EVERGREEN FUND, N-30D, 1996-06-07

EVERGREEN FUND
N-30D, 1996-06-07

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EVERGREEN DOMESTIC GROWTH FUNDS
TABLE OF CONTENTS
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Economic Overview......................................................... 1
(Photo of EVERGREEN FUND A Report From Your Portfolio Manager...................................... 2
Wall Street sign Statement of Investments.................................................. 5
appears here) Statement of Assets and Liabilities....................................... 10
Statement of Operations................................................... 11
Statement of Changes in Net Assets........................................ 12
Financial Highlights...................................................... 13
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(Photo of EVERGREEN AGGRESSIVE A Report From Your Portfolio Manager...................................... 15
beakers and test tubes GROWTH FUND Statement of Investments.................................................. 17
appears here) Statement of Assets and Liabilities....................................... 18
Statement of Operations................................................... 19
Statement of Changes in Net Assets........................................ 20
Financial Highlights...................................................... 21
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(Photo of EVERGREEN LIMITED A Report From Your Portfolio Manager...................................... 23
sculpture on building MARKET FUND, INC. Statement of Investments.................................................. 25
appears here) Statement of Assets and Liabilities....................................... 27
Statement of Operations................................................... 28
Statement of Changes in Net Assets........................................ 29
Financial Highlights...................................................... 30
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(Photo of EVERGREEN A Report From Your Portfolio Manager...................................... 32
American flag U.S. REAL ESTATE Statement of Investments.................................................. 35
appears here) EQUITY FUND Statement of Assets and Liabilities....................................... 36
Statement of Operations................................................... 37
Statement of Changes in Net Assets........................................ 38
Financial Highlights...................................................... 39
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Combined Notes to Financial Statements..................... 41
Trustees/Directors and Officers............................ Inside Back Cover
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<PAGE>
EVERGREEN DOMESTIC GROWTH FUNDS
ECONOMIC OVERVIEW
BY STEPHEN A. LIEBER, CHAIRMAN,
EVERGREEN ASSET MANAGEMENT CORP.
The volatility of investment markets during the (Photo of
first quarter of 1996 reflected a virtually constant Stephen A. Lieber
reappraisal of economic prospects. The prospects of appears here)
sporadic commodity inflation, evidence of resurgent
employment trends, failure of political
negotiations to achieve a balanced budget agreement, declining demand in
personal computer-based technological products, sizable consumer credit growth
and greater credit card losses, the increase in imports without concomitant
increases in exports, and the rise of the dollar, all drove the markets to
mirror the fast changing trends of new statistics. The question of whether
inflation might be reappearing was central to the investor reaction to these
concerns. The fear of inflation undoubtedly increased through the first quarter,
as evidenced by the sizable rise in bond market yields. By early April,
long-term U.S. Treasury bond yields reached 7%, a level last seen in August
1995, and up more than one full percentage point from the beginning of 1996.
Clearly, investors were demanding more of an inflation premium in interest
rates.
Stock prices during the same period increasingly detached their trend from
that of the bond market, with the overall indexes moving up, while bond prices
fell and bond yields rose. Driven by extraordinary inflows into equity mutual
funds, investors, including professionals, were literally chasing after stocks
in the effort to invest newly received monies and to participate in the
near-term investment performance derby. The lift-off in equities was not
general, as there was adverse pressure on technology stocks during periods of
disappointing growth in demand after the first of the year, and declining prices
for the commodity types of computer chips. Defensive growth stocks and major
cyclical stocks were alternately bought and sold as investors tried to decide
whether the proper strategy was to be in a mode which could obtain growth in a
recessionary environment, or growth in an expanding and inflationary
environment. Notwithstanding changing and often conflicting views, the pressure
of new monies drove the major stock market averages to new highs day after day.
The background with which this year has begun is inconclusive in its trends.
We have previously held to the view that a wage-driven inflation is unlikely in
the present economic environment due to the easy substitution of imported goods
for many domestic goods, while competitive pressures for U.S. and world markets
mount from the broadening dispersion of technology, capital, and capital goods.
The strength of American industry, it is generally held, must come from its
product innovation, its quality, and the rising productivity of its work force.
These internal and external pressures have had a major impact in restraining
wage-driven inflation. Monetary inflation has shown improving trends as the
budget deficit, as a percentage of gross domestic product, continues to decline.
Attention, however, must still be given to the longer term issues of potentially
destabilized Federal budgeting due to entitlements. While no solution to this
issue of government deficit control emerged from this year's political
negotiations, it is at least better established on the political agenda than
ever before.
As recently re-ignited inflation fears are cooled, bond yields should again
decline, and interest in equities should focus more on long-term performers
rather than on cyclical opportunities. Our continued emphasis will be to focus
on those businesses which have the best customer franchises and the greatest
ability to lead, rather than follow the competition. It is to these companies
that we look for the investment vehicles which will provide sustained or
accelerated growth and profitability. Even an environment of reduced volatility
should permit the careful purchase of these equities at times when investors
show uncertainty and prices are under comparative pressure.
We believe the common denominator of successful equity investment to be the
combination of strong near-term earnings growth prospects based on product
leadership, and undervaluation on a price/earnings ratio basis, together with a
historic record of strong achievement and excellent financial strength.
In summary, the economy has performed well in a slowing stage of economic
growth. As confidence in the stability and health of the economy increases, we
anticipate a less volatile, more long-term-focused equity market. This could
well be supported by a recovery in bond prices as the inflation premium in
interest rates is, again, reduced.
1

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(Photo of Wall Street EVERGREEN FUND
sign appears here)

A REPORT FROM YOUR
PORTFOLIO MANAGER
STEPHEN A. LIEBER
Evergreen Fund completed the first half of its 1996 fiscal (Photo of
year on March 31, 1996, with a total return (Class Y, no-load Stephen A.
shares) of 9.2%*. This continued positive performance reflects Lieber
the benefits of the diversified nature of the Fund's holdings, appears here)
providing numerous opportunities for gains in a highly
volatile, strategically shifting equity market. This recent
volatility and sector shifting in the equity markets reflects
both the large flows of new savings money into stock market
investment, and many uncertainties as to the outlook for
specific industries and the economy. Performance for the
Fund's Class A shares at NAV, Class B shares at NAV and Class
C shares at NAV
for the six months ended March 31, 1996, were 9.0%, 8.6%, and
8.6%, respectively. Class A shares are subject to a maximum 4.75% front end
sales charge, Class B shares are subject to a maximum 5% contingent deferred
sales charge, and Class C shares are subject to a 1% contingent deferred sales
charge within the first year of purchase. Sales charges are not reflected in
figures above, and if reflected, performance would be lower.
In much of the first quarter of the fiscal year, the stock and bond markets
were periodically "spooked" by fears of a slowdown which could lead to
recession. In the second quarter of the fiscal year, the markets were
periodically "spooked" by fears of resurgent economic strength which might lead
to inflation. The inflation-resistant growth stocks such as health care, which
outperformed the market during the December quarter, were often flat to negative
performers in the March quarter. On the other hand, cyclical stocks such as
chemicals and autos, which were under pressure during the December quarter,
found investor interest in the March quarter. Apprehensions were widespread;
fears over credit card losses and risks at one point putting pressure on bank
stocks, and inventory build-up of personal computers putting pressures on the
major electronic stocks, particularly in computer chips. Short-term rather than
long-term trends obviously dominated, especially as professional investors,
notably mutual funds, pushed for performance and tried to be in the favored
sectors and out of the unfavored ones. Record stock market volume was a
constant, as stock market averages rose to new high after new high.
The Evergreen Fund portfolio management strategy aims to buy growth
opportunities on an undervalued basis. When a well-established, high-quality
growth company or group of companies is out of market favor, we examine it for
new opportunities to buy growth without paying a premium and also, thereby,
reducing portfolio risk. In this period, the principal growth opportunity
developed was weakness among technology shares, particularly in January. The
Fund bought a number of issues and added to other holdings, with notable gains
at period-end such as 71.8% in Andrew Corp., and 33.3% in U.S. Robotics, Inc.
Purchases were also made in bank shares during a credit card loan-loss scare,
and homebuilder shares were bought when interest rates rose again and investors
feared that mortgages would become too expensive. The Fund took advantage of
many such opportunities for outstanding growth stock commitment during the six
months. Seventeen companies whose shares were purchased during the period
appreciated 25% or more, with gains ranging up to 71.2%.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
* PERFORMANCE FIGURES INCLUDE REINVESTMENT OF INCOME DIVIDEND AND CAPITAL GAIN
DISTRIBUTIONS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE.
INVESTORS' SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST.
EFFECTIVE THE CLOSE OF BUSINESS ON 1/19/96, EVERGREEN FUND ACQUIRED
SUBSTANTIALLY ALL OF THE NET ASSETS OF FFB LEXICON SMALL COMPANY GROWTH FUND.
2

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(Photo of Wall Street EVERGREEN FUND
sign appears here)

Selecting long-term growth opportunities on a significantly undervalued basis
has been a long-term strategy of the Evergreen Fund and has accounted for a
significant portion of the Fund's (Class Y, no-load shares) 3,909.6%* cumulative
total return, which equates to a 16.3% average annual compound return, since its
inception on September 14, 1971 through March 31, 1996. The Fund's five and
ten-year average annual compound returns through March 31 were 14.0% and 10.5%,
respectively. The 12-month total returns ended March 31, for the Fund's Class A
shares, Class B shares and Class C shares, including the applicable sales
charges, were 20.4%, 20.6% and 24.6%, respectively. Since their inception on
January 3, 1995, the average annual compound rates of return for these classes
of shares were 27.2%, 28.4% and 31.4%, respectively.
Another factor in both the Fund's recent gains and its long-term record of
capital appreciation is the acquisition of Fund portfolio holdings by other
companies. These acquisitions confirm the judgment of our research group that we
had bought undervalued companies. During this first half-year, eleven companies
among portfolio holdings either were acquired or received acquisition offers.
Those completed were: First Financial Management Corp., with a 294.0% gain in a
six-and-one-quarter-year holding period; Intercontinental Bank, with an 87.6%
gain in a three-and-one-half-year holding period; Medicine Shoppe International,
Inc., with a 102.5% gain in a seven-year holding period; REN Corp.-USA with a
66.6% gain in a two-and-one-quarter-year holding period; PSICOR, Inc. with a
17.8% gain in a four-year holding period; and Multimedia, Inc., with a 23.8%
gain in a ten-month holding period. Those pending at the end of the quarter
were: Baybanks, Inc., which has appreciated 369.8% (held five and three-quarter
years); Western Waste Industries Inc., which was sold after the acquisition
announcement for a 130.8% gain (held eight years); Circle K Corp., which has
appreciated 91.4% (held one year); Davidson & Associates, Inc. which has
appreciated 29.0% (held nine months); and MediSense, Inc., with a 53.7% gain
(held one month). Altogether, eleven issues were acquired, or have acquisitions
pending, with an average return of 98.7% on the six completed acquisitions. This
brings the number of companies acquired or merged from the Evergreen Fund
portfolio since its inception to 288.
Sales made during the half-year were generally of issues whose price had
risen to levels which no longer seemed to provide room for exceptional gains, or
where there were reduced profits growth expectations. Some of the holdings were
long held. Value and growth prospects were the dominant considerations in
selecting portfolio issues for sale. An important part of the Fund's focus on
both value and growth in recent months has been the holding of an above average
cash-equivalent position. At the end of the six-month period, the Fund held
20.4% of its assets in cash equivalents. Our intention in building up this high
degree of liquidity has been to use it as a resource to take advantage of
bargains which might be found as a result of the market's volatility, of its
intolerance for temporary set-backs, and of its avoidance of unpopular sectors.
We expect that these reserve funds will soon be most effectively used,
especially after the great burst of beginning-of-the-year buying tapers off. The
extraordinary amount of money placed in equities, particularly mutual funds, in
the first quarter of calendar 1996, may well prove to be a surge, rather than a
steady stream. Portfolio managers may then accelerate their portfolio turnover
in the search for better results, which, in turn, will provide opportunities for
our buying of neglected or misunderstood growth issues.
The Evergreen Fund stock selection policy aim is to select companies whose
growth opportunity we believe will be increased by current economic,
technological, and social developments. Recent acquisitions concentrated on
companies which we believe will benefit from new opportunities in the
communications fields
3

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(Photo of Wall Street EVERGREEN FUND
sign appears here)

A REPORT FROM YOUR
PORTFOLIO MANAGER -- (CONTINUED)
through enhanced technology and software, on companies whose products and
services enhance productivity, on companies whose business franchises offer
values not recognized in current market pricing, and on companies with promising
growth from new and innovative products or services.
The ten top performing stocks in the Evergreen Fund over the last six months
were companies which each met the description of growth opportunities. They are
as follows: Aspect Telecommunications Corp., +94.1%, an innovative leader in
inbound telemarketing and telecommunications systems products; Davidson &
Associates, Inc., +77.4%, innovative leader in developing educational software,
particularly for mathematics; Dialogic Corp., +70.4%, a producer of
telecommunications call processing systems; Jones Apparel Group, Inc., +62.6%, a
women's apparel company which has developed a unique niche in clothing for the
office working woman; FHP International Corp., +57.4%, due to the company's
announced restructuring of staff HMO operations; Redman Industries, Inc.,
+55.1%, a leader in the manufactured home industry, providing new impetus
through multi-section homes; MediSense, Inc., +53.8%, a leader in the blood
glucose monitoring business; HBO & Co., +51.2%, innovative and comprehensive
provider of computer information systems for health care management; Circle K
Corp., +50.3%, a leader in convenience store development, with a growth position
in gasoline marketing; and Gradco Systems, Inc., +50.0%, a turnaround company
with new products for paper handling systems for copiers and computer printers.
The weakest performers in Evergreen Fund during the first half of the fiscal
year were specialty companies experiencing an interruption in their business
trends. Thus, the major decliners were Adflex Solutions -36.8%, Sundance Homes,
- -39.4%, Circon Corp., -36.6%, and Franklin Electronic Publishers, -35.2% Each of
these businesses is a comparatively small enterprise, and such disappointments
are characteristics of the risks of non-diversified, specialty companies.
These companies all fit within the category of the small-to-medium size
company universe, which is the largest segment of the Evergreen Fund portfolio.
New purchases made during the first half of the fiscal year were predominantly
in the shares of small-to-medium size companies. Further, they were
predominantly characterized by the recent or the prospective introduction of new
products and services, which would enhance their growth and profitability. Of
the fifty-six issues added to the portfolio during the six months, only eighteen
had a market capitalization in excess of $1 billion. These include: Avnet, Inc.,
Delta Air Lines, Inc., Fila Holding S.P.A.** Gucci Group N.V.**, Hewlett-Packard
Co., Kyocera Corp.**, Newell Co., and UCAR International, Inc. The average
market capitalization of the remaining purchases is $239.0 million. The median
market capitalization of the entire portfolio at March 31, 1996 is $459.3
million.
The Evergreen Fund continues its historical emphasis in dynamic,
entrepreneurial opportunities in smaller companies, while also taking advantage
of the shares of larger companies when they are demonstrating new
entrepreneurially-based growth opportunities and which we believe to be
undervalued. In this subdued, but still dynamic economy, we believe these new
holdings and established holdings of Evergreen Fund should show growth and
profitability above the average for the American economy, as well as a reduced
risk profile in the event of negative market volatilities.
We appreciate the interest and commitment in our Fund from many new investors
and the strong support we continue to receive from long-time holders. We have
enhanced our research group with new talented security analysts who will
continue to search for outstanding investment results.
** INTERNATIONAL INVESTING MAY INVOLVE CERTAIN ADDITIONAL RISKS SUCH AS CURRENCY
FLUCTUATIONS, ECONOMIC AND POLITICAL INSTABILITY, AND DIFFERENCES IN
ACCOUNTING STANDARDS.
4

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(Photo of EVERGREEN FUND
Wall Street sign STATEMENT OF INVESTMENTS
appears here) MARCH 31, 1996
(UNAUDITED)

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SHARES VALUE
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COMMON STOCKS -- 79.6%
BANKS -- 16.6%
45,000 Amcore Financial, Inc................. $ 939,375
100,000* American Bancshares, Inc.............. 662,500
50,000 American Federal Bank, FSB............ 750,000
28,300 AmSouth Bancorporation................ 1,100,162
105,243 Arrow Financial Corp.................. 2,131,171
115,000 Bank of Boston Corp................... 5,706,875
9,000 Bank of Commerce/San Diego............ 139,500
273,320.. Barnett Banks, Inc.................... 17,014,170
194,200 Baybanks, Inc......................... 20,876,500
40,000 Benson Financial Corp................. 800,000
9,000 Cape Cod Bank & Trust Co.............. 348,750
30,000 Central Fidelity Banks, Inc........... 1,020,000
205,012 Chittenden Corp....................... 5,484,071
50,000 Cole Taylor Financial Group, Inc...... 1,475,000
30,000 Comerica, Inc......................... 1,252,500
12,800 Compass Bancshares, Inc............... 412,800
83,900 Cornerstone Bank...................... 886,194
28,700 Crestar Financial Corp................ 1,650,250
7,400 Cullen/Frost Bankers, Inc............. 364,450
127,000 First Empire State Corp............... 31,242,000
244,703 First Michigan Bank Corp.............. 7,402,266
65,000 First Palm Beach Bancorp., Inc........ 1,446,250
316,818 1st Source Corp....................... 6,811,587
62,500 First State Bancorp................... 757,812
50,000 1st United Bancorp.................... 475,000
160,350 Fort Wayne National Corp.............. 4,810,500
889,540 Hibernia Corp. Cl. A.................. 9,451,363
22,000 Hudson Chartered Bancorp, Inc......... 473,000
7,000 Letchworth Independent
Bancshares Corp....................... 217,000
10,000 Letchworth Independent Bancshares
Corp. warrants -- expiring
12/31/97.............................. 87,500
67,779 Magna Group, Inc...................... 1,567,389
10,400 Mark Twain Bancshares, Inc............ 390,000
11,000 Merchants Bancorp, Inc................ 310,750
170,000 North Fork Bancorporation, Inc........ 4,058,750
105,432 Old Kent Financial Corp............... 4,204,101
111,000 ONBANCorp, Inc........................ 3,885,000
21,500 One Valley Bancorp of West Virginia,
Inc................................... 674,562
30,000* Riggs National Corp................... 371,250
70,000 River Forest Bancorp.................. 2,030,000
100,000* SC Bancorp............................ 650,000
16,000 Seacoast Banking Corporation of
Florida............................... 356,000
455,200* Surety Capital Corp................... 1,707,000
5,625 Susquehanna Bancshares, Inc........... 158,906
77,200 United Carolina Bancshares Corp....... 1,891,400
66,550* United Security Bancorporation........ 831,875
39,285 Univest Corp. of Pennsylvania......... 1,213,121
10,000 USBanCorp, Inc........................ 326,250
16,800 Valley National Bancorp............... 466,200
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SHARES VALUE
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BANKS -- CONTINUED
65,000 Westamerica Bancorporation............ $ 3,071,250
36,000 West Coast Bancorp, Inc. (Fla.)....... 522,000
32,340 West Coast Bancorp, Inc. (Ore.)....... 630,630
155,504,980
BUILDING, CONSTRUCTION &
FURNISHINGS -- 3.0%
30,000* Castle & Cooke, Inc................... 491,250
100,000 Clayton Homes, Inc.................... 2,087,500
88,000 Continental Homes Holding Corp........ 2,024,000
67,000 D.R. Horton, Inc...................... 720,250
220,900 Interface, Inc. Cl. A................. 2,650,800
132,800 Juno Lighting, Inc.................... 1,826,000
48,000 Kaufman & Broad Home Corp............. 768,000
88,600 La-Z-Boy Chair Co..................... 2,757,675
50,000 Lennar Corp........................... 1,243,750
76,200* M/I Schottenstein Homes, Inc.......... 781,050
240,000* Redman Industries, Inc................ 4,860,000
75,700 Ryland Group, Inc..................... 1,220,663
45,000* Southern Energy Homes, Inc............ 663,750
158,200 Standard Pacific Corp................. 1,146,950
90,000* Sundance Homes, Inc................... 180,000
120,000* Toll Brothers, Inc.................... 2,070,000
93,500 US Home Corp.......................... 2,407,625
27,899,263
BUSINESS EQUIPMENT & SERVICES -- 2.8%
69,000* Aspect Telecommunications Corp........ 3,156,750
78,750* Boole & Babbage, Inc.................. 2,017,969
60,000 Bowne & Co., Inc...................... 1,095,000
40,000* Broderbund Software, Inc.............. 1,510,000
60,000* Cisco Systems, Inc.................... 2,782,500
40,000* EIS International, Inc................ 645,000
104,800* Gradco Systems, Inc................... 353,700
45,000* In Focus Systems, Inc................. 1,577,813
20,000* Intuit, Inc........................... 900,000
40,000 Miller (Herman), Inc.................. 1,240,000
110,000 Sensormatic Electronics Corp.......... 2,227,500
113,000 Snap-On, Inc.......................... 5,282,750
110,800* Zebra Technologies Corp............... 2,936,200
25,725,182
CHEMICALS & AGRICULTURAL PRODUCTS --
1.3%
30,000 Nalco Chemical Co..................... 922,500
11,000 OM Group, Inc......................... 408,375
349,568 Schulman (A.), Inc.................... 7,384,624
45,000 Sigma-Aldrich Corp.................... 2,576,250
24,000 Terra Industries, Inc................. 309,000
13,600 Universal Corp........................ 341,700
11,942,449
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(Photo of EVERGREEN FUND
Wall Street sign STATEMENT OF INVESTMENTS -- (CONTINUED)
appears here) MARCH 31, 1996
(UNAUDITED)
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SHARES VALUE
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COMMON STOCKS -- CONTINUED
COMMUNICATION SERVICES &
EQUIPMENT -- .6%
85,000* Boston Technology, Inc................ $ 1,126,250
50,000 Coherent Communications
Systems Corp.......................... 1,038,281
23,000* Colonial Data Technologies Corp....... 508,875
35,000* Level One Communications, Inc......... 971,250
110,000* Vertex Communications Corp............ 1,760,000
5,404,656
CONSUMER PRODUCTS & SERVICES -- 4.9%
70,000 Aaron Rents, Inc. Cl. B............... 1,452,500
105,000* American Business Information, Inc.... 1,680,000
196,030 Anthony Industries, Inc............... 5,194,795
60,000 Arctco, Inc........................... 592,500
45,000* Circle K Corp......................... 1,378,125
155,300 Crown Crafts, Inc..................... 1,475,350
112,500 CUC International, Inc................ 3,290,625
47,000 Data Translation, Inc................. 775,500
51,800 Davidson & Associates, Inc............ 1,210,825
30,000 Franklin Electric Co., Inc............ 1,080,000
75,300 Franklin Electronic Publishers,
Inc................................... 1,854,263
50,000* Furniture Brands
International, Inc.................... 462,500
54,200 Garan, Inc............................ 921,400
70,000* Gucci Group........................... 3,360,000
181,650 Harman International
Industries, Inc....................... 6,811,875
20,550 Kellwood Co........................... 318,525
232,777 Lancaster Colony Corp................. 8,670,943
70,000* LoJack Corp........................... 665,000
40,000* Nautica Enterprises, Inc.............. 1,910,000
40,000 Newell Co............................. 1,070,000
60,000* Recovery Engineering, Inc............. 645,000
23,000 Roto-Rooter, Inc...................... 707,250
45,526,976
ENERGY -- .2%
20,000* Global Industries Ltd................. 420,000
19,950 Newpark Resources, Inc................ 593,513
16,000 Sierra Pacific Resources, Inc......... 402,000
1,415,513
FINANCE & INSURANCE -- 8.7%
172,200 Allmerica Property
& Casualty Cos., Inc.................. 4,520,250
189,400 AMBAC, Inc............................ 9,114,875
99,200 Countrywide Credit Industries, Inc.... 2,194,800
10,500 Equitable of Iowa Cos................. 375,375
141,500 Executive Risk, Inc................... 4,528,000
126,900 Federal Home Loan
Mortgage Corp......................... 10,818,225
638,000 Federal National
Mortgage Association.................. 20,336,250
<CAPTION>
SHARES VALUE
<C> <S> <C>
FINANCE & INSURANCE -- CONTINUED
60,000 First American Financial Corp......... $ 1,725,000
50,000* Imperial Thrift & Loan Association.... 700,000
93,100 John Nuveen Co. (The) Cl. A........... 2,269,312
70,900 MBIA, Inc............................. 5,317,500
253,800 MGIC Investment Corp.................. 13,832,100
16,600 PennCorp Financial Group, Inc......... 522,900
6,400 Price (T.) Rowe Associates, Inc....... 339,200
23,992 Providian Corp........................ 1,070,643
9,800 ReliaStar Financial Corp.............. 443,450
66,852* Resource Bancshares Mortgage Group,
Inc................................... 1,044,563
20,000 State Auto Financial Corp............. 455,000
94,800 State Financial Services Corp......... 1,374,600
14,100 Vesta Insurance Group, Inc............ 460,012
81,442,055
FOOD RETAILING & DISTRIBUTION -- .5%
16,500+ Coca-Cola Bottling Co.
Consolidated Cl. B+................... 556,875
50,000 Coca-Cola
FEMSA, S.A. de C.V., ADR.............. 1,131,250
20,000 Panamerican Beverages, Inc............ 807,500
134,000 Seaway Food Town, Inc.**.............. 2,227,750
4,723,375
HEALTH CARE PRODUCTS &
SERVICES -- 13.9%
65,000 Arbor Drugs, Inc...................... 1,365,000
15,000 Arrow International, Inc.............. 624,375
100,000* Beverly Enterprises, Inc.............. 1,100,000
145,000* Biomet, Inc........................... 2,030,000
68,298* Boston Scientific Corp................ 3,141,708
111,000 Caremark International, Inc........... 2,788,875
30,000* Circon Corp........................... 438,750
100,000* Coherent, Inc......................... 4,250,000
130,200 Columbia/HCA Healthcare Corp.......... 7,519,050
40,000* Express Scripts, Inc.................. 1,870,000
65,828* FHP International Corp................ 2,081,810
28,974* Foundation Health Corp................ 1,104,634
24,700* Health Management Associates, Inc..... 864,500
11,800* HEALTHSOUTH Corp...................... 401,200
225,000* Idexx Laboratories, Inc............... 9,450,000
40,000 Invacare Corp......................... 1,130,000
55,000* Isomedix, Inc......................... 770,000
195,000 Johnson & Johnson..................... 17,988,750
34,100* Laser Industries, Ltd................. 341,000
13,400* Lincare Holdings, Inc................. 435,500
135,600* Living Centers of America, Inc........ 5,051,100
30,000* Maxxim Medical, Inc................... 566,250
117,900 McKesson Corp......................... 6,042,375
10,000* MediSense, Inc........................ 445,625
10,051* Medpartners/Mullikin, Inc............. 286,454
500,000 Merck & Co., Inc...................... 31,125,000
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6

<PAGE>
(Photo of EVERGREEN FUND
Wall Street sign STATEMENT OF INVESTMENTS -- (CONTINUED)
appears here) MARCH 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
COMMON STOCKS -- CONTINUED
HEALTH CARE PRODUCTS &
SERVICES -- CONTINUED
20,000* Mid Atlantic
Medical Services, Inc................. $ 462,500
14,750 Minntech Corp......................... 302,375
17,000* OrNda Healthcorp...................... 488,750
20,000* Pediatrix Medical Group, Inc.......... 710,000
125,000* Regency Health Services, Inc.......... 1,406,250
25,000* Regeneron Pharmaceuticals, Inc........ 318,750
15,000* Respironics, Inc...................... 315,000
45,000* Salick Health Care, Inc............... 1,676,250
13,600* Spacelabs Medical, Inc................ 316,200
112,500 St. Jude Medical, Inc................. 4,197,656
226,500 Stryker Corp.......................... 11,140,969
128,000* Sun Healthcare Group, Inc............. 1,696,000
39,600 Superior Surgical
Manufacturing Co., Inc................ 405,900
16,800* Sybron International Corp............. 411,600
75,750* Tecnol Medical Products, Inc.......... 1,326,809
50,000* Tenet Healthcare Corp................. 1,050,000
129,436,965
INDUSTRIAL SPECIALTY PRODUCTS -- 5.6%
63,000* Adflex Solutions, Inc................. 858,375
55,000 Breed Technologies, Inc............... 1,024,375
40,500* Chemfab Corp.......................... 491,062
7,800 Cleveland-Cliffs, Inc................. 345,150
145,000* Dionex Corp........................... 5,129,375
108,000 Fisher Scientific
International, Inc.................... 4,131,000
182,000 Fuller (H.B.) Co...................... 5,414,500
85,000* Galey & Lord, Inc..................... 924,375
23,200* Global Industrial
Technologies, Inc..................... 556,800
140,800 Leggett & Platt, Inc.................. 3,220,800
15,750 Mark IV Industries, Inc............... 346,500
80,000 Masland Corp.......................... 1,400,000
70,000* Material Sciences Corp................ 1,041,250
61,900 Medusa Corp........................... 1,895,688
43,400 Nacco Industries, Inc. Cl. A.......... 2,468,375
35,000* Northwestern Steel & Wire Co.......... 218,750
66,000* Osmonics, Inc......................... 1,237,500
174,687* Paxar Corp............................ 2,773,156
19,500 Roanoke Electric Steel Corp........... 290,062
10,000 Robbins & Myers, Inc.................. 342,500
30,000 Spartech Corp......................... 255,000
147,200 Tecumseh Products Co. Cl. A........... 8,666,400
57,800 Tecumseh Products Co. Cl. B........... 3,222,350
91,600 Teleflex, Inc......................... 4,133,450
50,000 Wescast Industries, Inc............... 600,000
103,800 Zero Corp............................. 1,738,650
52,725,443
<CAPTION>
SHARES VALUE
<C> <S> <C>
INFORMATION SERVICES &
TECHNOLOGY -- 7.9%
44,900* Analytical Surveys, Inc............... $ 611,762
127,500* Andrew Corp........................... 4,876,875
120,000 Autodesk, Inc......................... 4,530,000
40,000 Avnet, Inc............................ 1,930,000
11,000 Belden, Inc........................... 324,500
19,000* Black Box Corp........................ 323,000
93,000* Brooks Automation, Inc................ 1,046,250
10,000* Burr-Brown Corp....................... 157,500
15,900 Comdisco, Inc......................... 351,788
50,000* Dialogic Corp......................... 2,112,500
50,000* DSP Group, Inc........................ 625,000
148,565 First Data Corp....................... 10,473,832
11,400* FTP Software, Inc..................... 139,650
55,000 HBO & Co.............................. 5,183,750
15,600* Health Management Systems, Inc........ 440,700
65,000 Hewlett-Packard Co.................... 6,110,000
205,000 Intel Corp............................ 11,659,375
40,000* Intersolv, Inc........................ 465,000
2,000 Kyocera Corp. ADR..................... 269,000
25,000* Lam Research Corp..................... 875,000
12,200* Medic Computer Systems, Inc........... 924,150
62,437 Molex, Inc............................ 2,177,490
50,000* Mylex Corp............................ 1,187,500
100,000* NetManage, Inc........................ 1,087,500
90,000* Parametric Technology Corp............ 3,521,250
12,000* Proxima Corp.......................... 229,500
80,000* Silicon Graphics, Inc................. 2,000,000
13,000* Spectrian Corp........................ 289,250
95,000* Sun Microsystems, Inc................. 4,156,250
140,500* Trimble Navigation Ltd................ 3,213,938
20,000* UCAR International, Inc............... 777,500
4,000* Ultratech Stepper, Inc................ 70,500
15,000.. U.S. Robotics Corp.................... 1,938,750
74,079,060
PAPER & PACKAGING -- 1.0%
90,000 Avery Dennison Corp................... 4,860,000
6,500.. St. Joe Paper Co...................... 375,375
166,662 Wausau Paper Mills Co................. 3,833,226
9,068,601
PUBLISHING, BROADCASTING &
ENTERTAINMENT -- 3.9%
80,000 Cadmus Communications Corp............ 1,370,000
428,500* Clear Channel
Communications, Inc................... 24,210,250
15,000* Evergreen Media Corp.................. 540,000
50,000* EZ Communications, Inc. Cl. A 1,075,000
130,800* Jacor Communications, Inc............. 2,583,300
190,000 Wiley, (John) & Sons, Inc., Cl. A..... 6,341,250
36,119,800
</TABLE>
7

<PAGE>
(Photo of EVERGREEN FUND
Wall Street sign STATEMENT OF INVESTMENTS -- (CONTINUED)
appears here) MARCH 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
COMMON STOCKS -- CONTINUED
REAL ESTATE -- 2.1%
138,760* Alexander's, Inc...................... $ 9,158,160
46,200 Apartment Investment
& Management Co....................... 964,425
15,800 CBL & Associates Properties, Inc...... 333,775
54,000 Chelsea GCA Realty, Inc............... 1,593,000
45,000 CWM Mortgage Holdings, Inc............ 725,625
47,400* FRP Properties, Inc................... 965,775
19,600 Health & Retirement
Properties Trust...................... 338,100
50,000 HGI Realty, Inc....................... 1,056,250
80,000* Host Marriott Corp.................... 1,080,000
16,000* Host Marriott Services Corp........... 112,000
40,000 Irvine Apartment
Communities, Inc...................... 765,000
33,000* Prime Hospitality Corp................ 449,625
60,000 Rouse Co.............................. 1,312,500
29,300 Webb (Del) Corp....................... 538,387
30,500 Wellsford Residential
Property Trust........................ 667,188
20,059,810
RETAILING & WHOLESALE -- 3.5%
32,600 Blair Corp............................ 823,150
35,000* Burlington Coat Factory Warehouse..... 411,250
229,200 Dillard Department
Stores, Inc. Cl. A.................... 7,936,050
40,000 Fila Holding S.P.A. ADS............... 2,555,000
268,800 Fingerhut Companies, Inc.............. 3,460,800
115,000 Heilig-Meyers Co...................... 2,371,875
59,800* Jones Apparel Group, Inc.............. 2,900,300
<CAPTION>
SHARES VALUE
<C> <S> <C>
RETAILING & WHOLESALE -- CONTINUED
131,236* Leslie's Poolmart..................... $ 1,804,495
27,400 Lillian Vernon Corp................... 373,325
71,300 Lowe's Companies, Inc................. 2,548,975
105,300 Mercantile Stores Co., Inc............ 6,462,787
60,500* Michaels Stores, Inc.................. 847,000
9,000* Micro Warehouse, Inc.................. 373,500
32,868,507
THRIFT INSTITUTIONS -- 1.2%
161,625 BSB Bancorp, Inc...................... 4,202,250
70,000 Collective Bancorp, Inc............... 1,767,500
255,000 Dime Financial Corp.**................ 3,410,625
33,275 Glacier Bancorp, Inc.................. 732,050
73,500* Hawthorne Financial Corp.............. 358,313
55,000 Sandwich Co-Operative Bank............ 1,141,250
11,611,988
TRANSPORTATION -- 1.8%
135,000 Atlantic Southeast Airlines, Inc...... 3,459,375
73,000 Delta Air Lines, Inc.................. 5,611,875
144,977* Heartland Express, Inc................ 3,678,791
13,000 Pittston Brink's Group................ 347,750
6,500 Pittston Burlington Group............. 127,563
75,000 Skywest, Inc.......................... 984,375
120,000 TNT Freightways Corp.................. 2,730,000
16,939,729
OTHER SECURITIES -- .1%............... 570,542
TOTAL COMMON STOCKS
(COST $406,892,709)................... 743,064,894
</TABLE>

<PAGE>
(Photo of EVERGREEN FUND
Wall Street sign STATEMENT OF INVESTMENTS -- (CONTINUED)
appears here) MARCH 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) VALUE
<C> <S> <C> <C>
SHORT-TERM INVESTMENTS -- 24.7%
COMMERCIAL PAPER -- 13.0%
$1,800 American Home Food Products,
Inc.
5.35%, 4/30/96............... $ 1,792,243
11,000 AT&T Lucent Corp.
5.34%, 5/10/96............... 10,936,365
6,900 Caterpillar Financial
Services Corp.
5.25%, 4/4/96................ 6,896,981
6,000 Copley Financing Corp.
5.45%, 5/9/96................ 5,965,483
22,000 Dupont (E.I.) de Nemours &
Co.
5.20%, 4/11/96............... 21,968,222
2,810 Eiger Capital Corp.
5.25%, 4/3/96................ 2,809,180
5,400 First Chicago Corp.
5.39%, 4/26/96............... 5,379,787
1,300 Gannett Co.
5.26%, 4/19/96............... 1,296,581
19,500 Hercules, Inc.
5.32%, 4/19/96............... 19,448,130
10,800 Island Finance Puerto
Rico Inc.
5.35%, 4/30/96............... 10,753,455
4,500 Mid-South Capital Corp.
5.32%, 4/16/96............... 4,490,025
9,800 Mont Blanc Capital Corp.
5.25%, 4/9/96................ 9,788,567
10,000 Morgan (J.P.) & Co., Inc.
5.26%, 4/11/96............... 9,985,389
<CAPTION>
PRINCIPAL
AMOUNT
(000) VALUE
<C> <S> <C> <C>
COMMERCIAL PAPER -- CONTINUED
$2,000 Pfizer Inc.
5.30%, 4/24/96............... $ 1,993,228
8,000 Transamerica Finance Corp.
5.19%, 4/5/96................ 7,995,387
121,499,023
U.S. GOVERNMENT & AGENCY
OBLIGATIONS -- 11.7%
14,000 Federal Farm Credit Bank
5.25%, 5/2/96................ 13,936,708
30,000 Federal Farm Credit Bank
5.25%, 5/3/96................ 29,860,000
15,465 Federal Home Loan Bank 5.13%,
4/1/96....................... 15,465,000
50,000 Federal Home Loan
Mortgage Association
5.20%, 4/15/96............... 49,898,889
109,160,597
TOTAL SHORT-TERM INVESTMENTS
(COST $230,659,620).......... 230,659,620
TOTAL INVESTMENTS
(COST $637,552,329).......... 104.3% 973,724,514
OTHER ASSETS AND
LIABILITIES -- NET........... (4.3) (39,696,046)
NET ASSETS................... 100.0% $934,028,468
</TABLE>

* Non-income producing security.
** Investment in non-controlled affiliate-holding over 5% of outstanding
voting securities. During the period ended March 31, 1996, the Fund
recognized $31,250 in dividend income from these securities.
(dagger) No market quotation available. Valued at fair value as determined in
good faith by the Fund's Trustees.
See accompanying notes to financial statements.
9

<PAGE>
(Photo of EVERGREEN FUND
Wall Street sign STATEMENT OF ASSETS AND LIABILITIES
appears here) MARCH 31, 1996
(UNAUDITED)

<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments at value (identified cost $637,552,329)........................................................... $973,724,514
Cash.......................................................................................................... 1,764,881
Receivable for Fund shares sold............................................................................... 10,347,941
Receivable for investment securities sold..................................................................... 1,074,238
Dividends receivable.......................................................................................... 776,780
Prepaid expenses.............................................................................................. 48,293
Total assets............................................................................................ 987,736,647
LIABILITIES:
Payable for Fund shares repurchased........................................................................... 43,900,860
Payable for investment securities purchased................................................................... 8,626,511
Accrued advisory fee.......................................................................................... 782,978
Accrued expenses.............................................................................................. 276,263
Distribution fee payable...................................................................................... 121,567
Total liabilities....................................................................................... 53,708,179
NET ASSETS....................................................................................................... $934,028,468
NET ASSETS CONSIST OF:
Paid-in capital............................................................................................... $579,336,074
Undistributed net investment income........................................................................... 1,824,676
Undistributed net realized gain on investment transactions.................................................... 16,695,533
Net unrealized appreciation of investments.................................................................... 336,172,185
Net assets.............................................................................................. $934,028,468
CALCULATION OF NET ASSET VALUE AND MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares ($60,699,859 (divided by sign) 3,728,186 shares of beneficial interest outstanding)............ $ 16.28
Sales charge -- 4.75% of offering price....................................................................... .81
Maximum offering price.................................................................................. $ 17.09
Class B Shares ($154,355,300 (divided by sign) 9,529,459 shares of beneficial interest outstanding)........... $ 16.20
Class C Shares ($4,468,736 (divided by sign) 276,225 shares of beneficial interest outstanding)............... $ 16.18
Class Y Shares ($714,504,573 (divided by sign) 43,762,557 shares of beneficial interest outstanding).......... $ 16.33
</TABLE>

See accompanying notes to financial statements.
10

<PAGE>
(Photo of EVERGREEN FUND
Wall Street sign STATEMENT OF OPERATIONS
appears here) SIX MONTHS ENDED MARCH 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME:
Dividends...................................................................................... $ 4,625,886
Interest....................................................................................... 3,998,373
Total investment income..................................................................... 8,624,259
EXPENSES:
Advisory fee................................................................................... $4,009,956
Distribution fee -- Class A Shares............................................................. 53,604
Distribution fee -- Class B Shares............................................................. 400,993
Shareholder services fee -- Class B Shares..................................................... 133,664
Distribution fee -- Class C Shares............................................................. 10,544
Shareholder services fee -- Class C Shares..................................................... 3,514
Transfer agent fee............................................................................. 260,812
Custodian fee.................................................................................. 76,739
Registration and filing fees................................................................... 53,357
Professional fees.............................................................................. 47,750
Reports and notices to shareholders............................................................ 38,751
Trustees' fees and expenses.................................................................... 26,050
Insurance expense.............................................................................. 1,975
Miscellaneous.................................................................................. 24,975
Total expenses.............................................................................. 5,142,684
Less: Expense reimbursements................................................................... (9,740)
Net expenses................................................................................ 5,132,944
Net investment income............................................................................. 3,491,315
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investment transactions................................................... 18,218,973
Net increase in unrealized appreciation of investments......................................... 50,128,924
Net gain on investments........................................................................... 68,347,897
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.............................................. $71,839,212
</TABLE>

See accompanying notes to financial statements.
11

<PAGE>
(Photo of Wall Street EVERGREEN FUND
sign appears here) STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
MARCH 31, YEAR ENDED
1996 SEPTEMBER 30,
(UNAUDITED) 1995
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income................................................................ $ 3,491,315 $ 2,632,001
Net realized gain on investment transactions......................................... 18,218,973 27,142,401
Net change in unrealized appreciation of investments................................. 50,128,924 107,314,951
Net increase in net assets resulting from operations.............................. 71,839,212 137,089,353
DISTRIBUTION TO SHAREHOLDERS:
FROM NET INVESTMENT INCOME:
Class A Shares....................................................................... (141,870) --
Class B Shares....................................................................... (104,424) --
Class C Shares....................................................................... (3,361) --
Class Y Shares....................................................................... (3,380,300) (2,383,433)
Total distributions from net investment income.................................... (3,629,955) (2,383,433)
FROM NET REALIZED GAINS ON INVESTMENTS:
Class A Shares....................................................................... (1,345,646) --
Class B Shares....................................................................... (3,481,371) --
Class C Shares....................................................................... (94,635) --
Class Y Shares....................................................................... (21,876,221) (70,360,416)
Total distributions from net realized gains on investments........................ (26,797,873) (70,360,416)
Total distributions to shareholders............................................... (30,427,828) (72,743,849)
FUND SHARE TRANSACTIONS:
Proceeds from shares sold............................................................ 856,687,643 1,350,882,223
Proceeds from shares issued in acquisition of FFB Lexicon
Small Company Fund................................................................ 27,158,980 --
Proceeds from reinvestment of distributions.......................................... 27,043,183 66,336,031
Payment for shares redeemed.......................................................... (736,049,037) (1,289,695,764)
Net increase resulting from Fund share transactions............................... 174,840,769 127,522,490
Net increase in net assets........................................................ 216,252,153 191,867,994
NET ASSETS:
Beginning of period.................................................................. 717,776,315 525,908,321
End of period (including undistributed net investment income of $1,824,676 and
$1,963,316, respectively).......................................................... $ 934,028,468 $ 717,776,315
</TABLE>

See accompanying notes to financial statements.
12

<PAGE>
(Photo of EVERGREEN FUND
Wall Street sign CLASS A, CLASS B AND CLASS C SHARES
appears here) FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
CLASS C
CLASS A SHARES CLASS B SHARES SHARES
SIX MONTHS JANUARY 3, SIX MONTHS JANUARY 3, SIX MONTHS
ENDED 1995* ENDED 1995* ENDED
MARCH 31, THROUGH MARCH 31, THROUGH MARCH 31,
1996 SEPTEMBER 30, 1996 SEPTEMBER 30, 1996
(UNAUDITED) 1995 (UNAUDITED) 1995 (UNAUDITED)
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period........................ $15.55 $ 11.97 $ 15.48 $11.97 $ 15.48
Income from investment operations:
Net investment income (loss).............................. .07 .01 (.03) (.02) .01
Net realized and unrealized gain on investments........... 1.30 3.57 1.35 3.53 1.31
Total from investment operations........................ 1.37 3.58 1.32 3.51 1.32
Less distributions to shareholders from:
Net investment income..................................... (.06) -- (.02) -- (.04)
Net realized gains........................................ (.58) -- (.58) -- (.58)
Total distributions..................................... (.64) -- (.60) -- (.62)
Net asset value, end of period.............................. $16.28 $ 15.55 $ 16.20 $15.48 $ 16.18
TOTAL RETURN+............................................... 9.0% 29.9% 8.6% 29.3% 8.6%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (in millions)..................... $61 $29 $154 $74 $4
Ratios to average net assets:
Expenses(two daggers)..................................... 1.46% 1.70%# 2.14% 2.32%# 2.06%#
Interest expense(two daggers)............................. -- .01% -- .01% --
Net investment income (loss)(two daggers)................. .67% .13%# (.30%) (.48%)# .08%#
Portfolio turnover rate..................................... 10% 19% 10% 19% 10%
Average commission rate paid per share...................... $ .0613 N/A $ .0613 N/A $ .0613
<CAPTION>

JANUARY 3,
1995*
THROUGH
SEPTEMBER 30,
1995
<S> <C>
PER SHARE DATA:
Net asset value, beginning of period........................ $11.97
Income from investment operations:
Net investment income (loss).............................. (.01)
Net realized and unrealized gain on investments........... 3.52
Total from investment operations........................ 3.51
Less distributions to shareholders from:
Net investment income..................................... --
Net realized gains........................................ --
Total distributions..................................... --
Net asset value, end of period.............................. $15.48
TOTAL RETURN+............................................... 29.3%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (in millions)..................... $2
Ratios to average net assets:
Expenses(2 daggers)....................................... 2.12%#
Interest expense(2 daggers)............................... .01%
Net investment income (loss)(2 daggers)................... (.31%)#
Portfolio turnover rate..................................... 19%
Average commission rate paid per share...................... N/A
</TABLE>

* Commencement of class operations.
(dagger) Total return is calculated on net asset value per share for the
periods indicated and is not annualized. Initial sales charge or
contingent deferred sales charges are not reflected.
(two daggers) Annualized.
# Net of expense waivers and reimbursements. If the Fund had borne
all expenses that were assumed or waived by the investment
adviser, the annualized ratios of expenses and net investment
income (loss) to average net assets, exclusive of any applicable
state expense limitations would have been the following:
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
JANUARY 3, JANUARY 3, SIX MONTHS JANUARY 3,
1995* 1995* ENDED 1995*
THROUGH THROUGH MARCH 31, THROUGH
SEPTEMBER 30, SEPTEMBER 30, 1996 SEPTEMBER 30,
1995 1995 (UNAUDITED) 1995
<S> <C> <C> <C> <C>
Expenses...................................................... 1.75% 2.34% 2.75% 5.31%
Net investment income (loss).................................. .08% (.50%) (.61%) (3.50%)
</TABLE>

See accompanying notes to financial statements.
13

<PAGE>
(Photo of EVERGREEN FUND
Wall Street sign CLASS Y SHARES
appears here) FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
CLASS Y SHARES
SIX MONTHS
ENDED
MARCH 31,
1996 YEAR ENDED SEPTEMBER 30,
(UNAUDITED) 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period..................................... $15.59 $14.62 $14.46 $13.10 $13.32
Income from investment operations:
Net investment income.................................................. .16 .10 .07 .09 .09
Net realized and unrealized gain on investments........................ 1.23 3.10 .79 1.96 .55
Total from investment operations..................................... 1.39 3.20 .86 2.05 .64
Less distributions to shareholders from:
Net investment income.................................................. (.07) (.07) (.09) (.07) (.17)
Net realized gains..................................................... (.58) (2.16) (.61) (.62) (.69)
Total distributions.................................................. (.65) (2.23) (.70) (.69) (.86)
Net asset value, end of period........................................... $ 16.33 $15.59 $14.62 $14.46 $13.10
TOTAL RETURN*............................................................ 9.2% 26.8% 6.2% 15.8% 5.2%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (in millions).................................. $715 $612 $526 $657 $772
Ratios to average net assets:
Expenses............................................................... 1.11%(dagger)1.16% 1.13% 1.11% 1.13%
Interest expense....................................................... -- .06% .09% .01% --
Net investment income.................................................. 1.02%(dagger).53% .40% .60% .56%
Portfolio turnover rate.................................................. 10% 19% 19% 21% 32%
Average commission rate paid per share................................... $ .0613 N/A N/A N/A N/A
<CAPTION>

1991
<S> <C>
PER SHARE DATA:
Net asset value, beginning of period..................................... $9.66
Income from investment operations:
Net investment income.................................................. .17
Net realized and unrealized gain on investments........................ 3.93
Total from investment operations..................................... 4.10
Less distributions to shareholders from:
Net investment income.................................................. (.18)
Net realized gains..................................................... (.26)
Total distributions.................................................. (.44)
Net asset value, end of period........................................... $13.32
TOTAL RETURN*............................................................ 43.7%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (in millions).................................. $755
Ratios to average net assets:
Expenses............................................................... 1.15%
Interest expense....................................................... --
Net investment income.................................................. 1.45%
Portfolio turnover rate.................................................. 35%
Average commission rate paid per share................................... N/A
</TABLE>

* Total return is calculated on net asset value per share for the
periods indicated and is not annualized.
(dagger) Annualized.
See accompanying notes to financial statements.
14

<PAGE>
(Photo of beakers and EVERGREEN AGGRESSIVE GROWTH FUND
test tubes appears here)

A REPORT FROM YOUR
PORTFOLIO MANAGER
HAROLD R. IRELAND, JR.
Evergreen Aggressive Growth Fund had a good first half,
producing a total return (Class A shares at NAV) of 13.0%*,
for the six months ended March 31, 1996. This compares with
9.4% for the Russell Mid Cap Index**, an unmanaged index of
800 stocks that most closely fits the profile of the
securities in the Fund's portfolio. The total return for the
Lipper Capital Appreciation Funds average of the 183 capital
appreciation funds tracked by Lipper Analytical Services,
Inc., during that time was 8.3%***. The table below
illustrates the Fund's (Class A shares at NAV) longer-term
returns as of March 31, 1996.

<TABLE>
<CAPTION>
EVERGREEN AGGRESSIVE LIPPER
PERIOD ENDED GROWTH FUND CAPITAL APPRECIATION
3/31/96 (CLASS A, NAV) FUNDS AVERAGE RUSSELL MID CAP INDEX
<S> <C> <C> <C>
1-Year 41.6% 28.7% 29.1%
5-Year 21.0% 14.2% 16.9%
10-Year 13.8% 10.9% 13.6%
</TABLE>

The six-month total returns for the Fund's Class B shares at NAV and Class C
shares at NAV were 12.6%, and 12.7%, respectively. The Fund's Class B shares are
subject to a maximum 5% contingent deferred sales charge, and Class C shares are
subject to a 1% contingent deferred sales charge within the first year of
purchase. Sales charges are not reflected in the Fund's performance figures
above and if reflected, performance would be lower. The total return for the
six-month period ended March 31, for the Fund's Class Y (no-load) shares was
13.1%. The average annual compound rates of return for the Fund's Class A shares
with deduction of the maximum 4.75% front-end sales charge for the 1, 5, and
10-year periods ended March 31, were 34.8%, 19.8%, and 13.3%, respectively.
The Fund continues to pursue a strategy of concentrating its holdings in
industries with what we believe have dynamic growth prospects, and in companies
which display attractive growth characteristics.
Our approach is to take a long-term view of each of the companies in the
Fund's portfolio, unless one of the following takes place: a better investment
emerges; technically, the stock lags while others in the industry have strong
upside moves; the competitive environment has deteriorated or a significant
operational short-fall occurs that has a longer-term implication.
During the period, several changes were made in the portfolio. Ten new
securities were added and four positions were eliminated completely. On an
industry-weighted basis, Technology and Computer holdings were reduced by a
combined total of 8.2 percentage points to 20.5% of net assets. These two
sectors combined represent the Fund's third largest grouping even after
eliminating Sensormatic Electronics Corporation, American Power Conversion, and
Atmel Corporation.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
* PERFORMANCE FIGURES INCLUDE REINVESTMENT OF INCOME DIVIDEND AND CAPITAL GAIN
DISTRIBUTIONS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE.
INVESTORS' SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST. INCEPTION DATES: CLASS A SHARES 4/15/83,
CLASS B SHARES 7/7/95, CLASS C SHARES 8/3/95, CLASS Y SHARES 7/11/96.
** AN INVESTMENT CAN NOT BE MADE IN AN INDEX.
*** LIPPER ANALYTICAL SERVICES, INC., IS AN INDEPENDENT MUTUAL FUNDS PERFORMANCE
MONITOR. LIPPER PERFORMANCE FIGURES DO NOT INCLUDE SALES CHARGES, AND IF
INCLUDED, FIGURES WOULD BE LOWER AND RANKINGS MAY BE DIFFERENT.
15

<PAGE>
(Photo of beakers and EVERGREEN AGGRESSIVE GROWTH FUND
test tubes appears here)

A REPORT FROM YOUR
PORTFOLIO MANAGER -- (CONTINUED)
Healthcare, the Fund's second largest sector weighting at 20.7% of net
assets, had two positions added. In addition, one of the companies in the Fund's
portfolio, Surgical Care Affiliates, was merged into HEALTHSOUTH Corporation. We
added Matrix Pharmaceuticals (cancer and serious skin disease care products) and
Respronics, Inc. (sleep apnea therapy products). Both of these additions are
small-cap investments in this predominately mid-cap portfolio.
Specialty Retail is the Fund's largest industry sector at 20.8% of net
assets. We've retained our healthy investment in this area despite the relative
underperformance of retail stocks versus other sectors of the market place. We
have been fortunate that during the past six months, gains from AutoZone, Inc.,
Home Depot, Inc., and our recent purchase of Tommy Hilfiger Corp., have offset
the disappointing stock move of Office Depot, Inc.
Finally, at 19.6% of net assets, Business Services illustrates our strong
belief that, in most cases, outsourcing various business services is an economic
move that enhances the corporate bottom line.
It is our belief that continuing to focus on companies that display solid
growth characteristics in industries with positive dynamics, should help produce
long-term performance results.
16

<PAGE>
(Photo of EVERGREEN AGGRESSIVE GROWTH FUND
beakers and STATEMENT OF INVESTMENTS
test tubes MARCH 31, 1996
appears here) (UNAUDITED)

<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
COMMON STOCKS -- 99.3%
BUSINESS SERVICES -- 19.6%
100,000* APAC TeleServices, Inc.............. $ 7,125,000
100,000 Danka Business Systems, ADR......... 4,225,000
55,000 First Data Corp..................... 3,877,500
22,500* Fiserv, Inc......................... 630,000
18,500* Medic Computer Systems, Inc......... 1,401,375
100,000* Sterling Commerce, Inc.............. 3,075,000
20,333,875
COMPUTERS -- 8.5%
30,000* Adaptec, Inc........................ 1,447,500
160,000* Cisco Systems, Inc.................. 7,420,000
8,867,500
CONSUMER SERVICES -- .3%
10,000* Youth Services International,
Inc................................. 255,000
ENVIRONMENTAL CONTROL -- 6.0%
200,000* Republic Industries, Inc............ 6,275,000
FINANCIAL SERVICES -- 7.0%
110,000 Green Tree Financial Corp........... 3,781,250
250,000 Mercury Finance Co.................. 3,531,250
7,312,500
HEALTHCARE -- 20.7%
63,000* Health Management
Associates, Inc..................... 2,205,000
29,315* HEALTHSOUTH Corp.................... 996,710
120,000 IVAX Corp........................... 3,105,000
100,000* Matrix Pharmaceuticals, Inc......... 2,312,500
88,000 Medtronic, Inc...................... 5,247,000
75,000 Mylan Laboratories, Inc............. 1,575,000
150,000* Respironics, Inc.................... 3,150,000
46,900 United Healthcare Corp.............. 2,884,350
21,475,560
<CAPTION>
SHARES VALUE
<C> <S> <C>
SPECIALTY RETAIL -- 20.8%
60,000* AutoZone, Inc..................... $ 2,032,500
75,000* Bed Bath & Beyond, Inc............ 3,956,250
80,000 Fastenal Co....................... 3,080,000
92,000 Home Depot, Inc................... 4,404,500
250,000* Office Depot, Inc................. 4,906,250
806 Sound Advice, Inc.**
warrants -- $8.70, expiring
6/14/99......................... --
70,000* Tommy Hilfiger Corp............... 3,211,250
21,590,750
TECHNOLOGY -- 12.0%
75,000* Bay Networks, Inc................. 2,306,250
42,000* Microsoft Corp.................... 4,331,250
150,000* Parametric Technology Corp........ 5,868,750
12,506,250
TRANSPORTATION-AIRLINES -- 4.4%
185,000* ValuJet, Inc...................... 4,625,000
TOTAL COMMON STOCKS
(COST $60,428,637).............. 103,241,435
</TABLE>

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<C> <S> <C> <C>
REPURCHASE AGREEMENT -- 2.2%
$2,252,000 State Street Bank & Trust,
4.75%, dated 3/29/96,
due 4/1/96 -- collateralized
by $1,555,000 U.S. Treasury
Bond, 11.25%, 2/15/15; value
including accrued
interest -- $2,321,108
(cost $2,252,000)............. 2,252,000
TOTAL INVESTMENTS
(COST $62,680,637)...... 101.5% 105,493,435
OTHER ASSETS AND
LIABILITIES -- NET...... (1.5) (1,512,897)
NET ASSETS................ 100.0% $103,980,538
</TABLE>

ADR-American Depository Receipts
* Non-income producing security.
** No market quotation available. Valued at fair value as determined in good
faith by the Fund's Board of Trustees.
See accompanying notes to financial statements.
17

<PAGE>
(Photo of EVERGREEN AGGRESSIVE GROWTH FUND
beakers and STATEMENT OF ASSETS AND LIABILITIES
test tubes MARCH 31, 1996
appears here) (UNAUDITED)

<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments at value (identified cost $62,680,637)............................................................ $105,493,435
Cash.......................................................................................................... 374
Receivable for Fund shares sold............................................................................... 714,798
Unamortized organization expenses and other assets............................................................ 25,252
Dividends and interest receivable............................................................................. 14,696
Total assets............................................................................................... 106,248,555
LIABILITIES:
Payable for securities purchased.............................................................................. 1,748,750
Payable for Fund shares redeemed.............................................................................. 312,820
Accrued expenses.............................................................................................. 116,691
Accrued advisory fee.......................................................................................... 48,868
Distribution fee payable...................................................................................... 40,888
Total liabilities.......................................................................................... 2,268,017
NET ASSETS....................................................................................................... $103,980,538
NET ASSETS CONSIST OF:
Paid-in capital............................................................................................... $ 60,890,794
Accumulated net investment loss............................................................................... (392,619)
Undistributed net realized gain on investment transactions.................................................... 669,565
Net unrealized appreciation of investments.................................................................... 42,812,798
Net assets.............................................................................................. $103,980,538
CALCULATION OF NET ASSET VALUE AND MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares ($82,659,074 4,367,624 shares of beneficial interest outstanding).............................. $18.93
Sales charge -- 4.75% of offering price....................................................................... .94
Maximum offering price.................................................................................. $19.87
Class B Shares ($10,124,885 537,403 shares of beneficial interest outstanding)................................ $18.84
Class C Shares ($312,918 16,641 shares of beneficial interest outstanding).................................... $18.80
Class Y Shares ($10,883,661 574,110 shares of beneficial interest outstanding)................................ $18.96
</TABLE>

See accompanying notes to financial statements.
18

<PAGE>
(Photo of EVERGREEN AGGRESSIVE GROWTH FUND
beakers and STATEMENT OF OPERATIONS
test tubes SIX MONTHS ENDED MARCH 31, 1996
appears here) (UNAUDITED)

<TABLE>
<CAPTION>
INVESTMENT INCOME:
<S> <C> <C>
Dividends (net of foreign withholding taxes of $808)......................................... $ 101,539
Interest..................................................................................... 47,054
Total investment income................................................................ 148,593
EXPENSES:
Advisory fee................................................................................. $ 254,574
Administrative personnel and service fees.................................................... 22,436
Distribution fee -- Class A Shares........................................................... 91,155
Distribution fee -- Class B Shares........................................................... 19,639
Shareholder services fee -- Class B Shares................................................... 6,546
Distribution fee -- Class C Shares........................................................... 1,021
Shareholder services fee -- Class C Shares................................................... 341
Registration and filing fees................................................................. 46,167
Transfer agent fee........................................................................... 43,761
Custodian fee................................................................................ 23,612
Professional fees............................................................................ 12,929
Reports and notices to shareholders.......................................................... 9,946
Amortization of organization expense......................................................... 3,515
Trustees' fees and expenses.................................................................. 2,685
Miscellaneous................................................................................ 2,885
Total expenses......................................................................... 541,212
Net investment loss............................................................................. (392,619)
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investment transactions................................................. 1,205,464
Net increase in unrealized appreciation of investments....................................... 10,299,841
Net gain on investments......................................................................... 11,505,305
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............................................ $ 11,112,686
</TABLE>

See accompanying notes to financial statements.
19

<PAGE>
(Photo of beakers and EVERGREEN AGGRESSIVE GROWTH FUND
test tubes appears here) STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS
ENDED ELEVEN MONTHS
MARCH 31, ENDED
1996 SEPTEMBER 30,
(UNAUDITED) 1995
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment loss........................................................................ $ (392,619) $ (664,876)
Net realized gain on investment transactions............................................... 1,205,464 2,713,044
Net change in unrealized appreciation of investments....................................... 10,299,841 12,941,978
Net increase resulting from operations.................................................. 11,112,686 14,990,146
DISTRIBUTIONS TO SHAREHOLDERS FROM NET REALIZED GAINS:
Class A Shares............................................................................. (2,568,702) --
Class B Shares............................................................................. (157,683) --
Class C Shares............................................................................. (7,214) --
Class Y Shares............................................................................. (213,704) --
Total distributions to shareholders from net realized gains.......................... (2,947,303) --
FUND SHARE TRANSACTIONS:
Proceeds from shares sold.................................................................. 26,921,232 12,332,626
Proceeds from reinvestment of distributions................................................ 2,476,544 --
Payment for shares redeemed................................................................ (9,604,728) (15,935,716)
Net increase (decrease) resulting from Fund share transactions.......................... 19,793,048 (3,603,090)
Net increase in net assets.............................................................. 27,958,431 11,387,056
NET ASSETS:
Beginning of period........................................................................ 76,022,107 64,635,051
End of period (including net investment loss of $392,619 at March 31, 1996)................ $103,980,538 $ 76,022,107
</TABLE>

See accompanying notes to financial statements.
20

<PAGE>
(Photo of beakers and EVERGREEN AGGRESSIVE GROWTH FUND
test tubes CLASS A SHARES
appears here) FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
CLASS A SHARES
SIX
MONTHS ELEVEN
ENDED MONTHS
MARCH 31, ENDED
1996 SEPTEMBER 30, YEAR ENDED OCTOBER 31,
(UNAUDITED) 1995*# 1994(double daggers)#
<S> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period................................. $17.37 $13.85 $14.44
Income (loss) from investment operations:
Net investment loss................................................ (.07) (.16) (.13)
Net realized and unrealized gain (loss) on investments............. 2.27 3.68 (.22)
Total from investment operations................................. 2.20 3.52 (.35)
Less distributions to shareholders from net realized gains........... (.64) -- (.24)
Net asset value, end of period....................................... $18.93 $17.37 $13.85
TOTAL RETURN(dagger)................................................. 13.0% 25.4% (2.4%)
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted)............................ $82,659 $70,858 $64,635
Ratios to average net assets:
Expenses........................................................... 1.25%(2 daggers) 1.47%(2 daggers) 1.25%
Net investment loss................................................ (.89%)(2 daggers) (1.12%)(2 daggers) (.92%)
Portfolio turnover rate.............................................. 21% 31% 59%
Average commission rate paid per share............................... $.0594 N/A N/A
<CAPTION>

1993(double daggers)# 1992(double daggers)# 1991(double daggers)#
<S> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period................................. $11.76 $12.22 $7.37
Income (loss) from investment operations:
Net investment loss................................................ (.12) (.10) (.08)
Net realized and unrealized gain (loss) on investments............. 3.06 1.84 5.59
Total from investment operations................................. 2.94 1.74 5.51
Less distributions to shareholders from net realized gains........... (.26) (2.20) (.66)
Net asset value, end of period....................................... $14.44 $11.76 $12.22
TOTAL RETURN(dagger)................................................. 25.3% 17.4% 79.8%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted)............................ $58,053 $29,302 $23,509
Ratios to average net assets:
Expenses........................................................... 1.31% 1.44% 1.59%
Net investment loss................................................ (.92%) (.93%) (.71%)
Portfolio turnover rate.............................................. 48% 46% 108%
Average commission rate paid per share............................... N/A N/A N/A
</TABLE>

# Effective June 30, 1995, Evergreen Aggressive Growth Fund, a new
series of Evergreen Trust, acquired substantially all of the net
assets of ABT Emerging Growth Fund. ABT Emerging Growth Fund, which
had a fiscal year that ended on October 31 was the accounting
survivor in the combination. Accordingly, the information above
includes the results of operations of ABT Emerging Growth
Fund prior to June 30, 1995.
* The Fund changed its fiscal year end from October 31 to
September 30.
(double)
daggers) Per share data based on average shares outstanding.
(dagger) Total return is calculated on net asset value per share for the
periods indicated and is not annualized. Initial sales charge is
not reflected.
(2 daggers) Annualized.
See accompanying notes to financial statements.
21

<PAGE>
(Photo of beakers EVERGREEN AGGRESSIVE GROWTH FUND
and test tubes CLASS B, CLASS C AND CLASS Y SHARES
appears here) FINANCIAL HIGHLIGHTS

CLASS B SHARES CLASS C SHARES
SIX MONTHS JULY 7, SIX MONTHS
ENDED 1995* ENDED
MARCH 31, THROUGH MARCH 31,
1996 SEPTEMBER 30, 1996
(UNAUDITED) 1995 (UNAUDITED)
<S> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period................... $17.35 $15.82 $17.31
Income (loss) from investment operations:
Net investment loss.................................. (.08) (.03) (.13)
Net realized and unrealized gain on investments...... 2.21 1.56 2.26
Total from investment operations................... 2.13 1.53 2.13
Less distributions to shareholders from net realized
gains................................................ (.64) -- (.64)
Net asset value, end of period......................... $18.84 $17.35 $18.80
TOTAL RETURN(dagger)................................... 12.6% 9.7% 12.7%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted).............. $10,125 $2,858 $313
Ratios to average net assets:
Expenses............................................. 2.00%(2 daggers) 2.09%(2 daggers) 2.00%(2 daggers)
Net investment loss.................................. (1.66%)(2 daggers) (1.71%)(2 daggers) (1.62%)(2 daggers)
Portfolio turnover rate................................ 21% 31% 21%
Average commission rate paid per share................. $.0594 N/A $.0594

</TABLE>

<TABLE>
<CAPTION>
CLASS C
SHARES CLASS Y SHARES
AUGUST 3, SIX MONTHS JULY 11,
1995* ENDED 1995*
THROUGH MARCH 31, THROUGH
SEPTEMBER 30, 1996 SEPTEMBER 30,
1995 (UNAUDITED) 1995
<S> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period................... $16.42 $17.38 $15.79
Income (loss) from investment operations:
Net investment loss.................................. (.01) (.04) (.01)
Net realized and unrealized gain on investments...... .90 2.26 1.60
Total from investment operations................... .89 2.22 1.59
Less distributions to shareholders from net realized
gains................................................ -- (.64) --
Net asset value, end of period......................... $17.31 $18.96 $17.38
TOTAL RETURN(dagger)................................... 5.4% 13.1% 10.1%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted).............. $416 $10,884 $1,889
Ratios to average net assets:
Expenses............................................. 2.09%(2 daggers) .99%(2 daggers) 1.08%(2 daggers)
Net investment loss.................................. (1.51%)(2 daggers) (.65%)(2 daggers) (.71%)(2 daggers)
Portfolio turnover rate................................ .31% 21% 31%
Average commission rate paid per share................. N/A $.0594 N/A
</TABLE>

* Commencement of class operations.
(dagger) Total return is calculated on net asset value per share for the
periods indicated and is not annualized. Contingent deferred sales
charges are not reflected.
(2 daggers) Annualized.
See accompanying notes to financial statements.
22

<PAGE>
(Photo of sculpture on EVERGREEN LIMITED MARKET FUND, INC.
building appears here)

A REPORT FROM YOUR
PORTFOLIO MANAGER
STEPHEN A. LIEBER
Evergreen Limited Market Fund has re-oriented its (Photo of
investment strategy and restructured its portfolio in an Stephen A.
attempt to improve returns and achieve results similar to the Lieber
first ten years of the Fund's operations. Although the Fund appears here)
has been restructured, its goal remains the same: to obtain
capital appreciation opportunities available in smaller
companies which represent under-recognized or under-researched
growth investments.
These changes in policy center on the effort to focus the
portfolio on what we believe are the 100 best opportunities we
can find in terms of growth potential and relative
undervaluation. Parameters of valuation, growth trend analysis
and financial analysis which
we have developed over the years, are utilized in a large
scale screening effort, employing our proprietary computer capabilities. On a
continuous basis, we identify the 100 best opportunities for investment
according to our standards, and we then subject them to fundamental analysis
through an enlarged investment committee effort, involving both highly
experienced portfolio managers and research analysts with detailed knowledge of
a diverse group of industries.
Reporting on the Fund's investment results (Class Y, no-load shares) for the
first half of the 1996 fiscal year, including the period prior to the portfolio
restructuring, the Fund's total return was -6.3%, which remained below
comparative indexes as follows: 7.4% for the Russell 2000** and 5.5% for the
NASDAQ Composite Index**. The total returns for the six months ended March 31,
1996, for the Fund's Class A shares at NAV, Class B shares at NAV, and Class C
shares at NAV were -6.3%, -6.7%, and -6.6%, respectively. Class A shares are
subject to a maximum 4.75% front end sales charge, Class B shares are subject to
a maximum 5% contingent deferred sales charge, and Class C shares are subject to
a 1% contingent deferred sales charge within the first year of purchase. Sales
charges are not reflected in the Fund's performance figures above, and if
reflected, performance would be lower.
Merger and acquisition offers among the Fund's new holdings have contributed
positively to the Fund's performance. Three holdings purchased in February have
received acquisition bids: Brandon Systems Corp., which has appreciated 26.5%
through March 31, received an acquisition bid from Interim Services, Inc.,
Guardsman Products, Inc. which has appreciated 28.5%, received an acquisition
bid from Lilly Industries, Inc., and Today's Bancorp Inc. which has appreciated
16.5%, received an acquisition bid from Mercantile Bancorporation Inc.
During the six months under review, sizable appreciation among some of the
newer holdings was also seen, ranging up to 45.0% for the shares of Todd-AO
Corp., 29.9% for Health Risk Management, Inc., and 26.7% for Seattle Filmworks,
Inc. We believe these developments argue well for the Fund's future performance.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
* PERFORMANCE FIGURES INCLUDE REINVESTMENT OF INCOME DIVIDEND AND CAPITAL GAIN
DISTRIBUTIONS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE.
INVESTORS' SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST.
** UNMANAGED INDEXES OF SELECTED SECURITIES. AN INVESTMENT CAN NOT BE MADE IN AN
INDEX.
23

<PAGE>
(Photo of sculpture on EVERGREEN LIMITED MARKET FUND, INC.
building appears here)

A REPORT FROM YOUR
PORTFOLIO MANAGER -- (CONTINUED)
During the first half of the fiscal year, the Fund realized a number of
substantial gains. The largest were holdings in KCS Energy, Inc. with a realized
gain of 305.6% in a holding period of three and one-half years; Susquehanna
Bancshares, Inc., 243.3%, held two years and four months; JLG Industries, Inc.,
197.9% held one year; Financial Federal Corp., 127.1%, held three and
three-quarter years; Bank of New Hampshire Corp., 117.5% held two years; and
Right Management Consultants, Inc., 106.5% held one-year and seven months. The
repositioning of the portfolio also involved taking substantial losses in a
number of issues which had been disappointing. Most of these were shares of
companies where anticipated growth programs did not succeed, and expected
profits growth consequently did not materialize. Examples of these losses
include the shares of UTILX Corp. with a 69.3% loss in a holding period of two
years and seven months; Mediware Information Systems, Inc. -56.6%, held of four
years and four months; and Holopak Technologies, Inc. -43.3% held three years
and eight months.
The new portfolio strategies of the Fund involve a stop/loss program which we
anticipate will help reduce the risks of sizable portfolio losses in the case of
smaller growth companies failing to accomplish their projected goals.
Additionally, our program attempts a weighting of commitments equally, so that
any negative result is less likely to have a significant impact on the
portfolio's overall performance.
We are optimistic that systematic, quantitative and fundamental monitoring of
the portfolio, with the benefit of a highly experienced management team, will
not only help bring this Fund back to its historic performance, but also
demonstrate the continuing validity of an investment program which aims to hold
the best issues in the very small capitalization sector of the U.S. stock
market. The substantial Evergreen Limited Market Fund share holdings of our
management group indicate our commitment to the policy of the Fund and to the
shareholders for whom we manage these assets.
24

<PAGE>
(Photo of EVERGREEN LIMITED MARKET FUND, INC.
sculpture on STATEMENT OF INVESTMENTS
building MARCH 31, 1996
appears here) (UNAUDITED)

<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
COMMON STOCKS -- 92.2%
BANKS -- 11.2%
34,500 Allied Bankshares, Inc................. $ 383,813
15,000 BT Financial Corp...................... 528,750
20,000 First Oak Brook Bancshares, Inc.
Cl. A.................................. 475,000
17,500 Independent Bank Corp.................. 483,438
25,000 Mainstreet Bankgroup, Inc.............. 400,000
500 Northern States Financial Corp......... 37,000
23,000 Norwich Financial Corp................. 319,125
17,500 Pinnacle Financial Services, Inc....... 358,750
15,000 Premier Bankshares Corp................ 266,250
50,900 Premier Financial Services, Inc........ 502,637
15,000 Second Bancorp, Inc.................... 408,750
11,400 Today's Bancorp, Inc................... 336,300
14,100 Washington Trust Bancorp, Inc.......... 408,900
18,000 West Coast Bancorp, Inc................ 351,000
5,259,713
BUILDING & CONSTRUCTION -- 3.1%
54,500 Bairnco Corp........................... 367,875
26,800 Cavalier Homes, Inc.................... 415,400
25,000* Cavco Industries, Inc.................. 356,250
24,500* Mestek, Inc............................ 333,812
1,473,337
CHEMICALS -- 3.3%
32,000 Aceto Corp............................. 504,000
10,000 Guardsman Products, Inc................ 228,750
28,875 Hawkins Chemicals, Inc................. 252,656
24,500 Tuscarora, Inc......................... 581,875
1,567,281
COMMUNICATIONS SYSTEMS & SERVICES -- .9%
16,000* Norstan, Inc........................... 429,000
CONSUMER PRODUCTS -- 9.9%
18,000 Bush Industries, Inc. Cl. A............ 454,500
21,000 Cagle's, Inc. Cl. A.................... 315,000
14,500* Custom Chrome, Inc..................... 353,438
17,700 Del Laboratories, Inc.................. 504,450
12,500* Educational Development Corp........... 271,875
35,000 First Years, Inc. (The)................ 437,500
110,000* Gotham Apparel Corp.**+................ 5,500
30,000* Kleinert's, Inc........................ 502,500
3,000* Mossimo, Inc........................... 97,125
45,000* Motorcar Parts and Accessories, Inc.... 708,750
30,000 Stephan Co............................. 442,500
<CAPTION>
SHARES VALUE
<C> <S> <C>
CONSUMER PRODUCTS -- CONTINUED
30,000* TRM Copy Centers Corp.................. $ 330,000
35,500 Wolf (Howard B.), Inc.................. 239,625
4,662,763
CONSUMER SERVICES -- 5.5%
17,200 American List Corp..................... 541,800
30,000* Benihana, Inc.......................... 348,750
27,000 Cooker Restaurant Corp................. 378,000
17,000 Daka International, Inc................ 429,250
22,000* Guest Supply, Inc...................... 269,500
15,500 National Sanitary Supply Co............ 213,125
19,500* Seattle Filmworks, Inc................. 380,250
2,560,675
FINANCE & INSURANCE -- 3.5%
11,600* CorVel Corp............................ 406,000
16,500 First Financial Caribbean Corp......... 325,875
30,000 Nobel Insurance Ltd.................... 348,750
28,500* Penn Treaty American Corp.............. 541,500
1,622,125
HEALTH CARE PRODUCTS & SERVICES -- 5.1%
22,500* Alcide Corp............................ 478,125
22,500* Health Risk Management, Inc............ 393,750
6,100 Meridian Diagnostics, Inc.............. 64,812
50,000* Mesa Laboratories, Inc................. 362,500
33,900* Natural Alternatives International,
Inc.................................... 317,812
30,000 Sullivan Dental Products, Inc.......... 367,500
20,000* Summit Care Corp....................... 425,000
2,409,499
INDUSTRIAL & COMMERCIAL SERVICES -- 10.3%
30,000* CEM Corp............................... 420,000
30,000 CPAC, Inc.............................. 427,500
51,500 Graphic Industries, Inc................ 579,375
80,000* Heist (C.H.) Corp...................... 540,000
3,000* Lynch Corp............................. 203,250
50,000 Mercury Air Group, Inc................. 506,250
10,100 Pitt-Des Moines, Inc................... 454,500
9,000* Right Management Consultants, Inc...... 265,500
20,000* RPC, Inc............................... 207,500
90,000* UTILX Corp............................. 180,000
20,000 Varlen Corp............................ 460,000
126,200* Winston Resources, Inc................. 165,638
26,000 World Fuel Services Corp............... 442,000
4,851,513
INDUSTRIAL SPECIALTY PRODUCTS -- 12.0%
34,900 American Precision Industries, Inc..... 431,888
35,000* Autocam Corp........................... 363,125
</TABLE>
25

<PAGE>
(Photo of EVERGREEN LIMITED MARKET FUND, INC.
sculpture on STATEMENT OF INVESTMENTS -- (CONTINUED)
building MARCH 31, 1996
appears here) (UNAUDITED)

<TABLE>
<CAPTION>
SHARES VALUE
COMMON STOCKS -- CONTINUED
<C> <S> <C>
INDUSTRIAL SPECIALTY PRODUCTS -- CONTINUED
14,200 Badger Meter, Inc...................... $ 383,400
29,000 Core Industries, Inc................... 427,750
32,500* Digitran Systems, Inc.**............... 32,500
32,900 Met-Pro Corp........................... 534,625
4,800 Penn Engineering &
Manufacturing Corp..................... 408,000
20,000 Raven Industries, Inc.................. 335,000
17,500* Special Devices, Inc................... 315,000
31,500* Steel of West Virginia, Inc............ 299,250
29,000 Steel Technologies, Inc................ 340,750
29,900 Tech/OPS Sevcon, Inc................... 418,600
27,500 TSI, Inc............................... 488,125
28,200 Valley Forge Corp...................... 403,613
30,000 Woodhead Industries, Inc............... 438,750
5,620,376
REAL ESTATE -- 2.0%
22,500* FRP Properties, Inc.................... 458,438
37,000 United Mobile Homes, Inc............... 481,000
939,438
RETAILING -- 3.8%
15,500* Harold's Stores, Inc................... 251,875
24,700 Michaels Stores, Inc................... 389,025
34,500 Riser Foods, Inc....................... 655,500
32,000 Schultz Sav-O Stores, Inc.............. 504,000
1,800,400
TECHNOLOGICAL PRODUCTS &
SERVICES -- 9.4%
40,000* Analytical Surveys, Inc................ 545,000
27,000* Aseco Corp............................. 310,500
17,000* BARRA, Inc............................. 320,875
7,000 Brandon Systems Corp................... 231,000
17,500* Comarco, Inc........................... 260,313
60,500* Del Global Technologies Corp........... 495,344
35,000* IFR Systems, Inc....................... 476,875
2,000 Scientific Technologies, Inc........... 26,500
37,500 Timberline Software Corp............... 412,500
31,000 Todd-AO Corp. Cl. A.................... 426,250
80,000* Xata Corp.............................. 580,000
8,000* Zygo Corp.............................. 312,000
4,397,157
THRIFT INSTITUTIONS -- 5.0%
20,000 Central Jersey Financial Corp.......... 510,000
7,000 Iroquois Bancorp, Inc.................. 104,125
8,400 Parkvale Financial Corp................ 229,950
20,500 People's Savings Financial Corp........ 417,687
37,500 Virginia First Financial Corp.......... 450,000
20,000* WSFS Financial Corp.................... 152,500
27,000 York Financial Corp.................... 486,000
2,350,262
<CAPTION>
SHARES VALUE
<C> <S> <C>
TRANSPORTATION -- 3.4%
175,025* Cannon Express, Inc. Cl. B+............ $ 1,356,443
49,000* OTR Express, Inc....................... 232,750
1,589,193
UTILITIES-ELECTRIC -- 1.1%
1,500 Eselco, Inc............................ 38,625
20,500 UNITIL Corp............................ 474,062
512,687
UTILITIES-GAS -- 1.8%
30,900 Chesapeake Utilities Corp.............. 517,575
16,900 EnergyNorth, Inc....................... 325,325
842,900
UTILITIES-WATER -- .9%
25,000 Middlesex Water Co..................... 434,375
TOTAL COMMON STOCKS
(COST $43,966,091)..................... 43,322,694
</TABLE>

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<C> <S> <C> <C>
SHORT TERM U.S. GOVERNMENT &
AGENCY OBLIGATIONS -- 10.5%
$ 450,000 Federal Home Loan Mortgage
5.35%, 4/4/96................ 449,799
Federal National Mortgage
Association
1,300,000 5.12%, 4/26/96............... 1,295,378
3,200,000 5.32%, 5/1/96................ 3,185,813
TOTAL U.S. GOVERNMENT &
AGENCY OBLIGATIONS
(COST $4,930,990)............ 4,930,990
TOTAL INVESTMENTS
(COST $48,897,081)........... 102.7% 48,253,684
OTHER ASSETS AND
LIABILITIES -- NET........... (2.7) (1,264,893)
NET ASSETS................. 100.0% $46,988,791
</TABLE>

* Non-income producing security.
** No market quotation available. Valued at fair value as determined in
good faith by the Fund's Board of Directors.
(dagger) Investment in non-controlling affiliate-holdings over 5% of outstanding
voting securities. During the six-month period ended March 31, 1996,the
Fund recognized no dividend income from these securities.
See accompanying notes to financial statements.
26

<PAGE>
(Photo of EVERGREEN LIMITED MARKET FUND, INC.
sculpture on STATEMENT OF ASSETS AND LIABILITIES
building MARCH 31, 1996
appears here) (UNAUDITED)

<TABLE>
<S> <C>
ASSETS:
Investments at value (identified cost $48,897,081)............................................................. $48,253,684
Cash........................................................................................................... 18,825
Receivable for securities sold................................................................................. 163,177
Prepaid expenses............................................................................................... 43,917
Dividends and interest receivable.............................................................................. 38,699
Receivable for Fund shares sold................................................................................ 21,133
Total assets............................................................................................. 48,539,435
LIABILITIES:
Payable for securities purchased............................................................................... 1,400,757
Accrued expenses............................................................................................... 78,847
Payable for Fund shares redeemed............................................................................... 35,837
Accrued advisory fee........................................................................................... 32,747
Distribution fee payable....................................................................................... 2,456
Total liabilities........................................................................................ 1,550,644
NET ASSETS........................................................................................................ $46,988,791
NET ASSETS CONSIST OF:
Paid-in capital................................................................................................ $48,572,029
Accumulated net investment loss................................................................................ (184,106)
Accumulated net realized loss on investment transactions....................................................... (755,735)
Net unrealized depreciation of investments..................................................................... (643,397)
Net assets............................................................................................... $46,988,791
CALCULATION OF NET ASSET VALUE AND MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares ($906,130 (divided by sign) 54,274 shares outstanding).......................................... $ 16.70
Sales charge -- 4.75% of offering price........................................................................ .83
Maximum offering price................................................................................... $ 17.53
Class B Shares ($1,529,365 (divided by sign) 92,522 shares outstanding)........................................ $ 16.53
Class C Shares ($29,024 (divided by sign) 1,754 shares outstanding)............................................ $ 16.55
Class Y Shares ($44,524,272 (divided by sign) 2,663,680 shares outstanding).................................... $ 16.72
</TABLE>

See accompanying notes to financial statements.
27

<PAGE>
(Photo of EVERGREEN LIMITED MARKET FUND, INC.
sculpture on STATEMENT OF OPERATIONS
building SIX MONTHS ENDED MARCH 31, 1996
appears here) (UNAUDITED)

<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends (net of withholding taxes of $480).................................................. $ 154,458
Interest...................................................................................... 104,584
Total investment income.................................................................... 259,042
EXPENSES:
Advisory fee..................................................................................... $ 282,873
Distribution fee -- Class A Shares............................................................... 1,246
Distribution fee -- Class B Shares............................................................... 6,852
Shareholder services fee -- Class B Shares....................................................... 2,284
Distribution fee -- Class C Shares............................................................... 206
Shareholder services fee -- Class C Shares....................................................... 69
Registration and filing fees..................................................................... 47,634
Custodian fee.................................................................................... 40,930
Transfer agent fee............................................................................... 39,520
Professional fees................................................................................ 26,032
Reports and notices to shareholders.............................................................. 12,286
Insurance expense................................................................................ 6,616
Directors' fees and expenses..................................................................... 5,606
Miscellaneous.................................................................................... 2,483
Total operating expenses...................................................................... 474,637
Interest expense................................................................................. 8,987
Less: Fee waivers and expense reimbursements..................................................... (40,476)
Net expenses.................................................................................. 443,148
Net investment loss................................................................................. (184,106)
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS:
Net realized loss on investment transactions..................................................... (526,659)
Net change in unrealized appreciation (depreciation) of investments.............................. (3,440,625)
Net loss on investments............................................................................. (3,967,284)
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS................................................ ($4,151,390)
</TABLE>

See accompanying notes to financial statements.
28

<PAGE>
(Photo of sculpture on EVERGREEN LIMITED MARKET FUND, INC.
building appears here) STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
SIX MONTHS
ENDED
MARCH 31, YEAR ENDED
1996 SEPTEMBER 30,
(UNAUDITED) 1995
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment loss.................................................................. $ (184,106) $ (704,746)
Net realized gain (loss) on investment transactions.................................. (526,659) 2,480,633
Net change in unrealized appreciation (depreciation) of investments.................. (3,440,625) (99,059)
Net increase (decrease) resulting from operations................................. (4,151,390) 1,676,828
DISTRIBUTIONS TO SHAREHOLDERS FROM NET REALIZED GAINS:
Class A Shares....................................................................... (32,318) --
Class B Shares....................................................................... (61,166) --
Class C Shares....................................................................... (1,952) --
Class Y Shares....................................................................... (1,796,282) (15,681,527)
Total distributions to shareholders from net realized gains....................... (1,891,718) (15,681,527)
FUND SHARE TRANSACTIONS:
Proceeds from shares sold............................................................ 5,061,173 30,951,369
Proceeds from reinvestment of distributions.......................................... 1,739,216 14,048,986
Payment for shares redeemed.......................................................... (21,660,461) (62,443,458)
Net decrease resulting from Fund share transactions............................... (14,860,072) (17,443,103)
Net decrease in net assets........................................................ (20,903,180) (31,447,802)
NET ASSETS:
Beginning of period.................................................................. 67,891,971 99,339,773
End of period (including net investment loss of $184,106 at
March 31, 1996)................................................................... $ 46,988,791 $ 67,891,971
</TABLE>

See accompanying notes to financial statements.
29

<PAGE>
(Photo of sculpture EVERGREEN LIMITED MARKET FUND, INC.
on building CLASS A, CLASS B AND CLASS C SHARES
appears here) FINANCIAL HIGHLIGHTS

CLASS A SHARES CLASS B SHARES
SIX MONTHS JANUARY 3, SIX MONTHS
ENDED 1995* ENDED
MARCH 31, THROUGH MARCH 31,
1996 SEPTEMBER 30, 1996
(UNAUDITED) 1995 (UNAUDITED)
<S> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period........................ $ 18.41 $15.76 $18.30
Income (loss) from investment operations:
Net investment loss....................................... (.06) (.10) (.14)
Net realized and unrealized gain (loss) on investments.... (1.09) 2.75 (1.07)
Total from investment operations........................ (1.15) 2.65 (1.21)
Less distributions to shareholders from net realized
gains..................................................... (.56) -- (.56)
Net asset value, end of period.............................. $ 16.70 $18.41 $16.53
TOTAL RETURN(dagger)........................................ (6.3%) 16.8% (6.7%)
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted)................... $906 $1,089 $1,529
Ratios to average net assets:
Expenses.................................................. 1.61%(2 daggers)# 1.51%(2 daggers)# 2.36%(2 daggers)#
Interest expense.......................................... .03%(2 daggers) -- .03%(2 daggers)
Net investment loss....................................... (.70%)(2 daggers)# (1.03%)(2 daggers)# (1.46%)(2 daggers)#
Portfolio turnover rate..................................... 125% 84% 125%
Average commission rate paid per share...................... $.0459 N/A $.0459

</TABLE>

<TABLE>
<CAPTION>
CLASS C
CLASS B SHARES SHARES
JANUARY 3, SIX MONTHS JANUARY 3,
1995* ENDED 1995*
THROUGH MARCH 31, THROUGH
SEPTEMBER 30, 1996 SEPTEMBER 30,
1995 (UNAUDITED) 1995
<S> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period........................ $15.76 $18.31 $15.76
Income (loss) from investment operations:
Net investment loss....................................... (.20) (.23) (.20)
Net realized and unrealized gain (loss) on investments.... 2.74 (.97) 2.75
Total from investment operations........................ 2.54 (1.20) 2.55
Less distributions to shareholders from net realized
gains..................................................... -- (.56) --
Net asset value, end of period.............................. $18.30 $16.55 $18.31
TOTAL RETURN(dagger)........................................ 16.1% (6.6%) 16.2%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted)................... $2,020 $29 $62
Ratios to average net assets:
Expenses.................................................. 2.26%(2 daggers)# 2.35%(2 daggers)# 2.25%(2 daggers)#
Interest expense.......................................... -- .03%(2 daggers) --
Net investment loss....................................... (1.77%)(2 daggers)# (1.49%)(2 daggers)# (1.76%)(2 daggers)#
Portfolio turnover rate..................................... 84% 125% 84%
Average commission rate paid per share...................... N/A $.0459 N/A

</TABLE>
* Commencement of class operations.
(daggers) Total return is calculated for the periods indicated and is not
annualized. Initial sales charge or contingent deferred sales
charges are not reflected.
(2 daggers) Annualized.
# Net of expense waivers and reimbursements. If the Fund had borne
all expenses that were assumed or waived by the investment adviser,
the annualized ratios of expenses and net investment loss to
average net assets, exclusive of any applicable state expense
limitations, would have been the following:
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
SIX MONTHS JANUARY 3, SIX MONTHS JANUARY 3, SIX MONTHS JANUARY 3,
ENDED 1995* ENDED 1995* ENDED 1995*
MARCH 31, THROUGH MARCH 31, THROUGH MARCH 31, THROUGH
1996 SEPTEMBER 30, 1996 SEPTEMBER 30, 1996 SEPTEMBER 30,
(UNAUDITED) 1995 (UNAUDITED) 1995 (UNAUDITED) 1995
<S> <C> <C> <C> <C> <C> <C>
Expenses................. 4.18% 4.33% 3.72% 3.66% 47.06% 41.34%
Net investment loss...... (3.27%) (3.85%) (2.82%) (3.18%) (46.20%) (40.85%)
</TABLE>

See accompanying notes to financial statements.
30

<PAGE>
(Photo of sculpture EVERGREEN LIMITED MARKET FUND, INC.
on building CLASS Y SHARES
appears here) FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
CLASS Y SHARES
SIX MONTHS
ENDED FOUR MONTHS
MARCH 31, YEAR ENDED ENDED
1996 SEPTEMBER 30, SEPTEMBER 30,
(UNAUDITED) 1995 1994*
<S> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period................................. $18.42 $21.74 $21.20
Income (loss) from investment operations:
Net investment income (loss)....................................... (.06) (.23) (.05)
Net realized and unrealized gain on investments.................... (1.08) .59 .59
Total income from investment operations.......................... (1.14) .36 .54
Less distributions to shareholders from:
Net investment income.............................................. -- -- --
Net realized gains................................................. (.56) (3.68) --
Total distributions.............................................. (.56) (3.68) --
Net asset value, end of period....................................... $16.72 $18.42 $21.74
TOTAL RETURN(daggers)................................................ (6.3%) 4.8% 2.6%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted)............................ $44,524 $64,721 $99,340
Ratios to average net assets:
Expenses........................................................... 1.50%(2 daggers) 1.36% 1.37%(2 daggers)
Interest expense................................................... .03%(2 daggers) -- --
Net investment income (loss)....................................... (.62%)(2 daggers) (.87%) (.70%)(2 daggers)
Portfolio turnover rate.............................................. 125% 84% 36%
Average commission rate paid per share............................... $.0459 N/A N/A
<CAPTION>
YEAR ENDED MAY
31,
<S>
1994 1993 1992
<C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period.................................
Income (loss) from investment operations: $20.87 $21.02 $18.81
Net investment income (loss).......................................
Net realized and unrealized gain on investments.................... (.07) (.03) .02
Total income from investment operations.......................... 1.67 1.57 3.33
Less distributions to shareholders from: 1.60 1.54 3.35
Net investment income.............................................. (.14)
Net realized gains................................................. -- -- (1.00)
Total distributions.............................................. (1.27) (1.69) (1.14)
Net asset value, end of period....................................... (1.27) (1.69) $21.02
TOTAL RETURN(daggers)................................................ $21.20 $20.87 18.3%
RATIOS & SUPPLEMENTAL DATA: 7.6% 7.5%
Net assets, end of period (000's omitted)............................ $62,172
Ratios to average net assets: $96,357 $80,605
Expenses........................................................... 1.25%
Interest expense................................................... 1.26% 1.24% --
Net investment income (loss)....................................... -- -- .22%
Portfolio turnover rate.............................................. (.33%) (.07%) 55%
Average commission rate paid per share............................... 89% 29% N/A
N/A N/A
</TABLE>

* The Fund changed its fiscal year end from May 31 to September 30.
(daggers) Total return is calculated for the periods indicated and is not
annualized.
(2 daggers) Annualized.
# Net of expense waivers and reimbursements. If the Fund had borne
all expenses that were assumed or waived by the investment adviser,
the annualized ratios of expenses and net investment loss to
average net assets would have been the following:

<TABLE>

CLASS Y SHARES
SIX MONTHS
ENDED
MARCH 31,
1996
(UNAUDITED)

<S> <C>
Expenses..................................... 1.51%
Net investment loss.......................... (.63%)
</TABLE>

See accompanying notes to financial statements.
31

<PAGE>
(Photo of American flag EVERGREEN U.S. REAL ESTATE EQUITY FUND
appears here)

A REPORT FROM YOUR
PORTFOLIO MANAGER
SAMUEL A. LIEBER
Evergreen U.S. Real Estate Equity Fund's total returns (Photo of
(Class Y, no-load shares) for the six- and twelve-month Samuel A.
periods ended March 31, 1996, were 10.0%* and 35.3%, Lieber
respectively, which outpaced our benchmark Wilshire Real appears here)
Estate Securities Index** whose six- and twelve-month total
returns were 8.0% and 19.4%, respectively. Since its inception
on October 1, 1993, the Fund's average annual compound rate of
return through March 31, 1996, was 11.0%. The Fund's six- and
twelve-month total returns were 4.6%* and 28.4%, respectively
for the Fund's Class A shares and 4.4% and 28.9%,
respectively, for Class B shares. The average annual compound
rates of returns
for the Fund's Class A shares and Class B shares for the
periods since their inceptions on March 10, 1995, and March 7, 1995,
respectively, were 33.7% and 32.7%, respectively. The six-month total return for
the Fund's Class C shares was 8.4%. Evergreen U.S. Real Estate Equity Fund's
(Class Y, no-load shares) twelve-month total return through March 31, ranked #1
among all 32 real estate mutual funds tracked by Lipper Analytical Services***
during that time, The twelve-month total returns ended March 31, for the Fund's
Class A shares and Class B shares ranked #2 and #3, respectively.
We believe that the Fund's successful relative past performance is
attributable not only to the excellent returns of a number of the Fund's
investments, but also to the portfolio's design. The Fund utilizes a value-
oriented search for out-of-favor or mispriced real estate investment trusts
(REITs) and economically-sensitive growth stocks, such as hotel companies and
homebuilders. The Fund's REIT investments, just over 60% of net assets at March
31, help to provide a defensive measure against volatility, as high
dividend-yielding securities, such as REITs, can help provide stability during
down markets. Thus, the Fund can also participate in more volatile, high beta
stocks, such as homebuilders, and not be as subject to the broad price
fluctuations which would otherwise be the case in a real estate fund with a much
less diversified portfolio. Beta is a measure of market risk. It illustrates the
volatility of the price per share of a security as compared with the market as a
whole, as measured by the S&P 500 Reinvested Index(dagger), which is assigned a
beta of one. Generally, a beta of less than one indicates that the security
would fluctuate less than the market, and greater than one indicates it would
fluctuate more than the market. A beta is subject to change. The average beta
for REITs is approximately .6(2 daggers), and for homebuilders is
approximately 1.1(3 daggers). So, REITs will, on average, lag the broad market
on both the upside and the downside, while homebuilders on average will exceed
it. Thus, the respective weightings of these sectors could influence the
magnitude of the Fund's performance relative to the S&P 500.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
INVESTMENT CONCENTRATION IN ONE INDUSTRY MAY INCREASE THE RISKS THAT WOULD
OTHERWISE BE DECREASED IN MORE DIVERSE INVESTMENTS.
* PERFORMANCE FIGURES INCLUDE REINVESTMENT OF INCOME DIVIDEND AND
CAPITAL GAIN DISTRIBUTIONS. INVESTMENT RETURN AND PRINCIPAL VALUE
WILL FLUCTUATE. INVESTORS' SHARES, WHEN REDEEMED, MAY BE WORTH
MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE FIGURES FOR
CLASS A SHARES REFLECT DEDUCTION OF MAXIMUM 4.75% FRONT END
SALES CHARGE, FOR CLASS B SHARES REFLECT DEDUCTION
OF MAXIMUM 5% CONTINGENT DEFERRED SALES CHARGE, AND FOR CLASS C
SHARES REFLECT DEDUCTION OF 1% CONTINGENT DEFERRED SALES CHARGE
WITHIN THE FIRST YEAR OF PURCHASE. THE FUND'S CLASS C SHARES WERE
NOT IN EXISTENCE FOR THE FULL 12 MONTHS ENDED 3/31/96.
** AN UNMANAGED INDEX OF SELECTED SECURITIES. AN INVESTMENT CAN NOT BE
MADE IN AN INDEX.
*** LIPPER ANALYTICAL SERVICES, INC., IS AN INDEPENDENT MUTUAL FUNDS
PERFORMANCE MONITOR. LIPPER RANKINGS DO NOT INCLUDE THE EFFECT OF
SALES CHARGES. IF INCLUDED, RANKINGS COULD BE DIFFERENT.
(dagger) AN UNMANAGED INDEX OF COMMON STOCKS THAT IS GENERALLY CONSIDERED
REPRESENTATIVE OF THE U.S. STOCK MARKET.
(2 daggers) SOURCE: NAREIT, THE NATIONAL ASSOCIATION OF REAL ESTATE INVESTMENT
TRUSTS
(3 daggers) ARITHMETIC AVERAGE OF THE BETAS OF THE 18 HOMEBUILDERS WITH MARKET
CAPITALIZATIONS IN EXCESS OF $85 MILLION, AS COMPILED FROM DATA
PROVIDED BY BLOOMBERG FINANCIAL SERVICES.
32

<PAGE>
(Photo of American EVERGREEN U.S. REAL ESTATE EQUITY FUND
flag appears here)

ECONOMIC CONSIDERATIONS
We believe the current investment environment is holding back performance of
real estate stocks. Mixed economic signals have led to manic fears that the
economy is either approaching a recession within the next twelve months, or that
the economy is rebounding from a temporary slowdown and will show considerable
strength through the balance of the year. The constant ebb and flow between
these two polar interpretations has currently swung to favor the perspective
that the economy may strengthen and, thus, interest rates have risen in
anticipation. The rise in interest rates is competing against the high yield
nature of REITs and has encouraged sentiment that homebuilders' sales might be
pressured by rising mortgage rates. Nonetheless, the market does not appear to
believe that the economy will strengthen enough to push rents higher, or enable
more people to accumulate capital for down payments. We believe that such
indecisiveness from the market has created a buying opportunity. We believe that
the correct reading of the economy is that the Fed has indeed succeeded in
achieving a low inflation, slow growth economy, which, if not ideal for real
estate, is still generally positive in that we are enjoying an extended economic
recovery which may produce moderate rental growth, as well as steady demand for
new homes.
INVESTMENT PERFORMANCE
Given our prognosis for only modest economic growth, we are continuing our
emphasis on searching for value. We have had continued success in finding stocks
which are either misperceived or investment sectors which are out of favor with
the market. During the past six months, we have made a number of changes in the
portfolio, both investing in new opportunities and taking profits in holdings
which we believe are fully valued. Notable examples of this strategy include
Starwood Lodging Corp., a REIT whose shares we purchased in the first quarter of
1995 for $20. We sold part of our position at the beginning of 1996 for $32 or a
60% total return. Bay Apartment Communities, a major beneficiary of the boom in
Silicon Valley during 1995, was sold in December with a total return of over 32%
after the Fund acquired the shares last March for $18. Among homebuilders,
Redman Industries provided a 69% return over one year prior to its sale this
past February.
The Fund has also enjoyed significant appreciation in existing holdings.
Shares in the hotel company John Q. Hammons Corp., purchased in December, 1995,
rose 18% through the end of March, Prime Hospitality (a hotel company) rose 21%
since its acquisition in March, 1996, and Santa Anita Realty Enterprises Inc., a
REIT purchased in January, 1996 (which owns considerable land holdings and a
racetrack in Pasadena, California) rose 27%. On the negative side of the ledger,
the Fund was hurt by several stocks whose prices retreated during the March
quarter, specifically American Industrial Properties, whose shares fell back to
the Fund's cost basis of $1 5/8 from $2 following the end of takeover talks by
another REIT. The Fund's investments in outlet shopping centers were
particularly impacted by the overall weak retail environment as the Wilshire
Real Estate Securities/Factory Outlets Index** fell by 10.6% for the six months
through March 31, and was up just .6% for the twelve months. The Fund's
investment in U.S. Home Corp., which has been an exceptional performer (+87.9%)
in 1995, pulled back almost 24% during the March quarter, as did other
homebuilders in general.
PROPERTY MARKET PROSPECTS
We believe that the real estate recovery which started in 1991, has not yet
reached its midway point. We anticipate solid growth in selected markets and
property types, although expecting that the next few years will bring only
moderate growth and continued gradual recovery to real estate markets in
general. Real estate markets across the country should demonstrate varied
performance according to property type. Because the
33

<PAGE>
(Photo of American flag EVERGREEN U.S. REAL ESTATE EQUITY FUND
appears here)

A REPORT FROM YOUR
PORTFOLIO MANAGER -- (CONTINUED)
Southwest should continue to benefit from an expanding service sector and
relatively low cost of living, we expect demand to remain strong for apartments,
affordable homes, value oriented retailing, and warehouse distribution centers.
The gradual recovery of Southern California's economy should continue, and thus
provide positive support for most property sectors. Economic growth in the
Southeast, currently centered on Atlanta and the Carolinas, should remain
positive for most sectors, although certain markets may be impacted by recent
overbuilding of apartments and limited service hotels. The Midwest continues to
benefit from its strong manufacturing base, which has been positive not only for
office/industrial properties, but is also providing strong demand for affordable
homes. Both the Northeast and Mid-Atlantic regions have been impacted by
somewhat softer export demand and the continuing white collar job contraction
from downsizing and restructuring, particularly in the banking sector. Thus,
demand for office/industrial properties will probably continue to be modest and
residential demand has only been strong in well-located, in-fill locations.
RETAIL EVOLUTION
The outlook for retail and shopping centers is the subject of many questions
and concerns related to the performance of the retail sector in general. Retail
sales growth has clearly been pressured by a combination of greater value
consciousness on the part of shoppers, shifting demographic patterns which
effect demand, and a profusion of similar products which have failed to capture
consumers' desires. However, we believe that this does not represent a major
structural change in the viability of retailing, rather it reflects the ongoing
evolution of consumer needs, preferences, and interests, which renders some
forms of merchandising oversupplied or obsolete. Witness the decline of
department stores during the last recession and their successful reemergence in
1995 with strong sales gains. Contrast this with the collapse of discount
department stores during the past year highlighted by the fall of Wal-Mart's
share price from over $33 in 1993 to below $20 earlier this year and the
company's first ever negative year on year sales comparison this April. During
the first quarter of 1996 many specialty apparel companies experienced a surge
in sales after several years of steady decline. We believe that merchants may
once again be creating formats and products that will entice consumers to buy.
However, we recognize that consumers have grown increasingly astute in balancing
the variables of choice, value, convenience, and quality when they decide what
to buy and where to buy it. Given this perspective, we are continuing to
maintain the Fund's exposure to the retail sector in stocks which we believe are
significantly undervalued by the stock market.
SUMMARY
In summary, our strategy is to continue to focus on the growth markets
wherever applicable, but we will not pay significant premiums over underlying
real estate values in order to chase hot markets, high profile companies, or
highly regarded management teams. We believe that such a disciplined approach
has benefited the Fund over the past two and a half years of its existence and
that this approach to seeking growth opportunities at values we view as
reasonable and seeking situations to acquire real estate securities at a
discount will aid the Fund in the years to come.
With our selective positioning, we believe the Fund will benefit from its
current investment portfolio over the balance of 1996. We appreciate your
continued support and interest in Evergreen U.S. Real Estate Securities Fund,
and as shareholders, look forward to participating in its future performance.
34

<PAGE>
(Photo of EVERGREEN U.S. REAL ESTATE EQUITY FUND
American STATEMENT OF INVESTMENTS
flag MARCH 31, 1996
appears here) (UNAUDITED)

<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
EQUITY SECURITIES -- 95.0%
<C> <S> <C>
REAL ESTATE INVESTMENT TRUSTS -- 60.9%
APARTMENTS -- 11.7%
7,000 Apartment Investment &
Management Co.......................... $ 146,125
15,000 Chicago Dock & Canal Trust............. 212,812
19,000 Columbus Realty Trust.................. 370,500
6,000 Essex Property Trust, Inc.............. 124,500
6,200 Gables Residential Trust............... 148,800
11,300 Oasis Residential, Inc................. 265,550
1,268,287
COMMUNITY SHOPPING CENTERS -- 8.7%
20,000 Alexander Haagen Properties, Inc....... 230,000
22,638 Bradley Real Estate, Inc............... 325,421
12,000 Burnham Pacific Properties, Inc........ 132,000
8,000 Kranzco Realty Trust................... 121,000
8,500 Santa Anita Realty Enterprises, Inc.... 129,625
938,046
FACTORY OUTLET CENTERS -- 12.3%
17,500 Chelsea GCA Realty, Inc................ 516,250
40,900 Factory Stores of America, Inc......... 403,888
19,680 HGI Realty, Inc........................ 415,740
1,335,878
HOTELS -- 12.0%
16,000 Patriot American Hospitality, Inc...... 422,000
8,467 Starwood Lodging Trust................. 285,761
57,000 Sunstone Hotel Investors, Inc.......... 584,250
1,292,011
OFFICE/INDUSTRIAL BUILDINGS -- 3.2%
85,000 American Industrial Property........... 138,125
3,000 Crescent Real Estate Equities, Inc..... 100,875
10,000 * Koger Equity, Inc...................... 108,750
347,750
SELF STORAGE -- 3.8%
20,000 Public Storage, Inc.................... 407,500
SHOPPING MALLS -- 9.1%
3,000 Alexander's, Inc....................... 198,000
45,000 Crown American Realty Trust............ 343,125
25,900 Glimcher Realty Trust.................. 440,300
981,425
OTHER SECURITIES -- .1%................ 9,381
TOTAL REAL ESTATE INVESTMENT TRUSTS
(COST $6,044,562)...................... 6,580,278
<CAPTION>
SHARES VALUE
<C> <S> <C>
COMMON STOCKS -- 34.1%
HOMEBUILDERS -- 23.4%
24,300 Continental Homes Holding Corp......... $ 558,900
11,000 Del Webb Corp.......................... 202,125
40,000 * D.R. Horton, Inc....................... 430,000
8,000 Kaufman & Broad Home Corp.............. 128,000
18,800 * M/I Schottenstein Homes, Inc........... 192,700
99,300 * Presley Companies...................... 161,363
32,000 Standard-Pacific Corp.................. 232,000
61,200 * US Home Corp. warrants Cl. B........... 512,550
21,600 * Washington Homes, Inc.................. 105,300
2,522,938
LODGING -- 8.2%
33,000 * John Q Hammons Hotels, Inc............. 358,875
12,000 * Prime Hospitality Corp................. 163,500
13,000 * Studio Plus Hotels, Inc................ 360,750
883,125
MISCELLANEOUS -- 1.2%
20,000 * Cadiz Land Co. Inc..................... 126,875
SHOPPING MALLS -- 1.0%
4,900 Rouse Co............................... 107,188
OTHER SECURITIES -- .3%................ 39,775
TOTAL COMMON STOCKS
(COST $3,585,923)...................... 3,679,901
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<C> <S> <C> <C>
SHORT-TERM U.S. GOVERNMENT & AGENCY
OBLIGATIONS -- 4.6%
$200,000 Federal Home Loan Mortgage Association,
5.28%, 4/24/96......................... 199,325
300,000 Federal National Mortgage Association,
5.28%, 4/9/96.......................... 299,648
TOTAL SHORT-TERM US GOVERNMENT & AGENCY
OBLIGATIONS
(COST $498,973)........................ 498,973

TOTAL INVESTMENTS
(COST $10,129,458)................ 99.6 % 10,759,152

OTHER ASSETS AND
LIABILITIES -- NET................ .4 38,363
NET ASSETS........................... 100.0 % $10,797,515
</TABLE>

* Non-income producing security.
See accompanying notes to financial statements.
35

<PAGE>
(Photo of EVERGREEN U.S. REAL ESTATE EQUITY FUND
American STATEMENT OF ASSETS AND LIABILITIES
flag MARCH 31, 1996
appears here) (UNAUDITED)

<TABLE>
<S> <C>
ASSETS:
Investments at value (identified cost $10,129,458)............................................................. $10,759,152
Cash........................................................................................................... 72,205
Receivable for securities sold................................................................................. 294,959
Dividends and interest receivable.............................................................................. 64,740
Prepaid expenses............................................................................................... 52,278
Unamortized organization expenses.............................................................................. 19,743
Due from Adviser............................................................................................... 11,519
Receivable for Fund shares sold................................................................................ 1,153
Total assets................................................................................................ 11,275,749
LIABILITIES:
Payable for securities purchased............................................................................... 430,237
Accrued expenses............................................................................................... 47,577
Distribution fee payable....................................................................................... 420
Total liabilities........................................................................................... 478,234
NET ASSETS........................................................................................................ $10,797,515
NET ASSETS CONSIST OF:
Paid-in capital................................................................................................ $ 9,505,109
Undistributed net investment income............................................................................ 51,019
Undistributed net realized gain on investment transactions..................................................... 611,693
Net unrealized appreciation of investments..................................................................... 629,694
Net assets.................................................................................................. $10,797,515
CALCULATION OF NET ASSET VALUE AND MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares ($83,528 (divided by sign) 6,891 shares of beneficial interest outstanding).................. $ 12.12
Sales charge -- 4.75% of offering price..................................................................... .60
Maximum offering price................................................................................... $ 12.72
Class B Shares ($322,399 (divided by sign) 26,704 shares of beneficial interest outstanding)................ $ 12.07
Class C Shares ($36,998 (divided by sign) 3,058 shares of beneficial interest outstanding).................. $ 12.10
Class Y Shares ($10,354,590 (divided by sign) 851,765 shares of beneficial interest outstanding)............ $ 12.16
</TABLE>

See accompanying notes to financial statements.
36

<PAGE>
(Photo of EVERGREEN U.S. REAL ESTATE EQUITY FUND
American STATEMENT OF OPERATIONS
flag SIX MONTHS ENDED MARCH 31, 1996
appears here) (UNAUDITED)

<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Income:
Dividends......................................................................................... $177,725
Interest.......................................................................................... 2,440
Total investment income........................................................................ 180,165
EXPENSES:
Advisory fee......................................................................................... $ 50,180
Distribution fee -- Class A Shares................................................................... 114
Distribution fee -- Class B Shares................................................................... 795
Shareholder services fee -- Class B Shares........................................................... 265
Distribution fee -- Class C Shares................................................................... 66
Shareholder services fee -- Class C Shares........................................................... 22
Custodian fee........................................................................................ 28,432
Registration and filing fees......................................................................... 24,529
Transfer agent fee................................................................................... 23,656
Reports and notices to shareholders.................................................................. 18,956
Professional fees.................................................................................... 11,255
Amortization of organization expense................................................................. 3,380
Insurance expense.................................................................................... 3,350
Trustees' fees and expenses.......................................................................... 1,152
Miscellaneous........................................................................................ 8,611
174,763
Less: Fee waivers and expense reimbursements......................................................... (98,237)
Net expenses................................................................................... 76,526
Net investment income................................................................................... 103,639
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments..................................................................... 678,405
Net increase in unrealized appreciation of investments............................................... 167,796
Net gain on investments................................................................................. 846,201
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................................................... $949,840
</TABLE>

See accompanying notes to financial statements.
37

<PAGE>
(Photo of American EVERGREEN U.S. REAL ESTATE EQUITY FUND
flag appears here) STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
SIX MONTHS
ENDED
MARCH 31, YEAR ENDED
1996 SEPTEMBER 30,
(UNAUDITED) 1995
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income..................................................................... $ 103,639 $ 209,406
Net realized gain on investment transactions.............................................. 678,405 113,161
Net change in unrealized appreciation of investments...................................... 167,796 1,146,688
Net increase resulting from operations................................................. 949,840 1,469,255
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME:
Class A Shares......................................................................... (2,161) --
Class B Shares......................................................................... (2,282) --
Class C Shares......................................................................... (113) --
Class Y Shares......................................................................... (161,622) (183,475)
Total distributions to shareholders from net investment income...................... (166,178) (183,475)
NET REALIZED GAINS ON INVESTMENTS:
Class A Shares......................................................................... (2,640) --
Class B Shares......................................................................... (3,174) --
Class C Shares......................................................................... (144) --
Class Y Shares......................................................................... (170,850) (106,651)
Total distributions to shareholders from net realized gains on investments.......... (176,808) (106,651)
Total distributions to shareholders.............................................. (342,986) (290,126)
FUND SHARE TRANSACTIONS:
Proceeds from shares sold................................................................. 1,192,019 1,706,148
Proceeds from reinvestments of distributions.............................................. 326,475 273,657
Payment for shares redeemed............................................................... (951,657) (2,165,200)
Net increase (decrease) resulting from Fund share transactions......................... 566,837 (185,395)
Net increase in net assets............................................................. 1,173,691 993,734
NET ASSETS:
Beginning of period....................................................................... 9,623,824 8,630,090
End of period (including undistributed net investment income of $51,019 and $113,558,
respectively)........................................................................... $10,797,515 $ 9,623,824
</TABLE>

See accompanying notes to financial statements.
38

<PAGE>
(Photo of EVERGREEN U.S. REAL ESTATE EQUITY FUND
American flag CLASS A, CLASS B, AND CLASS C SHARES
appears here) FINANCIAL HIGHLIGHTS

CLASS A SHARES CLASS B SHARES
SIX MONTHS SIX MONTHS
ENDED MARCH 10, ENDED
MARCH 31, 1995* THROUGH MARCH 31,
1996 SEPTEMBER 30, 1996
(UNAUDITED) 1995 (UNAUDITED)
<S> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period................... $11.42 $9.21 $ 11.37
Income from investment operations:
Net investment income................................ .02 .18 .17
Net realized and unrealized gain on investments...... 1.09 2.03 .94
Total from investment
operations....................................... 1.11 2.21 1.11
Less distributions to shareholders from:
Net investment income................................ (.20) -- (.20)
Net realized gains................................... (.21) -- (.21)
Total distributions................................ (.41) -- (.41)
Net asset value, end of period......................... $12.12 $ 11.42 $ 12.07
TOTAL RETURN(dagger)................................... 9.8% 24.0% 9.4%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted).............. $84 $5 $322
Ratios to average net assets:
Expenses............................................. 1.76%(2 daggers) 1.78%(2 daggers) 2.51%(2 daggers)
Net investment income................................ 1.72%(2 daggers) 3.13%(2 daggers) 1.65%(2 daggers)
Portfolio turnover rate................................ 109% 115% 109%
Average commission rate paid per share................. $.0609 N/A $.0609
<CAPTION>

CLASS B
SHARES CLASS C SHARES
MARCH 7, SIX MONTHS JULY 12,
1995* THROUGH ENDED 1995* THROUGH
SEPTEMBER 30, MARCH 31, SEPTEMBER 30,
1995 1996 1995
<S> <C> <C> <C>
PER SHARE DATA: UNAUDITED
Net asset value, beginning of period................... $ 9.19 $ 10.87
Income from investment operations: $ 11.41
Net investment income................................ .05 .08
Net realized and unrealized gain on investments...... 2.13 .11 .46
Total from investment .94
operations....................................... 2.18 .54
Less distributions to shareholders from: 1.05
Net investment income................................ -- --
Net realized gains................................... -- (.15) --
Total distributions................................ -- (.21) --
Net asset value, end of period......................... $ 11.37 (.36) $ 11.41
TOTAL RETURN+.......................................... 23.7% $ 12.10 5.0%
RATIOS & SUPPLEMENTAL DATA: 9.4%
Net assets, end of period (000's omitted).............. $160 $3
Ratios to average net assets: $37
Expenses............................................. 2.51%(2 daggers) 2.52(2 daggers) 2.49%(2 daggers)
Net investment income................................ 2.00%(2 daggers) 1.75%(2 daggers) 2.55%(2 daggers)
Portfolio turnover rate................................ 115% 109% 115%
Average commission rate paid per share................. N/A .0609 N/A
</TABLE>

* Commencement of class operations.
** The Fund changed its fiscal year end from December 31 to
September 30.
(dagger) Total return is calculated on net asset value per share for the
periods indicated and is not annualized. Initial sales charge or
contingent deferred sales charges are not reflected.
(2 daggers) Annualized and net of expense waivers and reimbursements. If the
Fund had borne all expenses that were assumed or waived by the
investment adviser, the annualized ratios of expenses and net
investment loss to average net assets, exclusive of any applicable
state expense limitations, would have been the following:
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED MARCH 10, ENDED MARCH 7, ENDED JULY 12,
MARCH 31, 1995* THROUGH MARCH 31, 1995* THROUGH MARCH 31, 1995* THROUGH
1996 SEPTEMBER 30, 1996 SEPTEMBER 30, 1996 SEPTEMBER 30,
(UNAUDITED) 1995 (UNAUDITED) 1995 (UNAUDITED) 1995
<S> <C> <C> <C> <C> <C> <C>
Expenses................. 21.65% 364.74% 11.28% 28.70% 78.90% 421.54%
Net investment loss...... (18.17%) (359.83%) (7.12%) (24.19%) (74.63%) (416.50%)
</TABLE>

See accompanying notes to financial statements.
39

<PAGE>
(Photo of EVERGREEN U.S. REAL ESTATE EQUITY FUND
American flag CLASS Y SHARES
appears here) FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
CLASS Y SHARES
SIX MONTHS
ENDED NINE MONTHS
MARCH 31, YEAR ENDED ENDED
1996 SEPTEMBER 30, SEPTEMBER 30,
(UNAUDITED) 1995 1994**
<S> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period....................... $11.44 $ 10.07 $ 10.71
Income (loss) from investment operations:
Net investment income.................................... .09 .23 .11
Net realized and unrealized gain (loss) on investments... 1.01 1.46 (.75)
Total from investment
operations........................................... 1.10 1.69 (.64)
Less distributions to shareholders from:
Net investment income.................................... (.17) (.20) --
In excess of net investment income....................... -- -- --
Net realized gains....................................... (.21) (.12) --
Total distributions.................................... (.38) (.32) --
Net asset value, end of period............................. $12.16 $ 11.44 $ 10.07
TOTAL RETURN(dagger)....................................... 10.0% 17.6% (6.0%)
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted).................. $10,355 $ 9,456 $ 8,630
Ratios to average net assets:
Expenses................................................. 1.50%(2 daggers)# 1.50%# 1.49%(2 daggers)#
Net investment income.................................... 2.08%(2 daggers)# 2.45%# 1.60%(2 daggers)#
Portfolio turnover rate.................................... 109% 115% 102%
Average commission rate paid per share..................... $.0609 N/A N/A
<CAPTION>

SEPTEMBER 1, 1993*
THROUGH
DECEMBER 31, 1993
<S> <C>
PER SHARE DATA:
Net asset value, beginning of period...................................... $10.00
Income (loss) from investment operations:
Net investment income................................................... .04
Net realized and unrealized gain (loss) on investments.................. .72
Total from investment
operations.......................................................... .76
Less distributions to shareholders from:
Net investment income................................................... (.04)
In excess of net investment income...................................... (.01)
Net realized gains...................................................... --
Total distributions................................................... (.05)
Net asset value, end of period............................................ $10.71
TOTAL RETURN(dagger)...................................................... 7.6%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted)................................. $4,610
Ratios to average net assets:
Expenses................................................................ .44%(2 daggers)#
Net investment income................................................... 1.93%(2 daggers)#
Portfolio turnover rate................................................... 17%
Average commission rate paid per share.................................... N/A
</TABLE>

* Commencement of class operations.
** The Fund changed its fiscal year end from December 31 to
September 30.
(dagger) Total return is calculated on net asset value per share for the
periods indicated and is not annualized.
(2 daggers) Annualized.
# Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were assumed or waived by the investment adviser, the
annualized ratios of expenses and net investment income (loss) to
average net assets, exclusive of any applicable state expense
limitations, would have been the following:
<TABLE>
<CAPTION>
CLASS Y SHARES
SIX MONTHS
ENDED NINE MONTHS
MARCH 31, YEAR ENDED ENDED SEPTEMBER 1, 1993*
1996 SEPTEMBER 30, SEPTEMBER 30, THROUGH
(UNAUDITED) 1995 1994 DECEMBER 31, 1993
<S> <C> <C> <C> <C>
Expenses...................................... 2.16% 2.70% 2.65% 3.59%
Net investment income (loss).................. 1.42% 1.25% .44% (1.21%)
</TABLE>

See accompanying notes to financial statements.
40

<PAGE>
COMBINED NOTES TO FINANCIAL STATEMENTS
NOTE 1 -- ORGANIZATION AND NATURE OF OPERATIONS
The Evergreen Domestic Equity Funds (the "Funds") are separate series of
open-end management companies registered under the Investment Company Act of
1940, as amended (the "Act"). The Evergreen Domestic Equity Funds consist of
Evergreen Fund, Evergreen Aggressive Growth Fund ("Aggressive Growth"),
Evergreen Limited Market Fund, Inc. ("Limited Market") and Evergreen U.S. Real
Estate Equity Fund ("U.S. Real Estate"), known collectively as the Funds.
Evergreen Fund's investment objective is to seek capital appreciation
principally through investments in common stock and securities convertible into
or exchangeable for common stock of companies which are little-known, relatively
small or represent special situations which, in the opinion of the Fund's
investment adviser, offer potential for capital appreciation. Aggressive Growth
seeks to achieve long-term capital appreciation by investing primarily in common
stocks of emerging growth companies and larger, more well established companies,
all of which are viewed by its investment adviser as having above-average
appreciation potential. Limited Market seeks to achieve capital appreciation
principally through investing in the common stock of companies for which there
is a relatively limited trading market; income is not a factor in the selection
of portfolio securities. U.S. Real Estate's investment objective is long-term
capital growth which it seeks to achieve through investment primarily in equity
securities of domestic companies which are principally engaged in the real
estate industry or which own significant real estate assets.
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, Evergreen Fund acquired
substantially all of the net assets of FFB Lexicon Small Company Growth Fund, an
open-end investment company registered under the Act valued at $27,158,980. The
net assets were exchanged through a non-taxable merger for 1,752,546 Class Y
shares of Evergreen Fund valued at $15.50 per share. The acquired net assets
consisted primarily of portfolio securities with unrealized appreciation of
$2,905,682. The aggregate net assets of Evergreen Fund after the acquisition
were $824,140,509.
Effective June 30, 1995, Aggressive Growth, a new series of the Evergreen
Trust formed for the purpose of acquiring substantially all of ABT Emerging
Growth Fund's net assets, issued 4,209,767 of its Class A shares at $15.53 per
share in exchange for Emerging Growth's net assets valued at $65,368,158. The
acquired net assets, in this non-taxable transaction, primarily consisted of
portfolio securities with unrealized appreciation of $27,072,969. ABT Emerging
Growth Fund's fiscal year ended October 31. Because ABT Emerging Growth Fund
contributed substantially all of Aggressive Growth's net assets and
shareholders, its basis of accounting for assets and liabilities and its
operating results for prior periods are carried forward in the accompanying
financial statements and financial highlights as the accounting survivor.
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by
the Funds in the preparation of their financial statements. These policies are
in conformity with generally accepted accounting principles.
SECURITY VALUATIONS -- Investments in securities traded on a national
securities exchange or included on the NASDAQ National Market System ("NMS") are
valued at the last reported sale price. Securities traded on an exchange or NMS
for which there has been no sale and securities traded in the over-the-counter
market are valued at the mean between the last reported bid and asked price.
Securities for which market quotations are not readily available are valued at
their respective fair value as determined in good faith by the Board of
Trustees/Directors. Short-term investments are valued at amortized cost, which
approximates market value.
SECURITY TRANSACTIONS -- Security transactions are accounted for on the
date purchased or sold. Net realized gains or losses are determined on the
identified cost basis.
INVESTMENT INCOME AND EXPENSES -- Dividend income is recorded on the
ex-dividend date. Interest income and expenses are accrued daily.
41

<PAGE>
COMBINED NOTES TO FINANCIAL STATEMENTS
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES -- continued
REPURCHASE AGREEMENTS -- Securities pledged as collateral for repurchase
agreements are held by the Federal Reserve Bank and are designated as being held
on each Fund's behalf by its custodian under a book-entry system. Each Fund
monitors the adequacy of the collateral on a daily basis, and can require the
seller to provide additional collateral in the event the market value of the
securities pledged falls below the carrying value of the repurchase agreement,
including accrued interest. Each Fund will only enter into repurchase agreements
with banks and other financial institutions which are deemed by the investment
adviser to be creditworthy pursuant to guidelines established by the
Trustees/Directors.
DIVIDENDS TO SHAREHOLDERS -- Dividends from net investment income and net
realized capital gains on investments, if any, will be distributed at least
annually. Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from the amounts available for
distribution under generally accepted accounting principles. To the extent these
differences are permanent in nature, such amounts are reclassified within the
components of net assets.
INCOME TAXES -- It is each Fund's policy to meet the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable net income and net realized capital
gains to its shareholders. Accordingly, no provisions for Federal income or
excise taxes are necessary. 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.
Capital losses incurred after October 31, within the Fund's fiscal year are
deemed to arise on the first business day of the Fund's following fiscal year.
U.S. Real Estate incurred and has elected to defer $92,587 of these net capital
losses to the current fiscal year.
ALLOCATION OF EXPENSES -- Expenses specifically identifiable to a class of
shares are charged to that class. Expenses common to a Trust as a whole are
allocated to the funds in that Trust. Investment income, net of expenses (other
than class specific expenses) and realized and unrealized gains and losses are
allocated daily to each class of shares based upon the relative proportion of
net assets of each class.
UNAMORTIZED ORGANIZATION EXPENSES -- The expenses of U.S. Real Estate and
Aggressive Growth incurred in connection with their organization are being
deferred and amortized over a period of benefit not to exceed 60 months from the
date they commenced operations.
REAL ESTATE INVESTMENT TRUSTS -- U.S. Real Estate owns shares of real
estate investment trusts ("REITs") which report information on the source of
their distributions annually. A portion of distributions received from REITs
during the year is estimated to be a return of capital and is recorded as a
reduction of their cost.
USE OF ESTIMATES -- The preparation of the financial statements is in
accordance with generally accepted accounting principles which requires
management to make estimates and assumptions that affect the reported amounts
and disclosures. Actual results could differ from those estimates.
NOTE 3 -- INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY AGREEMENTS -- First Union is entitled to an annual fee
of .60 of 1% of Aggressive Growth's average daily net assets pursuant to the
Fund's investment advisory agreement.
Pursuant to an agreement with Evergreen Fund's, Limited Market's and U.S.
Real Estate's investment adviser, Evergreen Asset Management Corp. ("Evergreen
Asset"), a wholly owned subsidiary of First Union, is entitled to an annual fee
based on each of Evergreen Fund's, Limited Market's and U.S. Real Estate's
average daily net assets, 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>

<PAGE>
COMBINED NOTES TO FINANCIAL STATEMENTS
NOTE 3 -- INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH
AFFILIATES -- continued
Evergreen Asset has agreed to reimburse U.S. Real Estate to the extent that
the Fund's operating expenses (including the investment advisory fee and
amortization of organization 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 until the Fund's net
assets reach $15 million. For the six-month period ended March 31, 1996,
Evergreen Asset waived all of its advisory fee and reimbursed $48,057 in
expenses under this limitation. In addition, for the six-month period ended
March 31, 1996, Evergreen Asset voluntarily reimbursed expenses amounting to
$9,740 and $40,476 respectively, for Evergreen Fund and Limited Market.
Evergreen Asset can modify or terminate these voluntary waivers at any time.
Lieber & Company, an affiliate of First Union, is the investment
sub-adviser to Evergreen Fund, Limited Market and U.S. Real Estate and also
provides brokerage services with respect to substantially all security
transactions executed on the New York or American Stock Exchanges. For
transactions executed during the six-month period ended March 31, 1996,
Evergreen Fund, Limited Market and U.S. Real Estate incurred brokerage
commissions of $207,253, $116,012 and $60,660, respectively, with Lieber &
Company. Lieber & Company is reimbursed by Evergreen Asset, at no additional
expense to the Funds, for its cost of providing investment advisory services.
ADMINISTRATION AGREEMENT -- Evergreen Asset furnishes Evergreen Fund,
Limited Market and U.S. Real Estate with administrative services as part of
their advisory agreements and accordingly, these Funds do not pay a separate
administration fee. Furman Selz LLC ("Furman Selz") is each of the Funds'
sub-administrator. As sub-administrator, Furman Selz provides the officers of
the Funds. For Evergreen Fund, Limited Market and U.S. Real Estate, Furman Selz'
fee is paid by Evergreen Asset and is not a fund expense.
Evergreen Asset is also Aggressive Growth's administrator and Furman Selz
is sub-administrator. Evergreen Asset's and Furman Selz' fees for Aggressive
Growth are based on the average daily net assets of all the funds administered
by Evergreen Asset for which First Union or Evergreen Asset is also investment
adviser. These fees are calculated at the following annual rates:
<TABLE>
<CAPTION>
ADMINISTRATION FEE AVERAGE DAILY NET ASSETS
<C> <S>
0.050% on the first $7 billion
0.035% on the next $3 billion
0.030% on the next $5 billion
0.020% on the next $10 billion
0.015% on the next $5 billion
0.010% in excess of $30 billion
</TABLE>

<TABLE>
<CAPTION>
SUB-ADMINISTRATION FEE AVERAGE DAILY NET ASSETS
<C> <S>
0.0100% on the first $7 billion
0.0075% on the next $3 billion
0.0050% on the next $15 billion
0.0040% in excess of $25 billion
</TABLE>

At March 31, 1996, assets for which Evergreen Asset was the administrator
for which either Evergreen Asset or First Union was investment adviser totaled
approximately $14.6 billion.
PLANS OF DISTRIBUTION -- The Funds have adopted Distribution Plans (the
"Plans") pursuant to Rule 12b-1 under the Act for their Class A Shares, Class B
Shares, and Class C Shares (see Note 4). Under the terms of the Plans, the Funds
may incur distribution-related and shareholder servicing expenses which may not
exceed an annual fee of .75 of 1% for Class A Shares and 1% for Class B and
Class C Shares. For each of the Funds, the payments for Class A Shares were
voluntarily limited to .25 of 1% of average daily net assets.
43

<PAGE>
COMBINED NOTES TO FINANCIAL STATEMENTS
NOTE 3 -- INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH
AFFILIATES -- continued
In connection with their plans, the Funds have entered into distribution
agreements with Evergreen Funds Distributor, Inc. ("EFD"), a subsidiary of
Furman Selz, whereby the Funds will compensate EFD for its services at a rate
which may not exceed an annual fee of .25 of 1% of Class A Shares' average daily
net assets and an annual fee of .75 of 1% of Class B and Class C Share's average
daily net assets, respectively. A portion of the payments for Class B and C
Shares, up to .25 of 1% may constitute a shareholder services fee. EFD has
entered into a Shareholder Services Agreement with First Union Brokerage
("FUBS"), an affiliate of First Union, whereby they will compensate FUBS for
certain services provided to shareholders and/or maintenance of shareholder
accounts relating to each of the Fund's Class B and Class C Shares.
SALES CHARGES -- EFD has advised the Funds that it has retained the
following amounts from front-end sales charges resulting from sales of Class A
Shares during the six-month period ended March 31, 1996:
<TABLE>
<CAPTION>
FRONT-END
SALES
CHARGES
<S> <C>
Evergreen Fund $95,719
Aggressive Growth 15,908
Limited Market 225
U.S. Real Estate 214
</TABLE>

NOTE 4 -- SHARES OF BENEFICIAL INTEREST
Aggressive Growth, Evergreen Fund and U.S. Real Estate have an unlimited
number of shares of beneficial interest authorized. Limited Market has 25
million common shares authorized allocated equally to each of its classes of
shares sold. The par value of the Fund's shares are $.001, $.001, $.10, and
$.0001 for Evergreen Fund, Aggressive Growth, Limited Market and U.S. Real
Estate, respectively. The shares are divided into classes which are designated
Class A, Class B, Class C and Class Y shares. Class A shares are sold with a
front-end sales charge of up to 4.75%. Class B shares are sold with a contingent
deferred sales charge which declines from 5% to zero depending on the period of
time the shares are held. Class B shares will automatically convert to Class A
shares seven years after the date of purchase. Class C shares are sold with a
contingent deferred sales charge of 1% for shares redeemed during the first year
after the date of purchase. Class Y shares are sold without a sales charge and
are available 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 as of December 30,
1994. The classes have identical voting, dividend, liquidation and other rights,
except that Class A, Class B and Class C shares bear distribution expenses (see
Note 3) and have exclusive voting rights with respect to their distribution
plans.
44

<PAGE>
COMBINED NOTES TO FINANCIAL STATEMENTS
NOTE 4 -- SHARES OF BENEFICIAL INTEREST -- continued
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
MARCH 31, 1996 YEAR ENDED*
(UNAUDITED) SEPTEMBER 30, 1995
EVERGREEN FUND SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
CLASS A
Shares sold........................................... 2,469,969 $ 39,249,217 2,116,988 $ 30,255,833
Shares issued on reinvestment of distributions........ 94,545 1,474,992 -- --
Shares redeemed....................................... (729,951) (11,677,951) (223,365) (3,375,528)
Net increase.......................................... 1,834,563 29,046,258 1,893,623 26,880,305
CLASS B
Shares sold........................................... 4,920,242 78,082,028 4,886,698 69,361,586
Shares issued on reinvestment of distributions........ 227,759 3,541,875 -- --
Shares redeemed....................................... (410,344) (6,528,606) (94,896) (1,403,566)
Net increase.......................................... 4,737,657 75,095,297 4,791,802 67,958,020
CLASS C
Shares sold........................................... 158,120 2,516,902 138,560 1,992,663
Shares issued on reinvestment of distributions........ 6,333 98,423 -- --
Shares redeemed....................................... (13,970) (220,800) (12,818) (190,022)
Net increase.......................................... 150,483 2,394,525 125,742 1,802,641
CLASS Y
Shares sold........................................... 46,627,132 736,839,496 89,763,450 1,249,272,141
Shares issued in acquisition of FFB Lexicon Small
Company Fund........................................ 1,752,546 27,158,980 -- --
Shares issued on reinvestment of distributions........ 1,402,846 21,927,893 5,626,158 66,336,031
Shares redeemed....................................... (45,302,120) (717,621,680) (92,075,790) (1,284,726,648)
Net increase.......................................... 4,480,404 68,304,689 3,313,818 30,881,524
Total net increase resulting from Fund share
transactions........................................ 11,203,107 $ 174,840,769 10,124,985 $ 127,522,490
</TABLE>

* For Class A, B, and C shares, the Fund share transaction activity is for
the period January 3, 1995 (commencement of class operations) through September
30, 1995.
45

<PAGE>
COMBINED NOTES TO FINANCIAL STATEMENTS
NOTE 4 -- SHARES OF BENEFICIAL INTEREST -- continued
<TABLE>
<CAPTION>
SIX MONTHS ENDED
MARCH 31, 1996 ELEVEN MONTHS ENDED*
(UNAUDITED) SEPTEMBER 30, 1995
AGGRESSIVE GROWTH SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
CLASS A
Shares sold.................................................... 557,469 $ 9,984,056 495,784 $ 7,228,522
Shares issued on reinvestment of distributions................. 125,562 2,163,991 -- --
Shares redeemed................................................ (395,619) (6,962,607) (1,083,263) (15,863,245)
Net increase (decrease)........................................ 287,412 5,185,440 (587,479) (8,634,723)
CLASS B
Shares sold.................................................... 382,059 6,756,379 165,945 2,799,908
Shares issued on reinvestments of distributions................ 9,125 156,717 -- --
Shares redeemed................................................ (18,533) (329,157) (1,193) (19,616)
Net increase................................................... 372,651 6,583,939 164,752 2,780,292
CLASS C
Shares sold.................................................... 7,903 140,358 24,064 422,094
Shares issued on reinvestments of distributions................ 420 7,213 -- --
Shares redeemed................................................ (15,746) (280,145) -- --
Net increase (decrease)........................................ (7,423) (132,574) 24,064 422,094
CLASS Y
Shares sold.................................................... 571,960 10,040,439 111,806 1,882,102
Shares issued on reinvestments of distributions................ 8,611 148,623 -- --
Shares redeemed................................................ (115,176) (2,032,819) (3,091) (52,855)
Net increase................................................... 465,395 8,156,243 108,715 1,829,247
Total net increase (decrease) resulting from Fund share
transactions................................................. 1,118,035 $19,793,048 (289,948) ($ 3,603,090)
</TABLE>

* For Class B, Class C and Class Y shares, the Fund Share transaction
activity reflects the periods from commencement of class operations July 7,
1995, August 3, 1995 and July 11, 1995, respectively, through September 30,
1995.
46

<PAGE>
COMBINED NOTES TO FINANCIAL STATEMENTS
NOTE 4 -- SHARES OF BENEFICIAL INTEREST -- continued
<TABLE>
<CAPTION>
SIX MONTHS ENDED
MARCH 31, 1996 YEAR ENDED*
(UNAUDITED) SEPTEMBER 30, 1995
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
LIMITED MARKET
CLASS A
Shares sold.................................................. 5,012 $ 84,281 68,006 $ 1,122,391
Shares issued on reinvestments of distributions 1,829 31,166 -- --
Shares redeemed.............................................. (11,736) (197,181) (8,837) (150,079)
Net increase (decrease)...................................... (4,895) (81,734) 59,169 972,312
CLASS B
Shares sold.................................................. 8,428 142,652 132,239 2,169,679
Shares issued on reinvestments of distributions 3,263 55,180 -- --
Shares redeemed.............................................. (29,563) (487,291) (21,845) (382,430)
Net increase (decrease)...................................... (17,872) (289,459) 110,394 1,787,249
CLASS C
Shares sold.................................................. 134 2,393 4,195 68,235
Shares issued on reinvestments of distributions 112 1,899 -- --
Shares redeemed.............................................. (1,855) (30,083) (832) (15,092)
Net increase (decrease)...................................... (1,609) (25,791) 3,363 53,143
CLASS Y
Shares sold.................................................. 283,954 4,831,847 1,558,531 27,591,064
Shares issued on reinvestment of distributions............... 96,831 1,650,971 901,732 14,048,986
Shares redeemed.............................................. (1,230,803) (20,945,906) (3,515,593) (61,895,857)
Net decrease................................................. (850,018) (14,463,088) (1,055,330) (20,255,807)
Total net decrease resulting from Fund share transactions.... (874,394) ($14,860,072) (882,404) ($17,443,103)
</TABLE>

* For Class A, Class B and Class C shares, the Fund share transaction
activity is for the period January 3, 1995 (commencement of class operations)
through September 30, 1995.
47

<PAGE>
COMBINED NOTES TO FINANCIAL STATEMENTS
NOTE 4 -- SHARES OF BENEFICIAL INTEREST -- continued
<TABLE>
<CAPTION>
SIX MONTHS ENDED
MARCH 31, 1996 YEAR ENDED*
(UNAUDITED) SEPTEMBER 30, 1995
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
U.S. REAL ESTATE
CLASS A
Shares sold............................................................. 35,279 $ 417,024 1,923 $ 18,771
Shares issued on reinvestment of distributions.......................... 352 4,163 -- --
Shares redeemed......................................................... (29,173) (346,355) (1,490) (14,411)
Net increase............................................................ 6,458 74,832 433 $ 4,360
CLASS B
Shares sold............................................................. 13,326 158,486 14,116 147,171
Shares issued on reinvestment of distributions.......................... 459 5,421 -- --
Shares redeemed......................................................... (1,197) (14,442) -- --
Net increase............................................................ 12,588 149,465 14,116 147,171
CLASS C
Shares sold............................................................. 2,794 33,009 242 2,509
Shares issued on reinvestment of distributions.......................... 22 258 -- --
Net increase............................................................ 2,816 33,267 242 2,509
CLASS Y
Shares sold............................................................. 49,359 583,500 161,434 1,537,697
Shares issued on reinvestment of distributions.......................... 26,720 316,633 30,172 273,657
Shares redeemed......................................................... (51,051) (590,860) (222,266) (2,150,789)
Net increase (decrease)................................................. 25,028 309,273 (30,660) (339,435)
Total net increase (decrease) resulting from Fund share transactions.... 46,890 $ 566,837 (15,869) ($ 185,395)
</TABLE>

* For Class A, Class B and Class C shares, the Fund share transaction
activity reflects the periods from commencement of class operations, March 10,
1995, March 7, 1995 and July 12, 1995, respectively, through September 30, 1995.
48

<PAGE>
COMBINED NOTES TO FINANCIAL STATEMENTS
NOTE 5 -- INVESTMENT TRANSACTIONS
The cost of purchases and proceeds from sales of investments, excluding
short-term securities for the six-month period ended March 31, 1996 were as
follows:
<TABLE>
<CAPTION>
PURCHASES SALES
<S> <C> <C>
Evergreen Fund.......................................... $135,037,373 $69,779,155
Aggressive Growth....................................... 36,358,136 18,194,556
Limited Market.......................................... 67,122,594 86,008,324
U.S. Real Estate........................................ 11,167,649 10,898,983
</TABLE>

On March 31, 1996, the composition of unrealized appreciation and
depreciation of investment securities based on the aggregate cost of investments
for federal tax purposes was as follows:
<TABLE>
<CAPTION>
NET APPRECIATION/ FEDERAL TAX
APPRECIATION DEPRECIATION (DEPRECIATION) COST
<S> <C> <C> <C> <C>
Evergreen Fund............. $355,441,482 $ 19,598,600 $ 335,842,882 $637,881,632
Aggressive Growth.......... 44,297,461 1,484,663 42,812,798 62,680,637
Limited Market............. 1,820,412 2,686,867 (866,455) 49,120,139
U.S. Real Estate........... 1,120,444 506,915 613,529 10,145,623
</TABLE>

NOTE 6 -- FINANCING AGREEMENT
Evergreen Fund and Limited Market have a financing agreements with its
custodian, State Street Bank and Trust Company (the "Bank"), which provides the
Funds with lines of credit, in the aggregate amount of the lesser of $25,000,000
or 5% of the value of the Fund's net assets for the Evergreen Fund and a line of
credit in the aggregrate amount of $2,500,000 or 5% of the value of the Fund's
net assets for Limited Market, to be accessed for temporary or emergency
purposes. Borrowings under the lines of credit bear interest at 1% above the
Bank's cost of funds as set periodically by the Bank and are secured by
securities pledged by the Fund. During the six-month period ended March 31,
1996, the Evergreen Fund had no borrowings. Limited Market had borrowings
outstanding for 30 days under its line of credit and incurred $4,618 in interest
charges related to these borrowings. In addition, Limited Market incurred $4,369
in interest charges relating to other borrowings with the Bank. Limited Market's
average amount of debt outstanding during the period aggregated $835,000 at the
weighted interest rate of 8.39%. The fund had no outstanding borrowings at March
31, 1996.
NOTE 7 -- CONCENTRATION OF CREDIT RISK
Since U.S. Real Estate invests a substantial portion of its assets in
REITs, it may be more affected by economic developments in the real estate
industry than would a general equity fund.
49

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50

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51

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52

<PAGE>
TRUSTEES/DIRECTORS AND OFFICERS
TRUSTEES/DIRECTORS:
Laurence B. Ashkin
Foster Bam
James S. Howell, Chairman
Robert J. Jeffries
Gerald M. McDonnell
Thomas L. McVerry
William W. Pettit
Russell A. Salton, III M.D.
Michael S. Scofield
OFFICERS:
John J. Pileggi
President and Treasurer
Joan V. Fiore
Secretary
Sheryl Hirschfeld
Assistant Secretary
Donald E. Brostrom
Assistant Treasurer
Stephen W. St. Clair
Assistant Treasurer