<PAGE>
EVERGREEN
GROWTH AND INCOME FUND
(Evergreen Cone Tree G&I
logo appears here)
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1997 DECEMBER 31,
(UNAUDITED) 1996 1995*
<S> <C> <C> <C>
CLASS A SHARES
NET ASSET VALUE BEGINNING OF PERIOD......................................................... $ 22.53 $ 18.63 $14.48
INCOME FROM INVESTMENT OPERATIONS
Net investment income....................................................................... 0.06 0.12 0.13
Net realized and unrealized gain on investments............................................. 3.28 4.26 4.64
Total from investment operations............................................................ 3.34 4.38 4.77
LESS DISTRIBUTIONS FROM
Net investment income....................................................................... (0.06) (0.13) (0.14)
Net realized gain on investments............................................................ (0.01) (0.35) (0.48)
Total distributions......................................................................... (0.07) (0.48) (0.62)
NET ASSET VALUE END OF PERIOD............................................................... $ 25.80 $ 22.53 $18.63
Total return +.............................................................................. 14.84% 23.50% 33.00%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses............................................................................ 1.47%++ 1.41% 1.55%++
Total expenses, excluding indirectly paid expenses........................................ 1.47%++ 1.41% N/A
Total expenses, excluding fee waiver & expense reimbursement.............................. N/A N/A 1.64%++
Net investment income..................................................................... 0.57%++ 0.70% 0.99%++
Portfolio turnover rate..................................................................... 4% 14% 17%
Average commission rate paid per share...................................................... $0.0566 $0.0566 N/A
NET ASSETS END OF PERIOD (MILLIONS)......................................................... $ 149 $ 85 $ 19
</TABLE>
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from January 3, 1995 (commencement of Class operations) to
December 31, 1995.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1997 DECEMBER 31,
(UNAUDITED) 1996 1995*
<S> <C> <C> <C>
CLASS B SHARES
NET ASSET VALUE BEGINNING OF PERIOD......................................................... $ 22.43 $ 18.59 $14.48
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)................................................................ (0.01) 0# 0.05
Net realized and unrealized gain on investments............................................. 3.24 4.20 4.61
Total from investment operations............................................................ 3.23 4.20 4.66
LESS DISTRIBUTIONS FROM
Net investment income....................................................................... 0 (0.01) (0.07)
Net realized gain on investments............................................................ 0 (0.35) (0.48)
Total distributions......................................................................... 0 (0.36) (0.55)
NET ASSET VALUE END OF PERIOD............................................................... $ 25.66 $ 22.43 $18.59
Total return+............................................................................... 14.40% 22.60% 32.20%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses............................................................................ 2.22%++ 2.17% 2.24%++
Total expenses, excluding indirectly paid expenses........................................ 2.22%++ 2.17% N/A
Total expenses, excluding fee waiver & expense reimbursement.............................. N/A N/A 2.26%++
Net investment income (loss).............................................................. (0.17%)++ (0.06%) 0.30%++
Portfolio turnover rate..................................................................... 4% 14% 17%
Average commission rate paid per share...................................................... $0.0566 $0.0566 N/A
NET ASSETS END OF PERIOD (MILLIONS)......................................................... $ 481 $ 245 $ 46
</TABLE>
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from January 3, 1995 (commencement of Class operations) to
December 31, 1995.
# Less than one cent per share.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
1
<PAGE>
EVERGREEN
GROWTH AND INCOME FUND
(Evergreen Cone Tree G&I
logo appears here)
FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1997 DECEMBER 31,
(UNAUDITED) 1996 1995*
<S> <C> <C> <C>
CLASS C SHARES
NET ASSET VALUE BEGINNING OF PERIOD......................................................... $ 22.43 $ 18.58 $14.48
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)................................................................ (0.01) 0# 0.06
Net realized and unrealized gain on investments............................................. 3.24 4.21 4.60
Total from investment operations............................................................ 3.23 4.21 4.66
LESS DISTRIBUTIONS FROM
Net investment income....................................................................... 0 (0.01) (0.08)
Net realized gain on investments............................................................ 0 (0.35) (0.48)
Total distributions......................................................................... 0 (0.36) (0.56)
NET ASSET VALUE END OF PERIOD............................................................... $ 25.66 $ 22.43 $18.58
Total return+............................................................................... 14.40% 22.60% 32.20%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses............................................................................ 2.21%++ 2.17% 2.15%++
Total expenses, excluding indirectly paid expenses........................................ 2.21%++ 2.17% N/A
Total expenses, excluding fee waiver & expense reimbursement.............................. N/A N/A 4.94%++
Net investment income..................................................................... (0.17%)++ (0.06%) 0.35%++
Portfolio turnover rate..................................................................... 4% 14% 17%
Average commission rate paid per share...................................................... $0.0566 $0.0566 N/A
NET ASSETS END OF PERIOD (MILLIONS)......................................................... $ 21 $ 10 $ 2
</TABLE>
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from January 3, 1995 (commencement of Class operations) to
December 31, 1995.
# Less than one cent per share.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, 1997 YEAR ENDED DECEMBER 31,
(UNAUDITED) 1996 1995 1994 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS Y SHARES
NET ASSET VALUE BEGINNING OF
PERIOD..................... $ 22.55 $ 18.64 $ 14.52 $15.41 $14.18 $12.99 $10.72 $12.03 $10.62
INCOME FROM INVESTMENT
OPERATIONS
Net investment income........ 0.09 0.18 0.18 0.14 0.14 0.15 0.19 0.30 0.52
Net realized and unrealized
gain (loss) on
investments................ 3.28 4.25 4.59 0.12 1.91 1.65 2.58 (0.84) 2.17
Total from investment
operations................. 3.37 4.43 4.77 0.26 2.05 1.80 2.77 (0.54) 2.69
LESS DISTRIBUTIONS FROM
Net investment income........ (0.09) (0.17) (0.17) (0.14) (0.14) (0.15) (0.19) (0.30) (0.52)
Net realized gain on
investments................ (0.01) (0.35) (0.48) (1.01) (0.68) (0.46) (0.31) (0.47) (0.76)
Total distributions.......... (0.10) (0.52) (0.65) (1.15) (0.82) (0.61) (0.50) (0.77) (1.28)
NET ASSET VALUE END OF
PERIOD..................... $ 25.82 $ 22.55 $ 18.64 $14.52 $15.41 $14.18 $12.99 $10.72 $12.03
Total return+................ 14.97% 23.80% 32.90% 1.70% 14.40% 13.80% 25.80% (4.50%) 25.40%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses............. 1.22%++ 1.16% 1.27% 1.33% 1.26% 1.33% 1.41% 1.50% 1.54%
Total expenses, excluding
indirectly paid
expenses................. 1.22%++ 1.16% N/A N/A N/A N/A N/A N/A N/A
Net investment income...... 1.07%++ 0.93% 1.11% 0.96% 0.99% 1.18% 1.55% 2.62% 4.13%
Portfolio turnover rate...... 4% 14% 17% 29% 28% 30% 23% 41% 53%
Average commission rate paid
per share.................. $0.0566 $0.0566 N/A N/A N/A N/A N/A N/A N/A
NET ASSETS END OF PERIOD
(MILLIONS)................. $ 568 $ 442 $ 141 $ 73 $ 77 $ 64 $ 48 $ 36 $ 32
<CAPTION>
YEAR ENDED DECEMBER 31,
1988*
<S> <C>
CLASS Y SHARES
NET ASSET VALUE BEGINNING OF
PERIOD..................... $ 9.38
INCOME FROM INVESTMENT
OPERATIONS
Net investment income........ 0.19
Net realized and unrealized
gain (loss) on
investments................ 2.10
Total from investment
operations................. 2.29
LESS DISTRIBUTIONS FROM
Net investment income........ (0.19)
Net realized gain on
investments................ (0.86)
Total distributions.......... (1.05)
NET ASSET VALUE END OF
PERIOD..................... $10.62
Total return+................ 24.60%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses............. 1.56%
Total expenses, excluding
indirectly paid
expenses................. N/A
Net investment income...... 1.70%
Portfolio turnover rate...... 41%
Average commission rate paid
per share.................. N/A
NET ASSETS END OF PERIOD
(MILLIONS)................. $ 24
</TABLE>
* Net investment income is based on the average monthly shares outstanding for
the periods indicated.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
2
<PAGE>
EVERGREEN
SMALL CAP EQUITY INCOME FUND
(Evergreen Cone Tree Maple
Leaf logo appears here)
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1997 DECEMBER 31,
(UNAUDITED) 1996 1995*
<S> <C> <C> <C>
CLASS A SHARES
NET ASSET VALUE BEGINNING OF PERIOD......................................................... $ 13.10 $ 11.57 $ 9.64
INCOME FROM INVESTMENT OPERATIONS
Net investment income....................................................................... 0.16 0.34 0.34
Net realized and unrealized gain on investments............................................. 1.79 2.13 2.45
Total from investment operations............................................................ 1.95 2.47 2.79
LESS DISTRIBUTIONS FROM
Net investment income....................................................................... (0.14) (0.34) (0.37)
Net realized gain on investments............................................................ 0 (0.60) (0.49)
Total distributions......................................................................... (0.14) (0.94) (0.86)
NET ASSET VALUE END OF PERIOD............................................................... $ 14.91 $ 13.10 $11.57
Total return+............................................................................... 14.97% 22.00% 29.50%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses............................................................................ 1.67%++ 1.75% 1.75%++
Total expenses, excluding indirectly paid expenses........................................ 1.66%++ N/A N/A
Total expenses, excluding fee waiver & expense reimbursement.............................. 2.00%++ 5.03% 24.45%++
Net investment income..................................................................... 2.94%++ 3.08% 3.39%++
Portfolio turnover rate..................................................................... 12% 50% 48%
Average commission rate paid per share...................................................... $0.0588 $0.0635 N/A
NET ASSETS END OF PERIOD (THOUSANDS)........................................................ $ 2,747 $ 336 $ 216
</TABLE>
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from January 3, 1995 (commencement of Class operations) to
December 31, 1995.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1997 DECEMBER 31,
(UNAUDITED) 1996 1995*
<S> <C> <C> <C>
CLASS B SHARES
NET ASSET VALUE BEGINNING OF PERIOD......................................................... $ 13.09 $ 11.57 $ 9.64
INCOME FROM INVESTMENT OPERATIONS
Net investment income....................................................................... 0.11 0.27 0.28
Net realized and unrealized gain on investments............................................. 1.78 2.11 2.43
Total from investment operations............................................................ 1.89 2.38 2.71
LESS DISTRIBUTIONS FROM
Net investment income....................................................................... (0.10) (0.26) (0.29)
Net realized gain on investments............................................................ 0 (0.60) (0.49)
Total distributions......................................................................... (0.10) (0.86) (0.78)
NET ASSET VALUE END OF PERIOD............................................................... $ 14.88 $ 13.09 $11.57
Total return+............................................................................... 14.52% 21.10% 28.70%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses............................................................................ 2.41%++ 2.50% 2.50%++
Total expenses, excluding indirectly paid expenses........................................ 2.40%++ N/A N/A
Total expenses, excluding fee waiver & expense reimbursement.............................. 2.75%++ 5.72% 20.90%++
Net investment income..................................................................... 2.15%++ 2.39% 2.67%++
Portfolio turnover rate..................................................................... 12% 50% 48%
Average commission rate paid per share...................................................... $0.0588 $0.0635 N/A
NET ASSETS END OF PERIOD (THOUSANDS)........................................................ $ 5,659 $ 692 $ 266
</TABLE>
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from January 3, 1995 (commencement of Class operations) to
December 31, 1995.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
3
<PAGE>
EVERGREEN
SMALL CAP EQUITY INCOME FUND
(Evergreen Cone Tree Maple
Leaf logo appears here)
FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1997 DECEMBER 31,
(UNAUDITED) 1996 1995*
<S> <C> <C> <C>
CLASS C SHARES
NET ASSET VALUE BEGINNING OF PERIOD......................................................... $ 13.09 $ 11.56 $ 9.74
INCOME FROM INVESTMENT OPERATIONS
Net investment income....................................................................... 0.09 0.28 0.28
Net realized and unrealized gain on investments............................................. 1.79 2.10 2.33
Total from investment operations............................................................ 1.88 2.38 2.61
LESS DISTRIBUTIONS FROM:
Net investment income....................................................................... (0.10) (0.25) (0.30)
Net realized gain on investments............................................................ 0 (0.60) (0.49)
Total distributions......................................................................... (0.10) (0.85) (0.79)
NET ASSET VALUE END OF PERIOD............................................................... $ 14.87 $ 13.09 $11.56
Total return+............................................................................... 14.45% 21.10% 27.30%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses............................................................................ 2.42%++ 2.50% 2.50%++
Total expenses, excluding indirectly paid expenses........................................ 2.41%++ N/A N/A
Total expenses, excluding fee waiver & expense reimbursement.............................. 2.71%++ 5.77% 187.29%++
Net investment income..................................................................... 2.01%++ 2.33% 2.63%++
Portfolio turnover rate..................................................................... 12% 50% 48%
Average commission rate paid per share...................................................... $0.0588 $0.0635 N/A
NET ASSETS END OF PERIOD (THOUSANDS)........................................................ $ 1,851 $ 56 $ 24
</TABLE>
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from January 24, 1995 (commencement of Class operations) to
December 31, 1995.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, 1997 YEAR ENDED DECEMBER 31,
(UNAUDITED) 1996 1995 1994 1993*
<S> <C> <C> <C> <C> <C>
CLASS Y SHARES
NET ASSET VALUE BEGINNING OF PERIOD.................................... $ 13.12 $ 11.58 $ 9.70 $10.15 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income.................................................. 0.19 0.38 0.38 0.34 0.10
Net realized and unrealized gain (loss) on investments................. 1.78 2.13 2.38 (0.41) 0.15
Total from investment operations....................................... 1.97 2.51 2.76 (0.07) 0.25
LESS DISTRIBUTIONS FROM
Net investment income.................................................. (0.16) (0.37) (0.38) (0.33) (0.10)
Net realized gain on investments....................................... 0 (0.60) (0.50) (0.05) 0
Total distributions.................................................... (0.16) (0.97) (0.88) (0.38) (0.10)
NET ASSET VALUE END OF PERIOD.......................................... $ 14.93 $ 13.12 $11.58 $ 9.70 $10.15
Total return........................................................... 15.08% 22.40% 29.10% (0.70%) 2.50%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses....................................................... 1.35%++ 1.50% 1.50% 1.48% 0%++
Total expenses, excluding indirectly paid expenses................... 1.34%++ N/A N/A N/A N/A
Total expenses, excluding fee waiver & expense reimbursement......... 1.75%++ 4.75% 4.34% 4.68% 4.39%++
Net investment income................................................ 2.93%++ 3.36% 3.56% 3.72% 4.07%++
Portfolio turnover rate................................................ 12% 50% 48% 9% 15%
Average commission rate paid per share................................. $0.0588 $0.0635 N/A N/A N/A
NET ASSETS END OF PERIOD (THOUSANDS)................................... $37,631 $ 8,592 $4,806 $3,613 $2,236
</TABLE>
++ Annualized.
* For the period from October 1, 1993 (commencement of operations) to December
31, 1993.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
4
<PAGE>
EVERGREEN
UTILITY FUND
(Evergreen Cone Tree Light Bulb
logo appears here)
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, 1997 YEAR ENDED DECEMBER 31,
(UNAUDITED) 1996 1995 1994*
<S> <C> <C> <C> <C>
CLASS A SHARES
NET ASSET VALUE BEGINNING OF PERIOD............................................ $ 10.57 $ 10.80 $ 9.00 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income.......................................................... 0.21 0.41 0.44 0.45
Net realized and unrealized gain (loss) on investments......................... 0.66 0.05 2.25 (1.01)
Total from investment operations............................................... 0.87 0.46 2.69 (0.56)
LESS DISTRIBUTIONS FROM
Net investment income.......................................................... (0.20) (0.41) (0.44) (0.44)
Net realized gain on investments............................................... 0 (0.28) (0.45) 0
Total distributions............................................................ (0.20) (0.69) (0.89) (0.44)
NET ASSET VALUE END OF PERIOD.................................................. $ 11.24 $ 10.57 $ 10.80 $ 9.00
Total return+.................................................................. 8.23% 4.40% 30.70% 5.60%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses............................................................... 1.00%++ 0.87% 0.79% 0.53%++
Total expenses, excluding indirectly paid expenses........................... 0.99%++ N/A N/A N/A
Total expenses, excluding fee waiver & expense reimbursement................. 1.19%++ 1.15% 1.18% 1.43%++
Net investment income........................................................ 3.89%++ 3.87% 4.51% 5.07%++
Portfolio turnover rate........................................................ 42% 59% 88% 23%
Average commission rate paid per share......................................... $0.0592 $0.0605 N/A N/A
NET ASSETS END OF PERIOD (THOUSANDS)........................................... $91,467 $96,243 $107,872 $4,190
</TABLE>
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from January 4, 1994 (commencement of Class operations) to
December 31, 1994.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, 1997 YEAR ENDED DECEMBER 31,
(UNAUDITED) 1996 1995 1994*
<S> <C> <C> <C> <C>
CLASS B SHARES
NET ASSET VALUE BEGINNING OF PERIOD............................................ $ 10.58 $ 10.81 $ 9.00 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income.......................................................... 0.17 0.33 0.37 0.39
Net realized and unrealized gain (loss) on investments......................... 0.65 0.05 2.26 (1.01)
Total from investment operations............................................... 0.82 0.38 2.63 (0.62)
LESS DISTRIBUTIONS FROM
Net investment income.......................................................... (0.16) (0.33) (0.37) (0.38)
Net realized gain on investments............................................... 0 (0.28) (0.45) 0
Total distributions............................................................ (0.16) (0.61) (0.82) (0.38)
NET ASSET VALUE END OF PERIOD.................................................. $ 11.24 $ 10.58 $ 10.81 $ 9.00
Total return+.................................................................. 7.80% 3.60% 29.90% (6.20%)
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses............................................................... 1.75%++ 1.62% 1.53% 1.27%++
Total expenses, excluding indirectly paid expenses........................... 1.74%++ N/A N/A N/A
Total expenses, excluding fee waiver & expense reimbursement................. 1.94%++ 1.89% 1.93% 2.11%++
Net investment income........................................................ 3.13%++ 3.12% 3.78% 4.19%++
Portfolio turnover rate........................................................ 42% 59% 88% 23%
Average commission rate paid per share......................................... $0.0592 $0.0605 N/A N/A
NET ASSETS END OF PERIOD (THOUSANDS)........................................... $36,299 $38,511 $35,662 $28,792
</TABLE>
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from January 4, 1994 (commencement of Class operations) to
December 31, 1994.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
5
<PAGE>
EVERGREEN
UTILITY FUND
(Evergreen Cone Tree Light Bulb
logo appears here)
FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, 1997 YEAR ENDED DECEMBER 31,
(UNAUDITED) 1996 1995 1994*
<S> <C> <C> <C> <C>
CLASS C SHARES
NET ASSET VALUE BEGINNING OF PERIOD.............................................. $ 10.58 $ 10.82 $ 9.01 $ 9.33
INCOME FROM INVESTMENT OPERATIONS
Net investment income............................................................ 0.17 0.33 0.37 0.12
Net realized and unrealized gain (loss) on investments........................... 0.65 0.04 2.26 (0.33)
Total from investment operations................................................. 0.82 0.37 2.63 (0.21)
LESS DISTRIBUTIONS FROM
Net investment income............................................................ (0.16) (0.33) (0.37) (0.11)
Net realized gain on investments................................................. 0 (0.28) (0.45) 0
Total distributions.............................................................. (0.16) (0.61) (0.82) (0.11)
NET ASSET VALUE END OF PERIOD.................................................... $ 11.24 $ 10.58 $10.82 $ 9.01
Total return+.................................................................... 7.80% 3.50% 29.80% (2.20%)
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses................................................................. 1.75%++ 1.63% 1.54% 1.94%++
Total expenses, excluding indirectly paid expenses............................. 1.74%++ N/A N/A N/A
Total expenses, excluding fee waiver & expense reimbursement................... 1.94%++ 1.90% 1.93% 2.78%++
Net investment income.......................................................... 3.14%++ 3.13% 3.76% 3.96%++
Portfolio turnover rate........................................................ 42% 59% 88% 23%
Average commission rate paid per share........................................... $0.0592 $0.0605 N/A N/A
NET ASSETS END OF PERIOD (THOUSANDS)............................................. $ 367 $ 396 $ 246 $ 128
</TABLE>
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from September 2, 1994 (commencement of Class operations) to
December 31, 1994.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, 1997 YEAR ENDED DECEMBER 31,
(UNAUDITED) 1996 1995 1994*
<S> <C> <C> <C> <C>
CLASS Y SHARES
NET ASSET VALUE BEGINNING OF PERIOD.............................................. $ 10.58 $ 10.82 $ 9.00 $ 9.51
INCOME FROM INVESTMENT OPERATIONS
Net investment income............................................................ 0.21 0.44 0.47 0.37
Net realized and unrealized gain (loss) on investments........................... 0.66 0.03 2.27 (0.50)
Total from investment operations................................................. 0.87 0.47 2.74 (0.13)
LESS DISTRIBUTIONS FROM
Net investment income............................................................ (0.21) (0.43) (0.47) (0.37)
In excess of net investment income............................................... 0 0 0 (0.01)
Net realized gain on investments................................................. 0 (0.28) (0.45) 0
Total distributions.............................................................. (0.21) (0.71) (0.92) (0.38)
NET ASSET VALUE END OF PERIOD.................................................... $ 11.24 $ 10.58 $10.82 $ 9.00
Total return..................................................................... 8.34% 4.50% 31.30% (1.60%)
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses................................................................. 0.74%++ 0.61% 0.54% 0.40%++
Total expenses, excluding indirectly paid expenses............................. 0.73%++ N/A N/A N/A
Total expenses, excluding fee waiver & expense reimbursement................... 0.94%++ 0.89% 0.93% 1.24%++
Net investment income.......................................................... 4.08%++ 4.01% 4.76% 4.93%++
Portfolio turnover rate.......................................................... 42% 59% 88% 23%
Average commission rate paid per share........................................... $0.0592 $0.0605 N/A N/A
NET ASSETS END OF PERIOD (THOUSANDS)............................................. $ 1,529 $ 2,000 $7,791 $5,201
</TABLE>
++ Annualized.
* For the period from February 28, 1994 (commencement of Class operations) to
December 31, 1994.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
6
<PAGE>
EVERGREEN
VALUE FUND
(Evergreen Cone Tree
logo appears here)
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, 1997 YEAR ENDED DECEMBER 31,
(UNAUDITED) 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
CLASS A SHARES
NET ASSET VALUE BEGINNING OF PERIOD...................................... $ 20.57 $ 20.45 $ 16.62 $17.63 $17.11
INCOME FROM INVESTMENT OPERATIONS
Net investment income.................................................... 0.18 0.38 0.55 0.52 0.47
Net realized and unrealized gain (loss) on investments................... 2.45 3.49 4.69 (0.20) 1.10
Total from investment operations......................................... 2.63 3.87 5.24 0.32 1.57
LESS DISTRIBUTIONS FROM
Net investment income.................................................... (0.19) (0.41) (0.51) (0.51) (0.47)
Net realized gain on investments......................................... 0 (3.32) (0.90) (0.82) (0.58)
In excess of net investment income....................................... 0** (0.02) 0 0 0
Total distributions...................................................... (0.19) (3.75) (1.41) (1.33) (1.05)
NET ASSET VALUE END OF PERIOD............................................ $ 23.01 $ 20.57 $ 20.45 $16.62 $17.63
Total return+............................................................ 12.79% 18.90% 31.80% 1.90% 9.30%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses......................................................... 0.92%++ 0.91% 0.90% 0.93% 0.99%
Total expenses, excluding indirectly paid expenses..................... 0.92%++ N/A N/A N/A N/A
Total expenses, excluding fee waiver & expense reimbursement........... N/A N/A N/A N/A N/A
Net investment income.................................................. 1.67%++ 1.77% 2.78% 2.96% 2.63%
Portfolio turnover rate.................................................. 6% 91% 53% 70% 46%
Average commission rate paid per share................................... $0.0592 $0.0588 N/A N/A N/A
NET ASSETS END OF PERIOD (MILLIONS)...................................... $ 365 $ 328 $ 292 $ 189 $ 190
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED MARCH
YEAR ENDED DECEMBER 31, 31,
1992 1991 1990* 1990 1989
<S> <C> <C> <C> <C> <C>
CLASS A SHARES (CONTINUED)
NET ASSET VALUE BEGINNING OF PERIOD................................... $17.08 $14.61 $15.12 $14.45 $12.83
INCOME FROM INVESTMENT OPERATIONS
Net investment income................................................. 0.44 0.46 0.36 0.54 0.36
Net realized and unrealized gain (loss) on investments................ 0.89 3.17 (0.44) 1.70 2.11
Total from investment operations...................................... 1.33 3.63 (0.08) 2.24 2.47
LESS DISTRIBUTIONS FROM
Net investment income................................................. (0.43) (0.43) (0.36) (0.57) (0.38)
Net realized gain on investments...................................... (0.87) (0.73) (0.02) (1.00) (0.47)
In excess of net investment income.................................... 0 0 (0.05) 0 0
Total distributions................................................... (1.30) (1.16) (0.43) (1.57) (0.85)
NET ASSET VALUE END OF PERIOD......................................... $17.11 $17.08 $14.61 $15.12 $14.45
Total return+......................................................... 8.00% 25.10% (0.50%) 15.50% 19.70%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses...................................................... 1.01% 0.96% 1.39%++ 1.55% 1.71%
Total expenses, excluding indirectly paid expenses.................. N/A N/A N/A N/A N/A
Total expenses, excluding fee waiver & expense reimbursement........ 1.02% 1.05% N/A N/A N/A
Net investment income............................................... 2.37% 2.78% 3.28%++ 3.42% 2.72%
Portfolio turnover rate............................................... 56% 69% 13% 11% 24%
Average commission rate paid per share................................ N/A N/A N/A N/A N/A
NET ASSETS END OF PERIOD (MILLIONS)................................... $ 169 $ 136 $ 105 $ 96 $ 83
<CAPTION>
1988
<S> <C>
CLASS A SHARES (CONTINUED)
NET ASSET VALUE BEGINNING OF PERIOD................................... $14.66
INCOME FROM INVESTMENT OPERATIONS
Net investment income................................................. 0.26
Net realized and unrealized gain (loss) on investments................ (1.30)
Total from investment operations...................................... (1.04)
LESS DISTRIBUTIONS FROM
Net investment income................................................. (0.26)
Net realized gain on investments...................................... (0.53)
In excess of net investment income.................................... 0
Total distributions................................................... (0.79)
NET ASSET VALUE END OF PERIOD......................................... $12.83
Total return+......................................................... (7.10%)
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses...................................................... 1.74%
Total expenses, excluding indirectly paid expenses.................. N/A
Total expenses, excluding fee waiver & expense reimbursement........ N/A
Net investment income............................................... 1.92%
Portfolio turnover rate............................................... 24%
Average commission rate paid per share................................ N/A
NET ASSETS END OF PERIOD (MILLIONS)................................... $ 22
</TABLE>
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* The Fund changed its fiscal year end from March 31 to December 31, effective
December 31, 1990.
** Less than one cent per share.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
7
<PAGE>
EVERGREEN
VALUE FUND
(Evergreen Cone Tree
logo appears here)
FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, 1997 YEAR ENDED DECEMBER 31,
(UNAUDITED) 1996 1995 1994 1993*
<S> <C> <C> <C> <C> <C>
CLASS B SHARES
NET ASSET VALUE BEGINNING OF PERIOD............................... $ 20.58 $ 20.45 $ 16.62 $ 17.63 $ 17.24
INCOME FROM INVESTMENT OPERATIONS
Net investment income............................................. 0.10 0.22 0.39 0.42 0.35
Net realized and unrealized gain (loss) on investments............ 2.44 3.50 4.70 (0.20) 1.01
Total from investment operations.................................. 2.54 3.72 5.09 0.22 1.36
LESS DISTRIBUTIONS FROM
Net investment income............................................. (0.10) (0.25) (0.36) (0.41) (0.35)
Net realized gain on investments.................................. 0 (3.32) (0.90) (0.82) (0.58)
In excess of net investment income................................ 0** 0 0 0 (0.04)
In excess of net realized gain on investments..................... 0 (0.02) 0 0 0
Total distributions............................................... (0.10) (3.59) (1.26) (1.23) (0.97)
NET ASSET VALUE END OF PERIOD..................................... $ 23.02 $ 20.58 $ 20.45 $ 16.62 $ 17.63
Total return+..................................................... 12.37% 18.10% 30.90% 1.30% 8.00%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses.................................................. 1.65%++ 1.66% 1.65% 1.53% 1.48%++
Total expenses, excluding indirectly paid expenses.............. 1.65%++ N/A N/A N/A N/A
Net investment income........................................... 0.93%++ 1.01% 2.04% 2.36% 2.09%++
Portfolio turnover rate........................................... 6% 91% 53% 70% 46%
Average commission rate paid per share............................ $ 0.0592 $ 0.0588 N/A N/A N/A
NET ASSETS END OF PERIOD (THOUSANDS) $ 254,154 $197,411 $141,072 $104,297 $59,953
</TABLE>
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from February 2, 1993 (commencement of Class operations) to
December 31, 1993.
** Less than one cent per share
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, 1997 YEAR ENDED DECEMBER 31,
(UNAUDITED) 1996 1995 1994*
<S> <C> <C> <C> <C>
CLASS C SHARES
NET ASSET VALUE BEGINNING OF PERIOD............................................. $ 20.56 $ 20.44 $16.61 $ 18.28
INCOME FROM INVESTMENT OPERATIONS
Net investment income........................................................... 0.11 0.22 0.39 0.19
Net realized and unrealized gain (loss) on investments.......................... 2.43 3.50 4.70 (0.81)
Total from investment operations................................................ 2.54 3.72 5.09 (0.62)
LESS DISTRIBUTIONS FROM
Net investment income........................................................... (0.10) (0.26) (0.36) (0.19)
Net realized gain on investments................................................ 0 (3.32) (0.90) (0.82)
In excess of net investment income.............................................. 0** 0 0 (0.04)
In excess of net realized gain on investments................................... 0 (0.02) 0 0
Total distributions............................................................. (0.10) (3.60) (1.26) (1.05)
NET ASSET VALUE END OF PERIOD................................................... $ 23.00 $ 20.56 $20.44 $ 16.61
Total return+................................................................... 12.38% 18.10% 30.90% (3.40%)
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses................................................................ 1.64%++ 1.67% 1.65% 1.68%++
Total expenses, excluding indirectly paid expenses............................ 1.64%++ N/A N/A N/A
Net investment income......................................................... 0.95%++ 1.00% 2.03% 2.16%++
Portfolio turnover rate......................................................... 6% 91% 53% 70%
Average commission rate paid per share.......................................... $0.0592 $0.0588 N/A N/A
NET ASSETS END OF PERIOD (THOUSANDS)............................................ $ 2,306 $ 1,458 $ 811 $ 485
</TABLE>
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from September 2, 1994 (commencement of operations) to
December 31, 1994.
** Less than one cent per share
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
8
<PAGE>
EVERGREEN
VALUE FUND
(Evergreen Cone Tree
logo appears here)
FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, 1997 YEAR ENDED DECEMBER 31,
(UNAUDITED) 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C>
CLASS Y SHARES
NET ASSET VALUE BEGINNING OF PERIOD..................... $ 20.57 $ 20.45 $ 16.61 $17.63 $17.11 $17.08
INCOME FROM INVESTMENT OPERATIONS
Net investment income................................... 0.21 0.44 0.57 0.56 0.52 0.49
Net realized and unrealized gain (loss) on
investments........................................... 2.44 3.49 4.72 (0.20) 1.12 0.90
Total from investment operations........................ 2.65 3.93 5.29 0.36 1.64 1.39
LESS DISTRIBUTIONS FROM
Net investment income................................... (0.21) (0.47) (0.55) (0.56) (0.52) (0.49)
Net realized gain on investments........................ 0 (3.32) (0.90) (0.82) (0.58) (0.87)
In excess of net investment income...................... 0** 0 0 0 (0.02) 0
In excess of net realized gain on investments........... 0 (0.02) 0 0 0 0
Total distributions..................................... (0.21) (3.81) (1.45) (1.38) (1.12) (1.36)
NET ASSET VALUE END OF PERIOD........................... $ 23.01 $ 20.57 $ 20.45 $16.61 $17.63 $17.11
Total return+........................................... 12.93% 19.20% 32.20% 2.10% 9.70% 8.30%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses........................................ 0.67%++ 0.66% 0.65% 0.68% 0.65% 0.68%
Total expenses, excluding indirectly paid expenses.... 0.67%++ N/A N/A N/A N/A N/A
Total expenses, excluding fee waiver & expense
reimbursement....................................... N/A N/A N/A N/A N/A 0.69%
Net investment income................................. 1.92%++ 2.02% 3.02% 3.21% 2.98% 2.90%
Portfolio turnover rate................................. 6% 91% 53% 70% 46% 56%
Average commission rate paid per share.................. $0.0592 $0.0588 N/A N/A N/A N/A
NET ASSETS END OF PERIOD (MILLIONS)..................... $ 1,075 $ 996 $ 761 $ 507 $ 463 $ 326
<CAPTION>
YEAR ENDED DECEMBER 31,
1991*
<S> <C>
CLASS Y SHARES
NET ASSET VALUE BEGINNING OF PERIOD..................... $14.28
INCOME FROM INVESTMENT OPERATIONS
Net investment income................................... 0.47
Net realized and unrealized gain (loss) on
investments........................................... 3.53
Total from investment operations........................ 4.00
LESS DISTRIBUTIONS FROM
Net investment income................................... (0.47)
Net realized gain on investments........................ (0.73)
In excess of net investment income...................... 0
In excess of net realized gain on investments........... 0
Total distributions..................................... (1.20)
NET ASSET VALUE END OF PERIOD........................... $17.08
Total return+........................................... 25.40%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses........................................ 0.69%++
Total expenses, excluding indirectly paid expenses.... N/A
Total expenses, excluding fee waiver & expense
reimbursement....................................... 0.77%++
Net investment income................................. 3.04%++
Portfolio turnover rate................................. 69%
Average commission rate paid per share.................. N/A
NET ASSETS END OF PERIOD (MILLIONS)..................... $ 271
</TABLE>
++ Annualized.
* For the period from January 3, 1991 (commencement of Class operations) to
December 31, 1991.
** Less than one cent per share.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
EVERGREEN
GROWTH & INCOME FUND
(Evergreen Cone Tree G&I
logo appears here)
SCHEDULE OF INVESTMENTS
June 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
COMMON STOCKS-- 78.5%
BANKS-- 4.4%
118,440 Banc One Corp................... $ 5,736,938
80,000 Bank of New York Co., Inc.
(The)......................... 3,480,000
180,600 BSB Bancorp, Inc................ 6,907,950
101,250 Central Fidelity Banks, Inc..... 3,594,375
41,750 Crestar Financial Corp.......... 1,623,031
45,000 Cullen/Frost Bankers, Inc....... 1,906,875
157,500 First Security Corp............. 4,301,719
39,700 First Virginia Banks, Inc....... 2,394,406
210,000 Hibernia Corp. Cl. A............ 2,926,875
83,700 Norwest Corp.................... 4,708,125
65,000 Peoples Heritage Financial
Group......................... 2,461,875
110,000 State Street Boston Corp........ 5,087,500
45,000 Summit Bancorp.................. 2,255,625
72,600 Susquehanna Bancshares, Inc..... 2,849,550
13,800 Wells Fargo & Co................ 3,719,100
53,953,944
BUILDING, CONSTRUCTION &
FURNISHINGS-- 1.2%
320,000 * Furniture Brands International,
Inc........................... 6,200,000
113,000 Lone Star Industries, Inc....... 5,120,313
80,000 Medusa Corp..................... 3,070,000
14,390,313
BUSINESS EQUIPMENT &
SERVICES-- 12.6%
335,000 Air Express International
Corp.......................... 13,316,250
675,000 Circle International Group,
Inc........................... 17,803,125
48,000 * Cisco Systems, Inc.............. 3,222,000
350,000 Computer Associates
International, Inc............ 19,490,625
120,000 * Compuware Corp.................. 5,730,000
133,000 Equifax, Inc.................... 4,945,938
290,000 * Medic Computer Systems, Inc..... 6,452,500
450,000 * Metromail Corp.................. 11,137,500
10,000 * MSC Industrial Direct Co.,
Inc........................... 401,250
78,000 * Oracle Systems Corp............. 3,929,250
565,000 Pittston Brink's Group.......... 16,950,000
639,500 Pittston Burlington Group....... 17,985,937
500,000 * Platinum Technology Corp........ 6,625,000
212,500 * Policy Management Systems
Corp.......................... 9,987,500
900,000 Reynolds & Reynolds Co. (The),
Cl. A......................... 14,175,000
50,000 Wackenhut Corp. (The) Cl. B..... 996,875
153,148,750
<CAPTION>
COMMON STOCKS-- CONTINUED
<S> <C> <C>
CHEMICAL & AGRICULTURAL
PRODUCTS-- 3.9%
65,000 Air Products & Chemicals, Inc... $ 5,281,250
79,000 Du Pont (E. I.) De Nemours &
Co............................ 4,967,125
265,000 Engelhard Corp.................. 5,548,437
165,000 Grace (W.R.) & Co............... 9,095,625
42,300 H.B. Fuller Co.................. 2,326,500
79,000 Pioneer Hi-Bred International,
Inc........................... 6,320,000
260,000 Praxair, Inc.................... 14,560,000
48,098,937
COMMUNICATION SYSTEMS &
SERVICES-- 0.7%
160,000 * AirTouch Communications......... 4,380,000
168,000 * Aspect Telecommunications
Corp.......................... 3,738,000
8,118,000
CONSUMER PRODUCTS &
SERVICES-- 2.7%
96,000 Campbell Soup Co................ 4,800,000
90,000 Colgate-Palmolive Co............ 5,872,500
45,000 CPC International, Inc.......... 4,154,062
52,000 Gillette Co. (The).............. 4,927,000
72,000 Harley-Davidson, Inc............ 3,451,500
150,000 Philip Morris Companies, Inc.... 6,656,250
105,000 UST, Inc........................ 2,913,750
32,775,062
DIVERSIFIED COMPANIES-- 1.3%
70,200 General Electric Co............. 4,589,325
35,000 * ITT Corp........................ 2,137,188
195,000 ITT Industries, Inc............. 5,021,250
125,000 Morton International, Inc....... 3,773,437
15,521,200
ELECTRICAL EQUIPMENT &
SERVICES-- 5.3%
57,000 * 3Com Corp....................... 2,565,000
80,000 * Adaptec, Inc.................... 2,780,000
42,000 * Applied Materials, Inc.......... 2,974,125
191,000 AVX Corp........................ 5,157,000
165,000 Baldor Electric Co.............. 4,877,813
205,000 Belden, Inc..................... 6,982,812
70,000 Dallas Semiconductor Corp....... 2,747,500
36,000 Intel Corp...................... 5,105,250
210,000 * KLA Instruments Corp............ 10,237,500
85,000 * Lam Research Corp............... 3,150,313
42,000 * LSI Logic Corp.................. 1,344,000
3,875 * NCR Corp........................ 115,281
</TABLE>
(CONTINUED)
10
<PAGE>
EVERGREEN
GROWTH & INCOME FUND
(Evergreen Cone Tree G&I
logo appears here)
SCHEDULE OF INVESTMENTS (CONTINUED)
June 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
COMMON STOCKS-- CONTINUED
ELECTRICAL EQUIPMENT &
SERVICES-- CONTINUED
500,000 Sensormatic Electronics Corp.... $ 6,437,500
189,900 * Unitrode Corp................... 9,566,212
64,040,306
ENERGY-- 6.4%
25,000 Anadarko Petroleum Corp......... 1,500,000
134,000 * Atwood Oceanics, Inc............ 8,978,000
250,000 Berry Petroleum Co. Cl. A....... 4,750,000
45,000 Coastal Corp. (The)............. 2,393,437
165,000 * Denbury Resources, Inc.......... 2,763,750
31,570 Halliburton Co.................. 2,501,922
100,000 * Houston Exploration, Co. (The).. 1,556,250
25,000 Kerr-McGee Corp................. 1,584,375
95,000 Murphy Oil Corp................. 4,631,250
425,000 * Oryx Energy Co.................. 8,978,125
108,300 Petroleum Helicopters, Inc.
Voting........................ 1,854,638
775,000 Reading & Bates Corp............ 20,731,250
150,000 * Santa Fe Energy Resources,
Inc........................... 2,203,125
350,000 Southwestern Energy Co.......... 4,550,000
100,000 Tosco Corp...................... 2,993,750
63,520 Union Pacific Resource Group,
Inc........................... 1,580,060
87,000 Williams Companies, Inc. (The).. 3,806,250
77,356,182
FINANCE & INSURANCE-- 3.5%
340,000 Federal Home Loan Mortgage
Corp.......................... 11,687,500
290,000 Federal National Mortgage
Association................... 12,651,250
100,000 Hartford Financial Services
Group, Inc. (The)............. 8,275,000
115,000 LaSalle Re Holdings, Ltd........ 3,392,500
67,500 Meadowbrook Insurance Group,
Inc........................... 1,683,281
106,000 Price (T.) Rowe & Associates,
Inc........................... 5,472,250
43,161,781
FOOD RETAILING &
DISTRIBUTION-- 0.1%
50,000 * Dominick's Supermarkets, Inc.... 1,331,250
FOREST PRODUCTS-- 0.3%
120,000 Deltic Timber Corp.............. 3,517,500
HEALTHCARE PRODUCTS &
SERVICES-- 11.7%
110,000 Abbott Laboratories............. 7,342,500
65,000 * Amgen, Inc...................... 3,778,125
110,000 * Elan Corp, plc.................. 4,977,500
<CAPTION>
COMMON STOCKS-- CONTINUED
<S> <C> <C>
HEALTHCARE PRODUCTS &
SERVICES-- CONTINUED
425,000 * Foundation Health Systems, Inc.
Cl. A......................... $ 12,882,812
178,500 * Health Management Associates,
Inc. Cl. A.................... 5,087,250
55,000 * HealthCare COMPARE Corp......... 2,880,625
206,000 * HEALTHSOUTH Corp................ 5,137,125
24,000 Johnson & Johnson............... 1,545,000
130,000 * Laboratory Corp. of America
Holdings...................... 341,250
265,000 * Lincare Holdings, Inc........... 11,395,000
235,000 * Living Centers of America,
Inc........................... 9,282,500
20,000 Mallinckrodt, Inc............... 760,000
60,000 Manor Care, Inc................. 1,957,500
200,000 McKesson Corp................... 15,500,000
42,350 * MedPartners, Inc................ 915,819
49,600 Pfizer, Inc..................... 5,927,200
226,000 Schering-Plough Corp............ 10,819,750
225,000 Shared Medical System Corp...... 12,150,000
25,000 * Spacelabs Medical, Inc.......... 637,500
138,000 * Sybron International Corp....... 5,502,750
120,000 * Tenet Healthcare Corp........... 3,547,500
95,000 * Vencor, Inc..................... 4,013,750
34,000 Warner-Lambert Co............... 4,224,500
40,020 * Wellpoint Health Networks,
Inc........................... 1,835,918
370,000 West Co., Inc. (The)............ 10,591,250
143,033,124
INDUSTRIAL SPECIALTY PRODUCTS
& SERVICES-- 4.4%
42,625 * Autoliv, Inc.................... 1,667,703
150,000 Borg-Warner Automotive, Inc..... 8,109,375
42,000 Carpenter Technology Corp....... 1,921,500
65,500 Danaher Corp.................... 3,328,219
51,000 Dover Corp...................... 3,136,500
55,000 Ingersoll Rand Co............... 3,396,250
53,200 J & L Specialty Steel, Inc...... 638,400
525,000 JLG Industries, Inc............. 7,153,125
33,500 Magna Group, Inc................ 2,016,281
23,650 Newmont Mining Corp............. 922,350
300,000 * Strattec Security Corp.**....... 6,187,500
210,000 Sundstrand Corp................. 11,720,625
15,000 Tecumseh Products Co. Cl. A..... 898,125
25,000 Vulcan Materials Co............. 1,962,500
22,500 York International Corp......... 1,035,000
54,093,453
</TABLE>
(CONTINUED)
11
<PAGE>
EVERGREEN
GROWTH & INCOME FUND
(Evergreen Cone Tree G&I
logo appears here)
SCHEDULE OF INVESTMENTS (CONTINUED)
June 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
COMMON STOCKS-- CONTINUED
INFORMATION SERVICES &
TECHNOLOGY-- 0.2%
63,436 First Data Corp.................. $ 2,787,219
LEISURE & TOURISM-- 1.9%
90,000 Carnival, Corp. Cl. A............ 3,712,500
60,000 * Choice Hotels Holdings, Inc...... 1,016,250
821,400 Gaylord Entertainment Co. Cl. A.. 18,943,537
23,672,287
PAPER & PACKAGING-- 0.2%
75,000 Westvaco Corp.................... 2,357,813
PUBLISHING, BROADCASTING &
ENTERTAINMENT-- 7.4%
248,820 * American Radio Systems Corp.
Cl. A.......................... 9,921,697
49,805 Comcast Corp..................... 1,064,582
39,000 Disney Walt Co. (The)............ 3,129,750
255,000 * Emmis Broadcasting Corp. Cl. A... 11,124,375
42,000 * Evergreen Media Corp. Cl. A...... 1,874,250
425,000 * Jacor Communications, Inc........ 16,256,250
174,000 * Jacor Communications, Inc.
Warrants exp. 2001............. 609,000
100,000 * Katz Media Group, Inc............ 656,250
40,000 Knight-Ridder, Inc............... 1,962,500
275,000 * Lin Television Corp.............. 12,134,375
15,000 McGraw-Hill Companies, Inc....... 882,188
43,000 Scripps, (E.W.) , Inc............ 1,789,875
185,000 TCA Cable TV, Inc................ 6,960,625
250,000 Time Warner, Inc................. 12,062,500
50,000 * U S WEST Media Group............. 1,012,500
35,000 * Univision Communications, Inc.
Cl. A.......................... 1,369,375
8,276 * Viacom Inc. Cl. A................ 243,625
2,800 Washington Post Co. (The)........ 1,114,400
168,000 * Young Broadcasting Inc. Cl. A.... 5,460,000
89,628,117
RETAILING & WHOLESALE-- 0.4%
109,800 * Carson Pirie Scott & Co.......... 3,486,150
12,500 Mercantile Stores Co., Inc....... 786,719
20,000 Sears, Roebuck & Co.............. 1,075,000
5,347,869
THRIFT INSTITUTIONS-- 2.5%
126,500 Washington Mutual, Inc........... 7,558,375
492,500 Webster Financial Corp........... 22,408,750
29,967,125
<CAPTION>
COMMON STOCKS-- CONTINUED
<S> <C> <C>
TRANSPORTATION-- 5.3%
670,000 * Atlas Air, Inc................... $ 23,115,000
190,000 Burlington Northern Santa Fe..... 17,076,250
190,000 Kansas City Southern Industries,
Inc............................ 12,255,000
170,000 Union Pacific Corp............... 11,985,000
64,431,250
UTILITIES-- 2.1%
62,000 AT & T Corp...................... 2,173,875
100,000 Century Telephone Enterprises,
Inc............................ 3,368,750
64,000 Commonwealth Energy System....... 1,532,000
70,000 Houston Industries., Inc......... 1,500,625
50,000 Illinova Corp.................... 1,100,000
75,000 MCI Communications Corp.......... 2,871,094
40,000 Texas Utilities Co............... 1,377,500
393,200 TNP Enterprises, Inc............. 9,117,325
45,000 Unicom Corp...................... 1,001,250
60,000 * WorldCom, Inc.................... 1,920,000
25,962,419
TOTAL COMMON STOCKS
(COST $655,473,750)............ 956,693,901
<CAPTION>
PREFERRED STOCKS-- 0.0% (A)
<S> <C> <C>
HEALTHCARE PRODUCTS &
SERVICES-- 0.0%
130,000 * Fresenius National Med Care, Inc.
Series D....................... 7,475
TOTAL PREFERRED STOCKS
(COST $22,741)................. 7,475
<CAPTION>
CONVERTIBLE PREFERRED-- 0.1%
<S> <C> <C>
PUBLISHING, BROADCASTING &
ENTERTAINMENT-- 0.1%
6,407 * TCI Communications, Inc.
$2.125, Series A............... 659,921
TOTAL CONVERTIBLE PREFERRED
(COST $622,947)................ 659,921
<CAPTION>
PRINCIPAL
AMOUNT
CORPORATE BONDS-- 0.1%
<S> <C> <C>
ENERGY-- 0.0%
Columbia Gas Systems, Inc. (The)
$ 106,000 6.39%, 11/28/00.................. 105,020
101,000 6.61%, 11/28/02.................. 100,202
101,000 6.80%, 11/28/05.................. 99,569
101,000 7.05%, 11/28/07.................. 100,468
101,000 7.32%, 11/28/10.................. 100,647
101,000 7.42%, 11/28/15.................. 98,104
101,000 7.62%, 11/28/25.................. 97,870
701,880
</TABLE>
(CONTINUED)
12
<PAGE>
EVERGREEN
GROWTH & INCOME FUND
(Evergreen Cone Tree G&I
logo appears here)
SCHEDULE OF INVESTMENTS (CONTINUED)
June 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
CORPORATE BONDS-- CONTINUED
PUBLISHING, BROADCASTING &
ENTERTAINMENT-- 0.1%
Time Warner, Inc.
$ 206,000 6.7725%, 8/15/97................ $ 206,266
123,000 7.975%, 8/15/04................. 127,097
247,000 8.11%, 8/15/06.................. 258,023
247,000 8.18%, 8/15/07.................. 258,630
92,000 Viacom Inc.
8.00%, 7/7/06................. 89,240
939,256
TOTAL CORPORATE BONDS
(COST $1,595,465)............. 1,641,136
<CAPTION>
SHORT-TERM INVESTMENTS-- 21.2%
<S> <C> <C>
COMMERCIAL PAPER-- 17.9%
12,325,000 AC Acquisition Holding CO.
5.58%, 8/21/97................ 12,227,571
6,000,000 American Home Food Products,
Inc.
5.55%, 7/28/97................ 5,975,025
1,300,000 BankAmerica Corp.
5.52%, 8/5/97................. 1,293,023
1,800,000 Barton Capital Corp.
5.54%, 7/17/97................ 1,795,568
16,000,000 BIL North America, Inc.
5.55%, 7/1/97................. 16,000,000
13,600,000 BMW U.S. Capital Corp.
5.54%, 8/22/97................ 13,491,170
1,900,000 Chubb Capital Corp.
5.51%, 7/14/97................ 1,896,220
8,000,000 Columbia/HCA Healthcare Corp.
5.60%, 7/14/97................ 7,983,822
450,000 Equitable of Iowa Cos.
5.62%, 7/11/97................ 449,298
17,300,000 Great Lakes Chemical Corp.
5.50%, 7/7/97................. 17,284,142
2,100,000 Heinz (H.J.) Co.
5.52%, 7/3/97................. 2,099,356
950,000 Holy Cross Health System Corp.
5.58%, 7/21/97................ 947,055
19,750,000 IBM Credit Corp.
5.51%, 7/30/97................ 19,662,337
1,000,000 Island Finance Puerto Rico, Inc.
5.56%, 7/16/97................ 997,683
<CAPTION>
SHORT-TERM INVESTMENTS-- CONTINUED
<S> <C> <C>
COMMERCIAL PAPER-- CONTINUED
$21,500,000 Koch Industries, Inc.
5.51%, 7/18/97................ $ 21,444,058
2,500,000 Lucent Technologies, Inc.
5.49%, 8/8/97................. 2,485,512
3,400,000 Metropolitan Life, Inc.
5.53%, 8/12/97................ 3,378,064
2,400,000 Montana Blanc Capital Corp.
5.56%, 7/7/97................. 2,397,776
3,100,000 Morgan (J.P.) & Co., Inc.
5.51%, 7/2/97................. 3,099,526
12,325,000 Pepsico, Inc.
5.53%, 8/15/97................ 12,239,803
10,500,000 Sharp Electronics Corp.
5.56%, 7/25/97................ 10,461,080
6,400,000 Southland Corp.
5.57%, 8/7/97................. 6,363,362
9,150,000 Toyota Motor Credit Corp.
5.50%, 8/14/97................ 9,088,492
1,900,000 Tribune Co.
5.57%, 7/7/97................. 1,898,236
20,000,000 Warner Lambert Co.
5.51%, 7/30/97................ 19,911,228
22,900,000 Xerox Credit Corp.
5.55%, 7/9/97................. 22,871,757
217,741,164
GOVERNMENT AGENCY NOTES &
BONDS-- 3.3%
Federal Home Loan Bank
20,000,000 5.41%, 7/11/97.................. 19,969,944
20,000,000 5.40%, 7/18/97.................. 19,949,000
39,918,944
TOTAL SHORT-TERM INVESTMENTS
(COST 257,660,108)............ 257,660,108
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
TOTAL INVESTMENTS--
(COST $915,375,011).... 99.9% 1,216,662,541
OTHER ASSETS AND
LIABILITIES-- NET...... 0.1 1,780,470
NET ASSETS............... 100.0% $1,218,443,011
</TABLE>
* Non-income producing securities.
** Investment in a non-controlled affiliate. The Fund owns over 5% of
outstanding voting securities. The Fund has a cost basis of $4,482,537 in
this issue at June 30, 1997. The Fund did not earn any income from this
investment during the period ended June 30, 1997.
(a) Less than one-tenth of a percent.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
13
<PAGE>
EVERGREEN
SMALL CAP EQUITY INCOME FUND
(Evergreen Cone Tree Maple
Leaf logo appears here)
SCHEDULE OF INVESTMENTS
June 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
COMMON STOCKS-- 71.8%
AEROSPACE & DEFENSE-- 2.2%
18,000 Curtiss Wright Corp.................. $ 1,048,500
AUTOMOTIVE EQUIPMENT &
MANUFACTURING-- 0.1%
6,000 Simpson Industries, Inc.............. 63,750
BANKS-- 11.9%
3,750 ABC Bancorp.......................... 63,750
21,000 Amcore Financial, Inc................ 572,250
3,000 BancorpSouth, Inc.................... 87,000
19,200 BSB Bancorp, Inc..................... 734,400
15,500 CB Bancshares, Inc................... 542,500
31,000 Commercial Bankshares, Inc........... 589,000
30,000 CU Bancorp........................... 457,500
6,000 First Essex Bancorp, Inc............. 105,000
2,500 First Midwest Bancorp, Inc........... 79,219
10,000 First Oak Brook Bancshares Inc. Cl.
A.................................. 317,500
16,000 First Palm Beach Bancorp, Inc........ 544,000
4,761 First State Bancorp.................. 80,342
3,334 FNB Corp............................. 107,521
9,747 Hudson Chartered Bancorp, Inc........ 275,353
25,675 Independent Bancshares, Inc.......... 340,193
13,962 Interchange Financial Services
Corp............................... 326,362
2,500 One Valley Bancorp of West Virginia,
Inc................................ 105,000
8,160 State Financial Services Corp........ 173,400
5,000 Susquehanna Bancshares, Inc.......... 196,250
5,696,540
BUILDING, CONSTRUCTION &
FURNISHINGS-- 3.0%
28,000 La-Z-Boy Chair Co.................... 1,008,000
30,100 Shelby Williams Industries, Inc...... 410,112
1,418,112
BUSINESS EQUIPMENT &
SERVICES-- 2.0%
21,400 American Business Products, Inc...... 486,850
15,000 American List Corp................... 451,875
938,725
CHEMICAL & AGRICULTURAL
PRODUCTS-- 0.5%
10,500 Stepan Co............................ 258,563
CONSUMER PRODUCTS & SERVICES-- 4.3%
50,000 General Housewares Corp.............. 493,750
52,000 Oneida, Ltd.......................... 1,387,750
6,000 Polaris Industries, Inc.............. 195,375
2,076,875
<CAPTION>
COMMON STOCKS-- CONTINUED
<S> <C> <C>
DIVERSIFIED COMPANIES-- 2.4%
32,000 Mathews International Corp........... $ 1,168,000
ELECTRICAL EQUIPMENT &
SERVICES-- 2.1%
27,600 Badger Meter, Inc.................... 817,650
8,100 Research, Inc........................ 73,913
10,000 Tech/OPS Sevcon, Inc................. 131,250
1,022,813
ENERGY-- 4.1%
2,800 Berry Petroleum Co. Cl. A............ 53,200
24,000 Enron Global Power & Pipelines LLC... 799,500
22,300 Penn Virginia Corp................... 1,092,700
1,945,400
FINANCE & INSURANCE-- 5.9%
800 American Heritage Life Investment
Corp............................... 26,400
26,000 Arthur J. Gallagher & Co............. 981,500
2,350 Banc One Corp........................ 113,828
50,000 Horizon Financial Corp............... 812,500
5,000 LaSalle Re Holdings, Ltd............. 147,500
8,000 South Alabama Bancorp Inc............ 130,000
16,000 Trenwick Group, Inc.................. 600,000
2,811,728
FOOD & BEVERAGE PRODUCTS-- 4.0%
44,000 Bridgford Foods Corp................. 390,500
20,000 Lance, Inc........................... 382,500
16,000 Luby's Cafeterias, Inc............... 319,000
76,100 Piccadilly Cafeterias, Inc........... 808,563
1,900,563
HEALTHCARE PRODUCTS & SERVICES-- 1.3%
12,000 Kinetic Concepts, Inc................ 216,000
15,000 West Co., Inc. (The)................. 429,375
645,375
INDUSTRIAL SPECIALTY PRODUCTS &
SERVICES-- 4.7%
32,000 BW/IP, Inc........................... 650,000
6,400 Met-Pro Corp......................... 96,800
1,000 Petrolite Corp....................... 61,875
25,200 Raven Industries, Inc................ 607,950
40,400 Spartech Corp........................ 525,200
8,000 Woodward Governor Co................. 289,000
2,230,825
</TABLE>
(CONTINUED)
14
<PAGE>
EVERGREEN
SMALL CAP EQUITY INCOME FUND
(Evergreen Cone Tree Maple
Leaf logo appears here)
SCHEDULE OF INVESTMENTS (CONTINUED)
June 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
COMMON STOCKS-- CONTINUED
MACHINERY-- DIVERSIFIED-- 1.2%
29,800 Gorman Rupp Co................... $536,400
1,000 Tennant Co....................... 33,250
569,650
METAL PRODUCTS & SERVICES-- 1.8%
126,000 UNR Industries, Inc.............. 866,250
REAL ESTATE-- 4.4%
891 Bradley Real Estate, Inc. REIT... 17,152
2,000 CBL & Associates Properties, Inc.
REIT........................... 48,000
36,000 Columbus Realty Trust REIT....... 819,000
36,000 Evans Withycombe Residential,
Inc. REIT...................... 747,000
1,000 Kranzco Realty Trust REIT........ 17,000
2,500 Sovran Self Storage, Inc. REIT... 73,125
4,000 Summit Properties, Inc. REIT..... 82,500
20,000 Sunstone Hotel Investors, Inc.
REIT........................... 290,000
2,093,777
RETAILING & WHOLESALE-- 0.4%
2,800 Russ Berrie & Co., Inc........... 61,425
7,500 Schultz Sav O Stores Inc......... 133,125
194,550
TELECOMMUNICATION SERVICES &
EQUIPMENT-- 2.4%
28,000 BGS Systems, Inc................. 770,000
37,500 Computer Language Research,
Inc............................ 365,625
1,135,625
THRIFT INSTITUTIONS-- 3.1%
4,000 First Financial Holdings, Inc.... 128,000
38,000 Jacksonville Bancorp, Inc........ 572,375
12,000 Maryland Federal Bancorp, Inc.... 522,000
7,000 People's Savings Financial
Corp........................... 263,375
1,485,750
UTILITIES-- ELECTRIC-- 4.1%
33,000 Madison Gas & Electric Co........ 676,500
26,000 Northwestern Public Service
Co............................. 559,000
14,000 Otter Tail Power Co.............. 462,000
12,000 TNP Enterprises, Inc............. 278,250
1,975,750
COMMON STOCKS-- CONTINUED
UTILITIES-- GAS-- 5.9%
29,100 Chesapeake Utilities Corp........ $ 494,700
30,000 Connecticut Energy Corp.......... 727,500
12,700 Delta Natural Gas Co., Inc....... 225,425
4,000 Energen Corp..................... 134,750
7,400 NUI Corp......................... 166,037
Public Service Company of North
26,000 Carolina, Inc.................. 498,875
26,000 Southwest Gas Corp............... 516,750
2,000 United Cities Gas Co............. 47,000
TOTAL COMMON STOCKS
(COST $30,020,465)............. 2,811,037
34,358,158
<CAPTION>
CONVERTIBLE PREFERRED-- 6.7%
<S> <C> <C>
ENERGY-- 1.2%
16,000 Callon Petroleum Co.
8.50%, Series A................ 588,000
FINANCE & INSURANCE-- 1.4%
12,000 American Heritage Life Investment
Corp.
8.50%, PRIDES.................. 660,000
INDUSTRIAL SPECIALTY PRODUCTS &
SERVICES-- 2.2%
63,000 Worthington Industries, Inc.
7.25%, DECS.................... 1,055,250
PUBLISHING, BROADCASTING &
ENTERTAINMENT-- 0.3%
4,000 AMC Entertainment, Inc.
$1.75.......................... 127,000
TRANSPORTATION-- 1.6%
15,000 Hvide Capital Trust 6.50%,
144A........................... 787,500
TOTAL CONVERTIBLE PREFERRED
(COST $3,010,466).............. 3,217,750
<CAPTION>
PRINCIPAL
AMOUNT
CONVERTIBLE DEBENTURES-- 12.7%
<S> <C> <C>
BANKS-- 1.6%
$ 700,000 First State Bancorp.
7.50%, 4/30/17................. 768,250
BUILDING, CONSTRUCTION &
FURNISHINGS-- 0.6%
270,000 Toll Corp.
4.75%, 1/15/04................. 272,700
BUSINESS EQUIPMENT & SERVICES-- 0.4%
200,000 Personnel Group Of America, Inc.
5.75%, 7/1/04, 144A............ 213,000
</TABLE>
(CONTINUED)
15
<PAGE>
EVERGREEN
SMALL CAP EQUITY INCOME FUND
(Evergreen Cone Tree Maple
Leaf logo appears here)
SCHEDULE OF INVESTMENTS (CONTINUED)
June 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
CONVERTIBLE DEBENTURES-- CONTINUED
ELECTRICAL EQUIPMENT & SERVICES-- 2.4%
$1,050,000 Photronics, Inc.
6.00%, 6/1/04.................. $ 1,165,500
ENERGY-- 1.9%
250,000 Key Energy Group, Inc.
7.50%, 7/1/03, 144A............ 452,500
425,000 Offshore Logistics, Inc.
6.00%, 12/15/03, 144A.......... 456,875
909,375
HEALTHCARE PRODUCTS & SERVICES-- 1.2%
140,000 Maxxim Medical, Inc.
6.75%, 3/1/03.................. 150,150
480,000 Meridian Diagnostics, Inc.
7.00%, 9/1/06.................. 412,800
562,950
INDUSTRIAL SPECIALTY PRODUCTS &
SERVICES-- 1.8%
610,000 Robbins & Myers, Inc.
6.50%, 9/1/03.................. 866,200
RETAILING & WHOLESALE-- 2.8%
500,000 Central Garden & Pet Co.
6.00%, 11/15/03, 144A.......... 550,000
750,000 Proffitt's, Inc.
4.75%, 11/1/03................. 806,250
1,356,250
TOTAL CONVERTIBLE DEBENTURES
(COST $5,488,238).............. 6,114,225
<CAPTION>
SHORT-TERM INVESTMENTS-- 7.6%
<S> <C> <C>
GOVERNMENT AGENCY NOTES & BONDS-- 7.6%
$ 300,000 Federal Farm Credit Bank
5.42%, 7/1/97.................. $ 300,000
Federal Home Loan Bank
100,000 5.43%, 7/2/97.................... 99,985
100,000 5.41%, 7/11/97................... 99,850
1,350,000 5.40%, 7/18/97................... 1,346,557
Federal Home Loan Mortgage
540,000 5.40%, 7/9/97.................... 539,352
110,000 5.43%, 7/11/97................... 109,834
500,000 5.42%, 7/14/97................... 499,022
Federal National Mortgage
Association
100,000 5.40%, 7/14/97................... 99,805
550,000 5.43%, 7/30/97................... 547,594
TOTAL SHORT-TERM INVESTMENTS
(COST $3,641,999).............. 3,641,999
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS--
(COST $42,161,168)......... 98.8% 47,332,132
OTHER ASSETS AND
LIABILITIES-- NET.......... 1.2 556,383
NET ASSETS................... 100.0% $47,888,515
</TABLE>
DECS-- Dividend Enhanced Convertible Stock.
PRIDES-- Preferred Redeemable Increased Dividend Equity Securities.
144A-- Rule 144A securities are restricted as to resale to qualified
institutional investors.
REIT-- Real Estate Investment Trust
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
16
<PAGE>
EVERGREEN
UTILITY FUND
(Evergreen Cone Tree Light Bulb
logo appears here)
SCHEDULE OF INVESTMENTS
June 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
COMMON STOCKS-- 81.2%
AUTOMOTIVE EQUIPMENT &
MANUFACTURING-- 2.9%
100,000 Ford Motor Co..................... $ 3,775,000
OIL FIELD SERVICES-- 1.9%
250,000 Chesapeake Energy Corporation..... 2,453,125
TELECOMMUNICATION SERVICES &
EQUIPMENT-- 2.8%
50,000 Nokia Corp........................ 3,687,500
UTILITIES-- ELECTRIC-- 48.1%
82,000 American Electric Power
Co., Inc........................ 3,444,000
100,000 Central Hudson Gas &
Electric Corp................... 3,443,750
100,000 CINergy Corp...................... 3,481,250
88,774 Duke Power Co..................... 4,255,604
150,000 Enova Corp........................ 3,609,375
80,000 FPL Group, Inc.................... 3,685,000
100,000 GPU, Inc.......................... 3,587,500
170,000 Houston Industries., Inc.......... 3,644,375
100,000 Illinova Corp..................... 2,200,000
125,000 Long Island Lighting Co........... 2,875,000
48,000 NIPSCO Industries, Inc............ 1,983,000
100,000 PacifiCorp........................ 2,200,000
100,000 Pinnacle West Capital Corp........ 3,006,250
110,000 Portland General Corp............. 4,365,625
150,000 PP&L Resources, Inc............... 2,990,625
100,000 Public Service Co. of Colorado.... 4,150,000
100,000 Public Service Enterprise
Group, Inc...................... 2,500,000
100,000 Texas Utilities Co................ 3,443,750
120,000 UtiliCorp United, Inc............. 3,495,000
62,360,104
UTILITIES-- GAS-- 4.8%
105,000 NICOR Inc......................... 3,766,875
50,000 Northwest Natural Gas Co.......... 1,309,375
30,000 Peoples Energy Corp............... 1,123,125
6,199,375
UTILITIES-- TELEPHONE-- 20.7%
100,000 ALLTEL Corp....................... 3,343,750
40,000 Ameritech Corp.................... 2,717,500
70,000 BellSouth Corp.................... 3,246,250
80,000 GTE Corp.......................... 3,510,000
100,000 MCI Communications Corp........... 3,828,125
<CAPTION>
COMMON STOCKS-- CONTINUED
<S> <C> <C>
UTILITIES-- TELEPHONE-- CONTINUED
50,000 SBC Communications, Inc........... $ 3,093,750
60,000 Sprint Corp....................... 3,157,500
105,000 U.S. West Communications Group,
Inc............................. 3,957,187
26,854,062
TOTAL COMMON STOCKS
(COST $90,775,011).............. 105,329,166
<CAPTION>
CONVERTIBLE PREFERRED-- 14.2%
<S> <C> <C>
ENERGY-- 2.2%
50,000 Unocal Corp.
6.25% 144A...................... 2,887,500
UTILITIES-- ELECTRIC-- 2.3%
50,000 AES Trust I
Series A 5.375% TECONS.......... 2,943,750
UTILITIES-- GAS-- 2.9%
70,000 MCN Financing III
8% PRIDES....................... 3,806,250
UTILITIES-- TELEPHONE-- 6.8%
125,000 AirTouch Communications, Inc.
6.0%, Series B.................. 3,562,500
24,000 Compania de Inversiones en
Telecomunicaciones SA PRIDES*
(exchangeable for ADS's of
Telefonica de Argentina SA)
144A............................ 1,626,000
100,000 Sprint Corp. (SNG)
8.25%, DECS..................... 3,612,500
8,801,000
TOTAL CONVERTIBLE PREFERRED
(COST $17,017,190).............. 18,438,500
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
REPURCHASE AGREEMENT-- 1.3%
$1,635,331 Donaldson, Lufkin & Jenrette
Securities Corp., 5.9%, 7/1/97
(a)............................. 1,635,331
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS--
(COST $109,427,532)...... 96.7% 125,402,997
OTHER ASSETS AND
LIABILITIES-- NET........ 3.3 4,257,940
NET ASSETS................. 100.0% $129,660,937
</TABLE>
(a) Repurchase agreement is fully collateralized by U.S. Government and/or
agency obligations based on market prices on June 30, 1997.
PRIDES-- Preferred Redeemable Increased Dividend Equity Securities.
PRIDES*-- Provisionally Redeemable Income Debt Exchangeable for Stock.
TECONS-- Term Convertible Shares.
144A-- Rule 144A securities are restricted as to resale to qualified
institutional investors.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
17
<PAGE>
EVERGREEN
VALUE FUND
(Evergreen Cone Tree
logo appears here)
SCHEDULE OF INVESTMENTS
June 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
COMMON STOCKS-- 90.9%
AUTOMOTIVE EQUIPMENT &
MANUFACTURING-- 1.4%
626,500 Ford Motor Co................. $ 23,650,375
BANKS-- 15.4%
400,000 BankBoston Corp............... 28,825,000
380,000 Bankers Trust Corp............ 33,060,000
800,000 Central Fidelity Banks,
Inc......................... 28,400,000
95,000 Chase Manhattan Corp.......... 9,220,937
75,000 Citicorp...................... 9,042,188
675,000 CoreStates Financial Corp..... 36,281,250
450,000 First Chicago NBD Corp........ 27,225,000
367,500 First Security Corp........... 10,037,344
425,000 First Tennessee National
Corp........................ 20,400,000
405,000 NationsBank Corp.............. 26,122,500
230,000 SouthTrust Corp............... 9,516,250
240,000 Summit Bancorp................ 12,030,000
200,000 Union Planters Corp........... 10,375,000
260,535,469
BUSINESS EQUIPMENT &
SERVICES-- 1.9%
841,610 * Cabletron Systems, Inc........ 23,828,083
100,000 International Business
Machines Corp............... 9,018,750
32,846,833
CHEMICAL & AGRICULTURAL
PRODUCTS-- 1.9%
366,200 Dow Chemical Co............... 31,905,175
COMMUNICATION SYSTEMS &
SERVICES-- 0.9%
225,500 * Cisco Systems, Inc............ 15,136,688
CONSUMER PRODUCTS &
SERVICES-- 2.3%
888,300 Philip Morris Companies,
Inc......................... 39,418,313
DIVERSIFIED COMPANIES-- 9.0%
300,000 Fluor Corp.................... 16,556,250
808,200 Fortune Brands, Inc........... 30,155,962
1,000,000 Frontier Corp................. 19,937,500
673,200 General Electric Co........... 44,010,450
170,000 Loews Corp.................... 17,021,250
560,000 Tenneco, Inc.................. 25,305,000
152,986,412
<CAPTION>
COMMON STOCKS-- CONTINUED
<S> <C> <C>
ELECTRICAL EQUIPMENT &
SERVICES-- 7.3%
1,365,000 * ADT Ltd....................... $ 45,045,000
350,000 * Applied Materials, Inc........ 24,784,375
850,000 CINergy Corp.................. 29,590,625
463,900 Varian Associates, Inc........ 25,166,575
124,586,575
ENERGY-- 9.9%
1,027,500 Cabot Corp.................... 29,155,312
247,600 Mobil Corp.................... 17,301,050
637,500 Sonat, Inc.................... 32,671,875
154,800 Texaco, Inc................... 16,834,500
1,350,000 Tosco Corp.................... 40,415,625
700,000 Union Pacific Resource Group,
Inc......................... 17,412,500
360,000 Unocal Corp................... 13,972,500
167,763,362
FINANCE & INSURANCE-- 2.7%
300,000 Hartford Financial Services
Group, Inc. (The)........... 24,825,000
525,000 Travelers Property Casualty
Corp. Cl. A................. 20,934,375
45,759,375
FOOD & BEVERAGE PRODUCTS-- 6.1%
740,750 American Stores Co............ 36,574,531
808,200 Gallaher Group Plc............ 14,901,188
644,400 General Mills, Inc............ 41,966,550
1,602,475 * Shoney's Inc.................. 9,514,695
102,956,964
HEALTHCARE PRODUCTS &
SERVICES-- 7.9%
555,800 Bristol-Myers Squibb Co....... 45,019,800
790,300 Pharmacia & Upjohn, Inc....... 27,462,925
1,349,999 * Tenet Healthcare Corp......... 39,909,345
1,100,800 * Value Health, Inc............. 22,291,200
134,683,270
</TABLE>
(CONTINUED)
18
<PAGE>
EVERGREEN
VALUE FUND
(Evergreen Cone Tree
logo appears here)
SCHEDULE OF INVESTMENTS (CONTINUED)
June 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C>
COMMON STOCKS-- CONTINUED
INDUSTRIAL SPECIALTY PRODUCTS &
SERVICES-- 1.0%
229,600 Aluminum Co. of America....... $ 17,306,100
INFORMATION SERVICES &
TECHNOLOGY-- 1.0%
120,400 Intel Corp.................... 17,074,225
MANUFACTURING--
DISTRIBUTING-- 1.2%
500,000 * Teradyne, Inc................. 19,625,000
OIL-- 6.8%
342,900 Ashland Inc................... 15,901,988
200,000 Enron Corp.................... 8,162,500
370,000 Kerr-McGee Corp............... 23,448,750
965,000 Ultramar Diamond Shamrock
Corp........................ 31,483,125
841,350 Williams Companies., Inc.
(The)....................... 36,809,062
115,805,425
TELECOMMUNICATION SERVICES &
EQUIPMENT-- 2.8%
646,600 Nokia Corp.................... 47,686,750
TRANSPORTATION-- 3.3%
262,100 Burlington Northern Santa Fe.. 23,556,238
322,900 Norfolk Southern Corp......... 32,532,175
56,088,413
UTILITIES-- 8.1%
500,000 CMS Energy Corp............... 17,625,000
700,000 GPU, Inc...................... 25,112,500
683,200 GTE Corp...................... 29,975,400
637,800 Houston Industries., Inc...... 13,672,837
1,200,000 Illinova Corp................. 26,400,000
671,800 NICOR Inc..................... 24,100,825
136,886,562
TOTAL COMMON STOCKS
(COST $1,186,928,103)....... 1,542,701,286
<CAPTION>
CONVERTIBLE PREFERRED-- 1.7%
<S> <C> <C>
ENERGY-- 0.8%
227,664 Unocal Corp.
6.25%, 144A................. $ 13,147,596
MANUFACTURING-- DISTRIBUTING-- 0.9%
98,200 Case Corp.
4.50%, Series A, 144A....... 15,491,050
TOTAL CONVERTIBLE PREFERRED
(COST $24,199,251).......... 28,638,646
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
REPURCHASE AGREEMENT-- 7.9%
$133,290,921 Donaldson, Lufkin & Jenrette
Securities Corp.,
5.9%, 7/1/97 (a)............ 133,290,921
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(COST
$1,344,041,623)...... 100.5% 1,704,630,853
OTHER ASSETS AND
LIABILITIES-- NET.... (0.5) (7,696,174)
NET ASSETS............. 100.0% $1,696,934,679
</TABLE>
* Non-income producing securities.
(a) Repurchase agreement is fully collateralized by U.S. Government and/or
agency obligations based on market prices at June 30, 1997.
144A-- Rule 144A securities are restricted as to resale to qualified
institutional investors.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
19
<PAGE>
EVERGREEN KEYSTONE
(Cone logo appears here)
STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED)
June 30, 1997
<TABLE>
<CAPTION>
(G&I Tree logo) (Maple leaf logo) (Light Bulb Tree logo) (Tree logo)
GROWTH & SMALL CAP
INCOME EQUITY INCOME UTILITY VALUE
FUND FUND FUND FUND
<S> <C> <C> <C> <C>
ASSETS
Investments at value (identified cost-- $915,375,011,
$42,161,168, $109,427,532, and $1,344,041,623,
respectively)....................................... $1,216,662,541 $47,332,132 $125,402,997 $1,704,630,853
Cash.................................................. 324,393 49,941 3,455 0
Receivable for investments sold....................... 0 0 3,955,235 0
Receivable for Fund shares sold....................... 7,435,848 954,850 2,624 1,661,469
Dividends and interest receivable..................... 680,348 164,475 526,937 3,138,459
Unamortized organization expense...................... 0 8,688 0 0
Prepaid expenses...................................... 60,289 27,429 40,833 34,423
Total assets...................................... 1,225,163,419 48,537,515 129,932,081 1,709,465,204
LIABILITIES
Payable for investments purchased..................... 3,483,168 556,348 0 0
Payable for Fund shares repurchased................... 1,699,965 889 164,667 11,227,141
Advisory & administration fees payable................ 916,903 55,199 37,075 748,106
Distribution fee payable.............................. 340,468 4,427 33,063 184,945
Due to affiliates..................................... 53,109 6,177 11,691 90,024
Accrued expenses and other liabilities................ 226,795 25,960 24,648 280,309
Total liabilities................................. 6,720,408 649,000 271,144 12,530,525
NET ASSETS.............................................. $1,218,443,011 $47,888,515 $129,660,937 $1,696,934,679
NET ASSETS REPRESENTED BY
Paid-in capital....................................... $ 900,152,200 $41,895,691 $103,679,513 $1,278,697,944
Undistributed net investment income (accumulated
distributions in excess of net investment income)... (494,577) 14,548 205,350 (28,950)
Accumulated undistributed net realized gains on
investments......................................... 17,497,858 807,312 9,800,609 57,676,455
Net unrealized appreciation on investments............ 301,287,530 5,170,964 15,975,465 360,589,230
Total net assets.................................. $1,218,443,011 $47,888,515 $129,660,937 $1,696,934,679
NET ASSETS CONSISTS OF
Class A............................................... $ 148,641,486 $ 2,747,400 $ 91,466,785 $ 365,388,180
Class B............................................... 481,092,038 5,659,128 36,298,940 254,154,156
Class C............................................... 20,816,905 1,850,765 366,678 2,306,053
Class Y............................................... 567,892,582 37,631,222 1,528,534 1,075,086,290
Total net assets $1,218,443,011 $47,888,515 $129,660,937 $1,696,934,679
SHARES OUTSTANDING
Class A............................................... 5,762,046 184,219 8,139,650 15,878,306
Class B............................................... 18,749,737 380,353 3,230,704 11,042,063
Class C............................................... 811,224 124,479 32,635 100,266
Class Y............................................... 21,993,331 2,520,558 136,044 46,725,299
NET ASSET VALUE PER SHARE
Class A............................................... $ 25.80 $ 14.91 $ 11.24 $ 23.01
Class A-- Offering price (based on maximum initial sales
charge of 4.75%).................................... $ 27.09 $ 15.65 $ 11.80 $ 24.16
Class B............................................... $ 25.66 $ 14.88 $ 11.24 $ 23.02
Class C............................................... $ 25.66 $ 14.87 $ 11.24 $ 23.00
Class Y............................................... $ 25.82 $ 14.93 $ 11.24 $ 23.01
</TABLE>
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
20
<PAGE>
EVERGREEN KEYSTONE
(Cone logo appears here)
STATEMENTS OF OPERATIONS (UNAUDITED)
June 30, 1997
<TABLE>
<CAPTION>
(G&I Tree logo) (Maple leaf logo) (Light Bulb Tree logo) (Tree logo)
GROWTH & SMALL CAP
INCOME EQUITY INCOME UTILITY VALUE
FUND FUND FUND FUND
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Interest................................................... $ 5,435,349 $ 171,441 $ 241,621 $ 2,744,008
Dividends (net foreign withholding taxes of $2,188, $0,
$13,865, and $66,594, respectively)...................... 4,458,640 407,213 2,948,263 17,960,916
TOTAL INCOME................................................. 9,893,989 578,654 3,189,884 20,704,924
EXPENSES
Management fee............................................. 4,720,408 134,545 327,301 4,005,187
Distribution Plan expenses................................. 1,954,883 13,750 254,008 1,550,846
Transfer agent fees........................................ 717,809 17,131 89,297 518,987
Administration fees........................................ 0 0 24,649 300,719
Trustees fees.............................................. 4,702 2,525 1,346 17,628
Custodian fees............................................. 123,477 22,786 59,067 212,594
Professional fees.......................................... 16,448 13,407 13,727 28,729
Printing................................................... 203,647 4,715 42,412 157,451
Registration fees.......................................... 112,949 33,372 34,255 57,300
Amortization of organization expenses...................... 0 2,841 13,764 0
Other...................................................... 15,574 4,070 55,667 24,622
Total expenses......................................... 7,869,897 249,142 915,493 6,874,063
Less: Indirectly paid expenses............................. (2,717) (1,089) (8,049) (1,012)
Fee waiver and/or expense reimbursement from Investment
Adviser 0 (53,123) (125,650) 0
Net expenses........................................... 7,867,180 194,930 781,794 6,873,051
NET INVESTMENT INCOME...................................... 2,026,809 383,724 2,408,090 13,831,873
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investments........................... 17,542,203 767,649 9,823,916 58,756,371
Net change in unrealized appreciation on investments....... 123,944,285 3,665,972 (2,001,991) 122,323,851
Net realized and unrealized gain on investments............ 141,486,488 4,433,621 7,821,925 181,080,222
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS....... $143,513,297 $ 4,817,345 $10,230,015 $194,912,095
</TABLE>
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
21
<PAGE>
EVERGREEN KEYSTONE
(Cone logo appears here)
STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)
June 30, 1997
<TABLE>
<CAPTION>
(G&I Tree logo) (Maple leaf logo) (Light Bulb Tree logo) (Tree logo)
GROWTH & SMALL CAP
INCOME EQUITY INCOME UTILITY VALUE
FUND FUND FUND FUND
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income................................. $ 2,026,809 $ 383,724 $ 2,408,090 $ 13,831,873
Net realized gain on investments...................... 17,542,203 767,649 9,823,916 58,756,371
Net change in unrealized appreciation on investments.. 123,944,285 3,665,972 (2,001,991) 122,323,851
Net increase in net assets resulting from
operations........................................ 143,513,297 4,817,345 10,230,015 194,912,095
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income:
Class A............................................. (288,051) (12,419) (1,723,113) (2,937,615)
Class B............................................. 0 (19,871) (540,103) (1,096,350)
Class C............................................. 0 (7,739) (5,334) (9,112)
Class Y............................................. (1,738,758) (332,480) (34,907) (10,081,209)
In excess of net investment income:
Class A............................................. (69,425) 0 0 (6,021)
Class B............................................. 0 0 0 (2,247)
Class C............................................. 0 0 0 (19)
Class Y............................................. (419,065) 0 0 (20,663)
From net realized gain on investments:
Class A............................................. 0 0 0 0
Class B............................................. 0 0 0 0
Class C............................................. 0 0 0 0
Class Y............................................. 0 0 0 0
In excess of net realized gain in investments:
Class A............................................. 0 0 0 0
Class B............................................. 0 0 0 0
Class C............................................. 0 0 0 0
Class Y............................................. 0 0 0 0
Total distributions to shareholders................. (2,515,299) (372,509) (2,303,457) (14,153,236)
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold:
Class A............................................. 59,141,605 2,264,755 311,194 16,853,741
Class B............................................. 199,540,153 4,649,918 1,093,985 43,576,272
Class C............................................. 10,056,102 1,697,907 3,626 938,841
Class Y............................................. 117,720,982 25,830,781 166,182 120,908,248
Payment for shares redeemed:
Class A............................................. (12,202,690) (36,455) (12,132,503) (20,989,217)
Class B............................................. (15,431,784) (63,548) (5,976,780) (13,179,109)
Class C............................................. (1,047,360) (69,243) (60,342) (314,200)
Class Y............................................. (63,775,238) (711,202) (755,193) (165,526,691)
Net asset value of shares issued in reinvestment of
distributions:
Class A............................................. 352,217 12,209 1,419,684 2,835,381
Class B............................................. 0 19,444 492,000 1,086,555
Class C............................................. 0 7,415 4,963 9,201
Class Y............................................. 1,639,664 165,502 18,010 6,740,167
Net increase (decrease) in net assets resulting from
capital share transactions........................ 295,993,651 33,767,483 (15,415,174) (7,060,811)
Total increase (decrease) in net assets........... 436,991,649 38,212,319 (7,488,616) 173,698,048
NET ASSETS
Beginning of period................................... 781,451,362 9,676,196 137,149,553 1,523,236,631
END OF PERIOD......................................... $1,218,443,011 $47,888,515 $129,660,937 $1,696,934,679
Undistributed (accumulated distributions in excess of) net
investment income..................................... $ (494,577) $ 14,548 $ 205,350 $ (28,950)
</TABLE>
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
22
<PAGE>
EVERGREEN KEYSTONE
(Cone logo appears here)
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended December 31, 1996
<TABLE>
<CAPTION>
(G&I Tree logo) (Maple leaf logo) (Light Bulb Tree logo) (Tree logo)
GROWTH & SMALL CAP
INCOME EQUITY INCOME UTILITY VALUE
FUND FUND FUND FUND
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income................................... $ 3,525,699 $ 207,498 $ 5,338,113 $ 25,598,949
Net realized gain on investments........................ 11,660,346 329,191 3,459,558 216,135,176
Net change in unrealized appreciation (depreciation)
on investments........................................ 102,653,116 833,605 (3,509,310) 11,014,356
Net increase in net assets resulting from operations.. 117,839,161 1,370,294 5,288,361 252,748,481
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income:
Class A............................................... (346,965) (7,618) (3,887,411) (5,758,586)
Class B............................................... (65,442) (9,798) (1,173,301) (1,939,188)
Class C............................................... (2,714) (710) (11,835) (14,165)
Class Y............................................... (3,093,315) (186,039) (229,804) (19,538,457)
In excess of net investment income:
Class A............................................... (602) 0 0 0
Class B............................................... (114) 0 0 0
Class C............................................... (5) 0 0 0
Class Y............................................... (5,366) 0 0 0
From net realized gain on investment:
Class A............................................... (1,255,570) (12,475) (2,465,668) (45,832,278)
Class B............................................... (3,652,416) (27,933) (979,858) (27,532,324)
Class C............................................... (141,822) (1,936) (10,055) (204,292)
Class Y............................................... (6,629,223) (279,606) (53,192) (141,841,285)
In excess of net realized gain in investment:
Class A............................................... (4,767) 0 (16,378) (229,771)
Class B............................................... (13,868) 0 (6,509) (138,028)
Class C............................................... (538) 0 (67) (1,024)
Class Y............................................... (25,172) 0 (353) (711,093)
Total distributions to shareholders................... (15,237,899) (526,115) (8,834,431) (243,740,491)
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold:
Class A............................................... 76,959,622 285,774 2,626,118 23,895,251
Class B............................................... 185,314,202 341,494 8,401,385 47,442,303
Class C............................................... 7,294,757 48,265 274,673 832,827
Class Y............................................... 200,509,060 3,628,792 1,120,499 324,801,783
Payment for shares redeemed:
Class A............................................... (21,729,967) (213,193) (16,984,094) (39,736,035)
Class B............................................... (13,411,376) (11,697) (6,652,890) (18,943,891)
Class C............................................... (597,615) (22,125) (135,909) (377,207)
Class Y............................................... (135,786,868) (912,038) (6,607,014) (316,060,052)
Net asset value of shares issued in reinvestment of
distributions:
Class A............................................... 1,546,893 19,575 5,051,093 49,562,452
Class B............................................... 3,613,927 36,358 1,935,353 28,693,188
Class C............................................... 115,108 1,697 20,723 215,421
Class Y............................................... 7,729,161 316,899 74,971 108,890,530
Shares issued in acquistion of FFB Lexicon Capital
Appreciation Fund
Class Y............................................... 159,432,723 0 0 0
Shares issued in acquistion of FFB Lexicon Selct Value Fund
Class Y............................................... 0 0 0 95,883,824
Shares issued in acquistion of FFB Lexicon Equity Fund
Class Y............................................... 0 0 0 14,077,973
Net increase (decrease) in net assets resulting from
capital share transactions.......................... 470,989,627 3,519,801 (10,875,092) 319,178,367
Total increase (decrease) in net assets............. 573,590,889 4,363,980 (14,421,162) 328,186,357
NET ASSETS
Beginning of period..................................... 207,860,473 5,312,216 151,570,715 1,195,050,274
END OF PERIOD........................................... $781,451,362 $ 9,676,196 $137,149,553 $1,523,236,631
Undistributed (accumulated distributions in excess of) net
investment income....................................... $ (6,087) $ 3,333 $ 100,717 $ 292,413
</TABLE>
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
23
<PAGE>
EVERGREEN KEYSTONE
(Cone logo appears here)
COMBINED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. ORGANIZATION AND NATURE OF ORGANIZATIONS
The Evergreen Keystone Growth and Income Funds (the "Funds") consist of
Evergreen Growth and Income Fund ("Growth and Income"), Evergreen Small Cap
Equity Income Fund ("Small Cap"), Evergreen Utility Fund ("Utility") and
Evergreen Value Fund ("Value") each of which is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as diversified, open-end
investment companies. Growth and Income is a Massachusetts business trust
organized in 1986. Small Cap is a separate series of the Evergreen American
Retirement Trust, a Massachusetts business trust organized in 1987. Utility and
Value are separate series of the Evergreen Investment Trust (formerly the First
Union Funds) a Massachusetts business trust organized in 1984.
Evergreen Asset Management Corp. ("Evergreen Asset"), a wholly owned subsidiary
of First Union National Bank of North Carolina, is the Investment Adviser for
Growth & Income and Small Cap. First Union is the Investment Adviser for Utility
and Value. Each Fund offers Class A, Class B, Class C and Class Y shares. Class
A shares are offered at a public offering price which includes a maximum sales
charge of 4.75% payable at the time of purchase. Class B shares are sold subject
to a contingent deferred sales charge that is payable upon redemption and
decreases depending on how long the shares have been held. Class C shares are
sold subject to a contingent deferred sales charge payable on shares redeemed
within one year after the month of purchase. Class Y shares are available
without a front-end sales charge or contingent deferred sales charge only to
investment advisory clients of First Union Corp. and its affiliates, certain
institutional investors or Class Y shareholders of record of certain other funds
managed by First Union Corp. and its affiliates as of December 30, 1994.
2. ACQUISITION INFORMATION
Effective January 1, 1996, First Fidelity Bancorporation ("First Fidelity")
merged with First Union National Carolina ("First Union"). Effective on the
close of business on January 19, 1996, Growth and Income acquired substantially
all of the net assets of FFB Lexicon Capital Appreciation Fund, an open-end
investment company registered under the Act valued at $159,432,723. The net
assets were exchanged through a non-taxable exchange for 8,631,861 Class Y
shares of Growth and Income valued at $18.47 per share. The acquired net assets
consisted primarily of portfolio securities with unrealized appreciation of
$31,537,903. The aggregate net assets of Growth and Income upon the acquisition
were $375,936,243.
Effective on the close of business on January 19, 1996, Value acquired
substantially all the net assets of FFB Lexicon Select Value Fund and FFB Equity
Fund, open-end investment companies registered under the Act valued at
$95,883,824 and $14,077,973, respectively. The net assets of these Funds were
exchanged through a non-taxable exchange for 4,720,676 and 692,924 Class Y
shares of Value at $20.31 per share. The acquired net assets consisted primarily
of portfolio securities with unrealized appreciation of $12,858,729 and
$2,218,691, respectively. The aggregate net assets of Value upon acquisitions
were $1,310,431,335.
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. Although actual results could differ from these estimates, any
such differences are expected to be immaterial to the net assets of the Funds.
A. VALUATION OF SECURITIES
Investments in securities traded on a national securities exchange or included
on the NASDAQ National Market System ("NMS") are valued at the last reported
sales price. Securities traded on an exchange or NMS for which there has been no
sale and other securities traded in the over-the-counter market are valued at
the mean between the last reported bid and asked price. Debt securities (other
than short term securities) are valued at prices provided by an independent
pricing service. Securities for which market quotations are not available from
an independent pricing service (including restricted securities) are valued at
fair value as determined in good faith according to procedures approved 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 interest. Each Fund will only enter into repurchase agreements with
banks and other financial institutions which are deemed by the investment
adviser to be creditworthy pursuant to guidelines established by the Board of
Trustees.
24
<PAGE>
EVERGREEN KEYSTONE
(Cone logo appears here)
COMBINED NOTES TO FINANCIAL STATEMENTS (CONTINUED)
C. FOREIGN CURRENCY
The books and records of the Funds are maintained in United States (U.S.)
dollars. Foreign currency amounts are translated into U.S. dollars as follows:
market value of investments, assets and liabilities at the daily rate of
exchange; purchases and sales of investments, income and expenses at the rate of
exchange prevailing on the respective dates of such transactions. Net unrealized
foreign exchange gain (loss) resulting from changes in foreign currency exchange
rates is a component of net unrealized appreciation (depreciation) on
investments and foreign currency related transactions. Net realized foreign
currency gains and losses resulting from changes in exchange rates include
foreign currency gains and losses between trade date and settlement date on
investment securities transactions and foreign currency related transactions.
Foreign currency gains and losses from the difference between the amounts of
interest and dividends recorded on the books of the Fund and the amount actually
received are included in dividend and interest income. The portion of foreign
currency gains and losses related to fluctuations in exchange rates between the
initial purchase trade date and subsequent sale trade date is included in
realized gain (loss) on investments.
D. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
The Funds may enter into forward foreign currency exchange contracts ("forward
contracts") to settle portfolio purchases and sales of securities denominated in
a foreign currency and to hedge certain foreign currency assets or liabilities.
Forward contracts are recorded at the forward rate and marked-to-market daily.
Realized gains and losses arising from such transactions are included in net
realized gain (loss) on foreign currency related transactions. The Fund bears
the risk of an unfavorable change in the foreign currency exchange rate
underlying the forward contract and is subject to the credit risk that the other
party will not fulfill their obligations under the contract. Forward contracts
involve elements of market risk in excess of the amount reflected in the
statement of assets and liabilities.
E. 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
amortization of discounts and accretion of premiums. Dividend income is recorded
on the ex-dividend date.
F. FEDERAL INCOME TAXES
The Funds have qualified and intend to qualify in the future as regulated
investment companies under the Internal Revenue Code of 1986, as amended (the
"Code"). Thus, the Funds are relieved of any federal income tax liability by
distributing all of their net taxable investment income and net taxable capital
gains, if any, to their shareholders. The Funds also intend to avoid excise tax
liability by making the required distributions under the Code. Accordingly, no
provision for federal income 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.
G. DISTRIBUTIONS
Distributions from net investment income for the Funds are declared and paid
quarterly. Distributions from net realized capital gains, if any, are paid at
least annually. Distributions to shareholders are recorded at the close of
business on the ex-dividend date.
Income and capital gains distributions to shareholders are determined in
accordance with income tax regulations, which may differ from generally accepted
accounting principles. The tax treatment of such distributions for the calendar
year will be reported to shareholders prior to February 1, 1998.
H. CLASS DESCRIPTIONS & 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 each class.
I. ORGANIZATION EXPENSES
Organization expenses are amortized to operations over a five-year period on a
straight-line basis. In the event any of the initial shares of the Funds are
redeemed by First Union Corp. during the five-year amortization period,
redemption proceeds will be reduced by any unamortized organization expenses in
the same proportion as the number of initial shares being redeemed bears to the
number of initial shares outstanding at the time of the redemption.
2. CAPITAL SHARE TRANSACTIONS
The Funds have an unlimited number of shares of beneficial interest authorized.
The shares are divided into classes which are designated Class A, Class B, Class
C and Class Y shares. The classes have identical voting, dividend, liquidation
and other rights, except that Class A, Class B and Class C shares bear
distribution expenses and have exclusive voting rights with respect to their
distribution plans. Transactions in shares of the Funds were as follows:
25
<PAGE>
EVERGREEN KEYSTONE
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COMBINED NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
GROWTH AND INCOME
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1997 DECEMBER 31, 1996
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
CLASS A
Shares sold.......................................................... 2,500,896 $ 59,141,605 3,719,917 $ 76,959,622
Shares issued on reinvestment of distributions....................... 14,527 352,217 69,271 1,546,893
Shares redeemed...................................................... (517,994) (12,202,690) (1,044,500) (21,729,967)
Net increase......................................................... 1,997,429 $ 47,291,132 2,744,688 $ 56,776,548
CLASS B
Shares sold.......................................................... 8,490,566 $199,540,153 8,914,571 $185,314,202
Shares issued on reinvestment of distributions....................... 0 0 160,953 3,613,927
Shares redeemed...................................................... (656,203) (15,431,784) (646,461) (13,411,376)
Net increase......................................................... 7,834,363 $184,108,369 8,429,063 $175,516,753
CLASS C
Shares sold.......................................................... 427,163 $ 10,056,102 348,918 $ 7,294,757
Shares issued on reinvestment of distributions....................... -- -- 5,130 115,108
Shares redeemed...................................................... (44,428) (1,047,360) (29,065) (597,615)
Net increase......................................................... 382,735 $ 9,008,742 324,983 $ 6,812,250
CLASS Y
Shares sold.......................................................... 5,028,131 $117,720,982 9,899,164 $200,509,060
Shares issued in acquisition of FFB Lexicon Capital Appreciation
Fund............................................................... -- -- 8,631,861 159,432,723
Shares issued on reinvestment of distributions....................... 67,503 1,639,664 349,251 7,729,161
Shares redeemed...................................................... (2,710,344) (63,775,238) (6,820,349) (135,786,868)
Net increase......................................................... 2,385,290 55,585,408 12,059,927 231,884,076
Total net increase resulting from Fund share transactions............ 12,599,817 $295,993,651 23,558,661 $470,989,627
</TABLE>
SMALL CAP
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1997 DECEMBER 31, 1996
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
CLASS A
Shares sold.................................................................. 160,273 $ 2,264,755 23,318 $ 285,774
Shares issued on reinvestment of distributions............................... 854 12,209 1,564 19,575
Shares redeemed.............................................................. (2,565) (36,455) (17,926) (213,193)
Net increase................................................................. 158,562 $ 2,240,509 6,956 $ 92,156
CLASS B
Shares sold.................................................................. 330,749 $ 4,649,918 27,963 $ 341,494
Shares issued on reinvestment of distributions............................... 1,365 19,444 2,883 36,358
Shares redeemed.............................................................. (4,618) (63,548) (966) (11,697)
Net increase................................................................. 327,496 $ 4,605,814 29,880 $ 366,155
CLASS C
Shares sold.................................................................. 124,589 $ 1,697,907 3,956 $ 48,265
Shares issued on reinvestment of distributions............................... 521 7,415 136 1,697
Shares redeemed.............................................................. (4,929) (69,243) (1,838) (22,125)
Net increase................................................................. 120,181 $ 1,636,079 2,254 $ 27,837
CLASS Y
Shares sold.................................................................. 1,905,879 $25,830,781 289,906 $3,628,792
Shares issued on reinvestment of distributions............................... 11,719 165,502 25,358 316,899
Shares redeemed.............................................................. (51,916) (711,202) (75,598) (912,038)
Net increase................................................................. 1,865,682 25,285,081 239,666 3,033,653
Total net increase resulting from Fund share transactions.................... 2,471,921 $33,767,483 278,756 $3,519,801
</TABLE>
26
<PAGE>
EVERGREEN KEYSTONE
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COMBINED NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
UTILITY
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1997 DECEMBER 31, 1996
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
CLASS A
Shares sold............................................................ 34,278 $ 311,194 246,512 $ 2,626,118
Shares issued on reinvestment of distributions......................... 125,700 1,419 684 478,287 5,051,093
Shares redeemed........................................................ (1,123,877) (12,132,503) (1,609,448) (16,984,094)
Net decrease........................................................... (963,899) $(10,401,625) (884,649) $ (9,306,883)
CLASS B
Shares sold............................................................ 102,182 $ 1,093,985 787,800 $ 8,401,385
Shares issued on reinvestment of distributions......................... 44,548 492,000 183,056 1,935,353
Shares redeemed........................................................ (556,061) (5,976,780) (630,402) (6,652,890)
Net increase (decrease)................................................ (409,331) $ (4,390,795) 340,454 $ 3,683,848
CLASS C
Shares sold............................................................ 344 $ 3,626 25,812 $ 274,673
Shares issued on reinvestment of distributions......................... 453 4,963 1,963 20,723
Shares redeemed........................................................ (5,569) (60,342) (13,100) (135,909)
Net increase (decrease)................................................ (4,772) $ (51,753) 14,675 $ 159,487
CLASS Y
Shares sold............................................................ 15,690 $ 166,182 106,165 $ 1,120,499
Shares issued on reinvestment of distributions......................... 1,384 18,010 7,089 74,971
Shares redeemed........................................................ (70,043) (755,193) (644,560) (6,607,014)
Net decrease........................................................... (52,969) (571,001) (531,306) (5,411,544)
Total net decrease resulting from Fund share transactions.............. (1,430,971) $(15,415,174) (1,060,826) $(10,875,092)
</TABLE>
VALUE
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1997 DECEMBER 31, 1996
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
CLASS A
Shares sold......................................................... 777,037 $ 16,853,741 1,109,850 $ 23,895,251
Shares issued on reinvestment of distributions...................... 127,037 2,835,381 2,371,895 49,562,452
Shares redeemed..................................................... (969,713) (20,989,217) (1,836,296) (39,736,035)
Net increase (decrease)............................................. (65,639) $ (1,300,095) 1,645,449 $ 33,721,668
CLASS B
Shares sold......................................................... 2,008,070 $ 43,576,272 2,197,426 $ 47,442,303
Shares issued on reinvestment of distributions...................... 48,526 1,086 555 1,374,236 28,693,188
Shares redeemed..................................................... (609,175) (13,179,109) (873,740) (18,943,891)
Net increase........................................................ 1,447,421 $ 31,483,718 2,697,922 $ 57,191,600
CLASS C
Shares sold......................................................... 43,467 $ 938,841 38,761 $ 832,827
Shares issued on reinvestment of distributions...................... 410 9,201 10,328 215,421
Shares redeemed..................................................... (14,552) (314,200) (17,818) (377,207)
Net increase........................................................ 29,325 $ 633,842 31,271 $ 671,041
CLASS Y
Shares sold......................................................... 5,578,856 $ 120,908,248 15,195,754 $ 324,801,783
Shares issued in acquisition of FFB Lexicon Select Value Fund....... -- -- 4,720,676 95,883,824
Shares issued in acquisition of FFB Equity Fund..................... -- -- 692,924 14,077,973
Shares issued on reinvestment of distributions...................... 302,051 6,740,167 5,208,388 108,890,530
Shares redeemed..................................................... (7,591,137) (165,526,691) (14,584,293) (316,060,052)
Net increase (decrease)............................................. (1,710,230) (37,878,276) 11,233,449 227,594,058
Total net increase (decrease) resulting from Fund share
transactions...................................................... (299,123) $ (7,060,811) 15,608,091 $ 319,178,367
</TABLE>
27
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EVERGREEN KEYSTONE
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COMBINED NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of investment securities (excluding
short-term securities) were as follows for the six months ended June 30, 1997:
<TABLE>
<CAPTION>
COST OF PROCEEDS
PURCHASES FROM SALES
<S> <C> <C>
Growth and Income....................................................... $200,992,027 $ 33,318,259
Small Cap............................................................... 32,832,723 2,954,790
Utility................................................................. 54,865,860 75,307,264
Value................................................................... 87,747,842 159,700,282
</TABLE>
4. DISTRIBUTION PLANS
Each Fund bears some of the costs of selling its shares under Distribution Plans
adopted for its Class A, B and C shares pursuant to Rule 12b-1 under the 1940
Act. Under the Distribution Plans, each Fund pays its principal underwriter
amounts which are calculated and paid monthly.
The Fund's have entered into distribution agreements with Evergreen Keystone
Distributor, Inc. ("EKD"), a wholly-owned subsidiary of The BISYS Group Inc.
("BISYS").
The Class A Distribution Plan of the Funds provides for expenditures, which are
currently limited to 0.25% annually of the average daily net assets of the Class
A shares, to pay expenses related to the distribution of Class A shares.
Pursuant to each Fund's Class B and Class C Distribution Plans, each Fund pays a
distribution fee which may not exceed 1.00% annually of the average daily net
assets of Class B and Class C shares, respectively. Of that amount, 0.75% is
used to pay distribution expenses and 0.25% is used to pay service fees. EKD has
entered into a Shareholder Services Agreement with First Union Brokerage
Services ("FUBS"), an affiliate of First Union, whereby it will compensate FUBS
for certain services provided to shareholders and /or maintenance of shareholder
accounts relating to each of the Class B and Class C Shares of Growth and Income
and Small Cap.
During the six months ended June 30, 1997, amounts paid to EKD pursuant to each
Fund's Class A, Class B and Class C Distribution Plans were as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
<S> <C> <C> <C>
Growth and Income........................... $141,839 $1,740,111 $72,933
Small Cap................................... 1,013 9,018 3,719
Utility..................................... 181,270 72,032 706
Value....................................... 429,529 1,112,429 8,888
</TABLE>
EKD has advised the Funds that it has retained the following amounts from
front-end sales charges resulting from the sales of Class A shares during the
six months ended June 30, 1997 of $51,131, $1,272, $4,448 and $45,617 for Growth
and Income, Small Cap, Utility and Value, respectively.
Contingent deferred sales charges paid by redeeming shareholders are paid to
EKD.
5. INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT AND OTHER AFFILIATED
TRANSACTIONS
INVESTMENT ADVISORY AGREEMENTS-- First Union is entitled to an annual fee of .50
of 1% of Utility's and Value's average daily net assets pursuant to each Fund's
investment advisory agreement. First Union voluntarily waived $125,650 of its
fee for Utility for the six months ended June 30, 1997.
Pursuant to an agreement with Growth and Income's and Small Cap's investment
adviser, Evergreen Asset Management Corp. ("Evergreen Asset"), a wholly owned
subsidiary of First Union, Evergreen Asset is entitled to an annual fee based on
each of Growth and Income's and Small Cap's average daily net assets,
respectively, in accordance with the following schedule:
<TABLE>
<S> <C>
First $750 million 1.00%
Next $250 million 0.90%
Over $1 billion 0.80%
</TABLE>
Evergreen Asset has agreed to reimburse Small Cap to the extent that the Fund's
operating expenses (including the investment advisory fee and amortization of
organizational expenses but excluding interest, taxes, brokerage commissions,
12b-1 distribution and shareholder services fees and extraordinary expenses)
exceed 1.50% of its average daily net assets. Evergreen Asset waived advisory
fee aggregating $53,123 for the six months ended June 30, 1997 pursuant to this
agreement. First Union and Evergreen Asset can modify or terminate voluntary
waivers at any time.
Lieber & Company, an affiliate of First Union, is the investment sub-adviser to
Growth and Income and Small Cap and also provides brokerage services with
respect to substantially all security transactions of these Funds effected on
the New York or American Stock Exchanges. For
28
<PAGE>
EVERGREEN KEYSTONE
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COMBINED NOTES TO FINANCIAL STATEMENTS (CONTINUED)
transactions executed during the six months ended June 30, 1997, Growth and
Income and Small Cap incurred brokerage commissions of $323,608 and $43,097,
respectively, with Lieber & Company. Lieber & Company is reimbursed by Evergreen
Asset, at no additional expense to the Funds, for its cost of providing
investment advisory services.
ADMINISTRATION AGREEMENT-- Evergreen Keystone Investment Services, Inc. (EKIS),
a subsidiary of First Union, furnishes Growth and Income and Small Cap with
administrative services as part of the investment advisory agreements between
the Funds and Evergreen Asset, and accordingly, these Funds do not pay a
separate administration fee. BISYS is each of the Fund's sub-administrator. As
sub-administrator, BISYS provides the officers of the Funds. For Growth and
Income and Small Cap, BISYS' fee was paid by Evergreen Asset and was not a fund
expense.
EKIS is also Utility's and Value's administrator and BISYS is sub-administrator.
EKIS's and BISYS' fees for Utility and Value were based on the average daily net
assets of all of the funds administered by Evergreen Asset for which either
First Union, or its investment advisory subsidiaries, is also the investment
adviser. These fees were calculated at the following annual rates:
<TABLE>
<S> <C>
ADMINISTRATION FEE AVERAGE DAILY NET ASSETS
0.050% on the first $7 billion
0.035% on the next $3 billion
0.030% on the next $5 billion
0.020% on the next $10 billion
0.015% on the next $5 billion
0.010% in excess of $30 billion
SUB-ADMINISTRATION FEE AVERAGE DAILY NET ASSETS
0.0100% on the first $7 billion
0.0075% on the next $3 billion
0.0050% on the next $15 billion
0.0040% in excess of $25 billion
</TABLE>
At June 30, 1997, assets for which Evergreen Asset was the administrator for
which either First Union, or its investment advisory subsidiaries was investment
adviser totaled approximately $30.0 billion.
OTHER SERVICES WITH AFFILIATES-- Evergreen Keystone Service Company ("EKSC"), a
wholly-owned subsidiary of Keystone Investment Management Company, a subsidiary
of First Union, serves as the transfer and dividend disbursing agent for the
Funds. Effective May 5, 1997, EKSC began providing transfer and dividend
disbursing agent services for the Funds that were formerly provided by State
Street Bank and Trust Company ("State Street"). For certain accounts in Growth
and Income and Value, First Union had been sub-contracted by EKSC and State
Street to maintain shareholder sub-account records, take fund purchase and
redemption orders and answer inquiries. For each account, First Union earned a
fee which in aggregate totaled $22,515 and $144,367 for Growth and Income and
Value during the six months ended June 30, 1997.
Officers of the Funds and affiliated Trustees receive no compensation directly
from the Funds.
6. 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.
7. DEFERRED TRUSTEES' FEES
Each Trustee may defer any or all compensation related to performance of duties
as a Trustee. Each Trustee's deferred balances are allocated to deferral
accounts which are included in the accrued expenses for the Fund. The investment
performance of the deferral accounts are based on the investment performance of
certain Evergreen Keystone Funds. Any gains earned or losses incurred in the
deferral accounts are reported in the Fund's Trustees's fees and expenses.
Trustees will be paid either in one lump sum or in quarterly installments for up
to ten years at their election, not earlier than either the year in which the
Trustee ceases to be a member of the Board of Trustees or January 1, 2000. As of
June 30, 1997, the value of the Trustees deferral accounts were $10,565, $6,041,
$5,566, and $54,678 for Growth and Income, Small Cap, Utility and Value.
8. FINANCING AGREEMENT
A financing agreement is in place with all of the Evergreen Funds and State
Street, Societe Generale and ABN Amro Bank N.V. (collectively, the "Banks").
Under this agreement, the Banks provide an unsecured credit facility in the
aggregate amount of $225 million ($112.5 million committed and $112.5 million
uncommitted) allocated evenly between the Banks. Borrowings under this facility
bear interest at 0.75% per annum above the Federal Funds rate. A commitment fee
of 0.10% per annum will be incurred on the unused portion of the committed
facility which would be allocated to all participating funds. State Street acts
as agent for the Banks, and as agent is entitled to a fee of $15,000 which is
allocated to all of the Evergreen Funds. During the six months ended June 30,
1997, the Funds had no borrowings under this agreement.
29
