<PAGE>
Annual Report
as of July 31, 2000
Evergreen
[LOGO OF EVERGREEN FUNDS]
<PAGE>
Table of Contents
<TABLE>
<S> <C>
Letter to Shareholders .................................................... 1
Evergreen Blue Chip Fund
Fund at a Glance ....................................................... 2
Portfolio Manager Interview ............................................ 3
Evergreen Equity Income Fund
Fund at a Glance ....................................................... 5
Portfolio Manager Interview ............................................ 6
Evergreen Growth and Income Fund
Fund at a Glance ....................................................... 9
Portfolio Manager Interview ............................................ 10
Evergreen Small Cap Value Fund
Fund at a Glance ....................................................... 13
Portfolio Manager Interview ............................................ 14
Evergreen Utility Fund
Fund at a Glance ....................................................... 16
Portfolio Manager Interview ............................................ 18
Evergreen Value Fund
Fund at a Glance ....................................................... 19
Portfolio Manager Interview ............................................ 20
Financial Highlights
Evergreen Blue Chip Fund ............................................... 22
Evergreen Equity Income Fund ........................................... 24
Evergreen Growth and Income Fund ....................................... 26
Evergreen Small Cap Value Fund ......................................... 28
Evergreen Utility Fund ................................................. 31
Evergreen Value Fund ................................................... 33
Schedules of Investments
Evergreen Blue Chip Fund ............................................... 35
Evergreen Equity Income Fund ........................................... 40
Evergreen Growth and Income Fund ....................................... 49
Evergreen Small Cap Value Fund ......................................... 58
Evergreen Utility Fund ................................................. 64
Evergreen Value Fund ................................................... 67
Combined Notes to
Schedules of Investments .................................................. 71
Statements of Assets and Liabilities ...................................... 72
Statements of Operations .................................................. 73
Statements of Changes in Net Assets ....................................... 74
Combined Notes to Financial
Statements ................................................................ 76
Independent Auditors' Report .............................................. 87
Additional Information .................................................... 88
</TABLE>
Evergreen Funds
Evergreen Funds is one of the nation's fastest growing investment companies with
approximately $80 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 Evergreen Funds to provide a distinctive level of
service and excellence in investment management.
This annual report must be preceded or accompanied by a prospectus of an
Evergreen fund contained herein. The prospectus contains more complete
information, including fees and expenses, and should be read carefully before
investing or sending money.
-------------------------------------------------------------
Mutual Funds: ARE NOT FDIC INSURED MAY LOSE VALUE NOT BANK GUARANTEED
-------------------------------------------------------------
Evergreen Distributor, Inc.
Evergreen Funds/SM/ is a service mark of Evergreen Investment Services, Inc.
<PAGE>
Letter to Shareholders
----------------------
September 2000
[PHOTO]
William M. Ennis
President and CEO
Dear Evergreen Shareholders,
We are pleased to provide the Evergreen Growth and Income Funds annual report,
which covers the twelve-month period ended July 31, 2000.
Growth Stocks Experience Volatility
During the first half of 2000, a powerful rally in growth stocks came to an end
during April and May, as investors feared actions the Federal Reserve Board
would take to stem potential inflationary pressures. Growth in areas such as
technology, communications and biotechnology stocks reigned supreme for most of
the period and underwent a volatile environment during the last four months of
the period. Although these sectors have experienced sharp corrections, they
remain favored sectors.
The Federal Reserve Board increased interest rates six times during the
twelve-month period resulting in the highest Fed funds rate since May 1995.
Normally, the tightening of the money supply would curtail consumer spending,
however, investors in stocks and equity funds seemed to be ignoring the Federal
Reserve Board's actions to insulate the economy from the threat of inflation.
Despite the recent volatility, the threat of inflation and the Federal Reserve's
response to it, investors remain positive about the U.S. economy and the
long-term potential of the U.S. markets. At Evergreen, we believe the economy is
still fundamentally strong and that the Federal Reserve Board will continue to
act aggressively to contain inflation. We remain cautiously optimistic about
continued growth in the markets and believe there is a valuable lesson to be
learned from the market volatility of the last six months: remaining focused on
your goals and ensuring that your investments are suitable for your specific
needs.
Website Enhancements
Please visit our enhanced website, evergreen-funds.com, for more information
about Evergreen Funds. The site offers an array of helpful information including
an investment education center, interactive calculators to assist your
investment planning and general information about Evergreen Funds.
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 assist you in choosing the most appropriate for
your portfolio.
Thank you for your continued investment in Evergreen Funds.
Sincerely,
/s/ William M. Ennis
William M. Ennis
President and CEO
Evergreen Investment Company, Inc.
1
<PAGE>
EVERGREEN
Blue Chip Fund
Fund at a Glance as of July 31, 2000
"We will continue to seek industry-leading, blue chip companies that have
records of stable or accelerating earnings."
Portfolio
Management
------------
[PHOTO]
Judith A. Warners
Tenure: January 1995
--------------------------------------------------------------------------------
CURRENT INVESTMENT STYLE1
--------------------------------------------------------------------------------
[STYLE BOX]
Morningstar's Style Box is based on a portfolio date as of 7/31/2000.
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: 2000 Morningstar, Inc.
2 Past performance is no guarantee of future results. The performance of each
class may vary based on differences in loads, fees and expenses paid by the
shareholders investing in each class. The investment return and principal value
will fluctuate so that investors' shares, when redeemed, may be worth more or
less than their original cost. Performance includes the reinvestment of income
dividends and capital gain distributions.
Class Y shares are available to institutional shareholders, Evergreen Fund
shareholders prior to January 1995 and shareholders of record prior to October
12, 1990, and any series of Evergreen Investment Trust which existed at that
time.
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. These fees are 0.25% for
Class A and 1.00% for Classes B and C. Class Y does not pay a 12b-1 fee. If
these fees had not been eliminated, returns would have been lower.
--------------------------------------------------------------------------------
PERFORMANCE AND RETURNS2
--------------------------------------------------------------------------------
Portfolio Inception Date: Class A Class B Class C Class Y
9/11/1935
Class Inception Date 1/20/1998 9/11/1935 1/22/1998 4/30/1999
Average Annual Returns*
1 year with sales charge 7.84% 7.40% 10.37% n/a
1 year w/o sales charge 13.22% 12.40% 12.37% 13.53%
5 years 19.67% 18.21% 19.98% 21.12%
10 years 14.20% 13.15% 13.85% 15.04%
Maximum Sales Charge 4.75% 5.00% 2.00% n/a
Front End CDSC CDSC
12-month capital gain
distributions per share 2.40 2.40 2.40 2.40
* Adjusted for maximum applicable sales charge.
--------------------------------------------------------------------------------
LONG TERM GROWTH
--------------------------------------------------------------------------------
[GRAPH]
Class B S & P 500 CPI
7/31/90 10,000 10,000 10,000
Jul 31, 91 11,070 11,276 10,445
Jul 31, 92 11,744 12,718 10,775
Jul 31, 93 12,611 13,829 11,074
Jul 31, 94 12,746 14,542 11,380
Jul 31, 95 14,781 18,339 11,695
Jul 31, 96 15,717 21,378 12,040
Jul 31, 97 22,891 32,524 12,308
Jul 31, 98 26,320 38,795 12,515
Jul 31, 99 30,607 46,639 12,784
Jul 31, 2000 34,401 50,822 13,236
Comparison of a $10,000 investment in Evergreen Blue Chip Fund, Class B 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 or any mutual fund expenses.
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.
Foreign investments may contain more risks due to the inherent risks associated
with changing political climates, foreign market instability and foreign
currency fluctuations.
The Fund's investment objective is non-fundamental and may be changed without
the vote of the Fund's shareholders.
All data is as of July 31, 2000 and subject to change.
2
<PAGE>
EVERGREEN
Blue Chip Fund
Portfolio Manager Interview
How did the Fund perform?
For the twelve-month period ended July 31, 2000, Evergreen Blue Chip Fund Class
B shares returned 12.40%. Fund performance is before the deduction of any
applicable sales charges. During the same twelve-month period, the median return
of large-cap core funds was 11.26%, according to Lipper Inc., an independent
monitor of mutual fund performance, and the Standard & Poor's 500 Index returned
8.97%.
Portfolio
Characteristics
-----------------
(as of 7/31/2000)
Total Net Assets 982,406,006
Number of Holdings 110
Beta* 0.91
P/E Ratio* 36.0x
*As of 6/30/2000
What factors affected performance?
Early in the twelve-month period, stock market performance was dominated by a
relatively small group of technology-related companies, many of which were
involved in the internet, communications equipment or biotechnology industries.
"New economy" and "old economy" stocks seemed to diverge late in 1999, with
investors paying premium prices for "new economy", technology, internet,
communications, infrastructure or biotechnology companies, while avoiding stocks
in traditional industries. The leadership position rotated in March of this
year, however, to favor pharmaceutical companies, financial services and some
cyclical stocks. The change was extraordinarily swift, as investors moved away
from the high-priced technology stocks and toward the bargains available among
the stocks of drug companies and banks. This fast rotation could easily be seen
in the behavior of the technology-dependent
NASDAQ Index, which went into a tailspin from March until late May. At the end
of May, technology stocks started to recover. The volatile NASDAQ climbed back
24% between late May and mid-July, before declining again. The market appeared
to converge late in the period as investors recognized that many technology
companies were extremely overvalued while many other companies represented good
value.
The entire period was marked by extreme day-to-day volatility among individual
stocks. Often, just one disappointing earnings report was enough to send the
stock of an individual company into a tailspin. This occurred to such well-known
companies as Nokia, Honeywell, and Agilent Technologies.
Top 5 Sectors
-------------
(as a percentage of 7/31/2000 net assets)
Information Technology 29.7%
Financials 14.0%
Health Care 12.1%
Consumer Discretionary 10.9%
Industrials 8.4%
What strategies did you employ, particularly in the final six months?
As volatility increased, we moved to lower the Fund's emphasis on higher-priced
stocks, while increasing our emphasis on pharmaceutical and financial services
companies, bringing the Fund's weightings in line with those of the S&P 500
Index. We also added to the Fund's energy position to take advantage of very
strong oil pricing.
We reduced our emphasis on technology stocks, which had high weightings, and
also reduced emphasis in the consumer discretionary and consumer staples
sectors, where we were concerned about the effects of higher interest rates and
a potential slowing of economic growth.
3
<PAGE>
EVERGREEN
Blue Chip Fund
Portfolio Manager Interview
Throughout the period, we maintained large positions in the Fund's core
holdings--companies that have dominant roles in their industries and that have
demonstrated their ability to increase their earnings consistently over the
long-term. Many of these holdings are globally-oriented companies. They include
General Electric, Wal-Mart, Cisco Systems, Intel, Citigroup, American Express
and Microsoft.
What were some examples of stocks that helped the Fund's performance?
One company that was an excellent performer was Sanmina Corp., a contract
manufacturer supplying components for the technology and communications
equipment companies. Another was Tyco International, a diversified capital goods
and technology company.
Citigroup and American Express, two core holdings in the financial services
industry, both showed strong performance.
Within technology, two outstanding performers were Intel and Micron Technology,
both of which benefited from the surge in the semiconductor industry.
Two of the better performing energy stocks were Exxon Mobil, which showed
improved efficiencies as a result of its merger, and Apache Corp, which
benefited from increased oil and gas exploration activities.
We reduced our position in communication services, including long-distance phone
companies and local service providers; however, this area still held back the
Fund's relative performance as concerns about deregulation, increased
competition and corporate mergers hurt stock performance.
Top 10 Holdings
---------------
(as a percentage of 7/31/2000 net assets)
General Electric Co. 4.1%
Intel Corp. 3.6%
Cisco Systems, Inc. 3.5%
Microsoft Corp. 2.7%
Exxon Mobil Corp. 2.7%
Wal-Mart Stores, Inc. 2.2%
Citigroup, Inc. 2.1%
American International Group, Inc. 1.8%
Merck & Co., Inc 1.7%
EMC Corp. 1.5%
What is your outlook?
We think rotation and volatility will continue in the stock market, at least in
the short-term. Investors appear to be nervous, but not very patient.
In an uncertain environment, we do not plan to take highly over-weighted
positions in any industry, with the possible exception of energy which should
benefit from continued strength in oil prices and a growing global economy.
We will continue to seek industry-leading, blue chip companies that have records
of stable or accelerating earnings. We will look for opportunities where
valuations are attractive, and we plan to trim back positions in successful
investments that have advanced to relatively high stock prices.
4
<PAGE>
EVERGREEN
Equity Income Fund
(formerly, Evergreen Income and Growth Fund)
Fund at a Glance as of July 31, 2000
"We seek to provide total return through a combination of a relatively high
level of current income and growth in principal over time."
Portfolio
Management
------------
[PHOTO] [PHOTO]
Irene D. O'Neill, CFA Phillip M. Foreman, CFP, CFA
Tenure:December 1997 Tenure: September 1999
--------------------------------------------------------------------------------
CURRENT INVESTMENT STYLE1
--------------------------------------------------------------------------------
[STYLE BOX]
Morningstar's Style Box is based on a portfolio date as of 7/31/2000.
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: 2000 Morningstar, Inc.
2 Past performance is no guarantee of future results. The performance of each
class may vary based on differences in loads, fees and expenses paid by the
shareholders investing in each class. The investment return and principal value
will fluctuate so that investors' shares, when redeemed, may be worth more or
less than their original cost. Performance includes the reinvestment of income
dividends and capital gain distributions.
Class Y shares are available to institutional shareholders, Evergreen Fund
shareholders prior to January 1995 and shareholders of record prior to October
12, 1990, and any series of Evergreen Investment Trust which existed at that
time.
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 are 0.25% for Class A and 1.00% for
Classes B and C. Class Y does not pay a 12b-1 fee. If these fees had been
reflected, returns for Classes B and C would have been lower while returns for
Class Y would have been higher.
Returns reflect expense limits previously in effect, without which returns would
have been lower.
--------------------------------------------------------------------------------
PERFORMANCE AND RETURNS2
--------------------------------------------------------------------------------
Portfolio Inception Date: Class A Class B Class C Class Y
8/31/1978
Class Inception Date 1/3/1995 1/3/1995 1/3/1995 8/31/1978
Average Annual Returns*
1 year with sales charge -4.06% -4.62% -1.85% n/a
1 year w/o sales charge 0.74% 0.00% 0.00% 1.00%
5 years 10.01% 10.00% 10.27% 11.36%
10 years 9.97% 10.06% 10.05% 10.65%
Maximum Sales Charge 4.75% 5.00% 2.00% n/a
Front End CDSC CDSC
30-day SEC Yield $2.60% $1.83% $1.85% $2.85%
12-month income dividends
per share $1.01 $0.84 $0.84 $1.07
12-month capital gain
distributions per share 0.86 0.86 0.86 0.86
* Adjusted for maximum applicable sales charge.
--------------------------------------------------------------------------------
LONG TERM GROWTH
--------------------------------------------------------------------------------
[GRAPH]
Class A CPI Wilshire 5000 LBABI
7/31/90 9,525 10,000 10,000 10,000
Jul 31, 91 10,662 10,445 10,951 11,070
Jul 31, 92 12,111 10,775 12,069 12,706
Jul 31, 93 13,755 11,074 13,134 13,998
Jul 31, 94 13,465 11,380 13,360 14,011
Jul 31, 95 15,300 11,695 16,439 15,428
Jul 31, 96 16,536 12,040 18,466 16,282
Jul 31, 97 21,231 12,308 26,693 18,035
Jul 31, 98 22,906 12,515 30,801 19,453
Jul 31, 99 25,689 12,784 36,032 19,936
Jul 31, 2000 25,878 13,236 39,403 21,124
Comparison of a $10,000 investment in Evergreen Equity Income Fund, Class A
shares2, versus a similar investment in the Wilshire 5000 Index (Wilshire 5000),
the Lehman Brothers Aggregate Bond Index (LBABI) and the Consumer Price Index
(CPI).
The Wilshire 5000 and the LBABI are unmanaged market indices which do not
include transaction costs associated with buying and selling securities or any
mutual fund expenses. 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.
Foreign investments may contain more risks due to the inherent risks associated
with changing political climates, foreign market instability and foreign
currency fluctuations.
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.
The Fund's investment objective is non-fundamental and may be changed without
the vote of the Fund's shareholders.
All data is as of July 31, 2000 and subject to change.
5
<PAGE>
EVERGREEN (formerly,
Equity Income Fund Evergreen
Portfolio Manager Interview Income and
Growth Fund)
How did the Fund perform?
For the twelve-month period ended July 31, 2000, Evergreen Equity Income Fund
Class A shares returned 0.74%. Fund performance is before the deduction of any
applicable sales charges. During the same twelve month period, the Wilshire 5000
Index had a return of 9.36% and the Lehman Brothers Aggregate Bond Index
returned 5.97%. The average return of equity funds in the income category was
3.98%, according to Lipper Inc., an independent monitor of mutual fund
performance.
Evergreen Equity Income Fund is a result of the merger of Evergreen Income and
Growth Fund and Evergreen Equity Income Fund on July 21, 2000. The two funds had
very similar objectives. The combined Fund is managed with a philosophy and
style identical to that of the Income and Growth Fund.
Portfolio
Characteristics
---------------
(as of 7/31/2000)
Total Net Assets 983,133,861
Number of Holdings 192
Beta* 0.66
P/E Ratio* 22.2x
*as of 6/30/2000
How would you describe the investment philosophy of the Equity Income Fund?
We seek to provide total return through a combination of a relatively high level
of current income and growth in principal over time. The strategy is to build
assets and offset the effects of inflation. We believe current income is
important because, over time, dividend income has proven to be a significant
part of the total return realized from stock investments. Our strategy in
seeking long-term total return is to own a combination of stocks with
above-market dividend yields, as well as convertible securities.
Top 5 Sectors
-------------
(as a percentage of 7/31/2000 net assets)
Utilities 22.9%
Financials 17.4%
Information Technology 11.3%
Health Care 10.4%
Consumer Discretionary 8.7%
What was the investment environment like during the period?
The first six months of the investment period were characterized by rising
interest rates and a division in the stock market in which performance tended to
be dominated exclusively by the "new economy" stocks related to the internet,
technology and telecommunications. In contrast, "old economy" stocks, including
many dividend-paying companies, lagged in performance. This picture changed
during the second six months as rates continued to rise. Investors began
adjusting their expectations based on the likelihood that economic growth would
slow, fostering an environment where it would be less likely that "new economy"
stocks could sustain their performance.
The NASDAQ Index, heavily influenced by technology stocks, suffered a meltdown
in the spring after having risen to extremely high levels in early months.
Large-cap technology stocks were less affected by this meltdown than small-cap
tech stocks, which were more dependent on capital markets for funding their
development. Investors began to realize that not every internet-related company
would be able to survive over the long term. While the Fund's exposure to
internet-related companies was confined to a few
6
<PAGE>
EVERGREEN (formerly,
Equity Income Fund Evergreen
Portfolio Manager Interview Income and
Growth Fund)
convertible securities, even these investments were affected by the excessive
volatility in technology-related securities. Technology and telecommunications
stocks also showed poor performance during this period, as did capital goods
stocks. Valuations were affected by concerns about the effects of a potential
economic slowdown. While old-fashioned industrial stocks did rally somewhat
early this calendar year, they were unable to sustain their forward momentum
because of fears about the effects of rising interest rates and an economic
slowdown.
Although the Fund's performance was held back during this latter period, it
tended to do better than funds with more aggressive strategies. When we invested
in technology and telecommunications companies, we focused on companies with
financial resources and access to capital; we believed these companies would be
able to take advantage of opportunities and continue to grow. We continue to
expect that these sectors of the economy will benefit from long-term growth
trends in the internet and telecommunications services.
What were your principal strategies during the period?
We invested in a number of defensive sectors, where stocks were selling at
attractive valuations and the earnings of the underlying companies tended to be
relatively insensitive to swings in the economic cycle.
Our largest weighting was in utilities, partly because of the income they
offered and partly because they historically have had stable earnings. Utilities
tended to be good performers during the final six months of the period, as
investors sought stocks in the sector because of their defensive
characteristics.
We also emphasized financials, particularly real estate investment trusts
(REITs), where we increased our investments. This sector had good performance
during the final six months. We found REITs to be selling at very attractive
valuations after a period of under-performance, which left the securities
selling at discounts relative to the private market value of the underlying
properties. The REITs benefited from strong markets for commercial real estate
properties and generated high rates of current income to their shareholders. We
tended to select REITs with properties in markets where existing properties were
less likely to be affected by new competition. In these markets, restrictive
zoning laws and a limited supply of vacant land reduce the threat of new
construction.
We also increased our investments in health care stocks, particularly large
pharmaceutical companies. This was the best performing sector for the Fund.
These stocks were attractive because of their strong earnings growth and their
record of performing relatively well in difficult economic times due to the
durability of demand for health care products. Health care stocks also tended to
be selling at depressed valuations because of concerns that election-year
politics and pressure for Medicare prescription benefits could ultimately lead
to drug price controls. But we believed that the consistent earnings growth of
this sector over an economic cycle would be a more important driver of stock
prices. We invested in companies such as Johnson & Johnson, Abbott Laboratories,
Schering-Plough and the convertible securities of Pharmacia. We also added to
our positions in American Home Products and Bristol Myers. One of the top
performers for the Fund was Shared Medical Systems, which was acquired by
Siemens.
We continued to reduce our holdings in industrial and cyclical stocks, which
were vulnerable to the effects of rising interest rates. Early this calendar
year, we also reduced our holding in telecommunications stocks and convertible
securities, taking profits from their strong stock performance in prior months.
We sold part of our investments in companies such as American Tower, Level 3,
Qwest Communications, Metromedia Fiber and Global Crossings.
7
<PAGE>
EVERGREEN (formerly,
Equity Income Fund Evergreen
Portfolio Manager Interview Income and
Growth Fund)
Top 10 Holdings
---------------
(as a percentage of 7/31/2000 net assets)
Qwest Trends Trust 2.3%
AES Trust III 2.1%
American Home Products Corp. 2.1%
Utilicorp United, Inc. 2.0%
The Williams Companies, Inc. 2.0%
QUALCOMM, Inc. 2.0%
Metromedia Fiber, DECS 1.9%
Murphy Oil Corp. 1.8%
Baxter International, Inc. 1.7%
TXU Corp. 1.6%
What is your outlook?
We believe the current relatively high interest rates should cause the economy
to gradually lose steam and that the Federal Reserve Board may be close to
ending its cycle of interest rate increases. In addition, if the costs of oil
and natural gas remain at high levels, consumer spending may slow further once
the home-heating season begins. It is possible to see several different
scenarios unfolding in the current environment. For example, growth could slow
enough to pinch corporate earnings, but not enough to cause the Federal Reserve
Board to start lowering interest rates. Investors currently are uncertain
whether the slowdown in economic growth will result in a "hard landing," with a
dramatic decline in economic growth, or a "soft landing," with a more moderate
slowdown. This uncertainty is reflected in the changing day-to-day trends in the
stock market.
Until a clear pattern emerges, we intend to continue to focus primarily on
defensive sectors, including utilities, health care and REITs, with stable
earnings and attractive dividend yields. Should the economic landscape change
significantly, we would again look for opportunities in more economically
sensitive areas that would benefit from higher rates of economic growth.
8
<PAGE>
EVERGREEN
Growth and Income Fund
Fund at a Glance as of July 31, 2000
"We remained committed to our long-term strategy of investing in what we believe
are outstanding companies that have competitive advantages, that enjoy barriers
to entry that discourage additional competition, and that have shown their
ability to generate high returns on invested capital."
Portfolio
Management
-------------------
[PHOTO] [PHOTO]
Irene D. O'Neill, CFA Phillip M. Foreman, CFP, CFA
Tenure: September 1999 Tenure: September 1999
--------------------------------------------------------------------------------
CURRENT INVESTMENT STYLE(1)
--------------------------------------------------------------------------------
[STYLEBOX]
Morningstar's Style Box is based on a portfolio date as of 7/31/2000.
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: 2000 Morningstar, Inc.
(2)Past performance is no guarantee of future results. The performance of each
class may vary based on differences in loads, fees and expenses paid by the
shareholders investing in each class. The investment return and principal value
will fluctuate so that investors' shares, when redeemed, may be worth more or
less than their original cost. Performance includes the reinvestment of income
dividends and capital gain distributions.
Class Y shares are available to institutional shareholders, Evergreen Fund
shareholders prior to January 1995 and shareholders of record prior to October
12, 1990, and any series of Evergreen Investment Trust which existed at that
time.
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 are 0.25% for Class A and 1.00% for
Classes B and C. Class Y does not pay a 12b-1 fee. If these fees had been
reflected, returns would have been lower.
Returns reflect expense limits previously in effect, without which returns would
have been lower.
--------------------------------------------------------------------------------
PERFORMANCE AND RETURNS(2)
--------------------------------------------------------------------------------
Portfolio Inception Date: 8/31/1978 Class A Class B Class C Class Y
Class Inception Date 1/3/1995 1/3/1995 1/3/1995 10/15/1986
1 year with sales charge 0.99% 0.23% 3.23% n/a
1 year w/o sales charge 6.01% 5.23% 5.23% 6.30%
5 years 13.59% 13.64% 13.89% 15.01%
10 years 14.10% 14.20% 14.21% 14.82%
Maximum Sales Charge 4.75% 5.00% 2.00% n/a
Front End CDSC CDSC
12-month capital gain
distributions per share 0.60 0.60 0.60 0.60
* Adjusted for maximum applicable sales charge.
--------------------------------------------------------------------------------
LONG TERM GROWTH
--------------------------------------------------------------------------------
[GRAPH]
<TABLE>
<CAPTION>
EVERGREEN GROWTH &
INCOME FUND CLASS A S & P 400 Midcap Total Return Russell 2000 Value Consumer Price Index - US
<S> <C> <C> <C> <C>
7/31/90 9,525.00 10,000 10,000 10,000
7/31/91 10,635.08 12,243 11,071 10,445
7/31/92 12,054.01 14,370 12,797 10,775
7/31/93 14,124.80 16,765 15,193 11,074
7/31/94 15,118.19 17,356 15,744 11,380
7/31/95 18,836.74 21,610 19,028 11,695
7/31/96 21,620.38 23,283 22,051 12,040
7/31/97 30,348.53 33,847 32,818 12,308
7/31/98 33,763.19 37,642 38,633 12,515
7/31/99 35,261.86 44,914 44,422 12,784
7/31/00 37,400.98 54,527 42,206 13,236
</TABLE>
Comparison of a $10,000 investment in Evergreen Growth and Income Fund, Class A
shares2, versus a similar investment in the Standard and Poor's 400 Mid-Cap
Index (S&P 400), the Russell 1000 Value Index (Russell 1000 Value) and the
Consumer Price Index (CPI).
The S&P 400 and the Russell 1000 Value are unmanaged market indices which do not
include transaction costs associated with buying and selling securities or any
mutual fund expenses. 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.
Foreign investments may contain more risks due to the inherent risks associated
with changing political climates, foreign market instability and foreign
currency fluctuations. Funds that invest in high yield, lower-rated bonds may
contain more risks due to the increased possibility of default.
The Fund's investment objective is non-fundamental and may be changed without
the vote of the Fund's shareholders.
All data is as of July 31, 2000 and subject to change.
9
<PAGE>
EVERGREEN
Growth and Income Fund
Portfolio Manager Interview
How did the Fund perform?
Evergreen Growth and Income Fund, Class A shares, had a return of 6.01% for the
twelve-month period ended July 31, 2000. Fund performance is before the
deduction of any applicable sales charges. During the same period, the Standard
& Poor's 400 Mid-Cap Index and the Russell 1000 Value Index returned 21.40% and
-5.00% respectively, while the average return of multi-cap value funds was
-2.55%, according to Lipper Inc., an independent monitor of mutual fund
performance.
Portfolio
Characteristics
---------------
(as of 7/31/2000)
Total Net Assets 1,423,305,592
Number of Holdings 205
Beta* 0.82
P/E Ratio* 22.7x
*as of 6/30/2000
What factors affected the Fund's performance?
We have a long-term strategy of investing in mid-sized companies that we believe
are undervalued. We buy good businesses on sale. This strategy was not in vogue
during the twelve months ended July 31, 2000, as momentum-driven styles were
more in favor. Over the year, performance in the mid-cap stock market was led by
semi-conductor, biotechnology, oil drilling and electric utility companies. We
de-emphasized companies in those areas because they didn't meet our investment
standards. In the case of semi-conductor companies, while there were several
outstanding businesses, we believed their stock prices were fully valued in the
market. In the cases of biotechnology, oil drilling and electric utilities, we
did not find many companies that we believed were truly outstanding businesses.
One area that we emphasized and that worked very well for us was the general
health care industry other than biotechnology. A leading investment was in
Warner-Lambert, a major holding that was acquired by Pfizer at a substantial
premium to its stock price. After the acquisition, we continued to hold Pfizer
stock, which continued to perform very well.
Another outstanding performer in the pharmaceutical industry was Elan, which
develops mechanisms and products to control the delivery and absorption of drug
compounds. It produces devices such as syringes, patches and time-release pills
that help control drug dosages. Its stock rose by almost 90% during the period.
Top 5 Sectors
-------------
(as a percentage of 7/31/2000 net assets)
Information Technology 25.2%
Financials 18.0%
Industrials 13.3%
Consumer Discretionary 13.2%
Health Care 12.2%
What were your principal strategies?
We remained committed to our long-term strategy of investing in what we believe
are outstanding companies that have competitive advantages, that enjoy barriers
to entry that discourage additional competition, and that have shown their
ability to generate high returns on invested capital. We want to invest in these
companies when they are on sale, which means when their stock prices are trading
at substantial discounts--typically 40% or more--to the private market value of
the company, or the price that another corporation would likely pay to acquire
the company.
We intend to focus more on mid-cap stocks than in the past. There are a number
of large-cap holdings that were purchased previously or grew from mid-cap to
large-cap levels. Rather than selling all the large-cap
10
<PAGE>
EVERGREEN
Growth and Income Fund
Portfolio Manager Interview
stocks at once, we are planning to shift gradually toward mid-cap stocks by
selling the large-cap holdings when we feel they have become fully valued.
We recently have invested in several mid-cap companies that have not yet begun
to perform, but which we believe have terrific potential for the Fund.
One highly visible, and truly unique, example is Martha Stewart. Because Martha
Stewart's company has developed a franchise with a well defined, highly targeted
audience, her magazine can charge some of the highest advertising rates in the
industry. In addition, Ms. Stewart has the distinct advantage of being paid to
go on television to promote her publications and services. While the stock has
not performed particularly well since its initial public offering, the company
has good earnings and cash flow growth. We believe the stock should begin to
improve in performance.
Another recent investment is Charter Communications, a cable television company
which Microsoft founder Paul Allen recently brought public. This company
operates cable television franchises, primarily in the Midwest, in markets where
there is limited competition. We also believe its stock should start to perform
better.
What are some of the investments that supported performance?
Several Fund holdings did very well. We already have mentioned two
pharmaceutical companies: Pfizer and Elan.
In the telecommunications industry, Convergy's, the largest cellular phone
billing company in the country, had excellent performance. It is the low-cost
competitor providing a vital service to the fast-growing wireless communications
market. Three of the nation's four largest wireless telecommunications
companies, including AT&T and Sprint, use Convergy's to process their billing.
Convergy's has a business that is hard to duplicate and it has a competitive
advantage because of efficient operations. The stock, one of our top holdings
throughout the twelve month period, was up more than 100% during the period.
American Tower Corporation was another holding that benefited from the growth in
wireless communications. It is one of the largest operators of cellular
telephone towers in an industry where there are significant barriers to new
competitors. American Tower has excellent tower locations and the advantage of
being able to market its services to different cellular service companies. Its
stock rose by 82% during the twelve months.
Another successful investment was in Neuberger-Berman, an investment management
firm whose stock rose by more than 100% during the twelve months.
Neuberger-Berman's attractive stock price became highlighted with the
high-profile acquisitions of several other investment management firms by large
institutions.
Another financial services company that performed well was Lehman Brothers,
which specializes in security underwriting. Many of its competitors were
purchased at substantial premiums to their stock prices, highlighting the value
of Lehman Brothers' stock, which appreciated by 60% during the year.
Top 10 Holdings
---------------
(as a percentage of 7/31/2000 net assets)
Stilwell Financial, Inc. 2.9%
Convergys Corp. 2.9%
Seagate Technology, Inc. 2.6%
American Tower Systems Corp., Class A 2.4%
Pfizer, Inc. 2.3%
Cisco Systems, Inc. 2.1%
Neuberger-Berman, Inc. 1.9%
PE Corp-PE Biosystems Group 1.7%
Lockheed Martin Corp. 1.7%
General Electric Co. 1.6%
11
<PAGE>
EVERGREEN
Growth and Income Fund
Portfolio Manager Interview
What is your outlook?
After a repeated series of short-term interest rate increases, we believe the
Federal Reserve Board is at the end of its rate hikes. As a result, we believe
the broader stock market should start to improve in performance in an
environment of slow economic growth and low inflation. We have concentrated our
portfolio in historically defensive industries, including aerospace, defense,
pharmaceuticals and cellular phones, which should do well in this environment.
However, we also expect to be increasing our weightings in industries such as
financial services and consumer discretionary, which tend to perform well as
interest rates start to decline. In addition, we have added to our position in
technology to take advantage of the recent price corrections in this sector. For
the first time in many months, outstanding technology companies have gone on
sale. By the close of the fiscal year, we had increased our technology weighting
to about 27% of net assets, which is in line with the technology weighting in
the S&P 400 Mid-cap Index.
We have confidence in our style and will continue to look for outstanding
businesses that are on sale. We intend to invest in those sectors or groups that
have strong business fundamentals and attractive stock prices.
12
<PAGE>
EVERGREEN
Small Cap Value Fund
Fund at a Glance as of July 31, 2000
"We have found many good companies selling at reasonable stock valuations at a
time when there is evidence of renewed investor interest in small-cap value
stocks."
Portfolio Management
--------------------
[PHOTO OF JORDAN ALEXANDER]
Jordan Alexander, CFA
Tenure: January 1999
--------------------------------------------------------------------------------
CURRENT INVESTMENT STYLE(1)
--------------------------------------------------------------------------------
[STYLE BOX]
Morningstar's Style Box is based on a portfolio date as of 7/31/2000.
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: 2000 Morningstar, Inc.
/2/Past performance is no guarantee of future results. The performance of each
class may vary based on differences in loads, fees and expenses paid by the
shareholders investing in each class. The investment return and principal value
will fluctuate so that investors' shares, when redeemed, may be worth more or
less than their original cost. Performance includes the reinvestment of income
dividends and capital gain distributions.
Class Y shares are available to institutional shareholders, Evergreen Fund
shareholders prior to January 1995 and shareholders of record prior to October
12, 1990, and any series of Evergreen Investment Trust which existed at that
time.
Historical performance shown for Classes A, B, C and IS prior to their inception
is based on the performance of Class Y, the original class offered. These
historical returns for Classes A, B, C and IS have not been adjusted to reflect
the effect of each Class' 12b-1 fees. These fees are 0.25% for Classes A and IS,
and 1.00% for Classes B and C. Class Y does not pay a 12b-1 fee. If these fees
had been reflected, returns would have been lower.
Returns reflect expense limits previously in effect, without which returns would
have been lower.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------
PERFORMANCE AND RETURNS/2/
--------------------------------------------------------------------------------------------
Portfolio Inception Date:
10/1/1993 Class A Class B Class C Class Y Class IS
Class Inception Date 1/3/1995 1/3/1995 1/24/1995 10/1/1993 6/30/2000
Average Annual Returns*
<S> <C> <C> <C> <C> <C>
1 year with sales charge -5.58% -6.47% -3.58% n/a n/a
1 year w/o sales charge -0.85% -1.55% -1.62% -0.59% -0.59%
5 years 10.57% 10.54% 10.74% 11.93% 11.93%
Since Portfolio Inception 10.08% 10.19% 10.15% 11.10% 11.10%
Maximum Sales Charge 4.75% 5.00% 2.00% n/a n/a
Front End CDSC CDSC
12-month income
dividends per share 0.04 0.01 0.01 0.05 0.00
</TABLE>
* Adjusted for maximum applicable sales charge.
--------------------------------------------------------------------------------
LONG TERM GROWTH
--------------------------------------------------------------------------------
[GRAPH]
<TABLE>
<CAPTION>
EVERGREEN SMALL CAP VALUE FUND Russell 2000 Value Consumer Price Index - US Russell 2000
<S> <C> <C> <C> <C>
10/1/93 9,524 10,000 10,000 10,000
7/31/94 9,564 9,899 10,185 9,514
7/31/95 11,110 11,548 10,467 11,876
7/31/96 12,895 12,777 10,776 12,697
7/31/97 18,422 18,032 11,016 16,936
7/31/98 19,020 19,107 11,201 17,328
7/31/99 19,433 19,083 11,441 18,613
7/31/00 19,268 20,007 11,846 21,176
</TABLE>
Comparison of a $10,000 investment in Evergreen Small Cap Value Fund, Class A
shares/2/, versus a similar investment in the Russell 2000 Value Index (Russell
2000 Value), the Russell 2000 and the Consumer Price Index (CPI).
The Russell 2000 Value and the Russell 2000 are unmanaged market indices which
do not include transaction costs associated with buying and selling securities
or any mutual fund expenses. 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.
Foreign investments may contain more risks due to the inherent risks associated
with changing political climates, foreign market instability and foreign
currency fluctuations.
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.
The Fund's investment objective is non-fundamental and may be changed without
the vote of the Fund's shareholders.
All data is as of July 31, 2000 and subject to change.
Minimum investment in Class IS Shares is $1,000,000.
13
<PAGE>
EVERGREEN
Small Cap Value Fund
Portfolio Manager Interview
How did the Fund perform?
For the twelve-month period ended July 31, 2000, Evergreen Small Cap Value Fund
Class A shares returned -0.85%, compared with a gain of 4.85% for the Russell
2000 Value Index. Fund performance is before the deduction of any applicable
sales charges. The Russell 2000 Index returned 13.77% for the same period.
Portfolio
Characteristics
---------------
(as of 7/31/2000)
Total Net Assets 224,529,345
Number of Holdings 124
Beta* 0.45
P/E Ratio* 20.6x
*As of 6/30/2000
What were the principal factors affecting performance?
The Fund's performance improved substantially during the second six months of
the fiscal year. Increased weightings in health care and technology were major
factors. The increased emphasis on energy stocks also supported performance.
However, investments in consumer discretionary and financial services, which
were areas of emphasis before January 2000, detracted from returns. Although we
reduced the Fund's investments in consumer discretionary, stocks from this
sector continued to be a drag on performance during the second six months of the
period.
Top 5 Industries
----------------
(as a percentage of 7/31/2000 net assets)
Financials 19.2%
Health Care 15.4%
Information Technology 14.9%
Consumer Discretionary 11.7%
Industrials 8.4%
What were some of the individual stocks that helped the Fund's performance?
Stock selections in health care and technology were the greatest individual
contributors to the Fund's returns. Leading performers in the health care
industry included Amerisource, Arthrocare, Alpharma and Jones Pharma.
Amerisource, the fourth largest pharmaceutical distributor in the U.S., is
benefiting from a significant contract win and improved earnings visibility. Its
stock rose by 24.78% during the period. Arthrocare, which manufactures equipment
used in arthroscopic surgery, rose 154.80% for the twelve-month period.
Alpharma, a generic pharmaceutical company, also contributed to the Fund's
performance. The Fund's investment in Alpharma convertible bonds appreciated
62.60% during the period. Alpharma manufactures generic pharmaceutical products
for the U.S. and European markets, and also operates an animal health and fine
chemicals business. The company announced the acquisition of an animal feed
additive business that is expected to fuel an acceleration in earnings growth
next year. The stock of Jones Pharma, a specialty pharmaceutical company focused
in endocrinology and emergency care, appreciated 100.23% for the twelve months
on strong earnings growth.
14
<PAGE>
EVERGREEN
Small Cap Value Fund
Portfolio Manager Interview
The best performing investments in technology included Hadco, Plexus Corp. and
Scientific Atlanta. Hadco, a printed circuit-board manufacturer, appreciated
181.06% for the twelve months, helped by strong earnings and the company's
acquisition by Sanmina, a contract manufacturer. Plexus Corp, another contract
manufacturer, appreciated 87.13% during the period. The company is benefiting
from the manufacturing-outsourcing trend in technology and communications. In
addition, the announcement that Cisco Systems was acquiring Arrowpoint was a
positive for Plexus, as Arrowpoint is a major customer. Scientific Atlanta rose
321.90% during the period. The company is a leading manufacturer of set-top
boxes and transmission equipment for the cable television industry, and is a
beneficiary of the industry's upgrade in equipment for broadband services.
Top 10 Holdings
---------------
(as a percentage of 7/31/2000 net assets)
AmeriSource Health Corp., Class A 2.4%
Granite State Bankshares, Inc. 2.0%
MDU Resources Group, Inc. 1.8%
Michael Foods, Inc. 1.8%
Pier 1 Imports, Inc. 1.7%
Avocent Corp. 1.6%
Watson Pharmaceuticals, Inc. 1.5%
Zebra Technologies Corp., Class A 1.5%
Mid-State Bancshares 1.4%
Affiliated Computer Services, Inc., Class A 1.3%
What is your outlook?
We have a very favorable outlook for the stocks in the portfolio. We have found
what we believe to be many good companies selling at reasonable stock valuations
at a time when there is evidence of renewed investor interest in small-cap value
stocks. Relative to large-cap companies, small-caps trade at more attractive
valuations and we believe small-caps can generate stronger earnings growth this
year. The reasonable prices of these stocks, combined with continued stock
buybacks and merger-and-acquisition activity, increases the potential for strong
small-cap performance.
Indications that the Federal Reserve Board may be approaching the end of its
current cycle of short-term interest rate increases are another positive for
small-cap stocks, which have generally out performed in a declining interest
rate environment. Stabilization of interest rates also would create a more
favorable environment for sectors such as consumer discretionary and financials,
which have under-performed during the past year.
While there has been some evidence that the rate of economic growth may be
slowing, growth is still high on an absolute basis. This usually is a positive
sign for small-cap stock investors, who are more willing to invest in young
companies in a growing economy.
15
<PAGE>
EVERGREEN
Utility Fund
Fund at a Glance as of July 31, 2000
"We invest with a long-term outlook, and we work to compile a portfolio of
companies that we believe can maximize the Fund's objective."
Portfolio
Management
------------------
Leslie B. Rich, CFA Doris Kelley-Watkins
Tenure: February 2000 Tenure: February 1997
--------------------------------------------------------------------------------
CURRENT INVESTMENT STYLE/1/
--------------------------------------------------------------------------------
[STYLE BOX]
Morningstar's Style Box is based on a portfolio date as of 7/31/2000.
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: 2000 Morningstar, Inc.
/2/Past performance is no guarantee of future results. The performance of each
class may vary based on differences in loads, fees and expenses paid by the
shareholders investing in each class. The investment return and principal value
will fluctuate so that investors' shares, when redeemed, may be worth more or
less than their original cost. Performance includes the reinvestment of income
dividends and capital gain distributions.
Class Y shares are available to institutional shareholders, Evergreen Fund
shareholders prior to January 1995 and shareholders of record prior to October
12, 1990, and any series of Evergreen Investment Trust which existed at that
time.
Historical performance shown for Classes C and Y prior to their inception is
based on the performance of Class A, one of the original classes offered along
with Class B. These historical returns for Classes C and Y have not been
adjusted to reflect the effect of each Class' 12b-1 fees. These fees are 0.25%
for Class A and 1.00% for Classes B and C. Class Y does not pay a 12b-1 fee. If
these fees had been reflected, returns for Class C would have been lower while
returns for Class Y would have been higher.
The advisor is waiving a portion of its advisory fee. Had the fee not been
waived, the returns would have been lower.
--------------------------------------------------------------------------------
PERFORMANCE AND RETURNS/2/
--------------------------------------------------------------------------------
Portfolio Inception Date: 1/4/1994 Class A Class B Class C Class Y
Class Inception Date 1/4/1994 1/4/1994 9/2/1994 2/28/1994
Average Annual Returns*
1 year with sales charge 15.98% 15.79% 18.88% n/a
1 year w/o sales charge 21.75% 20.79% 20.88% 21.98%
5 years 18.02% 18.05% 18.25% 19.40%
Since Portfolio Inception 14.58% 14.60% 14.67% 15.71%
Maximum Sales Charge 4.75% 5.00% 2.00% n/a
Front End CDSC CDSC
30-day SEC Yield 1.02% 0.26% 0.29% 1.27%
12-month income dividends
per share 0.35 0.24 0.24 0.38
12-month capital gain
distributions per share 1.18 1.18 1.18 1.18
* Adjusted for maximum applicable sales charge.
--------------------------------------------------------------------------------
LONG TERM GROWTH
--------------------------------------------------------------------------------
[GRAPH]
EVERGREEN UTILITY
FUND CLASS A CPI S & P 500 S&P Utilities
1/04/94 9,525 10,000 10,000 10,000
7/31/95 10,179 10,460 12,584 10,843
7/31/96 11,198 10,768 14,669 12,156
7/31/97 13,589 11,008 22,317 14,005
7/31/98 15,939 11,193 26,621 16,944
7/31/99 20,088 11,433 32,002 19,153
7/31/00 24,456 11,838 34,873 21,466
Comparison of change in value of a$10,000 investment in Evergreen Utility Fund
Class A shares2, the Standard and Poor's Utility Index (S&P Utilities), the
Standard and Poor's 500 Index (S&P 500) and the Consumer Price Index (CPI).
The S&P Utilities and the S&P 500 are unmanaged market indices which do not
include transaction costs associated with buying and selling securities or any
mutual fund expenses. 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.
Foreign investments may contain more risks due to the inherent risks associated
with changing political climates, foreign market instability and foreign
currency fluctuations.
Funds that concentrate their investments into a single industry may face
increased risk of price fluctuation over more diversified funds due to adverse
developments within that industry.
The Fund's investment objective is non-fundamental and may be changed without
the vote of the Fund's shareholders.
All data is as of July 31, 2000 and subject to change.
16
<PAGE>
EVERGREEN
Utility Fund
Portfolio Manager Interview
How did the Fund perform?
For the twelve-month period ended July 31, 2000, Evergreen Utility Fund Class A
shares returned 21.75%, while the median return of utility funds was 7.77%,
according to Lipper Inc., an independent monitor of mutual fund performance.
During the same twelve month period, the Standard & Poor's Utility Index
returned 12.08% and the Standard & Poors 500 returned 8.97%. Fund performance is
before the deduction of any applicable sales charges.
Portfolio
Characteristics
---------------
(as of 7/31/2000)
Total Net Assets 422,353,967
Number of Holdings 67
Beta* 0.54
P/E Ratio* 14.9x
* As of 6/30/2000
What was the investment environment like during the twelve-month period?
Early in the period, we witnessed a continuation of the trend in which the
market favored the above-average growth opportunities of telecommunications
stocks, while electric utility stock prices lagged. However, market sentiment
later reversed and electric utility shares have gained steadily since March.
Deregulation has been initiated in all of the highly regulated utility
businesses: telecommunications, gas and, most recently, electricity. Electric
utilities, once strictly regulated, are now facing less governmental supervision
and more competition, including competition from new entrants to their
industries.
Utility stocks historically have not performed well as interest rates rise.
However, electric utility stock prices rose, even though the Federal Reserve
Board gradually raised the primary short-term interest rate by a total of 1.00%
during the first seven months of calendar year 2000. One reason was the
defensive nature of utility stocks in a time of growing investor uncertainty and
anxiety about the direction of both the overall economy and the general stock
market. Another was a sharp decline for 10-year Treasury Bond rates, which
influence utility stock prices more than any other rate measure. This was an
unusual period, which we do not expect to continue indefinitely, and yet it
worked to the benefit of the Fund's performance.
How did deregulation affect utilities?
Traditional electric utilities were the last to arrive in this new environment
of less regulation and more competition. Telecommunications companies and gas
utilities entered a deregulated era with increased competition earlier and more
completely, although both still have some governmental regulatory restraints
remaining. Electric utilities have much more regulatory oversight than other
types of utilities, which can limit their ability to maneuver successfully
through the uncharted waters of competition. We have begun to see the
traditional integrated electric utilities--which both generated and distributed
power--adopt new business models. Some companies concentrate on distributing
power, while others concentrate on power generation. Still others will pursue
higher growth businesses.
Top 5 Sectors
-------------
(as a percentage of 7/31/2000 net assets)
Utilities 48.6%
Telecommunication Services 34.1%
Information Technology 10.4%
Consumer Discretionary 0.9%
Industrials 0.3%
17
<PAGE>
EVERGREEN
Utility Fund
Portfolio Manager Interview
What were your principal investment strategies?
Our utility investments are selected with a goal of maximum total return, that
is, combining above-average income and price appreciation. While electric
utility investments tend to be defensive in relation to the overall market, we
don't want to give up growth to be defensive. We invest with a long-term
outlook, and we work to compile a portfolio of companies that we believe can
maximize the Fund's objective. This strategy includes telecommunications stocks,
which we believe are well positioned for future revenue growth.
What are some examples of the Fund investments?
Three types of holdings illustrate the diversified nature of the Fund's
investments used to maximize total return throughout the long term.
Consolidated Edison of New York is an example of a defensive stock with an
above-average yield. Con Ed is an electric utility serving metropolitan New York
City. It has divested itself of most of its power generating facilities and
plans to sell its nuclear plant within the next year. Now, it concentrates on
transmission and distribution of electric power to New York City and Westchester
County and distribution of natural gas to most of the same service area. While
Con Ed offers modest growth opportunities, its stock pays an above-average yield
of about 7.0%. This yield is expected to grow by about 2% a year over the next
several years. Electric utility stocks like Con Ed, which provide defensive
protection and safety, are an excellent base for the Fund's income component.
Calpine, an unregulated, independent power producer, develops, owns and operates
generation facilities in regions where electricity supplies often are tight.
Calpine's efficient, low-cost power plants support our expectation for 40%
earnings growth over the next several years, owing to current and projected
supply shortages. This company is an example of a very successful new entrant
into the deregulating power industry.
Nextel Communications represents a third type of company in which the Fund
invests. Nextel is a national wireless communications provider, primarily
targeting business customers, with a distinct competitive advantage in its
single-button-calling feature, called "Direct Connect." In addition to its
national wireless network, Nextel is also developing a global network that
should position it very well for future revenue growth of 25% to 30%.
Top 10 Holdings
---------------
(as a percentage of 7/31/2000 net assets)
Enron Corp. 4.9%
Dynegy, Inc. 3.5%
Qwest Communications International, Inc. 3.4%
AES Corp. 3.3%
Calpine Capital Trust 3.1%
Scottish Power Plc, ADR 2.7%
Nextel Communications, Inc., Class A 2.6%
American Electric Power Co., Inc. 2.5%
Verizon Communications 2.5%
Leap Wireless International, Inc. 2.3%
What is your outlook?
We plan to continue our diversified approach to utility investing. Although
telecommunications stocks have pulled back from their market highs in recent
months, we still think they have excellent long-term growth prospects and we are
searching for value opportunities in this sub-sector, stocks that we can acquire
at attractive prices. In addition, we will look for new names among power
generating companies with what we believe are superior long-term growth
prospects, as well as traditional electric utilities that provide attractive
income for the portfolio.
We will seek to combine all three types of companies in ways that may deliver
meaningful monthly dividends and opportunities for growth in principal as we
seek to maximize the Fund's total return.
18
<PAGE>
EVERGREEN
Value Fund
Fund at a Glance as of July 31, 2000
"We remain positive about the outlook for the value style of investing, and
positive about the opportunities that active portfolio management can uncover in
companies that have been overlooked by investors."
Portfolio
Management
--------------
[PHOTO]
Matthew D. Finn, CFA
Tenure: March 1998
--------------------------------------------------------------------------------
CURRENT INVESTMENT STYLE(1)
--------------------------------------------------------------------------------
[STYLE BOX]
Morningstar's Style Box is based on a portfolio date as of 7/31/2000.
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: 2000 Morningstar, Inc.
(2)Past performance is no guarantee of future results. The performance of each
class may vary based on differences in loads, fees and expenses paid by the
shareholders investing in each class. The investment return and principal value
will fluctuate so that investors' shares, when redeemed, may be worth more or
less than their original cost. Performance includes the reinvestment of income
dividends and capital gain distributions.
Class Y shares are available to institutional shareholders, Evergreen Fund
shareholders prior to January 1995 and shareholders of record prior to October
12, 1990, and any series of Evergreen Investment Trust which existed at that
time.
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 are 0.25% for Class A and 1.00% for
Classes B and C. Class Y does not pay a 12b-1 fee. If these fees had been
reflected, returns for Classes B and C would have been lower while returns for
Class Y would have been higher.
Returns reflect expense limits previously in effect, without which returns would
have been lower.
--------------------------------------------------------------------------------
PERFORMANCE AND RETURNS(2)
--------------------------------------------------------------------------------
Portfolio Inception Date: Class A Class B Class C Class Y
4/12/1985
Class Inception Date 4/12/1985 2/2/1993 9/2/1994 1/3/1991
Average Annual Returns*
1 year with sales charge -8.36% -8.67% -6.18% n/a
1 year w/o sales charge -3.78% -4.51% -4.52% -3.59%
5 years 12.33% 12.35% 12.61% 13.70%
10 years 11.90% 11.87% 11.97% 12.73%
Maximum Sales Charge 4.75% 5.00% 2.00% n/a
Front End CDSC CDSC
30-day SEC Yield 0.81% 0.05% 0.06% 1.05%
12-month income dividends
per share 0.19 0.04 0.04 0.25
12-month capital gain
distributions per share 3.11 3.11 3.11 3.11
* Adjusted for maximum applicable sales charge.
--------------------------------------------------------------------------------
LONG TERM GROWTH
--------------------------------------------------------------------------------
[GRAPH]
<TABLE>
<CAPTION>
EVERGREEN VALUE PORTFOLIO Consumer Price S & P 500 Composite Russell 1000
CLASS A Index - US Total Return Value
<S> <C> <C> <C> <C>
7/31-90 9,525 10,000 10,000 10,000
7/31-91 10,612 10,445 11,276 11,071
7/31-92 11,744 10,775 12,718 12,797
7/31-93 12,687 11,074 13,829 15,193
7/31-94 13,637 11,380 14,542 15,744
7/31-95 16,396 11,695 18,339 19,028
7/31-96 18,101 12,040 21,378 22,051
7/31-97 25,740 12,308 32,524 32,818
7/31-98 28,200 12,515 38,795 38,633
7/31-99 31,996 12,784 46,639 44,422
7/31-00 30,712 13,236 50,822 42,206
</TABLE>
Comparison of a $10,000 investment in Evergreen Value Fund, Class A shares2,
versus a similar investment in the Standard & Poor's 500 Index (S&P 500), the
Russell 1000 Value Index (Russell 1000 Value) and the Consumer Price Index
(CPI).
The S&P 500 and the Russell 1000 Value are unmanaged market indices which do not
include transaction costs associated with buying and selling securities or any
mutual fund expenses. 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.
Foreign investments may contain more risks due to the inherent risks associated
with changing political climates, foreign market instability and foreign
currency fluctuations.
The Fund's investment objective is non-fundamental and may be changed without
the vote of the Fund's shareholders.
All data is as of July 31, 2000 and subject to change.
19
<PAGE>
EVERGREEN
Value Fund
Portfolio Manager Interview
How did the Fund perform?
For the twelve-month period ended July 31, 2000, Evergreen Value Fund Class A
shares returned -3.78%. Fund performance is before the deduction of any
applicable sales charges. During the same twelvemonth period, the Russell 1000
Value Index returned -5.00% and the Standard & Poor's 500 Index returned 8.97%.
The median return of multi-cap value funds was -2.24%, according to Lipper Inc.,
an independent monitor of mutual fund performance.
Portfolio
Characteristics
---------------
(as of 7/31/2000)
Total Net Assets 646,397,406
Number of Holdings 92
Beta* 0.84
P/E Ratio* 25.4x
*As of 6/30/2000
What factors affected performance during the twelve-month period?
While the first six months were difficult, performance relative to the benchmark
Russell 1000 Value Index improved markedly during the final six months of the
period, helped by the strong returns from Fund holdings in the health care and
technology sectors.
The period started out, in the latter part of 1999, with a continuation of the
trend of the previous two years. Stock market performance was dominated by the
top 20 growth stocks. It was a very narrow market, which did not favor value
investing. The environment changed this year, however, as many technology stocks
started to tumble and other sectors, including financial services and energy,
improved in performance.
The Fund's investments in capital goods, health care and technology also
supported performance. Capital goods companies such as General Electric, SCI
Systems and American Power Conversion all were strong performers for the Fund,
as were Quest Diagnostics in the health care field and Gateway, Micron
Technology, LSI Logic and Intel in technology. Some of the Fund's holdings in
consumer discretionary and financial services tended to hold back performance,
and positions in many of the disappointing stocks in those sectors were
eliminated during the period.
Top 5 Sectors
-------------
(as a percentage of 7/31/2000 net assets)
Financials 29.6%
Industrials 11.9%
Information Technology 10.6%
Energy 8.4%
Health Care 7.8%
What were your principal strategies?
Given the possibility that the Federal Reserve Board's interest rate hikes could
lead to a slowdown in economic growth, holdings in many economically sensitive
industries were reduced late in 1999. These are industries that tend to perform
better when economic growth is accelerating, and include retail companies and
companies involved in basic materials, such as chemicals and paper.
Health care and financial services investments have been over-weighted. These
decisions particularly helped performance during the second six months of the
period, as investors began to favor industries with more stable earnings as they
anticipated an economic slowdown.
20
<PAGE>
EVERGREEN
Value Fund
Portfolio Manager Interview
In late 1999, holdings in health care were increased, as they represented good
value. Pharmaceutical stocks had come under pressure because of political
controversies about the cost of prescription drugs and were selling at a
discount compared to other sectors with similar fundamentals. In December,
negative news affected the stock prices of holdings such as American Home
Products (a failed merger) and Pharmacia Upjohn (a controversial acquisition of
Monsanto), but the entire sector began to revive in early 2000. One of the best
performers was Quest Diagnostics, which operates lung and tissue laboratories
across the country. Its stock was selling at an attractive valuation,
principally because of the controversy over regulatory issues and the efforts of
HMOs to limit testing, but we believed the long-term prospects were excellent.
Throughout the period, a healthy weighting in technology was maintained, when
compared to the benchmark Russell 1000 Value Index, but the weighting was
increased in March after a correction created investment opportunities. Among
the technology companies in which we invested during this period were Symantec,
a software and services company, and Compaq Computer, a full-service computer
company which is engineering a turn-around in operating performance.
Top 10 Holdings
---------------
(as a percentage of 7/31/2000 net assets)
AMBAC Financial Group, Inc. 3.6%
Exxon Mobil Corp. 3.3%
General Electric Co. 2.8%
FleetBoston Financial Corp. 2.5%
Citigroup, Inc. 2.4%
Verizon Communications 2.2%
Compaq Computer Corp. 2.2%
Emerson Electric Co. 2.0%
Golden West Financial Corp. 1.9%
Household International, Inc. 1.8%
What is your outlook?
We see opportunity. The market has broadened beyond the narrow focus of the
previous two years and investors are again recognizing the importance of
valuations--or stock prices--in their decisions. We particularly see
opportunities among selected mid-sized stocks, with market capitalizations
between$1 billion and $10 billion.
If the cycle of interest rate increases is nearing an end, we would anticipate
an environment of stable interest rates and moderate growth and a broadening
market.
We remain positive about the outlook for the value style of investing, and
positive about the opportunities that we as active portfolio managers can
uncover in companies that have been overlooked by investors.
21
<PAGE>
EVERGREEN
Blue Chip Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended July 31,
-------------------------
2000 1999 1998 (a)
<S> <C> <C> <C>
CLASS A SHARES
Net asset value, beginning of period $32.88 $30.42 $27.39
------ ------ ------
Income from investment operations
Net investment income (loss) (0.03) 0.05 0.08
Net realized and unrealized gains on securities 4.34 4.82 3.01
------ ------ ------
Total from investment operations 4.31 4.87 3.09
------ ------ ------
Distributions to shareholders from
Net investment income 0 (0.03) (0.06)
Net realized gains (2.40) (2.38) 0
------ ------ ------
Total distributions (2.40) (2.41) (0.06)
------ ------ ------
Net asset value, end of period $34.79 $32.88 $30.42
------ ------ ------
Total return* 13.22% 17.29% 11.29%
Ratios and supplemental data
Net assets, end of period (millions) $ 467 $ 382 $ 285
Ratios to average net assets
Expenses++ 1.15% 1.20% 1.20%+
Net investment income (loss) (0.04%) 0.19% 0.49%+
Portfolio turnover rate 153% 111% 112%
</TABLE>
<TABLE>
<CAPTION>
Year Ended July 31, Year Ended August 31,
-------------------------- ----------------------
2000 1999 1998 (b) 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
CLASS B SHARES
Net asset value,
beginning of period $32.54 $30.35 $29.79 $25.05 $22.98 $23.21
------ ------ ------ ------ ------ ------
Income from investment
operations
Net investment income
(loss) (0.14) (0.05) (0.12) 0.15 0.12 0.25
Net realized and
unrealized gains on
securities 4.15 4.62 5.72 7.97 3.69 2.66
------ ------ ------ ------ ------ ------
Total from investment
operations 4.01 4.57 5.60 8.12 3.81 2.91
------ ------ ------ ------ ------ ------
Distributions to
shareholders from
Net investment income 0 0 (0.08) (0.20) (0.76) (0.36)
Net realized gains (2.40) (2.38) (4.96) (3.18) (0.98) (2.78)
------ ------ ------ ------ ------ ------
Total distributions (2.40) (2.38) (5.04) (3.38) (1.74) (3.14)
------ ------ ------ ------ ------ ------
Net asset value, end of
period $34.15 $32.54 $30.35 $29.79 $25.05 $22.98
------ ------ ------ ------ ------ ------
Total return* 12.40% 16.26% 20.89% 34.76% 17.31% 13.87%
Ratios and supplemental
data
Net assets, end of period
(millions) $ 477 $ 255 $ 118 $ 313 $ 225 $ 199
Ratios to average net
assets
Expenses++ 1.90% 1.95% 1.68%+ 1.57% 1.85% 1.75%
Net investment income
(loss) (0.79%) (0.60%) (0.02%)+ 0.55% 0.52% 1.09%
Portfolio turnover rate 153% 111% 112% 109% 139% 115%
</TABLE>
(a) For the period from January 20, 1998 (commencement of class operations) to
July 31, 1998.
(b) For the eleven months ended July 31, 1998. The Fund changed its fiscal year
end from August 31 to July 31, effective July 31, 1998.
* Excluding applicable sales charges.
+ Annualized.
++ Ratio of expenses to average net assets includes fee waivers and excludes
expense reductions.
See Combined Notes to Financial Statements.
22
<PAGE>
EVERGREEN
Blue Chip Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended July 31,
---------------------------
2000 1999 1998 (a)
<S> <C> <C> <C>
CLASS C SHARES
Net asset value, beginning of period $ 32.63 $30.40 $27.70
------- ------ ------
Income from investment operations
Net investment income (loss) (0.04) (0.11) 0
Net realized and unrealized gains on securities 4.05 4.72 2.72
------- ------ ------
Total from investment operations 4.01 4.61 2.72
------- ------ ------
Distributions to shareholders from
Net investment income 0 0 (0.02)
Net realized gains (2.40) (2.38) 0
------- ------ ------
Total distributions (2.40) (2.38) (0.02)
------- ------ ------
Net asset value, end of period $ 34.24 $32.63 $30.40
------- ------ ------
Total return* 12.37% 16.37% 9.80%
Ratios and supplemental data
Net assets, end of period (thousands) $21,810 $2,969 $ 780
Ratios to average net assets
Expenses++ 1.90% 1.95% 2.02%+
Net investment loss (0.78%) (0.67%) (0.27%)+
Portfolio turnover rate 153% 111% 112%
</TABLE>
<TABLE>
<CAPTION>
Year Ended July 31,
------------------
2000 1999 (b)
<S> <C> <C>
CLASS Y SHARES
Net asset value, beginning of period $ 32.62 $32.30
------- ------
Income from investment operations
Net investment income 0.04 0
Net realized and unrealized gains on securities 4.33 0.32
------- ------
Total from investment operations 4.37 0.32
------- ------
Distributions to shareholders from
Net realized gains (2.40) 0
------- ------
Total distributions (2.40) 0
------- ------
Net asset value, end of period $ 34.59 $32.62
------- ------
Total return 13.53% 0.99%
Ratios and supplemental data
Net assets, end of period (thousands) $15,967 $ 789
Ratios to average net assets
Expenses++ 0.90% 0.95%+
Net investment income 0.22% 0.08%+
Portfolio turnover rate 153% 111%
</TABLE>
(a) For the period from January 22, 1998 (commencement of class operations) to
July 31, 1998.
(b) For the period from April 30, 1999 (commencement of class operations) to
July 31, 1999.
* Excluding applicable sales charges.
+ Annualized.
++ Ratio of expenses to average net assets includes fee waivers and excludes
expense reductions.
See Combined Notes to Financial Statements.
23
<PAGE>
(formerly,
EVERGREEN Evergreen
Equity Income Fund Income and
Financial Highlights Growth Fund)
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended
Year Ended July 31, January 31,
--------------------------------------- ----------------
2000 1999 # 1998 1997 (a) # 1997 1996
<S> <C> <C> <C> <C> <C> <C>
CLASS A SHARES
Net asset value,
beginning of period $ 22.57 $ 23.19 $ 23.94 $ 21.79 $ 20.15 $ 17.28
-------- -------- ------- ------- ------- -------
Income from investment
operations
Net investment income 0.98 0.94 1.05 0.52 1.02 1.01
Net realized and
unrealized gains or
losses on securities
and foreign currency
related transactions (0.82) 1.50 0.81 2.15 1.67 2.94
-------- -------- ------- ------- ------- -------
Total from investment
operations 0.16 2.44 1.86 2.67 2.69 3.95
-------- -------- ------- ------- ------- -------
Distributions to
shareholders from
Net investment income (1.01) (0.93) (1.02) (0.52) (1.05) (1.08)
Net realized gains (0.86) (2.13) (1.59) 0 0 0
-------- -------- ------- ------- ------- -------
Total distributions (1.87) (3.06) (2.61) (0.52) (1.05) (1.08)
-------- -------- ------- ------- ------- -------
Net asset value, end of
period $ 20.86 $ 22.57 $ 23.19 $ 23.94 $ 21.79 $ 20.15
-------- -------- ------- ------- ------- -------
Total return* 0.74% 12.14% 7.93% 12.45% 13.80% 23.40%
Ratios and supplemental
data
Net assets, end of
period (thousands) $ 62,692 $ 35,714 $15,005 $11,955 $ 9,678 $ 4,412
Ratios to average net
assets
Expenses++ 1.49% 1.46% 1.50% 1.45%+ 1.44% 1.36%
Net investment income 4.13% 4.39% 4.20% 4.69%+ 4.93% 5.39%
Portfolio turnover rate 115% 124% 133% 72% 168% 138%
<CAPTION>
Year Ended
Year Ended July 31, January 31,
--------------------------------------- ----------------
2000 1999 # 1998 1997 (a) # 1997 1996
<S> <C> <C> <C> <C> <C> <C>
CLASS B SHARES
Net asset value,
beginning of period $ 22.38 $ 23.04 $ 23.81 $ 21.69 $ 20.08 $ 17.28
-------- -------- ------- ------- ------- -------
Income from investment
operations
Net investment income 0.73 0.76 0.86 0.43 0.89 0.91
Net realized and
unrealized gains or
losses on securities
and foreign currency
related transactions (0.73) 1.51 0.81 2.15 1.64 2.87
-------- -------- ------- ------- ------- -------
Total from investment
operations 0.00 2.27 1.67 2.58 2.53 3.78
-------- -------- ------- ------- ------- -------
Distributions to
shareholders from
Net investment income (0.84) (0.80) (0.85) (0.46) (0.92) (0.98)
Net realized gains (0.86) (2.13) (1.59) 0 0 0
-------- -------- ------- ------- ------- -------
Total distributions (1.70) (2.93) (2.44) (0.46) (0.92) (0.98)
-------- -------- ------- ------- ------- -------
Net asset value, end of
period $ 20.68 $ 22.38 $ 23.04 $ 23.81 $ 21.69 $ 20.08
-------- -------- ------- ------- ------- -------
Total return* 0.00% 11.34% 7.13% 12.06% 13.00% 22.40%
Ratios and supplemental
data
Net assets, end of
period (thousands) $177,968 $185,177 $54,544 $43,977 $35,323 $14,750
Ratios to average net
assets
Expenses++ 2.24% 2.21% 2.25% 2.20%+ 2.19% 2.11%
Net investment income 3.28% 3.61% 3.46% 3.94%+ 4.17% 4.69%
Portfolio turnover rate 115% 124% 133% 72% 168% 138%
</TABLE>
(a) For the six months ended July 31, 1997. The Fund changed its fiscal year
end from January 31 to July 31, effective July 31, 1997.
* Excluding applicable sales charges.
+ Annualized.
++ Ratio of expenses to average net assets includes fee waivers and excludes
expense reductions.
# Net investment income is based on average shares outstanding during the
period.
See Combined Notes to Financial Statements.
24
<PAGE>
(formerly,
EVERGREEN Evergreen
Equity Income Fund Income and
Financial Highlights Growth Fund)
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended
Year Ended July 31, January 31,
---------------------------------- --------------
2000 1999 # 1998 1997 (a) # 1997 1996
<S> <C> <C> <C> <C> <C> <C>
CLASS C SHARES
Net asset value, beginning
of period $22.38 $23.04 $23.81 $21.69 $20.08 $17.27
------ ------ ------ ------ ------ ------
Income from investment
operations
Net investment income 0.88 0.76 0.87 0.44 0.87 0.90
Net realized and unrealized
gains or losses on
securities and foreign
currency related
transactions (0.88) 1.51 0.80 2.14 1.66 2.89
------ ------ ------ ------ ------ ------
Total from investment
operations 0.00 2.27 1.67 2.58 2.53 3.79
------ ------ ------ ------ ------ ------
Distributions to
shareholders from
Net investment income (0.84) (0.80) (0.85) (0.46) (0.92) (0.98)
Net realized gains (0.86) (2.13) (1.59) 0 0 0
------ ------ ------ ------ ------ ------
Total distributions (1.70) (2.93) (2.44) (0.46) (0.92) (0.98)
------ ------ ------ ------ ------ ------
Net asset value, end of
period $20.68 $22.38 $23.04 $23.81 $21.69 $20.08
------ ------ ------ ------ ------ ------
Total return* 0.00% 11.34% 7.13% 12.06% 12.90% 22.40%
Ratios and supplemental
data
Net assets, end of period
(thousands) $9,112 $2,502 $1,259 $ 950 $ 982 $ 523
Ratios to average net
assets
Expenses++ 2.25% 2.21% 2.25% 2.20%+ 2.19% 2.11%
Net investment income 3.43% 3.60% 3.48% 4.06%+ 4.15% 4.67%
Portfolio turnover rate 115% 124% 133% 72% 168% 138%
</TABLE>
<TABLE>
<CAPTION>
Year Ended
Year Ended July 31, January 31,
---------------------------------- --------------
2000 1999 # 1998 1997 (a) # 1997 1996
<S> <C> <C> <C> <C> <C> <C>
CLASS Y SHARES
Net asset value, beginning
of period $22.58 $23.22 $23.98 $21.81 $20.16 $17.28
------ ------ ------ ------ ------ ------
Income from investment
operations
Net investment income 0.94 0.99 1.02 0.55 1.08 1.10
Net realized and unrealized
gains or losses on
securities and foreign
currency related
transactions (0.72) 1.52 0.89 2.16 1.66 2.87
------ ------ ------ ------ ------ ------
Total from investment
operations 0.22 2.51 1.91 2.71 2.74 3.97
------ ------ ------ ------ ------ ------
Distributions to
shareholders from
Net investment income (1.07) (1.02) (1.08) (0.54) (1.09) (1.09)
Net realized gains (0.86) (2.13) (1.59) 0 0 0
------ ------ ------ ------ ------ ------
Total distributions (1.93) (3.15) (2.67) (0.54) (1.09) (1.09)
------ ------ ------ ------ ------ ------
Net asset value, end of
period $20.87 $22.58 $23.22 $23.98 $21.81 $20.16
------ ------ ------ ------ ------ ------
Total return 1.00% 12.46% 8.16% 12.65% 14.10% 23.50%
Ratios and supplemental
data
Net assets, end of period
(millions) $ 733 $ 847 $ 880 $ 900 $ 858 $ 914
Ratios to average net
assets
Expenses++ 1.23% 1.21% 1.25% 1.20%+ 1.18% 1.19%
Net investment income 4.29% 4.61% 4.46% 4.97%+ 5.14% 5.70%
Portfolio turnover rate 115% 124% 133% 72% 168% 138%
</TABLE>
(a) For the six months ended July 31, 1997. The Fund changed its fiscal year
end from January 31 to July 31, effective July 31, 1997.
* Excluding applicable sales charges.
+ Annualized.
++ Ratio of expenses to average net assets includes fee waivers and excludes
expense reductions.
# Net investment income is based on average shares outstanding during the pe-
riod.
See Combined Notes to Financial Statements.
25
<PAGE>
EVERGREEN
Growth and Income Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended
Year Ended July 31, December 31,
--------------------------------- ----------------
2000 1999 1998 1997 (b) 1996 1995 (a)
<S> <C> <C> <C> <C> <C> <C>
CLASS A SHARES
Net asset value,
beginning of period $29.56 $29.14 $27.26 $22.53 $18.63 $14.48
------ ------ ------ ------ ------ ------
Income from investment
operations
Net investment income
(loss) (0.09) 0.10 0.16 0.08 0.12 0.13
Net realized and
unrealized gains on
securities and foreign
currency related
transactions 1.85 1.16 2.86 4.72 4.26 4.64
------ ------ ------ ------ ------ ------
Total from investment
operations 1.76 1.26 3.02 4.80 4.38 4.77
------ ------ ------ ------ ------ ------
Distributions to
shareholders from
Net investment income 0 (0.06) (0.13) (0.07) (0.13) (0.14)
Net realized gains (0.60) (0.78) (1.01) 0 (0.35) (0.48)
------ ------ ------ ------ ------ ------
Total distributions (0.60) (0.84) (1.14) (0.07) (0.48) (0.62)
------ ------ ------ ------ ------ ------
Net asset value, end of
period $30.72 $29.56 $29.14 $27.26 $22.53 $18.63
------ ------ ------ ------ ------ ------
Total return* 6.01% 4.48% 11.26% 21.33% 23.50% 33.00%
Ratios and supplemental
data
Net assets, end of period
(millions) $ 207 $ 250 $ 296 $ 166 $ 85 $ 19
Ratios to average net
assets
Expenses++ 1.47% 1.43% 1.46% 1.47%+ 1.41% 1.55%+
Net investment income
(loss) (0.28%) 0.33% 0.61% 0.57%+ 0.70% 0.99%+
Portfolio turnover rate 61% 39% 20% 6% 14% 17%
</TABLE>
<TABLE>
<CAPTION>
Year Ended
Year Ended July 31, December 31,
----------------------------------- -----------------
2000 1999 1998 1997 (b) 1996 1995 (a)
<S> <C> <C> <C> <C> <C> <C>
CLASS B SHARES
Net asset value,
beginning of period $29.14 $28.88 $27.10 $22.43 $18.59 $14.48
------ ------ ------ ------ ------ ------
Income from investment
operations
Net investment income
(loss) (0.35) (0.14) (0.02) (0.02) 0 0.05
Net realized and
unrealized gains on
securities and foreign
currency related
transactions 1.86 1.18 2.81 4.69 4.20 4.61
------ ------ ------ ------ ------ ------
Total from investment
operations 1.51 1.04 2.79 4.67 4.20 4.66
------ ------ ------ ------ ------ ------
Distributions to
shareholders from
Net investment income 0 0 0 0 (0.01) (0.07)
Net realized gains (0.60) (0.78) (1.01) 0 (0.35) (0.48)
------ ------ ------ ------ ------ ------
Total distributions (0.60) (0.78) (1.01) 0 (0.36) (0.55)
------ ------ ------ ------ ------ ------
Net asset value, end of
period $30.05 $29.14 $28.88 $27.10 $22.43 $18.59
------ ------ ------ ------ ------ ------
Total return* 5.23% 3.73% 10.44% 20.82% 22.60% 32.20%
Ratios and supplemental
data
Net assets, end of
period (millions) $ 706 $ 891 $1,000 $ 542 $ 245 $ 46
Ratios to average net
assets
Expenses++ 2.22% 2.18% 2.21% 2.25%+ 2.17% 2.24%+
Net investment income
(loss) (1.03%) (0.43%) (0.14%) (0.19%)+ (0.06%) 0.30%+
Portfolio turnover rate 61% 39% 20% 6% 14% 17%
</TABLE>
(a) For the period from January 3, 1995 (commencement of class operations) to
December 31, 1995.
(b) For the seven months ended July 31, 1997. The Fund changed its fiscal year
end from December 31 to July 31, effective July 31, 1997.
* Excluding applicable sales charges.
+ Annualized.
++ Ratio of expenses to average net assets includes fee waivers and excludes
expense reductions.
See Combined Notes to Financial Statements.
26
<PAGE>
EVERGREEN
Growth and Income Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended
Year Ended July 31, December 31,
----------------------------------- -----------------
2000 1999 1998 1997 (b) 1996 1995 (a)
<S> <C> <C> <C> <C> <C> <C>
CLASS C SHARES
Net asset value,
beginning of period $29.14 $28.89 $27.10 $22.43 $18.58 $14.48
------ ------ ------ ------ ------ ------
Income from investment
operations
Net investment income
(loss) (0.36) (0.16) (0.02) (0.02) 0 0.06
Net realized and
unrealized gains on
securities and foreign
currency related
transactions 1.87 1.19 2.82 4.69 4.21 4.60
------ ------ ------ ------ ------ ------
Total from investment
operations 1.51 1.03 2.80 4.67 4.21 4.66
------ ------ ------ ------ ------ ------
Distributions to
shareholders from
Net investment income 0 0 0 0 (0.01) (0.08)
Net realized gains (0.60) (0.78) (1.01) 0 (0.35) (0.48)
------ ------ ------ ------ ------ ------
Total distributions (0.60) (0.78) (1.10) 0 (0.36) (0.56)
------ ------ ------ ------ ------ ------
Net asset value, end of
period $30.05 $29.14 $28.89 $27.10 $22.43 $18.58
------ ------ ------ ------ ------ ------
Total return* 5.23% 3.69% 10.47% 20.82% 22.60% 32.20%
Ratios and supplemental
data
Net assets, end of
period (millions) $ 26 $ 37 $ 50 $ 24 $ 10 $ 20
Ratios to average net
assets
Expenses++ 2.21% 2.18% 2.21% 2.25%+ 2.17% 2.15%+
Net investment income
(loss) (1.02%) (0.42%) (0.13%) (0.19%)+ (0.06%) 0.35%+
Portfolio turnover rate 61% 39% 20% 6% 14% 17%
<CAPTION>
Year Ended
Year Ended July 31, December 31,
----------------------------------- -----------------
2000 1999 1998 1997 (b) 1996 1995
<S> <C> <C> <C> <C> <C> <C>
CLASS Y SHARES
Net asset value,
beginning of period $29.65 $29.19 $27.29 $22.55 $18.64 $14.52
------ ------ ------ ------ ------ ------
Income from investment
operations
Net investment income
(loss) (0.01) 0.19 0.24 0.11 0.18 0.18
Net realized and
unrealized gains on
securities and foreign
currency related
transactions 1.86 1.15 2.87 4.73 4.25 4.59
------ ------ ------ ------ ------ ------
Total from investment
operations 1.85 1.34 3.11 4.84 4.43 4.77
------ ------ ------ ------ ------ ------
Distributions to
shareholders from
Net investment income 0 (0.10) (0.20) (0.10) (0.17) (0.17)
Net realized gains (0.60) (0.78) (1.01) 0 (0.35) (0.48)
------ ------ ------ ------ ------ ------
Total distributions (0.60) (0.88) (1.21) (0.10) (0.52) (0.65)
------ ------ ------ ------ ------ ------
Net asset value, end of
period $30.90 $29.65 $29.19 $27.29 $22.55 $18.64
------ ------ ------ ------ ------ ------
Total return 6.30% 4.75% 11.56% 21.52% 23.80% 32.90%
Ratios and supplemental
data
Net assets, end of
period (millions) $ 484 $ 634 $ 801 $ 616 $ 442 $ 141
Ratios to average net
assets
Expenses++ 1.22% 1.18% 1.20% 1.21%+ 1.16% 1.27%
Net investment income
(loss) (0.03%) 0.57% 0.86% 0.82%+ 0.93% 1.11%
Portfolio turnover rate 61% 39% 20% 6% 14% 17%
</TABLE>
(a) For the period from January 3, 1995 (commencement of class operations) to
December 31, 1995.
(b) For the seven months ended July 31, 1997. The Fund changed its fiscal year
end from December 31 to July 31, effective July 31, 1997.
* Excluding applicable sales charges.
+ Annualized.
++ Ratio of expenses to average net assets includes fee waivers and excludes
expense reductions.
See Combined Notes to Financial Statements.
27
<PAGE>
EVERGREEN
Small Cap Value Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended
Year Ended July 31 December 31,
---------------------------------------- ----------------
2000 1999 1998 1997 (b) # 1996 1995 (a)
<S> <C> <C> <C> <C> <C> <C>
CLASS A SHARES
Net asset value,
beginning of period $ 15.57 $15.75 $15.69 $13.10 $11.57 $ 9.64
------- -------- -------- ------ ------ ------
Income from investment
operations
Net investment income 0.05 0.26 0.29 0.14 0.34 0.34
Net realized and
unrealized gains or
losses on securities (0.18) 0.04 0.24 2.59 2.13 2.45
------- -------- -------- ------ ------ ------
Total from investment
operations (0.13) 0.30 0.53 2.73 2.47 2.79
------- -------- -------- ------ ------ ------
Distributions to
shareholders from
Net investment income (0.04) (0.30) (0.28) (0.13) (0.34) (0.37)
Net realized gains 0 (0.18) (0.19) (0.01) (0.60) (0.49)
------- -------- -------- ------ ------ ------
Total distributions (0.04) (0.48) (0.47) (0.14) (0.94) (0.86)
------- -------- -------- ------ ------ ------
Net asset value, end of
period $ 15.40 $15.57 $15.75 $15.69 $13.10 $11.57
------- -------- -------- ------ ------ ------
Total return* (0.85%) 2.17% 3.24% 20.99% 22.00% 29.50%
Ratios and supplemental
data
Net assets, end of
period (thousands) $48,166 $59,451 $54,142 $4,239 $ 336 $ 216
Ratios to average net
assets
Expenses++ 1.76% 1.67% 1.68% 1.71%+ 1.75% 1.75%+
Net investment income 0.41% 1.85% 1.95% 1.88%+ 3.08% 3.39%+
Portfolio turnover rate 138% 54% 18% 13% 50% 48%
<CAPTION>
Year Ended
Year Ended July 31, December 31,
---------------------------------------- ----------------
2000 1999 1998 1997 (b) # 1996 1995 (a)
<S> <C> <C> <C> <C> <C> <C>
CLASS B SHARES
Net asset value,
beginning of period $ 15.48 $ 15.67 $ 15.64 $13.09 $11.57 $ 9.64
------- -------- -------- ------ ------ ------
Income from investment
operations
Net investment income
(loss) (0.07) 0.16 0.19 0.08 0.27 0.28
Net realized and
unrealized gains or
losses on securities (0.17) 0.02 0.22 2.57 2.11 2.43
------- -------- -------- ------ ------ ------
Total from investment
operations (0.24) 0.18 0.41 2.65 2.38 2.71
------- -------- -------- ------ ------ ------
Distributions to
shareholders from
Net investment income (0.01) (0.19) (0.19) (0.09) (0.26) (0.29)
Net realized gains 0 (0.18) (0.19) (0.01) (0.60) (0.49)
------- -------- -------- ------ ------ ------
Total distributions (0.01) (0.37) (0.38) (0.10) (0.86) (0.78)
------- -------- -------- ------ ------ ------
Net asset value, end of
period $ 15.23 $ 15.48 $ 15.67 $15.64 $13.09 $11.57
------- -------- -------- ------ ------ ------
Total return* (1.55%) 1.35% 2.49% 20.37% 21.10% 28.70%
Ratios and supplemental
data
Net assets, end of
period (thousands) $69,450 $110,809 $130,191 $9,462 $ 692 $ 266
Ratios to average net
assets
Expenses++ 2.51% 2.42% 2.43% 2.46%+ 2.50% 2.50%+
Net investment income
(loss) (0.32%) 1.15% 1.20% 1.12%+ 2.39% 2.67%+
Portfolio turnover rate 138% 54% 18% 13% 50% 48%
</TABLE>
(a) For the period from January 3, 1995 (commencement of class operations) to
December 31, 1995.
(b) For the seven months ended July 31, 1997. The Fund changed its fiscal year
end from December 31 to July 31, effective July 31, 1997.
* Excluding applicable sales charges.
+ Annualized.
++ Ratio of expenses to average net assets includes fee waivers and excludes
expense reductions.
# Net investment income is based on average shares outstanding during the pe-
riod.
See Combined Notes to Financial Statements.
28
<PAGE>
EVERGREEN
Small Cap Value Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended
Year Ended July 31, December 31,
-------------------------------------- ----------------
2000 1999 1998 1997 (b) # 1996 1995 (a)
<S> <C> <C> <C> <C> <C> <C>
CLASS C SHARES
Net asset value,
beginning of period $ 15.46 $ 15.66 $ 15.63 $13.09 $11.56 $ 9.74
------- ------- ------- ------ ------ ------
Income from investment
operations
Net investment income
(loss) (0.08) 0.16 0.19 0.10 0.28 0.28
Net realized and
unrealized gains or
losses on securities (0.17) 0.01 0.22 2.54 2.10 2.33
------- ------- ------- ------ ------ ------
Total from investment
operations (0.25) 0.17 0.41 2.64 2.38 2.61
------- ------- ------- ------ ------ ------
Distributions to
shareholders from
Net investment income (0.01) (0.19) (0.19) (0.09) (0.25) (0.30)
Net realized gains 0 (0.18) (0.19) (0.01) (0.60) (0.49)
------- ------- ------- ------ ------ ------
Total distributions (0.01) (0.37) (0.38) (0.10) (0.85) (0.79)
------- ------- ------- ------ ------ ------
Net asset value, end of
period $ 15.20 $ 15.46 $ 15.66 $15.63 $13.09 $11.56
------- ------- ------- ------ ------ ------
Total return* (1.62%) 1.28% 2.49% 20.30% 21.10% 27.30%
Ratios and supplemental
data
Net assets, end of
period (thousands) $12,637 $22,842 $26,197 $2,770 $ 56 $ 24
Ratios to average net
assets
Expenses++ 2.50% 2.42% 2.43% 2.45%+ 2.50% 2.50%+
Net investment income
(loss) (0.29%) 1.15% 1.20% 1.20%+ 2.33% 2.63%+
Portfolio turnover rate 138% 54% 18% 13% 50% 48%
</TABLE>
<TABLE>
<CAPTION>
Year Ended
Year Ended July 31, December 31,
-------------------------------------- --------------
2000 1999 1998 1997 (b) # 1996 1995
<S> <C> <C> <C> <C> <C> <C>
CLASS Y SHARES
Net asset value,
beginning of period $ 15.57 $ 15.77 $ 15.71 $ 13.12 $11.58 $ 9.70
------- ------- ------- ------- ------ ------
Income from investment
operations
Net investment income 0.05 0.33 0.34 0.19 0.38 0.38
Net realized and
unrealized gains or
losses on securities (0.14) (0.02) 0.24 2.56 2.13 2.38
------- ------- ------- ------- ------ ------
Total from investment
operations (0.09) 0.31 0.58 2.75 2.51 2.76
------- ------- ------- ------- ------ ------
Distributions to
shareholders from
Net investment income (0.05) (0.33) (0.33) (0.15) (0.37) (0.38)
Net realized gains 0 (0.18) (0.19) (0.01) (0.60) (0.50)
------- ------- ------- ------- ------ ------
Total distributions (0.05) (0.51) (0.52) (0.16) (0.97) (0.88)
------- ------- ------- ------- ------ ------
Net asset value, end of
period $ 15.43 $ 15.57 $ 15.77 $ 15.71 $13.12 $11.58
------- ------- ------- ------- ------ ------
Total return (0.59%) 2.31% 3.57% 21.09% 22.40% 29.10%
Ratios and supplemental
data
Net assets, end of
period (thousands) $92,921 $56,903 $96,556 $42,374 $8,592 $4,806
Ratios to average net
assets
Expenses++ 1.50% 1.42% 1.39% 1.39%+ 1.50% 1.50%
Net investment income 0.70% 2.19% 2.23% 2.39%+ 3.36% 3.56%
Portfolio turnover rate 138% 54% 18% 13% 50% 48%
</TABLE>
(a) For the period from January 24, 1995 (commencement of class operations) to
December 31, 1995.
(b) For the seven months ended July 31, 1997. The Fund changed its fiscal year
end from December 31 to July 31, effective July 31, 1997.
* Excluding applicable sales charges.
+ Annualized.
++ Ratio of expenses to average net assets includes fee waivers and excludes
expense reductions.
# Net investment income is based on average shares outstanding during the pe-
riod.
See Combined Notes to Financial Statements.
29
<PAGE>
EVERGREEN
Small Cap Value Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended
July 31, 2000 (a)
<S> <C>
CLASS IS SHARES
Net asset value, beginning of period $15.61
------
Income from investment operations
Net investment income 0.00
Net realized and unrealized gains on securities (0.18)
------
Total from investment operations (0.18)
------
Net asset value, end of period $15.43
------
Total return (1.15%)
Ratios and supplemental data
Net assets, end of period (thousands) $1,355
Ratios to average net assets
Expenses++ 1.78%+
Net investment loss (0.02%)+
Portfolio turnover rate 138%
</TABLE>
(a) For the period from June 30, 2000 (commencement of class operations) to
July 31, 2000.
+ Annualized.
++ Ratio of expenses to average net assets includes fee waivers and excludes
expense reductions.
See Combined Notes to Financial Statements.
30
<PAGE>
EVERGREEN
Utility Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended
Year Ended July 31, December 31,
------------------------------------- -----------------
2000 1999 1998 1997 (a) 1996 1995
<S> <C> <C> <C> <C> <C> <C>
CLASS A SHARES
Net asset value,
beginning of period $ 12.85 $ 11.76 $ 11.45 $ 10.57 $ 10.80 $ 9.00
-------- -------- ------- ------- ------- --------
Income from investment
operations
Net investment income 0.35 0.42 0.43 0.25 0.41 0.44
Net realized and
unrealized gains on
securities 2.29 2.37 1.44 0.87 0.05 2.25
-------- -------- ------- ------- ------- --------
Total from investment
operations 2.64 2.79 1.87 1.12 0.46 2.69
-------- -------- ------- ------- ------- --------
Distributions to
shareholders from
Net investment income (0.35) (0.42) (0.44) (0.24) (0.41) (0.44)
Net realized gains (1.18) (1.28) (1.12) 0 (0.28) (0.45)
-------- -------- ------- ------- ------- --------
Total distributions (1.53) (1.70) (1.56) (0.24) (0.69) (0.89)
-------- -------- ------- ------- ------- --------
Net asset value, end of
period $ 13.96 $ 12.85 $ 11.76 $ 11.45 $ 10.57 $ 10.80
-------- -------- ------- ------- ------- --------
Total return* 21.75% 26.05% 17.30% 10.72% 4.40% 30.70%
Ratios and supplemental
data
Net assets, end of
period (thousands) $299,675 $108,411 $95,300 $91,638 $96,243 $107,872
Ratios to average net
assets
Expenses++ 1.06% 1.03% 0.99% 1.00%+ 0.87% 0.79%
Net investment income 2.41% 3.60% 3.58% 3.85%+ 3.87% 4.51%
Portfolio turnover rate 66% 46% 62% 50% 59% 88%
</TABLE>
<TABLE>
<CAPTION>
Year Ended
Year Ended July 31, December 31,
------------------------------------ ----------------
2000 1999 1998 1997 (a) 1996 1995
<S> <C> <C> <C> <C> <C> <C>
CLASS B SHARES
Net asset value,
beginning of period $ 12.86 $ 11.76 $ 11.46 $ 10.58 $ 10.81 $ 9.00
-------- ------- ------- ------- ------- -------
Income from investment
operations
Net investment income 0.24 0.34 0.34 0.20 0.33 0.37
Net realized and
unrealized gains on
securities 2.29 2.37 1.44 0.87 0.05 2.26
-------- ------- ------- ------- ------- -------
Total from investment
operations 2.53 2.71 1.78 1.07 0.38 2.63
-------- ------- ------- ------- ------- -------
Distributions to
shareholders from
Net investment income (0.24) (0.33) (0.36) (0.19) (0.33) (0.37)
Net realized gains (1.18) (1.28) (1.12) 0 (0.28) (0.45)
-------- ------- ------- ------- ------- -------
Total distributions (1.42) (1.61) (1.48) (0.19) (0.61) (0.82)
-------- ------- ------- ------- ------- -------
Net asset value, end of
period $ 13.97 $ 12.86 $ 11.76 $ 11.46 $ 10.58 $ 10.81
-------- ------- ------- ------- ------- -------
Total return* 20.79% 25.23% 16.31% 10.21% 3.60% 29.90%
Ratios and supplemental
data
Net assets, end of
period (thousands) $110,460 $54,839 $43,776 $36,738 $38,511 $35,662
Ratios to average net
assets
Expenses++ 1.80% 1.77% 1.74% 1.75%+ 1.62% 1.53%
Net investment income 1.76% 2.85% 2.82% 3.10%+ 3.12% 3.78%
Portfolio turnover rate 66% 46% 62% 50% 59% 88%
</TABLE>
(a) For the seven months ended July 31, 1997. The Fund changed its fiscal year
end from December 31 to July 31, effective July 31, 1997.
* Excluding applicable sales charges.
+ Annualized.
++ Ratio of expenses to average net assets includes fee waivers and excludes
expense reductions.
See Combined Notes to Financial Statements.
31
<PAGE>
EVERGREEN
Utility Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended
Year Ended July 31, December 31,
-------------------------------- --------------
2000 1999 1998 1997 (a) 1996 1995
<S> <C> <C> <C> <C> <C> <C>
CLASS C SHARES
Net asset value, beginning
of period $12.86 $11.76 $11.46 $10.58 $10.82 $ 9.01
------ ------ ------ ------ ------ ------
Income from investment
operations
Net investment income 0.24 0.34 0.34 0.20 0.33 0.37
Net realized and unrealized
gains on securities 2.30 2.37 1.44 0.87 0.04 2.26
------ ------ ------ ------ ------ ------
Total from investment
operations 2.54 2.71 1.78 1.07 0.37 2.63
------ ------ ------ ------ ------ ------
Distributions to
shareholders from
Net investment income (0.24) (0.33) (0.36) (0.19) (0.33) (0.37)
Net realized gains (1.18) (1.28) (1.12) 0 (0.28) (0.45)
------ ------ ------ ------ ------ ------
Total distributions (1.42) (1.61) (1.48) (0.19) (0.61) (0.82)
------ ------ ------ ------ ------ ------
Net asset value, end of
period $13.98 $12.86 $11.76 $11.46 $10.58 $10.82
------ ------ ------ ------ ------ ------
Total return* 20.88% 25.23% 16.31% 10.21% 3.50% 29.80%
Ratios and supplemental data
Net assets, end of period
(thousands) $9,589 $ 879 $ 486 $ 379 $ 396 $ 246
Ratios to average net assets
Expenses++ 1.82% 1.77% 1.74% 1.75%+ 1.63% 1.54%
Net investment income 1.77% 2.74% 2.82% 3.10%+ 3.13% 3.76%
Portfolio turnover rate 66% 46% 62% 50% 59% 88%
</TABLE>
<TABLE>
<CAPTION>
Year Ended
Year Ended July 31, December 31,
-------------------------------- --------------
2000 1999 1998 1997 (a) 1996 1995
<S> <C> <C> <C> <C> <C> <C>
CLASS Y SHARES
Net asset value, beginning
of period $12.86 $11.77 $11.46 $10.58 $10.82 $ 9.00
------ ------ ------ ------ ------ ------
Income from investment
operations
Net investment income 0.38 0.49 0.46 0.25 0.44 0.47
Net realized and unrealized
gains on securities 2.28 2.33 1.45 0.88 0.03 2.27
------ ------ ------ ------ ------ ------
Total from investment
operations 2.66 2.82 1.91 1.13 0.47 2.74
------ ------ ------ ------ ------ ------
Distributions to
shareholders from
Net investment income (0.38) (0.45) (0.48) (0.25) (0.43) (0.47)
Net realized gains (1.18) (1.28) (1.12) 0 (0.28) (0.45)
------ ------ ------ ------ ------ ------
Total distributions (1.56) (1.73) (1.60) (0.25) (0.71) (0.92)
------ ------ ------ ------ ------ ------
Net asset value, end of
period $13.96 $12.86 $11.77 $11.46 $10.58 $10.82
------ ------ ------ ------ ------ ------
Total return 21.98% 26.35% 17.60% 10.85% 4.50% 31.30%
Ratios and supplemental data
Net assets, end of period
(thousands) $2,630 $2,123 $1,695 $1,627 $2,000 $7,791
Ratios to average net assets
Expenses++ 0.79% 0.77% 0.74% 0.74%+ 0.61% 0.54%
Net investment income 2.78% 3.92% 3.82% 4.06%+ 4.01% 4.76%
Portfolio turnover rate 66% 46% 62% 50% 59% 88%
</TABLE>
(a) For the seven months ended July 31, 1997. The Fund changed its fiscal year
end from December 31 to July 31, effective July 31, 1997.
* Excluding applicable sales charges.
+ Annualized.
++ Ratio of expenses to average net assets includes fee waivers and excludes
expense reductions.
See Combined Notes to Financial Statements.
32
<PAGE>
EVERGREEN
Value Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended
Year Ended July 31, December 31,
--------------------------------- --------------
2000 1999 1998 1997 (a) 1996 1995
<S> <C> <C> <C> <C> <C> <C>
CLASS A SHARES
Net asset value, beginning
of period $24.86 $22.23 $24.64 $20.57 $20.45 $16.62
------ ------ ------ ------ ------ ------
Income from investment
operations
Net investment income 0.20 0.21 0.26 0.21 0.38 0.55
Net realized and unrealized
gains or losses on
securities (1.08) 2.76 2.00 4.05 3.49 4.69
------ ------ ------ ------ ------ ------
Total from investment
operations (0.88) 2.97 2.26 4.26 3.87 5.24
------ ------ ------ ------ ------ ------
Distributions to
shareholders from
Net investment income (0.19) (0.21) (0.29) (0.19) (0.41) (0.51)
Net realized gains (3.11) (0.13) (4.38) 0 (3.34) (0.90)
------ ------ ------ ------ ------ ------
Total distributions (3.30) (0.34) (4.67) (0.19) (3.75) (1.41)
------ ------ ------ ------ ------ ------
Net asset value, end of
period $20.68 $24.86 $22.23 $24.64 $20.57 $20.45
------ ------ ------ ------ ------ ------
Total return* (3.78%) 13.48% 9.55% 20.78% 18.90% 31.80%
Ratios and supplemental
data
Net assets, end of period
(millions) $ 380 $ 464 $ 476 $ 392 $ 328 $ 292
Ratios to average net
assets
Expenses++ 1.03% 1.00% 1.01% 0.92%+ 0.91% 0.90%
Net investment income 0.91% 0.93% 1.04% 1.66%+ 1.77% 2.78%
Portfolio turnover rate 83% 110% 69% 6% 91% 53%
</TABLE>
<TABLE>
<CAPTION>
Year Ended
Year Ended July 31, December 31,
--------------------------------- --------------
2000 1999 1998 1997 (a) 1996 1995
<S> <C> <C> <C> <C> <C> <C>
CLASS B SHARES
Net asset value, beginning
of period $24.81 $22.20 $24.63 $20.58 $20.45 $16.62
------ ------ ------ ------ ------ ------
Income from investment
operations
Net investment income 0.02 0.04 0.08 0.12 0.22 0.39
Net realized and unrealized
gains or losses on
securities (1.06) 2.75 1.99 4.03 3.50 4.70
------ ------ ------ ------ ------ ------
Total from investment
operations (1.04) 2.79 2.07 4.15 3.72 5.09
------ ------ ------ ------ ------ ------
Distributions to
shareholders from
Net investment income (0.04) (0.05) (0.12) (0.10) (0.25) (0.36)
Net realized gains (3.11) (0.13) (4.38) 0 (3.34) (0.90)
------ ------ ------ ------ ------ ------
Total distributions (3.15) (0.18) (4.50) (0.10) (3.59) (1.26)
------ ------ ------ ------ ------ ------
Net asset value, end of
period $20.62 $24.81 $22.20 $24.63 $20.58 $20.45
------ ------ ------ ------ ------ ------
Total return* (4.51%) 12.65% 8.73% 20.23% 18.10% 30.90%
Ratios and supplemental
data
Net assets, end of period
(millions) $ 206 $ 332 $ 326 $ 276 $ 197 $ 141
Ratios to average net
assets
Expenses++ 1.78% 1.75% 1.76% 1.67%+ 1.66% 1.65%
Net investment income 0.15% 0.18% 0.30% 0.92%+ 1.01% 2.04%
Portfolio turnover rate 83% 110% 69% 6% 91% 53%
</TABLE>
(a) For the seven months ended July 31, 1997. The Fund changed its fiscal year
end from December 31 to July 31, effective July 31, 1997.
* Excluding applicable sales charges.
+ Annualized.
++ Ratio of expenses to average net assets includes fee waivers and excludes
expense reductions.
See Combined Notes to Financial Statements.
33
<PAGE>
EVERGREEN
Value Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended
Year Ended July 31, December 31,
--------------------------------- --------------
2000 1999 1998 1997 (a) 1996 1995
<S> <C> <C> <C> <C> <C> <C>
CLASS C SHARES
Net asset value, beginning
of period $24.79 $22.18 $24.61 $20.56 $20.44 $16.61
------ ------ ------ ------ ------ ------
Income from investment
operations
Net investment income 0.03 0.04 0.10 0.12 0.22 0.39
Net realized and unrealized
gains or losses on
securities (1.07) 2.75 1.97 4.03 3.50 4.70
------ ------ ------ ------ ------ ------
Total from investment
operations (1.04) 2.79 2.07 4.15 3.72 5.09
------ ------ ------ ------ ------ ------
Distributions to
shareholders from
Net investment income (0.04) (0.05) (0.12) (0.10) (0.26) (0.36)
From net realized gains (3.11) (0.13) (4.38) 0 (3.34) (0.90)
------ ------ ------ ------ ------ ------
Total distributions (3.15) (0.18) (4.50) (0.10) (3.60) (1.26)
------ ------ ------ ------ ------ ------
Net asset value, end of
period $20.60 $24.79 $22.18 $24.61 $20.56 $20.44
------ ------ ------ ------ ------ ------
Total return* (4.52%) 12.66% 8.74% 20.25% 18.10% 30.90%
Ratios and supplemental
data
Net assets, end of period
(millions) $ 4 $ 5 $ 5 $ 3 $ 1 $ 1
Ratios to average net
assets
Expenses++ 1.77% 1.75% 1.76% 1.66%+ 1.67% 1.65%
Net investment income 0.15% 0.18% 0.29% 0.94%+ 1.00% 2.03%
Portfolio turnover rate 83% 110% 69% 6% 91% 53%
</TABLE>
<TABLE>
<CAPTION>
Year Ended
Year Ended July 31, December 31,
--------------------------------- --------------
2000 1999 1998 1997 (a) 1996 1995
<S> <C> <C> <C> <C> <C> <C>
CLASS Y SHARES
Net asset value, beginning
of period $24.87 $22.23 $24.64 $20.57 $20.45 $16.61
------ ------ ------ ------ ------ ------
Income from investment
operations
Net investment income 0.31 0.29 0.35 0.25 0.44 0.57
Net realized and unrealized
gains or losses on
securities (1.14) 2.74 1.97 4.03 3.49 4.72
------ ------ ------ ------ ------ ------
Total from investment
operations (0.83) 3.03 2.32 4.28 3.93 5.29
------ ------ ------ ------ ------ ------
Distributions to
shareholders from
Net investment income (0.25) (0.26) (0.35) (0.21) (0.47) (0.55)
Net realized gains (3.11) (0.13) (4.38) 0.00 (3.34) (0.90)
------ ------ ------ ------ ------ ------
Total distributions (3.36) (0.39) (4.73) (0.21) (3.81) (1.45)
------ ------ ------ ------ ------ ------
Net asset value, end of
period $20.68 $24.87 $22.23 $24.64 $20.57 $20.45
------ ------ ------ ------ ------ ------
Total return (3.59%) 13.81% 9.79% 20.93% 19.20% 32.20%
Ratios and supplemental
data
Net assets, end of period
(millions) $ 57 $ 132 $ 183 $1,149 $ 996 $ 761
Ratios to average net
assets
Expenses++ 0.77% 0.75% 0.70% 0.67%+ 0.66% 0.65%
Net investment income 1.16% 1.20% 1.47% 1.91%+ 2.02% 3.02%
Portfolio turnover rate 83% 110% 69% 6% 91% 53%
</TABLE>
(a) For the seven months ended July 31, 1997. The Fund changed its fiscal year
end from December 31 to July 31, effective July 31, 1997.
* Excluding applicable sales charges.
+ Annualized.
++ Ratio of expenses to average net assets includes fee waivers and excludes
expense reductions.
See Combined Notes to Financial Statements.
34
<PAGE>
EVERGREEN
Blue Chip Fund
Schedule of Investments
July 31, 2000
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - 93.2%
CONSUMER DISCRETIONARY - 10.9%
Automobiles - 0.8%
Ford Motor Co. .......................................... 110,650 $ 5,152,140
General Motors Corp. .................................... 50,900 2,898,119
------------
8,050,259
------------
Distributors - 0.7%
Avnet, Inc. ............................................. 114,000 6,490,875
------------
Hotels, Restaurants & Leisure - 0.8%
McDonald's Corp. ........................................ 233,500 7,355,250
------------
Media - 4.8%
Clear Channel Communications, Inc. *..................... 99,300 7,565,419
Infinity Broadcasting Corp. ............................. 146,550 5,165,888
The Walt Disney Co. ..................................... 303,600 11,745,525
Time Warner, Inc. ....................................... 29,100 2,231,606
Univision Communications, Inc., Class A *#............... 45,300 5,628,525
Viacom, Inc., Class B.................................... 221,565 14,692,529
------------
47,029,492
------------
Multi-line Retail - 2.2%
Wal-Mart Stores, Inc. ................................... 398,150 21,873,366
------------
Specialty Retail - 1.6%
Best Buy Co., Inc. *..................................... 85,700 6,234,675
Home Depot, Inc. ........................................ 186,350 9,643,612
------------
15,878,287
------------
CONSUMER STAPLES - 3.2%
Beverages - 1.1%
Pepsico, Inc. ........................................... 238,000 10,903,375
------------
Food & Drug Retailing - 1.0%
Safeway, Inc. *.......................................... 218,350 9,839,397
------------
Household Products - 0.6%
Procter & Gamble Co. .................................... 90,500 5,147,188
------------
Personal Products - 0.5%
Colgate-Palmolive Co. ................................... 90,700 5,050,856
------------
ENERGY - 8.0%
Energy Equipment & Services - 1.2%
Halliburton Co. ......................................... 131,650 6,072,356
Nabors Industries, Inc. *................................ 148,600 6,185,475
------------
12,257,831
------------
Oil & Gas - 6.8%
Apache Corp. ............................................ 210,900 10,492,275
BP Amoco Plc, ADR........................................ 178,864 9,356,823
</TABLE>
35
<PAGE>
EVERGREEN
Blue Chip Fund
Schedule of Investments (continued)
July 31, 2000
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
ENERGY - continued
Oil & Gas - continued
Conoco, Inc., Class A.................................... 205,100 $ 4,589,112
Exxon Mobil Corp. ....................................... 325,534 26,042,720
Kerr-McGee Corp. ........................................ 81,900 4,494,263
Royal Dutch Petroleum Co. ............................... 203,200 11,836,400
------------
66,811,593
------------
FINANCIALS - 14.0%
Banks - 4.0%
Chase Manhattan Corp. ................................... 70,501 3,503,018
FleetBoston Financial Corp. ............................. 125,750 4,503,422
Mellon Financial Corp. .................................. 323,900 12,206,981
PNC Financial Services Group............................. 94,400 4,802,600
The Bank of New York Co., Inc. .......................... 148,200 6,937,613
Wells Fargo Co. ......................................... 166,200 6,866,138
------------
38,819,772
------------
Diversified Financials - 6.9%
American Express Co. .................................... 219,500 12,442,906
Charles Schwab Corp. .................................... 138,600 5,006,925
Citigroup, Inc. ......................................... 293,750 20,727,734
Merrill Lynch & Co., Inc. ............................... 71,300 9,215,525
Morgan Stanley, Dean Witter & Co. ....................... 75,900 6,925,875
SCG Holding Corp. ....................................... 329,400 7,287,975
Stilwell Financial, Inc. ................................ 145,400 6,406,688
------------
68,013,628
------------
Insurance - 3.1%
American Intl. Group, Inc. .............................. 202,913 17,792,890
Hartford Financial Services Group, Inc. ................. 118,300 7,600,775
Marsh & McLennan Co., Inc. .............................. 45,300 5,526,600
------------
30,920,265
------------
HEALTH CARE - 12.1%
Biotechnology - 1.5%
Amgen, Inc. *............................................ 116,700 7,578,206
MedImmune, Inc. *........................................ 58,250 3,465,875
Millennium Pharmaceuticals, Inc. #....................... 35,000 3,368,750
------------
14,412,831
------------
Health Care Equipment & Supplies - 1.2%
Medtronic, Inc. ......................................... 133,250 6,804,078
PE Corp-PE Biosystems Group.............................. 59,200 5,161,500
------------
11,965,578
------------
</TABLE>
36
<PAGE>
EVERGREEN
Blue Chip Fund
Schedule of Investments (continued)
July 31, 2000
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
HEALTH CARE - continued
Health Care Providers & Services - 1.0%
Cardinal Health, Inc. ................................... 68,550 $ 5,038,425
Health Management Associates, Inc., Class A *............ 341,350 5,354,928
------------
10,393,353
------------
Pharmaceuticals - 8.4%
American Home Products Corp. ............................ 159,500 8,463,469
Bristol-Myers Squibb Co. ................................ 96,000 4,764,000
Eli Lilly & Co. ......................................... 68,700 7,136,213
Johnson & Johnson........................................ 120,300 11,195,419
Merck & Co., Inc. ....................................... 234,700 16,825,056
Pfizer, Inc. ............................................ 283,500 12,225,937
Pharmacia Corp. ......................................... 144,258 7,898,126
Schering-Plough Corp. ................................... 277,000 11,962,937
Watson Pharmaceuticals, Inc. *........................... 32,300 1,784,575
------------
82,255,732
------------
INDUSTRIALS - 8.4%
Aerospace & Defense - 0.7%
United Technologies Corp. ............................... 116,600 6,806,525
------------
Commercial Services & Supplies - 1.9%
Automatic Data Processing, Inc. ......................... 221,750 10,990,485
Bea Systems, Inc. ....................................... 88,113 3,794,366
Convergys Corp. *........................................ 92,100 4,150,256
------------
18,935,107
------------
Electrical Equipment - 0.2%
American Power Conversion Corp. *........................ 78,200 1,989,212
------------
Industrial Conglomerates - 5.2%
General Electric Co. .................................... 788,100 40,537,894
Tyco Intl., Ltd. ........................................ 198,950 10,643,825
------------
51,181,719
------------
Road & Rail - 0.4%
Burlington Northern Santa Fe Corp. ...................... 134,850 3,295,397
------------
INFORMATION TECHNOLOGY - 29.7%
Communications Equipment - 7.0%
Avici Systems, Inc. ..................................... 4,850 477,119
Cisco Systems, Inc. *.................................... 528,400 34,577,175
Corning, Inc. ........................................... 37,500 8,772,656
Corvis Corp. ............................................ 16,350 1,346,065
Motorola, Inc. .......................................... 192,750 6,372,797
Nokia Corp., ADR......................................... 91,800 4,067,887
Nortel Networks Corp. ................................... 181,200 13,476,750
------------
69,090,449
------------
</TABLE>
37
<PAGE>
EVERGREEN
Blue Chip Fund
Schedule of Investments (continued)
July 31, 2000
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
INFORMATION TECHNOLOGY - continued
Computers & Peripherals - 5.6%
Dell Computer Corp. *.................................... 110,900 $ 4,872,669
EMC Corp. *.............................................. 178,600 15,203,325
Hewlett-Packard Co. ..................................... 67,300 7,348,319
IBM Corp. ............................................... 127,150 14,296,428
Sun Microsystems, Inc. *................................. 129,750 13,680,515
------------
55,401,256
------------
Electronic Equipment & Instruments - 1.7%
Sanmina Corp. *.......................................... 79,900 7,420,713
SCI Systems, Inc. *...................................... 98,800 4,532,450
Solectron Corp. *........................................ 110,100 4,438,406
------------
16,391,569
------------
Internet Software & Services - 2.2%
America Online, Inc. *................................... 164,900 8,791,231
Internet Capital Group, Inc. #........................... 89,100 3,012,694
Lycos, Inc. ............................................. 94,850 5,750,281
VeriSign, Inc. .......................................... 22,500 3,570,469
------------
21,124,675
------------
Semiconductor Equipment & Products - 7.6%
Applied Materials, Inc. *................................ 77,200 5,857,550
Broadcom Corp. *......................................... 15,700 3,520,725
Intel Corp. ............................................. 532,400 35,537,700
Microchip Technology, Inc. .............................. 128,650 8,933,134
Micron Technology, Inc. ................................. 175,000 14,262,500
Teradyne, Inc. *......................................... 107,600 6,819,150
------------
74,930,759
------------
Software - 5.6%
Adobe Systems, Inc. ..................................... 31,100 3,560,950
Mercury Interactive Corp. *.............................. 26,700 2,650,392
Microsoft Corp. *........................................ 386,200 26,961,587
Oracle Systems Corp. *................................... 146,200 10,992,413
Rational Software Corp. *................................ 28,000 2,849,000
Siebel Systems, Inc. *................................... 26,600 3,857,000
Veritas Software Corp. *#................................ 42,900 4,373,119
------------
55,244,461
------------
MATERIALS - 1.6%
Chemicals - 1.1%
DuPont (E.I.) De Nemours & Co. .......................... 103,800 4,703,438
Millipore Corp. ......................................... 93,900 5,903,962
------------
10,607,400
------------
</TABLE>
38
<PAGE>
EVERGREEN
Blue Chip Fund
Schedule of Investments (continued)
July 31, 2000
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
MATERIALS - continued
Containers & Packaging - 0.5%
Sealed Air Corp. *................................... 102,900 $ 5,183,588
------------
TELECOMMUNICATION SERVICES - 3.9%
Diversified Telecommunication Services - 3.7%
AT&T Corp. .......................................... 263,854 8,162,983
AT&T Corp., Liberty Media Group, Class A............. 148,900 3,313,025
SBC Communications, Inc. ............................ 279,000 11,874,937
Tycom, Ltd. ......................................... 134,300 4,574,594
Verizon Communications............................... 98,900 4,648,300
WorldCom, Inc. ...................................... 89,200 3,484,375
------------
36,058,214
------------
Wireless Telecommunications Services - 0.2%
Vodafone AirTouch Plc, ADR........................... 57,200 2,466,750
------------
UTILITIES - 1.4%
Electric Utilities - 1.4%
Dominion Resources, Inc. ............................ 101,700 4,620,994
Duke Energy Corp. ................................... 144,550 8,916,928
------------
13,537,922
------------
Total Common Stocks (cost $787,945,226)............ 915,713,931
------------
SHORT-TERM INVESTMENTS - 8.0%
MUTUAL FUND SHARES - 8.0%
Evergreen Select Money Market Fund o................. 65,299,103 65,299,103
Navigator Prime Portfolio ##......................... 13,770,741 13,770,741
------------
Total Short-Term Investments (cost $79,069,844).... 79,069,844
------------
Total Investments - (cost $867,015,070) - 101.2%....... 994,783,775
Other Assets and Liabilities - (1.2)%.................. (12,377,769)
------------
Net Assets - 100.0%.................................... $982,406,006
============
</TABLE>
See Combined Notes to Schedule of Investments.
39
<PAGE>
EVERGREEN (formerly,
Equity Income Fund Evergreen
Schedule of Investments Income and
July 31, 2000 Growth Fund)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - 60.6%
CONSUMER DISCRETIONARY - 4.6%
Automobiles - 0.1%
General Motors Corp. .................................. 10,530 $ 599,552
--------------
Household Durables - 0.9%
Lancaster Colony Corp. #............................... 100,000 2,350,000
Newell Rubbermaid, Inc. #.............................. 224,415 6,045,179
--------------
8,395,179
--------------
Leisure Equipment & Products - 0.2%
Mattel, Inc. #......................................... 180,000 1,991,250
--------------
Media - 1.7%
Gaylord Entertainment Co. ............................. 108,700 2,697,119
Time Warner, Inc. ..................................... 152,057 11,660,871
USA Networks, Inc. *................................... 46,000 968,875
Viacom, Inc., Class B.................................. 27,125 1,798,726
--------------
17,125,591
--------------
Multi-line Retail - 1.5%
Costco Wholesale Corp. *#.............................. 11,000 358,188
J.C. Penney Co., Inc. ................................. 800,000 12,900,000
May Department Stores Co. ............................. 55,000 1,306,250
--------------
14,564,438
--------------
Textiles & Apparel - 0.2%
V.F. Corp. #........................................... 110,000 2,420,000
--------------
CONSUMER STAPLES - 1.2%
Beverages - 0.1%
Anheuser Busch Cos., Inc. ............................. 14,000 1,127,000
--------------
Food Products - 0.7%
General Mills, Inc. ................................... 200,000 6,875,000
--------------
Household Products - 0.3%
Procter & Gamble Co. .................................. 55,000 3,128,125
--------------
Personal Products - 0.1%
Kimberly-Clark Corp. .................................. 20,000 1,148,750
--------------
ENERGY - 3.9%
Energy Equipment & Services - 0.5%
Nabors Industries, Inc. *#............................. 110,344 4,593,066
--------------
Oil & Gas - 3.4%
BP Amoco Plc, ADR #.................................... 47,092 2,463,500
Conoco, Inc., Class B.................................. 148,637 3,427,941
Exxon Mobil Corp....................................... 36,000 2,880,000
Murphy Oil Corp........................................ 294,400 17,737,600
Sunoco, Inc. .......................................... 31,000 755,625
</TABLE>
40
<PAGE>
EVERGREEN (formerly,
Equity Income Fund Evergreen
Schedule of Investments (continued) Income and
July 31, 2000 Growth Fund)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
ENERGY - continued
Oil & Gas - continued
Texaco, Inc. .......................................... 110,700 $ 5,472,731
Ultramar Diamond Shamrock Corp. ....................... 35,000 800,625
--------------
33,538,022
--------------
FINANCIALS - 16.1%
Banks - 9.3%
Amcore Financial, Inc. ................................ 221,500 3,557,844
AmSouth Bancorp. #..................................... 219,917 3,697,355
Astoria Financial Corp. ............................... 135,000 3,931,875
Bancwest Corp. ........................................ 250,600 4,620,437
Bank of America Corp. ................................. 34,000 1,610,750
Banknorth Group, Inc. #................................ 310,430 4,753,459
CB Bancshares, Inc. ................................... 100,000 2,500,000
Comerica, Inc. #....................................... 86,500 4,411,500
Commerce Bancshares, Inc. ............................. 131,250 4,306,641
Commonwealth Bank of Australia......................... 612,750 9,865,787
First Charter Corp. ................................... 125,000 1,820,312
First Essex Bancorp, Inc. ............................. 282,000 4,476,750
First Security Corp. .................................. 200,000 2,875,000
First Tennessee National Corp. #....................... 141,000 2,573,250
First Union Corp./o/................................... 8,000 206,500
FleetBoston Financial Corp. ........................... 56,000 2,005,500
Hibernia Corp., Class A................................ 173,000 1,892,187
Interchange Financial Services Corp. .................. 277,353 3,536,251
KeyCorp................................................ 148,000 2,599,250
Keystone Financial, Inc. .............................. 84,000 1,911,000
National Commerce Bancorp.............................. 241,815 4,231,762
North Fork Bancorp, Inc. #............................. 380,000 5,866,250
Pacific Century Financial Corp. ....................... 121,168 1,688,779
PNC Financial Services Group........................... 20,000 1,017,500
Republic Security Financial Corp. ..................... 335,730 1,447,836
Susquehanna Bancshares, Inc. .......................... 138,375 2,058,328
Three Rivers Bancorp, Inc. ............................ 160,980 1,318,024
U.S. Bancorp........................................... 150,000 2,878,125
USBancorp, Inc. ....................................... 321,960 1,589,678
Wilmington Trust Corp. ................................ 50,000 2,190,625
--------------
91,438,555
--------------
Diversified Financials - 0.4%
Citigroup, Inc. ....................................... 21,000 1,481,813
FHLMC.................................................. 50,000 1,971,875
--------------
3,453,688
--------------
</TABLE>
41
<PAGE>
EVERGREEN (formerly,
Equity Income Fund Evergreen
Schedule of Investments (continued) Income and
July 31, 2000 Growth Fund)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
FINANCIALS - continued
Insurance - 1.6%
AMBAC Financial Group, Inc. #.......................... 7,800 $ 502,613
Partnerre, Ltd. ....................................... 104,500 4,140,812
XL Capital, Ltd., Class A.............................. 170,000 11,220,000
--------------
15,863,425
--------------
Real Estate - 4.8%
AMB Property Corp. REIT................................ 100,000 2,387,500
Arden Realty Group, Inc. REIT.......................... 100,000 2,650,000
Boston Properties, Inc. REIT........................... 27,000 1,120,500
Equity Office Properties Trust REIT.................... 40,000 1,220,000
Equity Residential Properties Trust REIT............... 147,900 7,376,513
First Industrial Realty Trust, Inc. REIT............... 134,000 4,288,000
Gables Residential Trust REIT.......................... 495,900 13,482,281
Kilroy Realty Corp. REIT............................... 100,000 2,650,000
Post Property, Inc. REIT............................... 235,700 10,930,587
Spieker Properties, Inc. REIT.......................... 20,000 1,033,750
--------------
47,139,131
--------------
HEALTH CARE - 9.4%
Health Care Equipment & Supplies - 1.8%
Alza Corp. *#.......................................... 15,000 971,250
Baxter International, Inc. #........................... 220,000 17,105,000
--------------
18,076,250
--------------
Pharmaceuticals - 7.6%
Abbott Laboratories.................................... 300,000 12,487,500
American Home Products Corp. .......................... 385,000 20,429,062
Bristol-Myers Squibb Co. .............................. 216,800 10,758,700
Eli Lilly & Co. ....................................... 50,000 5,193,750
Johnson & Johnson...................................... 133,000 12,377,313
Merck & Co., Inc. ..................................... 36,000 2,580,750
Pfizer, Inc. .......................................... 110,000 4,743,750
Pharmacia Corp. ....................................... 33,000 1,806,750
Schering-Plough Corp. ................................. 100,000 4,318,750
--------------
74,696,325
--------------
INDUSTRIALS - 4.0%
Aerospace & Defense - 0.5%
General Dynamics Corp. #............................... 81,900 4,622,231
General Motors Corp., Class H *........................ 11,085 286,824
--------------
4,909,055
--------------
</TABLE>
42
<PAGE>
EVERGREEN (formerly,
Equity Income Fund Evergreen
Schedule of Investments (continued) Income and
July 31, 2000 Growth Fund)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
INDUSTRIALS - continued
Commercial Services & Supplies - 0.2%
Electronic Data Systems Corp......................... 55,000 $ 2,365,000
--------------
Electrical Equipment - 1.8%
Emerson Electric Co.................................. 126,000 7,693,875
Hubbell, Inc., Class A............................... 5,000 123,125
Hubbell, Inc., Class B............................... 286,656 6,915,576
Thomas & Betts Corp. #............................... 131,900 2,572,050
--------------
17,304,626
--------------
Industrial Conglomerates - 0.3%
General Electric Co.................................. 60,000 3,086,250
--------------
Machinery - 1.2%
CNH Global N.V....................................... 1,539,900 12,030,469
--------------
INFORMATION TECHNOLOGY - 3.3%
Communications Equipment - 2.6%
3Com Corp. *......................................... 30,000 406,875
Lucent Technologies, Inc. ........................... 125,000 5,468,750
QUALCOMM, Inc. *..................................... 302,808 19,663,595
--------------
25,539,220
--------------
Computers & Peripherals - 0.7%
IBM Corp. ........................................... 22,000 2,473,625
Palm, Inc............................................ 44,496 1,735,344
Seagate Technology, Inc. *........................... 50,000 2,534,375
--------------
6,743,344
--------------
MATERIALS - 0.3%
Chemicals - 0.0%
Rohm & Haas Co. ..................................... 15,000 390,000
--------------
Paper & Forest Products - 0.3%
Bowater, Inc. ....................................... 50,000 2,462,500
--------------
TELECOMMUNICATION SERVICES - 2.5%
Diversified Telecommunication Services - 2.5%
AT&T Corp. .......................................... 25,000 773,437
Qwest Communications International, Inc. *........... 50,150 2,353,916
SBC Communications, Inc.............................. 142,000 6,043,875
Verizon Communications............................... 323,300 15,195,100
--------------
24,366,328
--------------
Wireless Telecommunications Services - 0.0%
Leap Wireless International, Inc..................... 9,462 599,654
--------------
</TABLE>
43
<PAGE>
EVERGREEN (formerly,
Equity Income Fund Evergreen
Schedule of Investments (continued) Income and
July 31, 2000 Growth Fund)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
UTILITIES - 15.3%
Electric Utilities - 10.6%
Ameren Corp. #........................................ 130,000 $ 4,704,375
American Electric Power Co., Inc. #................... 300,000 9,843,750
Consolidated Edison, Inc. #........................... 188,000 5,698,750
Constellation Energy Group, Inc. #.................... 31,000 1,032,688
Dominion Resources, Inc. #............................ 300,000 13,631,250
DPL, Inc. #........................................... 35,000 844,375
Duke Energy Corp...................................... 23,000 1,418,812
FirstEnergy Corp. .................................... 152,000 3,876,000
FPL Group, Inc. ...................................... 239,000 11,531,750
LG&E Energy Corp. .................................... 20,000 485,000
PPL Corp. ............................................ 181,700 4,905,900
Public Service Enterprise Group, Inc. ................ 200,000 6,725,000
Puget Sound Energy, Inc. #............................ 50,000 1,134,375
Scana Corp. #......................................... 430,000 11,314,375
Southern Co. ......................................... 164,000 4,007,750
Teco Energy, Inc. #................................... 340,000 7,458,750
TXU Corp. ............................................ 500,000 15,625,000
--------------
104,237,900
--------------
Gas Utilities - 4.7%
Peoples Energy Corp. ................................. 391,300 12,399,319
Piedmont Natural Gas Co., Inc......................... 113,000 3,206,375
Sempra Energy......................................... 557,963 10,461,806
The Williams Companies, Inc. #........................ 482,000 20,123,500
--------------
46,191,000
--------------
Total Common Stocks (cost $553,677,694)............. 596,398,693
--------------
CONVERTIBLE PREFERRED STOCKS - 21.7%
CONSUMER DISCRETIONARY - 3.1%
Household Durables - 0.4%
Newell Financial Trust I, 5.25% 12/01/2027 #.......... 100,000 3,837,500
--------------
Leisure Equipment & Products - 0.7%
Tribune Co. (exchangeable for Mattel, Inc. common
stock), 6.25%, 08/15/2001............................ 460,000 6,842,500
--------------
Media - 1.1%
Emmis Communications Corp., 6.25%..................... 40,000 2,122,500
Pegasus Communications Corp., 6.50%, 2/1/2003 144A.... 8,000 622,000
Seagram, Ltd., ACES, 7.50%............................ 110,000 5,788,750
Snyder STRYPES Trust, $1.68, 10/15/2000............... 95,000 2,470,000
--------------
11,003,250
--------------
</TABLE>
44
<PAGE>
EVERGREEN (formerly,
Equity Income Fund Evergreen
Schedule of Investments (continued) Income and
July 31, 2000 Growth Fund)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
CONVERTIBLE PREFERRED STOCKS - continued
CONSUMER DISCRETIONARY - continued
Multi-line Retail - 0.9%
Merrill Lynch & Co., Inc. (exchangeable for Dollar
General Corp. common stock) 8.50% 5/15/2001.......... 255,000 $ 8,383,125
--------------
CONSUMER STAPLES - 0.9%
Food & Drug Retailing - 0.9%
CVS TRACES, 5/15/2001................................. 118,800 8,583,300
--------------
ENERGY - 0.6%
Energy Equipment & Services - 0.3%
EVI, Inc. (exchangeable for Weatherford International,
Inc. common stock) 5.00%, 11/1/2027.................. 55,000 2,530,000
--------------
Oil & Gas - 0.3%
Callon Petroleum Co., 8.50%, Ser. A #................. 95,000 2,945,000
--------------
FINANCIALS - 1.2%
Banks - 0.4%
WBK Trust, 10.00%, 11/15/2000, STRYPES (exchangeable
for Westpac Banking Corp. common stock).............. 116,200 3,754,713
--------------
Insurance - 0.8%
St. Paul Capital, 6.00%, 5/31/2025, MIPS.............. 100,000 7,537,500
--------------
HEALTH CARE - 0.7%
Pharmaceuticals - 0.7%
Monsanto Co. (exchangeable for Pharmacia Corp. common
stock) 6.50%, 11/30/2001............................. 150,000 7,200,000
--------------
INDUSTRIALS - 1.3%
Machinery - 0.4%
Ingersoll-Rand Co., 6.75%, 5/16/2001, PRIDES #........ 200,000 4,112,500
--------------
Transportation Infrastructure - 0.9%
Union Pacific Capital Trust, 6.25%, 4/01/2028 #....... 216,800 9,078,500
--------------
INFORMATION TECHNOLOGY - 2.8%
Communications Equipment - 2.8%
Crown Castle, DECS, 7.25% 8/15/2002................... 320,000 9,690,000
Metromedia Fiber, DECS, 6.25%, 11/15/2002............. 280,000 18,235,000
--------------
27,925,000
--------------
MATERIALS - 0.1%
Paper & Forest Products - 0.1%
International Paper Capital Trust, 5.25%, 7/20/2025... 30,000 1,222,500
--------------
TELECOMMUNICATION SERVICES - 3.4%
Diversified Telecommunication Services - 2.5%
McLeod USA, Inc., Class A, 6.75%, 8/15/2002........... 3,000 1,352,859
Qwest Trends Trust, 5.75%, 11/17/2003, 144A........... 300,000 23,100,000
--------------
24,452,859
--------------
</TABLE>
45
<PAGE>
EVERGREEN (formerly,
Equity Income Fund Evergreen
Schedule of Investments (continued) Income and
July 31, 2000 Growth Fund)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
CONVERTIBLE PREFERRED STOCKS - continued
TELECOMMUNICATION SERVICES - continued
Wireless Telecommunications Services - 0.9%
MediaOne Group, Inc., PIES, 7.00% 11/15/2002
(exchangeable for Vodaphone common stock)........... 218,700 $ 9,021,375
--------------
UTILITIES - 7.6%
Electric Utilities - 7.6%
AES Trust III, 6.75%, 10/15/2029 #................... 250,000 20,781,250
BNDES Participacoes S.A., DECS, 7.25%, 2/15/2001
144A................................................ 45,000 810,000
Calpine Capital Trust, 5.75%, 11/1/2004 # ........... 75,960 9,646,920
CMS Energy Corp. 8.75%, 2/1/2002 #................... 438,000 13,933,875
TXU Corp., 9.25%, 8/16/2002.......................... 238,600 9,514,175
Utilicorp United, Inc., 9.75% 11/16/2002............. 800,000 20,150,000
--------------
74,836,220
--------------
Total Convertible Preferred Stocks (cost
$197,923,226)..................................... 213,265,842
--------------
<CAPTION>
Principal
Amount Value
<S> <C> <C>
CONVERTIBLE DEBENTURES - 7.5%
CONSUMER DISCRETIONARY - 1.0%
Media - 1.0%
Getty Images, Inc., 5.00%, 03/15/2007 144A........... 8,000,000 6,590,000
Young & Rubicam, Inc., 3.00%, 01/15/2005............. 3,000,000 3,052,500
--------------
9,642,500
--------------
HEALTH CARE - 0.3%
Biotechnology - 0.3%
Affymetrix, Inc., 4.75%, 02/15/2007 144A............. 4,000,000 2,825,000
--------------
INFORMATION TECHNOLOGY - 5.2%
Communications Equipment - 1.2%
American Tower Corp., 6.25%, 10/15/2009.............. 6,000,000 11,362,500
--------------
Internet Software & Services - 2.7%
At Home Corp., 4.75%, 12/15/2006 144A................ 4,000,000 2,480,000
Cnet, Inc., 5.00%, 03/01/2006........................ 5,950,000 5,831,000
Digital Island, Inc., 6.00%, 02/15/2005.............. 6,000,000 3,630,000
Exodus Communications, Inc., 4.75%, 07/15/2008....... 4,000,000 5,695,000
I2 Technologies, 5.25%, 12/15/2006................... 2,500,000 4,512,500
Internet Capital Group, Inc., 5.50%, 12/21/2004...... 4,000,000 2,660,000
Mail.com, Inc., 7.00%, 02/01/2005 144A............... 4,000,000 2,120,000
--------------
26,928,500
--------------
Semiconductor Equipment & Products - 0.5%
Cypress Semiconductor Corp., 3.75%, 07/01/2005....... 1,500,000 1,366,875
Lattice Semiconductor Corp., 4.75%, 11/01/2006....... 1,500,000 2,265,000
Triquint Semiconductor, Inc., 4.00%, 03/01/2007
144A................................................ 2,000,000 1,627,500
--------------
5,259,375
--------------
</TABLE>
46
<PAGE>
EVERGREEN (formerly,
Equity Income Fund Evergreen
Schedule of Investments (continued) Income and
July 31, 2000 Growth Fund)
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
CONVERTIBLE DEBENTURES - continued
INFORMATION TECHNOLOGY - continued
Software - 0.8%
Juniper Networks, Inc., 4.75%, 03/15/2007........... 2,000,000 $ 2,215,000
Rational Software Corp., 5.00%, 02/01/2007 144A..... 2,000,000 3,020,000
Usinternetworking, Inc., 7.00%, 11/01/2004 #........ 2,200,000 2,552,000
--------------
7,787,000
--------------
TELECOMMUNICATION SERVICES - 1.0%
Diversified Telecommunication Services - 1.0%
Level 3 Communications, Inc.:
6.00%, 09/15/2009-03/15/2010....................... 10,000,000 10,025,000
--------------
10,025,000
--------------
Total Convertible Debentures (cost $72,562,916)... 73,829,875
--------------
CORPORATE BONDS - 0.1%
FINANCIALS - 0.1%
Banks - 0.1%
NationsBank Corp., 6.50%, 08/15/2003 (cost
$1,012,370)........................................ 1,000,000 977,243
--------------
U.S. GOVERNMENT & AGENCY OBLIGATIONS - 5.0%
FFCB, 5.75%, 12/07/2028............................. 2,000,000 1,692,242
FHLB:
5.375%, 10/06/2003................................. 2,000,000 1,909,320
6.532%, 12/28/2007................................. 2,000,000 1,898,454
FHLMC:
6.54%, 12/10/2007.................................. 2,000,000 1,903,614
6.542%, 03/19/2008................................. 2,000,000 1,894,820
7.585%, 09/19/2006................................. 2,000,000 1,981,900
7.865%, 08/08/2011................................. 2,000,000 1,959,236
FNMA:
6.00%, 01/14/2005.................................. 1,850,000 1,772,803
6.10%, 01/26/2005.................................. 2,215,000 2,128,673
6.16%, 01/23/2008.................................. 3,000,000 2,811,246
6.24%, 01/14/2008.................................. 2,000,000 1,878,764
6.32%, 03/03/2008.................................. 3,000,000 2,832,237
6.41%, 03/08/2006.................................. 1,000,000 972,163
6.42%, 02/12/2008.................................. 5,000,000 4,730,060
6.46%, 01/01/2008.................................. 2,000,000 1,897,712
6.52%, 03/05/2008.................................. 4,000,000 3,791,008
6.875%, 09/24/2012................................. 2,355,000 2,237,314
7.125%, 01/15/2030................................. 7,750,000 7,864,095
7.28%, 05/23/2007.................................. 3,000,000 2,935,476
--------------
Total U.S. Government & Agency Obligations
(cost $52,410,601)............................... 49,091,137
--------------
</TABLE>
47
<PAGE>
EVERGREEN (formerly,
Equity Income Fund Evergreen
Schedule of Investments (continued) Income and
July 31, 2000 Growth Fund)
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
U.S. TREASURY OBLIGATIONS - 0.9%
U.S. Treasury Bonds:
7.125%, 02/15/2023.................................. 1,500,000 $ 1,687,500
7.25%, 08/15/2022................................... 6,000,000 6,828,750
--------------
Total U.S. Treasury Obligations (cost $8,073,464).. 8,516,250
--------------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
RIGHTS - 0.0%
INDUSTRIALS - 0.0%
Machinery - 0.0%
CNH Global N.V. (cost $0)........................... 1,539,900 0
--------------
SHORT-TERM INVESTMENTS - 11.4%
MUTUAL FUND SHARES - 11.4%
Evergreen Select Money Market Fund o................ 37,072,038 37,072,038
Navigator Prime Portfolio ##........................ 74,714,635 74,714,635
--------------
Total Short-Term Investments (cost $111,786,673).. 111,786,673
--------------
Total Investments - (cost $997,446,944) - 107.2%................. 1,053,865,713
Other Assets and Liabilities - (7.2)%............................ (70,731,852)
--------------
Net Assets - 100.0%.............................................. $ 983,133,861
==============
</TABLE>
See Combined Notes to Schedules of Investments.
48
<PAGE>
EVERGREEN
Growth and Income Fund
Schedule of Investments
July 31, 2000
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - 96.0%
CONSUMER DISCRETIONARY - 12.1%
Household Durables - 1.1%
Sony Corp., ADR........................................ 117,000 $ 10,990,687
Toll Brothers, Inc. #.................................. 174,200 4,213,463
--------------
15,204,150
--------------
Media - 10.8%
AMFM, Inc. *........................................... 96,000 6,858,000
Charter Communications, Inc. .......................... 824,800 10,877,050
Clear Channel Communications, Inc. *................... 123,349 9,397,652
Comcast Corp., Class A................................. 136,310 4,636,670
Cox Communications, Inc., Class A *.................... 232,200 8,576,888
Emmis Communications Corp., Class A *#................. 245,400 8,849,737
Fox Entertainment Group, Inc. *........................ 341,300 10,452,312
Gaylord Entertainment Co............................... 680,880 16,894,335
Knight-Ridder, Inc. #.................................. 25,900 1,350,038
Martha Stewart Living, Inc. #.......................... 656,200 16,281,962
Netratings, Inc. ...................................... 45,500 915,688
New York Times Co., Class A............................ 370,300 15,251,731
The Walt Disney Co. ................................... 360,700 13,954,581
Time Warner, Inc. ..................................... 94,100 7,216,294
Univision Communications, Inc., Class A *#............. 85,300 10,598,525
Viacom, Inc., Class A.................................. 127,200 8,482,650
Washington Post Co., Class B........................... 2,875 1,380,000
Young Broadcasting, Inc., Class A...................... 71,300 2,410,831
--------------
154,384,944
--------------
Specialty Retail - 0.2%
Intimate Brands, Inc. ................................. 166,600 2,905,088
--------------
CONSUMER STAPLES - 1.3%
Food & Drug Retailing - 0.5%
CVS Corp. ............................................. 184,000 7,256,500
--------------
Food Products - 0.1%
General Mills, Inc. ................................... 53,100 1,825,313
--------------
Personal Products - 0.7%
Colgate-Palmolive Co. ................................. 77,200 4,299,075
Kimberly-Clark Corp. .................................. 87,400 5,020,037
--------------
9,319,112
--------------
ENERGY - 4.3%
Energy Equipment & Services - 0.7%
L-3 Communications Holding Corp. ...................... 101,400 5,969,925
Nabors Industries, Inc. *.............................. 18,200 757,575
Petroleum Helicopters, Inc. ........................... 145,500 1,473,188
Santa Fe International Corp. .......................... 1,000 35,125
</TABLE>
49
<PAGE>
EVERGREEN
Growth and Income Fund
Schedule of Investments (continued)
July 31, 2000
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
ENERGY - continued
Energy Equipment & Services - continued
Schlumberger, Ltd. .................................. 28,314 $ 2,093,466
Weatherford International, Inc. *.................... 13,600 544,850
--------------
10,874,129
--------------
Oil & Gas - 3.6%
BP Amoco Plc, ADR.................................... 252,576 13,212,882
Conoco, Inc., Class B................................ 82,505 1,902,772
Exxon Mobil Corp. ................................... 121,500 9,720,000
Houston Exploration Co. *............................ 138,000 3,036,000
Kerr-McGee Corp. .................................... 132,455 7,268,468
Murphy Oil Corp. .................................... 130,200 7,844,550
Occidental Petroleum Corp. .......................... 180,700 3,659,175
Tosco Corp. ......................................... 174,800 4,632,200
--------------
51,276,047
--------------
FINANCIALS - 18.0%
Banks - 6.1%
AmSouth Bancorp...................................... 161,167 2,709,620
Banknorth Group, Inc. ............................... 152,000 2,327,500
BB&T Corp. .......................................... 12,000 299,250
BSB Bancorp, Inc. ................................... 236,000 5,044,500
Comerica, Inc. ...................................... 16,100 821,100
First Security Corp. ................................ 1,067,750 15,348,906
First Tennessee National Corp. #..................... 26,200 478,150
Hibernia Corp., Class A.............................. 186,400 2,038,750
Marshall & Ilsley Corp. ............................. 35,300 1,597,325
Mellon Financial Corp. .............................. 273,500 10,307,531
North Fork Bancorp, Inc. ............................ 215,100 3,320,606
Pacific Century Financial Corp. ..................... 421,000 5,867,687
SouthTrust Corp. .................................... 35,000 861,875
State Street Corp. .................................. 93,200 9,354,950
Suntrust Banks, Inc. ................................ 61,320 2,935,695
Susquehanna Bancshares, Inc. ........................ 160,500 2,387,438
The Bank of New York Co., Inc. ...................... 118,200 5,533,238
U.S. Bancorp......................................... 12,000 230,250
Webster Financial Corp. ............................. 520,200 11,639,475
Wilmington Trust Corp. .............................. 81,000 3,548,813
--------------
86,652,659
--------------
Diversified Financials - 9.7%
Citigroup, Inc. ..................................... 243,525 17,183,733
Countrywide Credit Industries, Inc. ................. 36,700 1,291,381
Federal National Mtge. Assn. ........................ 324,300 12,789,582
Goldman Sachs Group, Inc. ........................... 11,500 1,137,781
Legg Mason, Inc. .................................... 144,632 7,520,864
</TABLE>
50
<PAGE>
EVERGREEN
Growth and Income Fund
Schedule of Investments (continued)
July 31, 2000
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
FINANCIALS - continued
Diversified Financials - continued
Lehman Brothers Holdings, Inc. ........................ 138,000 $ 15,507,750
Neuberger-Berman, Inc. ................................ 537,400 26,668,475
Price (T. Rowe) Associates, Inc. ...................... 339,600 13,881,150
Stilwell Financial, Inc. .............................. 949,200 41,824,125
--------------
137,804,841
--------------
Insurance - 1.3%
AMBAC Financial Group, Inc. ........................... 50,100 3,228,319
American Intl. Group, Inc. ............................ 63,000 5,524,312
Hartford Financial Services Group, Inc. ............... 163,800 10,524,150
--------------
19,276,781
--------------
Real Estate - 0.9%
Boston Properties, Inc. REIT........................... 26,300 1,091,450
Duke Weeks Realty Corp. ............................... 208,914 5,118,393
Kimco Realty Corp., REIT............................... 40,000 1,650,000
Liberty Property Trust REIT............................ 39,000 1,121,250
Post Property, Inc. REIT............................... 88,300 4,094,912
--------------
13,076,005
--------------
HEALTH CARE - 11.8%
Biotechnology - 0.2%
Gilead Sciences, Inc. #................................ 29,300 2,171,863
--------------
Health Care Equipment & Supplies - 2.4%
Alza Corp. *........................................... 41,700 2,700,075
Beckman Coulter, Inc. ................................. 5,100 339,788
Boston Scientific Corp. *.............................. 12,500 207,031
PE Corp-PE Biosystems Group............................ 281,950 24,582,516
Sybron International Corp. *........................... 292,200 6,081,412
--------------
33,910,822
--------------
Health Care Providers & Services - 0.8%
Cardinal Health, Inc. ................................. 26,600 1,955,100
Health Management Associates, Inc., Class A *.......... 288,625 4,527,804
IMS Health, Inc. ...................................... 281,500 5,084,594
Medpartners, Inc. ..................................... 33,300 357,975
--------------
11,925,473
--------------
Pharmaceuticals - 8.4%
Abbott Laboratories.................................... 338,700 14,098,387
American Home Products Corp. .......................... 311,600 16,534,275
Bristol-Myers Squibb Co. .............................. 56,900 2,823,663
Elan Corp. Plc., ADR *#................................ 161,600 8,635,500
Eli Lilly & Co. ....................................... 84,900 8,818,988
Johnson & Johnson...................................... 125,300 11,660,731
</TABLE>
51
<PAGE>
EVERGREEN
Growth and Income Fund
Schedule of Investments (continued)
July 31, 2000
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
HEALTH CARE - continued
Pharmaceuticals - continued
Pfizer, Inc. .......................................... 756,100 $ 32,606,812
Pharmacia Corp. ....................................... 232,200 12,712,950
Schering-Plough Corp. ................................. 269,700 11,647,669
--------------
119,538,975
--------------
INDUSTRIALS - 13.3%
Aerospace & Defense - 2.9%
Bombardier, Inc., Class B.............................. 464,000 6,973,807
General Dynamics Corp. ................................ 184,100 10,390,144
Lockheed Martin Corp. ................................. 860,300 24,195,937
--------------
41,559,888
--------------
Air Freight & Couriers - 0.7%
Atlas Air, Inc. ....................................... 77,600 3,443,500
Expeditors International of Washington, Inc. .......... 132,100 6,638,025
--------------
10,081,525
--------------
Commercial Services & Supplies - 6.5%
ACNielsen Corp. ....................................... 527,600 12,926,200
American Management Systems, Inc. ..................... 10,200 255,638
Cadence Design Systems, Inc. *......................... 602,200 12,570,925
Computer Sciences Corp. *.............................. 90,200 5,637,500
Convergys Corp. *...................................... 901,100 40,605,819
Dendrite International, Inc. .......................... 45,000 1,219,922
Electronic Data Systems Corp. ......................... 3,000 129,000
Equifax, Inc. ......................................... 233,700 5,521,162
First Data Corp. ...................................... 38,436 1,770,458
McGraw-Hill Cos., Inc. ................................ 188,000 11,174,250
--------------
91,810,874
--------------
Construction & Engineering - 0.3%
Jacobs Engineering Group, Inc. #....................... 116,500 4,157,594
Spectrasite Holdings, Inc. ............................ 31,000 658,750
--------------
4,816,344
--------------
Industrial Conglomerates - 2.4%
Danaher Corp. ......................................... 18,000 916,875
Dover Corp. ........................................... 182,500 8,360,781
General Electric Co. .................................. 440,300 22,647,931
Honeywell International, Inc. ......................... 59,100 1,987,238
--------------
33,912,825
--------------
Machinery - 0.4%
Applied Power, Inc., Class A........................... 83,600 3,307,425
Deere & Co. ........................................... 45,600 1,758,450
--------------
5,065,875
--------------
</TABLE>
52
<PAGE>
EVERGREEN
Growth and Income Fund
Schedule of Investments (continued)
July 31, 2000
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
INDUSTRIALS - continued
Transportation Infrastructure - 0.1%
Kansas City Southern Industries, Inc. ................. 237,300 $ 1,646,269
--------------
INFORMATION TECHNOLOGY - 23.5%
Communications Equipment - 8.1%
3Com Corp. *........................................... 269,700 3,657,806
American Tower Corp., Class A *#....................... 806,820 34,592,407
Cisco Systems, Inc. *.................................. 452,566 29,614,788
Corning, Inc. ......................................... 75,990 17,776,911
Corvis Corp. .......................................... 9,000 740,953
Infospace, Inc. #...................................... 181,800 6,135,750
Lucent Technologies, Inc. ............................. 216,100 9,454,375
Motorola, Inc. ........................................ 383,275 12,672,030
--------------
114,645,020
--------------
Computers & Peripherals - 6.0%
Dell Computer Corp. *.................................. 209,000 9,182,937
EMC Corp. *............................................ 213,300 18,157,162
IBM Corp. ............................................. 21,800 2,451,138
Palm, Inc. ............................................ 400,021 15,600,819
Seagate Technology, Inc. *............................. 730,600 37,032,287
Sun Microsystems, Inc. *............................... 23,000 2,425,063
--------------
84,849,406
--------------
Electronic Equipment & Instruments - 0.7%
Burr-Brown Corp. ...................................... 136,900 10,387,288
Stratos Lightwave, Inc. #.............................. 2,250 84,375
--------------
10,471,663
--------------
Internet Software & Services - 1.0%
Broadvision, Inc. *#................................... 8,000 289,500
Go2Net................................................. 55,200 3,260,250
Real Networks, Inc. *#................................. 247,800 10,516,012
--------------
14,065,762
--------------
Office Electronics - 0.1%
Unova, Inc. ........................................... 204,900 1,626,394
--------------
Semiconductor Equipment & Products - 3.5%
Applied Materials, Inc. *.............................. 55,200 4,188,300
Intel Corp. ........................................... 337,000 22,494,750
Jabil Circuit, Inc. *.................................. 89,100 4,460,569
KLA-Tencor Corp. *..................................... 199,400 10,618,050
Mentor Graphics Corp. ................................. 248,100 4,946,494
Novellus Systems, Inc. *............................... 8,800 474,650
Texas Instruments, Inc. ............................... 14,100 827,494
</TABLE>
53
<PAGE>
EVERGREEN
Growth and Income Fund
Schedule of Investments (continued)
July 31, 2000
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
INFORMATION TECHNOLOGY - continued
Semiconductor Equipment & Products - continued
Triquint Semiconductor, Inc. #......................... 60,200 $ 2,306,412
Zilog, Inc.[].......................................... 18,648 9,324
--------------
50,326,043
--------------
Software - 4.1%
Adobe Systems, Inc. ................................... 88,300 10,110,350
Blaze Software, Inc. #................................. 400 6,850
I2 Technologies, Inc. *#............................... 47,200 6,124,200
Macromedia, Inc. ...................................... 136,100 10,411,650
Microsoft Corp. *...................................... 164,825 11,506,845
National Instruments Corp. ............................ 67,200 2,902,200
Network Associates, Inc. *............................. 457,200 8,772,525
Parametric Technology Corp. *.......................... 119,100 1,191,000
Rational Software Corp. *#............................. 40,600 4,131,050
Siebel Systems, Inc. *................................. 26,000 3,770,000
Telemate Net Software, Inc. ........................... 20,000 42,500
--------------
58,969,170
--------------
MATERIALS - 4.0%
Chemicals - 2.3%
Albemarle Corp. #...................................... 86,700 2,140,406
Donaldson, Inc. #...................................... 539,300 10,347,818
Engelhard Corp. ....................................... 295,900 5,344,694
IMC Global, Inc. ...................................... 458,300 6,330,269
Praxair, Inc. ......................................... 82,800 3,275,775
Sigma-Aldrich Corp. ................................... 199,100 5,425,475
--------------
32,864,437
--------------
Construction Materials - 0.3%
Southdown, Inc. ....................................... 72,700 4,525,575
--------------
Containers & Packaging - 1.1%
AptarGroup, Inc. ...................................... 362,000 9,027,375
Bemis Co., Inc. ....................................... 121,300 4,169,688
Sealed Air Corp. *..................................... 41,840 2,107,690
--------------
15,304,753
--------------
Paper & Forest Products - 0.3%
Asia Pulp & Paper, Ltd., ADR #......................... 449,200 2,246,000
Deltic Timber Corp. ................................... 75,600 1,563,975
--------------
3,809,975
--------------
</TABLE>
54
<PAGE>
EVERGREEN
Growth and Income Fund
Schedule of Investments (continued)
July 31, 2000
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
TELECOMMUNICATION SERVICES - 5.8%
Diversified Telecommunication Services - 4.6%
AT&T Corp. ........................................... 140,112 $ 4,334,715
AT&T Corp., Liberty Media Group, Class A.............. 31,000 689,750
Broadwing, Inc. ...................................... 206,100 5,410,125
Centurytel, Inc. ..................................... 225,000 6,595,313
Global Crossing, Ltd. *............................... 212,400 5,163,975
Powertel, Inc. #...................................... 84,500 7,594,438
Qwest Communications International, Inc. *............ 245,496 11,522,968
SBC Communications, Inc. ............................. 67,700 2,881,481
Teleglobe, Inc. #..................................... 648,500 13,213,187
WorldCom, Inc. ....................................... 195,388 7,632,344
--------------
65,038,296
--------------
Wireless Telecommunications Services - 1.2%
Crown Castle International Corp. ..................... 51,000 1,734,000
Nextel Communications, Inc., Class A *................ 83,700 4,681,968
Sprint Corp. (PCS Group), Ser. 1 *#................... 36,800 2,033,200
Voicestream Wireless Corp. *.......................... 28,671 3,677,056
Western Wireless Corp., Class A....................... 90,600 4,983,000
--------------
17,109,224
--------------
UTILITIES - 1.9%
Electric Utilities - 0.3%
Dynegy, Inc. ......................................... 21,800 1,534,175
Niagara Mohawk Holdings, Inc. *....................... 230,100 3,063,206
--------------
4,597,381
--------------
Gas Utilities - 1.6%
Piedmont Natural Gas Co., Inc. ....................... 292,800 8,308,200
Southwestern Energy Co. .............................. 547,600 4,038,550
The Williams Companies, Inc. ......................... 230,800 9,635,900
--------------
21,982,650
--------------
Total Common Stocks (cost $975,195,025)............. 1,366,482,051
--------------
CONVERTIBLE PREFERRED STOCKS - 1.2%
CONSUMER DISCRETIONARY - 0.7%
Leisure Equipment & Products - 0.7%
Tribune Co. (exchangeable for Mattel, Inc. common
stock), 6.25%, 08/15/2001............................ 647,600 9,633,050
--------------
MATERIALS - 0.3%
Containers & Packaging - 0.3%
Sealed Air Corp., $2.00, 04/01/2018, Ser. A........... 78,375 3,859,969
--------------
</TABLE>
55
<PAGE>
EVERGREEN
Growth and Income Fund
Schedule of Investments (continued)
July 31, 2000
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
TELECOMMUNICATION SERVICES - 0.2%
Diversified Telecommunication Services - 0.2%
Global Crossing, Ltd., 7.00%, 12/31/2049, 144A..... 18,800 $ 3,200,700
--------------
Total Convertible Preferred Stocks (cost
$18,323,874).................................... 16,693,719
--------------
PREFERRED STOCKS - 0.0%
HEALTH CARE - 0.0%
Health Care Equipment & Supplies - 0.0%
Fresenius National Medical Care, Inc., Ser. D (cost
$22,740).......................................... 130,000 3,835
--------------
<CAPTION>
Principal
Amount Value
<S> <C> <C>
CONVERTIBLE DEBENTURES - 2.2%
CONSUMER DISCRETIONARY - 0.3%
Media - 0.3%
Getty Images, Inc., 5.00%, 03/15/2007 144A......... $5,500,000 4,530,625
--------------
HEALTH CARE - 0.4%
Biotechnology - 0.4%
Affymetrix, Inc., 4.75%, 02/15/2007 144A........... 6,900,000 4,873,125
--------------
INFORMATION TECHNOLOGY - 1.5%
Communications Equipment - 0.3%
American Tower Corp., 6.25%, 10/15/2009............ 1,900,000 3,598,125
--------------
Internet Software & Services - 0.3%
Cnet, Inc., 5.00%, 03/01/2006...................... 5,000,000 4,900,000
--------------
Semiconductor Equipment & Products - 0.4%
Triquint Semiconductor, Inc., 4.00%, 03/01/2007
144A.............................................. 7,550,000 6,143,812
--------------
Software - 0.5%
Juniper Networks, Inc., 4.75%, 03/15/2007.......... 4,100,000 4,540,750
Network Associates, Inc., 0.00%, 02/13/2018........ 7,000,000 2,537,500
--------------
7,078,250
--------------
Total Convertible Debentures (cost $34,602,777).. 31,123,937
--------------
CORPORATE BONDS - 0.3%
CONSUMER DISCRETIONARY - 0.1%
Internet & Catalog Retail - 0.1%
Amazon.Com, Inc., 4.75%, 02/01/2009................ 2,700,000 1,454,625
--------------
INFORMATION TECHNOLOGY - 0.2%
Semiconductor Equipment & Products - 0.2%
Vitesse Semiconductor Corp., 4.00%, 03/15/2005
144A.............................................. 3,775,000 3,175,719
--------------
Total Corporate Bonds (cost $5,902,548).......... 4,630,344
--------------
</TABLE>
56
<PAGE>
EVERGREEN
Growth and Income Fund
Schedule of Investments (continued)
July 31, 2000
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
RIGHTS - 0.0%
INDUSTRIALS - 0.0%
Machinery - 0.0%
CNH Global N.V. (cost $0)........................... 233,000 $ 0
-------------
<CAPTION>
Principal
Amount Value
<S> <C> <C>
U.S. TREASURY OBLIGATIONS - 0.4%
U.S. Treasury Notes, 3.625 - 12.00%, 7/31/2001 -
2/15/2027 (cost $5,390,778) ##.................... $5,390,778 5,390,778
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
SHORT-TERM INVESTMENTS - 5.4%
MUTUAL FUND SHARES - 5.4%
Evergreen Select Money Market Fund o............... 885,097 885,097
Navigator Prime Portfolio ##....................... 76,581,601 76,581,601
--------------
Total Short-Term Investments (cost $77,466,698).. 77,466,698
--------------
Total Investments - (cost $1,116,904,440) - 105.5%.............. 1,501,791,362
--------------
Other Assets and Liabilities - (5.5)%........................... (78,485,770)
--------------
Net Assets - 100.0%............................................. $1,423,305,592
==============
</TABLE>
See Combined Notes to Schedules of Investments.
57
<PAGE>
EVERGREEN
Small Cap Value Fund
Schedule of Investments
July 31, 2000
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - 91.9%
CONSUMER DISCRETIONARY - 11.7%
Auto Components - 0.9%
Arvinmeritor, Inc. ...................................... 124,000 $ 1,937,500
------------
Household Durables - 2.6%
Ethan Allen Interiors, Inc. #............................ 43,400 1,106,700
Fossil, Inc. *........................................... 80,400 1,467,300
Furniture Brands International, Inc. *................... 115,400 1,709,363
Industrie Natuzzi SpA, ADR *............................. 157,500 1,643,906
------------
5,927,269
------------
Media - 1.9%
Scholastic Corp. *#...................................... 17,300 1,105,037
True North Communications, Inc........................... 30,700 1,498,544
Valassis Communications, Inc. *.......................... 48,000 1,614,000
------------
4,217,581
------------
Multi-line Retail - 0.7%
Reebok International, Ltd. *#............................ 96,500 1,628,438
------------
Specialty Retail - 4.0%
Abercrombie & Fitch Co., Class A *....................... 43,000 690,688
Linens 'n Things, Inc. *#................................ 69,000 2,065,687
Pier 1 Imports, Inc. .................................... 316,000 3,772,250
Ross Stores, Inc. #...................................... 153,100 2,353,912
------------
8,882,537
------------
Textiles & Apparel - 1.6%
Guess?, Inc. *........................................... 110,800 1,509,650
Russell Corp. #.......................................... 55,600 1,094,625
Wolverine World Wide, Inc. #............................. 102,500 1,082,656
------------
3,686,931
------------
CONSUMER STAPLES - 4.5%
Food & Drug Retailing - 0.7%
Whole Foods Market, Inc. *#.............................. 34,300 1,532,781
------------
Food Products - 3.8%
Flowers Industries, Inc. ................................ 68,500 1,459,906
International Multifoods Corp. #......................... 63,300 1,103,794
Michael Foods, Inc. ..................................... 166,600 3,998,400
Smithfield Foods, Inc. #................................. 74,000 2,104,375
------------
8,666,475
------------
ENERGY - 8.3%
Energy Equipment & Services - 2.8%
Cal Dive Intl., Inc. *................................... 23,800 1,148,350
Hanover Compressor Co. *#................................ 36,400 1,242,150
</TABLE>
58
<PAGE>
EVERGREEN
Small Cap Value Fund
Schedule of Investments (continued)
July 31, 2000
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
ENERGY - continued
Energy Equipment & Services - continued
Pride International, Inc. *#............................. 109,700 $ 2,283,131
UTI Energy Corp. ........................................ 53,500 1,685,250
------------
6,358,881
------------
Oil & Gas - 5.5%
Berry Petroleum Co., Class A #........................... 108,300 1,969,706
Cabot Oil & Gas Corp., Class A........................... 98,200 1,816,700
Cross Timbers Oil Co. ................................... 80,900 1,329,794
Newfield Exploration Co. *............................... 52,200 1,778,062
Pennzoil-Quaker State Co. #.............................. 134,209 1,677,613
Pogo Producing Co. ...................................... 35,000 695,625
Santa Fe Snyder Corp. ................................... 146,600 1,466,000
Stone Energy Corp. *#.................................... 30,600 1,468,800
------------
12,202,300
------------
FINANCIALS - 19.2%
Banks - 15.0%
Astoria Financial Corp. ................................. 77,200 2,248,450
Bancorp Connecticut, Inc. ............................... 21,000 303,188
Banknorth Group, Inc. ................................... 136,400 2,088,625
Britton & Koontz Capital Corp. .......................... 86,600 1,104,150
Centura Banks, Inc. #.................................... 31,280 995,095
City National Corp. #.................................... 21,350 783,278
Civic Bancorp *.......................................... 110,250 1,722,656
Columbia Banking Systems, Inc. *......................... 69,960 891,990
Commercial Bankshares, Inc. #............................ 35,885 639,202
Cullen/Frost Bankers, Inc. #............................. 78,500 2,232,344
First Oak Brook Bancshares, Inc., Class A................ 197,186 2,846,873
First State Bancorp...................................... 173,328 2,123,268
Granite State Bankshares, Inc. .......................... 261,900 4,419,562
Highland Bancorp, Inc. .................................. 36,000 888,750
Independent Bankshares, Inc. ............................ 129,500 2,569,766
MetroWest Bank........................................... 124,200 745,200
Mid-State Bancshares..................................... 111,600 3,152,700
Prosperity Bancshares, Inc. ............................. 87,000 1,479,000
Washington Trust Bancorp, Inc. .......................... 47,587 690,011
West Coast Bancorp, Inc. ................................ 83,000 762,562
Wilmington Trust Corp. .................................. 23,700 1,038,356
------------
33,725,026
------------
Diversified Financials - 1.1%
Raymond James Financial, Inc. ........................... 18,000 450,000
Ulticom, Inc. ........................................... 22,100 740,350
Waddell & Reed Financial, Inc., Class A #................ 37,150 1,216,663
------------
2,407,013
------------
</TABLE>
59
<PAGE>
EVERGREEN
Small Cap Value Fund
Schedule of Investments (continued)
July 31, 2000
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
FINANCIALS - continued
Real Estate - 3.1%
AMB Property Corp. REIT.................................. 74,500 $ 1,778,688
Brandywine Realty Trust REIT............................. 66,000 1,447,875
Liberty Property Trust REIT.............................. 47,000 1,351,250
Prentiss Properties Trust REIT........................... 44,200 1,110,525
SL Green Realty Corp. REIT............................... 45,900 1,362,656
------------
7,050,994
------------
HEALTH CARE - 14.7%
Biotechnology - 0.0%
Charles River Laboratories International, Inc. #......... 2,500 75,469
------------
Health Care Equipment & Supplies - 5.3%
Alza Corp. *#............................................ 33,800 2,188,550
Beckman Coulter, Inc. ................................... 32,900 2,191,962
CONMED Corp. ............................................ 50,000 668,750
DENTSPLY International, Inc. ............................ 50,000 1,690,625
Exactech, Inc. *......................................... 75,200 1,278,400
KV Pharmaceutical Co. ................................... 22,800 679,725
KV Pharmaceutical Co., Class A........................... 11,900 354,769
Sybron International Corp. *#............................ 131,500 2,736,844
------------
11,789,625
------------
Health Care Providers & Services - 3.1%
AmeriSource Health Corp., Class A *...................... 155,434 5,430,475
Owens & Minor, Inc. ..................................... 99,000 1,584,000
------------
7,014,475
------------
Pharmaceuticals - 6.3%
Alpharma, Inc., Class A.................................. 25,080 1,642,740
Barr Laboratories, Inc. #................................ 51,750 2,794,500
Jones Pharma, Inc. ...................................... 58,200 1,902,413
Medicis Pharmaceutical Corp., Class A *.................. 43,114 2,425,162
Shire Pharmaceuticals Group Plc, ADR *#.................. 5,700 312,075
Warner Chilcott Laboratories Plc, ADR #.................. 71,800 1,790,513
Watson Pharmaceuticals, Inc. *#.......................... 60,500 3,342,625
------------
14,210,028
------------
INDUSTRIALS - 8.4%
Building Products - 1.2%
American Woodmark Corp. ................................. 103,400 1,990,450
LSI Industries, Inc. .................................... 42,900 718,575
------------
2,709,025
------------
</TABLE>
60
<PAGE>
EVERGREEN
Small Cap Value Fund
Schedule of Investments (continued)
July 31, 2000
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
INDUSTRIALS - continued
Commercial Services & Supplies - 3.7%
Affiliated Computer Services, Inc., Class A *#........... 66,600 $ 3,001,163
Bowne & Co., Inc. #...................................... 136,100 1,199,381
CSG Systems International, Inc. *........................ 55,100 2,930,631
Spherion Corp. #......................................... 55,000 1,051,875
------------
8,183,050
------------
Electrical Equipment - 0.5%
Baldor Electric Co. #.................................... 59,500 1,093,312
------------
Machinery - 3.0%
Applied Power, Inc., Class A............................. 51,600 2,041,425
Badger Meter, Inc. ...................................... 50,000 1,381,250
Idex Corp. .............................................. 38,400 1,267,200
Manitowoc Co., Inc. ..................................... 39,000 960,375
Roper Industries, Inc. #................................. 40,800 1,127,100
------------
6,777,350
------------
INFORMATION TECHNOLOGY - 14.9%
Communications Equipment - 1.0%
Communications Systems, Inc. ............................ 68,100 919,350
Scientific Atlanta, Inc. ................................ 17,200 1,324,400
------------
2,243,750
------------
Computers & Peripherals - 2.1%
Radisys Corp. *.......................................... 22,000 1,353,000
Zebra Technologies Corp., Class A *...................... 65,100 3,324,169
------------
4,677,169
------------
Electronic Equipment & Instruments - 0.8%
Manufacturers Services, Ltd. #........................... 72,700 1,690,275
------------
Internet Software & Services - 1.6%
Avocent Corp. ........................................... 81,163 3,623,167
------------
Semiconductor Equipment & Products - 3.3%
Advanced Energy Industries, Inc. *#...................... 37,900 1,705,500
Helix Technology Corp. .................................. 91,000 2,957,500
Integrated Circuit Systems, Inc. ........................ 75,200 1,353,600
Kulicke & Soffa Industries, Inc. *#...................... 29,700 1,340,213
------------
7,356,813
------------
Software - 6.1%
Answerthink Consulting Group............................. 131,500 2,210,844
FileNet Corp. *.......................................... 92,500 1,636,094
Hyperion Solutions Corp. ................................ 70,600 1,879,725
National Instruments Corp. .............................. 41,600 1,796,600
Network Associates, Inc. *............................... 151,000 2,897,312
</TABLE>
61
<PAGE>
EVERGREEN
Small Cap Value Fund
Schedule of Investments (continued)
July 31, 2000
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
INFORMATION TECHNOLOGY - continued
Software - continued
Progress Software Corp. ............................... 136,200 $ 2,051,512
Remedy Corp. *......................................... 60,800 1,341,400
------------
13,813,487
------------
MATERIALS - 4.0%
Chemicals - 3.0%
Cambrex Corp. #........................................ 43,400 1,961,138
Crompton Corp. ........................................ 151,500 1,486,594
Donaldson, Inc. ....................................... 110,200 2,114,462
Olin Corp. ............................................ 80,500 1,262,844
------------
6,825,038
------------
Containers & Packaging - 1.0%
AptarGroup, Inc. ...................................... 87,100 2,172,056
------------
TELECOMMUNICATION SERVICES - 0.9%
Diversified Telecommunication Services - 0.9%
Hickory Tech Corp. .................................... 103,095 1,907,257
------------
Wireless Telecommunications Services - 0.0%
Airspan Networks, Inc. ................................ 2,500 55,938
------------
UTILITIES - 5.3%
Electric Utilities - 1.6%
Cleco Corp. ........................................... 32,500 1,198,438
Energy East Corp. ..................................... 3,088 58,286
UtiliCorp United, Inc. #............................... 107,000 2,280,437
------------
3,537,161
------------
Gas Utilities - 3.7%
Chesapeake Utilities Corp. ............................ 37,300 652,750
CTG Resources, Inc. #.................................. 20,000 743,750
Eastern Enterprises.................................... 45,000 2,818,125
MDU Resources Group, Inc. ............................. 177,200 4,119,900
------------
8,334,525
------------
Total Common Stocks (cost $202,734,914).............. 206,312,696
------------
<CAPTION>
Principal
Amount Value
<S> <C> <C>
CORPORATE BONDS - 0.7%
HEALTH CARE - 0.7%
Pharmaceuticals - 0.7%
Alpharma, Inc., 5.75%, 04/01/2005 (cost $670,000) #.... $670,000 1,542,675
------------
</TABLE>
62
<PAGE>
EVERGREEN
Small Cap Value Fund
Schedule of Investments (continued)
July 31, 2000
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
SHORT-TERM INVESTMENTS - 21.0%
MUTUAL FUND SHARES - 21.0%
Evergreen Select Money Market Fund o ................. 14,958,323 $ 14,958,323
Navigator Prime Portfolio ##.......................... 32,360,616 32,360,616
------------
Total Short-Term Investments (cost $47,318,939)..... 47,318,939
------------
Total Investments - (cost $250,723,853) - 113.6%................... 255,174,310
Other Assets and Liabilities - (13.6)%............................. (30,644,965)
------------
Net Assets - 100.0%................................................ $224,529,345
============
</TABLE>
See Combined Notes to Schedules of Investments.
63
<PAGE>
EVERGREEN
Utility Fund
Schedule of Investments
July 31, 2000
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - 72.9%
CONSUMER DISCRETIONARY - 0.9%
Media - 0.9%
Time Warner, Inc. ....................................... 52,393 $ 4,017,888
------------
INFORMATION TECHNOLOGY - 4.5%
Communications Equipment - 3.9%
3Com Corp. *............................................. 42,000 569,625
American Tower Systems Corp., Class A *.................. 50,000 2,143,750
Aware, Inc. #............................................ 83,000 3,268,125
Lucent Technologies, Inc. ............................... 85,000 3,718,750
QUALCOMM, Inc. *......................................... 103,778 6,739,084
------------
16,439,334
------------
Computers & Peripherals - 0.6%
Palm, Inc. .............................................. 62,294 2,429,466
------------
TELECOMMUNICATION SERVICES - 29.9%
Diversified Telecommunication Services - 19.0%
ALLTEL Corp. ............................................ 72,000 4,437,000
AT&T Corp. .............................................. 255,900 7,916,906
BellSouth Corp. ......................................... 184,400 7,341,425
Global Crossing, Ltd. *#................................. 125,000 3,039,063
NEXTLINK Communications, Inc., Class A *................. 75,000 2,479,688
Qwest Communications International, Inc. *............... 309,337 14,519,505
SBC Communications, Inc. ................................ 220,261 9,374,859
Sprint Corp. #........................................... 199,200 7,096,500
Telefonica de Espana SA de CV, ADR #..................... 59,036 3,737,717
Teleglobe, Inc. ......................................... 325,300 6,627,987
Time Warner Telecom, Inc. #.............................. 48,100 2,979,194
Verizon Communications................................... 224,880 10,569,360
Winstar Communications, Inc. *#.......................... 1 30
------------
80,119,234
------------
Wireless Telecommunications Services - 10.9%
Crown Castle International Corp. #....................... 290,000 9,860,000
Leap Wireless International, Inc. ....................... 156,127 9,894,548
Nextel Communications, Inc., Class A *#.................. 194,500 10,879,844
Sprint Corp. (PCS Group), Ser. 1 *....................... 149,600 8,265,400
Vodafone AirTouch Plc, ADR #............................. 110,250 4,754,531
Western Wireless Corp., Class A.......................... 44,000 2,420,000
------------
46,074,323
------------
UTILITIES - 37.6%
Electric Utilities - 27.8%
AES Corp. *#............................................. 261,599 13,979,197
American Electric Power Co., Inc. ....................... 328,000 10,762,500
Calpine Corp. *#......................................... 90,000 6,412,500
Companhia Paranaense de Energia-Copel, Plc, ADR #........ 160,000 1,490,000
</TABLE>
64
<PAGE>
EVERGREEN
Utility Fund
Schedule of Investments (continued)
July 31, 2000
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
UTILITIES - continued
Electric Utilities - continued
Duke Energy Corp. ....................................... 129,500 $ 7,988,531
Dynegy, Inc. ............................................ 210,000 14,778,750
El Paso Energy Partners, LP #............................ 1,100 24,819
FPL Group, Inc. ......................................... 67,000 3,232,750
Niagara Mohawk Holdings, Inc. *#......................... 448,900 5,975,981
Nisource, Inc. #......................................... 401,000 7,794,437
PPL Corp. ............................................... 231,700 6,255,900
Public Service Enterprise Group, Inc. ................... 265,200 8,917,350
Scottish Power Plc, ADR #................................ 339,110 11,233,019
Sierra Pacific Resources................................. 10,000 141,250
Southern Co. ............................................ 330,000 8,064,375
TECO Energy, Inc. #...................................... 52,300 1,147,331
Txu Corp. ............................................... 198,200 6,193,750
UtiliCorp United, Inc. #................................. 99,000 2,109,938
Wisconsin Energy Corp. .................................. 58,050 1,153,744
------------
117,656,122
------------
Gas Utilities - 9.8%
El Paso Energy Corp. #................................... 102,600 4,963,275
Enron Corp. ............................................. 234,000 17,228,250
Enron Corp., Exchangeable Notes 2002..................... 117,400 3,265,187
MDU Resources Group, Inc. ............................... 57,400 1,334,550
Peoples Energy Corp. .................................... 274,800 8,707,725
Sempra Energy............................................ 312,313 5,855,869
------------
41,354,856
------------
Total Common Stocks (cost $248,997,338)................ 308,091,223
------------
CONVERTIBLE PREFERRED STOCKS - 16.4%
INDUSTRIALS - 0.3%
Air Freight & Couriers - 0.3%
Loral Space & Communications, 6.00%, 11/01/2006.......... 70,000 1,242,500
------------
INFORMATION TECHNOLOGY - 3.7%
Communications Equipment - 3.7%
Crown Castle, DECS 7.25%, 8/15/2002...................... 214,200 6,486,244
Metromedia Fiber, DECS 6.25%, 11/15/2002................. 140,000 9,117,500
------------
15,603,744
------------
TELECOMMUNICATION SERVICES - 2.3%
Diversified Telecommunication Services - 1.0%
Qwest Trends Trust, 5.75%, 11/17/2003.................... 56,000 4,403,000
------------
Wireless Telecommunications Services - 1.3%
MediaOne Group, Inc., PIES, 7.00%, 11/15/2002............ 131,300 5,416,125
------------
</TABLE>
65
<PAGE>
EVERGREEN
Utility Fund
Schedule of Investments (continued)
July 31, 2000
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
CONVERTIBLE PREFERRED STOCKS - continued
UTILITIES - 10.1%
Electric Utilities - 10.1%
AES Trust III........................................ 40,000 $ 3,325,000
BNDES Participacoes S.A., DECS, 7.25%, 2/15/2001
144A................................................ 235,000 4,230,000
Calpine Capital Trust, 5.75%, 11/01/2004............. 104,040 13,213,080
CMS Energy Corp. #................................... 158,900 5,055,006
Coastal Corp. ....................................... 165,000 5,434,688
TXU Corp. ........................................... 70,000 2,791,250
UtiliCorp United, Inc., 9.75%, 11/16/2002............ 337,000 8,488,187
------------
42,537,211
------------
Total Convertible Preferred Stocks
(cost $60,366,800)................................ 69,202,580
------------
PREFERRED STOCKS - 0.9%
UTILITIES - 0.9%
Electric Utilities - 0.9%
Alliant Energy Resources, Inc., 0.00%, 02/15/2030
144A, (cost $4,347,250)............................. 61,100 3,704,188
------------
<CAPTION>
Principal
Amount Value
<S> <C> <C>
CONVERTIBLE DEBENTURES - 3.4%
INFORMATION TECHNOLOGY - 2.2%
Communications Equipment - 2.2%
American Tower Corp., 6.25%, 10/15/2009.............. $5,000,000 9,468,750
------------
TELECOMMUNICATION SERVICES - 1.2%
Diversified Telecommunication Services - 1.2%
Level 3 Communications, Inc., 6.00%, 09/15/2009...... 4,020,000 4,854,150
------------
Total Convertible Debentures (cost $11,991,600).... 14,322,900
------------
CORPORATE BONDS - 0.7%
TELECOMMUNICATION SERVICES - 0.7%
Wireless Telecommunications Services - 0.7%
Nextel Communications, Inc., 5.25%, 01/15/2010 144A,
(cost $2,611,000)................................... 2,800,000 2,807,000
------------
<CAPTION>
Shares Value
<S> <C> <C>
SHORT-TERM INVESTMENTS - 24.6%
MUTUAL FUND SHARES - 24.6%
Evergreen Select Money Market Fund o ................ 19,957,629 19,957,629
Navigator Prime Portfolio ##......................... 84,203,200 84,203,200
------------
Total Short-Term Investments (cost $104,160,829)... 104,160,829
------------
Total Investments - (cost $432,474,817) - 118.9%.................. 502,288,720
Other Assets and Liabilities - (18.9)%............................ (79,934,753)
------------
Net Assets - 100.0%............................................... $422,353,967
------------
</TABLE>
See Combined Notes to Schedules of Investments.
66
<PAGE>
EVERGREEN
Value Fund
Schedule of Investments
July 31, 2000
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - 92.3%
CONSUMER DISCRETIONARY - 7.0%
Auto Components - 1.0%
Delphi Automotive Systems Corp. ......................... 405,873 $ 6,011,994
Visteon Corp. ........................................... 15,214 212,996
------------
6,224,990
------------
Automobiles - 0.8%
Ford Motor Co. .......................................... 116,200 5,410,563
------------
Media - 3.5%
Clear Channel Communications, Inc. *#.................... 45,100 3,436,056
The Walt Disney Co. ..................................... 192,800 7,458,950
Univision Communications, Inc., Class A *#............... 35,150 4,367,388
Viacom, Inc., Class B.................................... 107,742 7,144,641
------------
22,407,035
------------
Specialty Retail - 1.7%
Intimate Brands, Inc. ................................... 356,800 6,221,700
Lowe's Companies, Inc. .................................. 73,650 3,107,109
Nordstrom, Inc. ......................................... 97,500 1,706,250
------------
11,035,059
------------
CONSUMER STAPLES - 2.0%
Personal Products - 1.1%
Avon Products, Inc. ..................................... 169,000 6,707,188
------------
Tobacco - 0.9%
Philip Morris Cos., Inc. ................................ 238,000 6,009,500
------------
ENERGY - 8.4%
Energy Equipment & Services - 0.7%
Halliburton Co. ......................................... 95,900 4,423,387
------------
Oil & Gas - 7.7%
BP Amoco Plc, ADR........................................ 91,808 4,802,706
Chevron Corp. ........................................... 9,900 782,100
Conoco, Inc., Class B.................................... 151,670 3,497,889
Exxon Mobil Corp. ....................................... 265,472 21,237,760
Royal Dutch Petroleum Co. ............................... 49,300 2,871,725
Sunoco, Inc. ............................................ 349,550 8,520,281
Texaco, Inc. #........................................... 95,350 4,713,866
Unocal Corp. ............................................ 103,850 3,141,463
------------
49,567,790
------------
FINANCIALS - 29.6%
Banks - 11.1%
Bank of America Corp. ................................... 244,600 11,587,925
Chase Manhattan Corp. ................................... 125,925 6,256,898
FleetBoston Financial Corp. ............................. 448,934 16,077,449
Golden West Financial Corp. #............................ 266,100 12,240,600
</TABLE>
67
<PAGE>
EVERGREEN
Value Fund
Schedule of Investments (continued)
July 31, 2000
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
FINANCIALS - continued
Banks - continued
J.P. Morgan & Co., Inc. ................................. 62,650 $ 8,363,775
Marshall & Ilsley Corp. ................................. 74,100 3,353,025
PNC Financial Services Group, Inc. ...................... 190,650 9,699,319
Wells Fargo Co. ......................................... 94,350 3,897,834
------------
71,476,825
------------
Diversified Financials - 10.5%
Citigroup, Inc. ......................................... 221,109 15,602,004
Federal National Mortgage Assn. ......................... 176,150 8,785,481
Federal Home Loan Mortgage Corp. ....................... 32,600 1,285,663
Household International, Inc. ........................... 266,550 11,878,134
John Hancock Finl. Svcs., Inc. .......................... 423,400 10,002,825
Merrill Lynch & Co., Inc. ............................... 39,650 5,124,762
Morgan Stanley, Dean Witter & Co. #...................... 73,600 6,716,000
Price (T. Rowe) Associates, Inc. ........................ 163,400 6,678,975
SCG Holding Corp. ....................................... 84,500 1,869,563
------------
67,943,407
------------
Insurance - 8.0%
Ace, Ltd. ............................................... 119,550 4,303,800
AMBAC Financial Group, Inc. ............................. 363,750 23,439,141
American Intl. Group, Inc. .............................. 60,824 5,333,461
Hartford Financial Services Group, Inc. ................. 153,400 9,855,950
Marsh & McLennan Co., Inc. #............................. 41,000 5,002,000
MGIC Investment Corp. ................................... 72,900 4,141,631
------------
52,075,983
------------
HEALTH CARE - 7.8%
Health Care Providers & Services - 1.3%
Health Management Associates, Inc., Class A *............ 119,600 1,876,225
Quest Diagnostics, Inc. #................................ 66,700 6,732,531
------------
8,608,756
------------
Pharmaceuticals - 6.5%
American Home Products Corp. ............................ 213,450 11,326,191
Johnson & Johnson #...................................... 57,100 5,313,869
Merck & Co., Inc. ....................................... 122,100 8,753,044
Pharmacia Corp. ......................................... 126,426 6,921,823
Schering-Plough Corp. ................................... 217,400 9,388,962
------------
41,703,889
------------
INDUSTRIALS - 11.9%
Air Freight & Couriers - 0.3%
United Parcel Service, Inc., Class B..................... 34,900 2,050,375
------------
</TABLE>
68
<PAGE>
EVERGREEN
Value Fund
Schedule of Investments (continued)
July 31, 2000
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
INDUSTRIALS - continued
Commercial Services & Supplies - 1.9%
Avery Dennison Corp. .................................... 88,100 $ 4,779,425
Electronic Data Systems Corp. ........................... 101,350 4,358,050
Keane, Inc. #............................................ 150,300 3,081,150
------------
12,218,625
------------
Electrical Equipment - 2.5%
American Power Conversion Corp. *........................ 113,000 2,874,438
Emerson Electric Co. .................................... 214,550 13,100,959
------------
15,975,397
------------
Industrial Conglomerates - 4.7%
General Electric Co. .................................... 347,400 17,869,387
Honeywell International, Inc. ........................... 68,075 2,289,022
Minnesota Mining & Manufacturing Co. .................... 114,050 10,271,628
------------
30,430,037
------------
Machinery - 0.5%
Deere & Co. ............................................. 88,000 3,393,500
------------
Road & Rail - 2.0%
Burlington Northern Santa Fe Corp. ...................... 134,200 3,279,513
Union Pacific Corp. ..................................... 227,900 9,842,431
------------
13,121,944
------------
INFORMATION TECHNOLOGY - 10.6%
Communications Equipment - 0.8%
Motorola, Inc. .......................................... 159,000 5,256,938
------------
Computers & Peripherals - 4.1%
Compaq Computer Corp. ................................... 495,550 13,906,372
Hewlett-Packard Co. ..................................... 50,750 5,541,266
IBM Corp. ............................................... 60,350 6,785,603
------------
26,233,241
------------
Electronic Equipment & Instruments - 1.1%
SCI Systems, Inc. *#..................................... 158,700 7,280,362
------------
Semiconductor Equipment & Products - 3.3%
Axcelis Technologies, Inc. .............................. 84,700 1,566,950
Intel Corp. ............................................. 59,500 3,971,625
Micron Technology, Inc. ................................. 83,150 6,776,725
National Semiconductor Corp. *........................... 114,550 4,145,278
Varian Semiconductor Equipment, Inc. .................... 100,550 4,882,959
------------
21,343,537
------------
Software - 1.3%
Symantec Corp. .......................................... 165,600 8,487,000
------------
</TABLE>
69
<PAGE>
EVERGREEN
Value Fund
Schedule of Investments (continued)
July 31, 2000
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
MATERIALS - 1.8%
Chemicals - 0.8%
DuPont (E.I.) De Nemours & Co. ...................... 113,927 $ 5,162,317
------------
Containers & Packaging - 1.0%
Sealed Air Corp. *#.................................. 129,000 6,498,375
------------
TELECOMMUNICATION SERVICES - 7.1%
Diversified Telecommunication Services - 7.1%
AT&T Corp. .......................................... 104,099 3,220,563
AT&T Corp., Liberty Media Group, Class A............. 261,800 5,825,050
AT&T Wireless Group #................................ 75,200 2,068,000
BellSouth Corp. ..................................... 74,550 2,968,022
Qwest Communications International, Inc. *........... 168,868 7,926,241
SBC Communications, Inc. ............................ 160,005 6,810,213
Verizon Communications............................... 300,000 14,100,000
WorldCom, Inc. ...................................... 83,950 3,279,297
------------
46,197,386
------------
UTILITIES - 6.1%
Electric Utilities - 4.7%
DPL, Inc. #.......................................... 483,250 11,658,407
Duke Energy Corp..................................... 136,800 8,438,850
FPL Group, Inc....................................... 86,000 4,149,500
GPU, Inc. #.......................................... 62,900 1,666,850
Southern Co.......................................... 182,000 4,447,625
------------
30,361,232
------------
Gas Utilities - 1.4%
NICOR, Inc........................................... 194,700 6,753,656
The Williams Companies, Inc.......................... 53,600 2,237,800
------------
8,991,456
------------
Total Common Stocks (cost $504,339,929)............ 596,596,094
------------
SHORT-TERM INVESTMENTS - 10.8%
MUTUAL FUND SHARES - 10.8%
Evergreen Select Money Market Fund Fund o ........... 45,418,923 45,418,923
Navigator Prime Portfolio ##......................... 24,312,959 24,312,959
------------
Total Short-Term Investments - (cost $69,731,882).. 69,731,882
------------
Total Investments - (cost $574,071,811) - 103.1%................ 666,327,976
Other Assets and Liabilities - (3.1)%........................... (19,930,570)
------------
Net Assets - 100.0%............................................. $646,397,406
------------
</TABLE>
See Combined Notes to Schedules of Investments.
70
<PAGE>
Combined Notes to Schedules of Investments
July 31, 2000
Symbol Description
--------------------------------------------------------------------------------
144A Security that may be sold to qualified institutional buyers under Rule
144A of the Securities Act of 1933, as amended. This security has been
determined to be liquid under guidelines established by the Board of
Trustees.
* Non-income producing security.
# All or a portion of this security is on loan.
## Represents investment of cash collateral received for securities on
loan.
[] No market quotation available. Valued at fair value as determined in
good faith under procedures established by the Board of Trustees.
/o/ Investment in non-controlled affiliate. The Fund owns shares of First
Union Corp. with a cost basis of $106,108 at July 31, 2000. The Fund
earned $15,200 of income from First Union Corp. during the year ended
July 31, 2000.
o The advisor of the Fund and the advisor of the Money Market Fund are
each a subsidiary of First Union.
Summary of Abbreviations:
ACES Adjustable Convertible Rate Equity Security Units
ADR American Depository Receipt
DECS Dividend Enhanced Convertible Stock
FFCB Federal Farm Credit Bank
FHLB Federal Home Loan Banks
FHLMC Federal Home Loan Mortgage Corporation
FNMA Federal National Mortgage Association
MIPS Monthly Income Preferred Shares
PIES Premium Income Exchangeable Securities
PRIDES Preferred Redeemable Increased Dividend Equity Securities
REIT Real Estate Investment Trust
STRYPES Structured Yield Product Exchangeable for Stock
TRACES Trust Automatic Common Exchange Securities
See Combined Notes to Financial Statements.
71
<PAGE>
EVERGREEN
Growth and Income Funds
Statements of Assets and Liabilities
July 31, 2000
<TABLE>
<CAPTION>
Growth
Equity and Small Cap
Income Income Value Utility Value
Blue Chip Fund Fund Fund Fund Fund Fund
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Assets
Identified cost of
securities............ $ 867,015,070 $ 997,446,944 $1,116,904,440 $250,723,853 $432,474,817 $574,071,811
Net unrealized gains on
securities............ 127,768,705 56,418,769 384,886,922 4,450,457 69,813,903 92,256,165
-----------------------------------------------------------------------------------------------------------------
Market value of
securities............ 994,783,775 1,053,865,713 1,501,791,362 255,174,310 502,288,720 666,327,976
Cash................... 7,733,292 90,584 1,705 1,029 0 0
Receivable for
securities sold....... 9,527,626 9,077,756 10,093,416 3,554,095 0 10,230,648
Receivable for Fund
shares sold........... 2,741,663 75,355 405,680 195,666 3,885,231 91,650
Dividends and interest
receivable............ 911,172 4,925,412 1,648,835 182,084 1,148,323 676,734
Receivable from
investment advisor.... 0 0 0 1,878 255,717 0
Prepaid expenses and
other assets.......... 246,502 27,849 86,623 41,008 9,319 15,598
-----------------------------------------------------------------------------------------------------------------
Total assets........... 1,015,944,030 1,068,062,669 1,514,027,621 259,150,070 507,587,310 677,342,606
-----------------------------------------------------------------------------------------------------------------
Liabilities
Distributions payable.. 0 266 752 0 113,300 0
Payable for securities
purchased............. 18,573,429 9,145,040 6,311,680 1,915,671 589,626 5,526,008
Payable for Fund shares
redeemed.............. 1,052,145 843,267 2,253,702 219,929 246,471 1,003,172
Payable for securities
on loan............... 13,770,741 74,714,635 81,972,379 32,360,616 84,203,200 24,312,959
Due to custodian bank.. 0 0 0 0 0 24,125
Advisory fee payable... 11,611 13,352 31,646 0 0 7,388
Distribution Plan
expenses payable...... 16,648 5,546 21,146 2,555 5,274 8,296
Due to other related
parties............... 2,656 2,688 3,838 608 1,148 1,759
Accrued expenses and
other liabilities..... 110,794 204,014 126,886 121,346 74,324 61,493
-----------------------------------------------------------------------------------------------------------------
Total liabilities...... 33,538,024 84,928,808 90,722,029 34,620,725 85,233,343 30,945,200
-----------------------------------------------------------------------------------------------------------------
Net assets.............. $ 982,406,006 $ 983,133,861 $1,423,305,592 $224,529,345 $422,353,967 $646,397,406
-----------------------------------------------------------------------------------------------------------------
Net assets represented
by
Paid-in capital........ $ 796,883,042 $ 934,185,359 $ 889,086,018 $260,165,248 $337,675,589 $504,246,764
Undistributed
(overdistributed) net
investment income
(loss)................ (22,197) 3,898,434 (76,015) (13,330) 68,353 58,349
Accumulated net
realized gains or
losses on securities
and foreign currency
related transactions.. 57,776,456 (11,368,525) 149,408,667 (40,073,030) 14,796,122 49,836,128
Net unrealized gains on
securities and foreign
currency related
transactions.......... 127,768,705 56,418,593 384,886,922 4,450,457 69,813,903 92,256,165
-----------------------------------------------------------------------------------------------------------------
Total net assets........ $ 982,406,006 $ 983,133,861 $1,423,305,592 $224,529,345 $422,353,967 $646,397,406
-----------------------------------------------------------------------------------------------------------------
Net assets consists of
Class A................ $ 467,213,888 $ 62,691,662 $ 207,221,016 $ 48,165,700 $299,674,821 $379,568,528
Class B................ 477,414,746 177,968,021 706,016,578 69,450,090 110,459,982 206,408,728
Class C................ 21,809,935 9,112,352 25,850,028 12,637,353 9,588,665 3,517,882
Class Y................ 15,967,437 733,361,826 484,217,970 92,921,210 2,630,499 56,902,268
Class IS............... 0 0 0 1,354,992 0 0
-----------------------------------------------------------------------------------------------------------------
Total net assets........ $ 982,406,006 $ 983,133,861 $1,423,305,592 $224,529,345 $422,353,967 $646,397,406
-----------------------------------------------------------------------------------------------------------------
Shares outstanding
Class A................ 13,428,908 3,005,173 6,745,504 3,127,236 21,469,982 18,356,297
Class B................ 13,980,616 8,605,138 23,497,006 4,561,340 7,909,393 10,012,055
Class C................ 636,954 440,726 860,234 831,228 686,109 170,750
Class Y................ 461,676 35,137,207 15,669,686 6,020,214 188,454 2,751,027
Class IS............... 0 0 0 87,810 0 0
-----------------------------------------------------------------------------------------------------------------
Net asset value per
share
Class A................ $ 34.79 $ 20.86 $ 30.72 $ 15.40 $ 13.96 $ 20.68
-----------------------------------------------------------------------------------------------------------------
Class A--Offering price
(based on sales charge
of 4.75%)............. $ 36.52 $ 21.90 $ 32.25 $ 16.17 $ 14.66 $ 21.71
-----------------------------------------------------------------------------------------------------------------
Class B................ $ 34.15 $ 20.68 $ 30.05 $ 15.23 $ 13.97 $ 20.62
-----------------------------------------------------------------------------------------------------------------
Class C................ $ 34.24 $ 20.68 $ 30.05 $ 15.20 $ 13.98 $ 20.60
-----------------------------------------------------------------------------------------------------------------
Class Y................ $ 34.59 $ 20.87 $ 30.90 $ 15.43 $ 13.96 $ 20.68
-----------------------------------------------------------------------------------------------------------------
Class IS............... -- -- -- $ 15.43 -- --
-----------------------------------------------------------------------------------------------------------------
</TABLE>
See Combined Notes to Financial Statements.
72
<PAGE>
EVERGREEN
Growth and Income Funds
Statements of Operations
Year ended July 31, 2000
<TABLE>
<CAPTION>
Growth
Blue Chip Equity and Small Cap Utility Value
Fund Income Fund Income Fund Value Fund Fund Fund
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Investment income
Dividends (net of
foreign withholding
taxes of $61,663,
$370,758, $65,308,
$34,950, $27,952 and
$40,660,
respectively)......... $ 6,185,670 $45,611,761 $ 17,477,697 $ 3,024,194 $ 8,030,460 $ 12,420,006
Interest............... 2,828,551 8,662,071 1,429,600 1,168,880 1,182,352 2,378,102
Securities lending
income................ 289,474 0 203,286 381 14,991 133,893
---------------------------------------------------------------------------------------------------------
Total investment
income................. 9,303,695 54,273,832 19,110,583 4,193,455 9,227,803 14,932,001
---------------------------------------------------------------------------------------------------------
Expenses
Advisory fee........... 4,052,109 9,045,828 13,764,717 1,832,163 1,166,093 3,548,365
Distribution Plan
expenses.............. 5,022,620 1,687,452 8,861,395 1,152,731 1,209,387 3,710,176
Administrative services
fees.................. 524,311 552,889 893,099 98,324 208,003 490,399
Transfer agent fee..... 2,260,857 1,961,915 4,129,071 773,519 851,529 1,611,937
Custodian fee.......... 220,393 308,995 411,462 39,485 70,291 180,410
Other.................. 543,327 285,665 412,754 167,109 192,883 179,017
---------------------------------------------------------------------------------------------------------
Total expenses......... 12,623,617 13,842,744 28,472,498 4,063,331 3,698,186 9,720,304
Less: Expense
reductions............ (59,662) (74,904) (76,944) (27,624) (17,469) (33,783)
Fee waivers.......... 0 (10,198) 0 (2,744) (363,022) 0
---------------------------------------------------------------------------------------------------------
Net expenses........... 12,563,955 13,757,642 28,395,554 4,032,963 3,317,695 9,686,521
---------------------------------------------------------------------------------------------------------
Net investment income
(loss)................ (3,260,260) 40,516,190 (9,284,971) 160,492 5,910,108 5,245,480
---------------------------------------------------------------------------------------------------------
Net realized and
unrealized gains or
losses on securities
and foreign currency
related transactions
Net realized gains or
losses on:
Securities............. 78,896,040 18,700,815 213,104,173 919,228 23,281,552 67,517,238
Foreign currency
related transactions.. 0 (990,245) (17,181) 0 50 787
---------------------------------------------------------------------------------------------------------
Net realized gains on
securities and foreign
currency related
transactions.......... 78,896,040 17,710,570 213,086,992 919,228 23,281,602 67,518,025
---------------------------------------------------------------------------------------------------------
Net change in
unrealized gains or
losses on securities
and foreign currency
related transactions.. 8,810,873 (52,654,764) (110,234,837) (8,734,036) (4,060,888) (113,133,774)
---------------------------------------------------------------------------------------------------------
Net realized and
unrealized gains or
losses on securities
and foreign currency
related transactions.. 87,706,913 (34,944,194) 102,852,155 (7,814,808) 19,220,714 (45,615,749)
---------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
resulting from
operations............ $84,446,653 $ 5,571,996 $ 93,567,184 $(7,654,316) $25,130,822 $(40,370,269)
---------------------------------------------------------------------------------------------------------
</TABLE>
See Combined Notes to Financial Statements.
73
<PAGE>
EVERGREEN
Growth and Income Funds
Statements of Changes in Net Assets
Year Ended July 31, 2000
<TABLE>
<CAPTION>
Growth
Equity and Small Cap
Blue Chip Income Income Value Utility Value
Fund Fund Fund Fund Fund Fund
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Operations
Net investment income
(loss)................ $ (3,260,260) $ 40,516,190 $ (9,284,971) $ 160,492 $ 5,910,108 $ 5,245,480
Net realized gains on
securities and foreign
currency related
transactions.......... 78,896,040 17,710,570 213,086,992 919,228 23,281,602 67,518,025
Net change in
unrealized gains or
losses on securities
and foreign currency
related transactions.. 8,810,873 (52,654,764) (110,234,837) (8,734,036) (4,060,888) (113,133,774)
--------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
resulting from
operations............ 84,446,653 5,571,996 93,567,184 (7,654,316) 25,130,822 (40,370,269)
--------------------------------------------------------------------------------------------------------------------
Distributions to
shareholders from
Net investment income
Class A.............. 0 (1,517,733) 0 (139,162) (4,423,099) (3,741,091)
Class B.............. 0 (6,095,230) 0 (69,660) (1,243,397) (485,194)
Class C.............. 0 (90,224) 0 (14,240) (56,923) (7,481)
Class Y.............. 0 (38,517,092) 0 (163,338) (66,050) (1,024,452)
Class IS............. 0 0 0 0 0 0
Net realized gains
Class A.............. (28,109,712) (1,256,663) (4,598,084) 0 (9,808,607) (55,282,862)
Class B.............. (23,321,638) (6,008,968) (16,932,536) 0 (5,178,058) (39,983,154)
Class C.............. (288,873) (93,940) (628,619) 0 (119,850) (563,611)
Class Y.............. (176,566) (30,650,070) (11,517,842) 0 (187,129) (14,849,499)
Class IS............. 0 0 0 0 0 0
--------------------------------------------------------------------------------------------------------------------
Total distributions to
shareholders....... (51,896,789) (84,229,920) (33,677,081) (386,400) (21,083,113) (115,937,344)
--------------------------------------------------------------------------------------------------------------------
Capital share
transactions
Proceeds from shares
sold.................. 466,453,878 30,819,574 277,918,059 44,289,316 110,944,245 77,460,524
Payment for shares
redeemed.............. (205,368,577) (200,508,033) (758,679,503) (130,420,812) (42,785,764) (317,896,465)
Net asset value of
shares issued in
reinvestment of
distributions......... 47,330,750 75,437,694 31,956,469 262,310 18,113,980 111,097,660
Net asset value of
shares issued in
acquisition........... 0 85,383,028 0 68,433,213 165,782,310 0
--------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
resulting from capital
share transactions.... 308,416,051 (8,867,737) (448,804,975) (17,435,973) 252,054,771 (129,338,281)
--------------------------------------------------------------------------------------------------------------------
Total increase
(decrease) in net
assets............... 340,965,915 (87,525,661) (388,914,872) (25,476,689) 256,102,480 (285,645,894)
Net assets
Beginning of period.... 641,440,091 1,070,659,522 1,812,220,464 250,006,034 166,251,487 932,043,300
--------------------------------------------------------------------------------------------------------------------
End of period.......... $ 982,406,006 $ 983,133,861 $1,423,305,592 $ 224,529,345 $422,353,967 $ 646,397,406
--------------------------------------------------------------------------------------------------------------------
Undistributed
(overdistributed) net
investment income
(loss)................. $ (22,197) $ 3,928,327 $ (76,015) $ (13,330) $ 68,353 $ 58,349
--------------------------------------------------------------------------------------------------------------------
</TABLE>
See Combined Notes to Financial Statements.
74
<PAGE>
EVERGREEN
Growth and Income Funds
Statements of Changes in Net Assets
Year Ended July 31, 1999
<TABLE>
<CAPTION>
Growth
Equity and Small Cap
Blue Chip Income Income Value Utility Value
Fund Fund Fund Fund Fund Fund
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Operations
Net investment income
(loss)................ $ (405,617) $ 39,827,948 $ 739,955 $ 4,374,984 $ 5,016,016 $ 6,696,229
Net realized gains or
losses on securities
and foreign currency
related transactions.. 37,712,909 35,191,732 9,259,355 (23,967,030) 6,752,256 118,989,239
Net change in
unrealized gains on
securities and foreign
currency related
transactions.......... 33,829,162 23,905,207 65,034,177 19,057,835 23,219,707 (10,264,625)
--------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
resulting from
operations............ 71,136,454 98,924,887 75,033,487 (534,211) 34,987,979 115,420,843
--------------------------------------------------------------------------------------------------------------------
Distributions to
shareholders from
Net investment income
Class A.............. (302,117) (590,960) (618,275) (1,241,862) (3,518,061) (4,093,423)
Class B.............. 0 (1,904,614) 0 (1,599,604) (1,359,833) (679,263)
Class C.............. 0 (40,664) 0 (319,899) (16,980) (9,129)
Class Y.............. 0 (38,238,097) (2,594,824) (1,709,875) (101,181) (1,708,800)
Net realized gains
Class A.............. (22,171,083) (1,297,466) (8,009,500) (792,880) (10,191,078) (2,706,113)
Class B.............. (10,585,999) (4,982,320) (27,000,584) (1,601,327) (4,842,643) (1,893,542)
Class C.............. (50,576) (108,434) (1,332,807) (315,684) (52,067) (26,406)
Class Y.............. 0 (79,113,403) (20,777,901) (998,252) (304,419) (926,882)
--------------------------------------------------------------------------------------------------------------------
Total distributions to
shareholders....... (33,109,775) (126,275,958) (60,333,891) (8,579,383) (20,386,262) (12,043,558)
--------------------------------------------------------------------------------------------------------------------
Capital share
transactions
Proceeds from shares
sold.................. 414,184,932 30,217,265 386,163,830 205,428,609 17,451,359 66,555,976
Payment for shares
redeemed.............. (243,648,933) (182,203,597) (792,989,619) (260,520,742) (24,384,302) (239,124,718)
Net asset value of
shares issued in
reinvestment of
distributions......... 29,469,348 114,061,954 57,025,779 7,125,678 17,326,400 10,412,391
Net asset value of
shares issued in
acquisition........... 0 185,281,144 0 0 0 0
--------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
resulting from capital
share transactions.... 200,005,347 147,356,766 (349,800,010) (47,966,455) 10,393,457 (162,156,351)
--------------------------------------------------------------------------------------------------------------------
Total increase
(decrease) in net
assets............... 238,032,026 120,005,695 (335,100,414) (57,080,049) 24,995,174 (58,779,066)
Net assets
Beginning of period.... 403,408,065 950,653,827 2,147,320,878 307,086,083 141,256,313 990,822,366
--------------------------------------------------------------------------------------------------------------------
End of period.......... $ 641,440,091 $1,070,659,522 $1,812,220,464 $ 250,006,034 $166,251,487 $ 932,043,300
--------------------------------------------------------------------------------------------------------------------
Undistributed
(overdistributed) net
investment income...... $ (14,545) $ 1,979,953 $ (55,326) $ (11,613) $ (52,336) $ 70,300
--------------------------------------------------------------------------------------------------------------------
</TABLE>
See Combined Notes to Financial Statements.
75
<PAGE>
Combined Notes to Financial Statements
1. ORGANIZATION
The Evergreen Growth and Income Funds consist of Evergreen Blue Chip Fund
("Blue Chip Fund"), Evergreen Equity Income Fund ("Equity Income Fund") (for-
merly, Evergreen Income and Growth Fund), Evergreen Growth and Income Fund
("Growth and Income Fund"), Evergreen Small Cap Value Fund ("Small Cap Value
Fund"), Evergreen Utility Fund ("Utility Fund") and Evergreen Value Fund
("Value Fund"), (collectively, the "Funds"). Each Fund is a diversified series
of Evergreen Equity Trust (the "Trust"), a Delaware business trust organized on
September 18, 1997. The Trust is an open-end management investment company reg-
istered 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. Additionally,
Small Cap Value Fund offers Class IS 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 distribution fee
than Class A. Class B shares are sold subject to a contingent deferred 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 au-
tomatically convert to Class A shares after seven years. Class B shares pur-
chased prior to January 1, 1997 follow the conversion rights at the time the
shares were purchased. Class C shares are sold subject to a 2.00% contingent
deferred sales charge payable on shares redeemed within one year after the
month of purchase and a 1.00% contingent deferred sales charge if such shares
are redeemed within two years after the month of purchase. Class Y shares are
sold at net asset value and are not subject to contingent deferred sales
charges or distribution fees. Class Y shares are sold only to investment advi-
sory clients of First Union Corporation ("First Union") and its affiliates,
certain institutional investors or Class Y shareholders of record of certain
other funds managed by First Union and its affiliates as of December 30, 1994.
Class IS shares are sold without a front-end sales charge or contingent de-
ferred sales charge but pay an ongoing service fee.
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
for which there has been no sale are valued at the mean between the last re-
ported bid and asked price.
Corporate bonds, U.S. government obligations, mortgage and other asset-backed
securities and other fixed-income securities are valued at prices provided by
an independent pricing service. In determining a price for normal institution-
al-size transactions, the pricing service uses methods based on market transac-
tions for comparable securities and analysis of various relationships between
similar securities which are generally recognized by institutional traders. Se-
curities for which valuations are not available from an independent pricing
service may be valued by brokers who use prices provided by market makers or
estimates of market value obtained from yield data relating to investments or
securities with similar characteristics.
Securities for which market quotations are not readily available, including re-
stricted securities, are valued at fair value as determined in good faith ac-
cording to procedures approved by the Board of Trustees.
Mutual fund shares are valued at the net asset value of each mutual fund.
Short-term investments with remaining maturities of 60 days or less are carried
at amortized cost, which approximates market value.
76
<PAGE>
Combined Notes to Financial Statements (continued)
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, the Funds may transfer uninvested cash balances into a joint trading ac-
count. These balances are invested in one or more repurchase agreements that
are fully collateralized by U.S. Treasury and/or federal agency obligations.
C. Foreign Currency
The books and records of the Funds are maintained in United States (U.S.) dol-
lars. Foreign currency amounts are translated into U.S. dollars as follows:
market value of investments, other assets and liabilities at the daily rate of
exchange; purchases and sales of investments and income and expenses at the
rate of exchange prevailing on the respective dates of such transactions. Net
unrealized foreign exchange gains or losses resulting from changes in foreign
currency exchange rates is a component of net unrealized gains or losses on se-
curities and foreign currency related transactions. Net realized foreign cur-
rency gains or losses on foreign currency related transactions include foreign
currency gains and losses between trade date and settlement date on investment
securities transactions, foreign currency related transactions and the differ-
ence between the amounts of interest and dividends recorded on the books of the
Funds and the amount actually received. The portion of foreign currency gains
or losses related to fluctuations in exchange rates between the initial pur-
chase trade date and subsequent sale trade date is included in realized gains
or losses on securities.
D. Forward Foreign Currency Exchange Contracts
The Funds may enter into forward foreign currency exchange contracts ("forward
contracts") to settle portfolio purchases and sales of securities denominated
in a foreign currency and to hedge certain foreign currency assets or liabili-
ties. Forward contracts are recorded at the forward rate and marked-to-market
daily. Realized gains and losses arising from such transactions are included in
net realized gains or losses on foreign currency related transactions. The
Funds bear the risk of an unfavorable change in the foreign currency exchange
rate underlying the forward contract and are subject to the credit risk that
the other party will not fulfill their obligations under the contract. Forward
contracts involve elements of market risk in excess of the amount reflected in
the Statements of Assets and Liabilities.
E. Securities Lending
In order to generate income and to offset expenses, the Funds may lend portfo-
lio securities to brokers, dealers and other financial organizations. The
Funds' investment advisors 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 business 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 shareholders. A Fund may pay fees
in connection with such loans.
F. Security Transactions and Investment Income
Securities transactions are accounted for no later than one business day after
the trade date. Realized gains and losses are computed on the identified cost
basis. Interest income is recorded on the accrual basis and
77
<PAGE>
Combined Notes to Financial Statements (continued)
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 thereafter when the Fund is made aware of the dividend. Foreign in-
come and capital gains realized on some foreign securities may be subject to
foreign taxes, which are accrued as applicable.
G. Federal Taxes
The Funds have qualified and intend to continue to qualify as regulated invest-
ment companies under the Internal Revenue Code of 1986, as amended (the
"Code"). Thus, the Funds will not incur any federal income tax liability since
they are expected to distribute all of their net investment company taxable in-
come and net capital gains, if any, to their shareholders. The Funds also in-
tend to avoid any excise tax liability by making the required distributions un-
der the Code. Accordingly, no provision for federal taxes is required.
H. Distributions
Distributions from net investment income, if any, for the Funds, except for the
Utility Fund, are declared and paid quarterly. Distributions from net invest-
ment income for Utility Fund are declared and paid monthly. Distributions from
net realized capital gains, if any, are paid at least annually. 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. 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. Reclassifications have been made to the Funds' components
of net assets to reflect income and gains available for distribution (or avail-
able capital loss carryovers, as applicable) under income tax regulations. The
primary permanent differences causing such reclassifications are due to net op-
erating losses, distributions from real estate investment trusts and capital
loss carryforwards assumed as a result of acquisitions. The Blue Chip Fund,
Growth and Income Fund and Value Fund have also utilized earnings and profits
distributed to shareholders on redemption of shares as part of the dividends
paid deduction for income tax purposes.
I. Class Allocations
Income, expenses (other than class specific expenses) and realized and
unrealized gains and losses are pro-rated among the classes based on the rela-
tive net assets of each class. Currently, class specific expenses are limited
to expenses incurred under the Distribution Plans for each class.
3. INVESTMENT ADVISORY AGREEMENT AND OTHER AFFILIATED TRANSACTIONS
Evergreen Investment Management Co. ("EIMC"), an indirect wholly owned subsidi-
ary of First Union National Bank ("FUNB"), is the investment advisor for Blue
Chip Fund. In return for providing investment management services to Blue Chip
Fund, the Fund pays EIMC a management fee that is computed and paid daily. The
management fee for Blue Chip Fund is computed daily by applying percentage
rates, starting at 0.61% and declining to 0.26% per annum as net assets in-
crease, to the average daily net assets of the Fund. Prior to January 3, 2000,
the management fee for the Blue Chip Fund was computed daily by applying per-
centage rates, starting at 0.70% and declining to 0.35% per annum as net assets
increased, to the average daily net assets of the Fund.
78
<PAGE>
Combined Notes to Financial Statements (continued)
Evergreen Asset Management Corp. ("EAMC"), an indirect wholly-owned subsidiary
of FUNB, is the investment advisor for Equity Income Fund, Growth and Income
Fund and Small Cap Value Fund and is paid a management fee that is computed and
paid daily based on each Fund's average daily net assets, in accordance with
the following schedule:
<TABLE>
<CAPTION>
Current Rate Prior to
Rate 1/3/2000
---------------------
<S> <C> <C>
First $750 million....................... 0.90% 1.00%
Next $250 million........................ 0.80 0.90
Over $1 billion.......................... 0.70 0.80
</TABLE>
Lieber & Company, an affiliate of First Union, is the investment sub-advisor to
Equity Income Fund, Growth and Income Fund and Small Cap Value Fund and also
provides brokerage services with respect to substantially all security transac-
tions of the Funds effected on the New York or American Stock Exchanges. For
the year ended July 31, 2000, Equity Income Fund, Growth and Income Fund and
Small Cap Value Fund incurred broker commissions of $712,353, $1,624,351 and
$242,766, respectively, with Lieber & Company. Lieber & Company is reimbursed
by EAMC for providing investment sub-advisory services at no additional expense
to the Funds.
FUNB is the investment advisor to Utility Fund and Value Fund and is paid a
management fee that is computed and paid daily at an annual rate of 0.42% of
each Fund's average daily net assets. Prior to January 3, 2000, the management
fee was computed daily at an annual rate of 0.50% of each Fund's average daily
net assets.
During the year ended July 31, 2000, the amount of investment advisory fees
waived by the investment advisors and the impact on each Fund's annualized ex-
pense ratio represented as a percentage of its average net assets were as fol-
lows:
<TABLE>
<CAPTION>
% of
Fees Average
Waived Net Assets
<S> <C> <C>
--------------
Equity Income Fund.......................... $ 10,198 0.00%
Small Cap Value Fund........................ 2,744 0.00%
Utility Fund................................ 363,022 0.14%
</TABLE>
Evergreen Investment Services ("EIS"), an indirect, wholly-owned subsidiary of
FUNB, is the administrator to the Funds. As administrator, EIS provides the
Funds with facilities, equipment and personnel. Prior to May 1, 2000, The BISYS
Group, Inc. ("BISYS") served as sub-administrator to the Funds and provided the
officers of the Funds. Officers of the Funds and affiliated Trustees receive no
compensation directly from the Funds.
For its services, Utility Fund and Value Fund pay the administrator a fee at
the annual rate of 0.10% of each Fund's average daily net assets. The sub-ad-
ministrator was paid by the administrator out of its fees until the sub-admin-
istration agreement with BISYS was terminated on April 30, 2000. Prior to Janu-
ary 3, 2000, the administrator and sub-administrator for Utility Fund and Value
Fund were entitled to an annual fee based on the combined average daily net as-
sets of the funds administered by EIS for which First Union or its investment
advisory subsidiaries are also the investment advisors. The administration fee
was calculated by applying percentage rates, which started at 0.05% and de-
clined to 0.01% per annum as net assets increased, to the average daily net as-
sets of each Fund. The sub-administration fee was calculated by applying per-
centage rates, which started at 0.01% and declined to 0.004% per annum as net
assets increased, to the average daily net assets of each Fund.
For its services, Blue Chip Fund, Equity Income Fund, Growth and Income Fund
and Small Cap Value Fund pay the administrator a fee at the annual rate of
0.10% of each Fund's average daily net assets. The sub-administration fee was
paid by the investment advisor until the sub-administration agreement with
BISYS was terminated on April 30, 2000. Prior to January 3, 2000, the adminis-
tration and sub-administration fee for each Fund was paid by the investment ad-
visor and was not a Fund expense. However, prior to January 3, 2000, the Blue
Chip Fund reimbursed EIMC for providing certain administration and accounting
expenses.
79
<PAGE>
Combined Notes to Financial Statements (continued)
For the year ended July 31, 2000, Utility Fund and Value Fund paid or accrued
to EIS and BISYS the following amounts for administrative and sub-administra-
tive services:
<TABLE>
<CAPTION>
Administration Sub-administration
Fee Fee
---------------------------------
<S> <C> <C>
Utility Fund................. $202,262 $5,741
Value Fund................... 483,028 7,371
</TABLE>
Evergreen Service Company ("ESC"), an indirect, wholly owned subsidiary of
FUNB, is 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 and Class IS incur distribution fees equal to 0.25% of the
average daily net asset of the class, all of which is used to pay for share-
holder service fees. Class B and Class C 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 expenses
are calculated and paid daily.
During the year ended July 31, 2000, amounts paid or accrued to EDI pursuant to
each Fund's Class A, Class B, Class C and Class IS Distribution Plans were as
follows:
<TABLE>
<CAPTION>
Class A Class B Class C Class IS
<S> <C> <C> <C> <C>
----------------------------------
Blue Chip Fund........ $1,108,348 $3,817,261 $ 97,011 n/a
Equity Income Fund.... 85,001 1,577,528 24,923 n/a
Growth and Income
Fund................. 571,352 7,987,261 302,782 n/a
Small Cap Value Fund.. 124,456 862,208 165,994 73
Utility Fund.......... 468,672 710,367 30,348 n/a
Value Fund............ 1,038,641 2,632,241 39,294 n/a
</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. ACQUISITIONS
During the year ended July 31, 2000, several of the Funds had acquired various
open-end management investment companies registered under the 1940 Act.
In addition, on July 30, 1999, Equity Income Fund (formerly, Evergreen Income
and Growth Fund) acquired substantially all of the net assets and assumed cer-
tain liabilities of Evergreen American Retirement Fund in an exchange of Class
A, Class B, Class C and Class Y shares of Income and Growth Fund.
On March 10, 2000, Utility Fund acquired substantially all the assets and as-
sumed certain liabilities of Evergreen America's Utility Fund in exchange for
Class A shares of Utility Fund.
On July 21, 2000, Small Cap Value Fund acquired substantially all the assets
and assumed certain liabilities of Evergreen Select Small Company Value Fund in
exchange for Class Y and Class IS shares of Small Cap Value Fund.
On July 21, 2000, Evergreen Income and Growth Fund acquired substantially all
the assets and assumed certain liabilities of Evergreen Equity Income Fund in
exchange for Class A, Class B, Class C and Class Y shares
80
<PAGE>
Combined Notes to Financial Statements (continued)
of Evergreen Income and Growth Fund. Immediately after the acquisition, Ever-
green Income and Growth Fund was renamed Evergreen Equity Income 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
Assets Shares Unrealized Net Assets after
Acquiring Fund Acquired Fund Acquired Issued Appreciation Acquisition
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Evergreen Income and Evergreen American Retirement Fund $185,281,144 $ 8,258,910 $20,212,515 $1,071,373,242
Growth Fund*
Utility Fund Evergreen America's Utility Fund 165,782,310 11,152,446 33,482,175 388,720,065
Small Cap Value Fund Evergreen Select Small Company Value Fund 68,433,213 4,390,281 4,468,589 228,024,824
Evergreen Income and Evergreen Equity Income Fund* 85,383,028 4,043,871 17,264,426 1,005,299,970
Growth Fund*
</TABLE>
* Immediately following the July 21, 2000 acquisition, the Evergreen Income and
Growth Fund was renamed the Evergreen Equity Income Fund.
6. CAPITAL SHARE TRANSACTIONS
The Funds have an unlimited number of shares of beneficial interest with $0.001
par value authorized. Shares of beneficial interest of the Funds are currently
divided into Class A, Class B, Class C, Class Y and Class IS. Transactions in
shares of the Funds were as follows:
Blue Chip Fund
<TABLE>
<CAPTION>
Year Ended Year Ended
July 31, 2000 July 31, 1999
------------------------- -------------------------
Shares Amount Shares Amount
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Shares
Shares sold............. 3,346,220 $ 117,138,997 7,069,269 $ 215,936,462
Automatic conversion of
Class B shares to Class
A shares............... 826,056 29,824,674 0 0
Shares redeemed......... (3,096,690) (107,656,914) (5,479,684) (162,273,843)
Shares issued in
reinvestment of
distributions.......... 721,250 24,746,076 682,121 19,382,250
-------------------------------------------------------------------------------
Net increase............ 1,796,836 64,052,833 2,271,706 73,044,869
-------------------------------------------------------------------------------
Class B Shares
Shares sold............. 8,193,633 281,540,924 6,218,762 192,571,481
Automatic conversion of
Class B shares to Class
A shares............... (826,056) (29,824,674) 0 0
Shares redeemed......... (1,882,548) (63,868,985) (2,617,336) (78,544,225)
Shares issued in
reinvestment of
distributions.......... 654,105 22,134,919 355,147 10,036,524
-------------------------------------------------------------------------------
Net increase............ 6,139,134 209,982,184 3,956,573 124,063,780
-------------------------------------------------------------------------------
Class C Shares
Shares sold............. 598,381 20,868,986 157,200 4,882,919
Shares redeemed......... (60,484) (2,098,642) (93,639) (2,830,715)
Shares issued in
reinvestment of
distributions.......... 8,052 273,190 1,785 50,574
-------------------------------------------------------------------------------
Net increase............ 545,949 19,043,534 65,346 2,102,778
-------------------------------------------------------------------------------
Class Y Shares
Shares sold............. 486,708 17,080,297 24,198 794,070
Shares redeemed......... (54,412) (1,919,363) (5) (150)
Shares issued in
reinvestment of
distributions.......... 5,187 176,566 0 0
-------------------------------------------------------------------------------
Net increase............ 437,483 15,337,500 24,193 793,920
-------------------------------------------------------------------------------
Net increase............ $ 308,416,051 $ 200,005,347
-------------------------------------------------------------------------------
</TABLE>
81
<PAGE>
Combined Notes to Financial Statements (continued)
Equity Income Fund (Formerly, Evergreen Income and Growth Fund)
<TABLE>
<CAPTION>
Year Ended Year Ended
July 31, 2000 July 31, 1999
------------------------- -------------------------
Shares Amount Shares Amount
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Shares
Shares sold............. 407,360 $ 8,852,655 546,531 $ 12,209,031
Automatic conversion of
Class B shares to Class
A shares............... 197,493 4,409,729 0 0
Shares redeemed......... (863,498) (18,764,153) (692,292) (15,388,197)
Shares issued in
reinvestment of
distributions.......... 121,410 2,614,701 84,216 1,766,406
Shares issued in
acquisition of: Equity
Income Fund............ 1,560,246 33,115,497 0 0
Evergreen American
Retirement Fund........ 0 0 996,586 22,495,315
-------------------------------------------------------------------------------
Net increase............ 1,423,011 30,228,429 935,041 21,082,555
-------------------------------------------------------------------------------
Class B Shares
Shares sold............. 199,032 4,300,452 267,996 5,756,610
Automatic conversion of
Class B shares to Class
A shares............... (199,139) (4,409,728) 0 0
Shares redeemed......... (2,342,320) (50,318,020) (684,457) (14,490,566)
Shares issued in
reinvestment of
distributions.......... 535,784 11,442,783 307,396 6,393,524
Shares issued in
acquisition of: Equity
Income Fund............ 2,138,594 45,007,185 0 0
Evergreen American
Retirement Fund........ 0 0 6,014,738 134,624,702
-------------------------------------------------------------------------------
Net increase
(decrease)............. 331,951 6,022,672 5,905,673 132,284,270
-------------------------------------------------------------------------------
Class C Shares
Shares sold............. 25,324 550,745 8,976 194,095
Shares redeemed......... (43,443) (929,456) (24,103) (510,097)
Shares issued in
reinvestment of
distributions.......... 7,751 165,465 6,072 126,280
Shares issued in
acquisition of: Equity
Income Fund............ 339,299 7,138,634 0 0
Evergreen American
Retirement Fund........ 0 0 66,207 1,481,914
-------------------------------------------------------------------------------
Net increase
(decrease)............. 328,931 6,925,388 57,152 1,292,192
-------------------------------------------------------------------------------
Class Y Shares
Shares sold............. 583,352 12,705,993 568,224 12,057,529
Shares redeemed......... (5,810,791) (126,086,676) (7,163,498) (151,814,737)
Shares issued in
reinvestment of
distributions.......... 2,842,240 61,214,745 5,039,388 105,775,744
Shares issued in
acquisition of: Equity
Income Fund............ 5,732 121,712 0 0
Evergreen American
Retirement Fund........ 0 0 1,181,379 26,679,213
-------------------------------------------------------------------------------
Net increase
(decrease)............. (2,379,467) (52,044,226) (374,507) (7,302,251)
-------------------------------------------------------------------------------
Net decrease............ $ (8,867,737) $ 147,356,766
-------------------------------------------------------------------------------
</TABLE>
Growth and Income Fund
<TABLE>
<CAPTION>
Year Ended Year Ended
July 31, 2000 July 31, 1999
------------------------- -------------------------
Shares Amount Shares Amount
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Shares
Shares sold............. 5,994,860 $ 176,810,399 6,356,759 $ 181,231,854
Automatic conversion of
Class B shares to Class
A shares............... 434,475 13,908,389 71,639 2,052,789
Shares redeemed......... (8,296,875) (246,957,350) (8,431,174) (239,858,978)
Shares issued in
reinvestment of
distributions.......... 146,826 4,392,976 300,493 8,412,371
-------------------------------------------------------------------------------
Net decrease............ (1,720,714) (51,845,586) (1,702,283) (48,161,964)
-------------------------------------------------------------------------------
Class B Shares
Shares sold............. 902,060 26,704,700 4,273,030 116,938,483
Automatic conversion of
Class B shares to Class
A shares............... (434,475) (13,908,389) (72,390) (2,052,789)
Shares redeemed......... (8,103,184) (240,218,978) (9,163,377) (254,977,395)
Shares issued in
reinvestment of
distributions.......... 544,457 16,017,281 945,090 26,226,276
-------------------------------------------------------------------------------
Net decrease............ (7,091,142) (211,405,386) (4,017,647) (113,865,425)
-------------------------------------------------------------------------------
Class C Shares
Shares sold............. 171,225 5,093,534 414,303 11,348,877
Shares redeemed......... (581,170) (17,172,838) (942,556) (26,271,690)
Shares issued in
reinvestment of
distributions.......... 16,567 487,415 45,443 1,261,465
-------------------------------------------------------------------------------
Net decrease............ (393,378) (11,591,889) (482,810) (13,661,348)
-------------------------------------------------------------------------------
Class Y Shares
Shares sold............. 1,835,436 55,401,037 2,753,486 76,644,616
Shares redeemed......... (7,923,847) (240,421,948) (9,565,395) (271,881,556)
Shares issued in
reinvestment of
distributions.......... 368,014 11,058,797 753,230 21,125,667
-------------------------------------------------------------------------------
Net decrease............ (5,720,397) (173,962,114) (6,058,679) (174,111,273)
-------------------------------------------------------------------------------
Net decrease............ $(448,804,975) $(349,800,010)
-------------------------------------------------------------------------------
</TABLE>
82
<PAGE>
Combined Notes to Financial Statements (continued)
Small Cap Value Fund
<TABLE>
<CAPTION>
Year Ended Year Ended
July 31, 2000 (a) July 31, 1999
------------------------ -------------------------
Shares Amount Shares Amount
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Shares
Shares sold............... 1,914,086 $ 28,692,368 10,088,863 $ 146,506,778
Automatic conversion of
Class B shares to Class A
shares................... 91,548 1,344,291 122,150 1,811,086
Shares redeemed........... (2,706,511) (40,096,745) (9,965,619) (143,998,401)
Shares issued in
reinvestment of
distributions............ 8,995 134,298 136,847 1,949,647
--------------------------------------------------------------------------------
Net increase (decrease)... (691,882) (9,925,788) 382,241 6,269,110
--------------------------------------------------------------------------------
Class B Shares
Shares sold............... 463,178 6,773,147 2,288,743 33,166,258
Automatic conversion of
Class B shares to Class A
shares................... (92,207) (1,344,291) (122,803) (1,811,086)
Shares redeemed........... (2,972,260) (43,544,988) (3,528,826) (50,084,066)
Shares issued in
reinvestment of
distributions............ 4,387 65,209 213,282 3,057,499
--------------------------------------------------------------------------------
Net decrease.............. (2,596,902) (38,050,923) (1,149,604) (15,671,395)
--------------------------------------------------------------------------------
Class C Shares
Shares sold............... 164,725 2,409,075 709,408 10,225,143
Shares redeemed........... (811,365) (11,836,726) (947,075) (13,384,026)
Shares issued in
reinvestment of
distributions............ 718 10,680 41,741 597,766
--------------------------------------------------------------------------------
Net decrease.............. (645,922) (9,416,971) (195,926) (2,561,117)
--------------------------------------------------------------------------------
Class Y Shares
Shares sold............... 337,149 5,054,124 1,069,945 15,530,430
Shares redeemed........... (2,277,556) (33,598,062) (3,645,558) (53,054,249)
Shares issued in
reinvestment of
distributions............ 3,491 52,123 105,065 1,520,766
Shares issued in
acquisition of Evergreen
Select Small Company
Value Fund............... 4,303,541 67,081,573 0 0
--------------------------------------------------------------------------------
Net increase (decrease)... 2,366,625 38,589,758 (2,470,548) (36,003,053)
--------------------------------------------------------------------------------
Class IS Shares
Shares sold............... 1,070 16,311
Shares redeemed........... 0 0
Shares issued in
reinvestment of
distributions............ 0 0
Shares issued in
acquisition of Evergreen
Select Small Company
Value Fund............... 86,740 1,351,640
--------------------------------------------------------------------------------
Net increase.............. 87,810 1,367,951
--------------------------------------------------------------------------------
Net decrease.............. $(17,435,973) $ (47,966,455)
--------------------------------------------------------------------------------
(a) For Class IS Shares, for the period from June 30, 2000 (commencement of
class operations) to July 31, 2000.
Utility Fund
<CAPTION>
Year Ended Year Ended
July 31, 2000 July 31, 1999
------------------------ -------------------------
Shares Amount Shares Amount
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Shares
Shares sold............... 2,133,626 $ 30,193,005 429,844 $ 5,133,429
Automatic conversion of
Class B Shares to Class A
Shares................... 562,558 7,873,019 11,373 126,409
Shares redeemed........... (1,724,014) (24,026,429) (1,117,587) (13,062,066)
Shares issued in
reinvestment of
distributions............ 910,347 11,880,407 1,006,678 11,457,282
Shares issued in
acquisition of Evergreen
America's Utility Fund... 11,152,446 165,782,310 0 0
--------------------------------------------------------------------------------
Net increase.............. 13,034,963 191,702,312 330,308 3,655,054
--------------------------------------------------------------------------------
Class B Shares
Shares sold............... 4,946,770 69,726,181 704,486 8,209,032
Automatic conversion of
Class B Shares to Class A
Shares................... (562,690) (7,873,019) (11,366) (126,409)
Shares redeemed........... (1,197,763) (16,519,375) (650,786) (7,545,094)
Shares issued in
reinvestment of
distributions............ 457,128 5,901,081 502,546 5,718,575
--------------------------------------------------------------------------------
Net increase.............. 3,643,445 51,234,868 544,880 6,256,104
--------------------------------------------------------------------------------
Class C Shares
Shares sold............... 692,664 9,816,862 162,138 1,808,980
Shares redeemed........... (84,513) (1,168,749) (140,732) (1,555,150)
Shares issued in
reinvestment of
distributions............ 9,634 126,381 5,627 64,145
--------------------------------------------------------------------------------
Net increase.............. 617,785 8,774,494 27,033 317,975
--------------------------------------------------------------------------------
Class Y Shares
Shares sold............... 85,509 1,208,198 182,271 2,173,509
Shares redeemed........... (78,268) (1,071,211) (168,716) (2,095,583)
Shares issued in
reinvestment of
distributions............ 16,052 206,110 7,586 86,398
--------------------------------------------------------------------------------
Net increase.............. 23,293 343,097 21,141 164,324
--------------------------------------------------------------------------------
Net increase.............. $252,054,771 $ 10,393,457
--------------------------------------------------------------------------------
</TABLE>
83
<PAGE>
Combined Notes to Financial Statements (continued)
Value Fund
<TABLE>
<CAPTION>
Year Ended Year Ended
July 31, 2000 July 31, 1999
------------------------- -------------------------
Shares Amount Shares Amount
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Shares
Shares sold............. 759,200 $ 16,395,105 1,304,364 $ 30,874,288
Automatic conversion of
Class B shares to Class
A shares............... 2,053,494 42,511,579 0 0
Shares redeemed......... (5,757,644) (121,536,123) (4,351,247) (100,747,544)
Shares issued in
reinvestment of
distributions.......... 2,640,004 56,176,037 285,275 6,540,493
-------------------------------------------------------------------------------
Net decrease............ (304,946) (6,453,402) (2,761,608) (63,332,763)
-------------------------------------------------------------------------------
Class B Shares
Shares sold............. 448,052 9,953,105 1,041,242 24,036,781
Automatic conversion of
Class B shares to Class
A shares............... (2,058,678) (42,511,579) 0 0
Shares redeemed......... (3,600,050) (75,831,400) (2,488,104) (57,458,861)
Shares issued in
reinvestment of
distributions.......... 1,850,597 39,240,340 111,928 2,520,116
-------------------------------------------------------------------------------
Net decrease............ (3,360,079) (69,149,534) (1,334,934) (30,901,964)
-------------------------------------------------------------------------------
Class C Shares
Shares sold............. 36,351 768,645 70,058 1,628,040
Shares redeemed......... (78,554) (1,655,240) (115,631) (2,643,004)
Shares issued in
reinvestment of
distributions.......... 25,959 549,897 1,529 34,419
-------------------------------------------------------------------------------
Net decrease............ (16,244) (336,698) (44,044) (980,545)
-------------------------------------------------------------------------------
Class Y Shares
Shares sold............. 385,384 7,832,090 444,392 10,016,867
Shares redeemed......... (3,642,618) (76,362,123) (3,438,601) (78,275,309)
Shares issued in
reinvestment of
distributions.......... 710,636 15,131,386 57,625 1,317,363
-------------------------------------------------------------------------------
Net decrease............ (2,546,598) (53,398,647) (2,936,584) (66,941,079)
-------------------------------------------------------------------------------
Net decrease............ $(129,338,281) $(162,156,351)
-------------------------------------------------------------------------------
</TABLE>
7. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of investment securities (excluding
short-term securities) were as follows for the year ended July 31, 2000:
<TABLE>
<CAPTION>
Cost of Purchases Proceeds from Sales
-------------------------------------
<S> <C> <C>
Blue Chip Fund............ $1,458,123,262 $1,245,153,940
Growth and Income Fund.... 970,106,902 1,440,764,925
Small Cap Value Fund...... 256,382,767 292,229,542
Utility Fund.............. 350,356,589 169,813,451
Value Fund................ 614,762,513 880,961,834
</TABLE>
For the Equity Income Fund, cost of purchases of U.S. government and non-U.S.
government securities were $15,186,344 and $1,052,586,881, respectively; the
Fund's proceeds from sale of U.S. government and non-U.S. government securities
were $8,597,052 and $1,064,898,995, respectively, for the year ended July 31,
2000.
The following Funds loaned securities during the year ended July 31, 2000 to
certain brokers who paid the Funds a negotiated lender's fee. These fees are
included in interest income. At July 31, 2000, the value of the securities on
loan, the value of collateral (including accrued interest) and the amount of
income earned from securities lending were as follows:
<TABLE>
<CAPTION>
Value of Securities
Securities Value of Lending
on loan Collateral Income
<S> <C> <C> <C>
--------------------------------
Blue Chip Fund.............. $13,365,081 $13,770,741 $289,474
Equity Income Fund.......... 72,543,920 74,714,635 0
Growth and Income Fund...... 81,853,118 81,972,379 203,286
Small Cap Value Fund........ 31,467,467 32,360,616 381
Utility Fund................ 81,184,327 84,203,200 14,991
Value Fund.................. 23,628,841 24,312,959 133,893
</TABLE>
84
<PAGE>
Combined Notes to Financial Statements (continued)
On July 31, 2000, the composition of unrealized appreciation and depreciation
of securities based on the aggregate cost of securities for federal income tax
purposes was as follows:
<TABLE>
<CAPTION>
Gross Gross Net Unrealized
Unrealized Unrealized Appreciation
Tax Cost Appreciation Depreciation (Depreciation)
<S> <C> <C> <C> <C>
------------------------------------------------------
Blue Chip
Fund.......... $ 876,097,532 $152,149,439 $(32,274,017) $119,875,422
Equity Income
Fund.......... 1,009,243,811 137,916,386 (93,294,484) 44,621,902
Growth and
Income Fund... 1,123,404,589 448,878,247 (70,491,474) 378,386,773
Small Cap Value
Fund.......... 250,782,921 25,496,849 (21,105,460) 4,391,389
Utility Fund... 433,170,418 93,271,273 (23,537,467) 69,733,806
Value Fund..... 578,962,752 113,149,945 (25,784,721) 87,365,224
</TABLE>
As of July 31, 2000, Small Cap Value Fund had capital loss carryovers for fed-
eral income tax purposes of $3,027,415, $15,263,469 and $20,599,292, expiring
in July 2006, 2007 and 2008, respectively. Part of the capital loss carryovers
were assumed as a result of an acquisition. As such, $17,207,625 is subject to
certain limitations pursuant to Federal tax regulations.
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. The
Small Cap Value Fund has incurred and will elect to defer post October losses
of $1,123,785.
8. EXPENSE REDUCTIONS
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 Funds have also entered into
brokerage/service arrangements with specific brokers who paid a portion of the
Fund's expenses. For the year ended July 31, 2000 the amount of expense reduc-
tions received by each Fund and the impact of the total expense reductions on
each Fund's expense ratio represented as a percentage of its average daily net
assets were as follows:
<TABLE>
<CAPTION>
Expense % of Average
Offset Brokerage Total Expense Daily Net
Arrangements Transactions Reductions Assets
----------------------------------------------------
<S> <C> <C> <C> <C>
Blue Chip Fund.. $44,904 $14,758 $59,662 0.01%
Equity Income
Fund........... 66,604 8,300 74,904 0.01
Growth and
Income Fund.... 74,577 2,367 76,944 0.01
Small Cap Value
Fund........... 20,423 7,201 27,624 0.01
Utility Fund.... 17,469 0 17,469 0.01
Value Fund...... 33,783 0 33,783 0.00
</TABLE>
9. DEFERRED TRUSTEES' FEES
Each Independent Trustee of each Fund may defer any or all compensation related
to performance of their duties as Trustees. The Trustees' deferred balances are
allocated to deferral accounts, which are included in the accrued expenses for
the Funds. The investment performance of the deferral accounts are based on the
investment performance of certain Evergreen Funds. Any gains earned or losses
incurred in the deferral accounts are reported in the Fund's Trustees' fees and
expenses. At the election of the Trustees, the deferral account will be paid
either in one lump sum or in quarterly installments for up to ten years.
10. FINANCING AGREEMENTS
On July 27, 1999, certain Evergreen Funds and a group of banks (the "Lenders")
entered into a credit agreement. Under this agreement, the Lenders provided an
unsecured revolving credit commitment in the aggregate amount of $1.050 bil-
lion. The credit facility was allocated, under the terms of the financing
agreement, among the Lenders. The credit facility was accessed by the Funds for
temporary or emergency purposes to fund the redemption of their shares or for
general working capital purposes as permitted by each Fund's borrowing restric-
tions. Borrowings under this facility bore interest at 0.75% per annum above
the Federal Funds rate (1.50% per annum above the Federal Funds rate during the
period from and including December 1, 1999
85
<PAGE>
Combined Notes to Financial Statements (continued)
through and including January 31, 2000). A commitment fee of 0.10% per annum
was incurred on the average daily unused portion of the revolving credit com-
mitment. The commitment fee was 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 Bank and Trust Company
("State Street") served as paying agent for the funds and as paying agent was
entitled to a fee of $20,000 per annum which was allocated to all the funds.
On July 25, 2000, this agreement was renewed, amended and restated among cer-
tain Evergreen Funds and the Lenders. Under this renewed agreement, the Lenders
provide an unsecured revolving credit commitment in the aggregate amount of
$755 million. The credit facility is allocated, under the terms of the financ-
ing agreement, among the Lenders. The credit facility is accessed by the Funds
to temporarily finance the purchase or sale of securities for prompt delivery,
including funding redemption of their shares, as permitted by each Fund's bor-
rowing restrictions. Borrowings under this facility bear interest at 0.50% per
annum above the Federal Funds rate. A commitment fee of 0.10% per annum contin-
ues to be incurred on the average daily unused portion of the revolving credit
commitment and is allocated to all funds. For its assistance in renewing this
financing agreement, First Union Capital Markets Corp. was paid a one-time ar-
rangement fee of $150,000. State Street continues as paying agent for the funds
and receives a fee of $20,000 per annum which is allocated to all the funds.
During the year ended July 31, 2000, the Funds had no significant borrowings
under the agreements.
11. CONCENTRATION OF RISK
The Funds may invest a substantial portion of assets in an industry or sector
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 industry
or sector.
86
<PAGE>
Independent Auditors Report
Board of Trustees and Shareholders
Evergreen Equity Trust
We have audited the accompanying statements of assets and liabilities, includ-
ing the schedules of investments of the Evergreen Blue Chip Fund, Evergreen Eq-
uity Income Fund (formerly Evergreen Income and Growth Fund), Evergreen Growth
and Income Fund, Evergreen Small Cap Value Fund, Evergreen Utility Fund and Ev-
ergreen Value Fund, portfolios of Evergreen Equity Trust, as of July 31, 2000,
and the related statements of operations for the year then ended, statements of
changes in net assets for each of the years in the two-year period then ended,
and the financial highlights for each of the years or periods in the five-year
period then ended. These financial statements and financial highlights are the
responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our au-
dits.
We conducted our audits in accordance with auditing standards generally ac-
cepted in the United States of America. Those standards require that we plan
and perform our audit to obtain reasonable assurance about whether the finan-
cial statements and financial highlights are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation
of securities owned as of July 31, 2000 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 presentation. We believe that our audits provide a reason-
able basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Ever-
green Blue Chip Fund, Evergreen Equity Income Fund, Evergreen Growth and Income
Fund, Evergreen Small Cap Value Fund, Evergreen Utility Fund and Evergreen
Value Fund as of July 31, 2000, the results of their operations, changes in
their net assets and financial highlights for each of the years or periods de-
scribed above in conformity with accounting principles generally accepted in
the United States of America.
/s/ KPMG LLP
Boston, Massachusetts
September 8, 2000
87
<PAGE>
Additional Information (unaudited)
FEDERAL TAX STATUS OF DISTRIBUTIONS
Pursuant to section 852 of the Internal Revenue Code, the Funds have designated
the following amounts as long-term capital gain distributions for the year
ended July 31, 2000:
<TABLE>
<CAPTION>
Aggregate Per share
------------ ---------
<S> <C> <C>
Blue Chip Fund........................... $ 57,073,197 $2.586
Equity Income Fund....................... 38,009,641 0.860
Growth and Income Fund................... 55,738,420 1.074
Small Cap Value Fund..................... 0 0.000
Utility Fund............................. 11,486,420 0.887
Value Fund............................... 118,886,749 3.372
</TABLE>
For corporate shareholders, the following percentages of ordinary income divi-
dends paid during the fiscal year ended July 31, 2000 qualified for the divi-
dends received deductions:
<TABLE>
<S> <C>
Blue Chip Fund............................................ 0.00%
Equity Income Fund........................................ 65.08
Growth and Income Fund.................................... 100.00
Small Cap Value Fund...................................... 100.00
Utility Fund.............................................. 60.99
Value Fund................................................ 100.00
</TABLE>
SPECIAL MEETING OF SHAREHOLDERS
On July 14, 2000, a Special Meeting of Shareholders for Equity Income Fund was
held to consider a number of proposals. On April 28, 2000, the record date for
the meeting, the net assets eligible to be voted, the net assets voted, and the
percentage of record date net assets were $89,563,173, $29,585,580, and 33.033%
respectively.
1. To approve an Agreement and Plan or Reorganization whereby Evergreen Income
and Growth Fund, a series of Evergreen Equity Trust, will (i) acquire all of
the assets of Equity Income Fund in exchange for shares of Evergreen Income
and Growth Fund; and (ii) assume the identified liabilities of Equity Income
Fund.
<TABLE>
<CAPTION>
Percentage
Net assets of net
voted assets voted
----------- ------------
<S> <C> <C>
Affirmative............................ $26,790,610 90.553%
Against................................ 982,468 3.321
Abstain................................ 1,812,502 6.126
----------- -------
Total................................. $29,585,580 100.000%
=========== =======
</TABLE>
2. To consider and vote upon such other matters as may properly come before
said meeting or any adjournments thereof.
<TABLE>
<CAPTION>
Percentage
Net assets of net
voted assets voted
----------- ------------
<S> <C> <C>
Affirmative............................ $26,253,541 88.738%
Against................................ 946,079 3.197
Abstain................................ 2,385,959 8.065
----------- -------
Total................................. $29,585,580 100.000%
=========== =======
</TABLE>
88
<PAGE>
Evergreen Funds
<TABLE>
<CAPTION>
<S> <C> <C>
Money Market Funds Short and Intermediate Domestic Growth Funds
Florida Municipal Money Market Fund Bond Funds Aggressive Growth Fund
Money Market Fund Intermediate Term Bond Fund Capital Growth Fund
Municipal Money Market Fund Short-Duration Income Fund Evergreen Fund
New Jersey Municipal Money Market Fund Growth Fund
Pennsylvania Municipal Money Market Fund Large Company Growth Fund
Treasury Money Market Fund Intermediate and Long Term Masters Fund
Bond Funds Omega Fund
State Municipal Bond Funds Diversified Bond Fund Small Company Growth Fund
Connecticut Municipal Bond Fund High Yield Bond Fund Special Equity Fund
Florida High Income Municipal Bond Fund Quality Income Fund Stock Selector Fund
Florida Municipal Bond Fund Strategic Income Fund Tax Strategic Equity Fund
Georgia Municipal Bond Fund U.S. Government Fund
Maryland Municipal Bond Fund Sector Funds
New Jersey Municipal Bond Fund Balanced Funds Health Care Fund
North Carolina Municipal Bond Fund Balanced Fund Technology Fund
Pennsylvania Municipal Bond Fund Foundation Fund
South Carolina Municipal Bond Fund Tax Strategic Foundation Fund Global & International
Virginia Municipal Bond Fund Funds
Growth & Income Funds Emerging Markets Growth Fund
Blue Chip Fund Global Leaders Fund
National Municipal Equity Income Fund Global Opportunities Fund
Bond Funds Equity Index Fund International Growth Fund
High Grade Municipal Bond Fund Growth and Income Fund Latin America Fund
High Income Municipal Bond Fund Small Cap Value Fund Perpetual Global Fund
Municipal Bond Fund Utility Fund Perpetual International Fund
Short Intermediate Municipal Fund Value Fund Precious Metals Fund
Express Line
800.346.3858
Investor Services
800.343.2898
www.evergreen-funds.com
</TABLE>
27745
543691 9/2000
[LOGO OF EVERGREEN FUNDS] -------------
200 Berkeley Street PRSRT STD
Boston, MA 02116 U.S. POSTAGE
PAID
LANCASTER, PA
PERMIT NO. 11
-------------
