenses** 1.32% 1.30%+
Net investment income (0.01%) 8.87%+
Portfolio turnover rate 90% 0%
</TABLE>
(a) For the period from November 4, 1998 (commencement of class operations) to
September 30, 1999.
(b) For the period from September 1, 1998 (commencement of class operations) to
September 30, 1998.
* Excluding applicable sales charges.
** Ratio of expenses to average net assets includes fee waivers and excludes
fee credits.
+ Annualized.
# Net investment income is based on average shares outstanding during the pe-
riod.
See Combined Notes to Financial Statements.
48
<PAGE>
EVERGREEN
Aggressive Growth Fund
Schedule of Investments
September 30, 1999
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - 96.6%
Business Equipment &
Services - 3.0%
225,000 Paychex, Inc. ....................................... $ 7,678,125
------------
Chemical & Agricultural
Products - 2.9%
205,000 Monsanto Co. ........................................ 7,315,938
------------
Communication Systems &
Services - 8.3%
80,000 * Allegiance Telecom, Inc. .......................... 4,210,000
175,000 * Cisco Systems, Inc. ............................... 11,998,437
40,000 * MCI WorldCom, Inc. ................................ 2,875,000
40,000 * Tellabs, Inc. ..................................... 2,277,500
------------
21,360,937
------------
Finance & Insurance - 5.9%
112,500 American Int'l Group, Inc. .......................... 9,780,469
123,300 Citigroup, Inc. ..................................... 5,425,200
------------
15,205,669
------------
Healthcare Products &
Services - 12.8%
350,000 * Health Management Associates, Inc., Cl. A ......... 2,581,250
260,000 Medtronic, Inc. ..................................... 9,230,000
203,700 * Osteotech, Inc. ................................... 2,775,413
230,000 * VISX, Inc. ........................................ 18,191,562
------------
32,778,225
------------
Information Services &
Technology - 35.2%
250,000 * American Power Conversion Corp. ................... 4,750,000
99,000 * Citrix Systems, Inc. .............................. 6,131,812
75,000 * Clarify, Inc. ..................................... 3,773,438
105,000 * Cree Research, Inc. ............................... 3,563,438
185,000 * Cymer, Inc. ....................................... 6,417,187
250,000 * EMC Corp. ......................................... 17,859,375
21,300 * Engage Technologies, Inc. ......................... 802,744
135,000 Intel Corp. ......................................... 10,032,187
60,000 * JDS Uniphase Corp. ................................ 6,828,750
200,000 * Microsoft Corp. ................................... 18,112,500
120,000 * Veritas Software Corp. ............................ 9,112,500
35,500 * Vitesse Semiconductor Corp. ....................... 3,030,813
------------
90,414,744
------------
Oil/Energy - 5.3%
122,600 Apache Corp. ........................................ 5,294,787
200,000 Devon Energy Corp. .................................. 8,287,500
------------
13,582,287
------------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Oil Field Services - 4.2%
103,000 * BJ Services Co., Inc. .......................... $ 3,276,687
100,000 Diamond Offshore Drilling, Inc. .................. 3,337,500
55,000 ENSCO International, Inc. ........................ 993,438
100,000 * Weatherford International, Inc. ................ 3,200,000
------------
10,807,625
------------
Pharmaceuticals - 5.1%
140,000 * Enzon, Inc. .................................... 4,270,000
35,000 * Forest Laboratories, Inc. ...................... 1,474,375
225,000 ICN Pharmaceuticals, Inc. ........................ 3,867,188
235,000 * Neopharm, Inc. ................................. 3,466,250
------------
13,077,813
------------
Printing, Publishing, Broadcasting &
Entertainment - 6.1%
75,000 * AMFM, Inc. ..................................... 4,565,625
75,000 * Clear Channel Communications, Inc. ............. 5,990,625
175,000 * Infinity Broadcasting Corp. .................... 5,129,687
------------
15,685,937
------------
Retailing & Wholesale - 7.8%
150,000 * Bed Bath & Beyond, Inc. ........................ 5,240,625
150,000 Home Depot, Inc. ................................. 10,293,750
202,000 * Staples, Inc. .................................. 4,406,125
------------
19,940,500
------------
Total Common Stocks
(cost $150,803,257).............................. 247,847,800
------------
<CAPTION>
Principal
Amount Value
<C> <S> <C>
SHORT-TERM INVESTMENTS - 3.7%
U.S. Government Agency
Obligations - 3.7%
$ 9,403,000 Federal Agricultural Mortgage Corp. Discount Note
5.20%, 10/1/1999
(cost $9,403,000)................................ 9,403,000
------------
</TABLE>
<TABLE>
<C> <S> <C> <C>
Total Investments -
(cost $160,206,257)....................... 100.3% 257,250,800
Other Assets and Liabilities - net......... (0.3) (709,062)
----- ------------
Net Assets................................. 100.0% $256,541,738
===== ============
</TABLE>
* Non-income producing security.
See Combined Notes to Financial Statements.
49
<PAGE>
EVERGREEN
Evergreen Fund
Schedule of Investments
September 30, 1999
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - 95.4%
Banks - 11.4%
479,186 1st Source Corp. ................................. $ 11,500,464
65,000 * American Bancshares, Inc. ...................... 832,813
160,310 Arrow Financial Corp. ............................ 4,168,060
101,495 Bank One Corp. ................................... 3,533,295
613,510 BankAmerica Corp. ................................ 34,164,838
1,076,580 BankBoston Corp. ................................. 46,696,657
179,358 BB&T Corp. ....................................... 5,806,715
89,000 CCB Financial Corp. .............................. 3,704,625
140,018 Chittenden Corp. ................................. 3,990,513
115,500 Comerica, Inc. ................................... 5,847,187
109,318 Cornerstone Bancorp, Inc.**....................... 1,434,799
15,000 Corus Bankshares, Inc. ........................... 384,375
60,500 First State Bancorp .............................. 1,240,250
20,500 Glacier Bancorp Inc. ............................. 351,063
160,000 Gold Banc Corp., Inc. ............................ 1,580,000
130,042 Hudson United Bancorp............................. 4,006,919
133,187 M&T Bank Corp. ................................... 61,132,833
338,286 National City Corp. .............................. 9,028,008
187,779 Old Kent Financial Corp. ......................... 6,971,295
726,309 Republic Security Financial Corp. ................ 6,309,809
66,950 Seacoast Banking Corp. of Florida, Cl. A.......... 1,970,841
67,200 Suntrust Banks, Inc. ............................. 4,418,400
--------------
219,073,759
--------------
Building, Construction & Furnishings - 2.3%
272,900 Crossmann Communities, Inc. ...................... 4,451,681
335,600 * Genlyte Group, Inc. ............................ 7,970,500
83,300 * Knoll, Inc. .................................... 2,238,688
72,600 * Koala Corp. .................................... 2,232,450
460,200 La-Z-Boy Chair Co. ............................... 8,772,562
235,600 M/I Schottenstein Homes, Inc. .................... 3,887,400
78,000 * Mity Lite, Inc. ................................ 1,404,000
224,362 * Monaco Coach Corp. ............................. 5,468,824
434,100 * Toll Brothers, Inc. ............................ 8,275,031
--------------
44,701,136
--------------
Business Equipment & Services - 1.0%
93,000 Automatic Data Processing, Inc. .................. 4,150,125
60,600 * Computer Sciences Corp. ........................ 4,260,937
77,130 First Data Corp. ................................. 3,384,079
164,700 * Zebra Technologies Corp., Cl. A................. 7,488,703
--------------
19,283,844
--------------
Chemical & Agricultural Products - 0.6%
361,200 Sigma-Aldrich Corp. .............................. 11,468,100
--------------
Communication Systems & Services - 4.8%
550,000 * Cisco Systems, Inc. ............................ 37,709,375
232,000 Coherent Communications Systems Corp., Inc. ...... 5,176,500
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Communication Systems & Services - continued
99,600 * Echostar Communications Corp. .................. $ 9,044,925
406,000 Lucent Technologies, Inc. ........................ 26,339,250
252,000 Tellabs, Inc. .................................... 14,348,250
70,600 * Vertex Communications Corp. .................... 789,838
--------------
93,408,138
--------------
Consumer Products &
Services - 2.5%
95,000 Commonwealth Industries, Inc. .................... 1,276,563
20,000 CPI Corp. ........................................ 683,750
63,300 Gucci Group....................................... 5,285,550
284,550 Harman International
Industries, Inc.................................. 11,968,884
345,115 Lancaster Colony Corp. ........................... 11,043,680
196,000 Procter & Gamble Co. ............................. 18,375,000
--------------
48,633,427
--------------
Diversified Companies - 1.1%
197,000 Tyco International Ltd. .......................... 20,340,250
--------------
Electrical Equipment &
Services - 4.6%
76,500 Applied Power, Inc., Cl. A........................ 2,323,687
388,933 Baldor Electric Co. .............................. 7,365,419
19,000 * Benchmark Electronics, Inc...................... 670,938
9,900 * Franklin Electric Co., Inc...................... 653,400
537,000 General Electric Co. ............................. 63,668,062
88,900 Measurement Specialties, Inc...................... 1,633,537
75,895 Molex, Inc........................................ 2,760,681
108,200 Motorola, Inc. ................................... 9,521,600
--------------
88,597,324
--------------
Electronic Equipment &
Services - 0.4%
155,000 * Jabil Circuit, Inc. ............................ 7,672,500
--------------
Finance & Insurance - 8.3%
49,166 Aegon N.V......................................... 4,252,859
71,228 Allmerica Financial Corp.......................... 3,392,233
368,800 AMBAC Financial Group, Inc........................ 17,471,900
74,440 American Int'l Group, Inc......................... 6,471,627
86,450 Chubb Corp........................................ 4,306,291
111,900 Countrywide Credit Industries, Inc. .............. 3,608,775
121,600 Dain Rauscher Corp................................ 5,958,400
507,600 Federal Home Loan Mortgage Corp. ................. 26,395,200
668,000 Federal National Mortgage Assoc................... 41,875,250
306,000 First American Financial Corp. ................... 4,092,750
148,266 Legg Mason, Inc. ................................. 5,680,441
61,801 MBIA, Inc. ....................................... 2,881,472
507,600 MGIC Investment Corp. ............................ 24,237,900
55,988 Providian Financial Corp.......................... 4,433,550
421,410 * Seacoast Financial Services Corp. .............. 4,214,100
--------------
159,272,748
--------------
</TABLE>
50
<PAGE>
EVERGREEN
Evergreen Fund
Schedule of Investments(continued)
September 30, 1999
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Food & Beverage Products - 2.6%
175,000 Anheuser Busch Companies, Inc. ................... $ 12,260,937
431,100 Coca Cola Co. .................................... 20,719,744
250,000 Pepsico, Inc...................................... 7,562,500
260,000 Philip Morris Companies, Inc...................... 8,888,750
--------------
49,431,931
--------------
Healthcare Products &
Services - 10.1%
30,500 * Alza Corp....................................... 1,305,781
190,000 Biomet, Inc....................................... 4,999,375
206,596 * Boston Scientific Corp. ........................ 5,100,339
30,800 Elan Corp. Plc, ADR............................... 1,033,725
80,000 * Express Scripts, Inc., Cl. A.................... 6,260,000
265,000 * Idexx Laboratories, Inc......................... 4,562,969
390,000 Johnson & Johnson................................. 35,831,250
179,000 Lilly (Eli) & Co.................................. 11,456,000
53,100 * Maxxim Medical, Inc............................. 1,271,081
398,600 McKesson HBOC, Inc................................ 11,559,400
1,000,000 Merck & Co., Inc.................................. 64,812,500
468,000 Stryker Corp...................................... 23,926,500
174,500 VISX, Inc. ....................................... 13,801,859
138,000 Warner-Lambert Co................................. 9,159,750
--------------
195,080,529
--------------
Industrial Specialty Products & Services - 4.6%
219,800 AptarGroup, Inc. ................................. 5,879,650
39,600 Badger Meter, Inc................................. 1,356,300
290,000 * Dionex Corp. ................................... 12,397,500
122,000 Dover Corp........................................ 4,986,750
202,900 Furon Co.......................................... 5,059,819
481,700 Gaylord Container Corp., Cl. A.................... 3,432,113
134,200 Kaydon Corp....................................... 3,338,225
361,600 Leggett & Platt, Inc.............................. 7,119,000
100,000 * Meade Instruments Corp.......................... 2,406,250
223,200 Pall Corp. ....................................... 5,175,450
185,200 Park Electrochemical Corp......................... 6,088,450
75,300 Robbins & Myers, Inc.............................. 1,167,150
176,500 Snap-on, Inc. .................................... 5,736,250
185,000 Spartech Corp..................................... 5,422,812
89,400 Tecumseh Products Co., Cl. A...................... 4,481,175
57,800 Tecumseh Products Co., Cl. B...................... 2,608,225
256,000 Teleflex, Inc..................................... 10,112,000
50,000 Wescast Industries, Inc. ......................... 1,431,250
--------------
88,198,369
--------------
Information Services & Technology - 19.3%
158,000 * America Online, Inc............................. 16,432,000
66,000 Autodesk, Inc..................................... 1,443,750
40,000 Compaq Computer Corp. ............................ 917,500
78,000 Comverse Technology, Inc. ........................ 7,356,375
515,000 * Dell Computer Corp. ............................ 21,533,438
510,000 * Gateway, Inc.................................... 22,663,125
377,468 Hewlett-Packard Co. .............................. 34,727,056
1,196,000 Intel Corp........................................ 88,877,750
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Information Services & Technology - continued
226,000 International Business Machines Corp............. $ 27,430,750
100,000 * Macromedia, Inc. .............................. 4,087,500
249,000 * Micros Systems, Inc............................ 10,084,500
670,000 * Microsoft Corp................................. 60,676,875
812,000 Sun Microsystems, Inc............................ 75,516,000
--------------
371,746,619
--------------
Oil/Energy - 2.5%
50,000 Atlantic Richfield Co. .......................... 4,431,250
122,000 Exxon Corp. ..................................... 9,264,375
131,000 Mobil Corp. ..................................... 13,198,250
155,000 * Precision Drilling Corp. ...................... 3,594,062
238,000 Royal Dutch Petroleum Co. ....................... 14,056,875
118,590 Tosco Corp. ..................................... 2,994,398
--------------
47,539,210
--------------
Oil Field Services - 0.9%
161,900 Baker Hughes, Inc. .............................. 4,695,100
107,500 Diamond Offshore Drilling, Inc. ................. 3,587,813
83,000 Halliburton Co. ................................. 3,403,000
87,000 Schlumberger Ltd. ............................... 5,421,187
--------------
17,107,100
--------------
Paper & Packaging - 0.0%
65,000 Wausau Mosinee Paper Corp. ...................... 788,125
--------------
Printing, Publishing, Broadcasting &
Entertainment - 8.7%
45,000 * AMFM, Inc. .................................... 2,739,375
1,920,075 * Clear Channel Communications, Inc. ............ 153,365,991
760,000 Wiley (John) & Sons, Inc., Cl. A................. 11,922,500
--------------
168,027,866
--------------
Real Estate - 0.6%
141,860 * Alexander's, Inc. REIT......................... 10,258,251
46,200 Apartment Investment & Management Co. Cl. A
REIT............................................ 1,767,150
--------------
12,025,401
--------------
Retailing & Wholesale - 5.7%
145,000 * Bed Bath & Beyond, Inc. ....................... 5,065,937
160,000 Costco Wholesale Corp. .......................... 11,520,000
68,200 Dillards, Inc., Cl. A............................ 1,385,313
180,000 Ethan Allen Interiors, Inc. ..................... 5,726,250
153,000 Home Depot, Inc. ................................ 10,499,625
169,138 * Jones Apparel Group, Inc. ..................... 4,862,718
402,800 Lowe's Companies, Inc. .......................... 19,636,500
86,500 * Safeway, Inc. ................................. 3,292,406
402,000 Seaway Food Town, Inc.**......................... 11,230,875
52,000 Tandy Corp. ..................................... 2,687,750
724,000 Wal-Mart Stores, Inc. ........................... 34,435,250
--------------
110,342,624
--------------
</TABLE>
51
<PAGE>
EVERGREEN
Evergreen Fund
Schedule of Investments(continued)
September 30, 1999
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Telecommunication Services & Equipment - 0.1%
30,000 * ADC Telecommunications, Inc. ................... $ 1,258,125
--------------
Transportation - 1.3%
45,000 Delta Air Lines, Inc. ............................ 2,182,500
165,365 * Heartland Express, Inc. ........................ 2,335,781
967,875 Southwest Airlines Co. ........................... 14,699,601
120,000 U.S. Freightways Corp. ........................... 5,685,000
--------------
24,902,882
--------------
Utilities - Gas - 0.3%
140,000 Williams Companies, Inc. ......................... 5,241,250
--------------
Utilities - Telephone - 1.7%
431,000 AT&T Corp. ....................................... 18,748,500
50,000 * Nextel Communications, Inc.,
Cl. A............................................ 3,390,625
190,400 * Powertel, Inc. ................................. 10,483,900
--------------
32,623,025
--------------
Total Common Stocks
(cost $891,839,436).............................. 1,836,764,282
--------------
UNIT INVESTMENT TRUST - 0.4%
60,000 S&P 500 Depository Receipt (Spiders)
(cost $7,436,893)................................ 7,725,000
--------------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
SHORT-TERM INVESTMENTS - 3.0%
Repurchase Agreement - 3.0%
$ 58,822,000 State Street Bank & Trust Co., purchased
9/30/1999, 5.22%, maturing 10/1/1999,
maturity value $58,830,529
(cost $58,822,000) (a)...................... $ 58,822,000
--------------
</TABLE>
<TABLE>
<C> <S> <C> <C>
Total Investments -(cost
$958,098,329)......................... 98.8% 1,903,311,282
Other Assets and Liabilities - net..... 1.2 22,228,567
----- --------------
Net Assets............................. 100.0% $1,925,539,849
===== ==============
</TABLE>
(a) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices plus accrued interest at Septem-
ber 30, 1999.
* Non-income producing security.
** Investment in non-controlled affiliate holding over 5% of outstanding vot-
ing shares. At September 30, 1999, the Fund held investments in the follow-
ing securities:
<TABLE>
<CAPTION>
Dividends
Security Name Shares Cost Value Earned
----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cornerstone Bancorp, Inc. 109,318 $ 1,089,310 $ 1,434,799 $ 45,914
Seaway Food Town, Inc. 402,000 1,563,474 11,230,875 72,360
</TABLE>
Summary of Abbreviations
ADR American Depository Receipt
REIT Real Estate Investment Trust
See Combined Notes to Financial Statements.
52
<PAGE>
EVERGREEN
Masters Fund
Schedule of Investments
September 30, 1999
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - 96.1%
Advertising & Related
Services - 0.5%
28,700 Interpublic Group of Companies, Inc. ................. $ 1,180,287
3,100 RH Donnelley Corp. ................................... 57,738
1,900 Young & Rubicam, Inc. ................................ 83,600
------------
1,321,625
------------
Aerospace & Defense - 0.9%
2,500 Boeing Co. ........................................... 106,562
4,000 General Dynamics Corp. ............................... 249,750
6,800 Rockwell International Corp. ......................... 357,000
26,400 United Technologies Corp. ............................ 1,565,850
------------
2,279,162
------------
Automotive Equipment & Manufacturing - 0.4%
2,400 Arvin Industries, Inc. ............................... 74,250
1,000 Cooper Tire & Rubber Co. ............................. 17,625
14,000 Federal-Mogul Corp. .................................. 385,875
2,500 Ford Motor Co. ....................................... 125,469
900 Johnson Controls, Inc. ............................... 59,681
7,700 Meritor Automotive, Inc. ............................. 160,737
1,000 SPX Corp. ............................................ 90,750
1,000 Standard Products Co. ................................ 35,375
2,200 * Tower Automotive, Inc. ............................. 43,588
------------
993,350
------------
Banks - 4.4%
20,000 Associated Banc Corp. ................................ 723,750
45,000 BankBoston Corp. ..................................... 1,951,875
3,000 BB&T Corp. ........................................... 97,125
7,000 Chase Manhattan Corp. ................................ 527,625
5,400 Comerica, Inc. ....................................... 273,375
4,800 Dime Bancorp, Inc. ................................... 84,000
9,300 Fifth Third Bancorp .................................. 565,847
8,000 First Security Corp. ................................. 190,250
35,200 Firstar Corp. ........................................ 902,000
4,600 Fleet Boston Corp. ................................... 168,475
55,000 Huntington Bancshares, Inc. .......................... 1,460,937
10,000 KeyCorp .............................................. 258,125
1,620 M&T Bank Corp. ....................................... 743,580
8,600 National City Corp. .................................. 229,513
25,000 North Fork Bancorp, Inc. ............................. 487,500
4,200 Northern Trust Corp. ................................. 350,700
3,360 Old Kent Financial Corp. ............................. 124,740
500 PNC Bank Corp. ....................................... 26,344
20,000 SouthTrust Corp. ..................................... 717,500
5,800 Wachovia Corp. ....................................... 456,025
1,700 Webster Financial Corp. .............................. 43,350
23,800 Wells Fargo Co. ...................................... 943,075
2,200 Zions Bancorp......................................... 121,275
------------
11,446,986
------------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Building, Construction &
Furnishings - 2.6%
3,600 * American Standard Companies, Inc. .................. $ 138,150
22,000 Armstrong World Industries, Inc. ..................... 988,625
12,900 Centex Construction Products, Inc. ................... 478,912
14,000 Centex Corp. ......................................... 413,875
30,000 Clayton Homes, Inc. .................................. 260,625
4,000 Johns Manville Corp. ................................. 53,000
26,800 Kaufman & Broad Home Corp. ........................... 552,750
30,000 * Knoll, Inc. ........................................ 806,250
5,000 La-Z-Boy Chair Co. ................................... 95,313
2,100 Lafarge Corp. ........................................ 67,463
70,000 Lennar Corp. ......................................... 1,115,625
3,400 * Lone Star Industries, Inc. ......................... 169,575
35,500 Miller (Herman), Inc. ................................ 848,672
2,000 * Mohawk Industries, Inc. ............................ 39,875
2,200 * NVR, Inc. .......................................... 111,100
900 Rayonier, Inc. ....................................... 37,800
2,000 Ryland Group, Inc. ................................... 45,500
10,700 * Shaw Industries, Inc. .............................. 169,862
1,000 Southdown, Inc. ...................................... 53,500
28,025 United States Aggregates, Inc. ....................... 390,598
------------
6,837,070
------------
Business Equipment &
Services - 4.1%
16,900 * Affiliated Computer Services
Inc., Cl. A.......................................... 686,563
8,300 Automatic Data Processing, Inc. ...................... 370,388
2,500 * CDI Corp. .......................................... 68,281
25,000 * Computer Sciences Corp. ............................ 1,757,812
25,100 * CSG System International, Inc. ..................... 687,897
1,000 De Luxe Corp. ........................................ 34,000
3,400 Dun & Bradstreet Corp. ............................... 101,575
2,200 First Data Corp. ..................................... 96,525
28,950 * Fiserv, Inc. ....................................... 940,875
2,000 Harte-Hanks, Inc. .................................... 50,375
250 Luminant Worlwide Corp. .............................. 7,688
79,000 Nova Corp. ........................................... 1,975,000
1,900 Paychex, Inc. ........................................ 64,838
27,900 * Policy Management Systems Corp. .................... 882,337
1,300 * Sabre Group Holdings, Inc., Cl. A................... 55,900
50,800 * SunGard Data Systems, Inc. ......................... 1,336,675
34,800 * Zebra Technologies Corp., Cl. A..................... 1,582,312
------------
10,699,041
------------
Chemical & Agricultural
Products - 1.2%
49,700 AGCO Corp. ........................................... 646,100
1,500 * Agribrands International, Inc. ..................... 74,438
1,300 Dow Chemical Co. ..................................... 147,712
5,600 Du Pont (E. I.) De Nemours & Co. ..................... 340,900
900 PPG Industries, Inc. ................................. 54,000
8,800 Praxair, Inc. ........................................ 404,800
2,200 Schulman (A.), Inc. .................................. 38,088
</TABLE>
53
<PAGE>
EVERGREEN
Masters Fund
Schedule of Investments(continued)
September 30, 1999
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Chemical & Agricultural
Products - continued
27,400 Sigma-Aldrich Corp. ................................. $ 869,950
5,700 Solutia, Inc. ....................................... 101,887
3,500 Union Carbide Corp. ................................. 198,844
1,400 Waters Corp. ........................................ 84,787
------------
2,961,506
------------
Communication Systems & Services - 2.3%
150 Airgate PCS, Inc. ................................... 3,731
38,200 * Cisco Systems, Inc. ............................... 2,619,088
1,500 * Conexant Systems, Inc. ............................ 108,984
28,600 Lucent Technologies, Inc. ........................... 1,855,425
12,100 * MCI WorldCom, Inc. ................................ 869,688
900 Nielsen Media Research, Inc. ........................ 33,469
9,500 * Tellabs, Inc. ..................................... 540,906
600 Western Wireless Corp. .............................. 26,906
------------
6,058,197
------------
Consumer Products &
Services - 2.4%
4,300 * Avis Rent-A-Car, Inc. ............................. 89,763
12,400 Colgate-Palmolive Co. ............................... 567,300
900 Eastman Kodak Co. ................................... 67,894
14,000 Gucci Group.......................................... 1,169,000
2,200 H & R Block, Inc. ................................... 95,562
2,000 Harley-Davidson, Inc. ............................... 100,125
1,000 Hasbro, Inc. ........................................ 21,438
1,200 Hertz Corp., Cl. A................................... 52,800
14,000 Lauder Estee Cos., Inc., Cl. A....................... 546,875
500 Liz Claiborne, Inc. ................................. 15,500
48,400 * Lo-Jack Corp. ..................................... 400,812
50 Mapquest Common, Inc. ............................... 594
3,400 Maytag Corp. ........................................ 113,262
40,000 Newell Rubbermaid, Inc. ............................. 1,142,500
4,800 * R.J. Reynolds Tobacco Holdings, Inc. .............. 129,600
55,000 Tupperware Corp. .................................... 1,113,750
15,000 Valspar Corp. ....................................... 490,312
1,900 WestPoint Stevens, Inc. ............................. 44,888
800 Whirlpool Corp. ..................................... 52,250
------------
6,214,225
------------
Diversified Companies - 1.3%
10,500 Allied Signal, Inc. ................................. 629,344
900 Cooper Industries, Inc. ............................. 42,075
5,400 Minnesota Mining &
Manufacturing Co. .................................. 518,737
21,700 Tyco International Ltd. ............................. 2,240,525
------------
3,430,681
------------
Education - 0.0%
1,600 * Learning Tree International, Inc. ................. 26,500
------------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Electrical Equipment &
Services - 5.1%
500 AVX Corp. ............................................ $ 17,563
59,500 * Cable Design Technologies Corp. .................... 1,357,344
12,400 Cypress Semiconductor Corp. .......................... 266,600
5,200 Emerson Electric Co. ................................. 328,575
35,600 General Electric Co. ................................. 4,220,825
2,000 * Lam Research Corp. ................................. 122,000
2,000 * Lattice Semiconductor Corp. ........................ 59,375
14,900 Motorola, Inc. ....................................... 1,311,200
19,100 * Novellus Systems, Inc. ............................. 1,288,056
1,000 * QLogic Corp. ....................................... 69,875
64,500 * Sipex Corp. ........................................ 923,156
9,400 * Solectron Corp. .................................... 675,037
40,000 Thomas & Betts Corp. ................................. 2,040,000
7,700 * Xilinx, Inc. ....................................... 504,591
------------
13,184,197
------------
Electronic Equipment &
Services - 1.0%
20,200 * Hadco Corp. ........................................ 873,650
2,600 * KLA-Tencor Corp. ................................... 169,000
5,800 LTX Corp. ............................................ 79,387
27,700 * MKS Instruments, Inc. .............................. 616,325
7,400 Sawtek, Inc. ......................................... 259,000
7,600 Texas Instruments, Inc. .............................. 625,100
------------
2,622,462
------------
Finance & Insurance - 5.2%
900 Aetna, Inc. .......................................... 44,325
4,500 AFLAC, Inc. .......................................... 188,437
2,900 Allmerica Financial Corp. ............................ 138,113
3,100 Allstate Corp. ....................................... 77,306
1,600 AMBAC Financial Group, Inc. .......................... 75,800
6,400 American Express Co. ................................. 861,600
8,300 American General Corp. ............................... 524,456
14,100 American Int'l Group, Inc. ........................... 1,225,819
2,000 AXA Financial, Inc. .................................. 111,625
8,300 Capital One Financial Corp. .......................... 323,700
3,300 CIGNA Corp. .......................................... 256,575
900 Cincinnati Financial Corp. ........................... 33,778
32,500 Citigroup, Inc. ...................................... 1,430,000
25,000 Countrywide Credit Industries, Inc. .................. 806,250
88,100 Edwards (A.G.), Inc. ................................. 2,323,637
5,200 Federal Home Loan Mortgage Corp. ..................... 270,400
1,600 Federal National Mortgage Assoc. ..................... 100,300
3,000 Financial Security Assured Holdings Ltd. ............. 155,063
2,600 Greenpoint Financial Corp. ........................... 69,063
700 Hartford Financial Services Group, Inc. .............. 28,613
2,100 Hartford Life, Inc., Cl. A............................ 103,425
2,700 Jefferson Pilot Corp. ................................ 170,606
4,500 Knight/Trimark Group, Inc. Cl. A...................... 133,313
8,500 Lincoln National Corp. ............................... 319,281
900 Marsh & McLennan Co., Inc. ........................... 61,650
</TABLE>
54
<PAGE>
EVERGREEN
Masters Fund
Schedule of Investments(continued)
September 30, 1999
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Finance & Insurance - continued
15,000 MBIA, Inc. ........................................... $ 699,375
8,800 Morgan Stanley, Dean Witter,
Discover & Co. ...................................... 784,850
7,600 Paine Webber Group, Inc. ............................. 275,500
4,050 PMI Group, Inc. ...................................... 165,544
5,600 Providian Financial Corp. ............................ 443,450
266 Radian Group, Inc. ................................... 11,421
10,000 Schwab (Charles) & Co., Inc. ......................... 336,875
35,300 Torchmark Corp. ...................................... 913,387
------------
13,463,537
------------
Food & Beverage Products - 2.7%
3,400 Albertsons, Inc. ..................................... 134,513
17,200 Anheuser Busch Companies, Inc. ....................... 1,205,075
1,900 Conagra, Inc. ........................................ 42,869
1,000 Coors Adolph Co., Cl. B............................... 54,125
1,900 Corn Products International, Inc. .................... 57,831
2,000 Darden Restaurants, Inc. ............................. 39,125
170,500 * Del Monte Foods Co. ................................ 2,408,312
3,000 Fortune Brands, Inc. ................................. 96,750
10,400 Great Atlantic & Pacific Tea, Inc. ................... 315,250
33,400 * Keebler Foods Co. .................................. 997,825
900 Kellogg Co. .......................................... 33,694
2,400 McDonald's Corp. ..................................... 103,200
25,600 Philip Morris Companies, Inc. ........................ 875,200
4,000 * Ryan's Family Steak Houses, Inc. ................... 36,000
14,500 * Suiza Foods Corp. .................................. 543,750
2,000 * Tricon Global Restaurants, Inc. .................... 81,875
2,000 Wendy's International, Inc. .......................... 52,750
------------
7,078,144
------------
Healthcare Products &
Services - 9.5%
11,200 Abbott Laboratories................................... 411,600
4,000 Allergan, Inc. ....................................... 440,000
35,000 * Alza Corp. ......................................... 1,498,437
13,900 * Amgen, Inc. ........................................ 1,132,850
4,400 Bausch & Lomb, Inc. .................................. 290,125
23,000 Beckman Coulter, Inc. ................................ 1,037,875
7,100 * Biogen, Inc. ....................................... 559,569
1,500 Biomet, Inc. ......................................... 39,469
28,400 Bristol-Myers Squibb Co. ............................. 1,917,000
700 * Cytyc Corp. ........................................ 27,081
50,000 * Elan Corp. Plc, ADR................................. 1,678,125
300 * Guidant Corp. ...................................... 16,088
377,500 * Health Management Associates,
Inc., Cl. A.......................................... 2,784,062
90,800 * Idexx Laboratories, Inc. ........................... 1,563,462
4,800 Immunex Corp. ........................................ 208,200
24,600 Johnson & Johnson .................................... 2,260,125
12,500 Lasersight, Inc. ..................................... 170,313
30,000 * Lincare Holdings, Inc. ............................. 799,687
11,000 McKesson HBOC, Inc. .................................. 319,000
13,900 Merck & Co., Inc. .................................... 900,894
5,000 Pharmacia & Upjohn, Inc. ............................. 248,125
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Healthcare Products &
Services - continued
15,000 * Quintiles Transnational Corp. ...................... $ 285,469
26,800 Schering-Plough Corp. ................................ 1,169,150
85,100 * Steris Corp. ....................................... 1,170,125
197,800 * Total Renal Care Holdings, Inc. .................... 1,471,137
500 Trigon Healthcare, Inc. .............................. 14,438
26,800 United Therapeutics Corp. ............................ 773,850
14,700 Ventana Med Systems, Inc. ............................ 249,900
2,000 * VISX, Inc. ......................................... 158,188
14,800 Warner-Lambert Co. ................................... 982,350
------------
24,576,694
------------
Industrial Specialty Products &
Services - 1.3%
1,900 Dover Corp. .......................................... 77,663
1,300 Eaton Corp. .......................................... 112,206
900 Ecolab, Inc. ......................................... 30,713
5,600 Honeywell, Inc. ...................................... 623,350
900 Illinois Tool Works, Inc. ............................ 67,106
21,900 Leggett & Platt, Inc. ................................ 431,156
3,500 Mark IV Industries, Inc. ............................. 69,125
2,300 McDermott International, Inc. ........................ 46,575
42,300 Teleflex, Inc. ....................................... 1,670,850
4,500 Vulcan Materials Co. ................................. 164,812
------------
3,293,556
------------
Information Services &
Technology - 18.3%
550 Active Software, Inc. ................................ 13,166
1,900 * Adaptec, Inc. ...................................... 75,406
1,000 Adobe Systems, Inc. .................................. 113,500
50 Agile Software Corp. ................................. 3,200
75 Alteon Websystems, Inc. .............................. 7,050
5,600 * America Online, Inc. ............................... 582,400
17,100 * Analog Devices, Inc. ............................... 876,375
10,500 * Apple Computer...................................... 664,781
7,400 * Applied Materials, Inc. ............................ 576,275
36,200 * Aspen Technology, Inc. ............................. 352,950
9,700 * BMC Software, Inc. ................................. 694,156
41,300 * Cadence Design Systems, Inc. ....................... 547,225
40,100 Checkfree Holdings Corp. ............................. 1,649,112
14,400 * Citrix Systems, Inc. ............................... 891,900
8,600 * Compuware Corp. .................................... 224,138
4,700 * Comverse Technology, Inc. .......................... 443,269
6,700 Covad Communications Group, Inc. ..................... 292,078
27,700 * Dell Computer Corp. ................................ 1,158,206
8,000 * DST Systems, Inc. .................................. 455,000
49,300 * Edify Corp. ........................................ 617,791
1,000 * Electronics for Imaging, Inc. ...................... 51,406
9,300 * EMC Corp. .......................................... 664,369
8,500 * Etec Systems, Inc. ................................. 319,813
51,000 Fair Issac & Co., Inc. ............................... 1,431,187
1,200 * Gateway, Inc. ...................................... 53,325
47,000 Harbinger Corp. ...................................... 793,125
20,100 Hewlett-Packard Co. .................................. 1,849,200
</TABLE>
55
<PAGE>
EVERGREEN
Masters Fund
Schedule of Investments(continued)
September 30, 1999
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Information Services &
Technology - continued
52,000 Intel Corp. .......................................... $ 3,864,250
7,000 Interliant, Inc. ..................................... 83,563
250 Internap Network Services Corp. ...................... 11,156
30,200 International Business Machines Corp. ................ 3,665,525
125 Interspeed, Inc. ..................................... 2,203
4,000 * Intuit, Inc. ....................................... 350,625
75 Keynote Systems, Inc. ................................ 1,875
2,000 * Legato Systems, Inc. ............................... 87,188
13,300 * Lexmark International Group,
Inc., Cl. A.......................................... 1,070,650
6,000 * LSI Logic........................................... 309,000
20,000 * Micros Systems, Inc. ............................... 810,000
51,600 * Microsoft Corp. .................................... 4,673,025
3,300 * NCR Corp. .......................................... 109,106
33,000 * Network Associates, Inc. ........................... 631,125
78,000 Network Solutions, Inc., Cl. A........................ 7,166,250
4,800 Online Resources...................................... 66,600
7,400 * Oracle Systems Corp. ............................... 336,700
125 Quest Software, Inc. ................................. 5,813
77,600 RSA Security, Inc. ................................... 2,061,250
19,300 Security First Tech Corp. ............................ 750,287
225 Silverstream Software, Inc. .......................... 7,003
78,300 * SportsLine USA, Inc. ............................... 2,314,744
12,900 * Sun Microsystems, Inc. ............................. 1,199,700
1,800 Symbol Technologies, Inc. ............................ 60,525
66,400 * Technology Solutions Co. ........................... 937,900
11,100 * Unisys Corp. ....................................... 500,887
4,700 VeriSign, Inc. ....................................... 500,550
400 * Veritas Software Corp. ............................. 30,375
100 Vitria Technology, Inc. .............................. 3,675
1,000 * Xircom, Inc. ....................................... 42,688
1,900 Yahoo, Inc. .......................................... 341,050
------------
47,395,691
------------
Iron & Steel - 0.0%
2,700 Reliance Steel & Aluminum Co. ........................ 56,700
------------
Leisure & Tourism - 0.2%
4,200 Brunswick Corp. ...................................... 104,475
5,000 Carnival, Corp., Cl. A................................ 217,500
1,044 MGM Grand, Inc. ...................................... 53,440
8,000 Park Place Entertainment Corp. ....................... 100,000
------------
475,415
------------
Machinery - Diversified - 0.2%
27,700 * Applied Science & Tech, Inc. ....................... 571,313
------------
Manufacturing - Distributing - 0.4%
1,300 Bandag, Inc. ......................................... 41,600
1,000 Briggs & Stratton Corp. .............................. 58,375
1,700 Dexter Corp. ......................................... 63,432
900 Sysco Corp. .......................................... 31,556
21,000 * Teradyne, Inc. ..................................... 740,250
------------
935,213
------------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Metal Products & Services - 0.0%
1,900 Inco Ltd. ............................................ $ 40,613
2,000 Ryerson Tull, Inc. ................................... 46,250
------------
86,863
------------
Office Equipment & Supplies - 0.1%
2,000 John H. Harland Co. .................................. 38,875
3,100 Pitney Bowes, Inc. ................................... 188,906
------------
227,781
------------
Oil / Energy - 4.9%
6,600 Apache Corp. ......................................... 285,038
400 Ashland, Inc. ........................................ 13,450
50,000 Beau Canada Exploration Ltd. ......................... 66,018
10,000 * Berkley Petroleum Corp. ............................ 100,048
5,700 Burlington Resources, Inc. ........................... 209,475
140,000 * Canadian 88 Energy Corp. ........................... 299,190
2,800 Canadian Hunter Exploration Ltd. ..................... 39,828
3,800 Chevron Corp. ........................................ 337,250
3,800 * Chieftain International, Inc. ...................... 72,200
23,700 Conoco, Inc., Cl. A................................... 657,675
3,800 Conoco, Inc., Cl. B................................... 104,025
12,000 Devon Energy Corp. ................................... 497,250
21,800 Enron Corp. .......................................... 899,250
6,800 EOG Resources, Inc. .................................. 144,500
29,500 Exxon Corp. .......................................... 2,240,156
25,300 * Houston Exploration Co. ............................ 548,694
9,800 Mobil Corp. .......................................... 987,350
2,000 Murphy Oil Corp. ..................................... 108,125
75,600 Newfield Exploration Co. ............................. 2,490,075
7,700 Paramount Resources Ltd. ............................. 112,149
5,000 Rio Alto Exploration Ltd. ............................ 71,292
19,000 Royal Dutch Petroleum Co. ............................ 1,122,187
1,900 * Stone Energy Corp. ................................. 96,663
5,700 Texaco, Inc. ......................................... 359,812
14,300 Vastar Resources, Inc. ............................... 894,644
------------
12,756,344
------------
Oil Field Services - 2.3%
4,900 * Anderson Exploration Ltd. .......................... 64,697
23,300 * Cooper Cameron Corp. ............................... 879,575
18,500 Diamond Offshore Drilling, Inc. ...................... 617,438
13,000 ENSCO International, Inc. ............................ 234,813
67,500 Frontier Oil Corp. ................................... 459,844
112,600 * Global Industries Ltd. ............................. 914,875
16,000 * Global Marine, Inc. ................................ 263,000
12,000 * Nabors Industries, Inc. ............................ 300,000
47,700 * Noble Drilling Corp. ............................... 1,043,437
30,600 Ranger Oil Ltd. ...................................... 132,247
4,700 Santa Fe International Corp. ......................... 101,344
2,100 * SEACOR SMIT, Inc. .................................. 107,625
5,100 Tidewater, Inc. ...................................... 130,050
22,500 Transocean Offshore, Inc. ............................ 689,062
------------
5,938,007
------------
</TABLE>
56
<PAGE>
EVERGREEN
Masters Fund
Schedule of Investments(continued)
September 30, 1999
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Paper & Packaging - 0.5%
6,000 Avery Dennison Corp. ................................ $ 316,500
1,000 Ball Corp. .......................................... 44,062
8,400 Kimberly-Clark Corp. ................................ 441,000
2,700 Louisiana Pacific Corp. ............................. 42,188
4,300 * Sealed Air Corp. .................................. 220,644
5,300 Weyerhaeuser Co. .................................... 305,412
------------
1,369,806
------------
Pharmaceuticals - 0.5%
1,000 Andrx Corp. ......................................... 58,531
12,600 * Cytoclonal Pharmaceutics, Inc. .................... 82,688
1,000 MedImmune, Inc. ..................................... 99,656
2,000 * Millennium Pharmaceuticals, Inc. .................. 130,000
13,300 * Sepracor, Inc. .................................... 1,004,150
------------
1,375,025
------------
Printing, Publishing, Broadcasting & Entertainment -
5.2%
31,700 AT&T Corp.
(Liberty Media Group), Cl. A........................ 1,176,862
17,000 * CBS Corp. ......................................... 786,250
800 Central Newspapers, Inc., Cl. A...................... 35,600
5,100 * Clear Channel Communications, Inc. ................ 407,362
21,400 Comcast Corp., Cl. A................................. 853,325
4,000 * Cox Communications, Inc., Cl. A.................... 167,000
5,000 Gannett Co., Inc. ................................... 345,938
56,480 * Gemstar International Group Ltd. .................. 4,412,500
15,100 * Hearst-Argyle Television, Inc. .................... 324,650
4,000 * King World Productions, Inc. ...................... 150,000
1,000 Knight-Ridder, Inc. ................................. 54,875
1,000 McClatchy Co., Cl. A................................. 35,750
6,900 Meredith Corp. ...................................... 250,556
1,700 Omnicom Group, Inc. ................................. 134,619
1,900 Reader's Digest Association,
Inc., Cl. A......................................... 55,575
23,000 * Scholastic Corp. .................................. 1,150,000
3,700 * Sinclair Broadcast Group, Inc., Cl. A.............. 33,531
24,500 Time Warner, Inc. ................................... 1,488,375
900 Times Mirror Co., Ser. A............................. 59,231
6,000 Tribune Co. ......................................... 298,500
3,600 * USA Networks, Inc. ................................ 139,500
1,000 * Valassis Communications, Inc. ..................... 43,938
24,400 * Viacom, Inc., Cl. B................................ 1,030,900
------------
13,434,837
------------
Real Estate - 0.6%
1,000 * Alexander's, Inc. REIT............................. 72,313
15,000 Boston Properties, Inc. REIT......................... 460,312
1,900 Del Webb Corp. ...................................... 41,800
8,300 Marriott International, Inc., Cl. A.................. 271,306
70,000 Meditrust Co. REIT................................... 595,000
------------
1,440,731
------------
Retailing & Wholesale - 9.2%
8,000 * Abercrombie & Fitch Co., Cl. A..................... 272,500
3,000 American Eagle Outfitters, Inc. ..................... 145,313
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Retailing & Wholesale - continued
1,000 * Ann Taylor Stores Corp. ............................ $ 40,875
45,000 * Autozone, Inc. ..................................... 1,262,812
25,000 * Barnes & Noble, Inc. ............................... 650,000
900 * Bed Bath & Beyond, Inc. ............................ 31,444
11,500 * Best Buy Co., Inc. ................................. 713,719
66,100 * BJ's Wholesale Club, Inc. .......................... 1,954,081
50,000 * Borders Group, Inc. ................................ 734,375
2,000 Brinker International, Inc. .......................... 54,250
7,300 Circuit City Stores, Inc. ............................ 307,969
10,400 Costco Wholesale Corp. ............................... 748,800
24,000 CVS Corp. ............................................ 979,500
900 Dollar General Corp. ................................. 27,788
45,000 Ethan Allen Interiors, Inc. .......................... 1,431,562
1,900 Family Dollar Stores, Inc. ........................... 40,138
4,500 * Federated Department Stores, Inc. .................. 196,594
11,000 Gap, Inc. ............................................ 352,000
30,400 Home Depot, Inc. ..................................... 2,086,200
1,000 Hughes Supply, Inc. .................................. 21,750
53,964 * Jones Apparel Group, Inc. .......................... 1,551,465
1,900 * K Mart Corp. ....................................... 22,206
600 Lands End, Inc. ...................................... 39,600
3,800 Limited, Inc. ........................................ 145,350
1,300 * Linens 'N Things, Inc. ............................. 43,875
5,000 Lowe's Companies, Inc. ............................... 243,750
4,950 May Department Stores Co. ............................ 180,366
14,100 * Office Depot, Inc. ................................. 143,644
2,000 * Payless Shoesource, Inc. ........................... 101,000
8,800 Petco Animal Supplies, Inc. .......................... 104,500
50,000 Rite Aid Corp. ....................................... 690,625
85,800 Ross Stores, Inc. .................................... 1,726,725
1,900 Ruby Tuesday, Inc. ................................... 37,050
20,000 * Saks, Inc. ......................................... 303,750
1,000 * Shopko Stores, Inc. ................................ 29,000
4,000 Tandy Corp. .......................................... 206,750
1,900 Tiffany & Co.......................................... 113,881
26,200 TJX Co., Inc. ........................................ 735,237
542 Too, Inc. ............................................ 9,722
3,800 W.W. Grainger, Inc. .................................. 182,637
84,100 Wal-Mart Stores, Inc. ................................ 4,000,006
5,900 Walgreen Co. ......................................... 149,712
20,000 * Williams Sonoma, Inc. .............................. 971,250
3,000 * Zale Corp. ......................................... 114,938
------------
23,898,709
------------
Telecommunication Services & Equipment - 2.6%
15,700 * Aerial Communications, Inc. ........................ 425,862
900 Commscope, Inc. ...................................... 29,250
2,500 * General Instrument Corp. ........................... 120,313
49,200 * Global Crossing Ltd. ............................... 1,303,800
53,900 * Intermedia Communications, Inc. .................... 1,172,325
12,700 * MediaOne Group, Inc. ............................... 867,569
7,500 Nokia Corp., ADR...................................... 673,594
3,900 * Qualcomm, Inc. ..................................... 737,831
</TABLE>
57
<PAGE>
EVERGREEN
Masters Fund
Schedule of Investments(continued)
September 30, 1999
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Telecommunication Services & Equipment - continued
15,000 Teligent, Inc., Cl. A................................. $ 745,312
3,100 Vodafone Airtouch Public Ltd., ADR.................... 737,025
------------
6,812,881
------------
Textile & Apparel - 0.2%
5,500 Unifi, Inc. .......................................... 60,500
10,000 V. F. Corp. .......................................... 310,000
------------
370,500
------------
Thrift Institutions - 0.1%
6,600 * Golden St. Bancorp, Inc. ........................... 118,387
2,090 Washington Federal, Inc. ............................. 48,462
------------
166,849
------------
Transportation - 1.4%
3,000 * Alaska Air Group, Inc. ............................. 122,062
1,500 Burlington Northern Santa Fe Corp. ................... 41,250
62,750 Comair Holdings, Inc. ................................ 1,047,141
3,000 * Continental Airlines, Inc., Cl. B................... 98,250
5,600 Delta Air Lines, Inc. ................................ 271,600
1,900 Northwest Airlines Corp., Cl. A....................... 48,450
4,100 Rollins Truck Leasing Corp. .......................... 41,513
50,000 Skywest, Inc. ........................................ 1,096,875
1,700 Southwest Airlines Co. ............................... 25,819
3,700 Union Pacific Corp. .................................. 177,831
20,000 * US Airways Group, Inc. ............................. 525,000
2,400 Xtra Corp. ........................................... 95,400
------------
3,591,191
------------
Utilities - Electric - 0.6%
3,500 Allegheny Energy, Inc. ............................... 111,344
1,900 * Calpine Corp. ...................................... 161,618
1,300 Consolidated Edison, Inc. ............................ 53,950
5,000 Energy East Corp. .................................... 118,750
2,000 Firstenergy Corp. .................................... 51,000
2,800 Florida Progress Corp. ............................... 129,500
3,400 FPL Group, Inc. ...................................... 171,275
2,000 Ipalco Enterprises.................................... 38,875
3,600 Oge Energy Corp. ..................................... 80,100
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Utilities - Electric - continued
4,100 PECO Energy Co. ...................................... $ 153,750
10,000 PG & E Corp. ......................................... 258,750
1,500 PP&L Resources, Inc. ................................. 40,594
4,500 Public Service Enterprise Group, Inc. ................ 173,812
2,900 TNP Enterprises, Inc. ................................ 112,919
------------
1,656,237
------------
Utilities - Telephone - 3.8%
11,900 ALLTEL Corp. ......................................... 837,462
16,900 Ameritech Corp. ...................................... 1,135,469
22,100 AT&T Corp. ........................................... 961,350
9,200 Bell Atlantic Corp. .................................. 619,275
46,200 BellSouth Corp. ...................................... 2,079,000
5,000 GTE Corp. ............................................ 384,375
19,700 SBC Communications, Inc. ............................. 1,005,931
40,000 Sprint Corp. ......................................... 2,170,000
5,900 * Sprint Corp. (PCS Group)............................ 439,919
3,700 U.S. West, Inc. ...................................... 211,131
400 * United States Cellular Corp. ....................... 27,200
------------
9,871,112
------------
Utilities - 0.1%
3,000 Unicom Corp. ......................................... 110,813
------------
Total Common Stocks
(cost $243,928,331).................................. 249,028,951
------------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
SHORT-TERM INVESTMENTS - 3.0%
Repurchase Agreement - 3.0%
$ 7,695,000 State Street Bank & Trust Co., purchased
9/30/1999, 5.22%, maturing 10/1/1999, maturity
value $7,696,116
(cost $7,695,000) (a)........................... 7,695,000
------------
</TABLE>
<TABLE>
<C> <S> <C> <C>
Total Investments -
(cost $251,623,331)........................ 99.10% 256,723,951
Other Assets and Liabilities - net.......... 0.90 2,286,939
----- ------------
Net Assets.................................. 100.0% $259,010,890
===== ============
</TABLE>
(a) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices plus accrued interest at
September 30, 1999.
* Non-income producing security.
Summary of Abbreviations
ADR American Depository Receipt
REIT Real Estate Investment Trust
See Combined Notes to Financial Statements.
58
<PAGE>
EVERGREEN
Omega Fund
Schedule of Investments
September 30, 1999
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - 93.4%
Business Equipment &
Services - 1.8%
400,000 Pychex, Inc. ......................................... $ 13,650,000
------------
Chemical & Agricultural
Products - 2.5%
542,900 Monsanto Co. ......................................... 19,374,744
------------
Communication Systems & Services - 6.0%
170,000 * Allegiance Telecom, Inc. ........................... 8,946,250
280,000 * Cisco Systems, Inc. ................................ 19,197,500
160,000 * McLeod USA, Inc., Cl. A (a)......................... 6,810,000
110,000 * Tellabs, Inc. ...................................... 6,263,125
140,000 * Winstar Communications, Inc. (a).................... 5,468,750
------------
46,685,625
------------
Diversified Companies - 3.5%
260,000 Tyco International Ltd. .............................. 26,845,000
------------
Electrical Equipment &
Services - 2.8%
185,000 General Electric Co. ................................. 21,934,062
------------
Finance & Insurance - 4.7%
100,000 American Express Co. ................................. 13,462,500
125,000 American Int'l Group, Inc. ........................... 10,867,187
273,300 Citigroup, Inc. ...................................... 12,025,200
------------
36,354,887
------------
Healthcare Products &
Services - 5.0%
211,400 Cardinal Health, Inc. ................................ 11,521,300
323,400 Medtronic, Inc. ...................................... 11,480,700
287,500 * Osteotech, Inc. (a)................................. 3,917,188
155,000 * VISX, Inc. ......................................... 12,259,531
------------
39,178,719
------------
Information Services &
Technology - 30.5%
615,400 * American Power Conversion Corp. .................... 11,692,600
145,000 * Citrix Systems, Inc. ............................... 8,980,938
138,200 * Clarify, Inc. (a)................................... 6,953,188
50,000 * CMG Information Services, Inc. (a).................. 5,125,000
200,000 * Cree Research, Inc. (a)............................. 6,787,500
300,000 * Cymer, Inc. ........................................ 10,406,250
360,000 * EMC Corp. .......................................... 25,717,500
33,300 * Engage Technologies, Inc. .......................... 1,254,994
80,000 Hewlett-Packard Co. .................................. 7,360,000
345,000 Intel Corp. .......................................... 25,637,812
100,000 International Business Machines Corp. ................ 12,137,500
75,000 * JDS Uniphase Corp. (a).............................. 8,535,938
240,000 * Microchip Technology, Inc. ......................... 12,330,000
291,000 * Microsoft Corp. .................................... 26,353,687
100,000 * Sanmina Corp. (a)................................... 7,737,500
150,000 * Sapient Corp. (a)................................... 14,137,500
221,600 * Sun Microsystems, Inc. ............................. 20,608,800
215,000 * Veritas Software Corp. (a).......................... 16,326,562
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Information Services &
Technology - continued
104,200 * Vitesse Semiconductor Corp. ....................... $ 8,896,075
------------
236,979,344
------------
Oil/Energy - 4.3%
389,700 Apache Corp. ........................................ 16,830,169
400,000 Devon Energy Corp. (a)............................... 16,575,000
------------
33,405,169
------------
Oil Field Services - 4.1%
285,000 * BJ Services Co., Inc. (a).......................... 9,066,562
200,000 Diamond Offshore Drilling, Inc. (a).................. 6,675,000
345,000 ENSCO International, Inc............................. 6,231,563
121,000 Halliburton Co. ..................................... 4,961,000
150,000 * Weatherford International, Inc. ................... 4,800,000
------------
31,734,125
------------
Pharmaceuticals - 9.6%
180,000 American Home Products Corp. ........................ 7,470,000
260,000 * Enzon, Inc. (a).................................... 7,930,000
225,000 * Forest Laboratories, Inc. ......................... 9,478,125
500,000 ICN Pharmaceuticals, Inc. (a)........................ 8,593,750
145,000 * Millennium Pharmaceuticals, Inc. .................. 9,425,000
330,000 * Neopharm, Inc. (a)................................. 4,867,500
190,000 Pharmacia & Upjohn, Inc. ............................ 9,428,750
265,000 Warner-Lambert Co. .................................. 17,589,375
------------
74,782,500
------------
Printing, Publishing, Broadcasting & Entertainment -
11.0%
225,000 * AMFM, Inc. (a)..................................... 13,696,875
200,000 * CBS Corp. ......................................... 9,250,000
170,000 * Clear Channel Communications, Inc. ................ 13,578,750
400,000 * Infinity Broadcasting Corp. (a).................... 11,725,000
190,000 Time Warner, Inc. ................................... 11,542,500
155,000 * Univision Communications, Inc.,
Cl. A (a)........................................... 12,613,125
300,000 * Viacom, Inc., Cl. B................................ 12,675,000
------------
85,081,250
------------
Retailing & Wholesale - 5.2%
100,000 * Kohl's Corp. ...................................... 6,612,500
273,750 * Staples, Inc. ..................................... 5,971,172
155,000 Tandy Corp. ......................................... 8,011,562
266,000 * Tweeter Home Entertainment
Group, Inc. (a)..................................... 9,941,750
210,000 Wal-Mart Stores, Inc. ............................... 9,988,125
------------
40,525,109
------------
Telecommunication Services & Equipment - 2.4%
180,000 * Antec Corp. (a).................................... 9,562,500
100,000 * Copper Mountain Networks, Inc. (a)................. 8,762,500
------------
18,325,000
------------
Total Common Stocks
(cost $606,362,475)................................. 724,855,534
------------
</TABLE>
59
<PAGE>
EVERGREEN
Omega Fund
Schedule of Investments(continued)
September 30, 1999
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
MONEY MARKET SHARES - 17.9%
138,839,560 Navigator Prime Portfolio
(cost $138,839,560) (b)............................ $138,839,560
------------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
SHORT-TERM INVESTMENTS - 6.7%
Repurchase Agreement - 6.7%
$ 51,502,000 Evergreen Joint Repurchase Agreement,
Investments in repurchase agreements, in a
joint trading account, purchased 9/30/1999,
5.30%, maturing 10/1/1999, maturity value
$51,509,582
(cost $51,502,000) (c)....................... $ 51,502,000
--------------
</TABLE>
<TABLE>
<C> <S> <C> <C>
Total Investments -
(cost $796,704,035)..................... 118.0% 915,197,094
Other Assets and
Liabilities - net....................... (18.0) (139,365,124)
----- -------------
Net Assets............................... 100.0% $ 775,831,970
===== =============
</TABLE>
(a) All or a portion of this security is on loan (See Note 8).
(b) Represents investment in cash collateral received for securities on
loan.
(c) The repurchase agreement is fully collateralized by U.S. government
and/or agency obligations based on market prices plus accrued
interest at September 30, 1999.
* Non-income producing security.
See Combined Notes to Financial Statements.
60
<PAGE>
EVERGREEN
Small Company Growth Fund
Schedule of Investments
September 30, 1999
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - 100.5%
Advertising & Related
Services - 2.6%
174,000 * Lamar Advertising Co., Cl. A........................ $ 8,613,000
356,000 * Outdoor Systems, Inc. .............................. 12,727,000
------------
21,340,000
------------
Automotive Equipment & Manufacturing - 0.1%
45,300 * Dura Automotive Systems, Inc. (b)................... 1,090,031
------------
Banks - 1.7%
304,440 BostonFed Bancorp, Inc. .............................. 4,566,600
465,420 * North Fork Bancorp, Inc. ........................... 9,075,690
------------
13,642,290
------------
Building, Construction &
Furnishings - 2.0%
120,400 Dycom Industries, Inc. (b)............................ 5,079,375
238,600 Texas Industries, Inc. (b)............................ 8,828,200
158,600 United States Aggregates, Inc. ....................... 2,210,487
------------
16,118,062
------------
Business Equipment &
Services - 5.1%
122,855 * BISYS Group, Inc. (a)(b)............................ 5,762,667
105,840 * Comdisco, Inc. ..................................... 2,044,035
103,600 * Consolidated Graphics, Inc. ........................ 4,364,150
233,500 * GTS Duratek, Inc. .................................. 1,393,703
254,200 i2 Technologies, Inc. (b)............................. 9,866,138
328,900 Navigant Consulting Co. (b)........................... 15,252,737
252,500 * Superior Consultant, Inc. (b)....................... 2,966,875
50,000 Trintech Group Plc (b)................................ 656,250
------------
42,306,555
------------
Capital Goods - 1.1%
107,200 Case Corp. ........................................... 5,339,900
100,000 Manitowoc Co., Inc. .................................. 3,412,500
------------
8,752,400
------------
Chemical & Agricultural
Products - 0.2%
53,700 * Cytec Industries, Inc. ............................. 1,288,800
------------
Communication Systems & Services - 7.9%
50,000 Airgate PCS, Inc. .................................... 1,243,750
187,700 * Allegiance Telecom, Inc. ........................... 9,877,713
230,600 * Conexant Systems, Inc. (b).......................... 16,754,531
50,000 Insight Communications, Inc. ......................... 1,431,250
615,500 * McLeod USA, Inc., Cl. A (b)......................... 26,197,219
22,500 NorthPoint Communications Group, Inc. (b)............. 416,250
189,600 RF Micro Devices, Inc. ............................... 8,674,200
8,100 Western Wireless Corp. ............................... 363,234
------------
64,958,147
------------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Consumer Products &
Services - 0.6%
100,000 * Action Performance Co., Inc. (b).................... $ 2,106,250
113,900 * Russ Berrie & Co., Inc. ............................ 2,384,781
25,100 * Scotts Co., Cl. A................................... 869,088
------------
5,360,119
------------
Education - 3.6%
400,000 * CBT Group Public Ltd. .............................. 9,850,000
680,068 * Devry, Inc. ........................................ 13,601,360
277,700 * ITT Educational Services, Inc. ..................... 5,415,150
40,200 Strayer Education, Inc. (b)........................... 798,975
------------
29,665,485
------------
Electrical Equipment &
Services - 5.5%
110,000 * Atmel Corp. (b)..................................... 3,719,375
100,000 AVX Corp. ............................................ 3,512,500
283,100 Cypress Semiconductor Corp. .......................... 6,086,650
103,578 * Maxim Integrated Products, Inc. .................... 6,535,125
137,200 * Microchip Technology, Inc. ......................... 7,048,650
45,500 * Novellus Systems, Inc. (b).......................... 3,068,406
140,000 * QLogic Corp. ....................................... 9,782,500
126,014 * Sipex Corp. ........................................ 1,803,575
60,500 * Xilinx, Inc. ....................................... 3,964,641
------------
45,521,422
------------
Electronic Equipment &
Services - 1.4%
111,000 Fairchild Semiconductor International................. 2,608,500
375,000 Vishay Intertechnology, Inc. ......................... 8,906,250
------------
11,514,750
------------
Finance & Insurance - 1.0%
95,200 Arthur J. Gallagher & Co. ............................ 5,069,400
91,600 Horace Mann Educators Corp. (b)....................... 2,364,425
50,000 Mutual Risk Management Ltd. (b)....................... 612,500
------------
8,046,325
------------
Food & Beverage Products - 0.3%
226,300 * Buffets, Inc. ...................................... 2,630,738
------------
Healthcare Products &
Services - 6.4%
92,600 Affymetrix, Inc. ..................................... 9,115,313
84,000 * Alkermes, Inc. (b).................................. 2,420,250
441,800 * Apria Healthcare Group, Inc. (b).................... 7,400,150
400,000 * Cyberonics, Inc. (b)................................ 7,150,000
193,200 * Osteotech, Inc. .................................... 2,632,350
454,920 * Pediatrix Medical Group, Inc. (b)................... 6,312,015
125,900 QLT Phototherapeutics, Inc. .......................... 9,623,481
95,400 * Renal Care Group, Inc. ............................. 2,089,856
165,700 * St. Jude Medical, Inc. ............................. 5,219,550
75,000 * Steris Corp. (b).................................... 1,031,250
------------
52,994,215
------------
</TABLE>
61
<PAGE>
EVERGREEN
Small Company Growth Fund
Schedule of Investments(continued)
September 30, 1999
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Industrial Specialty Products & Services - 4.7%
73,600 * Cognex Corp. (b).................................... $ 2,221,800
126,400 * Kaydon Corp. ....................................... 3,144,200
872,900 Roper Industries, Inc. (b)............................ 33,388,425
------------
38,754,425
------------
Information Services &
Technology - 27.7%
200,000 * Acxiom Corp. (b).................................... 3,931,250
20,000 Art Technology Group, Inc. ........................... 761,250
100,000 Bluestone Software, Inc. ............................. 2,312,500
291,500 * Cambridge Technology Partners (b)................... 4,226,750
400,200 * Citrix Systems, Inc. (b)............................ 24,787,387
200,000 * Clarify, Inc. ...................................... 10,062,500
96,200 * CMG Information Services, Inc. ..................... 9,860,500
111,100 * Cree Research, Inc. (b)............................. 3,770,456
35,000 Cybergold, Inc. (b)................................... 345,625
100,400 Diamond Technology Partners, Inc. .................... 4,505,450
166,800 * Electronics for Imaging, Inc. ...................... 8,574,563
106,900 * Engage Technologies, Inc. (b)....................... 4,028,794
100,000 * Entrust Technologies, Inc. (b)...................... 2,243,750
15,000 Internap Network Services Corp. ...................... 669,375
199,600 * JDS Uniphase Corp. (b).............................. 22,716,975
267,700 * Maximus, Inc. ...................................... 8,014,269
663,600 * Maxtor Corp. ....................................... 4,375,613
324,900 * National Semiconductor Corp. ....................... 9,909,450
148,400 * Network Appliance, Inc. ............................ 10,629,150
50,000 Paradyne Corp. ....................................... 1,400,000
233,300 * Pegrine Systems, Inc. .............................. 9,506,975
190,100 * PMC-Sierra, Inc. ................................... 17,584,250
464,700 * Radiant Systems, Inc. .............................. 7,522,331
20,000 Radware Ltd. ......................................... 550,000
335,200 * Rational Software Corp. ............................ 9,815,075
37,500 Rhythms NetConnections, Inc. ......................... 1,293,750
154,300 * Sandisk Corp. (b)................................... 10,058,431
76,100 * Sapient Corp. (b)................................... 7,172,425
326,300 * Silicon Graphics, Inc. (b).......................... 3,568,906
100,000 Tanning Technology Corp. ............................. 2,625,000
180,900 USweb Corp. .......................................... 6,207,131
58,200 * Vitesse Semiconductor Corp. ........................ 4,968,825
359,200 Western Digital Corp. ................................ 1,347,000
222,000 Whittman Hart, Inc. .................................. 8,609,438
------------
227,955,144
------------
Leisure & Tourism - 0.4%
125,400 * Steiner Leisure Ltd. ............................... 3,135,000
------------
Manufacturing - Distributing - 0.9%
181,200 Pentair, Inc. ........................................ 7,270,650
------------
Oil / Energy - 1.1%
786,100 * Newpark Resources, Inc. ............................ 6,092,275
179,000 Santa Fe Snyder Corp. ................................ 1,611,000
30,600 * Stone Energy Corp. (b).............................. 1,556,775
------------
9,260,050
------------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Oil Field Services - 4.8%
468,300 * BJ Services Co., Inc. (b).......................... $ 14,897,794
378,000 Diamond Offshore Drilling, Inc. (b).................. 12,615,750
253,800 * R & B Falcon Corp. ................................ 3,331,125
283,400 * Weatherford International, Inc. ................... 9,068,800
------------
39,913,469
------------
Paper & Packaging - 2.1%
83,600 Boise Cascade Corp. ................................. 3,046,175
70,300 Bowater, Inc. ....................................... 3,690,750
489,300 * Smurfit Container Corp. ........................... 10,581,112
------------
17,318,037
------------
Pharmaceuticals - 1.1%
133,300 * Millennium Pharmaceuticals, Inc. (b)............... 8,664,500
------------
Printing, Publishing, Broadcasting & Entertainment -
3.1%
99,100 * AMFM, Inc. ........................................ 6,032,713
273,000 * Big Flower Holdings, Inc. (b)...................... 7,729,312
20,571 * Clear Channel Communications, Inc. ................ 1,643,109
30,000 Radio One, Inc. ..................................... 1,245,000
137,700 * Sinclair Broadcast Group, Inc., Cl. A.............. 1,247,906
143,300 * Valassis Communications, Inc. ..................... 6,296,244
22,800 Young Broadcasting Inc., Cl. A....................... 1,194,150
------------
25,388,434
------------
Real Estate - 0.3%
184,200 * Catellus Development Corp. ........................ 2,164,350
490 * Crestline Capital Corp. ........................... 10,076
------------
2,174,426
------------
Retailing & Wholesale - 4.8%
133,000 American Eagle Outfitters, Inc. ..................... 6,442,187
63,900 * Best Buy Co., Inc. ................................ 3,965,794
110,100 Dollar Tree Stores, Inc. ............................ 4,397,119
295,199 * Jones Apparel Group, Inc. ......................... 8,486,971
219,600 Talbots Inc. ........................................ 9,868,275
166,900 * Zale Corp. ........................................ 6,394,356
------------
39,554,702
------------
Telecommunication Services & Equipment - 5.5%
335,100 * Amdocs Ltd. ....................................... 7,037,100
412,400 Intermedia Communications, Inc. (b).................. 8,969,700
519,400 * Premiere Technologies, Inc. (b).................... 3,083,938
243,700 Univision Communications, Inc.,
Cl. A (b)........................................... 19,831,087
40,700 * US LEC Corp., Cl. A................................ 1,002,238
147,000 * Viatel, Inc. ...................................... 4,345,687
9,400 Voicestream Wireless Corp. .......................... 580,156
------------
44,849,906
------------
Transportation - 2.1%
127,900 * Covenant Transport, Inc., Cl. A.................... 1,950,475
417,900 * Eagle USA Airfreight, Inc. (b)..................... 12,510,881
75,600 Expeditores International Washington, Inc. .......... 2,426,288
------------
16,887,644
------------
</TABLE>
62
<PAGE>
EVERGREEN
Small Company Growth Fund
Schedule of Investments(continued)
September 30, 1999
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Utilities - Electric - 0.9%
184,600 TNP Enterprises, Inc. .............................. $ 7,187,863
------------
Utilities - Telephone - 1.5%
50,000 * Rural Celluar Corp., Cl. A........................ 2,293,750
153,500 * United States Cellular Corp. (b).................. 10,438,000
------------
12,731,750
------------
Total Common Stocks
(cost $620,618,817)................................ 826,275,339
------------
WARRANTS - 0.0%
Leisure & Tourism - 0.0%
49,395 * Isle Capri Casinos, Inc. expiring
6/26/2001+ (cost $284,412)......................... 116,078
------------
MONEY MARKET SHARES - 21.7%
178,173,630 Navigator Prime Portfolio
(cost $178,173,630) (c)............................ 178,173,630
------------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
SHORT-TERM INVESTMENTS - 0.8%
Repurchase Agreement - 0.8%
$ 6,660,000 Evergreen Joint Repurchase Agreement,
Investments in repurchase agreements, in a
joint trading account, purchased 9/30/1999,
5.30%, maturing 10/1/1999, maturity value
$6,660,981
(cost $6,660,000) (d)....................... $ 6,660,000
--------------
</TABLE>
<TABLE>
<C> <S> <C> <C>
Total Investments -
(cost $805,736,859)................... 123.0% 1,011,225,047
Other Assets and
Liabilities - net..................... (23.0) (188,743,210)
----- --------------
Net Assets............................. 100.0% $ 822,481,837
===== ==============
</TABLE>
(a) At September 30, 1999, the Fund owned 122,855 shares of common stock of
BISYS Group, Inc. at a cost of $3,085,538. During the year ended September
30, 1999, the Fund earned no dividend income from this investment. These
shares were purchased prior to Evergreen Distributors, Inc., a wholly-owned
subsidiary of The BISYS Group, Inc. becoming the Fund's principal under-
writer and BISYS Fund Services, Inc. becoming the Funds sub-administrator.
(b) All or a portion of this security is on loan (See Note 8).
(c) Represents investment in cash collateral received for securities on loan.
(d) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices plus accrued interest at Septem-
ber 30, 1999.
* Non-income producing security.
+ No market quotation available. Valued at fair value as determined in good
faith under procedures established by the Fund's Board of Trustees.
See Combined Notes to Financial Statements.
63
<PAGE>
EVERGREEN
Stock Selector Fund
Schedule of Investments
September 30, 1999
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - 98.2%
Automotive Equipment & Manufacturing - 0.4%
36,450 Ford Motor Co. ....................................... $ 1,829,334
------------
Banks - 4.1%
168,295 BankAmerica Corp. .................................... 9,371,928
76,326 BankBoston Corp. ..................................... 3,310,640
60,517 Chase Manhattan Corp. ................................ 4,561,469
103,415 Mellon Bank Corp. .................................... 3,490,256
------------
20,734,293
------------
Building, Construction & Furnishings - 0.5%
207,511 Clayton Homes, Inc. .................................. 1,802,752
42,696 Lennar Corp. ......................................... 680,467
------------
2,483,219
------------
Business Equipment &
Services - 0.4%
139,530 * Thermo Electron Corp. .............................. 1,874,934
------------
Chemical & Agricultural
Products - 2.0%
88,497 IMC Global, Inc. ..................................... 1,288,738
131,993 Monsanto Co. ......................................... 4,710,500
85,023 Praxair, Inc. ........................................ 3,911,058
------------
9,910,296
------------
Communication Systems & Services - 9.2%
279,622 Lucent Technologies, Inc. ............................ 18,140,478
257,559 * MCI WorldCom, Inc. ................................. 18,512,053
91,938 * McLeod USA, Inc., Cl. A............................. 3,913,111
73,406 * Metromedia Fiber Network, Inc. ..................... 1,798,447
52,432 NorthPoint Communications Group, Inc. ................ 969,992
46,800 * Tellabs, Inc. ...................................... 2,664,675
------------
45,998,756
------------
Consumer Products &
Services - 0.2%
66,607 * Cendant Corp. ...................................... 1,182,274
------------
Diversified Companies - 2.7%
53,162 Allied Signal, Inc. .................................. 3,186,398
30,928 Textron, Inc. ........................................ 2,393,054
78,625 Tyco International Ltd. .............................. 8,118,031
------------
13,697,483
------------
Electrical Equipment &
Services - 3.5%
148,027 General Electric Co. ................................. 17,550,451
------------
Electronic Equipment &
Services - 4.2%
253,852 Texas Instruments, Inc................................ 20,879,327
------------
Environmental Services - 0.4%
105,012 Waste Management, Inc. ............................... 2,021,481
------------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Finance & Insurance - 10.2%
256,524 Allstate Corp. ....................................... $ 6,397,067
32,861 American Express Co. ................................. 4,423,912
68,707 American Int'l Group, Inc. ........................... 5,973,215
228,987 Citigroup, Inc. ...................................... 10,075,428
360,103 Conseco, Inc. ........................................ 6,954,489
325,884 Everest Reinsurance Holdings, Inc. ................... 7,760,113
76,433 Federal National Mortgage Assoc. ..................... 4,791,394
43,538 Lehman Brothers Holdings, Inc. ....................... 2,538,809
56,776 Nationwide Financial Services,
Inc., Cl. A.......................................... 2,008,451
------------
50,922,878
------------
Food & Beverage Products - 8.8%
83,133 Anheuser Busch Companies, Inc. ....................... 5,824,506
69,830 * Canandaigua Wine Co., Inc. ......................... 4,172,342
348,694 Chiquita Brands International, Inc. .................. 2,070,371
316,505 Kroger Co. ........................................... 6,982,891
310,265 Nabisco Holdings Corp., Cl. A......................... 10,723,534
55,596 * Pepsi Bottling Group, Inc. ......................... 948,607
145,463 Pepsico, Inc. ........................................ 4,400,256
157,216 Philip Morris Companies, Inc. ........................ 5,374,822
90,267 * Tricon Global Restaurants, Inc. .................... 3,695,305
------------
44,192,634
------------
Healthcare Products &
Services - 7.8%
60,494 American Home Products Corp. ......................... 2,510,501
24,704 Bristol-Myers Squibb Co. ............................. 1,667,520
468,921 Caremark Rx, Inc. .................................... 2,637,681
101,971 Lilly (Eli) & Co. .................................... 6,526,144
18,556 McKesson HBOC, Inc. .................................. 538,124
56,461 Merck & Co., Inc. .................................... 3,659,378
471,000 Mylan Laboratories, Inc. ............................. 8,654,625
66,966 Pfizer, Inc. ......................................... 2,406,591
36,797 Pharmacia & Upjohn, Inc. ............................. 1,826,051
103,877 Warner-Lambert Co. ................................... 6,894,836
29,367 * Watson Pharmaceuticals, Inc. ....................... 897,529
17,131 * Wellpoint Health Networks, Inc.,
Cl. A................................................ 976,467
------------
39,195,447
------------
Industrial Specialty Products &
Services - 1.1%
112,102 Magna International, Inc., Cl. A...................... 5,570,068
------------
Information Services &
Technology - 16.0%
151,260 * America Online, Inc. ............................... 15,731,040
314,073 * Apple Computer ..................................... 19,884,747
329,231 Compaq Computer Corp. ................................ 7,551,736
171,211 * EMC Corp. .......................................... 12,230,886
248,908 * Microsoft Corp. .................................... 22,541,731
56,537 Psinet, Inc. ......................................... 2,033,565
------------
79,973,705
------------
</TABLE>
64
<PAGE>
EVERGREEN
Stock Selector Fund
Schedule of Investments(continued)
September 30, 1999
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Oil/Energy - 6.5%
62,357 Apache Corp. ........................................ $ 2,693,043
54,061 BP Amoco Plc......................................... 5,990,635
122,421 * Midamerica Energy Holdings Co. .................... 3,611,420
114,951 Mobil Corp. ......................................... 11,581,313
83,402 Sunoco, Inc. ........................................ 2,283,130
214,558 USX Marathon Group................................... 6,275,821
------------
32,435,362
------------
Oil Field Services - 0.5%
89,607 * R&B Falcon Corp. .................................. 1,176,092
57,543 Tidewater, Inc. ..................................... 1,467,346
------------
2,643,438
------------
Paper & Packaging - 0.1%
16,618 International Paper Co. ............................. 798,703
------------
Pharmaceuticals - 0.3%
77,037 ICN Pharmaceuticals, Inc. ........................... 1,324,073
------------
Printing, Publishing, Broadcasting & Entertainment -
2.6%
29,227 * Emmis Broadcasting Corp., Cl. A.................... 1,930,809
143,691 * Fox Entertainment Group, Inc. ..................... 3,035,472
41,765 Time Warner, Inc. ................................... 2,537,224
137,865 * USA Networks, Inc. ................................ 5,342,269
------------
12,845,774
------------
Retailing & Wholesale - 6.6%
221,016 * Abercrombie & Fitch Co., Cl. A..................... 7,528,358
55,704 * Best Buy Co., Inc. ................................ 3,457,130
20,300 Circuit City Stores, Inc. ........................... 856,406
168,273 Dayton Hudson Corp. ................................. 10,106,897
80,528 Lowe's Companies, Inc. .............................. 3,925,740
53,924 * Safeway, Inc. ..................................... 2,052,482
327,106 * Saks, Inc. ........................................ 4,967,922
------------
32,894,935
------------
Telecommunication Services &
Equipment - 3.2%
187,376 * MediaOne Group, Inc. .............................. 12,800,123
213,679 * Metromedia International Group, Inc. .............. 881,426
75,894 * Qwest Communications
International, Inc. ................................ 2,243,616
------------
15,925,165
------------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Transportation - 0.9%
32,558 Burlington Northern Santa Fe Corp. .................. $ 895,345
32,653 CNF Transportation, Inc. ............................ 1,216,324
61,411 Comair Holdings, Inc. ............................... 1,024,796
29,841 CSX Corp. ........................................... 1,264,513
------------
4,400,978
------------
Utilities - Electric - 3.2%
204,814 * AES Corp. ......................................... 12,084,026
32,835 Duke Power Co. ...................................... 1,810,029
40,519 FPL Group, Inc. ..................................... 2,041,145
------------
15,935,200
------------
Utilities - Telephone - 2.8%
172,702 GTE Corp. ........................................... 13,276,467
134,046 * Star Telecommunications, Inc. ..................... 724,686
------------
14,001,153
------------
Total Common Stocks
(cost $409,756,759)................................. 491,221,361
------------
PREFERRED STOCKS - 1.3%
Printing, Publishing, Broadcasting & Entertainment -
1.3%
253,589 News Corp. Ltd.
(cost $5,478,392)................................... 6,767,656
------------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
SHORT-TERM INVESTMENTS - 0.5%
Repurchase Agreement - 0.5%
$ 2,479,986 Societe Generale
purchased 9/30/1999, 5.30%, maturing 10/1/1999,
maturity value $2,480,351
(cost $2,479,986) (a)............................ 2,479,986
------------
</TABLE>
<TABLE>
<C> <S> <C> <C>
Total Investments -
(cost $417,715,137)....................... 100.0% 500,469,003
Other Assets and
Liabilities - net......................... 0.0 (157,293)
----- ------------
Net Assets ................................ 100.0% $500,311,710
===== ============
</TABLE>
(a) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices plus accrued interest at
September 30, 1999.
* Non-income producing security.
See Combined Notes to Financial Statements.
65
<PAGE>
EVERGREEN
Strategic Growth Fund
Schedule of Investments
September 30, 1999
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - 95.6%
Aerospace & Defense - 0.8%
130,000 United Technologies Corp. ............................ $ 7,710,625
------------
Business Equipment &
Services - 1.2%
350,000 Paychex, Inc. ........................................ 11,943,750
------------
Capital Goods - 2.5%
175,000 Caterpillar, Inc. (a)................................. 9,592,188
385,000 Deere & Co. .......................................... 14,894,687
------------
24,486,875
------------
Chemical & Agricultural
Products - 2.1%
561,600 Monsanto Co. ......................................... 20,042,100
------------
Communication Systems & Services - 6.3%
400,000 * Cisco Systems, Inc. ................................ 27,425,000
90,000 * MCI WorldCom, Inc. ................................. 6,468,750
350,000 * McLeod USA, Inc., Cl. A (a)......................... 14,896,875
150,000 * Tellabs, Inc. ...................................... 8,540,625
100,000 * Winstar Communications, Inc. (a).................... 3,906,250
------------
61,237,500
------------
Consumer Products &
Services - 1.7%
175,000 Procter & Gamble Co. ................................. 16,406,250
------------
Diversified Companies - 3.7%
346,600 Tyco International Ltd. .............................. 35,786,450
------------
Electrical Equipment &
Services - 3.7%
300,000 General Electric Co. ................................. 35,568,750
------------
Finance & Insurance - 5.0%
85,000 American Express Co. ................................. 11,443,125
196,875 American Int'l Group, Inc. ........................... 17,115,820
453,800 Citigroup, Inc. ...................................... 19,967,200
------------
48,526,145
------------
Healthcare Products &
Services - 3.0%
239,300 Cardinal Health, Inc. ................................ 13,041,850
446,600 Medtronic, Inc. ...................................... 15,854,300
------------
28,896,150
------------
Industrial Specialty Products & Services - 1.4%
125,000 Honeywell, Inc. ...................................... 13,914,063
------------
Information Services &
Technology - 27.6%
190,000 * Citrix Systems, Inc. ............................... 11,768,125
40,000 * CMG Information Services, Inc. (a).................. 4,100,000
321,200 * EMC Corp. .......................................... 22,945,725
195,000 Hewlett-Packard Co. .................................. 17,940,000
530,000 Intel Corp. .......................................... 39,385,625
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Information Services &
Technology - continued
200,000 International Business Machines Corp. ............... $ 24,275,000
90,000 * JDS Uniphase Corp. (a)............................. 10,243,125
380,000 * Microchip Technology, Inc. (a)..................... 19,522,500
485,000 * Microsoft Corp. ................................... 43,922,812
290,000 * Oracle Systems Corp. .............................. 13,195,000
160,000 * Sapient Corp. (a).................................. 15,080,000
240,000 * Sun Microsystems, Inc. ............................ 22,320,000
200,000 * Veritas Software Corp. (a)......................... 15,187,500
82,200 * Vitesse Semiconductor Corp. ....................... 7,017,825
------------
266,903,237
------------
Machinery - Diversified - 1.6%
95,000 Mannesmann AG........................................ 15,162,704
------------
Oil / Energy - 5.3%
450,000 Apache Corp. ........................................ 19,434,375
500,000 Devon Energy Corp. (a)............................... 20,718,750
300,000 Unocal Corp. ........................................ 11,118,750
------------
51,271,875
------------
Oil Field Services - 4.1%
395,000 * BJ Services Co., Inc. (a).......................... 12,565,937
375,000 Diamond Offshore Drilling, Inc. (a).................. 12,515,625
475,000 ENSCO International, Inc. ........................... 8,579,688
140,000 Halliburton Co. ..................................... 5,740,000
------------
39,401,250
------------
Pharmaceuticals - 7.0%
200,000 American Home Products Corp. ........................ 8,300,000
350,000 Pharmacia & Upjohn, Inc. ............................ 17,368,750
210,000 Schering-Plough Corp. ............................... 9,161,250
400,000 * Shire Pharmaceuticals Group Plc. (a)............... 11,525,000
325,000 Warner-Lambert Co. .................................. 21,571,875
------------
67,926,875
------------
Printing, Publishing, Broadcasting & Entertainment -
8.6%
300,000 * AMFM, Inc. (a)..................................... 18,262,500
300,000 * CBS Corp. ......................................... 13,875,000
255,000 * Clear Channel Communications, Inc. ................ 20,368,125
265,000 Time Warner, Inc. ................................... 16,098,750
355,000 * Viacom, Inc., Cl. B................................ 14,998,750
------------
83,603,125
------------
Retailing & Wholesale - 6.0%
180,000 Home Depot, Inc. .................................... 12,352,500
140,000 * Kohl's Corp. ...................................... 9,257,500
439,650 * Staples, Inc. ..................................... 9,589,866
200,000 Tandy Corp. ......................................... 10,337,500
340,000 Wal-Mart Stores, Inc. ............................... 16,171,250
------------
57,708,616
------------
</TABLE>
66
<PAGE>
EVERGREEN
Strategic Growth Fund
Schedule of Investments(continued)
September 30, 1999
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Telecommunication Services & Equipment - 4.0%
260,000 Motorola, Inc. .................................... $ 22,880,000
170,000 Nokia Corp., ADR................................... 15,268,125
--------------
38,148,125
--------------
Total Common Stocks
(cost $678,728,446)............................... 924,644,465
--------------
MONEY MARKET SHARES - 9.6%
93,024,515 Navigator Prime Portfolio
(cost $93,024,515) (b)............................ 93,024,515
--------------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
SHORT-TERM INVESTMENTS - 4.2%
Repurchase Agreement - 4.2%
$ 40,623,000 Evergreen Joint Repurchase Agreement,
Investments in repurchase agreements, in
a joint trading account, purchased
9/30/1999, 5.30%, maturing 10/1/1999,
maturity value $40,628,981
(cost $40,623,000) (c)...................... $ 40,623,000
--------------
</TABLE>
<TABLE>
<C> <S> <C> <C>
Total Investments -
(cost $812,375,961)................... 109.4% 1,058,291,980
Other Assets and
Liabilities - net..................... (9.4) (90,636,693)
----- --------------
Net Assets............................. 100.0% $ 967,655,287
===== ==============
</TABLE>
(a) All or a portion of this security is on loan (See Note 8).
(b) Represents investment in cash collateral received for securities on
loan.
(c) The repurchase agreement is fully collateralized by U.S. government
and/or agency obligations based on market prices plus accrued
interest at September 30, 1999.
* Non-income producing security.
Summary of Abbreviations
ADR American Depository Receipt
See Combined Notes to Financial Statements.
67
<PAGE>
EVERGREEN
Tax Strategic Equity Fund
Schedule of Investments
September 30, 1999
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - 81.3%
Banks - 2.5%
1,000 Bank One Corp. ........................................ $ 34,813
1,500 BankAmerica Corp. ..................................... 83,531
7,500 BankBoston Corp. ...................................... 325,312
-----------
443,656
-----------
Building, Construction &
Furnishings - 1.4%
6,000 * Genlyte Group, Inc. ................................. 142,500
5,000 * Royal Group Technologies Ltd. ....................... 107,188
-----------
249,688
-----------
Business Equipment &
Services - 1.3%
1,000 Automatic Data Processing, Inc. ....................... 44,625
2,000 * Computer Sciences Corp. ............................. 140,625
800 First Data Corp. ...................................... 35,100
-----------
220,350
-----------
Capital Goods - 0.6%
2,000 Caterpillar, Inc. ..................................... 109,625
-----------
Chemical & Agricultural
Products - 0.7%
2,000 Du Pont (E. I.) De Nemours & Co. ...................... 121,750
-----------
Communication Systems &
Services - 4.3%
5,000 * Cisco Systems, Inc. ................................. 342,813
5,300 Lucent Technologies, Inc. ............................. 343,837
1,200 * Tellabs, Inc. ....................................... 68,325
-----------
754,975
-----------
Consumer Products & Services - 1.0%
1,800 Procter & Gamble Co. .................................. 168,750
-----------
Diversified Companies - 1.0%
1,700 Tyco International Ltd. ............................... 175,525
-----------
Electrical Equipment &
Services - 6.6%
6,000 Emerson Electric Co. .................................. 379,125
4,400 General Electric Co. .................................. 521,675
700 Motorola, Inc. ........................................ 61,600
4,000 Thomas & Betts Corp. .................................. 204,000
-----------
1,166,400
-----------
Finance & Insurance - 9.3%
5,000 AFLAC, Inc. ........................................... 209,375
2,000 American Express Co. .................................. 269,250
2,762 American Int'l Group, Inc. ............................ 240,121
3,750 Citigroup, Inc. ....................................... 165,000
1,700 Federal Home Loan Mortgage Corp. ...................... 88,400
1,700 Federal National Mortgage Assoc. ...................... 106,569
4,000 Merrill Lynch & Co., Inc. ............................. 268,750
10,000 Mony Group, Inc. ...................................... 288,750
-----------
1,636,215
-----------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Food & Beverage Products - 3.2%
1,500 Anheuser Busch Companies, Inc. ....................... $ 105,094
3,300 Coca Cola Co. ........................................ 158,606
10,000 Coca-Cola Co. Femsa SA, ADR........................... 138,125
2,200 Pepsico, Inc. ........................................ 66,550
2,500 Philip Morris Companies, Inc. ........................ 85,469
-----------
553,844
-----------
Healthcare Products & Services - 7.6%
6,000 * Alza Corp. ......................................... 256,875
1,900 Johnson & Johnson..................................... 174,563
1,600 Lilly (Eli) & Co. .................................... 102,400
4,000 Medtronic, Inc. ...................................... 142,000
3,800 Merck & Co., Inc. .................................... 246,287
2,000 PE Corp-PE Biosystems Group........................... 144,500
4,000 Warner-Lambert Co. ................................... 265,500
-----------
1,332,125
-----------
Industrial Specialty Products & Services - 4.0%
2,000 Honeywell, Inc. ...................................... 222,625
20,000 * Meade Instruments Corp. ............................ 481,250
-----------
703,875
-----------
Information Services &
Technology - 14.3%
900 * America Online, Inc. ............................... 93,600
3,000 Compaq Computer Corp. ................................ 68,812
4,000 * Dell Computer Corp. ................................ 167,250
1,000 * Gateway, Inc. ...................................... 44,438
1,400 Hewlett-Packard Co. .................................. 128,800
5,500 Intel Corp. .......................................... 408,719
6,000 International Business Machines Corp. ................ 728,250
7,600 * Microsoft Corp. .................................... 688,275
1,900 * Sun Microsystems, Inc. ............................. 176,700
-----------
2,504,844
-----------
Oil / Energy - 3.1%
500 Atlantic Richfield Co. ............................... 44,313
2,000 Chevron Corp. ........................................ 177,500
1,200 Exxon Corp. .......................................... 91,125
1,100 Mobil Corp. .......................................... 110,825
2,200 Royal Dutch Petroleum Co. ............................ 129,937
-----------
553,700
-----------
Oil Field Services - 0.7%
1,200 Baker Hughes, Inc. ................................... 34,800
800 Halliburton Co. ...................................... 32,800
1,000 Schlumberger Ltd. .................................... 62,313
-----------
129,913
-----------
Printing, Publishing, Broadcasting & Entertainment -
3.4%
1,700 * Clear Channel Communications, Inc. ................. 135,787
4,000 New York Times Co., Cl. A............................. 150,000
5,000 Time Warner, Inc. .................................... 303,750
-----------
589,537
-----------
</TABLE>
68
<PAGE>
EVERGREEN
Tax Strategic Equity Fund
Schedule of Investments(continued)
September 30, 1999
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Real Estate - 0.8%
5,089 Inversiones y Representaciones SA, GDR................. $ 143,128
-----------
Retailing & Wholesale - 6.9%
900 Costco Wholesale Corp. ................................ 64,800
3,000 Ethan Allen Interiors, Inc. ........................... 95,437
1,300 Home Depot, Inc. ...................................... 89,213
1,500 Lowe's Companies, Inc. ................................ 73,125
800 * Safeway, Inc. ....................................... 30,450
2,000 Tandy Corp. ........................................... 103,375
5,500 Wal-Mart Stores, Inc. ................................. 261,594
10,000 * Williams Sonoma, Inc. ............................... 485,625
-----------
1,203,619
-----------
Telecommunication Services & Equipment - 3.6%
22,550 * Global Crossing Ltd. ................................ 597,575
200 Juniper Networks, Inc. ................................ 36,600
-----------
634,175
-----------
Utilities - Gas - 0.3%
1,500 Williams Companies, Inc. .............................. 56,156
-----------
Utilities - Telephone - 4.7%
5,100 AT&T Corp. ............................................ 221,850
5,000 * Nextel Communications, Inc., Cl. A................... 339,062
2,000 Sprint Corp. .......................................... 108,500
2,000 * Sprint Corp. (PCS Group)............................. 149,125
-----------
818,537
-----------
Total Common Stocks
(cost $11,679,312).................................... 14,270,387
-----------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
SHORT-TERM INVESTMENTS - 15.2%
Repurchase Agreement - 15.2%
$ 2,675,000 State Street Bank & Trust Co., purchased 9/30/1999,
5.22%, maturing 10/1/1999, maturity value
$2,675,388
(cost $2,675,000) (a)............................. $ 2,675,000
-----------
</TABLE>
<TABLE>
<C> <S> <C> <C>
Total Investments -
(cost $14,354,312).............................. 96.5% 16,945,387
Other Assets and
Liabilities - net............................... 3.5 607,793
----- -----------
Net Assets....................................... 100.0% $17,553,180
===== ===========
</TABLE>
(a) The repurchase agreement is fully collateralized by U.S. government
and/or agency obligations based on market prices plus accrued
interest at September 30, 1999.
* Non-income producing security.
Summary of Abbreviations
ADR American Depository Receipt
GDR Global Depository Receipt
See Combined Notes to Financial Statements.
69
<PAGE>
EVERGREEN
Domestic Growth Funds
Statements of Assets and Liabilities
September 30, 1999
<TABLE>
<CAPTION>
Aggressive
Growth Evergreen Masters Omega
Fund Fund Fund Fund
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets
Identified cost of
securities............ $160,206,257 $ 899,276,329 $243,928,331 $745,202,035
Repurchase agreements,
at amortized cost..... 0 58,822,000 7,695,000 51,502,000
- -----------------------------------------------------------------------------------
Total identified cost
of investments........ 160,206,257 958,098,329 251,623,331 796,704,035
Net unrealized gains on
securities............ 97,044,543 945,212,953 5,100,620 118,493,059
- -----------------------------------------------------------------------------------
Market value of
securities............ 257,250,800 1,903,311,282 256,723,951 915,197,094
Cash................... 1,799 6,553 601 793
Receivable for
securities sold....... 94,890 23,156,551 3,468,535 3,661,870
Receivable for Fund
shares sold........... 181,663 367,619 182,401 4,017,002
Dividends and interest
receivable............ 8,986 1,382,173 172,651 138,687
Deferred organization
expenses.............. 4,342 0 0 0
Prepaid expenses and
other assets.......... 30,251 91,958 51,525 72,513
- -----------------------------------------------------------------------------------
Total assets......... 257,572,731 1,928,316,136 260,599,664 923,087,959
- -----------------------------------------------------------------------------------
Liabilities
Payable for securities
purchased............. 739,199 159,688 827,998 7,165,138
Payable for Fund shares
redeemed.............. 68,860 681,557 305,674 460,412
Payable for securities
on loan............... 0 0 0 138,839,560
Advisory fee payable... 130,176 1,458,098 278,767 426,648
Distribution Plan
expenses payable...... 31,455 138,566 48,472 188,279
Due to other related
parties............... 3,975 0 4,504 0
Accrued expenses and
other liabilities..... 57,328 338,378 123,359 175,952
- -----------------------------------------------------------------------------------
Total liabilities.... 1,030,993 2,776,287 1,588,774 147,255,989
- -----------------------------------------------------------------------------------
Net assets.............. $256,541,738 $1,925,539,849 $259,010,890 $775,831,970
- -----------------------------------------------------------------------------------
Net assets represented by
Paid-in capital........ $128,858,584 $ 950,211,582 $254,488,796 $630,311,836
Overdistributed net
investment income
(loss)................ (15,427) (111,928) (5,236) (8,206)
Accumulated net
realized gains or
losses on securities
and foreign currency
related transactions.. 30,654,038 30,227,242 (573,290) 27,035,281
Net unrealized gains on
securities and foreign
currency related
transactions.......... 97,044,543 945,212,953 5,100,620 118,493,059
- -----------------------------------------------------------------------------------
Total net assets........ $256,541,738 $1,925,539,849 $259,010,890 $775,831,970
- -----------------------------------------------------------------------------------
Net assets consists of
Class A................ $166,524,252 $ 180,402,745 $167,847,826 $371,360,866
Class B................ 56,466,097 645,699,853 82,978,609 372,955,890
Class C................ 4,684,555 13,836,262 4,836,559 26,929,243
Class Y................ 28,866,834 1,085,600,989 3,347,896 4,585,971
- -----------------------------------------------------------------------------------
Total net assets........ $256,541,738 $1,925,539,849 $259,010,890 $775,831,970
- -----------------------------------------------------------------------------------
Shares outstanding
Class A................ 6,436,297 7,442,052 16,693,257 13,847,064
Class B................ 2,254,977 27,133,166 8,286,199 14,922,818
Class C................ 187,535 582,161 483,869 1,074,939
Class Y................ 1,100,591 44,347,712 332,606 170,080
- -----------------------------------------------------------------------------------
Net asset value per share
Class A................ $ 25.87 $ 24.24 $ 10.05 $ 26.82
- -----------------------------------------------------------------------------------
Class A--Offering price
(based on sales charge
of 4.75%)............. $ 27.16 $ 25.45 $ 10.55 $ 28.16
- -----------------------------------------------------------------------------------
Class B................ $ 25.04 $ 23.80 $ 10.01 $ 24.99
- -----------------------------------------------------------------------------------
Class C................ $ 24.98 $ 23.77 $ 10.00 $ 25.05
- -----------------------------------------------------------------------------------
Class Y................ $ 26.23 $ 24.48 $ 10.07 $ 26.96
- -----------------------------------------------------------------------------------
</TABLE>
See Combined Notes to Financial Statements.
70
<PAGE>
EVERGREEN
Domestic Growth Funds
Statements of Assets and Liabilities
September 30, 1999
<TABLE>
<CAPTION>
Small Company Tax Strategic
Growth Stock Selector Strategic Growth Equity
Fund Fund Fund Fund
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets
Identified cost of
securities............ $ 799,076,859 $415,235,151 $ 771,752,961 $11,679,312
Repurchase agreements,
at amortized cost..... 6,660,000 2,479,986 40,623,000 2,675,000
- ---------------------------------------------------------------------------------------
Total identified cost
of investments........ 805,736,859 417,715,137 812,375,961 14,354,312
Net unrealized gains on
securities............ 205,488,188 82,753,866 245,916,019 2,591,075
- ---------------------------------------------------------------------------------------
Market value of
securities............ 1,011,225,047 500,469,003 1,058,291,980 16,945,387
Cash................... 628 0 830 292
Receivable for
securities sold....... 6,264,853 0 4,851,605 552,886
Receivable for Fund
shares sold........... 140,728 61,286 12,033 33,870
Dividends and interest
receivable............ 83,794 416,298 367,338 11,806
Prepaid expenses and
other assets.......... 125,248 66,730 339,973 28,719
- ---------------------------------------------------------------------------------------
Total assets........... 1,017,840,298 501,013,317 1,063,863,759 17,572,960
- ---------------------------------------------------------------------------------------
Liabilities
Payable for securities
purchased............. 15,956,100 256,554 2,220,222 0
Payable for Fund shares
redeemed.............. 547,300 52,613 153,409 0
Payable for securities
on loan............... 178,173,630 0 93,024,515 0
Advisory fee payable... 374,656 314,656 428,527 3,026
Distribution Plan
expenses payable...... 140,599 3,240 130,619 6,934
Due to other related
parties............... 0 9,730 0 395
Accrued expenses and
other liabilities..... 166,176 64,814 251,180 9,425
- ---------------------------------------------------------------------------------------
Total liabilities...... 195,358,461 701,607 96,208,472 19,780
- ---------------------------------------------------------------------------------------
Net assets.............. $ 822,481,837 $500,311,710 $ 967,655,287 $17,553,180
- ---------------------------------------------------------------------------------------
Net assets represented
by
Paid-in capital........ $ 650,334,717 $368,246,546 $ 581,691,110 $15,552,622
Undistributed
(overdistributed) net
investment income
(loss)................ (41,195) 94,561 (29,927) 0
Accumulated net
realized gains or
losses on securities,
futures contracts and
foreign currency
related transactions.. (33,299,873) 49,216,737 140,078,621 (590,517)
Net unrealized gains on
securities and foreign
currency related
transactions.......... 205,488,188 82,753,866 245,915,483 2,591,075
- ---------------------------------------------------------------------------------------
Total net assets........ $ 822,481,837 $500,311,710 $ 967,655,287 $17,553,180
- ---------------------------------------------------------------------------------------
Net assets consists of
Class A................ $ 712,063,860 $ 20,929,673 $ 861,731,307 $ 5,054,504
Class B................ 106,557,700 2,375,664 103,234,344 7,881,903
Class C................ 2,233,867 78,326 2,451,675 2,162,302
Class Y................ 1,626,410 476,928,047 237,961 2,454,471
- ---------------------------------------------------------------------------------------
Total net assets........ $ 822,481,837 $500,311,710 $ 967,655,287 $17,553,180
- ---------------------------------------------------------------------------------------
Shares outstanding
Class A................ 110,068,608 1,043,496 78,096,495 360,760
Class B................ 16,688,745 120,183 9,483,140 565,445
Class C................ 349,637 3,912 225,092 154,916
Class Y................ 250,021 23,721,855 21,799 174,326
- ---------------------------------------------------------------------------------------
Net asset value per
share
Class A................ $ 6.47 $ 20.06 $ 11.03 $ 14.01
- ---------------------------------------------------------------------------------------
Class A--Offering price
(based on sales charge
of 4.75%)............. $ 6.79 $ 21.06 $ 11.58 $ 14.71
- ---------------------------------------------------------------------------------------
Class B................ $ 6.39 $ 19.77 $ 10.89 $ 13.94
- ---------------------------------------------------------------------------------------
Class C................ $ 6.39 $ 20.02 $ 10.89 $ 13.96
- ---------------------------------------------------------------------------------------
Class Y................ $ 6.51 $ 20.11 $ 10.92 $ 14.08
- ---------------------------------------------------------------------------------------
</TABLE>
See Combined Notes to Financial Statements.
71
<PAGE>
EVERGREEN
Domestic Growth Funds
Statements of Operations
Year Ended September 30, 1999
<TABLE>
<CAPTION>
Aggressive
Growth Evergreen Masters Omega
Fund Fund Fund(a) Fund
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment income
Dividends (net of
foreign withholding
taxes of $0, $14,639,
$1,974, and $2,712,
respectively).......... $ 382,591 $ 17,944,912 $ 1,348,623 $ 1,704,871
Interest................ 229,370 11,788,123 517,635 1,355,284
- --------------------------------------------------------------------------------
Total investment income.. 611,961 29,733,035 1,866,258 3,060,155
- --------------------------------------------------------------------------------
Expenses
Advisory fee............ 1,470,729 18,282,740 1,762,332 3,375,183
Distribution Plan
expenses............... 931,529 7,550,108 856,233 2,982,564
Administrative services
fees................... 60,868 0 45,288 59,410
Transfer agent fee...... 535,477 4,241,842 568,918 1,158,171
Trustees' fees and
expenses............... 5,107 41,427 5,011 9,031
Other................... 195,840 974,225 331,491 433,981
- --------------------------------------------------------------------------------
Total expenses.......... 3,199,550 31,090,342 3,569,273 8,018,340
Less: Fee credits....... (15,526) (101,232) (7,273) (24,001)
- --------------------------------------------------------------------------------
Net expenses............ 3,184,024 30,989,110 3,562,000 7,994,339
- --------------------------------------------------------------------------------
Net investment loss..... (2,572,063) (1,256,075) (1,695,742) (4,934,184)
- --------------------------------------------------------------------------------
Net realized and
unrealized gains or
losses on securities and
foreign currency related
transactions
Net realized gains or
losses on:
Securities............ 47,119,802 34,102,255 (386,142) 32,232,168
Foreign currency related
transactions......... 0 0 (3,099) 0
- --------------------------------------------------------------------------------
Net realized gains or
losses on securities
and foreign currency
related transactions... 47,119,802 34,102,255 (389,241) 32,232,168
- --------------------------------------------------------------------------------
Net change in unrealized
gains on securities and
foreign currency
related transactions... 26,781,815 265,253,469 5,100,620 78,923,602
- --------------------------------------------------------------------------------
Net realized and
unrealized gains on
securities and foreign
currency related
transactions........... 73,901,617 299,355,724 4,711,379 111,155,770
- --------------------------------------------------------------------------------
Net increase in net
assets resulting from
operations............. $71,329,554 $298,099,649 $ 3,015,637 $106,221,586
</TABLE>
- --------------------------------------------------------------------------------
(a) For the period from December 31,1998 (commencement of operations) to Sep-
tember 30,1999.
See Combined Notes to Financial Statements.
72
<PAGE>
EVERGREEN
Domestic Growth Funds
Statements of Operations
Year Ended September 30, 1999
<TABLE>
<CAPTION>
Small Company Tax Strategic
Growth Stock Selector Strategic Growth Equity
Fund Fund Fund Fund
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment income
Dividends (net of
foreign withholding
taxes of $0, $35,356,
$27,186 and $92,
respectively)........ $ 2,996,478 $ 3,922,676 $ 5,424,765 $ 131,829
Interest.............. 1,562,677 314,183 1,531,205 58,175
- -------------------------------------------------------------------------------------
Total investment
income................ 4,559,155 4,236,859 6,955,970 190,004
- -------------------------------------------------------------------------------------
Expenses
Advisory fee.......... 4,527,512 3,346,783 5,150,970 137,638
Distribution Plan
expenses............. 3,163,878 62,042 3,358,439 69,436
Transfer agent fee.... 2,545,536 102,453 1,569,906 14,054
Administrative
services fees........ 104,938 112,631 140,909 3,554
Trustees' fees and
expenses............. 17,190 8,918 19,077 328
Other................. 548,550 270,016 507,584 160,136
- -------------------------------------------------------------------------------------
Total expenses...... 10,907,604 3,902,843 10,746,885 385,146
Less: Fee credits... (53,451) (25,263) (45,388) (3,297)
Fee waivers
and expense re-
imbursements.. 0 0 0 (123,734)
- -------------------------------------------------------------------------------------
Net expenses........ 10,854,153 3,877,580 10,701,497 258,115
- -------------------------------------------------------------------------------------
Net investment income
(loss)............... (6,294,998) 359,279 (3,745,527) (68,111)
- -------------------------------------------------------------------------------------
Net realized and
unrealized gains or
losses on securities,
futures contracts and
foreign currency
related transactions
Net realized gains or
losses on:
Securities.......... 88,121,980 55,919,458 144,290,538 (556,814)
Futures contracts... (14,406,511) 0 0 0
Foreign currency
related
transactions....... 0 0 (58,478) 0
- -------------------------------------------------------------------------------------
Net realized gains or
losses on securities,
futures contracts and
foreign currency
related
transactions......... 73,715,469 55,919,458 144,232,060 (556,814)
- -------------------------------------------------------------------------------------
Net change in
unrealized gains on
securities and
foreign currency
related
transactions......... 216,564,571 80,892,386 107,095,909 2,456,449
- -------------------------------------------------------------------------------------
Net realized and
unrealized gains on
securities, futures
contracts and foreign
currency related
transactions......... 290,280,040 136,811,844 251,327,969 1,899,635
- -------------------------------------------------------------------------------------
Net increase in net
assets resulting from
operations............ $283,985,042 $137,171,123 $247,582,442 $1,831,524
- -------------------------------------------------------------------------------------
</TABLE>
See Combined Notes to Financial Statements.
73
<PAGE>
EVERGREEN
Domestic Growth Funds
Statements of Changes in Net Assets
Year Ended September 30, 1999
<TABLE>
<CAPTION>
Aggressive
Growth Evergreen Masters Omega
Fund Fund Fund(a) Fund
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operations
Net investment loss.... $ (2,572,063) $ (1,256,075) $ (1,695,742) $ (4,934,184)
Net realized gains or
losses on securities
and foreign currency
related transactions.. 47,119,802 34,102,255 (389,241) 32,232,168
Net change in
unrealized gains on
securities and foreign
currency related
transactions.......... 26,781,815 265,253,469 5,100,620 78,923,602
- -------------------------------------------------------------------------------------
Net increase in net
assets resulting from
operations........... 71,329,554 298,099,649 3,015,637 106,221,586
- -------------------------------------------------------------------------------------
Distributions to
shareholders from
Net investment income
Class A............... 0 (344,730) 0 0
Class Y............... 0 (2,733,186) 0 0
Net realized gains
Class A............... (16,084,131) (652,480) 0 (18,881,795)
Class B............... (4,545,584) (2,054,332) 0 (14,406,403)
Class C............... (384,219) (41,149) 0 (1,728,482)
Class Y............... (3,420,978) (3,449,493) 0 (112,388)
- -------------------------------------------------------------------------------------
Total distributions to
shareholders......... (24,434,912) (9,275,370) 0 (35,129,068)
- -------------------------------------------------------------------------------------
Capital share
transactions
Proceeds from shares
sold.................. 160,664,688 3,509,054,746 308,336,791 547,549,257
Payment for shares
redeemed.............. (178,215,913) (3,764,445,912) (52,341,538) (159,851,713)
Net asset value of
shares issued in
reinvestment of
distributions......... 22,235,576 8,257,762 0 32,430,705
Net asset value of
shares issued in
acquisition........... 0 36,518,956 0 0
- -------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
resulting from capital
share transactions... 4,684,351 (210,614,448) 255,995,253 420,128,249
- -------------------------------------------------------------------------------------
Total increase in net
assets.............. 51,578,993 78,209,831 259,010,890 491,220,767
Net assets
Beginning of period.... 204,962,745 1,847,330,018 0 284,611,203
- -------------------------------------------------------------------------------------
End of period.......... $ 256,541,738 $ 1,925,539,849 $259,010,890 $775,831,970
- -------------------------------------------------------------------------------------
Overdistributed net
investment income
(loss)................. $ (15,427) $ (111,928) $ (5,236) $ (8,206)
- -------------------------------------------------------------------------------------
</TABLE>
(a) For the period from December 31,1998 (commencement of operations) to Sep-
tember 30,1999.
See Combined Notes to Financial Statements.
74
<PAGE>
EVERGREEN
Domestic Growth Funds
Statements of Changes in Net Assets
Year Ended September 30, 1999
<TABLE>
<CAPTION>
Small Company Tax Strategic
Growth Stock Selector Strategic Growth Equity
Fund Fund Fund Fund
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operations
Net investment income
(loss)................ $ (6,294,998) $ 359,279 $ (3,745,527) $ (68,111)
Net realized gains or
losses on securities,
futures contracts and
foreign currency
related transactions.. 73,715,469 55,919,458 144,232,060 (556,814)
Net change in
unrealized gains on
securities and foreign
currency related
transactions.......... 216,564,571 80,892,386 107,095,909 2,456,449
- ---------------------------------------------------------------------------------------
Net increase in net
assets resulting from
operations............ 283,985,042 137,171,123 247,582,442 1,831,524
- ---------------------------------------------------------------------------------------
Distributions to
shareholders from
Net investment income
Class A............... 0 (5,558) 0 (5,136)
Class B............... 0 0 0 (7,564)
Class C............... 0 0 0 (1,809)
Class Y............... 0 (490,627) 0 (6,166)
Net realized gains
Class A............... (129,434,483) (3,569,299) (97,518,215) 0
Class B............... (42,194,482) (120,260) (19,003,185) 0
Class C............... (829,079) 0 (92,547) 0
Class Y............... (222,576) (90,604,377) 0 0
- ---------------------------------------------------------------------------------------
Total distributions to
shareholders......... (172,680,620) (94,790,121) (116,613,947) (20,675)
- ---------------------------------------------------------------------------------------
Capital share
transactions
Proceeds from shares
sold.................. 427,997,897 209,754,401 148,502,035 18,078,274
Payment for shares
redeemed.............. (652,876,201) (287,629,154) (251,438,959) (5,993,681)
Net asset value of
shares issued in
reinvestment of
distributions......... 142,159,901 94,489,967 102,857,319 18,071
- ---------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
resulting from capital
share transactions... (82,718,403) 16,615,214 (79,605) 12,102,664
- ---------------------------------------------------------------------------------------
Total increase in net
assets.............. 28,586,019 58,996,216 130,888,890 13,913,513
Net assets
Beginning of period.... 793,895,818 441,315,494 836,766,397 3,639,667
- ---------------------------------------------------------------------------------------
End of period.......... $ 822,481,837 $ 500,311,710 $ 967,655,287 $17,553,180
- ---------------------------------------------------------------------------------------
Undistributed
(overdistributed) net
investment income
(loss)................. $ (41,195) $ 94,561 $ (29,927) $ 0
- ---------------------------------------------------------------------------------------
</TABLE>
See Combined Notes to Financial Statements.
75
<PAGE>
EVERGREEN
Domestic Growth Funds
Statements of Changes in Net Assets
Year Ended September 30, 1998
<TABLE>
<CAPTION>
Aggressive Small Company
Growth Evergreen Omega Growth
Fund Fund Fund Fund
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operations
Net investment income
(loss)................ $ (2,863,381) $ 2,949,364 $ (2,166,229) $ (9,053,309)
Net realized gains on
securities and foreign
currency related
transactions.......... 21,129,001 11,080,737 47,348,560 95,583,444
Net change in
unrealized gains or
losses on securities
and foreign currency
related transactions.. (32,882,258) (131,256,024) (33,661,614) (507,105,194)
- ---------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
resulting from
operations............ (14,616,638) (117,225,923) 11,520,717 (420,575,059)
- ---------------------------------------------------------------------------------------
Distributions to
shareholders from
Net investment income
Class A............... 0 (756,350) 0 0
Class Y............... 0 (6,894,401) 0 0
Net realized gains
Class A............... (6,090,321) (3,670,523) (14,940,773) 0
Class B............... (1,515,887) (11,529,535) (10,805,705) (124,537,167)
Class C............... (134,112) (199,185) (1,549,758) 0
Class Y............... (1,606,606) (23,699,502) (493) 0
- ---------------------------------------------------------------------------------------
Total distributions to
shareholders.......... (9,346,926) (46,749,496) (27,296,729) (124,537,167)
- ---------------------------------------------------------------------------------------
Capital share
transactions
Proceeds from shares
sold.................. 68,811,650 2,735,869,664 56,200,250 489,047,720
Payment for shares
redeemed.............. (111,550,305) (2,543,496,256) (70,377,012) (834,438,095)
Net asset value of
shares issued in
reinvestment of
distributions......... 8,139,247 40,835,635 25,295,379 105,065,592
Net asset value of
shares issued in
acquisition........... 0 0 0 33,587,309
- ---------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
resulting from capital
share transactions... (34,599,408) 233,209,043 11,118,617 (206,737,474)
- ---------------------------------------------------------------------------------------
Total increase
(decrease) in net
assets.............. (58,562,972) 69,233,624 (4,657,395) (751,849,700)
Net assets
Beginning of period... 263,525,717 1,778,096,394 289,268,598 1,545,745,518
- ---------------------------------------------------------------------------------------
End of period......... $ 204,962,745 $ 1,847,330,018 $284,611,203 $ 793,895,818
- ---------------------------------------------------------------------------------------
Undistributed
(overdistributed) net
investment income
(loss)................. $ (13,651) $ 1,991,530 $ (4,940) $ (31,807)
- ---------------------------------------------------------------------------------------
</TABLE>
See Combined Notes to Financial Statements.
76
<PAGE>
EVERGREEN
Domestic Growth Funds
Statements of Changes in Net Assets
Year Ended September 30, 1998
<TABLE>
<CAPTION>
Tax Strategic
Stock Selector Strategic Growth Equity
Fund(a) Fund Fund(b)
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
Operations
Net investment income (loss)..... $ 231,781 $ (547,355) $ 1,336
Net realized gains on securities
and foreign currency related
transactions.................... 17,941,229 149,548,329 22
Net change in unrealized gains or
losses on securities and foreign
currency related transactions... (120,015,197) (105,851,911) 134,626
- ----------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from
operations...................... (101,842,187) 43,149,063 135,984
- ----------------------------------------------------------------------------------
Distributions to shareholders from
Net investment income
Class B.......................... 0 (1,289,169) 0
Net realized gains
Class B.......................... 0 (113,103,093) 0
- ----------------------------------------------------------------------------------
Total distributions to
shareholders.................... 0 (114,392,262) 0
- ----------------------------------------------------------------------------------
Capital share transactions
Proceeds from shares sold........ 34,074,181 74,908,829 3,503,683
Payment for shares redeemed...... (75,761,134) (188,432,304) 0
Net asset value of shares issued
in reinvestment of
distributions................... 0 101,552,338 0
- ----------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from capital
share transactions............. (41,686,953) (11,971,137) 3,503,683
- ----------------------------------------------------------------------------------
Total increase (decrease) in net
assets........................ (143,529,140) (83,214,336) 3,639,667
Net assets
Beginning of period............. 584,844,634 919,980,733 0
- ----------------------------------------------------------------------------------
End of period................... $ 441,315,494 $ 836,766,397 $3,639,667
- ----------------------------------------------------------------------------------
Undistributed (overdistributed)
net investment income............ $ 231,756 $ (20,596) $ 17,081
</TABLE>
- --------------------------------------------------------------------------------
(a) For the three months ended September 30, 1998. The Fund changed its fiscal
year end from June 30 to September 30, effective September 30, 1998.
(b) For the period from September 1, 1998 (commencement of operations) to Sep-
tember 30, 1998.
See Combined Notes to Financial Statements.
77
<PAGE>
EVERGREEN
Domestic Growth Funds
Statement of Changes in Net Assets
Year Ended June 30, 1998
<TABLE>
<CAPTION>
Stock
Selector
Fund
- --------------------------------------------------------------------------------
<S> <C>
Operations
Net investment income........................................... $ 788,698
Net realized gains on securities and foreign currency related
transactions................................................... 99,737,743
Net change in unrealized gains on securities and foreign
currency related transactions.................................. 10,477,319
- --------------------------------------------------------------------------------
Net increase in net assets resulting from operations........... 111,003,760
- --------------------------------------------------------------------------------
Distributions to shareholders
From net investment income
Class B........................................................ (3,827)
Class Y........................................................ (1,044,935)
From net realized gains
Class A........................................................ (2,420,586)
Class B........................................................ (16,877)
Class Y........................................................ (69,731,105)
- --------------------------------------------------------------------------------
Total distributions to shareholders............................. (73,217,330)
- --------------------------------------------------------------------------------
Capital share transactions
Proceeds from shares sold....................................... 86,624,977
Payment for shares redeemed..................................... (137,373,206)
Net asset value of shares issued in reinvestment of
distributions.................................................. 66,747,336
- --------------------------------------------------------------------------------
Net increase in net assets resulting from capital share
transactions.................................................. 15,999,107
- --------------------------------------------------------------------------------
Total increase in net assets.................................. 53,785,537
Net assets
Beginning of period............................................ 531,059,097
- --------------------------------------------------------------------------------
End of period.................................................. $584,844,634
- --------------------------------------------------------------------------------
Undistributed net investment income.............................. $ 28,200
- --------------------------------------------------------------------------------
</TABLE>
See Combined Notes to Financial Statements.
78
<PAGE>
Combined Notes to Financial Statements
1. ORGANIZATION
The Evergreen Domestic Growth Funds consist of Evergreen Aggressive Growth Fund
("Aggressive Growth Fund"), Evergreen Fund ("Evergreen Fund"), Evergreen Mas-
ters Fund ("Masters Fund"), Evergreen Omega Fund ("Omega Fund"), Evergreen
Small Company Growth Fund ("Small Company Growth Fund"), Evergreen Stock Selec-
tor Fund ("Stock Selector Fund"), Evergreen Strategic Growth Fund ("Strategic
Growth Fund") and Evergreen Tax Strategic Equity Fund ("Tax Strategic Equity
Fund"), (collectively, the "Funds"). Each Fund is a diversified series of Ever-
green Equity Trust (the "Trust"), a Delaware business trust organized on Sep-
tember 18, 1997. The Trust is an open-end management investment company regis-
tered under the Investment Company Act of 1940, as amended (the "1940 Act").
The Funds offer Class A, Class B, Class C and Class Y shares. Class A shares
are sold with a maximum front-end sales charge of 4.75%. Class B and Class C
shares are sold without a front-end sales charge, but pay a higher ongoing dis-
tribution fee than Class A. Class B shares are sold subject to a contingent de-
ferred sales charge that is payable upon redemption and decreases depending on
how long the shares have been held. Class B shares purchased after January 1,
1997 will automatically convert to Class A shares after seven years. Class B
shares purchased prior to January 1, 1997 follow the conversion rights at the
time the shares were purchased. Class C shares are sold subject to a contingent
deferred sales charge payable on shares redeemed within one year after the
month of purchase. Class Y shares are sold at net asset value and are not sub-
ject to contingent deferred sales charges or distribution fees. Class Y shares
are sold only to investment advisory clients of First Union Corporation ("First
Union") and its affiliates, certain institutional investors or Class Y share-
holders of record of certain other funds managed by First Union and its affili-
ates 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 the security is primarily traded. Securities traded on an exchange or NMS
and other securities traded in the over-the-counter market for which there has
been no sale are valued at the mean between the last reported bid and asked
price. Securities for which market quotations are not readily available, in-
cluding restricted securities, are valued at fair value as determined in good
faith according to procedures approved 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. Collateral for certain tri-party repurchase agreements is
held at the counterparty's custodian in a segregated account for the benefit of
the Fund and the counterparty. Each Fund monitors the adequacy of the collat-
eral daily and will require the seller to provide additional collateral in the
event the market value of the securities pledged falls below the carrying value
of the repurchase agreement, including accrued interest. Each Fund will only
enter into repurchase agreements with banks and other financial institutions,
which are deemed by the investment advisor to be creditworthy pursuant to
guidelines established by the Board of Trustees.
Pursuant to an exemptive order issued by the Securities and Exchange Commis-
sion, Omega Fund, Small Company Growth Fund and Strategic Growth Fund, along
with certain other funds managed by Evergreen Investment Management Company
("EIMC"), a subsidiary of First Union, may transfer uninvested cash balances
into
79
<PAGE>
Combined Notes to Financial Statements (continued)
a joint trading account. These balances are invested in one or more repurchase
agreements that are fully collateralized by U.S. Treasury and/or federal agency
obligations.
C. Foreign Currency
The books and records of the Funds are maintained in United States (U.S.) dol-
lars. Foreign currency amounts are translated into U.S. dollars as follows:
market value of investment securities, other assets and liabilities at the
daily rate of exchange; purchases and sales of investment securities and income
and expenses at the rate of exchange prevailing on the respective dates of such
transactions. Net unrealized foreign exchange gains or losses resulting from
changes in foreign currency exchange rates are a component of net unrealized
gains or losses on securities and foreign currency related transactions. Net
realized foreign currency gains or losses on foreign currency related transac-
tions include: foreign currency gains or losses between trade date and settle-
ment date on investment securities transactions, foreign currency related
transactions and the difference between the amounts of interest and dividends
recorded on the books of the Funds and the amount actually received. The por-
tion of foreign currency gains or losses related to fluctuations in exchange
rates between the initial purchase trade date and subsequent sale trade date is
included in realized gains or losses on securities.
D. Futures Contracts
In order to gain exposure to or protect against changes in security values, the
Funds may buy and sell futures contracts.
The initial margin deposited with a broker when entering into a futures trans-
action is subsequently adjusted by daily payments or receipts ("variation mar-
gin") as the value of the contract changes. Such changes are recorded as
unrealized gains or losses. Realized gains or losses are recognized on closing
the contract.
Risks of entering into futures contracts include (i) the possibility of an il-
liquid market for the contract, (ii) the possibility that a change in the value
of the contract may not correlate with changes in the value of the underlying
instrument or index, and (iii) the credit risk that the other party will not
fulfill their obligations under the contract. Futures contracts also involve
elements of market risk in excess of the amount reflected in the Statements of
Assets and Liabilities.
E. Forward Foreign Currency Exchange Contracts
The Funds may enter into forward foreign currency exchange contracts ("forward
contracts") to settle portfolio purchases and sales of securities denominated
in a foreign currency and to hedge certain foreign currency assets or liabili-
ties. Forward contracts are recorded at the forward rate and marked-to-market
daily. Realized gains or losses arising from such transactions are included in
net realized gains or losses on foreign currency related transactions. The
Funds bear the risk of an unfavorable change in the foreign currency exchange
rate underlying the forward contract and is subject to the credit risk that the
other party will not fulfill their obligations under the contract. Forward con-
tracts involve elements of market risk in excess of the amount reflected in the
Statements of Assets and Liabilities.
F. Securities Lending
In order to generate income and to offset expenses, the Funds may lend portfo-
lio securities to brokers, dealers and other financial organizations. The
Funds' investment advisor will monitor the creditworthiness of such borrowers.
Loans of securities may not exceed 33 1/3% of a Fund's total assets and will be
collateralized by cash, letters of credit or U.S. Government securities that
are maintained at all times in an amount equal to at least 100% of the current
market value of the loaned securities, including accrued interest. The Fund
monitors the adequacy of the collateral daily and will require the borrower to
provide additional collateral in the event the value of the collateral falls
below 100% of the market value of the securities on loan. While such securities
are on loan, the borrower will pay a Fund any income accruing thereon, and the
Fund may invest any cash collateral received in portfolio securities, thereby
increasing its return. A Fund will have the right to call any such loan and ob-
tain the securities loaned at any time on five days' notice. Any gain or loss
in the market price of the loaned securities, which occurs during the term of
the loan, would affect a Fund and its investors. A Fund may pay fees in connec-
tion with such loans.
80
<PAGE>
Combined Notes to Financial Statements (continued)
G. Security Transactions and Investment Income
Securities transactions are accounted for no later than one business day after
the trade date. Realized gains and losses are computed on the identified cost
basis. Interest income is recorded on the accrual basis and includes accretion
of discounts and amortization of premiums. Dividend income is recorded on the
ex-dividend date, or in the case of some foreign securities, on the date there-
after when the Fund is made aware of the dividend. Foreign income and capital
gains realized on some foreign securities may be subject to foreign withholding
taxes, which are accrued as applicable.
H. 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, net tax-exempt income and net capital gains, if any, to their sharehold-
ers. The Funds also intend to avoid any excise tax liability by making the re-
quired distributions under 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.
I. Distributions
Distributions from net investment income and/or net realized capital gains for
the Funds, if any, are declared and paid at least annually. Distributions to
shareholders are recorded at the close of business on the ex-dividend date.
Income and capital gains distributions to shareholders are determined in accor-
dance with income tax regulations, which may differ from generally accepted ac-
counting principles. The significant differences between financial statement
amounts available for distribution and distributions made in accordance with
income tax regulations are primarily due to differing treatment for net operat-
ing losses, capital loss carryovers, certain realized losses on securities re-
purchased and for Aggressive Growth Fund, distributions made in connections
with shareholder redemptions. The Aggressive Growth Fund also utilized earnings
and profit distributed to shareholders on redemption of shares as part of the
dividends paid deduction for income tax purposes.
J. 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.
K. Organization Expenses
Organization expenses for Aggressive Growth Fund are amortized to operations
over a five-year period on a straight-line basis. In the event any of the ini-
tial shares of the Aggressive Growth Fund are redeemed by any holder during the
five-year amortization period, redemption proceeds will be reduced by any unam-
ortized 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. Expenses relating to the organization of the Masters
Fund have been reflected in the Fund's operating results for the period ended
September 30, 1999.
3. INVESTMENT ADVISORY AGREEMENT(S) AND OTHER AFFILIATED TRANSACTIONS
Evergreen Investment Management ("EIM"), a division of First Union National
Bank ("FUNB"), serves as the investment advisor to the Aggressive Growth Fund
and the Masters Fund and is paid an advisory fee that is computed daily and
paid monthly at an annual rate of 0.60% and 0.95%, respectively, of each Fund's
average daily net assets.
Evergreen Asset Management Corp. ("EAMC"), a wholly-owned subsidiary of First
Union, MFS Institutional Advisors, Inc., OppenheimerFunds, Inc. and Putnam In-
vestment Management, Inc. are investment managers of the Masters Fund. Subject
to the supervision of EIM, each Manager manages a segment of the Fund's portfo-
lio in accordance with the Fund's investment objective and policies. The Fund
pays no direct fees to the investment managers for their services.
81
<PAGE>
Combined Notes to Financial Statements (continued)
EAMC also serves as the investment advisor to the Evergreen Fund and Tax
Strategic Equity Fund. For Evergreen Fund, EAMC is paid an advisory fee based
on average daily net assets that is computed daily and paid monthly according
to the following schedule:
<TABLE>
<S> <C>
First $750 million......................................... 1.00%
Next $250 million.......................................... 0.90%
Over $1 billion............................................ 0.80%
</TABLE>
For Tax Strategic Equity Fund, EAMC is paid an advisory fee that is computed
daily and paid monthly at an annual rate of 0.95% of the Fund's average daily
net assets.
During the year ended September 30, 1999, the amount of investment advisory
fees waived by the investment advisor was $123,734 for the Tax Strategic Equity
Fund. The impact on the expense ratio represented as a percentage of the Fund's
average net assets was 0.85%.
Lieber & Company, an affiliate of First Union, is the investment sub-advisor to
Evergreen Fund, Masters Fund and Tax Strategic Equity Fund and also provides
brokerage services with respect to substantially all security transactions of
the Fund effected on the New York or American Stock Exchanges. For the periods
ended September 30, 1999, Evergreen Fund, Masters Fund and Tax Strategic Equity
Fund incurred brokerage commissions of $658,466, $122,777 and $45,122, respec-
tively, with Lieber & Company. Lieber & Company is reimbursed by EAMC for pro-
viding investment sub-advisory services at no additional expense to the Funds.
EIMC is the investment advisor for Omega Fund, Small Company Growth Fund and
Strategic Growth Fund. In return for providing investment management and admin-
istrative services to the Funds, EIMC is paid an advisory fee that is computed
daily and paid monthly. For Omega Fund, the advisory fee is determined by ap-
plying percentage rates starting at 0.75% and declining to 0.50% per annum as
net assets increase, to the average daily net assets of the Fund. For Small
Company Growth Fund and Strategic Growth Fund, the advisory fee is determined
by applying percentage rates starting at 0.70% and declining to 0.35% per annum
as net assets increase, to the average daily net assets of the Fund.
Meridian Investment Company ("Meridian"), an indirect subsidiary of First
Union, serves as the investment advisor to the Stock Selector Fund and is paid
an advisory fee that is computed daily and paid monthly at an annual rate of
0.74% of the Fund's average daily net assets.
Evergreen Investment Services ("EIS"), a subsidiary of First Union, serves as
the administrator and The BISYS Group, Inc. ("BISYS") serves as the sub-admin-
istrator to the Funds. As administrator, EIS provides the Funds with facili-
ties, equipment and personnel. As sub-administrator to the Funds, BISYS pro-
vides the officers of the Funds. Officers of the Funds and affiliated Trustees
receive no compensation directly from the Funds.
The administrator and sub-administrator for the Aggressive Growth Fund, Masters
Fund, Stock Selector Fund and Tax Strategic Equity Fund are entitled to an an-
nual 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 in-
vestment 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 assets of the Fund. The sub-administration fee
is calculated by applying percentage rates, which start at 0.01% and decline to
0.004% per annum as net assets increase, to the average daily net assets of the
Fund.
For the year ended September 30, 1999, the Aggressive Growth Fund, Masters
Fund, Stock Selector Fund and Tax Strategic Equity Fund paid or accrued to EIS
the following amounts for administrative and sub-administrative services.
<TABLE>
<CAPTION>
Administration Sub-administration
Fee Fee
----------------------------------
<S> <C> <C>
Aggressive Growth Fund........ $48,293 $12,575
Masters Fund.................. 35,850 9,438
Stock Selector Fund........... 89,398 23,233
Tax Strategic Equity Fund..... 2,815 739
</TABLE>
82
<PAGE>
Combined Notes to Financial Statements (continued)
For the year ended September 30, 1999, the Omega Fund, Small Company Growth
Fund and Strategic Growth Fund reimbursed EIMC for certain administration and
accounting expenses in the amount of $59,410, $104,938 and $140,909, respec-
tively. For the Evergreen Fund, the administration and sub-administration fee
is paid by the investment advisor and is not a Fund expense.
Evergreen Service Company ("ESC"), an indirectly, wholly owned subsidiary of
First Union, serves as the transfer and dividend disbursing agent for the
Funds.
4. DISTRIBUTION PLANS
Evergreen Distributor, Inc. ("EDI"), a wholly owned subsidiary of BISYS, serves
as principal underwriter to the Funds.
Each Fund has adopted Distribution Plans, as allowed by Rule 12b-1 of the 1940
Act, for each class of shares, except Class Y. Distribution plans permit a Fund
to compensate its principal underwriter for costs related to selling shares of
the Fund and for various other services. These costs, which consist primarily
of commissions and service fees to broker-dealers who sell shares of the Fund,
are paid by the Fund through "Distribution Plan expenses". Under the Distribu-
tion Plans, Class A shares incur distribution fees equal to 0.25% of the aver-
age daily net assets of the class, all of which is used to pay for shareholder
service fees. Class B shares and Class C shares incur distribution fees equal
to 1.00% of the average daily net assets of each class. Of this amount, 0.25%
of the distribution fees incurred is used to pay for shareholder service fees
and 0.75% is used to pay for distribution-related costs. Distribution Plan ex-
penses are calculated daily and paid at least quarterly.
During the year ended September 30, 1999, amounts paid or accrued to EDI pursu-
ant to each Fund's Class A, Class B and Class C Distribution Plans were as fol-
lows:
<TABLE>
<CAPTION>
Class A Class B Class C
-------------------------------
<S> <C> <C> <C>
Aggressive Growth Fund.......... $ 403,975 $ 486,251 $ 41,303
Evergreen Fund.................. 516,968 6,895,371 137,769
Masters Fund.................... 330,910 496,987 28,336
Omega Fund...................... 592,955 2,190,334 199,275
Small Company Growth Fund....... 1,737,875 1,394,030 31,973
Stock Selector Fund............. 50,314 11,659 69
Strategic Growth Fund........... 2,145,390 1,193,345 19,704
Tax Strategic Equity Fund....... 8,480 49,075 11,881
</TABLE>
With respect to Class B and Class C shares, the principal underwriter may pay
distribution fees greater than the allowable annual amounts each Fund is per-
mitted to pay under the Distribution Plans.
Each of the Distribution Plans may be terminated at any time by vote of the In-
dependent Trustees or by vote of a majority of the outstanding voting shares of
the respective class.
5. REORGANIZATION OF EVERGREEN STOCK SELECTOR FUND
Effective on the close of business on July 24, 1998, Stock Selector Fund ac-
quired all of the net assets and certain liabilities of the CoreFund Core Eq-
uity Fund (the "CoreFund") through a tax-free exchange of shares. Shareholders
of Class A, Class B and Class Y shares of the CoreFund became owners of that
number of full and fractional shares of Class A, Class B and Class Y, respec-
tively, of Stock Selector Fund having an aggregate net asset value equal to the
aggregate net asset value of their shares of the CoreFund immediately prior to
the close of business on July 24, 1998. The operating results of CoreFund for
prior periods have been carried forward.
6. ACQUISITIONS
Effective on the close of business on January 2, 1998, Small Company Growth
Fund acquired substantially all the assets and assumed certain liabilities of
Keystone Small Company Growth Fund II, an open-end management investment com-
pany registered under the 1940 Act in an exchange of Class A, Class B, Class C
and Class Y shares of Small Company Growth Fund.
Effective the close of business on July 30, 1999, Evergreen Fund acquired sub-
stantially all of the net assets and assumed certain liabilities of Evergreen
Micro Cap Fund, an open-end management investment company
83
<PAGE>
Combined Notes to Financial Statements (continued)
registered under the 1940 Act in an exchange of Class A, Class B, Class C and
Class Y shares of Evergreen Fund.
These acquisitions were accomplished by a tax-free exchange of the respective
shares of each Fund. The value of net assets acquired, number of shares issued,
unrealized appreciation acquired and the aggregate net assets of each Fund im-
mediately after the acquisition were as follows:
<TABLE>
<CAPTION>
Value of Net Number of Unrealized Net Assets
Acquiring Fund Acquired Fund Assets Acquired Shares Issued Appreciation After Acquisition
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Small Company Growth Keystone Small Company Growth Fund II $33,587,309 4,343,439 $ 490,029 $1,340,337,418
Fund
Evergreen Fund Micro Cap Fund 36,518,956 1,418,500 9,170,886 2,079,861,427
</TABLE>
7. CAPITAL SHARE TRANSACTIONS
The Funds have an unlimited number of shares of beneficial interest with $0.001
par value authorized. Shares of beneficial interest of the Funds are currently
divided into Class A, Class B, Class C and Class Y. Transactions in shares of
the Funds were as follows:
Aggressive Growth Fund
<TABLE>
<CAPTION>
Year Ended September 30,
---------------------------------------------------
1999 1998
------------------------- ------------------------
Shares Amount Shares Amount
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A
Shares sold.............. 4,091,486 $ 100,313,056 1,458,678 $ 32,751,533
Automatic conversion of
Class B shares to Class
A shares................ 11,191 258,550 0 0
Shares redeemed.......... (4,837,721) (117,577,148) (2,644,186) (58,974,321)
Shares issued in
reinvestment of
distributions........... 690,702 14,484,012 256,170 5,566,568
- -------------------------------------------------------------------------------
Net decrease............. (44,342) (2,521,530) (929,338) (20,656,220)
- -------------------------------------------------------------------------------
Class B
Shares sold.............. 1,041,861 25,104,998 438,746 9,743,538
Automatic conversion of
Class B shares to Class
A shares................ (10,834) (258,550) 0 0
Shares redeemed.......... (737,558) (17,491,988) (537,072) (11,598,031)
Shares issued in
reinvestment of
distributions........... 214,557 4,381,250 69,204 1,481,656
- -------------------------------------------------------------------------------
Net increase (decrease).. 508,026 11,735,710 (29,122) (372,837)
- -------------------------------------------------------------------------------
Class C
Shares sold.............. 559,471 12,662,073 257,084 5,525,299
Shares redeemed.......... (514,120) (11,614,643) (311,675) (6,765,435)
Shares issued in
reinvestment of
distributions........... 18,309 373,139 6,094 130,354
- -------------------------------------------------------------------------------
Net increase (decrease).. 63,660 1,420,569 (48,497) (1,109,782)
- -------------------------------------------------------------------------------
Class Y
Shares sold.............. 927,592 22,584,561 948,746 20,791,280
Shares redeemed.......... (1,287,577) (31,532,134) (1,556,481) (34,212,518)
Shares issued in
reinvestment of
distributions........... 141,310 2,997,175 44,007 960,669
- -------------------------------------------------------------------------------
Net decrease............. (218,675) (5,950,398) (563,728) (12,460,569)
- -------------------------------------------------------------------------------
Net increase (decrease).. $ 4,684,351 $(34,599,408)
</TABLE>
- --------------------------------------------------------------------------------
84
<PAGE>
Combined Notes to Financial Statements (continued)
Evergreen Fund
<TABLE>
<CAPTION>
Year Ended September 30,
----------------------------------------------------------
1999 1998
---------------------------- ----------------------------
Shares Amount Shares Amount
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A
Shares sold............. 55,677,019 $ 1,355,992,224 26,892,204 $ 635,409,399
Automatic conversion of
Class B shares to Class
A shares............... 21,872 535,683 0 0
Shares redeemed......... (57,057,535) (1,393,753,532) (25,471,595) (602,607,887)
Shares issued in
reinvestment of
distributions.......... 41,108 967,124 197,302 4,386,012
Shares issued in
acquisition of
Evergreen Micro Cap
Fund................... 110,596 2,832,746 0 0
- -------------------------------------------------------------------------------------
Net increase
(decrease)............. (1,206,940) (33,425,755) 1,617,911 37,187,524
- -------------------------------------------------------------------------------------
Class B
Shares sold............. 6,058,040 143,376,051 11,537,318 271,151,787
Automatic conversion of
Class B shares to Class
A shares............... (22,179) (535,683) 0 0
Shares redeemed......... (9,071,055) (217,443,162) (4,288,369) (99,320,748)
Shares issued in
reinvestment of
distributions.......... 87,586 2,024,982 516,498 11,383,615
Shares issued in
acquisition of
Evergreen Micro Cap
Fund................... 133,296 3,355,417 0 0
- -------------------------------------------------------------------------------------
Net increase
(decrease)............. (2,814,312) (69,222,395) 7,765,447 183,214,654
- -------------------------------------------------------------------------------------
Class C
Shares sold............. 157,835 3,791,613 311,900 7,316,782
Shares redeemed......... (232,531) (5,540,497) (105,425) (2,443,473)
Shares issued in
reinvestment of
distributions.......... 1,671 38,547 8,349 183,677
Shares issued in
acquisition of
Evergreen Micro Cap
Fund................... 48,087 1,208,311 0 0
- -------------------------------------------------------------------------------------
Net increase
(decrease)............. (24,938) (502,026) 214,824 5,056,986
- -------------------------------------------------------------------------------------
Class Y
Shares sold............. 81,931,751 2,005,894,858 77,736,786 1,821,991,696
Shares redeemed......... (87,321,515) (2,147,708,721) (78,332,089) (1,839,124,148)
Shares issued in
reinvestment of
distributions.......... 220,439 5,227,109 1,115,299 24,882,331
Shares issued in
acquisition of
Evergreen Micro Cap
Fund................... 1,126,521 29,122,482 0 0
- -------------------------------------------------------------------------------------
Net increase
(decrease)............. (4,042,804) (107,464,272) 519,996 7,749,879
- -------------------------------------------------------------------------------------
Net increase
(decrease)............. $ (210,614,448) $ 233,209,043
</TABLE>
- --------------------------------------------------------------------------------
Masters Fund
<TABLE>
<CAPTION>
Period Ended
September 30,1999 (a)
------------------------
Shares Amount
- --------------------------------------------------------------------------------
<S> <C> <C>
Class A
Shares sold........................................... 20,318,705 $202,859,751
Shares redeemed....................................... (3,625,448) (36,604,532)
- --------------------------------------------------------------------------------
Net increase.......................................... 16,693,257 166,255,219
- --------------------------------------------------------------------------------
Class B
Shares sold........................................... 9,086,441 89,703,567
Shares redeemed....................................... (800,242) (8,069,355)
- --------------------------------------------------------------------------------
Net increase.......................................... 8,286,199 81,634,212
- --------------------------------------------------------------------------------
Class C
Shares sold........................................... 587,143 5,789,821
Shares redeemed....................................... (103,274) (1,036,155)
- --------------------------------------------------------------------------------
Net increase.......................................... 483,869 4,753,666
- --------------------------------------------------------------------------------
Class Y
Shares sold........................................... 991,129 9,983,652
Shares redeemed....................................... (658,523) (6,631,496)
- --------------------------------------------------------------------------------
Net increase.......................................... 332,606 3,352,156
- --------------------------------------------------------------------------------
Net increase.......................................... $255,995,253
</TABLE>
- --------------------------------------------------------------------------------
(a) For the period from December 31, 1998 (commencement of operations) to Sep-
tember 30, 1999.
85
<PAGE>
Combined Notes to Financial Statements (continued)
Omega Fund
<TABLE>
<CAPTION>
Year Ended September 30,
--------------------------------------------------
1999 1998
------------------------ ------------------------
Shares Amount Shares Amount
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A
Shares sold............... 9,289,908 $249,132,222 1,365,259 $ 31,279,961
Automatic conversion of
Class B shares to Class A
shares................... 50,716 1,231,524 0 0
Shares redeemed........... (3,536,387) (88,747,695) (1,928,567) (43,773,765)
Shares issued in
reinvestment of
distributions............ 776,324 17,048,085 652,599 13,593,635
- -------------------------------------------------------------------------------
Net increase.............. 6,580,561 178,664,136 89,291 1,099,831
- -------------------------------------------------------------------------------
Class B
Shares sold............... 10,585,079 260,352,911 1,005,764 21,758,490
Automatic conversion of
Class B shares to Class A
shares................... (54,149) (1,231,524) 0 0
Shares redeemed........... (1,881,925) (44,716,715) (992,163) (21,153,692)
Shares issued in
reinvestment of
distributions............ 660,924 13,608,425 515,276 10,207,610
- -------------------------------------------------------------------------------
Net increase.............. 9,309,929 228,013,097 528,877 10,812,408
- -------------------------------------------------------------------------------
Class C
Shares sold............... 729,787 18,084,796 105,783 2,255,994
Shares redeemed........... (410,481) (10,036,714) (244,821) (5,151,403)
Shares issued in
reinvestment of
distributions............ 80,514 1,661,807 75,246 1,493,641
- -------------------------------------------------------------------------------
Net increase (decrease)... 399,820 9,709,889 (63,792) (1,401,768)
- -------------------------------------------------------------------------------
Class Y
Shares sold............... 788,319 19,979,328 38,657 905,805
Shares redeemed........... (649,835) (16,350,589) (12,421) (298,152)
Shares issued in
reinvestment of
distributions............ 5,104 112,388 24 493
- -------------------------------------------------------------------------------
Net increase.............. 143,588 3,741,127 26,260 608,146
- -------------------------------------------------------------------------------
Net increase.............. $420,128,249 $ 11,118,617
</TABLE>
- --------------------------------------------------------------------------------
Small Company Growth Fund
<TABLE>
<CAPTION>
Year Ended September 30,
---------------------------------------------------------
1999 1998
-------------------------- -----------------------------
Shares Amount Shares Amount
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A (a)
Shares sold............. 53,448,602 $ 312,196,051 27,641,238 $ 212,158,414
Automatic conversion of
Class B shares to Class
A shares............... 16,309,922 90,694,600 124,181,726 962,424,518
Shares redeemed......... (82,905,179) (481,200,472) (49,990,672) (395,810,407)
Shares issued in
reinvestment of
distributions.......... 20,259,885 101,907,344 0 0
Shares issued in
acquisition of Keystone
Small Company Growth
Fund II................ 0 0 1,123,086 8,684,926
- ------------------------------------------------------------------------------------
Net increase............ 7,113,230 23,597,523 102,955,378 787,457,451
- ------------------------------------------------------------------------------------
Class B
Shares sold............. 13,062,017 73,444,369 32,457,309 268,266,006
Automatic conversion of
Class B shares to Class
A shares............... (16,453,668) (90,694,600) (124,181,726) (962,424,518)
Shares redeemed......... (22,882,532) (126,566,626) (52,395,091) (430,471,220)
Shares issued in
reinvestment of
distributions.......... 7,865,978 39,251,232 13,003,167 105,065,592
Shares issued in
acquisition of Keystone
Small Company Growth
Fund II................ 0 0 2,456,961 18,998,994
- ------------------------------------------------------------------------------------
Net decrease............ (18,408,205) (104,565,625) (128,659,380) (1,000,565,146)
- ------------------------------------------------------------------------------------
Class C (a)
Shares sold............. 4,040,301 23,282,516 1,067,525 7,292,107
Shares redeemed......... (4,563,805) (26,279,445) (1,025,850) (7,103,508)
Shares issued in
reinvestment of
distributions.......... 155,750 778,749 0 0
Shares issued in
acquisition of Keystone
Small Company Growth
Fund II................ 0 0 675,716 5,225,388
- ------------------------------------------------------------------------------------
Net increase
(decrease)............. (367,754) (2,218,180) 717,391 5,413,987
- ------------------------------------------------------------------------------------
Class Y (a)
Shares sold............. 3,464,745 19,074,961 174,175 1,331,193
Shares redeemed......... (3,380,610) (18,829,658) (140,039) (1,052,960)
Shares issued in
reinvestment of
distributions.......... 44,074 222,576 0 0
Shares issued in
acquisition of Keystone
Small Company Growth
Fund II................ 0 0 87,676 678,001
- ------------------------------------------------------------------------------------
Net increase............ 128,209 467,879 121,812 956,234
- ------------------------------------------------------------------------------------
Net decrease............ $ (82,718,403) $ (206,737,474)
</TABLE>
- --------------------------------------------------------------------------------
(a) For the period from January 26, 1998 (commencement of class operations) to
September 30, 1998.
86
<PAGE>
Combined Notes to Financial Statements (continued)
Stock Selector Fund
<TABLE>
<CAPTION>
Year Ended September 30,
---------------------------------------------------- Year Ended
1999 1998 (a) June 30, 1998
-------------------------- ------------------------ -------------------------
Shares Amount Shares Amount Shares Amount
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A
Shares sold............. 663,818 $ 13,366,339 9,092 $ 185,580 179,299 $ 4,004,438
Automatic conversion of
Class B shares to Class
A shares............... 907 17,214 0 0 0 0
Shares redeemed......... (686,671) (13,666,848) (56,116) (1,183,750) (144,091) (3,155,375)
Shares issued in
reinvestment of
distributions.......... 197,997 3,461,192 0 0 119,866 2,407,663
- ----------------------------------------------------------------------------------------------------------
Net increase
(decrease)............. 176,051 3,177,897 (47,024) (998,170) 155,074 3,256,726
- ----------------------------------------------------------------------------------------------------------
Class B
Shares sold............. 334,998 6,785,937 8,269 159,003 17,128 335,684
Automatic conversion of
Class B shares to Class
A shares............... (916) (17,214) 0 0 0 0
Shares redeemed......... (243,303) (4,897,446) (1,244) (22,379) (2,484) (15,011)
Shares issued in
reinvestment of
distributions.......... 6,740 116,802 0 0 995 17,497
- ----------------------------------------------------------------------------------------------------------
Net increase............ 97,519 1,988,079 7,025 136,624 15,639 338,170
- ----------------------------------------------------------------------------------------------------------
Class C (b)
Shares sold............. 3,912 82,570 0 0 0 0
- ----------------------------------------------------------------------------------------------------------
Net increase............ 3,912 82,570 0 0 0 0
- ----------------------------------------------------------------------------------------------------------
Class Y
Shares sold............. 9,266,068 189,519,555 1,552,973 33,729,598 3,703,125 82,284,855
Shares redeemed......... (13,904,195) (269,064,860) (3,531,924) (74,555,005) (6,152,133) (134,202,820)
Shares issued in
reinvestment of
distributions.......... 5,193,569 90,911,973 0 0 3,198,533 64,322,176
- ----------------------------------------------------------------------------------------------------------
Net increase
(decrease)............. 555,442 11,366,668 (1,978,951) (40,825,407) 749,525 12,404,211
- ----------------------------------------------------------------------------------------------------------
Net increase
(decrease)............. $ 16,615,214 $(41,686,953) $ 15,999,107
</TABLE>
- --------------------------------------------------------------------------------
(a) For the three months ended September 30, 1998. The Fund changed its fiscal
year end from June 30 to September 30, effective September 30, 1998.
(b) For the period from June 30, 1999 (commencement of class operations) to
September 30, 1999.
Strategic Growth Fund
<TABLE>
<CAPTION>
Year Ended September 30,
------------------------------------------------------
1999 1998
-------------------------- --------------------------
Shares Amount Shares Amount
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A (a)
Shares sold............. 8,719,042 $ 92,955,895 2,441,784 $ 24,888,096
Automatic conversion of
Class B shares to Class
A shares............... 6,128,578 63,408,824 80,710,264 735,774,137
Shares redeemed......... (18,728,821) (200,386,524) (10,150,776) (103,841,488)
Shares issued in
reinvestment of
distributions.......... 8,976,424 85,277,296 0 0
- ---------------------------------------------------------------------------------
Net increase............ 5,095,223 41,255,491 73,001,272 656,820,745
- ---------------------------------------------------------------------------------
Class B
Shares sold............. 4,914,300 51,035,070 4,930,584 49,374,717
Automatic conversion of
Class B shares to Class
A shares............... (6,179,154) (63,408,824) (80,710,264) (735,774,137)
Shares redeemed......... (4,614,211) (48,490,126) (8,473,644) (84,439,886)
Shares issued in
reinvestment of
distributions.......... 1,854,514 17,488,143 11,014,353 101,552,338
- ---------------------------------------------------------------------------------
Net decrease............ (4,024,551) (43,375,737) (73,238,971) (669,286,968)
- ---------------------------------------------------------------------------------
Class C (a)
Shares sold............. 410,152 4,274,159 62,655 646,015
Shares redeemed......... (241,893) (2,562,309) (15,565) (150,929)
Shares issued in
reinvestment of
distributions.......... 9,743 91,880 0 0
- ---------------------------------------------------------------------------------
Net increase............ 178,002 1,803,730 47,090 495,086
- ---------------------------------------------------------------------------------
Class Y (b)
Shares sold............. 21,799 236,911 0 0
- ---------------------------------------------------------------------------------
Net increase............ 21,799 236,911 0 0
- ---------------------------------------------------------------------------------
Net decrease............ $ (79,605) $ (11,971,137)
</TABLE>
- --------------------------------------------------------------------------------
(a) For the period from January 22,1998 (commencement of class operations) to
September 30, 1998.
(b) For the period from June 30, 1999 (commencement of class operations) to
September 30, 1999.
87
<PAGE>
Combined Notes to Financial Statements (continued)
Tax Strategic Equity Fund
<TABLE>
<CAPTION>
Year Ended September 30,
-----------------------------------------
1999 1998
--------------------- ------------------
Shares Amount Shares Amount
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A (a)
Shares sold......................... 432,504 $ 5,821,410 964 $ 9,623
Automatic conversion of Class B
shares to Class A shares........... 3,112 42,135 0 0
Shares redeemed..................... (76,163) (1,045,908) 0 0
Shares issued in reinvestment of
distributions...................... 343 4,973 0 0
- ------------------------------------------------------------------------------
Net increase........................ 359,796 4,822,610 964 9,623
- ------------------------------------------------------------------------------
Class B (b)
Shares sold......................... 656,707 8,881,618 0 0
Automatic conversion of Class B
shares to Class A shares........... (3,115) (42,135) 0 0
Shares redeemed..................... (88,644) (1,211,916) 0 0
Shares issued in reinvestment of
distributions...................... 497 7,141 0 0
- ------------------------------------------------------------------------------
Net increase........................ 565,445 7,634,708 0 0
- ------------------------------------------------------------------------------
Class C (c)
Shares sold......................... 170,259 2,319,807 0 0
Shares redeemed..................... (15,428) (213,678) 0 0
Shares issued in reinvestment of
distributions...................... 85 1,225 0 0
- ------------------------------------------------------------------------------
Net increase........................ 154,916 2,107,354 0 0
- ------------------------------------------------------------------------------
Class Y (d)
Shares sold......................... 79,526 1,055,439 340,703 3,494,060
Shares redeemed..................... (246,229) (3,522,179) 0 0
Shares issued in reinvestment of
distributions...................... 326 4,732 0 0
- ------------------------------------------------------------------------------
Net increase (decrease)............. (166,377) (2,462,008) 340,703 3,494,060
- ------------------------------------------------------------------------------
Net increase........................ $12,102,664 $3,503,683
</TABLE>
- --------------------------------------------------------------------------------
(a) For the period from September 4, 1998 (commencement of class operations) to
September 30, 1998.
(b) For the period from October 14, 1998 (commencement of class operations) to
September 30, 1999.
(c) For the period from November 4, 1998 (commencement of class operations) to
September 30, 1999.
(d) For the period from September 1, 1998 (commencement of class operations) to
September 30, 1998.
8. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of investment securities (excluding
short-term securities) were as follows for the year ended September 30, 1999:
<TABLE>
<CAPTION>
Cost of Purchases Proceeds from Sales
-------------------------------------
<S> <C> <C>
Aggressive Growth Fund.... $ 206,152,262 $ 235,292,205
Evergreen Fund............ 663,251,356 649,936,082
Masters Fund.............. 394,738,608 151,165,167
Omega Fund................ 910,996,924 553,205,474
Small Company Growth
Fund..................... 1,034,158,921 1,239,840,831
Stock Selector Fund....... 378,599,747 445,666,459
Strategic Growth Fund..... 1,254,512,610 1,352,594,903
Tax Strategic Equity
Fund..................... 20,871,236 11,712,338
</TABLE>
On September 30, 1999, the composition of unrealized appreciation and deprecia-
tion of securities based on the aggregate cost of securities for federal income
tax purposes was as follows:
<TABLE>
<CAPTION>
Gross Gross Net Unrealized
Tax Unrealized Unrealized Appreciation
Cost Appreciation Depreciation (Depreciation)
---------------------------------------------------
<S> <C> <C> <C> <C>
Aggressive
Growth Fund.... $160,669,402 $108,030,083 $11,448,685 $ 96,581,398
Evergreen Fund.. 958,038,029 972,853,795 27,580,542 945,273,253
Masters Fund.... 252,196,621 29,069,238 24,541,908 4,527,330
Omega Fund...... 802,108,503 140,397,568 27,308,977 113,088,591
Small Company
Growth Fund.... 808,796,195 251,170,558 48,741,706 202,428,852
Stock Selector
Fund........... 422,714,121 125,907,521 48,152,639 77,754,882
Strategic Growth
Fund........... 818,266,698 255,760,608 15,735,326 240,025,282
Tax Strategic
Equity Fund.... 14,361,456 2,630,963 47,032 2,583,931
</TABLE>
Captital losses incurred after October 31, within a fund's fiscal year end are
deemed to arise on the first business day of the fund's following fiscal year.
For the fiscal year ended September 30, 1999, Masters Fund and Tax Strategic
Equity Fund incurred and elected to defer $3,099 and $583,373, respectively, of
capital loss.
88
<PAGE>
Combined Notes to Financial Statements (continued)
During the year ended September 30, 1999, Omega Fund, Small Company Growth Fund
and Strategic Growth Fund loaned securities to certain brokers who paid the
Funds a negotiated lenders' fee. These fees are included in interest income. At
September 30, 1999, the value of securities on loan and the value of collateral
were as follows:
<TABLE>
<CAPTION>
Value of Securities Value of
on Loan Collateral
--------------------------------
<S> <C> <C>
Omega Fund..................... $135,706,680 $138,839,560
Small Company Growth Fund...... 174,906,049 178,173,630
Strategic Growth Fund.......... 90,840,114 93,024,515
</TABLE>
During the year ended September 30, 1999, the Omega Fund, Small Company Growth
Fund and Strategic Growth Fund earned $111,899, $593,789 and $186,689, respec-
tively, in income from securities lending.
At September 30, 1999, the Small Company Growth Fund for federal tax purposes,
had a capital loss carryforward of $29,500,000. Pursuant to the Internal Reve-
nue Code, such capital loss carryforward will expire in 2006.
Capital losses incurred after October 31 within a Fund's fiscal year are deemed
to arise on the first business day of the Fund's following fiscal year. For the
fiscal year ended September 30, 1999, Tax Strategic Equity Fund incurred and
elected to defer $583,373 of such capital losses.
9. EXPENSE OFFSET ARRANGEMENTS
The Funds have entered into expense offset arrangements with ESC and their cus-
todian whereby credits realized as a result of uninvested cash balances were
used to reduce a portion of each Fund's related expenses. The assets deposited
with ESC and the custodian under these expense offset arrangements could have
been invested in income-producing assets. The amount of fee credits received by
each Fund and the impact on each Fund's expense ratio represented as a percent-
age of its average net assets were as follows:
<TABLE>
<CAPTION>
Total Fee Credits % of Average Net
Received Assets
----------------------------------
<S> <C> <C>
Aggressive Growth Fund....... $ 15,526 0.01%
Evergreen Fund............... 101,232 0.00
Masters Fund................. 7,273 0.00
Omega Fund................... 24,001 0.01
Small Company Growth Fund.... 53,451 0.01
Stock Selector Fund.......... 25,263 0.01
Strategic Growth Fund........ 45,388 0.00
Tax Strategic Equity Fund.... 3,297 0.02
</TABLE>
10. DEFERRED TRUSTEES' FEES
Each Independent Trustee of each Fund may defer any or all compensation related
to performance of their duties as Trustees. The Trustees' deferred balances are
allocated to deferral accounts, which are included in the accrued expenses for
the Fund. The investment performance of the deferral accounts are based on the
investment performance of certain Evergreen Funds. Any gains earned or losses
incurred in the deferral accounts are reported in the Fund's Trustees' fees and
expenses. Trustees will be paid either in one lump sum or in quarterly install-
ments for up to ten years at their election, not earlier than either the year
in which the Trustee ceases to be a member of the Board of Trustees or January
1, 2000.
11. FINANCING AGREEMENTS
Certain Evergreen Funds and State Street Bank and Trust Company ("State
Street") and a group of banks (collectively, the "Banks") entered into a fi-
nancing agreement dated December 22, 1997, as amended on November 20, 1998. Un-
der this agreement, the Banks provided an unsecured credit facility in the ag-
gregate amount of $400 million ($275 million committed and $125 million uncom-
mitted). The credit facility was allocated, under the terms of the financing
agreement, among the Banks. The credit facility was accessed by the Funds for
temporary or emergency purposes only and was subject to each Fund's borrowing
restrictions. Borrowings under this facility bore interest at 0.50% per annum
above the Federal Funds rate. A commitment
89
<PAGE>
Combined Notes to Financial Statements (continued)
fee of 0.065% per annum was incurred on the unused portion of the committed fa-
cility, which was allocated to all funds. For its assistance in arranging this
financing agreement, the Capital Markets Group of First Union was paid a one-
time arrangement fee of $27,500. State Street served as administrative agent
for the Banks, and as administrative agent was entitled to a fee of $20,000 per
annum which was allocated to all of the Funds.
This agreement was amended and renewed on December 22, 1998. The amended fi-
nancing agreement became effective on December 22, 1998 among all of the Ever-
green Funds, State Street and The Bank of New York ("BONY"). Under this agree-
ment, State Street and BONY provided an unsecured credit facility in the aggre-
gate amount of $150 million ($125 million committed and $25 million uncommit-
ted). The remaining terms and conditions of the agreement were unaffected.
On July 27, 1999, all of the Evergreen Funds and a group of banks (the "Lend-
ers") entered into a credit agreement. Under this agreement, the Lenders pro-
vide an unsecured revolving credit commitment in the aggregate amount of $1.050
billion. The credit facility is allocated, under the terms of the financing
agreement, among the Lenders. The credit facility is accessed by the Funds for
temporary or emergency purposes to fund the redemption of their shares or as
general working capital as permitted by each Fund's borrowing restrictions.
Borrowings under this facility bear interest at 0.75% per annum above the Fed-
eral Funds rate (1.50% per annum above the Federal Funds rate during the period
from and including December 1, 1999 through and including January 31, 2000). A
commitment fee of 0.10% per annum is incurred on the average daily unused por-
tion of the revolving credit commitment. The commitment fee is allocated to all
funds. For its assistance in arranging this financing agreement, First Union
Capital Markets Corp. was paid a one-time arrangement fee of $250,000. State
Street serves as paying agent for the funds, and as paying agent is entitled to
a fee of $20,000 per annum which is allocated to all of the funds.
During the year ended September 30, 1999, the Funds had no significant
borrowings under these agreements.
12. CONCENTRATION OF RISK
The Funds may invest a substantial portion of its assets in an industry or sec-
tor and, therefore, may be more affected by changes in that industry or sector
than would be a comparable mutual fund that is not heavily weighted in any in-
dustry or sector.
13. CHANGE IN INDEPENDENT AUDITORS (Unaudited)
Based on the recommendation of the Audit Committee of the fund, the Board of
Trustees has determined not to retain PricewaterhouseCoopers LLP as Aggressive
Growth and Stock Selector Fund's independent auditor and voted to appoint KPMG
LLP for the fund's fiscal year ended September 30, 1999. During the two previ-
ous fiscal years, PricewaterhouseCoopers LLP audit reports contained no adverse
opinion or disclaimer of opinion; nor were its reports qualified or modified as
to uncertainty, audit scope, or accounting principle. Further, in connection
with its audits for the two most recent fiscal years and through June 18, 1999,
there were no disagreements between the funds and PricewaterhouseCoopers LLP on
any matter of accounting principles or practices, financial statement disclo-
sure or auditing scope or procedure, which if not resolved to the satisfaction
of PricewaterhouseCoopers LLP would have caused it to make reference to the
disagreements in its report on the financial statements for such years.
90
<PAGE>
Independent Auditors' Report
The Board of Trustees and Shareholders
Evergreen Equity Trust
We have audited the accompanying statements of assets and liabilities, includ-
ing the schedules of investments of the Evergreen Aggressive Growth Fund, Ever-
green Fund, Evergreen Masters Fund, Evergreen Omega Fund, Evergreen Small Com-
pany Growth Fund, Evergreen Stock Selector Fund, Evergreen Strategic Growth
Fund and Evergreen Tax Strategic Equity Fund, portfolios of the Evergreen Eq-
uity Trust, as of September 30, 1999, and the related statements of operations,
statements of changes in net assets and financial highlights for each of the
years or periods then ended. We have also audited the statements of changes in
net assets for the Evergreen Omega Fund, Evergreen Small Company Growth Fund,
Evergreen Strategic Growth Fund and Evergreen Tax Strategic Equity Fund for the
years or periods ended September 30, 1998 and the financial highlights of these
funds for each of the years or periods in the four-year period ended September
30, 1998. These financial statements and financial highlights are the responsi-
bility of the Funds' management. Our responsibility is to express an opinion on
these financial statements and financial highlights based on our audits. The
statements of changes in net assets for the year or period ended September 30,
1998 and June 30, 1998, for the Evergreen Aggressive Growth Fund, Evergreen
Fund, and Evergreen Stock Selector Fund and financial highlights of these funds
for each of the years or periods ended September 30, 1998, and prior were au-
dited by other auditors whose report dated November 12, 1998 expressed an un-
qualified opinion on those financial statements and financial highlights.
We conducted our audits in accordance with generally accepted auditing stan-
dards. Those standards require that we plan and perform our audit to obtain
reasonable assurance about whether the financial statements and financial high-
lights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of Sep-
tember 30, 1999 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement pre-
sentation. We believe that our audits provide a reasonable basis for our opin-
ion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the portfolios of the Evergreen Equity Trust as of September 30, 1999, the
results of their operations, changes in their net assets and financial high-
lights for each of the years or periods described above in conformity with gen-
erally accepted accounting principles.
/s/ KPMG LLP
Boston, Massachusetts
November 5, 1999
91
<PAGE>
Additional Information (Unaudited)
YEAR 2000
Like other investment companies, the Funds could be adversely af-
fected 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 po-
tential year 2000 problem with respect to the computer systems that
they use and to obtain satisfactory assurances that comparable steps
are being taken by the Funds' other major service providers. At this
time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact on the Funds from this prob-
lem.
FEDERAL TAX STATUS OF DISTRIBUTIONS (Unaudited)
Pursuant to section 852 of the Internal Revenue Code, the Funds have
designated the following amounts as long-term 20% capital gain dis-
tributions for the fiscal year ended September 30, 1999:
<TABLE>
<CAPTION>
Aggregate Per Share
------------------------
<S> <C> <C>
Aggressive Growth Fund................... $ 24,434,912 $2.63
Evergreen Fund........................... 6,197,454 0.07
Omega Fund............................... 35,129,068 2.61
Small Company Growth Fund................ 172,680,620 1.18
Stock Selector Fund...................... 78,929,895 3.44
Strategic Growth Fund.................... 116,613,947 1.34
</TABLE>
For corporate shareholders, the following percentages of ordinary in-
come dividends paid during the fiscal year ended September 30, 1999
qualified for the dividends received deduction.
<TABLE>
<S> <C>
Evergreen Fund............................................ 65.67%
Stock Selector Fund....................................... 98.70%
</TABLE>
92
<PAGE>
Evergreen Funds
Money Market
Treasury Money Market Fund
Money Market Fund
Municipal Money Market Fund
Florida Municipal Money Market Fund
New Jersey Municipal Money Market Fund
Pennsylvania Municipal Money Market Fund
Tax Advantaged
Short Intermediate Municipal Fund
High Grade Municipal Bond Fund
Municipal Bond Fund
Municipal Income Fund
Connecticut Municipal Bond Fund
Florida Municipal Bond Fund
Florida High Income Municipal Bond Fund
Georgia Municipal Bond Fund
Maryland Municipal Bond Fund
New Jersey Municipal Bond Fund
North Carolina Municipal Bond Fund
Pennsylvania Municipal Bond Fund
South Carolina Municipal Bond Fund
Virginia Municipal Bond Fund
Income
Capital Preservation and Income Fund
Short Intermediate Bond Fund
Intermediate Term Bond Fund
U.S. Government Fund
Diversified Bond Fund
Strategic Income Fund
High Yield Bond Fund
Quality Income Fund
Short-Duration Income Fund
High Income Fund
Balanced
Balanced Fund
Tax Strategic Foundation Fund
Foundation Fund
Capital Balanced Fund
Capital Income and Growth Fund
Growth & Income
Utility Fund
Income and Growth Fund
Equity Income Fund
Value Fund
Blue Chip Fund
Growth and Income Fund
Small Cap Value Fund
Select Equity Index Fund
Domestic Growth
Tax Strategic Equity Fund
Strategic Growth Fund
Stock Selector Fund
Evergreen Fund
Masters Fund
Omega Fund
Small Company Growth Fund
Aggressive Growth Fund
Growth Fund
Capital Growth Fund
Select Special Equity Fund
Global International
Global Leaders Fund
International Growth Fund
Global Opportunities Fund
Precious Metals Fund
Emerging Markets Growth Fund
Latin America Fund
Perpetual Global Fund
Perpetual International Fund
Express Line
800.346.3858
Investor Services
800.343.2898
www.evergreen-funds.com
28565 540979 11/99
---------------
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