Evergreen - Prudential

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FUND AT A GLANCE as of December 31, 2006 MANAGEMENT TEAM Investment Advisor: • <strong>Evergreen</strong> Investment Management Company, LLC Sub-Advisor: • Tattersall Advisory Group, Inc. Portfolio Managers: • Walter T. McCormick, CFA • Robert A. Calhoun, CFA • Parham M. Behrooz, CFA • Mehmet Camurdan, CFA • Eric R. Harper, CFA • Todd C. Kuimjian, CFA PERFORMANCE AND RETURNS Portfolio inception date: 3/1/1996 Class 1 Class 2 Class inception date 3/1/1996 7/31/2002 Average annual return 1-year 9.85% 9.62% 5-year 5.16% 4.94% 10-year 5.75% 5.64% Past performance is no guarantee of future results. The performance quoted represents past performance and current performance may be lower or higher. The investment return and principal value of an investment will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. To obtain performance information current to the most recent month-end, please call 1.800.321.9332. The performance of each class may vary based on differences in fees and expenses paid by the shareholders investing in each class. Performance includes the reinvestment of income dividends and capital gain distributions, but does not reflect contract, policy, or separate account charges assessed by participating insurance companies. Historical performance shown for Class 2 prior to its inception is based on the performance of Class 1, the original class offered. The historical returns for Class 2 have not been adjusted to reflect the effect of the class’ 12b-1 fee. The fund incurs a 12b-1 fee of 0.25% for Class 2. Class 1 does not pay a 12b-1 fee. If the fee had been reflected, returns for Class 2 would have been lower. Returns reflect expense limits previously in effect, without which returns would have been lower. LONG-TERM GROWTH $25,000 $22,447 $18,313 $20,000 $15,000 $10,000 $5,000 $17,487 $12,724 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03 12/31/04 12/31/05 12/31/06 Class 1 LBABI S&P 500 Comparison of a $10,000 investment in the <strong>Evergreen</strong> VA Balanced Fund Class 1 shares versus a similar investment in the Lehman Brothers Aggregate Bond Index (LBABI), the S&P 500 Index (S&P 500) and the Consumer Price Index (CPI). CPI 6 The LBABI and the S&P 500 are unmanaged market indexes and do not include transaction costs associated with buying and selling securities, any mutual fund fees or expenses or any taxes. The CPI is a commonly used measure of inflation and does not represent an investment return. It is not possible to invest directly in an index.
PORTFOLIO MANAGER COMMENTARY The fund’s Class 1 shares returned 9.85% for the twelve-month period ended December 31, 2006. During the same period, the LBABI returned 4.33% and the S&P 500 returned 15.79%. The fund seeks capital growth and current income. The fund delivered positive returns during 2006, helped significantly by its relatively heavy allocation to its equity portfolio, which accounted for approximately 67% of fund assets at fiscal year end. It was a year in which the stock market significantly outperformed the bond market and the fund’s strong allocation to equities helped results. The equity sleeve of the portfolio, however, lagged the S&P 500. The key factor in the trailing performance was our shift to emphasize large-cap growth stocks which in our opinion had the ability to sustain their earnings and cash flow growth in a slowing economy. While these stocks had good absolute performance, the more cyclical, value stocks maintained their performance leadership throughout the year. Our selections in the energy sector helped performance, led by integrated oil company Exxon Mobil Corp., whose stock produced a total return of more than 35%. Oil field services company Schlumberger, Ltd. was another outstanding energy selection. The overweighting of technology and stock selection within the sector provided strong support to performance. Technology holdings that performed particularly well included: Cisco Systems, Inc., a producer of networking infrastructure technology; Oracle Corp., which develops software for large enterprises; and Hewlett-Packard Co., a diversified technology company. We sold our position in Hewlett- Packard and took profits during the year after the company’s shares staged a sharp rebound. In the financials sector, leading performers included investment bank Goldman Sachs Group, Inc., diversified broker Merrill Lynch & Co., Inc., and JPMorgan Chase & Co., a major diversified bank. Among our industrials holdings, stocks that performed particularly well included Lockheed Martin Corp., a defense contractor, and Pall Corp., which produces filtration devices. The equity portfolio’s performance was held back by stock selection in the consumer discretionary sector and the overweighting of the lagging health care sector. Among our consumer discretionary investments, the biggest disappointment was specialty retailer Chico’s FAS, Inc. Other notable disappointments included: technology company QUALCOMM, Inc.; internet auctioneer eBay, Inc.; adult education company Apollo Group, Inc.; asset manager Legg Mason, Inc.; and biotechnology company Amgen, Inc. The fixed income sleeve of the portfolio performed in line with the LBABI. Our positions in mortgage-backed securities and our selections within that sector generally helped support performance. While the fund’s underweighting of corporates did not help relative performance, security selection within corporate sector was supportive to results. Moreover, the decision to upgrade the quality of our corporate selections in the third quarter helped performance. Our neutral duration policy, relative to the LBABI, throughout the year did not have an impact on relative performance. The fund’s investment objective may be changed without a vote of the fund’s shareholders. Asset-backed and mortgage-backed securities are generally subject to higher prepayment risks than other types of debt securities, which can limit the potential for gain in a declining interest rate environment and increase the potential for loss in a rising interest rate environment. Mortgage-backed securities may also be structured so that they are particularly sensitive to interest rates. Derivatives involve additional risks including interest rate risk, credit risk, the risk of improper valuation and the risk of non-correlation to the relevant instruments they are designed to hedge or to closely track. The return of principal is not guaranteed due to fluctuation in the fund’s NAV caused by changes in the price of individual bonds held by the fund and the buying and selling of bonds by the fund. Bond funds have the same inflation, interest rate and credit risks as individual bonds. Generally, the value of bond funds rise when prevailing interest rates fall, and fall when interest rates rise. U.S. government guarantees apply only to certain securities held in the fund’s portfolio and not to the fund’s shares. Leverage may disproportionately increase a fundís portfolio losses and reduce opportunities for gain when interest rates, stock prices, or currency rates are changing. All data is as of December 31, 2006, and subject to change. 7
Page 1 and 2: Evergreen VA BALANCED FUND Annual R
Page 3 and 4: LETTER TO SHAREHOLDERS February 200
Page 5 and 6: LETTER TO SHAREHOLDERS continued Pl
Page 7: Notice to Shareholders: • The Fun
Page 11 and 12: FINANCIAL HIGHLIGHTS (For a share o
Page 13 and 14: SCHEDULE OF INVESTMENTS December 31
Page 15 and 16: SCHEDULE OF INVESTMENTS continued D
Page 23 and 24: STATEMENT OF ASSETS AND LIABILITIES
Page 25 and 26: STATEMENTS OF CHANGES IN NET ASSETS
Page 27 and 28: NOTES TO FINANCIAL STATEMENTS conti
Page 33 and 34: REPORT OF INDEPENDENT REGISTERED PU
Page 35 and 36: ADDITIONAL INFORMATION (unaudited)
Page 41 and 42: This page left intentionally blank
Page 43 and 44: TRUSTEES AND OFFICERS continued Ric

Evergreen - Prudential

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