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Evergreen
Variable Annuity Trust
Semiannual Report
June 30, 1999
[LOGO OF EVERGREEN FUNDS APPEARS HERE]
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Table of Contents
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Portfolio Manager Commentary:
Evergreen VA Aggressive Growth Fund......................................... 1
Evergreen VA Fund........................................................... 2
Evergreen VA Foundation Fund................................................ 3
Evergreen VA Global Leaders Fund............................................ 4
Evergreen VA Growth and Income Fund......................................... 6
Evergreen VA International Growth Fund...................................... 7
Evergreen VA Masters Fund................................................... 9
Evergreen VA Small Cap Value Fund........................................... 13
Evergreen VA Strategic Income Fund.......................................... 15
Financial Highlights........................................................ 17
Schedule of Investments..................................................... 22
Statements of Assets and Liabilities........................................ 47
Statements of Operations.................................................... 49
Statements of Changes in Net Assets......................................... 51
Combined Notes to Financial Statements...................................... 55
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EVERGREEN VARIABLE ANNUITY TRUST
Evergreen VA Aggressive Growth Fund
A Report From Your Portfolio Manager
Maureen E. Cullinane, CFA
Performance
For the six months ended June 30, 1999, Evergreen VA Aggressive Growth Fund
returned 12.8%. For the same period, the average of the Lipper Capital
Appreciation Fund Index advanced 13.7% and the Russell 1000 Growth Index
appreciated 10.4%.
Investment Environment
During the period, the Fund was managed in a favorable investment environment
for stocks. Economic growth was strong and inflation and interest rates
remained at relatively low levels. During the first three months of the
period, large-cap stocks maintained their leadership position in the market, a
position they had held for more than a year. Moving into the second three
months of the period, however, investor sentiment changed. As valuations on
large-cap growth companies reached excessive levels, investors took profits
and began to focus on market sectors that had lagged and offered attractive
prices. As a result, small-cap and mid-cap stocks bested large-cap stocks;
value outperformed growth; and cyclical and commodity companies, such as
paper, chemicals, and oil companies, produced strong returns.
Investment Themes and Strategy
Because we wanted to improve the Fund's diversification, we broadened our
investments into areas that we believed were underrepresented in the
portfolio. We trimmed the oil service industry from approximately 10% of
assets to about 5% and used the proceeds to invest in technology, consumer
cyclicals, healthcare and finance. While stocks are selected on a case-by-case
basis, the Fund's investments tended to cluster around certain themes, such as
the Graying of America or Information Technology.
Graying of America
Healthcare stocks accounted for about 20% of assets. VISX, a company that
develops systems to correct vision problems such as myopia, is the Fund's
largest holding. VISX, which has been held by the portfolio for more than a
year, has been a strong contributor to performance. In the pharmaceutical
area, we focused primarily on small and mid-cap companies. For these
companies, a successful new drug or medical product would have a significant
impact on earnings. Forest Laboratories, Osteotech and Monsanto are a few of
the healthcare stocks that are new to the portfolio. Forest Laboratories has
developed a drug to treat depression, Celexa, that is gaining market share
from competitive products. Osteotech is a company that produces bone graft
material used in spinal fusion procedures and to replace bone loss caused by
trauma or disease. Monsanto launched its new arthritis drug, Celebrex, in
February; it has been the most successful launch of any new drug in history
and is likely to be a multi-billion dollar drug longer term.
Information Technology
At about 30% of assets, technology stocks accounted for the largest sector
weighting in the portfolio. In this area we emphasized software manufacturers,
equipment suppliers and networking companies. We continued to hold some of the
leaders in technology--companies such as EMC Corp., Cisco Systems and
Microsoft. We invested in Veritas Software, which develops enterprise data
storage management solutions that protect companies against data loss or
system failure. Other additions to the portfolio were Tellabs, a manufacturer
of telecommunications equipment, and Qualcomm, one of the leaders in digital
wireless communications products and services.
Outlook
The market appears to be fixated on the Federal Reserve and the potential for
higher interest rates. Strong economic growth, tight labor markets, wage
pressures, a pickup in energy and grain prices, and a weaker dollar would lead
to this conclusion. Higher rates would slow the economy to a more moderate
pace from that of the first half of the year. We are already seeing signs of a
slowdown. Mortgage rates above 8% will certainly slow housing turnover and
stabilize the price of houses. The recent stock market decline has dampened
the wealth effect of consumers; lower consumer confidence will crimp consumer
spending. Inflation remains relatively moderate. Wage pressures are not
excessive, as layoffs and corporate restructurings continue to make headlines.
So, our outlook for moderate economic growth, moderate inflation and a
relatively benign interest rate environment remains intact. Near-term, we
believe an increase in rates has been discounted in the stock market, but we
believe that the market is likely to remain choppy for the next six months as
year-end issues will probably restrain forward momentum. Market volatility
offers the opportunity to buy great companies at more reasonable prices. The
Evergreen VA Aggressive Growth Fund remains focused on those companies that
have a consistent record of earnings growth and offer the potential for an
acceleration of earnings growth.
The Lipper Capital Fund and the Russell 1000 Growth are unmanaged indices
which do not include transaction costs associated with buying and selling
securities nor any management fees.
1
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EVERGREEN VARIABLE ANNUITY TRUST
Evergreen VA Fund
A Report From Your Portfolio Manager
Jean C. Ledford, CFA & Richard Welsh
For the six-month period ended June 30, 1999, the Evergreen VA Fund provided a
return of 13.4% versus the Russell 2000 performance of 9.3%. The average
annual return since inception on March 1, 1996 is 21.3%.
The Fund's performance leaders were a highly diverse group of companies,
primarily in the small capitalization category. The top ten performers in the
portfolio increased between 288.8% and 57.5%. The leaders were: VISX, Inc.,
+288.8%; Sprint Corp. (PCS Group), +146.5%; Powertel, Inc., +120.1%; Presley
Companies, Cl. A, +86.5%; Dain Rauscher Corp., +82.3%; Tandy Corp., +70.1%;
Boston Scientific Corp., +63.9%; Sun Microsystems, Inc., +60.8%; Nextel
Communications, Inc., Cl. A, +58.7%; and Donna Karan International, Inc.,
+57.5%. This diverse group of companies had in common innovative or strong,
brand-building, marketing strategies.
Reflecting long-term portfolio trends, basic undervaluation of many of the
Fund's holdings and purchases was demonstrated by acquisitions and mergers.
Eleven of the Fund's holdings were the subject of such transactions, with an
average return on completed transactions of 56.2%. The largest gain was in the
shares of SunAmerica, Inc., which was acquired by American International
Group, Inc., providing a 236.2% gain to the Fund in three years. Other gains
included: Eagle Hardware & Garden, Inc., +76.9%, by Lowe's Companies, Inc. and
ExecuStay Corp., +25.5%, by Marriott International, Inc. The pending
acquisitions include American Bankers Insurance Group, Inc., BankBoston Corp.,
and Maxxim Medical, Inc.
The largest single gain on the purchases made during the quarter was in the
shares of Nextel Communications, Inc., purchased in March, which had increased
58.7% by June 30, 1999. This was followed by Donna Karan International, Inc.,
Tupperware Corp., Midwest Express Holdings, Inc., and Barnes Group, Inc.
Twenty-nine sales were made during the quarter, largely of investments
considered matured, with gains as high as 790.0% for a portion of the Fund's
VISX, Inc. position, held ten months.
During 1999, the Fund continued to seek opportunities to purchase high
potential, undervalued entrepreneurial companies, which our research uncovers.
Particular care was taken to take advantage of these opportunities at times of
individual company, market sector, or overall market weakness. This has proven
a highly effective strategy in our continuing effort to add undervalued growth
stocks to the Fund's portfolio.
The Russell 2000 is an unmanaged index which does not include transaction
costs associated with buying and selling securities nor any management fees.
Small capitalization investing typically carries additional risks since small
companies generally have a higher risk failure. Although it may offer the
potential for greater long term results, it may also result in greater price
volatility.
2
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EVERGREEN VARIABLE ANNUITY TRUST
Evergreen VA Foundation Fund
A Report From Your Portfolio Manager
Jean C. Ledford, CFA & Richard Welsh
For the six months ended June 30, 1999, Evergreen VA Foundation Fund provided a
return of 5.3%, as compared to the Lipper Balanced Fund Average performance of
5.6%. It has provided a +17.6% average annual return since inception on March
1, 1996.
The top equity performers during the first half were: Sprint Corp. (PCS Group)
+146.5%; Dain Rauscher Corp., +81.0%; Frontier Corp., +76.0%; Rohm & Haas Co.,
+70.0%; Sun Microsystems, Inc., +60.8%; Corning Inc., +55.8%; Honeywell, Inc.
+53.7%; Hewlett-Packard Co., +46.8%; Crescent Operating, Inc., +43.2%; and
Lehman Brothers Holdings, Inc., +41.4%. During the quarter, the bulk of new
investment cash flow went into common stocks. The Fund's growing cash reserves
were primarily employed during periods of market weakness to purchase equities
believed to provide undervalued opportunities.
Mergers and acquisitions were again a very positive force for the Fund, with
five transactions completed providing an average return of 25.6%. Six
additional announcements made were: Eastern Utilities Associates, Consolidated
Natural Gas Co., BankBoston Corp., Frontier Corp., Mercantile Bancorp, Inc.,
and Honeywell, Inc., which had a 59.1% gain since October, 1997.
The largest new purchase for the Fund was Albertson's, Inc., bought during
periods of weakness, following our "value-timing" strategy. Albertson's, Inc.
was bought toward the end of the period, when it was under pressure with the
imminent conclusion of its merger with American Stores Co. The largest single
gain on the new purchases was in the shares of Illinois Tool Works, Inc., which
then had a rapid rise, and were sold shortly after purchase for a gain of
27.5%.
Other significant additions included: Horace Mann Educators Corp., Caterpillar,
Inc., Mercantile Bancorp, Inc., Computer Sciences Corp., and Emerson Electric
Co. New positions were added in Chelsea GCA Realty, Inc., Leggett & Platt,
Inc., J.C. Penney Co., Inc., American Express Co., and Centex Construction
Products, Inc. Partial sales were made in the positions of Lowe's Companies,
Inc. and AmSouth Bancorp during sharp run-ups earlier in the year, with gains
of 207.3% and 51.4%, respectively. Other sales included Exxon Corp., +72.4%,
Citigroup, Inc., +62.6%, and Disney (Walt) Co., +49.0%.
The main issue we face in the months ahead is the fixed income portfolio
allocation, and the maturities schedule. The allocation is currently 24.6% in
Treasuries, and 55.7% in common stocks and convertible preferred stock, with
19.7% in cash equivalents. These figures show a decline in bond and stock
percentages from earlier in the year, and an increase in cash equivalents. The
Fund bought some long-term bonds when 6% governments due in 2026 sold at a
little over $97 to yield 6.1%. Our strategic position has been to stay in long
maturities, believing that by year-end, we will have at least a modest rally in
the fixed income market. It may not occur until there is another increase by
the Federal Reserve, or until the rate of growth of the economy begins to
decline, and it becomes evident that the Fed is not going to have any further
increases. We believe that Fed restraint in making increases is important in
terms of international trade because of the continuing strength of the dollar,
particularly as the euro has fallen to approach parity with the dollar.
The Lipper Balanced Fund Average is an unmanaged index which does not include
transaction costs associated with buying and selling securities nor any
management fees.
3
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EVERGREEN VARIABLE ANNUITY TRUST
Evergreen VA Global Leaders Fund
A Report From Your Portfolio Manager
Edwin D. Miska
During a period characterized by a challenging, yet generally favorable
outlook for equity investing, the Fund returned 8.3% for the six months ended
June 30, 1999, compared to the MSCI World Index return of 8.5%.
The Fund continued to follow its long-term investment mission, seeking to
invest in the best 100 companies in the world. Robust gains in both domestic
and foreign markets were somewhat restrained by a weak market for currency
translation, most notably the euro, Japanese yen and Swiss franc. The Fund
performed comparatively to the Lipper Global Funds universe, which returned
10.8% and was in line with the MSCI World Index, which was up 8.5%.
Market Environment
The global scenario in the past 12 months presented the Fund with an
interesting and challenging, yet favorable, environment. While stock market
gains were impressive, much of the positive performance came in the wake of
the financial crises that gripped much of the world in late 1998, and occurred
in significance once interest rates were cut around the globe. Most of the
positive action occurred in countries, sectors and size segments in which the
Fund has no mandate. While larger capitalization strategies were solid
performers, smaller cap and emerging market styles led the way, followed by a
strong showing of cyclical industries which are recovering from depressed
profitability. Many of these sectors sold off significantly in 1998, and have
staged relief rallies thus far in 1999.
Among areas within the globe where the Fund can invest, economic activity has
continued to be strong, or has shown the prospect of acceleration. These
regions have continued to post the steadiest results. Countries such as the
United States, Canada, New Zealand and Australia, have benefited from strong
corporate profits, low inflation and high liquidity. These factors have
continued to fuel and sustain economic expansion.
The Far East, buoyed by the anticipation of an improved outlook in emerging
countries devastated by the '98 crises, and strong first quarter GDP growth in
Japan, saw foreign capital return and markets improve. Japan's corporate
world's willingness towards taking the first serious steps to restructuring,
including job cuts and cost containment measures, have increased the
likelihood of this region's recovery being sustained. Europe, in contrast, has
continued to lag partly due to the cyclical effects of the Asian and Russian
crises, the failure of the euro to be a dominant currency and the impact of
the war in Kosovo. Recent business surveys point towards a cyclical recovery
later this year, which moved the markets positively in anticipation of the
return of growth.
Overall, the Fund's geographical emphasis has remained consistent. The policy
of accentuating areas of the globe where economic growth is expected to remain
robust is likely to continue. This has lead towards over-weighting North
America, Australia and select European nations, while avoiding those areas
which have yet to fully recover in profit terms from more dramatic upheaval,
notably the Far East, and much of continental Europe.
Performance Review
Our largest overall allocation, the United States, has continued to perform
exceptionally. For the six months, performance was strong, up 20.6%, outpacing
the S&P 500 Index which rose 12.3%. Outperformance was achieved despite the
trends during the last three months as the U.S. broadened its focus away from
the larger-cap, growth-oriented, brand name companies into smaller companies
and companies with a distinct value-oriented bias. We continue to remain
confident in our abilities to identify outstanding opportunities by
implementing our long-term strategy of investing in leading companies
throughout the economy, emphasizing both quality and diversification. We
believe this strategy rarely goes out of style.
Standouts in the United States included technology leaders Oracle Systems
Corp., +126.7%; Cisco Systems, Inc., +96.1%; Microsoft Corp., +67.2% and Intel
Corp., +62.3%. Retailers that stood out were Gap, Inc., +87.3% and Wal-Mart
Stores, Inc., +64.1%. The Fund's performance also benefited from several
takeovers: American International Group's takeover of SunAmerica Corp.,
resulting in a net gain of 68.3% via stock, and United Technologies Corp.
purchase of Sundstrand Corp., +34.5% for stock, for the 12 months. Strength
was fairly broad-based, with 16 issues gaining more than 25% for the fiscal
year.
Among foreign issues, absolute and relative performance gains were more
challenging, but have shown an improving trend. Segment returns were +1.1%
versus +6.0% for MSCI EAFE Index. A 5% negative impact from the poor
performance of the euro, yen and Swiss franc
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EVERGREEN VARIABLE ANNUITY TRUST
Evergreen VA Global Leaders Fund
in calendar 1999, in which nearly 40% of the Fund's assets are denominated,
held back further gains. For the most recent quarter, the Fund handily
outperformed MSCI EAFE up 7.5% versus 2.2%, indicating improvement. Best
performing country allocations for the last 12 months included many of the
Asian markets rebounding from last year's crises: Finland, +154.2%; Malaysia,
+141.6%; Japan, +66.8%; and Hong Kong, +53.3%, Worst included many continental
European markets, still reeling from the lagging impact of Asia, Russia and
Kosovo: Germany, -33.1%; Belgium,-28.5%; and Italy, -5.4%. Much of the
underperformance arose primarily due to local currency erosion vis-a-vis the
US dollar and select profit disappointments brought on by weak economic
conditions.
Top individual issues included Malaysian holdings: AMMB Holdings, +386.3%; RHB
Capital, +214.8%; United Engineers Ltd., +288.4%; and Proton, +262.4%; all
reflecting recovery of the Malaysian stock market. Hong Kong shares: Cheung
Kong Holdings, Ltd., +80.9% and Henderson Land Development, +73.9% rebounded
on better real estate markets. Finnish wireless phone maker, Nokia Corp.
soared +154.2%, reflecting market share gains, as did UK cellular operator,
Vodafone Group Plc which was up +56.2%. The Fund's top two foreign holdings,
both from Japan, also reflected strong growth and a rebound in share prices,
despite the continued malaise in Japan. Seven-Eleven Japan Ltd. was up 67.5%
and game machine maker Nintendo Co, Ltd. rose +51.8%.
Conclusion & Outlook
The ongoing emphasis of the Fund will be to continue our strategy of
selectively allocating among the best individual companies and geographic
markets based on strong fundamental and competitive positions. These, we
believe, will be the keys to superior long-term performance. We believe
companies that consistently demonstrate sustained profit leadership and
project visible growth in any economic environment will be the likely
candidates for strong sustained stock performance. Companies with superior
management, strong earnings, cash flows and financial balance sheets will be
better able to capitalize on market opportunities. We intend to identify those
companies and include them in your portfolio. We also intend to remain
proactive, selling issues at the first hints of trouble and taking advantage
of challenging and unsustainable valuations to realize profits. We look
forward to updating you on the Fund's progress.
Foreign investments may contain more risk due to the inherent risks associated
with changing political climates, foreign market instability and foreign
currency fluctuations. Risks of international investing are magnified in
emerging or developing markets.
The MSCI World and Lipper Global Funds are unmanaged indices which do not
include transaction costs associated with buying and selling securities nor
any management fees.
5
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EVERGREEN VARIABLE ANNUITY TRUST
Evergreen VA Growth and Income Fund
A Report From Your Portfolio Manager
Philip M. Foreman, CFA, CFP
For the six months ended June 30, 1999, Evergreen VA Growth and Income Fund
gained 10.4%, underperforming the Standard & Poor's 500 Index return of 12.4%
and outperforming the Standard & Poor's MidCap 400 Index return of 6.9% for
the same period. Large cap industrial and economically sensitive holdings
helped propel the return for the period. In addition, mergers and acquisitions
continued at a brisk pace. The Fund participated nicely in this trend, and we
see the trend continuing into the foreseeable future. The market participation
(performance) broadened into small and mid-cap securities at the end of the
period for the first time in over a year.
The Fund's performance leaders for the six months were Honeywell, +53.4% and
TCA Cable TV, +55.4%. These companies were purchased in merger transactions
during the period, being recognized as undervalued franchises that could add
value to the acquiring companies. Industrial stocks that benefited from an
improving global economy were Halliburton, +52.2%; Computer Associates, +54%;
and IBM, +45%.
McKesson HBOC and Cole National were the poor performers for the period, down
over 50% for the period. We are currently evaluating whether to add to our
positions in these businesses.
Going forward, we are excited about the prospects for our shareholders to
achieve outstanding, risk-adjusted returns. We are finding many outstanding
businesses (companies that have a competitive advantage and high barriers to
entry) that we now own, trade at steep discounts to their business value. The
market performance is also broadening in market cap because of an improved
global economic situation.
Sony Corp., Gaylord Entertainment, New York Times and American Tower Systems
were purchased significantly during the period and represent an outstanding
investment potential in our opinion. Media companies should benefit from
powerful election spending in year 2000. In addition, many media companies'
historical content can now be accessed digitally. Our exposure to media and
entertainment has increased, and we are overweighted in this area. Pooling
accounting combinations come to an end in the year 2000. This could accelerate
the merger activity trend in the second half of 1999 and benefit our regional
bank position.
The S & P 500 and S & P MidCap 400 are unmanaged indices which do not include
transaction costs associated with buying and selling securities nor any
management fees.
Small capitalization investing typically carries additional risks since small
companies generally have a higher risk failure. Although it may offer the
potential for greater long term results, it may also result in greater price
volatility.
6
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EVERGREEN VARIABLE ANNUITY TRUST
Evergreen VA International Growth Fund
A Report From Your Portfolio Manager
Gilman C. Gunn
For the six months ended June 30, 1999, the Fund returned 3.3% compared to the
MSCI World Index, which returned 8.5%.
During a period of change in foreign markets, the Evergreen VA International
Growth Fund consistently has pursued its strategy designed to provide an
opportunity for international diversification without taking undue risk.
Launched on August 17, 1998, the Fund follows an investment discipline similar
to that of the successful $650-million Evergreen International Growth Fund,
emphasizing blue chip stocks in major markets, with strategic allocations to
smaller company stocks as values are found.
Changing Market Leadership
The Fund began operations in August 1998 in a period of uncertainty in the
global markets, caused by fears about the continuing problems in Asia and
emerging markets that were exacerbated by Russia's default on part of its
external debt. These fears began to recede late in 1998 as central monetary
authorities, including the U.S. Federal Reserve, lowered interest rates and
eased the flow of money into markets. Major international markets started to
rebound from mid-October through the end of 1998, led by established European
companies and more defensive-oriented stocks, including food, business
services and some technology companies.
A very different picture emerged in 1999, however, when the markets and
industries that had been most out of favor during the previous two years
started to bounce back as investors gained confidence that the world economy
was recovering. Market leadership changed dramatically.
During the first six months of 1999, the strongest performance in foreign
markets was realized in Japan, emerging markets and in commodity-related
industries, all of which had been mired in deep slumps in 1998. Japan has
shown strong signs that it may be recovering from its recession, while
emerging markets have staged a strong comeback. The stocks of companies tied
closely to the economic cycle, including companies in commodities,
manufacturing, oil and technology industries, all did very well.
At the same time, European investments faltered somewhat. The new European
currency--the euro--lost 13% of its value between the time of its introduction
on January 1 and the period ended June 30, 1999, undercutting potential gains
of U.S. dollar-based investors. The effects of the currency fluctuations held
back the performance of your Fund, although the impact was mitigated somewhat
by the fact that an average of about 35% of European investments were hedged
against the dollar. The introduction of the euro had another effect on the
markets. As portfolio managers in European countries moved to take advantage
of the new single currency, they tended to sell the smaller-company stocks in
their own countries in favor of large-company stocks in other euro-denominated
countries. This tended to result in better performance by large-cap stocks
than by small-cap stocks.
Strategy
Our biggest strategic move during the first six months of 1999 was to increase
the emphasis on Japan from about 12% of net assets to 21% of net assets on
June 30. In Japan, we have emphasized technology and a broad array of very
inexpensive shares of Japanese companies. European merger-and-acquisition
activity has been very strong in 1999, and several of our holdings have been
taken over, aiding performance. In addition, we have increased the Fund's
investments in European small company investments as their relative value
improved. In general, we have increased weightings in commodities industries,
including paper and forest products and the oil industry, from extremely low
levels earlier.
In telecommunications, strong contributors to performance included Nokia, the
manufacturer of wireless phones and equipment and Telecom Italia, which was
acquired by Olivetti at a healthy premium to its pre-bid stock price. The
Telecom Italia investment, one of the Fund's largest holdings, illustrated the
merger-and-acquisition trend, as did the investment in Quebecor, the giant
Canadian printing company which has recently made an acquisition offer for
World Color, a complementary U.S. company. The proposed acquisition would
result in the world's largest printing company.
Outlook
In an environment in which the U.S. economy continues to be the principal
factor affecting the performance of foreign markets, we see reasons to be
optimistic about opportunities in Europe and in Japan. Using traditional
investment valuation standards, companies in these markets appear much less
7
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EVERGREEN VARIABLE ANNUITY TRUST
Evergreen VA International Growth Fund
expensive than U.S. companies, which had enjoyed strong stock performance for
the past three years. In addition, interest rates in Europe and Japan are
significantly below rates in the U.S., while both the euro and the Japanese yen
appear to be relatively inexpensive versus the dollar, encouraging prospects
for export industries in Japan and in Europe. Moreover corporate restructuring,
including cost-reductions and the sale of non-core assets, is gaining strength
in both Japan and Europe.
We expect to continue to move from more defensive to more cyclical industries,
to seek opportunities in Japan and in European mid-cap stocks and, to a limited
extent, in emerging markets. We also intend to be watchful for selected
opportunities, as in the life insurance industry in Canada, where a number of
mutual companies are issuing stock to the public.
The MSCI World is an unmanaged index which does not include transaction costs
associated with buying and selling securities nor any management fees.
Foreign investments may contain more risk due to the inherent risks associated
with changing political climates, foreign market instability and foreign
currency fluctuations. Risks of international investing are magnified in
emerging or developing markets.
8
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EVERGREEN VARIABLE ANNUITY TRUST
Evergreen VA Masters Fund
Overview
The Evergreen VA Masters Fund's performance since its inception on January 29,
1999 was 8.4% as compared to 11.2% and 7.9% for the S & P 500 Index and the S &
P MidCap 400 Index, respectively, for the same period.
Evergreen VA Masters Fund is composed of four separate portfolios; each managed
by a different investment advisor. Together these portfolios provide a
diversified growth fund. Each investment advisor brings a unique investment
approach to the Fund. As a result, the Fund has the potential to benefit from
various investment methods and styles.
A Report From Your Portfolio Manager
Mid-Cap Value Portfolio
Jean C. Ledford, CFA & Richard Welsh, Evergreen Funds
This portfolio covers the mid-cap value segment of the investment spectrum. Its
selections are generally companies in the $1 billion to $5 billion market
capitalization range. Our focus in building this portfolio has been on choosing
investments that we feel have outstanding business franchise values and
significant growth potential, yet are comparatively undervalued. While not a
segment which has been popular in the recent phase of the stock market's
advance, this portfolio has had some outstanding gains while remaining
consistent to its strategy.
There are 34 holdings in the portfolio, the largest are in order: Ethan Allen
Interiors, Inc., Terex Corp., Teligent, Inc., Newell Rubbermaid, Inc., Computer
Sciences Corp., Analog Devices, Inc., SkyWest, Inc., AutoZone, Inc., Fair,
Isaac & Co., Inc., and Huntington Bancshares, Inc.
Merger and acquisition activity benefited the Fund with three announced
acquisitions in the Fund's brief history: American Bankers Insurance Group,
Inc., BankBoston Corp., and ALZA Corp.
The top performing purchases during the quarter included: Analog Devices, Inc.,
+64.9%; Ethan Allen Interiors, Inc., +41.8%; BankBoston Corp., +39.8%; Leggett
& Platt, Inc., +36.5%; and Ross Stores, Inc., +24.8%. There were only two sales
during this period: Boston Scientific Corp., 55.6% gain in one month; and Tandy
Corp., 45.6% gain in two months.
The positioning of the portfolio is structured to include companies with
characteristics of entrepreneurial growth, and those which are considered
undervalued or underexploited business franchises. It is primarily focused on
the long-term potentials of issues purchased.
The S & P 500 and the S & P MidCap 400 are unmanaged indices which do not
include transaction costs associated with buying and selling securities nor any
management fees.
9
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EVERGREEN VARIABLE ANNUITY TRUST
Evergreen VA Masters Fund
A Report From Your Portfolio Manager
Mid Cap Growth Portfolio
Mark Regan, MFS
The portfolio's relative outperformance of both the Russell MidCap Growth and
the S&P 400 MidCap indices can be largely attributed to strong stock selection
in the technology, leisure and healthcare sectors. Gemstar, the portfolio's
top Leisure holding, contributed significantly to the absolute return, gaining
73% in the quarter. The security continues to benefit from healthy growth and
is up 127% year-to-date.
Semi-conductor and internet-related holdings led the technology sector's
relative out-performance in the quarter. Leaders in the overweighted semi-
conductor segment include Teradyne and KLA-Tencor. Edify, a leading provider
of internet self-service software, announced an acquisition by Security First
in May, resulting in a 145% return for the quarter. VeriSign, an internet-
related business services holding (up 50%), is the leading provider of
encrypted digital internet IDs. Within the technology sector, software
holdings are underweighted versus the Index, as these companies are currently
experiencing lock-down impacts resulting from Y2K concerns.
The portfolio benefited from holdings in the overweighted healthcare sector.
Total Renal Care, the portfolio's largest healthcare holding, rebounded from a
first quarter earnings disappointment to return nearly 50% in the second
quarter.
A few sectors experienced weighting shifts in the quarter. Buyout activity in
retailing, including the acquisition of Fred Meyer by Kroger in June, prompted
a decrease in the overall sector weight. The energy sector weight was
increased to roughly 8.5%, with new names in the gas segment including
Newfield Exploration and Houston Exploration.
The S & P 400 MidCap and Russell MidCap Growth are unmanaged indices which do
not include transaction costs associated with buying and selling securities
nor any management fees.
10
<PAGE>
EVERGREEN VARIABLE ANNUITY TRUST
Evergreen VA Masters Fund
A Report From Your Portfolio Manager
Large Cap Value Portfolio
Charles Albers and Nikolaos Monoyios, Oppenheimer
Investment Environment:
The month of June saw a return to the old favorites as large-lap growth stocks
resumed their leadership role after a hiatus during April and May. The Nasdaq
100 (dominated by stocks such as Microsoft, Intel, and Cisco) had a total
return of +11.0% for the month compared to +5.55% for the S&P 500 Index and
+4.33% for the Russell 2000 Index. However, the big surge that lifted small-
cap and value stocks during April and May was enough to give those sectors of
the market a substantial edge over the S&P 500 for the second quarter. Over
that three-month period, the Russell 2000 had a total return of +15.1%, more
than twice the +7.05% earned by the S&P 500, while the S&P Barra Value Index
earned +10.80% compared to only +3.83% for the S&P Barra Growth benchmark.
This churning action is not unusual around major turning points in the market
and it is one reason we rely on our time-tested quantitative models to steer
the Oppenheimer managed portion of this fund. These models pick up signals
from many different macroeconomic (top-down) and company specific (bottom-up)
factors and keep the portfolio moving gradually in the right direction instead
of lurching back and forth based on subjective judgements about the future.
The most overweighted economic sectors in the portfolio were Consumer
Cyclicals, Communication Services and Energy. On the other hand, we are most
underweighted relative to the S&P 500 in the Consumer Staples and Financial
Sectors.
Outlook
There is increasing evidence that some factors that have strongly favored high
quality, large-cap growth stocks are beginning to change:
1) Worldwide economic growth is recovering while the U.S. economy continues to
be very strong.
2) The yield curve has steepened even after the recent quarter point increase
in the Fed Funds rate.
3) U.S. corporate profit estimates have been revised upward.
While it is too early to tell how sustainable these forces might be, we have
taken some steps within our stock scoring system to reflect these trends.
The S & P Barra Growth, S & P Barra Value, S & P 500 and NASDAQ are unmanaged
indices which do not include transaction costs associated with buying and
selling securities nor any management fees.
11
<PAGE>
EVERGREEN VARIABLE ANNUITY TRUST
Evergreen VA Masters Fund
A Report From Your Portfolio Manager
Large-Cap Growth Portfolio
Putnam Growth Team
The six months ended June 30, 1999, was marked by a dramatic shift in investor
sentiment and rapid, widespread market rotation. In the first three months of
the period, large-cap growth stocks set records and mid- and small-cap stocks
did not participate in these gains. Growth stocks continued to outperform
value stocks; however, during the second quarter, these trends were completely
reversed.
During the final three months of the quarter, a combination of an acceleration
in economic growth, both in the United States and abroad, coupled with a
sustained increase in interest rates led investors to conclude that global
economic conditions were improving. Larger-than-expected European interest-
rate cuts and the apparent revival of Asian economies, which had previously
been stagnant or even contracting, highlighted this trend. Investors sold
large-cap growth stocks, which offered more predictable earnings and which had
dominated the market since mid 1994, to buy more economically sensitive,
cyclical stocks. Money flowed into large-cap value stocks as well as into
small- and mid-cap stocks; areas that had previously lagged.
Major merger and acquisition activity remained high throughout the period and
had an impact on the portfolio's holdings. AT&T quickly became the world's
largest cable TV company as it concluded its acquisition of Tele-
Communications, Inc.; AT&T could increase its dominance further if its
unsolicited bid for MediaOne is accepted. In the capital goods area, Allied
Signal and Honeywell announced their merger intentions.
Performance of the Putnam managed portion of the Fund was hampered by weak
stock performance in both the healthcare and financial sectors. It was also
impacted by the strong performance of the energy, basic industry, and capital
goods sectors, sectors in which this portion of the Fund was underweight.
These sectors are composed of economically sensitive, cyclical stocks, but
lack the type of growth stocks that meet the large-cap growth investment
criteria. The best-performing sectors were consumer staples, communications
services, and conglomerates.
Putnam's Core Growth Equity investment team continues to employ a rigorous
risk-management program and is taking advantage of current market conditions
to broaden holdings while maintaining its growth bias. Our focus remains on
identifying companies that can improve their profits through a combination of
increased revenues and more efficient operations.
Looking ahead, we are closely monitoring potential problems (computer-related
spending freezes) and opportunities (inventory expansion to avoid supply
disruptions) related to Y2K; the explosive growth in data communications;
OPEC's renewed efforts to rein in the supply of oil; late-term presidential
efforts to pass restrictive health-care legislation; and the effect of
continued earnings growth acceleration on investor preference for large-cap,
quality growth stocks versus economically sensitive value stocks as well as
small- and mid-cap stocks.
The Putnam Large-Cap Growth Portfolio's investment philosophy remains
constant: We believe that a strategy of systematic selection of high-quality
growth stocks, combined with rigorous risk management and a disciplined sell
process, will generate attractive risk-adjusted returns over the course of a
market cycle.
12
<PAGE>
EVERGREEN VARIABLE ANNUITY TRUST
Evergreen VA Small Cap Value Fund
A Report From Your Portfolio Manager
Jordan Alexander, CFA
Performance
The VA Small Cap Value Fund delivered strong performance for the six months
ended June 30, 1999. During this period, the Fund returned 10.7%, compared
with an increase of 3.8% for the Wilshire Small Cap Value Index, the Fund's
benchmark. The Fund's performance was helped by the strength of investments in
the technology, healthcare and consumer sectors, and a number of mergers and
acquisitions in the portfolio. Of the 20 best performing investments in the
Fund during the period, five were involved in mergers and acquisitions, and
six were in technology, three in healthcare and two in the consumer sector.
Investment Strategy
During the period, the Fund benefited from the portfolio restructuring that
took place late last year. At that time, we significantly increased the Fund's
weighting of consumer, technology and healthcare names and/or companies with a
domestic U.S. market focus. More than 45 new investments were added to the
Fund since the fourth quarter of 1998, including 16 names in the consumer
sector, seven in technology and five in healthcare.
The Fund's investments in the technology sector posted some of the strongest
gains in the portfolio. For example, Helix Technology, a supplier of vacuum
pumps and instrumentation components to semiconductor equipment manufacturers,
rose 84.2% during the period. The company, which is the industry leader in
this market niche, is benefiting from the introduction of new products, strong
operating leverage and an upturn in the semiconductor capital equipment
market.
Other strong performers for the Fund in the technology sector are in the cable
equipment manufacturing business, an industry benefiting from the upgrading of
the cable TV infrastructure. Scientific Atlanta, a cable equipment company,
appreciated 58.5% during the period. The company should see strong earnings
growth over the next few years fueled by increased capital expenditures for
two-way digital cable services and the successful launch of digital services
using the company's set-top boxes by cable companies. ANTEC Corp., a cable
equipment manufacturer and distributor, is also benefiting from the cable TV
infrastructure upgrade and increased capital spending from AT&T. AT&T, which
owns 20% of ANTEC, plans to provide cable telephony services using equipment
developed by an ANTEC joint venture. The ANTEC convertible bonds appreciated
48.1% during the period.
The best performing stocks for the Fund in the consumer sector were Ethan
Allen Interiors, a furniture manufacturer and retailer, and Deb Shops, an
operator of specialty apparel stores. During the period, the Fund's
investments in these issues appreciated 48.6% and 32.1%, respectively. Healthy
economic growth, low inflation and strong consumer spending have improved the
earnings growth outlook for these companies.
In the healthcare sector, the two best performing issues for the Fund were
Alpharma, Inc., a manufacturer of specialty generic and proprietary human
pharmaceutical and animal health products, and Jones Pharma Inc., a specialty
pharmaceutical company. The Fund's investments appreciated 37.0% and 24.5%,
respectively, during the period, as these companies benefited from strong
earnings growth and consolidation activity in the sector.
Merger and acquisition activity also continued to help the performance of the
Fund. During the six-month period, eight of the Fund's holdings were involved
in mergers and acquisitions, including CPI Corp., Hach Co., Shelby Williams,
Wyman-Gordon, St. Paul Bancorp, SierraWest Bancorp, Western Bancorp, and New
England Community Bancorp. The most significant gains were in CPI Corp., an
operator of photography studios (potential gain upon completion of 52.4% since
May 1998), and Hach Co., a manufacturer of water-testing equipment for
industrial, commercial and consumer markets, which appreciated 90.3% since May
1998. We have seen a strong pace of mergers and acquisition activity during
the first half of 1999, and as we look at the relative values of large and
small cap value stocks, we expect acquisitions to continue to enhance the
performance of the Fund.
In addition, the Fund's performance was bolstered by investments in energy
companies, which benefited from the dramatic recovery in oil prices during the
period. For example, Cabot Oil & Gas appreciated 24.1% during the six-month
period and Southwestern Energy rose 40.7%. The sectors that most detracted
from the performance of the Fund included insurance, food, and printing and
publishing.
13
<PAGE>
EVERGREEN VARIABLE ANNUITY TRUST
Evergreen VA Small Cap Value Fund
Outlook
Looking forward, we continue to see numerous opportunities to invest in
undervalued, entrepreneurial small cap companies with strong growth prospects.
While small cap stocks generally outperformed the stocks of larger companies
in the latter part of the period, the disparity of small cap valuations
relative to large company stocks remains at historically high levels. We
believe this valuation differential will help fuel further merger and
acquisition activity and stock buyback programs in the small cap sector, which
should continue to have a positive impact on the Fund's performance.
Small capitalization investing typically carries additional risks since small
companies generally have a higher risk failure. Although it may offer the
potential for greater long term results, it may also result in greater price
volatility.
The Wilshire Small Cap Value is an unmanaged index which does not include
transaction costs associated with buying and selling securities nor any
management fees.
14
<PAGE>
EVERGREEN VARIABLE ANNUITY TRUST
Evergreen VA Strategic Income Fund
A Report From Your Portfolio Manager
Prescott B. Crocker, CFA
Evergreen VA Strategic Income Fund generated a negative return of 0.87% for
the six months ended June 30, 1999. We attribute the Fund's performance to its
substantial position in U.S. Treasuries in the first half of the period.
During that time, investors pushed interest rates higher on concerns of
stronger-than-expected economic growth; and U.S. Treasuries incurred greater
declines than other types of fixed-income investments. As of June 30, 1999,
the Fund was invested as follows: U.S. high yield securities: 42%; U.S.
Treasury securities: 38%; and foreign bonds: 20%. Foreign corporate bonds and
foreign government bonds comprised 12% and 8% of net assets, respectively; and
included the countries of Germany, Denmark and New Zealand. The Fund held no
Asian or emerging market debt during the period.
Robust labor and housing markets, as well as rising stock prices, fueled a
strong U.S. economic engine over the past six months. Global economies--on the
mend from 1998's international financial crisis--also rebounded with greater
strength than many investors expected. The combination caused market sentiment
to reverse from beliefs that existed early in the period. Many investors began
1999 watchful of weak world economies that could act as a drain on U.S.
growth. As the U.S. economy charged ahead, investors became concerned that
domestic growth could become excessive, rekindling inflationary pressures, and
prompting the Federal Reserve Board to raise interest rates to halt the rise
of inflation. Reflecting this atmosphere, investors pushed bond prices lower
and interest rates higher. The yield on the benchmark 30-year U.S. Treasury
rose from 5.10% on December 31, 1998 to 6.07% on June 30, 1999. The Federal
Reserve Board did, in fact, raise interest rates by 0.25% in June 1999 but its
members also announced that after the increase, they intended to keep interest
rates steady over the near-term.
The high yield bond market was the top-performing, fixed-income sector, over
the past six months. The Chase Bank Global High Yield Index returned 2.96% for
the six months ended June 30, 1999, compared to the Lehman Brothers Long-Term
U.S. Government Index, which declined 6.61%. High yield bond prices had
endured a steep decline during 1998's "flight-to-quality", but staged an
impressive recovery as the economy's outlook brightened and investors became
more comfortable with risk. High yield bonds provided attractive yield
advantages over U.S. Treasuries; drawing investors for both income and the
potential for price appreciation, in anticipation of yield relationships
returning to historical standards.
European interest rates rose in anticipation of economic recovery during the
period. Despite currency unification among eleven countries, the strength of
European economic conditions continued to vary by individual country. This mix
of economic conditions, the currency's limited use, and a more attractive
investment environment in the United States--higher interest rates and an
outlook for continued economic strength--caused the euro to decline in value
versus the U.S. dollar in the first half of 1999. The euro debuted at $1.18 on
January 1, 1999 and closed June 30, 1999 at $1.035.
Strategy
We emphasized income and total return during the period. At the end of 1998,
the Fund carried a 14% position in cash equivalents. We eliminated cash to
become fully invested, boosting the Fund's holdings in high yield bonds from
28% on December 31, 1998, to 42% on June 30, 1999. The Fund's high yield bond
position posted a return of 3.9% over the past six months, with performance
driven by energy, cable and media, gaming and telecommunications.
We modestly extended the Fund's duration from 4.7 years on December 31, 1998,
to 5.2 years on June 30, 1999, in anticipation of a decline in interest rates
in the second half of the year. Duration measures a fund's sensitivity to
interest rate changes. Lengthening duration increases sensitivity to interest
rate changes and shortening duration decreases sensitivity to changes in
interest rates. We lengthened the Fund's duration by swapping Danish mortgage-
backed securities with higher coupons for the same securities with lower
coupons and by investing in U.S. government securities with longer maturities.
We believe these changes will increase the Fund's potential for price
appreciation, as we anticipate a decline in long-term interest rates.
Outlook
Our outlook for the bond market is positive for the second half of 1999. We
anticipate the higher level of interest rates and oil price increases to slow
economic growth--a pattern which has taken place in each of the past three
years. Further, we expect inflation to remain
15
<PAGE>
EVERGREEN VARIABLE ANNUITY TRUST
Evergreen VA Strategic Income Fund
minimal. Both gold and the Commodities Research Bureau (CRB) price index
recently reached 20-year lows.
Our forecast for U.S. high yield bonds and European bonds also is favorable.
We believe solid earnings momentum should support stock prices and provide a
sound backdrop for the high yield bond market. Looking abroad, many European
economies appear to be mired in softness and, in our opinion, their yield
curves represent attractive relative value. With a positive outlook for all
three of the Fund's investment sectors, we think fixed-income returns can be
extremely solid in the second half of 1999.
Foreign investments may contain more risk due to the inherent risks associated
with changing political climates, foreign market instability and foreign
currency fluctuations. Risks of international investing are magnified in
emerging or developing markets.
16
<PAGE>
Evergreen Variable Annuity Trust
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended
Six Months Ended December 31,
June 30, 1999 # -------------------
(Unaudited) 1998 # 1997 (a) #
<S> <C> <C> <C>
AGGRESSIVE GROWTH FUND
Net asset value, beginning of period $13.57 $11.10 $10.00
------ ------ ------
Income from investment operations
Net investment income (0.03) (0.04) (0.06)
Net realized and unrealized gains or
losses on securities 1.79 2.51 1.16
------ ------ ------
Total from investment operations 1.76 2.47 1.10
------ ------ ------
Net asset value, end of period $15.33 $13.57 $11.10
------ ------ ------
Total return* 12.82% 22.25% 11.00%
Ratios and supplemental data
Net assets, end of period (thousands) $7,732 $4,039 $1,868
Ratios to average net assets:
Expenses** 1.01%+ 1.02% 1.06%+
Net investment income (0.42%)+ (0.33%) (0.74%)+
Portfolio turnover rate 34% 49% 39%
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended Year Ended December 31,
June 30, 1999 # ----------------------------
(Unaudited) 1998 # 1997 # 1996 (b) #
<S> <C> <C> <C> <C>
EVERGREEN FUND
Net asset value, beginning of
period $ 15.31 $ 14.89 $ 11.41 $ 10.00
------- ------- ------- -------
Income from investment
operations
Net investment income 0.03 0.07 0.06 0.05
Net realized and unrealized
gains or losses on securities 2.00 0.86 4.15 1.44
------- ------- ------- -------
Total from investment
operations 2.03 0.93 4.21 1.49
------- ------- ------- -------
Less distributions from
Net investment income (0.03) 0 (0.05) (0.05)
Net realized gains (0.06) (0.51) (0.68) (0.03)
------- ------- ------- -------
Total distributions (0.09) (0.51) (0.73) (0.08)
------- ------- ------- -------
Net asset value, end of period $ 17.25 $ 15.31 $ 14.89 $ 11.41
------- ------- ------- -------
Total return* 13.35% 6.44% 37.16% 14.90%
Ratios and supplemental data
Net assets, end of period
(thousands) $63,549 $45,820 $21,600 $10,862
Ratios to average net assets:
Expenses** 1.01%+ 1.01% 1.01% 1.00%+
Net investment income 0.42%+ 0.49% 0.42% 0.87%+
Portfolio turnover rate 17% 16% 32% 6%
</TABLE>
(a) For the period from March 6, 1997 (commencement of operations) to December
31, 1997.
(b) For the period from March 1, 1996 (commencement of operations) to December
31, 1996.
+ Annualized.
# Net investment income is based on average shares outstanding during the pe-
riod.
* Total return does not reflect charges of the separate accounts.
** Ratio of expenses to average net assets includes fee waivers and excludes
fee credits.
See Combined Notes to Financial Statements.
17
<PAGE>
Evergreen Variable Annuity Trust
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months Ended Year Ended December 31,
June 30, 1999 # ----------------------------
(Unaudited) 1998 # 1997 # 1996 (a) #
<S> <C> <C> <C> <C>
FOUNDATION FUND
Net asset value, beginning of
period $ 14.47 $ 13.54 $ 11.31 $ 10.00
-------- ------- ------- -------
Income from investment
operations
Net investment income 0.18 0.35 0.26 0.16
Net realized and unrealized
gains or losses on securities 0.59 1.07 2.86 1.37
-------- ------- ------- -------
Total from investment
operations 0.77 1.42 3.12 1.53
-------- ------- ------- -------
Less distributions from
Net investment income 0 (0.26) (0.24) (0.16)
Net realized gains (0.04) (0.23) (0.65) (0.06)
-------- ------- ------- -------
Total distributions (0.04) (0.49) (0.89) (0.22)
-------- ------- ------- -------
Net asset value, end of period $ 15.20 $ 14.47 $ 13.54 $ 11.31
-------- ------- ------- -------
Total return* 5.25% 10.56% 27.80% 15.30%
Ratios and supplemental data
Net assets, end of period
(thousands) $119,237 $78,371 $31,840 $15,812
Ratios to average net assets:
Expenses** 0.97%+ 1.00% 1.01% 1.00%+
Net investment income 2.51%+ 2.44% 2.15% 2.70%+
Portfolio turnover rate 8% 10% 26% 12%
</TABLE>
<TABLE>
<CAPTION>
Year Ended
Six Months Ended December 31,
June 30, 1999 # ------------------
(Unaudited) 1998 # 1997 (b) #
<S> <C> <C> <C>
GLOBAL LEADERS FUND
Net asset value, beginning of period $ 12.76 $10.79 $10.00
------- ------ ------
Income from investment operations
Net investment income 0.06 0.10 0.11
Net realized and unrealized gains or
losses on securities and foreign
currency related transactions 1.00 1.94 0.77
------- ------ ------
Total from investment operations 1.06 2.04 0.88
------- ------ ------
Less distributions from
Net investment income 0 (0.07) (0.06)
Net realized gains 0 0 (0.03)
------- ------ ------
Total distributions 0 (0.07) (0.09)
------- ------ ------
Net asset value, end of period $ 13.82 $12.76 $10.79
------- ------ ------
Total return* 8.33% 18.92% 8.80%
Ratios and supplemental data
Net assets, end of period (thousands) $14,154 $9,583 $2,899
Ratios to average net assets:
Expenses** 1.02%+ 1.04% 1.05%+
Net investment income 0.88%+ 0.89% 1.15%+
Portfolio turnover rate 11% 12% 11%
</TABLE>
(a) For the period from March 1, 1996 (commencement of operations) to December
31, 1996.
(b) For the period from March 6, 1997 (commencement of operations) to December
31, 1997.
+ Annualized.
# Net investment income is based on average shares outstanding during the pe-
riod.
* Total return does not reflect charges of the separate accounts.
** Ratio of expenses to average net assets includes fee waivers and excludes
fee credits.
See Combined Notes to Financial Statements.
18
<PAGE>
Evergreen Variable Annuity Trust
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months Ended Year Ended December 31,
June 30, 1999 # ----------------------------
(Unaudited) 1998 # 1997 # 1996 (a) #
<S> <C> <C> <C> <C>
GROWTH AND INCOME FUND
Net asset value, beginning of
period $ 15.58 $ 15.29 $ 11.83 $ 10.00
------- ------- ------- -------
Income from investment
operations
Net investment income 0.05 0.16 0.08 0.06
Net realized and unrealized
gains or losses on securities 0.79 0.56 4.01 1.84
------- ------- ------- -------
Total from investment
operations 0.84 0.72 4.09 1.90
------- ------- ------- -------
Less distributions from
Net investment income 0 (0.13) (0.07) (0.06)
Net realized gains (0.08) (0.30) (0.56) (0.01)
------- ------- ------- -------
Total distributions (0.08) (0.43) (0.63) (0.07)
------- ------- ------- -------
Net asset value, end of period $ 16.34 $ 15.58 $ 15.29 $ 11.83
------- ------- ------- -------
Total return* 10.36% 4.77% 34.66% 19.00%
Ratios and supplemental data
Net assets, end of period
(thousands) $74,797 $60,576 $31,088 $14,484
Ratios to average net assets:
Expenses** 1.01%+ 1.01% 1.01% 1.00%+
Net investment income 0.57%+ 1.02% 0.59% 1.00%+
Portfolio turnover rate 27% 13% 18% 2%
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended
June 30, 1999 # Period Ended
(Unaudited) December 31, 1998 (b) #
<S> <C> <C>
INTERNATIONAL GROWTH FUND
Net asset value, beginning of period $ 9.39 $10.00
------ ------
Income from investment operations
Net investment income 0.09 0.03
Net realized and unrealized gains or
losses on securities and foreign
currency related transactions 0.22 (0.64)
------ ------
Total from investment operations 0.31 (0.61)
------ ------
Net asset value, end of period $ 9.70 $ 9.39
------ ------
Total return* 3.30% (6.10%)
Ratios and supplemental data
Net assets, end of period
(thousands) $2,228 $1,425
Ratios to average net assets:
Expenses** 1.03%+ 1.02%+
Net investment income 1.96%+ 1.05%+
Portfolio turnover rate 93% 59%
</TABLE>
(a) For the period from March 1, 1996 (commencement of operations) to December
31, 1996.
(b) For the period from August 17, 1998 (commencement of operations) to Decem-
ber 31, 1998.
+ Annualized.
# Net investment income is based on average shares outstanding during the pe-
riod.
* Total return does not reflect charges of the separate accounts.
** Ratio of expenses to average net assets includes fee waivers and excludes
fee credits.
See Combined Notes to Financial Statements.
19
<PAGE>
Evergreen Variable Annuity Trust
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Period Ended
June 30, 1999 (a) #
(Unaudited)
<S> <C>
MASTERS FUND
Net asset value, beginning of period $ 10.00
-------
Income from investment operations
Net investment income 0
Net realized and unrealized gains or losses on securities 0.84
-------
Total from investment operations 0.84
-------
Net asset value, end of period $ 10.84
-------
Total return* 8.40%
Ratios and supplemental data
Net assets, end of period (thousands) $12,036
Ratios to average net assets:
Expenses** 1.00%+
Net investment income 0.30%+
Portfolio turnover rate 34%
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended
June 30, 1999 # Period Ended
(Unaudited) December 31, 1998 (b) #
<S> <C> <C>
SMALL CAP VALUE FUND
Net asset value, beginning of period $ 9.58 $10.00
------ ------
Income from investment operations
Net investment income 0.10 0.15
Net realized and unrealized gains or
losses on securities 0.92 (0.45)
------ ------
Total from investment operations 1.02 (0.30)
------ ------
Less distributions from
Net investment income 0 (0.11)
Net realized gains 0 (0.01)
------ ------
Total distributions 0 (0.12)
------ ------
Net asset value, end of period $10.60 $ 9.58
------ ------
Total return* 10.65% (2.86%)
Ratios and supplemental data
Net assets, end of period
(thousands) $3,804 $2,282
Ratios to average net assets:
Expenses** 1.04%+ 1.02%+
Net investment income 1.81%+ 2.49%+
Portfolio turnover rate 21% 26%
</TABLE>
(a) For the period from January 29, 1999 (commencement of operations) to June
30, 1999.
(b) For the period from May 1, 1998 (commencement of operations) to December
31, 1998.
+ Annualized.
# Net investment income is based on average shares outstanding during the
period.
* Total return does not reflect charges of the separate accounts.
** Ratio of expenses to average net assets includes fee waivers and excludes
fee credits.
See Combined Notes to Financial Statements.
20
<PAGE>
Evergreen Variable Annuity Trust
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year
Six Months Ended Ended December 31,
June 30, 1999 # -------------------
(Unaudited) 1998 # 1997 (a) #
<S> <C> <C> <C>
STRATEGIC INCOME FUND
Net asset value, beginning of period $ 10.39 $ 10.20 $10.00
------- ------- ------
Income from investment operations
Net investment income 0.32 0.64 0.32
Net realized and unrealized gains or
losses on securities and foreign
currency related transactions (0.41) (0.04) 0.21
------- ------- ------
Total from investment operations (0.09) 0.60 0.53
------- ------- ------
Less distributions from
Net investment income 0 (0.41) (0.31)
Net realized gains 0 0 (0.02)
------- ------- ------
Total distributions 0 (0.41) (0.33)
------- ------- ------
Net asset value, end of period $ 10.30 $ 10.39 $10.20
------- ------- ------
Total return* (0.87%) 5.91% 5.28%
Ratios and supplemental data
Net assets, end of period (thousands) $15,772 $11,182 $2,204
Ratios to average net assets:
Expenses** 0.85%+ 1.02% 1.02%+
Net investment income 6.38%+ 6.05% 5.34%+
Portfolio turnover rate 119% 231% 119%
</TABLE>
(a) For the period from March 6, 1997 (commencement of operations) to December
31, 1997.
+ Annualized.
# Net investment income is based on average shares outstanding during the
period.
* Total return does not reflect charges of the separate accounts.
** Ratio of expenses to average net assets includes fee waivers and excludes
fee credits.
See Combined Notes to Financial Statements.
21
<PAGE>
EVERGREEN VARIABLE ANNUITY TRUST
Evergreen VA Aggressive Growth Fund
Schedule of Investments
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - 92.9%
Business Equipment & Services - 2.6%
6,400 Paychex, Inc. ........................................... $ 204,000
----------
Chemical & Agricultural Products - 2.3%
4,500 Monsanto Co. ............................................ 177,469
----------
Communication Systems &
Services - 9.1%
4,100*Cisco Systems, Inc. ................................... 263,681
2,800*MCI WorldCom, Inc. .................................... 240,975
3,000*Tellabs, Inc. ......................................... 202,688
----------
707,344
----------
Consumer Products & Services - 1.0%
2,300*Action Performance Companies, Inc. .................... 75,900
----------
Finance & Insurance - 7.7%
1,710 American International Group, Inc. ...................... 200,177
3,700 Capital One Financial Corp. ............................. 206,044
4,000 Citigroup, Inc. ......................................... 190,000
----------
596,221
----------
Healthcare Products & Services - 15.0%
6,000*Health Management Associates, Inc. Cl. A............... 67,500
2,500 Medtronic, Inc. ......................................... 194,687
6,000*Osteotech, Inc. ....................................... 172,500
9,200*VISX, Inc. ............................................ 728,525
----------
1,163,212
----------
Information Services &
Technology - 19.2%
1,600*America Online, Inc. .................................. 176,800
8,200*American Power Conversion Corp. ....................... 165,025
2,500*Citrix Systems, Inc. .................................. 141,250
6,000*EMC Corp. ............................................. 330,000
3,500*Microsoft Corp. ....................................... 315,656
2,000*Safeguard Scientifics, Inc. ........................... 124,000
2,400*Veritas Software Corp. ................................ 227,850
----------
1,480,581
----------
Leisure & Tourism - 2.1%
4,500*Premier Parks, Inc. ................................... 165,375
----------
Oil & Energy - 2.0%
4,000 Apache Corp. ............................................ 156,000
----------
Oil Field Services - 3.3%
3,000*BJ Services Co., Inc. ................................. 88,312
4,500 ENSCO International, Inc. ............................... 89,719
2,000*Weatherford International, Inc. ....................... 73,250
----------
251,281
----------
</TABLE>
* Non-income producing security.
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Pharmaceuticals - 5.9%
3,500* Forest Laboratories, Inc. ........................... $ 161,875
6,000* ICN Pharmaceuticals, Inc. ........................... 193,125
7,000* Neopharm, Inc. ...................................... 103,250
-------------
458,250
-------------
Printing, Publishing, Broadcasting & Entertainment -
8.0%
3,500* Chancellor Media Corp. .............................. 192,938
3,100* Clear Channel Communications, Inc. .................. 213,706
7,000* Infinity Broadcasting Corp. ......................... 208,250
-------------
614,894
-------------
Retailing & Wholesale - 7.8%
2,600* Bed Bath & Beyond, Inc. ............................. 100,100
2,700 Family Dollar Stores, Inc. ............................ 64,800
3,600 Home Depot, Inc. ...................................... 231,975
5,000* Office Depot, Inc. .................................. 110,313
3,100* Staples, Inc. ....................................... 95,906
-------------
603,094
-------------
Telecommunication Services &
Equipment - 6.9%
3,700* ADC Telecommunications, Inc. ........................ 168,581
4,000* Allegiance Telecom, Inc. ............................ 219,500
1,000* Qualcomm, Inc. ...................................... 143,500
-------------
531,581
-------------
Total Common Stocks
(cost $5,272,312)..................................... 7,185,202
-------------
<CAPTION>
Principal
Amount Value
<C> <S> <C>
SHORT-TERM INVESTMENTS - 11.0%
U.S. Government Agency
Obligations - 11.0%
$852,000 Federal National Mortgage Association Discount Notes
4.55%, 7/1/1999
(cost $852,000)....................................... 852,000
------------
</TABLE>
<TABLE>
<C> <S> <C> <C>
Total Investments -
(cost $6,124,312)............................... 103.9% 8,037,202
Other Assets and
Liabilities - net............................... (3.9) (304,893)
----- ----------
Net Assets....................................... 100.0% $ 7,732,309
===== ===========
</TABLE>
See Combined Notes to Financial Statements.
22
<PAGE>
EVERGREEN VARIABLE ANNUITY TRUST
Evergreen VA Fund
Schedule of Investments
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - 80.1%
Banks - 6.4%
10,000 Associated Banc Corp. ............................... $ 415,000
18,000 BankBoston Corp. .................................... 920,250
25,000 Cardinal Financial Corp. ............................ 181,250
15,000 CCBT Bancorp, Inc. .................................. 288,750
6,000 Comerica, Inc. ...................................... 356,625
4,000 F&M National Corp. .................................. 132,750
4,000 Hibernia Corp. Cl. A................................. 62,750
10,000 Huntington Bancshares, Inc. ......................... 350,000
4,000 Mellon Bank Corp. ................................... 145,500
3,600 National City Corp. ................................. 235,800
10,665 Pe Corp. ............................................ 138,645
25,164 Republic Security Financial Corp. ................... 210,748
6,000 Seacoast Banking Corp. of Florida Cl. A.............. 183,000
5,276 Wachovia Corp. ...................................... 451,428
-----------
4,072,496
-----------
Building, Construction & Furnishings - 9.1%
15,000 * Beazer Homes USA, Inc. ............................ 347,812
26,250 Cavalier Homes, Inc. ................................ 214,922
28,125 Clayton Homes, Inc. ................................. 321,680
51,500 D.R. Horton, Inc. ................................... 856,187
25,000 * Genlyte Group, Inc. ............................... 560,937
10,000 * Knoll, Inc. ....................................... 266,250
23,000 Lennar Corp. ........................................ 552,000
16,000 M/I Schottenstein Homes, Inc. ....................... 295,000
10,000 * Morgan Products, Ltd. ............................. 38,125
24,700 Oakwood Homes Corp. ................................. 324,188
3,000 * Palm Harbor Homes, Inc. ........................... 75,188
27,500 * Presley Companies Cl. A............................ 24,063
10,000 Ryland Group, Inc. .................................. 296,875
10,000 TJ International, Inc. .............................. 310,000
22,000 * Toll Brothers, Inc. ............................... 471,625
23,500 * US Home Corp. ..................................... 834,250
-----------
5,789,102
-----------
Business Equipment & Services - 0.8%
10,000 * Convergys Corp. ................................... 192,500
12,031 * Paxar Corp. ....................................... 108,279
5,000 * Zebra Technologies Corp. Cl. A..................... 192,187
-----------
492,966
-----------
Chemical & Agricultural Products - 0.2%
1,000 Schulman (A.), Inc. ................................. 17,188
4,000 Sigma-Aldrich Corp. ................................. 137,750
-----------
154,938
-----------
Communication Systems & Services - 0.7%
7,625 * Andrew Corp. ...................................... 144,399
4,500 * Cisco Systems, Inc. ............................... 289,406
-----------
433,805
-----------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Consumer Products & Services - 4.2%
2,700 * Cendant Corp. ..................................... $ 55,350
15,000 Commonwealth Industries, Inc. ....................... 187,500
8,000 Harman International Industries, Inc. ............... 352,000
15,000 K2, Inc. ............................................ 134,062
13,700 Lancaster Colony Corp. .............................. 472,650
10,000 Noble Affiliates, Inc. .............................. 281,875
7,000 Russ Berrie & Co., Inc. ............................. 173,250
8,000 St. John Knits, Inc. ................................ 234,000
13,000 Stride Rite Corp. ................................... 134,062
2,700 Toro Co. ............................................ 106,313
20,000 Tupperware Corp. .................................... 510,000
-----------
2,641,062
-----------
Electronic Equipment & Services - 2.9%
10,000 * Dupont Photomasks, Inc. ........................... 478,750
5,000 * Hadco Corp. ....................................... 198,750
4,200 Hewlett-Packard Co. ................................. 422,100
12,000 * SMART Modular Technologies, Inc. .................. 208,500
8,000 * Sun Microsystems, Inc. ............................ 551,000
-----------
1,859,100
-----------
Finance & Insurance - 9.1%
3,000 AMBAC Financial Group, Inc. ......................... 171,375
10,000 American Bankers Insurance Group, Inc................ 544,375
6,412 American International Group, Inc. .................. 750,605
4,000 Countrywide Credit Industries, Inc. ................. 171,000
13,200 Dain Rauscher Corp. ................................. 714,450
10,500 Edwards (A.G.), Inc. ................................ 338,625
10,000 Enhance Financial Services Group, Inc. .............. 197,500
18,700 First American Financial Corp. ...................... 334,262
2,500 Freedom Securities Corp. ............................ 42,813
6,000 Horace Mann Educators Corp. ......................... 163,125
9,000 Landamerica Financial Group, Inc. ................... 258,750
2,800 MBIA, Inc. .......................................... 181,300
18,000 Mercury General Corp. ............................... 612,000
100 Merrill Lynch & Co., Inc. ........................... 7,994
5,000 MGIC Investment Corp. ............................... 243,125
15,500 Morgan Keegan, Inc. ................................. 293,531
5,000 Morgan Stanley, Dean Witter & Co. ................... 512,500
5,000 Paine Webber Group, Inc. ............................ 233,750
-----------
5,771,080
-----------
Healthcare Products & Services - 14.4%
15,000 * ADAC Laboratories.................................. 108,750
3,000 * Alcide Corp. ...................................... 54,000
3,000 Arrow International, Inc. ........................... 77,625
13,000 Beckman Coulter, Inc. ............................... 632,125
15,000 * Boston Scientific Corp. ........................... 659,062
20,000 * Carematrix Corp. .................................. 248,750
2,850 Columbia/HCA Healthcare Corp. ....................... 65,015
</TABLE>
23
<PAGE>
EVERGREEN VARIABLE ANNUITY TRUST
Evergreen VA Fund
Schedule of Investments(continued)
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Healthcare Products & Services - continued
26,000 * Elan Corp Plc, ADR................................. $ 721,500
37,000 * Health Management Associates, Inc. Cl. A .......... 416,250
10,000 * Hologic, Inc. .................................... 56,250
10,000 * Idexx Laboratories, Inc. .......................... 233,125
150 * LifePoint Hospitals, Inc. ......................... 2,016
4,300 * Maxxim Medical, Inc. .............................. 100,244
10,000 McKesson HBOC, Inc. ................................. 321,250
4,000 Merck & Co., Inc. ................................... 296,000
10,000 Meridian Med Technologies, Inc. ..................... 63,750
3,000 Pfizer, Inc. ........................................ 329,250
6,000 Stryker Corp. ....................................... 360,750
150 Triad Hospitals, Inc. ............................... 2,025
56,000 * VISX, Inc. ........................................ 4,434,500
-----------
9,182,237
-----------
Industrial Specialty Products & Services - 6.2%
9,000 AptarGroup, Inc. .................................... 270,000
10,000 Barnes Group, Inc. .................................. 217,500
10,000 Furon Co. ........................................... 190,000
30,000 * Gaylord Container Corp. Cl. A...................... 238,125
15,000 * Input/Output, Inc. ................................ 113,438
27,900 Kaydon Corp. ........................................ 938,137
1,000 Nacco Industries, Inc. Cl. A......................... 73,500
4,000 Robbins & Myers, Inc. ............................... 89,250
6,000 Spartech Corp. ...................................... 189,750
30,000 Superior Industries International, Inc. ............. 819,375
18,000 Teleflex, Inc. ...................................... 781,875
-----------
3,920,950
-----------
Information Services & Technology - 4.3%
27,500 * Analytical Surveys, Inc. .......................... 684,062
10,000 * Etec Systems, Inc. ................................ 332,500
9,000 Fair Issac & Co., Inc. .............................. 315,562
8,000 * Gateway, Inc. ..................................... 472,000
15,000 * Micros Systems, Inc. .............................. 510,000
3,000 * Network Associates, Inc. .......................... 44,063
28,000 * Parametric Technology Corp. ....................... 388,500
-----------
2,746,687
-----------
Leisure & Tourism - 0.7%
14,000 Starwood Hotels & Resorts............................ 427,875
-----------
Machinery - Diversified - 0.4%
9,000 * Terex Corp. ....................................... 273,938
-----------
Manufacturing - Distributing - 0.2%
7,000 CLARCOR, Inc. ....................................... 134,313
-----------
Oil Field Services - 0.7%
6,700 Diamond Offshore Drilling, Inc. ..................... 190,112
10,000 Transocean Offshore, Inc. ........................... 262,500
-----------
452,612
-----------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Printing, Publishing, Broadcasting & Entertainment -
1.7%
20,400 Belo (A.H.) Corp., Ser. A........................... $ 401,625
37,800 Bowne & Co., Inc. .................................. 491,400
3,000 * Chancellor Media Corp. ........................... 165,375
-----------
1,058,400
-----------
Real Estate - 2.8%
4,500 * Alexander's, Inc. REIT............................ 332,437
3,500 Equity Residential Properties Trust REIT............ 157,719
9,700 Newhall Land & Farming Co. ......................... 238,863
30,000 RFS Hotel Investors, Inc. REIT...................... 376,875
14,100 St. Joe Corp. ...................................... 380,700
31,800 Sunstone Hotel Investors, Inc. REIT................. 270,300
-----------
1,756,894
-----------
Retailing & Wholesale - 6.0%
3,000 Avnet, Inc. ........................................ 139,500
24,000 * Borders Group, Inc. .............................. 379,500
8,000 * Cole National Corp., Cl. A........................ 63,500
5,000 * Costco Companies, Inc. ........................... 400,313
22,500 Ethan Allen Interiors, Inc. ........................ 849,375
5,700 Heilig-Meyers Co. .................................. 38,831
19,600 Lowe's Companies, Inc. ............................. 1,111,075
20,000 * Sonic Automotive, Inc. ........................... 275,000
11,000 Tandy Corp. ........................................ 537,625
-----------
3,794,719
-----------
Telecommunication Services & Equipment - 0.0%
1,000 * Aspect Telecommunications Corp. .................. 9,750
-----------
Textile & Apparel - 1.2%
78,400 *Donna Karan International, Inc. ................... 779,100
-----------
Thrift Institutions - 0.8%
10,000 Mech Financial, Inc. ............................... 375,000
11,550 York Financial Corp. ............................... 168,919
-----------
543,919
-----------
Transportation - 3.9%
28,500 * Airnet Systems, Inc. ............................. 384,750
12,000 Florida East Coast Indiana, Inc. ................... 531,000
3,000 * Heartland Express, Inc. .......................... 49,125
17,500 * Midwest Express Holdings, Inc. ................... 595,000
30,250 Southwest Airlines Co. ............................. 941,531
-----------
2,501,406
-----------
Utilities - Electric - 0.7%
10,000 Central Hudson Gas & Electric Corp. ................ 420,000
-----------
Utilities - Telephone - 2.7%
20,000 * Nextel Communications, Inc. Cl. A................. 1,003,750
5,000 * Powertel, Inc. ................................... 149,375
</TABLE>
24
<PAGE>
EVERGREEN VARIABLE ANNUITY TRUST
Evergreen VA Fund
Schedule of Investments (continued)
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Utilities - Telephone - continued
8,000 Sprint Corp. ........................................ $ 422,500
2,000 * Sprint Corp. (PCS Group)........................... 114,250
-----------
1,689,875
-----------
Total Common Stocks
(cost $42,301,107).................................. 50,907,224
-----------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
SHORT-TERM INVESTMENTS - 20.3%
Repurchase Agreement - 20.3%
$12,875,000 State Street Bank & Trust Co.
4.80%, purchased 6/30/1999, maturing 7/1/1999,
maturity value $12,876,717 (cost $12,875,000)
(a)............................................... $12,875,000
-----------
</TABLE>
<TABLE>
<C> <S> <C> <C>
Total Investments -
(cost $55,176,107).......................... 100.4% 63,782,224
Other Assets and
Liabilities - net........................... (0.4) (233,564)
----- -----------
Net Assets................................... 100.0% $63,548,660
===== ===========
</TABLE>
(a) The repurchase agreement is fully collateralized by: $13,250,000 FNMA,
4.84%, 11/27/2000; value including accrued interest--$13,135,268.
* Non-income producing security.
Summary of Abbreviations
ADR American Depository Receipt
REIT Real Estate Investment Trust
See Combined Notes to Financial Statements.
25
<PAGE>
EVERGREEN VARIABLE ANNUITY TRUST
Evergreen VA Foundation Fund
Schedule of Investments
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - 55.2%
Aerospace & Defense - 0.4%
10,000 Boeing Co. ......................................... $ 441,875
------------
Automotive Equipment &
Manufacturing - 1.0%
12,087 Autoliv, Inc. ...................................... 365,632
6,235 Daimler Chrysler AG................................. 554,135
4,000 Goodyear Tire & Rubber Co. ......................... 235,250
------------
1,155,017
------------
Banks - 7.0%
2,625 AmSouth Bancorp..................................... 60,867
21,000 BankBoston Corp. ................................... 1,073,625
13,600 CCBT Bancorp, Inc. ................................. 261,800
13,000 Comerica, Inc. ..................................... 772,688
15,000 Compass Bancshares, Inc. ........................... 408,750
2,000 F&M National Corp. ................................. 66,375
10,000 Fleet Financial Group, Inc. ........................ 443,750
10,000 Huntington Bancshares, Inc. ........................ 350,000
10,000 KeyCorp............................................. 321,250
600 M&T Bank Corp. ..................................... 330,000
20,000 Mellon Bank Corp. .................................. 727,500
11,000 Mercantile Bancorp, Inc. ........................... 628,375
5,400 National City Corp. ................................ 353,700
25,000 Pacific Century Financial Corp. .................... 539,063
10,000 PNC Bank Corp. ..................................... 576,250
8,000 Seacoast Banking Corp. of Florida Cl. A............. 244,000
12,600 Suntrust Banks, Inc. ............................... 874,912
5,000 Wilmington Trust Corp. ............................. 287,215
------------
8,320,120
------------
Building, Construction & Furnishings - 3.6%
19,000 Armstrong World Industries, Inc..................... 1,098,437
20,000 Carlisle Companies, Inc. ........................... 962,500
10,000 Centex Construction Products, Inc. ................. 341,250
15,000 Centex Corp. ....................................... 563,438
42,750 D.R. Horton, Inc. .................................. 710,719
24,004 Lennar Corp. ....................................... 576,096
------------
4,252,440
------------
Business Equipment &
Services - 1.4%
13,000 * Computer Sciences Corp. .......................... 899,437
20,000 * Convergys Corp. .................................. 385,000
6,200 * Crescent Operating, Inc. ......................... 42,238
15,000 Steelcase, Inc. .................................... 300,000
------------
1,626,675
------------
Capital Goods - 1.4%
15,000 Caterpillar, Inc. .................................. 900,000
20,000 Deere & Co. ........................................ 792,500
------------
1,692,500
------------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Chemical & Agricultural
Products - 2.4%
20,000 Du Pont (E. I.) De Nemours & Co. ................... $ 1,366,250
20,000 Monsanto Co. ....................................... 788,750
8,000 PPG Industries, Inc. ............................... 472,500
2,581 Rohm & Haas Co. .................................... 110,660
8,500 Schulman (A.), Inc. ................................ 146,094
------------
2,884,254
------------
Communication Systems & Services - 0.5%
9,000 * Cisco Systems, Inc. .............................. 578,813
------------
Consumer Products &
Services - 1.3%
5,947 * Cendant Corp. .................................... 121,913
9,300 Harman International Industries, Inc. .............. 409,200
21,000 Newell Rubbermaid, Inc. ............................ 976,500
------------
1,507,613
------------
Diversified Companies - 0.3%
10,000 GATX Corp. ......................................... 380,625
------------
Electrical Equipment &
Services - 1.8%
6,000 Applied Power, Inc. Cl. A........................... 163,875
20,000 Emerson Electric Co. ............................... 1,257,500
6,400 General Electric Co. ............................... 723,200
------------
2,144,575
------------
Electronic Equipment &
Services - 2.5%
7,000 Hewlett-Packard Co. ................................ 703,500
8,000 Intel Corp. ........................................ 476,000
10,000 International Business Machines Corp. .............. 1,292,500
8,000 * Sun Microsystems, Inc. ........................... 551,000
------------
3,023,000
------------
Finance & Insurance - 10.7%
7,600 AFLAC, Inc. ........................................ 363,850
5,600 Allstate Corp. ..................................... 200,900
5,000 American Express Co. ............................... 650,625
7,000 American International Group, Inc. ................. 819,438
210 Berkshire Hathaway Inc. ............................ 470,400
11,000 Chubb Corp. ........................................ 764,500
4,000 Countrywide Credit Industries, Inc. ................ 171,000
6,200 Dain Rauscher Corp.................................. 335,575
3,000 Edwards (A.G.), Inc. ............................... 96,750
7,300 * Farm Family Holdings, Inc. ....................... 249,569
15,000 Federal National Mortgage Assoc. ................... 1,025,625
6,000 Goldman Sachs Group, Inc. .......................... 433,500
30,000 Horace Mann Educators Corp. ........................ 815,625
11,500 John Nuveen Co., Cl. A.............................. 490,906
16,732 Legg Mason, Inc. ................................... 644,182
8,000 Lehman Brothers Holdings, Inc. ..................... 498,000
</TABLE>
26
<PAGE>
EVERGREEN VARIABLE ANNUITY TRUST
Evergreen VA Foundation Fund
Schedule of Investments(continued)
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Finance & Insurance - continued
10,000 Lincoln National Corp. ............................ $ 523,125
15,000 Merrill Lynch & Co., Inc. ......................... 1,199,062
5,000 MGIC Investment Corp. ............................. 243,125
10,400 Paine Webber Group, Inc. .......................... 486,200
11,250 Raymond James Financial, Inc. ..................... 269,297
14,000 Torchmark Corp. ................................... 477,750
15,000 UNUM Corp. ........................................ 821,250
455 Waddell & Reed Financial, Inc. Cl. A............... 12,484
1,959 Waddell & Reed Financial, Inc. Cl. B............... 52,893
11,650 XL Capital Ltd. ................................... 658,225
------------
12,773,856
------------
Food & Beverage Products - 0.9%
20,000 Albertsons, Inc. .................................. 1,031,250
------------
Healthcare Products &
Services - 5.3%
9,000 Abbott Laboratories................................ 409,500
12,000 American Home Products Corp. ...................... 690,000
7,500 Celera Genomics Group.............................. 121,406
4,050 Columbia/HCA Healthcare Corp. ..................... 92,391
3,750 * Covance, Inc. ................................... 89,766
12,000 * First Health Group Corp. ........................ 258,750
213 * LifePoint Hospitals, Inc. ....................... 2,862
13,000 Lilly (Eli) & Co. ................................. 931,125
4,000 Medtronic, Inc. ................................... 311,500
14,200 Merck & Co., Inc. ................................. 1,050,800
15,000 PE Corp-PE Biosystems Group........................ 1,721,250
213 Triad Hospitals, Inc. ............................. 2,875
10,000 Warner-Lambert Co. ................................ 693,750
------------
6,375,975
------------
Industrial Specialty Products & Services - 1.7%
3,000 Corning, Inc. ..................................... 210,375
6,000 Honeywell, Inc. ................................... 695,250
12,800 Leggett & Platt, Inc. ............................. 356,000
10,000 Parker Hannifin Corp. ............................. 457,500
6,000 Snap-on, Inc. ..................................... 217,125
8,000 Timken Co. ........................................ 156,000
------------
2,092,250
------------
Oil & Energy - 0.9%
5,000 Chevron Corp. ..................................... 475,938
3,200 Consolidated Natural Gas Co. ...................... 194,400
6,200 Texaco, Inc. ...................................... 387,500
------------
1,057,838
------------
Oil Field Services - 0.4%
8,000 Schlumberger Ltd. ................................. 509,500
------------
Printing, Publishing, Broadcasting &
Entertainment - 0.6%
6,000 New York Times Co., Cl. A.......................... 220,875
7,000 Time Warner, Inc. ................................. 514,500
------------
735,375
------------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Real Estate - 3.9%
8,000 Apartment Investment & Management Co. Cl. A REIT.... $ 342,000
5,000 Brandywine Realty Trust REIT........................ 99,062
1,442 Camden Property Trust REIT.......................... 40,016
7,000 Capstead Mortgage Corp. REIT........................ 38,063
20,000 CarrAmerica Realty Corp. REIT....................... 500,000
5,000 Chelsea GCA Realty, Inc. REIT....................... 185,625
12,000 Crescent Real Estate Equities, Inc. REIT............ 285,000
12,000 Crown American Realty Trust REIT.................... 87,750
1,000 Equity Residential Properties Trust REIT............ 45,062
30,000 FelCor Lodging Trust, Inc. REIT..................... 622,500
334 * Horizon Group Properties, Inc. REIT............... 1,086
11,400 * Konover Property Trust, Inc. REIT................. 104,737
5,000 Kranzco Realty Trust REIT........................... 66,590
12,000 Marriott International, Inc., Cl. A................. 448,500
50,000 Meditrust Co. REIT.................................. 653,125
10,230 Post Property, Inc. REIT............................ 419,430
4,776 Prime Retail, Inc. REIT............................. 41,492
20,000 Simon Property Group Inc. REIT...................... 507,500
1,500 * Sodexho Marriott Services, Inc.................... 28,781
20,000 Sunstone Hotel Investors, Inc. REIT................. 175,100
------------
4,691,419
------------
Retailing & Wholesale - 1.2%
4,000 Avnet, Inc. ........................................ 186,000
1,700 J.C. Penney Co., Inc. .............................. 82,556
10,000 Lowe's Companies, Inc. ............................. 566,875
11,100 W.W. Grainger, Inc. ................................ 597,319
------------
1,432,750
------------
Textile & Apparel - 0.4%
10,000 V. F. Corp.......................................... 427,500
------------
Thrift Institutions - 0.7%
8,800 Golden West Financial Corp.......................... 862,400
------------
Transportation - 0.5%
9,800 Union Pacific Corp.................................. 571,463
------------
Utilities - Electric - 1.0%
5,000 Central Hudson Gas & Electric Corp.................. 210,000
15,000 Eastern Utilities Associates........................ 436,875
35,000 * Niagara Mohawk Holdings, Inc...................... 562,187
------------
1,209,062
------------
Utilities - Gas - 0.7%
15,000 Keyspan Corp........................................ 395,625
10,000 Williams Companies, Inc............................. 425,625
------------
821,250
------------
Utilities - Telephone - 2.7%
20,000 Cincinnati Bell, Inc................................ 498,750
20,000 Frontier Corp....................................... 1,180,000
5,000 GTE Corp............................................ 378,750
</TABLE>
27
<PAGE>
EVERGREEN VARIABLE ANNUITY TRUST
Evergreen VA Foundation Fund
Schedule of Investments(continued)
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Utilities - Telephone - continued
18,000 Sprint Corp......................................... $ 950,625
4,500 * Sprint Corp. (PCS Group).......................... 257,062
------------
3,265,187
------------
Total Common Stocks
(cost $54,559,509)................................. 65,864,582
------------
CONVERTIBLE PREFERRED - 0.5%
Real Estate - 0.0%
1,600 Prime Retail, Inc.
8.50%, 3/31/99, Ser. B............................. 25,600
------------
Transportation - 0.5%
10,000 Union Pacific Capital Trust 4/1/2028................ 531,250
------------
Total Convertible Preferred
(cost $544,766).................................... 556,850
------------
</TABLE>
(a) The repurchase agreement is fully collateralized by: $26,510,000 Federal
Farm Credit Bank, 5.00%, 12/4/2000; value including accrued interest --
$26,308,073.
* Non-income producing security.
Summary of Abbreviations
REIT Real Estate Investment Trust
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
U.S. GOVERNMENT & AGENCY OBLIGATIONS - 24.6%
Treasury Notes & Bonds - 24.6%
U.S. Treasury Bonds
$19,000,000 6.00%, 2/15/2026................................... $ 18,483,447
7,000,000 6.25%, 8/15/2023................................... 7,008,750
3,000,000 7.125%, 2/15/2023.................................. 3,315,000
500,000 U.S. Treasury Notes 6.50%, 8/15/2005............... 515,625
------------
29,322,822
------------
Total U.S. Government & Agency Obligations
(cost $30,073,480)................................ 29,322,822
------------
SHORT-TERM INVESTMENTS - 21.6%
Repurchase Agreement - 21.6%
25,788,000 State Street Bank & Trust Co. 4.80%, purchased
6/30/1999, maturing 7/1/1999, maturity
value $25,791,438
(cost $25,788,000) (a)............................ 25,788,000
------------
</TABLE>
<TABLE>
<C> <S> <C> <C>
Total Investments -
(cost $110,965,755)....................... 101.9% 121,532,254
Other Assets and
Liabilities - net......................... (1.9) (2,294,838)
----- ------------
Net Asset.................................. 100.0% $119,237,416
===== ============
</TABLE>
See Combined Notes to Financial Statements.
28
<PAGE>
EVERGREEN VARIABLE ANNUITY TRUST
Evergreen VA Global Leaders Fund
Schedule of Investments
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - 94.1%
Australia - 2.1%
3,500 National Australia Bank, Ltd. ........................ $ 294,000
-----------
Belgium - 0.9%
25 Colruyt SA............................................ 16,442
2,500 UCB SA................................................ 106,951
-----------
123,393
-----------
Canada - 3.7%
14,000 Bombardier, Inc., Cl. B............................... 213,922
2,000 * Canadian Natural Resources, Ltd. ................... 39,389
4,000 Du Pont Canada, Inc., Cl. A........................... 133,786
2,500 Magna International, Inc. Cl. A....................... 141,875
-----------
528,972
-----------
Denmark - 0.7%
900 Coloplast AS.......................................... 92,343
-----------
Finland - 1.3%
2,000 Nokia Corp., ADR...................................... 183,125
-----------
France - 3.6%
150 Carrefour............................................. 22,035
1,250 Hermes International.................................. 124,926
520 * Sanofi Synthelabo................................... 22,058
2,000 Societe Technip....................................... 224,313
680 Sodexho Alliance...................................... 117,063
-----------
510,395
-----------
Germany - 4.3%
2,150 Altana AG............................................. 121,011
120 Hugo Boss AG.......................................... 143,989
3,600 RWE AG................................................ 166,590
100 SAP AG................................................ 33,812
225 Suedzucker AG......................................... 90,457
200 VEW AG................................................ 52,780
-----------
608,639
-----------
Hong Kong - 2.2%
6,000 Cheung Kong Holdings, Ltd. ........................... 53,360
7,000 Henderson Land Development Co., Ltd................... 40,239
51,700 Hong Kong & China Gas................................. 74,965
3,000 Hong Kong Telecommunications, Ltd. ADS................ 80,813
75,000 National Mutual Asia Ltd. ............................ 59,934
-----------
309,311
-----------
Ireland - 1.3%
10,061 CRH Plc, London Exchange.............................. 178,224
-----------
Italy - 5.4%
5,724 Benetton Group SpA ADS................................ 226,456
13,500 Industrie Natuzzi SpA................................. 262,406
17,500 Luxottica Group SpA ADS............................... 272,344
-----------
761,206
-----------
Japan - 6.7%
3,300 Nintendo Co., Ltd. ................................... 464,024
5,000 Seven-Eleven Japan Co. Ltd. .......................... 490,204
-----------
954,228
-----------
Malaysia - 0.1%
1,400 AMMB Holdings Berhad.................................. 3,218
2,000 * Malayan Banking Berhad.............................. 5,403
2,000 Malaysian Oxygen Berhad............................... 4,265
2,000 Perusahaan Otomobil Nasional Berhad................... 4,171
1,000 RHB Capital Berhad.................................... 1,161
2,000 * United Engineers Ltd. Berhad........................ 2,867
-----------
21,085
-----------
Netherlands - 5.8%
616 CSM NV................................................ 31,274
2,528 CSM NV, Certificates.................................. 126,260
3,815 Getronics NV.......................................... 146,689
3,319 IHC Caland NV......................................... 130,013
3,324 Numico Kon NV......................................... 117,702
2,900 VNU NV................................................ 115,842
4,016 Wolters Kluwer........................................ 159,800
-----------
827,580
-----------
Spain - 2.2%
13,000 Endesa SA, ADS........................................ 276,250
3,100 Prosegur, CIA de Seguridad SA......................... 34,577
-----------
310,827
-----------
Sweden - 0.5%
3,000 Hennes & Mauritz, Ser. B.............................. 74,214
-----------
Switzerland - 2.6%
13,000 ABB AB, ADR........................................... 177,125
100 Schweizerische Rueckversicherungs-Gesellschaft........ 190,341
-----------
367,466
-----------
United Kingdom - 8.5%
3,917 Astrazeneca Plc, ADR.................................. 153,497
4,244 Granada Group Plc..................................... 78,603
2,500 Laporte Plc........................................... 28,215
11,000 Lloyds TSB Group Plc.................................. 149,373
9,000 Morgan Crucible Co. Plc............................... 38,374
5,000 Next Plc.............................................. 60,686
5,000 Pearson Publishing Plc................................ 101,589
36,200 Rentokil Initial Plc.................................. 140,368
1,800 SmithKline Beecham Plc, ADR........................... 118,913
6,231 Smiths Industries Plc................................. 82,698
10,000 TI Group Plc.......................................... 67,148
18,100 Tomkins Plc........................................... 78,458
300 Vodafone Airtouch Public Ltd., ADR.................... 59,100
6,245 Williams Plc.......................................... 41,245
-----------
1,198,267
-----------
United States - 42.2%
2,600 Allied Signal, Inc. .................................. 163,800
1,368 American International Group, Inc. ................... 160,142
2,700 Ameritech Corp. ...................................... 198,450
1,500 Armstrong World Industries, Inc. ..................... 86,719
3,000 Avon Products, Inc. .................................. 166,500
2,300 Carnival, Corp. Cl. A................................. 111,550
</TABLE>
29
<PAGE>
EVERGREEN VARIABLE ANNUITY TRUST
Evergreen VA Global Leaders Fund
Schedule of Investments(continued)
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
United States - continued
4,350 * Cisco Systems, Inc. ................................. $ 279,759
6,000 Citigroup, Inc. ....................................... 285,000
500 Coca Cola Co. ......................................... 31,250
3,100 Computer Associates International, Inc. ............... 170,500
1,800 Disney (Walt) Co. ..................................... 55,463
2,000 Federal National Mortgage Assoc. ...................... 136,750
2,700 Gannett Co., Inc. ..................................... 192,712
2,025 Gap, Inc. ............................................. 102,009
1,200 General Electric Co. .................................. 135,600
1,500 General Mills, Inc. ................................... 120,563
2,500 Home Depot, Inc. ...................................... 161,094
3,900 Intel Corp. ........................................... 232,050
4,000 Marriott International, Inc. Cl. A..................... 149,500
2,550 Marsh & McLennan Co., Inc. ............................ 192,525
2,500 Maytag Corp. .......................................... 174,219
4,575 MBNA Corp. ............................................ 140,109
3,100 McGraw-Hill Companies, Inc. ........................... 167,206
2,300 Merck & Co., Inc. ..................................... 170,200
3,000 * Microsoft Corp. ..................................... 270,562
1,500 Morgan Stanley, Dean Witter & Co. ..................... 153,750
1,575 * Oracle Systems Corp. ................................ 58,472
2,900 * Parametric Technology Corp. ......................... 40,238
2,000 Pitney Bowes, Inc. .................................... 128,500
1,200 SAP AG, ADR............................................ 41,550
2,800 Schering-Plough Corp. ................................. 148,400
1,500 Schwab (Charles) & Co., Inc. .......................... 164,812
2,500 SLM Holding Corp. ..................................... 114,531
2,225 * Sodexho Marriott Services, Inc. ..................... 42,692
5,000 TJX Co., Inc. ......................................... 166,562
2,000 Tribune Co. ........................................... 174,250
2,395 United Technologies Corp. ............................. 171,692
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
United States - continued
5,000 Viad Corp. .......................................... $ 154,688
4,900 Wal-Mart Stores, Inc. ............................... 236,425
3,000 Wells Fargo Co. ..................................... 128,250
-----------
5,979,044
-----------
Total Common Stocks
(cost $11,210,196).................................. 13,322,319
-----------
PREFERRED STOCKS - 1.2%
Germany - 1.2%
5,000 RWE AG............................................... 173,698
-----------
Total Preferred Stocks
(cost $172,722)..................................... 173,698
-----------
WARRANTS - 0.0%
Hong Kong - 0.0%
1,000 Hong Kong & China Gas
expire 9/30/1999 (cost $0).......................... 163
-----------
<CAPTION>
Principal
Amount Value
<C> <S> <C>
SHORT-TERM INVESTMENTS - 8.1%
United States - 8.1%
$1,144,000 State Street Bank & Trust Co. 4.80%, purchased
6/30/1999, maturing 7/1/1999,
maturity value $1,144,153 (cost $1,144,000) (a)..... 1,144,000
-----------
</TABLE>
<TABLE>
<C> <S> <C> <C>
Total Investments -
(cost $12,526,918)........................... 103.4% 14,640,180
Other Assets and
Liabilities - net............................ (3.4) (486,110)
----- -----------
Net Assets.................................... 100.0% $14,154,070
===== ===========
</TABLE>
(a) The repurchase agreement is fully collateralized by: $1,170,000 FNMA,
5.85%, 6/12/2001; value including accrued interest--$1,167,598.
* Non-income producing security.
Summary of Abbreviations
ADR American Depository Receipt
ADS American Depository Shares
REIT Real Estate Investment Trust
See Combined Notes to Financial Statements.
30
<PAGE>
EVERGREEN VARIABLE ANNUITY TRUST
Evergreen VA Growth and Income Fund
Schedule of Investments
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - 96.3%
Advertising & Related Services - 0.3%
4,000 Young & Rubicam, Inc. ................................ $ 181,750
-----------
Aerospace & Defense - 0.5%
2,000 Boeing Co. ........................................... 88,375
20,000 Bombardier, Inc., Cl. B............................... 305,603
-----------
393,978
-----------
Automotive Equipment & Manufacturing - 3.0%
10,375 Autoliv, Inc. ........................................ 313,844
6,500 Borg-Warner Automotive, Inc. ......................... 357,500
5,635 Daimler Chrysler AG................................... 500,810
12,000 Meritor Automotive, Inc. ............................. 306,000
22,000 * Strattec Security Corp. ............................ 742,500
-----------
2,220,654
-----------
Banks - 9.2%
9,047 Bank One Corp. ....................................... 538,862
14,000 BankBoston Corp. ..................................... 715,750
24,156 BB&T Corp. ........................................... 886,223
1,000 Centura Banks, Inc. .................................. 56,375
8,000 Chase Manhattan Corp. ................................ 693,000
2,000 Fleet Financial Group, Inc. .......................... 88,750
14,000 Hibernia Corp. Cl. A.................................. 219,625
12,000 KeyCorp............................................... 385,500
12,000 Marshall & Ilsley Corp. .............................. 772,500
24,000 Mellon Bank Corp. .................................... 873,000
2,000 Mercantile Bancorp, Inc. ............................. 114,250
20,000 Pacific Century Financial Corp. ...................... 431,250
2,000 SouthTrust Corp. ..................................... 76,750
6,975 Susquehanna Bancshares, Inc. ......................... 123,370
8,100 US Bancorp............................................ 275,400
20,000 * Webster Financial Corp. ............................ 542,500
2,000 Wells Fargo Co. ...................................... 85,500
-----------
6,878,605
-----------
Building, Construction & Furnishings - 3.3%
9,000 * Furniture Brands International, Inc................. 250,875
9,000 * Jacobs Engineering Group, Inc....................... 342,000
15,000 Lennar Corp........................................... 360,000
6,000 Lone Star Industries, Inc. ........................... 225,375
10,000 Ryland Group, Inc. ................................... 296,875
1,000 * Toll Brothers, Inc.................................. 21,437
26,500 * US Home Corp. ...................................... 940,750
-----------
2,437,312
-----------
Business Equipment &
Services - 5.7%
25,700 ACNnielsen Corp....................................... 777,425
16,500 Air Express International Corp. ...................... 418,687
3,000 * Atlas Air, Inc...................................... 96,750
15,000 Circle International Group, Inc. ..................... 328,125
12,800 * Computer Sciences Corp.............................. 885,600
34,000 * Convergys Corp...................................... 654,500
18,000 Petroleum Helicopters, Inc. .......................... 235,125
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Business Equipment &
Services - continued
15,300 Pittston Brink's Group................................ $ 409,275
14,000 Pittston Burlington Group............................. 133,000
11,400 * Policy Management Systems Corp...................... 342,000
-----------
4,280,487
-----------
Capital Goods - 0.8%
10,000 Caterpillar, Inc. .................................... 600,000
-----------
Chemical & Agricultural
Products - 2.9%
2,600 Air Products & Chemicals, Inc. ....................... 104,650
21,000 Albemarle Corp. ...................................... 485,625
9,000 Du Pont (E. I.) De Nemours & Co....................... 614,812
25,500 Engelhard Corp. ...................................... 576,937
500 Monsanto Co. ......................................... 19,378
3,000 Pioneer Hi-Bred International, Inc. .................. 116,813
5,000 Sigma-Aldrich Corp. .................................. 172,187
3,000 Solutia, Inc. ........................................ 63,938
-----------
2,154,340
-----------
Communication Systems & Services - 0.9%
7,650 * American Tower Systems Corp......................... 183,600
6,500 * Cisco Systems, Inc.................................. 418,031
5,000 * Loral Space & Communications........................ 90,000
-----------
691,631
-----------
Consumer Products &
Services - 5.3%
1,000 Gucci Group........................................... 70,000
28,600 Mattel, Inc. ......................................... 756,112
9,500 Newell Rubbermaid, Inc. .............................. 441,750
10,000 Premark International, Inc. .......................... 375,000
42,000 Service Corp. International........................... 808,500
12,000 Sony Corp. ADR........................................ 1,324,500
13,000 Stride Rite Corp...................................... 134,063
1,000 * Tommy Hilfiger Corp. ............................... 73,500
-----------
3,983,425
-----------
Diversified Companies - 1.8%
4,000 ITT Industries, Inc................................... 152,500
14,000 Minnesota Mining & Manufacturing Co................... 1,217,125
-----------
1,369,625
-----------
Electrical Equipment &
Services - 2.7%
12,000 Emerson Electric Co................................... 754,500
5,000 General Electric Co................................... 565,000
14,000 Thomas & Betts Corp. ................................. 661,500
-----------
1,981,000
-----------
Electronic Equipment &
Services - 2.2%
5,000 International Business Machines Corp.................. 646,250
8,000 * KLA-Tencor Corp..................................... 519,000
5,000 * Microsoft Corp...................................... 450,938
-----------
1,616,188
-----------
</TABLE>
31
<PAGE>
EVERGREEN VARIABLE ANNUITY TRUST
Evergreen VA Growth and Income Fund
Schedule of Investments(continued)
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Finance & Insurance - 7.7%
4,275 American International Group, Inc..................... $ 500,442
7,500 Edwards (A.G.), Inc................................... 241,875
13,500 Federal Home Loan Mortgage Corp....................... 783,000
5,000 Federal National Mortgage Assoc. ..................... 341,875
19,300 Frontier Insurance Group, Inc. ....................... 296,738
2,500 Hartford Financial Services Group, Inc. .............. 145,781
9,000 Legg Mason, Inc. ..................................... 346,500
10,000 Lehman Brothers Holdings, Inc. ....................... 622,500
1,000 MGIC Investment Corp. ................................ 48,625
9,100 Paine Webber Group, Inc. ............................. 425,425
5,000 Price (T.) Rowe & Associates, Inc. ................... 191,875
10,000 Progressive Corp. Ohio................................ 1,450,000
1,600 UNUM Corp. ........................................... 87,600
10,000 Waddell & Reed Financial, Inc. Cl. A.................. 274,375
-----------
5,756,611
-----------
Food & Beverage Products - 0.7%
9,000 Conagra, Inc. ........................................ 239,625
3,800 International Multifoods Corp. ....................... 85,738
5,000 Sara Lee Corp. ....................................... 113,437
10,000 * Vlasic Foods International, Inc. ................... 73,125
-----------
511,925
-----------
Forest Products - 0.4%
10,000 Deltic Timber Corp. .................................. 269,375
-----------
Healthcare Products &
Services - 8.9%
7,000 Abbott Laboratories................................... 318,500
15,000 * Acuson Corp. ....................................... 257,812
2,000 * Alza Corp. ......................................... 101,750
8,000 American Home Products Corp. ......................... 460,000
20,000 Amerisource Health Corp. ............................. 510,000
7,800 Beckman Coulter, Inc. ................................ 379,275
9,000 * Boston Scientific Corp. ............................ 395,437
4,500 Celera Genomics Group................................. 72,844
1,000 Dendrite International, Inc. ......................... 36,125
2,500 * Dura Pharmaceuticals, Inc. ......................... 29,844
14,000 * First Health Group Corp. ........................... 301,875
5,000 * HCR Manor Care, Inc. ............................... 120,938
4,000 * HEALTHSOUTH Corp. .................................. 59,750
9,000 Johnson & Johnson..................................... 882,000
18,000 * Lincare Holdings, Inc. ............................. 450,000
11,000 McKesson HBOC, Inc. .................................. 353,375
1,000 Medtronic, Inc. ...................................... 77,875
5,000 PE Corp-PE Biosystems Group........................... 573,750
2,000 Pfizer, Inc. ......................................... 219,500
14,500 * Quorum Health Group, Inc. .......................... 182,156
2,000 Schering-Plough Corp. ................................ 106,000
10,000 Shared Medical System Corp. .......................... 652,500
2,000 Warner-Lambert Co. ................................... 138,750
-----------
6,680,056
-----------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Industrial Specialty Products & Services - 7.2%
11,000 AptarGroup, Inc. .................................... $ 330,000
6,400 Bemis Co., Inc. ..................................... 254,400
30,000 Donaldson, Inc. ..................................... 735,000
10,000 Dover Corp. ......................................... 350,000
18,000 Honeywell, Inc. ..................................... 2,085,750
2,000 Illinois Tool Works, Inc. ........................... 164,000
7,000 Parker Hannifin Corp. ............................... 320,250
20,000 Teleflex, Inc. ...................................... 868,750
19,000 * Unova, Inc. ....................................... 301,625
-----------
5,409,775
-----------
Information Services &
Technology - 2.6%
11,200 * Adaptec, Inc. ..................................... 395,500
7,875 Computer Associates International, Inc. ............. 433,125
20,000 * Compuware Corp. ................................... 636,250
7,000 Intel Corp. ......................................... 416,500
5,000 * Network Associates, Inc. .......................... 73,437
-----------
1,954,812
-----------
Leisure & Tourism - 0.5%
12,000 Gaylord Entertainment Co. ........................... 360,000
-----------
Manufacturing - Distributing - 0.2%
10,000 Hussmann International, Inc. ........................ 165,625
-----------
Oil & Energy - 4.9%
7,600 Atlantic Richfield Co. .............................. 635,075
20,000 Berry Petroleum Co. Cl. A............................ 278,750
15,000 Cabot Oil & Gas Corp. Cl. A.......................... 279,375
6,000 Chevron Corp. ....................................... 571,125
17,500 * Houston Exploration Co. ........................... 331,406
7,690 Kerr-McGee Corp. .................................... 385,942
12,000 Phillips Petroleum Co. .............................. 603,750
16,100 Santa Fe Snyder Corp. ............................... 122,763
26,200 Southwestern Energy Co. ............................. 276,737
2,200 Texaco, Inc. ........................................ 137,500
1,000 Tosco Corp. ......................................... 25,938
-----------
3,648,361
-----------
Oil Field Services - 0.6%
3,444 Halliburton Co. ..................................... 155,841
5,000 Schlumberger Ltd. ................................... 318,438
-----------
474,279
-----------
Paper & Packaging - 0.3%
3,216 * Sealed Air Corp. .................................. 208,638
-----------
Printing, Publishing, Broadcasting & Entertainment -
6.6%
10,309 * Clear Channel Communications, Inc. ................ 710,677
9,200 Disney (Walt) Co. ................................... 283,475
21,300 * Fox Entertainment Group, Inc. ..................... 573,769
10,000 McGraw-Hill Companies, Inc. ......................... 539,375
36,100 New York Times Co. Cl. A............................. 1,328,931
11,000 TCA Cable TV, Inc. .................................. 610,500
</TABLE>
32
<PAGE>
EVERGREEN VARIABLE ANNUITY TRUST
Evergreen VA Growth and Income Fund
Schedule of Investments (continued)
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Printing, Publishing, Broadcasting & Entertainment -
continued
11,000 Time Warner, Inc. ................................... $ 808,500
2,000*Young Broadcasting, Inc. Cl. A....................... 85,125
-----------
4,940,352
-----------
Real Estate - 1.6%
2,800 Arden Realty Group, Inc. REIT........................ 68,950
3,500 CarrAmerica Realty Corp. REIT........................ 87,500
17,000 Duke-Weeks Realty Corp. REIT......................... 518,500
10,000 Mack-Cali Realty Corp. REIT.......................... 309,375
5,000 Spieker Properties, Inc. REIT........................ 194,375
-----------
1,178,700
-----------
Retailing & Wholesale - 4.0%
5,000 Avnet, Inc. ......................................... 232,500
10,000*Cole National Corp. Cl. A............................ 79,375
10,000*Consolidated Stores Corp............................. 270,000
8,000 Ethan Allen Interiors, Inc. ......................... 302,000
13,000 J. C. Penney Co., Inc. .............................. 631,312
5,000 Lowe's Companies, Inc. .............................. 283,438
15,000 Rite Aid Corp. ...................................... 369,375
10,016*Saks, Inc............................................ 289,212
11,000 Wal-Mart Stores, Inc. ............................... 530,750
-----------
2,987,962
-----------
Telecommunication Services & Equipment - 1.5%
11,000*MediaOne Group, Inc.................................. 818,125
8,000 Omnipoint Corp. ..................................... 231,500
3,000*Qwest Communications International, Inc.............. 99,188
-----------
1,148,813
-----------
Transportation - 4.0%
15,000 Burlington Northern Santa Fe Corp. .................. 465,000
3,000 Comair Holdings, Inc. ............................... 62,438
11,000 Kansas City SouthernIndustries, Inc. ................ 701,938
25,300 Southwest Airlines Co. .............................. 787,462
2,000*UAL Corp............................................. 130,000
12,200 Union Pacific Corp. ................................. 711,412
3,600*US Airways Group, Inc................................ 156,825
-----------
3,015,075
-----------
Utilities - Electric - 1.7%
40,000*Niagara Mohawk Holdings, Inc......................... 642,500
18,000 TNP Enterprises, Inc. ............................... 652,500
-----------
1,295,000
-----------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Utilities - Gas - 1.5%
11,000 Northwest Natural Gas Co. ........................... $ 265,375
19,700 Piedmont Natural Gas Co., Inc. ...................... 613,163
6,000 Williams Companies, Inc. ............................ 255,375
-----------
1,133,913
-----------
Utilities - Telephone - 2.8%
14,000 AT&T Corp. .......................................... 781,375
15,000*Frontier Corp........................................ 885,000
8,000*Nextel Communications, Inc. Cl. A.................... 401,500
-----------
2,067,875
-----------
Total Common Stocks
(cost $60,949,051).................................. 71,996,142
-----------
PREFERRED STOCKS - 0.0%
Healthcare Products &
Services - 0.0%
3,500*Fresenius National Medical Care, Inc.
Ser. D (cost $736).................................. 53
-----------
CONVERTIBLE PREFERRED - 0.2%
Paper & Packaging - 0.2%
2,850*Sealed Air Corp.
$2.00, 04/01/2018, Ser. A (cost $100,265)........... 178,125
-----------
<CAPTION>
Principal
Amount Value
<C> <S> <C>
CONVERTIBLE DEBENTURES - 0.1%
Information Services &
Technology - 0.1%
$ 350,000 Networks Associates, Inc. 0.01%, 2/13/2018
(cost $106,488)..................................... 103,687
-----------
SHORT-TERM INVESTMENTS - 4.1%
Repurchase Agreement - 4.1%
3,025,000 State Street Bank & Trust Co. 4.80%, purchased
6/30/1999, maturing 7/1/1999, maturity
value $3,025,433
(cost $3,025,000) (a)............................... 3,025,000
-----------
</TABLE>
<TABLE>
<C> <S> <C> <C>
Total Investments -
(cost $64,181,540)........................... 100.7% 75,303,007
Other Assets and
Liabilities - net............................ (0.7) (506,137)
----- -----------
Net Assets.................................... 100.0% $74,796,870
===== ===========
</TABLE>
(a) The repurchase agreement is fully collateralized by: $3,090,000 Fed-
eral Farm Credit Bank, 5.39%, 4/19/2001; value including accrued in-
terest -- $3,088,381.
* Non-income producing security.
Summary of Abbreviations
REIT Real Estate Investment Trust
See Combined Notes to Financial Statements.
33
<PAGE>
EVERGREEN VARIABLE ANNUITY TRUST
Evergreen VA International Growth Fund
Schedule of Investments
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - 95.1%
Aerospace & Military Technology - 0.5%
200 Alvis Plc................................................. $ 539
500 British Aerospace Plc..................................... 3,255
4,000 Embraer Empresa........................................... 6,778
----------
10,572
----------
Automobiles - 2.2%
200 Compagnie Generale des Etablissements Michelin Cl. B...... 8,179
108 Daimlerchrysler AG........................................ 9,352
4,000 Fuji Heavy Industries Ltd................................. 30,883
----------
48,414
----------
Banking - 10.6%
1,313 Anglo Irish Bank Corp..................................... 3,235
524 Argentaria SA............................................. 11,932
100 Banco Popular Espana SA................................... 7,190
50 Banque Paribas............................................ 5,603
1,040 Barclays Bank Plc......................................... 30,245
41 Dexia Belgium (Credit Communal)........................... 6,103
175 HSBC Holdings Plc......................................... 6,201
850 HSBC Holdings Plc......................................... 31,004
2,319 Lloyds TSB Group Plc...................................... 31,490
2,035 National Australia Bank Ltd............................... 33,631
1,068 Royal Bank Scot Group..................................... 21,885
1,029 Svenska Handelsbanken, Ser. A............................. 12,364
50 UBS AG.................................................... 14,919
100 Unidanmark AS, Registered Shares.......................... 6,655
3 Verwalt & Private Bank.................................... 12,588
----------
235,045
----------
Beverages & Tobacco - 2.8%
73 Al-Ahram Beverage Co. SA, GDR, 144A....................... 2,034
600 Bass Plc.................................................. 8,701
200 Diageo Plc................................................ 2,101
2,434 Fosters Brewing Group Ltd................................. 6,851
1,000 Fraser & Neave Ltd........................................ 4,436
219 Heineken NV............................................... 11,209
163 Panamerican Beverages, Inc., Cl. A........................ 3,881
98 Pernod Ricard SA.......................................... 6,567
900 Rembrandt Controlling Investments Ltd..................... 4,922
1,312 Rembrandt Group Ltd. ..................................... 10,937
400 Technical & Industrial Investments Ltd. ... 1,694
----------
63,333
----------
Broadcasting & Publishing - 3.3%
1,591 Arn Mondadori Edit SpA.................................... 27,553
32 Edipresse SA.............................................. 10,391
492 Quebecor, Inc., Cl. B..................................... 11,962
8,800 Seat Pagine Gille......................................... 7,484
125 VNU NV.................................................... 4,993
260 Wolters Kluwer............................................ 10,346
----------
72,729
----------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Building Materials & Components - 0.4%
815 Cemex SA de CV, Ser. B.................................... $ 4,036
50 Lafarge SA................................................ 4,752
----------
8,788
----------
Business & Public Services - 1.9%
600 Aegis Group Plc........................................... 1,324
205 Boewe Systec AG........................................... 6,338
46 Cap Gemini NV............................................. 7,227
500 Compass Group Plc......................................... 4,961
915 Cordiant Communications Group Plc......................... 2,517
27 Dauphin O.T.A............................................. 4,041
217 Logica Plc................................................ 2,283
300 Pearson Publishing Plc.................................... 6,095
900 Saatchi & Saatchi Plc..................................... 3,044
200 Telegraaf Holdings NV Certificate......................... 3,938
----------
41,768
----------
Chemicals - 1.4%
583 Akzo Nobel NV............................................. 24,520
155 BASF AG................................................... 6,847
----------
31,367
----------
Construction - 0.0%
875 Preussag AG............................................... 124
----------
Data Processing & Reproduction - 0.4%
95 Atos SA................................................... 9,695
----------
Electrical & Electronics - 1.5%
2,000 Nikon Corp................................................ 32,735
----------
Electronic Components - 1.1%
800 Assa Abloy................................................ 8,670
1,208 Smiths Industries Plc..................................... 16,033
----------
24,703
----------
Energy Sources - 3.6%
150 BP Amoco Plc.............................................. 16,275
1,093 British Petroleum Co. Plc................................. 19,572
2,100 ENI SpA................................................... 12,534
300 Repsol SA Rg.............................................. 6,123
860 Shell Transportation & Trading Co., Plc................... 6,453
70 Societe Nationale Elf Aquitaine SA........................ 10,268
70 Total SA, Cl. B........................................... 9,027
----------
80,252
----------
Financial Services - 7.9%
432 Close Brothers Group Plc.................................. 5,124
220 Gamma Holding NV.......................................... 9,525
200 Investor AB, Cl. A........................................ 2,238
100 Invik & Co. AB............................................ 59
100 Kinnevik Investments...................................... 1,885
444 Lend Lease Corp. Ltd...................................... 6,088
100 Orix Corp................................................. 8,928
475 Prudential Corp. Plc...................................... 7,001
30 Societe Eurafrance SA..................................... 18,617
200 * Societe Genrale d'Enterprises SA........................ 9,690
</TABLE>
34
<PAGE>
EVERGREEN VARIABLE ANNUITY TRUST
Evergreen VA International Growth Fund
Schedule of Investments(continued)
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Financial Services - continued
1,000 Takefuji Corp............................................. $ 103,414
600 Technical Investment Corp................................. 2,416
----------
174,985
----------
Food & Household Products - 5.3%
13,000 Dairy Farm International Holdings......................... 15,600
59 Groupe Danone............................................. 15,205
104 Hero AG................................................... 12,774
73 Huhtamaki Group........................................... 2,656
344 Koninklijke Ahold NV...................................... 11,844
300 Laurus NV................................................. 6,958
4 Lindt & Spruengli AG...................................... 10,186
18 Nestle SA................................................. 32,421
300 Reckitt & Colman Plc...................................... 3,133
100 Tiger Oats................................................ 912
80 Unilever NV............................................... 5,389
----------
117,078
----------
Forest Products & Paper - 1.5%
503 Enso OY................................................... 5,393
7,683 Jefferson Smurfit Group Plc............................... 18,018
353 UPM-Kymmene Corp.......................................... 10,116
----------
33,527
----------
Health & Personal Care - 5.8%
130 Bayer AG.................................................. 5,414
707 Cannons Group............................................. 61
100 * Fresenius Medical Care AG............................... 5,969
68 Glaxo Wellcome Plc........................................ 1,890
100 Hoechst AG................................................ 4,525
200 * ISS International Service System AS,
Ser. B................................................... 10,676
15 Novartis AG, Registered Shares............................ 21,896
1,000 Parkway Holdings Ltd...................................... 2,468
193 Pharmacia & Upjohn, Inc................................... 10,686
385 Rhone-Poulenc SA, Cl. A................................... 17,586
1 Roche Holding AG.......................................... 10,276
300 SmithKline Beecham Plc.................................... 3,901
50 SmithKline Beecham Plc, ADR............................... 3,303
3,300 Sonic Healthcare Ltd...................................... 9,249
1,000 Terumo Corp............................................... 22,278
----------
130,178
----------
Industrial Components - 2.3%
100 Compagnie de Saint Gobain................................. 15,927
200 McKechnie Plc............................................. 1,530
2,231 Siebe Plc................................................. 10,550
3,446 Williams Plc.............................................. 22,759
----------
50,766
----------
Insurance - 3.7%
1,568 Allied Zurich............................................. 19,711
200 Assicruz Generali......................................... 6,927
265 AXA-UAP................................................... 32,317
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Insurance - continued
394 Fortis (NL) NV............................................ $ 12,164
240 Scor...................................................... 11,900
----------
83,019
----------
Leisure & Tourism - 1.3%
108 Club Mediterranee SA...................................... 11,456
1,500 Ladbroke Group Plc........................................ 5,994
200 Millennium & Copthorne Hotels Plc......................... 1,868
3,180 Vardon Plc................................................ 9,273
----------
28,591
----------
Machinery & Engineering - 7.9%
6,000 Amada Co. Ltd............................................. 42,407
500 Electrolux AB............................................. 10,484
3,593 FKI Plc................................................... 11,161
600 Nitto Kohki Co., Ltd...................................... 11,408
900 SMC Corp.................................................. 100,810
----------
176,270
----------
Merchandising - 1.3%
44 Karstadt AG............................................... 21,136
1,300 New Clicks Holdings....................................... 1,950
200 Vendex NV................................................. 5,340
----------
28,426
----------
Metals-Non Ferrous - 0.4%
2,850 Billiton Plc.............................................. 9,973
----------
Multi-Industry - 5.8%
346 Anglo American Corp. of South Africa...................... 16,171
56 Marine- Wendel SA......................................... 8,688
875 Preussag AG............................................... 46,994
825 Thyssen Krupp AG.......................................... 18,140
479 Vivendi................................................... 38,786
----------
128,779
----------
Real Estate - 0.9%
2,000 Sponda OYJ................................................ 10,102
24,700 Unione Immobiliare........................................ 10,949
----------
21,051
----------
Technology - 0.2%
2,178 Tecnost Spa............................................... 5,366
----------
Telecommunications - 14.8%
2,083 British Telecommunications Plc............................ 34,869
1,660 Deutsche Telekom AG....................................... 69,646
1,660 Deutsche Telekom AG....................................... 190
1,100 Ericsson LM Telephone Co., ADR............................ 36,231
38 France Telecom SA......................................... 2,869
1,450 Koreal Telecom Corp....................................... 58,000
66 Mannesmann AG............................................. 9,913
556 Nokia AB OY............................................... 48,718
1,762 * Orange Plc.............................................. 25,857
</TABLE>
35
<PAGE>
EVERGREEN VARIABLE ANNUITY TRUST
Evergreen VA International Growth Fund
Schedule of Investments(continued)
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Telecommunications - continued
542 Telecom Italia Mobile (TIM) SpA........................... $ 3,235
100 Vimpel-Communications..................................... 2,319
1,980 Vodafone Group Plc........................................ 38,950
----------
330,797
----------
Transportation - Roads & Rail - 2.9%
10,000 Nippon Express Co. Ltd.................................... 59,932
200 Railtrack Group Plc....................................... 4,089
----------
64,021
----------
Utilities - Electric, Gas & Water - 1.2%
200 Scot & Southern En........................................ 2,043
500 Scottish Power Plc, ADR................................... 4,280
116 Suez Lyonn des Eaux....................................... 20,914
----------
27,237
----------
Wholesale & International Trade - 2.2%
225 Nippon Telegraph & Telephone Corp......................... 14,091
3 Nippon Telegraph & Telephone Corp......................... 34,967
----------
49,058
----------
Total Common Stocks
(cost $2,017,317)........................................ 2,118,647
----------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
PREFERRED STOCKS - 1.1%
Construction - 0.6%
50 Grohe (Friedrich) AG.................................... $ 14,123
----------
Health & Personal Care - 0.5%
60 Fresenius AG............................................ 10,607
----------
Total Preferred Stocks
(cost $21,774)......................................... 24,730
----------
<CAPTION>
Principal
Amount Value
<C> <S> <C>
FOREIGN BONDS (NON U.S. DOLLARS) - 0.5%
Technology - 0.5%
$10,530 Tecnost International NV 1.00%, 6/23/2004............... 11,047
----------
</TABLE>
<TABLE>
<C> <S> <C> <C>
Total Investments -
(cost $2,059,503)................................. 96.7% 2,154,424
Other Assets and
Liabilities - net................................. 3.3 73,532
----- ----------
Net Assets......................................... 100.0% $2,227,956
===== ==========
</TABLE>
* Non-income producing security.
144A Security that may be resold to "qualified institutional buyers" un-
der Rule 144A of the Securities Act of 1933. This security has been
determined to be liquid under guidelines established by the Board of
Trustees.
Summary of Abbreviations
ADR American Depository Receipt
GDR Global Depository Receipts
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
Forward Foreign Currency Exchange Contracts to Buy:
<TABLE>
<CAPTION>
Exchange U.S. Value at In Exchange Unrealized
Date Contracts to Receive June 30, 1999 for U.S. $ (Depreciation)
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
8/5/1999 89,015 British Pound Sterling $107,209 $109,064 $(1,855)
8/30/1999 390,621 Euro Currency 190,531 194,341 (3,810)
8/26/1999 79,562 Swiss Franc 19,415 19,875 (460)
</TABLE>
Forward Foreign Currency Exchange Contracts to Sell:
<TABLE>
<CAPTION>
Unrealized
Exchange U.S. Value at In Exchange Appreciation/
Date Contracts to Receive June 30, 1999 for U.S. $ (Depreciation)
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
9/1/1999 21,565 Australian Dollar $ 14,265 $ 14,000 $ (265)
8/5/1999 42,320 British Pound Sterling 66,721 68,000 1,279
8/5/1999 89,015 British Pound Sterling 140,341 142,000 1,659
8/30/1999 390,621 Euro Currency 404,487 415,000 10,513
8/26/1999 6,031,500 Japanese Yen 50,268 50,000 (268)
8/26/1999 22,175,758 Japanese Yen 184,819 181,000 (3,819)
8/26/1999 79,562 Swiss Franc 51,489 53,000 1,511
</TABLE>
36
<PAGE>
EVERGREEN VARIABLE ANNUITY TRUST
Evergreen VA International Growth Fund
Schedule of Investments(continued)
June 30, 1999 (Unaudited)
At June 30, 1999, the Fund held securities in the following countries:
<TABLE>
<CAPTION>
Percentage of
Market Value Portfolio Assets
- --------------------------------------------------------------------------------
<S> <C> <C>
Japan............................................. $ 447,764 20.8%
United Kingdom.................................... 441,191 20.5%
France............................................ 269,314 12.5%
Germany........................................... 229,319 10.6%
Switzerland....................................... 125,450 5.8%
Netherlands....................................... 106,226 4.9%
United States..................................... 101,370 4.7%
Italy............................................. 85,095 3.9%
Finland........................................... 76,985 3.6%
Sweden............................................ 71,931 3.3%
Australia......................................... 55,820 2.6%
Spain............................................. 25,246 1.2%
South Africa...................................... 22,830 1.1%
Ireland........................................... 21,253 1.0%
Denmark........................................... 17,332 0.8%
Bermuda........................................... 15,600 0.7%
Canada............................................ 11,962 0.6%
Mexico............................................ 7,917 0.4%
Singapore......................................... 6,904 0.3%
Brazil............................................ 6,778 0.3%
Belgium........................................... 6,103 0.3%
Egypt............................................. 2,034 0.1%
---------- -----
$2,154,424 100.0%
========== =====
</TABLE>
See Combined Notes to Financial Statements.
37
<PAGE>
EVERGREEN VARIABLE ANNUITY TRUST
Evergreen VA Masters Fund
Schedule of Investments
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - 96.3%
Advertising & Related Services - 0.5%
50 * Flycast Communications Corp. ......................... $ 956
700 Interpublic Group of Co., Inc. ......................... 60,638
100 RH Donnelley Corp. ..................................... 1,956
-----------
63,550
-----------
Aerospace & Defense - 0.8%
100 General Dynamics Corp. ................................. 6,850
100 Rockwell International Corp. ........................... 6,075
1,200 United Technologies Corp. .............................. 86,025
-----------
98,950
-----------
Automotive Equipment &
Manufacturing - 0.4%
100 Arvin Industries, Inc. ................................. 3,787
107 Federal-Mogul Corp. .................................... 5,564
500 Ford Motor Co. ......................................... 28,219
200 Meritor Automotive, Inc. ............................... 5,100
100 * Tower Automotive, Inc. ............................... 2,544
-----------
45,214
-----------
Banks - 4.0%
200 AmSouth Bancorp ........................................ 4,638
200 Bank of New York Co., Inc. ............................. 7,337
300 BankAmerica Corp. ...................................... 21,994
1,000 BankBoston Corp. ....................................... 51,125
100 BB&T Corp. ............................................. 3,669
400 Chase Manhattan Corp. .................................. 34,650
200 Comerica, Inc. ......................................... 11,887
600 Dime Bancorp, Inc. ..................................... 12,075
300 Fifth Third Bancorp .................................... 19,969
300 First Security Corp. ................................... 8,175
1,300 Firstar Corp. .......................................... 36,400
300 Fleet Financial Group, Inc. ............................ 13,312
2,500 Huntington Bancshares, Inc. ............................ 87,500
2,000 KeyCorp................................................. 64,250
400 National City Corp. .................................... 26,200
200 Northern Trust Corp. ................................... 19,400
105 Old Kent Financial Corp. ............................... 4,397
300 Wachovia Corp. ......................................... 25,669
700 Wells Fargo Co. ........................................ 29,925
-----------
482,572
-----------
Building, Construction &
Furnishings - 1.8%
200 * American Standard Companies, Inc. .................... 9,600
1,000 Armstrong World Industries, Inc. ....................... 57,812
100 Centex Construction Products, Inc. ..................... 3,413
2,000 Centex Corp. ........................................... 75,125
300 Lafarge Corp. .......................................... 10,631
1,500 Lennar Corp. ........................................... 36,000
100 * Lone Star Industries, Inc. ........................... 3,756
100 * Mohawk Industries, Inc. .............................. 3,038
100 * NVR, Inc. ............................................ 5,219
700 * Shaw Industries, Inc. ................................ 11,550
-----------
216,144
-----------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Business Equipment &
Services - 2.7%
980 * Affiliated Computer Services, Inc. ................... $ 49,612
300 Automatic Data Processing, Inc. ........................ 13,200
100 * CDI Corp. ............................................ 3,406
2,000 * Computer Sciences Corp. .............................. 138,375
200 * CSG System International, Inc. ....................... 5,238
100 Dun & Bradstreet Corp. ................................. 3,544
1,570 * Fiserv, Inc. ......................................... 49,161
2,034 * Policy Management Systems Corp. ...................... 61,020
-----------
323,556
-----------
Chemical & Agricultural
Products - 0.5%
100 * Agribrands International, Inc. ....................... 3,956
300 Du Pont (E. I.) De Nemours & Co. ....................... 20,494
500 Praxair, Inc. .......................................... 24,468
300 Solutia, Inc. .......................................... 6,394
-----------
55,312
-----------
Communication Systems &
Services - 2.5%
1,600 * Cisco Systems, Inc. .................................. 102,900
100 * Conexant Systems, Inc. ............................... 5,806
1,600 Lucent Technologies, Inc. .............................. 107,900
700 * MCI WorldCom, Inc. ................................... 60,244
400 * Tellabs, Inc. ........................................ 27,025
-----------
303,875
-----------
Consumer Products &
Services - 3.1%
200 * Avis Rent-A-Car, Inc. ................................ 5,825
200 Clorox Co. ............................................. 21,362
300 Colgate-Palmolive Co. .................................. 29,625
854 Dial Corp. ............................................. 31,758
100 H & R Block, Inc. ...................................... 5,000
100 Harley-Davidson, Inc. .................................. 5,438
100 Hertz Corp. ............................................ 6,200
800 Lauder Estee Cos., Inc. ................................ 40,100
2,300 * Lo-Jack Corp. ........................................ 19,262
50 Mapquest Common, Inc. .................................. 816
200 Maytag Corp. ........................................... 13,938
3,000 Newell Rubbermaid, Inc. ................................ 139,500
100 Nike, Inc. Cl. B........................................ 6,331
200 Procter & Gamble Co. ................................... 17,850
700 Valspar Corp. .......................................... 26,600
-----------
369,605
-----------
Diversified Companies - 1.2%
500 Allied Signal, Inc. .................................... 31,500
100 Minnesota Mining & Manufacturing Co. ................... 8,694
1,100 Tyco International Ltd. ................................ 104,225
-----------
144,419
-----------
Electrical Equipment &
Services - 3.8%
3,556 * Cable Design Technologies Corp. ...................... 54,896
200 Emerson Electric Co. ................................... 12,575
</TABLE>
38
<PAGE>
EVERGREEN VARIABLE ANNUITY TRUST
Evergreen VA Masters Fund
Schedule of Investments(continued)
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Electrical Equipment &
Services - continued
1,600 General Electric Co. ................................... $ 180,800
100 * Lam Research Corp. ................................... 4,669
100 * Lattice Semiconductor Corp. .......................... 6,225
600 Motorola, Inc. ......................................... 56,850
500 * Novellus Systems, Inc. ............................... 34,125
1,200 * Sipex Corp. .......................................... 24,600
400 * Solectron Corp. ...................................... 26,675
1,000 Thomas & Betts Corp. ................................... 47,250
100 * Xilinx, Inc. ......................................... 5,712
-----------
454,377
-----------
Electronic Equipment & Services - 6.4%
300 * EMC Corp. ............................................ 16,500
50 Globespan Semiconductor, Inc. .......................... 1,988
800 Hewlett-Packard Co. .................................... 80,400
1,400 Intel Corp. ............................................ 83,300
1,400 International Business Machines Corp. .................. 180,950
1,000 * KLA-Tencor Corp. ..................................... 64,875
1,614 * Kulicke & Soffa Industries, Inc. ..................... 43,275
2,600 * Microsoft Corp. ...................................... 234,487
900 * MKS Instruments, Inc. ................................ 16,763
700 * Sun Microsystems, Inc. ............................... 48,212
-----------
770,750
-----------
Finance & Insurance - 5.5%
400 AFLAC, Inc. ............................................ 19,150
200 Allmerica Financial Corp. .............................. 12,162
100 Allstate Corp. ......................................... 3,588
100 AMBAC Financial Group, Inc. ............................ 5,713
1,000 American Bankers Insurance Group, Inc. ................. 54,437
400 American Express Co. ................................... 52,050
600 American General Corp. ................................. 45,225
500 American International Group, Inc. ..................... 58,531
300 Capital One Financial Corp. ............................ 16,706
200 Chicago Title Corp. .................................... 7,138
100 CIGNA Corp. ............................................ 8,900
1,200 Citigroup, Inc. ........................................ 57,000
3,541 Edwards (A.G.), Inc. ................................... 114,197
100 Equitable Companies, Inc. .............................. 6,700
300 Federal Home Loan Mortgage Corp. ....................... 17,400
200 Federal National Mortgage Assoc. ....................... 13,675
100 Financial Security Assured Holdings Ltd. ............... 5,200
100 Greenpoint Financial Corp. ............................. 3,281
100 Hartford Financial Services Group, Inc. ................ 5,831
100 Hartford Life, Inc. Cl. A............................... 5,263
100 Jefferson Pilot Corp. .................................. 6,619
300 Lincoln National Corp. ................................. 15,694
100 Marsh & McLennan Co., Inc. ............................. 7,550
400 Morgan Stanley, Dean Witter & Co. ...................... 41,000
200 Paine Webber Group, Inc. ............................... 9,350
100 PMI Group, Inc. ........................................ 6,281
200 Providian Financial Corp. .............................. 18,700
400 Schwab (Charles) & Co., Inc. ........................... 43,950
-----------
661,291
-----------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Food & Beverage Products - 2.5%
100 Albertsons, Inc. ....................................... $ 5,156
300 Anheuser Busch Companies, Inc. ......................... 21,281
100 Corn Products International, Inc. ...................... 3,044
100 Darden Restaurants, Inc. ............................... 2,181
6,214 * Del Monte Foods Co. .................................. 104,084
100 Fortune Brands, Inc. ................................... 4,138
600 Great Atlantic & Pacific Tea, Inc. ..................... 20,288
980 * Keebler Foods Co. .................................... 29,768
127 McCormick & Co., Inc. .................................. 4,008
300 McDonald's Corp. ....................................... 12,394
1,000 Philip Morris Companies, Inc. .......................... 40,187
500 * Safeway, Inc. ........................................ 24,750
600 * Suiza Foods Corp. .................................... 25,125
100 * Tricon Global Restaurants, Inc. ...................... 5,413
100 Wendy's International, Inc. ............................ 2,831
-----------
304,648
-----------
Healthcare Products &
Services - 10.9%
700 Abbott Laboratories..................................... 31,850
100 Allergan, Inc. ......................................... 11,100
1,000 * Alza Corp. ........................................... 50,875
500 American Home Products Corp. ........................... 28,750
700 * Amgen, Inc. .......................................... 42,612
200 Bausch & Lomb, Inc. .................................... 15,300
1,100 Beckman Coulter, Inc. .................................. 53,487
400 * Biogen, Inc. ......................................... 25,725
100 Biomet, Inc. ........................................... 3,975
1,000 Bristol-Myers Squibb Co. ............................... 70,437
2,200 * Elan Corp Plc, ADR.................................... 61,050
100 * Guidant Corp. ........................................ 5,144
9,075 * Health Management Associates, Inc. Cl. A.............. 102,094
4,468 * Idexx Laboratories, Inc. ............................. 104,160
100 Immunex Corp. .......................................... 12,744
1,000 Johnson & Johnson....................................... 98,000
500 Lasersight, Inc. ....................................... 8,125
2,034 * Lincare Holdings, Inc. ............................... 50,850
800 Merck & Co., Inc. ...................................... 59,200
300 Omnicare, Inc. ......................................... 3,788
700 Pharmacia & Upjohn, Inc. ............................... 39,769
1,515 * PSS World Med, Inc. .................................. 16,949
1,334 * Quintiles Transnational Corp. ........................ 56,028
1,100 Schering-Plough Corp. .................................. 58,300
5,388 * Steris Corp. ......................................... 104,392
8,483 * Total Renal Care Holdings, Inc. ...................... 132,017
1,200 United Therapeutics Corp. .............................. 14,250
500 Ventana Med Systems, Inc. .............................. 9,563
600 Warner-Lambert Co. ..................................... 41,625
-----------
1,312,159
-----------
Industrial Specialty Products &
Services - 1.5%
200 * Albany International Corp. ........................... 4,150
200 Honeywell, Inc. ........................................ 23,175
2,600 Leggett & Platt, Inc. .................................. 72,312
</TABLE>
39
<PAGE>
EVERGREEN VARIABLE ANNUITY TRUST
Evergreen VA Masters Fund
Schedule of Investments(continued)
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Industrial Specialty Products &
Services - continued
1,500 Teleflex, Inc. ......................................... $ 65,156
200 Vulcan Materials Co. ................................... 9,650
-----------
174,443
-----------
Information Services &
Technology - 11.1%
100 * Adaptec, Inc. ........................................ 3,601
200 * America Online, Inc. ................................. 22,100
3,080 * Analog Devices, Inc. ................................. 154,577
400 * Apple Computer........................................ 18,525
1,434 * Aspen Technology, Inc. ............................... 16,850
1,800 * Cadence Design Systems, Inc. ......................... 22,950
100 Checkfree Holdings Corp. ............................... 2,756
1,458 * Citrix Systems, Inc. ................................. 82,377
100 * CMG Information Services, Inc. ....................... 11,406
200 * Comverse Technology, Inc. ............................ 15,100
100 * Critical Path, Inc. .................................. 5,531
881 * DST Systems, Inc. .................................... 55,393
1,300 * Edify Corp. .......................................... 17,388
2,500 Fair Issac & Co., Inc. ................................. 87,656
127 * Gartner Group, Inc. .................................. 2,604
1,200 * IMRglobal Corp. ...................................... 23,100
50 Informatica Corp. ...................................... 1,781
327 * Intuit, Inc. ......................................... 29,471
600 * Lexmark International Group, Inc. .................... 39,638
300 * LSI Logic............................................. 13,838
50 Marimba, Inc. .......................................... 2,634
1,500 * Micros Systems, Inc. ................................. 51,000
100 * NCR Corp. ............................................ 4,881
100 Net Perceptions, Inc. .................................. 2,181
3,000 * Network Associates, Inc. ............................. 44,062
2,300 Network Solutions, Inc. ................................ 181,987
200 Online Resources........................................ 2,713
3,850 * Security Dynamics Technology.......................... 81,812
800 Security First Tech Corp. .............................. 36,100
50 Software Common, Inc. .................................. 1,159
3,800 * SportsLine USA, Inc. ................................. 136,325
1,180 * SunGard Data Systems, Inc. ........................... 40,710
150 Symbol Technologies, Inc. .............................. 5,531
161 * Synopsys, Inc. ....................................... 8,885
2,401 * Technology Solutions Co. ............................. 25,961
100 Texas Instruments, Inc. ................................ 14,500
500 * Unisys Corp. ......................................... 19,469
100 USinternetworking, Inc. ................................ 4,200
400 VeriSign, Inc. ......................................... 34,500
200 * Xircom, Inc. ......................................... 6,013
100 * Ziff Davis, Inc.- ZDNet............................... 2,600
-----------
1,333,865
-----------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Leisure & Tourism - 0.2%
500 Carnival, Corp. Cl. A................................... $ 24,250
400 Park Place Entertainment Corp. ......................... 3,875
-----------
28,125
-----------
Machinery - Diversified - 2.3%
1,400 * Applied Science & Tech, Inc. ......................... 31,500
8,000 * Terex Corp. .......................................... 243,500
-----------
275,000
-----------
Manufacturing - Distributing - 1.3%
100 Briggs & Stratton Corp. ................................ 5,775
4,000 CLARCOR, Inc. .......................................... 76,750
100 Dexter Corp. ........................................... 4,081
1,000 * Teradyne, Inc. ....................................... 71,750
-----------
158,356
-----------
Metal Products & Services - 0.0%
100 Ryerson Tull, Inc. ..................................... 2,256
-----------
Office Equipment & Supplies - 0.3%
200 John H. Harland Co. .................................... 3,988
500 Pitney Bowes, Inc. ..................................... 32,125
-----------
36,113
-----------
Oil/Energy - 3.0%
1,000 * Berkley Petroleum Corp. .............................. 8,387
5,000 * Canadian 88 Energy Corp. ............................. 13,990
100 Chevron Corp. .......................................... 9,520
600 Conoco, Inc. ........................................... 16,725
300 Consol Energy, Inc. .................................... 3,600
300 Devon Energy Corp. ..................................... 10,725
500 Enron Corp. ............................................ 40,875
600 Exxon Corp. ............................................ 46,275
900 Houston Exploration Co. ................................ 17,044
400 Mobil Corp. ............................................ 39,600
100 Murphy Oil Corp. ....................................... 4,881
2,100 Newfield Exploration Co. ............................... 59,719
300 Rio Alto Exploration Ltd. .............................. 4,553
100 Texaco, Inc. ........................................... 6,247
2,500 Transocean Offshore, Inc. .............................. 65,625
300 Vastar Resources, Inc. ................................. 15,731
-----------
363,497
-----------
Oil Field Services - 2.2%
1,500 * Cooper Cameron Corp. ................................. 55,594
2,700 Diamond Offshore Drilling, Inc. ........................ 76,612
2,500 Frontier Oil Corp. ..................................... 17,031
1,323 * Global Industries Ltd. ............................... 16,951
1,600 * Nabors Industries Inc. ............................... 39,100
2,429 * Noble Drilling Corp. ................................. 47,821
3,000 Ranger Oil Ltd. ........................................ 14,567
-----------
267,676
-----------
</TABLE>
40
<PAGE>
EVERGREEN VARIABLE ANNUITY TRUST
Evergreen VA Masters Fund
Schedule of Investments(continued)
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Paper & Packaging - 0.5%
200 Avery Dennison Corp. .................................. $ 12,075
600 Kimberly-Clark Corp. .................................. 34,200
200 * Sealed Air Corp. .................................... 12,975
-----------
59,250
-----------
Pharmaceuticals - 0.4%
100 * Cytoclonal Pharmaceutics, Inc. ...................... 631
200 * Millennium Pharmaceuticals, Inc. .................... 7,200
527 * Sepracor, Inc. ...................................... 42,819
-----------
50,650
-----------
Printing, Publishing, Broadcasting & Entertainment -
4.2%
1,300 AT&T Corp. (Liberty Media Group) Cl. A................. 47,775
300 CBS Corp. ............................................. 13,031
200 * Clear Channel Communications, Inc. .................. 13,787
400 Comcast Corp. Cl. A.................................... 15,375
100 * Cox Communications, Inc. Cl. A....................... 3,681
200 Gannett Co., Inc. ..................................... 14,275
2,300 * Gemstar International Group Ltd. .................... 150,075
700 * Hearst-Argyle Television, Inc. ...................... 16,800
100 Knight-Ridder, Inc. ................................... 5,494
100 McClatchy Co. ......................................... 3,313
100 Meredith Corp. ........................................ 3,463
50 Radio One, Inc. ....................................... 2,325
880 * Scholastic Corp. .................................... 44,550
200 * Sinclair Broadcast Group, Inc. Cl. A................. 3,275
1,500 Time Warner, Inc. ..................................... 110,250
100 Tribune Co. ........................................... 8,712
100 * Valley Media, Inc. .................................. 1,488
1,100 * Viacom, Inc. Cl. B................................... 48,400
-----------
506,069
-----------
Real Estate - 0.2%
100 Del Webb Corp. ........................................ 2,388
500 Marriott International, Inc. Cl. A..................... 18,687
-----------
21,075
-----------
Retailing & Wholesale - 11.5%
400 * Abercrombie & Fitch Co. ............................. 19,200
100 * Amazon Common, Inc. ................................. 12,513
100 American Eagle Outfitters, Inc. ....................... 4,550
3,000 * Autozone, Inc. ...................................... 90,375
500 * Best Buy Co., Inc. .................................. 33,750
1,384 * BJ's Wholesale Club, Inc. ........................... 41,607
100 Brinker International, Inc. ........................... 2,719
4,700 * CompUSA, Inc. ....................................... 34,956
600 * Costco Companies, Inc. .............................. 48,037
1,100 CVS Corp. ............................................. 55,825
200 Dayton Hudson Corp. ................................... 13,000
9,000 Ethan Allen Interiors, Inc. ........................... 339,750
100 Family Dollar Stores, Inc. ............................ 2,453
300 * Federated Department Stores, Inc. ................... 15,881
1,350 Gap, Inc. ............................................. 68,006
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Retailing & Wholesale - continued
1,500 Home Depot, Inc. ....................................... $ 96,656
100 Hughes Supply, Inc. .................................... 2,969
500 * Jones Apparel Group, Inc. ............................ 17,156
100 * Linens 'N Things, Inc. ............................... 4,375
200 Lowe's Companies, Inc. ................................. 11,338
200 May Department Stores Co. .............................. 8,175
100 * Payless Shoesource, Inc. ............................. 5,350
3,000 Rite Aid Corp. ......................................... 73,875
1,100 Ross Stores, Inc. ...................................... 55,412
100 Ruby Tuesday, Inc. ..................................... 1,900
2,000 * Saks, Inc. ........................................... 57,750
100 * Shopko Stores, Inc. .................................. 3,625
200 Tandy Corp. ............................................ 9,775
1,200 TJX Co., Inc. .......................................... 39,975
3,500 Wal-Mart Stores, Inc. .................................. 168,875
1,100 Walgreen Co. ........................................... 32,313
200 * Zale Corp. ........................................... 8,000
-----------
1,380,141
-----------
Telecommunication Services & Equipment - 3.6%
3,700 * Aerial Communications, Inc. .......................... 49,950
100 Centurytel, Inc. ....................................... 3,975
50 Copper Mountain Networks, Inc. ......................... 3,863
100 * General Instrument Corp. ............................. 4,250
50 Inet Technologies, Inc. ................................ 1,200
2,100 * Intermedia Communications, Inc. ...................... 63,000
500 * MediaOne Group, Inc. ................................. 37,187
300 Nokia Corp. ADR......................................... 27,469
200 * Qualcomm, Inc. ....................................... 28,700
3,000 Teligent, Inc. ......................................... 179,437
50 * Time Warner Telecom, Inc. ............................ 1,450
150 Vodafone Airtouch Public Ltd., ADR...................... 29,551
-----------
430,032
-----------
Textile & Apparel - 0.0%
100 V. F. Corp. ............................................ 4,275
-----------
Thrift Institutions - 0.0%
200 * Golden St. Bancorp, Inc. ............................. 4,400
-----------
Transportation - 2.1%
200 * Alaska Air Group, Inc. ............................... 8,350
3,000 Comair Holdings, Inc. .................................. 62,437
200 * Continental Airlines, Inc. ........................... 7,525
300 Delta Air Lines, Inc. .................................. 17,288
400 * FDX Corp. ............................................ 21,700
100 Northwest Airlines Corp. ............................... 3,325
4,000 Skywest, Inc. .......................................... 99,750
200 Southwest Airlines Co. ................................. 6,225
400 Union Pacific Corp. .................................... 23,325
100 Xtra Corp. ............................................. 4,594
-----------
254,519
-----------
</TABLE>
41
<PAGE>
EVERGREEN VARIABLE ANNUITY TRUST
Evergreen VA Masters Fund
Schedule of Investments(continued)
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Utilities - Electric - 1.2%
100 Allegheny Energy, Inc. ................................. $ 3,206
2,000 Central Hudson Gas & Electric Corp. .................... 84,000
100 Consolidated Edison, Inc. .............................. 4,525
200 Energy East Corp. ...................................... 5,200
100 Firstenergy Corp. ...................................... 3,100
200 Florida Progress Corp. ................................. 8,263
100 Oge Energy Corp. ....................................... 2,375
200 PECO Energy Co. ........................................ 8,375
200 PG & E Corp. .......................................... 6,500
400 Public Service Enterprise Group, Inc. .................. 16,350
-----------
141,894
-----------
Utilities - Telephone - 4.1%
200 ALLTEL Corp. ........................................... 14,300
600 Ameritech Corp. ........................................ 44,100
1,100 AT&T Corp. ............................................. 61,394
500 Bell Atlantic Corp. .................................... 32,688
1,700 BellSouth Corp. ........................................ 79,687
1,000 Frontier Corp. ......................................... 59,000
500 GTE Corp. .............................................. 37,875
1,200 SBC Communications, Inc. ............................... 69,600
1,400 Sprint Corp. ........................................... 73,937
200*Sprint Corp. (PCS Group)................................ 11,425
200 U.S. West, Inc. ........................................ 11,750
-----------
495,756
-----------
Utilities - 0.0%
100 Unicom Corp. ........................................... 3,856
-----------
Total Common Stocks
(cost $10,666,605)..................................... 11,597,670
-----------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
SHORT-TERM INVESTMENTS - 4.4%
Repurchase Agreement - 4.4%
$525,000 State Street Bank & Trust Co.
4.80%, purchased 6/30/1999,
maturing 7/1/1999,
maturity value $525,070
(cost $525,000) (a).................................. $ 525,000
-----------
</TABLE>
<TABLE>
<C> <S> <C> <C>
Total Investments -
(cost $11,191,605)............................. 100.7% 12,122,670
Other Assets and
Liabilities - net.............................. (0.7) (86,752)
----- -----------
Net Assets...................................... 100.0% $12,035,918
===== ===========
</TABLE>
(a) The repurchase agreement is fully collateralized by: $535,000 FNMA,
5.86%, 11/7/2000; value including accrued interest--$540,031.
* Non-income producing security.
Summary of Abbreviations
ADR American Depository Receipt
REIT Real Estate Investment Trust
See Combined Notes to Financial Statements.
42
<PAGE>
EVERGREEN VARIABLE ANNUITY TRUST
Evergreen VA Small Cap Value Fund
Schedule of Investments
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - 87.7%
Aerospace & Defense - 1.6%
900 Curtiss Wright Corp. ............................... $ 34,988
1,300 * Wyman-Gordon Co. ................................. 25,106
-----------
60,094
-----------
Automotive Equipment &
Manufacturing - 1.0%
1,000 Arvin Industries, Inc. ............................. 37,875
-----------
Banks - 11.6%
1,400 ABC Bancorp......................................... 18,550
1,800 Britton & Koontz Capital Corp. ..................... 37,687
2,100 * Columbia Banking Systems, Inc. ................... 32,287
1,785 Commercial Bankshares, Inc. ........................ 38,601
1,600 Granite State Bankshares, Inc. ..................... 37,000
1,000 Greater Bay Bancorp................................. 33,250
2,000 Independent Bankshares, Inc. ....................... 22,000
1,400 Interchange Financial Services Corp. ............... 23,450
1,200 Mid-State Bancshares................................ 40,500
500 New England Community Bancorp, Inc. ................ 13,781
1,200 Pacific Bank, N.A. ................................. 22,875
1,000 SierraWest Bancorp.................................. 30,688
1,500 West Coast Bancorp, Inc. ........................... 26,250
1,500 Western Bancorp..................................... 65,250
-----------
442,169
-----------
Building, Construction &
Furnishings - 8.2%
1,000 American Woodmark Corp. ............................ 35,250
3,000 Apogee Enterprises, Inc. ........................... 40,313
4,000 Craftmade International, Inc. ...................... 52,000
2,000 D.R. Horton, Inc. .................................. 33,250
3,000 Industrie Natuzzi SpA............................... 58,312
2,500 Standard Pacific Corp. ............................. 32,344
2,000 TJ International, Inc. ............................. 62,000
-----------
313,469
-----------
Business Equipment & Services - 1.3%
2,500 McGrath Rentcorp ................................... 50,000
-----------
Communication Systems &
Services - 0.9%
1,500 * Orbital Sciences Corp. ........................... 35,438
-----------
Consumer Products & Services - 7.4%
2,300 Advanced Marketing Services, Inc. .................. 34,500
2,100 CPI Corp. .......................................... 69,300
1,500 Lancaster Colony Corp. ............................. 51,750
1,000 Polaris Industries, Inc. ........................... 43,500
3,000 Stewart Enterprises, Inc. Cl. A..................... 43,687
5,200 York Group, Inc. ................................... 39,000
-----------
281,737
-----------
Electrical Equipment & Services - 5.8%
1,300 Applied Power, Inc. Cl. A........................... 35,506
3,700 Helix Technology Corp. ............................. 88,569
3,000 * Kent Electronics Corp. ........................... 59,437
1,300 Park Electrochemical Corp. ......................... 37,375
-----------
220,887
-----------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Electronic Equipment & Services - 1.8%
1,600 Boston Acoustics, Inc. ................................ $ 28,600
1,000 * Hadco Corp. ......................................... 39,750
-----------
68,350
-----------
Finance & Insurance - 2.0%
2,000 Enhance Financial Services Group, Inc. ................ 39,500
2,000 Morgan Keegan, Inc. ................................... 37,875
-----------
77,375
-----------
Food & Beverage Products - 4.6%
2,640 Bridgford Foods Corp. ................................. 28,380
4,000 International Multifoods Corp. ........................ 90,250
1,400 Michael Foods, Inc. ................................... 32,900
1,000 Smucker (J. M.) Co., Cl. A............................. 22,250
-----------
173,780
-----------
Healthcare Products & Services - 7.7%
1,000 Alpharma, Inc. ........................................ 35,562
3,500 * ArthroCare Corp. .................................... 71,750
1,000 Beckman Coulter, Inc. ................................. 48,625
2,000 * Carematrix Corp. .................................... 24,875
2,000 Jones Pharma, Inc. .................................... 78,750
3,000 Kewaunee Scientific Corp. ............................. 31,313
-----------
290,875
-----------
Industrial Specialty Products &
Services - 4.4%
1,400 Badger Meter, Inc. .................................... 48,650
1,200 Federal Signal Corp. .................................. 25,425
1,000 Graco, Inc. ........................................... 29,375
2,000 Hach Co. .............................................. 36,250
1,500 Hach Co. Cl. A......................................... 26,437
-----------
166,137
-----------
Information Services &
Technology - 1.2%
3,000 Timberline Software Corp. ............................. 47,250
-----------
Machinery - Diversified - 0.6%
1,200 Hardinge, Inc. ........................................ 21,075
-----------
Manufacturing - Distributing - 1.0%
2,000 CLARCOR, Inc. ......................................... 38,375
-----------
Oil/Energy - 3.7%
2,500 Cabot Oil & Gas Corp. Cl. A............................ 46,562
2,000 Penn Virginia Corp. ................................... 39,500
2,000 Pennzoil-Quaker State Co. ............................. 30,000
2,200 Southwestern Energy Co. ............................... 23,238
-----------
139,300
-----------
Oil Field Services - 0.5%
1,000 Lufkin Industries, Inc. ............................... 20,000
-----------
Printing, Publishing, Broadcasting & Entertainment -
2.1%
2,000 Banta Corp. ........................................... 42,000
3,000 Bowne & Co., Inc. ..................................... 39,000
-----------
81,000
-----------
</TABLE>
43
<PAGE>
EVERGREEN VARIABLE ANNUITY TRUST
Evergreen VA Small Cap Value Fund
Schedule of Investments(continued)
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
COMMON STOCKS - continued
Real Estate - 2.8%
2,000 Eastgroup Properties, Inc. REIT......................... $ 40,125
4,000 Mission West Properties, Inc. REIT...................... 33,000
1,000 Parkway Properties, Inc. REIT........................... 33,125
-----------
106,250
-----------
Retailing & Wholesale - 3.5%
2,500 Deb Shops, Inc. ........................................ 49,688
1,350 Ethan Allen Interiors, Inc. ............................ 50,962
3,000 Pier 1 Imports, Inc. ................................... 33,750
-----------
134,400
-----------
Telecommunication Services & Equipment - 3.4%
3,900 Communications Systems, Inc. ........................... 48,263
4,000 Hickory Tech Corp. ..................................... 44,500
1,000 Scientific Atlanta, Inc. ............................... 36,000
-----------
128,763
-----------
Textile & Apparel - 0.8%
1,000 Oxford Industries, Inc. ................................ 28,313
-----------
Thrift Institutions - 4.6%
2,000 Abington Bancorp, Inc. ................................. 27,000
3,957 Community Savings Bankshares, Inc. ..................... 49,957
2,000 Harbor Florida Bancshares, Inc. ........................ 24,500
2,400 Horizon Financial Corp. ................................ 32,850
1,600 St. Paul Bancorp, Inc. ................................. 40,800
-----------
175,107
-----------
Utilities - Electric - 1.4%
1,400 MDU Resources Group, Inc. .............................. 31,938
700 WPS Resources Corp. .................................... 21,000
-----------
52,938
-----------
Utilities - Gas - 3.8%
2,400 Chesapeake Utilities Corp. ............................. 44,550
1,500 Delta Natural Gas Co., Inc. ............................ 24,938
3,000 Semco Energy, Inc. ..................................... 46,312
1,500 UGI Corp. .............................................. 30,281
-----------
146,081
-----------
Total Common Stocks
(cost $3,113,111)...................................... 3,337,038
-----------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
CONVERTIBLE PREFERRED - 2.8%
Electrical Equipment & Services - 1.2%
1,000 Pioneer Standard Financial Trust
6.75%, 3/31/2028................................... $ 48,000
-----------
Finance & Insurance - 1.6%
800 Frontier Financing Trust
6.25%, TOPRS....................................... 36,552
2,300 Philadelphia Consolidated
Holdings, Inc. 7.00%, PRIDES....................... 24,006
-----------
60,558
-----------
Total Convertible Preferred
(cost $113,669).................................... 108,558
-----------
<CAPTION>
Principal
Amount Value
<C> <S> <C>
CONVERTIBLE DEBENTURES - 5.5%
Business Equipment & Services - 0.9%
$ 40,000 Interim Services, Inc.
4.50%, 6/1/2005.................................... 34,300
-----------
Consumer Products & Services - 0.6%
25,000 Action Performance Companies, Inc.
4.75%, 4/1/2005, 144A.............................. 23,125
-----------
Healthcare Products & Services - 2.3%
40,000 Alpharma, Inc.
5.75%, 4/1/2005, 144A.............................. 55,300
45,000 Carematrix
6.25%, 8/15/2004................................... 31,669
-----------
86,969
-----------
Telecommunication Services & Equipment - 1.7%
45,000 Antec Corp.
4.50%, 5/15/2003................................... 64,462
-----------
Total Convertible Debentures
(cost $181,054).................................... 208,856
-----------
SHORT-TERM INVESTMENTS - 6.2%
Repurchase Agreement - 6.2%
235,000 State Street Bank & Trust Co.
4.80%, purchased 6/30/1999, maturing 7/1/1999,
maturity value $525,070
(cost $525,000) (a)................................ 235,000
-----------
</TABLE>
<TABLE>
<C> <S> <C> <C>
Total Investments -
(cost $3,642,834)............................... 102.2% 3,889,452
Other Assets and
Liabilities - net............................... (2.2) (85,366)
----- ----------
Net Assets....................................... 100.0% $3,804,086
===== ==========
</TABLE>
(a) The repurchase agreement is fully collateralized by: $240,000 FNMA,
5.86%, 11/7/2000; value including accrued interest--$242,257.
* Non-income producing security.
144A Security that may be resold to "qualified institutional buyers" un-
der Rule 144A of the Securities Act of 1933. This security has been
determined to be liquid under guidelines established by the Board of
Trustees.
Summary of Abbreviations
ADR American Depository Receipt
PRIDES Preferred Redeemable Increased Dividend Equity Security
REIT Real Estate Investment Trust
TOPRS Trust Originated Preferred Securities
See Combined Notes to Financial Statements.
44
<PAGE>
EVERGREEN VARIABLE ANNUITY TRUST
Evergreen VA Strategic Income Fund
Schedule of Investments
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
CORPORATE BONDS - 42.7%
Cable/Other Video Distribution - 1.9%
$290,000 Adelphia Communications Corp.,
Sr. Notes, Ser. B,
9.875%, 3/1/2007..................................... $ 303,050
-----------
Chemical & Agricultural Products - 5.1%
400,000 Huntsman ICI Chemicals, Inc.,
Sr. Notes (Subord.),
10.125%, 7/1/2009 144A............................... 403,500
400,000 Lyondell Chemical Co.,
9.625%, 5/1/2007 .................................... 409,500
-----------
813,000
-----------
Finance & Insurance - 1.0%
150,000 Americredit Corp.,
Sr. Notes,
9.875%, 4/15/2006 144A............................... 154,125
-----------
Gaming - 6.3%
500,000 Majestic Star Casino LLC,
10.875%, 7/1/2006.................................... 496,250
500,000 Mohegan Tribal Gaming Auth.,
Sr. Notes (Subord.),
8.75%, 1/1/2009...................................... 493,750
-----------
990,000
-----------
Metals & Mining - 2.6%
400,000 National Steel Corp.,
9.875%, 3/1/2009..................................... 409,000
-----------
Oil/Energy - 6.9%
Nuevo Energy Co.:
100,000 9.50%, 4/15/2006...................................... 100,000
125,000 8.88%, 6/1/2008....................................... 120,000
300,000 Petsec Energy, Inc.,
Sr. Notes (Subord.), Ser. B,
9.50%, 6/15/2007..................................... 155,250
200,000 Triton Energy Ltd/Corp.,
Sr. Notes,
9.25%, 4/15/2005..................................... 195,276
500,000 Western Gas Resources, Inc.,
Sr. Notes (Subord.),
10.00%, 6/15/2009 144A............................... 512,500
-----------
1,083,026
-----------
Paper & Packaging - 0.6%
100,000 Riverwood Int'l Corp.,
Sr. Notes,
10.25%, 4/1/2006..................................... 100,750
-----------
Printing, Publishing, Broadcasting & Entertainment -
2.5%
400,000 Ackerley Group, Inc.,
Sr. Notes (Subord.),
9.00%, 1/15/2009 144A................................ 392,000
-----------
Telecommunication Services &
Equipment - 11.5%
400,000 Echostar Communications Corp.,
Sr. Notes,
9.375%, 2/1/2009..................................... 408,000
300,000 Global Crossings Holdings Ltd.,
Sr. Notes,
9.625%, 5/15/2008.................................... 324,000
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
CORPORATE BONDS - continued
Telecommunication Services &
Equipment - continued
400,000 Intermedia Communications, Inc.,
(Eff. Yield 8.97%) (a) 0.00%, 7/15/2007............... $ 284,000
400,000 Nextel Communications, Inc.,
(Eff. Yield 9.56%) (a)
Sr. Notes 144A,
0.00%, 2/15/2008...................................... 276,000
500,000 Ono Finance Plc,
13.00%, 5/1/2009...................................... 516,250
-----------
1,808,250
-----------
Textile & Apparel - 0.2%
40,000 Delta Mills, Inc.,
Sr. Notes, Ser. B,
9.625%, 9/1/2007...................................... 38,000
-----------
Transportation - 4.1%
350,000 Greyhound Lines, Inc.,
Sr. Notes, Ser. B,
11.50%, 4/15/2007..................................... 403,375
250,000 Sea Containers Ltd.,
Sr. Notes, Ser. B,
7.875%, 2/15/2008..................................... 243,750
-----------
647,125
-----------
Total Corporate Bonds
(cost $6,826,920)..................................... 6,738,326
-----------
FOREIGN BONDS (NON U.S. DOLLARS) - 11.8%
Banks - 5.6%
3,950,000 Nykredit,
DKK 5.00%, 10/1/2029....................................... 487,986
2,970,000 Realkredit Danmark,
DKK Debs., 6.00%, 10/1/2029................................ 392,447
-----------
880,433
-----------
Government Agency Notes &
Bonds - 6.2%
625,000 Denmark (Kingdom of),
DKK Debs., 8.00%, 5/15/2003................................ 98,453
345,122 Germany (Republic of),
EUR Debs., 6.875%, 5/12/2005............................... 405,506
880,000 New Zealand Government,
NZD Debs., 7.00%, 7/15/2009................................ 477,331
-----------
981,290
-----------
Total Foreign Bonds (Non U.S. Dollars)
(cost $1,969,852)..................................... 1,861,723
-----------
U.S. GOVERNMENT & AGENCY OBLIGATIONS - 34.3%
600,000 U.S. Treasury Bonds,
5.25%, 11/15/2028..................................... 531,846
U.S. Treasury Notes
1,000,000 4.50%, 1/31/2001....................................... 985,310
1,000,000 4.75%, 11/15/2008...................................... 918,280
250,000 5.50%, 5/31/2003....................................... 248,085
945,000 5.75%, 4/30/2003....................................... 946,625
1,760,000 6.13%, 8/15/2007....................................... 1,778,973
-----------
Total U.S. Government &
Agency Obligations
(cost $5,538,813)..................................... 5,409,119
-----------
</TABLE>
45
<PAGE>
EVERGREEN VARIABLE ANNUITY TRUST
Evergreen VA Strategic Income Fund
Schedule of Investments (continued)
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
SHORT-TERM INVESTMENTS - 4.5%
Government Agency Notes &
Bonds - 4.5%
$712,000 Federal Farm Credit Bank Discount Notes, 4.60%,
7/1/1999 (cost $712,000)............................. $ 712,000
-----------
YANKEE OBLIGATIONS - 6.7%
Government Agency Notes &
Bonds - 3.0%
500,000 Chile, (Republic of),
6.875%, 4/28/2009.................................... 476,900
-----------
Metals & Mining - 0.9%
140,000 Great Central Mines Ltd.,
Sr. Notes, 8.875%, 4/1/2008.......................... 132,650
-----------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
YANKEE OBLIGATIONS - continued
Paper & Packaging - 2.8%
$250,000 Grupo Industrial Durango SA de CV, 12.00%, 7/15/2001... $ 238,125
250,000 Repap New Brunswick, Inc.,
Sr. Notes, 10.625%, 4/15/2005......................... 201,250
-----------
439,375
-----------
Total Yankee Obligations
(cost $1,071,689)..................................... 1,048,925
-----------
</TABLE>
<TABLE>
<C> <S> <C> <C>
Total Investments -
(cost $16,119,274).............................. 100.0% 15,770,093
Other Assets and
Liabilities - net............................... 0.0 1,915
----- -----------
Net Assets....................................... 100.0% $15,772,008
===== ===========
</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.
144A Security that may be resold to "qualified institutional buyers" un-
der Rule 144A of the Securities Act of 1933. This security has been
determined to be liquid under guidelines established by the Board of
Trustees.
Summary of Abbreviations
DKK Danish Krone
EUR European Currency
NZD New Zealand Dollar
See Combined Notes to Financial Statements.
46
<PAGE>
Evergreen Variable Annuity Trust
Statements of Assets and Liabilities
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Aggressive Evergreen Foundation Global Leaders Growth and
Growth Fund Fund Fund Fund Income Fund
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Assets
Identified cost of
securities............. $6,124,312 $55,176,107 $110,965,755 $12,526,918 $64,181,540
Net unrealized gains on
securities............. 1,912,890 8,606,117 10,566,499 2,113,262 11,121,467
- --------------------------------------------------------------------------------------------
Market value of
securities............. 8,037,202 63,782,224 121,532,254 14,640,180 75,303,007
Cash.................... 580 76,902 196,086 16,481 55,612
Foreign currency, at
value (cost $0, $0, $0,
$60,666 and $0, respectively) 0 0 0 60,452 0
Receivable for
securities sold........ 23,375 42,556 0 126,542 3,848,380
Dividends and interest
receivable............. 615 34,368 758,025 34,206 56,692
Deferred organization
expenses............... 5,451 6,865 7,223 5,423 7,221
Prepaid expenses and
other assets........... 449 2,111 1,233 183 1,132
- --------------------------------------------------------------------------------------------
Total assets........... 8,067,672 63,945,026 122,494,821 14,883,467 79,272,044
- --------------------------------------------------------------------------------------------
Liabilities
Payable for securities
purchased.............. 322,813 350,050 3,157,354 710,902 4,425,310
Advisory fee payable.... 3,604 44,059 74,550 7,958 28,549
Due to other related
parties................ 134 2,010 2,292 322 1,752
Accrued expenses and
other liabilities...... 8,812 247 23,209 10,215 19,563
- --------------------------------------------------------------------------------------------
Total liabilities...... 335,363 396,366 3,257,405 729,397 4,475,174
- --------------------------------------------------------------------------------------------
Net assets............... $7,732,309 $63,548,660 $119,237,416 $14,154,070 $74,796,870
- --------------------------------------------------------------------------------------------
Net assets represented
by
Paid-in capital......... $6,197,866 $51,774,337 $105,946,005 $12,139,736 $61,856,338
Undistributed
(overdistributed) net
investment income...... (11,226) 173,584 1,158,100 48,485 184,194
Accumulated net realized
gains or losses on
securities and foreign
currency related
transactions........... (367,221) 2,994,622 1,566,812 (148,032) 1,634,871
Net unrealized gains on
securities and foreign
currency related
transactions........... 1,912,890 8,606,117 10,566,499 2,113,881 11,121,467
- --------------------------------------------------------------------------------------------
Total net assets........ $7,732,309 $63,548,660 $119,237,416 $14,154,070 $74,796,870
- --------------------------------------------------------------------------------------------
Shares outstanding...... 504,339 3,685,005 7,843,884 1,024,067 4,576,168
- --------------------------------------------------------------------------------------------
Net asset value per
share.................. $ 15.33 $ 17.25 $ 15.20 $ 13.82 $ 16.34
- --------------------------------------------------------------------------------------------
</TABLE>
See Combined Notes to Financial Statements.
47
<PAGE>
Evergreen Variable Annuity Trust
Statements of Assets and Liabilities
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Small Cap Strategic
International Masters Value Income
Growth Fund Fund Fund Fund
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets
Identified cost of
securities................. $2,059,503 $11,191,605 $3,642,834 $16,119,274
Net unrealized gains or
losses on securities....... 94,921 931,065 246,618 (349,181)
- ---------------------------------------------------------------------------------
Market value of securities.. 2,154,424 12,122,670 3,889,452 15,770,093
Cash........................ 77,658 845 5,022 51,092
Receivable for securities
sold....................... 9,921 83,648 19,759 0
Dividends and interest
receivable................. 4,595 4,709 6,364 259,983
Unrealized gains on forward
foreign currency exchange
contracts.................. 14,962 0 0 0
Receivable from investment
advisor.................... 8,586 0 0 0
Deferred organization
expenses................... 0 0 0 5,451
Prepaid expenses and other
assets..................... 12 193 36 2,666
- ---------------------------------------------------------------------------------
Total assets............... 2,270,158 12,212,065 3,920,633 16,089,285
- ---------------------------------------------------------------------------------
Liabilities
Payable for securities
purchased.................. 0 166,022 104,652 308,338
Unrealized losses on forward
foreign currency exchange
contracts.................. 10,477 0 0 540
Advisory fee payable........ 0 3,821 761 0
Due to other related
parties.................... 32 227 75 0
Accrued expenses and other
liabilities................ 31,693 6,077 11,059 8,399
- ---------------------------------------------------------------------------------
Total liabilities.......... 42,202 176,147 116,547 317,277
- ---------------------------------------------------------------------------------
Net assets.................. $2,227,956 $12,035,918 $3,804,086 $15,772,008
- ---------------------------------------------------------------------------------
Net assets represented by
Paid-in capital............. $2,148,076 $11,064,605 $3,433,909 $15,975,983
Undistributed net investment
income..................... 18,350 9,739 28,037 415,240
Accumulated net realized
gains or losses on
securities and foreign
currency
related transactions....... (37,809) 30,509 95,522 (269,494)
Net unrealized gains or
losses on securities and
foreign currency
related transactions....... 99,339 931,065 246,618 (349,721)
- ---------------------------------------------------------------------------------
Total net assets............ $2,227,956 $12,035,918 $3,804,086 $15,772,008
- ---------------------------------------------------------------------------------
Shares outstanding.......... 229,669 1,109,888 359,003 1,531,287
- ---------------------------------------------------------------------------------
Net asset value per share... $ 9.70 $ 10.84 $ 10.60 $ 10.30
- ---------------------------------------------------------------------------------
</TABLE>
See Combined Notes to Financial Statements.
48
<PAGE>
Evergreen Variable Annuity Trust
Statements of Operations
Six Months Ended June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Aggressive Global Growth and
Growth Evergreen Foundation Leaders Income
Fund Fund Fund Fund Fund
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment income
Dividends (net of
foreign withholding
taxes of $0, $0,
$1561, $2,068 and
$8,940,
respectively)......... $ 3,704 $ 227,575 $ 553,467 $ 94,893 $ 410,611
Interest............... 11,649 133,593 1,053,768 10,324 100,066
- --------------------------------------------------------------------------------------
Total investment
income................ 15,353 361,168 1,607,235 105,217 510,677
- --------------------------------------------------------------------------------------
Expenses
Advisory fee........... 15,795 240,899 381,822 53,164 308,345
Administrative services
fees.................. 666 6,318 11,707 1,415 8,214
Transfer agent fee..... 138 173 160 33 71
Trustees' fees and
expenses.............. 48 491 2,108 125 650
Printing and postage
expenses.............. 1,605 8,496 12,766 2,136 17,087
Custodian fee.......... 1,118 7,300 17,798 4,807 11,254
Professional fees...... 8,126 9,104 13,840 8,219 9,708
Organization expenses.. 1,002 2,148 2,148 1,003 2,148
Other.................. 80 513 5,052 704 2,301
- --------------------------------------------------------------------------------------
Total expenses........ 28,578 275,442 447,401 71,606 359,778
Less: Fee credits..... (207) (1,299) (3,854) (1,068) (1,454)
Fee waivers and
expense
reimbursements..... (2,045) (20,565) 0 (14,576) (33,750)
- --------------------------------------------------------------------------------------
Net expenses.......... 26,326 253,578 443,547 55,962 324,574
- --------------------------------------------------------------------------------------
Net investment income.. (10,973) 107,590 1,163,688 49,255 186,103
- --------------------------------------------------------------------------------------
Net realized and
unrealized gains or
losses on securities
and foreign currency
related transactions
Net realized gains or
losses on:
Securities............ (207,278) 3,109,386 1,519,725 (76,590) 1,639,381
Foreign currency
related
transactions......... 0 0 0 (2,590) 0
- --------------------------------------------------------------------------------------
Net realized gains or
losses on securities
and foreign currency
related transactions.. (207,278) 3,109,386 1,519,725 (79,180) 1,639,381
- --------------------------------------------------------------------------------------
Net change in
unrealized gains on
securities and foreign
currency related
transactions.......... 936,332 3,623,534 2,595,345 1,033,459 4,929,964
- --------------------------------------------------------------------------------------
Net realized and
unrealized gains on
securities and foreign
currency related
transactions.......... 729,054 6,732,920 4,115,070 954,279 6,569,345
- --------------------------------------------------------------------------------------
Net increase in net
assets resulting from
operations............ $ 718,081 $6,840,510 $5,278,758 $1,003,534 $6,755,448
- --------------------------------------------------------------------------------------
</TABLE>
See Combined Notes to Financial Statements.
49
<PAGE>
Evergreen Variable Annuity Trust
Statements of Operations
Six Months Ended June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Small
Cap Strategic
International Masters Value Income
Growth Fund Fund (a) Fund Fund
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment income
Dividends (net of foreign
withholding taxes of $2,068,
$16, $0 and $0, respectively).. $ 22,652 $ 20,156 $ 34,501 $ 0
Interest........................ 3,155 22,376 8,137 470,105
- --------------------------------------------------------------------------------
Total investment income......... 25,807 42,532 42,638 470,105
- --------------------------------------------------------------------------------
Expenses
Advisory fee.................... 6,550 31,153 13,871 38,754
Transfer agent fee.............. 221 877 369 1,651
Administrative services fees.... 69 66 94 47
Trustees' fees and expenses..... 17 100 29 130
Printing and postage expenses... 909 1,695 1,404 3,300
Custodian fee................... 7,578 1,606 1,122 2,652
Professional fees............... 7,220 9,360 8,981 7,499
Organization expenses........... 0 10,830 0 0
Other........................... 722 1,114 590 1,268
- --------------------------------------------------------------------------------
Total expenses................. 23,286 56,801 26,460 55,301
Less: Fee credits.............. (307) (116) (648) (691)
Fee waivers and expense
reimbursements.............. (14,246) (23,892) (11,211) 0
- --------------------------------------------------------------------------------
Net expenses................... 8,733 32,793 14,601 54,610
- --------------------------------------------------------------------------------
Net investment income........... 17,074 9,739 28,037 415,495
- --------------------------------------------------------------------------------
Net realized and unrealized
gains or losses on securities
and foreign currency related
transactions
Net realized gains or losses on:
Securities..................... 59,054 30,509 118,059 (221,856)
Foreign currency related
transactions.................. 24,660 0 0 6,325
- --------------------------------------------------------------------------------
Net realized gains or losses on
securities and foreign currency
related transactions........... 83,714 30,509 118,059 (215,531)
- --------------------------------------------------------------------------------
Net change in unrealized gains
or losses on securities and
foreign currency
related transactions........... (26,227) 931,065 225,342 (319,693)
- --------------------------------------------------------------------------------
Net realized and unrealized
gains or losses on securities
and foreign currency
related transactions........... 57,487 961,574 343,401 (535,224)
- --------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from
operations..................... $ 74,561 $971,313 $371,438 $(119,729)
- --------------------------------------------------------------------------------
</TABLE>
(a) For the period from January 29, 1999 (commencement of operations) to June
30, 1999.
See Combined Notes to Financial Statements.
50
<PAGE>
Evergreen Variable Annuity Trust
Statements of Changes in Net Assets
Six Months Ended June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Aggressive Global
Growth Evergreen Foundation Leaders Growth and
Fund Fund Fund Fund Income Fund
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operations
Net investment income... $ (10,973) $ 107,590 $ 1,163,688 $ 49,255 $ 186,103
Net realized gains or
losses on securities
and foreign currency
related transactions... (207,278) 3,109,386 1,519,725 (79,180) 1,639,381
Net change in
unrealized gains on
securities and foreign
currency related
transactions........... 936,332 3,623,534 2,595,345 1,033,459 4,929,964
- -------------------------------------------------------------------------------------------
Net increase in net
assets resulting from
operations............ 718,081 6,840,510 5,278,758 1,003,534 6,755,448
- -------------------------------------------------------------------------------------------
Distributions to
shareholders from
Net investment income... 0 (90,550) 0 (2,531) 0
Net realized gains...... 0 (190,468) (227,108) 0 (333,529)
- -------------------------------------------------------------------------------------------
Total distributions to
shareholders.......... 0 (281,018) (227,108) (2,531) (333,529)
- -------------------------------------------------------------------------------------------
Capital share
transactions
Proceeds from shares
sold................... 3,165,452 12,027,275 35,858,999 3,785,506 8,807,411
Payment for shares
redeemed............... (190,062) (1,139,484) (271,298) (218,270) (1,342,180)
Net asset value of
shares issued in
reinvestment
of distributions....... 0 281,018 227,108 2,531 333,529
- -------------------------------------------------------------------------------------------
Net increase in net
assets resulting from
capital
share transactions.... 2,975,390 11,168,809 35,814,809 3,569,767 7,798,760
- -------------------------------------------------------------------------------------------
Total increase in net
assets............... 3,693,471 17,728,301 40,866,459 4,570,770 14,220,679
Net assets
Beginning of period..... 4,038,838 45,820,359 78,370,957 9,583,300 60,576,191
- -------------------------------------------------------------------------------------------
End of period........... $7,732,309 $63,548,660 $119,237,416 $14,154,070 $74,796,870
- -------------------------------------------------------------------------------------------
Undistributed
(overdistributed) net
investment income...... $ (11,226) $ 173,584 $ 1,158,100 $ 48,485 $ 184,194
- -------------------------------------------------------------------------------------------
</TABLE>
See Combined Notes to Financial Statements.
51
<PAGE>
Evergreen Variable Annuity Trust
Statements of Changes in Net Assets
Six Months Ended June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Small Cap Strategic
International Masters Value Income
Growth Fund Fund (a) Fund Fund
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operations
Net investment income..... $ 17,074 $ 9,739 $ 28,037 $ 415,495
Net realized gains or
losses on securities and
foreign currency
related transactions..... 83,714 30,509 118,059 (215,531)
Net change in unrealized
gains or losses on
securities and foreign
currency related
transactions............. (26,227) 931,065 225,342 (319,693)
- --------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from operations......... 74,561 971,313 371,438 (119,729)
- --------------------------------------------------------------------------------
Capital share transactions
Proceeds from shares
sold..................... 860,279 11,148,508 1,323,175 5,400,642
Payment for shares
redeemed................. (131,482) (83,903) (172,254) (690,734)
- --------------------------------------------------------------------------------
Net increase in net
assets resulting from
capital share
transactions............ 728,797 11,064,605 1,150,921 4,709,908
- --------------------------------------------------------------------------------
Total increase in net
assets................. 803,358 12,035,918 1,522,359 4,590,179
Net assets
Beginning of period....... 1,424,598 0 2,281,727 11,181,829
- --------------------------------------------------------------------------------
End of period............. $2,227,956 $12,035,918 $3,804,086 $15,772,008
- --------------------------------------------------------------------------------
Undistributed net
investment income........ $ 18,350 $ 9,739 $ 28,037 $ 415,240
- --------------------------------------------------------------------------------
</TABLE>
(a) For the period from January 29, 1999 (commencement of operations) to June
30, 1999.
See Combined Notes to Financial Statements.
52
<PAGE>
Evergreen Variable Annuity Trust
Statements of Changes in Net Assets
Year Ended December 31, 1998
<TABLE>
<CAPTION>
Aggressive Global
Growth Evergreen Foundation Leaders
Fund Fund Fund Fund
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operations
Net investment income....... $ (9,215) $ 166,541 $ 1,381,766 $ 54,640
Net realized gains or
losses on securities and
foreign currency
related transactions....... (122,678) 1,153,050 1,192,308 (68,172)
Net change in unrealized
gains on securities and
foreign currency
related transactions....... 820,212 407,756 2,722,636 1,018,021
- --------------------------------------------------------------------------------
Net increase in net assets
resulting from
operations................ 688,319 1,727,347 5,296,710 1,004,489
- --------------------------------------------------------------------------------
Distributions to
shareholders from
Net investment income....... 0 0 (1,361,829) (53,046)
Net realized gains.......... 0 (1,412,932) (1,143,134) 0
- --------------------------------------------------------------------------------
Total distributions to
shareholders.............. 0 (1,412,932) (2,504,963) (53,046)
- --------------------------------------------------------------------------------
Capital share transactions
Proceeds from shares sold... 2,148,396 26,319,301 43,723,203 6,009,276
Payment for shares
redeemed................... (666,191) (3,826,451) (2,489,319) (329,929)
Net asset value of shares
issued in reinvestment of
distributions.............. 0 1,412,932 2,504,963 53,046
- --------------------------------------------------------------------------------
Net increase in net assets
resulting from capital
share transactions........ 1,482,205 23,905,782 43,738,847 5,732,393
- --------------------------------------------------------------------------------
Total increase in net
assets................... 2,170,524 24,220,197 46,530,594 6,683,836
Net assets
Beginning of period......... 1,868,314 21,600,162 31,840,363 2,899,464
- --------------------------------------------------------------------------------
End of period............... $4,038,838 $45,820,359 $78,370,957 $9,583,300
- --------------------------------------------------------------------------------
Undistributed
(overdistributed) net
investment income.......... $ (253) $ 156,544 $ (5,588) $ 1,761
- --------------------------------------------------------------------------------
</TABLE>
See Combined Notes to Financial Statements.
53
<PAGE>
Evergreen Variable Annuity Trust
Statements of Changes in Net Assets
Year Ended December 31, 1998
<TABLE>
<CAPTION>
International Small Cap Strategic
Growth and Growth Value Income
Income Fund Fund (a) Fund (b) Fund
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operations
Net investment income.... $ 487,853 $ 4,370 $ 25,494 $ 413,610
Net realized gains or
losses on securities
and foreign currency
related transactions.... 1,366,195 (162,719) (19,832) (54,784)
Net change in unrealized
gains or losses on
securities and foreign
currency related
transactions............ (455,127) 125,566 21,276 (40,343)
- -------------------------------------------------------------------------------
Net increase (decrease)
in net assets
resulting from
operations............. 1,398,921 (32,783) 26,938 318,483
- -------------------------------------------------------------------------------
Distributions to
shareholders from
Net investment income.... (484,359) 0 (26,284) (421,077)
Net realized gains....... (1,110,182) 0 (2,958) 0
- -------------------------------------------------------------------------------
Total distributions to
shareholders........... (1,594,541) 0 (29,242) (421,077)
- -------------------------------------------------------------------------------
Capital share
transactions
Proceeds from shares
sold.................... 30,800,519 1,481,797 2,317,719 9,723,293
Payment for shares
redeemed................ (2,711,167) (24,416) (62,930) (1,064,322)
Net asset value of
shares issued in
reinvestment of
distributions........... 1,594,541 0 29,242 421,077
- -------------------------------------------------------------------------------
Net increase in net
assets resulting from
capital share
transactions........... 29,683,893 1,457,381 2,284,031 9,080,048
- -------------------------------------------------------------------------------
Total increase in net
assets................ 29,488,273 1,424,598 2,281,727 8,977,454
Net assets
Beginning of period...... 31,087,918 0 0 2,204,375
- -------------------------------------------------------------------------------
End of period............ $60,576,191 $1,424,598 $2,281,727 $11,181,829
- -------------------------------------------------------------------------------
Undistributed
(overdistributed) net
investment income....... $ (1,909) $ 1,276 0 $ (255)
- -------------------------------------------------------------------------------
</TABLE>
(a) For the period from August 17, 1998 (commencement of operations) to Decem-
ber 31, 1998.
(b) For the period from May 1, 1998 (commencement of operations) to December
31, 1998.
See Combined Notes to Financial Statements.
54
<PAGE>
Combined Notes to Financial Statements (Unaudited)
1. ORGANIZATION
The Evergreen Variable Annuity Trust (the "Trust") is organized as a Delaware
business trust with nine separate investment series, Evergreen VA Aggressive
Growth Fund ("Aggressive Growth Fund"), Evergreen VA Fund ("Evergreen Fund"),
Evergreen VA Foundation Fund ("Foundation Fund"), Evergreen VA Global Leaders
Fund ("Global Leaders Fund"), Evergreen VA Growth and Income Fund ("Growth and
Income Fund"), Evergreen VA International Growth Fund ("International Growth
Fund"), Evergreen VA Masters Fund ("Masters Fund"), Evergreen Small Cap Value
Fund ("Small Cap Value Fund") and Evergreen VA Strategic Income Fund ("Strate-
gic Income Fund"), collectively known as the "Funds". The Funds are registered
under the Investment Company Act of 1940, as diversified, open-ended, manage-
ment investment companies. Shares of each Fund may only be purchased by insur-
ance companies for the purpose of funding variable annuity contracts or vari-
able life insurance policies.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently fol-
lowed by the Funds in the preparation of their financial statements. The poli-
cies are in conformity with generally accepted accounting principles, which re-
quire management to make estimates and assumptions that affect amounts reported
herein. Actual results could differ from these estimates.
A. Valuation of Securities
Securities traded on a national securities exchange or included on the Nasdaq
National Market System ("NMS") are valued at the last reported sales price on
the exchange where primarily traded. For international securities, the Funds
value investments traded on an established exchange on the basis of the last
sales price on the exchange where primarily traded. Securities traded on an ex-
change 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. U.S. government obligations held by the Funds are valued
at the mean between the over-the-counter bid and asked prices. Corporate bonds,
other fixed income securities, and mortgage and other asset-backed securities
are valued at prices provided by an independent pricing service. In determining
a price for normal institutional-size transactions, the pricing service uses
methods based on market transactions for comparable securities and analysis of
various relationships between similar securities which are generally recognized
by institutional traders. Securities for which valuations are not available
from an independent pricing service, including restricted securities, are val-
ued at fair value as determined in good faith according to procedures estab-
lished by the Board of Trustees. Short-term investments with remaining maturi-
ties of 60 days or less are carried at amortized cost, which approximates mar-
ket 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 securi-
ties pledged falls below the carrying value of the repurchase agreement, in-
cluding accrued interest. Each Fund will only enter into repurchase agreements
with banks and other financial institutions, which are deemed by the investment
advisor to be creditworthy pursuant to guidelines established by the Board of
Trustees.
C. Foreign Currency
The books and records of the Funds are maintained in United States (U.S.) dol-
lars. Foreign currency amounts are translated into U.S. dollars as follows:
market value of investment securities, other assets and liabilities at the
daily rate of exchange; purchases and sales of investment securities and 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 on foreign currency related transac-
tions include: foreign currency gains or losses between trade date and settle-
ment date on investment securities transactions, foreign currency related
transactions and the difference
55
<PAGE>
Combined Notes to Financial Statements (Unaudited) (continued)
between the amounts of interest and dividends recorded on the books of the Fund
and the amounts that are actually received. The portion of foreign currency
gains or 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.
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 liabili-
ties. 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 con-
tracts involve elements of market risk in excess of the amount reflected in the
Statements 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, or in the case of some foreign securities, on the date there-
after when the Fund is made aware of the dividend. Foreign income may be sub-
ject to foreign withholding taxes which are accrued as applicable. Capital
gains realized on some foreign securities may be subject to foreign taxes and
are accrued as applicable.
F. Federal Taxes
The Funds have qualified and intend to continue to qualify as regulated invest-
ment 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 in-
come and net capital gains, if any, to their shareholders. The Funds also in-
tend to avoid excise tax liability by making the required distributions under
the Code. Accordingly, no provision for federal taxes is required. To the ex-
tent that realized capital gains can be offset by capital loss carryforwards,
it is each Fund's policy not to distribute such gains.
G. Distributions
Distributions from net investment income and net realized capital gains for the
Funds, if any, are declared and paid at least annually. Distributions to share-
holders are recorded at the close of business on the ex-dividend date. Income
and capital gains distributions to shareholders are determined in accordance
with income tax regulations, which may differ from generally accepted account-
ing principles.
H. Organization Expenses
For each Fund, except International Growth Fund, Masters Fund and Small Cap
Value Fund, organization expenses are amortized to operations over a five-year
period on a straight-line basis. In the event any of the initial shares of the
Funds are redeemed by any holder during the five-year amortization period, re-
demption 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.
Expenses relating to the organization of International Growth Fund and Small
Cap Value Fund have been reflected, in their entirety, in each Fund's operating
results in the first twelve months after the commencement of operations.
56
<PAGE>
Combined Notes to Financial Statements(Unaudited) (continued)
3. INVESTMENT ADVISORY AGREEMENT AND OTHER AFFILIATED TRANSACTIONS
Evergreen Investment Management ("EIM"), a division of First Union National
Bank ("FUNB"), is the investment advisor for Aggressive Growth Fund and Masters
Fund and is paid an advisory fee that is calculated daily and paid monthly at
an annual rate of 0.60% and 0.95%, respectively, of the Fund's average daily
net assets.
Evergreen Asset Management Corp. ("EAMC"), a wholly-owned subsidiary of First
Union Corporation ("First Union"), MFS Institutional Advisors, Inc.,
OppenheimerFunds, Inc. and Putnam Investment Management, Inc. are investment
managers to the Masters Fund. Subject to the supervision of EIM, each manager
manages a segment of the Masters Fund's portfolio in accordance with the Fund's
investment objective and policies. The Masters Fund pays no direct fees to the
investment managers for their services.
EAMC is the investment advisor to the Evergreen Fund, Foundation Fund, Global
Leaders Fund, Growth and Income Fund and Small Cap Value Fund and is paid an
investment advisory fee that is calculated daily and paid monthly. For Ever-
green Fund, Global Leaders Fund, Growth and Income Fund and Small Cap Value
Fund, the investment advisory fee is computed at a annual rate of 0.95% of each
respective Fund's average daily net assets. Foundation Fund 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, serves as investment sub-advisor
to the Evergreen Fund, Foundation Fund, Global Leaders Fund, Growth and Income
Fund, Masters Fund and Small Cap Value Fund. Lieber & Company provides such
services at no additional cost to the Funds.
Lieber & Company also provides brokerage services for Evergreen Fund, Founda-
tion Fund, Global Leaders Fund, Growth and Income Fund, Masters Fund and Small
Cap Value Fund with respect to substantially all security transactions executed
on the New York or American Stock Exchanges. For transactions executed during
the six months ended June 30, 1999, Evergreen Fund, Foundation Fund, Global
Leaders Fund, Growth and Income Fund, Masters Fund and Small Cap Value Fund in-
curred brokerage commissions of $27,049, $30,258, $4,600, $67,846, $4,584 and
$2,996, respectively, with Lieber & Company.
Evergreen Investment Management Company ("EIMC"), a subsidiary of First Union,
is the investment advisor for International Growth Fund and Strategic Income
Fund. In return for providing investment management and administrative services
to the Funds, EIMC is paid an advisory fee that is calculated daily and paid
monthly. For International Growth Fund, the investment advisory fee is calcu-
lated by applying percentage rates, which start at 0.75% and decline as assets
increase, to 0.45% of the Fund's average daily net assets. For Strategic Income
Fund, the advisory fee is calculated at an annual rate of 2.0% of the Fund's
gross investment income plus an amount which is determined by applying percent-
age 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 advisor has voluntarily agreed to reimburse the Funds to the
extent that each Fund's annual operating expenses (including the investment ad-
visory fee and amortization of organizational expenses but excluding interest,
taxes, brokerage commissions and extraordinary expenses) exceed 1.00% of its
average daily net assets excluding indirectly paid expenses. For the six months
ended June 30, 1999, the investment advisors voluntarily waived and/or reim-
bursed the following amounts:
<TABLE>
<CAPTION>
Waived Reimbursed
----------------------
<S> <C> <C>
Aggressive Growth Fund....................... $ 2,045 $ 0
Evergreen Fund............................... 20,565 0
Foundation Fund.............................. 0 0
Global Leaders Fund.......................... 14,576 0
Growth and Income Fund....................... 33,750 0
International Growth Fund.................... 6,550 7,696
Masters Fund................................. 23,892 0
Small Cap Value Fund......................... 11,211 0
Strategic Income Fund........................
</TABLE>
Evergreen Investment Services ("EIS"), a subsidiary of First Union, serves as
the administrator and The BISYS Group, Inc. ("BISYS") serves as the sub-admin-
istrator to the Funds. As administrator, EIS provides the Funds
57
<PAGE>
Combined Notes to Financial Statements (Unaudited) (continued)
with facilities, equipment and personnel. As sub-administrator to the Funds,
BISYS provides the officers of the Funds. Officers of the Funds and affiliated
Trustees receive no compensation directly from the Funds.
The administrator and sub-administrator for Funds 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 invest-
ment advisors. The administration fee is calculated by applying percentage
rates, which start at 0.05% and decline to 0.01% per annum as net assets in-
crease, to the average daily net asset value of each Fund. The sub-administra-
tion 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
asset value of each Fund.
During the six months ended June 30, 1999, the Funds paid or accrued the fol-
lowing amounts to EIS for administration fees and BISYS for sub-administration
fees:
<TABLE>
<CAPTION>
Administration Sub-administration
Fee Fee
------------------------------
<S> <C> <C>
Aggressive Growth Fund........ $ 530 $ 136
Evergreen Fund................ 5,005 1,313
Foundation Fund............... 9,311 2,396
Global Leaders Fund........... 1,126 289
Growth and Income Fund........ 6,533 1,681
International Growth Fund..... 176 45
Masters Fund.................. 708 169
Small Cap Value Fund.......... 293 76
Strategic Income Fund......... 1,313 338
</TABLE>
Evergreen Service Company ("ESC"), an indirect, wholly-owned subsidiary of
First Union, serves as the transfer and dividend disbursing agent for the
Funds.
4. CAPITAL SHARE TRANSACTIONS
The Funds have an unlimited number of shares of beneficial interest with a
$0.001 par value authorized. Transactions in shares of the Funds were as fol-
lows:
Aggressive Growth Fund (a)
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
June 30, 1999 December 31, 1998
- ------------------------------------------------------------------------------
<S> <C> <C>
Shares sold................................... 220,130 184,977
Shares redeemed............................... (13,410) (55,735)
- ------------------------------------------------------------------------------
Net increase.................................. 206,720 129,242
- ------------------------------------------------------------------------------
Evergreen Fund
<CAPTION>
Six Months
Ended Year Ended
June 30, 1999 December 31, 1998
- ------------------------------------------------------------------------------
<S> <C> <C>
Shares sold................................... 744,317 1,696,668
Shares redeemed............................... (71,829) (250,312)
Shares issued in reinvestment of
distributions................................ 18,760 96,422
- ------------------------------------------------------------------------------
Net increase.................................. 691,248 1,542,778
- ------------------------------------------------------------------------------
Foundation Fund
<CAPTION>
Six Months
Ended Year Ended
June 30, 1999 December 31, 1998
- ------------------------------------------------------------------------------
<S> <C> <C>
Shares sold................................... 2,431,836 3,066,890
Shares redeemed............................... (18,401) (178,716)
Shares issued in reinvestment of
distributions................................ 16,016 175,029
- ------------------------------------------------------------------------------
Net increase.................................. 2,429,451 3,063,203
- ------------------------------------------------------------------------------
</TABLE>
58
<PAGE>
Combined Notes to Financial Statements(Unaudited) (continued)
Global Leaders Fund (a)
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
June 30, 1999 December 31, 1998
- ------------------------------------------------------------------------------
<S> <C> <C>
Shares sold................................... 290,163 507,154
Shares redeemed............................... (17,249) (29,069)
Shares issued in reinvestment of
distributions................................ 202 4,197
- ------------------------------------------------------------------------------
Net increase.................................. 273,116 482,282
- ------------------------------------------------------------------------------
Growth and Income Fund
<CAPTION>
Six Months
Ended Year Ended
June 30, 1999 December 31, 1998
- ------------------------------------------------------------------------------
<S> <C> <C>
Shares sold................................... 548,621 1,929,361
Shares redeemed............................... (83,447) (177,543)
Shares issued in reinvestment of
distributions................................ 22,235 105,254
- ------------------------------------------------------------------------------
Net increase.................................. 487,409 1,857,072
- ------------------------------------------------------------------------------
International Growth Fund (b)
<CAPTION>
Six Months
Ended Year Ended
June 30, 1999 December 31, 1998
- ------------------------------------------------------------------------------
<S> <C> <C>
Shares sold................................... 92,114 154,555
Shares redeemed............................... (14,113) (2,887)
- ------------------------------------------------------------------------------
Net increase.................................. 78,001 151,668
- ------------------------------------------------------------------------------
Masters Fund (c)
<CAPTION>
Six Months
Ended Year Ended
June 30, 1999 December 31, 1998
- ------------------------------------------------------------------------------
<S> <C> <C>
Shares sold................................... 1,118,546 0
Shares redeemed............................... (8,658) 0
- ------------------------------------------------------------------------------
Net increase.................................. 1,109,888 0
- ------------------------------------------------------------------------------
Small Cap Value Fund (d)
<CAPTION>
Six Months
Ended Year Ended
June 30, 1999 December 31, 1998
- ------------------------------------------------------------------------------
<S> <C> <C>
Shares sold................................... 138,358 241,643
Shares redeemed............................... (17,528) (6,669)
Shares issued in reinvestment of
distributions................................ 0 3,199
- ------------------------------------------------------------------------------
Net increase.................................. 120,830 238,173
- ------------------------------------------------------------------------------
Strategic Income Fund (a)
<CAPTION>
Six Months
Ended Year Ended
June 30, 1999 December 31, 1998
- ------------------------------------------------------------------------------
<S> <C> <C>
Shares sold................................... 521,726 919,993
Shares redeemed............................... (66,731) (100,550)
Shares issued in reinvestment of
distributions................................ 0 40,670
- ------------------------------------------------------------------------------
Net increase.................................. 454,995 860,113
- ------------------------------------------------------------------------------
</TABLE>
(a) For the period from March 1, 1997 (commencement of operations) to December
31, 1997.
(b) For the period from August 17, 1998 (commencement of operations) to Decem-
ber 31, 1998.
(c) For the period from January 29, 1999 (commencement of operations) to June
30, 1999.
(d) For the period from May 1, 1998 (commencement of operations) to December
31, 1998.
59
<PAGE>
Combined Notes to Financial Statements(Unaudited) (continued)
5. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of investment securities (excluding
short-term securities) were as follows for the six months ended June 30, 1999:
<TABLE>
<CAPTION>
Cost of Purchases Proceeds from Sales
----------------------- ----------------------
U.S. Non-U.S. U.S. Non-U.S.
Government Government Government Government
--------------------------------------------
<S> <C> <C> <C> <C>
Aggressive
Growth Fund.... $ 0 $ 4,294,167 $ 0 $ 1,676,378
Evergreen Fund.. 0 9,920,921 0 7,761,014
Foundation
Fund........... 11,388,906 15,569,473 0 6,348,591
Global Leaders
Fund........... 0 4,553,158 0 1,226,050
Growth and
Income Fund.... 0 30,006,331 0 16,597,180
International
Growth Fund.... 0 2,384,345 0 1,544,817
Masters Fund.... 0 13,244,458 0 2,637,681
Small Cap Value
Fund........... 0 1,678,935 0 601,453
Strategic Income
Fund...........
</TABLE>
6. EXPENSE OFFSET ARRANGEMENT
The Funds have entered into expense offset arrangements with ESC and their cus-
todian whereby credits realized as a result of uninvested cash balances were
used to reduce a portion of each Fund's related expenses. The assets deposited
with ESC and the custodian under these expense offset arrangements could have
been invested in income-producing assets. The amount of fee credits received by
each Fund and the impact on each Fund's expense ratio represented as a percent-
age of its average daily net assets were as follows:
<TABLE>
<CAPTION>
Total
Fee Credits % of Average
Received Daily Net Assets
---------------------------
<S> <C> <C>
Aggressive Growth Fund............. $ 207 0.01%
Evergreen Fund..................... 1,299 0.01
Foundation Fund.................... 3,854 0.01
Global Leaders Fund................ 1,068 0.02
Growth and Income Fund............. 1,454 0.01
International Growth Fund.......... 307 0.03
Masters Fund....................... 116 0.00
Small Cap Value Fund............... 648 0.04
Strategic Income Fund.............. 691 0.01
</TABLE>
7. DEFERRED TRUSTEES' FEES
Each Independent Trustee of the Funds may defer any or all compensation related
to performance of their duties as Trustees. The Trustees' deferred balances are
allocated to deferral accounts, which are included in the accrued expenses for
the Funds. The investment performance of the deferral accounts are based on the
investment performance of certain Evergreen Funds. Any gains earned or losses
incurred in the deferral accounts are reported in the Fund's Trustees' fees and
expenses. Trustees will be paid either in one lump sum or in quarterly install-
ments 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.
8. FINANCING AGREEMENT
Certain Evergreen Funds and State Street Bank and Trust Company ("State
Street") and a group of banks (collectively, the "Banks") entered into a fi-
nancing agreement dated December 22, 1997, as amended on November 20, 1998. Un-
der this agreement, the Banks provided an unsecured credit facility in the ag-
gregate amount of $400 million ($275 million committed and $125 million uncom-
mitted). The credit facility was allocated, under the terms of the financing
agreement, among the Banks. The credit facility was accessed by the Funds for
temporary or emergency purposes only and was 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 in-
curred on the unused portion of the committed facility, which was allocated to
all funds. For its assistance in arranging this financing agreement, the Capi-
tal Market Group of First Union was paid a
60
<PAGE>
Combined Notes to Financial Statements (Unaudited) (continued)
one-time arrangement fee of $27,500. State Street serves as administrative
agent for the Banks, and as administrative agent is entitled to a fee of
$20,000 per annum which is allocated to all of the Funds.
This agreement was amended and renewed on December 22, 1998. The amended fi-
nancing agreement became effective on December 22, 1998 among all of the Ever-
green Funds, State Street and The Bank of New York ("BONY"). Under this agree-
ment, State Street and BONY provide an unsecured credit facility in the aggre-
gate amount of $150 million ($125 million committed and $25 million uncommit-
ted). The remaining terms and conditions of the agreement are unaffected.
During the six months ended June 30, 1999, the Funds had no borrowings pursuant
to this line of credit.
9. YEAR 2000
Like other investment companies, the Funds could be adversely affected if the
computer systems used by the Funds' investment advisors and the Funds' other
service providers are not able to perform their intended functions effectively
after 1999 because of the inability of computer software to distinguish the
year 2000 from the year 1900. The Funds' investment advisors are taking steps
to address this potential year 2000 problem with respect to the computer sys-
tems that they use and to obtain satisfactory assurances that comparable steps
are being taken by the Funds' other major service providers. At this time, how-
ever, there can be no assurance that these steps will be sufficient to avoid
any adverse impact on the Funds from this problem.
61
<PAGE>
This report must be preceded or accompanied by a prospectus of an Evergreen
fund contained herein. The prospectus contains more complete information, in-
cluding 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.
11775 547189 08/99
