<PAGE>
Semiannual Report
as of September 30, 2000
Evergreen
Balanced Funds
[LOGO OF EVERGREEN FUNDS]
[SEAL]
<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........................................................ 6
Portfolio Manager Interview............................................. 7
Evergreen Tax Strategic Foundation Fund
Fund at a Glance........................................................ 9
Portfolio Manager Interview............................................. 10
Financial Highlights
Evergreen Balanced Fund................................................. 13
Evergreen Foundation Fund............................................... 15
Evergreen Tax Strategic Foundation Fund................................. 17
Schedules of Investments
Evergreen Balanced Fund................................................. 19
Evergreen Foundation Fund............................................... 31
Evergreen Tax Strategic Foundation Fund................................. 39
Combined Notes to Schedules of
Investments................................................................. 47
Statements of Assets and Liabilities........................................ 48
Statements of Operations.................................................... 49
Statements of Changes in Net Assets......................................... 50
Combined Notes to Financial
Statements.................................................................. 52
Evergreen Funds
Evergreen Funds is one of the nation's fastest growing investment companies with
more than $80 billion in assets under management.
We offer over 80 mutual funds to choose among and acclaimed service and
operations capabilities, giving investors 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 semiannual report must be preceded or accompanied by a prospectus of an
Evergreen fund contained herein. The prospectus contains more complete
information, including fees and expenses, and should be read carefully before
investing or sending money.
Mutual Funds: ARE NOT FDIC INSURED MAY LOSE VALUE NOT BANK GUARANTEED
Evergreen Distributor, Inc.
Evergreen Funds\SM\ is a service mark of Evergreen Investment Services, Inc.
<PAGE>
Letter to Shareholders
----------------------
November 2000
[PHOTO]
William M. Ennis
President and CEO
Dear Evergreen Shareholders:
We are pleased to provide the Evergreen Balanced Funds semiannual report, which
covers the six-month period ended September 30, 2000
A Challenging Environment for Investors
During 2000, U.S. equity markets challenged investors with a series of turbulent
ups and downs and a constant rotation from one particular sector for a brief
period of time to another. The market favored the new economy then the old
economy, big caps then mid-caps, value then growth, dot coms then technology
equipment, creating significant uncertainties for investors.
Concerns about wage-driven inflation, higher interest rates and increasing oil
prices also affected market valuations and volatility. Although these factors
have the potential to meaningfully slow the economy, many leading indicators
continue to demonstrate strength. We believe that the U.S. economy will slow
moderately, aided by the Federal Reserve's focus on interest rates, and will
ultimately create a soft landing, which should create the launch pad for a
continued expansion.
New Products and Services
Evergreen Funds is constantly striving to develop products and services to meet
the sophisticated demands of our investors. This year we launched two new Sector
Funds: Evergreen Health Care Fund and Evergreen Technology Fund. We are very
excited about the launch of these funds. Please consult with your financial
advisor to see if these funds would be appropriate in your portfolio or visit
evergreen-funds.com for more information.
The Value of Diversification
An environment like this year's offers many reasons for building a diversified
portfolio rather than trying to predict the market's movements. Diversification
provides exposure to many different opportunities while reducing the risk of any
single investment or strategy. We encourage you to talk to your financial
advisor to confirm that your investment portfolio is appropriately diversified
and structured to support your long-term investment objectives.
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 September 30, 2000
"In general, it was a period in which it was prudent to be reasonably
diversified, with a large number of stocks from different industries and to trim
back specific holdings after periods of particularly strong performance."
Portfolio
Management
----------------
[PHOTO] [PHOTO]
Patricia Bannan, CFA Gary Pzegeo, CFA
Tenure: November 1999 Tenure: January 1999
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CURRENT INVESTMENT STYLE/1/
--------------------------------------------------------------------------------
[STYLE BOX]
Morningstar's Style Box is based on a portfolio date as of 9/30/2000.
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.
/1/ Source: Morningstar, Inc.
/2/ Past performance is no guarantee of future results. The performance of each
class may vary based on differences in loads, fees and expenses paid by the
shareholders investing in each class. 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, C 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.
The Fund's investment objective is non-fundamental and may be changed without
the vote of the Fund's shareholders.
--------------------------------------------------------------------------------
PERFORMANCE AND RETUNS/2/
--------------------------------------------------------------------------------
Portfolio Inception Date: 9/11/1935 Class A Class B Class C Class Y
Class Inception Date 1/20/1998 9/11/1935 1/22/1998 1/26/1998
Average Annual Returns*
6 months with sales charge -5.13% -5.68% -2.73% n/a
6 months w/o sales charge -0.39% -0.77% -0.76% -0.27%
1 year with sales charge 8.33% 7.89% 10.91% n/a
1 year w/o sales charge 13.69% 12.76% 12.86% 13.90%
5 years 13.10% 13.14% 13.36% 14.48%
10 years 12.54% 12.23% 12.21% 13.37%
Maximum Sales Charge 4.75% 5.00% 2.00% n/a
Front End CDSC CDSC
30-day SEC Yield 2.46% 1.83% 1.83% 2.84%
6-month income dividends per share $0.14 $0.09 $0.09 $0.15
* Adjusted for maximum applicable sales charge.
--------------------------------------------------------------------------------
LONG TERM GROWTH
--------------------------------------------------------------------------------
[GRAPH]
CPI LBGCI S&P 500 Class B
9/30/90 10,000 10,000 10,000 10,000
9/30/91 10,339 11,586 13,117 12,219
9/30/92 10,648 13,119 14,566 13,155
9/30/93 10,934 14,620 16,460 14,659
9/30/94 11,258 14,015 17,067 14,340
9/30/95 11,545 16,026 22,143 16,926
9/30/96 11,891 16,748 26,645 19,612
9/30/97 12,148 18,354 37,423 24,264
9/30/98 12,329 20,715 40,807 25,650
9/30/99 12,653 20,376 52,157 28,126
9/30/00 13,095 21,745 59,086 31,716
Comparison of a $10,000 investment in Evergreen Balanced Fund Class B shares/2/,
versus a similar investment in the Standard & Poor's 500 Index (S&P 500), the
Lehman Brothers Government/Credit Index (LBGCI), and the Consumer Price Index
(CPI).
The S&P 500 and the LBGCI are unmanaged market indices which do not include
transaction costs associated with buying and selling securities or any mutual
fund expenses. The CPI is a commonly used measure of inflation and does not
represent an investment return. It is not possible to invest directly in an
index.
U.S. government guarantees apply only to the underlying securities of the
Fund's portfolio and not to the Fund's shares.
Foreign investments contain more risk due to the inherent risk associated with
changing political climates, foreign market instability and foreign currency
fluctuations. Funds that invest in high yield, lower-rated bonds may contain
more risk due to the increased possibility of default.
Class Y shares are only offered to persons who owned Class Y shares of an
Evergreen Fund on or before 12/31/1994; certain institutional investors; and
investment advisory clients of an investment advisor of an Evergreen Fund (or
the investment advisor's affiliates).
All data is as of September 30, 2000 and subject to change.
2
<PAGE>
EVERGREEN
Balanced Fund
Portfolio Manager Interview
How did the Fund perform?
For the six-month period ended September 30, 2000, Evergreen Balanced Fund Class
B shares returned -0.77%. Fund performance figures are before deduction of any
applicable sales charges. During the same six-month period, the S&P 500 Index, a
common benchmark for stock investing, returned -3.60%, while the Lehman Brothers
Government/Credit Index returned 4.37%. The median return of balanced mutual
funds was 0.45%, according to Lipper Inc., an independent monitor of mutual fund
performance.
Portfolio
Characteristics
---------------
(as of 9/30/2000)
Total Net Assets $1,428,947,103
Number of Holdings 269
Beta 0.51
P/E Ratio 32.8x
Effective Maturity 9.0 years
Average Credit Quality AA
--------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
--------------------------------------------------------------------------------
(as a percentage of 9/30/2000 portfolio assets)
[GRAPH]
Common Stock -- 57.1%
Corporate Bonds & Notes -- 15.1%
Mortgage-Backed Securities -- 8.5%
Collateralized Mortgage
Obligations -- 6.4%
Asset-Backed Securities -- 3.0%
U.S. Treasury Obligations -- 2.6%
Yankee Obligations -- 2.5%
Mutual Fund Shares -- 4.8%
What was the investment environment like during the six-month period?
The period was extremely volatile for stocks, which hit their peak in early
March before falling in a steep correction. The volatility continued for the
remainder of the period, with one week's rally followed by another week's
decline. Performance shifted among different industries, sectors and individual
companies. In general, it was a period in which it was prudent to be reasonably
diversified, with a large number of stocks from different industries and to trim
back specific holdings after periods of particularly strong performance.
Several factors contributed to this volatility. First, after a period of
extremely strong economic growth, questions arose about its sustainability,
particularly with higher interest rates. Second, energy prices rose
substantially, raising concerns about the negative impact higher energy prices
could have on corporate profits as well as on inflation.
The environment was more positive for fixed income investing, although negative
sentiments were predominant when the period began in April. Early in the period,
the Federal Reserve Board was concerned that economic growth might be too
vigorous and it continued to raise short-term rates. Other rates also were
rising, and the spread--or difference--between the yields of Treasuries and of
corporate bonds and mortgage-backed securities continued to widen. However,
after the Federal Reserve Board raised rates by 0.50% in May, we began to see
signs that the economy was slowing, most interest rates started to decline and
bond prices started to rise. The 10-year Treasury, for example, started the
period with a yield of 6.00%. That yield climbed to 6.56% by May before starting
a gradual decline. It ended the period on September 30 at 5.80%. As investors
became less
3
<PAGE>
EVERGREEN
Balanced Fund
Portfolio Manager Interview
concerned that the Federal Reserve Board would raise rates further, volatility
was reduced and the yields on corporate bonds and mortgage-backed securities
started to decline and the prices rose. The exception to this general trend was
in domestic high yield securities, whose prices continued to decline because of
fears about credit quality in a slowing economy.
Did the target asset allocation between stocks and bonds change during the six
months?
We maintained a target allocation of 60% stocks and 40% bonds. In most
environments, this remains our targeted allocation, unless we happen to have
strong convictions about relative opportunities in either the equity or the
fixed income market.
What were your principal strategies in managing the equity portion of the
portfolio, Tricia?
We started the period with about 34% of equity assets invested in technology
stocks, but we reduced the weighting. We believed these stocks, which had done
very well, were likely to become volatile as their earnings grew less certain.
Many companies did have earnings disappointments, and we tended to sell or trim
back positions of those companies, such as Lucent Technologies, at the first
sign of disappointing earnings. We believe technology offers the best
opportunity for sustainable growth, even though growth is likely to be less than
we expected a year ago.
As we reduced our positions in technology, we added to the Fund's energy
holdings, diversifying throughout the industry. Our investments included large,
diversified oil companies such as Exxon-Mobil, natural gas companies such as
Devon, oil services companies such as Santa Fe International. One particularly
strong performer was Apache, an exploration and production company.
We also increased our investments in utilities, whose stocks tended to be
selling at depressed levels. In general, we sought utilities with catalysts to
generate future earnings growth and those that could take advantage of the
growing demand for power. Our investments included utilities such as Duke Power
and Constellation Energy, as well as AES, an independent power producer.
In addition, we slightly increased our weightings in health care and finance,
both of which performed well. Among finance investments, AIG, a global insurance
company, performed very well.
Top 5 Equity Sectors
--------------------
(as a percentage of 9/30/2000 net assets)
Information Technology 14.3%
Financials 9.7%
Health Care 7.3%
Energy 6.5%
Industrials 5.8%
Top 10 Equity Holdings
----------------------
(as a percentage of 9/30/2000 net assets)
Gen. Elec. Co. 3.1%
Exxon Mobil Corp. 1.9%
Cisco Sys., Inc. 1.9%
Citigroup, Inc. 1.5%
Pfizer, Inc. 1.4%
Microsoft Corp. 1.3%
Schering-Plough Corp. 1.3%
Intl. Business Machines Corp. 1.2%
EMC Corp. 1.1%
American Intl. Group, Inc. 1.1%
4
<PAGE>
EVERGREEN
Balanced Fund
Portfolio Manager Interview
What were your main investment themes in managing the fixed income portion of
the portfolio, Gary?
We maintained above-average duration--or sensitivity to interest rate
changes--because we believe the economy is decelerating and interest rates will
be lower in the future. A portfolio with above-average duration is better able
to take advantage of price appreciation opportunities in a declining interest
rate environment. At the end of the six-month period, duration was 5.25 years,
up from 5.1 years at the start of the period. We focused primarily on
intermediate-term securities, where we see potential for improved performance
if the difference between yields of shorter-term and longer-term securities
starts to steepen.
Because we believe economic growth is slowing, we also were concerned about
pressures on earnings of corporations, particularly those corporations with
lower-tier credit ratings than high yield bonds. As a result, we kept our credit
quality very high, finishing the period at AA+, the same average as at the start
of the period. We have concentrated on government agencies and high quality
corporate bonds in industries such as energy, utilities, finance and
transportation, which tend to do well in a declining interest-rate environment.
We maintained a relatively low weighting in high yield securities, at about 5%
of the fixed income portion of the portfolio, and focused on B- and BB-rated
securities in industries such as energy and wireless communications.
Top 5 Bond Industries
---------------------
(as a percentage of 9/30/2000 net assets)
Mortgage-Backed Securities 8.3%
Collateralized Mortgage Obligations 6.6%
Diversified Financials 4.0%
Asset-Backed Securities 3.1%
U.S. Treasury Obligations 2.7%
Top 5 Bond Holdings
-------------------
(as a percentage of 9/30/2000 net assets)
Coupon Maturity
------ --------
FHLMC 6.90% 01/15/2005 1.1%
FHLMC 6.25% 07/15/2004 1.0%
FNMA 5.50% 07/01/2009 0.8%
FNMA 7.25% 05/15/2030 0.8%
U.S. Treasury Bonds 7.90% 02/15/2021 0.8%
What is your outlook for the fixed-income markets, Gary?
We believe economic growth will slow, and the higher cost of borrowing could act
as a brake on both corporate and consumer spending. The recent increases in
energy prices also should help slow the pace of economic growth. With the
exception of energy, we do not see many signs of inflation, however. In this
environment, we will maintain a defensive posture, with our investments
concentrated on high quality, liquid securities for which there always is a
ready market. If the Federal Reserve Board were to change its policies and
reduce short-term rates to inject more liquidity into the market, we would have
the flexibility to invest in lower quality corporate bonds that should do well
in an economic expansion.
What is your outlook for the stock market, Tricia?
We expect volatility to continue, and we intend to remain well diversified to
buffer against the effects of unexpected problems in any industry or company. We
believe stock prices are now trading at levels that assume very negative news,
and so the risk/reward relationship for equities may be very positive. The
economy continues to be healthy, and a natural slowdown in economic growth
should prove beneficial for the economy and the stock market if it prolongs the
current 10-year economic recovery that we have enjoyed.
5
<PAGE>
EVERGREEN
Foundation Fund
Fund at a Glance as of September 30, 2000
"The economy continues to grow at a healthy pace, even if it is not growing as
fast as it was six months ago, and we believe there will continue to be
interesting opportunities in the stock market."
Portfolio
Management
---------------
[PHOTO] [PHOTO]
Jean C. Ledford, CFA Richard S. Welsh
Tenure: August 1999 Tenure: August 1999
--------------------------------------------------------------------------------
CURRENT INVESTMENT STYLE/1/
--------------------------------------------------------------------------------
Morningstar's Style Box is based on a portfolio date as of 9/30/2000.
[STYLE BOX]
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.
/1/ Source: Morningstar, Inc.
/2/ Past performance is no guarantee of future results. The performance of each
class may vary based on differences in loads, fees and expenses paid by the
shareholders investing in each class. 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, B and C prior to their inception is
based on the performance of Class Y, the original class offered. These
historical returns for Classes A, B and C have not been adjusted to reflect the
effect of each class' 12b-1 fees. These fees are 0.25% for Class A and 1.00% for
Classes B and C. Class Y does not pay a 12b-1 fee. If these fees had been
reflected, returns would have been lower. Returns reflect expense limits
previously in effect, without which returns would have been lower.
The Fund's investment objective is non-fundamental and may be changed without
the vote of the Fund's shareholders.
--------------------------------------------------------------------------------
PERFORMANCE AND RETURNS/2/
--------------------------------------------------------------------------------
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*
6 months with sales charge -7.73% -7.78% -5.21% n/a
6 months w/o sales charge -3.12% -3.50% -3.50% -3.03%
1 year with sales charge 6.31% 6.04% 8.86% n/a
1 year w/o sales charge 11.63% 10.82% 10.77% 11.94%
5 years 12.15% 12.15% 12.37% 13.53%
10 years 16.34% 16.39% 16.37% 17.07%
Maximum Sales Charge 4.75% 5.00% 2.00% n/a
Front End CDSC CDSC
30-day SEC Yield 1.23% 0.54% 0.54% 1.54%
6-month income
dividends per share $0.15 $0.07 $0.07 $0.18
6-month capital gain
distributions per share $2.47 $2.47 $2.47 $2.47
* Adjusted for maximum applicable sales charge.
--------------------------------------------------------------------------------
LONG TERM GROWTH
--------------------------------------------------------------------------------
[GRAPH]
S&P 500 CPI LBGCI Class A
9/30/90 10,000 10,000 10,000 9,525
9/30/91 13,117 10,339 11,586 13,197
9/30/92 14,566 10,648 13,119 16,188
9/30/93 16,460 10,934 14,620 20,010
9/30/94 17,067 11,258 14,015 19,814
9/30/95 22,143 11,545 16,026 24,384
9/30/96 26,645 11,891 16,748 26,499
9/30/97 37,423 12,148 18,354 34,489
9/30/98 40,807 12,329 20,715 36,168
9/30/99 52,157 12,653 20,376 40,700
9/30/00 59,086 13,095 21,745 45,426
Comparison of a $10,000 investment in Evergreen Foundation Fund, Class A
shares/2/ , versus a similar investment in the Standard & Poor's 500 Index (S&P
500), the Lehman Brothers Government/Credit Index (LBGCI), and the Consumer
Price Index (CPI).
The S&P 500 and LBGCI are unmanaged market indices which do not include
transaction costs associated with buying and selling securities or any mutual
fund expenses. The CPI is a commonly used measure of inflation and does not
represent an investment return. It is not possible to invest directly in an
index.
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.
Class Y shares are only offered to persons who owned Class Y shares of an
Evergreen Fund on or before 12/31/1994; certain institutional investors; and
investment advisory clients of an investment advisor of an Evergreen Fund (or
the investment advisor's affiliates).
All data is as of September 30, 2000 and subject to change.
6
<PAGE>
EVERGREEN
Foundation Fund
Portfolio Manager Interview
How did the Fund perform?
For the six-month period ended September 30, 2000, Evergreen Foundation Fund
Class A shares returned -3.12%. Fund returns are before deduction of any
applicable sales charges. During the same period, the S&P 500 Index, a benchmark
for large company stocks, returned -3.60%, while the Lehman Brothers
Government/Credit Index returned 4.37%. The average return of balanced funds was
0.63%, according to Lipper Inc., an independent monitor of mutual fund
performance.
Portfolio
Characteristics
---------------
(as of 9/30/2000)
Total Net Assets $3,508,965,179
Number of Holdings 185
Beta 0.62
P/E Ratio 36.4x
Effective Maturity 9.8 years
Average Credit Quality AAA
--------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
--------------------------------------------------------------------------------
(as a percentage of 9/30/2000 portfolio assets)
[GRAPH]
Common Stock -- 63.2%
U.S. Treasury Obligations -- 24.2%
Mutual Fund Shares -- 5.7%
Mortgage-Backed Securities -- 4.4%
Corporate Notes/Bonds -- 2.0%
Asset-Backed Securities -- 0.5%
What factors affected performance?
The Fund typically has a fixed income allocation of about 25%-to-35% of net
assets. This is a relatively low weighting versus most other balanced funds,
which tend to have between 40% and 50% of net assets invested in fixed income
securities. Our relatively low fixed income weighting was a detractor during a
period when fixed income securities outperformed most types of stocks.
Within the fixed income allocation, we concentrated on very high quality
investments, including Treasuries, government agencies, and investment-grade
corporate bonds, which tended to do well in a good environment for high quality
bonds.
In the equity portion of the portfolio, our emphasis on energy and health care
helped the equity performance during the period, as did our de-emphasis on the
consumer cyclicals industry, which was one of the worst performing sectors of
the S&P Index. We also didn't own some of the worst performing consumer
cyclicals stocks, including Gap, Circuit City and General Motors.
The Fund's underweighting in technology also helped the Fund's underperformance,
as the technology sector suffered a steep correction early in the period and was
extremely volatile during the entire six-month period. However, we did have
healthy positions in many of the technology companies that turned in strong
performance, including EMC, Sun Microsystems, Automatic Data Processing and
Corning.
On the negative side, the Fund's underweighted positions in utilities and
financial services stocks detracted from performance, as these industries
performed well during the six months. Our overweighted position in the consumer
staples industry, including poor performers such as Time
7
<PAGE>
EVERGREEN
Foundation Fund
Portfolio Manager Interview
McDonald's, also held back performance. Some consumer staples stocks performed
well for the Fund, however, including Anheuser-Bush, Pepsi Cola and Walgreen's.
Top 5 Equity Sectors
--------------------
(as a percentage of 9/30/2000 net assets)
Information Technology 15.2%
Financials 11.1%
Health Care 10.8%
Industrials 7.5%
Energy 5.6%
Top 10 Equity Holdings
----------------------
(as a percentage of 9/30/2000 net assets)
Gen. Elec. Co. 4.4%
American Intl. Group, Inc. 2.3%
Cisco Sys., Inc. 2.0%
Exxon Mobil Corp. 1.9%
Sun Microsystems, Inc. 1.8%
Citigroup, Inc. 1.8%
Intel Corp. 1.6%
EMC Corp. 1.6%
Pfizer, Inc. 1.5%
Time Warner, Inc. 1.3%
Top 5 Bond Industries
---------------------
(as a percentage of 9/30/2000 net assets)
U.S. Treasury Obligations 24.5%
Mortgage-Backed Securities 4.4%
Multi-line Retail 0.8%
Automobiles 0.7%
Asset-Backed Securities 0.5%
Top 5 Bond Holdings
-------------------
(as a percentage of 9/30/2000 net assets)
Coupon Maturity
------ --------
U.S. Treasury Notes 5.25% 08/15/2003 3.5%
U.S. Treasury Bonds 7.25% 05/15/2016 2.7%
U.S. Treasury Notes 6.12% 08/15/2007 2.2%
U.S. Treasury Notes 5.87% 09/30/2002 2.1%
U.S. Treasury Notes 8.12% 08/15/2019 1.7%
What is your outlook?
We see both uncertainties and opportunities.
A series of unanswered questions hover over the economy, including the effect of
the elections, high energy prices, the tensions in the Middle East and the
continued poor performance of the euro, which affects many companies with
international operations.
While we have reduced our technology position, we still like some traditional
growth industry leaders including Cisco Systems, EMC and Sun Microsystems, as
well as some newer companies such as Juniper and Veritas Software. We also see
opportunities in health care, where many companies had earnings acceleration
during the third quarter of 2000.
Despite these questions, the economy continues to grow at a healthy pace, even
if it is not growing as fast as it was six months ago, and we believe there will
continue to be interesting opportunities in the stock market.
8
<PAGE>
EVERGREEN
Tax Strategic Foundation Fund
Fund at a Glance as of September 30, 2000
"Evergreen Tax Strategic Foundation Fund has a distinct investment objective and
style. It is a balanced fund managed to maximize returns for shareholders on an
after-tax basis."
Portfolio Management
--------------------
Jean C. Ledford, CFA Mathew W. Kiselak
Tenure: August 1999 Tenure: September 2000
Richard S. Wesh
Tenure: August 1999
--------------------------------------------------------------------------------
CURRENT INVESTMENT STYLE/1/
--------------------------------------------------------------------------------
Morningstar's Style Box is based on a portfolio date as of 9/30/2000.
[STYLE BOX]
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.
/1/Source: Morningstar, Inc.
/2/Past performance is no guarantee of future results. The performance of each
class may vary based on differences in loads, fees and expenses paid by the
shareholders investing in each class. 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, B and C prior to their inception is
based on the performance of Class Y, the original class offered. These
historical returns for Classes A, B and C have not been adjusted to reflect the
effect of each class' 12b-1 fees. These fees are 0.25% for Class A and 1.00% for
Classes B and C. Class Y does not pay a 12b-1 fee. If these fees had been
reflected, returns would have been lower. Returns reflect expense limits
previously in effect, without which returns would have been lower.
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.
Class Y shares are only offered to persons who owned Class Y shares of an
Evergreen Fund on or before 12/31/1994; certain institutional investors; and
investment advisory clients of an investment advisor of an Evergreen Fund (or
the investment advisor's affiliates).
All data is as of September 30, 2000 and subject to change.
--------------------------------------------------------------------------------
PERFORMANCE AND RETURNS/2/
--------------------------------------------------------------------------------
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*
6 months with sales charge -5.89% -6.38% -3.50% n/a
6 months w/o sales charge -1.18% -1.49% -1.55% -1.04%
1 year with sales charge 3.49% 2.88% 5.89% n/a
1 year w/o sales charge 8.66% 7.88% 7.89% 8.99%
5 years 9.48% 9.49% 9.75% 10.87%
Since Portfolio Inception 10.83% 10.97% 10.96% 11.88%
Maximum Sales Charge 4.75% 5.00% 2.00% n/a
Front End CDSC CDSC
30-day SEC Yield 1.89% 1.22% 1.22% 2.24%
Tax Equivalent Yield** 2.97% 1.92% 1.92% 3.52%
6-month income
dividends per share $0.20 $0.13 $0.13 $0.22
* Adjusted for maximum applicable sales charge.
* Assumes maximum 39.6% federal tax rate. Results for investors subject to
lower tax rates would not be as advantageous.
--------------------------------------------------------------------------------
LONG TERM GROWTH
--------------------------------------------------------------------------------
[GRAPH]
CPI LBMBI S&P 500 Class A
11/2/93 10,000 10,000 10,000 9,525
9/30/94 10,254 9,737 10,158 10,072
9/30/95 10,515 10,826 13,180 12,329
9/30/96 10,830 11,480 15,860 14,006
9/30/97 11,064 12,515 22,275 17,471
9/30/98 11,229 13,606 24,290 17,519
9/30/99 11,524 13,511 31,045 18,729
9/30/00 11,926 14,346 35,169 20,352
Comparison of a $10,000 investment in Evergreen Tax Strategic Foundation Fund,
Class A shares/2/, 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 unmanaged market indices which do not include
transaction costs associated with buying and selling securities or any mutual
fund expenses. The CPI is a commonly used measure of inflation and does not
represent an investment return. It is not possible to invest directly in an
index.
9
<PAGE>
EVERGREEN
Tax Strategic Foundation Fund
Portfolio Manager Interview
How did the Fund perform?
Evergreen Tax Strategic Foundation Fund Class A shares returned -1.18% for the
six-month period ended September 30, 2000. Fund returns are before deduction of
any applicable sales charges. During the same period, S&P 500 Index, a common
benchmark for large company stocks, returned -3.60%, while the Lehman Brothers
Municipal Bond Index had a return of 3.97%. The average return of balanced
mutual funds during the same period was 0.45%, according to Lipper Inc., an
independent monitor of mutual fund performance.
Portfolio
Characteristics
---------------
(as of 9/30/2000)
Total Net Assets $ 292,840,631
Number of Holdings 163
Beta 0.45
P/E Ratio 32.5x
Effective Maturity 12.5 years
Average Credit Quality AAA
How is the Fund managed?
Evergreen Tax Strategic Foundation Fund has a distinct investment objective and
style. It is a balanced fund managed to maximize returns for shareholders on an
after-tax basis. The equity portion of the portfolio is intended to achieve
long-term growth while minimizing shareholders' exposure to capital gains. The
fixed income portion of the portfolio represents 50% or more of net assets and
typically is invested in tax-exempt municipal securities.
--------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
--------------------------------------------------------------------------------
(as a percentage of 9/30/2000 portfolio assets)
[GRAPH]
Municipal Obligations 54.2%
Common Stock 42.4%
Mutual Fund Shares 3.4%
What strategies have you pursued in managing the equity portion of the
portfolio?
We tend to emphasize larger-capitalization companies and we like to invest in
those companies with the potential to increase their earnings growth rates.
Our emphasis on the health care and energy industries helped performance during
a period when health care stocks rallied and rising oil prices lifted the stock
valuations of many energy-related companies. Among the better-performing health
care stocks were major pharmaceutical companies such as Merck and Eli Lilly.
Performance also was supported by the Fund's under-weighting in basic materials
stocks, which performed poorly in a general downturn in cyclical stocks, and a
neutral weighting in technology, which also had poor performance during the
period. We avoided some of the worst performing technology stocks, such as
Lucent Technologies and Texas Instruments. One technology holding that did drag
on performance was SCI Systems, which reported disappointing earnings. Fund
holdings in communications services also held back returns.
10
<PAGE>
EVERGREEN
Tax Strategic Foundation Fund
Portfolio Manager Interview
What strategies are you pursuing in the fixed income portion of the portfolio?
Our principal focus is to maximize tax-exempt income. As a secondary tactic, we
also try to take advantage of opportunities to harvest tax losses that can then
be used to offset capital gains incurred in the equity portfolio.
Our portfolio of municipal securities tends to be very high quality, with 96%
rated AAA. Average duration was 8.62 years and the effective average maturity
was 12.50 years. We recently have shortened the duration somewhat, to reduce the
Fund's sensitivity to changes in interest rates. Shorter duration portfolios
tend to be less susceptible to loss of principal than longer duration portfolios
when interest rates rise.
In general, we do not try to manage duration by guessing the direction of future
changes in interest rates. However, we do actively manage the portfolio to try
to take advantage of any inefficiencies in the marketplace that potentially can
benefit shareholders.
In 2000, we have seen a reduction in the supply of new municipal bonds compared
to 1999. We believe this restricted supply should help municipal securities hold
their values.
Top 5 Bond Industries
---------------------
(as a percentage of 9/30/2000 net assets)
General Obligation-Local 12.4%
Transportation 9.6%
Hospital 7.5%
Education 6.9%
General Obligation-State 6.0%
Top 5 Bond Holdings
-------------------
(as a percentage of 9/30/2000 net assets)
Coupon Maturity
------ --------
Florida Board of Ed.
Lottery RB 5.75% 07/01/2011 1.8%
New York, NY GO 5.35% 08/01/2013 1.7%
District of Columbia GO 5.50% 06/01/2014 1.7%
New York Dorm. Auth.
RB 5.75% 05/15/2013 1.7%
Missouri Hlth. &
Edl. Fac. RB 3.95% 06/01/2026 1.7%
What is your outlook in the equity market?
We see both uncertainties and opportunities.
A series of unanswered questions hover over the economy, including the effect of
the elections, high energy prices, the tensions in the Middle East and the
continued poor performance of the euro, which affects many companies with
international operations.
While we have reduced our technology position, we still like some traditional
growth industry leaders including Cisco Systems and EMC, as well as some newer
companies. We also see opportunities in health care, where many companies had
earnings acceleration during the third quarter of 2000.
Despite these questions, the economy continues to grow at a healthy pace, even
if it is not growing as fast as it was six months ago, and we believe there will
continue to be interesting opportunities in the stock market.
11
<PAGE>
EVERGREEN
Tax Strategic Foundation Fund
Portfolio Manager Interview
Top 5 Equity Sectors
--------------------
(as a percentage of 9/30/2000 net assets)
Information Technology 12.6%
Financials 7.5%
Health Care 6.5%
Industrials 4.6%
Consumer Discretionary 3.7%
Top 10 Equity Holdings
----------------------
(as a percentage of 9/30/2000 net assets)
Gen. Elec. Co. 3.0%
Intl. Business Machines Corp. 1.9%
Citigroup, Inc. 1.9%
Global Crossing, Ltd. 1.8%
Cisco Sys., Inc. 1.7%
Sun Microsystems, Inc. 1.6%
Merrill Lynch & Co., Inc. 1.5%
Pfizer, Inc. 1.4%
Intel Corp. 1.4%
Nortel Networks Corp. 1.2%
12
<PAGE>
EVERGREEN
Balanced Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months Ended Year Ended March 31,
September 30, 2000 ---------------------- Period Ended
(unaudited) 2000 1999 March 31, 1998 (a) #
<S> <C> <C> <C> <C>
CLASS A SHARES
Net asset value,
beginning of period $11.01 $ 11.28 $ 12.87 $12.36
------ ---------- ---------- ------
Income from investment
operations
Net investment income 0.15 0.28 0.37 0.08
Net realized and
unrealized gain or loss
on securities and
foreign currency
related transactions (0.19) 1.18 0.48 0.81
------ ---------- ---------- ------
Total from investment
operations (0.04) 1.46 0.85 0.89
------ ---------- ---------- ------
Distributions to
shareholders from
Net investment income (0.14) (0.28) (0.41) (0.12)
Net realized gains 0 (1.45) (2.03) (0.26)
------ ---------- ---------- ------
Total distributions to
shareholders (0.14) (1.73) (2.44) (0.38)
------ ---------- ---------- ------
Net asset value, end of
period $10.83 $ 11.01 $ 11.28 $12.87
------ ---------- ---------- ------
Total return* (0.39%) 13.89% 7.52% 7.38%
Ratios and supplemental
data
Net assets, end of
period (millions) $1,146 $ 1,264 $ 1,241 $1,277
Ratios to average net
assets
Expenses++ 0.92%+ 0.91% 0.96% 0.99%+
Net investment income 2.66%+ 2.48% 2.97% 3.25%+
Portfolio turnover rate 63% 109% 102% 76%
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended Year Ended March 31, Year Ended June 30,
September 30, 2000 ---------------------- Period Ended --------------------
(unaudited) 2000 1999 March 31, 1998 (b) # 1997 1996
<S> <C> <C> <C> <C> <C> <C>
CLASS B SHARES
Net asset value,
beginning of period $11.02 $ 11.29 $ 12.88 $12.95 $ 11.33 $ 10.09
------ ---------- ---------- ------ --------- ---------
Income from investment
operations
Net investment income 0.11 0.20 0.28 0.26 0.30 0.29
Net realized and
unrealized gain or loss
on securities and
foreign currency
related transactions (0.20) 1.18 0.48 1.53 2.07 1.42
------ ---------- ---------- ------ --------- ---------
Total from investment
operations (0.09) 1.38 0.76 1.79 2.37 1.71
------ ---------- ---------- ------ --------- ---------
Distributions to
shareholders from
Net investment income (0.09) (0.20) (0.32) (0.27) (0.30) (0.27)
Net realized gains 0 (1.45) (2.03) (1.59) (0.45) (0.20)
------ ---------- ---------- ------ --------- ---------
Total distributions to
shareholders (0.09) (1.65) (2.35) (1.86) (0.75) (0.47)
------ ---------- ---------- ------ --------- ---------
Net asset value, end of
period $10.84 $ 11.02 $ 11.29 $12.88 $ 12.95 $ 11.33
------ ---------- ---------- ------ --------- ---------
Total return* (0.77%) 13.06% 6.71% 14.89% 21.95% 17.35%
Ratios and supplemental
data
Net assets, end of
period (millions) $ 262 $ 279 $ 434 $ 580 $ 1,625 $ 1,481
Ratios to average net
assets
Expenses++ 1.68%+ 1.66% 1.71% 1.35%+ 1.70% 1.72%
Net investment income 1.92%+ 1.73% 2.23% 2.66%+ 2.50% 2.71%
Portfolio turnover rate 63% 109% 102% 76% 89% 96%
</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.
# Net investment income is based on average shares outstanding during the pe-
riod.
* Excluding applicable sales charges.
++ Ratio of expenses to average net assets excludes expense reductions, but
includes fee waivers.
+ Annualized.
See Combined Notes to Financial Statements.
13
<PAGE>
EVERGREEN
Balanced Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months Ended Year Ended March 31,
September 30, 2000 ---------------------- Period Ended
(unaudited) 2000 1999 March 31, 1998 # (a)
<S> <C> <C> <C> <C>
CLASS C SHARES
Net asset value,
beginning of period $11.03 $ 11.30 $ 12.88 $12.43
------ ---------- ---------- ------
Income from investment
operations
Net investment income 0.10 0.19 0.26 0.05
Net realized and
unrealized gain or loss
on securities and
foreign currency
related transactions (0.19) 1.19 0.51 0.75
------ ---------- ---------- ------
Total from investment
operations (0.09) 1.38 0.77 0.80
------ ---------- ---------- ------
Distributions to
shareholders from
Net investment income (0.09) (0.20) (0.32) (0.09)
Net realized gains 0 (1.45) (2.03) (0.26)
------ ---------- ---------- ------
Total distributions to
shareholders (0.09) (1.65) (2.35) (0.35)
------ ---------- ---------- ------
Net asset value, end of
period $10.85 $ 11.03 $ 11.30 $12.88
------ ---------- ---------- ------
Total return* (0.76%) 13.06% 6.79% 6.58%
Ratios and supplemental
data
Net assets, end of
period (millions) $ 5 $ 3 $ 2 $ 1
Ratios to average net
assets
Expenses++ 1.68%+ 1.66% 1.71% 1.76%+
Net investment income 1.92%+ 1.73% 2.21% 2.41%+
Portfolio turnover rate 63% 109% 102% 76%
<CAPTION>
Six Months Ended Year Ended March 31,
September 30, 2000 ---------------------- Period Ended
(unaudited) 2000 1999 March 31, 1998 # (b)
<S> <C> <C> <C> <C>
CLASS Y SHARES
Net asset value,
beginning of period $11.00 $ 11.27 $ 12.86 $12.01
------ ---------- ---------- ------
Income from investment
operations
Net investment income 0.17 0.32 0.39 0.08
Net realized and
unrealized gain or loss
on securities and
foreign currency
related transactions (0.20) 1.17 0.49 0.86
------ ---------- ---------- ------
Total from investment
operations (0.03) 1.49 0.88 0.94
------ ---------- ---------- ------
Distributions to
shareholders from
Net investment income (0.15) (0.31) (0.44) (0.09)
Net realized gains 0 (1.45) (2.03) 0
------ ---------- ---------- ------
Total distributions to
shareholders (0.15) (1.76) (2.47) (0.09)
------ ---------- ---------- ------
Net asset value, end of
period $10.82 $ 11.00 $ 11.27 $12.86
------ ---------- ---------- ------
Total return (0.27%) 14.21% 7.79% 7.79%
Ratios and supplemental
data
Net assets, end of
period (millions) $ 16 $ 20 $ 34 $ 39
Ratios to average net
assets
Expenses++ 0.67%+ 0.66% 0.71% 0.75%+
Net investment income 2.91%+ 2.73% 3.22% 3.47%+
Portfolio turnover rate 63% 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.
# Net investment income is based on average shares outstanding during the pe-
riod.
* Excluding applicable sales charges.
++ Ratio of expenses to average net assets excludes expense reductions, but
includes fee waivers.
+ Annualized.
See Combined Notes to Financial Statements.
14
<PAGE>
EVERGREEN
Foundation Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended
Six Months Ended Year Ended March 31, December 31,
September 30, 2000 -------------------------------- ----------------
(unaudited) 2000 1999 1998 # 1997 (b) 1996 1995 (a)
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A SHARES
Net asset value,
beginning of period $23.41 $20.98 $20.44 $16.00 $16.13 $15.12 $12.24
------ ------ ------ ------ ------ ------ ------
Income from investment
operations
Net investment income 0.16 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 (0.87) 3.01 0.68 4.87 (0.13) 1.16 3.14
------ ------ ------ ------ ------ ------ ------
Total from investment
operations (0.71) 3.37 1.12 5.31 (0.01) 1.66 3.58
------ ------ ------ ------ ------ ------ ------
Distributions to
shareholders from
Net investment income (0.15) (0.35) (0.43) (0.44) (0.12) (0.50) (0.47)
Net realized gains (2.47) (0.59) (0.15) (0.43) 0 (0.15) (0.23)
------ ------ ------ ------ ------ ------ ------
Total distributions to
shareholders (2.62) (0.94) (0.58) (0.87) (0.12) (0.65) (0.70)
------ ------ ------ ------ ------ ------ ------
Net asset value, end of
period $20.08 $23.41 $20.98 $20.44 $16.00 $16.13 $15.12
------ ------ ------ ------ ------ ------ ------
Total return* (3.12%) 16.38% 5.58% 33.88% (0.20%) 11.30% 29.70%
Ratios and supplemental
data
Net assets, end of
period (millions) $ 608 $ 486 $ 380 $ 350 $ 220 $ 206 $ 107
Ratios to average net
assets
Expenses++ 1.25%+ 1.21% 1.26% 1.28% 1.25%+ 1.24% 1.33%+
Net investment income 1.43%+ 1.62% 2.18% 2.39% 2.83%+ 3.39% 3.73%+
Portfolio turnover rate 39% 83% 10% 9% 2% 10% 28%
</TABLE>
<TABLE>
<CAPTION>
Year Ended
Six Months Ended Year Ended March 31, December 31,
September 30, 2000 -------------------------------- ----------------
(unaudited) 2000 1999 1998 # 1997 (b) 1996 1995 (a)
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS B SHARES
Net asset value,
beginning of period $23.29 $20.88 $20.34 $15.94 $16.07 $15.07 $12.24
------ ------ ------ ------ ------ ------ ------
Income from investment
operations
Net investment income 0.07 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 (0.86) 3.00 0.67 4.84 (0.13) 1.15 3.09
------ ------ ------ ------ ------ ------ ------
Total from investment
operations (0.79) 3.19 0.96 5.14 (0.04) 1.55 3.45
------ ------ ------ ------ ------ ------ ------
Distributions to
shareholders from
Net investment income (0.07) (0.19) (0.27) (0.31) (0.09) (0.40) (0.39)
Net realized gains (2.47) (0.59) (0.15) (0.43) 0.00 (0.15) (0.23)
------ ------ ------ ------ ------ ------ ------
Total distributions to
shareholders (2.54) (0.78) (0.42) (0.74) (0.09) (0.55) (0.62)
------ ------ ------ ------ ------ ------ ------
Net asset value, end of
period $19.96 $23.29 $20.88 $20.34 $15.94 $16.07 $15.07
------ ------ ------ ------ ------ ------ ------
Total return* (3.50%) 15.48% 4.81% 32.81% (0.30%) 10.50% 28.70%
Ratios and supplemental
data
Net assets, end of
period (millions) $1,522 $1,612 $1,432 $1,124 $ 606 $ 570 $ 296
Ratios to average net
assets
Expenses++ 2.00%+ 1.96% 2.01% 2.04% 2.00%+ 1.99% 2.07%+
Net investment income 0.65%+ 0.88% 1.43% 1.63% 2.07%+ 2.64% 2.99%+
Portfolio turnover rate 39% 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.
# Net investment income is based on average shares outstanding during the pe-
riod.
* Excluding applicable sales charges.
++ Ratio of expenses to average net assets excludes expense reductions, but
includes fee waivers.
+ Annualized.
See Combined Notes to Financial Statements.
15
<PAGE>
EVERGREEN
Foundation Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended
Six Months Ended Year Ended March 31, December 31,
September 30, 2000 -------------------------------- ----------------
(unaudited) 2000 1999 1998 # 1997 (b) 1996 1995 (a)
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS C SHARES
Net asset value,
beginning of period $23.28 $20.87 $20.34 $15.94 $16.06 $15.07 $12.24
------ ------ ------ ------ ------ ------ ------
Income from investment
operations
Net investment income 0.09 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 (0.88) 3.00 0.66 4.84 (0.13) 1.14 3.09
------ ------ ------ ------ ------ ------ ------
Total from investment
operations (0.79) 3.19 0.95 5.14 (0.04) 1.54 3.43
------ ------ ------ ------ ------ ------ ------
Distributions to
shareholders from
Net investment income (0.07) (0.19) (0.27) (0.31) (0.08) (0.40) (0.37)
Net realized gains (2.47) (0.59) (0.15) (0.43) 0 (0.15) (0.23)
------ ------ ------ ------ ------ ------ ------
Total distributions to
shareholders (2.54) (0.78) (0.42) (0.74) (0.08) (0.55) (0.60)
------ ------ ------ ------ ------ ------ ------
Net asset value, end of
period $19.95 $23.28 $20.87 $20.34 $15.94 $16.06 $15.07
------ ------ ------ ------ ------ ------ ------
Total return* (3.50%) 15.49% 4.76% 32.81% (0.30%) 10.40% 28.50%
Ratios and supplemental
data
Net assets, end of
period (millions) $ 322 $ 76 $ 68 $ 50 $ 28 $ 27 $ 11
Ratios to average net
assets
Expenses++ 2.02%+ 1.96% 2.01% 2.04% 2.00%+ 1.99% 2.23%+
Net investment income 0.77%+ 0.88% 1.43% 1.63% 2.07%+ 2.64% 2.83%+
Portfolio turnover rate 39% 83% 10% 9% 2% 10% 28%
</TABLE>
<TABLE>
<CAPTION>
Year Ended
Six Months Ended Year Ended March 31, December 31,
September 30, 2000 -------------------------------- --------------
(unaudited) 2000 1999 1998 # 1997 (b) 1996 1995
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS Y SHARES
Net asset value,
beginning of period $23.42 $20.99 $20.45 $16.02 $16.14 $15.13 $12.27
------ ------ ------ ------ ------ ------ ------
Income from investment
operations
Net investment income 0.18 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 (0.87) 3.00 0.68 4.86 (0.13) 1.16 3.07
------ ------ ------ ------ ------ ------ ------
Total from investment
operations (0.69) 3.43 1.17 5.35 0.00 1.70 3.58
------ ------ ------ ------ ------ ------ ------
Distributions to
shareholders from
Net investment income (0.18) (0.41) (0.48) (0.49) (0.12) (0.54) (0.49)
Net realized gains (2.47) (0.59) (0.15) (0.43) 0.00 (0.15) (0.23)
------ ------ ------ ------ ------ ------ ------
Total distributions to
shareholders (2.65) (1.00) (0.63) (0.92) (0.12) (0.69) (0.72)
------ ------ ------ ------ ------ ------ ------
Net asset value, end of
period $20.08 $23.42 $20.99 $20.45 $16.02 $16.14 $15.13
------ ------ ------ ------ ------ ------ ------
Total return (3.03%) 16.68% 5.84% 34.12% 0.00% 11.50% 29.70%
Ratios and supplemental
data
Net assets, end of
period (millions) $1,057 $1,176 $1,238 $1,117 $ 802 $ 809 $ 623
Ratios to average net
assets
Expenses++ 1.00%+ 0.96% 1.01% 1.03% 1.00%+ 0.99% 1.07%
Net investment income 1.65%+ 1.89% 2.43% 2.65% 3.07%+ 3.64% 3.89%
Portfolio turnover rate 39% 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.
# Net investment income is based on average shares outstanding during the pe-
riod.
* Excluding applicable sales charges.
++ Ratio of expenses to average net assets excludes expense reductions, but
includes fee waivers.
+ Annualized.
See Combined Notes to Financial Statements.
16
<PAGE>
EVERGREEN
Tax Strategic Foundation Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended
Six Months Ended Year Ended March 31, December 31,
September 30, 2000 -------------------------------- ----------------
(unaudited) 2000 1999 1998 1997 (b) 1996 1995 (a)
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A SHARES
Net asset value,
beginning of period $17.18 $16.17 $16.36 $13.57 $13.50 $12.20 $10.44
------ ------ ------ ------ ------ ------ ------
Income from investment
operations
Net investment income 0.18 0.36 0.34 0.31 0.07 0.27 0.29
Net realized and
unrealized gain or loss
on securities (0.38) 1.00 (0.16) 2.96 0.06** 1.59 2.24
------ ------ ------ ------ ------ ------ ------
Total from investment
operations (0.20) 1.36 0.18 3.27 0.13 1.86 2.53
------ ------ ------ ------ ------ ------ ------
Distributions to
shareholders from
Net investment income (0.20) (0.35) (0.34) (0.30) (0.06) (0.28) (0.31)
Net realized gains 0 0 (0.03) (0.18) 0 (0.28) (0.46)
------ ------ ------ ------ ------ ------ ------
Total distributions to
shareholders (0.20) (0.35) (0.37) (0.48) (0.06) (0.56) (0.77)
------ ------ ------ ------ ------ ------ ------
Net asset value, end of
period $16.78 $17.18 $16.17 $16.36 $13.57 $13.50 $12.20
------ ------ ------ ------ ------ ------ ------
Total return* (1.18%) 8.54% 1.19% 24.40% 1.00% 15.40% 24.80%
Ratios and supplemental
data
Net assets, end of
period (millions) $ 67 $ 78 $ 82 $ 70 $ 15 $ 11 $ 3
Ratios to average net
assets
Expenses++ 1.29%+ 1.30% 1.33% 1.42% 1.38%+ 1.52% 1.75%+
Net investment income 2.00%+ 2.15% 2.18% 2.21% 2.30%+ 2.39% 2.79%+
Portfolio turnover rate 9% 120% 64% 50% 29% 88% 110%
</TABLE>
<TABLE>
<CAPTION>
Year Ended
Six Months Ended Year Ended March 31, December 31,
September 30, 2000 -------------------------------- ----------------
(unaudited) 2000 1999 1998 1997 (b) 1996 1995 (c)
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS B SHARES
Net asset value,
beginning of period $17.14 $16.14 $16.33 $13.56 $13.49 $12.19 $10.31
------ ------ ------ ------ ------ ------ ------
Income from investment
operations
Net investment income 0.10 0.23 0.22 0.21 0.05 0.19 0.22
Net realized and
unrealized gain or loss
on securities (0.36) 1.00 (0.15) 2.94 0.06** 1.59 2.37
------ ------ ------ ------ ------ ------ ------
Total from investment
operations (0.26) 1.23 0.07 3.15 0.11 1.78 2.59
------ ------ ------ ------ ------ ------ ------
Distributions to
shareholders from
Net investment income (0.13) (0.23) (0.23) (0.20) (0.04) (0.20) (0.25)
Net realized gains 0 0 (0.03) (0.18) 0.00 (0.28) (0.46)
------ ------ ------ ------ ------ ------ ------
Total distributions to
shareholders (0.13) (0.23) (0.26) (0.38) (0.04) (0.48) (0.71)
------ ------ ------ ------ ------ ------ ------
Net asset value, end of
period $16.75 $17.14 $16.14 $16.33 $13.56 $13.49 $12.19
------ ------ ------ ------ ------ ------ ------
Total return* (1.49%) 7.69% 0.41% 23.44% 0.08% 14.70% 25.60%
Ratios and supplemental
data
Net assets, end of
period (millions) $ 185 $ 209 $ 244 $ 185 $ 39 $ 28 $ 7
Ratios to average net
assets
Expenses++ 2.03%+ 2.05% 2.08% 2.18% 2.14%+ 2.27% 2.50%+
Net investment income 1.25%+ 1.39% 1.42% 1.46% 1.55%+ 1.64% 2.03%+
Portfolio turnover rate 9% 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.
++ Ratio of expenses to average net assets excludes expense reductions, but
includes fee waivers.
+ Annualized.
See Combined Notes to Financial Statements.
17
<PAGE>
EVERGREEN
Tax Strategic Foundation Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended
Six Months Ended Year Ended March 31, December 31,
September 30, 2000 -------------------------------- ----------------
(unaudited) 2000 1999 1998 1997 (b) 1996 1995 (a)
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS C SHARES
Net asset value,
beginning of period $17.12 $16.11 $16.30 $13.53 $13.47 $12.19 $10.69
------ ------ ------ ------ ------ ------ ------
Income from investment
operations
Net investment income 0.10 0.23 0.22 0.21 0.06 0.18 0.22
Net realized and
unrealized gain or loss
on securities (0.37) 1.01 (0.15) 2.94 0.05** 1.58 1.99
------ ------ ------ ------ ------ ------ ------
Total from investment
operations (0.27) 1.24 0.07 3.15 0.11 1.76 2.21
------ ------ ------ ------ ------ ------ ------
Distributions to
shareholders from
Net investment income (0.13) (0.23) (0.23) (0.20) (0.05) (0.20) (0.25)
Net realized gains 0 0 (0.03) (0.18) 0 (0.28) (0.46)
------ ------ ------ ------ ------ ------ ------
Total distributions to
shareholders (0.13) (0.23) (0.26) (0.38) (0.05) (0.48) (0.71)
------ ------ ------ ------ ------ ------ ------
Net asset value, end of
period $16.72 $17.12 $16.11 $16.30 $13.53 $13.47 $12.19
------ ------ ------ ------ ------ ------ ------
Total return* (1.55%) 7.77% 0.41% 23.49% 0.08% 14.50% 21.20%
Ratios and supplemental
data
Net assets, end of
period (millions) $ 34 $ 37 $ 45 $ 28 $ 5 $ 4 $ 1
Ratios to average net
assets
Expenses++ 2.04%+ 2.05% 2.08% 2.18% 2.13%+ 2.25% 2.50%+
Net investment income 1.25%+ 1.39% 1.42% 1.46% 1.55%+ 1.64% 2.07%+
Portfolio turnover rate 9% 120% 64% 50% 29% 88% 110%
</TABLE>
<TABLE>
<CAPTION>
Year Ended
Six Months Ended Year Ended March 31, December 31,
September 30, 2000 -------------------------------- --------------
(unaudited) 2000 # 1999 1998 1997 (b) 1996 1995
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS Y SHARES
Net asset value,
beginning of period $17.22 $16.20 $16.39 $13.61 $13.54 $12.22 $10.27
------ ------ ------ ------ ------ ------ ------
Income from investment
operations
Net investment income 0.23 0.40 0.37 0.37 0.09 0.34 0.35
Net realized and
unrealized gain or loss
on securities (0.41) 1.02 (0.15) 2.95 0.05** 1.56 2.39
------ ------ ------ ------ ------ ------ ------
Total from investment
operations (0.18) 1.42 0.22 3.32 0.14 1.90 2.74
------ ------ ------ ------ ------ ------ ------
Distributions to
shareholders from
Net investment income (0.22) (0.40) (0.38) (0.36) (0.07) (0.30) (0.33)
Net realized gains 0 0 (0.03) (0.18) 0.00 (0.28) (0.46)
------ ------ ------ ------ ------ ------ ------
Total distributions to
shareholders (0.22) (0.40) (0.41) (0.54) (0.07) (0.58) (0.79)
------ ------ ------ ------ ------ ------ ------
Net asset value, end of
period $16.82 $17.22 $16.20 $16.39 $13.61 $13.54 $12.22
------ ------ ------ ------ ------ ------ ------
Total return (1.04%) 8.86% 1.38% 24.73% 1.00% 15.80% 27.30%
Ratios and supplemental
data
Net assets, end of
period (millions) $ 7 $ 8 $ 24 $ 20 $ 15 $ 15 $ 13
Ratios to average net
assets
Expenses++ 1.03%+ 1.04% 1.08% 1.15% 1.13%+ 1.30% 1.50%
Net investment income 2.25%+ 2.42% 2.42% 2.48% 2.54%+ 2.63% 3.06%
Portfolio turnover rate 9% 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.
# Net investment income is based on average shares outstanding during the pe-
riod.
* 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.
++ Ratio of expenses to average net assets excludes expense reductions, but
includes fee waivers.
+ Annualized.
See Combined Notes to Financial Statements.
18
<PAGE>
EVERGREEN
Balanced Fund
Schedule of Investments
September 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Credit Principal
Rating/\ Amount Value
<S> <C> <C> <C>
ASSET-BACKED SECURITIES - 3.1%
CNL Funding, LP, Ser. 1998-1, Class B1,
6.60%, 04/18/2011........................... NR $ 2,500,000 $ 2,258,594
Contimortgage Home Equity Loan Trust:
Ser. 1997-4, Class A7, 6.63%, 09/15/2016.... AAA 2,750,000 2,675,351
Ser. 1998-1, Class A6, 6.58%, 12/15/2018.... AAA 4,000,000 3,949,340
CoreStates Home Equity Loan Trust:
Ser. 1994-1, Class A, 6.65%, 05/15/2009..... AAA 738,659 736,292
Ser. 1996-1, Class A4, 7.00%, 06/15/2012.... AAA 6,150,000 6,156,119
Delta Funding Home Equity Loan Trust, Ser.
1997-1, Class A5, 7.74%, 04/25/2029......... AAA 5,000,000 5,042,775
First Alliance Mtge. Trust, Ser. 1998, Class
2F, 6.52%, 09/20/2029....................... AAA 4,488,340 4,385,041
Green Tree Finl. Corp., Ser. 1997-3, Class
A5, 7.14%, 07/15/2028....................... AAA 6,000,000 6,009,630
Merrill Lynch Mtge. Investors, Inc.:
Ser. 1991-D, Class B, 9.85%, 07/15/2011..... NR 3,235,994 3,252,546
Ser. 1992-D, Class B, 8.50%, 06/15/2017..... NR 2,479,571 2,474,277
Mid State Trust, Ser. 6, Class A3, 7.54%,
07/01/2035.................................. AA 1,433,542 1,400,993
Midwest Generation, LLC, Ser. B, 8.56%,
01/02/2016.................................. A- 2,750,000 2,722,500
Railcar Leasing LLC, Ser. 1, Class A2,
7.125%, 01/15/2013.......................... AAA 2,500,000 2,490,738
University Support Svcs., Inc., Ser. 1992-CD,
Class D, 9.52%, 11/01/2007.................. NA 220,000 219,670
------------
Total Asset-Backed Securities (cost
$44,126,308).............................. 43,773,866
------------
COLLATERALIZED MORTGAGE OBLIGATIONS - 6.6%
Bear Stearns Comml. Mtge. Secs., Inc., Ser.
2000-WF1, Class A2, 7.78%, 02/15/2010....... AAA 2,000,000 2,081,107
Carco Auto Loan Master Trust, Ser. 1997-1,
Class A, 6.689%, 08/15/2004................. AAA 2,729,582 2,700,771
Chase Comml. Mtge. Secs. Corp., Ser. 1999-2,
Class B, 7.343%, 11/15/2009................. AA 4,500,000 4,507,734
Criimi Mae Comml. Mtge. Trust, Ser. 1998-C1,
Class A2, 7.00%, 03/02/2011................. A 5,000,000 4,615,988
Criimi Mae Finl. Corp., Ser. 1, Class A,
7.00%, 01/01/2033........................... AAA 5,163,309 4,791,389
CWMBS, Inc., 8.00%, 09/25/2030............... AAA 7,218,889 7,285,231
DLJ Comml. Mtge. Corp.:
Ser. 1994-3, Class M, 6.50%, 04/25/2024..... AA 6,225,710 5,902,253
Ser. 2000-CF1, Class A3, 7.92%, 05/10/2010.. A 3,000,000 3,081,094
FFCA Secured Lending Corp., Ser. 1997-1,
Class B1, 7.74%, 06/18/2013................. NR 1,250,000 1,232,069
Finl. Asset Securitization, Inc.:
Ser. 1997-NAM1, Class B2, 7.75%,
05/25/2027................................. NR 2,043,696 2,021,144
Ser. 1997-NAM1, Class FXA2, 7.75%,
04/25/2027................................. AAA 5,377,446 5,386,346
FNMA, Ser. 1997-M6, Class C, 6.85%,
05/17/2020.................................. AAA 4,350,000 4,264,007
</TABLE>
19
<PAGE>
EVERGREEN
Balanced Fund
Schedule of Investments (continued)
September 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Credit Principal
Rating/\ Amount Value
<S> <C> <C> <C>
COLLATERALIZED MORTGAGE OBLIGATIONS - continued
GE Capital Mtge. Svcs., Inc.:
Ser. 1994-27, Class A6, 6.50%, 07/25/2024... AAA $ 3,745,000 $ 3,417,893
Ser. 1999-15, Class A5, 6.75%, 07/25/2029... AAA 5,000,000 4,847,175
GMAC Comml. Mtge. Secs., Inc., Ser. 2000-C2,
Class C, 7.74%, 07/16/2010.................. A 5,000,000 5,075,692
Mellon Residential Funding Corp., Ser. 1999-
TBC1, Class A3, 6.11%, 01/25/2029........... AAA 7,452,828 7,147,978
Nomura Depositor Trust, Ser. 1998-ST1, Class
A1, 6.899%, 01/15/2003...................... NA 7,016,450 7,016,626
PNC Mtge. Secs. Corp.:
Ser. 1997-4, Class 2PP3, 7.25%, 07/25/2027.. AAA 2,414,090 2,328,812
Ser. 1999-5, Class CB3, 6.89%, 07/25/2029... NR 2,156,178 1,947,298
Ser. 1999-8, Class CB3, 7.35%, 07/25/2029... NR 2,308,589 2,134,724
Residential Accredit Loans, Inc., Ser. 2000-
QS2, Class A4, 7.75%, 02/25/2030............ AAA 5,000,000 5,025,975
Residential Asset Securization Trust, Ser.
2000-A2, Class NB1, 8.00%, 04/25/2030....... AAA 3,177,873 3,212,137
Residential Funding Mtge. Secs., Inc., Ser.
1999-S2, Class M1, 6.50%, 01/25/2029........ NR 4,064,162 3,715,518
------------
Total Collateralized Mortgage Obligations
(cost $94,787,550)........................ 93,738,961
------------
CORPORATE BONDS - 15.5%
CONSUMER DISCRETIONARY - 2.0%
Auto Components - 0.1%
Lear Corp., 9.50%, 07/15/2006................ BB- 1,000,000 990,000
------------
Automobiles - 0.5%
Ford Motor Co., 8.90%, 01/15/2032............ A 6,000,000 6,373,500
------------
Hotels, Restaurants & Leisure - 0.3%
Boyd Gaming Corp., 9.50%, 07/15/2007......... B+ 1,000,000 940,000
Mohegan Tribal Gaming Auth., 8.75%,
01/01/2009.................................. BB- 1,000,000 995,000
Prime Hospitality Corp., Ser. B, 9.75%,
04/01/2007.................................. B+ 1,000,000 1,000,000
Station Casinos, Inc., 8.875%, 12/01/2008.... B+ 1,000,000 968,750
------------
3,903,750
------------
Household Durables - 0.1%
K Hovnanian Enterprises, Inc., 10.50%,
10/01/2007 144A............................. BB- 800,000 784,000
Stanley Works, 7.375%, 12/15/2002............ A 1,001,000 1,012,775
------------
1,796,775
------------
Leisure Equipment & Products - 0.5%
CSC Holdings, Inc., Ser. B, 8.125%,
07/15/2009.................................. BB+ 3,000,000 2,984,103
Mattel, Inc., 6.125%, 07/15/2005............. BBB 5,000,000 4,515,980
------------
7,500,083
------------
</TABLE>
20
<PAGE>
EVERGREEN
Balanced Fund
Schedule of Investments (continued)
September 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Credit Principal
Rating/\ Amount Value
<S> <C> <C> <C>
CORPORATE BONDS - continued
CONSUMER DISCRETIONARY - continued
Media - 0.5%
Ackerley Group, Inc., Ser. B, 9.00%,
01/15/2009................................. B $ 775,000 $ 734,313
Adelphia Communications Corp., 9.375%,
11/15/2009................................. B+ 1,000,000 911,250
Echostar DBS Corp., 9.375%, 02/01/2009...... B+ 1,000,000 985,000
Hollinger Intl. Publishing, Inc., 9.25%,
02/01/2006................................. BB- 1,000,000 1,010,000
Infinity Broadcasting, Inc., 8.875%,
06/15/2007................................. BBB 1,000,000 1,032,500
Lamar Media Corp., 9.625%, 12/01/2006....... B 1,000,000 1,028,750
Sinclair Broadcast Group, Inc., 10.00%,
09/30/2005................................. B 1,000,000 995,000
TV Guide, Inc., 8.125%, 03/01/2009.......... BB- 750,000 760,312
------------
7,457,125
------------
Multi-line Retail - 0.0%
Ames Dept. Stores, Inc., 10.00%,
04/15/2006................................. B+ 1,000,000 465,000
------------
Specialty Retail - 0.0%
Michael's Stores, Inc., 10.875%,
06/15/2006................................. BB 500,000 520,000
------------
CONSUMER STAPLES - 0.3%
Food & Drug Retailing - 0.2%
CVS Corp., 5.50%, 02/15/2004................ A 3,000,000 2,870,553
------------
Household Products - 0.1%
Playtex Family Products Corp., 9.00%,
12/15/2003................................. B 1,000,000 995,000
------------
ENERGY - 1.1%
Energy Equipment & Services - 0.2%
Oslo Seismic Svcs., Inc., 8.28%,
06/01/2011................................. BBB 2,322,487 2,356,946
------------
Oil & Gas - 0.9%
Alberta Energy Co., Ltd., 7.65%,
09/15/2010................................. BBB+ 2,500,000 2,514,675
BP Amoco Plc, 9.00%, 04/01/2021............. AA+ 931,000 1,100,577
Cross Timbers Oil Co., Ser. B, 9.25%,
04/01/2007................................. B 1,000,000 1,000,000
Golden State Petroleum Trans. Corp., First
Mtge., 8.04%, 02/01/2019................... Ba2 7,600,000 7,022,635
Ocean Energy, Inc., Ser. B, 8.375%,
07/01/2008................................. BB- 1,000,000 1,005,000
Triton Energy, Ltd., 8.75%, 04/15/2002...... BB- 550,000 567,875
------------
13,210,762
------------
FINANCIALS - 6.9%
Banks - 0.9%
FleetBoston Financial Corp., 7.25%,
09/15/2005................................. A 3,750,000 3,779,884
GS Escrow Corp., 6.75%, 08/01/2001.......... BB+ 5,500,000 5,416,317
Intl. Bank For Reconstruction & Dev. Co.,
MTN, 7.95%, 05/15/2016..................... Aaa 640,000 698,275
Wells Fargo & Co., 7.25%, 08/24/2005........ A+ 2,500,000 2,532,732
------------
12,427,208
------------
</TABLE>
21
<PAGE>
EVERGREEN
Balanced Fund
Schedule of Investments (continued)
September 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Credit Principal
Rating/\ Amount Value
<S> <C> <C> <C>
CORPORATE BONDS - continued
FINANCIALS - continued
Diversified Financials - 4.0%
Barnett Capital I, 8.06%, 12/01/2026........ A- $ 3,250,000 $ 2,992,772
Comdisco, Inc., 9.50%, 08/15/2003........... BBB+ 5,000,000 5,042,205
Comml. Credit Co., 10.00%, 05/15/2009....... AA- 6,400,000 7,411,814
Dean Witter, Discover & Co., 6.75%,
10/15/2013................................. AA- 1,280,000 1,177,347
Ford Motor Credit Co.:
5.75%, 02/23/2004.......................... A 4,000,000 3,818,628
7.60%, 08/01/2005.......................... A 9,500,000 9,597,793
Gen. Elec. Capital Corp., 8.75%,
03/14/2003................................. NA 1,300,000 1,360,654
HSBC Capital Funding, LP, 9.547%,
06/25/2002................................. NR 3,000,000 3,177,207
Lehman Brothers Holdings, Inc., 8.25%,
06/15/2007................................. A 5,000,000 5,182,530
Limestone Electron Trust, 8.625%, 03/15/2003
144A....................................... BBB- 2,700,000 2,751,853
Natl. Rural Util. Corp., 5.00%, 10/01/2002.. AA 6,500,000 6,284,291
Paine Webber Group, Inc., MTN, 6.64%,
04/14/2010................................. BBB+ 5,000,000 4,672,795
Regl. Diversified Funding, Ltd., 9.25%,
03/15/2030................................. A+ 2,500,000 2,453,003
United Rentals, Inc., Ser. B, 9.25%,
01/15/2009................................. BB- 1,000,000 910,000
------------
56,832,892
------------
Insurance - 1.8%
AMBAC Finl. Group, Inc., 9.375%,
08/01/2011................................. AA 5,500,000 6,217,910
Nationwide CSN Trust, 9.875%, 02/15/2025.... A 6,000,000 6,159,318
Prudential Properties, 7.125%, 07/01/2007
144A....................................... A+ 6,200,000 5,957,989
Sun Life Canada Capital Trust, 8.526%,
05/29/2049................................. A+ 9,200,000 8,278,887
------------
26,614,104
------------
Real Estate - 0.2%
EOP Operating, Ltd., 6.375%, 02/15/2003..... BBB+ 3,050,000 2,984,291
------------
HEALTH CARE - 0.4%
Pharmaceuticals - 0.4%
Johnson & Johnson, 8.72%, 11/01/2024........ AAA 5,000,000 5,497,035
------------
INDUSTRIALS - 2.4%
Aerospace & Defense - 0.6%
Lockheed Martin Corp., 7.45%, 06/15/2004.... BBB- 8,300,000 8,319,895
------------
Air Freight & Couriers - 0.3%
FedEx Corp., 6.845%, 01/15/2019............. AA- 5,509,478 5,110,620
------------
Airlines - 0.8%
American Airlines, Inc., 8.39%, 01/02/2017.. BBB 5,000,000 5,110,875
Continental Airlines, Inc., 6.795%,
02/02/2020................................. AA- 4,964,941 4,624,669
United Air Lines, Ser. 2000-1, Class A2,
7.73%, 07/01/2010.......................... AAA 1,500,000 1,521,832
------------
11,257,376
------------
Building Products - 0.1%
American Standard, Inc., 7.375%,
02/01/2008................................. BB+ 1,000,000 937,500
------------
</TABLE>
22
<PAGE>
EVERGREEN
Balanced Fund
Schedule of Investments (continued)
September 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Credit Principal
Rating/\ Amount Value
<S> <C> <C> <C>
CORPORATE BONDS - continued
INDUSTRIALS - continued
Commercial Services & Supplies - 0.5%
Republic Services, Inc., 7.125%,
05/15/2009................................. BBB $ 2,200,000 $ 2,037,532
USA Waste Service, Inc., 7.00%, 10/01/2004.. BBB 4,000,000 3,821,792
Waste Management, Inc., 8.75%, 05/01/2018... BBB 1,126,000 1,054,580
------------
6,913,904
------------
Machinery - 0.1%
Caterpillar, Inc., 9.375%, 07/15/2001....... A+ 2,000,000 2,031,906
------------
MATERIALS - 0.4%
Chemicals - 0.1%
Lyondell Chemical Co., Ser. A, 9.625%,
05/01/2007................................. BB 1,000,000 978,750
Scotts Co., 8.625%, 01/15/2009 144A......... B+ 1,000,000 985,000
------------
1,963,750
------------
Containers & Packaging - 0.1%
Owens-Illinois, Inc.:
7.15%, 05/15/2005.......................... BB+ 230,000 208,585
7.35%, 05/15/2008.......................... BB+ 450,000 395,545
Packaging Corp. of America, 9.625%,
04/01/2009................................. B+ 1,000,000 1,017,500
------------
1,621,630
------------
Metals & Mining - 0.2%
Alcoa, Inc., 7.375%, 08/01/2010............. A+ 1,550,000 1,570,223
P&L Coal Holdings Corp., Ser. B, 9.625%,
05/15/2008................................. B 1,000,000 975,000
------------
2,545,223
------------
TELECOMMUNICATION SERVICES - 1.0%
Diversified Telecommunication Services - 0.8%
MCI Worldcom, Inc., 6.25%, 04/15/2012....... A- 2,000,000 1,976,284
Nextlink Communications, Inc., 12.50%,
04/15/2006................................. B 1,000,000 982,500
Qwest Capital Funding, Inc., 7.90%,
08/15/2010 144A............................ BBB+ 5,250,000 5,362,465
Sprint Capital Corp., 6.375%, 05/01/2009.... BBB+ 1,500,000 1,374,746
Telecom De Puerto Rico, Inc., 6.65%,
05/15/2006................................. BBB 2,500,000 2,384,715
------------
12,080,710
------------
Wireless Telecommunications Services - 0.2%
Price Communications Wireless, Inc., 11.75%,
07/15/2007................................. B- 1,000,000 1,075,000
Voicestream Wireless Corp., 10.375%,
11/15/2009................................. B- 1,050,000 1,139,250
------------
2,214,250
------------
UTILITIES - 1.0%
Electric Utilities - 0.8%
AES Corp., 8.50%, 11/01/2007................ B+ 1,000,000 960,000
Duke Energy Field Svcs., LLC, 7.875%,
08/16/2010................................. BBB 2,500,000 2,546,065
LSP Energy, LP, Ser. C, 7.164%, 01/15/2014.. BBB- 3,500,000 3,396,715
</TABLE>
23
<PAGE>
EVERGREEN
Balanced Fund
Schedule of Investments (continued)
September 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Credit Principal
Rating/\ Amount Value
<S> <C> <C> <C>
CORPORATE BONDS - continued
UTILITIES - continued
Electric Utilities - continued
Soyland Pwr. Coop., Inc., 8.67%,
09/15/2018................................. Aaa $ 4,000,000 $ 4,164,120
Union Elec. Co., 8.00%, 12/15/2022.......... AA- 838,000 830,284
------------
11,897,184
------------
Gas Utilities - 0.2%
Williams Gas Pipelines Co., 7.375%,
11/15/2006 144A............................ BBB 2,000,000 2,001,910
------------
Total Corporate Bonds (cost
$229,842,264)............................ 221,690,882
------------
MORTGAGE-BACKED SECURITIES - 8.7%
FHLMC:
6.25%, 07/15/2004.......................... AAA 15,000,000 14,869,515
6.625%, 09/15/2009......................... AAA 5,700,000 5,638,155
6.875%, 01/15/2005......................... AAA 15,500,000 15,699,330
7.219%, 09/01/2028......................... AAA 2,898,098 2,882,102
7.565%, 03/01/2022......................... AAA 33,507 34,020
8.131%, 10/01/2028......................... AAA 901,811 927,855
FNMA:
5.471%, 07/01/2029......................... AAA 2,184,695 2,124,247
5.50%, 07/01/2009.......................... AAA 11,877,273 11,392,324
6.294%, 03/01/2027......................... AAA 1,020,798 1,024,847
6.385%, 11/01/2039......................... AAA 8,497,055 8,338,432
6.50%, 10/01/2028.......................... AAA 4,858,744 4,670,468
7.00%, 05/01/2024.......................... AAA 2,178,090 2,146,595
7.25%, 05/15/2030.......................... Aaa 10,775,000 11,329,719
7.30%, 05/25/2010.......................... NA 4,900,000 5,034,750
7.334%, 04/01/2028......................... AAA 3,112,587 3,148,317
7.50%, 03/01/2030.......................... AAA 6,288,897 6,280,721
7.856%, 12/01/2019......................... AAA 20,083 20,559
7.87%, 08/01/2027.......................... AAA 5,994,916 6,150,621
7.89%, 09/01/2021.......................... AAA 3,826,582 3,908,778
8.00%, 10/01/2029.......................... AAA 2,525,748 2,561,715
8.073%, 10/01/2029......................... AAA 5,651,745 5,831,969
8.079%, 12/01/2023......................... AAA 1,874,310 1,892,023
8.50%, 08/01/2030.......................... AAA 3,381,066 3,467,249
9.00%, 08/01/2014.......................... AAA 4,421,769 4,620,925
GNMA:
8.50%, 05/15/2021-06/15/2022............... AAA 599,794 617,299
9.00%, 10/15/2021.......................... AAA 174,993 181,576
9.50%, 02/15/2021.......................... AAA 106,314 110,713
------------
Total Mortgage-Backed Securities (cost
$123,207,125)............................ 124,904,824
------------
</TABLE>
24
<PAGE>
EVERGREEN
Balanced Fund
Schedule of Investments (continued)
September 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Credit Principal
Rating/\ Amount Value
<S> <C> <C> <C>
U.S. TREASURY OBLIGATIONS - 2.7%
U.S. Treasury Bonds:
6.125%, 08/15/2029.......................... AAA $ 9,635,000 $ 9,842,759
6.25%, 05/15/2030........................... AAA 4,000,000 4,206,252
7.875%, 02/15/2021.......................... AAA 9,200,000 11,065,880
8.125%, 05/15/2021.......................... AAA 5,980,000 7,372,222
U.S. Treasury Notes, 5.875%, 11/15/2004...... AAA 5,850,000 5,846,344
------------
Total U.S. Treasury Obligations (cost
$37,987,890).............................. 38,333,457
------------
YANKEE OBLIGATIONS - CORPORATE - 2.2%
CONSUMER DISCRETIONARY - 0.1%
Media - 0.1%
Rogers Cablesystems, Ltd., 11.00%,
12/01/2015.................................. BB- 1,050,000 1,181,250
------------
ENERGY - 0.8%
Energy Equipment & Services - 0.1%
Petroleum GEO Svcs., 7.50%, 03/31/2007....... BBB 2,250,000 2,207,842
------------
Oil & Gas - 0.7%
British Gas Intl. Fin. Co., 0.00%, 11/04/2021
#........................................... A 4,000,000 800,200
Gulf Canada Resources, Ltd., 8.35%,
08/01/2006.................................. BBB- 1,000,000 995,000
YPF Sociedad Anonima, 7.25%, 03/15/2003...... BBB- 8,000,000 7,840,000
------------
9,635,200
------------
FINANCIALS - 0.1%
Banks - 0.1%
Skandinaviska Enskilda, 0.00%, 05/26/2033 #.. 20,000,000 1,702,000
------------
MATERIALS - 0.2%
Paper & Forest Products - 0.2%
Domtar, Inc., 8.75%, 08/01/2006.............. BBB- 1,100,000 1,149,500
Tembec Inds., Inc, 8.625%, 06/30/2009........ BB+ 1,000,000 980,000
------------
2,129,500
------------
TELECOMMUNICATION SERVICES - 0.7%
Diversified Telecommunication Services - 0.6%
Deutsche Telekom Intl., 8.00%, 06/15/2010.... AA- 4,200,000 4,317,894
Koninklijke Kpn NV, 8.00%, 10/01/2010 144A... aaa 2,500,000 2,503,500
Telefonica Europe Bv, 7.75%, 09/15/2010...... A+ 2,500,000 2,519,517
------------
9,340,911
------------
Wireless Telecommunications Services - 0.1%
Rogers Cantel, Inc., 9.75%, 06/01/2016......... BB+ 1,000,000 1,085,000
------------
UTILITIES - 0.3%
Electric Utilities - 0.3%
TXU Eastern Funding Co., 6.75%, 05/15/2009... BBB+ 5,000,000 4,530,175
------------
Total Yankee Obligations-Corporate (cost
$32,635,589).............................. 31,811,878
------------
YANKEE OBLIGATIONS - GOVERNMENT - 0.4%
Canada, 7.50%, 09/15/2029 (cost $5,003,533).. A+ 5,000,000 5,047,640
------------
</TABLE>
25
<PAGE>
EVERGREEN
Balanced Fund
Schedule of Investments (continued)
September 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - 58.7%
CONSUMER DISCRETIONARY - 4.2%
Distributors - 0.4%
Avnet, Inc. ............................................ 174,000 $ 4,937,250
------------
Media - 1.8%
Clear Channel Communications, Inc. *.................... 50,000 2,825,000
Disney (Walt) Co. ...................................... 190,000 7,267,500
Time Warner, Inc. ...................................... 120,000 9,390,000
Viacom, Inc., Class B *................................. 110,000 6,435,000
------------
25,917,500
------------
Multi-line Retail - 0.9%
Wal-Mart Stores, Inc. .................................. 265,000 12,753,125
------------
Specialty Retail - 1.1%
Home Depot, Inc. ....................................... 170,000 9,020,625
RadioShack Corp. ....................................... 110,000 7,108,750
------------
16,129,375
------------
CONSUMER STAPLES - 2.5%
Beverages - 1.4%
Anheuser Busch Cos., Inc. .............................. 222,000 9,393,375
Pepsico, Inc. .......................................... 225,000 10,350,000
------------
19,743,375
------------
Food & Drug Retailing - 0.5%
Safeway, Inc. *......................................... 170,000 7,936,875
------------
Personal Products - 0.6%
Colgate-Palmolive Co. *................................. 180,000 8,496,000
------------
ENERGY - 6.5%
Energy Equipment & Services - 1.6%
Halliburton Co. ........................................ 140,000 6,851,250
Nabors Inds., Inc. *.................................... 175,000 9,170,000
Santa Fe Intl. Corp. ................................... 150,000 6,759,375
------------
22,780,625
------------
Oil & Gas - 4.9%
Apache Corp. ........................................... 175,000 10,346,875
Devon Energy Corp. ..................................... 170,000 10,225,500
Exxon Mobil Corp. ...................................... 300,000 26,737,500
Royal Dutch Petroleum Co. .............................. 155,000 9,290,313
Sunoco, Inc. ........................................... 150,000 4,040,625
Unocal Corp. ........................................... 275,000 9,745,312
------------
70,386,125
------------
</TABLE>
26
<PAGE>
EVERGREEN
Balanced Fund
Schedule of Investments (continued)
September 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
FINANCIALS - 9.7%
Banks - 2.5%
Bank of America Corp. .................................. 130,000 $ 6,808,750
Bank of New York Co., Inc. ............................. 90,000 5,045,625
FleetBoston Finl. Corp. *............................... 100,000 3,900,000
Mellon Finl. Corp. ..................................... 200,000 9,275,000
PNC Finl. Svcs. Group................................... 75,000 4,875,000
Wells Fargo Co. ........................................ 135,000 6,201,563
------------
36,105,938
------------
Diversified Financials - 4.3%
American Express Co. ................................... 115,000 6,986,250
Citigroup, Inc. ........................................ 386,666 20,904,131
Freddie Mac Corp. ...................................... 210,000 11,353,125
Goldman Sachs Group, Inc. .............................. 60,000 6,836,250
John Hancock Finl. Svcs., Inc. ......................... 230,000 6,181,250
Morgan Stanley Dean Witter & Co. ....................... 95,000 8,686,562
------------
60,947,568
------------
Insurance - 2.9%
AMBAC Finl. Group, Inc. ................................ 60,000 4,395,000
American Intl. Group, Inc. ............................. 158,125 15,130,586
CIGNA Corp. ............................................ 75,000 7,830,000
Hartford Finl. Svcs. Group, Inc. ....................... 85,000 6,199,687
Marsh & McLennan Co. ................................... 60,000 7,965,000
------------
41,520,273
------------
HEALTH CARE - 7.3%
Biotechnology - 1.1%
Amgen, Inc. *........................................... 120,000 8,379,375
MedImmune, Inc. *....................................... 50,000 3,862,500
Millennium Pharmaceuticals, Inc. *...................... 27,000 3,943,687
------------
16,185,562
------------
Health Care Equipment & Supplies - 0.3%
PE Corp-PE Biosystems Group............................. 36,000 4,194,000
------------
Health Care Providers & Services - 0.4%
Health Mgmt. Associates, Inc., Class A *................ 245,000 5,099,063
------------
Pharmaceuticals - 5.5%
American Home Products Corp. ........................... 230,000 13,009,375
Johnson & Johnson ...................................... 92,500 8,689,219
Merck & Co., Inc. ...................................... 165,000 12,282,187
Pfizer, Inc. ........................................... 440,000 19,772,500
Pharmacia Corp. ........................................ 100,000 6,018,750
Schering-Plough Corp. .................................. 395,000 18,367,500
------------
78,139,531
------------
</TABLE>
27
<PAGE>
EVERGREEN
Balanced Fund
Schedule of Investments (continued)
September 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
INDUSTRIALS - 5.8%
Aerospace & Defense - 0.6%
United Technologies Corp. .............................. 130,000 $ 9,002,500
------------
Commercial Services & Supplies - 0.9%
Automatic Data Processing, Inc. ........................ 105,000 7,021,875
Avery Dennison Corp. ................................... 130,000 6,028,750
------------
13,050,625
------------
Industrial Conglomerates - 3.8%
Gen. Elec. Co. ......................................... 760,000 43,842,500
Tyco Intl., Ltd. ....................................... 210,000 10,893,750
------------
54,736,250
------------
Machinery - 0.5%
Deere & Co. ............................................ 195,000 6,483,750
------------
INFORMATION TECHNOLOGY - 14.3%
Communications Equipment - 3.3%
Cisco Sys., Inc. *...................................... 480,000 26,520,000
Corning, Inc. .......................................... 25,500 7,573,500
Nortel Networks Corp. .................................. 200,000 11,912,500
Scientific Atlanta, Inc. ............................... 30,000 1,908,750
------------
47,914,750
------------
Computers & Peripherals - 3.1%
Dell Computer Corp. *................................... 50,000 1,540,625
EMC Corp. *............................................. 153,000 15,166,125
Intl. Business Machines Corp. .......................... 148,000 16,650,000
Sun Microsystems, Inc. *................................ 90,000 10,507,500
------------
43,864,250
------------
Electronic Equipment & Instruments - 0.6%
Sanmina Corp. *......................................... 85,000 7,958,125
------------
Internet Software & Services - 1.3%
America Online, Inc. *.................................. 165,000 8,868,750
Check Point Software Technologies, Ltd. *............... 33,000 5,197,500
VeriSign, Inc. ......................................... 21,000 4,253,813
------------
18,320,063
------------
Semiconductor Equipment & Products - 2.1%
Broadcom Corp. *........................................ 14,500 3,534,375
Cypress Semiconductor Corp. *........................... 80,000 3,325,000
Integrated Device Technology............................ 50,000 4,525,000
Intel Corp. ............................................ 290,000 12,053,125
Micron Tech., Inc. *.................................... 55,000 2,530,000
Teradyne, Inc. *........................................ 120,000 4,200,000
------------
30,167,500
------------
</TABLE>
28
<PAGE>
EVERGREEN
Balanced Fund
Schedule of Investments (continued)
September 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
INFORMATION TECHNOLOGY - continued
Software - 3.9%
Adobe Sys., Inc. ....................................... 40,000 $ 6,210,000
Mercury Interactive Corp. *............................. 21,000 3,291,750
Microsoft Corp. *....................................... 305,000 18,395,312
Oracle Sys. Corp. *..................................... 120,000 9,450,000
Rational Software Corp. *............................... 80,000 5,550,000
Sapient Corp. *......................................... 47,000 1,912,313
Siebel Sys., Inc. *..................................... 50,000 5,565,625
Veritas Software Corp. *................................ 39,000 5,538,000
------------
55,913,000
------------
MATERIALS - 0.7%
Chemicals - 0.4%
Millipore Corp. ........................................ 110,000 5,328,125
------------
Containers & Packaging - 0.3%
Sealed Air Corp. *...................................... 115,000 5,203,750
------------
TELECOMMUNICATION SERVICES - 3.7%
Diversified Telecommunications Services - 3.4%
AT&T Corp. ............................................. 219,050 6,434,594
AT&T Corp., Liberty Media Group, Class A................ 240,000 4,320,000
BellSouth Corp. ........................................ 155,000 6,238,750
Qwest Communications Intl., Inc. *...................... 150,225 7,220,189
SBC Communications, Inc. ............................... 235,000 11,750,000
Tycom, Ltd. *........................................... 195,000 7,483,125
Verizon Communications.................................. 102,802 4,979,472
Winstar Communications, Inc. *.......................... 50,000 775,000
------------
49,201,130
------------
Wireless Telecommunications Services - 0.3%
Vodafone Group Plc, ADR................................. 110,000 4,070,000
------------
UTILITIES - 4.0%
Electric Utilities - 3.4%
AES Corp. *............................................. 115,000 7,877,500
Constellation Energy Group, Inc. ....................... 265,000 13,183,750
Dominion Resources, Inc. ............................... 230,000 13,354,375
Duke Energy Corp. ...................................... 155,000 13,291,250
------------
47,706,875
------------
Gas Utilities - 0.6%
El Paso Energy Corp. ................................... 70,000 4,313,750
Enron Corp. ............................................ 50,000 4,381,250
------------
8,695,000
------------
Total Common Stocks (cost $657,734,978)............... $838,887,878
------------
</TABLE>
29
<PAGE>
EVERGREEN
Balanced Fund
Schedule of Investments (continued)
September 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
SHORT-TERM INVESTMENTS -
5.0%
MUTUAL FUND SHARES - 5.0%
Evergreen Select Money
Market Fund o .......... 30,025,991 $ 30,025,991
Navigator Prime Portfolio
pp ..................... 41,959,167 41,959,167
--------------
Total Short-Term
Investments (cost
$71,985,158).......... 71,985,158
--------------
Total Investments - (cost
$1,297,310,395) - 102.9%............. 1,470,174,544
Other Assets and Liabilities -
(2.9%).............................. (41,227,441)
--------------
Net Assets - 100.0%................... $1,428,947,103
--------------
</TABLE>
See Combined Notes to Schedules of Investments.
30
<PAGE>
EVERGREEN
Foundation Fund
Schedule of Investments
September 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Credit Principal
Rating/\ Amount Value
<S> <C> <C> <C>
ASSET-BACKED SECURITIES - 0.5%
Asset Backed - 0.5%
American Express Credit Account Master Trust,
Ser. 1999-2, Class A, 5.95%, 12/15/2006..... AAA $ 1,300,000 $ 1,269,235
Capital One Master Trust, Ser. 1998-4, Class
A,
5.43%, 01/15/2007........................... AAA 2,900,000 2,792,888
Continental Airlines Trust, Ser. 1997-1,
Class A,
7.46%, 04/01/2015........................... AA+ 1,651,945 1,613,926
Discover Card Master Trust I, Ser. 1996-3,
Class A,
6.05%, 08/18/2008........................... AAA 2,025,000 1,952,110
EQCC Home Equity Loan Trust, Ser. 1998-2,
Class A6F, 6.15%, 04/15/2008................ AAA 770,000 753,880
GE Capital Mtge. Funding Corp., Ser. 1999-
HE3, Class A3, 7.11%, 07/25/2014............ Aaa 1,300,000 1,298,459
HFC Home Equity Loan Trust, Ser. 1999-1,
Class A2,
6.95%, 10/20/2023........................... Aaa 1,100,000 1,096,101
Key Auto Fin. Trust, Ser. 1999-1, Class A4,
5.83%, 01/15/2007........................... AAA 2,680,000 2,641,663
Northwest Airlines Corp., Ser. 1999-2, Class
B,
7.95%, 03/01/2015........................... A 1,684,045 1,636,934
WFS Finl. Owner Trust, Ser. 1999-C, Class A2,
6.92%, 01/20/2004........................... AAA 1,750,000 1,753,369
------------
Total Asset-Backed Securities (cost
$17,124,299).............................. 16,808,565
------------
CORPORATE BONDS - 2.0%
CONSUMER DISCRETIONARY - 1.5%
Automobiles - 0.7%
Daimler Chrysler AG, 6.90%, 09/01/2004....... A+ 25,000,000 24,913,225
------------
Media - 0.0%
Times Mirror Co., 7.45%, 10/15/2009.......... A 1,750,000 1,748,869
------------
Multi-line Retail - 0.8%
Wal-Mart Stores, Inc., 6.87%, 08/10/2009..... AA 26,785,000 26,515,811
------------
CONSUMER STAPLES - 0.0%
Food Products - 0.0%
SmithKline Beecham Corp., 6.62%, 10/01/2001.. AA- 330,000 329,628
------------
ENERGY - 0.1%
Oil & Gas - 0.1%
Conoco, Inc., 6.35%, 04/15/2009.............. A- 1,800,000 1,708,924
------------
FINANCIALS - 0.1%
Diversified Financials - 0.1%
Gen. Elec. Capital Corp.:
6.29%, 12/03/2001........................... AAA 300,000 298,458
7.25%, 02/01/2005........................... AAA 4,500,000 4,572,329
Home Savings America, 6.00%, 11/01/2000...... BBB+ 250,000 249,757
------------
5,120,544
------------
</TABLE>
31
<PAGE>
EVERGREEN
Foundation Fund
Schedule of Investments (continued)
September 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Credit Principal
Rating/\ Amount Value
<S> <C> <C> <C>
CORPORATE BONDS - continued
INFORMATION TECHNOLOGY - 0.2%
Communications Equipment - 0.2%
Lucent Technologies, Inc., 6.90%,
07/15/2001................................. A $ 6,250,000 $ 6,248,669
------------
UTILITIES - 0.1%
Electric Utilities - 0.1%
Duke Energy Corp., Ser. A, 6.00%,
12/01/2028................................. A+ 1,000,000 797,479
Georgia Pwr. Co., 5.50%, 12/01/2005......... A 1,500,000 1,394,277
Pacific Gas & Elec. Co., MTN, 5.93%,
10/08/2003................................. A 250,000 240,772
------------
2,432,528
------------
Total Corporate Bonds (cost $69,619,322).. 69,018,198
------------
MORTGAGE-BACKED SECURITIES - 4.4%
FHLMC:
7.00%, 03/15/2010........................... Aaa 10,800,000 10,981,635
8.50%, 09/01/2020........................... AAA 4,246,785 4,382,894
FNMA:
5.12%, 02/13/2004........................... AAA 53,946,000 51,875,714
6.00%, 08/01/2006........................... AAA 6,029,543 5,850,103
6.50%, 11/01/2014........................... AAA 5,440,457 5,340,679
6.62%, 09/15/2009........................... Aaa 3,500,000 3,473,873
7.00%, 08/01/2029........................... AAA 10,415,149 10,215,074
7.50%, 09/01/2029........................... AAA 12,555,952 12,545,907
8.00%, 10/01/2014-11/01/2014................ AAA 4,642,130 4,728,938
8.50%, 04/01/2025-04/01/2030................ AAA 14,549,086 14,953,409
GNMA:
6.50%, 04/15/2029........................... AAA 7,582,035 7,310,901
7.00%, 04/15/2024........................... AAA 15,286,744 15,106,513
7.50%, 05/15/2029-12/15/2029................ AAA 6,022,890 6,046,801
8.00%, 04/15/2030........................... AAA 3,073,537 3,131,719
------------
Total Mortgage-Backed Securities (cost
$154,923,137)............................ AAA 155,944,160
------------
U.S. TREASURY OBLIGATIONS - 24.5%
U.S. Treasury Bonds:
5.25%, 11/15/2028-02/15/2029................ AAA 7,300,000 6,551,098
6.00%, 02/15/2026........................... AAA 38,000,000 37,655,644
6.12%, 08/15/2029........................... AAA 450,000 459,703
6.25%, 08/15/2023........................... AAA 40,000,000 40,750,000
6.50%, 11/15/2026........................... AAA 4,150,000 4,382,143
7.12%, 02/15/2023........................... AAA 25,000,000 28,085,950
7.25%, 05/15/2016........................... AAA 85,769,000 95,471,618
8.00%, 11/15/2021........................... AAA 10,000,000 12,218,750
8.12%, 08/15/2019-05/15/2021................ AAA 75,000,000 91,882,825
8.50%, 02/15/2020........................... AAA 10,000,000 12,668,750
9.00%, 11/15/2018........................... AAA 1,000,000 1,311,250
9.25%, 02/15/2016........................... AAA 2,610,000 3,419,917
</TABLE>
32
<PAGE>
EVERGREEN
Foundation Fund
Schedule of Investments (continued)
September 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Credit Principal
Rating/\ Amount Value
<S> <C> <C> <C>
U.S. TREASURY OBLIGATIONS - continued
U.S. Treasury Notes:
5.25%, 08/15/2003........................... AAA $125,000,000 $122,695,375
5.50%, 05/15/2009........................... AAA 25,000,000 24,289,075
5.87%, 09/30/2002-11/15/2005................ AAA 127,000,000 126,868,475
6.12%, 08/15/2007........................... AAA 75,000,000 75,820,350
6.50%, 08/31/2001-02/15/2010................ AAA 100,000,000 102,187,550
6.62%, 05/15/2007........................... AAA 25,000,000 25,921,875
6.87%, 05/15/2006........................... AAA 44,500,000 46,516,428
------------
Total U.S. Treasury Obligations (cost
$835,642,451)............................ $859,156,776
------------
YANKEE OBLIGATIONS-GOVERNMENT - 0.1%
Ontario, Canada, 7.75%, 06/04/2002.......... AA- 1,500,000 1,526,057
Quebec, Canada, 5.75%, 02/15/2009........... A+ 2,500,000 2,290,495
------------
Total Yankee Obligations - Government
(cost $3,863,321)........................ $ 3,816,552
------------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - 64.0%
CONSUMER DISCRETIONARY - 4.8%
Media - 3.2%
Clear Channel Communications, Inc. *.............. 174,200 $ 9,842,300
Disney (Walt) Co. ................................ 783,979 29,987,197
Echostar Communications Corp., Class A............ 223,000 11,763,250
Time Warner, Inc. ................................ 558,880 43,732,360
Viacom, Inc., Class B *........................... 289,599 16,941,541
--------------
112,266,648
--------------
Multi-line Retail - 1.2%
Kohl's Corp. *.................................... 120,600 6,957,112
Wal-Mart Stores, Inc. ............................ 732,040 35,229,425
--------------
42,186,537
--------------
Specialty Retail - 0.4%
Home Depot, Inc. ................................. 267,948 14,217,991
--------------
CONSUMER STAPLES - 5.2%
Beverages - 2.1%
Anheuser Busch Cos., Inc. ........................ 383,200 16,214,150
Pepsico, Inc. .................................... 549,340 25,269,640
The Coca-Cola Co. ................................ 576,900 31,801,612
--------------
73,285,402
--------------
Food & Drug Retailing - 0.8%
Kroger Co. *...................................... 431,700 9,740,231
Walgreen Co. ..................................... 477,100 18,099,982
--------------
27,840,213
--------------
</TABLE>
33
<PAGE>
EVERGREEN
Foundation Fund
Schedule of Investments (continued)
September 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
CONSUMER STAPLES - continued
Food Products - 0.1%
Bestfoods......................................... 68,000 $ 4,947,000
--------------
Household Products - 0.5%
Procter & Gamble Co. ............................. 261,900 17,547,300
--------------
Personal Products - 1.1%
Avon Products, Inc. .............................. 420,000 17,167,500
Clorox Co. ....................................... 168,500 6,666,281
Kimberly-Clark Corp. *............................ 220,000 12,278,750
The Estee Lauder Cos., Inc., Class A.............. 99,100 3,629,538
--------------
39,742,069
--------------
Tobacco - 0.6%
Philip Morris Co., Inc. .......................... 681,600 20,064,600
--------------
ENERGY - 5.6%
Energy Equipment & Services - 1.9%
Baker Hughes, Inc. ............................... 502,130 18,641,576
Diamond Offshore Drilling, Inc. .................. 123,200 5,051,200
Halliburton Co. .................................. 199,500 9,763,031
Schlumberger, Ltd. ............................... 301,200 24,792,525
Transocean Sedco Forex, Inc. ..................... 128,000 7,504,000
--------------
65,752,332
--------------
Oil & Gas - 3.7%
Anadarko Petroleum Corp. ......................... 182,700 12,142,242
Apache Corp. ..................................... 132,300 7,822,238
Chevron Corp. .................................... 120,000 10,230,000
Conoco, Inc., Class B............................. 306,200 8,248,262
Devon Energy Corp. ............................... 115,800 6,965,370
Exxon Mobil Corp. ................................ 750,126 66,854,980
Royal Dutch Petroleum Co. ........................ 211,600 12,682,775
Texaco, Inc. ..................................... 114,200 5,995,500
--------------
130,941,367
--------------
FINANCIALS - 11.1%
Banks - 4.0%
Bank of America Corp. ............................ 570,339 29,871,505
Bank of New York Co., Inc. ....................... 423,000 23,714,437
Firstar Corp. .................................... 260,200 5,821,975
FleetBoston Finl. Corp. *......................... 355,400 13,860,600
J.P. Morgan & Co., Inc. *......................... 71,700 11,713,987
KeyCorp .......................................... 276,900 7,009,031
Mellon Finl. Corp. ............................... 107,700 4,994,588
PNC Finl. Svcs. Group............................. 163,500 10,627,500
State Street Corp. ............................... 90,300 11,739,000
</TABLE>
34
<PAGE>
EVERGREEN
Foundation Fund
Schedule of Investments (continued)
September 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
FINANCIALS - continued
Banks - continued
Washington Mutual, Inc. .......................... 226,780 $ 9,028,679
Wells Fargo Co. .................................. 282,595 12,981,708
--------------
141,363,010
--------------
Diversified Financials - 3.4%
American Express Co. ............................. 363,900 22,106,925
Associates First Capital Corp., Class A........... 208,700 7,930,600
Charles Schwab Corp. ............................. 260,400 9,244,200
Citigroup, Inc. .................................. 1,145,200 61,912,375
Freddie Mac Corp. ................................ 289,800 15,667,313
--------------
116,861,413
--------------
Insurance - 3.7%
Allstate Corp. ................................... 364,200 12,655,950
American Intl. Group, Inc. ....................... 828,968 79,321,876
Chubb Corp. ...................................... 111,000 8,782,875
CIGNA Corp. ...................................... 63,500 6,629,400
Hartford Finl. Svcs. Group, Inc. ................. 131,500 9,591,281
Lincoln Natl. Corp. .............................. 139,400 6,708,625
Marsh & McLennan Co. ............................. 49,700 6,597,675
--------------
130,287,682
--------------
HEALTH CARE - 10.8%
Biotechnology - 0.5%
Amgen, Inc. *..................................... 196,900 13,749,158
MedImmune, Inc. *................................. 72,500 5,600,625
--------------
19,349,783
--------------
Health Care Equipment & Supplies - 2.3%
Alza Corp. *...................................... 182,100 15,751,650
Becton Dickinson & Co. ........................... 222,400 5,879,700
Boston Scientific Corp. *......................... 328,500 5,399,719
Guidant Corp. *................................... 401,200 28,359,825
Medtronic, Inc. .................................. 470,200 24,362,237
--------------
79,753,131
--------------
Health Care Providers & Services - 1.0%
HCA-The Healthcare Corp. ......................... 343,800 12,763,575
Tenet Healthcare Corp. *.......................... 409,970 14,912,659
UnitedHealth Group, Inc. ......................... 68,000 6,715,000
--------------
34,391,234
--------------
Pharmaceuticals - 7.0%
Abbott Laboratories............................... 634,400 30,173,650
American Home Products Corp. ..................... 551,350 31,185,734
Bristol-Myers Squibb Co. ......................... 207,400 11,847,725
</TABLE>
35
<PAGE>
EVERGREEN
Foundation Fund
Schedule of Investments (continued)
September 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
FINANCIALS - continued
Pharmaceuticals - continued
IDEC Pharmaceuticals Corp......................... 43,300 $ 7,593,061
Johnson & Johnson................................. 262,205 24,630,882
Merck & Co., Inc.................................. 436,900 32,521,744
Pfizer, Inc....................................... 1,150,225 51,688,236
Pharmacia Corp.................................... 496,567 29,887,126
Schering-Plough Corp.............................. 526,200 24,468,300
--------------
243,996,458
--------------
INDUSTRIALS - 7.5%
Aerospace & Defense - 1.3%
Boeing Co......................................... 264,700 16,676,100
Gen. Motors Corp., Class H *...................... 329,100 12,235,938
United Technologies Corp.......................... 217,030 15,029,327
--------------
43,941,365
--------------
Commercial Services & Supplies - 0.5%
Automatic Data Processing, Inc.................... 282,000 18,858,750
--------------
Industrial Conglomerates - 5.7%
Danaher Corp. .................................... 114,800 5,711,300
Gen. Elec. Co. ................................... 2,695,300 155,485,119
Minnesota Mining & Manufacturing Co. ............. 137,700 12,547,913
Tyco Intl., Ltd. ................................. 529,100 27,447,062
--------------
201,191,394
--------------
INFORMATION TECHNOLOGY - 15.2%
Communications Equipment - 4.7%
CIENA Corp. *..................................... 75,400 9,260,062
Cisco Sys., Inc. *................................ 1,243,200 68,686,800
Corning, Inc. .................................... 74,400 22,096,800
Juniper Networks, Inc. ........................... 50,800 11,122,025
Motorola, Inc. ................................... 281,700 7,958,025
Nortel Networks Corp. ............................ 617,600 36,785,800
QUALCOMM, Inc. *.................................. 130,000 9,262,500
--------------
165,172,012
--------------
Computers & Peripherals - 5.4%
Compaq Computer Corp. ............................ 306,300 8,447,754
EMC Corp. *....................................... 561,800 55,688,425
Hewlett-Packard Co. .............................. 190,800 18,507,600
Intl. Business Machines Corp. .................... 334,800 37,665,000
Palm, Inc. ....................................... 115,600 6,119,575
Sun Microsystems, Inc. *.......................... 539,050 62,934,087
--------------
189,362,441
--------------
</TABLE>
36
<PAGE>
EVERGREEN
Foundation Fund
Schedule of Investments (continued)
September 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
INFORMATION TECHNOLOGY - continued
Electronic Equipment & Instruments - 0.3%
JDS Uniphase Corp. *............................... 91,800 $ 8,692,313
--------------
Internet Software & Services - 0.7%
America Online, Inc. *............................. 301,400 16,200,250
Commerce One, Inc. ................................ 117,100 9,192,350
--------------
25,392,600
--------------
Semiconductor Equipment & Products - 2.7%
Applied Materials, Inc. *.......................... 140,700 8,345,269
Broadcom Corp. *................................... 23,200 5,655,000
Intel Corp. ....................................... 1,383,300 57,493,406
Micron Tech., Inc. *............................... 261,100 12,010,600
Texas Instruments, Inc. ........................... 210,300 9,923,531
--------------
93,427,806
--------------
Software - 1.4%
I2 Technologies, Inc. *............................ 66,600 12,458,363
Oracle Sys. Corp. *................................ 358,400 28,224,000
Veritas Software Corp. *........................... 67,300 9,556,600
--------------
50,238,963
--------------
TELECOMMUNICATION SERVICES - 2.2%
Diversified Telecommunication Services - 2.0%
Qwest Communications Intl., Inc. *................. 306,292 14,721,159
SBC Communications, Inc. .......................... 632,500 31,625,000
Verizon Communications............................. 503,818 24,403,685
--------------
70,749,844
--------------
Wireless Telecommunications Services - 0.2%
Nextel Communications, Inc., Class A *............. 135,200 6,320,600
--------------
UTILITIES - 1.6%
Electric Utilities - 0.8%
Duke Energy Corp. ................................. 152,100 13,042,575
Southern Co. ...................................... 409,300 13,276,669
--------------
26,319,244
--------------
Gas Utilities - 0.8%
Enron Corp. ....................................... 336,400 29,477,050
--------------
Total Common Stocks (cost $1,645,343,951)........ 2,243,938,552
--------------
</TABLE>
37
<PAGE>
EVERGREEN
Foundation Fund
Schedule of Investments (continued)
September 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
SHORT-TERM INVESTMENTS - 5.7%
MUTUAL FUND SHARES - 5.7%
Evergreen Select Money Market Fund o ........... 165,526,200 $ 165,526,200
Navigator Prime Portfolio pp ................... 35,980,196 35,980,196
--------------
Total Short-Term Investments (cost
$201,506,396)................................ 201,506,396
--------------
Total Investments - (cost $2,928,022,877) - 101.2%............ 3,550,189,199
Other Assets and Liabilities - (1.2%)......................... (41,224,020)
--------------
Net Assets - 100.0%........................................... $3,508,965,179
==============
</TABLE>
See Combined Notes to Schedules of Investments.
38
<PAGE>
EVERGREEN
Tax Strategic Foundation Fund
Schedule of Investments
September 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Credit Principal
Rating/\ Amount Value
<S> <C> <C> <C>
MUNICIPAL OBLIGATIONS - 50.7%
EDUCATION - 4.8%
Chicago, IL GO, City Colleges Capital Impt.,
6.00%, 01/01/2011, (Insd. by FGIC).......... AAA $2,500,000 $ 2,683,925
Florida Board of Ed. Lottery RB, Ser. A,
5.75%, 07/01/2011, (Insd. by FGIC).......... AAA 5,015,000 5,346,040
Massachusetts Hlth. & Edl. Facs. Auth. RB,
Univ. of MA Proj., Ser.A, 5.75%, 10/01/2019,
(Insd. by FGIC)............................. AAA 1,000,000 1,015,480
New York Dorm. Auth. RB, 5.75%, 05/15/2013,
(Insd. by FGIC)............................. AAA 4,755,000 5,001,975
GENERAL OBLIGATION - LOCAL - 12.4%
Cambria Cnty, PA GO, 5.50%, 08/15/2016,
(Insd. by FGIC)............................. AAA 2,375,000 2,372,340
Clark Cnty., WA GO, Sch. Dist. 117:
5.50%, 12/01/2016, (Insd. by FSA)........... AAA 3,500,000 3,504,690
5.50%, 12/01/2017, (Insd. by FSA)........... AAA 2,000,000 1,995,420
Cranston, RI GO, 5.50%, 07/15/2015, (Insd. by
MBIA)....................................... AAA 3,025,000 3,029,265
District of Columbia GO, Refunding, Ser. B,
5.50%, 06/01/2014, (Insd. by FSA)........... AAA 5,000,000 5,037,300
Du Page Cnty., IL GO, 0.00%, 11/01/2009 #.... AAA 5,000,000 3,160,800
Ferndale, MI GO, Ser. IV, 5.25%, 04/01/2014.. AAA 1,200,000 1,187,424
Fulton Cnty, GA Facs. Corp. COP, 6.00%,
11/01/2015, (Insd. by AMBAC)................ AAA 2,000,000 2,118,400
Huntsville, AL Pub. Bldg. Auth. RB, 5.90%,
10/01/2016.................................. AAA 1,750,000 1,802,325
Jefferson Cnty., OH GO, 5.70%, 12/01/2013,
(Insd. by FSA).............................. AAA 1,000,000 1,056,770
Pittsburgh, PA GO, Ser. A, 5.50%, 09/01/2014,
(Insd. by AMBAC)............................ AAA 3,115,000 3,194,184
Snohomish Cnty., WA GO, Sch. Dist. 15,
5.70%, 12/01/2015, (Insd. by FGIC).......... AAA 500,000 507,770
St. Louis, MO Muni. Fin. Corp. RB, Ser. A,
5.95%, 02/15/2016, (Insd. by AMBAC)......... AAA 500,000 516,640
Washington DC Convention Ctr. Auth. RB,
5.25%, 10/01/2014, (Insd. by AMBAC)......... AAA 2,000,000 1,970,200
Will County, IL GO, Sch. Dist. 61, 0.00%,
01/01/2016, (Insd. by FGIC) #............... NR 2,000,000 846,000
Worcester, MA GO, Ser. A, 5.50%, 04/01/2019,
(Insd. by FSA).............................. AAA 4,000,000 3,963,360
GENERAL OBLIGATION - STATE - 6.0%
Michigan Muni. Bond Auth. RB:
Prerefunded, Ser. G, 6.55%, 11/01/2008,
(Insd. by AMBAC)........................... AAA 195,000 212,560
Unrefunded, Ser. B, 6.55%, 11/01/2008,
(Insd. by AMBAC)........................... AAA 105,000 113,554
Nevada GO, Colorado River Commission, Ser. A,
5.625%, 09/15/2024, (Insd. by FGIC)......... AAA 4,010,000 3,976,035
</TABLE>
39
<PAGE>
EVERGREEN
Tax Strategic Foundation Fund
Schedule of Investments (continued)
September 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Credit Principal
Rating/\ Amount Value
<S> <C> <C> <C>
MUNICIPAL OBLIGATIONS - continued
GENERAL OBLIGATION - STATE - continued
New York, NY GO:
Ser. F, 5.25%, 08/01/2016, (Insd. by
MBIA/IBC).................................. AAA $5,000,000 $ 4,884,050
Ser. G, 5.35%, 08/01/2013, (Insd. by FGIC).. AAA 5,000,000 5,050,850
Pennsylvania Convention Ctr. Auth. RB, Ser.
A, 6.70%, 09/01/2016, (Insd. by FGIC)....... AAA 500,000 568,765
Texas Pub. Fin. Auth. RB, 5.00%, 08/01/2015,
(Insd. by AMBAC)............................ AAA 2,960,000 2,819,637
HOSPITAL - 4.6%
Bristol, TN Hlth. & Edl. Facs. RRB, Bristol
Mem. Hosp., 6.75%, 09/01/2007, (Insd. by
FGIC)....................................... A1+ 300,000 333,537
Harris Cnty., TX Hlth. Facs. Dev. Corp. RB,
Mem. Hermann Hosp. Proj., 5.50%, 06/01/2010,
(Insd. by FSA).............................. AAA 1,000,000 1,033,250
Massachusetts Hlth. & Edl. Facs. Auth. RB,
Beth Israel Deaconess Med. Ctr., Ser. G,
5.75%, 07/01/2012........................... AAA 2,500,000 2,544,425
New York City Hlth. & Hosp. Corp. RB, Ser. A,
5.125%, 02/15/2014.......................... AAA 2,000,000 1,938,700
New York Dorm. Auth. RB, 5.50%, 08/01/2011... AAA 2,500,000 2,582,300
New York Med. Care Facs. RB:
Prerefunded, Ser. B, 6.25%, 08/15/2010,
(Insd. by AMBAC)........................... AAA 210,000 219,053
Unrefunded, Ser. B, 6.25%, 08/15/2010,
(Insd. by AMBAC)........................... AAA 35,000 36,353
Oklahoma Indl. Auth. RRB, Ser. A, 6.25%,
08/15/2015, (Insd. by MBIA)................. AAA 4,010,000 4,249,277
Salt Lake City, UT Hosp. RRB, 6.30%,
02/15/2015,
(Insd. by MBIA/IBC)......................... AAA 500,000 546,135
HOUSING - 1.7%
Alaska Hsg. Fin. Corp. RB, Ser. A, 6.05%,
12/01/2017, (Insd. by MBIA)................. AAA 665,000 680,315
Maine Hsg. Auth. RB, Ser. F-1, 5.50%,
11/15/2029.................................. AA 500,000 478,315
Massachusetts HFA RB, Ser. A, 5.95%,
10/01/2008,
(Insd. by AMBAC)............................ AAA 250,000 259,270
Missouri Hsg. Dev. Commission SFHRB, Ser. B,
6.25%, 09/01/2015, (Insd. by GNMA/FNMA)..... AAA 725,000 744,981
New York Mtge. Agcy. SFHRB:
Ser. 44, 6.60%, 04/01/2003.................. NR 250,000 258,978
Ser. 56, 5.875%, 10/01/2019................. NR 750,000 751,215
Ser. 63, 5.60%, 04/01/2010.................. NR 500,000 515,545
North Carolina HFA SFHRB, Ser. 00, 5.80%,
09/01/2012, (Insd. by FHA).................. AA 490,000 506,983
Puerto Rico Hsg. Bank & Fin. Agcy. SFHRB,
5.85%, 04/01/2009, (Insd. by
GNMA/FNMA/FHLMC)............................ AAA 375,000 390,656
Utah HFA SFHRB, Ser. B-1, Class 1, 6.00%,
07/01/2016, (Insd. by FHA).................. AAA 385,000 394,517
</TABLE>
40
<PAGE>
EVERGREEN
Tax Strategic Foundation Fund
Schedule of Investments (continued)
September 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Credit Principal
Rating/\ Amount Value
<S> <C> <C> <C>
MUNICIPAL OBLIGATIONS - continued
INDUSTRIAL DEVELOPMENT REVENUE - 3.0%
Akron, OH EDRB, 6.00%, 12/01/2012, (Insd. by
MBIA)....................................... AAA $1,250,000 $ 1,353,350
Hillsborough Cnty., FL Sch. Board COP, Master
Lease Program, Ser.A, 5.375%, 07/01/2021,
(Insd. by MBIA)............................. AAA 2,500,000 2,428,250
Mercer Cnty., ND PCRRB, Ser. 2, 6.05%,
01/01/2019,
(Insd. by AMBAC)............................ AAA 1,000,000 1,027,610
New Jersey EDA PCRB, Ser. A, 6.40%,
05/01/2032,
(Insd. by MBIA)............................. AAA 2,500,000 2,608,425
Simi Valley, CA Unified Sch. Dist. COP,
5.25%, 08/01/2022, (Insd. by AMBAC)......... AAA 500,000 488,530
St. Louis, MO Regl. Convention & Sports
Complex Auth. RRB, Ser. C, 5.30%,
08/15/2017, (Insd. by AMBAC)................ AAA 1,000,000 978,550
POWER - 3.4%
Brownsville, TX Util. Sys. RRB, 6.25%,
09/01/2014,
(Insd. by MBIA)............................. AAA 1,000,000 1,088,540
Long Island, NY Pwr. Auth. Elec. Sys. RB,
0.00%, 06/01/2015, (Insd. by FSA) m......... AAA 1,200,000 536,700
Long Island, NY Pwr. Auth. RB, Ser. A, 5.00%,
12/01/2015, (Insd. by FSA).................. AAA 2,500,000 2,399,625
Lubbock, TX Elec. Light & Pwr. Sys. RB,
4.25%, 04/15/2017, (Insd. by AMBAC)......... AAA 460,000 382,214
San Antonio, TX Elec. & Gas RB:
Prerefunded, 5.25%, 02/01/2010.............. AA 50,000 51,695
Unrefunded, 5.25%, 02/01/2010............... AA 950,000 966,616
Southern MN Muni. Pwr. Agcy. RB, Unrefunded,
Ser. A, 5.75%, 01/01/2018, (Insd. by
MBIA/IBC)................................... AAA 2,000,000 2,011,020
Washington Pub. Pwr. Supply RB, 5.50%,
07/01/2017.................................. AAA 2,500,000 2,467,475
RESOURCE RECOVERY - 0.7%
York Cnty., PA Solid Wst. & Refuse Auth. RRB,
5.50%, 12/01/2011, (Insd. by FGIC).......... AAA 2,000,000 2,082,920
TRANSPORTATION - 9.6%
Alabama Docks Dept. Facs. RRB, 5.50%,
10/01/2022,
(Insd. by MBIA)............................. AAA 5,000,000 4,900,000
Atlanta, GA Arpt. RRB, Ser. A, 5.75%,
01/01/2020.................................. AAA 1,000,000 1,013,970
Chicago, IL Skyway Toll Bridge RB, 5.375%,
01/01/2011,
(Insd. by MBIA)............................. AAA 2,500,000 2,543,950
Delaware River Port Auth., PA & NJ RB,
5.625%, 01/01/2013, (Insd. by FSA).......... AAA 2,000,000 2,078,020
Illinois Toll Hwy. Auth. RRB, Ser. A, 5.50%,
01/01/2014.................................. AAA 2,500,000 2,558,925
Massachusetts Bay Trans. Auth. RRB, Ser. A:
7.00%, 03/01/2008........................... AA 250,000 284,157
7.00%, 03/01/2014, (Insd. by FGIC).......... AAA 1,000,000 1,171,240
Massachusetts Turnpike Auth. RB, Sr. Ser. A,
5.125%, 01/01/2017, (Insd. by MBIA)......... AAA 3,000,000 2,858,790
</TABLE>
41
<PAGE>
EVERGREEN
Tax Strategic Foundation Fund
Schedule of Investments (continued)
September 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Credit Principal
Rating/\ Amount Value
<S> <C> <C> <C>
MUNICIPAL OBLIGATIONS - continued
TRANSPORTATION - continued
New Jersey Trans. Corp. COP, Ser. A, 6.
125%, 09/15/2015, (Insd. by AMBAC)........... AAA $2,500,000 $ 2,669,450
New Jersey Turnpike Auth. RB, Ser. C,
6.50%, 01/01/2016, (Insd. by MBIA/IBC)....... AAA 1,400,000 1,569,372
New York City Trans. Auth. COP, Ser. A,
5.40%, 01/01/2019, (Insd. by AMBAC).......... AAA 2,500,000 2,448,650
New York Thruway Auth. RB, Ser. B,
5.00%, 01/01/2020, (Insd. by MBIA)........... AAA 1,000,000 913,260
Port Auth. of NY & NJ RB, Ser. 97,
7.00%, 07/15/2005, (Insd. by FGIC)........... AAA 250,000 273,640
Wisconsin St Trans. RB, 5.50%, 07/01/2016..... 2,800,000 2,803,920
WATER & SEWER - 4.5%
Detroit, MI Wtr. Supply Sys. RB, Ser. A,
5.50%, 07/01/2014, (Insd. by FGIC)........... AAA 1,000,000 1,013,320
Houston, TX Wtr Conveyance Sys. COP, Ser. H,
7.50%, 12/15/2010, (Insd. by AMBAC).......... AAA 500,000 595,420
Nashville & Davidson Cnty., TN Wtr. & Swr.
RRB,
5.50%, 01/01/2014, (Insd. by MBIA)........... AAA 2,000,000 2,021,180
New York Env. Facs. Corp. RB, Ser. A,
6.00%, 06/15/2017............................ AAA 3,255,000 3,409,710
Ohio Wtr. Dev. Auth. RB,
5.25%, 12/01/2017, (Insd. by AMBAC).......... AAA 3,000,000 2,920,350
Seattle, WA Wtr. Sys. RB, Ser. B,
5.75%, 07/01/2023, (Insd. by FGIC)........... AAA 2,000,000 2,007,200
Wisconsin Clean Wtr. RB, Ser. 1,
6.875%, 06/01/2011........................... AA+ 1,000,000 1,153,530
------------
Total Municipal Obligations (cost
$145,085,896).............................. 148,479,138
------------
SHORT-TERM MUNICIPAL OBLIGATIONS - 5.0%
VRDN - 5.0%
Education - 2.1%
Iowa Higher Ed. Loan Auth. RB, 4.40%, VRDN.... NR 1,200,000 1,200,000
Missouri Hlth. & Edl. Facs. RB, 3.95%, VRDN... A1+ 5,000,000 5,000,000
------------
6,200,000
------------
Hospital - 2.9%
Idaho Hlth Facs. Auth. RB, 3.95%, VRDN........ NR 3,500,000 3,500,000
Iowa Fin. Auth. RB, 4.00%, VRDN............... A-1 5,000,000 5,000,000
------------
8,500,000
------------
Total Short-Term Municipal Obligations
(cost $14,700,000)......................... 14,700,000
------------
</TABLE>
42
<PAGE>
EVERGREEN
Tax Strategic Foundation Fund
Schedule of Investments (continued)
September 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - 43.6%
CONSUMER DISCRETIONARY - 3.7%
Automobiles - 0.3%
Ford Motor Co. ....................................... 24,824 $ 628,358
Gen. Motors Corp. *................................... 6,092 395,980
------------
1,024,338
------------
Hotels, Restaurants & Leisure - 0.2%
McDonald's Corp. ..................................... 15,700 473,944
------------
Media - 1.5%
Disney (Walt) Co. .................................... 50,300 1,923,975
Time Warner, Inc. .................................... 25,100 1,964,075
Viacom, Inc., Class B *............................... 9,100 532,350
------------
4,420,400
------------
Multi-line Retail - 0.8%
Wal-Mart Stores, Inc. ................................ 45,900 2,208,937
------------
Specialty Retail - 0.9%
Home Depot, Inc. ..................................... 24,600 1,305,337
Lowe's Co., Inc. ..................................... 30,320 1,360,610
------------
2,665,947
------------
CONSUMER STAPLES - 1.8%
Beverages - 1.1%
Coca-Cola Femsa SA, ADR............................... 40,000 800,000
Pepsico, Inc. ........................................ 36,500 1,679,000
The Coca-Cola Co. .................................... 14,400 793,800
------------
3,272,800
------------
Food & Drug Retailing - 0.2%
CVS Corp. ............................................ 10,300 477,019
------------
Household Products - 0.4%
Procter & Gamble Co. ................................. 17,700 1,185,900
------------
Personal Products - 0.1%
Colgate-Palmolive Co. *............................... 6,600 311,520
------------
ENERGY - 3.2%
Energy Equipment & Services - 1.4%
Baker Hughes, Inc. ................................... 16,800 623,700
Diamond Offshore Drilling, Inc. ...................... 43,000 1,763,000
Halliburton Co. ...................................... 6,100 298,519
Schlumberger, Ltd. ................................... 15,000 1,234,687
Transocean Sedco Forex, Inc. ......................... 2,904 170,247
------------
4,090,153
------------
</TABLE>
43
<PAGE>
EVERGREEN
Tax Strategic Foundation Fund
Schedule of Investments (continued)
September 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
ENERGY - continued
Oil & Gas - 1.8%
Exxon Mobil Corp. .................................... 38,000 $ 3,386,750
Royal Dutch Petroleum Co. ............................ 29,700 1,780,144
------------
5,166,894
------------
FINANCIALS - 7.5%
Banks - 1.7%
Bank of America Corp. ................................ 5,875 307,703
Charter One Finl., Inc. .............................. 30,524 744,010
Chase Manhattan Corp. ................................ 37,500 1,732,031
FleetBoston Finl. Corp. *............................. 46,191 1,801,449
Wells Fargo Co. ...................................... 10,600 486,938
------------
5,072,131
------------
Diversified Financials - 4.2%
American Express Co. ................................. 12,600 765,450
Citigroup, Inc. ...................................... 100,500 5,433,281
Fannie Mae Co. ....................................... 12,000 858,000
Merrill Lynch & Co., Inc. ............................ 66,500 4,389,000
Morgan Stanley Dean Witter & Co. ..................... 9,200 841,225
------------
12,286,956
------------
Insurance - 1.6%
AFLAC, Inc. .......................................... 4,400 281,875
American Intl. Group, Inc. ........................... 31,875 3,050,039
Mony Group, Inc. ..................................... 35,000 1,395,625
------------
4,727,539
------------
HEALTH CARE - 6.5%
Biotechnology - 0.3%
Amgen, Inc. *......................................... 13,800 963,628
------------
Health Care Equipment & Supplies - 0.9%
Guidant Corp. *....................................... 9,200 650,325
Medtronic, Inc. ...................................... 36,000 1,865,250
------------
2,515,575
------------
Pharmaceuticals - 5.3%
Abbott Laboratories................................... 24,000 1,141,500
American Home Products Corp. ......................... 40,000 2,262,500
Eli Lilly & Co. ...................................... 24,900 2,020,013
Johnson & Johnson..................................... 8,400 789,075
Merck & Co., Inc. .................................... 33,800 2,515,987
Pfizer, Inc. ......................................... 93,150 4,185,928
Pharmacia Corp. ...................................... 21,544 1,296,680
Schering-Plough Corp. ................................ 26,700 1,241,550
------------
15,453,233
------------
</TABLE>
44
<PAGE>
EVERGREEN
Tax Strategic Foundation Fund
Schedule of Investments (continued)
September 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
INDUSTRIALS - 4.6%
Aerospace & Defense - 0.6%
General Motors Corp., Class H *....................... 30,384 $ 1,129,677
United Technologies Corp. ............................ 7,000 484,750
------------
1,614,427
------------
Air Freight & Couriers - 0.1%
United Parcel Svcs., Inc., Class B.................... 6,920 390,115
------------
Commercial Services & Supplies - 0.9%
Automatic Data Processing, Inc. ...................... 6,900 461,438
Computer Sciences Corp. *............................. 15,000 1,113,750
Dendrite Intl., Inc. ................................. 45,000 1,206,562
------------
2,781,750
------------
Industrial Conglomerates - 3.0%
Gen. Elec. Co. ....................................... 151,200 8,722,350
------------
INFORMATION TECHNOLOGY - 12.6%
Communications Equipment - 4.0%
Cisco Sys., Inc. *.................................... 90,000 4,972,500
Corning, Inc. ........................................ 3,330 989,010
Motorola, Inc. ....................................... 25,300 714,725
Nokia Corp., ADR...................................... 34,400 1,369,550
Nortel Networks Corp. ................................ 60,980 3,632,121
------------
11,677,906
------------
Computers & Peripherals - 4.7%
Dell Computer Corp. *................................. 19,700 607,006
EMC Corp. *........................................... 24,000 2,379,000
Hewlett-Packard Co. .................................. 4,000 388,000
Intl. Business Machines Corp. ........................ 50,000 5,625,000
Sun Microsystems, Inc. *.............................. 40,000 4,670,000
------------
13,669,006
------------
Electronic Equipment & Instruments - 1.2%
Park Electrochemical Corp. ........................... 17,700 984,563
SCI Sys., Inc. *...................................... 60,000 2,460,000
------------
3,444,563
------------
Semiconductor Equipment & Products - 1.3%
Intel Corp. .......................................... 96,000 3,990,000
------------
Software - 1.4%
Microsoft Corp. *..................................... 21,900 1,320,844
Oracle Sys. Corp. *................................... 35,200 2,772,000
------------
4,092,844
------------
MATERIALS - 0.2%
Chemicals - 0.2%
DuPont (E.I.) De Nemours & Co. ....................... 16,000 663,000
------------
</TABLE>
45
<PAGE>
EVERGREEN
Tax Strategic Foundation Fund
Schedule of Investments (continued)
September 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
TELECOMMUNICATION SERVICES - 3.2%
Diversified Telecommunication Services - 2.9%
Global Crossing, Ltd. * .............................. 166,050 $ 5,147,550
SBC Communications, Inc. ............................. 26,500 1,325,000
Sprint Corp. ......................................... 36,000 1,055,250
Verizon Communications. .............................. 18,900 915,469
------------
8,443,269
------------
Wireless Telecommunications Services - 0.3%
Nextel Communications, Inc., Class A * ............... 9,400 439,450
Sprint Corp. (PCS Group), Ser. 1 * ................... 18,000 631,125
------------
1,070,575
------------
UTILITIES - 0.3%
Electric Utilities - 0.3%
Duke Energy Corp. .................................... 6,000 514,500
Southern Co. ......................................... 7,100 230,306
------------
744,806
------------
Total Common Stocks (cost $80,460,641) ............. 127,621,525
------------
SHORT-TERM INVESTMENTS - 3.6%
MUTUAL FUND SHARES - 3.6%
Federated Tax Free Obligations Fund .................. 512,304 512,304
Navigator Prime Portfolio pp ......................... 9,958,411 9,958,411
------------
Total Short-Term Investments (cost $10,470,715) .... 10,470,715
------------
Total Investments - (cost $250,717,252) - 102.9% ................. 301,271,378
Other Assets and Liabilities - (2.9%) ............................ (8,430,747)
------------
Net Assets - 100.0% .............................................. $292,840,631
============
</TABLE>
See Combined Notes to Schedules of Investments.
46
<PAGE>
Combined Notes to Schedules of Investments (Unaudited)
September 30, 2000
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.
* Non-income producing security.
# Security issued in zero coupon form with no periodic interest payments
but is acquired at a discount that results in a current yeild to
maturity. An effective interest rate is applied to recognize interest
income daily for the bond. This rate is based on total expected income
to be earned over the life of the bond from amortization of discount at
acquisition.
pp Represents investment of cash collateral received for securities on
loan.
/\ Credit ratings are unaudited and rated by Moody's Investors Service
where Standard and Poor's ratings are not available.
o The advisor of the Fund and the advisor of the money market fund are
each a subsidiary of First Union.
Summary of Abbreviations:
ADR American Depository Receipt
AMBAC American Municipal Bond Assurance Corp.
COP Certificates of Participation
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.
GMAC General Mortgage Acceptance Corp.
GNMA Government National Mortgage Association
GO General Obligation
HFA Housing Finance Authority
IBC Insured Bond Certification
MBIA Municipal Bond Investors Assurance Corp.
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
47
<PAGE>
EVERGREEN
Balanced Funds
Statements of Assets and Liabilities
September 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Tax Strategic
Balanced Foundation Foundation
Fund Fund Fund
-------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets
Identified cost of securities.... $1,297,310,395 $2,928,022,877 $250,717,252
Net unrealized gains on
securities...................... 172,864,149 622,166,322 50,554,126
-------------------------------------------------------------------------------
Market value of securities....... 1,470,174,544 3,550,189,199 301,271,378
Cash............................. 0 29,844 109,678
Receivable for securities sold... 13,625,027 0 0
Receivable for Fund shares sold.. 186,783 3,510,985 318,362
Dividends and interest
receivable...................... 8,355,129 17,207,987 2,259,568
Prepaid expenses and other
assets.......................... 203,675 262,385 31,544
-------------------------------------------------------------------------------
Total assets................... 1,492,545,158 3,571,200,400 303,990,530
-------------------------------------------------------------------------------
Liabilities
Payable for securities
purchased....................... 19,527,192 20,186,425 600,763
Payable for Fund shares
redeemed........................ 1,670,613 5,263,506 472,898
Payable for securities on loan... 41,959,167 35,980,196 9,958,411
Advisory fee payable............. 40,372 186,477 18,793
Distribution Plan expenses
payable......................... 45,853 164,922 19,545
Due to other related parties..... 11,846 29,110 2,425
Accrued expenses and other
liabilities..................... 343,012 424,585 77,064
-------------------------------------------------------------------------------
Total liabilities.............. 63,598,055 62,235,221 11,149,899
-------------------------------------------------------------------------------
Net assets........................ $1,428,947,103 $3,508,965,179 $292,840,631
-------------------------------------------------------------------------------
Net assets represented by
Paid-in capital.................. $1,054,312,448 $2,813,359,497 $248,918,895
Undistributed (overdistributed)
net investment income........... 1,470,045 186,460 (432,277)
Accumulated net realized gains or
losses on securities and foreign
currency related transactions... 200,300,461 73,252,900 (6,200,113)
Net unrealized gains on
securities and foreign currency
related transactions............ 172,864,149 622,166,322 50,554,126
-------------------------------------------------------------------------------
Total net assets.................. $1,428,947,103 $3,508,965,179 $292,840,631
-------------------------------------------------------------------------------
Net assets consists of
Class A.......................... $1,145,882,823 $ 607,916,957 $ 66,965,117
Class B.......................... 261,889,717 1,521,788,138 185,094,858
Class C.......................... 4,757,787 321,820,901 34,253,040
Class Y.......................... 16,416,776 1,057,439,183 6,527,616
-------------------------------------------------------------------------------
$1,428,947,103 $3,508,965,179 $292,840,631
-------------------------------------------------------------------------------
Shares outstanding
Class A.......................... 105,803,142 30,278,078 3,990,652
Class B.......................... 24,152,371 76,247,597 11,053,145
Class C.......................... 438,574 16,131,574 2,048,608
Class Y.......................... 1,517,045 52,669,928 388,135
-------------------------------------------------------------------------------
Net asset value per share
Class A.......................... $ 10.83 $ 20.08 $ 16.78
-------------------------------------------------------------------------------
Class A--Offering price (based on
sales charge of 4.75%).......... $ 11.37 $ 21.08 $ 17.62
-------------------------------------------------------------------------------
Class B.......................... $ 10.84 $ 19.96 $ 16.75
-------------------------------------------------------------------------------
Class C.......................... $ 10.85 $ 19.95 $ 16.72
-------------------------------------------------------------------------------
Class Y.......................... $ 10.82 $ 20.08 $ 16.82
-------------------------------------------------------------------------------
</TABLE>
See Combined Notes to Financial Statements.
48
<PAGE>
EVERGREEN
Balanced Funds
Statements of Operations
Six Months Ended September 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Tax Strategic
Balanced Foundation Foundation
Fund Fund Fund
-------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment income
Dividends (net of foreign
withholding taxes of $40,975,
$100,582 and $7,480,
respectively).................... $ 4,030,242 $ 10,115,391 $ 538,597
Interest.......................... 22,579,360 33,965,411 4,527,246
-------------------------------------------------------------------------------
Total investment income............ 26,609,602 44,080,802 5,065,843
-------------------------------------------------------------------------------
Expenses
Advisory fee...................... 2,569,370 10,701,533 1,193,881
Distribution Plan expenses........ 2,834,739 9,225,866 1,238,181
Administrative services fees...... 736,197 1,664,126 154,049
Transfer agent fee................ 1,241,611 3,418,597 167,440
Trustees' fees and expenses....... 29,717 67,679 6,316
Printing and postage expenses..... 54,973 110,292 19,873
Custodian fee..................... 208,933 429,096 37,715
Registration and filing fees...... 60,015 112,879 4,073
Professional fees................. 12,406 15,183 6,483
Interest expense.................. 1,133 4,664 0
Other............................. 25,483 25,582 4,930
-------------------------------------------------------------------------------
Total expenses.................. 7,774,577 25,775,497 2,832,941
Less: Expense reductions........ (33,758) (166,496) (6,344)
-------------------------------------------------------------------------------
Net expenses.................... 7,740,819 25,609,001 2,826,597
-------------------------------------------------------------------------------
Net investment income............. 18,868,783 18,471,801 2,239,246
-------------------------------------------------------------------------------
Net realized and unrealized gains
or losses on securities and
foreign currency related
transactions
Net realized gains or losses on:
Securities...................... 66,261,319 86,755,807 2,938,498
Foreign currency related
transactions................... (238,506) 0 0
-------------------------------------------------------------------------------
Net realized gains on securities
and foreign currency related
transactions..................... 66,022,813 86,755,807 2,938,498
-------------------------------------------------------------------------------
Net change in unrealized losses on
securities and foreign currency
related transactions............. (93,424,120) (215,156,767) (10,081,249)
-------------------------------------------------------------------------------
Net realized and unrealized losses
on securities and foreign
currency related transactions.... (27,401,307) (128,400,960) (7,142,751)
-------------------------------------------------------------------------------
Net decrease in net assets
resulting from operations........ $ (8,532,524) $(109,929,159) $ (4,903,505)
-------------------------------------------------------------------------------
</TABLE>
See Combined Notes to Financial Statements.
49
<PAGE>
EVERGREEN
Balanced Funds
Statements of Changes in Net Assets
Six Months Ended September 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Tax Strategic
Balanced Foundation Foundation
Fund Fund Fund
--------------------------------------------------------------------------------
<S> <C> <C> <C>
Operations
Net investment income........... $ 18,868,783 $ 18,471,801 $ 2,239,246
Net realized gains on securities
and foreign currency related
transactions................... 66,022,813 86,755,807 2,938,498
Net change in unrealized gains
on securities and foreign
currency related transactions.. (93,424,120) (215,156,767) (10,081,249)
--------------------------------------------------------------------------------
Net decrease in net assets
resulting from operations...... (8,532,524) (109,929,159) (4,903,505)
--------------------------------------------------------------------------------
Distributions to shareholders
from
Net investment income
Class A....................... (14,676,041) (3,692,093) (808,351)
Class B....................... (2,324,723) (4,839,474) (1,520,621)
Class C....................... (37,440) (642,538) (277,119)
Class Y....................... (237,445) (8,995,965) (88,943)
Net realized gains..............
Class A....................... 0 (50,408,489) 0
Class B....................... 0 (170,483,683) 0
Class C....................... 0 (8,306,958) 0
Class Y....................... 0 (119,337,096) 0
--------------------------------------------------------------------------------
Total distributions to
shareholders................. (17,275,649) (366,706,296) (2,695,034)
--------------------------------------------------------------------------------
Capital share transactions
Proceeds from shares sold....... 18,669,001 231,107,125 8,980,508
Payment for shares redeemed..... (143,848,544) (370,882,203) (42,942,160)
Net asset value of shares issued
in reinvestment of
distributions.................. 14,330,888 345,669,047 2,269,071
Net asset value of shares issued
in acquisition................. 0 429,406,942 0
--------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from capital
share transactions........... (110,848,655) 635,300,911 (31,692,581)
--------------------------------------------------------------------------------
Total increase (decrease) in
net assets................. (136,656,828) 158,665,456 (39,291,120)
Net assets
Beginning of period............. 1,565,603,931 3,350,299,723 332,131,751
--------------------------------------------------------------------------------
End of period................... $1,428,947,103 $3,508,965,179 $292,840,631
--------------------------------------------------------------------------------
Undistributed (overdistributed)
net investment income........... $ 1,470,045 $ 186,460 $ (432,277)
--------------------------------------------------------------------------------
</TABLE>
See Combined Notes to Financial Statements.
50
<PAGE>
EVERGREEN
Balanced Funds
Statements of Changes in Net Assets
Year Ended March 31, 2000
<TABLE>
<CAPTION>
Tax Strategic
Foundation Foundation
Balanced 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) $ (115,271) $ 23,511
--------------------------------------------------------------------------------
</TABLE>
See Combined Notes to Financial Statements.
51
<PAGE>
Combined Notes to Financial Statements (Unaudited)
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 front-end sales charge. Class B and Class C shares are sold
without a front-end sales charge, but pay a higher ongoing distribution fee
than Class A. Class B and Class C 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 Y shares are sold at net asset value
and are not subject to contingent deferred sales charges or distribution fees.
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 valuations are not readily available, including restricted
securities, are valued at fair value as determined in good faith according 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.
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.
52
<PAGE>
Combined Notes to Financial Statements (Unaudited) (continued)
Pursuant to an exemptive order issued by the Securities and Exchange Commis-
sion, the funds may transfer uninvested cash balances into a joint trading ac-
count. These balances are invested in one or more repurchase agreements that
are fully collateralized by U.S. Treasury and/or federal agency obligations.
C. Foreign Currency
The books and records of the Funds are maintained in United States (U.S.) dol-
lars. Foreign currency amounts are translated into U.S. dollars as follows:
market value of investments, other assets and liabilities at the daily rate of
exchange; purchases and sales of investments and income and expenses at the
rate of exchange prevailing on the respective dates of such transactions. Net
unrealized foreign exchange gains or losses resulting from changes in foreign
currency exchange rates is a component of net unrealized gains or losses on se-
curities and foreign currency related transactions. Net realized foreign cur-
rency 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.
D. Forward Foreign Currency Exchange Contracts
The Funds may enter into forward foreign currency exchange contracts ("forward
contracts") to settle portfolio purchases and sales of securities denominated
in a foreign currency and to hedge certain foreign currency assets or liabili-
ties. Forward contracts are recorded at the forward rate and marked-to-market
daily. Realized gains and losses arising from such transactions are included in
net realized 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
each Fund's Statement of Assets and Liabilities.
E. 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.
F. 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.
Loans of securities 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 ac-
crued interest. The Fund monitors the adequacy of the collateral daily and will
require the borrower provide additional collateral as necessary. 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. The Fund
bears the risk that the borrower may not provide additional collateral when re-
quired or return the securities when due.
G. Security Transactions and Investment Income
Securities transactions are accounted for no later than one business day after
the trade date. Realized gains and losses are computed on the identified cost
basis. Interest income is recorded on the accrual basis and includes accretion
of discounts and amortization of premiums. Dividend income is recorded on the
ex-dividend date or in the case of some foreign securities, on the date there-
after when the Fund is made aware of the dividend. Foreign income and capital
gains realized on some foreign securities may be subject to foreign taxes,
which are accrued as applicable.
53
<PAGE>
Combined Notes to Financial Statements (Unaudited) (continued)
H. Federal Taxes
The Funds intend to comply with the provisions of the Internal Revenue Code ap-
plicable to regulated investment companies and to distribute all of their net
investment company taxable income, net tax-exempt income and net capital gains,
if any, to their shareholders. Accordingly, no provision for federal income or
excise tax is required.
I. 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. To the extent that realized capital gains can be offset by cap-
ital loss carryforwards, it is each Fund's policy not to distribute such gains.
Distributions to shareholders are recorded at the close of business on the ex-
dividend date.
Certain distributions paid during previous years have been reclassified to con-
form to current year presentation.
J. Class Allocations
Income, expenses (other than class specific expenses) and realized and
unrealized gains and losses are prorated among the classes based on the rela-
tive net assets of each class. Currently, class specific expenses are limited
to expenses incurred under the Distribution Plans for each class.
3. INVESTMENT ADVISORY AGREEMENTS AND OTHER AFFILIATED TRANSACTIONS
Evergreen Investment Management Company ("EIMC") is the investment advisor for
Balanced Fund. In return for providing investment management services to Bal-
anced Fund, the Fund pays EIMC a management fee that is computed and paid dai-
ly. 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 in-
crease, to the average daily net assets of the Fund.
Evergreen Asset Management Corp. ("EAMC"), an indirect wholly owned subsidiary
of First Union National Bank ("FUNB"), is the investment advisor to the Founda-
tion 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>
Annual Rate
-----------
<S> <C>
First $750 million................................... 0.775%
Next $250 million.................................... 0.650%
Over $1 billion...................................... 0.600%
</TABLE>
Lieber & Company, an affiliate of First Union Corporation ("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 Funds effected on the New York or American Stock Exchanges.
For the six months ended September 30, 2000, Foundation Fund and Tax Strategic
Foundation Fund incurred brokerage commissions of $32,213, and $4,301, respec-
tively, with Lieber & Company. Lieber & Company is reimbursed by EAMC for pro-
viding investment sub-advisory services at no additional expense to the Funds.
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. The sub-administration fee for the Funds was paid by the in-
vestment advisor until the sub-administration agreement with The BISYS Group,
Inc. ("BISYS") was terminated on April 30, 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.
54
<PAGE>
Combined Notes to Financial Statements (Unaudited) (continued)
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, each class incurs distribution fees at the following annual rates:
<TABLE>
<CAPTION>
Average Daily
Net Assets
-------------
<S> <C>
Class A............................................ 0.25%
Class B............................................ 1.00
Class C............................................ 1.00
</TABLE>
Of the above amounts, each share class may pay under its Distribution Plan a
maximum service fee of 0.25% of the average daily net assets of the class to
pay for shareholder service fees. Distribution Plan expenses are calculated and
paid daily.
During the six months ended September 30, 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................... $1,479,431 $1,335,543 $ 19,765
Foundation Fund................. 653,523 7,707,510 864,833
Tax Strategic Foundation Fund... 89,005 974,531 174,645
</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. ACQUISITION
Effective on the close of business on July 21, 2000, Foundation Fund acquired
substantially all the assets and assumed certain liabilities of Evergreen Capi-
tal 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 8,255,336 Class A shares, 160,745 Class B shares,
12,975,507 Class C shares and 1,575 Class Y shares of Capital Balanced Fund.
The acquired net assets consisted primarily of portfolio securities with
unrealized appreciation of $13,086,522. The aggregate net assets of Foundation
Fund and Evergreen Capital Balanced Fund immediately prior to the acquisition
were $3,159,650,995 and $429,406,942, respectively. The aggregate net assets of
Foundation Fund immediately after the acquisition were $3,589,057,937.
55
<PAGE>
Combined Notes to Financial Statements (Unaudited) (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>
Six Months Ended Year Ended
September 30, 2000 March 31, 2000
-------------------------- --------------------------
Shares Amount Shares Amount
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A
Shares sold............. 539,017 $ 5,685,471 1,427,850 $ 16,002,563
Automatic conversion of
Class B shares to Class
A shares............... 12,654 133,866 13,443,310 144,586,843
Shares redeemed......... (10,615,359) (114,728,855) (24,392,866) (270,880,152)
Shares issued in
reinvestment of
distributions.......... 1,122,040 12,070,623 14,225,023 151,080,079
---------------------------------------------------------------------------------
Net increase
(decrease)............. (8,941,648) (96,838,895) 4,703,317 40,789,333
---------------------------------------------------------------------------------
Class B
Shares sold............. 995,920 10,755,755 3,613,594 40,427,711
Automatic conversion of
Class B shares to Class
A shares............... (12,654) (133,866) (13,431,818) (144,586,843)
Shares redeemed......... (2,349,123) (25,298,120) (8,396,501) (93,905,119)
Shares issued in
reinvestment of
distributions.......... 199,963 2,153,998 5,103,562 54,090,243
---------------------------------------------------------------------------------
Net decrease............ (1,165,894) (12,522,233) (13,111,163) (143,974,008)
---------------------------------------------------------------------------------
Class C
Shares sold............. 177,988 1,928,148 129,406 1,420,820
Shares redeemed......... (50,192) (545,462) (67,047) (741,647)
Shares issued in
reinvestment of
distributions.......... 3,254 35,079 32,666 346,576
---------------------------------------------------------------------------------
Net increase............ 131,050 1,417,765 95,025 1,025,749
---------------------------------------------------------------------------------
Class Y
Shares sold............. 27,746 299,627 110,610 1,241,181
Shares redeemed......... (301,547) (3,276,107) (1,662,103) (18,497,410)
Shares issued in
reinvestment of
distributions.......... 6,623 71,188 330,278 3,491,268
---------------------------------------------------------------------------------
Net decrease............ (267,178) (2,905,292) (1,221,215) (13,764,961)
---------------------------------------------------------------------------------
Net decrease in net
assets resulting from
capital share
transactions........... $(110,848,655) $(115,923,887)
---------------------------------------------------------------------------------
</TABLE>
Foundation Fund
<TABLE>
<CAPTION>
Six Months Ended Year Ended
September 30, 2000 March 31, 2000
------------------------ --------------------------
Shares Amount Shares Amount
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A
Shares sold.............. 2,188,760 $ 47,131,294 6,798,761 $ 149,510,608
Automatic conversion of
Class B shares to Class
A shares................ 2,134 43,478 1,451,478 32,988,767
Shares redeemed.......... (3,528,535) (75,165,247) (6,372,862) (139,288,575)
Shares issued in
reinvestment of
distributions........... 2,587,947 52,647,354 784,989 17,356,659
Shares issued in
acquisition of Evergreen
Capital Balanced Fund... 8,255,336 166,396,900 0 0
--------------------------------------------------------------------------------
Net increase............. 9,505,642 191,053,779 2,662,366 60,567,459
--------------------------------------------------------------------------------
Class B
Shares sold.............. 4,626,521 99,598,951 12,155,031 264,194,950
Automatic conversion of
Class B shares to Class
A shares................ (2,134) (43,478) (1,459,461) (32,988,767)
Shares redeemed.......... (6,180,726) (131,790,189) (12,398,770) (270,600,331)
Shares issued in
reinvestment of
distributions........... 8,415,207 169,915,613 2,352,967 51,629,260
Shares issued in
acquisition of Evergreen
Capital Balanced Fund... 160,745 3,219,415 0 0
--------------------------------------------------------------------------------
Net increase............. 7,019,613 140,900,312 649,767 12,235,112
--------------------------------------------------------------------------------
Class C
Shares sold.............. 863,142 18,398,372 1,031,134 22,422,253
Shares redeemed.......... (1,390,959) (28,822,029) (1,096,422) (24,016,416)
Shares issued in
reinvestment of
distributions........... 417,424 8,419,631 91,220 1,999,515
Shares issued in
acquisition of Evergreen
Capital Balanced Fund... 12,975,507 259,758,873 0 0
--------------------------------------------------------------------------------
Net increase............. 12,865,114 257,754,847 25,932 405,352
--------------------------------------------------------------------------------
Class Y
Shares sold.............. 3,115,461 65,978,508 8,382,988 182,181,729
Shares redeemed.......... (6,281,869) (135,104,738) (19,463,190) (426,661,536)
Shares issued in
reinvestment of
distributions........... 5,631,904 114,686,449 2,314,964 51,180,189
Shares issued in
acquisition of Evergreen
Capital Balanced Fund... 1,575 31,754 0 0
--------------------------------------------------------------------------------
Net increase (decrease).. 2,467,071 45,591,973 (8,765,238) (193,299,618)
--------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from capital share
transactions............ $635,300,911 $(120,091,695)
--------------------------------------------------------------------------------
</TABLE>
56
<PAGE>
Combined Notes to Financial Statements (Unaudited) (continued)
Tax Strategic Foundation Fund
<TABLE>
<CAPTION>
Six Months Ended Year Ended
September 30, 2000 March 31, 2000
------------------------ ------------------------
Shares Amount Shares Amount
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A
Shares sold............... 129,764 $ 2,183,804 1,258,767 $ 21,031,217
Automatic conversion of
Class B shares to Class A
shares................... 25 407 100,148 1,666,149
Shares redeemed........... (723,261) (12,182,281) (1,955,391) (32,110,861)
Shares issued in
reinvestment of
distributions............ 42,097 706,161 93,937 1,547,638
-------------------------------------------------------------------------------
Net decrease.............. (551,375) (9,291,909) (502,539) (7,865,857)
-------------------------------------------------------------------------------
Class B
Shares sold............... 237,136 3,968,535 1,291,886 21,249,593
Automatic conversion of
Class B shares to Class A
shares................... (25) (407) (100,373) (1,666,149)
Shares redeemed........... (1,469,525) (24,683,021) (4,301,937) (70,574,536)
Shares issued in
reinvestment of
distributions............ 77,323 1,294,862 168,907 2,773,417
-------------------------------------------------------------------------------
Net decrease.............. (1,155,091) (19,420,031) (2,941,517) (48,217,675)
-------------------------------------------------------------------------------
Class C
Shares sold............... 163,224 2,760,704 436,018 7,161,827
Shares redeemed........... (300,805) (5,035,113) (1,086,896) (17,758,138)
Shares issued in
reinvestment of
distributions............ 13,363 223,335 28,527 466,838
-------------------------------------------------------------------------------
Net decrease.............. (124,218) (2,051,074) (622,351) (10,129,473)
-------------------------------------------------------------------------------
Class Y
Shares sold............... 4,117 67,465 22,542 377,484
Shares redeemed........... (61,376) (1,041,745) (1,063,959) (17,452,569)
Shares issued in
reinvestment of
distributions............ 2,659 44,713 9,419 154,626
-------------------------------------------------------------------------------
Net decrease.............. (54,600) (929,567) (1,031,998) (16,920,459)
-------------------------------------------------------------------------------
Net decrease in net assets
resulting from capital
shares transactions...... $(31,692,581) $(83,133,464)
-------------------------------------------------------------------------------
</TABLE>
7. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of investment securities (excluding
short-term securities) were as follows for the six months ended September 30,
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... $279,280,285 $ 613,005,430 $84,548,212 $ 896,358,484
Foundation
Fund........... 176,767,697 1,216,488,488 49,739,719 1,220,192,027
Tax Strategic
Foundation
Fund........... 0 26,245,727 0 71,501,921
</TABLE>
The Funds loaned securities during the six months ended September 30, 2000 to
certain brokers. At September 30, 2000, the value of securities on loan and the
value of collateral (including accrued interest) and the amount of income
earned from securities lending were as follows:
<TABLE>
<CAPTION>
Value of Securities
Securities Value of Lending
on Loan Collateral Income
<S> <C> <C> <C>
--------------------------------
Balanced Fund................... $37,599,037 $41,959,167 $ 78,369
Foundation Fund................. 34,565,820 35,980,196 247,278
Tax Strategic Foundation Fund... 9,683,657 9,958,411 6,092
</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
Through expense offset arrangements with ESC and their custodian and
brokerage/service arrangements with specific brokers, a portion of the fund ex-
penses have been reduced. 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>
Expense Offset Brokerage Total Expense % of Average
Arrangements Transactions Reductions Net Assets
------------------------------------------------------
<S> <C> <C> <C> <C>
Balanced Fund... $33,758 $ 0 $ 33,758 0.00%
Foundation
Fund........... 71,342 95,154 166,496 0.01
Tax Strategic
Foundation
Fund........... 6,344 0 6,344 0.00
</TABLE>
57
<PAGE>
Combined Notes to Financial Statements (Unaudited) (continued)
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
On July 27, 1999, certain Evergreen Funds and a group of banks (the "Lenders")
entered into a credit agreement. Under this agreement, the Lenders provided an
unsecured revolving credit commitment in the aggregate amount of $1.050 bil-
lion. The credit facility was allocated, under the terms of the financing
agreement, among the Lenders. The credit facility was accessed by the Funds for
temporary or emergency purposes to fund the redemption of their shares or for
general working capital purposes as permitted by each Fund's borrowing restric-
tions. Borrowings under this facility bore interest at 0.75% per annum above
the Federal Funds rate (1.50% per annum above the Federal Funds rate during the
period from and including December 1, 1999 through and including January 31,
2000). A commitment fee of 0.10% per annum was incurred on the average daily
unused portion of the revolving credit commitment. The commitment fee was allo-
cated to all funds. For its assistance in arranging this financing agreement,
First Union Capital Markets Corp. was paid a one-time arrangement fee of
$250,000. State Street served as paying agent for the funds and as paying agent
was entitled to a fee of $20,000 per annum which was allocated to all the
funds.
On July 25, 2000, this agreement was renewed, amended and restated among cer-
tain Evergreen Funds and the Lenders. Under this renewed agreement, the Lenders
provide an unsecured revolving credit commitment in the aggregate amount of
$755 million. The credit facility is allocated, under the terms of the financ-
ing agreement, among the Lenders. The credit facility is accessed by the Funds
to temporarily finance the purchase or sale of securities for prompt delivery,
including funding redemption of their shares, as permitted by each Fund's bor-
rowing restrictions. Borrowings under this facility bear interest at 0.50% per
annum above the Federal Funds rate. A commitment fee of 0.10% per annum contin-
ues to be incurred on the average daily unused portion of the revolving credit
commitment and is allocated to all funds. For its assistance in renewing this
financing agreement, First Union Capital Markets Corp. was paid a one-time ar-
rangement fee of $150,000. State Street continues as paying agent for the funds
and receives a fee of $20,000 per annum which is allocated to all the funds.
During the six months ended September 30, 2000, the Funds had no significant
borrowings under these agreements.
58
<PAGE>
Evergreen Funds
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Money Market Fund
Municipal Money Market Fund
New Jersey Municipal Money Market Fund
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Treasury Money Market Fund
State Municipal Bond Funds
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Florida Municipal Bond Fund
Georgia Municipal Bond Fund
Maryland Municipal Bond Fund
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Pennsylvania Municipal Bond Fund
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National Municipal Bond Funds
High Grade Municipal Bond Fund
High Income Municipal Bond Fund
Municipal Bond Fund
Short-Intermediate Municipal Bond Fund
Short and Intermediate Bond Funds
Intermediate Term Bond Fund
Short-Duration Income Fund
Intermediate and Long Term Bond Funds
Diversified Bond Fund
High Yield Bond Fund
Quality Income Fund
Strategic Income Fund
U.S. Government Fund
Balanced Funds
Balanced Fund
Foundation Fund
Tax Strategic Foundation Fund
Growth & Income Funds
Blue Chip Fund
Equity Income Fund
Equity Index Fund
Growth and Income Fund
Small Cap Value Fund
Value Fund
Domestic Growth Funds
Aggressive Growth Fund
Capital Growth Fund
Evergreen Fund
Growth Fund
Large Company Growth Fund
Masters Fund
Omega Fund
Small Company Growth Fund
Special Equity Fund
Stock Selector Fund
Tax Strategic Equity Fund
Sector Funds
Health Care Fund
Technology Fund
Utility Fund
Global & International Funds
Emerging Markets Growth Fund
Global Leaders Fund
Global Opportunities Fund
International Growth Fund
Latin America Fund
Perpetual Global Fund
Perpetual International Fund
Precious Metals Fund
Express Line
800.346.3858
Investor Services
800.343.2898
www.evergreen-funds.com
47727 540980 11/2000
---------------
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