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Evergreen
Domestic
Growth Funds
(Photo of mountain and trees)
1997 Annual Report
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Evergreen Funds(SM)
SINCE 1932
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EVERGREEN FUNDS
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TABLE OF CONTENTS
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Letter to Shareholders............................... 1
FUND AT A GLANCE
Evergreen Fund..................................... 2
Evergreen Aggressive Growth Fund................... 6
Evergreen Micro Cap Fund, Inc...................... 10
Evergreen U.S. Real Estate Equity Fund............. 13
Evergreen Omega Fund............................... 17
FINANCIAL HIGHLIGHTS
Evergreen Fund..................................... 20
Evergreen Aggressive Growth Fund................... 23
Evergreen Micro Cap Fund, Inc...................... 26
Evergreen U.S. Real Estate Equity Fund............. 29
Evergreen Omega Fund............................... 33
SCHEDULES OF INVESTMENTS
Evergreen Fund..................................... 36
Evergreen Aggressive Growth Fund................... 41
Evergreen Micro Cap Fund, Inc...................... 43
Evergreen U.S. Real Estate Equity Fund............. 45
Evergreen Omega Fund............................... 46
Statements of Assets and Liabilities................. 48
Statements of Operations............................. 49
Statements of Changes in Net Assets.................. 51
Combined Notes to Financial Statements............... 54
Report of Independent Accountants.................... 62
Independent Auditors' Report......................... 63
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ABOUT EVERGREEN FUNDS
Evergreen Funds is one of the nation's fastest growing investment companies with
more than $33 billion in assets under management.
With 65 mutual funds to choose among and acclaimed service and operations
capabilities, investors enjoy a broader range of quality investment products and
services designed to meet their needs.
The Evergreen Funds employ intensive, research-driven investment strategies
executed by over 90 research analysts and portfolio managers. The fund company
remains dedicated to meeting the needs of investors and their advisors in a
global economy. Look to the Evergreen Funds to provide a distinctive level of
service and excellence in investment management.
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EVERGREEN FUNDS
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LETTER TO SHAREHOLDERS
November 1997
Dear Shareholders:
(Photo of We have good news to share with you in this report. The U.S.
William M. stock market delivered exceptionally strong performance during
Ennis appears the 12 months that ended on September 30, 1997. Investors in the
here.) Evergreen Domestic Growth Funds certainly had the opportunity to
participate in this pleasant experience. Riding a friendly,
rising tide of moderate growth and modest inflation, the stock
WILLIAM M. market rose higher and higher, with the steady ascent
ENNIS interrupted just briefly for pauses in the late winter and late
summer of 1997.
MARKET LEADERSHIP
The 12 months from October 1, 1996 through September 30, 1997
were especially rewarding for the biggest of the large
capitalization companies. Stocks of the largest companies,
particularly those with strong positions in the global markets,
tended to be the market leaders. Funds that emphasized these
stocks did very well, some delivering total returns of 40% or
more for the 12-month period. It is important to keep these
returns in perspective, however, and not use the performance
over the past year as a basis for future expectations.
MARKET CYCLES
History has shown that the markets move in cycles, and one
year's performance does not often indicate the following year's
performance. History also has taught us that over longer periods
of time, the winning investment strategies are those that have
consistent disciplines and that remain faithful to those
disciplines, even during market slumps and corrections. Indeed,
we witnessed a significant market correction in late October,
after the close of the fiscal year.
At Evergreen Funds, we encourage you to remain focused on your
long-term goals and to remain disciplined in your personal
investment strategies. No one can confidently say whether next
year's market or the following year's market will be as
rewarding as last year's market. We can say, however, that the
most likely winners in the long run are those who consistently
follow long-term investment strategies.
UPCOMING DEVELOPMENTS
In the next few weeks and months, shareholders of Evergreen and
Keystone funds will begin to notice some changes. The Evergreen
Keystone Funds are becoming the Evergreen Funds. On October 31,
1997, Keystone America Funds adopted the name of Evergreen and
in early 1998 the original Keystone Funds will take the
Evergreen name.
We believe that by putting all the funds under the umbrella name
of Evergreen Funds we will be creating a simpler and more
cohesive image. Importantly, we expect to create substantial cost
savings for shareholders as a result of consolidating
prospectuses, annual reports, legal registrations and other
materials. It also will be easier for you to find all the funds
of the Evergreen Family, to which you have exchange privileges,
under one heading in newspapers and electronic services. What
will not change will be our commitment to provide you with the
finest investment products and shareholder services possible.
If you should have any questions about these changes or other
issues affecting your investments, we encourage you to consult
your financial adviser or call Evergreen Funds at 1-800-343-2898.
Sincerely,
/s/ William M. Ennis
WILLIAM M. ENNIS
MANAGING DIRECTOR
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EVERGREEN FUND
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FUND-AT-A-GLANCE
As of September 30, 1997
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CLASS A CLASS B CLASS C CLASS Y
INCEPTION DATE 1/3/95 1/3/95 1/3/95 10/15/71
<S> <C> <C> <C> <C>
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1-YEAR PERFORMANCE
1 year w/o sales charge 33.72% 32.69% 32.67% 34.08%
1 year w/sales charge 27.37% 27.69% 31.67% 34.08%
1 year dividends per
share $0.09 -- -- $0.12
1 year capital gains per
share $0.41 $0.41 $0.41 $0.41
AVERAGE ANNUAL RETURNS
3 years -- -- -- 26.27%
5 years -- -- -- 19.88%
10 years -- -- -- 12.64%
Since Inception 27.63% 28.32% 29.01% 16.94%
CUMULATIVE RETURNS
3 years 101.32%
5 years 147.54%
10 years 228.89%
Since Inception 95.37% 98.27% 101.24% 5730.19%
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OBJECTIVE
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The Evergreen Fund seeks long-term growth of capital.
STRATEGY
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The Fund invests primarily in common stocks of smaller or lesser known companies
that promise growth. Many of these are entrepreneurial businesses that offer
promising new products or services. The Fund also invests in businesses that are
favored by new laws and regulations and others that are judged to be valuable
acquisition targets. For added stability the Fund invests a portion of its
assets in large companies selected for their research and development
capabilities.
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PORTFOLIO CHARACTERISTICS (as of 9/30/97)
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Total Net Assets (all
classes) $1.78 billion
Number of issues: 325
Number of industries: 19
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PORTFOLIO MANAGEMENT TEAM
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Stephen A. Lieber, Nola Maddox Falcone and Gary Buesser
(Chart appears here with the following plot points.)
Comparison of change in value of a $10,000 investment in Evergreen Fund
Class A, the Russell 2000 Index, NASDAQ Index and the Consumer Price Index.
1/3/95 3/95 9/95 3/96 9/96 3/97 9/97
Class A Shares 9525 10672 12375 13485 14611 15309 19537
NASDAQ 10000 10868 13879 14648 16325 14674 20297
CPI 10000 10080 10214 10347 10508 10662 10741
Russell 2000 10000 10461 12572 13505 14229 14201 18945
Past performance is no guarantee of future results. The performance of each
class may vary based on differences in loads and fees paid by the shareholders
investing in each class. The Russell 2000 Index and NASDAQ Index are unmanaged
market indices. These indices do not include transaction costs associated with
buying and selling securities nor any management fees. The Consumer Price Index
(CPI) is through September 30, 1997.
LONG-TERM GROWTH
(Chart appears here with the following plot points.)
Growth of an investment in
Evergreen Fund, Class A
1/3/95 3/95 9/95 3/96 9/96 3/97 9/97
Dividend
Reinvestment 9525 10672 12375 13485 14611 15309 19537
Initial
Investment 9525 10618 12312 12890 13967 14244 18179
A $10,000 investment in Evergreen Fund, Class A made on January 3, 1995 with all
distributions reinvested was worth $19,537 on September 30, 1997. Past
performance is no guarantee of future results. The performance of each class
may vary based on differences in loads and fees paid by the shareholders
investing in each class.
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EVERGREEN FUND
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PORTFOLIO MANAGER INTERVIEW
[Photo of
Stephen A. Lieber
Goes Here]
STEPHEN A. LIEBER HOW DID THE FUND PERFORM
CHAIRMAN, EVERGREEN DURING THE FISCAL YEAR?
ASSET MANAGEMENT
CORP. LEAD For the 12 months that ended on September 30, 1997, the
PORTFOLIO Fund's Y Class Shares had a total return of 34.08%,
MANAGER OF THE including the reinvestment of dividends, continuing the
EVERGREEN FUND Fund's successful long-term record. The average annual
return of the Fund's original Y Class, which began
TENURE: OCTOBER, 1971. operations on October 15, 1971, stood at 16.94% by
September 30, 1997. An original Evergreen Fund shareholder, who invested $10,000
on the Fund's inception in 1971, would have seen that investment grow to
$583,019 by September 30, assuming all distributions were reinvested.
The Fund's newer classes of shares had parallel performance during the past
year. The total return of Class A Shares was 33.72%, while Class B and C Shares
had total returns of 32.69% and 32.67%, respectively. These returns were without
deduction of any sales charges, if applicable.
WHAT HELPED CONTRIBUTE TO THIS PERFORMANCE OVER THE PAST YEAR?
The 1997 fiscal year proved to be one of extraordinary opportunities for both
long-held investments of the Fund and new investments. With its predominant
focus on small entrepreneurial companies, the Fund's portfolio benefited from
both their dynamism and undervaluation. To illustrate, the top 20 performers in
the Fund all had gains of more than 100% during the year, ranging from Gradco
Systems, Inc., which had a return of 114.5%, to DSP Group, Inc., with a gain of
374.9%. Reflecting the breadth of opportunities in the Fund's portfolio, these
top 20 performers ranged across a variety of industries and sectors. Five of the
20 were related to computer technology, three were financial institutions, while
the balance was in a variety of areas. These varied investments included: Inter-
Tel, Inc., a developer and operator of cellular phone systems with a total
return of 170.8%; Recovery Engineering, Inc., a manufacturer of water filtration
equipment with a gain of 120.2%; and Miller (Herman), Inc., a manufacturer of
office and residential furniture, with a gain of 204.1%.
The fact that the portfolio, at the close of the fiscal year, had 325
different issues illustrates the Fund's diversification. At the same time, we
followed a policy of considerable depth in the areas we considered most
promising. The largest group is banks, accounting for 16.0% of the portfolio. As
a group, the Fund's bank investments had a return of 67% for the 12 months, led
by a number of holdings that were the objects of mergers and acquisitions. These
included Bank of Commerce (San Diego), with a 219.3% increase, BB&T Corp. (which
had acquired our holding, United Carolina Bancshares Corp.), which had a 159.9%
gain, Barnett Banks, Inc., up 109.9%, and Summit Bancorp (which had acquired our
holding, Collective Bancorp, Inc.) which was up 106.8%.
Other major areas of emphasis included finance and insurance, which comprised
9.3% of the portfolio and as a group was up 42.6%, and healthcare products and
services, which accounted for 10.7% of the portfolio. Healthcare products and
services included a number of specialty companies with significant gains,
including McKesson Inc. Corp., up 114.4%, Arterial Vascular Engineering, up
112.9%, and Regency Health Services Inc., up 95.4%.
(Chart appears here with the following plot points.)
INDUSTRY ALLOCATION AS OF 9/30/97
As a percentage of net assets
Banks 16.0%
Healthcare Products & Services 10.7%
Finance & Insurance 9.3%
Information Services & Technology 7.8%
Industrial Specialty Products & Services 7.5%
Other strong performing groups included business equipment and services, which
provided a 47.9% return during the 12 months, information services and
technology, which had a 41.4% return as a group, and the energy group, which had
a gain of 99.2%, although it represented a relatively small portion of the
portfolio. Thrift institutions were another strong performing group, with a
group average return of 71.8%.
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EVERGREEN FUND
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WHAT ARE THE MAJOR INVESTMENT THEMES OF THE EVERGREEN FUND?
At the core of our investing in the Evergreen Fund is a strategy that we call
"value timing for growth." It means, simply, that we think we have one basic
aim, which is to buy exceptional growth opportunities with a minimal risk
relative to the nature of the opportunity. Because of our strategy, our
investment performance will not be entirely market-dependent. In our basic stock
selection, we are looking for growth opportunities that we consider
significantly undervalued and that we believe, ultimately, will be recognized
for their value either by the market, their peers or their competitors.
The Evergreen Fund has had a long-term concentration on entrepreneurially
managed corporations that develop specialty products and services. While we
often have a number of larger capitalization stocks in the portfolio, most of
the holdings tend to be smaller cap companies. Of the 325 companies in the
portfolio at the close of the fiscal year, 195 had market capitalizations of
less than $1 billion, including 129 with capitalizations of $500 million or
less.
In pursuing this search for entrepreneurial growth opportunities, we believe
we will find many companies that later will become involved in mergers or
acquisitions.
WERE THERE A SIGNIFICANT NUMBER OF MERGERS AND ACQUISITIONS DURING THE PAST
YEAR?
Yes, during the 12-month fiscal year, 42 portfolio companies benefited from
mergers or acquisitions. The most outstanding long-term example was Barnett
Banks Corp., which received an acquisition bid from NationsBank. As of September
30, 1997, the Fund's gain in its Barnett position was 109.9% for the fiscal
year. The stock was first purchased in December 1990 as stock in First Florida
Banks, Inc., which subsequently was acquired by Barnett. Our view was that First
Florida Banks, Inc., was a significantly undervalued franchise, and then that
Barnett itself was a uniquely valuable franchise likely to achieve substantial
growth and, eventually, be the object of acquisition. During the past fiscal
year, 11 of the Fund's bank holdings were the object of merger or acquisition
bids. The average gain to the Fund on the completed deals was 130.9%, with four
pending.
While many of our holdings involved in mergers or acquisitions were long-term
investments, some were shorter term. For example, the Fund's position in
VeriFone, Inc., realized a gain of 55% based on the June 1997 acquisition by
Hewlett-Packard Co., just one year after the Fund's investment. Similarly, a
June 1997 acquisition, just six months after the Fund's investment in Kysor
Industrial Corp. represented a 58.7% gain, and the investment in American
Medical Response, Inc., represented a 43.2% gain following a February 1997
acquisition, just two months after our purchase.
In 26 years of investment operations, the Evergreen Fund has owned 334
companies that have been acquired by, or merged with, other companies. The
average gain to the Fund was 66.25%. Approximately 10% of all stocks ever owned
by the Fund have been involved in mergers and acquisitions. We regard this as
confirmation of the effectiveness of our search for truly undervalued companies.
(Chart appears here with the following plot points.)
TOP 10 HOLDINGS AS OF 9/30/97
AS A PERCENTAGE OF NET ASSETS
Clear Channel Communications, Inc. 3.1%
First Empire State Corp. 3.0%
Intel Corp. 2.9%
Merck & Co., Inc. 2.8%
BankBoston Corp. 2.6%
Barnett Banks, Inc. 2.1%
MGIC Investment Corp. 1.6%
Fannie Mae 1.6%
Hewlett-Packard Co. 1.6%
Johnson & Johnson 1.3%
WHAT SIGNIFICANT NEW INVESTMENTS WERE ADDED TO THE PORTFOLIO DURING THE FISCAL
YEAR?
We added a total of 71 new holdings to the Fund, ranging across a great number
of industries. Virtually all these investments represented companies with unique
or important product or service niches. In general, the results were favorable.
The most significant
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EVERGREEN FUND
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gains among new holdings included Stolt Comex Seaway S.A., which had an increase
of 260% since purchase in March, and Inter-Tel, Inc., a cellular telephone
service provider, which had a 223% gain since the Fund's investment in December
1996.
The broad sell-off in the stock market in the spring of 1997 provided an
opportunity to use the Fund's significant cash equivalent reserves to make a
number of new investments in opportunities we believed were undervalued by the
market.
One illustration of this strategy was the investment in Input/Output, Inc., a
provider of geophysical information technology that had experienced difficulty
in a product transition. This holding gained 62% after the Fund's investment in
December 1996. Similarly, the Fund invested in U.S. Home Corp. in October 1996
at a time when interest rate fears had hurt the prices of homebuilders. This
investment provided an 82% gain by the end of the fiscal year. A third
illustration is the Fund's investment in Cadmus Communications Corp., which had
experienced difficulty because of too rapid expansion, but had initiated a
re-engineering of operations. We invested in the company in January, and by the
end of September the investment represented a 48% gain.
WHAT IS YOUR OUTLOOK?
We believe it is time for cautious confidence in the markets. We believe that it
is essential that managers carefully select investments after a very careful
appraisal. At the same time, as I have indicated, we believe the Fund's
performance is not entirely dependent on the overall market. During the next
fiscal year, we anticipate sustaining the Fund's long-term strategies of
investing in companies that we believe are undervalued and are characterized by
entrepreneurial growth opportunities.
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EVERGREEN
AGGRESSIVE GROWTH FUND
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FUND-AT-A-GLANCE
As of September 30, 1997
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS Y
INCEPTION DATE 4/15/83 7/7/95 8/3/95 7/11/95
<S> <C> <C> <C> <C>
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1-YEAR PERFORMANCE
1 year w/o sales
charge 11.60% 10.96% 10.92% 11.76%
1 year w/sales charge 6.30% 5.96% 9.92% 11.76%
1 year dividends per
share -- -- -- --
1 year capital gains
per share -- -- -- --
AVERAGE ANNUAL RETURNS
3 years 19.62% -- -- --
5 years 16.77% -- -- --
10 years 14.73% -- -- --
Since Inception 14.05% 19.49% 19.22% 21.67%
CUMULATIVE RETURNS
3 years 71.17% -- -- --
5 years 117.1% -- -- --
10 years 295.1% -- -- --
Since Inception 570.57% 48.97% 46.30% 54.80%
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OBJECTIVE
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Evergreen Aggressive Growth Fund seeks long-term capital appreciation.
STRATEGY
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The Fund invests primarily in common stocks of domestic emerging growth
companies and larger, more well-established companies, all of which are viewed
by the Adviser as having above-average appreciation potential. Emerging or
aggressive growth companies are considered to be in the developmental stage, but
have demonstrated or are expected to achieve growth of earnings over various
major business cycles. The Fund may also invest in equity securities of
seasoned, established companies which the Adviser believes to have above-average
appreciation potential.
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PORTFOLIO CHARACTERISTICS
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Total Net Assets: $264 million
Number of issues: 65
Number of industries: 11
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(Chart appears here with the following plot points.)
Comparison of change in value of a $10,000 investment in
Evergreen Aggressive Growth Fund Class A, the NASDAQ
Industrials Index and the Consumer Price Index.
9/87 9/89 9/91 9/93 9/95 9/97
Class A Shares 9525 11111 15051 22969 28187 39515
CPI 10000 10871 11932 12618 13323 14010
NASDAQ Industrials 10000 9657 12418 16415 20655 28937
Past performance is no guarantee of future results. The performance of each
class may vary based on differences in loads and fees paid by the shareholders
investing in each class. The NASDAQ Industrials Index is an unmanaged market
index and does not include transaction costs associated with buying and selling
securities nor any management fees. The Consumer Price Index (CPI) is through
September 30, 1997.
LONG-TERM GROWTH
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Growth of an investment in
Evergreen Aggressive Growth Fund, Class A
9/87 9/89 9/91 9/93 9/95 9/97
Dividend
Reinvestment 9525 11111 15051 22969 28187 39515
Initial
Investment 9525 10729 11226 13757 16595 22432
A $10,000 investment in Evergreen Aggressive Growth Fund, Class A made on
September 30, 1987 with all distributions reinvested was worth $39,515 on
September 30, 1997. Past performance is no guarantee of future results. The
performance of each class may vary based on differences in loads and fees paid
by the shareholders investing in each class.
6
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EVERGREEN
AGGRESSIVE GROWTH FUND
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PORTFOLIO MANAGER INTERVIEW
(Photo of HOW DID THE FUND PERFORM
Harold Ireland DURING THE FISCAL YEAR?
Goes Here) In contrast to the Fund's excellent 3-, 5-, and 10-year
performance record, results for the past 12 months were
HAROLD IRELAND somewhat disappointing. For the 12 months ended on
TENURE: APRIL 1983 September 30, 1997, the Fund's Class A shares,
unadjusted for sales charge, had a total return of 11.6%
compared to the Lipper Capital Appreciation Funds group average of 27.5%,
ranking it 174 out of 203 funds.1 For the first six months of the fiscal year,
small and mid cap stocks dramatically lagged behind the broad market,
contributing to the Fund's mediocre performance for the fiscal year.
WHAT CONTRIBUTED TO THE FUND'S RELATIVE UNDERPERFORMANCE?
The Fund's strategy of holding a concentrated portfolio of small and mid cap
companies has allowed it to outperform its peer group 11 of the past 13 calendar
years. This year, however, a portfolio with a relatively small number of
holdings worked against us. Specifically, major declines in three individual
holdings-- APAC TeleServices, Sitel, and Network General-- accounted for over
45% of the Fund's underperformance. As an example, APAC TeleServices alone
accounted for over one-third of the relative decline. The company was
unexpectedly forced to cut prices to one of its primary customers, AT&T, which
led to reduced profitability for the year.
WHAT CHANGES HAVE YOU MADE TO THE PORTFOLIO?
The most noteworthy change took place in August 1997, as the Keystone America
Hartwell Emerging Growth Fund, Inc. (over $80 million in total assets) was
merged into the Evergreen Aggressive Growth Fund. Through this merger, we have
inherited 30 additional small cap issues whose price action of late has
outperformed large cap stocks. We were pleased that the merger came at an
opportunistic time given the relative cheapness of the small and mid cap
sectors. In addition to the increased number of holdings within the Fund, we
also increased the portfolio's diversification and altered the relative industry
weightings. Prior to the merger, we increased the number of issues in the
portfolio from 30 to 39 companies. We trimmed many of our large positions to
produce funds for this diversification. From a sector standpoint, we increased
the weighting in the energy sector from 5.1% to 28.0% over the 12-month period.
Following the merger, the Fund kept an additional 24 positions, for a total of
65 holdings at fiscal year end. Along with reducing the adverse effect of any
one unexpected event, our greater diversification, combined with the increased
energy sector weighting, has greatly reduced the beta-- or volatility-- of the
portfolio, from 1.39 six months ago (39% more volatile than the S&P 500) to 1.04
(4% more volatile than the S&P 500) at fiscal year end.
(Chart appears here with the following plot points.)
INDUSTRY ALLOCATION AS OF 9/30/97
AS A PERCENTAGE OF NET ASSETS
Oil/Gas-Drilling 16.9%
Software/Technology 15.4%
Business Services 13.3%
Healthcare 13.2%
Retail (Specialty) 12.4%
WHAT CAUSED YOU TO INCREASE YOUR ENERGY EXPOSURE DURING THE YEAR?
We believe that the Oil Drilling and Oil Service industries have emerged from a
fifteen-year down cycle and have undergone a protracted consolidation and
downsizing. These industries are among the very few which have the ability to
raise prices to increase profit margins. We believe that the fundamentals of
these industries will support rising stock prices for several years. In
addition, new technologies have also made expenditures on oil drilling much more
productive than in the past. A higher proportion of major oil company budgets is
being allocated to outsourcing, exploration and drilling. The increasing
worldwide demand for energy is being spurred by the rapid growth of such areas
as China, East Asia, and Latin America, as well as the increasing growth of
Eastern Europe and the countries of the former Soviet Union. At the same time,
these newly emerging capitalist economies have opened up a great deal of
promising
- ---------------
1 Lipper Analytical Services Inc. is an independent mutual fund rating company.
The rankings are based on total return and do not include the effect of a
sales charge. For the 5 year period ending September 30, 1997 the Fund ranked
47 out of 76 funds and for the 10 year period ending September 30, 1997, the
Fund ranked 9 out of 55 funds.
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EVERGREEN
AGGRESSIVE GROWTH FUND
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land and offshore territory for oil exploration and development. All of the
major oil companies are competing for these "frontier" drilling concessions.
However, the drilling itself is done by outside contractors. New rigs and
trained technicians cannot be developed fast enough to meet demand.
(Chart appears here with the following plot points.)
TOP 10 HOLDINGS AS OF 9/30/97
AS A PERCENTAGE OF NET ASSETS
Cisco Systems, Inc. 4.4%
Petroleum Geo-Services ADR 4.0%
Transocean Offshore, Inc. 3.6%
Microsoft Corporation 3.3%
Republic Industries, Inc. 2.9%
EVI Inc. 2.9%
Medtronic, Inc. 2.7%
BMC Software, Inc. 2.6%
First Data Corporation 2.4%
Green Tree Financial Corporation 2.1%
WHAT WERE SOME OF THE MAJOR POSITIVE CONTRIBUTORS TO THE PORTFOLIO IN THE PAST
YEAR?
Five holdings stood out as major successes in the
portfolio during the fiscal year.
(Bullet) Petroleum Geo-Services ADR, the second largest holding as of
September 30, had the largest percentage increase. This Norwegian
company provides marine research services to the oil industry, using
state-of-the-art, proprietary technology.
(Bullet) Transocean Offshore is the leading company on global, deep-water,
harsh-environment drilling and was the stock that provided the most
total dollar appreciation for the year.
(Bullet) Microsoft, representing our technology exposure, gained 101% for the
twelve months. This company dominates the desktop software industry
globally, continuing to dictate the terms of industry competition.
(Bullet) BMC Software, up 63% for the year, is a leader in system software for
large enterprise computing environments in the database management
and open systems software tools and utilities market.
(Bullet) Medtronic rose 48% for the year, benefiting from its dominance of the
pacemaker and cardiovascular device market. As the research and
development leader, Medtronic has been able to stay far ahead of its
competitors with new and better products.
HOW HAVE ECONOMIC FACTORS INFLUENCED THE FUND?
During the past year, the U.S. economy grew at a pace which exceeded most
investors' expectations. This strong growth rate led to a fear of rising rates,
which subsequently hurt the performance of smaller companies during most of the
year. Despite these fears, actual inflation rates have been below expectations,
producing some of the best economic numbers in a generation. Investment in
technology, downsizing and outsourcing have produced greater productivity and
real growth in the economy. Your Fund has many holdings which not only
contribute to these trends, but also benefit from them. Our current economic
environment-- fostered by free trade, global competition and the inclusion of
all of the world in one global capitalist economic system-- is creating
competitive and disinflationary pressures which prevent most companies from
raising prices, and can even lead to unanticipated price reductions. The net
effects are very positive for the consumer and the economy as a whole, but are
very challenging for most industries and individual companies.
ARE THERE ANY TRENDS IN THE MARKET AFFECTING THE FUND?
Smaller and mid-size companies comprise roughly 67% of the Fund's holdings, and
continue to maintain very attractive valuations relative to their larger
counterparts. After underperforming severely for the first half of the fiscal
year, these sectors rebounded strongly from April through July, appreciating in
line with large cap stocks. Most recently, in the final two months of the fiscal
period, small and mid cap stocks have been outperforming large companies. Year
to date, our holdings in the Oil Drilling and Oil Service sectors have been in
the forefront of industry outperformance, occupying three of the top five
industry groups (from a total of 197) that we follow.
HOW DO THE NEW TAX LAW CHANGES AFFECT THE FUND AND ITS SHAREHOLDERS?
Historically, the Fund has had one of the lower
portfolio turnover ratios in its group. This makes the Fund more "tax efficient"
for taxable investors who are trying to accumulate wealth. The new capital gains
legislation decreases long-term capital gains tax rates, but increases the
holding period to eighteen months to qualify for the lowest capital gains tax
rates. This
8
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EVERGREEN
AGGRESSIVE GROWTH FUND
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increases the benefits of owning mutual funds with lower portfolio turnover. The
Fund's relatively low turnover rate means that its securities are held on
average for a longer period of time, translating into better after-tax relative
performance for taxable investors.
WHY WAS THE FUND'S PORTFOLIO TURNOVER UP THIS YEAR VERSUS PAST YEARS?
Although our long-term portfolio turnover is relatively low, this year it was
somewhat higher due to several factors. First, the merger of the two funds
required the pruning and elimination of some positions. Second, the strategy of
having a less concentrated portfolio in individual issues led to several sales
and new purchases. Third, the repositioning of the portfolio in an effort to
take advantage of the outstanding opportunities we see in the energy sector also
contributed to more turnover than usual. Several new positions were established
in the Oil Service and Oil Drilling industries with funds raised from the
elimination or reduction of other positions. Going forward we expect that the
Fund will return to its long-term, lower portfolio turnover.
HOW HAS THE PORTFOLIO PROFILE CHANGED OVER THE PAST 6 MONTHS?
At March 31, 1997 and September 30, 1997 the Fund's holdings had the following
respective average position profile on a position, dollar-weighted basis:
<TABLE>
<CAPTION>
9/30/97 3/31/97
- -----------------------------------------------------------------
<S> <C> <C>
Revenue Growth (past five years
compounded) 50% 41%
Earnings Per Share Growth (past
five years compounded) 38% 38%
Return on Equity (last twelve
months) 18% 23%
Net Profit Margin (after tax) 8.1% 9.0%
Median Market Value $2.1 Billion $3.2 Billion
Long Term Debt as a Percent of
Total Capital 29% 22%
Beta 1.04 1.21
Price/Earnings Ratio (latest
twelve months EPS) 38.9 40.1
PEG Ratio (Forward PE/Estimated 5
YR Estimated EPS Growth) 0.9 0.8
</TABLE>
These characteristics reflect our strategy to own the best companies in their
respective industries and to pay a fair price for their established superior
growth. While these numbers reflect the companies' past achievements, our
successful growth stock investing process also focused on current business
trends and future growth opportunities for each company.
WHAT IS YOUR INVESTMENT PHILOSOPHY AND STRATEGY?
Most simply put, our philosophy has always been to go with the winners and to
hold on for the long term. A rigorous quantitative screening process produces a
list of candidates for the portfolio and helps separate the contenders from the
pretenders. In-depth analysis of the company, its products and/or services, the
management team and their past successes and current commitment contribute to
the final selection. Finally, careful judgment of each company's franchise and
growth opportunity and the current structure of its industry's competition are
essential in completing the selection process. Since we believe in focusing on
and sticking with established, dominant companies and do not believe in trading
down in quality, our philosophy also has led to lower portfolio turnover, with
consequently lower costs and a higher after-tax return to shareholders.
Eighteen years of mutual fund portfolio management have taught me that
sticking with an investment philosophy and strategy is the most important factor
in producing long-term success. The past fiscal year was one of transition and
some changes in the implementation of our philosophy. Despite any short-term
volatility, we remain confident that our proven strategy has the potential to
provide investors with attractive long-term returns.
9
<PAGE>
EVERGREEN
MICRO CAP FUND, INC.
(Pine cone logo
appears here.)---------------------------------------------------------------
FUND-AT-A-GLANCE
As of September 30, 1997
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS Y
INCEPTION DATE 1/3/95 1/3/95 1/3/95 6/1/83
<S> <C> <C> <C> <C>
- ----------------------------------------------------------
1-YEAR PERFORMANCE
1 year w/o sales charge 54.13% 53.13% 53.07% 54.64%
1 year w/sales charge 46.81% 48.13% 52.07% 54.64%
1 year dividends per
share -- -- -- --
1 year capital gains
per share -- -- -- --
AVERAGE ANNUAL RETURNS
3 years -- -- -- 16.83%
5 years -- -- -- 14.19%
10 years -- -- -- 11.46%
Since Inception 20.43% 20.91% 21.72% 15.22%
CUMULATIVE RETURNS
3 years -- -- -- 57.64%
5 years -- -- -- 94.12%
10 years -- -- -- 196.03%
Since Inception 66.53% 68.34% 71.46% 662.95%
</TABLE>
OBJECTIVE
- ------------------------------------------------------------
Evergreen Micro Cap Fund seeks long-term growth of capital.
STRATEGY
- ------------------------------------------------------------
The Fund invests in small, undiscovered companies that have promising products
or services and have the potential for fast growth. Many of the Fund's holdings
are little known in the marketplace or their growth potential has not been
recognized. These holdings are therefore undervalued. By investing in these
companies, the Fund aims to uncover unexploited growth opportunities.
<TABLE>
<CAPTION>
PORTFOLIO CHARACTERISTICS
<S> <C>
- ------------------------------------------------------------
Total Net Assets: $55 million
Number of issues: 116
Number of industries: 19
</TABLE>
PORTFOLIO MANAGEMENT TEAM
- ------------------------------------------------------------
Stephen A. Lieber and Edwin D. Miska
(Chart appears here with the following plot points.)
Comparison of change in value of a $10,000 investment in
Evergreen Micro Cap Fund, Inc. Class A, the Russell 2000
Index, NASDAQ Index and the Consumer Price Index.
1/3/95 3/95 9/95 3/96 9/96 3/97 9/97
Class A Shares 9525 9913 11128 10424 10805 11572 16653
CPI 10000 10080 10214 10347 10508 10662 10741
NASDAQ 10000 10868 13879 14648 16325 14674 20297
Russell 2000 10000 10461 12572 13505 14229 14201 18945
Past performance is no guarantee of future results. The performance of each
class may vary based on differences in loads and fees paid by the shareholders
investing in each class. The Russell 2000 Index and NASDAQ Index are unmanaged
market indices. These indices do not include transaction costs associated with
buying and selling securities nor any management fees. The Consumer Price Index
(CPI) is through September 30, 1997.
LONG-TERM GROWTH
- ------------------------------------------------------------
(Chart appears here with the following plot points.)
Growth of an investment in
Evergreen Micro Cap Fund, Inc. Class A
1/3/95 3/95 9/95 3/96 9/96 3/97 9/97
Dividend
Reinvestment 9525 9913 11128 10424 10805 11572 16653
Initial
Investment 9525 9912 11127 10093 10462 11205 16131
A $10,000 investment in Evergreen Micro Cap Fund, Inc. Class A made on January
3, 1995 with all distributions reinvested was worth $16,653 on September 30,
1997. Past performance is no guarantee of future results. The performance of
each class may vary based on differences in loads and fees paid by the
shareholders investing in each class.
10
<PAGE>
EVERGREEN
MICRO CAP FUND, INC.
- ------------------------------------------------------------(Pine cone logo
appears here.)
PORTFOLIO MANAGER INTERVIEW
(Photo of HOW DID THE FUND PERFORM
Stephen A. Lieber) DURING THE YEAR?
Evergreen Micro Cap Fund, Inc. recorded its second
NAME STEPHEN A. LIEBER highest annual return since its inception in 1983. For
TENURE: JANUARY 1996 the fiscal year that ended on September 30, 1997, the
Fund's Y Class Shares had a total return of 54.64%. This
result was a strong achievement in both absolute and
(Photo of relative terms, as it exceeded the market averages and
Edwin D. Miska) peer group comparisons by wide margins. The Russell 2000
Index returned 33.19% and the Lipper Micro- Cap Average
NAME EDWIN D. MISKA of 42 similar funds returned 38.93% for the same period.
TENURE: JANUARY 1996 During the same one-year period, Class A Shares
had a total return of 54.13%, Class B Shares had a return of 53.13% and Class C
Shares had a return of 53.07%. These performance figures were without deduction
of any sales charge, if applicable.
HOW WOULD YOU DESCRIBE THE FUND'S INVESTMENT STRATEGY?
The Fund focuses on careful selection of the stocks of very small companies,
frequently called micro cap companies. To better describe the types of companies
in which the Fund invests, the name of the Fund was changed to Evergreen Micro
Cap Fund, Inc. on October 31, 1997. We use a thorough quantitative, fundamental
and valuation review, coupled with a discipline to sell issues which no longer
meet the standards for continued investment. We believe the selection of well
managed, high quality issues with consistent records of profitability and
revenue and earnings growth has served the Fund well. We also emphasize select
areas that we believe benefit from macro-economic changes, such as industry
consolidation. The consolidation trend has led to a brisk pace of takeover or
merger proposals affecting the Fund's holdings. The Fund saw 15 of its holdings
receive offers during the fiscal year, many at significant premiums to their
stock prices.
(Chart appears here with the following plot points.)
TOP 10 HOLDINGS AS OF 9/30/97
AS A PERCENTAGE OF NET ASSETS
Badger Meter, Inc. 3.4%
Alcide Corp. 2.8%
Analytical Surveys, Inc. 2.3%
Del Laboratories, Inc. 2.3%
First Years, Inc. (The) 2.2%
General Employment Enterprises, Inc. 1.8%
Met-Pro Corp. 1.8%
RPC, Inc. 1.8%
West Coast Bancorp, Inc. (Ore.) 1.8%
Virginia First Financial Corp. 1.7%
WHAT WERE SOME OF THE COMPANIES THAT HELPED THE PERFORMANCE OF THE FUND?
The Fund benefited from a broad-based strength. Twenty-eight holdings had
appreciated more than 50% during the year, with nine returning more than 100%.
The top-performing stock was Badger Meter, Inc.,
a manufacturer of water and industrial fluid metering devices, which had a
210.0% return during the year. This was followed by Alcide Corp., a
biotechnology firm specializing in anti-microbial products, with a return of
155.3%; and RPC, Inc., a company involved in both oil field services and the
manufacture of pleasure boats, which had a return of 143.6% during the year.
Other significant contributors were FPIC Insurance Group, Inc., which is
involved in medical malpractice insurance and which rose 121.7% during the year;
and WSFS Financial, a Delaware-based savings and loan association which had a
return of 118.7% for the Fund.
Each of the Fund's top 10 holdings was a strong contributor to the Fund.
Badger, Alcide and RPC were the Fund's largest, and second and eighth largest
holdings, respectively, at the end of the fiscal period. Other top ten holdings
and their performance during the year were: Analytical Surveys, Inc., up 108.1%;
The First Years, Inc., which rose 99.4%; West Coast Bancorp, which rose 97.1%;
Del Laboratories, Inc., which rose 80.8%; Virginia First Financial Corp., which
rose 74.5%; General Employment Enterprises, Inc., which rose 56.2%; and Met-Pro
Corp., which rose 49.5%.
11
<PAGE>
EVERGREEN
MICRO CAP FUND, INC.
(Pine cone logo
appears here.)------------------------------------------------------------
Damage from disappointing stocks was kept at a minimum as we attempted to weed
out underperforming issues at the first signs of trouble. As a result, only
eight out of 116 holdings at the end of the fiscal year showed negative
performance for the 12 months.
INDUSTRY ALLOCATION AS OF 9/30/97
AS A PERCENTAGE OF NET ASSETS
Industrial Specialty Products & Services 17.3%
Banks 12.0%
Information Services & Technology 11.4%
Healthcare Products & Services 10.7%
Business Equipment & Services 7.9%
WHAT INDUSTRIES AND SECTORS PARTICULARLY HELPED PERFORMANCE?
The Fund is well diversified. At the end of the fiscal year, 19 different
industry groups were represented in the portfolio. Two of the largest and best
performing areas were banks and thrift institutions. Banks, representing 12.0%
of the Fund, rose 63.3% during the year. Thrift institutions, which represented
5.8% of the portfolio, rose 64.0%. The Fund has emphasized these areas both
because of their growth and on-going consolidation. Consolidation particularly
affected four portfolio companies that received takeover offers during the year:
Premier Bankshares Corp., Virginia First Financial, Peoples Savings Financial
Corp. and Norwich Financial Corp.
Other industries that contributed to overall performance included: Electrical
equipment and services were up 77.0%; information services and technology
increased by 67.9%; industrial specialty products and services increased 62.1%;
healthcare products and services were up 61.1%; and finance and insurance
increased 53.9%. Sub-par results were in textiles and apparel, down by 0.8%; and
retailing and wholesale, which had a positive 3.4% return.
INVESTMENTS IN POTENTIAL MERGER AND ACQUISITION TARGETS HAVE TRADITIONALLY
HELPED THE FUND. HOW IMPORTANT WAS THIS DURING THE PAST YEAR?
The Fund continued to benefit from the long-term trend of larger companies
acquiring specialty businesses with strong franchises, markets, products and
services. As we indicated earlier, 15 of the Fund's holdings were subject to
acquisition or merger offers during the year. Of the eight completed
transactions, the average gain to the portfolio was 66.0%. Since the Fund's
inception on June 1, 1983, 91 portfolio companies have been involved in either
pending or completed transactions. The average gain to the portfolio over the
years is 60.9%.
We have consistently believed that acquisitions of relatively undervalued,
well managed and consistently profitable small companies will continue as the
larger companies seek ways to enhance their overall positions and
competitiveness. During a period of low inflation, strong internal growth is
harder to achieve. We expect companies will continue to use acquisitions as ways
to increase both revenues and profits.
WHAT IS YOUR OUTLOOK?
We believe those companies that consistently demonstrate sustained, vigorous
growth will achieve superior performance. We continue to see opportunities. We
think micro capitalization stocks remain largely undervalued, and present
outstanding growth opportunities because of their innovation and entrepreneurial
character.
Funds that invest in stocks of small companies, also called small-cap stocks,
involve certain risks and, therefore, may not be appropriate for all investors.
Although they may offer the potential for greater long-term returns, they also
may experience greater price volatility due to their limited focus on a
particular industry, market, product, or service, or because they invest in
smaller, less established companies.
12
<PAGE>
EVERGREEN
U.S. REAL ESTATE EQUITY FUND
- -------------------------------------------------------(Pine trees
logo appears here.)
FUND-AT-A-GLANCE
As of September 30, 1997
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS Y
INCEPTION DATE 3/10/95 3/7/95 7/12/95 9/1/93
<S> <C> <C> <C> <C>
- ----------------------------------------------------------
1-YEAR PERFORMANCE
1 year w/o sales charge 78.28% 76.87% 76.89% 78.79%
1 year w/sales charge 69.81% 71.87% 75.89% 78.79%
1 year dividends per
share $0.26 $0.20 $0.23 $0.28
1 year capital gains
per share $1.58 $1.58 $1.58 $1.58
AVERAGE ANNUAL RETURNS
3 years -- -- -- 33.65%
Since Inception 40.28% 41.25% 39.24% 24.09%
<CAPTION>
CUMULATIVE RETURNS
<S> <C> <C> <C> <C>
3 years -- -- -- 138.72%
Since Inception 138.19% 143.15% 108.86% 141.63%
</TABLE>
OBJECTIVE
- ------------------------------------------------------------
Evergreen U.S. Real Estate Equity Fund seeks long-term growth of capital.
STRATEGY
- ------------------------------------------------------------
The Fund invests primarily in stocks of domestic companies that are involved in
various aspects of the real estate industry in the United States. These include
real estate investment trusts (REIT's), companies with substantial real estate
holdings and companies whose products and services are related to the real
estate industry.
<TABLE>
<CAPTION>
PORTFOLIO CHARACTERISTICS
<S> <C>
- ------------------------------------------------------------
Total Net Assets $27 million
Number of issues: 49
Number of industries: 9
</TABLE>
(Chart appears here with the following plot points.)
Comparison of change in value of a $10,000 investment in
Evergreen U.S. Real Estate Equity Fund Class A, the Wilshire
Real Estate Index, S&P 500 and the Consumer Price Index.
3/10/95 3/95 9/95 3/96 9/96 3/97 9/97
Class A Shares 9525 9617 11810 12963 13360 16023 23819
CPI 10000 10033 10153 10318 10457 10604 10677
WREI 10000 10057 10989 11818 13118 15774 18549
S&P 500 10000 10295 12172 13596 14644 16291 20565
Past performance is no guarantee of future results. The performance of each
class may vary based on differences in loads and fees paid by the shareholders
investing in each class. The Wilshire Real Estate Index and S&P 500 Index are
unmanaged market indices. These indices do not include transaction costs
associated with buying and selling securities nor any management fees. The
Consumer Price Index (CPI) is through September 30, 1997.
LONG-TERM GROWTH
- ------------------------------------------------------------
(Chart appears here with the following plot points.)
Growth of an investment in
Evergreen U.S. Real Estate Equity Fund, Class A
3/10/95 3/95 9/95 3/96 9/96 3/97 9/97
Dividend
Reinvestment 9525 9618 11811 12963 13360 16023 23819
Initial
Investment 9525 9618 11811 12535 12917 13455 20001
A $10,000 investment in Evergreen U.S. Real Estate Equity Fund, Class A made on
March 10, 1995 with all distributions reinvested was worth $23,819 on September
30, 1997. Past performance is no guarantee of future results. The performance of
each class may vary based on differences in loads and fees paid by the
shareholders investing in each class.
13
<PAGE>
EVERGREEN
U.S. REAL ESTATE EQUITY FUND
(Pine trees
logo appears here.)---------------------------------------------------
PORTFOLIO MANAGER INTERVIEW
(Photo of HOW DID THE FUND DO DURING
Samuel A. Lieber THE FISCAL YEAR?
appears here.) For the fiscal year ended September 30, 1997, the Fund's
Y Class Shares had a total return of 78.79%. Not only
SAMUEL A. LIEBER was it the top-performing Real Estate Fund (of 56 funds)
for the one year period, it was number three among all
352 Sector Funds during this period, according
to Lipper Analytical Services, Inc., an independent monitor of mutual funds.1
The Evergreen U.S. Real Estate Equity Fund, Class Y, also was the seventh best
performing mutual fund of all 4,605 mutual funds in all categories tracked by
Lipper for the one year period that ended on September 30, 1997.1 During the
same period, Class A Shares had a total return of 78.28%, Class B Shares had a
total return of 76.87% and Class C Shares had a total return of 76.89%. These
performance figures were without deduction of any sales charges, if applicable.
It should be noted that the Fund was also number one out of 18 real estate
funds for the past three years, providing an average annual return of 33.65%,
according to Lipper1. For comparative purposes, the benchmark Wilshire Real
Estate Securities Index gained 41.41% for the past one year, and had an average
annual return of 22.30% for the past three years.
WHAT ACCOUNTED FOR THIS YEAR'S STRONG PERFORMANCE?
There were several factors. First, a favorable investment environment of modest
growth, restrained inflation and declining interest rates has been a very good
climate for both real estate and stock investments. Second, we made some timely
investment decisions in real estate investment trusts (REITs). Third, we
concentrated in the hotel, office and homebuilding sectors, where the
fundamentals are strongest.
As a general rule, real estate is a late cycle performer. It tends to lag the
economic cycle. Generally, this sector will show superior returns late in the
economic cycle, and this proved to be true during the past year. For example,
industry consolidation has occurred because many stocks were cheap relative to
underlying or future value. Eight of the Fund's holdings received and/or agreed
to buyout proposals during the fiscal year, typically providing enhanced returns
for the Fund. The emphasis on value also led to strong performance in holdings
where the stock market was slow to perceive value. This was most notable in the
homebuilding sector, which has been cheap by historical measures, as we noted in
both the Fund's 1995 and 1996 annual reports. Such "value" investments can take
time to produce results, and in fact were a drag on performance during the
calendar year 1996, before contributing this year.
(Chart appears here with the following plot points.)
SECTOR ALLOCATION AS OF 9/30/97
AS A PERCENTAGE OF NET ASSETS
Lodging/Hotels 31.5%
Office-Industrial Buildings 28.3%
Homebuilders 16.7%
Misc. Real Estate Companies 10.9%
WERE THERE ANY NOTABLE TRENDS OR INDUSTRY
DEVELOPMENTS THAT HAVE HELPED PRODUCE THIS
PERFORMANCE?
The hotel and office sectors have benefited from strong demand and a lack of
significant new supply. After industry overbuilding in the late 1980s and early
1990s, there has been little investment in new buildings. Sustained economic
growth has stimulated business and leisure demand for hotel rooms. Strong tenant
demand gives office landlords significant pricing power and the prospect of
rising profit margins. Homebuilders have similarly benefited from strong demand,
low inventory levels, and great affordability, which have produced record levels
of home ownership.
- ---------------
1 Lipper Analytical Services, Inc. is an independent mutual fund rating company.
The rankings are based on total return and do not include the effect of a sales
charge. The Fund's Class A shares ranked 2 out of 18 Real Estate Funds for the
one year ending September 30, 1997. The Fund's Class A shares ranked 4 out of
the 352 Sector Funds for the one year period ending September 30, 1997 and
number 8 of the 4,605 mutual funds.
14
<PAGE>
EVERGREEN
U.S. REAL ESTATE EQUITY FUND
- --------------------------------------------------------(Pine trees logo
appears here.)
A MAJOR EMPHASIS OF THE FUND HAS BEEN IN REAL ESTATE INVESTMENT TRUSTS (REITS),
WHICH ACCOUNTED FOR 52.3% OF PORTFOLIO ASSETS AT THE END OF THE FISCAL YEAR. HOW
DID THEY DO?
As I mentioned earlier, we made some good decisions about when to buy and sell
some REITs. A REIT is a corporate structure that is most efficient at
distributing real estate income, but is not ideal for maximizing asset
appreciation or generating high returns on equity. However, the high dividend
yields of REITs and stable prospective income give these stocks defensive
qualities. In the wake of a slump in technology stocks in July of 1996,
investors sought out sectors with more reliable earnings, which created new
interest in REITs. REITs were the top-performing group in the stock market
during the fourth quarter of 1996. However, after such outperformance, we became
concerned that prices had jumped too far ahead of the intrinsic value of these
investments, so we cut back on a number of holdings. This proved fortunate, as
rising interest rates hurt high-flying REITs' prices. Then, in April, we started
to buy back selected REITs at attractive values, sometimes 15% to 20% below
prior highs. This enabled the Fund to again benefit as REITs rallied into
September.
Among the top-performing REITs were holdings in Patriot American Hospitality,
Starwood Lodging Trust, Crescent Real Estate, Sunstone Hotel Investors, and
Apartment Investment and Management Company (AIMCO). Patriot American, Starwood
and Crescent were all examples of companies that we had owned, then sold or
substantially reduced our investments, and then bought back again after the
slump in REITs.
WHAT OTHER AREAS HELPED THE FUND'S PERFORMANCE?
In addition to REITS and homebuilders, the Fund also invests in real estate
operating companies (REOCs). At the end of the fiscal year, 27.9% of the
portfolio was invested in real estate operating companies and 16.7% in
homebuilding companies.
Unlike REITs, these companies are not constrained by regulations that could
limit entrepreneurial activity or opportunity. The Fund's 27.9% concentration in
REOCs did well, albeit somewhat less so than homebuilders and REITs for the 12
months. Among the better performing companies in the portfolio were Grubb &
Ellis, which until this year was the only publicly listed real estate broker,
and two hotel companies: Wyndham Hotels and Homegate Hospitality, both of which
have agreed to be acquired by larger companies.
(Chart appears here with the following plot points.)
TOP 10 HOLDINGS AS OF 9/30/97
AS A PERCENTAGE OF NET ASSETS
US Home Corp. 5.2%
Crossman Communities, Inc. 4.1%
Equity Office Properties Trust 3.7%
Starwood Lodging Trust 3.6%
Asset Investors Corp. 3.6%
Forest City Enterprises, Inc. 3.2%
Patriot Amercian Hospitality, Inc. 3.2%
Kilroy Realty Corp. 3.1%
Sunstone Hotel Investors, Inc. 2.9%
Crescent Operating, Inc. 2.9%
The Fund's 16.7% holding in homebuilding stocks produced the strongest return
during the 12 months. This is an industry that is being favorably revalued by
the market, with a positive impact on the Fund's performance. In the past,
homebuilding industry stocks were held back because of the perception that
earnings fluctuated dramatically as they moved through the economic cycle.
Today's extended growth cycle, however, is unlike the pattern of the 1970s and
1980s, and has led to a revaluation of homebuilding stocks. They are no longer
seen as "boom or bust" stocks, but are being valued for their increasingly
stable earnings. Nonetheless, these stocks are still selling at a discount to
their historic price/earnings ratio in relation to the S&P 500, and at little or
no premium to book value.
Among the homebuilding stocks that performed especially well were Pacific
Greystone, which was up 91.6% for the year, and Continental Homes, which added
65.8%. Both received takeover bids. Pacific
15
<PAGE>
EVERGREEN
U.S. REAL ESTATE EQUITY FUND
(Pine trees
logo appears here.)---------------------------------------------------
Greystone will be acquired by Lennar, while Continental Homes has put itself up
for auction after having received a private offer.
WHAT IS YOUR OUTLOOK?
We have a positive outlook, although we do not expect the kind of returns in the
next year that we had this past year. We are a little more cautious because many
real estate stocks are trading too far above their fundamental values. We still
see selected values and growth opportunities, however, that could provide
relative outperformance. In general, we expect continued modest economic growth
and low inflation through the end of the decade. When these factors are combined
with a healthy real estate industry with its late-cycle pattern of performance,
we see the potential for sustained, positive relative performance.
16
<PAGE>
EVERGREEN
OMEGA FUND
- ---------------------------------------------------------(Pine tree
logo appears here.)
FUND-AT-A-GLANCE
As of September 30, 1997
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS Y
INCEPTION DATE 4/29/68 8/2/93 8/2/93 1/13/97
<S> <C> <C> <C> <C>
- ----------------------------------------------------------
1-YEAR PERFORMANCE
1 year w/o sales
charge 26.61% 25.45% 25.41% --
1 year w/sales
charge 20.60% 20.45% 24.41% --
1 year dividends per
share -- -- -- --
1 year capital gains
per share $0.85 $0.85 $0.85 $0.85
AVERAGE ANNUAL RETURNS
3 years 20.27% 20.45% 21.10% --
5 years 16.86% -- -- --
10 years 14.31% -- -- --
Since Inception 13.24% 15.45% 15.78% --
CUMULATIVE RETURNS
3 years 73.98% 74.74% 77.58% --
5 years 117.93% -- -- --
10 years 280.78% -- -- --
Since Inception 3,792.31% 81.98% 84.14% 18.60%
</TABLE>
OBJECTIVE
- ------------------------------------------------------------
The Evergreen Omega Fund seeks maximum capital growth by investing in a
diversified portfolio of small, medium and large company stocks.
STRATEGY
- ------------------------------------------------------------
The Fund invests in companies with demonstrated and projected superior earnings
growth. To determine this, the Fund identifies industries that are growing
faster than the economy and then seeks companies within those industries that
offer greater earnings growth than the S & P 500 and industry or product
leadership.
<TABLE>
<CAPTION>
PORTFOLIO CHARACTERISTICS
<S> <C>
- ------------------------------------------------------------
Total Net Assets $289 million
Number of issues: 61
Number of industries: 22
</TABLE>
(Chart appears here with the following plot points.)
Comparison of change in value of a $10,000 investment
in Evergreen Omega Fund, Class A, the S&P 500 and the
Consumer Price Index.
9/87 9/89 9/91 9/93 9/95 9/97
Class A Shares 9525 11434 15726 22234 26629 38078
CPI 10000 10871 11932 12618 13323 14010
S&P 500 10000 10970 13054 16372 22018 37201
Past performance is no guarantee of future results. The performance of each
class may vary based on differences in loads and fees paid by the shareholders
investing in each class. The S&P 500 Index is an unmanaged market index and does
not include transaction costs associated with buying and selling securities nor
any management fees. The Consumer Price Index (CPI) is through September 30,
1997.
LONG-TERM GROWTH
- ------------------------------------------------------------
(Chart appears here with the following plot points.)
Growth of an investment in
Evergreen Omega Fund, Class A
9/87 9/89 9/91 9/93 9/95 9/97
Dividend
Reinvestment 9525 11434 15726 22234 26629 38078
Initial
Investment 9525 9788 10145 10310 10343 12449
A $10,000 investment in Evergreen Omega Fund, Class A made on September 30, 1987
with all distributions reinvested was worth $38,078 on September 30, 1997. Past
performance is no guarantee of future results. The performance of each class may
vary based on differences in loads and fees paid by the shareholders investing
in each class.
17
<PAGE>
EVERGREEN
OMEGA FUND
(Pine tree
logo appears here.)------------------------------------------------------
PORTFOLIO MANAGER INTERVIEW
(Photo of HOW DID THE FUND PERFORM DURING
Maureen E. THE TWELVE MONTH PERIOD
Cullinane THAT ENDED SEPTEMBER 30, 1997?
appears here.) During the twelve month period, the Fund's Class A
shares returned 26.61%, Class B shares generated a
MAUREEN E. CULLINANE 25.45% return, and Class C shares proTENURE: APRIL 1989
duced a 25.41% return. In comparison, the Standard &
Poor's 500 Index (S&P 500), a highly followed stock index composed of 500 common
stocks, generated a 37.4% return for the same period.
Please note that we have changed the Fund's fiscal year end from December 31
to September 30. We have placed all of the domestic growth funds in the same
fiscal year cycle in order to streamline and increase the efficiency of fund
administration. The next report you receive will be a semi-annual report for the
period ending March 31, 1998, which you should receive in May 1998.
WHAT WAS THE ECONOMIC ENVIRONMENT LIKE DURING THE TWELVE MONTHS?
The economic environment was positive for stocks during the twelve months.
Economic growth was moderate, inflation remained under control, and interest
rates, despite some short-term fluctuations, were relatively stable. Against
this backdrop, stocks generated strong gains. For most of the year, the stocks
of large U.S. companies were market leaders. During the last three months of the
period, however, slower growth overseas and a stronger U.S. dollar translated
into disappointing earnings projections for large companies, and their stock
prices lost ground. At the same time, small and mid size company stocks, which
had lagged their large cap counterparts for more than two years, began to rise.
HOW DID YOU MANAGE THE FUND IN THIS ENVIRONMENT?
We invested in a variety of large, small and medium size companies. Our primary
focus, however, was on companies that have proven records of consistent earnings
growth, regardless of market capitalization. We believe that establishing a
nucleus of such companies within the portfolio reduced the Fund's volatility and
produced relatively consistent performance over time. Approximately 55% of the
Fund's net assets were invested in large company stocks.
HOW DO YOU SELECT STOCKS FOR THE PORTFOLIO?
We choose companies on a case-by-case basis. We seek businesses that have good
earnings growth, strong management, industry leadership and products or services
that give them a competitive edge. We search for companies in all industries and
economic sectors. During the past twelve months, financial, healthcare, energy,
business services, technology and capital goods sectors have been represented in
your Fund's portfolio.
(Chart appears here with the following plot points.)
TOP 10 HOLDINGS AS OF 9/30/97
AS A PERCENTAGE OF NET ASSETS
Warner-Lambert Co. 3.3%
EMC Corp. 2.8%
General Electric Co. 2.7%
Texas Instruments, Inc. 2.6%
ENSCO International, Inc. 2.5%
SLM Holding Corp. 2.4%
Motorola, Inc. 2.4%
Travelers Group, Inc. 2.3%
Greenpoint Financial Corp. 2.3%
International Business Machines Corp. 2.2%
FINANCE STOCKS HAVE BEEN A CONTINUING THEME IN THE PORTFOLIO. WHY WERE THESE
STOCKS ATTRACTIVE?
When we refer to finance stocks, we include banks, insurance companies and other
financial institutions. On September 30, l997 nearly 21.3% of the portfolio's
net assets were invested in finance stocks. Within this group, banks have
rebounded from the early 1990s, a period in which many financial institutions
were crippled by bad loans. Financial companies (banks in particular) have
ridden a wave of mergers, low interest rates and productivity-enhancing
technology to outstanding gains. We invested in large banks, such as BankBoston,
and smaller institutions such as Coast Savings, a California savings and loan.
Among other financial institutions, we favored American Express, which is
benefitting from increased demand for credit card, travel and financial
services. In the insurance area, we added Travelers to the portfolio, a
18
<PAGE>
EVERGREEN
OMEGA FUND
- ---------------------------------------------------------(Pine tree
logo appears here.)
company that is expanding its business through acquisitions. Travelers owns
Smith Barney brokerage and will acquire Salomon Brothers, a move that should
increase the company's global presence.
AT 13.9% ON SEPTEMBER 30, 1997, PHARMACEUTICAL AND HEALTHCARE STOCKS COMPOSED
THE FUND'S SECOND LARGEST SECTOR WEIGHTING. WHY DID YOU EMPHASIZE THESE TYPES OF
STOCKS?
We favored pharmaceutical companies with strong product pipelines or the ability
to develop and introduce successful new products over time. We invested in
companies that we believed were attractively priced and that have the potential
to increase their earnings going forward. Our holdings have included Pfizer,
Warner-Lambert and Eli Lilly & Co. Among healthcare products and services
companies, we added HBO, a healthcare software company that produces nurses
stations and patient monitoring devices. We also added Health Management
Associates, a rural hospital chain, to the portfolio. In this part of the
healthcare sector, we sought companies whose products and services have the
potential to enhance productivity and reduce healthcare costs.
(chart appears here with the following plot points.)
INDUSTRY ALLOCATION AS OF 9/30/97
AS A PERCENTAGE OF NET ASSETS
Finance & Insurance 12.4%
Banks 8.9%
Oil Field Services 7.7%
Pharmaceuticals 7.4%
Healthcare Products & Services 6.5%
WHERE ELSE DID YOU FIND OPPORTUNITY?
Throughout the twelve month period, energy services companies were strong
contributors to your Fund's performance. They accounted for 7.7% of the
portfolio's net assets. Energy services companies supply major oil and gas
corporations with the drilling rigs, boats and other equipment needed to explore
and produce oil and gas. Energy services companies are benefitting from a strong
growth trend in exploration that has been triggered by dwindling reserves and
increased worldwide energy demand.
WHAT IS YOUR OUTLOOK?
As we look toward 1998, we find ourselves in one of the most positive investment
environments in memory, with moderate economic growth, stable-to-falling
interest rates, solid corporate profits, liquidity in the markets and low
inflation. In addition, investors continue to put money into the equity markets,
fueling strong demand for stocks in general. We believe that as long as
inflation remains under control, interest rates can remain relatively stable and
the favorable environment for stocks can continue.
However, we approach 1998 with a degree of caution. U.S. stocks have made very
strong gains over the past couple of years, valuations are high, and the market
is vulnerable to profit-taking. The recent market correction, although painful,
was healthy in that it reduced stock valuations to more reasonable levels. While
we anticipate greater volatility in the market, we consider market corrections
as opportunities to buy good growth stocks at more favorable prices.
19
<PAGE>
EVERGREEN
EVERGREEN FUND
(Pine tree
logo appears here.)------------------------------------------------------
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR)
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
--------------------------
1997| 1996
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
NET ASSET VALUE BEGINNING OF YEAR........................................................... $ 17.64 $ 15.55
------------ -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income....................................................................... 0.11 0.12
Net realized and unrealized gain on investments............................................. 5.71 2.61
------------ -------
Total from investment operations............................................................ 5.82 2.73
------------ -------
LESS DISTRIBUTIONS FROM
Net investment income....................................................................... (0.09) (0.06)
Net realized gain on investments............................................................ (0.41) (0.58)
------------ -------
Total distributions......................................................................... (0.50) (0.64)
------------ -------
NET ASSET VALUE END OF YEAR................................................................. $ 22.96 $ 17.64
------------ -------
Total return +.............................................................................. 33.72% 18.07%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses............................................................................ 1.40% 1.45%
Total expenses, excluding indirectly paid expenses........................................ 1.40% N/A
Total expenses, excluding fee waivers & expense reimbursements............................ N/A N/A
Net investment income..................................................................... 0.58% 0.63%
Portfolio turnover rate..................................................................... 12% 15%
Average commission rate paid per share...................................................... $ 0.0577 $0.0603
NET ASSETS END OF YEAR (MILLIONS)........................................................... $ 161 $ 87
<CAPTION>
1995*
<S> <C>
- --------------------------------------------------------------------------------------------
CLASS A SHARES
NET ASSET VALUE BEGINNING OF YEAR........................................................... $11.97
------
INCOME FROM INVESTMENT OPERATIONS
Net investment income....................................................................... 0.01
Net realized and unrealized gain on investments............................................. 3.57
------
Total from investment operations............................................................ 3.58
------
LESS DISTRIBUTIONS FROM
Net investment income....................................................................... 0
Net realized gain on investments............................................................ 0
------
Total distributions......................................................................... 0
------
NET ASSET VALUE END OF YEAR................................................................. $15.55
------
Total return +.............................................................................. 29.91%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses............................................................................ 1.70%++
Total expenses, excluding indirectly paid expenses........................................ N/A
Total expenses, excluding fee waivers & expense reimbursements............................ 1.75%++
Net investment income..................................................................... 0.13%++
Portfolio turnover rate..................................................................... 19%
Average commission rate paid per share...................................................... N/A
NET ASSETS END OF YEAR (MILLIONS)........................................................... $ 29
</TABLE>
| Calculated based on average shares outstanding throughout the period.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from January 3, 1995 (commencement of class operations) to
September 30, 1995.
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
--------------------------
1997| 1996
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
NET ASSET VALUE BEGINNING OF YEAR........................................................... $ 17.49 $ 15.48
------------ -------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss......................................................................... (0.03) (0.03)
Net realized and unrealized gain on investments............................................. 5.64 2.64
------------ -------
Total from investment operations............................................................ 5.61 2.61
------------ -------
LESS DISTRIBUTIONS FROM
Net investment income....................................................................... 0 (0.02)
Net realized gain on investments............................................................ (0.41) (0.58)
------------ -------
Total distributions......................................................................... (0.41) (0.60)
------------ -------
NET ASSET VALUE END OF YEAR................................................................. $ 22.69 $ 17.49
------------ -------
Total return +.............................................................................. 32.69% 17.29%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses............................................................................ 2.15% 2.18%
Total expenses, excluding indirectly paid expenses........................................ 2.15% N/A
Total expenses, excluding fee waivers & expense reimbursements............................ N/A N/A
Net investment loss....................................................................... (0.16%) (0.10%)
Portfolio turnover rate..................................................................... 12% 15%
Average commission rate paid per share...................................................... $ 0.0577 $0.0603
NET ASSETS END OF YEAR (MILLIONS)........................................................... $ 503 $ 254
<CAPTION>
1995*
<S> <C>
- --------------------------------------------------------------------------------------------
CLASS B SHARES
NET ASSET VALUE BEGINNING OF YEAR........................................................... $11.97
------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss......................................................................... (0.02)
Net realized and unrealized gain on investments............................................. 3.53
------
Total from investment operations............................................................ 3.51
------
LESS DISTRIBUTIONS FROM
Net investment income....................................................................... 0
Net realized gain on investments............................................................ 0
------
Total distributions......................................................................... 0
------
NET ASSET VALUE END OF YEAR................................................................. $15.48
------
Total return +.............................................................................. 29.32%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses............................................................................ 2.32%++
Total expenses, excluding indirectly paid expenses........................................ N/A
Total expenses, excluding fee waivers & expense reimbursements............................ 2.34%++
Net investment loss....................................................................... (0.48%)++
Portfolio turnover rate..................................................................... 19%
Average commission rate paid per share...................................................... N/A
NET ASSETS END OF YEAR (MILLIONS)........................................................... $ 74
</TABLE>
| Calculated based on average shares outstanding throughout the period.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from January 3, 1995 (commencement of class operations) to
September 30, 1995.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
20
<PAGE>
EVERGREEN
EVERGREEN FUND
- ---------------------------------------------------------(Pine tree
logo appears here.)
FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR)
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
--------------------------
1997| 1996
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
NET ASSET VALUE BEGINNING OF YEAR........................................................... $ 17.47 $ 15.48
------------ -------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss......................................................................... (0.04) 0
Net realized and unrealized gain on investments............................................. 5.64 2.61
------------ -------
Total from investment operations............................................................ 5.60 2.61
------------ -------
LESS DISTRIBUTIONS FROM
Net investment income....................................................................... 0 (0.04)
Net realized gain on investments............................................................ (0.41) (0.58)
------------ -------
Total distributions......................................................................... (0.41) (0.62)
------------ -------
NET ASSET VALUE END OF YEAR................................................................. $ 22.66 $ 17.47
------------ -------
Total return +.............................................................................. 32.67% 17.29%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses............................................................................ 2.16% 2.14%
Total expenses, excluding indirectly paid expenses........................................ 2.16% N/A
Total expenses, excluding fee waivers & expense reimbursements............................ N/A 2.38%
Net investment loss....................................................................... (0.18%) (0.07%)
Portfolio turnover rate..................................................................... 12% 15%
Average commission rate paid per share...................................................... $ 0.0577 $0.0603
NET ASSETS END OF YEAR (MILLIONS)........................................................... $ 9 $ 6
<CAPTION>
1995*
<S> <C>
- --------------------------------------------------------------------------------------------
CLASS C SHARES
NET ASSET VALUE BEGINNING OF YEAR........................................................... $11.97
------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss......................................................................... (0.01)
Net realized and unrealized gain on investments............................................. 3.52
------
Total from investment operations............................................................ 3.51
------
LESS DISTRIBUTIONS FROM
Net investment income....................................................................... 0
Net realized gain on investments............................................................ 0
------
Total distributions......................................................................... 0.00
------
NET ASSET VALUE END OF YEAR................................................................. $15.48
------
Total return +.............................................................................. 29.32%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses............................................................................ 2.12%++
Total expenses, excluding indirectly paid expenses........................................ N/A
Total expenses, excluding fee waivers & expense reimbursements............................ 5.31%++
Net investment loss....................................................................... (0.31%)++
Portfolio turnover rate..................................................................... 19%
Average commission rate paid per share...................................................... N/A
NET ASSETS END OF YEAR (MILLIONS)........................................................... $ 2
</TABLE>
| Calculated based on average shares outstanding throughout the period.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from January 3, 1995 (commencement of class operations) to
September 30, 1995.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
21
<PAGE>
EVERGREEN
EVERGREEN FUND
(Pine tree
logo appears here.)------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR)
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
-------------------------------------------
1997| 1996 1995 1994
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
CLASS Y SHARES
NET ASSET VALUE BEGINNING OF YEAR............................................... $ 17.71 $ 15.59 $14.62 $14.46
------------ ------- ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income........................................................... 0.16 0.24 0.10 0.07
Net realized and unrealized gain (loss) on investments.......................... 5.73 2.55 3.10 0.79
------------ ------- ------ ------
Total from investment operations................................................ 5.89 2.79 3.20 0.86
------------ ------- ------ ------
LESS DISTRIBUTIONS FROM
Net investment income........................................................... (0.12) (0.09) (0.07) (0.09)
Net realized gain on investments................................................ (0.41) (0.58) (2.16) (0.61)
------------ ------- ------ ------
Total distributions............................................................. (0.53) (0.67) (2.23) (0.70)
------------ ------- ------ ------
NET ASSET VALUE END OF YEAR..................................................... $ 23.07 $ 17.71 $15.59 $14.62
------------ ------- ------ ------
Total return.................................................................... 34.08% 18.43% 26.79% 6.16%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses................................................................ 1.15% 1.15% 1.16% 1.13%
Total expenses, excluding indirectly paid expenses............................ 1.15% N/A N/A N/A
Interest expense.............................................................. N/A N/A 0.06% 0.09%
Net investment income......................................................... 0.80% 0.93% 0.53% 0.40%
Portfolio turnover rate......................................................... 12% 15% 19% 19%
Average commission rate paid per share.......................................... $ 0.0577 $0.0603 N/A N/A
NET ASSETS END OF YEAR (MILLIONS)............................................... $ 1,104 $ 841 $ 612 $ 526
<CAPTION>
1993
<S> <C>
- --------------------------------------------------------------------------------
CLASS Y SHARES
NET ASSET VALUE BEGINNING OF YEAR............................................... $13.10
------
INCOME FROM INVESTMENT OPERATIONS
Net investment income........................................................... 0.09
Net realized and unrealized gain (loss) on investments.......................... 1.96
------
Total from investment operations................................................ 2.05
------
LESS DISTRIBUTIONS FROM
Net investment income........................................................... (0.07)
Net realized gain on investments................................................ (0.62)
------
Total distributions............................................................. (0.69)
------
NET ASSET VALUE END OF YEAR..................................................... $14.46
------
Total return.................................................................... 15.83%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses................................................................ 1.11%
Total expenses, excluding indirectly paid expenses............................ N/A
Interest expense.............................................................. 0.01%
Net investment income......................................................... 0.60%
Portfolio turnover rate......................................................... 21%
Average commission rate paid per share.......................................... N/A
NET ASSETS END OF YEAR (MILLIONS)............................................... $ 657
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
-----------------------------------------------
1992 1991 1990 1989 1988*
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS Y SHARES (continued)
NET ASSET VALUE BEGINNING OF YEAR............................................ $13.32 $ 9.66 $ 14.01 $12.47 $15.12
------ ------ ------- ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income........................................................ 0.09 0.17 0.24 0.32 0.21
Net realized and unrealized gain (loss) on investments....................... 0.55 3.93 (3.62) 1.99 (1.05)
------ ------ ------- ------ ------
Total from investment operations............................................. 0.64 4.10 (3.38) 2.31 (0.84)
------ ------ ------- ------ ------
LESS DISTRIBUTIONS FROM
Net investment income........................................................ (0.17) (0.18) (0.36) (0.21) (0.25)
Net realized gain on investments............................................. (0.69) (0.26) (0.61) (0.56) (1.56)
------ ------ ------- ------ ------
Total distributions.......................................................... (0.86) (0.44) (0.97) (0.77) (1.81)
------ ------ ------- ------ ------
NET ASSET VALUE END OF YEAR.................................................. $13.10 $13.32 $ 9.66 $14.01 $12.47
------ ------ ------- ------ ------
Total return................................................................. 5.19% 43.74% (25.38%) 19.99% (1.87%)
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses............................................................. 1.13% 1.15% 1.15% 1.11% 1.03%
Interest expense........................................................... N/A N/A N/A N/A N/A
Net investment income...................................................... 0.56% 1.45% 1.83% 2.46% 1.70%
Portfolio turnover rate...................................................... 32% 35% 39% 40% 42%
Average commission rate paid per share....................................... N/A N/A N/A N/A N/A
NET ASSETS END OF YEAR (MILLIONS)............................................ $ 772 $ 755 $ 525 $ 867 $ 751
</TABLE>
| Calculated based on average shares outstanding throughout the period.
* Net of expense limitation in fiscal year 1988.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
22
<PAGE>
EVERGREEN
AGGRESSIVE GROWTH FUND
- ---------------------------------------------------------(Pine tree
logo appears here.)
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR)
<TABLE>
<CAPTION>
YEAR ENDED
YEAR ENDED SEPTEMBER 30, OCTOBER 31,
---------------------------------- -------------
1997| 1996 1995* 1994#|
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
NET ASSET VALUE BEGINNING OF YEAR................................. $ 21.04 $ 17.37 $ 13.85 $ 14.44
------------ ------- ------- -------------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss............................................... (0.21) (0.15) (0.16) (0.13)
Net realized and unrealized gain (loss) on investments............ 2.65 4.46 3.68 (0.22)
------------ ------- ------- -------------
Total from investment operations.................................. 2.44 4.31 3.52 (0.35)
------------ ------- ------- -------------
LESS DISTRIBUTIONS FROM
Net realized gain on investments.................................. 0 (0.64) 0 (0.24)
------------ ------- ------- -------------
Total distributions............................................... 0 (0.64) 0 (0.24)
------------ ------- ------- -------------
NET ASSET VALUE END OF YEAR....................................... $ 23.48 $ 21.04 $ 17.37 $ 13.85
------------ ------- ------- -------------
Total return +.................................................... 11.60% 25.62% 25.42% (2.42)%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses.................................................. 1.26% 1.22% 1.47%++ 1.25%
Total expenses, excluding indirectly paid expenses.............. 1.25% N/A N/A N/A
Net investment loss............................................. (1.05%) (0.86%) (1.12%)++ (0.92%)
Portfolio turnover rate........................................... 56% 33% 31% 59%
Average commission rate paid per share............................ $ 0.0531 $0.0582 N/A N/A
NET ASSETS END OF YEAR (THOUSANDS)................................ $ 173,982 $96,608 $70,858 $ 64,635
<CAPTION>
1993#| 1992#|
<S> <C> <C>
- ------------------------------------------------------------------
CLASS A SHARES
NET ASSET VALUE BEGINNING OF YEAR................................. $ 11.76 $ 12.22
------------- -------------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss............................................... (0.12) (0.10)
Net realized and unrealized gain (loss) on investments............ 3.06 1.84
------------- -------------
Total from investment operations.................................. 2.94 1.74
------------- -------------
LESS DISTRIBUTIONS FROM
Net realized gain on investments.................................. (0.26) (2.20)
------------- -------------
Total distributions............................................... (0.26) (2.20)
------------- -------------
NET ASSET VALUE END OF YEAR....................................... $ 14.44 $ 11.76
------------- -------------
Total return +.................................................... 25.31% 17.43%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses.................................................. 1.31% 1.44%
Total expenses, excluding indirectly paid expenses.............. N/A N/A
Net investment loss............................................. (0.92%) (0.93%)
Portfolio turnover rate........................................... 48% 46%
Average commission rate paid per share............................ N/A N/A
NET ASSETS END OF YEAR (THOUSANDS)................................ $ 58,053 $ 29,302
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
------------------------------------------------
1991#| 1990#| 1989#|
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------
CLASS A SHARES (continued)
NET ASSET VALUE BEGINNING OF YEAR................................... $ 7.37 $ 11.06 $ 7.62
------------- ------------- --------------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss................................................. (0.08) (0.04) (0.11)
Net realized and unrealized gain (loss) on investments.............. 5.59 (2.02) 3.55
------------- ------------- --------------
Total from investment operations.................................... 5.51 (2.06) 3.44
------------- ------------- --------------
LESS DISTRIBUTIONS FROM
Net realized gain on investments.................................... (0.66) (1.63) 0
------------- ------------- --------------
Total distributions................................................. (0.66) (1.63) 0
------------- ------------- --------------
NET ASSET VALUE END OF YEAR......................................... $ 12.22 $ 7.37 $ 11.06
------------- ------------- --------------
Total return +...................................................... 79.80% (20.45%) 45.14%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses.................................................... 1.59% 1.86% 1.78%
Total expenses, excluding indirectly paid expenses................ N/A N/A N/A
Net investment loss............................................... (0.71%) (0.49%) (1.19%)
Portfolio turnover rate............................................. 108% 100% 120%
Average commission rate paid per share.............................. N/A N/A N/A
NET ASSETS END OF YEAR (THOUSANDS).................................. $ 23,509 $ 14,325 $ 21,241
<CAPTION>
YEAR ENDED
DECEMBER 31,
1988**#| 1987#|
<S> <C> <C>
- --------------------------------------------------------------------
CLASS A SHARES (continued)
NET ASSET VALUE BEGINNING OF YEAR................................... $ 7.07 $ 8.77
--------------- ------------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss................................................. (0.21) (0.11)
Net realized and unrealized gain (loss) on investments.............. 0.76 (1.34)
--------------- ------------
Total from investment operations.................................... 0.55 (1.45)
--------------- ------------
LESS DISTRIBUTIONS FROM
Net realized gain on investments.................................... 0 (0.25)
--------------- ------------
Total distributions................................................. 0 (0.25)
--------------- ------------
NET ASSET VALUE END OF YEAR......................................... $ 7.62 $ 7.07
--------------- ------------
Total return +...................................................... 7.78% (16.51%)
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses.................................................... 2.02%++ 1.57%
Total expenses, excluding indirectly paid expenses................ N/A N/A
Net investment loss............................................... (1.36%)++ (1.05%)
Portfolio turnover rate............................................. 45% 65%
Average commission rate paid per share.............................. N/A N/A
NET ASSETS END OF YEAR (THOUSANDS).................................. $19,900 $ 25,700
</TABLE>
| Calculations based on average shares outstanding throughout the period.
++ Annualized.
+ Initial sales charge or contingent deferred sales charge is not reflected.
* For the eleven months ended September 30, 1995. The Fund changed its fiscal
year end from October 31 to September 30, effective September 30, 1995.
** For the ten months ended October 31, 1988. The Fund changed its fiscal year
end from December 31 to October 31, effective October 31, 1988.
# 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.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
23
<PAGE>
EVERGREEN
AGGRESSIVE GROWTH FUND
(Pine tree
logo appears here.)------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR)
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
--------------------------
1997| 1996
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
NET ASSET VALUE BEGINNING OF YEAR........................................................... $ 20.89 $ 17.35
------------ -------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss......................................................................... (0.37) (0.16)
Net realized and unrealized gain on investments............................................. 2.66 4.34
------------ -------
Total from investment operations............................................................ 2.29 4.18
------------ -------
LESS DISTRIBUTIONS FROM
Net realized gain on investments............................................................ 0 (0.64)
------------ -------
Total distributions......................................................................... 0 (0.64)
------------ -------
NET ASSET VALUE END OF YEAR................................................................. $ 23.18 $ 20.89
------------ -------
Total return +.............................................................................. 10.96% 24.88%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses............................................................................ 2.02% 1.98%
Total expenses, excluding indirectly paid expenses........................................ 2.01% N/A
Net investment loss....................................................................... (1.80%) (1.60%)
Portfolio turnover rate..................................................................... 56% 33%
Average commission rate paid per share...................................................... $ 0.0531 $0.0582
NET ASSETS END OF YEAR (THOUSANDS).......................................................... $ 41,167 $21,644
<CAPTION>
1995*
<S> <C>
- --------------------------------------------------------------------------------------------
CLASS B SHARES
NET ASSET VALUE BEGINNING OF YEAR........................................................... $15.82
------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss......................................................................... (0.03)
Net realized and unrealized gain on investments............................................. 1.56
------
Total from investment operations............................................................ 1.53
------
LESS DISTRIBUTIONS FROM
Net realized gain on investments............................................................ 0
------
Total distributions......................................................................... 0
------
NET ASSET VALUE END OF YEAR................................................................. $17.35
------
Total return +.............................................................................. 9.67%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses............................................................................ 2.09%++
Total expenses, excluding indirectly paid expenses........................................ N/A
Net investment loss....................................................................... (1.71%)++
Portfolio turnover rate..................................................................... 31%
Average commission rate paid per share...................................................... N/A
NET ASSETS END OF YEAR (THOUSANDS).......................................................... $2,858
</TABLE>
| Calculations based on average shares outstanding throughout the period.
* For the period from July 7, 1995 (commencement of class operations) to
September 30, 1995.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
--------------------------
1997| 1996
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
NET ASSET VALUE BEGINNING OF YEAR........................................................... $ 20.88 $ 17.31
------------ -------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss......................................................................... (0.36) (0.15)
Net realized and unrealized gain on investments............................................. 2.64 4.36
------------ -------
Total from investment operations............................................................ 2.28 4.21
------------ -------
LESS DISTRIBUTIONS FROM
Net realized gain on investments............................................................ 0 (0.64)
------------ -------
Total distributions......................................................................... 0 (0.64)
------------ -------
NET ASSET VALUE END OF YEAR................................................................. $ 23.16 $ 20.88
------------ -------
Total return +.............................................................................. 10.92% 25.11%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses............................................................................ 2.02% 1.96%
Total expenses, excluding indirectly paid expenses........................................ 2.01% N/A
Net investment loss....................................................................... (1.80%) (1.57%)
Portfolio turnover rate..................................................................... 56% 33%
Average commission rate paid per share...................................................... $ 0.0531 $0.0582
NET ASSETS END OF YEAR (THOUSANDS).......................................................... $ 3,992 $ 991
<CAPTION>
1995*
<S> <C>
- --------------------------------------------------------------------------------------------
CLASS C SHARES
NET ASSET VALUE BEGINNING OF YEAR........................................................... $16.42
------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss......................................................................... (0.01)
Net realized and unrealized gain on investments............................................. 0.90
------
Total from investment operations............................................................ 0.89
------
LESS DISTRIBUTIONS FROM
Net realized gain on investments............................................................ 0
------
Total distributions......................................................................... 0
------
NET ASSET VALUE END OF YEAR................................................................. $17.31
------
Total return +.............................................................................. 5.42%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses............................................................................ 2.09%++
Total expenses, excluding indirectly paid expenses........................................ N/A
Net investment loss....................................................................... (1.51%)++
Portfolio turnover rate..................................................................... 31%
Average commission rate paid per share...................................................... N/A
NET ASSETS END OF YEAR (THOUSANDS).......................................................... $ 416
</TABLE>
| Calculations based on average shares outstanding throughout the period.
* For the period from August 3, 1995 (commencement of class operations) to
September 30, 1995.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
24
<PAGE>
EVERGREEN
AGGRESSIVE GROWTH FUND
- ---------------------------------------------------------(Pine tree
logo appears here.)
FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR)
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
--------------------------
1997| 1996
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
CLASS Y SHARES
NET ASSET VALUE BEGINNING OF YEAR........................................................... $ 21.09 $ 17.38
------------ -------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss......................................................................... (0.17) (0.06)
Net realized and unrealized gain on investments............................................. 2.65 4.41
------------ -------
Total from investment operations............................................................ 2.48 4.35
------------ -------
LESS DISTRIBUTIONS FROM
Net realized gain on investments............................................................ 0 (0.64)
------------ -------
Total distributions......................................................................... 0 (0.64)
------------ -------
NET ASSET VALUE END OF YEAR................................................................. $ 23.57 $ 21.09
------------ -------
Total return................................................................................ 11.76% 25.84%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses............................................................................ 1.01% 0.97%
Total expenses, excluding indirectly paid expenses........................................ 1.00% N/A
Net investment loss....................................................................... (.78%) (0.60%)
Portfolio turnover rate..................................................................... 56% 33%
Average commission rate paid per share...................................................... $ 0.0531 $0.0582
NET ASSETS END OF YEAR (THOUSANDS).......................................................... $ 44,384 $25,918
<CAPTION>
1995*
<S> <C>
- --------------------------------------------------------------------------------------------
CLASS Y SHARES
NET ASSET VALUE BEGINNING OF YEAR........................................................... $15.79
------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss......................................................................... (0.01)
Net realized and unrealized gain on investments............................................. 1.60
------
Total from investment operations............................................................ 1.59
------
LESS DISTRIBUTIONS FROM
Net realized gain on investments............................................................ 0
------
Total distributions......................................................................... 0
------
NET ASSET VALUE END OF YEAR................................................................. $17.38
------
Total return................................................................................ 10.07%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses............................................................................ 1.08%++
Total expenses, excluding indirectly paid expenses........................................ N/A
Net investment loss....................................................................... (0.71%)++
Portfolio turnover rate..................................................................... 31%
Average commission rate paid per share...................................................... N/A
NET ASSETS END OF YEAR (THOUSANDS).......................................................... $1,889
</TABLE>
| Calculations based on average shares outstanding throughout the period.
* For the period from July 11, 1995 (commencement of class operations) to
September 30, 1995.
++ Annualized.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
25
<PAGE>
EVERGREEN
MICRO CAP FUND, INC.
(Pine cone logo
appears here.)---------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR)
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
--------------------------
1997| 1996
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
NET ASSET VALUE BEGINNING OF YEAR........................................................... $ 17.31 $ 18.41
------------ -------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss......................................................................... (0.15) (0.10)
Net realized and unrealized gain (loss) on investments...................................... 9.52 (0.44)
------------ -------
Total from investment operations............................................................ 9.37 (0.54)
------------ -------
LESS DISTRIBUTIONS FROM
Net realized gain on investments............................................................ 0 (0.56)
------------ -------
Total distributions......................................................................... 0 (0.56)
------------ -------
NET ASSET VALUE END OF YEAR................................................................. $ 26.68 $ 17.31
------------ -------
Total return +.............................................................................. 54.13% (2.90%)
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses............................................................................ 1.79% 1.73%
Interest expense.......................................................................... 0.02% 0.02%
Total expenses, excluding indirectly paid expenses........................................ 1.78% N/A
Total expenses, excluding fee waiver & expense reimbursement.............................. N/A 3.08%
Net investment loss....................................................................... (0.73%) (0.52%)
Portfolio turnover rate..................................................................... 59% 160%
Average commission rate paid per share...................................................... $ 0.0543 $0.0465
NET ASSETS END OF YEAR (THOUSANDS).......................................................... $ 2,438 $ 903
<CAPTION>
1995*
<S> <C>
- --------------------------------------------------------------------------------------------
CLASS A SHARES
NET ASSET VALUE BEGINNING OF YEAR........................................................... $15.76
------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss......................................................................... (0.10)
Net realized and unrealized gain (loss) on investments...................................... 2.75
------
Total from investment operations............................................................ 2.65
------
LESS DISTRIBUTIONS FROM
Net realized gain on investments............................................................ 0
------
Total distributions......................................................................... 0
------
NET ASSET VALUE END OF YEAR................................................................. $18.41
------
Total return +.............................................................................. 16.81%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses............................................................................ 1.51%++
Interest expense.......................................................................... N/A
Total expenses, excluding indirectly paid expenses........................................ N/A
Total expenses, excluding fee waiver & expense reimbursement.............................. 4.33%++
Net investment loss....................................................................... (1.03%)++
Portfolio turnover rate..................................................................... 84%
Average commission rate paid per share...................................................... N/A
NET ASSETS END OF YEAR (THOUSANDS).......................................................... $1,089
</TABLE>
| Calculated based on average shares outstanding throughout the period.
* For the period from January 3, 1995 (commencement of class operations) to
September 30, 1995.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
--------------------------
1997| 1996
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
NET ASSET VALUE BEGINNING OF YEAR........................................................... $ 17.07 $ 18.30
------------ -------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss......................................................................... (0.28) (0.25)
Net realized and unrealized gain (loss) on investments...................................... 9.35 (0.42)
------------ -------
Total from investment operations............................................................ 9.07 (0.67)
------------ -------
LESS DISTRIBUTIONS FROM
Net realized gain on investments............................................................ 0 (0.56)
------------ -------
Total distributions......................................................................... 0 (0.56)
------------ -------
NET ASSET VALUE END OF YEAR................................................................. $ 26.14 $ 17.07
------------ -------
Total return +.............................................................................. 53.13% (3.64%)
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses............................................................................ 2.59% 2.47%
Interest expense.......................................................................... 0.02% 0.02%
Total expenses, excluding indirectly paid expenses........................................ 2.58% N/A
Total expenses, excluding fee waiver & expense reimbursement.............................. N/A 3.26%
Net investment loss....................................................................... (1.44%) (1.28%)
Portfolio turnover rate..................................................................... 59% 160%
Average commission rate paid per share...................................................... $ 0.0543 $0.0465
NET ASSETS END OF YEAR (THOUSANDS).......................................................... $ 1,713 $ 1,461
<CAPTION>
1995*
<S> <C>
- --------------------------------------------------------------------------------------------
CLASS B SHARES
NET ASSET VALUE BEGINNING OF YEAR........................................................... $15.76
------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss......................................................................... (0.20)
Net realized and unrealized gain (loss) on investments...................................... 2.74
------
Total from investment operations............................................................ 2.54
------
LESS DISTRIBUTIONS FROM
Net realized gain on investments............................................................ 0
------
Total distributions......................................................................... 0
------
NET ASSET VALUE END OF YEAR................................................................. $18.30
------
Total return +.............................................................................. 16.12%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses............................................................................ 2.26%++
Interest expense.......................................................................... N/A
Total expenses, excluding indirectly paid expenses........................................ N/A
Total expenses, excluding fee waiver & expense reimbursement.............................. 3.66%++
Net investment loss....................................................................... (1.77%)++
Portfolio turnover rate..................................................................... 84%
Average commission rate paid per share...................................................... N/A
NET ASSETS END OF YEAR (THOUSANDS).......................................................... $2,020
</TABLE>
| Calculated based on average shares outstanding throughout the period.
* For the period from January 3, 1995 (commencement of class operations) to
September 30, 1995.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
26
<PAGE>
EVERGREEN
MICRO CAP FUND, INC.
- --------------------------------------------------------(Pine cone logo
appears here.)
FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR)
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
--------------------------
1997| 1996
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
NET ASSET VALUE BEGINNING OF YEAR........................................................... $ 17.09 $ 18.31
------------ -------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss......................................................................... (0.25) (0.35)
Net realized and unrealized gain (loss) on investments...................................... 9.32 (0.31)
------------ -------
Total from investment operations............................................................ 9.07 (0.66)
------------ -------
LESS DISTRIBUTIONS FROM
Net realized gain on investments............................................................ 0 (0.56)
------------ -------
Total distributions......................................................................... 0 (0.56)
------------ -------
NET ASSET VALUE END OF YEAR................................................................. $ 26.16 $ 17.09
------------ -------
Total return +.............................................................................. 53.07% (3.58%)
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses............................................................................ 2.56% 2.44%
Interest expense.......................................................................... 0.02% 0.02%
Total expenses, excluding indirectly paid expenses........................................ 2.55% N/A
Total expenses, excluding fee waiver & expense reimbursement.............................. N/A 32.28%
Net investment loss....................................................................... (1.50%) (1.35%)
Portfolio turnover rate..................................................................... 59% 160%
Average commission rate paid per share...................................................... $ 0.0543 $0.0465
NET ASSETS END OF YEAR (THOUSANDS).......................................................... $ 261 $ 27
<CAPTION>
1995*
<S> <C>
- --------------------------------------------------------------------------------------------
CLASS C SHARES
NET ASSET VALUE BEGINNING OF YEAR........................................................... $15.76
------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss......................................................................... (0.20)
Net realized and unrealized gain (loss) on investments...................................... 2.75
------
Total from investment operations............................................................ 2.55
------
LESS DISTRIBUTIONS FROM
Net realized gain on investments............................................................ 0
------
Total distributions......................................................................... 0
------
NET ASSET VALUE END OF YEAR................................................................. $18.31
------
Total return +.............................................................................. 16.18%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses............................................................................ 2.25%++
Interest expense.......................................................................... N/A
Total expenses, excluding indirectly paid expenses........................................ N/A
Total expenses, excluding fee waiver & expense reimbursement.............................. 41.34%++
Net investment loss....................................................................... (1.76%)++
Portfolio turnover rate..................................................................... 84%
Average commission rate paid per share...................................................... N/A
NET ASSETS END OF YEAR (THOUSANDS).......................................................... $ 62
</TABLE>
| Calculated based on average shares outstanding throughout the period.
* For the period from January 3, 1995 (commencement of class operations) to
September 30, 1995.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
27
<PAGE>
EVERGREEN
MICRO CAP FUND, INC.
(Pine cone logo
appears here.)---------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR)
<TABLE>
<CAPTION>
YEAR
ENDED
YEAR ENDED SEPTEMBER 30, MAY 31,
--------------------------------------------- -------
1997| 1996 1995 1994* 1994
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
CLASS Y SHARES
NET ASSET VALUE BEGINNING OF YEAR.................................. $ 17.35 $ 18.42 $ 21.74 $ 21.20 $ 20.87
------------ ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)....................................... (0.09) (0.08) (0.23) (0.05) (0.07)
Net realized and unrealized gain (loss) on investments............. 9.57 (0.43) 0.59 0.59 1.67
------------ ------- ------- ------- -------
Total from investment operations................................... 9.48 (0.51) 0.36 0.54 1.60
------------ ------- ------- ------- -------
LESS DISTRIBUTIONS FROM
Net investment income.............................................. 0 0 0 0 0
Net realized gain on investments................................... 0 (0.56) (3.68) 0 (1.27)
------------ ------- ------- ------- -------
Total distributions................................................ 0 (0.56) (3.68) 0 (1.27)
------------ ------- ------- ------- -------
NET ASSET VALUE END OF YEAR........................................ $ 26.83 $ 17.35 $ 18.42 $ 21.74 $ 21.20
------------ ------- ------- ------- -------
Total return....................................................... 54.64% (2.73%) 4.76% 2.55% 7.64%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses................................................... 1.59% 1.55% 1.36% 1.37%+ 1.26%
Interest expense................................................. 0.02% 0.02% N/A N/A N/A
Total expenses, excluding indirectly paid expenses............... 1.58% N/A N/A N/A N/A
Total expenses, excluding fee waivers & expense reimbursements... N/A 1.60% N/A N/A N/A
Net investment income (loss)..................................... (0.45%) (0.38%) (0.87%) (0.70%)+ (0.33%)
Portfolio turnover rate............................................ 59% 160% 84% 36% 89%
Average commission rate paid per share............................. $ 0.0543 $0.0465 N/A N/A N/A
NET ASSETS END OF YEAR (THOUSANDS)................................. $ 50,732 $39,622 $64,721 $99,340 $96,357
<CAPTION>
1993
<S> <C>
- -------------------------------------------------------------------
CLASS Y SHARES
NET ASSET VALUE BEGINNING OF YEAR.................................. $ 21.02
-------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)....................................... (0.03)
Net realized and unrealized gain (loss) on investments............. 1.57
-------
Total from investment operations................................... 1.54
-------
LESS DISTRIBUTIONS FROM
Net investment income.............................................. 0
Net realized gain on investments................................... (1.69)
-------
Total distributions................................................ (1.69)
-------
NET ASSET VALUE END OF YEAR........................................ $ 20.87
-------
Total return....................................................... 7.47%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses................................................... 1.24%
Interest expense................................................. N/A
Total expenses, excluding indirectly paid expenses............... N/A
Total expenses, excluding fee waivers & expense reimbursements... N/A
Net investment income (loss)..................................... (0.07%)
Portfolio turnover rate............................................ 29%
Average commission rate paid per share............................. N/A
NET ASSETS END OF YEAR (THOUSANDS)................................. $80,605
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
---------------------------------------------------
1992 1991 1990 1989| 1988
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS Y SHARES (continued)
NET ASSET VALUE BEGINNING OF YEAR........................................ $ 18.81 $ 17.69 $ 21.02 $ 16.82 $ 18.55
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)............................................. 0.02 0.56 0.45 0.16 0
Net realized and unrealized gain (loss) on investments................... 3.33 1.67 0.25 4.37 (0.78)
------- ------- ------- ------- -------
Total from investment operations......................................... 3.35 2.23 0.70 4.53 (0.78)
------- ------- ------- ------- -------
LESS DISTRIBUTIONS FROM
Net investment income.................................................... (0.14) (0.53) (0.36) (0.05) 0
Net realized gain on investments......................................... (1.00) (0.58) (3.67) (0.28) (0.95)
------- ------- ------- ------- -------
Total distributions...................................................... (1.14) (1.11) (4.03) (0.33) (0.95)
------- ------- ------- ------- -------
NET ASSET VALUE END OF YEAR.............................................. $ 21.02 $ 18.81 $ 17.69 $ 21.02 $ 16.82
------- ------- ------- ------- -------
Total return............................................................. 18.33% 14.42% 4.20% 27.35% (4.01%)
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses......................................................... 1.25% 1.32% 1.33% 1.30% 1.47%
Interest expense....................................................... N/A N/A N/A N/A N/A
Total expenses, excluding indirectly paid expenses..................... N/A N/A N/A N/A N/A
Total expenses, excluding fee waivers & expense reimbursements......... N/A N/A N/A N/A N/A
Net investment income (loss)........................................... 0.22% 3.32% 2.25% 0.86% 0.01%
Portfolio turnover rate.................................................. 55% 59% 46% 45% 47%
Average commission rate paid per share................................... N/A N/A N/A N/A N/A
NET ASSETS END OF YEAR (THOUSANDS)....................................... $62,172 $45,687 $37,838 $37,292 $23,007
</TABLE>
| Calculated based on average shares outstanding throughout the period.
* For the four months ended September 30, 1994. The Fund changed its fiscal year
end from May 31 to September 30, effective September 30, 1994.
+ Annualized.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
28
<PAGE>
EVERGREEN
U.S. REAL ESTATE EQUITY FUND
- ----------------------------------------------------------(Pine trees
logo appears here.)
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR)
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
-------------------------------
1997| 1996|
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
NET ASSET VALUE BEGINNING OF YEAR........................................................... $ 12.49 $ 11.42
------------ ------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income....................................................................... 0.12# 0.20
Net realized and unrealized gain on investments............................................. 8.57 1.28
------------ ------------
Total from investment operations............................................................ 8.69 1.48
------------ ------------
LESS DISTRIBUTIONS FROM
Net investment income....................................................................... (0.26)# (0.20)
Net realized gain on investments............................................................ (1.58) (0.21)
------------ ------------
Total distributions......................................................................... (1.84) (0.41)
------------ ------------
NET ASSET VALUE END OF YEAR................................................................. $ 19.34 $ 12.49
------------ ------------
Total return +.............................................................................. 78.28% 13.12%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses............................................................................ 1.77% 1.72%
Interest expense.......................................................................... N/A 0.04%
Total expenses, excluding indirectly paid expenses........................................ 1.76% N/A
Total expenses, excluding fee waivers & expense reimbursements............................ 2.49% 9.65%
Net investment income..................................................................... 0.90% 1.60%
Portfolio turnover rate..................................................................... 205% 169%
Average commission rate paid per share...................................................... $ 0.0597 $ 0.0619
NET ASSETS END OF YEAR (THOUSANDS).......................................................... $ 2,778 $ 263
<CAPTION>
1995*
<S> <C>
- --------------------------------------------------------------------------------------------
CLASS A SHARES
NET ASSET VALUE BEGINNING OF YEAR........................................................... $ 9.21
------
INCOME FROM INVESTMENT OPERATIONS
Net investment income....................................................................... 0.18
Net realized and unrealized gain on investments............................................. 2.03
------
Total from investment operations............................................................ 2.21
------
LESS DISTRIBUTIONS FROM
Net investment income....................................................................... 0
Net realized gain on investments............................................................ 0
------
Total distributions......................................................................... 0
------
NET ASSET VALUE END OF YEAR................................................................. $11.42
------
Total return +.............................................................................. 24.00%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses............................................................................ 1.78%++
Interest expense.......................................................................... N/A
Total expenses, excluding indirectly paid expenses........................................ N/A
Total expenses, excluding fee waivers & expense reimbursements............................ 364.74%++
Net investment income..................................................................... 3.13%++
Portfolio turnover rate..................................................................... 115%
Average commission rate paid per share...................................................... N/A
NET ASSETS END OF YEAR (THOUSANDS).......................................................... $ 5
</TABLE>
| Calculated based on average shares outstanding throughout the period.
* For the period from March 10, 1995 (commencement of class operations) to
September 30, 1995.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
# The per share amount of net investment income is not in accordance with the
distributions per share from net investment income due to the timing of sales
of Fund shares after the Fund declared its annual income distribution on
December 26, 1996. Further, the distributions declared on such date were paid
principally from net investment income earned during the previous fiscal
year.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
29
<PAGE>
EVERGREEN
U.S. REAL ESTATE EQUITY FUND
(Pine trees logo
appears here.)----------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR)
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
-------------------------------
1997| 1996|
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
NET ASSET VALUE BEGINNING OF YEAR........................................................... $ 12.41 $ 11.37
------------ ------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income....................................................................... 0.02# 0.13
Net realized and unrealized gain on investments............................................. 8.49 1.27
------------ ------------
Total from investment operations............................................................ 8.51 1.40
------------ ------------
LESS DISTRIBUTIONS FROM
Net investment income....................................................................... (0.20)# (0.15)
Net realized gain on investments............................................................ (1.58) (0.21)
------------ ------------
Total distributions......................................................................... (1.78) (0.36)
------------ ------------
NET ASSET VALUE END OF YEAR................................................................. $ 19.14 $ 12.41
------------ ------------
Total return +.............................................................................. 76.87% 12.49%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses............................................................................ 2.52% 2.46%
Interest expense.......................................................................... N/A 0.04%
Total expenses, excluding indirectly paid expenses........................................ 2.51% N/A
Total expenses, excluding fee waivers & expense reimbursements............................ 3.24% 6.19%
Net investment income..................................................................... 0.12% 1.05%
Portfolio turnover rate..................................................................... 205% 169%
Average commission rate paid per share...................................................... $ 0.0597 $ 0.0619
NET ASSETS END OF YEAR (THOUSANDS).......................................................... $ 3,446 $ 431
<CAPTION>
1995*
<S> <C>
- --------------------------------------------------------------------------------------------
CLASS B SHARES
NET ASSET VALUE BEGINNING OF YEAR........................................................... $ 9.19
------
INCOME FROM INVESTMENT OPERATIONS
Net investment income....................................................................... 0.05
Net realized and unrealized gain on investments............................................. 2.13
------
Total from investment operations............................................................ 2.18
------
LESS DISTRIBUTIONS FROM
Net investment income....................................................................... 0
Net realized gain on investments............................................................ 0
------
Total distributions......................................................................... 0
------
NET ASSET VALUE END OF YEAR................................................................. $11.37
------
Total return +.............................................................................. 23.72%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses............................................................................ 2.51%++
Interest expense.......................................................................... N/A
Total expenses, excluding indirectly paid expenses........................................ N/A
Total expenses, excluding fee waivers & expense reimbursements............................ 28.70%++
Net investment income..................................................................... 2.00%++
Portfolio turnover rate..................................................................... 115%
Average commission rate paid per share...................................................... N/A
NET ASSETS END OF YEAR (THOUSANDS).......................................................... $ 160
</TABLE>
| Calculated based on average shares outstanding throughout the period.
* For the period from March 7, 1995 (commencement of class operations) to
September 30, 1995.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
# The per share amount of net investment income is not in accord with the
distributions per share from net investment income due to the timing of sales
of Fund shares after the Fund declared its annual income distribution on
December 26, 1996. The distributions declared on such date were paid
principally from net investment income earned during the previous fiscal
year.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
30
<PAGE>
EVERGREEN
U.S. REAL ESTATE EQUITY FUND
- ----------------------------------------------------------(Pine trees
logo appears here.)
FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR)
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
-------------------------------
1997| 1996|
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
NET ASSET VALUE BEGINNING OF YEAR........................................................... $ 12.44 $ 11.41
------------ ------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income....................................................................... 0.03# 0.13
Net realized and unrealized gain on investments............................................. 8.47 1.28
------------ ------------
Total from investment operations............................................................ 8.50 1.41
------------ ------------
LESS DISTRIBUTIONS FROM
Net investment income....................................................................... (0.23)# (0.17)
Net realized gain on investments............................................................ (1.58) (0.21)
------------ ------------
Total distributions......................................................................... (1.81) (0.38)
------------ ------------
NET ASSET VALUE END OF YEAR................................................................. $ 19.13 $ 12.44
------------ ------------
Total return +.............................................................................. 76.89% 12.49%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses............................................................................ 2.52% 2.47%
Interest expense.......................................................................... N/A 0.04%
Total expenses, excluding indirectly paid expenses........................................ 2.51% N/A
Total expenses, excluding fee waivers & expense reimbursements............................ 3.24% 18.82%
Net investment income..................................................................... 0.23% 1.08%
Portfolio turnover rate..................................................................... 205% 169%
Average commission rate paid per share...................................................... $ 0.0597 $ 0.0619
NET ASSETS END OF YEAR (THOUSANDS).......................................................... $ 1,673 $ 125
<CAPTION>
1995*
<S> <C>
- --------------------------------------------------------------------------------------------
CLASS C SHARES
NET ASSET VALUE BEGINNING OF YEAR........................................................... $10.87
------
INCOME FROM INVESTMENT OPERATIONS
Net investment income....................................................................... 0.08
Net realized and unrealized gain on investments............................................. 0.46
------
Total from investment operations............................................................ 0.54
------
LESS DISTRIBUTIONS FROM
Net investment income....................................................................... 0
Net realized gain on investments............................................................ 0
------
Total distributions......................................................................... 0
------
NET ASSET VALUE END OF YEAR................................................................. $11.41
------
Total return +.............................................................................. 4.97%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses............................................................................ 2.49%++
Interest expense.......................................................................... N/A
Total expenses, excluding indirectly paid expenses........................................ N/A
Total expenses, excluding fee waivers & expense reimbursements............................ 421.54%++
Net investment income..................................................................... 2.55%++
Portfolio turnover rate..................................................................... 115%
Average commission rate paid per share...................................................... N/A
NET ASSETS END OF YEAR (THOUSANDS).......................................................... $ 3
</TABLE>
| Calculated based on average shares outstanding throughout the period.
* For the period from July 12, 1995 (commencement of class operations) to
September 30, 1995.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
# The per share amount of net investment income is not in accord with the
distributions per share from net investment income due to the timing of sales
of Fund shares after the Fund declared its annual income distribution on
December 26, 1996. The distributions declared on such date were paid
principally from net investment income earned during the previous fiscal
year.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
31
<PAGE>
EVERGREEN
U.S. REAL ESTATE EQUITY FUND
(Pine trees logo
appears here.)----------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR)
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
--------------------------------------------------------
1997| 1996| 1995 1994**|
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
CLASS Y SHARES
NET ASSET VALUE BEGINNING OF YEAR................................. $ 12.56 $ 11.44 $10.07 $10.71
------------ ------------ ------ --------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income............................................. 0.16# 0.24 0.23 0.11
Net realized and unrealized gain (loss) on investments............ 8.63 1.29 1.46 (0.75)
------------ ------------ ------ --------------
Total from investment operations.................................. 8.79 1.53 1.69 (0.64)
------------ ------------ ------ --------------
LESS DISTRIBUTIONS FROM
Net investment income............................................. (0.28)# (0.20) (0.20) 0
In excess of net investment income................................ 0 0 0 0
Net realized gains on investments................................. (1.58) (0.21) (0.12) 0
------------ ------------ ------ --------------
Total distributions............................................... (1.86) (0.41) (0.32) 0
------------ ------------ ------ --------------
NET ASSET VALUE, END OF YEAR...................................... $ 19.49 $ 12.56 $11.44 $10.07
------------ ------------ ------ --------------
Total return...................................................... 78.79% 13.57% 17.63% (5.98%)
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses.................................................. 1.51% 1.46% 1.50% 1.49%+
Interest expense................................................ N/A 0.04% N/A N/A
Total expenses, excluding indirectly paid expenses.............. 1.50% N/A N/A N/A
Total expenses, excluding fee waivers & expense
reimbursements................................................ 2.26% 2.25% 2.70% 2.65%+
Net investment income........................................... 1.10% 2.02% 2.45% 1.60%+
Portfolio turnover rate........................................... 205% 169% 115% 102%
Average commission rate paid per share............................ $ 0.0597 $ 0.0619 N/A N/A
NET ASSETS END OF YEAR (THOUSANDS)................................ $ 19,459 $ 10,601 $9,456 $8,630
<CAPTION>
SEPTEMBER 1, 1993*
DECEMBER 31,
1993
<S> <C>
- ------------------------------------------------------------------
CLASS Y SHARES
NET ASSET VALUE BEGINNING OF YEAR................................. $10.00
------
INCOME FROM INVESTMENT OPERATIONS
Net investment income............................................. 0.04
Net realized and unrealized gain (loss) on investments............ 0.72
------
Total from investment operations.................................. 0.76
------
LESS DISTRIBUTIONS FROM
Net investment income............................................. (0.04)
In excess of net investment income................................ (0.01)
Net realized gains on investments................................. 0
------
Total distributions............................................... (0.05)
------
NET ASSET VALUE, END OF YEAR...................................... $10.71
------
Total return...................................................... 7.60%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses.................................................. 0.44+
Interest expense................................................ N/A
Total expenses, excluding indirectly paid expenses.............. N/A
Total expenses, excluding fee waivers & expense
reimbursements................................................ 3.59%+
Net investment income........................................... 1.93%+
Portfolio turnover rate........................................... 17%
Average commission rate paid per share............................ N/A
NET ASSETS END OF YEAR (THOUSANDS)................................ $4,610
</TABLE>
| Calculated based on average shares outstanding throughout the period.
* Commencement of class operations.
** For the nine months ended September 30, 1994. The Fund changed its fiscal
year end from December 31 to September 30, effective September 30, 1994.
++ Annualized.
# The per share amount of net investment income is not in accord with the
distributions per share from net investment income due to the timing of sales
of Fund shares after the Fund declared its annual income distribution on
December 26, 1996. The distributions declared on such date were paid
principally from net investment income earned during the previous fiscal
year.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
32
<PAGE>
EVERGREEN
OMEGA FUND
- ----------------------------------------------------------(Pine tree
logo appears here.)
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
NINE MONTHS YEAR ENDED DECEMBER 31,
ENDED -------------------------------
SEPTEMBER 30, 1997#| 1996 1995 1994
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
NET ASSET VALUE BEGINNING OF PERIOD........................... $ 19.52 $ 19.56 $ 15.54 $ 17.11
-------- -------- -------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss).................................. (0.03) (0.06) 0 0.04
Net realized and unrealized gain (loss) on investments........ 4.05 2.15 5.58 (1.00)
-------- -------- -------- -------
Total from investment operations.............................. 4.02 2.09 5.58 (0.96)
-------- -------- -------- -------
LESS DISTRIBUTIONS FROM
Net investment income......................................... 0 0 0 0
In excess of net investment income............................ 0 0 0 0
Net realized gain on investments.............................. (0.85) (2.13) (1.56) (0.61)
-------- -------- -------- -------
Total distributions........................................... (0.85) (2.13) (1.56) (0.61)
-------- -------- -------- -------
NET ASSET VALUE END OF PERIOD................................. $ 22.69 $ 19.52 $ 19.56 $ 15.54
-------- -------- -------- -------
Total return +................................................ 21.45% 11.31% 36.94% (5.66%)
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses.............................................. 1.32%++ 1.33% 1.38% 1.41%
Total expenses, excluding indirectly paid expenses.......... 1.31%++ 1.32% 1.37% N/A
Net investment income (loss)................................ (0.20%)++ (0.29%) 0.00% 0.27%
Portfolio turnover rate....................................... 76% 173% 159% 137%
Average commission rate paid per share........................ $ 0.0580 $ 0.0621 N/A N/A
NET ASSETS END OF PERIOD (THOUSANDS).......................... $ 162,847 $154,825 $135,079 $99,569
<CAPTION>
1993
<S> <C>
- --------------------------------------------------------------
CLASS A SHARES
NET ASSET VALUE BEGINNING OF PERIOD........................... $ 15.84
-------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss).................................. (0.07)
Net realized and unrealized gain (loss) on investments........ 3.07
-------
Total from investment operations.............................. 3.00
-------
LESS DISTRIBUTIONS FROM
Net investment income......................................... 0
In excess of net investment income............................ 0
Net realized gain on investments.............................. (1.73)
-------
Total distributions........................................... (1.73)
-------
NET ASSET VALUE END OF PERIOD................................. $ 17.11
-------
Total return +................................................ 19.33%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses.............................................. 1.51%
Total expenses, excluding indirectly paid expenses.......... N/A
Net investment income (loss)................................ (.48%)
Portfolio turnover rate....................................... 162%
Average commission rate paid per share........................ N/A
NET ASSETS END OF PERIOD (THOUSANDS).......................... $90,404
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------
1992| 1991 1990 1989 1988 1987
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES (continued)
NET ASSET VALUE BEGINNING OF PERIOD............................. $ 17.68 $ 13.37 $ 16.03 $ 13.66 $ 12.08 $ 13.44
------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss).................................... 0 (0.04) 0.11 0.17 0.30(a) 0.02
Net realized and unrealized gain (loss) on investments.......... 0.39 6.92 (0.39) 4.30 1.40 1.11
------- ------- ------- ------- ------- -------
Total from investment operations................................ 0.39 6.88 (0.28) 4.47 1.70 1.13
------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS FROM
Net investment income (loss).................................... 0 (0.02) (0.25) (0.20) (0.12) (0.24)
In excess of net investment income.............................. 0 (0.05) (0.04) 0 0 0
Net realized gain on investments................................ (2.23) (2.50) (2.09) (1.90) 0 (2.25)
------- ------- ------- ------- ------- -------
Total distributions............................................. (2.23) (2.57) (2.38) (2.10) (0.12) (2.49)
------- ------- ------- ------- ------- -------
NET ASSET VALUE END OF PERIOD................................... $ 15.84 $ 17.68 $ 13.37 $ 16.03 $ 13.66 $ 12.08
------- ------- ------- ------- ------- -------
Total return +.................................................. 4.00% 54.49% (2.38%) 33.05% 14.05% 8.27%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses................................................ 1.52% 1.57% 1.73% 1.84% 1.78% 1.99%
Total expenses, excluding indirectly paid expenses............ N/A N/A N/A N/A N/A N/A
Net investment income......................................... (0.01%) (0.31%) 0.70% 1.03% 2.22% 0.13%
Portfolio turnover rate......................................... 176% 115% 108% 77% 84% 106%
Average commission rate paid per share.......................... N/A N/A N/A N/A N/A N/A
NET ASSETS END OF PERIOD (THOUSANDS)............................ $73,144 $58,671 $38,531 $39,682 $33,951 $30,246
</TABLE>
| Calculated based on average shares outstanding throughout the period.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
# The Fund changed its fiscal year end from December 31 to September 30,
effective September 30, 1997.
(a) Includes $0.17 per share relating to a special non-recurring distribution
from Inco Limited.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
33
<PAGE>
EVERGREEN
OMEGA FUND
(Pine tree logo
appears here.)-------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
NINE MONTHS YEAR ENDED DECEMBER 31,
ENDED -----------------------------
SEPTEMBER 30, 1997#| 1996 1995 1994
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
NET ASSET VALUE BEGINNING OF PERIOD............................. $ 18.83 $ 19.10 $ 15.34 $ 17.06
-------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss).................................... (0.15) (0.17) (0.09) (0.06)
Net realized and unrealized gain (loss) on investments.......... 3.88 2.03 5.41 (1.60)
-------- ------- ------- -------
Total from investment operations................................ 3.73 1.86 5.32 (1.66)
-------- ------- ------- -------
LESS DISTRIBUTIONS FROM
Net realized gain on investments................................ (0.85) (2.13) (1.56) (0.06)
-------- ------- ------- -------
Total distributions............................................. (0.85) (2.13) (1.56) (0.06)
-------- ------- ------- -------
NET ASSET VALUE END OF PERIOD................................... $ 21.71 $ 18.83 $ 19.10 $ 15.34
-------- ------- ------- -------
Total return +.................................................. 20.68% 10.31% 35.70% (6.57%)
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses................................................ 2.18%++ 2.20% 2.29% 2.30%
Total expenses, excluding indirectly paid expenses............ 2.17%++ 2.18% 2.27% N/A
Net investment income (loss).................................. (1.06%)++ (1.15%) (0.94%) (0.58%)
Portfolio turnover rate......................................... 76% 173% 159% 137%
Average commission rate paid per share.......................... $ 0.0580 $0.0621 N/A N/A
NET ASSETS END OF PERIOD (THOUSANDS)............................ $ 110,349 $89,921 $71,636 $32,266
<CAPTION>
1993*
<S> <C>
- ----------------------------------------------------------------
CLASS B SHARES
NET ASSET VALUE BEGINNING OF PERIOD............................. $ 17.29
-------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss).................................... (0.05)
Net realized and unrealized gain (loss) on investments.......... 1.55
-------
Total from investment operations................................ 1.50
-------
LESS DISTRIBUTIONS FROM
Net realized gain on investments................................ (1.73)
-------
Total distributions............................................. (1.73)
-------
NET ASSET VALUE END OF PERIOD................................... $ 17.06
-------
Total return +.................................................. 9.02%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses................................................ 2.57%++
Total expenses, excluding indirectly paid expenses............ N/A
Net investment income (loss).................................. (1.73%)++
Portfolio turnover rate......................................... 162%
Average commission rate paid per share.......................... N/A
NET ASSETS END OF PERIOD (THOUSANDS)............................ $ 7,423
</TABLE>
| Calculated based on average shares outstanding throughout the period.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from August 2, 1993 (Date of initial public offering) to
December 31, 1993.
# The Fund changed its fiscal year end from December 31 to September 30,
effective September 30, 1997.
<TABLE>
<CAPTION>
NINE MONTHS YEAR ENDED DECEMBER 31,
ENDED ----------------------------
SEPTEMBER 30, 1997#| 1996 1995 1994
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
NET ASSET VALUE BEGINNING OF PERIOD............................... $ 18.86 $ 19.13 $ 15.37 $17.09
------- ------- ------- ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)...................................... (0.15) (0.18) (0.13) (0.07)
Net realized and unrealized gain (loss) on investments............ 3.88 2.04 5.45 (1.04)
------- ------- ------- ------
Total from investment operations.................................. 3.73 1.86 5.32 (1.11)
------- ------- ------- ------
LESS DISTRIBUTIONS FROM
Net realized gain on investments.................................. (0.85) (2.13) (1.56) (0.61)
------- ------- ------- ------
Total distributions............................................... (0.85) (2.13) (1.56) (0.61)
------- ------- ------- ------
NET ASSET VALUE END OF PERIOD..................................... $ 21.74 $ 18.86 $ 19.13 $15.37
------- ------- ------- ------
Total return +.................................................... 20.65% 10.29% 35.62% (6.56%)
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses.................................................. 2.18%++ 2.21% 2.30% 2.30%
Total expenses, excluding indirectly paid expenses.............. 2.17%++ N/A N/A N/A
Net investment income........................................... (1.05%)++ (1.17%) (0.91%) (0.63%)
Portfolio turnover rate........................................... 76% 173% 159% 137%
Average commission rate paid per share............................ $0.0580 $0.0621 N/A N/A
NET ASSETS END OF PERIOD (THOUSANDS).............................. $16,067 $17,628 $13,963 $9,900
<CAPTION>
1993*
<S> <C>
- ------------------------------------------------------------------
CLASS C SHARES
NET ASSET VALUE BEGINNING OF PERIOD............................... $17.29
------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)...................................... (0.06)
Net realized and unrealized gain (loss) on investments............ 1.59
------
Total from investment operations.................................. 1.53
------
LESS DISTRIBUTIONS FROM
Net realized gain on investments.................................. (1.73)
------
Total distributions............................................... (1.73)
------
NET ASSET VALUE END OF PERIOD..................................... $17.09
------
Total return +.................................................... 9.20%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses.................................................. 2.48%++
Total expenses, excluding indirectly paid expenses.............. N/A
Net investment income........................................... (1.64%)++
Portfolio turnover rate........................................... 162%
Average commission rate paid per share............................ N/A
NET ASSETS END OF PERIOD (THOUSANDS).............................. $3,620
</TABLE>
| Calculated based on average shares outstanding throughout the period.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from August 2, 1993 (Date of initial public offering) to
December 31, 1993.
# The Fund changed its fiscal year end from December 31 to September 30,
effective September 30, 1997.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
34
<PAGE>
EVERGREEN
OMEGA FUND
- ----------------------------------------------------------(Pine tree
logo appears here.)
FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
FOR THE PERIOD FROM
JANUARY 13, 1997
(DATE OF INITIAL
PUBLIC OFFERING)
TO SEPTEMBER 30, 1997|
<S> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS Y SHARES
NET ASSET VALUE BEGINNING OF PERIOD............................................................. $ 19.98
-------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss............................................................................. (0.01)
Net realized and unrealized gain on investments................................................. 3.56
-------
Total from investment operations................................................................ 3.55
-------
LESS DISTRIBUTIONS FROM
Net realized gain on investments................................................................ (0.85)
-------
Total distributions............................................................................. (0.85)
-------
NET ASSET VALUE END OF PERIOD................................................................... $ 22.68
-------
Total return.................................................................................... 18.60%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS
Total expenses................................................................................ 1.24%++
Total expenses, excluding indirectly paid expenses............................................ 1.24%++
Net investment income (loss).................................................................. (0.21%)++
Portfolio turnover rate......................................................................... 76%
Average commission rate paid per share.......................................................... $ 0.0580
NET ASSETS END OF PERIOD (THOUSANDS)............................................................ $ 5
</TABLE>
| Calculated based on average shares outstanding throughout the period.
++ Annualized, amounts calculated for period from July 23, 1997 (commencement of
class operations) to September 30, 1997.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
35
<PAGE>
EVERGREEN
EVERGREEN FUND
(Pine tree logo
appears here.)-------------------------------------------------------------
SCHEDULE OF INVESTMENTS
September 30, 1997
<TABLE>
<CAPTION>
SHARES VALUE
- -------------------------------------------------------------------
COMMON STOCKS-- 83.3%
<S> <C> <C> <C>
BANKS-- 16.0%
396,022 1st Source Corp................. $ 11,063,865
50,000 1st United Bancorp.............. 1,087,500
90,450 Amcore Financial, Inc........... 2,057,738
100,000 * American Bancshares, Inc........ 1,275,000
111,650 AmSouth Bancorp................. 5,408,047
1,500 Anchor Financial Corp........... 49,500
115,767 Arrow Financial Corp............ 3,444,068
110,450 Banc One Corp................... 6,164,491
22,500 Bank of Commerce/San Diego...... 540,000
532,240 BankBoston Corp................. 47,069,975
516,640 Barnett Banks, Inc.............. 36,552,280
87,281 BB & T Corp..................... 4,664,078
242,437 BSB Bancorp, Inc................ 6,667,017
63,000 Cape Cod Bank & Trust Co........ 2,157,750
44,500 CCB Financial Corp.............. 3,587,813
45,000 Central Fidelity Banks, Inc..... 1,991,250
35,000 * Century Bancshares Inc.......... 308,438
130,015 Chittenden Corp................. 5,005,577
40,000 * Columbia Banking Systems, Inc... 920,000
77,000 Comerica, Inc................... 6,078,187
19,200 Compass Bancshares, Inc......... 746,400
99,380 Cornerstone Bank **............. 1,931,699
70,000 Corus Bankshares, Inc........... 2,528,750
70,000 Crestar Financial Corp.......... 3,281,250
14,800 Cullen/Frost Bankers, Inc....... 701,150
30,013 F.N.B. Corp..................... 949,161
127,000 First Empire State Corp......... 52,705,000
185,100 First Palm Beach Bancorp, Inc... 6,443,794
62,500 First State Bancorp............. 1,210,938
225,525 Fort Wayne National Corp........ 8,034,328
54,903 Glacier Bancorp Inc............. 1,036,294
105,000 Gold Banc Corp., Inc............ 1,995,000
889,540 Hibernia Corp. Cl. A............ 15,122,180
24,200 Hudson Chartered Bancorp, Inc... 810,700
37,500 Independent Bancshares, Inc..... 682,031
7,000 Letchworth Independent
Bancshares Corp............... 318,500
10,000 * Letchworth Independent
Bancshares Corp. Warrants--
$23, expiring 12/31/97........ 230,000
67,779 Magna Group, Inc................ 2,673,034
11,000 Merchants Bancorp, Inc.......... 540,375
100,000 North Fork Bancorp, Inc......... 2,900,000
89,923 Old Kent Financial Corp......... 5,800,033
56,000 ONBANCorp, Inc.................. 3,206,000
33,594 One Valley Bancorp of West
Virginia, Inc................. 1,242,969
54,692 Providian Financial Corp........ 2,170,589
90,000 Reliance Acceptance Group,
Inc........................... 275,625
56,000 Sandwich Co-operative Bank...... 2,072,000
100,000 * SC Bancorp...................... 1,362,500
50,000 Seacoast Banking Corp. of
Florida Cl. A................. 1,775,000
<CAPTION>
SHARES VALUE
- -------------------------------------------------------------------
COMMON STOCKS-- CONTINUED
<S> <C> <C> <C>
BANKS-- CONTINUED
113,760 State Financial Services Corp... $ 2,588,040
93,975 Summit Bancorp.................. 4,176,014
455,200 * Surety Capital Corp. **......... 2,901,900
97,405 * United Security Bancorp......... 1,814,168
39,285 Univest Corp. of Pennsylvania... 1,885,680
10,000 USBancorp, Inc.................. 645,000
17,000 Webster Financial Corp.......... 998,750
35,425 West Coast Bancorp, Inc.
(Ore.)........................ 1,098,175
--------------
284,945,601
--------------
BUILDING, CONSTRUCTION &
FURNISHINGS-- 3.5%
70,000 Burcon International Ltd........ 828,118
30,000 * Castle & Cooke, Inc............. 588,750
151,250 Cavalier Homes, Inc............. 1,569,219
421,625 Clayton Homes, Inc.............. 7,826,414
138,600 Continental Homes Holding Corp.
.............................. 4,062,712
242,360 * D.R. Horton, Inc................ 3,817,170
80,000 * Furniture Brands International,
Inc........................... 1,510,000
120,900 Interface Systems, Inc.......... 3,521,212
95,800 Juno Lighting, Inc.............. 1,640,575
70,000 * Knoll, Inc...................... 2,345,000
105,000 La-Z-Boy Chair Co............... 3,885,000
20,000 Lennar Corp..................... 850,000
159,700 * M/I Schottenstein Homes, Inc.... 2,465,369
30,000 Miller (Herman), Inc............ 1,605,000
22,500 * Monaco Coach Corp............... 531,563
230,000 * Pacific Greystone Corp.......... 4,571,250
22,600 * Palm Harbor Homes, Inc.......... 666,700
10,000 * Royal Group Technologies Ltd.... 286,875
100,000 * Southern Energy Homes, Inc. .... 1,056,250
89,900 Standard Pacific Corp........... 943,950
40,600 * Stanley Furniture Co., Inc...... 1,086,050
90,000 * Sundance Homes, Inc............. 149,063
538,600 * Toll Brothers, Inc.............. 12,522,450
121,500 * US Home Corp.................... 4,692,937
--------------
63,021,627
--------------
BUSINESS EQUIPMENT &
SERVICES-- 2.0%
126,900 Fair Issac & Co., Inc........... 5,615,325
297,130 First Data Corp................. 11,160,946
84,800 * Gradco Systems, Inc............. 752,600
140,000 * Hvide Marine Inc................ 4,480,000
90,000 * In Focus Systems, Inc........... 2,013,750
113,000 * Input/Output, Inc............... 3,347,625
100,000 * Macromedia, Inc................. 1,206,250
57,000 * Metromail Corp.................. 1,150,687
154,700 * Zebra Technologies Corp......... 5,530,525
--------------
35,257,708
--------------
</TABLE>
(CONTINUED)
36
<PAGE>
EVERGREEN
EVERGREEN FUND
- ----------------------------------------------------------(Pine tree
logo appears here.)
SCHEDULE OF INVESTMENTS (CONTINUED)
September 30, 1997
<TABLE>
<CAPTION>
SHARES VALUE
- -------------------------------------------------------------------
COMMON STOCKS-- CONTINUED
<S> <C> <C> <C>
CHEMICAL & AGRICULTURAL
PRODUCTS-- 1.7%
46,666 Delta & Pine Land Co............ $ 1,502,062
150,000 H.B. Fuller Co.................. 8,128,125
40,000 Nalco Chemical Co............... 1,602,500
16,500 OM Group, Inc................... 658,969
359,568 Schulman (A.), Inc.............. 7,685,766
317,500 Sigma-Aldrich Corp.............. 10,457,656
11,700 Tredegar Industries, Inc........ 821,925
--------------
30,857,003
--------------
COMMUNICATION SYSTEMS &
SERVICES-- 2.4%
264,250 * Andrew Corp..................... 6,920,047
158,000 * Aspect Telecommunications
Corp.......................... 3,693,250
80,000 * Boston Technology, Inc.......... 2,710,000
30,000 * Cellularvision USA, Inc......... 236,250
110,000 * Cisco Systems, Inc.............. 8,036,875
50,000 * Coherent Communications System
Corp.......................... 1,418,750
116,000 * Coherent, Inc................... 6,423,500
50,000 * DSP Group, Inc.................. 1,962,500
60,000 * Inter-Tel, Inc.................. 3,180,000
165,000 * Powertel Corp................... 3,135,000
30,000 * Tellabs, Inc.................... 1,545,000
140,000 * Vertex Communications Corp...... 3,377,500
--------------
42,638,672
--------------
CONSUMER PRODUCTS &
SERVICES-- 4.1%
140,000 Aaron Rents, Inc. Cl. B......... 2,450,000
150,000 * American Business Information,
Inc........................... 4,068,750
105,000 Commonwealth Industries, Inc.... 2,021,250
151,300 Crown Crafts, Inc............... 2,193,850
339,795 * CUC International, Inc.......... 10,533,645
25,000 * Deckers Outdoor Corp............ 195,313
100,000 * Gaylord Container Corp. Cl. A... 850,000
30,000 Gucci Group..................... 1,406,250
354,150 Harman International Industries,
Inc........................... 17,729,634
201,030 K2, Inc......................... 5,050,879
177,777 Lancaster Colony Corp........... 9,444,403
122,500 * LoJack Corp..................... 1,745,625
100,000 * Nautica Enterprises, Inc........ 2,812,500
54,400 Nike, Inc....................... 2,883,200
70,000 Noble Affiliates, Inc........... 3,132,500
65,000 * North Face, Inc. (The).......... 1,746,875
60,000 * Recovery Engineering, Inc....... 1,635,000
53,800 Toro Co. (The).................. 2,131,825
--------------
72,031,499
--------------
<CAPTION>
SHARES VALUE
- -------------------------------------------------------------------
<CAPTION>
COMMON STOCKS-- CONTINUED
<S> <C> <C> <C>
ELECTRICAL EQUIPMENT &
SERVICES-- 2.5%
90,000 * ADFlex Solutions, Inc........... $ 2,193,750
285,400 * Atmel Corp...................... 10,399,262
291,700 Baldor Electric Co.............. 8,878,619
50,000 * Computer Products, Inc.......... 1,487,500
42,500 * Dupont Photomasks, Inc.......... 3,060,000
50,000 * Electro Scientific Industries,
Inc........................... 3,050,000
27,000 Franklin Electric Co., Inc...... 1,512,000
120,000 * Hadco Corp...................... 6,498,750
102,500 * IFR Systems, Inc................ 3,382,500
22,500 * Reliability Inc................. 973,125
41,500 * SMART Modular Technologies,
Inc........................... 3,444,500
--------------
44,880,006
--------------
ENERGY-- 1.1%
10,000 * Barrett Resources Corp.......... 389,375
100,000 * COHO Energy Inc................. 1,131,250
20,000 * Global Marine, Inc.............. 665,000
30,000 KN Energy, Inc.................. 1,372,500
50,000 * Noble Drilling Corp............. 1,612,500
20,000 Penn Virginia Corp.............. 596,250
36,300 Precision Drilling Corp......... 2,318,663
80,000 Ranger Oil Ltd.................. 750,000
100,000 * Reading & Bates Corp............ 4,156,250
30,000 * Stolt Comex Seaway, S.A......... 1,876,875
118,590 Tosco Corp...................... 4,128,414
--------------
18,997,077
--------------
FINANCE & INSURANCE-- 9.3%
23,969 Aegon N.V....................... 1,910,030
71,228 Allmerica Financial Corp........ 3,129,580
368,800 AMBAC, Inc...................... 15,005,550
58,000 CapMAC Holdings Inc............. 1,874,125
111,900 Countrywide Credit Industries,
Inc........................... 4,077,356
220,000 Edwards (A.G.), Inc............. 11,302,500
29,100 Enhance Financial Services
Group, Inc.................... 1,593,225
20,500 Equitable of Iowa Companies..... 1,373,500
100,000 Executive Risk, Inc............. 6,837,500
507,600 Federal Home Loan Mortgage
Corp.......................... 17,892,900
618,000 Federal National Mortgage
Association................... 29,046,000
68,000 First American Financial Corp... 4,080,000
50,000 * First Enterprise Financial
Group......................... 237,500
85,000 * FPIC Insurance Group, Inc....... 2,507,500
95,100 Interra Financial, Inc.......... 5,711,944
50,000 * Itla Capital Corp............... 1,012,500
</TABLE>
(CONTINUED)
37
<PAGE>
EVERGREEN
EVERGREEN FUND
(Pine tree logo
appears here.)-------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
September 30, 1997
<TABLE>
<CAPTION>
SHARES VALUE
- -------------------------------------------------------------------
COMMON STOCKS-- CONTINUED
<S> <C> <C> <C>
FINANCE & INSURANCE-- CONTINUED
108,100 John Nuveen Co. (The) Cl. A..... $ 3,749,719
30,333 Legg Mason, Inc................. 1,600,083
44,000 * Life USA Holdings, Inc.......... 709,500
37,200 MBIA, Inc....................... 4,666,275
75,000 * Mego Mortgage Corp.............. 1,012,500
507,600 MGIC Investment Corp............ 29,091,825
19,100 Mutual Risk Management Ltd...... 970,519
15,000 Ohio Casualty Corp.............. 695,625
100,000 Penn-America Group, Inc......... 2,025,000
16,600 PennCorp Financial Group, Inc... 514,600
20,000 Price (T.) Rowe & Associates,
Inc........................... 1,345,000
86,000 ReliaStar Financial Corp........ 3,423,875
71,531 Resource Bancshares Mortgage
Group, Inc.................... 934,374
30,000 State Auto Financial Corp....... 678,750
52,500 SunAmerica, Inc................. 2,057,344
89,250 Trenwick Group, Inc............. 3,369,187
14,100 Vesta Insurance Group, Inc...... 803,700
--------------
165,239,586
--------------
FOOD RETAILING &
DISTRIBUTION-- 0.4%
16,500 Coca Cola Bottling Co........... 948,750
268,000 Seaway Food Town, Inc. **....... 4,757,000
40,000 Wendy's International, Inc...... 850,000
--------------
6,555,750
--------------
HEALTHCARE PRODUCTS &
SERVICES-- 10.7%
30,000 * Abiomed, Inc.................... 517,500
50,000 Arbor Drugs, Inc................ 1,162,500
60,000 Arrow International, Inc........ 1,987,500
35,000 * Arterial Vascular Engineering,
Inc. ......................... 1,942,500
100,000 Beckman Instruments, Inc........ 4,256,250
130,000 * Beverly Enterprises, Inc........ 2,258,750
18,750 * Bio-Rad Laboratories, Inc. Cl.
A............................. 562,500
190,000 Biomet, Inc..................... 4,560,000
68,298 * Boston Scientific Corp.......... 3,769,196
115,000 * Chad Therapeutics, Inc.......... 1,171,562
205,300 Columbia / HCA Healthcare Corp.
.............................. 5,902,375
8,025 * Coram Healthcare Corp.
Warrants-- $22.125, expiring
7/11/99+...................... 0
5,000 Empi, Inc....................... 120,000
112,800 * Exactech, Inc................... 761,400
40,000 * Express Scripts, Inc............ 2,155,000
67,666 * Foundation Health Systems,
Inc........................... 2,165,312
220,000 HBO & Co........................ 8,305,000
47,050 * Health Management Associates,
Inc........................... 1,487,956
23,600 * HEALTHSOUTH Corp................ 629,825
20,000 * Heartstream, Inc................ 200,000
<CAPTION>
SHARES VALUE
- -------------------------------------------------------------------
COMMON STOCKS-- CONTINUED
<S> <C> <C> <C>
HEALTHCARE PRODUCTS &
SERVICES-- CONTINUED
149,000 * Hologic, Inc.................... $ 4,181,312
300,000 * Idexx Laboratories, Inc......... 5,025,000
30,000 Invacare Corp................... 705,000
390,000 Johnson & Johnson............... 22,473,750
69,100 * Laser Industries, Ltd........... 1,191,975
13,400 * Lincare Holdings, Inc........... 675,863
145,600 * Living Centers of America,
Inc........................... 5,933,200
43,100 * Maxxim Medical, Inc............. 1,120,600
117,900 McKesson Corp................... 12,018,431
99,400 * Medic Computer Systems, Inc..... 3,404,450
144,361 MedPartners/Mullikin, Inc....... 3,094,739
500,000 Merck & Co., Inc................ 49,968,750
35,000 Meridian Diagnostics, Inc....... 415,625
1,446 Pacificare Health Systems, Inc.
Cl. A......................... 95,436
4,545 * Pacificare Health Systems, Inc.
Cl. B......................... 309,628
135,000 * Regency Health Services, Inc.... 2,953,125
107,500 * St. Jude Medical, Inc........... 3,769,219
468,000 * Stryker Corp.................... 20,445,750
90,000 * Sun Healthcare Group, Inc....... 1,850,625
75,750 * Tecnol Medical Products, Inc.... 1,524,469
72,950 * Tenet Healthcare Corp........... 2,124,669
26,500 U.S. Surgical Corp.............. 773,469
45,600 West Co., Inc. (The)............ 1,504,800
--------------
189,475,011
--------------
INDUSTRIAL SPECIALTY PRODUCTS &
SERVICES-- 7.5%
121,000 AptarGroup, Inc................. 6,768,437
33,000 BHA Group, Inc.................. 569,250
77,500 * Brooks Automation, Inc.......... 2,974,063
150,000 Cadmus Communications Corp...... 3,075,000
40,500 * Chemfab Corp.................... 870,750
145,000 * Dionex Corp..................... 7,820,937
61,000 Dover Corp...................... 4,140,375
186,200 Fisher Scientific International,
Inc........................... 8,739,762
95,700 Furon Co........................ 3,929,681
43,200 * Global Industrial Technologies,
Inc........................... 893,700
70,000 * Global Industries, Inc.......... 2,791,250
70,000 Kaydon Corp..................... 4,200,000
92,900 * Lear Corp....................... 4,575,325
180,800 Leggett & Platt, Inc............ 8,056,900
61,900 Medusa Corp..................... 2,947,988
18,400 Nacco Industries, Inc. Cl. A.... 2,163,150
66,000 * Osmonics, Inc................... 1,084,875
140,700 * Park Electrochemical Corp....... 4,080,300
266,697 * Paxar Corp...................... 5,250,597
133,200 Robbins & Myers, Inc............ 5,128,200
30,000 * Simula, Inc..................... 581,250
241,500 Snap-on, Inc.................... 11,124,094
</TABLE>
(CONTINUED)
38
<PAGE>
EVERGREEN
EVERGREEN FUND
- ----------------------------------------------------------(Pine tree
logo appears here.)
SCHEDULE OF INVESTMENTS (CONTINUED)
September 30, 1997
<TABLE>
<CAPTION>
SHARES VALUE
- -------------------------------------------------------------------
COMMON STOCKS-- CONTINUED
<S> <C> <C> <C>
INDUSTRIAL SPECIALTY PRODUCTS &
SERVICES-- CONTINUED
185,000 Spartech Corp................... $ 2,775,000
20,000 * Special Devices, Inc............ 562,500
35,800 Superior Industries
International, Inc............ 991,213
147,200 Tecumseh Products Co. Cl. A..... 8,197,200
57,800 Tecumseh Products Co. Cl. B..... 3,193,450
230,000 Teleflex, Inc................... 7,963,750
20,000 * U.S. Rentals, Inc............... 526,250
202,400 * UCAR International, Inc......... 9,664,600
50,000 Wescast Industries, Inc......... 1,660,156
104,000 Woodward Governor Co............ 3,685,500
90,000 Zero Corp....................... 2,548,125
--------------
133,533,628
--------------
INFORMATION SERVICES &
TECHNOLOGY-- 7.8%
89,850 * Analytical Surveys, Inc......... 2,055,319
120,000 Autodesk, Inc................... 5,445,000
50,000 Computer Associates
International, Inc............ 3,590,625
120,000 * Dialogic Corp................... 5,160,000
380,000 * Gateway 2000, Inc............... 11,946,250
402,000 Hewlett-Packard Co.............. 27,964,125
428,000 Intel Corp...................... 39,509,750
170,000 * Intel Corp. Warrants-- $41.75,
expiring 3/14/98.............. 12,250,625
96,796 Molex, Inc...................... 4,295,322
22,500 * National Instruments Corp....... 1,043,438
145,000 * Parametric Technology Corp...... 6,398,125
406,000 * Sun Microsystems, Inc........... 19,005,875
44,000 * Trimble Navigation, Ltd......... 863,500
--------------
139,527,954
--------------
PAPER & PACKAGING-- 0.4%
30,400 Avery Dennison Corp............. 1,216,000
21,000 St. Joe Corp.................... 2,079,000
186,662 Wausau Paper Mills Co........... 4,573,219
--------------
7,868,219
--------------
PUBLISHING, BROADCASTING &
ENTERTAINMENT-- 5.0%
45,000 * American Radio Systems Corp. ... 2,143,125
252,000 Belo (A.H.) Corp................ 12,222,000
22,500 * Chancellor Media Corp........... 1,184,063
857,000 * Clear Channel Communications,
Inc........................... 55,597,875
30,000 Gaylord Entertainment Co. Cl.
A............................. 774,375
205,800 * Jacor Communications, Inc....... 9,093,787
125,000 * Obie Media Corp................. 859,375
190,000 Wiley (John) & Sons, Inc. Cl.
A............................. 7,279,375
--------------
89,153,975
--------------
<CAPTION>
SHARES VALUE
- -------------------------------------------------------------------
COMMON STOCKS-- CONTINUED
<S> <C> <C> <C>
REAL ESTATE-- 3.0%
138,960 * Alexander's, Inc. REIT.......... $ 11,429,460
46,200 Apartment Investment &
Management Co. Cl. A REIT..... 1,668,975
19,900 Arden Realty, Inc. REIT......... 624,363
137,500 * Candlewood Hotel Co., Inc....... 1,495,313
303,100 * Champion Enterprises, Inc....... 5,796,787
54,000 Chelsea GCA Realty, Inc. REIT... 2,254,500
19,062 Equity Residential Properties
Trust REIT.................... 1,040,070
47,400 * FRP Properties, Inc............. 1,611,600
188,300 * HFS, Inc........................ 14,016,581
118,000 * Homegate Hospitality, Inc....... 1,563,500
50,000 Horizon Group, Inc. REIT........ 603,125
140,000 * Host Marriott Corp.............. 3,185,000
20,000 Irvine Apartment Communities,
Inc. REIT..................... 667,500
10,000 * John Q. Hammons Hotels, Inc.
Class A....................... 87,500
250,000 * Prime Hospitality Corp.......... 5,640,625
115,000 * Servico, Inc.................... 1,969,375
7,625 * Wellsford Real Properties Inc.
144A.......................... 122,000
--------------
53,776,274
--------------
RETAILING & WHOLESALE-- 3.1%
140,000 Avnet, Inc...................... 8,898,750
25,000 * Carson Pirie Scott & Co......... 985,938
180,000 * Cole National Corp.............. 7,481,250
90,000 * Costco Companies Inc............ 3,386,250
108,200 Dillards, Inc................... 4,740,512
256,800 Fingerhut Companies, Inc........ 5,778,000
50,000 * Footstar, Inc................... 1,346,875
178,000 Heilig-Meyers Co................ 2,736,750
80,000 * Home Products International,
Inc........................... 1,170,000
34,800 IMC Global, Inc................. 1,226,700
60,800 * Jones Apparel Group, Inc........ 3,283,200
131,000 Lowe's Companies, Inc........... 5,092,625
122,900 Mercantile Stores Co., Inc...... 7,735,019
29,500 * Payless Shoesource, Inc......... 1,760,781
--------------
55,622,650
--------------
THRIFT INSTITUTIONS-- 0.8%
295,000 Dime Financial Corp. **......... 9,218,750
73,500 * Hawthorne Financial Corp........ 1,323,000
65,000 Maryland Federal Bancorp, Inc... 3,071,250
--------------
13,613,000
--------------
TRANSPORTATION-- 2.0%
125,000 ASA Holdings, Inc............... 3,515,625
88,000 Delta Air Lines, Inc............ 8,288,500
217,465 * Heartland Express, Inc.......... 6,007,471
100,000 * Offshore Logistics, Inc......... 1,800,000
</TABLE>
(CONTINUED)
39
<PAGE>
EVERGREEN
EVERGREEN FUND
(Pine tree logo
appears here.)-------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
September 30, 1997
<TABLE>
<CAPTION>
SHARES VALUE
- -------------------------------------------------------------------
COMMON STOCKS-- CONTINUED
<S> <C> <C> <C>
TRANSPORTATION-- CONTINUED
13,000 Pittston Brink's Group.......... $ 520,812
75,000 Skywest, Inc.................... 1,481,250
289,000 Southwest Airlines Co........... 9,229,937
120,000 U.S. Freightways Corp........... 4,035,000
--------------
34,878,595
--------------
TOTAL COMMON STOCKS
(COST $679,829,213)........... 1,481,873,835
--------------
<CAPTION>
PRINCIPAL
AMOUNT
- -----------
SHORT-TERM INVESTMENTS-- 17.0%
<S> <C> <C> <C>
COMMERCIAL PAPER-- 11.7%
AC Acquisition Holding Co.
$18,300,000 5.49%, 10/6/97.................. 18,286,047
5,150,000 5.50%, 11/7/97.................. 5,120,888
20,050,000 Associates First Capital Corp.
5.52%, 10/28/97............... 19,966,993
24,900,000 Bell Atlantic Financial
Services, Inc.
5.50%, 10/24/97............... 24,812,504
3,150,000 BIL North America, Inc.
5.51%, 10/20/97............... 3,140,840
20,275,000 BMW U.S. Capital Corp.
5.51%, 10/28/97............... 20,191,213
2,400,000 Corporate Asset Fund
5.50%, 11/7/97................ 2,386,433
26,650,000 Daimler-Benz North America Corp.
5.51%, 11/10/97............... 26,486,843
9,300,000 Duke Capital Corp.
5.57%, 10/6/97................ 9,292,805
885,000 Eiger Capital Corp.
5.52%, 10/9/97, LOC:Union
Bank.......................... 883,914
Finova Capital Corp.
6,965,000 5.55%, 10/22/97................. 6,942,451
12,860,000 5.55%, 11/7/97.................. 12,786,644
13,350,000 Gannett Co.
5.49%, 10/3/97................ 13,345,928
650,000 Mitsubishi International
5.53%, 10/15/97............... 648,602
12,600,000 Safeco Corp.
5.65%, 10/23/97............... 12,556,495
20,000,000 Sigma Finance Inc.
5.52%, 10/15/97............... 19,957,067
10,400,000 Tiger Managers Accept Corp.
5.55%, 10/7/97................ 10,390,380
1,350,000 Triple A One Funding Corp.
5.53%, 10/6/97................ 1,348,963
--------------
208,545,010
--------------
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------
SHORT-TERM INVESTMENTS-- CONTINUED
<S> <C> <C> <C>
U.S. GOVERNMENT AGENCY
OBLIGATIONS-- 5.3%
$21,850,000 Federal Home Loan Bank
5.40%, 10/10/97............... $ 21,820,502
22,350,000 Federal Home Loan Mortgage
Association
5.47%, 10/29/97............... 22,254,913
49,550,000 Federal National Mortgage
Association
5.47%, 10/24/97............... 49,376,837
--------------
93,452,252
--------------
TOTAL SHORT-TERM INVESTMENTS
(COST $301,997,262)........... 301,997,262
--------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
TOTAL INVESTMENTS--
(COST $981,826,475).... 100.3% 1,783,871,097
OTHER ASSETS AND
LIABILITIES-- NET...... (0.3) (5,774,703)
------- --------------
NET ASSETS............... 100.0% $1,778,096,394
-------- --------------
------- --------------
</TABLE>
ADS American Depository Shares
REIT Real Estate Investment Trust
144A 144A securities are restricted as to resale to qualified institutional
investors.
LOC Letter of Credit
* Non-income producing securities.
+ No market quotation available. Valued at fair value as determined in good
faith under procedures established by the Fund's Board of Trustees.
** Investment in non-controlled affiliate holding over 5% of outstanding voting
securities. At September 30, 1997, the Fund held investments in the following
securities:
<TABLE>
<CAPTION>
DIVIDENDS
SECURITY NAME SHARES COST VALUE EARNED
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------
Cornerstone Bank... 99,380 $1,089,310 $1,931,699 $27,713
Dime Financial
Corp............. 295,000 3,573,760 9,218,750 --
Seaway Food Town,
Inc.............. 268,000 1,563,474 4,757,000 61,640
Surety Capital
Corp. ........... 455,200 1,728,888 2,901,900 --
</TABLE>
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
40
<PAGE>
EVERGREEN
AGGRESSIVE GROWTH FUND
- ----------------------------------------------------------(Pine tree
logo appears here.)
SCHEDULE OF INVESTMENTS
September 30, 1997
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------
COMMON STOCKS-- 99.7%
<S> <C> <C> <C>
BUSINESS SERVICES-- 13.3%
350,000 * APAC TeleServices, Inc............ $ 4,571,875
101,500 * CSG Systems International, Inc.... 3,837,969
80,000 Danka Business Systems, ADR....... 3,560,000
170,000 First Data Corporation............ 6,385,625
25,000 * Fiserv, Inc....................... 1,096,875
127,500 Paychex, Inc...................... 4,446,562
25,000 * Saville Systems, Plc.............. 1,756,250
280,000 * Sitel Corporation................. 2,940,000
150,000 * Sterling Commerce, Inc............ 5,390,625
75,000 TSI International Software
* Limited......................... 993,750
------------
34,979,531
------------
COMMUNICATION SYSTEMS
& SERVICES-- 9.8%
160,000 * Cisco Systems, Inc................ 11,690,000
90,000 * Eletronics For Imaging, Inc....... 4,590,000
60,000 * MRV Communications, Inc........... 2,190,000
160,000 * P-COM, Inc........................ 3,830,000
100,000 * WorldCom, Inc..................... 3,537,500
------------
25,837,500
------------
CONSUMER DIVERSIFIED-- 2.9%
235,000 * Republic Industries, Inc.......... 7,740,313
------------
EDUCATIONAL SERVICES-- 0.7%
40,000 * Sylvan Learning Systems, Inc...... 1,755,000
------------
FINANCIAL-- 3.3%
90,000 * AMRESCO, Inc...................... 3,341,250
116,000 Green Tree Financial Corporation.. 5,452,000
------------
8,793,250
------------
HEALTHCARE-- 13.2%
50,000 * ArQule Inc........................ 1,050,000
50,000 HBO & Company..................... 1,887,500
100,000 Health Management Associates,
* Inc............................. 3,162,500
60,000 * HEALTHSOUTH Corporation........... 1,601,250
100,000 * Medic Computer Systems, Inc....... 3,425,000
105,000 Medicis Pharmaceutical
* Corporation..................... 4,816,875
108,750 * MedQuest, Inc..................... 2,542,031
150,000 Medtronic, Inc.................... 7,050,000
50,000 Mylan Laboratories, Inc........... 1,121,875
115,000 * PhyCor, Inc....................... 3,342,188
135,000 * Renal Care Group, Inc............. 4,860,000
------------
34,859,219
------------
SOFTWARE/TECHNOLOGY-- 15.4%
125,000 * American Power Conversion Corp.... 3,515,625
106,000 * BMC Software, Inc................. 6,863,500
75,000 * Computer Horizons Corp............ 2,718,750
52,500 * Etec Systems, Inc................. 2,992,500
125,000 * Harbinger Corp.................... 4,546,875
86,250 * McAfee Associates, Inc............ 4,571,250
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------
COMMON STOCKS-- CONTINUED
<S> <C> <C> <C>
SOFTWARE/TECHNOLOGY-- CONTINUED
65,000 * Microsoft Corporation............. $ 8,600,312
75,000 Parametric Technology
* Corporation..................... 3,309,375
45,000 * Uniphase Corporation.............. 3,577,500
------------
40,695,687
------------
EQUIPMENT RENTAL-- 0.7%
86,000 * Rental Service Corporation........ 1,929,625
------------
OIL/GAS-- DRILLING-- 16.9%
70,000 * Cliffs Drilling Company........... 4,873,750
80,000 Diamond Offshore Drilling, Inc.... 4,415,000
116,000 ENSCO International, Inc.......... 4,574,750
100,000 * Falcon DrillingCompany, Inc....... 3,531,250
115,000 * Global Marine, Inc................ 3,823,750
140,000 * Marine Drilling Companies, Inc.... 4,375,000
140,000 * Noble Drilling Corporation........ 4,515,000
90,000 * Patterson Energy, Inc............. 4,713,750
200,000 Transocean Offshore, Inc.......... 9,587,500
------------
44,409,750
------------
OIL/GAS-- EQUIPMENT
& SERVICES-- 11.1%
120,000 * EVI, Inc.......................... 7,680,000
128,000 * Global Industries Ltd............. 5,104,000
155,000 * Petroleum Geo-Services ADR........ 10,481,875
48,000 Schlumberger Ltd.................. 4,041,000
31,000 * SEACOR SMIT, Inc.................. 1,922,000
------------
29,228,875
------------
RETAILING (SPECIALTY)-- 12.4%
75,000 * Bed Bath & Beyond, Inc............ 2,634,375
120,000 * Central Garden & Pet Company...... 3,690,000
80,000 * Fastenal Company.................. 4,260,000
100,000 * Henry Schein, Inc................. 3,575,000
75,000 Home Depot, Inc................... 3,909,375
102,500 * Linens 'N Things, Inc............. 3,433,750
70,000 * Men's Wearhouse, Inc.............. 2,607,500
215,000 * Office Depot, Inc................. 4,340,313
806 * Sound Advice, Inc. Warrants,--
$8.70 expiring 6/14/99+......... 0
150,000 * Staples, Inc...................... 4,143,750
------------
32,594,063
------------
TOTAL COMMON STOCKS
(COST $159,677,827)............. 262,822,813
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
- ----------
<S> <C> <C>
CONVERTIBLE NOTES-- 0.0%
$ 85 Surgical Laser Technologies
8.00%, 7/30/99+.......... 0
------------
</TABLE>
(CONTINUED)
41
<PAGE>
EVERGREEN
AGGRESSIVE GROWTH FUND
(Pine tree logo
appears here.)-------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
September 30, 1997
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- -------------------------------------------------------------------
REPURCHASE AGREEMENT-- 0.2%
<S> <C> <C> <C> <C>
$ 515,000 State Street Bank & Trust Co.
5.00% dated 9/30/97, due 10/1/97,
maturity value $515,072.
(Cost-- $515,000)(a)............. $ 515,000
------------
TOTAL INVESTMENTS--
(COST $160,192,827)...... 99.9% 263,337,813
OTHER ASSETS AND
LIABILITIES-- NET........ 0.1 187,904
------- ------------
NET ASSETS................. 100.0% $263,525,717
------- -----------
------- ------------
</TABLE>
* Non-income producing securities.
+ No market quotation available. Valued at fair value as determined in good
faith under procedures established by the Funds' Board of Trustees.
(a) The repurchase agreement is fully collateralized by U.S. Government and/or
agency obligations based on market prices at September 30, 1997.
ADR American Depository Receipts
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
42
<PAGE>
EVERGREEN
MICRO CAP FUND, INC.
- --------------------------------------------------------(Pine cone logo
appears here.)
SCHEDULE OF INVESTMENTS
September 30, 1997
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------
COMMON STOCKS-- 100.9%
<S> <C> <C> <C>
AEROSPACE & DEFENSE-- 0.7%
9,900 * Ducommun, Inc.......................... $ 373,106
----------
BANKS-- 12.0%
19,360 BT Financial Corp...................... 895,400
10,000 CNB Financial Corp..................... 245,000
20,000 First Oak Brook Bancshares, Inc. Cl.
A.................................... 680,000
1,900 First West Virginia Bancorp, Inc. ++... 74,338
25,712 Independent Bank Corp.................. 838,854
2,700 Northern States Financial Corp......... 263,250
25,000 Norwich Financial Corp................. 725,000
5,000 Peoples Bancorp, Inc................... 202,500
17,500 Pinnacle Financial Services, Inc....... 613,594
20,000 Second Bancorp, Inc.................... 455,000
21,150 Washington Trust Bancorp, Inc.......... 650,362
31,250 West Coast Bancorp, Inc. (Ore.)........ 968,750
----------
6,612,048
----------
BUILDING, CONSTRUCTION & FURNISHINGS-- 3.7%
23,750 Cavalier Homes, Inc.................... 246,406
15,000 * Crossmann Communities, Inc............. 339,375
22,000 * Mity Lite, Inc......................... 401,500
20,000 * Modtech, Inc........................... 455,000
22,000 Republic Group, Inc.................... 412,500
20,000 * Southern Energy Homes, Inc............. 211,250
----------
2,066,031
----------
BUSINESS EQUIPMENT & SERVICES-- 7.9%
32,000 * Equitrac Corp.......................... 556,000
20,000 * Execustay Corp......................... 235,000
56,500 General Employment Enterprises, Inc.... 995,812
40,000 Graphic Industries, Inc................ 737,500
1,630 * Stevens International, Inc. Warrants--
$2.67 expiring 10/30/97 +............ 0
46,000 * TEAM America Corp...................... 483,000
32,000 * Uniflex, Inc........................... 230,000
25,000 Uniforce Services, Inc................. 765,625
14,200 * Union Corp. (The)...................... 340,800
----------
4,343,737
----------
CHEMICAL & AGRICULTURAL PRODUCTS-- 3.3%
21,600 Balchem Corp........................... 337,500
40,000 * Calnetics Corp......................... 275,000
37,800 Chase Corp............................. 446,513
51,318 Hawkins Chemical, Inc.................. 500,350
20,000 * JLM Industries, Inc.................... 247,500
----------
1,806,863
----------
CONSUMER PRODUCTS & SERVICES-- 7.5%
22,000 Bush Industries, Inc. Cl. A............ 609,125
35,000 Cooker Restaurant Corp................. 365,312
25,000 * Educational Development Corp........... 187,500
42,000 First Years, Inc. (The)................ 1,186,500
30,000 * Fountain Power Boat Industries, Inc.... 444,375
110,000 * Gotham Apparel Corp.**+................ 5,500
1,800 Oneida, Ltd............................ 63,900
15,000 Shelby Williams Industries, Inc........ 297,188
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------
COMMON STOCKS-- CONTINUED
<S> <C> <C> <C>
CONSUMER PRODUCTS & SERVICES-- CONTINUED
20,000 * Stanley Furniture, Inc................. $ 535,000
31,600 Stephan Co. (The)...................... 438,450
----------
4,132,850
----------
ELECTRICAL EQUIPMENT & SERVICES-- 7.3%
25,000 * Ault, Inc.............................. 215,625
38,000 Badger Meter, Inc. #................... 1,864,375
48,270 * Del Global Technologies Corp........... 515,886
5,000 * Graham Corp............................ 97,500
6,400 L.S. Starrett, Co. Cl. A............... 235,200
35,000 * Powell Industries, Inc................. 542,500
25,000 Power One, Inc......................... 350,000
21,000 Todd-AO Corp. (The) Cl. A.............. 233,625
----------
4,054,711
----------
ENERGY-- 1.4%
20,000 * Mitcham Industries, Inc................ 422,500
14,500 Prima Energy Corp. Co.................. 340,750
----------
763,250
----------
FINANCE & INSURANCE-- 5.4%
47,000 * ACE Cash Express, Inc.................. 898,875
21,600 * CorVel Corp............................ 826,200
10,000 * FPIC Insurance Group, Inc.............. 295,000
21,804 * Grand Premier Financial, Inc........... 280,726
20,000 * Penn Treaty American Corp.............. 660,000
----------
2,960,801
----------
FOOD RETAILING & DISTRIBUTION-- 1.0%
25,000 Worthington Foods, Inc................. 578,125
----------
HEALTHCARE PRODUCTS & SERVICES-- 10.7%
29,000 * Alcide Corp............................ 1,566,000
91,000 * Biosource International, Inc........... 574,437
33,666 Del Laboratories, Inc.................. 1,254,058
15,000 * Empi, Inc.............................. 360,000
25,000 Kewaunee Scientific Corp............... 312,500
20,000 * Laser Industries, Ltd.................. 345,000
26,100 Meridian Diagnostics, Inc.............. 309,938
60,000 * Mesa Laboratories, Inc................. 393,750
35,300 * Neogen Corp............................ 503,025
20,000 * Nutramax Products, Inc................. 282,500
----------
5,901,208
----------
INDUSTRIAL SPECIALTY PRODUCTS & SERVICES-- 17.3%
20,000 * AG Services of America, Inc............ 367,500
25,000 American Eco Corp...................... 325,000
24,900 American Precision Industries, Inc..... 569,587
8,700 Benthos, Inc........................... 239,250
25,000 * CEM Corp............................... 262,500
20,000 * Chemfab Corp........................... 430,000
20,000 CPAC, Inc.............................. 215,000
10,000 Fibermark, Inc......................... 208,125
40,000 General Bearing Corp................... 580,000
30,000 * Genlyte Group, Inc..................... 510,000
35,000 Gorman Rupp Co......................... 695,625
</TABLE>
(CONTINUED)
43
<PAGE>
EVERGREEN
MICRO CAP FUND, INC.
(Pine tree logo
appears here.)-------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
September 30, 1997
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------
COMMON STOCKS-- CONTINUED
<S> <C> <C> <C>
INDUSTRIAL SPECIALTY PRODUCTS & SERVICES--
CONTINUED
40,000 Meade Instruments Corp................. $ 385,000
53,250 Met-Pro Corp........................... 978,469
22,500 Modern Controls, Inc................... 213,750
31,900 Raven Industries, Inc.................. 783,544
35,000 RPC, Inc............................... 975,625
17,500 * Special Devices, Inc................... 492,187
26,500 * Steel of West Virginia, Inc............ 289,844
20,000 * Sterignics International, Inc.......... 350,000
26,000 World Fuel Services Corp............... 646,750
----------
9,517,756
----------
INFORMATION SERVICES & TECHNOLOGY-- 11.4%
25,000 * Advanced Communications Systems, Inc... 318,750
34,400 * American Science & Engineering Inc..... 447,200
55,000 * Analytical Surveys, Inc................ 1,258,125
12,500 * Comarco, Inc........................... 277,344
33,000 Equinox Systems, Inc................... 457,875
27,500 * IFR Systems, Inc....................... 907,500
27,000 * Norstan, Inc........................... 580,500
3,500 * Optelecom, Inc......................... 61,250
20,000 * Percon Acquisition, Inc................ 280,000
10,000 * Reliability, Inc....................... 432,500
25,000 * SBS Technologies, Inc.................. 596,875
30,000 * WPI Group, Inc......................... 363,750
10,000 * Zygo Corp.............................. 300,000
----------
6,281,669
----------
RETAILING & WHOLESALE-- 2.3%
60,500 * Bowlin Outdoor Advertising & Travel
Centers, Inc......................... 287,375
20,000 * Buckle, Inc. (The)..................... 487,500
25,000 * Kenneth Cole Productions, Inc.......... 407,813
15,000 * World Of Science, Inc.................. 85,781
----------
1,268,469
----------
TELECOMMUNICATION SERVICES & EQUIPMENT-- 0.8%
14,400 Hickory Tech Corp...................... 468,000
----------
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------
COMMON STOCKS-- CONTINUED
<S> <C> <C> <C>
TEXTILE & APPAREL-- 1.4%
30,000 Culp, Inc.............................. $ 622,500
14,500 Decorator Industries, Inc.............. 143,188
----------
765,688
----------
THRIFT INSTITUTIONS-- 5.8%
14,600 Iroquois Bancorp, Inc.................. 375,950
24,568 Parkvale Financial Corp................ 801,531
38,900 Virginia First Financial Corp.......... 933,600
30,000 * WSFS Financial Corp.................... 551,250
20,000 York Financial Corp.................... 515,000
----------
3,177,331
----------
TRANSPORTATION-- 0.9%
18,000 * MTL, Inc............................... 495,000
----------
UTILITIES-- ELECTRIC-- 0.1%
1,591 Eselco, Inc............................ 63,342
----------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
TOTAL INVESTMENTS--
(COST $38,284,878).......... 100.9% 55,629,985
OTHER ASSETS AND
LIABILITIES-- NET........... (0.9) (485,641)
------- -----------
NET ASSETS.................... 100.0% $55,144,344
------- ----------
------- -----------
</TABLE>
* Non-income producing securities.
+ No market quotation available. Valued at fair value as determined in good
faith under procedures established by the Fund's Board of Directors.
++ 1,260 shares of this security are being acquired on a delayed delivery basis
at a cost of $32,560.
** Investment in non-controlled affiliate-holding over 5% of outstanding voting
securities. This investment was acquired by the Fund at a cost of $665,880.
During the year-ended September 30, 1997, the Fund recognized no dividend
income from this security.
# 2,000 shares of this security have been segregated to cover securities
acquired on a delayed delivery basis.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
44
<PAGE>
EVERGREEN
U.S. REAL ESTATE EQUITY FUND
- ---------------------------------------------------(Pine trees logo
appears here.)
SCHEDULE OF INVESTMENTS
September 30, 1997
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------
EQUITY SECURITIES-- 98.2%
<S> <C> <C> <C>
REAL ESTATE INVESTMENT TRUSTS-- 52.3%
APARTMENTS-- 2.0%
15,000 Apartment Investment & Management Co.
Cl. A............................... $ 541,875
-----------
FACTORY OUTLET CENTERS-- 1.1%
6,000 Chelsea GCA Realty, Inc............... 250,500
4,800 Horizon Group, Inc.................... 57,900
-----------
308,400
-----------
HOTELS-- 13.6%
35,000 Innkeepers USA Trust.................. 601,562
26,999 Patriot American Hospitality, Inc..... 860,593
25,000 RFS Hotel Investors, Inc.............. 487,500
17,001 Starwood Lodging Trust................ 976,495
45,000 Sunstone Hotel Investors, Inc......... 793,125
-----------
3,719,275
-----------
MORTGAGES-- 3.2%
204,400 Asset Investors Corp.................. 881,475
-----------
OFFICE-INDUSTRIAL BUILDINGS-- 28.3%
97,000 American Industrial Property.......... 303,125
25,000 Arden Realty, Inc..................... 784,375
12,000 Bedford Property Investors, Inc....... 264,000
10,000 Boston Properties, Inc................ 328,125
25,000 Brandywine Realty Trust............... 598,437
20,000 Carramerica Realty Corp............... 640,000
18,600 Crescent Real Estate Equities, Inc.... 746,325
30,000 Equity Office Properties Trust........ 1,018,125
30,000 Kilroy Realty Corp.................... 810,000
15,000 Liberty Property Trust................ 404,063
20,000 Parkway Properties, Inc............... 678,750
20,000 SL Green Realty Corp.................. 517,500
20,000 Weeks Corp............................ 655,000
-----------
7,747,825
-----------
SHOPPING CENTERS-- 4.1%
8,000 * Alexander's, Inc...................... 658,000
6,000 Kimco Reality Corp.................... 208,875
17,800 Western Investment Real Estate
Trust............................... 240,300
-----------
1,107,175
-----------
TOTAL REAL ESTATE INVESTMENT TRUSTS
(COST $11,272,530).................. 14,306,025
-----------
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------
EQUITY SECURITIES-- (continued)
<S> <C> <C> <C>
COMMON STOCKS-- 45.9%
HOMEBUILDERS-- 16.7%
25,000 * Belmont Homes, Inc.................... $ 201,563
19,300 Continental Homes Holding Corp........ 565,731
50,000 * Crossmann Communities, Inc............ 1,131,250
22,900 * Pacific Greystone Corp................ 455,137
117,800 * Presley Companies (The), Class A...... 103,075
30,000 * Toll Brothers, Inc.................... 697,500
76,500 * US Home Corp., Warrants Cl. B,
$20-expiring 6/22/98................ 1,415,250
-----------
4,569,506
-----------
LODGING-- 17.9%
27,000 * Bridgestreet Accomodations, Inc....... 310,500
70,000 * Candlewood Hotel Co., Inc............. 761,250
40,000 * Extended Stay America, Inc............ 600,000
25,000 * Homegate Hospitality, Inc............. 331,250
44,000 * Homestead Village Properties, Inc..... 781,000
11,600 * Interstate Hotels Co.................. 378,450
65,000 * John Q. Hammons Hotels, Inc........... 568,750
38,000 * Servico, Inc.......................... 650,750
12,000 * Wyndham Hotel Corp.................... 531,000
-----------
4,912,950
-----------
MISC. REAL ESTATE COMPANIES-- 10.9%
27,000 * Cadiz Land, Inc....................... 192,375
26,000 * Capital Trust......................... 269,750
38,500 * Crescent Operating, Inc............... 784,437
15,000 Forest City Enterprises, Inc.......... 862,500
20,600 * Grubb & Ellis Co...................... 299,988
35,200 * Wellsford Real Properties, Inc........ 563,200
-----------
2,972,250
-----------
SELF-STORAGE-- 0.4%
20,000 Fortress Group, Inc................... 102,500
500 * Value Property Trust.................. 7,938
-----------
110,438
-----------
TOTAL COMMON STOCKS
(COST $9,449,794)................... 12,565,144
-----------
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
TOTAL INVESTMENTS
(COST $20,722,324)........... 98.2% 26,871,169
OTHER ASSETS AND
LIABILITIES-- NET............ 1.8 484,840
------- -----------
NET ASSETS..................... 100.0% $27,356,009
-------
------- -----------
-----------
</TABLE>
* Non-income producing security.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
45
<PAGE>
EVERGREEN
OMEGA FUND
(Pine tree logo
appears here.)---------------------------------------------------------
SCHEDULE OF INVESTMENTS
September 30, 1997
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------
COMMON STOCKS-- 96.0%
<S> <C> <C> <C>
BANKS-- 8.9%
34,700 BankBoston Corp................... $ 3,068,781
40,000 * Coast Savings Financial, Inc...... 2,097,500
100,000 First American Corp. Tennessee.... 4,903,125
56,000 * Firstplus Financial Group, Inc.... 3,143,000
105,000 Greenpoint Financial Corp......... 6,654,375
100,000 TCF Financial Corp................ 5,843,750
------------
25,710,531
------------
BUILDING, CONSTRUCTION & FURNISHINGS-- 2.6%
236,300 * Furniture Brands International,
Inc............................. 4,460,163
100,000 Sherwin-Williams Company.......... 2,943,750
------------
7,403,913
------------
BUSINESS EQUIPMENT & SERVICES-- 3.4%
110,000 * Interim Services, Inc............. 3,093,750
100,000 Paychex, Inc...................... 3,490,625
77,200 Stewart Enterprises, Inc.......... 3,372,675
------------
9,957,050
------------
CAPITAL GOODS-- 2.1%
50,000 Case Corp......................... 3,331,250
50,000 Caterpillar, Inc.................. 2,696,875
------------
6,028,125
------------
CHEMICAL & AGRICULTURAL PRODUCTS-- 1.0%
45,000 Du Pont (E. I.) De Nemours & Co... 2,770,313
------------
DIVERSIFIED COMPANIES-- 1.7%
60,000 Tyco International Limited........ 4,923,750
------------
EDUCATION-- 0.2%
23,300 * Edutrek International, Inc........ 617,450
------------
ELECTRONICS-- 5.8%
151,666 * Analog Devices, Inc............... 5,080,811
47,000 Intel Corp........................ 4,343,094
55,000 Texas Instruments, Inc............ 7,431,875
------------
16,855,780
------------
ELECTRICAL EQUIPMENT & SERVICES-- 4.1%
115,000 General Electric Co............... 7,827,187
155,000 Westinghouse Electric Corp........ 4,194,688
------------
12,021,875
------------
ENVIRONMENTAL SERVICES-- 3.7%
109,000 * United States Filter Corp......... 4,693,812
150,000 * USA Waste Services, Inc........... 5,981,250
------------
10,675,062
------------
FINANCE & INSURANCE-- 12.4%
65,000 American Express Co............... 5,321,875
52,500 American International Group,
Inc............................. 5,417,344
43,500 CMAC Investment Corp.............. 2,332,687
150,000 * Concord EFS, Inc.................. 4,040,625
80,000 Nationwide Financial Services,
Inc.
Cl. A........................... 2,230,000
55,000 Protective Life Corp.............. 2,777,500
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------
COMMON STOCKS-- (CONTINUED)
<S> <C> <C> <C>
FINANCE & INSURANCE-- CONTINUED
45,000 SLM Holding Corp.................. $ 6,952,500
98,333 Travelers Group, Inc.............. 6,711,227
------------
35,783,758
------------
FOOD & BEVERAGE PRODUCTS-- 4.7%
268,200 Flowers Industries, Inc........... 5,464,575
130,000 Pepsico, Inc...................... 5,273,125
70,000 Philip Morris Companies, Inc...... 2,909,375
------------
13,647,075
------------
HEALTHCARE PRODUCTS & SERVICES-- 5.7%
59,250 Cardinal Health, Inc.............. 4,206,750
80,000 HBO & Company..................... 3,015,000
125,000 * Health Management Associates,
Inc............................. 3,953,125
200,000 * HEALTHSOUTH Corp.................. 5,337,500
------------
16,512,375
------------
INFORMATION SERVICES & TECHNOLOGY-- 3.9%
41,100 * J.D. Edwards & Company............ 1,381,987
44,000 * Microsoft Corp.................... 5,823,125
70,000 * PeopleSoft, Inc................... 4,178,125
------------
11,383,237
------------
LEISURE & TOURISM-- 1.2%
45,000 * HFS, Inc.......................... 3,349,688
------------
NATURAL GAS-- 3.3%
100,000 * Nuevo Energy Corp................. 4,787,500
127,100 * United Meridian Corp.............. 4,670,925
------------
9,458,425
------------
OFFICE EQUIPMENT & SUPPLIES-- 6.2%
140,000 * EMC Corp.......................... 8,172,500
50,000 Hewlett-Packard Co................ 3,478,125
60,000 International Business Machines
Corp............................ 6,356,250
------------
18,006,875
------------
OIL-- 2.2%
97,500 Exxon Corp........................ 6,246,094
------------
OIL FIELD SERVICES-- 7.7%
80,000 * BJ Services Co.................... 5,940,000
63,200 * Diamond Offshore Drilling, Inc.... 3,487,850
180,000 ENSCO International, Inc.......... 7,098,750
160,000 * Falcon Drilling................... 5,650,000
------------
22,176,600
------------
PHARMACEUTICALS-- 8.2%
31,300 American Home Products Corp....... 2,284,900
50,000 Lilly (Eli) & Co.................. 6,021,875
100,000 Pfizer, Inc....................... 6,006,250
70,000 Warner-Lambert Co................. 9,445,625
------------
23,758,650
------------
</TABLE>
(CONTINUED)
46
<PAGE>
EVERGREEN
OMEGA FUND
- ------------------------------------------------------(Pine tree logo
appears here.)
SCHEDULE OF INVESTMENTS (CONTINUED)
September 30, 1997
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------
COMMON STOCKS-- CONTINUED
<S> <C> <C> <C>
RETAILING & WHOLESALE-- 3.0%
81,250 Dollar General Corp............... $ 2,767,578
85,000 * Kohl's Corp....................... 6,035,000
------------
8,802,578
------------
TELECOMMUNICATION SERVICES &
EQUIPMENT-- 4.0%
60,000 * Cisco Systems, Inc................ 4,385,625
95,000 Motorola, Inc..................... 6,828,125
17,900 * NEXTLINK Communications, Inc...... 431,837
------------
11,645,587
------------
TOTAL COMMON STOCKS
(COST $204,503,720)............. 277,734,791
------------
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------
REPURCHASE AGREEMENT-- 3.4%
<S> <C> <C> <C>
9,939,000 Keystone Joint Repurchase
Agreement, investment in
repurchase agreements in a joint
trading account, purchased
9/30/97, 6.15%, maturing
10/1/97, maturity value
$9,940,698.
(cost $9,939,000) (a)........... $ 9,939,000
------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
TOTAL INVESTMENTS--
(COST $214,442,720)....... 99.4% 287,673,791
OTHER ASSETS AND
LIABILITIES-- NET....... 0.6 1,594,807
-------- ------------
NET ASSETS................ 100.0% $289,268,598
-------- ------------
-------- ------------
</TABLE>
* Non-income producing securities.
(a) The repurchase agreements are fully collaterized by U.S. Government and/or
agency obligations based on market prices at September 30, 1997.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
47
<PAGE>
EVERGREEN
(logo)-------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
September 30, 1997
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
(Photo) (Photo) (Photo) (Photo)
AGGRESSIVE MICRO U.S. REAL
EVERGREEN GROWTH CAP ESTATE EQUITY
FUND FUND FUND, INC. FUND
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Investments, at value (identified cost,
$981,826,475, $160,192,827, $38,284,878,
$20,722,324 and $214,442,720, respectively)... $1,783,871,097 $263,337,813 $55,629,985 $ 26,871,169
Cash............................................ 42,608 448 4,001 211,920
Receivable for Fund shares sold................. 3,788,583 105,919 184,027 1,094,065
Receivable for investments sold................. 2,019,487 1,000,927 900,554 495,922
Dividends and interest receivable............... 982,747 15,877 23,148 90,625
Unamortized organization expense................ 0 14,562 0 6,778
Prepaid expenses and other assets............... 185,843 65,079 23,726 22,712
- ----------------------------------------------------------------------------------------------------------------------
Total assets................................ 1,790,890,365 264,540,625 56,765,441 28,793,191
- ----------------------------------------------------------------------------------------------------------------------
LIABILITIES
Payable for Fund shares repurchased............. 5,813,311 261,956 304,099 42,253
Payable for investments purchased............... 5,040,253 410,801 556,335 1,345,104
Notes payable................................... 0 0 650,000 0
Management fee payable.......................... 1,277,255 127,529 43,518 7,000
Distribution plan expenses payable.............. 366,362 68,378 1,503 2,885
Due to related parties.......................... 0 6,300 0 0
Accrued expenses and other liabilities.......... 296,790 139,944 65,642 39,940
- ----------------------------------------------------------------------------------------------------------------------
Total liabilities........................... 12,793,971 1,014,908 1,621,097 1,437,182
- ----------------------------------------------------------------------------------------------------------------------
NET ASSETS........................................ $1,778,096,394 $263,525,717 $55,144,344 $ 27,356,009
- ----------------------------------------------------------------------------------------------------------------------
NET ASSETS REPRESENTED BY
Paid-in capital................................. $ 935,099,031 $151,213,024 $34,979,240 $ 17,403,899
Undistributed net investment income (accumulated
net investment loss).......................... 6,764,258 (11,041) (11,658) 94,223
Accumulated net realized gains on investments
and
foreign currency related transactions......... 34,168,483 9,178,748 2,831,655 3,709,042
Net unrealized appreciation on investments and
foreign currency related transactions......... 802,044,622 103,144,986 17,345,107 6,148,845
- ----------------------------------------------------------------------------------------------------------------------
Total net assets............................ $1,778,096,394 $263,525,717 $55,144,344 $ 27,356,009
- ----------------------------------------------------------------------------------------------------------------------
NET ASSETS CONSISTS OF
Class A......................................... $ 161,415,496 $173,982,495 $ 2,438,122 $ 2,778,279
Class B......................................... 503,355,066 41,167,404 1,713,372 3,445,644
Class C......................................... 8,887,834 3,992,280 260,558 1,672,650
Class Y......................................... 1,104,437,998 44,383,538 50,732,292 19,459,436
- ----------------------------------------------------------------------------------------------------------------------
Total net assets............................ $1,778,096,394 $263,525,717 $55,144,344 $ 27,356,009
- ----------------------------------------------------------------------------------------------------------------------
SHARES OUTSTANDING
Class A......................................... 7,031,081 7,409,977 91,371 143,621
Class B......................................... 22,182,031 1,776,073 65,538 179,988
Class C......................................... 392,275 172,372 9,961 87,415
Class Y......................................... 47,870,520 1,882,994 1,890,874 998,433
- ----------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
Class A......................................... $ 22.96 $ 23.48 $ 26.68 $ 19.34
- ----------------------------------------------------------------------------------------------------------------------
Class A-- Offering price (based on sales charge
of 4.75%)..................................... $ 24.10 $ 24.65 $ 28.01 $ 20.30
- ----------------------------------------------------------------------------------------------------------------------
Class B......................................... $ 22.69 $ 23.18 $ 26.14 $ 19.14
- ----------------------------------------------------------------------------------------------------------------------
Class C......................................... $ 22.66 $ 23.16 $ 26.16 $ 19.13
- ----------------------------------------------------------------------------------------------------------------------
Class Y......................................... $ 23.07 $ 23.57 $ 26.83 $ 19.49
- ----------------------------------------------------------------------------------------------------------------------
<CAPTION>
(Photo)
OMEGA
FUND
- ----------------------------------------------------------------
<S> <C>
ASSETS
Investments, at value (identified cost,
$981,826,475, $160,192,827, $38,284,878,
$20,722,324 and $214,442,720, respectively)... $287,673,791
Cash............................................ 0
Receivable for Fund shares sold................. 268,114
Receivable for investments sold................. 2,338,501
Dividends and interest receivable............... 147,481
Unamortized organization expense................ 0
Prepaid expenses and other assets............... 95,585
- -----------------------------------------------------------------
Total assets................................ 290,523,472
- -----------------------------------------------------------------
LIABILITIES
Payable for Fund shares repurchased............. 681,636
Payable for investments purchased............... 304,300
Notes payable................................... 0
Management fee payable.......................... 173,585
Distribution plan expenses payable.............. 69,846
Due to related parties.......................... 3,000
Accrued expenses and other liabilities.......... 22,507
- ----------------------------------------------------------------
Total liabilities........................... 1,254,874
- ----------------------------------------------------------------
NET ASSETS........................................ $289,268,598
- ----------------------------------------------------------------
NET ASSETS REPRESENTED BY
Paid-in capital................................. $199,064,970
Undistributed net investment income (accumulated
net investment loss).......................... (2,889)
Accumulated net realized gains on investments
and
foreign currency related transactions......... 16,975,446
Net unrealized appreciation on investments and
foreign currency related transactions......... 73,231,071
- ----------------------------------------------------------------
Total net assets............................ $289,268,598
- ----------------------------------------------------------------
NET ASSETS CONSISTS OF
Class A......................................... $162,847,147
Class B......................................... 110,348,949
Class C......................................... 16,067,238
Class Y......................................... 5,264
- ----------------------------------------------------------------
Total net assets............................ $289,268,598
- ----------------------------------------------------------------
SHARES OUTSTANDING
Class A......................................... 7,177,212
Class B......................................... 5,084,012
Class C......................................... 738,911
Class Y......................................... 232
- ----------------------------------------------------------------
NET ASSET VALUE PER SHARE
Class A......................................... $ 22.69
- ----------------------------------------------------------------
Class A-- Offering price (based on sales charge
of 4.75%)..................................... $ 23.82
- ----------------------------------------------------------------
Class B......................................... $ 21.71
- ----------------------------------------------------------------
Class C......................................... $ 21.74
- ----------------------------------------------------------------
Class Y......................................... $ 22.69
- ----------------------------------------------------------------
</TABLE>
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
48
<PAGE>
EVERGREEN
- -----------------------------------------------------(logo)
STATEMENTS OF OPERATIONS
For the Year Ended September 30, 1997
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
(Photo) (Photo) (Photo) (Photo)
AGGRESSIVE MICRO
EVERGREEN GROWTH CAP U.S. REAL ESTATE
FUND FUND FUND, INC. EQUITY FUND
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Interest........................................... $ 12,706,266 $ 123,452 $ 4,317 $ 6,392
Dividends (net of foreign withholding taxes of
$11,452, $0, $719, $180 and $0, respectively).... 15,182,315 230,690 480,254 402,951
- ----------------------------------------------------------------------------------------------------------------------
Total income................................... 27,888,581 354,142 484,571 409,343
- ----------------------------------------------------------------------------------------------------------------------
EXPENSES
Management fee..................................... 13,089,112 1,013,344 428,047 156,812
Distribution Plan expenses......................... 4,002,175 560,145 17,647 18,973
Transfer agent fees................................ 2,195,796 349,155 73,766 49,813
Administrative fees................................ 0 62,915 0 0
Custodian fees..................................... 375,219 54,405 53,168 33,041
Registration fees.................................. 134,049 112,739 62,160 53,551
Professional fees.................................. 46,752 29,876 20,832 24,699
Trustees fees...................................... 58,712 12,287 10,933 6,001
Organization expense............................... 0 5,110 0 6,187
Other.............................................. 479,758 66,955 29,307 24,149
- ----------------------------------------------------------------------------------------------------------------------
Total expenses................................. 20,381,573 2,266,931 695,860 373,226
Less: Indirectly paid expenses..................... (7,379) (12,485) (1,887) (2,261)
Fee waivers and/or reimbursement from
Investment
Adviser...................................... 0 0 0 (116,715)
- ----------------------------------------------------------------------------------------------------------------------
Net expenses................................... 20,374,194 2,254,446 693,973 254,250
- ----------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS)....................... 7,514,387 (1,900,304) (209,402) 155,093
- ----------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments................... 36,805,817 12,171,177 3,640,708 4,054,572
Net change in unrealized appreciation on
investments and foreign currency related
transactions..................................... 388,053,134 16,257,433 16,316,906 5,804,070
- ----------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments.... 424,858,951 28,428,610 19,957,614 9,858,642
- ----------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS.................................. $432,373,338 $26,528,306 $19,748,212 $ 10,013,735
- ----------------------------------------------------------------------------------------------------------------------
<CAPTION>
(Photo)
OMEGA
FUND*
- -------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME
Interest........................................... $ 589,621
Dividends (net of foreign withholding taxes of
$11,452, $0, $719, $180 and $0, respectively).... 1,635,384
- ------------------------------------------------------------------
Total income................................... 2,225,005
- ------------------------------------------------------------------
EXPENSES
Management fee..................................... 1,480,178
Distribution Plan expenses......................... 1,012,520
Transfer agent fees................................ 572,105
Administrative fees................................ 33,135
Custodian fees..................................... 103,682
Registration fees.................................. 61,635
Professional fees.................................. 35,256
Trustees fees...................................... 19,148
Organization expense............................... 0
Other.............................................. 59,699
- -------------------------------------------------------------------
Total expenses................................. 3,377,358
Less: Indirectly paid expenses..................... (21,889)
Fee waivers and/or reimbursement from
Investment
Adviser...................................... 0
- -------------------------------------------------------------------
Net expenses................................... 3,355,469
- -------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS)....................... (1,130,464)
- --------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments................... 17,255,823
Net change in unrealized appreciation on
investments and foreign currency related
transactions..................................... 35,276,768
- ------------------------------------------------------------------
Net realized and unrealized gain on investments.... 52,532,591
- ------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS.................................. $51,402,127
- ------------------------------------------------------------------
</TABLE>
* THE STATEMENT OF OPERATIONS IS FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30,
1997. OMEGA FUND'S FISCAL YEAR-END CHANGED FROM DECEMBER 31 TO SEPTEMBER 30,
EFFECTIVE SEPTEMBER 30, 1997.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
49
<PAGE>
EVERGREEN
(logo)--------------------------------------------------------------
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1996
<TABLE>
<CAPTION>
<S> <C>
(Photo)
OMEGA
FUND
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME
Interest...................................................................................................... $ 614,911
Dividends (net foreign withholding taxes of $11,152).......................................................... 1,898,416
- -------------------------------------------------------------------------------------------------------------------------------
Total income................................................................................................ 2,513,327
- -------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Advisory fee.................................................................................................. 1,831,142
Distribution Plan expenses.................................................................................... 1,170,321
Transfer agent fees........................................................................................... 691,038
Registration fees............................................................................................. 85,770
Custodian fees................................................................................................ 151,914
Professional fees............................................................................................. 72,898
Printing...................................................................................................... 34,344
Trustees fees................................................................................................. 8,074
Other......................................................................................................... 66,125
- -------------------------------------------------------------------------------------------------------------------------------
Total expenses............................................................................................ 4,111,626
Less: Indirectly paid expenses................................................................................ (35,028)
- -------------------------------------------------------------------------------------------------------------------------------
Net expenses.............................................................................................. 4,076,598
- -------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT LOSS........................................................................................... (1,563,271)
- -------------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investments.............................................................................. 35,051,903
Net change in unrealized appreciation (depreciation) on investments........................................... (8,092,996)
- -------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments............................................................... 26,958,907
- -------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.......................................................... $ 25,395,636
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
50
<PAGE>
EVERGREEN
- ------------------------------------------------------(logo)
STATEMENTS OF CHANGES IN NET ASSETS
For the year ended September 30, 1997
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
(Photo) (Photo) (Photo) (Photo)
AGGRESSIVE MICRO
EVERGREEN GROWTH CAP U.S. REAL ESTATE
FUND FUND FUND, INC. EQUITY FUND
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income (loss)................... $ 7,514,387 $ (1,900,304) $ (209,402) $ 155,093
Net realized gain on investments............... 36,805,817 12,171,177 3,640,708 4,054,572
Net change in unrealized appreciation on
investments and foreign currency related
transactions................................. 388,053,134 16,257,433 16,316,906 5,804,070
- ----------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from
operations................................. 432,373,338 26,528,306 19,748,212 10,013,735
- ----------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income:
Class A...................................... (454,970) 0 0 (6,261)
Class B...................................... 0 0 0 (9,714)
Class C...................................... 0 0 0 (6,723)
Class Y...................................... (5,485,239) 0 0 (227,570)
Net realized gain on investments:
Class A...................................... (2,174,311) 0 0 (38,196)
Class B...................................... (6,498,011) 0 0 (78,705)
Class C...................................... (143,970) 0 0 (45,396)
Class Y...................................... (18,647,833) 0 0 (1,293,384)
- ----------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders.......... (33,404,334) 0 0 (1,705,949)
- ----------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Class A...................................... 39,895,501 60,500,657 755,407 2,049,164
Class B...................................... 145,818,712 15,217,239 (340,774) 2,229,478
Class C...................................... 915,254 2,598,069 211,290 1,266,292
Class Y...................................... 4,791,605 13,520,194 (7,243,226) 2,083,236
- ----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from capital share
transactions............................... 191,421,072 91,836,159 (6,617,303) 7,628,170
- ----------------------------------------------------------------------------------------------------------------------
Total increase in net assets............... 590,390,076 118,364,465 13,130,909 15,935,956
NET ASSETS
Beginning of period............................ 1,187,706,318 145,161,252 42,013,435 11,420,053
- ----------------------------------------------------------------------------------------------------------------------
END OF PERIOD.................................. $1,778,096,394 $263,525,717 $ 55,144,344 $ 27,356,009
- ----------------------------------------------------------------------------------------------------------------------
Undistributed net investment income (accumulated
net investment loss)........................... $ 6,764,258 $ (11,041) $ (11,658) $ 94,223
- ----------------------------------------------------------------------------------------------------------------------
<CAPTION>
(Photo)
OMEGA
FUND*
- --------------------------------------------------------------
<S> <C>
OPERATIONS
Net investment income (loss)................... $ (1,130,464)
Net realized gain on investments............... 17,255,823
Net change in unrealized appreciation on
investments and foreign currency related
transactions................................. 35,276,768
- ------------------------------------------------------------------
Net increase in net assets resulting from
operations................................. 51,402,127
- -----------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income:
Class A...................................... 0
Class B...................................... 0
Class C...................................... 0
Class Y...................................... 0
Net realized gain on investments:
Class A...................................... (6,112,342)
Class B...................................... (4,386,128)
Class C...................................... (657,041)
Class Y...................................... (1)
- ----------------------------------------------------------------
Total distributions to shareholders.......... (11,155,512)
- ----------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Class A...................................... (14,871,793)
Class B...................................... 5,281,615
Class C...................................... (3,766,590)
Class Y...................................... 5,022
- ----------------------------------------------------------------
Net increase (decrease) in net assets
resulting from capital share
transactions............................... (13,351,746)
- -----------------------------------------------------------------
Total increase in net assets............... 26,894,869
NET ASSETS
Beginning of period............................ 262,373,729
- ----------------------------------------------------------------
END OF PERIOD.................................. $289,268,598
- ---------------------------------------------------------------
Undistributed net investment income (accumulated
net investment loss)........................... $ (2,889)
- ----------------------------------------------------------------
</TABLE>
* THE STATEMENT OF CHANGES IN NET ASSETS IS FOR THE NINE-MONTH PERIOD ENDED
SEPTEMBER 30, 1997. OMEGA FUND'S FISCAL YEAR-END CHANGED FROM DECEMBER 31 TO
SEPTEMBER 30, EFFECTIVE SEPTEMBER 30, 1997.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
51
<PAGE>
EVERGREEN
(logo)--------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
For the year ended September 30, 1996
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
(Photo) (Photo) (Photo) (Photo)
AGGRESSIVE MICRO
EVERGREEN GROWTH CAP U.S. REAL ESTATE
FUND FUND FUND, INC. EQUITY FUND
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income (loss)................... $ 6,883,572 $ (923,543) $ (209,279) $ 207,611
Net realized gain (loss) on investments........ 26,342,145 (2,456,367) (378,317) 1,211,270
Net change in unrealized appreciation
(depreciation) on investments................ 127,948,227 27,981,236 (1,769,027) (117,123)
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations.................. 161,173,944 24,601,326 (2,356,623) 1,301,758
- -----------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income:
Class A...................................... (140,066) 0 0 (2,161)
Class B...................................... (104,944) 0 0 (2,282)
Class C...................................... (3,361) 0 0 (113)
Class Y...................................... (3,380,345) 0 0 (161,622)
Net realized gain on investment:
Class A...................................... (1,345,646) (2,568,867) (32,318) (2,640)
Class B...................................... (3,481,371) (157,682) (61,166) (3,174)
Class C...................................... (94,635) (7,213) (1,952) (144)
Class Y...................................... (21,876,223) (213,704) (1,796,283) (170,850)
- -----------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders.......... (30,426,591) (2,947,466) (1,891,719) (342,986)
- -----------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Class A...................................... 49,340,892 9,902,168 (119,306) 248,714
Class B...................................... 158,213,010 16,238,029 (403,806) 246,452
Class C...................................... 3,486,783 468,255 (28,984) 119,786
Class Y...................................... 128,141,965 20,876,833 (21,078,098) 222,505
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from capital share
transactions............................... 339,182,650 47,485,285 (21,630,194) 837,457
- -----------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets.... 469,930,003 69,139,145 (25,878,536) 1,796,229
NET ASSETS
Beginning of year.............................. 717,776,315 76,022,107 67,891,971 9,623,824
- -----------------------------------------------------------------------------------------------------------------------
END OF YEAR.................................... $1,187,706,318 $ 145,161,252 $ 42,013,435 $ 11,420,053
- -----------------------------------------------------------------------------------------------------------------------
Undistributed net investment income.............. $ 5,218,172 $ 0 $ 0 $ 197,030
- -----------------------------------------------------------------------------------------------------------------------
<CAPTION>
(Photo)
OMEGA
FUND*
- -----------------------------------------------------------------
<S> <C>
OPERATIONS
Net investment income (loss)................... $ (1,563,271)
Net realized gain (loss) on investments........ 35,051,903
Net change in unrealized appreciation
(depreciation) on investments................ (8,092,996)
- ------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations.................. 25,395,636
- -------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income:
Class A...................................... 0
Class B...................................... 0
Class C...................................... 0
Class Y...................................... 0
Net realized gain on investment:
Class A...................................... (15,011,932)
Class B...................................... (9,027,710)
Class C...................................... (1,879,136)
Class Y...................................... 0
- ------------------------------------------------------------------
Total distributions to shareholders.......... (25,918,778)
- ------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Class A...................................... 19,324,190
Class B...................................... 19,006,976
Class C...................................... 3,887,315
Class Y...................................... 0
- ------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from capital share
transactions............................... 42,218,481
- ----------------------------------------------------------------
Total increase (decrease) in net assets.... 41,695,339
NET ASSETS
Beginning of year.............................. 220,678,390
- ----------------------------------------------------------------
END OF YEAR.................................... $262,373,729
- ----------------------------------------------------------------
Undistributed net investment income.............. $ 0
- -------------------------------------------------------------------
</TABLE>
* THE STATEMENT OF CHANGES IN NET ASSETS IS FOR THE YEAR ENDED DECEMBER 31,
1996.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
52
<PAGE>
EVERGREEN
- -----------------------------------------------------------------(logo)
STATEMENT OF CHANGES IN NET ASSETS
For the year ended December 31, 1995
<TABLE>
<CAPTION>
<S> <C>
(Photo)
OMEGA
FUND
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C>
OPERATIONS
Net investment loss........................................................................................... $ (548,862)
Net realized gain on investments.............................................................................. 24,020,841
Net change in unrealized appreciation on investments.......................................................... 30,134,778
- -------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations........................................................ 53,606,757
- -------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net realized gain on investments:
Class A..................................................................................................... (9,531,332)
Class B..................................................................................................... (4,676,811)
Class C..................................................................................................... (973,850)
- -------------------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders......................................................................... (15,181,993)
- -------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Class A..................................................................................................... 9,739,944
Class B..................................................................................................... 29,213,698
Class C..................................................................................................... 1,564,788
Class Y..................................................................................................... 0
- -------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from capital share transactions........................................ 40,518,430
- -------------------------------------------------------------------------------------------------------------------------------
Total increase in net assets.............................................................................. 78,943,194
NET ASSETS
Beginning of year............................................................................................. 141,735,196
- -------------------------------------------------------------------------------------------------------------------------------
END OF YEAR................................................................................................... $220,678,390
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
53
<PAGE>
EVERGREEN
(logo)--------------------------------------------------------------
COMBINED NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
The Evergreen Domestic Growth Funds consist of the Evergreen Fund ("Evergreen"),
Evergreen Aggressive Growth Fund ("Aggressive Growth"), Evergreen Micro Cap
Fund, Inc. ("Micro Cap") (formerly Evergreen Limited Market Fund, Inc.),
Evergreen U.S. Real Estate Equity Fund ("U.S. Real Estate") and Evergreen Omega
Fund ("Omega"), (formerly Keystone Omega Fund), all of which are registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), as
open-end management investment companies. Evergreen and Aggressive Growth are
separate series of the Evergreen Trust, a Massachusetts business trust organized
in 1986 from a Maryland predecessor corporation. Micro Cap is a Maryland
corporation organized in 1983. U.S. Real Estate is a separate series of the
Evergreen Equity Trust, a Massachusetts business trust organized in 1988. Omega
is a Massachusetts business Trust organized in 1994.
The Funds offer Class A, Class B, Class C and Class Y shares. Class A shares are
sold with a maximum front-end sales charge of 4.75%. Class B and Class C shares
are sold without a front-end sales charge, but pay a higher ongoing distribution
fee than Class A. Class B shares are sold subject to a contingent deferred sales
charge that is payable upon redemption and decreases depending on how long the
shares have been held. Class C shares are sold subject to a contingent deferred
sales charge payable on shares redeemed within one year after the month of
purchase. Class B shares purchased after January 1, 1997 will automatically
convert to Class A shares after seven years. Class B shares purchased prior to
January 1, 1997 retain their existing conversion rights. Class Y shares are sold
at net asset value and are not subject to contingent deferred sales charges or
distribution fees. Class Y shares are sold only to investment advisory clients
of First Union and its affiliates, certain institutional investors or Class Y
shareholders of record of certain other funds managed by First Union and its
affiliates.
The investment adviser to Evergreen, Micro Cap and U.S. Real Estate is Evergreen
Asset Management Corp. ("Evergreen Asset"), a wholly-owned subsidiary of First
Union Corporation ("First Union"). Lieber & Co, a wholly owned subsidiary of
First Union, provides certain sub-advisory services to Evergreen Asset in
connection with its duties as investment adviser to Evergreen, Micro Cap and
U.S. Real Estate. The Capital Management Group of First Union ("CMG") serves as
the investment adviser to Aggressive Growth. Keystone Investment Management
Company ("Keystone"), a wholly-owned subsidiary of First Union, is the
investment adviser to Omega.
2. ACQUISITION INFORMATION
Effective at the close of business on August 14, 1997, Aggressive Growth
acquired the net assets of Keystone America Hartwell Emerging Growth Fund, an
open-end management investment company registered under the 1940 Act in an
exchange of shares. The net assets were exchanged through a non-taxable exchange
for 3,837,539 shares of Aggressive Growth. The acquired net assets consisted
primarily of portfolio securities with unrealized appreciation of $26,393,360.
The aggregate net assets of Aggressive Growth and Keystone America Hartwell
Emerging Growth Fund immediately prior to the acquisition were $163,571,120 and
$82,227,499, respectively. The aggregate net assets of Aggressive Growth
immediately after the acquisition were $245,798,619.
On April 25, 1996, Omega acquired the net assets of Keystone Hartwell Growth
Fund, an open-end management investment company registered under the 1940 Act in
an exchange of Class A, Class B and Class C shares. The net assets of Keystone
Hartwell Growth Fund were exchanged through a nontaxable exchange for 1,002,456
shares of Omega. The acquired net assets consisted primarily of portfolio
securities with unrealized appreciation of $7,665,038. The aggregate net assets
of Omega and Keystone Hartwell Growth Fund immediately prior to the acquisition
were $236,927,458 and $18,599,730, respectively. The aggregate net assets of
Omega immediately after the acquisition were $255,527,188.
On January 1, 1996, First Fidelity Bancorporation ("First Fidelity") merged with
First Union. On January 19, 1996, Evergreen Fund acquired the net assets of FFB
Lexicon Small Company Growth Fund, an open-end management investment company
registered under the 1940 Act in an exchange of shares. The net assets of FFB
Lexicon Small Company Growth Fund were exchanged through a non-taxable exchange
for 1,752,546 Class Y shares of Evergreen Fund. The acquired net assets
consisted primarily of portfolio securities with unrealized appreciation of
$2,905,682. The aggregate net assets of Evergreen Fund and FFB Lexicon Small
Company Growth Fund immediately prior to the acquisition were 796,981,529 and
$27,158,980, respectively. The aggregate net assets of Evergreen immediately
after the acquisition were $824,140,509.
3. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. The
policies are in conformity with generally accepted accounting principles, which
require management to make estimates and assumptions that affect amounts
reported herein. Actual results could differ from these estimates.
54
<PAGE>
EVERGREEN
- -----------------------------------------------------------------(logo)
COMBINED NOTES TO FINANCIAL STATEMENTS (CONTINUED)
A. VALUATION OF SECURITIES
The Funds value securities traded on a national securities exchange or included
on the NASDAQ National Market System ("NMS") at the last reported sales price on
the exchange where primarily traded. The Funds value securities traded on an
exchange or NMS for which there has been no sale and other securities traded in
the over-the-counter market at the mean between the last reported bid and asked
price. Securities for which market quotations are not available, including
restricted securities, are valued at fair value as determined in good faith
according to procedures approved by the Board of Trustees or Directors.
Short-term investments with remaining maturities of 60 days or less are carried
at amortized cost, which approximates market value.
B. REPURCHASE AGREEMENTS
Each Fund may invest in repurchase agreements. Securities pledged as collateral
for repurchase agreements are held by the custodian on the Fund's behalf. Each
Fund monitors the adequacy of the collateral daily and will require the seller
to provide additional collateral in the event the market value of the securities
pledged falls below the carrying value of the repurchase agreement, including
accrued interest. Each Fund will only enter into repurchase agreements with
banks and other financial institutions which are deemed by the investment
adviser to be creditworthy pursuant to guidelines established by the Board of
Trustees or Directors.
Pursuant to an exemptive order issued by the Securities and Exchange Commission,
Omega along with certain other funds managed by Keystone, may transfer
uninvested cash balances into a joint trading account. These balances are
invested in one or more repurchase agreements that are fully collateralized by
U.S. Treasury and/or federal agency obligations.
C. SECURITY TRANSACTIONS AND INVESTMENT INCOME
Securities transactions are accounted for no later than one business day after
the trade date. Realized gains and losses are computed on the identified cost
basis. Interest income is recorded on the accrual basis and includes accretion
of discounts and, if required, amortization of premiums. Dividend income is
recorded on the ex-dividend date or in the case of some foreign securities, on
the date thereafter when the Fund is made aware of the dividend. Foreign income
may be subject to foreign withholding taxes which are accrued as applicable.
Capital gains realized on some foreign securities are subject to foreign taxes
and are accrued as applicable.
D. FEDERAL TAXES
The Funds have qualified and intend to continue to qualify as regulated
investment companies under the Internal Revenue Code of 1986, as amended (the
"Code"). Thus, the Funds will not incur any federal income tax liability since
they are expected to distribute all of their net investment company taxable
income and net capital gains, if any, to their shareholders. The Funds also
intend to avoid any excise tax liability by making the required distributions
under the Code. Accordingly, no provision for federal taxes is required. To the
extent that realized capital gains can be offset by capital loss carryforwards,
it is each Fund's policy not to distribute such gains.
E. DISTRIBUTIONS
Distributions from net investment income and net realized capital gains for the
Funds are declared and paid at least annually. Distributions to shareholders are
recorded at the close of business on the ex-dividend date.
Income and capital gains distributions to shareholders are determined in
accordance with income tax regulations, which may differ from generally accepted
accounting principles. The significant differences between financial statement
amounts available for distributions and distributions made in accordance with
income tax regulations are primarily due to differing treatment for net
operating losses and certain distributions received from real estate investment
trusts.
F. CLASS ALLOCATIONS
Income, expenses (other than class specific expenses) and realized and
unrealized gains and losses are prorated among the classes based on the relative
net assets of each class. Currently, class specific expenses are limited to
expenses incurred under the Distribution Plans for each class.
G. ORGANIZATION EXPENSES
Organization expenses for Aggressive Growth and U.S. Real Estate are amortized
to operations over a five-year period on a straight-line basis. In the event any
of the initial shares of the Funds are redeemed by any holder during the
five-year amortization period, redemption proceeds will be reduced by any
unamortized organization expenses in the same proportion as the number of
initial shares being redeemed bears to the number of initial shares outstanding
at the time of the redemption.
H. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Funds record when-issued or delayed delivery transactions on the trade date
and will establish and maintain a segregated account containing qualifying
assets having a value sufficient to make payment for the securities purchased.
Securities purchased on a when-issued or delayed delivery basis are marked to
market daily. Losses may arise due to changes in the market value of the
underlying securities or if the counterparty does not perform under the
contract.
55
<PAGE>
EVERGREEN
(logo)--------------------------------------------------------------
COMBINED NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. CAPITAL SHARE TRANSACTIONS
Evergreen, Aggressive Growth, U.S. Real Estate and Omega have an unlimited
number of shares of beneficial interest authorized. Micro Cap has 25 million
common shares authorized for each of its classes of shares sold. The par value
of the Funds' shares are $0.001, $0.001, $0.10, and $0.0001 for Evergreen,
Aggressive Growth, Micro Cap and U.S. Real Estate, respectively. Omega's shares
are issued without par value. Transactions in shares of the Funds were as
follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 1997 SEPTEMBER 30, 1996
------------------------------ ------------------------------
<S> <C> <C> <C> <C>
EVERGREEN FUND SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS A
Shares sold..................................................... 10,240,806 $ 201,289,910 6,095,487 $ 99,948,887
Shares issued in reinvestment of distributions.................. 141,874 2,555,157 94,388 1,472,450
Shares redeemed................................................. (8,297,731) (163,949,566) (3,137,366) (52,080,445)
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase.................................................... 2,084,949 39,895,501 3,052,509 49,340,892
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS B
Shares sold..................................................... 9,332,781 179,140,600 10,528,707 171,559,260
Shares issued in reinvestment of distributions.................. 359,029 6,426,786 230,476 3,588,103
Shares redeemed................................................. (2,027,269) (39,748,674) (1,033,495) (16,934,353)
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase.................................................... 7,664,541 145,818,712 9,725,688 158,213,010
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS C
Shares sold..................................................... 166,021 3,177,817 253,398 4,102,332
Shares issued in reinvestment of distributions.................. 7,595 135,795 6,180 96,026
Shares redeemed................................................. (123,428) (2,398,358) (43,233) (711,575)
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase.................................................... 50,188 915,254 216,345 3,486,783
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS Y
Shares sold..................................................... 82,859,843 1,605,086,492 87,374,014 1,420,506,634
Shares issued in acquisition of FFB Lexicon Small Company Growth
Fund.......................................................... -- -- 1,752,546 27,158,980
Shares issued in reinvestment of distributions.................. 1,085,192 19,587,726 1,402,844 21,926,423
Shares redeemed................................................. (83,538,658) (1,619,882,613) (82,347,414) (1,341,450,072)
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase.................................................... 406,377 4,791,605 8,181,990 128,141,965
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase resulting from Fund share transactions............. 10,206,055 $ 191,421,072 21,176,532 $ 339,182,650
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
56
<PAGE>
EVERGREEN
- -----------------------------------------------------------------(logo)
COMBINED NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 1997 SEPTEMBER 30, 1996
-------------------------- -------------------------
<S> <C> <C> <C> <C>
AGGRESSIVE GROWTH SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS A
Shares sold............................................................. 2,422,550 $ 47,560,544 1,486,503 $28,206,250
Shares issued in reinvestment of distributions.......................... -- -- 125,571 2,164,153
Shares redeemed......................................................... (3,066,636) (61,339,895) (1,100,349) (20,468,235)
Shares issued in acquisition of Keystone America Hartwell Emerging
Growth Fund........................................................... 3,462,126 74,280,008 -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase............................................................ 2,818,040 60,500,657 511,725 9,902,168
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS B
Shares sold............................................................. 816,049 16,534,301 1,012,639 18,916,487
Shares issued in reinvestment of distributions.......................... -- -- 9,125 156,717
Shares redeemed......................................................... (363,564) (7,410,013) (150,663) (2,835,175)
Shares issued in acquisition of Keystone America Hartwell Emerging
Growth Fund........................................................... 287,735 6,092,951 -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase............................................................ 740,220 15,217,239 871,101 16,238,029
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS C
Shares sold............................................................. 147,478 2,974,904 44,926 857,932
Shares issued in reinvestment of distributions.......................... -- -- 420 7,213
Shares redeemed......................................................... (110,246) (2,231,375) (21,948) (396,890)
Shares issued in acquisition of Keystone America Hartwell Emerging
Growth Fund........................................................... 87,678 1,854,540 -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase............................................................ 124,910 2,598,069 23,398 468,255
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS Y
Shares sold............................................................. 2,044,324 42,091,753 1,385,748 25,808,879
Shares issued in reinvestment of distributions.......................... -- -- 8,611 148,623
Shares redeemed......................................................... (1,390,494) (28,571,559) (273,910) (5,080,669)
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase............................................................ 653,830 13,520,194 1,120,449 20,876,833
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase resulting from Fund share transactions..................... 4,337,000 $ 91,836,159 2,526,673 $47,485,285
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 1997 SEPTEMBER 30, 1996
------------------------ --------------------------
<S> <C> <C> <C> <C>
MICRO CAP SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS A
Shares sold.............................................................. 115,021 $ 2,520,780 44,104 755,204
Shares issued in reinvestment of distributions........................... -- -- 1,829 31,166
Shares redeemed.......................................................... (75,840) (1,765,373) (52,912) (905,676)
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease).................................................. 39,181 755,407 (6,979) (119,306)
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS B
Shares sold.............................................................. 16,193 358,523 15,418 265,257
Shares issued in reinvestment of distributions........................... -- -- 3,263 55,180
Shares redeemed.......................................................... (36,249) (699,297) (43,481) (724,243)
- ----------------------------------------------------------------------------------------------------------------------------------
Net decrease............................................................. (20,056) (340,774) (24,800) (403,806)
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS C
Shares sold.............................................................. 8,543 214,527 134 2,393
Shares issued in reinvestment of distributions........................... -- -- 112 1,899
Shares redeemed.......................................................... (152) (3,237) (2,040) (33,276)
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease).................................................. 8,391 211,290 (1,794) (28,984)
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS Y
Shares sold.............................................................. 216,277 4,734,848 332,812 5,693,077
Shares issued in reinvestment of distributions........................... -- -- 96,831 1,650,971
Shares redeemed.......................................................... (609,034) (11,978,074) (1,659,712) (28,422,146)
- ----------------------------------------------------------------------------------------------------------------------------------
Net decrease............................................................. (392,757) (7,243,226) (1,230,069) (21,078,098)
- ----------------------------------------------------------------------------------------------------------------------------------
Net decrease resulting from Fund share transactions...................... (365,241) $ (6,617,303) (1,263,642) $(21,630,194)
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
57
<PAGE>
EVERGREEN
(logo)--------------------------------------------------------------
COMBINED NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 1997 SEPTEMBER 30, 1996
---------------------- ----------------------
<S> <C> <C> <C> <C>
U.S. REAL ESTATE SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS A
Shares sold.................................................................... 184,220 $ 3,010,088 50,221 $ 600,589
Shares issued in reinvestment of distributions................................. 3,065 37,276 352 4,164
Shares redeemed................................................................ (64,718) (998,200) (29,953) (356,039)
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase................................................................... 122,567 2,049,164 20,620 248,714
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS B
Shares sold.................................................................... 154,550 2,373,682 21,611 258,923
Shares issued in reinvestment of distributions................................. 7,088 85,699 459 5,421
Shares redeemed................................................................ (16,358) (229,903) (1,478) (17,892)
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase................................................................... 145,280 2,229,478 20,592 246,452
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS C
Shares sold.................................................................... 103,769 1,665,261 11,216 136,531
Shares issued in reinvestment of distributions................................. 1,541 18,793 22 258
Shares redeemed................................................................ (27,945) (417,762) (1,430) (17,003)
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase................................................................... 77,365 1,266,292 9,808 119,786
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS Y
Shares sold.................................................................... 137,476 2,023,188 79,674 958,807
Shares issued in reinvestment of distributions................................. 104,600 1,277,261 26,720 316,633
Shares redeemed................................................................ (87,776) (1,217,213) (88,998) (1,052,935)
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase................................................................... 154,300 2,083,236 17,396 222,505
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase resulting from Fund share transactions............................ 499,512 $ 7,628,170 68,416 $ 837,457
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, 1997 DECEMBER 31, 1996 DECEMBER 31, 1995
------------------------- ------------------------- -------------------------
<S> <C> <C> <C> <C> <C> <C>
OMEGA SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS A
Shares sold..................................... 764,570 $ 14,997,288 1,759,793 $ 33,571,953 1,178,460 $ 21,425,010
Shares issued in reinvestment of distributions.. 292,502 5,545,839 736,752 13,822,516 482,356 8,685,153
Shares redeemed.................................(1,812,460) (35,414,920) (2,381,626) (44,999,521) (1,161,391) (20,370,219)
Shares issued in acquisition of Hartwell Growth
Fund.......................................... -- -- 910,037 16,929,242 -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)......................... (755,388) (14,871,793) 1,024,956 19,324,190 499,425 9,739,944
- ---------------------------------------------------------------------------------------------------------------------------------
CLASS B
Shares sold..................................... 1,361,525 25,967,636 1,552,928 28,806,348 1,902,255 33,563,718
Shares issued in reinvestment of distributions.. 227,976 4,149,157 466,572 8,494,665 245,291 4,332,038
Shares redeemed.................................(1,280,735) (24,835,178) (1,062,059) (19,500,081) (499,966) (8,682,058)
Shares issued in acquisition of Hartwell Growth
Fund.......................................... -- -- 66,754 1,206,044 -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)......................... 308,766 5,281,615 1,024,195 19,006,976 1,647,580 29,213,698
- ---------------------------------------------------------------------------------------------------------------------------------
CLASS C
Shares sold..................................... 121,875 2,315,406 336,661 6,288,512 273,387 4,723,834
Shares issued in reinvestment of distributions.. 34,837 635,076 95,593 1,743,341 52,465 927,300
Shares redeemed................................. (352,354) (6,717,072) (253,439) (4,608,982) (240,110) (4,086,346)
Shares issued in acquisition of Hartwell Growth
Fund -- -- 25,665 464,444 -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)......................... (195,642) (3,766,590) 204,480 3,887,315 85,742 1,564,788
- ---------------------------------------------------------------------------------------------------------------------------------
CLASS Y *
Shares sold..................................... 232 5,021 -- -- -- --
Shares issued in reinvestment of distributions.. -- 1 -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase.................................... 232 5,022 -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) resulting from Fund share
transactions.................................. (642,032) $(13,351,746) 2,253,631 $ 42,218,481 2,232,747 $ 40,518,430
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* OMEGA FUND, CLASS Y SHARES COMMENCED OPERATIONS ON JULY 23, 1997.
58
<PAGE>
EVERGREEN
- -----------------------------------------------------------------(logo)
COMBINED NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of investment securities, excluding
short-term securities, were as follows for the year ended September 30, 1997:
<TABLE>
<CAPTION>
COST OF PROCEEDS
PURCHASES FROM SALES
------------ ------------
<S> <C> <C>
Evergreen................................. $242,317,670 $145,439,093
Aggressive Growth......................... 159,198,629 93,315,416
Micro Cap................................. 25,574,465 31,812,182
U.S. Real Estate.......................... 37,963,492 32,009,594
Omega*.................................... 189,655,509 193,158,727
</TABLE>
* THE ABOVE INVESTMENT ACTIVITY IS FOR THE NINE-MONTH PERIOD
ENDED SEPTEMBER 30, 1997.
For the year ended December 31, 1996, cost of purchases and proceeds from sales
of investment securities, excluding short-term securities, for Omega Fund, were
$400,230,776 and $403,223,255, respectively.
On September 30, 1997, the composition of unrealized appreciation and
depreciation of investment securities based on the aggregate cost of investments
for federal income tax purposes was as follows:
<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED NET UNREALIZED
TAX COST APPRECIATION DEPRECIATION APPRECIATION
------------ ------------ ------------ --------------
<S> <C> <C> <C> <C>
Evergreen...................................................... $982,175,581 $806,861,955 $5,166,439 $801,695,516
Aggressive Growth.............................................. 160,192,827 107,216,299 4,071,313 103,144,986
Micro Cap...................................................... 38,297,208 18,711,787 1,379,010 17,332,777
U.S. Real Estate............................................... 21,083,947 5,989,333 202,111 5,787,222
Omega.......................................................... 214,621,906 74,394,116 1,342,231 73,051,885
</TABLE>
6. DISTRIBUTION PLANS
Evergreen Keystone Distributor, Inc. (formerly Evergreen Funds Distributor,
Inc.) ("EKD"), a wholly-owned subsidiary of The BISYS Group Inc. ("BISYS")
serves as principal underwriter to the Funds. Prior to December 11, 1996,
Evergreen Keystone Investment Services, Inc. (formerly Keystone Investment
Distributors Company) ("EKIS"), a wholly-owned subsidiary of Keystone, served as
Omega's principal underwriter.
Each Fund has adopted Distribution Plans for each class of shares, except Class
Y Shares, as allowed by Rule 12b-1 of the 1940 Act. Distribution plans permit
the Funds to reimburse their principal underwriter for costs related to selling
shares of the Fund and for various other services. These costs, which consist
primarily of commissions and service fees to broker-dealers who sell shares of
the Fund, are paid by the Funds through expenses called "Distribution Plan
expenses". Each Class, except Class Y, currently pays a service fee equal to
0.25% of the average daily net assets of the Class. Class B and Class C also
presently pay distribution fees equal to 0.75% of the average daily net assets
of the Class. Distribution Plan expenses are calculated daily and paid monthly.
During the year ended September 30, 1997, amounts paid to EKD and/or EKIS
pursuant to each Fund's Class A, Class B and Class C Distribution Plans were as
follows
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
-------- ---------- --------
<S> <C> <C> <C>
Evergreen.......................................................... $299,430 $3,629,968 $ 72,777
Aggressive Growth.................................................. 251,302 289,795 19,048
Micro Cap.......................................................... 3,314 13,933 400
U.S. Real Estate................................................... 1,824 12,232 4,917
Omega*............................................................. 153,219 739,237 120,064
</TABLE>
* THE ABOVE DISTRIBUTION PLAN EXPENSES ARE FOR THE NINE-MONTH PERIOD
ENDED SEPTEMBER 30, 1997.
For the year ended December 31, 1996, amounts paid to EKD and/or EKIS pursuant
to Omega's Class A, Class B and Class C Distribution Plans were $186,596,
$814,977 and $168,748, respectively.
Each of the Distribution Plans may be terminated at any time by vote of the
Independent Trustees/Directors or by vote of a majority of the outstanding
voting shares of the respective class. However, after the termination of any
Omega Distribution Plan, and subject to the discretion of the Independent
Trustees, payments to EKIS and/or EKD may continue as compensation for services
which had been provided while the Distribution Plan was in effect.
59
<PAGE>
EVERGREEN
(logo)--------------------------------------------------------------
COMBINED NOTES TO FINANCIAL STATEMENTS (CONTINUED)
7. INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT AND OTHER AFFILIATED
TRANSACTIONS
CMG 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, Micro Cap, and U.S. Real Estate,
Evergreen Asset is entitled to an annual fee based on each of Evergreen's, Micro
Cap's, and U.S. Real Estate's average daily net assets, respectively, in
accordance with the following schedule:
<TABLE>
<S> <C>
First $750 million................................................ 1.00%
Next $250 million................................................. 0.90%
Over $1 billion................................................... 0.80%
</TABLE>
Evergreen Asset has agreed to reimburse U.S. Real Estate to the extent that the
Fund's operating expenses (including the investment advisory fee and
amortization of organizational expenses but excluding interest, taxes, brokerage
commissions, 12b-1 distribution and shareholder services fees and extraordinary
expenses) exceed 1.50% of its average daily net assets. Evergreen Asset waived
advisory fees aggregating $106,421 for the year ended September 30, 1997
pursuant to this agreement. Additionally, for the year ended September 30, 1997
Evergreen Asset reimbursed other expenses amounting to $10,294. Evergreen Asset
can modify or terminate voluntary waivers at any time. At September 30, 1997,
Stephen A. Lieber, Chairman of Evergreen Asset, owned directly or beneficially,
29.5% of the outstanding shares of U.S. Real Estate.
Pursuant to an agreement with Omega, Keystone is paid a management fee, for
providing investment management and administrative services that is calculated
daily and paid monthly. The management fee is determined by applying percentage
rates starting at 0.75% and declining to 0.50% per annum as net assets increase,
to the average daily net asset value of the Fund.
EKIS is the administrator for the Funds. Prior to March 11, 1997, Evergreen
Asset was the administrator for Evergreen, Aggressive Growth, Micro Cap and U.S.
Real Estate. Furman Selz LLC ("Furman Selz") was the sub-administrator through
December 31, 1996 for Evergreen, Aggressive Growth, Micro Cap and U.S. Real
Estate. Effective January 1, 1997, BISYS acquired Furman Selz' mutual fund unit
and accordingly BISYS Fund Services became sub-administrator for the Funds. The
administrator and sub-administrator for each Fund are entitled to an annual fee
based on the average daily net assets of the funds administered by EKIS for
which First Union or its investment advisory subsidiaries are also the
investment advisers. The administration fee is calculated by applying percentage
rates, which start at 0.05% and decline to 0.01% per annum as net assets
increase, to the average daily net asset value of the Fund. The
sub-administration fee is calculated by applying percentage rates, which start
at 0.01% and decline to .004% per annum as net assets increase, to the average
daily net asset value of the Fund. For Evergreen, Micro Cap, U.S. Real Estate
and Omega the administration and sub-administration fees are paid by their
respective investment adviser and are not Fund expenses. During the year ended
September 30, 1997, Aggressive Growth paid administration and sub-administration
fees of $51,750 and $11,165, respectively.
Lieber & Company is the investment sub-adviser to Evergreen, Micro Cap and U.S.
Real Estate and also provides brokerage services with respect to substantially
all security transactions of these Funds effected on the New York or American
Stock Exchanges. For the year ended September 30, 1997, Evergreen, Micro Cap and
U.S. Real Estate incurred $416,953, $61,717 and $164,711, respectively, in
brokerage commissions 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.
During the nine-month period ended September 30, 1997 and year ended December
31, 1996, Omega Fund paid or accrued to Keystone $33,135 and $30,154,
respectively, for certain administrative expenses.
Evergreen Keystone Service Company ("EKSC"), a wholly-owned subsidiary of
Keystone, serves as the transfer and dividend disbursing agent for Omega.
Effective May 5, 1997, EKSC also began providing transfer and dividend
disbursing agent services for Evergreen, Aggressive Growth, Micro Cap and U.S.
Real Estate that were formerly provided by State Street Bank and Trust Company
("State Street"). For the year ended September 30, 1997, EKSC received fees of
$1,292,042, $228,313, $26,101, $21,878 and $572,105, respectively, from
Evergreen, Aggressive Growth, Micro Cap, U.S. Real Estate and Omega. For certain
accounts, First Union was sub-contracted by EKSC, and previously by State
Street, to maintain shareholder sub-account records, take fund purchase and
redemption orders and answer inquiries. For the year ended September 30, 1997,
First Union earned fees aggregating $135,791 and $275, respectively, from
Evergreen and Aggressive Growth.
Officers of the Funds and affiliated Trustees/Directors receive no compensation
directly from the Funds.
8. EXPENSE OFFSET ARRANGEMENT
The Funds have entered into an expense offset arrangement with their custodian.
The assets deposited with the custodian under this expense offset arrangement
could have been invested in income-producing assets.
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EVERGREEN
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COMBINED NOTES TO FINANCIAL STATEMENTS (CONTINUED)
9. DEFERRED TRUSTEES'/DIRECTORS' FEES
Each Independent Trustee/Director of Evergreen, Aggressive Growth, Micro Cap and
U.S. Real Estate may defer any or all compensation related to performance of
duties as a Trustee/Director. Each Trustee's/Directors deferred balances are
allocated to deferral accounts which are included in the accrued expenses for
the Fund. The investment performance of the deferral accounts is based on the
investment performance of certain Evergreen Keystone Funds. Any gains earned or
losses incurred in the deferral accounts are reported in the Fund's Trustees'
fees and expenses. Trustees will be paid either in one lump sum or in quarterly
installments for up to ten years at their election, not earlier than either the
year in which the Trustee ceases to be a member of the Board of Trustees or
January 1, 2000. As of September 30, 1997, the values of the Trustees/Directors
deferral accounts for Evergreen, Aggressive Growth, Micro Cap and U.S. Real
Estate were $66,883, $11,041, $11,658 and $6,678, respectively.
10. FINANCING AGREEMENT
On October 31, 1996, a financing agreement among all of the Evergreen Funds and
State Street, Societe Generale and ABN Amro Bank N.V. (collectively, the
"Banks") became effective. Under this agreement, the Banks provide an unsecured
credit facility in the aggregate amount of $225 million ($112.5 million
committed and $112.5 million uncommitted) allocated evenly among the Banks.
Borrowings under this facility bear interest at 0.75% per annum above the
Federal Funds rate. A commitment fee of 0.10% per annum will be incurred on the
unused portion of the committed facility which will be allocated to all
participating Funds. State Street acts as agent for the Banks, and as agent is
entitled to a fee of $15,000 which is allocated to all of the Evergreen Funds.
During the year ended September 30, 1997, Evergreen, Aggressive Growth, and U.S.
Real Estate had no borrowings under this agreement. Micro Cap had borrowings
outstanding for 186 days under its line of credit and incurred $10,245 in
interest charges related to these borrowings. Micro Cap's average amount of debt
outstanding during the year was $275,000 at a weighted average interest rate of
7.308%. Micro Cap had $650,000 outstanding at September 30, 1997 under this
agreement. Omega is not a party to this financing agreement.
11. CONCENTRATION OF CREDIT RISK
U.S. Real Estate invests a substantial portion of its assets in real estate
investment trusts, therefore it may be more affected by economic developments in
the real estate industry than would a general equity fund.
12. FISCAL YEAR-END AND NAME CHANGE
Omega changed its fiscal year-end from December 31 to September 30, effective
September 30, 1997. Additionally, effective October 31, 1997, Keystone Omega
Fund changed its name to Evergreen Omega Fund.
Effective October 31, 1997, Evergreen Limited Market Fund, Inc. changed its name
to Evergreen Micro Cap Fund, Inc.
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EVERGREEN
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees or Directors and Shareholders of
Evergreen Fund, Evergreen Aggressive Growth Fund,
Evergreen Micro Cap Fund, Inc. and
Evergreen U.S. Real Estate Equity Fund
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Evergreen Fund, Evergreen
Aggressive Growth Fund, Evergreen Micro Cap Fund, Inc. (formerly Evergreen
Limited Market Fund, Inc.) and Evergreen U.S. Real Estate Equity Fund (the
"Funds") at September 30, 1997, the results of their operations for the year
then ended, the changes in their net assets for each of the two years in the
period then ended, and the financial highlights of Evergreen Fund for the
periods indicated, of Evergreen Aggressive Growth Fund for each of the two years
in the period then ended and for the eleven months in the period ended September
30, 1995, of Evergreen Micro Cap Fund, Inc., for each of the two years in the
period then ended, and of Evergreen U.S. Real Estate Equity Fund for the periods
indicated in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Funds' management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
September 30, 1997 by correspondence with the custodian and the application of
alternative auditing procedures where securities purchased had not been
received, provide a reasonable basis for the opinion expressed above. The
financial highlights of Evergreen Aggressive Growth Fund for each of the six
years in the period ended October 31, 1994, for the ten months ended October 31,
1988 and for the year ended December 31, 1987 and the financial highlights of
Evergreen Micro Cap Fund, Inc. for the year ended September 30, 1995, for the
four month period ended September 30, 1994 and for each of the seven years in
the period ended May 31, 1994, were audited by other auditors, whose opinions,
dated November 29, 1994 and November 16, 1995, respectively, were unqualified.
Price Waterhouse LLP
1177 Avenue of the Americas
New York, NY 10036
November 11, 1997
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EVERGREEN
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INDEPENDENT AUDITORS' REPORT
The Trustees and Shareholders
Evergreen Omega Fund
We have audited the accompanying statement of assets and liabilities of
Evergreen Omega Fund (formerly Keystone Omega Fund), including the schedule of
investments, as of September 30, 1997, and the related statements of operations
for the nine-month period then ended and the year ended December 31, 1996, the
statements of changes in net assets for the nine-month period then ended and for
each of the years in the two-year period ended December 31, 1996, and the
financial highlights for the nine-month period ended September 30, 1997 and for
each of the years in the eight-year period ended December 31, 1996 for Class A
Shares and for the nine-month period ended September 30, 1997, for each of the
years in the three-year period ended December 31, 1996 and the period from
August 2, 1993 (Date of Initial Public Offering) to December 31, 1993 for Class
B and Class C Shares and the period from January 13, 1997 (Date of Initial
Public Offering) to September 30, 1997 for Class Y Shares. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits. The financial
highlights for Class A shares for each of the years in the two-year period ended
December 31, 1988 were audited by other auditors whose report, dated February 3,
1989, expressed an unqualified opinion thereon.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
September 30, 1997 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Evergreen Omega Fund as of September 30, 1997, the results of its operations for
the nine-month period then ended and the year ended December 31, 1996,
statements of changes in net assets for the nine-month period then ended and for
each of the years in the two-year period ended December 31, 1996, and the
financial highlights for the nine-month period ended September 30, 1997 and each
of the years in the eight-year period ended December 31, 1996 in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
Boston, Massachusetts
October 31, 1997
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EVERGREEN
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FEDERAL INCOME TAX STATUS OF DISTRIBUTIONS (UNAUDITED)
During the year ended September 30, 1997, the Funds paid the following
distributions in shares or cash:
<TABLE>
<CAPTION>
LONG-TERM ORDINARY
TOTAL CAPITAL GAIN INCOME
DISTRIBUTIONS DISTRIBUTIONS DIVIDENDS
------------- ------------- ----------
<S> <C> <C> <C>
Evergreen Fund........................................................ $33,404,334 $25,115,427 $8,288,907
Evergreen U.S. Real Estate Fund....................................... 1,705,949 0 1,705,949
Evergreen Omega Fund.................................................. 11,155,512 9,580,616 1,574,896
</TABLE>
Of the ordinary income distributions stated above for Evergreen Fund, Evergreen
U.S. Real Estate Fund, and Evergreen Omega Fund, 100%, 22%, and 0%,
respectively, are eligible for the corporate dividend received deduction. The
above figures may differ from those previously reported and those cited
elsewhere in this report due to differences in the calculation of income and
capital gains for accounting (book) purposes and Internal Revenue Service (tax)
purposes. In January 1998, we will send you complete information on the
distributions paid during the calendar year 1997 to help you in completing your
federal tax return.
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This brochure must be preceded or accompanied by a prospectus of an Evergreen
fund contained herein. The prospectus contains more complete information,
including fees and expenses, and should be read carefully before investing or
sending money.
NOT May lose value
FDIC No bank guarantee
INSURED
Evergreen Funds Distributor, Inc.
63081 540979 Rev. 01
11/97
