Evergreen Growth and Income Funds
January 31, 1998
Semi Annual Reports
[Evergreen Logo}
<PAGE>
Table of Contents
<TABLE>
<S> <C>
Letter to Shareholders ................... 1
Evergreen Growth & Income Fund
Fund at a Glance ...................... 2
Portfolio Manager Interview ........... 3
Evergreen Income & Growth Fund
Fund at a Glance ...................... 6
Portfolio Manager Interview ........... 7
Evergreen Small Cap Equity Income
Fund
Fund at a Glance ...................... 10
Portfolio Manager Interview ........... 11
Evergreen Utility Fund
Fund at a Glance ...................... 14
Portfolio Manager Interview ........... 15
Evergreen Value Fund
Fund at a Glance ...................... 17
Portfolio Manager Interview ........... 18
Evergreen Fund for Total Return
Fund at a Glance ...................... 20
Portfolio Manager Interview ........... 21
</TABLE>
<TABLE>
<S> <C>
Financial Highlights
Evergreen Growth & Income Fund ........ 24
Evergreen Income & Growth Fund ........ 28
Evergreen Small Cap Equity
Income Fund ........................ 32
Evergreen Utility Fund ................ 35
Evergreen Value Fund .................. 37
Evergreen Fund for Total Return ....... 41
Schedule of Investments
Evergreen Growth & Income Fund ........ 44
Evergreen Income & Growth Fund ........ 48
Evergreen Small Cap Equity
Income Fund ........................ 52
Evergreen Utility Fund ................ 55
Evergreen Value Fund .................. 56
Evergreen Fund for Total Return ....... 58
Statements of Assets and Liabilities ..... 61
Statements of Operations ................. 62
Statements of Changes in Net Assets -
Period ended January 31, 1998 ......... 63
Statements of Changes in Net Assets -
Period ended July 31, 1997 ............ 64
Statements of Changes in Net Assets -
Prior Periods ......................... 65
Combined Notes to Financial
Statements ............................... 66
</TABLE>
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Evergreen Funds
Evergreen Funds is one of the nation's fastest growing investment companies
with more than $45 billion in assets under management.
With 85 mutual funds to choose among and acclaimed service and operations
capabilities, investors enjoy a broader range of quality investment products
and services designed to meet their needs.
The Evergreen Funds employ intensive, research-driven investment strategies
executed by over 90 research analysts and portfolio managers. The fund company
remains dedicated to meeting the needs of investors and their advisors in a
global economy. Look to the Evergreen Funds to provide a distinctive level of
service and excellence in investment management.
This semiannual report must be preceded or accompanied by a prospectus of an
Evergreen fund contained herein. The prospectus contains more complete
information, including fees and expenses, and should be read carefully before
investing or sending money.
<TABLE>
<S> <C>
ARE NOT FDIC INSURED May lose value o Are not bank guaranteed
</TABLE>
Mutual Funds:
Evergreen Funds Distributor, Inc.
<PAGE>
Letter to Shareholders
March 1998
Dear Shareholders:
Growth and income funds, as a general rule,
follow moderate strategies in seeking their
primary objective of growth of capital,
especially when compared to aggressive funds.
(Photograph of These cautious strategies served the
William M. Ennis shareholders of the Evergreen Growth and William
appears here) M. Ennis Income Funds well in the Managing
Director sometimes-bumpy market of the six
William M. Ennis months that ended on January 31, 1998. Changes
Managing Director in the market
During the six months, the reassuring stock market of the previous months
changed, and began showing periodic flashes of volatility. This volatility was
linked to anxieties about the effects of the Asian financial crisis on the
American economy in general, and on the earnings of multi-national companies
and technology companies, in particular.
The Standard and Poor's 500 Index, the most widely used barometer for the
performance of the U.S. stock market, had a return of 3.56% for the six-month
period. While this was positive, it masked dramatic fluctuations in the market
from month to month. The final figure also marked a departure from the returns
of 20% or more generated by the index during the last three calendar years.
Competitive Performance
During the six months, the Evergreen Growth and Income Funds provided very
competitive returns, generally matching or surpassing the performance of the
overall market. We believe the solid performance during the volatile period
again validated the moderate strategies of the Growth and Income Funds,
designed for long-term investors seeking conservative approaches to growth. We
believe growth and income funds, such as these, have a major place in the
equity portions of the asset allocation plans for most investors.
At Evergreen Funds, we are committed to providing a strong array of funds with
complementary objectives and strategies to help investors and their financial
advisors assemble personal portfolios that make sense for their needs and risk
tolerances. We recommend shareholders periodically review their portfolios with
professional investment advisors to make sure their allocations continue to be
in line with their financial plans.
We can assist by providing the information you require about Evergreen Funds.
If you have any questions about the funds in this report or other Evergreen
Funds, we encourage you to consult your financial advisor or call us at
1-800-343-2898.
Sincerely,
/s/ Bill Ennis
William M. Ennis
Managing Director
1
<PAGE>
EVERGREEN
Growth and Income Fund
Fund at a Glance as of January 31, 1998
Overall 5-Star by Morningstar(1)
Class B and C shares were rated among 2,364 Domestic Equity funds for the 3
year period ending 1/31/98. Class Y shares were rated among 680 Domestic Equity
funds for the 10 year period ending 1/31/98.
The Fund's investment strategy of buying growth on a value basis carries less
risk than traditional growth strategies.
Portfolio
Management
- ------------------
(Photo of Stephen
A. Lieber appears here)
Stephen A. Lieber
Evergreen Asset
Management Corp.
Tenure: July 1997
(Photo of
Gary R. Buesser appears here)
Gary R. Buesser, CFA
Evergreen Asset
Management Corp.
Tenure: July 1997
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS*
<TABLE>
<CAPTION>
Class A Class B Class C Class Y
<S> <C> <C> <C> <C>
Inception Date 1/3/95 1/3/95 1/3/95 10/15/86
Average Annual Returns
6 months with sales charge 1.61% 1.27% 5.27% N/A
6 months w/o sales charge 6.68% 6.27% 6.27% 6.82%
One year with sales charge 19.12% 19.08% 23.08% N/A
One year w/o sales charge 25.06% 24.08% 24.08% 25.36%
3 years 25.81% 26.31% 26.99% 28.16%
5 years - - - 19.63%
10 years - - - 17.42%
Since Inception 25.74% 26.24% 26.86% 15.52%
Cumulative Total Return
since inception 102.60% 105.06% 108.17% 411.05%
Maximum Sales Charge 4.75% 5.00% 1.00% N/A
Front End CDSC CDSC
30-day SEC Yield 0.36% ( 0.36%) ( 0.36%) 0.65%
6 month income dividends
per share $ 0.06 - - $ 0.09
6 month capital gain
distributions per share $ 1.01 $ 1.01 $ 1.01 $ 1.01
</TABLE>
*Adjusted for maximum applicable sales charge
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LONG TERM GROWTH
[LINE GRAPH APPEARS BELOW WITH THE FOLLOWING INFORMATION:]
<TABLE>
<CAPTION>
1/3/95 1/95 1/96 1/97 1/98
<S> <C> <C> <C> <C> <C>
Class A Shares 9525 9689 13004 16199 20252
Standard & Poor's 500 Index 10000 10259 14202 17964 22318
Lipper Growth & Income Fund Average 10000 10157 13504 16532 21178
Consumer Price Index 10000 10040 10314 10629 10780
</TABLE>
Comparison of change in value of a $10,000 investment in Evergreen Growth &
Income Fund Class A, the Standard & Poor's 500 Index, the Lipper Growth &
Income Funds Average, and the Consumer Price Index.
Past performance is no guarantee of future results. The performance of each
class may vary based on differences in loads and fees paid by the shareholders
investing in each class. The investment return and principal value will
fluctuate so that an investor's shares, when redeemed,
may be worth more or less than original cost. The Standard & Poor's 500 Index
is an unmanaged market index. This index does not include transaction costs
associated with buying and selling securities nor any management fees. The
Lipper Growth and Income Funds Average and the Consumer Price Index are through
January 31, 1998.
- --------------------------------------------------------------------------------
CURRENT INVESTMENT STYLE
[GRAPHIC OMITTED]
Morningstar's Style Box is based on a portfolio date as
of 12/31/97.
The Equity Style Box placement is based on a fund's
price-to-earnings and price-to-book ratios relative to
the S&P 500, as well as the size of the companies in
which it invests, or median market capitalization.
Source: 1997 Morningstar, Inc.
2
<PAGE>
EVERGREEN
Growth and Income Fund
Portfolio Manager Interview
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How did the Fund perform during the
period?
We think the Evergreen Growth and Income Fund performed very well,
consistent with its long-term record. During the six months that ended on
January 31, 1998, the Fund's Class A Shares had a total return of 6.68%,
unadjusted for any sales charge. During the same period, the Standard &
Poor's 500 Index, a commonly used benchmark of stock market performance,
had a return of 3.56%.
The Fund's investment strategy of buying growth on a value basis carries
less risk than traditional growth strategies. This was borne out by the
fact that classes B, C and Y were rated five-star, the highest rating for
risk-adjusted performance, by Morningstar, an independent monitor of
mutual fund performance, as of January 31, 19981. Class B and C shares
were rated among 2,364 Domestic Equity funds for the 3-year period, and
Class Y shares were rated among 680 Domestic Equity funds for
the 10-year period ending January 31, 1998.
Portfolio Characteristics
as of 1/31/98 unless noted
Total Net Assets $1,707,388,644
Number of Holdings 247
*Beta 0.92
*P/E Ratio 18.4x
* as of 12/31/97
(1) Source: Morningstar, Inc. Morningstar's proprietary ratings reflect the
Fund's historical risk-adjusted performance as of 1/31/98 (for Class B,
C, and Y shares). Ratings are subject to change monthly and are
calculated from the Fund's 3, 5, and 10 year average annual returns in
excess of 90 day Treasury Bill returns with appropriate fee adjustments
and a risk factor that reflects fund performance below 90 day T-bill
returns. Class Y shares received 5 stars for the overall, 3 and 5 year
periods ending 1/31/98 and 4 stars for the 10 year period ending
1/31/98. It was rated among 2,364 and 1,315 Domestic Equity funds for
the 3 and 5 year periods. The top 10% of the funds in an investment
category receive five stars, the next 22.5% receive four stars. Past
performance is no guarantee of future results.
- --------------------------------------------------------------------------------
What was the investment environment
like, and how did this affect strategy?
The six months were marked by periods of short-term volatility, including
a market correction in October 1997 linked to the Asian financial crisis
and the resulting market worries about the effects on the U.S. economy.
Periods when companies or industries are temporarily out of favor can work
to the benefit of the Fund's "value-timing" strategy. The Evergreen Growth
and Income Fund, since its inception in October 1986, has employed this
"value-timing" strategy consistently. In fact, the original name of the
Fund was the Evergreen Value Timing Fund. Evergreen's team of portfolio
managers and analysts search for investment opportunities among companies
that are temporarily out of favor. We buy stocks during periods of either
market uncertainty, when values are under pressure, or at times when the
investment community is undervaluing either specific companies or general
industries. This six-month period offered a number of investment
opportunities for this "value-timing"
strategy.
--------------------------------------------------------------------
PORTFOLIO COMPOSITION
(as a percentage of net assets)
[PIE CHART APPEARS BELOW WITH THE FOLLOWING INFORMATION:]
Common Stock 79.9%
Cash/Cash Equivalents 20.1%
Corporate Notes/Bonds 0.9%
- --------------------------------------------------------------------------------
What were some of the companies in which you invested, using the "value-
timing" strategy?
During the half-year under review, the companies in
which we invested included those:
o Whose stock values had been hurt because of the Asian crisis;
o Whose long-term growth patterns were interrupted by short-term events;
3
<PAGE>
EVERGREEN
Growth and Income Fund
Portfolio Manager Interview
o Which were temporarily out of fashion;
o Which had hidden value not recognized by the overall market.
The turmoil in Asia caused the stock prices of several interesting
companies to fall well below our estimate of their inherent value. These
included Avon Products, Inc., Caterpillar, Inc., DuPont Photomasks, Inc.,
AFLAC, Inc., Jabil Circuit, Inc., and Honeywell, Inc.
Other good companies had encountered some problems distinct to themselves
that we believe only interrupted their long-term growth, and we used the
stock price declines as opportunities to make purchases. These included
AutoZone, Inc., Black & Decker Corp., Boeing Co., Cole National Corp.,
Hillenbrand Industries, Inc., and Sara Lee Corp.
Sometimes an industry group falls out of favor, hurting the stock prices
of good companies within the group. During the period, we found several
companies that we believe fit this category, including: Merck & Co., Inc.,
Southwest Airlines Co., Lancaster Colony Corp., Steel Dynamics, Inc., and
New York State Electric & Gas Corp.
Finally, there were several examples of companies which had "hidden value"
not recognized in the price of their stock. These included A.G. Edwards,
Inc., GTE Corp., Solutia, Inc., and Wilmington Trust Corp.
The stock prices of all these companies appreciated after
they were purchased by the Fund.
Top 10 Sectors
Healthcare Products & Services 10.8%
Banks 7.7%
Publishing, Broadcasting & Entertainment 6.7%
Industrial Specialty Products & Services 6.4%
Business Equipment & Services 6.1%
Finance & Insurance 5.1%
Oil/Energy 4.2%
Transportation 4.1%
Chemical & Agricultural Products 3.9%
Electrical and Electronic Equipment & Services 3.6%
- --------------------------------------------------------------------------------
What were some of the industry groups
that led performance during the period?
There were several industry groups that supported the Fund's strong
performance, led by Food and Beverage Products, Communication Systems and
Services, Industrial Specialty Products and Services, and Electric
Utilities. The following table gives the top 10 industry groups, by
asset-weighted performance. Asset-weighted returns are based on the
average returns of stocks in industries, adjusted proportionately to the
size of the investment in the portfolio.
Leading Performance
by Industry
(Asset-weighted, July 31, 1997-January 31, 1998)
Industry Average % Gain
Food & Beverage Products 34.6%
Communication Systems & Services 31.9
Industrial Specialty Products & Services 27.9
Utilities - Electric 27.1
Retailing & Wholesaling 22.1
Finance & Insurance 19.0
Telecommunication Services & Equipment 15.0
Automotive Equipment & Manufacturing 10.8
Banks 9.9
Healthcare Products & Services 9.5
- --------------------------------------------------------------------------------
What were some of the individual companies in the Fund's portfolio that
led performance during the period?
We had a number of companies with more than 30% total return performance
during the six months. These included two banking companies, Carolina
First Corp (31.0%) and Susquehanna Bancshares, Inc., (30.0%); Platinum
Technology Corp. (82.6%), and Pioneer Hi-Bred International, Inc., an
agricultural product company (34.8%). Two finance-related companies were
on the list: A.G. Edwards, Inc. (38.7%) and Fannie Mae
4
<PAGE>
EVERGREEN
Growth and Income Fund
Portfolio Manager Interview
(30.3%). Dominic's Supermarkets, Inc., was a strong performer (36.6%), as
were two pharmaceutical companies, Pfizer, Inc., (37.0%) and
Schering-Plough Corp. (32.5%). The Fund's investment in Strattec Security
Corp., an industrial specialty company, did well (38.4%), as did the
holding in Walt Disney & Co. (31.7%).
Four broadcasting or cable companies were very strong performers, American
Radio Systems Corp., Class A, (32.4%), Chancellor Media Corp., (49.2%),
Comcast Corp. Special Class A (37.9%) and U.S. West Media Group, Inc.,
(34.5%). Other companies that did well included Carson Pirie Scott & Co, a
retailer, (58.3%), Univision Communications, Inc., Class A (76.7%),
Petroleum Helicopters, Inc., (32.3%) and Commonwealth Energy System
(34.4%).
Four telephone-related stocks also had outstanding performance: Air Touch
Communications, Inc., (32.8%); Century Telephone Enterprises (43.4%); MCI
Communications Corp. (31.4%); and AT&T (69.7%).
Top 10 Holdings
Webster Financial Corp. 1.8%
Computer Associates International, Inc. 1.6%
R & B Falcon Corp. 1.6%
Pittston Brink's Group 1.4%
Jacor Communications, Inc. 1.2%
Lincare Holdings, Inc. 1.2%
McKesson Corp. 1.1%
Kansas City Southern Industries, Inc. 1.1%
Federal National Mortgage Association 1.0%
Circle International Group, Inc. 1.0%
- --------------------------------------------------------------------------------
What is your outlook?
We would not be surprised to see continued volatility in the stock market.
Stock market valuations are at relatively high levels, on an historical
basis, and the effects of the Asian financial crisis will continue to be
assessed. This environment provides opportunities for the Fund and its
"value-timing" strategy, however. This strategy has resulted in very
strong performance over the long term and we are confident that our team
of managers and analysts will discover investment opportunities among
companies whose stock values are temporarily undervalued.
5
<PAGE>
EVERGREEN
Income and Growth Fund
Fund at a Glance as of January 31, 1998
Many of the best-performing stocks in the portfolio during the six months were
bank stocks. Banks and thrifts have found they can increase profitability and
take advantage of the efficiencies of technology by consolidating companies.
Portfolio
Management
- ----------------------------------------
(Photo of Nola Maddox
Falcone appears here)
Nola Maddox Falcone, CFA
Evergreen Asset
Management Corp.
Tenure: August 31, 1978
(Photo of Irene O'Neill
appears here)
Irene O'Neill
Evergreen Asset
Management Corp.
Tenure: December 1997
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS*
<TABLE>
<CAPTION>
Class A Class B Class C Class Y
<S> <C> <C> <C> <C>
Inception Date 1/3/95 1/3/95 1/3/95 8/31/78
Average Annual Returns
6 months with sales charge 2.69% 2.43% 6.42% N/A
6 months w/o sales charge 7.81% 7.36% 7.41% 7.93%
One year with sales charge 15.52% 15.37% 19.42% N/A
One year w/o sales charge 21.28% 20.37% 20.42% 21.59%
3 years 17.49% 17.79% 18.52% 19.66%
5 years - - - 12.62%
10 years - - - 11.45%
Since Inception 17.41% 17.70% 18.39% 14.63%
Cumulative Total Return
since inception 63.98% 65.27% 68.26% 1319.75%
Maximum Sales Charge 4.75% 5.00% 1.00% N/A
Front End CDSC CDSC
30-day SEC Yield 2.44% 1.83% 1.82% 2.81%
6 month income dividends per
share $ 0.51 $ 0.44 $ 0.44 $ 0.54
6 month capital gain
distributions per share $ 1.59 $ 1.59 $ 1.59 $ 1.59
</TABLE>
*Adjusted for maximum applicable sales charge
- --------------------------------------------------------------------------------
LONG TERM GROWTH
[LINE GRAPH APPEARS BELOW WITH THE FOLLOWING INFORMATION:]
1/3/95 1/95 1/96 1/97 1/98
Class A Shares 9525 9635 11888 13527 16398
Consumer Price Index 10000 10040 10314 10629 10780
Lipper Income Fund Average 10000 10063 9894 13210 13509
Wilshire 5000 Index 10000 10200 13681 16685 20572
Comparison of change in value of a $10,000 investment in Evergreen Income &
Growth Fund Class A, the Wilshire 5000 Index, the Lipper Income Funds Average
and the Consumer Price Index.
Past performance is no guarantee of future results. The performance of each
class may vary based on differences in loads and fees paid by the shareholders
investing in each class. The investment return and principal value will
fluctuate so that an investor's shares, when redeemed,
may be worth more or less than original cost. The Wilshire 5000 Index is an
unmanaged market index. This index does not include transaction costs
associated with buying and selling securities nor any management fees. The
Lipper Income Funds Average, Lipper Equity Income Funds Average and Consumer
Price Index are through January 31, 1998.
- --------------------------------------------------------------------------------
CURRENT INVESTMENT STYLE
[GRAPHIC OMITTED]
Morningstar's Style Box is based on a portfolio date as
of 12/31/97.
The Equity Style Box placement is based on a fund's
price-to-earnings and price-to-book ratios relative to
the S&P 500, as well as the size of the companies in
which it invests, or median market capitalization.
Source: 1997 Morningstar, Inc.
6
<PAGE>
EVERGREEN
Income and Growth Fund
Portfolio Manager Interview
- --------------------------------------------------------------------------------
How did the Fund perform during the
period?
We believe the Fund did very well, continuing its strong, long-term
performance record. For the six months that ended on January 31, 1998, the
Fund's Class A shares had a total return of 7.81%, unadjusted for any
sales charge. In contrast, the Wilshire 5000 Index had a return of 4.19%
and the average return of the Lipper Income Fund was 3.85%. For the past
year, the Fund's Class A shares have been in the top 18% of their
competitive universe, the Lipper Income Fund category. The Fund was rated
12 out of 66 for the one year period ended December 31, 1997.1 During the
same time, we have successfully been able to sustain the Fund's above-
average dividend distributions, which for the oldest class, Class Y
shares, were 27 cents per share per quarter. The Class Y shares have paid
at least this dividend
for the past 12 years.
Portfolio Characteristics
as of 1/31/98 unless noted
Total Net Assets $987,462,282
Number of Holdings 146
* Beta 0.75
* P/E Ratio 14.9x
* as of 12/31/97
- --------------------------------------------------------------------------------
What was the investment environment
like during the six months?
It was a positive environment for investing in equities, although the Asian
financial crisis increased the volatility in the stock market. In general,
in the United States we 1 Source: Lipper Analytical Services, an
independent mutual fund rating company. The ranking is based on total
return and does not include the effect of a sales charge. Past performance
is no guarantee of future results.
enjoyed moderate economic growth, declining interest rates and low
inflation. The relatively low interest rates helped business in a number
of ways, particularly by limiting the cost of capital and allowing
financing at reasonable rates. This low interest rate environment also was
a factor contributing to one of the most important trends in the American
economy, mergers and acquisitions. The extent of this trend was
highlighted in a front-page New York Times article on January 19, 1998,
which estimated that the total value of mergers and acquisitions during
1997 had reached $1 trillion. During the six-month period, this trend had
a major impact on the Income and Growth Fund. Seventeen portfolio holdings
were involved in some consolidation activity, with nine corporate
takeovers actually completed for an average gain to the Fund of 70%.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
(as a percentage of net assets)
[PIE CHART APPEARS BELOW WITH THE FOLLOWING INFORMATION:]
Common Stock 66.5%
Convertible Preferred Stock 23.6%
Convertible Debentures 6.0%
Cash/Cash Equivalents 3.9%
- --------------------------------------------------------------------------------
What were your principal strategies?
Four themes heavily influenced our strategy during the
period:
o Value-timing opportunities, i.e., companies that our research indicates
are priced temporarily below the true value of their operations;
7
<PAGE>
EVERGREEN
Income and Growth Fund
Portfolio Manager Interview
o Companies that were re-structuring themselves to focus on their most
profitable enterprises;
o Convertible securities, which allow us to participate in opportunities
among growth companies while receiving income and helping to reduce
risk;
o The merger and acquisition trend, particularly in indus
tries most likely to be consolidating.
Top 10 Sectors
Banks & Thrifts 18.2%
Utilities - Electric 13.1%
Finance & Insurance 8.4%
Oil/Energy 7.6%
Real Estate 6.3%
Utilities - Telephone 4.8%
Healthcare Products & Services 5.1%
Food & Beverage Products 4.6%
Electrical Equipment & Services 3.2%
Utilities - Gas 2.9%
- --------------------------------------------------------------------------------
What industries helped contribute to the
performance?
The banking and thrift industries had a relatively heavy emphasis in the
Fund, with a combined weighting of 18.2% of net assets at the end of the
period. This was an area where the consolidation trend was particularly
evident. Many of the best-performing stocks in the portfolio during the
six months were bank stocks, including the top-performing stock, Deposit
Guaranty Corp., which is in the process of being taken over by First
American Corp. Another holding, First of America Bancorp, has agreed to be
taken over by National City Corp. Other portfolio holdings that are
involved in the consolidation trend include ONBANCorp, Hudson Charter
Bancorp and Jefferson Bankshares. Within the thrift industry, holdings
involved in mergers included CFX Corp., Eagle Financial Corp., and Peoples
Savings Financial Corp. Banks and thrifts have found they can increase
profitability and take advantage of the efficiencies of technology by
consolidating companies.
The utility industry also was an area we emphasized. The favorable
interest rate environment helped utility stocks in general, including
telephone companies. Industry consolidation and the development of new
enterprises, such as data transmission, also helped stocks in this area.
During the six months, we took advantage of weakness in the oil and energy
industries to make some acquisitions. We believe investor concerns about
the Asian crisis and other factors, including El Ni-o, depressed stock
prices in these industries too far, and led to some value-timing
investment opportunities for the Fund. Longer term, we believe the world's
economy is growing and the demand for oil and energy will continue to
increase.
Healthcare was another area that performed very well for the Fund.
Bristol-Myers Squibb Co. and Glaxo Wellcome Plc, ADR, were just two of the
portfolio holdings that benefited from the steady demand for drugs. We
expect this demand will continue as the baby boomer population continues
to age.
- --------------------------------------------------------------------------------
What are some examples of investments that demonstrate the value-timing
and re-structuring themes?
Two good examples of the value-timing strategy were the Fund's investments
in Sara Lee Corp. and American Home Products. The stock price of American
Home Products was hurt by the controversy over the diet drug combination,
Fen-Phen. However, our analysis indicated that the company's potential
liability in that controversy didn't justify the low stock price. We
purchased the stock in September, and it has performed very well since
then. Sara Lee was another situation where the market had not recognized
the value of a good group of assets.
8
<PAGE>
EVERGREEN
Income and Growth Fund
Portfolio Manager Interview
The stock price had risen by more than 35% from the time the Fund
purchased it in August to the end of January.
IBM, which the Fund has sold at a profit of more than 100%, was a good
example of the re-structuring theme. We purchased the company when it was
out of favor, but management re-invigorated the company and the stock
performed well. We decided to sell our stock in IBM during the most recent
period because we think its growth may start to slow, partly because of
the financial problems in Asia.
Top 10 Holdings
Wendy's Financing I, 5.00%, Conv. Pref.
TECONS 4.0%
Long Island Lighting Co. 3.5%
Merrill Lynch & Co., Inc.
6.0% and 6.25% STRYPES 2.7%
Frontier Corp. Common Stock and
6.25% Conv. Pref. TOPRS 2.3%
Amoco Corp. 2.1%
American Home Products Corp. 2.0%
GTE Corp. 1.9%
AirTouch Communications, Inc.
6.0% Series B, Conv. Pref. 1.9%
ONBANCorp., Inc. 1.9%
Equity Residential Properties Trust REIT 1.7%
- --------------------------------------------------------------------------------
Were there any areas of disappointment?
Convertible securities, as a group, did not perform as well on a total
return basis, although they did contribute to the Fund's dividend income.
Industrial and specialty products, such as chemicals, also did not perform
well.
- --------------------------------------------------------------------------------
What is your outlook?
We believe the U.S. will continue to have moderate growth with low
inflation in 1998. There are basic forces pushing for a strong, though
volatile, stock market. We are seeing some growth trends among a number of
sectors in the economy where we believe we still can find some attractive
investment opportunities. As bad as the situation in Asia now appears, we
believe the impact on the U.S. should be relatively modest, and some of
the effects may be positive. The currency crisis and slowdown in growth
will probably keep inflation low and further reduce interest rates.
World peace, since the fall of the Soviet empire, has truly created a
better worldwide business environment. The world economies are growing and
inflation worldwide is at a relatively low level. This favorable
inflationary outlook is good for both stocks and bonds. Also helping the
bond market, in particular, is the reduced federal deficit, which means
there is less government need to borrow and therefore less upward pressure
on
interest rates.
Within sectors, we look for continued strong growth in oil service and
telecommunications. This also leads to investment opportunities beyond
these industries.
The single largest factor supporting the stock market, however, is the
demographic issue. The United States has 76 million baby boomers born
between 1946 and 1964. These individuals are concerned about savings and
investing for retirement and are using stock mutual funds and 401K plans
actively. In 1997, equity funds received net in-flows of $232 billion into
equity funds and another $45 billion into bond funds.(1)
Given all these factors, we continue to be positive about the investment
environment, despite the periodic volatility we have come to expect.
(1) Source: Investment Company Institute.
9
<PAGE>
EVERGREEN
Small Cap Equity Income Fund
Fund at a Glance as of January 31, 1998
We believe 1998 could be a year of opportunity in the small company sector,
primarily because of the merger-and-acquisition trend.
Portfolio
Management
- ---------------------------------------
(Photo of Nola Maddox
Falcone appears here)
Nola Maddox Falcone, CFA
Evergreen Asset
Management Corp.
Tenure: October 1, 1993
(Photo of Eric Cinnamond
appears here)
Eric Cinnamond, CFA
Evergreen Asset
Management Corp.
Tenure: September 1996
Funds that invest in stocks of small companies, also called small-cap
stocks, involve certain risks and, therefore, may not be appropriate for
all investors. Although they may offer the potential for greater
long-term returns, they also may experience greater price volatility due
to their limited focus on a particular industry, market, product, or
service, or because they invest in smaller, less-established companies.
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS*
<TABLE>
<CAPTION>
Class A Class B Class C Class Y
<S> <C> <C> <C> <C>
Inception Date 1/3/95 1/3/95 1/24/95 10/1/93
Average Annual Returns
6 months with sales charge 1.57% 1.23% 5.23% N/A
6 months w/o sales charge 6.63% 6.23% 6.23% 6.77%
One year with sales charge 20.32% 20.38% 24.31% N/A
One year w/o sales charge 26.32% 25.38% 25.31% 26.58%
3 years 24.34% 24.76% 25.36% 26.63%
Since Inception 24.03% 24.45% 25.13% 18.38%
Cumulative Total Return
since inception 94.22% 96.25% 96.99% 107.96%
Maximum Sales Charge 4.75% 5.00% 1.00% N/A
Front End CDSC CDSC
30-day SEC Yield 1.58% 0.75% 0.75% 1.85%
6 month income dividends
per share $ 0.13 $ 0.10 $ 0.10 $ 0.17
6 month capital gain
distributions per share $ 0.19 $ 0.19 $ 0.19 $ 0.19
</TABLE>
*Adjusted for maximum applicable sales charge
- --------------------------------------------------------------------------------
LONG TERM GROWTH
[LINE GRAPH APPEARS BELOW WITH THE FOLLOWING INFORMATION:]
1/3/95 1/95 1/96 1/97 1/98
Class A Shares 9525 9623 12368 15375 19422
NASDAQ Index 10000 10043 14095 16567 18342
Russell 2000 Index 10000 9874 12831 15269 18594
Consumer Price Index 10000 10040 10314 10629 10826
Comparison of change in value of a $10,000 investment in Evergreen Small Cap
Equity Income Fund Class A, the Russell 2000 Index, the NASDAQ Index and the
Consumer Price Index.
Past performance is no guarantee of future results. The performance of each
class may vary based on differences in loads and fees paid by the shareholders
investing in each class. The investment return and principal value will
fluctuate so that an investor's shares, when redeemed, may be worth more or
less than original cost. The Russell 2000 Index and NASDAQ Index are
unmanaged market indices. These indices do not include transaction costs
associated with buying and selling securities nor any management fees. The
Consumer Price Index is through January 31, 1998.
- --------------------------------------------------------------------------------
CURRENT INVESTMENT STYLE
[GRAPHIC OMITTED]
Morningstar's Style Box is based on a portfolio date as
of 12/31/97.
The Equity Style Box placement is based on a fund's
price-to-earnings and price-to-book ratios relative to
the S&P 500, as well as the size of the companies in
which it invests, or median market capitalization.
Source: 1997 Morningstar, Inc.
10
<PAGE>
EVERGREEN
Small Cap Equity Income Fund
Portfolio Manager Interview
- --------------------------------------------------------------------------------
How did the Fund perform during the
period?
The Fund did well. For the six months that ended on January 31, 1998, the
Fund's Class A shares had a total return of 6.63%, unadjusted for any
sales charge. During the same period, the Russell 2000 Index, a commonly
used benchmark for the small company stock market, had a return of 4.4%
and the NASDAQ Composite Index
had a return of 1.60%.
Portfolio Characteristics
--------------------------------------------------------------------
as of 1/31/98 unless noted
Total Net Assets $199,828,246
Number of holdings 138
*Median Market Capitalization $299,600,000
*P/E Ratio 17.0x
*Beta 0.65
*as of 12/31/97
- --------------------------------------------------------------------------------
What was the investment environment
like during the six months?
It was a positive environment for investing in equities, although the
Asian financial crisis increased the volatility in the stock market.
During the period, large company stocks tended to do better than small
company stocks. In general, in the United States we enjoyed moderate
economic growth, declining interest rates and low inflation. The
relatively low interest rates helped business in a number of ways,
particularly by limiting the cost of capital and allowing financing at
reasonable rates. The low interest rate environment also was a factor
contributing to one of the most important trends in the American economy,
mergers and acquisitions. The extent of this trend was highlighted in a
front-page New York Times article on January 19, 1998 which estimated that
the total value of mergers and acquisitions during 1997 reached $1
trillion. During the six-month period, this trend had a major impact on
the Small Cap Equity Income Fund. Eleven portfolio holdings were involved
in some consolidation activity, with six corporate takeovers actually
completed for an average gain to the
Fund of 87%.
--------------------------------------------------------------------
PORTFOLIO COMPOSITION
(as a percentage of net assets)
[PIE CHART APPEARS BELOW WITH THE FOLLOWING INFORMATION:]
Common Stock 66.1%
Convertible Debentures 15.2%
Cash/Cash Equivalents 13.0%
Convertible Preferred Stock 5.7%
- --------------------------------------------------------------------------------
What factors contributed to the strong
performance during the six months?
Three major themes guided our strategy, as we searched
for value among companies that were:
o Candidates for Evergreen's value-timing strategy, i.e., companies whose
stocks are selling at discounts to what we believe are their true
values;
o Undergoing some type of re-structuring that could unlock potential value;
o Potential merger and acquisition candidates.
In pursuing these themes, we found a number of attractive opportunities in
the banking and thrift industries, which together accounted for about
10.8% of net assets at the end of the fiscal period. The banking and
thrift industries, in particular, are undergoing consolidation, and a
number of portfolio companies were involved in mergers and acquisitions.
Technology companies and electric and gas utilities also were strong
performers. Technology companies obviously are benefiting from the growth
of the industry, while utilities were helped both by the declining
interest rate environment and by consolidation.
11
<PAGE>
EVERGREEN
Small Cap Equity Income Fund
Portfolio Manager Interview
Top 10 Sectors
Oil Field Services 9.0%
Consumer Products & Services 8.1%
Oil/Energy 6.9%
Utilities - Gas 6.9%
Finance & Insurance 6.6%
Real Estate 6.4%
Banks 6.2%
Thrift Institutions 4.6%
Industrial Specialty Products & Services 4.2%
Leisure & Tourism 3.4%
- --------------------------------------------------------------------------------
What were some of the companies that performed well for the Fund during
the six months?
The banking and thrift stocks did very well. Five of the 11 takeover
companies in the portfolio were banks or thrift institutions. These
included Hudson Charter Bancorp, Life Bancorp, People's Savings Financial
Corp., Cenfed Financial Corp and FFVA Financial Corp. We believe the
consolidation trend in this industry will continue and we will keep
looking for companies with good operating fundamentals that are potential
acquisition targets.
The top-performing stock in the Fund during the six months was a
technology company, Computer Language Research, Inc., which is being taken
over by Thomson Corp. We project a gain to the Fund of 117% as of January
31, 1998, from date of initial purchase.
We are emphasizing gas utilities in the portfolio because we think they
are very strong acquisition candidates, primarily for electric utilities
that could greatly expand their operating efficiencies and cross-selling
opportunities.
A good example of the re-structuring theme was the Fund's investment in
CPI Corp., which sold its underperforming photolabs division to Kodak at a
good price, $110 million. This company, which operates the portrait
studios at Sears stores, generates considerable cash flow and is an
industry leader in introducing digital technology to the photography
industry. A stock buy-back program also has helped stock performance.
We have a number of holdings in the funeral and related industries, an
out-of-favor group. These include Matthews International Corp., which
manufactures memorial plaques for the funeral industry. This company's
stock also has benefited from a stock buy-back program. Another fund
investment in this industry is York Group, a leading casket manufacturer.
Our investment in this company was an example of the value-timing
strategy. The company had lost a major contract, and its stock price
suffered considerably; however, our independent analysis of the company's
remaining business indicated that the stock was significantly undervalued
and we made the investment.
Top 10 Holdings
CPI Corp. 2.4%
Matthews International Corp. Cl. A 2.4%
Hvide Capital Trust, 6.5% conv. pref. 2.3%
York Group, Inc. 2.2%
Pxre Corp. 2.1%
Knape & Vogt Manufacturing Co. 2.1%
Lufkin Industries, Inc. 1.8%
Horizon Financial Corp. 1.8%
Frontier Financial Trust, 6.25% TOPRS 1.8%
Phototronics, Inc. 1.7%
12
<PAGE>
EVERGREEN
Small Cap Equity Income Fund
Portfolio Manager Interview
- --------------------------------------------------------------------------------
Were there any new areas of emphasis
during the six months?
Yes. We have been increasing our investments in oil and gas exploration
companies and service companies. We believe the market reaction to both
the Asian financial and currency crisis and the Iraq situation has left
the stocks of companies in these industries undervalued. Our analysis
shows the market has over-reacted, and continued world growth will
increase the demand for energy during 1998.
- --------------------------------------------------------------------------------
What is your outlook?
The market has clearly favored large company stocks over small company
stocks for the past 3 1|M/2 years. We believe 1998 could be a year of
opportunity in the small company sector, primarily because of the
merger-and-acquisition trend.
We believe the U.S. will continue to have moderate growth with low
inflation in 1998. There are basic forces pushing for a strong, though
volatile, stock market. We are seeing some growth trends among a number of
sectors in the economy, and we believe we still can find some attractive
investment opportunities. As bad as the situation in Asia now appears, we
believe the impact on the U.S. should be relatively modest, and some of
the effects may be positive. The currency crisis and slowdown in growth
can keep inflation low and further reduce interest rates.
World peace since the fall of the Soviet empire has truly created a better
worldwide business environment. The world economies are growing and
inflation worldwide is at a relatively low level. This favorable
inflationary outlook is good for both stocks and bonds.
Within sectors, we look for continued strong growth in oil service and
telecommunications. This also leads to investment opportunities beyond
these industries.
The biggest single factor supporting the stock market is the demographic
issue. The United States has 76 million baby boomers born between 1946 and
1964. These individuals are concerned about saving and investing for
retirement and are using stock mutual funds and 401K plans actively. In
1997, mutual funds received net in-flows of $232 billion into equity funds
and another $47 billion into bond funds.
Given all these factors, we continue to be positive about the investment
environment, despite the periodic volatility we have come to expect. This
Fund strongly benefits from the rigorous, independent fundamental analysis
performed at Evergreen Asset Management Corp., where we have 16 industry
analysts with an average of 20 years' professional experience. In
conducting their normal analysis, they frequently come upon undervalued
small company opportunities that are consistent with this Fund's strategy.
13
<PAGE>
EVERGREEN
Utility Fund
Fund at a Glance as of January 31, 1998
We attribute strong returns to two specific factors: a market rotation which
favored utility companies and our strong individual stock selection.
Portfolio
Management
- ----------------------------------------
[GRAPHIC OMITTED]
(Photo of Paul DiLella
appears here)
Paul DiLella
Capital Management Group
Tenure: July 1996
(Photo of Doris Kelley-Watkins
appears here)
Doris Kelley-Watkins
Evergreen Asset
Management Corp.
Tenure: February 1997
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS*
<TABLE>
<CAPTION>
Class A Class B Class C Class Y
<S> <C> <C> <C> <C>
Inception Date 1/4/94 1/4/94 9/2/94 2/28/94
Average Annual Returns
6 months with sales charge 8.99% 8.88% 12.88% N/A
6 months w/o sales charge 14.42% 13.88% 13.88% 14.46%
One year with sales charge 17.75% 17.56% 21.56% N/A
One year w/o sales charge 23.62% 22.56% 22.56% 23.79%
3 years 16.44% 16.69% 17.40% 18.57%
Since Inception 11.42% 11.59% 15.76% 14.76%
Cumulative Total Return
since inception 55.46% 56.42% 64.95% 71.76%
Maximum Sales Charge 4.75% 5.00% 1.00% N/A
Front End CDSC CDSC
30-day SEC Yield 3.03% 2.44% 2.44% 3.43%
6 month income dividends per
share $ 0.23 $ 0.18 $ 0.18 $ 0.24
6 month capital gain
distributions per share $ 1.12 $ 1.12 $ 1.12 $ 1.12
</TABLE>
*Adjusted for maximum applicable sales charge
- --------------------------------------------------------------------------------
LONG TERM GROWTH
[LINE GRAPH APPEARS BELOW WITH THE FOLLOWING INFORMATION:]
<TABLE>
<CAPTION>
1/4/94 1/94 1/95 1/96 1/97 1/98
<S> <C> <C> <C> <C> <C> <C>
Class A Shares 9525 9554 9380 11979 12574 15546
Standard & Poor's 500 Index 10000 10340 10394 14389 18201 22448
Standard & Poosr's Utilities Index 10000 10063 9894 13210 13509 17111
Consumer Price Index 10000 10027 10308 10590 10913 11115
</TABLE>
Comparison of change in value of a $10,000 investment in Evergreen Utility Fund
Class A, the Standard & Poor's 500 Index, the Standard & Poor's Utilities Index
and the Consumer Price Index.
Past performance is no guarantee of future results. The performance of each
class may vary based on differences in loads and fees paid by the shareholders
investing in each class. The investment return and principal value will
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than original cost. The Standard & Poor's 500 Index and the Standard & Poor's
Utilities Index are unmanaged market indices. These indices do not include
transaction costs associated with buying and selling securities nor any
management fees. The Consumer Price Index is through January 31, 1998.
- --------------------------------------------------------------------------------
CURRENT INVESTMENT STYLE
[GRAPHIC OMITTED]
Morningstar's Style Box is based on a portfolio date as
of 12/31/97.
The Equity Style Box placement is based on a fund's
price-to-earnings and price-to-book ratios relative to
the S&P 500, as well as the size of the companies in
which it invest, or median market capitalization.
Source: 1997 Morningstar, Inc.
14
<PAGE>
EVERGREEN
Utility Fund
Portfolio Manager Interview
- --------------------------------------------------------------------------------
How was the Fund's performance during
the fiscal period?
The Evergreen Utility Fund Class A shares provided
investors with a strong 14.4% total return during the six-month period
ended January 31, 1998, unadjusted for any sales charge. This performance
compared favorably to the S&P Utilities' Index's total return of 11.64% as
well as the 3.56% return for the S&P 500. For the six-month period, the
Evergreen Utility Fund also outperformed the 13.2% average return of the
102 utility funds tracked by Lipper Analytical Services, an independent
mutual fund
rating company.
Portfolio Characteristics
as of 1/31/98 unless noted
Total Net Assets $143,443,358
Number of Holdings 38
*Beta 0.68
*P/E Ratio 17.7x
/qa
* as of 12/31/97
- --------------------------------------------------------------------------------
What factors fueled the Fund's strong
performance?
We attribute strong returns to two specific factors: a market rotation
which favored utility companies and our strong individual stock selection.
During the fiscal period, the U.S. stock market experienced volatility
which was initiated by financial problems in Southeast Asia. Nervous
investors sought to escape the uncertain market environment by flocking to
more defensive stocks, especially those which paid higher dividends.
Consequently, utility companies replaced the volatile technology sector as
investors' area of preference. This rotation prompted the S&P Utility
Index's spectacular 16.3% total return in the fourth quarter of 1997, and
fueled the performance of the Evergreen Utility Fund.
Strong stock selection also played a key role in allowing the Fund to
outperform its benchmark, the S&P 500 Index, and the average return of its
peer universe. For example, the portfolio's top five individual holdings
(which represent 22% of the Fund's net assets) posted an average return of
27.2% during the six-month period. The Fund's top performers included two
telecommunications companies, U.S. West Communications and AirTouch
Communications, which posted six-month total
returns of 34.3% and 33.0%, respectively.
Top 10 Holdings
Sprint Corp. (common & 8.25% DECS) 6.5%
Houston Industries, Inc. (common & 7.0% ACES) 5.6%
GTE Corp. 3.8%
U.S. West Communications Group, Inc. 3.2%
AirTouch Communications, Inc. 6.0%,
Series B, Conv. Pref. 3.0%
UtilCorp United, Inc. 3.0%
BellSouth Corp. 3.0%
MCN Financing III, 8.0% PRIDES 3.0%
Long Island Lighting Co. 2.9%
Enron Corp. 2.9%
- --------------------------------------------------------------------------------
What is your investment strategy?
Our primary objective is to provide investors a diversified, high income
portfolio with defensive characteristics. We feel that this objective can
be best achieved by focusing on three specific areas.
First, we actively monitor the utility industry. Utility companies
currently operate in an environment of uncertainty as states attempt to
manage the transition from monopoly regulation to a competitive market.
The negative effects of deregulation to utility stocks can be swift and
decisive. Our management style dictates careful analysis of the regulatory
and political impact to the utility sector in order to assure our utility
holdings are not adversely affected.
15
<PAGE>
EVERGREEN
Utility Fund
Portfolio Manager Interview
Secondly, we emphasize a strong current yield. As of January 31, the
Fund's 30-day annualized yield was 3.03% for Class A shares versus the S&P
500 Index's 12-month yield of 1.58%. We believe that increasing the
portfolio's income element will help reduce the volatility of returns
during periods of market uncertainty.
Lastly, we strive to strengthen the portfolio through the addition of
quality non-utility companies. Diversification is very important in the
overall success of the Fund. For example, over 20% of the portfolio's net
assets are invested in non-utility companies. As managers, we recognize
that the selective addition of non-utility companies can enhance the
Fund's performance. Consistent with this strategy, FelCor Suite Hotels - a
Real Estate Investment Trust - was added to the portfolio.
By remaining focused on these three factors: the industry landscape,
current yield and diversification, we are confident that performance will
be enhanced over the long term.
Top 5 Sectors
Utilities - Electric 51.6%
Utilities - Telephone 21.5%
Utilities - Gas 5.4%
Oil/Energy 5.2%
Real Estate 2.6%
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
(as a percentage of net assets)
[PIE CHART APPEARS BELOW WITH THE FOLLOWING INFORMATION:]
Common Stock 79.6%
Convertible Preferred Stock 19.5%
Cash/Cash Equivalents 0.9%
- --------------------------------------------------------------------------------
What is your outlook?
As we enter 1998, we maintain a cautiously optimistic outlook. In a prior
commentary, we stated that the "utility sector's valuation continues to be
very attractive". The recent advance by utility stocks, consequently, has
adjusted the sector's previously attractive valuation to more reasonable
levels.
In addition, the coming year will be pivotal within the industry in terms
of restructuring, and we will thoroughly analyze the landscape in
selectively searching for investment opportunities. Despite any changes or
potential volatility within the utility sector, we will continue to
emphasize diversification and a strong current yield, two strategies which
have rewarded investors with a strong total return during the fiscal
period.
16
<PAGE>
EVERGREEN
Value Fund
Fund at a Glance as of January 31, 1998
Our two primary strategies involved sector weightings which positively impacted
performance during the fiscal period. Specifically, we maintained a strong
representation in the financial sector and selectively added to our utility
holdings.
Portfolio
Management
- ----------------------------------------
(Photo of David C. Francis
appears here)
David C. Francis, CFA
Capital Management Group
Tenure: July 1995
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS*
<TABLE>
<CAPTION>
Class A Class B Class C Class Y
<S> <C> <C> <C> <C>
Inception Date 4/12/85 2/2/93 9/2/94 1/3/91
Average Annual Returns
6 months with sales charge ( 2.24%) ( 2.59%) 1.26% N/A
6 months w/o sales charge 2.63% 2.26% 2.26% 2.78%
One year with sales charge 12.03% 11.76% 15.78% N/A
One year w/o sales charge 17.61% 16.76% 16.78% 17.92%
3 years 21.86% 22.30% 22.98% 24.16%
5 years 15.55% - - 17.00%
10 years 14.66% - - -
Since Inception 14.05% 15.53% 19.46% 17.04%
Cumulative Total Return
since inception 439.03% 105.79% 83.65% 204.85%
Maximum Sales Charge 4.75% 5.00% 1.00% N/A
Front End CDSC CDSC
30-day SEC Yield 1.01% 0.32% 0.32% 1.37%
6 month income dividends
per share $ 0.20 $ 0.12 $ 0.12 $ 0.22
6 month capital gain
distributions per share $ 1.18 $ 1.18 $ 1.18 $ 1.18
</TABLE>
*Adjusted for maximum applicable sales charge
- --------------------------------------------------------------------------------
LONG TERM GROWTH
[GRAPHIC OMITTED]
[LINE GRAPH APPEARS BELOW WITH THE FOLLOWING INFORMATION:]
<TABLE>
<CAPTION>
1/88 1/90 1/92 1/94 1/96 1/98
<S> <C> <C> <C> <C> <C> <C>
Class A Shares 9525 13194 16487 20393 27293 39290
Standard & Poor's 500 Index 10000 10597 14086 17573 24455 38431
Consumer Price Index 10000 11198 12139 12848 13569 14322
</TABLE>
Comparison of change in value of a $10,000 investment in Evergreen Value Fund
Class A, the Standard & Poor's 500 Index and the Consumer Price Index.
Past performance is no guarantee of future results. The performance of each
class may vary based on differences in loads and fees paid by the shareholders
investing in each class. The investment return and principal value will
fluctuate so that an investor's shares, when redeemed,
may be worth more or less than original cost. The Standard & Poor's 500 Index
is an unmanaged market index. This index does not include transaction costs
associated with buying and selling securities nor any management fees. The
Consumer Price Index is through January 31, 1998.
- --------------------------------------------------------------------------------
CURRENT INVESTMENT STYLE
[GRAPHIC OMITTED]
Morningstar's Style Box is based on a portfolio date as
of 12/31/97.
The Equity Style Box placement is based on a fund's
price-to-earnings and price-to-book ratios relative to
the S&P 500, as well as the size of the companies in
which it invests, or median market capitalization.
Source: 1997 Morningstar, Inc.
17
<PAGE>
EVERGREEN
Value Fund
Portfolio Manager Interview
- --------------------------------------------------------------------------------
How did the Fund perform during the
fiscal period?
The Evergreen Value Fund Class A shares had a total
return of 2.6% unadjusted for sales charge, for the six-month period ended
January 31, 1998. This performance compares to the 3.6% return for the S&P
500 Index during the same time period. The Fund outperformed the 2.3%
average return of 684 growth and income funds as tracked by Lipper
Analytical Services, an independent
mutual fund rating company.
Portfolio Characteristics
as of 1/31/98 unless noted
Total Net Assets $922,122,054
Number of holdings 77
*Beta 1.00
*P/E Ratio 21.6x
* as of 12/31/97
- --------------------------------------------------------------------------------
What was your investment strategy
during the fiscal period?
Our two primary strategies involved sector weightings which positively
impacted performance during the fiscal period. Specifically, we maintained
a strong representation in the financial sector and selectively added to
our utility holdings.
Our strong commitment to the financial sector is illustrated by the
portfolio's 23.3% exposure to banks and financial companies, the Fund's
largest sector weighting. Also, three of the Fund's top ten holdings were
banks. In addition, strong stock selection within this sector paid off as
consolidation within the financial industry allowed three of the
portfolio's holdings - First of America, Central Fidelity and CoreStates -
to post exceptional gains following announced takeover bids.
Similarly, the portfolio's utility exposure contributed to performance.
The resurgence of the utility sector was initiated, ironically, by
financial problems in Southeast Asia. This crisis caused volatility in
U.S. markets, prompting investors to seek refuge in safer, high-yielding
companies such as utilities. Attractive valuations and strong fundamentals
within this sector spurred two utility purchases during the period -
Pacificorp and Houston Industries - which we feel will continue to enhance
Fund returns.
Top 10 Sectors
Banks and Finance 23.3%
Oil/Energy 14.2%
Healthcare Products & Services 12.1%
Information Services & Technology 8.6%
Food & Beverage Products 7.3%
Utilities - Electric 4.9%
Diversified Companies 3.5%
Electrical Equipment & Services 3.5%
Transportation 2.8%
Consumer Products & Services 2.5%
- --------------------------------------------------------------------------------
What other factors influenced the Fund's
performance?
The portfolio's healthcare weighting remains strong at 12.1%. Tenet
Healthcare and Bristol-Myers Squibb are two of the portfolio's largest
healthcare holdings and gained 15.2% and 28.2%, respectively, during the
six months.
Other top performers include CoreStates Financial, Williams Companies and
Wachovia which returned 25.8%, 25.8% and 21.9%, respectively. Conversely,
our position in Philip Morris hurt performance when it declined 6.3%
during the six-month period.
18
<PAGE>
EVERGREEN
Value Fund
Portfolio Manager Interview
Top 10 Holdings
General Electric Co. 3.0%
Bristol-Myers Squibb Co. 2.9%
Tyco International Ltd. 2.9%
Williams Companies, Inc. (The) 2.8%
Tenet Healthcare Corp. 2.7%
Tosco Corp. 2.6%
Wachovia Corp. 2.3%
Corestates Financial Corp. 2.2%
Philip Morris Companies, Inc. 2.2%
BankBoston Corp. 2.1%
- --------------------------------------------------------------------------------
What is your outlook?
Following some modest sector adjustments at the onset of the period, we
feel the Fund is well positioned to provide solid returns during 1998.
Despite the recent focus on volatility in global markets and its impact on
the U.S. markets, it is important to remember that individual stock
selection will be the primary determinant of a Fund's performance.
With that in mind, our objective continues to be to maintain a portfolio
of strongly managed, industry-leading companies which demonstrate the
ability to meet, and exceed, earnings expectations. By adhering
to this strategy, we remain confident the Fund will help provide investors
with solid returns over the long term.
- --------------------------------------------------------------------------------
New Manager Effective March 16, 1998
Matthew D. Finn joins Evergreen from Advantus Capital Management, Inc., a
wholly owned subsidiary of the Minnesota Mutual Life Insurance Company
with $15.5 billion in assets under management. While at Advantus, Finn was
head of value equities for the firm and managed two mutual funds: the
Advantus Cornerstone and the Advantus Venture Fund.
Matt Finn received his B.A. from the University of Pennsylvania, his
M.B.A. from the University of Michigan and became a Certified Financial
Analyst (CFA) in 1991. Finn has eight years' portfolio management
experience.
19
<PAGE>
EVERGREEN
Fund for Total Return
Fund at a Glance as of January 31, 1998
We examine every stock in the portfolio, and we try to buy stocks of companies
where the fundamental analysis gives us confidence they have the ability to
improve their earnings.
Portfolio
Management
- ----------------------------------------
(Photo of Walter McCormick
appears here)
Walter McCormick, CFA
Keystone Investment
Management Company
Tenure: June 10, 1995
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS*
<TABLE>
<CAPTION>
Class A Class B Class C Class Y
<S> <C> <C> <C> <C>
Inception Date 4/14/87 2/1/93 2/1/93 1/13/97
Average Annual Returns
6 months with sales charge ( 1.35%) ( 1.57%) 2.25% N/A
6 months w/o sales charge 3.57% 3.21% 3.21% 3.88%
One year with sales charge 14.04% 13.85% 17.83% N/A
One year w/o sales charge 19.73% 18.85% 18.83% 19.74%
3 years 25.04% 25.40% 26.07% -
5 years 15.48% - - -
10 years 14.12% - - -
Since Inception 12.45% 15.42% 15.55% 20.59%
Cumulative Total Return
since inception 255.65% 104.89% 106.06% 21.77%
Maximum Sales Charge 4.75% 5.00% 1.00% N/A
Front End CDSC CDSC
30-day SEC Yield 0.51% ( 0.19%) ( 0.19%) 0.78%
6 month income dividends
per share $ 0.11 $ 0.05 $ 0.05 $ 0.13
6 month capital gain
distributions per share $ 1.52 $ 1.52 $ 1.52 $ 1.52
</TABLE>
*Adjusted for maximum applicable sales charge
- --------------------------------------------------------------------------------
LONG TERM GROWTH
[LINE GRAPH APPEARS BELOW WITH THE FOLLOWING INFORMATION:]
<TABLE>
<CAPTION>
1/88 1/90 1/92 1/94 1/96 1/98
<S> <C> <C> <C> <C> <C> <C>
Class A Shares 9525 12453 15765 19921 24189 37460
Standard & Poor's 500 Index 10000 10597 14086 17573 24455 39103
Consumer Price Index 10000 11198 12139 12848 13569 14183
</TABLE>
Comparison of change in value of a $10,000 investment in Evergreen Fund for
Total Return Class A, the Standard & Poor's 500 Index and the Consumer Price
Index.
Past performance is no guarantee of future results. The performance of each
class may vary based on differences in loads and fees paid by the shareholders
investing in each class. The investment return and principal value will
fluctuate so that an investor's shares, when redeemed,
may be worth more or less than original cost. The Standard & Poor's 500 Index
is an unmanaged market index. This index does not include transaction costs
associated with buying and selling securities nor any management fees. The
Consumer Price Index is through January 31, 1998.
- --------------------------------------------------------------------------------
CURRENT INVESTMENT STYLE
[GRAPHIC OMITTED]
Morningstar's Style Box is based on a portfolio date as
of 12/31/97.
The Equity Style Box placement is based on a fund's
price-to-earnings and price-to-book ratios relative to
the S&P 500, as well as the size of the companies in
which it invests, or median market capitalization.
Source: 1997 Morningstar, Inc.
20
<PAGE>
EVERGREEN
Fund for Total Return
Portfolio Manager Interview
- --------------------------------------------------------------------------------
How did the Fund perform?
We think the Fund performed respectably, although not as well as we would
have liked. For the six months that ended on January 31, 1998, Class A
Shares had a total return of 3.57%, unadjusted for any sales charge.
During the same period, the Standard & Poor's 500 Index had a
total return of 3.56%.
Portfolio Characteristics
as of 1/31/98 unless noted
Total Net Assets $168,873,822
Number of Holdings 98
*Beta 0.79
*P/E Ratio 19.6x
* as of 12/31/97
- --------------------------------------------------------------------------------
How would you describe the investment environment during the six-month
period, and how did this affect strategy?
Overall, it was a generally favorable period, despite considerable
short-term volatility and changing market leadership. The Fund, after two
strong performance years, started 1997 perhaps a bit too cautiously. We
had a relatively large cash weighting of 7-to-8%, and concentrations in
defensive areas. We were concerned that the Federal Reserve Board might
tighten money supply significantly by raising short-term rates to slow
economic growth and head off inflation. Although the Fed did raise rates
once in March, subsequent evidence of moderating economic growth and
minimal inflation reassured the markets. The Fund was not positioned
aggressively enough to take advantage of the stock market rally that
started in early spring. We restructured the portfolio as we saw evidence
of favorable economic conditions, and the Fund improved its relative
performance during the summer. In August, however, small-cap stocks began
to be in favor over the large-company stocks that are emphasized by the
Fund. After the Asian financial crisis struck the markets in October,
there was a return to quality and liquidity in the markets, and this
tended to favor the large-company, blue-chip stocks held by the Fund. The
Fund finished the period, in December and January, with relatively good
performance. We think the Fund is very well positioned now.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
(as a percentage of net assets)
[PIE CHART APPEARS BELOW WITH THE FOLLOWING INFORMATION:]
Common Stock 90.6%
Convertible Preferred Stock 6.2%
Convertible Debentures 2.7%
Cash/Cash Equivalents 0.5%
- --------------------------------------------------------------------------------
What are the principal strategies of the
Fund?
We are emphasizing large- and mid-capitalization stocks, with a strong
domestic orientation. We expect the portfolio to produce better income
than the overall market, as measured by the S&P 500, and we seek solid
returns with below average risk. We examine every stock in the portfolio,
and we try to buy stocks of companies where the fundamental analysis gives
us confidence they have the ability to improve their earnings.
- --------------------------------------------------------------------------------
What industries is the Fund emphasizing?
Right now, the Fund's largest industry weighting is in the Healthcare
industry, at 12.2% of net assets at the end of the fiscal period.
Demographic changes favor this industry. The aging baby boomer population
will use more of this industry's products. Drug companies also have strong
product flows, and we have confidence in their future earnings' streams,
regardless of the overall economic environment. American Home Products was
the Fund's largest holding at the end of the period.
21
<PAGE>
EVERGREEN
Fund for Total Return
Portfolio Manager Interview
Other major pharmaceutical holdings include Bristol Myers-Squibb, Merck &
Co. and Johnson & Johnson.
We also are emphasizing the banking and finance industry, at 15.3% of net
assets. Finance stocks, particularly banking stocks, have been helped by
declining interest rates and the growth of fee income. The consolidation
trend has helped support banking stocks. We have reduced our holdings in
BankAmerica stock, which has been a very strong performer for the Fund,
and we have substantially increased our investment in Fleet Financial, a
New England-based bank that we believe may be a
potential acquisition candidate.
Top 10 Sectors
Healthcare Products & Services 12.2%
Finance & Insurance 9.4%
Real Estate 7.7%
Banks 5.9%
Oil/Energy 5.9%
Electrical Equipment & Services 5.6%
Utilities - Telephone 5.4%
Retailing & Wholesale 5.1%
Food & Beverage Products 4.9%
Information Services & Technology 4.9%
- --------------------------------------------------------------------------------
You continue to emphasize Real Estate Investment Trusts (REITS), which is
somewhat unusual for an equity fund. Why do you have this emphasis?
At the close of the fiscal period, REITs were still prominent in the
portfolio, at about 7.7% of net assets. Even though REITs are unlikely to
match their stellar returns of the past two years, we believe they still
can deliver better total return than the stocks of electric utilities,
which they have essentially replaced in the portfolio. Real Estate
investments in general are doing well, and REITs are attractive because of
their growing dividends. In addition, they offer more defensive protection
than most equity investments. Our REIT investments are well balanced and
include office properties, apartments and hotels. The REIT investments
account for most of the small-cap holdings in the portfolio.
Top 10 Holdings
American Home Products Corp. 3.4%
General Electric Co. 3.2%
Bristol-Myers Squibb Co. 3.0%
Merck & Co., Inc. 2.8%
Johnson & Johnson 2.4%
Fleet Financial Group, Inc. 2.1%
AT&T Corp. 1.9%
Philip Morris Companies, Inc. 1.8%
Tyco International Ltd. 1.8%
International Business Machines Corp. 1.8%
- --------------------------------------------------------------------------------
Have you made any significant changes
in strategy during the six months?
We have increased our emphasis on telecommunications and technology in
general. A major addition to the Fund is AT&T Corp., which we added in the
fall after it had been absent from the portfolio for about two years. This
company has made a significant management change, installing a new chief
executive and focusing more heavily on cost-containment. This stock has
been a very good performer for the Fund since it was added to the
portfolio.
In technology, we recently added Compaq Computer to the portfolio. I
believe this company's planned acquisition of Digital Equipment Co. will
make it a very formidable competitor to companies such as IBM and
Hewlett-Packard by giving it a very strong service component to supplement
equipment sales. The Fund's other technology holdings include IBM,
Microsoft and Intel.
22
<PAGE>
EVERGREEN
Fund for Total Return
Portfolio Manager Interview
- --------------------------------------------------------------------------------
What is your outlook?
We think the stock market continues to offer reasonable opportunities,
although we believe investors should moderate their return expectations.
The stock market, after all, has just gone through three extraordinary
years and a return to the normal, historic average of 10% annual returns
would not be unexpected. Stock market valuations are high, although we do
not believe they are excessive, and we think there is continued potential
for positive returns, given a growing economy, declining interest rates,
and low inflation.
In that context, we will focus on better quality, largely domestic
companies, that appear to have assured earnings streams and have been
consistent performers over time. We intend to stay with companies that are
leaders in their industries.
23
<PAGE>
EVERGREEN
Growth & Income Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months Ended
January 31, 1998 Seven Months Ended Year Ended December 31,
(Unaudited) July 31, 1997# 1996 1995*
<S> <C> <C> <C> <C>
CLASS A SHARES
Net asset value beginning of period $ 27.26 $ 22.53 $ 18.63 $ 14.48
========== ========= ============= ===========
Income from investment operations
Net investment income 0.07 0.08 0.12 0.13
Net realized and unrealized gain on investments 1.75 4.72 4.26 4.64
---------- --------- ------------- -----------
Total from investment operations 1.82 4.80 4.38 4.77
---------- --------- ------------- -----------
Less distributions
From net investment income ( 0.05) ( 0.07) ( 0.13) ( 0.14)
In excess of net investment income ( 0.01) 0** 0 0
From net realized gain on investments ( 1.01) 0 ( 0.35) ( 0.48)
---------- ---------- ------------- -----------
Total distributions ( 1.07) ( 0.07) ( 0.48) ( 0.62)
---------- ---------- ------------- -----------
Net asset value end of period $ 28.01 $ 27.26 $ 22.53 $ 18.63
========== ========== ============= ===========
Total return + 6.68 % 21.33 % 23.50 % 33.00%
Ratios/Supplemental Data
Ratios to average net assets
Total expenses 1.48 %++ 1.47 %++ 1.41 % 1.55%++
Total expenses, excluding indirectly paid expenses 1.48 %++ 1.47 %++ N/A N/A
Total expenses, excluding fee waivers and expense
reimbursements N/A N/A N/A 1.64%++
Net investment income 0.53 %++ 0.57 %++ 0.70 % 0.99%++
Portfolio turnover rate 12% 6% 14% 17%
Average commission rate paid per share $ 0.0608 $ 0.0603 $ 0.0566 N/A
Net assets end of period (millions) $ 223 $ 166 $ 85 $ 19
</TABLE>
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from January 3, 1995 (commencement of class operations) to
December 31, 1995.
** Less than one cent per share.
# The Fund changed its fiscal year end from December 31 to July 31, effective
July 31, 1997.
See Combined Notes to Financial Statements.
24
<PAGE>
EVERGREEN
Growth & Income Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months Ended
January 31, 1998 Seven Months Ended Year Ended December 31,
<S> <C> <C> <C> <C>
(Unaudited) July 31, 1997# 1996 1995*
CLASS B SHARES
Net asset value beginning of period $ 27.10 $ 22.43 $ 18.59 $ 14.48
=========== ========== =========== ===========
Income from investment operations
Net investment income (loss) ( 0.02) ( 0.02) 0** 0.05
Net realized and unrealized gain on investments 1.72 4.69 4.20 4.61
----------- ---------- ----------- -----------
Total from investment operations 1.70 4.67 4.20 4.66
----------- ---------- ----------- -----------
Less distributions
From net investment income 0 0 ( 0.01) ( 0.07)
From net realized gain on investments ( 1.01) 0 ( 0.35) ( 0.48)
----------- ---------- ----------- -----------
Total distributions ( 1.01) 0 ( 0.36) ( 0.55)
----------- ---------- ----------- -----------
Net asset value end of period $ 27.79 $ 27.10 $ 22.43 $ 18.59
=========== ========== =========== ===========
Total return + 6.27 % 20.82 % 22.60 % 32.20%
Ratios/Supplemental Data
Ratios to average net assets:
Total expenses 2.23 %++ 2.25 %++ 2.17 % 2.24%++
Total expenses, excluding indirectly paid expenses 2.23 %++ 2.25 %++ N/A N/A
Total expenses, excluding fee waivers & expense
reimbursements N/A N/A N/A 2.26%++
Net investment income (loss) ( 0.22 %)++ ( 0.19 %)++ ( 0.06 %) 0.30%++
Portfolio turnover rate 12% 6% 14% 17%
Average commission rate paid per share $ 0.0608 $ 0.0603 $ 0.0566 N/A
Net assets end of period (millions) $ 741 $ 542 $ 245 $ 46
</TABLE>
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from January 3, 1995 (commencement of class operations) to
December 31, 1995.
** Less than one cent per share.
# The Fund changed its fiscal year end from December 31 to July 31, effective
July 31, 1997.
See Combined Notes to Financial Statements.
25
<PAGE>
EVERGREEN
Growth & Income Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months Ended
January 31, 1998 Seven Months Ended Year Ended December 31,
<S> <C> <C> <C> <C>
(Unaudited) July 31, 1997# 1996 1995*
CLASS C SHARES
Net asset value beginning of period $ 27.10 $ 22.43 $ 18.58 $ 14.48
=========== ========== =========== ===========
Income from investment operations
Net investment income (loss) ( 0.02) ( 0.02) 0** 0.06
Net realized and unrealized gain on investments 1.72 4.69 4.21 4.60
----------- ---------- ----------- -----------
Total from investment operations 1.70 4.67 4.21 4.66
----------- ---------- ----------- -----------
Less distributions
From net investment income 0 0 ( 0.01) ( 0.08)
From net realized gain on investments ( 1.01) 0 ( 0.35) ( 0.48)
----------- ---------- ----------- -----------
Total distributions ( 1.01) 0 ( 0.36) ( 0.56)
----------- ---------- ----------- -----------
Net asset value end of period $ 27.79 $ 27.10 $ 22.43 $ 18.58
=========== ========== =========== ===========
Total return + 6.27 % 20.82 % 22.60 % 32.20%
Ratios/Supplemental Data
Ratios to average net assets
Total expenses 2.23 %++ 2.25 %++ 2.17 % 2.15%++
Total expenses, excluding indirectly paid expenses 2.23 %++ 2.25 %++ N/A N/A
Total expenses, excluding fee waivers & expense
reimbursements N/A N/A N/A 4.94%++
Net investment income (loss) ( 0.22 %)++ ( 0.19 %)++ ( 0.06 %) 0.35%++
Portfolio turnover rate 12% 6% 14% 17%
Average commission rate paid per share $ 0.0608 $ 0.0603 $ 0.0566 N/A
Net assets end of period (millions) $ 35 $ 24 $ 10 $ 20
</TABLE>
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from January 3, 1995 (commencement of class operations) to
December 31, 1995.
** Less than one cent per share.
# The Fund changed its fiscal year end from December 31 to July 31, effective
July 31, 1997.
See Combined Notes to Financial Statements.
26
<PAGE>
EVERGREEN
Growth & Income Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months
Ended Seven Months
January 31, 1998 Ended
(Unaudited) July 31, 1997#
<S> <C> <C>
CLASS Y SHARES
Net asset value beginning of period $ 27.29 $ 22.55
========= =========
Income from investment operations
Net investment income 0.11 0.11
Net realized and unrealized gain on
investments 1.75 4.73
--------- ---------
Total from investment operations 1.86 4.84
--------- ---------
Less distributions
From net investment income ( 0.08) ( 0.10)
In excess of net investment income ( 0.01) 0**
From net realized gain on investments ( 1.01) 0
---------- ---------
Total distributions ( 1.10) ( 0.10)
---------- ---------
Net asset value end of period $ 28.05 $ 27.29
========== =========
Total return 6.82 % 21.52 %
Ratios/Supplemental Data
Ratios to average net assets
Total expenses 1.23 %+ 1.21 %+
Total expenses, excluding indirectly paid
expenses 1.23 %+ 1.21 %+
Net investment income 0.79 %+ 0.82 %+
Portfolio turnover rate 12% 6%
Average commission rate paid per share $ 0.0608 $ 0.0603
Net assets end of period (millions) $ 708 $ 616
<CAPTION>
Year Ended December 31,
1996 1995 1994 1993
<S> <C> <C> <C> <C>
CLASS Y SHARES
Net asset value beginning of period $ 18.64 $ 14.52 $ 15.41 $ 14.18
============ ========= ========= =========
Income from investment operations
Net investment income 0.18 0.18 0.14 0.14
Net realized and unrealized gain on
investments 4.25 4.59 0.12 1.91
------------ --------- --------- ---------
Total from investment operations 4.43 4.77 0.26 2.05
------------ --------- --------- ---------
Less distributions
From net investment income ( 0.17) ( 0.17) ( 0.14) ( 0.14)
In excess of net investment income 0 0 0 0
From net realized gain on investments ( 0.35) ( 0.48) ( 1.01) ( 0.68)
------------ ---------- ---------- ----------
Total distributions ( 0.52) ( 0.65) ( 1.15) ( 0.82)
------------ ---------- ---------- ----------
Net asset value end of period $ 22.55 $ 18.64 $ 14.52 $ 15.41
============ ========== ========== ==========
Total return 23.80 % 32.90% 1.70% 14.40%
Ratios/Supplemental Data
Ratios to average net assets
Total expenses 1.16 % 1.27% 1.33% 1.26%
Total expenses, excluding indirectly paid
expenses 1.16 % N/A N/A N/A
Net investment income 0.93 % 1.11% 0.96% 0.99%
Portfolio turnover rate 14% 17% 29% 28%
Average commission rate paid per share $ 0.0566 N/A N/A N/A
Net assets end of period (millions) $ 442 $ 141 $ 73 $ 77
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31,
1992 1991 1990 1989 1988
<S> <C> <C> <C> <C> <C>
CLASS Y SHARES
Net asset value beginning of period $ 12.99 $ 10.72 $ 12.03 $ 10.62 $ 9.38
========= ========= ========= ========= ========
Income from investment operations
Net investment income 0.15 0.19 0.30 0.52 0.19*
Net realized and unrealized gain (loss) on investments 1.65 2.58 ( 0.84) 2.17 2.10
--------- --------- --------- --------- ---------
Total from investment operations 1.80 2.77 ( 0.54) 2.69 2.29
--------- --------- --------- --------- ---------
Less distributions
From net investment income ( 0.15) ( 0.19) ( 0.30) ( 0.52) ( 0.19)
In excess of net investment income 0 0 0 0 0
From net realized gain on investments ( 0.46) ( 0.31) ( 0.47) ( 0.76) ( 0.86)
---------- ---------- --------- ---------- ---------
Total distributions ( 0.61) ( 0.50) ( 0.77) ( 1.28) ( 1.05)
---------- ---------- --------- ---------- ---------
Net asset value end of period $ 14.18 $ 12.99 $ 10.72 $ 12.03 $ 10.62
========== ========== ========= ========== =========
Total return 13.80% 25.80% ( 4.50%) 25.40% 24.60%
Ratios/Supplemental Data
Ratios to average net assets
Total expenses 1.33% 1.41% 1.50% 1.54% 1.56%
Total expenses, excluding indirectly paid expenses N/A N/A N/A N/A N/A
Net investment income 1.18% 1.55% 2.62% 4.13% 1.70%
Portfolio turnover rate 30% 23% 41% 53% 41%
Average commission rate paid per share N/A N/A N/A N/A N/A
Net assets end of period (millions) $ 64 $ 48 $ 36 $ 32 $ 24
</TABLE>
+ Annualized.
** Less than one cent per share.
* Net investment income based on average shares outstanding during the period.
# The Fund changed its fiscal year end from December 31 to July 31, effective
July 31, 1997.
See Combined Notes to Financial Statements.
27
<PAGE>
EVERGREEN
Income & Growth Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months
Ended Six Months
January 31, 1998 Ended Year Ended January 31,
(Unaudited) July 31, 1997# 1997 1996 1995*
<S> <C> <C> <C> <C> <C>
CLASS A SHARES
Net asset value beginning of period $ 23.94 $ 21.79 $ 20.15 $ 17.28 $ 17.09
========== =========== ============ ========= ==========
Income from investment operations
Net investment income 0.49 0.52 1.02 1.01 0.02
Net realized and unrealized gain on
investments 1.33 2.15 1.67 2.94 0.17
---------- ----------- ------------ --------- ----------
Total from investment operations 1.82 2.67 2.69 3.95 0.19
---------- ----------- ------------ --------- ----------
Less distributions
From net investment income ( 0.51) ( 0.52) ( 1.05) ( 1.08) 0
From net realized gain on investments ( 1.59) 0 0 0 0
---------- ----------- ------------ ---------- ----------
Total distributions ( 2.10) ( 0.52) ( 1.05) ( 1.08) 0
---------- ----------- ------------ ---------- ----------
Net asset value end of period $ 23.66 $ 23.94 $ 21.79 $ 20.15 $ 17.28
========== =========== ============ ========== ==========
Total return + 7.81% 12.45 % 13.80 % 23.40% 1.10%
Ratios/Supplemental Data
Ratios to average net assets
Total expenses 1.53%++ 1.45 %++ 1.44 % 1.36% 1.45%++
Total expenses, excluding indirectly paid
expenses 1.52%++ 1.45 %++ N/A N/A N/A
Total expenses, excluding fee waivers
and expense reimbursements N/A N/A N/A 2.50% N/A
Interest expense N/A N/A 0.03 % N/A N/A
Net investment income 3.97%++ 4.69 %++ 4.93 % 5.39% 4.09%++
Portfolio turnover rate 60% 72% 168% 138% 151%
Average commission rate paid per share $ 0.0498 $ 0.0487 $ 0.0491 N/A N/A
Net assets end of period (thousands) $ 13,570 $ 11,955 $ 9,678 $ 4,412 $ 119
</TABLE>
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from January 3, 1995 (commencement of class operations) to
January 31, 1995.
# The Fund changed its fiscal year end from January 31 to July 31, effective
July 31, 1997.
See Combined Notes to Financial Statements.
28
<PAGE>
EVERGREEN
Income & Growth Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months
Ended Six Months
January 31, 1998 Ended Year Ended January 31,
(Unaudited) July 31, 1997# 1997 1996 1995*
<S> <C> <C> <C> <C> <C>
CLASS B SHARES
Net asset value beginning of period $ 23.81 $ 21.69 $ 20.08 $ 17.28 $ 17.09
========== =========== ============ ========= ==========
Income from investment operations
Net investment income 0.40 0.43* * 0.89 0.91 0.02
Net realized and unrealized gain on
investments 1.32 2.15 1.64 2.87 0.17
---------- ----------- ------------ --------- ----------
Total from investment operations 1.72 2.58 2.53 3.78 0.19
---------- ----------- ------------ --------- ----------
Less distributions
From net investment income ( 0.44) ( 0.46) ( 0.92) ( 0.98) 0
From net realized gain on investments ( 1.59) 0 0 0 0
---------- ----------- ------------ ---------- ----------
Total distributions ( 2.03) ( 0.46) ( 0.92) ( 0.98) 0
---------- ----------- ------------ ---------- ----------
Net asset value end of period $ 23.50 $ 23.81 $ 21.69 $ 20.08 $ 17.28
========== =========== ============ ========== ==========
Total return + 7.36% 12.06 % 13.00 % 22.40% 1.10%
Ratios/Supplemental Data
Ratios to average net assets
Total expenses 2.28%++ 2.20 %++ 2.19 % 2.11% 2.23%++
Total expenses, excluding indirectly paid
expenses 2.27%++ 2.20 %++ N/A N/A N/A
Total expenses, excluding fee waivers
and expense reimbursements N/A N/A N/A 2.25% N/A
Interest expense N/A N/A 0.03 % N/A N/A
Net investment income 3.22%++ 3.94 %++ 4.17 % 4.69% 3.23%++
Portfolio turnover rate 60% 72% 168% 138% 151%
Average commission rate paid per share $ 0.0498 $ 0.0487 $ 0.0491 N/A N/A
Net assets end of period (thousands) $ 51,247 $ 43,977 $ 35,323 $ 14,750 $ 599
</TABLE>
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from January 3, 1995 (commencement of class operations) to
January 31, 1995.
** Net investment income is based on average shares outstanding during the
period.
# The Fund changed its fiscal year end from January 31 to July 31, effective
July 31, 1997.
See Combined Notes to Financial Statements.
29
<PAGE>
EVERGREEN
Income & Growth Fund
Financial Highlights
(For a share outstanding throughout each period)
.
<TABLE>
<CAPTION>
Six Months
Ended Six Months
January 31, 1998 Ended Year Ended January 31,
(Unaudited) July 31, 1997# 1997 1996 1995*
<S> <C> <C> <C> <C> <C>
CLASS C SHARES
Net asset value beginning of period $ 23.81 $ 21.69 $ 20.08 $ 17.27 $ 17.09
========== =========== ============ ========= ==========
Income from investment operations
Net investment income 0.40 0.44* * 0.87 0.90 0.01
Net realized and unrealized gain on
investments 1.32 2.14 1.66 2.89 0.17
---------- ----------- ------------ --------- ----------
Total from investment operations 1.72 2.58 2.53 3.79 0.18
---------- ----------- ------------ --------- ----------
Less distributions
From net investment income ( 0.44) ( 0.46) ( 0.92) ( 0.98) 0
From net realized gain on investments ( 1.59) 0 0 0 0
---------- ----------- ------------ ---------- ----------
Total distributions ( 2.03) ( 0.46) ( 0.92) ( 0.98) 0
---------- ----------- ------------ ---------- ----------
Net asset value end of period $ 23.50 $ 23.81 $ 21.69 $ 20.08 $ 17.27
========== =========== ============ ========== ==========
Total return + 7.41% 12.06 % 12.90 % 22.40% 1.10%
Ratios/Supplemental Data
Ratios to average net assets
Total expenses 2.28%++ 2.20 %++ 2.19 % 2.11% 2.22%++
Total expenses, excluding indirectly paid
expenses 2.27%++ 2.20 %++ N/A N/A N/A
Total expenses, excluding fee waivers
and expense reimbursements N/A N/A N/A 13.03% N/A
Interest expense N/A N/A 0.03 % N/A N/A
Net investment income 3.23%++ 4.06 %++ 4.15 % 4.67% 2.68%++
Portfolio turnover rate 60% 72% 168% 138% 151%
Average commission rate paid per share $ 0.0498 $ 0.0487 $ 0.0491 N/A N/A
Net assets end of period (thousands) $ 1,033 $ 950 $ 982 $ 523 $ 24
</TABLE>
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from January 3, 1995 (commencement of class operations) to
January 31, 1995.
** Net investment income is based on average shares outstanding during the
period.
# The Fund changed its fiscal year end from January 31 to July 31, effective
July 31, 1997.
See Combined Notes to Financial Statements.
30
<PAGE>
EVERGREEN
Income & Growth Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months
Ended Six Months
January 31, 1998 Ended Year Ended January 31,
(Unaudited) July 31, 1997# 1997 1996 1995##
<S> <C> <C> <C> <C> <C>
CLASS Y SHARES
Net asset value beginning of period $ 23.98 $ 21.81 $ 20.16 $ 17.28 $ 18.29
========= ========== ============ ========= =========
Income from investment operations
Net investment income 0.51 0.55 1.08 1.10 0.87
Net realized and unrealized gain (loss) on
investments 1.33 2.16 1.66 2.87 ( 0.55)
--------- ---------- ------------ --------- ---------
Total from investment operations 1.84 2.71 2.74 3.97 0.32
--------- ---------- ------------ --------- ---------
Less distributions
From net investment income ( 0.54) ( 0.54) ( 1.09) ( 1.09) ( 1.08)
From net realized gain on investments ( 1.59) 0 0 0 ( 0.25)
--------- ---------- ------------ ---------- ---------
Total distributions ( 2.13) ( 0.54) ( 1.09) ( 1.09) ( 1.33)
--------- ---------- ------------ ---------- ---------
Net asset value end of period $ 23.69 $ 23.98 $ 21.81 $ 20.16 $ 17.28
========= ========== ============ ========== =========
Total return 7.93% 12.65 % 14.10 % 23.50% 1.90%
Ratios/Supplemental Data
Ratios to average net assets
Total expenses 1.28%+ 1.20 %+ 1.18 % 1.19% 1.24%+
Total expenses, excluding indirectly paid
expenses 1.27%+ 1.20 %+ N/A N/A N/A
Interest expense N/A N/A 0.03 % N/A N/A
Net investment income 4.24%+ 4.97 %+ 5.14 % 5.70% 5.70%+
Portfolio turnover rate 60% 72% 168% 138% 151%
Average commission rate paid per share $ 0.0498 $ 0.0487 $ 0.0491 N/A N/A
Net assets end of period (millions) $ 922 $ 900 $ 858 $ 914 $ 942
</TABLE>
<TABLE>
<CAPTION>
Year Ended March 31,
1994 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C>
CLASS Y SHARES
Net asset value beginning of period $ 20.90 $ 18.82 $ 18.12 $ 18.26 $ 17.92 $ 17.11
========= ========= ========= ========= ========= =========
Income from investment operations
Net investment income 1.08 1.11 1.08 1.02 1.07 1.12
Net realized and unrealized gain (loss) on
investments ( 1.41) 2.51 0.70 ( 0.08) 0.36 0.79
--------- --------- --------- ---------- --------- ---------
Total from investment operations ( 0.33) 3.62 1.78 0.94 1.43 1.91
--------- --------- --------- ---------- --------- ---------
Less distributions
From net investment income ( 1.08) ( 1.08) ( 1.08) ( 1.08) ( 1.09) ( 1.08)
From net realized gain on investments ( 1.20) ( 0.46) 0 0 0 ( 0.02)
--------- ---------- ---------- ---------- ---------- ----------
Total distributions ( 2.28) ( 1.54) ( 1.08) ( 1.08) ( 1.09) ( 1.10)
--------- ---------- ---------- ---------- ---------- ----------
Net asset value end of period $ 18.29 $ 20.90 $ 18.82 $ 18.12 $ 18.26 $ 17.92
========= ========== ========== ========== ========== ==========
Total return ( 2.10%) 20.20% 10.20% 5.80% 7.90% 1.30%
Ratios/Supplemental Data
Ratios to average net assets
Total expenses 1.18% 1.18% 1.21% 1.23% 1.18% 1.02%
Total expenses, excluding indirectly paid
expenses N/A N/A N/A N/A N/A N/A
Interest expense N/A N/A N/A N/A N/A N/A
Net investment income 5.29% 5.65% 5.73% 5.90% 5.64% 6.36%
Portfolio turnover rate 106% 164% 137% 137% 89% 86%
Average commission rate paid per share N/A N/A N/A N/A N/A N/A
Net assets end of period (millions) $ 1,065 $ 1,142 $ 1,032 $ 1,151 $ 1,292 $ 1,312
</TABLE>
+ Annualized.
# The Fund changed its fiscal year end from December 31 to July 31, effective
July 31, 1997.
## The Fund changed its fiscal year end from March 31 to January 31, effective
January 31, 1995.
See Combined Notes to Financial Statements.
31
<PAGE>
EVERGREEN
Small Cap Equity Income Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months
Ended Seven Months
January 31, 1998 Ended Year Ended December 31,
(Unaudited) July 31, 1997# 1996 1995*
<S> <C> <C> <C> <C>
CLASS A SHARES
Net asset value beginning of period $ 15.69 $ 13.10 $ 11.57 $ 9.64
========== =========== ============= ==========
Income from investment operations
Net investment income 0.13 0.14* * 0.34 0.34
Net realized and unrealized gain on investments 0.91 2.59 2.13 2.45
---------- ----------- ------------- ----------
Total from investment operations 1.04 2.73 2.47 2.79
---------- ----------- ------------- ----------
Less distributions
From net investment income ( 0.13) ( 0.13) ( 0.34) ( 0.37)
From net realized gain on investments ( 0.19) ( 0.01) ( 0.60) ( 0.49)
---------- ----------- ------------- ----------
Total distributions ( 0.32) ( 0.14) ( 0.94) ( 0.86)
---------- ----------- ------------- ----------
Net asset value end of period $ 16.41 $ 15.69 $ 13.10 $ 11.57
========== =========== ============= ==========
Total return + 6.63 % 20.99 % 22.00 % 29.50%
Ratios/Supplemental Data
Ratios to average net assets
Total expenses 1.61 %++ 1.71 %++ 1.75 % 1.75%++
Total expenses, excluding indirectly paid expenses 1.60 %++ 1.70 %++ N/A N/A
Total expenses, excluding fee waivers and expense
reimbursements N/A 1.91 %++ 5.03 % 24.45%++
Net investment income 1.88 %++ 1.88 %++ 3.08 % 3.39%++
Portfolio turnover rate 9% 13% 50% 48%
Average commission rate paid per share $ 0.0568 $ 0.0665 $ 0.0635 N/A
Net assets end of period (thousands) $ 31,546 $ 4,239 $ 336 $ 216
</TABLE>
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from January 3, 1995 (commencement of class operations) to
December 31, 1995.
** Net investment income is based on average shares outstanding during the
period.
# The Fund changed its fiscal year ended from December 31 to July 31,
effective July 31, 1997.
See Combined Notes to Financial Statements.
32
<PAGE>
EVERGREEN
Small Cap Equity Income Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months
Ended Seven Months
January 31, 1998 Ended Year Ended December 31,
(Unaudited) July 31, 1997# 1996 1995*
<S> <C> <C> <C> <C>
CLASS B SHARES
Net asset value beginning of period $ 15.64 $ 13.09 $ 11.57 $ 9.64
========== =========== ============= ==========
Income from investment operations
Net investment income 0.09 0.08* * 0.27 0.28
Net realized and unrealized gain on investments 0.89 2.57 2.11 2.43
---------- ----------- ------------- ----------
Total from investment operations 0.98 2.65 2.38 2.71
---------- ----------- ------------- ----------
Less distributions
From net investment income ( 0.10) ( 0.09) ( 0.26) ( 0.29)
From net realized gain on investments ( 0.19) ( 0.01) ( 0.60) ( 0.49)
---------- ----------- ------------- ----------
Total distributions ( 0.29) ( 0.10) ( 0.86) ( 0.78)
---------- ----------- ------------- ----------
Net asset value end of period $ 16.33 $ 15.64 $ 13.09 $ 11.57
========== =========== ============= ==========
Total return + 6.23 % 20.37 % 21.10 % 28.70%
Ratios/Supplemental Data
Ratios to average net assets
Total expenses 2.35 %++ 2.46 %++ 2.50 % 2.50%++
Total expenses, excluding indirectly paid expenses 2.34 %++ 2.45 %++ N/A N/A
Total expenses, excluding fee waivers and
expense reimbursements N/A 2.66 %++ 5.72 % 20.90%++
Net investment income 1.13 %++ 1.12 %++ 2.39 % 2.67%++
Portfolio turnover rate 9% 13% 50% 48%
Average commission rate paid per share $ 0.0568 $ 0.0665 $ 0.0635 N/A
Net assets end of period (thousands) $ 72,102 $ 9,462 $ 692 $ 266
</TABLE>
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from January 3, 1995 (commencement of class operations) to
December 31, 1995.
** Net investment income is based on average shares outstanding during the
period.
# The Fund changed its fiscal year ended from December 31 to July 31,
effective July 31, 1997.
<TABLE>
<CAPTION>
Six Months
Ended Seven Months
January 31, 1998 Ended Year Ended December 31,
(Unaudited) July 31, 1997# 1996 1995*
<S> <C> <C> <C> <C>
CLASS C SHARES
Net asset value beginning of period $ 15.63 $ 13.09 $ 11.56 $ 9.74
========== =========== ============= ==========
Income from investment operations
Net investment income 0.09 0.10* * 0.28 0.28
Net realized and unrealized gain on investments 0.89 2.54 2.10 2.33
---------- ----------- ------------- ----------
Total from investment operations 0.98 2.64 2.38 2.61
---------- ----------- ------------- ----------
Less distributions
From net investment income ( 0.10) ( 0.09) ( 0.25) ( 0.30)
From net realized gain on investments ( 0.19) ( 0.01) ( 0.60) ( 0.49)
---------- ----------- ------------- ----------
Total distributions ( 0.29) ( 0.10) ( 0.85) ( 0.79)
---------- ----------- ------------- ----------
Net asset value end of period $ 16.32 $ 15.63 $ 13.09 $ 11.56
========== =========== ============= ==========
Total return + 6.23 % 20.30 % 21.10 % 27.30%
Ratios/Supplemental Data
Ratios to average net assets
Total expenses 2.35 %++ 2.45 %++ 2.50 % 2.50%++
Total expenses, excluding indirectly paid expenses 2.34 %++ 2.44 %++ N/A N/A
Total expenses, excluding fee waivers and expense
reimbursements N/A 2.58 %++ 5.77 % 187.29%++
Net investment income 1.14 %++ 1.20 %++ 2.33 % 2.63%++
Portfolio turnover rate 9% 13% 50% 48%
Average commission rate paid per share $ 0.0568 $ 0.0665 $ 0.0635 N/A
Net assets end of period (thousands) $ 13,807 $ 2,770 $ 56 $ 24
</TABLE>
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from January 24, 1995 (commencement of class operations) to
December 31, 1995.
** Net investment income is based on average shares outstanding during the
period.
# The Fund changed its fiscal year ended from December 31 to July 31,
effective July 31, 1997.
See Combined Notes to Financial Statements.
33
<PAGE>
EVERGREEN
Small Cap Equity Income Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months
Ended Seven Months
January 31, 1998 Ended
(Unaudited) July 31, 1997#
<S> <C> <C>
CLASS Y SHARES
Net asset value beginning of period $ 15.71 $ 13.12
========== ==========
Income from investment operations
Net investment income 0.16 0.19* *
Net realized and unrealized gain (loss) on
investments 0.91 2.56
---------- ----------
Total from investment operations 1.07 2.75
---------- ----------
Less distributions
From net investment income ( 0.17) ( 0.15)
From net realized gain on investments ( 0.19) ( 0.01)
---------- ----------
Total distributions ( 0.36) ( 0.16)
---------- ----------
Net asset value end of period $ 16.42 $ 15.71
========== ==========
Total return 6.77% 21.09 %
Ratios/Supplemental Data
Ratios to average net assets
Total expenses 1.33%+ 1.39 %+
Total expenses, excluding indirectly paid
expenses 1.32%+ 1.38 %+
Total expenses, excluding fee waivers and
expense reimbursements N/A 1.59 %+
Net investment income 2.17%+ 2.39 %+
Portfolio turnover rate 9% 13%
Average commission rate paid per share $ 0.0568 $ 0.0665
Net assets end of period (thousands) $ 82,373 $ 42,374
<CAPTION>
Year ended December 31,
1996 1995 1994 1993*
<S> <C> <C> <C> <C>
CLASS Y SHARES
Net asset value beginning of period $ 11.58 $ 9.70 $ 10.15 $ 10.00
============ ======== ========== ==========
Income from investment operations
Net investment income 0.38 0.38 0.34 0.10
Net realized and unrealized gain (loss) on
investments 2.13 2.38 ( 0.41) 0.15
------------ -------- ---------- ----------
Total from investment operations 2.51 2.76 ( 0.07) 0.25
------------ -------- ---------- ----------
Less distributions
From net investment income ( 0.37) ( 0.38) ( 0.33) ( 0.10)
From net realized gain on investments ( 0.60) ( 0.50) ( 0.05) 0
------------ --------- ---------- ----------
Total distributions ( 0.97) ( 0.88) ( 0.38) ( 0.10)
------------ --------- ---------- ----------
Net asset value end of period $ 13.12 $ 11.58 $ 9.70 $ 10.15
============ ========= ========== ==========
Total return 22.40 % 29.10% ( 0.70%) 2.50%
Ratios/Supplemental Data
Ratios to average net assets
Total expenses 1.50 % 1.50% 1.48% 0.00%+
Total expenses, excluding indirectly paid
expenses N/A N/A N/A N/A
Total expenses, excluding fee waivers and
expense reimbursements 4.75 % 4.34% 4.68% 4.39%+
Net investment income 3.36 % 3.56% 3.72% 4.07%+
Portfolio turnover rate 50% 48% 9% 15%
Average commission rate paid per share $ 0.0635 N/A N/A N/A
Net assets end of period (thousands) $ 8,592 $ 4,806 $ 3,613 $ 2,236
</TABLE>
+ Annualized.
* For the period from October 1, 1993 (commencement of class operations) to
December 31, 1995.
** Net investment income is based on average shares outstanding during the
period.
# The Fund changed its fiscal year ended from December 31 to July 31,
effective July 31, 1997.
See Combined Notes to Financial Statements.
34
<PAGE>
EVERGREEN
Utility Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months
Ended Seven Months
January 31, 1998 Ended Year Ended December 31,
(Unaudited) July 31, 1997# 1996 1995 1994*
<S> <C> <C> <C> <C> <C>
CLASS A SHARES
Net asset value beginning of period $ 11.45 $ 10.57 $ 10.80 $ 9.00 $ 10.00
========== =========== ============ ======== ==========
Income from investment operations
Net investment income 0.22 0.25 0.41 0.44 0.45
Net realized and unrealized gain (loss) on i 1.36 0.87 0.05 2.25 ( 1.01)
---------- ----------- ------------ -------- ----------
Total from investment operations 1.58 1.12 0.46 2.69 ( 0.56)
---------- ----------- ------------ -------- ----------
Less distributions
From net investment income ( 0.23) ( 0.24) ( 0.41) ( 0.44) ( 0.44)
From net realized gain on investments ( 1.12) 0 ( 0.28) ( 0.45) 0
---------- ----------- ------------ -------- ----------
Total distributions ( 1.35) ( 0.24) ( 0.69) ( 0.89) ( 0.44)
---------- ----------- ------------ -------- ----------
Net asset value end of period $ 11.68 $ 11.45 $ 10.57 $ 10.80 $ 9.00
========== =========== ============ ======== ==========
Total return + 14.42% 10.72 % 4.40 % 30.70% ( 5.60%)
Ratios/Supplemental Data
Ratios to average net assets
Total expenses 0.98%++ 1.00 %++ 0.87 % 0.79% 0.53%++
Total expenses, excluding indirectly paid e 0.98%++ 0.99 %++ N/A N/A N/A
Total expenses, excluding fee waivers and expense
reimbursements 1.17%++ 1.19 %++ 1.15 % 1.18% 1.43%++
Net investment income 3.68%++ 3.85 %++ 3.87 % 4.51% 5.07%++
Portfolio turnover rate 30% 50% 59% 88% 23%
Average commission rate paid per share $ 0.0600 $ 0.0593 $ 0.0605 N/A N/A
Net assets end of period (thousands) $ 99,936 $ 91,638 $ 96,243 $107,872 $ 4,190
</TABLE>
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from January 4, 1994 (commencement of class operations) to
December 31, 1994.
# The Fund changed its fiscal year ended from December 31 to July 31,
effective July 31, 1997.
<TABLE>
<CAPTION>
Six Months
Ended Seven Months
January 31, 1998 Ended Year Ended December 31,
(Unaudited) July 31, 1997# 1996 1995 1994*
<S> <C> <C> <C> <C> <C>
CLASS B SHARES
Net asset value beginning of period $ 11.46 $ 10.58 $ 10.81 $ 9.00 $ 10.00
========== =========== ============ ======== ==========
Income from investment operations
Net investment income 0.17 0.20 0.33 0.37 0.39
Net realized and unrealized gain (loss) on i 1.35 0.87 0.05 2.26 ( 1.01)
---------- ----------- ------------ -------- ----------
Total from investment operations 1.52 1.07 0.38 2.63 ( 0.62)
---------- ----------- ------------ -------- ----------
Less distributions
From net investment income ( 0.18) ( 0.19) ( 0.33) ( 0.37) ( 0.38)
From net realized gain on investments ( 1.12) 0 ( 0.28) ( 0.45) 0
---------- ----------- ------------ --------- ----------
Total distributions ( 1.30) ( 0.19) ( 0.61) ( 0.82) ( 0.38)
---------- ----------- ------------ --------- ----------
Net asset value end of period $ 11.68 $ 11.46 $ 10.58 $ 10.81 $ 9.00
========== =========== ============ ========= ==========
Total return + 13.88% 10.21 % 3.60 % 29.90% ( 6.20%)
Ratios/Supplemental Data
Ratios to average net assets
Total expenses 1.73%++ 1.75 %++ 1.62 % 1.53% 1.27%++
Total expenses, excluding indirectly paid e 1.73%++ 1.74 %++ N/A N/A N/A
Total expenses, excluding fee waivers and expense
reimbursements 1.92%++ 1.94 %++ 1.89 % 1.93% 2.11%++
Net investment income 2.93%++ 3.10 %++ 3.12 % 3.78% 4.19%++
Portfolio turnover rate 30% 50% 59% 88% 23%
Average commission rate paid per share $ 0.0600 $ 0.0593 $ 0.0605 N/A N/A
Net assets end of period (thousands) $ 41,293 $ 36,738 $ 38,511 $ 35,662 $ 28,792
</TABLE>
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from January 4, 1994 (commencement of class operations) to
December 31, 1994.
# The Fund changed its fiscal year ended from December 31 to July 31,
effective July 31, 1997.
See Combined Notes to Financial Statements.
35
<PAGE>
EVERGREEN
Utility Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months
Ended Seven Months
January 31, 1998 Ended
(Unaudited) July 31, 1997#
<S> <C> <C>
CLASS C SHARES
Net asset value beginning of period $ 11.46 $ 10.58
=========== ===========
Income from investment operations
Net investment income 0.17 0.20
Net realized and unrealized gain (loss) on investments 1.35 0.87
----------- -----------
Total from investment operations 1.52 1.07
----------- -----------
Less distributions
From net investment income ( 0.18) ( 0.19)
From net realized gain on investments ( 1.12) 0
----------- -----------
Total distributions ( 1.30) ( 0.19)
----------- -----------
Net asset value end of period $ 11.68 $ 11.46
=========== ===========
Total return + 13.88% 10.21 %
Ratios/Supplemental Data
Ratios to average net assets
Total expenses 1.73%++ 1.75 %++
Total expenses, excluding indirectly paid expenses 1.73%++ 1.74 %++
Total expenses, excluding fee waivers and expense
reimbursements 1.92%++ 1.94 %++
Net investment income 2.93%++ 3.10 %++
Portfolio turnover rate 30% 50%
Average commission rate paid per share $ 0.0600 $ 0.0593
Net assets end of period (thousands) $ 405 $ 379
<CAPTION>
Year Ended December 31,
1996 1995 1994*
<S> <C> <C> <C>
CLASS C SHARES
Net asset value beginning of period $ 10.82 $ 9.01 $ 9.33
============ ======== ==========
Income from investment operations
Net investment income 0.33 0.37 0.12
Net realized and unrealized gain (loss) on investments 0.04 2.26 ( 0.33)
------------ -------- ----------
Total from investment operations 0.37 2.63 ( 0.21)
------------ -------- ----------
Less distributions
From net investment income ( 0.33) ( 0.37) ( 0.11)
From net realized gain on investments ( 0.28) ( 0.45) 0
------------ --------- ----------
Total distributions ( 0.61) ( 0.82) ( 0.11)
------------ --------- ----------
Net asset value end of period $ 10.58 $ 10.82 $ 9.01
============ ========= ==========
Total return + 3.50 % 29.80% ( 2.20%)
Ratios/Supplemental Data
Ratios to average net assets
Total expenses 1.63 % 1.54% 1.94%++
Total expenses, excluding indirectly paid expenses N/A N/A N/A
Total expenses, excluding fee waivers and expense
reimbursements 1.90 % 1.93% 2.78%++
Net investment income 3.13 % 3.76% 3.96%++
Portfolio turnover rate 59% 88% 23%
Average commission rate paid per share $ 0.0605 N/A N/A
Net assets end of period (thousands) $ 396 $ 246 $ 128
</TABLE>
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from September 2, 1994 (commencement of class operations) to
December 31, 1994.
# The Fund changed its fiscal year ended from December 31 to July 31,
effective July 31, 1997.
<TABLE>
<CAPTION>
Six Months
Ended Seven Months
January 31, 1998 Ended
(Unaudited) July 31, 1997#
<S> <C> <C>
CLASS Y SHARES
Net asset value beginning of period $ 11.46 $ 10.58
========= ==========
Income from investment operations
Net investment income 0.23 0.25
Net realized and unrealized gain (loss) on investments 1.35 0.88
--------- ----------
Total from investment operations 1.58 1.13
--------- ----------
Less distributions
From net investment income ( 0.24) ( 0.25)
In excess of net investment income 0 0
From net realized gain on investments ( 1.12) 0
---------- ----------
Total distributions ( 1.36) ( 0.25)
---------- ----------
Net asset value end of period $ 11.68 $ 11.46
========== ==========
Total return 14.46 % 10.85 %
Ratios/Supplemental Data
Ratios to average net assets
Total expenses 0.73 %+ 0.73 %+
Total expenses, excluding indirectly paid expenses 0.73 %+ 0.72 %+
Total expenses, excluding fee waivers and expense
reimbursements 0.92 %+ 0.94 %+
Net investment income 3.93 %+ 4.06 %+
Portfolio turnover rate 30% 50%
Average commission rate paid per share $ 0.0600 $ 0.0593
Net assets end of period (thousands) $ 1,809 $ 1,627
<CAPTION>
Year Ended December 31,
1996 1995 1994*
<S> <C> <C> <C>
CLASS Y SHARES
Net asset value beginning of period $ 10.82 $ 9.00 $ 9.51
============ ======== =========
Income from investment operations
Net investment income 0.44 0.47 0.37
Net realized and unrealized gain (loss) on investments 0.03 2.27 ( 0.50)
------------ -------- ---------
Total from investment operations 0.47 2.74 ( 0.13)
------------ -------- ---------
Less distributions
From net investment income ( 0.43) ( 0.47) ( 0.37)
In excess of net investment income 0 0 ( 0.01)
From net realized gain on investments ( 0.28) ( 0.45) 0
------------ --------- ---------
Total distributions ( 0.71) ( 0.92) ( 0.38)
------------ --------- ---------
Net asset value end of period $ 10.58 $ 10.82 $ 9.00
============ ========= =========
Total return 4.50 % 31.30% ( 1.60%)
Ratios/Supplemental Data
Ratios to average net assets
Total expenses 0.61 % 0.54% 0.40%+
Total expenses, excluding indirectly paid expenses N/A N/A N/A
Total expenses, excluding fee waivers and expense
reimbursements 0.89 % 0.93% 1.24%+
Net investment income 4.01 % 4.76% 4.93%+
Portfolio turnover rate 59% 88% 23%
Average commission rate paid per share $ 0.0605 N/A N/A
Net assets end of period (thousands) $ 2,000 $ 7,791 $ 5,201
</TABLE>
+ Annualized.
* For the period from February 28, 1994 (commencement of class operations) to
December 31, 1994.
# The Fund changed its fiscal year ended from December 31 to July 31,
effective July 31, 1997.
See Combined Notes to Financial Statements.
36
<PAGE>
EVERGREEN
Value Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months
Ended Seven Months
January 31, 1998 Ended Year Ended December 31,
(Unaudited) July 31, 1997 # 1996 1995 1994
<S> <C> <C> <C> <C> <C>
CLASS A SHARES
Net asset value beginning of period $ 24.64 $ 20.57 $ 20.45 $ 16.62 $ 17.63
========== =========== ============ ========= =========
Income from investment operations
Net investment income 0.16 0.21 0.38 0.55 0.52
Net realized and unrealized gain (loss) on
investments 0.47 4.05 3.49 4.69 ( 0.20)
---------- ----------- ------------ --------- ----------
Total from investment operations 0.63 4.26 3.87 5.24 0.32
---------- ----------- ------------ --------- ----------
Less distributions
From net investment income ( 0.20) ( 0.19) ( 0.41) ( 0.51) ( 0.51)
From net realized gain on investments ( 1.18) 0 ( 3.32) ( 0.90) ( 0.82)
In excess of net investment income 0** 0 0 0 0
In excess of net realized gain on investments 0 0 ( 0.02) 0 0
---------- ----------- ------------ ---------- ----------
Total distributions ( 1.38) ( 0.19) ( 3.75) ( 1.41) ( 1.33)
---------- ----------- ------------ ---------- ----------
Net asset value end of period $ 23.89 $ 24.64 $ 20.57 $ 20.45 $ 16.62
========== =========== ============ ========== ==========
Total return + 2.63 % 20.78 % 18.90 % 31.80% 1.90%
Ratios/Supplemental Data
Ratios to average net assets
Total expenses 0.94 %++ 0.92 %++ 0.91 % 0.90% 0.93%
Total expenses, excluding indirectly paid
expenses 0.94 %++ 0.92 %++ N/A N/A N/A
Total expenses, excluding fee waiver and
expense reimbursement N/A N/A N/A N/A N/A
Net investment income 1.28 %++ 1.66 %++ 1.77 % 2.78% 2.96%
Portfolio turnover rate 30% 6% 91% 53% 70%
Average commission rate paid per share $ 0.0590 $ 0.0600 $ 0.0588 N/A N/A
Net assets end of period (millions) $ 388 $ 392 $ 328 $ 292 $ 189
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31, Year Ended March 31,
1993 1992 1991 1990* 1990 1989
<S> <C> <C> <C> <C> <C> <C>
CLASS A SHARES
Net asset value beginning of period $ 17.11 $ 17.08 $ 14.61 $ 15.12 $ 14.45 $ 12.83
========= ========= ========= =========== ========= =========
Income from investment operations
Net investment income 0.47 0.44 0.46 0.36 0.54 0.36
Net realized and unrealized gain (loss) on
investments 1.10 0.89 3.17 ( 0.44) 1.70 2.11
---------- --------- --------- ----------- --------- ---------
Total from investment operations 1.57 1.33 3.63 ( 0.08) 2.24 2.47
---------- --------- --------- ----------- --------- ---------
Less distributions
From net investment income ( 0.47) ( 0.43) ( 0.43) ( 0.36) ( 0.57) ( 0.38)
From net realized gain on investments (0.58) ( 0.87) ( 0.73) ( 0.02) ( 1.00) ( 0.47)
In excess of net investment income 0 0 0 ( 0.05) 0 0
---------- ---------- ---------- ----------- ---------- ----------
Total distributions (1.05) ( 1.30) ( 1.16) ( 0.43) ( 1.57) ( 0.85)
---------- ---------- ---------- ----------- ---------- ----------
Net asset value end of period $ 17.63 $ 17.11 $ 17.08 $ 14.61 $ 15.12 $ 14.45
========== ========== ========== =========== ========== ==========
Total return + 9.30% 8.00% 25.10% ( 0.50%) 15.50% 19.70%
Ratios/Supplemental data
Ratios to average net assets
Total expenses 0.99% 1.01% 0.96% 1.39%++ 1.55% 1.71%
Total expenses, excluding indirectly paid
expenses N/A N/A N/A N/A N/A N/A
Total expenses, excluding fee waiver and
expense reimbursement N/A 1.02% 1.05% N/A N/A N/A
Net investment income 2.63% 2.37% 2.78% 3.28%++ 3.42% 2.72%
Portfolio turnover rate 46% 56% 69% 13% 11% 24%
Average commission rate paid per share N/A N/A N/A N/A N/A N/A
Net assets end of period (millions) $ 190 $ 169 $ 136 $ 105 $ 96 $ 83
</TABLE>
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* The Fund changed fiscal year end from March 31 to December 31, effective
December 31, 1990.
** Less than one cent per share.
# The Fund changed its fiscal year end from December 31 to July 31, effective
July 31, 1997.
See Combined Notes to Financial Statements.
37
<PAGE>
EVERGREEN
Value Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months
Ended Seven Months
January 31, 1998 Ended
(Unaudited) July 31, 1997 #
<S> <C> <C>
CLASS B SHARES
Net asset value beginning of period $ 24.63 $ 20.58
========== ===========
Income from investment operations
Net investment income 0.07 0.12
Net realized and unrealized gain (loss) on
investments 0.47 4.03
---------- -----------
Total from investment operations 0.54 4.15
---------- -----------
Less distributions
From net investment income ( 0.12) ( 0.10)
From net realized gain on investments ( 1.18) 0
In excess of net investment income 0** 0
In excess of net realized gain on
investments 0 0
---------- -----------
Total distributions ( 1.30) ( 0.10)
---------- -----------
Net asset value end of period $ 23.87 $ 24.63
========== ===========
Total return + 2.26 % 20.23 %
Ratios/Supplemental Data
Ratios to average net assets
Total expenses 1.69 %++ 1.67 %++
Total expenses, excluding indirectly paid
expenses 1.69 %++ 1.67 %++
Net investment income 0.52 %++ 0.92 %++
Portfolio turnover rate 30% 6%
Average commission rate paid per share $ 0.0590 $ 0.0600
Net assets end of period (thousands) $ 298,343 $ 276,256
<CAPTION>
Year Ended December 31,
1996 1995 1994 1993*
<S> <C> <C> <C> <C>
CLASS B SHARES
Net asset value beginning of period $ 20.45 $ 16.62 $ 17.63 $ 17.24
============ ========= ========= ===========
Income from investment operations
Net investment income 0.22 0.39 0.42 0.35
Net realized and unrealized gain (loss) on
investments 3.50 4.70 ( 0.20) 1.01
------------ --------- ---------- -----------
Total from investment operations 3.72 5.09 0.22 1.36
------------ --------- ---------- -----------
Less distributions
From net investment income ( 0.25) ( 0.36) ( 0.41) ( 0.35)
From net realized gain on investments ( 3.32) ( 0.90) ( 0.82) ( 0.58)
In excess of net investment income 0 0 0 ( 0.04)
In excess of net realized gain on
investments ( 0.02) 0 0 0
------------ ---------- ---------- -----------
Total distributions ( 3.59) ( 1.26) ( 1.23) ( 0.97)
------------ ---------- ---------- -----------
Net asset value end of period $ 20.58 $ 20.45 $ 16.62 $ 17.63
============ ========== ========== ===========
Total return + 18.10 % 30.90% 1.30% 8.00%
Ratios/Supplemental Data
Ratios to average net assets
Total expenses 1.66 % 1.65% 1.53% 1.48%++
Total expenses, excluding indirectly paid
expenses N/A N/A N/A N/A
Net investment income 1.01 % 2.04% 2.36% 2.09%++
Portfolio turnover rate 91% 53% 70% 46%
Average commission rate paid per share $ 0.0588 N/A N/A N/A
Net assets end of period (thousands) $ 197,411 $ 141,072 $ 104,297 $ 59,953
</TABLE>
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from February 2, 1993 (commencement of class operations) to
December 31, 1993.
** Less than one cent per share.
# The Fund changed its fiscal year end from December 31 to July 31, effective
July 31, 1997.
See Combined Notes to Financial Statements.
38
<PAGE>
EVERGREEN
Value Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months
Ended Seven Months
January 31, 1998 Ended Year Ended December 31,
(Unaudited) July 31, 1997 # 1996 1995 1994*
<S> <C> <C> <C> <C> <C>
CLASS C SHARES
Net asset value beginning of period $ 24.61 $ 20.56 $ 20.44 $ 16.61 $ 18.28
========== =========== ============ ========= ===========
Income from investment operations
Net investment income 0.07 0.12 0.22 0.39
0.19
Net realized and unrealized gain (loss) on
investments 0.48 4.03 3.50 4.70
----------- ----------- ------------ --------- --------
( 0.81)
--------
Total from investment operations 0.55 4.15 3.72 5.09
----------- ----------- ------------ --------- --------
( 0.62)
--------
Less distributions
From net investment income (0.12) ( 0.10) ( 0.26) ( 0.36) ( 0.19)
From net realized gain on investments (1.18) 0 ( 3.32) ( 0.90) ( 0.82)
In excess of net investment income 0** 0 0 0 ( 0.04)
In excess of net realized gain on investments 0 0 ( 0.02) 0 0
----------- ----------- ------------ ---------- -----------
Total distributions (1.30) ( 0.10) ( 3.60) ( 1.26) ( 1.05)
----- --------- ------------ -------- -----------
Net asset value end of period 23.86 $ 24.61 $ 20.56 $ 20.44 $ 16.61
=========== =========== ============ ========== ===========
Total return + 2.26% 20.25 % 18.10 % 30.90% ( 3.40%)
Ratios/Supplemental Data
Ratios to average net assets
Total expenses 1.69 %++ 1.66 %++ 1.67 % 1.65% 1.68%++
Total expenses, excluding indirectly paid
expenses 1.69 %++ 1.66 %++ N/A N/A N/A
Net investment income 0.54%++ 0.94 %++ 1.00 % 2.03% 2.16%++
Portfolio turnover rate 30% 6 % 91 % 53% 70%
Average commission rate paid per share $ 0.0590 $ 0.0600 $ 0.0588 N/A N/A
Net assets end of period (thousands) $ 3,084 $ 2,507 $ 1,458 $ 811 $ 485
</TABLE>
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from September 2, 1994 (commencement of class operations) to
December 31, 1994.
** Less than one cent per share.
# The Fund changed its fiscal year end from December 31 to July 31, effective
July 31, 1997.
See Combined Notes to Financial Statements.
39
<PAGE>
EVERGREEN
Value Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months
Ended Seven Months
January 31, 1998 Ended Year Ended December 31,
(Unaudited) July 31, 1997 # 1996 1995
<S> <C> <C> <C> <C>
CLASS Y SHARES
Net asset value beginning of period $ 24.64 $ 20.57 $ 20.45 $ 16.61
========= ========== ============= ==========
Income from investment operations
Net investment income 0.20 0.25 0.44 0.57
Net realized and unrealized gain on investments 0.46 4.03 3.49 4.72
--------- ---------- ------------- ----------
Total from investment operations 0.66 4.28 3.93 5.29
--------- ---------- ------------- ----------
Less distributions
From net investment income ( 0.22) ( 0.21) ( 0.47) ( 0.55)
From net realized gain on investments ( 1.18) 0 ( 3.32) ( 0.90)
In excess of net investment income 0** 0 0 0
In excess of net realized gain on investments 0 0 ( 0.02) 0
---------- ---------- ------------- -----------
Total distributions ( 1.40) ( 0.21) ( 3.81) ( 1.45)
---------- ---------- ------------- -----------
Net asset value end of period $ 23.90 $ 24.64 $ 20.57 $ 20.45
========== ========== ============= ===========
Total return 2.78 % 20.93 % 19.20 % 32.20%
Ratios/Supplemental Data
Ratios to average net assets:
Total expenses 0.67 %+ 0.67 %+ 0.66 % 0.65%
Total expenses, excluding indirectly paid expenses 0.67 %+ 0.67 %+ N/A N/A
Total expenses, excluding fee waivers & expense
reimbursements N/A N/A N/A N/A
Net investment income 2.08 %+ 1.91 %+ 2.02 % 3.02%
Portfolio turnover rate 30% 6% 91 % 53%
Average commission rate paid per share $ 0.0590 $ 0.0600 $ 0.0588 N/A
Net assets end of period (millions) $ 233 $ 1,149 $ 996 $ 761
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31,
1994 1993 1992 1991*
<S> <C> <C> <C> <C>
CLASS Y SHARES
Net asset value beginning of period $ 17.63 $ 17.11 $ 17.08 $ 14.28
========== ========== ========== ==========
Income from investment operations
Net investment income 0.56 0.52 0.49 0.47
Net realized and unrealized gain (loss) on investments ( 0.20) 1.12 0.90 3.53
----------- ---------- ---------- ----------
Total from investment operations 0.36 1.64 1.39 4.00
----------- ---------- ---------- ----------
Less distributions
From net investment income ( 0.56) ( 0.52) ( 0.49) ( 0.47)
From net realized gain on investments ( 0.82) ( 0.58) ( 0.87) ( 0.73)
In excess of net investment income 0 ( 0.02) 0 0
In excess of net realized gain on investments 0 0 0 0
----------- ----------- ----------- ----------
Total distributions ( 1.38) ( 1.12) ( 1.36) ( 1.20)
----------- ----------- ----------- ----------
Net asset value end of period $ 16.61 $ 17.63 $ 17.11 $ 17.08
=========== =========== =========== ==========
Total return 2.10% 9.70% 8.30% 25.40%
Ratios/Supplemental Data
Ratios to average net assets:
Total expenses 0.68% 0.65% 0.68% 0.69%+
Total expenses, excluding indirectly paid expenses N/A N/A N/A N/A
Total expenses, excluding fee waivers & expense
reimbursements N/A N/A 0.69% 0.77%+
Net investment income 3.21% 2.98% 2.90% 3.04%+
Portfolio turnover rate 70% 46% 56% 69%
Average commission rate paid per share N/A N/A N/A N/A
Net assets end of period (millions) $ 507 $ 463 $ 326 $ 271
</TABLE>
+ Annualized.
* For the period from January 3, 1991 (commencement of class operations) to
December 31, 1991.
** Less than one cent per share.
# The Fund changed its fiscal year end from December 31 to July 31, effective
July 31, 1997.
See Combined Notes to Financial Statements.
40
<PAGE>
EVERGREEN
Fund for Total Return
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months
Ended Eight Months
January 31, 1998 Ended
(Unaudited) July 31, 1997#
<S> <C> <C>
CLASS A SHARES
Net asset value, beginning of period $ 20.69 $ 17.33
========== ===========
Income from investment operations
Net investment income 0.09* * 0.18
Net realized and unrealized gain (loss) on investments 0.62 3.34
---------- -----------
Total from investment operations 0.71 3.52
---------- -----------
Less distributions
From net investment income ( 0.09) ( 0.16)
In excess of net investment income ( 0.02) 0
From net realized gains on investments ( 1.52) 0
---------- -----------
Total distributions ( 1.63) ( 0.16)
---------- -----------
Net asset value, end of period $ 19.77 $ 20.69
========== ===========
Total return + 3.57 % 20.40 %
Ratios/Supplemental Data
Ratios to average net assets
Total expenses 1.27 %++ 1.24 %++
Total expenses, excluding indirectly paid expenses 1.27 %++ 1.22 %++
Total expenses, excluding fee waivers and expense
reimbursements N/A N/A
Net investment income 0.83 %++ 1.46 %++
Portfolio turnover rate 26% 41%
Average commission rate paid per share $ 0.0587 $ 0.0501
Net assets, end of period (thousands) $ 49,513 $ 47,812
<CAPTION>
Year Ended November 30,
1996 1995 1994 1993
<S> <C> <C> <C> <C>
CLASS A SHARES
Net asset value, beginning of period $ 13.83 $ 11.75 $ 12.31 $ 12.06
=========== ======== ========= ========
Income from investment operations
Net investment income 0.26 0.25 0.24 0.21
Net realized and unrealized gain (loss) on investments 3.83 2.80 ( 0.56) 1.34
----------- -------- --------- --------
Total from investment operations 4.09 3.05 ( 0.32) 1.55
----------- -------- --------- --------
Less distributions
From net investment income ( 0.26) ( 0.25) ( 0.24) ( 0.21)
In excess of net investment income 0 ( 0.07) 0 ( 0.03)
From net realized gains on investments ( 0.33) ( 0.65) 0 ( 1.06)
----------- --------- --------- ---------
Total distributions ( 0.59) ( 0.97) ( 0.24) ( 1.30)
----------- --------- --------- ---------
Net asset value, end of period $ 17.33 $ 13.83 $ 11.75 $ 12.31
=========== ========= ========= =========
Total return + 29.83 % 26.57% ( 2.65%) 12.67%
Ratios/Supplemental Data
Ratios to average net assets
Total expenses 1.41 % 1.69% 1.59% 1.85%
Total expenses, excluding indirectly paid expenses 1.39 % 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 1.66 % 1.94% 1.93% 1.63%
Portfolio turnover rate 41% 77% 57% 92%
Average commission rate paid per share $ 0.0037 N/A N/A N/A
Net assets, end of period (thousands) $ 40,487 $ 27,037 $ 23,162 $ 26,367
</TABLE>
<TABLE>
<CAPTION>
Year Ended November 30,
1992 1991 1990
<S> <C> <C> <C>
CLASS A SHARES
Net asset value, beginning of period $ 11.45 $ 10.29 $ 10.89
========= ======== =========
Income from investment operations
Net investment income 0.23 0.34 0.41
Net realized and unrealized gain (loss) on investments 1.19 1.38 ( 0.61)
--------- -------- ---------
Total from investment operations 1.42 1.72 ( 0.20)
--------- -------- ---------
Less distributions
From net investment income ( 0.23) ( 0.35) ( 0.40)
In excess of net investment income ( 0.05) ( 0.05) 0
From net realized gains on investments ( 0.53) ( 0.16) 0
---------- --------- ---------
Total distributions ( 0.81) ( 0.56) ( 0.40)
---------- --------- ---------
Net asset value, end of period $ 12.06 $ 11.45 $ 10.29
========== ========= =========
Total return + 12.56% 16.70% ( 1.85%)
Ratios/Supplemental Data
Ratios to average net assets
Total expenses 1.85% 1.88% 2.00%
Total expenses, excluding indirectly paid expenses N/A N/A N/A
Total expenses, excluding fee waivers and expense
reimbursements N/A N/A 2.41%
Net investment income 1.87% 2.98% 3.85%
Portfolio turnover rate 66% 43% 51%
Average commission rate paid per share N/A N/A N/A
Net assets, end of period (thousands) $ 23,607 $ 22,974 $ 22,080
<CAPTION>
Year Ended November 30,
1989 1988 1987*
<S> <C> <C> <C>
CLASS A SHARES
Net asset value, beginning of period $ 9.41 $ 8.59 $ 10.00
======= ======= ===========
Income from investment operations
Net investment income 0.42 0.46 0.30
Net realized and unrealized gain (loss) on investments 2.01 0.89 ( 1.47)
------- ------- -----------
Total from investment operations 2.43 1.35 ( 1.17)
------- ------- -----------
Less distributions
From net investment income ( 0.42) ( 0.53) ( 0.24)
In excess of net investment income 0 0 0
From net realized gains on investments ( 0.53) 0 0
------- ------- -----------
Total distributions ( 0.95) ( 0.53) ( 0.24)
------- ------- -----------
Net asset value, end of period $ 10.89 $ 9.41 $ 8.59
======= ======= ===========
Total return + 26.17% 15.98% 11.94%
Ratios/Supplemental Data
Ratios to average net assets
Total expenses 2.00% 1.47% 1.00%+++
Total expenses, excluding indirectly paid expenses N/A N/A N/A
Total expenses, excluding fee waivers and expense
reimbursements 2.48% 2.92% 4.77%+++
Net investment income 3.94% 4.87% 4.94%+++
Portfolio turnover rate 50% 64% 16%
Average commission rate paid per share N/A N/A N/A
Net assets, end of period (thousands) $22,764 $20,735 $ 7,672
</TABLE>
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
+++ Annualized for the period from April 14, 1987 (commencement of investment
operations) to November 30, 1987.
* For the period from February 13, 1987 (commencement of operations) to
November 30, 1987.
** Net investment income is based on average shares outstanding during the
period.
# The Fund changed its fiscal year end from November 30 to July 31, effective
July 31, 1997.
See Combined Notes to Financial Statements.
41
<PAGE>
EVERGREEN
Fund for Total Return
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months
Ended Eight Months
January 31, 1998 Ended
(Unaudited) July 31, 1997#
<S> <C> <C>
CLASS B SHARES
Net asset value, beginning of period $ 20.63 $ 17.31
========== ===========
Income from investment operations
Net investment income 0.01* * 0.09
Net realized and unrealized gain (loss) on investments 0.63 3.31
---------- -----------
Total from investment operations 0.64 3.40
---------- -----------
Less distributions
From net investment income ( 0.01) ( 0.08)
In excess of net investment income ( 0.04) 0
From net realized gains on investments ( 1.52) 0
---------- -----------
Total distributions ( 1.57) ( 0.08)
---------- -----------
Net asset value, end of period $ 19.70 $ 20.63
========== ===========
Total return + 3.21 % 19.68 %
Ratios/Supplemental Data
Ratios to average net assets
Total expenses 2.04 %++ 2.02 %++
Total expenses, excluding indirectly paid expenses 2.04 %++ 2.00 %++
Net investment income 0.07 %++ 0.58 %++
Portfolio turnover rate 26% 41%
Average commission rate paid per share $ 0.0587 $ 0.0501
Net assets, end of period (thousands) $ 98,028 $ 94,309
<CAPTION>
Year Ended November 30,
1996 1995 1994 1993*
<S> <C> <C> <C> <C>
CLASS B SHARES
Net asset value, beginning of period $ 13.84 $ 11.77 $ 12.32 $ 12.65
============ ========= ========== ===========
Income from investment operations
Net investment income 0.15 0.15 0.15 0.10
Net realized and unrealized gain (loss) on investments 3.80 2.82 ( 0.56) 0.74
------------ --------- ---------- -----------
Total from investment operations 3.95 2.97 ( 0.41) 0.84
------------ --------- ---------- -----------
Less distributions
From net investment income ( 0.15) ( 0.15) ( 0.14) ( 0.10)
In excess of net investment income 0 ( 0.10) 0 ( 0.04)
From net realized gains on investments ( 0.33) ( 0.65) 0 ( 1.03)
------------ ---------- ---------- -----------
Total distributions ( 0.48) ( 0.90) ( 0.14) ( 1.17)
------------ ---------- ---------- -----------
Net asset value, end of period $ 17.31 $ 13.84 $ 11.77 $ 12.32
============ ========== ========== ===========
Total return + 28.73 % 25.59% ( 3.36%) 6.68%
Ratios/Supplemental Data
Ratios to average net assets
Total expenses 2.18 % 2.47% 2.31% 2.64%++
Total expenses, excluding indirectly paid expenses 2.16 % 2.46% N/A N/A
Net investment income 0.88 % 1.06% 1.27% 0.84%
Portfolio turnover rate 41% 77% 57% 92%
Average commission rate paid per share $ 0.0037 N/A N/A N/A++
Net assets, end of period (thousands) $ 43,526 $ 20,605 $ 7,314 $ 4,283
</TABLE>
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from February 1, 1993 (commencement of class operations) to
November 30, 1993.
** Net investment income is based on average shares outstanding during the
period.
# The Fund changed its fiscal year end from November 30 to July 31, effective
July 31, 1997.
<TABLE>
<CAPTION>
Six Months
Ended Eight Months
January 31, 1998 Ended
(Unaudited) July 31, 1997#
<S> <C> <C>
CLASS C SHARES
Net asset value, beginning of period $ 20.65 $ 17.32
========== ===========
Income from investment operations
Net investment income 0.01* * 0.09
Net realized and unrealized gain (loss) on investments 0.63 3.32
---------- -----------
Total from investment operations 0.64 3.41
---------- -----------
Less distributions
From net investment income ( 0.01) ( 0.08)
In excess of net investment income ( 0.04) 0
From net realized gains on investments ( 1.52) 0
---------- -----------
Total distributions ( 1.57) ( 0.08)
---------- -----------
Net asset value, end of period $ 19.72 $ 20.65
========== ===========
Total return + 3.21 % 19.73 %
Ratios/Supplemental Data
Ratios to average net assets
Total expenses 2.03 %++ 2.01 %++
Total expenses, excluding indirectly paid expenses 2.03 %++ 1.99 %++
Net investment income 0.07 %++ 0.66 %++
Portfolio turnover rate 26% 41%
Average commission rate paid per share $ 0.0587 $ 0.0501
Net assets, end of period (thousands) $ 21,284 $ 21,125
<CAPTION>
Year Ended November 30,
1996 1995 1994 1993*
<S> <C> <C> <C> <C>
CLASS C SHARES
Net asset value, beginning of period $ 13.85 $ 11.78 $ 12.33 $ 12.65
=========== ======== ========= ==========
Income from investment operations
Net investment income 0.14 0.16 0.15 0.10
Net realized and unrealized gain (loss) on investments 3.81 2.81 ( 0.56) 0.75
----------- -------- --------- ----------
Total from investment operations 3.95 2.97 ( 0.41) 0.85
----------- -------- --------- ----------
Less distributions
From net investment income ( 0.15) ( 0.16) ( 0.14) ( 0.10)
In excess of net investment income 0 ( 0.09) 0 ( 0.04)
From net realized gains on investments ( 0.33) ( 0.65) 0 ( 1.03)
----------- --------- --------- ----------
Total distributions ( 0.48) ( 0.90) ( 0.14) ( 1.17)
----------- --------- --------- ----------
Net asset value, end of period $ 17.32 $ 13.85 $ 11.78 $ 12.33
=========== ========= ========= ==========
Total return + 28.71 % 25.57% ( 3.36%) 6.76%
Ratios/Supplemental Data
Ratios to average net assets
Total expenses 2.17 % 2.47% 2.34% 2.64%++
Total expenses, excluding indirectly paid expenses 2.15 % 2.44% N/A N/A
Net investment income 0.89 % 1.16% 1.21% 0.83%++
Portfolio turnover rate 41% 77% 57% 92%
Average commission rate paid per share $ 0.0037 N/A N/A N/A
Net assets, end of period (thousands) $ 14,562 $ 9,503 $ 5,968 $ 5,030
</TABLE>
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from February 1, 1993 (commencement of class operations) to
November 30, 1993.
** Net investment income is based on average shares outstanding during the
period.
# The Fund changed its fiscal year end from November 30 to July 31, effective
July 31, 1997.
See Combined Notes to Financial Statements.
42
<PAGE>
EVERGREEN
Fund for Total Return
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months For the period from
Ended January 13, 1997
January 31, 1998 (date of initial public offering)
(Unaudited) to July 31, 1997
<S> <C> <C>
CLASS Y SHARES
Net asset value, beginning of period $ 20.62 $ 17.74
============= =============
Income from investment operations
Net investment income 0.11* 0.18
Net realized and unrealized gain on investments 0.66 2.86
------------- -------------
Total from investment operations 0.77 3.04
------------- -------------
Less distributions
From net investment income ( 0.11) ( 0.16)
In excess of net investment income ( 0.02) 0
From net realized gains on investments ( 1.52) 0
------------- --------------
Total distributions ( 1.65) ( 0.16)
------------- --------------
Net asset value, end of period $ 19.74 $ 20.62
============= ==============
Total return 3.88 % 17.22 %
Ratios/Supplemental Data
Ratios to average net assets
Total expenses 1.02 %+ 1.34 %+
Total expenses, excluding indirectly paid expenses 1.02 %+ 1.34 %+
Net investment income 1.43 %+ 0.79 %+
Portfolio turnover rate 26% 41%
Average commission rate paid per share $ 0.0587 $ 0.0501
Net assets, end of period (thousands) $ 49 $ 93
</TABLE>
+ Annualized.
* Net investment income is based on average shares outstanding during the
period.
See Combined Notes to Financial Statements.
43
<PAGE>
EVERGREEN
Growth & Income Fund
Schedule of Investments
January 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - 79.4%
Aerospace & Defense - 0.6%
205,000 Boeing Co. ........................ $ 9,750,312
===========
Automotive Equipment &
Manufacturing - 0.5%
50,000 Ford Motor Co. .................... 2,550,000
275,000 Meritor Automotive, Inc. .......... 6,290,625
===========
8,840,625
===========
Banks - 7.7%
87,900 AmSouth Bancorp ................... 4,746,600
118,440 Banc One Corp. .................... 6,617,835
80,000 Bank of New York Co., Inc. ........ 4,335,000
286,500 BSB Bancorp, Inc. ................. 8,809,875
135,000 Carolina First Corp. .............. 2,944,688
73,000 Citicorp .......................... 8,687,000
45,750 Crestar Financial Corp. ........... 2,401,875
45,000 Cullen/Frost Bankers, Inc. ........ 2,469,375
157,500 First Security Corp. .............. 5,492,812
59,550 First Virginia Banks, Inc. ........ 2,746,744
20,000 Fleet Financial Group, Inc. ....... 1,432,500
210,000 Hibernia Corp. Cl. A .............. 4,003,125
91,100 KeyCorp ........................... 5,921,500
178,125 NationsBank Corp. ................. 10,687,500
167,400 Norwest Corp. ..................... 6,110,100
65,000 Peoples Heritage Financial Group .. 2,795,000
100,000 State Street Corp. ................ 5,600,000
67,500 Summit Bancorp .................... 3,375,000
108,900 Susquehanna Bancshares, Inc. ...... 3,934,013
63,787 Wachovia Corp. .................... 4,959,439
515,000 Webster Financial Corp. ........... 31,382,812
32,000 Wilmington Trust Corp. ............ 1,868,000
===========
131,320,793
===========
Building, Construction &
Furnishings - 2.1%
320,000 * Furniture Brands International, Inc. 8,260,000
60,000 Home Depot, Inc. .................. 3,618,750
113,000 Lone Star Industries, Inc. ........ 6,285,625
140,000 Lowe's Companies, Inc. ............ 7,078,750
80,000 Medusa Corp. ...................... 3,525,000
9,700 Sherwin Williams Co. .............. 276,450
169,800 * US Home Corp. ..................... 6,441,787
===========
35,486,362
===========
Business Equipment &
Services - 6.1%
469,500 Air Express International Corp. ... 12,471,094
794,300 Circle International Group, Inc. .. 17,276,025
180,000 * Compuware Corp. ................... 7,020,000
133,000 Equifax, Inc. ..................... 4,372,375
123,436 First Data Corp. .................. 3,780,228
500,000 * Metromail Corp. ................... 8,218,750
640,200 Pittston Burlington Group ......... 13,764,300
300,000 * Platinum Technology Corp. ......... 8,400,000
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
Business Equipment &
Services - continued
235,000 * Policy Management Systems Corp. ... $15,436,562
647,000 Reynolds & Reynolds Co., Cl. A .... 12,859,125
===========
103,598,459
===========
Capital Goods - 0.4%
127,200 Caterpillar, Inc. ................. 6,105,600
===========
Chemical &
Agricultural
Products - 3.9%
65,000 Air Products & Chemicals, Inc. .... 5,204,063
140,000 Du Pont (E. I.) De Nemours & Co. .. 7,927,500
265,000 Engelhard Corp. ................... 4,438,750
165,000 Grace (W.R.) & Co. ................ 12,962,812
42,300 H.B. Fuller Co. ................... 2,220,750
125,000 Morton International, Inc. ........ 4,125,000
160,000 Nalco Chemical Co. ................ 6,000,000
79,000 Pioneer Hi-Bred International, Inc. . 7,904,937
260,000 Praxair, Inc. ..................... 10,773,750
175,000 Solutia, Inc. ..................... 4,889,063
===========
66,446,625
===========
Communication Systems &
Services - 0.4%
72,000 * Cisco Systems, Inc. ............... 4,540,500
60,000 * WorldCom, Inc. .................... 2,148,750
===========
6,689,250
===========
Consumer Products &
Services - 2.7%
35,000 Avon Products, Inc. ............... 2,100,000
175,200 Black & Decker Corp. .............. 8,442,450
90,000 Colgate-Palmolive Co. ............. 6,592,500
25,000 CPI Corp. ......................... 601,563
80,000 Gucci Group ....................... 3,185,000
40,700 Harley-Davidson, Inc. ............. 1,022,587
150,000 Hillenbrand Industries, Inc. ...... 7,687,500
97,500 Lancaster Colony Corp. ............ 3,802,500
220,000 Premark International, Inc. ....... 6,146,250
190,000 Snap-on, Inc. ..................... 7,445,625
===========
47,025,975
===========
Diversified Companies - 0.9%
170,000 Harnischfeger Industries, Inc. .... 5,950,000
35,000 * ITT Corp. ......................... 2,800,000
195,000 ITT Industries, Inc. .............. 6,045,000
===========
14,795,000
===========
Electrical and Electronic
Equipment & Services - 3.6%
99,400 AVX Corp. ......................... 2,025,275
220,000 Baldor Electric Co. ............... 5,018,750
185,000 Belden, Inc. ...................... 7,053,125
60,000 * Dupont Photomasks, Inc. ........... 1,755,000
70,200 General Electric Co. .............. 5,440,500
165,000 Harman International Industries, Inc. 6,455,625
155,000 Honeywell, Inc. ................... 10,859,687
42,500 * Jabil Circuit, Inc. ............... 1,601,719
134,800 * KLA-Tencor Corp. .................. 5,055,000
</TABLE>
44
<PAGE>
EVERGREEN
Growth & Income Fund
Schedule of Investments (continued)
January 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
Electrical and Electronic
Equipment & Services - continued
65,000 * Lam Research Corp. $ 1,482,813
72,500 Perkin Elmer Corp. 4,277,500
395,000 Sensormatic 6,764,375
Electronics Corp.
255,200 * Unitrode Corp. . 4,625,500
===========
62,414,869
===========
Finance &
Insurance - 5.1%
60,000 AFLAC, Inc. .... 3,266,250
97,000 Chubb Corp. .... 7,365,938
279,750 Edwards (A.G.), 10,595,531
Inc.
340,000 Federal Home Loan 15,130,000
Mortgage Corp.
290,000 Federal National
Mortgage
Association .... 17,907,500
190,000 Frontier Insurance 4,536,250
Group, Inc.
100,000 Hartford Financial
Services Group,
Inc. ........... 9,000,000
115,000 LaSalle Re 3,895,625
Holdings Ltd.
120,000 Lehman Brothers 6,517,500
Holdings, Inc.
67,500 Meadowbrook
Insurance Group,
Inc. ........... 1,953,281
106,000 Price (T.) Rowe & 6,863,500
===========
Associates, Inc.
87,031,375
===========
Food & Beverage
Products - 0.8%
45,000 Bestfoods ...... 4,387,500
11,250 * Corn Products 360,000
International,
Inc.
350,000 Darden 4,418,750
Restaurants, Inc.
50,000 * Dominick's 1,981,250
Supermarkets, Inc.
40,000 Sara Lee Corp. . 2,182,500
===========
13,330,000
===========
Forest
Products - 0.2%
120,000 Deltic Timber 3,435,000
===========
Corp.
Healthcare
Products &
Services - 10.8%
110,000 Abbott 7,789,375
Laboratories
100,000 American Home 9,543,750
Products Corp.
65,000 * Amgen, Inc. .... 3,250,000
15,000 Baxter 835,313
International,
Inc.
43,300 Beckman 1,864,606
Instruments, Inc.
110,000 * Elan Corp., 5,713,125
Plc-ADR
151,000 * First Health Group 7,191,375
Corp.
365,000 * Foundation Health 9,467,187
Systems, Inc.
267,750 * Health Management
Associates,
Inc. Cl. A ..... 6,409,266
206,000 * HEALTHSOUTH Corp. 4,622,125
24,000 Johnson & Johnson 1,606,500
325,000 * Lincare Holdings, 19,865,625
Inc.
60,000 Manor Care, Inc. . 2,081,250
400,000 McKesson Corp. . 19,150,000
42,350 * MedPartners, Inc. 420,853
20,000 Merck & Co., Inc. 2,345,000
99,200 Pfizer, Inc. ... 8,128,200
310,000 * Quorum Health 7,750,000
Group, Inc.
226,000 Schering-Plough 16,356,750
Corp.
225,000 Shared Medical 14,737,500
System Corp.
128,000 * Sybron 6,072,000
International
Corp.
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
Healthcare Products &
Services - continued
120,000 Tenet Healthcare $ 4,140,000
Corp.
95,000 * Vencor, Inc. ... 2,327,500
54,000 Warner-Lambert Co. 8,127,000
65,020 * Wellpoint Health
Networks, Inc.
Cl. A .......... 3,185,980
350,000 West Co., Inc. . 10,696,875
===========
183,677,155
===========
Industrial
Specialty Products
&
Services - 6.4%
137,500 AptarGroup, Inc. . 7,012,500
157,625 Autoliv, Inc. .. 5,309,992
200,000 Bemis Co., Inc. 8,625,000
150,000 Borg-Warner 8,034,375
Automotive, Inc.
42,000 Carpenter 1,824,375
Technology Corp.
50,900 Danaher Corp. .. 3,213,063
102,000 Dover Corp. .... 3,474,375
211,900 Flowserve Corp. 5,668,325
52,800 J & L Specialty 438,900
Steel, Inc.
411,300 JLG Industries, 5,526,844
Inc.
33,500 Magna Group, Inc. 1,961,844
Cl. A
23,650 Newmont Mining Corp. 674,025
594,000 Pittston Brink's 24,094,125
Group
284,000 * Strattec Security 7,774,500
Corp.+
235,000 Sundstrand Corp. . 12,792,812
15,000 Tecumseh Products 716,250
Co. Cl. A
125,000 * UCAR 4,437,500
International,
Inc.
361,300 * Unova, Inc. .... 5,871,125
25,000 Vulcan Materials Co. 2,462,500
===========
109,912,430
===========
Information
Services &
Technology - 2.9%
155,000 * Adaptec, Inc. .. 3,458,438
100,000 * Applied Materials, 3,281,250
Inc.
13,300 * Choicepoint, Inc. 601,825
525,000 Computer
Associates
International,
Inc. ........... 27,923,437
100,000 Hewlett-Packard 6,000,000
Co.
72,000 Intel Corp. .... 5,832,000
87,500 * Perceptron, Inc. . 1,968,750
===========
49,065,700
===========
Leisure &
Tourism - 0.2%
39,000 Disney Walt Co. 4,155,938
===========
(The)
Metal Products &
Services - 0.2%
185,000 * Steel Dynamics, 3,700,000
===========
Inc.
Oil/Energy - 4.2%
25,000 Anadarko Petroleum 1,475,000
Corp.
250,000 Berry Petroleum 3,875,000
Co. Cl. A
89,800 Cabot Oil & Gas 1,779,163
Corp.
45,000 Coastal Corp. .. 2,610,000
165,000 * Denbury Resources, 3,196,875
Inc.
160,000 * Houston 2,600,000
Exploration, Co.
80,300 Kerr-McGee Corp. . 5,028,788
139,500 Murphy Oil Corp. . 6,966,281
</TABLE>
45
<PAGE>
EVERGREEN
Growth & Income Fund
Schedule of Investments (continued)
January 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
Oil/Energy - continued
55,900 National Fuel Gas Co. ........... $ 2,571,400
425,000 * Oryx Energy Co. ................. 10,200,000
400,000 * Santa Fe Energy Resources, Inc. . 4,200,000
339,600 Southwestern Energy Co. ......... 3,735,600
100,000 Tosco Corp. ..................... 3,343,750
190,000 Transocean Offshore, Inc. ....... 7,552,500
63,520 Union Pacific Resource Group, Inc. 1,421,260
315,000 Union Texas Petroleum Holdings,
Inc. ............................ 5,965,312
174,000 Williams Companies, Inc. ........ 4,959,000
=============
71,479,929
=============
Oil Field Services - 2.5%
268,000 * Atwood Oceanics, Inc. ........... 11,055,000
63,140 Halliburton Co. ................. 2,837,354
15,500 Lufkin Industries, Inc. ......... 472,750
914,500 * R & B Falcon Corp. .............. 27,663,625
=============
42,028,729
=============
Paper & Packaging - 0.1%
75,000 Westvaco Corp. .................. 2,432,813
=============
Publishing, Broadcasting &
Entertainment - 6.6%
248,820 * American Radio Systems Corp.
Cl. A ........................... 14,307,150
84,000 * Chancellor Media Corp. .......... 2,887,500
49,805 Comcast Corp. ................... 1,559,519
270,000 * Emmis Broadcasting Corp. Cl. A .. 12,926,250
273,800 Gaylord Entertainment Co. ....... 8,539,137
425,000 * Jacor Communications, Inc. ...... 21,250,000
40,000 Knight-Ridder, Inc. ............. 2,202,500
275,000 * Lin Television Corp. ............ 15,056,250
15,000 McGraw-Hill Companies, Inc. ..... 1,047,188
43,000 Scripps (E.W.) Co. Cl. A ........ 2,074,750
185,000 TCA Cable TV, Inc. .............. 8,648,750
250,000 Time Warner, Inc. ............... 16,046,875
50,000 * U.S. West Media Group, Inc. ..... 1,484,375
1 * Viacom, Inc. Cl. A .............. 41
2,800 Washington Post Co., Cl. B ...... 1,363,600
95,000 * Young Broadcasting, Inc. Cl. A .. 3,859,375
=============
113,253,260
=============
Real Estate - 1.9%
40,000 AMB Property Corp. REIT ......... 980,000
20,000 Apartment Investment &
Management Co. Cl. A REIT ....... 742,500
60,000 Arden Realty Group , Inc. REIT .. 1,695,000
60,000 Berkshire Realty Co., Inc. REIT . 708,750
70,000 Brandywine Realty Trust REIT .... 1,680,000
35,000 CarrAmerica Realty Corp. REIT ... 1,025,937
20,000 CBL & Associates Properties, Inc.
REIT ............................ 493,750
26,100 * Choice Hotels, Inc. REIT ........ 396,394
78,000 Crescent Real Estate Equities, Inc.
REIT ............................ 2,739,750
75,000 Entertainment Properties Trust REIT 1,481,250
30,000 Gables Residential Trust REIT ... 819,375
34,000 Kilroy Realty Corp. REIT ........ 969,000
64,000 Kimco Realty Corp. REIT ......... 2,208,000
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
Real Estate - continued
85,000 Liberty Property Trust REIT ..... $ 2,305,625
40,000 Mack-Cali Realty Corp. REIT ..... 1,612,500
91,400 Patriot American Hospitality, Inc.
REIT ............................ 2,342,125
20,000 RFS Hotel Investors, Inc. REIT .. 370,000
160,000 * Servico, Inc. ................... 2,650,000
17,000 * Sunburst Hospitality Corp. ...... 151,938
94,600 Sunstone Hotel Investors, Inc. REIT 1,590,462
160,000 Weeks Corp. REIT ................ 4,990,000
=============
31,952,356
=============
Retailing & Wholesale - 0.9%
50,000 * Autozone, Inc. .................. 1,371,875
124,300 * Carson Pirie Scott & Co. ........ 6,339,300
199,600 * Cole National Corp. Cl. A ....... 6,611,750
33,100 Mercantile Stores Co., Inc. ..... 1,969,450
=============
16,292,375
=============
Telecommunication Services &
Equipment - 0.4%
168,000 * Aspect Telecommunications Corp. . 4,179,000
70,000 * Univision Communications, Inc.
Cl. A ........................... 2,668,750
=============
6,847,750
=============
Thrift Institutions - 0.0% (a)
29,000 Life Bancorp, Inc. .............. 982,375
=============
Transportation - 4.1%
542,200 * Atlas Air, Inc. ................. 12,199,500
350,000 Bombardier, Inc., Cl. B ......... 6,719,904
190,000 Burlington Northern Santa Fe .... 16,482,500
612,600 Kansas City Southern Industries,
Inc. ............................ 18,339,712
140,000 + Petroleum Helicopters, Inc. ..... 3,010,000
113,500 Southwest Airlines Co. .......... 2,958,094
170,000 Union Pacific Corp. ............. 10,200,000
=============
69,909,710
=============
Utilities-Electric - 1.4%
64,000 Commonwealth Energy System ...... 2,200,000
70,000 Houston Industries, Inc. ........ 1,828,750
140,900 New York State Electric & Gas Corp. 4,966,725
40,000 Texas Utilities Co. ............. 1,645,000
400,000 TNP Enterprises, Inc. ........... 13,375,000
=============
24,015,475
=============
Utilities-Telephone - 1.8%
160,000 * AirTouch Communications, Inc. ... 7,020,000
62,000 AT&T Corp. ...................... 3,882,750
100,000 Century Telephone Enterprises, Inc. 5,275,000
200,000 GTE Corp. ....................... 10,912,500
75,000 MCI Communications Corp. ........ 3,482,812
=============
30,573,062
=============
Total Common Stocks
(cost $951,752,639).............. 1,356,549,302
-------------
</TABLE>
46
<PAGE>
EVERGREEN
Growth & Income Fund
Schedule of Investments (continued)
January 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
PREFERRED STOCKS - 0.0% (a)
Healthcare Products &
Services - 0.0% (a)
130,000 * Fresenius National Med Care, Inc.
Ser. D ........................ $7,149
======
Total Preferred Stocks
(cost $22,740)................. 7,149
======
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
CORPORATE BONDS - 0.1%
Energy - 0.0% (a)
Columbia Gas Systems, Inc. (The)
$ 106,000 6.39%, 11/28/00 ................... 107,310
101,000 6.61%, 11/28/02 ................... 103,687
101,000 6.80%, 11/28/05 ................... 104,671
101,000 7.05%, 11/28/07 ................... 105,610
101,000 7.32%, 11/28/10 ................... 106,490
101,000 7.42%, 11/28/15 ................... 105,314
101,000 7.62%, 11/28/25 ................... 105,645
=========
738,727
=========
Publishing, Broadcasting &
Entertainment - 0.1%
Time Warner, Inc.
123,000 7.975%, 8/15/04 ................... 133,047
247,000 8.11%, 8/15/06 .................... 271,543
247,000 8.18%, 8/15/07 .................... 274,151
92,000 Viacom, Inc.
8.00%, 7/7/06 ...................... 94,300
=========
773,041
=========
Total Corporate Bonds
(cost $1,389,465)................... 1,511,768
=========
SHORT-TERM INVESTMENTS - 20.6%
Commercial Paper - 17.7%
12,350,000 American Home Products, Inc.
5.49%, 2/27/98 ..................... 12,301,032
20,300,000 Banner Receivables Corp.
5.58%, 3/9/98 ...................... 20,186,726
21,000,000 Bell Atlantic Financial Services, Inc.
5.55%, 2/5/98 ...................... 20,987,050
3,700,000 BMW U.S. Capital Corp.
5.45%, 3/17/98 ..................... 3,675,354
15,000,000 BTR Dunlop Finance, Inc.
5.75%, 2/9/98 ...................... 14,980,833
14,700,000 Daimler-Benz North America Corp.
5.50%, 3/9/98 ...................... 14,619,150
8,500,000 Duke University
5.80%, 2/18/98 ..................... 8,476,720
8,400,000 Dun & Bradstreet Corp.
5.80%, 2/10/98 ..................... 8,387,820
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C> <C>
SHORT-TERM INVESTMENTS - continued
Commercial
Paper - continued
$ 4,700,000 Eiger Capital Corp.
5.48%, 3/6/98 ....................... $ 4,676,390
2,650,000 Golden Managers Acceptance Corp.
5.48%, 2/24/98 ...................... 2,640,722
2,200,000 Great Lakes Chemical Corp.
6.02%, 2/2/98 ....................... 2,199,632
20,900,000 Holy Cross Health System Corp.
5.80%, 2/2/98 ....................... 20,896,633
26,005,000 Market Street Funding Corp.
6.00%, 2/3/98 ....................... 25,996,333
15,466,000 Massachusetts College of Pharmacy
and Allied Health Services
5.95%, 2/12/98 ...................... 15,437,882
5,700,000 Montana Blanc Capital Corp.
5.48%, 3/13/98 ...................... 5,665,293
15,200,000 Monte Rosa Capital Corp.
5.83%, 2/6/98 ....................... 15,187,692
19,000,000 Old Line Funding Corp.
5.95%, 2/6/98 ....................... 18,984,299
2,200,000 Penney (J. C.) Funding Corp.
5.48%, 2/19/98 ...................... 2,193,972
17,400,000 PHH Corp.
5.50%, 2/25/98 ...................... 17,336,200
3,225,000 Sharp Electronics Corp.
5.85%, 2/20/98 ...................... 3,215,043
11,000,000 Sothebys, Inc.
5.62%, 2/13/98 ...................... 10,979,393
10,000,000 Transamerica Finance Corp.
5.49%, 2/17/98 ...................... 9,975,600
20,000,000 Trident Capital Finance, Inc.
5.50%, 2/26/98 ...................... 19,923,611
1,300,000 Twin Towers, Inc.
5.50%, 2/19/98 ...................... 1,296,425
21,500,000 Windmill Funding Corp.
5.52%, 3/6/98 ....................... 21,391,210
==============
301,611,015
==============
Government Agency Notes &
Bonds - 2.9%
50,000,000 Federal Home Loan Mortgage Corp.
5.44%, 2/20/98 ...................... 49,856,444
==============
Total Short-Term Investments
(cost $351,467,459).................. 351,467,459
==============
Total Investments -
(cost $1,304,632,303)..... 100.1% 1,709,535,678
Other Assets and
Liabilities - Net ........ ( 0.1) (2,147,034)
===== ==============
Net Assets ................ 100.0% $1,707,388,644
===== ==============
</TABLE>
* Non-income producing securities.
+ Investment in a non-controlled affiliate. The Fund owns over 5% of the
outstanding voting shares of Strattec Security Corp. and Petroleum
Helicopters, Inc. with a cost basis of $4,202,147 and $2,392,500,
respectively, at January 31, 1998. The Fund earned $7,000 of income from
Petroleum Helicopters, Inc. during the period ended January 31, 1998.
(a) Less than one-tenth of a percent.
Summary of Abbreviations:
ADR American Depository Receipts
REIT Real Estate Investment Trust
See Combined Notes to Financial Statements.
47
<PAGE>
EVERGREEN
Income and Growth Fund
Schedule of Investments
January 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - 70.4%
Automotive Equipment &
Manufacturing - 1.3%
250,900 Dana Corp. ......................... $12,576,363
===========
Banks - 16.5%
17,850 AmSouth Bancorp .................... 963,900
2,000,000 Australian & New Zealand Banking
Group Ltd. ......................... 13,517,070
142,000 BancorpSouth, Inc. ................. 6,203,625
120,100 Bankers Trust Corp. ................ 12,527,931
192,500 + CB Bancshares, Inc. ................ 7,675,938
24,850 CCB Financial Corp. ................ 2,539,359
1,000,000 Commonwealth Bank of Australia ..... 12,509,459
30,000 Deposit Guaranty Corp. ............. 1,548,750
77,606 F&M National Corp. ................. 2,565,848
300,300 First Hawaiian, Inc. ............... 10,923,412
3,000 First of America Bank Corp. ........ 211,875
20,000 First Tennessee National Corp. ..... 1,177,500
120,750 First Virginia Banks, Inc. ......... 5,569,594
11,250 Firstbank of Illinois Co. .......... 427,500
8,200 FirstMerit Corp. ................... 232,675
150,000 Fleet Financial Group, Inc. ........ 10,743,750
50,326 Hudson Chartered Bancorp, Inc. ..... 1,000,229
212,940 Interchange Financial Services
Corp. .............................. 6,148,643
175,900 Magna Group, Inc. .................. 7,926,494
18,000 Mercantile Bancorp, Inc. ........... 909,000
180,000 National Australia Bank, Ltd. ...... 12,420,000
268,337 ONBANCorp, Inc. .................... 18,716,506
15,625 One Valley Bancorp of West
Virginia, Inc. ..................... 547,852
79,254 Second Bancorp, Inc. ............... 1,971,443
74,250 Susquehanna Bancshares, Inc. ....... 2,682,281
3,500 United Bankshares, Inc. ............ 164,063
107,320 USBancorp, Inc. .................... 7,619,720
1,930,402 Westpac Banking Corp., Ltd. ........ 13,231,937
===========
162,676,354
===========
Capital Goods - 1.2%
246,500 Caterpillar, Inc. .................. 11,832,000
===========
Chemical & Agricultural
Products - 0.4%
60,000 Du Pont (E. I.) De Nemours & Co. ... 3,397,500
96,574 Incitec, Ltd. ...................... 377,321
===========
3,774,821
===========
Diversified Companies - 0.7%
325,000 Tomkins Plc, ADR ................... 7,028,125
===========
Electrical Equipment &
Services - 1.1%
5,000 Hubbell, Inc. Cl. A ................ 236,250
110,900 Hubbell, Inc. Cl. B ................ 5,551,931
98,800 Thomas & Betts Corp. ............... 4,878,250
===========
10,666,431
===========
Finance & Insurance - 3.3%
50,000 Chubb Corp. ........................ 3,796,875
363,000 IPC Holdings Ltd. .................. 10,844,625
100,000 LaSalle Re Holdings Ltd. ........... 3,387,500
195,800 Ohio Casualty Corp. ................ 8,872,187
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
Finance & Insurance - continued
143,200 Provident Co., Inc. ................ $ 5,208,900
===========
32,110,087
===========
Food & Beverage Products - 0.6%
60,000 Sara Lee Corp. ..................... 3,273,750
91,700 Sbarro, Inc. ....................... 2,687,956
===========
5,961,706
===========
Healthcare Products &
Services - 5.1%
53,000 * ADAC Laboratories .................. 1,119,625
210,000 American Home Products Corp. ....... 20,041,875
200,000 Baxter International, Inc. ......... 11,137,500
59,400 Bristol-Myers Squibb Co. ........... 5,921,437
100,000 Glaxo Wellcome Plc, ADR ............ 5,381,250
47,500 Shared Medical System Corp. ........ 3,111,250
106,800 U.S. Surgical Corp. ................ 3,050,475
8,200 Zeneca Group Plc, ADR .............. 976,313
===========
50,739,725
===========
Industrial Specialty Products &
Services - 0.5%
15,000 Fisher Scientific International, Inc. 749,063
200,000 Pall Corp. ......................... 3,987,500
===========
4,736,563
===========
Information Services &
Technology - 0.5%
50,000 International Business Machines
Corp. .............................. 4,934,375
===========
Metal Products & Services - 0.3%
200,601 Freeport McMoRan Copper & Gold,
Inc. Cl. A ......................... 2,958,865
===========
Oil/Energy - 7.1%
250,000 Amoco Corp. ........................ 20,343,750
176,100 Consolidated Natural Gas Co. ....... 9,564,431
463,200 Equitable Resources, Inc. .......... 15,227,700
190,000 Mobil Corp. ........................ 12,943,750
10,000 National Fuel Gas Co. .............. 460,000
184,429 * Santa Fe Energy Resources, Inc. .... 1,936,505
189,009 Texaco, Inc. ....................... 9,840,281
===========
70,316,417
===========
Publishing, Broadcasting &
Entertainment - 0.1%
50,000 Reader's Digest Association, Inc.
(The) .............................. 1,196,875
===========
Real Estate - 6.3%
190,000 Apartment Investment &
Management Co. Cl. A REIT .......... 7,053,750
55,000 Burnham Pacific Properties, Inc. REIT 821,563
324,900 Equity Residential Properties Trust
REIT ............................... 16,610,512
412,700 Gables Residential Trust REIT ...... 11,271,869
399,312 Horizon Group, Inc. REIT ........... 4,841,658
484,600 Kranzco Realty Trust REIT .......... 9,328,550
260,050 Post Property, Inc. REIT ........... 9,995,672
34,800 Prentiss Properties Trust REIT ..... 948,300
44,000 Sunstone Hotel Investors, Inc. REIT 739,750
</TABLE>
48
<PAGE>
EVERGREEN
Income and Growth Fund
Schedule of Investments (continued)
January 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
Real Estate - continued
76,500 Western Investment Real Estate Trust
REIT ............................... $ 1,051,875
===========
62,663,499
===========
Retailing & Wholesale - 1.2%
200,000 Mercantile Stores Co., Inc. ........ 11,900,000
===========
Telecommunication Services &
Equipment - 0.7%
200,000 Compania de Telecom de Chile SA,
ADR ................................ 4,812,500
5,000 Portugal Telecom SA, ADR ........... 254,375
95,000 Telefonica del Peru SA, ADR ........ 1,864,375
===========
6,931,250
===========
Thrift Institutions - 0.8%
82,782 CFX Corp. .......................... 2,354,113
30,800 Eagle Financial Corp. .............. 1,558,288
56,000 First Essex Bancorp, Inc. .......... 1,162,000
120,000 Jacksonville Bancorp, Inc. ......... 2,400,000
===========
7,474,401
===========
Utilities-Electric - 13.1%
7,100 Black Hills Corp. .................. 233,413
40,500 Central Hudson Gas & Electric Corp. 1,612,406
239,000 FPL Group, Inc. .................... 13,712,625
197,300 Houston Industries, Inc. ........... 5,154,462
86,600 IES Industries, Inc. ............... 3,177,138
342,800 LG & E Energy Corp. ................ 8,012,950
1,177,100 Long Island Lighting Co. ........... 34,283,037
244,800 Northern State Power Corp. ......... 13,127,400
580,000 PP&L Resources, Inc. ............... 12,687,500
275,000 Public Service Enterprise Group, Inc. 8,525,000
1,000,000 Scottish Power Plc, ADR ............ 8,578,793
101,300 Texas Utilities Co. ................ 4,165,963
320,200 TNP Enterprises, Inc. .............. 10,706,687
175,500 WPL Holdings, Inc. ................. 5,626,969
===========
129,604,343
===========
Utilities-Gas - 2.2%
73,300 Chesapeake Utilities Corp. ......... 1,447,675
91,700 New Jersey Resources Corp. ......... 3,255,350
60,000 Oneok, Inc. ........................ 2,051,250
368,400 Peoples Energy Corp. ............... 13,907,100
29,300 Piedmont Natural Gas Co., Inc. ..... 888,156
10,000 South Jersey Industries, Inc. ...... 301,250
8,300 Yankee Energy System, Inc. ......... 209,056
===========
22,059,837
===========
Utilities-Telephone - 3.2%
265,100 Frontier Corp. ..................... 6,909,169
350,000 GTE Corp. .......................... 19,096,875
116,000 U.S. West Communications Group,
Inc. ............................... 5,582,500
===========
31,588,544
===========
Other Securities - 4.2% ............ 41,999,776
===========
Total Common Stocks
(cost $579,812,459)................. 695,730,357
===========
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
CONVERTIBLE PREFERRED - 21.7%
Banks - 0.6%
210,000 National Australia Bank, Ltd.
7.875%, Series UNIT ................ $ 6,011,250
===========
Chemical & Agricultural
Products - 1.7%
485,000 Merrill Lynch & Co., Inc.
6.25%, Series IGL, STRYPES
(Exchangeable for IMC Global,
Inc. common stock) ................. 16,853,750
===========
Communication Systems &
Services - 2.1%
500,000 AirTouch Communications, Inc.
6.00%, Series B .................... 18,750,000
15,000 Worldcom, Inc.
8.00%, DECS ........................ 1,876,875
===========
20,626,875
===========
Diversified Companies - 0.2%
35,000 Corning, Inc.
6.00%, MIPS 2,019,063
===========
Finance & Insurance - 5.1%
100,000 Aetna, Inc.
6.25%, Series C 7,568,750
205,000 Allstate Corp. (The)
6.76%, DECS (Exchangeable for
PMI Group, Inc. common stock) 11,544,062
100,000 American General Corp.
$3.00, Series A, MIPS 7,300,000
270,000 Frontier Financing Trust
6.25%, TOPRS 16,267,500
100,000 St. Paul Capital
6.00%, MIPS 7,581,250
===========
50,261,562
===========
Food & Beverage Products - 4.0%
753,000 Wendys Financing I
5.00%, Series A, TECONS 39,814,875
===========
Metal Products & Services - 1.2%
212,800 Freeport McMoRan Copper &
Gold, Inc. 7.00%, EDS .............. 4,482,100
100,000 Timet Capital Trust I
6.625%, BUCS, 144A ................. 4,750,000
150,000 Worthington Industries, Inc.
7.25%, DECS (Exchangeable for
Rouge Steel Co. common stock) ...... 2,137,500
===========
11,369,600
===========
Oil/Energy - 0.4%
50,000 Callon Petroleum Co.
8.50%, Series A .................... 1,903,125
48,000 Nuevo Energy Co. 5.75%, Series A,
TECONS ............................. 2,349,000
===========
4,252,125
===========
</TABLE>
49
<PAGE>
EVERGREEN
Income and Growth Fund
Schedule of Investments (continued)
January 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
CONVERTIBLE PREFERRED - continued
Oil Field Services - 0.7%
40,000 EVI, Inc.
5.00%, 144A ................. $ 1,715,200
100,000 Hvide Capital Trust
6.50%, 144A ................. 4,788,000
===========
6,503,200
===========
Publishing, Broadcasting &
Entertainment - 2.3%
220,000 * Houston Industries, Inc.
7.00%, ACES (exchangeable for
Time Warner, Inc. common stock) 12,980,000
303,000 Merrill Lynch & Co., Inc.
6.00% STRYPES
(exchangeable for Cox
Communications, Inc. common
stock) ...................... 9,582,375
===========
22,562,375
===========
Telecommunication Services &
Equipment - 0.7%
150,000 Qualcomm Financial Trust I
5.75% ....................... 7,312,500
===========
Transportation - 0.4%
68,400 CNF Trust I
5.00%, Series A, TECONS ..... 4,360,500
===========
Utilities-Gas - 0.7%
200,000 MCN Corp.
8.75%, PRIDES ............... 6,475,000
===========
Utilities-Telephone - 1.6%
315,000 Philippine Long Distance
Telephone Co.,
7.00%, Series III ........... 15,868,125
===========
Total Convertible Preferred
(cost $204,933,328).......... 214,290,800
===========
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
CONVERTIBLE DEBENTURES - 5.9%
Banks - 0.3%
$ 1,500,000 Magna Group, Inc.
8.75%, 11/1/98 ... 2,720,700
=========
Business Equipment &
Services - 1.2%
HMT Technology Corp.
3,500,000 5.75%, 1/15/04, 2,852,500
144A
400,000 5.75%, 1/15/04 .. 326,000
750,000 Personnel Group of
America, Inc.
5.75%, 7/1/04, 144A 915,000
8,000,000 Quantum Corp.
7.00%, 8/1/04 .... 7,790,000
250,000 Tecnomatix
Technologies Ltd.
5.25%, 2/15/98, 144A 220,325
=========
12,103,825
==========
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C> <C>
CONVERTIBLE DEBENTURES - continued
Electrical Equipment &
Services - 2.1%
$ 9,700,000 Kent Electronics Corp.
4.50%, 9/1/04 ........................... $ 8,148,000
9,700,000 Photronics, Inc.
6.00%, 6/1/04 ........................... 10,815,500
1,000,000 Sci Systems, Inc.
5.00%, 5/1/06, 144A ..................... 1,862,500
============
20,826,000
============
Industrial Specialty Products &
Services - 0.3%
2,000,000 Solectron Corp.
6.00%, 3/1/06, 144A ..................... 2,840,000
============
Information Services &
Technology - 0.3%
3,000,000 Adaptec, Inc.
4.75%, 2/1/04, 144A ..................... 2,613,900
============
Oil/Energy - 0.1%
1,500,000 Swift Energy Co.
6.25%, 11/15/06 ......................... 1,470,000
============
Oil Field Services - 1.6%
Key Energy Group, Inc.
5,750,000 5.00%, 9/15/04, 144A ................... 4,844,375
1,250,000 7.00%, 7/1/03, 144A .................... 2,543,750
Offshore Logistics, Inc.
3,775,000 6.00%, 12/15/03, 144A .................. 3,926,000
2,000,000 6.00%, 12/15/03 ........................ 2,080,000
2,000,000 Seacor Holdings, Inc.
5.375%, 11/15/06 ........................ 2,060,000
============
15,454,125
============
Total Convertible Debentures
(cost $58,237,571)....................... 58,028,550
============
SHORT-TERM INVESTMENTS - 1.4%
Government Agency Notes &
Bonds - 1.4%
Federal Home Loan Mortgage
Corp.
200,000 5.38%, 2/12/98 ......................... 199,671
9,850,000 5.40%, 2/27/98 ......................... 9,811,585
Federal National Mortgage
Association
2,350,000 5.34%, 2/18/98 ......................... 2,344,074
550,000 5.37%, 2/17/98 ......................... 548,688
400,000 5.39%, 2/10/98 ......................... 399,461
============
13,303,479
============
Total Short-Term Investments
(cost $13,303,479)....................... 13,303,479
============
Total Investments -
(cost $856,286,837).......... 99.4% 981,353,186
Other Assets and
Liabilities - Net ........... 0.6 6,109,096
===== ============
Net Assets ................... 100.0% $987,462,282
===== ============
</TABLE>
50
<PAGE>
EVERGREEN
Income and Growth Fund
Schedule of Investments (continued)
January 31, 1998 (Unaudited)
* Non-income producing securities.
+ Investment in a non-controlled affiliate. The Fund owns over 5% of the
outstanding voting shares of CB Bancshares, Inc. The Fund has a cost basis
of $6,024,625 in this issue at January 31, 1998. The Fund earned $19,250 of
income from this investment during the period ended January 31, 1998.
Summary of Abbreviations:
ACES Automatically Convertible Equity Securities
ADR American Depository Receipts
BUCS Beneficial Unsecured Convertible Securities
DECS Dividend Enhanced Convertible Stock
EDS Exchangable Depositary Shares
GDS Global Depositary Shares
MIPS Monthly Income Preferred Shares
PRIDES Preferred Redeemable Increased Dividend Equity Securities
REIT Real Estate Investment Trust
STRYPES Structured Yield Product Exchangeable for Stock
TECONS Term Convertible Shares
TOPRS Trust Originated Preferred Securities
144A Rule 144A securities are restricted as to resale to qualified
institutional investors.
See Combined Notes to Financial Statements.
51
<PAGE>
EVERGREEN
Small Cap Equity Income Fund
Schedule of Investments
January 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - 66.1%
Aerospace &
Defense - 1.5%
87,000 Curtiss Wright Corp. $3,066,750
==========
Banks .8%
58,750 ABC Bancorp ......... 1,145,625
31,500 Amcore Financial, Inc. 771,750
3,000 BancorpSouth, Inc. .. 131,063
10,000 Bank of Essex ....... 185,000
3,800 Britton & Koontz 82,650
Capital Corp.
28,800 BSB Bancorp, Inc. ... 885,600
7,000 California State Bank . 294,875
2,500 Carrollton Bancorp .. 95,000
25,000 CB Bancshares, Inc. . 996,875
32,550 Commercial Bankshares, 740,512
Inc.
8,200 Community Bancshares, 216,275
Inc.
2,500 First Midwest Bancorp, 99,375
Inc.
30,000 First Oak Brook 1,267,500
Bancshares, Inc. Cl. A
53,761 First State Bancorp . 1,132,341
14,620 Hudson Chartered 290,572
Bancorp, Inc.
30,000 Independent Bancshares, 506,250
Inc.
13,962 Interchange Financial 403,153
Services Corp.
15,000 James River Bankshares, 307,500
Inc.
800 Northern States 100,000
Financial Corp.
3,125 One Valley Bancorp of
West Virginia,
Inc. ................ 109,570
19,668 Pacific Century 419,174
Financial Corp.
16,000 South Alabama Bancorp, 400,000
Inc.
8,160 State Financial 244,800
Services Corp. Cl. A
7,500 Susquehanna Bancshares, 270,938
Inc.
11,600 Union Bankshares Corp. 469,800
==========
11,566,198
==========
Building, Construction
& Furnishings .8%
28,000 La-Z-Boy Chair Co. .. 1,216,250
30,100 Shelby Williams 475,956
==========
Industries, Inc.
1,692,206
==========
Business Equipment &
Services - 0.2%
21,400 American Business 428,000
==========
Products, Inc.
Capital Goods - 0.3%
18,300 Manitowoc, Inc. ..... 622,200
==========
Chemical & Agricultural
Products - 1.1%
1,000 Hawkins Chemical, Inc. 10,000
50,000 Learonal, Inc. ...... 1,415,625
25,500 Stepan Co. .......... 710,812
==========
2,136,437
==========
Consumer Products &
Services - 8.1%
200,000 CPI Corp. ........... 4,812,500
50,000 General Housewares 531,250
Corp.
191,440+ Knape & Vogt 4,139,890
Manufacturing Co.
50,300 Mikasa, Inc. Cl. B .. 691,625
20,000 Polaris Industries, 602,500
Inc.
17,800 Russ Berrie & Co., Inc. 457,237
50,000 Stride Rite Corp. ... 568,750
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
Consumer Products &
Services - continued
189,600 York Group, Inc. .... $4,313,400
==========
16,117,152
==========
Diversified
Companies - 2.4%
112,000 Mathews International 4,795,000
==========
Corp. Cl. A
Electrical Equipment &
Services - 1.1%
36,200 BGS Systems, Inc. ... 1,321,300
37,500 Computer Language 836,719
Research, Inc. ==========
2,158,019
==========
Finance &
Insurance - 4.4%
26,600 Arthur J. Gallagher &
Co. ................. 984,200
80,000 FFVA Financial Corp. 2,835,000
5,000 LaSalle Re Holdings
Ltd. ............... 169,375
122,500 Pxre Corp. .......... 4,149,687
16,000 Trenwick Group, Inc. 556,000
==========
8,694,262
==========
Food & Beverage
Products - 1.5%
75,900 Bridgford Foods Corp. . 929,775
20,000 Lance, Inc. ......... 470,000
16,000 Luby's Cafeterias, Inc. 256,000
76,100 Piccadilly Cafeterias, 799,050
Inc.
8,000 Schultz Sav O Stores, 122,000
Inc.
39,400 Smithfield Companies, Inc. 472,800
==========
3,049,625
==========
Healthcare Products &
Services - 0.2%
15,000 West Co., Inc. (The) 458,438
==========
Industrial Specialty
Products & Services .8%
24,500 Badger Meter, Inc. 851,375
72,297 Flowserve Corp. 1,933,945
84,100 Gorman Rupp Co. 1,639,950
18,700 Met-Pro Corp. 289,850
42,000 Minuteman 438,375
International, Inc.
9,000 Oilgear Co. 128,250
55,800 Raven Industries, Inc. 1,262,475
46,400 Spartech Corp. ...... 748,200
8,000 Woodward Governor Co. . 254,000
==========
7,546,420
==========
Machinery-Diversified - 1.2%
65,800 Hardinge Brothers, Inc. 2,171,400
5,800 Tennant Co. ......... 205,900
==========
2,377,300
==========
Oil / Energy - 6.6%
106,000 Berry Petroleum Co. Cl. A 1,643,000
155,500 Cabot Oil & Gas Corp. 3,080,844
Cl. A
105,600 Penn Virginia Corp. . 2,970,000
123,000 Quaker State Corp. .. 1,675,875
270,000 Southwestern Energy Co. 2,970,000
67,600 Wiser Oil Co. ....... 887,250
==========
13,226,969
==========
</TABLE>
52
<PAGE>
EVERGREEN
Small Cap Equity Income Fund
Schedule of Investments (continued)
January 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
Oil Field Services - 1.9%
121,200 Lufkin Industries, Inc. .............. $ 3,696,600
===========
Paper & Packaging - 0.0% (a)
3,550 Tuscarora, Inc. ...................... 58,131
===========
Real Estate - 6.4%
86,291 Bradley Real Estate, Inc. REIT ....... 1,774,359
10,000 Brandywine Realty Trust REIT ......... 240,000
80,000 Eastgroup Properties, Inc. REIT ...... 1,680,000
23,000 Equity Residential Properties Trust REIT 1,175,875
95,000 Gables Residential Trust REIT ........ 2,594,687
60,000 Innkeepers USA Trust REIT ............ 918,750
1,000 Kranzco Realty Trust REIT ............ 19,250
30,000 Parkway Properties, Inc. REIT ........ 1,023,750
47,540 Post Property, Inc. REIT ............. 1,827,319
22,500 Sovran Self Storage, Inc. REIT ....... 691,875
4,000 Summit Properties, Inc. REIT ......... 80,500
50,000 Sunstone Hotel Investors, Inc. REIT .. 840,625
===========
12,866,990
===========
Telecommunication Services &
Equipment - 0.3%
126,000 Rohn Industries, Inc. ................ 661,500
===========
Textile & Apparel - 1.0%
120,200 Superior Surgical Manufacturing Co.,
Inc. ................................. 1,893,150
===========
Thrift Institutions - 4.6%
14,000 Cenfed Financial Corp. ............... 556,500
6,000 First Essex Bancorp, Inc. ............ 124,500
4,000 First Financial Holdings, Inc. ....... 202,000
16,000 First Palm Beach Bancorp, Inc. ....... 592,000
211,000 Horizon Financial Corp. .............. 3,639,750
38,000 Jacksonville Bancorp, Inc. ........... 760,000
30,000 Life Bancorp, Inc. ................... 1,016,250
24,000 Maryland Federal Bancorp, Inc. ....... 738,000
92,000 Virginia Beach Federal Financial Corp. . 1,633,000
===========
9,262,000
===========
Utilities - Electric - 2.8%
18,300 Interstate Power Co. ................. 637,069
124,100 Madison Gas & Electric Co. ........... 2,730,200
26,000 Northwestern Public Service Co. ...... 576,875
33,000 Otter Tail Power Co. ................. 1,241,625
12,000 TNP Enterprises, Inc. ................ 401,250
===========
5,587,019
===========
Utilities - Gas - 6.9%
34,200 Chesapeake Utilities Corp. ........... 675,450
30,000 Connecticut Energy Corp. ............. 815,625
80,000 CTG Resources, Inc. .................. 1,915,000
64,800 Delta Natural Gas Co., Inc. .......... 1,166,400
40,000 Eastern Enterprises .................. 1,655,000
27,400 NUI Corp. ............................ 732,950
22,600 Providence Energy Corp. .............. 500,025
76,600 Public Service Co. of North Carolina,
Inc. ................................. 1,603,813
1,000 South Jersey Industries, Inc. ........ 30,125
56,000 Southwest Gas Corp. .................. 997,500
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
Utilities - Gas - continued
85,000 UGI Corp. ............................ $ 2,406,562
50,000 Yankee Energy System, Inc. ........... 1,259,375
===========
13,757,825
===========
Utilities - Telephone - 0.8%
44,700 Hickory Tech Corp. ................... 1,614,788
===========
Other Securities - 2.4% .............. 4,776,519
===========
Total Common Stocks
(cost $121,784,618)................... 132,109,498
===========
CONVERTIBLE PREFERRED - 5.7%
Finance & Insurance - 2.2%
12,000 American Heritage Life Investment
Corp.
8.50%, PRIDES ........................ 718,500
60,000 Frontier Financing Trust
6.25%, TOPRS ......................... 3,615,000
===========
4,333,500
===========
Metal Products & Services - 0.9%
118,000 Worthington Industries, Inc.
7.25%, DECS (exchangeable for
Rouge Steel Co. common stock) ........ 1,681,500
===========
Oil/Energy - 0.3%
16,000 Callon Petroleum Co.
8.50%, Series A ...................... 609,000
===========
Oil Field Services - 2.3%
40,000 Hvide Capital Trust
6.50%, 144A .......................... 1,915,200
57,000 Hvide Capital Trust
6.50% ................................ 2,729,160
===========
4,644,360
===========
Total Convertible Preferred
(cost $12,382,375).................... 11,268,360
===========
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
CONVERTIBLE DEBENTURES - 15.2%
Banks - 0.4%
$ 700,000 First State Bancorp
7.50%, 4/30/17 ........ 882,000
===========
Building, Construction &
Furnishings - 1.5%
2,500,000 Eagle Hardware & Garden,
Inc.
6.25%, 3/15/01 ........ 2,956,250
===========
Business Equipment &
Services - 1.2%
2,600,000 HMT Technology Corp.
5.75%, 1/15/04 ........ 2,119,000
200,000 Personnel Group of
America, Inc.
5.75%, 7/1/04, 144A ... 244,000
===========
2,363,000
===========
Electrical Equipment &
Services - 1.7%
3,050,000 Photronics, Inc.
6.00%, 6/1/04 ......... 3,400,750
===========
</TABLE>
53
<PAGE>
EVERGREEN
Small Cap Equity Income Fund
Schedule of Investments (continued)
January 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C> <C>
CONVERTIBLE DEBENTURES - continued
Healthcare Products &
Services - 0.2%
$ 480,000 Meridian Diagnostics, Inc.
7.00%, 9/1/06 ....................... $ 436,800
============
Industry Specialty Products &
Services - 0.4%
610,000 Robbins & Myers, Inc.
6.50%, 9/1/03 ....................... 793,000
============
Leisure & Tourism - 3.4%
3,000,000 Family Golf Centers, Inc.
5.75%, 10/15/04, 144A ............... 3,345,000
3,370,000 Speedway Motorsports, Inc.
5.75%, 9/30/03 ...................... 3,365,788
============
6,710,788
============
Oil Field Services - 4.8%
Key Energy Group, Inc.
3,250,000 5.00%, 9/15/04, 144A ............... 2,738,125
250,000 7.00%, 7/1/03, 144A ................ 508,750
Offshore Logistics, Inc.
1,425,000 6.00%, 12/15/03, 144A .............. 1,482,000
1,750,000 6.00%, 12/15/03 .................... 1,820,000
3,000,000 Seacor Holdings, Inc.
5.375%, 11/15/06 ................... 3,090,000
============
9,638,875
============
Retailing & Wholesale - 1.6%
Central Garden & Pet Co.
500,000 6.00%, 11/15/03, 144A .............. 637,500
2,000,000 6.00%, 11/15/03 .................... 2,550,000
============
.................................... 3,187,500
============
Total Convertible Debentures
(cost $30,493,999)................... 30,368,963
============
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C> <C>
SHORT-TERM INVESTMENTS - 11.5%
Government Agency Notes &
Bonds - 11.5%
$ 3,570,000 Federal Home Loan Bank
5.37%, 2/20/98 ...................... $ 3,559,882
Federal Home Loan Mortgage Corp.
2,955,000 5.38%, 2/12/98 ..................... 2,950,142
2,070,000 5.38%, 2/20/98 ..................... 2,064,123
1,200,000 5.39%, 2/13/98 ..................... 1,197,844
1,350,000 5.40%, 2/27/98 ..................... 1,344,735
Federal National Mortgage Association
720,000 5.34%, 2/18/98 ..................... 718,184
1,255,000 5.37%, 2/17/98 ..................... 1,252,005
2,470,000 5.38%, 2/9/98 ...................... 2,467,047
840,000 5.39%, 2/10/98 ..................... 838,868
785,000 5.41%, 2/19/98 ..................... 782,876
5,900,000 5.42%, 2/27/98 ..................... 5,876,905
============
23,052,611
============
Total Short-Term Investments
(cost $23,052,611)................... 23,052,611
============
Total Investments -
(cost $187,713,603)......... 98.5% 196,799,432
Other Assets and
Liabilities - Net .......... 1.5 3,028,814
===== ============
Net Assets ................. 100.0% $199,828,246
===== ============
</TABLE>
* Non-income producing securities.
+ Investment in a non-controlled affiliate. The Fund owns over 5% of the
outstanding voting shares of Knape & Vogt Manufacturing Co. The Fund has a
cost basis of $3,959,237 in this issue at January 31, 1998. The Fund earned
$28,156 of income from this investment during the period ended January 31,
1998.
(a) Less than one-tenth of a percent.
Summary of Abbreviations:
DECS Dividend Enhanced Convertible Stock
PRIDES Preferred Redeemable Increased Dividend Equity Securities
REIT Real Estate Investment Trust
TOPRS Trust Originated Preferred Securities
144A Rule 144A securities are restricted as to resale to qualified
institutional investors.
See Combined Notes to Financial Statements.
54
<PAGE>
EVERGREEN
Utility Fund
Schedule of Investments
January 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - 79.6%
Banks - 2.5%
40,000 BankBoston Corp. .................. $ 3,580,000
============
Oil/Energy - 5.2%
100,000 Enron Corp. ....................... 4,143,750
75,000 Sonat, Inc. ....................... 3,276,563
============
7,420,313
============
Real Estate - 2.6%
100,000 FelCor Suite Hotels, Inc. REIT .... 3,731,250
============
Utilities-Electric - 49.3%
82,000 American Electric Power Co., Inc. . 4,043,625
100,000 Central Hudson Gas & Electric Corp. 3,981,250
100,000 Cinergy Corp. ..................... 3,450,000
150,000 Companhia Paranaense De
Energia-Copel, Plc-ADR ............ 1,800,000
75,000 Duke Power Co. .................... 4,064,062
150,000 Enova Corp. ....................... 3,806,250
70,000 FPL Group, Inc. ................... 4,016,250
170,000 Houston Industries, Inc. .......... 4,441,250
145,000 Long Island Lighting Co. .......... 4,223,125
80,000 New Century Energies, Inc. ........ 3,645,000
115,000 New York State Electric & Gas Corp. 4,053,750
80,000 NIPSCO Industries, Inc. ........... 4,085,000
100,000 PacifiCorp ........................ 2,318,750
100,000 Pinnacle West Capital Corp. ....... 4,000,000
150,000 PP&L Resources, Inc. .............. 3,281,250
100,000 Public Service Enterprise Group, Inc. 3,100,000
100,000 Texas Utilities Co. ............... 4,112,500
120,000 UtiliCorp United, Inc. ............ 4,245,000
125,000 WPL Holdings, Inc. ................ 4,007,813
============
70,674,875
============
Utilities-Gas - 2.5%
50,000 Northwest Natural Gas Co. ......... 1,331,250
60,000 Peoples Energy Corp. .............. 2,265,000
============
3,596,250
============
Utilities-Telephone - 17.5%
80,000 Ameritech Corp. ................... 3,435,000
70,000 BellSouth Corp. ................... 4,239,375
100,000 GTE Corp. ......................... 5,456,250
50,000 SBC Communications, Inc. .......... 3,887,500
60,000 Sprint Corp. ...................... 3,562,500
95,000 U.S. West Communications Group,
Inc. .............................. 4,571,875
============
25,152,500
============
Total Common Stocks
(cost $90,317,688)................. 114,155,188
============
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
CONVERTIBLE PREFERRED - 19.5%
Communication Systems &
Services - 3.0%
115,000 AirTouch Communications, Inc.
6.00%, Series B ................... $ 4,312,500
============
Oil Field Services - 2.4%
80,000 EVI, Inc.
5.00%, 144A ....................... 3,430,400
============
Publishing, Broadcasting &
Entertainment - 2.5%
60,000 Houston Industries Inc.
(Exchangeable for Time Warner
common stock) 7.00%, ACES ......... 3,540,000
============
Telecommunication Services &
Equipment - 2.4% ..................
70,000 Qualcomm Financial Trust I
5.75% ............................. 3,412,500
============
Utilities - 2.3%
50,000 AES Trust I
5.375%, Series A, TECONS .......... 3,300,000
============
Utilities-Gas - 2.9%
70,000 MCN Financing III
8.00% PRIDES ...................... 4,226,250
============
Utilities-Telephone - 4.0%
100,000 Sprint Corp. (Exchangeable for
Southern N.E. Telephone Common
Stock)
8.25%, DECS ....................... 5,750,000
============
Total Convertible Preferred
(cost $22,771,970) ................ 27,971,650
============
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount
<S> <C> <C> <C>
REPURCHASE AGREEMENT - 0.6%
$ 887,376 Donaldson, Lufkin & Jenrette
Securities Corp., (purchased
1/31/98; 5.58% maturing 2/2/98;
maturity value $887,789; cost
$887,376 (a)..................... 887,376
=======
Total Investments -
(cost $113,977,034).... 99.7% 143,014,214
Other Assets and
Liabilities - Net ...... 0.3 429,144
===== ===========
Net Assets ............. 100.0% $143,443,358
===== ===========
</TABLE>
(a) At January 31, 1998, the repurchase agreement was fully collateralized by:
$847,000 U.S. Treasury Notes, 6.125%, 8/15/07; value including accrued
interest - $905,219.
Summary of Abbreviations:
ACES Automatically Convertible Equity Securities
ADR American Depository Receipt
DECS Dividend Enhanced Convertible Stock
PRIDES Preferred Redeemable Increased Dividend Equity Securities
REIT Real Estate Investment Trust
TECONS Term Convertible Shares
144A Rule 144A securities are restricted as to resale to qualified
institutional investors.
See Combined Notes to Financial Statements.
55
<PAGE>
EVERGREEN
Value Fund
Schedule of Investments
January 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - 97.5%
Automotive Equipment &
Manufacturing - 1.9%
337,200 Ford Motor Co. ....................... $17,197,200
===========
Banks - 17.9%
53,800 Banc One Corp. ....................... 3,006,075
215,300 BankBoston Corp. ..................... 19,269,350
163,600 Bankers Trust Corp. .................. 17,065,525
51,100 Chase Manhattan Corp. ................ 5,477,281
40,400 Citicorp ............................. 4,807,600
269,100 + CoreStates Financial Corp. ........... 20,586,150
242,200 First Chicago NBD Corp. .............. 18,074,175
228,700 First Tennessee National Corp. ....... 13,464,712
80,425 Fleet Financial Group, Inc. .......... 5,760,441
218,000 NationsBank Corp. .................... 13,080,000
123,800 SouthTrust Corp. ..................... 6,986,963
193,800 Summit Bancorp ....................... 9,690,000
107,600 Union Planters Corp. ................. 6,617,400
271,300 Wachovia Corp. ....................... 21,093,575
===========
164,979,247
===========
Building, Construction &
Furnishings - 1.1%
204,500 Masco Corp. .......................... 10,071,625
===========
Chemical & Agricultural
Products - 1.9%
197,100 Dow Chemical Co. ..................... 17,739,000
===========
Communication Systems &
Services - 1.2%
182,050 * Cisco Systems, Inc. .................. 11,480,528
===========
Consumer Products &
Services - 2.5%
462,900 * Cendant Corp. ........................ 15,680,738
102,300 Colgate-Palmolive Co. ................ 7,493,475
===========
23,174,213
===========
Diversified Companies - 3.5%
156,100 AlliedSignal, Inc. ................... 6,078,144
592,000 * Tyco International Ltd. .............. 26,270,000
===========
32,348,144
===========
Electrical Equipment &
Services - 3.5%
362,300 General Electric Co. ................. 28,078,250
167,100 * Silicon Valley Group, Inc. ........... 3,738,862
===========
31,817,112
===========
Finance & Insurance - 5.4%
148,000 Allstate Corp. (The) ................. 13,098,000
64,600 American International Group, Inc. ... 7,126,187
91,500 Loews Corp. .......................... 9,132,844
177,600 ReliaStar Financial Corp. ............ 7,370,400
53,800 Travelers Group, Inc. ................ 2,663,100
242,200 Travelers Property Casualty Corp. Cl. A 10,111,850
===========
49,502,381
===========
Food & Beverage Products - 7.3%
797,400 American Stores Co. .................. 17,343,450
107,600 Coca Cola Co. ........................ 6,967,100
435,000 Fortune Brands, Inc. ................. 16,638,750
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
Food & Beverage Products -
continued
478,100 Philip Morris Companies, Inc. ........ $19,841,150
115,700 Sara Lee Corp. ....................... 6,312,881
===========
67,103,331
===========
Healthcare Products &
Services - 12.1%
269,100 Bristol-Myers Squibb Co. ............. 26,825,907
306,800 HBO & Co. ............................ 16,049,475
516,700 * HEALTHSOUTH Corp. .................... 11,593,456
226,700 Johnson & Johnson .................... 15,174,731
91,500 Pfizer, Inc. ......................... 7,497,281
145,300 SmithKline Beecham Plc, ADR .......... 9,162,981
726,599 Tenet Healthcare Corp. ............... 25,067,666
===========
111,371,497
===========
Information Services &
Technology - 8.6%
150,700 * 3Com Corp. ........................... 4,982,519
215,300 * Applied Materials, Inc. .............. 7,064,531
453,010 * Cabletron Systems, Inc. .............. 6,540,332
236,800 * EMC Corp. ............................ 7,710,800
129,600 Intel Corp. .......................... 10,497,600
121,100 International Business Machines Corp. 11,951,056
376,700 * Sun Microsystems, Inc. ............... 18,058,056
249,700 Varian Associates, Inc. .............. 12,734,700
===========
79,539,594
===========
Metal Products & Services - 1.9%
61,400 * Alumax, Inc. ......................... 2,137,488
123,600 Aluminum Co. of America .............. 9,439,950
168,500 USX United States Steel Group ........ 5,623,687
===========
17,201,125
===========
Oil/Energy - 14.2%
184,600 Ashland, Inc. ........................ 9,737,650
83,400 Atlantic Richfield Co. ............... 6,202,875
526,100 Cabot Corp. .......................... 14,862,325
133,300 Mobil Corp. .......................... 9,081,063
343,100 Sonat, Inc. .......................... 14,989,181
166,600 Texaco, Inc. ......................... 8,673,613
726,600 Tosco Corp. .......................... 24,295,687
519,400 Ultramar Diamond Shamrock Corp. ...... 17,302,512
905,600 Williams Companies, Inc. (The) ....... 25,809,600
===========
130,954,506
===========
Oil Field Services - 1.1%
152,900 Diamond Offshore Drilling, Inc. ...... 6,832,719
113,020 * R & B Falcon Corp. ................... 3,418,855
===========
10,251,574
===========
Retailing & Wholesale - 2.1%
153,400 * Federated Department Stores, Inc. .... 6,500,325
283,100 Sears, Roebuck & Co. ................. 13,040,294
===========
19,540,619
===========
Telecommunication Services &
Equipment - 1.3%
160,400 Nokia Corp. ADR ...................... 12,190,400
===========
</TABLE>
56
<PAGE>
EVERGREEN
Value Fund
Schedule of Investments (continued)
January 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
Textile & Apparel - 0.7%
150,700 V. F. Corp. ............... $ 6,442,425
============
Transportation - 2.8%
141,100 Burlington Northern Santa Fe 12,240,425
440,600 Norfolk Southern Corp. .... 13,906,438
============
26,146,863
============
Utilities-Electric - 4.9%
457,500 Cinergy Corp. ............. 15,783,750
269,100 CMS Energy Corp. .......... 11,453,569
58,400 GPU, Inc. ................. 2,295,850
412,700 Houston Industries, Inc. .. 10,781,787
215,300 PacifiCorp ................ 4,992,269
============
45,307,225
============
Utilities-Gas - 1.6%
361,600 NICOR Inc. ................ 14,554,400
============
Total Common Stocks
(cost $683,652,064)........ 898,913,009
============
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
CONVERTIBLE PREFERRED - 0.8%
Capital Goods - 0.8%
52,800 Case Corp.
4.50%, Series A, 144A ..... $ 7,233,600
============
Total Convertible Preferred
(cost $6,904,275).......... 7,233,600
============
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount
<S> <C> <C> <C>
REPURCHASE AGREEMENT - 1.6%
$15,362,167 Donaldson, Lufkin & Jenrette
Securities
Corp., purchased 1/30/98, 5.58%,
maturing 2/2/98, maturity value
$15,369,310; cost $15,362,167 (a) 15,362,167
==========
Total Investments -
(cost $705,918,506).. 99.9% 921,508,776
Other Assets and
Liabilities - Net ... 0.1 613,278
===== ===========
Net Assets ........... 100.0% $922,122,054
===== ===========
</TABLE>
* Non-income producing securities.
+ At January 31, 1998 the Fund owned 269,100 shares of common stock of
CoreStates Financial Corp., at a cost of $10,350,124. During the six-month
period ended January 31, 1998, the Fund earned $654,750 in dividend income
from this investment. These shares were purchased before the announcement of
the acquisition of CoreStates Financial Corp. by First Union Corp.
(a) At January 31, 1998, the repurchase agreement was fully collateralized by:
$622,000 U.S. Treasury Notes, 7.125%, 9/30/99; value including accrued
interest - $653,909, $143,000 U.S. Treasury Notes, 6.00%, 8/15/00; value
including accrued interest - $147,937, $2,200,000 U.S. Treasury Notes,
7.50%, 2/15/05; value including accrued interest - $2,520,789, $280,000 U.S.
Treasury Notes, 6.625%, 5/15/07; value including accrued interest -
$304,248, and $10,074,000 U.S. Treasury Bonds, 7.50%, 11/15/16; value
including accrued interest - $12,045,157.
Summary of Abbreviations:
ADR American Depository Receipts
144A Rule 144A securities are restricted as to resale to qualified
institutional investors.
See Combined Notes to Financial Statements.
57
<PAGE>
EVERGREEN
Fund for Total Return
Schedule of Investments
January 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - 90.6%
Automotive Equipment &
Manufacturing - 3.5%
30,000 Federal-Mogul Corp. .... $1,350,000
50,000 Ford Motor Co. ......... 2,550,000
40,000 * Lear Corp. ............. 1,987,500
----------
5,887,500
----------
Banks - 5.9%
30,000 BankAmerica Corp. ...... 2,131,875
30,000 BankBoston Corp. ....... 2,685,000
15,000 Chase Manhattan Corp. .. 1,607,812
50,000 Fleet Financial Group, 3,581,250
----------
Inc.
10,005,937
----------
Building, Construction &
Furnishings - 1.1%
75,000 Furniture Brands 1,935,938
----------
International, Inc.
Business Equipment &
Services - 1.7%
75,000 * Thermo Electron Corp. .. 2,925,000
----------
Capital Goods - 0.9%
50,000 Regal Beloit Corp. ..... 1,509,375
----------
Chemical & Agricultural
Products - 3.4% ..........
30,000 Du Pont (E. I.) De Nemours 1,698,750
& Co.
50,000 Monsanto Co. ........... 2,371,875
50,000 Morton International, Inc. 1,650,000
----------
5,720,625
----------
Consumer Products &
Services - 3.0%
15,000 Gillette Co. (The) ..... 1,481,250
20,000 Procter & Gamble Co. (The) 1,567,500
35,000 Whirlpool Corp. ........ 2,023,437
----------
5,072,187
----------
Diversified
Companies - 3.5%
75,000 * Owens Illinois, Inc. ... 2,728,125
70,000 Tyco International Ltd. 3,106,250
----------
5,834,375
----------
Electrical Equipment &
Services - 5.6%
30,000 Emerson Electric Co. ... 1,815,000
70,000 General Electric Co. ... 5,425,000
50,000 * Solectron Corp. ........ 2,162,500
----------
9,402,500
----------
Finance & Insurance - 6.3%
25,000 * Hartford Life, Inc. Cl. A 1,070,313
15,000 Loews Corp. ............ 1,497,187
50,000 Nationwide Financial 1,834,375
Services, Inc. Cl. A
20,000 PMI Group, Inc. (The) .. 1,356,250
35,000 SLM Holding Corp. ...... 1,474,375
37,500 Travelers Group, Inc. .. 1,856,250
35,000 Travelers Property 1,461,250
----------
Casualty Corp. Cl. A
10,550,000
----------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
Food & Beverage
Products - 4.9%
25,000 Anheuser Busch Companies, $1,123,438
Inc.
35,000 H.J. Heinz Co. ......... 1,940,312
18,900 International Home Foods, 499,669
Inc.
14,600 Keebler Foods Co. ...... 401,500
30,000 Nabisco Holdings Corp. Cl. 1,241,250
A
75,000 Philip Morris Companies, 3,112,500
----------
Inc.
8,318,669
----------
Healthcare Products &
Services - 12.2%
60,000 American Home Products 5,726,250
Corp.
50,000 Bristol-Myers Squibb Co. . 4,984,375
19,100 Guidant Corp. .......... 1,227,175
60,000 Johnson & Johnson ...... 4,016,250
40,000 Merck & Co., Inc. ...... 4,690,000
----------
20,644,050
----------
Industrial Specialty
Products &
Services - 2.0%
35,000 Trinity Industries, Inc. 1,583,750
50,000 * USA Waste Services, Inc. 1,837,500
----------
3,421,250
----------
Information Services &
Technology - 4.9%
50,033 * Analog Devices, Inc. ... 1,475,973
50,000 Compaq Computer Corp. .. 1,503,125
10,000 Intel Corp. ............ 810,313
30,000 International Business 2,960,625
Machines Corp.
10,000 * Microsoft Corp. ........ 1,492,187
----------
8,242,223
----------
Leisure & Tourism - 1.2%
35,000 Carnival, Corp. Cl. A .. 1,953,438
----------
Oil/Energy - 5.9%
15,000 Amoco Corp. ............ 1,220,625
10,000 Atlantic Richfield Co. . 743,750
15,000 Burlington Resources, Inc. 641,250
15,000 Chevron Corp. .......... 1,122,188
20,000 Exxon Corp. ............ 1,186,250
12,000 Mobil Corp. ............ 817,500
18,700 Pennzoil Co. ........... 1,208,487
20,000 Sonat, Inc. ............ 873,750
24,000 Texaco, Inc. ........... 1,249,500
25,000 Unocal Corp. ........... 859,375
----------
9,922,675
----------
Oil Field Services - 2.5%
25,000 Camco International, Inc. 1,367,187
16,000 Halliburton Co. ........ 719,000
50,000 Nabors Industries Inc. . 1,196,875
12,000 Schlumberger Ltd. ...... 884,250
----------
4,167,312
----------
Paper & Packaging - 1.4%
100,000 Unisource Worldwide, Inc. 1,418,750
20,000 Weyerhaeuser Co. ....... 996,250
----------
2,415,000
----------
</TABLE>
58
<PAGE>
EVERGREEN
Fund for Total Return
Schedule of Investments (continued)
January 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - continued
Publishing, Broadcasting &
Entertainment - 1.3%
75,000 CBS Corp. ............................. $ 2,245,313
------------
Real Estate - 7.7%
40,000 * Boston Properties, Inc. REIT .......... 1,422,500
25,000 Camden Property Trust REIT ............ 745,313
50,000 * Equity Office Properties Trust REIT ... 1,515,625
25,000 Equity Residential Properties Trust REIT 1,278,125
30,000 First Industrial Realty Trust, Inc. REIT 1,076,250
26,800 Highwoods Properties, Inc. REIT REIT .. 969,825
44,999 Patriot American Hospitality, Inc. REIT . 1,153,099
49,000 Prentiss Properties Trust REIT ........ 1,335,250
25,000 Spieker Properties, Inc. REIT ......... 1,056,250
30,000 Storage USA, Inc. REIT ................ 1,171,875
50,000 Tower Realty Trust, Inc. REIT ......... 1,268,750
------------
12,992,862
------------
Retailing & Wholesale - 3.0%
50,000 * Costco Companies, Inc. ................ 2,170,312
14,300 J. C. Penney Co., Inc. ................ 963,463
50,000 Wal-Mart Stores, Inc. ................. 1,993,750
------------
5,127,525
------------
Telecommunications Services &
Equipment - 1.0%
30,000 Teleport Communications Group Cl. A ... 1,674,375
------------
Transportation - 2.3%
50,300 Canadian National Railway Co. ......... 2,511,856
100,000 Laidlaw, Inc. ......................... 1,425,000
------------
3,936,856
------------
Utilities-Telephone - 5.4%
40,000 Ameritech Corp. ....................... 1,717,500
50,000 AT&T Corp. ............................ 3,131,250
20,000 BellSouth Corp. ....................... 1,211,250
20,000 GTE Corp. ............................. 1,091,250
25,000 SBC Communications, Inc. .............. 1,943,750
------------
9,095,000
------------
Total Common Stocks
(cost $113,902,016).................... 152,999,985
------------
CONVERTIBLE PREFERRED - 6.2%
Automotive Equipment &
Manufacturing - 1.0%
35,000 BTI Capital Trust
6.50%, 144A .......................... 1,715,000
------------
Finance & Insurance - 3.1%
15,000 Allstate Corp. (The)
6.76%, DECS (Exchangeable for
PMI Group, Inc. common stock) ......... 844,687
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
CONVERTIBLE PREFERRED - continued
10,000 Conseco, Inc.
7.00%, PRIDES ........................ $ 1,563,750
30,000 Newell Financial Trust I
5.25%, 144A .......................... 1,571,250
27,500 SunAmerica, Inc.
$3.188, PERCS ........................ 1,294,219
------------
5,273,906
------------
Retailing & Wholesale - 1.5%
50,000 Kmart Financing I
7.75% ................................ 2,575,000
------------
Telecommunication Services &
Equipment - 0.6%
15,000 Loral Space & Communications Ltd.
6.00%, 144A .......................... 937,500
------------
Total Convertible Preferred
(cost $8,917,873)...................... 10,501,406
============
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount
<S> <C> <C> <C>
CONVERTIBLE DEBENTURES - 2.7%
Consumer Products &
Services - 1.5%
$ 1,000,000 CUC International, Inc.
3.00%, 2/15/02, 144A .............. 1,260,630
1,000,000 Sunrise Assisted Living, Inc.
5.50%, 6/15/02, 144A .............. 1,280,220
---------
2,540,850
---------
Environmental Services - 0.3%
290,000 US Filter Corp.
6.00%, 9/15/05, 144A .............. 528,163
---------
Industrial Specialty Products &
Services - 0.3%
400,000 Robbins & Myers, Inc.
6.50%, 9/1/03 ..................... 580,000
---------
Retailing & Wholesale - 0.6%
750,000 Staples, Inc.
4.50%, 10/1/00, 144A .............. 975,000
---------
Total Convertible Debentures
(cost $3,440,000)................... 4,624,013
---------
REPURCHASE AGREEMENT - 2.5%
4,150,000 Keystone Joint Repurchase Agreement,
Investments in repurchase
agreements, in a joint trading account
purchased 1/30/98, 5.61%, maturing
2/2/98, maturity value $4,151,940 (a)
(cost $4,150,000) .................. 4,150,000
---------
Total Investments-
(cost $130,409,889)....... 102.0% 172,275,404
Other Assets and
Liabilities - Net ........ ( 2.0) (3,401,582)
----- -----------
Net Assets ............... 100.0% $168,873,822
===== ===========
</TABLE>
* Non-income producing securities
(a) The repurchase agreements are fully collateralized by U.S. Government
and/or agency obligations based on market prices plus accrued interest at
January 31, 1998.
59
<PAGE>
EVERGREEN
Fund for Total Return
Schedule of Investments (continued)
January 31, 1998 (Unaudited)
Summary of Abbreviations:
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.
See Combined Notes to Financial Statements.
60
<PAGE>
EVERGREEN
Growth & Income Funds
Statements of Assets and Liabilities
January 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
Growth & Income &
Income Growth
Fund Fund
----------------- -----------------
<S> <C> <C>
Assets
Investments at value (identified cost,
$1,304,632,303, $856,286,837,
$187,713,603, $113,977,034,
$705,918,506 and $130,409,889,
respectively) ........................... $1,709,535,678 $ 981,353,186
Foreign currency, at value (identified
cost, $458,284 )......................... 0 474,645
Cash ..................................... 373,891 96,341
Receivable for Fund shares sold .......... 10,474,223 297,136
Receivable for investments sold .......... 1,932,906 4,337,685
Dividends and interest receivable ........ 705,740 2,726,971
Foreign tax reclaim receivable ........... 0 17,182
Unamortized organization expense ......... 0 0
Prepaid expenses and other assets ........ 121,617 13,918
- ------------------------------------------- -------------- -------------
Total assets ........................... 1,723,144,055 989,317,064
- ------------------------------------------- -------------- -------------
Liabilities
Payable for investments purchased ........ 11,488,709 237,469
Payable for Fund shares repurchased....... 2,274,491 560,534
Advisory fee payable ..................... 1,279,456 815,155
Distribution Plan expenses payable ....... 681,807 46,639
Due to related parties ................... 0 0
Accrued expenses and other
liabilities ............................. 30,948 194,985
- ------------------------------------------- -------------- -------------
Total liabilities ...................... 15,755,411 1,854,782
- ------------------------------------------- -------------- -------------
Net assets ................................ $1,707,388,644 $ 987,462,282
=========================================== ============== =============
Net assets represented by
Paid-in capital .......................... $1,283,392,282 $ 851,612,176
Undistributed net investment income
(accumulated distributions in
excess of net investment income) ........ (174,571) 610,970
Accumulated net realized gains on
investments and foreign currency
related transactions .................... 19,267,756 10,145,026
Net unrealized appreciation on
investments and foreign currency
related transactions .................... 404,903,177 125,094,110
- ------------------------------------------- -------------- -------------
Total net assets ....................... $1,707,388,644 $ 987,462,282
=========================================== ============== =============
Net assets consists of
Class A .................................. $ 222,870,599 $ 13,569,980
Class B .................................. 740,697,139 51,247,264
Class C .................................. 35,325,340 1,033,393
Class Y .................................. 708,495,566 921,611,645
- ------------------------------------------- -------------- -------------
Total net assets ....................... $1,707,388,644 $ 987,462,282
=========================================== ============== =============
Shares outstanding
Class A .................................. 7,958,094 573,560
Class B .................................. 26,654,419 2,181,094
Class C .................................. 1,270,991 43,972
Class Y .................................. 25,258,549 38,897,712
=========================================== ============== =============
Net asset value per share
Class A .................................. $ 28.01 $ 23.66
=========================================== ============== =============
Class A - Offering price (based on
sales charge of 4.75%) .................. $ 29.41 $ 24.84
=========================================== ============== =============
Class B .................................. $ 27.79 $ 23.50
=========================================== ============== =============
Class C .................................. $ 27.79 $ 23.50
=========================================== ============== =============
Class Y .................................. $ 28.05 $ 23.69
=========================================== ============== =============
<CAPTION>
Small Cap
Equity Income Utility Value Fund for
Fund Fund Fund Total Return
----------------- ----------------- --------------- ---------------
<S> <C> <C> <C> <C>
Assets
Investments at value (identified cost,
$1,304,632,303, $856,286,837,
$187,713,603, $113,977,034,
$705,918,506 and $130,409,889,
respectively) ........................... $ 196,799,432 $ 143,014,214 $921,508,776 $172,275,404
Foreign currency, at value (identified
cost, $458,284 )......................... 0 0 0 0
Cash ..................................... 6,617 0 0 594
Receivable for Fund shares sold .......... 3,793,409 159,792 1,194,030 370,577
Receivable for investments sold .......... 0 2,493,792 0 388,909
Dividends and interest receivable ........ 521,542 530,200 1,319,299 203,623
Foreign tax reclaim receivable ........... 0 10,886 0 2,977
Unamortized organization expense ......... 5,313 0 0 0
Prepaid expenses and other assets ........ 108,057 58,363 104,946 48,326
- -------------------------------------------- ------------- ------------- ------------ ------------
Total assets ........................... 201,234,370 146,267,247 924,127,051 173,290,410
- -------------------------------------------- ------------- ------------- ------------ ------------
Liabilities
Payable for investments purchased ........ 1,015,149 2,625,275 0 3,992,560
Payable for Fund shares repurchased....... 170,222 86,017 1,006,958 260,460
Advisory fee payable ..................... 156,666 37,703 623,472 84,233
Distribution Plan expenses payable ....... 45,737 56,267 335,339 52,897
Due to related parties ................... 0 3,850 37,156 2,500
Accrued expenses and other
liabilities ............................. 18,350 14,777 2,072 23,938
- -------------------------------------------- ------------- ------------- ------------ ------------
Total liabilities ...................... 1,406,124 2,823,889 2,004,997 4,416,588
- -------------------------------------------- ------------- ------------- ------------ ------------
Net assets ................................ $ 199,828,246 $ 143,443,358 $922,122,054 $168,873,822
============================================ ============= ============= ============ ============
Net assets represented by
Paid-in capital .......................... $ 189,850,502 $ 111,945,379 $439,092,977 $124,203,860
Undistributed net investment income
(accumulated distributions in
excess of net investment income) ........ 48,019 81,866 (81,909) (433,962)
Accumulated net realized gains on
investments and foreign currency
related transactions .................... 843,896 2,378,933 267,520,716 3,238,409
Net unrealized appreciation on
investments and foreign currency
related transactions .................... 9,085,829 29,037,180 215,590,270 41,865,515
- -------------------------------------------- ------------- ------------- ------------ ------------
Total net assets ....................... $ 199,828,246 $ 143,443,358 $922,122,054 $168,873,822
============================================ ============= ============= ============ ============
Net assets consists of
Class A .................................. $ 31,546,036 $ 99,935,734 $388,073,494 $ 49,512,785
Class B .................................. 72,102,275 41,293,172 298,343,285 98,027,771
Class C .................................. 13,807,017 405,293 3,083,815 21,284,072
Class Y .................................. 82,372,918 1,809,159 232,621,460 49,194
- -------------------------------------------- ------------- ------------- ------------ ------------
Total net assets ....................... $ 199,828,246 $ 143,443,358 $922,122,054 $168,873,822
============================================ ============= ============= ============ ============
Shares outstanding
Class A .................................. 1,922,155 8,559,293 16,241,909 2,504,278
Class B .................................. 4,414,758 3,534,894 12,498,760 4,975,809
Class C .................................. 846,034 34,696 129,271 1,079,357
Class Y .................................. 5,015,542 154,869 9,733,570 2,492
============================================ ============= ============= ============ ============
Net asset value per share
Class A .................................. $ 16.41 $ 11.68 $ 23.89 $ 19.77
============================================ ============= ============= ============ ============
Class A - Offering price (based on
sales charge of 4.75%) .................. $ 17.23 $ 12.26 $ 25.08 $ 20.76
============================================ ============= ============= ============ ============
Class B .................................. $ 16.33 $ 11.68 $ 23.87 $ 19.70
============================================ ============= ============= ============ ============
Class C .................................. $ 16.32 $ 11.68 $ 23.86 $ 19.72
============================================ ============= ============= ============ ============
Class Y .................................. $ 16.42 $ 11.68 $ 23.90 $ 19.74
============================================ ============= ============= ============ ============
</TABLE>
See Combined Notes to Financial Statements.
61
<PAGE>
EVERGREEN
Growth & Income Funds
Statements of Operations
For the six month period ended January 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
Growth & Income & Small Cap
Income Growth Equity Income
Fund Fund Fund
--------------- -------------- ---------------
<S> <C> <C> <C>
Investment income
Interest ...................................... $ 9,699,072 $ 2,044,351 $ 740,903
Dividends (net of foreign withholding taxes
of $4,941, $240,041, $0, $0, $97,512,
and $2,551 respectively)...................... 5,962,214 24,969,393 1,431,543
- ------------------------------------------------ ----------- ----------- ----------
Total income ................................... 15,661,286 27,013,744 2,172,446
- ------------------------------------------------ ----------- ----------- ----------
Expenses
Advisory fee .................................. 7,111,859 4,793,520 623,305
Distribution Plan expenses .................... 3,658,025 262,920 244,557
Transfer agent fees ........................... 1,591,242 908,089 152,138
Administrative and services fees .............. 0 0 0
Registration fees ............................. 127,281 48,536 7,767
Custodian fees ................................ 222,219 150,106 19,980
Printing ...................................... 449,314 280,373 18,730
Trustees fees ................................. 16,160 15,891 1,869
Other ......................................... 49,456 51,905 13,070
- ------------------------------------------------ ----------- ----------- ----------
Total expenses ............................... 13,225,556 6,511,340 1,081,416
Less: Indirectly paid expenses ................ (4,388) (13,467) (5,074)
Fee waivers and/or reimbursement from
Investment Adviser .......................... 0 0 0
- ------------------------------------------------ ----------- ----------- ----------
Net expenses ................................. 13,221,168 6,497,873 1,076,342
- ------------------------------------------------ ----------- ----------- ----------
Net investment income ......................... 2,440,118 20,515,871 1,096,104
================================================ =========== =========== ==========
Net realized and unrealized gain (loss) on
investments and foreign currency
related transactions
Net realized gain (loss) from
Investments .................................. 51,958,376 30,780,247 1,316,217
Foreign currency related transactions ........ 0 (202,284) 0
- ------------------------------------------------ ----------- ----------- ----------
Net realized gain on investments and
foreign currency related transactions ........ 51,958,376 30,577,963 1,316,217
- ------------------------------------------------ ----------- ----------- ----------
Net change in unrealized appreciation on
investments and foreign currency related
transactions ................................. 39,177,846 23,219,599 1,545,352
- ------------------------------------------------ ----------- ----------- ----------
Net realized and unrealized gain on
investments and foreign currency related
transactions ................................. 91,136,222 53,797,562 2,861,569
- ------------------------------------------------ ----------- ----------- ----------
Net increase in net assets resulting from
operations ................................... $93,576,340 $74,313,433 $3,957,673
================================================ =========== =========== ==========
<CAPTION>
Utility Value Fund for
Fund Fund Total Return
--------------- ----------------- ---------------
<S> <C> <C> <C>
Investment income
Interest ...................................... $ 74,506 $ 2,698,393 $ 293,211
Dividends (net of foreign withholding taxes
of $4,941, $240,041, $0, $0, $97,512,
and $2,551 respectively)...................... 3,094,178 16,741,204 1,469,970
- ------------------------------------------------- ----------- --------------- -------------
Total income ................................... 3,168,684 19,439,597 1,763,181
- ------------------------------------------------- ----------- --------------- -------------
Expenses
Advisory fee .................................. 339,662 4,373,836 511,858
Distribution Plan expenses .................... 311,659 1,945,009 649,645
Transfer agent fees ........................... 137,113 802,102 155,485
Administrative and services fees .............. 23,131 290,269 20,444
Registration fees ............................. 39,975 18,375 51,183
Custodian fees ................................ 21,632 194,876 33,320
Printing ...................................... 51,244 165,211 58,723
Trustees fees ................................. 1,842 21,426 5,386
Other ......................................... 15,003 63,642 32,057
- ------------------------------------------------- ----------- --------------- -------------
Total expenses ............................... 941,261 7,874,746 1,518,101
Less: Indirectly paid expenses ................ (1,348) (6,576) (627)
Fee waivers and/or reimbursement from
Investment Adviser .......................... (129,071) 0 0
- ------------------------------------------------- ----------- --------------- -------------
Net expenses ................................. 810,842 7,868,170 1,517,474
- ------------------------------------------------- ----------- --------------- -------------
Net investment income ......................... 2,357,842 11,571,427 245,707
================================================= =========== =============== =============
Net realized and unrealized gain (loss) on
investments and foreign currency
related transactions
Net realized gain (loss) from
Investments .................................. 3,426,543 295,619,591 6,847,115
Foreign currency related transactions ........ 0 0 0
- ------------------------------------------------- ----------- --------------- -------------
Net realized gain on investments and
foreign currency related transactions ........ 3,426,543 295,619,591 6,847,115
- ------------------------------------------------- ----------- --------------- -------------
Net change in unrealized appreciation on
investments and foreign currency related
transactions ................................. 12,061,944 (262,135,819) (1,603,152)
- ------------------------------------------------- ----------- --------------- -------------
Net realized and unrealized gain on
investments and foreign currency related
transactions ................................. 15,488,487 33,483,772 5,243,963
- ------------------------------------------------- ----------- --------------- -------------
Net increase in net assets resulting from
operations ................................... $17,846,329 $ 45,055,199 $ 5,489,670
================================================= =========== =============== =============
</TABLE>
See Combined Notes to Financial Statements.
62
<PAGE>
EVERGREEN
Growth & Income Funds
Statements of Changes in Net Assets
For the six month period ended January 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
Growth & Income &
Income Growth
Fund Fund
------------------ ----------------
<S> <C> <C>
Operations
Net investment income .................. $ 2,440,118 $ 20,515,871
Net realized gain on investments
and foreign currency related
transactions .......................... 51,958,376 30,577,963
Net change in unrealized
appreciation on investments and
foreign currency related
transactions .......................... 39,177,846 23,219,599
- ----------------------------------------- -------------- -------------
Net increase in net assets
resulting from operations ............ 93,576,340 74,313,433
- ----------------------------------------- -------------- -------------
Distributions to shareholders
From net investment income
Class A ............................... (404,663) (270,600)
Class B ............................... 0 (892,353)
Class C ............................... 0 (18,345)
Class Y ............................... (2,035,445) (20,471,763)
In excess of net investment income
Class A ............................... (27,161) 0
Class B ............................... 0 0
Class C ............................... 0 0
Class Y ............................... (136,629) 0
From net realized gain on
investments
Class A ............................... (7,164,362) (827,257)
Class B ............................... (23,729,561) (3,160,159)
Class C ............................... (1,087,731) (63,045)
Class Y ............................... (23,937,007) (58,431,405)
- ----------------------------------------- -------------- -------------
Total distributions to
shareholders ......................... (58,522,559) (84,134,927)
- ----------------------------------------- -------------- -------------
Capital share transactions
Proceeds from shares sold .............. 421,389,483 17,080,735
Net asset value of shares issued in
reinvestment of distributions ......... 51,997,135 76,198,098
Payment for shares redeemed ............ (149,744,134) (52,464,009)
- ----------------------------------------- -------------- -------------
Net increase (decrease) in net
assets resulting from capital
share transactions ................... 323,642,484 40,814,824
- ----------------------------------------- -------------- -------------
Total increase (decrease) in net
assets .............................. 358,696,265 30,993,330
Net assets
Beginning of period .................... 1,348,692,379 956,468,952
- ----------------------------------------- -------------- -------------
End of period .......................... $1,707,388,644 $ 987,462,282
========================================= ============== =============
Undistributed net investment income
(accumulated distributions in excess
of net investment income) .............. $ (174,571) $ 610,970
========================================= ============== =============
<CAPTION>
Small Cap
Equity Income Utility Value Fund for
Fund Fund Fund Total Return
--------------- --------------- ------------------- ---------------
<S> <C> <C> <C> <C>
Operations
Net investment income .................. $ 1,096,104 $ 2,357,842 $ 11,571,427 $ 245,707
Net realized gain on investments
and foreign currency related
transactions .......................... 1,316,217 3,426,543 295,619,591 6,847,115
Net change in unrealized
appreciation on investments and
foreign currency related
transactions .......................... 1,545,352 12,061,944 (262,135,819) (1,603,152)
- ------------------------------------------ ------------ ------------- ----------------- -------------
Net increase in net assets
resulting from operations ............ 3,957,673 17,846,329 45,055,199 5,489,670
- ------------------------------------------ ------------ ------------- ----------------- -------------
Distributions to shareholders
From net investment income
Class A ............................... (149,499) (1,813,961) (3,098,436) (203,116)
Class B ............................... (239,664) (591,066) (1,363,837) (34,537)
Class C ............................... (50,332) (5,656) (14,259) (7,764)
Class Y ............................... (663,474) (35,777) (10,043,165) (290)
In excess of net investment income
Class A ............................... 0 0 (17,479) (56,012)
Class B ............................... 0 0 (7,694) (174,180)
Class C ............................... 0 0 (80) (37,840)
Class Y ............................... 0 0 (56,656) (156)
From net realized gain on
investments
Class A ............................... (213,842) (8,654,842) (18,485,824) (3,551,251)
Class B ............................... (507,582) (3,545,873) (13,846,878) (7,082,118)
Class C ............................... (100,773) (34,234) (133,515) (1,542,452)
Class Y ............................... (758,969) (166,884) (52,853,523) (3,495)
- ------------------------------------------ ------------ ------------- ----------------- -------------
Total distributions to
shareholders ......................... (2,684,135) (14,848,293) (99,921,346) (12,693,211)
- ------------------------------------------ ------------ ------------- ----------------- -------------
Capital share transactions
Proceeds from shares sold .............. 145,792,699 8,085,175 130,171,223 21,797,354
Net asset value of shares issued in
reinvestment of distributions ......... 1,827,984 12,592,637 91,648,275 11,838,962
Payment for shares redeemed ............ (7,911,161) (10,615,163) (1,065,053,217) (20,896,722)
- ------------------------------------------ ------------ ------------- ----------------- -------------
Net increase (decrease) in net
assets resulting from capital
share transactions ................... 139,709,522 10,062,649 (843,233,719) 12,739,594
- ------------------------------------------ ------------ ------------- ----------------- -------------
Total increase (decrease) in net
assets .............................. 140,983,060 13,060,685 (898,099,866) 5,536,053
Net assets
Beginning of period .................... 58,845,186 130,382,673 1,820,221,920 163,337,769
- ------------------------------------------ ------------ ------------- ----------------- -------------
End of period .......................... $199,828,246 $ 143,443,358 $ 922,122,054 $ 168,873,822
========================================== ============ ============= ================= =============
Undistributed net investment income
(accumulated distributions in excess
of net investment income) .............. $ 48,019 $ 81,866 $ (81,909) $ (433,962)
========================================== ============ ============= ================= =============
</TABLE>
See Combined Notes to Financial Statements.
63
<PAGE>
EVERGREEN
Growth & Income Funds
Statements of Changes in Net Assets
For the period ended July 31, 1997*
<TABLE>
<CAPTION>
Growth & Income &
Income Growth
Fund Fund
------------------ ----------------
<S> <C> <C>
Operations
Net investment income .................. $ 2,407,908 $ 21,889,648
Net realized gain on investments
and foreign currency related
transactions .......................... 23,375,321 44,086,999
Net change in unrealized
appreciation on investments and
foreign currency related
transactions .......................... 188,382,086 42,180,501
- ----------------------------------------- -------------- -------------
Net increase in net assets
resulting from operations ............ 214,165,315 108,157,148
- ----------------------------------------- -------------- -------------
Distributions to shareholders
From net investment income
Class A ............................... (342,216) (248,453)
Class B ............................... 0 (790,199)
Class C ............................... 0 (19,512)
Class Y ............................... (2,065,692) (20,540,101)
In excess of net investment income
Class A ............................... (15,263) 0
Class B ............................... 0 0
Class C ............................... 0 0
Class Y ............................... (92,131) 0
From net realized gain on
investments
Class A ............................... 0 0
Class B ............................... 0 0
Class C ............................... 0 0
Class Y ............................... 0 0
- ----------------------------------------- -------------- -------------
Total distributions to
shareholders ......................... (2,515,302) (21,598,265)
- ----------------------------------------- -------------- -------------
Capital share transactions
Proceeds from shares sold .............. 465,092,821 17,909,857
Net asset value of shares issued in
reinvestment of distributions ......... 1,997,489 18,977,783
Payment for shares redeemed ............ (111,499,306) (71,220,009)
- ----------------------------------------- -------------- -------------
Net increase (decrease) in net
assets resulting from capital
share transactions ................... 355,591,004 (34,332,369)
- ----------------------------------------- -------------- -------------
Total increase (decrease) in net
assets .............................. 567,241,017 52,226,514
Net assets
Beginning of period .................... 781,451,362 904,242,438
- ----------------------------------------- -------------- -------------
End of period .......................... $1,348,692,379 $ 956,468,952
========================================= ============== =============
Undistributed net investment income
(accumulated distributions in excess
of net investment income) .............. $ (10,791) $ 1,748,160
========================================= ============== =============
<CAPTION>
Small Cap
Equity Income Utility Value Fund for
Fund Fund Fund Total Return
--------------- --------------- ------------------ ----------------
<S> <C> <C> <C> <C>
Operations
Net investment income .................. $ 385,091 $ 2,786,986 $ 16,353,679 $ 766,801
Net realized gain on investments
and foreign currency related
transactions .......................... 1,108,151 11,377,530 58,756,392 8,633,551
Net change in unrealized
appreciation on investments and
foreign currency related
transactions .......................... 6,035,485 (1,002,220) 239,837,361 15,979,989
- ------------------------------------------ ------------ ------------- -------------- -------------
Net increase in net assets
resulting from operations ............ 7,528,727 13,162,296 314,947,432 25,380,341
- ------------------------------------------ ------------ ------------- -------------- -------------
Distributions to shareholders
From net investment income
Class A ............................... (11,097) (2,030,267) (2,943,697) (368,590)
Class B ............................... (17,755) (639,939) (1,098,593) (315,494)
Class C ............................... (6,915) (6,346) (9,131) (78,332)
Class Y ............................... (297,079) (40,667) (10,102,012) 0
In excess of net investment income
Class A ............................... 0 0 0 0
Class B ............................... 0 0 0 0
Class C ............................... 0 0 0 0
Class Y ............................... 0 0 0 0
From net realized gain on
investments
Class A ............................... (1,322) 0 0 0
Class B ............................... (2,116) 0 0 0
Class C ............................... (824) 0 0 0
Class Y ............................... (35,401) 0 0 0
- ------------------------------------------ ------------ ------------- -------------- -------------
Total distributions to
shareholders ......................... (372,509) (2,717,219) (14,153,433) (762,416)
- ------------------------------------------ ------------ ------------- -------------- -------------
Capital share transactions
Proceeds from shares sold .............. 50,579,448 2,104,932 210,144,988 63,866,407
Net asset value of shares issued in
reinvestment of distributions ......... 204,650 2,210,326 10,671,545 680,769
Payment for shares redeemed ............ (8,771,326) (21,527,215) (224,625,243) (24,402,541)
- ------------------------------------------ ------------ ------------- -------------- -------------
Net increase (decrease) in net
assets resulting from capital
share transactions ................... 42,012,772 (17,211,957) (3,808,710) 40,144,635
- ------------------------------------------ ------------ ------------- -------------- -------------
Total increase (decrease) in net
assets .............................. 49,168,990 (6,766,880) 296,985,289 64,762,560
Net assets
Beginning of period .................... 9,676,196 137,149,553 1,523,236,631 98,575,209
- ------------------------------------------ ------------ ------------- -------------- -------------
End of period .......................... $ 58,845,186 $ 130,382,673 $1,820,221,920 $ 163,337,769
========================================== ============ ============= ============== =============
Undistributed net investment income
(accumulated distributions in excess
of net investment income) .............. $ 54,884 $ 170,484 $ 2,948,270 $ (165,774)
========================================== ============ ============= ============== =============
</TABLE>
* Each of the Funds changed their fiscal year end to July 31. The Statements of
Changes in Net Assets are for the following periods: For Total Return Fund, the
eight months ended July 31, 1997; For Growth and Income Fund, Small Cap Fund,
Utility Fund and Value Fund, the seven months ended July 31, 1997; For Income
and Growth Fund, the six months ended July 31, 1997
See Combined Notes to Financial Statements.
64
<PAGE>
EVERGREEN
Growth & Income Funds
Statements of Changes in Net Assets
Prior Periods
<TABLE>
<CAPTION>
Growth & Income &
Income Growth
Fund** Fund*
------------------- -----------------
<S> <C> <C>
Operations
Net investment income ..................................... $ 3,525,699 $ 45,851,306
Net realized gain on investments and foreign
currency transactions .................................... 11,660,346 28,617,120
Net change in unrealized appreciation
(depreciation) on investments and foreign
currency related transactions ............................ 102,653,116 43,508,253
- ------------------------------------------------------------ -------------- ---------------
Net increase in net assets resulting from
operations .............................................. 117,839,161 117,976,679
- ------------------------------------------------------------ -------------- ---------------
Distributions to shareholders
From net investment income
Class A .................................................. (346,965) (379,400)
Class B .................................................. (65,442) (1,152,510)
Class C .................................................. (2,714) (39,024)
Class Y .................................................. (3,093,315) (45,453,926)
In excess of net investment income
Class A .................................................. (602) 0
Class B .................................................. (114) 0
Class C .................................................. (5) 0
Class Y .................................................. (5,366) 0
From net realized gain on investment
Class A .................................................. (1,255,570) 0
Class B .................................................. (3,652,416) 0
Class C .................................................. (141,822) 0
Class Y .................................................. (6,629,223) 0
In excess of net realized gain in investment
Class A .................................................. (4,767) 0
Class B .................................................. (13,868) 0
Class C .................................................. (538) 0
Class Y .................................................. (25,172) 0
- ------------------------------------------------------------ ---------------- ---------------
Total distributions to shareholders ...................... (15,237,899) (47,024,860)
- ------------------------------------------------------------ ---------------- ---------------
Capital share transactions
Proceeds from shares sold ................................. 470,077,641 55,014,841
Net asset value of shares issued in reinvestment
of distributions ......................................... 13,005,089 41,805,502
Payment for shares redeemed ............................... (171,525,826) (197,670,999)
Shares issued in acquisition of FFB Lexicon Capital
Appreciation Fund Class Y ................................ 159,432,723 0
Shares issued in acquisition of FFB Lexicon Select
Value Fund Class Y ....................................... 0 0
Shares issued in acquisition of FFB Lexicon Equity
Fund Class Y ............................................. 0 0
- ------------------------------------------------------------ ---------------- ---------------
Net increase (decrease) in net assets resulting
from capital share transactions ......................... 470,989,627 (100,850,656)
- ------------------------------------------------------------ ---------------- ---------------
Total increase (decrease) in net assets ................. 573,590,889 (29,898,837)
Net assets
Beginning of period ....................................... 207,860,473 934,141,275
- ------------------------------------------------------------ ---------------- ---------------
End of period ............................................. $ 781,451,362 $ 904,242,438
============================================================ ================ ===============
Undistributed net investment income (accumulated
distributions in excess of net investment income) ......... $ 6,087 $ 1,321,369
============================================================ ================ ===============
<CAPTION>
Small Cap
Equity Income Utility Value Fund for
Fund** Fund** Fund** Total Return***
--------------- --------------- ------------------ ----------------
<S> <C> <C> <C> <C>
Operations
Net investment income ..................................... $ 207,498 $ 5,338,113 $ 25,598,949 $ 853,438
Net realized gain on investments and foreign
currency transactions .................................... 329,191 3,459,558 216,135,176 1,913,430
Net change in unrealized appreciation
(depreciation) on investments and foreign
currency related transactions ............................ 833,605 (3,509,310) 11,014,356 16,084,525
- ------------------------------------------------------------- ------------- ------------- -------------- --------------
Net increase in net assets resulting from
operations .............................................. 1,370,294 5,288,361 252,748,481 18,851,393
- ------------------------------------------------------------- ------------- ------------- -------------- --------------
Distributions to shareholders
From net investment income
Class A .................................................. (7,618) (3,887,411) (5,758,586) (539,949)
Class B .................................................. (9,798) (1,173,301) (1,939,188) (273,356)
Class C .................................................. (710) (11,835) (14,165) (112,998)
Class Y .................................................. (186,039) (229,804) (19,538,457) 0
In excess of net investment income
Class A .................................................. 0 0 0 0
Class B .................................................. 0 0 0 0
Class C .................................................. 0 0 0 0
Class Y .................................................. 0 0 0 0
From net realized gain on investment
Class A .................................................. (12,475) (2,465,668) (45,832,278) (754,551)
Class B .................................................. (27,933) (979,858) (27,532,324) (808,105)
Class C .................................................. (1,936) (10,055) (204,292) (270,058)
Class Y .................................................. (279,606) (53,192) (141,841,285) 0
In excess of net realized gain in investment
Class A .................................................. 0 (16,378) (229,771) 0
Class B .................................................. 0 (6,509) (138,028) 0
Class C .................................................. 0 (67) (1,024) 0
Class Y .................................................. 0 (353) (711,093) 0
- ------------------------------------------------------------- ------------- ------------- -------------- --------------
Total distributions to shareholders ...................... (526,115) (8,834,431) (243,740,491) (2,759,017)
- ------------------------------------------------------------- ------------- ------------- -------------- --------------
Capital share transactions
Proceeds from shares sold ................................. 4,304,325 12,422,675 396,972,164 41,871,515
Net asset value of shares issued in reinvestment
of distributions ......................................... 374,529 7,082,140 187,361,591 2,530,195
Payment for shares redeemed ............................... (1,159,053) (30,379,907) (375,117,185) (19,063,497)
Shares issued in acquisition of FFB Lexicon Capital
Appreciation Fund Class Y ................................ 0 0 0 0
Shares issued in acquisition of FFB Lexicon Select
Value Fund Class Y ....................................... 0 0 95,883,824 0
Shares issued in acquisition of FFB Lexicon Equity
Fund Class Y ............................................. 0 0 14,077,973 0
- ------------------------------------------------------------- ------------- ------------- -------------- --------------
Net increase (decrease) in net assets resulting
from capital share transactions ......................... 3,519,801 (10,875,092) 319,178,367 25,338,213
- ------------------------------------------------------------- ------------- ------------- -------------- --------------
Total increase (decrease) in net assets ................. 4,363,980 (14,421,162) 328,186,357 41,430,589
Net assets
Beginning of period ....................................... 5,312,216 151,570,715 1,195,050,274 57,144,620
- ------------------------------------------------------------- ------------- ------------- -------------- --------------
End of period ............................................. $ 9,676,196 $ 137,149,553 $1,523,236,631 $ 98,575,209
============================================================= ============= ============= ============== ==============
Undistributed net investment income (accumulated
distributions in excess of net investment income) ......... $ 3,333 $ 100,717 $ 292,413 $ (233,100)
============================================================= ============= ============= ============== ==============
</TABLE>
* - year ended January 31, 1997; ** - year ended December 31, 1996; and *** -
year ended November 30, 1996
See Combined Notes to Financial Statements.
65
<PAGE>
Combined Notes to Financial Statements (Unaudited)
The Evergreen Growth and Income Funds consist of Evergreen Growth and Income
Fund ("Growth and Income"), Evergreen Income and Growth Fund ("Income and
Growth"), Evergreen Small Cap Equity Income Fund ("Small Cap"), Evergreen
Utility Fund ("Utility"), Evergreen Value Fund ("Value") and Evergreen Fund for
Total Return (formerly, Keystone Fund for Total Return) ("Total Return"). Each
of which is registered under the Investment Company Act of 1940, as amended
(the "1940 Act"), as diversified, open-end management investment companies.
Each Fund is a series of the Evergreen Equity Trust, a Delaware Business Trust
organized on September 18, 1997. Formerly, each Fund was organized as either a
Massachusetts Business Trust or a series of a Massachusetts Business Trust and
are collectively referred to 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 a higher ongoing
distribution fee 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 and its affiliates, certain
institutional investors or Class Y shareholders of record of certain other
funds managed by First Union and its affiliates.
1. ACQUISITION INFORMATION
Effective January 1, 1996, First Fidelity Bancorporation ("First Fidelity")
merged with First Union National Bank of North Carolina ("First Union").
Effective on the close of business on January 19, 1996, Growth and Income
acquired substantially all of the net assets of FFB Lexicon Capital
Appreciation Fund, an open-end investment company registered under the Act
valued at $159,432,723. The net assets were exchanged through a non-taxable
exchange for 8,631,861 Class Y shares of Growth and Income valued at $18.47 per
share. The acquired net assets consisted primarily of portfolio securities with
unrealized appreciation of $31,537,903. The aggregate net assets of Growth and
Income upon the acquisition were $375,936,243.
Effective on the close of business on January 19, 1996, Value acquired
substantially all the net assets of FFB Lexicon Select Value Fund and FFB
Equity Fund, open-end investment companies registered under the Act valued at
$95,883,824 and $14,077,973, respectively. The net assets of these Funds were
exchanged through a non-taxable exchange for 4,720,676 and 692,924 Class Y
shares of Value valued at $20.31 per share. The acquired net assets consisted
primarily of portfolio securities with unrealized appreciation of $12,858,729
and $2,218,691, respectively. The aggregate net assets of Value upon the
acquisitions were $1,310,431,335.
2. REDEMPTION IN KIND
On January 21, 1998, 33,532,392 Class Y shares of Value Fund, with a net asset
value of $798,367,277 were redeemed through a "redemption in kind" transaction
and reinvested in the Evergreen Select Diversified Value Fund. Securities with
a value of $774,879,156, including unrealized appreciation of $221,367,103, and
cash of $19,143,281 were used to satisfy the redemption. The shares and value
of this redemption transaction are included in note 3 "Capital share
transactions" and the value is also included in the payment for shares redeemed
on the statement of changes in net assets.
3. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. The
policies are in conformity with generally accepted accounting principles, which
require management to make estimates and assumptions that affect amounts
reported herein. Actual results could differ from these estimates.
A. Valuation of Securities
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
price. U.S. government obligations held by the Funds are valued at the mean
between the over-the-counter bid and asked prices. Corporate bonds, other
fixed-income securities, and mortgage and other asset-backed securities are
valued at prices provided by an independent pricing service. In determining
value for normal institutional-size transactions, the pricing service uses
methods
66
<PAGE>
Combined Notes to Financial Statements (Unaudited) (continued)
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.
Pursuant to an exemptive order issued by the Securities and Exchange
Commission, Total Return, along with certain other funds managed by Keystone,
may transfer uninvested cash balances into a joint trading account. These
balances are invested in one or more repurchase agreements that are fully
collateralized by U.S. Treasury and/or federal agency obligations.
C. Reverse Repurchase Agreements
To obtain short-term financing, Small Cap, Utility, Value and Total Return may
enter into reverse repurchase agreements with qualified third-party
broker-dealers. Interest on the value of reverse repurchase agreements is based
upon competitive market rates at the time of issuance. At the time a Fund
enters into a reverse repurchase agreement, it will establish and maintain a
segregated account with the custodian containing qualifying assets having a
value not less than the repurchase price, including accrued interest. If the
counterparty to the transaction is rendered insolvent, the ultimate realization
of the securities to be repurchased by the Fund may be delayed or limited.
D. Foreign Currency
The books and records of the Funds are maintained in United States (U.S.)
dollars. Foreign currency amounts are translated into U.S. dollars as follows:
market value of investments, assets and liabilities at the daily rate of
exchange; purchases and sales of investments, income and expenses at the rate
of exchange prevailing on the respective dates of such transactions. Net
unrealized foreign exchange gain (loss) resulting from changes in foreign
currency exchange rates is a component of net unrealized appreciation
(depreciation) on investments and foreign currency related transactions. Net
realized foreign currency gains and losses resulting from changes in exchange
rates include: foreign currency gains and losses between trade date and
settlement date on investment securities transactions, foreign currency related
transactions and the difference between the amounts of interest and dividends
recorded on the books of the Fund and the amount actually received. Such gains
and losses are included in realized gain (loss) on foreign currency related
transactions. The portion of foreign currency gains and losses related to
fluctuations in exchange rates between the initial purchase trade date and
subsequent sale trade date is included in realized gain (loss) on foreign
currency related transactions.
E. Forward Foreign Currency Exchange Contracts
The Funds may enter into forward foreign currency exchange contracts ("forward
contracts") to settle portfolio purchases and sales of securities denominated
in a foreign currency and to hedge certain foreign currency assets or
liabilities. Forward contracts are recorded at the forward rate and
marked-to-market daily. Realized gains and losses arising from such
transactions are included in net realized gain (loss) on foreign currency
related transactions. The Funds bear the risk of an unfavorable change in the
foreign currency exchange rate underlying the forward contract and is subject
to the credit risk that the other party will not fulfill their obligations
under the contract. Forward contracts involve elements of market risk in excess
of the amount reflected in the statement of assets and liabilities.
F. Security Transactions and Investment Income
Securities transactions are accounted for no later than one business day after
the trade date. Realized gains and losses are computed on the identified cost
basis. Interest income is recorded on the accrual basis and includes accretion
of discounts and amortization of premiums. Dividend income is recorded on the
ex-dividend date or in the case of some foreign securities, on the date
thereafter when the fund is made aware of the dividend. Foreign income may be
subject to foreign withholding taxes which are accrued as applicable. Capital
gains realized on some foreign securities maybe subject to foreign taxes and
are accrued as applicable.
G. 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
67
<PAGE>
Combined Notes to Financial Statements (Unaudited) (continued)
all of their net investment company taxable 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 income taxes is required. To the extent that realized
capital gains can be offset by capital loss carryforwards, it is each Fund's
policy not to distribute such gains.
H. Distributions
Distributions from net investment income for the Funds, except Utility, are
declared and paid quarterly. Distributions for Utility from net investment
income are declared and paid monthly. Distributions from net realized capital
gains, if any, are paid at least annually. Distributions to shareholders are
recorded at the close of business on the ex-dividend date.
Income and capital gains distributions to shareholders are determined in
accordance with income tax regulations, which may differ from generally
accepted accounting principles.
I. 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.
J. Organization Expenses
Organization expenses are amortized to operations over a five-year period on a
straight-line basis. In the event any of the initial shares of Small Cap 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.
68
<PAGE>
Combined Notes to Financial Statements (Unaudited) (continued)
4. CAPITAL SHARE TRANSACTIONS
The Funds have an unlimited number of shares of beneficial interest authorized
with a $0.001 par value. 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:
- --------------------------------------------------------------------------------
GROWTH & INCOME
<TABLE>
<CAPTION>
Period Ended Period Ended
January 31, 1998 July 31, 1997*
-------------------------------- --------------------------------
Shares Amount Shares Amount
--------------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C>
Class A
Shares sold ........................................... 2,993,957 $ 84,034,823 2,967,692 $ 71,457,862
Shares issued in reinvestment of distributions ........ 264,532 7,387,471 14,532 352,344
Shares redeemed ....................................... (1,401,790) (39,367,926) (645,446) (15,573,680)
- ------------------------------------------------------- ------------- -------------- ------------- --------------
Net increase .......................................... 1,856,699 52,054,368 2,336,778 56,236,526
- ------------------------------------------------------- ------------- -------------- ------------- --------------
Class B
Shares sold ........................................... 6,873,390 191,982,169 9,881,863 236,281,947
Shares issued in reinvestment of distributions ........ 837,198 23,198,770 166 3,746
Shares redeemed ....................................... (1,073,652) (29,933,195) (779,920) (18,705,681)
- ------------------------------------------------------- ------------- -------------- ------------- --------------
Net increase .......................................... 6,636,936 185,247,744 9,102,109 217,580,012
- ------------------------------------------------------- ------------- -------------- ------------- --------------
Class C
Shares sold ........................................... 474,360 13,179,204 511,624 12,290,220
Shares issued in reinvestment of distributions ........ 38,010 1,053,643 0 0
Shares redeemed ....................................... (126,001) (3,496,878) (55,491) (1,340,999)
- ------------------------------------------------------- ------------- -------------- ------------- --------------
Net increase .......................................... 386,369 10,735,969 456,133 10,949,221
- ------------------------------------------------------- ------------- -------------- ------------- --------------
Class Y
Shares sold ........................................... 4,694,301 132,193,287 6,060,064 145,062,792
Shares issued in acquisition of FFB Lexicon Capital
Appreciation Fund .................................... 0 0 0 0
Shares issued in reinvestment of distributions ........ 727,739 20,357,251 67,571 1,641,399
Shares redeemed ....................................... (2,735,639) (76,946,135) (3,163,527) (75,878,946)
- ------------------------------------------------------- ------------- -------------- ------------- --------------
Net increase .......................................... 2,686,401 75,604,403 2,964,108 70,825,245
- ------------------------------------------------------- ------------- -------------- ------------- --------------
Total net increase resulting from Fund share
transactions ......................................... 11,566,405 $ 323,642,484 14,859,128 $ 355,591,004
======================================================= ============= ============== ============= ==============
<CAPTION>
Year Ended
December 31, 1996
---------------------------------
Shares Amount
--------------- -----------------
<S> <C> <C>
Class A
Shares sold ........................................... 3,719,917 $ 76,959,622
Shares issued in reinvestment of distributions ........ 69,271 1,546,893
Shares redeemed ....................................... (1,044,500) (21,729,967)
- --------------------------------------------------------------------- ----------------
Net increase .......................................... 2,744,688 56,776,548
- --------------------------------------------------------------------- ----------------
Class B
Shares sold ........................................... 8,914,571 185,314,202
Shares issued in reinvestment of distributions ........ 160,953 3,613,927
Shares redeemed ....................................... (646,461) (13,411,376)
- --------------------------------------------------------------------- ----------------
Net increase .......................................... 8,429,063 175,516,753
- --------------------------------------------------------------------- ----------------
Class C
Shares sold ........................................... 348,918 7,294,757
Shares issued in reinvestment of distributions ........ 5,130 115,108
Shares redeemed ....................................... (29,065) (597,615)
- --------------------------------------------------------------------- ----------------
Net increase .......................................... 324,983 6,812,250
- --------------------------------------------------------------------- ----------------
Class Y
Shares sold ........................................... 9,899,164 200,509,060
Shares issued in acquisition of FFB Lexicon Capital
Appreciation Fund .................................... 8,631,861 159,432,723
Shares issued in reinvestment of distributions ........ 349,251 7,729,161
Shares redeemed ....................................... (6,820,349) (135,786,868)
- --------------------------------------------------------------------- ----------------
Net increase .......................................... 12,059,927 231,884,076
- --------------------------------------------------------------------- ----------------
Total net increase resulting from Fund share
transactions ......................................... 23,558,661 $ 470,989,627
===================================================================== ================
</TABLE>
* The Fund changed its fiscal year end from December 31 to July 31, effective
July 31, 1997.
- --------------------------------------------------------------------------------
INCOME & GROWTH
<TABLE>
<CAPTION>
Period Ended Period Ended
January 31, 1998 July 31, 1997*
-------------------------------- ---------------------------------
Shares Amount Shares Amount
--------------- ---------------- --------------- -----------------
<S> <C> <C> <C> <C>
Class A
Shares sold ......................................... 74,190 $ 1,777,464 96,124 2,114,635
Shares issued in reinvestment of distributions ...... 44,327 1,035,786 10,209 225,329
Shares redeemed ..................................... (44,251) (1,062,372) (51,264) (1,121,079)
- ----------------------------------------------------- ------------- --------------- ------------- ---------------
Net increase ........................................ 74,266 1,750,878 55,069 1,218,885
- ----------------------------------------------------- ------------- --------------- ------------- ---------------
Class B
Shares sold ......................................... 303,978 7,286,309 308,925 6,799,151
Shares issued in reinvestment of distributions ...... 163,170 3,783,991 32,359 710,178
Shares redeemed ..................................... (132,797) (3,156,082) (123,038) (2,685,666)
- ----------------------------------------------------- ------------- --------------- ------------- ---------------
Net increase ........................................ 334,351 7,914,218 218,246 4,823,663
- ----------------------------------------------------- ------------- --------------- ------------- ---------------
Class C
Shares sold ......................................... 9,038 213,637 2,951 66,274
Shares issued in reinvestment of distributions ...... 2,956 68,562 712 15,602
Shares redeemed ..................................... (7,915) (188,202) (9,060) (189,123)
- ----------------------------------------------------- ------------- --------------- ------------- ---------------
Net increase (decrease) ............................. 4,079 93,997 (5,397) (107,247)
- ----------------------------------------------------- ------------- --------------- ------------- ---------------
Class Y
Shares sold ......................................... 324,596 7,803,325 407,330 8,929,797
Shares issued in reinvestment of distributions ...... 3,045,734 71,309,759 816,636 18,026,674
Shares redeemed ..................................... (1,993,308) (48,057,353) (3,049,701) (67,224,141)
- ----------------------------------------------------- ------------- --------------- ------------- ---------------
Net increase (decrease) ............................. 1,377,022 31,055,731 (1,825,735) (40,267,670)
- ----------------------------------------------------- ------------- --------------- ------------- ---------------
Total net increase (decrease) resulting from Fund
share transactions ................................. 1,789,718 $ 40,814,824 (1,557,817) $ (34,332,369)
===================================================== ============= =============== ============= ===============
<CAPTION>
Year Ended
January 31, 1997
---------------------------------
Shares Amount
--------------- -----------------
<S> <C> <C>
Class A
Shares sold ......................................... 288,739 $ 5,918,321
Shares issued in reinvestment of distributions ...... 16,567 341,281
Shares redeemed ..................................... (80,074) (1,646,836)
- ------------------------------------------------------------------- ---------------
Net increase ........................................ 225,232 4,612,766
- ------------------------------------------------------------------- ---------------
Class B
Shares sold ......................................... 973,616 19,899,458
Shares issued in reinvestment of distributions ...... 48,861 1,003,747
Shares redeemed ..................................... (128,458) (2,649,792)
- ------------------------------------------------------------------- ---------------
Net increase ........................................ 894,019 18,253,413
- ------------------------------------------------------------------- ---------------
Class C
Shares sold ......................................... 33,684 684,918
Shares issued in reinvestment of distributions ...... 1,429 29,305
Shares redeemed ..................................... (15,865) (328,507)
- ------------------------------------------------------------------- ---------------
Net increase (decrease) ............................. 19,248 385,716
- ------------------------------------------------------------------- ---------------
Class Y
Shares sold ......................................... 1,398,445 28,512,144
Shares issued in reinvestment of distributions ...... 1,968,663 40,431,169
Shares redeemed ..................................... (9,386,347) (193,045,864)
- ------------------------------------------------------------------- ---------------
Net increase (decrease) ............................. (6,019,239) (124,102,551)
- ------------------------------------------------------------------- ---------------
Total net increase (decrease) resulting from Fund
share transactions ................................. (4,880,740) $ (100,850,656)
=================================================================== ===============
</TABLE>
* The Fund changed its fiscal year end from January 31 to July 31, effective
July 31,1997.
69
<PAGE>
Combined Notes to Financial Statements (Unaudited) (continued)
- --------------------------------------------------------------------------------
SMALL CAP
<TABLE>
<CAPTION>
Period Ended
January 31, 1998
------------------------------
Shares Amount
------------- ----------------
<S> <C> <C>
Class A
Shares sold .............................................. 1,793,483 $ 29,784,519
Shares issued in reinvestment of distributions ........... 20,640 341,312
Shares redeemed .......................................... (162,229) (2,697,159)
- ---------------------------------------------------------- ----------- --------------
Net increase ............................................. 1,651,894 27,428,672
- ---------------------------------------------------------- ----------- --------------
Class B
Shares sold .............................................. 3,842,444 63,412,895
Shares issued in reinvestment of distributions ........... 43,282 712,965
Shares redeemed .......................................... (75,965) (1,249,054)
- ---------------------------------------------------------- ----------- --------------
Net increase ............................................. 3,809,761 62,876,806
- ---------------------------------------------------------- ----------- --------------
Class C
Shares sold .............................................. 686,860 11,338,132
Shares issued in reinvestment of distributions ........... 8,787 144,615
Shares redeemed .......................................... (26,865) (441,283)
- ---------------------------------------------------------- ----------- --------------
Net increase ............................................. 668,782 11,041,464
- ---------------------------------------------------------- ----------- --------------
Class Y
Shares sold .............................................. 2,491,298 41,257,153
Shares issued in reinvestment of distributions ........... 37,958 629,092
Shares redeemed .......................................... (211,293) (3,523,665)
- ---------------------------------------------------------- ----------- --------------
Net increase ............................................. 2,317,963 38,362,580
- ---------------------------------------------------------- ----------- --------------
Total net increase resulting from Fund share transactions 8,448,400 $139,709,522
========================================================== =========== ==============
<CAPTION>
Period Ended Year Ended
July 31, 1997* December 31, 1996
----------------------------- --------------------------
Shares Amount Shares Amount
------------- --------------- ------------ -------------
<S> <C> <C> <C> <C>
Class A
Shares sold .............................................. 246,413 $ 3,587,404 23,318 $ 285,774
Shares issued in reinvestment of distributions ........... 854 12,209 1,564 19,575
Shares redeemed .......................................... (2,663) (37,984) (17,926) (213,193)
- ---------------------------------------------------------------------- ------------- ---------- -----------
Net increase ............................................. 244,604 3,561,629 6,956 92,156
- ---------------------------------------------------------------------- ------------- ---------- -----------
Class B
Shares sold .............................................. 560,543 8,164,490 27,963 341,494
Shares issued in reinvestment of distributions ........... 1,366 19,472 2,883 36,358
Shares redeemed .......................................... (9,769) (142,514) (966) (11,697)
- ---------------------------------------------------------------------- ------------- ---------- -----------
Net increase ............................................. 552,140 8,041,448 29,880 366,155
- ---------------------------------------------------------------------- ------------- ---------- -----------
Class C
Shares sold .............................................. 178,877 2,529,352 3,956 48,265
Shares issued in reinvestment of distributions ........... 524 7,467 136 1,697
Shares redeemed .......................................... (6,447) (91,950) (1,838) (22,125)
- ---------------------------------------------------------------------- ------------- ---------- -----------
Net increase ............................................. 172,954 2,444,869 2,254 27,837
- ---------------------------------------------------------------------- ------------- ---------- -----------
Class Y
Shares sold .............................................. 2,593,853 36,298,202 289,906 3,628,792
Shares issued in reinvestment of distributions ........... 11,719 165,502 25,358 316,899
Shares redeemed .......................................... (562,869) (8,498,878) (75,598) (912,038)
- ---------------------------------------------------------------------- ------------- ---------- -----------
Net increase ............................................. 2,042,703 27,964,826 239,666 3,033,653
- ---------------------------------------------------------------------- ------------- ---------- -----------
Total net increase resulting from Fund share transactions 3,012,401 $ 42,012,772 278,756 $3,519,801
====================================================================== ============= ========== ===========
</TABLE>
* The Fund changed its fiscal year end from December 31 to July 31, effective
July 31, 1997.
- --------------------------------------------------------------------------------
UTILITY
<TABLE>
<CAPTION>
Period Ended Period Ended
January 31, 1998 July 31, 1997*
----------------------------- --------------------------------
Shares Amount Shares Amount
------------- --------------- --------------- ----------------
<S> <C> <C> <C> <C>
Class A
Shares sold ............................................... 411,810 $ 4,767,785 45,144 $ 494,721
Shares issued in reinvestment of distributions ............ 774,520 8,730,206 147,141 1,602,820
Shares redeemed ........................................... (628,282) (7,316,574) (1,294,589) (14,079,531)
- ----------------------------------------------------------- ----------- ------------- ------------- --------------
Net increase (decrease) ................................... 558,048 6,181,417 (1,102,304) (11,981,990)
- ----------------------------------------------------------- ----------- ------------- ------------- --------------
Class B
Shares sold ............................................... 246,647 2,857,790 123,876 1,340,352
Shares issued in reinvestment of distributions ............ 333,364 3,757,976 52,424 581,312
Shares redeemed ........................................... (250,228) (2,900,901) (611,224) (6,601,705)
- ----------------------------------------------------------- ----------- ------------- ------------- --------------
Net increase (decrease) ................................... 329,783 3,714,865 (434,924) (4,680,041)
- ----------------------------------------------------------- ----------- ------------- ------------- --------------
Class C
Shares sold ............................................... 2,219 25,750 1,231 13,677
Shares issued in reinvestment of distributions ............ 3,295 37,149 536 5,909
Shares redeemed ........................................... (3,913) (45,052) (6,079) (66,033)
- ----------------------------------------------------------- ----------- ------------- ------------- --------------
Net increase (decrease) ................................... 1,601 17,847 (4,312) (46,447)
- ----------------------------------------------------------- ----------- ------------- ------------- --------------
Class Y
Shares sold ............................................... 37,420 433,850 23,627 256,182
Shares issued in reinvestment of distributions ............ 5,960 67,306 1,585 20,285
Shares redeemed ........................................... (30,516) (352,636) (72,220) (779,946)
- ----------------------------------------------------------- ----------- ------------- ------------- --------------
Net increase (decrease) ................................... 12,864 148,520 (47,008) (503,479)
- ----------------------------------------------------------- ----------- ------------- ------------- --------------
Total net increase (decrease) resulting from Fund share
transactions ............................................. 902,296 $ 10,062,649 (1,588,548) $ (17,211,957)
=========================================================== =========== ============= ============= ==============
<CAPTION>
Year Ended
December 31, 1996
--------------------------------
Shares Amount
--------------- ----------------
<S> <C> <C>
Class A
Shares sold ............................................... 246,512 $ 2,626,118
Shares issued in reinvestment of distributions ............ 478,287 5,051,093
Shares redeemed ........................................... (1,609,448) (16,984,094)
- ------------------------------------------------------------------------- --------------
Net increase (decrease) ................................... (884,649) (9,306,883)
- ------------------------------------------------------------------------- --------------
Class B
Shares sold ............................................... 787,800 8,401,385
Shares issued in reinvestment of distributions ............ 183,056 1,935,353
Shares redeemed ........................................... (630,402) (6,652,890)
- ------------------------------------------------------------------------- --------------
Net increase (decrease) ................................... 340,454 3,683,848
- ------------------------------------------------------------------------- --------------
Class C
Shares sold ............................................... 25,812 274,673
Shares issued in reinvestment of distributions ............ 1,963 20,723
Shares redeemed ........................................... (13,100) (135,909)
- ------------------------------------------------------------------------- --------------
Net increase (decrease) ................................... 14,675 159,487
- ------------------------------------------------------------------------- --------------
Class Y
Shares sold ............................................... 106,165 1,120,499
Shares issued in reinvestment of distributions ............ 7,089 74,971
Shares redeemed ........................................... (644,560) (6,607,014)
- ------------------------------------------------------------------------- --------------
Net increase (decrease) ................................... (531,306) (5,411,544)
- ------------------------------------------------------------------------- --------------
Total net increase (decrease) resulting from Fund share
transactions ............................................. (1,060,826) $ (10,875,092)
========================================================================= ==============
</TABLE>
* The Fund changed its fiscal year end from December 31 to July 31, effective
July 31, 1997.
70
<PAGE>
Combined Notes to Financial Statements (Unaudited) (continued)
- --------------------------------------------------------------------------------
VALUE
<TABLE>
<CAPTION>
Period Ended
January 31, 1998
-----------------------------------
Shares Amount
--------------- -------------------
<S> <C> <C>
Class A
Shares sold ........................................ 517,360 $ 12,548,785
Shares issued in reinvestment of distributions ..... 876,337 20,785,478
Shares redeemed .................................... (1,072,603) (26,022,373)
- ---------------------------------------------------- ------------- ------------------
Net increase (decrease) ............................ 321,094 7,311,890
- ---------------------------------------------------- ------------- ------------------
Class B
Shares sold ........................................ 1,260,492 30,594,037
Shares issued in reinvestment of distributions ..... 627,382 14,850,193
Shares redeemed .................................... (607,049) (14,673,491)
- ---------------------------------------------------- ------------- ------------------
Net increase ....................................... 1,280,825 30,770,739
- ---------------------------------------------------- ------------- ------------------
Class C
Shares sold ........................................ 52,246 1,267,803
Shares issued in reinvestment of distributions ..... 6,090 144,080
Shares redeemed .................................... (30,930) (752,996)
- ---------------------------------------------------- ------------- ------------------
Net increase ....................................... 27,406 658,887
- ---------------------------------------------------- ------------- ------------------
Class Y
Shares sold ........................................ 3,532,002 85,760,598
Shares issued in acquisition of FFB Lexicon
Select Value Fund ................................. 0 0
Shares issued in acquisition of FFB Equity Fund..... 0 0
Shares issued in reinvestment of distributions ..... 2,355,982 55,868,524
Shares redeemed .................................... (42,798,275) (1,023,604,357)
- ---------------------------------------------------- ------------- ------------------
Net increase (decrease) ............................ (36,910,291) (881,975,235)
- ---------------------------------------------------- ------------- ------------------
Total net increase (decrease) resulting from
Fund share transactions ........................... (35,280,966) $ (843,233,719)
==================================================== ============= ==================
<CAPTION>
Period Ended Year Ended
July 31, 1997* December 31, 1996
--------------------------------- ---------------------------------
Shares Amount Shares Amount
--------------- ----------------- --------------- -----------------
<S> <C> <C> <C> <C>
Class A
Shares sold ........................................ 948,931 $ 21,010,689 1,109,850 $ 23,895,251
Shares issued in reinvestment of distributions ..... 127,041 2,835,467 2,371,895 49,562,452
Shares redeemed .................................... (1,099,102) (24,085,514) (1,836,296) (39,736,035)
- ------------------------------------------------------------------ ---------------- ------------- ----------------
Net increase (decrease) ............................ (23,130) (239,358) 1,645,449 33,721,668
- ------------------------------------------------------------------ ---------------- ------------- ----------------
Class B
Shares sold ........................................ 2,284,482 50,184,755 2,197,426 47,442,303
Shares issued in reinvestment of distributions ..... 48,527 1,086,571 1,374,236 28,693,188
Shares redeemed .................................... (709,716) (15,577,742) (873,740) (18,943,891)
- ------------------------------------------------------------------ ---------------- ------------- ----------------
Net increase ....................................... 1,623,293 35,693,584 2,697,922 57,191,600
- ------------------------------------------------------------------ ---------------- ------------- ----------------
Class C
Shares sold ........................................ 46,777 1,018,408 38,761 832,827
Shares issued in reinvestment of distributions ..... 410 9,201 10,328 215,421
Shares redeemed .................................... (16,263) (355,395) (17,818) (377,207)
- ------------------------------------------------------------------ ---------------- ------------- ----------------
Net increase ....................................... 30,924 672,214 31,271 671,041
- ------------------------------------------------------------------ ---------------- ------------- ----------------
Class Y
Shares sold ........................................ 6,289,283 137,931,136 15,195,754 324,801,783
Shares issued in acquisition of FFB Lexicon
Select Value Fund ................................. 0 0 4,720,676 95,883,824
Shares issued in acquisition of FFB Equity Fund..... 0 0 692,924 14,077,973
Shares issued in reinvestment of distributions ..... 302,057 6,740,306 5,208,388 108,890,530
Shares redeemed .................................... (8,383,008) (184,606,592) (14,584,293) (316,060,052)
- ------------------------------------------------------------------ ---------------- ------------- ----------------
Net increase (decrease) ............................ (1,791,668) (39,935,150) 11,233,449 227,594,058
- ------------------------------------------------------------------ ---------------- ------------- ----------------
Total net increase (decrease) resulting from
Fund share transactions ........................... (160,581) $ (3,808,710) 15,608,091 $ 319,178,367
================================================================== ================ ============= ================
</TABLE>
* The Fund changed its fiscal year end from December 31 to July 31, effective
July 31, 1997.
- --------------------------------------------------------------------------------
TOTAL RETURN
<TABLE>
<CAPTION>
Period Ended Period Ended
January 31, 1998 July 31, 1997**
------------------------------ ------------------------------
Shares Amount Shares Amount
------------- ---------------- ------------- ----------------
<S> <C> <C> <C> <C>
Class A
Shares sold ................................................... 194,610 $ 3,930,736 521,092 $ 9,464,499
Shares issued in reinvestment of distributions ................ 184,042 3,579,097 18,071 331,175
Shares redeemed ............................................... (185,730) (3,729,178) (564,385) (10,121,645)
- --------------------------------------------------------------- ----------- --------------- ----------- ---------------
Net increase (decrease) ....................................... 192,922 3,780,655 (25,222) (325,971)
- --------------------------------------------------------------- ----------- --------------- ----------- ---------------
Class B
Shares sold ................................................... 744,258 14,989,542 2,651,702 48,001,066
Shares issued in reinvestment of distributions ................ 348,362 6,742,859 15,072 275,911
Shares redeemed ............................................... (688,200) (13,827,099) (609,684) (11,087,288)
- --------------------------------------------------------------- ----------- --------------- ----------- ---------------
Net increase .................................................. 404,420 7,905,302 2,057,090 37,189,689
- --------------------------------------------------------------- ----------- --------------- ----------- ---------------
Class C
Shares sold ................................................... 139,750 2,821,119 350,562 6,315,824
Shares issued in reinvestment of distributions ................ 78,104 1,513,361 4,023 73,683
Shares redeemed ............................................... (161,534) (3,239,817) (172,539) (3,193,608)
- --------------------------------------------------------------- ----------- --------------- ----------- ---------------
Net increase .................................................. 56,320 1,094,663 182,046 3,195,899
- --------------------------------------------------------------- ----------- --------------- ----------- ---------------
Class Y*
Shares sold ................................................... 2,722 55,957 4,486 85,018
Shares issued in reinvestment of distributions ................ 188 3,645 0 0
Shares redeemed ............................................... (4,905) (100,628) 0 0
- --------------------------------------------------------------- ----------- --------------- ----------- ---------------
Net increase (decrease) ....................................... (1,995) (41,026) 4,486 85,018
- --------------------------------------------------------------- ----------- --------------- ----------- ---------------
Total net increase resulting from Fund share transactions ..... 651,667 $ 12,739,594 2,218,400 $ 40,144,635
=============================================================== =========== =============== =========== ===============
<CAPTION>
Year Ended
November 30, 1996
----------------------------
Shares Amount
------------- --------------
<S> <C> <C>
Class A
Shares sold ................................................... 756,854 $ 11,818,891
Shares issued in reinvestment of distributions ................ 71,945 1,193,118
Shares redeemed ............................................... (446,563) (6,837,747)
- --------------------------------------------------------------------------- -------------
Net increase (decrease) ....................................... 382,236 6,174,262
- --------------------------------------------------------------------------- -------------
Class B
Shares sold ................................................... 1,503,008 23,867,265
Shares issued in reinvestment of distributions ................ 57,897 974,432
Shares redeemed ............................................... (534,970) (8,156,600)
- --------------------------------------------------------------------------- -------------
Net increase .................................................. 1,025,935 16,685,097
- --------------------------------------------------------------------------- -------------
Class C
Shares sold ................................................... 398,635 6,185,359
Shares issued in reinvestment of distributions ................ 21,672 362,645
Shares redeemed ............................................... (265,577) (4,069,150)
- --------------------------------------------------------------------------- -------------
Net increase .................................................. 154,730 2,478,854
- --------------------------------------------------------------------------- -------------
Class Y*
Shares sold ................................................... 0 0
Shares issued in reinvestment of distributions ................ 0 0
Shares redeemed ............................................... 0 0
- --------------------------------------------------------------------------- -------------
Net increase (decrease) ....................................... 0 0
- --------------------------------------------------------------------------- -------------
Total net increase resulting from Fund share transactions ..... 1,562,901 $ 25,338,213
=========================================================================== =============
</TABLE>
* The Fund share activity for Class Y shares reflects the period from June 10,
1997 (commencement of class operations) through July 31, 1997.
** The Fund changed its fiscal year end from November 30 to July 31, effective
July 31, 1997.
71
<PAGE>
Combined Notes to Financial Statements (Unaudited) (continued)
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 January 31,
1998:
<TABLE>
<CAPTION>
Cost of Proceeds
Purchases from Sales
--------------- ---------------
<S> <C> <C>
Growth and Income ......... $377,943,212 $154,226,976
Income and Growth ......... 570,099,192 598,149,412
Small Cap ................. 125,913,982 10,341,439
Utility ................... 40,304,301 43,648,403
Value ..................... 458,288,828 507,771,047
Total Return .............. 46,645,395 41,209,829
</TABLE>
6. DISTRIBUTION PLANS
Evergreen Distributor, Inc. (formerly, Evergreen Keystone Distributor, Inc.)
("EDI"), 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 as allowed by
Rule 12b-1 of the 1940 Act. Distribution plans permit the fund to reimburse its
principal underwriter for costs related to selling shares of the fund and for
various other services. These costs, which consist primarily of commissions and
service fees to broker-dealers who sell shares of the fund, are paid by
shareholders 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 asset 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.
With respect to Class B and Class C shares of Total Return, the principal
underwriter may pay 12b-1 fees greater than the allowable annual amounts the
Fund is permitted to pay. The Fund may reimburse the principal underwriter for
such excess amounts in later years with annual interest at the prime rate plus
1.00%.
During the six months ended January 31, 1998, amounts paid to EDI and/or its
predecessor pursuant to each Fund's Class A, Class B and Class C Distribution
Plans were as follows:
<TABLE>
<CAPTION>
Class A Class B Class C
----------- ------------- -----------
<S> <C> <C> <C>
Growth and Income ......... $249,536 $3,258,800 $149,689
Income and Growth ......... 16,039 241,930 4,951
Small Cap ................. 20,550 185,250 38,757
Utility ................... 117,429 192,394 1,836
Value ..................... 488,148 1,442,385 14,476
Total Return .............. 57,922 485,584 106,139
</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. However, after the termination of any Total Return's
Distribution Plan, and subject to the discretion of the Independent Trustees,
payments to EDI and/or its predecessor may continue as compensation for
services which had been provided while the Distribution Plan was in effect.
Contingent deferred sales charges paid by redeeming shareholders are paid to
EDI or its predecessor.
7. INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT AND OTHER AFFILIATED
TRANSACTIONS
First Union is entitled to an annual fee of .50 of 1% of Utility's and Value's
average daily net assets pursuant to each Fund's investment advisory agreement.
First Union voluntarily waived $129,071 of its fee for Utility for the six
months ended January 31, 1998.
72
<PAGE>
Combined Notes to Financial Statements (Unaudited) (continued)
Pursuant to an agreement with Growth and Income's, Income and Growth's and
Small Cap's investment adviser, Evergreen Asset Management Corp. ("Evergreen
Asset"), a wholly owned subsidiary of First Union, Evergreen Asset is entitled
to an annual fee based on each Fund's average daily net assets, respectively,
in accordance with the following schedule:
<TABLE>
<S> <C>
First $750 million ......... 1.00%
Next $250 million .......... 0.90%
Over $1 billion ............ 0.80%
</TABLE>
Evergreen Asset has agreed to reimburse Small Cap to the extent that the Fund's
operating expenses (including the investment advisory fee and amortization of
organizational expenses but excluding interest, taxes, brokerage commissions,
12b-1 distribution and shareholder services fees and extraordinary expenses)
exceed 1.50% of its average daily net assets. The Fund did not receive any
reimbursements of expenses during the six months ended January 31, 1998. First
Union and Evergreen Asset can modify or terminate these voluntary waivers at
any time.
Keystone Investment Management Company ("Keystone"), a subsidiary of First
Union, is the investment advisor for Total Return. In return for providing
investment management and administrative services to Total Return, the Fund
pays Keystone a management fee that is calculated daily and paid monthly. The
management fee is computed at an annual rate of 1.50% of Total Return's gross
investment income plus an amount determined by applying percentage rates
starting at 0.60% and declining to 0.30% per annum as net assets increase, to
the average daily net asset value of the Fund.
Evergreen Investment Services, Inc. ("EIS")(formerly Evergreen Keystone
Investment Services, Inc.), a subsidiary of First Union, is the administrator
and BISYS Fund Services is sub-administrator to the Funds. As administrator,
EIS provides the Funds with facilities, equipment and personnel. As
sub-administrator to the Funds, BISYS Fund Services provides the officers of
the Funds. The administrator and sub-administrator for each Fund are entitled
to an annual fee based on the average daily net assets of the funds
administered by EIS for which First Union or its investment advisory
subsidiaries are also the investment advisers. The administration fee is
calculated by applying percentage rates, which start at 0.05% and decline to
0.01% per annum as net assets increase, to the average daily net asset value of
the Fund. The sub-administration fee is calculated by applying percentage
rates, which start at 0.01% and decline to .004% per annum as net assets
increase, to the average daily net asset value of the Fund. For Growth and
Income, Income and Growth, Small Cap and Total Return the administration and
sub-administration fee is paid by their respective investment advisor and is
not a Fund expense. For the six months ended January 31, 1998, the Funds paid
the following amounts to EIS for providing administrative services:
<TABLE>
<S> <C>
Utility ......... $ 23,131
Value ........... 290,269
</TABLE>
Lieber & Company, an affiliate of First Union, is the investment sub-advisor to
Growth and Income, Income and Growth, and Small Cap and also provides brokerage
services with respect to substantially all security transactions of each Fund
effected on the New York or American Stock Exchanges. For the six months ended
January 31, 1998 Growth and Income, Income and Growth, and Small Cap incurred
the following brokerage commissions with Lieber & Company:
<TABLE>
<S> <C>
Growth and Income ........ $684,931
Income and Growth ........ 859,169
Small Cap ................ 149,060
</TABLE>
Lieber & Company is reimbursed by Evergreen Asset, at no additional expense to
the Funds, for its cost of providing investment advisory services.
During the period ended July 31, 1997, Total Return paid or accrued to EIS
$20,444 for certain administrative and accounting services.
73
<PAGE>
Combined Notes to Financial Statements (Unaudited) (continued)
Evergreen Service Company ("ESC") (formerly, Evergreen Keystone Service
Company, Inc.), a wholly-owned subsidiary of Keystone, serves as the transfer
and dividend disbursing agent for the Funds.
Officers of the Funds and affiliated Trustees receive no compensation directly
from the Funds.
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 Growth and Income, Income and Growth, Small Cap,
Utility and Value may defer any or all compensation related to performance of
duties as a Trustee. Each Trustee's deferred balances are allocated to deferral
accounts which are included in the accrued expenses for the Fund. The
investment performance of the deferral accounts are based on the investment
performance of certain Evergreen 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 January 31, 1998, the value of the Trustees deferral account for Growth
and Income, Income and Growth, Small Cap, Utility, and Value was $20,218,
$82,106, $7,482, $7,317 and $76,069.
10. FINANCING AGREEMENT
On October 31, 1996, a financing agreement among certain of the Evergreen
Funds, State Street Bank & Trust ("State Street") and a group of Banks (the
"Banks") became effective. Under this agreement, the Banks provided 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 bore interest at 0.75% per annum above
the Federal Funds rate. A commitment fee of 0.10% per annum was incurred on the
unused portion of the committed facility, which was allocated to all
participating funds. State Street served as agent for the Banks, and as agent
was entitled to a fee of $15,000 which was allocated to all of the
participating Funds. This agreement was terminated on October 31, 1997.
On October 31, 1997, a temporary financing agreement between the participating
Funds and First Union became effective. Under this agreement, First Union
provided a fully committed unsecured credit facility in the aggregate amount of
$300 million. Borrowings under this facility bore interest at 1.00% per annum
above the Federal Funds rate. State Street served as administrative agent under
this agreement, but received no compensation for its services. This agreement
was terminated on December 22, 1997.
On December 22, 1997, a financing agreement among all of the Evergreen Funds,
State Street and a group of Banks (the "Banks") became effective. Under this
agreement, the Banks provide an unsecured credit facility in the aggregate
amount of $400 million ($275 million committed and $125 million uncommitted).
The credit facility is allocated, under the terms of the financing agreement,
among the Banks. The credit facility is to be accessed by the Funds for
temporary or emergency purposes only and is subject to each Fund's borrowing
restrictions. Borrowings under this facility bear interest at 0.50% per annum
above the Federal Funds rate. A commitment fee of 0.065% per annum will be
incurred on the unused portion of the committed facility, which will be
allocated to all Funds. For its assistance in arranging this financing
agreement, the Capital Market Group of First Union was paid a one time
arrangement fee of $27,500. State Street serves as administrative agent for the
Banks, and as administrative agent is entitled to a fee of $20,000 per annum
which is allocated to all of the Funds
During the year ended December 31, 1997, the Funds had no significant
borrowings under these agreements.
11. CONCENTRATION OF CREDIT RISK
Utility invests a substantial portion of its assets in issuers in the Utilities
industry, therefore, it may be more affected by economic and political
developments in that industry than would be a comparable general equity fund.
74
<PAGE>
Combined Notes to Financial Statements (Unaudited) (continued)
12. SPECIAL MEETING OF SHAREHOLDERS
On December 15, 1997, a special meeting of shareholders for each of the Funds
was held to consider a number of proposals. Presented below are the record date
shares outstanding on October 16, 1997 and the number of shares represented at
the meeting:
<TABLE>
<CAPTION>
Growth and Income and
Income Growth
-------------- --------------
<S> <C> <C>
Record date shares outstanding ................ 53,688,243 39,666,808
Shares represented at meeting ................. 34,273,587 23,217,810
Percentage of record date shares represented at
meeting ...................................... 63.8% 58.5%
<CAPTION>
Small Total
Cap Utility Value Return
------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
Record date shares outstanding ................ 6,671,397 11,155,565 71,937,080 8,060,561
Shares represented at meeting ................. 4,599,991 6,202,452 54,195,495 4,852,347
Percentage of record date shares represented at
meeting ...................................... 69.0% 55.6% 75.3% 60.2%
</TABLE>
The votes recorded at the meeting, by proposal, were as follows:
<TABLE>
<CAPTION>
Growth and Income and Small Total
Income Growth Cap Utility Value Return
------------ ------------ ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Proposal 1 - The proposed reorganization of each Fund as a series of the
Evergreen Equity Trust, a Delaware business trust:
Shares voted "For" ......... 28,053,809 21,115,758 4,511,648 5,784,821 44,971,037 4,451,782
Shares voted "Against" ..... 366,348 714,756 12,464 71,942 227,564 130,833
Shares voted "Abstain" ..... 5,853,430 1,387,296 75,879 345,689 8,996,894 269,732
Proposal 2 - Reclassification as non-fundamental of the investment objective of
those Funds whose investment objective is currently classified as fundamental:
Shares voted "For" ......... 27,723,843 20,446,402 4,491,082 5,674,416 44,811,285 4,412,824
Shares voted "Against" ..... 609,425 1,326,821 25,419 139,868 328,401 163,278
Shares voted "Abstain" ..... 5,940,319 1,444,587 83,490 388,168 9,055,809 276,245
Proposal 3 - Changes to Fundamental investment restrictions:
Proposal 3A - To amend the Fundamental restriction concerning diversification
of investments:
Shares voted "For" ......... 27,605,634 20,369,017 4,489,474 5,643,704 44,590,692 4,262,996
Shares voted "Against" ..... 689,803 1,192,698 24,072 125,456 518,855 296,410
Shares voted "Abstain" ..... 5,978,150 1,656,095 86,445 433,292 9,085,948 292,941
Proposal 3B - To amend the Fundamental restriction concerning concentration of
a Fund's assets in a particular industry:
Shares voted "For" ......... 27,605,860 20,372,216 4,489,474 5,647,880 44,591,408 4,260,422
Shares voted "Against" ..... 689,577 1,188,618 24,072 121,280 518,139 298,157
Shares voted "Abstain" ..... 5,978,150 1,656,976 86,445 433,292 9,085,948 293,768
Proposal 3C - To amend the Fundamental restriction concerning the
issuance of senior securities:
Shares voted "For" ......... 27,607,656 20,363,374 4,488,153 5,647,880 44,587,631 4,262,049
Shares voted "Against" ..... 687,781 1,197,460 25,393 121,280 521,916 296,530
Shares voted "Abstain" ..... 5,978,150 1,656,976 86,445 433,292 9,085,648 293,768
Proposal 3D - To amend the Fundamental restriction concerning borrowing:
Shares voted "For" ......... 27,602,832 20,351,437 4,487,976 5,647,040 44,587,510 4,260,303
Shares voted "Against" ..... 692,605 1,209,945 25,570 122,120 522,037 298,276
Shares voted "Abstain" ..... 5,978,150 1,656,428 86,445 433,292 9,085,948 293,768
Proposal 3E - To amend the Fundamental restriction concerning underwriting:
Shares voted "For" ......... 27,606,758 20,373,398 4,489,469 5,647,880 44,591,408 4,262,169
Shares voted "Against" ..... 688,679 1,187,436 24,077 121,280 518,139 296,410
Shares voted "Abstain" ..... 5,978,150 1,656,976 86,445 433,292 9,085,948 293,768
Proposal 3F - To amend the Fundamental restriction concerning investments in Real Estate:
Shares voted "For" ......... 27,607,545 20,377,240 4,489,652 5,647,880 44,591,288 4,262,169
Shares voted "Against" ..... 687,892 1,184,198 23,894 121,280 518,259 296,410
Shares voted "Abstain" ..... 5,978,150 1,656,372 86,445 433,292 9,085,948 293,768
Proposal 3G - To amend the Fundamental restriction concerning commodities:
Shares voted "For" ......... 27,602,604 20,345,170 4,487,976 5,647,040 44,587,510 4,262,049
Shares voted "Against" ..... 692,833 1,216,268 25,70 122,120 522,037 296,530
Shares voted "Abstain" ..... 5,978,150 1,656,372 86,445 433,292 9,085,948 293,768
Proposal 3H - To amend the Fundamental restriction concerning lending:
Shares voted "For" ......... 27,606,659 20,344,839 4,487,976 5,645,251 44,587,510 4,260,422
Shares voted "Against" ..... 688,778 1,215,995 25,570 121,280 522,037 298,157
Shares voted "Abstain" ..... 5,978,150 1,656,976 86,445 435,921 9,085,948 293,768
</TABLE>
75
<PAGE>
Combined Notes to Financial Statements (Unaudited) (continued)
<TABLE>
<CAPTION>
Growth and Income and Small Total
Income Growth Cap Utility Value Return
------------ ------------ ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Proposal 3J9 - Reclassification as nonfundamental of current fundamental restriction: Unseasoned Issuers
Shares voted "For" ......... 27,601,588 20,350,054 4,489,174 5,644,357 44,589,647 4,260,158
Shares voted "Against" ..... 694,024 1,210,067 24,195 121,280 519,900 296,302
Shares voted "Abstain" ..... 5,977,975 1,657,689 86,622 436,815 9,085,948 295,887
Proposal 3J10 - Reclassification as nonfundamental of current fundamental restriction: Control or
Management
Shares voted "For" ......... 27,600,912 20,334,009 4,489,174 5,642,862 44,587,508 4,260,038
Shares voted "Against" ..... 694,700 1,226,112 24,195 123,668 522,039 296,422
Shares voted "Abstain" ..... 5,977,975 1,657,689 86,622 435,922 9,085,948 295,887
Proposal 3J11 - Reclassification as nonfundamental of current fundamental restriction: Short Sales
Shares voted "For" ......... 27,603,412 20,347,957 - 5,645,251 44,585,870 4,262,168
Shares voted "Against" ..... 692,200 1,213,265 - 121,280 523,677 294,292
Shares voted "Abstain" ..... 5,977,975 1,656,688 - 435,921 9,085,948 295,887
Proposal 3J12 - Reclassification as nonfundamental of current fundamental restriction: Margin Purchases
Shares voted "For" ......... 27,600,758 20,349,438 - - 44,585,747 4,262,168
Shares voted "Against" ..... 694,854 1,211,785 - - 523,800 294,292
Shares voted "Abstain" ..... 5,977,975 1,656,587 - - 9,085,948 295,887
Proposal 3J13 - Reclassification as nonfundamental of current fundamental restriction: Other Investment
Companies
Shares voted "For" ......... 27,602,247 20,358,374 - - - 4,264,557
Shares voted "Against" ..... 694,381 1,206,306 - - - 294,291
Shares voted "Abstain" ..... 5,976,959 1,653,130 - - - 293,499
Proposal 3J14 - Reclassification as nonfundamental of current fundamental restriction: Officers' and
Director's Ownership of Shares
Shares voted "For" ......... 27,602,396 20,350,966 - - - 4,264,557
Shares voted "Against" ..... 694,232 1,213,714 - - - 294,291
Shares voted "Abstain" ..... 5,976,959 1,653,130 - - - 293,499
Proposal 3J15 - Reclassification as nonfundamental of current fundamental restriction: Warrants
Shares voted "For" ......... 27,602,859 20,351,817 - - - -
Shares voted "Against" ..... 693,769 1,212,863 - - - -
Shares voted "Abstain" ..... 5,976,959 1,653,130 - - - -
Proposal 3J16 - Reclassification as nonfundamental of current fundamental restriction: Interests in Oil,
Gas or Other Mineral Explorations or Development Programs
Shares voted "For" ......... 27,602,386 20,358,260 - - - -
Shares voted "Against" ..... 694,050 1,205,368 - - - -
Shares voted "Abstain" ..... 5,977,151 1,654,182 - - - -
Proposal 3J17 - Reclassification as nonfundamental of current fundamental restriction: Joint Trading
Shares voted "For" ......... 27,604,568 20,350,732 - - - -
Shares voted "Against" ..... 691,868 1,212,639 - - - -
Shares voted "Abstain" ..... 5,977,151 1,654,439 - - - -
Proposal 3J18 - Reclassification as nonfundamental of current fundamental restriction: Options
Shares voted "For" ......... 27,602,386 20,358,800 - - - -
Shares voted "Against" ..... 694,050 1,203,833 - - - -
Shares voted "Abstain" ..... 5,977,151 1,655,177 - - - -
</TABLE>
76
<PAGE>
66576 540390 RV02
3/98
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U.S. POSTAGE
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CHARLOTTE, NC
PERMIT NO. 136
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SINCE 1932
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