<PAGE>
Evergreen
Balanced
Funds
1997 Annual Report
(Evergreen logo appears here)
Evergreen Funds (SM)
SINCE 1932
<PAGE>
(Photo of pine cones and
branches appears here)
EVERGREEN FUNDS
TABLE OF CONTENTS
<TABLE>
<S> <C>
Letter to Shareholders............................... 1
FUND AT A GLANCE
Evergreen American Retirement Fund................. 2
Evergreen Balanced Fund............................ 5
Evergreen Foundation Fund.......................... 8
Evergreen Tax Strategic Foundation Fund............ 11
FINANCIAL HIGHLIGHTS
Evergreen American Retirement Fund................. 14
Evergreen Balanced Fund............................ 17
Evergreen Foundation Fund.......................... 20
Evergreen Tax Strategic Foundation Fund............ 23
SCHEDULES OF INVESTMENTS
Evergreen American Retirement Fund................. 26
Evergreen Balanced Fund............................ 31
Evergreen Foundation Fund.......................... 34
Evergreen Tax Strategic Foundation Fund............ 40
Statements of Assets and Liabilities................. 46
Statements of Operations............................. 47
Statements of Changes in Net Assets.................. 48
Combined Notes to Financial Statements............... 51
</TABLE>
ABOUT EVERGREEN FUNDS
Evergreen Funds is one of the nation's fastest growing investment companies with
more than $33 billion in assets under management.
With 65 mutual funds to choose among and acclaimed service and operations
capabilities, investors enjoy a broader range of quality investment products and
services designed to meet their needs.
The Evergreen Funds employ intensive, research-driven investment strategies
executed by over 90 research analysts and portfolio managers. The fund company
remains dedicated to meeting the needs of investors and their advisors in a
global economy. Look to the Evergreen Funds to provide a distinctive level of
service and excellence in investment management.
<PAGE>
EVERGREEN FUNDS (Photo of pine cones and
branches appears here)
LETTER TO SHAREHOLDERS
November 1997
(Photo of William M. Ennis appears here)
WILLIAM M. ENNIS
Dear Shareholders:
We have good news to share with you in this report. The U.S. stock market
delivered exceptionally strong performance during the six months that ended on
September 30, 1997. Investors in the Evergreen Balanced Funds certainly had the
opportunity to participate in this pleasant experience without taking the full
risk of a pure stock fund investment. Riding a friendly, rising tide of moderate
growth and modest inflation, the stock market rose higher and higher, with the
steady ascent interrupted just briefly for pauses in the late winter and late
summer of 1997. It is important to keep these returns in perspective, however,
and not use the performance over the past six months as a basis for future
expectations.
MARKET CYCLES
History has shown that the markets move in cycles, and one year's performance
does not often indicate the following year's performance. History also has
taught us that over longer periods of time, the winning investment strategies
are those that have consistent disciplines and that remain faithful to those
disciplines, even during market slumps and corrections. Indeed, we witnessed a
significant market correction in late October, after the close of the fiscal
period.
At Evergreen Funds, we encourage you to remain focused on your long-term goals
and to remain disciplined in your personal investment strategies. No one can
confidently say whether next year's market or the following year's market will
be as rewarding as last year's market. We can say, however, that the most likely
winners in the long run are those who consistently follow long-term investment
strategies.
UPCOMING DEVELOPMENTS
In the next few weeks and months, shareholders of Evergreen and Keystone funds
will begin to notice some changes. The Evergreen Keystone Funds are becoming the
Evergreen Funds. On October 31, 1997, Keystone America Funds adopted the name of
Evergreen and in early 1998 the original Keystone Funds will take the Evergreen
name.
We believe that by putting all the funds under the umbrella name of Evergreen
Funds we will be creating a simpler and more cohesive image. Importantly, we
expect to create substantial cost savings for shareholders as a result of
consolidating prospectuses, annual reports, legal registrations and other
materials. It also will be easier for you to find all the funds of the Evergreen
Family, to which you have exchange privileges, under one heading in newspapers
and electronic services.
What will not change will be our commitment to provide you with the finest
investment products and shareholder services possible. If you should have any
questions about these changes or other issues affecting your investments, we
encourage you to consult your financial adviser or call Evergreen Funds at
1-800-343-2898.
Sincerely,
/s/ William M. Ennis
WILLIAM M. ENNIS
MANAGING DIRECTOR
1
<PAGE>
(Photo of eagle EVERGREEN
appears here) AMERICAN RETIREMENT FUND
FUND-AT-A-GLANCE
As of September 30, 1997
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS Y
INCEPTION DATE 1/3/95 1/3/95 1/3/95 3/14/88
<S> <C> <C> <C> <C>
1-YEAR PERFORMANCE
1 year w/o sales
charge 24.84% 23.84% 23.86% 25.06%
1 year w/sales charge 18.91% 18.84% 22.86% 25.06%
6 month dividends per
share $0.25 $0.19 $0.19 $0.27
6 month capital gains
per share $0.03 $0.03 $0.03 $0.03
AVERAGE ANNUAL RETURNS
3 years -- -- -- 17.60%
5 years -- -- -- 14.04%
Since Inception 18.41% 18.81% 19.62% 11.96%
CUMULATIVE RETURNS
3 years -- -- -- 62.63%
5 years -- -- -- 92.89%
Since Inception 59.02% 60.52% 63.54% 194.30%
</TABLE>
OBJECTIVE
Evergreen American Retirement Fund seeks to preserve capital while also earning
steady current income and achieving long-term captial growth.
STRATEGY
The Fund generally invests in a balanced mix of corporate bonds, U.S. Government
or agency obligations, dividend-paying stocks, preferred stocks and
convertibles. Generally, at least half of the bonds in the portfolio are U.S.
Government or agency securities. The remainder are upper-medium or high-quality
corporate bonds.
<TABLE>
<CAPTION>
PORTFOLIO CHARACTERISTICS
<S> <C>
Total Net Assets $184 million
Number of issues 196
Number of industries 26
Average Duration 2.28 years
</TABLE>
PORTFOLIO MANAGEMENT TEAM
Irene D. O'Neill and Natalie Kucharski
LONG-TERM GROWTH
(Chart appears here with the following plot points.)
Growth of an investment in
Evergreen American Retirement Fund, Class A
1/95 9/95 3/96 9/96 3/97 9/97
Dividend
Reinvestment 0 11362 12294 12740 13390 15902
Initial
Investment 9525 10998 11676 11908 12266 14310
A $10,000 investment in Evergreen American Retirement Fund, Class A made on
January 3, 1995 with all distributions reinvested was worth $15,902 on September
30, 1997. Past performance is no guarantee of future results. The performance of
each class may vary based on differences in loads and fees paid by the
shareholders investing in each class. The investment return and principal value
will fluctuate so that an investor's shares, when redeemed, may be worth more or
less than original cost.
<TABLE>
<CAPTION>
TOP 10 HOLDINGS AS A PERCENTAGE OF NET ASSETS
<S> <C>
EQUITY HOLDINGS:
Proffitt's, Inc. 1.1%
Corning, Inc.-- Conv. Preferred 6.00% MIPS 1.1%
Hardinge Brothers, Inc. 1.0%
WBK Strypes Trust-- Conv. Preferred 10% 11/15/00 1.0%
Tomkins Plc, ADR 1.0%
BOND HOLDINGS:
Federal National Mortgage Association 7.28% 5/23/07 1.7%
Federal Home Loan Bank 6.715% 4/9/03 1.6%
Federal Home Loan Bank 8.00% 1/10/12 1.6%
Federal Home Loan Mortgage Corp. 7.585% 9/19/06 1.1%
Federal Home Loan Mortgage Corp. 7.865% 8/8/11 1.1%
<CAPTION>
INDUSTRY ALLOCATION AS A PERCENTAGE OF NET ASSETS
<S> <C>
EQUITY HOLDINGS:
Banks 9.4%
Energy 5.8%
Finance & Insurance 5.6%
Utilities-- Electric 5.3%
Publishing, Broadcasting & Entertainment 4.1%
BOND HOLDINGS:
Government Agency Notes & Bonds 24.1%
Finance & Insurance 1.1%
Treasury Notes & Bonds 0.9%
Banks 0.6%
Telecommunications Services & Equipment 0.5%
</TABLE>
2
<PAGE>
EVERGREEN (Photo of eagle
AMERICAN RETIREMENT FUND appears here)
PORTFOLIO MANAGER INTERVIEW
(Photo of HOW DID THE FUND PERFORM OVER THE PAST SIX MONTHS?
Irene D. O'Neill
appears here)
We think the Fund performed very well. For the six month
period that ended on September 30, 1997, Class A Shares
IRENE D. O'NEILL had a total return of 18.77%, Class B Shares had a total
TENURE: MARCH 1988 return of 18.34%, Class C Shares had a total return of
18.30% and Class Y Shares had a total return of 18.92%. These returns are before
deduction of any sales charges, if applicable.
We think these were strong performance figures. The Fund has a conservative
objective: to preserve capital, produce income, and provide some growth.
ASSET ALLOCATION
AS A PERCENTAGE OF NET ASSETS
(Pie graph appears here with the following plot points.)
Convertible Debentures 10.0%
Convertible Preferred Stocks 13.8%
U.S. Government and Agency Obligations 25.0%
Cash and other 2.5%
Corporate Bonds 2.2%
Preferred Stocks 0.7%
Common Stocks 45.8%
HOW WOULD YOU DESCRIBE YOUR STRATEGY DURING THE PERIOD?
In managing the Fund, we try to be defensive to protect investors' principal and
reduce price fluctuations. The basic philosophy is to try to participate in the
growth of the equity markets without taking too much risk. The Evergreen
American Retirement Fund is a balanced fund and therefore owns a combination of
common stocks, convertible securities and fixed income securities. At the end of
the period, we had 45.8% of net assets invested in common stocks. We also placed
an increased emphasis on convertible securities-- both convertible preferred
stock and convertible debt-- during the period. I call this a "defensive growth"
strategy that gave us some of the growth characteristics of stocks, but with
more income. At the end of the period, convertible preferreds accounted for
13.8% of net assets and convertible bonds accounted for 10.0%.
The bond portion of the portfolio, excluding convertible debt, accounted for
27.2% of net assets. By far, the largest concentration was in U.S. Government
agency bonds, which together accounted for 25% of net assets. We believed that
government agency securities offered most of the income of corporate bonds, but
with less risk.
In our stock selections, we tend to buy stocks that pay yields above the yield
of the overall stock market, as measured by the S&P 500.
In bonds, we must buy securities rated A or higher, so we remain with the
higher quality segment of the fixed income market. We have been conservative in
our bond investments, with an average weighted maturity of 3.01 years.
WHAT AREAS HELPED CONTRIBUTE TO THE PERFORMANCE?
The emphasis on convertible securities certainly helped. In our equity and
convertible security investments, we also emphasized investments in
consolidating industries and in companies that are restructuring.
One of the best performing areas for the Fund was the oil drilling industry.
Two of the best performing securities were convertible bonds in Key Energy
Group, which were up 125% for the six months, and Nabors Industries, up 76% for
the period. Both these
3
<PAGE>
(Photo of eagle EVERGREEN
appears here) AMERICAN RETIREMENT FUND
companies benefited from the accelerated pace of oil drilling which is occurring
because of both increased energy demand and the development of new technologies
that increase the efficiency of drilling operations. In addition, both companies
have been acquiring smaller companies, and realizing the benefits of
consolidation.
Another industry that helped the Fund was the cement industry. This industry
has seen very little capital investment in recent years because of the slump in
the late 1980s and early 1990s. Now, commercial construction is picking up,
residential building remains strong and government infrastructure projects also
are increasing. Two convertible preferred stocks that performed particularly
well for the Fund were Southdown, Inc. and Medusa Corp.
A third industry that performed well was the retailing industry. One company
that stands out was Proffitt's, Inc., a retailer in the Southeast and Midwest,
which has been acquiring smaller competitors. Rapid earnings growth is resulting
from the consolidation of back office and merchandising operations. This also
was an example of a convertible preferred stock that performed well.
WHY HAVE INVESTMENTS IN CONSOLIDATING INDUSTRIES REPRESENTED SUCH GOOD
OPPORTUNITIES?
In the 1980s, it was often possible for companies to grow their profits by
raising prices. With relatively low inflation, this is not an option now. Now,
companies have found that they can grow their revenues by acquisitions, then
increase earnings by reducing overhead and improving operating efficiencies.
Industries that are undergoing consolidation are often those that historically
have been fragmented. Now, we are seeing the emergence of a few dominant
companies that are able to buy up smaller competitors, reduce operating costs,
improve operating margins and grow earnings. We have witnessed this in the oil
drilling and retail industries, which we have mentioned. Another example is the
radio broadcasting industry, where a number of convertible securities have been
very strong performers. One example is the Fund's investment in Chancellor Media
Corp. (formerly Evergreen Media), which has had a total return of 68% during the
six months.
WHAT OTHER TYPES OF COMPANIES DO YOU FIND ATTRACTIVE?
Historically, we have always looked for companies undergoing restructuring. A
good example is the Fund's investment in Dana Corp., an automobile parts
manufacturer and supplier. Management is in the process of selling off a group
of businesses, which had not been performing well, and using the proceeds to
acquire other companies in its core, auto parts business. This is an example of
a company that in the past did not have fast-growing earnings. As a result of
aggressive management actions, the company has been able to improve its earnings
growth power, and its stock performance has improved. We often look for some
catalyst for change in a company that makes it more attractive than it may have
been in the past.
WHAT IS YOUR OUTLOOK?
We don't think the stock market will continue to go up 30% every year, and there
is some risk of a pick-up of inflation, particularly because of the tight job
market. However, we think the Federal Reserve Board will move aggressively if
there is any sign of inflation.
In general, we are optimistic, although when stock prices are relatively high,
as they have been, there is always the chance of market corrections and
volatility. Indeed, we saw significant volatility in the market in late October,
after the end of the fiscal period.
We are maintaining our conservative strategy, and we expect to continue to see
investment opportunities.
4
<PAGE>
EVERGREEN (Photo of scales of justice
BALANCED FUND appears here)
FUND-AT-A-GLANCE
As of September 30, 1997
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS Y
INCEPTION DATE 6/6/91 1/26/93 9/2/94 4/1/91
<S> <C> <C> <C> <C>
1-YEAR PERFORMANCE
1 year w/o sales
charge 24.38% 23.46% 23.69% 24.73%
1 year w/sales
charge 18.47% 18.46% 22.69% 24.73%
6 month dividends
per share $0.25 $0.20 $0.20 $0.27
6 month capital
gains per share $0.85 $0.85 $0.85 $0.85
AVERAGE ANNUAL RETURNS
3 years 16.00% 16.28% 16.92% 18.20%
5 years 11.72% -- -- 13.10%
Since Inception 12.36% 11.84% 15.47% 13.11%
CUMULATIVE RETURNS
3 years 56.07% 57.22% 59.83% 65.14%
5 years 74.01% -- -- 85.10%
Since Inception 108.96% 68.86% 55.78% 122.93%
</TABLE>
OBJECTIVE
Evergreen Balanced Fund seeks long-term total return through capital
appreciation, dividends, and interest income.
STRATEGY
The Fund offers a systematic and disciplined approach to establish investment
exposure in both the stock and bond markets. The basis of this approach is
founded in the belief that stocks provide the greatest long-term growth
opportunities while bonds provide income and less risk to principal.
<TABLE>
<CAPTION>
PORTFOLIO CHARACTERISTICS
<S> <C>
Total Net Assets $986 million
Number of issues 91
Number of industries 23
Average Duration 5.47 years
</TABLE>
LONG-TERM GROWTH
(Chart appears here with the following plot points.)
Growth of an investment in
Evergreen Balanced Fund, Class A
6/91 3/92 3/93 3/94 3/95 3/96 3/97 7/97
Dividend
Reinvestment 0 10629 12191 12571 13476 16292 17859 20896
Initial
Investment 9525 10163 11163 11078 11230 12611 12259 13268
A $10,000 investment in Evergreen Balanced Fund, Class A made on June 10, 1991
with all distributions reinvested was worth $20,896 on September 30, 1997. Past
performance is no guarantee of future results. The performance of each class may
vary based on differences in loads and fees paid by the shareholders investing
in each class. The investment return and principal value will fluctuate so that
an investor's shares, when redeemed, may be worth more or less than original
cost.
<TABLE>
<CAPTION>
TOP 10 HOLDINGS AS A PERCENTAGE OF NET ASSETS
<S> <C>
TOP EQUITY HOLDINGS
<CAPTION>
<S> <C>
General Electric Co. 2.1%
Bristol-Myers Squibb Co. 1.8%
Texaco, Inc. 1.6%
Compaq Computer 1.5%
CUC International, Inc. 1.4%
TOP BOND HOLDINGS
<CAPTION>
<S> <C>
U.S. Treasury Notes, 9.125%, 5/15/99 6.3%
U.S. Treasury Notes, 8.125%, 2/15/98 4.8%
U.S. Treasury Bonds, 6.375%, 8/15/27 4.0%
U.S. Treasury Bonds, 8.875%, 8/15/17 2.7%
U.S. Treasury Bonds, 8.75%, 5/15/17 2.5%
</TABLE>
<TABLE>
<CAPTION>
INDUSTRY ALLOCATION AS A PERCENTAGE OF NET ASSETS
<S> <C>
INDUSTRY ALLOCATION-- EQUITY
<CAPTION>
<S> <C>
Healthcare Products & Services 8.8%
Information Services & Technology 5.8%
Energy 4.9%
Banks 4.9%
Consumer Products & Services 4.0%
INDUSTRY ALLOCATION-- BONDS
<CAPTION>
<S> <C>
Treasury Notes & Bonds 32.4%
Finance & Insurance 2.5%
Industrial Specialty Products & Services 2.0%
Banks 1.9%
Government Agency Notes & Bonds 1.6%
</TABLE>
5
<PAGE>
(Photo of scales of justice EVERGREEN
appears here) BALANCED FUND
PORTFOLIO MANAGER INTERVIEW
(Photo of HOW DID THE FUND PERFORM DURING THE FISCAL YEAR?
Dean Hawes
appears here) For the six-month period ended September 30, 1997, the
Fund's Class A shares had a total return of 17.01%,
Class B shares had a total return of 16.55%, Class C
DEAN HAWES shares had a total return of 16.73%, and Class Y shares
TENURE: JUNE 1991 had a total return of 17.17%. These returns are before
deduction of any sales charge, if applicable. In comparison, the S&P 500 Index,
an unmanaged index generally representative of the domestic stock market,
returned 26.24% and the Lehman Brothers Government/Corporate Bond Index returned
7.27% during the same period.
HOW WOULD YOU DESCRIBE THE INVESTMENT ENVIRONMENT DURING THE PAST SIX MONTHS?
The investment climate was extremely favorable for both equity and fixed income
investors. A powerful backdrop of moderate economic growth, low interest rates
and benign inflation continued to fuel corporate earnings growth. In response to
these positive signals, the Federal Reserve Board affirmed their confidence in
the economy by leaving interest rates unchanged during the six-month period.
Lack of inflationary pressure resulted in a decline in interest rates during
August and September, spurring a strong rally in the bond market.
Conversely, the stock market witnessed a transition during the six-month
period. Unlike the first quarter of 1997, the subsequent months were
characterized by a much broader market advance in which small and mid cap
companies, which had struggled early in the year, outperformed their large cap
counterparts. Investors witnessed a market environment in which fundamentals and
earnings growth, rather than size and liquidity, drove stock prices.
ASSET ALLOCATION
AS A PERCENTAGE OF NET ASSETS
(Pie graph appears here with the following plot points.)
U.S. Government and Agency Obligations 34.0%
Cash and other 5.4%
Corporate Bonds 10.9%
Common Stocks 49.7%
HOW WAS THE BOND PORTION OF THE PORTFOLIO MANAGED DURING THE PERIOD?
Strong performance within the fixed income portion of the portfolio can be
attributed to a series of timely duration adjustments as interest rates
fluctuated rather dramatically. Duration measures the sensitivity of bonds and
bond fund prices to changes in interest rates. A shorter duration bond fund is
less subject to price risk. At the beginning of the period, our duration model
indicated that the market's momentum had shifted and that a duration shift was
warranted. We responded by increasing duration from 93.8% of our benchmark's
duration (the Lehman Brothers Government/Corporate Index) to 108% by June 30. In
response to a changing market environment, we shortened the portfolio's duration
in August, reflecting our concerns about pending economic releases and their
effect on the market. In our final strategic adjustment, we modestly extended
duration in early September by purchasing 30-year Treasuries, and at the end of
this reporting period on September 30, we stood at 5.47 years, or 106.6% of our
benchmark.
WHAT HAS BEEN THE STRATEGY WITHIN THE EQUITY PORTION OF THE PORTFOLIO?
We maintained a strategy of investing in high quality companies that we believe
have above-average, long-term growth prospects. More specifically, we emphasized
6
<PAGE>
EVERGREEN (Photo of scales of justice
BALANCED FUND appears here)
companies that exhibit industry dominance, proven management and solid revenue
growth. These types of companies, such as Compaq Computer Corp. and Microsoft
Corp., have provided our investors with very attractive long-term returns. In
addition, we maintained a strong sector weighting in areas which we believe have
the best growth rates. For example, we currently favor industries benefiting
from consolidation, changing demographics, and rising productivity.
WHAT SECTORS DID YOU FAVOR DURING THIS PERIOD?
We have maintained a strong emphasis in the healthcare, technology, and energy
sectors due to the extremely positive fundamentals within those industries. Our
technology weighting increased during the third quarter due to several new
additions as well as exceptional price appreciation of the portfolio's existing
technology holdings. "Corporate America's" quest for increased productivity via
technology remains unabated, and was reflected in the group's price performance
during the period. While we are cognizant of the inherent price volatility
within the technology sector, we do believe that identifying and owning dominant
companies will be most rewarding to investors. The search for business solutions
and productivity enhancement will be increasingly centered around technology.
For different, but equally valid, reasons the portfolio's healthcare weighting
was increased. Demographics strongly favor the healthcare industry as
seventy-six million baby-boomers march from middle-age toward retirement.
Subsequently, demand for drug, medical, and healthcare products are expected to
significantly increase in years to come. Bristol-Myers Squibb Co., Pfizer Inc.,
and Johnson & Johnson are three of the market leaders within this sector that
are well positioned to benefit from the long-term "Graying of America" theme.
Although we have maintained a slight overweighting in the energy sector, our
emphasis is away from those companies whose price performance is most directly
linked to crude oil prices, such as Diamond Offshores Drilling, Inc. and Reading
& Bates Corp., both of which are engaged in the contract drilling of offshore
oil and gas wells.
WERE THERE ANY OTHER NOTEWORTHY CHANGES TO THE PORTFOLIO?
In addition to the duration adjustments within the fixed income portfolio, we
made some significant additions and deletions to our equity holdings. The Fund's
exposure to utilities, an area which lagged in performance, was reduced from
5.2% to 2.7% during the third quarter. Within the telecommunications area, we
sold our position in Bell Atlantic Corp., as strong performance in 1997 from a
proposed merger with NYNEX allowed us to achieve our price target and lock in
solid gains. We also liquidated Norfolk & Southern Corp., a freight railroad
company which has enjoyed substantial appreciation. Conversely, we added
Aluminum Co. of America, a company we feel is well positioned to take advantage
of the low inventory levels and overall strong fundamental outlook within the
aluminum industry.
WHAT IS YOUR OUTLOOK?
The exceptional performance by equities over the past couple of years can be
attributed, in part, to a strong fundamental backdrop which has fueled corporate
earnings growth. Going forward, we will maintain a focus on companies which are
benefiting from positive economic fundamentals, experiencing solid revenue
growth, and are the more dominant players within their industry. It should be
cautioned, however, that the market's rapid advance had significantly increased
stock valuations. While a market setback, or intermediate correction, is
overdue, we do not believe that the end of this current bull market cycle is
imminent. Although painful in the short term, a 10% to 15% market correction
would be viewed as a buying opportunity, not as a signal to reduce equity
exposure.
7
<PAGE>
(Photo of brick wall EVERGREEN
and stars appears here) FOUNDATION FUND
FUND-AT-A-GLANCE
As of September 30, 1997
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS Y
INCEPTION DATE 1/3/95 1/3/95 1/3/95 1/2/90
<S> <C> <C> <C> <C>
1-YEAR PERFORMANCE
1 year w/o sales
charge 30.14% 29.22% 29.23% 30.42%
1 year w/sales charge 23.96% 24.22% 28.23% 30.42%
6 month dividends per
share $0.23 $0.17 $0.17 $0.25
6 month capital gains
per share $0.16 $0.16 $0.16 $0.16
AVERAGE ANNUAL RETURNS
3 years -- -- -- 20.57%
5 years -- -- -- 16.49%
Since Inception 20.30% 20.74% 21.46% 17.52%
CUMULATIVE RETURNS
3 years -- -- -- 75.26%
5 years -- -- -- 14.55%
Since Inception 66.08% 67.75% 70.53% 249.47%
</TABLE>
OBJECTIVE
Evergreen Foundation Fund seeks reasonable income, preservation of capital and
growth.
STRATEGY
The Fund invests in a diversified portfolio of common and preferred stocks, as
well as convertible and fixed income securities. The stocks in the portfolio are
chosen for their potential for captial appreciation and current income. The
bonds, which are of investment grade, are managed to take advantage of changes
in interest rates. The Fund's Adviser varies the allocation of the portfolio to
take advantage of changing economic conditions and market opportunities.
<TABLE>
<CAPTION>
PORTFOLIO CHARACTERISTICS
<S> <C>
Total Net Assets $2,134 billion
Number of issues 306
Number of industries 26
Average Duration 8.34 years
</TABLE>
LONG-TERM GROWTH
(Chart appears here with the following plot points.)
Growth of an investment in
Evergreen Foundation Fund, Class A
1/95 3/95 9/95 3/96 9/96 3/97 9/97
Dividend
Reinvestment 0 10180 11742 12166 12761 13727 16608
Initial
Investment 9525 10061 11326 11442 11800 12770 14703
A $10,000 investment in Evergreen Foundation Fund, Class A made on January 3,
1995 with all distributions reinvested was worth $16,608 on September 30, 1997.
Past performance is no guarantee of future results. The performance of each
class may vary based on differences in loads and fees paid by the shareholders
investing in each class. The investment return and principal value will
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than original cost.
<TABLE>
<CAPTION>
TOP 10 HOLDINGS AS A PERCENTAGE OF NET ASSETS
<S> <C>
EQUITY:
Intel Corp. 3.4%
Hewlett-Packard Co. 1.7%
General Electric Co. 1.6%
BankBoston Corp. 1.6%
Du Pont (E.I.) De Nemours & Co. 1.6%
BONDS:
<CAPTION>
<S> <C>
U.S. Treasury Bond 6.25% 8/15/23 7.7%
U.S. Treasury Bond 7.125% 2/15/23 6.3%
U.S. Treasury Bond 8.125% 8/15/19 2.8%
U.S. Treasury Bond 7.25% 5/15/16 2.5%
U.S. Treasury Bond 6.75% 8/15/26 1.8%
</TABLE>
<TABLE>
<CAPTION>
INDUSTRY ALLOCATION AS A PERCENTAGE OF NET ASSETS
<S> <C>
EQUITY:
Finance & Insurance 9.7%
Information Services & Technology 6.8%
Real Estate 6.4%
Healthcare Products & Services 6.2%
Banks 5.7%
BONDS:
Treasury Notes & Bonds 27.6%
Government Agency Notes & Bonds 0.9%
</TABLE>
8
<PAGE>
EVERGREEN (Photo of brick wall and
FOUNDATION FUND stars appears here)
PORTFOLIO MANAGER INTERVIEW
(Photo of Stephen A. HOW DID THE FUND PERFORM DURING THE SIX MONTHS?
Lieber appears here)
We are pleased to report that the Foundation Fund's Y
Class Shares had a total return of 21.10% for the six
month period ending September 30, 1997. For the 12
STEPHEN A. LIEBER months, the Y Class Shares had a total return of 30.42%,
TENURE: JANUARY 1990 placing it 18th of 333 funds, or in the top 5%, in the
Balanced Fund Category, according to Lipper Analytical Services, Inc.,1 an
independent monitor of mutual fund performance. The Y Share Class is the
top-performing balanced fund since its inception in January 1990, out of 58
Balanced Funds ranked by Lipper.
WHAT CONTRIBUTED TO THIS STRONG PERFORMANCE?
The equity holdings of the Fund continue to power performance. To illustrate,
for the six months, the equity performance returned 29.96%. The fixed income
portion of the portfolio provided an 11.27% return. Many of this highly
diversified Fund's equity positions had very good returns, helping the
performance. More than 30 equity positions had returns of more than 50% for the
six months. The top performers were: Halter Marine Group, Inc., up 146.0%,
Caliber System, Inc., up 104.3%; Trinity Industries, Inc., which had a return of
99.7%; Reading & Bates Corp., which returned 84.9%; and John Alden Financial
Corp. up 84.8%. The Fund's real estate-related and financial stocks performed
especially well during the period.
HOW WOULD YOU DESCRIBE THE INVESTMENT ENVIRONMENT DURING THE PERIOD?
The 12 month period ended September 30, 1997, witnessed a continuation of a
remarkable rally in the stock market and impressive real returns, after
inflation, in the bond market. The strength of the markets has been built upon
long-term factors, including: the gradual disinflation of the 1980's and 1990's;
correspondingly falling interest rates; declining unemployment; the strong
dollar which has attracted foreign investors; and corporate profits growing at
roughly twice the Gross Domestic Product growth rate. The strong performance in
the stock market, in particular, has encouraged public confidence in the market
and helped to sustain record flows from personal and 401(k) assets into common
stocks.
WHAT INVESTMENT STRATEGIES WERE EMPLOYED DURING THE PERIOD?
We continued the long-term strategies that have worked well for the Evergreen
Foundation Fund. Major new commitments were made in stocks, especially during
periods of market weakness, such as the August market decline. Among the large
new equity commitments was CitiCorp, a major international bank. This investment
was an example of Evergreen's "value timing" strategy, in which we try to take
advantage of intrinsic values notwithstanding market weakness. Other examples of
positions we either added to or initiated because of market weakness were the
stocks of American Home Products Corp., Boeing Co., New York St. Electric & Gas
Corp. and Chubb Corp.
The Fund also continues to look for opportunities among potential merger and
acquisition candidates. During the first nine months of 1997, merger and
acquisition activity affected 15 portfolio companies, either through
announcements or completed transactions. One pending acquisition, is that of
Barnett Banks, Inc., by NationsBank Corp. As of September 30, 1997, the Fund's
position in Barnett Banks realized a 113.5% gain for the fiscal year.
1 Lipper Analytical Services, Inc. is an independent mutual fund rating company.
The rankings are based on total return and do not include the effect of a
sales charge. Class A, B, and C shares ranked 24, 31, and 30 out of 333
Balanced Funds for the one year period ending September 30, 1997. Class Y
shares ranked number 10 out of 94 funds in the category for the five year
period ending September 30, 1997.
9
<PAGE>
(Photo of brick wall EVERGREEN
and stars appears here) FOUNDATION FUND
ASSET ALLOCATION
AS A PERCENTAGE OF NET ASSETS
(Pie graph appears here with the following plot points.)
U.S. Government and Agency Obligations 28.5%
Cash and other 10.5%
Convertible Preferred Stocks 0.7%
Convertible Debentures 0.4%
Common Stocks 59.9%
HOW WOULD YOU DESCRIBE THE FIXED INCOME STRATEGY OF THE FUND?
One of the reasons we chose the name "Evergreen Foundation Fund" is that we
wanted a fund meant to be the foundation of a portfolio. If you want to build
the foundation of a portfolio, you put something very solid at the base. We
chose United States Government Bonds. The Foundation Fund has only the highest
quality bonds. As of September 30, 1997, the asset allocation was 61.0% of net
assets in equities, 10.5% in cash and cash equivalents, and 28.5% in government
bonds. At the close of the period, the average weighted maturity of the bonds
was a relatively long 17.35 years, and average duration was 8.34 years.
We invest in government bonds as part of the asset allocation decision, with a
reduced allocation when we expect interest rates to rise and bond prices to
decline, and an increased allocation when we expect interest rates to decline
and bond prices to rise. This strategy is intended both to provide income from
the bonds and to give the Fund the opportunity for capital appreciation in the
interest rate cycle.
WHAT IS YOUR OUTLOOK?
Our research and portfolio management is dedicated to carefully selecting
investments based on a detailed appraisal of the opportunities and risk in
individual industries and sectors, and a thorough analysis of the dynamics of
individual companies. This is our challenge looking toward the future.
10
<PAGE>
(Photo of brick
EVERGREEN wall and dollar sign
TAX STRATEGIC FOUNDATION FUND appears here)
- --------------------------------------------------------------------------------
FUND-AT-A-GLANCE
As of September 30, 1997
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS Y
INCEPTION DATE 1/17/95 1/6/95 3/3/95 11/2/93
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------
1-YEAR PERFORMANCE
1 year w/o sales
charge 24.73% 23.95% 23.93% 25.14%
1 year w/sales charge 18.81% 18.95% 22.93% 25.14%
6 month dividends per share $0.15 $0.10 $0.10 $0.18
6 month capital gains
per share $0.10 $0.10 $0.10 $0.10
AVERAGE ANNUAL RETURNS
3 years -- -- -- 20.51%
Since Inception 19.09% 19.99% 20.40% 17.02%
CUMULATIVE RETURNS
3 years -- -- -- 75.00%
Since Inception 60.45% 64.68% 61.56% 85.04%
</TABLE>
OBJECTIVE
- ------------------------------------------------------------
Evergreen Tax Strategic Foundation Fund seeks to maximize an investor's
after-tax total return, which consists of current income and growth of capital.
STRATEGY
- ------------------------------------------------------------
The Fund is designed for investors seeking to reduce taxes but looking for
greather growth potential than municipal bonds alone offer. The Fund's bond
portion is invested in municipal bonds, which are exempt from federal income
taxes, and are of high and upper-medium quality. The stocks in the portfolio are
chosen for their potential for growth and above-average yields. The Fund
utilizes various strategies in equities to obtain the most tax advantage, such
as: investing as much as 80% of its stock portfolio in companies that buy back
their own stock, rather than pay out taxable dividends, and balancing losses
with gains to reduce taxes on Fund distributions.
<TABLE>
<CAPTION>
PORTFOLIO CHARACTERISTICS
<S> <C>
- ------------------------------------------------------------
Total Net Assets: $165 million
Number of issues: 209
Number of industries: 21
Average Duration 7.06 years
</TABLE>
PORTFOLIO MANAGEMENT TEAM
- ------------------------------------------------------------
Stephen A. Lieber, James Colby III, and Gary Buesser
LONG-TERM GROWTH
(Chart appears here with the following plot points.)
Growth of an investment in
Evergreen Tax Strategic Fund, Class A
1/95 3/95 9/95 3/96 9/96 3/97 9/97
Dividend
Reinvestment 0 10180 11742 12166 12761 13727 16608
Initial
Investment 9525 10061 11326 11442 11800 12770 14703
A $10,000 investment in Evergreen Tax Strategic Fund, Class A made on January
17, 1995 with all distributions reinvested was worth $16,045 on September 30,
1997. Past performance is no guarantee of future results. The performance of
each class may vary based on differences in loads and fees paid by the
shareholders investing in each class. The investment return and principal value
will fluctuate so that an investor's shares, when redeemed, may be worth more or
less than original cost.
<TABLE>
<CAPTION>
TOP 10 HOLDINGS AS A PERCENTAGE OF NET ASSETS
<S> <C>
- ------------------------------------------------------------
EQUITY:
- ------------------------------------------------------------
Intel Corp. 1.3%
WBK Trust, 10.0% STRYPES 1.2%
American Home Products Corp. 1.1%
BankBoston Corp. 1.0%
First Empire State Corp. 1.0%
BONDS:
<CAPTION>
- -----------------------------------------------------------
<S> <C>
Pennsylvania Intergovernmental Coop. 6.80% 6/15/12;
7.00% 6/15/14 2.3%
Pennsylvania Tpke Comm RB Ser. J 7.15% 12/1/11 2.1%
Massachusetts Go. Prerefunded Ser. B 6.50% 8/1/11 1.6%
Hanover Cnty Indl Dev. Auth. Ser. 1995 6.38% 8/15/18 1.4%
Metro. Pier & Exposition Auth. 6.50%, 6/15/07 1.4%
</TABLE>
<TABLE>
<CAPTION>
INDUSTRY ALLOCATION AS A PERCENTAGE OF NET ASSETS
<S> <C>
- -----------------------------------------------------------
EQUITY:
- -----------------------------------------------------------
Banks 7.3%
Real Estate 6.8%
Finance & Insurance 6.6%
Healthcare Products & Services 3.7%
Electrical Equipment & Services 3.5%
MUNICIPAL OBLIGATIONS:
- -----------------------------------------------------------
Prerefunded 20.7%
Housing 5.2%
Toll Roads 4.3%
Water/Sewer 4.0%
Electrical Power 3.7%
</TABLE>
11
<PAGE>
(Photo of brick
wall and dollar sign EVERGREEN
appears here) TAX STRATEGIC FOUNDATION FUND
- --------------------------------------------------------------------------------
PORTFOLIO MANAGER INTERVIEW
(Photo of Stephen A. HOW DID THE FUND PERFORM DURING THE SIX MONTHS?
Lieber appears here)
For the six month period that ended on September 30,
1997, for example, the total return of the Fund's Y
Class Shares was 16.02%. For the year it was 25.14%.
This continued the strong record of the Fund. Average
STEPHEN A. LIEBER annual return of the Y Class Shares since inception
TENURE: NOVEMBER 1993 in November 1993 has been 17.02%.
During the six months, the Fund's other classes had parallel performance. The
Fund's A Class Shares had a total return of 15.83%, B Class Shares had a total
return of 15.46%, and C Class Shares had a total return of 15.49%.
WHAT CONTRIBUTED TO THIS PERFORMANCE?
The equity holdings of the Fund continue to power performance. To illustrate,
for the six months, the equity performance returned 31.81%. The fixed income
portion of the portfolio provided a 6.97% return. For the last 12 months,
equities provided a 50.2% gain, and fixed income provided an 8.9% gain. More
than 20 different equity holdings had total returns greater than 40% during the
six months that ended on September 30.
<TABLE>
<CAPTION>
TOP FIVE EQUITY PERFORMERS:
<S> <C>
- -----------------------------------------------------------
MacDermid, Inc. +132.2%
Southern Electronics Corp. +110.3%
Furon Co. +92.6%
Continental Homes Holding Co. +74.1%
FPIC Insurance Group, Inc. +72.1%
</TABLE>
WHAT INVESTMENT THEMES HELPED THIS STRONG EQUITY PERFORMANCE?
Merger and acquisition events provided significant gains from stocks that we
purchased when we believed they were undervalued. Rhone-Poulenc Rorer, Inc.,
received an acquisition offer from its parent, Rhone-Poulenc, S.A. The Fund's
holding in Rhone-Poulenc Rorer, Inc. had a gain of 34.0% during the fiscal year
ended September 30, 1997. Barnett Banks, Inc., whose stock was purchased by the
Fund in November 1994, received an acquisition offer from NationsBank Corp. The
Fund's gain in its Barnett position was 104.4% for the fiscal year.
The benefits of a broad-ranging investment research effort for value and
growth companies continued to be evident in the sustained performance of the
Fund's equity portfolio. Among the large new additions to the portfolio are
stocks of: Lehman Brothers Holdings, Inc., CitiCorp, Merrill Lynch & Co., Inc.,
AirNet Systems, Inc., Equity Office Properties Trust, and Pfizer, Inc.
HOW WOULD YOU DESCRIBE THE INVESTMENT ENVIRONMENT DURING THE PERIOD?
The 12 month period ended September 30, 1997, witnessed a continuation of a
remarkable rally in the stock market and impressive real returns, after
inflation, in the bond market. The strength of the markets has been built upon
long-term factors, including: the gradual disinflation of the 1980's and 1990's;
correspondingly falling interest rates; declining unemployment; the strong
dollar which has attracted foreign investors; and corporate profits growing at
roughly twice the Gross Domestic Product growth rate. The strong performance in
the stock market, in particular, has encouraged public confidence as indicated
by record flows from personal and 401(k) assets into common stocks.
12
<PAGE>
(Photo of brick wall
EVERGREEN and dollar sign
TAX STRATEGIC FOUNDATION FUND appears here)
- --------------------------------------------------------------------------------
THE FUND HAS AN UNUSUAL OBJECTIVE OF TAX EFFICIENCY, IN ADDITION TO INCOME AND
GROWTH. HOW IS IT MANAGED?
The Tax Strategic Foundation Fund is a balanced fund that seeks to be the
"foundation" of an investor's portfolio, providing the stability, income and
gains potential of highest quality, tax exempt bonds and the capital
appreciation potential of stocks, together with tax efficiency. It attempts to
provide the most tax-efficient return to investors. It also is a balanced fund,
with allocations to stocks, bonds and cash equivalents. As of September 30,
1997, the asset allocation was 55.0% in municipal bonds, 44.5% in equities, and
0.5% in cash equivalents and other assets and liabilities.
The entire bond allocation is invested in insured or the highest-rated,
tax-exempt bonds.
In stocks, the Fund uses Evergreen's "value timing for growth" strategy. Our
goal is to find exceptional growth opportunities with a reduced risk relative to
the nature of the opportunity. In our basic stock selection, we are looking for
growth opportunities that we consider significantly undervalued and that we
believe, ultimately, will be recognized for their value either by the market,
their peers or their competitors. The Tax Strategic Foundation Fund emphasizes
stocks of companies with low dividends, or in companies with favorable tax
treatment of dividends. The fund also invests in companies that have a policy to
buy back shares in preference to paying out dividends.
ASSET ALLOCATION
AS A PERCENTAGE OF NET ASSETS
(Pie graph appears here with the following plot points.)
Short Term Municipal Obligations 0.5%
Long Term Municipal Obligations 55.0%
Convertible Preferred Stocks 2.0%
Convertible Debentures 0.3%
Common Stocks 42.2%
HOW WAS THE BOND PORTION OF THE PORTFOLIO MANAGED DURING THE PERIOD?
The tax-exempt portfolio remained invested in insured or AAA-rated bonds,
generally of long duration, as well as short-term tax exempts used as cash
equivalents. At the close of the period, average weighted maturity of the bond
portfolio was 13.04 years, and average duration was 7.06 years.
The cash equivalent portion was very low (0.5%) as we have used it for
liquidity purposes for the opportunistic purchase of equities during periods of
market weakness, consistent with the "value timing" strategy. This liquidity
helped the Fund make sizable purchases in late July and in August during the
market decline.
WHAT IS YOUR OUTLOOK?
Our research and portfolio management is dedicated to carefully selecting
investments based on a detailed appraisal of the opportunities and risk in
individual industries and sectors, and a thorough analysis of the dynamics of
individual companies. This is our challenge looking toward the future.
13
<PAGE>
(Photo of eagle EVERGREEN
appears here) AMERICAN RETIREMENT FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED THREE MONTHS YEAR ENDED
SEPTEMBER 30, 1997 ENDED DECEMBER 31,
(UNAUDITED) MARCH 31, 1997** 1996 1995*
<S> <C> <C> <C> <C>
CLASS A SHARES
NET ASSET VALUE BEGINNING OF PERIOD........................... $ 13.74 $ 13.86 $ 12.82 $10.65
--------- ---------- --------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income......................................... 0.25 0.11 0.45 0.41
Net realized and unrealized gain (loss) on investments........ 2.32 (0.12) 1.12 2.22
--------- ---------- --------- -------
Total from investment operations.............................. 2.57 (0.01) 1.57 2.63
--------- ---------- --------- -------
LESS DISTRIBUTIONS FROM
Net investment income......................................... (0.25) (0.11) (0.42) (0.46)
Net realized gain on investments.............................. (0.03) 0 (0.11) 0
--------- ---------- --------- -------
Total distributions........................................... (0.28) (0.11) (0.53) (0.46)
--------- ---------- --------- -------
NET ASSET VALUE END OF PERIOD................................. $ 16.03 $ 13.74 $ 13.86 $12.82
--------- ---------- --------- -------
Total return+................................................. 18.77% (0.09%) 12.46% 24.88%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses.............................................. 1.36%++ 1.37%++ 1.30% 1.37%++
Total expenses, excluding indirectly paid expenses.......... 1.35%++ N/A N/A N/A
Total expenses, excluding fee waivers and expense
reimbursements............................................ N/A 1.68%++ 1.33% 10.96%++
Net investment income....................................... 3.31%++ 3.43%++ 3.53% 3.73%++
Portfolio turnover rate....................................... 19% 9% 16% 49%
Average commission rate paid per share........................ $ 0.0600 $ 0.0606 $0.0619 N/A
NET ASSETS END OF PERIOD (THOUSANDS).......................... $ 22,569 $ 14,590 $11,116 $1,335
</TABLE>
* For the period from January 3, 1995 (commencement of class operations) to
December 31, 1995.
** The Fund changed its fiscal year end from December 31 to March 31, effective
March 31, 1997.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED THREE MONTHS YEAR ENDED
SEPTEMBER 30, 1997 ENDED DECEMBER 31,
(UNAUDITED) MARCH 31, 1997** 1996 1995*
<S> <C> <C> <C> <C>
CLASS B SHARES
NET ASSET VALUE BEGINNING OF PERIOD........................... $ 13.67 $ 13.80 $ 12.80 $10.65
--------- ---------- --------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income......................................... 0.20 0.09 0.36 0.35
Net realized and unrealized gain (loss) on investments........ 2.30 (0.13) 1.09 2.20
--------- ---------- --------- -------
Total from investment operations.............................. 2.50 (0.04) 1.45 2.55
--------- ---------- --------- -------
LESS DISTRIBUTIONS FROM
Net investment income......................................... (0.19) (0.09) (0.34) (0.40)
Net realized gain on investments.............................. (0.03) 0 (0.11) 0
--------- ---------- --------- -------
Total distributions........................................... (0.22) (0.09) (0.45) (0.40)
--------- ---------- --------- -------
NET ASSET VALUE END OF PERIOD................................. $ 15.95 $ 13.67 $ 13.80 $12.80
--------- ---------- --------- -------
Total return+................................................. 18.34% (0.32%) 11.49% 24.09%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses.............................................. 2.11%++ 2.11%++ 2.06% 2.12%++
Total expenses, excluding indirectly paid expenses.......... 2.10%++ N/A N/A N/A
Total expenses, excluding fee waivers and expense
reimbursements............................................ N/A 2.43%++ 2.09% 4.20%++
Net investment income....................................... 2.56%++ 2.68%++ 2.79% 2.97%++
Portfolio turnover rate....................................... 19% 9% 16% 49%
Average commission rate paid per share........................ $ 0.0600 $ 0.0606 $0.0619 N/A
NET ASSETS END OF PERIOD (THOUSANDS).......................... $120,101 $ 76,791 $57,622 $4,839
</TABLE>
* For the period from January 3, 1995 (commencement of class operations) to
December 31, 1995.
** The Fund changed its fiscal year end from December 31 to March 31, effective
March 31, 1997.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
14
<PAGE>
EVERGREEN (Photo of eagle
AMERICAN RETIREMENT FUND appears here)
FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED THREE MONTHS YEAR ENDED
SEPTEMBER 30, 1997 ENDED DECEMBER 31,
(UNAUDITED) MARCH 31, 1997** 1996 1995*
<S> <C> <C> <C> <C>
CLASS C SHARES
NET ASSET VALUE BEGINNING OF PERIOD........................... $ 13.70 $ 13.83 $ 12.81 $10.65
--------- --------- -------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income......................................... 0.20 0.09 0.36 0.36
Net realized and unrealized gain (loss) on investments........ 2.30 (0.13) 1.11 2.19
--------- --------- -------- -------
Total from investment operations.............................. 2.50 (0.04) 1.47 2.55
--------- --------- -------- -------
LESS DISTRIBUTIONS FROM
Net investment income......................................... (0.19) (0.09) (0.34) (0.39)
Net realized gain on investments.............................. (0.03) 0 (0.11) 0
--------- --------- -------- -------
Total distributions........................................... (0.22) (0.09) (0.45) (0.39)
--------- --------- -------- -------
NET ASSET VALUE END OF PERIOD................................. $ 15.98 $ 13.70 $ 13.83 $12.81
--------- --------- -------- -------
Total return+................................................. 18.30% (0.32%) 11.63% 24.00%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses.............................................. 2.11%++ 2.12%++ 2.05% 2.10%++
Total expenses, excluding indirectly paid expenses.......... 2.10%++ N/A N/A N/A
Total expenses, excluding fee waivers and expense
reimbursements............................................ N/A 2.43%++ 2.08% 103.52%++
Net investment income....................................... 2.56%++ 2.65%++ 2.80% 2.96%++
Portfolio turnover rate....................................... 19% 9% 16% 49%
Average commission rate paid per share........................ $ 0.0600 $ 0.0606 $0.0619 N/A
NET ASSETS END OF PERIOD (THOUSANDS) $ 2,130 $ 1,769 $ 1,487 $ 110
</TABLE>
* For the period from January 3, 1995 (commencement of class operations) to
December 31, 1995.
** The Fund changed its fiscal year end from December 31 to March 31, effective
March 31, 1997.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
15
<PAGE>
(Photo of eagle EVERGREEN
appears here) AMERICAN RETIREMENT FUND
FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED THREE MONTHS YEAR ENDED
SEPTEMBER 30, 1997 ENDED DECEMBER 31,
(UNAUDITED) MARCH 31, 1997** 1996 1995 1994
<S> <C> <C> <C> <C> <C>
CLASS Y SHARES
NET ASSET VALUE BEGINNING OF PERIOD................... $ 13.74 $ 13.86 $ 12.83 $ 10.67 $ 11.60
--------- -------- ------- -------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income................................. 0.29 0.14 0.48 0.47 0.60
Net realized and unrealized gain (loss) on
investments......................................... 2.30 (0.14) 1.10 2.16 (0.93)
--------- -------- ------- -------- -------
Total from investment operations...................... 2.59 0 1.58 2.63 (0.33)
--------- -------- ------- -------- -------
LESS DISTRIBUTIONS FROM
Net investment income................................. (0.27) (0.12) (0.44) (0.47) (0.60)
Net realized gain on investments...................... (0.03) 0 (0.11) 0 0
In excess of net realized gain on investments......... 0 0 0 0 0
--------- -------- ------- -------- -------
Total distributions................................... (0.30) (0.12) (0.55) (0.47) (0.60)
--------- -------- ------- -------- -------
NET ASSET VALUE END OF PERIOD......................... $ 16.03 $ 13.74 $ 13.86 $ 12.83 $ 10.67
--------- -------- ------- -------- -------
Total return.......................................... 18.92% (0.01%) 12.59% 25.06% (2.86%)
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses...................................... 1.10%+ 1.11%+ 1.05% 1.26% 1.28%
Total expenses, excluding indirectly paid
expenses.......................................... 1.09%+ N/A N/A N/A N/A
Total expenses, excluding fee waivers and expense
reimbursements.................................... N/A 1.38%+ 1.09% N/A N/A
Net investment income............................... 3.55%+ 3.56%+ 3.65% 3.96% 5.40%
Portfolio turnover rate............................... 19% 9% 16% 49% 136%
Average commission rate paid per share................ $ 0.0600 $ 0.0606 $0.0619 N/A N/A
NET ASSETS END OF PERIOD (THOUSANDS).................. $ 39,576 $ 37,237 $41,243 $39,327 $37,176
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
CLASS Y SHARES (continued)
NET ASSET VALUE BEGINNING OF PERIOD................................ $ 10.95 $ 10.52 $ 9.59 $ 10.41 $ 10.09
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income.............................................. 0.56 0.66 0.60 0.60 0.57
Net realized and unrealized gain (loss) on investments............. 0.96 0.55 1.15 (0.66) 0.76
-------- -------- -------- -------- --------
Total from investment operations................................... 1.52 1.21 1.75 (0.06) 1.33
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS FROM
Net investment income.............................................. (0.60) (0.61) (0.60) (0.60) (0.59)
Net realized gain on investments................................... (0.24) (0.17) (0.22) (0.16) (0.42)
In excess of net realized gain on investments...................... (0.03) 0 0 0 0
-------- -------- -------- -------- --------
Total distributions................................................ (0.87) (0.78) (0.82) (0.76) (1.01)
-------- -------- -------- -------- --------
NET ASSET VALUE END OF PERIOD...................................... $ 11.60 $ 10.95 $ 10.52 $ 9.59 $ 10.41
-------- -------- -------- -------- --------
Total return....................................................... 14.06% 11.82% 18.79% (0.47%) 13.42%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses................................................... 1.36% 1.51% 1.50% 1.50% 1.88%
Total expenses, excluding indirectly paid expenses............... N/A N/A N/A N/A N/A
Total expenses, excluding fee waivers and expense
reimbursements................................................. N/A 1.59% 1.82% 1.95% 2.03%
Net investment income............................................ 5.13% 6.23% 5.91% 6.04% 5.49%
Portfolio turnover rate............................................ 92% 151% 97% 33% 152%
Average commission rate paid per share............................. N/A N/A N/A N/A N/A
NET ASSETS END OF PERIOD (THOUSANDS)............................... $37,336 $23,781 $15,632 $12,351 $11,610
<CAPTION>
1988*(A)
<S> <C>
CLASS Y SHARES (continued)
NET ASSET VALUE BEGINNING OF PERIOD................................ $10.00
-------
INCOME FROM INVESTMENT OPERATIONS
Net investment income.............................................. 0.39
Net realized and unrealized gain (loss) on investments............. 0.18
-------
Total from investment operations................................... 0.57
-------
LESS DISTRIBUTIONS FROM
Net investment income.............................................. (0.36)
Net realized gain on investments................................... (0.12)
In excess of net realized gain on investments...................... 0
-------
Total distributions................................................ (0.48)
-------
NET ASSET VALUE END OF PERIOD...................................... $10.09
-------
Total return....................................................... 5.80%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses................................................... 2.00%+
Total expenses, excluding indirectly paid expenses............... N/A+
Total expenses, excluding fee waivers and expense
reimbursements................................................. N/A
Net investment income............................................ 5.01%+
Portfolio turnover rate............................................ 52%
Average commission rate paid per share............................. N/A
NET ASSETS END OF PERIOD (THOUSANDS)............................... $9,449
</TABLE>
* For the period from March 14, 1988 (commencement of class operations) to
December 31, 1988.
** The Fund changed its fiscal year end from December 31 to March 31, effective
March 31, 1997.
+ Annualized.
(a) Calculated based on average shares outstanding throughout the period.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
16
<PAGE>
EVERGREEN (Photo of scales of justice
BALANCED FUND appears here)
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED THREE MONTHS YEAR ENDED
SEPTEMBER 30, 1997 ENDED DECEMBER 31,
(UNAUDITED) MARCH 31, 1997** 1996 1995
<S> <C> <C> <C> <C>
CLASS A SHARES
NET ASSET VALUE BEGINNING OF PERIOD................................ $ 12.87 $ 12.95 $ 13.12 $ 11.17
--------- ---------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS
Net investment income.............................................. 0.25 0.12 0.54 0.51
Net realized and unrealized gain (loss) on investments............. 1.91 (0.08) 0.94 2.40
--------- ---------- --------- ---------
Total from investment operations................................... 2.16 0.04 1.48 2.91
--------- ---------- --------- ---------
LESS DISTRIBUTIONS FROM
Net investment income.............................................. (0.25) (0.12) (0.54) (0.50)
Net realized gain on investments................................... (0.85) 0 (1.11) (0.46)
--------- ---------- --------- ---------
Total distributions................................................ (1.10) (0.12) (1.65) (0.96)
--------- ---------- --------- ---------
NET ASSET VALUE END OF PERIOD...................................... $ 13.93 $ 12.87 $ 12.95 $ 13.12
--------- ---------- --------- ---------
Total return+...................................................... 17.01% 0.25% 11.44% 26.49%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses................................................... 0.92%++ 0.93%++ 0.89% 0.88%
Total expenses, excluding indirectly paid expenses............... 0.92%++ N/A N/A N/A
Net investment income............................................ 3.60%++ 3.62%++ 3.95% 4.05%
Portfolio turnover rate............................................ 61% 28% 34% 37%
Average commission rate paid per share............................. $ 0.0594 $ 0.0595 $0.0593 N/A
NET ASSETS END OF PERIOD (THOUSANDS)............................... $ 46,014 $ 41,429 $43,169 $41,849
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1994 1993 1992 1991*
<S> <C> <C> <C> <C>
CLASS A SHARES (continued)
NET ASSET VALUE BEGINNING OF PERIOD $ 12.07 $ 11.41 $ 11.02 $10.00
INCOME FROM INVESTMENT OPERATIONS ---------- --------- -------- --------
Net investment income................................................................... 0.43 0.42 0.42 0.30
Net realized and unrealized gain (loss) on investments.................................. (0.71) 0.75 0.43 1.08
---------- --------- ------- --------
Total from investment operations........................................................ (0.28) 1.17 0.85 1.38
---------- --------- ------- --------
LESS DISTRIBUTIONS FROM
Net investment income................................................................... (0.43) (0.42) (0.42) (0.35)
Net realized gain on investments........................................................ (0.19) (0.09) (0.04) (0.01)
---------- --------- ------- --------
Total distributions..................................................................... (0.62) (0.51) (0.46) (0.36)
---------- --------- ------- --------
NET ASSET VALUE END OF PERIOD $ 11.17 $ 12.07 $ 11.41 $11.02
---------- --------- ------- --------
Total return+........................................................................... (2.41%) 10.40% 7.94% 14.10%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses........................................................................ 0.89% 0.91% 0.91% 0.92%++
Total expenses, excluding indirectly paid expenses.................................... N/A N/A N/A N/A
Net investment income................................................................. 3.69% 3.61% 3.93% 4.38%++
Portfolio turnover rate................................................................. 35% 19% 12% 19%
Average commission rate paid per share.................................................. N/A N/A N/A N/A
NET ASSETS END OF PERIOD (THOUSANDS).................................................... $41,010 $35,032 $17,408 $ 334
</TABLE>
* For the period from June 10, 1991 (commencement of class operations) to
December 31, 1991.
** The Fund changed its fiscal year end from December 31 to March 31, effective
March 31, 1997.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
17
<PAGE>
(Photo of scales of justice EVERGREEN
appears here) BALANCED FUND
FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED THREE MONTHS YEAR ENDED
SEPTEMBER 30, 1997 ENDED DECEMBER 31,
(UNAUDITED) MARCH 31, 1997** 1996 1995 1994 1993*
<S> <C> <C> <C> <C> <C> <C>
CLASS B SHARES
NET ASSET VALUE BEGINNING OF PERIOD... $ 12.88 $ 12.96 $ 13.13 $ 11.18 $ 12.08 $ 11.54
--------- ---------- --------- ---------- --------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income................. 0.20 0.10 0.43 0.42 0.36 0.34
Net realized and unrealized gain
(loss) on investments............... 1.90 (0.08) 0.95 2.40 (0.71) 0.65
--------- ---------- --------- ---------- --------- --------
Total from investment operations...... 2.10 0.02 1.38 2.82 (0.35) 0.99
--------- ---------- --------- ---------- --------- --------
LESS DISTRIBUTIONS FROM
Net investment income................ (0.20) (0.10) (0.44) (0.41) (0.36) (0.34)
Net realized gain on investments...... (0.85) 0 (1.11) (0.46) (0.19) (0.09)
In excess of net investment income.... 0 0 0 0 0 (0.02)
--------- ---------- --------- ---------- --------- --------
Total distributions................... (1.05) (0.10) (1.55) (0.87) (0.55) (0.45)
--------- ---------- --------- ---------- --------- --------
NET ASSET VALUE END OF PERIOD......... $ 13.93 $ 12.88 $ 12.96 $ 13.13 $ 11.18 $ 12.08
--------- ---------- --------- ---------- --------- --------
Total return +........................ 16.55% 0.10% 10.60% 25.55% (2.99%) 8.72%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses...................... 1.67%++ 1.68%++ 1.64% 1.62% 1.48% 1.41%++
Total expenses, excluding indirectly
paid expenses..................... 1.67%++ N/A N/A N/A N/A N/A
Net investment income............... 2.85%++ 2.87%++ 3.19% 3.30% 3.12% 3.09%++
Portfolio turnover rate............... 61% 28% 34% 37% 35% 19%
Average commission rate paid per
share............................... $ 0.0594 $ 0.0595 $ 0.0593 N/A N/A N/A
NET ASSETS END OF PERIOD
(THOUSANDS)......................... $119,797 $107,347 $109,591 $108,983 $100,052 $65,475
</TABLE>
* For the period from January 26, 1993 (commencement of class operations) to
December 31, 1993.
** The Fund changed its fiscal year end from December 31 to March 31, effective
March 31, 1997.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED THREE MONTHS YEAR ENDED
SEPTEMBER 30, 1997 ENDED DECEMBER 31,
(UNAUDITED) MARCH 31, 1997** 1996 1995 1994*
<S> <C> <C> <C> <C> <C>
CLASS C SHARES
NET ASSET VALUE BEGINNING OF PERIOD.................. $ 12.80 $ 12.88 $ 13.11 $11.17 $12.00
--------- --------- --------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income................................ 0.20 0.10 0.40 0.41 0.18
Net realized and unrealized gain (loss) on
investments........................................ 1.91 (0.09) 0.93 2.40 (0.61)
--------- --------- --------- ------- -------
Total from investment operations..................... 2.11 0.01 1.33 2.81 (0.43)
--------- --------- --------- ------- -------
LESS DISTRIBUTIONS FROM
Net investment income................................ (0.20) (0.09) (0.45) (0.41) (0.21)
Net realized gain on investments..................... (0.85) 0 (1.11) (0.46) (0.19)
--------- --------- --------- ------- -------
Total distributions.................................. (1.05) (0.09) (1.56) (0.87) (0.40)
--------- --------- --------- ------- -------
NET ASSET VALUE END OF PERIOD........................ $ 13.86 $ 12.80 $ 12.88 $13.11 $11.17
--------- --------- --------- ------- -------
Total return+........................................ 16.73% 0.06% 10.24% 25.48% (3.58%)
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses..................................... 1.67%++ 1.68%++ 1.65% 1.62% 1.64%++
Total expenses, excluding indirectly paid
expenses......................................... 1.67%++ N/A N/A N/A N/A
Net investment income.............................. 2.86%++ 2.92%++ 3.19% 3.31% 3.23%++
Portfolio turnover rate.............................. 61% 28% 34% 37% 35%
Average commission rate paid per share............... $ 0.0594 $ 0.0595 $0.0593 N/A N/A
NET ASSETS END OF PERIOD (THOUSANDS)................. $ 509 $ 353 $ 355 $ 300 $ 195
</TABLE>
* For the period from September 2, 1994 (commencement of class operations) to
December 31, 1994.
** The Fund changed its fiscal year end from December 31 to March 31, effective
March 31, 1997.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
18
<PAGE>
EVERGREEN (Photo of scales of justice
BALANCED FUND appears here)
FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED THREE MONTHS
SEPTEMBER 30, 1997 ENDED
(UNAUDITED) MARCH 31, 1997**
<S> <C> <C>
CLASS Y SHARES
NET ASSET VALUE BEGINNING OF PERIOD................................................ $ 12.87 $ 12.95
--------- ---------
INCOME FROM INVESTMENT OPERATIONS
Net investment income.............................................................. 0.27 0.13
Net realized and unrealized gain (loss) on investments............................. 1.91 (0.08)
--------- ---------
Total from investment operations................................................... 2.18 0.05
--------- ---------
LESS DISTRIBUTIONS FROM
Net investment income.............................................................. (0.27) (0.13)
Net realized gain on investments................................................... (0.85) 0
--------- ---------
Total distributions................................................................ (1.12) (0.13)
--------- ---------
NET ASSET VALUE END OF PERIOD...................................................... $ 13.93 $ 12.87
--------- ---------
Total return....................................................................... 17.17% 0.33%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses................................................................... 0.67%+ 0.68%+
Total expenses, excluding indirectly paid expenses............................... 0.67%+ N/A
Net investment income............................................................ 3.85%+ 3.87%+
Portfolio turnover rate............................................................ 61% 28%
Average commission rate paid per share............................................. $ 0.0594 $ 0.0595
NET ASSETS END OF PERIOD (THOUSANDS)............................................... $819,535 $767,747
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1996 1995 1994 1993 1992 1991*
<S> <C> <C> <C> <C> <C> <C>
CLASS Y SHARES (continued)
NET ASSET VALUE BEGINNING OF PERIOD....................... $ 13.12 $ 11.17 $ 12.07 $ 11.41 $ 11.02 $ 10.00
--------- --------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS
Net investment income..................................... 0.57 0.54 0.46 0.45 0.46 0.36
Net realized and unrealized gain (loss) on investments.... 0.95 2.40 (0.71) 0.75 0.42 1.03
--------- --------- --------- --------- --------- ---------
Total from investment operations.......................... 1.52 2.94 (0.25) 1.20 0.88 1.39
--------- --------- --------- --------- --------- ---------
LESS DISTRIBUTIONS FROM
Net investment income..................................... (0.58) (0.53) (0.46) (0.45) (0.45) (0.36)
Net realized gain on investments.......................... (1.11) (0.46) (0.19) (0.09) (0.04) (0.01)
--------- --------- --------- --------- --------- ---------
Total distributions....................................... (1.69) (0.99) (0.65) (0.54) (0.49) (0.37)
--------- --------- --------- --------- --------- ---------
NET ASSET VALUE END OF PERIOD............................. $ 12.95 $ 13.12 $ 11.17 $ 12.07 $ 11.41 $ 11.02
--------- --------- --------- --------- --------- ---------
Total return.............................................. 11.72% 26.81% (2.15%) 10.68% 8.21% 14.22%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses.......................................... 0.64% 0.62% 0.64% 0.66% 0.66% 0.68%+
Total expenses, excluding indirectly paid expenses...... N/A N/A N/A N/A N/A N/A
Net investment income................................... 4.19% 4.30% 3.93% 3.86% 4.20% 4.86%+
Portfolio turnover rate................................... 34% 37% 35% 19% 12% 19%
Average commission rate paid per share.................... $ 0.0593 N/A N/A N/A N/A N/A
NET ASSETS END OF PERIOD (THOUSANDS)...................... $778,641 $818,137 $778,657 $760,147 $520,232 $247,472
</TABLE>
* For the period from April 1, 1991 (commencement of class operations) to
December 31, 1991.
** The Fund changed its fiscal year end from December 31 to March 31, effective
March 31, 1997.
+ Annualized.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
19
<PAGE>
(Photo of brick wall EVERGREEN
and stars appears here) FOUNDATION FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED THREE MONTHS YEAR ENDED
SEPTEMBER 30, 1997 ENDED DECEMBER 31,
(UNAUDITED) MARCH 31, 1997** 1996 1995*
<S> <C> <C> <C> <C>
CLASS A SHARES
NET ASSET VALUE BEGINNING OF PERIOD........................... $ 16.00 $ 16.13 $ 15.12 $12.24
--------- --------- -------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income......................................... 0.23 0.12 0.50 0.44
Net realized and unrealized gain (loss) on investments........ 3.10 (0.13) 1.16 3.14
--------- --------- -------- -------
Total from investment operations.............................. 3.33 (0.01) 1.66 3.58
--------- --------- -------- -------
LESS DISTRIBUTIONS FROM
Net investment income......................................... (0.23) (0.12) (0.50) (0.47)
Net realized gain on investments.............................. (0.16) 0 (0.15) (0.23)
--------- --------- -------- -------
Total distributions........................................... (0.39) (0.12) (0.65) (0.70)
--------- --------- -------- -------
NET ASSET VALUE END OF PERIOD................................. $ 18.94 $ 16.00 $ 16.13 $15.12
--------- --------- -------- -------
Total return+................................................. 20.99% (0.16%) 11.27% 29.73%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses.............................................. 1.25%++ 1.25%++ 1.24% 1.33%++
Total expenses, excluding indirectly paid expenses.......... 1.25%++ N/A N/A N/A
Total expenses, excluding fee waivers and expense
reimbursements............................................ N/A N/A N/A 1.34%++
Net investment income....................................... 2.60%++ 2.83%++ 3.39% 3.73%++
Portfolio turnover rate....................................... 8% 2% 10% 28%
Average commission rate paid per share........................ $ 0.0658 $ 0.0670 $0.0649 N/A
NET ASSETS END OF PERIOD (MILLIONS)........................... $ 282 $ 220 $ 206 $ 107
</TABLE>
* For the period from January 3, 1995 (commencement of class operations) to
December 31, 1995.
** The Fund changed its fiscal year end from December 31 to March 31, effective
March 31, 1997.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED THREE MONTHS YEAR ENDED
SEPTEMBER 30, 1997 ENDED DECEMBER 31,
(UNAUDITED) MARCH 31, 1997** 1996 1995*
<S> <C> <C> <C> <C>
CLASS B SHARES
NET ASSET VALUE BEGINNING OF PERIOD........................... $ 15.94 $ 16.07 $ 15.07 $12.24
--------- --------- --------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income......................................... 0.16 0.09 0.40 0.36
Net realized and unrealized gain (loss) on investments........ 3.09 (0.13) 1.15 3.09
--------- --------- --------- -------
Total from investment operations.............................. 3.25 (0.04) 1.55 3.45
--------- --------- --------- -------
LESS DISTRIBUTIONS FROM
Net investment income......................................... (0.17) (0.09) (0.40) (0.39)
Net realized gain on investments.............................. (0.16) 0 (0.15) (0.23)
--------- --------- --------- -------
Total distributions........................................... (0.33) (0.09) (0.55) (0.62)
--------- --------- --------- -------
NET ASSET VALUE END OF PERIOD................................. $ 18.86 $ 15.94 $ 16.07 $15.07
--------- --------- --------- -------
Total return+................................................. 20.51% (0.32%) 10.47% 28.68%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses.............................................. 2.00%++ 2.00%++ 1.99% 2.07%++
Total expenses, excluding indirectly paid expenses.......... 2.00%++ N/A N/A N/A
Net investment income....................................... 1.85%++ 2.07%++ 2.64% 2.99%++
Portfolio turnover rate....................................... 8% 2% 10% 28%
Average commission rate paid per share........................ $ 0.0658 $ 0.0670 $0.0649 N/A
NET ASSETS END OF PERIOD (MILLIONS)........................... $ 840 $ 606 $ 570 $ 296
</TABLE>
* For the period from January 3, 1995 (commencement of class operations) to
December 31, 1995.
** The Fund changed its fiscal year end from December 31 to March 31, effective
March 31, 1997.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
20
<PAGE>
EVERGREEN (Photo of brick wall
FOUNDATION FUND and stars appears here)
FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED THREE MONTHS YEAR ENDED
SEPTEMBER 30, 1997 ENDED DECEMBER 31,
(UNAUDITED) MARCH 31, 1997** 1996 1995*
<S> <C> <C> <C> <C>
CLASS C SHARES
NET ASSET VALUE BEGINNING OF PERIOD........................... $ 15.94 $ 16.06 $ 15.07 $12.24
--------- --------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income......................................... 0.16 0.09 0.40 0.34
Net realized and unrealized gain (loss) on investments........ 3.09 (0.13) 1.14 3.09
--------- --------- -------- --------
Total from investment operations.............................. 3.25 (0.04) 1.54 3.43
--------- --------- -------- --------
LESS DISTRIBUTIONS FROM
Net investment income......................................... (0.17) (0.08) (0.40) (0.37)
Net realized gain on investments.............................. (0.16) 0 (0.15) (0.23)
--------- --------- -------- --------
Total distributions........................................... (0.33) (0.08) (0.55) (0.60)
--------- --------- -------- --------
NET ASSET VALUE END OF PERIOD................................. $ 18.86 $ 15.94 $ 16.06 $15.07
--------- --------- -------- --------
Total return+................................................. 20.51% (0.26%) 10.41% 28.49%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses.............................................. 2.00%++ 2.00%++ 1.99% 2.23%++
Total expenses, excluding indirectly paid expenses.......... 2.00%++ N/A N/A N/A
Total expenses, excluding fee waivers and expense
reimbursements............................................ N/A N/A N/A 2.37%++
Net investment income....................................... 1.84%++ 2.07%++ 2.64% 2.83%++
Portfolio turnover rate....................................... 8% 2% 10% 28%
Average commission rate paid per share........................ $ 0.0658 $ 0.0670 $0.0649 N/A
NET ASSETS END OF PERIOD (MILLIONS) $ 37 $ 28 $ 27 $ 11
</TABLE>
* For the period from January 3, 1995 (commencement of class operations) to
December 31, 1995.
** The Fund changed its fiscal year end from December 31 to March 31, effective
March 31, 1997.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
21
<PAGE>
(Photo of brick wall EVERGREEN
and stars appears here) FOUNDATION FUND
FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED THREE MONTHS YEAR ENDED
SEPTEMBER 30, 1997 ENDED DECEMBER 31,
(UNAUDITED) MARCH 31, 1997** 1996 1995
<S> <C> <C> <C> <C>
CLASS Y SHARES
NET ASSET VALUE BEGINNING OF PERIOD........................... $ 16.02 $ 16.14 $ 15.13 $12.27
---------- ---------- -------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income......................................... 0.25 0.13 0.54 0.51
Net realized and unrealized gain (loss) on investments........ 3.10 (0.13) 1.16 3.07
---------- ---------- -------- -------
Total from investment operations.............................. 3.35 0 1.70 3.58
---------- ---------- -------- -------
LESS DISTRIBUTIONS FROM
Net investment income......................................... (0.25) (0.12) (0.54) (0.49)
Net realized gain on investments.............................. (0.16) 0 (0.15) (0.23)
---------- ---------- -------- -------
Total distributions........................................... (0.41) (0.12) (0.69) (0.72)
---------- ---------- -------- -------
NET ASSET VALUE END OF PERIOD................................. $ 18.96 $ 16.02 $ 16.14 $15.13
---------- ---------- -------- -------
Total return.................................................. 21.10% (0.02%) 11.53% 29.69%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses.............................................. 0.99%+ 1.00%+ 0.99% 1.07%
Total expenses, excluding indirectly paid expenses.......... 0.99%+ N/A N/A N/A
Total expenses, excluding fee waivers and expense
reimbursements............................................ N/A N/A N/A N/A
Net investment income....................................... 2.85%+ 3.07%+ 3.64% 3.89%
Portfolio turnover rate....................................... 8% 2% 10% 28%
Average commission rate paid per share........................ $ 0.0658 $ 0.0670 $0.0649 N/A
NET ASSETS END OF PERIOD (THOUSANDS).......................... $ 975 $ 802 $ 809 $ 623
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1994 1993 1992 1991 1990*
<S> <C> <C> <C> <C> <C>
CLASS Y SHARES (continued)
NET ASSET VALUE BEGINNING OF PERIOD.......................................... $13.12 $11.98 $10.75 $ 8.95 $10.00
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income........................................................ 0.42 0.31 0.27 0.33 1.23(a)
Net realized and unrealized gain (loss) on investments....................... (0.57) 1.55 1.83 2.77 (0.59)
------- ------- ------- ------- -------
Total from investment operations............................................. (0.15) 1.86 2.10 3.10 0.64
------- ------- ------- ------- -------
LESS DISTRIBUTIONS FROM
Net investment income........................................................ (0.42) (0.31) (0.24) (0.33) (1.17)
Net realized gain on investments............................................. (0.28) (0.41) (0.63) (0.97) (0.52)
------- ------- ------- ------- -------
Total distributions.......................................................... (0.70) (0.72) (0.87) (1.30) (1.69)
------- ------- ------- ------- -------
NET ASSET VALUE END OF PERIOD................................................ $12.27 $13.12 $11.98 $10.75 $ 8.95
------- ------- ------- ------- -------
Total return................................................................. (1.12%) 15.71% 19.99% 36.36% 6.60%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses............................................................. 1.14% 1.20% 1.40% 1.20% 0.00%+
Total expenses, excluding indirectly paid expenses......................... N/A N/A N/A N/A N/A
Total expenses, excluding fee waivers and expense reimbursements........... N/A N/A 1.43% 2.58% 3.64%+
Net investment income...................................................... 3.51% 2.81% 2.93% 2.86% 15.07%+(a)
Portfolio turnover rate...................................................... 33% 60% 127% 178% 131%
Average commission rate paid per share....................................... N/A N/A N/A N/A N/A
NET ASSETS END OF PERIOD (MILLIONS).......................................... $332 $240 $ 64 $ 11 $ 2
</TABLE>
* For the period from January 2, 1990 (commencement of class operations) to
December 31, 1990.
** The Fund changed its fiscal year end from December 31 to March 31, effective
March 31, 1997.
+ Annualized.
(a) Includes receipt of a special dividend representing $0.62 per share of net
investment income and 7.59% of average net assets.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
22
<PAGE>
EVERGREEN (Photo of brick wall
TAX STRATEGIC FOUNDATION FUND and dollar sign appears here)
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED THREE MONTHS YEAR ENDED
SEPTEMBER 30, 1997 ENDED DECEMBER 31,
(UNAUDITED) MARCH 31, 1997** 1996 1995*
<S> <C> <C> <C> <C>
CLASS A SHARES
NET ASSET VALUE BEGINNING OF PERIOD........................... $ 13.57 $ 13.50 $ 12.20 $ 10.44
---------- --------- ---------- ---------
INCOME FROM INVESTMENT OPERATIONS
Net investment income......................................... 0.16 0.07 0.27 0.29
Net realized and unrealized gain (loss) on investments........ 1.98 0.06+++ 1.59 2.24
---------- --------- ---------- ---------
Total from investment operations.............................. 2.14 0.13 1.86 2.53
---------- --------- ---------- ---------
LESS DISTRIBUTIONS FROM
Net investment income......................................... (0.15) (0.06) (0.28) (0.31)
Net realized gain on investments.............................. (0.10) 0 (0.28) (0.46)
---------- --------- ---------- ---------
Total distributions........................................... (0.25) (0.06) (0.56) (0.77)
---------- --------- ---------- ---------
NET ASSET VALUE END OF PERIOD................................. $ 15.46 $ 13.57 $ 13.50 $ 12.20
---------- --------- ---------- ---------
Total return +................................................ 15.83% 0.98% 15.39% 24.82%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses.............................................. 1.39%++ 1.38%++ 1.52% 1.75%++
Total expenses, excluding indirectly paid expenses.......... 1.38%++ N/A N/A N/A
Total expenses, excluding fee waivers and expense
reimbursements............................................ N/A N/A 1.76% 5.02%++
Net investment income....................................... 2.29%++ 2.30%++ 2.39% 2.79%++
Portfolio turnover rate....................................... 35% 29% 88% 110%
Average commission rate paid per share........................ $ 0.0657 $ 0.0656 $0.0648 N/A
NET ASSETS END OF PERIOD (THOUSANDS).......................... $ 36,943 $ 15,039 $11,166 $2,702
</TABLE>
* For the period from January 17, 1995 (commencement of class operations) to
December 31, 1995.
** The Fund changed its fiscal year end from December 31 to March 31, effective
March 31, 1997.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
+++ The per share amount is not in accord with the net realized and unrealized
gain (loss) for the period due to the timing of the sales of fund shares and
the amount of per share realized and unrealized gains and losses at such
time.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED THREE MONTHS YEAR ENDED
SEPTEMBER 30, 1997 ENDED DECEMBER 31,
(UNAUDITED) MARCH 31, 1997** 1996 1995*
<S> <C> <C> <C> <C>
CLASS B SHARES
NET ASSET VALUE BEGINNING OF PERIOD........................... $ 13.56 $ 13.49 $ 12.19 $10.31
--------- --------- -------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income......................................... 0.11 0.05 0.19 0.22
Net realized and unrealized gain (loss) on investments........ 1.98 0.06+++ 1.59 2.37
--------- --------- -------- -------
Total from investment operations.............................. 2.09 0.11 1.78 2.59
--------- --------- -------- -------
LESS DISTRIBUTIONS FROM
Net investment income......................................... (0.10) (0.04) (0.20) (0.25)
Net realized gain on investments.............................. (0.10) 0 (0.28) (0.46)
--------- --------- -------- -------
Total distributions........................................... (0.20) (0.04) (0.48) (0.71)
--------- --------- -------- -------
NET ASSET VALUE END OF PERIOD................................. $ 15.45 $ 13.56 $ 13.49 $12.19
--------- --------- -------- -------
Total return +................................................ 15.46% 0.84% 14.65% 25.61%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses.............................................. 2.15%++ 2.14%++ 2.27% 2.50%++
Total expenses, excluding indirectly paid expenses.......... 2.14%++ N/A N/A N/A
Total expenses, excluding fee waivers and expense
reimbursements............................................ N/A N/A 2.51% 3.65%++
Net investment income....................................... 1.53%++ 1.55%++ 1.64% 2.03%++
Portfolio turnover rate....................................... 35% 29% 88% 110%
Average commission rate paid per share........................ $ 0.0657 $ 0.0656 $0.0648 N/A
NET ASSETS END OF PERIOD (THOUSANDS).......................... $ 98,086 $ 38,838 $28,007 $6,559
</TABLE>
* For the period from January 6, 1995 (commencement of class operations) to
December 31, 1995.
** The Fund changed its fiscal year end from December 31 to March 31, effective
March 31, 1997.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
+++ The per share amount is not in accord with the net realized and unrealized
gain (loss) for the period due to the timing of the sales of fund shares and
the amount of per share realized and unrealized gains and losses at such
time.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
23
<PAGE>
(Photo of brick wall EVERGREEN
and dollar sign appears here) TAX STRATEGIC FOUNDATION FUND
FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED THREE MONTHS YEAR ENDED
SEPTEMBER 30, 1997 ENDED DECEMBER 31,
(UNAUDITED) MARCH 31, 1997** 1996 1995*
<S> <C> <C> <C> <C>
CLASS C SHARES
NET ASSET VALUE BEGINNING OF PERIOD........................... $ 13.53 $ 13.47 $ 12.19 $10.69
--------- --------- --------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income......................................... 0.11 0.06 0.18 0.22
Net realized and unrealized gain (loss) on investments........ 1.98 0.05+++ 1.58 1.99
--------- --------- --------- -------
Total from investment operations.............................. 2.09 0.11 1.76 2.21
--------- --------- --------- -------
LESS DISTRIBUTIONS FROM
Net investment income......................................... (0.10) (0.05) (0.20) (0.25)
Net realized gain on investments.............................. (0.10) 0 (0.28) (0.46)
--------- --------- --------- -------
Total distributions........................................... (0.20) (0.05) (0.48) (0.71)
--------- --------- --------- -------
NET ASSET VALUE END OF PERIOD................................. $ 15.42 $ 13.53 $ 13.47 $12.19
--------- --------- --------- -------
Total return +................................................ 15.49% 0.77% 14.54% 21.19%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses.............................................. 2.15%++ 2.13%++ 2.25% 2.50%++
Total expenses, excluding indirectly paid expenses.......... 2.14%++ N/A N/A N/A
Total expenses, excluding fee waivers and expense
reimbursements............................................ N/A N/A 2.48% 18.91%++
Net investment income....................................... 1.54%++ 1.55%++ 1.64% 2.07%++
Portfolio turnover rate....................................... 35% 29% 88% 110%
Average commission rate paid per share........................ $ 0.0657 $ 0.0656 $0.0648 N/A
NET ASSETS END OF PERIOD (THOUSANDS).......................... $ 11,943 $ 5,086 $ 4,108 $ 496
</TABLE>
* For the period from March 3, 1995 (commencement of class operations) to
December 31, 1995.
** The Fund changed its fiscal year end from December 31 to March 31, effective
March 31, 1997.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
+++ The per share amount is not in accord with the net realized and unrealized
gain (loss) for the period due to the timing of the sales of fund shares and
the amount of per share realized and unrealized gains and losses at such
time.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
24
<PAGE>
(Photo of brick
EVERGREEN wall and dollar sign
TAX STRATEGIC FOUNDATION FUND appears here)
FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED THREE MONTHS YEAR ENDED
SEPTEMBER 30, 1997 ENDED DECEMBER 31,
(UNAUDITED) MARCH 31, 1997** 1996 1995 1994 1993*
<S> <C> <C> <C> <C> <C> <C>
CLASS Y SHARES
NET ASSET VALUE BEGINNING OF PERIOD....... $ 13.61 $ 13.54 $ 12.22 $ 10.27 $ 10.31 $10.00
-------- -------- -------- -------- -------- ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income..................... 0.19 0.09 0.34 0.35 0.27 0.05
Net realized and unrealized gain (loss) on
investments............................. 1.98 0.05++ 1.56 2.39 0.08 0.31
-------- -------- -------- -------- -------- ------
Total from investment operations.......... 2.17 0.14 1.90 2.74 0.35 0.36
-------- -------- -------- -------- -------- ------
LESS DISTRIBUTIONS FROM
Net investment income..................... (0.18) (0.07) (0.30) (0.33) (0.27) (0.05)
Net realized gain on investments.......... (0.10) 0 (0.28) (0.46) (0.12) 0
-------- -------- -------- -------- -------- ------
Total distributions....................... (0.28) (0.07) (0.58) (0.79) (0.39) (0.05)
-------- -------- -------- -------- -------- ------
NET ASSET VALUE END OF PERIOD............. $ 15.50 $ 13.61 $ 13.54 $ 12.22 $ 10.27 $10.31
-------- -------- -------- -------- -------- ------
Total return.............................. 16.02% 1.03% 15.77% 27.30% 3.44% 3.55%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses.......................... 1.12%+ 1.13%+ 1.30% 1.50% 1.49% 0.00%+
Total expenses, excluding indirectly
paid expenses......................... 1.11%+ N/A N/A N/A N/A N/A
Total expenses, excluding fee waivers
and expense reimbursements............ N/A N/A 1.56% 2.23% 2.41% 3.10%+
Net investment income................... 2.56%+ 2.54%+ 2.63% 3.06% 2.87% 3.65%+
Portfolio turnover rate................... 35% 29% 88% 110% 245% 25%
Average commission rate paid per share.... $ 0.0657 $ 0.0656 $0.0648 N/A N/A N/A
NET ASSETS END OF PERIOD (THOUSANDS)...... $ 17,838 $ 15,311 $15,002 $13,485 $10,575 $5,424
</TABLE>
* For the period from November 2, 1993 (commencement of class operations) to
December 31, 1993.
** The Fund changed its fiscal year end from December 31 to March 31, effective
March 31, 1997.
+ Annualized.
++ The per share amount is not in accord with the net realized and unrealized
gain (loss) for the period due to the timing of the sales of fund shares and
the amount of per share realized and unrealized gains and losses at such
time.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
25
<PAGE>
- ------------------------------------------------------------------------
(Photo of eagle EVERGREEN
appears here) AMERICAN RETIREMENT FUND
SCHEDULE OF INVESTMENTS
September 30, 1997 (Unaudited)
[CAPTION]
<TABLE>
<CAPTION>
SHARES VALUE
- -------------------------------------------------------------------
<C> <C> <S> <C>
COMMON STOCKS-- 45.8%
<C> <C> <S> <C>
AUTOMOTIVE EQUIPMENT &
MANUFACTURING-- 0.8%
30,000 Dana Corp......................... $ 1,481,250
--------------
BANKS-- 7.1%
40,000 Australia & New Zealand Banking
Group Ltd....................... 1,625,000
29,375 Banc One Corp..................... 1,639,492
20,000 BancorpSouth, Inc................. 705,000
20,000 Bank of New York Co., Inc. (The).. 960,000
16,000 Cape Cod Bank & Trust Co.......... 548,000
13,000 Comerica, Inc..................... 1,026,188
25,050 Crestar Financial Corp............ 1,174,219
45,000 First Palm Beach Bancorp, Inc..... 1,566,562
8,000 First Union Corp. **.............. 400,500
5,000 Fleet Financial Group, Inc........ 327,813
53,000 Hibernia Corp. Cl. A.............. 901,000
18,100 Horizon Financial Corp............ 290,731
25,200 Maryland Federal Bancorp, Inc..... 1,190,700
24,000 Susquehanna Bancshares, Inc....... 738,000
-----------
13,093,205
-----------
BUILDING, CONSTRUCTION &
FURNISHINGS-- 1.2%
30,000 Fletcher Challenge Building ADR... 988,125
13,584 Medusa Corp....................... 646,938
10,578 Southdown, Inc.................... 577,811
----------
2,212,874
----------
BUSINESS EQUIPMENT & SERVICES--
1.6%
15,000 Dun & Bradstreet Corp. (The)...... 425,625
18,000 Pitney Bowes, Inc................. 1,497,375
56,000 Reynolds & Reynolds Co. (The),
Cl. A........................... 1,088,500
----------
3,011,500
----------
CHEMICAL & AGRICULTURAL
PRODUCTS-- 1.6%
8,000 Eastman Chemical Co............... 496,000
11,000 Grace (W.R.) & Co................. 809,875
17,000 Imperial Chemical Industrial Plc,
ADR............................. 1,124,125
15,600 Stepan Co......................... 416,325
----------
2,846,325
----------
COMMUNICATION SYSTEMS &
SERVICES-- 0.1%
5,500 * AirTouch Communications, Inc...... 194,906
---------
CONSUMER PRODUCTS &
SERVICES-- 1.0%
11,000 International Flavors &
Fragrances, Inc................. 539,000
30,000 Jostens, Inc...................... 813,750
16,611 Service Corporation
International................... 534,667
----------
1,887,417
----------
<CAPTION>
SHARES VALUE
- ---------------------------------------------------------------------
<C> <C> <S> <C>
<CAPTION>
COMMON STOCKS-- CONTINUED
<C> <C> <S> <C>
DIVERSIFIED COMPANIES-- 1.7%
10,000 Harris Corp....................... $ 457,500
19,000 Tenneco, Inc...................... 909,625
80,000 Tomkins Plc, ADR.................. 1,810,000
----------
3,177,125
----------
ELECTRICAL EQUIPMENT & SERVICES--
1.3%
15,000 AMP, Inc.......................... 803,438
2,000 Emerson Electric Co............... 115,250
11,656 Hubbell, Inc...................... 539,090
16,000 Thomas & Betts Corp............... 874,011
----------
2,331,789
----------
ENERGY-- 4.9%
8,000 Amoco Corp........................ 771,000
8,000 Atlantic Richfield Co............. 683,500
60,000 Berry Petroleum Co. Cl. A......... 1,192,500
15,000 Consolidated Natural Gas Co....... 872,812
15,400 Exxon Corp........................ 986,562
3,000 Kerr-McGee Corp................... 206,438
10,000 Mobil Corp........................ 740,000
19,250 Northwest Natural Gas Co.......... 495,688
17,200 Penn Virginia Corp................ 512,775
10,775 * Seitel, Inc....................... 478,141
12,000 Texaco, Inc....................... 737,250
30,000 Williams Companies, Inc. (The).... 1,404,375
----------
9,081,041
----------
FINANCE & INSURANCE-- 3.9%
36,363 Equitable Companies, Inc.......... 1,493,156
10,000 Hartford Financial Services Group,
Inc. (The)...................... 860,625
8,000 HSB Group, Inc.................... 445,500
20,000 LaSalle Re Holdings, Ltd.......... 702,500
30,000 Ohio Casualty Corp................ 1,391,250
6,000 Transamerica Corp................. 597,000
46,184 Trenwick Group, Inc............... 1,743,446
----------
7,233,477
----------
FOOD & BEVERAGE
PRODUCTS-- 2.1%
70,900 Flowers Industries, Inc........... 1,444,587
18,000 H.J. Heinz Co..................... 831,375
50,000 Lance, Inc........................ 1,037,500
22,400 Tasty Baking Corp................. 467,600
----------
3,781,062
----------
HEALTHCARE PRODUCTS & SERVICES--
2.8%
10,000 Abbott Laboratories............... 639,375
14,000 Bristol-Myers Squibb Co........... 1,158,500
10,000 Merck & Co., Inc.................. 999,375
34,000 Shared Medical System Corp........ 1,797,750
5,000 Warner-Lambert Co................. 674,687
30,000 West Co., Inc. (The).............. 990,000
----------
6,259,687
----------
</TABLE>
(CONTINUED)
26
<PAGE>
- ------------------------------------------------------------
EVERGREEN (Photo of eagle
AMERICAN RETIREMENT FUND appears here)
SCHEDULE OF INVESTMENTS (CONTINUED)
September 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
SHARES VALUE
- ---------------------------------------------------------------
<C> <C> <S> <C>
<CAPTION>
COMMON STOCKS-- CONTINUED
<C> <C> <S> <C>
INDUSTRIAL SPECIALTY PRODUCTS &
SERVICES-- 1.8%
48,776 Flowserve Corp.................... $ 1,457,183
55,100 Hardinge Brothers, Inc............ 1,894,062
------------
3,351,245
------------
LEISURE & TOURISM-- 0.6%
45,000 Gaylord Entertainment Co. Cl. A... 1,161,563
------------
METAL PRODUCTS & SERVICES-- 0.5%
42,000 Lindberg Corp..................... 504,000
5,000 Phelps Dodge Corp................. 388,125
------------
892,125
------------
PUBLISHING, BROADCASTING &
ENTERTAINMENT-- 1.7%
15,625 * Chancellor Media Corp............. 822,266
8,000 McGraw-Hill Companies, Inc........ 541,500
50,000 Reader's Digest Association., Inc.
(The)........................... 1,500,000
5,800 Time Warner, Inc.................. 314,287
----------
3,178,053
----------
REAL ESTATE-- 0.5%
10,000 Post Property, Inc. REIT.......... 397,500
15,000 Prentiss Properties Trust REIT.... 433,125
---------
830,625
---------
RETAILING & WHOLESALE-- 2.1%
23,000 J. C. Penney Co., Inc............. 1,339,750
8,000 Mercantile Stores Co., Inc........ 503,500
35,129 * Proffitts, Inc.................... 2,081,381
----------
3,924,631
----------
TEXTILE & APPAREL-- 0.2%
10,000 Oxford Industry, Inc.............. 338,750
----------
TRANSPORTATION-- 0.4%
3,191 Burlington Northern Santa Fe...... 308,330
7,000 Union Pacific Corp................ 438,375
----------
746,705
----------
UTILITIES-- ELECTRIC-- 5.3%
18,200 Commonwealth Energy System........ 491,400
20,000 Eastern Utilities Assocociates.... 398,750
30,000 Enova Corp........................ 757,500
80,000 Houston Industries, Inc........... 1,740,000
50,000 Illinova Corp..................... 1,078,125
50,000 Long Island Lighting Co........... 1,281,250
37,000 PP&L Resources, Inc............... 809,375
50,000 Public Service Enterprise Group,
Inc............................. 1,287,500
22,000 Southern Co....................... 496,375
55,000 TNP Enterprises, Inc.............. 1,381,875
----------
9,722,150
----------
<CAPTION>
SHARES VALUE
- ---------------------------------------------------------------------
<C> <C> <S> <C>
<CAPTION>
COMMON STOCKS-- CONTINUED
<C> <C> <S> <C>
UTILITIES-- GAS-- 1.9%
40,500 Chesapeake Utilities Corp......... $ 744,187
25,000 CMS Energy Corp. Cl. G............ 539,063
22,000 South Jersey Industry, Inc........ 552,750
40,000 Southwest Gas Corp................ 785,000
40,400 Yankee Energy System, Inc......... 956,975
----------
3,577,975
----------
UTILITIES-- TELEPHONE-- 0.7%
2,521 AT & T Corp....................... 111,712
35,000 Frontier Corp..................... 805,000
10,000 U.S. West Communications, Inc..... 385,000
----------
1,301,712
----------
TOTAL COMMON STOCKS
(COST $61,478,067).............. 85,617,192
-----------
<CAPTION>
PREFERRED STOCKS-- 0.7%
<C> <C> <S> <C>
HEALTHCARE PRODUCTS AND
SERVICES-- 0.7%
5,000 Pacificare Health Systems Inc. Cl.
A (cost $165,312)............... 137,500
-----------
<CAPTION>
CONVERTIBLE PREFERRED STOCKS-- 13.8%
<C> <C> <S> <C>
BANKS-- 1.8%
50,000 National Australia Bank Ltd.
7.875%, Series Unit............. 1,468,750
58,000 WBK Trust
10.0%, STRYPES (exchangeable for
Westpac Banking Corp. Common
Stock).......................... 1,834,800
-----------
3,303,550
-----------
BUSINESS EQUIPMENT & SERVICES--
0.3%
6,000 Microsoft Corp.
$2.196, Series A, PERCS......... 526,125
----------
COMMUNICATION SYSTEMS &
SERVICES-- 0.5%
30,000 AirTouch Communications
6.00%, Series B................. 976,875
----------
DIVERSIFIED COMPANIES-- 1.1%
26,800 Corning, Inc.
6.00%, MIPS..................... 2,008,325
----------
ENERGY-- 0.6%
20,000 Callon Petroleum Co.
8.50%, Series A................. 847,500
5,000 Nuevo Energy Co.
5.75%, Series A, TECONS......... 256,250
----------
1,103,750
----------
</TABLE>
(CONTINUED)
27
<PAGE>
- -------------------------------------------------------------------------
(Photo of eagle EVERGREEN
appears here) AMERICAN RETIREMENT FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
September 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
SHARES VALUE
- ---------------------------------------------------------------------------
<C> <C> <S> <C>
<CAPTION>
CONVERTIBLE PREFERRED-- CONTINUED
<C> <C> <S> <C>
FINANCE & INSURANCE-- 1.7%
20,000 American General Corp.
$3.00, Series A, MIPS........... $ 1,345,000
13,000 American Heritage Life
Investment Corp.
8.50%, PRIDES................... 806,000
15,000 Merrill Lynch & Co., Inc.
7.25%, STRYPES
(exchangeable for SunAmerica,
Inc. Common Stock).............. 1,057,500
----------
3,208,500
----------
FOOD & BEVERAGE PRODUCTS-- 1.8%
25,000 Ralston Purina Co.
7.00%, SAILS (exchangeable for
Interstate Bakeries Common
Stock).......................... 1,684,375
30,000 Wendys Financing I
5.00%, Series A, TECONS......... 1,563,750
----------
3,248,125
----------
METAL PRODUCTS & SERVICES-- 1.3%
20,000 Timet Capital Trust I
6.625%, 144A, BUCS.............. 1,170,000
80,000 Worthington Industries, Inc.
7.25%, DECS (exchangeable for
Rouge Steel Co. Common Stock)... 1,280,000
----------
2,450,000
----------
PAPER & PACKAGING-- 0.7%
30,000 Crown Cork & Seal Co., Inc.
4.50%, MIPS..................... 1,335,000
----------
PUBLISHING, BROADCASTING &
ENTERTAINMENT-- 2.1%
15,000 AMC Entertainment, Inc.
$1.75........................... 505,312
10,000 American Radio Systems Corp.
7.00%, 144A..................... 576,300
10,300 Granite Broadcasting Corp.
$1.938.......................... 618,000
22,000 Houston Industries, Inc.
7.00%, ACES (exchangeable for
Time Warner, Inc. Common
Stock).......................... 1,144,000
20,000 Merrill Lynch & Co., Inc.
6.00%, STRYPES
(exchangeable for Cox
Communications, Inc. Common
Stock).......................... 501,250
10,000 TCI Communications, Inc.
$2.125, Series A................ 515,000
-----------
3,859,862
-----------
<CAPTION>
SHARES VALUE
- ----------------------------------------------------------------------------
<C> <C> <S> <C>
<CAPTION>
CONVERTIBLE PREFERRED-- CONTINUED
<C> <C> <S> <C>
TRANSPORTATION-- 1.1%
20,000 CNF Trust I
5.00%, Series A, TECONS......... $ 1,287,500
10,000 Hvide Capital Trust
6.50%, 144A..................... 655,000
----------
1,942,500
----------
UTILITIES-- 0.8%
40,000 MCN Corp.
8.75%, PRIDES................... 1,220,000
5,000 Philippine Long Distance
Telephone Co., GDS
7.00%, Series III............... 258,125
----------
1,478,125
----------
TOTAL CONVERTIBLE PREFERRED
(COST $22,651,353).............. 25,440,737
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
- -----------------------------------------------------------------------------
<C> <C> <S> <C>
CONVERTIBLE DEBENTURES-- 10.0%
BANKS-- 0.5%
$ 800,000 First State Bancorp.
7.50%, 4/30/17.................. 984,000
----------
BUSINESS EQUIPMENT & SERVICES--
2.2%
1,000,000 Adaptec, Inc.
4.75%, 2/1/04, 144A............. 1,150,000
1,000,000 HMT Technology Corp.
5.75%, 1/15/04, 144A............ 960,000
250,000 Personnel Group of America Inc.
5.75%, 7/1/04, 144A............. 294,375
250,000 Platinum Technology, Inc.
6.75%, 11/15/01................. 427,500
1,000,000 Quantum Corp.
7.00%, 8/1/04................... 1,154,166
----------
3,986,041
----------
ELECTRICAL EQUIPMENT & SERVICES--
0.8%
1,500,000 Kent Electronics Corp.
4.50%, 9/1/04................... 1,518,750
----------
ENERGY-- 0.3%
500,000 Swift Energy Co.
6.25%, 11/15/06................. 542,500
----------
INDUSTRIAL SPECIALTY PRODUCTS &
SERVICES-- 0.5%
600,000 Robbins & Myers, Inc.
6.50%, 9/1/03................... 909,000
-----------
LEISURE & TOURISM-- 0.4%
1,000,000 Marriot International, Inc.
Zero Coupon, 3/25/11 (effective
yield 4.27%) LYONS.............. 653,800
-----------
</TABLE>
(CONTINUED)
28
<PAGE>
- ----------------------------------------------------------------
EVERGREEN (Photo of eagle
AMERICAN RETIREMENT FUND appears here)
SCHEDULE OF INVESTMENTS (CONTINUED)
September 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------
<C> <C> <S> <C>
<CAPTION>
CONVERTIBLE DEBENTURES-- CONTINUED
<C> <C> <S> <C>
OIL FIELD SERVICES-- 4.2%
$ 1,000,000 Key Energy Group, Inc
5.00%, 9/15/04.................. $ 1,025,000
500,000 Key Energy Group, Inc.
7.50%, 7/1/03, 144A............. 1,666,900
1,000,000 Nabors Industries, Inc.
5.00%, 5/15/06.................. 2,225,000
500,000 Offshore Logistics, Inc
6.00%, 12/15/03................. 517,500
1,000,000 Offshore Logistics, Inc.
6.00%, 12/15/03, 144A........... 1,035,000
1,000,000 Parker Drilling Co.
5.50%, 8/1/04................... 1,215,000
----------
7,684,400
----------
PUBLISHING, BROADCASTING &
ENTERTAINMENT-- 0.3%
1,000,000 Jacor Communications, Inc.
Zero Coupon, 6/12/11 (effective
yield 5.50%) LYONS.............. 635,000
----------
RETAILING & WHOLESALE-- 0.7%
Central Garden & Pet Co.
500,000 6.00%, 11/15/03, 144A............. 628,750
500,000 6.00%, 11/15/03................... 628,750
----------
1,257,500
----------
TRANSPORTATION-- 0.1%
200,000 Halter Marine Group Inc.
4.50%, 9/15/04.................. 233,760
----------
TOTAL CONVERTIBLE DEBENTURES
(COST $14,246,056).............. 18,404,751
----------
<CAPTION>
CORPORATE BONDS-- 2.2%
<C> <C> <S> <C>
BANKS-- 0.6%
1,000,000 NationsBank Corp.
6.50%, 8/15/03.................. 995,644
----------
FINANCE & INSURANCE-- 1.1%
1,000,000 American General Finance Corp.
7.125%, 12/1/99................. 1,020,360
1,000,000 Ford Motor Credit Co.
5.625%, 12/15/98................ 996,038
----------
2,016,398
----------
TELECOMMUNICATION SERVICES &
EQUIPMENT-- 0.5%
1,000,000 GTE Southwest, Inc.
5.82%, 12/1/99, Ser. A.......... 993,944
----------
TOTAL CORPORATE BONDS
(COST $4,004,940)............... 4,005,986
----------
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------
<C> <C> <S> <C>
<CAPTION>
U.S. GOVERNMENT & AGENCY OBLIGATIONS-- 25.0%
<C> <C> <S> <C>
GOVERNMENT AGENCY NOTES &
BONDS-- 24.1%
$ 700,000 Federal Agricultural Mortgage
Corp.
7.03%, 5/26/98.................. $ 706,041
1,000,000 Federal Farm Credit Bank
6.70%, 8/6/04................... 1,001,352
Federal Home Loan Bank
2,000,000 5.65%, 12/29/00................... 1,979,160
1,000,000 6.195%, 2/5/03.................... 988,431
2,000,000 6.565%, 8/6/02.................... 2,005,480
2,000,000 6.585%, 10/15/02.................. 2,000,000
600,000 6.665%, 9/30/02................... 599,617
2,000,000 6.70%, 4/9/03..................... 1,998,750
3,000,000 6.715%, 4/9/03.................... 2,994,170
2,000,000 7.00%, 8/13/04.................... 2,010,094
2,000,000 7.00%, 7/14/05.................... 2,018,500
1,000,000 7.015%, 1/14/03................... 1,001,259
2,000,000 7.04%, 10/14/05................... 1,998,750
2,000,000 7.25%, 2/23/06.................... 2,012,258
2,000,000 7.26%, 4/3/02..................... 2,010,612
3,000,000 8.00%, 1/10/12.................... 2,982,270
Federal Home Loan Mortgage Corp.
1,000,000 6.773%, 1/7/02.................... 1,001,708
1,000,000 6.91%, 6/20/05.................... 1,014,767
2,000,000 7.00%, 3/12/02.................... 2,003,060
2,000,000 7.585%, 9/19/06................... 2,066,170
2,000,000 7.865%, 8/8/11.................... 2,064,582
Federal National Mortgage
Association
1,000,000 6.25%, 8/12/03.................... 988,867
1,000,000 6.41%, 3/8/06..................... 1,007,292
2,000,000 6.68%, 12/28/01................... 2,000,890
3,000,000 7.28%, 5/23/07.................... 3,079,629
1,000,000 Student Loan Marketing Association
5.90%, 2/20/01.................. 989,647
-----------
44,523,356
-----------
TREASURY NOTES & BONDS-- 0.9%
1,500,000 U.S. Treasury Bonds
7.125%, 2/15/23................. 1,617,656
----------
TOTAL U.S. GOVERNMENT & AGENCY
OBLIGATIONS
(COST $45,798,844).............. 46,141,012
-----------
</TABLE>
(CONTINUED)
29
<PAGE>
- -----------------------------------------------------------------------------
(Photo of eagle EVERGREEN
appears here) AMERICAN RETIREMENT FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
September 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS-- 7.7%
<C> <C> <S> <C>
COMMERCIAL PAPER-- 4.3%
$ 300,000 AC Acquisition Holding Co.
5.50%, 10/7/97.................. $ 299,725
American Home Food Products, Inc.
220,000 5.50%, 10/2/97.................... 219,966
700,000 5.52%, 10/17/97................... 698,283
900,000 Bell Atlantic Financial
Services, Inc.
5.50%, 10/24/97................. 896,837
BIL North America, Inc.
200,000 5.51%, 10/20/97................... 199,419
150,000 5.53%, 10/21/97................... 149,539
150,000 BMW U.S. Capital Corp.
5.51%, 10/28/97................. 149,380
350,000 Eiger Capital Corp.
5.52%, 10/9/97.................. 349,571
Finova Capital Corp.
250,000 5.53%, 10/30/97................... 248,886
2,000,000 5.55%, 10/22/97................... 1,993,525
350,000 Mitsubishi International Corp.
5.53%, 10/15/97................. 349,247
250,000 Safeco Credit Co., Inc.
5.57%, 10/21/97................. 249,226
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------
<C> <C> <S> <C>
<CAPTION>
SHORT-TERM INVESTMENTS-- CONTINUED
<C> <C> <S> <C>
COMMERCIAL PAPER-- CONTINUED
$ 1,200,000 Sonoco Products Co.
5.53%, 10/22/97................. $ 1,196,129
Tiger Managers Accept Corp.
385,000 5.53%, 10/14/97................... 384,231
300,000 5.55%, 10/7/97.................... 299,723
300,000 Triple A One Funding Corp.
5.53%, 10/6/97.................. 299,770
----------
7,983,457
----------
GOVERNMENT AGENCY NOTES &
BONDS-- 3.4%
500,000 Federal Home Loan Mortgage
5.41%, 10/14/97................. 499,024
5,700,000 Federal National Mortgage
Association
5.47%, 10/24/97................. 5,680,080
----------
6,179,104
----------
TOTAL SHORT-TERM INVESTMENTS
(COST $14,162,561).............. 14,162,561
-----------
</TABLE>
<TABLE>
<C> <S> <C> <C>
TOTAL INVESTMENTS--
(COST $162,507,133)....... 105.2% 193,909,739
OTHER ASSETS AND
LIABILITIES-- NET......... (5.2) (9,533,242)
------- ------------
NET ASSETS.................. 100.0% $184,376,497
======= ============
</TABLE>
* Non-income producing securities.
** At September 30, 1997, the Fund owned 8,000 shares of common stock of First
Union Corp. at a cost of $106,108. During the period ended September 30,
1997, the Fund earned $4,880 in dividend income from this investment. These
shares were purchased by the Fund prior to the acquisition of the investment
advisor and Lieber & Company by First Union.
The following abbreviations are used in this portfolio:
<TABLE>
<S> <C>
ACES Automatically Convertible Equity Securities
ADR American Depository Receipts
BUCS Beneficial Unsecured Convertible Securities
DECS Dividend Enhanced Convertible Stock
GDS Global Depositary Shares
LYONS Liquid Yield Option Notes
MIPS Monthly Income Preferred Shares
PERCS Preferred Equity Redemption Cumulative Stock
PRIDES Provisionally Redeemable Income Debt Exchangeable for Stock
REIT Real Estate Investment Trust
SAILS Stock Appreciation Income Linked Securities
STRYPES Structured Yield Product Exchangeable for Stock
TECONS Term Convertible Shares
144A Rule 144A securities are restricted as to resale to qualified
institutional investors.
</TABLE>
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
30
<PAGE>
- ---------------------------------------------------
EVERGREEN (Photo of scales of justice
BALANCED FUND appears here)
SCHEDULE OF INVESTMENTS
September 30, 1997 (Unaudited)
[CAPTION]
<TABLE>
<CAPTION>
SHARES VALUE
- -----------------------------------------------------------------------------
<C> <S> <C> <C>
COMMON STOCKS-- 49.7%
<C> <S> <C> <C>
AUTOMOTIVE EQUIPMENT &
MANUFACTURING-- 0.7%
145,000 Ford Motor Co.................... $ 6,561,250
BANKS-- 4.9% -------------
120,000 Banc One Corp.................... 6,697,500
136,800 BankBoston Corp.................. 12,098,250
60,000 Bankers Trust Corp............... 7,350,000
110,000 Chase Manhattan Corp............. 12,980,000
125,000 First Chicago NBD Corp........... 9,406,250
-----------
48,532,000
-----------
BUILDING, CONSTRUCTION &
FURNISHINGS-- 1.2%
150,000 * American Standard Companies,
Inc............................ 6,018,750
135,000 Masco Corp....................... 6,184,688
-----------
12,203,438
-----------
COMMUNICATION SYSTEMS &
SERVICES-- 3.1%
125,000 * 3Com Corp........................ 6,406,250
270,000 * Adaptec, Inc..................... 12,622,500
150,000 * Cisco Systems, Inc............... 10,959,375
-----------
29,988,125
-----------
CONSUMER PRODUCTS & SERVICES--
4.0%
190,000 Colgate-Palmolive Co............. 13,240,625
455,000 * CUC International, Inc........... 14,105,000
300,000 Philip Morris Companies, Inc..... 12,468,750
-----------
39,814,375
-----------
DIVERSIFIED COMPANIES-- 3.4%
305,000 AlliedSignal, Inc................ 12,962,500
300,000 General Electric Co.............. 20,418,750
-----------
33,381,250
-----------
ENERGY-- 4.9%
175,000 * Reading & Bates Corp............. 7,273,437
250,000 Sonat, Inc....................... 12,718,750
250,000 Texaco, Inc...................... 15,359,375
380,000 Tosco Corp....................... 13,228,750
-----------
48,580,312
-----------
FINANCE & INSURANCE-- 2.7%
175,000 Allstate Corp. (The)............. 14,065,625
125,000 American International Group,
Inc............................ 12,898,437
-----------
26,964,062
-----------
FOOD & BEVERAGE PRODUCTS-- 2.4%
220,700 American Stores Co............... 5,379,563
125,000 Coca Cola Co. (The).............. 7,617,187
200,000 Sara Lee Corp.................... 10,300,000
-----------
23,296,750
-----------
<CAPTION>
SHARES VALUE
- -----------------------------------------------------------------------------
<C> <S> <C> <C>
<CAPTION>
COMMON STOCKS-- CONTINUED
<C> <S> <C> <C>
HEALTHCARE PRODUCTS &
SERVICES-- 8.8%
220,000 Bristol-Myers Squibb Co.......... $ 18,205,000
250,000 HBO & Co......................... 9,437,500
435,000 * HEALTHSOUTH Corp................. 11,609,062
220,000 Johnson & Johnson................ 12,677,500
270,000 * Lincare Holdings, Inc............ 13,618,125
120,000 Pfizer, Inc...................... 7,207,500
150,000 SmithKline Beecham Plc ADS....... 7,331,250
160,000 * Universal Health Services,
Inc............................ 6,920,000
-----------
87,005,937
-----------
INFORMATION SERVICES &
TECHNOLOGY-- 5.8%
120,000 * Cadence Design Systems, Inc...... 6,420,000
200,000 * Compaq Computer Corp............. 14,950,000
110,000 Intel Corp....................... 10,154,375
265,000 * Iomega Corp...................... 6,923,125
125,000 * McAfee Associates, Inc........... 6,625,000
50,000 * Microsoft Corp................... 6,615,625
60,000 * Sanmina Corp..................... 5,193,750
-----------
56,881,875
-----------
MANUFACTURING-- DISTRIBUTING--
2.6%
185,000 Case Corp........................ 12,325,625
150,000 Stanley Works.................... 6,450,000
90,000 Tyco International Ltd........... 7,385,625
-----------
26,161,250
-----------
METAL PRODUCTS & SERVICES-- 1.7%
160,000 Aluminum Co. of America.......... 13,120,000
85,000 Crown Cork & Seal Co., Inc....... 3,920,625
-----------
17,040,625
-----------
OIL-- 1.2%
125,000 * Diamond Offshore Drilling,
Inc............................ 6,898,438
150,000 Ultramar Diamond Shamrock Corp... 4,846,875
-----------
11,745,313
-----------
UTILITIES-- 2.3%
185,000 CINergy Corp..................... 6,185,938
170,000 CMS Energy Corp.................. 6,290,000
160,000 SBC Communications, Inc.......... 9,820,000
-----------
22,295,938
-----------
TOTAL COMMON STOCKS
(COST $374,319,170)............ 490,452,500
------------
</TABLE>
(CONTINUED)
31
<PAGE>
- ----------------------------------------------------------------------------
(Photo of scales of justice EVERGREEN
appears here) BALANCED FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
September 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------
<C> <S> <C> <C>
<CAPTION>
CORPORATE BONDS-- 10.9%
<C> <S> <C> <C>
BANKS-- 1.9%
$ 3,000,000 Boatmen's Bancshares, Inc.
6.75%, 3/15/03................. $ 3,033,834
5,000,000 First Chicago Corp.
9.875%, 8/15/00................ 5,467,060
10,000,000 NationsBank Corp.
7.625%, 4/15/05................ 10,527,060
-----------
19,027,954
-----------
CHEMICAL & AGRICULTURAL
PRODUCTS-- 0.6%
5,000,000 Dow Chemical Co.
8.625%, 4/1/06................. 5,620,255
----------
CONSUMER PRODUCTS & SERVICES--
0.5%
5,000,000 Philip Morris Companies, Inc.
8.65%, 5/15/98................. 5,083,540
----------
ENERGY-- 0.5%
4,000,000 Atlantic Richfield Co.
9.00%, 4/1/21.................. 4,911,556
----------
FINANCE & INSURANCE-- 2.5%
5,500,000 Dean Witter, Discover & Co.
6.75%, 10/15/13................ 5,387,223
31,428 Fleet Financial Home Equity Trust
6.70%, 1/16/06................. 31,496
5,500,000 General Electric Capital Corp.
8.75%, 3/14/03................. 6,078,297
2,750,000 International Bank For
Reconstruction & Development
7.95%, 5/15/16................. 3,084,153
5,000,000 Merrill Lynch, Pierce, Fenner &
Smith, Inc.
7.00%, 4/27/08................. 5,113,400
5,000,000 Smith Barney Holdings, Inc.
5.50%, 1/15/99................. 4,965,610
-----------
24,660,179
-----------
FOOD & BEVERAGE PRODUCTS-- 1.0%
5,000,000 General Mills, Inc.
9.00%, 12/20/02................ 5,582,160
4,250,000 PepsiCo, Inc.
7.625%, 11/1/98................ 4,326,445
----------
9,908,605
----------
HEALTHCARE PRODUCTS &
SERVICES-- 0.5%
5,000,000 Baxter International
7.25%, 2/15/08................. 5,247,640
----------
INDUSTRIAL SPECIALTY PRODUCTS &
SERVICES-- 2.0%
7,000,000 Jet Equipment Trust, 144A
9.41%, 6/15/10................. 8,291,304
10,000,000 Loews Corp.
6.75%, 12/15/06................ 9,943,920
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------
<C> <S> <C> <C>
<CAPTION>
CORPORATE BONDS-- CONTINUED
<C> <S> <C> <C>
INDUSTRIAL SPECIALTY PRODUCTS &
SERVICES-- CONTINUED
$ 1,400,000 Waste Management, Inc.
8.75%, 5/1/18.................. $ 1,566,160
-----------
19,801,384
-----------
MANUFACTURING-- DISTRIBUTING--
0.5%
4,300,000 Stanley Works
7.375%, 12/15/02............... 4,490,929
-----------
SOVEREIGN GOVERNMENT-- 0.5%
5,000,000 Ontario Province Canada
7.75%, 6/4/02.................. 5,280,245
----------
UTILITIES-- 0.4%
3,600,000 Union Electric Co.
8.00%, 12/15/22................ 3,775,529
----------
TOTAL CORPORATE BONDS
(COST $101,745,309)............ 107,807,816
------------
<CAPTION>
U.S. GOVERNMENT & AGENCY OBLIGATIONS-- 34.0%
<C> <S> <C> <C>
GOVERNMENT AGENCY NOTES &
BONDS-- 1.6%
Government National Mortgage
Association
2,714,674 8.50%, 5/15/21................... 2,843,621
1,675,825 8.50%, 7/15/21................... 1,755,427
3,469,750 8.50%, 6/15/22................... 3,634,563
1,821,360 9.00%, 9/15/21................... 1,942,593
3,115,868 9.00%, 10/15/21.................. 3,323,266
1,564,064 9.50%, 2/15/21................... 1,696,520
-----------
15,195,990
-----------
TREASURY NOTES & BONDS-- 32.4%
U.S. Treasury Bonds
40,000,000 6.375%, 8/15/27.................. 39,825,000
20,000,000 7.625%, 2/15/07.................. 21,087,500
20,000,000 8.75%, 5/15/17................... 25,037,500
15,000,000 8.75%, 5/15/20................... 19,003,125
21,000,000 8.875%, 8/15/17.................. 26,610,927
17,500,000 9.125%, 5/15/18.................. 22,750,000
U.S. Treasury Notes
7,000,000 5.50%, 11/15/98.................. 6,984,684
8,000,000 6.375%, 7/15/99.................. 8,080,000
10,000,000 6.50%, 4/30/99................... 10,112,500
19,000,000 7.75%, 11/30/99.................. 19,730,303
10,000,000 7.75%, 2/15/01................... 10,553,120
47,300,000 8.125%, 2/15/98.................. 47,758,195
59,000,000 9.125%, 5/15/99.................. 62,005,283
------------
319,538,137
------------
TOTAL U.S. GOVERNMENT & AGENCY
OBLIGATIONS
(COST $328,381,429)............ 334,734,127
------------
</TABLE>
(CONTINUED)
32
<PAGE>
- ---------------------------------------------------
EVERGREEN (Photo of scales of justice
BALANCED FUND appears here)
SCHEDULE OF INVESTMENTS (CONTINUED)
September 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------
<C> <S> <C> <C>
<CAPTION>
REPURCHASE AGREEMENT-- 4.9%
<C> <S> <C> <C>
$47,921,221 Donaldson, Lufkin & Jenrette
Securities Corp.,
6.00%, dated 9/30/97,
due 10/1/97, maturity
value $47,929,198,
(Cost $47,921,221) (a)......... $ 47,921,221
-------------
</TABLE>
<TABLE>
<C> <S> <C> <C> <C>
TOTAL INVESTMENTS--
(COST $852,367,129)..... 99.5% 980,915,664
OTHER ASSETS AND
LIABILITIES-- NET....... 0.5 4,940,115
------ ------------
NET ASSETS................ 100.0% $985,855,779
====== ============
</TABLE>
* Non-income producing securities.
ADS American Depository Shares.
(a) The repurchase agreement is fully collateralized by U.S. Government and/or
agency obligations based on market prices at
September 30, 1997.
144A Rule 144A securities are restricted as to resale to qualified institutional
investors.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
33
<PAGE>
- ------------------------------------------------------------------------------
(Photo of brick wall and EVERGREEN
stars appears here) FOUNDATION FUND
SCHEDULE OF INVESTMENTS
September 30, 1997 (Unaudited)
[CAPTION]
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------------------
<C> <S> <C> <C>
COMMON STOCKS-- 59.9%
<C> <S> <C> <C>
AEROSPACE & DEFENSE-- 0.8%
317,600 Boeing Co. (The).............. $ 17,289,350
1,000 United Technologies Corp...... 81,000
-----------
17,370,350
-----------
AUTOMOTIVE EQUIPMENT &
MANUFACTURING-- 1.1%
483,400 Chrysler Corp................. 17,795,162
85,000 General Motors Corp........... 5,689,688
-----------
23,484,850
-----------
BANKS-- 5.7%
55,400 AmSouth Bancorp............... 2,683,438
50,000 Bancfirst Corp................ 1,650,000
391,800 BankBoston Corp............... 34,649,812
110,000 Barnett Banks, Inc............ 7,782,500
140,062 BSB Bancorp, Inc.............. 3,851,705
62,000 Cape Cod Bank & Trust Co...... 2,123,500
27,000 CB Bancshares, Inc............ 1,194,750
92,500 Central Fidelity Banks, Inc... 4,093,125
79,700 CitiCorp...................... 10,674,819
101,000 Crestar Financial Corp........ 4,734,375
80,138 First Chicago NBD Corp........ 6,030,384
3,600 First Empire State Corp....... 1,494,000
290,900 First of America Bank Corp.... 15,617,694
11,250 First Security Corp........... 334,688
117,000 First Union Corp. **.......... 5,857,312
45,000 Fleet Financial Group, Inc.... 2,950,312
70,801 Hibernia Corp, Cl. A.......... 1,203,617
20,000 KeyCorp....................... 1,272,500
25,000 Mississippi Valley
Bancshares, Inc............. 1,225,000
1,200 NationsBank Corp.............. 74,250
66,150 Peoples Heritage Financial
Group....................... 2,798,972
102,000 Seacoast Banking Corp. of
Florida Cl. A............... 3,621,000
20,000 SunTrust Banks, Inc........... 1,358,750
65,000 U.S. Trust Corp............... 3,664,375
------------
120,940,878
------------
BUILDING, CONSTRUCTION &
FURNISHINGS-- 1.0%
175,800 Armstrong World
Industries, Inc............. 11,789,588
149,300 Continental Homes Holding
Corp........................ 4,376,356
20,000 * M/I Schottenstein Homes,
Inc......................... 308,750
269,000 * Pacific Greystone Corp........ 5,346,375
------------
21,821,069
-----------
<CAPTION>
SHARES VALUE
- --------------------------------------------------------------------------
<C> <S> <C> <C>
<CAPTION>
COMMON STOCKS-- CONTINUED
<C> <S> <C> <C>
BUSINESS EQUIPMENT &
SERVICES-- 1.4%
75,000 * Compaq Computer Corp.......... $ 5,606,250
35,500 * Crescent Operating, Inc....... 723,313
164,000 International Business
Machines Corp............... 17,373,750
50,000 Lucent Technologies, Inc...... 4,068,750
10,000 * Policy Management
Systems Corp................ 621,875
10,000 Xerox Corp.................... 841,875
-----------
29,235,813
-----------
CHEMICAL & AGRICULTURAL
PRODUCTS-- 3.5%
90,000 A. Schulman, Inc.............. 1,923,750
40,000 Air Products & Chemicals,
Inc......................... 3,317,500
561,200 Du Pont (E. I.) De Nemours
& Co........................ 34,548,875
70,000 Grace (W.R.) & Co............. 5,153,750
60,000 H.B. Fuller Co................ 3,251,250
217,800 Monsanto Co................... 8,494,200
170,000 Morton International, Inc..... 6,035,000
75,000 Nalco Chemical Co............. 3,004,687
58,000 Pioneer Hi-Bred
International, Inc.......... 5,278,000
20,000 Praxair, Inc.................. 1,023,750
100,560 * Solutia, Inc.................. 2,011,200
-----------
74,041,962
-----------
COMMUNICATION SYSTEMS &
SERVICES-- 0.2%
70,000 * Cisco Systems, Inc............ 5,114,375
-----------
CONSUMER PRODUCTS &
SERVICES-- 2.8%
30,000 American Greetings Corp.
Cl. A....................... 1,106,250
95,000 Black & Decker Corp........... 3,538,750
25,642 * Consolidated Products, Inc.... 498,416
120,000 CPC International, Inc........ 11,115,000
188,800 Goodyear Tire & Rubber Co..... 12,980,000
50,000 H. & R. Block, Inc............ 1,931,250
170,300 International Flavors &
Fragrances, Inc............. 8,344,700
85,000 Kimberly-Clark Corp........... 4,159,687
70,100 * Nautica Enterprises, Inc...... 1,971,563
40,000 Nike, Inc., Cl. B............. 2,120,000
114,200 Procter & Gamble Co. (The).... 7,886,937
118,500 Tupperware Corp............... 3,332,813
-----------
58,985,366
-----------
</TABLE>
(CONTINUED)
34
<PAGE>
- -----------------------------------------------------------
EVERGREEN (Photo of brick wall
FOUNDATION FUND and stars appears here)
SCHEDULE OF INVESTMENTS (CONTINUED)
September 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
SHARES VALUE
- -----------------------------------------------------------------------------
<C> <S> <C> <C>
<CAPTION>
COMMON STOCKS-- CONTINUED
<C> <S> <C> <C>
DIVERSIFIED COMPANIES-- 2.4%
8,000 Cooper Industries, Inc........ $ 432,500
512,200 General Electric Co........... 34,861,612
110,800 PPG Industries, Inc........... 6,945,775
135,000 Trizec Hahn Corp.............. 3,484,688
1,400 Tyco International Ltd........ 114,888
56,000 * Western Atlas, Inc............ 4,928,000
-----------
50,767,463
-----------
ELECTRICAL EQUIPMENT &
SERVICES-- 0.5%
153,400 AMP, Inc...................... 8,216,487
2,666 * Analog Devices, Inc........... 89,311
1,500 Motorola, Inc................. 107,813
1,000 Texas Instruments, Inc........ 135,125
69,500 Westinghouse Electric Corp.... 1,880,844
-----------
10,429,580
-----------
ENERGY-- 1.8%
60,000 Amoco Corp.................... 5,782,500
1,200 Atlantic Richfield Co......... 102,525
94,400 Consolidated Natural Gas Co... 5,492,900
282,400 Equitable Resources, Inc...... 8,895,600
102,400 Exxon Corp.................... 6,560,000
1,600 Halliburton Co................ 83,200
900 Kerr-McGee Corp............... 61,931
91,800 Mobil Corp.................... 6,793,200
900 Pennzoil Co................... 75,600
40,000 * Reading & Bates Corp.......... 1,662,500
1,400 Schlumberger Ltd.............. 117,862
43,103 * Seitel, Inc................... 1,912,696
1,200 Sonat, Inc.................... 61,050
33,877 Union Pacific Resource
Group, Inc.................. 887,154
-----------
38,488,718
-----------
FINANCE & INSURANCE-- 9.7%
10,668 Aetna, Inc.................... 868,775
120,000 Allstate Corp................. 9,645,000
110,600 AMBAC, Inc.................... 4,500,038
147,675 American International
Group, Inc.................. 15,238,214
178,500 Beneficial Corp............... 13,599,469
51,800 Chubb Corp.................... 3,681,038
148,350 Countrywide Credit
Industries, Inc............. 5,405,503
95,000 * Degeorge Financial Corp....... 112,813
20,000 FBL Financial Group, Inc.,
Cl. A....................... 740,000
40,000 Federal Home Loan Mortgage
Corp........................ 1,410,000
729,400 Federal National Mortgage
Association................. 34,281,800
117,827 * HFS, Inc...................... 8,770,747
70,000 John Alden Financial Corp..... 2,170,000
<CAPTION>
SHARES VALUE
- --------------------------------------------------------------------------
<C> <S> <C> <C>
<CAPTION>
COMMON STOCKS-- CONTINUED
<C> <S> <C> <C>
FINANCE & INSURANCE--
CONTINUED
142,200 John Nuveen Co. (The), Cl. A.. $ 4,932,562
15,000 Lehman Brothers Holdings,
Inc......................... 782,270
279,400 Marsh & McLennan Co., Inc..... 21,409,025
307,400 Merrill Lynch & Co., Inc...... 22,805,237
345,200 MGIC Investment Corp.......... 19,784,275
155,000 NAC RE Corp................... 7,963,125
110,000 * National Financial Services,
Inc., Cl. A................. 3,066,250
235,000 North American Mortgage Co.... 6,756,250
35,000 Ohio Casualty Corp............ 1,623,125
142,250 Raymond James Financial,
Inc......................... 5,121,000
9,470 * Security Capital Group Inc.,
Cl. B Warrants $28.00
Expiring 9/18/98............ 75,760
1,000 SLM Holding Corp.............. 154,500
238,300 Wilmington Trust Corp......... 13,017,137
------------
207,913,913
------------
FOOD & BEVERAGE PRODUCTS--
0.1%
1,800 Nabisco Holdings
Corp. Cl. A................. 76,613
30,000 Pepsico, Inc.................. 1,216,875
----------
1,293,488
----------
FOREST PRODUCTS-- 0.4%
88,000 Union Camp Corp............... 5,428,500
90,000 Willamette Industries, Inc.... 3,442,500
----------
8,871,000
----------
HEALTHCARE PRODUCTS &
SERVICES-- 6.2%
205,700 Abbott Laboratories........... 13,151,944
1,750 * Alza Corp. Warrants $65.00
Expiring 12/31/1999......... 328
202,900 American Home Products Corp... 14,811,700
101,200 Bristol-Myers Squibb Co....... 8,374,300
180,900 Columbia / HCA Healthcare
Corp........................ 5,200,875
23,000 * Covance, Inc.................. 497,375
68,550 Guidant Corp.................. 3,838,800
30,000 * HealthCare COMPARE Corp....... 1,913,075
114,500 Johnson & Johnson............. 6,598,062
171,262 Lilly (Eli) & Co.............. 20,626,367
65,000 * Lincare Holdings, Inc......... 3,278,437
100,000 * Living Centers of America,
Inc......................... 4,075,000
80,000 McKesson Corp................. 8,155,000
151,750 * MedPartners, Inc.............. 3,253,141
121,600 Medtronic, Inc................ 5,715,200
167,758 Merck & Co., Inc.............. 16,765,315
96,000 Pfizer, Inc................... 5,766,000
11,500 * Quest Diagnostics, Inc........ 194,781
</TABLE>
(CONTINUED)
35
<PAGE>
- ---------------------------------------------------------------------------
(Photo of brick wall and EVERGREEN
stars appears here) FOUNDATION FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
September 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
SHARES VALUE
- ----------------------------------------------------------------------------
<C> <S> <C> <C>
<CAPTION>
COMMON STOCKS-- CONTINUED
<C> <S> <C> <C>
HEALTHCARE PRODUCTS &
SERVICES-- CONTINUED
25,000 Rhone Poulenc Rorer, Inc...... $ 2,417,188
132,000 Schering-Plough Corp.......... 6,798,000
9,200 Shared Medical System Corp.... 486,450
34,900 Superior Surgical
Manufacturing Co., Inc...... 549,675
1,750 * Therapeutic Discovery Corp.... 21,602
------------
132,488,615
------------
INDUSTRIAL SPECIALTY PRODUCTS
& SERVICES-- 2.8%
65,000 Applied Power, Inc............ 4,090,937
122,970 Autoliv, Inc.................. 5,226,225
10,000 Bemis Co., Inc................ 447,500
107,000 Corning, Inc.................. 5,055,750
261,700 Deere & Co.................... 14,066,375
30,000 Genuine Parts Co.............. 924,375
17,400 * Halter Marine Group, Inc...... 841,725
30,000 Parker Hannifin Corp.......... 1,350,000
180,000 Snap-on, Inc.................. 8,291,250
6,000 * Strattec Security Corp........ 166,875
378,000 Timken Co. (The).............. 15,143,625
50,000 Trinity Industries, Inc....... 2,412,500
30,000 * UCAR International, Inc....... 1,432,500
-----------
59,449,637
-----------
INFORMATION SERVICES &
TECHNOLOGY-- 6.8%
25,000 Computer Associates
International, Inc.......... 1,795,313
524,800 Hewlett-Packard Co............ 36,506,400
681,600 Intel Corp.................... 62,920,200
140,000 * Intel Corp. Warrants $41.75
Expiring 3/14/98............ 10,088,750
173,000 * Microsoft Corp................ 22,890,062
224,000 * Sun Microsystems, Inc......... 10,486,000
------------
144,686,725
------------
OTHER-- 0.0% (A)
20,000 Premark International, Inc.... 640,000
------------
PUBLISHING, BROADCASTING
& ENTERTAINMENT-- 0.5%
30,000 Belo (A.H.) Corp. Ser. A...... 1,455,000
20,000 * Cox Communications, Inc. Cl.
A........................... 551,250
30,993 Disney Walt Co. (The)......... 2,498,811
20,000 Gaylord Entertainment Co. Cl.
A........................... 516,250
2,500 * Lin Television Corp........... 116,563
65,000 Time Warner, Inc.............. 3,522,187
3,000 Washington Post Co. (The)
Cl. B....................... 1,344,375
-----------
10,004,436
-----------
<CAPTION>
SHARES VALUE
- ----------------------------------------------------------------------------
<C> <S> <C> <C>
<CAPTION>
COMMON STOCKS-- CONTINUED
<C> <S> <C> <C>
REAL ESTATE-- 6.2%
38,000 * Alexander's, Inc.............. $ 3,125,500
23,400 Arbor Property Trust REIT..... 228,150
24,100 Arden Realty, Inc. REIT....... 756,138
50,000 Bay Apartment Communities,
Inc. REIT................... 1,996,875
100,000 * Boston Properties, Inc. REIT.. 3,281,250
50,009 Bradley Real Estate, Inc.
REIT........................ 1,050,189
70,000 Brandywine Realty Trust REIT.. 1,675,625
125,000 Cali Realty Corp. REIT........ 5,203,125
270,400 * Capstead Mortgage Corp. REIT.. 7,030,400
161,900 CarrAmerica Realty Corp.
REIT........................ 5,180,800
40,000 Chelsea GCA Realty, Inc.
REIT........................ 1,670,000
184,900 Columbus Realty Trust REIT.... 4,472,269
355,000 Crescent Real Estate Equities,
Inc. REIT................... 14,244,375
305,300 Crown American Realty Trust
REIT........................ 2,957,594
105,200 Essex Property Trust, Inc.
REIT........................ 3,662,275
85,000 Evans Withycombe Residential,
Inc. REIT................... 2,295,000
199,700 FAC Realty, Inc. REIT......... 1,684,969
90,000 FelCor Suite Hotels, Inc.
REIT........................ 3,695,625
100,200 Gables Residential Trust
REIT........................ 2,717,925
174,000 Glimcher Realty Trust REIT.... 3,991,125
28,000 Highwoods Properties, Inc.
REIT........................ 990,500
45,076 * Homestead Village
Properties, Inc............. 800,099
9,443 * Homestead Village Properties,
Inc. Warrants $10.00
Expiring 10/29/97........... 76,724
377,216 Horizon Group, Inc. REIT...... 4,550,168
50,300 INMC Mortgage Holdings, Inc.
REIT........................ 1,257,500
120,000 Innkeepers USA Trust REIT..... 2,062,500
30,000 * Interstate Hotels Co.......... 978,750
101,500 Kilroy Realty Corp. REIT...... 2,740,500
142,000 Kranzco Realty Trust REIT..... 2,671,375
45,000 Liberty Property Trust REIT... 1,212,187
90,000 Marriott International,
Inc......................... 6,395,625
38,100 Oasis Residential, Inc. REIT.. 928,688
58,497 Patriot American Hospitality,
Inc. REIT................... 1,864,592
130,000 Post Property, Inc. REIT...... 5,167,500
166,500 Prentiss Properties Trust
REIT........................ 4,807,687
90,000 Public Storage, Inc. REIT..... 2,666,250
76,817 Security Capital Industrial
Trust REIT.................. 1,790,796
111,992 Security Capital Pacific Trust
REIT........................ 2,631,812
100,000 Sovran Self Storage, Inc...... 3,150,000
70,000 Spieker Properties, Inc.
REIT........................ 2,839,375
</TABLE>
(CONTINUED)
36
<PAGE>
- ------------------------------------------------------
EVERGREEN (Photo of brick wall and
FOUNDATION FUND stars appears here)
SCHEDULE OF INVESTMENTS (CONTINUED)
September 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
SHARES VALUE
- -------------------------------------------------------------------------
<C> <S> <C> <C>
<CAPTION>
COMMON STOCKS-- CONTINUED
<C> <S> <C> <C>
REAL ESTATE-- CONTINUED
157,750 Starwood Lodging Trust REIT... $ 9,060,766
14,000 Storage USA, Inc. REIT........ 568,750
45,000 Sunstone Hotel Investors, Inc.
REIT........................ 793,125
57,900 Tanger Factory Outlet Centers,
Inc. REIT................... 1,704,431
2,200 TriNet Corporate Realty Trust,
Inc. REIT................... 77,275
30,000 Western Investment Real Estate
Trust REIT.................. 405,000
------------
133,111,184
------------
RETAILING & WHOLESALE-- 1.6%
216,511 Avnet, Inc.................... 13,761,980
82,500 Home Depot, Inc. (The)........ 4,300,313
103,000 Lowe's Companies., Inc........ 4,004,125
199,000 Mercantile Stores Co., Inc.... 12,524,562
-----------
34,590,980
-----------
THRIFT INSTITUTIONS-- 0.6%
83,300 Golden West Financial Corp.... 7,476,175
80,000 Webster Financial Corp........ 4,700,000
-----------
12,176,175
-----------
TRANSPORTATION-- 0.5%
25,000 Burlington Northern Santa Fe.. 2,415,625
34,000 Caliber System, Inc........... 1,844,500
20,000 KLM Royal Dutch Air Lines..... 686,250
30,000 Pittston Brink's Group........ 1,201,875
17,000 Roadway Express, Inc.......... 465,375
80,000 Union Pacific Corp............ 5,010,000
-----------
11,623,625
-----------
UTILITIES-- ELECTRIC-- 0.6%
20,000 Central Hudson Gas &
Electric Corp............... 716,250
149,700 Long Island Lighting Co....... 3,836,062
138,400 New York St. Electric &
Gas Corp.................... 3,719,500
16,700 Orange & Rockland
Utilities, Inc.............. 623,119
40,000 PP&L Resources, Inc........... 875,000
100,000 Public Service Enterprise
Group, Inc.................. 2,575,000
32,000 TNP Enterprises, Inc.......... 804,000
-----------
13,148,931
-----------
UTILITIES-- TELEPHONE-- 2.7%
98,333 * 360 Communications Co......... 2,052,701
30,000 * AirTouch Communications,
Inc......................... 1,063,125
1,000 Ameritech Corp................ 66,500
10,000 AT&T Corp..................... 443,125
174,040 Bell Atlantic Corp............ 13,999,343
<CAPTION>
SHARES VALUE
- ---------------------------------------------------------------------------
<C> <S> <C> <C>
<CAPTION>
COMMON STOCKS-- CONTINUED
<C> <S> <C> <C>
UTILITIES-- TELEPHONE--
CONTINUED
1,600 BellSouth Corp................ $ 74,000
310,000 Frontier Corp................. 7,130,000
326,400 GTE Corp...................... 14,810,400
1,200 SBC Communications, Inc....... 73,650
371,000 Sprint Corp................... 18,550,000
-----------
58,262,844
-----------
TOTAL COMMON STOCKS
(COST $809,959,662)......... 1,278,941,977
--------------
</TABLE>
<TABLE>
<CAPTION>
CONVERTIBLE PREFERRED STOCKS-- 0.7%
<C> <S> <C> <C>
FINANCE & INSURANCE--
0.0% (A)
3,557 Aetna, Inc.
6.25%, Ser. C............... 276,779
1,000 Conseco, Inc.
7.00%, PRIDES............... 171,000
2,500 SunAmerica, Inc.
$3.188, PERCS............... 114,688
-----------
562,467
-----------
INDUSTRIAL SPECIALTY PRODUCTS
& SERVICES-- 0.2%
50,000 Qualcomm Financial Trust I
5.75%, 144A................. 2,681,500
115,000 Worthington Industries, Inc.
7.25%, DECS................. 1,868,750
----------
4,550,250
----------
METAL PRODUCTS & SERVICES--
0.3%
100,000 Timet Capital Trust I
6.625%, BUCS, 144A.......... 5,850,000
-----------
REAL ESTATE-- 0.2%
95,000 First Union Real Estate Equity
8.40%, Ser. A............... 4,298,750
------------
RETAILING & WHOLESALE--
0.0% (A)
1,300 Kmart Financing I
7.75%....................... 76,050
------------
TOTAL CONVERTIBLE PREFERRED
(COST $11,957,797).......... 15,337,517
-------------
<CAPTION>
PRINCIPAL
AMOUNT
CONVERTIBLE DEBENTURES-- 0.4%
<C> <S> <C> <C>
BUILDING, CONSTRUCTION &
FURNISHINGS-- 0.1%
$ 500,000 Engle Homes, Inc.
7.00%, 3/1/03............... 544,400
500,000 Home Depot, Inc. (The)
3.25%, 10/1/01.............. 611,250
----------
1,155,650
----------
</TABLE>
(CONTINUED)
37
<PAGE>
- -------------------------------------------------------------------------
(Photo of brick wall and EVERGREEN
stars appears here) FOUNDATION FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
September 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------
CONVERTIBLE DEBENTURES-- CONTINUED
<C> <S> <C> <C>
BUSINESS EQUIPMENT &
SERVICES-- 0.00% (A)
$ 800,000 Personnel Group of America,
Inc. 144A
5.75%, 7/1/04............... $ 942,000
------------
ENVIRONMENTAL SERVICES--
0.0% (A)
100,000 USA Waste Services, Inc.
4.00%, 2/1/02............... 111,000
------------
HEALTHCARE PRODUCTS &
SERVICES-- 0.0% (A)
750,000 Maxxim Medical, Inc.
6.75%, 3/1/03............... 1,083,750
-----------
INDUSTRIAL SPECIALTY PRODUCTS
& SERVICES-- 0.2%
2,100,000 Robbins & Myers, Inc.
6.50%, 9/1/03............... 3,181,500
750,000 Simula, Inc.
8.00%, 5/1/04............... 918,750
-----------
4,100,250
-----------
NATURAL GAS-- 0.1%
1,328,000 Consolidated Natural Gas Co.
7.25%, 12/15/15............. 1,470,760
-----------
TOTAL CONVERTIBLE DEBENTURES
(COST $7,034,665)........... 8,863,410
-----------
<CAPTION>
U.S. GOVERNMENT & AGENCY
OBLIGATIONS-- 28.5%
<C> <S> <C> <C>
GOVERNMENT AGENCY NOTES &
BONDS-- 0.9%
1,000,000 Federal National Mortgage
Assn.
8.10%, 8/12/19.............. 1,148,865
Tennessee Valley Authority
8,000,000 7.25%, 7/15/43................ 8,063,944
10,000,000 7.85%, 6/15/44, Ser. A........ 10,565,330
------------
19,778,139
------------
TREASURY NOTES & BONDS--
27.6%
U.S. Treasury Bonds
170,000,000 6.25%, 8/15/23................ 165,165,540
36,340,000 6.75%, 8/15/26................ 37,736,801
125,000,000 7.125%, 2/15/23............... 134,804,625
49,000,000 7.25%, 5/15/16................ 53,226,250
7,000,000 7.625%, 11/15/22.............. 7,980,000
10,000,000 8.00%, 11/15/21............... 11,825,000
50,000,000 8.125%, 8/15/19............... 59,515,600
25,000,000 8.125%, 5/15/21............... 29,898,425
30,000,000 8.375%, 8/15/08............... 33,356,250
10,000,000 8.50%, 2/15/20................ 12,362,500
7,000,000 10.00%, 5/15/10............... 8,581,559
1,000,000 10.625%, 8/15/15.............. 1,441,875
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------
<C> <S> <C> <C>
<CAPTION>
U.S. GOVERNMENT & AGENCY
OBLIGATIONS-- CONTINUED
<C> <S> <C> <C>
TREASURY NOTES & BONDS--
CONTINUED
U.S. Treasury Notes
$ 30,000,000 5.75%, 8/15/03................ $ 29,550,000
350,000 5.875%, 2/15/00............... 350,219
455,000 6.125%, 8/31/98............... 456,990
400,000 6.25%, 3/31/99................ 402,875
900,000 6.50%, 5/31/01................ 916,031
630,000 6.50%, 8/15/05................ 643,781
------------
588,214,321
------------
TOTAL U.S. GOVERNMENT & AGENCY
OBLIGATIONS
(COST $598,234,703)......... 607,992,460
------------
<CAPTION>
SHORT-TERM INVESTMENTS-- 10.5%
<C> <S> <C> <C>
COMMERCIAL PAPER-- 8.5%
10,330,000 A.H. Robins Co., Inc.
5.52%, 11/13/97............. 10,261,891
American Home Products, Inc.
650,000 5.50%, 10/2/97................ 649,901
1,400,000 5.52%, 10/17/97............... 1,396,565
17,350,000 Bell Atlantic Financial
Services, Inc.
5.52%, 11/12/97............. 17,238,266
BIL North America, Inc.
1,100,000 5.51%, 10/20/97............... 1,096,801
6,500,000 5.53%, 10/21/97............... 6,480,031
23,450,000 BMW U.S. Capital Corp.
5.51%, 10/28/97............. 23,353,093
12,000,000 Corporate Asset Funding Co.,
Inc.
5.50%, 11/7/97.............. 11,932,167
10,000,000 Cosmair, Inc.
5.52%, 10/7/97.............. 9,990,800
23,350,000 Daimler-Benz North America
Corp.
5.51%, 11/10/97............. 23,207,046
3,700,000 Duke Capital Corp.
5.57%, 10/6/97.............. 3,697,138
1,400,000 Eiger Capital Corp.
5.52%, 10/9/97.............. 1,398,283
4,300,000 Finova Capital Corp.
5.55%, 10/22/97............. 4,286,079
12,700,000 Gannett Co.
5.49%, 10/3/97.............. 12,696,127
3,400,000 GTE Corp.
5.53%, 10/14/97............. 3,393,210
1,500,000 Koch Industries, Inc.
5.50%, 10/1/97.............. 1,500,000
</TABLE>
(CONTINUED)
38
<PAGE>
- -------------------------------------------------------
EVERGREEN (Photo of brick wall and
FOUNDATION FUND stars appears here)
SCHEDULE OF INVESTMENTS (CONTINUED)
September 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------
<C> <S> <C> <C>
<CAPTION>
SHORT-TERM INVESTMENTS-- CONTINUED
<C> <S> <C> <C>
COMMERCIAL PAPER-- CONTINUED
$ 225,000 Morgan (J.P.) & Co., Inc.
5.51%, 10/24/97............. $ 224,208
3,610,000 Safeco Corp.
5.65%, 10/23/97............. 3,597,535
4,450,000 Safeco Credit Co., Inc.
5.57%, 10/21/97............. 4,436,230
2,350,000 Sharp Electronics Corp.
5.53%, 10/31/97............. 2,339,170
100,000 Sonoco Products Co.
5.53%, 10/22/97............. 99,677
27,000,000 State Street Bank & Trust Co.,
5.00%, 10/1/97.............. 27,000,000
7,950,000 Three Rivers Funding Corp.
5.57%, 10/15/97............. 7,932,779
Tiger Managers Acceptance
Corp.
1,300,000 5.53%, 10/14/97............... 1,297,404
1,700,000 5.55%, 10/7/97................ 1,698,427
200,000 Toys "R" Us, Inc.
5.51%, 11/3/97.............. 198,990
------------
181,401,818
------------
GOVERNMENT AGENCY NOTES &
BONDS-- 2.0%
41,400,000 Federal Home Loan Bank
5.41%, 10/3/97.............. 41,387,557
-----------
TOTAL SHORT-TERM INVESTMENTS
(COST $222,789,375)......... 222,789,375
------------
</TABLE>
<TABLE>
<C> <S> <C> <C> <C>
TOTAL INVESTMENTS--
(COST $1,649,976,202)
..................... 100.0% 2,133,924,739
OTHER ASSETS AND
LIABILITIES-- NET.... 0.0 332,446
------- ---------------
NET ASSETS............. 100.0% $2,134,257,185
</TABLE> ======= ===============
* Non-income producing securities.
** At September 30, 1997, the Fund owned 117,000 shares of common stock of
First Union Corp. at a cost of $2,358,411. During the period ended
September 30, 1997, the Fund earned $71,370 in dividend income from this
investment. These shares were purchased by the Fund prior to the acquisition
of the investment adviser and Lieber & Company by First Union.
(a) Less than one-tenth of a percent.
<TABLE>
<S> <C>
BUCS Beneficial Unsecured Convertible Securities.
DECS Dividend Enhanced Convertible Stock
PERCS Preferred Equity Redemption Cumulative Stock
PRIDES Preferred Redeemable Increased Dividend Equity Securities.
REIT Real Estate Investment Trust.
144A Rule 144A securities are restricted as to resale to qualified institutional investors.
</TABLE>
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
(CONTINUED)
39
<PAGE>
(Photo of brick--------------------------------------------------------------
wall and dollar EVERGREEN
sign appear here) TAX STRATEGIC FOUNDATION FUND
SCHEDULE OF INVESTMENTS
September 30, 1997 (Unaudited)
[CAPTION]
<TABLE>
<CAPTION>
SHARES VALUE
- ---------------------------------------------------------------------------
<C> <C> <S> <C>
COMMON STOCK-- 42.2%
<C> <C> <S> <C>
AEROSPACE & DEFENSE-- 0.7%
20,000 Boeing Co. (The).................... $ 1,088,750
-------------
AUTOMOTIVE EQUIPMENT &
MANUFACTURING-- 0.2%
5,000 General Motors Corp................. 334,688
------------
BANKS-- 6.1%
19,500 BankBoston Corp..................... 1,724,531
10,000 Barnett Banks, Inc.................. 707,500
26,250 Beverly Bancorporation, Inc......... 529,922
12,000 Cape Cod Bank & Trust Co............ 411,000
6,000 CitiCorp............................ 803,625
5,000 Comerica, Inc....................... 394,687
14,000 Crestar Financial Corp.............. 656,250
4,000 First Empire State Corp............. 1,660,000
16,500 First of America Bank Corp.......... 885,844
3,000 First Union Corp. **................ 150,188
5,000 Fleet Financial Group, Inc.......... 327,813
1,650 Interchange Financial Services
Corp.............................. 40,425
15,000 Seacoast Banking Corp.
of Florida Cl. A.................. 532,500
24,837 SouthTrust Corp..................... 1,223,222
-----------
10,047,507
-----------
BUILDING, CONSTRUCTION &
FURNISHINGS-- 1.4%
20,000 Armstrong World Industries, Inc..... 1,341,250
25,000 Clayton Homes, Inc.................. 464,062
10,700 La-Z-Boy Chair Co................... 395,900
15,000 * Southern Energy Homes, Inc.......... 158,438
-----------
2,359,650
-----------
BUSINESS EQUIPMENT &
SERVICES-- 0.6%
3,000 * Cisco Systems, Inc.................. 219,188
4,000 International Business Machines
Corp.............................. 423,750
5,000 Lucent Technologies, Inc............ 406,875
-----------
1,049,813
-----------
CHEMICALS & AGRICULTURAL
PRODUCTS-- 1.6%
10,000 Du Pont (E. I.) De Nemours & Co..... 615,625
10,000 H.B. Fuller Co...................... 541,875
8,000 MacDermid, Inc...................... 697,000
11,000 Morton International, Inc........... 390,500
10,000 Sigma-Aldrich Corp.................. 329,375
----------
2,574,375
----------
CONSUMER PRODUCTS &
SERVICES-- 1.5%
10,000 Adidas AG ADS, 144A................. 656,900
8,000 International Flavors & Fragrances,
Inc............................... 392,000
2,000 * National Processing, Inc............ 22,250
4,000 Nike, Inc. Cl. B.................... 212,000
<CAPTION>
SHARES VALUE
- ----------------------------------------------------------------------------
<C> <C> <S> <C>
<CAPTION>
COMMON STOCK-- CONTINUED
<C> <C> <S> <C>
CONSUMER PRODUCTS &
SERVICES-- CONTINUED
17,100 St. John Knits, Inc................. $ 768,431
10,500 Toro Co. (The)...................... 416,063
----------
2,467,644
----------
DIVERSIFIED COMPANIES-- 0.6%
10,000 General Electric Co................. 680,625
15,000 Trizec Hahn Corp.................... 387,187
----------
1,067,812
----------
ELECTRICAL EQUIPMENT &
SERVICES-- 3.5%
6,000 AMP, Inc............................ 321,375
8,000 Avnet, Inc.......................... 508,500
10,000 * Gateway 2000, Inc................... 314,375
30,000 Harman International Industries,
Inc............................... 1,501,875
21,000 Hewlett-Packard Co.................. 1,460,812
14,300 Park Electrochemical Corp........... 414,700
60,000 * Southern Electronics Corp........... 1,170,000
----------
5,691,637
----------
ENERGY-- 0.9%
5,000 Amoco Corp.......................... 481,875
10,000 Equitable Resources, Inc............ 315,000
15,000 Williams Companies., Inc. (The)..... 702,187
----------
1,499,062
----------
FINANCE & INSURANCE-- 6.6%
10,000 American International Group, Inc... 1,031,875
12,000 Chubb Corp.......................... 852,750
20,000 Countrywide Credit Industries,
Inc............................... 728,750
3,000 Enhance Financial Services Group,
Inc. ............................. 164,250
10,000 FBL Financial Group, Inc., Cl. A.... 370,000
12,000 Federal National Mortgage Assn...... 564,000
15,000 FFVA Financial Corp................. 474,375
20,000 * FPIC Insurance Group, Inc........... 590,000
11,100 Interstate/Johnson Lane, Inc........ 345,488
13,333 Legg Mason, Inc..................... 703,333
20,000 Lehman Brothers Holdings, Inc....... 1,072,500
9,000 Mercury General Corp................ 787,500
10,000 Merrill Lynch & Co., Inc............ 741,875
28,000 Nationwide Financial Services, Inc.,
Cl. A............................. 780,500
18,000 North American Mortgage Co.......... 517,500
183 * Security Capital Group, Inc.,
Cl. B, Warrants $28.00
Expiring 9/18/98.................. 1,464
20,000 Wilmington Trust Corp............... 1,092,500
-----------
10,818,660
-----------
HEALTHCARE PRODUCTS &
SERVICES-- 3.7%
7,000 Abbott Laboratories................. 447,562
25,000 American Home Products Corp......... 1,825,000
21,200 Beckman Instruments, Inc............ 902,325
</TABLE>
(CONTINUED)
40
<PAGE>
- ----------------------------------------------------------------(Photo of brick
EVERGREEN wall and dollar sign
TAX STRATEGIC FOUNDATION FUND appear here)
SCHEDULE OF INVESTMENTS (CONTINUED)
September 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------------------
<C> <C> <S> <C>
<CAPTION>
COMMON STOCK-- CONTINUED
<C> <C> <S> <C>
HEALTHCARE PRODUCTS &
SERVICES-- CONTINUED
8,250 * Bio-Rad Laboratories, Inc. Cl. A.... $ 247,500
5,000 * Lincare Holdings, Inc............... 252,188
2,000 Medtronic, Inc...................... 94,000
10,000 Pfizer, Inc......................... 600,625
10,000 Rhone Poulenc Rorer, Inc............ 966,875
5,000 Shared Medical System Corp.......... 264,375
15,000 U.S. Surgical Corp.................. 437,812
----------
6,038,262
----------
INDUSTRIAL SPECIALTY PRODUCTS &
SERVICES-- 2.7%
3,300 Applied Power, Inc., Cl. A.......... 207,694
14,751 Autoliv, Inc........................ 626,917
5,000 Cadmus Communications Corp.......... 102,500
7,500 * Chemfab Corp........................ 161,250
16,000 Fisher Scientific International,
Inc............................... 751,000
12,000 Furon Co............................ 492,750
25,000 Meade Instruments Corp.............. 240,625
13,900 Snap-on, Inc........................ 640,269
20,000 Timken Co. (The).................... 801,250
10,000 * UCAR International, Inc............. 477,500
----------
4,501,755
----------
INFORMATION SERVICES &
TECHNOLOGY-- 1.3%
24,000 Intel Corp.......................... 2,215,500
----------
PUBLISHING, BROADCASTING &
ENTERTAINMENT-- 0.3%
10,000 Belo (A.H.) Corp., Ser. A........... 485,000
----------
REAL ESTATE-- 6.8%
8,800 * Alexander's, Inc.................... 723,800
50,000 * Boston Properties, Inc. REIT........ 1,640,625
20,000 Brandywine Realty Trust REIT........ 478,750
12,000 * Capstead Mortgage Corp.............. 312,000
31,400 Continental Homes Holding Corp...... 920,412
25,000 Equity Office Properties Trust
REIT.............................. 848,437
13,500 Gables Residential Trust REIT....... 366,188
15,725 * HFS, Inc............................ 1,170,530
24,438 * Homestead Village Properties,
Inc............................... 433,774
293 * Homestead Village Properties, Inc.,
Warrants $10.00 Expiring
10/29/97.......................... 2,381
40,000 INMC Mortgage Holdings, Inc. REIT... 1,000,000
15,000 * Interstate Hotels Co................ 489,375
2,000 * John Q. Hammons Hotels, Inc., Cl.
A................................. 17,500
30,000 Kilroy Realty Corp. REIT............ 810,000
19,000 Patriot American Hospitality, Inc.
REIT.............................. 605,625
20,000 Prentiss Properties Trust REIT...... 577,500
3,485 Security Capital Pacific Trust
REIT.............................. 81,898
10,000 * SL Green Reality Corp. REIT......... 258,750
25,000 Sunstone Hotel Investors, Inc....... 440,625
-----------
11,178,170
-----------
<CAPTION>
SHARES VALUE
- --------------------------------------------------------------------------
<C> <C> <S> <C>
<CAPTION>
COMMON STOCK-- CONTINUED
<C> <C> <S> <C>
RETAILING & WHOLESALE-- 1.1%
16,000 Lowe's Companies., Inc.............. $ 622,000
8,200 Mercantile Stores Co., Inc.......... 516,087
10,000 * Payless Shoesource, Inc............. 596,875
----------
1,734,962
----------
THRIFT INSTITUTIONS-- 1.1%
18,000 Bank United Corp.................... 796,500
15,000 * BankUnited Financial Corp........... 196,875
10,000 Golden West Financial Corp.......... 897,500
----------
1,890,875
----------
TRANSPORTATION-- 0.3%
20,500 * Airnet Systems, Inc................. 494,563
----------
UTILITIES-- ELECTRIC-- 0.1%
9,900 TNP Enterprises, Inc................ 248,738
----------
UTILITIES-- TELEPHONE-- 1.1%
10,000 * 360 Communications Co............... 208,750
15,000 Frontier Corp....................... 345,000
8,000 GTE Corp............................ 363,000
18,000 Sprint Corp......................... 900,000
----------
1,816,750
----------
TOTAL COMMON STOCK--
(COST $51,999,830)................ 69,604,173
-----------
<CAPTION>
CONVERTIBLE PREFERRED STOCKS-- 2.0%
<C> <C> <S> <C>
BANKS-- 1.2%
63,000 WBK Trust,
10.0%, STRYPES (exchangeable for
Westpac Banking Corp. Common
Stock)............................ 1,975,050
-----------
TRANSPORTATION-- 0.8%
20,000 CNF Trust I,
6.25%, Series IGL, STRYPES
(exchangeable for CNF
Transportation, Inc. Common
Stock)............................ 1,287,500
-----------
TOTAL CONVERTIBLE PREFERRED STOCKS
(COST $2,975,050)................. 3,262,550
-----------
</TABLE>
<TABLE>
<CAPTION>
AMOUNT
<S> <C> <C>
CONVERTIBLE DEBENTURES-- 0.3%
ENERGY-- 0.2%
Parker Drilling Co.,
$250,000 5.50%, 8/1/04.....................
303,750
--------
TRANSPORTATION-- 0.1%
Personnel Group of America, Inc.,
5.75%, 7/1/04, 144A...............
TOTAL CONVERTIBLE DEBENTURES
150,000 (COST $400,000)................... 176,625
--------
480,375
--------
</TABLE>
(CONTINUED)
41
<PAGE>
(Photo of brick--------------------------------------------------------------
wall and dollar EVERGREEN
sign appear here) TAX STRATEGIC FOUNDATION FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
September 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------
<C> <C> <S> <C>
<CAPTION>
MUNICIPAL OBLIGATIONS-- 59.3%
<C> <C> <S> <C>
LONG TERM MUNICIPAL
OBLIGATIONS-- 55.0%
ALASKA-- 0.6%
$1,000,000 Alaska Hsg. Fin. Corp. Mtge. RB,
1996 Ser. A
6.05%, 12/1/17 (MBIA)............ $ 1,026,790
-------------
ARIZONA-- 0.3%
500,000 City of Tucson GO RB, Ser. 1995
5.70%, 7/1/08 (FGIC)............. 538,050
-----------
CALIFORNIA-- 4.0%
500,000 California Edl. Facs. Auth. RB
(Carnegie Institution of
Washington), Ser. A
5.60%, 10/1/23................... 504,165
700,000 California Hsg. Fin. Agcy. RB Ser.
I
5.75%, 2/1/29 (MBIA)............. 704,116
1,000,000 Los Angeles Cnty. Metro Trans.
Auth. Sales Tax RB Ser. A
5.13%, 7/1/10 (MBIA)............. 1,019,390
1,200,000 Northern CA Transmission RB Ser. A
5.30%, 5/1/10 (MBIA)............. 1,257,300
1,000,000 Oakland GO Ser. C, Measure K
5.90%, 12/15/22 (MBIA)........... 1,043,250
1,000,000 San Francisco City & Cnty. Intl
Aprt. RB Ser. Issue 10-A, (AMT)
5.70%, 5/1/26 (MBIA)............. 1,017,440
1,000,000 Southern CA Pub. Pwr. Auth. RB
(Mead Adelanto Proj.) Ser. A
5.00%, 7/1/17 (AMBAC)............ 961,090
----------
6,506,751
----------
COLORADO-- 3.0%
500,000 Arapahoe Cnty. Pub. Hwy. Auth.
Capital Imp. Trust Fund Hwy. RB
(E-470 Proj.)
6.15%, 8/31/26 (MBIA)............ 537,865
1,475,000 Colorado Hlth. Facs. Auth. RB (P/SL
Hlthcare Sys.) Proj. A
6.88%, 2/15/23................... 1,676,632
500,000 Denver City & Cnty. Sch. Dist. # 1
GO RB, Ser. 1994A
6.50%, 6/1/10 (MBIA)............. 575,830
1,070,000 Douglas Cnty. Co. Sch. Dist. # 1
Prerefunded Imp. Ser. A
6.50%, 12/15/16.................. 1,214,611
1,000,000 E-470 Pub. Hwy. Auth. RB Ser. A
5.00%, 9/1/26 (MBIA)............. 938,970
----------
4,943,908
----------
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- -------------------------------------------------------------------------
<C> <C> <S> <C>
<CAPTION>
MUNICIPAL OBLIGATIONS-- CONTINUED
<C> <C> <S> <C>
DELAWARE-- 0.7%
$1,000,000 Delaware Econ. Dev. Auth. Hosp. RB
(The Osteopathic Hosp. Assoc. of
Delaware/Riverside Hosp.), Ser. A
6.50%, 1/1/08..................... $ 1,116,370
-----------
DISTRICT OF COLUMBIA-- 0.9%
1,500,000 Metro Wash D.C. Aprt. Auth.
RB Ser. B
5.50%, 10/1/23 (AMT).............. 1,495,875
-----------
FLORIDA-- 1.6%
300,000 Dade Cnty. Aviation RRB,
Ser. 1995A
6.10%, 10/1/11 (AMBAC)............ 327,627
2,000,000 Florida Muni. Pwr Agy. RB Prefunded
(Stanton II Proj.)
6.50%, 10/1/20 (AMBAC)............ 2,234,260
----------
2,561,887
----------
GEORGIA-- 2.6%
1,000,000 Atlanta Wtr. & Swr. RB
5.25%, 1/1/27 (FGIC).............. 976,540
1,000,000 Cherokee Cnty. Wtr. & Swr.
Auth. RB
5.20%, 8/1/25 (MBIA).............. 989,760
1,000,000 Dalton Util. RRB
6.00%, 1/1/08 (MBIA).............. 1,106,440
1,000,000 Muni. Elec. Auth. Special Obligation
Bonds (5Th Crossover Proj. 1)
6.50%, 1/1/17 (MBIA).............. 1,155,510
----------
4,228,250
----------
HAWAII-- 1.3%
2,000,000 Honolulu City & Cnty. GO Prerefunded
Ser. A
6.60%, 8/1/04..................... 2,184,600
----------
ILLINOIS-- 2.0%
1,000,000 Chicago Wastewater Transmission RB
5.00%, 1/1/15 (FGIC).............. 973,990
2,000,000 Metro. Pier & Exposition
Auth. RB Prerefunded
(McCormick Pl. Expn. A)
6.50%, 6/15/07 (FGIC)............. 2,248,580
----------
3,222,570
----------
MAINE-- 0.6%
1,000,000 Maine Hlth. & High Edl. Fac. Auth.
RB Ser. B
5.75%, 7/1/26 (AMBAC)............. 1,025,710
----------
MASSACHUSETTS-- 3.4%
250,000 Massachusetts Hsg. Fin. Agcy. Hsg.
Proj. RRB, 1993 Ser. A
5.95%, 10/1/08 (AMBAC)............ 261,843
</TABLE>
(CONTINUED)
42
<PAGE>
- ----------------------------------------------------------------(Photo of brick
EVERGREEN wall and dollar
TAX STRATEGIC FOUNDATION FUND sign appear here)
SCHEDULE OF INVESTMENTS (CONTINUED)
September 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
MUNICIPAL OBLIGATIONS-- CONTINUED
<C> <C> <S> <C>
MASSACHUSETTS-- CONTINUED
$ 250,000 Massachusetts Bay Trans. Auth.
General Trans. Sys. Bonds,
Ser. 1994A
7.00%, 3/1/08..................... $ 294,442
2,335,000 Massachusetts GO Prerefunded Ser. B
6.50%, 8/1/11 (AMBAC)............. 2,563,106
1,500,000 Massachusetts Port. Auth. RB Ser. A
5.00%, 7/1/27..................... 1,407,315
1,000,000 Massachusetts Tpk. Auth. RB (Western
Tpke.) Ser. A
5.55%, 1/1/17 (MBIA).............. 1,008,500
----------
5,535,206
----------
MICHIGAN-- 2.9%
1,030,000 Detroit Wtr. Supply Sys. RB
Sr. Lien Ser. A
5.75%, 7/1/11 (MBIA).............. 1,109,269
1,000,000 Detroit GO Ser. A
6.80%, 4/1/15..................... 1,152,930
300,000 Michigan Muni. Bond Auth. RB (Local
Govt. Loan Prog.),
Ser 1994G
6.55%, 11/1/08 (AMBAC)............ 338,199
2,000,000 Monroe Cnty. Econ. Dev. Corp. Ltd.
Prerefunded RB (Comm. Hlth.
Serv.)
7.00%, 9/1/21 (MBIA).............. 2,232,800
----------
4,833,198
----------
MISSOURI-- 3.1%
480,000 Missouri Hsg. Dev. Commission Single
Family Mtge. RB (Homeownership
Loan Prog.),
1996 Ser. D
6.00%, 9/1/17 (Collaterialized by
GNMA or FNMA Certificates)........ 491,390
935,000 Missouri Hsg. Dev. Commission Single
Family Mtge. RB (Homeownership
Loan Prog.),
1996 Ser. B
6.25%, 9/1/15 (Collaterialized by
GNMA or FNMA Certificates)........ 970,932
2,000,000 Sikeston Elec. Prerefunded RB
6.25%, 6/1/22 (MBIA).............. 2,197,840
500,000 St. Louis Muni. Fin. Corp. Leasehold
Rev. Imp. Bonds (City Justice
Ctr.), Ser. 1996A
5.95%, 2/15/16 (AMBAC)............ 529,990
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------
<C> <C> <S> <C>
<CAPTION>
MUNICIPAL OBLIGATIONS-- CONTINUED
<C> <C> <S> <C>
MISSOURI-- CONTINUED
$1,000,000 St. Louis Regl. Convention & Spts
Complex Auth. RB Fac. C
5.30%, 8/15/17 (AMBAC)............ $ 992,650
-----------
5,182,802
-----------
NEVADA-- 2.6%
1,000,000 Clark Cnty. (Las Vegas McCarran
Int'l Arpt. Passenger Fac. Charge)
RB,
1992 Ser. A
6.00%, 7/1/22 (AMBAC)............. 1,050,780
2,000,000 Clark Cnty. Sanitation Dist.
Prerefunded Ser. A
6.80%, 7/1/12..................... 2,230,860
1,000,000 Washoe Cnty. GO
5.00%, 6/1/17 (MBIA).............. 961,190
----------
4,242,830
----------
NEW JERSEY-- 1.7%
1,090,000 New Jersey GO Prerefunded
6.00%, 8/1/05..................... 1,178,693
1,400,000 New Jersey Tpke. Auth. RB Ser. C
6.50%, 1/1/16 (MBIA).............. 1,621,774
----------
2,800,467
----------
NEW YORK-- 5.4%
1,245,000 Metro Trans. Auth. Fac. RB
Prerefunded Ser. L
6.63%, 7/1/14..................... 1,387,366
375,000 New York GO Ser. L
5.38%, 8/1/11 (MBIA).............. 382,714
250,000 New York St. Mtge. Agcy. Homeowner
Mtge. RB, Ser. 44
(AMT)
6.60%, 4/1/03..................... 262,687
1,000,000 New York St. Mtge. Agcy. Homeowner
Mtge. RB, Ser. 56
(AMT)
5.88%, 10/1/19.................... 1,026,850
245,000 New York St. Med. Care Facs. Fin.
Agcy. RB (Mental Hlth. Svcs.
Facs.), 1992 Ser. B
6.25%, 8/15/10 (AMBAC)............ 261,831
500,000 New York St. Med. Care Facs. Fin.
Agcy. RB (Mental Hlth. Svcs.
Facs.), 1995 Ser. A
6.00%, 2/15/25 (MBIA)............. 525,185
500,000 New York St. Mtge. Agcy. RB
(Homeowner Mtge.) Ser. 63,
(AMT)
5.60%, 4/1/10..................... 509,945
1,000,000 New York St. Thruway Auth.
General RB, Ser. C
6.00%, 1/1/25 (FGIC).............. 1,051,330
</TABLE>
(CONTINUED)
43
<PAGE>
(Photo of brick--------------------------------------------------------------
wall and dollar EVERGREEN
sign appear here) TAX STRATEGIC FOUNDATION FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
September 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------
MUNICIPAL OBLIGATIONS-- CONTINUED
<C> <C> <S> <C>
NEW YORK-- CONTINUED
$1,000,000 New York St. Thruway Auth. RB
Ser. B
5.00%, 1/1/20 (MBIA).............. $ 944,760
250,000 Port Auth. of New York & New Jersey
Consolidated Bonds, 97th Ser. 2nd
Installment (AMT)
7.00%, 7/15/05 (FGIC)............. 289,258
2,000,000 Port Auth. of New York & New Jersey
Special Obligation RB (JFK Intl.
Airport Terminal 6 Proj.)
6.25%, 12/1/10 (MBIA)............. 2,247,140
----------
8,889,066
----------
NORTH CAROLINA-- 0.3%
500,000 North Carolina Hsg. Fin. Agy. Single
Family Ser. 00, (Orig. Avg. Life
Est.)
5.80%, 9/1/12 (FHA)............... 518,585
----------
NORTH DAKOTA-- 0.6%
1,000,000 Mercer Cnty. Poll. Ctrl. RRB (Basin
Elec. Pwr. Cooperative-Antelope
Valley Unit 1 & Common Facs.),
Second 1995 Ser.
6.05%, 1/1/19 (AMBAC)............. 1,060,200
-----------
OHIO-- 0.5%
700,000 Board of Ed. Beavercreek Local Sch.
Dist. (Cnty. of Greene) Sch. Imp.
Bonds (Unltd. Tax GO), Ser. 1996
6.60%, 12/1/15 (FGIC)............. 823,361
----------
PENNSYLVANIA-- 4.9%
1,965,000 Pennsylvania Intergovernmental Coop.
Auth. Spec. Tax Rev. Phil. Funding
Prog., Prerefunded
6.80%, 6/15/12.................... 2,173,978
1,450,000 Pennsylvania Intergovernmental Coop.
Auth. Spec. Tax Rev. Phil. Funding
Prog., Prerefunded
7.00%, 6/15/14.................... 1,684,813
3,000,000 Pennsylvania Tpke. Commission RB
Ser. J, Prerefunded
7.15%, 12/1/11 (FGIC)............. 3,379,320
750,000 Philadelphia Wtr. & Wastewater RB
6.25%, 8/1/11 (MBIA).............. 850,815
----------
8,088,926
----------
TENNESSEE-- 0.2%
300,000 Bristol Hlth. & Edl. Facs. Board RRB
(Bristol Mem. Hosp.),
Ser. 1993
6.75%, 9/1/07 (FGIC).............. 347,523
--------
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------
<C> <C> <S> <C>
<CAPTION>
MUNICIPAL OBLIGATIONS-- CONTINUED
<C> <C> <S> <C>
TEXAS-- 6.6%
$1,000,000 Dallas GO, Prerefunded
6.13%, 2/15/05.................... $ 1,085,200
1,000,000 Harris Cnty. RB (Toll Road Sr. Lien)
5.00%, 8/15/24 (MBIA)............. 944,910
1,000,000 Houston Wtr. Conveyance Sys.
Contract COP, Ser. 1993J
6.13%, 12/15/09 (AMBAC)........... 1,123,230
500,000 Houston Wtr. Conveyance Sys.
Contract COP, Ser. 1993H
7.50%, 12/15/10 (AMBAC)........... 627,510
500,000 Houston Wtr. & Swr. Sys. RB Jr.
Lien Ser. D
5.00%, 12/1/25 (FGIC)............. 471,870
1,000,000 San Antonio Elec. & Gas RB
5.25%, 2/1/10..................... 1,017,900
1,500,000 Tarrant Cnty. Hlth. Facs. Dev. Corp.
Hlth. Res. Sys. Ser. A
5.25%, 2/15/17 (MBIA)............. 1,462,530
1,000,000 Texas Muni. Pwr. Agy. RB
5.25%, 9/1/09 (MBIA).............. 1,046,000
1,000,000 Texas Wtr. Dev. Board RB Sr. Lien
Ser. B
5.13%, 7/15/18.................... 971,890
2,000,000 Univ. of Texas Permanent Univ. Fund
RB Prerefunded
6.50%, 7/1/11..................... 2,192,240
-----------
10,943,280
-----------
UTAH-- 0.7%
500,000 Salt Lake City Hosp. RB (IHC
Hospitals, Inc.)
6.30%, 2/15/15.................... 557,495
500,000 Utah Hsg. Fin. Agcy. RB (Single
Family Mtge.) Ser. B
6.00%, 7/1/16 (FHA)............... 517,745
----------
1,075,240
----------
VIRGINIA-- 2.0%
2,000,000 Hanover Cnty. Indl. Dev. Auth. (Mem.
Regl. Med. Center Proj. at Hanover
Med. Park), Ser. 1995
6.38%, 8/15/18 (MBIA)............. 2,288,680
1,000,000 Virginia Pub. Bldg. Auth. Facs. RB
Ser. A
5.38%, 8/1/10..................... 1,040,380
----------
3,329,060
----------
WASHINGTON-- 0.6%
500,000 Snohomish Cnty. Sch. Dist. GO
5.70%, 12/1/15 (FGIC)............. 520,235
500,000 Vancouver Wtr. & Swr. RB
5.25%, 6/1/17 (MBIA).............. 491,535
----------
1,011,770
----------
</TABLE>
(CONTINUED)
44
<PAGE>
- ----------------------------------------------------------------(Photo of brick
EVERGREEN wall and dollar
TAX STRATEGIC FOUNDATION FUND sign appear here)
SCHEDULE OF INVESTMENTS (CONTINUED)
September 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------
MUNICIPAL OBLIGATIONS-- CONTINUED
<C> <C> <S> <C>
WEST VIRGINIA-- 0.6%
$1,000,000 West Virginia St. Hsg. Dev. Fund
RB Ser. A
6.05%, 5/1/27..................... $ 1,032,560
----------
WISCONSIN-- 0.3%
500,000 Wisconsin Hsg. & Econ. Dev. Auth.
Home Ownership RB Ser. E
(AMT)
6.00%, 9/1/28..................... 512,670
---------
PUERTO RICO-- 1.0%
500,000 Puerto Rico Elec. Pwr. Auth.
RB Ser. BB
6.25%, 7/1/10 (MBIA).............. 569,535
500,000 Puerto Rico Hsg. Bank & Fin. Agcy.
RB (Single Family Affordable Hsg.
Mtge. Subsidy Prog.) Portfolio I
(AMT)
5.85%, 4/1/09 (Collaterialized by
GNMA, FNMA & FHLMC
Certificates)..................... 514,530
500,000 Puerto Rico Pub. Bldgs Auth. RB
Govt. Fac. Ser. B
5.10%, 7/1/10 (MBIA).............. 509,265
----------
1,593,330
----------
TOTAL LONG TERM MUNICIPAL
OBLIGATIONS
(COST $88,818,357)................ 90,670,835
-----------
<CAPTION>
SHORT TERM MUNICIPAL
OBLIGATIONS-- 4.3%
<C> <C> <S> <C>
GEORGIA-- 0.9%
1,500,000 Hapeville Dev. Auth. Indl. Dev. RB
(Hapeville Hotel Ltd. Partnership
Proj.), Ser. 1985
3.85%-- VRDN (LOC: Swiss Bank
Corp.)............................ 1,500,000
NEW YORK-- 3.4%
2,000,000 New York City GO, Fiscal 1995
Ser. B Sub-Ser. B-7
3.85%-- VRDN (AMBAC).............. 2,000,000
3,500,000 New York City Muni. Wtr. Fin. Auth.;
Wtr. and Swr. Sys. RB,
1993 Ser. C
3.85%-- VRDN (FGIC)............... 3,500,000
----------
5,500,000
----------
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------
<C> <C> <S> <C>
TOTAL SHORT TERM MUNICIPAL
OBLIGATIONS
(COST $7,000,000)................. $ 7,000,000
-----------
TOTAL MUNICIPAL OBLIGATIONS
(COST $95,818,357)................ 97,670,835
-----------
<CAPTION>
MUTUAL FUND SHARES-- 0.0% (A)
<C> <C> <S> <C>
67,000 Federated Tax Free Obligations Fund
(COST $67,000).................... 67,000
-----------
</TABLE>
<TABLE>
<C> <C> <S> <C> <C>
TOTAL INVESTMENTS--
(COST $151,260,237)..... 103.8% 171,084,933
OTHER ASSETS AND
LIABILITIES-- NET....... (3.8)% (6,275,691)
------- -------------
NET ASSETS-- 100.0% $164,809,242
======= =============
</TABLE>
THE FOLLOWING ABBREVIATIONS ARE USED IN THIS PORTFOLIO:
<TABLE>
<S> <C>
ADS American Depository Shares
AMT Subject to Alternative Minimum Tax
COP Certificate of Participation
FHA Federal Housing Authority
FHLMC Federal Home Loan Mortgage Corp.
FNMA Federal National Mortgage Corp.
GO General Obligations
GNMA Government National Mortgage Corp.
LOC Letter of Credit
RB Revenue Bonds
REIT Real Estate Investment Trust
RRB Refunding Revenue Bonds
STRYPES Structured Yield Product Exchangeable for Stock
VRDN Variable Rate Demand Notes are payable on demand
at par on no more than seven calendar days' notice
given by the Fund to the issuer or other parties
not affiliated with the issuer. These notes
normally incorporate an irrevocable letter of
credit or line of credit from a major bank.
Interest rates presented for these securities are
those in effect as of September 30, 1997.
</TABLE>
MUNICIPAL BOND INSURANCE COMPANIES:
<TABLE>
<S> <C>
AMBAC American Municipal Bond Assurance Corp.
FGIC Financial Guarantee Insurance Corp.
MBIA Municipal Bond Insurance Association
144A Rule 144A securities are restricted as to resale
to qualified institutional investors.
</TABLE>
* Non income producing security.
** At September 30, 1997, the Fund owned 3,000 shares of common stock of First
Union Corp. at a cost of $57,890. During the period ended September 30,
1997, the Fund earned $1,830 in dividend income from this investment. These
shares were purchased by the Fund prior to the acquisition of the
investment adviser and Lieber & Company by First Union.
(a) Less than one-tenth of a percent.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
45
<PAGE>
(Photo of pine cone and
branches appears here) EVERGREEN
STATEMENTS OF ASSETS AND LIABILITIES
September 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
(Photo) (Photo) (Photo) (Photo)
AMERICAN TAX STRATEGIC
RETIREMENT BALANCED FOUNDATION FOUNDATION
FUND FUND FUND FUND
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Investments, at market value (identified cost, $162,507,133,
$852,367,129, $1,649,976,202, $151,260,237,
respectively).............................................. $193,909,739 $ 980,915,664 $2,133,924,739 $171,084,933
Cash......................................................... 7,636 0 15,229 1,233,703
Receivable for investments sold.............................. 2,332,425 24,895,549 57,742 0
Receivable for Fund shares sold.............................. 958,171 197,221 6,234,488 3,383,429
Dividends and interest receivable............................ 981,001 9,475,994 9,507,845 1,451,496
Prepaid expenses and other assets............................ 84,898 56,172 56,166 65,780
- ------------------------------------------------------------------------------------------------------------------------------
Total assets............................................. 198,273,870 1,015,540,600 2,149,796,209 177,219,341
- ------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Payable for investments purchased............................ 13,463,401 26,792,553 12,000,483 12,139,771
Payable for Fund shares repurchased.......................... 174,328 2,236,096 1,497,065 27,268
Management fee payable....................................... 135,534 432,042 1,312,936 125,534
Distribution Plan expenses payable........................... 89,263 82,279 616,549 77,589
Due to affiliates............................................ 0 28,428 0 0
Accrued expenses and other liabilities....................... 34,847 113,423 111,991 39,937
- ------------------------------------------------------------------------------------------------------------------------------
Total liabilities........................................ 13,897,373 29,684,821 15,539,024 12,410,099
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSETS..................................................... $184,376,497 $ 985,855,779 $2,134,257,185 $164,809,242
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSETS REPRESENTED BY
Paid-in capital.............................................. $149,184,528 $ 752,060,631 $1,621,677,242 $143,778,789
Undistributed net investment income.......................... 79,873 250,843 318,223 55,155
Accumulated undistributed net realized gains on
investments................................................ 3,709,490 104,995,770 28,313,183 1,150,602
Net unrealized appreciation on investments................... 31,402,606 128,548,535 483,948,537 19,824,696
- ------------------------------------------------------------------------------------------------------------------------------
Total net assets......................................... $184,376,497 $ 985,855,779 $2,134,257,185 $164,809,242
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSETS CONSISTS OF
Class A...................................................... $22,569,457 $ 46,014,346 $ 282,258,724 $36,942,860
Class B...................................................... 120,101,008 119,797,058 840,047,090 98,085,668
Class C...................................................... 2,130,175 509,754 36,982,221 11,942,992
Class Y...................................................... 39,575,857 819,534,621 974,969,150 17,837,722
- ------------------------------------------------------------------------------------------------------------------------------
Total net assets......................................... $184,376,497 $ 985,855,779 $2,134,257,185 $164,809,242
- ------------------------------------------------------------------------------------------------------------------------------
SHARES OUTSTANDING
Class A...................................................... 1,407,993 3,303,565 14,902,252 2,388,969
Class B...................................................... 7,532,121 8,598,683 44,542,417 6,349,968
Class C...................................................... 133,304 36,791 1,961,329 774,493
Class Y...................................................... 2,468,868 58,842,876 51,427,472 1,150,794
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
Class A...................................................... $ 16.03 $ 13.93 $ 18.94 $ 15.46
- ------------------------------------------------------------------------------------------------------------------------------
Class A-- Offering price (based on maximum initial sales
charge of 4.75%)........................................... $ 16.83 $ 14.62 $ 19.88 $ 16.23
- ------------------------------------------------------------------------------------------------------------------------------
Class B...................................................... $ 15.95 $ 13.93 $ 18.86 $ 15.45
- ------------------------------------------------------------------------------------------------------------------------------
Class C...................................................... $ 15.98 $ 13.86 $ 18.86 $ 15.42
- ------------------------------------------------------------------------------------------------------------------------------
Class Y...................................................... $ 16.03 $ 13.93 $ 18.96 $ 15.50
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
46
<PAGE>
(Photo of pine cones and
EVERGREEN branches appears here)
STATEMENTS OF OPERATIONS
Six months ended September 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(Photo) (Photo) (Photo) (Photo)
AMERICAN TAX STRATEGIC
RETIREMENT BALANCED FOUNDATION FOUNDATION
FUND FUND FUND FUND
<CAPTION>
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Interest...................................................... $ 1,957,588 $16,322,615 $23,965,812 $ 1,598,452
Dividends (net of foreign withholding taxes of $11,085, $0,
$3,933, and $587, respectively)............................. 1,707,937 5,339,110 12,506,167 429,876
- ------------------------------------------------------------------------------------------------------------------------------
Total income.............................................. 3,665,525 21,661,725 36,471,979 2,028,328
EXPENSES
Management fee................................................ 590,274 2,398,336 7,364,929 499,087
Distribution Plan expenses.................................... 526,001 634,552 4,075,603 376,183
Transfer agent fees........................................... 169,068 277,501 1,613,895 73,058
Administrative services fees.................................. 0 170,177 0 0
Trustees fees................................................. 4,935 14,919 15,251 3,129
Custodian fees................................................ 23,438 193,984 187,408 13,318
Other......................................................... 81,363 146,764 269,821 40,541
- ------------------------------------------------------------------------------------------------------------------------------
Total expenses............................................ 1,395,079 3,836,233 13,526,907 1,005,316
Less: Indirectly paid expenses................................ (2,151) (2,137) (5,261) (3,909)
- ------------------------------------------------------------------------------------------------------------------------------
Net expenses.............................................. 1,392,928 3,834,096 13,521,646 1,001,407
- ------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME......................................... 2,272,597 17,827,629 22,950,333 1,026,921
- ------------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments.............................. 3,896,003 105,107,762 28,477,168 1,203,899
Net change in unrealized appreciation on investments.......... 20,451,552 26,720,894 300,785,397 13,674,179
- ------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments................. 24,347,555 131,828,656 329,262,565 14,878,078
- ------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............ $26,620,152 $149,656,285 $352,212,898 $15,904,999
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
47
<PAGE>
(Photo of pine cones
and branches appears here) EVERGREEN
STATEMENTS OF CHANGES IN NET ASSETS
Six months ended September 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(Photo) (Photo) (Photo) (Photo)
AMERICAN TAX STRATEGIC
RETIREMENT BALANCED FOUNDATION FOUNDATION
FUND FUND FUND FUND
<CAPTION>
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income......................................... $ 2,272,597 $17,827,629 $ 22,950,333 $ 1,026,921
Net realized gain on investments.............................. 3,896,003 105,107,762 28,477,168 1,203,899
Net change in unrealized appreciation on investments.......... 20,451,552 26,720,894 300,785,397 13,674,179
- ------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations........ 26,620,152 149,656,285 352,212,898 15,904,999
- ------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income
Class A..................................................... (306,948) (803,175) (3,292,493) (277,277)
Class B..................................................... (1,243,406) (1,667,559) (6,887,298) (465,328)
Class C..................................................... (22,372) (6,764) (302,699) (54,463)
Class Y..................................................... (631,345) (15,345,823) (12,590,707) (205,154)
Net realized gain on investments
Class A..................................................... (50,054) (2,708,135) (2,266,859) (206,978)
Class B..................................................... (268,074) (6,890,880) (6,486,778) (530,383)
Class C..................................................... (5,025) (27,504) (284,153) (64,519)
Class Y..................................................... (101,776) (47,382,895) (8,106,840) (114,361)
- ------------------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders......................... (2,629,000) (74,832,735) (40,217,827) (1,918,463)
- ------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Class A..................................................... 5,140,448 1,115,063 21,403,235 18,745,144
Class B..................................................... 28,294,388 3,505,058 116,692,352 51,454,288
Class C..................................................... 82,096 123,489 3,971,685 5,969,170
Class Y..................................................... (3,517,976) (10,587,584) 25,503,995 379,455
- ------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from capital
share transactions........................................ 29,998,956 (5,843,974) 167,571,267 76,548,057
- ------------------------------------------------------------------------------------------------------------------------------
Total increase in net assets.............................. 53,990,108 68,979,576 479,566,338 90,534,593
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of period........................................... 130,386,389 916,876,203 1,654,690,847 74,274,649
- ------------------------------------------------------------------------------------------------------------------------------
END OF PERIOD................................................. $184,376,497 $985,855,779 $2,134,257,185 $164,809,242
- ------------------------------------------------------------------------------------------------------------------------------
Undistributed net investment income............................. $ 79,873 $ 250,843 $ 318,223 $ 55,155
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
48
<PAGE>
(Photo of pine cones and
EVERGREEN branches appears here)
STATEMENTS OF CHANGES IN NET ASSETS
Three Months Ended March 31, 1997*
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(Photo) (Photo) (Photo) (Photo)
AMERICAN TAX STRATEGIC
RETIREMENT BALANCED FOUNDATION FOUNDATION
FUND FUND FUND FUND
<CAPTION>
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income......................................... $ 916,564 $ 8,751,104 $ 10,995,411 $ 316,568
Net realized gain on investments.............................. 274,144 56,839,210 7,808,618 865,777
Net change in unrealized appreciation (depreciation) on
investments................................................. (1,782,365) (62,291,441) (22,555,700) (916,721)
- -------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations................................................ (591,657) 3,298,873 (3,751,671) 265,624
- -------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income
Class A..................................................... (114,069) (369,566) (1,460,563) (69,706)
Class B..................................................... (485,797) (786,903) (3,012,553) (123,210)
Class C..................................................... (11,029) (2,467) (138,668) (16,785)
Class Y..................................................... (323,235) (7,410,252) (5,968,305) (78,613)
- -------------------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders......................... (934,130) (8,569,188) (10,580,089) (288,314)
- -------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Class A..................................................... 3,671,829 (1,518,600) 15,311,573 3,898,394
Class B..................................................... 20,234,620 (1,586,498) 41,126,464 10,911,137
Class C..................................................... 304,125 251 1,497,047 970,077
Class Y..................................................... (3,766,017) (6,504,902) (1,068,567) 235,053
- -------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from capital
share transactions........................................ 20,444,557 (9,609,749) 56,866,517 16,014,661
- -------------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets................... 18,918,770 (14,880,064) 42,534,757 15,991,971
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of period........................................... 111,467,619 931,756,267 1,612,156,090 58,282,678
- -------------------------------------------------------------------------------------------------------------------------------
End of period................................................. $130,386,389 $916,876,203 $1,654,690,847 $74,274,649
- -------------------------------------------------------------------------------------------------------------------------------
Undistributed net investment income............................. $ 11,347 $ 246,535 $ 441,087 $ 30,456
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* THE FUNDS CHANGED THEIR FISCAL YEAR END FROM DECEMBER 31 TO MARCH 31.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
49
<PAGE>
(Photo of pine cones EVERGREEN
and branches appears here)
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended December 31, 1996
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(Logo) (Logo) (Logo) (Logo)
AMERICAN TAX STRATEGIC
RETIREMENT BALANCED FOUNDATION FOUNDATION
FUND FUND FUND FUND
<CAPTION>
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income......................................... $ 2,435,368 $38,768,775 $ 45,192,977 $ 858,454
Net realized gain on investments.............................. 537,906 74,563,015 21,629,530 1,133,442
Net change in unrealized appreciation (depreciation) on
investments................................................. 6,223,491 (8,122,510) 96,176,448 4,531,613
- -----------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations........ 9,196,765 105,209,280 162,998,955 6,523,509
- -----------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income
Class A..................................................... (214,502) (1,699,709) (5,718,718) (163,381)
Class B..................................................... (839,295) (3,505,791) (12,786,120) (306,929)
Class C..................................................... (22,543) (9,398) (568,120) (42,461)
Class Y..................................................... (1,330,115) (33,878,986) (26,366,104) (342,618)
In excess of net investment income
Class A..................................................... 0 0 0 (121)
Class B..................................................... 0 0 0 (226)
Class C..................................................... 0 0 0 (31)
Class Y..................................................... 0 0 0 (253)
Net realized gain on investment
Class A..................................................... (61,826) (3,402,462) (1,819,496) (209,265)
Class B..................................................... (302,689) (8,639,808) (5,077,907) (555,359)
Class C..................................................... (7,483) (28,096) (231,947) (82,045)
Class Y..................................................... (321,583) (62,657,565) (7,335,097) (303,414)
In excess of net realized gain in investment
Class A..................................................... (3,185) 0 0 0
Class B..................................................... (15,592) 0 0 0
Class C..................................................... (385) 0 0 0
Class Y..................................................... (16,566) 0 0 0
- -----------------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders......................... (3,135,764) (113,821,815) (59,903,509) (2,006,103)
- -----------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Class A..................................................... 9,277,590 1,734,257 85,968,709 7,701,565
Class B..................................................... 50,421,437 1,833,803 237,036,022 19,431,340
Class C..................................................... 1,310,608 64,578 13,452,660 3,335,899
Class Y..................................................... (1,214,773) (32,534,086) 134,914,397 53,935
- -----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from capital
share transactions........................................ 59,794,862 (28,901,448) 471,371,788 30,522,739
- -----------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets................... 65,855,863 (37,513,983) 574,467,234 35,040,145
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of period........................................... 45,611,756 969,270,250 1,037,688,856 23,242,533
- -----------------------------------------------------------------------------------------------------------------------------
End of period................................................. $111,467,619 $931,756,267 $1,612,156,090 $58,282,678
- -----------------------------------------------------------------------------------------------------------------------------
Undistributed (accumulated distributions in excess of) net
investment income............................................. $ 28,913 $ 115,118 $ 25,764 $ (631)
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
50
<PAGE>
(Photo of pine cones
EVERGREEN and branches appears here)
COMBINED NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. ORGANIZATION
The Evergreen Balanced Funds consist of Evergreen American Retirement Fund
("American Retirement"), Evergreen Balanced Fund ("Balanced"), Evergreen
Foundation Fund ("Foundation") and Evergreen Tax Strategic Foundation Fund ("Tax
Strategic"), each of which is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as diversified, open-end management
investment companies. American Retirement is a separate series of the Evergreen
American Retirement Trust, a Massachusetts business trust organized in 1987.
Balanced is a separate investment series of Evergreen Investment Trust, a
Massachusetts business trust organized in 1984. Foundation and Tax Strategic are
separate series of the Evergreen Foundation Trust, a Massachusetts business
trust organized in 1989. American Retirement, Balanced, Foundation and Tax
Strategic are collectively referred herein as the "Funds".
The Funds offer Class A, Class B, Class C and Class Y shares. Class A shares are
sold with a maximum front-end sales charge of 4.75%. Class B and Class C shares
are sold without a front-end sales charge, but pay higher ongoing distribution
expenses than Class A. 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 B shares purchased after January 1, 1997 will automatically
convert to Class A shares after seven years. Class B shares purchased prior to
January 1, 1997 retain their existing conversion rights. Class Y shares are sold
at net asset value and are not subject to contingent deferred sales charges or
distribution fees. Class Y shares are sold only to investment advisory clients
of First Union Corporation ("First Union") and its affiliates, certain
institutional investors or Class Y shareholders of record of certain other funds
managed by First Union and its affiliates.
2. ACQUISITION INFORMATION
Effective at the close of business on July 17, 1997, Foundation acquired the net
assets of Keystone Balanced Fund II, an open-end management investment company
registered under the 1940 Act in an exchange of shares. The net assets were
exchanged through a non-taxable exchange for 111,203, 316,984, and 36,146 Class
A, Class B and Class C shares, respectively, of Foundation. The acquired net
assets consisted primarily of portfolio securities with unrealized appreciation
of $1,216,239. The aggregate net assets of Foundation and Keystone Balanced Fund
II immediately prior to the acquisition were $1,984,767,050 and $8,490,928,
respectively. The aggregate net assets of Foundation immediately after the
acquisition were $1,993,257,978.
3. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. The
policies are in conformity with generally accepted accounting principles, which
require management to make estimates and assumptions that affect amounts
reported herein. Actual results could differ from these estimates.
A. VALUATION OF SECURITIES
The Funds value securities traded on a national securities exchange or included
on the NASDAQ National Market System ("NMS") at the last reported sales price on
the exchange where primarily traded. The Funds value securities traded on an
exchange or NMS for which there has been no sale and other securities traded in
the over-the-counter market at the mean between the last reported bid and asked
prices. Corporate bonds, other fixed-income securities, and mortgage and other
asset-backed securities are valued at prices provided by an independent pricing
service. In determining value for normal institutional-size transactions, the
pricing service uses methods based on market transactions for comparable
securities and analysis of various relationships between similar securities
which are generally recognized by institutional traders. Securities for which
valuations are not available from an independent pricing service, including
restricted securities, are valued at fair value as determined in good faith
according to procedures established by the Board of Trustees. Short-term
investments with remaining maturities of 60 days or less are carried at
amortized cost, which approximates market value.
B. REPURCHASE AGREEMENTS
Each Fund may invest in repurchase agreements. Securities pledged as collateral
for repurchase agreements are held by the custodian on each 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
advisor to be creditworthy pursuant to guidelines established by the Board of
Trustees.
C. SECURITY TRANSACTIONS AND INVESTMENT INCOME
Securities transactions are accounted for no later than one business day after
the trade date. Realized gains and losses are computed on the identified cost
basis. Interest income is recorded on the accrual basis and includes accretion
of discounts and amortization of premiums. Dividend income is recorded on the
ex-dividend date.
D. FEDERAL TAXES
The Funds have qualified and intend to continue to qualify as regulated
investment companies under the Internal Revenue Code of 1986, as amended (the
"Code"). Thus, the Funds will not incur any federal income tax liability since
they are expected to distribute all of their net
51
<PAGE>
(Photo of pine cones
and branches appears here) EVERGREEN
COMBINED NOTES TO FINANCIAL STATEMENTS (CONTINUED)
investment company taxable income, net tax-exempt income and net capital gains,
if any, to their shareholders. The Funds also intend to avoid any excise tax
liability by making the required distributions under the Code. Accordingly, no
provision for federal taxes is required.
E. 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 significant differences between financial statement
amounts available for distributions and distributions made in accordance with
income tax regulations are primarily due to differing treatments for realized
gains from foreign currency related transactions and certain distributions
received from real estate investment trusts.
F. CLASS ALLOCATIONS
Income, expenses (other than class specific expenses), and realized and
unrealized gains and losses are prorated among the classes based on the relative
net assets of each class. Currently, class specific expenses are limited to
expenses incurred under the Distribution Plans for each class.
G. ORGANIZATION EXPENSES
Organization expenses of Tax Strategic are amortized to operations over a
five-year period on a straight-line basis. In the event any of the initial
shares of Tax Strategic are redeemed by any holder 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.
4. CAPITAL SHARE TRANSACTIONS
The Funds have an unlimited number of shares of beneficial interest with a par
value of $0.0001 authorized. Shares of beneficial interest of the Funds are
currently divided into Class A, Class B, Class C and Class Y. Transactions in
shares of the Funds were as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED THREE MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 1997 MARCH 31, 1997* DECEMBER 31, 1996
AMERICAN RETIREMENT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C> <C> <C>
CLASS A
Shares sold........................................ 409,427 $ 6,073,868 326,820 $ 4,608,875 762,980 $10,140,786
Shares redeemed.................................... (85,786) (1,277,382) (74,356) (1,044,019) (84,770) (1,127,903)
Shares issued in reinvestment of distributions..... 22,332 343,962 7,652 106,973 19,559 264,707
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase....................................... 345,973 5,140,448 260,116 3,671,829 697,769 9,277,590
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS B
Shares sold........................................ 2,083,865 30,766,495 1,531,877 21,511,234 3,892,133 51,648,645
Shares redeemed.................................... (264,741) (3,928,479) (124,007) (1,740,809) (175,385) (2,331,018)
Shares issued in reinvestment of distributions..... 95,096 1,456,372 33,372 464,195 81,733 1,103,810
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase....................................... 1,914,220 28,294,388 1,441,242 20,234,620 3,798,481 50,421,437
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS C
Shares sold........................................ 36,303 522,994 25,543 360,283 100,739 1,334,965
Shares redeemed.................................... (33,868) (467,693) (4,726) (66,693) (3,928) (53,590)
Shares issued in reinvestment of distributions..... 1,748 26,795 755 10,535 2,161 29,233
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase....................................... 4,183 82,096 21,572 304,125 98,972 1,310,608
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS Y
Shares sold........................................ 147,975 2,204,642 87,120 1,231,385 287,843 3,807,908
Shares redeemed.................................... (428,371) (6,323,531) (370,659) (5,263,594) (481,537) (6,415,509)
Shares issued in reinvestment of distributions..... 39,114 600,913 19,041 266,192 103,943 1,392,828
- ----------------------------------------------------------------------------------------------------------------------------------
Net decrease....................................... (241,282) (3,517,976) (264,498) (3,766,017) (89,751) (1,214,773)
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase resulting from Fund share
transactions..................................... 2,023,094 $29,998,956 1,458,432 $20,444,557 4,505,471 $59,794,862
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* THE FUND CHANGED ITS FISCAL YEAR END FROM DECEMBER 31 TO MARCH 31, EFFECTIVE
MARCH 31, 1997.
52
<PAGE>
(Photo of pine cones
EVERGREEN and branches appears here)
COMBINED NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED THREE MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 1997 MARCH 31, 1997* DECEMBER 31, 1996
BALANCED SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C> <C> <C>
CLASS A
Shares sold................................. 174,254 $ 2,386,143 82,428 $ 1,093,429 450,824 $ 5,988,616
Shares redeemed............................. (337,830) (4,674,848) (223,885) (2,966,293) (680,925) (9,159,435)
Shares issued in reinvestment of
distributions............................. 248,262 3,403,768 26,899 354,264 372,747 4,905,076
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)..................... 84,686 1,115,063 (114,558) (1,518,600) 142,646 1,734,257
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS B
Shares sold................................. 274,021 3,770,254 165,348 2,196,560 529,783 7,095,087
Shares redeemed............................. (612,027) (8,507,341) (341,159) (4,533,333) (1,260,613) (16,901,766)
Shares issued in reinvestment of
distributions............................. 601,851 8,242,145 56,925 750,275 883,591 11,640,482
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)..................... 263,845 3,505,058 (118,886) (1,586,498) 152,761 1,833,803
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS C
Shares sold................................. 9,451 126,236 3,813 50,440 19,191 256,143
Shares redeemed............................. (2,663) (35,601) (3,891) (51,872) (16,775) (220,556)
Shares issued in reinvestment of
distributions............................. 2,412 32,854 128 1,683 2,215 28,991
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase................................ 9,200 123,489 50 251 4,631 64,578
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS Y
Shares sold................................. 6,444,462 88,579,312 3,764,660 49,606,477 16,615,288 221,340,376
Shares redeemed............................. (9,313,258) (127,376,397) (4,480,218) (59,399,461) (22,526,104) (302,083,357)
Shares issued in reinvestment of
distributions............................. 2,056,772 28,209,501 249,854 3,288,082 3,659,774 48,208,895
- ------------------------------------------------------------------------------------------------------------------------------------
Net decrease................................ (812,024) (10,587,584) (465,704) (6,504,902) (2,251,042) (32,534,086)
- ------------------------------------------------------------------------------------------------------------------------------------
Net decrease resulting from Fund share
transactions.............................. (454,293) $ (5,843,974) (699,098) $ (9,609,749) (1,951,004) $ (28,901,448)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* THE FUND CHANGED ITS FISCAL YEAR END FROM DECEMBER 31 TO MARCH 31, EFFECTIVE
MARCH 31, 1997.
53
<PAGE>
(Photo of pine cones and
branches appears here) EVERGREEN
COMBINED NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED THREE MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 1997 MARCH 31, 1997* DECEMBER 31, 1996
FOUNDATION SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C> <C> <C>
CLASS A
Shares sold.................................. 2,138,641 $ 37,952,889 1,573,527 $ 26,044,624 8,413,021 $ 126,479,881
Shares redeemed.............................. (1,374,097) (24,058,166) (734,487) (12,146,536) (3,177,106) (47,846,922)
Shares issued in reinvestment of
distributions.............................. 305,776 5,468,350 85,926 1,413,485 474,763 7,335,750
Shares issued in acquisition of Keystone
Balance Fund II............................ 111,203 2,040,162 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase................................. 1,181,523 21,403,235 924,966 15,311,573 5,710,678 85,968,709
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS B
Shares sold.................................. 7,638,579 135,299,965 3,519,353 58,129,934 18,909,215 282,822,448
Shares redeemed.............................. (2,138,489) (37,379,888) (1,205,547) (19,871,723) (4,174,149) (62,881,641)
Shares issued in reinvestment of
distributions.............................. 730,455 12,981,571 175,001 2,868,253 1,109,399 17,095,215
Shares issued in acquisition of Keystone
Balance Fund II............................ 316,984 5,790,704 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase................................. 6,547,529 116,692,352 2,488,807 41,126,464 15,844,465 237,036,022
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS C
Shares sold.................................. 346,148 6,175,674 176,251 2,897,772 1,165,822 17,413,787
Shares redeemed.............................. (198,682) (3,419,487) (91,055) (1,506,028) (308,109) (4,629,756)
Shares issued in reinvestment of
distributions.............................. 31,260 555,436 6,429 105,303 43,393 668,629
Shares issued in acquisition of Keystone
Balance Fund II............................ 36,146 660,062 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase................................. 214,872 3,971,685 91,625 1,497,047 901,106 13,452,660
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS Y
Shares sold.................................. 4,272,912 75,868,202 2,229,198 37,037,547 19,300,331 290,354,485
Shares redeemed.............................. (3,903,866) (68,516,732) (2,606,400) (43,297,987) (12,328,011) (185,863,701)
Shares issued in reinvestment of
distributions.............................. 1,013,845 18,152,525 315,233 5,191,873 1,977,198 30,423,613
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)...................... 1,382,891 25,503,995 (61,969) (1,068,567) 8,949,518 134,914,397
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase resulting from Fund share
transactions............................... 9,326,815 $167,571,267 3,443,429 $ 56,866,517 31,405,767 $ 471,371,788
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* THE FUND CHANGED ITS FISCAL YEAR END FROM DECEMBER 31 TO MARCH 31, EFFECTIVE
MARCH 31, 1997.
54
<PAGE>
- -------------------------------------------------------(Photo of pine cones and
EVERGREEN branches appears here)
COMBINED NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED THREE MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 1997 MARCH 31, 1997* DECEMBER 31, 1996
TAX STRATEGIC SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C> <C> <C>
CLASS A
Shares sold........................................ 1,314,390 $19,224,077 315,408 $ 4,371,432 652,149 $ 8,273,511
Shares redeemed.................................... (65,001) (946,696) (38,895) (539,727) (73,546) (929,252)
Shares issued in reinvestment of distributions..... 31,215 467,763 4,842 66,689 26,949 357,306
- --------------------------------------------------------------------------------------------------------------------------------
Net increase....................................... 1,280,604 18,745,144 281,355 3,898,394 605,552 7,701,565
- --------------------------------------------------------------------------------------------------------------------------------
CLASS B
Shares sold........................................ 3,576,099 52,745,827 816,857 11,299,403 1,563,566 19,725,070
Shares redeemed.................................... (153,562) (2,229,774) (36,136) (499,992) (85,378) (1,087,302)
Shares issued in reinvestment of distributions..... 62,718 938,235 8,114 111,726 59,693 793,572
- --------------------------------------------------------------------------------------------------------------------------------
Net increase....................................... 3,485,255 51,454,288 788,835 10,911,137 1,537,881 19,431,340
- --------------------------------------------------------------------------------------------------------------------------------
CLASS C
Shares sold........................................ 532,638 7,862,760 102,016 1,405,348 263,684 3,324,801
Shares redeemed.................................... (141,354) (2,005,186) (31,923) (445,521) (5,604) (70,810)
Shares issued in reinvestment of distributions..... 7,465 111,596 745 10,250 6,172 81,908
- --------------------------------------------------------------------------------------------------------------------------------
Net increase....................................... 398,749 5,969,170 70,838 970,077 264,252 3,335,899
- --------------------------------------------------------------------------------------------------------------------------------
CLASS Y
Shares sold........................................ 37,958 549,399 27,768 386,755 63,086 768,496
Shares redeemed.................................... (18,514) (267,321) (12,744) (174,602) (84,857) (1,055,874)
Shares issued in reinvestment of distributions..... 6,489 97,377 1,657 22,900 26,475 341,313
- --------------------------------------------------------------------------------------------------------------------------------
Net increase....................................... 25,933 379,455 16,681 235,053 4,704 53,935
- --------------------------------------------------------------------------------------------------------------------------------
Net increase resulting from Fund share
transactions..................................... 5,190,541 $76,548,057 1,157,709 $16,014,661 2,412,389 $30,522,739
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* THE FUND CHANGED ITS FISCAL YEAR END FROM DECEMBER 31 TO MARCH 31, EFFECTIVE
MARCH 31, 1997.
5. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of investment securities, excluding
short-term securities, were as follows for the six months ended September 30,
1997:
<TABLE>
<CAPTION>
COST OF PROCEEDS
PURCHASES FROM SALES
<S> <C> <C>
American Retirement............................. $ 65,990,453 $ 27,760,377
Balanced........................................ 556,122,395 637,340,406
Foundation...................................... 220,478,088 137,508,574
Tax Strategic................................... 118,289,879 38,293,361
</TABLE>
6. DISTRIBUTION PLANS
Evergreen Keystone Distributor, Inc. (formerly Evergreen Funds Distributor,
Inc.) ("EKD"), a wholly-owned subsidiary of The BISYS Group Inc. ("BISYS")
serves as principal underwriter to the Funds.
Each Fund has adopted Distribution Plans for each class of shares, except Class
Y Shares, as allowed by Rule 12b-1 of the 1940 Act. Distribution plans permit
the Funds to reimburse their principal underwriter for costs related to selling
shares of the Fund and for various other services. These costs, which consist
primarily of commissions and service fees to broker-dealers who sell shares of
the Fund, are paid by the Funds through expenses called "Distribution Plan
expenses". Each Class, except Class Y, currently pays a service fee equal to
0.25% of the average daily net assets of the class. Class B and Class C also
presently pay distribution fees equal to 0.75% of the average daily net assets
of the Class. Distribution Plan expenses are calculated daily and paid monthly.
During the six months ended September 30, 1997, amounts paid to EKD and/or EKIS
pursuant to each Fund's Class A, Class B and Class C Distribution Plans were
follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
<S> <C> <C> <C>
American Retirement.................................... $ 23,328 $ 493,479 $ 9,194
Balanced............................................... 56,171 576,180 2,201
Foundation............................................. 314,505 3,602,390 158,708
Tax Strategic.......................................... 30,995 309,248 35,940
</TABLE>
Each of the Distribution Plans may be terminated at any time by vote of the
Independent Trustees or by vote of a majority of the outstanding voting shares
of the respective class.
55
<PAGE>
(Photo of pine cones
and branches appears here) EVERGREEN
COMBINED NOTES TO FINANCIAL STATEMENTS (CONTINUED)
7. INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT AND OTHER AFFILIATED
TRANSACTIONS
First Union serves as Balanced's investment advisor and is paid a management fee
that is computed and paid monthly at an annual rate of 0.50 of 1% of Balanced's
average daily net assets.
Evergreen Asset Management Corp. ("Evergreen Asset"), a wholly owned subsidiary
of First Union, is the investment advisor for American Retirement, Foundation
and Tax Strategic Funds and is entitled to an annual fee based on each of
American Retirement's, Foundation's and Tax Strategic's average daily net
assets, respectively, in accordance with the following schedules:
<TABLE>
<CAPTION>
FOUNDATION AND AMERICAN
TAX STRATEGIC RETIREMENT
<S> <C> <C> <C>
First $750 million........... 0.875% First $750 million........... 0.75%
Next $250 million............ 0.750% Next $750 million............ 0.70%
Over $1 billion.............. 0.700%
</TABLE>
Evergreen Keystone Investment Services, Inc. ("EKIS"), a subsidiary of First
Union, serves as the administrator for the Funds. BISYS Fund Services, an
affiliate of EKD, serves as the sub-administrator for the Funds. The
administrator for the Funds is entitled to an annual fee based on the average
daily net assets of the funds administered by EKIS for which First Union or its
investment advisory subsidiaries are also the investment advisers. The
administration fee is calculated by applying percentage rates, which start at
0.05% and decline to 0.01% per annum as net assets increase, to the average
daily net asset value of each Fund. The sub-administration fee is calculated by
applying percentage rates, which start at 0.01% and decline to .004% per annum
as net assets increase, to the average daily net asset value of each Fund. For
American Retirement, Foundation, and Tax Strategic the administration and
sub-administration fee is paid by their investment advisor and is not a Fund
expense.
Lieber & Company, an affiliate of First Union, is the investment sub-adviser to
American Retirement, Foundation and Tax Strategic 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 the six months ended
September 30, 1997, American Retirement, Foundation, and Tax Strategic incurred
brokerage commissions of $38,229, $252,266, $36,546, 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.
Effective May 5, 1997, Evergreen Keystone Service Company ("EKSC"), a
wholly-owned subsidiary of Keystone 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 the six months ended
September 30, 1997, EKSC received $169,068, $277,501, $1,613,895, and $73,058,
in transfer agent fees from American Retirement, Balanced, Foundation, and Tax
Strategic. For certain accounts in American Retirement, Balanced and Foundation,
First Union was sub-contracted by EKSC, and previously 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 totaled
$4,713, $131,015 and $111,436 for American Retirement, Balanced and Foundation,
respectively, for the six months ended September 30, 1997.
Officers of the Funds and affiliated Trustees receive no compensation directly
from the Funds.
8. 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.
9. DEFERRED TRUSTEES' FEES
Each Independent Trustee of the Funds 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 Funds. 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 September 30, 1997, the value of the Trustees deferral
accounts was $15,634, $43,441, $16,437 and $6,067 for American Retirement,
Balanced, Foundation and Tax Strategic, respectively.
10. FINANCING AGREEMENT
On October 31, 1996, a financing agreement among all of the Evergreen Funds and
State Street, Societe Generale and ABN Amro Bank N.V. (collectively, the
"Banks") became effective. 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 among 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 will 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 September 30, 1997, the Funds had no borrowings
under this agreement.
56
<PAGE>
This brochure must be preceded or accompanied by a prospectus of an Evergreen
fund contained herein. The prospectus contains more complete information,
including fees and expenses, and should be read carefully before investing or
sending money.
NOT May lose value
FDIC No bank guarantee
INSURED
Evergreen Funds Distributor, Inc.
540980 Rev. 01
63060 11/97
