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September 30, 1998
[GRAPHIC APPEARS HERE]
Evergreen Select
Fixed Income Funds
Annual Report
[LOGO OF EVERGREEN FUNDS(SM) APPEARS HERE]
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Table of Contents
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Letter to Shareholders ................................................... 1
Evergreen Select Adjustable Rate Fund
Fund at a Glance ...................................................... 2
Portfolio Manager Commentary .......................................... 3
Evergreen Select Core Bond Fund
Fund at a Glance ...................................................... 5
Portfolio Manager Commentary .......................................... 6
Evergreen Select Fixed Income Fund
Fund at a Glance ...................................................... 8
Portfolio Manager Commentary .......................................... 9
Evergreen Select Income Plus Fund
Fund at a Glance ...................................................... 11
Portfolio Manager Commentary .......................................... 12
Evergreen Select Intermediate
Tax Exempt Bond Fund
Fund at a Glance ...................................................... 14
Portfolio Manager Commentary .......................................... 15
Evergreen Select International
Bond Fund
Fund at a Glance ...................................................... 17
Portfolio Manager Commentary .......................................... 18
Evergreen Select Limited Duration Fund
Fund at a Glance ...................................................... 20
Portfolio Manager Commentary .......................................... 21
Evergreen Select Total Return Bond Fund
Fund at a Glance ...................................................... 23
Portfolio Manager Commentary .......................................... 24
Financial Highlights
Evergreen Select Adjustable Rate Fund.................................. 26
Evergreen Select Core Bond Fund........................................ 28
Evergreen Select Fixed Income Fund..................................... 29
Evergreen Select Income Plus Fund...................................... 30
Evergreen Select Intermediate
Tax Exempt Bond Fund................................................. 31
Evergreen Select International
Bond Fund ........................................................... 32
Evergreen Select Limited Duration Fund................................. 33
Evergreen Select
Total Return Bond Fund............................................... 34
Schedules of Investments
Evergreen Select Adjustable Rate Fund.................................. 35
Evergreen Select Core Bond Fund........................................ 37
Evergreen Select Fixed Income Fund..................................... 39
Evergreen Select Income Plus Fund...................................... 44
Evergreen Select Intermediate
Tax Exempt Bond Fund................................................. 49
Evergreen Select International
Bond Fund ........................................................... 55
Evergreen Select Limited Duration Fund................................. 57
Evergreen Select
Total Return Bond Fund............................................... 59
Statements of Assets and
Liabilities .............................................................. 62
Statements of Operations ................................................. 63
Statements of Changes in
Net Assets ............................................................... 65
Combined Notes to Financial
Statements ............................................................... 67
Independent Auditors' Report ............................................. 77
Report of Independent Accountants......................................... 78
Additional Information (Unaudited)........................................ 79
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EVERGREEN FUNDS
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Evergreen Funds is one of the nation's fastest growing investment companies with
approximately $50 billion in assets under management.
With over 70 mutual funds to choose among and acclaimed service and operations
capabilities, investors enjoy a broad range of quality investment products and
services designed to meet their needs.
The Evergreen Funds employ intensive, research-driven investment strategies
executed by over 90 research analysts and portfolio managers. The fund company
remains dedicated to meeting the needs of investors and their advisors in a
global economy. Look to the Evergreen Funds to provide a distinctive level of
service and excellence in investment management.
This annual report must be preceded or accompanied by a prospectus of an
Evergreen fund contained herein. The prospectus contains more complete
information, including fees and expenses, and should be read carefully before
investing or sending money.
Mutual Funds: ARE NOT FDIC INSURED May lose value . Are not bank guaranteed
Evergreen Distributor, Inc.
Evergreen(SM) is a Service Mark of Evergreen Investment Services, Inc.
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Letter to Shareholders
----------------------
November 1998
Dear Shareholders:
We are pleased to provide you the Evergreen Select Fixed Income Funds annual
report covering the fiscal year ended September 30, 1998.
Market Volatility
[PHOTO OF WILLIAM M. ENNIS APPEARS HERE]
WILLIAM M. ENNIS
[PHOTO OF DAVID C. FRANCIS APPEARS HERE]
DAVID C. FRANCIS
The financial markets have certainly experienced volatility in the past few
months. The Dow Jones Industrial Average peaked in mid-July, when prices were at
historic highs relative to benchmarks such as corporate profit and dividends. A
few weeks later, the markets began a downward turn tipped off by the debt
troubles in Russia and general loss of confidence in emerging markets. Investors
began a "flight to quality" by seeking safety in U.S. Treasuries, pushing
long-term Treasury bonds' yields to record low levels.
While we anticipate continued volatility throughout the world markets, we want
to emphasize the strong fundamentals of the U.S. economy: low unemployment, low
inflation, low interest rates, relatively high levels of consumer confidence and
business optimism, responsible fiscal policy and a moderately growing economy.
The Federal Reserve has started the necessary steps to sustain the economic
momentum by its recent rate cuts. The U.S. Treasury market continues to be the
global safe haven and our Evergreen Select Fixed Income Funds offer various
strategies to keep your portfolio diversified and invested in the fixed income
sector which has enjoyed increasing growth.
Year 2000/1/
The year 2000 is nearly upon us, and unlike some we are looking forward to it.
We have been addressing the Year 2000 issue since February 1996 and have adopted
an industry best practices methodology for the project. Our team is on schedule
to complete the following milestones: Inventory and Assessment, Remediation,
Testing and Contingency. We believe that for Evergreen shareholders, the
transition into the next millennium should be seamless, with virtually no impact
on the products and services you receive from us.
Cost Savings
In an effort to achieve efficiencies and cost savings, we are combining your
funds' required mailings so you only receive one per household, based on the
registration last name and exact address/2/. This reduces the mailing costs, not
to mention the amount of paper needed to print, which in turn benefits your
funds by reducing the overall expenses. If you prefer to receive separate copies
of reports and prospectuses for each registered holder in your household, please
notify us by calling the number on your statement and we will adjust our records
accordingly.
Thank you for your continued investment with Evergreen Funds.
Sincerely,
/s/ William M. Ennis
William M. Ennis
Managing Director
Evergreen Funds
/s/ David C. Francis
David C. Francis, C.F.A.
Managing Director
Chief Investment Officer
First Capital Group
Good News!
Effective for the 1998 Tax Year, long-term capital gains taxes are reduced to
20%.
/1/ The information above constitutes Year 2000 readiness disclosure.
/2/ If you purchased your shares through a financial representative, we may not
be able to consolidate your mailings by last name and address, because that
institution controls the mailings.
1
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EVERGREEN
Select Adjustable Rate Fund
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Fund at a Glance as of September 30, 1998
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PORTFOLIO PROFILE
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Philosophy
Evergreen Select Adjustable Rate Fund seeks a high level of current income
consistent with low volatility of principal.
Process
Portfolio management emphasizes non-convertible, one-year CMT-indexed ARMS to
achieve coupon sensitivity to changing interest rates. A series of laddered
maturities help to ensure a gradual response to changing interest rates.
Benchmark
6-month Treasury Bill
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PERFORMANCE AND RETURNS
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Class I Class IS
Inception Date 10/1/91 5/23/94
................................................................................
Average Annual Returns
................................................................................
1 year 5.54% 5.17%
................................................................................
3 years 6.65% 6.38%
................................................................................
5 years 5.63% --
................................................................................
Since Inception 5.58% 5.99%
................................................................................
30-day SEC Yield 5.75% 5.46%
................................................................................
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LONG TERM GROWTH
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[LINE GRAPH APPEARS HERE]
Date CPI 6 mo. T-bill Class I
---- --- ------------ -------
10/1/91 $1,000,000 $1,000,000 $1,000,000
9/30/92 $1,029,900 $1,044,900 $1,053,900
9/30/93 $1,057,600 $1,079,300 $1,112,200
9/30/94 $1,088,900 $1,120,500 $1,128,100
9/30/95 $1,116,600 $1,186,700 $1,205,600
9/30/96 $1,150,100 $1,251,400 $1,288,300
9/30/97 $1,174,900 $1,319,400 $1,385,700
9/30/98 $1,192,400 $1,390,500 $1,462,400
Comparison of a $1,000,000 investment in Evergreen Select Adjustable Rate Fund
Class I, versus a similar investment in the 6-month Treasury Bill, and the
Consumer Price Index (CPI).
Past performance is no guarantee of future results. The performance of each
class may vary based on differences in loads and fees paid by the shareholders
investing in each class. The investment return and principal value will
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than original cost. The 6-month Treasury Bill does not include transaction costs
associated with buying and selling securities nor any management fees. The CPI
is a commonly used measure of inflation and does not represent an investment
return. It is not possible to invest directly in an index.
2
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EVERGREEN
Select Adjustable Rate Fund
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Portfolio Management Commentary
Portfolio Management
[PHOTO OF GARY PZEGEO APPEARS HERE]
GARY PZEGEO
Performance
Evergreen Select Adjustable Rate Fund posted strong performance during the 12
months ended September 30, 1998. For the period, the Fund's Institutional Shares
returned 5.54% and the Institutional Service Shares returned 5.17%, generously
surpassing the 4.73% average return generated by the 34 funds in the Lipper
Adjustable Mortgage category. Lipper Analytical Services, Inc. is an independent
monitor of mutual fund performance.
Portfolio
Characteristics
---------------
Total Net Assets $32,818,552
.......................................................
Average Credit Quality AAA
.......................................................
Average Maturity 4.9 years
.......................................................
Average Duration 0.5 years
.......................................................
Investment Environment
Investors in adjustable-rate mortgage securities (ARMS) faced a challenging
investment environment over the past 12 months. Continued low interest rates
across all maturities, the decline of long-term interest rates relative to
short-term interest rates, fewer buyers, and concerns about the liquidity of
ARMS all limited the securities' potential for price appreciation. Offsetting
some of the hurdles, however, was a reduced supply of ARMS. A lower supply tends
to support prices.
The lowest interest rates in nearly 30 years prompted many consumers to
refinance -- or prepay -- their existing higher-cost mortgages and replace them
with ones that carried lower interest rates. The interest rate climate also
fueled a strong housing market. This contributed to a rapid pace of prepayments
by creating a high turnover rate for those mortgages already in existence. The
fact that ARMS can be prepaid creates the possibility of their underperformance
versus other fixed-income securities, such as U.S. Treasuries, when interest
rates are low or declining. When bonds can be prepaid prior to maturity,
investors face the risk of reinvesting the proceeds from prepaid principal at
lower rates than those that prevailed at the time of the original investment.
In addition to a rapid pace of prepayments, investors were confronted with
concerns about the market's liquidity when a large institutional buyer
experienced financial difficulties. The firm's uncertain condition not only
removed it as a buyer, but caused many investors to be exceptionally cautious
about taking on additional, potentially risky positions, as they waited for
market conditions to stabilize. Although the ARMS market remains extremely
liquid, these events exerted further downward pressure on the securities'
prices.
3
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EVERGREEN
Select Adjustable Rate Fund
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Portfolio Manager Commentary
Low and declining long-term interest rates meant that the supply of ARMS fell
because many consumers chose to lock in historically low mortgage rates by
selecting fixed-rate mortgages rather than their adjustable-rate counterparts.
Often, this involved paying off an adjustable rate mortgage and replacing it
with one that carried a fixed rate. This restrained the growth of outstanding
ARMS and provided investors with some relief during a challenging market.
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PORTFOLIO COMPOSITION
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(based on 9/30/98 net assets)
[PIE CHART APPEARS HERE]
ARMS -- 77.6%
Fixed-rate mortgage-backed securities -- 12.0%
U.S. Treasuries/Government Agency Notes/Bond -- 7.1%
Other assets less liabilities, net -- 3.3%
Investment Strategy
Over the past 12 months, we reduced the Fund's position in ARMS and increased
holdings in fixed-rate mortgage securities, U.S. Treasuries and cash. Within the
ARMS sector, we invested in securities with lower coupons and emphasized
"hybrid-ARMS", which contain a fixed-rate component for a number of years before
converting to an adjustable rate bond. The combination of these strategies
reduced prepayment risk, increased the Fund's potential for price appreciation
in a declining interest rate environment and improved liquidity. As of September
30, 1998, the Fund was invested as follows: ARMS -- 77.6%; Fixed-rate
mortgage-backed securities -- 12.0%; U.S. Treasuries -- 7.1% and Other assets
less liabilities, net -- 3.3%.
Outlook
We believe that ARMS will reward the patient investor with attractive total
return in the coming months, after we endure some continued price fluctuations
and concerns about liquidity in the near term. During the past year, the
performance of mortgage-backed securities lagged other types of bonds, such as
U.S. Treasuries, and, in our opinion, this has created significant value in the
mortgage-backed sector. We think conditions will remain favorable for
fixed-income investors over the next six months. Inflation should stay low -- in
the range of 1 1/2% to 2%. Further, we expect the world's central bankers and
fiscal authorities to continue to focus their efforts on stimulating global
economies, which could include lowering interest rates and weakening the U.S.
dollar. We think this will improve international economic conditions and
increase investors' confidence in investing in a wider range of securities.
4
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EVERGREEN
Select Core Bond Fund
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Fund at a Glance as of September 30, 1998
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PORTFOLIO PROFILE
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Philosophy
The Evergreen Select Core Bond Fund is designed to maximize total return by
focusing on current income and identifying opportunities to capture capital
gains. The portfolio maintains a bias toward corporate and mortgage securities
in order to capture higher levels of income.
Process
The portfolio managers seek to enhance performance, while pursuing a controlled
risk approach, by actively managing three specific characteristics within the
portfolio: duration, sector allocation, and security selection. The managers use
both quantitative tools and fundamental research in order to determine an
appropriate duration strategy as well as enhance the sector allocation and
security selection processes.
Benchmark
Lehman Brothers Aggregate Bond Index
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PERFORMANCE AND RETURNS
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Class I Class IS Class IC
Average Annual Returns
................................................................................
1 year 10.75% 10.55% 10.75%
................................................................................
3 years 7.62% 7.38% 7.62%
................................................................................
5 years 6.05% 5.80% 6.05%
................................................................................
10 years 8.88% 8.61% 8.88%
................................................................................
Since Inception 8.33% 8.06% 8.33%
................................................................................
30-day SEC Yield 5.66% 5.42% 5.67%
................................................................................
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LONG TERM GROWTH
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[LINE GRAPH APPEARS HERE]
Date CPI LBABI Class I
---- --- ----- -------
9/30/88 $1,000,000 $1,000,000 $1,000,000
9/30/89 $1,043,400 $1,112,600 $1,105,800
9/30/90 $1,107,700 $1,196,800 $1,170,600
9/30/91 $1,145,200 $1,388,200 $1,369,400
9/30/92 $1,179,500 $1,562,400 $1,554,600
9/30/93 $1,211,200 $1,718,300 $1,745,100
9/30/94 $1,247,100 $1,662,900 $1,658,700
9/30/95 $1,278,800 $1,896,700 $1,888,000
9/30/96 $1,317,200 $1,989,600 $1,945,400
9/30/97 $1,345,600 $2,183,500 $2,113,700
9/30/98 $1,365,600 $2,434,100 $2,340,900
Comparison of a $1,000,000 investment in Evergreen Select Core Bond Fund, Class
I shares, versus a similar investment in the Lehman Brothers Aggregate Bond
Index (LBABI), and the Consumer Price Index (CPI).
Past performance is no guarantee of future results. The investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than original cost. Class I, IS and IC performance
information includes the performance of the Fund's predecessor common trust fund
for periods before the Fund's registration statement became effective on
November 21, 1997. The inception date of the predecessor common trust fund was
February 28, 1986. Performance for the common trust fund has been adjusted to
include the effect of estimated mutual fund expense ratios at the time the
common trust funds were converted to mutual funds. Performance information for
Class IS also includes performance of the Fund's Class IC for the period from
November 24, 1997 to March 9, 1998 (commencement of Class IS operations) and
does not include the deduction of 12b-1 fees. If such fees had been included,
the returns would have been lower. Returns of Class I, IS and IC, since their
respective commencement of class operations, were 8.12%, 6.54% and 8.55%,
respectively. The common trust fund was not registered under the Investment
Company Act of 1940 (the "1940 Act") or subject to certain investment
restrictions that are imposed by the 1940 Act. If the common trust fund had been
registered under the 1940 Act, its performance may have been adversely affected.
Index returns do not reflect expenses, which have been deducted from the Fund's
return. It is not possible to invest directly in an index.
5
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EVERGREEN
Select Core Bond Fund
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Portfolio Manager Commentary
Portfolio Management Team
[PHOTO OF L. ROBERT CHESHIRE APPEARS HERE]
L. ROBERT CHESHIRE
[PHOTO OF BRUCE J. BESECKER APPEARS HERE]
BRUCE J. BESECKER, CFA
Performance
For the 12 month period ended September 30, 1998, the Evergreen Select Core Bond
Fund's Class I, IC and IS shares returned 10.75%, 10.75%, and 10.55%,
respectively. These returns modestly trailed the 11.50% return of the Lehman
Brothers Aggregate Index. The Fund's performance, however, compared favorably
to the 10.02% average return of 218 intermediate investment grade bond funds
tracked by Lipper Analytical Services, an independent monitor of mutual fund
performance. The Fund's strong total return relative to its peer group can be
attributed to the portfolio's long duration stance for much of the quarter,
which benefited performance amid steadily declining interest rates.
Portfolio
Characteristics
---------------
Total Net Assets $596,776,430
................................................................
Average Credit Quality AAA
................................................................
Average Maturity 7.9 years
................................................................
Average Duration 4.7 years
................................................................
A Good Year for Bond Investors
The past 12 months was a particularly rewarding period for bond investors and
was brought about, ironically, by the Asian financial crisis which flared up
roughly a year ago. While the crisis prompted volatility in financial markets
throughout the world, it also slowed U.S. economic growth and calmed
inflationary fears that, in turn, allowed interest rates to trend markedly
lower. In fact, over the past 12 months, the yield on the bellwether 30-year
Treasury bond fell from 6.40% to 4.98%.
The U.S. bond market rally was most pronounced in the final months of 1997 and
again in the third quarter of 1998. The flight to quality, reignited in August
and September, was a result of economic problems in Russia and its potential
"domino effect" on other world economies. As a result of this crisis and a
likely U.S. economic slowdown, the Federal Reserve Board moved away from a
tightening bias and actually reduced the Fed Funds Rate at the end of September
(and again in early October). The net result was a declining interest rate
environment which boosted bond prices.
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PORTFOLIO COMPOSITION
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(based on 9/30/98 net assets)
[PIE CHART APPEARS HERE]
Mortgage-Backed Securities -- 39.3%
Corporate Notes/Bonds -- 19.6%
Treasury Notes/Bonds -- 13.3%
Yankee Obligations -- 13.2%
Other assets and liabilities, net -- 8.7%
Government Agency Notes/Bonds -- 3.8%
Asset-Backed Securities -- 1.6%
Collateralized Mortgage Obligations -- 0.5%
6
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EVERGREEN
Select Core Bond Fund
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Portfolio Manager Commentary
Our Strategy
Since the beginning of 1998, we have forecasted two things in the midst of the
current global investment environment: increased volatility and range-bound --
or even declining -- interest rates. Consequently, we maintained a neutral-to-
long duration stance for much of the fiscal year in order to take advantage of
declining interest rates. The portfolio's average duration currently stands at
4.7 years. Our duration strategy, as well as the portfolio's high-quality
emphasis, played a crucial role in allowing the Fund to outperform its peer
group average.
The most significant strategic adjustment made to the portfolio was the removal
of its barbell structure in late September. Typically, this type of portfolio
structure, distinguished by securities primarily on both ends of the yield curve
rather than in the middle, is beneficial during extended periods of economic
strength as well as when there is a narrowing yield curve; two themes in the
fixed-income market over the past several quarters. In fact, after being
implemented roughly a year ago, this strategy paid off handsomely during much of
the 12-month period. We felt, however, that fundamental changes taking place
within the economy warranted the removal of the barbell structure and going to a
more evenly distributed portfolio structure.
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PORTFOLIO QUALITY
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(based on 9/30/98 portfolio assets)
[PIE CHART APPEARS HERE]
U.S. Government Agency -- 50.5%
A -- 18.3%
U.S. Government -- 14.6%
AA -- 7.0%
AAA -- 4.8%
BAA -- 3.2%
Less than CAA -- 1.6%
Outlook
We maintain a very cautious outlook for the final months of 1998. Problems in
several international economies continue to filter back to the U.S. financial
markets in the form of increased volatility. Although we feel this turbulence is
likely to continue in the near term, we are confident that adjustments made to
the portfolio have positioned the Fund to perform well within this environment.
From a duration standpoint, we anticipate maintaining a neutral-to-modestly-long
duration as interest rates stay in their trading range and possibly trend lower.
We will continue to closely monitor the market and wait until the outcome of the
global crisis becomes clearer before taking more aggressive duration or sector
bets.
7
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EVERGREEN
Select Fixed Income Fund
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Fund at a Glance as of September 30, 1998
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PORTFOLIO PROFILE
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Philosophy
The Evergreen Select Fixed Income Fund seeks to increase total return by
focusing on current income and identifying opportunities to capture capital
gains. The portfolio maintains a bias toward corporate and mortgage securities
in order to capture higher levels of income.
Process
The Fund's portfolio manager seeks to enhance performance, while controlling
risk, by actively managing three specific characteristics within the portfolio:
duration, sector allocation and security selection. The manager utilizes both
quantitative tools and fundamental research to determine an appropriate duration
strategy as well as to enhance the sector allocation and security selection
processes.
Benchmark
Lehman Brothers Intermediate
Government/Corporate Index
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PERFORMANCE AND RETURNS
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Class I Class IS
Average Annual Returns
................................................................................
1 year 9.23% 9.04%
................................................................................
3 years 7.24% 7.00%
................................................................................
5 years 5.86% 5.61%
................................................................................
10 years 7.99% 7.73%
................................................................................
Since Inception 8.59% 8.32%
................................................................................
30-day SEC Yield 5.37% 5.12%
................................................................................
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LONG TERM GROWTH
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[LINE GRAPH APPEARS HERE]
Date CPI LBIGCBI Class I
---- --- ------- -------
9/30/88 $1,000,000 $1,000,000 $1,000,000
9/30/89 $1,043,400 $1,097,200 $1,091,900
9/30/90 $1,107,700 $1,189,300 $1,193,200
9/30/91 $1,145,200 $1,354,100 $1,350,000
9/30/92 $1,179,500 $1,526,400 $1,503,000
9/30/93 $1,211,200 $1,651,800 $1,622,200
9/30/94 $1,247,100 $1,624,500 $1,582,700
9/30/95 $1,278,800 $1,807,900 $1,748,800
9/30/96 $1,317,200 $1,900,600 $1,836,700
9/30/97 $1,345,600 $2,056,400 $1,974,700
9/30/98 $1,365,600 $2,270,800 $2,156,900
Comparison of a $1,000,000 investment in Evergreen Select Fixed Income Fund
Class I, versus a similar investment in the Lehman Brothers Intermediate
Government/Corporate Index (LBIGCBI), and the Consumer Price Index (CPI).
Past performance is no guarantee of future results. The investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than original cost. Class I and IS performance information
includes the performance of the Fund's predecessor common trust fund for periods
before the Fund's registration statement became effective on November 21, 1997.
The inception date of the predecessor common trust fund was March 31, 1971.
Performance for the common trust fund has been adjusted to include the effect of
estimated mutual fund expense ratios at the time the common trust funds were
converted to mutual funds. Performance information for Class IS also includes
performance of the Fund's Class I for the period from November 24, 1997 to March
9, 1998 (commencement of Class IS operations) and does not include the deduction
of 12b-1 fees. If such fees had been included, the returns would have been
lower. Returns of Class I and IS, since their respective commencement of class
operations, were 8.06% and 5.94%, respectively. The common trust fund was not
registered under the Investment Company Act of 1940 (the "1940 Act") or subject
to certain investment restrictions that are imposed by the 1940 Act. If the
common trust fund had been registered under the 1940 Act, its performance may
have been adversely affected. Index returns do not reflect expenses, which have
been deducted from the Fund's return. It is not possible to invest directly in
an index.
8
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EVERGREEN
Select Fixed Income Fund
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Portfolio Manager Commentary
Portfolio Management
[PHOTO OF THOMAS L. ELLIS APPEARS HERE]
THOMAS L. ELLIS
Performance
For the fiscal period ended September 30, 1998, the Evergreen Select Fixed
Income Fund's Class I and IS shares returned 9.23% and 9.04%, respectively,
trailing the 10.42% return for the Lehman Brother Intermediate
Government/Corporate Index. The Fund's annual return did compare very favorably
to the 8.04% average return of 91 short-intermediate investment grade funds
tracked by Lipper Analytical Services, an independent monitor of mutual fund
performance. The Fund's strong performance relative to its peer group can be
attributed to the portfolio's long duration, which positively impacted
performance throughout the fiscal period.
Portfolio
Characteristics
---------------
Total Net Assets $678,715,328
.......................................................
Average Credit Quality AA
.......................................................
Average Maturity 4.5 years
.......................................................
Average Duration 3.5 years
.......................................................
A Turbulent but Positive Period for Bonds
During the 12 months, bond investors witnessed a particularly strong performance
by fixed income investments. At the beginning of the period, investors were
concerned that an overly strong U.S. economy would cause an inflationary flare-
up. As the Asian financial crisis began to spread and international economies
began to weaken, the focus switched to a potential slowdown, or even recession,
in the U.S. economy. Global economic uncertainty prompted a bit of volatility as
well as a flight to quality to U.S. bonds, and fueled an especially strong
performance by U.S. Treasuries.
In effect, the Asian financial crisis slowed U.S. economic growth, calmed
inflation fears and created a "bond-friendly" environment. Consequently,
interest rates continued their steady decline which, in turn, boosted bond
prices. In fact, over the past twelve months, the yield on the bellwether 30-
year Treasury bond fell from 6.40% to 4.98%. In addition, the U.S. economic
slowdown became the Federal Reserve Board's primary concern, prompting a shift
in monetary policy from a tightening bias to an actual reduction in the Fed
Funds rate at the end of September, and again in early October.
Portfolio Management Amid Global Volatility
The Fund's annual return, which outperformed the vast majority of funds in its
peer group, can be primarily attributed to a positive duration strategy. During
the first six months of the fiscal year, we increased the portfolio's duration
and kept it at roughly 105% to 110% of the benchmark. The extended duration
positively impacted the Fund's total return because of the declining interest
rate
9
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EVERGREEN
Select Fixed Income Fund
- --------------------------------------------------------------------------------
Portfolio Manager Commentary
environment. In the final half of the period, we modestly shortened duration --
from 3.6 years to 3.5 years -- but still kept it near 105% of the benchmark.
During the final months of the period, poor performances within the mortgage and
corporate sectors partially offset our favorable duration stance and had a
negative impact on performance. The portfolio's modest exposure to foreign bonds
also hurt the Fund, because returns of these issues were weakened by the
volatile global investing environment. Despite some poor performing sectors,
however, the Fund's especially strong duration strategy more than offset any
negative factors and allowed us to perform strongly against our peer group.
- --------------------------------------------------------------------------------
Portfolio Composition
- --------------------------------------------------------------------------------
(based on 9/30/98 net assets)
[PIE CHART APPEARS HERE]
Treasury Notes/Bonds -- 27.2%
Corporate Notes/Bond -- 23.8%
Asset-Backed Securities -- 12.6%
Collateralized Mortgage Obligations -- 12.5%
Government Agency Notes/Bond -- 11.7%
Yankee Obligations -- 6.6%
Other assets and liabilities, net -- 3.3%
Mortgage-Backed Securities -- 2.3%
Outlook
Looking ahead, we anticipate more turbulence in the financial markets as
overseas economies continue to struggle. In response, we will adjust the
portfolio and reduce exposure of corporate bonds and mortgages while bolstering
the weighting of U.S. Treasuries and Agencies. In fact, the vast majority of
purchases over the past few weeks were U.S. Treasuries and Agencies. Should the
global crisis continue to worsen -- a scenario we expect in the near term -- we
anticipate a continued strong performance by Treasuries while the corporate and
mortgage sectors lag. Finally, we anticipate an eventual reallocation of the
portfolio to both the corporate and mortgage sectors as widening yield spreads
improve their expected return profile over Treasuries and Agencies.
- --------------------------------------------------------------------------------
PORTFOLIO QUALITY
- --------------------------------------------------------------------------------
(based on 9/30/98 portfolio assets)
[PIE CHART APPEARS HERE]
AAA -- 30.1%
U.S. Government -- 28.2%
A -- 16.0%
U.S. Government Agency -- 8.7%
AA -- 8.0%
BAA --8.0%
BA -- 1.0%
10
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
Select Income Plus Fund
- --------------------------------------------------------------------------------
Fund at a Glance as of September 30, 1998
- --------------------------------------------------------------------------------
PORTFOLIO PROFILE
- --------------------------------------------------------------------------------
Philosophy
The Evergreen Select Income Plus Fund seeks to increase total return by pursuing
a high level of current income and a potential for capital appreciation. The
portfolio managers seek to achieve the Fund's objective by actively managing
portfolio duration for capital gain opportunities.
Process
The portfolio managers complement fundamental research with quantitative tools
which identify undervalued or over-looked fixed income securities with potential
for appreciation. In an effort to achieve a high level of current income, the
Fund emphasizes corporate and mortgage-backed securities.
Benchmark
Lehman Brothers Government/Corporate Index
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS
- --------------------------------------------------------------------------------
Class I Class IS
Average Annual Returns
................................................................................
1 year 11.14% 10.96%
................................................................................
3 years 8.05% 7.81%
................................................................................
5 years 6.49% 6.24%
................................................................................
10 years 8.46% 8.20%
................................................................................
Since Inception 8.58% 8.32%
................................................................................
30-day SEC Yield 5.45% 5.23%
................................................................................
- --------------------------------------------------------------------------------
LONG TERM GROWTH
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
Date CPI LBGCBI Class I
---- --- ------ -------
9/30/88 $1,000,000 $1,000,000 $1,000,000
9/30/89 $1,043,400 $1,113,200 $1,088,700
9/30/90 $1,107,700 $1,188,400 $1,156,500
9/30/91 $1,145,200 $1,376,800 $1,333,400
9/30/92 $1,179,500 $1,559,000 $1,478,600
9/30/93 $1,211,200 $1,737,400 $1,645,800
9/30/94 $1,247,100 $1,665,500 $1,567,100
9/30/95 $1,278,800 $1,904,500 $1,786,700
9/30/96 $1,317,200 $1,990,300 $1,853,000
9/30/97 $1,345,600 $2,181,100 $2,027,700
9/30/98 $1,365,600 $2,461,800 $2,253,600
Comparison of a $1,000,000 investment in Evergreen Select Income Plus Fund Class
I, versus a similar investment in the Lehman Brothers Government/Corporate Bond
Index (LBGCBI), and the Consumer Price Index (CPI).
Past performance is no guarantee of future results. The investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than original cost. Class I and IS performance information
includes the performance of the Fund's predecessor common trust fund for periods
before the Fund's registration statement became effective on November 21, 1997.
The inception date of the predecessor common trust fund was August 31, 1988.
Performance for the common trust fund has been adjusted to include the effect of
estimated mutual fund expense ratios at the time the common trust funds were
converted to mutual funds. Performance information for Class IS also includes
performance of the Fund's Class I for the period from November 24, 1997 to March
2, 1998 (commencement of Class IS operations) and does not include the deduction
of 12b-1 fees. If such fees had been included, the returns would have been
lower. Returns of Class I and IS, since their respective commencement of class
operations, were 8.99% and 7.02%, respectively. The common trust fund was not
registered under the Investment Company Act of 1940 (the "1940 Act") or subject
to certain investment restrictions that are imposed by the 1940 Act. If the
common trust fund had been registered under the 1940 Act, its performance may
have been adversely affected. Index returns do not reflect expenses, which have
been deducted from the Fund's return. It is not possible to invest directly in
an index.
11
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
Select Income Plus Fund
- --------------------------------------------------------------------------------
Portfolio Manager Commentary
Portfolio Management Team
[PHOTO OF GEORGE PRATTOS APPEARS HERE]
GEORGE PRATTOS
[PHOTO OF J.P. WEAVER, CFA APPEARS HERE]
J.P. WEAVER, CFA
Performance
For the 12 months ended September 30, 1998, the Evergreen Select Income Plus
Bond Fund's Class I and IS shares returned 11.14% and 9.43%, respectively,
trailing the 12.84% total return for the Lehman Brothers Government/Corporate
Index. The Fund's performance, however, compared very favorably to the 7.91%
average return of 92 BBB-rated corporate debt funds tracked by Lipper Analytical
Services, an independent monitor of mutual fund performance.
Portfolio
Characteristics
---------------
Total Net Assets $1,374,768,556
........................................................
Average Credit Quality AA
........................................................
Average Maturity 5.8 years
........................................................
Average Duration 5.7 years
........................................................
Overall, A Positive Period for Bond Investors
Over the past 12 months, U.S. investors witnessed strong returns by fixed income
investments. In fact, during this period bonds (represented by the Lehman
Brothers Government Corporate Index) outpaced the S&P 500 Index by nearly 4%.
This "bond-friendly" fiscal period was brought about, ironically, by the global
financial crisis that began in southeast Asia. Overseas turmoil essentially
slowed U.S. economic growth and calmed inflationary fears. Consequently,
interest rates trended markedly lower as the yield on the bellwether 30-year
Treasury bond fell from 6.40% to 4.98% during the year.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
(based on 9/30/98 net assets)
[PIE CHART APPEARS HERE]
Corporate Notes/Bonds -- 29.7%
Treasury Notes/Bonds -- 25.6%
Federal Agency Notes/Bonds -- 18.1%
Yankee Obligations -- 10.6%
Other Assets and Liabilities,
net -- 5.7%
Asset-Backed Securities -- 3.2%
Mortgage-Backed Securities -- 3.1%
Collateralized Mortgage
Obligations -- 2.9%
Taxable Municipal Bonds -- 1.1%
Sector Performance
During the second half of the fiscal period, investors' appetite for safety
fueled a flight to quality to U.S. Treasuries, and nearly every sector of the
U.S. fixed income market trailed the strong performance by Treasuries.
Consequently, the portfolio's weighting of U.S. Treasuries and Agencies, which
was increased from 37% to 40% during the final three months, positively impacted
performance. Despite reducing corporate and mortgage-backed securities during
the past six months by 15%, the portfolio's overweight relative to its
benchmark detracted from performance.
12
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
Select Income Plus Fund
- --------------------------------------------------------------------------------
Portfolio Manager Commentary
- --------------------------------------------------------------------------------
PORTFOLIO QUALITY
- --------------------------------------------------------------------------------
(based on 9/30/98 portfolio assets)
[PIE CHART APPEARS HERE]
U.S. Government -- 26.0%
A -- 21.6%
AAA -- 16.2%
U.S. Government Agency -- 14.3%
BAA -- 12.2%
AA -- 9.7%
Duration Strategy
During the past 12 months, we felt that underlying market fundamentals supported
the case for lower interest rates. Consistent with our analysis, we increased
the portfolio's duration, from 5.14 years to 5.66 years during the fiscal year,
in order to benefit from lower-trending interest rates. As rates declined
steadily over the twelve months, our increased duration stance made a positive
contribution to the Fund's total return and was the primary reason we
outperformed the average of our Lipper peer group.
Outlook
For the remainder of 1998, our outlook for the domestic economy and corporate
profits remains fairly gloomy. We anticipate the global economic crisis to
result in a slowdown in the U.S. economy as well as deteriorating corporate
earnings. Based on this assessment, we have increased the percentage of U.S.
Treasury and Agency securities during the final months of the fiscal year. We
also foresee a period of increased rate volatility and economic fragility ahead,
but given the Fund's long-term bias toward capitalizing upon income enhancement
opportunities, we may begin to add to the corporate and mortgage-backed sectors
as 1998 comes to a close.
13
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
Select Intermediate Tax Exempt Bond Fund
- --------------------------------------------------------------------------------
Fund at a Glance as of September 30, 1998
- --------------------------------------------------------------------------------
PORTFOLIO PROFILE
- --------------------------------------------------------------------------------
Philosophy
The Evergreen Select Intermediate Tax Exempt Bond Fund seeks the highest
possible current income, exempt from federal income taxes, consistent with the
Fund's maturity and preservation of capital./1/ The Fund provides stable,
non-taxable income flows at competitive rates by primarily investing in tax-free
bonds.
Process
The portfolio manager utilizes both quantitative tools and hands-on, fundamental
research to identify attractive tax-exempt investment opportunities. In order to
increase total return, the Fund may also lend portfolio securities and enter
into repurchase and reverse repurchase agreements.
Benchmark
Lehman Brothers Municipal 7-Year Index
Past performance is no guarantee of future results. The investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than original cost. Class I and IS performance information
includes the performance of the Fund's predecessor common trust fund for periods
before the Fund's registration statement became effective on November 21, 1997.
The inception date of the predecessor common trust fund was January 31, 1984.
Performance for the common trust fund has been adjusted to include the effect of
estimated mutual fund expense ratios at the time the common trust funds were
converted to mutual funds. Performance information for Class IS also includes
performance of the Fund's Class I for the period from November 24, 1997 to March
2, 1998 (commencement of Class IS operations) and does not include the deduction
of 12b-1 fees. If such fees had been included, the returns would have been
lower. Returns of Class I and IS, since their respective commencement of class
operations, were 7.61% and 4.43%, respectively. The common trust fund was not
registered under the Investment Company Act of 1940 (the "1940 Act") or subject
to certain investment restrictions that are imposed by the 1940 Act. If the
common trust fund had been registered under the 1940 Act, its performance may
have been adversely affected. Index returns do not reflect expenses, which have
been deducted from the Fund's return. It is not possible to invest directly in
an index.
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS
- --------------------------------------------------------------------------------
Class I Class IS
Average Annual Returns
................................................................................
1 year 8.62% 8.43%
................................................................................
3 years 7.00% 6.77%
................................................................................
5 years 5.61% 5.37%
................................................................................
10 years 6.84% 6.59%
................................................................................
Since Inception 7.56% 7.30%
................................................................................
30-day SEC Yield 4.37% 4.12%
................................................................................
Tax Equivalent Yield* 7.24% 6.82%
................................................................................
* Assumes maximum 39.6% federal tax rate. Results for investors subject to lower
tax rates would not be as advantageous.
- --------------------------------------------------------------------------------
LONG TERM GROWTH
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
Date Class I LBMB7YI CPI
---- ------- ------- ---
9/30/88 $1,000,000 $1,000,000 $1,000,000
9/30/89 $1,063,700 $1,073,900 $1,043,400
9/30/90 $1,129,600 $1,151,000 $1,107,700
9/30/91 $1,241,300 $1,292,000 $1,145,200
9/30/92 $1,341,400 $1,418,700 $1,179,500
9/30/93 $1,475,600 $1,573,500 $1,211,200
9/30/94 $1,463,800 $1,563,400 $1,247,100
9/30/95 $1,582,500 $1,723,800 $1,278,800
9/30/96 $1,654,600 $1,800,200 $1,317,200
9/30/97 $1,784,700 $1,943,400 $1,345,600
9/30/98 $1,938,500 $2,096,200 $1,365,600
Comparison of a $1,000,000 investment in Evergreen Select Intermediate Tax
Exempt Bond Fund, Class I shares, versus a similar investment in the Lehman
Brothers Municipal Bond 7-year Index (LBMB7YI**), and the Consumer Price Index
(CPI).
**The Lehman Brothers Municipal Bond 7-Year Index inception date was 1/31/90.
The Lehman Brothers Municipal Bond 10-Year Index was used for the period 8/31/88
- - 1/31/90.
/1/ Some portion of the Fund's income may be subject to the Federal Alternative
Minimum Tax.
14
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
Select Intermediate Tax Exempt Bond Fund
- --------------------------------------------------------------------------------
Portfolio Manager Commentary
Portfolio Management
[PHOTO OF RICHARD K. MARRONE APPEARS HERE]
RICHARD K. MARRONE
Performance
For the 12 months ended September 30, 1998, the Evergreen Select Intermediate
Tax Exempt Bond Funds' Class I and IS shares returned 8.62% and 8.43%,
respectively. This performance compares very favorably to the 7.04% average
return of 145 intermediate municipal debt funds tracked by Lipper Analytical
Services, an independent monitor of mutual fund performance.
Portfolio
Characteristics
---------------
Total Net Assets $751,609,852
.......................................................
Average Credit Quality AA-
.......................................................
Average Maturity 9.4 years
.......................................................
Average Duration 7.3 years
.......................................................
A Good Year for Municipal Bond Investors
During the course of the fiscal year, investors shifted their focus from an
inflationary flare-up to concerns of an economic slowdown in the U.S. Many
market participants felt the Asian financial crisis would serve as the catalyst
which would negatively impact earnings of U.S. companies and trigger an economic
slowdown. This shift in sentiment prompted lower-trending interest rates which,
in turn, boosted municipal bond prices.
In fact, the yield on the bellwether 30-year Treasury bond dropped markedly
lower, from 6.40% to 4.98%. Declining interest rates served as the primary
determinant in record new issuances in the market, as municipalities rushed to
capitalize upon attractive new rates.
- --------------------------------------------------------------------------------
PORTFOLIO QUALITY
- --------------------------------------------------------------------------------
(based on 9/30/98 portfolio assets)
[PIE CHART APPEARS HERE]
AAA -- 39.8%
BBB -- 24.0%
A -- 14.9%
AA -- 14.0%
Not Rated -- 7.3%
Our Strategy
Our primary strategy continues to be to emphasize higher-yielding securities to
bolster the Fund's income orientation. In addition to this strategy, decisions
regarding duration and sector allocation fueled total return and allowed us to
outperform our peer group average.
The Fund's duration strategy had a positive impact on performance throughout the
fiscal period. In anticipation of lower-trending interest rates, we maintained a
long duration within the portfolio, currently at 7.3 years. This decision proved
timely as rates declined steadily throughout the period.
15
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
Select Intermediate Tax Exempt Bond Fund
- --------------------------------------------------------------------------------
Portfolio Manager Commentary
The portfolio's exposure of non-callable bonds also enhanced total return within
the declining interest rate environment, as many issuers "called" their bonds to
reissue at more attractive rates. Moreover, the decision to actively pursue
zero-coupon bonds, a security that enjoys significant price appreciation in
periods of declining rates, also had a positive impact on performance.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
(based on 9/30/98 net assets)
[PIE CHART APPEARS HERE]
Other Revenue Bonds -- 21.6%
General Obligation Notes/Bonds -- 17.8%
Hospitals/Nursing Homes/Health Care -- 14.3%
Escrow -- 13.8%
Residential Care -- 6.7%
Housing -- 6.6%
Transportation -- 6.5%
Public Facilities -- 6.1%
Sales Tax -- 5.0%
Other assets and liabilities, net -- 1.0%
Mutual fund shares -- 0.6%
Outlook
From an historical perspective, valuation levels of municipal bonds, relative to
Treasuries, are at very attractive levels. In our opinion, this has created a
buying opportunity that we expect to capitalize upon in the final months of 1998
and into 1999. It is worth noting that despite a volatile investment landscape,
municipal bonds have posted solid returns over the 12 months. In fact, the
Evergreen Select Intermediate Tax Exempt Bond Fund's total return during the
fiscal year performed in line with the S&P 500 Index, which was 9.05%.
Looking ahead, we anticipate more turbulence in the financial markets as
overseas economies continue to struggle. On a positive note, we believe the
Federal Reserve Board will likely further reduce the Fed Funds rate to protect
the U.S. from the international meltdown and stimulate a slowing economy. Within
this environment, we anticipate keeping a neutral to modestly long duration
stance and will continue to pursue our high-yield strategy.
16
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
Select International Bond Fund
- --------------------------------------------------------------------------------
Fund at a Glance as of September 30, 1998
- --------------------------------------------------------------------------------
PORTFOLIO PROFILE
- --------------------------------------------------------------------------------
Philosophy
The Evergreen Select International Bond Fund seeks to capitalize upon the
unprecedented opportunities taking place in international capital markets and
economies worldwide. The investment management team aims to add yield, provide
diversification, control currency risk while adding value, and utilize the low
to negative correlation to U.S. asset classes.
Process
The investment process incorporates quantitative tools to manage a massive amo
unt of financial data and to complement the team's fundamental research. A
minimum of 80% of the portfolio is invested in investment grade securities of 19
of the world's top economies*. Up to 20% can be invested into below investment
grade bonds from those 19 countries, or in emerging market bonds. The team
actively uses currency hedging for more efficient risk control
*AUSTRALIA, AUSTRIA, BELGIUM, CANADA, DENMARK, FINLAND, FRANCE, GERMANY,
IRELAND, ITALY, JAPAN, NETHERLANDS, NEW ZEALAND, NORWAY, PORTUGAL, SPAIN,
SWEDEN, SWITZERLAND, UNITED KINGDOM.
Benchmark
J. P. Morgan International Bond Index
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS
- --------------------------------------------------------------------------------
Class I Class IS
Performance Inception Date 12/15/93 12/15/93
...............................................................................
Average Annual Returns
...............................................................................
1 year 6.31% 6.05%
...............................................................................
3 years 6.80% 6.55%
...............................................................................
Since Inception 4.58% 4.33%
...............................................................................
30-day SEC Yield 4.76% 4.50%
...............................................................................
- --------------------------------------------------------------------------------
LONG TERM GROWTH
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
Date CPI JPMGGI Class I
---- --- ------ -------
12/31/93 $1,000,000 $1,000,000 $1,000,000
9/30/94 $1,024,700 $1,042,500 $898,500
9/30/95 $1,050,800 $1,236,500 $1,011,000
9/30/96 $1,082,300 $1,302,700 $1,098,500
9/30/97 $1,105,600 $1,299,700 $1,158,700
9/30/98 $1,122,100 $1,448,100 $1,231,800
Comparison of a $1,000,000 investment in Evergreen Select International Bond
Fund Class I, versus a similar investment in the J.P. Morgan Global Government
Index--excluding U.S. (JPMGGI), and the Consumer Price Index (CPI).
Past performance is no guarantee of future results. The performance of each
class may vary based on differences in loads and fees paid by the shareholders
investing in each class. The investment return and principal value will
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than original cost. The JPMGGI does not include transaction costs associated
with buying and selling securities or any management fees. The CPI is a commonly
used measure of inflation and does not represent an investment return. It is not
possible to invest directly in an index.
17
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
Select International Bond Fund
- --------------------------------------------------------------------------------
Portfolio Manager Commentary
Portfolio Management
[PHOTO OF GEORGE MCNEILL APPEARS HERE]
GEORGE MCNEILL
First International Advisors, Ltd.
Performance
Reflecting changes in its investment objectives and parameters, the former
CoreFund Global Bond Fund was renamed Evergreen Select International Bond Fund
during the past quarter. Under its new guidelines, the Fund seeks to maximize
total return by investing exclusively in foreign (non-U.S.) debt obligations,
denominated in both U.S. dollars and foreign currencies.
The Fund's first fiscal year closed on September 30, 1998, aligning it with the
fiscal years of the other Evergreen Select Fixed-Income Funds. For the three
months ended September 30, 1998 -- a period incorporating both former and
current investment parameters -- the Fund's Class I and Class IS shares produced
total returns of 3.56% and 3.61%, respectively. In comparison, the Fund's
benchmark, the J.P. Morgan International Bond Index generated a total return of
9.96% for the same time period.
Portfolio
Characteristics
---------------
Total Net Assets $46,736,061
.....................................................................
Average Credit Quality AA
.....................................................................
Average Maturity 9.2 years
.....................................................................
Average Duration 6.1 years
.....................................................................
Investment Environment and Strategy
Over the past three months, investors' concerns about stability and liquidity in
the world's financial markets refueled the "flight to quality" that has existed
throughout most of 1998. Russia's economic turmoil and renewed problems in Asia
prompted investors to make safety their paramount consideration when making
investment decisions. The prices of high quality bonds rose, pushing their
yields lower. Government bonds of the highest quality were the top-performers,
while the yield advantage provided by corporate bonds relative to their
government counterparts, increased.
The Fund eliminated nearly all obligations of U.S. issuers during the period, in
accordance with its new investment parameters. As of June 30, 1998, 15% of the
Fund had been invested in U.S. dollar-denominated obligations of U.S. issuers.
As these positions were sold, assets were reinvested in foreign government and
corporate securities that were denominated in both U.S. dollars and foreign
currencies.
The Fund maintained a strong emphasis on quality, investing 62% of its assets in
securities rated Aaa, as of September 30, 1998. The Fund's Aaa-rated government
holdings -- totaling 33% of net assets -- included the governments of Canada,
France, Germany, New South Wales, New Zealand and Sweden. These countries
represent extremely solid political and economic situations and have large,
liquid securities markets. The remaining 29% of the Fund's Aaa-rated position
was invested in corporate securities. As of September 30, 1998, the Fund also
was invested in the following: Bonds rated Aa -- 24%; A -- 6%; Baa -- 4%;
Ba -- 4%. Ba is considered to be the highest level of quality within the
high-yield bond sector.
18
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
Select International Bond Fund
- --------------------------------------------------------------------------------
Portfolio Manager Commentary
Investors' reactions to global events over the past three months often prompted
considerable price fluctuations. At times, certain bonds became "cheaper" than
we believed was warranted, creating an attractive investment opportunity. We
used these situations to selectively add higher-yielding bonds to the Fund,
adding to both the Fund's income and its potential for total return. As of
September 30, 1998, high-yield holdings included the governments of Lithuania,
Slovakia, South Korea and Thailand. The economies of South Korea and Thailand,
in our opinion, already have begun to recover. We expect to increase the fund's
high-yield positions as these markets stabilize further.
In our opinion, the Fund also benefited from its currency positions,
particularly as the U.S. dollar weakened. As of June 30, 1998, 92% of assets
were invested in a U.S. dollar hedge. We reduced those holdings to 77% by
September 30, 1998. The remaining 23% of the Fund was invested in the following
currencies, exclusive of the effects of hedging: Deutschmark -- 10%; New Zealand
Dollar -- 5%; Dutch Guilder -- 4%; Australian Dollar -- 2%; Other European
Currencies -- 2%.
Outlook
We believe the global economic slowdown that is currently underway -- combined
with continued low inflation -- will last into 1999, prompting lower bond yields
and higher bond prices. Much of the future course of the world's economies will
depend on the speed and degree to which central bankers lower interest rates.
In our opinion, many investors have factored in a greater slowdown than what we
think will take place. We look for stability to be restored to the financial
markets over the next few months, as investors realize their anticipated
scenario was worse than what actually developed.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
(based on 9/30/98 net assets)
[PIE CHART APPEARS HERE]
Foreign Bonds -- 97.3%
Corporate Notes/Bonds -- 1.4%
Other Assets and
Liabilities, net -- 1.3%
- --------------------------------------------------------------------------------
GEOGRAPHICAL ALLOCATION
- --------------------------------------------------------------------------------
(based on 9/30/98 net assets)
Germany 21.6%
................................................................................
France 13.1%
................................................................................
Netherlands 10.7%
................................................................................
United Kingdom 9.7%
................................................................................
Canada 9.0%
................................................................................
Sweden 8.2%
................................................................................
Norway 3.9%
................................................................................
Japan 3.4%
................................................................................
Austria 3.4%
................................................................................
New Zealand 2.8%
................................................................................
Australia 2.5%
................................................................................
Supernational 2.1%
................................................................................
Denmark 2.0%
................................................................................
Other countries 6.3%
................................................................................
Other assets and liabilities, net 1.3%
................................................................................
19
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
Select Limited Duration Fund
- --------------------------------------------------------------------------------
Fund at a Glance as of September 30, 1998
- --------------------------------------------------------------------------------
PORTFOLIO PROFILE
- --------------------------------------------------------------------------------
Philosophy
Evergreen Select Limited Duration Fund seeks higher yields consistent with
preservation of capital and low principal fluctuation. By emphasizing the use of
high quality corporate, mortgage and asset-backed securities maturing in less
than five years, the Fund seeks to provide investors a high level of current
income while reducing price volatility.
Process
The Fund's portfolio manager seeks to enhance performance, while reducing
principal fluctuation, by actively managing three specific characteristics
within the portfolio: maturity structure, sector allocation and security
selection. In addition, quantitative tools are utilized to analyze interest rate
movement and to determine an appropriate duration strategy.
Benchmark
Merrill Lynch 1-3 Year Treasury
Bond Index
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS
- --------------------------------------------------------------------------------
Class I Class IS
Average Annual Returns
................................................................................
1 year 7.27% 7.15%
................................................................................
3 years 6.58% 6.37%
................................................................................
Since Inception 6.55% 6.32%
................................................................................
30-day SEC Yield 5.25% 4.99%
................................................................................
- --------------------------------------------------------------------------------
LONG TERM GROWTH
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
Date CPI ML1-3YTBI Class I
---- --- --------- -------
4/30/94 $1,000,000 $1,000,000 $1,000,000
9/30/95 $1,039,400 $1,098,300 $1,093,000
9/30/96 $1,070,600 $1,160,200 $1,155,100
9/30/97 $1,093,600 $1,240,100 $1,233,700
9/30/98 $1,109,900 $1,338,400 $1,323,400
Comparison of a $1,000,000 investment in Evergreen Select Limited Duration Fund,
Class I shares, versus a similar investment in the Merrill Lynch 1-3 Year
Treasury Bond Index (ML1-3YTBI), and the Consumer Price Index (CPI).
Past performance is no guarantee of future results. The investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than original cost. Class I and IS performance information
includes the performance of the Fund's predecessor common trust fund for periods
before the Fund's registration statement became effective on November 21, 1997.
The inception date of the predecessor common trust fund was April 30, 1994.
Performance for the common trust fund has been adjusted to include the effect of
estimated mutual fund expense ratios at the time the common trust funds were
converted to mutual funds. Performance information for Class IS also includes
performance of the Fund's Class I for the period from November 24, 1997 to July
28, 1998 (commencement of Class IS operations) and does not include the
deduction of 12b-1 fees. If such fees had been included, the returns would have
been lower. Returns of Class I and IS, since their respective commencement of
class operations, were 6.21% and 2.12%, respectively. The common trust fund was
not registered under the Investment Company Act of 1940 (the "1940 Act") or
subject to certain investment restrictions that are imposed by the 1940 Act. If
the common trust fund had been registered under the 1940 Act, its performance
may have been adversely affected. Index returns do not reflect expenses, which
have been deducted from the Fund's return. It is not possible to invest directly
in an index.
20
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
Select Limited Duration Fund
- --------------------------------------------------------------------------------
Portfolio Manager Commentary
Portfolio Management
[PHOTO OF DAVID FOWLEY APPEARS HERE]
DAVID FOWLEY
[PHOTO OF SAM C. PADDISON APPEARS HERE]
SAM C. PADDISON
[PHOTO OF ANDREW C. ZIMMERMAN APPEARS HERE]
ANDREW C. ZIMMERMAN
Performance
For the 12 months ended September 30, 1998, the Evergreen Select Limited
Duration Fund Class I and IS shares returned 7.27% and 7.15%, respectively,
ahead of the average return of 6.68% for short investment grade funds tracked by
Lipper Analytical Services, an independent monitor of mutual fund performance.
The Fund's return was slightly lower than the Merrill Lynch 1-3 year Treasury
Index, which returned 7.99%.
Portfolio
Characteristics
---------------
Total Net Assets $71,424,432
...............................................................
Average Credit Quality AA
...............................................................
Average Maturity 2.0 years
...............................................................
Average Duration 1.7 years
...............................................................
Investment Environment
The last 12 months have been predominantly characterized by a strong
acceleration in the descent of interest rates along with a broad widening in
corporate spreads. These were the results of investors seeking the relative
safety of U.S. Treasury securities in a world gripped with fear of deflation.
The economic rumblings of deflation increased during the quarter as new evidence
continued to be presented that "Asian storm clouds," which Fed Chairman
Greenspan alluded to in his last Humphrey-Hawkins testimony, are indeed
spreading to other sectors of the global economy. Russia, surprising many
investors, had a de facto default on their government debt. While not the cause,
this event started a vicious cycle of a dramatic flight to quality, prompting
world equity markets, corporate bonds and even U.S. Agency debt to underperform
U.S. Treasuries. The stream of bad news continued during the quarter as the
Japanese economy showed a continuation of its recessionary (some fear
depressionary) trend.
Latin America seems to be the next area of concern as economies slow in this
area of the world, prompting fears of devaluation in the Brazilian Real. The IMF
acknowledged that the world economy is much worse off than they anticipated,
calling for a global decrease in interest rates to stem the economic weakness.
The Fed demonstrated its resolve to stave off the global crisis as it lowered
interest rates by 25 basis points.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
(based on 9/30/98 net assets)
[PIE CHART APPEARS HERE]
Corporate Notes/Bonds -- 38.9%
Treasury Notes/Bonds -- 25.2%
Asset-Backed Securities -- 14.5%
U.S. Agency Obligations -- 8.4%
Other Assets and
Liabilities net -- 6.0%
Yankee Obligations -- 3.0%
Funding Agreement -- 2.8%
Collateralized Mortgage
Obligations -- 1.2%
21
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
Select Limited Duration Fund
- --------------------------------------------------------------------------------
Portfolio Manager Commentary
Investment Strategy
Our fundamental assessment of factors affecting the direction of interest rates
was very positive over the last six months. We felt that the Fed would, in the
end, be forced to give up on its fight against inflation, as the signs of
deflation grew stronger. Moreover, the technical position of the market was very
strong for falling interest rates. As a result, we were longer in duration than
the benchmark during the quarter. This resulted in strong performance in the
Treasury portion of the portfolio, helping to offset the underperformance in the
corporate and mortgage-backed sectors.
Our sector allocation favored a modest overweighting of high quality corporates,
mortgage, and asset-backed securities. We have avoided the lower quality
spectrum of securities because their value has been less than overwhelming up
until the recent declines in these sectors of the bond market. Unfortunately,
the extreme flight to quality led to underperformance of all corporates and
mortgages relative to Treasuries. In staying with only high quality securities,
however, we were able to significantly outperform our peers, and be positioned
to take advantage of what now may be an opportunity in the lower quality
sectors.
- --------------------------------------------------------------------------------
PORTFOLIO QUALITY
- --------------------------------------------------------------------------------
(based on 9/30/98 portfolio assets)
[PIE CHART APPEARS HERE]
A -- 31.2%
U.S. Government -- 26.8%
AAA -- 19.3%
U.S. Government Agency -- 8.9%
AA -- 7.4%
BAA -- 6.4%
Outlook
It is now quite clear that the Fed is much more concerned with the lack of
liquidity stemming from the declines in world equity and bond markets than any
potential uptick in inflation due to the strong domestic economy. In fact, while
the pundits believed that the U.S. economy was insulated from international
problems, it now appears that our economy, in fact, will be affected by the
tumult internationally. The question is to what extent. Will there only be a
mild profit recession, or are we in store for a full scale economic recession?
This will be the ongoing debate over the next few months. We believe that the
fundamental factors that prompted the Fed to ease up are still in place, and
that the general direction of interest rates will be down.
Valuations on corporate securities have been much improved over the last few
months. It seems as if the widening that has occurred is due more to a lack of
liquidity than to a significant deterioration in credit quality. As such, we are
preparing to increase our exposure to the corporate sector, where we have
avoided a significant overweighting for the past several months.
Valuations in mortgage-backed securities have also dramatically improved as
fears of prepayments have swept through this market. Because we believe that
rates could be somewhat range bound over the short-term, we will be using this
as an opportunity to increase our exposure here as well.
22
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
Select Total Return Bond Fund
- --------------------------------------------------------------------------------
Fund at a Glance as of September 30, 1998
- --------------------------------------------------------------------------------
PORTFOLIO PROFILE
- --------------------------------------------------------------------------------
Philosophy
The Evergreen Select Total Return Bond Fund uses a core-plus, fixed income
approach which seeks to enhance returns by opportunistically investing up to 35%
of the portfolio in the high yield and international fixed income markets.
Process
The managers maintain a focus on sector allocation, credit analysis and security
selection as opposed to interest rate anticipation. Asset allocation among the
three portfolio components - domestic high grade, domestic high yield and
international -- is aided by quantitative models, and determined through dynamic
discussions among the three portfolio managers that revolve around several
factors, including underlying market fundamentals.
Benchmark
Lehman Brothers Aggregate Bond Index
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS
- --------------------------------------------------------------------------------
Class I Class IS
Performance Inception Date 4/20/98 8/3/98
................................................................................
Since Inception 2.83% 2.79%
................................................................................
30-day SEC Yield 6.55% 6.32%
................................................................................
- --------------------------------------------------------------------------------
GROWTH CHART
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
Date CPI LBABI Class I
---- --- ----- -------
4/30/98 $1,000,000 $1,000,000 $1,000,000
5/31/98 $1,001,800 $1,010,200 $1,008,800
6/30/98 $1,003,100 $1,018,700 $1,016,300
7/31/98 $1,004,300 $1,020,900 $1,019,100
8/31/98 $1,005,500 $1,037,500 $1,015,400
9/30/98 $1,006,800 $1,061,800 $1,030,900
Comparison of a $1,000,000 investment in Evergreen Select Total Return Bond Fund
Class I, versus a similar investment in the Lehman Brothers Aggregate Bond Index
(LBABI), and the Consumer Price Index (CPI).
Past performance is no guarantee of future results. The performance of each
class may vary based on differences in loads and fees paid by the shareholders
investing in each class. The investment return and principal value will
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than original cost. Performance information for Class IS also includes
performance of the Fund's Class I for the period from April 20, 1998 to August
3, 1998 (commencement of Class IS operations) and does not include the deduction
of 12b-1 fees. If such fees had been included returns would have been lower. The
LBABI is an unmanaged index and does not include transaction costs associated
with buying and selling securities nor any management fees. The CPI is a
commonly used measure of inflation and does not represent an investment return.
It is not possible to invest directly in an index.
23
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
Select Total Return Bond Fund
- --------------------------------------------------------------------------------
Portfolio Manager Commentary
Portfolio Management Team
[PHOTO OF ROLLIN C. WILLIAMS APPEARS HERE]
ROLLIN C. WILLIAMS, CFA
[PHOTO OF RICHARD CRYAN APPEARS HERE]
RICHARD CRYAN
[PHOTO OF ANTHONY NORRIS APPEARS HERE]
ANTHONY NORRIS
First International Advisers, Ltd.
Performance
For the fiscal period ended September 30, the Evergreen Select Total Return Bond
Fund's Class I and IS shares returned 2.83% and 2.79%, respectively. These
returns are from the Fund's inception date of April 20, 1998, and do not
represent an annual return.
Portfolio
Characteristics
---------------
Total Net Assets $136,022,056
.......................................................
Average Credit Quality A
.......................................................
Average Maturity 7.9 years
.......................................................
Average Duration 4.8 years
.......................................................
An Opportunistic Fixed Income Approach
The Total Return Bond Fund uses a core-plus, fixed income approach which seeks
to enhance returns by opportunistically investing up to 35% of the portfolio in
the high yield and international fixed income markets. The managers seek to add
value over the benchmark, the Lehman Brothers Aggregate Index, by focusing
primarily on sector allocation, credit analysis and security selection. In
addition, because the Fund's different components tend to have a low correlation
(returns don't necessarily rise and fall in sync with each other), the Fund's
risk profile is reduced and returns are smoothed over time.
A Positive Backdrop for Bonds
The past 12 months represented a particularly strong period for bond
investors, especially within the U.S. The Asian financial crisis effectively
slowed U.S. economic growth and had a calming effect on inflation. As a result,
interest rates fell and bond prices rose. In fact, the yield on the bellwether
30-year Treasury bond declined markedly, from 6.40% to 4.98% during the 12-month
period ended September 30, 1998. A worldwide flight to quality fueled a
spectacular performance of U.S. Treasuries while corporate bonds, mortgages and
high-yield issues lagged behind.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
(based on 9/30/98 net assets)
[PIE CHART APPEARS HERE]
Corporate Notes/Bonds -- 39.0%
Treasury Notes/Bonds -- 29.3%
Mortgage-Backed Securities -- 21.8%
Foreign Bonds -- 5.4%
Other assets and liabilities, net -- 3.1%
Yankee Obligations -- 1.4%
24
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
Select Total Return Bond Fund
- --------------------------------------------------------------------------------
Portfolio Manager Commentary
Sector Allocation and Investment
Strategy
During the past three months, the portfolio's weighting of international
securities increased from 0% to 4.3%; purchases in this sector focused primarily
on higher quality issues. These securities were typically from countries which
enjoy solid political and economic stability and have large, liquid securities
markets. It is also worth noting that effective October 1, 1998, the portfolio's
fixed income component is being managed by First International Advisors, Ltd., a
London-based international fixed income management firm that was acquired in
August 1998. The Board approved appointing First International Advisers, Ltd.
(formerly Analytic TSA International) as a sub-adviser for the Select Total
Return Bond Fund.
The Fund's domestic high yield weighting was reduced from roughly 29% to 17%
during the past three months. This move was undertaken to shelter the Fund from
an especially turbulent period of underperformance in the high yield market.
Conversely, following a modest weighting increase, domestic investment grade
securities now represent 79% of the portfolio. Underlying this exposure was a
nearly 30% weighting of U.S. Government and Agency issues, an area that enjoyed
especially strong performance over the past several months.
- --------------------------------------------------------------------------------
PORTFOLIO QUALITY
- --------------------------------------------------------------------------------
(based on 9/30/98 portfolio assets)
[PIE CHART APPEARS HERE]
U.S. Government -- 29.0%
U.S. Government Agency -- 21.7%
A -- 14.3%
B -- 10.9%
BAA - 9.8%
AAA - 7.5%
BA -- 5.0%
Not Rated -- 1.0%
AA -- 0.8%
Outlook
Looking to the remainder of the year, we believe the volatile, fixed income
investing has created a degree of emotional overreaction and, consequently, has
presented some attractive opportunities. Due to the spread widening near
quarter-end, we are actively looking to increase the portfolio's international
exposure to over 7%. Similarly, we believe recent problems in the high yield
market have increased the attractiveness in some areas, and expect to increase
this weighting by capitalizing on these opportunities.
25
<PAGE>
- --------------------------------------------------------------------------------
Evergreen
Select Adjustable Rate Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
<TABLE>
<CAPTION>
Year Ended September
30,
---------------------------
Seven Months Five Months
Ended Year Ended Ended
September 30, 1998 (e) February 28, 1998 February 28, 1997 (a) 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
INSTITUTIONAL SHARES
NET ASSET VALUE,
BEGINNING OF PERIOD $ 9.75 $ 9.71 $ 9.68 $ 9.65 $ 9.61 $ 9.93
------- ------- ------- ------- ------- -------
.........................................................................................................................
INCOME FROM INVESTMENT
OPERATIONS
.........................................................................................................................
Net investment income 0.35 0.64 0.28 0.64(b) 0.63 0.63
.........................................................................................................................
Net gains or losses on
securities (both
realized and
unrealized) (0.07) 0.04 0(d) 0 0.01 (0.49)
------- ------- ------- ------- ------- -------
.........................................................................................................................
Total from investment
operations 0.28 0.68 0.28 0.64 0.64 0.14
------- ------- ------- ------- ------- -------
.........................................................................................................................
LESS DIVIDENDS (FROM NET
INVESTMENT INCOME) (0.35) (0.64) (0.25) (0.61) (0.60) (0.46)
------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF
PERIOD $ 9.68 $ 9.75 $ 9.71 $ 9.68 $ 9.65 $ 9.61
------- ------- ------- ------- ------- -------
.........................................................................................................................
TOTAL RETURN 2.88% 7.15% 2.97% 6.86% 6.87% 1.43%
.........................................................................................................................
RATIOS/SUPPLEMENTAL DATA
.........................................................................................................................
NET ASSETS, END OF
PERIOD (THOUSANDS) $23,174 $25,981 $70,264 $65,974 $23,616 $25,200
.........................................................................................................................
RATIOS TO AVERAGE NET
ASSETS
Total expenses 0.33%(c) 0.30% 0.30%(c) 0.30% 0.30% 0.30%
.........................................................................................................................
Net investment income 6.12%(c) 6.63% 6.79%(c) 6.84% 6.61% 5.15%
.........................................................................................................................
PORTFOLIO TURNOVER RATE 46% 107% 44% 85% 56% 63%
.........................................................................................................................
</TABLE>
<TABLE>
<CAPTION>
May 23, 1994
Year Ended (Date of Initial
Seven Months Five Months September 30, Public Offering)
Ended Year Ended Ended ----------------- to
September 30, 1998 (e) February 28, 1998 February 28, 1997 (a) 1996 1995 September 30, 1994
<S> <C> <C> <C> <C> <C> <C>
INSTITUTIONAL SERVICE SHARES
NET ASSET VALUE,
BEGINNING OF PERIOD $ 9.76 $ 9.72 $ 9.68 $ 9.65 $ 9.61 $9.73
------ ------- ------ ------- ------ -----
....................................................................................................................................
INCOME FROM INVESTMENT
OPERATIONS
....................................................................................................................................
Net investment income 0.33 0.59 0.28 0.65(b) 0.64 0.17
....................................................................................................................................
Net gains or losses on
securities (both
realized and unrealized) (0.08) 0.06 0(d) (0.03) (0.02) (0.13)
------ ------- ------ ------- ------ -----
....................................................................................................................................
Total from investment
operations 0.25 0.65 0.28 0.62 0.62 0.04
------ ------- ------ ------- ------ -----
....................................................................................................................................
LESS DIVIDENDS (FROM NET
INVESTMENT INCOME) (0.33) (0.61) (0.24) (0.59) (0.58) (0.16)
------ ------- ------ ------- ------ -----
....................................................................................................................................
NET ASSET VALUE, END OF
PERIOD $ 9.68 $ 9.76 $ 9.72 $ 9.68 $ 9.65 $9.61
------ ------- ------ ------- ------ -----
....................................................................................................................................
TOTAL RETURN 2.63% 6.89% 2.97% 6.60% 6.60% 0.35%
....................................................................................................................................
RATIOS/SUPPLEMENTAL DATA
....................................................................................................................................
NET ASSETS, END OF PERIOD
(THOUSANDS) $9,645 $10,320 $3,564 $14,361 $2,871 $ 1
....................................................................................................................................
RATIOS TO AVERAGE NET
ASSETS
Total expenses 0.57%(c) 0.55% 0.55%(c) 0.55% 0.55% 0.43%(c)
....................................................................................................................................
Net investment income 5.82%(c) 6.15% 6.39%(c) 6.64% 6.70% 5.03%(c)
....................................................................................................................................
PORTFOLIO TURNOVER RATE 46% 107% 44% 85% 56% 63%
....................................................................................................................................
</TABLE>
(a) The Fund changed its fiscal year end from September 30 to the last day of
February, effective February 28, 1997
(b) Per share calculations based on weighted average shares outstanding.
(c) Annualized.
(d) Amount represents less than $0.01 per share.
(e) The Fund changed its fiscal year end from the last day of February to Sep-
tember 30, effective September 30 1998.
See Combined Notes to Financial Statements.
26
<PAGE>
- --------------------------------------------------------------------------------
Evergreen
Select Core Bond Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
<TABLE>
<CAPTION>
December 19, 1997
(Commencement of
Class Operations) to
September 30, 1998
<S> <C>
INSTITUTIONAL SHARES
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.68
--------
.............................................................................
INCOME FROM INVESTMENT OPERATIONS
.............................................................................
Net investment income 0.51
.............................................................................
Net gains on securities (both realized and unrealized) 0.34
--------
.............................................................................
Total from investment operations 0.85
--------
.............................................................................
LESS DIVIDENDS (FROM NET INVESTMENT INCOME) (0.51)
--------
.............................................................................
NET ASSET VALUE, END OF PERIOD $ 11.02
--------
.............................................................................
TOTAL RETURN 8.12%
.............................................................................
RATIOS/SUPPLEMENTAL DATA
.............................................................................
NET ASSETS, END OF PERIOD (THOUSANDS) $125,070
.............................................................................
RATIOS TO AVERAGE NET ASSETS
Expenses 0.42%(a)
.............................................................................
Expenses, excluding indirectly paid expenses 0.42%(a)
.............................................................................
Expenses, excluding waivers and reimbursements 0.54%(a)
.............................................................................
Net investment income 5.99%(a)
.............................................................................
PORTFOLIO TURNOVER RATE 77%
.............................................................................
<CAPTION>
March 9, 1998
(Commencement of
Class Operations) to
September 30, 1998
<S> <C>
INSTITUTIONAL SERVICE SHARES
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.66
--------
.............................................................................
INCOME FROM INVESTMENT OPERATIONS
.............................................................................
Net investment income 0.35
.............................................................................
Net gains on securities (both realized and unrealized) 0.36
--------
.............................................................................
Total from investment operations 0.71
--------
.............................................................................
LESS DIVIDENDS (FROM NET INVESTMENT INCOME) (0.35)
--------
.............................................................................
NET ASSET VALUE, END OF PERIOD $ 11.02
--------
.............................................................................
TOTAL RETURN 6.74%
.............................................................................
RATIOS/SUPPLEMENTAL DATA
.............................................................................
NET ASSETS, END OF PERIOD (THOUSANDS) $ 286
.............................................................................
RATIOS TO AVERAGE NET ASSETS
Expenses 0.68%(a)
.............................................................................
Expenses, excluding indirectly paid expenses 0.68%(a)
.............................................................................
Expenses, excluding waivers and reimbursements 0.79%(a)
.............................................................................
Net investment income 5.76%(a)
.............................................................................
PORTFOLIO TURNOVER RATE 77%
.............................................................................
</TABLE>
(a) Annualized.
See Combined Notes to Financial Statements.
27
<PAGE>
- --------------------------------------------------------------------------------
Evergreen
Select Core Bond Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
<TABLE>
<CAPTION>
November 24, 1997
(Commencement of
Class Operations) to
September 30, 1998
<S> <C>
INSTITUTIONAL CHARITABLE SHARES
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.68
--------
.............................................................................
INCOME FROM INVESTMENT OPERATIONS
.............................................................................
Net investment income 0.55
.............................................................................
Net gains on securities (both realized and unrealized) 0.34
--------
.............................................................................
Total from investment operations 0.89
--------
.............................................................................
LESS DIVIDENDS (FROM NET INVESTMENT INCOME) (0.55)
--------
.............................................................................
NET ASSET VALUE, END OF PERIOD $ 11.02
--------
.............................................................................
TOTAL RETURN 8.55%
.............................................................................
RATIOS/SUPPLEMENTAL DATA
.............................................................................
NET ASSETS, END OF PERIOD (THOUSANDS) $471,421
.............................................................................
RATIOS TO AVERAGE NET ASSETS
Expenses 0.42%(a)
.............................................................................
Expenses, excluding indirectly paid expenses 0.42%(a)
.............................................................................
Expenses, excluding waivers and reimbursements 0.53%(a)
.............................................................................
Net investment income 5.98%(a)
.............................................................................
PORTFOLIO TURNOVER RATE 77%
.............................................................................
</TABLE>
(a) Annualized.
See Combined Notes to Financial Statements.
28
<PAGE>
- --------------------------------------------------------------------------------
Evergreen
Select Fixed Income Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
<TABLE>
<CAPTION>
November 24, 1997
(Commencement of
Class Operations) to
September 30, 1998
<S> <C>
INSTITUTIONAL SHARES
NET ASSET VALUE, BEGINNING OF PERIOD $ 5.96
--------
.............................................................................
INCOME FROM INVESTMENT OPERATIONS
.............................................................................
Net investment income 0.31
.............................................................................
Net gains on securities (both realized and unrealized) 0.16
--------
.............................................................................
Total from investment operations 0.47
--------
.............................................................................
LESS DIVIDENDS (FROM NET INVESTMENT INCOME) (0.31)
--------
.............................................................................
NET ASSET VALUE, END OF PERIOD $ 6.12
--------
.............................................................................
TOTAL RETURN 8.06%
.............................................................................
RATIOS/SUPPLEMENTAL DATA
.............................................................................
NET ASSETS, END OF PERIOD (THOUSANDS) $668,907
.............................................................................
RATIOS TO AVERAGE NET ASSETS
Expenses 0.52%(a)
.............................................................................
Expenses, excluding indirectly paid expenses 0.52%(a)
.............................................................................
Expenses, excluding waivers and reimbursements 0.63%(a)
.............................................................................
Net investment income 5.99%(a)
.............................................................................
PORTFOLIO TURNOVER RATE 46%
.............................................................................
<CAPTION>
March 9, 1998
(Commencement of
Class Operations) to
September 30, 1998
<S> <C>
INSTITUTIONAL SERVICE SHARES
NET ASSET VALUE, BEGINNING OF PERIOD $ 5.97
--------
.............................................................................
INCOME FROM INVESTMENT OPERATIONS
.............................................................................
Net investment income 0.20
.............................................................................
Net gains on securities (both realized and unrealized) 0.15
--------
.............................................................................
Total from investment operations 0.35
--------
.............................................................................
LESS DIVIDENDS (FROM NET INVESTMENT INCOME) (0.20)
--------
.............................................................................
NET ASSET VALUE, END OF PERIOD $ 6.12
--------
.............................................................................
TOTAL RETURN 5.94%
.............................................................................
RATIOS/SUPPLEMENTAL DATA
.............................................................................
NET ASSETS, END OF PERIOD (THOUSANDS) $ 9,808
.............................................................................
RATIOS TO AVERAGE NET ASSETS
Expenses 0.77%(a)
.............................................................................
Expenses, excluding indirectly paid expenses 0.77%(a)
.............................................................................
Expenses, excluding waivers and reimbursements 0.89%(a)
.............................................................................
Net investment income 5.65%(a)
.............................................................................
PORTFOLIO TURNOVER RATE 46%
.............................................................................
</TABLE>
(a) Annualized.
See Combined Notes to Financial Statements.
29
<PAGE>
- --------------------------------------------------------------------------------
Evergreen
Select Income Plus Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
<TABLE>
<CAPTION>
November 24, 1997
(Commencement of
Class Operations) to
September 30, 1998
<S> <C>
INSTITUTIONAL SHARES
NET ASSET VALUE, BEGINNING OF PERIOD $ 5.72
----------
.............................................................................
INCOME FROM INVESTMENT OPERATIONS
.............................................................................
Net investment income 0.30
.............................................................................
Net gains on securities (both realized and unrealized) 0.20
----------
.............................................................................
Total from investment operations 0.50
----------
.............................................................................
LESS DIVIDENDS (FROM NET INVESTMENT INCOME) (0.30)
----------
.............................................................................
NET ASSET VALUE, END OF PERIOD $ 5.92
----------
.............................................................................
TOTAL RETURN 8.99%
.............................................................................
RATIOS/SUPPLEMENTAL DATA
.............................................................................
NET ASSETS, END OF PERIOD (THOUSANDS) $1,367,240
.............................................................................
RATIOS TO AVERAGE NET ASSETS
Expenses 0.51%(a)
.............................................................................
Expenses, excluding indirectly paid expenses 0.51%(a)
.............................................................................
Expenses, excluding waivers and reimbursements 0.61%(a)
.............................................................................
Net investment income 6.09%(a)
.............................................................................
PORTFOLIO TURNOVER RATE 37%
.............................................................................
<CAPTION>
March 2, 1998
(Commencement of
Class Operations) to
September 30, 1998
<S> <C>
INSTITUTIONAL SERVICE SHARES
NET ASSET VALUE, BEGINNING OF PERIOD $ 5.71
----------
.............................................................................
INCOME FROM INVESTMENT OPERATIONS
.............................................................................
Net investment income 0.19
.............................................................................
Net gains on securities (both realized and unrealized) 0.21
----------
.............................................................................
Total from investment operations 0.40
----------
.............................................................................
LESS DIVIDENDS (FROM NET INVESTMENT INCOME) (0.19)
----------
.............................................................................
NET ASSET VALUE, END OF PERIOD $ 5.92
----------
.............................................................................
TOTAL RETURN 7.21%
.............................................................................
RATIOS/SUPPLEMENTAL DATA
.............................................................................
NET ASSETS, END OF PERIOD (THOUSANDS) $ 7,528
.............................................................................
RATIOS TO AVERAGE NET ASSETS
Expenses 0.75%(a)
.............................................................................
Expenses, excluding indirectly paid expenses 0.75%(a)
.............................................................................
Expenses, excluding waivers and reimbursements 0.84%(a)
.............................................................................
Net investment income 5.80%(a)
.............................................................................
PORTFOLIO TURNOVER RATE 37%
.............................................................................
</TABLE>
(a) Annualized.
See Combined Notes to Financial Statements.
30
<PAGE>
- --------------------------------------------------------------------------------
Evergreen
Select Intermediate Tax Exempt Bond Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
<TABLE>
<CAPTION>
November 24, 1997
(Commencement of
Class Operations) to
September 30, 1998
<S> <C>
INSTITUTIONAL SHARES
NET ASSET VALUE, BEGINNING OF PERIOD $ 64.84
--------
.............................................................................
INCOME FROM INVESTMENT OPERATIONS
.............................................................................
Net investment income 2.57
.............................................................................
Net gains on securities (both realized and unrealized) 2.27
--------
.............................................................................
Total from investment operations 4.84
--------
.............................................................................
LESS DIVIDENDS (FROM NET INVESTMENT INCOME) (2.57)
--------
.............................................................................
NET ASSET VALUE, END OF PERIOD $ 67.11
--------
.............................................................................
TOTAL RETURN 7.61%
.............................................................................
RATIOS/SUPPLEMENTAL DATA
.............................................................................
NET ASSETS, END OF PERIOD (THOUSANDS) $746,874
.............................................................................
RATIOS TO AVERAGE NET ASSETS
Expenses 0.62%(a)
.............................................................................
Expenses, excluding indirectly paid expenses 0.62%(a)
.............................................................................
Expenses, excluding waivers and reimbursements 0.72%(a)
.............................................................................
Net investment income 4.59%(a)
.............................................................................
PORTFOLIO TURNOVER RATE 47%
.............................................................................
<CAPTION>
March 2, 1998
(Commencement of
Class Operations) to
September 30, 1998
<S> <C>
INSTITUTIONAL SERVICE SHARES
NET ASSET VALUE, BEGINNING OF PERIOD $ 65.91
--------
.............................................................................
INCOME FROM INVESTMENT OPERATIONS
.............................................................................
Net investment income 1.66
.............................................................................
Net gains on securities (both realized and unrealized) 1.20
--------
.............................................................................
Total from investment operations 2.86
--------
.............................................................................
LESS DIVIDENDS (FROM NET INVESTMENT INCOME) (1.66)
--------
.............................................................................
NET ASSET VALUE, END OF PERIOD $ 67.11
--------
.............................................................................
TOTAL RETURN 4.41%
.............................................................................
RATIOS/SUPPLEMENTAL DATA
.............................................................................
NET ASSETS, END OF PERIOD (THOUSANDS) $ 4,736
.............................................................................
RATIOS TO AVERAGE NET ASSETS
Expenses 0.89%(a)
.............................................................................
Expenses, excluding indirectly paid expenses 0.89%(a)
.............................................................................
Expenses, excluding waivers and reimbursements 0.99%(a)
.............................................................................
Net investment income 4.35%(a)
.............................................................................
PORTFOLIO TURNOVER RATE 47%
.............................................................................
</TABLE>
(a) Annualized.
See Combined Notes to Financial Statements.
31
<PAGE>
- --------------------------------------------------------------------------------
Evergreen
Select International Bond Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
<TABLE>
<CAPTION>
December 15, 1993
Three Months Year Ended June 30, (Commencement of
Ended ---------------------------------- Operations) to
September 30, 1998** 1998* 1997* 1996* 1995* June 30, 1994*
<S> <C> <C> <C> <C> <C> <C>
INSTITUTIONAL SHARES
NET ASSET VALUE, BEGINNING
OF PERIOD $ 9.32 $ 9.54 $ 9.70 $ 9.62 $ 9.06 $ 10.00
------- ------- ------- ------- ------- -------
.........................................................................................................
INCOME FROM INVESTMENT
OPERATIONS
.........................................................................................................
Net investment income 0.11(b) 0.47 0.49 0.47 0.62 0.25
.........................................................................................................
Net gains or losses on
securities (both realized
and unrealized) 0.22 (0.06) 0.09 0.30 0.24 (1.15)
------- ------- ------- ------- ------- -------
.........................................................................................................
Total from investment
operations 0.33 0.41 0.58 0.77 0.86 (0.90)
------- ------- ------- ------- ------- -------
LESS DIVIDENDS (FROM NET
INVESTMENT INCOME) (0.13) (0.63) (0.74) (0.69) (0.30) (0.04)
------- ------- ------- ------- ------- -------
.........................................................................................................
NET ASSET VALUE, END OF
PERIOD $ 9.52 $ 9.32 $ 9.54 $ 9.70 $ 9.62 $ 9.06
------- ------- ------- ------- ------- -------
.........................................................................................................
TOTAL RETURN 3.56% 4.42% 6.18% 8.00% 9.70% (9.00)%
.........................................................................................................
RATIOS/SUPPLEMENTAL DATA
.........................................................................................................
NET ASSETS, END OF PERIOD
(THOUSANDS) $46,607 $36,722 $34,590 $32,998 $26,898 $24,957
.........................................................................................................
RATIOS TO AVERAGE NET ASSETS
Expenses 0.76%(a) 0.81% 0.85% 0.71% 0.64% 0.73%(a)
.........................................................................................................
Expenses, excluding waivers
and reimbursements 1.22%(a) 1.00% 1.03% 0.95% 1.03% 1.12%(a)
.........................................................................................................
Net investment income 4.89%(a) 4.90% 5.14% 5.81% 6.84% 5.04%(a)
.........................................................................................................
PORTFOLIO TURNOVER RATE 3% 46% 90% 67% 133% 161%
.........................................................................................................
<CAPTION>
December 15, 1993
Three Months Year Ended June 30, (Commencement of
Ended ---------------------------------- Operations) to
September 30, 1998** 1998* 1997* 1996* 1995* June 30, 1994*
<S> <C> <C> <C> <C> <C> <C>
INSTITUTIONAL SERVICE SHARES
NET ASSET VALUE, BEGINNING
OF PERIOD $ 9.30 $ 9.52 $ 9.68 $ 9.61 $ 9.04 $ 10.00
------- ------- ------- ------- ------- -------
.........................................................................................................
Net gains or losses on
securities (both realized
and unrealized) 0.23 (0.01) 0.14 0.12 0.24 (1.11)
------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT
OPERATIONS
.........................................................................................................
Total from investment
operations 0.34 0.39 0.56 0.73 0.85 (0.92)
------- ------- ------- ------- ------- -------
Net investment income 0.11(b) 0.40 0.42 0.61 0.61 0.19
.........................................................................................................
LESS DIVIDENDS (FROM NET
INVESTMENT INCOME) (0.13) (0.61) (0.72) (0.66) (0.28) (0.04)
------- ------- ------- ------- ------- -------
.........................................................................................................
NET ASSET VALUE, END OF
PERIOD $ 9.51 $ 9.30 $ 9.52 $ 9.68 $ 9.61 $ 9.04
------- ------- ------- ------- ------- -------
.........................................................................................................
TOTAL RETURN 3.61% 4.16% 5.92% 7.74% 9.57% (9.22)%
.........................................................................................................
RATIOS/SUPPLEMENTAL DATA
.........................................................................................................
NET ASSETS, END OF PERIOD
(THOUSANDS) $ 129 $ 198 $ 182 $ 152 $ 170 $ 167
.........................................................................................................
RATIOS TO AVERAGE NET ASSETS
Expenses 1.00%(a) 1.06% 1.10% 0.96% 0.89% 0.98%(a)
.........................................................................................................
Expenses, excluding waivers
and reimbursements 1.46%(a) 1.25% 1.28% 1.20% 1.28% 1.37%(a)
.........................................................................................................
Net investment income 4.65%(a) 4.65% 4.89% 5.56% 6.59% 4.79%(a)
.........................................................................................................
PORTFOLIO TURNOVER RATE 3% 46% 90% 67% 133% 161%
.........................................................................................................
</TABLE>
(a) Annualized.
(b) Calculation based on average shares outstanding.
* On August 28, 1998, CoreFund Global Bond Fund exchanged substantially all of
its net assets to Evergreen Select International Bond Fund. As CoreFund
Global Bond Fund is the accounting survivor, its basis of accounting for as-
sets and liabilities and its operating results for the periods prior to Au-
gust 28, 1998 have been carried forward in these financial highlights.
** The Fund changed its fiscal year end from June 30 to September 30.
See Combined Notes to Financial Statements.
32
<PAGE>
- --------------------------------------------------------------------------------
Evergreen
Select Limited Duration Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
<TABLE>
<CAPTION>
November 24, 1997
(Commencement of
Class Operations) to
September 30, 1998
<S> <C>
INSTITUTIONAL SHARES
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.42
-------
.............................................................................
INCOME FROM INVESTMENT OPERATIONS
.............................................................................
Net investment income 0.53(b)
.............................................................................
Net gains on securities (both realized and unrealized) 0.10
-------
.............................................................................
Total from investment operations 0.63
-------
.............................................................................
LESS DIVIDENDS (FROM NET INVESTMENT INCOME) (0.53)
-------
.............................................................................
NET ASSET VALUE, END OF PERIOD $ 10.52
-------
.............................................................................
TOTAL RETURN 6.21%
.............................................................................
RATIOS/SUPPLEMENTAL DATA
.............................................................................
NET ASSETS, END OF PERIOD (THOUSANDS) $70,810
.............................................................................
RATIOS TO AVERAGE NET ASSETS
Expenses 0.30%(a)
.............................................................................
Expenses, excluding indirectly paid expenses 0.30%(a)
.............................................................................
Expenses, excluding waivers and reimbursements 0.60%(a)
.............................................................................
Net investment income 5.97%(a)
.............................................................................
PORTFOLIO TURNOVER RATE 78%
.............................................................................
<CAPTION>
July 28, 1998
(Commencement of
Class Operations) to
September 30, 1998
<S> <C>
INSTITUTIONAL SERVICE SHARES
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.41
-------
.............................................................................
INCOME FROM INVESTMENT OPERATIONS
.............................................................................
Net investment income 0.11(b)
.............................................................................
Net gains on securities (both realized and unrealized) 0.11
-------
.............................................................................
Total from investment operations 0.22
-------
.............................................................................
LESS DIVIDENDS (FROM NET INVESTMENT INCOME) (0.11)
-------
.............................................................................
NET ASSET VALUE, END OF PERIOD $ 10.52
-------
.............................................................................
TOTAL RETURN 2.12%
.............................................................................
RATIOS/SUPPLEMENTAL DATA
.............................................................................
NET ASSETS, END OF PERIOD (THOUSANDS) $ 614
.............................................................................
RATIOS TO AVERAGE NET ASSETS
Expenses 0.55%(a)
.............................................................................
Expenses, excluding indirectly paid expenses 0.55%(a)
.............................................................................
Expenses, excluding waivers and reimbursements 0.94%(a)
.............................................................................
Net investment income 5.84%(a)
.............................................................................
PORTFOLIO TURNOVER RATE 78%
.............................................................................
</TABLE>
(a) Annualized.
(b) Calculation based on average shares outstanding.
See Combined Notes to Financial Statements.
33
<PAGE>
- --------------------------------------------------------------------------------
Evergreen
Select Total Return Bond Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout each year)
<TABLE>
<CAPTION>
April 20, 1998
(Commencement of
Class Operations) to
September 30, 1998
<S> <C>
INSTITUTIONAL SHARES
NET ASSET VALUE, BEGINNING OF PERIOD $ 100.00
--------
.............................................................................
INCOME FROM INVESTMENT OPERATIONS
.............................................................................
Net investment income 3.08
.............................................................................
Net gains on securities (both realized and unrealized) (0.29)
--------
.............................................................................
Total from investment operations 2.79
--------
.............................................................................
LESS DIVIDENDS (FROM NET INVESTMENT INCOME) (3.08)
--------
.............................................................................
NET ASSET VALUE, END OF PERIOD $ 99.71
--------
.............................................................................
TOTAL RETURN 2.83%
.............................................................................
RATIOS/SUPPLEMENTAL DATA
.............................................................................
NET ASSETS, END OF PERIOD (THOUSANDS) $135,998
.............................................................................
RATIOS TO AVERAGE NET ASSETS
.............................................................................
Expenses 0.41%(a)
.............................................................................
Expenses, excluding indirectly paid expenses 0.41%(a)
.............................................................................
Expenses, excluding waivers and reimbursements 0.67%(a)
.............................................................................
Net investment income 6.88%(a)
.............................................................................
PORTFOLIO TURNOVER RATE 80%
.............................................................................
<CAPTION>
August 3, 1998
(Commencement of
Class Operations) to
September 30, 1998
<S> <C>
INSTITUTIONAL SERVICE SHARES
NET ASSET VALUE, BEGINNING OF PERIOD $ 99.67
--------
.............................................................................
INCOME FROM INVESTMENT OPERATIONS
.............................................................................
Net investment income 1.05
.............................................................................
Net gains on securities (both realized and unrealized) 0.04
--------
.............................................................................
Total from investment operations 1.09
--------
.............................................................................
LESS DIVIDENDS (FROM NET INVESTMENT INCOME) (1.05)
--------
.............................................................................
NET ASSET VALUE, END OF PERIOD $ 99.71
--------
.............................................................................
TOTAL RETURN 1.10%
.............................................................................
RATIOS/SUPPLEMENTAL DATA
.............................................................................
NET ASSETS, END OF PERIOD (THOUSANDS) $ 24
.............................................................................
RATIOS TO AVERAGE NET ASSETS
Expenses 0.66%(a)
.............................................................................
Expenses, excluding indirectly paid expenses 0.66%(a)
.............................................................................
Expenses, excluding waivers and reimbursements 0.92%(a)
.............................................................................
Net investment income 6.51%(a)
.............................................................................
PORTFOLIO TURNOVER RATE 80%
.............................................................................
</TABLE>
(a) Annualized.
See Combined Notes to Financial Statements.
34
<PAGE>
- --------------------------------------------------------------------------------
Evergreen
Select Adjustable Rate Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
September 30, 1998
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
ADJUSTABLE RATE MORTGAGE SECURITIES - 77.6%
FEDERAL HOME LOAN MORTGAGE CORP. ("FHLMC ") - 34.4%
$ 784,420 FHLMC Pool #605343,
7.607%, 3/1/19....................................... $ 822,661
1,129,260 FHLMC Pool #605386,
7.545%, 9/1/17....................................... 1,171,427
570,824 FHLMC Pool #606541,
7.411%, 3/1/21....................................... 588,308
606,085 FHLMC Pool #606679,
7.745%, 10/1/21...................................... 625,686
363,031 FHLMC Pool #607352,
7.569%, 4/1/22....................................... 377,327
2,257,299 FHLMC Pool #608034,
7.084%, 6/1/16....................................... 2,312,603
81,703 FHLMC Pool #785114,
7.466%, 7/1/19....................................... 84,447
1,675,168 FHLMC Pool #845063,
7.674%, 11/1/21...................................... 1,740,081
1,631,955 FHLMC Pool #845070,
7.593%, 1/1/22....................................... 1,699,273
861,760 FHLMC Pool #845082,
7.414%, 3/1/22....................................... 888,690
777,020 FHLMC Pool #846163,
7.374%, 7/1/30....................................... 798,995
161,301 FHLMC Pool #865220,
7.991%, 4/1/20....................................... 165,006
-----------
11,274,504
-----------
FEDERAL NATIONAL MORTGAGE ASSOC. ("FNMA") - 43.2%
263,072 FNMA Pool #070033,
7.210%, 10/1/17...................................... 269,238
1,034,110 FNMA Pool #070119,
7.440%, 11/1/17...................................... 1,074,182
292,437 FNMA Pool #070179,
7.151%, 7/1/27....................................... 299,472
805,770 FNMA Pool #090678,
7.477%, 9/1/18....................................... 837,501
349,873 FNMA Pool #092086,
7.416%, 10/1/16...................................... 359,603
677,188 FNMA Pool #094564,
7.270%, 1/1/16....................................... 690,312
729,753 FNMA Pool #095405,
7.517%, 12/1/19...................................... 759,399
217,977 FNMA Pool #102905,
7.360%, 7/1/20....................................... 225,369
686,735 FNMA Pool #124015,
7.226%, 11/1/18...................................... 703,478
538,450 FNMA Pool #124204,
7.464%, 1/1/22....................................... 552,417
2,298,699 FNMA Pool #124289,
7.393%, 9/1/21....................................... 2,372,695
1,163,001 FNMA Pool #124945,
7.503%, 1/1/31....................................... 1,195,344
488,739 FNMA Pool #142963,
7.450%, 1/1/22....................................... 496,760
196,486 FNMA Pool #303247,
7.276%, 12/1/22...................................... 200,754
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
ADJUSTABLE RATE MORTGAGE SECURITIES - CONTINUED
FEDERAL NATIONAL MORTGAGE ASSOC.
("FNMA") - CONTINUED
$ 1,331,981 FNMA Pool #313663,
7.291%, 5/1/22.................................... $ 1,369,023
687,030 FNMA Pool #313994,
7.475%, 12/1/23................................... 697,027
997,084 FNMA Pool #331526,
6.119%, 5/1/36.................................... 1,010,794
108,491 FNMA Pool #391290,
7.444%, 2/1/17.................................... 109,423
953,392 FNMA Pool #423207,
5.826%, 4/1/38.................................... 956,377
-----------
14,179,168
-----------
Total Adjustable Rate Mortgage Securities (cost
$25,609,219)...................................... 25,453,672
-----------
FIXED RATE MORTGAGE SECURITIES - 12.0%
FHLMC - 3.3%
849,702 FHLMC STRIPS CMO Series 20, Class F, IO
6.465%, 7/1/29.................................... 851,030
185,113 FHLMC Pool #B00475
10.500%, 4/1/04................................... 192,770
29,032 FHLMC Pool #277831
7.250%, 11/1/08................................... 29,373
-----------
1,073,173
-----------
FNMA - 4.7%
562,127 FNMA Pool #004534,
10.750%, 10/1/12.................................. 614,883
388,976 FNMA Pool #058442
11.000%, 1/1/18................................... 428,274
377,719 FNMA Pool #070472
10.500%, 3/1/01................................... 389,077
118,188 FNMA Pool #100051
9.500%, 4/15/05................................... 124,097
-----------
1,556,331
-----------
GOVERNMENT NATIONAL MORTGAGE ASSOC. ("GNMA") - 4.0%
1,285,067 GNMA Pool #268164,
10.250%, 11/15/29................................. 1,326,035
-----------
Total Fixed Rate Mortgage Securities
(cost $3,984,357)................................. 3,955,539
-----------
GOVERNMENT AGENCY NOTES - 0.8%
250,000 Federal Home Loan Bank,
5.500%, 08/13/01 (cost $249,297).................. 255,560
-----------
U.S. TREASURY NOTES - 6.3%
155,000 U.S. Treasury Notes,
6.250%, 8/31/02................................... 165,342
1,400,000 U.S. Treasury Notes,
5.750%, 11/30/02.................................. 1,472,842
400,000 U.S. Treasury Notes,
5.500%, 5/31/03................................... 419,624
-----------
Total U.S. Treasury Notes
(cost $1,982,192)................................. 2,057,808
-----------
</TABLE>
See Combined Notes to Financial Statements.
35
<PAGE>
- --------------------------------------------------------------------------------
Evergreen
Select Adjustable Rate Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (continued)
September 30, 1998
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
REPURCHASE AGREEMENT - 2.7%
$ 896,000 Keystone Joint Repurchase Agreement (Investments in
repurchase agreements, in a joint trading account,
purchased 9/30/98)
5.600%, 10/1/98 (cost $896,000) maturity value,
$896,138 (a)....................................... $ 896,000
-----------
<CAPTION>
<S> <C> <C>
TOTAL INVESTMENTS -
(COST $32,721,065)............................ 99.4% 32,618,579
OTHER ASSETS AND
LIABILITIES - NET............................. 0.6 199,973
----- -----------
NET ASSETS -................................... 100.0% $32,818,552
===== ===========
</TABLE>
(a) The repurchase agreements are fully collateralized by U.S. government
and/or agency obligations based on market prices at September 30,
1998.
Note: The maturity date included in each security description is the
stated maturity date. The effective maturity of each security may
be shorter due to current and projected prepayment rates. Changes
in interest rates may accelerate or slow prepayment of mortgage
obligations.
SUMMARY OF ABBREVIATIONS:
CMO Collateralized Mortgage Obligation
STRIPS Separate Trading of Registered Interest and Principal of Securities
IO Interest Only
See Combined Notes to Financial Statements.
36
<PAGE>
- --------------------------------------------------------------------------------
Evergreen
Select Core Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
September 30, 1998
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
ASSET-BACKED SECURITIES - 1.6%
$ 514,822 Advanta Mortgage Loan Trust,
6.85%, 5/25/12....................................... $ 513,810
4,832,483 Delta Funding Home Equity
Loan Trust,
6.60%, 1/25/12....................................... 4,835,938
2,000,000 Jet Equipment Trust,
9.41%, 6/15/10(a).................................... 2,486,116
2,015,000 UCFC Loan Trust,
7.15%, 12/15/13...................................... 2,078,854
------------
Total Asset-Backed Securities (cost $9,803,444)...... 9,914,718
------------
CORPORATE BONDS - 19.6%
BANKS - 4.7%
1,000,000 Harris Bancorp,
9.375%, 6/1/01....................................... 1,100,984
4,000,000 NBD Bank N.A.,
Subordinated Note,
8.25%, 11/1/24....................................... 4,809,984
5,000,000 NCNB Texas National Bank
Dallas, Texas,
9.50%, 6/1/04........................................ 5,999,150
8,000,000 State Street Bank Corp.,
7.35%, 6/15/26....................................... 9,165,800
2,455,000 SunTrust Banks Inc.,
6.00%, 2/15/26....................................... 2,510,407
4,000,000 Westpac Banking,
9.125%, 8/15/01...................................... 4,385,976
------------
27,972,301
------------
FINANCE - 5.8%
6,500,000 Associates Corp. N.A.,
5.96%, 5/15/37....................................... 6,579,371
7,930,000 Chrysler Financial Corp. MTN,
6.16%, 7/28/99....................................... 7,969,230
1,300,000 Ford Motor Credit Co.,
8.00%, 1/15/99....................................... 1,308,168
7,500,000 General Electric Capital Corp.,
6.29%, 12/15/07...................................... 7,750,425
3,150,000 General Motors Acceptance Corp.,
7.75%, 1/15/99....................................... 3,168,421
1,500,000 KFW International Finance,
8.85%, 6/15/99....................................... 1,538,433
1,700,000 Lincoln National Corp.,
7.00%, 3/15/18....................................... 1,760,593
1,600,000 Merrill Lynch & Co. Inc.,
8.40%, 11/1/19....................................... 1,828,202
2,250,000 WMC Finance USA Ltd.,
6.50%, 11/15/03...................................... 2,368,323
------------
34,271,166
------------
INDUSTRIAL SPECIALTY PRODUCTS & SERVICES - 1.6%
5,338,000 Dow Chemical Co.,
8.55%, 10/15/09...................................... 6,467,873
3,000,000 Owens Corning,
7.50%, 5/1/05........................................ 3,182,685
------------
9,650,558
------------
INSURANCE - 0.7%
3,800,000 Allstate Corp.,
6.75%, 5/15/18....................................... 3,864,163
------------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
CORPORATE BONDS - CONTINUED
MANUFACTURING - DISTRIBUTING - 1.1%
$ 2,100,000 Deere & Co.,
8.95%, 6/15/19..................................... $ 2,643,936
3,500,000 Ford Motor Co.,
9.00%, 9/15/01..................................... 3,879,449
------------
6,523,385
------------
OIL/ENERGY - 3.0%
14,160,000 Phillips Petroleum Co.,
7.125%, 3/15/28.................................... 14,917,702
3,000,000 Tenaska Washington
Partners LP
6.79%, 9/23/11 (a)................................. 3,142,500
------------
18,060,202
------------
PAPER & PACKAGING - 2.1%
5,520,000 Caliber Systems Inc.,
7.80%, 8/1/06...................................... 6,001,863
6,000,000 Westvaco Corp.,
7.75%, 2/15/23..................................... 6,754,260
------------
12,756,123
------------
UTILITIES - 0.6%
1,100,000 Alltel Corp.,
6.50%, 11/1/13..................................... 1,213,425
2,000,000 Carolina Power & Light Co.,
8.625%, 9/15/21.................................... 2,598,606
------------
3,812,031
------------
Total Corporate Bonds (cost $110,346,023).......... 116,909,929
------------
COLLATERALIZED MORTGAGE OBLIGATIONS - 0.5%
2,801,488 Collateralized Mortgage
Obligation Trust 22,
7.95%, 5/1/17...................................... 2,832,598
47,937 Drexel Burnham Lambert CMO,
8.50%, 7/1/14...................................... 48,024
------------
Total Collateralized Mortgage Obligations
(cost $2,863,618)................................. 2,880,622
------------
MORTGAGE-BACKED SECURITIES - 39.3%
Federal Home Loan Mortgage Corp.:
7,873,374 6.44%, 9/1/27...................................... 8,121,952
17,757,713 6.50%, 4/1/28...................................... 18,094,044
17,399,678 7.00%, 4/1/28...................................... 17,876,081
1,446,882 7.50%, 5/1/09...................................... 1,492,097
1,863,315 7.667%, 8/1/26..................................... 1,973,381
761,028 8.00%, 10/1/25..................................... 786,812
Federal Home Loan Mortgage PC Guaranteed:
2,900,000 5.85%, 1/25/19..................................... 2,931,174
2,000,000 6.50%, 4/15/18..................................... 2,031,067
Federal National Mortgage Assoc.:
58,609,941 6.00%, 11/1/00 - 5/15/08........................... 62,469,093
5,038,078 6.16%, 8/1/37...................................... 5,155,117
5,174,664 6.46%, 9/1/27...................................... 5,271,860
</TABLE>
37
<PAGE>
- --------------------------------------------------------------------------------
Evergreen
Select Core Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (continued)
September 30, 1998
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
MORTGAGE-BACKED SECURITIES - CONTINUED
Federal National Mortgage Assoc. - continued
$11,109,438 6.50%, 10/1/00 - 10/1/27............................ $ 11,328,160
1,318,253 7.272%, 12/1/25..................................... 1,353,485
Federal National Mortgage Assoc. REMIC:
6,098,250 5.50%, 2/25/15...................................... 6,088,767
4,600,000 7.75%, 9/25/22...................................... 4,945,013
Government National Mortgage Assoc.:
2,844,497 6.00%, 3/15/11 - 4/15/11............................ 2,889,583
20,957,769 6.50%, 10/1/98 - 7/15/28............................ 21,464,133
40,816,250 7.00%, 10/1/98 - 7/15/28............................ 42,109,141
4,628,466 7.50%, 8/15/12 - 3/15/26............................ 4,801,138
11,390,685 8.00%, 6/15/24 - 8/15/27............................ 11,916,743
872,645 9.00%, 4/15/20 - 8/15/21............................ 931,277
355,552 9.50%, 2/15/21...................................... 384,219
------------
Total Mortgage-Backed Securities
(cost $230,488,901)................................ 234,414,337
------------
U.S. AGENCY OBLIGATIONS - 3.8%
Farm Credit Systems
Financial Assistance Corp.:
8,300,000 8.80%, 6/10/05...................................... 10,136,018
6,000,000 9.375%, 7/21/03..................................... 7,169,820
5,000,000 Federal Farm Credit Bank,
8.65%, 10/1/99...................................... 5,186,295
------------
Total U.S. Agency Obligations
(cost $19,254,627)................................. 22,492,133
------------
U.S. TREASURY OBLIGATIONS - 13.3%
U.S. Treasury Bonds:
10,185,000 6.875%, 8/15/25..................................... 12,654,873
1,400,000 8.75%, 5/15/17...................................... 2,000,688
3,950,000 8.875%, 8/15/17..................................... 5,713,924
U.S. Treasury Notes:
5,093,800 3.625%, 7/15/02..................................... 5,117,679
35,000,000 5.875%, 1/31/99 - 11/15/05.......................... 36,896,900
15,000,000 6.50%, 10/15/06..................................... 17,043,765
------------
Total U.S. Treasury Obligations
(cost $77,298,446)................................. 79,427,829
------------
YANKEE OBLIGATIONS - 13.2%
Bayerische Landesbank Girozen:
5,000,000 6.20%, 2/9/06....................................... 5,168,725
2,500,000 6.375%, 8/31/00..................................... 2,556,282
</TABLE>
(a) Securities that may be resold to "qualified institutional buyers"
under Rule 144A or securities offered pursuant to Section 4(2) of the
Securities Act of 1933, as amended. These securities have been
determined to be liquid under guidelines established by the Board of
Trustees.
(b) Repurchase agreement is collateralized by $12,348,000 U.S. Treasury
Notes, 5.50% due 3/31/03 and $20,180,000 U.S. Treasury Notes, 5.375%
due 6/30/03 with an aggregate value, including accrued interest of
$34,102,106.
SUMMARY OF ABBREVIATIONS:
MTN Medium Term Note
CMO Collateralized Mortgage Obligation
REMIC Real Estate Mortgaged Investment Conduit
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
YANKEE OBLIGATIONS - CONTINUED
$ 7,000,000 BHP Finance USA Ltd.,
8.50%, 12/1/12...................................... $ 8,667,876
2,000,000 Export Development Corp.,
8.125%, 8/10/99..................................... 2,046,768
13,330,000 Hydro-Quebec,
8.00%, 2/1/13....................................... 15,777,921
3,500,000 Japan Finance Corp.
Municipal Enterprises,
6.85%, 4/15/06...................................... 3,865,060
Korea Development Bank:
5,000,000 6.625%, 11/21/03.................................... 3,849,550
6,350,000 7.125%, 9/17/01..................................... 5,427,174
1,500,000 New Brunswick Province Canada,
7.625%, 2/15/13..................................... 1,788,285
8,020,000 Petro Canada Ltd.,
8.60%, 1/15/10...................................... 10,370,101
5,300,000 Philips Electers N V,
7.125%, 5/15/25..................................... 5,965,320
3,000,000 Placer Dome Inc.,
8.50%, 12/31/45..................................... 3,281,718
Svenska Handelsbanken:
3,500,000 8.125%, 8/15/07..................................... 4,073,100
5,000,000 8.35%, 7/15/04...................................... 5,720,445
------------
Total Yankee Obligations
(cost $71,425,023)................................. 78,558,325
------------
REPURCHASE AGREEMENT - 5.6%
33,433,304 Dresdner Bank AG,
5.00%, dated 9/30/98, due 10/1/98 cost $33,433,304
maturity value, $33,437,947 (b)..................... 33,433,304
------------
Shares
MUTUAL FUND SHARES - 1.9%
11,716,395 Valiant General Fund,
(cost $11,716,395) ................................ 11,716,395
------------
</TABLE>
<TABLE>
<CAPTION>
<C> <S> <C> <C>
TOTAL INVESTMENTS -
(COST $566,629,781)................................. 98.8% 589,747,592
OTHER ASSETS AND
LIABILITIES - NET................................... 1.2 7,028,838
----- ------------
NET ASSETS -......................................... 100.0% $596,776,430
===== ============
</TABLE>
See Combined Notes to Financial Statements.
38
<PAGE>
- --------------------------------------------------------------------------------
Evergreen
Select Fixed Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
September 30, 1998
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
ASSET-BACKED SECURITIES - 12.6%
Amresco Residential Securities Mortgage Loan Trust:
$ 6,203,713 Series 98-2, Class A1,
6.50%, 11/25/15..................................... $ 6,230,792
8,000,000 Series 98-2, Class A2,
6.245%, 4/25/22..................................... 8,093,960
Case Equipment Loan Trust:
500,000 Series 95-B, Class CTFS,
6.45%, 9/15/02...................................... 502,442
1,857,000 Series 97-B, Class A4,
6.41%, 9/15/04...................................... 1,912,181
200,000 Series 98-A, Class A4,
5.83%, 2/15/05...................................... 203,419
Contimortgage Home Equity Loan Trust:
4,999,962 Series 96-1, Class A5,
6.15%, 3/15/11...................................... 5,079,786
3,185,000 Series 97-2, Class A9,
7.09%, 4/15/28...................................... 3,365,323
1,640,000 Series 97-4, Class A3,
6.26%, 7/15/12...................................... 1,650,717
5,495,999 Empire Funding Home Loan Owner Trust,
Series 98-1, Class A4,
6.64%, 12/25/12..................................... 5,665,220
917,447 EQCC Home Equity Loan Trust,
Series 96-1, Class A2,
5.82%, 9/15/09...................................... 921,405
First Plus Home Loan Trust:
660,000 Series 97-2, Class A5,
6.82%, 4/10/23...................................... 677,665
2,455,000 Series 97-3, Class A5,
6.86%, 10/10/13..................................... 2,531,576
731,562 First Security Auto Grantor Trust,
Series 95-A, Class A,
6.25%, 1/15/01...................................... 733,102
346,112 Federal National Mortgage Assoc.,
Series 95-W5, Class A1,
6.23%, 12/25/25..................................... 345,400
615,811 GCC Home Equity Trust,
Series 90-1, Class A,
10.00%, 7/15/05..................................... 617,495
1,147,662 Heller Equipment Asset Receivables Trust,
Series 97-1, Class A2,
6.39%, 5/25/05...................................... 1,160,476
1,311,000 IMC Home Equity Loan Trust,
Series 97-2, Class A3,
6.94%, 11/20/11..................................... 1,326,502
2,329,038 Life Financial Home Loan Owner Trust,
Series 97-3, Class A2,
6.79%, 10/25/11..................................... 2,368,713
MBNA Master Credit Card Trust:
2,910,000 Series 96-J, Class A,
5.74%, 2/15/06...................................... 2,909,753
1,570,000 Series 98-A, Class A,
5.70%, 8/15/05...................................... 1,568,249
1,700,000 Metlife Capital Equipment Loan Trust,
Series 97-A, Class A,
6.85%, 5/20/08...................................... 1,799,961
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
ASSET-BACKED SECURITIES - CONTINUED
$ 532,018 Olympic Automobile Receivables Trust,
Series 95-D, Class B,
6.10%, 4/15/02...................................... $ 535,921
Premier Auto Trust:
1,500,000 Series 95-3, Class CTFS,
6.25%, 8/6/01....................................... 1,511,573
2,265,000 Series 97-3, Class A5,
6.34%, 1/6/02....................................... 2,320,979
2,705,000 Series 98-2, Class A4,
5.82%, 12/6/02...................................... 2,763,631
3,468,184 Prudential Securities Secured Financing Corp.,
Series 94-4, Class A1,
8.12%, 2/15/25...................................... 3,699,252
2,840,000 Sears Credit Account Master Trust,
Series 95-3, Class A,
7.00%, 10/15/04..................................... 2,931,040
2,500,000 Southern Pacific Secured Assets Corp.,
Series 98-1, Class A6,
7.08%, 3/25/28...................................... 2,667,946
The Money Store Home Equity Trust:
993,370 Series 92-B, Class A,
6.90%, 7/15/07...................................... 1,003,914
2,367,000 Series 96-D, Class A9,
7.00%, 4/15/28...................................... 2,489,388
1,500,000 Series 97-D, Class AF7,
6.485%, 12/15/28.................................... 1,549,067
3,697,000 Toyota Auto Lease Trust,
Series 97-A, Class A2,
6.35%, 4/26/04...................................... 3,849,372
819,744 Union Acceptance Corp.,
Series 96-A, Class A,
5.40%, 4/7/03....................................... 821,068
1,408,491 Western Financial Grantor Trust,
Series 95-3, Class A2,
6.05%, 11/1/00...................................... 1,414,949
WFS Financial Owner Trust:
5,000,000 Series 97-D, Class A4,
6.25%, 3/20/03...................................... 5,114,500
3,200,000 Series 98-A, Class A4,
5.95%, 2/20/03...................................... 3,291,984
------------
Total Asset-Backed Securities
(cost $83,887,042)................................. 85,628,721
------------
CORPORATE BONDS - 23.8%
AUTOMOTIVE EQUIPMENT & MANUFACTURING - 0.8%
5,000,000 Johnson Controls, Inc.,
Sr. Notes,
6.30%, 2/1/08....................................... 5,283,135
------------
BANKS - 2.3%
85,000 Banc One Corp.,
Sr. Notes (Subord.),
7.60%, 5/1/07....................................... 95,311
682,000 Banca Commerziale Italiana,
8.25%, 7/15/07...................................... 790,487
BB & T Corp.,
Sr. Notes (Subord.):
6,850,000 6.375%, 6/30/05..................................... 7,112,650
1,000,000 7.05%, 5/23/03...................................... 1,067,547
</TABLE>
39
<PAGE>
- --------------------------------------------------------------------------------
Evergreen
Select Fixed Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (continued)
September 30, 1998
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
CORPORATE BONDS - CONTINUED
BANKS - CONTINUED
$ 1,545,000 Bear Stearns Co.,
Sr. Notes,
6.65%, 12/1/04.................................... $ 1,603,280
2,120,000 NationsBank Corp.,
Sr. Notes,
5.75%, 3/15/01.................................... 2,139,814
1,970,000 Security Pacific Corp.,
Sr. Notes (Subord.),
11.50%, 11/15/00.................................. 2,207,338
899,000 Societe Generale New York,
Sr. Notes (Subord.),
7.40%, 6/1/06..................................... 966,555
------------
15,982,982
------------
BUILDING PRODUCTS - 0.2%
1,545,000 CSR America, Inc.,
Sr. Notes,
6.875%, 7/21/05................................... 1,690,456
------------
CABLE/OTHER VIDEO DISTRIBUTION - 0.5%
1,288,000 Tele-Communications, Inc.,
Sr. Notes,
7.25%, 8/1/05..................................... 1,415,604
1,690,000 Time Warner, Inc.,
Sr. Notes,
8.11%, 8/15/06.................................... 1,954,767
------------
3,370,371
------------
DIVERSIFIED COMPANIES - 0.2%
1,355,000 Philip Morris Co., Inc.,
6.15%, 3/15/00.................................... 1,373,211
------------
FINANCE & INSURANCE - 15.3%
7,000,000 Associated P&C Holdings, Inc.,
Sr. Notes,
6.75%, 7/15/03 (a)................................ 7,176,540
Associates Corp. of North America:
Sr. Notes,
5,000,000 6.00%, 6/15/00.................................... 5,061,670
1,890,000 6.75%, 7/15/01.................................... 1,966,991
2,000,000 Chase Manhattan Corp.,
Sr. Notes (Subord.),
8.00%, 5/15/04.................................... 2,025,180
3,720,000 CIT Group Holdings, Inc.,
Sr. Notes,
6.375%, 8/1/02.................................... 3,853,760
2,000,000 Commercial Credit Co.,
Sr. Notes,
6.75%, 5/15/00.................................... 2,046,152
1,600,000 Duke Capital Corp.,
Sr. Notes, Series A,
6.25%, 7/15/05.................................... 1,652,637
First Chicago Corp.:
3,000,000 MTN, Sr. Notes (Subord.),
9.20%, 12/17/01................................... 3,342,285
7,725,000 Sr. Notes (Subord.),
9.00%, 6/15/99.................................... 7,907,094
8,750,000 First Security Corp.,
MTN,
6.08%, 2/9/01..................................... 8,869,945
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
CORPORATE BONDS - CONTINUED
FINANCE & INSURANCE - CONTINUED
$ 3,567,000 General Motors Acceptance Corp.,
Sr. Notes,
5.875%, 1/22/03..................................... $ 3,638,319
2,250,000 Horace Mann Educators Corp.,
Sr. Notes,
6.625%, 1/15/06..................................... 2,384,447
3,620,000 Household Finance Corp. MTN,
Sr. Notes,
6.00%, 5/8/00....................................... 3,646,433
Lehman Brothers Holdings:
5,000,000 Sr. Notes,
6.625%, 11/15/00.................................... 4,987,625
75,000 Sr. Notes, MTN,
6.71%, 10/12/99..................................... 74,926
Lehman Brothers, Inc.:
3,500,000 MTN, Sr. Notes (Subord.),
6.84%, 10/7/99...................................... 3,500,889
2,640,000 Sr. Notes (Subord.),
7.25%, 4/15/03...................................... 2,695,730
1,695,000 Loews Corp.,
Sr. Notes,
6.75%, 12/15/06..................................... 1,825,740
1,289,000 Macsaver Financial Services, Inc.,
Sr. Notes,
7.60%, 8/1/07....................................... 889,971
2,350,000 Merrill Lynch & Co.,
6.00%, 2/12/03...................................... 2,403,079
Metropolitan Life Insurance Co.:
Sr. Notes,
5,000,000 6.30%, 11/1/03 (a).................................. 5,071,015
5,000,000 7.00%, 11/1/05 (a).................................. 5,379,735
3,210,000 Morgan Stanley Dean Witter, MTN,
Sr. Notes,
5.89%, 3/20/00...................................... 3,232,425
1,020,000 NCNB Corp.,
Sr. Notes (Subord.),
9.125%, 10/15/01.................................... 1,131,568
1,665,000 Paine Webber Group, Inc.,
Sr. Notes,
6.50%, 11/1/05...................................... 1,701,603
2,405,000 Salomon Smith Barney, Inc.,
Sr. Notes,
6.25%, 1/15/05...................................... 2,454,846
3,000,000 SFFED Corp.
Sr. Debs.,
11.20%, 9/1/04 (a).................................. 3,603,750
5,000,000 Swiss Bank Corp. New York,
Sr. Notes (Subord.),
6.75%, 7/15/05...................................... 5,336,705
5,000,000 Traveler's Group, Inc.,
Sr. Notes,
6.125%, 6/15/00..................................... 5,076,530
1,000,000 U.S. Life Corp.,
Sr. Notes,
6.375%, 6/15/00..................................... 1,018,984
------------
103,956,574
------------
</TABLE>
40
<PAGE>
- --------------------------------------------------------------------------------
Evergreen
Select Fixed Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (continued)
September 30, 1998
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
CORPORATE BONDS - CONTINUED
FOOD & BEVERAGE PRODUCTS - 0.3%
$ 1,800,000 Nabisco, Inc.,
Sr. Notes,
6.00%, 2/15/01.................................... $ 1,819,530
------------
HEALTHCARE PRODUCTS & SERVICES - 1.0%
7,175,000 Columbia/HCA Healthcare Corp.,
MTN,
6.875%, 7/15/01................................... 7,060,760
------------
INDUSTRIAL SPECIALTY PRODUCTS & SERVICES - 0.2%
1,000,000 Harcourt General, Inc.,
Sr. Notes,
8.25%, 6/1/02..................................... 1,067,462
------------
OFFICE EQUIPMENT & SUPPLIES - 0.6%
4,143,631 Xerox Rental Equipment Trust,
6.20%, 12/26/05 (a)............................... 4,196,980
------------
OIL/ENERGY - 0.9%
423,000 Commonwealth Edison Co.,
MTN,
9.05%, 10/15/99................................... 436,902
3,675,000 Pacific Gas,
Sr. Notes,
7.10%, 6/1/05..................................... 4,036,480
1,410,000 USX Corp.,
Sr. Debs.,
9.625%, 8/15/03................................... 1,652,381
------------
6,125,763
------------
REAL ESTATE - 0.2%
1,250,000 EOP Operating LP,
Sr. Notes,
6.376%, 2/15/12................................... 1,277,703
------------
RETAILING & WHOLESALE - 0.3%
1,585,000 Gap Inc.,
Sr. Notes,
6.90%, 9/15/07.................................... 1,749,074
------------
TELECOMMUNICATION SERVICES & EQUIPMENT - 0.3%
2,000,000 MCI Worldcom Inc.,
Sr. Notes,
6.125%, 8/15/01................................... 2,054,534
------------
TRANSPORTATION - 0.5%
2,968,597 Continental Airlines, Inc.,
Series 971B,
7.461%, 4/1/13.................................... 3,289,725
------------
UTILITIES - 0.2%
1,200,000 Pennsylvania Power & Light Co.,
7.75%, 5/1/02..................................... 1,296,463
------------
Total Corporate Bonds
(cost $156,269,582)............................... 161,594,723
------------
COLLATERALIZED MORTGAGE OBLIGATIONS - 12.5%
5,350,000 Carco Auto Loan Master Trust,
Series 97-1, Class A,
6.689%, 8/15/04................................... 5,525,595
1,089,284 Citicorp Mortgage Securities, Inc.,
7.25%, 2/25/27.................................... 1,095,302
5,000,000 CS First Boston Mortgage Securities Corp.,
Series 1998-C1, Class A1B,
6.48%, 5/17/08.................................... 5,240,875
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
COLLATERALIZED MORTGAGE OBLIGATIONS - CONTINUED
CWMBS, Inc.:
$ 775,916 Series 97-A1, Class A1,
7.00%, 3/25/27...................................... $ 782,864
1,720,000 Series 97-A3, Class A10,
7.25%, 5/25/27...................................... 1,736,134
2,250,000 DLJ Mortgage Acceptance Corp.,
Series 93-MF7, Class A2,
7.95%, 6/18/03...................................... 2,480,321
Federal Home Loan Mortgage Corp.:
4,160,314 Series 1342, Class F,
7.40%, 10/15/05..................................... 4,189,332
1,675,000 Series 1519, Class F,
6.75%, 3/15/07...................................... 1,729,920
8,048,668 Series 1991, Class PA,
6.00%, 3/15/14...................................... 8,096,759
5,183,532 Series B-02, Class 1,
5.75%, 10/15/16..................................... 5,200,767
Federal Home Loan Mortgage Corp. PC Gtd.:
4,640,444 Series 12, Class A,
9.25%, 11/15/19..................................... 4,889,644
1,151,584 Series 1608, Class FN,
6.325%, 11/15/23.................................... 1,151,228
1,051,577 Series 1935, Class FL,
6.325%, 2/15/27..................................... 1,053,566
Federal National Mortgage Assoc.:
756,496 Series 91-61, Class G,
7.00%, 9/25/20...................................... 759,715
690,634 Series 97-16, Class F,
6.488%, 11/18/18.................................... 691,770
5,750,000 Series 98-W8, Class A4,
6.02%, 9/25/28...................................... 5,789,675
GE Capital Mortgage Services, Inc.:
4,667,980 Series 94-10, Class A14,
6.50%, 3/25/24...................................... 4,654,233
1,019,706 Series 97-3, Class A4,
7.50%, 4/25/27...................................... 1,023,393
5,000,000 Iroquois Trust,
Series 97-3, Class A,
6.68%, 11/10/03 (a) ................................ 5,168,875
3,000,000 Nationslink Funding Corp.,
Series 98-1, Class D,
6.803%, 1/20/08..................................... 3,101,730
Potomac Gurnee Finance Corp.:
2,438,861 Series 1, Class A,
6.887%, 12/21/26 (a) ............................... 2,658,321
2,000,000 Series 1, Class B,
7.003%, 12/21/26 (a) ............................... 2,183,390
4,788,537 Prudential Home Mortgage Securities,
Series 93-39, Class A8,
6.50%, 10/25/08..................................... 4,847,317
3,488,871 Saxon Mortgage Securities Corp.,
Series 93-8A, Class 1A2,
7.375%, 9/25/23..................................... 3,529,264
7,000,000 Structured Asset Securities Corp.,
Series 96-CFL, Class C,
6.525%, 2/25/28..................................... 7,163,485
------------
Total Collateralized Mortgage Obligations
(cost $82,980,870).................................. 84,743,475
------------
</TABLE>
41
<PAGE>
- --------------------------------------------------------------------------------
Evergreen
Select Fixed Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (continued)
September 30, 1998
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
MORTGAGE-BACKED SECURITIES - 2.3%
Federal Home Loan Mortgage Corp.:
$ 1,383,640 Pool #G40281,
6.50%, 7/1/04...................................... $ 1,406,747
2,744,657 Pool #G50352,
7.00%, 1/1/00...................................... 2,765,270
345,891 Pool #L73490,
6.00%, 12/1/00..................................... 348,128
154,138 Pool #L90152,
8.00%, 2/1/00...................................... 159,562
113,239 Pool #L90164,
8.00%, 4/1/00...................................... 117,224
Federal National Mortgage Assoc.:
6,227,030 Pool #100131,
11.00%, 2/15/25.................................... 7,213,625
1,119,512 Pool #303460,
6.50%, 8/1/10...................................... 1,144,679
822,317 Pool #327118,
6.50%, 10/1/10..................................... 840,062
100,680 Pool #61688,
6.13%, 6/1/17...................................... 101,735
Government National Mortgage Assoc.:
607,761 Pool #247052,
9.20%, 4/15/18..................................... 661,438
280,320 Pool #255658,
9.20%, 8/15/18..................................... 305,078
580,753 Pool #256980,
9.20%, 9/15/18..................................... 632,045
------------
Total Mortgage-Backed Securities (cost
$15,336,920)...................................... 15,695,593
------------
U.S. TREASURY NOTES - 27.2%
U.S. Treasury Notes:
4,000,000 5.375%, 2/15/01.................................... 4,091,252
18,487,000 5.625%, 10/31/99-5/15/08........................... 19,319,477
8,930,000 5.75%, 4/30/03..................................... 9,454,646
3,493,000 5.875%, 7/31/99.................................... 3,527,934
3,700,000 6.00%, 10/15/99.................................... 3,753,191
34,470,000 6.125%, 8/15/07.................................... 38,606,434
5,180,000 6.25%, 2/15/03-2/15/07............................. 5,813,871
21,500,000 6.50%, 10/15/06.................................... 24,429,397
21,700,000 6.625%, 4/30/02-5/15/07............................ 24,993,522
7,220,000 7.00%, 7/15/06..................................... 8,415,820
5,695,000 7.25%, 5/15/04-8/15/04............................. 6,524,448
4,150,000 7.75%, 12/31/99.................................... 4,308,223
12,000,000 7.875%, 11/15/04................................... 14,231,256
3,480,000 8.00%, 5/15/01..................................... 3,786,679
13,355,000 8.875%, 2/15/99.................................... 13,563,685
------------
Total U.S. Treasury Notes (cost $171,060,215)...... 184,819,835
------------
U.S. GOVERNMENT & AGENCY OBLIGATIONS - 11.7%
47,877 Federal Farm Credit Bank, Consolidated Systems,
6.38%, 2/25/02..................................... 47,944
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
U.S. GOVERNMENT & AGENCY OBLIGATIONS - CONTINUED
Federal Housing Administration:
$ 7,218,327 Insured,
7.43%, 9/1/23....................................... $ 7,398,786
10,008,741 Putable Project Loans,
7.43%, 1/1/24....................................... 11,139,078
Federal Home Loan Bank:
6,500,000 Series 1T03,
6.025%, 5/12/03..................................... 6,526,000
5,000,000 Series CK08,
5.905%, 3/27/08..................................... 5,344,085
3,720,000 Series GJ08,
5.89%, 6/30/08...................................... 3,975,315
1,810,000 Series H400,
6.10%, 10/12/00..................................... 1,834,067
5,000,000 Series IQ08,
6.07%, 8/28/08...................................... 5,190,790
4,000,000 Series KP07,
6.54%, 12/12/07..................................... 4,176,400
3,700,000 Series NR05,
6.23%, 5/18/05...................................... 3,729,970
5,000,000 Series YU03,
6.043%, 4/28/03..................................... 5,024,000
10,000,000 Sr. Notes, Series AT04,
7.70%, 9/20/04...................................... 11,514,180
2,000,000 Sr. Notes, Series TT00,
5.37%, 11/3/00...................................... 2,000,558
Federal Home Loan Mortgage Corp.:
2,250,000 Sr. Debs.,
6.51%, 1/8/07....................................... 2,481,964
3,000,000 7.55%, 4/26/06...................................... 3,036,321
1,825,000 Sr. Notes,
6.97%, 6/16/05...................................... 1,893,289
Federal National Mortgage Assoc.:
550,000 Sr. Notes,
8.70%, 6/10/99...................................... 564,207
2,000,000 Sr. Notes, MTN,
6.17%, 12/30/03..................................... 2,006,868
1,000,000 6.44%, 6/21/05...................................... 1,087,538
------------
Total U.S. Government & Agency Obligations
(cost $74,471,177)................................. 78,971,360
------------
YANKEE OBLIGATIONS - 6.6%
1,625,000 Amoco Argentina Oil Co., MTN,
6.75%, 2/1/07....................................... 1,796,715
1,510,000 Barrick Gold Corp.,
7.50%, 5/1/07....................................... 1,678,037
1,420,000 BCH Cayman Islands Ltd.,
7.70%, 7/15/06...................................... 1,536,031
1,500,000 FBG Finance Ltd,
Sr. Notes,
6.75%, 11/15/05 (a) ................................ 1,535,490
Hydro Quebec, MTN:
10,000,000 7.45%, 12/11/98..................................... 10,037,650
1,000,000 7.52%, 7/17/03...................................... 1,097,904
5,000,000 7.25%, 5/15/06...................................... 3,816,585
</TABLE>
42
<PAGE>
- --------------------------------------------------------------------------------
Evergreen
Select Fixed Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (continued)
September 30, 1998
See Combined Notes to Financial Statements.
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
YANKEE OBLIGATIONS - CONTINUED
Korea Development Bank:
$ 5,000,000 7.375%, 9/17/04..................................... $ 3,827,735
14,865,000 National Bank of Canada,
Sr. Notes (Subord.), Series B,
8.125%, 8/15/04..................................... 17,019,667
2,500,000 Ras Laffan Liquefied Natural Gas,
7.628%, 9/15/06 (a) ................................ 2,040,153
------------
Total Yankee Obligations (cost $45,175,588)......... 44,385,967
------------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
REPURCHASE AGREEMENT - 3.0%
$20,509,163 Dresdner Bank AG,
5.00%, dated 9/30/98, due 10/1/98 cost $20,509,163
maturity value, $20,512,011 (b)...................... $ 20,509,163
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS -
(COST $649,690,557)......................... 99.7% 676,348,837
OTHER ASSETS AND
LIABILITIES - NET........................... 0.3 2,366,491
----- ------------
NET ASSETS - ................................ 100.0% $678,715,328
===== ============
</TABLE>
(a) Securities that may be resold to "qualified institutional buyers"
under Rule 144A or securities offered pursuant to Section 4(2) of the
Securities Act of 1933, as amended. These securities have been
determined to be liquid under guidelines established by the Board of
Trustees.
(b) Repurchase agreement is collateralized by $19,160,000 U.S. Treasury
Notes, 5.625% due 12/31/99 and $1,210,000 U.S. Treasury Notes, 5.375%
due 6/30/03 with an aggregate value, including accrued interest, of
$20,924,074.
SUMMARY OF ABBREVIATIONS:
MTN Medium Term Note
43
<PAGE>
- --------------------------------------------------------------------------------
Evergreen
Select Income Plus Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
September 30, 1998
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
ASSET-BACKED SECURITIES - 3.2%
$1,855,000 BankBoston Recreational Vehicle Asset-Backed
Trust, Series 1997-1, Class A8,
6.54%, 5/15/09.................................. $ 1,916,636
1,815,000 Case Equipment Loan Trust, Series 1997-B, Class
A4, 6.41%, 9/15/04.............................. 1,868,933
2,078,011 Corestates Home Equity Trust,
Series 1993-2, Class A,
5.10%, 3/15/09.................................. 2,069,024
4,996,363 Empire Funding Home Loan Owner Trust,
Series 1998-1, Class A4,
6.64%, 12/25/12................................. 5,150,200
First Plus Home Loan Trust:
2,200,000 6.82%, 4/10/23.................................. 2,258,883
2,755,000 6.86%, 10/10/13................................. 2,840,933
6,862,653 Harley-Davidson Eaglemark
Motorcycle Trust,
Series 1997-3, Class A1,
5.98%, 12/15/01................................. 6,920,676
4,500,000 Harley-Davidson Eaglemark
Ownership Trust,
Series 1996-3, Class A2,
6.35%, 10/15/02 (a)............................. 4,519,688
1,214,963 Heller Equipment Asset
Receivables Trust,
Series 1997-1, Class A2,
6.39%, 5/25/05.................................. 1,228,528
4,000,000 HUBCO Inc.,
Capital Trust II, Special Purpose,
7.65%, 6/15/28 (a).............................. 4,140,760
MBNA Master Credit Card Trust:
1,480,000 5.74%, 2/15/06.................................. 1,479,874
1,490,000 5.70%, 8/15/05.................................. 1,488,339
1,800,000 Metlife Capital Equipment Loan Trust,
Series 1997-A, Class A,
6.85%, 5/20/08.................................. 1,905,841
1,735,000 The Money Store Home Equity Trust,
Series 1997-D, Class AF7,
6.485%, 12/15/28................................ 1,791,754
2,135,000 The Money Store Residential Trust,
Series 1997-I, Class A3,
6.68%, 8/15/12.................................. 2,214,671
2,156,409 Xerox Rental Equipment Trust,
Series 1996-A,
6.20%, 12/26/05 (a)............................. 2,184,173
-----------
Total Asset-Backed
Securities
(cost $43,054,162).............................. 43,978,913
-----------
CORPORATE BONDS - 29.7%
BANKS - 4.3%
973,000 Banca Commerziale Italiana,
8.25%, 7/15/07................................... 1,127,777
1,540,000 BankBoston, N.A.,
7.00%, 9/15/07................................... 1,656,635
4,906,000 Bankers Trust New York Corp.,
7.25%, 10/15/11.................................. 5,062,766
5,000,000 Banq Paribas, New York,
6.95%, 7/22/13................................... 4,886,100
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
CORPORATE BONDS - CONTINUED
BANKS - CONTINUED
$7,500,000 Comerica, Inc.,
7.125%, 12/1/13................................... $ 7,648,523
5,000,000 Fleet Financial Group Inc.,
7.625%, 12/1/99................................... 5,122,320
1,150,000 FNBC Inc.,
Pass-Thru Certificates,
Series 1993-A,
8.08%, 1/5/18..................................... 1,367,933
144,000 Irving Bank Corp.,
8.50%, 6/1/02..................................... 144,148
1,685,000 KeyCorp,
7.50%, 6/15/06.................................... 1,874,667
7,000,000 Mellon Capital I,
Series A,
7.72%, 12/1/26.................................... 7,313,740
1,600,000 Midlantic Corp.,
9.25%, 9/1/99..................................... 1,651,107
5,000,000 NCNB Texas National Bank of Dallas,
9.50%, 6/1/04..................................... 5,999,150
11,000,000 PNC Inc., Institutional Capital Trust B, Special
Purpose,
8.315%, 5/15/27 (a)............................... 12,302,631
3,000,000 SFFED Corp.,
11.20%, 9/1/04 (a)................................ 3,603,750
-----------
59,761,247
-----------
ELECTRICAL EQUIPMENT & SERVICES - 0.4%
5,000,000 Texas Instruments Inc.,
6.125%, 2/1/06.................................... 5,274,240
-----------
ENVIRONMENTAL SERVICES - 0.3%
4,000,000 United States Filter Corp.,
6.50%, 5/15/03.................................... 4,031,240
-----------
FINANCE & INSURANCE - 8.7%
5,000,000 Associates Corp., N.A.,
8.55%, 7/15/09.................................... 6,076,305
10,500,000 Continental Corp.,
8.375%, 8/15/12................................... 12,424,513
3,000,000 ERP Operating Limited Partnership,
6.63%, 4/13/15.................................... 3,039,444
1,490,000 Fleet Financial Group Inc.,
6.875%, 1/15/28................................... 1,505,246
1,322,061 GE Capital Mortgage Services Inc.,
7.50%, 4/25/27.................................... 1,326,841
5,000,000 Geico Corp.,
7.50%, 4/15/05.................................... 5,602,945
26,500,000 General Electric Capital Corp.,
6.29%, 12/15/01................................... 27,384,835
1,000,000 General Motors Acceptance Corp.,
9.625%, 5/15/00................................... 1,065,609
2,250,000 Goldman Sachs Group, L.P.,
6.375%, 6/15/00 (a)............................... 2,272,880
Lehman Brothers Holdings Inc.:
5,000,000 6.00%, 2/26/01.................................... 4,914,660
1,250,000 7.38%, 5/15/04.................................... 1,268,718
10,000,000 Liberty Mutual Insurance Co.,
8.20%, 5/4/07 (a)................................. 11,603,630
1,655,000 Mellon Capital II,
Series B,
7.995%, 1/15/27................................... 1,764,561
</TABLE>
44
<PAGE>
- --------------------------------------------------------------------------------
Evergreen
Select Income Plus Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (continued)
September 30, 1998
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
CORPORATE BONDS - CONTINUED
FINANCE & INSURANCE - CONTINUED
$ 3,000,000 Merrill Lynch & Co., Inc.,
8.40%, 11/1/19.................................... $ 3,427,878
3,125,000 Morgan Stanley Dean Witter Inc.,
5.89%, 3/20/00.................................... 3,146,831
5,000,000 Paine Webber Group Inc.,
6.50%, 11/1/05.................................... 5,109,920
10,000,000 Travelers Capital II,
7.75%, 12/1/36.................................... 10,548,120
5,000,000 United States West Capital Funding Inc.,
6.375%, 7/15/08................................... 5,261,605
750,000 Wesco Financial Corp.,
8.875%, 11/1/99................................... 776,977
10,000,000 Western Investment Real Estate Trust,
7.30%, 9/15/10.................................... 10,579,700
------------
119,101,218
------------
FOOD & BEVERAGE PRODUCTS - 0.5%
7,000,000 Coca Cola Enterprises Inc.,
7.875%, 2/1/02.................................... 7,602,063
------------
GAMING - 0.3%
4,000,000 Circus Circus Enterprises Inc.,
7.625%, 7/15/13................................... 3,733,280
------------
INDUSTRIAL SPECIALTY PRODUCTS & SERVICES - 4.3%
3,000,000 Baxter International, Inc.,
9.25%, 12/15/99................................... 3,138,888
1,132,000 Belo (A.H.) Corp.,
6.875%, 6/1/02.................................... 1,184,303
4,500,000 Freeport McMoran Resource Partners,
7.00%, 2/15/08.................................... 4,347,081
10,000,000 Jet Equipment Trust,
Series A10,
9.41%, 6/15/10 (a)................................ 12,430,580
Loews Corp.:
1,810,000 6.75%, 12/15/06................................... 1,949,611
10,000,000 7.00%, 10/15/23................................... 10,273,520
5,000,000 Owens-Corning Inc.,
7.50%, 5/1/05..................................... 5,304,475
1,390,000 Philip Morris Companies Inc.,
6.15%, 3/15/00.................................... 1,408,682
1,385,000 Tele-Communications, Inc.,
7.25%, 8/1/05..................................... 1,522,213
Time Warner, Inc.:
4,000,000 6.88%, 6/15/18.................................... 4,132,760
1,915,000 8.11%, 8/15/06.................................... 2,215,017
9,277,592 Topaz Ltd.,
Series 1997-1,
6.92%, 3/10/07 (a)................................ 9,954,021
1,124,000 Weyerhaeuser Co.,
6.95%, 8/1/17..................................... 1,140,408
------------
59,001,559
------------
LEISURE & TOURISM - 0.8%
10,500,000 Brunswick Corp.,
6.75%, 12/15/06................................... 11,157,898
------------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
CORPORATE BONDS - CONTINUED
MACHINERY - DIVERSIFIED - 0.5%
$ 5,000,000 Deere & Co.,
8.95%, 6/15/19.................................... $ 6,295,085
-----------
OIL/ENERGY - 2.4%
6,500,000 Atlantic Richfield Co.,
9.00%, 4/1/21..................................... 8,782,085
1,656,000 Lasmo (USA) Inc.,
Special Purpose,
6.75%, 12/15/07................................... 1,637,329
2,500,000 Suburban Propane Partners, L.P.,
7.54%, 6/30/11.................................... 2,660,250
6,000,000 Transocean Offshore Inc.,
7.45%, 4/15/27.................................... 6,969,630
12,000,000 Union Pacific Resources Group Inc.,
7.50%, 10/15/26................................... 13,644,972
-----------
33,694,266
-----------
PAPER & PACKAGING - 0.7%
8,000,000 Westvaco Corp.,
7.75%, 2/15/23.................................... 9,005,680
-----------
RETAILING & WHOLESALE - 0.7%
500,000 Dayton Hudson Corp.,
9.75%, 11/1/98.................................... 501,426
1,685,000 Gap Inc.,
6.90%, 9/15/07.................................... 1,859,426
9,870,000 Macsaver Financial Services Inc.,
7.60%, 8/1/07..................................... 6,814,593
-----------
9,175,445
-----------
TELECOMMUNICATION SERVICES & EQUIPMENT - 2.0%
3,279,916 Bellsouth Savings & Employee Stock Option Trust,
Debentures, Series A,
9.125%, 7/1/03.................................... 3,640,281
GTE Corp.:
7,500,000 6.36%, 4/15/06.................................... 7,956,502
5,000,000 9.38%, 12/1/00.................................... 5,439,495
10,500,000 LCI International Inc.,
7.25%, 6/15/07.................................... 10,956,299
-----------
27,992,577
-----------
TRANSPORTATION - 1.6%
2,000,000 Consolidated Rail Corp.,
9.75%, 6/1/00..................................... 2,133,394
1,472,300 Continental Airlines Inc.,
Pass-Thru Certificates,
Series 1997-CI,
7.42%, 4/1/07..................................... 1,576,841
10,000,000 Norfolk Southern Corp.,
7.70%, 5/15/17.................................... 11,391,190
2,925,731 Southwest Airlines Co.,
7.67%, 1/2/14..................................... 3,345,529
3,819,000 Union Pacific Corp.,
6.125%, 1/15/04................................... 3,849,674
-----------
22,296,628
-----------
UTILITIES - ELECTRIC - 2.2%
3,000,000 Carolina Power & Light Co.,
8.625%, 9/15/21................................... 3,897,909
</TABLE>
45
<PAGE>
- --------------------------------------------------------------------------------
Evergreen
Select Income Plus Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (continued)
September 30, 1998
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
CORPORATE BONDS - CONTINUED
UTILITIES - ELECTRIC - CONTINUED
Pennsylvania Power & Light Resources Inc.:
$ 8,500,000 7.38%, 3/1/14..................................... $ 9,540,204
15,000,000 7.75%, 5/1/02..................................... 16,205,790
1,000,000 Virginia Electric & Power Co.,
9.30%, 6/9/99..................................... 1,026,780
------------
30,670,683
------------
Total Corporate Bonds
(cost $381,271,892).............................. 408,793,109
------------
MORTGAGE-BACKED SECURITIES - 3.1%
Federal Home Loan Mortgage Corp.:
1,380,981 5.60%, 2/15/13.................................... 1,380,828
3,500,000 5.85%, 1/25/19.................................... 3,537,623
1,132,712 6.00%, 8/1/99..................................... 1,136,892
5,000,000 6.24%, 10/6/04.................................... 5,382,600
5,776,529 6.50%, 4/15/18.................................... 5,866,259
2,899,578 6.50%, 11/1/99.................................... 2,918,774
2,000,000 6.52%, 8/25/00.................................... 2,066,798
2,000,000 6.75%, 5/30/06.................................... 2,226,086
6,579,892 7.50%, 5/1/09 - 10/1/10........................... 6,788,852
2,169,205 8.00%, 7/1/25..................................... 2,242,698
7,724,000 Federal National Mortgage Assoc.,
7.75%, 9/25/22.................................... 8,303,321
------------
Total Mortgage-Backed Securities
(cost $40,311,945)............................... 41,850,731
------------
COLLATERALIZED MORTGAGE OBLIGATIONS - 2.9%
1,510,000 Carco Auto Loan Master Trust,
Series 1997-1, Class A,
6.689%, 8/15/04................................... 1,559,560
1,256,623 Citicorp Mortgage Securities Inc.,
Series 1997-1, Class A2,
7.25%, 2/25/27.................................... 1,263,566
2,334,573 Collateralized Mortgage
Obligation Trust,
Series 22, Class Y,
7.95%, 5/1/17..................................... 2,360,498
62,918 Drexel Burnham Lambert,
Collateralized Mortgage
Obligation Trust,
Series H, Class 3,
8.50%, 7/1/14..................................... 63,031
2,285,000 Federal Home Loan Mortgage Corp.,
Series 1519, Class F,
6.75%, 3/15/07.................................... 2,359,920
5,000,000 Paine Webber Mortgage Acceptance Corp.,
Series 1996-M1, Class E,
7.655%, 1/2/12.................................... 5,343,945
Potomac Gurnee Finance Corp.:
16,584,251 6.89%, 12/21/26................................... 18,076,585
5,250,000 7.22%, 12/21/26................................... 5,635,429
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
COLLATERALIZED MORTGAGE OBLIGATIONS - CONTINUED
Residential Asset Securitization Trust:
$ 894,400 7.00%, 3/25/27..................................... $ 902,409
1,765,000 7.25%, 5/25/27..................................... 1,781,556
------------
Total Collateralized Mortgage Obligations (cost
$37,054,321)...................................... 39,346,499
------------
MUNICIPAL BONDS - TAXABLE - 1.1%
Baltimore, MD, General Obligation:
370,000 7.45%, 10/15/09.................................... 430,628
395,000 7.50%, 10/15/10.................................... 460,159
420,000 7.60%, 10/15/11.................................... 489,775
450,000 7.70%, 10/15/12.................................... 526,059
Mississippi State, General Obligation:
3,095,000 7.00%, 9/1/10...................................... 3,416,787
3,195,000 7.05%, 9/1/12...................................... 3,511,657
6,000,000 Virginia State Housing Development Authority,
7.50%, 5/1/11...................................... 6,779,940
------------
Total Municipal Bonds - Taxable
(cost $13,806,365)................................ 15,615,005
------------
FEDERAL AGENCY BONDS - 18.1%
Federal Farm Credit Bank:
2,000,000 5.75%, 2/9/05...................................... 2,099,972
5,000,000 5.80%, 10/10/00.................................... 5,113,705
7,000,000 6.37%, 10/30/07.................................... 7,702,730
2,000,000 7.60%, 7/24/06..................................... 2,339,606
Federal Home Loan Bank:
2,000,000 5.50%, 1/21/03..................................... 2,062,816
10,000,000 5.62%, 1/27/03..................................... 10,359,010
10,000,000 5.75%, 4/30/01..................................... 10,268,020
5,000,000 5.89%, 6/30/08..................................... 5,343,165
5,000,000 6.19%, 5/6/08...................................... 5,452,185
5,000,000 6.50%, 11/29/05.................................... 5,458,430
1,000,000 9.25%, 11/25/98.................................... 1,006,201
1,400,000 9.30%, 1/25/99..................................... 1,418,848
1,177,499 Federal Housing Administration,
Putable Project Loans,
7.43%, 1/1/24...................................... 1,310,480
Federal National Mortgage Association
5,000,000 5.50%, 2/2/01...................................... 5,092,855
5,000,000 5.78%, 10/10/00.................................... 5,106,045
5,000,000 6.00%, 11/4/02..................................... 5,245,260
10,000,000 6.21%, 11/7/07..................................... 10,896,980
2,000,000 6.29%, 2/11/02..................................... 2,100,348
5,000,000 6.38%, 1/16/02..................................... 5,262,200
10,000,000 6.48%, 6/28/04 - 8/27/07........................... 10,966,950
5,280,774 6.50%, 8/1/10 - 9/1/10 ............................ 5,396,977
5,000,000 6.63%, 6/20/05..................................... 5,491,720
10,000,000 6.71%, 5/21/03..................................... 10,819,240
5,000,000 6.82%, 8/23/05..................................... 5,547,570
2,982,056 7.00%, 11/1/26..................................... 3,071,727
1,842,661 7.50%, 6/1/11...................................... 1,902,197
14,580,069 7.50%, 6/1/02 - 8/1/25 ............................ 14,947,107
</TABLE>
46
<PAGE>
- --------------------------------------------------------------------------------
Evergreen
Select Income Plus Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (continued)
September 30, 1998
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
FEDERAL AGENCY BONDS - CONTINUED
Federal National Mortgage
Association - continued
$ 1,000,000 8.35%, 11/10/99................................... $ 1,038,086
2,500,000 8.70%, 6/10/99.................................... 2,564,578
1,620,000 Federal National Mortgage Association, REMIC,
6.50%, 3/25/19.................................... 1,654,656
Financial Assistance Corp.:
17,500,000 8.80%, 6/10/05.................................... 21,371,123
5,000,000 9.38%, 7/21/03.................................... 5,974,850
Government National Mortgage Association:
3,964,102 6.00%, 4/15/11.................................... 4,026,932
11,365,804 6.50%, 2/15/09 - 5/15/28.......................... 11,642,646
5,252,651 7.00%, 2/15/11 - 6/15/26.......................... 5,432,133
5,970,922 7.50%, 12/15/25 - 6/15/27......................... 6,197,282
1,398,633 8.00%, 12/15/26................................... 1,464,705
637,824 8.50%, 7/15/21.................................... 675,097
3,484,674 9.00%, 1/15/20 - 10/15/21......................... 3,731,903
1,700,285 9.50%, 12/15/20................................... 1,843,551
North Carolina, Housing Finance Agency
1,780,000 6.72%, 3/1/03 - 9/1/03............................ 1,880,747
Private Export Funding Corp.:
5,000,000 6.90%, 1/31/03.................................... 5,428,905
10,000,000 7.30%, 1/31/02.................................... 10,818,700
2,000,000 7.90%, 3/31/00.................................... 2,091,048
5,000,000 9.45%, 12/31/99................................... 5,280,515
3,500,000 Tennessee Valley Authority,
8.375%, 10/1/99................................... 3,620,113
------------
248,519,914
------------
Total Federal Agency Bonds
(cost $235,082,405).............................. 248,519,914
------------
U.S. TREASURY OBLIGATIONS - 25.6%
U.S. Treasury Bonds:
25,000,000 7.50%, 11/15/16................................... 31,882,825
15,000,000 7.875%, 2/15/21................................... 20,278,140
25,000,000 8.00%, 11/15/21................................... 34,375,025
15,000,000 8.75%, 5/15/20.................................... 21,909,390
15,000,000 9.00%, 11/15/18................................... 22,153,140
25,000,000 9.25%, 2/15/16.................................... 36,859,400
15,000,000 11.25%, 2/15/15................................... 25,542,195
U.S. Treasury Notes:
5,000,000 5.625%, 11/30/00.................................. 5,128,130
10,000,000 5.625%, 5/15/08................................... 10,940,630
5,000,000 5.75%, 8/15/03.................................... 5,307,815
15,000,000 5.875%, 2/15/04................................... 16,101,570
10,000,000 6.125%, 8/15/07................................... 11,200,010
5,000,000 6.25%, 2/28/02.................................... 5,295,315
25,000,000 6.50%, 5/15/05.................................... 28,070,325
5,000,000 6.75%, 4/30/00.................................... 5,170,315
5,000,000 7.25%, 5/15/04.................................... 5,710,940
5,000,000 7.50%, 11/15/01................................... 5,450,005
25,000,000 7.75%, 11/30/99 - 1/31/00......................... 26,003,150
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
U.S. TREASURY OBLIGATIONS - CONTINUED
U.S. Treasury Notes - continued
$25,000,000 7.875%, 11/15/04.................................. $ 29,648,450
5,000,000 8.00%, 5/15/01.................................... 5,440,630
------------
Total U.S. Treasury Obligations
(cost $319,267,822).............................. 352,467,400
------------
YANKEE OBLIGATIONS - 10.6%
BANKS - 2.4%
2,000,000 Banco Santiago, S.A,
7.00%, 7/18/07.................................... 1,934,928
Korea Development Bank:
8,000,000 7.25%, 5/15/06.................................... 6,106,536
8,000,000 7.375%, 9/17/04................................... 6,124,376
2,982,000 Skandinaviska Enskilda Banken,
6.875%, 2/15/09................................... 3,314,767
Svenska Handelsbanken:
3,000,000 8.125%, 8/15/07................................... 3,491,229
5,000,000 8.35%, 7/15/04.................................... 5,720,445
5,000,000 Westpac Banking Co.
9.125%, 8/15/01................................... 5,482,470
------------
32,174,751
------------
FINANCE & INSURANCE - 1.3%
10,000,000 Abbey National PLC,
6.69%, 10/17/05................................... 10,591,880
5,000,000 Ford Capital B.V.,
9.875%, 5/15/02................................... 5,730,450
1,885,000 Santander Finance Issuances,
6.375%, 2/15/11................................... 1,824,064
------------
18,146,394
------------
GOVERNMENT AGENCY NOTES & BONDS - 3.0%
10,000,000 Hydro-Quebec Inc.,
8.00%, 2/1/13..................................... 11,836,400
10,000,000 Manitoba (Province of), Canada,
8.00%, 4/15/02.................................... 10,956,000
7,500,000 Ontario Hydro Corp.,
7.45%, 3/31/13.................................... 8,829,000
8,200,000 Quebec Province, Canada,
8.80%, 4/15/03.................................... 9,367,188
------------
40,988,588
------------
INDUSTRIAL SPECIALTY PRODUCTS & SERVICES - 3.9%
1,785,000 Barrick Gold Corp.,
7.50%, 5/1/07..................................... 1,983,640
5,000,000 Celulosa Arauco Y Constitucion,
7.20%, 9/15/09.................................... 4,212,440
6,000,000 FBG Finance Ltd.,
6.75%, 11/15/05 (a)............................... 6,141,960
16,500,000 Fletcher Challenge Capital Canada Inc.,
7.875%, 3/24/17................................... 16,879,764
2,590,000 Legrand, S.A.,
8.50%, 2/15/25.................................... 3,317,803
15,000,000 Petro-Canada Ltd.,
8.60%, 1/15/10.................................... 19,395,450
1,665,000 Royal Caribbean Cruises Ltd.,
7.50%, 10/15/27................................... 1,651,324
------------
53,582,381
------------
Total Yankee Obligations
(cost $134,541,589).............................. 144,892,114
------------
</TABLE>
47
<PAGE>
- --------------------------------------------------------------------------------
Evergreen
Select Income Plus Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (continued)
September 30, 1998
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
REPURCHASE AGREEMENT - 4.7%
$64,813,015 Dresdner Bank, AG,
5.00%, dated 9/30/98,
due 10/1/98
cost, $64,813,015 maturity
value $64,822,017(b).............................. $ 64,813,015
--------------
<CAPTION>
Shares
<C> <S> <C>
MUTUAL FUND SHARES
211,435 Valiant General Fund (cost $211,435)............. 211,435
--------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS -
(COST $1,269,414,951)..................... 99.0% 1,360,488,135
OTHER ASSETS AND
LIABILITIES - NET......................... 1.0 14,280,421
----- --------------
NET ASSETS - .............................. 100.0% $1,374,768,556
===== ==============
</TABLE>
(a) Securities that may be resold to "qualified institutional buyers" un-
der Rule 144A or securities offered pursuant to Section 4(2) of the
Securities Act of 1933, as amended. These securities have been deter-
mined to be liquid under guidelines established by the Board of
Trustees.
(b) Repurchase agreement is collateralized by $62,835,000 U.S. Treasury
Notes, 5.37% due 6/30/03 with a value, including accrued interest, of
$66,114,198.
SUMMARY OF ABBREVIATIONS:
REMIC Real Estate Mortgage Investment Conduit
See Combined Notes to Financial Statements.
48
<PAGE>
- --------------------------------------------------------------------------------
Evergreen
Select Intermediate Tax Exempt Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
September 30, 1998
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
MUNICIPAL OBLIGATIONS - 98.4%
ALABAMA - 1.1%
$ 3,790,000 Alabama Special Care Facilities Finance Authority
RB, Hospital Charity Obligation Group, Series D,
4.95%, 11/1/14..................................... $ 3,970,631
Alabama State Docks Department, Facilities RB:
1,505,000 5.50%, 10/1/03, (MBIA)............................. 1,618,447
1,000,000 6.00%, 10/1/05, (MBIA)............................. 1,124,350
1,175,000 6.00%, 10/1/07, (MBIA)............................. 1,344,506
------------
8,057,934
------------
ARIZONA - 0.5%
3,660,000 Phoenix AZ, SFHRB, Series A,
6.60%, 12/1/29..................................... 4,046,935
------------
CALIFORNIA - 8.7%
10,000,000 California Pollution Control Financing Authority
RB, San Diego Gas & Electric, Series A,
5.90%, 6/1/14...................................... 11,403,400
California State GO:
4,000,000 8.00%, 5/1/03, (AMBAC-TCRS)........................ 4,726,640
1,000,000 9.25%, 3/1/02...................................... 1,178,620
1,700,000 Delta County CA, SFHRB, Series A,
6.70%, 6/1/24, (MBIA).............................. 1,897,421
Foothill/Eastern Corridor Agency, Toll Road RB,
Series A:
4,000,000 6.50%, 1/1/32...................................... 4,471,080
10,255,000 (Eff. Yield 5.75%)
0.00%, 1/1/24 (a).................................. 2,811,921
2,000,000 Huntington Park CA, SFHRB, Series A, ETM,
8.00%, 12/1/19..................................... 2,858,240
Long Beach CA, Harbor RB Series A:
8,435,000 6.00%, 5/15/16..................................... 9,738,714
2,600,000 6.00%, 5/15/19, (FGIC)............................. 3,012,932
4,210,000 Palmdale CA, SFHRB, Series A, ETM,
8.00%, 9/1/11...................................... 5,691,246
San Joaquin Hills CA, Toll Road RB ETM,
23,500,000 (Eff. Yield 5.60%) (a)
0.00%, 1/1/22...................................... 7,676,510
7,050,000 Series A, (Eff. Yield 4.10%) (a),
0.00%, 1/15/02..................................... 6,188,278
3,500,000 Valley Health Systems California, Hospital RB,
Series A,
6.50%, 5/15/25..................................... 3,805,060
------------
65,460,062
------------
COLORADO - 9.0%
Arapahoe County CO, Capital Improvement Highway RB
15,000,000 Prefunded 8/31/05 @ 66.217
(Eff. Yield 4.21%) (a)
0.00%, 8/31/11..................................... 7,491,600
4,000,000 Prerefunded 8/31/05 @ 103
(Eff. Yield 4.21%) (a)
0.00%, 8/31/15..................................... 4,808,720
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
MUNICIPAL OBLIGATIONS - CONTINUED
COLORADO - CONTINUED
Arapahoe County CO, Capital Improvement Highway
RB - continued:
$32,000,000 Series C, Prerefunded
8/31/05 @ 48.6181
(Eff. Yield 4.21%) (a)
0.00%, 8/31/15..................................... $ 11,734,080
Colorado Housing Finance Authority, SFHRB:
1,000,000 Senior Series A 2
6.60%, 5/1/28...................................... 1,117,210
500,000 Senior Series A 3
6.50%, 11/1/29..................................... 561,830
2,250,000 Senior Series C 2
6.875%, 11/1/28.................................... 2,546,258
1,000,000 Senior Series C 3
6.75%, 5/1/17...................................... 1,124,510
1,385,000 Colorado Student Obligation Bond Authority, Student
Loan RB, Series B
6.55%, 12/1/02..................................... 1,464,236
Dawson Ridge CO, Metropolitan District GO ETM,
8,325,000 Series A, (Eff. Yield 5.42%)
0.00%, 10/1/22 (a)................................. 2,383,031
74,685,000 Series B, (Eff. Yield 5.58%)
0.00%, 10/1/22 (a)................................. 21,378,581
2,000,000 Denver CO, City & County GO
6.50%, 8/1/04...................................... 2,171,140
El Paso County CO, GO, School District Number 11:
2,500,000 7.10%, 12/1/16..................................... 3,271,175
2,000,000 7.125%, 12/1/19.................................... 2,671,880
3,485,000 Larimer County CO, GO School District Number R1
8.50%, 12/15/08, (MBIA)............................ 4,716,634
------------
67,440,885
------------
CONNECTICUT - 1.1%
Connecticut State Development Authority, Mortgage
RB, Church Homes Inc. Health Care Project:
485,000 4.45%, 4/1/99...................................... 487,037
340,000 4.65%, 4/1/00...................................... 343,587
425,000 4.90%, 4/1/02...................................... 436,127
925,000 5.00%, 4/1/03...................................... 956,219
1,220,000 5.40%, 4/1/07...................................... 1,298,641
2,035,000 5.70%, 4/1/12...................................... 2,119,229
2,550,000 5.80%, 4/1/21...................................... 2,657,941
------------
8,298,781
------------
DELAWARE - 0.4%
3,000,000 Delaware State, Solid Waste Systems RB, Series A
6.75%, 7/1/03...................................... 3,190,890
------------
</TABLE>
49
<PAGE>
- --------------------------------------------------------------------------------
Evergreen
Select Intermediate Tax Exempt Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (continued)
September 30, 1998
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
MUNICIPAL OBLIGATIONS - CONTINUED
FLORIDA - 3.8%
$ 535,000 Escambia County FL, Health Facilities Authority RB
Azalea Trace Inc., Prerefunded 1/1/99 @ 102,
9.25%, 1/1/06...................................... $ 553,532
Halifax Hospital Medical Center Health Care
Facilities Revenue, Series A:
1,080,000 4.60%, 4/1/08, (ACA)............................... 1,097,971
1,200,000 4.75%, 4/1/09, (ACA)............................... 1,221,864
675,000 4.80%, 4/1/10, (ACA)............................... 685,692
4,500,000 Orange County FL, Health Facilities Authority RB,
Orlando Regional Healthcare, Series A,
6.25%, 10/1/16, (MBIA)............................. 5,341,005
Palm Beach County FL, Health Facilities Authority
RB, Abbey DelRay South Project:
675,000 4.25%, 10/1/98..................................... 675,007
675,000 4.35%, 10/1/99..................................... 678,787
700,000 4.50%, 10/1/00..................................... 705,999
750,000 4.65%, 10/1/01..................................... 760,695
805,000 4.80%, 10/1/02..................................... 822,332
775,000 5.00%, 10/1/03..................................... 799,536
850,000 5.00%, 10/1/04..................................... 878,007
930,000 5.10%, 10/1/05..................................... 962,029
500,000 5.30%, 10/1/07..................................... 518,175
Palm Beach County FL, Health Facilities Authority
RB, Waterford Project:
675,000 4.25%, 10/1/98..................................... 675,007
475,000 4.35%, 10/1/99..................................... 477,665
675,000 4.50%, 10/1/00..................................... 680,785
725,000 4.65%, 10/1/01..................................... 735,338
400,000 4.80%, 10/1/02..................................... 408,612
320,000 5.00%, 10/1/03..................................... 330,131
440,000 5.00%, 10/1/04..................................... 454,498
460,000 5.10%, 10/1/05..................................... 475,842
485,000 5.20%, 10/1/06..................................... 501,912
345,000 5.30%, 10/1/07..................................... 357,541
5,000,000 Pinellas County FL, Housing Finance Authority,
SFHRB,
5.95%, 3/1/30...................................... 5,413,150
2,025,000 Tampa FL, Health Systems RB, Catholic Health East,
Series A 3,
5.50%, 11/15/06, (MBIA)............................ 2,216,201
------------
28,427,313
------------
GEORGIA - 2.8%
Fulton County GA, Development Authority Special RB,
Delta Airlines Inc. Project:
11,695,000 5.30%, 5/1/13...................................... 11,835,925
7,350,000 5.45%, 5/1/23...................................... 7,380,355
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
MUNICIPAL OBLIGATIONS - CONTINUED
GEORGIA - CONTINUED
Savannah GA, Water & Sewage RB, ETM, (Securities):
$ 1,000,000 6.30%, 12/1/01..................................... $ 1,078,360
1,000,000 6.35%, 12/1/02..................................... 1,099,920
------------
21,394,560
------------
HAWAII - 0.4%
2,500,000 Hawaii State Department of Budget & Finance,
Special Purpose RB, The Queens Health Systems
Group, Series A,
6.05%, 7/1/16...................................... 2,789,950
------------
IDAHO - 0.3%
2,000,000 Idaho Student Loan Fund Marketing Association,
Student Loan RB
6.25%, 10/1/98..................................... 2,000,120
------------
ILLINOIS - 5.2%
Illinois Development Finance Authority RB,
Community Rehabilitation Providers, Series A:
2,540,000 5.70%, 7/1/07...................................... 2,764,053
3,490,000 5.80%, 7/1/08...................................... 3,822,702
5,490,000 Illinois Educational Facilities Authority RB Sarah
Bush Lincoln Health Center,
5.50%, 2/15/16..................................... 5,673,805
Illinois Health & Educational Facilities Authority
RB:
4,945,000 Mercy Hospital Center ETM
10.00%, 1/1/15..................................... 7,156,108
5,000,000 Northwestern Memorial Hospital
6.75%, 8/15/11..................................... 5,453,850
12,500,000 Illinois State Sales Tax RB, Series Q,
6.00%, 6/15/12, (MBIA-IBC)......................... 14,457,375
------------
39,327,893
------------
INDIANA - 2.3%
7,000,000 Indiana Health Facility Financing Authority,
Hospital RB, Charity Obligation Group, Series D
5.00%, 11/1/26 .................................... 7,332,850
1,565,000 Indiana State Housing,
SFHRB, Series B 1,
7.55%, 7/1/10...................................... 1,644,032
3,900,000 Indianapolis IN, Airport Authority RB, Special
Facility United Air Lines Project, Series A,
6.50%, 11/15/31.................................... 4,254,900
3,000,000 Indianapolis IN, Local Public Improvement Bond Bank
RB,
6.75%, 2/1/14...................................... 3,641,760
550,000 Lafayette IN,
PCRB, Anheuser-Busch Inc. Project,
6.50%, 6/1/04...................................... 552,899
------------
17,426,441
------------
</TABLE>
50
<PAGE>
- --------------------------------------------------------------------------------
Evergreen
Select Intermediate Tax Exempt Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (continued)
September 30, 1998
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
MUNICIPAL OBLIGATIONS - CONTINUED
IOWA - 0.3%
$ 2,500,000 Iowa Student Loan Liquidity Corp. RB, Series A,
6.45%, 3/1/02...................................... $ 2,659,400
------------
KANSAS - 1.6%
2,900,000 Kansas State Department of Transportation Highway
RB Prerefunded 3/1/02 @ 102
6.50%, 3/1/07...................................... 3,206,646
4,700,000 Kansas State Development Finance Authority RB,
University of Kansas Athletic Facilities, Series
A,
4.80%, 6/1/13...................................... 4,703,290
1,540,000 Newton KS, Hospital RB Newton Healthcare Corp.,
Series A
5.70%, 11/15/18.................................... 1,581,611
2,000,000 Sedgwick & Shawnee County KS, SFHRB, Series A,
5.50%, 6/1/29...................................... 2,282,960
------------
11,774,507
------------
KENTUCKY - 1.2%
Kentucky Economic Development Finance Authority,
Hospital Systems RB Appalachian Regional
Healthcenter:
5,000,000 5.85%, 10/1/17..................................... 5,230,200
3,500,000 5.875%, 10/1/22.................................... 3,651,760
------------
8,881,960
------------
LOUISIANA - 0.6%
East Baton Rouge LA, Sales & Use Tax RB, Series ST:
1,760,000 8.00%, 2/1/02, (FGIC).............................. 1,984,136
1,920,000 8.00%, 2/1/03, (FGIC).............................. 2,226,950
------------
4,211,086
------------
MASSACHUSETTS - 0.9%
1,750,000 Massachusetts State Health & Educational Facilities
Authority RB, Milford Whitinsville Regional,
Series C,
5.75%, 7/15/13..................................... 1,857,695
2,000,000 Massachusetts State Housing Finance Agency RB,
Residential Development
6.35%, 5/15/03..................................... 2,157,140
2,500,000 New England Education Loan Marketing Corp., Student
Loan RB,
6.50%, 9/1/02...................................... 2,710,400
------------
6,725,235
------------
MICHIGAN - 5.8%
2,040,000 Avondale MI, School District GO,
8.25%, 5/1/02...................................... 2,342,083
3,700,000 Brighton MI, Area School District Capital
Appreciation, Series II,
(Eff. Yield 4.90%) (a),
0.00%, 5/1/11, (AMBAC)............................. 2,108,075
1,730,000 Dexter MI, Community Schools, GO
6.25%, 5/1/08, (FGIC).............................. 2,013,357
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
MUNICIPAL OBLIGATIONS - CONTINUED
MICHIGAN - CONTINUED
$ 2,500,000 Michigan Higher Education Facilities Authority RB,
Thomas M Cooley,
(LOC: First of America Bank) 5.00%, 5/1/11 ........ $ 2,588,950
Michigan State Trunk Line, Series A:
2,760,000 5.25%, 11/1/12..................................... 2,986,127
2,500,000 5.25%, 11/1/10..................................... 2,717,025
6,070,000 Royal Oak MI, Hospital Finance Authority RB,
William Beaumont Hospital,
6.25%, 1/1/10...................................... 7,069,486
Wayne Charter County MI, Airport RB, Detroit Metro,
Series B:
4,395,000 5.25%, 12/1/05, (MBIA)............................. 4,714,429
10,225,000 5.25%, 12/1/10, (MBIA)............................. 10,926,946
6,000,000 5.25%, 12/1/13, (MBIA)............................. 6,311,340
------------
43,777,818
------------
MINNESOTA - 0.9%
2,935,000 Bass Brook MN, PCRB, Minnesota Power & Light Co.
Project,
6.00%, 7/1/22...................................... 3,096,542
Minnesota State Housing Finance Agency, SFHRB,
Series C:
500,000 6.80%, 7/1/11...................................... 527,190
1,335,000 7.10%, 7/1/11...................................... 1,416,302
2,000,000 Rochester MN, Health Care Facilities RB, Mayo
Medical Center, Series C,
6.85%, 11/15/98.................................... 2,008,760
------------
7,048,794
------------
MISSISSIPPI - 3.3%
10,750,000 Mississippi Business Finance Corp. Solid Waste
Disposal RB, Mississippi Phosphates Corp. Project
5.80%, 3/1/22...................................... 10,983,598
4,855,000 Mississippi Gulf Coast, Regional Wasterwater
Authority RB, ETM,
7.00%, 7/1/12...................................... 5,957,522
7,295,000 Mississippi Home Corp., SFHRB, Series H
5.50%, 12/1/29..................................... 8,040,111
------------
24,981,231
------------
MISSOURI - 1.2%
3,000,000 Missouri State Office Building, Special Obligation
6.00%, 12/1/02..................................... 3,200,700
2,500,000 Missouri State, SFHRB,
6.40%, 9/1/29...................................... 2,771,675
2,600,000 University City MO, IDA MFHRB Oak Forest Apartment
Project
(LOC: Sumitomo Bank LTD)
7.375%, 3/1/21 .................................... 2,910,362
------------
8,882,737
------------
</TABLE>
51
<PAGE>
- --------------------------------------------------------------------------------
Evergreen
Select Intermediate Tax Exempt Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (continued)
September 30, 1998
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
MUNICIPAL OBLIGATIONS - CONTINUED
NEW JERSEY - 2.8%
$ 2,000,000 Howell Township NJ, GO Partially Prerefunded 1/1/02
@ 102,
6.40%, 1/1/03, (FGIC).............................. $ 2,190,620
New Jersey Economic Development Authority RB
Franciscan Oaks Project:
3,620,000 5.60%, 10/1/12..................................... 3,687,332
4,185,000 5.70%, 10/1/17..................................... 4,223,669
900,000 Keswick Pines Project
5.60%, 1/1/12...................................... 912,240
The Evergreens:
3,380,000 5.875%, 10/1/12.................................... 3,471,902
680,000 6.00%, 10/1/17..................................... 720,229
3,325,000 6.00%, 10/1/22..................................... 3,509,471
1,650,000 New Jersey State Housing & Mortgage Finance Agency
RB,
Series One
6.45%, 11/1/07..................................... 1,777,034
160,000 New Jersey Wastewater Treatment Trust RB,
6.80%, 6/15/02..................................... 168,693
210,000 Salem County NJ, Industrial PCRB, BF Goodrich Co
Project,
10.75%, 12/1/00.................................... 211,121
------------
20,872,311
------------
NEW MEXICO - 0.6%
3,425,000 Santa Fe NM, Utility RB, Series A,
8.00%, 6/1/06, (AMBAC)............................. 4,314,130
------------
NEW YORK - 15.9%
Metropolitan Transportation Authority of New York
RB, Series A:
4,325,000 5.70%, 7/1/17 (MBIA)............................... 4,730,815
7,000,000 6.10%, 7/1/26, (FSA)............................... 8,114,820
8,000,000 New York City Municipal Water Finance Authority,
Water & Sewer Systems RB Series B
6.25%, 6/15/20..................................... 9,288,480
New York NY, GO:
Series A:
10,535,000 5.875%, 8/1/03..................................... 11,399,923
2,500,000 6.25%, 8/1/10...................................... 2,819,575
3,000,000 6.25%, 8/1/11...................................... 3,375,000
14,490,000 Series B,
7.50%, 2/1/06...................................... 16,214,745
5,795,000 Series C,
6.50%, 2/1/08...................................... 6,742,193
2,500,000 Series C, ETM,
6.90%, 2/1/99, (FGIC).............................. 2,527,650
1,755,000 Series D,
6.50%, 2/15/06..................................... 1,993,118
3,245,000 Series D, Prefunded
2/15/05 @ 101
6.50%, 2/15/06..................................... 3,742,329
6,000,000 Series I,
6.50%, 3/15/05..................................... 6,802,380
5,515,000 Series K,
8.00%, 4/1/05...................................... 6,749,477
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
MUNICIPAL OBLIGATIONS - CONTINUED
NEW YORK - CONTINUED
$13,000,000 New York State Dormitory Authority RB, Series A,
5.50%, 5/15/13..................................... $ 14,307,800
5,710,000 New York State Thruway Authority, Service Contract
RB, Series A,
6.00%, 1/1/05, (MBIA).............................. 6,349,177
New York State Urban Development Corp. RB:
6,045,000 5.75%, 7/1/09...................................... 6,750,996
3,570,000 6.40%, 1/1/04, (AMBAC-TCRS)........................ 3,985,298
3,000,000 Port Authority of NY & NJ, Special Obligation,
6.75%, 10/1/11..................................... 3,334,770
------------
119,228,546
------------
NORTH CAROLINA - 2.1%
North Carolina Medical Care Commission, Hospital
RB, Transylvania Community Hospital Inc.:
115,000 4.30%, 10/1/98..................................... 115,002
130,000 4.45%, 10/1/99..................................... 131,034
135,000 4.60%, 10/1/00..................................... 136,804
140,000 4.70%, 10/1/01..................................... 142,786
155,000 4.80%, 10/1/02..................................... 159,199
155,000 4.90%, 10/1/03..................................... 160,273
155,000 5.00%, 10/1/04..................................... 161,268
175,000 5.00%, 10/1/05..................................... 182,233
185,000 5.05%, 10/1/06..................................... 193,164
190,000 5.15%, 10/1/07..................................... 199,633
9,440,000 North Carolina State Medical Care Commission,
Health Care Facilities RB, Deerfield Episcopal,
5.30%, 11/1/04..................................... 9,756,523
4,430,000 North Carolina, Eastern Municipal Power Systems RB,
Series A,
5.70%, 1/1/15, (MBIA).............................. 4,823,960
------------
16,161,879
------------
OHIO - 1.9%
Franklin County OH, Health Care Facilities RB,
Friendship Village of Dublin Project:
505,000 5.00%, 11/1/05..................................... 522,367
380,000 5.05%, 11/1/06..................................... 392,434
225,000 5.10%, 11/1/07..................................... 232,108
100,000 5.15%, 11/1/08..................................... 103,047
1,250,000 5.50%, 11/1/16..................................... 1,264,612
1,750,000 5.625%, 11/1/22.................................... 1,770,370
5,735,000 Hamilton County OH, Sales Tax RB, Hamilton County
Football Project, Series B,
5.375%, 12/1/09, (MBIA)............................ 6,318,422
Miami County OH, Hospital Facilities RB, Upper
Valley Medical Center, Series A:
1,500,000 6.25%, 5/15/16..................................... 1,614,450
2,250,000 6.375%, 5/15/26.................................... 2,433,082
------------
14,650,892
------------
</TABLE>
52
<PAGE>
- --------------------------------------------------------------------------------
Evergreen
Select Intermediate Tax Exempt Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (continued)
September 30, 1998
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
MUNICIPAL OBLIGATIONS - CONTINUED
OKLAHOMA - 0.7%
$ 5,000,000 Tulsa County OK, Industrial Authority, Health Care
RB, St. Francis Hospital,
5.15%, 12/15/18.................................... $ 5,255,650
------------
PENNSYLVANIA - 3.1%
1,500,000 Beaver Falls PA, Municipal Authority Special
Obligation, Prerefunded 10/1/04 @ 102,
9.125%, 8/1/05..................................... 1,954,230
Dauphin County PA, General Authority RB, Office &
Parking, Forum Place, Series A:
7,865,000 5.50%, 1/15/08..................................... 7,995,874
3,950,000 5.75%, 1/15/10..................................... 4,055,307
2,200,000 Delaware County PA, Hospital RB, Riddle Memorial
Hospital,
6.50%, 1/1/22...................................... 2,421,760
260,000 Delaware River Port Authority of PA & NJ, Delaware
River Bridges RB,
6.50%, 1/15/11..................................... 295,747
4,000,000 Montgomery County PA, Higher Education & Health
Authority RB, Beaver College,
5.80%, 4/1/16...................................... 4,337,800
1,795,000 West View PA, Municipal Authority Special
Obligation, ETM,
(COLL: U.S. Government Securities)
9.20%, 5/15/03..................................... 2,123,252
------------
23,183,970
------------
SOUTH CAROLINA - 1.2%
3,000,000 Piedmont SC, Municipal Power Agency, Electric RB,
6.25%, 1/1/21, (FGIC).............................. 3,599,850
5,000,000 Richland County SC, Hospital Facilities RB,
Sunhealth Orangeburg,
8.125%, 10/1/11,
(LOC: Sumitomo Bank LTD)........................... 5,100,650
------------
8,700,500
------------
SOUTH DAKOTA - 0.8%
5,000,000 Heartland Consumer Power District RB, ETM,
7.00%, 1/1/16...................................... 6,103,800
------------
TEXAS - 7.9%
9,915,000 Alliance Airport Authority,
Special Facilities RB, American Airlines Inc.
Project,
7.00%, 12/1/11..................................... 11,895,720
Austin TX, Utility Systems RB:
420,000 8.00%, 11/15/99, (BIG)............................. 440,933
330,000 ETM,
8.00%, 11/15/99, (BIG)............................. 346,632
6,055,000 Lufkin TX, Health Facilities Development Corp. RB,
Memorial Health Systems of East Texas,
6.875%, 2/15/26.................................... 6,730,435
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
MUNICIPAL OBLIGATIONS - CONTINUED
TEXAS - CONTINUED
North Central TX, Health Facility Development Corp.
RB, Texas Health Resources Systems, Series B:
$ 3,910,000 5.75%, 2/15/09, (MBIA)............................. $ 4,352,573
4,595,000 5.75%, 2/15/12, (MBIA)............................. 5,083,219
North Texas Health Facilities Development Corp, RB,
United Regional Health Care Systems Inc. Project:
2,245,000 5.25%, 9/1/06, (MBIA).............................. 2,405,473
2,000,000 5.25%, 9/1/08, (MBIA).............................. 2,150,380
1,300,000 Retama TX, Development Corp. Special Facilities RB,
Retama Racetrack, ETM,
8.75%, 12/15/05.................................... 1,674,764
10,000,000 San Antonio TX, Electric & Gas RB,
5.80%, 2/1/06...................................... 10,995,900
Texas State Department Housing & Community Affairs:
2,650,000 MFHRB,
5.55%, 1/1/05...................................... 2,775,000
3,000,000 SFHRB, Series E
5.00%, 3/1/16, (MBIA).............................. 3,103,950
5,455,000 Texas State Turnpike Authority RB, Prerefunded
7/1/02 @ 102,
12.625%, 1/1/20.................................... 7,208,182
------------
59,163,161
------------
VIRGINIA - 1.3%
2,900,000 Bedford County VA, IDA RB, Georgia Pacific Corp.
Project,
4.60%, 8/1/04...................................... 2,951,823
5,985,000 Riverside VA, Regional Jail Authority RB,
5.875%, 7/1/14, (MBIA)............................. 6,588,348
------------
9,540,171
------------
WASHINGTON - 3.0%
17,000,000 Washington State GO,
Series B & AT 7,
6.40%, 6/1/17...................................... 20,636,130
2,000,000 Washington State Public Power Supply RB, Nuclear
Project, Series A,
6.50%, 7/1/02...................................... 2,165,360
------------
22,801,490
------------
WISCONSIN - 1.0%
6,865,000 Wisconsin State Health & Educational Facilities RB,
Medical College Inc.,
5.95%, 12/1/15..................................... 7,408,296
------------
PUERTO RICO - 2.4%
22,630,000 Commonwealth of Puerto Rico GO, (Eff. Yield 4.04%)
(a),
0.00%, 7/1/04...................................... 18,059,871
------------
</TABLE>
53
<PAGE>
- --------------------------------------------------------------------------------
Evergreen
Select Intermediate Tax Exempt Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (continued)
September 30, 1998
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
MUNICIPAL OBLIGATIONS - CONTINUED
U.S. VIRGIN ISLANDS - 2.3%
Virgin Islands Public Finance Authority RB, Senior
Lien:
$ 7,070,000 Series A,
5.20%, 10/1/09..................................... $ 7,405,683
Series C:
3,000,000 5.50%, 10/1/07..................................... 3,226,950
3,855,000 5.50%, 10/1/08..................................... 4,143,470
2,000,000 Virgin Islands Water & Power Authority RB, Series B
7.60%, 1/1/12...................................... 2,286,660
------------
17,062,763
------------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
MUTUAL FUND SHARES - 0.6%
4,632,000 Federated Municipal Obligation Fund
(cost $4,632,000)................................... $ 4,632,000
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS -
(COST $699,113,382)......................... 99.0% 743,943,962
OTHER ASSETS AND LIABILITIES - NET........... 1.0 7,665,890
----- ------------
NET ASSETS - ................................ 100.0% $751,609,852
===== ============
</TABLE>
(a)Effective yield (calculated at date of purchase) is the annual yield at
which the bond accrues until its maturity date.
Note: Securities that have been Escrowed to Maturity (ETM) or prerefunded have
been fully collateralized with U.S. Government Securities, cash or both.
SUMMARY OF ABBREVIATIONS:
ACA American Capital Access
AMBAC American Municipal Bond Assurance Corp.
BIG Bond Investors Guaranty
ETM Escrowed to Maturity
FGIC Financial Guaranty Insurance Corp.
FSA Financial Security Assurance Corp.
GO General Obligation
IBC Insured Bond Certification
IDA Industrial Development Authority
LOC Letter of Credit
MBIA Municipal Bond Investors Assurance Corp.
MFHRB Multi Family Housing Revenue Bond
PCRB Pollution Control Revenue Bond
RAN Revenue Anticipation Note
RB Revenue Bond
REFCORP Resolution Trust Funding Corp.
SFHRB Single Family Housing Revenue Bond
TCRS Transferable Custody Receipts
The Fund had the following insurance concentration at September 30, 1998:
<TABLE>
<CAPTION>
PERCENTAGE
OF NET
ASSETS
----------
<S> <C>
MBIA...................................................... 12.8%
</TABLE>
See Combined Notes to Financial Statements.
54
<PAGE>
- --------------------------------------------------------------------------------
Evergreen
Select International Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
September 30, 1998
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
CORPORATE BONDS - 1.4%
UNITED STATES - 1.4%
$ 500,000 Rothmans Holdings,
6.50%, 5/6/03........................................ $ 515,909
200,000 Samsung Electronics America Inc.,
9.75%, 5/1/03........................................ 156,000
-----------
Total Corporate Bonds
(cost $685,990)..................................... 671,909
-----------
YANKEE OBLIGATIONS - 8.5%
CHINA - 0.7%
400,000 Hutchison Whampoa Finance,
6.95%, 8/1/07........................................ 340,115
-----------
COLOMBIA - 0.3%
200,000 Republic of Colombia,
7.25%, 2/23/04....................................... 152,062
-----------
KAZAKHSTAN - 0.2%
200,000 Republic of Kazakhstan,
8.38%, 10/2/02....................................... 109,500
-----------
KOREA - 0.8%
200,000 Korea Development Bank,
7.13%, 9/17/01....................................... 171,750
200,000 Korea Republic,
8.75%, 4/15/03....................................... 183,014
-----------
354,764
-----------
LITHUANIA - 1.0%
525,000 Republic of Lithuania,
7.13%, 7/22/02....................................... 474,386
-----------
SLOVAKIA - 0.4%
200,000 Republic of Slovakia,
9.50%, 5/28/03....................................... 165,250
-----------
THAILAND - 0.4%
200,000 Kingdom of Thailand,
7.75%, 4/15/07....................................... 158,985
-----------
UNITED KINGDOM - 4.7%
500,000 Abbey National Plc,
6.69%, 10/17/05...................................... 529,554
500,000 British Telecom Plc,
7.00%, 5/23/07....................................... 553,999
500,000 ICI Finance Nederland,
6.75%, 8/7/02........................................ 527,337
545,000 Rolls Royce Capital,
7.13%, 7/29/03....................................... 593,248
-----------
2,204,138
-----------
Total Yankee Obligations
(cost $4,126,625)................................... 3,959,200
-----------
FOREIGN BONDS (NON U.S. DOLLARS) - 88.8%
AUSTRALIA - 2.5%
1,600,000 New South Wales Treasury,
AUD 12.00%, 12/1/01...................................... 1,159,050
-----------
AUSTRIA - 3.4%
2,400,000 Oest Kontrollbank,
DEM 5.75%, 9/12/07....................................... 1,586,275
-----------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
FOREIGN BONDS (NON U.S. DOLLARS) - CONTINUED
CANADA - 9.0%
$ 3,900,000 Canadian Government,
CAD 4.75%, 9/15/99....................................... $ 2,550,998
2,400,000 JP Morgan & Co Inc,
CAD 6.88%, 3/17/04....................................... 1,652,189
-----------
4,203,187
-----------
DENMARK - 2.0%
5,800,000 City of Copenhagen,
DKK 6.25%, 3/15/01....................................... 946,506
-----------
FRANCE - 13.1%
10,600,000 Credit Local De France,
FRF 5.38%, 1/13/04....................................... 2,020,383
10,000,000 Diageo,
FRF 6.25%, 11/25/02...................................... 1,954,371
10,250,000 OAT,
FRF 6.00%, 10/25/25...................................... 2,141,752
-----------
6,116,506
-----------
GERMANY - 21.6%
8,590,000 Bundesrepublic,
DEM 6.25%, 1/4/24........................................ 6,183,859
3,000,000 Kreditanst Fuer Wied,
DEM 5.50%, 3/12/07....................................... 1,953,651
3,400,000 Siemens Co Ordinat,
NLG 5.50%, 3/12/07....................................... 1,944,076
-----------
10,081,586
-----------
JAPAN - 3.4%
950,000 Chubu Electric Power,
GBP 6.75%, 8/10/99....................................... 1,609,184
-----------
MEXICO - 0.4%
125,000 United Mexican States,
GBP 8.75%, 5/30/02....................................... 175,076
-----------
NETHERLANDS - 10.7%
1,700,000 Bank Voor Ned Gemeenten,
NLG 6.25%, 9/15/00....................................... 943,404
9,800,000 Depfa Finance NV,
FRF 6.38%, 11/18/08...................................... 2,041,553
3,150,000 DSL Finance NV,
DEM 5.00%, 7/23/04....................................... 1,997,784
-----------
4,982,741
-----------
NEW ZEALAND - 2.8%
2,320,000 New Zealand,
NZD 8.00%, 11/15/06...................................... 1,333,395
-----------
NORWAY - 3.9%
13,000,000 Eksportfinans AS,
SEK 6.88%, 2/9/04........................................ 1,822,213
-----------
SLOVAKIA - 0.7%
550,000 Vodohospodarska Vystavba,
DEM 8.00%, 7/9/01........................................ 307,943
-----------
SUPERNATIONAL - 2.1%
1,860,000 World Bank,
NZD 7.25%, 5/27/03....................................... 976,982
-----------
</TABLE>
55
<PAGE>
- --------------------------------------------------------------------------------
Evergreen
Select International Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (continued)
September 30, 1998
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
FOREIGN BONDS (NON U.S. DOLLARS) - CONTINUED
SWEDEN - 8.2%
$ 8,000,000 Kingdom of Sweden,
SEK 5.00%, 1/15/04...................................... $ 1,043,302
11,500,000 Kingdom of Sweden,
SEK 8.00%, 8/15/07...................................... 1,815,628
550,000 Swedish Export Credit Corp,
GBP 7.63%, 12/27/01..................................... 965,444
-----------
3,824,374
-----------
UNITED KINGDOM - 5.0%
1,175,000 Gallaher Group Plc,
DEM 5.88%, 8/6/08....................................... 711,530
950,000 Halifax Building,
GBP 8.38%, 12/15/99..................................... 1,641,273
-----------
2,352,803
-----------
Total Foreign Bonds (Non U.S. Dollars) (cost
$38,752,313)....................................... 41,477,821
-----------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS -
(COST $43,564,928)........................... 98.7% 46,108,930
OTHER ASSETS AND
LIABILITIES - NET............................ 1.3 627,131
----- -----------
NET ASSETS -.................................. 100.0% $46,736,061
===== ===========
</TABLE>
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
<TABLE>
<CAPTION>
U.S. $ VALUE AT IN EXCHANGE UNREALIZED
EXCHANGE DATE CONTRACTS TO DELIVER SEPTEMBER 30, 1998 FOR U.S. $ DEPRECIATION
- --------------------------------------------------------------------------------------------
Forward Foreign Currency Exchange Contracts to Sell:
<S> <C> <C> <C> <C> <C>
12/23/98 6,400,000 Canadian Dollar 4,194,933 4,191,773 $ (3,160)
10/14/98 3,300,000 German Deutsche Mark 1,977,565 1,811,197 (166,368)
12/23/98 11,270,000 German Deutsche Mark 6,777,093 6,740,431 (36,662)
10/14/98 6,126,000 Danish Krone 964,854 947,124 (17,730)
10/13/98 12,250,000 French Franc 2,189,073 2,058,823 (130,250)
10/14/98 22,120,000 French Franc 3,953,049 3,621,777 (331,272)
12/24/98 11,000,000 French Franc 1,972,698 1,943,119 (29,579)
10/13/98 2,200,000 British Pound Sterling 3,737,587 3,575,000 (162,587)
10/23/98 600,000 British Pound Sterling 1,018,788 1,007,406 (11,382)
12/9/98 1,850,000 Dutch Guilder 986,115 937,896 (48,219)
10/14/98 14,260,000 Swedish Krone 1,820,239 1,792,132 (28,107)
11/24/98 8,440,000 Swedish Krone 1,078,604 1,069,282 (9,322)
11/24/98 14,260,000 Swedish Krone 1,942,509 1,920,404 (22,105)
---------
$(996,743)
=========
</TABLE>
SUMMARY OF ABBREVIATIONS:
AUD Australian Dollar
CAD Canadian Dollar
DEM German Deutsche Mark
DKK Danish Krone
FRF French Franc
GBP British Pound Sterling
NLG Dutch Guilder
NZD New Zealand Dollar
SEK Swedish Krone
See Combined Notes to Financial Statements.
56
<PAGE>
- --------------------------------------------------------------------------------
Evergreen
Select Limited Duration Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
September 30, 1998
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
ASSET-BACKED SECURITIES - 14.5%
$ 143,507 Aames Mortgage Trust,
Series 1996, Class A1B,
7.275%, 5/15/20...................................... $ 145,284
850,000 Chase Credit Card Master Trust,
Series 1997-2, Class A,
6.30%, 4/15/03....................................... 871,467
247,900 Chevy Chase Auto Receivables,
Series 1995-1, Class A,
6.00%, 12/15/01...................................... 248,809
163,087 CIT RV Owner Trust,
Series 1995-B, Class A,
6.50%, 4/15/11....................................... 165,287
500,000 Contimortgage Home Equity
Loan Trust, Series 1997-4, Class A3,
6.26%, 7/15/12....................................... 503,268
210,000 Contimortgage Home Equity
Loan Trust, Series 1996-4, Class A5,
6.60%, 10/15/11...................................... 212,765
EQCC Home Equity Loan Trust:
136,546 Series 1996-2, Class A2,
6.70%, 9/15/08....................................... 138,035
76,755 Series 1996-4, Class A3,
6.26%, 11/15/06...................................... 77,043
750,000 Series 1997-1, Class A3,
6.84%, 9/15/11....................................... 768,626
500,000 Firstplus Home Loan Owner Trust, Series 1997-3, Class
A3,
6.57%, 10/10/10...................................... 504,558
531,325 Heller Equipment Asset Receivables, Series 1997-1,
Class A2,
6.39%, 5/25/05....................................... 537,257
Navistar Financial Owner Trust:
228,603 Series 1996-B, Class A3,
6.33%, 4/21/03....................................... 228,603
165,639 Series 1997-A, Class A2,
6.35%, 1/15/00....................................... 166,347
662,344 Olympic Automobile Receivables,
Series 1995-D, Class B,
6.10%, 4/15/02....................................... 667,203
525,000 Premier Auto Trust,
Series 1996-2, Class A4,
6.575%, 10/6/00...................................... 531,103
540,828 Student Loan Marketing Assoc., Series 1997-1, Class
A1,
5.003%, 10/25/05..................................... 538,272
129,276 The Money Store,
Home Equity Loan Trust,
Series 1993-B, Class A1,
5.40%, 8/15/05....................................... 129,234
750,000 Toyota Auto Lease Trust,
Series 1997-A, Class A2,
6.35%, 4/26/04....................................... 780,911
Union Acceptance Corp.:
123,228 Series 1995-A, Class A,
7.725%, 3/10/01...................................... 124,283
367,091 Series 1995-D, Class B,
6.025%, 1/7/03....................................... 369,266
307,596 Series 1996-A, Class A,
5.40%, 4/7/03........................................ 308,093
1,800,000 Series 1996-D, Class A2,
6.17%, 10/9/02....................................... 1,822,275
115,217 Series 1997-A, Class A1,
6.13%, 7/10/01....................................... 115,513
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
ASSET-BACKED SECURITIES - CONTINUED
$ 430,000 Vanderbilt Mortgage and Finance Inc., Series 1997-B,
Class 1A2,
6.775%, 1/7/08....................................... $ 439,221
-----------
Total Asset-Backed Securities
(cost $10,284,747).................................. 10,392,723
-----------
CORPORATE BONDS - 38.9%
BANKS - 3.6%
1,000,000 Banc One, MTN,
7.00%, 3/25/02....................................... 1,049,882
500,000 Citicorp, FRN,
5.887%, 11/23/99..................................... 501,712
1,000,000 Wachovia Corp.,
6.375%, 4/15/03...................................... 1,045,328
-----------
2,596,922
-----------
CHEMICAL & AGRICULTURAL PRODUCTS - 1.5%
1,000,000 Hoechst Celanese Corp.,
6.125%, 2/1/04....................................... 1,048,741
-----------
COMMUNICATION SYSTEMS & SERVICES - 0.7%
500,000 TCI Communications,
6.375%, 9/15/99...................................... 505,711
-----------
CONSUMER PRODUCTS & SERVICES - 1.5%
1,000,000 Honeywell, Inc.,
6.75%, 3/15/02....................................... 1,056,029
-----------
FINANCE & INSURANCE - 24.2%
Associates Corp., N.A.:
1,250,000 6.00%, 6/15/00....................................... 1,265,418
525,000 6.25%, 3/15/99....................................... 526,464
1,000,000 Caterpillar Financial Services, MTN,
6.75%, 6/15/01....................................... 1,039,546
510,000 Chrysler Financial Corp.,
6.375%, 1/28/00...................................... 516,770
1,000,000 CIT Group Holdings, Inc. MTN,
6.15%, 12/15/02...................................... 1,028,210
500,000 Fleet Mortgage Group, Inc.,
6.50%, 9/15/99....................................... 504,851
1,000,000 Ford Motor Credit Co.,
6.55%, 9/10/02....................................... 1,042,819
General Motors Acceptance Corp., MTN:
700,000 5.593%, 12/9/99...................................... 700,479
500,000 5.95%, 4/20/01....................................... 507,815
750,000 Goldman Sachs Group LP,
6.60%, 7/15/02 (a)................................... 764,415
1,000,000 Ikon Capital, Inc., MTN,
6.73%, 6/15/01....................................... 1,004,501
International Lease Finance Corp.:
1,000,000 6.00%, 6/15/03....................................... 1,028,024
1,000,000 7.00%, 5/15/00....................................... 1,025,335
850,000 Lehman Brothers Holdings Inc.,
6.50%, 7/18/00....................................... 846,574
255,000 Mellon Financial Corp.,
7.625%, 11/15/99..................................... 261,149
750,000 Morgan Stanley Dean Witter, MTN,
5.89%, 3/20/00....................................... 755,240
Morgan Stanley Group, Inc., FRN:
500,000 5.663%, 12/10/98..................................... 500,901
1,250,000 5.739%, 2/26/99...................................... 1,252,070
</TABLE>
57
<PAGE>
- --------------------------------------------------------------------------------
Evergreen
Select Limited Duration Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (continued)
September 30, 1998
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
CORPORATE BONDS - CONTINUED
FINANCE & INSURANCE - CONTINUED
$ 395,000 NationsBank Corp.,
5.375%, 4/15/00....................................... $ 394,673
Salomon, Inc.:
750,000 6.50%, 3/1/00......................................... 759,073
1,000,000 7.30%, 5/15/02........................................ 1,055,559
500,000 Transamerica Finance Corp.,
6.75%, 6/1/00......................................... 510,644
-----------
17,290,530
-----------
FOOD & BEVERAGE PRODUCTS - 3.6%
1,000,000 Coca-Cola Enterprises, Inc.,
6.375%, 8/1/01........................................ 1,031,080
1,500,000 Pepsico, Inc., MTN,
6.375%, 12/31/99...................................... 1,526,328
-----------
2,557,408
-----------
PAPER & PACKAGING - 1.4%
1,000,000 International Paper Co.,
7.00%, 6/1/01......................................... 1,041,057
-----------
RETAILING & WHOLESALE - 2.4%
Sears Roebuck Acceptance Corp., MTN:
650,000 6.38%, 2/16/99........................................ 652,194
1,000,000 6.56%, 11/20/03....................................... 1,050,494
-----------
1,702,688
-----------
Total Corporate Bonds
(cost $27,347,432)................................... 27,799,086
-----------
COLLATERALIZED MORTGAGE OBLIGATIONS - 1.2%
857,564 Prudential Home Mortgage
Securities Co., Series
1992-45, Class A4,
6.50%, 1/25/00 (cost $853,276)........................ 861,779
-----------
U.S. AGENCY OBLIGATIONS - 8.4%
750,000 Federal Home Loan Bank, FRN,
5.52%, 6/17/99........................................ 750,232
Federal Home Loan Mortgage Corp.:
476,272 6.00%, 1/1/01......................................... 478,258
847,135 6.00%, 9/1/01......................................... 853,209
1,499,152 7.00%, 12/1/99........................................ 1,515,178
235,948 8.00%, 1/1/99......................................... 237,647
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
U.S. AGENCY OBLIGATIONS - CONTINUED
$ 753,619 Federal National Mortgage Assoc.,
6.50%, 9/1/05......................................... $ 768,450
500,000 Federal National Mortgage Assoc., MTN,
5.546%, 10/20/98...................................... 499,985
864,319 Government National Mortgage Assoc.,
6.50%, 12/15/08....................................... 885,996
-----------
Total U.S. Agency Obligations
(cost $5,922,332).................................... 5,988,955
-----------
U.S. TREASURY NOTES - 25.2%
U.S. Treasury Notes:
2,000,000 5.25%, 8/15/03........................................ 2,090,002
4,000,000 5.375%, 2/15/01....................................... 4,091,252
1,000,000 6.00%, 8/15/00........................................ 1,028,751
1,000,000 6.375%, 1/15/99....................................... 1,005,626
1,000,000 6.375%, 5/15/99....................................... 1,010,626
5,000,000 6.375%, 5/15/00....................................... 5,148,440
3,500,000 7.50%, 10/31/99....................................... 3,606,095
-----------
Total U. S. Treasury Notes
(cost $17,643,796)................................... 17,980,792
-----------
YANKEE OBLIGATIONS - 3.0%
1,000,000 WMC Finance USA Limited,
6.50%, 11/15/03 ...................................... 1,052,588
1,000,000 Hanson PLC,
7.375%, 1/15/03....................................... 1,077,191
-----------
Total Yankee Obligations
(cost $2,051,214).................................... 2,129,779
-----------
FUNDING AGREEMENTS - 2.8%
2,000,000 Allstate Insurance,
5.698%, 10/1/98 (cost $2,000,000)..................... 2,000,000
-----------
REPURCHASE AGREEMENT - 5.1%
3,614,223 Dresdner Bank AG, 5.00% dated 9/30/98, due 10/1/98
cost, $3,614,223, maturity value $3,614,725 (b)...... 3,614,223
-----------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
TOTAL INVESTMENTS -
(COST $69,717,020)................................... 99.1% 70,767,337
OTHER ASSETS AND
LIABILITIES - NET.................................... 0.9 657,095
----- -----------
NET ASSETS - ......................................... 100.0% $71,424,432
===== ===========
</TABLE>
(a) Securities that may be resold to "qualified institutional buyers" under
Rule 144A or securities offered pursuant to Section 4(2) of the Securities
Act of 1933, as amended. These securities have been determined to be liquid
under guidelines established by the Board of Trustees.
(b) Repurchase agreement is collateralized by $3,615,605 U.S. Treasury Notes,
5.395%, due 6/30/03 with a value, including accrued interest, of
$3,687,917.
SUMMARY OF ABBREVIATIONS:
FRN Floating Rate Note
MTN Medium Term Note
See Combined Notes to Financial Statements.
58
<PAGE>
- --------------------------------------------------------------------------------
Evergreen
Select Total Return Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
September 30, 1998
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
FOREIGN BONDS - 5.4%
BANKS - 0.6%
$ 750,000 Kreditanst Fur Wie,
DEM 5.50%, 3/12/07........................................ $ 488,413
560,000 International Bank of Reconstruction & Development
NZD 7.25%, 5/27/03........................................ 291,987
----------
780,400
----------
FINANCE - 0.9%
1,000,000 DSL Finance NV,
DEM 5.00%, 7/23/04........................................ 634,217
2,500,000 Eksportfinans AS,
SEK 6.875%, 2/9/04........................................ 346,092
200,000 GMAC International Finance BV,
GBP 7.125%, 2/10/00....................................... 340,258
----------
1,320,567
----------
MANUFACTURING - DISTRIBUTING - 0.3%
840,000 Siemens Co Ordinat,
NLG 5.50%, 3/12/07........................................ 481,695
----------
UTILITIES - WATER - 0.1%
180,000 Vodohospodarska Vystavba,
DEM 8.00%, 7/9/01......................................... 100,615
----------
GOVERNMENT - 3.5%
4,000,000 Denmark Kingdom,
DKK 6.00%, 11/15/02....................................... 667,538
1,000,000 Dutch Government
NLG 5.75%, 9/15/02........................................ 569,730
French Government:
3,500,000 5.25%, 4/25/08........................................ 682,149
FRF
2,500,000 5.50%, 4/25/29........................................ 484,392
FRF
German Federal Republic:
1,250,000 5.25%, 1/4/08......................................... 822,630
DEM
720,000 5.625%, 1/4/28........................................ 479,657
DEM
Kingdom of Sweden:
2,200,000 5.00%, 1/15/04........................................ 286,907
SEK
2,500,000 6.50%, 10/25/06....................................... 357,078
SEK
70,000 Mexican United States,
GBP 8.75%, 5/30/02........................................ 98,701
500,000 New Zealand,
NZD 8.00%, 4/15/04........................................ 277,586
----------
4,726,368
----------
Total Foreign Bonds
(cost $7,098,303).................................... 7,409,645
----------
MORTGAGE-BACKED SECURITIES - 21.8%
FEDERAL HOME LOAN MORTGAGE CORP. - 18.4%
6,213,797 7.00%, 6/1/27-5/1/28.................................. 6,390,828
11,829,568 7.50%, 10/1/11-7/1/28................................. 12,209,562
3,743,061 8.00%, 4/1/27-5/1/27.................................. 3,869,352
2,538,690 8.50%, 1/1/28......................................... 2,646,508
----------
25,116,250
----------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
MORTGAGE-BACKED SECURITIES - CONTINUED
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 3.4%
$ 1,508,863 6.00%, 5/15/28.................................. $ 1,517,313
3,002,095 6.50%, 5/15/28.................................. 3,071,443
-------------
4,588,756
-------------
Total Mortgage-Backed Securities (cost
$29,447,311)................................... 29,705,006
-------------
U.S. TREASURY OBLIGATIONS - 29.3%
U.S. Treasury Bonds:
7,560,000 5.50%, 8/15/28.................................. 8,171,891
3,000,000 7.625%, 2/15/07................................. 3,290,628
2,000,000 7.875%, 2/15/21................................. 2,703,752
3,000,000 9.00%, 11/15/18................................. 4,430,628
U.S. Treasury Notes:
3,000,000 5.50%, 2/28/03.................................. 3,139,689
2,700,000 5.625%, 11/30/00................................ 2,769,190
3,000,000 5.625%, 2/15/06................................. 3,238,128
2,175,000 5.875%, 10/31/98................................ 2,177,721
2,200,000 6.50%, 8/15/05.................................. 2,479,814
4,000,000 6.625%, 3/31/02................................. 4,288,752
2,850,000 7.50%, 11/15/01................................. 3,106,503
-------------
39,796,696
-------------
Total U.S. Treasury Obligations
(cost $37,701,787)............................. 39,796,696
-------------
YANKEE OBLIGATIONS - 1.4%
FINANCE - 0.5%
100,000 Hutchison Whampoa Finance Ltd.,
6.95%, 8/1/07................................... 87,325
500,000 ICI Finance Ned,
6.75%, 8/7/02................................... 527,336
-------------
614,661
-------------
OTHER - 0.2%
500,000 Mastellone Hermanos S A,
11.75%, 4/1/08 (a).............................. 320,000
-------------
PUBLISHING, BROADCASTING & ENTERTAINMENT - 0.4%
1,000,000 Radio E Televisao Bandeirantes,
12.875%, 5/15/06 (a)............................ 556,320
-------------
GOVERNMENT - 0.3%
100,000 Kingdom of Thailand,
7.75%, 4/15/07.................................. 79,493
100,000 Korea Republic,
8.75%, 4/15/03.................................. 91,507
100,000 Republic of Kazakhstan,
8.375%, 10/2/02................................. 68,758
100,000 Republic of Lithuania,
7.125%, 7/22/02................................. 90,359
100,000 Republic of Slovakia,
9.50%, 5/28/03.................................. 80,500
-------------
410,617
-------------
Total Yankee Obligations -
(cost $2,568,865).............................. 1,901,598
-------------
</TABLE>
59
<PAGE>
- --------------------------------------------------------------------------------
Evergreen
Select Total Return Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (continued)
September 30, 1998
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
CORPORATE BONDS & NOTES - 39.0%
AUTOMOTIVE EQUIPMENT & MANUFACTURING - 0.3%
$ 500,000 Walbro Corp.,
10.125%, 12/15/07................................... $ 455,000
------------
BANKS - 3.2%
2,000,000 Bankers Trust New York Corp.,
7.25%, 10/15/11..................................... 2,063,908
2,000,000 Keycorp,
8.00%, 7/1/04....................................... 2,255,580
------------
4,319,488
------------
BROKERS - 1.5%
2,000,000 Paine Webber Group Inc.,
6.50%, 11/1/05...................................... 2,043,968
------------
CHEMICAL & AGRICULTURAL PRODUCTS - 0.2%
250,000 Polymer Group Inc.,
9.00%, 7/1/07....................................... 238,750
------------
COMMUNICATION SYSTEMS & SERVICES - 4.5%
500,000 Adelphia Communications Corp.,
9.875%, 3/1/07...................................... 540,000
2,000,000 Cable & Wireless Communication,
6.75%, 3/6/08....................................... 2,091,314
1,000,000 Century Communications Corp.,
(Eff. Yield 9.03%) (c)
0.00% 1/15/08....................................... 475,000
500,000 Lenfest Communications, Inc.,
8.375%, 11/1/05..................................... 528,750
1,000,000 Microcell Telecommunications,
(Eff. Yield 9.75%) (c)
0.00% 6/1/06........................................ 715,000
500,000 Price Communications Wireless,
9.125%, 12/15/06 (a)................................ 490,000
500,000 Rogers Cablesystems Ltd.,
9.625%, 8/1/02...................................... 530,000
500,000 Rural Cellular Corp.,
9.625%, 5/15/08..................................... 456,875
400,000 Winstar Communications Inc.,
(Eff. Yield 10.50%) (c)
0.00%, 10/15/05..................................... 270,000
------------
6,096,939
------------
ENERGY - 0.9%
P&L Coal Holdings Corp.:
1,000,000 8.875%, 5/15/08 (a)................................. 1,020,000
250,000 9.625%, 5/15/08 (a)................................. 245,625
------------
1,265,625
------------
FINANCE & INSURANCE - 0.4%
500,000 Reliance Group Holdings Inc.,
9.75%, 11/15/03..................................... 517,500
------------
FINANCE - 5.0%
500,000 CB Richards Ellis Services Inc.,
8.875%, 6/1/06...................................... 491,250
2,000,000 Chrysler Financial Corp.,
6.16%, 7/28/99...................................... 2,009,894
2,000,000 Household Finance Corp.,
8.00%, 8/1/04....................................... 2,243,656
2,000,000 Lincoln National Corp.,
7.00%, 3/15/18...................................... 2,071,286
------------
6,816,086
------------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
CORPORATE BONDS & NOTES - CONTINUED
FOOD & BEVERAGE PRODUCTS - 1.5%
$ 500,000 Aurora Foods Inc.,
8.75%, 7/1/08....................................... $ 517,500
500,000 Chiquita Brands International Inc.,
9.625%, 1/15/04..................................... 511,250
500,000 Perkins Family Restaurant,
10.125%, 12/15/07................................... 501,250
500,000 R A B Enterprises Inc.,
10.50%, 5/1/05 (a).................................. 467,500
------------
1,997,500
------------
GAMING - 0.2%
250,000 Grand Casino Inc.,
10.125%, 12/1/03.................................... 263,750
------------
HEALTHCARE PRODUCTS & SERVICES - 0.9%
500,000 Genesis Health,
9.75%, 6/15/05...................................... 495,000
500,000 Insight Health Services Corp.,
9.625%, 6/15/08 (a)................................. 452,500
250,000 Oxford Health Plans Inc.,
11.00%, 5/15/05 (a)................................. 212,500
------------
1,160,000
------------
INFORMATION SERVICES & TECHNOLOGY - 0.2%
250,000 Unisys Corp.,
12.00%, 4/15/03..................................... 278,750
------------
IRON & STEEL - 0.3%
500,000 WHX Corp.,
10.50%, 4/15/05..................................... 458,750
------------
METALS & MINING - 1.6%
2,000,000 Barrick Gold Corp Inc.,
7.50%, 5/1/07....................................... 2,222,566
------------
MANUFACTURING - DISTRIBUTING - 2.9%
750,000 Exide Corp.,
2.90%, 12/15/05 (a)................................. 375,938
500,000 International Knife and Saw,
11.375%, 11/15/06................................... 515,000
500,000 NSM Steel Inc.,
12.00%, 2/1/06 (a).................................. 248,750
750,000 Outboard Marine Corp.,
10.75%, 6/1/08 (a).................................. 724,687
2,000,000 Sony Corp.,
6.125%, 3/4/03...................................... 2,070,292
------------
3,934,667
------------
OIL/ENERGY - 2.5%
500,000 HS Resources Inc.,
9.25%, 11/15/06..................................... 476,250
950,000 Parker Drilling Co.,
9.75%, 11/15/06..................................... 883,500
2,000,000 Petroleum Geo Services,
6.625%, 3/30/08..................................... 2,034,446
------------
3,394,196
------------
PAPER & PACKAGING - 1.5%
2,000,000 UPM-Kymmene Corp.,
6.875%, 11/26/07 (a)................................ 2,071,762
------------
</TABLE>
60
<PAGE>
- --------------------------------------------------------------------------------
Evergreen
Select Total Return Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (continued)
September 30, 1998
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
CORPORATE BONDS & NOTES - CONTINUED
PUBLISHING, BROADCASTING & ENTERTAINMENT - 0.4%
$ 500,000 American Lawyer Media Inc.,
9.75%, 12/15/07..................................... $ 501,250
------------
REAL ESTATE - 0.7%
500,000 HMH Property Inc.,
7.875%, 8/1/08...................................... 493,750
500,000 MDC Holdings Inc.,
8.375%, 2/1/08...................................... 480,000
------------
973,750
------------
RETAILING & WHOLESALE - 4.8%
500,000 FRD Acquisition Co.,
12.50%, 7/15/04..................................... 500,000
500,000 Jitney Jungle Stores America Inc.,
10.375%, 9/15/07.................................... 505,000
2,000,000 Kroger Co.,
6.375%, 3/1/08...................................... 2,000,862
500,000 MTS Inc.,
9.375%, 5/1/05 (a).................................. 452,500
500,000 Pamida Inc.,
11.75%, 3/15/03..................................... 460,000
2,000,000 Sears Roebuck & Co.,
9.375%, 11/1/11..................................... 2,668,182
------------
6,586,544
------------
TELECOMMUNICATION SERVICES & EQUIPMENT - 1.2%
600,000 Acme Television LLC,
(Eff. Yield 8.93%)
0.00%, 9/30/04...................................... 471,000
250,000 Comcast Corp.,
9.50%, 1/15/08...................................... 280,062
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
CORPORATE BONDS & NOTES - CONTINUED
TELECOMMUNICATION SERVICES &
EQUIPMENT - CONTINUED
$ 500,000 ICO Global Commerce,
15.00%, 8/1/05...................................... $ 397,500
500,000 Paging Network Inc.,
10.00%, 10/15/08.................................... 498,750
------------
1,647,312
------------
TEXTILE & APPAREL - 0.4%
500,000 Delta Mills Inc.,
9.625%, 9/1/07...................................... 467,500
------------
TRANSPORTATION - 3.9%
500,000 Cenargo International Ltd.,
9.75%, 6/15/08...................................... 411,250
2,000,000 Federal Express Corp.,
9.875%, 4/1/02...................................... 2,294,818
1,882,790 Southwest Airlines Co.,
8.70%, 7/1/11....................................... 2,258,285
500,000 TBS Shipping International Ltd.,
10.00%, 5/1/05 (a).................................. 372,500
------------
5,336,853
------------
Total Corporate Bonds & Notes
(cost $53,618,313)................................. 53,048,506
------------
REPURCHASE AGREEMENTS - 3.6%
4,896,481 Dresdner Bank AG
5.00% dated 9/30/98,
due 10/1/98, cost, $4,896,481,
maturity value $4,897,161 (b)...................... 4,896,481
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS -
(COST $135,331,060)........................ 100.5% 136,757,932
OTHER ASSETS AND LIABILITIES - NET.......... (0.5) (735,876)
----- ------------
NET ASSETS -................................ 100.0% $136,022,056
===== ============
</TABLE>
(a) Securities that may be resold to "qualified institutional buyers" under
Rule 144A or securities offered pursuant to Section 4(2) of the Securities
Act of 1933, as amended. These securities have been determined to be liquid
under guidelines established by the Board of Trustees.
(b) Repurchase agreements collateralized by $4,870,000 US Treasury Notes,
5.625% due 12/31/99 with a value, including accrued interest, $4,994,782.
(c) Effective yield (calculated at date of purchase) is the annual yield at
which the bond accrues until its maturity date.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
<TABLE>
<CAPTION>
U.S. $ VALUE AT IN EXCHANGE UNREALIZED
EXCHANGE DATE CONTRACTS TO DELIVER SEPTEMBER 30, 1998 FOR U.S. $ DEPRECIATION
- ----------------------------------------------------------------------------------------
Forward Foreign Currency Exchange Contracts to Sell:
<S> <C> <C> <C> <C> <C>
11/13/98 300,000 French Francs 53,694 50,519 $ (3,175)
11/13/98 700,000 German Deutsche Marks 420,131 395,525 (24,606)
11/13/98 600,000 Danish Krone 94,541 88,843 (5,698)
11/13/98 300,000 Swedish Krone 38,327 37,008 (1,319)
--------
$(34,798)
========
</TABLE>
SUMMARY OF ABBREVIATIONS:
DEM German Deutsche Marks
DKK Danish Krone
FRF French Franc
GBP British Pound Sterling
NLG Netherland Guilder
NZD New Zealand Dollar
SEK Swedish Krona
See Combined Notes to Financial Statements.
61
<PAGE>
- --------------------------------------------------------------------------------
Evergreen
Select Fixed Income Funds
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
September 30, 1998
<TABLE>
<CAPTION>
ADJUSTABLE CORE FIXED INCOME INTERMEDIATE INTERNATIONAL LIMITED TOTAL RETURN
RATE BOND INCOME PLUS TAX EXEMPT BOND DURATION BOND
FUND FUND FUND FUND BOND FUND FUND FUND FUND
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments at
market value
(identified
cost -
$32,721,065,
$566,629,781,
$649,690,557,
$1,269,414,951,
$699,113,382,
$43,564,928,
$69,717,020 and
$135,331,060
respectively).... $32,618,579 $589,747,592 $676,348,837 $1,360,488,135 $743,943,962 $46,108,930 $70,767,337 $136,757,932
Cash.............. 2,699 0 0 3,439 423 290,906 0 0
Foreign currency
(cost $0, $0,
$0, $0, $0,
$120,191, $0 and
$30,185
respectively).... 0 0 0 0 0 117,577 0 30,531
Interest
receivable....... 289,561 7,306,695 8,100,318 21,789,595 11,018,786 1,356,610 911,363 2,109,052
Receivable for
investments
sold............. 242,865 2,460,514 53,668 0 0 0 0 444,023
Receivable for
Fund shares
sold............. 0 332,761 523,054 2,171,445 131,000 0 0 0
Receivable from
investment
adviser.......... 0 0 0 0 0 0 5,790 0
Prepaid expenses
and other
assets........... 0 20,900 44,130 246,683 25,286 35,976 30,005 45,833
- ----------------------------------------------------------------------------------------------------------------------------------
Total assets.... 33,153,704 599,868,462 685,070,007 1,384,699,297 755,119,457 47,909,999 71,714,495 139,387,371
- ----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Dividends
payable.......... 24,486 2,433,853 2,285,266 5,816,049 2,765,892 127,722 116,705 158,799
Payable for
investments
purchased........ 299,190 0 43,171 0 0 0 0 3,067,850
Payable for Fund
shares
redeemed......... 0 293,359 3,571,744 3,187,617 138,162 0 116,849 0
Unrealized
depreciation on
forward foreign
currency
contracts........ 0 0 0 0 0 996,743 0 34,798
Due to
custodian........ 0 15,999 322 0 0 0 0 0
Distribution fee
payable.......... 988 85 2,428 2,782 827 117 383 5
Due to related
parties.......... 8,343 165,611 208,820 475,791 300,387 5,498 2,053 25,754
Accrued expenses
and other
liabilities...... 2,145 183,125 242,928 448,502 304,337 43,858 54,073 78,109
- ----------------------------------------------------------------------------------------------------------------------------------
Total
liabilities.... 335,152 3,092,032 6,354,679 9,930,741 3,509,605 1,173,938 290,063 3,365,315
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS........ $32,818,552 $596,776,430 $678,715,328 $1,374,768,556 $751,609,852 $46,736,061 $71,424,432 $136,022,056
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
REPRESENTED BY
Paid-in capital... $33,537,970 $561,891,384 $653,937,008 $1,272,861,362 $697,084,509 $48,146,440 $70,251,242 $136,338,755
Undistributed net
investment
income........... 2,876 (199,613) (288,591) (242,819) 10,524 (103,870) 5,023 4,751
Accumulated net
realized gains
or losses on
investments and
foreign currency
related
transactions..... (619,808) 11,966,848 (1,591,369) 11,076,829 9,684,239 (2,897,681) 117,850 (1,719,312)
Net unrealized
appreciation
(depreciation)
on investments
and foreign
currency related
transactions..... (102,486) 23,117,811 26,658,280 91,073,184 44,830,580 1,591,172 1,050,317 1,397,862
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL NET
ASSETS......... $32,818,552 $596,776,430 $678,715,328 $1,374,768,556 $751,609,852 $46,736,061 $71,424,432 $136,022,056
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST
OF
Institutional
Shares........... $23,173,962 $125,069,522 $668,906,868 $1,367,240,083 $746,873,697 $46,606,596 $70,810,095 $135,998,399
Institutional
Service Shares... 9,644,590 285,979 9,808,460 7,528,473 4,736,155 129,465 614,337 23,657
Institutional
Charitable
Shares........... 0 471,420,929 0 0 0 0 0 0
- ----------------------------------------------------------------------------------------------------------------------------------
$32,818,552 $596,776,430 $678,715,328 $1,374,768,556 $751,609,852 $46,736,061 $71,424,432 $136,022,056
- ----------------------------------------------------------------------------------------------------------------------------------
SHARES OUTSTANDING
Institutional
Shares........... 2,395,201 11,345,900 109,255,445 231,012,949 11,129,384 4,893,330 6,731,896 1,363,876
Institutional
Service Shares... 996,046 25,943 1,602,027 1,272,214 70,574 13,607 58,402 237
Institutional
Charitable
Shares........... 0 42,765,453 0 0 0 0 0 0
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE
PER SHARE
Institutional
Shares........... $9.68 $11.02 $6.12 $5.92 $67.11 $9.52 $10.52 $99.71
- ----------------------------------------------------------------------------------------------------------------------------------
Institutional
Service Shares... $9.68 $11.02 $6.12 $5.92 $67.11 $9.51 $10.52 $99.71
- ----------------------------------------------------------------------------------------------------------------------------------
Institutional
Charitable
Shares........... -- $11.02 -- -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Combined Notes to Financial Statements.
62
<PAGE>
- --------------------------------------------------------------------------------
Evergreen
Select Fixed Income Funds
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
Period Ended September 30, 1998
<TABLE>
<CAPTION>
ADJUSTABLE CORE FIXED INCOME INTERMEDIATE INTERNATIONAL LIMITED TOTAL RETURN
RATE BOND INCOME PLUS TAX EXEMPT BOND DURATION BOND
FUND* FUND** FUND** FUND** BOND FUND** FUND*** FUND** FUND****
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Interest............ $1,314,020 $29,830,414 $28,882,276 $ 68,024,173 $33,259,276 $ 574,578 $3,235,267 $ 3,826,787
- -------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Management fee...... 61,312 1,862,392 2,219,526 5,151,727 3,831,537 60,189 154,868 209,962
Distribution Plan
expenses........... 14,710 285 8,535 6,981 3,458 92 268 13
Administrative
services fees...... 0 133,870 125,951 293,363 183,098 1,735 14,591 14,250
Transfer agent
fees............... 0 64,475 1,404 731 2,541 234 784 33
Trustees' fees and
expenses........... 1,642 10,575 9,068 18,181 14,071 194 972 588
Registration and
filing fees........ 0 232,757 282,924 407,366 296,508 1,082 80,633 75,675
Custodian fees...... 139,675 116,572 319,995 196,048 2,424 15,747 17,932
Professional fees... 3,974 27,566 25,929 36,740 27,961 24,137 21,636 27,110
Shareholder reports
expense............ 0 17,363 22,652 44,682 32,056 1,353 16,231 4,921
Organizational
fees............... 0 0 0 0 0 38,864 0 0
Other............... 0 10,034 9,979 23,995 30,105 0 2,506 900
- -------------------------------------------------------------------------------------------------------------------------------
Total expenses..... 81,638 2,498,992 2,822,540 6,303,761 4,617,383 130,304 308,236 351,384
Less: Indirectly
paid expenses...... 0 (15,383) (768) (13,722) (1,847) 0 (448) (182)
Fee waivers....... 0 (526,182) (504,930) (1,033,751) (639,284) (45,948) (152,769) (135,770)
- -------------------------------------------------------------------------------------------------------------------------------
Net expenses....... 81,638 1,957,427 2,316,842 5,256,288 3,976,252 84,356 155,019 215,432
- -------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT
INCOME............. 1,232,382 27,872,987 26,565,434 62,767,885 29,283,024 490,222 3,080,248 3,611,355
- -------------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND
UNREALIZED GAIN
(LOSS) ON
SECURITIES AND
FOREIGN CURRENCY
RELATED
TRANSACTIONS
Net realized gain
(loss) on:
Securities.......... (78,229) 11,761,342 (496,271) 10,936,797 9,684,239 (227,959) 184,337 (1,717,936)
Foreign currency
related
transactions....... 0 0 0 0 0 (360,771) 0 0
Net change in
unrealized
appreciation
(depreciation) on
securities and
foreign currency
related
transactions....... (188,602) 5,569,632 18,257,417 34,820,095 16,064,710 1,578,308 616,411 1,397,862
- -------------------------------------------------------------------------------------------------------------------------------
Net realized and
unrealized gain
(loss) on
securities and
foreign currency
related
transactions....... (266,831) 17,330,974 17,761,146 45,756,892 25,748,949 989,578 800,748 (320,074)
- -------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET
ASSETS RESULTING
FROM OPERATIONS.... $ 965,551 $45,203,961 $44,326,580 $108,524,777 $55,031,973 $1,479,800 $3,880,996 $ 3,291,281
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Seven months ended September 30, 1998. The Fund changed its fiscal year
end from the last day of February to September 30, effective September 30,
1998.
** Fund commenced operations on November 24, 1997.
*** Three months ended September 30, 1998. The Fund changed its fiscal year
end from June 30 to September 30, effective September 30, 1998.
**** Fund commenced operations on April 20, 1998.
See Combined Notes to Financial Statements.
63
<PAGE>
- --------------------------------------------------------------------------------
Evergreen
Select Fixed Income Funds
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
ADJUSTABLE INTERNATIONAL
RATE BOND
FUND FUND
----------------- -------------
Year Ended Year Ended
February 28, 1998 June 30, 1998
- --------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Interest...................................... $3,163,703 $2,066,080
- --------------------------------------------------------------------------------
EXPENSES
Management fee................................ 137,489 220,826
Distribution Plan expenses.................... 17,676 1,344
Professional fees............................. 500 3,306
Trustees' fees and expenses................... 405 566
Custodian fees................................ 0 11,965
Registration and filing fees.................. 0 3,552
Administrative services fees.................. 0 90,347
Shareholder reports expense................... 0 11,143
Transfer agent fees........................... 0 10,840
Other......................................... 0 9,555
- --------------------------------------------------------------------------------
Total expenses............................... 156,070 363,444
Less: Fee waivers............................. 0 (68,548)
- --------------------------------------------------------------------------------
Net Expenses................................. 156,070 294,896
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME......................... 3,007,633 1,771,184
- --------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
SECURITIES AND FOREIGN CURRENCY RELATED
TRANSACTIONS
Net realized gain (loss) on:
Securities................................... 297,743 (1,082,597)
Foreign currency related transactions........ 0 840,135
Net change in unrealized appreciation
(depreciation) on securities and foreign
currency related transactions................ (69,974) 38,713
- --------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on
securities and foreign currency related
transactions................................. 227,769 (203,749)
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS................................... 3,235,402 1,567,435
- --------------------------------------------------------------------------------
</TABLE>
See Combined Notes to Financial Statements.
64
<PAGE>
- --------------------------------------------------------------------------------
Evergreen
Select Fixed Income Funds
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
Period Ended September 30, 1998
<TABLE>
<CAPTION>
ADJUSTABLE CORE FIXED INCOME INTERMEDIATE INTERNATIONAL LIMITED
RATE BOND INCOME PLUS TAX EXEMPT BOND DURATION
FUND* FUND** FUND** FUND** BOND FUND** FUND*** FUND**
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS
Net investment
income.......... $ 1,232,382 $ 27,872,987 $ 26,565,434 $ 62,767,885 $ 29,283,024 $ 490,222 $ 3,080,248
Net realized gain
(loss) on:
Securities...... (78,229) 11,761,342 (496,271) 10,936,797 9,684,239 (227,959) 184,337
Foreign currency
related
transactions... 0 0 0 0 0 (360,771) 0
Net change in
unrealized
appreciation
(depreciation)
on securities
and foreign
currency related
transactions.... (188,602) 5,569,632 18,257,417 34,820,095 16,064,710 1,578,308 616,411
- ------------------------------------------------------------------------------------------------------------------------
Net increase in
net assets
resulting from
operations..... 965,551 45,203,961 44,326,580 108,524,777 55,031,973 1,479,800 3,880,996
- ------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO
SHAREHOLDERS
FROM NET
INVESTMENT
INCOME
Institutional
Shares.......... (887,998) (5,164,728) (26,373,150) (62,598,276) (29,222,895) (638,833) (3,073,999)
Institutional
Service Shares.. (344,384) (6,574) (192,964) (169,001) (60,129) (1,692) (6,249)
Institutional
Charitable
Shares.......... 0 (22,701,686) 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------
Total
distributions
to
shareholders... (1,232,382) (27,872,988) (26,566,114) (62,767,277) (29,283,024) (640,525) (3,080,248)
- ------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE
TRANSACTIONS
Proceeds from
shares sold..... 12,620,392 763,461,851 584,709,292 1,335,192,430 815,300,441 8,607,670 76,083,563
Proceeds from
reinvestment of
distributions... 913,798 4,186,376 2,361,028 1,853,405 120,031 512,803 1,650,900
Payment for
shares
redeemed........ (16,749,211) (188,202,770) (98,155,046) (170,985,567) (89,559,569) (144,292) (40,029,773)
Shares issued in
connection with
the acquisition
of:
CoreFund Bond
Fund........... 0 0 0 162,950,788 0 0 0
CoreFund Short
Term Income
Fund........... 0 0 0 0 0 0 32,918,994
CoreFund Short
Intermediate
Bond Fund...... 0 0 172,039,588 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------
Net increase
(decrease) in
net
assets resulting
from capital
share
transactions... (3,215,021) 579,445,457 660,954,862 1,329,011,056 725,860,903 8,976,181 70,623,684
- ------------------------------------------------------------------------------------------------------------------------
Total increase
(decrease) in
net assets.... (3,481,852) 596,776,430 678,715,328 1,374,768,556 751,609,852 9,815,456 71,424,432
NET ASSETS
Beginning of
period.......... 36,300,404 0 0 0 0 36,920,605 0
- ------------------------------------------------------------------------------------------------------------------------
End of period.... $ 32,818,552 $ 596,776,430 $678,715,328 $1,374,768,556 $751,609,852 $46,736,061 $71,424,432
- ------------------------------------------------------------------------------------------------------------------------
Undistributed net
investment
income ......... $ 2,876 $ (199,613) $ (288,591) $ (242,819) $ 10,524 $ (103,870) $ 5,023
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
TOTAL RETURN
BOND
FUND****
- ------------------------------------------------------------------------------------------------------------------------
<S> <C>
OPERATIONS
Net investment
income.......... $ 3,611,355
Net realized gain
(loss) on:
Securities...... (1,717,936)
Foreign currency
related
transactions... 0
Net change in
unrealized
appreciation
(depreciation)
on securities
and foreign
currency related
transactions.... 1,397,862
- ------------------------------------------------------------------------------------------------------------------------
Net increase in
net assets
resulting from
operations..... 3,291,281
- ------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO
SHAREHOLDERS
FROM NET
INVESTMENT
INCOME
Institutional
Shares.......... (3,611,031)
Institutional
Service Shares.. (324)
Institutional
Charitable
Shares.......... 0
- ------------------------------------------------------------------------------------------------------------------------
Total
distributions
to
shareholders... (3,611,355)
- ------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE
TRANSACTIONS
Proceeds from
shares sold..... 134,638,661
Proceeds from
reinvestment of
distributions... 3,130,119
Payment for
shares
redeemed........ (1,426,650)
Shares issued in
connection with
the acquisition
of:
CoreFund Bond
Fund........... 0
CoreFund Short
Term Income
Fund........... 0
CoreFund Short
Intermediate
Bond Fund...... 0
- ------------------------------------------------------------------------------------------------------------------------
Net increase
(decrease) in
net
assets resulting
from capital
share
transactions... 136,342,130
- ------------------------------------------------------------------------------------------------------------------------
Total increase
(decrease) in
net assets.... 136,022,056
NET ASSETS
Beginning of
period.......... 0
- ------------------------------------------------------------------------------------------------------------------------
End of period.... $136,022,056
- ------------------------------------------------------------------------------------------------------------------------
Undistributed net
investment
income ......... $ 4,751
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Seven months ended September 30, 1998. The Fund changed its fiscal year
end from the last day of February to September 30, effective September
30,1998.
** Funds commenced operations on November 24, 1997.
*** Three months ended September 30, 1998. The Fund changed its fiscal year
end from June 30 to September 30, effective September 30,1998.
**** Fund commenced operations on April 20, 1998.
See Combined Notes to Financial Statements.
65
<PAGE>
- --------------------------------------------------------------------------------
Evergreen
Select Fixed Income Fund
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
ADJUSTABLE RATE FUND INTERNATIONAL BOND FUND
--------------------------- ----------------------------
Year Five Months
Ended Ended Year Ended
February 28, February 28,* June 30,
------------ ------------- ----------------------------
1998 1997 1998 1997
- -----------------------------------------------------------------------------------
(000's)
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income.. $ 3,007,633 $ 2,283,405 $ 1,771,184 $ 1,774
Net realized gain
(loss) on:
Securities............. 297,743 27,179 (1,082,597) 423
Foreign currency
related transactions.. 0 0 840,135
Net change in
unrealized
appreciation
(depreciation) on
securities and foreign
currency related
transactions.......... (69,974) 38,889 38,713 (149)
- -----------------------------------------------------------------------------------
Net increase in net
assets resulting from
operations............ 3,235,402 2,349,473 1,567,435 2,048
- -----------------------------------------------------------------------------------
DISTRIBUTIONS TO
SHAREHOLDERS FROM NET
INVESTMENT INCOME
Institutional Shares... (2,543,452) (1,889,020) (2,380,391) (2,621)
Institutional Service
Shares................ (437,527) (214,330) (14,784) (13)
- -----------------------------------------------------------------------------------
Total distributions to
shareholders.......... (2,980,979) (2,103,350) (2,395,175) (2,634)
- -----------------------------------------------------------------------------------
CAPITAL SHARE
TRANSACTIONS
Proceeds from shares
sold.................. 17,099,051 18,545,059 1,569,153 138
Proceeds from
reinvestment of
distributions......... 2,868,485 2,386,262 2,047,650 2,685
Payment for shares
redeemed.............. (57,749,240) (27,684,051) (640,270) (615)
- -----------------------------------------------------------------------------------
Net increase in net
assets resulting from
capital share
transactions.......... (37,781,704) (6,752,730) 2,976,533 2,208
- -----------------------------------------------------------------------------------
Total increase in net
assets............... (37,527,281) (6,506,607) 2,148,793 1,622
NET ASSETS
Beginning of period.... 73,827,685 80,334,292 34,771,812 33,150
- -----------------------------------------------------------------------------------
END OF PERIOD.......... $ 36,300,404 $ 73,827,685 $ 36,920,605 $ 34,772
- -----------------------------------------------------------------------------------
Undistributed net
investment income ..... $ (10,097) $ (250) $ 0 $ 0
- -----------------------------------------------------------------------------------
</TABLE>
* The Fund changed its fiscal year end from September 30 to the last day of
February, effective February 28, 1997.
See Combined Notes to Financial Statements.
66
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMBINED NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
The Evergreen Select Fixed Income Funds consist of Evergreen Select Adjustable
Rate Fund ("Adjustable Rate Fund"), Evergreen Select Core Bond Fund ("Core Bond
Fund"), Evergreen Select Fixed Income Fund ("Fixed Income Fund"), Evergreen Se-
lect Income Plus Fund ("Income Plus Fund"), Evergreen Select Intermediate Tax
Exempt Bond Fund ("Intermediate Bond Fund"), Evergreen Select International
Bond Fund ("International Bond Fund"), Evergreen Select Limited Duration Fund
("Limited Duration Fund"), and Evergreen Select Total Return Bond Fund ("Total
Return Bond Fund") (collectively, the "Funds"). Each Fund is a diversified se-
ries of Evergreen Select Fixed Income Trust (the "Trust"), a Delaware business
trust organized on September 18, 1997. The Trust is an open end management in-
vestment company registered under the Investment Company Act of 1940, as
amended (the "1940 Act").
The Funds offer an Institutional Class of shares ("Class I") and an Institu-
tional Service Class of shares ("Class IS"). Additionally, certain Funds offer
an Institutional Charitable Class of shares ("Class IC"). Each class of shares
is sold without a front-end sales charge or contingent deferred sales charge.
Class IS shares pay an ongoing service fee. Class I and Class IS shares are
available to institutional investors through broker-dealers, banks and other
financial intermediaries. Class IC shares are available only to those investors
that qualify as a non-profit organization under the Internal Revenue Code. Such
organizations would include charitable trusts, non-profit hospitals, private
foundations, private schools and colleges, public charities, religious entities
and charitable remainder trusts.
2. REORGANIZATION OF COREFUND GLOBAL BOND FUND
Effective on the close of business August 28, 1998, the International Bond Fund
acquired all of the assets and certain liabilities of the CoreFund Global Bond
Fund (the "CoreFund") through a tax-free exchange of shares. Shareholders of
Class A and Class Y shares of the CoreFund became owners of that number of full
and fractional shares of Class IS and Class I, respectively, of the Interna-
tional Bond Fund having an aggregate net asset value equal to the aggregate net
asset value of their shares of the CoreFund immediately prior to the close of
business on August 28, 1998. The financial statements of the International Bond
Fund reflect the historical financial results of the CoreFund prior to the re-
organization. Additionally, the fiscal year end of the CoreFund for financial
reporting and tax purposes was changed to coincide with that of the Trust.
3. COREFUND ACQUISITIONS
Effective July 27, 1998, the Funds noted below acquired substantially all the
assets and assumed certain liabilities of the following management investment
companies through tax-free exchanges. The value of net assets acquired, number
of shares issued, unrealized appreciation acquired and the aggregate net assets
of each Fund immediately after the acquisition are as follows:
<TABLE>
<CAPTION>
Value of Net Number of Unrealized Net Assets
Acquiring Fund Acquired Fund Assets Acquired Shares Issued Appreciation After Acquisition
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Fixed Income Fund CoreFund Short Intermediate Bond Fund $172,039,588 28,782,616 $1,206,249 $ 672,078,330
Income Plus Fund CoreFund Bond Fund $162,950,788 28,298,931 $3,357,731 $1,341,154,434
Limited Duration Fund CoreFund Short Term Income Fund $ 32,918,994 3,162,720 $ 82,968 $ 86,669,648
</TABLE>
4. CONVERSION INFORMATION
On November 24, 1997, the Fixed Income Fund, Income Plus Fund, Intermediate
Bond Fund and Limited Duration Fund commenced operations of their respective
Class I shares, and the Core Bond Fund commenced operations of its Class IC
shares, as a result of a conversion of common trust funds managed by First
Union National Bank ("FUNB"), a subsidiary of First Union Corporation ("First
Union").
<TABLE>
<CAPTION>
Core Bond Fixed Income Income Plus Intermediate Limited
Fund Fund Fund Bond Fund Duration Fund
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Shares issued........... 37,986,480 78,155,087 201,873,263 11,507,322 4,756,439
Net assets.............. $405,676,074 $465,572,501 $1,153,786,915 $746,085,404 $49,567,895
Net asset value per
share.................. 10.68 5.96 5.72 64.84 10.42
Unrealized appreciation
of investments......... 17,548,179 7,194,614 52,895,358 28,765,870 350,938
</TABLE>
The foregoing amounts are reflected as proceeds received from shares sold in
the statements of changes in net assets.
67
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMBINED NOTES TO FINANCIAL STATEMENTS (continued)
5. IN-KIND TRANSACTION
On January 21, 1998, the Evergreen Intermediate Term Bond Fund II, Class Y, ex-
ecuted a redemption in kind transaction of $107,122,275. This transaction re-
sulted in the liquidation of substantially all of the net assets of this Fund's
Class Y shares. In turn, on January 22, 1998, the assets from this transaction
were transferred to the Core Bond Fund in exchange for 9,937,532 Class I
shares. These amounts are reflected in proceeds from shares sold in the state-
ment of changes in net assets. In exchange for these shares, investment securi-
ties, excluding cash and cash equivalents, with a cost and market value of
$105,937,662, were contributed to the Fund. Additionally, Core Bond Fund re-
ceived cash and other assets of $1,184,613 to complete the transaction.
6. 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
U.S. government obligations held by the Funds are valued at the mean between
the over-the-counter bid and asked prices. Corporate bonds, other fixed-income
securities, and mortgage and other asset-backed securities are valued at prices
provided by an independent pricing service. In determining a price for normal
institutional-size transactions, the pricing service uses methods based on mar-
ket transactions for comparable securities and analysis of various relation-
ships between similar securities, which are generally recognized by institu-
tional traders. Securities for which valuations are not readily available from
an independent pricing service (including restricted securities) are valued at
fair value as determined in good faith according to procedures established by
the Board of Trustees.
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 by the custodian on the Fund's behalf. Each
Fund monitors the adequacy of the collateral daily and will require the seller
to provide additional collateral in the event the market value of the securi-
ties pledged falls below the carrying value of the repurchase agreement, in-
cluding accrued interest. Each Fund will only enter into repurchase agreements
with banks and other financial institutions which are deemed by the investment
advisor to be creditworthy pursuant to guidelines established by the Board of
Trustees.
Pursuant to an exemptive order issued by the Securities and Exchange Commis-
sion, Adjustable Rate Fund along with certain other funds managed by Evergreen
Investment Management Company (formerly Keystone Investment Management Company)
("EIMCO"), a subsidiary of First Union, may transfer uninvested cash balances
into a joint trading account. These balances are invested in one or more repur-
chase agreements that are fully collateralized by U.S. Treasury and/or federal
agency obligations.
C. REVERSE REPURCHASE AGREEMENTS
To obtain short-term financing, the Funds may enter into reverse repurchase
agreements with qualified third-party broker-dealers. Interest on the value of
reverse repurchase agreements is based upon competitive market rates at the
time of issuance. At the time the Fund enters into a reverse repurchase agree-
ment, it will establish and maintain a segregated account with the custodian
containing qualifying assets having a value not less than the repurchase price,
including accrued interest. If the counterparty to the transaction is rendered
insolvent, the ultimate realization of the securities to be repurchased by the
Fund may be delayed or limited.
D. FOREIGN CURRENCY
The books and records of the Funds are maintained in United States (U.S.) dol-
lars. Foreign currency amounts are translated into U.S. dollars as follows:
market value of investments, other assets and liabilities at the daily rate of
exchange; purchases and sales of investments, income and expenses at the rate
of exchange prevailing on the respective dates of such transactions. Net
unrealized foreign exchange gain (loss) resulting from
68
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMBINED NOTES TO FINANCIAL STATEMENTS(continued)
changes in foreign currency exchange rates is a component of net unrealized ap-
preciation (depreciation) on investments and foreign currency related transac-
tions. Net realized foreign currency gains and losses resulting from changes in
exchange rates include foreign currency gains and losses between trade date and
settlement date on investment securities transactions, foreign currency related
transactions and the difference between the amounts of interest and dividends
recorded on the books of the Fund and the amount actually received and is in-
cluded in realized gain (loss) on foreign currency related transactions. The
portion of foreign currency gains and losses related to fluctuations in ex-
change rates between the initial purchase trade date and subsequent sale trade
date is included in realized gain (loss) on foreign currency related transac-
tions.
E. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
The Funds may enter into forward foreign currency exchange contracts ("forward
contracts") to settle portfolio purchases and sales of securities denominated
in a foreign currency and to hedge certain foreign currency assets or liabili-
ties. Forward contracts are recorded at the forward rate and marked-to-market
daily. Realized gains and losses arising from such transactions are included in
net realized gains or losses on foreign currency related transactions. The Fund
bears the risk of an unfavorable change in the foreign currency exchange rate
underlying the forward contract and is subject to the credit risk that the
other party will not fulfill their obligations under the contract. Forward con-
tracts involve elements of market risk in excess of the amount reflected in the
statements of assets and liabilities.
F. SECURITIES LENDING
In order to generate income and to offset expenses, the Funds may lend portfo-
lio securities to brokers, dealers and other financial organizations. The
Funds' investment adviser will monitor the creditworthiness of such borrowers.
Loans of securities may not exceed 30% of a Fund's total assets and will be
collateralized by cash, letters of credit or U.S. Government securities that
are maintained at all times in an amount equal to at least 100% of the current
market value of the loaned securities, including accrued interest. While such
securities are on loan, the borrower will pay a Fund any income accruing there-
on, and the Fund may invest the cash collateral in portfolio securities,
thereby increasing its return. A Fund will have the right to call any such loan
and obtain the securities loaned at any time on five days' notice. Any gain or
loss in the market price of the loaned securities, which occurs during the term
of the loan, would affect a Fund and its investors. A Fund may pay reasonable
fees in connection with such loans.
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.
H. FEDERAL TAXES
The Funds have qualified and intend to continue to qualify as regulated invest-
ment companies under the Internal Revenue Code of 1986, as amended (the
"Code"). Thus, the Funds will not incur any federal income tax liability since
they are expected to distribute all of their net investment company taxable in-
come, net tax-exempt income and net capital gains, if any, to their sharehold-
ers. The Funds also intend to avoid any excise tax liability by making the re-
quired distributions under the Code. Accordingly, no provision for federal
taxes is required. To the extent that realized capital gains can be offset by
capital loss carryforwards, it is each Fund's policy not to distribute such
gains.
I. DISTRIBUTIONS
Distributions from net investment income for the Funds are declared daily and
paid monthly, with the exception of International Bond Fund which declares and
pays dividends quarterly. Distributions from net realized capital gains, if
any, are paid at least annually. Distributions to shareholders are recorded at
the close of business on the ex-dividend date.
Income and Capital gains distributions to shareholders are determined in accor-
dance with income tax regulations, which may differ from generally accepted ac-
counting principles.
69
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMBINED NOTES TO FINANCIAL STATEMENTS (continued)
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 Class IS.
7. CAPITAL SHARE TRANSACTIONS
The Funds have an unlimited number of shares of beneficial interest with a par
value of $0.001 authorized. Shares of beneficial interest of the Funds are cur-
rently divided into Class I, Class IS and Class IC. Transactions in shares of
the Funds were as follows:
Adjustable Rate Fund
<TABLE>
<CAPTION>
Seven Months Five Months
Ended Year Ended Ended
September 30, 1998* February 28,1998 February 28, 1997**
------------------------ ------------------------- -------------------------
Shares Amount Shares Amount Shares Amount
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CLASS I
Shares sold............. 694,346 $ 6,750,376 756,542 $ 7,370,775 1,030,429 $ 10,000,000
Shares issued in
reinvestment of
distributions.......... 76,201 739,024 254,776 2,481,417 221,061 2,145,897
Shares redeemed......... (1,040,259) (10,108,386) (5,579,904) (54,382,797) (830,759) (8,073,653)
- --------------------------------------------------------------------------------------------------------
Net increase
(decrease)............. (269,712) $ (2,618,986) (4,568,586) $(44,530,605) 420,731 $ 4,072,244
- --------------------------------------------------------------------------------------------------------
CLASS IS
Shares sold............. 603,561 $ 5,870,016 996,337 $ 9,728,276 879,121 $ 8,545,059
Shares issued in
reinvestment of
distributions.......... 18,011 174,774 39,661 387,068 24,800 240,365
Shares redeemed......... (683,194) (6,640,825) (344,863) (3,366,443) (2,020,244) (19,610,398)
- --------------------------------------------------------------------------------------------------------
Net increase
(decrease)............. (61,622) $ (596,035) 691,135 $ 6,748,901 (1,116,323) $(10,824,974)
- --------------------------------------------------------------------------------------------------------
</TABLE>
* The Fund changed its fiscal year end from the last day of February to
September 30, effective September 30, 1998.
**The Fund changed its fiscal year end from September 30 to the last day of
February, effective February 28, 1997.
Core Bond Fund
<TABLE>
<CAPTION>
December 19, 1997
(Commencement of Class
Operations) to
September 30, 1998
--------------------------
Shares Amount
- -------------------------------------------------------------------------------
<S> <C> <C>
CLASS I
Shares sold........................................ 25,320,737 $ 272,870,840
Shares issued in reinvestment of distributions..... 380,632 4,107,609
Shares redeemed.................................... (14,355,469) (154,715,985)
- -------------------------------------------------------------------------------
Net increase....................................... 11,345,900 $ 122,262,464
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
March 9, 1998
(Commencement of Class
Operations) to
September 30, 1998
------------------------
Shares Amount
- --------------------------------------------------------------------------------
<S> <C> <C>
CLASS IS
Shares sold........................................... 28,459 $ 298,107
Shares issued in reinvestment of distributions........ 466 5,043
Shares redeemed....................................... (2,982) (32,567)
- --------------------------------------------------------------------------------
Net increase.......................................... 25,943 $ 270,583
- --------------------------------------------------------------------------------
</TABLE>
70
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMBINED NOTES TO FINANCIAL STATEMENTS (continued)
Core Bond Fund
<TABLE>
<CAPTION>
November 24, 1997
(Commencement of Class
Operations) to
September 30, 1998
------------------------
Shares Amount
- --------------------------------------------------------------------------------
<S> <C> <C>
CLASS IC
Shares sold........................................... 45,858,535 $490,292,904
Shares issued in reinvestment of distributions........ 6,818 73,724
Shares redeemed....................................... (3,099,900) (33,454,218)
- --------------------------------------------------------------------------------
Net increase.......................................... 42,765,453 $456,912,410
- --------------------------------------------------------------------------------
</TABLE>
Fixed Income Fund
<TABLE>
<CAPTION>
November 24, 1997
(Commencement of Class
Operations) to
September 30, 1998
-------------------------
Shares Amount
- ------------------------------------------------------------------------------
<S> <C> <C>
CLASS I
Shares sold........................................ 96,306,245 $574,168,788
Shares issued in acquisition of CoreFund Short
Intermediate Bond Fund............................ 28,361,801 169,524,345
Shares issued in reinvestment of distributions..... 367,945 2,225,816
Shares redeemed.................................... (15,780,546) (94,528,967)
- ------------------------------------------------------------------------------
Net increase....................................... 109,255,445 $651,389,982
- ------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
March 9, 1998
(Commencement of Class
Operations) to
September 30, 1998
------------------------
Shares Amount
- ------------------------------------------------------------------------------
<S> <C> <C>
CLASS IS
Shares sold......................................... 1,763,400 $ 10,540,504
Shares issued in acquisition of CoreFund Short
Intermediate Bond Fund............................. 420,815 2,515,243
Shares issued in reinvestment of distributions...... 22,476 135,212
Shares redeemed..................................... (604,664) (3,626,079)
- ------------------------------------------------------------------------------
Net increase........................................ 1,602,027 $ 9,564,880
- ------------------------------------------------------------------------------
</TABLE>
Income Plus Fund
<TABLE>
<CAPTION>
November 24, 1997
(Commencement of Class
Operations) to
September 30, 1998
---------------------------
Shares Amount
- ------------------------------------------------------------------------------
<S> <C> <C>
CLASS I
Shares sold...................................... 231,167,025 $1,322,240,227
Shares issued in acquisition of CoreFund Bond
Fund............................................ 28,015,168 161,316,824
Shares issued in reinvestment of distributions... 300,191 1,753,774
Shares redeemed.................................. (28,469,435) (163,795,977)
- ------------------------------------------------------------------------------
Net increase..................................... 231,012,949 $1,321,514,848
- ------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
March 2, 1998
(Commencement of Class
Operations) to
September 30, 1998
-----------------------
Shares Amount
- -------------------------------------------------------------------------------
<S> <C> <C>
CLASS IS
Shares sold........................................... 2,219,376 $12,952,203
Shares issued in acquisition of CoreFund Bond Fund.... 283,763 1,633,964
Shares issued in reinvestment of distributions........ 17,172 99,631
Shares redeemed....................................... (1,248,097) (7,189,590)
- -------------------------------------------------------------------------------
Net increase.......................................... 1,272,214 $ 7,496,208
- -------------------------------------------------------------------------------
</TABLE>
71
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMBINED NOTES TO FINANCIAL STATEMENTS(continued)
Intermediate Tax Exempt Bond Fund
<TABLE>
<CAPTION>
November 24, 1997
(Commencement of Class
Operations) to
September 30, 1998
------------------------
Shares Amount
- --------------------------------------------------------------------------------
<S> <C> <C>
CLASS I
Shares sold........................................... 12,457,190 $808,447,293
Shares issued in reinvestment of distributions........ 1,174 77,276
Shares redeemed....................................... (1,328,980) (87,315,146)
- --------------------------------------------------------------------------------
Net increase.......................................... 11,129,384 $721,209,423
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
March 2, 1998
(Commencement of Class
Operations) to
September 30, 1998
------------------------
Shares Amount
- --------------------------------------------------------------------------------
<S> <C> <C>
CLASS IS
Shares sold........................................... 104,141 $ 6,853,148
Shares issued in reinvestment of distributions........ 647 42,755
Shares redeemed....................................... (34,214) (2,244,423)
- --------------------------------------------------------------------------------
Net increase.......................................... 70,574 $ 4,651,480
- --------------------------------------------------------------------------------
</TABLE>
International Bond Fund
<TABLE>
<CAPTION>
Three Months
Ended Year Ended Year Ended
September 30, 1998 June 30, 1998 June 30, 1997 (000's)
------------------- ------------------- -----------------------
Shares Amount Shares Amount Shares Amount
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CLASS I
Shares sold............. 906,343 $8,607,462 157,657 $1,499,070 11 $ 107
Shares issued in
reinvestment of
distributions.......... 53,689 511,122 216,504 2,032,922 276 2,670
Shares redeemed......... (7,356) (70,319) (60,566) (577,276) (62) (602)
- ------------------------------------------------------------------------------------------
Net increase............ 952,676 $9,048,265 313,595 $2,954,716 225 $ 2,175
- ------------------------------------------------------------------------------------------
CLASS IS
Shares sold............. 22 $ 208 7,353 $ 70,083 3 $ 31
Shares issued in
reinvestment of
distributions.......... 177 1,681 1,571 14,728 1 15
Shares redeemed......... (7,900) (73,973) (6,711) (62,994) (1) (13)
- ------------------------------------------------------------------------------------------
Net increase
(decrease)............. (7,701) $ (72,084) 2,213 $ 21,817 3 $ 33
- ------------------------------------------------------------------------------------------
</TABLE>
Limited Duration Fund
<TABLE>
<CAPTION>
November 24, 1997
(Commencement of Class
Operations) to
September 30, 1998
------------------------
Shares Amount
- ------------------------------------------------------------------------------
<S> <C> <C>
CLASS I
Shares sold......................................... 7,297,523 $ 76,033,178
Shares issued in acquisition of CoreFund Short Term
Income Fund........................................ 3,109,745 32,367,615
Shares issued in reinvestment of distributions...... 157,603 1,644,655
Shares redeemed..................................... (3,832,975) (40,029,735)
- ------------------------------------------------------------------------------
Net increase........................................ 6,731,896 $ 70,015,713
- ------------------------------------------------------------------------------
<CAPTION>
July 28, 1998
(Commencement of Class
Operations) through
September 30, 1998
------------------------
Shares Amount
- ------------------------------------------------------------------------------
<S> <C> <C>
CLASS IS
Shares sold......................................... 4,835 $ 50,385
Shares issued in acquisition of CoreFund Short Term
Income Fund........................................ 52,975 551,379
Shares issued in reinvestment of distributions...... 596 6,245
Shares redeemed..................................... (4) (38)
- ------------------------------------------------------------------------------
Net increase........................................ 58,402 $ 607,971
- ------------------------------------------------------------------------------
</TABLE>
72
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMBINED NOTES TO FINANCIAL STATEMENTS (continued)
Total Return Bond Fund
<TABLE>
<CAPTION>
April 20, 1998
(Commencement of Class
Operations) to
September 30, 1998
-------------------------
Shares Amount
- --------------------------------------------------------------------------------
<S> <C> <C>
CLASS I
Shares sold.......................................... 1,346,358 $ 134,570,252
Shares issued in reinvestment of distributions....... 31,423 3,130,119
Shares redeemed...................................... (13,905) (1,381,981)
- --------------------------------------------------------------------------------
Net increase......................................... 1,363,876 $ 136,318,390
- --------------------------------------------------------------------------------
<CAPTION>
August 3, 1998
(Commencement of Class
Operations) to
September 30, 1998
-------------------------
Shares Amount
- --------------------------------------------------------------------------------
<S> <C> <C>
CLASS IS
Shares sold.......................................... 689 $ 68,409
Shares issued in reinvestment of distributions....... 0 0
Shares redeemed...................................... (452) (44,669)
- --------------------------------------------------------------------------------
Net increase......................................... 237 $ 23,740
- --------------------------------------------------------------------------------
</TABLE>
8. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of investment securities (excluding
short-term securities) were as follows for the period ended September 30, 1998:
<TABLE>
<CAPTION>
Cost of Purchases Proceeds from Sales
--------------------------- ---------------------------
Government Non-Government Government Non-Government
--------------------------------------------------------
<S> <C> <C> <C> <C>
Adjustable Rate Fund.... $ 16,324,897 $ 0 $ 15,353,426 $ 0
Core Bond Fund.......... 452,648,618 128,416,776 322,257,170 64,552,939
Fixed Income Fund....... 200,424.161 61,903,267 161,816,158 71,121,433
Income Plus Fund........ 404,061,589 134,491,186 265,388,031 162,632,219
Intermediate Bond Fund.. 0 343,961,060 0 343,718,606
International Bond
Fund................... 1,979,075 9,804,339 0 1,309,067
Limited Duration Fund... 0 43,647,376 28,476,380 26,999,078
Total Return Bond Fund.. 134,920,063 91,221,124 60,227,273 31,444,637
</TABLE>
The Adjustable Rate Fund had an average daily balance of reverse repurchase
agreements outstanding during the seven months ended September 30, 1998 of
$48,633 at a weighted average interest rate of 5.55%. The maximum amount of
borrowing outstanding during the seven months ended September 30, 1998 was
$1,440,888 (including accrued interest). As of September 30, 1998, the Fund had
no outstanding reverse repurchase agreements.
For the fiscal years ended February 28, 1998 and June 30, 1998, Adjustable Rate
Fund and International Bond Fund, respectively, had the following cost of pur-
chases and proceeds from sales of investment securities (excluding short-term
securities):
<TABLE>
<CAPTION>
Cost of Purchases Proceeds from Sales
-------------------------- --------------------------
Government Non-Government Government Non-Government
----------------------------------------------------
<S> <C> <C> <C> <C>
Adjustable Rate Fund.... $48,809,646 -- $84,187,289 --
International Bond
Fund................... -- $20,192,000 -- $11,888,000
</TABLE>
The Income Plus Fund and Fixed Income Fund each loaned securities during the
period ended September 30, 1998 to certain brokers who paid each Fund a negoti-
ated lenders' fee. These fees are included in interest income. During the pe-
riod ended September 30, 1998, the Funds earned $62,279 and $21,485, respec-
tively, in income from securities lending. At September 30, 1998, the Funds had
no securities on loan.
73
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMBINED NOTES TO FINANCIAL STATEMENTS (continued)
On September 30, 1998, the tax cost and composition of gross unrealized gains
and losses on investment securities based on the aggregate cost of investments
for federal tax purposes was as follows:
<TABLE>
<CAPTION>
Gross Gross
Tax Unrealized Unrealized Net Unrealized
Cost Gains Losses Gains (Losses)
------------------------------------------------------
<S> <C> <C> <C> <C>
Adjustable Rate Fund.... $ 32,726,464 $ 112,923 $ (220,808) $ (107,885)
Core Bond Fund.......... 566,629,781 24,557,062 (1,439,251) 23,117,811
Fixed Income Fund....... 649,781,409 30,084,129 (3,516,701) 26,567,428
Income Plus Fund........ 1,269,414,951 99,173,752 (8,100,568) 91,073,184
Intermediate Bond Fund.. 699,113,382 44,976,863 (146,283) 44,830,580
International Bond
Fund................... 43,565,383 3,699,341 (1,155,794) 2,543,547
Limited Duration Fund... 69,717,020 1,099,922 (49,605) 1,050,317
Total Return Bond Fund.. 135,331,060 3,775,920 (2,349,048) 1,426,872
</TABLE>
As of September 30, 1998, the following funds had capital loss carryovers for
federal income tax purposes as follows:
<TABLE>
<CAPTION>
Expiration
-------------------------------------------------------------------------
2000 2001 2002 2003 2004 2005 2006
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Adjustable Rate Fund.... $198,000 $281,000 -- $ 43,000 -- -- $ 81,000
Fixed Income Fund....... 157,000 $1,229,000
International Bond
Fund................... -- -- $844,000 -- $729,000 $402,000 $923,000
</TABLE>
Fixed Income Fund's capital loss carryforward was created as a result of the
July 27, 1998 acquisition of substantially all the assets and assumption of
certain liabilities of CoreFund Short Intermediate Fund. In accordance with in-
come tax regulations, certain Fixed Income Fund gains may not be used to offset
this capital loss carryforward. In addition to capital loss carryovers, capital
losses incurred after October 31 within a Fund's fiscal year end are deemed to
arise on the first business day of the Fund's following fiscal year. For the
fiscal year ended September 30, 1998, Fixed Income Fund and Total Return Bond
Fund have incurred and elected to defer $114,532 and $1,719,312 of capital
loss, respectively.
9. DISTRIBUTION PLAN
Evergreen Distributor, Inc. ("EDI"), a wholly owned subsidiary of The BISYS
Group Inc. ("BISYS"), serves as principal underwriter to the Funds.
Each Fund has adopted a Distribution Plan for Class IS shares, as allowed by
Rule 12b-1 of the 1940 Act. Distribution plans permit a fund to reimburse 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 expenses called "Distribution Plan expenses". Class IS currently
pays a service fee equal to 0.25% of the average daily net assets of the class.
Distribution Plan expenses are calculated daily and paid monthly. Prior to July
1, 1998, SEI Financial Services ("SFS"), a wholly owned subsidiary of SEI, was
the International Bond Fund's distributor.
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.
10. INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT AND OTHER AFFILIATED
TRANSACTIONS
EIMCO is the investment adviser for the Adjustable Rate Fund. In return for
providing management and administrative services to the Fund, the Fund pays
EIMCO a management fee that is calculated daily and paid monthly. The manage-
ment fee is computed at an annual rate of 0.30% of the average daily net assets
of the Fund.
First International Advisors, Inc. ("First International") (formerly Analytic
TSA International), a subsidiary of First Union, is the investment adviser to
the International Bond Fund. First International is paid a management fee that
is calculated daily and paid monthly. The management fee is computed at an an-
nual rate of 0.60% of
74
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMBINED NOTES TO FINANCIAL STATEMENTS (continued)
the average daily net assets of the Fund. First International waived advisory
fees of $45,948. Prior to July 1, 1998, the International Bond Fund had an in-
vestment advisory agreement with CoreState Investment Advisers, Inc. ("CSIA").
Under this agreement CSIA was paid a fee of 0.60% based on the annual average
daily net assets of the Fund. Prior to July 1, 1998, First International pro-
vided sub-investment advisory services to the Fund. CSIA was responsible for
the supervision, and payment of fees to First International. During the fiscal
year ended June 30, 1998, CSIA waived fees of $35,984.
FUNB is the investment adviser for Core Bond Fund, Fixed Income Fund, Income
Plus Fund, Intermediate Bond Fund, Limited Duration Fund, and Total Return Bond
Fund. In return for providing investment management and administrative services
to the Funds, each Fund pays FUNB a management fee that is calculated daily and
paid monthly based on a percentage of the Fund's respective average daily net
assets:
<TABLE>
<CAPTION>
Annual
Advisory Fee
------------
<S> <C>
Core Bond Fund....................... 0.40%
Fixed Income Fund.................... 0.50%
Income Plus Fund..................... 0.50%
Intermediate Bond Fund............... 0.60%
Limited Duration Fund................ 0.30%
Total Return Bond Fund............... 0.40%
</TABLE>
FUNB has voluntarily agreed to reduce the investment advisory fee on each Fund
by 0.10% and to reimburse a portion of each Fund's annual operating expenses
(excluding interest, taxes, brokerage commissions and extraordinary expenses).
For the period ended September 30, 1998, FUNB voluntarily waived the following
amounts:
<TABLE>
<CAPTION>
Advisory Fees
Waived
-------------
<S> <C>
Core Bond Fund...................... $ 526,182
Fixed Income Fund................... 504,930
Income Plus Fund.................... 1,033,751
Intermediate Bond Fund.............. 639,284
Limited Duration Fund............... 152,769
Total Return Bond Fund.............. 135,770
</TABLE>
First International and EIMCO serve as sub-investment advisers to the Total Re-
turn Bond Fund. These services are being provided at no additional cost to the
Fund. FUNB is responsible for the Supervision and payment of fees to First In-
ternational and EIMCO.
Evergreen Investment Services, Inc. ("EIS"), a subsidiary of First Union, is
the administrator and BISYS Fund Services is sub-administrator to the Funds. As
administrator, EIS provides the Funds with facilities, equipment and personnel.
As sub-administrator to the Funds, BISYS Fund Services provides the officers of
the Funds. The administrator and sub-administrator for each Fund, other than
Adjustable Rate Fund, are entitled to an annual fee based on the average daily
net assets of the funds administered by EIS for which First Union or its in-
vestment advisory subsidiaries are also the investment advisers. The adminis-
tration fee is calculated by applying percentage rates, which start at 0.05%
and decline to 0.01% per annum as net assets increase, to the average daily net
assets of the Fund. The sub-administration fee is calculated by applying per-
centage rates, which start at 0.01% and decline to 0.004% per annum as net as-
sets increase, to the average daily net assets of the Fund.
Prior to July 1, 1998, SEI Fund Resources ("SFR") acted as the International
Bond Fund's administrator. Under the terms of the agreement SFR was entitled to
receive an annual fee of 0.25% of the average daily net assets of the Fund. For
the year ended June 30, 1998, SFR waived fees of $32,564.
75
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMBINED NOTES TO FINANCIAL STATEMENTS (continued)
During the period ended September 30, 1998, the Funds, other than Adjustable
Rate Fund, paid or accrued to EIS and BISYS the following amounts for certain
administrative services:
<TABLE>
<CAPTION>
EIS BISYS
-------- ------
<S> <C> <C>
Core Bond Fund................... $108,456 25,414
Fixed Income Fund................ 101,741 24,210
Income Plus Fund................. 237,098 56,265
Intermediate Bond Fund........... 148,193 34,905
International Bond Fund.......... 1,093 642
Limited Duration Fund............ 11,778 2,813
Total Return Bond Fund........... 5,827 8,423
</TABLE>
Evergreen Service Company ("ESC"), a wholly-owned subsidiary of First Union,
serves as the transfer and dividend disbursing agent for the Funds. The Funds
have entered into an expense offset arrangement with ESC, relating to certain
cash balances held at First Union for the benefit of the Funds. Prior to August
28, 1998, Boston Financial Data Services ("BFDS") was the transfer and dividend
disbursing agent for the International Bond Fund.
Prior to the reorganization of International Bond Fund on July 1, 1998,
Corestates Bank (now First Union) served as Custodian to the Fund. Under the
Custodian Agreement, CoreStates Bank held the Fund's securities and cash items,
made receipts and disbursements of money on behalf of the Fund, collected and
received all income and other payments and distributions on account of the
Fund's securities and performed other related services.
Officers of the Funds and affiliated Trustees receive no compensation directly
from the Funds.
11. EXPENSE OFFSET ARRANGEMENT
The Funds have entered into an expense offset arrangement with their custodian.
The uninvested cash deposited with the custodian under this expense offset ar-
rangement could have been invested in income-producing assets.
12. DEFERRED TRUSTEES' FEES
Each Independent Trustee of the Funds 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 each Fund's Trustees' fees
and expenses. Trustees will be paid either in one lump sum or in quarterly in-
stallments for up to ten years at their election, not earlier than either the
year in which the Trustee ceases to be a member of the Board of Trustees or
January 1, 2000.
76
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
The Trustees and Shareholders
Evergreen Select Fixed Income Trust
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of Evergreen Select Adjustable Rate Fund, a series
of the Evergreen Select Fixed Income Trust, as of September 30, 1998, and the
related statements of operations for the seven months then ended and the year
ended February 28, 1998, the statements of changes in net assets for the seven
months ended September 30, 1998, the year ended February 28, 1998 and the five
months ended February 28, 1997, and the financial highlights for the six years
or periods ended September 30, 1998. These financial statements and financial
highlights are the responsibility of the Trust's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing stan-
dards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial high-
lights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of September 30, 1998 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a reason-
able basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Ever-
green Select Adjustable Rate Fund as of September 30, 1998, the results of its
operations, changes in its net assets and financial highlights for each of the
years or periods specified in the first paragraph above in conformity with gen-
erally accepted accounting principles.
KPMG Peat Marwick LLP
Boston, Massachusetts
November 6, 1998
77
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees and Shareholders of
Evergreen Select Core Bond Fund, Evergreen Select Fixed Income Fund,
Evergreen Select Income Plus Fund, Evergreen Select Intermediate Tax Exempt
Bond Fund,
Evergreen Select International Bond Fund, Evergreen Select Limited Duration
Fund
and Evergreen Select Total Return Bond Fund
In our opinion, the accompanying statements of assets and liabilities, includ-
ing the schedules of investments, and the related statements of operations and
of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Evergreen Select Core Bond Fund,
Evergreen Select Fixed Income Fund, Evergreen Select Income Plus Fund, Ever-
green Select Intermediate Tax Exempt Bond Fund, Evergreen Select International
Bond Fund, Evergreen Select Limited Duration Fund and Evergreen Select Total
Return Bond Fund (the "Funds") at September 30, 1998, the results of opera-
tions, changes in net assets and financial highlights of Evergreen Select In-
ternational Bond Fund for the three months in the period then ended, and the
results of operations, changes in net assets and financial highlights of Ever-
green Select Total Return Bond Fund, Evergreen Select Core Bond Fund, Evergreen
Select Fixed Income Fund, Evergreen Select Income Plus Fund, Evergreen Select
Intermediate Tax Exempt Bond Fund and Evergreen Select Limited Duration Fund
for each of the periods indicated, in conformity with generally accepted ac-
counting principles. These financial statements and financial highlights (here-
after referred to as "financial statements") are the responsibility of the
Funds' management; our responsibility is to express an opinion on these finan-
cial statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which re-
quire that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and dis-
closures in the financial statements, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall finan-
cial statement presentation. We believe that our audits, which included confir-
mation of securities at September 30, 1998 by correspondence with the custodi-
an, provide a reasonable basis for the opinion expressed above. The statement
of operations of Evergreen Select International Bond Fund for the year ended
June 30, 1998, the statement of changes in net assets for each of the two years
in the period ended June 30, 1998, and the financial highlights for each of the
four years in the period ended June 30, 1998 and for the period December 15,
1993 (commencement of operations) through June 30, 1994 were audited by other
independent accountants whose report dated August 25, 1998 expressed an unqual-
ified opinion on those statements.
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036
November 23, 1998
78
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION (UNAUDITED)
YEAR 2000
Like other investment companies, the Funds could be adversely affected if the
computer systems used by the Funds' investment advisers and the Funds' other
service providers are not able to perform their intended functions effectively
after 1999 because of the inability of computer software to distinguish the
year 2000 from the year 1900. The Funds' investment advisers are taking steps
to address this potential year 2000 problem with respect to the computer sys-
tems that they use and to obtain satisfactory assurances that comparable steps
are being taken by the Funds' other major service providers. At this time, how-
ever, there can be no assurance that these steps will be sufficient to avoid
any adverse impact on the Funds from this problem.
FEDERAL TAX STATUS OF DIVIDENDS
For the fiscal period ended 9/30/98, 99.16% of the dividends from net invest-
ment income of the Select Intermediate Tax Exempt Fund are exempt from federal
income tax, other than alternative minimum tax.
79
<PAGE>
Evergreen Select Funds
Money Market Growth and Income/
Money Market Fund Balanced
Treasury Money Market Fund Equity Income Fund
100% Treasury Money Market Fund Balanced Fund
Municipal Money Market Fund
Growth
Municipal Fixed Small Company Growth Fund
Income Small Company Value Fund
Intermediate Tax Exempt Bond Fund Strategic Growth Fund
Common Stock Fund
Taxable Fixed Large Cap Blend Fund
Income Strategic Value Fund
International Bond Fund Diversified Value Fund
Total Return Bond Fund Social Principles Fund
Income Plus Fund
Core Bond Fund
Fixed Income Fund
Adjustable Rate Fund
Limited Duration Fund
543698 RVO 11/98
BULK RATE
U.S. POSTAGE
PAID
PERMIT NO. 19
HUDSON, MA
[LOGO OF EVERGREEN FUNDS(SM) APPEARS HERE]
200 Berkeley Street
Boston, MA 02116
