<PAGE>
Evergreen Select
Fixed Income
Funds
March 31, 1998
Semiannual Report
[Evergreen Logo]
Evergreen Funds(SM)
Since 1932
<PAGE>
Table of Contents
<TABLE>
<S> <C>
Letter to Shareholders ........................ 1
Evergreen Select Core Bond Fund
Fund at a Glance ........................... 2
Portfolio Commentary ....................... 3
Evergreen Select Fixed Income Fund
Fund at a Glance ........................... 5
Portfolio Commentary ....................... 6
Evergreen Select Income Plus Fund
Fund at a Glance ........................... 8
Portfolio Commentary ....................... 9
Evergreen Select Intermediate
Tax Exempt Bond Fund
Fund at a Glance ........................... 11
Portfolio Commentary ....................... 12
Evergreen Select Limited Duration Fund
Fund at a Glance ........................... 14
Portfolio Commentary ....................... 15
</TABLE>
<TABLE>
<S> <C>
Financial Highlights
Evergreen Select Core Bond Fund ............ 17
Evergreen Select Fixed Income Fund ......... 19
Evergreen Select Income Plus Fund .......... 20
Evergreen Select Intermediate Tax Exempt
Bond Fund ............................... 21
Evergreen Select Limited Duration Fund ..... 22
Schedules of Investments
Evergreen Select Core Bond Fund ............ 23
Evergreen Select Fixed Income Fund ......... 25
Evergreen Select Income Plus Fund .......... 28
Evergreen Select Intermediate Tax Exempt
Bond Fund ............................... 32
Evergreen Select Limited Duration Fund ..... 39
Statements of Assets and Liabilities .......... 40
Statements of Operations ...................... 41
Statements of Changes in Net Assets ........... 42
Combined Notes to Financial
Statements .................................. 43
</TABLE>
- --------------------------------------------------------------------------------
Evergreen Funds
Evergreen Funds is one of the nation's fastest growing investment companies
with more than $47 billion in assets under management.
With over 80 mutual funds to choose among and acclaimed service and operations
capabilities, investors enjoy a broader 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 semiannual report must be preceded or accompanied by a prospectus of an
Evergreen fund contained herein. The prospectus contains more complete
information, including fees and expenses, and should be read carefully before
investing or sending money.
Mutual Funds: ARE NOT FDIC INSURED May lose value o Are not bank guaranteed
Evergreen Distributor, Inc.
Evergreen(SM) is a Service Mark of Evergreen Investment Services, Inc.
Copyright 1998.
<PAGE>
Letter to Shareholders
May 1998
Dear Shareholders:
Whether you look at the six-month period or the 12-month period that ended on
March 31, 1998, it has been an excellent time for institutions to be invested
in a portfolio taking advantage of opportunities in the
domestic bond market. The U.S. economy has been
growing at a strong rate, while
inflationary pressures have been kept under
control and interest rates -- particularly
long-term rates -- have continued to decline,
leading to price appreciation for most fixed-
income securities. In fact, the
(Photo of William M. Ennis) yield on the 30-year Treasury
William M. Ennis declined 114 basis points during
the 12-months from 7.07% to
5.93% -- a significant move, particularly during
healthy economic times. During the same period,
the yield curve flattened significantly,
(Photo of David C. Francis) reflecting the outperformance of longer-
David C. Francis duration securities over those with shorter
durations. The yield on the six-month Treasury
bill, for example, declined just 25 basis points, from 5.29% to 5.04%.
Despite inevitable periods of short-term market corrections, it has been a year
when even the bad news has often been good news for the U.S. bond market.
Uncertainty abroad -- particularly the Asian financial and currency crisis --
has tended to increase the relative attractiveness of the U.S. currency and the
relative safety of dollar-based bonds. High-grade investments have tended to do
very well, while high-yield investments have done even better as the strong
domestic economy has encouraged investors to seek the higher income and accept
the greater credit risk of high-yield securities.
Within this environment, the five portfolios of the Evergreen Select Fixed
Income Funds have each pursued their distinct strategies to take advantage of
different investment opportunities and to respond to different investor risk
control needs. In the following pages, we present specific reports on the
management and performance of each of the five portfolios for the six-month
period that ended on March 31, 1998.
At Evergreen Funds, we provide the Select Funds to give institutional investors
the opportunity to choose among a range of investment alternatives, each with
its distinct objectives and risk parameters. Thank you for your continued
support of Evergreen Select Funds.
Sincerely,
/s/ William M. Ennis
William M. Ennis
Managing Director
Evergreen Funds
/s/ David C. Francis
David C. Francis, C.F.A.
Chief Investment Officer
Managing Director
First Capital Group
1
<PAGE>
EVERGREEN
Select Core Bond Fund
Fund at a Glance as of March 31, 1998
-------------------------------------------------------
PORTFOLIO PROFILE
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
utilize 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
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS
<TABLE>
<CAPTION>
Class I Class IS Class IC
<S> <C> <C> <C>
Performance Inception Date 12/19/97 3/9/98 2/28/88
Average Annual Returns
6 months -- -- 4.59%
1 year -- -- 11.43%
3 years -- -- 8.36%
5 years -- -- 6.31%
10 years -- -- 8.56%
Since Inception 2.11% 0.74% 8.17%
30-day SEC Yield 5.85% -- 5.85%
</TABLE>
- --------------------------------------------------------------------------------
LONG TERM GROWTH
(Chart appears here. The plot points are listed in the table below.)
3/88 3/90 3/92 3/94 3/96 3/98
Class IC Shares 10,000 11,562 14,592 17,292 19,565 22,733
LBABI 10,000 11,814 14,859 17,233 20,045 23,547
CPI 10,000 11,047 11,957 12,635 13,350 13,923
Comparison of a $10,000 investment in Evergreen Select Core Bond Fund, Class IC
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 performance of each
class may vary based on differences in 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 includes the performance of the Fund's
predecessor common trust fund for periods before the Fund's registration
statement became effective on November 24, 1997. Performance for the common
trust fund has been adjusted to include the effect of estimated expenses based
upon the mutual fund expense ratio as stated in the Fund's current Prospectus.
Index returns do not reflect expenses, which have been deducted from the Fund's
return. 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.
2
<PAGE>
EVERGREEN
Select Core Bond Fund
Portfolio Commentary
- --------------------------------------------------------------------------------
Portfolio Management Team
(Photo of L. Robert Cheshire) (Photo of Bruce J. Besecker)
L. Robert Cheshire Bruce J. Besecker, C.F.A.
- --------------------------------------------------------------------------------
Performance
For the six months ending March 31, 1998, the Evergreen Select Core Bond
Fund Class I shares posted a total return of 4.59%. This performance
compares favorably to the Fund's benchmark, the Lehman Brothers Aggregate
Bond Index, which returned 4.55% during the same period. Strong
performance relative to the benchmark can be attributed primarily to the
portfolio's "barbelled" structure as well as an effective, though somewhat
conservative, duration strategy.
Portfolio
Characteristics
---------------
Total Net Assets $570,110,897
Average Credit Quality AAA
Average Maturity 9.8 years
Average Duration 4.8 years
- --------------------------------------------------------------------------------
Investment Environment
During the fiscal period, despite dire headlines the U.S. bond market
experienced positive side-effects from the well-publicized turmoil in Asia.
Although the extent of the crisis is not yet known, the initial impact was
generally beneficial to fixed-income investors in that it effectively
slowed economic growth and had a calming effect on inflation. Within this
market environment, interest rates trended lower, as the yield on the
30-year Treasury bond declined from 6.40% to 5.92% over the six-month
period.
--------------------------------------------------------------------
PORTFOLIO COMPOSITION
(as a percentage of net assets)
(Pie chart appears here. See table below for the plot points.)
Mortgage-Backed Securities--29.1%
Treasury Notes/Bonds--26.5%
Corporate Notes/Bonds--16.9%
Foreign Bonds--13.7%
Mutual fund shares and
other assets and liabilities, net--6.1%
Asset-Backed Securities--3.9%
Government Agency Notes/Bonds--3.8%
- --------------------------------------------------------------------------------
Investment Strategy
Sector allocations in the portfolio remained essentially unchanged during
the fiscal period. Instead, our strategy focused primarily on the
structure of the portfolio as well as duration management.
Implemented approximately a year ago, the portfolio's barbell structure
was maintained throughout the fiscal period and had a positive impact on
performance. A "barbelled" portfolio is distinguished by securities
primarily on both ends of the yield curve rather than in
3
<PAGE>
EVERGREEN
Select Core Bond Fund
Portfolio Commentary
the middle. As spreads -- or the difference between yields -- in the bond
market narrowed during the fiscal period, this structure enhanced the
Fund's total return.
Our duration strategy was also effective during the past six months in
reducing the Fund's volatility. Generally speaking, investors despise
uncertainty, and the situation in Southeast Asia represented uncharted
territory for the financial markets. As investors grappled with the extent
of the impact from this crisis, the market experienced volatility as
interest rates bounced around. Because the Fund's duration was kept near
that of the benchmark, our returns did not fluctuate too dramatically.
Rather, we enjoyed a relatively smooth ride and still managed to outpace
our benchmark. Duration declined modestly during the six months -- in step
with falling interest rates -- and finished the period at 4.8 years,
slightly longer than the Lehman Brothers Aggregate Bond Index.
--------------------------------------------------------------------
PORTFOLIO QUALITY
(as a percentage of portfolio assets)
(Pie chart appears here. See table below for the plot points.)
U.S. Government Agency--62.0%
A--17.0%
AAA--8.0%
AA--6.0%
BAA--2.5%
NR--2.5%
BA--2.0%
- --------------------------------------------------------------------------------
Outlook
Going forward, our outlook can best be described as "cautiously positive."
Although underlying economic fundamentals bode well for lower inflation
and interest rates in the long term, we are concerned about whether the
impact from the Asian crisis will counterbalance inflationary growth in
the short term. Some emerging data such as rising personal income and
increased
consumer spending actually suggest that inflation may heat up in the near
term. In the face of these mixed
economic signals, we do not anticipate implementing
significant sector allocation adjustments or an overly aggressive duration
stance.
We do, however, anticipate maintaining the portfolio's barbell structure,
with a particularly strong weighting on the long end of the yield curve.
Whether the economy slows due to the Asian crisis or heats up because
growth is too strong, we feel spreads in the bond market will narrow. If
they do, as we expect, the portfolio's barbelled structure should continue
to enhance total return.
4
<PAGE>
EVERGREEN
Select Fixed Income Fund
Fund at a Glance as of March 31, 1998
-------------------------------------------------------
PORTFOLIO PROFILE
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 Bond Index
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS
<TABLE>
<CAPTION>
Class I Class IS
<S> <C> <C>
Performance Inception Date 3/31/77 3/9/98
Average Annual Returns
6 months 3.29% --
1 year 8.53% --
3 years 7.45% --
5 years 5.54% --
10 years 7.68% --
Since Inception 8.51% 0.31%
30-day SEC Yield 6.03% --
</TABLE>
- --------------------------------------------------------------------------------
LONG TERM GROWTH
(Chart appears here. See the table below for plot points.)
3/88 3/90 3/92 3/94 3/96 3/98
Class I Shares 10,000 11,593 14,368 16,283 18,439 20,950
LBIGCBI 10,000 11,627 14,437 16,642 19,053 21,892
CPI 10,000 11,047 11,957 12,635 13,350 13,923
Comparison of a $10,000 investment in Evergreen Select Fixed Income Fund, Class
I shares, versus a similar investment in the Lehman Brothers Intermediate
Government/Corporate Bond Index (LBIGCBI), 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 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 includes the performance of the Fund's
predecessor common trust fund for periods before the Fund's registration
statement became effective on November 24, 1997. Performance for the common
trust fund has been adjusted to include the effect of estimated expenses based
upon the mutual fund expense ratio as stated in the Fund's current Prospectus.
Index returns do not reflect expenses, which have been deducted from the Fund's
return. 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.
5
<PAGE>
EVERGREEN
Select Fixed Income Fund
Portfolio Commentary
- --------------------------------------------------------------------------------
Portfolio Management
(Photo of Thomas L. Ellis)
Thomas L. Ellis
- --------------------------------------------------------------------------------
Performance
The Evergreen Select Fixed Income Fund Class I shares posted a 3.29% total
return for the six-month period ending March 31, 1998 slightly lower than
the 3.73% return of its benchmark, the Lehman Brothers Intermediate
Government/Corporate Bond Index. However, the Fund did outperform the
3.11% average return of short intermediate investment grade debt funds
tracked by Lipper Analytical Services. Although returns were hampered by a
small exposure to foreign securities that lagged as a result of the Asian
crisis, the Fund's outperformance relative to its peer group can be
attributed to a favorable duration stance.
Portfolio
Characteristics
---------------
Total Net Assets $483,071,117
Average Credit Quality AA
Average Maturity 4.8 years
Average Duration 3.6 years
- --------------------------------------------------------------------------------
Favorable Economic Backdrop
The bond market's positive returns during the fiscal period were driven by
a fundamentally sound U.S. economy. Investors witnessed the same favorable
economic themes that have been prevalent for the past several quarters:
healthy economic growth, benign inflation and low interest rates. In fact,
interest rates continued to trend lower, as the yield on the 30-year
Treasury bond declined from 6.40% to 5.92% during the six months.
Despite the favorable economic backdrop, investors spent the period
grappling with the potential impact from the financial crisis unfolding in
Asia. Although the effects of the "Asian flu" included brief volatility,
the overall effect for fixed income investors was generally positive,
inducing slower U.S. economic growth and a calming effect on inflation.
6
<PAGE>
EVERGREEN
Select Fixed Income Fund
Portfolio Commentary
--------------------------------------------------------------------
PORTFOLIO COMPOSITION
(as a percentage of net assets)
(Pie chart appears here. See table below for the plot points.)
Corporate Notes/Bonds--26.9%
Treasury Notes/Bonds--24.8%
Government Agency Notes/Bonds--14.0%
Collateralized Mortgage Obligations--10.9%
Asset-Backed Securities--8.9%
Repurchase agreement and other assets and liabilities, net--5.8%
Yankee Obligations--5.5%
Mortgage-Backed Securities--3.2%
- --------------------------------------------------------------------------------
Investment Strategy
The Fund's duration was lengthened approximately 12% over the course of
the fiscal period. Duration began the period slightly less than that of
the benchmark, but following the increase stood at 3.6 years, nearly 107%
of the index. This move was undertaken in response to analysis which
indicated that underlying economic fundamentals would fuel a steady
interest rate decline. Our forecast proved accurate as rates proceeded to
decline steadily over the fiscal period, and allowed the Fund to
outperform its benchmark by 13 basis points during the first quarter of
1998.
From a sector standpoint, we maintained a strong weighting in corporate,
mortgage and asset-backed securities. During the final three months of the
period the Fund's exposure to corporate and asset-backed securities
remained steady at 26.9% and 8.9%, respectively. Our mortgage weighting
was increased significantly, and currently represents 14.1% of the
portfolio. Within the mortgage sector, we focused security selection on
issues which may be less likely to be affected by pre-payment risk. This
strategy has proved timely as the declining interest rate environment
caused a surge in homeowner refinancings.
--------------------------------------------------------------------
PORTFOLIO QUALITY
(as a percentage of portfolio assets)
(Pie chart appears here. See table below for the plot points.)
U.S. Government--26.3%
U.S. Government Agency--17.3%
AAA--17.9%
AA--3.7%
A--22.7%
BAA--6.1%
BA--4.1%
Not rated--1.9%
- --------------------------------------------------------------------------------
Outlook
Our outlook for the bond market remains extremely positive as a number of
economic forces continue to bode well for low interest rates and benign
inflation over the long term. In the short term, however, uncertain
investors are currently struggling to gauge which of the "countervailing
forces" -- strong U.S. growth or the tempering effect from the Asian crisis
-- will prevail. This uncertainty is likely to cause increased volatility
in the near term as the situation and its effects unfold. Until this
situation becomes more clear, we anticipate modestly shortening our
duration -- to neutral -- in order to help cushion the portfolio from
volatility and potentially higher interest rates in the short term.
7
<PAGE>
EVERGREEN
Select Income Plus Fund
Fund at a Glance as of March 31, 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 serve to identify undervalued or overlooked 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 Bond Index
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS
<TABLE>
<CAPTION>
Class I Class IS
<S> <C> <C>
Performance Inception Date 8/31/88 3/2/98
..
Average Annual Returns
..
6 months 4.05% --
..
1 year 11.41% --
..
3 years 8.68% --
..
5 years 6.36% --
..
Since Inception 8.30% 0.31%
..
30-day SEC Yield 5.93% --
..
</TABLE>
- --------------------------------------------------------------------------------
LONG TERM GROWTH
(Chart appears here. The plot points are listed in the table below.)
8/88 3/90 3/92 3/94 3/96 3/98
Class I Shares 10,000 11,293 14,007 16,126 18,489 21,474
LBGCBI 10,000 11,651 14,598 17,145 19,892 23,355
CPI 10,000 10,815 11,706 12,370 13,069 13,630
Comparison of a $10,000 investment in Evergreen Select Income Plus Fund, Class
I shares, 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 performance of each
class may vary based on differences in 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 includes the performance of the Fund's
predecessor common trust fund for periods before the Fund's registration
statement became effective on November 24, 1997. Performance for the common
trust fund has been adjusted to include the effect of estimated expenses based
upon the mutual fund expense ratio as stated in the Fund's current Prospectus.
Index returns do not reflect expenses, which have been deducted from the Fund's
return. 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.
8
<PAGE>
EVERGREEN
Select Income Plus Fund
Portfolio Commentary
- --------------------------------------------------------------------------------
Portfolio Management Team
(Photo of George Prattos) (Photo of J.P. Weaver)
George Prattos J.P. Weaver, C.F.A.
- --------------------------------------------------------------------------------
Performance
For the six months ended March 31, 1998 the Evergreen Select Income Plus
Fund Class I shares posted a 4.05% total return, slightly lower than the
Lehman Brothers Government/Corporate Bond Index of 4.77%. The Fund did
outperform the 3.94% average return of all intermediate investment grade
debt funds tracked by Lipper Analytical Services, an independent mutual
fund rating company.
Portfolio
Characteristics
---------------
Total Net Assets $1,177,269,484
Average Credit Quality AA
Average Maturity 8.8 years
Average Duration 6.5 years
- --------------------------------------------------------------------------------
Strong Underlying Fundamentals
Healthy economic growth and near-invisible inflation provided the backdrop
for another positive period in the bond market. Interest rates remained
stable as the effects of the Asian crisis -- slower domestic growth and
declining import prices -- began filtering back into U.S. economic data.
Subsequently, the yield on the 30-year Treasury bond hovered comfortably
between 5.75% and 6.25%, and managed to decline nearly 50 basis points
during the six months. The Federal Reserve Board, apparently content with
current economic data, left key short-term interest rates unchanged on the
final day of the fiscal period.
--------------------------------------------------------------------
PORTFOLIO COMPOSITION
(as a percentage of net assets)
(Pie chart appears here. See the table below for plot points.)
Corporate Notes/Bonds--30.5%
Treasury Notes/Bonds--25.4%
Government Agency Notes/Bonds--13.3%
Yankee Obligations--12.9%
Repurchase agreements, mutual fund shares
and other assets and liabilities, net--5.8%
Mortgage-Backed Securities--4.3%
Taxable Municipal Bonds--3.1%
- --------------------------------------------------------------------------------
Investment Strategy
Corporate and mortgage bonds -- the two primary yield enhancing sectors
the Fund emphasizes -- both outpaced Treasuries in the final three months
of the fiscal period. We increased the portfolio's corporate weighting,
including Yankee Obligations, from 36.2% to 43.4% during the same period.
This increased weighting, coupled with the sector's subsequent strong
returns, contributed to the Fund's outperformance relative to its peers.
Conversely, exposure to mortgage-backed securities has remained relatively
stable. Our cautious outlook toward this sector can be partially
attributed to the recent boom in refinancings which has increased
pre-payment risk within the mortgage sector.
9
<PAGE>
EVERGREEN
Select Income Plus Fund
Portfolio Commentary
The portfolio's duration was lengthened 11% during the period and
currently stands at 6.5 years. This move was in response to our
expectation that interest rates would continue to trend lower. As emerging
economic data supported the case for a low inflation environment and rates
steadily declined, the portfolio's lengthened duration enhanced the Fund's
total return.
--------------------------------------------------------------------
PORTFOLIO QUALITY
(as a percentage of portfolio assets)
(Pie chart appears here. See the table below for plot points.)
U.S. Government--27.0%
U.S. Government Agency--16.2%
AAA--5.6%
AA--4.2%
A--18.7%
BAA--10.0%
BA--2.5%
Not Rated--15.8%
- --------------------------------------------------------------------------------
Outlook
Our outlook for the bond market is very positive in the long term as
global economic forces continue to foster low interest rates and benign
inflation world-wide. Market technicals remain very favorable, but we
remain concerned by the overwhelming consensus expectation for a strong
performance by bonds in 1998. We feel much of the positive economic data
has already been priced into the market, and soaring bond prices during
the remainder of 1998 may be unrealistic. Consequently, we approach the
coming months with a degree of caution and plan to take advantage of any
pullbacks in the market to selectively add to the portfolio. In
anticipation of stable to modestly lower interest rates, we will likely
maintain a duration slightly longer than our benchmark.
10
<PAGE>
EVERGREEN
Select Intermediate Tax Exempt Bond Fund
Fund at a Glance as of March 31, 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 Bond 7-Year Index
1 Some portion of the Fund's income may be subject to the Federal Alternative
Minimum Tax.
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS
<TABLE>
<CAPTION>
Class I Class IS
<S> <C> <C>
Performance Inception Date 1/31/84 3/2/98
Average Annual Returns
6 months 3.90% --
1 year 10.12% --
3 years 6.88% --
5 years 5.76% --
10 years 6.65% --
Since Inception 7.45% 0.01%
30-day SEC Yield 4.57% --
Tax Equivalent Yield* 7.57% --
</TABLE>
*Assumes maximum 39.6% federal tax rate. Results for investors subject to lower
tax rates would not be as advantageous.
- --------------------------------------------------------------------------------
LONG TERM GROWTH
(Chart appears here. The plot points are listed in the table below.)
3/88 3/90 3/92 3/94 3/96 3/98
Class I Shares 10,000 11,295 13,099 14,901 16,640 19,044
LBMBI* 10,000 11,603 13,846 15,910 18,284 20,853
CPI 10,000 11,047 11,957 10,635 13,350 13,923
Comparison of a $10,000 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 (LBMBI), and the Consumer Price Index (CPI).
*The Lehman Brothers Municipal Bond 7-Year Index inception date was
1/31/90. The Lehman Brothers Municipal 10-Year Index was used for the period
from 3/31/88 -- 1/31/90.
Past performance is no guarantee of future results. The performance of each
class may vary based on differences in 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 includes the performance of the Fund's
predecessor common trust fund for periods before the Fund's registration
statement became effective on November 24, 1997. Performance for the common
trust fund has been adjusted to include the effect of estimated expenses based
upon the mutual fund expense ratio as stated in the Fund's current Prospectus.
Index returns do not reflect expenses, which have been deducted from the Fund's
return. 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.
11
<PAGE>
EVERGREEN
Select Intermediate Tax Exempt Bond Fund
Portfolio Commentary
- --------------------------------------------------------------------------------
Portfolio Management
(Photo of Richard K. Marrone)
Richard K. Marrone
- --------------------------------------------------------------------------------
Performance
For the six months ending March 31, 1998, the Evergreen Select Intermediate
Tax Exempt Bond Fund Class I shares posted a 3.90% total return. This
performance compares very favorably to the 3.00% average return of
intermediate municipal debt funds tracked by Lipper Analytical Services, an
independent mutual fund rating company. The Fund's strong performance
relative to its peers can be attributed to an emphasis on higher- yielding
bonds as well as a favorable duration strategy.
Portfolio
Characteristics
---------------
Total Net Assets $754,208,248
Average Credit Quality AA
Average Maturity 9.8 years
Average Duration 8.4 years
- --------------------------------------------------------------------------------
The Municipal Bond Market
Moderating economic growth, low inflation and range-bound interest rates
created a favorable environment for fixed-income investors during the past
six months. A decline in new Treasury issuance contributed to stable
interest rates, as the 30-year Treasury bond traded between 5.75% and
6.25% for most of the period. Within the municipal market, spreads -- or
the difference in yields -- between high- and low-rated bonds narrowed
considerably during this same period. This compression of spreads
essentially meant that investors received less reward for assuming a
greater amount of risk associated with lower-rated securities.
Supply within the municipal market was generally strong due to
exceptionally low interest rates that spurred a flurry of new issuance.
This supply-and-demand imbalance caused municipal bonds to cheapen,
prompting individual and institutional investors to take advantage of the
temporary buying opportunity during the final weeks of the period.
--------------------------------------------------------------------
PORTFOLIO COMPOSITION
(as a percentage of net assets)
(Pie chart appears here. The Plot points are listed in the table below.)
General Obligation Notes/Bonds--20.2%
Escrow--17.7%
Other Revenue Bonds, mutual fund shares and other
assets and liabilities, net--15.1%
Hospitals/Nursing Homes/Health Care--14.0%
Residential Care--7.7%
Transportation--6.6%
Housing--6.4%
Industrial Development/Pollution Control--6.2%
Utility--5.0%
Lease Rental Bonds/Municipal Leases--1.1%
12
<PAGE>
EVERGREEN
Select Intermediate Tax Exempt Bond Fund
Portfolio Commentary
- --------------------------------------------------------------------------------
Investment Strategy
Our two primary strategies during the fiscal period involved increasing
the Fund's yield and lengthening duration. Both measures contributed to a
strong quarterly performance and allowed the Fund to outpace its peers.
Consistent with our income-oriented strategy, high grade bonds were sold
and replaced with primarily higher-yielding securities. These purchases
consisted primarily of callable bonds or housing bonds, and offered a
premium yield due to their inherent structure. By pursuing a higher coupon
structure, the portfolio will be better able to help provide a steady
stream of income as well as a degree of stability amid a potentially
volatile market environment.
Another decision which positively impacted performance was the
implementation of a modestly long duration. This move was in response to
our expectation that interest rates would continue their decline. In line
with our forecast, the yield on the 30-year Treasury bond declined from
6.40% to 5.92% during the six months. As interest rates trended lower,
duration was lengthened nearly 7% (during the final three months of the
period) and currently stands at 8.4 years.
--------------------------------------------------------------------
PORTFOLIO QUALITY
(as a percentage of portfolio assets)
(Pie chart appears here. The Plot points are listed in the table below.)
AAA--39.7%
AA--14.6%
A--15.2%
BAA--23.3%
Not Rated--7.2%
- --------------------------------------------------------------------------------
Outlook
Looking ahead, we anticipate interest rates will remain relatively stable
as a result of slower domestic growth, the after-effects of the Asian
crisis and benign inflation. Although the effects until now have been
generally positive, we recognize that the fallout from the Asian crisis
can still cause problems and create volatility within the financial
markets.
Technically speaking, we feel municipal bonds remain solid. Two factors
bode particularly well for the municipal market going forward: a favorable
supply/demand backdrop and the fact that yields on municipals are at their
most attractive levels in nearly a year. These two factors have created a
buying opportunity which should allow municipal bonds to outperform in the
coming months. Going forward, we will be mindful of potential pitfalls and
continue to monitor the market for hidden value and opportunities.
13
<PAGE>
EVERGREEN
Select Limited Duration Fund
Fund at a Glance as of March 31, 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
<TABLE>
<CAPTION>
Class I
<S> <C>
Performance Inception Date 4/30/94
Average Annual Returns
6 months 2.91%
1 year 7.27%
3 years 6.68%
Since Inception 6.28%
30-day SEC Yield 5.48%
</TABLE>
- --------------------------------------------------------------------------------
LONG TERM GROWTH
(Chart appears here. Plot points are listed in the table below.)
4/94 3/95 3/96 3/97 3/98
Class I Shares 10,000 10,458 11,242 11,836 12,696
MLTBI 10,000 10,484 11,296 11,898 12,791
CPI 10,000 10,271 10,551 10,855 11,004
Comparison of a $10,000 investment in Evergreen Select Limited Duration Fund,
Class I shares, versus a similar investment in the Merrill Lynch 1-3 Year
Treasury Bond Index (MLTBI), and the Consumer Price Index (CPI).
Past performance is no guarantee of future results. The investment return and
principal value may fluctuate so that an investor's shares, when redeemed, may
be worth more or less than original cost. 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 24, 1997.
Performance for the common trust fund has been adjusted to include the effect
of estimated expenses based upon the mutual fund expense ratio as stated in the
Fund's current Prospectus. Index returns do not reflect expenses, which have
been deducted from the Fund's return. 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.
14
<PAGE>
EVERGREEN
Select Limited Duration Fund
Portfolio Commentary
- --------------------------------------------------------------------------------
Portfolio Management
(Photo of George Prattos)
George Prattos
- --------------------------------------------------------------------------------
Performance
For the six months ending March 31, 1998, the Evergreen Select Limited
Duration Fund posted a total return of 2.91%, slightly lower than the
Merrill Lynch 1-3 year Treasury Bond Index, which returned 3.17%. The Fund
did outperform the 2.77% average return of short investment grade debt
funds tracked by Lipper Analytical Services, an independent mutual fund
rating company.
Portfolio
Characteristics
---------------
Total Net Assets $57,112,479
Average Credit Quality AA
Average Maturity 2.0 years
- --------------------------------------------------------------------------------
Investment Environment
Competitive currency devaluations in developing Southeast Asian countries
have raised concerns that the global economy may be adversely affected by
significantly slower growth in this area. Inflation has showed little
signs of life as these potentially deflationary effects make their way to
the U.S. In recent testimony, the Federal Reserve Board pondered whether
inflation has become so low that policy makers need to consider at what
point effective price stability has been reached. As such, over the last
six months, interest rates declined modestly. Declines were more
pronounced in the long end of the yield curve due to the impressive
declines in inflation. The decline in short rates was less than that in
the long end as domestic growth continued on a path of strength leaving
investors unsure of the next move from the Fed.
--------------------------------------------------------------------
PORTFOLIO COMPOSITION
(as a percentage of net assets)
(Pie chart appears here. The Plot points are listed in the table below.)
Treasury Notes/Bonds--30.2%
Corporate Notes/Bonds--29.1%
Government Agency Notes/Bonds--18.5%
Commercial Paper--14.0%
Asset-Backed Securities--4.3%
Collateralized Mortgage Obligations--2.1%
Repurchase agreements, other assets and liabilities, net--1.8%
- --------------------------------------------------------------------------------
Investment Strategy
Our sector allocation continues to favor an overweighting of corporate,
mortgage- and asset-backed securities versus Treasuries. While it is too
early to discern if corporate spreads made an important low last year, we
viewed the modest widening of corporate spreads at year-end as an
opportunity to add to our positions. These decisions contributed in a
positive fashion to the funds' performance.
We have employed a barbell structure in the fund, a strategy which
overweights the long and short end of the maturity spectrum while
underweighting the middle.
15
<PAGE>
EVERGREEN
Select Limited Duration Fund
Portfolio Commentary
This strategy has potential to outperform the benchmark in an environment
where long rates fall faster than short rates. This, in fact, has been the
case and was an important contributor to our favorable performance during
the time period.
Over the last six months, our assessment of the fundamentals affecting
interest rates has largely been positive. Furthermore, the technical
backdrop for a declining interest rate environment has also been present.
As such, we have positioned the Fund neutral to longer in duration than
the benchmark over the last six months. This also has been an important
factor in our strong performance recently.
--------------------------------------------------------------------
PORTFOLIO QUALITY
(as a percentage of portfolio assets)
(Pie chart appears here. The Plot points are listed in the table below.)
AAA--65.4%
AA--10.9%
A--15.8%
BAA--4.2%
Not Rated--3.7%
- --------------------------------------------------------------------------------
Outlook
While it remains quite clear that Asian economies are weakening, the
effects on domestic growth, at this point, seem muted. In fact, domestic
growth continues on a path of strength leaving the risk of domestic
overheating and a tighter Fed policy, a credible possibility. The Fed
seems to be on hold, taking a "wait and see" attitude. Chairman Greenspan
has publicly pondered as to whether something is different this time and
will likely influence the Fed to leave interest rates unchanged until they
see the white of inflation's eyes, banking on higher productivity, a
stronger dollar, and lower import and commodity prices to hold the line on
inflation. Any surprises in these key areas, or an unexpected
strengthening in Asian economies will put the pressure on the Fed to
tighten, in order to ensure continued price stability.
We will be monitoring this fundamental backdrop against the potential for
further buying power by investors due to a potential decrease in U.S.
Treasury supply stemming from an improving budget surplus. Conversely,
selling pressure may evolve if supply does not decrease as much as
expected or if investors embrace a bullish fundamental scenario too
quickly, as they did in early January of this year. Evaluating these
changes in market sentiment will be another important factor in the months
to come. Together, changes in the fundamental bias and market sentiment
have the potential to drive a movement out of the trading range that has
recently been defined over the last quarter.
16
<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
March 31, 1998
(Unaudited)
<S> <C>
INSTITUTIONAL SHARES
Net asset value beginning of period $ 10.68
----------
Income from investment operations
Net investment income 0.18
Net realized and unrealized gain on investments 0.04
----------
Total from investment operations 0.22
----------
Less distributions from net investment income ( 0.18)
----------
Net asset value end of period $ 10.72
----------
Total return 2.11%
Ratios/supplemental data
Ratios to average net assets
Expenses 0.42%(a)
Expenses excluding indirectly paid expenses 0.42%(a)
Expenses excluding fee waivers 0.54%(a)
Net investment income 6.09%(a)
Portfolio turnover rate 19%
Net assets end of period (thousands) $ 128,263
</TABLE>
<TABLE>
<CAPTION>
March 9, 1998
(Commencement of
Class Operations) to
March 31, 1998
(Unaudited)
<S> <C>
INSTITUTIONAL SERVICE SHARES
Net asset value beginning of period $ 10.68
----------
Income from investment operations
Net investment income 0.04
Net realized and unrealized gain on investments 0.04
----------
Total from investment operations 0.08
----------
Less distributions from net investment income ( 0.04)
----------
Net asset value end of period $ 10.72
----------
Total return 0.74%
Ratios/supplemental data
Ratios to average net assets
Expenses 0.67%(a)
Expenses excluding indirectly paid expenses 0.67%(a)
Expenses excluding fee waivers 0.79%(a)
Net investment income 6.69%(a)
Portfolio turnover rate 19%
Net assets end of period (thousands) $ 110
</TABLE>
(a) Annualized.
See Combined Notes to Financial Statements.
17
<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
March 31, 1998
(Unaudited)
<S> <C>
INSTITUTIONAL CHARITABLE SHARES
Net asset value beginning of period $ 10.68
----------
Income from investment operations
Net investment income 0.23
Net realized and unrealized gain on investments 0.04
----------
Total from investment operations 0.27
----------
Less distributions from net investment income ( 0.23)
----------
Net asset value end of period $ 10.72
----------
Total return 2.51%
Ratios/supplemental data
Ratios to average net assets
Expenses 0.42%(a)
Expenses excluding indirectly paid expenses 0.42%(a)
Expenses excluding fee waivers 0.53%(a)
Net investment income 6.03%(a)
Portfolio turnover rate 19%
Net assets end of period (thousands) $ 441,739
</TABLE>
(a) Annualized.
See Combined Notes to Financial Statements.
18
<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
March 31, 1998
(Unaudited)
<S> <C>
INSTITUTIONAL SHARES
Net asset value beginning of period $ 5.96
---------
Income from investment operations
Net investment income 0.13
Net realized and unrealized gain on investments 0
---------
Total from investment operations 0.13
---------
Less distributions from net investment income ( 0.13)
---------
Net asset value end of period $ 5.96
---------
Total return 2.18%
Ratios/supplemental data
Ratios to average net assets
Expenses 0.52%(a)
Expenses excluding indirectly paid expenses 0.52%(a)
Expenses excluding fee waivers 0.62%(a)
Net investment income 6.17%(a)
Portfolio turnover rate 19%
Net assets end of period (thousands) $ 481,529
</TABLE>
<TABLE>
<CAPTION>
March 9, 1998
(Commencement of
Class Operations) to
March 31, 1998
(Unaudited)
<S> <C>
INSTITUTIONAL SERVICE SHARES
Net asset value beginning of period $ 5.97
---------
Income from investment operations
Net investment income 0.03
Net realized and unrealized loss on investments ( 0.01)
---------
Total from investment operations 0.02
---------
Less distributions from net investment income ( 0.03)
---------
Net asset value end of period $ 5.96
---------
Total return 0.31%
Ratios/supplemental data
Ratios to average net assets
Expenses 0.77%(a)
Expenses excluding indirectly paid expenses 0.77%(a)
Expenses excluding fee waivers 0.88%(a)
Net investment income 5.97%(a)
Portfolio turnover rate 19%
Net assets end of period (thousands) $ 1,542
</TABLE>
(a) Annualized.
See Combined Notes to Financial Statements.
19
<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
March 31, 1998
(Unaudited)
<S> <C>
INSTITUTIONAL SHARES
Net asset value beginning of period $ 5.72
---------
Income from investment operations
Net investment income 0.13
Net realized and unrealized loss on investments ( 0.01)
---------
Total from investment operations 0.12
---------
Less distributions from net investment income ( 0.13)
---------
Net asset value end of period $ 5.71
---------
Total return 2.03%
Ratios/supplemental data
Ratios to average net assets
Expenses 0.51%(a)
Expenses excluding indirectly paid expenses 0.51%(a)
Expenses excluding fee waivers 0.61%(a)
Net investment income 6.25%(a)
Portfolio turnover rate 24%
Net assets end of period (thousands) $1,174,460
</TABLE>
<TABLE>
<CAPTION>
March 2, 1998
(Commencement of
Class Operations) to
March 31, 1998
(Unaudited)
<S> <C>
INSTITUTIONAL SERVICE SHARES
Net asset value beginning of period $ 5.72
---------
Income from investment operations
Net investment income 0.03
Net realized and unrealized loss on investments ( 0.01)
---------
Total from investment operations 0.02
---------
Less distributions from net investment income ( 0.03)
---------
Net asset value end of period $ 5.71
---------
Total return 0.31%
Ratios/supplemental data
Ratios to average net assets
Expenses 0.76%(a)
Expenses excluding indirectly paid expenses 0.76%(a)
Expenses excluding fee waivers 0.91%(a)
Net investment income 6.11%(a)
Portfolio turnover rate 24%
Net assets end of period (thousands) $ 2,809
</TABLE>
(a) Annualized.
See Combined Notes to Financial Statements.
20
<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
March 31, 1998
(Unaudited)
<S> <C>
INSTITUTIONAL SHARES
Net asset value beginning of period $ 64.84
----------
Income from investment operations
Net investment income 1.07
Net realized and unrealized gain on investments 0.83
----------
Total from investment operations 1.90
----------
Less distributions from net investment income ( 1.07)
----------
Net asset value end of period $ 65.67
----------
Total return 2.93%
Ratios/supplemental data
Ratios to average net assets
Expenses 0.61%(a)
Expenses excluding indirectly paid expenses 0.61%(a)
Expenses excluding fee waivers 0.72%(a)
Net investment income 4.62%(a)
Portfolio turnover rate 18%
Net assets end of period (thousands) $ 753,155
</TABLE>
<TABLE>
<CAPTION>
March 2, 1998
(Commencement of
Class Operations) to
March 31, 1998
(Unaudited)
<S> <C>
INSTITUTIONAL SERVICE SHARES
Net asset value beginning of period $ 65.90
----------
Income from investment operations
Net investment income 0.24
Net realized and unrealized loss on investments ( 0.23)
----------
Total from investment operations 0.01
----------
Less distributions from net investment income ( 0.24)
----------
Net asset value end of period $ 65.67
----------
Total return 0.01%
Ratios/supplemental data
Ratios to average net assets
Expenses 0.85%(a)
Expenses excluding indirectly paid expenses 0.85%(a)
Expenses excluding fee waivers 0.96%(a)
Net investment income 4.49%(a)
Portfolio turnover rate 18%
Net assets end of period (thousands) $ 1,053
</TABLE>
(a) Annualized.
See Combined Notes to Financial Statements.
21
<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
March 31, 1998
(Unaudited)
<S> <C>
INSTITUTIONAL SHARES
Net asset value beginning of period $ 10.42
----------
Income from investment operations
Net investment income 0.22
Net realized and unrealized loss on investments ( 0.02)
----------
Total from investment operations 0.20
----------
Less distributions from net investment income ( 0.22)
----------
Net asset value end of period $ 10.40
----------
Total return 1.90%
Ratios/supplemental data
Ratios to average net assets
Expenses 0.30%(a)
Expenses excluding indirectly paid expenses 0.30%(a)
Expenses excluding fee waivers and expense reimbursements 0.50%(a)
Net investment income 5.93%(a)
Portfolio turnover rate 41%
Net assets end of period (thousands) $ 57,112
</TABLE>
(a) Annualized.
See Combined Notes to Financial Statements.
22
<PAGE>
EVERGREEN
Select Core Bond Fund
Schedule of Investments
March 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
ASSET-BACKED SECURITIES -- 3.9%
$6,637,130 Contimortage Home Equity
Loan Trust,
6.37%, 3/15/08 ..................... $6,632,915
462,677 Green Tree Financial Corp.,
6.15%, 10/15/17 .................... 463,156
2,000,000 Jet Equipment Trust,
9.41%, 6/15/10 (a) ................. 2,406,014
12,975,000 Southern Pacific Security Asset Corp.,
6.27%, 3/25/19 ..................... 12,972,972
----------
Total Asset-Backed Securities
(cost $22,519,356) .................. 22,475,057
----------
COLLATERALIZED MORTGAGE OBLIGATIONS -- 0.6%
3,417,558 Collateralized Mortgage
Obligation Trust,
7.95%, 5/1/17 ...................... 3,458,768
118,802 Drexel Burnham Lambert,
Collateralized Mortgage Obligation
Trust
8.50%, 7/1/14 ...................... 119,658
----------
Total Collateralized Mortgage
Obligations (cost $3,554,332) ....... 3,578,426
----------
CORPORATE BONDS -- 16.9%
Banks -- 3.7%
500,000 Cenfed Financial Corp.,
11.17%, 12/15/01 (a) ............... 557,500
1,000,000 Harris Bancorp.,
9.375%, 6/1/01 ..................... 1,092,129
4,000,000 NBD Bank N.A., Subordinated Note,
8.25%, 11/1/24 ..................... 4,758,796
5,000,000 NCNB Texas National Bank of Dallas,
9.50%, 6/1/04 ...................... 5,809,395
8,000,000 State Street Boston Corp.,
7.35%, 6/15/26 ..................... 8,782,736
----------
21,000,556
----------
Chemical & Agricultural
Products -- 1.1%
5,338,000 Dow Chemical Company,
8.55%, 10/15/09 .................... 6,311,961
----------
Energy -- 3.0%
14,160,000 Phillips Petroleum Company,
7.125%, 3/15/28 .................... 14,175,180
3,000,000 Tenaska Washington Partners,
6.79%, 9/23/11 (a) ................. 3,000,000
----------
17,175,180
----------
Finance & Insurance -- 3.9%
6,500,000 Associates Corp., N.A.,
5.96%, 5/15/37 ..................... 6,602,557
1,300,000 Ford Motor Credit Co.,
8.00%, 1/15/99 ..................... 1,319,344
7,500,000 General Electric Capital Corp.,
6.29%, 12/15/07 .................... 7,553,107
3,150,000 General Motors Acceptance Corp.,
7.75%, 1/15/99 ..................... 3,193,700
1,500,000 KFW International Finance,
8.85%, 6/15/99 ..................... 1,557,552
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
CORPORATE BONDS -- continued
Finance & Insurance -- continued
$1,600,000 Merrill Lynch & Co., Inc.,
8.40%, 11/1/19 ..................... $ 1,849,357
----------
22,075,617
----------
Metals & Mining -- 1.4%
7,000,000 BHP Finance USA Ltd.,
8.50%, 12/1/12 ..................... 7,958,804
----------
Machinery -- Diversified -- 1.1%
2,100,000 Deere & Co.,
8.95%, 6/15/19 ..................... 2,514,263
3,500,000 Ford Motor Co.,
9.00%, 9/15/01 ..................... 3,806,967
----------
6,321,230
----------
Paper & Packing -- 2.1%
5,000,000 Caliber Systems Inc.,
7.80%, 8/1/06 ...................... 5,382,460
6,000,000 Westvaco Corp.,
7.75%, 2/15/23 ..................... 6,487,890
----------
11,870,350
----------
Utilities -- 0.6%
1,100,000 ALLTEL Corp.,
6.50%, 11/1/13 ..................... 1,088,616
2,000,000 Carolina Power & Light Co.,
8.625%, 9/15/21 .................... 2,446,834
----------
3,535,450
----------
Total Corporate Bonds
(cost $92,072,835) .................. 96,249,148
----------
MORTGAGE-BACKED SECURITIES -- 28.5%
Federal Home Loan Mortgage Corp.:
9,537,023 6.465%, 9/1/27 ..................... 9,705,523
1,727,138 7.50%, 5/1/09 ...................... 1,778,413
4,398,892 7.621%, 8/1/26 ..................... 4,563,763
1,039,068 8.00%, 10/1/25 ..................... 1,076,786
Federal Home Loan Mortgage
PC Guaranteed:
10,092,050 5.25%, 4/15/16 ..................... 10,070,302
2,900,000 5.85%, 1/25/19 ..................... 2,867,303
2,000,000 6.50%, 4/15/18 ..................... 2,017,270
Federal National Mortgage
Association:
5,423,086 6.189%, 8/1/37 ..................... 5,557,464
5,893,805 6.468%, 9/1/27 ..................... 5,983,085
9,053,639 6.50%, 10/1/00 ..................... 9,110,767
5,499,500 6.568%, 10/1/27 .................... 5,662,670
2,334,084 6.976%, 12/1/25 .................... 2,418,697
Federal National Mortgage
Association REMIC:
14,482,342 5.50%, 2/25/15 ..................... 14,437,229
4,659,000 5.65%, 7/25/19 ..................... 4,627,482
4,600,000 7.75%, 9/25/22 ..................... 4,919,543
12,035,000 Federal National Mortgage
Association, Medium Term Note,
6.92%, 3/19/07 ..................... 12,843,451
</TABLE>
23
<PAGE>
EVERGREEN
Select Core Bond Fund
Schedule of Investments (continued)
March 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
MORTGAGE-BACKED SECURITIES -- continued
Government National Mortgage
Association:
$ 3,001,092 6.00%, 3/15/11 - 4/15/11 ..... $ 2,973,152
11,457,777 6.50%, 5/15/09 - 2/15/28 ..... 11,452,368
39,833,601 7.00%, 2/15/11 - 2/15/28 ..... 40,682,713
5,460,910 7.50%, 8/15/12 - 3/15/26 ..... 5,626,569
2,595,242 8.00%, 10/15/24 .............. 2,690,131
1,056,316 9.00%, 4/15/20 - 8/15/21 ..... 1,131,578
471,473 9.50%, 2/15/21 ............... 511,696
------------
Total Mortgage-Backed Securities
(cost $161,677,174) ........... 162,707,955
. ------------
U. S. AGENCY OBLIGATIONS -- 3.8%
Farm Credit Systems Financial
Assistance Corporation:
8,300,000 8.80%, 6/10/05 ............... 9,697,230
6,000,000 9.375%, 7/21/03 .............. 6,936,444
5,000,000 Federal Farm Credit Bank
8.65%, 10/1/99 ............... 5,205,930
------------
Total U. S. Agency Obligations
(cost $19,237,957) ........... 21,839,604
------------
U. S. TREASURY OBLIGATIONS -- 26.5%
United States Treasury Bonds:
74,685,000 6.875%, 8/15/25 .............. 83,250,473
1,400,000 8.75%, 5/15/17 ............... 1,833,126
3,950,000 8.875%, 8/15/17 .............. 5,236,223
United States Treasury Notes:
600,000 5.75%, 8/15/03 ............... 602,063
38,000,000 5.875%, 8/15/98 .............. 38,059,394
22,000,000 5.875%, 3/31/99 .............. 22,075,636
------------
Total U. S. Treasury Obligations
(cost $145,728,884) ........... 151,056,915
------------
YANKEE OBLIGATIONS -- 13.7%
Bayerische Landesbank Girozen,
5,000,000 6.20%, 2/9/06 ................ 4,967,305
2,500,000 6.375%, 8/31/00 .............. 2,524,155
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
YANKEE OBLIGATIONS -- continued
$ 2,000,000 Export Development Corp.
8.125%, 8/10/99 .............. $ 2,059,838
13,330,000 Hydro-Quebec,
8.00%, 2/1/13 ................ 15,002,915
3,500,000 Japan Finance Corp. Municipal
Enterprises,
6.85%, 4/15/06 ............... 3,660,139
Korea Development Bank,
5,000,000 6.625%, 11/21/03 ............. 4,438,940
6,350,000 7.125%, 9/17/01 .............. 5,977,871
1,500,000 New Brunswick Province, Canada,
7.625%, 2/15/13 .............. 1,673,775
3,000,000 Ontario Province, Canada,
7.75%, 6/4/02 ................ 3,184,200
8,020,000 Petro Canada Ltd.,
8.60% ........................ 9,585,905
5,300,000 Philips Electers N V,
7.125%, 5/15/25 .............. 5,637,594
Quebec Province, Canada,
3,000,000 8.80%, 4/15/03 ............... 3,329,610
2,000,000 9.375%, 4/1/99 ............... 2,064,400
Svenska Handelsbanken:
3,500,000 8.12%, 8/15/07 ................ 3,925,278
5,000,000 8.35%, 7/15/04 ............... 5,554,425
4,000,000 Westpac Banking,
9.125%, 8/15/01 .............. 4,336,404
------------
Total Yankee Obligations
(cost $73,550,187) ........... 77,922,754
------------
</TABLE>
<TABLE>
<CAPTION>
Shares
<S> <C> <C> <C>
MUTUAL FUND SHARES -- 2.3%
(cost $12,884,524)
12,884,524 Valiant General Fund .............. 12,884,524
----------
Total Investments --
(cost $531,225,249) ..... 96.2% 548,714,383
Other Assets and
Liabilities -- net ...... 3.8 21,396,514
----- -----------
Net Assets -- ............ 100.0% $570,110,897
===== ============
</TABLE>
(a) Securities that may be sold 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.
Legend of Portfolio Abbreviation
PC Participating Certificate
REMIC Real Estate Mortgage Investment Conduit
See Combined Notes to Financial Statements.
24
<PAGE>
EVERGREEN
Select Fixed Income Fund
Schedule of Investments
March 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
ASSET-BACKED SECURITIES -- 8.9%
$5,350,000 Carco Auto Loan Master Trust,
Series 97-1, Class A,
6.689%, 8/15/04 ..................... $ 5,417,865
500,000 Case Equipment Loan Trust,
Series 95-B, Class B,
6.45%, 9/15/02 ...................... 503,723
5,500,000 Empire Funding Home Loan
Owner Trust, Series 98-1, Class A4,
6.64%, 12/25/12 ..................... 5,481,327
1,474,187 EQCC Home Equity Loan Trust,
Series 96-1, Class A2,
5.82%, 9/15/09 ...................... 1,470,951
714,843 FCC Grantor Trust,
Series 91-AA,
8.75%, 2/15/06 ...................... 713,774
1,277,405 First Security Auto Grantor Trust,
Series 95-A, Class A,
6.25%, 1/15/01 ...................... 1,280,452
814,494 GCC Second Mortgage Trust,
10.00%, 7/15/05 ..................... 818,986
5,000,000 Iroquois Trust, Series 97-3,
6.68%, 11/10/03 ..................... 5,031,000
2,329,038 Life Financial Home Loan
Owner Trust,
6.79%, 10/25/11 ..................... 2,334,033
9,000,000 Mercantile Credit Card,
Master Trust, Series 95, Class A,
5.82%, 4/15/98 ...................... 9,023,175
719,682 Olympic Automobile Receivables,
Series 95-D, Class B,
6.10%, 4/15/02 ...................... 721,284
1,500,000 Premier Auto Trust, Series 95-3,
6.25%, 8/6/01 ....................... 1,508,347
1,240,269 TMS Home Equity Loan Trust,
Series 92-B, Class A,
6.90%, 7/15/07 ...................... 1,238,327
2,161,080 Western Financial Grantor Trust,
Series 95-3, Class A2,
6.05%, 11/1/00 ...................... 2,164,203
5,444,038 Xerox Rental Equipment Trust,
6.20%, 12/26/05 (a) ................. 5,452,544
-----------
Total Asset-Backed Securities
(cost $43,048,969).................... 43,159,991
-----------
COLLATERALIZED MORTGAGE OBLIGATIONS -- 10.9%
2,250,000 DLJ Mortgage Acceptance Corp., Series 93-MF7,
7.95%, 6/18/03 ...................... 2,362,514
1,962,000 Federal Home Loan Mortgage Corp.:
Series 1229, Class 1229H,
6.80%, 10/15/05 ..................... 1,965,483
8,111,813 Series 1342, Class F,
7.40%, 10/15/05 ..................... 8,191,268
Federal Home Loan Mortgage PC
Guaranteed:
5,477,382 Series 12, Class 12-A,
9.25%, 11/15/19 ..................... 5,848,868
1,176,463 Series 1608, Class 1608,
6.33%, 11/15/23 ..................... 1,181,937
97,533 Series 1903, Class 1903-AA,
6.75%, 10/15/03 ..................... 97,508
1,304,825 Series 1935, Class 1935,
6.33%, 2/15/27 ...................... 1,315,528
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
COLLATERALIZED MORTGAGE OBLIGATIONS -- continued
Federal National Mortgage Association:
$1,356,367 Series 95, Class A1,
6.23%, 12/25/25 ..................... $ 1,354,515
1,315,395 Series 97, Class 16-F,
6.43%, 11/18/18 ..................... 1,321,720
3,000,000 Nationslink Funding Corp.,
Series 98-1, Class D,
6.803%, 1/20/08 ..................... 2,952,000
Prudential Home Mortgage Securities:
1,835,611 Series 92-31, Class A5,
6.30%, 10/25/99 ..................... 1,833,454
4,788,537 Series 93-39, Class A8,
6.50%, 10/25/08 ..................... 4,787,411
4,128,193 Prudential Securities Secured Financing
Corp.,
Series 94-4, Class A1,
8.12%, 2/15/25 ...................... 4,326,036
3,088,723 Resolution Trust Corp.,
Series 92-7, Class A2D,
8.35%, 6/25/29 ...................... 3,079,225
5,051,489 Saxon Mortgage Securities Corp.,
Series 93-8A, Class 1A2,
7.375%, 9/25/23 ..................... 5,109,799
7,000,000 Structured Asset Securities Corp.,
Series 96, Class C,
6.525%, 2/25/28 ..................... 6,859,615
-----------
Total Collateralized Mortgage
Obligations (cost $52,607,658) ...... 52,586,881
-----------
CORPORATE BONDS -- 26.9%
Automotive Equipment &
Manufacturing -- 1.1%
5,000,000 Johnson Controls, Inc.,
6.30%, 2/1/08 ....................... 5,019,795
-----------
Banks -- 10.5%
3,890,000 Abbey National PLC,
6.69%, 10/17/05 ..................... 3,925,804
Chase Manhattan Corp.:
4,500,000 8.00%, 5/1/05 ....................... 4,502,227
2,000,000 8.00%, 5/15/04 ...................... 2,040,324
3,000,000 Comerica, Inc.
10.125%, 6/1/98 ...................... 3,019,440
First Chicago Corp.:
7,725,000 9.00%, 6/15/99 ...................... 7,982,999
3,000,000 9.20%, 12/17/01 ..................... 3,303,630
14,865,000 National Bank of Canada,
8.125%, 8/15/04 ..................... 16,227,600
1,020,000 NCNB Corp.,
9.13%, 10/15/01 ..................... 1,116,680
3,000,000 SFFED Corp.,
11.20%, 9/1/04 (a) .................. 3,622,500
5,000,000 Swiss Bank Corp.,
6.75%, 7/15/05 ...................... 5,130,215
-----------
50,871,419
-----------
Finance & Insurance -- 11.3%
7,000,000 Associated P&C Holdings, Inc.,
6.75%, 7/15/03 (a) .................. 6,950,139
5,000,000 Associates Corp., N.A.,
6.00%, 6/15/00 ...................... 4,998,990
1,500,000 FBG Finance Ltd.
6.75%, 11/15/05 (a) ................. 1,502,400
</TABLE>
25
<PAGE>
EVERGREEN
Select Fixed Income Fund
Schedule of Investments (continued)
March 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
CORPORATE BONDS -- continued
Finance & Insurance -- continued
$8,750,000 First Security Corp.,
6.08%, 2/9/01 ...... $ 8,739,299
2,250,000 Horace Mann Educators
Corp.,
6.625%, 1/15/06 .... 2,270,205
Lehman Brothers
Holdings, Inc.:
5,000,000 6.625%, 11/15/00 ... 5,041,290
3,500,000 6.84%, 10/7/99 ..... 3,532,081
Metropolitan Life
Insurance Company:
5,000,000 6.30%, 11/1/03 (a) 4,955,800
5,000,000 7.00%, 11/1/05 (a) 5,123,370
Potomac Gurnee Finance
Corp.:
2,457,097 6.89%, 12/21/26 (a) .. 2,529,299
2,000,000 Class B,
7.00%, 12/21/26 ... 2,057,870
1,000,000 Southern National
Corp. of North
Carolina,
7.05%, 5/23/03 ..... 1,036,917
5,000,000 Traveler's Group,
Inc.,
6.125%, 6/15/00 .... 5,024,950
1,000,000 U.S. Life Corp.,
6.375%, 6/15/00 .... 1,008,231
-----------
54,770,841
-----------
Healthcare Products &
Services -- 1.9%
9,675,000 Columbia/HCA
Healthcare Corp.,
6.875%, 7/15/01 .... 9,349,427
-----------
Industrial Specialty
Products &
Services -- 0.2
1,000,000 Harcourt General, Inc.,
8.25%, 6/1/02 ...... 1,067,478
-----------
Oil / Energy -- 0.8%
3,675,000 Pacific Gas,
7.10%, 6/1/05 ...... 3,839,475
-----------
Real Estate -- 0.3%
1,250,000 EOP Operating LP,
6.376%, 2/15/02 .... 1,242,550
-----------
Transportation -- 0.7
3,000,000 Continental Airlines, Inc.,
7.461%, 4/1/13 ..... 3,176,745
-----------
Utilities -- 0.1
423,000 Commonwealth Edison Co.,
9.05%, 10/15/99 .... 439,172
-----------
Total Corporate Bonds
(cost $127,320,727) 129,776,902
-----------
MORTGAGE-BACKED SECURITIES -- 3.2%
Federal Home Loan Mortgage Corp.:
384,762 6.00%, 12/1/00 ..... 385,435
3,972,705 7.00%, 1/1/00 ...... 4,016,405
435,768 8.00%, 2/1/00 -
4/1/00 ............. 443,864
Federal National
Mortgage Association:
127,601 6.15%, 6/1/17 ...... 129,157
7,680,774 11.00%, 1/1/99 ..... 8,844,891
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
MORTGAGE-BACKED SECURITIES -- continued
$1,657,007 Government National Mortgage
Association,
9.20%, 4/15/18 - $ 1,808,822
9/15/18 -----------
Total Mortgage-Backed
Securities
(cost $15,305,795).. 15,628,574
-----------
U. S. TREASURY OBLIGATIONS -- 24.8%
U.S. Treasury Notes:
25,000,000 6.125%, 8/15/07 .... 25,703,150
15,000,000 6.25%, 2/15/07 ..... 15,515,640
21,500,000 6.50%, 10/15/06 .... 22,554,854
21,500,000 6.625%, 5/15/07 .... 22,816,896
7,220,000 7.00%, 7/15/06 ..... 7,799,860
3,500,000 7.25%, 8/15/04 ..... 3,786,566
12,000,000 7.875%, 11/15/04 ... 13,410,012
8,100,000 8.875%, 2/15/99 .... 8,327,821
-----------
Total U. S. Treasury
Obligations
(cost $116,975,198). 119,914,799
-----------
U.S. GOVERNMENT & AGENCY OBLIGATIONS -- 14.0%
224,417 Federal Farm Credit
Bank, Consolidated
Systems,
6.38%, 2/25/02 ..... 224,750
Federal Home Loan Bank:
2,000,000 5.37%, 11/3/00 ...... 1,973,468
10,000,000 7.70%, 9/20/04 ..... 10,964,740
Federal Home Loan
Mortgage Corp.:
1,000,000 6.55%, 4/2/03 ...... 997,719
1,825,000 6.97%, 6/16/05 ..... 1,859,319
4,000,000 7.435%, 8/10/05 .... 4,024,136
3,000,000 7.55%, 4/26/06 ..... 3,047,178
7,282,971 Federal Housing
Administration,
7.43%, 9/1/23 ...... 7,378,560
10,104,217 Federal Housing Administration -
Puttable Project
Loans,
7.43%, 1/1/24 ...... 10,562,191
Federal National
Mortgage Association:
3,000,000 5.33%, 6/26/98 ..... 2,998,176
4,150,000 5.35%, 8/12/98 ..... 4,143,829
500,000 6.00%, 12/15/00 .... 498,121
1,000,000 6.44%, 6/21/05 ..... 1,031,795
3,000,000 6.55%, 11/21/00 .... 3,001,434
6,500,000 6.64%, 6/19/00 ..... 6,513,338
4,000,000 7.11%, 8/7/01 ...... 3,993,508
2,500,000 7.65%, 5/4/05 ...... 2,504,145
550,000 8.70%, 6/10/99 ..... 568,384
1,300,000 Private Export Funding
Corp.,
5.75%, 4/30/98 ..... 1,299,954
-----------
Total U.S. Government
& Agency
Obligations (cost 67,584,745
$65,088,033) ----------
</TABLE>
26
<PAGE>
EVERGREEN
Select Fixed Income Fund
Schedule of Investments (continued)
March 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C> <C>
YANKEE OBLIGATIONS -- 5.5%
Hydro Quebec MTN:
$10,000,000 7.45%, 12/11/98 .................. $ 10,110,900
1,000,000 7.52%, 7/17/03 ................... 1,059,895
Korea Development Bank:
5,000,000 7.25%, 5/15/06 ................... 4,540,255
5,000,000 7.375%, 9/17/04 .................. 4,574,115
4,000,000 Petroliam Nasional Berhad,
7.125%, 10/18/06 (a) ............. 3,746,324
2,500,000 Ras Laffan Liquefied Natural Gas,
7.628%, 9/15/06 (a) .............. 2,536,752
------------
Total Yankee Obligations
(cost $27,450,699)................ 26,568,241
------------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C> <C>
REPURCHASE AGREEMENT -- 4.7%
(cost $22,726,592)
$22,726,592 Dresdner Bank AG, 5.90% dated
3/31/98, due 4/1/98, maturity value
$22,730,317(collateralized by,
$22,870,000 U.S. Treasury Note,
5.62%, due 12/31/99; value including
accrued interest $23,182,744)..... $ 22,726,592
------------
Total Investments --
(cost $470,523,671)...... 98.9% 477,946,725
Other Assets and
Liabilities -- net ...... 1.1 5,124,392
----- ------------
Net Assets -- ............ 100.0% $483,071,117
===== ============
</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.
Legend of Portfolio Abbreviations
MTN Medium Term Note
PC Participating Certificate
See Combined Notes to Financial Statements.
27
<PAGE>
EVERGREEN
Select Income Plus Fund
Schedule of Investments
March 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
ASSET-BACKED SECURITIES -- 4.7%
$3,534,122 Bellsouth Savings &
Employee Stock,
9.125%, 7/1/03 ...... $ 3,880,501
1,500,000 Continental Airlines
Pass Through Trust,
7.42%, 4/1/07 ....... 1,555,838
2,772,524 Corestates Home Equity
Trust,
5.10%, 3/15/09 ...... 2,730,340
5,000,000 Empire Funding Home
Loan Owner Trust,
6.64%, 12/25/12 ..... 4,983,025
1,150,000 FNBC 1993-A Pass
Through Trust,
8.08%, 1/5/18 ....... 1,314,210
Harley-Davidson
Eaglemark Ownership
Trust:
11,755,572 5.98%, 12/15/01 (a). 11,767,269
4,500,000 6.35%, 10/15/02 ..... 4,516,875
10,000,000 Jet Equipment Trust
9.41%, 6/15/10 (a) .. 12,030,070
9,277,592 Topaz 1997-1 Limited,
6.92%, 3/10/07 (a) .. 9,688,774
2,833,161 Xerox Rental Equipment
Trust
6.20%, 12/25/05 (a) . 2,837,587
-----------
Total Asset-Backed
Securities
( cost $52,333,353) .. 55,304,489
-----------
COLLATERALIZED MORTGAGE OBLIGATIONS -- 0.6%
2,847,965 Collateralized Mortgage
Obligation Trust,
7.95%, 5/1/17 ....... 2,882,306
155,927 Drexel Burnham Lambert,
Collateralized
Mortgage Obligation
Trust,
8.50%, 7/1/14 ....... 157,051
3,622,674 Kidder Peabody Mortgage
Assets Trust,
7.95%, 7/20/18 ...... 3,729,849
-----------
Total Collateralized
Mortgage
Obligations
(cost $6,648,892) ... 6,769,206
-----------
CORPORATE BONDS -- 30.5%
Banks -- 4.5%
1,500,000 Cenfed Financial Corp.
11.17%, 12/15/01 (a) 1,672,500
3,500,000 Comerica, Inc.
7.125%, 12/1/13 ..... 3,595,910
5,000,000 Fleet Financial Group
Inc.
7.625%, 12/1/99 ..... 5,127,090
230,000 Irving Bank Corp.
8.50%, 6/1/02 ....... 230,174
7,000,000 Mellon Capital I,
7.72%, 12/1/26 ...... 7,272,454
1,600,000 Midlantic Corp.
9.25%, 9/1/99 ....... 1,670,595
1,500,000 NBD Bank, N.A.,
6.25%, 8/15/03 ...... 1,508,501
5,000,000 NCNB Texas National
Bank of Dallas,
9.50%, 6/1/04 ....... 5,809,395
11,000,000 PNC Institutional
Capital Trust B,
8.315%, 5/15/27 (a) . 11,929,115
3,000,000 SFFED Corp.
11.20%, 9/1/04 (a) .. 3,622,500
10,000,000 Wachovia Bank, NC,
N.A.,
6.30%, 3/15/01 ...... 10,092,890
-----------
52,531,124
-----------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
CORPORATE BONDS -- continued
Electrical Equipment &
Services -- 0.6%
$1,500,000 Emerson Electric Co.
7.875%, 6/5/98 ...... $ 1,503,990
5,000,000 Texas Instruments Inc.
6.125%, 2/1/06 ...... 4,977,460
-----------
6,481,450
-----------
Finance &
Insurance -- 10.6%
250,000 American General
Finance Corp.
6.375%, 3/1/03 ...... 251,182
5,000,000 Associates Corp. N.A.,
8.55%, 7/15/09 ...... 5,840,520
199,000 Chubb Corp.
8.75%, 11/15/99 ..... 199,571
10,500,000 Continental Corp.
8.375%, 8/15/12 ..... 11,770,930
1,000,000 Ford Motor Credit Co.
7.75%, 11/15/02 ..... 1,062,249
11,000,000 Geico Corp.
7.50%, 4/15/05 ...... 11,824,868
26,500,000 General Electric
Capital Corp.
6.29%, 12/15/07 ..... 26,687,646
1,000,000 General Motors Acceptance
Corp.
9.625%, 5/15/00 ..... 1,070,591
2,250,000 Goldman Sachs Group
L.P.,
6.375%, 6/15/00 (a) . 2,262,301
5,000,000 Lehman Brothers
Holdings Inc.
6.00%, 2/26/01 ...... 4,961,950
10,000,000 Liberty Mutual
Insurance Co.
8.20%, 5/4/07 (a) ... 11,101,120
10,000,000 Loews Corp.
7.00%, 10/15/23 ..... 9,756,080
3,000,000 Merrill Lynch & Co., Inc.
8.40%, 11/1/19 ...... 3,467,544
1,000,000 Morgan Stanley Group
Inc.
6.875%, 3/1/07 ...... 1,027,443
Potomac Gurnee Finance
Corp.
5,250,000 7.22%, 12/21/26 (a) 5,305,046
16,708,263 6.89%, 12/21/26 (a) 17,199,235
10,000,000 Travelers Capital II,
7.75%, 12/1/36 ...... 10,364,280
750,000 Wesco Financial Corp.
8.875%, 11/1/99 ..... 782,702
-----------
124,935,258
-----------
Food & Beverage
Products -- 0.6%
7,000,000 Coca Cola Enterprises
Inc.
7.875%, 2/1/02 ...... 7,437,283
-----------
Gaming -- 1.3%
Circus Circus
Enterprises Inc.:
10,000,000 7.00%, 11/15/36 ..... 10,370,410
5,000,000 7.625%, 7/15/13 ..... 4,781,590
-----------
15,152,000
-----------
Industrial Specialty
Products & Services -- 0.7%
3,000,000 Baxter International,
Inc.
9.25%, 12/15/99 ..... 3,152,742
4,500,000 Freeport McMoran
Resource Partners,
7.00%, 2/15/08 ...... 4,576,343
</TABLE>
28
<PAGE>
EVERGREEN
Select Income Plus Fund
Schedule of Investments (continued)
March 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
CORPORATE BONDS -- continued
Industrial Specialty Products &
Services -- continued
$1,000,000 Upjohn Co.
5.875%, 4/15/00 ..... $ 1,000,027
------------
8,729,112
------------
Leisure & Tourism -- 0.9%
10,500,000 Brunswick Corp.
6.75%, 12/15/06 .... 10,692,864
------------
Metals & Mining -- 0.7%
7,400,000 BHP Finance USA
Ltd.,
8.50%, 12/1/12 ...... 8,413,593
------------
Machinery -- Diversified -- 0.5%
5,000,000 Deere & Co.,
8.95%, 6/15/19 ...... 5,986,340
------------
Office Equipment &
Supplies -- 0.1%
750,000 Xerox Credit Corp.
10.00%, 4/1/99 ...... 779,423
------------
Oil/Energy -- 2.6%
6,500,000 Atlantic Richfield
Co.
9.00%, 4/1/21 ....... 8,282,924
500,000 Burlington
Resources Inc.
9.625%, 6/15/00 ..... 536,570
2,500,000 Suburban Propane
Partners, L.P.,
7.54%, 6/30/11 ...... 2,599,250
6,000,000 Transocean Offshore
Inc.
7.45%, 4/15/27 ...... 6,538,614
12,000,000 Union Pacific
Resources Group
Inc.,
7.50%, 10/15/26 ..... 12,879,120
------------
30,836,478
------------
Paper & Packaging -- 0.9%
8,000,000 Westvaco Corp.
7.75%, 2/15/23 ...... 8,650,520
1,500,000 Willamette
Industrials Inc.
7.35%, 7/1/26 ....... 1,668,125
------------
10,318,645
------------
Retailing & Wholesale -- 0.8%
500,000 Dayton Hudson Corp.
9.75%, 11/1/98 ...... 510,540
9,870,000 Macsaver Financial
Services Inc.,
7.60%, 8/1/07 ....... 9,127,549
------------
9,638,089
------------
Telecommunication
Services & Equipment -- %
5,000,000 GTE Corp.
9.375%, 12/1/00 ..... 5,394,020
10,500,000 LCI International
Inc.
7.25%, 6/15/07 ...... 10,496,230
------------
15,890,250
------------
Transportation -- 1.8%
2,000,000 Consolidated Rail
Corp.
9.75%, 6/1/00 ....... 2,146,426
1,500,000 CSX Transportation
Inc.,
5.91%, 3/15/00 ...... 1,498,863
10,000,000 Norfolk Southern
Corp.
7.70%, 5/15/17 ...... 11,007,160
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
CORPORATE BONDS -- continued
Transportation -- continued
$2,925,731 Southwest Airlines
Co.
7.67%, 1/2/14 ....... $ 3,209,483
3,819,000 Union Pacific Corp.
6.125%, 1/15/04 ..... 3,745,488
------------
21,607,420
------------
Utilities -- Electric -- 2.6%
3,000,000 Carolina Power &
Light Co.
8.625%, 9/15/21 ..... 3,670,251
500,000 PacifiCorp
Holdings,
6.75%, 4/1/01 (a), .. 507,946
Pennsylvania Power
& Light Co.:
8,500,000 7.375%, 3/1/14 ...... 9,098,247
15,000,000 7.75%, 5/1/02 ....... 15,778,725
1,000,000 Virginia Electric &
Power Co.
9.30%, 6/9/99 ....... 1,038,500
------------
30,093,669
------------
Total Corporate Bonds
(cost $341,870,473).. 359,522,998
------------
MORTGAGE-BACKED SECURITIES -- 3.7%
Federal Home Loan Mortgage Corp.:
3,820,756 5.60%, 2/15/13 ...... 3,812,302
3,500,000 5.85%, 1/25/19 ...... 3,460,537
1,500,338 6.00%, 8/1/99 ....... 1,504,944
5,000,000 6.24%, 10/6/04 ...... 5,094,245
9,554,326 6.50%, 11/1/99 -
4/15/18 ............. 9,632,162
2,000,000 6.515%, 8/25/00 ..... 2,033,156
3,647,219 6.75%, 10/15/03 -
5/30/06 ............. 3,753,878
5,683,158 7.50%, 5/1/09 ....... 5,851,880
50,040 9.00%, 4/15/20 ...... 50,163
7,724,000 Federal National Mortgage
Association,
7.75%, 9/25/22 ...... 8,260,554
------------
Total Mortgage-Backed Securities
(cost $42,631,297)... 43,453,821
------------
TAXABLE MUNICIPAL OBLIGATIONS -- 3.1%
Baltimore, MD, General Obligation:
370,000 7.45%, 10/15/09 ...... 406,034
395,000 7.50%, 10/15/10 ...... 433,378
420,000 7.60%, 10/15/11 ...... 461,677
450,000 7.70%, 10/15/12 ..... 495,549
Mississippi State, General Obligation:
3,095,000 7.00%, 9/1/10 ....... 3,215,798
3,195,000 7.05%, 9/1/12 ....... 3,302,065
10,000,000 New York State, Dormitory Authority
Revenue Bond,
6.11%, 4/1/98 ....... 10,000,000
North Carolina, Housing Finance
Agency:
1,025,000 6.72%, 3/1/03 ...... 1,042,025
935,000 6.72%, 9/1/03 ...... 951,868
5,000,000 San Bernardino County, CA,
Financing Revenue
Bond,
6.94%, 8/1/09 ....... 5,182,000
</TABLE>
29
<PAGE>
EVERGREEN
Select Income Plus Fund
Schedule of Investments (continued)
March 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
TAXABLE MUNICIPAL OBLIGATIONS -- continued
Virginia State Housing Development
Authority:
$ 4,000,000 7.00%, 11/1/15 ..................... $ 4,051,760
6,000,000 7.50%, 5/1/11 ...................... 6,416,280
------------
Total Taxable Municipal Obligations
(cost $34,685,465).................. 35,958,434
------------
U. S. AGENCY OBLIGATIONS -- 13.3%
Farm Credit System Financial Asset
Corp.
17,500,000 8.80%, 6/10/05 ..................... 20,445,968
9,600,000 9.375%, 7/21/03 .................... 11,098,310
Federal Farm Credit Bank:
2,000,000 5.75%, 2/9/05 ...................... 1,981,724
5,000,000 5.80%, 10/10/00 .................... 5,004,990
7,000,000 6.37%, 10/30/07 .................... 7,198,443
2,000,000 7.60%, 7/24/06 ..................... 2,213,958
Federal Home Loan Bank:
2,000,000 5.50%, 1/21/03 ..................... 1,970,878
5,000,000 6.50%, 11/29/05 .................... 5,183,305
1,500,000 8.375%, 10/25/99 ................... 1,558,190
1,000,000 9.25%, 11/25/98 .................... 1,022,028
1,400,000 9.30%, 1/25/99 ..................... 1,439,061
1,188,731 Federal Housing Administration,
Putable Project Loans,
7.43%, 1/1/24 ....................... 1,242,610
Federal National Mortgage Association:
5,000,000 5.50%, 2/2/01 ...................... 4,963,615
5,000,000 5.78%, 10/10/00 .................... 5,001,520
2,000,000 6.29%, 2/11/02 ..................... 2,029,028
5,000,000 6.375%, 1/16/02 .................... 5,086,580
5,000,000 6.48%, 6/28/04 ..................... 5,154,415
5,000,000 6.63%, 6/20/05 ..................... 5,211,245
5,000,000 6.82%, 8/23/05 ..................... 5,270,280
12,999,492 7.50%, 6/1/02 ...................... 13,191,365
1,000,000 8.35%, 11/10/99 .................... 1,039,362
2,500,000 8.70%, 6/10/99 ..................... 2,583,565
Government National Mortgage
Association:
4,231,169 6.00%, 4/15/11 ..................... 4,191,777
4,027,215 6.50%, 2/15/09 - 3/15/11 ........... 4,059,422
3,999,356 7.00%, 2/15/11 - 3/15/11 ........... 4,094,741
890,130 8.50%, 7/15/21 ..................... 939,643
4,187,720 9.00%, 1/15/20-10/15/21 ............ 4,510,497
2,227,166 9.50%, 12/15/20 .................... 2,435,584
Private Export Funding Corp.:
5,000,000 6.90%, 1/31/03 ..................... 5,220,845
10,000,000 7.30%, 1/31/02 ..................... 10,495,810
2,000,000 7.90%, 3/31/00 ..................... 2,080,424
5,000,000 9.45%, 12/31/99 .................... 5,303,715
3,500,000 Tennessee Valley Authority,
8.375%, 10/1/99 ..................... 3,633,059
------------
Total U. S. Agency Obligations
(cost $151,695,187)................. 156,855,957
------------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
U. S. TREASURY OBLIGATIONS -- 25.4%
U.S. Treasury Bonds:
$25,000,000 7.50%, 11/15/16 ................... $ 29,156,275
15,000,000 7.875%, 2/15/21 ................... 18,412,515
25,000,000 8.00%, 11/15/21 ................... 31,164,075
10,000,000 13,309,380
15,000,000 9.00%, 11/15/18 ................... 20,245,320
15,000,000 11.25%, 2/15/15 ................... 23,446,890
U.S. Treasury Notes:
15,000,000 5.75%, 8/15/03 .................... 15,051,570
25,000,000 5.875%, 2/15/04 ................... 25,257,825
25,000,000 6.50%, 5/15/05 .................... 26,109,400
20,000,000 7.75%, 11/30/99 ................... 20,675,020
25,000,000 7.75%, 1/31/00 .................... 25,921,900
20,000,000 7.875%, 11/15/99 .................. 20,700,020
25,000,000 7.875%, 11/15/04 .................. 27,937,525
1,250,000 9.125%, 5/15/99 ................... 1,297,266
------------
Total U. S. Treasury Obligations
(cost $288,724,760)................ 298,684,981
------------
YANKEE OBLIGATIONS -- 12.9%
10,000,000 Abbey National PLC,
6.69%, 10/17/05 ................... 10,092,040
5,000,000 Celulosa Arauco Y Constitucion,
7.20%, 9/15/09 (a) ................ 4,906,375
6,000,000 FBG Finance Ltd.,
6.75%, 11/15/05 (a) ............... 6,009,600
16,500,000 Fletcher Challenge Capital Canada Inc.
7.875%, 3/24/17 ................... 17,588,967
5,000,000 Ford Capital BV,
9.875%, 5/15/02 ................... 5,624,850
10,000,000 Hydro-Quebec Inc.
8.00%, 2/1/13 ..................... 11,255,000
Korea Development Bank:
11,000,000 7.25%, 5/15/06 .................... 9,988,561
9,000,000 7.375%, 9/17/04 ................... 8,233,407
10,000,000 Manitoba Province, Canada,
8.00%, 4/15/02 .................... 10,672,600
7,500,000 Ontario Hydro Corp.
7.45%, 3/31/13 .................... 8,233,575
15,000,000 Petro Canada Ltd.,
8.60%, 1/15/10 .................... 17,928,750
Quebec Province, Canada:
8,200,000 8.80%, 4/15/03 .................... 9,100,934
3,800,000 9.375%, 4/1/99 .................... 3,922,360
Svenska Handelsbanken:
8,000,000 8.125%, 8/15/07 ................... 8,972,064
12,000,000 8.35%, 7/15/04 .................... 13,330,620
5,000,000 Westpac Banking Co.
9.125%, 8/15/01 ................... 5,420,505
------------
Total Yankee Obligations
(cost $141,236,401)................ 151,280,208
------------
</TABLE>
30
<PAGE>
EVERGREEN
Select Income Plus Fund
Schedule of Investments (continued)
March 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
REPURCHASE AGREEMENT -- 4.7% (cost $55,741,441)
$55,741,441 Dresdner Bank, AG, 5.90% dated
3/31/98, due 4/1/98, maturity value
$55,750,576 (Collateralized by
$55,556,000 U.S. Treasury Notes,
5.62% to 7.75%, due 5/15/99 to
12/31/99; value including accrued
interest $56,858,569)............ $55,741,441
-----------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C> <C>
MUTUAL FUND SHARES -- 0.0% (cost $201,707)
201,707 Valiant General Fund .............. $ 201,707
--------------
Total Investments --
(cost $1,115,768,976)..... 98.9% 1,163,773,242
Other Assets and
Liabilities -- net ....... 1.1 13,496,242
----- --------------
Net Assets -- ............ 100.0% $1,177,269,484
===== ==============
</TABLE>
(a) Securities that may be sold 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.
See Combined Notes to Financial Statements.
31
<PAGE>
EVERGREEN
Select Intermediate Tax Exempt Bond Fund
Schedule of Investments
March 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
MUNICIPAL OBLIGATIONS -- 101.4%
Alabama -- 1.0%
$3,790,000 Alabama Special Care
Facilities Finance Authority
RB, Hospital Charity
Obligation Group, Series D,
4.95%, 11/1/14 ....................... $3,871,106
Alabama State Docks Department,
Facilities RB: .......................
1,505,000 5.50%, 10/1/03, (MBIA) .............. 1,587,263
1,000,000 6.00%, 10/1/05, (MBIA) .............. 1,090,150
1,175,000 6.00%, 10/1/07, (MBIA) .............. 1,295,673
----------
7,844,192
----------
Arizona -- 0.6%
4,000,000 Maricopa County AZ, GO,
School District 48,
Prerefunded 7/1/01 @ 101,
(COLL: U.S. Government Securities)
6.75%, 7/1/08 ........................ 4,354,200
----------
Arkansas -- 1.9%
14,445,000 Jefferson County AR, PCRB,
Entergy Arkansas Inc. Project,
5.60%, 10/1/17 ....................... 14,574,861
----------
California -- 12.7%
10,000,000 California Pollution Control
Financing Authority RB, San
Diego Gas & Electric, Series A,
5.90%, 6/1/14 ........................ 11,047,800
California State GO:
4,000,000 8.00%, 5/1/03, (AMBAC-TCRS) ......... 4,697,640
1,000,000 9.25%, 3/1/02 ....................... 1,184,580
29,500,000 California Statewide Communities
Development Authority, Special
Facilities RB, United Air Lines Inc.,
5.63%, 10/1/34 ....................... 29,836,300
1,700,000 Delta County CA, SFHRB,
Series A,
5.50%, 6/1/24, (MBIA) ................ 1,855,550
Foothill/Eastern Corridor Agency, Toll
Road RB, Series A:
4,000,000 6.50%, 1/1/32 ....................... 4,360,960
10,255,000 (Eff. Yield 5.75%) (a),
0.00%, 1/1/24 ....................... 2,498,323
2,000,000 Huntington Park CA, SFHRB, Series A,
ETM,
(COLL: U.S. Government Securities)
8.00%, 12/1/19 ....................... 2,778,200
Long Beach CA, Harbor RB
Series A:
8,435,000 6.00%, 5/15/16 ...................... 9,378,539
2,600,000 6.00%, 5/15/19, (FGIC) .............. 2,900,274
4,210,000 Palmdale CA, SFHRB, Series A,
ETM,
(COLL: U.S. Treasury STRIPS &
REFCORP STRIPS)
8.00%, 9/1/11 ........................ 5,570,798
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
MUNICIPAL OBLIGATIONS -- continued
California -- continued
San Joaquin Hills CA, Toll Road RB,
ETM,
(COLL: U.S Government Securities):
$4,525,000 (Eff. Yield 3.21%) (a),
0.00%, 1/1/00 ........................ $4,219,834
12,915,000 (Eff. Yield 5.38%) (a),
0.00%, 1/1/19 ........................ 4,496,487
23,500,000 (Eff. Yield 5.60%) (a),
0.00%, 1/1/22 ........................ 7,024,150
3,500,000 Valley Health Systems, CA,
Hospital RB, Series A,
6.50%, 5/15/25 ....................... 3,770,060
----------
95,619,495
----------
Colorado -- 10.1%
Arapahoe County CO, Capital
Improvement Highway RB,
(COLL: U.S. Treasury Obligations &
STRIPS):
4,000,000 Prerefunded 8/31/05 @ 103,
6.90%, 8/31/15 ...................... 4,732,800
31,520,000 Prerefunded 8/31/05 @ 66.217,
(Eff. Yield 4.21%)(a)
0.00%, 8/31/11 ...................... 15,004,781
Series C,
32,000,000 Prerefunded 8/31/05 @ 48.618,
(Eff. Yield 4.21%)(a)
0.00%, 8/31/15, ...................... 11,184,320
Colorado Health Facilities Authority RB,
National Benevolent Association:
1,325,000 Series A,
5.25%, 1/1/27 ........................ 1,325,000
1,000,000 Series B,
5.10%, 2/1/12 ....................... 968,300
Colorado Housing Finance
Authority, SFHRB:
1,000,000 Senior Series A 2,
6.60%, 5/1/28 ....................... 1,099,890
Senior Series A 3:
1,000,000 6.50%, 5/1/16 ....................... 1,096,110
500,000 6.50%, 11/1/29 ...................... 553,115
2,250,000 Senior Series C 2,
6.88%, 11/1/28 ...................... 2,510,437
1,000,000 Senior Series C 3,
6.75%, 5/1/17 ....................... 1,108,360
1,385,000 Colorado Student Obligation Bond
Authority, Student Loan RB, Series B,
6.55%, 12/1/02 ....................... 1,458,544
Dawson Ridge CO, Metropolitan
District, GO, ETM,
(COLL: U.S. Government Securities):
8,325,000 Series A,
(Eff. Yield 5.42%) (a),
0.00%, 10/1/22 ...................... 2,272,725
74,685,000 Series B,
(Eff. Yield 5.58%) (a),
0.00%, 10/1/22 ...................... 20,389,005
2,000,000 Denver CO, City & County GO,
6.50%, 8/1/04 ........................ 2,158,320
</TABLE>
32
<PAGE>
EVERGREEN
Select Intermediate Tax Exempt Bond Fund
Schedule of Investments (continued)
March 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
MUNICIPAL OBLIGATIONS -- continued
Colorado -- continued
El Paso County CO, GO, School
District Number 11:
$2,500,000 7.10%, 12/1/16 ................. $3,118,075
2,000,000 7.13%, 12/1/19 ................. 2,533,400
3,485,000 Larimer County CO, GO, School
District Number R1,
8.50%, 12/15/08, (MBIA)......... 4,632,262
----------
76,145,444
----------
Connecticut -- 1.1 %
Connecticut State Development
Authority, Mortgage RB, Church
Homes Inc. Health Care Project:
485,000 4.45%, 4/1/99 .................. 486,979
340,000 4.65%, 4/1/00 .................. 342,128
425,000 4.90%, 4/1/02 .................. 430,538
925,000 5.00%, 4/1/03 .................. 939,707
1,220,000 5.40%, 4/1/07 .................. 1,264,872
2,035,000 5.70%, 4/1/12 .................. 2,092,794
2,550,000 5.80%, 4/1/21 .................. 2,622,063
----------
8,179,081
----------
Delaware -- 0.4 %
3,000,000 Delaware State, Solid Waste
Systems RB, Series A,
6.75%, 7/1/03 .................. 3,200,250
----------
Florida -- 3.8 %
7,500,000 Florida State Board Of
Education, Capital Outlay GO,
Series A, Prerefunded 6/1/00 @
40.5744,
(COLL: U.S. Government Securities),
(Eff. Yield 3.07%)(a),
0.00%, 6/1/13 .................. 2,788,050
Halifax Hospital Medical
Center, Health Care
Facilities Revenue, Series A:
1,080,000 4.60%, 4/1/08, (ACA) ........... 1,063,681
1,200,000 4.75%, 4/1/09, (ACA) ........... 1,185,840
675,000 4.80%, 4/1/10, (ACA) ........... 663,525
4,500,000 Orange County FL, Health
Facilities Authority RB,
Orlando Regional Healthcare,
Series A,
6.25%, 10/1/16, (MBIA) ......... 5,166,090
Palm Beach County FL, Health
Facilities Authority RB,
Abbey DelRay South Project:
675,000 4.25%, 10/1/98 ................. 675,493
675,000 4.35%, 10/1/99 ................. 676,262
700,000 4.50%, 10/1/00 ................. 700,987
750,000 4.65%, 10/1/01 ................. 752,160
805,000 4.80%, 10/1/02 ................. 809,854
775,000 5.00%, 10/1/03 ................. 784,284
850,000 5.00%, 10/1/04 ................. 858,925
930,000 5.10%, 10/1/05 ................. 941,281
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
MUNICIPAL OBLIGATIONS -- continued
Florida -- continued
Palm Beach County FL, Health
Facilities Authority RB,
Waterford Project:
$ 675,000 4.25%, 10/1/98 ................. $ 675,493
475,000 4.35%, 10/1/99 ................. 475,888
675,000 4.50%, 10/1/00 ................. 675,952
725,000 4.65%, 10/1/01 ................. 727,088
400,000 4.80%, 10/1/02 ................. 402,412
320,000 5.00%, 10/1/03 ................. 323,834
440,000 5.00%, 10/1/04 ................. 444,620
460,000 5.10%, 10/1/05 ................. 465,580
485,000 5.20%, 10/1/06 ................. 492,207
345,000 5.30%, 10/1/07 ................. 351,065
5,000,000 Pinellas County FL, Housing
Finance Authority, SFHRB,
5.95%, 3/1/30 ................... 5,326,700
1,275,000 Tampa FL, Health Systems RB,
Catholic Health East, Series A 3,
5.50%, 11/15/06, (MBIA) ......... 1,368,980
----------
28,796,251
----------
Georgia -- 0.9 %
1,500,000 Coffee County GA, Hosptial
Authority, RAN, Coffee
Regional Medical Center,
6.75%, 12/1/26 .................. 1,544,055
3,000,000 Georgia State GO, Series A,
6.00%, 2/1/02 ................... 3,205,590
Savannah GA, Water & Sewage
RB, ETM,
(COLL: U.S. Government Securities):
1,000,000 6.30%, 12/1/01 .................. 1,074,470
1,000,000 6.35%, 12/1/02 .................. 1,092,840
----------
6,916,955
----------
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 ................... 2,702,050
----------
Idaho -- 0.3 %
2,000,000 Idaho Student Loan Fund Marketing
Association, Student Loan RB,
6.25%, 10/1/98 .................. 2,018,580
----------
Illinois -- 6.2 %
Illinois Development Finance
Authority RB, Community
Rehabilitation Providers,
Series A:
1,000,000 5.60%, 7/1/05 .................. 1,049,040
1,000,000 5.60%, 7/1/06 .................. 1,051,110
2,540,000 5.70%, 7/1/07 .................. 2,691,409
3,490,000 5.80%, 7/1/08 .................. 3,725,924
Illinois Health & Educational
Facilities Authority RB:
11,000,000 Friendship Village
Schaumburg, Series A,
5.25%, 12/1/18 ................. 10,688,480
</TABLE>
33
<PAGE>
EVERGREEN
Select Intermediate Tax Exempt Bond Fund
Schedule of Investments (continued)
March 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
MUNICIPAL OBLIGATIONS -- continued
Illinois -- continued
Illinois Health & Educational
Facilities Authority RB: (cont.)
$1,000,000 Highland Park Hospital
Project, Series A,
5.50%, 10/1/08 .................... $ 1,059,750
4,945,000 Mercy Hospital Center,
ETM,
(COLL: U.S. Government Securities)
10.00%, 1/1/15 ................ .... 7,035,845
5,000,000 Northwestern Memorial Hospital,
6.75%, 8/15/11 ............... ..... 5,460,450
12,500,000 Illinois State Sales Tax RB, Series Q,
6.00%, 6/15/12, (MBIA-IBC) ......... 14,003,500
----------
46,765,508
----------
Indiana -- 1.8%
7,000,000 Indiana Health Facility
Financing Authority, Hospital
RB, Charity Obligation Group,
Series D,
5.00%, 11/1/26, (MBIA) ............. 7,149,450
1,760,000 Indiana State Housing, SFHRB,
Series B 1,
7.55%, 7/1/10 ...................... 1,854,054
3,900,000 Indianapolis IN, Airport Authority RB,
Special Facility, United Air Lines
Project, Series A,
6.50%, 11/15/31 .................... 4,233,411
550,000 Lafayette IN, PCRB,
Anheuser-Bush Inc. Project,
6.50%, 6/1/04 ...................... 552,580
----------
13,789,495
----------
Iowa -- 0.4%
2,500,000 Iowa Student Loan Liquidity
Corp. RB, Series A,
6.45%, 3/1/02 ...................... 2,655,725
----------
Kansas -- 1.9%
Kansas State Department of
Transportation Highway RB:
2,900,000 Prerefunded 3/1/02 @ 102
(COLL: U.S. Government Securities)
6.50%, 3/1/07 ..................... 3,192,175
3,475,000 Series A,
7.25%, 9/1/09 ..................... 4,278,629
4,700,000 Kansas State Development
Finance Authority RB,
University of Kansas Athletic
Facilities, Series A,
4.80%, 6/1/13 ...................... 4,523,186
2,000,000 Sedgwick & Shawnee Counties
KS, SFHRB, Series A,
5.50%, 6/1/29 ...................... 2,247,500
----------
14,241,490
----------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
MUNICIPAL OBLIGATIONS -- continued
Kentucky -- 1.0%
Kentucky Economic Development
Finance Authority, Hosptial
Systems, RB, Appalachian
Regional Healthcenter:
$3,500,000 5.85%, 10/1/17 .................... $3,591,105
3,500,000 5.88%, 10/1/22 .................... 3,598,700
----------
7,189,805
----------
Louisiana -- 0.9%
East Baton Rouge LA, Sales &
Use Tax RB, Series ST:
1,760,000 8.00%, 2/1/02, (FGIC) ............. 1,994,837
1,920,000 8.00%, 2/1/03, (FGIC) ............. 2,227,795
1,800,000 Orleans Parish LA, School
Board RB, ETM,
(COLL: REFCORP STRIPS)
9.05%, 2/1/10, (MBIA) ............ 2,504,322
----------
6,726,954
----------
Maryland -- 0.8%
3,000,000 Maryland State GO, Third Series,
6.10%, 7/15/00 ..................... 3,146,940
3,000,000 Maryland State Transportation
Authority RB,
6.50%, 7/1/04 ...................... 3,246,390
----------
6,393,330
----------
Massachusetts -- 0.9%
1,750,000 Massachusetts State Health &
Educational Facilities
Authority RB, Series C,
5.75%, 7/15/13 ..................... 1,830,780
2,000,000 Massachusetts State Housing
Finance Agency RB,
Residential Development,
6.35%, 5/15/03 ..................... 2,138,240
2,500,000 New England Education Loan
Marketing Corp., Student Loan RB,
6.50%, 9/1/02 ...................... 2,714,800
----------
6,683,820
----------
Michigan -- 1.2%
2,040,000 Avondale MI, School District GO,
8.25%, 5/1/02 ...................... 2,349,590
6,070,000 Royal Oak MI, Hospital
Finance Authority RB, William
Beaumont Hospital,
6.25%, 1/1/10 ...................... 6,852,909
----------
9,202,499
----------
Minnesota -- 1.1%
3,935,000 Bass Brook MN, PCRB,
Minnesota Power & Light Co.
Project,
6.00%, 7/1/22 ...................... 4,109,084
Minnesota State Housing
Finance Agency, SFHRB, Series C:
500,000 6.80%, 7/1/11 ..................... 527,565
1,340,000 7.10%, 7/1/11 ..................... 1,424,380
</TABLE>
34
<PAGE>
EVERGREEN
Select Intermediate Tax Exempt Bond Fund
Schedule of Investments (continued)
March 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
MUNICIPAL OBLIGATIONS -- continued
Minnesota -- continued
$2,000,000 Rochester MN, Health Care
Facilities RB, Mayo Medical
Center, Series C,
6.85%, 11/15/98 ................. $ 2,038,740
-----------
8,099,769
-----------
Mississippi -- 1.8%
4,855,000 Mississippi Gulf Coast, Regional
Wasterwater Authority RB, ETM,
(COLL: U.S. Government Securities)
7.00%, 7/1/12 ................... 5,843,187
7,295,000 Mississippi Home Corp., SFHRB,
Series H
5.50%, 12/1/29 .................. 7,919,087
-----------
13,762,274
-----------
Missouri -- 1.2%
3,000,000 Kansas City MO, IDA RB, Owens
Illinois Inc. Project,
4.90%, 12/31/08 ................. 2,964,270
3,000,000 Missouri State Office Building,
Special Obligation,
6.00%, 12/1/02 .................. 3,187,830
2,600,000 University City MO, IDA MFHRB,
Oak Forest Apartment Project,
(LOC: Sumitomo Bank Ltd.)
7.38%, 3/1/21 ................... 2,895,204
-----------
9,047,304
-----------
Nevada -- 1.4%
2,000,000 Clark County NV, GO
6.40%, 6/1/00, (FGIC) ........... 2,103,080
Nevada State GO:
3,000,000 Colorado River Commission,
Prerefunded 10/1/02 @ 101,
(COLL: U.S. Treasury Obligations &
STRIPS)
6.40%, 10/1/05 ................. 3,299,430
5,000,000 Series A,
5.60%, 7/15/06 ................. 5,352,800
-----------
10,755,310
-----------
New Jersey -- 3.7%
2,000,000 Howell Township NJ, GO,
Partially Prerefunded 1/1/02 @ 102,
(COLL: U.S. Government Securities &
Cash)
6.40%, 1/1/03, (FGIC) ........... 2,184,100
New Jersey Economic
Development Authority RB:
Franciscan Oaks Project:
3,370,000 5.60%, 10/1/12 ................. 3,380,481
3,335,000 5.70%, 10/1/17 ................. 3,356,911
Keswick Pines Project,
900,000 5.60%, 1/1/12 .................. 895,653
The Evergreens:
3,380,000 5.88%, 10/1/12 ................. 3,415,862
680,000 6.00%, 10/1/17 ................. 699,638
3,325,000 6.00%, 10/1/22 ................. 3,421,026
1,650,000 New Jersey State Housing &
Mortgage Finance Agency RB,
Series One,
6.45%, 11/1/07 .................. 1,770,334
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
MUNICIPAL OBLIGATIONS -- continued
New Jersey -- continued
New Jersey State Turnpike
Authority RB:
$3,755,000 Series A,
6.75%, 1/1/08, (MBIA-IBC) ....... $ 4,071,997
3,000,000 Series C,
6.50%, 1/1/06 ................... 3,197,160
160,000 New Jersey Wastewater
Treatment Trust RB,
6.80%, 6/15/02 .................. 169,842
210,000 Salem County NJ, Industrial
PCRB, BF Goodrich Co. Project,
10.75%, 12/1/00 ................. 211,079
1,390,000 Western Monmouth NJ,
Utilities Authority RB, ETM,
(COLL: U.S. Government Securities)
6.80%, 2/1/14 ................... 1,487,078
-----------
28,261,161
-----------
New Mexico -- 0.8%
1,160,000 Farmington NM, Power RB
Prerefunded 7/1/05 @ 100,
(COLL: U.S. Government Securities)
9.88%, 1/1/13 ................... 1,548,681
3,425,000 Santa Fe NM, Utility RB, Series A,
8.00%, 6/1/06, (AMBAC) .......... 4,246,966
-----------
5,795,647
-----------
New York -- 16.3%
Metropolitan Transportation
Authority of New York RB, Series A:
4,325,000 5.70%, 7/1/17 .................. 4,590,382
7,000,000 6.10%, 7/1/26, (FSA) ........... 7,667,730
8,000,000 New York City Municipal Water
Finance Authority, Water &
Sewer Systems RB, Series B,
6.25%, 6/15/20 .................. 9,095,120
New York NY, GO:
Series A:
10,535,000 5.88%, 8/1/03 .................. 11,229,783
2,500,000 6.25%, 8/1/10 .................. 2,735,500
3,000,000 6.25%, 8/1/11 .................. 3,269,730
14,490,000 Series B:
7.50%, 2/1/06 ................... 16,139,686
5,510,000 Prerefunded 2/1/02 @ 101.5,
(COLL: U.S. Government Securities)
7.50%, 2/1/06 ................... 6,217,649
5,795,000 Series C
6.50%, 2/1/08 ................... 6,549,857
2,500,000 ETM,
(COLL: U.S. Government Securities)
6.90%, 2/1/99, (FGIC) ........... 2,549,425
5,000,000 Series D,
6.50%, 2/15/06 .................. 5,556,250
6,000,000 Series I,
6.50%, 3/15/05 .................. 6,649,320
5,515,000 Series K,
8.00%, 4/1/05 .................. 6,663,113
13,000,000 New York State Dormitory
Authority RB, Series A,
5.50%, 5/15/13 .................. 13,697,320
5,710,000 New York State Thruway Authority,
Service Contract RB, Series A,
6.00%, 1/1/05, (MBIA) ........... 6,234,635
</TABLE>
35
<PAGE>
EVERGREEN
Select Intermediate Tax Exempt Bond Fund
Schedule of Investments (continued)
March 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
MUNICIPAL OBLIGATIONS -- continued
New York -- continued
New York State Urban
Development Corp. RB:
$6,045,000 5.75%, 7/1/09 ...................... $ 6,582,945
3,570,000 6.40%, 1/1/04, (AMBAC-TCRS) ........ 3,943,065
3,000,000 Port Authority of NY & NJ,
Special Obligation,
6.75%, 10/1/11 ...................... 3,331,980
-----------
122,703,490
-----------
North Carolina -- 2.5%
2,500,000 Mecklenburg County NC, GO,
Prerefunded 1/1/02 @ 102,
(COLL: U.S. Government Securities)
6.25%, 1/1/07 ....................... 2,726,000
North Carolina Medical Care Commission,
Hospital RB, Transylvania Community
Hospital Inc.:
115,000 4.30%, 10/1/98 ..................... 115,181
130,000 4.45%, 10/1/99 ..................... 130,749
135,000 4.60%, 10/1/00 ..................... 136,046
140,000 4.70%, 10/1/01 ..................... 141,395
155,000 4.80%, 10/1/02 ..................... 157,001
155,000 4.90%, 10/1/03 ..................... 157,387
155,000 5.00%, 10/1/04 ..................... 158,100
175,000 5.00%, 10/1/05 ..................... 177,954
185,000 5.05%, 10/1/06 ..................... 188,326
190,000 5.15%, 10/1/07 ..................... 194,444
9,440,000 North Carolina State Medical
Care Commission, Health Care
Facilities RB, Deerfield Episcopal,
5.30%, 11/1/04 ...................... 9,626,723
4,430,000 North Carolina, Eastern Municipal
Power Systems RB, Series A,
5.70%, 1/1/15, (MBIA) ............... 4,666,252
-----------
18,575,558
-----------
Ohio -- 1.1%
Franklin County OH, Health Care
Facilities RB,
Friendship Village of Dublin Project:
505,000 5.00%, 11/1/05 ..................... 510,621
380,000 5.05%, 11/1/06 ..................... 384,226
225,000 5.10%, 11/1/07 ..................... 227,497
100,000 5.15%, 11/1/08 ..................... 100,996
1,250,000 5.50%, 11/1/16 ..................... 1,258,362
1,750,000 5.63%, 11/1/22 ..................... 1,767,150
Miami County OH, Hospital
Facilities RB, Upper Valley
Medical Center, Series A:
1,500,000 6.25%, 5/15/16 ..................... 1,596,510
2,250,000 6.38%, 5/15/26 ..................... 2,407,410
-----------
8,252,772
-----------
Oklahoma -- 0.7%
5,000,000 Tulsa County OK, Industrial
Authority, Health Care RB,
St. Francis Hospital,
5.15%, 12/15/18 ..................... 5,197,300
-----------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
MUNICIPAL OBLIGATIONS -- continued
Pennsylvania -- 1.4%
$1,500,000 Beaver Falls PA, Municipal
Authority Special Obligation,
Prerefunded 10/1/04 @ 102,
(COLL: State & Local Government
Series)
9.13%, 8/1/05 ....................... $ 1,941,075
2,200,000 Delaware County PA, Hospital
RB, Riddle Memorial Hospital,
6.50%, 1/1/22 ....................... 2,330,834
260,000 Delaware River Port Authority of PA &
NJ, Delaware River Bridges RB,
6.50%, 1/15/11 ...................... 291,320
4,000,000 Montgomery County PA, Higher
Education & Health Authority
RB, Beaver College,
5.80%, 4/1/16 ....................... 4,210,800
1,795,000 West View PA, Municipal
Authority Special Obligation, ETM,
(COLL: U.S. Government Securities)
9.20%, 5/15/03 ...................... 2,134,757
-----------
10,908,786
-----------
South Carolina -- 1.2%
3,000,000 Piedmont SC, Municipal Power
Agency, Electric RB,
6.25%, 1/1/21, (FGIC) ............... 3,477,540
5,000,000 Richland County SC, Hospital
Facilities RB,
(LOC: Sumitomo Bank Ltd.)
8.13%, 10/1/11 ...................... 5,195,300
-----------
8,672,840
-----------
South Dakota -- 0.8%
5,000,000 Heartland Consumer Power
District RB, ETM,
(COLL: U.S. Government Securites)
7.00%, 1/1/16 ....................... 5,949,950
-----------
Texas -- 9.3%
Austin TX, Utility Systems RB:
420,000 8.00%, 11/15/99, (BIG) ............. 447,250
330,000 ETM,
(COLL: U.S. Government Securities)
8.00%, 11/15/99, (BIG) .............. 352,014
8,000,000 Edinburg TX, Consolidated
Independent School District,
Lease Revenue,
5.25%, 8/15/13, (AMBAC) ............. 8,140,400
6,055,000 Lufkin TX, Health Facilities
Development Corp. RB, Memorial
Health Systems of East Texas,
6.88%, 2/15/26 ...................... 6,641,306
North Central TX, Health Facility
Development Corp. RB, Texas Health
Resources Systems, Series B:
3,910,000 5.75%, 2/15/09, (MBIA) ............. 4,238,792
4,595,000 5.75%, 2/15/12, (MBIA) ............. 4,926,024
North Texas Health Facilities
Development Corp, RB, United
Regional Health Care Systems Inc.
Project:
2,245,000 5.25%, 9/1/06, (MBIA) .............. 2,361,807
2,000,000 5.25%, 9/1/08, (MBIA) .............. 2,099,800
</TABLE>
36
<PAGE>
EVERGREEN
Select Intermediate Tax Exempt Bond Fund
Schedule of Investments (continued)
March 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
MUNICIPAL OBLIGATIONS -- continued
Texas -- continued
Retama TX, Development Corp.,
Special Facilities RB, Retama
Racetrack, ETM,
(COLL: U.S. Treasury STRIPS):
$ 1,300,000 8.75%, 12/15/05 .................. $ 1,657,240
2,440,000 8.75%, 12/15/08 .................. 3,303,101
2,655,000 8.75%, 12/15/09 .................. 3,639,023
4,770,000 8.75%, 12/15/16 .................. 6,900,473
10,000,000 San Antonio TX, Electric & Gas RB,
5.80%, 2/1/06 ..................... 10,870,200
Texas State Department
2,650,000 Housing & Community Affairs:
MFHRB,
5.55%, 1/1/05 ..................... 2,747,758
SFHRB, Series E:
1,755,000 4.50%, 3/1/07 .................... 1,772,936
3,000,000 5.00%, 9/1/16, (MBIA) ............ 3,035,010
5,455,000 Texas State Turnpike Authority RB,
Prerefunded 7/1/02 @ 102,
(COLL: U.S. Government Securities)
12.63%, 1/1/20 .................... 7,306,754
------------
70,439,888
------------
Utah -- 0.3%
2,325,000 Utah State, Housing Finance
Agency SFHRB, Series G 1,
7.35%, 7/1/18 ..................... 2,497,236
------------
Virginia -- 1.2%
2,900,000 Bedford County VA, IDA RB,
Georgia Pacific Corp. Project,
4.60%, 8/1/04 ..................... 2,894,316
5,985,000 Riverside VA, Regional Jail
Authority RB,
5.88%, 7/1/14, (MBIA) ............. 6,435,072
------------
9,329,388
------------
Washington -- 3.7%
17,000,000 Washington State GO, Series B & AT 7,
6.40%, 6/1/17 ..................... 19,922,810
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
MUNICIPAL OBLIGATIONS -- continued
Washington -- continued
Washington State Public Power
Supply RB, Nuclear Project:
$ 2,000,000 Series A,
6.50%, 7/1/02 ..................... $ 2,164,900
2,000,000 Series B, (Eff. Yield 4.50%) (a),
0.00%, 7/1/06, (FGIC) ............. 1,362,160
4,000,000 Washington Suburban MD,
Sanitation District GO,
Prerefunded 11/1/01 @ 102,
(COLL: U.S. Government Securities)
6.30%, 11/1/03 .................... 4,362,320
------------
27,812,190
------------
West Virginia -- 1.3%
10,000,000 Pleasants County WV, PCRB,
Monongahela Power Co.,
4.70%, 11/1/07 .................... 10,027,200
------------
Wisconsin -- 1.0%
6,865,000 Wisconsin State Health &
Educational Facilities RB,
Medical College Inc.,
5.95%, 12/1/15 .................... 7,164,520
------------
Puerto Rico -- 2.3%
22,630,000 Commonwealth of Puerto Rico GO,
(Eff. Yield 4.04%) (a),
0.00%, 7/1/04 ..................... 17,335,711
------------
Total Municipal Obligations
(cost $731,324,346) ............... 764,588,279
------------
</TABLE>
<TABLE>
<CAPTION>
Shares
<S> <C> <C> <C>
MUTUAL FUND SHARES -- 0.1%
(Cost $784,000)
784,000 Federated Municipal Obligation Fund 784,000
-------
Total Investments --
(cost $732,108,346)..... 101.5% 765,372,279
Other Assets and
Liabilities -- net ..... ( 1.5) (11,164,031)
----- -----------
Net Assets -- ........... 100.0% $ 754,208,248
===== =============
</TABLE>
(a) Effective yield (calculated at date of purchase) is the annual yield at
which the bond accrues until its maturity date.
37
<PAGE>
EVERGREEN
Select Intermediate Tax Exempt Bond Fund
Schedule of Investments (continued)
March 31, 1998 (Unaudited)
Legend of Abbreviations:
ACA American Capital Access
AMBAC Insured by American Municipal Bond Assurance Corp.
BIG Bond Investors Guaranty
COLL Collateral
ETM Escrowed to Maturity
FGIC Insured by Financial Guaranty Insurance Corp.
FSA Financial Security Assurance Inc.
GO General Obligation
IBC Insured Bond Certification
IDA Industrial Development Authority
LOC Letter of Credit
MBIA Insured by 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
STRIPS Separately Traded Registered and Interest Principal Security
TCRS Transferable Custody Receipts
See Combined Notes to Financial Statements.
38
<PAGE>
EVERGREEN
Select Limited Duration Fund
Schedule of Investments
March 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C> <C>
ASSET-BACKED SECURITIES -- 4.3%
$ 750,000 Chase Credit Card Master Trust,
6.30%, 4/15/03 ................... $ 757,429
331,020 Chevy Chase Auto Receivables,
6.00%, 12/15/01 .................. 331,584
809,643 Olympic Automobile Receivables,
6.10%, 4/15/02 ................... 811,444
174,243 Union Acceptance Corp., 1995 A
Grantor Trust,
7.725%, 3/10/01 .................. 175,975
376,751 Union Acceptance Corp., 1995 D
Auto Trust,
6.025%, 1/7/03 ................... 376,628
-----------
Total Asset-Backed Securities
(cost $2,450,101) ................ 2,453,060
-----------
COLLATERALIZED MORTGAGE OBLIGATIONS -- 2.1%
(cost $1,181,287)
1,187,223 Prudential Home Mortgage Securities
Co.
6.50%, 1/25/00 ................... 1,189,010
-----------
COMMERCIAL PAPER -- 14.0%
2,000,000 J.B. Hunt Transport Services, Inc.
5.75%, 4/7/98 .................... 1,998,083
2,000,000 Marriott International, Inc.
5.90%, 4/7/98 .................... 1,998,033
2,000,000 Merril Lynch and Co.
5.53%, 5/5/98 .................... 1,989,555
2,000,000 Raytheon Co.
5.79%, 4/13/98 ................... 1,996,140
-----------
Total Commercial Paper
(cost $7,981,811) ................ 7,981,811
-----------
CORPORATE BONDS -- 29.1%
Banks -- 4.4%
1,000,000 Banc One,
7.00%, 3/25/02 ................... 1,025,988
500,000 First Chicago NBD Corp.,
8.50%, 6/1/98 .................... 501,953
1,000,000 Norwest Corp. MTN,
5.625%, 2/5/01 ................... 989,830
-----------
2,517,771
-----------
Finance & Insurance -- 24.7%
1,000,000 Alco Capital Resource, Inc. MTN,
6.20%, 6/29/98 ................... 1,001,303
500,000 American General Finance Corp. MTN,
6.65%, 8/30/00 ................... 505,534
1,250,000 Associates Corp. ,N.A.,
6.00%, 6/15/00 ................... 1,249,747
CIT Group Holdings, Inc. MTN: ....
1,000,000 6.15%, 12/15/02 ................. 999,046
1,000,000 6.20%, 4/15/98 .................. 1,000,034
1,000,000 Ford Motor Credit Co.,
6.55%, 9/10/02 ................... 1,013,725
1,000,000 GMAC Pass Through Trust,
6.375%, 9/30/98 (a) .............. 1,002,158
750,000 Goldman Sachs Group LP,
6.60%, 7/15/02 ................... 757,679
1,000,000 Ikon Capital, Inc.
6.73%, 6/15/01 ................... 1,013,332
2,000,000 International Lease Finance Corp.
7.00%, 5/15/00 ................... 2,038,276
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C> <C>
CORPORATE BONDS -- continued
Finance & Insurance -- continued
$ 1,500,000 Lehman Brothers Holdings, Inc.
6.40%, 12/27/99 .................. $ 1,504,852
500,000 Morgan Stanley Group, Inc.
5.757%, 6/10/98 .................. 500,348
1,000,000 Salomon, Inc.
7.30%, 5/15/02 ................... 1,033,551
500,000 Transamerica Finance Corp.,
6.75%, 6/1/00 .................... 506,715
-----------
14,126,300
-----------
Total Corporate Bonds
(cost $16,584,818)................ 16,644,071
-----------
U. S. AGENCY OBLIGATIONS -- 18.5%
Federal National Mortgage
Association
MTN:
2,500,000 5.90%, 7/19/99 .................. 2,505,380
2,000,000 6.03%, 7/7/99 ................... 2,007,336
Federal Home Loan Mortgage Corp.:
564,378 6.00%, 1/1/01 ................... 564,135
979,253 6.00%, 9/1/01 ................... 977,814
1,714,586 7.00%, 12/1/99 .................. 1,734,166
432,461 6.00%, 4/1/98 ................... 433,395
396,165 8.00%, 1/1/99 ................... 399,290
Federal National Mortgage
Association
929,415 6.50%, 9/1/05 ................... 933,344
989,981 Government National Mortgage
Association,
6.50%, 12/15/08 .................. 997,901
-----------
Total U. S. Agency Obligations
(cost $10,505,539) ............... 10,552,761
-----------
U. S. TREASURY OBLIGATIONS -- 30.2%
U.S. Treasury Notes:
1,500,000 5.875%, 11/30/01 ................ 1,509,845
5,000,000 6.00%, 8/15/00 .................. 5,042,190
2,000,000 6.25%, 8/31/02 .................. 2,043,752
5,000,000 6.375%, 5/15/00 ................. 5,078,130
3,500,000 7.50%, 10/31/99 ................. 3,598,441
-----------
Total U. S. Treasury Obligations
(cost $17,184,315) ............... 17,272,358
-----------
REPURCHASE AGREEMENT -- 0.7% (cost $408,588)
408,588 Dresdner Bank AG, 5.90% dated
3/31/98, due 4/1/98, maturity value
$408,655 (collateralized by $415,000
U.S. Treasury Note, 5.63%, 12/31/99;
value including accrued interest
$420,675)......................... 408,588
-----------
Total Investments --
(cost $56,296,459)...... 98.9% 56,501,659
Other Assets and
Liabilities -- net ...... 1.1 610,820
----- -----------
Net Assets -- ........... 100.0% $57,112,479
===== ===========
</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.
Legend of Portfolio Abbreviations:
MTN Medium Term Note
See Combined Notes to Financial Statements.
39
<PAGE>
EVERGREEN
Select Fixed Income Funds
Statements of Assets and Liabilities
March 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
Core Fixed
Bond Income
Fund Fund
----------------- -----------------
<S> <C> <C>
Assets
Investments at market value (identified cost-$531,225,249,
$470,523,671, $1,115,768,976, $732,108,346 and
$56,296,459, respectively)................................... $ 548,714,383 $ 477,946,725
Cash ......................................................... 13,057,387 0
Interest receivable .......................................... 5,787,661 6,556,794
Receivable for investments sold .............................. 4,556,758 250,278
Receivable for Fund shares sold .............................. 623,081 1,243,072
Prepaid expenses and other assets ............................ 124,844 55,294
- --------------------------------------------------------------- ------------- -------------
Total assets ................................................ 572,864,114 486,052,163
- --------------------------------------------------------------- ------------- -------------
Liabilities
Dividends payable ............................................ 2,341,696 2,509,680
Due to related parties ....................................... 173,973 172,520
Payable for Fund shares redeemed ............................. 144,350 206,832
Due to custodian ............................................. 0 23,078
Distribution fee payable ..................................... 12 212
Accrued Trustees' fees and expenses .......................... 2,703 2,809
Payable for investments purchased ............................ 0 0
Accrued expenses and other liabilities ....................... 90,483 65,915
- --------------------------------------------------------------- ------------- -------------
Total liabilities ........................................... 2,753,217 2,981,046
- --------------------------------------------------------------- ------------- -------------
Net assets .................................................... $ 570,110,897 $ 483,071,117
=============================================================== ============= =============
Net assets represented by
Paid-in capital .............................................. $ 551,704,705 $ 475,585,078
Accumulated net realized gain on investments ................. 917,058 62,985
Net unrealized appreciation on investments ................... 17,489,134 7,423,054
- --------------------------------------------------------------- ------------- -------------
Total net assets ............................................ $ 570,110,897 $ 483,071,117
=============================================================== ============= =============
Net assets consist of
Institutional Shares ......................................... $ 128,262,762 $ 481,529,415
Institutional Service Shares ................................. 109,549 1,541,702
Institutional Charitable Shares .............................. 441,738,586 0
- --------------------------------------------------------------- ------------- -------------
$ 570,110,897 $ 483,071,117
=============================================================== ============= =============
Shares outstanding
Institutional Shares ......................................... 11,965,460 80,776,312
Institutional Service Shares ................................. 10,219 258,653
Institutional Charitable Shares .............................. 41,209,398 0
- --------------------------------------------------------------- ------------- -------------
Net asset value per share
Institutional Shares ......................................... $ 10.72 $ 5.96
=============================================================== ============= =============
Institutional Service Shares ................................. $ 10.72 $ 5.96
=============================================================== ============= =============
Institutional Charitable Shares .............................. $ 10.72 --
=============================================================== ============= =============
<CAPTION>
Income Intermediate Limited
Plus Bond Duration
Fund Fund Fund
------------------- ----------------- ----------------
<S> <C> <C> <C>
Assets
Investments at market value (identified cost-$531,225,249,
$470,523,671, $1,115,768,976, $732,108,346 and
$56,296,459, respectively)................................... $ 1,163,773,242 $ 765,372,279 $ 56,501,659
Cash ......................................................... 0 201 0
Interest receivable .......................................... 20,366,543 10,658,881 666,404
Receivable for investments sold .............................. 7,462 0 0
Receivable for Fund shares sold .............................. 844,867 350,549 0
Prepaid expenses and other assets ............................ 267,776 62,822 94,326
- ---------------------------------------------------------------- --------------- ------------- ------------
Total assets ................................................ 1,185,259,890 776,444,732 57,262,389
- ---------------------------------------------------------------- --------------- ------------- ------------
Liabilities
Dividends payable ............................................ 6,028,652 2,921,241 97,788
Due to related parties ....................................... 436,726 316,300 36,215
Payable for Fund shares redeemed ............................. 1,300,247 365,324 0
Due to custodian ............................................. 56,916 0 0
Distribution fee payable ..................................... 394 138 0
Accrued Trustees' fees and expenses .......................... 5,478 3,436 160
Payable for investments purchased ............................ 0 18,502,981 0
Accrued expenses and other liabilities ....................... 161,993 127,064 15,747
- ---------------------------------------------------------------- --------------- ------------- ------------
Total liabilities ........................................... 7,990,406 22,236,484 149,910
- ---------------------------------------------------------------- --------------- ------------- ------------
Net assets .................................................... $ 1,177,269,484 $ 754,208,248 $ 57,112,479
=============================================================== =============== ============= ============
Net assets represented by
Paid-in capital .............................................. $ 1,124,724,314 $ 715,807,494 $ 56,866,809
Accumulated net realized gain on investments ................. 4,540,904 5,136,822 40,470
Net unrealized appreciation on investments ................... 48,004,266 33,263,932 205,200
- ---------------------------------------------------------------- --------------- ------------- ------------
Total net assets ............................................ $ 1,177,269,484 $ 754,208,248 $ 57,112,479
=============================================================== =============== ============= ============
Net assets consist of
Institutional Shares ......................................... $ 1,174,460,192 $ 753,155,404 $ 57,112,479
Institutional Service Shares ................................. 2,809,292 1,052,844 0
Institutional Charitable Shares .............................. 0 0 0
- ---------------------------------------------------------------- --------------- ------------- ------------
$ 1,177,269,484 $ 754,208,248 $ 57,112,479
--------------- ------------- ------------
Shares outstanding
Institutional Shares ......................................... 205,512,455 11,468,555 5,490,748
Institutional Service Shares ................................. 491,609 16,032 0
Institutional Charitable Shares .............................. 0 0 0
- ---------------------------------------------------------------- --------------- ------------- ------------
Net asset value per share
Institutional Shares ......................................... $ 5.71 $ 65.67 $ 10.40
=============================================================== =============== ============= ============
Institutional Service Shares ................................. $ 5.71 $ 65.67 --
=============================================================== =============== ============= ============
Institutional Charitable Shares .............................. -- -- --
=============================================================== =============== ============= ============
</TABLE>
See Combined Notes to Financial Statements.
40
<PAGE>
EVERGREEN
Select Fixed Income Funds
Statements of Operations
Period Ended March 31, 1998* (Unaudited)
<TABLE>
<CAPTION>
Core Fixed
Bond Income
Fund Fund
-------------- --------------
<S> <C> <C>
Investment income
Interest ................................................... $11,146,740 $11,063,852
- ------------------------------------------------------------- ----------- -----------
Expenses
Management fee ............................................. 689,140 826,506
Registration and filing fees ............................... 82,168 64,922
Custodian fees ............................................. 56,537 47,633
Administrative services fees ............................... 51,553 49,762
Professional fees .......................................... 10,765 15,958
Shareholder reports expense ................................ 9,546 11,042
Trustees' fees and expenses ................................ 3,205 5,836
Transfer agent fees ........................................ 98 313
Distribution Plan expenses ................................. 12 212
Other ...................................................... 13,001 8,544
Fee waivers and/or expense reimbursements .................. (189,359) (170,454)
- ------------------------------------------------------------- ----------- -----------
Total expenses ............................................ 726,666 860,274
Less: Indirectly paid expenses ............................. (1,422) (496)
- ------------------------------------------------------------- ----------- -----------
Net expenses .............................................. 725,244 859,778
- ------------------------------------------------------------- ----------- -----------
Net investment income ...................................... 10,421,496 10,204,074
- ------------------------------------------------------------- ----------- -----------
Net realized and unrealized gain (loss) on investments
Net realized gain on investments ........................... 917,058 62,985
Net change in unrealized appreciation (depreciation) on
investments ............................................... (59,073) 228,440
- ------------------------------------------------------------- ----------- -----------
Net realized and unrealized gain (loss) on investments ..... 857,985 291,425
- ------------------------------------------------------------- ----------- -----------
Net increase in net assets resulting from operations ....... $11,279,481 $10,495,499
============================================================= =========== ===========
<CAPTION>
Income Intermediate Limited
Plus Bond Duration
Fund Fund Fund
-------------- --------------- -------------
<S> <C> <C> <C>
Investment income
Interest ................................................... $ 27,706,027 $13,845,475 $1,139,910
- -------------------------------------------------------------- ------------ ----------- ----------
Expenses
Management fee ............................................. 2,048,493 1,589,852 54,899
Registration and filing fees ............................... 148,599 95,187 8,710
Custodian fees ............................................. 125,315 80,916 5,124
Administrative services fees ............................... 123,349 80,612 5,497
Professional fees .......................................... 19,651 16,113 10,889
Shareholder reports expense ................................ 22,143 13,643 4,780
Trustees' fees and expenses ................................ 13,046 8,304 291
Transfer agent fees ........................................ 214 206 89
Distribution Plan expenses ................................. 394 138 0
Other ...................................................... 9,358 13,900 1,257
Fee waivers and/or expense reimbursements .................. (409,699) (291,618) (36,216)
- -------------------------------------------------------------- ------------ ----------- ----------
Total expenses ............................................ 2,100,863 1,607,253 55,320
Less: Indirectly paid expenses ............................. (10,982) (1,272) (421)
- -------------------------------------------------------------- ------------ ----------- ----------
Net expenses .............................................. 2,089,881 1,605,981 54,899
- -------------------------------------------------------------- ------------ ----------- ----------
Net investment income ...................................... 25,616,146 12,239,494 1,085,011
- -------------------------------------------------------------- ------------ ----------- ----------
Net realized and unrealized gain (loss) on investments
Net realized gain on investments ........................... 4,540,904 5,136,822 40,470
Net change in unrealized appreciation (depreciation) on
investments ............................................... (4,891,632) 4,498,062 (145,739)
- -------------------------------------------------------------- ------------ ----------- ----------
Net realized and unrealized gain (loss) on investments ..... (350,728) 9,634,884 (105,269)
- -------------------------------------------------------------- ------------ ----------- ----------
Net increase in net assets resulting from operations ....... $ 25,265,418 $21,874,378 $ 979,742
============================================================== ============ =========== ==========
</TABLE>
* Each Fund commenced operations on November 24, 1997.
See Combined Notes to Financial Statements.
41
<PAGE>
EVERGREEN
Select Fixed Income Funds
Statements of Changes in Net Assets
Period Ended March 31, 1998* (Unaudited)
<TABLE>
<CAPTION>
Core Fixed
Bond Income
Fund Fund
----------------- ----------------
<S> <C> <C>
Operations
Net investment income ...................................... $ 10,421,496 $ 10,204,074
Net realized gain on investments ........................... 917,058 62,985
Net change in unrealized appreciation (depreciation) on
investments ............................................... (59,073) 228,440
- ------------------------------------------------------------- --------------- -------------
Net increase in net assets resulting from operations ...... 11,279,481 10,495,499
- ------------------------------------------------------------- --------------- -------------
Distributions to shareholders from net investment
income
Institutional Shares ...................................... (1,515,076) (10,198,740)
Institutional Service Shares .............................. (327) (5,334)
Institutional Charitable Shares ........................... (8,906,093) 0
- ------------------------------------------------------------- --------------- -------------
Total distributions to shareholders ....................... (10,421,496) (10,204,074)
- ------------------------------------------------------------- --------------- -------------
Capital share transactions
Proceeds from shares sold .................................. 691,142,663 507,906,971
Proceeds from reinvestment of distributions ................ 1,262,568 92,973
Payment for shares redeemed ................................ (123,152,319) (25,220,252)
- ------------------------------------------------------------- --------------- -------------
Net increase in net assets resulting from capital share
transactions ............................................. 569,252,912 482,779,692
- ------------------------------------------------------------- --------------- -------------
Total increase in net assets ............................. 570,110,897 483,071,117
- ------------------------------------------------------------- --------------- -------------
Net assets
Beginning of period ........................................ 0 0
- ------------------------------------------------------------- --------------- -------------
End of period .............................................. $ 570,110,897 $ 483,071,117
============================================================= =============== =============
Undistributed net investment income ......................... $ 0 $ 0
============================================================= =============== =============
<CAPTION>
Income Intermediate Limited
Plus Bond Duration
Fund Fund Fund
----------------- --------------- ---------------
<S> <C> <C> <C>
Operations
Net investment income ...................................... $ 25,616,146 $ 12,239,494 $ 1,085,011
Net realized gain on investments ........................... 4,540,904 5,136,822 40,470
Net change in unrealized appreciation (depreciation) on
investments ............................................... (4,891,632) 4,498,062 (145,739)
- -------------------------------------------------------------- -------------- ------------- ------------
Net increase in net assets resulting from operations ...... 25,265,418 21,874,378 979,742
- -------------------------------------------------------------- -------------- ------------- ------------
Distributions to shareholders from net investment
income
Institutional Shares ...................................... (25,598,627) (12,236,922) (1,085,011)
Institutional Service Shares .............................. (17,519) (2,572) 0
Institutional Charitable Shares ........................... 0 0 0
- -------------------------------------------------------------- -------------- ------------- ------------
Total distributions to shareholders ....................... (25,616,146) (12,239,494) (1,085,011)
- -------------------------------------------------------------- -------------- ------------- ------------
Capital share transactions
Proceeds from shares sold .................................. 1,228,041,582 774,532,522 60,814,231
Proceeds from reinvestment of distributions ................ 63,669 18,337 299,637
Payment for shares redeemed ................................ (50,485,039) (29,977,495) (3,896,120)
- -------------------------------------------------------------- -------------- ------------- ------------
Net increase in net assets resulting from capital share
transactions ............................................. 1,177,620,212 744,573,364 57,217,748
- -------------------------------------------------------------- -------------- ------------- ------------
Total increase in net assets ............................. 1,177,269,484 754,208,248 57,112,479
- -------------------------------------------------------------- -------------- ------------- ------------
Net assets
Beginning of period ........................................ 0 0 0
- -------------------------------------------------------------- -------------- ------------- ------------
End of period .............................................. $1,177,269,484 $ 754,208,248 $ 57,112,479
============================================================= =============== =============
Undistributed net investment income ......................... $ 0 $ 0 $ 0
============================================================= =============== ============= ============
</TABLE>
* Each Fund commenced operations on November 24, 1997.
See Combined Notes to Financial Statements.
42
<PAGE>
Combined Notes to Financial Statements (Unaudited)
1. ORGANIZATION
The Evergreen Select Fixed Income Funds consist of Evergreen Select Core Bond
Fund ("Core Bond Fund"), Evergreen Select Fixed Income Fund ("Fixed Income
Fund"), Evergreen Select Income Plus Fund ("Income Plus Fund"), Evergreen
Select Intermediate Tax Exempt Bond Fund ("Intermediate Bond Fund") and
Evergreen Select Limited Duration Fund ("Limited Duration Fund") (collectively,
the "Funds"). Each Fund is a diversified series of Evergreen Select Fixed
Income Trust (the "Trust"), a Delaware business trust organized in September
17, 1997. The Trust is an open end management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act").
The Funds offer an Institutional Class of shares ("Class I") and an
Institutional Service Class of shares ("Class IS"). Each class of shares is
sold without a front-end sales charge or contingent deferred sales charge.
Class IS shares pay on ongoing service fee. Class I and Class IS shares are
available to institutional investors through broker dealers, banks and other
financial intermediaries. Additionally, the Core Bond Fund offers an
Institutional Charitable class of shares ("Class IC"). Class IC shares are
available 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. 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 Core Bond Fund commenced operations of its Class IC shares,
as a result of a tax-free conversion of common trust funds managed by First
Union National Bank ("FUNB"), a subsidiary of First Union Corporation ("First
Union"). The following chart summarizes pertinent data related to each Fund on
the date of conversion.
<TABLE>
<CAPTION>
Core Bond Fixed Income
Fund Fund
----------------- -----------------
<S> <C> <C>
Shares issued .............................. 37,986,482 78,155,088
Net assets ................................. $ 405,676,074 $ 465,572,507
Net asset value per share .................. $ 10.68 $ 5.96
Unrealized appreciation of investments ..... $ 17,548,207 $ 7,194,614
<CAPTION>
Intermediate Limited
Income Plus Bond Duration
Fund Fund Fund
------------------- ----------------- ----------------
<S> <C> <C> <C>
Shares issued .............................. 201,873,264 11,507,322 4,756,440
Net assets ................................. $ 1,153,786,921 $ 746,085,469 $ 49,567,906
Net asset value per share .................. $ 5.72 $ 64.84 $ 10.42
Unrealized appreciation of investments ..... $ 52,895,898 $ 28,765,870 $ 350,939
</TABLE>
The foregoing amounts are reflected as shares issued and proceeds received in
the statements of changes in net assets.
3. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. The
policies are in conformity with generally accepted accounting principles, which
require 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
market transactions for comparable securities and analysis of various
relationships between similar securities, which are generally recognized by
institutional 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. For Intermediate Bond Fund, an
independent pricing service values the municipal bonds at fair value using a
variety of factors which may include yield, liquidity, interest rate risk,
credit quality, coupon, maturity and type of issue. Securities for which
valuations are not 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
securities pledged falls below the carrying value of the repurchase agreement,
including accrued
43
<PAGE>
Combined Notes to Financial Statements (Unaudited) (continued)
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.
C. Securities Lending
In order to generate income and to offset expenses, the Funds may lend
portfolio 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
thereon, and the Fund may invest the 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.
D. 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.
E. Federal Taxes
The Funds have qualified and intend to continue to qualify as regulated
investment 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
income, net tax-exempt income and net capital gains, if any, to their
shareholders. The Funds also intend to avoid any excise tax liability by making
the required 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.
F. Distributions
Distributions from net investment income for the Funds are declared daily and
paid monthly. 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.
G. Class Allocations
Income, expenses (other than class specific expenses) and realized and
unrealized gains and losses are prorated among the classes based on the
relative net assets of each class. Currently, class specific expenses are
limited to expenses incurred under the Distribution Plans for Class IS.
44
<PAGE>
Combined Notes to Financial Statements (Unaudited) (continued)
3. 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
currently divided into Class I, Class IS and/or Class IC. Transactions in
shares of the Funds were as follows:
- --------------------------------------------------------------------------------
CORE BOND FUND
<TABLE>
<CAPTION>
December 19, 1997
(Commencement of Class Operations)
to March 31, 1998
---------------------------------
Shares Amount
---------------- ----------------
<S> <C> <C>
Class I
Shares sold ........................................... 22,728,782 $ 244,856,992
Shares issued in reinvestment of distributions ........ 115,887 1,243,576
Shares redeemed ....................................... (10,879,209) (117,243,093)
- ------------------------------------------------------- -------------- ---------------
Net increase .......................................... 11,965,460 $ 128,857,475
======================================================= ============== ===============
</TABLE>
<TABLE>
<CAPTION>
March 9, 1998
(Commencement of Class
Operations)
to March 31, 1998
-----------------------
Shares Amount
----------- -----------
<S> <C> <C>
Class IS
Shares sold ........................................... 10,188 $109,590
Shares issued in reinvestment of distributions ........ 32 344
Shares redeemed ....................................... (1) (11)
- ------------------------------------------------------- ---------- ---------
Net increase .......................................... 10,219 $109,923
======================================================= ========== =========
</TABLE>
<TABLE>
<CAPTION>
November 24, 1997
(Commencement of Class
Operations)
to March 31, 1998
------------------------------
Shares Amount
-------------- ---------------
<S> <C> <C>
Class IC
Shares sold ........................................... 41,758,711 $446,176,081
Shares issued in reinvestment of distributions ........ 1,735 18,648
Shares redeemed ....................................... (551,048) (5,909,215)
- ------------------------------------------------------- ------------ -------------
Net increase .......................................... 41,209,398 $440,285,514
======================================================= ============ =============
</TABLE>
- --------------------------------------------------------------------------------
FIXED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
November 24, 1997
(Commencement of Class
Operations)
to March 31, 1998
--------------------------------
Shares Amount
--------------- ----------------
<S> <C> <C>
Class I
Shares sold ........................................... 84,970,265 $ 506,295,526
Shares issued in reinvestment of distributions ........ 14,987 89,463
Shares redeemed ....................................... (4,208,940) (25,146,990)
- ------------------------------------------------------- ------------- --------------
Net increase .......................................... 80,776,312 $ 481,237,999
======================================================= ============= ==============
</TABLE>
<TABLE>
<CAPTION>
March 9, 1998
(Commencement of Class
Operations)
to March 31, 1998
---------------------------
Shares Amount
------------ --------------
<S> <C> <C>
Class IS
Shares sold ........................................... 270,377 $ 1,611,445
Shares issued in reinvestment of distributions ........ 589 3,510
Shares redeemed ....................................... (12,313) (73,262)
- ------------------------------------------------------- ---------- ------------
Net increase .......................................... 258,653 $ 1,541,693
======================================================= ========== ============
</TABLE>
45
<PAGE>
Combined Notes to Financial Statements (Unaudited) (continued)
- --------------------------------------------------------------------------------
INCOME PLUS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
November 24, 1997
(Commencement of Class Operations)
to March 31, 1998
---------------------------------
Shares Amount
--------------- -----------------
<S> <C> <C>
Class I
Shares sold ........................................... 214,158,166 $1,224,210,390
Shares issued in reinvestment of distributions ........ 10,334 59,121
Shares redeemed ....................................... (8,656,045) (49,663,764)
- ------------------------------------------------------- ------------- ---------------
Net increase .......................................... 205,512,455 $1,174,605,747
======================================================= ============= ===============
</TABLE>
<TABLE>
<CAPTION>
March 2, 1998
(Commencement of Class
Operations)
to March 31, 1998
---------------------------
Shares Amount
------------- -------------
<S> <C> <C>
Class IS
Shares sold ........................................... 634,493 $3,831,192
Shares issued in reinvestment of distributions ........ 797 4,548
Shares redeemed ....................................... (143,681) (821,275)
- ------------------------------------------------------- ----------- -----------
Net increase .......................................... 491,609 $3,014,465
======================================================= =========== ===========
</TABLE>
- --------------------------------------------------------------------------------
INTERMEDIATE BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
November 24, 1997
(Commencement of Class
Operations)
to March 31, 1998
------------------------------
Shares Amount
-------------- ---------------
<S> <C> <C>
Class I
Shares sold ........................................... 11,924,381 $ 773,484,594
Shares issued in reinvestment of distributions ........ 243 15,995
Shares redeemed ....................................... (456,069) (29,977,430)
- ------------------------------------------------------- ------------ --------------
Net increase .......................................... 11,468,555 $ 743,523,159
======================================================= ============ ==============
</TABLE>
<TABLE>
<CAPTION>
March 2, 1998
(Commencement of Class
Operations)
to March 31, 1998
-------------------------
Shares Amount
----------- -------------
<S> <C> <C>
Class IS
Shares sold ........................................... 15,997 $1,047,928
Shares issued in reinvestment of distributions ........ 36 2,342
Shares redeemed ....................................... (1) (65)
- ------------------------------------------------------- ---------- -----------
Net increase .......................................... 16,032 $1,050,205
======================================================= ========= ===========
</TABLE>
- --------------------------------------------------------------------------------
LIMITED DURATION FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
November 24, 1997
(Commencement of Class
Operations)
to March 31, 1998
-----------------------------
Shares Amount
------------- ---------------
<S> <C> <C>
Class I
Shares sold ........................................... 5,834,775 60,814,231
Shares issued in reinvestment of distributions ........ 28,790 299,637
Shares redeemed ....................................... (372,817) (3,896,120)
- ------------------------------------------------------- ----------- -------------
Net increase .......................................... 5,490,748 57,217,748
======================================================= =========== =============
</TABLE>
46
<PAGE>
Combined Notes to Financial Statements (Unaudited) (continued)
4. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of investment securities (excluding
short-term securities) were as follows for the period ended March 31, 1998:
<TABLE>
<S> <C> <C> <C> <C>
Cost of Purchases Proceeds from Sales
-------------------------------- -------------------------------
Government Non-Government Government Non-Government
------------ ---------- ----------- ----------
Core Bond Fund ................. $189,645,275 $ 86,638,174 $ 78,897,203 $ 9,604,729
Fixed Income Fund .............. 69,742,588 16,996,973 24,428,112 64,407,279
Income Plus Fund ............... 228,167,696 67,438,668 267,219,759 82,302,748
Intermediate Bond Fund ......... 0 177,757,427 0 135,455,747
Limited Duration Fund .......... 12,217,617 8,121,332 19,277,993 1,000,000
</TABLE>
The Income Plus Fund and Fixed Income Fund loaned securities during the period
ended March 31, 1998 to certain brokers who paid the Fund a negotiated lenders'
fee. These fees are included in interest income. During the period ended March
31, 1998, the Funds earned $62,279 and $21,485, respectively, in income from
securities lending. At March 31, 1998, the Funds had no securities on loan.
5. 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.
Each of the Distribution Plans may be terminated at any time by vote of the
Independent Trustees or by vote of a majority of the outstanding voting shares
of the respective class.
6. INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT AND OTHER AFFILIATED
TRANSACTIONS
FUNB is the investment adviser for each of the Funds. 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>
<S> <C>
Annual
Advisory Fee
----------------
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%
</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 March 31, 1998, FUNB voluntarily waived and/or reimbursed
the following amounts:
<TABLE>
<S> <C> <C>
Fees Expenses
Waived Reimbursed
-------- ----------
Core Bond Fund ............... $189,359 --
Fixed Income Fund ............ 170,454 --
Income Plus Fund ............. 409,699 --
Intermediate Bond Fund ....... 291,618 --
Limited Duration Fund ........ 18,300 $ 17,916
</TABLE>
Evergreen Investment Services ("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 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 investment advisory
subsidiaries are also the investment advisers. The administration 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 asset value of
the Fund. The sub-administration fee is calculated by applying percentage
rates, which start at 0.01% and decline to 0.004% per annum as net assets
increase, to the average daily net asset value of the Fund.
47
<PAGE>
Combined Notes to Financial Statements (Unaudited) (continued)
During the period ended March 31, 1998, the Funds paid or accrued to EIS the
following amounts for certain administrative services:
<TABLE>
<S> <C>
Core Bond Fund ................. $32,708
Fixed Income Fund .............. 31,622
Income Plus Fund ............... 78,392
Intermediate Bond Fund ......... 50,721
Limited Duration Fund .......... 3,492
</TABLE>
Evergreen Service Company ("ESC"), a subsidiary of First Union, serves as the
transfer and dividend disbursing agent for the Funds.
Officers of the Funds and affiliated Trustees receive no compensation directly
from the Funds.
7. EXPENSE OFFSET ARRANGEMENT
The Funds have entered into an expense offset arrangement with their custodian.
The assets deposited with the custodian under this expense offset arrangement
could have been invested in income-producing assets.
48
<PAGE>
Evergreen Select Funds
MONEY MARKET
Money Market Fund
Treasury Money Market Fund
100% Treasury Money Market Fund
Municipal Money Market Fund
MUNICIPAL FIXED
INCOME
Intermediate Tax Exempt Bond Fund
TAXABLE FIXED
INCOME
Total Return Bond Fund
Income Plus Fund
Core Bond Fund
Fixed Income Fund
Adjustable Rate Fund
Limited Duration Fund
GROWTH AND INCOME/
BALANCED
Equity Income Fund
Balanced Fund
GROWTH
Small Company Growth Fund
Small Company Value Fund
Strategic Growth Fund
Common Stock Fund
Large Cap Blend Fund
Strategic Value Fund
Diversified Value Fund
Social Principles Fund
68430 543697 RV0 5/98
(EVERGREEN LOGO) --------------------
BULK RATE
U.S. POSTAGE
PAID
CHARLOTTE, NC
PERMIT NO. 136
--------------------
201 South College St.
Charlotte, NC 28288
