<PAGE>
Annual Report
as of March 31, 2000
Evergreen Balanced Funds
[LOGO OF EVERGREEN FUNDS]
[LOGO OF MUTUAL FUND
SERVICE AWARD]
<PAGE>
Table of Contents
Letter to Shareholders .................................................... 1
Evergreen Balanced Fund
Fund at a Glance ........................................................ 2
Portfolio Manager Interview ............................................. 3
Evergreen Foundation Fund
Fund at a Glance ........................................................ 7
Portfolio Manager Interview ............................................. 8
Evergreen Tax Strategic Foundation Fund
Fund at a Glance ........................................................ 11
Portfolio Manager Interview ............................................. 12
Financial Highlights
Evergreen Balanced Fund ................................................. 15
Evergreen Foundation Fund ............................................... 17
Evergreen Tax Strategic Foundation Fund ................................. 19
Schedule of Investments
Evergreen Balanced Fund ................................................. 21
Evergreen Foundation Fund ............................................... 28
Evergreen Tax Strategic Foundation Fund ................................. 31
Combined Notes to Schedules of Investments ................................ 36
Statements of Assets and Liabilities ...................................... 37
Statements of Operations .................................................. 38
Statements of Changes in Net Assets ....................................... 39
Combined Notes to Financial Statements .................................... 41
Independent Auditors' Report .............................................. 50
Additional Information .................................................... 51
- --------------------------------------------------------------------------------
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
----------------------
May 2000
[PHOTO]
William M. Ennis
President and CEO
Dear Evergreen Shareholders,
We are pleased to provide the Evergreen Balanced Funds annual report, which
covers the twelvemonth period ended March 31, 2000.
U.S. Markets Experience Volatility
During the past twelve months, U.S. equity markets experienced significant ups
and downs. Technology, communications and biotechnology stocks reigned supreme
during the last six months only to undergo a volatile environment during the
last three months of the period. While these sectors experienced sharp
corrections late in the period, they remain favored sectors.
The Federal Reserve Board increased interest rates five 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 Fed'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 will continue to act
aggressively to contain inflation. We remain cautiously optimistic about
continued growth in the markets.
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.
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.
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
Balanced Fund
Fund at a Glance as of March 31, 2000
"Within technology,we have focused primarily on a core of high quality,
established companies that benefit from the major trends in the economy,the
build-out of the internet and the growth in electronic business-to-business
commerce."
Portfolio
Management
----------
[PHOTO] [PHOTO]
Patricia Bannan, CFA Gary E. Pzegeo, CFA
Tenure: November 1999 Tenure: January 1999
- --------------------------------------------------------------------------------
CURRENT INVESTMENT STYLE1
- --------------------------------------------------------------------------------
[STYLE BOX]
Morningstar's Style Box is based on a portfolio date as of 3/31/2000.
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.
[STYLE BOX]
The Fixed-Income Style Box placement is based on a fund's average effective
maturity or duration and the average credit rating of the bond portfolio.
1Source: 2000 Morningstar, Inc.
2Past 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. Investment return and principal value of
an investment 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.
Historical performance shown for Classes A, C, and Y prior to their inception is
based on the performance of Class B, the original class offered. These
historical returns for Classes A and Y have been adjusted to eliminate the
effect of the higher 12b-1 fees applicable to Class B. The 12b-1 fees 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 9/11/1935 Class A Class B Class C Class Y
Class Inception Date 1/20/1998 9/11/1935 1/22/1998 1/26/1998
Average Annual Returns*
1 year with sales charge 8.50% 8.18% 11.11% n/a
1 year w/o sales charge 13.89% 13.06% 13.06% 14.21%
5 years 15.86% 15.96% 16.15% 17.30%
10 years 12.23% 11.91% 11.88% 13.06%
Maximum Sales Charge 4.75% 5.00% 2.00% n/a
Front End CDSC CDSC
30-day SEC Yield 2.43% 1.82% 1.82% 2.80%
12-month income dividends
per share $0.28 $0.20 $0.20 $0.31
12-month capital gain
distributions per share $1.45 $1.45 $1.45 $1.45
* Adjusted for maximum applicable sales charge unless noted.
- --------------------------------------------------------------------------------
LONG TERM GROWTH
- --------------------------------------------------------------------------------
[GRAPH]
Consumer Price Lehman Brothers S & P 500 Evergreen
Index -US Gov/Corp Composite Balanced B
3/31/90 10,000 10,000 10,000 10,000
3/31/91 10,490 11,249 11,441 11,036
3/31/92 10,824 12,529 12,705 12,226
3/31/93 11,158 14,321 14,639 13,568
3/31/94 11,437 14,718 14,855 13,661
3/31/95 11,764 15,392 17,168 14,559
3/31/96 12,098 17,073 22,679 17,867
3/31/97 12,432 17,834 27,175 20,146
3/31/98 12,603 20,045 40,218 25,542
3/31/99 12,821 21,360 47,648 27,254
3/31/00 13,219 21,717 56,194 30,813
Comparison of a $10,000 investment in Evergreen Balanced Fund Class B shares2,
versus a similar investment in the Standard & Poor's 500 Index (S&P 500), the
Lehman Brothers Government/Corporate Bond Index (LBGCBI), and the Consumer Price
Index (CPI).
The S&P 500 and the LBGCBI are unmanaged indices and do not include transaction
costs associated with buying and selling securities nor any 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.
The Fund's investment objective is non-fundamental and may be changed without
the vote of the Fund's shareholders.
U.S. government guarantees apply only to the underlying securities of the Fund's
portfolio and not to the Fund's shares.
All data is as of March 31, 2000 and subject to change.
2
<PAGE>
EVERGREEN
Balanced Fund
Portfolio Manager Interview
How did the Evergreen Balanced Fund perform?
For the twelve-month period ended March 31, 2000, the Evergreen Balanced Fund's
Class B shares had a total return of 13.06%. During the same period, the S&P 500
and Lehman Brothers Government/Corporate Bond Indices returned 17.94% and 1.70%,
respectively. The median return of balanced funds was 9.95%, according to Lipper
Inc., an independent monitor of mutual fund performance. Fund performance is
before the deduction of any applicable sales charges.
Portfolio
Characteristics
---------------
(as of 3/31/2000)
Total Net Assets $1,565,603,931
Number of Holdings 280
Beta 0.53
P/E Ratio 80.6x
Effective Maturity 9.5 years
Average Duration 5.1 years
Average Credit Quality AA+
What was the environment like during the period?
The market for fixed income investing deteriorated steadily throughout the
period as interest rates rose and prices declined. Earlier in the year, rapidly
shifting trends dominated the stock market, which was encouraged by strong
economic growth but remained worried about higher interest rates. After moving
back and forth between peaks and valleys during the first six months, the market
rallied strongly during the second half of the period, with technology stocks
leading the charge.
Interest rates, in general, rose throughout the year as the Federal Reserve
Board increased short-term rates five separate times in an effort to bring the
economy's supply and demand forces into better balance, reduce the pace of
economic growth and head-off the danger of inflation. Gross Domestic Product
rose by an annual rate of 7.3% during the final quarter of 1999, a rapid pace
that heightened fears of inflation. However, with the exception of energy
prices, the economy has not yet seen evidence of a pick-up in inflation, but the
Federal Reserve is concerned about potential inflation.
In contrast to the general trends in the fixed income markets, long-term
Treasuries staged a rally late in the fiscal year as the federal government
reduced the issuance of new debt and started buying back older bonds, shifting
the supply-demand balance. However, 30-year Treasury yields ended the year at
higher levels than they started in April 1999. At the opposite end of the
quality spectrum, domestic high yield bonds suffered the most as corporate
bonds, in general, suffered. With increased volatility in the equity market,
bond buyers wanted to be compensated with higher yields which translates into
lower prices. In addition, the strong market for Treasuries worked against
corporate bonds. Similarly, the mortgage market suffered as investors were
attracted to Treasuries.
In the first half of the fiscal year, the stock market alternated between
rallies and slumps before hitting a low point in October 1999. In contrast to
the previous two years, however, there were no major international problems,
such as an Asian crisis or a Russian default, that acted as a catalyst for stock
selling. Rather, the dominant fear seemed to be that the Y2K problem might cause
serious dislocations in some sectors of the economy as the risk of computer
system failures rose. However, in the fall of 1999, people started believing
that Y2K was not likely to be a serious problem. At the same time, the economy
continued to grow at a healthy pace and corporate earnings generally rose at
3
<PAGE>
EVERGREEN
Balanced Fund
Portfolio Manager Interview
brisk rates. These favorable signals set off a strong rally in late 1999 and
early 2000, with the technology sector the clear leader. The NASDAQ Composite
Index, which is heavily influenced by technology, rose by about 70% from October
through March 31, 2000. In contrast, the S&P 500 Index, a benchmark for large
company investing, rose by 20% and the Dow Jones Industrial Average rose by
about 8%. Clearly, the "new economy" technology stocks were the leaders, with
the "old economy" stocks falling behind.
Did the allocation to stocks and bonds change during the period?
The allocation was relatively steady. During the first half of the year, it
averaged about 62% of net assets in equities and about 38% in bonds. As the year
progressed and the stock market rallied, we reduced the overall risk of the
higher stock prices by slightly reducing the amount invested in stocks. At the
end of the fiscal year, the target allocation was around 60% equities and 40%
bonds.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
(as a percentage of 3/31/2000 portfolio assets)
[GRAPH]
Common Stock -- 57.6%
Corporate Bonds & Notes -- 13.8%
Collateralized Mortgage Obligations -- 5.6%
Mortgage-Backed Securities -- 5.2%
U.S. Treasury Obligations -- 4.5%
Mutual Fund Shares -- 4.3%
Asset-Backed Securities -- 2.9%
Repurchase Agreements -- 2.0%
U.S. Agency Obligations -- 1.8%
Yankee Obligations -- 1.7%
Foreign Bonds -- 0.6%
What was your overall strategy in managing the fixed income portion of the Fund?
We tried to reduce the overall risk by selling corporate bonds. In recognition
of the favorable conditions in the Treasury market, we increased our allocations
to long-term Treasuries, while keeping the portfolio's interest rate sensitivity
relatively stable by also investing in shorter-term securities.
At the close of the fiscal year, the portfolio's duration was 5.1 years.
Duration is a measure of a portfolio's sensitivity to changes in interest rates.
Credit quality of bonds rose steadily during the year. Average credit quality
was AA- at the start of the fiscal year and AA+ at the end of the 12-month
period.
Top 5 Industries
Bonds
-----
(as a percentage of 3/31/2000 net assets)
Collateralized Mortgage Obligations 5.8%
Mortgage-Backed Securities 5.4%
U.S. Treasury Obligations 4.6%
Finance & Insurance 3.9%
Asset-Backed Securities 3.1%
Top 5
Bond Holdings
-------------
(as a percentage of 3/31/2000 net assets)
Coupon Maturity
------ --------
U.S. Treasury Bonds 6.13% 08/15/2029 2.5%
U.S. Treasury Bonds 6.50% 11/15/2026 1.1%
FHLMC 6.63% 09/15/2009 0.8%
FNMA 5.50% 07/01/2009 0.8%
U.S. Treasury Bonds 7.88% 02/15/2021 0.7%
4
<PAGE>
EVERGREEN
Balanced Fund
Portfolio Manager Interview
What has been the strategy in managing the equity portfolio of the Fund?
The greatest emphasis has been on technology. In a period of uncertainty about
the ultimate effects of the Federal Reserve Board's actions to slow economic
growth, the one known fact is that companies are spending more on technology to
be competitive. The growth of the internet and the development of new hardware,
software and communications products have made technology more and more
important.
The Fund's emphasis on technology had been increasing, and I continued that
trend when I took responsibility for the equity portfolio at the start of 2000.
Even as technology became a larger weighting in the benchmark S&P 500 Index, we
raised the portfolio's weighting above the benchmark, although we have pulled
back somewhat recently. Investments in technology accounted for about 34% of net
assets on March 31, similar to the technology weighting in the S&P 500 Index.
Within technology, we have focused primarily on a core of high quality,
established companies that benefit from the major trends in the economy, the
build-out of the internet and the growth in electronic business-to-business
commerce. The Fund's largest positions are some of the biggest companies in
these developments--Cisco Systems, Oracle Research, Sun Microsystems and EMC.
These are the companies that produce the hardware, software and data storage
systems that are the core of the internet and of electronic commerce. They are
quality growth companies that have demonstrated their ability to grow their
earnings.
In addition to these core technology holdings, we also have invested in newer
opportunities in technology when the companies have records of earnings and
revenue acceleration. These include companies such as Verisign, which produces
security software for electronic commerce; Veritas, which has developed
important software for data storage and Broadcom, an integrated circuit company.
While we believe in the opportunities in technology, we have tended to avoid
companies with no earnings records or sales growth.
Outside technology, we have emphasized media stocks, which have benefited both
from strong advertising revenues and continued merger-and-acquisition activity.
Media holdings include CBS, AT&T Liberty Media, Disney, Time-Warner and
Univision, the leading producer of Spanish-language programming for cable
television.
We recently have added to the Fund weightings in the pharmaceuticals and
financial services industries after de-emphasizing these industries for much of
the fiscal year. In pharmaceuticals, we have invested in leading drug companies
such as Merck, American Home Products, Schering-Plough and Warner-Lambert.
Earlier, we had invested in biotechnology, but we have reduced our emphasis
there after stock prices rose sharply.
In finance, we have emphasized the large, diversified companies such as
Citigroup, Chase Manhattan, Morgan Stanley Dean-Witter and American Express. We
also have invested in Charles Schwab, Freddie Mac and some insurance companies.
Throughout the period, we have under-weighted basic materials companies, whose
prospects appear limited in a disinflationary environment, and consumer staples
companies, which have not demonstrated an ability to increase prices to generate
top-line revenue growth.
We also have under-weighted consumer cyclicals and retailers, although we
recently have invested in high growth retailers such as Costco and Best Buy,
which have shown an ability to continue to generate sales growth.
As the equity portfolio's new manager, how would you describe your investment
style, Tricia?
I consider myself a conservative growth manager who looks for companies with
strong, proven management and predictability and consistency of earnings. I try
to
5
<PAGE>
EVERGREEN
Balanced Fund
Portfolio Manager Interview
combine bottom-up stock-picking with top-down analysis of trends. I try to look
at where the biggest opportunities are likely to be and then find the quality
companies that can capture those opportunities. I invest the core of the
portfolio in companies with excellent growth records. I believe in keeping a
portfolio well diversified, and also will make smaller investments in growth
companies with excellent long-term prospects. To add balance and defensive
protection, I also invest in more conservative companies such as energy firms or
regional telephone companies.
My philosophy is to concentrate on quality growth companies, but be aware of
changes in the environment that require adjustments in my investment discipline.
Top 5 Industries - Equity
-------------------------
(as a percentage of 3/31/2000 net assets)
Communications Equipment 6.1%
Diversified Telecommunication Services 6.0%
Diversified Financials 6.0%
Oil & Gas 5.0%
Semiconductor Equipment & Products 5.0%
Top 10 Equity Holdings
----------------------
(as a percentage of 3/31/2000 net assets)
Microsoft Corp. 2.6%
Cisco Systems, Inc. 2.6%
General Electric Co. 2.5%
Intel Corp. 2.2%
AT&T Corp. 1.6%
Exxon Mobil Corp. 1.4%
Citigroup, Inc. 1.4%
Oracle Systems Corp. 1.0%
American International Group, Inc. 1.0%
Lucent Technologies, Inc. 0.9%
What is your outlook for the bond market?
We think the Federal Reserve Board will continue to raise short-term rates to
slow down the pace of economic growth and avoid an increase in inflation. In
this environment, longer-term Treasuries are likely to continue to show the
strongest performance, especially as the federal government continues buying
back its long-term debt.
The risks to the market are that the Federal Reserve either will not be
aggressive enough, in which case inflation could emerge, or that the Federal
Reserve will be too aggressive and slow economic growth too much and create
greater volatility in the stock market.
We intend to maintain our present strategy and emphasize Treasury securities and
higher quality bonds. We think this will give us the flexibility to execute the
appropriate strategies as the environment may change.
What is your outlook for the equity market?
We remain reasonably positive about the stock market. The economy is growing and
inflation is under control, largely because of the influence of technology. If
economic growth were to accelerate and inflation were to increase, we believe
the Federal Reserve Board will be able to dampen growth and keep the environment
relatively benign.
In this environment, we believe earnings growth prospects remain strong,
especially in technology. While the heavy pace of new stock issuance through
initial public offerings (IPOs) is a cause for concern, we think there is enough
money in short-term instruments and cash to act as a brake to the market if
prices start falling. We believe the stock market can continue to do well for
the foreseeable future, although perhaps with lower returns than in recent
years.
6
<PAGE>
EVERGREEN
Foundation Fund
Fund at a Glance as of March 31, 2000
"We invested in integrated companies because of the strength of their
diversification."
Portfolio Management
--------------------
[PHOTO]
Jean C. Ledford, CFA
Tenure: August 1999
[PHOTO]
Richard S. Welsh
Tenure: August 1999
- --------------------------------------------------------------------------------
CURRENT INVESTMENT STYLE1
- --------------------------------------------------------------------------------
[STYLE BOX]
Morningstar's Style Box is based on a portfolio date as of 3/31/2000.
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.
[STYLE BOX]
The Fixed-Income Style Box placement is based on a fund's average effective
Quality maturity or duration and the average credit rating of the bond
portfolio.
1Source: 2000 Morningstar, Inc.
2Past 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. Investment return and principal value of
an investment will fluctuate so that investors' shares, when redeemed, may be
worth more or less than original cost. Performance includes the reinvestment of
income dividends and capital gain distributions. Returns reflect expense limits
previously in effect, without which returns would have been lower.
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. The 12b-1 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.
The Fund's investment objective is non-fundamental and may be changed without
the vote of the Fund's shareholders.
U.S. government guarantees apply only to the underlying securities of the Fund's
portfolio and not to the Fund's shares.
Foreign investments may contain more risk due to the inherent risks associated
with changing political climates, foreign market instability and foreign
currency fluctuations. Risks of international investing are magnified in
emerging or developing markets.
All data is as of March 31, 2000 and subject to change.
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS2
- --------------------------------------------------------------------------------
Portfolio Inception Date 1/2/1990 Class A Class B Class C Class Y
Class Inception Date 1/3/1995 1/3/1995 1/3/1995 1/2/1990
Average Annual Returns*
1 year with sales charge 10.83% 10.48% 13.49% n/a
1 year w/o sales charge 16.38% 15.48% 15.49% 16.68%
5 years 16.14% 16.17% 16.37% 17.55%
10 years 16.13% 16.23% 16.21% 16.84%
Maximum Sales Charge 4.75% 5.00% 2.00% n/a
Front End CDSC CDSC
30-day SEC Yield 1.18% 0.52% 0.52% 1.48%
12-month income dividends per share $0.35 $0.19 $0.19 $0.41
12-month capital gain
distributions per share $0.59 $0.59 $0.59 $0.59
* Adjusted for maximum applicable sales charge unless noted.
- --------------------------------------------------------------------------------
LONG TERM GROWTH
- --------------------------------------------------------------------------------
[GRAPH]
S & P 500 Consumer Price Evergreen
Composite Value Index - US S&P 500 Foundation Fund A
3/31/90 10,000 10,000 10,000 9,525
3/31/91 11,441 10,490 11,249 11,173
3/31/92 12,705 10,824 12,529 14,429
3/31/93 14,639 11,158 14,321 17,627
3/31/94 14,855 11,437 14,718 18,375
3/31/95 17,168 11,764 15,392 20,104
3/31/96 22,679 12,098 17,073 24,020
3/31/97 27,175 12,432 17,834 27,103
3/31/98 40,218 12,603 20,045 36,288
3/31/99 47,648 12,821 21,360 38,318
3/31/00 56,194 13,219 21,717 44,595
Comparison of a $10,000 investment in Evergreen Foundation Fund, Class A
shares2, versus a similar investment in the Standard & Poor's 500 Index (S&P
500), the Lehman Brothers Government/Corporate Bond Index (LBGCBI), and the
Consumer Price Index (CPI).
The S&P 500 and LBGCBI are an unmanaged indices which do not include transaction
costs associated with buying and selling securities nor 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.
7
<PAGE>
EVERGREEN
Foundation Fund
Portfolio Manager Interview
How did the Evergreen Foundation Fund perform?
For the twelve-month period ended March 31, 2000, Evergreen Foundation Fund
Class A shares posted a return of 16.38%. The S&P 500 and Lehman Brothers
Government/Corporate Bond indices returned 17.94% and 1.70%, respectively for
the same period. The median return of balanced funds was 9.95%, according to
Lipper Inc., an independent monitor of mutual fund performance. Fund returns are
before deduction of any applicable sales charges.
Portfolio
Characteristics
---------------
(as of 3/31/2000)
Total Net Assets $3,350,299,723
Number of Holdings 133
Beta 0.62
P/E Ratio 76.5x
Effective Maturity 9.8 years
Average Duration 6.0 years
Average Credit Quality AAA
What factors contributed to performance?
The Fund was in transition during the period. When we took responsibility for
management of the Fund shortly before the period began, the equity portfolio had
a high weighting in financial stocks and a relatively low weighting in
technology. Our stock selection process led us to change those relationships, as
we found companies in the technology sector with the opportunity to increase
their earnings growth rates.
As we invested, we built up the weighting in technology within the equity
portfolio consistent with the technology sector's weighting in the S&P 500,
about 34% of assets. The new emphasis in the Fund helped during the final
quarter of 1999 and the first two months of 2000 as our investments in
technology rallied. Even when technology slumped and financials started
recovering in March, the Fund's relative performance did not suffer greatly
because we did not have a substantial overweighting in technology. We also did
not hold many mid-cap technology companies, which tended to suffer the most.
Consistent with our investment emphasis on large-cap companies, the majority of
our technology investments were in larger companies, especially leading
companies involved in the explosive growth of the internet and electronic
commerce. Some of the best performance came from companies such as Oracle
Systems, Sun Microsystems and Cisco Systems.
Oracle, a relatively new holding, is a leading beneficiary of the rise of the
internet as a medium for commerce. Already the top seller of database services
to other companies, Oracle is taking advantage of the expansion of
business-to-business exchanges of information. Oracle is uniquely positioned to
help companies set up common platforms for information exchanges and then to
operate these platforms.
Cisco and Sun also are benefiting from the rapid growth in technology. Cisco
Systems is taking advantage of the convergence of telephone systems and computer
systems to take market share from the telephone equipment companies. Sun
Microsystems is the largest high-end provider of database and communications
servers for use on the internet. As data processing on the internet grows more
widespread, Sun's sophisticated platforms give it a competitive advantage.
8
<PAGE>
EVERGREEN
Foundation Fund
Portfolio Manager Interview
Outside of technology, what industries did you emphasize?
We also raised our emphasis on energy stocks, which had been under-weighted, as
we grew increasingly positive about the sector, including integrated energy
companies and oil services firms. Even after oil prices peaked in March at $34 a
barrel and then started declining, we added to our positions because earnings
should continue to accelerate. We invested in integrated companies because of
the strength of their diversification. As their profit margins from refining
grew, they had the ability to re-invest proceeds in exploration and production.
The recovery in the oil markets helped oil services companies, including those
involved in exploration. Two of the leading performers in oil services were
Schlumberger and Baker Hughes. Schlumberger is the bellwether of the oil
services industry. During the past year, it has divested itself of some of its
more capital-intensive operations, such as the ownership of oil rigs, to focus
more directly on technological operations, including oil exploration using
seismic technology. We invested in Baker Hughes to take advantage of many of the
same trends. At the same time, an earnings disappointment and a change in
management at Baker Hughes enabled the Fund to take advantage of the favorable
trends at an attractive stock price.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
(as a percentage of 3/31/2000 portfolio assets)
[GRAPH]
Common Stock -- 68.2%
U.S. Treasury Obligations -- 23.7%
Mutual Fund Shares -- 4.5%
Corporate Bonds & Notes -- 1.6%
U.S. Agency Obligations -- 1.4%
Repurchase Agreements -- 0.6%
Did you make any changes in your asset allocation, between stocks and bonds, or
in your fixed income policy?
We maintained an asset allocation of about 68% in stocks and 25% in bonds during
most of the period in which we managed the Fund. This helped performance, as
stocks performed much better than bonds, particularly in the second half of the
fiscal year. We invested primarily in Treasury and government agency securities,
although we did take advantage of selective opportunities in high quality
corporate bonds. During a period of rising interest rates, we kept interest rate
sensitivity relatively low, with the fixed income portfolio's duration about six
years. Going forward, we may take advantage of opportunities in long-term
Treasuries, which may raise the Fund's duration. We also intend to balance the
long-term Treasury allocations by using a "barbell" strategy, investing in long
and short-term securities.
Top 10
Equity Holdings
---------------
(as a percentage of 3/31/2000 net assets)
General Electric Co. 3.7%
Cisco Systems, Inc. 3.6%
Microsoft Corp. 3.6%
Intel Corp. 3.2%
Exxon Mobil Corp. 2.1%
Sun Microsystems, Inc. 2.1%
Oracle Systems Corp. 1.7%
Time Warner, Inc. 1.6%
Nortel Networks Corp. 1.6%
Disney (Walt) Co. 1.5%
9
<PAGE>
EVERGREEN
Foundation Fund
Portfolio Manager Interview
Top 5 Industries
Equity
------
(as a percentage of 3/31/2000 net assets)
Communications Equipment 8.6%
Diversified Financials 6.8%
Media 5.9%
Semiconductor Equipment & Products 5.8%
Software 5.3%
Top 5 Bond Holdings
-------------------
(as a percentage of 3/31/2000 net assets)
Coupon Maturity
------ --------
U.S. Treasury Notes 5.25% 8/15/2003 3.6%
U.S. Treasury Notes 6.50% 8/31/2001 3.0%
U.S. Treasury Notes 7.25% 5/15/2016 2.7%
U.S. Treasury Notes 6.13% 8/15/2007 2.2%
U.S. Treasury Notes 5.88% 9/30/2002 2.2%
Top 5 Industries
Bonds
-----
(as a percentage of 3/31/2000 net assets)
U.S. Treasury Obligations 25.0%
U.S. Agency Obligations 1.5%
Automotive Equipment & Manufacturing 0.7%
Retailing & Wholesale 0.7%
Communication Systems & Services 0.2%
What is your outlook?
We are generally optimistic about the marketplace. Corporate earnings growth
should remain strong, and stock prices should follow earnings.
Having said that, there are several places in the marketplace, notably
technology and biotechnology, where stock valuations have become quite
stretched. These high prices are particularly a concern in the context of rising
interest rates and the release of new government statistics indicating a
possible increase in inflationary pressures. Investors have been watching for
signs of inflation. While not conclusive evidence of a serious inflation threat,
these new statistics nevertheless are enough to remove any complacency in the
market about the lack of inflation. As a result, we would expect a significant
amount of volatility, particularly in technology, as corporations report their
earnings results for the first quarter of 2000.
We are more optimistic about the marketplace as a whole when we take a
longer-term view of the secular trends. We believe that the baby boomer
generation will need to save for retirement, and that ought to be a strong
positive for the capital markets.
10
<PAGE>
EVERGREEN
Tax Strategic Foundation Fund
Fund at a Glance as of March 31, 2000
"We believe that the baby boomer generation will need to save for retirement,and
that ought to be a strong positive for the capital markets."
Portfolio Management
--------------------
[PHOTO] [PHOTO]
Jean C. Ledford, CFA James T. Colby III
Tenure: August 1999 Tenure: November 1993
[PHOTO]
Richard S. Welsh
Tenure: August 1999
- --------------------------------------------------------------------------------
CURRENT INVESTMENT STYLE1
- --------------------------------------------------------------------------------
[STYLE BOX]
Morningstar's Style Box is based on a portfolio date as of 3/31/2000.
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.
[STYLE BOX]
The Fixed-Income Style Box placement is based on a fund's average effective
maturity or duration and the average credit rating of the bond portfolio.
1Source: 2000 Morningstar, Inc.
2Past 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. Investment return and
principal value of an investment will fluctuate so that investors' shares, when
redeemed, may be worth more or less than original cost. Performance includes the
reinvestment of income dividends and capital gain distributions. Returns reflect
expense limits previously in effect, without which returns would have been
lower.
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. The 12b-1 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.
The Fund's investment objective is non-fundamental and may be changed without
the vote of the Fund's shareholders.
The Fund's yield will fluctuate, and there can be no guarantee that the Fund
will achieve its objective or any particular tax-exempt yield. Income may be
subject to federal alternative minimum tax.
All data is as of March 31, 2000 and subject to change.
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS2
- --------------------------------------------------------------------------------
Portfolio Inception Date 11/2/1993 Class A Class B Class C Class Y
Class Inception Date 1/17/1995 1/6/1995 3/3/1995 11/2/1993
Average Annual Returns*
1 year with sales charge 3.37% 2.69% 5.77% n/a
1 year w/o sales charge 8.54% 7.69% 7.77% 8.86%
5 years 12.77% 12.81% 13.04% 14.19%
Since Portfolio Inception 11.93% 12.14% 12.14% 13.06%
Maximum Sales Charge 4.75% 5.00% 2.00% n/a
Front End CDSC CDSC
30-day SEC Yield 1.70% 1.05% 1.05% 2.03%
Tax Equivalent Yield** 2.64% 1.63% 1.63% 3.16%
12-month income dividends
per share $0.35 $0.23 $0.23 $0.40
* Adjusted for maximum applicable sales charge unless noted.
** Assumes maximum 39.6% federal tax rate. Results for investors subject to
lower tax rates would not be as advantageous.
- --------------------------------------------------------------------------------
LONG TERM GROWTH
- --------------------------------------------------------------------------------
[GRAPH]
Consumer Price Lehman Brothers S & P 500 Evergreen Tax
Index -US Municipals Composite Strat Foundation A
11/2/93 10,000 10,000 10,000 9,525
3/31/94 10,096 9,651 9,737 9,615
3/31/95 10,384 10,368 11,253 10,760
3/31/96 10,679 11,237 14,865 13,031
3/31/97 10,974 11,849 17,812 15,083
3/31/98 11,125 13,118 26,362 18,750
3/31/99 11,317 13,932 31,232 18,969
3/31/00 11,668 13,896 36,834 20,594
Comparison of a $10,000 investment in Evergreen Tax Strategic Foundation Fund,
Class A shares2 , versus a similar investment in the Standard & Poor's 500 Index
(S&P 500), the Lehman Brothers Municipal Bond Index (LBMBI), and the Consumer
Price Index (CPI).
The S&P 500 and LBMBI are an unmanaged indices which do not include transaction
costs associated with buying and selling securities nor any mutual fund
expenses. The CPIis a commonly used measure of inflation and does not represent
an investment return. It is not possible to invest directly in an index.
<PAGE>
EVERGREEN
Tax Strategic Foundation Fund
Portfolio Manager Interview
How did the Evergreen Tax Strategic Foundation Fund perform?
For the twelve-month period ended March 31, 2000, Evergreen Tax Strategic
Foundation Fund Class A shares posted a return of 8.54%. The benchmark S&P 500
and Lehman Brothers Municipal Bond indices returned 17.94% and -0.08%,
respectively for the same period. The median return of balanced funds was 9.95%,
according to Lipper Inc., an independent monitor of mutual fund performance. We
consider this to be exceptionally strong performance when viewed in the context
of the Fund's distinctive tax-efficiency objective, which requires relatively
heavy allocations in tax-exempt municipal bonds. Fund returns are before
deduction of any applicable sales charges.
Portfolio
Characteristics
---------------
(as of 3/31/2000)
Total Net Assets $332,131,751
Number of Holdings 185
Beta 0.42
P/E Ratio 51.9x
Effective Maturity 12.4 years
Average Duration 8.3 years
Average Credit Quality AAA
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
(as a percentage of 3/31/2000 portfolio assets)
[GRAPH]
Municipal Obligations -- 52.8%
Common Stock -- 46.9%
Mutual Fund Shares -- 0.3%
What factors contributed to the performance?
The Fund was in transition during the period. We found companies in the
technology sector with the potential to increase their earnings growth rates. We
moved the portfolio allocations in a measured way to generate capital
appreciation in a tax-efficient manner. We have avoided too much emphasis on
cyclical trends that may not have long-term staying power. At the same time, our
stock selection process led us to find companies within the technology sector
that had the opportunity to increase their earnings growth rates.
Consistent with our investment emphasis on large-cap companies, the great
majority of our technology investments were in larger companies, especially
leading companies involved in the explosive growth of the internet and
electronic commerce. Some of the best performance came from companies such as
Oracle Systems and Sun Microsystems.
Oracle, a relatively new holding, is a leading beneficiary of the rise of the
internet as a medium for commerce. Already the top seller of database services
to other companies, Oracle is taking advantage of the expansion of
business-to-business exchanges of information. Oracle is uniquely positioned to
help companies set up common platforms for information exchanges and then to
operate these platforms. Sun Microsystems is the largest high-end provider of
database and communications servers for use on the internet. As data processing
on the internet grows more widespread, Sun's sophisticated platforms give it a
competitive advantage.
12
<PAGE>
EVERGREEN
Tax Strategic Foundation Fund
Portfolio Manager Interview
Outside of technology, what industries did you emphasize?
We cautiously raised our emphasis in energy stocks, which had been
under-weighted, as we grew increasingly positive about the sector, including
integrated energy companies and oil services firms. Even after oil prices peaked
in March at $34 a barrel and then started declining, we added to our positions
because earnings should continue to accelerate. We invested in integrated
companies because of the strength of their diversification. As their profit
margins from refining grew, they had the ability to re-invest proceeds in
exploration and production.
The recovery in the oil markets helped oil services companies, including those
involved in exploration such as Baker Hughes. Baker Hughes presented us with an
opportunity to benefit from the expansion of oil exploration and drilling at an
attractive price. An earnings disappointment and a change in management at Baker
Hughes presented us with the opportunity to invest at a very attractive stock
price. At the same time, our analysis gave us confidence that the company had
the ability to increase its earnings substantially. We also invested in
Schlumberger, the bellwether of the oil services industry.
Top 5 Industries
Equity
------
(as a percentage of 3/31/2000 net assets)
Diversified Financials 5.8%
Communications Equipment 5.5%
Diversified Telecommunication Services 4.0%
Computers & Peripherals 3.8%
Pharmaceuticals 3.3%
Top 10
Equity Holdings
---------------
(as a percentage of 3/31/2000 net assets)
Intel Corp. 2.9%
General Electric Co. 2.4%
Microsoft Corp. 2.2%
Cisco Systems, Inc. 2.1%
Global Crossing, Ltd. 2.0%
SCI Systems, Inc. 1.9%
International Business Machines Corp. 1.8%
Merrill Lynch & Co., Inc. 1.4%
Citigroup, Inc. 1.3%
Nortel Networks Corp. 1.2%
What was the strategy in managing the Fund's fixed income portfolio?
The fiscal year encompassed a period of generally rising interest rates as the
Federal Reserve Board tightened monetary policy in an effort to slow economic
growth and reduce the threat of potential inflation. While it was generally a
poor environment for fixed income investments, the restructuring of the Fund's
equity portfolio also created some opportunities for the fixed income portfolio.
As equity positions were sold at gains, fixed income positions also were sold to
create off-setting losses and reduce potential tax liabilities of shareholders.
As we invested in other bonds, the environment of rising interest rates allowed
us to invest in higher-yielding securities, creating more income potential for
the Fund.
During the period, the Fund's average credit quality remained the highest, AAA.
Approximately 90% of municipal securities held by the Fund were insured.
Duration, or interest rate sensitivity, declined somewhat, to about 8.3 years,
while effective maturity on March 31, 2000 was 12.4 years.
13
<PAGE>
EVERGREEN
Tax Strategic Foundation Fund
Portfolio Manager Interview
Top 5 Industries
Bonds
-----
(as a percentage of 3/31/2000 net assets)
General Obligation - Local 16.4%
Transportation 8.1%
Water & Sewer 5.6%
Education 4.4%
Hospital 4.4%
Top 5
Bond Holdings
-------------
(as a percentage of 3/31/2000 net assets)
Coupon Maturity
------ --------
Florida Board of Ed. RB 5.75% 07/01/2011 2.0%
Florida Fin. Dept. RB 6.60% 07/01/2004 1.6%
Georgia GO 5.80% 11/01/2002 1.5%
New York, NY GO 5.35% 08/01/2013 1.5%
District of Columbia GO 5.50% 06/01/2014 1.5%
What is your outlook?
We have a generally positive attitude about the marketplace. Corporate earnings
growth should remain strong, and stock prices should follow earnings.
Having said that, there are several places in the marketplace--notably
technology and biotechnology--where stock valuations have become quite
stretched. These high prices are particularly a concern in the context of rising
interest rates and the release of new government statistics indicating a
possible increase in inflationary pressures. Investors have been watching for
signs of inflation. While not conclusive evidence of a serious inflation threat,
these new statistics nevertheless are enough to remove any complacency in the
market about the lack of inflation. As a result, we would expect a significant
amount of volatility, particularly in technology, as corporations report their
earnings results for the first quarter of 2000.
We are more optimistic about the marketplace as a whole when we take a
longer-term view of the secular trends. We believe that the baby boomer
generation will need to save for retirement, and that ought to be a strong
positive for the capital markets.
14
<PAGE>
EVERGREEN
Balanced Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended March 31,
---------------------- Period Ended
2000 1999 March 31, 1998 # (a)
<S> <C> <C> <C>
CLASS A SHARES
Net asset value, beginning of
period $ 11.28 $ 12.87 $12.36
---------- ---------- ------
Income from investment
operations
Net investment income 0.28 0.37 0.08
Net realized and unrealized gain
or loss on securities and
foreign currency related
transactions 1.18 0.48 0.81
---------- ---------- ------
Total from investment operations 1.46 0.85 0.89
---------- ---------- ------
Distributions to shareholders
from
Net investment income (0.28) (0.41) (0.12)
Net realized gains on securities (1.45) (2.03) (0.26)
---------- ---------- ------
Total distributions (1.73) (2.44) (0.38)
---------- ---------- ------
Net asset value, end of period $ 11.01 $ 11.28 $12.87
---------- ---------- ------
Total return* 13.89% 7.52% 7.38%
Ratios and supplemental data
Net assets, end of period
(millions) $ 1,264 $ 1,241 $1,277
Ratios to average net assets
Expenses ++ 0.91% 0.96% 0.99%+
Net investment income 2.48% 2.97% 3.25%+
Portfolio turnover rate 109% 102% 76%
</TABLE>
<TABLE>
<CAPTION>
Year Ended March 31, Year Ended June 30,
---------------------- Period Ended ----------------------
2000 1999 March 31, 1998 # (b) 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
CLASS B SHARES
Net asset value,
beginning of period $ 11.29 $ 12.88 $12.95 $11.33 $10.09 $ 9.26
---------- ---------- ------ ------ ------ ------
Income from investment
operations
Net investment income 0.20 0.28 0.26 0.30 0.29 0.31
Net realized and
unrealized gain or loss
on securities and
foreign currency
related transactions 1.18 0.48 1.53 2.07 1.42 0.96
---------- ---------- ------ ------ ------ ------
Total from investment
operations 1.38 0.76 1.79 2.37 1.71 1.27
---------- ---------- ------ ------ ------ ------
Distributions to
shareholders from
Net investment income (0.20) (0.32) (0.27) (0.30) (0.27) (0.33)
Net realized gains on
securities (1.45) (2.03) (1.59) (0.45) (0.20) (0.11)
---------- ---------- ------ ------ ------ ------
Total distributions (1.65) (2.35) (1.86) (0.75) (0.47) (0.44)
---------- ---------- ------ ------ ------ ------
Net asset value, end of
period $ 11.02 $ 11.29 $12.88 $12.95 $11.33 $10.09
---------- ---------- ------ ------ ------ ------
Total return* 13.06% 6.71% 14.89% 21.95% 17.35% 14.20%
Ratios and supplemental
data
Net assets, end of
period (millions) $ 279 $ 434 $ 580 $1,625 $1,481 $1,345
Ratios to average net
assets
Expenses ++ 1.66% 1.71% 1.35%+ 1.70% 1.72% 1.77%
Net investment income 1.73% 2.23% 2.66%+ 2.50% 2.71% 3.33%
Portfolio turnover rate 109% 102% 76% 89% 96% 88%
</TABLE>
(a) For the period from January 20, 1998 (commencement of class operations) to
March 31, 1998.
(b) For the nine months ended March 31, 1998. The Fund changed its fiscal year
end from June 30 to March 31, effective March 31, 1998.
* Excluding applicable sales charges.
+ 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.
15
<PAGE>
EVERGREEN
Balanced Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended
March 31, Period Ended
-------------- March 31,
2000 1999 1998 # (a)
<S> <C> <C> <C>
CLASS C SHARES
Net asset value, beginning of period $11.30 $12.88 $12.43
------ ------ ------
Income from investment operations
Net investment income 0.19 0.26 0.05
Net realized and unrealized gain or loss on
securities and foreign currency related
transactions 1.19 0.51 0.75
------ ------ ------
Total from investment operations 1.38 0.77 0.80
------ ------ ------
Distributions to shareholders from
Net investment income (0.20) (0.32) (0.09)
Net realized gains on securities (1.45) (2.03) (0.26)
------ ------ ------
Total distributions (1.65) (2.35) (0.35)
------ ------ ------
Net asset value, end of period $11.03 $11.30 $12.88
------ ------ ------
Total return* 13.06% 6.79% 6.58%
Ratios and supplemental data
Net assets, end of period (millions) $ 3 $ 2 $ 1
Ratios to average net assets
Expenses ++ 1.66% 1.71% 1.76%+
Net investment income 1.73% 2.21% 2.41%+
Portfolio turnover rate 109% 102% 76%
</TABLE>
<TABLE>
<CAPTION>
Year Ended
March 31, Period Ended
-------------- March 31,
2000 1999 1998 # (b)
<S> <C> <C> <C>
CLASS Y SHARES
Net asset value, beginning of period $11.27 $12.86 $12.01
------ ------ ------
Income from investment operations
Net investment income 0.32 0.39 0.08
Net realized and unrealized gain or loss on
securities and foreign currency related
transactions 1.17 0.49 0.86
------ ------ ------
Total from investment operations 1.49 0.88 0.94
------ ------ ------
Distributions to shareholders from
Net investment income (0.31) (0.44) (0.09)
Net realized gains on securities (1.45) (2.03) 0
------ ------ ------
Total distributions (1.76) (2.47) (0.09)
------ ------ ------
Net asset value, end of period $11.00 $11.27 $12.86
------ ------ ------
Total return 14.21% 7.79% 7.79%
Ratios and supplemental data
Net assets, end of period (millions) $ 20 $ 34 $ 39
Ratios to average net assets
Expenses ++ 0.66% 0.71% 0.75%+
Net investment income 2.73% 3.22% 3.47%+
Portfolio turnover rate 109% 102% 76%
</TABLE>
(a) For the period from January 22, 1998 (commencement of class operations) to
March 31, 1998.
(b) For the period from January 26, 1998 (commencement of class operations) to
March 31, 1998.
* Excluding applicable sales charges.
+ 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.
16
<PAGE>
EVERGREEN
Foundation Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended
Year Ended March 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 $20.98 $20.44 $16.00 $16.13 $15.12 $12.24
------ ------ ------ ------ ------ ------
Income from investment
operations
Net investment income 0.36 0.44 0.44 0.12 0.50 0.44
Net realized and
unrealized gain or loss
on securities and
foreign currency related
transactions 3.01 0.68 4.87 (0.13) 1.16 3.14
------ ------ ------ ------ ------ ------
Total from investment
operations 3.37 1.12 5.31 (0.01) 1.66 3.58
------ ------ ------ ------ ------ ------
Distributions to
shareholders from
Net investment income (0.35) (0.43) (0.44) (0.12) (0.50) (0.47)
Net realized gains on
securities (0.59) (0.15) (0.43) 0 (0.15) (0.23)
------ ------ ------ ------ ------ ------
Total distributions (0.94) (0.58) (0.87) (0.12) (0.65) (0.70)
------ ------ ------ ------ ------ ------
Net asset value, end of
period $23.41 $20.98 $20.44 $16.00 $16.13 $15.12
------ ------ ------ ------ ------ ------
Total return* 16.38% 5.58% 33.88% (0.20%) 11.30% 29.70%
Ratios and supplemental
data
Net assets, end of period
(millions) $ 486 $ 380 $ 350 $ 220 $ 206 $ 107
Ratios to average net
assets
Expenses ++ 1.21% 1.26% 1.28% 1.25%+ 1.24% 1.33%+
Net investment income 1.62% 2.18% 2.39% 2.83%+ 3.39% 3.73%+
Portfolio turnover rate 83% 10% 9% 2% 10% 28%
</TABLE>
<TABLE>
<CAPTION>
Year Ended
Year Ended March 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 $20.88 $20.34 $15.94 $16.07 $15.07 $12.24
------ ------ ------ ------ ------ ------
Income from investment
operations
Net investment income 0.19 0.29 0.30 0.09 0.40 0.36
Net realized and
unrealized gain or loss
on securities and
foreign currency related
transactions 3.00 0.67 4.84 (0.13) 1.15 3.09
------ ------ ------ ------ ------ ------
Total from investment
operations 3.19 0.96 5.14 (0.04) 1.55 3.45
------ ------ ------ ------ ------ ------
Distributions to
shareholders from
Net investment income (0.19) (0.27) (0.31) (0.09) (0.40) (0.39)
Net realized gains on
securities (0.59) (0.15) (0.43) 0 (0.15) (0.23)
------ ------ ------ ------ ------ ------
Total distributions (0.78) (0.42) (0.74) (0.09) (0.55) (0.62)
------ ------ ------ ------ ------ ------
Net asset value, end of
period $23.29 $20.88 $20.34 $15.94 $16.07 $15.07
------ ------ ------ ------ ------ ------
Total return* 15.48% 4.81% 32.81% (0.30%) 10.50% 28.70%
Ratios and supplemental
data
Net assets, end of period
(millions) $1,612 $1,432 $1,124 $ 606 $ 570 $ 296
Ratios to average net
assets
Expenses ++ 1.96% 2.01% 2.04% 2.00%+ 1.99% 2.07%+
Net investment income 0.88% 1.43% 1.63% 2.07%+ 2.64% 2.99%+
Portfolio turnover rate 83% 10% 9% 2% 10% 28%
</TABLE>
(a) For the period from January 3, 1995 (commencement of class operations) to
December 31, 1995.
(b) For the three months ended March 31, 1997. The Fund changed its fiscal year
end from December 31 to March 31, effective March 31, 1997.
* Excluding applicable sales charges.
+ 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.
17
<PAGE>
EVERGREEN
Foundation Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended
Year Ended March 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 $20.87 $20.34 $15.94 $16.06 $15.07 $12.24
------ ------ ------ ------ ------ ------
Income from investment
operations
Net investment income 0.19 0.29 0.30 0.09 0.40 0.34
Net realized and
unrealized gain or loss
on securities
and foreign currency
related transactions 3.00 0.66 4.84 (0.13) 1.14 3.09
------ ------ ------ ------ ------ ------
Total from investment
operations 3.19 0.95 5.14 (0.04) 1.54 3.43
------ ------ ------ ------ ------ ------
Distributions to
shareholders from
Net investment income (0.19) (0.27) (0.31) (0.08) (0.40) (0.37)
Net realized gains on
securities (0.59) (0.15) (0.43) 0 (0.15) (0.23)
------ ------ ------ ------ ------ ------
Total distributions (0.78) (0.42) (0.74) (0.08) (0.55) (0.60)
------ ------ ------ ------ ------ ------
Net asset value, end of
period $23.28 $20.87 $20.34 $15.94 $16.06 $15.07
------ ------ ------ ------ ------ ------
Total return* 15.49% 4.76% 32.81% (0.30%) 10.40% 28.50%
Ratios and supplemental
data
Net assets, end of period
(millions) $ 76 $ 68 $ 50 $ 28 $ 27 $ 11
Ratios to average net
assets
Expenses++ 1.96% 2.01% 2.04% 2.00%+ 1.99% 2.23%+
Net investment income 0.88% 1.43% 1.63% 2.07%+ 2.64% 2.83%+
Portfolio turnover rate 83% 10% 9% 2% 10% 28%
</TABLE>
<TABLE>
<CAPTION>
Year Ended
Year Ended March 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 $20.99 $20.45 $16.02 $16.14 $15.13 $12.27
------ ------ ------ ------ ------ ------
Income from investment
operations
Net investment income 0.43 0.49 0.49 0.13 0.54 0.51
Net realized and unrealized
gain or loss on securities
and foreign currency
related transactions 3.00 0.68 4.86 (0.13) 1.16 3.07
------ ------ ------ ------ ------ ------
Total from investment
operations 3.43 1.17 5.35 0.00 1.70 3.58
------ ------ ------ ------ ------ ------
Distributions to
shareholders from
Net investment income (0.41) (0.48) (0.49) (0.12) (0.54) (0.49)
Net realized gains on
securities (0.59) (0.15) (0.43) 0 (0.15) (0.23)
------ ------ ------ ------ ------ ------
Total distributions (1.00) (0.63) (0.92) (0.12) (0.69) (0.72)
------ ------ ------ ------ ------ ------
Net asset value, end of
period $23.42 $20.99 $20.45 $16.02 $16.14 $15.13
------ ------ ------ ------ ------ ------
Total return 16.68% 5.84% 34.12% 0.00% 11.50% 29.70%
Ratios and supplemental
data
Net assets, end of period
(millions) $1,176 $1,238 $1,117 $ 802 $ 809 $ 623
Ratios to average net
assets
Expenses++ 0.96% 1.01% 1.03% 1.00%+ 0.99% 1.07%
Net investment income 1.89% 2.43% 2.65% 3.07%+ 3.64% 3.89%
Portfolio turnover rate 83% 10% 9% 2% 10% 28%
</TABLE>
(a) For the period from January 3, 1995 (commencement of class operations) to
December 31, 1995.
(b) For the three months ended March 31, 1997. The Fund changed its fiscal year
end from December 31 to March 31, effective March 31, 1997.
* Excluding applicable sales charges.
+ 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.
18
<PAGE>
EVERGREEN
Tax Strategic Foundation Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended
Year Ended March 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 $16.17 $16.36 $13.57 $13.50 $12.20 $10.44
------ ------ ------ ------ ------ ------
Income from investment
operations
Net investment income 0.36 0.34 0.31 0.07 0.27 0.29
Net realized and
unrealized gain or loss
on securities 1.00 (0.16) 2.96 0.06** 1.59 2.24
------ ------ ------ ------ ------ ------
Total from investment
operations 1.36 0.18 3.27 0.13 1.86 2.53
------ ------ ------ ------ ------ ------
Distributions to
shareholders from
Net investment income (0.35) (0.34) (0.30) (0.06) (0.28) (0.31)
Net realized gains on
securities 0 (0.03) (0.18) 0 (0.28) (0.46)
------ ------ ------ ------ ------ ------
Total distributions (0.35) (0.37) (0.48) (0.06) (0.56) (0.77)
------ ------ ------ ------ ------ ------
Net asset value, end of
period $17.18 $16.17 $16.36 $13.57 $13.50 $12.20
------ ------ ------ ------ ------ ------
Total return* 8.54% 1.19% 24.40% 1.00% 15.40% 24.80%
Ratios and supplemental
data
Net assets, end of period
(millions) $ 78 $ 82 $ 70 $ 15 $ 11 $ 3
Ratios to average net
assets
Expenses++ 1.30% 1.33% 1.42% 1.38%+ 1.52% 1.75%+
Net investment income 2.15% 2.18% 2.21% 2.30%+ 2.39% 2.79%+
Portfolio turnover rate 120% 64% 50% 29% 88% 110%
</TABLE>
<TABLE>
<CAPTION>
Year Ended
Year Ended March 31, December 31,
-------------------------------- ----------------
2000 1999 1998 1997 (b) 1996 1995 (c)
<S> <C> <C> <C> <C> <C> <C>
CLASS B SHARES
Net asset value,
beginning of period $16.14 $16.33 $13.56 $13.49 $12.19 $10.31
------ ------ ------ ------ ------ ------
Income from investment
operations
Net investment income 0.23 0.22 0.21 0.05 0.19 0.22
Net realized and
unrealized gain or loss
on securities 1.00 (0.15) 2.94 0.06** 1.59 2.37
------ ------ ------ ------ ------ ------
Total from investment
operations 1.23 0.07 3.15 0.11 1.78 2.59
------ ------ ------ ------ ------ ------
Distributions to
shareholders from
Net investment income (0.23) (0.23) (0.20) (0.04) (0.20) (0.25)
Net realized gains on
securities 0 (0.03) (0.18) 0 (0.28) (0.46)
------ ------ ------ ------ ------ ------
Total distributions (0.23) (0.26) (0.38) (0.04) (0.48) (0.71)
------ ------ ------ ------ ------ ------
Net asset value, end of
period $17.14 $16.14 $16.33 $13.56 $13.49 $12.19
------ ------ ------ ------ ------ ------
Total return* 7.69% 0.41% 23.44% 0.08% 14.70% 25.60%
Ratios and supplemental
data
Net assets, end of period
(millions) $ 209 $ 244 $ 185 $ 39 $ 28 $ 7
Ratios to average net
assets
Expenses++ 2.05% 2.08% 2.18% 2.14%+ 2.27% 2.50%+
Net investment income 1.39% 1.42% 1.46% 1.55%+ 1.64% 2.03%+
Portfolio turnover rate 120% 64% 50% 29% 2% 110%
</TABLE>
(a) For the period from January 17, 1995 (commencement of class operations) to
December 31, 1995.
(b) For the three months ended March 31, 1997. The Fund changed its fiscal year
end from December 31 to March 31, effective March 31, 1997.
(c) For the period from January 6, 1995 (commencement of class operations) to
December 31, 1995.
* Excluding applicable sales charges.
** The per share amount is not in accord with the net realized and unrealized
gains or losses for the period due to the timing of the sales of Fund shares
and the amount of per share realized and unrealized gains or losses at such
time.
+ Annualized.
++ Ratio of expenses to average net assets includes fee waivers and excludes
expense reductions.
See Combined Notes to Financial Statements.
19
<PAGE>
EVERGREEN
Tax Strategic Foundation Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended March 31, Year Ended 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 $16.11 $16.30 $13.53 $13.47 $12.19 $ 10.69
------ ------ ------ ------ ----------- -----------
Income from investment
operations
Net investment income 0.23 0.22 0.21 0.06 0.18 0.22
Net realized and
unrealized gain or loss
on securities 1.01 (0.15) 2.94 0.05** 1.58 1.99
------ ------ ------ ------ ----------- -----------
Total from investment
operations 1.24 0.07 3.15 0.11 1.76 2.21
------ ------ ------ ------ ----------- -----------
Distributions to
shareholders from
Net investment income (0.23) (0.23) (0.20) (0.05) (0.20) (0.25)
Net realized gains on
securities 0 (0.03) (0.18) 0 (0.28) (0.46)
------ ------ ------ ------ ----------- -----------
Total distributions (0.23) (0.26) (0.38) (0.05) (0.48) (0.71)
------ ------ ------ ------ ----------- -----------
Net asset value, end of
period $17.12 $16.11 $16.30 $13.53 $13.47 $ 12.19
------ ------ ------ ------ ----------- -----------
Total return* 7.77% 0.41% 23.49% 0.08% 14.50% 21.20%
Ratios and supplemental
data
Net assets, end of
period (millions) $ 37 $ 45 $ 28 $ 5 $ 4 $ 1
Ratios to average net
assets
Expenses ++ 2.05% 2.08% 2.18% 2.13%+ 2.25% 2.50%+
Net investment income 1.39% 1.42% 1.46% 1.55%+ 1.64% 2.07%+
Portfolio turnover rate 120% 64% 50% 29% 88% 110%
</TABLE>
<TABLE>
<CAPTION>
Year Ended March 31, Year Ended 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 $16.20 $16.39 $13.61 $13.54 $12.22 $ 10.27
------ ------ ------ ------ ----------- -----------
Income from investment
operations
Net investment income 0.40 0.37 0.37 0.09 0.34 0.35
Net realized and
unrealized gain or loss
on securities 1.02 (0.15) 2.95 0.05** 1.56 2.39
------ ------ ------ ------ ----------- -----------
Total from investment
operations 1.42 0.22 3.32 0.14 1.90 2.74
------ ------ ------ ------ ----------- -----------
Distributions to
shareholders from
Net investment income (0.40) (0.38) (0.36) (0.07) (0.30) (0.33)
Net realized gains on
securities 0 (0.03) (0.18) 0 (0.28) (0.46)
------ ------ ------ ------ ----------- -----------
Total distributions (0.40) (0.41) (0.54) (0.07) (0.58) (0.79)
------ ------ ------ ------ ----------- -----------
Net asset value, end of
period $17.22 $16.20 $16.39 $13.61 $13.54 $ 12.22
------ ------ ------ ------ ----------- -----------
Total return 8.86% 1.38% 24.73% 1.00% 15.80% 27.30%
Ratios and supplemental
data
Net assets, end of
period (millions) $ 8 $ 24 $ 20 $ 15 $ 15 $ 13
Ratios to average net
assets
Expenses ++ 1.04% 1.08% 1.15% 1.13%+ 1.30% 1.50%
Net investment income 2.42% 2.42% 2.48% 2.54%+ 2.63% 3.06%
Portfolio turnover rate 120% 64% 50% 29% 88% 110%
</TABLE>
(a) For the period from March 3, 1995 (commencement of class operations) to De-
cember 31, 1995.
(b) For the three months ended March 31, 1997. The Fund changed its fiscal year
end from December 31 to March 31, effective March 31, 1997.
* Excluding applicable sales charges.
** The per share amount is not in accord with the net realized and unrealized
gains or losses for the period due to the timing of the sales of Fund shares
and the amount of per share realized and unrealized gains or losses at such
time.
+ 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.
20
<PAGE>
EVERGREEN
Balanced Fund
Schedule of Investments
March 31, 2000
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - 59.8%
Automobiles - 0.6%
118,000 General Motors Corp............................... $ 9,771,875
--------------
Banks - 1.8%
140,000 Chase Manhattan Corp.............................. 12,206,250
160,000 FleetBoston Financial Corp........................ 5,840,000
360,000 Mellon Financial Corp............................. 10,620,000
--------------
28,666,250
--------------
Beverages - 0.7%
91,000 Anheuser Busch Companies, Inc..................... 5,664,750
150,000 Pepsico, Inc...................................... 5,184,375
--------------
10,849,125
--------------
Biotechnology - 1.0%
80,000 * Amgen, Inc...................................... 4,910,000
36,000 * Biogen, Inc..................................... 2,515,500
30,000 * MedImmune, Inc.................................. 5,223,750
17,000 * Millennium Pharmaceuticals, Inc................. 2,207,875
--------------
14,857,125
--------------
Chemicals - 0.4%
110,000 Millipore Corp.................................... 6,208,125
--------------
Commercial Services &
Supplies - 0.9%
105,000 Automatic Data Processing, Inc. .................. 5,066,250
150,000 Electronic Data Systems Corp...................... 9,628,125
--------------
14,694,375
--------------
Communications Equipment - 6.1%
520,000 * Cisco Systems, Inc. ............................ 40,202,500
30,000 Corning, Inc...................................... 5,820,000
233,000 Lucent Technologies, Inc.......................... 14,154,750
66,500 Motorola, Inc..................................... 9,467,937
38,700 Nokia Corp., ADR.................................. 8,407,575
95,000 Nortel Networks Corp.............................. 11,970,000
17,000 * RF Micro Devices, Inc........................... 2,284,375
50,000 Scientific Atlanta, Inc........................... 3,171,875
--------------
95,479,012
--------------
Computers & Peripherals - 3.2%
72,000 * EMC Corp........................................ 9,000,000
40,000 * Gateway, Inc.................................... 2,120,000
95,000 Hewlett-Packard Co................................ 12,593,437
97,700 International Business Machines Corp.............. 11,528,600
48,000 * Lexmark Intl. Group, Inc., Cl. A................ 5,076,000
16,450 Palm, Inc.+....................................... 738,194
103,200 * Sun Microsystems, Inc........................... 9,670,163
--------------
50,726,394
--------------
Diversified Financials - 6.0%
45,000 American Express Co............................... 6,702,188
366,400 Citigroup, Inc.................................... 21,732,100
140,000 Federal Home Loan Mtge. Assn...................... 6,186,250
255,000 General Electric Co. ............................. 39,572,812
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Diversified Financials - continued
150,000 Morgan Stanley, Dean Witter & Co.................. $ 12,234,375
120,000 Schwab (Charles) & Co., Inc....................... 6,817,500
--------------
93,245,225
--------------
Diversified Telecommunication Services - 6.0%
60,000 * Allegiance Telecom, Inc......................... 4,837,500
244,050 AT&T Corp......................................... 13,727,813
200,000 * AT&T Corp. Liberty Media Group, Cl. A........... 11,850,000
105,202 Bell Atlantic Corp................................ 6,430,472
150,000 BellSouth Corp.................................... 7,050,000
170,000 * Global Crossing, Ltd.+.......................... 6,959,375
80,000 GTE Corp.......................................... 5,680,000
76,000 * Intermedia Communications, Inc.+................ 3,671,750
150,000 * MCI WorldCom, Inc............................... 6,796,875
235,000 SBC Communications, Inc........................... 9,870,000
120,960 Sprint Corp. ..................................... 7,620,480
85,000 U.S. West, Inc.................................... 6,173,125
63,300 * Winstar Communications, Inc.+................... 3,798,000
--------------
94,465,390
--------------
Electric Utilities - 0.5%
195,000 Dominion Resources, Inc........................... 7,495,313
--------------
Electrical Equipment - 0.5%
170,000 * American Power Conversion Corp.................. 7,288,750
--------------
Electronic Equipment & Instruments - 0.5%
25,000 * Sandisk Corp.................................... 3,062,500
80,000 * Sanmina Corp.+.................................. 5,405,000
--------------
8,467,500
--------------
Health Care Equipment & Supplies - 1.2%
217,000 Medtronic, Inc.................................... 11,161,938
72,000 PE Corp-PE Biosystems Group....................... 6,948,000
--------------
18,109,938
--------------
Health Care Providers & Services - 0.7%
325,000 * Health Management Associates, Inc., Cl. A....... 4,631,250
100,000 United Healthcare Corp............................ 5,962,500
--------------
10,593,750
--------------
Industrial Conglomerates - 0.7%
225,000 Tyco International, Ltd........................... 11,221,875
--------------
Insurance - 1.9%
60,000 AMBAC Finl. Group, Inc............................ 3,022,500
143,750 American International Group, Inc................. 15,740,625
105,000 Marsh & McLennan Co., Inc......................... 11,582,812
--------------
30,345,937
--------------
</TABLE>
21
<PAGE>
EVERGREEN
Balanced Fund
Schedule of Investments (continued)
March 31, 2000
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Internet Software & Services - 0.9%
125,000 * America Online, Inc............................. $ 8,406,250
15,000 VeriSign, Inc..................................... 2,242,500
24,000 * Yahoo!, Inc.+................................... 4,113,000
--------------
14,761,750
--------------
Machinery - 0.4%
150,000 Deere & Co........................................ 5,700,000
--------------
Media - 3.8%
165,000 * CBS Corp........................................ 9,343,125
60,000 * Clear Channel Communications, Inc............... 4,143,750
140,000 Disney (Walt) Co. ................................ 5,792,500
200,000 Martha Stewart Living Omnimedia, Inc.+............ 5,400,000
85,000 Seagram Co., Ltd.................................. 5,057,500
140,000 Time Warner, Inc.................................. 14,000,000
90,000 * Univision Communications, Inc., Cl. A+.......... 10,170,000
90,000 * Viacom, Inc., Cl. B............................. 4,747,500
--------------
58,654,375
--------------
Metals & Mining - 0.3%
70,000 Alcoa, Inc........................................ 4,917,500
--------------
Multiline Retail - 1.7%
175,000 * Costco Wholesale Corp. ......................... 9,198,438
80,000 Target Corp....................................... 5,980,000
200,000 Wal-Mart Stores, Inc.............................. 11,100,000
--------------
26,278,438
--------------
Oil & Gas - 5.0%
255,000 Apache Corp....................................... 12,686,250
80,800 Atlantic Richfield Co............................. 6,868,000
96,868 BP Amoco PLC, ADR+................................ 5,140,058
185,989 Conoco, Inc., Cl. B............................... 4,765,968
100,000 Devon Energy Corp................................. 4,856,250
282,664 Exxon Mobil Corp.................................. 21,994,792
155,000 Royal Dutch Petroleum Co.......................... 8,922,188
200,000 Sunoco, Inc....................................... 5,475,000
150,000 Texaco, Inc....................................... 8,043,750
--------------
78,752,256
--------------
Paper & Forest Products - 0.4%
120,000 Bowater, Inc...................................... 6,405,000
--------------
Personal Products - 0.3%
95,000 Kimberly-Clark Corp............................... 5,320,000
--------------
Pharmaceuticals - 2.6%
210,000 American Home Products Corp....................... 11,261,250
62,500 Johnson & Johnson................................. 4,378,906
225,000 Merck & Co., Inc.................................. 13,978,125
100,000 Schering-Plough Corp.............................. 3,675,000
80,000 Warner-Lambert Co................................. 7,800,000
--------------
41,093,281
--------------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Semiconductor Equipment & Products - 5.0%
84,000 * Applied Materials, Inc.......................... $ 7,917,000
15,000 * Broadcom Corp................................... 3,643,125
150,000 Integrated Device Technology...................... 5,943,750
256,000 Intel Corp........................................ 33,776,000
115,000 * LSI Logic Corp. +............................... 8,351,875
15,000 * PMC-Sierra, Inc................................. 3,055,312
115,000 * Teradyne, Inc................................... 9,458,750
40,000 Texas Instruments, Inc............................ 6,400,000
--------------
78,545,812
--------------
Software - 4.5%
15,000 * I2 Technologies, Inc. +......................... 1,831,875
390,000 * Microsoft Corp.................................. 41,437,500
210,000 * Oracle Systems Corp. ........................... 16,393,125
50,000 * Remedy Corp..................................... 2,106,250
45,000 * Siebel Systems, Inc............................. 5,374,687
23,000 * Veritas Software Corp........................... 3,013,000
--------------
70,156,437
--------------
Specialty Retail - 1.1%
70,000 * Best Buy Co., Inc............................... 6,020,000
105,000 Home Depot, Inc................................... 6,772,500
200,000 * Staples, Inc.................................... 4,000,000
--------------
16,792,500
--------------
Wireless Telecommunications Services - 1.1%
140,000 Vodafone AirTouch Plc, ADR+....................... 7,778,750
70,360 * Voicestream Wireless Corp.+..................... 9,063,248
--------------
16,841,998
--------------
Total Common Stocks
(cost $653,904,089).............................. 936,705,306
--------------
<CAPTION>
Principal
Amount Value
<C> <S> <C>
ASSET-BACKED SECURITIES - 2.9%
$ 2,500,000 CNL Funding, L.P.,
Ser. 1998-1, Cl. B1,
6.60%, 4/18/2011................................. 2,264,844
Contimortgage Home Equity Loan Trust:
4,000,000 Ser. 1998-1, Cl. A6,
6.58%, 12/15/2018................................. 3,897,580
2,750,000 Ser. 1997-4, Cl. A7,
6.63%, 9/15/2016.................................. 2,624,751
6,150,000 Corestates Home Equity Loan Trust,
Ser. 1996-1, Cl. A4,
7.00%, 6/15/2012 (d)............................. 6,115,345
4,500,000 Delta Funding Home Equity Loan Trust,
Ser. 1997-1, Cl. A5,
7.74%, 4/25/2029................................. 4,485,622
6,000,000 Green Tree Finl. Corp.,
Ser. 1997-3, Cl. A5,
7.14%, 7/15/2028................................. 5,967,990
</TABLE>
22
<PAGE>
EVERGREEN
Balanced Fund
Schedule of Investments (continued)
March 31, 2000
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
ASSET-BACKED SECURITIES - continued
Merrill Lynch Mtge. Investors, Inc.:
$ 2,657,268 Ser. 1992-D, Cl. B,
8.50%, 6/15/2017.................................. $ 2,663,659
3,688,665 Ser. 1991-D, Cl. B,
9.85%, 7/15/2011.................................. 3,745,083
1,498,658 Mid State Trust,
Ser. 6, Cl. A3,
7.54%, 7/1/2035.................................. 1,433,114
10,000,000 Premier Auto Trust,
Ser. 1997-2, Cl. B,
6.53%, 12/6/2003................................. 9,884,350
2,500,000 Railcar Leasing LLC,
Ser. 1, Cl. A2,
7.125%, 1/15/2013................................ 2,486,787
320,000 University Support Svcs., Inc.,
Ser. 1992-CD, Cl. D,
9.00%, 11/1/2007................................. 319,520
--------------
Total Asset-Backed Securities
(cost $46,641,516)............................... 45,888,645
--------------
COLLATERALIZED MORTGAGE OBLIGATIONS - 5.9%
Bear Stearns Comml. Mtge. Securities, Inc.:
10,000,000 Ser. 1998-C1, Cl. C,
6.75%, 6/16/2030.................................. 9,190,188
2,000,000 Ser. 2000-WF1, Cl. A2,
7.78%, 2/15/2010.................................. 2,044,545
1,986,951 Carco Auto Loan Master Trust,
Ser. 1997-1, Cl. A,
6.689%, 8/15/2004................................ 1,983,762
4,500,000 Chase Comml. Mtge. Securities Corp.,
Ser. 1999-2, Cl. B,
7.343%, 11/15/2009............................... 4,384,687
2,400,000 Comml. Mtge. Acceptance Corp.,
Ser. 1997-ML1, Cl. B,
6.489%, 12/15/2007............................... 2,281,668
5,000,000 Criimi Mae Comml. Mtge. Trust,
Ser. 1998-C1, Cl. A2,
7.00%, 3/2/2011.................................. 4,334,825
5,188,006 Criimi Mae Finl. Corp.,
Ser. 1, Cl. A,
7.00%, 1/1/2033.................................. 4,947,250
6,446,401 DLJ Mtge. Acceptance Corp.,
Ser. 1994-3, Cl. M,
6.50%, 4/25/2024................................. 5,974,170
1,250,000 FFCA Secured Lending Corp.,
Ser. 1997-1, Cl. B1,
7.74%, 6/18/2013................................. 1,229,844
5,406,225 Finl. Asset Securitization, Inc.,
Ser. 1997-NAM1, Cl. FXA2,
7.75%, 4/25/2027................................. 5,343,431
FNMA:
8,125,000 Ser. 1993-248, Cl. SA,
3.393%, 8/25/2023................................. 6,798,389
4,350,000 Ser. 1997-M6, Cl. C,
6.85%, 5/17/2020.................................. 4,174,325
GE Capital Mtge. Svcs., Inc.:
3,745,000 Ser. 1994-27, Cl. A6,
6.50%, 7/25/2024.................................. 3,290,713
5,000,000 Ser. 1999-15, Cl. A5,
6.75%, 8/25/2029.................................. 4,746,225
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
COLLATERALIZED MORTGAGE OBLIGATIONS - continued
$ 4,800,000 GMAC Comml. Mtge. Securities, Inc.,
Ser. 2000-C1, Cl. A2,
7.724%, 12/15/2009............................... $ 4,861,477
6,452,828 Mellon Residential Funding Corp.,
Ser. 1999-TBC1, Cl. A3,
6.11%, 1/25/2029................................. 6,136,268
7,012,466 Nomura Depositor Trust,
Ser. 1998-ST1, Cl. A1,
6.283%, 1/15/2003................................ 6,942,868
PNC Mtge. Securities Corp.:
2,172,367 Ser. 1999-5, Cl. CB3,
6.89%, 7/25/2029.................................. 2,006,385
2,429,035 Ser. 1997-4, Cl. 2PP3,
7.25%, 7/25/2027.................................. 2,312,842
2,320,276 Ser. 1999-8, Cl. CB3,
7.35%, 9/25/2029.................................. 2,199,187
3,825,813 Residential Asset Securization Trust,
Ser. 2000-A2, Cl. NB1,
8.00%, 4/25/2030................................. 3,819,836
4,087,189 Residential Funding Mtge. Securities I, Inc.,
Ser. 1999-S2, Cl. M1,
6.50%, 1/25/2029................................. 3,695,166
--------------
Total Collateralized Mortgage Obligations
(cost $95,762,272)............................... 92,698,051
--------------
CORPORATE BONDS - 14.4%
Advertising & Related Services - 0.2%
1,500,000 Infinity Broadcasting, Inc.,
Sr. Sub. Notes,
8.875%, 6/15/2007................................ 1,530,000
1,500,000 Lamar Media Corp.,
Sr. Sub. Notes,
9.625%, 12/1/2006................................ 1,496,250
--------------
3,026,250
--------------
Aerospace & Defense - 0.5%
8,300,000 Lockheed Martin Corp.,
7.45%, 6/15/2004................................. 8,104,618
--------------
Automotive Equipment & Manufacturing - 0.5%
1,000,000 Federal Mogul Corp., Notes,
7.50%, 1/15/2009................................. 774,940
6,000,000 Ford Motor Co., Deb.,
8.90%, 1/15/2032................................. 6,703,260
1,000,000 Lear Corp.,
Sub. Notes,
9.50%, 7/15/2006................................. 975,000
--------------
8,453,200
--------------
Banks - 0.5%
3,465,000 Amsouth Bancorp.,
Sub. Deb.,
6.75%, 11/1/2025................................. 3,348,583
3,250,000 Barnett Capital I,
8.06%, 12/1/2026................................. 3,132,880
698,000 Boatmen's Bancshares, Inc.,
6.75%, 3/15/2003................................. 684,221
--------------
7,165,684
--------------
</TABLE>
23
<PAGE>
EVERGREEN
Balanced Fund
Schedule of Investments (continued)
March 31, 2000
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
CORPORATE BONDS - continued
Building, Construction & Furnishings - 0.1%
$ 1,750,000 American Standard, Inc.,
Sr. Notes,
7.375%, 2/1/2008................................ $ 1,583,750
--------------
Cable/Other Video Distribution - 0.2%
1,000,000 Charter Communications,
Sr. Notes,
8.625%, 4/1/2009................................ 887,500
3,000,000 CSC Holdings, Inc.,
Sr. Notes, Ser. B,
8.125%, 7/15/2009............................... 2,946,468
--------------
3,833,968
--------------
Chemical & Agricultural Products - 0.1%
1,000,000 Huntsman ICI Chemicals LLC,
Sr. Sub. Notes,
10.125%, 7/1/2009............................... 970,000
1,000,000 Scotts Co., Sr. Sub. Notes, 144A,
8.625%, 1/15/2009............................... 925,000
--------------
1,895,000
--------------
Communication Systems & Services - 0.1%
1,750,000 Century Communications Corp.,
Sr. Notes,
8.875%, 1/15/2007............................... 1,610,000
--------------
Consumer Products & Services - 0.1%
1,000,000 Playtex Family Products Corp.,
Sr. Sub. Notes,
9.00%, 12/15/2003............................... 977,500
--------------
Energy - 0.5%
2,750,000 Edison Mission Holdings Co.,
Sr. Secd. Bond, Ser. A, 144A,
8.137%, 10/1/2019............................... 2,648,531
2,000,000 El Paso Energy Corp.,
Sr. Notes,
6.75%, 5/15/2009................................ 1,859,684
3,500,000 LSP Energy LP,
Sr. Secd. Notes, 144A,
7.164%, 6/30/2013............................... 3,321,636
--------------
7,829,851
--------------
Environmental Services - 0.2%
2,382,334 Oslo Seismic Svcs., Inc.,
1st Pfd. Mtge. Notes,
8.28%, 6/1/2011................................. 2,374,391
--------------
Finance & Insurance - 3.9%
5,500,000 AMBAC Finl. Group, Inc., Deb.,
9.375%, 8/1/2011................................ 6,079,183
6,550,000 Associates Corp. No. America, MTN,
8.625%, 11/15/2004.............................. 6,839,051
6,400,000 Comml. Credit Co., Notes,
10.00%, 5/15/2009............................... 7,430,784
1,280,000 Dean Witter, Discover & Co.,
6.75%, 10/15/2013............................... 1,179,122
4,000,000 Ford Motor Credit Co.,
5.75%, 2/23/2004................................ 3,770,452
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
CORPORATE BONDS - continued
Finance & Insurance - continued
$ 1,300,000 General Electric Capital Corp., MTN,
8.75%, 3/14/2003................................ $ 1,354,254
5,500,000 GS Escrow Corp.,
Sr. Notes,
6.75%, 8/1/2001................................. 5,305,982
640,000 Intl. Bank For Reconstruction & Dev. Co., MTN,
7.95%, 5/15/2016................................ 689,024
1,750,000 Intl. Lease Fin. Corp.,
5.75%, 1/15/2003+............................... 1,671,037
5,000,000 Lehman Brothers Holdings, Inc.,
6.625%, 4/1/2004................................ 4,819,880
2,700,000 Limestone Electron Trust,
Sr. Notes, 144A,
8.625%, 3/15/2003............................... 2,717,153
Paine Webber Group, Inc.:
2,500,000 6.375%, 5/15/2004 2,370,962
5,460,000 6.45%, 12/1/2003................................ 5,224,838
2,500,000 Regl. Diversified Funding,
Ltd., Sr. Notes, 144A,
9.25%, 3/15/2030................................ 2,512,668
9,200,000 Sun Life Canada Capital Trust, Capital
Securities, 144A,
8.526%, 5/6/2007................................ 8,579,396
--------------
60,543,786
--------------
Gaming - 0.3%
1,000,000 Boyd Gaming Corp.,
Sr. Sub. Notes,
9.50%, 7/15/2007................................ 941,250
1,000,000 Harrahs Operating Co., Inc.,
Sr. Sub. Notes,
7.875%, 12/15/2005.............................. 930,000
1,000,000 Hollywood Park, Inc.,
Sr. Sub. Notes,
9.25%, 2/15/2007................................ 985,000
1,000,000 Mohegan Tribal Gaming Auth.,
Sr. Notes,
8.125%, 1/1/2006................................ 947,500
1,500,000 Station Casinos, Inc.,
Sr. Sub. Notes,
8.875%, 12/1/2008............................... 1,387,500
--------------
5,191,250
--------------
Healthcare Products & Services - 0.1%
3,000,000 Healthsouth Corp., 144A,
3.25%, 4/1/2003................................. 2,358,750
--------------
Industrial Specialty Products & Services - 0.1%
1,126,000 Waste Management, Inc., Deb.,
8.75%, 5/1/2018................................. 1,021,659
--------------
Information Services & Technology - 0.3%
4,500,000 Comdisco Inc.,
6.125%, 1/15/2003............................... 4,313,219
--------------
Lease Rental Obligations - 0.1%
1,000,000 United Rentals, Inc.,
Sr. Sub. Notes, Ser. B,
9.25%, 1/15/2009................................ 890,000
--------------
</TABLE>
24
<PAGE>
EVERGREEN
Balanced Fund
Schedule of Investments (continued)
March 31, 2000
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
CORPORATE BONDS - continued
Leisure & Tourism - 0.1%
$ 1,100,000 Prime Hospitality Corp.,
Sr. Sub. Notes, Ser. B,
9.75%, 4/1/2007................................. $ 1,061,500
--------------
Machinery - Diversified - 0.1%
2,000,000 Caterpillar, Inc.,
9.375%, 7/15/2001............................... 2,047,234
--------------
Manufacturing -Distributing - 0.1%
450,000 Owens Illinois, Inc.,
Sr. Notes,
7.35%, 5/15/2008................................ 405,324
1,001,000 Stanley Works, Notes,
7.375%, 12/15/2002.............................. 995,819
--------------
1,401,143
--------------
Oil/Energy - 0.4%
931,000 Atlantic Richfield Co.,
9.00%, 4/1/2021................................. 1,072,475
1,000,000 Cross Timbers Oil Co.,
Sr. Sub. Notes, Ser. B,
8.75%, 11/1/2009................................ 920,000
1,050,000 Ocean Energy, Inc.,
Sr. Sub. Notes, Ser. B,
8.375%, 7/1/2008................................ 981,750
1,500,000 P&L Coal Holdings Corp.,
Sr. Sub. Notes, Ser. B,
9.625%, 5/15/2008............................... 1,338,750
350,000 Triton Energy, Ltd.,
Sr. Notes,
8.75%, 4/15/2002................................ 347,375
2,000,000 Williams Gas Pipelines Co.,
Sr. Notes, 144A,
7.375%, 11/15/2006.............................. 1,959,400
--------------
6,619,750
--------------
Paper & Packaging - 0.1%
1,300,000 Packaging Corp. of America,
Sr. Sub. Notes,
9.625%, 4/1/2009................................ 1,287,000
--------------
Pharmaceuticals - 0.3%
5,000,000 Johnson & Johnson, Deb.,
8.72%, 11/1/2024................................ 5,426,775
--------------
Printing, Publishing, Broadcasting &
Entertainment - 0.3%
775,000 Ackerley Group, Inc.,
Sr. Sub. Notes, Ser. B,
9.00%, 1/15/2009................................ 720,750
1,000,000 Echostar DBS Corp.,
Sr. Notes,
9.375%, 2/1/2009................................ 970,000
1,000,000 Hollinger Intl. Publishing, Inc.,
Sr. Sub. Notes,
9.25%, 2/1/2006................................. 947,500
1,000,000 Sinclair Broadcast Group, Inc.,
Sr. Sub. Notes,
10.00%, 9/30/2005............................... 945,000
750,000 TV Guide, Inc., Sr. Sub. Notes,
8.125%, 3/1/2009................................ 742,500
--------------
4,325,750
--------------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
CORPORATE BONDS - continued
Real Estate - 0.6%
$ 3,050,000 EOP Operating, Ltd., Sr. Notes,
6.375%, 2/15/2003............................... $ 2,916,877
6,200,000 Prudential Properties,
Notes, 144A,
7.125%, 7/1/2007................................ 5,845,143
--------------
8,762,020
--------------
Retailing & Wholesale - 0.6%
1,000,000 Ames Dept. Stores, Inc.,
Sr. Notes,
10.00%, 4/15/2006............................... 940,000
3,000,000 CVS Corp., Notes,
5.50%, 2/15/2004................................ 2,801,361
1,000,000 Jo-Ann Stores, Inc.,
Sr. Sub. Notes,
10.375%, 5/1/2007............................... 885,000
5,000,000 Mattel, Inc.,
6.125%, 7/15/2005............................... 4,383,455
500,000 Michaels Stores, Inc.,
Sr. Notes,
10.875%, 6/15/2006.............................. 522,500
--------------
9,532,316
--------------
Telecommunication Services
& Equipment - 0.7%
1,000,000 Global Crossing, Ltd.,
Sr. Notes, 144A,
9.125%, 11/15/2006.............................. 955,000
1,000,000 Hyperion Telecommunications, Inc., Sr. Secd.
Notes, Ser. B,
12.25%, 9/1/2004................................ 1,040,000
1,300,000 Nextlink Communications, Inc., Sr. Notes,
12.50%, 4/15/2006............................... 1,345,500
1,000,000 Price Communications Wireless, Inc., Sr. Sub.
Notes,
11.75%, 7/15/2007............................... 1,085,000
2,500,000 Qwest Communications Intl., Inc., Sr. Notes,
7.50%, 11/1/2008................................ 2,430,010
2,500,000 Telecom De Puerto Rico, Inc., Sr. Notes,
6.65%, 5/15/2006................................ 2,409,712
1,050,000 Voicestream Wireless Co., Sr. Notes, 144A,
10.375%, 11/15/2009............................. 1,050,000
1,000,000 Williams Communications Group, Inc., Sr. Notes,
10.875%, 10/1/2009.............................. 992,500
--------------
11,307,722
--------------
Transportation - 1.0%
3,120,000 Burlington Northern Santa Fe Corp., Notes,
6.125%, 3/15/2009+.............................. 2,821,416
5,560,949 FedEx Corp.,
6.845%, 1/15/2019............................... 5,301,614
7,600,000 Golden State Petroleum Trans. Corp., 1st Mtge.
Notes,
8.04%, 2/1/2019................................. 6,869,754
--------------
14,992,784
--------------
</TABLE>
25
<PAGE>
EVERGREEN
Balanced Fund
Schedule of Investments (continued)
March 31, 2000
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
CORPORATE BONDS - continued
Utilities - Electric - 0.7%
$ 6,000,000 Nationwide CSN Trust, Notes, 144A,
9.875%, 2/15/2025............................... $ 6,485,706
4,000,000 Soyland Power Coop., Inc.,
8.67%, 9/15/2018................................ 4,250,468
838,000 Union Electric Co.,
8.00%, 12/15/2022............................... 818,672
--------------
11,554,846
--------------
Utilities - Telephone - 0.1%
2,000,000 MCI Worldcom, Inc., Notes,
6.125%, 4/15/2002............................... 1,950,180
--------------
Utilities - 0.5%
1,750,000 AES Corp., Sr. Sub. Notes,
8.50%, 11/1/2007................................ 1,540,000
6,500,000 Natl. Rural Util. Corp., Coll. Trust,
5.00%, 10/1/2002................................ 6,180,804
--------------
7,720,804
--------------
Airlines - 0.6%
5,000,000 American Airlines, Inc.,
8.39%, 1/2/2017................................. 5,062,000
4,986,039 Continental Airlines, Inc.,
Ser. 1999-1, Cl. B,
6.795%, 2/2/2020................................ 4,663,717
--------------
9,725,717
--------------
Water & Sewer - 0.4%
Republic Services, Inc., Notes:
4,000,000 6.625%, 5/15/2004................................ 3,649,600
2,200,000 7.125%, 5/15/2009................................ 1,919,500
--------------
5,569,100
--------------
Total Corporate Bonds
(cost $238,049,536)............................. 224,457,517
--------------
FOREIGN BONDS (NON U.S. DOLLARS) - 0.7%
40,613,000 Nykredit,
DKK 6.00%, 10/1/2029................................ 4,957,899
43,772,000 Realkredit Danmark,
DKK 6.00%, 10/1/2029................................ 5,337,912
--------------
Total Foreign Bonds (Non U.S. Dollars)
(cost $11,900,490).............................. 10,295,811
--------------
MORTGAGE-BACKED SECURITIES - 5.4%
FHLMC:
4,493,255 5.683%, 8/1/2029................................. 4,348,594
36,634 7.106%, 3/1/2022................................. 37,547
1,915,731 7.144%, 4/1/2022................................. 1,979,245
834,136 7.289%, 1/1/2022................................. 853,297
995,430 8.119%, 5/1/2026................................. 1,013,024
FNMA:
2,442,063 5.482%, 7/1/2029................................. 2,358,920
12,916,534 5.50%, 7/1/2009.................................. 12,034,980
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
MORTGAGE-BACKED SECURITIES - continued
FNMA - continued
$ 2,829,358 6.29%, 3/1/2027.................................. $ 2,782,391
10,230,618 6.386%, 11/1/2039................................ 10,023,499
5,018,727 6.50%, 10/1/2028................................. 4,711,932
2,454,467 7.00%, 5/1/2024.................................. 2,370,303
949,331 7.141%, 5/1/2022................................. 964,826
22,644 7.156%, 12/1/2019................................ 23,423
6,506,021 7.244%, 9/1/2021................................. 6,714,447
1,792,025 7.279%, 1/1/2031................................. 1,857,041
9,357,237 7.456%, 8/1/2027................................. 9,599,808
7,935,609 7.49%, 8/1/2027.................................. 8,179,407
6,500,000 7.50%, 12/1/2099................................. 6,388,265
2,537,634 8.00%, 10/1/2029................................. 2,545,221
4,985,203 9.00%, 8/1/2014.................................. 5,202,209
GNMA:
268,629 8.50%, 5/15/2021................................. 275,836
124,214 8.50%, 7/15/2021................................. 127,547
308,213 8.50%, 6/15/2022................................. 316,483
196,623 9.00%, 10/15/2021................................ 204,234
120,833 9.50%, 2/15/2021................................. 126,837
--------------
Total Mortgage-Backed Securities
(cost $85,272,468).............................. 85,039,316
--------------
U.S. GOVERNMENT & AGENCY OBLIGATIONS - 1.9%
FHLMC:
7,000,000 4.75%, 12/14/2001................................ 6,761,762
10,000,000 5.75%, 6/15/2001................................. 9,877,800
12,950,000 6.625%, 9/15/2009................................ 12,475,240
--------------
Total U.S. Government & Agency Obligations
(cost $29,452,461).............................. 29,114,802
--------------
U.S. TREASURY OBLIGATIONS - 4.6%
U.S. Treasury Bonds:
38,935,000 6.125%, 8/15/2029................................ 39,725,887
15,750,000 6.50%, 11/15/2026................................ 16,621,180
9,200,000 7.875%, 2/15/2021................................ 11,019,879
57,810 5.62-13.875%, 4/30/2000-2/15/2027(a)............. 57,810
5,000,000 U.S. Treasury Notes,
6.00%, 8/15/2009................................ 4,937,500
--------------
Total U.S. Treasury Obligations
(cost $69,000,707).............................. 72,362,256
--------------
YANKEE OBLIGATIONS - 1.7%
Banks - 0.1%
30,000,000 Skandinaviska Enskilda,
8.11%, 5/26/2033................................ 2,415,000
--------------
Cable/Other Video Distribution - 0.1%
1,050,000 Rogers Cablesystems, Ltd.,
11.00%, 12/1/2015............................... 1,189,125
--------------
Finance & Insurance - 0.1%
1,100,000 Tembec Fin. Corp.,
9.875%, 9/30/2005............................... 1,100,000
--------------
</TABLE>
26
<PAGE>
EVERGREEN
Balanced Fund
Schedule of Investments(continued)
March 31, 2000
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
YANKEE OBLIGATIONS - continued
Government - 0.2%
$ 1,000,000 Philippines,
9.875%, 3/16/2010................................ $ 963,750
1,500,000 United Mexican States,
9.875%, 2/1/2010................................. 1,581,750
--------------
2,545,500
--------------
Oil/Energy - 0.2%
1,750,000 Gulf Canada Resources, Ltd.,
8.35%, 8/1/2006.................................. 1,697,500
2,250,000 Petroleum GEO Svcs.,
7.50%, 3/31/2007................................. 2,187,945
--------------
3,885,445
--------------
Oil Field Services - 0.5%
8,000,000 YPF Sociedad Anonima,
7.25%, 3/15/2003................................. 7,790,512
--------------
Paper & Packaging - 0.1%
1,100,000 Domtar, Inc.,
8.75%, 8/1/2006.................................. 1,109,625
400,000 Norampac, Inc.,
9.50%, 2/1/2008.................................. 390,000
--------------
1,499,625
--------------
Telecommunication Services & Equipment - 0.1%
1,000,000 Rogers Cantel, Inc.,
9.75%, 6/1/2016.................................. 1,105,000
825,000 Telewest Communications, Plc,
9.625%, 10/1/2006................................ 800,250
--------------
1,905,250
--------------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
YANKEE OBLIGATIONS - continued
Utilities - 0.3%
$ 5,000,000 TXU Eastern Funding Co.,
6.75%, 5/15/2009................................. $ 4,537,455
--------------
Total Yankee Obligations
(cost $28,323,867)............................... 26,867,912
--------------
<CAPTION>
Shares Value
<C> <S> <C>
MUTUAL FUND SHARES - 4.4%
69,153,929 Navigator Prime Portfolio (a)
(cost $69,153,929)............................... 69,153,929
--------------
<CAPTION>
Principal
Amount Value
<C> <S> <C>
REPURCHASE AGREEMENTS - 2.1%
33,094,000 Evergreen Joint Repurchase Agreement, 6.05%,
dated 3/31/2000, due 4/3/2000, maturity value
$33,110,685
(cost $33,094,000)(b)............................ 33,094,000
--------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
Total Investments -
(cost $1,360,555,334)................... 103.8% 1,625,677,545
Other Assets and
Liabilities - net....................... (3.8) (60,073,614)
------ --------------
Net Assets............................... 100.00% $1,565,603,931
====== ==============
</TABLE>
See Combined Notes to Schedules of Investments.
27
<PAGE>
EVERGREEN
Foundation Fund
Schedule of Investments
March 31, 2000
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - 72.0%
Aerospace & Defense - 0.8%
109,700 * General Motors Corp., Cl. H +..................... $ 13,657,650
194,430 United Technologies Corp.......................... 12,285,546
--------------
25,943,196
--------------
Auto Components - 0.2%
332,760 Delphi Automotive Systems Corp.................... 5,324,160
--------------
Banks - 2.7%
932,039 BankAmerica Corp. ................................ 48,873,795
202,300 Chase Manhattan Corp. ............................ 17,638,031
355,400 FleetBoston Financial Corp........................ 12,972,100
85,700 State Street Corp. ............................... 8,302,188
68,600 U.S. Bancorp...................................... 1,500,625
--------------
89,286,739
--------------
Beverages - 0.9%
182,000 Anheuser Busch Companies, Inc..................... 11,329,500
519,640 Pepsico, Inc...................................... 17,960,057
--------------
29,289,557
--------------
Biotechnology - 0.4%
196,900 * Amgen, Inc. +..................................... 12,084,738
--------------
Chemicals - 1.5%
96,600 Dow Chemical Co................................... 11,012,400
575,400 DuPont (E.I.) De Nemours & Co. +.................. 30,424,275
165,510 PPG Industries, Inc............................... 8,658,242
--------------
50,094,917
--------------
Commercial Services & Supplies - 0.5%
226,100 Automatic Data Processing, Inc.................... 10,909,325
67,100 Priceline.com, Inc. +............................. 5,368,000
--------------
16,277,325
--------------
Communications Equipment - 8.6%
1,565,800 * Cisco Systems, Inc................................ 121,055,912
113,100 Corning, Inc. .................................... 21,941,400
136,200 Ericsson LM Telephone Co., Cl. B, ADR............. 12,777,263
178,600 Motorola, Inc..................................... 25,428,175
116,000 Nokia Corp., ADR.................................. 25,201,000
428,800 Nortel Networks Corp. +........................... 54,028,800
187,000 * Qualcomm, Inc. ................................... 27,921,437
--------------
288,353,987
--------------
Computers & Peripherals - 5.0%
242,500 * EMC Corp.......................................... 30,312,500
176,900 Hewlett-Packard Co................................ 23,450,306
353,400 International Business Machines Corp.............. 41,701,200
52,600 * Network Appliance, Inc. .......................... 4,352,650
740,000 * Sun Microsystems, Inc. ........................... 69,340,313
--------------
169,156,969
--------------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Diversified Financials - 6.8%
149,300 American Express Co............................... $ 22,236,369
682,525 Citigroup, Inc.................................... 40,482,264
196,000 Federal National Mortgage Assn.................... 11,061,750
803,900 General Electric Co............................... 124,755,231
125,100 Morgan Stanley, Dean Witter & Co.................. 10,203,469
318,900 Schwab (Charles) & Co., Inc....................... 18,117,506
--------------
226,856,589
--------------
Diversified Telecommunication Services - 3.7%
2 ALLTEL Corp....................................... 126
458,700 AT&T Corp......................................... 25,801,875
274,215 * Global Crossing, Ltd. +........................... 11,225,676
236,900 GTE Corp. ........................................ 16,819,900
553,650 * MCI WorldCom, Inc................................. 25,087,266
253,000 * Qwest Communications International, Inc. +........ 12,270,500
365,500 Sprint Corp....................................... 23,026,500
127,800 U.S. West, Inc.................................... 9,281,475
--------------
123,513,318
--------------
Electric Utilities - 0.3%
86,100 Duke Energy Corp.................................. 4,520,250
241,500 Southern Co. +.................................... 5,252,625
--------------
9,772,875
--------------
Electronic Equipment & Instruments - 0.2%
66,000 * JDS Uniphase Corp. ............................... 7,957,125
--------------
Energy Equipment & Services - 1.5%
502,130 Baker Hughes, Inc................................. 15,189,432
123,200 Diamond Offshore Drilling, Inc.................... 4,920,300
127,400 Halliburton Co. .................................. 5,223,400
250,200 Schlumberger, Ltd. +.............................. 19,140,300
128,000 Transocean Sedco Forex, Inc....................... 6,568,000
--------------
51,041,432
--------------
Food & Drug Retailing - 0.3%
146,000 CVS Corp. ........................................ 5,484,125
212,800 Walgreen Co. ..................................... 5,479,600
--------------
10,963,725
--------------
Food Products - 0.2%
109,800 Quaker Oats Co.................................... 6,656,625
--------------
Gas Utilities - 0.8%
278,700 Enron Corp........................................ 20,867,662
166,600 The Williams Companies, Inc....................... 7,319,988
--------------
28,187,650
--------------
</TABLE>
28
<PAGE>
EVERGREEN
Foundation Fund
Schedule of Investments (continued)
March 31, 2000
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Health Care Equipment & Supplies - 1.5%
147,800 Baxter International, Inc......................... $ 9,265,212
181,500 Biomet, Inc....................................... 6,602,063
130,700 * Guidant Corp...................................... 7,686,794
448,700 Medtronic, Inc.................................... 23,080,006
43,600 PE Corp-PE Biosystems Group....................... 4,207,400
--------------
50,841,475
--------------
Hotels Restaurants & Leisure - 0.6%
526,200 McDonald's Corp. ................................. 19,765,388
--------------
Industrial Conglomerates - 1.7%
336,000 Honeywell International, Inc...................... 17,703,000
170,500 Minnesota Mining & Manufacturing Co. +............ 15,099,906
451,900 Tyco International, Ltd........................... 22,538,513
--------------
55,341,419
--------------
Insurance - 1.2%
356,912 American International Group, Inc. ............... 39,081,864
--------------
Internet Software & Services - 1.2%
301,400 * America Online, Inc. ............................. 20,269,150
110,300 * Yahoo!, Inc. +.................................... 18,902,662
--------------
39,171,812
--------------
Leisure Equipment & Products - 0.1%
82,300 Eastman Kodak Co.................................. 4,469,919
--------------
Machinery - 0.2%
122,400 Illinois Tool Works, Inc.......................... 6,762,600
--------------
Media - 5.9%
286,820 * CBS Corp.......................................... 16,241,183
262,500 * Clear Channel Communications, Inc. ............... 18,128,906
154,500 * Cox Communications, Inc., Cl. A................... 7,493,250
1,228,779 Disney (Walt) Co. +............................... 50,840,731
188,400 Echostar Communications Corp., Cl. A.............. 14,883,600
105,200 Gannett Co., Inc. ................................ 7,403,450
117,500 * MediaOne Group, Inc............................... 9,517,500
192,800 Seagram Co., Ltd. ................................ 11,471,600
552,680 Time Warner, Inc.................................. 55,268,000
144,200 * Viacom, Inc., Cl. B +............................. 7,606,550
--------------
198,854,770
--------------
Metals & Mining - 0.3%
143,400 Alcoa, Inc. ...................................... 10,073,850
--------------
Multiline Retail - 2.4%
257,060 * Costco Wholesale Corp............................. 13,511,716
126,400 * Kohl's Corp....................................... 12,956,000
84,000 Target Corp....................................... 6,279,000
877,240 Wal-Mart Stores, Inc. ............................ 48,686,820
--------------
81,433,536
--------------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Oil & Gas - 5.1%
182,700 Anadarko Petroleum Corp........................... $ 7,068,206
132,300 Apache Corp. ..................................... 6,581,925
190,200 Burlington Resources, Inc......................... 7,037,400
238,400 Chevron Corp...................................... 22,037,100
526,100 Conoco, Inc., Cl. B............................... 13,481,313
907,226 Exxon Mobil Corp.................................. 70,593,523
423,100 Royal Dutch Petroleum Co.......................... 24,354,694
230,000 Texaco, Inc....................................... 12,333,750
198,400 Unocal Corp....................................... 5,902,400
--------------
169,390,311
--------------
Paper & Forest Products - 0.2%
192,200 International Paper Co............................ 8,216,550
--------------
Personal Products - 0.1%
141,800 Avon Products, Inc................................ 4,121,063
--------------
Pharmaceuticals - 4.0%
292,800 Abbott Laboratories............................... 10,302,900
491,700 American Home Products Corp....................... 26,367,412
276,400 Bristol-Myers Squibb Co. ......................... 15,962,100
264,516 Merck & Co., Inc. +............................... 16,433,056
740,400 Pfizer, Inc....................................... 27,070,875
203,250 Pharmacia & Upjohn, Inc........................... 12,042,563
261,500 Warner-Lambert Co. ............................... 25,496,250
--------------
133,675,156
--------------
Semiconductor Equipment & Products - 5.8%
221,400 * Applied Materials, Inc............................ 20,866,950
804,500 Intel Corp. ...................................... 106,143,719
159,700 * LSI Logic Corp. +................................. 11,598,212
105,700 Micron Technology, Inc............................ 13,318,200
135,500 * Teradyne, Inc..................................... 11,144,875
185,100 Texas Instruments, Inc............................ 29,616,000
--------------
192,687,956
--------------
Software - 5.3%
1,128,000 * Microsoft Corp.................................... 119,850,000
748,100 * Oracle Systems Corp............................... 58,398,556
--------------
178,248,556
--------------
Specialty Retail - 0.6%
330,048 Home Depot, Inc................................... 21,288,096
--------------
Wireless Telecommunications Services - 1.4%
188,100 * Nextel Communications, Inc., Cl. A +.............. 27,885,825
293,200 * Sprint Corp. (PCS Group), Ser. 1 +................ 19,149,625
--------------
47,035,450
--------------
Total Common Stocks
(cost $1,596,039,501)............................ 2,411,220,698
--------------
</TABLE>
29
<PAGE>
EVERGREEN
Foundation Fund
Schedule of Investments(continued)
March 31, 2000
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
CORPORATE BONDS - 1.6%
Automotive Equipment & Manufacturing - 0.7%
$ 25,000,000 Daimler Chrysler AG,
6.90%, 9/1/2004................................. $ 24,523,200
--------------
Communication Systems & Services - 0.2%
6,250,000 Lucent Technologies, Inc.,
6.90%, 7/15/2001................................ 6,233,481
--------------
Retailing & Wholesale - 0.7%
24,975,000 Wal-Mart Stores, Inc., Sr. Notes,
6.875%, 8/10/2009............................... 24,375,600
--------------
Total Corporate Bonds
(cost $56,288,978).............................. 55,132,281
--------------
U.S. GOVERNMENT & AGENCY OBLIGATIONS - 1.5%
53,946,000 FNMA,
5.125%, 2/13/2004............................... 50,422,679
--------------
Total U.S. Government & Agency Obligations
(cost $51,009,629).............................. 50,422,679
--------------
U.S. TREASURY OBLIGATIONS - 25.0%
U.S. Treasury Bonds:
38,000,000 6.00%, 2/15/2026................................. 37,584,394
40,000,000 6.25%, 8/15/2023................................. 40,587,520
25,000,000 7.125%, 2/15/2023................................ 27,976,575
80,500,000 7.25%, 5/15/2016................................. 89,002,813
10,000,000 8.00%, 11/15/2021................................ 12,178,130
50,000,000 8.125%, 8/15/2019................................ 60,781,250
25,000,000 8.125%, 5/15/2021................................ 30,718,750
10,000,000 8.50%, 2/15/2020................................. 12,609,380
U.S. Treasury Notes:
11,360,647 5.00%, 4/30/2001 (a)............................. 11,360,647
125,000,000 5.25%, 8/15/2003................................. 120,742,250
25,000,000 5.50%, 5/15/2009................................. 23,781,250
75,000,000 5.875%, 9/30/2002................................ 73,992,225
52,000,000 5.875%, 11/15/2005............................... 50,927,500
75,000,000 6.125%, 8/15/2007................................ 74,320,350
100,000,000 6.50%, 8/31/2001................................. 99,937,500
25,000,000 6.625%, 5/15/2007................................ 25,492,200
44,500,000 6.875%, 5/15/2006................................ 45,723,750
--------------
Total U.S. Treasury Obligations
(cost $826,917,468)............................. 837,716,484
--------------
<CAPTION>
Shares
<C> <S> <C>
MUTUAL FUND SHARES - 4.8%
158,734,958 Navigator Prime Portfolio (a)
(cost $158,734,958)............................. 158,734,958
--------------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
REPURCHASE AGREEMENTS - 0.6%
$20,630,000 State Street Bank & Trust Co., 6.05%, dated
3/31/2000, due 4/3/2000, maturity value
$20,640,401
(cost $20,630,000) (b)........................... $ 20,630,000
--------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
Total Investments -
(cost $2,709,620,534).. 105.5% 3,533,857,100
Other Assets and
Liabilities - net...... (5.5) (183,557,377)
----- --------------
Net Assets.............. 100.0% $3,350,299,723
===== ==============
</TABLE>
See Combined Notes to Schedules of Investments.
30
<PAGE>
EVERGREEN
Tax Strategic Foundation Fund
Schedule of Investments
March 31, 2000
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
MUNICIPAL OBLIGATIONS - 52.3%
Alabama - 2.1%
$ 5,000,000 Alabama Docks Dept. Facs. RRB,
5.50%, 10/1/2022 (MBIA)........................... $ 4,818,900
2,335,000 Alabama Wtr. Poll. Ctl. Auth. RB, Ser. B,
5.50%, 8/15/2016 (AMBAC).......................... 2,322,391
------------
7,141,291
------------
Alaska - 0.8%
Alaska Hsg. Fin. Corp. RB:
700,000 Ser. A,
6.05%, 12/1/2017 (MBIA)........................... 714,287
2,000,000 Ser. A-1,
5.30%, 12/1/2012 (MBIA)........................... 1,961,200
------------
2,675,487
------------
California - 0.4%
980,000 California HFA MHRB, Ser. C,
5.30%, 8/1/2028................................... 880,873
500,000 Simi Valley, CA Unified Sch. Dist. COP,
5.25%, 8/1/2022 (AMBAC)........................... 479,040
------------
1,359,913
------------
Colorado - 0.4%
1,500,000 Jefferson Cnty., CO GO, Sch. Dist. R-001, Ser. A,
5.00%, 12/15/2017 (FGIC).......................... 1,386,915
------------
Delaware - 0.3%
1,000,000 Delaware EDA RB, Osteopathic Hosp. Assn., Ser. A,
6.50%, 1/1/2008................................... 1,061,900
------------
District Of Columbia - 3.3%
District of Columbia GO, Refunding, Ser. B:
5,000,000 5.50%, 6/1/2014 (FSA).............................. 4,994,700
2,500,000 5.25%, 6/1/2026 (FSA).............................. 2,256,850
1,900,000 District of Columbia RB, Carnegie Endowment,
5.75%, 11/15/2026................................. 1,837,091
2,000,000 Washington DC Convention Ctr. Auth. RB, Sr. Lien,
5.25%, 10/1/2014 (AMBAC).......................... 1,958,300
------------
11,046,941
------------
Florida - 5.0%
6,265,000 Florida Board of Ed. Lottery RB, Ser. A,
5.75%, 7/1/2011 (FGIC)............................ 6,598,799
5,000,000 Florida Fin. Dept. RB, Dept. of Natural Resources,
Ser. A,
6.60%, 7/1/2004 (AMBAC)........................... 5,224,750
2,500,000 Gainesville, FL Util. Sys. RB, Ser. B,
5.50%, 10/1/2013.................................. 2,515,300
2,500,000 Hillsborough Cnty., FL Sch. Board COP, Master Lease
Program, Ser. A,
5.375%, 7/1/2021 (MBIA)........................... 2,400,400
------------
16,739,249
------------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
MUNICIPAL OBLIGATIONS - continued
Georgia - 2.2%
$2,000,000 Fulton County, GA Facs. Corp. COP,
6.00%, 11/1/2015 (AMBAC)........................... $ 2,098,800
5,000,000 Georgia GO, Ser. D,
5.80%, 11/1/2002................................... 5,142,650
------------
7,241,450
------------
Illinois - 2.8%
2,500,000 Chicago, IL GO, City Colleges Capital Impt.,
6.00%, 1/1/2011 (FGIC)............................. 2,654,425
2,500,000 Chicago, IL Skyway Toll Bridge RB,
5.375%, 1/1/2011 (MBIA)............................ 2,519,750
3,000,000 Metropolitan Pier & Exposition Auth. IL RB,
Prerefunded,
6.50%, 6/15/2027................................... 3,201,300
2,000,000 Will County, IL GO, Sch. Dist. 61,
(Eff. Yield 5.50%)
0.00%, 1/1/2016 (FGIC) (c)......................... 807,760
------------
9,183,235
------------
Maine - 0.1%
500,000 Maine Hsg. Auth. RB, Ser. F-1,
5.50%, 11/15/2029.................................. 455,270
------------
Massachusetts - 4.7%
Massachusetts Bay Trans. Auth. RRB, Ser. A:
1,000,000 7.00%, 3/1/2014 (FGIC)............................. 1,160,430
250,000 7.00%, 3/1/2008.................................... 280,783
250,000 Massachusetts HFA RB, Ser. A,
5.95%, 10/1/2008 (AMBAC)........................... 256,285
Massachusetts Hlth. & Edl. Facs. Auth. RB:
2,500,000 Beth Israel Hosp., Ser. G,
5.75%, 7/1/2012.................................... 2,531,650
2,500,000 Cooley Dickinson Hosp., Ser. B,
5.50%, 11/15/2018 (AMBAC).......................... 2,409,600
1,000,000 Univ. of MA Proj., Ser. A,
5.75%, 10/1/2019 (FGIC)............................ 1,007,530
Massachusetts Turnpike Auth. RB:
3,000,000 Sr. Ser. A,
5.125%, 1/1/2017 (MBIA)............................ 2,831,220
1,195,000 Ser. A,
5.55%, 1/1/2017.................................... 1,188,439
4,000,000 Worcester, MA GO, Ser. A,
5.50%, 4/1/2019 (FSA).............................. 3,912,440
------------
15,578,377
------------
Michigan - 0.4%
1,000,000 Detroit, MI Wtr. Supply Sys. RB, Sr. Lien, Ser. A,
5.50%, 7/1/2014 (FGIC)............................. 1,009,390
Michigan Muni. Bond Auth. RB:
195,000 Prerefunded, Ser. G,
6.55%, 11/1/2008 (AMBAC)........................... 211,515
105,000 Unrefunded, Ser. B,
6.55%, 11/1/2008 (AMBAC)........................... 113,127
------------
1,334,032
------------
</TABLE>
31
<PAGE>
EVERGREEN
Tax Strategic Foundation Fund
Schedule of Investments(continued)
March 31, 2000
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
MUNICIPAL OBLIGATIONS - continued
Minnesota - 0.6%
$2,000,000 Southern MN Muni. Pwr. Agcy. RB, Unrefunded, Ser. A,
5.75%, 1/1/2018 (MBIA/IBC)......................... $ 2,004,740
------------
Missouri - 0.7%
760,000 Missouri Hsg. Dev. Commission SFHRB, Ser. B,
6.25%, 9/1/2015 (GNMA/FNMA)........................ 763,397
500,000 St. Louis, MO Muni. Fin. Corp. RB, Ser. A,
5.95%, 2/15/2016 (AMBAC)........................... 513,860
1,000,000 St. Louis, MO Regl. Convention & Sports Complex
Auth. RRB, Ser. C,
5.30%, 8/15/2017 (AMBAC)........................... 966,880
------------
2,244,137
------------
Nevada - 1.2%
4,010,000 Nevada GO, Colorado River Commission, Ser. A,
5.625%, 9/15/2024 (FGIC)........................... 3,913,640
------------
New Jersey - 2.0%
2,500,000 New Jersey EDA PCRB, Ser. A,
6.40%, 5/1/2032 (MBIA)............................. 2,574,650
2,500,000 New Jersey Trans. Corp. COP, Ser. A,
6.125%, 9/15/2015 (AMBAC).......................... 2,632,775
1,400,000 New Jersey Turnpike Auth. RB, Ser. C,
6.50%, 1/1/2016 (MBIA/IBC)......................... 1,557,360
------------
6,764,785
------------
New York - 8.4%
2,500,000 Long Island Pwr. Auth. RB, Ser. A,
5.00%, 12/1/2015 (FSA)............................. 2,349,675
2,000,000 New York City Hlth. & Hosp. Corp. RB, Ser. A,
5.125%, 2/15/2014.................................. 1,918,380
2,500,000 New York City Trans. Auth. COP, Ser. A,
5.40%, 1/1/2019 (AMBAC)............................ 2,425,250
4,755,000 New York Dorm. Auth. RB,
5.75%, 5/15/2013 (FGIC)............................ 4,948,576
3,255,000 New York Env. Facs. Corp. RB, Ser. A,
6.00%, 6/15/2017................................... 3,382,921
New York Med. Care Facs. RB:
210,000 Prerefunded, Ser. B,
6.25%, 8/15/2010 (AMBAC)........................... 219,721
35,000 Unrefunded, Ser. B,
6.25%, 8/15/2010 (AMBAC)........................... 36,447
New York Mtge. Agcy. SFHRB:
250,000 Ser. 44,
6.60%, 4/1/2003.................................... 258,542
780,000 Ser. 56,
5.875%, 10/1/2019.................................. 784,017
500,000 Ser. 63,
5.60%, 4/1/2010.................................... 508,050
1,000,000 New York Thruway Auth. RB, Ser. B,
5.00%, 1/1/2020 (MBIA)............................. 901,140
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
MUNICIPAL OBLIGATIONS - continued
New York - continued
New York, NY GO:
$5,000,000 Ser. F,
5.25%, 8/1/2016 (MBIA/IBC).......................... $ 4,829,450
5,000,000 Ser. G,
5.35%, 8/1/2013 (FGIC).............................. 5,007,950
250,000 Port Auth. of NY & NJ RB, Ser. 97,
7.00%, 7/15/2005 (FGIC)............................. 272,718
------------
27,842,837
------------
North Carolina - 0.1%
500,000 North Carolina HFA SFHRB, Ser. 00,
5.80%, 9/1/2012 (FHA)............................... 508,460
------------
North Dakota - 0.6%
1,000,000 Mercer Cnty., ND PCRRB, Ser. 2,
6.05%, 1/1/2019 (AMBAC)............................. 1,020,960
975,000 North Dakota HFA SFHRB, Ser. C,
5.55%, 7/1/2029..................................... 874,166
------------
1,895,126
------------
Ohio - 1.6%
1,250,000 Akron, OH EDRB,
6.00%, 12/1/2012 (MBIA)............................. 1,343,037
1,000,000 Jefferson Cnty., OH GO,
5.70%, 12/1/2013 (FSA).............................. 1,049,000
3,000,000 Ohio Wtr. Dev. Auth. RB,
5.25%, 12/1/2017 (AMBAC)............................ 2,889,450
------------
5,281,487
------------
Oklahoma - 1.3%
4,010,000 Oklahoma Indl. Auth. RRB, Ser. A,
6.25%, 8/15/2015 (MBIA)............................. 4,218,640
------------
Pennsylvania - 3.1%
2,375,000 Cambria County, PA GO,
5.50%, 8/15/2016 (FGIC)............................. 2,362,175
2,000,000 Delaware River Port Auth., PA & NJ RB,
5.625%, 1/1/2013 (FSA).............................. 2,058,020
500,000 Pennsylvania Convention Ctr. Auth. RB, Ser. A,
6.70%, 9/1/2016 (FGIC).............................. 564,470
3,115,000 Pittsburgh, PA GO, Ser. A,
5.50%, 9/1/2014 (AMBAC)............................. 3,133,347
2,000,000 York Cnty., PA Solid Wst. & Refuse Auth. RRB,
5.50%, 12/1/2011 (FGIC)............................. 2,050,080
------------
10,168,092
------------
Rhode Island - 0.9%
3,025,000 Cranston, RI GO,
5.50%, 7/15/2015 (MBIA)............................. 3,012,356
------------
South Dakota - 0.8%
1,455,000 Brookings, SD COP,
5.10%, 12/1/2018 (AMBAC)............................ 1,332,693
1,235,000 South Dakota Hsg. Dev. Auth. RB, Ser. B,
5.25%, 5/1/2017..................................... 1,183,871
------------
2,516,564
------------
</TABLE>
32
<PAGE>
EVERGREEN
Tax Strategic Foundation Fund
Schedule of Investments(continued)
March 31, 2000
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
MUNICIPAL OBLIGATIONS - continued
Tennessee - 0.7%
$ 300,000 Bristol, TN Hlth. & Edl. Facs. RRB, Bristol Mem.
Hosp.,
6.75%, 9/1/2007 (FGIC)............................. $ 328,878
2,000,000 Nashville & Davidson Cnty., TN Wtr. & Swr. RRB,
5.50%, 1/1/2014 (MBIA)............................. 2,015,640
------------
2,344,518
------------
Texas - 3.8%
1,000,000 Brownsville, TX Util. Sys. RRB,
6.25%, 9/1/2014 (MBIA)............................. 1,081,200
1,000,000 Harris Cnty., TX Hlth. Facs. Dev. Corp. RB, Mem.
Hermann Hosp. Proj.,
5.50%, 6/1/2010 (FSA).............................. 1,013,130
500,000 Houston, TX Water Conveyance Sys. COP, Ser. H,
7.50%, 12/15/2010 (AMBAC).......................... 585,805
460,000 Lubbock, TX Elec. Light & Pwr. Sys. RB,
4.25%, 4/15/2017 (AMBAC)........................... 382,587
San Antonio, TX Elec. & Gas RB:
50,000 Prerefunded,
5.25%, 2/1/2010.................................... 51,011
950,000 Unrefunded,
5.25%, 2/1/2010.................................... 953,923
2,500,000 Texas GO, Ser. B,
5.50%, 10/1/2010................................... 2,557,375
2,960,000 Texas Pub. Fin. Auth. RB,
5.00%, 8/1/2015 (AMBAC)............................ 2,781,512
3,000,000 Texas Wtr. Dev. Board RB, Sr. Lien, Ser. B,
5.75%, 7/15/2013................................... 3,101,790
------------
12,508,333
------------
Utah - 0.3%
500,000 Salt Lake City, UT Hosp. RRB,
6.30%, 2/15/2015 (MBIA/IBC)........................ 541,505
415,000 Utah HFA SFHRB, Ser. B-1, Cl. 1,
6.00%, 7/1/2016 (FHA).............................. 424,014
------------
965,519
------------
Virginia - 0.7%
2,500,000 Northern VA Trans. RRB, Railway Express Project,
5.375%, 7/1/2014 (FSA)............................. 2,500,750
------------
Washington - 2.4%
Clark Cnty., WA GO, Sch. Dist. 117:
3,500,000 5.50%, 12/1/2016 (FSA)............................. 3,480,820
2,000,000 5.50%, 12/1/2017 (FSA)............................. 1,979,780
2,000,000 Seattle, WA Wtr. Sys. RB, Ser. B,
5.75%, 7/1/2023 (FGIC)............................. 1,977,060
500,000 Snohomish Cnty., WA GO, Sch. Dist. 15,
5.70%, 12/1/2015 (FGIC)............................ 506,205
------------
7,943,865
------------
Wisconsin - 0.5%
1,000,000 Wisconsin Clean Wtr. RB, Ser. 1,
6.875%, 6/1/2011................................... 1,142,730
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
MUNICIPAL OBLIGATIONS - continued
Wisconsin - continued
$ 500,000 Wisconsin Hsg. & Econ. Dev. Auth. RB, Ser. E,
6.00%, 9/1/2028..................................... $ 491,935
------------
1,634,665
------------
Puerto Rico - 0.1%
375,000 Puerto Rico Hsg. Bank & Fin. Agcy. SFHRB,
5.85%, 4/1/2009 (GNMA/FNMA/FHLMC)................... 386,445
------------
Total Municipal Obligations
(cost $173,227,886)................................. 173,859,019
------------
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - 46.6%
Aerospace & Defense - 0.4%
7,990 * General Motors Corp., Cl. H........................ 994,755
7,000 United Technologies Corp. ........................... 442,313
------------
1,437,068
------------
Air Freight & Couriers - 0.1%
6,920 United Parcel Service, Inc., Cl. B................... 435,960
------------
Automobiles - 0.4%
14,200 Ford Motor Co........................................ 652,313
8,100 General Motors Corp.................................. 670,781
------------
1,323,094
------------
Banks - 1.6%
5,875 BankAmerica Corp..................................... 308,070
29,070 Charter One Financial, Inc........................... 610,470
25,000 Chase Manhattan Corp................................. 2,179,687
46,191 FleetBoston Financial Corp........................... 1,685,972
10,600 Wells Fargo Co....................................... 433,938
------------
5,218,137
------------
Beverages - 0.6%
40,000 Coca-Cola Co. Femsa SA, ADR.......................... 742,500
36,500 Pepsico, Inc......................................... 1,261,531
------------
2,004,031
------------
Biotechnology - 0.3%
13,800 * Amgen, Inc. ....................................... 846,975
------------
Chemicals - 0.6%
20,000 DuPont (E.I.) De Nemours & Co........................ 1,057,500
12,500 Monsanto Co. ........................................ 643,750
2,800 Praxair, Inc......................................... 116,550
------------
1,817,800
------------
Commercial Services & Supplies - 0.8%
6,900 Automatic Data Processing, Inc. ..................... 332,925
15,000 * Computer Sciences Corp. ........................... 1,186,875
45,000 * Dendrite International, Inc. ...................... 942,187
7,000 First Data Corp. .................................... 309,750
------------
2,771,737
------------
</TABLE>
33
<PAGE>
EVERGREEN
Tax Strategic Foundation Fund
Schedule of Investments(continued)
March 31, 2000
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Communications Equipment - 5.5%
90,000 * Cisco Systems, Inc. ............................... $ 6,958,125
3,330 Corning, Inc......................................... 646,020
10,100 Ericsson LM Telephone Co., Cl. B, ADR................ 947,506
8,100 Motorola, Inc........................................ 1,153,238
15,200 Nokia Corp., ADR..................................... 3,302,200
30,490 Nortel Networks Corp................................. 3,841,740
9,800 * Qualcomm, Inc...................................... 1,463,262
------------
18,312,091
------------
Computers & Peripherals - 3.8%
19,700 * Dell Computer Corp................................. 1,062,569
12,000 * EMC Corp. ......................................... 1,500,000
4,000 Hewlett-Packard Co................................... 530,250
50,000 International Business Machines Corp. ............... 5,900,000
40,000 * Sun Microsystems, Inc. ............................ 3,748,125
------------
12,740,944
------------
Diversified Financials - 5.8%
4,200 American Express Co.................................. 625,538
75,375 Citigroup, Inc....................................... 4,470,680
15,000 Federal National Mortgage Assn....................... 846,562
50,400 General Electric Co.................................. 7,821,450
44,500 Merrill Lynch & Co., Inc. ........................... 4,672,500
9,200 Morgan Stanley, Dean Witter & Co. ................... 750,375
------------
19,187,105
------------
Diversified Telecommunication Services - 4.0%
36,800 AT&T Corp............................................ 2,070,000
18,900 Bell Atlantic Corp. ................................. 1,155,262
166,050 * Global Crossing, Ltd............................... 6,797,672
26,500 SBC Communications, Inc. ............................ 1,113,000
36,000 Sprint Corp.......................................... 2,268,000
------------
13,403,934
------------
Electric Utilities - 0.2%
6,000 Duke Energy Corp. ................................... 315,000
12,200 Southern Co.......................................... 265,350
------------
580,350
------------
Electronic Equipment & Instruments - 2.9%
37,000 * Meade Instruments Corp............................. 2,553,000
17,700 Park Electrochemical Corp............................ 433,650
120,000 * SCI Systems, Inc. ................................. 6,457,500
------------
9,444,150
------------
Energy Equipment & Services - 1.1%
16,800 Baker Hughes, Inc.................................... 508,200
43,000 Diamond Offshore Drilling, Inc....................... 1,717,312
6,100 Halliburton Co....................................... 250,100
15,000 Schlumberger, Ltd.................................... 1,147,500
2,904 Transocean Sedco Forex, Inc.......................... 149,012
------------
3,772,124
------------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Food & Drug Retailing - 0.1%
10,300 CVS Corp............................................. $ 386,894
500 * Safeway, Inc....................................... 22,625
------------
409,519
------------
Health Care Equipment & Supplies - 0.7%
9,200 * Guidant Corp....................................... 541,075
36,000 Medtronic, Inc....................................... 1,851,750
------------
2,392,825
------------
Hotels, Restaurants & Leisure - 0.2%
15,700 McDonald's Corp...................................... 589,731
------------
Household Durables - 0.4%
37,500 Ethan Allen Interiors, Inc........................... 937,500
32,100 La-Z-Boy Chair Co.................................... 493,538
------------
1,431,038
------------
Insurance - 1.1%
4,400 AFLAC, Inc........................................... 200,475
21,250 American International Group, Inc.................... 2,326,875
35,000 Mony Group, Inc...................................... 1,130,937
------------
3,658,287
------------
Internet Software & Services - 0.5%
22,200 * America Online, Inc................................ 1,492,950
------------
Leisure Equipment & Products - 0.1%
5,700 Eastman Kodak Co..................................... 309,581
------------
Machinery - 0.1%
4,000 Illinois Tool Works, Inc............................. 221,000
------------
Media - 1.5%
50,300 Disney (Walt) Co..................................... 2,081,162
25,100 Time Warner, Inc..................................... 2,510,000
9,100 * Viacom, Inc., Cl. B................................ 480,025
------------
5,071,187
------------
Multiline Retail - 0.9%
55,700 Wal-Mart Stores, Inc. ............................... 3,091,350
------------
Oil & Gas - 1.4%
38,000 Exxon Mobil Corp..................................... 2,956,875
29,700 Royal Dutch Petroleum Co............................. 1,709,606
------------
4,666,481
------------
Paper & Forest Products - 0.1%
5,600 International Paper Co............................... 239,400
------------
Personal Products - 0.4%
6,600 Colgate-Palmolive Co................................. 372,075
22,900 Gillette Co. ........................................ 863,044
------------
1,235,119
------------
Pharmaceuticals - 3.3%
24,000 Abbott Laboratories.................................. 844,500
40,000 American Home Products Corp.......................... 2,145,000
</TABLE>
34
<PAGE>
EVERGREEN
Tax Strategic Foundation Fund
Schedule of Investments(continued)
March 31, 2000
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Pharmaceuticals - continued
24,900 Lilly (Eli) & Co. ................................... $ 1,568,700
33,800 Merck & Co., Inc. ................................... 2,099,825
51,900 Pfizer, Inc.......................................... 1,897,594
7,600 Pharmacia & Upjohn, Inc.............................. 450,300
16,200 Schering-Plough Corp. ............................... 595,350
15,000 Warner-Lambert Co.................................... 1,462,500
------------
11,063,769
------------
Semiconductor Equipment & Products - 2.9%
72,000 Intel Corp........................................... 9,499,500
------------
Software - 3.1%
7,430 Computer Associates International, Inc............... 439,763
68,200 * Microsoft Corp. ................................... 7,246,250
35,200 * Oracle Systems Corp. .............................. 2,747,800
------------
10,433,813
------------
Specialty Retail - 1.0%
24,600 Home Depot, Inc. .................................... 1,586,700
30,320 Lowe's Companies, Inc................................ 1,769,930
------------
3,356,630
------------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Tobacco - 0.1%
17,900 Philip Morris Cos., Inc............................. $ 378,138
------------
Wireless Telecommunication Services - 0.6%
4,700 * Nextel Communications, Inc.,...................... 696,775
18,000 * Sprint Corp. (PCS Group), Ser. 1.................. 1,175,625
------------
1,872,400
------------
Total Common Stocks
(cost $94,703,976)................................. 154,708,218
------------
MUTUAL FUND SHARES - 0.3%
1,055,516 Federated Tax Free Obligations Fund (cost
$1,055,516)........................................ 1,055,516
------------
</TABLE>
<TABLE>
<C> <S> <C> <C>
Total Investments -
(cost $268,987,378).......................... 99.2% 329,622,753
Other Assets and
Liabilities - net............................ 0.8 2,508,998
----- ------------
Net Assets.................................... 100.0% $332,131,751
===== ============
</TABLE>
See Combined Notes to Schedules of Investments.
35
<PAGE>
EVERGREEN
Combined Notes to Schedules of Investments
March 31, 2000
(a) Represents investment in cash collateral received for securities on loan.
(b) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices plus accrued interest.
(c) Effective Yield (calculated at the time of purchase) is the yield at which
the bond accretes on an annual basis until maturity date.
(d) Investment in non-controlled affiliate. The Fund owns over 5% of outstand-
ing voting Shares of Corestates Home Equity Loan Trust with a cost basis
of $5,954,274 at March 31, 2000. The Fund earned $430,500 of income from
Corestates Home Equity Loan Trust during the year ended March 31, 2000.
* Non-income producing security.
+ All or a portion of this security is on loan (see Note 7).
144A Security that may be resold to qualified institutional buyers under Rule
144A of the Securities Act of 1933. This security has been determined to
be liquid under guidelines established by the Board of Trustees.
Summary of Abbreviations:
ADR American Depository Receipt
AMBAC American Municipal Bond Assurance Corp.
COP Certificates of Participation
DKK Danish Krone
EDA Economic Development Authority
EDRB Economic Development Revenue Bond
FGIC Financial Guaranty Insurance Corp.
FHA Federal Housing Authority
FHLMC Federal Home Loan Mortgage Corp.
FNMA Federal National Mortgage Association
FSA Financial Security Assurance, Inc.
GNMA Government National Mortgage Association
GO General Obligation
HFA Housing Finance Authority
IBC Insured Bond Certification
MBIA Municipal Bond Investors Assurance Corp.
MHRB Multifamily Housing Revenue Bond
MTN Medium Term Note
PCRB Pollution Control Revenue Bond
PCRRB Pollution Control Refunding Revenue Bond
RB Revenue Bond
RRB Refunding Revenue Bond
SFHRB Single Family Housing Revenue Bond
36
<PAGE>
EVERGREEN
Balanced Funds
Statements of Assets and Liabilities
March 31, 2000
<TABLE>
<CAPTION>
Tax Strategic
Balanced Foundation Foundation
Fund Fund Fund
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets
Identified cost of securities.. $1,360,555,334 $2,709,620,534 $268,987,378
Net unrealized gains on
securities.................... 265,122,211 824,236,566 60,635,375
- -------------------------------------------------------------------------------
Market value of securities..... 1,625,677,545 3,533,857,100 329,622,753
Cash........................... 463 0 186,499
Receivable for securities
sold.......................... 23,287,357 9,635,009 0
Receivable for Fund shares
sold.......................... 338,672 4,995,611 676,156
Dividends and interest
receivable.................... 8,932,045 12,553,757 2,992,767
Unrealized gains on forward
foreign currency exchange
contracts..................... 1,260,895 0 0
Prepaid expenses and other
assets........................ 153,835 76,117 25,583
- -------------------------------------------------------------------------------
Total assets................... 1,659,650,812 3,561,117,594 333,503,758
- -------------------------------------------------------------------------------
Liabilities
Payable for securities
purchased..................... 21,681,192 32,087,753 0
Payable for Fund shares
redeemed...................... 2,667,667 7,995,168 1,202,952
Payable for securities on
loan.......................... 69,211,739 170,095,605 0
Unrealized losses on forward
foreign currency exchange
contracts..................... 81,259 0 0
Due to custodian bank.......... 0 58,180 0
Advisory fee payable........... 39,005 175,405 21,048
Distribution Plan expenses
payable....................... 48,712 147,233 21,740
Due to other related parties... 12,755 27,270 2,716
Accrued expenses and other
liabilities................... 304,552 231,257 123,551
- -------------------------------------------------------------------------------
Total liabilities.............. 94,046,881 210,817,871 1,372,007
- -------------------------------------------------------------------------------
Net assets...................... $1,565,603,931 $3,350,299,723 $332,131,751
- -------------------------------------------------------------------------------
Net assets represented by
Paid-in capital................ $1,165,161,103 $2,191,145,109 $280,611,476
Undistributed (overdistributed)
net investment income......... (123,089) (115,272) 23,511
Accumulated net realized gains
or losses on securities and
foreign currency related
transactions.................. 134,277,648 335,033,320 (9,138,611)
Net unrealized gains on
securities and foreign
currency related
transactions.................. 266,288,269 824,236,566 60,635,375
- -------------------------------------------------------------------------------
Total net assets................ $1,565,603,931 $3,350,299,723 $332,131,751
- -------------------------------------------------------------------------------
Net assets consists of
Class A........................ $1,263,488,146 $ 486,339,364 $ 78,025,241
Class B........................ 279,093,305 1,612,341,908 209,293,643
Class C........................ 3,391,765 76,052,118 37,190,766
Class Y........................ 19,630,715 1,175,566,333 7,622,101
- -------------------------------------------------------------------------------
Total net assets................ $1,565,603,931 $3,350,299,723 $332,131,751
- -------------------------------------------------------------------------------
Shares outstanding
Class A........................ 114,744,790 20,772,436 4,542,027
Class B........................ 25,318,265 69,227,984 12,208,236
Class C........................ 307,524 3,266,460 2,172,826
Class Y........................ 1,784,223 50,202,857 442,735
- -------------------------------------------------------------------------------
Net asset value per share
Class A........................ $ 11.01 $ 23.41 $ 17.18
- -------------------------------------------------------------------------------
Class A--Offering price (based
on sales charge of 4.75%)..... $ 11.56 $ 24.58 $ 18.04
- -------------------------------------------------------------------------------
Class B........................ $ 11.02 $ 23.29 $ 17.14
- -------------------------------------------------------------------------------
Class C........................ $ 11.03 $ 23.28 $ 17.12
- -------------------------------------------------------------------------------
Class Y........................ $ 11.00 $ 23.42 $ 17.22
- -------------------------------------------------------------------------------
</TABLE>
See Combined Notes to Financial Statements.
37
<PAGE>
EVERGREEN
Balanced Funds
Statements of Operations
Year Ended March 31, 2000
<TABLE>
<CAPTION>
Tax Strategic
Balanced Foundation Foundation
Fund Fund Fund
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment income
Dividends (net of foreign
withholding taxes of $94,994,
$143,164 and $8,712,
respectively)...................... $ 10,844,843 $ 29,245,760 $ 1,906,651
Interest............................ 44,214,290 63,315,250 11,021,276
- --------------------------------------------------------------------------------
Total investment income.............. 55,059,133 92,561,010 12,927,927
- --------------------------------------------------------------------------------
Expenses
Advisory fee........................ 6,617,566 23,444,313 3,209,748
Distribution Plan expenses.......... 6,984,862 17,182,043 2,962,300
Administrative services fees........ 518,361 810,085 84,128
Transfer agent fee.................. 2,675,323 5,780,199 441,252
Custodian fee....................... 545,177 839,810 49,352
Other............................... 384,731 565,112 163,666
- --------------------------------------------------------------------------------
Total expenses..................... 17,726,020 48,621,562 6,910,446
Less: Expense reductions........... (107,474) (273,671) (41,764)
- --------------------------------------------------------------------------------
Net expenses....................... 17,618,546 48,347,891 6,868,682
- --------------------------------------------------------------------------------
Net investment income............... 37,440,587 44,213,119 6,059,245
- --------------------------------------------------------------------------------
Net realized and unrealized gains or
losses on securities and foreign
currency related transactions
Net realized gains or losses on:
Securities......................... 233,544,811 400,233,996 (8,829,068)
Foreign currency related
transactions...................... 176,240 (4,322) 0
- --------------------------------------------------------------------------------
Net realized gains or losses on
securities and foreign currency
related transactions............... 233,721,051 400,229,674 (8,829,068)
- --------------------------------------------------------------------------------
Net change in unrealized gains or
losses on securities and foreign
currency related transactions...... (64,983,281) 38,290,296 28,993,003
- --------------------------------------------------------------------------------
Net realized and unrealized gains on
securities and foreign currency
related transactions............... 168,737,770 438,519,970 20,163,935
- --------------------------------------------------------------------------------
Net increase in net assets resulting
from operations.................... $206,178,357 $482,733,089 $26,223,180
- --------------------------------------------------------------------------------
</TABLE>
See Combined Notes to Financial Statements.
38
<PAGE>
EVERGREEN
Balanced Funds
Statements of Changes in Net Assets
Year Ended March 31, 2000
<TABLE>
<CAPTION>
Tax Strategic
Balanced Foundation Foundation
Fund Fund Fund
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
Operations
Net investment income........... $ 37,440,587 $ 44,213,119 $ 6,059,245
Net realized gains or losses on
securities and foreign currency
related transactions........... 233,721,051 400,229,674 (8,829,068)
Net change in unrealized gains
or losses on securities and
foreign currency related
transactions................... (64,983,281) 38,290,296 28,993,003
- ---------------------------------------------------------------------------------
Net increase in net assets
resulting from operations..... 206,178,357 482,733,089 26,223,180
- ---------------------------------------------------------------------------------
Distributions to shareholders
from
Net investment income
Class A........................ (29,905,660) (6,868,187) (1,737,492)
Class B........................ (6,735,679) (13,050,680) (3,207,992)
Class C........................ (49,319) (600,655) (571,600)
Class Y........................ (748,998) (22,626,769) (424,178)
Net realized gains
Class A........................ (142,980,978) (11,319,247) 0
Class B........................ (51,645,527) (40,961,522) 0
Class C........................ (333,772) (1,907,517) 0
Class Y........................ (3,263,474) (32,065,334) 0
- ---------------------------------------------------------------------------------
Total distributions to
shareholders.................. (235,663,407) (129,399,911) (5,941,262)
- ---------------------------------------------------------------------------------
Capital share transactions
Proceeds from shares sold....... 59,092,275 618,309,540 49,820,121
Payment for shares redeemed..... (384,024,328) (860,566,858) (137,896,104)
Net asset value of shares issued
in reinvestment of
distributions.................. 209,008,166 122,165,623 4,942,519
- ---------------------------------------------------------------------------------
Net decrease in net assets
resulting from capital share
transactions.................. (115,923,887) (120,091,695) (83,133,464)
- ---------------------------------------------------------------------------------
Total increase (decrease) in
net assets................... (145,408,937) 233,241,483 (62,851,546)
Net assets
Beginning of period............. 1,711,012,868 3,117,058,240 394,983,297
- ---------------------------------------------------------------------------------
End of period................... $1,565,603,931 $3,350,299,723 $ 332,131,751
- ---------------------------------------------------------------------------------
Undistributed (overdistributed)
net investment income........... $ (123,089) $ (115,272) $ 23,511
- ---------------------------------------------------------------------------------
</TABLE>
See Combined Notes to Financial Statements.
39
<PAGE>
EVERGREEN
Balanced Funds
Statements of Changes in Net Assets
Year Ended March 31, 1999
<TABLE>
<CAPTION>
Tax Strategic
Balanced Foundation Foundation
Fund Fund Fund
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Operations
Net investment income........... $ 48,706,814 $ 55,794,790 $ 6,167,375
Net realized gains or losses on
securities, futures contracts
and foreign currency related
transactions................... 358,710,888 34,888,892 (145,766)
Net change in unrealized gains
or losses on securities and
foreign currency related
transactions................... (286,664,700) 65,223,251 (2,886,895)
- --------------------------------------------------------------------------------
Net increase in net assets
resulting from operations..... 120,753,002 155,906,933 3,134,714
- --------------------------------------------------------------------------------
Distributions to shareholders
from
Net investment income
Class A........................ (40,794,518) (7,549,144) (1,787,162)
Class B........................ (14,038,816) (17,590,016) (3,343,831)
Class C........................ (42,716) (829,474) (594,293)
Class Y........................ (1,284,883) (28,290,021) (541,359)
Net realized gains
Class A........................ (184,104,811) (2,672,130) (131,728)
Class B........................ (86,113,414) (9,707,057) (378,359)
Class C........................ (276,654) (461,341) (68,239)
Class Y........................ (5,578,251) (9,222,962) (36,526)
- --------------------------------------------------------------------------------
Total distributions to
shareholders.................. (332,234,063) (76,322,145) (6,881,497)
- --------------------------------------------------------------------------------
Capital share transactions
Proceeds from shares sold....... 223,177,562 728,373,282 166,239,896
Payment for shares redeemed..... (493,032,834) (542,736,621) (76,065,961)
Net asset value of shares
issued in reinvestment of
distributions.................. 295,195,460 70,776,628 6,054,905
Net asset value of shares
issued in acquisition of
CoreFund, Inc. Balanced Fund... 0 139,832,551 0
- --------------------------------------------------------------------------------
Net increase in net assets
resulting from capital share
transactions.................. 25,340,188 396,245,840 96,228,840
- --------------------------------------------------------------------------------
Total increase (decrease) in
net assets................... (186,140,873) 475,830,628 92,482,057
Net assets
Beginning of period............. 1,897,153,741 2,641,227,612 302,501,240
- --------------------------------------------------------------------------------
End of period................... $1,711,012,868 $3,117,058,240 $394,983,297
- --------------------------------------------------------------------------------
Undistributed (overdistributed)
net investment income.......... $ 410,783 $ (67,644) $ (11,170)
- --------------------------------------------------------------------------------
</TABLE>
See Combined Notes to Financial Statements.
40
<PAGE>
Combined Notes to Financial Statements
1. ORGANIZATION
The Evergreen Balanced Funds consist of Evergreen Balanced Fund ("Balanced
Fund"), Evergreen Foundation Fund ("Foundation Fund") and Evergreen Tax Strate-
gic Foundation Fund ("Tax Strategic Foundation Fund"), (collectively, the
"Funds"). Each Fund is a diversified series of Evergreen Equity Trust (the
"Trust"), a Delaware business trust organized on September 18, 1997. The Trust
is an open-end management investment company registered under the Investment
Company Act of 1940, as amended (the "1940 Act").
The Funds offer Class A, Class B, Class C and Class Y shares. Class A shares
are sold with a maximum front-end sales charge of 4.75%. Class B and Class C
shares are sold without a front-end sales charge, but pay a higher ongoing dis-
tribution fee than Class A. Class B shares are sold subject to a contingent de-
ferred sales charge that is payable upon redemption and decreases depending on
how long the shares have been held. Class B shares purchased after January 1,
1997 will automatically convert to Class A shares after seven years. Class B
shares purchased prior to January 1, 1997 follow the conversion rights at the
time the shares were purchased. Class C shares are sold subject to a 2.00% con-
tingent 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 C
shares purchased prior to February 1, 2000 follow the contingent deferred sales
charge schedule at the time the shares were initially purchased. 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.
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
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 which use prices provided by market makers or
estimates of market value obtained from yield data relating to investments or
securities with similar characteristics.
Securities traded on a national securities exchange or included on the Nasdaq
National Market System ("NMS") and other securities traded in the over-the-
counter market are valued at the last reported sales price on the exchange
where the security is primarily traded. Securities traded on an exchange or NMS
and other securities traded in the over-the-counter market for which there has
been no sale are valued at the mean between the last reported bid and asked
price.
Securities for which market quotations are not readily available, 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 held in a Fund are valued at the net asset value of each mu-
tual fund.
Short-term investments with remaining maturities of 60 days or less are carried
at amortized cost, which approximates market value.
41
<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. Reverse Repurchase Agreements
To obtain short-term financing, the Funds may enter into reverse repurchase
agreements with qualified third-party broker-dealers. Interest on the value of
reverse repurchase agreements is based upon competitive market rates at the
time of issuance. At the time the Funds enter into a reverse repurchase agree-
ment, they will establish and maintain a segregated account with the custodian
containing qualifying assets having a value not less than the repurchase price,
including accrued interest. If the counterparty to the transaction is rendered
insolvent, the ultimate realization of the securities to be repurchased by the
Funds may be delayed or limited.
D. 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 gain or loss on foreign currency related transactions includes foreign
currency gains and losses between trade date and settlement date on investment
securities transactions, foreign currency related transactions and the differ-
ence between the amounts of interest and dividends recorded on the books of the
Fund and the amount actually received. The portion of foreign currency gains or
losses related to fluctuations in exchange rates between the initial purchase
trade date and subsequent sale trade date is included in realized gain or loss
on securities.
E. Futures Contracts
In order to gain exposure to or protect against changes in security values, the
Funds may buy and sell futures contracts.
The initial margin deposited with a broker when entering into a futures trans-
action is subsequently adjusted by daily payments or receipts ("variation mar-
gin") as the value of the contract changes. Such changes are recorded as
unrealized gains or losses. Realized gains or losses are recognized on closing
the contract.
Risks of entering into futures contracts include (i) the possibility of an il-
liquid market for the contract, (ii) the possibility that a change in the value
of the contract may not correlate with changes in the value of the underlying
instrument or index, and (iii) the credit risk that the other party will not
fulfill their obligations under the contract. Futures contracts also involve
elements of market risk in excess of the amount reflected in the Statements of
Assets and Liabilities.
42
<PAGE>
Combined Notes to Financial Statements(continued)
F. Forward Foreign Currency Exchange Contracts
The Funds may enter into forward foreign currency exchange contracts ("forward
contracts") to settle portfolio purchases and sales of securities denominated
in a foreign currency and to hedge certain foreign currency assets or liabili-
ties. Forward contracts are recorded at the forward rate and marked-to-market
daily. Realized gains and losses arising from such transactions are included in
net realized gain or loss on foreign currency related transactions. The Fund
bears the risk of an unfavorable change in the foreign currency exchange rate
underlying the forward contract and is subject to the credit risk that the
other party will not fulfill their obligations under the contract. Forward con-
tracts involve elements of market risk in excess of the amount reflected in the
Statements of Assets and Liabilities.
G. When-issued and Delayed Delivery Transactions
The Funds record when-issued or delayed delivery transactions on the trade date
and will segregate with the custodian qualifying assets having a value suffi-
cient to make payment for the securities purchased. Securities purchased on a
when-issued or delayed delivery basis are marked-to-market daily and the Fund
begins earning interest on the settlement date. Losses may arise due to changes
in the market value of the underlying securities or if the counterparty does
not perform under the contract.
H. Securities Lending
In order to generate income and to offset expenses, the Funds may lend portfo-
lio securities to brokers, dealers and other qualified financial organizations.
The Funds' investment adviser will monitor the creditworthiness of such borrow-
ers. 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 bor-
rower 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 se-
curities 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 obtain the securities loaned at any time on five days' notice. Any gain or
loss in the market price of the loaned securities, which occurs during the term
of the loan, would affect a Fund and its investors. A Fund may pay fees in con-
nection with such loans.
I. Security Transactions and Investment Income
Securities transactions are accounted for no later than one business day after
the trade date. Realized gains and losses are computed on the identified cost
basis. Interest income is recorded on the accrual basis and includes accretion
of discounts and amortization of premiums. Dividend income is recorded on the
ex-dividend date or in the case of some foreign securities, on the date there-
after when the Fund is made aware of the dividend. Foreign income and capital
gains realized on some foreign securities may be subject to foreign taxes,
which are accrued as applicable.
J. Federal Taxes
The Funds have qualified and intend to continue to qualify as regulated invest-
ment companies under the Internal Revenue Code of 1986, as amended (the
"Code"). Thus, the Funds will not incur any federal income tax liability since
they are expected to distribute all of their net investment company taxable in-
come, net tax-exempt income and net capital gains, if any, to their sharehold-
ers. The Funds also intend to avoid any excise tax liability by making the re-
quired distributions under the Code. Accordingly, no provision for federal
taxes is required. To the extent that realized capital gains can be offset by
capital loss carryforwards, it is each Fund's policy not to distribute such
gains.
K. Distributions
Distributions from net investment income for the Funds are declared and paid
quarterly. Distributions from net realized capital gains, if any, are paid at
least annually. Distributions to shareholders are recorded at the close of
business on the ex-dividend date.
43
<PAGE>
Combined Notes to Financial Statements(continued)
Income and capital gains distributions to shareholders are determined in accor-
dance with income tax regulations, which may differ from generally accepted ac-
counting principles. The significant differences between financial statement
amounts available for distributions and distributions made in accordance with
income tax regulations are primarily due to differing treatment for real estate
investment trusts, net foreign currency gains or losses, certain repurchases of
securities sold at a loss, and deferred trustees' fees.
Certain distributions paid during previous years have been reclassified to con-
form to current year presentation.
L. Class Allocations
Income, expenses (other than class specific expenses) and realized and
unrealized gains and losses are prorated among the classes based on the rela-
tive net assets of each class. Currently, class specific expenses are limited
to expenses incurred under the Distribution Plans for each class.
3. INVESTMENT ADVISORY AGREEMENTS AND OTHER AFFILIATED TRANSACTIONS
EIMC is the investment advisor for Balanced Fund. In return for providing in-
vestment management services to Balanced Fund, the Fund pays EIMC a management
fee that is computed and paid daily. The management fee is computed daily at an
annual rate of 1.50% of Balanced Fund's gross investment income plus an amount
determined by applying percentage rates, starting at 0.51% and declining to
0.21% per annum as net assets increase, to the average daily net assets of the
Fund. Prior to January 3, 2000, the management fee was computed daily at an an-
nual rate of 1.50% of the Fund's gross investment income plus an amount deter-
mined by applying percentage rates, starting at 0.60% and declining to 0.30%
per annum as net assets increase, to the average daily net assets of the Fund.
Evergreen Asset Management Corp. ("EAMC"), an indirect wholly owned subsidiary
of FUNB, is the investment advisor to the Foundation Fund and Tax Strategic
Foundation 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>
Advisory Annual Rate
--------------------
<S> <C>
First $750 million.......................... 0.775%
Next $250 million........................... 0.650%
Over $1 billion............................. 0.600%
</TABLE>
Prior to January 3, 2000, the management fee was computed and paid daily based
on each Fund's average daily net assets, in accordance with the following
schedule:
<TABLE>
<CAPTION>
Advisory Annual Rate
--------------------
<S> <C>
First $750 million.......................... 0.875%
Next $250 million........................... 0.750%
Over $1 billion............................. 0.700%
</TABLE>
Lieber & Company, an affiliate of First Union, is the investment sub-advisor to
Foundation Fund and Tax Strategic Foundation Fund and also provides brokerage
services with respect to substantially all security transactions of the Fund
effected on the New York or American Stock Exchanges. For the year ended March
31, 2000, Foundation Fund and Tax Strategic Foundation Fund incurred brokerage
commissions of $695,894 and $118,860, respectively, with Lieber & Company.
Lieber & Company is reimbursed by EAMC for providing investment sub-advisory
services at no additional expense to the Fund.
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. For its services, the Funds pay
the administrator a fee at the annual rate of 0.10% of each Fund's average
daily net assets. Prior to January 3, 2000, the administration fee for each
Fund was also paid by the investment advisor and was not a fund expense; howev-
er, the Balanced Fund reimbursed EIMC for providing certain administration and
accounting expenses.
44
<PAGE>
Combined Notes to Financial Statements(continued)
Prior to March 15, 2000, The BISYS Group, Inc. ("BISYS") served as the sub-ad-
ministrator to the Funds and provided the officers of the Funds. For each Fund,
the sub-administration fee was paid by the investment advisor until the sub-ad-
ministration agreement with BISYS was terminated on March 14, 2000.
Officers of the Funds and affiliated Trustees receive no compensation directly
from the Funds.
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 incurs distributions fees equal to 0.25% of the average
daily net assets of the class, all of which is used to pay for shareholder
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 distribu-
tion 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 cal-
culated and paid daily.
During the year ended March 31, 2000, amounts paid or accrued to EDI pursuant
to each Fund's Class A, Class B and Class C Distribution Plans were as follows:
<TABLE>
<CAPTION>
Class A Class B Class C
-------------------------------
<S> <C> <C> <C>
Balanced Fund.................. $3,008,164 $ 3,949,810 $ 26,888
Foundation Fund................ 1,071,883 15,393,630 716,530
Tax Strategic Foundation Fund.. 205,744 2,340,567 415,989
</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
Effective on the close of business on July 24, 1998, Foundation Fund acquired
substantially all the assets and assumed certain liabilities of CoreFunds, Inc.
Balanced Fund, an open-end management investment company registered under the
1940 Act, in an exchange of shares. The net assets were exchanged through a
tax-free exchange for 321,554 Class A shares, 49,982 Class B shares and
6,470,202 Class Y shares of Foundation Fund. The acquired net assets consisted
primarily of portfolio securities with unrealized appreciation of $29,739,766.
The aggregate net assets of Foundation Fund and CoreFunds, Inc. Balanced Fund
immediately prior to the acquisition were $2,784,240,332 and $139,832,551, re-
spectively. The aggregate net assets of Foundation Fund immediately after the
acquisition were $2,924,072,883.
45
<PAGE>
Combined Notes to Financial Statements(continued)
6. CAPITAL SHARE TRANSACTIONS
The Funds have an unlimited number of shares of beneficial interest with $0.001
par value authorized. Shares of beneficial interest of the Funds are currently
divided into Class A, Class B, Class C and Class Y. Transactions in shares of
the Funds were as follows:
Balanced Fund
<TABLE>
<CAPTION>
Year Ended Year Ended
March 31, 2000 March 31, 1999
-------------------------- --------------------------
Shares Amount Shares Amount
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A
Shares sold............. 1,427,850 $ 16,002,563 12,998,481 $ 147,893,792
Automatic conversion of
Class B shares to Class
A shares............... 13,443,310 144,586,843 0 0
Shares redeemed......... (24,392,866) (270,880,152) (20,007,662) (241,408,480)
Shares issued in
reinvestment of
distributions.......... 14,225,023 151,080,079 17,759,884 197,162,184
- ---------------------------------------------------------------------------------
Net increase............ 4,703,317 40,789,333 10,750,703 103,647,496
- ---------------------------------------------------------------------------------
Class B
Shares sold............. 3,613,594 40,427,711 5,776,852 70,031,992
Automatic conversion of
Class B shares to Class
A shares............... (13,431,818) (144,586,843) 0 0
Shares redeemed......... (8,396,501) (93,905,119) (20,690,767) (241,461,335)
Shares issued in
reinvestment of
distributions.......... 5,103,562 54,090,243 8,339,827 92,447,046
- ---------------------------------------------------------------------------------
Net decrease............ (13,111,163) (143,974,008) (6,574,088) (78,982,297)
- ---------------------------------------------------------------------------------
Class C
Shares sold............. 129,406 1,420,820 169,732 2,053,953
Shares redeemed......... (67,047) (741,647) (49,785) (594,203)
Shares issued in
reinvestment of
distributions.......... 32,666 346,576 28,180 311,824
- ---------------------------------------------------------------------------------
Net increase............ 95,025 1,025,749 148,127 1,771,574
- ---------------------------------------------------------------------------------
Class Y
Shares sold............. 110,610 1,241,181 261,048 3,197,825
Shares redeemed......... (1,662,103) (18,497,410) (784,486) (9,568,816)
Shares issued in
reinvestment of
distributions.......... 330,278 3,491,268 478,147 5,274,406
- ---------------------------------------------------------------------------------
Net decrease............ (1,221,215) (13,764,961) (45,291) (1,096,585)
- ---------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from capital share
transactions........... $(115,923,887) $ 25,340,188
- ---------------------------------------------------------------------------------
</TABLE>
Foundation Fund
<TABLE>
<CAPTION>
Year Ended Year Ended
March 31, 2000 March 31, 1999
-------------------------- --------------------------
Shares Amount Shares Amount
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A
Shares sold............. 6,798,761 $ 149,510,608 5,707,085 $ 116,332,291
Automatic conversion of
Class B shares to Class
A shares............... 1,451,478 32,988,767 0 0
Shares redeemed......... (6,372,862) (139,288,575) (5,528,399) (112,531,601)
Shares issued in
reinvestment of
distributions.......... 784,989 17,356,659 480,589 9,839,057
Shares issued in
acquisition of
CoreFunds, Inc.
Balanced Fund.......... 0 0 321,554 6,566,886
- ---------------------------------------------------------------------------------
Net increase............ 2,662,366 60,567,459 980,829 20,206,633
- ---------------------------------------------------------------------------------
Class B
Shares sold............. 12,155,031 264,194,950 20,450,695 415,256,001
Automatic conversion of
Class B shares to Class
A shares............... (1,459,461) (32,988,767)
Shares redeemed......... (12,398,770) (270,600,331) (8,458,046) (170,363,447)
Shares issued in
reinvestment of
distributions.......... 2,352,967 51,629,260 1,292,568 26,379,301
Shares issued in
acquisition of
CoreFunds, Inc.
Balanced Fund.......... 0 0 49,982 1,015,265
- ---------------------------------------------------------------------------------
Net increase............ 649,767 12,235,112 13,335,199 272,287,120
- ---------------------------------------------------------------------------------
Class C
Shares sold............. 1,031,134 22,422,253 1,358,670 27,583,261
Shares redeemed......... (1,096,422) (24,016,416) (646,190) (13,071,227)
Shares issued in
reinvestment of
distributions.......... 91,220 1,999,515 59,528 1,214,951
- ---------------------------------------------------------------------------------
Net increase............ 25,932 405,352 772,008 15,726,985
- ---------------------------------------------------------------------------------
Class Y
Shares sold............. 8,382,988 182,181,729 8,320,162 169,201,729
Shares redeemed......... (19,463,190) (426,661,536) (12,069,787) (246,770,346)
Shares issued in
reinvestment of
distributions.......... 2,314,964 51,180,189 1,628,347 33,343,319
Shares issued in
acquisition of
CoreFunds, Inc.
Balanced Fund.......... 0 0 6,470,202 132,250,400
- ---------------------------------------------------------------------------------
Net increase
(decrease)............. (8,765,238) (193,299,618) 4,348,924 88,025,102
- ---------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from capital share
transactions........... $(120,091,695) $ 396,245,840
- ---------------------------------------------------------------------------------
</TABLE>
46
<PAGE>
Combined Notes to Financial Statements(continued)
Tax Strategic Foundation Fund
<TABLE>
<CAPTION>
Year Ended Year Ended
March 31, 2000 March 31, 1999
------------------------ ------------------------
Shares Amount Shares Amount
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A
Shares sold................ 1,258,767 $ 21,031,217 2,373,800 $ 38,260,527
Automatic conversion of
Class B shares to Class A
shares.................... 100,148 1,666,149 0 0
Shares redeemed............ (1,955,391) (32,110,861) (1,712,788) (27,167,670)
Shares issued in
reinvestment of
distributions............. 93,937 1,547,638 110,933 1,765,631
- -------------------------------------------------------------------------------
Net increase (decrease).... (502,539) (7,865,857) 771,945 12,858,488
- -------------------------------------------------------------------------------
Class B
Shares sold................ 1,291,886 21,249,593 5,907,847 94,740,617
Automatic conversion of
Class B shares to Class A
shares.................... (100,373) (1,666,149) 0 0
Shares redeemed............ (4,301,937) (70,574,536) (2,307,135) (36,564,880)
Shares issued in
reinvestment of
distributions............. 168,907 2,773,417 217,074 3,451,970
- -------------------------------------------------------------------------------
Net increase (decrease).... (2,941,517) (48,217,675) 3,817,786 61,627,707
- -------------------------------------------------------------------------------
Class C
Shares sold................ 436,018 7,161,827 1,684,267 26,890,534
Shares redeemed............ (1,086,896) (17,758,138) (625,888) (9,938,022)
Shares issued in
reinvestment of
distributions............. 28,527 466,838 37,777 599,814
- -------------------------------------------------------------------------------
Net increase (decrease).... (622,351) (10,129,473) 1,096,156 17,552,326
- -------------------------------------------------------------------------------
Class Y
Shares sold................ 22,542 377,484 395,815 6,348,218
Shares redeemed............ (1,063,959) (17,452,569) (149,296) (2,395,389)
Shares issued in
reinvestment of
distributions............. 9,419 154,626 14,888 237,490
- -------------------------------------------------------------------------------
Net increase (decrease).... (1,031,998) (16,920,459) 261,407 4,190,319
- -------------------------------------------------------------------------------
Net increase (decrease) in
net assets resulting from
capital shares
transactions.............. $(83,133,464) $ 96,228,840
- -------------------------------------------------------------------------------
</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 March 31, 2000:
<TABLE>
<CAPTION>
Cost of Purchases Proceeds from Sales
--------------------------- ---------------------------
U.S. Non-U.S. U.S. Non-U.S.
Government Government Government Government
-------------------------------------------------------
<S> <C> <C> <C> <C>
Balanced Fund.. $495,940,585 $1,232,127,024 $379,265,367 $1,658,657,576
Foundation
Fund.......... 633,652,797 1,936,174,742 571,687,496 2,043,264,735
Tax Strategic
Foundation
Fund.......... 0 440,054,764 0 524,495,464
</TABLE>
At March 31, 2000, Balanced Fund had forward foreign exchange contracts out-
standing as follows:
Forward Foreign Currency Exchange Contracts to Buy:
<TABLE>
<CAPTION>
Contracts U.S. Value at In Exchange Unrealized
Exchange Date to Receive March 31, 2000 for U.S. $ Gain (Loss)
---------------------------------------------------------------------
<S> <C> <C> <C> <C>
4/20/2000 6,814,980 Euro $6,534,587 6,615,846 $(81,259)
4/20/2000 6,753,000 Euro 6,475,157 6,434,933 40,224
</TABLE>
Forward Foreign Currency Exchange Contracts to Sell:
<TABLE>
<CAPTION>
Unrealized
Contracts to U.S. Value at In Exchange Gain
Exchange Date Deliver March 31, 2000 for U.S. $ (Loss)
---------------------------------------------------------------------
<S> <C> <C> <C> <C>
4/20/2000 20,000,000 Euro $19,177,129 20,397,800 $1,220,671
</TABLE>
The Balanced Fund and Foundation Fund loaned securities during the year ended
March 31, 2000 to certain brokers who paid the Funds a negotiated lenders' fee.
These fees are included in interest income. At March 31, 2000, the value of se-
curities on loan and the value of collateral (including accrued interest)
amounted to $68,014,648 and $69,211,739, respectively, for Balanced Fund and
$167,457,356 and $170,095,605, respectively, for Foundation Fund. During the
year ended March 31, 2000, Balanced Fund and Foundation Fund earned $1,035,373
and $38,555, respectively, in income from securities lending.
47
<PAGE>
Combined Notes to Financial Statements(continued)
On March 31, 2000 the composition of unrealized appreciation and depreciation
on securities based on the aggregate cost of securities for federal income tax
purposes were as follows:
<TABLE>
<CAPTION>
Gross Gross Net
Unrealized Unrealized Unrealized
Tax Cost Appreciation Depreciation Appreciation
------------------------------------------------------
<S> <C> <C> <C> <C>
Balanced Fund.. $1,362,027,056 $300,282,328 $(36,631,839) $263,650,489
Foundation
Fund.......... 2,709,627,672 864,961,693 (40,732,265) 824,229,428
Tax Strategic
Foundation
Fund.......... 268,997,579 63,893,625 (3,268,451) 60,625,174
</TABLE>
As of March 31, 2000, the Tax Strategic Foundation Fund had a capital loss car-
ryover for federal income tax purposes of $9,128,410, which expires on
3/31/2008.
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
Funds' expenses. The amount of expense reductions received by each Fund and the
impact of the total expense reductions on each Fund's annualized expense ratio
represented as a percentage of its average net assets were as follows:
<TABLE>
<CAPTION>
% of
Expense Offset Brokerage Total Expense Average
Arrangements Transactions Reductions Net Assets
----------------------------------------------------
<S> <C> <C> <C> <C>
Balanced Fund... $ 82,415 $ 25,059 $107,474 0.01%
Foundation
Fund........... 138,960 134,711 273,671 0.01
Tax Strategic
Foundation
Fund........... 19,337 22,427 41,764 0.01
</TABLE>
9. DEFERRED TRUSTEES' FEES
Each Independent Trustee of each Fund may defer any or all compensation related
to performance of their duties as Trustees. The Trustees' deferred balances are
allocated to deferral accounts, which are included in the accrued expenses for
the Fund. The investment performance of the deferral accounts 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
Certain Evergreen Funds, State Street Bank and Trust Company ("State Street")
and The Bank of New York ("BONY") entered into an amended financing agreement
on December 22, 1998. Under this agreement, State Street and BONY provided an
unsecured credit facility in the aggregate amount of $150 million ($125 million
committed and $25 million uncommitted). The credit facility was allocated, un-
der the terms of the financing agreement between State Street and BONY. The
credit facility was accessed by the Funds for temporary or emergency purposes
only and was subject to each Fund's borrowing restrictions. Borrowings under
this facility bore interest at 0.50% per annum above the Federal Funds rate. A
commitment fee of 0.065% per annum was incurred on the unused portion of the
committed facility, which was allocated to all funds. State Street served as
administrative agent and was entitled to a fee of $20,000 per annum which was
allocated to all of the funds. This agreement was terminated on July 27, 1999.
On July 27, 1999, certain Evergreen Funds and a group of banks (the "Lenders")
entered into a credit agreement. Under this agreement, the Lenders provide an
unsecured revolving credit commitment in the aggregate amount of $1.050 bil-
lion. The credit facility is allocated, under the terms of the financing agree-
ment, among the Lenders. The credit facility is accessed by the Funds for tem-
porary or emergency purposes to fund the redemption of their shares or for gen-
eral working capital purposes as permitted by each Fund's borrowing restric-
tions. Borrowings under this facility bear 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
48
<PAGE>
Combined Notes to Financial Statements(continued)
through and including January 31, 2000). A commitment fee of 0.10% per annum is
incurred on the average daily unused portion of the revolving credit commit-
ment. The commitment fee is allocated to all funds. For its assistance in ar-
ranging this financing agreement, First Union Capital Markets Corp. was paid a
one-time arrangement fee of $250,000. State Street serves as paying agent for
the funds and as paying agent is entitled to a fee of $20,000 per annum which
is allocated to all the funds.
During the year ended March 31, 2000, the Funds had no significant borrowings
under these agreements.
49
<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 Balanced Fund, Evergreen
Foundation Fund and Evergreen Tax Strategic Foundation Fund, portfolios of Ev-
ergreen Equity Trust, as of March 31, 2000, and the related statements of oper-
ations 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 finan-
cial 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 audits.
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 March 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 Balanced Fund, Evergreen Foundation Fund and Evergreen Tax Strategic
Foundation Fund as of March 31, 2000, the results of their operations, changes
in their net assets and financial highlights for each of the years or periods
described above in conformity with accounting principles generally accepted in
the United States of America.
/s/ KPMG LLP
Boston, Massachusetts
May 5, 2000
50
<PAGE>
Additional Information (Unaudited)
FEDERAL STATUS OF DIVIDENDS
Pursuant to section 852 of the Internal Revenue Code, the Funds have designated
the following amounts as long-term capital gains for the fiscal year ended
March 31, 2000:
<TABLE>
<CAPTION>
Per
Aggregate Share
-------------------
<S> <C> <C>
Balanced Fund............................... $198,223,751 $1.454
Foundation Fund............................. 86,373,923 0.586
</TABLE>
For corporate shareholders, the following percentages of ordinary income divi-
dends paid during the fiscal year ended March 31, 2000 qualified for the divi-
dends received deduction:
<TABLE>
<S> <C>
Balanced Fund............................................. 11.80%
Foundation Fund........................................... 57.88
Tax Strategic Foundation Fund............................. 100.00
</TABLE>
For the fiscal year ended March 31, 2000, the percentage representing the por-
tion of dividends exempt from federal income tax, other than alternative mini-
mum tax for Tax Strategic Foundation Fund is 84.70%.
51
<PAGE>
Evergreen Funds
Money Market
Treasury Money Market Fund
Money Market Fund
Municipal Money Market Fund
Florida Municipal Money Market Fund
New Jersey Municipal Money Market Fund
Pennsylvania Municipal Money Market Fund
Tax Advantaged
Short Intermediate Municipal Bond Fund
High Grade Municipal Bond Fund
Municipal Bond Fund
Connecticut Municipal Bond Fund
Florida Municipal Bond Fund
Florida High Income Municipal Bond Fund
Georgia Municipal Bond Fund
Maryland Municipal Bond Fund
New Jersey Municipal Bond Fund
North Carolina Municipal Bond Fund
Pennsylvania Municipal Bond Fund
South Carolina Municipal Bond Fund
Virginia Municipal Bond Fund
Tax-Free High Income Fund
Income
Intermediate Term Bond Fund
U.S. Government Fund
Diversified Bond Fund
Strategic Income Fund
High Yield Bond Fund
Quality Income Fund
Short-Duration Income Fund
Balanced
Balanced Fund
Tax Strategic Foundation Fund
Foundation Fund
Growth & Income
Utility Fund
Income and Growth Fund
Value Fund
Blue Chip Fund
Growth and Income Fund
Small Cap Value Fund
Select Equity Index Fund
Domestic Growth
Tax Strategic Equity Fund
Strategic Growth Fund
Stock Selector Fund
Evergreen Fund
Masters Fund
Omega Fund
Small Company Growth Fund
Aggressive Growth Fund
Growth Fund
Capital Growth Fund
Select Special Equity Fund
Global International
Global Leaders Fund
International Growth Fund
Global Opportunities Fund
Precious Metals Fund
Emerging Markets Growth Fund
Latin America Fund
Perpetual Global Fund
Perpetual International Fund
Express Line
800.346.3858
Investor Services
800.343.2898
www.evergreen-funds.com
64261 543690 5/2000
-----------------
BULK RATE
[LOGO OF EVERGREEN FUNDS] U.S. POSTAGE
200 Berkeley Street PAID
Boston,MA 02116 PERMIT NO. 19
HUDSON, MA
-----------------
