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EVERGREEN
VARIABLE TRUST
SEMIANNUAL REPORT
JUNE 30, 1998
LOGO
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Evergreen Variable Trust
EVERGREEN VA AGGRESSIVE GROWTH FUND
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A REPORT FROM YOUR PORTFOLIO MANAGER
Harold J. Ireland, Jr.
At June 30, 1998, Evergreen VA Aggressive Growth Fund had a net asset value of
$12.28 and $3,052,969 in total net assets. The Fund returned 10.63% for the
six-month period and 19.57% for the 12-month period ended June 30, 1998.
The Fund's improving performance for the six-month period ended June 30, 1998,
has been driven by the outstanding share price gains of the Fund's ten largest
holdings and by the Fund's above average commitment to the Retail sector at
17.6%; Software/Technology sector at 20.3%; Communications Systems & Services
sector at 7.6%; and the Healthcare sector at 16.6%. For the six months, the
Communications Systems & Services sector was up 63.9%, Healthcare was up
53.3%, Software/ Technology was up 42.7%, and Retail was up 26.3%. The Energy
sector, Oil/Gas Drilling and Oil/Gas Equipment & Services, however, was down -
20.3% for the six months.
The Fund's holdings in the Communications Systems & Services sector are
benefiting from the explosive growth of the Internet and the demand for
increased bandwidth. Holdings in the Healthcare sector are benefiting from
very positive demographic and economic trends, including the aging of
America's population and the drive by government and managed care to reduce
healthcare costs. The Software/ Technology sector is benefiting from strong
capital investment in the U.S. in order to remain globally competitive given a
very strong dollar. Dealing with the Year 2000 problem is also a strong driver
of demand for this sector. The Retail sector holdings continue to benefit from
strong consumer spending, driven by strong employment and personal income, low
inflation, dramatically lower gasoline prices and the highest consumer
confidence in 30 years. Costs in retailing are being driven lower by industry
consolidation, heavy investment in technology and lower imported product
prices due to the decline in Asian currencies and economies.
The energy sector, Oil/Gas--Drilling and Oil/Gas--Equipment & Services,
continued to hurt performance for the fiscal period. The Energy Sector,
consisting of 15 holdings, was 20.6% of the portfolio on June 30, 1998, and
had a negative performance of -20.3% for the six months. We continue to
believe that these holdings represent above average growth potential at a
valuation that is among the cheapest in the marketplace. For the most recently
reported quarter, all 15 of the holdings reported earnings growth above 30%
and they are selling at an aggregate PE to growth rate of 80%.
Clearly the psychological negatives of declining and depressed spot oil prices
have kept short-term, momentum-oriented institutional investors from this
sector in the past six months. The severe decline in spot oil prices is based
on short-term uncertainties regarding the extent and duration of a slow-down
in Asian economies, much warmer than normal weather in the northern hemisphere
this past winter, a calamitous miscalculation by OPEC in increasing their
production quota by 2.5 million barrels a day last November and skepticism
regarding OPEC's current commitment to announced reductions in output. Oil has
recently been selling for $13 to $14 per barrel. However, even at last year's
average of $19 per barrel, oil was at a low in inflation adjusted terms versus
the oil prices five, ten, and fifteen years ago. A recent positive development
was the formation of a new group of non-OPEC and OPEC nations, including
erstwhile competitors Mexico, Venezuela, and Saudi Arabia. This group agreed
to reduce production substantially and these reductions go well beyond the
reductions implied by just reduced OPEC quotas.
Even though the real price has not gone up during the past 15 years, the
physical demand for oil in the world has increased by about 50%. Since oil is
a rapidly depleting resource, substantial volumes must be found, developed and
produced each year. This underpins a secular growth rate of demand for oil
exploration, equipment and services. Advanced technology, economies of scale
and increased outsourcing by the major integrated oil companies are driving
further consolidation of these industries. In fact, three of our holdings have
been involved in major mergers in the past three months, indicating that those
who know the industry best are finding it cheaper to purchase industry assets
in the stock market than to build new assets from the ground up.
Many of the Fund's energy holdings are involved directly or indirectly in
offshore drilling, exploration and development, particularly in deep-water
drilling. It is this segment of the industry that is supply-constrained and
has the power to raise prices even at $13 per barrel oil. New offshore deep-
water drilling ships take two to three years to build and cost $300 million or
more. Capital expenditures to build new deep-water drilling units were not
economically justified even at last year's higher oil prices. Despite the
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Evergreen Variable Trust
EVERGREEN VA AGGRESSIVE GROWTH FUND
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short-term uncertainties, many observers, ourselves included, expect a
recovery and profitable growth in this sector that will last several years.
Any postponement or reduction in the expenditures on building of new capacity
in oil equipment and services based on recent declines in oil prices only
enhances the value of existing capacity and makes a lengthier period of future
profitability more likely. Under this scenario, when the price of oil begins
its expected recovery to the $16-$18 per barrel level later this year, the
stock market should quickly price these stocks upward in accord with their
increased value.
New names among the Fund's top ten holdings this period include VISX, Inc. and
MedQuist, Inc. in the Healthcare sector; Staples, Inc. in Retail; and
SunAmerica, Inc. in Financial Services. Each of these stocks has had
exceptional appreciation over the past three months: VISX, Inc. was up 138%;
Medquest, Inc. was up 56.9%; Staples, Inc. was up 24.8%, and SunAmerica, Inc.
was up 20.2%.
We are encouraged by the improving relative performance of the Fund,
especially given the general backdrop of continued severe under-performance of
small and mid-cap stocks to the major stock indices. We believe the progress
in the Fund's performance would likely be driven even more positively when
these sectors again come into favor. This and the longer-term growth potential
of the oil drilling, equipment and service sector holdings lead us to believe
that there are much better days ahead for the Fund's portfolio. We continue to
search for and find companies with strong business momentum, selling at
attractive prices.
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Evergreen Variable Trust
EVERGREEN VA FUND
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A REPORT FROM YOUR PORTFOLIO MANAGER
Stephen A. Lieber
The Evergreen VA Fund provided an 8.93% return in the first half of 1998, as
compared with +4.93% for the Russell 2000 Index, used as a benchmark for
comparability. A significant portion of the Fund's 132 equity holdings
provided exceptional leadership returns. The largest increases were in the
shares of VISX, Inc., First American Financial Corp., and Lowe's Companies,
Inc., +163.9%, +71.8%, and +69.9%, respectively. The top twenty performers
provided gains of over 38.0%. They represented a diverse group of industries,
including five health care specialists. Corporations experiencing a favorable
turnaround in their operations were also major contributors, led by Beckman
Coulter, Inc., +47.1%.
A number of significant gains were realized during the year, ranging up to
+308.0% for the holdings in Arterial Vascular Engineering, Inc.; +187.6% for
the holdings in Merrill Lynch & Co., Inc.; +43.9% for the holdings in Park
Electrochemical Corp.; and +37.3% for the holdings in Maxxim Medical, Inc.
Purchases during the quarter included additions to VISX, Inc., which increased
+133.9% since this recent purchase, and First American Financial Corp.,
+72.2%. New positions were established in Young & Rubicam, Inc., +28.0% and
Midwest Express Holdings, Inc., +27.4%.
Mergers and acquisitions played a favorable role among the Fund's holdings,
with several completed transactions including: Continental Homes Holdings
Corp. +153.0%; First of America Bank Corp. +146.0%; and Fisher Scientific
International, Inc. +24.5%.
Declines in value occurred in just two companies, Reliability, Inc. -7.4% in
one year; and Broderbund Software, Inc. -49.6% in two years.
We have endeavored to build this portfolio as a diversified group of holdings
of undervalued growth stocks. It ranges widely in industries, focusing on
investing in growth opportunities with exceptionally conservative valuation.
Through this approach, we have held selectively among major companies,
including Sprint Corp. and McKesson Corp., which have provided sizable value
increases for the Fund. We have also sought participation in important
technological opportunities, with commitments in Intel Corp., Sun
Microsystems, Inc., Cisco Systems, Inc., and a group of smaller, but pivotal
research-driven specialists such as Aspect Telecommunications Corp., MICROS
Systems, Inc. and Zebra Technologies Corp.
Expecting a low rate of inflation and declining interest rates, the Fund has
been positioned in a number of rate sensitive and financial investments,
including banks such as Comerica, Inc. and National City Corp. In the real
estate and residential construction fields, the Fund has benefited by
significant positions in D.R. Horton, Inc., +69.3%, and U.S. Home Corp.,
+12.5%. Overall, the selection of investments has been based both on macro
views as to the trend of the economy and individual industry outlooks, as well
as on the underlying dynamics of individual corporations. We anticipate that
these strategies will continue to be rewarding for the Fund's shareholders in
1998, and in the years ahead.
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Evergreen Variable Trust
EVERGREEN VA FOUNDATION FUND
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A REPORT FROM YOUR PORTFOLIO MANAGER
Stephen A. Lieber
Evergreen VA Foundation Fund provided a year-to-date return of +6.94%,
compared with +9.61% for the Lipper Variable Annuity Balanced Funds Average
for the six month period ended June 30, 1998. The Fund experienced positive
performance, both in its equities and in its U.S. Treasury bond investments.
The Fund was managed to combine both an equity and a fixed-income portfolio,
using a strategy aimed at capital appreciation in both sectors, and varying
the asset allocation between the two in line with expected opportunities.
Through the six months, the bulk of the commitment was on the equity side,
although both stocks and bonds provided capital appreciation for the Fund. The
stock performance was led by a diverse group of companies, with particular
strength in three sectors which might be described as interest sensitive:
brokerage, residential construction and improvement, and insurance. The top
ten equity performances for the half year were: Lowe's Companies, Inc. +69.9%;
Cisco Systems, Inc. +64.7%; Lehman Brothers Holdings, Inc. +52.1%; Lennar
Corp. +36.5%; American Home Products Corp. +35.3%; American International
Group, Inc. +34.1%; Monsanto Co. +32.8%; Unova, Inc. +30.7%; Quest
Diagnostics, Inc. +29.5%; and Mercantile Stores Co., Inc. +29.4%.
Several major increases in value were accomplished through mergers and
acquisitions. Among those acquisitions completed were First of America Bank
Corp. +161.9%; Continental Homes Holding Corp. +109.7%; and Oasis Residential,
Inc. +7.2%. Announced during the six months were Mercantile Stores Co., Inc.
and Monsanto Co. The largest purchases made during the six months, among
equities, were in the shares of Lilly (Eli) & Co. and Frontier Corp., each
viewed as an undervalued specialist company in its field. On the fixed income
side, the largest purchase was in U.S. Treasury 6% bonds due in 2026. This
purchase made in February provided +4.3% appreciation by June 30. There were
no losses in the Fund's bond market holdings.
The strategy to be employed for the Fund for the remainder of 1998 will be a
continuation of the focus on purchasing common stocks with growth potential at
times of comparative undervaluation. We anticipate that in 1998 there will be
considerable searching for stocks promising exceptional corporate earnings
performance, as well as for undervalued companies. The fixed-income
positioning of the Fund has correctly anticipated the decline in interest
rates to date. We will remain flexible in asset allocation, seeking to benefit
by indicated interest rate trends.
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Evergreen Variable Trust
EVERGREEN VA GLOBAL LEADERS FUND
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A REPORT FROM YOUR PORTFOLIO MANAGERS
Stephen A. Lieber
Edwin D. Miska
Evergreen VA Global Leaders Fund concluded a successful six months, returning
+13.81% for the semiannual period ended June 30, 1998. This return was
slightly below that of the MSCI World Index, which returned +16.16%, but more
in line with the Lipper VA Global Funds Average which returned +15.44%. The
effects of foreign currency translation brought on in part by the turmoil in
the Asian markets was negative. The Fund also held a cash position throughout
the period hoping to maximize trading decisions, which had the effect of
holding back returns given the market's strong bull run. The six-month time
period has been rewarding but challenging, as the overall world market rally
has been of limited amplitude, favoring certain larger-cap, highly-followed,
index-oriented issues and largely ignoring or discarding others, despite
strong fundamentals and prospective earnings growth, and both relative and
absolute undervaluation. The ongoing Asian financial crises and ensuing fears
of a slowing domestic economy has created a heightened market volatility
creating a preference for liquidity over fundamentals. Overall, despite bouts
of volatility, the principal markets in which your Fund invests registered
solid performance. For the six months of 1998, the EMU countries Index
returned +34.6% and most developed market regions were higher, with the Nordic
countries region up +26.1%. Finland was the top overall performing market
rising +65.0%, while Singapore in Asia was the weakest, being down -31.5%. The
USA country index gained +17.1%.
The Fund continued its disciplined strategy of seeking out what we believed to
be the "100 best companies in the world" based on our quantitative and
qualitative analyses. Against a backdrop of an economic environment around the
globe that was generally favorable towards equity investing, the Fund
successfully implemented this by focusing on companies whose financial
performance and product and service reach distinguish them as "leaders" within
their markets. Our investment discipline continued to concentrate on building
a portfolio of companies which have been and are consistently profitable,
exhibit a strong pattern of sustained earnings growth, both historical and
prospective, generate the highest returns on shareholders' equity and are
appropriately priced, offering the most value relative to other similar
issues. When reviewed within a global, country and industry perspective, these
characteristics generally identify the most successful corporations
representing exceptional investment opportunities. The Fund has also sought to
correctly optimize country and currency exposures based on a rigorous review
of global macroeconomic and political factors. This combination of a diligent,
qualitative stock selection process, strong value oriented discipline, and a
structured economic review has helped the Fund maximize shareholder returns.
Lead by the strength of the U.S. economy, where fears of higher interest rates
had abated amidst strengthening consumer demand, low unemployment and almost
non-existent inflationary pressures, corporate earnings continued to be
buoyant and made for rising expectations, encouraging strong investment
participation. Continued strength of the U.S. dollar vis a vis the world's
currencies reflected this bullish sentiment. The Fund benefited from its
continued strong outperformance of its U.S holdings which were up +18.2% for
the six months and +31.5% for the trailing 12 months. Standout performers were
major names, that have shown an ability to achieve consistently outstanding
top and bottom line results, despite difficulties from many in similar
industries. For example year-to-date, from technology: Microsoft Corp rose
+68.6% and Cisco Systems Inc. was up +64.7%, bucking the difficult industry
environment. From the consumer sector: Gap Inc. +75.1%, Wal-Mart Stores Inc.
+53.9%, Home Depot Inc. +40.8%, and Avon Products +27.7%. Pharmaceutical firms
Schering-Plough rose +46.9% and Merck & Co. rose +25.7%. Financial issues
benefited from falling interest rates: Sunamerica Corp was up +37.9%, Student
Loan Marketing Assoc. +23.4% and MBNA Corp. +20.7%. In total the Fund
benefitted from broad based strength, as 31 of the 37 positions held at least
six months registered positive performance, with 15 returning in excess of
20%.
The Fund's international holdings performance continued to be challenging and
registered results slightly below those of the MSCI EAFE Index. A sign of
optimism might be the trend in returns, as for the first time in recent
results, a majority of the Fund's best performers for six months were from
international holdings. Seven of the Fund's top 10 performers were from non-US
investments. The Fund's international portfolio returned +11.6% versus +15.2%
for EAFE. The fund maintained a diversified portfolio of 76 issues from 16
countries representing 50% of the Fund's assets. Two major factors contributed
towards overall results:
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Evergreen Variable Trust
EVERGREEN VA GLOBAL LEADERS FUND
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A deliberate overweighting towards the improving economic conditions in
Europe, where 40% of the Fund is invested and the portfolio's lack of exposure
to the regional economic instability within the Far East. Among other
individual countries, year-to-date returns from Belgium: +56.5%, Germany:
+27.1%, Italy: +29.1%, Sweden: +20.5%, Denmark: +26.9% and France: +17.2%
contributed positively, while shares in Malaysia:-21.7%, Hong Kong: -22.6% and
Japan: -10.4% continued to be particularly weak. European returns from Norway
and the Netherlands were weak and held back further gains. Among individual
issues, positives for the year to date included German industrial process
software giant SAP AG which was up +97.7%, and was the Fund's overall best
performing stock. From Great Britain mobile phone operator Vodaphone Group Plc
was up 73.6% and business services conglomerate Rentokil Plc rose +64.7%.
Other standouts included from Germany, european clothing designer and retailer
Hugo Boss +60.9%; from Belgium pharmaceutical firm UCB (+57.2%), retailer
Colruyt (+53.3%) and instrument maker Barco (+55.3%). Swedish clothing
retailer Hennes & Mauritz returned 44.4%. French firms Sodexho, the worlds
largest food caterer was up +44.6% and drug maker Synthelabo rose +34.8%.
Canadian diversified manufacturer Bombardier Cl B. was also a standout up
+32.0% for the six months.
Despite recent regional market volatility and profit growth warnings from
selected issues, overall corporate earnings performance has been exceptional
and expectations remain robust so far into 1998. It will be increasingly
difficult, however, for world markets to eclipse the double digit performance
of the past three years. Rising valuations and expectations have made the
margins for error ever thinner. Therefore, selectivity amongst individual
companies and markets will be the key to outperformance. We believe superior
performance will be achieved by the companies that consistently demonstrate
sustained and visible growth in any economic environment. Firms with superior
managements and outstanding strong financial wherewithall are better able to
seize opportunities created by market uncertainties. Your Fund will be ever
vigilant to identify such companies and make them part of your investment
portfolio. Understanding these cautions, we continue to remain enthusiastic
for prospects for the remainder of 1998 and beyond.
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Evergreen Variable Trust
EVERGREEN VA GROWTH AND INCOME FUND
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A REPORT FROM YOUR PORTFOLIO MANAGERS
Stephen A. Lieber
Gary Buesser
Evergreen VA Growth and Income Fund had a total return of +7.52% for the first
half of 1998. The "value timing" investment strategy seeks quality companies
with above-average growth prospects that are undervalued in relation to a
company's asset values, earnings, and cash flow potential. The Fund selects
companies that possess a catalyst for change, such as new management, new
products, restructuring potential, or earnings turnaround to close the
undervaluation gap.
PORTFOLIO HIGHLIGHTS
The following industry groups provided the strongest performance during the
First Half of 1998: Building, Construction & Furnishings, +45%; Healthcare
Products & Services, +32%; and Retailing & Wholesale, +29%.
The Building, Construction and Furnishings group benefited from the robust
domestic U.S. economy. Lowe's Companies, Inc. and Furniture Brands
International, Inc., +70% and +37%, respectively, had strong earnings growth
due to healthy new and existing home sales.
Healthcare Products & Services' strong performers included: Wellpoint Health
Networks, Inc. +75%; Boston Scientific Corp., +56%; and McKesson Corp. +56%.
McKesson continued its recent strong profitability trends, while Boston
Scientific Corp. and Wellpoint Health Networks, Inc. experienced earnings
growth.
The Retailing & Wholesale group was favorably impacted by the strong U.S.
economy. Proffitt's, Inc., which acquired our original holding in Carson Pirie
Scott & Co., was +41%.
Other strong performers were: Unova, Inc. +61%; Compuware Corp. +60%; Kansas
City Southern Industries, Inc. +56%; Black & Decker Corp. +56%; Lehman
Brothers Holdings, Inc. +52%; and Lincare Holdings, Inc. +47%.
During the first half of 1998, eight of the Fund's holdings received bids, or
completed merger and acquisition transactions, with an average gain of +79%.
The completed acquisitions were: Carson Pirie Scott & Co. +163.3%; American
Radio Systems Corp. +102.5%; Metromail Corp. +95.8%; Reading & Bates Corp.
+71.3%; LIN Television Corp. +58.0%; and Union Texas Petroleum Holdings, Inc.
+35.3%. Announced during the first half of 1998 were Maryland Federal Bancorp,
Inc. and Mercantile Stores Co., Inc.
The portfolio has a price/earnings ratio of 21.9X (based on this year's
earnings), and a growth rate of 20.2% (also based on this year's earnings).
Our "value timing" investment strategy remains constant: we buy what we
believe are quality companies with above-average growth prospects when they
are temporarily out-of-favor.
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Evergreen Variable Trust
EVERGREEN VA SMALL CAP EQUITY INCOME FUND
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A REPORT FROM YOUR PORTFOLIO MANAGER
Nola M. Falcone
ECONOMIC OVERVIEW
The strong domestic economy has been fueled by the consumers' urge to splurge.
The strong job market increased consumers' ability and willingness to spend.
The unemployment rate remained historically low at 4.5%. Low interest rates
and a rising stock market enabled consumers to purchase large ticket items.
Purchases of homes and autos were near historic highs during the first half of
1998. The consumers' purchasing habits are not likely to change in the near
future. In fact, the Consumer Confidence Index reached a three-decade high of
137.6 in June.
Despite consumer enthusiasm, some signs of an economic slowdown are beginning
to show. Asia's economic problems are having an effect on the manufacturing
portion of the U.S. economy. Most noticeable, is the increase in the trade
deficit caused by the strong dollar. Partially due to the slowdown in exports,
the Purchasing Managers' Survey fell in June to 49.6 from 51.4. Economists are
predicting that the trade deficit will reduce the U.S. economy's GNP by 0.5%
to 1% in 1998. The GM strike may also have a negative impact on the U.S.
economy this year.
Inflation remains low. During the first half of 1998 the core CPI increased
2.5% on an annual rate. Lower commodity prices and a strong dollar have helped
keep inflation low. Price competition due to the Asia slowdown has also helped
to maintain a low inflation rate. Many companies are no longer relying on
pricing to improve profits and are now focused on productivity. Recent
improvements in productivity have allowed companies to refrain from price
increases despite their increase in labor costs. Interest rates are reflecting
the positive inflation environment, as the 30-year treasury yield is also at
historic lows. Economists are not expecting an increase in inflation or
interest rates in the near term.
STRATEGY
The strategy of the Evergreen VA Small Cap Equity Income Fund is to buy
entrepreneurial small cap companies with promising growth prospects, strong
cash flows, and finances. The Fund attempts to invest in companies that are
attractively priced based on earnings, cash flow, or asset value. This type of
investing is often categorized as value investing. In addition to an
attractive valuation, these small cap companies must provide a dividend yield.
The Fund also purchases equity equivalents--convertible bonds or convertible
preferred stocks. Through the investment of undervalued equities that provide
a yield, the Fund is able to obtain favorable risk/return attributes. Our
studies show that the yield and attractive valuation often act as buffer in
market downturns. For instance, since the Fund's inception on May 1, 1998, the
Russell 2000 has decreased by 5.64% while the Evergreen VA Small Cap Equity
Income Fund is only down 1.90%.
We have recently increased the weighting of the consumer sector in the Fund.
Strong consumer spending should continue to improve earnings in many of the
consumer stocks that we have included in the Fund. Examples include:
Boston Acoustics is a manufacturer of speaker systems. Earnings are benefiting
from new contracts with a computer manufacturer. Earnings grew to $0.82/share
from $0.28/share last quarter. Earnings are expected to grow again next year,
albeit at a slower pace. Boston Acoustics is selling at 14x next year's
earnings.
CPI is a leading portrait studio. CPI recently sold its poorly performing
photo developing division and bought back approximately 30% of its stock with
the proceeds. We are expecting margins to continue to improve in its portrait
studio division. Earnings are expected to grow 40% this year. Selling at 14x
this year's earnings and 10x free cash flow, we believe CPI is significantly
undervalued.
Hach Co. is a manufacturer of water testing equipment. Hach recently acquired
a company called ETS. ETS is a leader in the manufacturing and distributing of
water testing equipment for pools. Through this division, Hach is able to sell
water testing equipment for faucets in the home. In addition to the growth
prospects of its newly acquired consumer division, Hach's core business is
very consistent and profitable. Hach grew earnings per share by 23% in 1997
and is currently selling at 14x this year's earnings.
We have also continued to purchase small regional banks at attractive
valuations. We believe the consolidation in the bank and thrift industry will
continue. Some recent purchases include Granite St. Bank of Keene, New
Hampshire, Horizon Financial of Bellingham, Washington, and St. Paul Bancorp
of Chicago, Illinois.
In addition to the names mentioned above, we have been purchasing companies
that have displayed earnings growth that has exceeded our expectations.
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Evergreen Variable Trust
EVERGREEN VA SMALL CAP EQUITY INCOME FUND
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We have also been diligent in disposing of stocks that no longer have
operating catalysts or stocks that have become too expensive.
OUTLOOK
In general, performance of small company stocks, especially value issues,
struggled during the first two quarters of 1998. The liquidity of the
marketplace flowed heavily into a few large capitalization issues. We believe
that the small company value sector offers such outstanding values that the
market will probably broaden out with an upward adjustment in price earnings
multiples.
Many of the companies that we own in the Fund have displayed excellent
earnings growth year to date. As we continue to focus on companies with
positive earnings results and outlooks, we are confident that these companies'
stock prices will eventually coincide with their operating performance.
As large cap companies search for efficient ways to increase their growth
rates, we believe attractively priced small cap companies will continue to be
acquired. Since many of the Fund's holdings are in consolidating industries
and are selling at attractive valuations, we are hopeful for further
acquisitions in the Fund.
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Evergreen Variable Trust
EVERGREEN VA STRATEGIC INCOME FUND
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A REPORT FROM YOUR PORTFOLIO MANAGER
Prescott Crocker
We are pleased to report on the events and strategies that shaped the
performance of Evergreen VA Strategic Income Fund for the six months ending
June 30, 1998.
The impact of recent global events on financial markets outside of a country's
own domain have reminded investors of the degree to which international
connections have multiplied and strengthened over the years. These events
reinforce the value of a flexible and diverse investment philosophy in ever-
dynamic world markets.
For the six months ending June 30, 1998, Evergreen VA Strategic Income Fund
produced a total return of 3.92%. We attribute the Fund's performance to
thorough research and the careful selection of securities and sectors, as well
as prudence in implementing the Fund's investment strategies. As of June 30,
1998, the Fund was invested as follows: U.S. high yield securities--12%; U.S.
Treasury securities--39%; foreign bonds--23% and cash equivalents--26%. The
Fund's foreign holdings included the government bonds of Spain, Denmark,
Germany, the United Kingdom, Australia and New Zealand. The Fund held no Asian
or emerging market debt during the period.
U.S. Treasury securities benefited from the country's positive economic
climate and the "flight to quality" that stemmed from the Asian crisis. The
yield on the benchmark 30-year U.S. Treasury fell from 5.92% on December 31,
1997 to 5.63% on June 30, 1998, generating considerable price appreciation.
Investors were attracted to the United States for several reasons--the
country's hardy economic growth--5.4% in the year's first quarter, minimal
inflation despite the eighth year of an economic expansion and favorable
fiscal news. The economy's strength increased federal tax revenues, helping to
generate the first federal budget surplus in nearly 30 years. The combination
of these factors propelled the rise of the U.S. dollar.
In the high yield sector, prices rose in the year's first quarter, erased
their gains in the second quarter and ended the six month period relatively
unchanged. In the second quarter, heavy supply and reduced demand, declining
equity values for small capitalization stocks and concerns about the effect of
Asia's problems on the corporate profits of high yield companies put downward
pressure on high yield bond prices. The combination of price declines in the
high yield sector with the sharp rise in U.S. Treasury prices caused high
yield bonds to underperform U.S. Treasuries, and drove the yield advantage of
high yield bonds over U.S. Treasuries to their highest levels in two years.
The performance of the Fund's foreign government bonds was in line with U.S.
Treasuries, although total return was limited by the strength of the U.S.
dollar. The European bond market has led the U.S. bond market to new highs,
despite the fact that--with the exception of the United Kingdom, whose
interest rates are at similar levels to those in the United States--Europe's
interest rates are lower than domestic interest rates. The European bond
market's strength has resulted from the creation of the European Monetary
Union (EMU)--the common currency uniting 11 European countries--and the
economic, fiscal and monetary standards required for entrance into the EMU.
Further, with the Bundesbank as the consortium's leader, Europeans are
regarded as the most cautious watchdogs of inflation, worldwide.
The situation in Asia and emerging markets continued to deteriorate, as
investors focused on Japan's economic slowdown, ongoing concerns of further
currency devaluation in Asia and Russia's liquidity crisis. Measured by J.P.
Morgan's Emerging Market Sovereign Spread Index, prices for emerging market
sovereign debt declined by 28% during the period.
Over the past six months, the Fund's strategy emphasized U.S. Treasury
securities and de-emphasized the high yield sector. We selected U.S.
Treasuries with 7-10 year maturities, as bonds with longer maturities provided
little additional yield. We also raised the Fund's investment in international
sovereign bonds but did not invest in Asia, despite our belief that economic
stability eventually will return to that area. We selected international
sovereign bonds that provided what we considered to be an attractive yield
advantage over alternative investments.
In the second half of 1998, we expect a continuation of many of the positive
trends that have benefited fixed-income markets worldwide, including modest
economic growth and benign inflation. We think U.S. interest rates will remain
relatively stable and perhaps move modestly lower, benefiting U.S. Treasuries.
We believe high yield bonds are beginning to represent attractive relative
value and we anticipate stronger investor interest now that they offer a
greater yield advantage to higher-rated alternatives. In Europe, we anticipate
the investment climate to remain favorable and look for either stable prices
or modest price appreciation.
10
<PAGE>
Evergreen Variable Trust
EVERGREEN VA STRATEGIC INCOME FUND
- -------------------------------------------------------------------------------
Also in the coming months, we expect the possibility of a "relief rally" in
Asia and the emerging markets, as commitments from the International Monetary
Fund help stabilize Russia's economy and programs designed to stimulate
Japan's economy, implemented by its ruling party, restore investor confidence
in the long-term value of emerging market debt.
11
<PAGE>
Evergreen Variable Trust
EVERGREEN VA AGGRESSIVE GROWTH Fund
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
See Combined Notes to Financial Statements.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED PERIOD
JUNE 30, ENDED
1998 DECEMBER 31,
(UNAUDITED) 1997*
- --------------------------------------------------------------------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.................. $11.10 $10.00
------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income#............................... (0.02) (0.06)
Net gains on securities (both realized and
unrealized)......................................... 1.20 1.16
------ ------
Total from investment operations...................... 1.18 1.10
------ ------
NET ASSET VALUE, END OF PERIOD........................ $12.28 $11.10
------ ------
Total return.......................................... 10.63% 11.00%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (thousands)................. $3,053 $1,868
Ratios to average net assets:
Total expenses....................................... 1.02%+ 1.06%+
Total expenses, excluding indirectly paid expenses... 1.00%+ 1.00%+
Total expenses, excluding fee waivers and/or
reimbursements...................................... 1.79%+ 3.02%+
Net investment income................................ (0.33)%+ (0.74)%+
Portfolio turnover rate............................... 38% 39%
</TABLE>
+ Annualized.
* For the period from March 6, 1997 (commencement of operations) to December
31, 1997.
# Net investment income is based on average shares outstanding during the peri-
od.
See Combined Notes to Financial Statements
12
<PAGE>
Evergreen Variable Trust
EVERGREEN VA FUND
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
See Combined Notes to Financial Statements.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
1998 ----------------
(UNAUDITED) 1997 1996*
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD............ $ 14.89 $ 11.41 $ 10.00
------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income #........................ 0.05 0.06 0.05
Net gains on securities (both realized and
unrealized)................................... 1.28 4.15 1.44
------- ------- -------
Total from investment operations................ 1.33 4.21 1.49
------- ------- -------
LESS DISTRIBUTIONS
Dividends from net investment income........... 0 (0.05) (0.05)
Distributions from capital gains............... 0 (0.68) (0.03)
------- ------- -------
Total distributions............................. 0 (0.73) (0.08)
------- ------- -------
NET ASSET VALUE, END OF PERIOD.................. $ 16.22 $ 14.89 $ 11.41
------- ------- -------
Total return.................................... 8.93% 37.16% 14.90%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (thousands)........... $39,260 $21,600 $10,862
Ratios to average net assets:
Total expenses................................. 1.01%+ 1.01% 1.00%+
Total expenses, excluding indirectly paid
expenses...................................... 1.00%+ 1.00% 1.00%+
Total expenses, excluding fee waivers and/or
reimbursements................................ 1.15%+ 1.31% 2.38%+
Net investment income.......................... 0.63%+ 0.42% 0.87%+
Portfolio turnover rate......................... 5% 32% 6%
</TABLE>
+ Annualized.
* For the period from March 1, 1996 (commencement of operations) to December
31, 1996.
# Net investment income is based on average shares outstanding during the peri-
od.
See Combined Notes to Financial Statements
13
<PAGE>
Evergreen Variable Trust
EVERGREEN VA FOUNDATION FUND
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
See Combined Notes to Financial Statements.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
1998 ----------------
(UNAUDITED) 1997 1996*
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD............ $ 13.54 $ 11.31 $ 10.00
------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income #........................ 0.16 0.26 0.16
Net gains on securities (both realized and
unrealized)................................... 0.78 2.86 1.37
------- ------- -------
Total from investment operations................ 0.94 3.12 1.53
------- ------- -------
LESS DISTRIBUTIONS
Dividends from net investment income........... 0 (0.24) (0.16)
Distributions from capital gains............... 0 (0.65) (0.06)
------- ------- -------
Total distributions............................. 0 (0.89) (0.22)
------- ------- -------
NET ASSET VALUE, END OF PERIOD.................. $ 14.48 $ 13.54 $ 11.31
------- ------- -------
Total return.................................... 6.94% 27.80% 15.30%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (thousands)........... $62,594 $31,840 $15,812
Ratios to average net assets:
Total expenses................................. 1.01%+ 1.01% 1.00%+
Total expenses, excluding indirectly paid
expenses...................................... 1.00%+ 1.00% 1.00%+
Total expenses, excluding fee waivers and/or
reimbursements................................ 1.05%+ 1.10% 1.72%+
Net investment income.......................... 2.33%+ 2.15% 2.70%+
Portfolio turnover rate......................... 2% 26% 12%
</TABLE>
+ Annualized.
* For the period from March 1, 1996 (commencement of operations) to December
31, 1996.
# Net investment income is based on average shares outstanding during the peri-
od.
See Combined Notes to Financial Statements
14
<PAGE>
Evergreen Variable Trust
EVERGREEN VA GLOBAL LEADERS FUND
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
See Combined Notes to Financial Statements.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED PERIOD
JUNE 30, ENDED
1998 DECEMBER 31,
(UNAUDITED) 1997*
- -------------------------------------------------------------------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.................. $10.79 $10.00
------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income#............................... 0.09 0.11
Net gains on securities and foreign currency related
transactions
(both realized and unrealized)...................... 1.40 0.77
------ ------
Total from investment operations...................... 1.49 0.88
------ ------
LESS DISTRIBUTIONS
Dividends from net investment income................. 0 (0.06)
Distributions from capital gains..................... 0 (0.03)
------ ------
Total distributions................................... 0 (0.09)
------ ------
NET ASSET VALUE, END OF PERIOD........................ $12.28 $10.79
------ ------
Total return.......................................... 13.81% 8.80%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (thousands)................. $6,671 $2,899
Ratios to average net assets:
Total expenses....................................... 1.06%+ 1.05%+
Total expenses, excluding indirectly paid expenses... 1.00%+ 1.00%+
Total expenses, excluding fee waivers and/or
reimbursements...................................... 1.76%+ 2.89%+
Net investment income................................ 1.57%+ 1.15%+
Portfolio turnover rate............................... 5% 11%
</TABLE>
+ Annualized.
* For the period from March 6, 1997 (commencement of operations) to December
31, 1997.
# Net investment income is based on average shares outstanding during the peri-
od.
See Combined Notes to Financial Statements
15
<PAGE>
Evergreen Variable Trust
EVERGREEN VA GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
See Combined Notes to Financial Statements.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
1998 ----------------
(UNAUDITED) 1997 1996*
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD............ $ 15.29 $ 11.83 $ 10.00
------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income#......................... 0.08 0.08 0.06
Net gains on securities (both realized and
unrealized)................................... 1.07 4.01 1.84
------- ------- -------
Total from investment operations................ 1.15 4.09 1.90
------- ------- -------
LESS DISTRIBUTIONS
Dividends from net investment income........... 0 (0.07) (0.06)
Distributions from capital gains............... 0 (0.56) (0.01)
------- ------- -------
Total distributions............................. 0 (0.63) (0.07)
------- ------- -------
NET ASSET VALUE, END OF PERIOD.................. $ 16.44 $ 15.29 $ 11.83
------- ------- -------
Total return.................................... 7.52% 34.66% 19.00%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (thousands)........... $53,678 $31,088 $14,484
Ratios to average net assets:
Total expenses................................. 1.01%+ 1.01% 1.00%+
Total expenses, excluding indirectly paid
expenses...................................... 1.00%+ 1.00% 1.00%+
Total expenses, excluding fee waivers and/or
reimbursements................................ 1.14%+ 1.23% 2.05%+
Net investment income.......................... 1.00%+ 0.59% 1.00%+
Portfolio turnover rate......................... 9% 18% 2%
</TABLE>
+ Annualized.
* For the period from March 1, 1996 (commencement of operations) to December
31, 1996.
# Net investment income is based on average shares outstanding during the peri-
od.
See Combined Notes to Financial Statements
16
<PAGE>
Evergreen Variable Trust
EVERGREEN VA SMALL CAP EQUITY INCOME FUND
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout the period)
See Combined Notes to Financial Statements.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30,
1998*
(UNAUDITED)
- --------------------------------------------------------------------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD................................ $10.00
------
INCOME FROM INVESTMENT OPERATIONS
Net investment income#............................................. 0.04
Net losses on securities (both realized and unrealized)............ (0.23)
------
Total from investment operations.................................... (0.19)
------
NET ASSET VALUE, END OF PERIOD...................................... $ 9.81
------
Total return........................................................ (1.90)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (thousands)............................... $1,372
Ratios to average net assets:
Total expenses..................................................... 1.00%+
Total expenses, excluding indirectly paid expenses................. 1.00%+
Total expenses, excluding fee waivers and/or reimbursements........ 6.32%+
Net investment income.............................................. 2.56%+
Portfolio turnover rate............................................. 2%
</TABLE>
+ Annualized.
* For the period from May 1, 1998 (commencement of operations) to June 30,
1998.
# Net investment income is based on average shares outstanding during the peri-
od.
See Combined Notes to Financial Statements
17
<PAGE>
Evergreen Variable Trust
EVERGREEN VA STRATEGIC INCOME FUND
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
See Combined Notes to Financial Statements.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED PERIOD
JUNE 30, ENDED
1998 DECEMBER 31,
(UNAUDITED) 1997*
- -------------------------------------------------------------------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.................. $10.20 $10.00
------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income#............................... 0.30 0.32
Net gains on securities and foreign currency related
transactions
(both realized and unrealized)...................... 0.10 0.21
------ ------
Total from investment operations...................... 0.40 0.53
------ ------
LESS DISTRIBUTIONS
Dividends from net investment income................. 0 (0.31)
Distributions from capital gains..................... 0 (0.02)
------ ------
Total distributions................................... 0 (0.33)
------ ------
NET ASSET VALUE, END OF PERIOD........................ $10.60 $10.20
------ ------
Total return.......................................... 3.92% 5.28%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (thousands)................. $7,351 $2,204
Ratios to average net assets:
Total expenses....................................... 1.03%+ 1.02%+
Total expenses, excluding indirectly paid expenses... 1.00%+ 1.00%+
Total expenses, excluding fee waivers and/or
reimbursements...................................... 1.23%+ 2.67%+
Net investment income................................ 5.90%+ 5.34%+
Portfolio turnover rate............................... 57% 119%
</TABLE>
+ Annualized.
* For the period from March 6, 1997 (commencement of operations) to December
31, 1997.
# Net investment income is based on average shares outstanding during the peri-
od.
See Combined Notes to Financial Statements
18
<PAGE>
Evergreen Variable Trust
EVERGREEN VA AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------
Schedule of Investments
June 30, 1998 (unaudited)
See Combined Notes to Financial Statements.
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- --------------------------------------------------------------------------------
COMMON STOCKS--96.5%
BUILDING--1.0%
1,000 Oakwood Homes Corporation................................ $ 30,000
-----------
BUSINESS SERVICES--8.1%
1,400 *Fiserv, Inc. ........................................... 59,456
2,000 Paychex, Inc. ........................................... 81,375
600 Saville System, Plc, ADR................................. 30,075
1,600 *Sterling Commerce, Inc. ................................ 77,600
-----------
248,506
-----------
COMMUNICATION SYSTEMS & SERVICES--7.6%
1,900 *Cisco Systems, Inc. .................................... 174,919
1,200 *WorldCom, Inc. ......................................... 58,125
-----------
233,044
-----------
EDUCATIONAL SERVICES--0.9%
800 *Sylvan Learning Systems, Inc. .......................... 26,200
-----------
FINANCIAL--3.8%
2,000 SunAmerica, Inc. ........................................ 114,875
-----------
HEALTHCARE--16.6%
1,300 HBO & Company............................................ 45,825
1,900 *Health Management Associates, Inc. ..................... 63,531
800 *HEALTHSOUTH Corporation................................. 21,350
2,800 MedQuist, Inc. .......................................... 80,850
1,600 Medtronic, Inc. ......................................... 102,000
1,700 Renal Care Group, Inc. .................................. 74,906
2,000 VISX, Inc. .............................................. 119,000
-----------
507,462
-----------
OIL/GAS--DRILLING--10.4%
900 Cliffs Drilling Company.................................. 29,531
1,000 Diamond Offshore Drilling, Inc. ......................... 40,000
1,500 ENSCO International, Inc. ............................... 26,063
1,500 *Global Marine, Inc. .................................... 28,031
1,800 *Marine Drilling Companies, Inc. ........................ 28,800
1,800 *Noble Drilling Corporation.............................. 43,312
2,300 Patterson Energy, Inc. .................................. 22,497
1,300 *R & B Falcon Corporation................................ 29,413
1,600 Transocean Offshore, Inc. ............................... 71,200
-----------
318,847
-----------
</TABLE>
* Non-income producing securities.
SUMMARY OF ABBREVIATIONS:
ADR--American Depositary Receipts
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------------------------------------------------------------------------
COMMON STOCKS--CONTINUED
OIL/GAS--EQUIPMENT & SERVICES--10.2%
1,500 *EVI Weatherford Inc. ................................. $ 55,687
3,300 Global Industries Ltd. ................................ 55,688
800 Halliburton Company.................................... 35,650
3,200 *Petroleum Geo-Services ADR............................ 97,600
600 Schlumberger Ltd. ..................................... 40,988
400 *SEACOR SMIT, Inc. .................................... 24,525
-----------
310,138
-----------
RETAIL (SPECIALTY)--17.6%
1,500 *Action Performance Companies, Inc. ................... 48,281
900 *Bed Bath & Beyond, Inc. .............................. 46,631
1,500 *Central Garden & Pet Company.......................... 46,688
1,000 Ethan Allen Interiors, Inc. ........................... 49,938
2,000 Family Dollar Stores, Inc. ............................ 37,000
700 Fastenal Company....................................... 32,506
1,400 Home Depot, Inc. ...................................... 116,287
2,400 *Office Depot, Inc. ................................... 75,750
2,900 *Staples, Inc. ........................................ 83,919
-----------
537,000
-----------
SOFTWARE/TECHNOLOGY--20.3%
1,600 *American Power Conversion Corporation................. 48,000
1,400 Analysts International Corporation..................... 39,725
2,700 *BMC Software, Inc. ................................... 140,231
600 *Citrix Systems, Inc. ................................. 41,025
1,600 *EMC Corporation....................................... 71,700
1,400 *Microsoft Corporation................................. 151,725
1,600 *Network Associates, Inc. ............................. 76,600
1,900 *Parametric Technology Corporation..................... 51,538
-----------
620,544
-----------
</TABLE>
<TABLE>
<C> <S> <C> <C>
TOTAL INVESTMENTS--
(COST $2,423,528)................................... 96.5% 2,946,616
OTHER ASSETS AND
LIABILITIES--NET.................................... 3.5 106,353
------ ----------
NET ASSETS........................................... 100.0% $3,052,969
====== ==========
</TABLE>
See Combined Notes to Financial Statements
19
<PAGE>
Evergreen Variable Trust
EVERGREEN VA FUND
- --------------------------------------------------------------------------------
Schedule of Investments
June 30, 1998 (unaudited)
(continued)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ----------------------------------------------------------------------------
COMMON STOCKS--85.8%
ADVERTISING & RELATED SERVICES--0.4%
5,000 *Young & Rubicam Inc............................... $ 160,000
-----------
AUTOMOTIVE EQUIPMENT & MANUFACTURING--0.6%
15,000 *Sonic Automotive, Inc............................. 246,563
-----------
BANKS--4.1%
2,000 Bankers Trust Corp. ............................... 232,125
7,500 Cape Cod Bank & Trust Co. ......................... 304,688
6,000 Comerica, Inc...................................... 397,500
4,000 F&M National Corp. ................................ 116,000
4,000 Hibernia Corp. Cl. A............................... 80,750
3,600 National City Corp................................. 255,600
6,000 Seacoast Banking Corp. of Florida
Cl. A............................................. 231,000
-----------
1,617,663
-----------
BUILDING, CONSTRUCTION & FURNISHINGS--16.2%
26,250 Cavalier Homes, Inc................................ 339,609
22,500 Clayton Homes, Inc................................. 427,500
46,500 D.R. Horton, Inc................................... 970,687
15,000 *Eagle Hardware & Garden, Inc. .................... 346,875
10,000 *Knoll, Inc........................................ 295,000
5,000 La-Z-Boy Chair Co.................................. 282,500
15,000 Lennar Corp........................................ 442,500
10,000 Lowe's Companies, Inc.............................. 405,625
11,000 M/I Schottenstein Homes, Inc....................... 237,875
10,000 *Morgan Products, Ltd. ............................ 45,625
19,700 Oakwood Homes Corp................................. 591,000
2,400 *Palm Harbor Homes, Inc. .......................... 102,300
27,500 *Presley Companies Cl. A........................... 24,063
10,000 Ryland Group, Inc. ................................ 262,500
10,000 TJ International, Inc.............................. 301,250
12,000 *Toll Brothers, Inc................................ 344,250
22,500 *US Home Corp. .................................... 928,125
-----------
6,347,284
-----------
BUSINESS EQUIPMENT & SERVICES--0.5%
5,000 *Zebra Technologies Corp. Cl. A.................... 213,750
-----------
CHEMICAL & AGRICULTURAL PRODUCTS--0.4%
1,000 Schulman (A.), Inc................................. 19,563
4,000 Sigma-Aldrich Corp. ............................... 140,500
-----------
160,063
-----------
COMMUNICATION SYSTEMS & SERVICES--1.6%
7,625 *Andrew Corp. ..................................... 137,727
1,500 *Cisco Systems, Inc................................ 138,094
10,000 *Coherent, Inc. ................................... 171,562
6,000 Inter-Tel, Inc..................................... 96,000
5,000 *Powertel, Inc..................................... 92,500
-----------
635,883
-----------
CONSUMER PRODUCTS & SERVICES--4.4%
2,700 *Cendant Corp...................................... 56,363
15,000 Commonwealth Industries, Inc....................... 150,000
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- --------------------------------------------------------------------------------
COMMON STOCKS--CONTINUED
CONSUMER PRODUCTS & SERVICES--CONTINUED
30,000 *Gaylord Container Corp. Cl. A......................... $ 230,625
5,700 Heilig-Meyers Co....................................... 70,181
5,000 K2, Inc................................................ 88,125
12,000 Lancaster Colony Corp. ................................ 454,500
10,000 Noble Affiliates, Inc.................................. 380,000
7,000 Russ Berrie & Co., Inc................................. 175,000
3,000 Toro Co. .............................................. 102,750
-----------
1,707,544
-----------
ELECTRICAL EQUIPMENT & SERVICES--3.0%
5,000 *ADFlex Solutions, Inc. ............................... 44,375
2,000 AMP, Inc............................................... 68,750
6,000 *Atmel Corp. .......................................... 81,750
6,000 Fair Issac & Co., Inc.................................. 228,000
5,000 *Hadco Corp............................................ 116,563
8,000 Harman International Industries, Inc................... 308,000
12,031 *Paxar Corp............................................ 138,356
12,000 *SMART Modular Technologies, Inc....................... 175,500
-----------
1,161,294
-----------
FINANCE & INSURANCE--12.8%
3,000 AMBAC Financial Group, Inc............................. 175,500
4,000 Countrywide Credit Industries, Inc..................... 203,000
5,700 Dain Rauscher Corp..................................... 312,075
10,500 Edwards (A.G.), Inc.................................... 448,219
10,000 Enhance Financial Services Group, Inc. 337,500
1,500 First American Financial Corp.......................... 135,000
2,500 Freedom Securities Corp. .............................. 45,313
6,000 Horace Mann Educators Corp. ........................... 207,000
9,600 Interstate/Johnson Lane, Inc. ......................... 302,400
9,000 Landamerica Financial Group, Inc. ..................... 515,250
6,800 MBIA, Inc.............................................. 509,150
3,000 Mercury General Corp. ................................. 193,312
2,600 Merrill Lynch & Co., Inc............................... 239,850
5,000 MGIC Investment Corp................................... 285,312
13,800 Morgan Keegan, Inc..................................... 357,075
8,000 Paine Webber Group, Inc................................ 343,000
7,500 SunAmerica, Inc........................................ 430,781
-----------
5,039,737
-----------
HEALTHCARE PRODUCTS & SERVICES--11.1%
15,000 *ADAC Laboratories..................................... 337,500
3,000 *Alcide Corp........................................... 127,125
3,000 Arrow International, Inc............................... 82,313
10,000 Beckman Coulter Inc.................................... 582,500
2,850 Columbia / HCA Healthcare Corp......................... 83,006
5,000 Depuy, Inc............................................. 141,250
10,000 *Hologic, Inc.......................................... 181,875
10,000 *Idexx Laboratories, Inc............................... 248,750
2,000 Johnson & Johnson...................................... 147,500
900 *Maxxim Medical, Inc................................... 26,100
2,000 McKesson Corp. ........................................ 162,500
2,000 Merck & Co., Inc. ..................................... 267,500
</TABLE>
(Continued)
20
<PAGE>
Evergreen Variable Trust
EVERGREEN VA FUND
- --------------------------------------------------------------------------------
Schedule of Investments (continued)
June 30, 1998 (unaudited)
(continued)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- --------------------------------------------------------------------------------
COMMON STOCKS--CONTINUED
HEALTHCARE PRODUCTS & SERVICES--CONTINUED
7,000 *St. Jude Medical, Inc. ............................... $ 257,687
6,000 Stryker Corp. ......................................... 230,250
25,000 *VISX, Inc. ........................................... 1,487,500
-----------
4,363,356
-----------
INDUSTRIAL SPECIALTY PRODUCTS & SERVICES--5.7%
6,000 AptarGroup, Inc........................................ 373,125
10,000 Furon Co. ............................................. 181,250
15,000 *Input/Output, Inc..................................... 267,187
4,400 Kaydon Corp............................................ 155,375
1,000 Nacco Industries, Inc. Cl. A........................... 129,250
10,000 Pall Corp.............................................. 205,000
1,500 Park Electrochemical Corp.............................. 31,688
4,000 Robbins & Myers, Inc. ................................. 116,250
4,250 Snap-on, Inc........................................... 154,062
6,000 Spartech Corp.......................................... 128,625
8,000 Teleflex, Inc.......................................... 304,000
6,000 *UCAR International, Inc. ............................. 175,125
-----------
2,220,937
-----------
INFORMATION SERVICES & TECHNOLOGY--8.8%
2,000 *American Business Information, Inc.................... 32,000
2,000 *American Business Information, Inc. Cl. A............. 30,500
5,000 *Analytical Surveys, Inc............................... 183,125
10,000 *Dupont Photomasks, Inc. .............................. 345,000
10,000 *Etec Systems, Inc..................................... 351,875
8,000 *Gateway 2000, Inc..................................... 405,000
6,000 Hewlett-Packard Co..................................... 359,250
5,000 Intel Corp. ........................................... 370,625
10,000 *Micros Systems, Inc................................... 330,937
15,000 Molex, Inc............................................. 375,000
18,000 *Parametric Technology Corp............................ 488,250
4,000 *Sun Microsystems, Inc................................. 173,750
-----------
3,445,312
-----------
OIL/ENERGY--1.1%
10,000 Transocean Offshore, Inc............................... 445,000
-----------
OIL FIELD SERVICES--0.0% (A)
500 *Dril Quip, Inc........................................ 13,125
-----------
PAPER & PACKAGING--0.4%
5,100 St. Joe Corp........................................... 139,613
-----------
PUBLISHING, BROADCASTING & ENTERTAINMENT--1.6%
20,400 Belo (A.H.) Corp. Ser. A............................... 497,250
3,000 *Chancellor Media Corp................................. 148,969
-----------
646,219
-----------
REAL ESTATE--3.4%
4,500 *Alexander's, Inc. REIT................................ 400,500
3,500 Equity Residential Properties Trust REIT............... 166,031
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- --------------------------------------------------------------------------------
COMMON STOCKS--CONTINUED
REAL ESTATE--CONTINUED
9,000 Starwood Hotels & Resorts Trust REIT.................. $ 434,812
25,000 Sunstone Hotel Investors, Inc. REIT................... 332,813
-----------
1,334,156
-----------
RETAILING & WHOLESALE--2.8%
3,000 Avnet, Inc............................................ 164,063
8,000 *Cole National Corp. Cl. A............................ 320,000
5,000 *Costco Companies, Inc. .............................. 315,312
8,000 St. John Knits, Inc................................... 309,000
-----------
1,108,375
-----------
TELECOMMUNICATION SERVICES & EQUIPMENT--0.1%
1,000 *Aspect Telecommunications Corp....................... 27,375
-----------
THRIFT INSTITUTIONS--2.0%
6,000 First Palm Beach Bancorp, Inc......................... 261,000
10,000 Mech Financial, Inc. ................................. 290,000
11,000 York Financial Corp................................... 229,625
-----------
780,625
-----------
TRANSPORTATION--3.3%
13,500 *Airnet Systems, Inc.................................. 217,688
12,000 Florida East Coast Indiana, Inc....................... 351,000
3,000 *Heartland Express, Inc............................... 60,750
7,500 *Midwest Express Holdings, Inc. ...................... 271,406
13,500 Southwest Airlines Co. ............................... 399,937
-----------
1,300,781
-----------
UTILITIES--TELEPHONE--1.5%
10,000 Cincinnati Bell, Inc.................................. 286,250
4,000 Sprint Corp........................................... 282,000
-----------
568,250
-----------
Total Common Stocks
(cost $27,539,982)................................... $33,682,905
-----------
WARRANTS--0.1%
MANUFACTURING--DISTRIBUTING--0.1%
10,000 Perkin Elmer Corp. Cl G,
$65.73, exp 9/11/03.................................. 47,500
-----------
Total Warrants
(cost $37,900)....................................... $ 47,500
-----------
<CAPTION>
PRINCIPAL
AMOUNT
---------
<C> <S> <C>
SHORT-TERM INVESTMENTS--18.5%
COMMERCIAL PAPER--11.2%
$1,000,000 Avnet, Inc.
5.55%, 7/28/98........................................ 995,837
1,000,000 BMW U.S. Capital Corp.
5.58%, 7/13/98....................................... 998,140
Finova Capital Corp.
220,000 5.53%, 7/9/98......................................... 219,730
170,000 5.53%, 7/10/98........................................ 169,765
1,000,000 Gold Crown Managers Acceptance 5.60%, 7/15/98......... 997,822
1,000,000 Tampa Electric Co.
5.52%, 7/20/98........................................ 997,087
-----------
4,378,381
-----------
</TABLE>
(continued)
21
<PAGE>
Evergreen Variable Trust
EVERGREEN VA FUND
- --------------------------------------------------------------------------------
Schedule of Investments (continued)
June 30, 1998 (unaudited)
See Combined Notes to Financial Statements.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS--CONTINUED
GOVERNMENT AGENCY NOTES & BONDS--7.3%
$ 230,000 Federal Home Loan Bank Discount Note
5.43%, 8/28/98........................................ $ 227,988
-----------
Federal Home Loan Mortgage Discount Notes
2,015,000 5.46%, 7/16/98........................................ 2,010,416
250,000 5.47%, 7/14/98........................................ 249,506
Federal National Mortgage Association Discount Notes
225,000 5.43%, 7/10/98........................................ 224,694
160,000 5.50%, 7/29/98........................................ 159,316
-----------
2,871,920
-----------
Total Short-Term Investments
(cost $7,250,301).................................... $ 7,250,301
-----------
</TABLE>
<TABLE>
<C> <S> <C> <C>
TOTAL INVESTMENTS--
(COST $34,828,183)........................... 104.4% 40,980,706
OTHER ASSETS AND
LIABILITIES--NET............................. (4.4) (1,721,005)
------ ------------
NET ASSETS.................................... 100.0% $ 39,259,701
====== ============
</TABLE>
* Non-income producing securities.
SUMMARY OF ABBREVIATIONS:
REIT--Real Estate Investment Trust
See Combined Notes to Financial Statements
22
<PAGE>
Evergreen Variable Trust
EVERGREEN VA FOUNDATION FUND
- --------------------------------------------------------------------------------
Schedule of Investments (continued)
June 30, 1998 (unaudited)
(continued)
<TABLE>
<CAPTION>
SHARES VALUE
- --------------------------------------------------------------------------------
<C> <S> <C> <C>
COMMON STOCKS--56.4%
AEROSPACE & DEFENSE--0.6%
8,000 Boeing Co. ....................................... $ 356,500
-----------
AUTOMOTIVE EQUIPMENT & MANUFACTURING--0.2%
2,300 Goodyear Tire & Rubber Co. ....................... 148,206
-----------
BANKS--8.0%
14,250 AmSouth Bancorp................................... 560,203
6,000 BankBoston Corp. ................................. 333,750
2,000 Bankers Trust Corp. .............................. 232,125
6,800 Cape Cod Bank & Trust Co. ........................ 276,250
4,000 Citicorp.......................................... 597,000
4,500 Comerica, Inc. ................................... 298,125
10,000 Compass Bancshares, Inc. ......................... 451,250
5,000 Crestar Financial Corp. .......................... 272,813
2,000 F&M National Corp. ............................... 58,000
5,000 Fleet Financial Group, Inc. ...................... 417,500
600 M & T Bank Corp. ................................. 332,400
5,400 National City Corp. .............................. 383,400
20,000 Pacific Century Financial Corp. .................. 480,000
8,000 Seacoast Banking Corp. of Florida Cl. A........... 308,000
-----------
5,000,816
-----------
BUILDING, CONSTRUCTION & FURNISHINGS--5.2%
10,000 Armstrong World Industries, Inc. ................. 673,750
15,000 Carlisle Companies, Inc. ......................... 645,938
42,750 D.R. Horton, Inc. ................................ 892,406
24,004 Lennar Corp. ..................................... 708,118
8,000 Lowe's Companies, Inc. ........................... 324,500
-----------
3,244,712
-----------
BUSINESS EQUIPMENT & SERVICES--0.4%
6,200 *Crescent Operating, Inc. ........................ 105,400
5,000 Steelcase, Inc. .................................. 130,000
-----------
235,400
-----------
CAPITAL GOODS--0.8%
5,000 Caterpillar, Inc. ................................ 264,375
5,000 Deere & Co. ...................................... 264,375
-----------
528,750
-----------
CHEMICAL & AGRICULTURAL PRODUCTS--2.7%
11,000 Du Pont (E. I.) De Nemours & Co. ................. 820,875
6,000 Monsanto Co. ..................................... 335,250
7,000 Morton International, Inc. ....................... 175,000
3,000 PPG Industries, Inc. ............................. 208,688
8,500 Schulman (A.), Inc. .............................. 166,281
-----------
1,706,094
-----------
COMMUNICATION SYSTEMS & SERVICES--0.4%
3,000 *Cisco Systems, Inc. ............................. 276,188
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------------------
<C> <S> <C> <C>
COMMON STOCKS--CONTINUED
CONSUMER PRODUCTS & SERVICES--0.6%
3,500 Avon Products, Inc. ............................ $ 271,250
5,947 *Cendant Corp. ................................. 124,144
-----------
395,394
-----------
ELECTRICAL EQUIPMENT & SERVICES--3.3%
4,000 AMP, Inc. ...................................... 137,500
6,000 Applied Power, Inc. Cl. A....................... 206,250
6,400 General Electric Co. ........................... 582,400
9,300 Harman International Industries, Inc. .......... 358,050
6,000 Honeywell, Inc. ................................ 501,375
5,000 Perkin Elmer Corp. ............................. 310,937
-----------
2,096,512
-----------
FINANCE & INSURANCE--10.6%
6,000 AFLAC, Inc. .................................... 181,875
2,800 Allstate Corp. ................................. 256,375
3,000 American International Group, Inc. ............. 438,000
4,000 Chubb Corp. .................................... 321,500
4,000 Countrywide Credit Industries, Inc. ............ 203,000
4,300 *Farm Family Holdings, Inc. .................... 167,431
10,000 Horace Mann Educators Corp. .................... 345,000
7,500 John Nuveen Co. Cl. A........................... 297,656
6,366 Legg Mason, Inc. ............................... 366,443
5,000 Lehman Brothers Holdings, Inc. ................. 387,813
5,000 Lincoln National Corp. ......................... 456,875
5,000 Merrill Lynch & Co., Inc. ...................... 461,250
5,000 MGIC Investment Corp. .......................... 285,313
2,000 Mid Ocean Ltd. ................................. 157,000
10,500 NAC RE Corp. ................................... 560,437
11,100 Paine Webber Group, Inc. ....................... 475,912
11,250 Raymond James Financial, Inc. .................. 336,797
8,000 Torchmark Corp. ................................ 366,000
10,000 UNUM Corp. ..................................... 555,000
-----------
6,619,677
-----------
HEALTHCARE PRODUCTS & SERVICES--4.9%
9,000 Abbott Laboratories............................. 367,875
12,000 American Home Products Corp. ................... 621,000
4,050 Columbia/HCA Healthcare Corp. .................. 117,956
750 *Covance, Inc. ................................. 16,875
12,000 *First Health Group Corp. ...................... 342,000
5,000 Johnson & Johnson............................... 368,750
12,000 Lilly (Eli) & Co. .............................. 792,750
2,000 Medtronic, Inc. ................................ 127,500
2,100 Merck & Co., Inc. .............................. 280,875
375 *Quest Diagnostics, Inc. ....................... 8,203
-----------
3,043,784
-----------
INDUSTRIAL SPECIALTY PRODUCTS & SERVICES--1.3%
7,087 Autoliv, Inc. .................................. 224,126
3,000 Corning, Inc. .................................. 104,250
</TABLE>
(continued)
23
<PAGE>
Evergreen Variable Trust
EVERGREEN VA FOUNDATION FUND
- --------------------------------------------------------------------------------
Schedule of Investments (continued)
June 30, 1998 (unaudited)
(continued)
<TABLE>
<CAPTION>
SHARES VALUE
- --------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
INDUSTRIAL SPECIALTY PRODUCTS & SERVICES--CONTINUED
6,000 Snap-on, Inc. ........................................ 217,500
8,000 Timken Co. ........................................... 246,500
2,000 *Unova, Inc. ......................................... 43,000
-----------
835,376
-----------
INFORMATION SERVICES & TECHNOLOGY--3.1%
13,100 *Analog Devices, Inc. ................................ 321,769
7,000 Hewlett-Packard Co. .................................. 419,125
9,000 Intel Corp. .......................................... 667,125
3,000 International Business Machines Corp. ................ 344,437
4,000 *Sun Microsystems, Inc. .............................. 173,750
-----------
1,926,206
-----------
LEISURE & TOURISM--0.0% (A)
300 Disney Walt Co. ...................................... 31,519
-----------
MACHINERY--DIVERSIFIED--0.6%
7,000 W.W. Grainger, Inc. .................................. 348,688
-----------
OIL/ENERGY--0.9%
3,200 Consolidated Natural Gas Co. ......................... 188,400
5,000 Exxon Corp. .......................................... 356,562
-----------
544,962
-----------
OIL FIELD SERVICES--0.9%
8,000 Schlumberger Ltd. .................................... 546,500
-----------
PUBLISHING, BROADCASTING & ENTERTAINMENT--0.3%
2,000 Time Warner, Inc. .................................... 170,875
-----------
REAL ESTATE--4.6%
8,000 Apartment Investment & Management Co. Cl. A REIT...... 316,000
5,000 Brandywine Realty Trust REIT.......................... 111,875
1,442 Camden Property Trust REIT............................ 42,900
7,000 Capstead Mortgage Corp. REIT.......................... 58,625
10,000 CarrAmerica Realty Corp. REIT......................... 283,750
12,000 Crescent Real Estate Equities, Inc. REIT.............. 403,500
12,000 Crown American Realty Trust REIT...................... 116,250
1,000 Equity Residential Properties Trust REIT.............. 47,438
11,400 *FAC Realty, Inc. REIT................................ 91,200
334 Horizon Group Properties, Inc. REIT................... 2,202
12,000 Marriott International, Inc. Cl. A.................... 388,500
24,000 Meditrust Co. REIT.................................... 670,500
6,230 Post Property, Inc. REIT.............................. 239,855
4,776 Prime Retail, Inc..................................... 57,013
1,500 Sodexho Marriott Services, Inc........................ 43,500
-----------
2,873,108
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
- --------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
RETAILING & WHOLESALE--0.8%
4,000 Avnet, Inc. .......................................... $ 218,750
4,000 Mercantile Stores Co., Inc. .......................... 315,750
-----------
534,500
-----------
THRIFT INSTITUTIONS--1.7%
10,000 Golden West Financial Corp. .......................... 1,063,125
-----------
TRANSPORTATION--1.1%
15,000 Union Pacific Corp. .................................. 661,875
-----------
UTILITIES--TELEPHONE--3.4%
20,000 Cincinnati Bell, Inc. ................................ 572,500
20,000 Frontier Corp. ....................................... 630,000
5,000 GTE Corp. ............................................ 278,125
9,000 Sprint Corp. ......................................... 634,500
-----------
2,115,125
-----------
Total Common Stocks
(cost $29,094,507)................................... 35,303,892
-----------
CONVERTIBLE PREFERRED--0.8%
REAL ESTATE--0.1%
1,600 Prime Retail, Inc. 3/31/99, Series B.................. 32,800
-----------
TRANSPORTATION--0.7%
10,000 Union Pacific Capital Trust 4/01/28, 144A............. 467,500
-----------
Total Convertible Preferred
(cost $544,766)...................................... 500,300
-----------
<CAPTION>
PRINCIPAL
AMOUNT
----------
<C> <S> <C>
CONVERTIBLE DEBENTURES--0.5%
INFORMATION SERVICES & TECHNOLOGY--0.5%
$ 270,000 Aspen Technology 5.25%, 6/15/05....................... 306,788
-----------
Total Convertible Debentures
(cost $270,000)...................................... 306,788
-----------
U.S. GOVERNMENT & AGENCY OBLIGATIONS--19.4%
TREASURY NOTES & BONDS--19.4%
U.S. Treasury Bonds
8,000,000 6.00%, 2/15/26........................................ 8,325,008
2,000,000 6.25%, 8/15/23........................................ 2,141,252
1,000,000 7.125%, 2/15/23....................................... 1,183,126
-----------
500,000 U.S. Treasury Notes
6.50%, 8/15/05....................................... 527,969
-----------
12,177,355
-----------
Total U.S. Government & Agency Obligations
(cost $11,269,328)................................... 12,177,355
-----------
</TABLE>
(continued)
24
<PAGE>
Evergreen Variable Trust
EVERGREEN VA FOUNDATION FUND
- --------------------------------------------------------------------------------
Schedule of Investments (continued)
June 30, 1998 (unaudited)
See Combined Notes to Financial Statements.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
<C> <S> <C>
SHORT-TERM INVESTMENTS--24.1%
COMMERCIAL PAPER--9.4%
$1,000,000 Avnet, Inc.
5.55%, 7/28/98....................................... $ 995,837
1,000,000 BMW U.S. Capital Corp.
5.58%, 7/13/98....................................... 998,140
340,000 Dollar Thrifty Funding Corp.
5.54%, 7/14/98....................................... 339,320
Finova Capital Corp.
420,000 5.53%, 7/9/98......................................... 419,484
240,000 5.53%, 7/10/98........................................ 239,668
1,000,000 Gold Crown Managers Acceptance
5.60%, 7/15/98....................................... 997,822
1,000,000 Southern Co.
5.52%, 7/16/98....................................... 997,700
895,000 System Capital Corp.
5.62%, 7/10/98....................................... 893,743
-----------
5,881,714
-----------
</TABLE>
* Non-income producing securities.
(a) Less than one-tenth percent.
SUMMARY OF ABBREVIATIONS:
REIT--Real Estate Investment Trust
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
<C> <S> <C>
SHORT-TERM INVESTMENTS--CONTINUED
GOVERNMENT AGENCY NOTES & BONDS--14.7%
Federal Home Loan Bank Discount Notes
$ 180,000 5.39%, 7/1/98......................................... $ 180,000
900,000 5.43%, 7/15/98........................................ 898,100
6,680,000 5.43%, 8/28/98........................................ 6,621,561
Federal Home Loan Mortgage Discount Notes
315,000 5.43%, 7/14/98........................................ 314,382
185,000 5.47%, 7/14/98........................................ 184,634
460,000 5.48%, 7/15/98........................................ 459,020
Federal National Mortgage Association Discount Notes
315,000 5.43%, 7/10/98........................................ 314,572
210,000 5.50%, 7/29/98........................................ 209,102
-----------
9,181,371
-----------
Total Short-Term Investments
(cost $15,063,085)................................... 15,063,085
-----------
</TABLE>
<TABLE>
<C> <S> <C> <C>
TOTAL INVESTMENTS--
(COST $56,241,686)........................... 101.2% 63,351,420
OTHER ASSETS AND
LIABILITIES--NET............................. (1.2) (757,265)
------ -----------
NET ASSETS ................................... 100.0% $62,594,155
====== ===========
</TABLE>
See Combined Notes to Financial Statements
25
<PAGE>
Evergreen Variable Trust
EVERGREEN VA GLOBAL LEADERS FUND
- --------------------------------------------------------------------------------
Schedule of Investments
June 30, 1998 (unaudited)
(continued)
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS--84.5%
AUSTRALIA--0.1%
Chemical & Agricultural Products--0.1%
2,500 Incitec, Ltd. ......................................... $ 7,883
----------
BELGIUM--1.3%
Healthcare Products & Services--0.4%
5 UCB SA................................................. 25,954
----------
Industrial Specialty Products & Services--0.6%
150 Barco NV............................................... 41,947
----------
Retailing & Wholesale--0.3%
25 *Colruyt SA............................................ 19,629
----------
TOTAL BELGIUM.......................................... 87,530
----------
CANADA--4.0%
Automotive Equipment & Manufacturing--1.6%
1,500 Magna International, Inc. Cl. A........................ 102,937
----------
Chemical & Agricultural Products--0.7%
1,500 Du Pont Canada, Inc., Cl. A............................ 45,768
----------
Energy--0.5%
2,000 *Canadian Natural Resources, Ltd. ..................... 34,250
----------
Industrial Specialty Products & Services--1.2%
3,000 Bombardier, Inc., Cl. B................................ 81,547
----------
TOTAL CANADA........................................... 264,502
----------
DENMARK--0.6%
Healthcare Products & Services--0.6%
400 Coloplast AS........................................... 39,304
----------
FRANCE--3.7%
Building, Construction & Furnishings--1.8%
1,000 Societe Technip........................................ 122,236
----------
Food & Beverage Products--0.5%
180 Sodexho Alliance....................................... 34,031
----------
Healthcare Products & Services--0.3%
100 Synthelabo............................................. 16,871
----------
Retailing & Wholesale--0.2%
25 Carrefour SA........................................... 15,817
----------
Textile & Apparel--0.9%
750 Hermes International................................... 58,926
----------
TOTAL FRANCE........................................... 247,881
----------
GERMANY--9.0%
Electrical Equipment & Services--1.0%
200 VEW AG................................................. 63,212
----------
Food & Beverage Products--0.6%
75 Suedzucker AG.......................................... 41,795
----------
Healthcare Products & Services--0.7%
650 Altana AG.............................................. 49,648
----------
Information Services & Technology--0.9%
100 SAP AG................................................. 60,717
----------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
- --------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
Textile & Apparel--2.6%
150 Adidas AG................................................ $ 26,158
70 Hugo Boss AG............................................. 147,495
----------
173,653
----------
Utilities--Electric--3.1%
3,600 RWE AG................................................... 213,192
----------
TOTAL GERMANY............................................ 602,217
----------
HONG KONG--3.6%
Banks--0.0% (a)
600 Wing Lung Bank........................................... 1,394
----------
Diversified Companies--0.0%
60,000 First Pacific Ltd. ...................................... 25,168
----------
Finance & Insurance--0.7%
75,000 National Mutual Asia Ltd................................. 47,915
----------
Real Estate--0.8%
6,000 Cheung Kong Holdings, Ltd................................ 29,505
7,000 Henderson Land Development Co., Ltd...................... 23,083
----------
52,588
----------
Retailing & Wholesale--0.0% (a)
2,000 Giordano International, Ltd. ............................ 405
----------
Telecommunication Services & Equipment--0.9%
3,000 Hong Kong Telecommunications, Ltd. ADS................... 56,625
----------
Utilities--Gas--0.8%
1,000 Hong Kong & China Gas warrants exp 9/30/99............... 68
47,000 Hong Kong & China Gas.................................... 53,382
----------
53,450
----------
TOTAL HONG KONG.......................................... 237,545
----------
IRELAND--0.5%
Building, Construction & Furnishings--0.5%
2,521 CRH Plc, London Exchange................................. 35,779
----------
ITALY--5.0%
Consumer Products & Services--1.4%
3,500 *Industrie Natuzzi SpA ADS............................... 91,000
----------
Healthcare Products & Services--1.6%
6,900 Luxottica Group SpA ADS.................................. 106,950
----------
Textile & Apparel--2.0%
3,224 Benetton Group SpA ADS................................... 134,199
----------
TOTAL ITALY.............................................. 332,149
----------
JAPAN--1.4%
Consumer Products & Services--0.4%
300 Nintendo Co., Ltd........................................ 27,880
----------
Publishing, Broadcasting & Entertainment--0.1%
1,000 Kyodo Printing Co........................................ 5,092
----------
</TABLE>
(continued)
26
<PAGE>
Evergreen Variable Trust
EVERGREEN VA GLOBAL LEADERS FUND
- --------------------------------------------------------------------------------
Schedule of Investments (continued)
June 30, 1998 (unaudited)
(continued)
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
Retailing & Wholesale--0.9%
1,000 Seven-Eleven Japan Co. Ltd. ........................... $ 59,738
----------
Transportation--0.0% (a)
1,000 Keisei Electric Railway................................ 2,755
----------
TOTAL JAPAN............................................ 95,465
----------
MALAYSIA--0.2%
Automotive Equipment & Manufacturing--0.0% (a)
2,000 Perusahaan Otomobil Nasional Berhad.................... 1,277
----------
Banks--0.1%
1,000 *Malayan Banking Berhad................................ 1,007
1,000 *Malaysian Bank........................................ 1,007
1,000 RHB Capital Berhad..................................... 408
----------
2,422
----------
Building, Construction & Furnishings--0.0% (a)
2,000 United Engineers Ltd. Berhad........................... 814
----------
Chemical & Agricultural Products--0.1%
2,000 Malaysian Oxygen Berhad................................ 4,434
----------
Finance & Insurance--0.0% (a)
1,400 AMMB Holdings Berhad................................... 735
----------
TOTAL MALAYSIA......................................... 9,682
----------
NETHERLANDS--4.6%
Energy--1.0%
1,200 IHC Caland NV.......................................... 67,593
----------
Food & Beverage Products--1.4%
605 CSM NV................................................. 29,852
500 CSM NV, Certificates................................... 24,031
1,275 Numico Kon NV.......................................... 39,955
----------
93,838
----------
Information Services & Technology--0.2%
301 Getronics NV........................................... 15,622
----------
Publishing, Broadcasting Entertainment--2.0%
2,700 Elsevier NV ADS........................................ 81,000
900 VNU.................................................... 32,719
125 Wolters Kluwer NV...................................... 17,169
----------
130,888
----------
TOTAL NETHERLANDS...................................... 307,941
----------
NORWAY--1.7%
Diversified Companies--1.1%
3,000 Orkla SA............................................... 69,868
----------
Publishing, Broadcasting & Entertainment--0.6%
2,500 Schibsted ASA.......................................... 42,077
----------
Transportation--0.0% (a)
16 *Bona Shipholding...................................... 118
----------
TOTAL NORWAY........................................... 112,063
----------
SPAIN--2.3%
Industrial Specialty Products & Services--0.6%
3,100 Prosegur, CIA de Seguridad SA.......................... 36,893
----------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
- --------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
Retailing & Wholesale--0.1%
400 Centros Comerciales Pryca SA............................. $ 7,408
----------
Utilities--Electric--1.6%
5,000 Endesa SA, ADS........................................... 108,125
----------
TOTAL SPAIN.............................................. 152,426
----------
SWEDEN--2.3%
Healthcare Products & Services--2.1%
6,766 Astra AB ADS............................................. 138,703
----------
Retailing & Wholesale--0.2%
250 Hennes & Mauritz, Cl. B.................................. 15,954
----------
TOTAL SWEDEN............................................. 154,657
----------
UNITED KINGDOM--8.9%
Advertising & Related Services--0.7%
2,500 Pearson Publishing Plc................................... 45,833
----------
Banks--0.2%
1,000 Lloyds TSB Group Plc..................................... 14,001
----------
Building, Construction & Furnishings--0.7%
8,200 Wolseley Plc............................................. 48,194
----------
Chemical & Agricultural Products--0.2%
800 Burmah Castrol Plc....................................... 14,266
----------
Finance & Insurance--0.0% (a)
300 Legal & General Group Plc................................ 3,203
----------
Healthcare Products & Services--0.7%
800 SmithKline Beecham Plc, ADR ............................. 48,400
----------
Industrial Specialty Products & Services--3.4%
9,000 Morgan Crucible Co. Plc.................................. 58,607
6,200 Rentokil Initial Plc..................................... 44,618
1,700 Smiths Industries Plc.................................... 23,559
7,000 TI Group Plc............................................. 53,180
6,766 Williams Holdings Plc.................................... 43,494
----------
223,458
----------
Publishing, Broadcasting & Entertainment--1.3%
800 Carlton Communications Plc ADS........................... 36,000
2,700 Granada Group Plc........................................ 49,680
----------
85,680
----------
Retailing & Wholesale-- %
2,500 Laporte.................................................. 29,846
5,000 Next Plc................................................. 42,995
----------
72,841
----------
Telecommunications Service & Equipment--0.6%
300 Vodafone Group Plc, ADR.................................. 37,819
----------
TOTAL UNITED KINGDOM..................................... 593,695
----------
UNITED STATES--35.3%
Advertising & Related Services--0.4%
400 Gannett Co., Inc......................................... 28,425
----------
Automotive Equipment & Manufacturing--1.2%
1,400 TRW, Inc. ............................................... 76,475
----------
</TABLE>
(continued)
27
<PAGE>
Evergreen Variable Trust
EVERGREEN VA GLOBAL LEADERS FUND
- --------------------------------------------------------------------------------
Schedule of Investments (continued)
June 30, 1998 (unaudited)
See Combined Notes to Financial Statements.
<TABLE>
<CAPTION>
SHARES VALUE
- --------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
Banks--3.1%
500 Citicorp................................................. $ 74,625
1,500 National Australia Bank, Ltd............................. 99,094
900 Norwest Corp............................................. 33,637
----------
207,356
----------
Building, Construction & Furnishings--1.5%
1,000 Armstrong World Industries, Inc. ........................ 67,375
400 Home Depot, Inc. ........................................ 33,225
----------
100,600
----------
Capital Goods--2.4%
1,300 Caterpillar, Inc. ....................................... 68,738
1,700 Deere & Co............................................... 89,887
----------
158,625
----------
Chemical & Agricultural Products--1.1%
1,000 Du Pont (E. I.) De Nemours & Co. ........................ 74,625
----------
Consumer Products & Services--2.8%
800 Avon Products, Inc. ..................................... 62,000
1,100 Callaway Golf Co. ....................................... 21,656
2,600 *Cendant Corp. .......................................... 54,275
1,000 Maytag Corp.............................................. 49,375
----------
187,306
----------
Diversified Companies--0.1%
1,200 AlliedSignal, Inc........................................ 53,250
----------
Electrical Equipment & Services--1.9%
900 General Electric Co. .................................... 81,900
800 Sundstrand Corp. ........................................ 45,800
----------
127,700
----------
Energy--0.7%
1,100 Dresser Industries, Inc. ................................ 48,469
----------
Finance & Insurance--4.7%
1,000 Federal National Mortgage Association.................... 60,750
1,350 Marsh & McLennan Co., Inc. .............................. 81,591
750 MBNA Corp................................................ 24,750
1,350 Schwab (Charles) & Co., Inc.............................. 43,875
1,200 SLM Holding Corp. ....................................... 58,800
800 SunAmerica, Inc.......................................... 45,950
----------
315,716
----------
Food & Beverage Products--1.4%
1,000 Campbell Soup Co......................................... 53,125
500 Coca Cola Co. ........................................... 42,750
----------
95,875
----------
Healthcare Products & Services--1.5%
600 Merck & Co., Inc. ....................................... 80,250
200 Schering-Plough Corp. ................................... 18,325
----------
98,575
----------
</TABLE>
* Non-income producing securities.
(a) Less than one-tenth percent.
<TABLE>
<CAPTION>
SHARES VALUE
- -----------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
Information Services & Technology--6.0%
650 *Cisco Systems, Inc. ................................ $ 59,841
1,600 Compaq Computer Corp. ............................... 45,400
600 Computer Associates International, Inc. ............. 33,338
1,300 Intel Corp. ......................................... 96,362
700 *Microsoft Corp. .................................... 75,862
1,050 *Oracle Systems Corp................................. 25,791
2,400 *Parametric Technology Corp.......................... 65,100
----------
401,694
----------
Leisure & Tourism--0.6%
400 Disney (Walt) Co. ................................... 42,025
----------
Publishing, Broadcasting & Entertainment--0.8%
800 Tribune Company...................................... 55,050
----------
Real Estate--1.9%
1,800 Marriott International, Inc. Cl. A................... 58,275
2,225 Sodexho Marriott Services, Inc. ..................... 64,525
----------
122,800
----------
Retailing & Wholesale--1.7%
500 Gap, Inc............................................. 30,812
1,300 Wal-Mart Stores, Inc................................. 78,975
----------
109,787
----------
Telecommunication Services & Equipment--0.8%
700 Nokia Corp. ADR...................................... 50,794
----------
TOTAL UNITED STATES.................................. 2,355,147
----------
Total Common Stocks
(cost $5,177,802)................................... 5,635,866
----------
<CAPTION>
PRINCIPAL
AMOUNT
- --------
<C> <S> <C>
SHORT-TERM INVESTMENTS--13.4%
UNITED STATES--13.4%
$715,000 Federal Home Loan Mortgage Discount Notes, 5.50%,
7/20/98............................................. 712,925
180,000 Federal National Mortgage Association Discount Notes,
5.50%, 7/10/98...................................... 179,752
----------
Total Short-Term Investments (cost $892,677)......... 892,677
----------
</TABLE>
<TABLE>
<C> <S> <C> <C>
TOTAL INVESTMENTS--(COST $6,070,479).............. 97.9% 6,528,543
OTHER ASSETS AND LIABILITIES--NET................. 2.1 142,826
------ ----------
NET ASSETS ....................................... 100.0% $6,671,369
====== ==========
</TABLE>
SUMMARY OF ABBREVIATIONS:
AB--Aktiebolag (Swedish Stock Company)
ADR--American Depository Receipts
ADS--American Depository Shares
AG--Aktiengesellschaft (German Stock Company)
NV--Naamloze Veunootschap (Dutch Corporation)
SA--Sociedad Anonyme (Spanish Corporation)
See Combined Notes to Financial Statements
28
<PAGE>
Evergreen Variable Trust
EVERGREEN VA GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
Schedule of Investments
June 30, 1998 (unaudited)
(continued)
<TABLE>
<CAPTION>
SHARES VALUE
- ----------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS--78.3%
ADVERTISING & RELATED SERVICES--0.3%
5,000 *Young & Rubicam Inc. ............................ $ 160,000
-----------
AUTOMOTIVE EQUIPMENT & MANUFACTURING--1.4%
15,000 CSK Auto Corp. ................................... 378,750
15,000 Meritor Automotive, Inc. ......................... 360,000
-----------
738,750
-----------
BANKS--5.6%
3,000 AmSouth Bancorp................................... 117,937
9,047 Banc One Corp. ................................... 504,936
4,000 Bankers Trust Corp. .............................. 464,250
10,000 KeyCorp........................................... 356,250
7,000 Marshall & Ilsley Corp. .......................... 357,437
15,000 Pacific Century Financial Corp. .................. 360,000
4,650 Susquehanna Bancshares, Inc. ..................... 173,794
20,000 Webster Financial Corp. .......................... 665,000
-----------
2,999,604
-----------
BUILDING, CONSTRUCTION & FURNISHINGS--5.6%
14,000 *Furniture Brands International, Inc. ............ 392,875
10,000 *Jacobs Engineering Group, Inc. .................. 321,250
10,000 Lennar Corp. ..................................... 295,000
3,000 Lone Star Industries, Inc. ....................... 231,187
10,000 Lowe's Companies, Inc. ........................... 405,625
10,000 Ryland Group, Inc. ............................... 262,500
26,500 *US Home Corp. ................................... 1,093,125
-----------
3,001,562
-----------
BUSINESS EQUIPMENT & SERVICES--5.2%
16,500 Air Express International Corp. .................. 441,375
15,000 Circle International Group, Inc. ................. 420,000
10,000 *Compuware Corp. ................................. 511,250
14,000 Pittston Burlington Group......................... 217,875
20,000 *Platinum Technology Corp......................... 571,250
12,000 *Policy Management Systems Corp. ................. 471,000
10,000 Reynolds & Reynolds Co., Cl. A.................... 181,875
-----------
2,814,625
-----------
CAPITAL GOODS--0.5%
5,000 Caterpillar, Inc. ................................ 264,375
-----------
CHEMICAL & AGRICULTURAL PRODUCTS--2.3%
2,600 Air Products & Chemicals, Inc. ................... 104,000
10,000 Engelhard Corp. .................................. 202,500
6,000 *Grace (W.R.) & Co. .............................. 102,375
8,500 Morton International, Inc. ....................... 212,500
6,000 Nalco Chemical Co. ............................... 210,750
3,000 Pioneer Hi-Bred International, Inc. .............. 124,125
5,000 Praxair, Inc. .................................... 234,063
2,000 Solutia, Inc. .................................... 57,375
-----------
1,247,688
-----------
COMMUNICATION SYSTEMS & SERVICES--0.4%
7,650 American Tower Systems Corp. ..................... 190,772
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
- --------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
CONSUMER PRODUCTS & SERVICES--2.2%
5,500 Black & Decker Corp. ................................. $ 335,500
5,500 Hillenbrand Industries, Inc. ......................... 330,000
10,000 Premark International, Inc. .......................... 322,500
7,000 Russ Berrie & Co., Inc. .............................. 175,000
-----------
1,163,000
-----------
DIVERSIFIED COMPANIES--0.8%
9,000 Harnischfeger Industries, Inc. ....................... 254,813
4,000 ITT Industries, Inc. ................................. 149,500
-----------
404,313
-----------
ELECTRICAL EQUIPMENT & SERVICES--2.6%
7,500 Harman International Industries, Inc. ................ 288,750
3,000 Honeywell, Inc. ...................................... 250,688
9,000 Jabil Circuit, Inc. .................................. 297,562
4,000 Perkin Elmer Corp. ................................... 248,750
11,000 Sensormatic Electronics Corp. ........................ 154,000
14,000 *Unitrode Corp. ...................................... 161,000
-----------
1,400,750
-----------
FINANCE & INSURANCE--4.8%
7,500 Edwards (A.G.), Inc. ................................. 320,156
6,000 Federal Home Loan Mortgage Corp. ..................... 282,375
19,300 Frontier Insurance Group, Inc. ....................... 435,456
5,000 Lehman Brothers Holdings, Inc. ....................... 387,813
4,000 Mid Ocean Ltd. ....................................... 314,000
19,100 Paine Webber Group, Inc. ............................. 818,913
1,500 Waddell & Reed Financial, Inc. ....................... 35,906
-----------
2,594,619
-----------
FOOD & BEVERAGE PRODUCTS--0.9%
2,000 Bestfoods............................................. 116,125
250 *Corn Products International, Inc. ................... 8,469
5,000 *Keebler Foods Co. ................................... 137,500
10,000 *Vlasic Foods International, Inc. .................... 201,250
-----------
463,344
-----------
FOREST PRODUCTS--0.5%
10,000 Deltic Timber Corp. .................................. 250,625
-----------
HEALTHCARE PRODUCTS & SERVICES--10.0%
2,000 Abbott Laboratories................................... 81,750
15,000 *Acuson Corp. ........................................ 272,813
8,000 American Home Products Corp. ......................... 414,000
6,000 *Boston Scientific Corp. ............................. 429,750
14,000 *First Health Group Corp. ............................ 399,000
10,000 *Foundation Health Systems, Inc. ..................... 263,750
7,000 Lilly (Eli) & Co. .................................... 462,437
20,000 *Lincare Holdings, Inc. .............................. 841,250
5,000 Manor Care, Inc. ..................................... 192,188
10,000 McKesson Corp. ....................................... 812,500
14,500 *Quorum Health Group, Inc. ........................... 384,250
1,000 Schering-Plough Corp. ................................ 91,625
</TABLE>
(continued)
29
<PAGE>
Evergreen Variable Trust
EVERGREEN VA GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
Schedule of Investments (continued)
June 30, 1998 (unaudited)
(continued)
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS--CONTINUED
HEALTHCARE PRODUCTS & SERVICES--CONTINUED
5,000 *Wellpoint Health Networks, Inc. Cl. A ... $ 370,000
12,500 West Co., Inc. ........................... 353,906
-----------
5,369,219
-----------
INDUSTRIAL SPECIALTY PRODUCTS & SERVICES--7.8%
5,500 AptarGroup, Inc. ......................... 342,031
5,375 Autoliv, Inc. ............................ 169,984
7,000 Bemis Co., Inc. .......................... 286,125
6,500 Borg-Warner Automotive, Inc. ............. 312,406
1,000 Carpenter Technology Corp. ............... 50,250
9,000 Flowserve Corp. .......................... 221,625
15,000 Pittston Brink's Group.................... 553,125
7,500 Snap-on, Inc. ............................ 271,875
22,000 *Strattec Security Corp. ................. 662,750
7,000 Sundstrand Corp. ......................... 400,750
18,200 *UCAR International, Inc. ................ 531,213
19,000 *Unova, Inc. ............................. 408,500
-----------
4,210,634
-----------
INFORMATION SERVICES & TECHNOLOGY--1.4%
5,000 *Adaptec, Inc. ........................... 71,562
7,875 Computer Associates International, Inc. .. 437,555
8,000 *KLA-Tencor Corp. ........................ 221,500
3,000 *Perceptron, Inc. ........................ 36,000
-----------
766,617
-----------
METAL PRODUCTS & SERVICES--0.5%
18,300 *Steel Dynamics, Inc. .................... 253,913
-----------
OIL/ENERGY--5.4%
20,000 Berry Petroleum Co. Cl. A................. 260,000
15,000 Cabot Oil & Gas Corp. Cl. A............... 300,000
17,500 *Houston Exploration, Co. ................ 401,406
4,000 Kerr-McGee Corp. ......................... 231,500
7,000 National Fuel Gas Co. .................... 304,938
8,000 *Nuevo Energy Co. ........................ 257,000
10,000 *Oryx Energy Co. ......................... 221,250
15,500 *Santa Fe Energy Resources, Inc. ......... 166,625
20,000 Southwestern Energy Co. .................. 183,750
8,000 Transocean Offshore, Inc. ................ 356,000
6,000 Williams Companies, Inc. ................. 202,500
-----------
2,884,969
-----------
OIL FIELD SERVICES--2.1%
11,000 *Atwood Oceanics, Inc. ................... 437,938
500 *Dril Quip, Inc. ......................... 13,125
3,444 Halliburton Co. .......................... 153,473
14,160 *R & B Falcon Corp. ...................... 320,370
10,000 *Varco International, Inc. ............... 198,125
-----------
1,123,031
-----------
PAPER & PACKAGING--0.2%
3,216 Sealed Air Corp. ......................... 118,188
-----------
PUBLISHING, BROADCASTING & ENTERTAINMENT--2.9%
5,000 Gaylord Entertainment Co. ................ 161,250
11,500 *Jacor Communications, Inc. .............. 678,500
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
PUBLISHING, BROADCASTING & ENTERTAINMENT--CONTINUED
4,500 TCA Cable TV, Inc. ................................. $ 270,000
5,500 Time Warner, Inc. .................................. 469,906
-----------
1,579,656
-----------
REAL ESTATE--3.8%
2,800 Arden Realty Group, Inc. REIT....................... 72,450
3,500 CarrAmerica Realty Corp. REIT....................... 99,312
10,000 Mack-Cali Realty Corp. REIT......................... 343,750
20,000 *Starwood Hotels & Resorts Trust REIT............... 966,250
17,000 Weeks Corp. REIT.................................... 537,625
-----------
2,019,387
-----------
RETAILING & WHOLESALE--2.8%
5,000 Avnet, Inc. ........................................ 273,437
10,000 *Cole National Corp. Cl. A.......................... 400,000
4,000 Mercantile Stores Co., Inc. ........................ 315,750
3,500 *Proffitts, Inc. ................................... 141,313
10,000 Rite Aid Corp. ..................................... 375,625
-----------
1,506,125
-----------
THRIFT INSTITUTIONS--1.5%
20,000 Maryland Federal Bancorp, Inc. ..................... 792,500
-----------
TRANSPORTATION--4.8%
2,000 *Atlas Air, Inc. ................................... 67,625
10,000 Bombardier, Inc., Cl. B............................. 271,822
5,000 Burlington Northern Santa Fe........................ 490,938
13,500 Kansas City Southern Industries, Inc. .............. 669,937
17,000 Petroleum Helicopters, Inc. ........................ 350,625
10,200 Southwest Airlines Co. ............................. 302,175
10,000 Union Pacific Corp. ................................ 441,250
-----------
2,594,372
-----------
UTILITIES--ELECTRIC--1.0%
18,000 TNP Enterprises, Inc. .............................. 555,750
-----------
UTILITIES--GAS--0.6%
11,000 Northwest Natural Gas Co. .......................... 307,656
-----------
UTILITIES--TELEPHONE--0.4%
4,000 *AirTouch Communications, Inc. ..................... 233,750
-----------
Total Common Stocks (cost $34,061,281).............. 42,009,794
-----------
PREFERRED STOCKS--0.0%
HEALTHCARE PRODUCTS & SERVICES--0.0%
3,500 *Fresenius National Med Care, Inc. Ser. D........... 227
-----------
Total Preferred Stocks
(cost $736)........................................ 227
-----------
</TABLE>
(continued)
30
<PAGE>
Evergreen Variable Trust
EVERGREEN VA GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
Schedule of Investments (continued)
June 30, 1998 (unaudited)
See Combined Notes to Financial Statements.
<TABLE>
<CAPTION>
SHARES VALUE
- --------------------------------------------------------------------------------
<C> <S> <C>
CONVERTIBLE PREFERRED--0.2%
PAPER & PACKAGING--0.2%
2,850 *Sealed Air Corp...................................... $ 119,700
-----------
Total Convertible Preferred (cost $100,265)........... 119,700
-----------
<CAPTION>
PRINCIPAL
AMOUNT
- ---------
<C> <S> <C>
SHORT-TERM INVESTMENTS--26.5%
COMMERCIAL PAPER--12.4%
$1,000,000 American Express Credit Yrs 1+2 5.53%, 7/29/98........ 995,699
1,000,000 Avnet, Inc.
5.55%, 7/28/98....................................... 995,838
1,000,000 BMW U.S. Capital Corp. 5.58%, 7/13/98................. 998,140
1,000,000 Dominion Semiconductor 5.65%, 7/24/98................. 996,390
295,000 Finova Capital Corp.
5.53%, 7/9/98........................................ 294,638
1,000,000 Gold Crown Managers Acceptance 5.60%, 7/15/98......... 997,822
1,000,000 Southern Co.
5.52%, 7/16/98....................................... 997,700
370,000 System Capital Corp. 5.62%, 7/10/98................... 369,480
-----------
6,645,707
-----------
</TABLE>
* Non-income producing securities.
SUMMARY OF ABBREVIATIONS:
REIT--Real Estate Investment Trust
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- -------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS--CONTINUED
GOVERNMENT AGENCY NOTES & BONDS--14.1%
$2,805,000 Federal Farm Credit Bank Consolidated Discount Note
5.42%, 7/15/98...................................... $ 2,799,088
Federal Home Loan Bank Discount Note
170,000 5.39%, 7/1/98........................................ 170,000
1,565,000 5.43%, 7/15/98....................................... 1,561,695
1,440,000 5.43%, 8/28/98....................................... 1,427,402
Federal Home Loan Mortgage Discount Notes
130,000 5.47%, 7/7/98........................................ 129,881
930,000 5.47%, 7/14/98....................................... 928,163
125,000 5.48%, 7/15/98....................................... 124,734
Federal National Mortgage Association Discount Notes
225,000 5.43%, 7/10/98....................................... 224,695
200,000 5.50%, 7/29/98....................................... 199,144
-----------
7,564,802
-----------
Total Short-Term Investments (cost $14,210,509)...... $14,210,509
-----------
</TABLE>
<TABLE>
<C> <S> <C> <C>
TOTAL INVESTMENTS--(COST $48,372,791)......... 105.0% 56,340,230
OTHER ASSETS AND LIABILITIES--NET............. (5.0) (2,662,245)
------ -----------
NET ASSETS.................................... 100.0% $53,677,985
====== ===========
</TABLE>
See Combined Notes to Financial Statements
31
<PAGE>
Evergreen Variable Trust
EVERGREEN VA SMALL CAP EQUITY INCOME FUND
- --------------------------------------------------------------------------------
Schedule of Investments
June 30, 1998 (unaudited)
(continued)
<TABLE>
<CAPTION>
SHARES VALUE
- ----------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS--70.9%
AEROSPACE & DEFENSE--2.6%
900 Curtiss Wright Corp. ................................ $ 35,269
----------
BANKS--12.6%
1,400 ABC Bancorp.......................................... 22,750
1,300 Britton & Koontz Capital Corp. ...................... 28,762
1,700 Commercial Bankshares, Inc. ......................... 41,225
1,600 Granite State Bankshares, Inc. ...................... 44,600
1,600 St. Paul Bancorp, Inc. .............................. 36,150
----------
173,487
----------
BUILDING, CONSTRUCTION & FURNISHINGS--4.4%
2,700 Shelby Williams Industries, Inc. .................... 40,500
1,600 Tab Products Co. .................................... 19,800
----------
60,300
----------
CHEMICAL & AGRICULTURAL PRODUCTS--1.4%
800 Learonal, Inc. ...................................... 19,100
----------
CONSUMER PRODUCTS & SERVICES--10.7%
1,600 CPI Corp. ........................................... 38,100
1,800 Knape & Vogt Manufacturing Co. ...................... 40,500
700 Polaris Industries, Inc. ............................ 26,337
2,200 York Group, Inc. .................................... 41,800
----------
146,737
----------
DIVERSIFIED COMPANIES--2.2%
1,200 Matthews International Corp. Cl. A................... 29,475
----------
ELECTRICAL EQUIPMENT & SERVICES--5.6%
800 Boston Acoustics, Inc. .............................. 29,400
1,200 Federal Signal Corp. ................................ 29,175
1,200 Helix Technology Corp. .............................. 18,000
----------
76,575
----------
FINANCE & INSURANCE--1.9%
1,000 Morgan Keegan, Inc. ................................. 25,875
----------
INDUSTRIAL SPECIALTY PRODUCTS & SERVICES--5.3%
700 Badger Meter, Inc. .................................. 24,806
2,000 Hach Co. ............................................ 24,813
2,000 Minuteman International, Inc. ....................... 22,875
----------
72,494
----------
MACHINERY--DIVERSIFIED--2.1%
1,200 Hardinge Brothers, Inc. ............................. 29,250
----------
OIL / ENERGY--5.1%
1,200 Cabot Oil & Gas Corp. Cl. A.......................... 24,000
1,000 Penn Virginia Corp. ................................. 25,875
2,200 Southwestern Energy Co. ............................. 20,213
----------
70,088
----------
PAPER & PACKAGING--2.8%
2,400 Tuscarora, Inc. ..................................... 38,100
----------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS--70.9%
REAL ESTATE--4.6%
2,000 Eastgroup Properties, Inc. REIT....................... $ 40,125
800 Parkway Properties, Inc. REIT......................... 23,600
----------
63,725
----------
TELECOMMUNICATION SERVICES & EQUIPMENT--1.6%
1,400 Communications Systems, Inc. ......................... 22,400
----------
THRIFT INSTITUTIONS--2.8%
2,400 Horizon Financial Corp. .............................. 38,400
----------
UTILITIES--GAS--3.5%
1,200 Chesapeake Utilities Corp. ........................... 21,000
1,500 Delta Natural Gas Co., Inc. .......................... 26,625
----------
47,625
----------
UTILITIES--TELEPHONE--1.7%
600 Hickory Tech Corp. ................................... 23,850
----------
Total Common Stocks (cost $993,525)................... 972,750
----------
CONVERTIBLE PREFERRED--5.0%
FINANCE & INSURANCE--3.5%
400 Frontier Financing Trust 6.25%, TOPRS................. 24,100
2,300 *Philadelphia Consolidated Holdings, Inc. PRIDES...... 23,575
----------
47,675
----------
OIL FIELD SERVICES--1.5%
500 Hvide Capital Trust 6.50%............................. 21,125
----------
Total Convertible Preferred (cost $73,769)............ 68,800
----------
<CAPTION>
PRINCIPAL
AMOUNT
- --------
<C> <S> <C>
CONVERTIBLE DEBENTURES--7.9%
CONSUMER PRODUCTS & SERVICES--1.7%
$ 25,000 *Action Performance Companies, Inc. 4.75%, 4/1/05..... 23,375
----------
INDUSTRIAL SPECIALTY PRODUCTS & SERVICES--1.7%
1,300 Cooper Industries, Inc. 6.00%, 1/1/99, DECS........... 22,913
----------
INFORMATION SERVICES & TECHNOLOGY--2.5%
25,000 *May & Speh, Inc. 5.25%, 4/1/03....................... 34,845
----------
LEISURE & TOURISM--2.0%
25,000 *Speedway Motorsports, Inc. 5.75%, 9/30/03............ 26,656
----------
Total Convertible Debentures (cost $104,598).......... 107,789
----------
</TABLE>
(continued)
32
<PAGE>
Evergreen Variable Trust
EVERGREEN VA SMALL CAP EQUITY INCOME FUND
- --------------------------------------------------------------------------------
Schedule of Investments (continued)
June 30, 1998 (unaudited)
See Combined Notes to Financial Statements.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- -------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS--27.3%
GOVERNMENT AGENCY NOTES & BONDS--27.3%
$375,000 Federal National Mortgage Association Discount Notes
5.50%, 7/10/98.......................................... $374,484
--------
Total Short-Term Investments
(cost $374,484)......................................... 374,484
--------
</TABLE>
<TABLE>
<C> <S> <C> <C>
TOTAL INVESTMENTS--(COST $1,546,376)............. 111.1% 1,523,823
OTHER ASSETS AND LIABILITIES--NET................ (11.1) (152,017)
------ ----------
NET ASSETS....................................... 100.0% $1,371,806
====== ==========
</TABLE>
* Non-income producing securities.
SUMMARY OF ABBREVIATIONS:
DECS--Dividend Enhanced Convertible Stock
REIT--Real Estate Investment Trust
See Combined Notes to Financial Statements
33
<PAGE>
Evergreen Variable Trust
EVERGREEN VA STRATEGIC INCOME FUND
- --------------------------------------------------------------------------------
Schedule of Investments
June 30, 1998 (unaudited)
See Combined Notes to Financial Statements.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
<C> <S> <C>
CORPORATE BONDS--12.4%
COMMUNICATION SYSTEMS & SERVICES--1.3%
$ 90,000 Adelphia Communications Corporation,
Series B, Sr. Notes, 9.875%, 3/1/07.................. $ 97,425
----------
CONSUMER PRODUCTS & SERVICES--1.5%
145,000 Revlon Worldwide Corporation,
Series B, Sr. Secd. Disc. Notes,
(Eff. Yield 9.22%) (a),
0.00%, 3/15/01....................................... 112,013
----------
METALS & MINING--2.1%
150,000 WHX Corporation,
Sr. Notes,
10.50%, 4/15/05...................................... 152,625
----------
OIL / ENERGY--2.1%
150,000 Petsec Energy, Incorporated,
Series B, Sr. Notes (Subord.),
9.50%, 6/15/07....................................... 151,500
----------
PAPER & PACKAGING--1.4%
100,000 Riverwood International Corporation, Sr. Notes,
10.25%, 4/1/06....................................... 102,000
----------
PUBLISHING, BROADCASTING & ENTERTAINMENT--0.6%
50,000 Echostar Satellite Broadcast Corporation,
Sr. Secd. Disc. Notes, Step Bond,
(Eff. Yield 10.39%) (a),
0.00%, 3/15/04....................................... 45,938
----------
RETAILING & WHOLESALE--2.2%
150,000 Perkins Family Restaurant,
Series B, Sr. Notes,
10.125%, 12/15/07.................................... 159,187
----------
TEXTILE & APPAREL--1.2%
90,000 Delta Mills, Incorporated,
Series B, Sr. Notes,
9.625%, 9/1/07....................................... 88,200
----------
Total Corporate Bonds (cost $899,707)................. 908,888
----------
FOREIGN BONDS (U.S. DOLLARS)--5.2%
140,000 Great Central Mines Ltd.,
Sr. Notes,
8.875%, 4/1/08 (b)................................... 137,200
200,000 Satelites Mexicanos SA DE CV,
Sr. Notes,
10.125%, 11/1/04 (b)................................. 194,000
</TABLE>
(a) Effective yield (calculated at the date of purchase) is the yield at which
the bond accretes on an annual basis until maturity date.
(b) Securities that may be resold to qualified institutional buyersunder Rule
144A or securities offered pursuant to Section 4(2) of the Securities Act
of 1933, as amended. These securities have been determined to be liquid un-
der guidelines established by the Board of Trustees.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- -------------------------------------------------------------------------------
<C> <S> <C>
FOREIGN BONDS (U.S. DOLLARS)--CONTINUED
$ 50,000 Sea Containers Ltd.,
Series B, Sr. Notes,
7.875%, 2/15/08..................................... $ 49,563
----------
Total Foreign Bonds (U.S. Dollars) (cost $389,304)... 380,763
----------
FOREIGN BONDS (NON U.S. DOLLARS)--17.5%
250,000 Australia (Government of), Deb., 10.00%, 10/15/07....
AUD 204,188
625,000 Denmark (Kingdom of), Deb.,
DKK 8.00%, 5/15/03...................................... 104,056
325,000 Germany (Republic of), Deb.,
DEM 6.875%, 5/12/05..................................... 203,475
455,000 New Zealand (Government of), Deb., 7.00%, 7/15/09....
NZD 248,242
1,500,000 Nykredit,
DKK 7.00%, 10/1/29...................................... 222,069
14,000,000 Spain (Government of), Deb.,
ESP 11.45%, 8/30/98..................................... 92,207
110,000 United Kingdom Treasury, Deb., 8.50%, 12/7/05........
GBP 209,782
----------
Total Foreign Bonds (Non U.S. Dollars)
(cost $1,286,206)................................... 1,284,019
----------
U.S. TREASURY OBLIGATIONS--38.9%
U. S. Treasury Notes:
$ 300,000 5.625%, 12/31/99..................................... 300,468
1,845,000 5.75%, 4/30/03....................................... 1,863,155
315,000 6.25%, 6/30/02....................................... 322,925
350,000 6.625%, 5/15/07...................................... 375,921
----------
Total U.S. Treasury Obligations (cost $2,846,924).... 2,862,469
----------
SHORT-TERM INVESTMENTS--22.1%
(COST $1,629,000)
1,629,000 Federal Farm Credit Bank, Consolidated Discount
Notes, 5.40%, 7/1/98................................ 1,629,000
----------
</TABLE>
<TABLE>
<C> <S> <C> <C>
TOTAL INVESTMENTS--(COST $7,051,141)........... 96.1% 7,065,139
OTHER ASSETS AND LIABILITIES--NET.............. 3.9 286,330
------ ----------
NET ASSETS..................................... 100.0% $7,351,469
====== ==========
</TABLE>
LEGEND OF PORTFOLIO ABBREVIATIONS:
AUD--Australian Dollar
DEM--German Deutsche Mark
DKK--Danish Krone
ESP--Spanish Peseta
GBP--Pound Sterling
NZD--New Zealand Dollar
See Combined Notes to Financial Statements
34
<PAGE>
Evergreen Variable Trust
- --------------------------------------------------------------------------------
Statements of Assets and Liabilities
June 30, 1998 (unaudited)
See Combined Notes to Financial Statements.
<TABLE>
<CAPTION>
AGGRESSIVE GLOBAL GROWTH SMALL CAP STRATEGIC
GROWTH EVERGREEN FOUNDATION LEADERS AND INCOME EQUITY INCOME INCOME
FUND FUND FUND FUND FUND FUND FUND
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments, at value
(identified cost,
$2,423,528,
$34,828,183,
$56,241,686,
$6,070,479,
$48,372,791,
$1,546,376, and
$7,051,141,
respectively)......... $2,946,616 $40,980,706 $63,351,420 $6,528,543 $56,340,230 $1,523,823 $7,065,139
Foreign currency, at
value (identified
cost, $0, $0, $0,
$6,171, $0, $0, and
$0, respectively)..... 0 0 0 6,107 0 0 0
Cash................... 33,857 188,725 366,341 68,804 318,723 29,065 154,445
Receivable for
investments sold...... 87,947 59,998 0 0 0 0 0
Receivable for Fund
shares sold........... 14,944 175,090 233,356 55,431 241,402 4,235 57,168
Dividends and interest
receivable............ 286 19,460 305,179 19,924 27,359 2,436 70,357
Unamortized
organization expense.. 7,473 11,377 11,555 7,445 11,554 0 7,473
Receivable from
investment adviser.... 0 0 0 2,028 0 5,185 0
Prepaid expenses and
other assets.......... 997 2,116 253 5 12,914 0 502
- -------------------------------------------------------------------------------------------------------------
Total assets........... 3,092,120 41,437,472 64,268,104 6,688,287 56,952,182 1,564,744 7,355,084
- -------------------------------------------------------------------------------------------------------------
LIABILITIES
Payable for investments
purchased............. 0 2,127,668 1,625,641 14,688 3,259,594 184,699 0
Demand note payable.... 34,000 0 0 0 0 0 0
Advisory fee payable... 0 25,582 27,579 0 5,877 1,590 0
Due to related
parties............... 54 0 12,813 187 1,161 28 3,267
Accrued expenses and
other liabilities..... 5,097 24,521 7,916 2,043 7,565 6,621 348
- -------------------------------------------------------------------------------------------------------------
Total liabilities...... 39,151 2,177,771 1,673,949 16,918 3,274,197 192,938 3,615
- -------------------------------------------------------------------------------------------------------------
NET ASSETS.............. $3,052,969 $39,259,701 $62,594,155 $6,671,369 $53,677,985 $1,371,806 $7,351,469
- -------------------------------------------------------------------------------------------------------------
NET ASSETS REPRESENTED
BY
Paid-in capital........ $2,657,661 $32,175,717 $54,638,976 $6,151,996 $44,451,733 $1,390,244 $7,211,722
Undistributed net
investment income..... (4,226) 91,808 525,742 34,948 202,813 4,278 125,598
Accumulated
undistributed net
realized gains or
losses on securities
and foreign currency
related transactions.. (123,554) 839,653 319,703 26,477 1,056,000 (163) 278
Net unrealized gains or
losses on securities
and foreign currency
related transactions.. 523,088 6,152,523 7,109,734 457,948 7,967,439 (22,553) 13,871
- -------------------------------------------------------------------------------------------------------------
Total net assets....... $3,052,969 $39,259,701 $62,594,155 $6,671,369 $53,677,985 $1,371,806 $7,351,469
- -------------------------------------------------------------------------------------------------------------
Shares outstanding...... 248,691 2,420,100 4,323,492 543,478 3,264,402 139,842 693,660
- -------------------------------------------------------------------------------------------------------------
Net asset value per
share.................. $ 12.28 $ 16.22 $ 14.48 $ 12.28 $ 16.44 $ 9.81 $ 10.60
- -------------------------------------------------------------------------------------------------------------
</TABLE>
See Combined Notes to Financial Statements
35
<PAGE>
Evergreen Variable Trust
- --------------------------------------------------------------------------------
Statements of Operations
Six Months Ended June 30, 1998 (unaudited)
See Combined Notes to Financial Statements.
<TABLE>
<CAPTION>
AGGRESSIVE GLOBAL GROWTH SMALL CAP STRATEGIC
GROWTH EVERGREEN FOUNDATION LEADERS AND INCOME EQUITY INCOME INCOME
FUND FUND FUND FUND FUND FUND* FUND
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends (net of
foreign withholding
taxes of $0, $0, $0,
$3,900, $85, $0, and
$0, respectively)..... $ 1,790 $ 96,911 $ 215,283 $ 41,640 $ 157,523 $ 4,357 $ 0
Interest (net of
foreign withholding
taxes of $0, $0, $0,
$0, $0, $0 and $811,
respectively)......... 6,266 143,727 544,176 16,395 257,889 1,595 145,347
- ----------------------------------------------------------------------------------------------------------
TOTAL INCOME............ 8,056 240,638 759,459 58,035 415,412 5,952 145,347
- ----------------------------------------------------------------------------------------------------------
EXPENSES
Advisory fee........... 7,220 140,452 188,109 21,447 197,354 1,590 12,331
Administrative service
fee................... 338 4,023 6,401 633 5,910 46 623
Transfer agent fees.... 33 69 64 30 637 30 23
Trustees' fees and
expenses.............. 543 453 314 54 248 5 118
Professional fees...... 10,350 19,560 29,836 12,950 24,125 3,785 10,011
Custodian fees......... 285 3,334 6,914 1,874 4,344 42 592
Printing............... 537 640 5,454 1,415 1,967 3,040 500
Amortization of
organization
expenses.............. 1,002 2,326 2,148 1,003 2,148 0 1,002
Other.................. 1,255 0 1,267 218 820 2,046 794
- ----------------------------------------------------------------------------------------------------------
Total expenses......... 21,563 170,857 240,507 39,624 237,553 10,584 25,994
Less: Indirectly paid
expenses.............. (282) (2,126) (2,977) (1,299) (2,544) 0 (586)
Fee waivers and/or
reimbursement from
Investment Adviser... (9,252) (20,886) (9,298) (15,751) (27,200) (8,910) (4,393)
- ----------------------------------------------------------------------------------------------------------
Net expenses........... 12,029 147,845 228,232 22,574 207,809 1,674 21,015
- ----------------------------------------------------------------------------------------------------------
Net investment income.. (3,973) 92,793 531,227 35,461 207,603 4,278 124,332
- ----------------------------------------------------------------------------------------------------------
NET REALIZED AND
UNREALIZED GAINS OR
LOSSES ON SECURITIES
AND FOREIGN CURRENCY
RELATED TRANSACTIONS
Net realized gains or
losses on:
Securities............. (86,289) 513,079 121,419 25,419 983,607 (163) 2,535
Foreign currency
related transactions.. 0 0 0 1,058 0 0 (631)
- ----------------------------------------------------------------------------------------------------------
Net realized gains or
losses on securities
and foreign currency
related transactions.. (86,289) 513,079 121,419 26,477 983,607 (163) 1,904
- ----------------------------------------------------------------------------------------------------------
Net change in
unrealized gains or
losses on securities
and foreign currency
related transactions.. 366,742 1,577,696 1,861,216 395,547 1,320,809 (22,553) 3,556
- ----------------------------------------------------------------------------------------------------------
Net realized and
unrealized gains or
losses on securities
and foreign currency
related transactions.. 280,453 2,090,775 1,982,635 422,024 2,304,416 (22,716) 5,460
- ----------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE)
IN NET ASSETS
RESULTING FROM
OPERATIONS............ $276,480 $2,183,568 $2,513,862 $457,485 $2,512,019 $(18,438) $129,792
- ----------------------------------------------------------------------------------------------------------
</TABLE>
* For the period from May 1, 1998 (commencement of operations) to June 30,
1998.
See Combined Notes to Financial Statements
36
<PAGE>
Evergreen Variable Trust
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
Six Months Ended June 30, 1998 (unaudited)
See Combined Notes to Financial Statements.
<TABLE>
<CAPTION>
AGGRESSIVE GLOBAL GROWTH SMALL CAP STRATEGIC
GROWTH EVERGREEN FOUNDATION LEADERS AND INCOME EQUITY INCOME INCOME
FUND FUND FUND FUND FUND FUND* FUND
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS
Net investment income.. $ (3,973) $ 92,793 $ 531,227 $ 35,461 $ 207,603 $ 4,278 $ 124,332
Net realized gains or
losses on securities
and foreign currency
related transactions.. (86,289) 513,079 121,419 26,477 983,607 (163) 1,904
Net change in
unrealized gains or
losses on securities
and foreign currency
related transactions.. 366,742 1,577,696 1,861,216 395,547 1,320,809 (22,553) 3,556
- ------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
resulting from
operations............ 276,480 2,183,568 2,513,862 457,485 2,512,019 (18,438) 129,792
- ------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE
TRANSACTIONS
Proceeds from shares
sold.................. 1,447,849 18,174,310 29,484,355 3,375,274 21,314,413 1,390,244 5,742,308
Payment for shares
redeemed.............. (539,674) (2,698,339) (1,244,425) (60,854) (1,236,365) 0 (725,006)
- ------------------------------------------------------------------------------------------------------------------
Net increase in net
assets resulting from
capital share
transactions.......... 908,175 15,475,971 28,239,930 3,314,420 20,078,048 1,390,244 5,017,302
- ------------------------------------------------------------------------------------------------------------------
Total increase in net
assets................ 1,184,655 17,659,539 30,753,792 3,771,905 22,590,067 1,371,806 5,147,094
NET ASSETS
Beginning of period.... 1,868,314 21,600,162 31,840,363 2,899,464 31,087,918 0 2,204,375
- ------------------------------------------------------------------------------------------------------------------
End of period.......... $3,052,969 $39,259,701 $62,594,155 $6,671,369 $53,677,985 $1,371,806 $7,351,469
- ------------------------------------------------------------------------------------------------------------------
Undistributed net
investment income..... $ (4,226) $ 91,808 $ 525,742 $ 34,948 $ 202,813 $ 4,278 $ 125,598
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
* For the period from May 1, 1998 (commencement of operations) to June 30,
1998.
See Combined Notes to Financial Statements
37
<PAGE>
Evergreen Variable Trust
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
Year Ended December 31, 1997
See Combined Notes to Financial Statements.
<TABLE>
<CAPTION>
AGGRESSIVE GLOBAL GROWTH STRATEGIC
GROWTH EVERGREEN FOUNDATION LEADERS AND INCOME INCOME
FUND* FUND FUND FUND* FUND FUND*
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS
Net investment income.. $ (7,814) $ 66,723 $ 470,937 $ 15,518 $ 128,975 $ 59,509
Net realized gains or
losses on securities
and foreign currency
related transactions.. (37,265) 1,210,189 1,288,151 2,395 1,072,723 1,177
Net change in
unrealized gains or
losses on securities
and foreign currency
related transactions.. 156,346 3,658,731 3,805,707 62,401 5,223,120 10,315
- ----------------------------------------------------------------------------------------------------
Net increase in net
assets resulting from
operations............ 111,267 4,935,643 5,564,795 80,314 6,424,818 71,001
- ----------------------------------------------------------------------------------------------------
DISTRIBUTION TO
SHAREHOLDERS
Dividends from net
investment income..... 0 (66,336) (489,506) (13,693) (127,123) (58,403)
Distributions from
capital gains......... 0 (899,946) (1,300,033) (6,846) (1,004,449) (3,203)
- ----------------------------------------------------------------------------------------------------
Total distributions to
shareholders.......... 0 (966,282) (1,789,539) (20,539) (1,131,572) (61,606)
- ----------------------------------------------------------------------------------------------------
CAPITAL SHARE
TRANSACTIONS
Proceeds from shares
sold.................. 1,903,355 7,331,021 11,637,130 2,913,597 10,949,903 2,160,728
Payment for shares
redeemed.............. (146,318) (1,528,968) (1,173,846) (94,457) (770,650) (27,364)
Net asset value of
shares issued in
reinvestment of
distributions......... 0 966,282 1,789,539 20,539 1,131,572 61,606
- ----------------------------------------------------------------------------------------------------
Net increase in net
assets resulting from
capital share
transactions.......... 1,757,037 6,768,335 12,252,823 2,839,679 11,310,825 2,194,970
- ----------------------------------------------------------------------------------------------------
Total increase in net
assets................ 1,868,304 10,737,696 16,028,079 2,899,454 16,604,071 2,204,365
NET ASSETS
Beginning of period.... 10 10,862,466 15,812,284 10 14,483,847 10
- ----------------------------------------------------------------------------------------------------
End of period.......... $1,868,314 $21,600,162 $31,840,363 $2,899,464 $31,087,918 $2,204,375
- ----------------------------------------------------------------------------------------------------
Undistributed net
investment income..... (253) (985) (5,485) (513) (4,790) 1,266
- ----------------------------------------------------------------------------------------------------
</TABLE>
* For the period from March 6, 1997 (commencement of operations) to December
31, 1997.
See Combined Notes to Financial Statements
38
<PAGE>
Evergreen Variable Trust
- -------------------------------------------------------------------------------
Combined Notes to Financial Statements
June 30, 1998 (unaudited)
1. ORGANIZATION
Evergreen Variable Trust (the "Trust") is organized as a Delaware business
trust with seven separate investment series, Evergreen VA Aggressive Growth
Fund ("Aggressive Growth"), Evergreen VA Fund ("Evergreen"), Evergreen VA
Foundation Fund ("Foundation"), Evergreen VA Global Leaders Fund ("Global
Leaders"), Evergreen VA Growth and Income Fund ("Growth and Income"),
Evergreen Small Cap Equity Income Fund ("Small Cap"), and Evergreen VA
Strategic Income Fund ("Strategic Income"), collectively known as the "Funds".
Prior to April 22, 1998, the Funds were organized as separate investment
series of a Massachusetts business trust. The Funds are registered under the
Investment Company Act of 1940, as open-ended, diversified, management
investment companies. Shares of each Fund may only be purchased by insurance
companies for the purpose of funding variable annuity contracts or variable
life insurance policies.
The investment adviser to Evergreen, Foundation, Global Leaders, Growth and
Income and Small Cap 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, Foundation, Global Leaders, Growth and Income and Small
Cap. 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 Strategic Income.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Funds in the preparation of their financial statements. The policies are in
conformity with generally accepted accounting principles, which require
management to make estimates and assumptions that affect amounts reported
herein. Actual results could differ from these estimates.
A. Security Valuations--Investments in securities traded on a national
securities exchange or included on the NASDAQ National Market System ("NMS")
are valued at the last reported sale price. Securities traded on an exchange
or NMS for which there has been no sale and other securities traded in the
over-the-counter market are valued at the mean between the last reported bid
and asked price. International securities traded on an established exchange
are valued on the basis of the last sales price on the exchange where
primarily traded. Unlisted securities for which market quotations are not
readily available are valued at a price quoted by one or more brokers. U.S.
government obligations held by the Funds are valued at the mean between the
over-the-counter bid and asked prices. Corporate bonds, other fixed-income
securities, mortgage and other asset-backed securities are valued at prices
provided by an independent pricing service. In determining value for normal
institutional-size transactions, the pricing service uses methods based on
market transactions for comparable securities and various relationships
between securities which are generally recognized by institutional traders.
Securities for which market quotations are not available from independent
pricing services are valued at fair value as determined in good faith
according to procedures approved by the Funds' Board of Trustees. Short-term
investments with remaining maturities of 60 days or less are carried at
amortized cost, which approximates market value.
B. Repurchase Agreements--Each Fund may invest in repurchase agreements.
Securities pledged as collateral for repurchase agreements are held by the
custodian on the Fund's behalf. Each Fund monitors the adequacy of the
collateral daily and will require the seller to provide additional collateral
in the event the market value of the securities pledged falls below the
carrying value of the repurchase agreement, including accrued interest. Each
Fund will only enter into repurchase agreements with banks and other financial
institutions which are deemed by the investment adviser to be creditworthy
pursuant to guidelines established by the Board of Trustees.
C. Foreign Currency--The books and records of the Funds are maintained in
United States (U.S.) dollars. Foreign currency amounts are translated into
United States dollars as follows: market value of securities, assets and
liabilities at the daily rate of exchange; purchases and sales of securities,
income and expenses at the rate of exchange prevailing on the respective dates
of such transactions. Net unrealized foreign exchange gains or losses
resulting from changes in foreign currency exchange rates are a component of
net unrealized gains or losses on securities and foreign currency related
transactions. Net realized foreign currency gains or losses resulting from
changes in exchange rates include foreign currency gains or losses between
trade date and settlement date on investment securities transactions, foreign
currency related transactions and the difference between the amounts of
interest and dividends recorded on the books of the Fund and the amount
actually received and are included in realized gains or losses on foreign
currency related transactions. For each Fund except Strategic Income, the
portion of foreign currency gains and losses related to fluctuations in
exchange rates between the initial purchase trade date and subsequent sale
trade date is included in realized gains or losses on securities. For
Strategic Income, such gains or losses are included in realized gains or
losses on foreign currency related transactions.
D. Forward Foreign Currency Exchange Contracts--The Funds may enter into
forward foreign currency exchange contracts ("forward contracts") to settle
portfolio purchases and sales of securities denominated in a foreign currency
and to hedge certain foreign currency assets or liabilities. Forward contracts
are recorded at the forward rate and marked-to-market daily. Realized gains
and losses arising from such transactions are included in net realized gains
or losses on foreign currency related transactions. The Fund bears the risk of
an unfavorable change in the foreign currency exchange rate underlying the
forward contract and is subject to the credit risk that the other party will
not fulfill their obligations under the contract. Forward contracts involve
elements of market risk in excess of the amount reflected in the statement of
assets and liabilities.
E. Security Transactions and Investment Income--Securities transactions are
accounted for no later than one business day after the trade date. Realized
gains and losses are computed on the identified cost basis. Interest income is
recorded on the accrual basis and includes accretion of discounts and
amortization of premiums. Dividend income is recorded on the ex-dividend date.
39
<PAGE>
Evergreen Variable Trust
- -------------------------------------------------------------------------------
Combined Notes to Financial Statements (unaudited) (Continued)
F. Distributions--Distributions from net investment income and net realized
capital gains on investments, if any, will be distributed at least annually.
Distributions to shareholders are recorded at the close of business on the ex-
dividend date. Income and capital gain distributions are determined in accor-
dance with income tax regulations. Certain distributions paid during previous
years have been reclassified to conform with current year presentation.
G. Federal Taxes--The Funds have qualified and intend to qualify in the future
as regulated investment companies under the Internal Revenue Code of 1986, as
amended (the "Code"). Thus, the Funds will not incur any federal income tax
liability since they are expected to distribute all of their net investment
company taxable income and net taxable capital gains, if any, to their
shareholders. The Funds also intend to avoid any excise tax liability by
making the required distributions under the Code. Accordingly, no provision
for federal income taxes is required. To the extent that realized capital
gains can be offset by capital loss carryforwards, it is each Fund's policy
not to distribute such gains.
Additionally, the Funds intend to meet the diversification standards on the
underlying assets of a variable insurance contract under the Code. Failure to
meet these standards would cause the disqualification of the variable
insurance contract as an annuity contract or life insurance contract and would
result in the immediate imposition of federal income tax on contract owners
with respect to earnings allocable to the contract.
H. Organization Expenses--Organization expenses are amortized to operations
over a five-year period (from the date the Fund commenced operations) 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.
40
<PAGE>
Evergreen Variable Trust
- -------------------------------------------------------------------------------
Combined Notes to Financial Statements (unaudited) (Continued)
3. SHARES OF BENEFICIAL INTEREST
The Funds have an unlimited number of shares of beneficial interest
authorized. Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
1998 1997*
- --------------------------------------------------------------------------------
<S> <C> <C>
AGGRESSIVE GROWTH
Shares sold............................................ 125,218 181,866
Shares redeemed........................................ (44,904) (13,490)
- --------------------------------------------------------------------------------
Net increase........................................... 80,314 168,376
- --------------------------------------------------------------------------------
EVERGREEN
Shares sold............................................ 1,138,954 540,931
Shares redeemed........................................ (169,833) (108,385)
Shares issued in reinvestment of distributions......... 0 66,227
- --------------------------------------------------------------------------------
Net increase........................................... 969,121 498,773
- --------------------------------------------------------------------------------
FOUNDATION
Shares sold............................................ 2,059,388 905,499
Shares redeemed........................................ (87,126) (88,122)
Shares issued in reinvestment of distributions......... 0 135,505
- --------------------------------------------------------------------------------
Net increase........................................... 1,972,262 952,882
- --------------------------------------------------------------------------------
GLOBAL LEADERS
Shares sold............................................ 279,816 275,213
Shares redeemed........................................ (5,007) (8,439)
Shares issued in reinvestment of distributions......... 0 1,894
- --------------------------------------------------------------------------------
Net increase........................................... 274,809 268,668
- --------------------------------------------------------------------------------
GROWTH AND INCOME
Shares sold............................................ 1,308,068 786,872
Shares redeemed........................................ (76,353) (53,607)
Shares issued in reinvestment of distributions......... 0 74,988
- --------------------------------------------------------------------------------
Net increase........................................... 1,231,715 808,253
- --------------------------------------------------------------------------------
SMALL CAP
Shares sold............................................ 139,842 0
- --------------------------------------------------------------------------------
Net increase........................................... 139,842 0
- --------------------------------------------------------------------------------
STRATEGIC INCOME
Shares sold............................................ 546,155 212,808
Shares redeemed........................................ (68,674) (2,693)
Shares issued in reinvestment of distributions......... 0 6,063
- --------------------------------------------------------------------------------
Net increase........................................... 477,481 216,178
- --------------------------------------------------------------------------------
</TABLE>
* For the period from March 6, 1997 (commencement of operations) to December
31, 1997 for Aggressive Growth, Global Leaders and Strategic Income,
respectively.
**For the period from May 1, 1998 (commencement of operations) to June 30,
1998.
4. INVESTMENT ADVISORY AND OTHER AFFILIATE TRANSACTIONS
Evergreen, Foundation, Global Leaders, Growth and Income and Small Cap have
entered into investment advisory agreements with Evergreen Asset. In return
for providing investment management and administrative services to each Fund,
Evergreen Asset is paid an Investment Advisory fee that is calculated daily
and paid monthly. The Investment Advisory fee is computed at an annual rate of
0.95% of each respective Fund's average daily net assets. Foundation pays an
investment advisory fee at an annual rate of 0.825% of its average daily net
assets.
Lieber & Company, an affiliate of First Union, is the investment sub-adviser
to Evergreen, Foundation, Global Leaders, Growth and Income and Small Cap, and
also provides brokerage services with respect to substantially all security
transactions executed on the New York or American Stock Exchanges. For
transactions executed during the period ended June 30, 1998, Evergreen,
Foundation, Global Leaders, Growth and Income and Small Cap incurred brokerage
commissions of $20,501, $17,170, $3,028, $29,269 and $1,333, respectively,
with Lieber & Company. Lieber & Company is reimbursed by Evergreen Asset, at
no additional expense to the Funds.
41
<PAGE>
Evergreen Variable Trust
- -------------------------------------------------------------------------------
Combined Notes to Financial Statements (unaudited) (Continued)
Aggressive Growth has entered into an investment advisory agreement with CMG.
In return for providing investment management and administrative services to
the Fund, CMG is paid a management fee that is calculated and paid monthly.
The investment advisory fee is computed at an annual rate of 0.60% of the
Fund's average daily net assets.
Strategic Income has entered into an investment advisory agreement with
Keystone. In return for providing investment management and administrative
services to the Fund, Keystone is paid an investment advisory fee that is
calculated and paid monthly. The investment advisory fee is computed at an
annual rate of 2.0% of the Fund's gross investment income plus an amount which
is determined by applying percentage rates, starting at 0.45% and declining as
net assets increase to 0.20% per annum, to the average daily net assets of the
Fund.
Each investment adviser has voluntarily agreed to reimburse the Funds to the
extent that each Fund's annual operating expenses (including the investment
advisory fee and amortization of organization expenses but excluding interest,
taxes, brokerage commissions and extraordinary expenses) exceed 1.00%,
excluding indirectly paid expenses, of its average daily net assets. For the
period ended June 30, 1998, the investment advisers voluntarily waived and/or
reimbursed the following amounts:
<TABLE>
<CAPTION>
WAIVED REIMBURSED
-------------------------------------------------------
<S> <C> <C>
Aggressive Growth........................ $7,220 $2,032
Evergreen................................ 20,886 0
Foundation............................... 9,298 0
Global Leaders........................... 15,751 0
Growth and Income........................ 27,200 0
Small Cap................................ 1,590 7,320
Strategic Income......................... 4,393 0
</TABLE>
Each Fund has entered into an administrative services agreement with Evergreen
Investment Services, Inc. ("EIS"), a subsidiary of First Union, to provide
administrative services to each Fund. BISYS Fund Services ("BISYS") serves as
sub-administrator to each Fund. As sub-administrator BISYS provides the
officers of the Funds. The administrator and sub-administrator for each Fund
are entitled to an annual fee based on the average daily net assets of the
funds administered by EIS for which First Union or its investment advisory
subsidiaries are also the investment advisers. For each Fund the
administration fee is calculated by applying percentage rates, which start at
0.05% and decline to 0.01% per annum as net assets increase, to the average
daily net asset value of each Fund. The sub-administration fee is calculated
by applying percentage rates, which start at 0.01% and decline to 0.004% per
annum as net assets increase, to the average daily net assets of each Fund.
The following administrative service fees were paid to EIS during the period
ended June 30, 1998:
<TABLE>
<S> <C>
Aggressive Growth........................ $ 275
Evergreen................................ 3,372
Foundation............................... 5,196
Global Leaders........................... 514
Growth and Income........................ 4,739
Small Cap*............................... 0
Strategic Income......................... 560
</TABLE>
* For the period from May 1, 1998 (commencement of operations) to June 30,
1998.
5. INVESTMENT TRANSACTIONS
The cost of purchases and proceeds from sales of investments, excluding short-
term securities, for the six months ended June 30, 1998 were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
-------------------------------------------------------
<S> <C> <C>
Aggressive Growth................... $ 1,819,979 $ 838,584
Evergreen........................... 13,310,344 1,386,634
Foundation:
U.S. Government.................... 6,980,000 0
Non-U.S. Government................ 13,714,236 545,478
Global Leaders...................... 2,874,379 177,483
Growth and Income................... 16,396,530 2,939,295
Small Cap*.......................... 1,193,509 21,475
Strategic Income:
U.S. Government.................... 2,499,405 369,031
Non-U.S. Government................ 2,882,983 1,365,712
</TABLE>
* For the period from May 1, 1998 (commencement of operations) to June 30,
1998.
42
<PAGE>
Evergreen Variable Trust
- -------------------------------------------------------------------------------
Combined Notes to Financial Statements (unaudited) (Continued)
6. FINANCING AGREEMENT
A financing agreement among all of the Evergreen Funds, State Street and a
group of Banks (the "Banks") became effective December 22, 1997. Under this
agreement, the Banks provide an unsecured credit facility in the aggregate
amount of $400 million ($275 million committed and $125 million uncommitted).
The credit facility is allocated among the Banks, under the terms of the
financing agreement. The credit facility is to be accessed by the Funds for
temporary or emergency purposes only and is subject to each Fund's borrowing
restrictions. Borrowings under this facility bear interest at 0.50% per annum
above the Federal Funds rate. A commitment fee of 0.065% per annum will be
incurred on the unused portion of the committed facility, which will be
allocated to all Funds. State Street serves as administrative agent for the
Banks, and as administrative agent is entitled to a fee of $20,000 per annum
which is allocated to all of the Funds.
At June 30, 1998, Aggressive Growth had borrowings pursuant to this line of
credit of $34,000. During the six month period ended June 30, 1998, Aggressive
Growth had average daily borrowing pursuant to this financing agreement of
$6,725 and was charged an average interest rate of 6.212%. During the period
ended June 30, 1998, Aggressive Growth had maximum balance outstanding under
this agreement of $383,000. No other Fund had borrowings under this agreement
during the period ended June 30, 1998.
7. DEFERRED TRUSTEES' FEES
Each Trustee may defer any or all compensation related to performance of
duties as a Trustee of the Funds. Each Trustee's deferred balances are
allocated to deferral accounts which are included in the accrued expenses for
each Fund. The investment performance of the deferral accounts are based on
the investment performance of certain Evergreen Funds. Any gains earned or
losses incurred in the deferral accounts are reported in each 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 June 30, 1998, the value of the Trustees
deferral accounts was $253, $4,294, $5,589, $255, $4,891, $0 and $255 for
Aggressive Growth, Evergreen, Foundation, Global Leaders, Growth and Income,
Small Cap and Strategic Income, respectively.
43
<PAGE>
Evergreen Variable Trust
- -------------------------------------------------------------------------------
Additional Information (unaudited)
Special Meeting of Shareholders
On April 20, 1998, a special meeting of shareholders for Aggressive Growth,
Evergreen, Foundation, Global Leaders, Growth and Income, Small Cap and Stra-
tegic Income was held to consider a number of proposals and had the following
shares represented at the meeting. On February 28, 1998, the record date for
the meeting, the Funds had the following shares outstanding:
<TABLE>
<CAPTION>
AGGRESSIVE GLOBAL GROWTH & STRATEGIC
GROWTH EVERGREEN FOUNDATION LEADERS INCOME INCOME
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Record date shares
outstanding............ 198,254 1,636,068 2,743,587 311,760 2,325,329 306,900
Shares represented at
meeting................ 198,254 1,636,050 2,731,998 311,760 2,325,313 306,900
Percentage of record
date shares represented
at meeting............. 100.0% 100.0% 99.6% 100.0% 100.0% 100.0%
The votes recorded at
the meeting, by
proposal, were as
follows:
PROPOSAL 1--THE PROPOSED REORGANIZATION OF EACH FUND AS A SERIES OF THE EVERGREEN
VARIABLE ANNUITY TRUST, A DELAWARE BUSINESS TRUST:
Shares voted "For"...... 190,561 1,593,394 2,583,191 303,221 2,260,063 301,487
Shares voted "Against".. 5,725 5,864 5,159 4,140 17,180 5,413
Shares voted "Abstain".. 1,968 36,792 143,648 4,399 48,070 0
PROPOSAL 2--RECLASSIFICATION AS NON-FUNDAMENTAL OF THE INVESTMENT OBJECTIVE
CURRENTLY CLASSIFIED AS FUNDAMENTAL:
Shares voted "For"...... 189,448 1,591,436 2,474,019 303,221 2,240,557 300,513
Shares voted "Against".. 6,838 7,822 85,918 4,140 27,471 6,387
Shares voted "Abstain".. 1,968 36,792 172,061 4,399 57,285 0
PROPOSAL 3--CHANGES TO FUNDAMENTAL INVESTMENT
RESTRICTIONS:
Proposal 3A--To amend the Fundamental
restriction concerning diversification of
investments:
Shares voted "For"...... 191,522 1,584,278 2,538,946 307,361 2,233,898 306,900
Shares voted "Against".. 4,764 6,363 88,625 0 22,823 0
Shares voted "Abstain".. 1,968 45,409 104,427 4,399 68,592 0
Proposal 3B--To amend the Fundamental restriction concerning concentration of a
Fund's assets in a particular industry:
Shares voted "For"...... 191,522 1,584,278 2,537,030 305,864 2,231,850 306,900
Shares voted "Against".. 4,764 6,363 90,541 1,497 24,871 0
Shares voted "Abstain".. 1,968 45,409 104,427 4,399 68,592 0
Proposal 3C--To amend the Fundamental restriction
concerning the issuance of senior securities:
Shares voted "For"...... 191,193 1,584,278 2,537,330 307,071 2,232,287 304,913
Shares voted "Against".. 5,093 6,363 90,241 290 24,434 1,987
Shares voted "Abstain".. 1,968 45,409 104,427 4,399 68,592 0
Proposal 3D--To amend the Fundamental restriction
concerning borrowing:
Shares voted "For"...... 191,522 1,584,278 2,538,946 307,361 2,233,897 306,900
Shares voted "Against".. 4,764 6,363 88,625 0 22,824 0
Shares voted "Abstain".. 1,968 45,409 104,427 4,399 68,592 0
Proposal 3E--To amend the Fundamental restriction
concerning underwriting:
Shares voted "For"...... 191,522 1,584,278 2,538,946 307,361 2,233,897 306,900
Shares voted "Against".. 4,764 6,363 88,625 0 22,824 0
Shares voted "Abstain".. 1,968 45,409 104,427 4,399 68,592 0
Proposal 3F--To amend the Fundamental restriction
concerning investments in Real Estate:
Shares voted "For"...... 191,522 1,584,278 2,538,946 307,361 2,233,897 306,900
Shares voted "Against".. 4,764 6,363 88,625 0 22,824 0
Shares voted "Abstain".. 1,968 45,409 104,427 4,399 68,592 0
Proposal 3G--To amend the Fundamental restriction
concerning commodities:
Shares voted "For"...... 191,522 1,584,278 2,538,946 307,361 2,233,897 306,900
Shares voted "Against".. 4,764 6,363 88,625 0 22,824 0
Shares voted "Abstain".. 1,968 45,409 104,427 4,399 68,592 0
Proposal 3H--To amend the Fundamental restriction
concerning lending:
Shares voted "For"...... 191,522 1,584,278 2,538,946 307,361 2,233,897 306,900
Shares voted "Against".. 4,764 6,363 88,625 0 22,824 0
Shares voted "Abstain".. 1,968 45,409 104,427 4,399 68,592 0
</TABLE>
44
<PAGE>
Evergreen Variable Trust
- --------------------------------------------------------------------------------
Additional Information (continued)
Special Meeting of Shareholders
<TABLE>
<CAPTION>
AGGRESSIVE GLOBAL GROWTH & STRATEGIC
GROWTH EVERGREEN FOUNDATION LEADERS INCOME INCOME
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PROPOSAL 3--CHANGES TO FUNDAMENTAL INVESTMENT
RESTRICTIONS--CONTINUED:
Proposal 3I--Reclassification as non-fundamental of all current fundamental
restrictions other than those described in proposals 3A--3H.
Shares voted "For"...... 190,408 1,584,278 2,538,157 307,361 2,233,066 305,927
Shares voted "Against".. 5,878 6,363 89,414 0 23,655 973
Shares voted "Abstain".. 1,968 45,409 104,427 4,399 68,592 0
Proposal 3J--Reclassification as non-fundamental of
current fundamental restriction on margin purchases
Shares voted "For"...... 191,522 1,584,278 2,538,946 307,361 2,233,897 306,900
Shares voted "Against".. 4,764 6,363 88,625 0 22,824 0
Shares voted "Abstain".. 1,968 45,409 104,427 4,399 68,592 0
</TABLE>
45
<PAGE>
This report must be preceded or accompanied by a prospectus of an Evergreen
fund contained herein. The prospectus contains more complete information,
including fees and expenses, and should be read carefully before investing or
sending money.
NOT May lose value
FDIC INSURED
No bank guarantee
EVERGREEN FUNDS DISTRIBUTORS, INC.
544426 RV0 8/98
